09Annual Report

09 Annual Report 09 Annual Report 1 2 Duro Felguera, S.A. 2010 Design, desktop publishing and production: Multiplicamos las Ideas, (Gráfik Estudio) Printers: Eujoa Artes Gráficas. Aerial view of Puerto de Barcelona regasification plant (page 40) by courtesy of Enagas. Index 3 Letter from the Chairman & CEO 4 Main figures and Milestones 9 Evolution of Main figures 10 Balance sheet 12 Income Statement 14 2009 Milestones 16 Governing Bodies 18 Board of Directors 18 Committees 19 Company Structure 20 Evolution of Business 21 Stock Market Information 26 Activities by Business Segments 31 Duro Felguera Energía 32 Duro Felguera Plantas Industriales 36 Felguera - IHI 40 Felguera Montajes y Mantenimiento 42 Mompresa 44 Opemasa 45 Feresa 46 Montajes Eléctricos Industriales 47 Felguera Tecnologías de la Información 48 Tedesa 49 Felguera Calderería Pesada 50 Felguera Melt 52 Felguera Rail 53 Felguera Construcciones Mecánicas 54 International Presence 55 Corporate Responsibility Report 56 Directory 64 Corporate Governance Report 67 1 Letter from 4 the Chairman & CEO In 2009, Duro Felguera profit, order intake and backlog figures 5 registered record highs Dear Shareholder: went from 7.5% to 9.3% which still places us over the average in our sector. It would seem obvious to say at the start of this letter, that we are going through hard times and Consolidated profits before tax also rose to 80 that the 2009 financial year was one of the million euros and profits after tax increased by hardest in living memory for most companies. 33.6% reaching a record figure for Duro Felguera But it would be equally strange to just disregard of 70.7 million. the subject not just because it has been extremely harsh and has conditioned our business over In 2009 Duro Felguera continued to increase the year, but also because it will continue to the stability of its balance of accounts and current affect business in general over the next few assets were reinforced by 33.4 million euros. years. Treasury remained at around 346 million euros and working capital finished the year at 116.3 In effect, we have been through a truly hard year million euros all of which shows a frankly positive which has put many companies to the test and, position of liquidity. where we are concerned, has measured the strength of our business model, based on The main development in the balance sheet engineering and construction of industrial plants during the year consisted in a substantial with an ever increasing, yet selective and prudent, increase in assets and short term debt due to international expansion. the major revenues from new large international contracts which in the near future should provide Well, despite such a sombre economic greater increases in treasury and sales. panorama, the 2009 financial year -the subject of this annual report- provided outstanding A more detailed analysis by segments continues figures. And they were outstanding not just to reflect the importance of the Major Projects because they reflect a substantial improvement area of the business within which Power Projects on the previous year's, but more significantly reached an income figure of 463 million euros, because they are in complete contrast with the and Industrial Plants 185 million. As a sum, times of depression and uncertainty we are these figures represent 67.5% of the group's going through. total turnover. Whilst SERCOBE (national association of The income figures of the Specialised Services industrial equipment companies) estimates, segment which includes our erection, using data compiled from a wide sample of maintenance and operation companies, businesses, that 2009 was the worst year for increased to 212 million euros, 28% higher than our sector since statistical records exist, Duro the previous year, whilst Manufacturing with Felguera profit, order intake and backlog figures income figures of 99.7 million, showed a are at record highs and are indubitably better reduction of 19.4%. than last year's. In terms of EBITDA, the contribution made by Consolidated sales of 927.7 million euros, similar each segment as well as being positive was to figures in 2008, resulted in an EBITDA of 83.5 consistent with its sales. It is worth noting that million; a rise of 19.3%. Margins over sales Power Systems, with an operating result of 49.3 6 million euros, had a 52% share in consolidated at Claus C, for Alstom Power, in Holland; the EBITDA; Industrial Plants and Specialised manufacture of coke drums for Technip-France Services had 20% each, whilst the Manufacturing and a major extension of the Ferrominera Orinoco segment which represents 11% of income, had contract being carried in Venezuela. On the an 8% share in the total EBITDA. national market of note are two large liquefied natural gas tanks of 150,000 m3 capacity each In short, Duro Felguera has maintained notable for the Regasification Plant at El Musel (Gijón). growth rate figures in sharp contrast to the general trends of the economy, both the Spanish Our vision of the company has not changed in and international. the last few years meaning that we have been able to face this crisis with certain calm. In the But nothing of what has been said up to now sector where we operate, companies need to would be especially satisfying if this were due be forearmed in order to successfully confront to special circumstances or if it were any economic crisis, in the sense that business unsustainable. Yet the high order intakes over plans require a certain amount of time to take 2009 and derived from that, the backlog existing hold; something which the market and the at the end of the year, are sufficient reasons to current situation do not allow for. foresee that in spite of the general background And in our case, a decided direction towards of instability, Duro Felguera's business as a the international markets and specialisation in whole will continue to grow at the same levels large project management supported by of the last several years. providing services to industry are the factors that have allowed us to carry on growing despite In fact total order intake of the group doubled the declining economic scenario. last year's. We have closed 2009 with contracts totalling a value of 1,876 million euros which is Thus international sales reached peak levels for a new record figure for the company. the group, similar to the year before, representing 1 Letter from the Chairman & CEO 47% of income for the year and will surely As a consequence, backlog or works pending increase in 2010 and the following years as 90% execution, which is the same thing, at December of order intake in 2009 and 86.5% of backlog 31st was at 2,065 million euros. This contrasts at the end of the year came from markets abroad. once again with last year's 1,110 million and provides us with a reasonable outlook for future Furthermore, these figures confirm what we had income to remain at current levels over the next foreseen on other occasions: we must continue three years. our international expansion as the basic sectors of Spanish industry, power, mining, gas, oil, Furthermore, this backlog consists almost steel, etc., which had always been our main entirely of international projects which are customers, are no longer investing due to the expected to develop satisfactorily as they are downturn of the economy coinciding with an very similar to previous projects carried out by excess of installed capacity, a circumstance the company. Among them worth mentioning which will continue in the next few years. are: 1000 MW Termocentro combined cycle power plant for Electricidad de Caracas; the Having foreseen this occurrence, we have made 1 erection of three HRSGs and auxiliary equipment considerable efforts and strategic decisions in past years to penetrate and establish new Ingeniería Aplicada -E.I.A.XXI, S.A.- with over markets, signing major contracts in Brazil and 30 years experience and 200 professionals India which have allowed our entry into two operating in our business sectors. The aim is emerging economies with major potential for to reinforce the engineering area and in particular growth and which should be an importance to support the companies in the group managing source of business in the future for the group. turnkey projects in the power and industrial To this aim we have set up subsidiaries, opened sectors. sales offices and reached agreements with local partners in both countries to expand more On another subject, the development of Duro rapidly. Felguera on the Stock Market in 2009 was also highly positive, occupying fifth place in Also in Europe, where we have had a notable appreciation on the Spanish market and well presence in the last few years, we will try to above the main reference indexes. Our shares boost business in the United Kingdom in went up by 93.03% closing the year at 7.2 euros. particular where great prospects are to be had Capitalisation of the company reached 734.5 in the power sector and where we have been million euros, 354 million higher than last year, successfull in recent years. nearly double the average of the last six years and more than eight times above 2003. Working along these lines and trying to make the most of complementing traits whether technical, commercial or human, we have reorganised our companies. We have grouped together all the subsidiaries dealing with erection, Our vision of the company has not maintenance and operations into one unit or changed in the last few years segment - Specialised Services - and likewise meaning that we have been able to 7 with the workshops, all of which are located in Asturias, which have become the Manufacturing face this crisis with certain calm Segment.

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