SEPI Sociedad Estatal de Participaciones Industriales

• This results would reach 272 M€ without the workforce commitments for the mining and shipbuilding industries
• The Group keeps a very low indebtedness level and its financial autonomy, without having to resort again to the State General Budget

Mr. Ramón Aguirre, Chairman of the state-owned industrial holding company Sociedad Estatal de Participaciones Industriales (SEPI), appeared this evening before the Budgetary Committee of the lower house of the Spanish Parliament in order to explain the key figures in SEPI's 2016 Budget.

Mr. Aguirre announced that 'in 2016, Grupo SEPI will earn a 171 M€ net profit'. 'These earnings would reach 272 M€ were we not to include the commitments assumed with the workforce for the mining and shipbuilding industries', he stated.

These accounts will mean, once again, as has happened along the Parliament's current term of office, that SEPI will not contribute towards the State?s deficit, nor that it will have to resort to the State Budget. After all, Grupo SEPI will begin the financial year 2016 with 589 M€ in cash. 'Notwithstanding the above, there is still some cash stress, mostly caused by HUNOSA, IZAR and NAVANTIA, which will be covered through borrowing from banks', he warned.

According to SEPI's Chairman, 'the debt of the state-owned holding company will reach 728 M€, which amounts to a very low level of 5.65% of the total assets, which will make possible for this company to preserve its financial autonomy'.

Furthermore, the turnover will reach 4,827 M€ (13% more than the 4,725 M€ recorded in 2015), and it will keep the growth's path recorded during the Parliament?s current term of office.

As for the trend of the employment, the workforce of Grupo SEPI will reach in 2016 a total of 70,906 employees, which will entail a 2.6% decrease, due to natural wastage, in comparison with the early estimates for the closing of the financial year 2015.

Review of the Group's companies

After explaining the main figures which will define the next financial year for Grupo SEPI, Mr. Aguirre analyzed the most relevant questions affecting the main companies in the Group.

In the case of CORREOS, he pointed out that the current third collective bargaining agreement will continue in force until a new agreement is reached, although he announced that the legal tool for a new consolidation process of the workforce will begin, with the entry into force for remunerations of the final approval of the measures included in the State General Budget for the financial year 2016. Furthermore, he stated again the significance of the removal of the debt resulting from the supply of the Universal Postal Service, after the collection of 518 M€.

Regarding NAVANTIA, SEPI's Chairman showed again the continuous support provided by the Government to this company through the Ministries of the Treasury, Industry and Defense, analyzed the consequences of the lifting of the veto for civil shipbuilding imposed by the European Commission, an instance of which is the order for the construction of the SUEZMAX-type oil tankers for 2016, and he showed his commitment with diversification, as proved the recent contract won in such projects as WIKINGER or STATOIL.

Besides, he praised the realities of the accommodation ship (flotel) and of the offshore multi-role vessels (BAMs), the good health of the Repairs branch, with a high average workload of more than 90%, and the significant commercial activity carried out by the company during the last four years, with a total of 314 bids submitted in the civil, wind power, and military market, in more than 30 countries per year on average, such as for instance, in Australia, New Zealand, Saudi Arabia, Turkey, Brazil, or Canada.

With regard to energy, Mr. Aguirre highlighted the importance which had the solution found for adapting ENSA's and ENUSA's workforces to the requirements resulting from their contractual undertakings. Furthermore, he stressed the signing of the new collective bargaining agreement and the labor stability in both companies, besides pointing out the increase in ENSA's turnover thanks to its sound order book.

The highest ranking officer at the state-owned holding company also stressed the consolidation experienced by MERCASA and CETARSA in the international market - the former has experienced an increase of more than 38% in its turnover -, and the advantages resulting from the Prices Agreement reached by the tobacco company.

Finally, he mentioned the optimal results obtained in the grants program of Fundación SEPI, the project for integrating this program in the Ibero-American Summit, or the opening for this school year of the Hall of Residence after the refurbishment work carried out in it last year.