The Villar Mir Group is set up as the sum of different companies with their own identity and great autonomy, with an extremely reduced corporate structure, to maximally decrease the determining factors of the Group and the horizontal relationships between companies in the daily running of each company.

Management of the companies in the Villar Mir Group is done with utmost professionalism and decentralisation, with each subsidiary company wholly responsible for its own balance sheet and income statements. There are almost no horizontal or vertical Group determining factors. Therefore, the holding activity is limited to the tasks of holding, coordination, management support, monitoring and control.

For management purposes and with the objective of respecting the individual and autonomous nature of each business area, the Group activity is carried out in accordance with the following management structure:

HOLDING DIVISION

• Holding and management of shares Gropup companies. • Financial planning and control. • Management of minor activities.

FERRO-ALLOYS DIVISION

• Production and sale of ferro-alloys and silicon metal. • Research and development. • Quartz mining and manganese.

ENERGY DIVISION

• Generation and sale of electric energy.

FERTILIZER DIVISION

• Production and sales of fertilizers and industrial chemical products. • Engineering and design of chemical plants.

REAL STATE DIVISION

• Activities concernin the promotion of real estate.   • Office rentals.

CONSTRUCTION DIVISION

• Construction activities (building and civil works) both in Spain and overseas. • Industrial construction. • Promotion of infrastructures (concessions). • Services (enviroment and development).

FINANCIAL ASSETS DIVISION

• Management og Group Long term financial assets.

OTHER SUBSIDIARIES

		Grupo Pacadar, company engaged in the design, manufacturing and sale of reinforced and pre-stressed concrete structures.
		Mothercare, company that sells retail clothing and articles for children.
		Codisoil, company that markets, transports and distributes diesel oil.

Once again I have the pleasure of telling you about the development of the Villar Mir Group during the recentlycompleted financial year and of presenting the respective Annual Report.

During the 2009 fiscal period, framed by an extremely difficult international context aggravated by the toughest economic crisis since the 1930’s, the Group has once again delivered satisfactory results.

Economic Situation

In 2009 the world economy’s deterioration starting in February 2008 worsened, despite the fact that in the second half some developed economies (Germany, France and Japan) began to show some positive macroeconomic signs, followed by the United States in the third quarter. In turn, the main emerging countries (China, India, Brazil and others) have started to regain some strength thus making a major contribution to the world economy’s recovery.

In Spain, the world economic crisis has surfaced out the weaknesses of our economic model, with the slump of the real estate sector pushed and aggravated by the financial and economic crisis worldwide. This has been coupled by a marked and worrying loss of productivity, and hence of competitiveness, of our economy vis-à-vis the main developed countries caused by inflation levels far above our neighbours’ – around 1% annually over the past 10 years. This has led to the relative price increase of our products that, in the current highly competitive context, have been left virtually out of the markets.

The Spanish economy’s situation is extremely brittle. In fact, the loss of productivity mentioned above is coupled, on the one hand, by a high level of indebtedness that, even if in the case of the public administrations is not very high yet (55.2% at 2009 year end), for the overall economy it is as the debt of Spanish individuals, companies and public agencies amounts to around 200% of the GDP, and, on the other, by a heavy foreign deficit –the highest in the world in relative terms– although the fall in consumption, and therefore imports, has already started to correct this unbalance.

The first anti-crisis decisions taken by the Spanish authorities during 2009 proved to be useless since the structural measures needed have taken longer than they should have, also pushing public spending far beyond normal standards resulting in a public deficit of 11.4% of the GDP in 2009.

In order to solve such a difficult scenario, urgent structural and substantial measures are required that, in our opinion, should include:

• A dramatic reduction of the Spanish economy’s indebtedness as a whole (not only that of public administrations), which is absolutely necessary to issue more debt on the markets to refinance current payment obligations. In this regard, any steps taken by the Government would be most important because if the current level of public spending is maintained, together with the high budgetary deficit, families will have to reduce their indebtedness even more drastically and more time will be needed for the Spanish economy to recover.

• A major labour market reform is required, not only in terms of flexibilisation and lower costs of employment termination, which is only one aspect and probably not the most important one, in order to create jobs and reduce the high unemployment of 20% that is weighing down the Spanish economy.

• A reorientation of the energy policy in order to reduce the cost of this component of production to put it at the same footing as the rest of our competitors. For this purpose, it is necessary to continue applying the policy –already underway– of reducing the impact of renewable sources on the energy bill by migrating to more competitive energy sources, which undoubtedly include nuclear energy.

• Improved productivity through major investments in R+D+i and infrastructure which, together with the labour market reform, should enable companies to regain competitiveness globally, increasing our exports and cutting down our foreign deficit.

• A substantial restructuring of our financial institutions –especially small and medium sized companies and savings banks– in order to absorb the losses derived from the real estate crisis now and in the future and to favour the reactivation of credits to both companies and individuals.

• Completion of the radical adjustment of the real estate sector –already implemented– which continues to be both overvalued and oversized. The large stock of unsold real property must be absorbed by the market before the sector can see any recovery and, nonetheless, this process will still take some time.

The International Monetary Fund (IMF) and the World Bank have foreseen a positive growth of the world’s GDP in 2010, mainly driven by the “thrust” from the emerging economies. In the case of Spain, unfortunately, estimations are much worse since 2010 growth is expected to near zero, with unemployment levels above 20% of the active population –by far the highest amongst developed economies– and with still extremely high levels of public deficit (10.8%), despite the public spending cutting programmes implemented by the Spanish Government.

Regarding Grupo Villar Mir’s core activity sectors, the situation in 2009 was as follows:

• The Electrometallurgy Division underwent a tough year due to a sharp fall of demand and the drop of metal silicon prices and, particularly, that of ferroalloys worldwide. Such a fall, which spread rapidly in the last four-month period of 2008, continued well into the summer of 2009, when it began to show some slight and slow recovery that speeded up markedly in early 2010.

• The Fertilizers and Basic Chemicals Division also experienced an extremely difficult year characterised by very low prices of the finished products and a weak international demand, thus resulting in losses both in Spain and Portugal that could not be offset by Algeria’s proceeds. During the early months of 2010, like in the electrometallurgy sector, prices and demand began to regain much strength.

• The Energy Division, which currently operates in Spain only, had a hydrological year slightly below average in Galicia and slightly above average in the Pyrenees in a pool low price context due to the economic crisis delivering, however, satisfactory results.

• The real estate sector in Spain, the only one where the Group operates except for two projects recently started in the USA, continues to be seriously affected with a slump of demand in the residential subsector that has virtually disappeared rendering highly negative sales and results to the Group’s Real Estate Division which, however, obtained some benefits in 2009.

• Grupo OHL attained highly satisfactory results in a complex scenario thanks to the internationalisation and diversification strategy that has been successfully implemented since 2002. The construction sector in Spain, and particularly the civil works subsector in which Grupo OHL operates almost exclusively, continued to slide down. However, a strong increase of international construction and infrastructure promotion projects, most of which are carried out overseas and that in 2009 accounted for 61% of Grupo OHL’s EBITDA, has fostered its overall growth for another year.

Grupo Villar Mir

Financial year 2009 was a difficult one for Grupo Villar Mir’s Industrial Division, with reasonably good results given the context, but still considerably below the levels reached prior to the collapse of the world economy.

Consolidated sales in 2009 (including 100% of OHL) totalled 5,866 million Euros –i.e., 6.7% less than in the previous period– with a strong fall in the Fertilizers and Electrometallurgy Divisions, yet showing an increase for Grupo OHL. Out of that figure, 25.5% or 1,493 million Euros (-35.5% compared to 2008) corresponds to the rest of the Group companies, excluding OHL.

EBITDA fell by 31.8% against 2008 amounting to 959 million Euros, i.e. 16.4% over sales. Out of the total EBITDA, 791 million Euros correspond to Grupo OHL. On the other hand –these data being extremely important as they show the Group’s high degree of internationalisation– 85% over the Group’s total EBITDA in 2009 came from operations outside Spain, which in the case of OHL equals 88%. Thus, the difficult situation of the Spanish economy should have a minimum impact on the Group’s bottom line.

The net attributable profit (after taxes) in 2009 totalled 178 million Euros –i.e., 18.1% less than in 2008–, chiefly due to the losses obtained by the Fertilizers Division and the poor results delivered by the Electrometallurgy Division. However, Grupo OHL’s contribution increased by 12% as well as that of the Energy and Real Estate Divisions, although with a lower impact.

The Group’s consolidated total assets at the closing of 2009 amounted to 13,081 million Euros (13.6% higher than at the previous year end) and to 4,002 million Euros (2.7% less than the year before) consolidating OHL by global integration and the equity method respectively.

The net bank debt at the closing of the fiscal period, including debt with and without recourse, totalled 5,701 million Euros, with a 24.9% increase vis-à-vis the previous period. The net bank debt with recourse was tantamount to 2,222 million Euros accounting for 17% over total assets and 4.3 times EBITDA with recourse, even though this ratio is unusually high due to the low volume of EBITDA generated by the Group as a whole during 2009 in the unfavourable context described above.

The Consolidated Group’s total equity was 2,115 million Euros –16.2% over assets– with a 1.2 guarantee ratio. Out of such equity, Grupo Villar Mir’s equity amounts to 1,293 million Euros, the rest belonging to minority shareholders, mainly OHL. If OHL’s assets and liabilities are excluded, which given the sectors in which it operates (construction and concessions) it has a ratio of equity over total assets comparatively lower, the equity of the rest of Grupo Villar Mir (that is, consolidating OHL by the equity method) is significantly higher (31.6% over assets), with a guarantee ratio also higher (1.5 times), both figures being satisfactory.

The highlights of Grupo Villar Mir during 2009 are as follows:

• In the Fertilizers Division the acquisition of 100% of CUF Adubos de Portugal –today ADP Fertilizantes– was completed. This company includes all of the chemical fertilizers factories in the neighbouring country.

• In the Electrometallurgy Division further steps have been taken for the construction of the world’s largest metal silicon plant (with an output capacity of 120,000 tons/year), in the province of Sichuan.

• In the Energy Division further steps have also been taken for the implementation of the Energas project and significant headway has been made with the Chinese authorities for the award of four hydroelectric plants with an installed power of 560 Mw on the Liqiu river, in the province of Sichuan. These plants will supply power to the metal silicon factory and will place the surplus on the markets. Likewise, the first steps have been taken to start commercialisation in Spain both for the Group companies and third parties.

• Regarding Grupo OHL

– the international construction activity continued to show significant growth with a 56% increase in EBITDA;

– the operation of five federal highways under concession awarded in Brazil in 2008 began as well as the first phase of the Bicentenary Viaduct; also, the works of new concessions in Mexico (next phases of the Bicentenary Viaduct and the Mexican Outer Belt) and in Peru (North highway awarded in 2009), with a 34% EBITDA increase and a 17% long-term portfolio increment; and

– a major capital increase of 20% (1x5) has taken place, thus reinforcing Grupo OHL’s capitalisation levels.

2010 Outlook

During 2010 the Group will continue to implement its internationalisation and diversification strategy with quite a favourable forecast in broad terms that make it possible to claim that the impact of the 2009 crisis will be almost over returning to profit levels similar those prior to the downturn of approximately 300 million Euros after taxes.

The outlook broken down by sector is the following:

• The Electrometallurgy Division will deliver satisfactory results, especially from metal silicon, showing a recovery in demand and prices and rendering significant gains, as it has been the case in the early months of this year. As for Spanish factories, low energy costs will also contribute to better results.

• In the Fertilizers Division an improvement is also estimated compared to 2009, with a rapid price recovery and consumption levels clearly above the previous period. This will most certainly contribute to recover profit levels as already shown in the first part of 2010.

• Regarding the Energy Division a slight improvement compared to the average year is estimated since, although the pool prices in Spain are still low, high rainfall levels during early 2010 make it possible to forecast better results than in 2009.

• During 2010, and probably for at least two or three consecutive periods, the Spanish real estate sector will continue to undergo a strong adjustment. Hence, activity estimates in this area are very low.

• In the construction and infrastructure promotion sector, the Spanish Government announced in early 2010 a dramatic cut in public works, which will negatively affect these activities in our country.

Fortunately, however, the Spanish operation only generates 12% of Grupo OHL’s EBITDA, so this standstill will impair its bottom line moderately. The international construction activity and, above all, infrastructure promotion (mainly in Brazil and Mexico) will continue to grow strongly in 2010, boosting Grupo OHL’s estimated results above those in 2009, when they already showed some positive signs.

The Group will continue focusing on the large projects started some years ago (ammonia in Algeria, Energas in China), where significant progress is expected to be made. No other significant projects are foreseen, except in the area of infrastructure concessions where an annual investment of 1,000 million Euros will be maintained reinforcing, if applicable, the policy of prudence and financial security in order to ensure investment grade financing across the Group companies on a permanent basis.

Based on the foregoing, we can ascertain that in the 2010 period 2009 sales and results will be clearly surpassed by all divisions, except for the Real Estate Division and the National Construction Division of Grupo OHL, reaching consolidated results that will show that Grupo Villar Mir has finally overcome the effects of the world economic crisis.

On behalf of the Board of Directors, I would like to extend my appreciation once again to our customers, suppliers and financial institutions supporting the various companies of the Group, as well as its entire staff, for their effort and dedication.

Juan-Miguel Villar Mir
Chairman of the Board of Directors

BALANCE SHEET AND INCOME STATEMENT EVOLUTION

The basic data for the different divisions in the Group, and for the consolidated group, for the 2009 period are the following:

Balance Sheet and Income Evolution

The Group sales (fully consolidated OHL) reached the sum of 5,865.9 million Euros, which is 6.7% less than the previous year. Sales, consolidating OHL by the equity method, which does not, therefore, include Grupo OHL’s, amounted to 1,492.5 million Euros, 35.5% less than in 2008.

The sales evolution for the different Group divisions is as follows:

Sales Evolution

Sales 2000-2009

In terms of turnover, the main activity is still, by far, construction, representing 57% of the Group’s income, followed by infrastructures development, with 13% and electrometallurgy with 11%. Below are the fertilizers activities. Finally, and farther down in terms of sales volume, are services, real estate and power generation.

Sales by Activity

58.1% of the Group’s overall sales in 2009 were placed abroad.

Distribution of Foreingn Sales by Activity

The Group’s consolidated income (earnings after tax) during 2009 amounted to 178.1 million Euros, which should be considered satisfactory in such an extremely complicated world economic scenario as the one experienced during 2009.

Per division contributions to 2009 profits and a comparison with the previous period is as follows:

Division Contributions

The net attributable profit evolution for the different Group divisions is as follows:

Net Attributable Profit Evolution

Attributable Net Profit

Consolidated EBITDA amounted to 959.4 million Euros (equivalent to +16.4% of sales), with a +31.8% year-onyear reduction.

EBITDA evolution for the different Group divisions is as follows:

EBITDA Evolution

The net cash flow (attributable profit + amortisation) in 2009 amounts to 511.7 million Euros, with an 11.7% year-on-year reduction.

As to the consolidated balance sheet, the Group’s total assets at 31 December 2009 amount to 13,043.3 million Euros, with a +13.2% year-on-year growth.

Total assets evolution for the different Group divisions is as follows:

Total Assets Evolution

The equity financing said assets, i.e., Grupo Villar Mir’s shareholders’ equity plus external shareholders’ equity, mainly OHL’s (Total Equity), amounts to 2,076.8 million Euros, equivalent to 15.9% of total assets.

Grupo Villar Mir’s equity (excluding external shareholders) amounts to 1,255.4 million Euros.

Shareholder Equity + Minority Interest / SHareHolder Equity

Total net consolidated bank debt amounts to 5,701.4 million Euros (43.7% of assets). 3,174.7 million Euros of the total bank debt correspond to non-recourse debt.

The bank debt is equal to 5.9 times the EBITDA generated in 2009 even though it should be noted that, as regards to this ratio, a significant portion of said debt corresponds to investment financing (mainly for Torre Espacio Castellana and concessions of motorways under construction), which has not yet started to generate EBITDA.

Net bank debt figures for the different Group activities are as follows:

Net Bank Debt Figures

Permanent Resources (long-term non-receivable plus receivable funds) at 31 December 2009 amount to 7,772.5 million Euros, i.e., 59.58% of consolidated assets (fully consolidated OHL).

The return on equity in 2009 was 13.9%, calculated over average consolidated shareholders’ equity, which is a satisfactory ratio.

At 31 December 2009, the Group had 27,945 employees, 21,401 of which were employed by Grupo OHL. The average turnover per employee during 2009 was 210 thousand Euros.

At 31 December 2009, 71.5% of OHL staff and 54.4% of Grupo Villar Mir staff as a whole (including OHL) worked outside Spain, showing the Group’s high level of internationalisation.

HIGHLIGHTS OF THE GRUPO VILLAR MIR
GRUPO VILLAR MIR GRUPO VILLAR MIR GRUPO VILLAR MIR 2009 2005-2009 With OHL consolidated by the equity method 2005-2009  With OHL consolidated by full consolidation
EVOLUTION OF HIGHLIGHTS 2005 -2009
ELECTROMETALLURGY DIVISION	ENERGY DIVISION	FERTILIZERS DIVISION	REAL ESTATE DIVISION	GRUPO OHL
2005-2009	2005-2009	2005-2009	2005-2009	2005-2009

HIGHLIGHTS PREVIEW 2010

Main Figures 12/31/2010 MM EUR

Balance Sheet as of 12/31/2010 MM EUR

1995-2010 Group Evolution

2011 Budget MM EUR

GRUPO VILLAR MIR S.L. BOARD OF DIRECTORS (al 31/12/2008)
CHAIRMAN	MEMBERS
Mr. Juan-Miguel Villar Mir	Ms. Silvia Villar-Mir de Fuentes
	Mr. Álvaro Villar-Mir de Fuentes
VICE-CHAIRMAN	Mr. Francisco J. de la Riva Garriga
Mr. Juan Villar-Mir de Fuentes
MANAGING DIRECTORS	NON-BOARD MEMBER SECRETARY
Mr. Javier López Madrid	Mr. Daniel García-Pita Pemán
Mr. Tomás García Madrid
	VICE-SECRETARIES
	Ms. Isabel García Pita Ripollés
	Mr. Iván Muñoz López de Carrizosa
GRUPO VILLAR MIR EXECUTIVE COMMITTEE
CHAIRMAN	MEMBERS
Mr. Juan-Miguel Villar Mir	Mr. Juan Villar-Mir de Fuentes
	Mr. Javier López Madrid
	Mr. Tomás García Madrid
MANAGEMENT TEAM OF THE PARENT COMPANY (GRUPO VILLAR MIR S.L.)
MANAGING DIRECTOR	DIRECTOR OF ADMINISTRATION AND CONTROL
Mr. Tomás García Madrid	Mr. Íñigo Cano Asua
LEGAL CONSULTANCY DIRECTOR	DIRECTOR OF PLANNING AND FINANCE
Ms. María Cachero Ribes	Mr. Manuel Garrido y Ruano

HISTORY OF THE VILLAR MIR GROUP

JULY 1987		• Acquisition of Inmobiliaria Espacio, S.A. and Obrascón, S.A. from Altos Hornos de Vizcaya (AHV), S.A.
JULY 1991		• Listing of Obrascón, S.A. on the Stock Exchange of Madrid.
DECEMBER 1992		• Acquisition of Ferroatlántica, S.L. from Carburos Metálicos, S.A. (under the control of Air Products).
MARCH 1995		• Acquisition of Fesa/Fertiberia from Ercros/Freeport McMoran.
JANUARY 1996		• Acquisition of Cuarzos Indutriales, S.A. from Cimpor (Portugal).
MAY 1996		• Takeover bid on 100% of Hidro Nitro Española, S.A. • Acquisition of Elsan, S.A. from private shareholders.
DECEMBER 1996		• Takeover bid on 100% of Sefanitro, S.A.
JANUARY 1997		• Acquisition of Sato, S.A. from private shareholders.
JUNE 1998		• Takeover of Huarte, S.A. by Obrascón (Obrascón Huarte OH, S.A.).
JULY 1998		• Acquisition of Pacadar, S.A. from private shareholders.
DECEMBER 1998		• Acquisition of 80% of Ferroven, S.A. from th State of Venezuela at a public auction.
MAY 1999		• Merger by takeover of Lain, S.A. by Obrascón Huarte, S.A. (OHL, S.A.).
JULY 2000		• Acquisition of 67% of Rocas, Arcillas y Minerales, S.A. (RAMSA) from the Norwegian ELKEM Group.
MAY 2005		• Acquisition of 100% of Pechiney Électrométallurgie from ALCAN (Canada).
AUGUST 2005		• Acquisition of 66% of Fertial SPA from the State of Algeria.
DECEMBER 2006		• GVM achieves the majority interest (50,7%) in the OHL Group.
DECEMBER 2007		• Commissioning of Torre Espacio Castellana.
JANUARY 2008		• Acquisition of the assets of Rand Carbide PLC (ferroosilicon plant) in South Africa.
JUNE 2008		• Incorporation Ferroatlántica Brasil Mineraçao Ltd.
APRIL 2009		• Acquisition of 100% of Adubos de Portugal. • Incorporation of Silicio Ferrosolar S.L.
NOVEMBER 2010		• Acquisition of the Silice Silicon Industries assets 8Silicon Metal factory), in the Rep of China (Yunnan)
2011		• Start of construction foreseen for:    - the world largest ammonia plant in Arzew (Algeria)    - the world largest silicon metal in Sichuan (China)    - Hidroelectril plant of 560 MW in Sichuan (China)    - a regasification plant in Huelva (Spain)

PRINCIPLES OF THE VILLAR MIR GROUP

Group
• Family-Run,
• Independent,
• Industrial,
• Diversified and
• Decentralized

Integrity, Honesty and Ethics in All Aspects of Business

Satisfaction by
• Work with Passion,
• With a Vocation of Leadership,
• With the Capacity to Save and Consolidate Companies with Difficulties,
• With a Spirit of Overcoming Problems and Constantly Improving,
• With Long-Therm Criteria,
• Encouraging Individual Initiative,
• With the Utmost Delegation and
• Rewarding According to Result 

Responsible Loyalty to
• Customers,
• Employees,
• The Community and
• Shareholders.

Commitment to Quality, Safety and Respect for the Environment

Maximum Profits and Self-finanding
• As a Goal and
• As a Means for a Policy of
   • Financial Security,
   • With Ambitious Investments.

VILLAR MIR HIGHLIGHTS

FAMILY-OWNED	• 100% owned by its founder (D. Juan-Miguel Villar Mir) and his three sons.
INDEPENDENT	• No chares are held by any other institution, either financial or any other nature.
INDUSTRIAL	• Basic industrial sectors, construction, real estate and services. • Long-term action criteria. No sales of companies.
DIVERSIFIED
DESCENTRALIZED	• No Group constraints: each company if fully responsible for its Balance Sheet and Income Statement. • The Group in designed as the sum of individual companies with their own entity and great autonomy. Very reduced corporate structure.
INTERNATIONAL	• Permanet presence in 32 countries on 5 continents.
INNOVATIVE	• Ongoing activities in R&D&i

GRUPO VILLAR MIR INTERNATIONAL ACTIVITIES

Increasing internationalization is the first priority for Grupo Villar Mir.
 

Presence	Profile 2010	Sales 2010	Employees 2010	Evolution