INFORMATION ABOUT HUNOSA GROUP

The company plan applied in Hunosa, based on the Plan for the Coal Mining  and Alternative Development of the Mining Zones has as its main objective to guarantee a stable dimension of the company, with those reductions in the level of activity which have the lesser impact on the surpluses, keeping the acquisitive power and social and working conditions for the workers, always taking into account the special characteristics of the mining zones.

Company Plan and the Collective Agreement 2006/2012

The Chairman and the Vice President of the state-owned holding company Sociedad Estatal de Participaciones Industriales (SEPI), Mr. Enrique Martínez Robles and Mr. Federico Montero Hita, respectively; Hunosa´s Chairman, Mr. Juan Ramón García Secades, and the highest-ranking officers of the trade unions SOMA-FIA-UGT, Mr. José Ángel Fernández Villa, FMM of CC.OO., Mr. Maximino García Suárez, and the Federación de Cuadros, Mr. Juan Antonio García García, have signed the Company Plan and the Collective Agreement which will be in force during the years 2006/2012 in the coal-mining company.

The above mentioned Company Plan guarantees the future of the mining activity, and assumes the objectives and guidelines of the National Plan for the Strategic Coal Reserve for the same period 2006-2012, which provides a long-term stability to Hunosa´s mining facilities. The access to the Strategic Reserve also contributes to the principle of security for the country energy supply which is included in the current Company Plan, which sets a production goal for Hunosa for the year 2010 of 860,000 tons.

The Plan also takes into account, and in a very special way, the economic and social significance which Hunosa has in the Asturian Central coal mining zone. For this reason, it will promote its contribution to the zone´s development through an increased effort in its diversification and industrial promotion activity. The Plan envisages the generation, until 2010, of almost 1,800 new jobs, of which 900 will take place in alternative projects to coal-mining, while the remaining will consist in new contracts or job transfers within the Company itself.

Hunosa´s Company Plan is organized in two phases: 2006/2010 and 2011/2012, and it includes an Industrial Plan, which will equip the Company with the production structure and capacity, and a Diversification Activities and Industrial Promotion Plan whose goal is the development of alternative projects to coal-mining.

The first phase ends with the expiration of the Council´s Regulation 1407/2002, and during this phase the technical parameters which determine the Company´s adjustment to a size which allows its long-term and stable continuity will be set. For the second phase, the company´s structure which results from the previous phase will make possible the continuity objective, in a compatible way with the Mining National Plan 2006/2012, the European Union norms and the required loss reduction.

The signature of the Collective Agreement for the years 2006/2012 means also the definition of a stable industrial framework for the next seven years, in which are stipulated the relations between the Company and the workers, with a 2% wage raise. Equally, an agreement has been signed regarding the treatment to be given to the manpower surplus which will take place within the framework of the Company Plan, in which a workforce objective is defined, at the end of 2010, of 2,042 workers.

Activity of the company in year 2009:

In the coal market for thermal power stations, HUNOSA has the guaranteed sale of all its production through an exclusive supply contract with its customer, whose validity has been extended until December 31st, 2012. However, in keeping with that stipulated in the Mining Plan, the Company must gradually reduce its gross production, which during this year must be 6.4% below that recorded in the previous year. However, the higher quality of the coal extracted (weighted yield), has meant that the washed production has reached 951,857 tons, just 2.4% below that in 2008.

Prices have been negatively affected both by the evolution of the international price of coal for thermal power plants imported into the EU, which is set in dollar terms, which was on average 18.8% below that recorded a year before, and by the evolution of the exchange rate of the Euro to the Dollar, whose average in 2009 has been of 1.39 Euros/$, against 1.47 Euros/$ in 2008.

As a result, the Group¿s turnover has been negatively affected in 2009 as a result of the combination of the reduction in the sale volumes, both of coal and energy, and the reduction in the sale prices of both, reaching 150 Million Euros, which represents a 5% decrease on the figure recorded in 2008. A reduction has also been recorded in the income of the industrial promotion affiliated companies (SADIM and SODECO), which depend on the general evolution of the interest rates.

Coal productivity has reached 2,292 kg/wage, which means a 7.1% increase on the previous year. The final workforce of the Group has been 2,347 persons, after the early retirement of 410 workers based on the terms and conditions stipulated in the Plan.

The savings in operating expenses, especially those in personnel expenses, have partially offset the income reduction, although the losses after taxation reach 1.4 Million Euros.

As for the investment in promotion and as part of the commitments made in the Mining Plan, SADIM Inversiones has committed 7.1 Million Euros, which is expected will generate 146 jobs; in this way, it is expected that the number of jobs created thanks to the investments approved during the period during which the Plan will be in force amounts to 1,008 jobs, 12% above the goal set until 2010.