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ANNUAL REPORT 2002 INDEX

Letter from the Chairman 03

Corporate Governance 07

Approval of Proposals by the Board of Directors 13

Financial Information 17

Auditor’s Report 25

Industrial Activity and Strategies 29

Corporate Structure 44

Activities of the Business Lines 47

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LETTER FROM THE CHAIRMAN

Dear Shareholders:

As Chairman of Duro Felguera it is a great satisfaction for me to appear before you once again to inform you of the company’s results, the most relevant events of the last financial year and the outlook 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 business has 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, already announced 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 the last 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 where the 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’s results. This great difference is due to the fact that a large portion of business undertaken by companies 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%, rising from 4.4 million euros in 2001 to 12.3 million in 2002.

ORDER INTAKE & BACKLOG Possibly 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 is also 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 from the 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 expectations and 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 to make a profit, if modestly.

Over 2002, order intake has been orientated in favour of the domestic market mainly due to the 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 more effectively. 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 significant bearing in mind the enormous difficulties that the international markets have gone through, in a climate of industrial, financial and political uncertainty.

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LEADERS IN TURNKEY PROJECTS You 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 in turnkey 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 gas combined cycle power generation plants for our client Endesa, namely Son Reus II and Barranco de Tirajana. Having achieved this objective drives us even more to double our efforts for the future.

STRATEGIC ALLIANCES Last 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, by securing alliances with the most appropriate technological partners in each case. But, this would always be based on the fact that the Duro Felguera name should be sufficiently attractive to the large multinationals in possession of the technology.

Well, the solid performance of Duro Felguera in years past and confirmed throughout 2002, has allowed 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 by stable, long-term alliances with large multinationals thereby complementing our strengths. This has been 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 the English 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 group Mitsubishi Heavy Industries to undertake joint ventures in Europe. This is the first time that the Japanese company creates a joint venture in Europe to open up new markets. Although initially this enterprise is foreseen to market, design and manufacture tunnel boring machines, it will later extend its 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 Pycorsa has meant a significant entrance into the Mexican Oil industry.

A major qualitative leap forward has also been made into the of Petrochemical Product Storage sector, which is carried out by Felguera-IHI. This advance opens up improved perspectives for the future 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, the significant achievements in construction of cryogenic storage tanks have consolidated Duro Felguera’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 to further penetrate into various markets. Even more so when you consider that these alliances are established 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’s Strategy Scheme to reinforce engineering and manufacturing capacity of capital goods and turnkey plants have been covered. Duro Felguera is currently focused towards power systems, petrochemi- cal, infrastructure, engineering, erection and start-up of industrial installations.

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| LETTER FROM THE CHAIRMAN

INVESTMENTS Another 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 same time 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 been allocated to increase communication capacity, to make Duro Felguera known both internally and externally 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 the methods 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 wishes to 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 that is periodically sent to the Comisión Nacional del Mercado de Valores (CNMV).

HUMAN RESOURCES In 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 exception of the conflicts which arose just before the union elections at Felguera Calderería Pesada and Felguera 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. These have included both occupational and continuous training and are being developed in cooperation with the National Institute for Employment (Instituto Nacional de Empleo), taking place at Duro Felguera Training Centres. Different types of professional courses are offered geared to the needs of the Company’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 Nations Secretary General, Kofi Annan, Duro Felguera expressed its deep interest in adopting, supporting and promoting within its area of influence the fundamental values in the fields of Human Rights, Labour Relations and respect for the Environment sponsored by the Global Compact. Duro Felguera has expressed a wish to include the commitment in its objectives to comply faithfully with the nine Fundamental Principles on which the Global Compact stands. The necessary internal measures will be taken to carry this out.

GOOD GOVERNANCE The incorporation of Duro Felguera shareholders onto the Board of Directors representing major companies from diverse sectors within Asturias has aided certain business transactions affording successful cooperation from these incorporations. Following the Code of Good Governance these transactions 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 Conduct to 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 of industrial 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 2000 started in 2002.

The Board of Directors Advisory, Audit and Strategy Committees were set up in the year 2000. It is in 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.

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Subsequently, when the Finance Act (Ley Financiera) of November 2002 came into force, Duro Felguera 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 Code of Governance. In addition, Corporate Management Procedures regulating the Company’s Governing Bodies are to be established, adapted to the obligations and recommendations of the European Community Directives that are or will come into force, as well as the already mentioned Finance Act and other legal requirements within Spanish legislation.

POST FINANCIAL CLOSURE EVENTS Even 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 Participaciones Industriales (SEPI) in which Duro Felguera was requested to study the possibility of acquiring shares in Babcock Borsig España, S.A., a company resulting as the product of the privatisation process of Babcock 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 that once this documentation was examined and the circumstances surrounding the process were taken into account, Duro Felguera’s Board of Directors desisted from acquiring the previously mentioned shares.

We have come a long way since 1994, when I first had the honour of presiding over the Board of Directors of this great Company. There have been several obstacles, some of them quite large. We can now see that the strategic objectives we had at the time were sound, and I am pleased to say that they have been met in their totality. As a consequence, we look to the future with optimism; aware of the efforts that have to be made, but convinced that the Company’s team of people and our approach to 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 utmost appreciation for placing your trust on this Board of Directors and its Chairman. To end, I wish to transmit our optimism for the Company’s future, the Shareholders and Personnel, as well as our commitment to make every effort and sacrifice to achieve our greatest expectations for the future.

Many thanks to you all.

Ramón Colao Caicoya CHAIRMAN

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CORPORATE GOVERNANCE 123456 7/8/03 09:54 Página 8

CORPORATE GOVERNANCE

Duro Felguera, S.A. was set up for an indefinite period of time on 22 April 1900 under the name of Sociedad Metalúrgica Duro Felguera, S.A. On 25th July 1991 the company 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 awarded on 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 various divisions via which it carried out the company’s multiple business activities into legally independent companies, reordering the human, material and financial resources 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 Line operating as Duro Felguera, S.A. under the umbrella of the Parent Company; Duro Felguera Plantas Industriales, S.A., Duro Felguera Equipos y Montajes, S.A., both of which have the same Board of Directors as the Parent Company; the Mining and Handling Line and the Storage Line.

As it has always done, the Parent Company continues to coordinate and support the financial activities of its subsidiaries both in their relationships with the credit entities 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 as well.

Duro Felguera, S.A shareholders’ equity as at 31 December 2002 consisted of 14.877.421 fully subscribed and paid registered shares represented by account entries, 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 Nacional del Mercado de Valores (CNMV), the following parties hold a substantial interest of 3% or more in the Company shareholders’ equity:

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.

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| CORPORATE GOVERNANCE

| BOARD OF DIRECTORS

(From left to right) Standing Mr. 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 Seated Mr. 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 the Company’s Board of Directors, and thus TSK Electrónica y Electricidad, S.A., is represented on the Board as well as PHB Weserhütte, S.A., being a company controlled by the former. In the same manner IMASA, Ingeniería Montajes y Construcciones, 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 Carlos Torres Inclán and Mr. José Manuel Cuesta Viña are members of the group of management holding tied shares.

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 of August when it does not usually meet, and twice in February to examine and approve the interim accounts and the current year’s budget. A further five meetings have also been held to deal with urgent matters.

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CORPORATE GOVERNANCE RULES

Since February 1999 Duro Felguera, S.A. has an Internal Code of Good Governance which was drawn up to comply with Article 1 of Royal Decree 629/1993 dated 3 May and with the Comisión Nacional del Mercado de Valores (CNMV) Circulars 12/1998 and 14/1998, relative to management criteria of treasury stock 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 of acceptance, stating its intention to establish and regulate good corporate management to adapt to market demands which it started with the creation of three Committees.

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

| BOARD COMMITTEES

Audit Committee

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

Strategy Committee

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

Advisory Committee

Mr. Florentino Fernández del Valle Chairman T.S.K. Electrónica y Electricidad, S.A. Member. Represented by Mr. Sabino García Vallina Mr. José Manuel Cuesta Viña Member Mr. José Luis García Arias Member IMASA, Ingeniería Montajes y Construcciones, S.A. Member. Represented by Mr. Saturnino Martínez Zapico Mr. Guillermo Quirós Pintado Secretary

All of the Board Committees met periodically throughout 2002. A Committee meeting was held every 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 good corporate governance procedures, which are also to include Internal Code of Governance to regulate the financial relations between the company and some of the shareholders who are present on the Board. On the same vein, it also intends to commit itself to updating these Internal Codes and to inform 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 of Shareholders, a modification to be incorporated in the Company’s statutes, i.e. the existence of an Audit Committee. Also to be approved are the updated Code of Governance.

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| CORPORATE GOVERNANCE

| REMUNERATION OF BOARD MEMBERS

Each of the Board directors receives 601 euros before taxes for expenses to attend the meetings held by the Board. Once a year and after the company’s accounts have been approved, each director receives a statutory remuneration, 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 are in turn employed by the Company, has also been included. Consequently, the financial report shows a total amount received by the Board directors of 1,016,368 euros before taxes by the end of the financial year.

| ECONOMIC RELATIONS WITH THE SHAREHOLDERS PRESENT IN THE COMPANY BOARD

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 they did 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:

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

| AUDITORS AND THEIR REMUNERATION

The Company’s accounts were audited in 2002 by Pricewaterhouse Coopers, Auditores, S.L., who were appointed 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:

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

| COST OF ORGANISING THE ANNUAL GENERAL MEETING

The Annual General Meeting was published in the Official Bulletin of the Register of Companies (Boletín Oficial del Registro Mercantil) and in the Asturias newspapers; La Nueva España, La Voz de Asturias and El Comercio, 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 as the attentions bestowed on the Shareholders that attended the meeting came to a total of 20,865.40 euros.

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

Management Committe

Mr. Florentino Fernández del Valle Director. General Manager Mr. Mariano Blanc Díaz Finance Manager Mr. Eduardo del Valle Dago Organisation & Human Resources Manager Mr. Javier González Canga Development & Marketing Manager Mr. Guillermo Quirós Pintado General Secretary and Legal Manager Mr. José Manuel Cuesta Viña Duro Felguera Plantas Industriales, S.A. General Manager Mr. Pedro García Fernández Duro Felguera Equipos y Montajes, S.A. General Manager Mr. Félix García Valdés Mining and Handling General Manager Mr. Juan Carlos Torres Inclán Power Systems General Manager Mr. 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 Manager Mr. Gaspar Antuña Suárez Management Control Manager

Image Committee

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

Risk Committee

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

Project Management Control Committee

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

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APPROVAL OF PROPOSALS BY THE BOARD OF DIRECTORS 123456 7/8/03 09:54 Página 14

APPROVAL OF PROPOSALS BY THE BOARD OF DIRECTORS

Report submitted by Mr. Guillermo Quirós Pintado, Secretary of the Board of Directors, stating that the Members of the Board signed hereto at the end of the meeting held on 27 March 2003 in approval of the 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 by The Chairman and includes a page signed by the Directors stating their name, surname and office after their signatures which I declare are bona fide.

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

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

| 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 of dividends (year profits plus the previous year’s retained earnings) as follows:

To Legal Reserve 506 To Voluntary Reserve 586 Retained Earnings 298 Dividends 3,719 (in thousand euros)

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.

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| APPROVAL OF PROPOSALS BY THE BOARD OF DIRECTORS

| AGREEMENTS PROPOSED BY THE BOARD OF DIRECTORS TO THE SHAREHOLDERS GENERAL MEETING

The Company Board Meeting held on 27 March 2003 and attended by the Legal Advisor, agreed to convene the Annual General Meeting of Shareholders at 12:00 on 25 June 2003 to be held at the Auditorio Príncipe Felipe in Oviedo. If the legally required quorum was not met, then the meeting would 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

FIRST | Analysis and approval, if such is the case, of the management report and annual accounts which include Balance Sheet, Profit and Loss Account and Financial Report for Duro Felguera Sociedad Anónima and Duro Felguera, Sociedad Anónima and its dependent companies (Consolidated) for the fiscal year 2002, as well as the proposed application of profits for the year and the General Meeting attendance bonus.

SECOND | Approval of the Board of Directors Management over 2002.

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

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

FIFTH | Appointment or re-election of the Auditors as per Art. 204 of the Revised Company Law.

SIXTH | Delegation of authority indistinctly in favour of the Chairman, the Secretary of the Board of Directors or his vice-secretary to legalise and execute the agreements reached, to file the Annual Accounts and the Auditors Report with the necessary authorities.

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FINANCIAL INFORMATION 123456 7/8/03 09:54 Página 18

RESULTS

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| FINANCIAL INFORMATION

The 2002 financial year has been marked by yet another increase in business turnover which mainly corresponds 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 a chloride 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 agreement reached with this multinational.

The Profit from Ordinary Activities amply surpasses those of 2001, going from 4,364 thousand euros to 12,261 thousand euros. The Consolidated Profit before taxes however, is only slightly improved. This is due to 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.

CONSOLIDATED Year Year Year Year In Thousand Euros 1999 2000 2001 2002 Net Turnover 183,763 227,970 356,476 463,996 Profit from Ordinary Activities 828 9,432 4,364 12,261 Profit before taxes 6,631 11,021 8,193 8,588 Profit after taxes 4,903 8,524 5,859 6,320 Profit attributable to minority shareholders 419 1,124 750 627 Profit attributed to the Parent Company 4,485 7,400 5,109 5,693

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

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CONSOLIDATED BALANCE SHEETS

SUMMARY Data expressed in thousand ¤ ASSETS 19961997 1998 1999 2000 2001 2002 Formation expenses 247.77 152.57 336.46 294.06 612.68 453.35 351.39 Intangible Fixed Assets 1,620.18 1,857.40 1,370.55 1,394.73 1,421.97 1,501.58 10,276.72 Tangible Fixed Assets 31,933.70 33,731.98 35,259.69 40,724.72 47,862.13 53,102.19 41,662.35 Investments 19,826.69 6,376.32 12,393.67 15,228.26 13,851.75 15,664.75 10,904.86 Long-term Debt 7,172.24 5,440.86 2,427.30 8,548.85 2,038.06 0.00 0.00 TOTAL ASSETS 60,800.58 47,559.13 51,787.67 66,190.62 65,786.59 70,721.87 63,195.32 Goodwill on Consolidation 10.70 4.75 0.09 0.07 104.86 87.74 629.74 Deferred expenses 94.72 11.06 9.72 4.03 3.19 1.12 407.90 Inventories 32,290.69 25,640.95 24,047.59 19,802.87 23,412.57 46,175.96 17,899.86 Debtors 77,052.40 96,478.19 89,225.04 84,215.98 140,970.24 122,137.84 257,402.86 Current Asset Investments 45,437.64 108,315.58 78,225.93 52,890.44 17,273.88 36,436.72 25,745.10 Cash at bank and in hand 8,189.55 12,024.37 9,322.01 6,810.84 7,627.54 12,837.67 9,657.60 Prepayments and accrued income 639.94 207.37 231.51 207.31 231.62 58.49 200.81 TOTAL CURRENT ASSETS 163,610.22 242,666.46 201,052.08 163,927.44 189,515.85 217,646.68 310,906.23 TOTAL ASSETS 224,516.22 290,241.40 252,849.56 230,122.16 255,410.49 288,457.41 375,139.19

LIABILITIES 19961997 1998 1999 2000 2001 2002 Share capital 36,497.65 36,497.65 44,283.55 44,632.26 44,632.26 44,632.26 44,632.26 Reserves 1,015.41 3,490.31 10,388.90 14,397.12 15,008.97 16,974.78 16,879.99 Consolidated Profit and Loss 2,998.78 8,046.73 7,770.49 4,903.32 8,524.22 5,859.56 6,319.21 Minority Profit and Loss -576.70 -272.35 -316.04 -418.79 -1,124.52 -750.25 -626.70 Payable Dividend 0.00 -1,459.91 0.00 0.00 0.00 0.00 0.00 CAPITAL AND RESERVES 39,935.14 46,302.43 62,126.90 63,513.91 67,040.93 66,716.35 67,204.76 Minority shareholders 1,465.41 1,737.85 2,053.89 2,472.68 3,755.41 3,989.38 4,878.03 Negative difference on consolidation 116.18 114.25 109.86 109.86 110.03 0.99 0.95 Deferred income 817.08 948.58 5,334.14 6,628.04 6,041.66 6,890.86 7,198.40 Provisions for liabilities and charges 34,508.69 34,946.46 48,965.20 13,457.50 7,255.81 6,863.14 12,171.67 Creditors: amounts falling due after more than one year 30,460.45 57,663.35 23,951.21 11,282.74 11,820.49 12,005.77 48,637.64 Issue of Bonds 24,040.48 1,552.65 632.62 632.62 0.00 0.00 Bank loans 27,545.17 31,992.99 21,391.07 9,731.27 10,389.57 11,956.13 48,608.79 Other Creditors 2,915.28 1,629.88 1,007.49 918.85 798.30 49.64 28.85 Creditors: amounts falling due in less than one year 117,213.27 148,528.48 110,308.36 132,657.43 159,386.16 191,990.92 235,047.74 Bank loans and overdrafts 28,486.75 58,608.78 27,127.75 33,362.32 25,718.08 27,483.52 54,099.80 Trade Creditors 75,206.39 71,569.15 65,697.66 56,945.07 101,657.25 141,768.03 149,675.55 Other Creditors 10,108.55 11,460.72 12,686.18 38,423.30 22,436.64 18,271.34 25,508.04 Provisions for liabilities and charges and other trade provisions 3,178.77 6,343.82 4,665.87 3,872.34 9,531.88 4,420.66 5,745.71 Accruals and deferred income 232.81 546.01 130.90 54.40 42.31 47.37 18.64 TOTAL LIABILITIES 224,516.22 290,241.40 252,849.56 230,122.16 255,410.49 288,457.41 375,139.19

20 123456 7/8/03 09:54 Página 21

| FINANCIAL INFORMATION

CONSOLIDATED PROFIT AND LOSS ACCOUNTS

SUMMARY Data expressed in thousand ¤ 19961997 1998 1999 2000 2001 2002 Mean Sales National 139,482.72 110,387.48 95,165.97 105,687.47 159,946.94 265,882.48 309,821.56 Mean Sales Exports 78,474.14 150,241.94 104,628.03 78,075.15 68,022.55 90,593.61 154,173.00 TOTAL SALES 217,956.86 260,629.42 199,794.00 183,762.62 227,969.49 356,476.09 463,995.56 Reduction in inventories of finished goods and work in progress 9,384.65 -7,326.42 3,051.61 -5,904.10 4,709.99 22,641.53 -30,918.40 Work for Fixed Assets 601.22 959.82 1,336.04 993.35 5,225.61 4,057.42 1,641.97 Other Operating Revenue 1,179.77 2,155.44 868.24 1,247.05 2,224.12 3,046.07 884.38 Production 229,122.50 256,418.26 205,049.89 180,098.92 240,129.21 386,221.11 435,603.51 Raw materials and consumables 131,939.15 154,991.91 106,419.01 85,645.69 124,844.70 234,943.46 257,818.77 Added Value 97,183.35 101,426.35 98,630.88 94,453.23 115,284.51 151,277.65 177,784.74 Staff Costs 54,262.39 55,786.59 63,910.17 63,456.47 71,335.74 105,689.16 106,703.75 Other operating charges 28,212.21 29,820.12 27,973.38 23,802.30 24,720.85 35,253.45 44,267.78 EBITDA 14,708.75 15,819.64 6,747.33 7,194.46 19,227.92 10,335.04 26,813.21 Fixed Asset Depreciation 2,708.44 2,960.63 2,800.75 2,796.82 3,408.83 3,970.04 4,986.44 Changes in Trade Provisions 97.54 3,482.00 -819.76 -207.22 1,966.04 659.22 3,961.44 Operating Profit 11,902.77 9,377.01 4,766.34 4,604.86 13,853.05 5,705.78 17,865.33 Financial Revenue 4,952.63 9,413.69 9,862.09 7,313.24 3,262.88 2,740.02 4,649.07 Financial Expense 11,308.48 11,387.68 12,857.01 11,077.46 7,639.19 4,061.81 10,316.64 Consolidated share in company losses 1,904.38 1,853.09 15.80 0.07 0.06 23.10 136.28 Good will arising on consolidation written off 168.01 25.91 52.77 13.08 44.46 43.60 71.74 Profit from ordinary activities 7,283.29 9,230.20 1,734.45 827.63 9,432.34 4,363.49 12,262.30 Extraordinary Income 1,425.58 4,062.63 3,629.50 8,696.51 2,598.69 7,189.91 3,856.17 Extraordinary Expense 4,917.63 3,651.18 2,180.12 2,893.40 1,009.66 3,360.07 7,530.78 Consolidated profit before taxes 3,791.24 9,641.65 3,183.83 6,630.74 11,021.37 8,193.33 8,587.69 Company Tax 792.46 1,594.92 -4,586.66 1,727.42 2,497.15 2,333.77 2,268.48 Profit for the year 2,998.78 8,046.73 7,770.49 4,903.32 8,524.22 5,859.56 6,319.21 Profit attributable to minority shareholders 576.70 272.35 316.04 418.79 1,124.52 750.25 626.70 Profit for the year attributed to the Parent company 2,422.08 7,774.38 7,454.45 4,484.53 7,399.70 5,109.31 5,692.51

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STOCK EXCHANGE INFORMATION

DURO FELGUERA (MDF.MC) 1996 1997 1998 1999 2000 2001 2002 Quotation at 31 December 7.96 9.80 7.15 6.90 5.85 6.80 5.60 Year’s High 8.26 14.00 13.04 8.29 8.34 8.10 7.6 Year’s Low 2.58 6.49 5.53 6.25 5.37 5.10 4.56 Year Average 3.99 10.16 9.50 7.11 6.65 7.14 6.49 Average Market (million ¤) 48.47 123.44 115.38 105.78 98.93 106.22 96.55 Trading days 253 252 248 250 249 249 250 Quotation Frequency 100 % 100 % 100 % 100 % 100 % 100 % 100 % Average Volume (n. of shares) 72,406 138,459 102,258 45,159 52,369 24,534 8,050 Profitability per dividend - - 3.36% 3.91% 4.62% 5.44% 4.82% (paid dividend of the year / closing quotation)

During the 2002 trading year, figures have been whilst the Index marked a fall of 23.1%, Duro unusually low. Some of the significant factors that Felguera only decreased by 17.65%. If we look at we believe have contributed to share behaviour the PER, the market average was 16.17 whilst are: the size of the company, the holding of subs- Duro Felguera reached 16.47. tantial stakes in the company which have remai- ned stable throughout the past few years and the As is becoming usual over the last few years, stock market environment in general. during the early months of 2003, the quotation experienced a sharp rise when approaching the We can safely say that 2002 was not a good year Annual General Meeting date and the average for share investment and, as was to be expected, quote value during the first week of May 2003 our values did not escape the general tendencies reached 6.6 euros per share. of the markets. However, the behaviour of Duro Felguera shares in comparison with the Madrid Stock Exchange General Index is worth noting:

DURO FELGUERA 90 periods moving average Madrid Stock Exchange Gen. Index 8.0

7.5

7.0

6.5

6.0

5.5

5.0

4.5

4.0

Volume (thousands) 100 90 80 70 60 50 40 30 200 10 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 22 123456 7/8/03 09:54 Página 23

| FINANCIAL INFORMATION PERFORMANCE RECORD Data expressed in million euros 35.00 11.00%

10.00% 30.00 9.00% 8.01% 26.81 25.00 8.00%

6.42% 7.00% 6.17% 19.23 20.00 6.00% 15.82 6.16% 14.71 5.00% 15.00 3.99% 10.34 4.00% 3.29% 9.43 12.26 9.23 10.00 3.00% 7.28 7.77 2.68% 7.19 5.86 8.05 8.52 6.32 6.75 2.00% 5.00 1.73 1.00% 3.00 4.90 4.36 0.83 0.00 0.00%

19961997 1998 1999 2000 2001 2002 Profits from Ordinary Activities EBITDA Fiscal Year Profits EBIDTA (% s/Production)

LIQUID ASSETS & BANKING DEBTS Data expressed in million euros 140.00

120.34 120.00 102.71

100.00 90.60 87.55

80.00

56.03 59.70 60.00 49.27 43.09 53.63 36.11 35.40 40.00 48.52 39.44 20.00 24.90

0.00 19961997 1998 1999 2000 2001 2002 Current asset investments + Treasury Banking Debt

WORKING CAPITAL & NET BANKING DEBT Data expressed in million euros

100.00 94.14 90.74

80.00 75.86

60.00 67.31 46.40

40.00 30.13 25.66 31.27 20.00 11.21 2.40 0.00

-20.00 -16.61 -9.83 -29.74 -39.03 -40.00

-60.00

19961997 1998 1999 2000 2001 2002 Working Capital Net Banking Debt

PRODUCTION VS. PERSONNEL COSTS Data expressed in million euros

500.00 70.00% 435.60 450.00 65.00%

400.00 386.22 60.00%

350.00 55.00%

300.00 50.00% 256.42 240.13 250.00 45.00% 205.05 180.10 200.00 229.12 40.00%

150,00 35.00% 31.17% 105.69 106.70 35.23% 29.71% 100.00 30.00% 54.26 55.79 24.50% 50.00 63.91 63.46 71.34 27.36% 25.00% 23.68% 21.76% 0.00 20.00% 19961997 1998 1999 2000 2001 2002 Production Personal Costs % Personal Costs Vs Production

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AUDITOR’S REPORT 123456 7/8/03 09:55 Página 26

AUDITOR’S REPORT

26 123456 7/8/03 09:55 Página 27

| AUDITORS REPORT

27 123456 7/8/03 09:55 Página 28 123456 7/8/03 09:55 Página 29

INDUSTRIAL ACTIVITES & STRATEGIES 123456 7/8/03 09:55 Página 30

INDUSTRIAL ACTIVITIES

| COMMERCIAL ACTIVITY

EVOLUTION OF ORDER INTAKE

(in millions euros) 1999 2000 2001 2002 Total Order Intake 386.49 300.37 335.99 558.17 Domestic 295.40 244.07 149.00 473.08 International 91.09 56.30 186.99 85.09

Order intake in 2002 surpassed predictions by On the other hand, Duro Felguera, S.A. has not almost 75 % and, as may be observed in the table been exempt from suffering, in part, the grave con- attached, by over 66% with respect to 2001. This, sequences of the international economic situation. among other reasons is due to, the materialisation This has led on the one hand, to having to support of contracts which were previously considered as considerable delays in signing contracts that were intentional and to the slight advance made in the ready to be consolidated, and on the other, having to power systems sector in which two important com- wait for those projects which suffered delays in their bined cycle projects have been awarded. launch, in the hope that this is only temporary. Notwithstanding, our experience and flexibility has allowed us to sustain our presence and secure our future in foreign markets, whilst at the same time reinforcing our capacity to take on contracts on the domestic market and in specialised sectors, as well as stabilising our leadership.

EVOLUTION By Business Lines, order intake during 2002 has OF ORDER INTAKE (in millions euros) been as follows:

600.00 The Power Systems Line, which since 2001 ope- rates as a department within the parent company, 550.00 has seen its leadership materialise after surpassing

558.17 the figure of 7.600 MW for constructed gas power 500.00 generation plants as a result of two considerable turnkey contracts in Spain; Barranco de Tirajana 450.00 Combined Cycle Plant on the Canary Islands and Phase II of Son Reus. The Power Systems 386.49 400.00 Department is on the sidelines and in an excellent position to deal with those projects that are pending

350.00 335.99 their launch, both abroad and in Spain. They are mindful of the opportunities in the European power 300.37 300.00 systems sector resulting in the necessary revamping of currently operating power generation plants, and for which this Department is fully experienced and 250.00 offers total guarantees. 203.10

200.00 185.50 Mompresa maintains its traditional business in the assembly, erection, maintenance and overhaul of 150.00 generation units made up fundamentally of steam and gas turbines operating in power generation 100.00 plants for the most relevant companies in the sector. Its almost permanent presence in these works and 50.00 the constant effort made in re-training its techni- cians and operators has afforded the confidence of 0.00 technological companies and clients, which is also a 1997 1998 1999 2000 2001 2002

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| INDUSTRIAL ACTIVITES & STRATEGIES

% ORDER INTAKE PER BUSINESS LINES

59% POWER SYSTEMS

MEXICO 3%

STORAGE 8% leaders in the logistic systems and automated ware- house storage sector.

In the Mining and Handling area, also within Duro 22% Felguera Plantas Industriales, S.A., the efforts made EQUIPMENT & ERECTION to penetrate the North American market were 5% MINING rewarded. Felguera Parques y Minas, S.A. obtained 3% & HANDLING INDUSTRIAL a contract for the Port Management at Long Beach, PLANTS which consisted of the design, construction, and supply of ship loading equipment for bulk cargo. On the domestic market, contracts similarly worth fea- positive factor in consolidating its presence in new pro- turing include a circular mineral stockyard and ship- jects. Fruit of this confidence by equipment manufactu- loader for HOLCIM, in Almería and the services and rers has been the award of contracts in 2002 by new supply contract for “Medusa Phase I”, project belon- clients, and in European countries where new markets ging to UNION FENOSA, in La Coruña. opened up to them thereby offering new expectations. During the business year, the Crane Department Despite the recession suffered in the steelworks was awarded a contract for two overhead cranes by industry, the experience and knowledge of Duro VA Stahl-Linz, in Austria. Felguera Plantas Industriales, S.A. has aided them to win an engineering and construction contract for a gas- Once again, the Equipment and Erection Business holder for USINOR in Dunkerque. They have also been Line has managed to close the business year with an awarded the execution of a contract for the SOLAC excellent order intake, improving by more than 17 % on Atlantic installations in Dunkerque, consisting of engine- the figure forecasted for 2002. The subsidiaries ering upgrading, development and manufacture of what making up this line of business have made steady can be considered one of the largest “torpedo wagons” efforts resulting in achieving their objectives of order for transporting pig-iron. These have an effective load intake for the year by a wide margin, and consolidating capacity of 450 Tn and are more than 35 m in length ove- their presence in some of the new markets where they rall, conferring experience and expectations for similar had established strategies, such as in heavy machi- projects in the future. For the steel rolling mill belonging nery for road infrastructures, railways, energy, large to Aceralia, Avilés, they were awarded the turnkey project laboratories, etc. to modify the Temper III mill. Felguera Melt, S.A. has surpassed order intake In the civil works for large infrastructures sector, in expectations by almost 20% for 2002, continuing its 2002 Duro Felguera Plantas Industriales, S.A. was awar- trajectory of securing technology and market expan- ded the engineering and supply of a complete Back Up sion, sustained by its product developments in rail- for a Tunnel Boring Machine, a TBM, by MITSUBISHI way track materials and components for wind power HEAVY INDUSTRIES. generators. The company maintains its position as one of the leading suppliers of these products in The Logistic Systems Unit operating within Duro Europe. Felguera Plantas Industriales, S.A., has managed to gain three substantial contracts for Nireo Corp. General of Felguera Construcciones Mecánicas, S.A., has Toledo, Izar in Ferrol and Sika in Madrid, respectively, based good part of its order intake success on the with which this unit consolidates its position among the aforementioned new markets for Capital Goods in

31 123456 7/8/03 09:55 Página 32

DISTRIBUTION the Public Works sector. Specifically, in the manu- DISTRIBUTION OF INTERNATIONAL BUSINESS facture of tunnel boring machines, it was awarded a OF INTERNATIONAL BUSINESS PER BUSINESS LINES contract to manufacture two machines by MITSU- PER BUSINESS LINES BISHI HEAVY INDUSTRIES, destined to bore tunnels 65% on the new high-speed railway lines in Spain. This EQUIPMENT & ERECTION experience not only goes to demonstrate once again the capabilities of Felguera Construcciones Mecánicas, but also maintains the confidence placed by the principal technological companies in the sec- tor with new industrial and commercial projects in their sights. Business in the heat recovery steam generator sector, in the large European laboratories and hydraulic generation sectors has continued to be MEXICO 20% a keynote for this subsidiary. 13% MINING & HANDLING 2% POWER SYSTEMS

EVOLUTION OF ORDER INTAKE PER BUSINESS LINES AS A % OVER THE WHOLE GROUP

Felguera Calderería Pesada, S.A., has achieved 100% good order intake results in 2002 despite a slight 6.9% imbalance in the order intake over the year, which 9.6% may cause irregularities in following business 90% 7.1% periods. It is worth noting however, that over 80% of 5.9% order intake was due to foreign contracts of which those awarded by prestigious engineering and petro- 80% leum product companies stand out. 22.2% Foster Wheeler Ibérica, requested several reac- 70% tors for the Petrox Refinery in Chile and for Bulgaria 40% the equipment required to revamp an FCC was also manufactured. 2.6% 60% 4.8% PDVSA (Venezuela) awarded a contract for an FCC unit and for LINDE in Norway, several Pressure 50% Vessels were manufactured, all of which went over the 25 million euros figure.

40% Técnicas de Entibación, S.A. (Tedesa) responded to its strategies to overcome the business decline in the mining sector and surpassed by 14,6 % its order 29.3% 30% 56.4% intake forecasts for 2002, consolidating its position in sectors of notable growth such as are communica- MEXICO tions and energy. Tedesa has become a major sup- 20% STORAGE plier of aerials and pylons for high voltage transmis- sion lines. In the Public Works sector, there are two EQUIPMENT 1.5% & ERECTION fundamental activities where Tedesa excels. On the INDUSTRIAL one hand is the manufacture of support components 10% PLANTS and formwork for tunnels, and on the other is the 13.7% MINING & HANDLING manufacture of back-up structures for tunnel boring POWER SYSTEMS 0 machines. For the latter, Tedesa carried out a whole 2001 2002

32 123456 7/8/03 09:55 Página 33

| INDUSTRIAL ACTIVITES & STRATEGIES

series of detailed investigations that are now having a EVOLUTION significant bearing in opening up new business opportu- OF ORDER INTAKE VS. PRODUCTION nities for this subsidiary. (Mil. euros) ORDER INTAKE Felguera Montajes y Mantenimiento, S.A. has rein- PRODUCTION forced its growing business in the integral maintenance services sector and has achieved acceptable levels of 600.00

order intake. Given the highly competitive nature of this 558.17 line of business, it is notable that the company has been able to maintain its presence principally in the fields of power systems, petrochemicals, and steelworks. Its 500.00 levels of specialisation and experience have allowed the

company to reorganise and adapt to the immediate 434.89 future. 386.50

400.00 383.20 Felguera-IHI, S.A., has once more amply surpassed its expectations of order intake for the year 2002 with an increase of 79 %, reaffirming its position in the storage 335.99 300.37 sector of Petrochemical products and continuing to acti- vely cooperate in the modernisation of major refineries 300.00 and storage plants in Europe and further afield. 239.64

The most noteworthy contracts in 2002 among others 200.00 related to its field, are those signed for Libya, consisting 179.29 of the manufacture of a process tank to the sum of 1.7 million euros, or for Spain, for the execution of two 5,000 m3 tanks and especially a 100,000 m3 capacity tank for over 6.9 million euros. 100.00

Due to its technical complexity, a special mention should be made to the contract for the design and cons- truction of a total retention tank to store liquefied gas at 0.00 –170ºC at a regasification plant belonging to ENAGAS. 1999 2000 2001 2002

Apart from the internal and external piping and PRODUCTION IN 2002 accessories, the tank was manufactured in reinfor- PER BUSINESS LINES ced concrete with internals made of 9% nickel-steel alloy. 4% F-IHI EQUIPMENT 25% Duro Felguera México, S.A. de C.V., continues to & ERECTION 43% POWER SYSTEMS lead the way in a sector as relevant as it is the cons- truction and erection of power generation plants in Mexico whilst at the same time opening up new busi- ness opportunities in other sectors, e.g. the MINING Petrochemical Industry. & HANDLING 4% Last year order intakes at Duro Felguera México, 14% S.A. de C.V. continued to increase. The new con- INDUSTRIAL tracts for the PEMEX Chloride Products Plant and PLANTS 10% the SOLUZIONA construction and erection contract INTERNATIONAL for the gas-fired power plant in Naco Nogales were among its most notable businesses in 2002.

33 123456 7/8/03 09:55 Página 34

Finally, worth mentioning as proof of the con- CONSOLIDATED solidation of Duro Felguera, S.A. in Mexico, is PRODUCTION FIGURES (Mil. euros) the investment in a 51% stake of the Mexican engineering company PYCORSA. This enginee- 500.00 ring company has been working since 1947 in both the public and private sectors of the energy, petrochemical, gas, steelwork, and 450.00 434.89 mining businesses. It has a solid organisation,

383.20 technical and human resources and a notable 400.00 presence in the previously mentioned industrial sectors in Mexico. Pycorsa’s contribution is cle- 350.00 arly positive for the already existing organisation of Duro Felguera, S.A. in Mexico. By adding 300.00 engineering to support services in executing and managing turnkey projects, this undoubtedly 250.00 239.64 expands possibilities and fields of action, not 205.00 only for the organisation in Mexico, but also for 200.00 179.29 the Subsidiaries in Spain, as it has been the case in the PEMEX project for the Pajaritos refi- 150.00 nery.

100.00

50.00

0.00 1998 1999 2000 2001 2002

% SPREAD OF ORDER INTAKE IN 2002 OUTSIDE SPAIN

EU 29.4% NORWAY 2.6% AZERBAIJAN 9.4% U.S.A. 11.2%

JAPAN 12.2%

MEXICO 21.7%

AFRICA 0.5%

SOUTH AMERICA 13%

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| INDUSTRIAL ACTIVITES & STRATEGIES

STRATEGIC MEASURES

The Board of Directors of Duro Felguera, S.A., conscious of the changes produced in the business environment 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 Duro Felguera, S.A., defined the Strategy Guidelines. These are sufficiently wide to cover the diverse aspects of the market and the general objectives that the Scheme had to contemplate. By defining objectives, tracing models of organisation and management, attending to the market environment and its development, trying to assure stability of business margins and income, focusing it towards customer 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 2002-2004 Scheme are:

| With reference to the various businesses, to bear out vocation and know how in Plant turnkey construction, supported by equipment manufacture and the provision of services, based on progressive specialisation and concentration on these matters, making the most of the advantages provided by the current markets and diver- sifying the business within these markets or in those which are closely related.

| To fix increase in value for the shareholder as main objective by sustaining profit, continuing with a balan- ced policy of self-financing along with stable dividends and referenced on the capital markets. Contributing to all of this are the various Business Units with their know 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, making provisions for business cycles to be covered by growth and 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 value for the customer.

| To further focus R&D activities towards improving pro- duction processes and project execution, development of management expertise, creation of new products or improvement of already existing ones, and optimising the use of applied resources.

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ORGANIZATION & HUMAN RESOURCES

As from 2002, DURO FELGUERA, S.A. is committed to managing its group of companies as an ethical and socially responsible organisa- tion by subscribing to the United Nations Global Compact.

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

The Global Compact is not a regulatory code of conduct nor does it have legal force. It is a voluntary initiative that provides a basis for pro- moting social responsibility from committed and creative corporate management.

C.T.LADA (Asturias 1942)

It is based on nine basic principles to reach the objective “a global compact of shared values 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 effective recognition 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 but which acquires greater bearing when it is made public and ratified on a global scale in this third millennium.

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

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| INDUSTRIAL ACTIVITES & STRATEGIES

LABOUR RELATIONS

The year 2002 was marked by an intensive collective 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 Felguera Construcciones Mecánicas, S.A., as well as an Earnings Agreement in Felguera Montajes y Mantenimiento, S.A.

These collective bargaining agreements will be in force until 31.12.2004 (except for the Felguera Montajes y Mantenimiento, S.A. agre- ement which will be valid until 31.12.2002 and the companies that have subscribed to the Metal Workers agreement which must be negotiated in 2003).

It is worth pointing out that within the Duro Felguera Collective Agreements the denomi- C.T.LADA (Asturias 2002) nated replacement contracts are gaining more ground and linked to the strategy plan for staff planning.

These courses are set out in the Annual Cooperation Agreements TRAINING that DURO FELGUERA subscribes to on a national scale with the General Management of the Instituto Nacional de Empleo. Professional Training: The Duro Felguera training programs, Continuous Training which have been in effect in the last few years The Continuous Training Programme developed throughout 2002 within the Vocational Training area, are carried has as main objective to improve personnel expertise in order to out at five Training Centres certified by the subsequently improve competitiveness and production at the diffe- Instituto Nacional de Empleo, INEM (National rent business units on a national and international level. Therefore, Employment Service). Courses held are aimed Duro Felguera, S.A. defines a training process that is geared to at the unemployed and fall within the frame- achieve, via a learning process: work of the Plan F.I.P, i.e. Plan de Formación e Inserción Profesional (Professional Training & | Multi-purpose, Integration Scheme) and are financed by the | Improvement in quality, Instituto Nacional de Empleo and by the | Innovation in procedures, techniques and technologies, and European Social Fund. | Diversification of professional scopes

Of the five Training Centres, two are in The 2002 Training Programme includes the following areas of Langreo, two in Gijón and the other (created in priority: 2002) is in the central area of Asturias, on the Silvota Industrial Estate in Llanera. | Graduate Training. | Labour Health & Safety. The centres are managed and coordinated | Quality and Environment. by company technicians and specialist courses | Computing. are held on the following: boiler making, wel- | Technical and technological areas. ding, fitting, machine tools with numerical con- trol, smelting and insulation processes. The Therefore, the Continuous Training Programme for 2002 carried alumni receive practical training and theory out a total of 82 training courses over 34,000 training hours and in from DURO FELGUERA professionals. which over 1,300 workers participated.

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CORPORATE COMMUNITY

In observance of the principles of the ethical commitment made by DURO FELGUERA, S.A., in subscribing to the Global Compact in 2002, the Annual Duro Felguera Prize was set up for “Duro Felguera Employee of the Year”. The objective is to acknowledge those workers who have stood out during their career, in a single, notable act or for excellence in human, ethical and professional values orientated towards improving the working environment, their surroundings and Company progress.

The first prize last year was awarded to Mr. Fernando Argüelles Pando, member of staff at Felguera Montajes y Mantenimiento, S.A., whose professionalism, constant research, creativity, dedication and humanity have been, among others, the values praised by more that 250 of his colleagues, and whose signatures came from all over Spain to second his candidature for this prize. The JURY, made up of employees from the various subsidiaries, in turn acknowledged these values and on 11 December 2002 they decided to award him with the Employee of the Year Prize for 2002.

The prize was given in December at a cere- mony in which the Gold Awards for Service were also presented. These went to Mr. José Ramón Gutiérrez Ceñera (Felguera Calderería Pesada, S.A.) and Mr. Pedro Manuel Antuña Suárez (Felguera Construcciones Mecánicas, S.A.). Also presented were the Prizes for the II ANNUAL PRIZE FOR SPECIALISED PUBLICATIONS. The first 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. Montserrat Santamarina Menéndez (Duro Felguera, S.A.) for her work titled “¿Hacia dónde camina la evalua- ción de la formación?” (Where is training eva- luation headed?), published in the magazine “Capital Humano”.

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| INDUSTRIAL ACTIVITES & STRATEGIES

ORGANISATION AND INFORMATION SYSTEMS

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

Advisory and Development Area

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

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

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

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

| Implementation of the new corporate reporting tool ACTUATE.

Systems, Networks and Communications Area

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

| Implementation of Corporate Antivirus.

| Implementation of the “Stonegate” firewall, which allows total management of resources and safety bet- ween the Corporate Network and Internet. This also affords VPN (access to the Corporate Network via Internet), Multilink (redundancy Internet line) and load balance.

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

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Logistics, Micro computing DISTRIBUTION OF THE WORKFORCE and New Products Area BY PROFESSIONAL GROUPS

| Process and implement corporate security The average number of staff at Duro Felguera, S.A., protocols. during 2002 including subsidiaries and companies with majority share interest amounted to 3.276 employees. | Software and hardware standardisation (S.O., The following graph shows the distribution of the work- office tools, equipment). Included migration force per professional groups, by categories as they exist to Server 2000 for NT servers and installation in the industrial group. The denomination “Technicians” of Windows and Office 2000 as standard soft- groups higher, medium and lower qualified technical ware in Duro Felguera. With reference to staff. “Clerical” groups administration personnel and hardware, this was updated. other subordinate staff. “Workers” groups the various skilled and non-skilled staff members. | In order to carry out the previous actions, an Enterprise Agreement was negotiated with Microsoft, for all the company’s licenses.

TECHNICIANS 24.10% PREVENTION OF OCCUPATIONAL HAZARDS

A most significant reduction in work accidents was achieved in 2002, resulting from the Prevention and Safety and Health policies established by DURO WORKERS FELGUERA based on four priority areas of action: 70.47% 5.43% analysis of accidents/incidents, application of CLERICAL STAFF corrective measures, making staffing and material improvements and annual continuous training pro- grammes.

In 2002, accidents causing labour layoff fell by 20,6% with respect to the previous year. DISTRIBUTION OF STAFF OVER THE BUSINESS LINES During 2002, DURO FELGUERA, S.A. has signed an external Health at Work agreement (Mutual The following graph shows the distribution of average Health Service Company - IBERMUTUAMUR), to staff in % throughout 2002 in the different Business Lines carry out health check-ups required on the work and Units of the industrial group. sites in the various Autonomous Communities.

In the same manner, an ambitious agreement on Prevention of Hazards was subscribed to, speciali- sing in Industrial Health also, and which ends on 30 EQUIPMENT June 2003. & ERECTION 46% 5% STORAGE Finally, a Joint Service for Prevention of Hazards was undertaken by DURO FELGUERA, S.A. coming into force at the beginning of 2003.

INDUSTRIAL PLANTS 3% MINING & 2% 35% HANDLING MEXICO 7% POWER SYSTEMS 2% DURO FELGUERA, S.A.

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MARKETING & DEVELOPMENT

Following the plans traced and as a complement to tions and workshop machinery. In addition, adhering to our growing business in Mexico, the engineering busi- the policy of developing engineering and production pro- ness had to be reinforced which is why the Mexican engi- cesses up to date, both hardware and software was neering company PYCORSA was bought, as previously invested in, all of which has meant an approved and exe- mentioned. cuted investment of over 5 million euros, of which the most noteworthy are as follows: The constant search to add technology to our com- pany and the need to further specialise and concentrate Felguera Melt, S.A. on new markets with our own means of productions, has The Environment and working conditions are a steady led us to reach the necessary agreements to develop and concern for Felguera Melt, S.A., which is why some of manufacture Tunnel Boring Machines. Having comple- their main investments are made in equipment to miti- ted the first phase and after having been contracted to gate aggressive effects. Such is the case for the recently manufacture two of these machines, led us to sign a acquired induction equipment to Silica Sands to reduce Memorandum of Understanding with the Japanese tech- the amount of dust at workstations. nological company MITSUBISHI HEAVY INDUSTRIES. This agreement refers to setting up a joint venture in Other investments in 2002 were directly made in Spain in the future aimed at the previously mentioned improving production processes and capacity, such as market in Europe and Latin America. the two recently acquired 100t Silos to store sand or the Automatic Shotblast machine for parts up to 15 t. Business concerning equipment for high speed rail- way track material is being developed as well as other The 3D software for Dynamic Modelling of track com- businesses, which are expected to consolidate during ponents “CoCreate One Space Designer Modelling” also 2003. formed a part of the investments made by Felguera Melt, S.A. in 2002. The agreements with 53 Agents working in 31 countries remain in force for any of our subsidiaries, on four conti- Técnicas de Entibación , S.A., (TEDESA) nents. To add to these, a non-exclusive Agent has been In order to diversify markets by incorporating new incorporated in Chile where the economic stability, indus- products, TEDESA has added a cutting and drilling line trial growth and ever greater presence of Spanish compa- for rolled beams to its production chain, assisted by state nies in the Energy, Civil Works and Communications sec- of the art numerical control. This has allowed them to tors, as well as prospections made in this area are more fulfil the needs of major contracts such as the construc- than sufficient grounds to take an interest in this market. tion of steel structures for industrial warehouses of large Our offices and subsidiaries in USA, India, Brazil, dimensions or for the manufacture of back ups for Venezuela, and Mexico have carried on regardless with Tunnel Boring Machines belonging to two major techno- their marketing task for all of the companies that go to logical companies in this field. It has also made other make up Duro Felguera, S.A. minor investments to maintain and upgrade its current production equipment. The Development activities carried out from Duro Felguera, S.A. over 2002 were focussed mainly on the Felguera Construcciones Mecánicas, S.A. analysis of the different opportunities which the market Major investments were made in this subsidiary to situation has allowed to explore in the sense of evalua- improve and extend manufacturing processes. Of note is ting strategically and financially the advantages of inves- the new machining lathe, an automatic welding robot, ting in companies. This has led to the possibility in the and a Helium leakage detector. In addition, several short-term of participating in companies whose business modifications and modernisation of existing machine activities are similar to ours or that have their own mar- equipment was made to guarantee operability and incre- kets. ase capacity.

INVESTMENTS Felguera Calderería Pesada, S.A. The nature of the Felguera Calderería Pesada, S.A. Quality, cost reduction and assurance of delivery production process requires constant renovation of pro- schedules have been, among others, the main objectives duction equipment and the update of work techniques that have justified the investments made during 2002. and procedures to adapt to quality and profitability. With Significant volumes of investment were required to main- this aim in mind, some of the main investments made by tain operability and modernise our industrial installa- this subsidiary in 2002 were in acquiring a skid for large

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parts, a new oxy-cut machine, various welding machines, Felguera Melt, S.A. tools, ancillary manufacturing and transport equipment, Development of a casing for an aerogenerator made and modifications to infrastructures. out of one smelted piece instead of the traditional method of design and manufacture by mechanised wel- Felguera Tecnologías de la Información, S.A. ding. This is being done in collaboration with Gamesa This is a subsidiary undergoing rapid expansion and Eólica, S.A. and Oviedo University. with a promising future. It has to necessarily invest perio- dically in developing its activity in the computing and Design and development of a prototype crossovers applied computing sector. To meet its demands for space, with mobile heads installed on a diagonal for Metro quality and image improvement, it has made a significant Madrid, S.A. investment in constructing a building on the Parque Tecnológico de Asturias (Asturias Technological Estate) in Felguera Calderería Pesada, S.A. Llanera, which will be its headquarters as from Of note for their incidence on improvement of produc- September 2003. tivity and cost, the following projects developed by this company over 2002 are: The other investments made during 2002 were spread throughout the various subsidiaries and business units | Weldability Study and Mechanical Properties of destined to modernise and adapt technology equipment New Consumables for Coated Electrodes Type E- (hardware and software), tools, machinery and basic 8018B2, of application on alloy steels 1 _ Cr _ Mo infrastructures, among others. used in reactors in the chemical and petrochemi- cal industries. | Analysis of Productivity Increase by use of 90 mm RESEARCH & DEVELOPMENT wide band in submerged arc welding in pressure It has become usual over the past few years and cer- vessels. tainly no different in 2002, that several R&D projects are | New build up in one sole Layer, of application on developed by the subsidiaries in Duro Felguera, S.A. carbon steel materials for alloy type 316L using the These works are generally destined to improve the qua- ESW process or SAW process as an alternative. lity of products and services offered on the market or to | Research of the influence on mechanical proper- optimise manufacturing processes applied in the produc- ties of low temperature impact and increase in tion of these with the double aim of increasing customer hardness of deposited metal and on the ZAT as a satisfaction on the one hand, an on the other to have gre- consequence of the reduction of the amount of ater options in increasing new market shares. Duro time during the post-welding heat treatment, com- Felguera, S.A. partly relies on the stable and fluid rela- pulsory in the manufacture of pressure vessels of tions maintained over the years with Public Bodies, both large diameter and thicknesses below 50 mm, national and European, who are competent in the area by using 2 _ Cr-1Mo type materials. means of the different lines of action which, in supporting | ECOPRESS: Economic and Safe Design of Pressure the R&D activities in companies, are sponsored by these Vessels applying new DUPLEX type steels. Project Public Bodies. co-financed by the European Commission.

Duro Felguera continues to maintain a presence as a The Technological Institute of Materials, ITMA, of noted member of the main decision and design policy Asturias has participated in all the above projects and making organisations in the R&D sectors of the region, studies. such as, FICYT (Foundation for Scientific and Technological Development), CLUB DE LA INNOVACIÓN Mining & Handling Line (The Innovation Society), CLUB DE LA CALIDAD (The During 2002 the Mining & Handling Line developed Quality Society), ITMA (Technological Institute for various projects framed within the R&D policy to optimi- Materials), etc. se to the maximum its competitive resources, such as:

Continuing with this policy and given that these types | Project for the Standardisation of Transfer of projects often surpass the financial year in time, Mechanisms, which allows for accumulated kno- these R&D projects have continued to be developed, wledge and experience in this area to be transfor- published and presented whether they are just starting med into competitiveness by simplifying designs out, finalised, or realisable in the near future. Some of and thereby improving manufacturing costs and the these are: advantages of unifying spares and maintenance.

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| INDUSTRIAL ACTIVITES & STRATEGIES

| Project for the Standardisation of Conveyor Belt Drums, with the same objectives as the previously mentioned project. | Calculation Programme to Design Transfer Structures, Bridges and Crane Trolleys, which allows dimensions and weights to be optimised and consequently costs.

CORPORATE IMAGE The purpose of making the company known internally and to clients, suppliers, shareholders, institutions or even the social setting where business is developed, is closely linked with communication capacity. In this sense Duro Felguera has continued to promote the use of the channel that Internet affords to its always increasing number of users, to transmit via public announcements on its website “www.gdfsa.com “ a wide and clear image of its capacities, activities, results and objectives.

The following information may be accessed Via its During the last edition of the Asturias Trade Fair website on the Internet: in which Duro Felguera repeated by being present yet another year running, the company participated in | General Information on the company and executive the First Forum for Employment held by the organisation charts University of Oviedo, by interviewing young graduates | Detailed information of each of the business lines aspiring to their first job, all of whom presented their and the companies that go to make them up. Curriculum Vitae. | Main projects of reference | Stock exchange information, which substitutes the It is also an honour to mention the presence of periodically edited Shareholder Bulletin, including Duro Felguera on the boards of trustees and executi- periodic reports, financial calendars, financial ve committees of renowned forums, regional and information, news and the newly incorporated national, which are important focal points for com- direct access to the stock exchange . munication and interchange of cultural and business | Information related to the Human Resources experiences. Some of these are: The Board of Department, such as job offers, prevention poli- Trustees for the Prince of Asturias Foundation cies, labour information, etc. (Patronato de la Fundación Príncipe de Asturias), the | A suggestion box Board of Trustees for the Asturias Business School | Localisation of the international commercial net- Foundation, the Executive Committee of the work, etc. Principality of Asturias Metal Federation, (Federación del Metal del Principado de Asturias), the Executive To sum up, this annual report may soon be accessed Committee of the Asturias Business Federation from the website which will be incorporated as informa- (Federación Asturiana de Empresarios), the tion addressed mainly to the Shareholders, Clients, Executive Committee of the National Association of Collaborators and the Finance Corporations. Capital Goods Manufacturers (Asociación Nacional de Fabricantes de Bienes de Equipo), etc. Based on its roots in Asturias and the commitment that the company has made to the social setting, a pre- sence has been maintained in the different bodies and institutions of the region during 2002. Whether they were of a social, cultural or business nature, the company has collaborated on occasion in a financial way or by lending out premises or infrastructures.

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CORPORATE STRUCTURE To 31 December 2002

DURO FELGUERA, S.A.

EQUIPMENT POWER SYSTEMS INDUSTRIAL PLANTS & ERECTION

DURO FELGUERA DURO FELGUERA DURO FELGUERA Energía Plantas Industriales, S.A. Equipos y Montajes, S.A.

Montajes de Maquinaria Felguera Calderería Felguera Tecnologías de Precisión, S.A. Pesada, S.A. de Información, S.A. * (MOMPRESA) / FCP Servicios, S.A.

Felguera Construcciones OPEMASA * Mecánicas, S.A.

Felguera Melt, S.A.

Técnicas de Entibación, S.A. (TEDESA)

Felguera Montajes y Mantenimiento, S.A. / FERESA

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| INDUSTRIAL ACTIVITES & STRATEGIES

FINANCIAL AREA Acervo, S.A.

MINING & HANDLING STORAGE INTERNATIONAL ACTIVITIES

FELGUERA FELGUERA - IHI, S.A. * Parque y Minas, S.A.

DURO FELGUERA PYCORSA * México, S.A. de C.V. FELGUERA Grúas y Almacenaje, S.A.

DURO FELGUERA do Brasil (Ltda.)

DURO FELGUERA, S.A. India Office

[FOREIGN COMPANIES] * Major Shareholding

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ACTIVITIES OF THE BUSINESS UNITS 123456 7/8/03 09:56 Página 48

MINING & HANDLING

Managing Director: Mr. Félix García Valdés

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 of which have their own independent means and human resources. They are located in the building known as the Centro de Proyectos e Ingeniería (Centre for Projects and Engineering) or CPI, in La Felguera. The main aspects of both companies throughout 2002 are broken down below.

PRODUCTS FELGUERA PARQUES Y MINAS, S.A.

Felguera Parques y Minas, S.A. This subsidiary has made great efforts to penetra- Turnkey plant engineering and supply for: te certain markets that up to now were very difficult to access, characterised for having their own techno- | Seaport terminals for bulk handling logy or by the consolidated presence of other compe- | Bulk handling and stockyards at power titors among other reasons. However, during 2002 plants, steelworks, mines, cement plants, etc. these efforts were rewarded as Felguera Parques y | Bulk stackers and reclaimers Minas, S.A., competing with major international, | Grab unloaders and shiploaders technological companies in the sector, was awarded | Equipment and installations for the design, manufacture and supply of a bulk cargo underground mining ship loader at Long Beach (USA). This project is | Mineral Processing Plants currently being executed and will open up further opportunities in this market. Design, supply, installation and after-sales service of environmental maintenance systems:

| Chain Conveyors | Screw Conveyors Equipment for solids, slag, ash and lye extraction systems 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 and after-sales services for: | Industrial, steelworks and nuclear overhead cranes 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 Certificate ISO 9001 / 2000

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Order intake and works in progress and containers. Its list of references is extensive and it has equipment operating in a large number of Among others, the following stand out: countries

| Within the Cement sector, the contract signed for Order intake and works in progress HOLCIM in Almeria, for the design, manufacture and supply of a circular mineral yard, including Among others, the following are of special rele- conveyors and ship loader. vance:

| Of note also, it is the participation in Phase I of the | Supply of two 40-ton overhead cranes for inter- Medusa Equipment Project, which Unión Fenosa is nal transport of reels on the Tin Line belonging carrying out at the port in Corunna and for which to the company Voest Alpine in Linz, Austria. Felguera Parques y Minas has a contract for the design, manufacture and supply of the silos inclu- | The manufacture of two overhead cranes of 30 ding car loader, transfer conveyors and transfer and 80-ton capacity respectively was comple- towers. Felguera Parques y Minas has submitted a ted during 2002 for Aceralia, and destined for bid for Phase II that includes a complete storage the rolling mill in Avilés. yard. Phase III remains pending and consists of a shipunloader for which the corresponding bid will | Another lot of overhead cranes for the steel- also be presented. works plant belonging to the SMS-DEMAG consortium in Egypt was also finished and deli- | Considerable efforts have been made over a vered in 2002. period of time to opt for the extension of the mining complex belonging to Ferrominera del Orinoco, in Venezuela. In the first phase, a con- R & D Activities tract was awarded to partially develop the basic engineering of this project, which offers great During 2002 the Mining & Handling Line has deve- hopes for the future. loped various projects in the framework of its R&D activities, such as: | As already mentioned, in 2002, a shiploader of up to 70.000 DWT was awarded for the port at Long | Project for the Standardisation for Transfer Beach (USA). This loader has special technical Mechanisms, to simplify designs and reduce characteristics. It is designed to manage two very manufacture and maintenance costs. different products that demand different treatment; Sulphur (2.700 Tn/h) requires fire protected trans- | Project for the Standardisation of Conveyor fer systems and electrical equipment and also Belt Drums with the same objectives as the environmental protection measures when it is dis- previously mentioned project. charged for which a telescopic chute is used. The other product is Petroleum Coke (2.400 Tn/h) and | Calculation Programme to Design Transfer for this an innovative system is used to cushion the Structures, Bridges and Crane Trolleys, which fall of the product into the ship’s hold. The mecha- allows dimensions and weights to be optimised nism has a telescopic jib with up to 45-metre tur- and consequently costs. ning radius.

FELGUERA GRÚAS Y ALMACENAJE, S.A.

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

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INDUSTRIAL PLANTS LINE

Managing Director: Mr. José Manuel Cuesta Viña

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

| Steelworks & Industry. Specialised in the sectors of steelworks and heavy industry in general. | Petrochemicals, Gas & Environment, acting in the petrochemical sector and heavy industry in general. | Logistical Systems, focussing its activities towards automated storage.

The Industrial Plants Line has engineering ser- vices for its own projects and provide assistance to other Duro Felguera subsidiaries. Its main advan- PRODUCTS tage is its know-how, gained over many years of Steelworks & Industry experience, with the addition of high-grade capa- | Electric Steel Mills and B.O.F. city and permanent re-training of the technical | Secondary metallurgy – ladle furnaces personnel among its employees. | Process Lines (pickling, tin plating, galvanizing, etc.) Over the last 10 years, this line has supplied | Pelleting Plants notable installations and turnkey plants (EPC), | Continuous casting both in Spain and abroad. Among these projects, it | Rolling Mills is worth pointing out that in 2002, 50% of the con- tract signed with PEMEX for a total amount of 7.5 Petrochemical, Gas & Environment. million dollars, the “Chlorinated Products III | Petrochemical Plants Project” in its Pajaritos refinery in Mexico was | Refineries carried out. At the same time others of lesser | Liquefied Gas Storage & Filling Stations dimensions were carried out in Europe. | Non-ferrous metallurgy | Acid regeneration plants A summary of the main activities of the units | Environment – Incineration Plants making up this Line can be found below. | 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

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| ACTIVITIES OF THE BUSINESS UNITS

DURO FELGUERA PLANTAS INDUSTRIALES, S.A.

Order intake and works in progress

The following orders and works in progress during 2002 stand out among others: | The design and manufacture of a torpedo wagon for the transport of pig iron for the SOLLAC Atlantic | For the USINOR steelworks in Dunkirk, a contract factory in Dunkirk was completed in 2002. This had was awarded to develop engineering, construct and special dimensions, a 450t capacity and was more supply a 60.000 m3 gas tank to store gas from Coke than 35 m in length. batteries. It is 53 metres in diameter and made up of three bodies, two of which are mobile. | The construction and start up project for COGERSA (Asturias Waste Management Consortium) in con- | For the Aceralia rolling mill in Avilés, it was awarded junction with another company consisting of a a turnkey contract to revamp the Temper Mill III, to go waste incineration plant with gas treatment and from 1,016 to 1,300 mm wide strips to be milled. This heat recovery for power generation continued in project was particular in that the engineering and 2002. manufacturing stages had to be coordinated with the very tight erection schedule, which had to be done during a programmed outage of only four weeks. Despite this difficulty, it was completed satisfactorily.

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

| The Logistics Platform. NIREO Corporación awarded a contract in 2002 for the design, manufacture and supply of a “Logistics Platform” for its warehouse in Toledo.

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

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

| The contract for Petróleos Mexicanos, PEMEX for the Pajaritos chloride derived products plant continued in 2002.

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FELGUERA TECNOLOGÍAS DE INFORMACIÓN, S.A.

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

Particular interest has been placed on management processes with a greater projection towards the client and ADTIVITIES taking special care in providing solutions suited to the client needs, from the point of view of a specialised service com- Felguera Tecnologías de Información, S.A. pany. | Own software and integration products with corporate systems Its position in the market is based on a diversity of busi- | Project study and analysis services ness options, via project solutions based on standard pro- | Execution of turnkey projects ducts with an important added component of service analy- | Supply of equipment and systems sis and adaptation to parameters and the needs of the | Customer service and technical assistance client. (SAT) PRODUCT

| Logistic Systems: Warehouse Management Software (SGA) capable of operating with radio frequency terminals and orientated to automation of maintenance systems with loader-transport equipment whose technology belongs to Duro Felguera. | Management Systems: ERP Integralia© application operating in web environments or client-server and Automation of Sales Force (AFV) on PDA/PDT terminals. | Internet Projects: Corporate websites, e- commerce, Internet security and other developments using Web platforms by the use of tools for dynamic contents (EVA/HADA).

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| ACTIVITIES OF THE BUSINESS UNITS

Technology

Major advances have been made in consolidating pro- | A major experience during 2002 and which has ducts based on JAVA/J2EE technology which were deve- allowed Felguera T. I. to rub shoulders with the loped in previous years and which now constitute one of most prestigious European competitors in the sec- the company’s main strengths. But in 2002 work has also tor, was the bid made for the main Pharmacy continued on research and gaining more technological Cooperative in Andalusia (CECOFAR), where they knowledge required for new projects. Worth mentioning reached the last selection phase with its replace- are the works carried out on the IPSec standard to ope- ment and traceability software as main advantage. rate using the Telefónica GPRS communication system.

Order intake and commercial activities:

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

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

| The Internet projects go from a major extension of the tourism website “Infoasturias.com” for the Regional Tourist Board (SRT), through corporate websites such as Asturiana de Perfumería, Nireo- Ferrobox, and catalogue management systems such as Ortoibérica, to Network security platforms for various clients.

| The marketing work carried out, mainly during this financial year, in conjunction with Duro Felguera Plantas 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 is particularly relevant given the possibility of repea- ting with other warehouses in the EC.

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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 and services to markets of diverse industrial activity throughout the world, making the most of the advanta- ges afforded by its installations such as Felguera Calderería Pesada, S.A., in Gijón. Felguera Calderería Pesada, S.A is capable of shaping, welding and cons- tructing equipment to the most demanding quality and design standards, manufacturing in alloy steels and of almost limitless dimensions given the capacity of its facilities and the special characteristics of its expedi- ting centres. It has its own dock that is located within its installations making it possible to carry out complex expediting by ship.

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

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Fruit of the efforts made during past years This line of business also includes two important which were focussed on making new develop- service companies Felguera Montajes y Mante- ments and consequently providing greater added nimiento, S.A. and Felguera Revestimientos, S.A. value products by its capacity to attend to more These two companies have continued to grow, carr- complex technical and technological require- ying out a complimentary role of significant importan- ments, Felguera Melt, S.A., has met its objecti- ce with respect to finalising turnkey projects and coo- ves to sustain growth. It is constantly incorpora- perating in project commissioning not only for this line ting modern production means to its manufactu- of business but also for Duro Felguera companies ring processes and its R&D team takes great belonging to other lines, i.e. the Power Systems Line, care in obtaining appropriate technologies and with whom they have cooperated in the erection and strategic alliances with partners who comple- commissioning of the latest combined cycle power ment their activities in the specialised markets generation projects. And all of this without abando- where they operate, such as wind power genera- ning their traditional markets where they have conti- tion or railway track material (crossings and tur- nued to provide their services, i.e. engineering, steel- nouts, basically) for the high speed railway works, mining, power generation, petrochemicals, expansion projects both in Europe, and the etc. domestic market namely with the development of the AVE lines.

Growth shown by TEDESA in 2002 is basi- cally due to a reorientation of its commercial strategies which started in past years and is geared to new products and equipment for the construction of public infrastructures and which are complementary to those of more tra- ditional characteristics (although in constant innovation) such as mine framing, consolidation and shoring up of tunnels and trenches. To do this TEDESA has made significant investments in modern production equipment and has esta- blished decisive commercial agreements by which it has successfully opted for the manu- facture of steel structures for large industrial buildings and the construction of back-ups for Tunnel Boring Machines, among other activities of note.

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

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

| Continuing with traditional activities, which have more than consolidated in the specialised market of heavy boiler making which is their speciality, by mainly supplying equipment to the petrochemical industry, fully dressed and manufactured with their special capacities: shaping of great thicknesses, of more than 200mm, high technology welding for steel Chrome, Nickel, Molybdenum and Vanadium alloys, and expedi- tion of pieces and equipment of large dimensions and weights, directly from its own dock which is integrated PRODUCTS in its facilities and which can be used by several types of ships: roll on – roll off, self-loaders, barges and flo- | Equipment for the chemical ating cranes high enough to undergo ocean voyages. & petrochemical industries · Large scale crude and vacuum columns | It is notable that they have obtained a surplus order · Reactors · Exchangers intake over 7% with respect to the forecast at the · High-pressure separators beginning of the year despite the adverse conditions of · Desalinators · Spherical storage tanks the international petrochemical sector and the com- · Digesters petition offered by companies in certain Southeast · Mounded vessels Asia countries. This has once more demonstrated the · Converters capacity of Felguera Calderería Pesada, S. A. to res- | Heavy equipment for industry in general pond and adapt to market environments. · Steelworks · Power Systems · Cellulose and paper | It is the export capacity of its products that has made · Cement it possible for more than 85% of its contracts to have · Transport of liquefied gases come from abroad in 2002, from England, Chile, | Off-shore equipment Azerbaijan, Norway, Venezuela and Bulgaria, adding to its already extensive list of references of the most | In general, all types of heavy boilers notable engineering and technological companies, both national and international working within the Quality: industrial and petrochemical sectors. Stamps ASME: U, U2 and S To sum up, the main contracts awarded to Felguera National Board: R (for alterations and Calderería Pesada, S.A. in 2002 were, among others: overhauls of ASME equipment in service) S.Q.L. (for equipment destined for the People’s Republic of China) | Various gas-crude oil separators for a refinery in Certificates Azerbaijan. ISO 9000 / 2000 ISO 14001 / 2000 | A set of reactors for Foster Wheeler for the PETROX TUV: AD-Merkblatt HP0 / TRD 201 / DIN- refinery in Chile. EN 792-2

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| Also awarded by Foster Wheeler was the revamping of Training an FCC unit at a refinery in Bulgaria. Mindful of the high value placed on the human factor, | An FCC reactor for PDVSA in Venezuela. Felguera Calderería Pesada, S.A., the same as other Duro Felguera business units, has spared no material or econo- | For Linde and destined for an installation in Norway, the mic expense to continue training and professionally upda- construction of several pressure vessels. ting its personnel, always conscious of the fact that well trained and motivated personnel increase resource values Of the works carried out in 2002, worth pointing out are: and achieve high rates of performance.

| Within the package awarded by the Ameriven Group in With this aim in mind and making the most of the pro- Venezuela, the manufacture of a vacuum column of 12 fessional training centre within its installations (certified by metres in diameter. the National Employment Agency), in 2002 Felguera Calderería Pesada, S.A. organised an extensive Welding | The construction for Halliburton in the U.K. of 11 sepa- course. A screening process established that 15 professio- rators for a B.P. Exploration refinery in Azerbaijan. nals were eligible for the course of 924 man-hours, and These works were performed along with the process Duro Felguera, S.A. made the commitment to employ 60% design engineering which were included in the scope of of those who successfully finished the course. the contract The usual internal courses to update its own personnel | The construction of 4 Unicracking reactors, made of were carried out in 2002, not only for labourers but also alloy steel Cr-Mo-V for the PETROX refinery in Chile. middle management and administration staff, paying spe- cial attention to Safety at Work. R&D Activities The emergency brigade, permanently established at Felguera Calderería Pesada, organised first aid courses, Of the activities carried out by Felguera Calderería Pesada, imparted by the Duro Felguera Medical Service, in keeping S. A., in the field of Research and Development, and in which with the Prevention of Labour Risks policy and in order to the Asturias Technological Institute of Materials (ITMA) parti- maintain updated its technology and intervention capacity. cipated, the following stand out:

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

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

Investigation of the influence on mechanical properties of low temperature impact and increase in hardness of deposited metal and on the ZAT as a consequence of the reduction of the amount 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 type materials.

ECOPRESS: Economic and Safe Design of Pressure Vessels applying new highly elastic steels. Project co-financed by the European Commission.

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

Felguera Construcciones Mecánicas, S.A. has not only maintained its collaborating, production unit role in turnkey contracts with other Duro Felguera lines, mainly in the power generation area, but has also revalidated its position as primary supplier of compo- nents and heavy equipment in sectors as diverse as power generation of different types (thermal, hydrau- lic, wind power), particle physics research or public works, among others. These have been spread over different 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 by Felguera Construcciones Mecánicas, S.A. The result has been to maintain a significant volume of order PRODUCTS intake, once again surpassing the year’s forecast. It should be pointed out that foreign order intake in | Equipment for the steelworks industry 2002 constituted 73% of the year’s total. · Rolling mills, continuous casting, ladles · Boom Shears, milling towers, coilers Commercial Activities | Cranes · Overhead, gantry, dockside · Mineral unloaders, containers In addition to capturing new clients, which has | Hydraulic allowed it to extend its commercial presence in many · Turbines and generators countries, it has also successfully opted for new and · Gates and cofferdams interesting products in growing sectors such as · Penstocks public works where two contracts were awarded to | Off-shore manufacture the same number of tunnel boring · Swivel, central pipe, mechanical parts, turrets and Sea platforms machines for Mitsubishi Heavy Industries. This not only adds a positive workload but also opens up pos- | Thermal Power · Boilers (HRSG) for combined cycle power sibilities for future negotiations, falling in line with its plants policy to expand technological assets, to establish · Exchangers, condensors stable agreement for further actions. This has been · Kilns and mills reflected in 2002 in the establishment of a commit- · Fans · Dearators and heaters ment to set up future strategic alliances. The capabi- | Wind Power lities of Felguera Construcciones Mecánicas, S.A. and · Shafts for aerogenerators confidence in its quality of work as shown by its cus- · Components for aerogenerators tomers are proved once more. | Equipment for mining and mineral yards | Equipment for large civil works infrastructures, Contracts awarded and executed in 2002 Tunnel boring machines | Industrial Equipment in general The following contracts were executed in 2002 or · Cement industry are still in progress for the previously mentioned new · Chemical & Petrochemical markets and customers: · Desalination Plants · Presses | Eight cryostats for the Atlas Project at the | Components for large research prototypes European Centre for Nuclear Research (CERN). Quality: Stamps | Three hundred and thirteen cryostats for the ASME: U, U2, S and NB LHC Project at the European Centre for PECAL/ AQAP 120 Nuclear Research (CERN). S.Q.L. (for equipment destined to the People’s Republic of China) Certificates: | Twenty-four boiler modules for CMI heat reco- ISO 9000/2000 very steam generators (HRSG) destined for the TUV: HP0 / TRD 201 Termorrio Power Generation Plant in Brazil, awarded in 2002.

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| ACTIVITIES OF THE BUSINESS UNITS

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

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

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

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

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

Of the order intake in 2002 by Felguera Construcciones Mecánicas, S.A. that was far beyond expectations, the following contracts are worth men- tioning: | One hundred and fifty “Service Modules” for the | Two tunnel boring machines, TBM, for LHC Project at the European Centre for Mitsubishi Heavy Industries, for the construc- Nuclear Research (CERN). tion of the Córdoba-Málaga high-speed railway line, also known as AVE. | One HRSG for the 1 x 400 MW power generation plant Cristóbal Colón.

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

| Seven CH tanks for the Chicoasen Project in Mexico.

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

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

Felguera Melt fixed objectives mainly on its two core businesses in 2002: railway track material and foundry components for aerogenerators. As a result of its innova- tions, experience and high quality achieved in making components for the wind power industry, in conjunction with exhaustive commercial work in the sector, Felguera Melt maintains and constantly expands its list of clients: NEG – MIKON, LAGERWEY, GAME- SA Eólica, IZAR, NKK, ENERCON, EHN, etc. Also praiseworthy are its constant efforts to innovate on the railway track material side of the business, using its experience and knowledge gained over that last few years as a basis. The consequence of all this is that 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 to reinforce its commercial side, effectively improving and reconditioning its production installations which are ever more respectful with the environment, where new, modern systems of production are implemented, increasing capacities by incorporating new sand 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 and favours the working environment.

PRODUCTS

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

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

Quality: Certificates: AENOR: ISO 9001

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| ACTIVITIES OF THE BUSINESS UNITS

R&D Activities

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

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

| Design and development of two prototype cros- sings with mobile heads installed on a diagonal | Design, manufacture and supply of various turnouts for Metro Madrid. and crossovers for FERROVIAL-AGROMAN, destined for the Spanish National Railway System. | Design and development of a prototype turnout for High Speed Railway lines at over 350 Km / | Design, manufacture and supply of various turnouts hour. and crossovers directly to Spanish National Railway System. | Contract for the Metallurgy Department at Oviedo University to improve the metallurgy pro- | Design, manufacture and supply of various turnouts cess when smelting either iron or steel. and crossovers for SACYR, destined for the Spanish National Railway System. | Contract for the University of Corunna to carry out simulations and tests on the project of a pro- | Design, manufacture and supply of various turnouts totype turnout design for High Speed Railways. and crossovers for the METROLAM joint venture.

Main contracts awarded in 2002 | Design, manufacture and supply of various turnouts for Portugal. Throughout 2002 Felguera-Melt has been awarded several contracts of which the following stand out: | Design, manufacture and supply of various turnouts for the Buenos Aires Metro (Argentina). | Design, manufacture and supply of various tur- nouts for ERGOSE destined for the Greek | Supply of diverse material to the Morocco railways. Railways. | Supply of rotors, shafts, casings and other compo- nents for GAMESA, for the construction of wind power generators.

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

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

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

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

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

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

| Steelworks and Metallurgy: maintaining its pre- sence in this area with extensive references for blast 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 all types of industrial installations but mainly in the cement, chemical, petrochemical and naval sec- tors with wide experience in these fields.

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

PRODUCTS

| Engineering, management and development 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 erections for large installations to high levels to technical demand for industry in general

| Revamping and maintenance

Quality: Certificates AENOR: ISO 9002 / 1994 ASME: A. STAMP

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| ACTIVITIES OF THE BUSINESS UNITS

To carry out its usual works, the company has a great variety of material resources: truck-mounted cranes 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 a skilled and semi-skilled labour force which is highly 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 of Felguera Montajes y Mantenimiento, S.A. have permitted it to dedicate great part of its resources to the power generation sector in which the pro- jects for the Duro Felguera Power Systems Line and for other customers have demanded serious attention. Notwithstanding, it has also participa- ted in other sectors such as the paper industry, steelworks, petrochemical plants, as well as in other activities in which it specialises, namely integral maintenance.

References for 2002, finalised or ongoing | Maintenance works at the FERTIBERIA plant in Among others the following contracts and Palos (Huelva) ongoing works worth pointing out: | Maintenance works at wood storage yard of the | Works on the programmed outage at the Coal factory belonging to Empresa Nacional de fired Power Generation Plant in Lada, belon- Celulosa, ENCE, in Huelva. ging to IBERDROLA. | Mechanical maintenance works at the Asturiana de | Revamping works on the MEGASA SIDERUR- Zinc plant in Asturias. GICA infrastructure in Ferrol. | Maintenance works at the coal fired Power | Revamping works on the coke gas and raw Generation Plant in Lada, belonging to IBERDRO- water systems at the ACERALIA factory. LA.

| Mechanical equipment erection on the Tin | Maintenance works on the fluids systems of the Tin Line at the ACERALIA factory in Avilés Line III at ACERALIA in Avilés.

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FELGUERA REVESTIMIENTOS, S.A. FERESA Sole Administrator: Mr. Pedro García Fernández FERESA has carried on its activities in 2002, mainly in the power systems sector, but maintaining and expanding into different industrial sectors where its experience and grade 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 most relevant are listed below:

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

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

| Heat insulation works for IBERDROLA, at the Lada (Asturias) and Guardo (Palencia) Power Plants. PRODUCTS | Heat insulation works for SINAE on the whole of the | Industrial Thermal Insulation purine treatment plant.

| Refractory Linings | Supply and erection of tank lining for SINAE-Foster Wheeler Iberia at the Alperujo de Enemansa | Maintenance and reconstruction of all types (Ciudad Real) and La Loma (Jaén) plants. of thermal and acoustic linings

Quality: | Heat insulation works for FLS-MILJO on the elec- Certificates trostatic precipitator at the SMURFIT-Nervión plant AENOR: ISO 9002 / 1994 in Durango.

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

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

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| ACTIVITIES OF THE BUSINESS UNITS

TÉCNICAS DE ENTIBACIÓN, S.A. TEDESA Managing 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 taken steps 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 develop technologies 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 or auxiliary 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.

PRODUCTS Main contracts awarded and executed in 2002

| Mining: | Manufacture of electricity pylons for SEMI Y · Steel arches in TH, HEB, IPN sections S.R.F. MOYANO · Hydraulic and friction props · Link bars | Manufacture and supply of formworks for tun- · Lining sheets nels for DRAGADOS OBRAS Y PROYECTOS · Grating S.A. | Underground works: · Metal arches in TH, HEB, IPN sections | Manufacture and supply of formworks for tun- · Lattice and rolled girders nels for the joint venture constructing the · Formworks Lleida-Barcelona AVE line. · Bernold-type sheet · Anchor pins for resin | Manufacture and supply of formworks for tun- | Trench Screen framing nels for the LIERES joint venture, FERROVIAL- | Electricity Pylons NECSO-ACS on the Cantábrico Motorway. | Mobile Phone Antenas | Steel structures | Manufacture and supply of formworks for tun- nels for the MONTORNÉS joint venture. Quality: Certificates | Manufacture and supply of formworks for tun- AENOR: ISO 9001 nels for the GUADALHORCE joint venture.

| Manufacture and supply of the “back-up” Commercial Management structure for the Herrenknecht A.G. Tunnel Boring Machine, working on the Guadarrama The incorporation of new production methods tunnels for the new High Speed Railway. has allowed new markets to be explored in the building and industrial structure sectors by | Manufacture and supply of the back-up struc- focussing mainly on heavy machinery compo- ture for the Mitsubishi Heavy Industries nents of large dimensions whilst marketing of Tunnel Boring Machine, working on the traditional products continues at the same time. Abdalajis tunnel for the new High Speed Already incorporated into the production process Railway. are the new lattice girders, which as they grip to shotcrete with ease and with their weight charac- | Steel structure for the new Tin Line III building teristics and resistance, are being particularly at the ACERALIA factory in Avilés. successful on the market. The same goes for the formwork equipment developed and manufactu- | Various steel casing systems for mining and red by TEDESA. public works in Spain and other countries.

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THE POWER SYSTEMS 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 power generation sector and this has led to the fact that in 2002 its aspirations were fulfilled when GESA and UNELCO both belong to ENDESA awarded the company with two combined cycle power generation projects Son Reus II (1 x 218 MW) and Barranco de Tirajana (1 x 219 MW) as Main Contractor, the first time in Spain that a national company is awarded a contract in this way. This has been the reward for the hard work of its highly qualified personnel and which shows the confidence placed on the company by leading customers and tech- nological companies in the sector.

In a sector where contractual demands are highly stringent, as is the power generation sector, where CORE BUSINESS equipment, work quality and compliance to schedules are directed towards quick and effective plant opera- DURO FELGUERA, S.A. ENERGIA tion, a company like MOMPRESA is essential. This | Execution of Turnkey Projects for Gas Fired company not only supports Duro Felguera Energía in its Power Generation Plants (Open and new projects, but also with its ample experience and Combined Cycle) knowledge of the market, it has become a leading com- | Turnkey projects for conventional power plants pany in the erection and overhaul of power island, wor- king on major power generation plants in Spain, Latin Main Scope: | Project Management America and other countries in Europe. | Engineering | Supplies By adding OPEMASA, Duro Felguera Energía rein- | Construction forces its already diverse capabilities to deal with power | Erection generation plant construction projects as main con- | Commissioning tractor, widening its scope to include Operation and | Operation Maintenance services. Quality Certificates Below is a summary of the main works carried out Lloyd´s Register Quality Assurance, EN / BSEN / by this Line throughout 2002. DIN EN- ISO 9001 / 2000, applicable to design, engineering, supply and construction of projects and services for industrial installations on a DURO FELGUERA, S.A., ENERGÍA turnkey basis in the industrial and power generation sectors. The activities carried out by DURO FELGUERA ENERGÍA in 2002 to further develop their business are fundamentally based on its experience and on widening its capacity. It has continued to explore new business opportunities within the power market, as is the case with the future projects to adapt traditional coal fired power generation plants to environmental legislation, supported by their more than sufficient experience and the major technological companies in the sector. Duro Felguera Energía, always within its field of specialisa- tion, has continued to maintain its presence in other

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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 year to finalise some of the projects awarded in previous years in which other Duro Felguera business lines have cooperated such 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 power generation plants.

DURO FELGUERA REFERENCES FOR GAS FIRED POWER GENERATION PLANTS COMMERCIAL CAPACITY COUNTRY PROJECT CUSTOMER OPERATON LOCATION TYPE* MW TECHNOLOGY COLOMBIA Las Flores I Banco Ganadero 1994 Barranquilla C/C 1 x 150 Westinghouse Las Flores II Westinghouse 1996 Barranquilla S/C 1 x 100 Westinghouse Las Flores III Westinghouse 1997 Barranquilla S/C 1 x 150 Westinghouse Termopon Westinghouse 1998 Santander S/C 2 x 115 Westinghouse Termolasierra E.E.P.P. Medellín 1998 Puerto Nare S/C 2 x 150 General Electric Termo Candelaria KMR Power Co. 2000 Cartagena de Indias S/C 2 x 157 Westinghouse Subtotal 1.244 MEXICO El Saúz Westinghouse 1998 Querétaro S/C 1 x 150 Westinghouse Huinalá Westinghouse 1998 Monterrey S/C 1 x 150 Westinghouse Hermosillo Westinghouse 1998 Hermosillo S/C 1 x 150 Westinghouse Monterrey I y II ABB Alstom Power 1999 Monterrey C/C 2 x 250 ABB Alstom Power Hermosillo ABB Alstom Power 2001 Hermosillo C/C 1 x 250 ABB Alstom Power Rosarito ABB Alstom Power 2001 Rosarito C/C 2 x 250 ABB Alstom Power Monterrey III ABB Alstom Power 2001 Monterrey C/C 4 x 250 ABB Alstom Power El Saúz II SiemensWestinghouse 2002 Querétaro S/C 1 x 150 SiemensWestinghouse El Encino SiemensWestinghouse 2002 Chihuahua S/C 1 x 150 SiemensWestinghouse Valle de Mexico ALSTOM Power 2002 Mexico S/C 1 x 250 Alstom Power San Lorenzo CFE/SiemensWestinghouse 2003 Puebla S/C 2 x 150 SiemensWestinghouse Tuxpan CFE/SiemensWestinghouse 2003 Veracruz S/C 1 x 150 SiemensWestinghouse Subtotalal 3.700 SPAIN Besós Endesa/Gas Natural 2001 Barcelona C/C 2 x 400 ABB Alstom Power San Roque Endesa/Gas Natural 2002 Cádiz C/C 2 x 400 ABB Alstom Power Castejón Hidrocantábrico 2002 Navarra C/C 1 x 400 ABB Alstom Power Son Reus Endesa (GESA II) 2002 Palma de Mallorca C/C 1 x 225 Alstom Power Barranco de Tirajana Endesa (UNELCO) 2005 Gran Canaria C/C 1 x 219 General Electric Son Reus II Endesa (GESA II) 2005 Palma de Mallorca C/C 1 x 218 General Electric Subtotal 2.662 TOTAL 7.606 (*) S/C = Open Cycle C/C= Combined Cycle

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| For ENDESA and located in Lanzarote and Ceuta, Duro Felguera Energía working in joint venture with Técnicas Reunidas, constructed two plants: 2 x 18 Mw. and 1 x 12 Mw. respectively, using Diesel units with MAN technology, on a turnkey contract basis and which are currently in commercial operation.

Projects awarded in 2002

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

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

| Tuxpan Project, in Veracruz – Mexico, also for Comisión Works carried out in 2002 Federal de Energía with Siemens Westinghouse tech- nology, consisting of a power generation plant of one Of the works carried out in 2002, which have reached 150 Mw turbo generator (1 x 150 MW) to operate in the final stages, the following are to be pointed out: open cycle.

| At the San Roque combined cycle plant in Cadiz for Of the contracts awarded in 2002 the most relevant, not ENDESA – GAS NATURAL, 2 x 400 Mw power rate only for the size of investment, but also for the widened sco- and constructed in consortium with Alstom Power, pes and responsibilities, are those listed below and in which commissioning activities were carried out and both Duro Felguera Energía is the main contractor. units were placed in commercial operation last summer. | For ENDESA – UNELCO, located in Gran Canaria, Duro Felguera Energía was awarded the complete execution | At the combined cycle plant in San Adriá de Besós of the gas fired power generation plant Barranco de (Barcelona), also for ENDESA – GAS NATURAL, 2 x Tirajana, with General Electric gas turbines and a 400 Mw power rate and 2 x KA26 Alstom Power combined cycle configuration, and with Alstom steam technology, commissioning and commercial ope- turbine, to generate 219 Mw. ration was completed with success. | For ENDESA – GESA II, located in Palma de Mallorca, | In Castejón, Navarra and in consortium with Duro Felguera Energía was awarded the complete exe- Alstom Power, commissioning activities were cution for a gas fired power generation plant, namely carried out on the 400 Mw Unit for Hidrocantábrico Son Reus II, with General Electric gas turbines and a and which is already operating commercially. combined cycle configuration, and with Alstom steam turbine, to generate 218 Mw. | In Son Reus (Palma de Mallorca), Duro Felguera Energía constructed a combined cycle power plant The execution of both projects is currently in progress. with one 225 Mw unit for GESA – ENDESA, based on 3 x KA8C Alstom Power technology. This plant had been operating commercially in open cycle since June 2001 and the works to place it in com- mercial operation in combined cycle were carried out in 2002.

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| ACTIVITIES OF THE BUSINESS UNITS

MONTAJES DE MAQUINARIA DE PRECISIÓN, S.A. MOMPRESA

The constant trajectory of Mompresa is once more worth stressing. Throughout the year it has maintai- ned its activities and reinforced it presence in the tra- ditional markets of turbine and rotating machinery in general, mainly within the power generation sector where it acts on first phase equipment erection and assembly and in later overhauls and programmed maintenance outages.

The spread of its activities has been maintained both in Europe and in Latin America, as can be seen in the summary of works carried out and awarded in 2002 below:

Works carried out in 2002 to be noted: CORE BUSINESS

| Of the contracts established for periodical over- MOMPRESA hauls of machinery belonging to foreign and Overhauls of: Spanish manufacturers and power generating | Gas and Steam Turbines companies, 23 Turbogenerators and Auxiliary | Generators | AuxiliaryTurbines Equipment were revised for different power | Engines generation plants in Spain, Italy and Turkey | Heater pumps exceeding 7,2 Gw. | Condensators | Fans | Erection and assembly work was finalised on the 335 Mw turbogenerator at the Naco Nogales Erection: | Gas and Steam Turbines Combined Cycle Plant in Mexico. | Turbogenerators | Power generation plants, especially simple | Also finalised last year were the civil works and and combined cycles electromechanical erection awarded in conjunc- tion with the Power Systems Line for Siemens- Predictive Maintenance: | Vibration analysis Westinghouse at the El Sáuz II and El Encino Power Plants in Mexico. Quality: Certificate AENOR: UNE-EN ISO 9002 / 1994 | In Spain, the works on the combined cycle plants of Son Reus I, Besós, San Roque and Castejón, with Alstom turbines, were also finalised. | Several overhauls were awarded for various custo- mers, i.e. ENDESA, UNION FENOSA, IBERDROLA, The most relevant contracts HIDROCANTÁBRICO, SIEMENS, GENERAL ELECTRIC, ALSTOM, etc, all in Spain, on different turbogenera- | For General Electric in Turkey – overhaul of 3 tors and auxiliary equipment. alternators and 1 steam turbine at a power generation plant. | In conjunction with Duro Felguera Energía, the erec- tion of turbogenerator units on the new combined | For Alstom in Italy – overhaul of 6 turbines at 3 cycle projects Son Reus II and Barranco de Tirajana power generation plants. were also awarded.

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OPERACIÓN Y MANTENIMIENTO, S.A. OPEMASA

The deep involvement of the Power Systems Line in power generation projects has increased with the recent creation of the company OPEMASA, in which Mompresa holds a majority share interest, and which covers the ever- increasing demand by customers for scope and guarantees in this area. With the incorporation of OPEMASA, commis- sioning, operation and maintenance activities are more within reach whilst at the same time projecting a more solid image of responsibility before the customer and increasing business opportunities.

Fields of Action and Activities:

The main fields of action where OPEMASA is already operating with clear perspectives for future growth are: Open and Combined Cycle Power Generation Plants, Co- generation Plants and Diesel fired Plants, in which it carries out 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 turnovers to the operation and maintenance personnel.

CORE BUSINESS Operation and Maintenance OPEMASA On those projects where the following works form a part Precommissioning: of the scope, OPEMASA is more than capable of carrying | Final erection supervision them out with full guarantees; Operation of Systems up to | Punch lists provisional acceptance (PAC), operation and maintenance at | Compilation of documents first levels and integral maintenance of power generation Commissioning: facilities. | Equipment tests Start-up: To carry out these activities, OPEMASA relies upon the | Execution and administration of procedures various Duro Felguera subsidiaries, as well as its own highly | Delivery schedules qualified technical personnel, summing long-standing | Coordination experience to the development of engineering, manufacture | Preparation of turnovers and coordination of certain components, erection and maintenance of power of delivery generation plants. Operation and Maintenance: | Operation of systems up to provisional acceptance | 1st level operation and maintenance | Complete maintenance of installations

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| ACTIVITIES OF THE BUSINESS UNITS

STORAGE LINE

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

The capacity to adapt to different market demands is for PRODUCTS Felguera-IHI one of the main virtues of its potential and which has sustained it ahead of its competitors and has Engineering, design, manufacture and erection of storage plants on a turnkey contract basis. significantly contributed to the fact that the company sur- passed the year’s budget by more than 78% in 2002. It will | Storage plants for crude oil, derived products therefore continue to the modernisation and extension of and chemicals storage plants for some of the most notable customers in | LNG regasification plants the petrochemical sector. Engineering, design, manufacture and erection of The advantages that its wide range of products offers, individual storage equipment. sustained by modern and experience engineering, gives the | Fixed- and floating -roof tanks company amply guaranteed access to contracts for cylin- | Fixed-roof tanks with floating screen drical and spherical vessels of the most stringent technical specifications and to complete turnkey storage plants. | Cooling and cryogenic tanks Felguera-IHI has ample experience in this type of contrac- | Spherical storage pressure vessels for the chemical and petrochemical industries tual mode participating in some cases with vested share | Silos and thickeners interest demonstrating a self-confidence of the highest level. Quality: Certificates: AENOR: ISO 9002 / 1994

Main contracts awarded in 2002

| In the field of fossil fuel storage, the project at the regasification plant in Barcelona for ENAGAS particularly stands our due to its technical complexity. This contract consists of the design, engineering and construction Main contracts executed in 2002 of one total containment tank to store Liquefied Natural Gas at a temperature of Just to illustrate, the following projects are some of those exe- –170ºC. The tank comprises of an external cuted or finalised in 2002: armoured concrete tank and an internal reci- pient of 9% nickel-steel alloy, as well as the | For CEPSA in Huelva, 2 dome-roof tanks of 50.000 m3 each internals, externals and accessories. to store gas oil.

| In keeping with its international expansion in | A turnkey ammonium storage plant for PROQUIMED-UBE. 2002, it was awarded 2 tanks for a petroleum oil/water separation process destined for | For SINAE in Jaén, 2 taper-roof tanks of 3.000 m3 each to Libya. store olive oil industry products.

| Consolidating its presence in the main refi- | A set of 6 vertical tanks for IHI-NISSAN at the NISSAN nery expansion projects, a 100.000 m3 tank MOTOR IBERICA plant in Montcada (Barcelona) for crude oil storage was awarded by REP- SOL-YPF in Puertollano. | For the CEPSA factory in Huelva, one 4.000 m3 spherical tank to store butane. | Also for REPSOL-YPF, 2 tanks of 50.000 m3 each for gas oil and destined for the refinery | Complete turnkey plant to store petroleum derived products at Puertollano. at Motril (Granada) for SECICAR.

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INTERNATIONAL LINE

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

PRODUCTS Working under its new name, this Mexican company has maintained its activities mainly in the power sector ERECTION OF THE FOLLOWING TYPES OF where it continued to develop last year and where it has PLANTS: future business prospects given development programmes | Power: Coal, gas fired combined cycle, and the levels of market consolidation that Duro Felguera hydraulic Mexico has reached with various projects already finalised | Petrochemicals: New plants, modernisation and in operation. and extension of already existing plants | Gas: Gas ducts, regasification plants, etc. Market prospects increase with the investment pro- grammes foreseen in the petrochemical sector among MAINTENANCE: others, reinforced by strategic alliances, e.g. with Grupo | Combined Cycle Plants Diavaz and the incorporation of complementary compa- | Others nies, as is the case with the recently acquired Mexican engineering firm, PYCORSA. Quality: Certificates: ISO 9000 / 2000 Works Executed or ongoing ISO 14000 (in the pipeline) During 2002, Duro Felguera México continued with its work and finalised some of the major contracts that were already in progress. It has continued with those contracts already awarded and in development such as:

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

| In the traditional coal fired sector, Duro Felguera México 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 extension to 400.000 t./year of the Pajaritos chloride derived products plant was awarded to Duro Felguera México in 2002 and civil works have already commenced. The main contract had previously been awarded to Duro Felguera, S.A. The execution conditions of this contract pose an interesting challenge, as it requires exhaustive programming, expe- rience and capacity due to the fact that it must be executed whilst the current plant is in operation and without crea- ting any interference.

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

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| ACTIVITIES OF THE BUSINESS UNITS

Commercial Activity

Duro Felguera México has been active commercially and has presented various offers for projects in diverse areas, power generation and petrochemical industries fundamentally, and has continued to sup- port the different Duro Felguera business lines in Spain by aiding their marketing potential on the Mexican markets.

Human Resources

The Human Resources Department has continued to focus its efforts in training Mexican personnel. To do this it has relied on the one hand upon the support of Duro Felguera technicians who have gone to Mexico on specific occasions, and on the other, it has relied on experience gained on several already executed projects or those undergoing construction where the level of training has been patent given the grade of quality on executed works certified by their customers. The average workforce during 2002 consisted of 1,198 workers.

Quality Policy

The quality policy continued to be a firm objective in 2002, as demanded by market requirements and attending to customer grade 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. The corresponding ISO 9000 / 2000 certification was obtained recently and adjustments are being made to meet requirements for the ISO 14000 certification relating to protection of the environment.

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

PRODUCTS | Comisión Federal de Electricidad. | Comisión de Aguas del Valle de México. ENGINEERING SERVICES: | Comisión Nacional de la Industria Azucarera. | Basic Engineering | Exxon México. | Detail Engineering | Foxboro. | Technical Assistance | Grupo Desc. | Special Reports | Gulf Engineering Co. (USA) PROJECT DEVELOPMENT: | Kimberly Clark de México. | Technical and Financial Studies and | Mitsui. Evaluations | PEMEX. | Technology Selection | Praxair. | Topographical Studies | PRC Environmental. (USA) | Environmental Studies | Snamprogetti. (Italia) | Financial Studies | Spie Batignoles. (Francia) | Tennessee Gas Co. PROJECT ADMINISTRATION: | Universal Ensco Inc. (USA) | Planning, Administration and Control of Resources | Williams Brothers Engineering Co. (USA)

SUPPLIES: PYCORSA has recently carried out or is currently | Purchasing executing works for the extension of the Pajaritos | Inspections refinery chloride III plant for PEMEX, a Polyethylene | Logistics Plant for Escolin and Nitrogen plants for Praxair, among others. Quality Certificates Human Resources NMX-CC-003/1995, ISO 9001/ 1994 The nature of PYCORSA’s typical activities demands constant attention to its main asset, its With the recent majority share interest acqui- people. Human and material means are applied to red in the engineering firm PYCORSA, Duro maintain the best working conditions possible and Felguera strengthens its presence on the the most modern methods of production based on Mexican and adjacent markets by complemen- computer support to aid and assure the quality of the ting its service capacities with engineering, which environment and the final product. in this case is specialised in the principle indus- Last year the average workforce at PYCORSA con- trial sectors of the region. sisted of 124 people with a peak of 210. These varia- tions mainly depend on the workload of the projects PYCORSA is a Mexican company with more in progress. than 27 years of experience in the public and pri- vate industrial sector and attends to the demands Quality Policy of industrial projects from its head office in Since 1999 PYCORSA holds the Quality Assurance Mexico City. It has wide experience in a varied System certificate for the Standard NMX-CC- number of disciplines, i.e. production, processes 003/1995, ISO 9001/ 1994, issued by Instituto or storage in the power and petrochemical sec- Mexicano de Normalización y Certificación, (the tors of industry amongst others. When project Mexican Standards Organisation) registered under characteristics so require, PYCORSA is able to number RSC-200. establish work centres near customer installa- The scope of the procedures covers engineering tions. services, studies and projects for different sectors of industry. References and finalised or ongoing contracts It employs Mexican, European or North American With an extensive list of clients in which the codes and standards to develop projects and is following figure: currently working towards the ISO 9001/ 2000.

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DIRECTORY 123456 7/8/03 09:57 Página 76

DIRECTORY

PARENT COMPANY SUBSIDIARIES Registered Address:

| DURO FELGUERA, S.A. | ACERVO, S.A. C/ Marqués de Sta. Cruz, 14 C/ Marqués de Sta. Cruz, 14 33007 Oviedo (Asturias) 33007 Oviedo (Asturias) Spain Spain Tel.: +34 985 22 63 83 | CHAIRMANSHIP Fax: +34 985 22 42 17 | Chief Executive Officer Tel.: +34 985 22 97 00 | DURO FELGUERA EQUIPOS Fax: +34 985 21 93 39 | Y MONTAJES, S.A. e-mail: [email protected] Travesía del Mar s/n 33212 – Gijón (Asturias) | SECRETARY GENERAL Spain | Board Secretary, Legal Counsel, Tel.: +34 985 32 26 00 | Patrimony & Archives Fax: +34 985 30 00 86 Tel.: +34 985 22 60 20 e-mail: [email protected] Fax: +34 985 22 99 56 e-mail: [email protected] | FELGUERA CALDERERÍA PESADA, S.A. Travesía del Mar, s/n. | MARKETING & DEVELOPMENT 33212 Gijón (Asturias) Tel.: +34 985 22 97 00 Spain Fax: +34 985 21 93 39 Tel.: +34 985 32 26 00 e-mail: [email protected] Fax: +34 985 32 56 50 e-mail: [email protected] | ORGANISATION | & HUMAN RESOURCES | FELGUERA CALDERERÍA PESADA Tel.: +34 985 21 80 30 | SERVICIOS, S.A. Fax: +34 985 20 39 34 Travesía del Mar, s/n. e-mail: [email protected] 33212 Gijón (Asturias) Spain | FINANCE Tel.: +34 985 32 26 00 Tel.: +34 985 22 63 83 / 22 99 19 Fax: +34 985 32 56 50 Fax: +34 985 20 39 34 / 21 96 99 e-mail: [email protected] e-mail: [email protected] | FELGUERA CONSTRUCCIONES | DURO FELGUERA, S.A. ENERGÍA | MECÁNICAS, S.A. C/ Rodríguez Sampedro, 5 –7º Crta. de Langreo-Oviedo, s/n 33206 – Gijón (Asturias) 33930 Barros (Asturias) Spain Spain Tel.: +34 985 17 94 00 Tel.: +34 985 67 97 00 Fax: +34 985 34 64 74 Fax: +34 985 67 97 02 e-mail: [email protected] e-mail: [email protected]

OFFICES IN MADRID | FELGUERA MELT, S.A. | DURO FELGUERA, S.A. Prolg. Ing. Fernando Casariego, s/n C/ Juan Esplandiú, 13-12ª B 33930 La Felguera (Asturias) Edif. Centro O'Donnell Spain 28007 Madrid Tel.: +34 98 569 56 11 España Fax: +34 98 569 64 65 Tel.: +34 91 504 3545 - 91 504 3646 e-mail: [email protected] Fax: +34 91 504 6446 - 91 504 64 53 e-mail: [email protected]

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| DIRECTORY

| FELGUERA MONTAJES | FELGUERA PARQUES Y MINAS, S.A. | Y MANTENIMIENTO, S.A. Centro de Proyectos e Ingeniería Crta. de Langreo-Oviedo, s/n C/ Hornos Altos, s/n (Valnalón) 33930 Barros (Asturias) 33930 La Felguera (Asturias) Spain Spain Tel.: +34 985 67 97 50 Tel.: +34 985 67 98 00 Fax: +34 985 67 97 97 Fax: +34 985 67 37 63 e-mail: [email protected] e-mail: [email protected]

| FELGUERA REVESTIMIENTOS, S.A. | FELGUERA TECNOLOGÍAS | FERESA | DE LA INFORMACIÓN, S.A. Crta. de Langreo-Oviedo, s/n C/ José María Martínez Cachero, 15 - bajo 33930 Barros (Asturias) 33013 – Oviedo (Asturias) Spain Spain Tel.: +34 985 67 97 50 Tel.: +34 985 27 29 89 Fax: +34 985 67 97 97 Fax: +34 985 27 59 60 e-mail: [email protected] e-mail: [email protected]

| TÉCNICAS DE ENTIBACIÓN, S.A. | MONTAJES DE MAQUINARIA | TEDESA | DE PRECISIÓN, S.A. Polígono de Silvota, parcela 10 | MOMPRESA 33192 Llanera (Asturias) C/ Rodríguez Sampedro, 5, 8ª Spain 33206 Gijón (Asturias) Tel.: +34 985 26 04 64 Spain Fax: +34 985 26 14 16 Tel.: +34 985 17 94 94 e-mail: [email protected] Fax: +34 985 35 53 77 e-mail: [email protected] | DURO FELGUERA | PLANTAS INDUSTRIALES, S.A. | OPERACIÓN Y MANTENIMIENTO, S.A. Centro de Proyectos e Ingeniería | OPEMASA C/ Hornos Altos, s/n (Valnalón) C/ Rodríguez Sampedro, 5, 8ª 33930 La Felguera (Asturias) 33206 Gijón (Asturias) Spain Spain Tel.: +34 985 67 98 00 Tel.: +34 985 17 94 94 Fax: +34 985 69 37 20 Fax: +34 985 35 53 77 e-mail: [email protected] e-mail: [email protected]

| FELGUERA GRÚAS Y ALMACENAJE, S.A. | FELGUERA-I.H.I., S.A. Centro de Proyectos e Ingeniería Parque Empresarial Las Rozas C/ Hornos Altos, s/n (Valnalón) C/ Jacinto Benavente, 4 33930 La Felguera (Asturias) 28230 Las Rozas (Madrid) Spain Spain Tel.: +34 985 67 98 00 Tel.: +34 91 640 20 51 Fax: +34 985 67 37 63 Fax: +34 91 640 21 00 e-mail: [email protected] e-mail: [email protected]

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SUBSIDIARIES AND BRANCH OFFICES ABROAD

MEXICO INDIA

| DURO FELGUERA MÉXICO, S.A. DE C.V. | DURO FELGUERA S.A. Río Tíber, 66 Piso 6 India Representative Office Col. Cuauthémoc 408, JOP Plaza, P-2, Sector 18 06500 – México DF Noida (U.P.) - 201 301, adjoining New Delhi México India Tel.: +52 5 55 08 000 51 Tel.: + 91 120 451 6210 / 11 Fax: +52 5 55 08 013 32 Fax: + 91 120 451 6310 e-mail: [email protected] e-mail: [email protected]

| PROYECTOS E INGENIERÍA PYCOR, S.A. BRAZIL | PYCORSA Río Tíber, 66 Piso 6 | DURO FELGUERA DO BRASIL LTDA. Col. Cuauthémoc Alameda Jaú, 1528 - Coj. 62 06500 – México DF 01420-002 - São Paulo México Brasil. Tel.: +52 5 55 53 358 90 / 93 / 94 Tel.: + 55 11 306 305 38 / 40 Fax: +52 5 55 20 760 11 Fax: + 55 11 306 305 39 e-mail: [email protected] e-mail: [email protected]

| DURO FELGUERA POWER MÉXICO, S.A. U.S.A. | DE C.V. José Benítez 2228 B Altos. Colonia Obispado | DURO FELGUERA Monterrey 64060 Delegación en USA Nuevo León – México 205 Cádiz Court Tel.: + 52 81 1052 8610 Merritt Island - Florida 32953 Fax: + 52 81 1052 8609 U.S.A. e-mail: [email protected] Tel.: + 1 321 452 6162 Fax: + 1 321 427 4085 | TURBOGENERADORES DE MÉXICO, S.A. e-mail: [email protected] | DE C.V. José Benítez 2228 B Altos. Colonia Obispado JORDAN Monterrey 64060 Nuevo León – México | DURO FELGUERA P.I., SA Tel.: + 52 81 1052 8610 Jordan Branch Fax: + 52 81 1052 8609 C.O. No 8 - 3rd floor. e-mail: [email protected] Haddad Center Building, Suweifiyeh P.O. Box 141556 Amman 11814 - Jordan VENEZUELA Tel.: + 962 6 5821366 Fax: + 962 6 5821366 | FELGUERA PARQUES e-mail: [email protected] | Y MINAS DE VENEZUELA, S.A. Urbanización Santa Elena. Manzana 15 Casa B4 Sector Río Aro Puerto Ordaz – Ciudad Guayana Estado Bolívar – Venezuela Tel.: + 58 41 48 92 82 46 Fax.: + 58 28 69 51 26 29 e-mail: [email protected]

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| Dep. Legal AS-

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