48957_131013102005165417.pdf - Duro Felguera

INDEX

Letter from the Chairman

Corporate Governance

Approval of Proposals by the Board of Directors

Financial Information

Auditor’s Report

Industrial Activity and Strategies

Corporate Structure

Activities of the Business Lines

Directory

03

07

13

17

25

29

44

47

75

ANNUAL REPORT 2002

123456 7/8/03 09:54 Página 1

123456 7/8/03 09:54 Página 2

3

Dear Shareholders:

As Chairman of Duro Felguera it is a great satisfaction for me to appear before you once againto inform you of the company’s results, the most relevant events of the last financial year and theoutlook for the future.

Firstly, I would like to point out that the favourable effects of having implemented the 2002-2004 Strategy Scheme have already started to show. Consequently, the company’s core businesshas been perfectly defined and this has allowed us to:

· Mantain and improve our business turnover.· Reinforce our technological alliances.· Re-order the markets in cooperation with other relevant companies.· Optimise our resources by improving the professional, financial and industrial profile of

Duro Felguera, all of which places us at the third stage of planned development, alreadyannounced in my letter to you in last year’s Annual Report.

2002 YEARLY RESULTS Having said this and as all of you have been able to verify by the documentation handed to you

at the start of this meeting as well as by the information made public by the company over thelast months, the results of Duro Felguera during the last financial year, although not optimum,may be qualified as reasonably favourable given the special developments of the markets wherethe company is present.

Consolidated profits have risen by 7% with respect to the previous financial year. The most sig-nificant increase has been made by the Parent Company, which more than triples last year’sresults. This great difference is due to the fact that a large portion of business undertaken bycompanies which make up the group, is now concentrated in the Parent Company.

It is equally important to note that general business has experienced a growth of 179%, risingfrom 4.4 million euros in 2001 to 12.3 million in 2002.

ORDER INTAKE & BACKLOGPossibly the most outstanding aspect of Duro Felguera over the last year has been the great

increase registered in orders, showing a growth of 66% with respect to the previous year. It isalso noteworthy that at last year’s closure, orders to the amount of 430 million euros were expec-ted in comparison to the previous year’s 303 million euros; an overall increase of 42%. Apart fromthe importance of this rise, the previously mentioned 430 million euros assure not only the com-pany’s activities over a continuous period of time, but are also a favourable reflection on the pro-fit and loss accounts. All Duro Felguera subsidiaries that have reached business expectationsand results foreseen in the Strategy Scheme, as gathered in their respective accounts, contribu-te to the Profit and Loss Account except those who are still in an adaptation phase. The subsi-diary Duro Felguera, S.A. de C.V. in Mexico and its engineering subsidiary Pycorsa have begun tomake a profit, if modestly.

Over 2002, order intake has been orientated in favour of the domestic market mainly due tothe fact that better business opportunities have been appraised and as a consequence of the con-tracts that have been awarded and their proximity to production centres, streamlining costs moreeffectively. All of this can be observed in greater detail throughout this report.

The fact that an increase in orders has been maintained during 2002 is especially significantbearing in mind the enormous difficulties that the international markets have gone through, in aclimate of industrial, financial and political uncertainty.

LETTER FROMTHE CHAIRMAN

123456 7/8/03 09:54 Página 3

4

LEADERS IN TURNKEY PROJECTSYou will remember that during our previous meeting we insisted that our strategy was to make

Duro Felguera a company focused towards turnkey projects and that it should have its own techno-logy or technology in consortium with others.

Well, our primary aspirations have come true during 2002: Duro Felguera has become a leader inturnkey industrial projects. Among our principal successes is having become the first Spanish com-pany in history to be awarded, as Main Contractor, the construction and commissioning of two gascombined cycle power generation plants for our client Endesa, namely Son Reus II and Barranco deTirajana. Having achieved this objective drives us even more to double our efforts for the future.

STRATEGIC ALLIANCESLast year when we talked about our own technology or technology in consortium with others, we

referred, in the latter supposition, to the procedure by means of which to acquire this technology, bysecuring alliances with the most appropriate technological partners in each case. But, this wouldalways be based on the fact that the Duro Felguera name should be sufficiently attractive to the largemultinationals in possession of the technology.

Well, the solid performance of Duro Felguera in years past and confirmed throughout 2002, hasallowed us to further increase our prestige in the capital goods sector and to consolidate our strategy.We are present in each of the business sectors where the Company carries out its purpose backed bystable, long-term alliances with large multinationals thereby complementing our strengths. This hasbeen applied with great success till now and we will continue to do so in the future.

In previous General Meetings I have informed you of the various agreements signed with interna-tional and foremost companies in the power generation sector where Duro Felguera is at the fore-front. During this fiscal year we have added another technological alliance. This was signed with theEnglish construction company Balfour Beatty to develop high-speed railway track components.

In addition, a joint venture has been set up with the prestigious Japanese industrial groupMitsubishi Heavy Industries to undertake joint ventures in Europe. This is the first time that theJapanese company creates a joint venture in Europe to open up new markets. Although initially thisenterprise is foreseen to market, design and manufacture tunnel boring machines, it will later extendits activities, employing other commercially viable technologies developed by the Japanese multina-tional in Europe and South America.

It is thanks to these agreements that Duro Felguera has taken a step forward into the infrastruc-ture sector.

The alliances with important Mexican partners aimed at strengthening activities in the petroche-mical engineering sector are also worth noting. A majority share in the engineering company Pycorsahas meant a significant entrance into the Mexican Oil industry.

A major qualitative leap forward has also been made into the of Petrochemical Product Storagesector, which is carried out by Felguera-IHI. This advance opens up improved perspectives for thefuture in this field. Without having to abandon its traditional role of construction and engineering,Felguera-IHI has evolved towards crude storage management as logistical operator. In addition, thesignificant achievements in construction of cryogenic storage tanks have consolidated DuroFelguera’s position in the regasification of increasingly demanded liquid gas.

It is a great pride for us that top international companies accept alliances with Duro Felguera tofurther penetrate into various markets. Even more so when you consider that these alliances areestablished without any significant limits for business expansion.

These important developments go to fulfil one of Duro Felguera’s needs and apparent weaknes-ses, interpreted by some analysts as being the possible lack of technology in the Company. As I alre-ady informed you in my previous letter, at last year’s closure the needs expressed in the Company’sStrategy Scheme to reinforce engineering and manufacturing capacity of capital goods and turnkeyplants have been covered. Duro Felguera is currently focused towards power systems, petrochemi-cal, infrastructure, engineering, erection and start-up of industrial installations.

123456 7/8/03 09:54 Página 4

5

| LETTER FROM THE CHAIRMAN

INVESTMENTSAnother major objective for Duro Felguera during 2002 was to pay particular attention to its tangi-

ble assets, in order to maintain the highest quality and to assure delivery schedules whilst at the sametime optimising production costs and results of the multiple business units.

Therefore, in order to improve productivity more than 5 million euros have been invested in moder-nising machinery, work centres and environments of various industrial and administrative installa-tions in the certainty that this initiative will favour Duro Felguera’s competitiveness.

Attention has also been focused on the corporate Image. Significant financial resources have beenallocated to increase communication capacity, to make Duro Felguera known both internally andexternally among clients, suppliers, and shareholders, to institutions of all kinds and the social set-ting where the Company carries out its activities.

The magnificent opportunities that Internet has to offer have been acknowledged as one of themethods to achieve this objective. The permanently updated Duro Felguera website contains infor-mation considered of general interest and is available to the shareholders and to anybody that wishesto make us a virtual visit.

At the same time, the Shareholders Bulletin hosted on the website is updated every three months.This substitutes the traditional hardcopy format and includes a summary of the mandatory report thatis periodically sent to the Comisión Nacional del Mercado de Valores (CNMV).

HUMAN RESOURCESIn the Company’s Human Resources area the process to optimise resources has continued. This

has been developed in the usual climate of understanding and good relations with the only exceptionof the conflicts which arose just before the union elections at Felguera Calderería Pesada andFelguera Calderería Pesada Servicios causing some tension, though this has gradually eased.

The Training schemes, which have been of such success to Duro Felguera have continued. Thesehave included both occupational and continuous training and are being developed in cooperation withthe National Institute for Employment (Instituto Nacional de Empleo), taking place at Duro FelgueraTraining Centres. Different types of professional courses are offered geared to the needs of theCompany’s activities. Trained personnel have been taken on in the various workshops and depart-ments of the Company and its subsidiaries.

We are also pleased to inform you that last 25 September, in a letter to the United NationsSecretary General, Kofi Annan, Duro Felguera expressed its deep interest in adopting, supporting andpromoting within its area of influence the fundamental values in the fields of Human Rights, LabourRelations and respect for the Environment sponsored by the Global Compact. Duro Felguera hasexpressed a wish to include the commitment in its objectives to comply faithfully with the nineFundamental Principles on which the Global Compact stands. The necessary internal measures willbe taken to carry this out.

GOOD GOVERNANCEThe incorporation of Duro Felguera shareholders onto the Board of Directors representing major

companies from diverse sectors within Asturias has aided certain business transactions affordingsuccessful cooperation from these incorporations. Following the Code of Good Governance thesetransactions have been checked and approved by the Board without intervention of the interested par-ties. Actions taken in these types of operations are already regulated in the Board’s Rules of Conductto ensure greater transparency of information throughout Duro Felguera’s activities.

I would also like to refer to Duro Felguera’s constant concern in responding to the demands ofindustrial modernity as well as adapting to the business environment where its activities take place.The study to update the Code of Good Governance, which been in force in Duro Felguera since 2000started in 2002.

The Board of Directors Advisory, Audit and Strategy Committees were set up in the year 2000. It isin this manner that Duro Felguera was one step ahead of what today is a reality and, in some cases,legally mandatory for companies whose shares are traded on the stock markets, as is our case.

123456 7/8/03 09:54 Página 5

6

Subsequently, when the Finance Act (Ley Financiera) of November 2002 came into force, DuroFelguera already had an Audit Committee with its own rules of governance.

It is foreseen that in 2003 the study will continue so that the Board may approve the updated Codeof Governance. In addition, Corporate Management Procedures regulating the Company’s GoverningBodies are to be established, adapted to the obligations and recommendations of the EuropeanCommunity Directives that are or will come into force, as well as the already mentioned Finance Actand other legal requirements within Spanish legislation.

POST FINANCIAL CLOSURE EVENTSEven though these events occurred after the year’s financial closure, they commenced before it

finalised. It is necessary to refer to the call received from the Sociedad Estatal de ParticipacionesIndustriales (SEPI) in which Duro Felguera was requested to study the possibility of acquiring sharesin Babcock Borsig España, S.A., a company resulting as the product of the privatisation process ofBabcock Wilcox Española, S.A.

During this process, a confidentiality agreement was subscribed to whilst looking into this possi-bility and the examining the documentation required to come to a decision. It is public knowledge thatonce this documentation was examined and the circumstances surrounding the process were takeninto account, Duro Felguera’s Board of Directors desisted from acquiring the previously mentionedshares.

We have come a long way since 1994, when I first had the honour of presiding over the Board ofDirectors of this great Company. There have been several obstacles, some of them quite large. Wecan now see that the strategic objectives we had at the time were sound, and I am pleased to say thatthey have been met in their totality. As a consequence, we look to the future with optimism; aware ofthe efforts that have to be made, but convinced that the Company’s team of people and our approachto the business will bear the fruits that our Shareholders expect.

I would like to take this opportunity in addressing you, the Shareholders, to convey our utmostappreciation for placing your trust on this Board of Directors and its Chairman. To end, I wish totransmit our optimism for the Company’s future, the Shareholders and Personnel, as well as ourcommitment to make every effort and sacrifice to achieve our greatest expectations for the future.

Many thanks to you all.

Ramón Colao Caicoya CHAIRMAN

123456 7/8/03 09:54 Página 6

CORPORATEGOVERNANCE

123456 7/8/03 09:54 Página 7

8

Duro Felguera, S.A. was set up for an indefinite period of time on 22 April 1900under the name of Sociedad Metalúrgica Duro Felguera, S.A. On 25th July 1991 thecompany changed its name Grupo Duro Felguera, S.A. and on 26th April 2001 it sub-sequently adopted its current name, DURO FELGUERA, S.A.

To sum up, the Company’s corporate purpose is to carry out engineering activities,construction, manufacturing, erection and assembly in the steelworks, boiler-making, smelting and capital goods areas and to construct Industrial Plants awardedon a turnkey basis, as well as provide services, market and create industrial, com-mercial and service companies. It may also acquire and hold fixed or variable inco-me securities.

In 1991 Duro Felguera, S.A. completed the process of transforming the variousdivisions via which it carried out the company’s multiple business activities intolegally independent companies, reordering the human, material and financialresources of the Industrial Group. The company structure has currently been reor-ganised establishing an organisation chart divided into the different lines of business,illustrated in the chart on pages 44 and 45 of this report under the heading“Corporate Structure”.

The most important Lines of Business are constituted by: the Power Systems Lineoperating as Duro Felguera, S.A. under the umbrella of the Parent Company; DuroFelguera Plantas Industriales, S.A., Duro Felguera Equipos y Montajes, S.A., both ofwhich have the same Board of Directors as the Parent Company; the Mining andHandling Line and the Storage Line.

As it has always done, the Parent Company continues to coordinate and supportthe financial activities of its subsidiaries both in their relationships with the creditentities and in centralising the treasury of all the subsidiaries.

This report includes data relative to the consolidated group, providing a break-down of business and information on the companies that go to make up the group aswell.

Duro Felguera, S.A shareholders’ equity as at 31 December 2002 consisted of14.877.421 fully subscribed and paid registered shares represented by accountentries, each with a par value of three euros. All the shares are listed on the Madrid,Barcelona and Bilbao stock exchanges and carry the same voting and dividend rights.As at 31 December 2002, according to the data submitted to the Comisión Nacionaldel Mercado de Valores (CNMV), the following parties hold a substantial interest of3% or more in the Company shareholders’ equity:

CORPORATEGOVERNANCE

TSK, Electrónica y Electricidad, S.A. 15.87%IMASA, Ingeniería Montajes y Construcciones, S.A. 9.53%Duro Felguera, S.A., management holding tied shares 5.66%Cartera de Inversiones MELCA 5.00%Morgan Stanley International 5.00%Caja de Asturias 5.00%

The rest of the Company’s share interests are less significant being lower than 3%,and of which there is no real reference until the Annual General Meeting takes place,the shareholders being the Company’s ultimate governing body.

123456 7/8/03 09:54 Página 8

9

| CORPORATE GOVERNANCE

Mr. Ramón Colao Caicoya Chairman

Mr. Florentino Fernández del Valle Director. General Manager

Mr. José Manuel Cuesta Viña Director

Mr. Juan Carlos Torres Inclán Director

Mr. Marcos Antuña Egocheaga Director

IMASA, Ingeniería Montajes y Construcciones, S.A. Director. Represented by Mr. Saturnino Martínez Zapico

PROYECTOS MODULARES, PMP, S.A. Director. Represented by Mr. Tomás Casado Martínez

T.S.K. Electrónica y Electricidad, S.A. Director. Represented by Mr. Sabino García Vallina

P.H.B. Weserhütte, S.A. Director. Represented by Mr. Acacio Rodríguez García

Mr. José Luis García Arias Director

INVERSIONES EL PILES, S.L. Director. Represented by Mr. Gonzalo Álvarez Arrojo

Mr. José Manuel Agüera Sirgo Director

Mr. Guillermo Quirós Pintado Secretary (Non Director)

Mr. Secundino Felgueroso Fuentes Assistant Secretary (Non Director)

Mr. Agustín Tomé Fernández Legal Advisor

The Board of Directors, in accordance with its regulations, met once a month last year except during the month ofAugust when it does not usually meet, and twice in February to examine and approve the interim accounts and the currentyear’s budget. A further five meetings have also been held to deal with urgent matters.

| BOARD OF DIRECTORS

(From left to right)StandingMr. Juan Carlos Torres Inclán, Mr. Marcos Antuña Egocheaga, Mr. José Manuel Agüera Sirgo, Mr. Guillermo Quirós Pintado, Mr. Gonzalo Álvarez Arrojo, Mr. José Manuel Cuesta Viña, Mr. Acacio Rodríguez García

SeatedMr. Sabino García Vallina, Mr. Saturnino Martínez Zapico, Mr. Florentino Fernández del Valle, Mr. Ramón Colao Caicoya,Mr. Tomás Casado Martínez, Mr. José Luis García Arias

A representative from each of the previously mentioned substantial shareholding interests is a member of theCompany’s Board of Directors, and thus TSK Electrónica y Electricidad, S.A., is represented on the Board as well as PHBWeserhütte, S.A., being a company controlled by the former. In the same manner IMASA, Ingeniería Montajes yConstrucciones, S.A. is Board member of the company and Proyectos Modulares PMP, S.A., company controlled by the for-mer. Also making up the Board are Inversiones EL Piles, S.L. represented by Mr José Luis García Arias. Mr. Juan CarlosTorres Inclán and Mr. José Manuel Cuesta Viña are members of the group of management holding tied shares.

123456 7/8/03 09:54 Página 9

Since February 1999 Duro Felguera, S.A. has an Internal Code of Good Governance which was drawnup to comply with Article 1 of Royal Decree 629/1993 dated 3 May and with the Comisión Nacional delMercado de Valores (CNMV) Circulars 12/1998 and 14/1998, relative to management criteria of treasurystock on the market and to Relevant Events, and to its communication to the CNMV and the market.The Company adopted a series of Procedures in February 2000, laid out in the Board’s declaration ofacceptance, stating its intention to establish and regulate good corporate management to adapt tomarket demands which it started with the creation of three Committees.

The Committees that were set up and their respective members are as follows:

10

All of the Board Committees met periodically throughout 2002. A Committee meeting was heldevery month last year and there were some months when several meetings took place.

In line with Law 44/2002 of 22 November 2002, the Board of Directors has started to update the goodcorporate governance procedures, which are also to include Internal Code of Governance to regulatethe financial relations between the company and some of the shareholders who are present on theBoard. On the same vein, it also intends to commit itself to updating these Internal Codes and toinform those who are a part of the company’s organisation of their content.

In addition, the Board also wishes to propose, for approval in the Annual General Meeting ofShareholders, a modification to be incorporated in the Company’s statutes, i.e. the existence of anAudit Committee. Also to be approved are the updated Code of Governance.

| BOARD COMMITTEES

CORPORATE GOVERNANCE RULES

Audit Committee

Mr. Ramón Colao Caicoya ChairmanINVERSIONES EL PILES, S.L. Member. Represented by Mr. Gonzalo Álvarez Arrojo Mr. José Manuel Agüera Sirgo MemberMr. Secundino Felgueroso Fuentes Secretary

Strategy Committee

Mr. Marcos Antuña Egocheaga ChairmanMr. Florentino Fernández del Valle MemberMr. Juan Carlos Torres Inclán MemberMr. José Luis García Arias MemberIMASA, Ingeniería Montajes y Construcciones, S.A. Member. Represented by Mr. Saturnino Martínez ZapicoP.H.B. Weserhütte, S.A. Member. Represented by Mr. Acacio Rodríguez GarcíaMr. Secundino Felgueroso Fuentes Secretary

Advisory Committee

Mr. Florentino Fernández del Valle ChairmanT.S.K. Electrónica y Electricidad, S.A. Member. Represented by Mr. Sabino García VallinaMr. José Manuel Cuesta Viña MemberMr. José Luis García Arias MemberIMASA, Ingeniería Montajes y Construcciones, S.A. Member. Represented by Mr. Saturnino Martínez ZapicoMr. Guillermo Quirós Pintado Secretary

123456 7/8/03 09:54 Página 10

11

| CORPORATE GOVERNANCE

Each of the Board directors receives 601 euros before taxes for expenses to attend the meetings held by theBoard. Once a year and after the company’s accounts have been approved, each director receives a statutoryremuneration, which in 2002 reached the sum of 14,664.70 euros before taxes.

The company’s financial report shows the sum of what each of the directors actually received for all concepts.In compliance with legal requirements, remuneration of the Chairman and three of the Board directors, who arein turn employed by the Company, has also been included. Consequently, the financial report shows a totalamount received by the Board directors of 1,016,368 euros before taxes by the end of the financial year.

In 2002 certain Shareholders conducted business transactions with Duro Felguera, S.A., which were consi-dered of mutual benefit. The Board examined these operations and once they were proved to be licit, that theydid not go against Duro Felguera’s or the Shareholders’ interests but were in fact of real benefit to the Company,they were approved.

The business operations mentioned above in 2002 were as follows:

The Company’s accounts were audited in 2002 by Pricewaterhouse Coopers, Auditores, S.L., who wereappointed in the Annual General Meeting held on 19 June 2002.

Auditors Remuneration:During 2002 the auditors received a total amount of 188.800 euros for their work. Said amount is broken

down as follows:

The Annual General Meeting was published in the Official Bulletin of the Register of Companies (BoletínOficial del Registro Mercantil) and in the Asturias newspapers; La Nueva España, La Voz de Asturias and ElComercio, as well as in the national, financial daily, Expansión.

Costs for publishing the announcement came to 16,054.26 euros.

The hire cost of the auditorium to hold the meeting, audiovisual means, the installations required as well asthe attentions bestowed on the Shareholders that attended the meeting came to a total of 20,865.40 euros.

| REMUNERATION OF BOARD MEMBERS

| AUDITORS AND THEIR REMUNERATION

| COST OF ORGANISING THE ANNUAL GENERAL MEETING

COMPANY AMOUNT IN EUROSTSK, Electrónica y Electricidad, S.A. 8,577,313.64P.H.B. Weserhütte, S.A. 201,000.00ARS, S.A. 12,146.34ARSIDE, C.M. 750,438.90IMASA, Ingeniería Montajes y Construcción, S.A. 3,423,256.10

Audit of Duro Felguera, S.A. & consolidated group 37,576 eurosAdvisory services to Finance Management, daily allowance & travel expenses 30,800 eurosAudit of Subsidiaries’ accounts 120,424 euros

| ECONOMIC RELATIONS WITH THE SHAREHOLDERSPRESENT IN THE COMPANY BOARD

123456 7/8/03 09:54 Página 11

12

Within the Company’s good corporate management procedures, the creation of a series of work committeeswas agreed. These have several goals and have been especially active throughout 2002. The members of eachwork committee are shown below.

Management Committe

Mr. Florentino Fernández del Valle Director. General ManagerMr. Mariano Blanc Díaz Finance ManagerMr. Eduardo del Valle Dago Organisation & Human Resources ManagerMr. Javier González Canga Development & Marketing ManagerMr. Guillermo Quirós Pintado General Secretary and Legal Manager Mr. José Manuel Cuesta Viña Duro Felguera Plantas Industriales, S.A. General ManagerMr. Pedro García Fernández Duro Felguera Equipos y Montajes, S.A. General ManagerMr. Félix García Valdés Mining and Handling General ManagerMr. Juan Carlos Torres Inclán Power Systems General ManagerMr. Antonio Martínez Acebal Chief Executive Officer Felguera – I.H.I., S.A.Mr. Ángel Peña Menéndez Duro Felguera México, S.A. de C.V. General ManagerMr. Gaspar Antuña Suárez Management Control Manager

Image Committee

Mr. Florentino Fernández del Valle Director. General ManagerMr. Eduardo del Valle Dago Organisation & Human Resources ManagerMr. Javier González Canga Development & Marketing ManagerMr. Guillermo Quirós Pintado General Secretary and Legal ManagerMr. Joaquín Olay Rodríguez Equity ManagerMr. Jaime de Pablo Torrente Advisor- Dos Folios y Medio, S.A.

Risk Committee

Mr. Florentino Fernández del Valle Director. General ManagerMr. Gaspar Antuña Suárez Management Control ManagerMr. Mariano Blanc Díaz Finance ManagerMr. Javier González Canga Development & Marketing ManagerMr. Guillermo Quirós Pintado General Secretary and Legal Manager

Project Management Control Committee

Mr. Florentino Fernández del Valle Director. General ManagerMr. Gaspar Antuña Suárez Management Control ManagerMr. Mariano Blanc Díaz Finance ManagerMr. Guillermo Quirós Pintado General Secretary and Legal Manager

123456 7/8/03 09:54 Página 12

APPROVALOF PROPOSALSBY THE BOARDOF DIRECTORS

123456 7/8/03 09:54 Página 13

14

Report submitted by Mr. Guillermo Quirós Pintado, Secretary of the Board of Directors, stating thatthe Members of the Board signed hereto at the end of the meeting held on 27 March 2003 in approval ofthe Balance Sheet, Profit and Loss Account, Financial Report and Management Report related to the fis-cal year closed on 31 December 2002. This has been initialled by me in its entirety and countersigned byThe Chairman and includes a page signed by the Directors stating their name, surname and office aftertheir signatures which I declare are bona fide.

In Oviedo on 27 March 2003Guillermo Quirós Pintado (Secretary of the Board of Directors)

Mr. Ramón Colao Caicoya ChairmanMr. Florentino Fernández del Valle Director. General ManagerMr. José Manuel Cuesta Viña Director Mr. Juan Carlos Torres Inclán DirectorMr. Marcos Antuña Egocheaga DirectorIMASA, Ingeniería Montajes y Construcciones, S.A. Director. Represented by

Mr. Saturnino Martínez ZapicoPROYECTOS MODULARES, PMP, S.A. Director. Represented by

Mr. Tomás Casado MartínezT.S.K. Electrónica y Electricidad, S.A. Director. Represented by

Mr. Sabino García VallinaP.H.B. Weserhütte, S.A. Director. Represented by

Mr. Acacio Rodríguez GarcíaMr. José Luis García Arias DirectorINVERSIONES EL PILES, S. L. Director. Represented by

Mr. Gonzalo Álvarez Arrojo Mr. José Manuel Agüera Sirgo Director

| PROPOSAL OF APPLICATION OF PROFITS OF DURO FELGUERA, S.A.

At the Board of Directors meeting on 27 March 2003 it was agreed to apply profits and distribution ofdividends (year profits plus the previous year’s retained earnings) as follows:

The distribution of dividends was approved at 0.25 euros per share.The General Meeting attendace bonus is proposed at 0.02 euros per share.

APPROVAL OF PROPOSALSBY THE BOARD OF DIRECTORS

To Legal Reserve 506To Voluntary Reserve 586Retained Earnings 298Dividends 3,719

(in thousand euros)

123456 7/8/03 09:54 Página 14

15

| APPROVAL OF PROPOSALS BY THE BOARD OF DIRECTORS

| AGREEMENTS PROPOSED BY THE BOARD OF DIRECTORSTO THE SHAREHOLDERS GENERAL MEETING

The Company Board Meeting held on 27 March 2003 and attended by the Legal Advisor, agreed toconvene the Annual General Meeting of Shareholders at 12:00 on 25 June 2003 to be held at theAuditorio Príncipe Felipe in Oviedo. If the legally required quorum was not met, then the meetingwould be held on the following day, 26 June 2003 at the same place and same time in order to delibe-rate and agree upon, if such was the case, the following items:

| AGENDA

Analysis and approval, if such is the case, of the management report and annualaccounts which include Balance Sheet, Profit and Loss Account and FinancialReport for Duro Felguera Sociedad Anónima and Duro Felguera, Sociedad Anónimaand its dependent companies (Consolidated) for the fiscal year 2002, as well as theproposed application of profits for the year and the General Meeting attendancebonus.

Approval of the Board of Directors Management over 2002.

Confirmation, re-election and appointment of Board Members, if such is the case.

Authorisation to the Board to acquire shares in the company or its subsidiaries inaccordance with Art. 75, First Additional Clause and conformities of the RevisedCompany Law (Texto Refundido de la Ley de Sociedades Anónimas), specifying theways and means of acquisition, maximum number of shares, maximum and mini-mum prices and duration of the authorisation.

Appointment or re-election of the Auditors as per Art. 204 of the Revised CompanyLaw.

Delegation of authority indistinctly in favour of the Chairman, the Secretary of theBoard of Directors or his vice-secretary to legalise and execute the agreementsreached, to file the Annual Accounts and the Auditors Report with the necessaryauthorities.

FIRST |

SECOND |

THIRD |

FOURTH |

FIFTH |

SIXTH |

123456 7/8/03 09:54 Página 15

123456 7/8/03 09:54 Página 16

FINANCIALINFORMATION

123456 7/8/03 09:54 Página 17

18

RESULTS

123456 7/8/03 09:54 Página 18

19

| FINANCIAL INFORMATION

The 2002 financial year has been marked by yet another increase in business turnover which mainlycorresponds to the completion of the Combined Cycle Power Generation Plants awarded at the end of 1999,the start of construction of two new Combined Cycle Plants awarded this year and the development of achloride products plant for PEMEX.

In addition, two tunnel boring machines for Mitsubishi Heavy Industries are currently being manufactu-red. It is expected that the Company’s presence in this sector will increase as a result of the agreementreached with this multinational.

The Profit from Ordinary Activities amply surpasses those of 2001, going from 4,364 thousand euros to12,261 thousand euros. The Consolidated Profit before taxes however, is only slightly improved. This is dueto provisions made in prudence for costs and expenses inherent to two cases currently in the courts.Nevertheless, the Company expects satisfactory resolutions of these cases.

As to the financial situation, capital and reserves are 67,204 thousand euros, working capital is 75,858thousand euros and cash is 35,403 thousand euros.

In Thousand Euros

CONSOLIDATED

Net Turnover

Profit from Ordinary Activities

Profit before taxes

Profit after taxes

Profit attributable to minority shareholders

Profit attributed to the Parent Company

Year2001

Year2000

Year1999

356,476

4,364

8,193

5,859

750

5,109

227,970

9,432

11,021

8,524

1,124

7,400

183,763

828

6,631

4,903

419

4,485

463,996

12,261

8,588

6,320

627

5,693

Year2002

123456 7/8/03 09:54 Página 19

20

Formation expensesIntangible Fixed AssetsTangible Fixed AssetsInvestmentsLong-term DebtTOTAL ASSETSGoodwill on ConsolidationDeferred expensesInventoriesDebtorsCurrent Asset InvestmentsCash at bank and in handPrepayments and accrued incomeTOTAL CURRENT ASSETSTOTAL ASSETS

Share capitalReservesConsolidated Profit and LossMinority Profit and LossPayable DividendCAPITAL AND RESERVESMinority shareholdersNegative difference on consolidationDeferred incomeProvisions for liabilities and charges

Issue of BondsBank loansOther Creditors

Bank loans and overdraftsTrade CreditorsOther Creditors

Accruals and deferred incomeTOTAL LIABILITIES

36,497.65

1,015.41

2,998.78

-576.70

0.00

39,935.14

1,465.41

116.18

817.08

34,508.69

30,460.45

27,545.17

2,915.28

117,213.27

28,486.75

75,206.39

10,108.55

3,178.77

232.81

224,516.22

36,497.65

3,490.31

8,046.73

-272.35

-1,459.91

46,302.43

1,737.85

114.25

948.58

34,946.46

57,663.35

24,040.48

31,992.99

1,629.88

148,528.48

58,608.78

71,569.15

11,460.72

6,343.82

546.01

290,241.40

44,283.55

10,388.90

7,770.49

-316.04

0.00

62,126.90

2,053.89

109.86

5,334.14

48,965.20

23,951.21

1,552.65

21,391.07

1,007.49

110,308.36

27,127.75

65,697.66

12,686.18

4,665.87

130.90

252,849.56

44,632.26

14,397.12

4,903.32

-418.79

0.00

63,513.91

2,472.68

109.86

6,628.04

13,457.50

11,282.74

632.62

9,731.27

918.85

132,657.43

33,362.32

56,945.07

38,423.30

3,872.34

54.40

230,122.16

44,632.26

15,008.97

8,524.22

-1,124.52

0.00

67,040.93

3,755.41

110.03

6,041.66

7,255.81

11,820.49

632.62

10,389.57

798.30

159,386.16

25,718.08

101,657.25

22,436.64

9,531.88

42.31

255,410.49

44,632.26

16,974.78

5,859.56

-750.25

0.00

66,716.35

3,989.38

0.99

6,890.86

6,863.14

12,005.77

0.00

11,956.13

49.64

191,990.92

27,483.52

141,768.03

18,271.34

4,420.66

47.37

288,457.41

247.77

1,620.18

31,933.70

19,826.69

7,172.24

60,800.58

10.70

94.72

32,290.69

77,052.40

45,437.64

8,189.55

639.94

163,610.22

224,516.22

152.57

1,857.40

33,731.98

6,376.32

5,440.86

47,559.13

4.75

11.06

25,640.95

96,478.19

108,315.58

12,024.37

207.37

242,666.46

290,241.40

336.46

1,370.55

35,259.69

12,393.67

2,427.30

51,787.67

0.09

9.72

24,047.59

89,225.04

78,225.93

9,322.01

231.51

201,052.08

252,849.56

294.06

1,394.73

40,724.72

15,228.26

8,548.85

66,190.62

0.07

4.03

19,802.87

84,215.98

52,890.44

6,810.84

207.31

163,927.44

230,122.16

612.68

1,421.97

47,862.13

13,851.75

2,038.06

65,786.59

104.86

3.19

23,412.57

140,970.24

17,273.88

7,627.54

231.62

189,515.85

255,410.49

453.35

1,501.58

53,102.19

15,664.75

0.00

70,721.87

87.74

1.12

46,175.96

122,137.84

36,436.72

12,837.67

58.49

217,646.68

288,457.41

351.39

10,276.72

41,662.35

10,904.86

0.00

63,195.32

629.74

407.90

17,899.86

257,402.86

25,745.10

9,657.60

200.81

310,906.23

375,139.19

ASSETS 1996 1997 1998 1999 2000 2001 2002

Data expressed in thousand ¤SUMMARY

44,632.26

16,879.99

6,319.21

-626.70

0.00

67,204.76

4,878.03

0.95

7,198.40

12,171.67

48,637.64

0.00

48,608.79

28.85

235,047.74

54,099.80

149,675.55

25,508.04

5,745.71

18.64

375,139.19

LIABILITIES 1996 1997 1998 1999 2000 2001 2002

Creditors:amounts falling due after more than one year

Creditors:amounts falling due in less than one year

Provisions for liabilitiesand charges and other trade provisions

CONSOLIDATEDBALANCE SHEETS

123456 7/8/03 09:54 Página 20

21


CONSOLIDATED PROFITAND LOSS ACCOUNTS

139,482.72

78,474.14

217,956.86

9,384.65

601.22

1,179.77

229,122.50

131,939.15

97,183.35

54,262.39

28,212.21

14,708.75

2,708.44

97.54

11,902.77

4,952.63

11,308.48

1,904.38

168.01

7,283.29

1,425.58

4,917.63

3,791.24

792.46

2,998.78

576.70

2,422.08

110,387.48

150,241.94

260,629.42

-7,326.42

959.82

2,155.44

256,418.26

154,991.91

101,426.35

55,786.59

29,820.12

15,819.64

2,960.63

3,482.00

9,377.01

9,413.69

11,387.68

1,853.09

25.91

9,230.20

4,062.63

3,651.18

9,641.65

1,594.92

8,046.73

272.35

7,774.38

95,165.97

104,628.03

199,794.00

3,051.61

1,336.04

868.24

205,049.89

106,419.01

98,630.88

63,910.17

27,973.38

6,747.33

2,800.75

-819.76

4,766.34

9,862.09

12,857.01

15.80

52.77

1,734.45

3,629.50

2,180.12

3,183.83

-4,586.66

7,770.49

316.04

7,454.45

105,687.47

78,075.15

183,762.62

-5,904.10

993.35

1,247.05

180,098.92

85,645.69

94,453.23

63,456.47

23,802.30

7,194.46

2,796.82

-207.22

4,604.86

7,313.24

11,077.46

0.07

13.08

827.63

8,696.51

2,893.40

6,630.74

1,727.42

4,903.32

418.79

4,484.53

159,946.94

68,022.55

227,969.49

4,709.99

5,225.61

2,224.12

240,129.21

124,844.70

115,284.51

71,335.74

24,720.85

19,227.92

3,408.83

1,966.04

13,853.05

3,262.88

7,639.19

0.06

44.46

9,432.34

2,598.69

1,009.66

11,021.37

2,497.15

8,524.22

1,124.52

7,399.70

265,882.48

90,593.61

356,476.09

22,641.53

4,057.42

3,046.07

386,221.11

234,943.46

151,277.65

105,689.16

35,253.45

10,335.04

3,970.04

659.22

5,705.78

2,740.02

4,061.81

23.10

43.60

4,363.49

7,189.91

3,360.07

8,193.33

2,333.77

5,859.56

750.25

5,109.31

309,821.56

154,173.00

463,995.56

-30,918.40

1,641.97

884.38

435,603.51

257,818.77

177,784.74

106,703.75

44,267.78

26,813.21

4,986.44

3,961.44

17,865.33

4,649.07

10,316.64

136.28

71.74

12,262.30

3,856.17

7,530.78

8,587.69

2,268.48

6,319.21

626.70

5,692.51

1996 1997 1998 1999 2000 2001 2002

Data expressed in thousand ¤SUMMARY

Mean Sales NationalMean Sales ExportsTOTAL SALESReduction in inventories of finished goods

Work for Fixed AssetsOther Operating RevenueProductionRaw materials and consumablesAdded ValueStaff CostsOther operating chargesEBITDAFixed Asset DepreciationChanges in Trade ProvisionsOperating ProfitFinancial RevenueFinancial ExpenseConsolidated share in company lossesGood will arising on consolidation written offProfit from ordinary activitiesExtraordinary IncomeExtraordinary ExpenseConsolidated profit before taxesCompany TaxProfit for the yearProfit attributable to minority shareholdersProfit for the year attributedto the Parent company

and work in progress

123456 7/8/03 09:54 Página 21

22

STOCK EXCHANGEINFORMATION

During the 2002 trading year, figures have beenunusually low. Some of the significant factors thatwe believe have contributed to share behaviourare: the size of the company, the holding of subs-tantial stakes in the company which have remai-ned stable throughout the past few years and thestock market environment in general.

We can safely say that 2002 was not a good yearfor share investment and, as was to be expected,our values did not escape the general tendenciesof the markets. However, the behaviour of DuroFelguera shares in comparison with the MadridStock Exchange General Index is worth noting:

DURO FELGUERA (MDF.MC)Quotation at 31 DecemberYear’s HighYear’s LowYear AverageAverage Market (million ¤)

Trading daysQuotation FrequencyAverage Volume (n. of shares)

Profitability per dividend(paid dividend of the year / closing quotation)

20025.60

7.64.566.49

96.55250

100 %8,050

4.82%

19967.968.262.583.99

48.47253

100 %72,406

-

19979.80

14.006.49

10.16123.44

252100 %

138,459-

19987.15

13.045.539.50

115.38248

100 %102,258

3.36%

19996.908.296.257.11

105.78250

100 %45,1593.91%

20005.858.345.376.65

98.93249

100 %52,3694.62%

20016.808.105.107.14

106.22249

100 %24,5345.44%

010

02030405060708090

100

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03

DURO FELGUERA90 periods moving averageMadrid Stock Exchange Gen. Index

Volume (thousands)

whilst the Index marked a fall of 23.1%, DuroFelguera only decreased by 17.65%. If we look atthe PER, the market average was 16.17 whilstDuro Felguera reached 16.47.

As is becoming usual over the last few years,during the early months of 2003, the quotationexperienced a sharp rise when approaching theAnnual General Meeting date and the averagequote value during the first week of May 2003reached 6.6 euros per share.

123456 7/8/03 09:54 Página 22

23


0.00

PRODUCTION VS. PERSONNEL COSTSData expressed in million euros

1996 1997 1998 1999 2000 2001 2002

23.68%

229.12

27.36%24.50%

ProductionPersonal Costs% Personal Costs Vs Production

50.00

100.00

150,00

200.00

250.00

300.00

350.00

21.76%

256.42

31.17%

180.10

35.23%

205.05

29.71%

240.13

435.60

386.22400.00

450.00

500.00

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

55.00%

60.00%

65.00%

70.00%

54.26 55.79

63.91 63.46 71.34

105.69 106.70

0.00

-20.00

-40.00

-60.00

20.00

40.00

60.00

80.00

100.00

WORKING CAPITAL & NET BANKING DEBTData expressed in million euros

1996 1997 1998 1999 2000 2001 2002

94.14

46.40

90.74

31.27

30.13 25.66

75.86

2.40

-29.74 -39.03-16.61

11.21

-9.83

67.31

Working CapitalNet Banking Debt

0.00

LIQUID ASSETS & BANKING DEBTSData expressed in million euros

1996 1997 1998 1999 2000 2001 2002

53.63

56.03

49.27

35.40

Current asset investments + TreasuryBanking Debt

20.00

40.00

60.00

80.00

100.00

120.00

140.00

120.34

90.6087.55

43.09

59.70

48.52

24.90

36.11

102.71

39.44

PERFORMANCE RECORDData expressed in million euros

1996 1997 1998 1999 2000 2001 2002

7.28

14.71

3.00 4.36

12.26

Profits from Ordinary ActivitiesFiscal Year Profits

5.00

10.00

15.00

20.00

25.00

30.00

35.00

9.23

15.82

1.73

7.77 7.19

4.90

0.83

6.75

9.43

8.52

19.23

26.81

6.328.05

10.34

5.86

0.00 0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

6.42%6.17%

3.29%3.99%

8.01%

2.68%

6.16%

EBITDAEBIDTA (% s/Production)

123456 7/8/03 09:54 Página 23

123456 7/8/03 09:54 Página 24

AUDITOR’SREPORT

123456 7/8/03 09:55 Página 25

26

AUDITOR’SREPORT

123456 7/8/03 09:55 Página 26

27

| AUDITORS REPORT

123456 7/8/03 09:55 Página 27

123456 7/8/03 09:55 Página 28

INDUSTRIALACTIVITES& STRATEGIES

123456 7/8/03 09:55 Página 29

30

INDUSTRIALACTIVITIES

| COMMERCIAL ACTIVITY

100.00

200.00

400.00

300.00

0.001997 1998 1999 2000 2001

EVOLUTIONOF ORDER INTAKE(in millions euros)

450.00

350.00

250.00

150.00

50.00

500.00

185.

50

203.

10

386.

49

300.

37 335.

99

558.

17

600.00

550.00

2002

Order intake in 2002 surpassed predictions byalmost 75 % and, as may be observed in the tableattached, by over 66% with respect to 2001. This,among other reasons is due to, the materialisationof contracts which were previously considered asintentional and to the slight advance made in thepower systems sector in which two important com-bined cycle projects have been awarded.

Total Order IntakeDomesticInternational

386.49295.40

91.09

300.37244.07

56.30

335.99149.00186.99

558.17473.08

85.09

1999 2000 2001 2002(in millions euros)

EVOLUTION OF ORDER INTAKE

On the other hand, Duro Felguera, S.A. has notbeen exempt from suffering, in part, the grave con-sequences of the international economic situation.This has led on the one hand, to having to supportconsiderable delays in signing contracts that wereready to be consolidated, and on the other, having towait for those projects which suffered delays in theirlaunch, in the hope that this is only temporary.Notwithstanding, our experience and flexibility hasallowed us to sustain our presence and secure ourfuture in foreign markets, whilst at the same timereinforcing our capacity to take on contracts on thedomestic market and in specialised sectors, as wellas stabilising our leadership.

By Business Lines, order intake during 2002 hasbeen as follows:

The Power Systems Line, which since 2001 ope-rates as a department within the parent company,has seen its leadership materialise after surpassingthe figure of 7.600 MW for constructed gas powergeneration plants as a result of two considerableturnkey contracts in Spain; Barranco de TirajanaCombined Cycle Plant on the Canary Islands andPhase II of Son Reus. The Power SystemsDepartment is on the sidelines and in an excellentposition to deal with those projects that are pendingtheir launch, both abroad and in Spain. They aremindful of the opportunities in the European powersystems sector resulting in the necessary revampingof currently operating power generation plants, andfor which this Department is fully experienced andoffers total guarantees.

Mompresa maintains its traditional business inthe assembly, erection, maintenance and overhaul ofgeneration units made up fundamentally of steamand gas turbines operating in power generationplants for the most relevant companies in the sector.Its almost permanent presence in these works andthe constant effort made in re-training its techni-cians and operators has afforded the confidence oftechnological companies and clients, which is also a

123456 7/8/03 09:55 Página 30

31

| INDUSTRIAL ACTIVITES & STRATEGIES

positive factor in consolidating its presence in new pro-jects. Fruit of this confidence by equipment manufactu-rers has been the award of contracts in 2002 by newclients, and in European countries where new marketsopened up to them thereby offering new expectations.

Despite the recession suffered in the steelworksindustry, the experience and knowledge of DuroFelguera Plantas Industriales, S.A. has aided them towin an engineering and construction contract for a gas-holder for USINOR in Dunkerque. They have also beenawarded the execution of a contract for the SOLACAtlantic installations in Dunkerque, consisting of engine-ering upgrading, development and manufacture of whatcan be considered one of the largest “torpedo wagons”for transporting pig-iron. These have an effective loadcapacity of 450 Tn and are more than 35 m in length ove-rall, conferring experience and expectations for similarprojects in the future. For the steel rolling mill belongingto Aceralia, Avilés, they were awarded the turnkey projectto modify the Temper III mill.

In the civil works for large infrastructures sector, in2002 Duro Felguera Plantas Industriales, S.A. was awar-ded the engineering and supply of a complete Back Upfor a Tunnel Boring Machine, a TBM, by MITSUBISHIHEAVY INDUSTRIES.

The Logistic Systems Unit operating within DuroFelguera Plantas Industriales, S.A., has managed to gainthree substantial contracts for Nireo Corp. General ofToledo, Izar in Ferrol and Sika in Madrid, respectively,with which this unit consolidates its position among the

leaders in the logistic systems and automated ware-house storage sector.

In the Mining and Handling area, also within DuroFelguera Plantas Industriales, S.A., the efforts madeto penetrate the North American market wererewarded. Felguera Parques y Minas, S.A. obtaineda contract for the Port Management at Long Beach,which consisted of the design, construction, andsupply of ship loading equipment for bulk cargo. Onthe domestic market, contracts similarly worth fea-turing include a circular mineral stockyard and ship-loader for HOLCIM, in Almería and the services andsupply contract for “Medusa Phase I”, project belon-ging to UNION FENOSA, in La Coruña.

During the business year, the Crane Departmentwas awarded a contract for two overhead cranes byVA Stahl-Linz, in Austria.

Once again, the Equipment and Erection BusinessLine has managed to close the business year with anexcellent order intake, improving by more than 17 % onthe figure forecasted for 2002. The subsidiariesmaking up this line of business have made steadyefforts resulting in achieving their objectives of orderintake for the year by a wide margin, and consolidatingtheir presence in some of the new markets where theyhad established strategies, such as in heavy machi-nery for road infrastructures, railways, energy, largelaboratories, etc.

Felguera Melt, S.A. has surpassed order intakeexpectations by almost 20% for 2002, continuing itstrajectory of securing technology and market expan-sion, sustained by its product developments in rail-way track materials and components for wind powergenerators. The company maintains its position asone of the leading suppliers of these products inEurope.

Felguera Construcciones Mecánicas, S.A., hasbased good part of its order intake success on theaforementioned new markets for Capital Goods in

% ORDER INTAKEPER BUSINESS LINES

59%

3%

8%

22%

5% MINING & HANDLING

STORAGE

MEXICO

EQUIPMENT & ERECTION

POWER SYSTEMS

3%INDUSTRIALPLANTS

123456 7/8/03 09:55 Página 31

DISTRIBUTIONOF INTERNATIONAL BUSINESSPER BUSINESS LINES

65%

20%

13% MINING & HANDLING

MEXICO

EQUIPMENT & ERECTION

2%POWER SYSTEMS

32

the Public Works sector. Specifically, in the manu-facture of tunnel boring machines, it was awarded acontract to manufacture two machines by MITSU-BISHI HEAVY INDUSTRIES, destined to bore tunnelson the new high-speed railway lines in Spain. Thisexperience not only goes to demonstrate once againthe capabilities of Felguera ConstruccionesMecánicas, but also maintains the confidence placedby the principal technological companies in the sec-tor with new industrial and commercial projects intheir sights. Business in the heat recovery steamgenerator sector, in the large European laboratoriesand hydraulic generation sectors has continued to bea keynote for this subsidiary.

20%

40%

50%

100%

30%

02001

EVOLUTION OF ORDER INTAKEPER BUSINESS LINESAS A % OVER THE WHOLE GROUP

MINING& HANDLING

POWER SYSTEMS

10%

60%

70%

80%

90%

2002

13.7%

29.3%

40%

5.9%

9.6%

56.4%

4.8%

2.6%

22.2%

7.1%

6.9%

EQUIPMENT& ERECTION

INDUSTRIALPLANTS

MEXICO

STORAGE

1.5%

DISTRIBUTIONOF INTERNATIONAL BUSINESSPER BUSINESS LINES

Felguera Calderería Pesada, S.A., has achievedgood order intake results in 2002 despite a slightimbalance in the order intake over the year, whichmay cause irregularities in following businessperiods. It is worth noting however, that over 80% oforder intake was due to foreign contracts of whichthose awarded by prestigious engineering and petro-leum product companies stand out.

Foster Wheeler Ibérica, requested several reac-tors for the Petrox Refinery in Chile and for Bulgariathe equipment required to revamp an FCC was alsomanufactured.

PDVSA (Venezuela) awarded a contract for an FCCunit and for LINDE in Norway, several PressureVessels were manufactured, all of which went overthe 25 million euros figure.

Técnicas de Entibación, S.A. (Tedesa) respondedto its strategies to overcome the business decline inthe mining sector and surpassed by 14,6 % its orderintake forecasts for 2002, consolidating its position insectors of notable growth such as are communica-tions and energy. Tedesa has become a major sup-plier of aerials and pylons for high voltage transmis-sion lines. In the Public Works sector, there are twofundamental activities where Tedesa excels. On theone hand is the manufacture of support componentsand formwork for tunnels, and on the other is themanufacture of back-up structures for tunnel boringmachines. For the latter, Tedesa carried out a whole

123456 7/8/03 09:55 Página 32

33


PRODUCTION IN 2002PER BUSINESS LINES

43%25%

4%

14%

MINING& HANDLING

F-IHI

EQUIPMENT& ERECTION

INTERNATIONAL

POWER SYSTEMS

10%INDUSTRIALPLANTS

4%

series of detailed investigations that are now having asignificant bearing in opening up new business opportu-nities for this subsidiary.

Felguera Montajes y Mantenimiento, S.A. has rein-forced its growing business in the integral maintenanceservices sector and has achieved acceptable levels oforder intake. Given the highly competitive nature of thisline of business, it is notable that the company has beenable to maintain its presence principally in the fields ofpower systems, petrochemicals, and steelworks. Itslevels of specialisation and experience have allowed thecompany to reorganise and adapt to the immediatefuture.

Felguera-IHI, S.A., has once more amply surpassedits expectations of order intake for the year 2002 with anincrease of 79 %, reaffirming its position in the storagesector of Petrochemical products and continuing to acti-vely cooperate in the modernisation of major refineriesand storage plants in Europe and further afield.

The most noteworthy contracts in 2002 among othersrelated to its field, are those signed for Libya, consistingof the manufacture of a process tank to the sum of 1.7million euros, or for Spain, for the execution of two 5,000m3 tanks and especially a 100,000 m3 capacity tank forover 6.9 million euros.

Due to its technical complexity, a special mentionshould be made to the contract for the design and cons-truction of a total retention tank to store liquefied gas at–170ºC at a regasification plant belonging to ENAGAS.

Apart from the internal and external piping andaccessories, the tank was manufactured in reinfor-ced concrete with internals made of 9% nickel-steelalloy.

Duro Felguera México, S.A. de C.V., continues tolead the way in a sector as relevant as it is the cons-truction and erection of power generation plants inMexico whilst at the same time opening up new busi-ness opportunities in other sectors, e.g. thePetrochemical Industry.

Last year order intakes at Duro Felguera México,S.A. de C.V. continued to increase. The new con-tracts for the PEMEX Chloride Products Plant andthe SOLUZIONA construction and erection contractfor the gas-fired power plant in Naco Nogales wereamong its most notable businesses in 2002.

100.00

200.00

400.00

500.00

600.00

300.00

0.001999 2000 2001 2002

EVOLUTIONOF ORDER INTAKE VS. PRODUCTION(Mil. euros)

ORDER INTAKE

PRODUCTION

386.

50

179.

29

300.

37

239.

64

335.

99

383.

20

558.

17

434.

89

123456 7/8/03 09:55 Página 33

34

U.S.A. 11.2%

% SPREAD OF ORDERINTAKE IN 2002OUTSIDE SPAIN

MEXICO 21.7%

SOUTH AMERICA 13%

EU 29.4%

AFRICA 0.5%

JAPAN 12.2%

NORWAY 2.6% AZERBAIJAN 9.4%

Finally, worth mentioning as proof of the con-solidation of Duro Felguera, S.A. in Mexico, isthe investment in a 51% stake of the Mexicanengineering company PYCORSA. This enginee-ring company has been working since 1947 inboth the public and private sectors of theenergy, petrochemical, gas, steelwork, andmining businesses. It has a solid organisation,technical and human resources and a notablepresence in the previously mentioned industrialsectors in Mexico. Pycorsa’s contribution is cle-arly positive for the already existing organisationof Duro Felguera, S.A. in Mexico. By addingengineering to support services in executing andmanaging turnkey projects, this undoubtedlyexpands possibilities and fields of action, notonly for the organisation in Mexico, but also forthe Subsidiaries in Spain, as it has been thecase in the PEMEX project for the Pajaritos refi-nery.

100.00

200.00

400.00

300.00

0.001998 1999 2000 2001 2002

CONSOLIDATEDPRODUCTION FIGURES(Mil. euros)

450.00

350.00

250.00

150.00

50.00

500.00

205.

00

179.

29

239.

64

383.

20

434.

89

123456 7/8/03 09:55 Página 34

35


STRATEGICMEASURES

The Board of Directors of Duro Felguera, S.A., conscious of the changes produced in the businessenvironment where the Company operates and the previous 1999-2001 Strategy Scheme having expi-red, after internal debate to establish new ideas, concepts and guidelines, came up with the 2002-2004 Strategy Scheme.

In order to provide a framework and orientate this Plan, the Board set up a Strategy Committee,which, after several debate sessions and constant interchanges with the Management team of DuroFelguera, S.A., defined the Strategy Guidelines. These are sufficiently wide to cover the diverseaspects of the market and the general objectives that the Scheme had to contemplate. By definingobjectives, tracing models of organisation and management, attending to the market environmentand its development, trying to assure stability of business margins and income, focusing it towardscustomer service, and making it both demanding and critical, it is clearly differentiated from the con-cept of a mere plan of action.

The main Strategy Guidelines orientating the 2002-2004Scheme are:

| With reference to the various businesses, to bear outvocation and know how in Plant turnkey construction,supported by equipment manufacture and the provisionof services, based on progressive specialisation andconcentration on these matters, making the most of theadvantages provided by the current markets and diver-sifying the business within these markets or in thosewhich are closely related.

| To fix increase in value for the shareholder as mainobjective by sustaining profit, continuing with a balan-ced policy of self-financing along with stable dividendsand referenced on the capital markets. Contributing toall of this are the various Business Units with theirknow how in safeguard while increasing their producti-vity and rate of return.

| To re-define the model of adapting organisation to inte-gral management based on the Business Units, makingprovisions for business cycles to be covered by growthand minimising incurred risks in a controlled manner.

| To build up durable alliances with international techno-logical companies in each of the business areas, loo-king to complement activities and create added valuefor the customer.

| To further focus R&D activities towards improving pro-duction processes and project execution, developmentof management expertise, creation of new products orimprovement of already existing ones, and optimisingthe use of applied resources.

123456 7/8/03 09:55 Página 35

36

ORGANIZATION & HUMAN RESOURCES

As from 2002, DURO FELGUERA, S.A. iscommitted to managing its group of companiesas an ethical and socially responsible organisa-tion by subscribing to the United Nations GlobalCompact.

The Global Compact is a platform for com-panies to encourage and promote good corpo-rate practices, within their respective spheresof influence, in the areas of human rights,labour and the environment.

The Global Compact is not a regulatory codeof conduct nor does it have legal force. It is avoluntary initiative that provides a basis for pro-moting social responsibility from committedand creative corporate management.

It is based on nine basic principles to reach the objective “a global compact of sharedvalues and principles, which will give a human face to the global market” (Kofi Annan,Secretary General to the United Nations). These principles are:

| Human Rights

· Principle 1: Businesses should support and respect the protection of internationally pro-claimed human rights within their sphere of influence; and · Principle 2: make sure that they are not complicit in human rights abuses.

| Labour Standards

· Principle 3: Businesses should uphold the freedom of association and the effectiverecognition of the right to collective bargaining; · Principle 4: the elimination of all forms of forced and compulsory labour; · Principle 5: the effective abolition of child labour; and · Principle 6: eliminate discrimination in respect of employment and occupation.

| Medio Ambiente

· Principle 7: Businesses should support a precautionary approach to environmental challenges; · Principle 8: undertake initiatives to promote greater environmental responsibility; and · Principle 9: encourage the development and diffusion of environmentally friendly technologies

Company participation in the Global Compact means issuing a statement showing an ethi-cal commitment which has always been present in the internal policies of the Company butwhich acquires greater bearing when it is made public and ratified on a global scale in thisthird millennium.

As a result of this commitment to responsible management, there were a series of aspectsrelating to Organisation and Human Resources that gained priority in 2002.

C.T.LADA (Asturias 1942)

123456 7/8/03 09:55 Página 36

37


LABOUR RELATIONS

The year 2002 was marked by an intensivecollective negotiation. Four collective bargai-ning agreements were signed at Felguera Melt,S.A., Duro Felguera Plantas Industriales, S.A.,Felguera Calderería Pesada, S.A. and FelgueraConstrucciones Mecánicas, S.A., as well as anEarnings Agreement in Felguera Montajes yMantenimiento, S.A.

These collective bargaining agreements willbe in force until 31.12.2004 (except for theFelguera Montajes y Mantenimiento, S.A. agre-ement which will be valid until 31.12.2002 andthe companies that have subscribed to theMetal Workers agreement which must benegotiated in 2003).

It is worth pointing out that within the DuroFelguera Collective Agreements the denomi-nated replacement contracts are gaining moreground and linked to the strategy plan for staffplanning.

TRAINING

Professional Training:The Duro Felguera training programs,

which have been in effect in the last few yearswithin the Vocational Training area, are carriedout at five Training Centres certified by theInstituto Nacional de Empleo, INEM (NationalEmployment Service). Courses held are aimedat the unemployed and fall within the frame-work of the Plan F.I.P, i.e. Plan de Formación eInserción Profesional (Professional Training &Integration Scheme) and are financed by theInstituto Nacional de Empleo and by theEuropean Social Fund.

Of the five Training Centres, two are inLangreo, two in Gijón and the other (created in2002) is in the central area of Asturias, on theSilvota Industrial Estate in Llanera.

The centres are managed and coordinatedby company technicians and specialist coursesare held on the following: boiler making, wel-ding, fitting, machine tools with numerical con-trol, smelting and insulation processes. Thealumni receive practical training and theoryfrom DURO FELGUERA professionals.

These courses are set out in the Annual Cooperation Agreementsthat DURO FELGUERA subscribes to on a national scale with theGeneral Management of the Instituto Nacional de Empleo.

Continuous TrainingThe Continuous Training Programme developed throughout 2002

has as main objective to improve personnel expertise in order tosubsequently improve competitiveness and production at the diffe-rent business units on a national and international level. Therefore,Duro Felguera, S.A. defines a training process that is geared toachieve, via a learning process:

| Multi-purpose,| Improvement in quality,| Innovation in procedures, techniques and technologies, and | Diversification of professional scopes

The 2002 Training Programme includes the following areas ofpriority:

| Graduate Training. | Labour Health & Safety.| Quality and Environment. | Computing. | Technical and technological areas.

Therefore, the Continuous Training Programme for 2002 carriedout a total of 82 training courses over 34,000 training hours and inwhich over 1,300 workers participated.

C.T.LADA (Asturias 2002)

123456 7/8/03 09:55 Página 37

38

CORPORATE COMMUNITY

In observance of the principles of the ethicalcommitment made by DURO FELGUERA, S.A., insubscribing to the Global Compact in 2002, theAnnual Duro Felguera Prize was set up for “DuroFelguera Employee of the Year”. The objective isto acknowledge those workers who have stoodout during their career, in a single, notable act orfor excellence in human, ethical and professionalvalues orientated towards improving the workingenvironment, their surroundings and Companyprogress.

The first prize last year was awarded to Mr.Fernando Argüelles Pando, member of staff atFelguera Montajes y Mantenimiento, S.A., whoseprofessionalism, constant research, creativity,dedication and humanity have been, amongothers, the values praised by more that 250 of hiscolleagues, and whose signatures came from allover Spain to second his candidature for thisprize. The JURY, made up of employees from thevarious subsidiaries, in turn acknowledged thesevalues and on 11 December 2002 they decided toaward him with the Employee of the Year Prizefor 2002.

The prize was given in December at a cere-mony in which the Gold Awards for Service werealso presented. These went to Mr. José RamónGutiérrez Ceñera (Felguera Calderería Pesada,S.A.) and Mr. Pedro Manuel Antuña Suárez(Felguera Construcciones Mecánicas, S.A.). Alsopresented were the Prizes for the II ANNUALPRIZE FOR SPECIALISED PUBLICATIONS. Thefirst prize went to Mr. Angel Pelegry Cuesta(Felguera Parques y Minas, S.A.) for his work“Tailor made solutions vs. project net cost”,published in the magazine “World Coal”.Second prize was awarded to Ms. MontserratSantamarina Menéndez (Duro Felguera, S.A.) forher work titled “¿Hacia dónde camina la evalua-ción de la formación?” (Where is training eva-luation headed?), published in the magazine“Capital Humano”.

123456 7/8/03 09:56 Página 38

39


ORGANISATION ANDINFORMATION SYSTEMS

Among the activities carried out by the InformationSystems Management for this year, the following are of notefor their strategic importance within the “Duro FelgueraTechnological and Information Systems Plan”.

Advisory and Development Area

| SEGOBRA Project “Work Follow-up and Management”for Felguera Montajes y Mantenimiento, S.A., developedin graphic applications, and with consolidation modulein head office. This tool served as a base for the “OverallProject Management”.

| Development and implementation of the LogisticsProject (Phase I), in Felguera Calderería Pesada, S.A.,which also includes quality management.

| Automatic issue of the Human Resources reports andgraphics for the Boards monthly meetings (IMG –RR.HH.).

| GGP Project “Overall Project Management”. Using theSEGOBRA tool, this is a project control tool.

| Implementation of the new corporate reporting toolACTUATE.

Systems, Networks and Communications Area

| Renewal and technological integration of the corpora-te mobile and fixed telephone system, which includesthe solution “MoviStar Intranet” by means of GPRS.

| Implementation of Corporate Antivirus.

| Implementation of the “Stonegate” firewall, whichallows total management of resources and safety bet-ween the Corporate Network and Internet. This alsoaffords VPN (access to the Corporate Network viaInternet), Multilink (redundancy Internet line) and loadbalance.

| Change in the typology of the LAN network and theCorporate Network, affording increases in flow andelectronic renovation. This includes extension of theCorporate Network to link up with the work centres inMadrid and Tirajana (Canary Islands) for the PowerSystems Line, and start-up of 2 MB ADSL line at theCPI (Project and Engineering Centre) in order to rein-force network security.

123456 7/8/03 09:56 Página 39

40

Logistics, Micro computingand New Products Area

| Process and implement corporate securityprotocols.

| Software and hardware standardisation (S.O.,office tools, equipment). Included migrationto Server 2000 for NT servers and installationof Windows and Office 2000 as standard soft-ware in Duro Felguera. With reference tohardware, this was updated.

| In order to carry out the previous actions, anEnterprise Agreement was negotiated withMicrosoft, for all the company’s licenses.

PREVENTION OF OCCUPATIONAL HAZARDS

A most significant reduction in work accidentswas achieved in 2002, resulting from the Preventionand Safety and Health policies established by DUROFELGUERA based on four priority areas of action:analysis of accidents/incidents, application ofcorrective measures, making staffing and materialimprovements and annual continuous training pro-grammes.

In 2002, accidents causing labour layoff fell by20,6% with respect to the previous year.

During 2002, DURO FELGUERA, S.A. has signedan external Health at Work agreement (MutualHealth Service Company - IBERMUTUAMUR), tocarry out health check-ups required on the worksites in the various Autonomous Communities.

In the same manner, an ambitious agreement onPrevention of Hazards was subscribed to, speciali-sing in Industrial Health also, and which ends on 30June 2003.

Finally, a Joint Service for Prevention of Hazardswas undertaken by DURO FELGUERA, S.A. cominginto force at the beginning of 2003.

DISTRIBUTION OF THE WORKFORCEBY PROFESSIONAL GROUPS

The average number of staff at Duro Felguera, S.A.,during 2002 including subsidiaries and companies withmajority share interest amounted to 3.276 employees.The following graph shows the distribution of the work-force per professional groups, by categories as they existin the industrial group. The denomination “Technicians”groups higher, medium and lower qualified technicalstaff. “Clerical” groups administration personnel andother subordinate staff. “Workers” groups the variousskilled and non-skilled staff members.

DISTRIBUTION OF STAFF OVERTHE BUSINESS LINES

The following graph shows the distribution of averagestaff in % throughout 2002 in the different Business Linesand Units of the industrial group.

24.10%

70.47%WORKERS

TECHNICIANS

CLERICAL STAFF5.43%

5%46%

3%

2%

INDUSTRIALPLANTS

EQUIPMENT& ERECTION

DURO FELGUERA, S.A.

STORAGE

2%

MINING &HANDLING MEXICO

35%

POWERSYSTEMS

7%

123456 7/8/03 09:56 Página 40

41

MARKETING & DEVELOPMENT

Following the plans traced and as a complement toour growing business in Mexico, the engineering busi-ness had to be reinforced which is why the Mexican engi-neering company PYCORSA was bought, as previouslymentioned.

The constant search to add technology to our com-pany and the need to further specialise and concentrateon new markets with our own means of productions, hasled us to reach the necessary agreements to develop andmanufacture Tunnel Boring Machines. Having comple-ted the first phase and after having been contracted tomanufacture two of these machines, led us to sign aMemorandum of Understanding with the Japanese tech-nological company MITSUBISHI HEAVY INDUSTRIES.This agreement refers to setting up a joint venture inSpain in the future aimed at the previously mentionedmarket in Europe and Latin America.

Business concerning equipment for high speed rail-way track material is being developed as well as otherbusinesses, which are expected to consolidate during2003.

The agreements with 53 Agents working in 31 countriesremain in force for any of our subsidiaries, on four conti-nents. To add to these, a non-exclusive Agent has beenincorporated in Chile where the economic stability, indus-trial growth and ever greater presence of Spanish compa-nies in the Energy, Civil Works and Communications sec-tors, as well as prospections made in this area are morethan sufficient grounds to take an interest in this market.Our offices and subsidiaries in USA, India, Brazil,Venezuela, and Mexico have carried on regardless withtheir marketing task for all of the companies that go tomake up Duro Felguera, S.A.

The Development activities carried out from DuroFelguera, S.A. over 2002 were focussed mainly on theanalysis of the different opportunities which the marketsituation has allowed to explore in the sense of evalua-ting strategically and financially the advantages of inves-ting in companies. This has led to the possibility in theshort-term of participating in companies whose businessactivities are similar to ours or that have their own mar-kets.

INVESTMENTS

Quality, cost reduction and assurance of deliveryschedules have been, among others, the main objectivesthat have justified the investments made during 2002.Significant volumes of investment were required to main-tain operability and modernise our industrial installa-

tions and workshop machinery. In addition, adhering tothe policy of developing engineering and production pro-cesses up to date, both hardware and software wasinvested in, all of which has meant an approved and exe-cuted investment of over 5 million euros, of which themost noteworthy are as follows:

Felguera Melt, S.A.The Environment and working conditions are a steady

concern for Felguera Melt, S.A., which is why some oftheir main investments are made in equipment to miti-gate aggressive effects. Such is the case for the recentlyacquired induction equipment to Silica Sands to reducethe amount of dust at workstations.

Other investments in 2002 were directly made inimproving production processes and capacity, such asthe two recently acquired 100t Silos to store sand or theAutomatic Shotblast machine for parts up to 15 t.

The 3D software for Dynamic Modelling of track com-ponents “CoCreate One Space Designer Modelling” alsoformed a part of the investments made by Felguera Melt,S.A. in 2002.

Técnicas de Entibación , S.A., (TEDESA)In order to diversify markets by incorporating new

products, TEDESA has added a cutting and drilling linefor rolled beams to its production chain, assisted by stateof the art numerical control. This has allowed them tofulfil the needs of major contracts such as the construc-tion of steel structures for industrial warehouses of largedimensions or for the manufacture of back ups forTunnel Boring Machines belonging to two major techno-logical companies in this field. It has also made otherminor investments to maintain and upgrade its currentproduction equipment.

Felguera Construcciones Mecánicas, S.A.Major investments were made in this subsidiary to

improve and extend manufacturing processes. Of note isthe new machining lathe, an automatic welding robot,and a Helium leakage detector. In addition, severalmodifications and modernisation of existing machineequipment was made to guarantee operability and incre-ase capacity.

Felguera Calderería Pesada, S.A.The nature of the Felguera Calderería Pesada, S.A.

production process requires constant renovation of pro-duction equipment and the update of work techniquesand procedures to adapt to quality and profitability. Withthis aim in mind, some of the main investments made bythis subsidiary in 2002 were in acquiring a skid for large

123456 7/8/03 09:56 Página 41

42

parts, a new oxy-cut machine, various welding machines,tools, ancillary manufacturing and transport equipment,and modifications to infrastructures.

Felguera Tecnologías de la Información, S.A. This is a subsidiary undergoing rapid expansion and

with a promising future. It has to necessarily invest perio-dically in developing its activity in the computing andapplied computing sector. To meet its demands for space,quality and image improvement, it has made a significantinvestment in constructing a building on the ParqueTecnológico de Asturias (Asturias Technological Estate) inLlanera, which will be its headquarters as fromSeptember 2003.

The other investments made during 2002 were spreadthroughout the various subsidiaries and business unitsdestined to modernise and adapt technology equipment(hardware and software), tools, machinery and basicinfrastructures, among others.

RESEARCH & DEVELOPMENTIt has become usual over the past few years and cer-

tainly no different in 2002, that several R&D projects aredeveloped by the subsidiaries in Duro Felguera, S.A.These works are generally destined to improve the qua-lity of products and services offered on the market or tooptimise manufacturing processes applied in the produc-tion of these with the double aim of increasing customersatisfaction on the one hand, an on the other to have gre-ater options in increasing new market shares. DuroFelguera, S.A. partly relies on the stable and fluid rela-tions maintained over the years with Public Bodies, bothnational and European, who are competent in the area bymeans of the different lines of action which, in supportingthe R&D activities in companies, are sponsored by thesePublic Bodies.

Duro Felguera continues to maintain a presence as anoted member of the main decision and design policymaking organisations in the R&D sectors of the region,such as, FICYT (Foundation for Scientific andTechnological Development), CLUB DE LA INNOVACIÓN(The Innovation Society), CLUB DE LA CALIDAD (TheQuality Society), ITMA (Technological Institute forMaterials), etc.

Continuing with this policy and given that these typesof projects often surpass the financial year in time,these R&D projects have continued to be developed,published and presented whether they are just startingout, finalised, or realisable in the near future. Some ofthese are:

Felguera Melt, S.A.Development of a casing for an aerogenerator made

out of one smelted piece instead of the traditionalmethod of design and manufacture by mechanised wel-ding. This is being done in collaboration with GamesaEólica, S.A. and Oviedo University.

Design and development of a prototype crossoverswith mobile heads installed on a diagonal for MetroMadrid, S.A.

Felguera Calderería Pesada, S.A.Of note for their incidence on improvement of produc-

tivity and cost, the following projects developed by thiscompany over 2002 are:

| Weldability Study and Mechanical Properties ofNew Consumables for Coated Electrodes Type E-8018B2, of application on alloy steels 1 _ Cr _ Moused in reactors in the chemical and petrochemi-cal industries.

| Analysis of Productivity Increase by use of 90 mmwide band in submerged arc welding in pressurevessels.

| New build up in one sole Layer, of application oncarbon steel materials for alloy type 316L using theESW process or SAW process as an alternative.

| Research of the influence on mechanical proper-ties of low temperature impact and increase inhardness of deposited metal and on the ZAT as aconsequence of the reduction of the amount oftime during the post-welding heat treatment, com-pulsory in the manufacture of pressure vessels oflarge diameter and thicknesses below 50 mm,using 2 _ Cr-1Mo type materials.

| ECOPRESS: Economic and Safe Design of PressureVessels applying new DUPLEX type steels. Projectco-financed by the European Commission.

The Technological Institute of Materials, ITMA, ofAsturias has participated in all the above projects andstudies.

Mining & Handling LineDuring 2002 the Mining & Handling Line developed

various projects framed within the R&D policy to optimi-se to the maximum its competitive resources, such as:

| Project for the Standardisation of TransferMechanisms, which allows for accumulated kno-wledge and experience in this area to be transfor-med into competitiveness by simplifying designsand thereby improving manufacturing costs and theadvantages of unifying spares and maintenance.

123456 7/8/03 09:56 Página 42

43


| Project for the Standardisation of Conveyor BeltDrums, with the same objectives as the previouslymentioned project.

| Calculation Programme to Design TransferStructures, Bridges and Crane Trolleys, whichallows dimensions and weights to be optimisedand consequently costs.

CORPORATE IMAGEThe purpose of making the company known internally

and to clients, suppliers, shareholders, institutions oreven the social setting where business is developed, isclosely linked with communication capacity. In this senseDuro Felguera has continued to promote the use of thechannel that Internet affords to its always increasingnumber of users, to transmit via public announcementson its website “www.gdfsa.com “ a wide and clear imageof its capacities, activities, results and objectives.

The following information may be accessed Via itswebsite on the Internet:

| General Information on the company and executiveorganisation charts

| Detailed information of each of the business linesand the companies that go to make them up.

| Main projects of reference| Stock exchange information, which substitutes the

periodically edited Shareholder Bulletin, includingperiodic reports, financial calendars, financialinformation, news and the newly incorporateddirect access to the stock exchange .

| Information related to the Human ResourcesDepartment, such as job offers, prevention poli-cies, labour information, etc.

| A suggestion box| Localisation of the international commercial net-

work, etc.

To sum up, this annual report may soon be accessedfrom the website which will be incorporated as informa-tion addressed mainly to the Shareholders, Clients,Collaborators and the Finance Corporations.

Based on its roots in Asturias and the commitmentthat the company has made to the social setting, a pre-sence has been maintained in the different bodies andinstitutions of the region during 2002. Whether they wereof a social, cultural or business nature, the company hascollaborated on occasion in a financial way or by lendingout premises or infrastructures.

During the last edition of the Asturias Trade Fairin which Duro Felguera repeated by being present yetanother year running, the company participated inthe First Forum for Employment held by theUniversity of Oviedo, by interviewing young graduatesaspiring to their first job, all of whom presented theirCurriculum Vitae.

It is also an honour to mention the presence ofDuro Felguera on the boards of trustees and executi-ve committees of renowned forums, regional andnational, which are important focal points for com-munication and interchange of cultural and businessexperiences. Some of these are: The Board ofTrustees for the Prince of Asturias Foundation(Patronato de la Fundación Príncipe de Asturias), theBoard of Trustees for the Asturias Business SchoolFoundation, the Executive Committee of thePrincipality of Asturias Metal Federation, (Federacióndel Metal del Principado de Asturias), the ExecutiveCommittee of the Asturias Business Federation(Federación Asturiana de Empresarios), theExecutive Committee of the National Association ofCapital Goods Manufacturers (Asociación Nacionalde Fabricantes de Bienes de Equipo), etc.

123456 7/8/03 09:56 Página 43

DURO FELGUERAEnergía

OPEMASA *

POWER SYSTEMS INDUSTRIAL PLANTSEQUIPMENT& ERECTION

Montajes de Maquinariade Precisión, S.A.(MOMPRESA)

Felguera Tecnologíasde Información, S.A. *

DURO FELGUERAPlantas Industriales, S.A.

DURO FELGUERAEquipos y Montajes, S.A.

Felguera CaldereríaPesada, S.A. / FCP Servicios, S.A.

Felguera ConstruccionesMecánicas, S.A.

Felguera Melt, S.A.

Técnicas deEntibación, S.A.(TEDESA)

Felguera Montajesy Mantenimiento, S.A. / FERESA

DURO FELGUERA, S.A.

44

CORPORATESTRUCTURETo 31 December 2002

123456 7/8/03 09:56 Página 44

* Major Shareholding

[FOREIGN COMPANIES]

MINING& HANDLING STORAGE

INTERNATIONALACTIVITIES

FINANCIAL AREAAcervo, S.A.

FELGUERAParque y Minas, S.A.

FELGUERAGrúas y Almacenaje, S.A.

DURO FELGUERAMéxico, S.A. de C.V.

DURO FELGUERAdo Brasil (Ltda.)

DUROFELGUERA, S.A.India Office

FELGUERA - IHI, S.A. *

PYCORSA *

45


123456 7/8/03 09:56 Página 45

123456 7/8/03 09:56 Página 46

ACTIVITIESOF THE BUSINESSUNITS

123456 7/8/03 09:56 Página 47

48

PRODUCTS

Felguera Parques y Minas, S.A.

Turnkey plant engineering and supply for:

| Seaport terminals for bulk handling| Bulk handling and stockyards at power

plants, steelworks, mines, cement plants,etc.

| Bulk stackers and reclaimers| Grab unloaders and shiploaders| Equipment and installations for

underground mining| Mineral Processing Plants

Design, supply, installation and after-sales serviceof environmental maintenance systems:

| Chain Conveyors| Screw Conveyors

Equipment for solids, slag, ash and lye extractionsystems for:

| Waste water treatment plants| Incineration Plants| Cement Plants| Power Generation Plants

Quality:Lloyd´s Register Quality Assurance Certificate,ISO 9001 / 2000

Felguera Grúas y Almacenaje, S.A.

Design, development, production, installation andafter-sales services for:

| Industrial, steelworks and nuclear overheadcranes and gantry cranes

| Dockside and gantry cranes for port services| Overhead and gantry cranes for containers,

general and bulk loads

Quality:Lloyd´s Register Quality Assurance CertificateISO 9001 / 2000

MINING& HANDLING

The Mining and Handling Line is formed by two separate companies, Felguera Parques y Minas, S.A.,and Felguera Grúas y Almacenaje, S.A., subsidiaries of Duro Felguera Plantas Industriales, S.A. both ofwhich have their own independent means and human resources. They are located in the building knownas the Centro de Proyectos e Ingeniería (Centre for Projects and Engineering) or CPI, in La Felguera. Themain aspects of both companies throughout 2002 are broken down below.

Managing Director: Mr. Félix García Valdés

FELGUERA PARQUES Y MINAS, S.A.

This subsidiary has made great efforts to penetra-te certain markets that up to now were very difficultto access, characterised for having their own techno-logy or by the consolidated presence of other compe-titors among other reasons. However, during 2002these efforts were rewarded as Felguera Parques yMinas, S.A., competing with major international,technological companies in the sector, was awardedthe design, manufacture and supply of a bulk cargoship loader at Long Beach (USA). This project iscurrently being executed and will open up furtheropportunities in this market.

123456 7/8/03 09:56 Página 48

49

Order intake and works in progress

Among others, the following stand out:

| Within the Cement sector, the contract signed forHOLCIM in Almeria, for the design, manufactureand supply of a circular mineral yard, includingconveyors and ship loader.

| Of note also, it is the participation in Phase I of theMedusa Equipment Project, which Unión Fenosa iscarrying out at the port in Corunna and for whichFelguera Parques y Minas has a contract for thedesign, manufacture and supply of the silos inclu-ding car loader, transfer conveyors and transfertowers. Felguera Parques y Minas has submitted abid for Phase II that includes a complete storageyard. Phase III remains pending and consists of ashipunloader for which the corresponding bid willalso be presented.

| Considerable efforts have been made over aperiod of time to opt for the extension of themining complex belonging to Ferrominera delOrinoco, in Venezuela. In the first phase, a con-tract was awarded to partially develop the basicengineering of this project, which offers greathopes for the future.

| As already mentioned, in 2002, a shiploader of up to70.000 DWT was awarded for the port at LongBeach (USA). This loader has special technicalcharacteristics. It is designed to manage two verydifferent products that demand different treatment;Sulphur (2.700 Tn/h) requires fire protected trans-fer systems and electrical equipment and alsoenvironmental protection measures when it is dis-charged for which a telescopic chute is used. Theother product is Petroleum Coke (2.400 Tn/h) andfor this an innovative system is used to cushion thefall of the product into the ship’s hold. The mecha-nism has a telescopic jib with up to 45-metre tur-ning radius.

FELGUERA GRÚAS Y ALMACENAJE, S.A.

With wide experience in the industrial sector, thiscompany is specialised in the design, manufacture andsupply of overhead cranes and gantry cranes for indus-trial processes, steelworks and nuclear installations, aswell as cranes for dockyards, general and bulk loading,

and containers. Its list of references is extensive andit has equipment operating in a large number ofcountries


Among others, the following are of special rele-vance:

| Supply of two 40-ton overhead cranes for inter-nal transport of reels on the Tin Line belongingto the company Voest Alpine in Linz, Austria.

| The manufacture of two overhead cranes of 30and 80-ton capacity respectively was comple-ted during 2002 for Aceralia, and destined forthe rolling mill in Avilés.

| Another lot of overhead cranes for the steel-works plant belonging to the SMS-DEMAGconsortium in Egypt was also finished and deli-vered in 2002.

R & D Activities

During 2002 the Mining & Handling Line has deve-loped various projects in the framework of its R&Dactivities, such as:

| Project for the Standardisation for TransferMechanisms, to simplify designs and reducemanufacture and maintenance costs.

| Project for the Standardisation of ConveyorBelt Drums with the same objectives as thepreviously mentioned project.

| Calculation Programme to Design TransferStructures, Bridges and Crane Trolleys, whichallows dimensions and weights to be optimisedand consequently costs.

123456 7/8/03 09:56 Página 49

50

PRODUCTS

Steelworks & Industry

| Electric Steel Mills and B.O.F.| Secondary metallurgy – ladle furnaces| Process Lines (pickling, tin plating,

galvanizing, etc.)| Pelleting Plants| Continuous casting| Rolling Mills

Petrochemical, Gas & Environment.| Petrochemical Plants| Refineries| Liquefied Gas Storage & Filling Stations| Non-ferrous metallurgy| Acid regeneration plants| Environment – Incineration Plants| Water Treatment Plants

Logistical Systems| Automated physical distribution, logistics and

storage.Turnkey installations and systems| Loader-transport equipment

OTHER ENGINEERING PROJECTS| “Back-ups” for Tunnel Boring Machines

Quality:Lloyd’s Register Quality Assurance Certificate,ISO 9001 / 2000

INDUSTRIALPLANTS LINE

Managing Director: Mr. José Manuel Cuesta Viña

This business Line is formed by two companies:Duro Felguera Plantas Industriales, S.A. andFelguera Tecnologías de la Información, S.A., inwhich Duro Felguera holds a majority share inte-rest. At the same time, this line is occupied withthree Business Units:

| Steelworks & Industry. Specialised in thesectors of steelworks and heavy industry ingeneral.

| Petrochemicals, Gas & Environment, actingin the petrochemical sector and heavyindustry in general.

| Logistical Systems, focussing its activitiestowards automated storage.

The Industrial Plants Line has engineering ser-vices for its own projects and provide assistance toother Duro Felguera subsidiaries. Its main advan-tage is its know-how, gained over many years ofexperience, with the addition of high-grade capa-city and permanent re-training of the technicalpersonnel among its employees.

Over the last 10 years, this line has suppliednotable installations and turnkey plants (EPC),both in Spain and abroad. Among these projects, itis worth pointing out that in 2002, 50% of the con-tract signed with PEMEX for a total amount of 7.5million dollars, the “Chlorinated Products IIIProject” in its Pajaritos refinery in Mexico wascarried out. At the same time others of lesserdimensions were carried out in Europe.

A summary of the main activities of the unitsmaking up this Line can be found below.

123456 7/8/03 09:56 Página 50

51

| ACTIVITIES OF THE BUSINESS UNITS

DURO FELGUERA PLANTAS INDUSTRIALES, S.A.


The following orders and works in progress during 2002stand out among others:

| For the USINOR steelworks in Dunkirk, a contractwas awarded to develop engineering, construct andsupply a 60.000 m3 gas tank to store gas from Cokebatteries. It is 53 metres in diameter and made up ofthree bodies, two of which are mobile.

| For the Aceralia rolling mill in Avilés, it was awardeda turnkey contract to revamp the Temper Mill III, to gofrom 1,016 to 1,300 mm wide strips to be milled. Thisproject was particular in that the engineering andmanufacturing stages had to be coordinated with thevery tight erection schedule, which had to be doneduring a programmed outage of only four weeks.Despite this difficulty, it was completed satisfactorily.

| The Steelworks and Industry Unit was charged withdeveloping the necessary engineering for the cons-truction of a complete “Back-up” for a Tunnel BoringMachine that is currently being constructed at theFelguera Construcciones Mecánicas, S.A. works-hops.

| The Logistics Platform. NIREO Corporación awardeda contract in 2002 for the design, manufacture andsupply of a “Logistics Platform” for its warehouse inToledo.

| An automated warehouse was developed and sup-plied for IZAR for its shipyard in Ferrol.

| SIKA awarded a contract for an automatic transportsystem for its cement additives plant in Madrid.

| The contract for Petróleos Mexicanos, PEMEX for thePajaritos chloride derived products plant continued in2002.

| The design and manufacture of a torpedo wagon forthe transport of pig iron for the SOLLAC Atlanticfactory in Dunkirk was completed in 2002. This hadspecial dimensions, a 450t capacity and was morethan 35 m in length.

| The construction and start up project for COGERSA(Asturias Waste Management Consortium) in con-junction with another company consisting of awaste incineration plant with gas treatment andheat recovery for power generation continued in2002.

123456 7/8/03 09:56 Página 51

52

FELGUERA TECNOLOGÍASDE INFORMACIÓN, S.A.

As a subsidiary of Duro Felguera Plantas Industriales,S.A., in its task to develop information technology productsand place them in service, Felguera Tecnologías deInformación in 2002 continued to go deeper into adapting toa business model of turnkey contracts of larger dimen-sions.

Particular interest has been placed on managementprocesses with a greater projection towards the client andtaking special care in providing solutions suited to the clientneeds, from the point of view of a specialised service com-pany.

Its position in the market is based on a diversity of busi-ness options, via project solutions based on standard pro-ducts with an important added component of service analy-sis and adaptation to parameters and the needs of theclient.

ADTIVITIES

Felguera Tecnologías de Información, S.A.

| Own software and integration products withcorporate systems

| Project study and analysis services| Execution of turnkey projects| Supply of equipment and systems| Customer service and technical assistance

(SAT)

PRODUCT

| Logistic Systems: Warehouse ManagementSoftware (SGA) capable of operating withradio frequency terminals and orientatedto automation of maintenance systems withloader-transport equipment whosetechnology belongs to Duro Felguera.

| Management Systems: ERP Integralia©application operating in web environmentsor client-server and Automation of SalesForce (AFV) on PDA/PDT terminals.

| Internet Projects: Corporate websites, e-commerce, Internet security and otherdevelopments using Web platforms by theuse of tools for dynamic contents(EVA/HADA).

123456 7/8/03 09:56 Página 52

53


Technology

Major advances have been made in consolidating pro-ducts based on JAVA/J2EE technology which were deve-loped in previous years and which now constitute one ofthe company’s main strengths. But in 2002 work has alsocontinued on research and gaining more technologicalknowledge required for new projects. Worth mentioningare the works carried out on the IPSec standard to ope-rate using the Telefónica GPRS communication system.

Order intake and commercial activities:

In its mission to capture, offer and negotiate LogisticsSystems, alongside Duro Felguera Plantas Industriales,S.A., the work carried out to be finally awarded with theDistribution Platform for Nireo Corporación in Noblejas-Toledo to the value of 3 million euros is highly commen-dable.

| Within the information and management systemsarea, commercial activities have been spread outover the different lines of products: Integralia©(ERP) with contracts awarded by; El Rodamiento,Cerámicas del Principado, Derlain, etc.; laAutomatización de Fuerza de Ventas. In addition,applications for mobile terminals in general(RF/PDT/PDA) have been implemented forDistribuciones Arbesú, Efmo, Distribuciones Mapa,Enri 2000, etc., and with Sales Point Terminals(Terminales Punto de Venta – TPV) the installationof a medium sized DIY and Hardware store forManuel Bernardo, S.A. in Portugal.

| The Internet projects go from a major extension ofthe tourism website “Infoasturias.com” for theRegional Tourist Board (SRT), through corporatewebsites such as Asturiana de Perfumería, Nireo-Ferrobox, and catalogue management systemssuch as Ortoibérica, to Network security platformsfor various clients.

| The marketing work carried out, mainly during thisfinancial year, in conjunction with Duro FelgueraPlantas Industriales, S.A. is worthy of note, to reac-tivate the bid made to automise the future ware-house of Real Casa de la Moneda (the Royal Mint)in Madrid. This project of special characteristics isparticularly relevant given the possibility of repea-ting with other warehouses in the EC.

| A major experience during 2002 and which hasallowed Felguera T. I. to rub shoulders with themost prestigious European competitors in the sec-tor, was the bid made for the main PharmacyCooperative in Andalusia (CECOFAR), where theyreached the last selection phase with its replace-ment and traceability software as main advantage.

123456 7/8/03 09:56 Página 53

54

EQUIPMENT & ERECTION LINE

Managing Director: Mr. Pedro García Fernández

During the last financial year, the Equipment &Erection Line belonging to Duro Felguera, S.A. conti-nued to create and deliver first quality products andservices to markets of diverse industrial activitythroughout the world, making the most of the advanta-ges afforded by its installations such as FelgueraCalderería Pesada, S.A., in Gijón. Felguera CaldereríaPesada, S.A is capable of shaping, welding and cons-tructing equipment to the most demanding quality anddesign standards, manufacturing in alloy steels and ofalmost limitless dimensions given the capacity of itsfacilities and the special characteristics of its expedi-ting centres. It has its own dock that is located withinits installations making it possible to carry out complexexpediting by ship.

Within this Line, Felguera Construcciones Mecánicas, S.A., the mechani-cal/welding factory belonging to Duro Felguera in Barros (Langreo), has madegreat efforts in 2002 to maintain its activities by entering new markets andimproving on the traditional ones whilst at the same time successfully main-taining its policies of improving on cost, quality and schedule; objectives whichare demanded by the markets where Felguera Construcciones Mecánicas, S.A.competes, such as the power systems market (hydraulic, fossil-fuelled andwind), the large multinational laboratories, or the promising turnkey construc-tion of Tunnel Boring Machines for civil works on major infrastructures, whereit has been awarded two important contracts in 2002.

123456 7/8/03 09:56 Página 54

Fruit of the efforts made during past yearswhich were focussed on making new develop-ments and consequently providing greater addedvalue products by its capacity to attend to morecomplex technical and technological require-ments, Felguera Melt, S.A., has met its objecti-ves to sustain growth. It is constantly incorpora-ting modern production means to its manufactu-ring processes and its R&D team takes greatcare in obtaining appropriate technologies andstrategic alliances with partners who comple-ment their activities in the specialised marketswhere they operate, such as wind power genera-tion or railway track material (crossings and tur-nouts, basically) for the high speed railwayexpansion projects both in Europe, and thedomestic market namely with the developmentof the AVE lines.

Growth shown by TEDESA in 2002 is basi-cally due to a reorientation of its commercialstrategies which started in past years and isgeared to new products and equipment for theconstruction of public infrastructures andwhich are complementary to those of more tra-ditional characteristics (although in constantinnovation) such as mine framing, consolidationand shoring up of tunnels and trenches. To dothis TEDESA has made significant investmentsin modern production equipment and has esta-blished decisive commercial agreements bywhich it has successfully opted for the manu-facture of steel structures for large industrialbuildings and the construction of back-ups forTunnel Boring Machines, among other activitiesof note.

55

This line of business also includes two importantservice companies Felguera Montajes y Mante-nimiento, S.A. and Felguera Revestimientos, S.A.These two companies have continued to grow, carr-ying out a complimentary role of significant importan-ce with respect to finalising turnkey projects and coo-perating in project commissioning not only for this lineof business but also for Duro Felguera companiesbelonging to other lines, i.e. the Power Systems Line,with whom they have cooperated in the erection andcommissioning of the latest combined cycle powergeneration projects. And all of this without abando-ning their traditional markets where they have conti-nued to provide their services, i.e. engineering, steel-works, mining, power generation, petrochemicals,etc.

123456 7/8/03 09:56 Página 55

56

PRODUCTS

| Equipment for the chemical& petrochemical industries

· Large scale crude and vacuum columns· Reactors· Exchangers· High-pressure separators· Desalinators· Spherical storage tanks· Digesters· Mounded vessels· Converters

| Heavy equipment for industry in general· Steelworks· Power Systems· Cellulose and paper· Cement· Transport of liquefied gases

| Off-shore equipment

| In general, all types of heavy boilers

Quality:Stamps

ASME: U, U2 and SNational Board: R (for alterations andoverhauls of ASME equipment in service)S.Q.L. (for equipment destined for thePeople’s Republic of China)

CertificatesISO 9000 / 2000ISO 14001 / 2000TUV: AD-Merkblatt HP0 / TRD 201 / DIN-EN 792-2

The activities of Felguera Calderería Pesada, S. A.,during 2002 are summed up in the main contracts explainedbelow:

| Continuing with traditional activities, which have morethan consolidated in the specialised market of heavyboiler making which is their speciality, by mainlysupplying equipment to the petrochemical industry,fully dressed and manufactured with their specialcapacities: shaping of great thicknesses, of more than200mm, high technology welding for steel Chrome,Nickel, Molybdenum and Vanadium alloys, and expedi-tion of pieces and equipment of large dimensions andweights, directly from its own dock which is integratedin its facilities and which can be used by several typesof ships: roll on – roll off, self-loaders, barges and flo-ating cranes high enough to undergo ocean voyages.

| It is notable that they have obtained a surplus orderintake over 7% with respect to the forecast at thebeginning of the year despite the adverse conditions ofthe international petrochemical sector and the com-petition offered by companies in certain SoutheastAsia countries. This has once more demonstrated thecapacity of Felguera Calderería Pesada, S. A. to res-pond and adapt to market environments.

| It is the export capacity of its products that has madeit possible for more than 85% of its contracts to havecome from abroad in 2002, from England, Chile,Azerbaijan, Norway, Venezuela and Bulgaria, addingto its already extensive list of references of the mostnotable engineering and technological companies,both national and international working within theindustrial and petrochemical sectors.

To sum up, the main contracts awarded to FelgueraCalderería Pesada, S.A. in 2002 were, among others:

| Various gas-crude oil separators for a refinery inAzerbaijan.

| A set of reactors for Foster Wheeler for the PETROXrefinery in Chile.

FELGUERA CALDERERÍA PESADA, S.A. Managing Director: Ms. Esperanza Gutiérrez Sánchez-Escalonilla

123456 7/8/03 09:56 Página 56

57

| Also awarded by Foster Wheeler was the revamping ofan FCC unit at a refinery in Bulgaria.

| An FCC reactor for PDVSA in Venezuela.

| For Linde and destined for an installation in Norway, theconstruction of several pressure vessels.

Of the works carried out in 2002, worth pointing out are:

| Within the package awarded by the Ameriven Group inVenezuela, the manufacture of a vacuum column of 12metres in diameter.

| The construction for Halliburton in the U.K. of 11 sepa-rators for a B.P. Exploration refinery in Azerbaijan.These works were performed along with the processdesign engineering which were included in the scope ofthe contract

| The construction of 4 Unicracking reactors, made ofalloy steel Cr-Mo-V for the PETROX refinery in Chile.

R&D Activities

Of the activities carried out by Felguera Calderería Pesada,S. A., in the field of Research and Development, and in whichthe Asturias Technological Institute of Materials (ITMA) parti-cipated, the following stand out:

Increase of Productivity Study by use of 90 mm wide bandin ES welding of pressure vessels.

New build up in one sole Layer, of application on carbonsteel materials for alloy type 316L using the ESW process orSAW process as an alternative.

Investigation of the influence on mechanical properties oflow temperature impact and increase in hardness of depositedmetal and on the ZAT as a consequence of the reduction of theamount of time during the post-welding heat treatment, obli-gatory in the manufacture of pressure vessels of large diame-ter and thicknesses below 50 mm, using 2 _ Cr-1Mo typematerials.

ECOPRESS: Economic and Safe Design of Pressure Vesselsapplying new highly elastic steels. Project co-financed by theEuropean Commission.

Training

Mindful of the high value placed on the human factor,Felguera Calderería Pesada, S.A., the same as other DuroFelguera business units, has spared no material or econo-mic expense to continue training and professionally upda-ting its personnel, always conscious of the fact that welltrained and motivated personnel increase resource valuesand achieve high rates of performance.

With this aim in mind and making the most of the pro-fessional training centre within its installations (certified bythe National Employment Agency), in 2002 FelgueraCalderería Pesada, S.A. organised an extensive Weldingcourse. A screening process established that 15 professio-nals were eligible for the course of 924 man-hours, andDuro Felguera, S.A. made the commitment to employ 60%of those who successfully finished the course.

The usual internal courses to update its own personnelwere carried out in 2002, not only for labourers but alsomiddle management and administration staff, paying spe-cial attention to Safety at Work.

The emergency brigade, permanently established atFelguera Calderería Pesada, organised first aid courses,imparted by the Duro Felguera Medical Service, in keepingwith the Prevention of Labour Risks policy and in order tomaintain updated its technology and intervention capacity.

123456 7/8/03 09:56 Página 57

58

FELGUERA CONSTRUCCIONESMECÁNICAS, S.A. Managing Director: Mr. Cristino González León

PRODUCTS

| Equipment for the steelworks industry· Rolling mills, continuous casting, ladles· Boom Shears, milling towers, coilers

| Cranes· Overhead, gantry, dockside· Mineral unloaders, containers

| Hydraulic· Turbines and generators· Gates and cofferdams· Penstocks

| Off-shore· Swivel, central pipe, mechanical parts,turrets and Sea platforms

| Thermal Power· Boilers (HRSG) for combined cycle powerplants· Exchangers, condensors· Kilns and mills· Fans· Dearators and heaters

| Wind Power· Shafts for aerogenerators · Components for aerogenerators

| Equipment for mining and mineral yards

| Equipment for large civil works infrastructures,Tunnel boring machines

| Industrial Equipment in general· Cement industry· Chemical & Petrochemical· Desalination Plants· Presses

| Components for large research prototypes

Quality:Stamps

ASME: U, U2, S and NBPECAL/ AQAP 120S.Q.L. (for equipment destined to the People’sRepublic of China)

Certificates:ISO 9000/2000TUV: HP0 / TRD 201

Felguera Construcciones Mecánicas, S.A. has notonly maintained its collaborating, production unit rolein turnkey contracts with other Duro Felguera lines,mainly in the power generation area, but has alsorevalidated its position as primary supplier of compo-nents and heavy equipment in sectors as diverse aspower generation of different types (thermal, hydrau-lic, wind power), particle physics research or publicworks, among others. These have been spread overdifferent areas of the globe, which only goes to con-firm the confidence of our national and foreign custo-mers in the quality and grade of compliance shown byFelguera Construcciones Mecánicas, S.A. The resulthas been to maintain a significant volume of orderintake, once again surpassing the year’s forecast. Itshould be pointed out that foreign order intake in2002 constituted 73% of the year’s total.

Commercial Activities

In addition to capturing new clients, which hasallowed it to extend its commercial presence in manycountries, it has also successfully opted for new andinteresting products in growing sectors such aspublic works where two contracts were awarded tomanufacture the same number of tunnel boringmachines for Mitsubishi Heavy Industries. This notonly adds a positive workload but also opens up pos-sibilities for future negotiations, falling in line with itspolicy to expand technological assets, to establishstable agreement for further actions. This has beenreflected in 2002 in the establishment of a commit-ment to set up future strategic alliances. The capabi-lities of Felguera Construcciones Mecánicas, S.A. andconfidence in its quality of work as shown by its cus-tomers are proved once more.

Contracts awarded and executed in 2002

The following contracts were executed in 2002 orare still in progress for the previously mentioned newmarkets and customers:

| Eight cryostats for the Atlas Project at theEuropean Centre for Nuclear Research (CERN).

| Three hundred and thirteen cryostats for theLHC Project at the European Centre forNuclear Research (CERN).

| Twenty-four boiler modules for CMI heat reco-very steam generators (HRSG) destined for theTermorrio Power Generation Plant in Brazil,awarded in 2002.

123456 7/8/03 09:57 Página 58

59


| Various components for wind power genera-tors, such as masts, hubs, shaft supports, fra-mes and shafts, within the contract to supplyGAMESA with 100 units per year.

| Various components for Francis and Peltonturbines belonging to Alstom Power Hydro,France.

| Bodies and components for butterfly and sphe-rical valves.

| Complete pump bodies for Flor Serve destinedfor various petrochemical projects.

| A coal mill for Claudius Peters for the pulveri-sed coal injection system at ACERALIA blastfurnace in Gijón.

Of the order intake in 2002 by FelgueraConstrucciones Mecánicas, S.A. that was far beyondexpectations, the following contracts are worth men-tioning:

| Two tunnel boring machines, TBM, forMitsubishi Heavy Industries, for the construc-tion of the Córdoba-Málaga high-speed railwayline, also known as AVE.

| One hundred and fifty “Service Modules” for theLHC Project at the European Centre forNuclear Research (CERN).

| One HRSG for the 1 x 400 MW power generationplant Cristóbal Colón.

| Twenty-four boiler modules for CMI heat reco-very steam generators (HRSG) destined for theTermorrio Power Generation Plant in Brazil.

| Seven CH tanks for the Chicoasen Project inMexico.

Another year running the excellent capacities ofFelguera Construcciones Mecánicas, S.A. are confir-med, offering great expectations for their future asone of the major centres of construction and machi-ning of Capital Goods on the national and internatio-nal markets.

123456 7/8/03 09:57 Página 59

60

Felguera Melt fixed objectives mainly on its two core businesses in 2002: railwaytrack material and foundry components for aerogenerators. As a result of its innova-tions, experience and high quality achieved in making components for the wind powerindustry, in conjunction with exhaustive commercial work in the sector, Felguera Meltmaintains and constantly expands its list of clients: NEG – MIKON, LAGERWEY, GAME-SA Eólica, IZAR, NKK, ENERCON, EHN, etc. Also praiseworthy are its constant effortsto innovate on the railway track material side of the business, using its experience andknowledge gained over that last few years as a basis. The consequence of all this isthat in 2002 there was a significant increase in order intake going over the year’s bud-get by 20%.

Part of the Felguera Melt success story is due to initiatives and actions which go toreinforce its commercial side, effectively improving and reconditioning its productioninstallations which are ever more respectful with the environment, where new, modernsystems of production are implemented, increasing capacities by incorporating newsand storage silos, automatic shot blasting equipment for pieces of up to 15 Tn, or sili-ca sand aspiration equipment which reduces pollution levels at work stations andfavours the working environment.

PRODUCTS

| Manufacture of iron and steel foundry parts· Foundry of grey iron – maximum weightper piece 40 t.· Foundry of iron modules - maximumweight per piece 25 t.· Foundry of carbon and manganesesteel. Maximum weight per piece 3,5 t.· Foundry of wind power generatorcomponents

| Manufacture of railway track material· Moulded manganese steel crossings· Sidings· Complete pre-mounted trappings onwood or concrete· Disconnecting gears· Double crossovers (scissors)· Rail bearers (sleepers)· Expansion joints· Split joints

Quality:Certificates:

AENOR: ISO 9001

FELGUERA MELT, S.A. Managing Director: Mr. Celedonio Rodríguez Riesco

123456 7/8/03 09:57 Página 60

61

R&D Activities

Felguera Melt is without a doubt ever more cons-cious of the difficulties to shore up business in highlycompetitive, growing, diversified modern marketswhich is why over the past years it has set its sights onconstant innovation and development of its productsand processes, patent in its R&D activities to date,such as:

| Design, development and manufacture of afoundry made Frame for the Gamesa Eólica G-52 aerogenerator.

| Design and development of two prototype cros-sings with mobile heads installed on a diagonalfor Metro Madrid.

| Design and development of a prototype turnoutfor High Speed Railway lines at over 350 Km /hour.

| Contract for the Metallurgy Department atOviedo University to improve the metallurgy pro-cess when smelting either iron or steel.

| Contract for the University of Corunna to carryout simulations and tests on the project of a pro-totype turnout design for High Speed Railways.

Main contracts awarded in 2002

Throughout 2002 Felguera-Melt has been awardedseveral contracts of which the following stand out:

| Design, manufacture and supply of various tur-nouts for ERGOSE destined for the GreekRailways.

| Design, manufacture and supply of various turnoutsand crossovers for FERROVIAL-AGROMAN, destinedfor the Spanish National Railway System.

| Design, manufacture and supply of various turnoutsand crossovers directly to Spanish National RailwaySystem.

| Design, manufacture and supply of various turnoutsand crossovers for SACYR, destined for the SpanishNational Railway System.

| Design, manufacture and supply of various turnoutsand crossovers for the METROLAM joint venture.

| Design, manufacture and supply of various turnoutsfor Portugal.

| Design, manufacture and supply of various turnoutsfor the Buenos Aires Metro (Argentina).

| Supply of diverse material to the Morocco railways.

| Supply of rotors, shafts, casings and other compo-nents for GAMESA, for the construction of wind powergenerators.

| Supply of rotors, shafts, casings and other compo-nents for NEG-MICON (Denmark), for the constructionof wind power generators.

| Supply of rotors, shafts, casings and other compo-nents for NKK (Japan), for the construction of windpower generators.

| Supply of rotors, shafts, casings and other compo-nents for IZAR, for the construction of wind powergenerators.


123456 7/8/03 09:57 Página 61

62

PRODUCTS

| Engineering, management anddevelopment of erection projects for:

· Power generation plants· Metallurgy and steelworks industries· Cement, paper, sugar, etc. plants· Car industry, naval sector, etc.· Chemical & petrochemical industries

| Metal-mechanical and electrical erectionsfor large installations to high levels totechnical demand for industry in general

| Revamping and maintenance

Quality:Certificates

AENOR: ISO 9002 / 1994ASME: A. STAMP

The high levels of quality and competitiveness deman-ded today by the large industrial projects necessarilyleads for service companies to make permanent effortsto keep a foot in the markets. In this sense, FelgueraMontajes y Mantenimiento, S.A. relies on vast experien-ce, human and professional, and is equipped with themost modern techniques to handle specialised work indifferent areas competitively, such as:

| Energy – Power Generation: this Line has muchlong standing experience which added to the erec-tion contracts of combined cycle steam generatorsplaces the company in a privileged position on anational level in this sector.

| Steelworks and Metallurgy: maintaining its pre-sence in this area with extensive references forblast furnaces, coke batteries, sintering plants,rolling mills, continuous casting, structural mills,strip mills, rod mills, zinc production plants, etc.

| Industrial Plants: Felguera Montajes y Manteni-miento, S.A., has participated in the erection of alltypes of industrial installations but mainly in thecement, chemical, petrochemical and naval sec-tors with wide experience in these fields.

| Maintenance: throughout the last year, FelgueraMontajes y Mantenimiento, S.A. has not only conti-nued with maintenance contracts but has alsoreinforced activities in this field by extending intothe integral maintenance field in the energy, che-mical and petrochemical sectors.

FELGUERA MONTAJESY MANTENIMIENTO, S.A. Sole Administrator: Mr. Pedro García Fernández

123456 7/8/03 09:57 Página 62

63


To carry out its usual works, the company has agreat variety of material resources: truck-mountedcranes and lifting equipment, modern heat treat-ment equipment, non-destructive testing, etc.These are constantly being updated and moderni-sed and adapting erection techniques to each spe-cific situation on the field. The company also has askilled and semi-skilled labour force which ishighly qualified and experienced, but which under-goes regular training, specialising in planning,expediting, design of special tools, manoeuvres,safety, etc.

Commercial Activity

The capacity to adapt to different market condi-tions and the commercial performance ofFelguera Montajes y Mantenimiento, S.A. havepermitted it to dedicate great part of its resourcesto the power generation sector in which the pro-jects for the Duro Felguera Power Systems Lineand for other customers have demanded seriousattention. Notwithstanding, it has also participa-ted in other sectors such as the paper industry,steelworks, petrochemical plants, as well as inother activities in which it specialises, namelyintegral maintenance.

References for 2002, finalised or ongoing

Among others the following contracts andongoing works worth pointing out:

| Works on the programmed outage at the Coalfired Power Generation Plant in Lada, belon-ging to IBERDROLA.

| Revamping works on the MEGASA SIDERUR-GICA infrastructure in Ferrol.

| Revamping works on the coke gas and rawwater systems at the ACERALIA factory.

| Mechanical equipment erection on the TinLine at the ACERALIA factory in Avilés

| Maintenance works at the FERTIBERIA plant inPalos (Huelva)

| Maintenance works at wood storage yard of thefactory belonging to Empresa Nacional deCelulosa, ENCE, in Huelva.

| Mechanical maintenance works at the Asturiana deZinc plant in Asturias.

| Maintenance works at the coal fired PowerGeneration Plant in Lada, belonging to IBERDRO-LA.

| Maintenance works on the fluids systems of the TinLine III at ACERALIA in Avilés.

123456 7/8/03 09:57 Página 63

64

FERESA has carried on its activities in 2002, mainly inthe power systems sector, but maintaining and expandinginto different industrial sectors where its experience andgrade of compliance stand out with major customers,such as: Foster Wheeler Iberia, FLS Miljo, CEPSA, SINAE,ALIBESA, SMURFIT, etc.

Contracts executed or in progress in 2002

Of the contracts executed by FERESA in 2002, the mostrelevant are listed below:

| Internal and external insulations on different equip-ment: boilers, ducts, valves, collectors, turbines,steam and water piping, etc for the combined cyclepower generation plants Son Reus I and Besós.

| Heat insulation works for HIDROCANTABRICO atthe Aboño and Soto de Ribera Power Plants(Asturias).

| Heat insulation works for IBERDROLA, at the Lada(Asturias) and Guardo (Palencia) Power Plants.

| Heat insulation works for SINAE on the whole of thepurine treatment plant.

| Supply and erection of tank lining for SINAE-FosterWheeler Iberia at the Alperujo de Enemansa(Ciudad Real) and La Loma (Jaén) plants.

| Heat insulation works for FLS-MILJO on the elec-trostatic precipitator at the SMURFIT-Nervión plantin Durango.

| Heat insulation works for ALIBESA on asphalt tartanks at its plant in Puerto Real.

| Heat insulation works for CEPSA in various tanks atits plant in Algeciras.

PRODUCTS

| Industrial Thermal Insulation

| Refractory Linings

| Maintenance and reconstruction of all typesof thermal and acoustic linings


AENOR: ISO 9002 / 1994

FELGUERA REVESTIMIENTOS, S.A.FERESA Sole Administrator: Mr. Pedro García Fernández

123456 7/8/03 09:57 Página 64

65


PRODUCTS

| Mining:· Steel arches in TH, HEB, IPN sections· Hydraulic and friction props· Link bars· Lining sheets· Grating

| Underground works:· Metal arches in TH, HEB, IPN sections· Lattice and rolled girders· Formworks· Bernold-type sheet· Anchor pins for resin

| Trench Screen framing

| Electricity Pylons

| Mobile Phone Antenas

| Steel structures


AENOR: ISO 9001

TÉCNICAS DE ENTIBACIÓN, S.A.TEDESAManaging Director: Mr. Carlos Ruiz Cornejo

The traditional market of underground mining and especially in the Asturias region, has suffered con-siderable decreases over the last few years that were accentuated in 2002. TEDESA had already takensteps to reorient its business by focussing on two main activities; firstly to obtain the means and condi-tions necessary to manufacture new products and secondly to enter new markets with these products.Consequently, promoting and marketing efforts outside Asturias and strategic agreements to developtechnologies needed to be increased. These efforts are already proving effective and they have contribu-ted to the fact that TEDESA reached a considerable turnover figure in 2002, amply surpassing the esta-blished budget.

The investments made in modern production units have provided the option of manufacturing structu-ral elements and equipment for diverse sectors of industry, such as structures for industrial buildings orauxiliary equipment for large public works machines (tunnel boring machines) and above all the manu-facture of formworks for tunnels, placing the company in an excellent position on the market.

Main contracts awarded and executed in 2002

| Manufacture of electricity pylons for SEMI YS.R.F. MOYANO

| Manufacture and supply of formworks for tun-nels for DRAGADOS OBRAS Y PROYECTOSS.A.

| Manufacture and supply of formworks for tun-nels for the joint venture constructing theLleida-Barcelona AVE line.

| Manufacture and supply of formworks for tun-nels for the LIERES joint venture, FERROVIAL-NECSO-ACS on the Cantábrico Motorway.

| Manufacture and supply of formworks for tun-nels for the MONTORNÉS joint venture.

| Manufacture and supply of formworks for tun-nels for the GUADALHORCE joint venture.

| Manufacture and supply of the “back-up”structure for the Herrenknecht A.G. TunnelBoring Machine, working on the Guadarramatunnels for the new High Speed Railway.

| Manufacture and supply of the back-up struc-ture for the Mitsubishi Heavy IndustriesTunnel Boring Machine, working on theAbdalajis tunnel for the new High SpeedRailway.

| Steel structure for the new Tin Line III buildingat the ACERALIA factory in Avilés.

| Various steel casing systems for mining andpublic works in Spain and other countries.

Commercial Management

The incorporation of new production methodshas allowed new markets to be explored in thebuilding and industrial structure sectors byfocussing mainly on heavy machinery compo-nents of large dimensions whilst marketing oftraditional products continues at the same time.Already incorporated into the production processare the new lattice girders, which as they grip toshotcrete with ease and with their weight charac-teristics and resistance, are being particularlysuccessful on the market. The same goes for theformwork equipment developed and manufactu-red by TEDESA.

123456 7/8/03 09:57 Página 65

66

THE POWERSYSTEMS LINE

DURO FELGUERA, S.A., ENERGÍA Manager: Mr. Juan Carlos Torres Inclán

Power Systems Line

The Power Systems Line relies upon its long trajec-tory backed by over forty years experience in the powergeneration sector and this has led to the fact that in2002 its aspirations were fulfilled when GESA andUNELCO both belong to ENDESA awarded the companywith two combined cycle power generation projects SonReus II (1 x 218 MW) and Barranco de Tirajana (1 x 219MW) as Main Contractor, the first time in Spain that anational company is awarded a contract in this way.This has been the reward for the hard work of its highlyqualified personnel and which shows the confidenceplaced on the company by leading customers and tech-nological companies in the sector.

In a sector where contractual demands are highlystringent, as is the power generation sector, whereequipment, work quality and compliance to schedulesare directed towards quick and effective plant opera-tion, a company like MOMPRESA is essential. Thiscompany not only supports Duro Felguera Energía in itsnew projects, but also with its ample experience andknowledge of the market, it has become a leading com-pany in the erection and overhaul of power island, wor-king on major power generation plants in Spain, LatinAmerica and other countries in Europe.

By adding OPEMASA, Duro Felguera Energía rein-forces its already diverse capabilities to deal with powergeneration plant construction projects as main con-tractor, widening its scope to include Operation andMaintenance services.

Below is a summary of the main works carried outby this Line throughout 2002.

DURO FELGUERA, S.A., ENERGÍA

The activities carried out by DURO FELGUERAENERGÍA in 2002 to further develop their business arefundamentally based on its experience and on wideningits capacity. It has continued to explore new businessopportunities within the power market, as is the casewith the future projects to adapt traditional coal firedpower generation plants to environmental legislation,supported by their more than sufficient experience andthe major technological companies in the sector. DuroFelguera Energía, always within its field of specialisa-tion, has continued to maintain its presence in other

CORE BUSINESS

DURO FELGUERA, S.A. ENERGIA| Execution of Turnkey Projects for Gas Fired

Power Generation Plants (Open andCombined Cycle)

| Turnkey projects for conventional powerplants

Main Scope:| Project Management| Engineering| Supplies| Construction| Erection| Commissioning| Operation

QualityCertificatesLloyd´s Register Quality Assurance, EN / BSEN /DIN EN- ISO 9001 / 2000, applicable to design,engineering, supply and construction of projectsand services for industrial installations on aturnkey basis in the industrial and powergeneration sectors.

123456 7/8/03 09:57 Página 66

67

countries such as Portugal, Peru and Mexico where it has par-ticipated in various bids, which are soon expected to materia-lise.

Also worth mentioning are the works carried out last yearto finalise some of the projects awarded in previous years inwhich other Duro Felguera business lines have cooperatedsuch as Felguera Construcciones Mecánicas, S.A. in manufac-ture and supply of the heat recovery steam generators (HRSG)among others, Felguera Montajes y Mantenimiento, S.A.,MOMPRESA and OPEMASA with electromechanical erection,commissioning assistance and operation of the new powergeneration plants.

COLOMBIA

MEXICO

SPAIN

Las Flores ILas Flores IILas Flores IIITermoponTermolasierraTermo Candelaria

El SaúzHuinaláHermosilloMonterrey I y IIHermosilloRosaritoMonterrey IIIEl Saúz IIEl EncinoValle de MexicoSan LorenzoTuxpan

BesósSan RoqueCastejónSon ReusBarranco de TirajanaSon Reus II

(*) S/C = Open Cycle

Banco GanaderoWestinghouseWestinghouseWestinghouseE.E.P.P. MedellínKMR Power Co.

WestinghouseWestinghouseWestinghouseABB Alstom PowerABB Alstom PowerABB Alstom PowerABB Alstom PowerSiemensWestinghouseSiemensWestinghouseALSTOM PowerCFE/SiemensWestinghouseCFE/SiemensWestinghouse

Endesa/Gas NaturalEndesa/Gas NaturalHidrocantábricoEndesa (GESA II)Endesa (UNELCO)Endesa (GESA II)

C/C= Combined Cycle

199419961997199819982000

199819981998199920012001200120022002200220032003

200120022002200220052005

BarranquillaBarranquillaBarranquillaSantanderPuerto NareCartagena de Indias

QuerétaroMonterreyHermosilloMonterreyHermosilloRosaritoMonterreyQuerétaroChihuahuaMexicoPueblaVeracruz

BarcelonaCádizNavarraPalma de MallorcaGran CanariaPalma de Mallorca

C/CS/CS/CS/CS/CS/CSubtotalS/CS/CS/CC/CC/CC/CC/CS/CS/CS/CS/CS/CSubtotalalC/CC/CC/CC/CC/CC/CSubtotal

TOTAL

1 x 1501 x 1001 x 1502 x 1152 x 1502 x 1571.2441 x 1501 x 1501 x 1502 x 2501 x 2502 x 2504 x 2501 x 1501 x 1501 x 2502 x 1501 x 1503.7002 x 4002 x 4001 x 4001 x 2251 x 2191 x 2182.662

7.606

WestinghouseWestinghouseWestinghouseWestinghouseGeneral ElectricWestinghouse

WestinghouseWestinghouseWestinghouseABB Alstom PowerABB Alstom PowerABB Alstom PowerABB Alstom PowerSiemensWestinghouseSiemensWestinghouseAlstom PowerSiemensWestinghouseSiemensWestinghouse

ABB Alstom PowerABB Alstom PowerABB Alstom PowerAlstom PowerGeneral ElectricGeneral Electric

COUNTRY PROJECT CUSTOMERCOMMERCIALOPERATON LOCATION TYPE*

CAPACITYMW TECHNOLOGY

DURO FELGUERA REFERENCES FOR GAS FIRED POWER GENERATION PLANTS

123456 7/8/03 09:57 Página 67

68

Works carried out in 2002

Of the works carried out in 2002, which have reachedthe final stages, the following are to be pointed out:

| At the San Roque combined cycle plant in Cadiz forENDESA – GAS NATURAL, 2 x 400 Mw power rateand constructed in consortium with Alstom Power,commissioning activities were carried out and bothunits were placed in commercial operation lastsummer.

| At the combined cycle plant in San Adriá de Besós(Barcelona), also for ENDESA – GAS NATURAL, 2 x400 Mw power rate and 2 x KA26 Alstom Powertechnology, commissioning and commercial ope-ration was completed with success.

| In Castejón, Navarra and in consortium withAlstom Power, commissioning activities werecarried out on the 400 Mw Unit for Hidrocantábricoand which is already operating commercially.

| In Son Reus (Palma de Mallorca), Duro FelgueraEnergía constructed a combined cycle power plantwith one 225 Mw unit for GESA – ENDESA, basedon 3 x KA8C Alstom Power technology. This planthad been operating commercially in open cyclesince June 2001 and the works to place it in com-mercial operation in combined cycle were carriedout in 2002.

| For ENDESA and located in Lanzarote and Ceuta, DuroFelguera Energía working in joint venture withTécnicas Reunidas, constructed two plants: 2 x 18 Mw.and 1 x 12 Mw. respectively, using Diesel units withMAN technology, on a turnkey contract basis andwhich are currently in commercial operation.

Projects awarded in 2002

The previously mentioned presence of Duro FelgueraEnergía in foreign countries has not only included continuousmarketing activities but also having been awarded two con-tracts in Mexico, as shown below:

| San Lorenzo Project, in Puebla - Mexico, for ComisiónFederal de Energía with Siemens Westinghouse tech-nology, consisting of a power generation plant of two150 Mw turbo generators (2 x 150 MW) to operate inopen cycle.

| Tuxpan Project, in Veracruz – Mexico, also for ComisiónFederal de Energía with Siemens Westinghouse tech-nology, consisting of a power generation plant of one150 Mw turbo generator (1 x 150 MW) to operate inopen cycle.

Of the contracts awarded in 2002 the most relevant, notonly for the size of investment, but also for the widened sco-pes and responsibilities, are those listed below and in whichDuro Felguera Energía is the main contractor.

| For ENDESA – UNELCO, located in Gran Canaria, DuroFelguera Energía was awarded the complete executionof the gas fired power generation plant Barranco deTirajana, with General Electric gas turbines and acombined cycle configuration, and with Alstom steamturbine, to generate 219 Mw.

| For ENDESA – GESA II, located in Palma de Mallorca,Duro Felguera Energía was awarded the complete exe-cution for a gas fired power generation plant, namelySon Reus II, with General Electric gas turbines and acombined cycle configuration, and with Alstom steamturbine, to generate 218 Mw.

The execution of both projects is currently in progress.

123456 7/8/03 09:57 Página 68

69


MONTAJES DE MAQUINARIA DE PRECISIÓN, S.A. MOMPRESA

The constant trajectory of Mompresa is once moreworth stressing. Throughout the year it has maintai-ned its activities and reinforced it presence in the tra-ditional markets of turbine and rotating machinery ingeneral, mainly within the power generation sectorwhere it acts on first phase equipment erection andassembly and in later overhauls and programmedmaintenance outages.

The spread of its activities has been maintainedboth in Europe and in Latin America, as can be seen inthe summary of works carried out and awarded in2002 below:

Works carried out in 2002 to be noted:

| Of the contracts established for periodical over-hauls of machinery belonging to foreign andSpanish manufacturers and power generatingcompanies, 23 Turbogenerators and AuxiliaryEquipment were revised for different powergeneration plants in Spain, Italy and Turkeyexceeding 7,2 Gw.

| Erection and assembly work was finalised on the335 Mw turbogenerator at the Naco NogalesCombined Cycle Plant in Mexico.

| Also finalised last year were the civil works andelectromechanical erection awarded in conjunc-tion with the Power Systems Line for Siemens-Westinghouse at the El Sáuz II and El EncinoPower Plants in Mexico.

| In Spain, the works on the combined cycle plantsof Son Reus I, Besós, San Roque and Castejón,with Alstom turbines, were also finalised.

The most relevant contracts

| For General Electric in Turkey – overhaul of 3alternators and 1 steam turbine at a powergeneration plant.

| For Alstom in Italy – overhaul of 6 turbines at 3power generation plants.

CORE BUSINESS

MOMPRESAOverhauls of:

| Gas and Steam Turbines| Generators| AuxiliaryTurbines| Engines| Heater pumps| Condensators| Fans

Erection:| Gas and Steam Turbines| Turbogenerators| Power generation plants, especially simple

and combined cycles

Predictive Maintenance:| Vibration analysis

Quality:Certificate AENOR: UNE-EN ISO 9002 / 1994

| Several overhauls were awarded for various custo-mers, i.e. ENDESA, UNION FENOSA, IBERDROLA,HIDROCANTÁBRICO, SIEMENS, GENERAL ELECTRIC,ALSTOM, etc, all in Spain, on different turbogenera-tors and auxiliary equipment.

| In conjunction with Duro Felguera Energía, the erec-tion of turbogenerator units on the new combinedcycle projects Son Reus II and Barranco de Tirajanawere also awarded.

123456 7/8/03 09:57 Página 69

70

OPERACIÓN Y MANTENIMIENTO, S.A.OPEMASA

The deep involvement of the Power Systems Line inpower generation projects has increased with the recentcreation of the company OPEMASA, in which Mompresaholds a majority share interest, and which covers the ever-increasing demand by customers for scope and guaranteesin this area. With the incorporation of OPEMASA, commis-sioning, operation and maintenance activities are morewithin reach whilst at the same time projecting a more solidimage of responsibility before the customer and increasingbusiness opportunities.

Fields of Action and Activities:

The main fields of action where OPEMASA is alreadyoperating with clear perspectives for future growth are:Open and Combined Cycle Power Generation Plants, Co-generation Plants and Diesel fired Plants, in which it carriesout commissioning activities.

The OPEMASA commissioning business basically com-prises execution and administration of procedures, establis-hing equipment delivery schedules, coordination of subcon-tracted services and preparing and coordinating turnoversto the operation and maintenance personnel.

Operation and Maintenance

On those projects where the following works form a partof the scope, OPEMASA is more than capable of carryingthem out with full guarantees; Operation of Systems up toprovisional acceptance (PAC), operation and maintenance atfirst levels and integral maintenance of power generationfacilities.

To carry out these activities, OPEMASA relies upon thevarious Duro Felguera subsidiaries, as well as its own highlyqualified technical personnel, summing long-standingexperience to the development of engineering, manufactureof certain components, erection and maintenance of powergeneration plants.

CORE BUSINESS

OPEMASAPrecommissioning:

| Final erection supervision| Punch lists| Compilation of documents

Commissioning:

| Equipment tests

Start-up:

| Execution and administration of procedures| Delivery schedules| Coordination| Preparation of turnovers and coordination

of delivery

Operation and Maintenance:

| Operation of systems up to provisionalacceptance

| 1st level operation and maintenance| Complete maintenance of installations

123456 7/8/03 09:57 Página 70

71


STORAGELINE

The capacity to adapt to different market demands is forFelguera-IHI one of the main virtues of its potential andwhich has sustained it ahead of its competitors and hassignificantly contributed to the fact that the company sur-passed the year’s budget by more than 78% in 2002. It willtherefore continue to the modernisation and extension ofstorage plants for some of the most notable customers inthe petrochemical sector.

The advantages that its wide range of products offers,sustained by modern and experience engineering, gives thecompany amply guaranteed access to contracts for cylin-drical and spherical vessels of the most stringent technicalspecifications and to complete turnkey storage plants.Felguera-IHI has ample experience in this type of contrac-tual mode participating in some cases with vested shareinterest demonstrating a self-confidence of the highestlevel.

PRODUCTS

Engineering, design, manufacture and erection ofstorage plants on a turnkey contract basis.

| Storage plants for crude oil, derived productsand chemicals

| LNG regasification plants

Engineering, design, manufacture and erection ofindividual storage equipment.

| Fixed- and floating -roof tanks| Fixed-roof tanks with floating screen| Cooling and cryogenic tanks| Spherical storage pressure vessels for the

chemical and petrochemical industries| Silos and thickeners


AENOR: ISO 9002 / 1994

FELGUERA – IHI, S.A.Board Member: Mr. Antonio Martínez Acebal

Main contracts awarded in 2002

| In the field of fossil fuel storage, the projectat the regasification plant in Barcelona forENAGAS particularly stands our due to itstechnical complexity. This contract consistsof the design, engineering and constructionof one total containment tank to storeLiquefied Natural Gas at a temperature of–170ºC. The tank comprises of an externalarmoured concrete tank and an internal reci-pient of 9% nickel-steel alloy, as well as theinternals, externals and accessories.

| In keeping with its international expansion in2002, it was awarded 2 tanks for a petroleumoil/water separation process destined forLibya.

| Consolidating its presence in the main refi-nery expansion projects, a 100.000 m3 tankfor crude oil storage was awarded by REP-SOL-YPF in Puertollano.

| Also for REPSOL-YPF, 2 tanks of 50.000 m3

each for gas oil and destined for the refineryat Puertollano.

Main contracts executed in 2002

Just to illustrate, the following projects are some of those exe-cuted or finalised in 2002:

| For CEPSA in Huelva, 2 dome-roof tanks of 50.000 m3 eachto store gas oil.

| A turnkey ammonium storage plant for PROQUIMED-UBE.

| For SINAE in Jaén, 2 taper-roof tanks of 3.000 m3 each tostore olive oil industry products.

| A set of 6 vertical tanks for IHI-NISSAN at the NISSANMOTOR IBERICA plant in Montcada (Barcelona)

| For the CEPSA factory in Huelva, one 4.000 m3 sphericaltank to store butane.

| Complete turnkey plant to store petroleum derived productsat Motril (Granada) for SECICAR.

123456 7/8/03 09:57 Página 71

72

INTERNATIONALLINE

PRODUCTS

ERECTION OF THE FOLLOWING TYPES OFPLANTS:

| Power: Coal, gas fired combined cycle,hydraulic

| Petrochemicals: New plants, modernisationand extension of already existing plants

| Gas: Gas ducts, regasification plants, etc.

MAINTENANCE:

| Combined Cycle Plants

| Others


ISO 9000 / 2000ISO 14000 (in the pipeline)

Working under its new name, this Mexican companyhas maintained its activities mainly in the power sectorwhere it continued to develop last year and where it hasfuture business prospects given development programmesand the levels of market consolidation that Duro FelgueraMexico has reached with various projects already finalisedand in operation.

Market prospects increase with the investment pro-grammes foreseen in the petrochemical sector amongothers, reinforced by strategic alliances, e.g. with GrupoDiavaz and the incorporation of complementary compa-nies, as is the case with the recently acquired Mexicanengineering firm, PYCORSA.

Works Executed or ongoing

During 2002, Duro Felguera México continued with itswork and finalised some of the major contracts that werealready in progress. It has continued with those contractsalready awarded and in development such as:

| Finalisation and start-up of the 330 Mw combinedcycle plant in Valle de México for Alstom.

| In the traditional coal fired sector, Duro FelgueraMéxico continued with the electromechanical erec-tion works for the 520 MW Power Plant at Tamuin.

Significant Contracts obtained in 2002

The local part of the PEMEX contract for the extensionto 400.000 t./year of the Pajaritos chloride derived productsplant was awarded to Duro Felguera México in 2002 andcivil works have already commenced. The main contracthad previously been awarded to Duro Felguera, S.A. Theexecution conditions of this contract pose an interestingchallenge, as it requires exhaustive programming, expe-rience and capacity due to the fact that it must be executedwhilst the current plant is in operation and without crea-ting any interference.

Within the power industry sector, of significance is thecontract for Unión Fenosa, Soluziona to execute mechani-cal erection of the whole plant, and the supply and erectionof BOP piping at the 335 MW de Naco-Nogales gas-firedpower plant.

DURO FELGUERA MÉXICO, S.A. DE C.V.Director: Mr. Angel Peña Menéndez

123456 7/8/03 09:57 Página 72

73


Commercial Activity

Duro Felguera México has been activecommercially and has presented variousoffers for projects in diverse areas, powergeneration and petrochemical industriesfundamentally, and has continued to sup-port the different Duro Felguera businesslines in Spain by aiding their marketingpotential on the Mexican markets.

Human Resources

The Human Resources Department has continued to focus itsefforts in training Mexican personnel. To do this it has relied onthe one hand upon the support of Duro Felguera technicians whohave gone to Mexico on specific occasions, and on the other, it hasrelied on experience gained on several already executed projectsor those undergoing construction where the level of training hasbeen patent given the grade of quality on executed works certifiedby their customers. The average workforce during 2002 consistedof 1,198 workers.

Quality Policy

The quality policy continued to be a firm objective in 2002, asdemanded by market requirements and attending to customergrade of compliance in this respect and in delivery schedules.Objectives were reached and a constant effort was made to achie-ve improvements in cost factors, quality and delivery dates. Thecorresponding ISO 9000 / 2000 certification was obtained recentlyand adjustments are being made to meet requirements for the ISO14000 certification relating to protection of the environment.

123456 7/8/03 09:57 Página 73

74

PRODUCTS

ENGINEERING SERVICES:| Basic Engineering| Detail Engineering| Technical Assistance| Special Reports

PROJECT DEVELOPMENT:| Technical and Financial Studies and

Evaluations| Technology Selection| Topographical Studies| Environmental Studies| Financial Studies

PROJECT ADMINISTRATION:| Planning, Administration and Control of

Resources

SUPPLIES:| Purchasing| Inspections| Logistics

QualityCertificatesNMX-CC-003/1995, ISO 9001/ 1994

With the recent majority share interest acqui-red in the engineering firm PYCORSA, DuroFelguera strengthens its presence on theMexican and adjacent markets by complemen-ting its service capacities with engineering, whichin this case is specialised in the principle indus-trial sectors of the region.

PYCORSA is a Mexican company with morethan 27 years of experience in the public and pri-vate industrial sector and attends to the demandsof industrial projects from its head office inMexico City. It has wide experience in a variednumber of disciplines, i.e. production, processesor storage in the power and petrochemical sec-tors of industry amongst others. When projectcharacteristics so require, PYCORSA is able toestablish work centres near customer installa-tions.

References and finalised or ongoing contractsWith an extensive list of clients in which the

following figure:

PROYECTOS E INGENIERÍA PYCOR, S.A. DE C.V.PYCORSADirector: D. Joaquín Rodríguez Torreblanca

| Comisión Federal de Electricidad.| Comisión de Aguas del Valle de México.| Comisión Nacional de la Industria Azucarera.| Exxon México.| Foxboro.| Grupo Desc.| Gulf Engineering Co. (USA)| Kimberly Clark de México.| Mitsui.| PEMEX.| Praxair.| PRC Environmental. (USA) | Snamprogetti. (Italia)| Spie Batignoles. (Francia)| Tennessee Gas Co.| Universal Ensco Inc. (USA)| Williams Brothers Engineering Co. (USA)

PYCORSA has recently carried out or is currentlyexecuting works for the extension of the Pajaritosrefinery chloride III plant for PEMEX, a PolyethylenePlant for Escolin and Nitrogen plants for Praxair,among others.

Human ResourcesThe nature of PYCORSA’s typical activities

demands constant attention to its main asset, itspeople. Human and material means are applied tomaintain the best working conditions possible andthe most modern methods of production based oncomputer support to aid and assure the quality of theenvironment and the final product.

Last year the average workforce at PYCORSA con-sisted of 124 people with a peak of 210. These varia-tions mainly depend on the workload of the projectsin progress.

Quality PolicySince 1999 PYCORSA holds the Quality Assurance

System certificate for the Standard NMX-CC-003/1995, ISO 9001/ 1994, issued by InstitutoMexicano de Normalización y Certificación, (theMexican Standards Organisation) registered undernumber RSC-200.

The scope of the procedures covers engineeringservices, studies and projects for different sectors ofindustry.

It employs Mexican, European or North Americancodes and standards to develop projects and iscurrently working towards the ISO 9001/ 2000.

123456 7/8/03 09:57 Página 74

DIRECTORY

123456 7/8/03 09:57 Página 75

76

PARENT COMPANYRegistered Address:

| DURO FELGUERA, S.A.C/ Marqués de Sta. Cruz, 1433007 Oviedo (Asturias)Spain

| CHAIRMANSHIP| Chief Executive Officer

Tel.: +34 985 22 97 00Fax: +34 985 21 93 39e-mail: [email protected]

| SECRETARY GENERAL| Board Secretary, Legal Counsel,| Patrimony & Archives


| MARKETING & DEVELOPMENTTel.: +34 985 22 97 00Fax: +34 985 21 93 39e-mail: [email protected]

| ORGANISATION| & HUMAN RESOURCES


| FINANCETel.: +34 985 22 63 83 / 22 99 19Fax: +34 985 20 39 34 / 21 96 99 e-mail: [email protected]

| DURO FELGUERA, S.A. ENERGÍAC/ Rodríguez Sampedro, 5 –7º33206 – Gijón (Asturias) SpainTel.: +34 985 17 94 00Fax: +34 985 34 64 74e-mail: [email protected]

OFFICES IN MADRID| DURO FELGUERA, S.A.

C/ Juan Esplandiú, 13-12ª BEdif. Centro O'Donnell28007 MadridEspañaTel.: +34 91 504 3545 - 91 504 3646Fax: +34 91 504 6446 - 91 504 64 53e-mail: [email protected]

SUBSIDIARIES

| ACERVO, S.A.C/ Marqués de Sta. Cruz, 1433007 Oviedo (Asturias)SpainTel.: +34 985 22 63 83Fax: +34 985 22 42 17

| DURO FELGUERA EQUIPOS| Y MONTAJES, S.A.

Travesía del Mar s/n33212 – Gijón (Asturias)SpainTel.: +34 985 32 26 00Fax: +34 985 30 00 86e-mail: [email protected]

| FELGUERA CALDERERÍA PESADA, S.A.Travesía del Mar, s/n.33212 Gijón (Asturias)SpainTel.: +34 985 32 26 00Fax: +34 985 32 56 50e-mail: [email protected]

| FELGUERA CALDERERÍA PESADA| SERVICIOS, S.A.

Travesía del Mar, s/n.33212 Gijón (Asturias)SpainTel.: +34 985 32 26 00Fax: +34 985 32 56 50e-mail: [email protected]

| FELGUERA CONSTRUCCIONES| MECÁNICAS, S.A.

Crta. de Langreo-Oviedo, s/n33930 Barros (Asturias)SpainTel.: +34 985 67 97 00Fax: +34 985 67 97 02e-mail: [email protected]

| FELGUERA MELT, S.A.Prolg. Ing. Fernando Casariego, s/n33930 La Felguera (Asturias)SpainTel.: +34 98 569 56 11Fax: +34 98 569 64 65e-mail: [email protected]

DIRECTORY

123456 7/8/03 09:57 Página 76

77

| DIRECTORY

| FELGUERA MONTAJES| Y MANTENIMIENTO, S.A.


| FELGUERA REVESTIMIENTOS, S.A.| FERESA


| TÉCNICAS DE ENTIBACIÓN, S.A.| TEDESA

Polígono de Silvota, parcela 1033192 Llanera (Asturias)SpainTel.: +34 985 26 04 64Fax: +34 985 26 14 16e-mail: [email protected]

| DURO FELGUERA| PLANTAS INDUSTRIALES, S.A.

Centro de Proyectos e IngenieríaC/ Hornos Altos, s/n (Valnalón)33930 La Felguera (Asturias)SpainTel.: +34 985 67 98 00Fax: +34 985 69 37 20e-mail: [email protected]

| FELGUERA GRÚAS Y ALMACENAJE, S.A.Centro de Proyectos e IngenieríaC/ Hornos Altos, s/n (Valnalón)33930 La Felguera (Asturias)SpainTel.: +34 985 67 98 00Fax: +34 985 67 37 63e-mail: [email protected]

| FELGUERA PARQUES Y MINAS, S.A.Centro de Proyectos e IngenieríaC/ Hornos Altos, s/n (Valnalón)33930 La Felguera (Asturias)SpainTel.: +34 985 67 98 00Fax: +34 985 67 37 63 e-mail: [email protected]

| FELGUERA TECNOLOGÍAS| DE LA INFORMACIÓN, S.A.

C/ José María Martínez Cachero, 15 - bajo33013 – Oviedo (Asturias)SpainTel.: +34 985 27 29 89Fax: +34 985 27 59 60e-mail: [email protected]

| MONTAJES DE MAQUINARIA| DE PRECISIÓN, S.A.| MOMPRESA

C/ Rodríguez Sampedro, 5, 8ª33206 Gijón (Asturias)SpainTel.: +34 985 17 94 94Fax: +34 985 35 53 77e-mail: [email protected]

| OPERACIÓN Y MANTENIMIENTO, S.A. | OPEMASA

C/ Rodríguez Sampedro, 5, 8ª33206 Gijón (Asturias)SpainTel.: +34 985 17 94 94Fax: +34 985 35 53 77e-mail: [email protected]

| FELGUERA-I.H.I., S.A.Parque Empresarial Las RozasC/ Jacinto Benavente, 428230 Las Rozas (Madrid)SpainTel.: +34 91 640 20 51Fax: +34 91 640 21 00e-mail: [email protected]

123456 7/8/03 09:57 Página 77

78

SUBSIDIARIES AND BRANCHOFFICES ABROAD

MEXICO

| DURO FELGUERA MÉXICO, S.A. DE C.V.Río Tíber, 66 Piso 6Col. Cuauthémoc06500 – México DFMéxicoTel.: +52 5 55 08 000 51Fax: +52 5 55 08 013 32e-mail: [email protected]

| PROYECTOS E INGENIERÍA PYCOR, S.A. | PYCORSA

Río Tíber, 66 Piso 6Col. Cuauthémoc06500 – México DFMéxicoTel.: +52 5 55 53 358 90 / 93 / 94Fax: +52 5 55 20 760 11e-mail: [email protected]

| DURO FELGUERA POWER MÉXICO, S.A.| DE C.V.

José Benítez 2228 B Altos. Colonia ObispadoMonterrey 64060Nuevo León – MéxicoTel.: + 52 81 1052 8610 Fax: + 52 81 1052 8609e-mail: [email protected]

| TURBOGENERADORES DE MÉXICO, S.A.| DE C.V.

José Benítez 2228 B Altos. Colonia ObispadoMonterrey 64060Nuevo León – MéxicoTel.: + 52 81 1052 8610Fax: + 52 81 1052 8609e-mail: [email protected]

VENEZUELA

| FELGUERA PARQUES| Y MINAS DE VENEZUELA, S.A.Urbanización Santa Elena. Manzana 15 Casa B4Sector Río AroPuerto Ordaz – Ciudad GuayanaEstado Bolívar – VenezuelaTel.: + 58 41 48 92 82 46 Fax.: + 58 28 69 51 26 29e-mail: [email protected]

INDIA

| DURO FELGUERA S.A.India Representative Office408, JOP Plaza, P-2, Sector 18Noida (U.P.) - 201 301, adjoining New DelhiIndiaTel.: + 91 120 451 6210 / 11Fax: + 91 120 451 6310e-mail: [email protected]

BRAZIL

| DURO FELGUERA DO BRASIL LTDA.Alameda Jaú, 1528 - Coj. 6201420-002 - São Paulo Brasil.Tel.: + 55 11 306 305 38 / 40Fax: + 55 11 306 305 39e-mail: [email protected]

U.S.A.

| DURO FELGUERADelegación en USA205 Cádiz CourtMerritt Island - Florida 32953U.S.A.Tel.: + 1 321 452 6162Fax: + 1 321 427 4085e-mail: [email protected]

JORDAN

| DURO FELGUERA P.I., SAJordan BranchC.O. No 8 - 3rd floor.Haddad Center Building, SuweifiyehP.O. Box 141556Amman 11814 - JordanTel.: + 962 6 5821366Fax: + 962 6 5821366e-mail: [email protected]

123456 7/8/03 09:57 Página 78

79

| Dep. Legal AS-

123456 7/8/03 09:57 Página 79

80

123456 7/8/03 09:57 Página 80

48957_131013102005165417.pdf - Duro Felguera

Documents

Transcript of 48957_131013102005165417.pdf - Duro Felguera