Informe Anual
2014 Annual Report
ANNUAL REPORT 2014 INFORME ANUAL
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CONTENTS ÍNDICE
LETTERS TO SHAREHOLDERS
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STRATEGY 2013-2017
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TUBACEX SHARES IN 2014
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CORPORATE RESPONSIBILITY REPORT 2014
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ANNUAL ACCOUNTS
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BUSINESS DIRECTORY
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CARTAS A LOS ACCIONISTAS Letter from the Chairman Letter from the CEO
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ESTRATEGIA 2013-2017
Carta del Presidente Carta del Consejero Delegado
CORPORATE INFORMATION 13
LA ACCIÓN DE TUBACEX EN 2014
INFORMACIÓN CORPORATIVA Governing bodies Órganos de gobierno Key figures Principales cifras del ejercicio Mission, vision & values Misión, visión y valores Global presence Presencia internacional
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2014 HIGHLIGHTS ACONTECIMIENTOS DE 2014
PERFORMANCE FOR THE YEAR INFORMACIÓN CORPORATIVA
INFORME DE RESPONSABILIDAD CORPORATIVA 2014
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CUENTAS ANUALES
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DIRECTORIO DE EMPRESAS
Market environment Entorno de mercado Results for the year Resultados del ejercicio Business evolution Evolución del negocio Capital expenditure Inversiones
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General Report to Shareholders Informe General a los Accionistas
LETTERS
TO SHAREHOLDERS CARTAS A LOS ACCIONISTAS
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Strategy 2013-2017 Estrategia 2013-2017
ÁLVARO VIDEGAIN
CHAIRMAN · PRESIDENTE
Dear Shareholder,
Estimado accionista,
It is an honor for me to address you once again as Chairman of the TUBACEX Board of Directors, and share some of the most relevant aspects that have occurred in 2014, which has undoubtedly been an important year for our Company in this new phase.
De nuevo es un gran honor dirigirme a usted un año más como Presidente del Consejo de Administración de TUBACEX para poder compartir los aspectos más destacados que se han producido durante el ejercicio 2014, el cual sin duda ha sido muy importante en esta nueva etapa para nuestra compañía.
Following the celebration of the company’s fiftieth anniversary and the implementation of the Strategic Plan with a 2017 horizon, I am in a position to declare that, in 2014, the company I have presided over for more than two decades has taken firm steps on its path towards sustainability and international growth. The Group’s transformation is extremely relevant, with the expansion of our industrial activities throughout the world. With this, I am not only referring to the recent acquisition of the Italian company, IBF, which undoubtedly extends the company’s perimeter, our industrial and commercial capacities and perfectly rounds off our product range, but also to the consolidation of the bases and processes that will enable the company to become a world leader, as set out in its corporate vision.
Tras la celebración del cincuenta aniversario de la compañía y la puesta en marcha del Plan Estratégico con el horizonte puesto en el año 2017, estoy en condiciones de manifestar que la compañía que presido desde hace más de dos décadas, ha dado pasos firmes durante el ejercicio de 2014 en su camino hacia su sostenibilidad y crecimiento internacional. La transformación del Grupo está siendo muy relevante con la expansión de nuestras actividades industriales por el mundo. Con esto no solo me refiero a la reciente adquisición de la compañía italiana IBF, que sin duda amplía de forma muy destacada el perímetro societario, nuestras capacidades tanto industriales como comerciales así como completa a la perfección nuestra gama de productos, sino también a la consolidación de las bases y procesos que permitirán que la compañía se convierta en el referente mundial que se describe en su visión corporativa.
All of this is the result of internal effort, whilst always focusing on continuous improvement and the commitment of our investors to the TUBACEX project, which is one of our essential pillars. In this respect, I would like to inform you that at the beginning of 2014, following the total divestiture of capital by Bagoeta SL, who had supported us since 2006, new shareholders entered the company, such as Corporación Aristrain, among others, who share and support the TUBACEX long-term project.
Todo ello es fruto tanto del esfuerzo interno realizado siempre con el foco de la mejora continua así como del compromiso de nuestros inversores en el proyecto de TUBACEX y que es uno de nuestros pilares fundamentales. En este sentido, quiero informarle de que a principios de 2014 y tras la desinversión total en el capital por parte de Bagoeta SL, quien nos acompañaba desde 2006, se ha producido la entrada en la compañía de nuevos accionistas, como Corporación Aristrain entre otros, que comparten y apoyan el proyecto a largo plazo de TUBACEX.
ANNUAL REPORT 2014 INFORME ANUAL
I am pleased to inform you that, thanks to the effort of us all, this second year of the Strategic Plan has closed with extremely positive results, bearing in mind the market complexity and the sharp fall in oil prices in the second half of 2014. I am not going to go into great detail here, but proof of the confidence in our management has been the positive market acceptance of the issue of promissory notes during the year.
Me alegra poder comunicarles que, con el esfuerzo de todos, este segundo año de vigencia del Plan Estratégico se ha cerrado con unos resultados muy positivos, teniendo en cuenta la dificultad del mercado y el desplome del precio de petróleo iniciado a mediados de 2014. No me voy a extender en este capítulo, pero una prueba de la confianza en nuestra gestión ha sido la buena aceptación por parte del mercado de la emisión de pagarés lanzada durante este ejercicio.
Furthermore, we are continuing to work on innovative projects, determined to make use of all the tools available to us to optimize the value of our company and reward the trust placed in us.
Además, seguimos trabajando en proyectos muy innovadores, decididos a hacer uso de todas las herramientas que estén a nuestro alcance para maximizar el valor de nuestra compañía y recompensar la confianza depositada en nosotros.
In this respect, I am proud to say that the company has reaffirmed its shareholder retribution policy and, trusting in the soundness of its management system, it has opted once more for the payment of interim dividends. In 2014, we have paid out two dividends, one corresponding to 2013 and the other to 2014, which will be supplemented by another dividend payment in the second half of the year.
En este sentido, me enorgullece decirles que la compañía en este ejercicio ha reafirmado su política de retribución al accionista y que, confiando en la solidez de su sistema de gestión, ha optado nuevamente por el pago a cuenta de dividendos. En total, durante 2014 hemos abonado dos pagos de dividendo, uno referido al ejercicio de 2013 y otro de 2014 que se verá complementado con otro dividendo en el segundo semestre del ejercicio.
I would also like to point out that the TUBACEX Board of Directors has expressly defined its framework for Corporate Social Responsibility this year and has continued making significant progress in this field. Ever aware of the direct and indirect impact of its activity on its areas of influence, the company has integrated traditional relations with its stakeholders in its management plans.
También me gustaría señalar que este año, el Consejo de Administración de TUBACEX ha definido expresamente su marco de Responsabilidad Social Corporativa y ha seguido avanzado de forma importante en este campo. Consciente en todo momento de los impactos tanto directos como indirectos, que produce su actividad en su zona de influencia, la compañía ha integrado las relaciones tradicionales con sus grupos de interés en sus planes de gestión.
Finally, with respect to 2015, we hope to continue improving with the necessary realism in such an uncertain economic environment. We trust that our commitment to operational excellence will help us to deal with the adversities and will enable us to continue consolidating our worldwide leadership.
Por último, y respecto al ejercicio de 2015 esperamos poder seguir mejorando pero con la dosis necesaria de realismo en un entorno económico tan lleno de incertidumbres. Confiamos en que nuestro compromiso con la excelencia operacional nos ayude a gestionar adecuadamente las adversidades y nos permitan seguir consolidando nuestro liderazgo mundial.
Thank you for trusting in TUBACEX.
Agradeciendo su confianza en TUBACEX.
“The Group’s transformation is extremely relevant, with the expansion of our industrial activities throughout the world.” Alvaro Videgain
“La transformación del Grupo está siendo muy relevante con la expansión de nuestras actividades industriales por el mundo.”
Chairman · Presidente
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Strategy 2013-2017 Estrategia 2013-2017
EBITDA margin, the product mix and the working capital over sales. As announced in June 2014, we have begun the second phase of the Strategic Plan, focused on growth. The acquisition of IBF SpA announced in November 2014 (whose incorporation into our Group began in 2015) and the agreement to acquire Prakash Steelage signed in February 2015 fall into the framework of this phase. Both operations, together with the TUBACEX Services project in Cantabria have enabled TUBACEX to become the leading manufacturer of seamless stainless steel tubes worldwide and capable of offering the widest dimensional range. With a view to the current year, the drastic fall in oil prices has caused a slowdown in investments in the oil and gas and petrochemical sector (the main demand sectors for seamless stainless steel tubes) since the final months of 2014, and has continued throughout the first months of 2015. For this reason, we can say that we have a complicated year ahead of us, full of uncertainty.
JESÚS ESMORÍS
CEO · CONSEJERO DELEGADO
Dear Shareholder,
Estimado accionista,
It is an honor for me to address you once again to inform you of the key aspects throughout the year and the intense work being carried out within the organization.
Es para mí un honor dirigirme a usted un año más para informarle de los aspectos más relevantes del ejercicio y del intenso trabajo que estamos realizando en toda la organización.
The 2014 financial year evolved in an unfavorable market environment, marked by uncertainty in macroeconomic terms and, in particular, by the drastic fall in oil prices in the second half of the year. In spite of the negative situation, our company has continued progressing in its Strategic Plan and based on its two major pillars -specialization in premium products and operational excellence- it has significantly increased its operating profit and margins.
El ejercicio de 2014 se ha desarrollado en un entorno de mercado desfavorable, marcado por la incertidumbre en el plano macroeconómico y, sobre todo, por la significativa caída del precio del petróleo desde mediados de año. Pese a esta negativa situación, nuestra compañía ha seguido avanzando en su Plan Estratégico y, apoyándose en sus dos grandes pilares, la especialización en productos premium y la excelencia operacional, ha mejorado sustancialmente sus resultados y sus márgenes operativos.
The gross operating profit (EBITDA) increased 25.1%, reaching 64.1 million Euros and the profit margin increased from 9.3% last year to 11.7%, thanks to the better mix and operational improvements implemented. Profit before tax nearly doubled with respect to the previous year, reaching 32.6 million Euros. As for the net profit, it increased by 58.3%, reaching 23.7 million Euros.
El resultado bruto de explotación (EBITDA) ha crecido un 25,1% hasta situarse en 64,1 millones de euros y el margen ha mejorado desde el 9,3% del año pasado hasta el 11,7%, gracias al mejor mix y a las mejoras operacionales implantadas. En términos de beneficio antes de impuestos, éste prácticamente se ha duplicado con respecto al año pasado y ha alcanzado los 32,6 millones de euros. Por su parte, el beneficio neto ha aumentado un 58,3% situándose en 23,7 millones de euros.
Throughout this year, we have continued working on the financial deleveraging process which began last year. In this way, net financial debt has been reduced by 43.1 million Euros and its ratio over EBITDA stands at 2.4 times. In 2014, we concluded the first phase of our Strategic Plan, aimed at cash generation. As can be verified in the Strategy section, we have fulfilled all of the objectives set for the close of this phase and on some occasions, we have even far exceeded them, as is the case of the targets set for the
ANNUAL REPORT 2014 INFORME ANUAL
A lo largo de este ejercicio hemos seguido trabajando en el proceso de desapalancamiento financiero iniciado el año pasado. De esta manera la deuda financiera neta se ha reducido en 43,1 millones de euros y su ratio sobre EBITDA se sitúa en 2,4x. Con este ejercicio de 2014 damos por concluida la primera fase de nuestro Plan Estratégico, enfocada en la generación de caja. Como podrá comprobar en el apartado de Estrategia, hemos cumplido todos los objetivos que nos planteábamos para el
However, at TUBACEX, we are fully committed to our project. Although 2015 will evolve in an unfavorable environment, all of the improvements made over the past two years will enable us to face this environment from a better position. We are going to continue working towards the fulfillment of our strategic objectives, maintaining our specialization strategy in high quality products, our commitment to innovation and progressing towards continuous improvement. These are the actions that will help us make the most of the circumstances when the market improves, which it is bound to. All of the people that form part of the TUBACEX Group are going to work in this direction and I am convinced that with the effort of us all, we will emerge stronger from this situation.
cierre de esta fase e incluso, en algunas ocasiones, los hemos sobrepasado de manera llamativa, tal es el caso de los objetivos marcados para el margen EBITDA, el mix de producto y el capital circulante sobre ventas. Como ya anticipábamos en junio de 2014, hemos comenzado la segunda fase del Plan Estratégico orientada al crecimiento. Dentro de esta fase se enmarcan la adquisición de IBF SpA anunciada en noviembre de 2014 (que se ha empezado a integrar en nuestro Grupo desde comienzos de 2015) y el acuerdo para la adquisición de Prakash Steelage firmado en febrero de 2015. Ambas operaciones unidas al proyecto de TUBACEX Services en Cantabria han permitido a TUBACEX convertirse en el primer fabricante del mundo de tubo de acero inoxidable sin soldadura y el que mayor gama dimensional ofrece. De cara al presente ejercicio, la drástica caída del precio de petróleo ha provocado desde los últimos meses de 2014 un retraso en las inversiones del sector de petróleo, gas y petroquímico (los principales sectores demandantes de tubo de acero inoxidable sin soldadura), que se ha mantenido en los primeros meses de 2015. Por esta razón, podemos afirmar que tenemos por delante un ejercicio complicado y lleno de incertidumbre. Sin embargo en TUBACEX confiamos plenamente en nuestro proyecto. Aunque el ejercicio de 2015 se desarrolle en un entorno desfavorable, todas las mejoras realizadas en los dos últimos años nos permiten afrontar este entorno desde una mejor posición. Vamos a seguir trabajando en la consecución de nuestros objetivos estratégicos, manteniendo nuestra estrategia de especialización en productos de alta gama, nuestro compromiso con la innovación y avanzando en la mejora continua. Porque son estas acciones las que nos permitirán aprovechar al máximo las circunstancias cuando se produzca la mejora del mercado, que sin duda se producirá. Todas las personas que formamos el Grupo TUBACEX vamos a trabajar en esta dirección y no me cabe duda que con el esfuerzo de todos saldremos reforzados de esta situación.
“...maintaining our specialization strategy in high quality products, our commitment to innovation and progressing towards continuous improvement” Jesús Esmorís CEO · Consejero delegado
“manteniendo nuestra estrategia de especialización en productos de alta gama, nuestro compromiso con la innovación y avanzando en la mejora continua”
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General Report to Shareholders
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Informe General a los Accionistas
CORPORATE
Vision: To be a global reference and supplier worldwide in the Oil&Gas sector Visión: Ser un proveedor global y de referencia a nivel mundial en el sector de Oil&Gas
INFORMATION
INFORMACIÓN CORPORATIVA 1.1.
GOVERNING BODIES ÓRGANOS DE GOBIERNO
Important growth of the results Crecimiento importante de resultados
ANNUAL REPORT 2014 INFORME ANUAL
Industrial platforms in Europe, America and Asia Plataformas industriales en Europa, América y Asia
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KEY FIGURES
1.3.
MISSION, VISION & VALUES
1.4.
GLOBAL PRESENCE
PRINCIPALES CIFRAS DEL EJERCICIO MISIÓN, VISIÓN Y VALORES PRESENCIA INTERNACIONAL
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GOVERNING BODIES
General Report to Shareholders
Informe General a los Accionistas
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ÓRGANOS DE GOBIERNO
BOARD OF DIRECTORS CONSEJO DE ADMINISTRACIÓN
EXECUTIVE TEAM COMITÉ DE DIRECCIÓN
MEMBERSHIP OF COMMITTEES OF THE BOARD OF DIRECTORS COMPOSICIÓN DE LAS COMISIONES DEL CONSEJO DE ADMINISTRACIÓN
Strategy & Investments Estrategia e Inversiones Álvaro Videgain Jesús Esmorís Antonio González - Adalid Dámaso Quintana Appointments & Remunerations Nombramientos y Retribuciones Juan Ramón Guevara Gerardo Aróstegui Ignacio Marco-Gardoqui Audit & Compliance Auditoría y Cumplimiento Xabier de Irala Juan Garteizgogeascoa Consuelo Crespo José Toribio
(1) In representation of Cartera Industrial REA S.A. En representación de Cartera Industrial REA S.A. (2) In representation of José María Aristrain de la Cruz. En representación de José María Aristrain de la Cruz.
From left to right (De izquierda a derecha): Ignacio Marco-Gardoqui, Antonio González-Adalid, Xabier de Irala, Jesús Esmorís, Álvaro Videgain, Consuelo Crespo, Gerardo Aróstegui, Dámaso Quintana, José Toribio, Juan Ramón Guevara, Juan Garteizgogeascoa.
From left to right (De izquierda a derecha): Werner Horvath, Guillermo Ruiz-Longarte, Rufino Orce, Celestino Danis, Jesús Esmorís, Pedro Carbajo, Ajay Sambrani, Diego Herrero, Manuel Sarabia, Juan Ignacio Roscales*, Roberto Cazzaniga, Antón Azlor. Picture of the Executive Team as of March 2015. Fotografía del Comité de Dirección actualizado a marzo de 2015. * Appointed as Purchasing Corporate Director as from February 2015. Nombrado Director de Compras Corporativo desde febrero de 2015.
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KEY FIGURES
General Report to Shareholders
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PRINCIPALES CIFRAS DEL EJERCICIO
SALES VENTAS
EBITDA
EMPLOYEES EMPLEADOS
1,789
1,723
2010
2011
1,852
1,947
1,927
2012
2013
2014 Figures in millions of euros. Cifras en millones de euros. ( ) Negative balances. Cifras y saldos negativos. (1) Attributed to holders of equity instruments in the parent Company. Atribuido a tenedores de instrumentos de patrimonio neto de la sociedad dominante. (2) Million shares traded. Millones de acciones negociadas.
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VISION, MISSION & VALUES
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MISIÓN, VISIÓN Y VALORES
VISION VISIÓN We aspire to be a global supplier and a benchmark in innovative tubular solutions in advanced materials, offering service and management excellence, fulfilling and exceeding customer expectations, whilst profitably sustainable and focused on people development.
MISSION MISIÓN ■■ Market: We are an innovative, multi-national industrial
■■ Mercado: Somos un grupo industrial multinacional innovador,
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Aspiramos a ser un proveedor global y de referencia en soluciones tubulares innovadoras en materiales avanzados, excelente en gestión y servicio, que cumple y supera las expectativas de nuestros clientes, rentablemente sostenible y enfocado al desarrollo de las personas. ANNUAL REPORT 2014 INFORME ANUAL
VALUES VALORES
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group reference for seamless stainless steel tubes in the global market. Customer: We seek customer satisfaction through a portfolio of products and services that are constantly being developed. We are a reliable company that fulfills its obligations with internal and external clients. Profit: We grow in a profitable and sustainable way. It is our commitment to effectively manage the return on all of our investments and to reward shareholders. Continuous improvement: We seek excellence, through rigorous process management and the systematic application of continuous improvement. Occupational health and safety: We are committed to constantly foster a safe and pleasant workplace, while demonstrating respect for the environment. People: We contribute to the development of society and our suppliers, developing our professionals and people, working as a team and constantly measuring our results.
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de referencia en el mercado global de los tubos inoxidables sin soldadura. Cliente: Buscamos la satisfacción del cliente, mediante un portfolio de productos y servicios en constante desarrollo. Somos una empresa fiable, que cumple sus compromisos con los clientes externos e internos. Beneficio: Crecemos de forma rentable y sostenida. Nos comprometemos a gestionar eficazmente el retorno de todas nuestras inversiones, así como a retribuir adecuadamente al Accionista. Mejora continua: Gestionamos con rigor nuestros procesos y aplicamos de forma sistemática la mejora continua buscando la Excelencia. Seguridad y Salud laboral: Nos comprometemos a promover de forma permanente un entorno de trabajo seguro y agradable, siempre respetando el medio ambiente. Personas: Queremos desarrollarnos como profesionales y personas, trabajando en equipo y midiendo permanentemente nuestros resultados.
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Leadership Focus on Achievement Customer Satisfaction Continuous Improvement Creativity and Innovation Teamwork Creation of Value and Profitability Diversity and Dignity in the Workplace Corporate Ethics
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Liderazgo Logro Satisfacción del Cliente Mejora Continua Creatividad e Innovación Trabajo en Equipo Creación de Valor y Rentabilidad Diversidad y Dignidad en el Trabajo Ética Empresarial
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GLOBAL PRESENCE
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PRESENCIA INTERNACIONAL
TUBACEX has a global presence with sales in more than 100 countries and a wide commercial network and manufacturing facilities in Europe, America and Asia TUBACEX tiene una presencia gobal con ventas en más de 100 países y una amplia red comercial con plantas productivas en Europa, América y Asia * TUBACEX Service Solutions
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Informe General a los Accionistas
TUBACEX adquiere la compañía italiana IBF TUBACEX acquires italian company IBF
HIGHLIGHTS
2013-2016 Collective agreement for 2013 - 2016 Aprobación de convenio colectivo para 2013 - 2016
ANNUAL REPORT 2014 INFORME ANUAL
2014
The OCTG line obtains the API Q1 certificate
ACONTECIMIENTOS DE 2014
La línea de OCTG obtiene la certificación API Q1
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2014 Highlights Acontecimientos de 2014
2014 HIGHLIGHTS (1/2) ACONTECIMIENTOS DE 2014 (1/2)
JAN.2014 MANAGEMENT PLAN DEPLOYMENT
MAY.2014 SHAREHOLDERS’ GENERAL MEETING
MAY.2014 PROMISSORY NOTE PROGRAMME
JUL.2014 UPDATING OF THE STRATEGIC PLAN
TUBACEX has deployed its Annual Management Plan throughout the organization. This deployment represents the breakdown of the Group’s global objectives in the different divisions in order to proceed to their monthly control and monitoring, rapidly detecting any deviations and establishing the tools to correct them.
TUBACEX held its Shareholders’ Annual General Meeting in May, in which the annual accounts, Management Report and Corporate Governance Report corresponding to the 2013 financial year were approved. Besides approving a supplementary dividend and ratifying the interim dividend that was paid in November 2013, the Meeting also ratified the appointments of Dámaso Quintana Pradera and José Toribio González as board members, both in representation of the shareholder Corporación Aristrain, who will therefore have a position as proprietary directors. The Meeting also authorized the Board to issue security debts (obligations, bonds, promissory notes or other securities) with a cap of 250 million Euros.
In May TUBACEX registered via the Alternative Fixed Income Market (MARF) a programme to issue promissory notes up to a maximum of 29.9 million Euros, aim to diversify its short-term financing sources and to optimize the Group’s financial management. During the year TUBACEX launched three emissions of promissory notes representing the whole amount of the programme.
In July, TUBACEX held an Analyst Day in Madrid where it explained the progress of the Strategic Plan presented in 2013 and announced the anticipation by one year of the objectives set for 2017. Furthermore, the updating of the Strategic Plan was released to all the Group’s Key members of staff in the different companies.
DESPLIEGUE DEL PLAN DE GESTIÓN TUBACEX ha desplegado su Plan de Gestión Anual a lo largo de toda la organización. Este despliegue supone el desglose de los objetivos globales del Grupo en las distintas divisiones para poder proceder a su control y seguimiento mensual, detectando así rápidamente las desviaciones y estableciendo las herramientas para corregirlas.
MAR.2014 COLLECTIVE AGREEMENT In March, TUBACEX’s Management and the majority of the trade unions approved a collective agreement for 2013-2016 at the Llodio and Amurrio plants, which was subsequently endorsed by the workforce. This agreement covers aspects such as the creation of permanent jobs, substitution contract and maintaining the purchasing power of salaries and includes significant agreements on competitiveness and industrial organization.
ACUERDO CONVENIO COLECTIVO En marzo, la Dirección de TUBACEX y la mayoría de los sindicatos aprobaron un acuerdo de convenio colectivo para el período 2013-2016 en las plantas de Llodio y Amurrio que posteriormente fue refrendado por la plantilla. El acuerdo contempla aspectos como creación de empleo fijo, contrato de relevo y mantenimiento del poder adquisitivo de los salarios, e incluye consensos significativos en materia de competitividad y organización industrial.
ANNUAL REPORT 2014 INFORME ANUAL
JUNTA GENERAL DE ACCIONISTAS TUBACEX celebró en mayo su Junta General Ordinaria de Accionistas en la que se aprobaron las cuentas anuales, el Informe de Gestión y el de Gobierno Corporativo, correspondientes al ejercicio de 2013. Además de acordar el reparto de un dividendo complementario y ratificar el dividendo a cuenta abonado en noviembre de 2013, la Junta también ratificó el nombramiento de Dámaso Quintana Pradera y José Toribio González como consejeros dominicales, ambos en representación del accionista Corporación Aristrain. Además, autorizó al Consejo, durante el plazo máximo de cinco años, para emitir valores de renta fija (obligaciones, bonos, pagarés u otro tipo de valores) con un límite máximo de 250 millones de euros.
REGISTRO DEL PROGRAMA DE PAGARÉS TUBACEX registró en mayo en el Mercado Alternativo de Renta Fija (MARF) un programa de emisión de pagarés por importe de 29,9 millones de euros, con el objetivo de diversificar sus fuentes de financiación en el corto plazo y optimizar su coste financiero. A lo largo del año se han realizado tres emisiones de pagarés, habiéndose emitido a cierre del ejercicio la totalidad del importe del programa.
ACTUALIZACIÓN DEL PLAN ESTRATÉGICO En julio TUBACEX celebró un Analyst Day en Madrid donde se explicó el grado de avance del Plan Estratégico presentado en 2013 y se anunció la anticipación en un año de los objetivos marcados para 2017. Asimismo la actualización del Plan Estratégico fue presentada en las diferentes compañías a todo el personal clave del Grupo.
JUL.2014 SUPPLEMENTARY DIVIDEND Following the agreement of the Shareholders’ Annual General Meeting, TUBACEX paid in July a supplementary dividend. The Company had already paid an interim dividend in November 2013, whereby the total dividend payment for 2013 was 0.0463 Euros per share, representing a pay-out of 40%.
DIVIDENDO COMPLEMENTARIO En virtud del acuerdo adoptado por la Junta General de Accionistas, TUBACEX ha repartido en el mes de julio un dividendo complementario que se une al dividendo a cuenta ya abonado en noviembre de 2013. El dividendo total con cargo al ejercicio de 2013 asciende a 0,0463 euros brutos por acción, lo que supone un pay-out del 40% sobre los beneficios obtenidos ese año.
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2014 Highlights Acontecimientos de 2014
2014 HIGHLIGHTS (2/2) ACONTECIMIENTOS DE 2014 (2/2)
OCT.2014 SALEM TUBE RECEIVED THE NADCAP ACCREDITATION Salem Tube, subsidiary of TUBACEX in USA, received in October the Nadcap (National Aerospace and Defense Contractor Accreditation Program) accreditation for Material Testing and Heat Treatment. Through this accreditation Nadcap recognizes Salem Tube for its continuous improvement in aerospace quality. Nadcap is the Accreditation American Program for suppliers in the aerospace and defense industries.
SALEM OBTIENE CERTIFICACIÓN DEL NADCAP Salem Tube, la filial industrial del Grupo en Estados Unidos, ha obtenido en el mes de octubre la certificación del National Aerospace and Defense Contractors Accreditation Program (Nadcap) a sus laboratorios para ensayos de materiales y proceso de tratamiento térmico de sus productos. Nadcap reconoce el compromiso de Salem con la mejora continua en la calidad para industria aeroespacial. El Nadcap es el programa norteamericano de acreditación para suministradores de la industria aeroespacial y de defensa.
OCT.2014 ACQUISITION OF IBF On 31st October, TUBACEX announced the acquisition of 65% of the Italian Company, IBF SpA. A Letter of Intent had been signed between the parties in July and the closing of the transaction is expected to occur during the first days of January 2015. The acquisition enables TUBACEX to take a step further in its strategic goal of becoming a global tubular solutions provider. IBF is a leading manufacturer of high alloy stainless steel tubes and special fittings, which are larger and thicker than those currently produced by TUBACEX. With the acquisition of IBF, TUBACEX has become the only seamless stainless steel tube manufacturer capable of offering the full range of dimensions, as well as entering, with a leading position, into the pipe accessories (fittings, elbows, tees, caps, etc.) market.
ADQUISICIÓN DE IBF El 31 de octubre, TUBACEX anuncia la adquisición del 65% de la compañía italiana IBF, S.p.A., con la que ya había suscrito un acuerdo de intenciones en julio y cuya integración se hará efectiva a partir de enero de 2015. Esta adquisición permite a TUBACEX dar un paso más en su objetivo estratégico de convertirse en un proveedor global de soluciones tubulares. IBF es una empresa líder en la fabricación de tubos y componentes especiales de acero inoxidable sin soldadura en altas aleaciones, de mayor tamaño y espesor a los fabricados actualmente por TUBACEX. Con la adquisición de IBF, TUBACEX se convierte en el único fabricante de tubos de acero inoxidable sin soldadura capaz de ofrecer la gama completa de dimensiones, al tiempo que entra como fabricante en el mercado de accesorios de tubería (fittings, elbows, tees, caps, etc.) con una posición de liderazgo.
NOV.2014 PRESENTATION OF IBF AT THE STOCK MARKET PALACE IN MADRID
NOV.2014 TTI-AMURRIO HAS OBTAINED THE APIQ1 CERTIFICATE FOR THE OCTG TUBES
In November, TUBACEX presented the acquisition of the Italian company IBF at the Stock Market Palace in Madrid, before an audience of almost 80 people from the financial world. The CEO of TUBACEX Group, Jesús Esmorís, was responsible for the presentation, with the presence of the IBF General Manager, Roberto Cazzaniga and the TUBACEX CFO, Guillermo Ruiz-Longarte. After the closure of the financial year, on 9 January 2015, TUBACEX informed the Spanish Securities Exchange Commission (CNMV) that it had closed the transaction.
TTI has obtained in November the APIQ1 certificate for the new OCTG Line in Amurrio Plant. This new certificate will help TUBACEX to obtain the approval for CRA OCTG products of End Users in Oil & Gas market. API is a very basic and typical requirement for most of the worldwide Oil&Gas Operators, mainly in Asia and USA. It is also a previous and mandatory requirement before key Operators initiate a full approval process of Quality system, Process capabilities and Product performance.
PRESENTACIÓN DE IBF EN LA BOLSA DE MADRID En noviembre, TUBACEX presentó en la Bolsa de Madrid la operación de adquisición de la empresa italiana IBF, en un acto al que asistieron más de 80 personas pertenecientes al mundo financiero. La presentación estuvo a cargo del Consejero Delegado del Grupo, Jesús Esmorís, y contó con la presencia del Director General de IBF, Roberto Cazzaniga, y del Director Financiero de TUBACEX, Guillermo Ruiz-Longarte. Con posterioridad al cierre del ejercicio, el 9 de enero de 2015, TUBACEX ha anunciado la integración de IBF en el Grupo.
TTI-AMURRIO OBTIENE LA CERTIFICACIÓN APIQ1 PARA SUS TUBOS OCTG TTI ha obtenido en noviembre la certificación APIQ1 para la nueva línea de OCTG de su planta de Amurrio. Esta certificación ayudará a TUBACEX a obtener las homologaciones para tubos de OCTG en aleaciones de alta resistencia a la corrosión de los consumidores finales de Oil&Gas. La certificación API es un requerimiento necesario para la mayoría de los operadores del sector del petróleo y gas, especialmente en Estados Unidos y Asia. Es también un requisito previo y obligatorio antes de que algunos clientes clave del petróleo y gas inicien un proceso de aprobación de los sistemas de fabricación, calidad y rendimiento de los productos.
DEC.2014 INTERIM DIVIDEND The TUBACEX Board of Directors meeting held in December approved an interim dividend against the results of the year 2014, amounting to 0.0231 euros gross per share, payable on 20 January 2015.
DIVIDENDO A CUENTA El Consejo de Administración ha aprobado en su reunión de diciembre el reparto de un dividendo a cuenta de los resultados de 2014 por importe de 0,0231 euros brutos por acción. Este dividendo se ha abonado a los accionistas el 20 de enero de 2015.
ANNUAL REPORT 2014 INFORME ANUAL
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2014 Highlights Acontecimientos de 2014
SOME PROJECTS OF TUBACEX IN 2014 ALGUNOS PROYECTOS DE TUBACEX EN 2014
FURNACE TUBE FOR CEDAR BAYOU PLANT ETHYLENE UNIT TUBO DE HORNO PARA PLANTA CEDAR BAYOU – UNIDAD DE ETILENO
HEAT EXCHANGER TUBE FOR FERTILIZER PLANT TUBO DE INTERCAMBIADOR DE CALOR PARA PLANTA DE FERTILIZANTES
LINEPIPE FOR OFFSHORE GAS PROJECT. SHAH DENIZ 2
End user · Usuaro final: Chevron Phillips Chemical Company LP USA
Licensor - Ingeniería: STAMICARBON AUSTRIA
End user · Usuaro final: BP AZERBAIJAN
TUBO DE CONDUCCIÓN OFFSHORE PARA PROYECTO DE GAS. SHAH DENIZ 2
TUBING FOR BOILER’S SUPERHEATER AND RE-HEATER. LAIWU POWER GENERATION PROJECT TUBOS PARA CALDERAS SUPERCRÍTICAS. LAIWU POWER GENERATION PROJECT
End user · Usuaro final: CHINA HUANENG CHINA
OCTG TUBE FOR SATAH AL-RAZBOOT (SARB) OFFSHORE OILFIELD TUBO DE OCTG PARA YACIMIENTO PETROLÍFERO SUBMARINO PARA SATAH AL-RAZBOOT (SARB)
TP-400 TURBOPROP ENGINE - AIRBUS 400 MOTOR TURBO PROPULSOR TP-400 AIRBUS 400
End user · Usuaro final: ADNOC (Abu Dhabi National Oil Company) ABU DHABI
End user · Usuaro final: Rolls Royce Plc MEXICO - SPAIN
HEAT EXCHANGER TUBE FOR FPSO UNIT TUBO DE INTERCAMBIADORES DE CALOR PARA FPSO
MANIFOLDS FOR KAOMBO SUBSEA PROJECT MANIFOLDS PARA PROYECTO KAOMBO
LINEPIPE FOR GAS PROCESSING PLANT. KHUFF GAS PLAN PROJECT TUBO DE CONDUCCIÓN PARA PLANTA DE GAS
LINE PIPE AND FURNACE TUBE FOR REFINERY PROJECT. JAMNAGAR J3 TUBO DE CONDUCCIÓN Y TUBO DE HORNO PARA REFINERIA. JAMNAGAR J3
End user · Usuaro final: TECHNIP-PETROBRAS BRAZIL
End user · Usuaro final: TOTAL ANGOLA
End user · Usuaro final: SAUDI ARAMCO SAUDI ARABIA
End user · Usuaro final: RELIANCE INDIA
ANNUAL REPORT 2014 INFORME ANUAL
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1
General Report to Shareholders
3
Informe General a los Accionistas
PERFORMANCE Net financial debt has been reduced by 22% La deuda financiera neta se ha reducido un 22%
FOR THE YEAR
EVOLUCIÓN DEL EJERCICIO 3.1.
MARKET ENVIRONMENT ENTORNO DE MERCADO
EBITDA up 25,1%, reaching 64,13 million Euros El EBITDA ha aumentado un 25,1% hasta los 64,13 millones de euros
ANNUAL REPORT 2014 INFORME ANUAL
Net profit reached 23.76 million Euros (+58.3%) El beneficio neto ha alcanzado los 23,76 millones de euros (+58,3%)
3.2.
RESULTS FOR THE YEAR
3.3.
BUSINESS EVOLUTION
3.4.
CAPITAL EXPENDITURE
RESULTADOS DEL EJERCICIO EVOLUCIÓN DEL NEGOCIO INVERSIONES
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MARKET ENVIRONMENT
Performance for the Year
Evolución del Ejercicio
.1
ENTORNO DE MERCADO
In 2014, TUBACEX developed its activity in an unfavorable market environment, affected by the macroeconomic uncertainty, the volatility in the price of raw materials and in particular, the sharp drop in oil prices in the second half of the year, among other factors.
La actividad de TUBACEX en 2014 se ha desarrollado en un entorno de mercado desfavorable, afectado por la incertidumbre macroeconómica, la volatilidad de los precios de las materias primas y, sobre todo, por el fuerte descenso experimentado por los precios del petróleo a partir del segundo semestre, entre otros factores.
ECONOMIC GROWTH
CRECIMIENTO ECONÓMICO
The world economy experienced certain improvement in 2014 from the macroeconomic point of view, with global growth of 3.3%. This positive trend has been observed in almost all the reference economies, although with large differences in accordance with the geographic area.
La economía mundial ha vivido en 2014 una cierta mejoría desde el punto de vista macroeconómico, con un crecimiento global del 3,3%. Esta tendencia positiva se ha observado prácticamente en todas las economías de referencia, aunque con diferencias muy marcadas en función de las zonas geográficas.
DROP OF THE EURO
CAÍDA DEL EURO
On the foreign exchange market, although the average annual exchange rate of the dollar against the Euro maintained the same figures as in 2013 (1.33 Euros per dollar), the macroeconomic imbalances between the United States and the Euro Zone have led to a steady depreciation of the dollar, which has fallen by 12% since halfway through the year.
En el mercado de divisas, aunque el cambio anual medio del dólar frente al euro se ha mantenido en las mismas cifras que en 2013 (1,33 euros por dólar), los desequilibrios macroeconómicos entre Estados Unidos y la Zona Euro han provocado una continua depreciación del dólar, que desde mediados de año ha caído un 12%.
The Euro has been devalued against the dollar
€/$
El euro se devalúa frente al dólar
ECONOMIC GROWTH (1)
Crecimiento económico
EVOLUTION OF NICKEL PRICES AND DOLLAR EXCHANGE RATES
Evolución de las cotizaciones del níquel y del dólar
* IMF. World Economic Outlook. January 2015. FMI. Perspectivas de la Economía mundial. Enero 2015
ANNUAL REPORT 2014 INFORME ANUAL
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Performance for the Year Evolución del Ejercicio
RISE IN THE PRICE OF RAW MATERIALS
ASCENSO DE PRECIOS EN LAS MATERIAS PRIMAS
The raw materials used by the Group in the production of stainless steel that is then turned into tubes, namely nickel, molybdenum and stainless steel scrap, moved with a fair amount of volatility. The price of nickel began the year with a significant upward trend which dipped during the second half of the year.
Las materias primas que utiliza el Grupo en la elaboración del acero inoxidable que posteriormente convierte en tubos –básicamente níquel, molibdeno y chatarra de inoxidable- se han movido en términos generales con bastante volatilidad. Los precios del níquel comenzaron el año con una importante tendencia alcista que se ha suavizado durante el segundo semestre.
The average price of nickel in 2014 was 16,932 dollars/ton, up 12.8% on 2013, when the average price stood at 15,004 dollars/ton. After starting the year with prices increasing by up to 30% in June, nickel underwent continued correction during the second half of the year, closing the year in December at slightly above 15,000 dollars/ton.
El precio medio del níquel ha sido en 2014 de 16.932 dólares por tonelada, un 12,8% superior al precio medio de 2013 que fue de 15.004 dólares por tonelada. Tras un inicio de año en el que los precios fueron aumentando hasta más de un 30% en el mes de junio, el níquel ha tenido una corrección continuada durante la segunda mitad del año hasta cerrar en diciembre ligeramente por encima de los 15.000 dólares por tonelada.
As far as molybdenum is concerned, the average price also registered a rise of 9.4%, from an average of 25,823 dollars/ ton in 2013 to 28.238 dollars/ton in 2014. As for stainless steel scrap, the average price rose by 8.8% to stand at 1,360 Euros/ton compared with an average of 1,250 Euros/ton in 2013.
Por lo que se refiere al molibdeno, el precio medio ha registrado una subida de un 9,4%, al pasar de 25.823 dólares por tonelada de media de 2013 a 28,238 dólares por tonelada en 2014.
FALL IN OIL PRICES
CAÍDADELPRECIODELPETRÓLEO
After several financial years of stability, with prices between 105-115 dollars/barrel, oil experienced a sharp fall in price in 2014, which led it to lose 50% of its value in the second half of the year and standing at 55 dollars/barrel at the end of the year.
Tras varios ejercicios de estabilidad, con precios entre los 105115 dólares por barril, el petróleo ha vivido durante el año 2014 una vertiginosa caída de precios, que le ha llevado a perder en el segundo semestre un 50% de su valor y situarse a finales del año sobre los 55 dólares por barril.
Given that oil prices act as a determining factor in the investment levels of the oil, gas, petrochemical and power generation industries, they fell in the second half of the year, with a negative impact on orders from these sectors.
Dado que los precios del petróleo actúan como un elemento dinamizador fundamental en los niveles de inversión de los sectores del petróleo y gas, petroquímica y energía, éstas se han resentido en la segunda parte del ejercicio, afectando negativamente a los pedidos procedentes de estos sectores .
EVOLUTION OF THE PRICE OF THE CRUDE OIL BARREL (BRENT)
Evolución del precio del barril de petroleo Brent
En cuanto a la chatarra de inoxidable, el precio medio ha subido un 8,8% situándose en 1.360 euros por tonelada frente a los 1.250 euros por tonelada de media en 2013.
EVOLUTION OF AVERAGE PRICES OF THE MAIN RAW MATERIALS
Evolución de los precios medios de las principales materias primas
(1) Dollars/ton. Dólares/tm. (2) Euros/ton. Euros/tm.
Inestability in the price of raw materials Inestabilidad en los precios de las materias primas
ANNUAL REPORT 2014 INFORME ANUAL
Oil price fell by 50% in the second half of the year El precio del petróleo ha caído un 50% en el segundo semestre
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RESULTS FOR THE YEAR
Performance for the Year
Evolución del Ejercicio
.2
RESULTADOS DEL EJERCICIO
In spite of the fact that the market has not been favorable, the development of operational excellence programs and the increase in sales of high-end products enabled TUBACEX to significantly improve its results and operating margins in 2014.
A pesar de que el entorno de mercado no ha sido favorable, el desarrollo de los programas de excelencia operacional y el aumento de las ventas de productos de alta gama ha permitido a TUBACEX mejorar sustancialmente en 2014 sus resultados y sus márgenes operativos.
Therefore, the gross operating profit (EBITDA) increased 25.1%, reaching 64.13 million Euros and profit before tax nearly doubled, standing at 32.65 million Euros.
Así, el resultado bruto de explotación (EBITDA) ha crecido un 25,1% hasta los 64,13 millones de euros y el beneficio antes de impuestos prácticamente se ha duplicado situándose en 32,65 millones de euros.
SALES
VENTAS
From a commercial point of view, 2014 has been characterized by an increase in order intake both in terms of quantity and product mix sold, reaching a consolidated sales figure of 546.65 million Euros.
Desde el punto de vista comercial, el ejercicio de 2014 se ha caracterizado por una mejora en la entrada de pedidos tanto en términos de cantidad como de mix de producto vendido, alcanzándose una cifra de ventas consolidada de 546,65 millones de euros.
SALES EVOLUTION
Evolución de las ventas
Sales have reached 546.65 million Euros Las ventas han alcanzado los 546,65 millones de euros
underwater handling and extraction of hydrocarbons. As for the Powergen sector, following a slight slowdown mid year caused mainly by the growth slowdown in China, the main destination for supercritical boiler tubes, demand recovered during the last quarter of the year. By geographical area, the significant increase in sales in Asia (+39.15%) can be highlighted, whereby this growth has been constant over the last two years, making this market one of the fastest growing for products manufactured by TUBACEX.
Este buen comportamiento ha sido, sin embargo, dispar según productos y mercados. En el mercado de proyectos, donde se concentran los productos más especializados del grupo, TUBACEX ha aumentado su cuota de mercado y las cifras de facturación se han mantenido elevadas a lo largo del ejercicio, mientras que el mercado de distribución, orientado al producto más estándar, ha experimentado una tendencia decreciente.
By demand segments, the Oil & Gas Exploration and Production segment continued its good performance and increased its weight in the Group’s total sales, in line with the Company’s strategic objectives. Within this sector, the performance of tubes for oil and gas extraction can be highlighted, significantly increasing its weight in sales, as well as tubes for the off-shore market where TUBACEX continues to extend its range of products, from tubes for oil platforms to tubes for the manufacture of umbilicals and other equipment for
Por sectores de demanda, el segmento de exploración y producción de petróleo y gas ha mantenido su dinamismo y ha aumentado su peso en las ventas totales, en línea con los objetivos estratégicos de la compañía. Dentro de este sector, destaca el comportamiento de los tubos para extracción de petróleo y gas que han aumentado de manera significativa su peso en las ventas y, en general, los tubos para el mercado off-shore, donde TUBACEX continúa ampliando su gama de productos que va desde el tubo para plataformas petrolíferas hasta los tubos para la fabricación
ANNUAL REPORT 2014 INFORME ANUAL
Por áreas geográficas, destaca el importante aumento experimentado en las ventas en Asia (+39,15%), aumento que viene siendo habitual durante los dos últimos ejercicios y que hace que este mercado se configure como uno de los de mayor crecimiento para los productos fabricados por TUBACEX.
RESULTS
RESULTADOS
The increased weight of the Premium Products on sales and the progress made in operational excellence have enabled TUBACEX to obtain much better results for 2014 than in 2013.
El incremento del peso de los Productos Premium en las ventas y los avances realizados en la excelencia operacional han permitido a TUBACEX que los resultados de 2014 presenten una mejora importante respecto a 2013.
The gross operating profit (EBITDA) increased by 25.1%, reaching 64.13 million Euros, with an EBIDTA on sales margin of 11.7%, compared with 9.3% in 2013.
El resultado bruto de explotación (EBITDA) ha aumentado un 25,1% hasta los 64,13 millones de euros, con un margen de EBITDA sobre ventas de 11,7% frente al 9,3% de 2013.
The consolidated operating profit (EBIT) stood at 43.66 million Euros, up 38.5% on 2013. The EBIT margin stands at 8.0%, compared with 5.7% in 2013.
El resultado operativo consolidado (EBIT) ha alcanzado los 43,66 millones de euros, un 38,5% más que en 2013. El margen EBIT se ha situado en el 8,0% frente al 5,7% de 2013.
Profit before tax has almost doubled, obtaining growth of 96.6% and closing the year at 32.65 million Euros.
El beneficio antes de impuestos casi se ha duplicado, logrando un crecimiento del 96,6%, y cerrando el año en 32,65 millones de euros.
The consolidated net profit for the financial year increased by 58.3% to reach 23.76 million Euros, compared with 15.01 million Euros in 2013.
CONSOLIDATED. FIGURES IN MILLIONS OF EUROS CONSOLIDADO. CIFRAS EN MILLONES DE EUROS
However, this good performance was different depending on the product and market. In the projects market, where the Group’s most specialized products are concentrated, TUBACEX increased its market share and invoicing level was high throughout the year, whereas the distribution market, aimed at more standard products, experienced a downward trend.
de umbilicales y otros equipos de gestión y explotación de la extracción de hidrocarburos bajo la superficie del mar. En el sector de energía, tras una pequeña ralentización a mediados de año provocada sobre todo por la desaceleración del crecimiento de China, principal destino del tubo para calderas supercríticas, la demanda ha experimentado un repunte en el último trimestre.
El beneficio neto consolidado del ejercicio ha crecido un 58,3% hasta los 23,76 millones de euros frente a los 15,01 millones de euros de 2013.
GROSS OPERATING PROFIT (EBITDA) EVOLUTION
NET PROFIT EVOLUTION
Evolución del resultado bruto de explotación (EBITDA)
Evolución del beneficio neto
CONSOLIDATED. FIGURES IN MILLIONS OF EUROS CONSOLIDADO. CIFRAS EN MILLONES DE EUROS
CONSOLIDATED. FIGURES IN MILLIONS OF EUROS CONSOLIDADO. CIFRAS EN MILLONES DE EUROS
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Performance for the Year Evolución del Ejercicio
DEBT REDUCTION
REDUCCIÓN DE DEUDA
FINANCIAL SOUNDNESS
SOLIDEZ FINANCIERA
Net financial debt fell during the year by 43.1 million Euros and stands at 151.50 million Euros, which represents a decrease of 22.1% on the previous year.
La deuda financiera neta ha disminuido durante el ejercicio en 43,1 millones de euros y si sitúa en 151,50 millones de euros, lo que supone una reducción del 22,1% respecto al ejercicio anterior.
TUBACEX enjoys a sound financial position, with its net equity attributed to the parent company amounting to 282.17 million Euros, accounting for 40.3% of the company’s total liabilities.
TUBACEX cuenta con una sólida posición financiera, con un patrimonio neto atribuido a la sociedad dominante que asciende a 282,17 millones de euros, lo que representa el 40,3% sobre el pasivo total de la compañía.
The net financial debt over EBITDA ratio at the end of the year stands at 2.4 times compared with 3.8 times in 2013, fulfilling the strategic objective of keeping debt under three times EBITDA.
El ratio de deuda financiera neta sobre EBITDA al cierre del ejercicio se ha situado en 2,4 veces frente a las 3,8 veces de 2013, cumpliendo el objetivo estratégico de mantener la deuda por debajo de tres veces el EBITDA.
On the other hand, the net debt over parent company’s equity stood at 53.69% compared with 74.88% in 2013.
Por otra parte, el nivel de deuda financiera neta sobre el patrimonio neto de la sociedad dominante se ha situado en el 53,69% frente al 74,88% de 2013.
The operating working capital closed the financial year at 202.40 million Euros, compared with 217.59 million Euros in 2013. This figure represents 37.0% of sales over the past twelve months.
El circulante neto operativo ha finalizado el ejercicio en 202,40 millones de euros frente a 217,59 millones de euros de 2013. La cifra representa el 37,0% de las ventas de los últimos doce meses.
WORKING CAPITAL EVOLUTION
NET FINANCIAL DEBT EVOLUTION
NET FINANCIAL DEBT / EQUITY EVOLUTION
Evolución del circulante neto operativo
Evolución de la deuda financiera neta
Evolución de la deuda financiera neta / patrimonio neto
Improvement in these two ratios is proof of the company’s financial solvency, significantly reducing its debt levels whilst increasing its profitability.
La mejora de estos dos ratios muestra la solvencia financiera de TUBACEX, que ha conseguido reducir de manera importante sus niveles de endeudamiento mientras incrementaba su rentabilidad.
Net financial debt stands at 2.4 times EBITDA La deuda financiera neta se sitúa en 2,4 veces el EBITDA
CONSOLIDATED. FIGURES IN MILLIONS OF EUROS CONSOLIDADO. CIFRAS EN MILLONES DE EUROS
CONSOLIDATED. FIGURES IN MILLIONS OF EUROS CONSOLIDADO. CIFRAS EN MILLONES DE EUROS
CONSOLIDATED. FIGURES IN % CONSOLIDADO. CIFRAS EN %
TUBACEX enjoys a solid financial position TUBACEX cuenta con una sólida posición financiera
ANNUAL REPORT 2014 INFORME ANUAL
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BUSINESS EVOLUTION
Performance for the Year
Evolución del Ejercicio
.3
EVOLUCIÓN DEL NEGOCIO
The TUBACEX Group is devoted to the manufacture and sale of stainless steel and high-nickel alloy tubular solutions.
El Grupo TUBACEX es un Grupo dedicado a la fabricación y comercialización de soluciones tubulares en acero inoxidable y altas aleaciones de níquel.
The Group’s main manufacturers are:
Las principales compañías fabricantes del Grupo son:
■■TUBACEX Tubos Inoxidables ■■Devoted to the manufacture of hot and cold drawn seamless
stainless steel tubes with a plant in Alava (Spain). TTI has three falicities: ■■1. TTI Llodio: focused on hot extrusion. ■■2. TTI Amurrio: focused on cold rolling. ■■3. TTI OCTG: dedicated to the manufacture of OCTG tubes
■■Schoeller Bleckmann Edelstahlror ■■Based in Ternitz (Austria) manufactures hot finished and
■■TUBACEX Tubos Inoxidables ■■Dedicada a la fabricación tubos de acero inoxidable sin
soldadura tanto en caliente como en frío y con instalaciones en Álava (España). Cuenta con tres plantas productivas: ■■1. TTI Llodio: dedicada a la extrusión en caliente ■■2. TTI Amurrio: enfocada a los acabados en frío ■■3. TTI OCTG: destinada a la fabricación de tubos de OCTG
■■Schoeller Bleckmann Edelstahlror ■■Ubicada en Ternitz (Austria) fabrica tubos acabados en
cold-rolled tubes. SBER has two facilities: ■■1. SBER: to manufacture traditional tubes. ■■2. SBER PU: focused on manufacturing Umbilical tubes
caliente y laminados en frío. Cuenta con dos plantas: ■■1. SBER: planta para la fabricación de tubo tradicional ■■2. SBER PU: dedicada a la fabricación de tubo para umbilicales
■■Salem Tube ■■With industrial facilities in Greenville (Pennsylvania), it is
■■Salem Tube ■■Con instalaciones industriales en la localidad estadounidense
devoted to manufacturing cold-drawn seamless tubes in stainless steel and high-nickel alloys and superalloys.
■■TUBACEX Taylor Accesorios ■■Located in Alava (Spain) is devoted to the manufacture of
curved sections and tube fittings.
■■Acería de Álava ■■Devoted to the manufacture of primary-processed stainless
steel, with a plant in Alava (Spain).
■■
The products manufactured by these companies are sold through an extensive network of sales offices and agents in over forty countries, which includes warehouses in Spain (Cotubes), France (MIS), Brazil (SSB), United States (TX America) and Shanghai (TX Asia). It also sells hollow tubes through the Tubos Mecánicos Group. In 2015, TUBACEX has incorporated the Italian company, IBF (with plants in Italy and China) and the Indian company, Prakash, into the group, becoming the leading global manufacturer of seamless stainless steel tubular solutions.
ANNUAL REPORT 2014 INFORME ANUAL
SECTORS OF DEMAND
SECTORES DE DEMANDA
The main sectors demanding the tubes manufactured by TUBACEX are oil and gas, petrochemical and power generation, which accounted for over 90% of the sales of seamless stainless steel tubes in 2014. The rest of the Group’s sales are aimed at diverse sectors, such as the mechanical industry, aerospace, food, water desalination, electronics, capital goods and new technologies, among others.
Los principales sectores de demanda de los tubos que fabrica TUBACEX son los del petróleo y gas, petroquímica, química y energía, que representaron más de un 90% de las ventas de tubos sin soldadura en acero inoxidable en 2014. El resto de las ventas del Grupo se dirige a diversos sectores como la industria mecánica, aeroespacial, de alimentación, desalinización de agua, electrónica, de bienes de equipo y nuevas tecnologías, entre otros.
The TUBACEX Group sells its products either to the market for new investment projects in the entire value chain of the oil and power generation industry, in this market its products can be sold to EPCs, engineering companies or the end-user, or through tube stockists and distributors.
El Grupo TUBACEX comercializa sus productos tanto en el mercado de nuevos proyectos de inversión en toda la cadena de valor del petróleo y la energía, en este caso sus productos se venden a EPCs, ingenierías o al usuario final, como a través de almacenistas y distribuidores de tubo.
Major Customers END USER. Cliente final
Principales clientes ENGINEERING CONTRACTOR. Contratista de Ingeniería
de Greenville (Pennsylvania), está dedicada a la fabricación de tubos sin soldadura en acero inoxidable así como en altas aleaciones y superaleaciones de níquel estirados en frío.
■■TUBACEX Taylor Accesorios ■■Ubicada en Álava (España) está dedicada a la fabricación de
curvas y accesorios.
■■Acería de Alava ■■Dedicada a la fabricación de acero inoxidable en primera
transformación y con instalaciones en Álava (España).
Los productos fabricados por estas compañías se comercializan a través de una amplia red de oficinas y agentes comerciales en más de cuarenta países, que incluye almacenes en España (Cotubes), Francia (MIS), Brasil (SSB), Estados Unidos (TX America) y Shanghai (TX Asia). También comercializa barra perforada a través del Grupo Tubos Mecánicos. En 2015 TUBACEX ha incorporado a su grupo a la empresa italiana IBF (con factorías en Italia y China) y a la india Prakash, con lo que se conforma como el primer fabricante mundial de soluciones tubulares en acero inoxidable sin soldadura.
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WORLD’S LARGEST MANUFACTURER
SEAMLESS STAINLESS STEEL TUBE
TUBO DE ACERO INOXIDABLE SIN SOLDADURA
In the seamless stainless steel tube segment, 2014 was characterized by an improvement in the market, in terms of price, quantity and product mix.
En el segmento de tubos de acero inoxidable sin soldadura el ejercicio de 2014 se ha caracterizado por la mejora en volúmenes y mix de producto.
The first quarter of the year was marked by the good performance in terms of demand in most segments; as of this time, the performance of the standard product and the Premium Product followed different paths. Whilst the standard product underwent a fall in demand throughout the year, the specialized products and those with higher added value were much more stable and even grew in some segments (such as tubes for OCTG and umbilicals). However the final months of the year were characterized by a general weakness in the market caused by the strong offsetting of the oil prices with the exception of some segments (such as the power generation boiler tube) which are not so directly related to the oil price.
El primer trimestre del año estuvo marcado por el buen comportamiento de la demanda en la mayor parte de los segmentos; a partir de este momento el comportamiento del producto estándar y del Producto Premium ha seguido diferentes caminos. Mientras que el producto estándar ha experimentado una caída de demanda a lo largo de todo el año, los productos especializados y de mayor valor añadido han mantenido una tónica más estable, e incluso creciente en algunos segmentos (como en el caso del tubo para OCTG y Umbilicales). Si bien los últimos meses del año se han caracterizado por una debilidad general del mercado provocada por la fuerte corrección del precio del petróleo excepto en algunos segmentos (como el tubo para calderas de generación eléctrica) no tan directamente ligados a la evolución del precio del petróleo.
PROJECT MARKET
MERCADO DE PROYECTOS
TUBACEX’s penetratrion in the market for new investments projects grew thorough the year, increasing its market share, until the final months of the year, in which demand was affected by the offsetting of the oil and gas prices. Since the final months of 2014, this offsetting has begun to cause delays and even cancellations in the oil, gas and petrochemical sectors (or in other words, sectors demanding seamless stainless steel tubes), resulting in a drop in the order intake of the Company.
La penetración de TUBACEX en el mercado de tubos para nuevos proyectos de inversión ha sido creciente hasta los últimos meses del año, ganando progresivamente cuota de mercado, hasta que la demanda se ha visto afectada por la corrección en los precios del petróleo y el gas. Esta corrección ha empezado a producir desde los últimos meses de 2014 retrasos e incluso cancelaciones en los sectores de petróleo, gas y petroquímico (es decir, los principales sectores demandantes de tubo de acero inoxidable sin soldadura), lo que se ha traducido en una caída en la entrada de pedidos de la Compañía.
The performance of other sectors, such as power generation, deserves special mention as the evolution was downward throughout the year but with a significant recovery in order intake in the final months of the year, which will be turned into sales in 2015.
of seamless stainless steel tubes MAYOR FABRICANTE DEL MUNDO
en tubos de acero inoxidable sin soldadura
SALES BREAKDOWN BY SECTOR IN 2014
Sectores de demanda de tubos para proyectos 2014
Mención especial merece el comportamiento de otros sectores como la generación eléctrica donde la evolución ha sido decreciente a lo largo del ejercicio pero con un importante repunte en la entrada de pedidos en los meses finales del año que se plasmará en las ventas de 2015.
The projects market has evolved favorably El mercado para proyectos ha evolucionado positivamente
ANNUAL REPORT 2014 INFORME ANUAL
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DISTRIBUTION MARKET
MERCADO DE DISTRIBUCIÓN
On the other hand, sales of seamless stainless steel tubes to the stockist and distribution market, the other sales channel for the Group’s products, performed unequally throughout 2014, particularly affected by the variations in the price of nickel and the huge entry of products from low cost countries.
Por otra parte, las ventas al mercado de almacenistas y distribuidores de tubo sin soldadura en acero inoxidable el otro canal de comercialización de productos del Grupo- se han comportado de manera desigual a lo largo de 2014, particularmente afectadas por las oscilaciones en el precio del níquel y la masiva entrada de productos de países de bajo coste.
Like in previous years, the German market was the main destination for tubes for distributors, although its performance fell at the end of the year.
Como en los ejercicios precedentes el mercado alemán ha supuesto el principal destino del tubo para distribuidores, si bien a final de año su comportamiento ha sido decreciente.
GEOGRAPHICAL MARKETS
MERCADOS GEOGRÁFICOS
The European market, which is still the main market for the TUBACEX Group, was characterized by a fall in orders throughout the year. In addition to the sluggishness of the distribution market, performance was comparatively worse than that of other areas in the projects market, due to the relative weakness of the petrochemical sector in Europe.
El mercado europeo, que sigue constituyendo el principal mercado del Grupo TUBACEX, se ha caracterizado por un nivel decreciente de pedidos a lo largo del año. A la situación de atonía en el mercado de distribución se ha añadido un comportamiento comparativamente peor que el de otras áreas en el mercado de proyectos, debido a la situación de relativa debilidad del sector petroquímico en Europa.
GEOGRAPHICAL BREAKDOWN OF REVENUES
Distribución geográfica de las ventas
The main positive notes to point out are the good performance of the tube market for furnaces, as European manufacturers of this type of equipment maintain a good competitive position in the world markets and the good situation of the precision tube market in which demand was constant throughout the year. The positive evolution of the North Sea market and the highly specialized products demanded in this geographical area should also be highlighted, with an increase in the backlog for umbilicals and off-shore tubes and subsea tubes. In spite of strong competition, the American market improved slightly with respect to 2013. It is also worth mentioning the positive evolution of demand on the Gulf of Mexico, where TUBACEX has obtained important orders for umbilicals, and the petrochemical sector, with an important volume of tubes for furnaces (highlighting the Cedar Bayou project in Louisiana). The markets of emerging and developing countries were characterized by good performance throughout the year, focusing mainly on high value-added products. In these markets, given the strong competition from low cost producers, the group’s gradual evolution from the standard product towards high-end products is particularly relevant. More specifically, orders have been received to supply OCTG in areas in which the company was not present, such as Kuwait (Kuwait Oil Company). Sales to rapid growth countries, such as Indonesia (highlighting tube deliveries to the world’s largest paper pulp factory) or Vietnam (Nghi son refinery) have increased significantly.
ANNUAL REPORT 2014 INFORME ANUAL
Las principales notas positivas a destacar son el buen comportamiento del mercado de tubo para hornos, ya que los fabricantes europeos de estos equipos mantienen una buena situación competitiva en los mercados mundiales y la buena situación del mercado de tubo de precisión en el que la demanda ha sido constante a lo largo de todo el ejercicio. También cabe destacar la buena evolución del mercado del mar del Norte y de los productos altamente especializados que se demandan en esta área geográfica, con un incremento de la cartera de umbilicales y de tubo para offshore y así como de tubo para aguas profundas. El mercado americano, a pesar de la fuerte competencia ha mejorado ligeramente respecto a 2013. Cabe destacar también la buena evolución de la demanda en el Golfo de México, donde TUBACEX ha logrado importantes pedidos para umbilicales, y del sector petroquímico, con un importante volumen de tubos para hornos (destacando el proyecto Cedar Bayou en Lousiana).
Sales in Asia were up by almost 40% Las ventas en Asia han crecido casi un 40%
CONSOLIDATED. FIGURES IN MILLIONS OF EUROS CONSOLIDADO. CIFRAS EN MILLONES DE EUROS
Los mercados de los países emergentes y en desarrollo se han caracterizado por un buen comportamiento a lo largo de todo el ejercicio, centrado principalmente en los productos de alto valor añadido. En estos mercados, dada la fuerte competencia de productores de bajo coste, es donde cobra relevancia la progresiva evolución del grupo desde el producto estándar hacia productos de gama alta. En concreto, se han obtenido pedidos para suministrar OCTG en áreas en las que la empresa no estaba presente, como Kuwait (Kuwait Oil Company). Asimismo se han aumentado fuertemente las ventas a países de rápido crecimiento como Indonesia (destacando las entregas de tubos para la mayor fábrica mundial de pulpa de papel) o Vietnam (Nghi son refinery).
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HIGH-END PRODUCTS / PREMIUM PRODUCTS
PRODUCTOS DE ALTA GAMA / PREMIUM
OCTG TUBE
TUBO OCTG
It is worth mentioning the good performance of the OCTG tube, in which the sales volume rose by 30% with respect to 2013. Two noteworthy events must be highlighted: - Homologation by Total, one of the leading operators in this market, which was immediately followed by an order from this company for the Arab Emirates. - API Q1 recognition was obtained (in January 2015) which acknowledges TUBACEX capability in this demanding market and which will lead to further homologations. This favorable performance has been possible thanks to the cooperation agreement with Vallourec and the heavy investment in an automated production line for the exclusive production of this product. Furthermore, TUBACEX is developing new investments to extend the production range of high alloy OCTG tubes, some of which will be operational in 2015.
Cabe destacar dentro el ya mencionado buen comportamiento de tubo OCTG, donde el volumen de ventas se ha incrementado un 30% con respecto a 2013. Hay que destacar dos hechos reseñables: - La homologación con Total, uno de los principales operadores en este mercado, que fue inmediatamente seguida por un pedido de esta empresa con destino a los Emiratos Árabes. - La obtención (en enero de 2015) de la homologación API Q1 que reconoce las capacidades de TUBACEX en este exigente mercado y que facilitará la consecución de nuevas homologaciones. Este buen comportamiento ha sido posible gracias al acuerdo de cooperación con Vallourec y a las fuertes inversiones realizadas, con una línea de fabricación automatizada orientada exclusivamente a la fabricación de este producto. Adicionalmente TUBACEX está desarrollando nuevas inversiones para ampliar la gama de fabricación de tubos OCTG en altas aleaciones, algunas de las cuales entrarán en funcionamiento en 2015.
Sales of OCTG tubes increased by 30% in 2014
OFF-SHORE MARKET
Las ventas de tubos para OCTG han aumentado un 30% en 2014
La entrada de pedidos en aceros especiales en altas aleaciones también ha experimentado una fuerte mejora y se ha situado en niveles históricos, con particular buen comportamiento de los tubos para el mercado off-shore donde TUBACEX continua ampliando su gama de productos que va desde el tubo para plataformas petrolíferas hasta los tubos para la fabricación de umbilicales y otros equipos de gestión y explotación de la extracción de hidrocarburos bajo la superficie del mar. Al incremento en las ventas de umbilicales, cabe destacar la buena evolución de otros productos como los manifolds, que TUBACEX va a suministrar en proyectos como el de Kaombo en Angola.
SUPERCRITICAL BOILERS
CALDERAS SUPERCRÍTICAS
ANNUAL REPORT 2014 INFORME ANUAL
entrada de pedidos de este tipo de tubo en las últimas semanas del año. La compañía está introduciendo nuevos desarrollos, aspecto fundamental considerando que el mercado se encuentra en plena transformación y transición tecnológica hacia nuevas formas de generación más eficientes a la vez que más exigentes en relación a los materiales utilizados, y el tubo de acero inoxidable sin soldadura se ubica en los lugares más críticos de los equipos.
NEW NICKEL ALLOYS
ALTAS ALEACIONES DE NÍQUEL
Other high value-added demand sectors in which TUBACEX enjoys increasing demand are high nickel alloys with the incorporation of new grades in the product portfolio, tubes for the nuclear industry (in which despite the uncertainty that characterized this market following the Fukushima accident, the company maintains low but highly profitable level of sales) and tubes for highly specialized applications, aeronautics and precision sectors.
Otros sectores de demanda de productos de alta gama donde TUBACEX mantiene un nivel creciente de demanda son las altas aleaciones de níquel, con la incorporación de nuevos grados en la cartera de productos, los tubos para la industria nuclear (en la que, a pesar de la situación de incertidumbre que caracteriza a este mercado tras el accidente de Fukushima, la compañía mantiene un nivel reducido, pero altamente rentable de ventas) y los tubos para aplicaciones muy especializadas, industria aeronáutica y de precisión.
NEW MARKET NICHES
NUEVOS NICHOS DE MERCADO
The TUBACEX Group continues looking for new demand niches. More specifically, 2014 saw strong technical efforts and commercial positioning in the fertilizer market, which is extremely interesting due to its specialization and countercyclical nature and which has begun to reap its rewards with extremely profitable order intakes.
El grupo TUBACEX continúa buscando nuevos nichos de demanda. En concreto en el año 2014 se ha realizado un fuerte esfuerzo técnico y de posicionamiento comercial en el mercado de fertilizantes, muy interesante por su especialización y su carácter contracíclico, y que ya ha comenzado a dar sus frutos con la entrada de pedidos de alta rentabilidad.
In 2015, the TUBACEX Group hopes to continue focusing its activity on high value-added products, including those already mentioned and new developments. In fact, the Strategic Plan 2013-2017 is committed to knowledge development and production capacity in those segments with a higher level of specialization and added value, which will provide a portfolio of higher quality and greater proximity to the endclient, fostering service and solutions rather than just tube manufacturing. In this respect, the setting up of TUBACEX Services to develop the concept of integral supplier of high value-added solutions can be highlighted.
De cara a 2015, el Grupo TUBACEX espera seguir orientando su actividad hace productos de alto valor añadido, tanto los mencionados como nuevos desarrollos. De hecho, el Plan Estratégico de 2013-2017 apuesta por el desarrollo de conocimiento y capacidades de producción en aquellos segmentos de mayor nivel de especialización y valor añadido, que permitan una cartera de mayor calidad y una mayor proximidad a los clientes finales, potenciando el servicio y las soluciones frente a la simple fabricación de tubo. En este sentido, destaca la creación de TUBACEX Services para desarrollar profundamente el concepto de proveedor integral de soluciones de alto valor añadido.
TUBACEX also considers it a priority to strengthen the Group’s presence in areas in which high growth in demand for tubes is expected over the forthcoming years. From this point of view, the Group is committed to Asia, where it has hired a new regional head and it plans to open new sales offices over the next few years.
TUBACEX contempla además como aspecto prioritario fortalecer la presencia del Grupo en zonas en las que se esperan los mayores crecimientos de la demanda de tubos en los próximos años. Desde este punto de vista, el Grupo apuesta por Asia, donde se ha contratado a un nuevo responsable regional y se prevé la apertura de nuevas oficinas comerciales en los próximos años. .
MERCADO OFF-SHORE
Order intake for special high alloy steels also experienced heavy growth and reached historic levels, with particularly good performance of tubes for the off-shore market where TUBACEX continues to extend its range of products, from tubes for oil platforms to tubes for the manufacture of umbilicals and other equipment for subsea handling and extraction of hydrocarbons. In addition to the increase in the sale of umbilicals, it is worth mentioning the positive evolution of other products, such as the manifolds that TUBACEX is going to supply in projects like Kaombo in Angola. It is also worth mentioning the favorable evolution of figures in the boiler market for new power generation stations with supercritical technology, in spite of the drop in sales halfway through the year (closely related to the aforementioned weakness of the Chinese market). The first orders for tubes for supercritical boilers in the demanding Japanese market and the positive order intake for this type of tube in the final
weeks of the year must also be pointed out. The company is introducing new developments, an essential aspect considering that the market is in the midst of a technological transformation and transition to new, more efficient power generation methods that are more demanding in terms of the materials used and seamless stainless steel tubes are among the most critical equipment.
También merece la pena mencionar la buena evolución de las cifras en el mercado de calderas para nuevas centrales de generación de energía de tecnología supercrítica, a pesar del bache de ventas experimentado a mitad del ejercicio (muy vinculado a la mencionada debilidad del mercado chino). Hay que destacar los primeros pedidos de tubos para calderas supercríticas en el exigente mercado japonés y el buen nivel de
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STAINLESS STEEL BILLETS AND ROUND BARS
INOXIDABLE EN PALANQUILLA Y REDONDO
CURVED SECTIONS AND TUBE FITTINGS
CURVAS Y ACCESORIOS PARA TUBO
Besides supplying the Group’s plants with raw materials, Acería de Alava is active in foreign markets, manufacturing rolled and forged stainless steel products in billets or round bars for other consumers of this raw material, mainly forging and machining companies.
Además de suministrar la materia prima a las plantas del Grupo que fabrican tubos, Acería de Álava opera activamente en el mercado externo, fabricando productos laminados y forjados de acero inoxidable en forma de palanquilla y redondos para otros consumidores de esta materia prima, sobre todo forjadores y mecanizadores.
Through its subsidiary, TUBACEX Taylor Accesorios (TTA), the Group manufactures curved sections in stainless steel, carbon steel and alloys, as well as tube fittings.
El Grupo, a través de su filial TUBACEX Taylor Accesorios (TTA), fabrica curvas en acero inoxidable, así como en aceros al carbono y aleados, y accesorios para tubo.
This market showed a downward trend throughout the year in line with the steel sector, which continued with its adjustment process in 2014 with poor results in most companies of the sector.
Se trata de un mercado que se ha comportado de manera decreciente a lo largo del ejercicio, en consonancia con el sector del acero que, considerado en sentido amplio, ha continuado su proceso de ajuste en 2014, con resultados muy débiles en la mayor parte de empresas del sector.
The performance of the market for this sector remained stable throughout the year. It is a product that is closely related to the petrochemical industry, specifically to the manufacture of refinery furnaces, a segment in which TUBACEX boasts a leading position.
El comportamiento del mercado de este producto se ha mantenido estable a lo largo del ejercicio. Se trata de un producto muy vinculado a la industria Petroquímica, en particular a la fabricación de hornos de refinería, segmento en el cual TUBACEX detenta una posición de liderazgo.
DISTRIBUTION BUSINESS
NEGOCIOS DE DISTRIBUCIÓN
TUBACEX has several distributors that work with some of their products. Cotubes in Spain, MIS in France and SSB in Brazil distribute seamless stainless steel tubes. The company also has warehouses in the United States and China.
TUBACEX cuenta con varias empresas a través de las cuales distribuye parte de sus productos. Para la distribución de tubos sin soldadura en acero inoxidable cuenta con Cotubes en el mercado español, MIS, en Francia, y SSB en Brasil. Tiene también almacenes en Estados Unidos y China.
Tubos Mecánicos Group, with warehouses in Barcelona, Madrid, Zaragoza, Valencia and Galicia, sells the so called mechanical tubes (hollow bars) for use in the manufacture of machined parts. It also sells tubes for hydraulic and pneumatic circuits, tubes for cylinders, lapped and prelapped items and chrome-plated bars, which are mainly used in the capital goods industry.
El Grupo Tubos Mecánicos, con almacenes en Barcelona, Madrid, Zaragoza, Valencia y Galicia, se dedica a la comercialización del denominado tubo mecánico (barra perforada), un producto que se utiliza en la fabricación de piezas mecanizadas. También comercializa tubos para circuitos hidráulicos y neumáticos, tubos para cilindros, lapeados, prelapeados y barras cromadas, productos que se utilizan fundamentalmente en la industria de bienes de equipo.
The market segments in which Acería de Alava operates have performed negatively. The trend of previous years continued, concentrating on high value added products and special grades. Nevertheless, a new Strategic Plan has been launched for the steel mill to stop being considered as a cost center and becoming a profit center focused on external clients.
ANNUAL REPORT 2014 INFORME ANUAL
Los segmentos de mercado en los que opera Acería de Álava se han comportado de manera decreciente. Se ha profundizado la tendencia de años anteriores, basada en la concentración en aquellos tipos de producto de mayor valor añadido y grados especiales. No obstante, se ha realizado un nuevo Plan Estratégico para la acería que deja de ser considerada un centro de coste y se apuesta por su conversión en un centro de beneficio orientado su actividad hacia los clientes externos.
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CAPITAL EXPENDITURE
Performance for the Year
Evolución del Ejercicio
.4
INVERSIONES
TUBACEX invested 23.90 million Euros in technical facilities and equipment in 2014. The most significant investments during the year were a continuation of those commenced in previous years, which seek to reinforce the strategic development of production capacity in those segments requiring a higher level of expertise and added value within the oil, gas and power generation sectors. From 2010 to 2014, the company has invested 170.49 million Euros, mainly in strategic development. It is important to highlight that a large percentage of this investment has been made in the midst of the global economic crisis, which shows the company’s financial capacity. This ongoing investment policy is enabling the company to continue to undertake strategic investments (high valueadded and technologically advanced products), and to maintain and renew its facilities, all of which is focused on the improvement of costs, productivity and quality, contributing towards operational excellence, one of the pillars of the Strategic Plan 2013-2017.
TUBACEX ha puesto en operación durante 2014 inversiones en instalaciones técnicas y maquinaria por importe de 23,90 millones de euros. Las inversiones más importantes del ejercicio son continuidad de las iniciadas en años anteriores y están destinadas a reforzar el desarrollo estratégico de capacidades de producción en los segmentos de mayor nivel de especialización y alto valor añadido dentro de los sectores de petróleo, gas y energía. Entre 2010 y 2014 la compañía ha invertido, básicamente en este desarrollo estratégico, la cantidad de 170,49 millones de euros. Hay que destacar que buena parte de esta inversión se ha efectuado en plena crisis económica internacional, lo que muestra la capacidad financiera de la compañía. Esta política de inversiones sostenida en el tiempo está posibilitando, por una parte, acometer inversiones estratégicas (productos de mayor valor añadido y tecnológico), así como continuar con el mantenimiento y renovación de los equipos, como un elemento más para la consecución de la mejora en costes, productividad y calidad, contribuyendo a la excelencia operacional, uno de los pilares del Plan Estratégico 2013-2017.
HIGHER ADDED VALUE PRODUCTS
PRODUCTOS DE MAYOR VALOR
The most significant investments throughout the year are those deriving from the Group’s positioning strategy in higher added value products and which are necessary to ensure the quality demanded in this type of products and to improve the effectiveness of these product lines.
Las inversiones más importantes del período se corresponden con las derivadas de la estrategia del Grupo de posicionamiento en los productos de mayor valor añadido y que son necesarias para garantizar la calidad exigida en este tipo de productos y mejorar la eficiencia de dichas líneas de producto.
There were also investments in improving the efficiency of key facilities at the Group’s different industrial plants, with the renewal and maintenance of equipment, soundly implemented procedures for preventive maintenance at the facilities and strict compliance with environmental and industrial safety regulations.
También se han mantenido las inversiones relacionadas con la mejora de la eficiencia en las instalaciones clave de las distintas plantas industriales del Grupo, con la renovación y mantenimiento de los equipos, con los procedimientos sólidamente implantados para el mantenimiento preventivo de las instalaciones y con el cumplimiento estricto de la legislación medioambiental y de seguridad industrial.
INVESTMENT IN SBER
INVERSIÓN DE SBER
An investment project has been developed at the Austrian subsidiary, SBER, to extend the welding capacity of the umbilical tube production facilities, given the positive outlook for this product. The project also includes logistical and productivity improvements.
En la filial austriaca SBER se ha desarrollado un proyecto de inversión para la ampliación de la capacidad de soldadura de las instalaciones de fabricación de tubo para umbilicales, dada la buestas perspectivas de este producto. El proyecto incluye también mejoras de tipo logístico y de productividad.
CAPITAL EXPENDITURE IN SALEM
INVERSIONES EN SALEM
On the other hand, the North American subsidiary, Salem Tube, is undergoing an extensive investment plan to improve its industrial facilities. In this respect, the new finishing building is now in operation, which increases the quality assurance of the products and improves the position of the North American subsidiary in high value-added niches, such as the aeronautics and nuclear sectors.
Por otra parte, en la filial norteamericana Salem Tube se está acometiendo un amplio plan de inversiones para la mejora de sus instalaciones industriales. En este sentido ya está en funcionamiento la nueva nave de acabado, que refuerza el aseguramiento de la calidad de los productos y mejora el posicionamiento que la filial norteamericana tiene en nichos de alto valor añadido, como el aeronáutico y el nuclear.
The new quality testing laboratory, which boasts cuttingedge technology in this type of facilities, obtained certification from Nadcap, the National Aerospace and Defense Contractors Accreditation Program.
El nuevo laboratorio de ensayos de calidad, que se encuentra en la vanguardia tecnológica en este tipo de instalaciones, ha recibido la certificación de Nadcap, el programa nacional de acreditación de contratistas de la industria aeroespacial y de defensa.
SHOTPEENING FACILITY
INSTALACIÓN DE SHOTPEENING
In 2014, a special shotpeening facility was implemented at the TUBACEX Services plant in Cantabria, which is a special technology for surface treatment and aims to increase the resistance of materials subject to high temperatures. The facility has started to be used to improve the characteristics of certain tubes, particularly those to be used in the manufacture of supercritical boilers for power generation.
Durante 2014 se ha puesta en marcha en la planta de TUBACEX Services en Cantabria una instalación de granallado especial (shotpeening), una tecnología especial de tratamiento de superficie y cuyo objetivo es incrementar la resistencia de los materiales sometidos a altas temperaturas. La instalación ya ha comenzado a emplearse para mejorar las características de ciertos tubos especialmente aquellos con destino la fabricación de calderas supercríticas para generación eléctrica.
OTHER CAPITAL EXPENDITURE The remaining investments are aimed at diverse improvements linked to the efficiency of the key facilities in the manufacturing process of the different plants, maintenance and replacement of industrial equipment, quality improvement, increasing the added value of products, environmental friendliness and occupational safety.
OTRAS INVERSIONES El resto de las inversiones están destinadas a diversas mejoras relacionadas con la eficiencia de las instalaciones clave en el proceso de fabricación de las distintas plantas, el mantenimiento y reposición de equipos industriales, la mejora de la calidad, el incremento del valor añadido de los productos, el respeto al medio ambiente y la seguridad laboral.
CAPITAL EXPENDITURE EVOLUTION
Evolución de las inversiones
TUBACEX invested almost 24 million Euros in 2014 TUBACEX ha invertido casi 24 millones de euros en 2014
CONSOLIDATED. FIGURES IN MILLIONS OF EUROS CONSOLIDADO. CIFRAS EN MILLONES DE EUROS
ANNUAL REPORT 2014 INFORME ANUAL
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Innovation is a key component
STRATEGY
La innovación, elemento esencial
Sucessful completion of the First Phase of the Strategic Plan Cumplimiento exitoso de la Primera Fase del Plan Estratégico
ANNUAL REPORT 2014 INFORME ANUAL
2013-2017
Full value proposition for customers
ESTRATEGIA 2013-2017
Propuesta de valor completa para los clientes
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STRATEGIC PLAN 2013 - 2017
BUSINESS STRATEGY
PLAN ESTRATÉGICO 2013 – 2017
ESTRATEGIA DE NEGOCIO
In 2013, TUBACEX launched a Strategic Plan for 2013 - 2017, based on operational excellence, management excellence and a business strategy aimed at making the Company a global supplier of tubular solutions.
En el ejercicio 2013 TUBACEX lanzó un Plan Estratégico para el periodo 2013-2017 basado en la excelencia operacional, la excelencia en la gestión y una estrategia de negocio orientada a convertir a la Compañía en un proveedor global de soluciones tubulares.
The TUBACEX business strategy focuses on three essential aspects: product, customer and market and ultimately aims to develop a full value proposition for customers of the Group.
La estrategia de negocio de TUBACEX se enfoca en tres aspectos fundamentales, producto, cliente y mercado, y tiene como objetivo último desarrollar una propuesta de valor completa para los clientes del Grupo.
The plan was divided into three different phases with specific objectives for each phase. The first phase (2013-2014) focused on obtaining returns on investments over recent years, cash generation and financial strengthening, whereas the second phase (2015-2016) is focused on growth and the third phase (2017 onwards) is dedicated to the fulfillment and consolidation of goals, with sustained and profitable growth.
El plan se dividió en tres fases diferenciadas con unos objetivos específicos marcados para cada una de ellas. La primera fase (2013-2014) estaba centrada en la obtención del rendimiento de las inversiones realizadas en los últimos años, la generación de caja y el fortalecimiento financiero, la segunda fase (2015-2016) está enfocada al crecimiento y la tercera (a partir de 2017) es una fase de ejecución y consolidación de los objetivos logrados, con un crecimiento sostenido y rentable.
The Strategic Plan aims to extend and improve the product portfolio by gradually increasing the importance of products with high added value and greater market growth, particularly those for oil and gas exploration and extraction.
El Plan Estratégico prevé ampliar y mejorar la cartera de productos a través de un aumento progresivo del peso de los productos de mayor valor añadido y con mayor crecimiento de mercado, especialmente aquellos destinados al sector de exploración y producción de petróleo y gas.
The objective is for high value-added products (nuclear, urea, OCTG, umbilicals, high nickel alloys, special alloys, precision tubes and supercritical boilers, among others) to account for more than two thirds of revenue by 2019. To achieve this goal, TUBACEX is increasing its proximity to the end-client in order to identify their needs and be able to offer a full solution based on its technological know-how and the development of new services and products, an aspect in which the Group’s innovation strategy, which will be mentioned below, takes on particular relevance. Along the same line, specific strategies have also been established for each geographic area in order to increase proximity to the end-client and ensure the full satisfaction of their needs.
El objetivo es que los productos de alto valor añadido (nuclear, urea, OCTG, umbilicales, altas aleaciones de níquel, aleaciones especiales, tubos de precisión y calderas supercríticas, entre otros) representen más de dos tercios de los ingresos en 2019. Para alcanzar este objetivo, TUBACEX está aumentando su proximidad al cliente final para identificar sus necesidades y poder ofrecer una solución completa basada en su conocimiento tecnológico y en el desarrollo de nuevos servicios y productos, aspecto donde cobra especial relevancia la estrategia de innovación del Grupo que se comentará más adelante. En esta misma línea, se han establecido también estrategias específicas para cada área geográfica, con el objetivo de aumentar la cercanía al cliente final y poder garantizar la satisfacción completa de sus necesidades.
OPERATIONAL EXCELLENCE EXCELENCIA OPERACIONAL 1) Sales Growth 2014 vs. 2012 assuming nickel price is steady. Crecimiento de ventas 2014 vs. 2012 asumiendo un precio estable del níquel.
In 2014, TUBACEX successfully completed the first phase of its Strategic Plan, fulfilling all of the objectives set out therein and, in many cases, approaching the objectives for the next phase. For this reason, TUBACEX began its Growth phase at mid-2014, proof of which is the acquisition of IBF in Italy (company which has been integrated in the Group since January 2015). In the first months of 2015, TUBACEX has continued on its growth path with the agreement to acquire the seamless stainless steel tube division of the Indian company, Prakash Steelage. Both operations, along with the Greenfield project in Cantabria, have enabled the TUBACEX Group to become the leading manufacturer of seamless stainless steel tubes worldwide.
ANNUAL REPORT 2014 INFORME ANUAL
En 2014 TUBACEX ha completado exitosamente la primera fase de su Plan Estratégico, cumpliendo todos los objetivos marcados para la misma y, en muchos casos, acercándose ya a los objetivos de la siguiente fase. Por esta razón, TUBACEX inició a mediados de 2014 su etapa de Crecimiento y, muestra de ello, es la adquisición de IBF en Italia (compañía que se integra en el Grupo desde enero de 2015). En los primeros meses de 2015 TUBACEX ha seguido profundizando en la vía del crecimiento con el acuerdo para adquirir la división de tubo de acero inoxidable sin soldadura de la compañía india Prakash Steelage. Ambas operaciones, unidas al proyecto de Greenfield de Cantabria han permitido al Grupo TUBACEX convertirse en el primer fabricante del mundo de tubo de acero inoxidable sin soldadura.
The TUBACEX Group not only assumes the principles of operational excellence as an essential part of the management strategy, but is also fully committed to habitually reviewing the results obtained as well as the efficiency of the processes used in order to progress firmly and improve the focuses and deployments. The final objective is always to boost the concepts of quality, delivery, cost and continuous improvement of products, processes and systems that the Group offers its customers. The redefinition of the TUBACEX management model in 2013 involved the launch of a large number of initiatives to foster participation and align the efforts of all the people that make up the Group and hence ensure that the objectives of the Strategic Plan 2017 are fulfilled. Efforts during 2014 were specifically focused on improving the Leadership capacity at all levels.
El Grupo TUBACEX no solo asume los principios de la excelencia operacional como parte fundamental de la estrategia de gestión, sino que está plenamente comprometido a revisar regularmente tanto los resultados obtenidos como la eficiencia de los procesos que usa, para ir avanzando con firmeza y mejorando los enfoques y despliegues. El objetivo final siempre es potenciar los conceptos de calidad, entrega, coste y mejora continua de productos, procesos y sistemas servicios que el Grupo ofrece a sus clientes. La redefinición del modelo de gestión de TUBACEX en 2013 supuso el lanzamiento de un gran número de iniciativas para potenciar la participación y alinear los esfuerzos de todas las personas que forman el Grupo y asegurar así el logro de los objetivos del plan estratégico 2017. Por su parte, el esfuerzo durante el ejercicio de 2014 ha estado especialmente enfocado en la mejora de la capacidad de Liderazgo a todos los niveles.
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Proof of this is the deployment of the “Leadership Process” for more than 200 people throughout the global corporation, the restructuring of local training plans to increase skill development at the production plants, as well as numerous advanced management courses for specialized groups, such as Industrial Management 3.0, Integral Logistics, PMI Project Management, World Class Series Lean and Six Sigma, among others. Thanks to the exponential industrial improvement programs, the annual management plan and the TxPS (TUBACEX Production System) introduced last year and deployed in all of the Group’s traditional plants throughout 2014, TUBACEX has significantly accelerated its progress towards operational excellence with excellent results at all levels of management. In 2014, the basic TxPS level has been deployed at the Schoeller Bleckmann Edelstahlrohr GmbH (SBER) plant in Austria and at Salem Tube Inc. in the USA, observing the same enthusiasm of the people and improved productivity as at the plants in Spain. During this period, the “TxPS - Standardization” project has been implemented for advanced control management of the production processes at the Acerálava, TTI Amurrio and TTI Llodio plants. All these tools have had a positive impact in the Group’s results, allowing to reduce the intermediate stock and consequently the working capital.
Muestra de ello son el despliegue del “Leadership Process” para más de 200 personas en toda la corporación a nivel global, la restructuración de los planes de formación locales para aumentar el desarrollo de competencias en las plantas productivas, así como numerosos cursos de gestión avanzada para colectivos especializados del Grupo, como Gestión Industrial 3.0, Logística integral, Gestión de proyectos PMI, World Class Series Lean y 6 Sigma, entre otros. Gracias a los programas de mejora industrial exponencial, el plan de gestión anual y el sistema de producción TxPS (TUBACEX Production System) introducido el año anterior y desplegado a todas las plantas tradicionales del grupo durante el 2014, TUBACEX ha acelerado su avance hacia la excelencia operacional de forma significativa con unos resultados excelentes a todos los niveles de gestión. Durante el ejercicio de 2014, el nivel básico del TxPS ha sido desplegado a las plantas de Schoeller Bleckmann Edelstahlrohr GmbH (SBER) en Austria, y Salem Tube Inc. en EEUU, observando la misma ilusión en la gente y mejora productiva que en las plantas en España. Durante este periodo se ha implantado el proyecto de “TxPS - Estandarización” para una gestión avanzada de control de los procesos productivos en las plantas de Acerálava, TTI Amurrio y TTI LLodio. Todas estas herramientas han tenido un impacto positivo en los resultados del Grupo, permitiendo reducir el stock intermedio y, por lo tanto, el capital circulante.
In 2015, it is expected that the TxPS basic systems and tools will be implemented at the newly incorporated plants (IBF in Italy, TUBACEX Services in Cantabria and Prakash Steelage in India) as well as advancing in the rest of the units of the Group in order to consolidate all of the TxPS basic tools and progress in the introduction of more sophisticated tools (advanced process control, empowerment, etc.) in order to keep on moving forward step by step towards operational excellence.
Para el ejercicio 2015 está previsto que se lleve a cabo la implantación de los sistemas básicos y herramientas del TxPS en las plantas de nueva incorporación (IBF en Italia, TUBACEX Services en Cantabria y Prakash Steelage en la India) así como el avance en el resto de las unidades del Grupo con el fin de consolidar todas las herramientas básicas del TxPS e ir progresando en la introducción de herramientas de mayor sofisticación (control avanzado de proceso, empowerment, etc.) para poder seguir avanzando paso a paso hacia la excelencia operacional.
Furthermore, given the level of standardization of the industrial management processes as a result of the implementation of TxPS, the first steps towards the establishment of inter-group benchmarks will be taken in 2015 in order to take global advantage of the production best practices and know-how at the nine TUBACEX plants. Furthermore, it is planned to set up a Continuous Improvement Team similar to the Business Teams and Technology Teams created in previous years to lead this interchange.
Además, dado el grado de estandarización de los procesos de gestión industrial conseguida con la implantación del TxPS, en 2015 también se darán los primeros pasos para el establecimiento de benchmarks intergrupo, para así poder aprovechar a nivel global las mejores prácticas y el know-how productivo de las 9 plantas de TUBACEX. Adicionalmente, se plantea el nacimiento de un Continuous Improvement Team semejante a los Business Teams y Technology Teams creados en los años anteriores para que lideren este intercambio.
TxPS Together towards excellence The TUBACEX objective is to be able to provide maximum customer satisfaction offering them the highest quality products with an optimum service level, while being cost-competitive to achieve greater economic efficiency. The TxPS slogan this year will continue to be: “Together towards excellence”.
ANNUAL REPORT 2014 INFORME ANUAL
TxPS Juntos hacia la excelencia El objetivo de TUBACEX es poder proporcionar la máxima satisfacción a sus clientes ofreciéndoles productos de la más alta calidad con un nivel de servicio óptimo, todo ello siendo competitivos en costes para alcanzar la mayor eficiencia económica. El eslogan de TxPS este año sigue siendo: “Juntos hacia la excelencia”.
INNOVATION INNOVACIÓN 2014 was a year of deployment and consolidation of the actions identified in the Strategic Plan 2013.
El año 2014 ha sido un año de despliegue y consolidación de las acciones identificadas en el Plan Estratégico de 2013.
Sales of new products increased significantly with respect to the previous year, exceeding 30% of sales of manufactured tube, as a result of the commercial success of the projects carried out in previous years. Important approvals by potential customers have also been obtained, which will enable sales of high value-added products to increase in the future.
Las ventas de nuevos productos han aumentado significativamente con respecto al año anterior, superando el 30% de las ventas de tubo fabricado, como consecuencia del éxito comercial de los proyectos desarrollados en años anteriores. También se han conseguido homologaciones relevantes con potenciales clientes, que permitirán incrementar las ventas de productos de alto valor en el futuro.
SALES OF NEW PRODUCTS* OVER TOTAL SALES VENTAS DE NUEVOS PRODUCTOS* CON RESPECTO AL TOTAL
* New products are understood to be those industrialized as of 2008. * Se entienden por nuevos productos aquellos industrializados a partir de 2008.
From the innovation management point of view, 2014 was an intense year in the deployment of corporate processes and systems for innovation management in the group’s industrial units.
Desde el punto de vista de gestión de la innovación, 2014 ha sido un año intenso en el despliegue de procesos y sistemas corporativos para la gestión de la innovación en las unidades industriales del grupo.
On the one hand, this will allow innovation to be managed more efficiently, taking advantage of synergies between companies and on the other hand, have a scalable management system, prepared for the incorporation of new industrial units.
Esto que permitirá, por una parte, gestionar la innovación de una forma más eficiente, aprovechando sinergias entre compañías, y por otra parte, disponer de un sistema de gestión escalable, preparado para la incorporación de nuevas unidades industriales.
INNOVATION STRATEGY
ESTRATEGIA DE INNOVACIÓN
As a result of the new strategic approach entailing a key business vision change, TUBACEX redefined in 2013 the Group’s innovation strategy.
Como consecuencia del nuevo enfoque estratégico, que supone un cambio fundamental en la visión del negocio, TUBACEX redefinió en 2013 la estrategia de innovación del grupo.
In general, the company is committed not only to added value or product complexity but also to developing comprehensive solutions for customers and innovative service models.
En general la compañía apuesta no sólo por el valor añadido o la complejidad de los productos, sino también por el desarrollo de soluciones integrales para clientes, y los modelos de servicio innovadores.
For this purpose, new capabilities and new management ways are required to be developed in a structured way according to a consistent, achievable plan and adapted to the current reality of TUBACEX.
Para ello, se requiere de nuevas capacidades y nuevas formas de gestión, que se tienen que desarrollar de una forma estructurada, según un plan coherente, alcanzable, y adaptado a la realidad actual de TUBACEX.
The next chart summarizes the capabilities to be developed and actions implemented for the first time in 2013, with a five year span to strengthen the aforementioned capabilities.
En el siguiente gráfico se resumen las capacidades a desarrollar y las acciones que comenzaron a adoptarse en 2013, con un desarrollo de cinco años, para fortalecer dichas capacidades.
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INNOVATION EFFORT
ESFUERZO DE INNOVACIÓN
Total effort in R&D&I activities in 2014 was up 9% on the previous year, consolidating the boost that began in previous years in order to fulfill the objectives set out in the Strategic Plan. In the last three years the innovation effort has increased by more than 50%.
El esfuerzo total en actividades de I+D+i en 2014 ha aumentado un 9% sobre el año anterior, consolidándose el impulso iniciado en años anteriores, necesario para la consecución de los objetivos establecidos en el plan estratégico. En los últimos 3 años el esfuerzo en innovación acumula un crecimiento de más del 50%.
EVOLUTION OF R&D EXPENDITURE, INDUSTRIALIZATION OF NEW PRODUCTS AND TECHNOLOGICAL INNOVATION EVOLUCIÓN DEL GASTO EN I+D, INDUSTRIALIZACIÓN DE NUEVOS PRODUCTOS E INNOVACIÓN TECNOLÓGICA
NEW R&D LABORATORY
NUEVO LABORATORIO DE I+D
A milestone in 2014 was the opening of a new laboratory specifically devoted to R&D, which is located on the Zamudio Scientific and Technology Park (Bizkaia).
Un hito destacable de 2014, es la apertura de un nuevo laboratorio dedicado específicamente a I+D, ubicado en el Parque Científico y Tecnológico de Zamudio (Bizkaia).
This new laboratory will accelerate the development of the R&D unit, in skills such as metallurgical and metallographic knowledge, which is key for the development of new materials and processes.
Este nuevo laboratorio acelerará el desarrollo de la unidad de I+D, en competencias como el conocimiento metalúrgico y metalográfico, clave para el desarrollo de nuevos materiales y procesos.
The creation of the new laboratory will act as a base for the future growth of the R&D capacities of the TUBACEX Group, enabling closer collaboration with customers in the development of new solutions for the PowerGen sector.
La creación del nuevo laboratorio servirá como base para el futuro crecimiento de las capacidades de I+D del grupo TUBACEX, permitiendo una colaboración cada vez más estrecha con clientes en el desarrollo de nuevas soluciones para la industria energética.
ANNUAL REPORT 2014 INFORME ANUAL
MAIN INNOVATION PROJECTS
PRINCIPALES PROYECTOS DE INNOVACIÓN
POWER GENERATION
GENERACIÓN DE ENERGÍA
In 2014, projects which had commenced in previous years were completed and the work focused mainly on the optimization of the processes for the ultra-supercritical boiler product range and in product development and the industrialization of the Shotpeening process on the inner surface of tubes in order to improve resistance to oxidation. In relation to shotpeening, an industrial facility has been implemented at the new TUBACEX Services plant in Cantabria.
En 2014 se han finalizado proyectos iniciados en años anteriores, y el trabajo se ha centrado principalmente en la optimización de los procesos para la gama de producto de calderas ultra-supercríticas, y en el desarrollo de producto y la industrialización del proceso de Shotpeening interior de los tubos, con objeto de mejorar la resistencia a la oxidación. En relación con el shotpeening, se ha puesto en marcha una instalación industrial en la nueva fábrica de TUBACEX Services en Cantabria.
With these developments, almost the entire ultra-supercritical boiler product range is covered, whereby projects aimed at the optimization of the product-process for improved inservice performance are open.
Con estos desarrollos se cubre la práctica totalidad de la gama de producto demandada en calderas ultra-supercríticas, quedando abiertos proyectos orientados a la optimización del productoproceso para el mejor comportamiento en servicio.
Activities in two European projects aimed at the identification of innovative materials for their application in power generation have also been completed.
También se han finalizado las actividades de dos proyectos europeos destinados a la identificación de materiales novedosos para su aplicación en la generación de energía
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OIL&GAS:
OIL&GAS:
Within the OCTG program, development of the defined multiannual program has continued, achieving various important milestones.
Dentro del programa de OCTG, se ha continuado desarrollando el programa multi-anual definido, alcanzándose varios hitos relevantes.
•
•
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The first Grade TX28CR-125 order has been successfully supplied. The Grade TX825-110 has been developed. Qualification by the Total oil company has been obtained, which means high recognition in terms of product quality and control of the TUBACEX process.
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Se ha suministrado con éxito el primer pedido del grado TX28CR-125. Se ha desarrollado el grado TX825-110 Se ha conseguido la cualificación de la petrolera Total para el grado TX28CR, lo cual supone un alto reconocimiento en cuanto a la calidad del producto y el control del proceso de TUBACEX.
On the other hand, work has continued on extending the dimensional range, in order to access an ever increasing market.
Por otra parte, se ha seguido trabajando en la ampliación de la gama dimensional, con objeto de acceder a un mercado cada vez mayor.
UMBILICAL OFFSHORE TUBE
TUBO PARA UMBILICALES
R&D tasks carried out were geared towards accelerating the market penetration process through the extension of the dimensional range, comprehensive product characterization and steel quality improvement. Approvals by all the clients have been achieved and orders for all of them have been supplied. Next step is the increase of the coiling line capacity, scheduled for the first semester of 2015. Commencement of the development of large diameter umbilical offshore tubes at the plant in Spain must be highlighted.
Las labores de I+D realizadas han estado orientadas a acelerar el proceso de penetración en el mercado, por medio de la extensión de la gama dimensional, caracterización exhaustiva del producto, y mejora de la calidad del acero. Se ha conseguido la homologación con todos los clientes y se han suministrado pedidos a todos ellos. El siguiente paso es la ampliación de capacidad de la línea de bobinado prevista para el primer semestre de 2015. Cabe destacar el inicio del desarrollo de tubos para umbilical de gran diámetro en la planta de España.
ANNUAL REPORT 2014 INFORME ANUAL
OTHER PRODUCTS
OTROS PRODUCTOS
In line with the specialization and migration strategy towards higher added value products, various work lines began in 2014 with the aim of developing new product ranges in high demand niches for different final sectors.
De acuerdo a la estrategia de especialización y migración hacia productos de más valor añadido, en 2014 se han iniciado varias líneas de trabajo cuyo objeto es desarrollar nuevas gamas de producto, en nichos de aplicación de alta exigencia, para distintos sectores finales.
TUBACOAT (CERAMIC COATING)
TUBACOAT (REVESTIMIENTOS CERÁMICOS)
Pre-industrialization activities have continued with significant progress although without any commercial results to date. Progressive development is expected in 2015.
Han continuado las actividades de pre-industrialización, con avances significativos, aunque sin resultado comercial hasta el momento. Se espera un desarrollo progresivo durante 2015.
AGREEMENTS WITH TECHNOLOGY CENTERS
ACUERDOS CON CENTROS TECNOLÓGICOS
In 2014, joint research projects were carried out with the CEIT (IK4), CIDETEC (IK4) and Tecnalia technology centers within the R&D projects underway.
En el año 2014, dentro de los proyectos de I+D en curso, se han realizado actividades de investigación conjuntas con los centros tecnológicos CEIT (IK4), CIDETEC (IK4), y Tecnalia.
On the other hand, within the alliance framework with the French group Vallourec, active cooperation with technology centers in this company takes place.
Por otra parte, dentro de la alianza con el grupo francés Vallourec, se colabora activamente con los centros tecnológicos de dicha compañía.
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Share values have increased by 7.3% Las acciones se han revalorizado un 7,3%
TUBACEX
SHARES IN 2014 The dividend against 2013 reached €0.0463 El dividendo con cargo a 2013 ha ascendido a 0,0463€
ANNUAL REPORT 2014 INFORME ANUAL
The highest trading levels since 2008
LA ACCIÓN DE TUBACEX EN 2014
Los niveles de contratación son los más elevados desde 2008
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TUBACEX Shares in 2014 La Acción de TUBACEX en 2014
TUBACEX SHARES IN 2014
TREASURY STOCK
AUTOCARTERA
LA ACCIÓN DE TUBACEX EN 2014
There have been no movements in the company’s treasury stock.
Durante el ejercicio no se han producido movimientos en la autocartera de la compañía.
As of December 31 2014, the number of TUBACEX shares held by Group companies was 3,142,975, a figure that represents 2.36% of the capital. The average purchase share price is 2.39 Euros.
A 31 de diciembre de 2014 el número de acciones de TUBACEX en poder de sociedades del Grupo es de 3.142.975, cifra que representa el 2,36% del capital. El precio medio de compra de estas acciones es de 2,39 euros.
DIVIDEND
DIVIDENDO
A total dividend of 0.0463 Euros gross per share was paid against the results of 2013, by means of an interim dividend (November 2013) and a supplementary one (July 2014), thus distributing 40% of the profits of the financial year.
Con cargo a los resultados de 2013 se ha repartido un dividendo total de 0,0463 euros brutos por acción, mediante un pago a cuenta (noviembre de 2013) y otro complementario (julio de 2014), distribuyendo así el 40% de los beneficios de ese ejercicio. Por lo que respecta al resultado de 2014, también se procederá a distribuir a los accionistas el 40% de los beneficios. A cuenta de esos resultados ya se ha distribuido en enero de 2015 un dividendo de 0,0231 euros brutos por acción y tras la formulación de las cuentas anuales el Consejo de Administración ha propuesto a la Junta de Accionistas el pago de un dividendo de 0,0501 euros brutos por acción, alcanzándose entre ambos dividendos un pay-out del 40% de los beneficios de 2014.
TUBACEX share capital stands at 59.84 million Euros, divided into 132,978,782 shares, each having a nominal value of 0.45 Euros. All of the company’s share capital is traded on the continuous market of the Spanish Stock Exchange. TUBACEX is quoted on the Madrid Stock Market General Index. Throughout 2014 it has been quoted on the “IBEX MEDIUM CAP” index, which is made up of the 20 stocks with the largest adjusted floating capital, excluded the stocks listed on the IBEX-35. During this financial year, TUBACEX shares increased by 7.3%, from 2.890 Euros per share on the last day of trading in 2013 to 3.100 Euros per share at the end of December 2014. The company’s market capitalization at the end of the financial year amounted to 412.23 million Euros as opposed to 384.31 million Euros in 2013.
TUBACEX cuenta con un capital social de 59,84 millones de euros repartidos en 132.978.782 acciones de 0,45 euros de valor nominal cada una. La totalidad del capital de la compañía cotiza en el mercado continuo de la Bolsa española. TUBACEX forma parte del Índice General de la Bolsa de Madrid y ha estado integrado en 2014 en el índice IBEX MEDIUM CAP, que integra a los 20 valores de mayor capital flotante corregido, excluidos los valores del IBEX-35.
Share prices experienced two phases during the year. During the first part of the year, they experienced progressive growth until achieving an appreciation of almost 53% by mid September (4.33 Euros). From that moment onwards, the trading price dropped in parallel with the fall of oil prices, ending the year at 3.10 Euros per share.
Durante el ejercicio la cotización de las acciones de TUBACEX ha registrado un crecimiento de un 7,3%, al pasar de los 2,890 euros por acción en la última cotización de 2013 a 3,100 euros por acción al cierre de diciembre de 2014. La capitalización bursátil de la compañía al cierre del ejercicio asciende a 412,23 millones de euros frente a los 384,31 millones de euros de 2013. La cotización de las acciones ha tenido dos fases durante el ejercicio. En la primera parte de año se ha producido un progresivo crecimiento hasta alcanzar una revalorización de casi un 53% a mediados del mes de septiembre (4,33 euros). Desde ese momento la cotización desciende de forma paralela a la caída del precio del petróleo, para cerrar el año a 3,10 euros por acción.
The highest listed price of TUBACEX shares during the year was 4.33 Euros per share which occurred on September 18. The lowest trading price, on the other hand, was 2.75 Euros per share which took place on January 27.
La cotización máxima de las acciones de TUBACEX durante el ejercicio ha sido de 4,33 euros por acción y se produjo 18 de septiembre. La cotización más baja, por el contrario, fue de 2,75 euros por acción el día 27 de enero.
In 2014, 162.05 million TUBACEX shares were traded, which a 50% increase was regarding the number of shares traded in 2013. This figure means that there has been a 122% rotation during the year of the total number of the company’s shares.
Durante el año 2014 se han negociado un total de 162,05 millones de títulos de TUBACEX, lo que representa un aumento de un 50% respecto al número de acciones negociado en 2013. Esta cifra supone que durante el ejercicio se ha producido una rotación de un 122% respecto al número total de acciones de la compañía.
As regards the results of 2014, 40% of profits will also be distributed among the shareholders. A dividend of 0.0231 Euros gross per share has been distributed in January 2015 against these results. After preparing the Consolidated Financial Statements, the Board of Directors has proposed a payment of a dividend of 0.0501 Euros gross per share. Both dividends account for a total pay-out of 40% of the profits of 2014.
TUBACEX EVOLUTION ON THE STOCK MARKET EVOLUCIÓN DE TUBACEX EN BOLSA
Effective trading was 98.5% higher than the volume traded in 2013 La contratación efectiva fue un 98,5% superior al volumen contratado en 2013
Regarding effective trading, it rose to 539.67 million Euros, which is 98.5% higher than the volume traded in the previous year, which reached 271.87 million Euros. These trading figures, in terms of the number of shares and Euros as well as the rotation of shares, are the highest since 2008.
ANNUAL REPORT 2014 INFORME ANUAL
Por lo que se refiere a la contratación efectiva, ésta ascendió a 539,67 millones de euros, un 98,5% más que el volumen contratado en el ejercicio precedente, que ascendió a 271,87 millones de euros. Estas cifras de contratación, tanto en número de títulos como en euros y en rotación de las acciones, son las más elevadas desde 2008.
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TUBACEX Shares in 2014 La Acción de TUBACEX en 2014
MARKET CAPITALIZATION IN 2014
SHARE PRICE EVOLUTION IN 2014
CAPITALIZACIÓN BURSÁTIL EN 2014
EVOLUCIÓN DEL PRECIO DE LA ACCIÓN EN 2014
TUBACEX COMPARED WITH THE IGBM TUBACEX COMPARADA CON EL IGBM
FIGURES IN MILLIONS OF EUROS CIFRAS EN MILLONES DE EUROS
FIGURES IN EUROS CIFRAS EN EUROS
TUBACEX SHAREHOLDING 12-31-2014 ACCIONARIADO DE TUBACEX 31-12-2014
MARKET CAPITALIZATION EVOLUTION
DIVIDEND PER SHARE EVOLUTION1
EVOLUCIÓN DE LA CAPITALIZACIÓN BURSÁTIL
EVOLUCIÓN DEL DIVIDENDO BRUTO POR ACCIÓN1
FIGURES IN MILLIONS OF EUROS CIFRAS EN MILLONES DE EUROS
FIGURES IN EUROS CIFRAS EN EUROS 1) Charged to results of that financial year. 1) Con cargo a los resultados generados ese año
TUBACEX IN THE STOCK MARKET TUBACEX EN BOLSA
ANNUAL REPORT 2014 INFORME ANUAL
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General Report to Shareholders
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Informe General a los Accionistas
CORPORATE RESPONSIBILITY REPORT 2014 INFORME DE RESPONSABILIDAD SOCIAL CORPORATIVA 2014 6.1
COMMITMENT TO CORPORATE SOCIAL RESPONSIBILITY COMPROMISO CON LA RESPONSABILIDAD SOCIAL CORPORATIVA
ANNUAL REPORT 2014 INFORME ANUAL
6.2
CORPORATE GOVERNANCE
6.3
RISK MANAGEMENT
6.4
MANAGEMENT MODEL
6.5
INTERNAL SOCIAL DIMENSION
6.6
EXTERNAL SOCIAL DIMENSION
6.7
ENVIRONMENTAL DIMENSION
GOBIERNO CORPORATIVO GESTIÓN DE RIESGOS
MODELO DE GESTIÓN
DIMENSIÓN SOCIAL INTERNA
DIMENSIÓN SOCIAL EXTERNA DIMENSIÓN AMBIENTAL
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COMMITMENT TO CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility Report 2014
Informe de Responsabilidad Social Corporativa 2014
.1
COMPROMISO CON LA RESPONSABILIDAD SOCIAL CORPORATIVA
The TUBACEX vision is related to fulfilling the expectations of its stakeholders, and its values include aspects that are closely related to Corporate Social Responsibility, such as customer satisfaction, innovation, teamwork, value creation, diversity and dignity in the workplace and business ethics.
La visión de TUBACEX está relacionada con la satisfacción de las expectativas de sus grupos de interés, y entre sus valores se encuentran aspectos estrechamente relacionados con la Responsabilidad Social Corporativa como la satisfacción del cliente, la innovación, el trabajo en equipo, la creación de valor, la diversidad, la dignidad en el trabajo y la ética empresarial.
For these reasons and due to the interest of the governing bodies to ensure the responsible conduct of the company and those forming part of it, the Board of Directors approved the Corporate Social Responsibility Policy in 2014, which sets out the company’s basic action principles and commitments in this field within the framework of its business strategy.
Por estos motivos y por el interés por parte de los órganos de gobierno de garantizar un comportamiento responsable de la compañía y las personas que forman parte de ella, en 2014 el Consejo de Administración ha aprobado la Política de Responsabilidad Social Corporativa, que establece los principios básicos de actuación y los compromisos de la compañía en la materia en el marco de su estrategia empresarial.
These commitments have been defined on the basis that CSR in the company is understood to be a source of competitiveness and that all actions must be integrated in the company’s culture and management and cover economic, social, environmental and corporate governance aspects. These commitments pervade all of the strategic actions and are extended to all of the Group’s units.
Estos compromisos se han definido sobre la base de que la RSC en la compañía es entendida como fuente de competitividad, que todas sus actuaciones han de estar integradas en la cultura y en la gestión de la compañía, y que abarca aspectos económicos, sociales, ambientales y de gobierno corporativo. Estos compromisos impregnan todas las actuaciones estratégicas y se extienden a todas las unidades del grupo.
To define the bases of this CSR Policy, the company carried out a diagnosis in 2014 in which internal reflection was made on the importance of CSR in TUBACEX and its application through specific actions and recommendations and good practices have been identified to continue moving forwards in the future. All areas of the company have been involved in this process, relying on the commitment of the most senior levels of management.
Para definir las bases de esta Política de RSC, la compañía ha realizado en 2014 un diagnóstico a través del cual se ha llevado a cabo una reflexión interna sobre la importancia de la RSC en TUBACEX y su aplicación a través de actuaciones concretas, identificándose recomendaciones y buenas prácticas en la materia para seguir avanzando en el futuro. En este proceso han estado implicadas todas las áreas de la compañía, contando con el compromiso de los más altos niveles de gestión.
TUBACEX COMMITMENT TO CSR
COMPROMISOS EN MATERIA DE RSC
• • • • • • •
Market: To be an innovative, leading, multi-national industrial group in the global market of seamless stainless steel tubes. People: Development of its professionals and people, working as a team and constantly measuring results. Customer: Seek customer satisfaction through a portfolio of products and services that are constantly being developed. Reliability: to be a reliable company that fulfills its obligations with internal and external clients. Profit: To grow in a profitable and sustainable way. Effective Management: Effectively manage the return on investments and reward Shareholders. Continuous Improvement: Rigorously manage processes and systematically apply continuous improvement in search of Excellence.
ANNUAL REPORT 2014 INFORME ANUAL
• • • • • • •
Mercado: Ser un grupo industrial multinacional innovador, de referencia en el mercado global de los tubos inoxidables sin soldadura. Personas: Desarrollo de sus profesionales y personas, trabajando en equipo y midiendo permanentemente los resultados. Cliente: Buscar la satisfacción de nuestros clientes, mediante un portfolio de productos y servicios en constante desarrollo. Fiabilidad: ser una empresa que cumple sus compromisos con los clientes externos e internos. Beneficio: Crecer de forma rentable y sostenida. Gestión eficaz: Gestionar el retorno de sus inversiones y retribuir adecuadamente al Accionista. Mejora continua: Gestionar con rigor sus procesos y aplicando de forma sistemática la mejora continua
•
Occupational Health and Safety: Constantly foster a safe and pleasant workplace, whilst respecting the environment.
•
buscando la Excelencia. Seguridad y Salud laboral: Promover de forma permanente un entorno de trabajo seguro y agradable, siempre respetando el medio ambiente.
THE GLOBAL COMPACT
EL PACTO MUNDIAL
In line with the commitments assumed by TUBACEX, the company has been a signatory of the Global Compact since 2004, a UN initiative that seeks to promote the creation of a global corporate citizenship that enables business interests and processes to be reconciled with the values and requirements of civil society. Through the agreement, members embrace and foster 10 universal principles and report annually on their progress. Once more, the company has issued its annual Progress Report, confirming its commitment to the principles proclaimed by the Global Compact and the progress made in each field.
En línea con los compromisos asumidos por TUBACEX, desde 2004 la compañía es firmante del Pacto Mundial, iniciativa de la ONU que tiene por objeto promover la creación de una ciudadanía corporativa global que permita la conciliación de intereses y procesos de la actividad empresarial con los valores y demandas de la sociedad civil. A través de la firma del Pacto, los socios se adhieren y promulgan 10 principios universales y reportan anualmente su avance en el compromiso de los mismos. Un año más, la sociedad ha remitido su Informe de Progreso anual confirmando su compromiso con los principios proclamados por el Pacto y los avances conseguidos en cada uno de ellos.
PRINCIPLES OF THE GLOBAL COMPACT
LOS PRINCIPIOS DEL PACTO MUNDIAL
1. Support and respect human rights. 2. Commitment to not being complicit in human rights abuses. 3. Uphold the freedom of association and the right to collective bargaining. 4. Elimination of all forms of forced and compulsory labor. 5. Effective abolition of child labor. 6. Elimination of discrimination in respect of employment and occupation. 7. Application of a precautionary approach and respect for environmental challenges. 8. Adoption of initiatives to promote greater environmental responsibility. 9. Development and diffusion of environmentally friendly technologies. 10. Work actively against corruption.
1. Apoyo y respeto a los derechos humanos. 2. Compromiso de no verse involucrado en abusos de los derechos humanos. 3. Respeto a la libertad de asociación y al derecho a la negociación colectiva. 4. Eliminación de todas las formas de trabajo forzoso y obligatorio. 5. Abolición efectiva del trabajo infantil. 6. Eliminación de la discriminación respecto del empleo y de la ocupación. 7. Aplicación de un criterio de precaución y respeto en los problemas ambientales. 8. Adopción de iniciativas para promover la responsabilidad ambiental. 9. Desarrollo y difusión de tecnologías inocuas para el medio ambiente. 10. Lucha activa contra la corrupción.
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CORPORATE GOVERNANCE
Corporate Social Responsibility Report 2014
Informe de Responsabilidad Social Corporativa 2014
.2
GOBIERNO CORPORATIVO
TUBACEX has always stood out as a forward company in terms of Corporate Governance. As early as 1994, it approved an “Internal Stock Market Code of Conduct” and since 1995, it has been incorporating the recommendations derived from the Cadbury and Viennot Reports to the operations of its Board of Directors.
TUBACEX se ha distinguido siempre por ser una compañía avanzada en materia de Gobierno Corporativo. Desde que en 1994 aprobara un “Reglamento Interno de Conducta en los Mercados de Valores” a partir de 1995 ha venido incorporando al funcionamiento de su Consejo de Administración las recomendaciones derivadas de los informes Cadbury y Viennot.
In this respect, the composition of the Management Body is made up of mainly independent directors with solid professional careers in all areas of economic life. Likewise, it was pioneering in establishing the annual evaluation of the governing body in 1999 and in setting an age limit to be appointed a member of the Board of Directors.
Destaca en este sentido la composición mayoritaria de consejeros independientes con profesionales de reconocido prestigio de todos los ámbitos de la vida económica. Igualmente fue pionera al establecer la evaluación anual del órgano de gobierno en 1999 así como al establecer un límite de edad para ser nombrado miembro del Consejo de Administración.
Today, it strictly fulfills practically all of the recommendations set out in the Unified Good Governance Code and maintains its commitment to adopt all those practices that help to increase transparency and trust in its management model.
Con todo ello, en la actualidad cumple estrictamente la práctica totalidad de recomendaciones del Código Unificado de Buen Gobierno y mantiene el compromiso de hacer propias todas aquellas prácticas que contribuyan a incrementar la transparencia y confianza en su modelo de gestión.
GOVERNING STRUCTURE
JUNTA GENERAL DE ACCIONISTAS
The functioning of the Meeting, the company’s supreme body, is regulated by the Regulations of the Shareholders Annual General Meeting, last modified in May 2013. Its non-transferable powers include the determination of the number of members of the Board of Directors and their appointment, the approval of the annual accounts and the appointment of the accounts auditor, among others.
El funcionamiento de la Junta, máximo órgano soberano de la compañía, está regulado por el Reglamento de la Junta General de Accionistas, modificado por última vez en mayo de 2013. Entre sus competencias indelegables cabe destacar la determinación del número de miembros del Consejo de Administración y su nombramiento, la aprobación de las cuentas anuales y el nombramiento del auditor de cuentas, entre otras.
TUBACEX SHAREHOLDING 12-31-2014 ACCIONARIADO DE TUBACEX 31-12-2014
In 2014, the Annual General Meeting was held on 28 May with a total participation of 48.05% of the share capital. The issues addressed were:
ESTRUCTURA DE GOBIERNO The Board of Directors is the highest governing body of TUBACEX, dependent on the Shareholders’ General Meeting, to which it is accountable as the company’s supreme body. Ordinary management is channeled through the Management Committee, led by the Group’s CEO.
SHAREHOLDERS’ GENERAL MEETING
El Consejo de Administración es el máximo órgano de gobierno de TUBACEX, dependiente de la Junta General de Accionistas, a quien debe rendir cuentas como órgano soberano de la compañía. Canaliza la gestión ordinaria a través del Comité de Dirección, liderado por el primer ejecutivo del Grupo.
• • •
Likewise, the Board of Directors has set up three specialized committees with specific responsibilities and powers. These committees are made up of different members of the Board of Directors, so that each and every one of the board members forms part of one of the committees in accordance with their knowledge and professional experience.
ANNUAL REPORT 2014 INFORME ANUAL
Igualmente el Consejo de Administración ha constituido en su seno tres comisiones especializadas con responsabilidades y atribuciones específicas. Dichas comisiones están compuestas por diferentes miembros del Consejo de Administración, de manera que todos y cada uno de los consejeros forman parte a su vez de alguna de las comisiones en función de sus conocimientos y bagaje profesional.
• • •
Examination and approval of the individual and consolidated annual accounts and their respective management reports. Approval of the proposed distribution of profit for 2013. Ratification of the appointment of board members elected through co-option by the Board of Directors. Authorization for the derivative acquisition of own shares. Authorization for the issue of debentures and fixedincome securities up to 250 million euros. Delegation to the Board of Directors of the power to exercise the agreement to increase the share capital.
En 2014 la Junta General Ordinaria se ha celebrado el 28 de mayo con una concurrencia total del 48,05% del capital social. Los temas tratados fueron: • • • • • •
Examen y aprobación de las cuentas anuales individuales y consolidadas y de sus respectivos informes de gestión. Aprobación de la propuesta de aplicación del resultado del ejercicio 2013. Ratificación de los nombramientos de los consejeros elegidos mediante cooptación por el Consejo de Administración. Autorización para la adquisición derivativa de acciones propias. Autorización para la emisión de obligaciones y valores de renta fija hasta 250 millones de euros. Delegación en el Consejo de Administración de la facultad de ejecutar el acuerdo para aumentar el capital social.
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BOARD OF DIRECTORS
CONSEJO DE ADMINISTRACIÓN
The functioning of this governing body is regulated by the Regulations of the Shareholders Annual General Meeting, last modified in May 2014. Without detriment to the powers attributed exclusively to the Shareholders’ General Meeting, the Board of Directors is the company’s highest governing body. It is responsible for general supervision and its action criteria should be based on maximizing the company’s value, creating value for the shareholders within a framework of respect for stakeholders and integrity as the basis of all business action.
El funcionamiento de este órgano de gobierno está regulado por el Reglamento del Consejo de Administración, modificado por última vez en mayo de 2014. Sin perjuicio de las competencias atribuidas exclusivamente a la Junta General de Accionistas, el Consejo de Administración es el máximo órgano de gobierno de la compañía. Sobre él recae la función general de supervisión y su criterio de actuación debe basarse en la maximización del valor de la empresa creando valor para los accionistas, en un marco de actuación de respecto de los grupos de interés y con la integridad como base de toda actuación empresarial.
In 2014, the Board of Directors met on 10 occasions with 98% total effective attendance of its members.
Durante 2014 el Consejo de Administración se ha reunido en 10 ocasiones con un 98% de asistencia total efectiva de sus miembros.
MEMBERS
COMPOSICIÓN
At the end of 2014, the TUBACEX Board of Directors was made up of 11 board members and a non-member Secretary of the Board. The board member selection process is based on the recognition of the solvency, competence and experience of the candidates, exercising due rigor in the selection of independent board members.
A cierre de 2014 el Consejo de Administración de TUBACEX estaba compuesto por 11 consejeros y un Secretario no miembro del Consejo. El proceso de selección de consejeros se basa en el reconocimiento de la solvencia, competencia y experiencia de los candidatos, extremando el rigor en la selección de consejeros independientes.
The Appointments and Remunerations Committee has expressly delegated the responsibility of ensuring gender equality to the Board of Directors and TUBACEX has been adopting appropriate measures to foster the incorporation of women since 2009.
La Comisión de Nombramientos y Retribuciones tiene expresamente delegada la competencia de velar por la igualdad de género y desde 2009 TUBACEX viene adoptando las medidas oportunas para fomentar la incorporación progresiva de mujeres al Consejo de Administración.
Consequently, the composition by typology at the end of 2014 was as follows:
Como resultado de todo ello, la composición por tipologías a cierre del ejercicio 2014 quedó como se detalla:
BOARD OF DIRECTORS • 1 Executive Director (CEO) • 6 Independent Directors Including the Vice-Chairman • 3 Proprietary Directors • 1 External Director (Chairman)
CONSEJO DE ADMINISTRACION • 1 Consejero ejecutivo (Consejero Delegado) • 6 Consejeros independientes Entre ellos se encuentra el Vicepresidente • 3 consejeros dominicales • 1 Consejero externo (Presidente)
AUDIT AND COMPLIANCE COMMITTEE • 3 Independent Directors • 1 Proprietary Director
COMISION DE AUDITORIA Y CUMPLIMIENTO • 3 Consejeros independientes • 1 Consejero dominical
APPOINTMENTS AND REMUNERATIONS COMMITTEE • 3 Independent Directors
COMISION DE NOMBRAMIENTOS Y RETRIBUCIONES • 3 Consejeros independientes
STRATEGY AND INVESTMENTS COMMITTEE • 1 Executive Director • 2 Proprietary Directors • 1 External Director
COMISION DE ESTRATEGIA E INVERSIONES • 1 Consejero ejecutivo • 2 Consejeros dominicales • 1 Consejero externo
ANNUAL REPORT 2014 INFORME ANUAL
FUNCTIONS
FUNCIONES
The Board of Directors has the general function of overseeing the company, assuming specific functions, such as the approval of the general strategies, the appointment, remuneration and removal from office of senior management, control of the management activity and the evaluation of the executives, identification of the main risks and approval of the Corporate Governance and Corporate Social Responsibility policies, among others.
El Consejo de Administración tiene asignada la función general de supervisión de la compañía, asumiendo en concreto funciones como la aprobación de las estrategias generales; el nombramiento, retribución y destitución de los altos directivos; el control de la actividad de gestión y la evaluación de los directivos; la identificación de los principales riesgos y la aprobación de las políticas de Gobierno Corporativo y Responsabilidad Social Corporativa, entre otras.
REMUNERATION
REMUNERACIÓN
The Board of Directors is the body responsible for the definition of the remuneration of the board members in accordance with the provisions set out in the Articles of Association and the proposals made by the Appointments and Remunerations Committee. The remuneration policy for the administrators is established in accordance with market demands, dedication of the board members to the company and the responsibility entailed. At the Annual General Meeting in May 2013, the shareholders modified the remuneration of the Board of Directors in order to remunerate appropriately the responsibility of the administrators, eliminating the variable remuneration and establishing fixed fees for serving on the Board and its committees. In the case of external directors, the Board and the Appointments and Remunerations Committee will ensure that under no circumstances does remuneration represent an obstacle to their independence.
El Consejo de Administración es el órgano encargado de la definición de la retribución de los consejeros de acuerdo a lo establecido en los Estatutos Sociales y a las propuestas de la Comisión de Nombramientos y Retribuciones. La política retributiva de los administradores se establece en función de las exigencias del mercado, la dedicación a la compañía de los consejeros y la responsabilidad aparejada. La Junta General de Accionistas en su reunión de mayo de 2013 modificó el sistema retributivo del consejo en aras a retribuir adecuadamente la responsabilidad de los administradores, eliminando la retribución variable y estableciendo honorarios fijos por pertenencia al Consejo y sus comisiones. En el caso de los consejeros externos, el Consejo y la Comisión de Nombramientos y Retribuciones se asegurarán en todo caso de que la retribución no constituya un obstáculo para su independencia.
EVALUATION OF THE BOARD
EVALUACIÓN DEL CONSEJO
Since 1999, the Board has been carrying out annual evaluations of the Chairman and since 2002, it has been self-evaluating its task as a responsible body, that of its committees and that of the CEO. The control session corresponding to 2014 was carried out in the first quarter of 2015. Based on the conclusions drawn and the areas for improvement identified, an action plan is established with specific initiatives to be developed throughout the following year.
Desde el año 1999 el Consejo ha venido realizando evaluaciones anuales del Presidente y desde el 2002 autoevaluando su labor como órgano colegiado, la de sus comisiones así como la del Consejero Delegado. La sesión de control correspondiente al ejercicio 2014 se realizó el primer trimestre del 2015. A partir de las conclusiones y las áreas de mejora detectadas se establece un plan de acción con iniciativas concretas a desarrollar durante el ejercicio siguiente.
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BOARD OF DIRECTORS’ DELEGATE COMMITTEES
COMISIONES DELEGADAS DEL CONSEJO DE ADMINISTRACIÓN
AUDIT AND COMPLIANCE COMMITTEE
COMISIÓN DE AUDITORÍA Y CUMPLIMIENTO
Created in 1996, it is responsible for: • Proposing the appointment of external accounts auditors to the Board of Directors and supervising their activity • Directing and supervising the internal auditing and risk management activity • Knowing the financial information process and internal control systems • Reviewing the accounts and supervising the fulfillment of the legal requirements and the proper application of the accounting principles • Reporting on related operations in advance
Creada en 1996 es la encargada de: • Proponer al Consejo de Administración el nombramiento de los auditores de cuentes externos y supervisar su actividad • Dirigir y supervisar la actividad de auditoría interna y gestión de riesgos • Conocer el proceso de información financiera y los sistemas de control interno • Revisar las cuentas y vigilar el cumplimiento de los requerimientos legales y la correcta aplicación de los principios de contabilidad • Informar previamente sobre las operaciones vinculadas
In 2014, it met on 5 occasions.
En 2014 se ha reunido en 5 ocasiones.
APPOINTMENTS AND REMUNERATIONS COMMITTEE
COMISIÓN DE NOMBRAMIENTOS Y RETRIBUCIONES
Created in 1996, it has the following objectives: • Review the criteria considered in the determination of the composition of the Board of Directors and the appointment of candidates to board members • Provide the Board of Directors with reports and proposals for appointments • Plan the succession of the Chairman and Chief Executive Officer • Propose the system and amount of annual remuneration for board members, general managers and management committees to the Board of Directors • Periodically review the remuneration programs • Review and propose modifications to the remuneration policy for Board members • Propose the remuneration policy for the administrators
Creada en 1996 tiene como objetivos: • Revisar los criterios considerados en la determinación de la composición del Consejo y la selección de los candidatos a consejeros • Elevar al Consejo los informes y propuestas de nombramientos • Planificar la sucesión del presidente y primer ejecutivo • Proponer al Consejo el sistema y la cuantía de las retribuciones anuales de consejeros, directores generales y Comité de dirección • Revisar periódicamente los programas de retribución • Revisar y proponer modificaciones a la política de remuneración de los consejeros • Proponer la política de remuneración de los administradores En 2014 se ha reunido en 3 ocasiones.
In 2014, it met on 3 occasions COMISIÓN DE ESTRATEGIA E INVERSIONES STRATEGY AND INVESTMENTS COMMITTEE Created in 1997, its main responsibilities include: • Review the annual investment plans for approval by the Board of Directors • Analyze company opportunities and operations • Report in advance on strategic plans to be approved by the Board of Directors
Creada en 1997, entre sus principales cometidos se encuentran: • Revisar los planes de inversiones anuales para su aprobación por el Consejo • Analizar las oportunidades de operaciones societarias • Informar previamente sobre los planes estratégicos a ser aprobados por el Consejo
In 2014, it met on 3 occasions.
En 2014 se ha reunido en 3 ocasiones.
* To obtain further information on Corporate Governance at TUBACEX, consult the Corporate Governance Annual Report 2014 and other related documentation published on the corporate website (www.TUBACEX.es) and on the Spanish Securities Exchange Commission’s website (www.cnmv.es). * Para acceder a más información sobre Gobierno Corporativo en TUBACEX, consultar el Informe Anual de Gobierno Corporativo de 2014 y otra documentación relacionada publicada en la página web corporativa (www.TUBACEX.es) y en la página web de la CNMV (www.cnmv.es).
ANNUAL REPORT 2014 INFORME ANUAL
BUSINESS ETHICS ÉTICA EN LOS NEGOCIOS In addition to joining the Global Pact, TUBACEX has formalized its commitment to ethics in the development of its activity through the Board of Director’s approval of the Code of Conduct in January 2014.
Adicionalmente a la adhesión al Pacto Mundial, TUBACEX ha formalizado su compromiso con la ética en el desarrollo de su actividad a través de la aprobación por parte del Consejo de Administración del Código de Conducta en enero de 2014.
This code sets out the standards of conduct and ethical behavior that TUBACEX expects each of its employees worldwide to follow at a corporate and individual level.
Este código establece los estándares de conducta y comportamientos éticos que TUBACEX asume cumplir a nivel mundial, a nivel corporativo y a nivel individual para cada uno de sus empleados.
Since its approval, it has been published on the corporate website, communicated cascade-style to all employees and issued to new incorporations to ensure that the workforce is aware of it.
Desde su aprobación, se ha publicado en la página web corporativa, se ha comunicado en cascada a los empleados y se entrega a las nuevas incorporaciones para garantizar su conocimiento por parte de la plantilla. La Comisión de Auditoría y Cumplimiento es la responsable de velar por la aplicación del código y el Responsable de Cumplimiento es el encargado de resolver las posibles consultas que puedan surgir en lo relativo a su aplicación.
The Audit and Compliance Committee is responsible for ensuring the application of the code and the Head of Compliance is responsible for resolving any questions that may arise in relation to its application. Furthermore, an Ethical Channel has been created to communicate any dubious practice or possible conflicts of interest that should be analyzed, guaranteeing the confidential handling of the information reported and the identity of the informant. It is worth mentioning that since the ethical channel was implemented and throughout 2014, there have not been any reports or similar notifications. • • • • • • • • • • • • • • • •
Respect for shareholders Respect for customers Respect for collaborators Respect for suppliers and service subcontractors Respect for strategic partners Conflicts of interest Acceptance of gifts Respect for Local Communities and Countries Environment Politics Use of insider information Use of property, assets and resources Prevention of money laundering Confidentiality Personal Data Protection Rejection of all forms of bribery and corruption
Además, se ha creado un Canal Ético para que se comunique cualquier práctica dudosa o posibles conflictos de interés que deban ser analizados, garantizando el tratamiento confidencial de la información reportada y de la identidad del informante. Cabe destacar que desde la habilitación del canal ético y durante el ejercicio 2014 no se ha producido denuncia alguna ni notificación asimilable. • • • • • • • • • • • • • • • •
Respeto a sus accionistas Respeto a sus clientes Respeto a sus colaboradores Respeto a sus proveedores y sus prestatarios de servicios Respeto a sus socios estratégicos Conflictos de interés Aceptación de regalos Respeto a las Comunidades Locales y Países Medioambiente Política Uso de información privilegiada Protección de la propiedad, activos y recursos Prevención del blanqueo de capitales Confidencialidad Protección de datos personales Repulsa de toda forma de soborno y corrupción
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GESTIÓN DE RIESGOS
TUBACEX has progressively developed policies, procedures, tools and resources to face up to the risks arising from its activity, implementing preventative and detective controls. The Internal Audit function is responsible for supporting the implementation of a more effective risk management and control model. Therefore, it functionally depends on the Audit and Compliance Committee and indirectly on the Board of Directors, supported by the Corporate Finance Management and the different finance divisions of the Group’s units to develop its auditing plans.
TUBACEX se ha ido dotando progresivamente de las políticas, procedimientos, herramientas y recursos para afrontar los riesgos asociados a su actividad poniendo en marcha controles tanto preventivos como detectivos. La función de Auditoría Interna es la responsable de apoyar y dar soporte en la implantación de un modelo más efectivo de gestión y control de riesgos. Es por ello que depende funcionalmente de la Comisión de Auditoría y Cumplimiento y por tanto indirectamente del Consejo de Administración, apoyándose para desarrollar sus planes de auditoría tanto en la Dirección Financiera Corporativa como en las diferentes direcciones financieras de las unidades del Grupo.
The main risks that may affect the fulfillment of the business objectives in accordance with the sector of activity and field of action, although they did not arise in 2014, are the following:
Los principales riesgos que pueden afectar a la consecución de los objetivos de negocio en función del sector de actividad y ámbito de actuación, aunque ninguno se haya materializado en 2014, son tradicionalmente los siguientes:
TYPE OF RISK AND DESCRIPTION TIPO DE RIESGO Y DESCRIPCIÓN
MITIGATION MEASURES MEDIDAS DE MITIGACIÓN
CREDIT CRÉDITO This risk is related to the possible breach of contractual agreements by the agents with which TUBACEX works and is one of the company’s most important risks as it may affect the total business turnover figure. Este riesgo está relacionado con el posible incumplimiento de las obligaciones contractuales de los agentes con los que TUBACEX se relaciona, y es uno de los riesgos más importantes para la compañía ya que puede afectar a la totalidad de la cifra de negocio.
TUBACEX hedges the largest possible number of operations with credit insurance and the rest are covered with letters of credit or sufficient collateral guarantees. Thanks to this management, the company is achieving exceptionally low non-payment percentages. TUBACEX cubre el mayor número posible de operaciones con seguros de crédito, y el resto queda cubierto con cartas de crédito o garantías colaterales suficientes. Gracias a esta gestión, la compañía está logrando porcentajes de impagos excepcionalmente bajos.
FOREIGN CURRENCY DIVISA TUBACEX is exposed to currency fluctuations, which may affect the variation of the margin on product sales and purchasing raw materials, and the consolidation of results from group subsidiaries operating outside the Euro Zone by using the closing rate method. The greatest exposure corresponds to US dollars, although there is also exposure in pounds sterling and Canadian dollars. TUBACEX está expuesto a las fluctuaciones de divisa, lo que puede afectar a la variación del margen de las ventas de productos y la compra de materias primas, y a la consolidación de los resultados de las filiales fuera de la zona Euro por utilizar el método de tipo de cambio de cierre. La mayor exposición corresponde a dólares USA, pero también existe en libras esterlinas y dólares canadienses.
ANNUAL REPORT 2014 INFORME ANUAL
To mitigate this risk, TUBACEX, carries out a daily analysis of foreign currency, does not speculate with open positions, compensating inflows with outflows and takes out exchange rate insurance. Para minimizar este riesgo TUBACEX realiza un análisis diario de divisas, no especula con posiciones abiertas compensando los flujos de entradas y salidas y contrata seguros de cambio.
INTEREST RATE TIPOS DE INTERÉS This risk is related to the variation of exchange rates in the market. The loans and credit accounts entered into by TUBACEX are mainly indexed to the Euribor index and to a lesser extent to the US Libor index, based on different contract and settlement periods, which exposes its financial cost to these potential variations.
To mitigate exposure to this risk, TUBACEX undertakes fixed rate hedging on interest rates. Para mitigar su exposición a este riesgo, TUBACEX realiza coberturas de riesgo de tipo de interés a tipo fijo.
Este riesgo está relacionado con la variación de los tipos de interés en el mercado. Los préstamos y cuentas de crédito contratados por TUBACEX están mayoritariamente indexados al índice Euribor y en menor medida al índice Libor USA en diferentes plazos de contratación y liquidación, lo que expone su coste financiero a estas potenciales variaciones. VOLATILITY IN THE PRICE OF RAW MATERIALS VOLATILIDAD EN EL PRECIO DE LAS MATERIAS PRIMAS TUBACEX is exposed to variations in the price of the main raw materials used in the production of stainless steel (nickel, chromium, molybdenum and stainless scrap metal). The most significant risk arises from the price of nickel (which also has an impact on the cost of scrap), whose price is listed daily on the London Metal Exchange (LME), being subject to supply and demand tension between producers and consumers and is highly affected by the involvement of financial investors.
The TUBACEX general and conservative policy is to enter into annual contracts with the world’s leading suppliers at a fixed price to avoid potential fluctuations prior to their collection. La política general y conservadora de TUBACEX consiste en realizar contratos anuales con los principales proveedores a nivel mundial a precio fijo para evitar potenciales fluctuaciones previas a su cobro.
TUBACEX está expuesto a las variaciones de precio de las principales materias primas para la fabricación del acero inoxidable (níquel, cromo, molibdeno y chatarra de inoxidable). El mayor riesgo está asociado al precio del níquel (que además influye en el coste de la chatarra) que cotiza diariamente en el London Metal Exchange (LME), estando sometido a tensiones de oferta y demanda entre productores y consumidores y muy afectado por la intervención de inversores financieros.
In addition to these risks, TUBACEX updated its risk map in 2014 to identify and evaluate all of the operating risks, among which those related to portfolio management, stock management, reputational risk, raw material management and attracting and retaining talent can be highlighted.
Además de estos riesgos, TUBACEX ha llevado a cabo durante 2014 una actualización del mapa de riesgos para identificación y evaluación de todos sus riesgos operativos entre los que cabe destacar los relacionados con la gestión de carteras, la gestión del stock, el riesgo reputacional, la gestión de materias primas y la captación y retención del talento.
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MANAGEMENT MODEL
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MODELO DE GESTIÓN
MATRIX ORGANIZATION
ORGANIZACIÓN MATRICIAL
In order to efficiently and sustainably address the increasing market and customer demands, in 2013, TUBACEX implemented a change towards a matrix organization based on two criteria: functions and products, coinciding with the launch of its current Strategic Plan.
Con el objetivo de cubrir las cada vez más exigentes demandas del mercado y de los clientes de forma eficiente y sostenible, TUBACEX abordó durante 2013, coincidiendo con el lanzamiento de su actual Plan Estratégico, un cambio hacia una organización matricial en base a dos criterios: funciones y productos.
This structure favors corporate alignment and improves the capacity to respond to changes in the market. Furthermore, it improves the flow of information, increasing quality in decision-making at all levels and highlighting the fulfillment of the business objectives.
Esta estructura favorece el alineamiento corporativo y mejora la capacidad de respuesta ante los cambios del mercado. Además, mejora el flujo de información incrementando la calidad de la toma de decisiones a todos los niveles y pone el foco en el cumplimiento de objetivos de negocio.
A global management plan was also implemented, through which the indicators related to efficiency, quality, production, innovation, sales, and the fulfillment of objectives are monitored monthly.
Además, puso en marcha un plan de gestión a nivel global a través del cual hacer seguimiento mensual de indicadores relacionados con la eficiencia, la calidad, la producción, la innovación, las ventas, y de cumplimiento de objetivos.
To ensure the success of this new organization and make the most of all its advantages, it is necessary to strengthen the business culture and improve adaptation to the change through the different initiatives closely related to Corporate Social Responsibility, such as internal communication or quality management. With the purchase of the Italian company, IBF S.p.A, in October 2014, this matrix organization will adopt a new operations division in Italy depending on the CEO as of 2015, when the effective integration into the group takes place. The flexibility of this type of organization will enable TUBACEX to adapt immediately.
Para garantizar el éxito de esta nueva organización y aprovechar todas sus ventajas es necesario fortalecer la cultura empresarial y mejorar la adaptación al cambio a través de diferentes iniciativas muy relacionadas con la Responsabilidad Social Corporativa como la comunicación interna o la gestión de la calidad. Con la compraventa en octubre de 2014 de la compañía italiana IBF S.p.A, esta organización matricial acogerá a partir de 2015, momento en el cual se producirá su integración efectiva en el grupo, una nueva dirección de operaciones Italia, dependiente del Consejero Delegado de la compañía. La flexibilidad de este tipo de organización permitirá a TUBACEX adaptar inmediatamente.
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CONTINUOUS IMPROVEMENT. EFQM MODEL
MEJORA CONTINUA. MODELO EFQM
Also in 2013 TUBACEX began a new path towards operational excellence, framing their business processes in the model EFQM, which is a global non-for-profit membership foundation with five hundred members covering more than 55 countries and 50 industries providing a unique platform for organisations to learn from each other and improve performance.
Igualmente en 2013 TUBACEX inició un nuevo camino hacia la excelencia operacional, enmarcando sus procesos corporativos en el modelo EFQM, siendo ésta una fundación global sin ánimo del lucro con más de medio millar de miembros en todo el mundo, que da cobertura a mas de 55 países y 50 sectores industriales a través de una única plataforma donde las organizaciones aprenden unas de otras a mejorar su desarrollo empresarial.
Under this model organizations that organizations pursuing the goal of excellence through continuous improvement share a common framework and language that facilitates the effective sharing of information between them; transcending sectorial and cultural barriers.
Bajo este modelo las organizaciones que persiguen el objetivo de la excelencia a través de la mejora continua, comparten un mismo lenguaje y marco de actuación de manera que se facilita el intercambio de información entre ellas, independientemente de los sectores y barreras culturales.
In the year 2014 the company has carried out its first EFQM self-evaluation. This evaluation examines nine aspects that match the nine EFQM criteria.
En el ejercicio 2014 la compañía ha llevado a cabo su primera autoevaluación EFQM según los nueve aspectos que coinciden con los nueve criterios de EFQM.
Special mention to the global deployment of the group’s 5 standard management cycles and operational data management and reporting system, as well as significant advancement in the redesign of the corporate process map and global implementation of the matrix organization.
Merece especial mención el despliegue global de los cinco ciclos de gestión estándar, la gestión de la información operacional y el sistema de reporte, así como el significativo avance en la redefinición del mapa de procesos corporativos y la implementación global de la organización matricial.
But more important than any initial self-evaluation result are surely the areas of improvement uncovered that have led to focused initiatives in the EFQM Criteria areas of Impact in Society and Leadership.
Pero mucho más importante que los resultados iniciales de la autoevaluación es que las áreas de mejora detectadas han dado lugar al desarrollo de iniciativas en los aspectos de EFQM con impacto en SOCIEDAD y LIDERAZGO.
A small excerpt of the initiatives in the area of SOCIETY are the more than 28 scholarships awarded in Spain alone, of which 4 are international; the firm commitment to integrate CSR, and a new HSE policy and reviewed HSE processes to further improve the groups commitment to assure a healthy and safe workplace. Finally mention the introduction of substantially higher standards for the entire TUBACEX Group supply chain.
Un pequeño extracto de las iniciativas en el ámbito de la SOCIEDAD son los más de 28 programas de formación para estudiantes realizadas solamente en España, cuatro de las cuales son internacionales; el firme compromiso para integrar la RSC, así como la nueva política y proceso revisado de Prevención de Riesgos Laborales para asegurar un entorno de trabajo saludable y seguro a través de un mayor compromiso. Finalmente destaca también la introducción de altos estándares de gestión en toda la cadena de suministro.
The areas of improvement uncovered have led to focused initiatives in the EFQM Criteria areas of Impact in Society and Leadership
In the area of LEADERSHIP and training, the group deployed globally the “LEADERSHIP PROCESS” to all Key people (this process includes different tools to evaluate performance and plan an effective specialization and professional development); completely restructured the local training plans with a strong focus on competence development; launched specific specialized management training activities for over 200 Key People in areas like: Industrial management, Integral logistics, Senior Project management, Lean Management and Account Management. The assessment was structured as questionnaire around the aspects of excellence that make up the nine criteria of the EFQM Excellence Model: LEADERSHIP, PEOPLE, STRATEGY, PARTNERSHIP & RESSOURCES, PROCESSES, PRODUCTS & SERVICES, as well as PEOPLE RERSULTS, CUSTOMER RESULTS, SOCIETY RESULTS and finally KEY RESULTS.
La autoevaluación ha consistido en un cuestionario sobre los aspectos que constituyen los nueve criterios del Modelo de Excelencia de EFQM: LIDERAZGO, PERSONAS, ESTRATEGIA, ALIANZAS Y RECURSOS, PROCESOS, PRODUCTOS Y SERVICIOS, así como RESULTADOS EN PERSONAS, RESULTADOS EN CLIENTE, RESULTADOS EN SOCIEDAD y finalmente RESULTADOS CLAVE.
In this first simple self-assessment performed by some of groups internal EFQM Champions (5 to 10 years of EFQM experience) the TUBACEX Group achieved 386 point, showing extraordinary evolution since 2013 in all of the group´s main management system building blocks.
En esta simple y primera autoevaluación llevada a cabo por algunos de los valedores internos de la EFQM (con 5 a 10 años de experiencia) el grupo TUBACEX consiguió 286 puntos, mostrando así una extraordinaria evolución desde 2013 en todos los pilares fundamentales del sistema de gestión del grupo.
ANNUAL REPORT 2014 INFORME ANUAL
The next step in this continuous improvement cycle is to follow up with the improvement actions and to further deploy the model awareness and its benefits to all Leaders of the Group, as solid tool to strive sustainably in an ever more complex world. TUBACEX is convinced that to remain competitive and of value to the customers, continuous innovation and improvement are mandatory. Now, more than ever before the need to balance and effectively manage the needs and expectations of all their stakeholders is of elemental importance. RSC and EFQM will be the guides during this never ending journey to management excellence.
Las áreas de mejora detectadas han dado lugar al desarrollo de iniciativas en los aspectos de EFQM con impacto en Sociedad y Liderazgo
En el ámbito de LIDERAZGO y formación, el grupo ha desplegado globalmente el PROCESO DE LIDERAZGO para todos sus posiciones clave (este proceso incluye diferentes herramientas para evaluar el desempeño y planificar el desarrollo profesional así como la efectiva especialización); reestructurando completamente la formación de ámbito local con el foco puesto en el desarrollo de competencias; poniendo en marcha actividades formativas especificas para más de 200 puestos clave en áreas como gestión industrial, logística integral, gestión de proyectos, gestión contable y producción Lean. El próximo paso en este ciclo de mejora continua es proseguir con las acciones y poner en conocimiento de todos los líderes del grupo el modelo y sus beneficios, como una solida herramienta para perseguir la sostenibilidad en un mundo cada vez más complejo. TUBACEX está convencido de que es obligatorio mantener la competitividad, el valor añadido a los clientes, así como la innovación y mejora continua. Ahora más que nunca, la necesidad de equilibrar y manejar adecuadamente las necesidades y expectativas de los grupos de interés es de vital importancia. La RSC y EFQM serán las guías en este interminable viaje a la excelencia operacional.
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INNOVATION
INNOVATION
Due to the rapid market evolution, innovation has become a key element in TUBACEX management.
Debido a la rápida evolución del mercado, la innovación se ha convertido en un elemento fundamental en la gestión de TUBACEX.
The need to develop new solutions adapted to customer and high value-added requirements has forced the company to advance rapidly in terms of innovation, and 2014 was the year in which some of the management formalization and systemization processes culminated.
La necesidad de desarrollar nuevas soluciones adaptadas a las necesidades de los clientes y de alto valor añadido ha hecho que la compañía haya tenido que avanzar rápidamente en materia de innovación, y 2014 ha sido el año en que se han culminado algunos de los procesos de formalización y sistematización de su gestión.
Among the advances in this field, those related with innovation and knowledge management processes can be differentiated from those related to the industrialization of products, aimed at minimizing quality and rejection risks normally encountered in new developments.
Entre los avances en la materia se pueden diferenciar los relacionados con los procesos de gestión de la innovación y el conocimiento y los relacionados con la industrialización de productos, encaminados a minimizar los riesgos de calidad y de rechazos normalmente vinculados con los nuevos desarrollos.
The innovation process usually begins with the generation of ideas, to later develop the concept to the prototype application and finally, proceed to industrialization (systematization of the production process) and commercialization of products.
El proceso de innovación suele comenzar con la generación de ideas, para posteriormente desarrollar la aplicación del concepto al prototipo y por último proceder a la industrialización (sistematización del proceso productivo) y comercialización de los productos.
ANNUAL REPORT 2014 INFORME ANUAL
To fulfill this ambitious objective TUBACEX is investing and strengthening its R&D capacities through the growth of teams and material resources, and developing alliances and collaborations with specialized technology centers.
Para cumplir este ambicioso objetivo TUBACEX está invirtiendo y reforzando las capacidades de I+D a través del crecimiento de equipos y recursos materiales, y desarrollando alianzas y colaboraciones con centros tecnológicos especializados.
To ensure the effectiveness of these advances, different work teams with specific innovation functions have been created:
Para garantizar la eficiencia de estos avances se han creado diferentes equipos de trabajo con funciones específicas sobre innovación:
BUSINESS TEAMS
EQUIPOS DE NEGOCIO
Multi-disciplinary teams focused on specific categories, responsible for the identification of development opportunities (related to products and customers), their analysis and coordination of the necessary activities.
TECHNOLOGY TEAMS Multi-plant teams focused on specific technologies, responsible for the identification of best practices, their standardization and development.
Equipos multidisciplinares focalizados en categorías específicas de productos que se encargan de la identificación de oportunidades de desarrollo (relativas a productos y clientes), su análisis y coordinación de las actividades necesarias.
EQUIPOS TECNOLÓGICOS Equipos multiplanta focalizados en tecnologías específicas que se encargan de la identificación de las mejores prácticas, su estandarización y desarrollo.
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INTERNAL SOCIAL DIMENSIONS
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DIMENSIÓN SOCIAL INTERNA
PEOPLE MANAGEMENT
GESTIÓN DE PERSONAS
In 2014, the TUBACEX workforce was made up of 1,927 employees around the world, mainly in Spain, Austria and the United States. The company promotes quality employment and proof of this is the low rotation rate and the high percentage of the workforce with permanent contracts. Equal opportunities and non-discrimination is of vital importance in TUBACEX, which is making positive progress in the progressive and natural incorporation of women in all areas and levels of responsibility.
En 2014 la plantilla de TUBACEX ha estado formada por 1.927 personas repartidas por todo el mundo, principalmente en España, Austria y Estados Unidos. La compañía promueve el empleo de calidad y prueba de ello es la baja tasa de rotación existente con un elevado porcentaje de personal contratado de forma indefinida. La igualdad de oportunidades y la no discriminación es una máxima en TUBACEX, que avanza positivamente en la incorporación progresiva y natural de mujeres en todos sus ámbitos y niveles de responsabilidad.
DISTRIBUCIÓN DE LA PLANTILLA POR CATEGORÍA
ANNUAL REPORT 2014 INFORME ANUAL
GESTIÓN DEL TALENTO
TUBACEX considers a committed and trained human team that works towards the fulfillment of the business objectives to be essential. To do so, talent management is an essential element in people management. The process of 90º performance evaluation (carried out by the immediate boss) has recently been implemented, in which the fulfillment of the established objectives are evaluated and the future development of those used is analyzed in line with the identified key competences. In the short-medium term, TUBACEX aims to implement a 180-360º evaluation process for the management team.
En TUBACEX se considera esencial contar con un equipo humano comprometido y capacitado que colabore en el cumplimiento de los objetivos de negocio. Para ello, la gestión del talento es un elemento fundamental de la gestión de personas. Recientemente se ha implantado el proceso de evaluación del desempeño 90º (realizada por el jefe inmediato) a través del cual se valora el cumplimiento de los objetivos establecidos y se analiza el desarrollo futuro de los empleados, en línea con las competencias clave identificadas. A corto-medio plazo TUBACEX pretende implantar un proceso de evaluación 180-360º para el equipo directivo.
KEY COMPETENCES
COMPETENCIAS CLAVE
• • • • • • • • •
STAFF DISTRIBUTION BY CATEGORIES
Given the industrial component of its business, a significant percentage of the workforce works at the different production centers which are covered by collective agreements, offering a series of highly attractive social benefits. It must be added that TUBACEX fosters trade union freedom at all of its units as well as the freedom of association of all its workers all over the world. In 2014, the collective agreement for the Spanish units was signed, covering 1,745 employees.
TALENT MANAGEMENT
Dado el componente industrial de su negocio, un porcentaje significativo de la plantilla desarrolla su trabajo en los diferentes centros de producción y se encuentran amparados por convenios colectivos que ofrecen una serie de beneficios sociales muy atractivos. Cabe añadir que TUBACEX promueve la libertad sindical en todas sus unidades así como la libertad de afiliación de sus trabajadores repartidos por todo el mundo. En 2014 se ha producido la firma del convenio colectivo de las unidades españolas, que abarca a 1.745 empleados.
Leadership Teamwork Personal Development Results Oriented Decision-making Customer Satisfaction Initiative Continuous Improvement Occupational Health and Safety.
• • • • • • • • •
Liderazgo Trabajo en equipo Desarrollo personal Enfoque a resultados Toma de decisiones Satisfacción de clientes Iniciativa Mejora continua Seguridad y salud laboral
TRAINING
FORMACIÓN
In line with employee development and training, TUBACEX carries out an annual training program aimed at improving technical and management skills. In 2014, a total of 2,555 training hours were offered to 1,437 people divided into 93 training actions covering many topics, of which occupational risk prevention, quality and project management can be highlighted.
En línea con el desarrollo y capacitación de los empleados, TUBACEX lleva a cabo anualmente un programa formativo dirigido a mejorar sus competencias técnicas y de gestión. En 2014 se han impartido 2.555 horas de formación a 1.437 asistentes, repartidas en 93 acciones formativas que han abarcado multitud de temáticas entre las que cabe destacar la prevención de riesgos laborales, la calidad y la gestión de proyectos.
In 2014, the first edition of the Management Development Program organized in conjunction with Deusto Business School and IESE was completed, in which around 100 of the company’s managers participated.
En 2014 se clausuró la primera edición al programa de desarrollo directivo desarrollado conjuntamente con Deusto Business School e IESE, en el que participan alrededor de 100 directivos de la compañía.
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INTERNAL COMMUNICATION
COMUNICACIÓN INTERNA
Communication is another essential element in people management aimed at strengthening the business culture and employee commitment.
La comunicación es otro elemento fundamental de la gestión de personas orientado al fortalecimiento de la cultura empresarial y al compromiso de los empleados.
Communication may be:
La comunicación puede producirse:
•
•
•
Downward from the organization to the employees, through informative meetings or internal memos, for example, in search of integration, recognition and the feeling of belonging. Upward from the employees to the organization, through suggestions and complaints, satisfaction surveys or development interviews, for example, in search of improving the organization. Horizontal or Transversal between employees or departments, through work meetings or improvement groups, for example, in search of greater efficiency at work.
As of 2013 and with a view to the implementation of the new management plan, focus is being placed on the communication of the monitoring of the key indicators and the progress made in relation to the established objectives. In addition to those mentioned above, there are also many communication and dialog forums, such as the Management Committee, operational forums, the Innovation Committee and the People Committee, inter alia, as well as other channels of communication, such as the internal newsletter, notice boards or development interviews.
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De forma descendente desde la organización a los empleados, a través de reuniones informativas o comunicados internos, por ejemplo, en busca de la integración, el reconocimiento y el sentimiento de pertenencia. De forma ascendente desde los empleados a la organización, a través de sugerencias y denuncias, encuestas de satisfacción o entrevistas de desarrollo, por ejemplo, en busca de la mejora de la organización. De forma horizontal o transversal entre empleados o departamentos, a través de reuniones de trabajo o grupos de mejora, por ejemplo, en busca de una mayor eficacia del trabajo. A partir de 2013, y con motivo de la puesta en marcha del nuevo plan de gestión, se está poniendo el foco en la comunicación del seguimiento de los indicadores clave y del avance en relación a los objetivos establecidos. Además de los mencionados anteriormente, existen numerosos foros de comunicación y diálogo como el Comité de Dirección, los foros operacionales, el Comité de Innovación y el Comité de Personas, entre otros, así como otros canales de comunicación como el boletín interno, los paneles informativos o las entrevistas de desarrollo.
EMPLOYEE SATISFACTION
SATISFACCIÓN DE EMPLEADOS
The fulfillment of a company’s objectives is related to the satisfaction of its employees and their level of commitment. For this reason, TUBACEX has implemented an annual employee satisfaction survey to find out their perceptions on elements that make up the business culture and the effect of management on their attitudes, performance and affectivity.
La consecución de objetivos de una compañía está relacionada con la satisfacción de sus empleados y su grado de compromiso. Por este motivo TUBACEX ha puesto en marcha una encuesta de satisfacción anual a los empleados para conocer sus percepciones sobre los elementos que conforman la cultura empresarial y los efectos de la gestión sobre sus actitudes, comportamientos y afectividad.
ANNUAL REPORT 2014 INFORME ANUAL
In 2014, 57% of employees participated in this survey, the aim of which was to analyze employee satisfaction and detect any source of dissatisfaction to define improvement actions. The most valued elements of the business culture were the relationship and communication between team members, autonomy and motivation towards results.
En 2014 el 57% de los empleados participaron en esta encuesta cuyo objetivo es analizar la satisfacción de los empleados y detectar posibles focos de insatisfacción para definir acciones de mejora. Los elementos más valorados de la cultura empresarial han sido la relación y comunicación entre los miembros de los equipos, la autonomía y la motivación orientada a logros.
The evaluations on satisfaction, commitment, affectivity and pro-activity are in line with the average for the industrial sector, whereby the extra role variable related to voluntary actions regarding creativity and innovation stand out from the rest. These results are taken into account by TUBACEX in the definition of internal initiatives to improve employee satisfaction and commitment.
Las valoraciones sobre satisfacción, compromiso, afectividad y proactividad están en línea con la media del sector industrial, destacando sobre las demás la variable extra-rol, relacionada con comportamientos voluntarios relacionados con la creatividad y la innovación. Estos resultados son tenidos en cuenta por TUBACEX en la definición de iniciativas internas para mejorar la satisfacción y compromiso de sus empleados.
The annual employee satisfaction survey results are taken into account by TUBACEX to improve employee satisfaction and commitment
Los resultados de la encuesta anual de satisfacción de empleados son tenidos en cuenta por TUBACEX para mejorar la satisfacción y compromiso de sus empleados
OCCUPATIONAL HEALTH AND SAFETY
SALUD Y SEGURIDAD LABORAL
As set out in the Prevention, Quality and Environment Policy approved by the Board of Directors in 2013, TUBACEX undertakes to put the safety and integrity of people before any other economic, commercial or production consideration.
Tal y como se establece en la Política de Prevención, Calidad y Medio Ambiente aprobada por el Consejo de Administración en 2013, TUBACEX se compromete a poner la seguridad e integridad de las personas frente a cualquier otra consideración de carácter económico, comercial o productivo.
As proof of this commitment, activities are developed in accordance with the OHSAS 18001 occupational risk prevention management standard and the company provides its employees with information and training so that they can apply the best criteria in their daily work and ensure their health and safety. Furthermore, programs are regularly organized to share best practices in occupational health and safety.
Como muestra de este compromiso las actividades se llevan a cabo según lo establecido por el reconocido estándar OHSAS 18001 de gestión de prevención de riesgos laborales y la compañía ofrece información y formación a sus empleados para que apliquen el mejor criterio en sus actividades para proteger su salud y seguridad. Además se organizan periódicamente programas para compartir las mejores prácticas en seguridad y salud laboral.
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EXTERNAL SOCIAL DIMENSIONS
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DIMENSIÓN SOCIAL EXTERNA
CUSTOMERS
CLIENTES
SUPPLIERS
PROVEEDORES
One of the objectives of the Strategic Plan 2013-2017 is to become a leading supplier for customers by increasing market share, quality of products and the service provided, management of the close relationship with the customer and offering new innovative products.
Uno de los objetivos del Plan Estratégico 2013-2017 es en convertirse en proveedor de referencia para los clientes, a través del aumento de cuota de mercado, la calidad de los productos y el servicio prestado, la gestión de la relación de cercanía con el cliente y la oferta de nuevos productos innovadores.
To fulfill the growth and consolidation objectives set out in the Strategic Plan 2013 - 2017, the relationship with its suppliers is directly related to the capacity of TUBACEX to adapt to the needs of its customers, fulfilling the efficiency and leadership criteria.
Para cumplir los objetivos definidos en el Plan Estratégico 2013-2017 de crecimiento y consolidación, la relación con sus proveedores está directamente relacionada con la capacidad de TUBACEX de adaptarse a las necesidades de los clientes cumpliendo con los criterios de eficiencia y liderazgo.
To do so, TUBACEX has made significant investment and progress in terms of innovation and quality and is working constantly to improve the relationship with customers and their satisfaction.
Para ello, TUBACEX ha realizado importantes inversiones y significativos avances en materia de innovación y calidad, y trabaja de forma continua en la mejora de la relación con los clientes y su satisfacción.
The company’s most relevant purchases are strategic raw materials (components required to manufacture stainless steel, such as nickel, chromium or molybdenum) and are usually procured from large global suppliers.
Las compras más relevantes para la compañía corresponden a las materias primas estratégicas (componentes necesarios para la fabricación de acero inoxidable como el níquel, el cromo o el molibdeno) y suelen realizarse a grandes proveedores a nivel mundial.
Customer satisfaction surveys are conducted every three years to identify the aspects that are most valued by customers and areas for improvement on which specific action needs to be taken. Customer relations key indicators are regularly monitored which also enables their satisfaction to be measured, among which the percentage of repeat customers, the number of claims over the number of orders invoiced, fulfillment of delivery times and the ratio of budget fulfillment can be highlighted.
Cada tres años se realizan encuestas de satisfacción de clientes a través de las cuales se busca identificar los aspectos mejor valorados por los clientes y las áreas de mejora sobre las que actuar a través de actuaciones específicas. Además, se lleva a cabo un seguimiento periódico de los indicadores clave de la relación con los clientes que también permite valorar su satisfacción, entre los que cabe destacar el porcentaje de clientes que repiten, el número de reclamaciones por número de pedidos facturados, el cumplimiento de plazos y el ratio de cumplimiento del presupuesto.
TUBACEX seeks to maintain a fluid relationship with all of its suppliers, based on trust and aimed at mutual benefit. For the company, it is essential to work together with its suppliers to rapidly and efficiently address customer demands.
TUBACEX busca mantener con todos sus proveedores una relación fluida basada en la confianza y orientada a un beneficio mutuo. Para la compañía es fundamental trabajar de forma conjunta con sus proveedores para dar respuesta a las demandas de los clientes de forma rápida y eficiente.
The general purchase process begins with the identification of the supply need (regular purchase of products subject to agreed conditions) and the definition of the specific requirements.
El proceso general de compras comienza con la identificación de la necesidad de suministro o aprovisionamiento (compra habitual de productos sujetos a condiciones acordadas) y la definición de los requisitos concretos de la misma.
TUBACEX has a procedure for the receipt of complaints, which are dealt with by the commercial and quality departments along with any other area involved.
TUBACEX tiene establecido un procedimiento para la recepción de reclamaciones, en cuya gestión participan el área comercial, de calidad y cualquier otra área implicada.
After requesting offers, where appropriate, certain established efficiency and quality criteria are evaluated (if the supplier has not been previously approved). Environmental (fulfillment of requirements that affect its activity) and social criteria, such as preference to work with special employment centers, are among the criteria used.
Tras la petición de ofertas, cuando corresponda, se procede a la evaluación de determinados criterios de eficiencia y calidad establecidos (si el proveedor no ha sido previamente aprobado). Entre estos criterios utilizados se encuentran criterios ambientales (cumplimiento de requisitos que afecten a su actividad) y sociales como la preferencia de colaboración con centros especiales de empleo.
Offers from approved suppliers are analyzed and following negotiation of the terms and conditions, the supplier to which the order is issued is selected.
In 2014, 43% of non-strategic purchases were from national suppliers. For the purchase of minerals that may come from the Democratic Republic of the Congo or any of the nine neighboring countries set out in the Dodd Frank Law in the United States, TUBACEX has a responsible supply policy.
ANNUAL REPORT 2014 INFORME ANUAL
Las ofertas correspondientes a los proveedores aprobados se analizan y tras una posible negociación de las condiciones de las mismas, se selecciona el proveedor al que emitir el pedido.
En 2014, un 43% de las compras no estratégicas ha correspondido a proveedores nacionales. Para la compra de minerales que puedan proceder de la República Democrática del Congo o alguno de los nueve países vecinos contemplados por la Ley Dodd-Frank de Estados Unidos, TUBACEX cuenta con una política para su suministro responsable.
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INVESTORS AND ANALYSTS
INVERSORES Y ANALISTAS
COMMUNITY
COMUNIDAD
Transparency and dialog is the key to TUBACEX relations with investors and analysts. Proof of this is that in 2014, TUBACEX had 150 meetings with investment funds, participated in four sectoral conferences, organized eight roadshows, received many visits to its production facilities and had sixteen conference calls with the managers of investment funds.
El foco de TUBACEX en lo relativo a su relación con inversores y analistas es la transparencia y el diálogo. Muestra de ello es que durante 2014 se han mantenido más de 150 reuniones con fondos de inversión, la compañía ha participado en cuatro conferencias sectoriales, se han llevado a cabo ocho roadshows, se han recibido numerosas visitas en las instalaciones productivas y se han mantenido dieciséis conference calls con gestores de fondos de inversión.
TUBACEX has had a close relationship with diverse educational institutions for many years, particularly those located within its area of influence. Local Vocational Training Centers are an important source of recruitment in the most critical areas of the industrial activity and therefore placement students are incorporated in the different departments and units of the company each year. So much so, that in conjunction with the Municipal Vocational Training Center in Llodio, the IKASLAN system was set up, in which students from two consecutive cycles in the field of maintenance carry out work placements at the TUBACEX subsidiaries in Alava, with a high level of subsequent incorporation. Cooperation agreements have also been entered into with other training centers and universities, totaling 145,000 euro in 2014. The Austrian subsidiary has an apprenticeship school for technical specialties in which it invests 300,000 euro a year. In 2014, four Spanish students went on an exchange program and carried out training at the Austrian subsidiary.
TUBACEX mantiene desde sus inicios s una intensa relación con diferentes entidades docentes, especialmente con aquellas ubicadas en su zona de influencia. Los centros de Formación Profesional cercanos son una fuente de reclutamiento importante en las áreas más críticas de la actividad industrial y es por ello que anualmente se incorporan personas en prácticas en las diferentes unidades y departamentos de la compañía. Tanto es así, que en colaboración con el Centro Municipal de Formación Profesional de LLodio se articulo el sistema IKASLAN porque el cual estudiantes de dos ciclos consecutivos del área de mantenimiento realizan formación práctica en las instalaciones de las filiales alavesas de TUBACEX, con un alto grado de incorporación posterior. También se celebran convenios de colaboración con otros centros formativos y universidades, cuyo montante para el 2014 ha ascendido a 145.000 eur. Por su parte la filial austriaca mantiene una escuela de aprendices para perfiles técnicos, en el que invierte anualmente 300.000 eur. En 2014 se ha producido el intercambio de cuatro estudiantes españoles que han realizado formación en la filial austriaca.
Furthermore, TUBACEX offers shareholders, investors and analysts different communication channels, such as the corporate website (www.tubacex.com) with a specific section for shareholders and investors and the Shareholder Office, which can be contacted by telephone, fax, post or e-mail. Among the information that is regularly shared with investors and analysts, financial information (quarterly results, payment of dividends, etc.), commercial information (quarterly in the presentation of results and at specific moments when considered opportune) and industrial information or that regarding innovation (information on the main investments made in the presentation of results) can be highlighted.
Además, TUBACEX pone a disposición de los accionistas, inversores y analistas diferentes canales de comunicación como la página web corporativa (www.tubacex.es) con un apartado específico para accionistas e inversores y la Oficina del Accionista con la que se puede contactar a través del teléfono, fax, correo postal o correo electrónico. Entre la información que se comparte periódicamente con inversores y analistas cabe destacar la información financiera (resultados trimestrales, pago de dividendos, etc.), información comercial (trimestralmente en la presentación de resultados y de forma puntual cuando se considera oportuno) y la información industrial o sobre innovación (información sobre las principales inversiones realizadas en la presentación de resultados).
On the other hand, it is common for the company’s senior executives to give classes and work on Final Degree Projects with students at Deusto Commercial University, ESIDE, UPV and the Engineering School. Similarly, further collaboration has taken place with the Chamber of Commerce in Bilbao and Cantabria, the Basque Logistics Institute, EUSKALITE and Mondragon University. Work placements and similar collaboration also take place in the influence area of the foreign subsidiaries. It is also common to receive visits from graduate and post-graduate students as well as from other interest groups. The most significant events in 2014 include participation in the EUSKALITE European Week of advanced management, National Congress of the SISTEPLANR Factory of the Future. On the other hand, it works actively in sectoral projects and with local companies and technology centers. As for sponsorships, it is worth mentioning that of the annual Prize for excellence in the business integration of young professionals by the Novia Salcedo Foundation from the very first edition, as well as long term agreements with cultural entities, such as the Guggenheim Museum in Bilbao and the Artium Museum in Vitoria. In 2014, it also worked with the Bilbao Choral Society. TUBACEX forms part of different associations, such as the Basque Business Circle, SEA-Alava Business Association, the Union of Steelmaking Enterprises, the Association for Progress in Management, ACYMA, PLATEA (Spanish Steel Platform), the Basque Maritime Forum, the Basque Innovation Agency, the Basque Logistics Institute or the IK4 and Tecnalia technology centers, and participates in other specific associations in the sector, such as AGEX, SIDEREX and FLUIDEX. On the other hand, the USA subsidiary participates actively in the Steel Tube Trade Advancement Committee.
ANNUAL REPORT 2014 INFORME ANUAL
Por otro lado, también es habitual que los altos ejecutivos de la compañía colaboren impartiendo clases y colaborando en los proyectos fin de carrera de alumnos de la Universidad Comercial de Deusto, ESIDE, UPV y la Escuela de Ingenieros. Igualmente se han llevado a cabo otras colaboraciones con las Cámaras de Comercio de Bilbao y Cantabria, el Instituto Vasco de Logística, EUSKALIT y la Universidad de Mondragon. Prácticas y colaboraciones similares se realizan en la zona de influencia de las filiales extranjeras. Es habitual igualmente recibir visitas de estudiantes de grados y postgrados así como de otros grupos de interés. Entre las participaciones más relevantes de 2014 se encuentra la participación en la Semana Europea de la gestión avanzada de EUSKALIT, en el Congreso Nacional de la Fábrica del futuro de SISTEPLANT, Por otro lado se colabora activamente en proyectos sectoriales con empresas de la zona y con centros tecnológicos. Entre los patrocinios cabe destacar, desde su primera edición, el del Premio anual a la excelencia en la integración empresarial de jóvenes profesionales de la Fundación Novia Salcedo, así como los acuerdos a largo plazo con entidades culturales como el Museo Guggenheim de Bilbao y el Museo Artium de Vitoria. En 2014 adicionalmente se ha colaborado con la Coral de Bilbao. TUBACEX forma parte de diferentes asociaciones como el Círculo de Empresarios Vascos, SEA-Empresarios Alaveses, Unión de Empresas Siderúrgicas, Asociación para el Progreso de la Dirección, ACYMA, PLATEA (Plataforma Española del acero), Foro Marítimo Vasco, Agencia Vasca de la Innovación, Instituto Vasco de logística o los centros tecnológicos IK4 y Tecnalia, y participa en otras específicas del sector como AGEX, SIDEREX y FLUIDEX. Por su parte la filial de EEUU participa activamente en el Steel Tube Trade Advancement Commitee.
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ENVIRONMENTAL DIMENSION
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DIMENSIÓN AMBIENTAL
ENVIRONMENTAL MANAGEMENT
GESTIÓN AMBIENTAL
TUBACEX has a Prevention, Quality and Environment Policy in terms of the environment and is firmly committed to preventing and minimizing environmental impact as a result of the company’s activity, fulfilling applicable environmental legislation and transparency with interested parties.
TUBACEX dispone de una Política de Prevención, Calidad y Medio Ambiente, que en lo que respecta a la componente ambiental destaca el compromiso de prevenir y minimizar los impactos ambientales asociados a la actividad de la compañía, cumplir los requisitos legislativos establecidos y de transparencia con las partes interesadas.
The environmental management systems at the plants are designed in accordance with the requirements of the ISO 14001 Standard, and the TTI and Acerálava production plants in Spain, SBER in Austria and Salem Tube in the United States have the corresponding external certification.
Los sistemas de gestión ambiental de las instalaciones están diseñados acorde a los requisitos de la norma ISO 14001, y las plantas de producción de TTI y Aceralava en España, SBER en Austria y Salem Tube en Estados Unidos cuentan con la certificación externa correspondiente.
All of the plants identify the corresponding legal requirements in terms of the environment (emissions, waste, soil, energy, water, noise, etc.) and monitor their fulfillment, whereby the Emissions Trading Scheme, the REACH Regulation on the registration, evaluation, authorization and restriction of chemicals and the IKSeeM System (environmental information management system of the Basque Government’s Department for the Environment and Regional Planning) can be highlighted.
Todas las instalaciones además realizan una identificación de los requisitos legales correspondientes en materia ambiental (emisiones, residuos, suelos, energía, agua, ruido, etc.) y un seguimiento de su cumplimiento, entre los que cabe destacar el Régimen de Comercio de Derechos de Emisión, el Reglamento REACH sobre el registro, evaluación, autorización y restricción de sustancias químicas y el Sistema IKS-eeM (sistema de gestión de la información ambiental del Departamento de Medio Ambiente y Ordenación del Territorio del Gobierno Vasco).
Each of the TUBACEX plants has its corresponding environmental authorization setting out the reference parameters to be fulfilled in terms of emissions, noise and discharges.
Cada una de las instalaciones de TUBACEX cuenta con su correspondiente autorización ambiental en la que se establecen los parámetros de referencia que deben cumplirse en relación a emisiones, ruidos y vertidos, fundamentalmente.
ANNUAL REPORT 2014 INFORME ANUAL
ENERGY CONSUMPTION
CONSUMO ENERGÉTICO
Energy consumption at the production plants is mainly related to electricity and thermal energy consumption. At some of the plants, a slight increase in energy consumption was observed last year, associated with a greater demand for the production of higher quality products. However, the energy consumption indicators are constantly monitored to identify opportunities to increase the efficiency of processes. In 2014, the main actions in terms of energy efficiency were:
El consumo energético en las instalaciones productivas corresponde fundamentalmente al consumo de electricidad y energía térmica. En algunas de las plantas se aprecia un ligero aumento en el consumo energético en el último ejercicio asociado a una mayor demanda para la producción de productos de mayor calidad. Sin embargo, se realiza un seguimiento continuo de los indicadores de consumo energético para identificar oportunidades de mejora en la eficiencia de los procesos. En 2014 las actuaciones más significativas en materia de eficiencia energética han sido:
• • •
Purchase of new equipment (for example, new rolling furnace with energy recovery Increased productivity through waste reduction or the early identification of defective materials Plan to replace equipment with more efficient models (for example, lights, pumps and compressors)
• • •
Compra de nuevos equipos (por ejemplo, nuevo horno de laminación con recuperación energética) Mejora de la productividad a través de la reducción de rechazos o la pronta identificación de materiales defectuosos Plan de sustitución de equipos por otros más eficientes (por ejemplo, luminarias o bombas y compresores)
WATER CONSUMPTION
CONSUMO DE AGUA
Due to the nature of its activity, there is significant water consumption at the production plants associated with the surface treatment and tube and cooling circuit degreasing operations. The main water consumption indicators are regularly monitored (consumption of drinking water and water intake per plant and per production unit and discharge of industrial water) which allows for a systematic analysis to identify specific problems, such as leaks or inefficient equipment.
Debido a la naturaleza de su actividad, en las instalaciones productivas se produce un consumo significativo de agua asociado a las operaciones de tratamiento superficial y de desengrase de los tubos y a los circuitos de refrigeración. Periódicamente se realiza un seguimiento de los principales indicadores de consumo de agua (consumo de agua potable y captación de agua por planta y por unidad de producción y vertido de aguas industriales) que permite hacer un análisis sistemático para identificar problemas específicos como fugas o ineficiencias de los equipos.
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As for the parameters of discharged water quality, regular monitoring is also carried out and the data is reported to the authorities. Generally speaking, the water consumption tendency is quite stable and is falling slightly and the discharge quality parameters do not exceed the established limits.
En relación a los parámetros de calidad de las aguas vertidas también se realiza un seguimiento periódico cuyos datos son reportados a la administración. En general la tendencia en el consumo de agua es bastante estable y de ligera reducción y los parámetros de calidad de los vertidos no superan los límites establecidos.
Among the actions carried out to minimize water consumption, improve the quality of discharges and reuse effluents, the following can be highlighted:
Entre las actuaciones llevadas a cabo para minimizar el consumo de agua, mejorar la calidad de los vertidos y reutilizar los efluentes, cabe destacar las siguientes:
• • •
Implementation of new water treatment facilities Development of a discharge monitoring plan Reuse of water in different phases of the production process
• • •
Implantación de nuevas instalaciones de tratamiento de aguas Desarrollo de un plan de monitorización de vertidos Reutilización de aguas en diferentes fases del proceso productivo
EMISSIONS
EMISIONES
The main sources of emission at the TUBACEX plants are associated with the steel melting and casting processes at the steelworks, heating in furnaces, grinding and polishing, pickling, straightening and cold rolling. These sources are associated with different types of emissions: at the steelworks, the most relevant emissions are those related to particles, metals and CO2, whilst emissions are related to acid compounds at tube plants.
Los principales focos de emisión en las instalaciones de TUBACEX están asociados a los procesos de fusión y colado del acero en la acería, calentamiento en hornos, esmerilado y pulido, decapado, enderezado y laminación en frío. Estos focos llevan asociados diferentes tipos de emisiones: en la acería las emisiones más relevantes son las de partículas, metales y CO2, mientras que en las plantas de tubos son las emisiones de compuestos ácidos.
As set out in the prevailing legislation, opportune regular controls of the source of the emissions will be carried out to ensure that the legal limits are being followed. The most relevant actions carried out in 2014 to control and minimize emissions were the following: Improvement of the information management tools Development of an emissions monitoring plan Restriction or modification of the substances used in the production process
Las actuaciones más relevantes acometidas en 2014 para el control y minimización de emisiones son las siguientes:
• •
Mejora de las herramientas para la gestión de la información Desarrollo de un plan de monitorización de emisiones Restricción o modificación de las sustancias utilizadas en el proceso productivo
The activities carried out by the Group’s steelworks are included in Appendix I of Law 1/2005 and are therefore subject to the Emissions Trading Scheme for Greenhouse Gases. The free allocation of rights for the 2013 is regulated by Royal Decree 1722/2012.
Las actividades desarrolladas por la acería del Grupo están incluidas en el Anexo I de la Ley 1/2005 y por tanto están sometidas al régimen para comercio de derechos de emisión de gases de efecto invernadero. La asignación gratuita de derechos para el período 2013-2020 está regulada por el Real Decreto 1722/2012.
SOIL AND NOISE
SUELO Y RUIDO
At all of the TUBACEX plants, soil was managed in accordance with the applicable regulations, and the soil quality maps were regularly updated and actions identified to minimize the associated impact were also carried out.
En todas las instalaciones de TUBACEX la gestión del suelo se adecúa a lo establecido en la normativa vigente, actualizando periódicamente los mapas de calidad del suelo y acometiendo las actuaciones identificadas para minimización del impacto asociada a la misma.
ANNUAL REPORT 2014 INFORME ANUAL
En las instalaciones donde se ha identificado un potencial impacto asociado al ruido ambiental originado por la actividad industrial se ha llevado a cabo una evaluación del mismo acorde a la metodología establecida por la norma ISO 9613, recomendada por el Real Decreto 1513/2005 sobre ruido. A partir de esta evaluación, TUBACEX está en proceso de estudio y desarrollo de actuaciones que permitan reducir este impacto.
WASTE
RESIDUOS
The activities carried out at the production plants have diverse types of associated waste generation, among which slag, refractory, steel dust and acid waste can be highlighted.
Las actividades desarrolladas en las instalaciones productivas llevan asociada la generación de residuos de muy diversas tipologías, entre los que cabe destacar las escorias, los refractarios, el polvo de acería y los residuos ácidos.
TUBACEX waste management consists of proper waste separation and classification, waste generation monitoring and analysis of the most efficient management method from an environmental and economic point of view for each of the categories.
La gestión llevada a cabo por TUBACEX consiste en la correcta separación y clasificación de residuos, seguimiento de la generación de los mismos y análisis del método de gestión más eficiente desde el punto de vista ambiental y económico para cada una de las categorías.
The most relevant actions carried out in 2014 to minimize waste were the following:
Las actuaciones más destacadas de 2014 para la minimización de residuos son las siguientes:
• •
Según lo establecido en la legislación vigente, en cada foco de emisión se llevan a cabo los controles periódicos oportunos verificando el cumplimiento de los límites legales.
• • • •
At plants where a potential impact associated with environmental noise as a result of the industrial activity has been identified, it has been evaluated in accordance with the methodology set out in ISO 9613 Standard recommended in Royal Decree 1513/2005 on noise. Based on this evaluation, TUBACEX is in the process of studying and developing actions to reduce this impact.
• •
Reduction of sludge generation through filtering and drying processes Recycling of concrete, arid and refractory waste and plastic from the production process. Recovery of pallets Over recent years, there has been a general reduction in the amount of waste generated by each production unit, whilst the proportion of waste whose destination is recovered has increased and the amount of landfilled waste has been reduced.
• • • •
Reducción de la generación de lodos a través de procesos de filtración y secado Reciclado de hormigones, áridos, refractarios y plásticos procedentes del proceso productivo Recuperación/valorización de palets En los últimos ejercicios se ha logrado una reducción general de las cantidades de residuos generadas por unidad de producción, a la vez que se ha aumentado la proporción de residuos cuyo destino es la valorización y se ha disminuido la cantidad de residuos depositados en vertedero.
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ACCOUNTS CUENTAS ANUALES
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Annual Accounts Cuentas anuales
CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER (THOUSANDS OF EUROS)
BALANCES DE SITUACIÓN CONSOLIDADOS AL 31 DE DICIEMBRE (MILES DE EUROS)
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CONSOLIDATED INCOME STATEMENTS (THOUSANDS OF EUROS)
CONSOLIDATED STATEMENTS OF CASH FLOWS (THOUSANDS OF EUROS)
CUENTA DE PÉRDIDAS Y GANANCIAS CONSOLIDADAS (MILES DE EUROS)
ESTADOS DE FLUJO DE EFECTIVO CONSOLIDADOS (MILES DE EUROS)
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Bussiness Directory Directorio de Empresas
PRODUCTION SITES. PLANTAS DE PRODUCCIÓN
SALES OFFICES. OFICINAS COMERCIALES
T.T.I. LLODIO Tres Cruces 8 PO Box 22 01400 LLODIO (ALAVA), SPAIN Phone: +34 94 671 93 00 Fax: +34 94 672 50 62 / 74 E-mail:
[email protected]
SBER Rohrstrasse 1 A-2630 TERNITZ, AUSTRIA Phone: +43 2630 3160 Fax: +43 2630 369 47 E-mail:
[email protected]
IBF Fittings Division Via Bonina Est, 20 29010 SAN NICOLO’ (PIACENZA), ITALIA Tel:+39.0523.76641 Fax:+39.0523.766451 Email:
[email protected]
TUBACEX EUROPE, B.V. Brieltjenspolder 28 4921 PJ MADE, NETHERLANDS Phone: +31 0 162 690 430 Fax: +31 0 162 690 435 E-mail:
[email protected]
T.T.I. AMURRIO Polígono Industrial Saratxo 01470 AMURRIO (ALAVA), SPAIN Phone: +34 94 671 93 00 Fax: +34 94 672 50 62 / 74 E-mail:
[email protected]
SBER PU Rohrstrasse 1 A-2630 TERNITZ, AUSTRIA Phone: +43 2630 3160 Fax: +43 2630 369 47 E-mail:
[email protected]
IBF Tubes Division Via Gandhi, 17/19 20010 VITTUONE (MILAN), ITALIA Tel:+39.02.9025131 Fax:+39.02.90251340 Email:
[email protected]
TUBACEX ITALY Via Vitruvio 43 20124 MILAN, ITALY Phone: +39 02 669 55 05 Fax: +39 02 673 84 592 E-mail:
[email protected]
T.T.I. OCTG Polígono Industrial Saratxo 01470 AMURRIO (ALAVA), SPAIN Phone: +34 94 671 93 00 Fax: +34 94 672 50 62 / 74 E-mail:
[email protected]
ACERÍA DE ÁLAVA, S.A. Polígono Industrial Saratxo 01470 AMURRIO (ALAVA), SPAIN Phone: +34 945 89 14 61 Fax: +34 945 39 30 01 E-mail:
[email protected]
JSI Co. Ltd Jilin City CHINA Tel:+39.039.6825201 Fax:+39.039.68252855 Email:
[email protected]
TUBACEX AMERICA 5430 Brystone Drive, HOUSTON, TEXAS 77041, U.S.A. Phone: +1 713 856 27 00 Fax: +1 713 856 27 99 E-mail:
[email protected]
SALEM TUBE INC. 951 Fourth Street GREENVILLE (PA) 16125, U.S.A. Phone: +1 724 646 43 01 Fax: +1 724 646 43 11 E-mail:
[email protected]
T.T.A., S.A. Barrio Arenaza, 10 01474 ARTZINIEGA (ALAVA), SPAIN Phone: +34 945 39 60 30 Fax: +34 945 39 60 64 E-mail:
[email protected]
TUBACEX CANADA INC. 4580 Eastgate Parkway, Unit 4 MISSISSAUGA, ONTARIO L4W 4K4, CANADA Phone: +905 629 2011 Fax: +905 629 4468 E-mail:
[email protected]
TUBACEX ASIA China Merchants Plaza Unit #1502 - East Building 333, Chengdu Bei Road SHANGHAI 200041, CHINA Phone: +86 21 5298 0242 (6 ext.) +86 1331 1681 767 Fax: +86 21 5298 0241 E-mail:
[email protected] TUBACEX LATIN AMERICA Rodovia Anhanguera Km 15, Modulo 31 CEP-05113-000, SÃO PAULO, BRAZIL Phone: +55 11 3622 4860 / 4863 / 4970 Fax: +55 11 3621 9117 E-mail:
[email protected] TUBACEX MIDDLE EAST Dubai Airport Free Zone Area Building 6EA (East Wing-Block A), Office 217 P.O. Box: 293692. DUBAI, UAE Phone: +971 4 701 72 12 Fax: +971 4 701 72 13 E-mail:
[email protected] TUBACEX CIS Post box 186 Ovchinnikovskaya Naberezhnaya 22, stroyenie 1 115035 MOSCOW, RUSSIA Phone: +7 916 644 22 51 Fax: +7 495 959 21 80 E-mail:
[email protected]
SBER GERMANY Am Wasserturm 6 40668 MEERBUSCH, GERMANY Phone: +49 2150 70 567-0 Fax: +49 2150 70 567-20 E-mail:
[email protected] SBER POLAND Wrzosowa 36 41-250 CZELADZ, POLAND Phone:+ 48 32 253 99 67 Fax:+ 48 32 206 82 48 E-mail:
[email protected] SBER CZECH REPUBLIC Rudnik 4. Areal MZ Liberec 543-72-RUDNIK, CZECH REPUBLIC Phone: +42 02 71 00 11 91 Fax: +42 02 71 00 11 90 E-mail:
[email protected] SBER HUNGARY Nemesacél Kereskedelmi Kft. Bokor utca 15-19, H-1036 BUDAPEST, HUNGARY Phone: +36 1 250 23 42 Fax: +36 1 250 23 46 Email:
[email protected] SBER FRANCE 9 rue du 11 Novembre 93600 AULNAY SOUS BOIS, FRANCE Phone: +33 1 48 79 30 50 Fax: +33 1 48 79 18 06 E-mail:
[email protected] E-mail:
[email protected]
SERVICE CENTERS. CENTROS DE SERVICIO COTUBES S.A. Polígono Industrial Saratxo 01470 AMURRIO (ALAVA), SPAIN Phone: +34 945 39 36 00 Fax: +34 945 39 34 22 E-mail:
[email protected]
TUBACEX AMERICA 5430 Brystone Drive, HOUSTON, TEXAS 77041, U.S.A. Phone: +1 713 856 27 00 Fax: +1 713 856 27 99 E-mail:
[email protected]
M.I.S., S.A.S. Z.A.C. des Chesnes Nord Rue des Combes, 38290 SATOLAS & BONCE, FRANCE Phone: +33 474 94 00 64 Fax: +33 474 95 48 42 E-mail:
[email protected]
SSB Rodovia Anhanguera Km 15, Modulo 31 CEP-05113-000, SÃO PAULO, BRASIL Phone: +55 11 3622 4860 / 4863 / 4970 Fax: +55 11 3621 9117 E-mail:
[email protected]
ANNUAL REPORT 2014 INFORME ANUAL
TUBACEX ASIA China Merchants Plaza Unit #1502 - East Building 333, Chengdu Bei Road SHANGHAI 200041, CHINA Phone: +86 21 5298 0242 (6 ext.) +86 1331 1681 767 Fax: +86 21 5298 0241 E-mail:
[email protected] TUBACEX SERVICES Bº Tijero 507, Solares 39719 MARINA DE CUDEYO (CANTABRIA), SPAIN
GRUPO TUBOS MECÁNICOS S.A. C/ Hostal del Pí, nº 14 - P.I. Barcelonés 08630 ABRERA (BARCELONA), SPAIN Phone: +34 93 770 33 33 Fax: +34 93 770 24 54 E-mail:
[email protected]
Office Madrid: Phone: +34 91 871 13 28 Fax: +34 91 870 18 49 E-mail:
[email protected]
Office Valencia: Phone: +34 96 151 70 86 Fax: +34 96 151 71 01 E-mail:
[email protected]
Office North: Phone: +34 945 39 98 00 Fax: +34 945 39 98 33 E-mail:
[email protected]
Office Galicia: Phone: +34 986 33 95 00 Fax: +34 986 33 80 33 E-mail:
[email protected]
Office Zaragoza: Phone: +34 976 57 10 10 Fax: +34 976 57 17 74 E-mail:
[email protected]
109
Tres Cruces, 8 01400 LLODIO (ALAVA) SPAIN Phone: +34 946 719 300 Fax: +34 946 725 062 E-mail:
[email protected] WWW.TUBACEX.COM
Tubacex, S.A. and Subsidiaries composing the TUBACEX Group Auditor’s Report Consolidated Financial Statements for the year ended 31 December 2014, prepared in accordance with International Financial Reporting Standards Consolidated Directors' Report Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain and of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see Notes 2 and 32). In the event of a discrepancy, the Spanish-language version prevails.
Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain and of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see Notes 2 and 32). In the event of a discrepancy, the Spanish-language version prevails.
INDEPENDENT AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS To the Shareholders of Tubacex, S.A. at the request of the Board of Directors, Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Tubacex, S.A. (“the Parent”) and Subsidiaries (“the Group”), which comprise the consolidated balance sheet as at 31 December 2014, and the consolidated statement of profit or loss, consolidated statement of changes in equity, consolidated statement of cash flows and notes to the consolidated financial statements for the year then ended. Directors’ Responsibility for the Consolidated Financial Statements The Parent’s directors are responsible for preparing the accompanying consolidated financial statements so that they present fairly the consolidated equity, consolidated financial position and consolidated results of Tubacex, S.A. and Subsidiaries in accordance with International Financial Reporting Standards as adopted by the European Union and the other provisions of the regulatory financial reporting framework applicable to the Group in Spain (identified in Note 2a to the accompanying consolidated financial statements) and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the audit regulations in force in Spain. Those regulations require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the preparation by the Parent’s directors of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated equity and consolidated financial position of Tubacex, S.A. and Subsidiaries as at 31 December 2014, and their consolidated results and their consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the other provisions of the regulatory financial reporting framework applicable to the Group in Spain.
Report on Other Legal and Regulatory Requirements The accompanying consolidated directors’ report for 2014 contains the explanations which the Parent’s directors consider appropriate about the Group’s situation, the evolution of its business and other matters, but is not an integral part of the consolidated financial statements. We have checked that the accounting information in the consolidated directors’ report is consistent with that contained in the consolidated financial statements for 2014. Our work as auditors was confined to checking the consolidated directors’ report with the aforementioned scope, and did not include a review of any information other than that drawn from the accounting records of the Group companies.
DELOITTE, S.L. Registered in ROAC under no. S0692
Alberto Uribe-Echevarría Abascal 25 February 2015
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see Notes 2 and 32). In the event of a discrepancy, the Spanish-language version prevails.
TUBACEX, S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS AT 31 DECEMBER 2014 AND 2013 (Thousands of Euros)
ASSETS NON-CURRENT ASSETS Intangible assets Goodwill Other intangible assets Property, plant and equipment Investments accounted for using the equity method Non-current financial assets Deferred tax assets Total non-current assets
Notes
Note 7
Note 8 Note 10 Note 11 Note 22
31/12/14
31/12/13 (*)
36.887
35.051
18.375 18.512 198.726 775 5.964 44.912 287.264
18.375 16.676 192.706 1.474 1.951 51.732 282.914
EQUITY AND LIABILITIES EQUITY Shareholders' equityRegistered share capital Share premium Revaluation reserves Other reserves of the Parent and of fully consolidated companies and companies accounted for using the equity method Treasury shares Profit for the year attributable to the Parent (Interim dividend) Other equity instruments
Notes
Note 4 Note 16-f
Note 16-g Equity attributable to the Parent Non-controlling interests Total equity
CURRENT ASSETS Inventories Trade and other receivables Trade receivables for sales and services Other receivables Current tax assets Derivative financial instruments Current financial assets Other current assets Cash and cash equivalents Total current assets TOTAL ASSETS
Note 13 Note 14
Note 12 Note 11 Note 15
208.972 94.045 67.767 25.836 442 577 68.361 819 40.230 413.004
186.364 134.202 100.641 32.798 763 215 15.582 929 16.914 354.206
700.268
637.120
CURRENT LIABILITIES Short-term provisions Current financial liabilities Debt instruments and other marketable securities Bank borrowings Derivative financial instruments Other financial liabilities Trade and other payables Payable to suppliers Other payables Current tax liabilities Total current liabilities TOTAL EQUITY AND LIABILITIES
(*) Presented for comparison purposes only. The accompanying Notes 1 to 32 are an integral part of the consolidated balance sheet as at 31 December 2014
31/12/13 (*)
Note 16
Valuation adjustments Translation differences Hedges
NON-CURRENT LIABILITIES Long-term provisions Deferred income Non-current financial liabilities Bank borrowings Derivative financial instruments Employee benefits Deferred tax liabilities Other non-current financial liabilities Total non-current liabilities
31/12/14
Note 17
Note 18 Note 12 Note 21 Note 22 Note 19
Note 17 Note 18 Note 18 Note 12 Notes 10 & 31 Note 20
Note 22
59.840 17.108 3.763
59.840 17.108 3.763
183.531 (7.850) 23.761 (3.000) 332 277.485
175.461 (7.850) 15.014 (3.000) 166 260.502
5.500 (817) 4.683 282.168 2.933 285.101
(51) (600) (651) 259.851 3.580 263.431
4.834 1.948 121.269 120.733 536 14.618 4.354
4.630 1.870 93.704 93.522 182 12.655 3.629
16.241 163.264
12.221 128.709
5.899 143.460 26.197 113.162 1.101 3.000 102.544 74.338 27.511 695 251.903
4.182 134.578 -
106.220 69.419 36.213 588 244.980
700.268
637.120
133.558 1.020 -
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see Notes 2 and 32). In the event of a discrepancy, the Spanish-language version prevails.
TUBACEX, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF PROFIT OR LOSS FOR 2014 AND 2013 (Thousands of Euros)
Notes
2014
2013 (*)
Continuing operations: Revenue ` +/- Changes in inventories of finished goods and work in progress In-house work on non-current assets Procurements Other operating income Staff costs Other operating expenses Depreciation and amortisation charge Profit from operations Finance income Finance costs Translation differences
Note 6 Note 13 Note 3-b Note 13 Note 24 Note 25 Note 24 Notes 7 & 8
Note 18
Financial loss Result of companies accounted for using the equity method
Note 22 Profit for the year from continuing operations
Profit/Loss from discontinued operations Consolidated profit for the year
Attributable to: The Parent Non-controlling interests Earnings per share (in euros) - Basic - Diluted
554.149 (35.048) 2.657 (270.724) 6.381 (114.835) (91.316)
(20.473) 43.659
(19.748) 31.516
1.878 (13.372) 472
882 (14.437) (1.417)
(11.022)
(14.972)
13
65
32.650
16.609
(9.389) 23.261
(1.974) 14.635
-
-
23.261
14.635
23.761 (500)
15.014 (379)
0,183 0,183
0,116 0,116
Note 10
Profit before tax Income tax
546.650 7.726 2.802 (292.644) 6.641 (119.072) (87.971)
Note 23 Note 23 (*) Presented for comparison purposes only.
The accompanying Notes 1 to 32 are an integral part of the consolidated statement of profit or loss for 2014.
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see Notes 2 and 32). In the event of a discrepancy, the Spanish-language version prevails.
TUBACEX, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED 31 DECEMBER 2014 AND 2013 (Thousands of Euros)
Notes
2014 23.261
Consolidated profit for the year
2013 (*) 14.635
Items that may be reclassified subsequently to profit or loss: Income and expense recognised directly in equity Measurement of cash flow hedging instruments Tax effect Translation differences Transfers to profit or loss Measurement of cash flow hedging instruments Tax effect
Notes 12 & 16 Notes 12, 16 & 22
(96) 27 5.551
(94) 26 (1.657)
Notes 12 & 16 Notes 12, 16 & 22
(206) 58
212 (59)
5.334
(1.572)
Total comprehensive income for the year
28.595
13.063
Attributable to: The Parent Non-controlling interests
29.095 (500)
13.442 (379)
Other comprehensive income
(*) Presented for comparison purposes only.
The accompanying Notes 1 to 32 are an integral part of the consolidated statement of comprehensive income for 2014.
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see Notes 2 and 32). In the event of a discrepancy, the Spanish-language version prevails.
TUBACEX, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR 2014 AND 2013 (Thousands of Euros) Equity attributable to the Parent Shareholders’ equity Net
Balance as at 31 December 2012 (*) Total comprehensive income Other changes in equity Distribution of dividends (Notes 4 and 16-h) Transfers between equity items Transactions with shareholders Other changes Long-term incentive plan (Notes 3-k, 3-l and 16) Balance as at 31 December 2013 (*) Total comprehensive income Other changes in equity Distribution of dividends (Notes 4 and 16-h) Transfers between equity items Other changes Long-term incentive plan (Notes 3-k, 3-l and 16) Balance as at 31 December 2014
Other
Share
Share
Revaluation
Other
Treasury
profit for
(Interim
equity
Translation
Cash flow
Non-controlling
Total
capital
premium
reserves
reserves
shares
the year
dividend)
instruments
differences
hedges
interests
equity
59.840
17.108
3.763
-
-
-
-
-
-
59.840
17.108
(756) 9.060 1.326 3.763
175.461
-
-
-
-
-
-
-
-
59.840
17.108
9.008 (938) 3.763
11.863
-
-
1.606
(685)
478
251.954
-
15.014
-
-
(1.657)
85
(379)
13.063
-
(2.803) (9.060)
165.831
183.531
(7.850)
(7.850)
15.014
-
23.761
-
(3.006) (12.008) 23.761
(7.850)
(3.000) -
166 166
(3.000) -
(51)
(3.000) 3.000
(3.000)
-
166 332
-
3.481
3.580
(217) -
5.500
(6.559) -
(600)
5.551
-
-
(500) -
28.595 (6.006) -
(147) 2.933
(1.085) 166 285.101
-
-
(817)
3.481 1.326 166 263.431
(*) Presented for comparison purposes only. -
The accompanying Notes 1 to 32 are an integral part of the consolidated statement of changes in equity for 2014.
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see Notes 2 and 32). In the event of a discrepancy, the Spanish-language version prevails.
TUBACEX, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR 2014 AND 2013 (Thousands of Euros)
Notes Cash flows from operating activities Profit for the year before tax Adjustments for: Depreciation and amortisation charge Exchange (gains)/losses Change in write-downs and allowances Finance income Finance costs
2014
32.650
16.609
20.473 (472) 2.028 (1.193) 13.372 (13) (685) 166 (2.802)
19.748 1.417 (2.378) (882) 14.437 (65) 157 166 (2.657)
Note 24
(1.353) 62.171
(1.052) 45.500
Note 13 Note 14
(23.528) 41.189 110 345 107 1.862 20.085
46.465 16.083 -
(13.001) 321
(14.362) (2.530)
69.576
108.528
Notes 7 & 8 Notes 13 & 14
Share of results of companies accounted for using the equity method Change in the fair value of financial instruments Change in equity instruments - share-based payment transactions In-house work on non-current assets Recognition of government grants in profit or loss Changes in working capital: Inventories Trade and other receivables Other current assets Trade and other payables Other current liabilities Other non-current assets and liabilities
Note 10 Note 11 Note 16 Note 3-b
Note 20
Other cash flows from operating activities: Interest paid Income tax recovered/(paid)
Note 22
Net cash flows from operating activities (I) Cash flows from investing activities: Proceeds from the disposal of non-current assets Proceeds from the disposal of financial assets Interest received Investments accounted for using the equity method Acquisition of property, plant and equipment Acquisition of intangible assets Acquisition of other financial assets
Notes 7 & 8 Note 11 Note 10 Note 8 Note 7 Note 11
Net cash flows from investing activities (II) Cash flows from financing activities: Proceeds from issue of other non-current financial liabilities Proceeds from issue of bank borrowings Proceeds from issue of other borrowings Repayment of bank borrowings Grants received Dividends paid Payment of interim dividends
Note 19 Note 18 Note 18 Note 18 Note 16-h Notes 4 & 16-h
(37.713) (2.584) (11.046)
(75.888)
(42.798)
-
420 13.000 -
79.267 26.190 (72.823) (3.006) 29.628 -
Effect of foreign exchange rate changes (IV)
20.719 (1.489) (1.858) 79.920
2.595 12.586 1.193 699 (21.143) (4.318) (67.500)
Net cash flows from financing activities (III)
Net increase/(decrease) in cash and cash equivalents (I+II+III+IV) Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December
2013 (*)
Note 15 Note 15
(*) Presented for comparison purposes only.
The accompanying Notes 1 to 32 are an integral part of the consolidated statement of cash flows for 2014.
23.316 16.914 40.230
1.765 5.898 882 -
(77.218) 802 (3.559) (3.000) (69.555) (3.825) 20.739 16.914
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to the Group in Spain (see Notes 2 and 32). In the event of a discrepancy, the Spanish-language version prevails.
Tubacex, S.A. and Subsidiaries composing the TUBACEX Group Notes to the Consolidated Financial Statements for the year ended 31 December 2014
1.
Description and activities of the Parent Tubacex, S.A. (“the Parent”) was incorporated as a public limited liability company for an indefinite period of time on 6 June 1963 and its registered office is in Llodio (Álava). Its company object is, inter alia, the manufacture and sale of special seamless (basically stainless) steel tubes and any other type of product related to the iron and steel industry or other similar activities in which the Group agrees to engage. However, on 1 January 1994 the Parent became a holding company and head of the Tubacex Group, without engaging in any production activities, since these are carried on by its subsidiaries. Tubacex, S.A. engages mainly in the holding of ownership interests (see Appendix) and in the rendering to Group companies of certain centralised and leasing services that are invoiced to them. Tubacex, S.A. is the Parent of a Group made up of the subsidiaries listed in the accompanying Appendix, which is an integral part of this Note. Tubacex, S.A. and its Subsidiaries ("the TUBACEX Group" or "the Group") engage mainly in the manufacture and sale of special seamless (basically stainless) steel tubes. The shares of Tubacex, S.A. are listed on the Spanish Stock Market Interconnection System.
2.
Basis of presentation of the consolidated financial statements a)
Basis of presentationThe consolidated financial statements for 2014 of the TUBACEX Group were formally prepared by the directors:
In accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, in conformity with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council, including International Accounting Standards (IASs) and the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) and by the Standing Interpretations Committee (SIC). The principal accounting policies and measurement bases applied in preparing the accompanying consolidated financial statements are summarised in Note 3.
Taking into account all the mandatory accounting principles and rules and measurement bases with a material effect on the consolidated financial statements, as well as the alternative treatments permitted by the relevant standards in this connection, which are specified in Note 3.
So that they present fairly the TUBACEX Group’s consolidated equity and consolidated financial position as at 31 December 2014 and the results of its operations, the changes in consolidated equity and the consolidated cash flows in the year then ended.
On the basis of the accounting records kept by the Parent and by the other Group companies. However, since the accounting policies and measurement bases used in preparing the Group's consolidated financial statements (IFRSs) differ from those used by the Group companies (local standards), the required adjustments and reclassifications were made on consolidation to unify the policies and methods used and to make them compliant with International Financial Reporting Standards.
The TUBACEX Group's consolidated financial statements for 2013 were approved by the shareholders at the Annual General Meeting of TUBACEX on 28 May 2014. The 2014 consolidated financial statements of the Group and the 2014 financial statements of the Group companies have not yet been approved by their shareholders at the respective Annual General Meetings. However, TUBACEX's Board of Directors considers that the aforementioned consolidated financial statements will be approved without any changes. b) Adoption of International Financial Reporting Standards (IFRSs)The TUBACEX Group's consolidated financial statements for the year ended 31 December 2014 were prepared in accordance with IFRSs, in conformity with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council, of 19 July 2002, taking into account all the mandatory accounting principles and rules and measurement bases with a material effect, as well as the alternative treatments permitted by the relevant standards in this connection. In 2014 new accounting standards came into force and were therefore taken into account when preparing the accompanying consolidated financial statements: IFRS 10, Consolidated Financial Statements IFRS 10 supersedes the requirements relating to consolidated financial statements in IAS 27, and the interpretation SIC 12, Consolidation - Special Purpose Entities, and introduces changes to the concept of control, which continues to be defined as the basis for determining which entities are consolidated in the consolidated financial statements. The new definition of control is based on the following three elements of control which the investor must have at all times: power over the investee (determined by substantive rights relating thereto); rights to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor’s returns. These amendments did not have any effect on the TUBACEX Group's consolidated financial statements. IFRS 11, Joint Arrangements IFRS 11 supersedes IAS 31 on joint ventures and provides an accounting treatment for joint arrangements based on the rights and obligations arising from the arrangement rather than its legal form. The types of joint arrangement are reduced to just two, namely joint operations and joint ventures. In joint operations, a joint operator has direct rights to the assets and obligations arising from the arrangement and, therefore, it recognises its proportional share of the assets, liabilities, income and expenses of the entity in which it has an interest. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the profit or loss or to the net assets of the arrangement and, therefore, account for their interest in the arrangement using the equity method. Interests in joint ventures may no longer be proportionately consolidated. These amendments did not have any effect on the TUBACEX Group's consolidated financial statements.
2
IFRS 12, Disclosure of Interests in Other Entities IFRS 12 defines the disclosure requirements for interests in subsidiaries, associates, joint arrangements and unconsolidated entities. IFRS 12 also introduces mandatory disclosures on interests in unconsolidated vehicles. The consolidated financial statements of the TUBACEX Group includes the disclosures required by this standard. Transition guidance: Amendments to IFRS 10, 11 and 12 It is clarified that the date of initial application of the amendments to IFRS 10, 11 and 12 is the beginning of the 2014 reporting period. This is the date at which an investor should perform its analysis as to which investments should be consolidated. Also, in relation to comparative information, the standards state that if there are no changes in the consolidation criteria as a result of application of these amendments, no adjustments need be made to the comparative amounts. If there are any changes, the comparative amounts have to be restated, but only the comparative amounts for the preceding period. These amendments did not have any effect on the TUBACEX Group's consolidated financial statements. IAS 27 (Revised), Separate Financial Statements Following the entry into force of IFRS 10, IAS 27 only applies to separate financial statements. These amendments did not have any effect on the TUBACEX Group's consolidated financial statements. IAS 28 (Revised), Investments in Associates and Joint Ventures IAS 28 has been revised to include references to joint ventures, which under the new IFRS 11, Joint Arrangements must be accounted for using the equity method. These amendments did not have any effect on the TUBACEX Group's consolidated financial statements. Investment entities: Amendments to IFRS 10, IFRS 12 and IAS 27 These amendments establish an exception to the IFRS 10 standards on consolidation for entities that qualify as investment entities. These amendments did not have any effect on the TUBACEX Group's consolidated financial statements. Amendments to IAS 32, Offsetting Financial Assets and Financial Liabilities The amendments clarify the requirements of the standard for being able to offset a financial asset and a financial liability in the balance sheet, for which an entity must have a legally enforceable right to set off the recognised amounts.
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These amendments did not have any effect on the TUBACEX Group's consolidated financial statements.
Amendments to IAS 36, Recoverable Amount Disclosures for Non-Financial Assets The amendments restrict the current disclosure of the recoverable amount of an asset or cashgenerating unit to reporting periods in which an entity has recognised or reversed an impairment loss, i.e. removing the requirement to disclose the recoverable amount when an impairment loss is not recognised or reversed. The amendments also introduce new disclosure requirements for when the recoverable amount has been calculated as fair value less costs of disposal and an impairment loss has been recognised or reversed. These amendments did not have any effect on the TUBACEX Group's consolidated financial statements. Amendments to IAS 39, Novation of Derivatives and Continuation of Hedge Accounting These amendments determine the cases in which there is no need to discontinue hedge accounting when a derivative must be novated with a central clearing counterparty or an entity acting in a similar capacity as a consequence of legal requirements. These amendments did not have any effect on the TUBACEX Group's consolidated financial statements. Standards and interpretations issued but not yet in force At the date of preparation of these consolidated financial statements, the following standards and interpretations had been published by the IASB but had not yet come into force, either because their effective date is subsequent to the date of the consolidated financial statements or because they had not yet been adopted by the European Union. IFRIC 21, Levies This interpretation clarifies the timing of recognition of a liability to pay a levy if that liability is based on financial data for a period other than that in which the activity that triggers the payment of the levy occurs. This interpretation is mandatorily applicable for annual reporting periods beginning on or after 1 January 2015 under EU-IFRSs (17 June 2014 under IFRSs approved by the International Accounting Standards Board ("IASB-IFRSs")), and may be applied voluntarily in 2014. The TUBACEX Group is analysing the impact that this new interpretation might have on the consolidated financial statements if it is applied and, in the opinion of the directors, it is not expected to have a material effect on the TUBACEX Group's consolidated financial statements. Lastly, following is a description of the standards, amendments and interpretations of existing IFRSs that have not yet been adopted by the European Union: IFRS 9, Financial Instruments This standard supersedes IAS 39 and introduces amendments to the impairment model, classification and measurement of financial instruments. This amendment will be
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mandatorily applicable for reporting periods beginning on or after 1 January 2018 under IASBIFRSs. IFRS 15, Revenue from Contracts with Customers. This new standard on the recognition of revenue will be mandatorily applicable for annual reporting periods beginning on or after 1 January 2017 under IASB-IFRSs. Amendments to IAS 19, Defined Benefit Plans: Employee Contributions These amendments must be applied retrospectively for periods beginning on or after 1 July 2014 under IASB-IFRSs. Improvements issued relating to the Annual Improvements to IFRSs, 2010-2012 and 2011-2013 Cycles. These improvements are mandatorily applicable for annual reporting periods beginning on or after 1 July 2014 under IASB-IFRSs. Amendments to IASs 16 and 38, Clarification of Acceptable Methods of Depreciation and Amortisation, Amendments to IFRS 11, Accounting for Acquisitions of Interests in Joint Operations, Improvements to IFRSs, 2012-2014 cycle, Amendments to IFRS 10 and IAS 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, Amendments to IAS 27, Equity Method in Separate Financial Statements, and Amendments to IASs 16 and 41, Bearer Plants. These amendments are mandatorily applicable for annual reporting periods beginning on or after 1 January 2016 under IASB-IFRSs. The TUBACEX Group is analysing the impact that these new standards and amendments might have on the consolidated financial statements if they are adopted. c)
Functional currencyThese consolidated financial statements are presented in euros, since this is the currency of the main economic area in which the Group operates. Foreign operations are accounted for in accordance with the policies established in Note 2-f. The detail of the equivalent value in thousands of euros of the assets and liabilities of the subsidiaries with a functional currency other than the euro as at 31 December 2014 and 2013, including intra-group balances eliminated from the accompanying consolidated balance sheet, is as follows:
Currency Brazilian real Canadian dollar US dollar Total
Equivalent value in thousands of euros 31/12/14 31/12/13 Assets Liabilities Assets Liabilities 9,335 674 57,247 67,256
11,241 2,107 10,060 23,408
9,074 634 45,829 55,537
9,596 1,946 6,391 17,933
At 31 December 2014 and 2013, the Parent did not hold any foreign currency balances. The detail of the main foreign currency balances of subsidiaries is as follows:
Nature of the balances Intangible assets Property, plant and equipment
Equivalent value in thousands of euros 31/12/14 31/12/13 Assets Liabilities Assets Liabilities 17 21,854
-
611 17,975
-
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Non-current financial assets and deferred tax assets Inventories Trade and other receivables Other current financial assets Cash and cash equivalents Non-current liabilities Current liabilities Total
1,994 15,073 14,473 2,201 11,644 67,256
12,523 10,885 23,408
5,045 14,679 11,511 1,883 3,833 55,537
4,999 12,934 17,933
d) Responsibility for the information and use of significant estimatesThe information in these consolidated financial statements is the responsibility of the Board of Directors of TUBACEX. In the consolidated financial statements of the TUBACEX Group for 2014 estimates were occasionally made. These estimates relate basically to the following:
The assumptions used in the measurement of goodwill (see Note 7).
The assumptions used for evaluating the recoverability of deferred tax assets (see Note 22).
The useful life of the intangible assets and property, plant and equipment (see Notes 7 and 8).
The evaluation of possible impairment losses on certain assets (see Notes 7, 8, 10, 11 and 14).
The analysis of net realisable values and the assessment of write-downs due to the slow movement of inventories, and the evaluation of possible losses on the committed order backlog (existence of onerous contracts) (see Note 13).
The amount of provisions for contingencies and charges and the probability of occurrence and amount of any liabilities of undetermined amount or contingent liabilities (see Note 17).
The assumptions used in the actuarial calculation of pension and other obligations to employees (see Note 21).
The fair value of certain equity instruments (see Notes 3-l and 16-f), and fulfilment of the conditions for them to be derecognised (see Note 3-e).
Although these estimates were made on the basis of the best information available on the events analysed, events that take place in the future might make it necessary to change these estimates (upwards or downwards) in coming years. Changes in accounting estimates would be applied prospectively in accordance with the requirements of IAS 8, recognising the effects of the change in estimates in the related consolidated statements of profit or loss. Due to the uncertainty involved in any estimate based on future expectations in the current economic environment, differences might arise between projected and actual results. The importance of these estimates should be taken into account in any interpretation of the accompanying consolidated financial statements and, in particular, in relation to the recovery of goodwill, property, plant and equipment and tax assets recognised. At 31 December 2014, the directors of the TUBACEX Group considered that the Group did not have any material contingent liabilities other than those disclosed herein.
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e) Comparative informationAs required by IAS 1, the information relating to 2013 contained in these notes to the consolidated financial statements is presented, for comparison purposes, with information relating to 2014 and, accordingly, it does not constitute the TUBACEX Group's statutory consolidated financial statements for 2013.
f) Basis of consolidationScope of consolidation The accompanying consolidated financial statements include the Parent and the companies over which it exercises control, where control is power over the investee; exposure, or rights, to variable returns from involvement with the investee; and the ability to use power over the investee to affect the amount of the investor’s returns. The accompanying consolidated financial statements for the year ended 31 December 2014 were prepared from the separate accounting records at that date of Tubacex, S.A. (the Parent -see Note 1) and of the subsidiaries listed in the Appendix to these notes to the consolidated financial statements. The Parent and subsidiaries all have the same financial year. Changes in the scope of consolidation In 2014 there were no significant changes in the scope of consolidation. The most significant changes in the scope of consolidation in 2013 were as follows:
Tubacex Services, S.L. was incorporated on 23 October 2013. Tubacex, S.A. holds an 81% ownership interest in this company and the other 19% belongs to Sociedad para el Desarrollo Regional de Cantabria, S.A. (Sodercan). The share capital of Tubacex Services, S.L. amounts to EUR 3,703,703 and its registered office is located in Santander (Cantabria). Its company object is the manufacture and sale of special tubes made from steel or metal in general, seamless or otherwise, and any other products specific to the iron and steel industry, as well as the preparation and implementation of plans and projects with regard to the creation, promotion, development and investment, and participation, in general, relating to industrial, commercial and services companies and businesses. This company has been fully consolidated in the consolidated financial statements since 2013.
Tubacoat, S.L., which is 75% owned by Tubacex, S.A., was also incorporated in 2013. Its share capital amounts to EUR 30,000 and its registered office is located in Leioa (Vizcaya). Its corporate purpose is the industrial and commercial development of long steel products with ceramic coating. This company has been fully consolidated in the consolidated financial statements since 2013.
Consolidation method a)
Subsidiaries
“Subsidiaries” are defined as companies over which TUBACEX exercises control. Control exists where the Group has:
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-
power over the investee; exposure, or rights, to variable returns from involvement with the investee; and the ability to use power over the investee to affect the amount of the investor’s returns.
The Group will reassess whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Where the Group holds less than a majority of voting rights, it has power over the investee when the voting rights are sufficient to afford it the practical ability to direct the relevant activities unilaterally. When assessing whether the Group’s voting rights are sufficient to give it power, it considers all facts and circumstances, including: -
the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; potential voting rights held by the Group, other vote holders or other parties; rights arising from other contractual agreements; and any additional facts and circumstances that indicate the Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
Consolidation of an investee shall begin from the date the Group obtains control of the investee and cease when the investor loses control of the investee. An entity shall attribute the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests. The entity shall also attribute total comprehensive income to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Where necessary, adjustments shall be made to the subsidiaries' financial statements to ensure conformity with the Group’s accounting policies. Intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group are eliminated in full on consolidation. b)
Associates and joint arrangements
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture (unlike a joint operation described in 2-f.c)) is an arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. The results and assets and liabilities of associates and joint ventures are accounted for in these consolidated financial statements using the equity method. Under the equity method, an investment in an associate or joint venture is initially recognised at cost and the carrying amount is increased or reduced to recognise the investor’s share of the profit or loss of the investee after the acquisition date. If a Group’s share of losses of an associate or a joint venture equals or exceeds its interest therein, the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.
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An investment in an associate or joint venture is accounted for using the equity method from the date on which it becomes an associate or joint venture. Profits and losses resulting from transactions between the Parent and an associate or joint venture are recognised in the Group's consolidated financial statements on the basis of the interest in the associate or joint venture not held by the Group.
c)
Joint operations and unincorporated temporary joint ventures
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. When a Group company carries on its activities within the framework of a joint operation, the Group, as joint operator, shall recognise in relation to its interest in a joint operation: -
its assets, including its share of any assets held jointly;
-
its liabilities, including its share of any liabilities incurred jointly;
-
its share of the revenue from the sale of the output by the joint operation; and
-
its expenses, including its share of any expenses incurred jointly.
When a Group company enters into a transaction with a joint operation in which it is a joint operator, such as a purchase of assets, it shall not recognise its share of the gains and losses until it resells those assets to a third party. At 31 December 2014, the Tubacex Group had no joint operations or ventures of this nature. Business combinations The Group is considered to carry out a business combination when the assets acquired and liabilities assumed constitute a business. The Group accounts for each business combination by applying the acquisition method, which entails identifying the acquirer, determining the acquisition date -which is the date on which control is obtained- and cost of acquisition, recognising and measuring the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree and, lastly, recognising and measuring any goodwill or gains from a bargain purchase. The costs incurred upon acquisition are recognised as an expense in the year in which they are incurred and, accordingly, they are not considered to be an increase in the cost of the business combination. The identifiable assets acquired and the liabilities assumed are measured at fair value at the acquisition date and non-controlling interests are measured at the proportional part of the interest in the identifiable net assets. In the case of step acquisitions, the acquirer revalues the existing investment at fair value on the date control is obtained, and recognises the related gain or loss in the consolidated statement of profit or loss.
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In addition, transactions between the Parent and non-controlling interests (transactions subsequent to obtaining control in which the Parent acquires further ownership interests from non-controlling interests or disposes of investments without losing control) are accounted for as transactions with equity instruments. The Group recognises goodwill at the acquisition date as the excess of:
the aggregate of (i) the consideration transferred measured at acquisition-date fair value; (ii) the amount of any non-controlling interest; and (iii) in a business combination achieved in stages, the acquisition-date fair value of the Group’s previously held equity interest, over
the net amount of identifiable assets acquired and liabilities assumed.
Where this difference is negative, the Group repeats the analysis of all the elements in order to determine whether the acquisition was made in highly advantageous conditions, in which case the difference is recognised in profit or loss. Translation of financial statements denominated in foreign currency The financial statements in foreign currencies were translated to euros using the year-end exchange rate method, which consists of translating all the assets, rights and obligations to euros at the closing exchange rates and the statement of profit or loss items at the average exchange rates for the year. The difference between the amount of the foreign companies’ equity translated at historical exchange rates (except for the profit or loss for the year, which is translated as stated above) and the net asset value arising from the translation of the assets, rights and obligations at the closing exchange rates from 1 January 2004 is presented in equity under “Translation Differences” in the consolidated balance sheet, net of the portion of the difference that relates to non-controlling interests, which is recognised under “Equity – Non-Controlling Interests”. g) Correction of errorsIn preparing the accompanying consolidated financial statements no significant errors were detected that would have made it necessary to restate the amounts included in the consolidated financial statements for 2013. 3.
Accounting policies The principal accounting policies used by the TUBACEX Group in preparing its consolidated financial statements as at 31 December 2014 and 2013 were as follows: a) Intangible assetsGoodwillGoodwill arising on consolidation is calculated as explained in Note 2-f. Goodwill is recognised as an asset when it arises in an acquisition for valuable consideration in the context of a business combination. Goodwill is allocated to the cash-generating units to which the economic benefits of the business combination are expected to flow and is not amortised. Instead, these cash-generating units are tested for impairment at least once a year using the methodology described in Note 3-c and, where appropriate, are written down. An impairment loss recognised for goodwill must not be reversed in a subsequent period.
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Greenhouse gas emission allowancesWhen acquired from third parties, emission allowances are recognised at cost less any accumulated impairment losses when entitlement thereto arises for the Group. Emission allowances received for no consideration or at a price substantially lower than their fair value are recognised at fair value. The difference between this value and any consideration given is recognised with a credit to "Deferred Income - Government Grants". The recognition in profit or loss of the amounts presented under "Other Operating Income" in the accompanying consolidated statement of profit or loss is determined on the basis of the emissions released in proportion to the total emissions forecasted for the complete period for which they had been allocated (see Note 24). Emission allowances are not amortised. The Group derecognises emission allowances using the weighted average cost formula. Works of art"Works of Art" includes works of art owned by the Group which are measured at cost less any related impairment losses arising as a result of periodic appraisals by independent valuers. Works of art are not depreciated since it is considered that they do not suffer decline in value from the passage of time. Other intangible assetsOther intangible assets (mostly computer software and related development) acquired by the Group are presented in the consolidated balance sheet at cost less any accumulated amortisation and impairment losses. Useful life and amortisationIntangible assets with finite useful lives are amortised systematically on a straight-line basis over their estimated years of useful life (between five and ten years). For these purposes amortisable amount is understood to be acquisition or deemed cost less residual value. The Group reviews the residual value, useful life and amortisation method applied to the intangible assets at the end of each reporting period. Changes in the criteria initially established are accounted for as a change in estimate. b) Property, plant and equipmentItems of property, plant and equipment are carried at cost revalued, where appropriate, pursuant to the applicable legislation, and the surplus resulting therefrom, in accordance with IFRSs, was treated as part of the cost of these assets, less any related accumulated depreciation and impairment losses. Cost includes the expenses directly attributable to the acquisition of the assets. In-house work on noncurrent assets is measured at accumulated cost (external costs plus in-house costs, determined on the basis of in-house materials consumption, direct labour and general manufacturing costs calculated using absorption rates similar to those used for the measurement of inventories). In 2014 the costs capitalised in this connection amounted to EUR 5,950 thousand, of which EUR 2,802 thousand were recognised under “In-House Work on Non-Current Assets” (31 December 2013: EUR 2,657 thousand). Of the EUR 5,950 thousand capitalised (31 December 2013: EUR 4,583 thousand), EUR 3,405 thousand were recognised under “Intangible Assets” (see Note 7) (31 December 2013: EUR 1,671 thousand) and EUR 2,545 thousand were recognised under “Property, Plant and Equipment” (see Note 8) (31 December 2013: EUR 2,912 thousand).
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Property, plant and equipment upkeep and maintenance expenses are recognised in the consolidated statement of profit or loss for the year in which they are incurred. However, the costs of improvements leading to increased capacity or efficiency or to a lengthening of the useful lives of the assets are capitalised. Items of property, plant and equipment are depreciated by allocating the depreciable amount thereof on a systematic basis over their useful life. For these purposes depreciable amount is understood to be acquisition or deemed cost less residual value. The Group calculates the depreciation charge separately for each part of an item of property, plant and equipment whose cost is significant in relation to the total cost of the item. Items of property, plant and equipment are depreciated on a straight-line basis over their years of useful life, the detail being as follows:
Years of estimated useful life Buildings Plant and machinery Other fixtures, tools, furniture and other items of property, plant and equipment
25 - 48 5 - 20 5 - 10
The directors of the TUBACEX Group periodically review the residual value and useful life of the various items of property, plant and equipment. Changes in the parameters initially established are accounted for as a change in estimate. In 2013 the Group re-estimated the useful life of certain items of property, plant and equipment, which led to a decrease of EUR 810 thousand in the period depreciation charge. In 2014 the Group re-estimated the useful life of certain items of property, plant and equipment, which led to a decrease of EUR 900 thousand recognised under “Depreciation and Amortisation Charge” in the accompanying consolidated statement of profit or loss. In general, for non-current assets that necessarily take a period of more than twelve months to get ready for their intended use, the capitalised costs include such borrowing costs as might have been incurred before the assets are ready for their intended use and which have been charged by the supplier or relate to specific-purpose or general-purpose borrowings directly attributable to the acquisition or production of the assets. The Group did not capitalise any borrowing costs under “Property, Plant and Equipment in the Course of Construction” in 2014 or 2013. The Group assesses and calculates the impairment losses and reversals of impairment losses on its property, plant and equipment in accordance with the methods discussed in Note 3-c. c) Impairment of assetsAt each reporting date, the TUBACEX Group reviews the carrying amounts of its non-current assets to determine whether there is any indication that these assets might have suffered impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is deemed to be the present value of estimated future cash flows. If the recoverable amount of an asset is less than its carrying amount, the related impairment loss is recognised for the difference with a charge to “Impairment and Gains or Losses on Disposals of NonCurrent Assets” in the accompanying consolidated statement of profit or loss and a credit to “Property, Plant and Equipment” or "Intangible Assets", as appropriate, in the accompanying consolidated balance sheet.
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Impairment losses recognised for an asset in prior years are reversed when there is a change in the estimates concerning the recoverable amount of the asset, increasing the carrying amount of the asset, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised, except in the case of the impairment of goodwill, which must not be reversed. At the end of 2014 and 2013, after testing each of the cash-generating units composing the Group for impairment, the Group did not deem it necessary to recognise any impairment losses in this connection (see Notes 7 and 8). d) LeasesLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases. Finance leases In finance leases in which the Group acts as the lessee, the cost of the leased assets is presented in the consolidated balance sheet, based on the nature of the leased asset, and, simultaneously, a liability is recognised for the same amount. This amount will be the lower of the fair value of the leased asset and the present value, at the inception of the lease, of the agreed minimum lease payments, including the price of the purchase option when it is reasonably certain that it will be exercised. The minimum lease payments do not include contingent rent, costs for services and taxes to be paid by and reimbursed to the lessor. The total finance charges arising under the lease are allocated to the consolidated statement of profit or loss for the year in which they are incurred using the effective interest method. Contingent rent is recognised as an expense for the period in which it is incurred. The assets recognised for transactions of this kind are depreciated on the basis of their nature using similar criteria to those applied to the items of property, plant and equipment taken as a whole. Operating leases Expenses resulting from operating leases are charged to income in the year in which they are incurred. A payment made on entering into or acquiring a leasehold that is accounted for as an operating lease represents prepaid lease payments that are amortised over the lease term in accordance with the pattern of benefits provided. e) Financial instrumentsTrade and other receivables Trade and other receivables are initially recognised in the consolidated balance sheet at the fair value of the consideration given, plus any directly attributable transaction costs, and are subsequently measured at amortised cost using the effective interest method. The required adjustments are recognised for the difference between the recoverable amount of accounts receivable and their carrying amount determined as indicated in the preceding paragraph. The Group recognises an allowance for debts in an irregular situation due to late payment, administration, insolvency or other reasons, after performing a case-by-case collectibility analysis. In 2014 the net change in impairment losses on accounts receivable was a reversal of EUR 360 thousand (2013: charge of EUR 322 thousand) (see Note 14). The Group derecognises a financial asset when the rights to the cash flows from the financial asset expire or have been transferred and substantially all the risks and rewards of ownership of the financial asset have also been transferred, such as in the case of firm asset sales, factoring of trade receivables
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in which the Group does not retain any credit or interest rate risk, sales of financial assets under an agreement to repurchase them at fair value and the securitisation of financial assets in which the transferor does not retain any subordinated debt, provide any kind of guarantee or assume any other kind of risk. At 31 December 2014, the Group derecognised receivables amounting to EUR 40,068 thousand (31 December 2013: EUR 14,234 thousand) in relation to non-recourse factoring agreements (see Note 2-d). However, the Group does not derecognise financial assets, and recognises a financial liability for an amount equal to the consideration received, in transfers of financial assets in which substantially all the risks and rewards of ownership are retained, such as in the case of bill discounting, with-recourse factoring, sales of financial assets under an agreement to repurchase them at a fixed price or at the selling price plus interest and the securitisation of financial assets in which the transferor retains a subordinated interest or any other kind of guarantee that absorbs substantially all the expected losses. At 31 December 2014 and 2013, the Group had not transferred any assets in which substantially all the risks and rewards of ownership are retained. Financial assets In accordance with the classification criteria established by IAS 39, the Group classifies its financial assets in the following categories: (1) Non-current loans and other receivables. Non-current loans and other receivables are initially recognised at fair value and subsequently measured at amortised cost, using the effective interest method. The amortised cost is understood to be the initial cost minus principal repayments and any reduction for impairment or uncollectibility. The effective interest rate is the discount rate that exactly matches the initial value to all its cash flows. (2) Held-to-maturity investments. Financial assets with fixed maturity that the Group has the intention and ability to hold to maturity. These investments are also initially recognised at fair value and are subsequently measured at amortised cost. (3) Held-for-trading financial assets measured at fair value through profit or loss. These assets must meet any of the following conditions:
They have been classified as held-for-trading because they have been acquired to generate a profit through short-term fluctuations in their prices.
They are financial derivatives provided that they have not been designated as part of a hedging relationship.
They have been included in this category of assets since initial recognition.
(4) Available-for-sale financial assets. Available-for-sale financial assets are measured at fair value. This category includes financial assets acquired that are not held for trading purposes and are not classified as held-to-maturity investments or as financial assets at fair value through profit or loss. Substantially all these assets relate to equity investments. These assets are measured in the consolidated balance sheet at market value which, in the case of unlisted companies, is obtained using alternative methods, such as comparison with similar transactions or, if sufficient information is available, by discounting expected future cash flows. Changes in market value are recognised with a charge or credit to “Valuation Adjustments” in the consolidated balance sheet until the investments are disposed of, at which time the cumulative balance of this heading relating to the investments disposed of is recognised in full in the consolidated statement of profit or loss.
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Equity investments in unlisted companies, the market value of which cannot be measured reliably using alternative methods such as those indicated in the preceding paragraph, are measured at cost. Management of the TUBACEX Group decides on the most appropriate classification for each asset on acquisition.
Cash and cash equivalents Cash and cash equivalents include cash on hand, demand deposits at banks and other short-term, highly liquid investments with current initial maturity, which are subject to an insignificant risk of changes in value. For these purposes, cash and cash equivalents include investments maturing in less than three months from the date of acquisition. Trade and other payables Accounts payable are initially recognised at market value and are subsequently measured at amortised cost using the effective interest rate. The Group derecognises financial liabilities when the obligations giving rise to them cease to exist. Bank borrowings and other financial liabilities Bank borrowings and other financial liabilities are initially recognised at the proceeds received, net of transaction costs, i.e. equivalent to the subsequent application of the amortised cost model, for which the effective interest rate is used. Borrowing costs are recognised in the consolidated statement of profit or loss on an accrual basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise (see Note 18). Derivative financial instruments Derivative financial instruments are initially recognised in accordance with the criteria described above for financial assets and liabilities. Derivative financial instruments that, pursuant to the criteria described below, do not qualify for hedge accounting are classified and measured as financial assets or liabilities at fair value through profit or loss. Derivative financial instruments that qualify for hedge accounting are initially recognised at fair value plus any transaction costs that are directly attributable to the arrangement thereof or less any transaction costs that are directly attributable to the issue thereof. The Group uses cash flow hedges. At the inception of the hedge, the Group designates and formally documents the hedging relationship and the objective and strategy for undertaking the hedge. Hedge accounting only applies when the hedge is expected to be highly effective from inception and in subsequent years in offsetting the changes in the fair value or cash flows of the hedged risk during the life of the hedge (prospective analysis) and the actual effectiveness of the hedge, which can be reliably calculated, is within a range of 80 - 125% (retrospective analysis). Additionally, in relation to cash flow hedges of forecasted transactions, the Group assesses whether such transactions are highly probable and whether they are exposed to changes in cash flows that might ultimately affect profit for the year. The Group only designates as hedged items the assets, liabilities and highly probable forecast transactions that involve a non-Group third party.
15
The portion of the gains or losses arising from measurement of the hedging instrument at fair value that is identified as an effective hedge is recognised temporarily as income and expenses in equity. The portion of the hedge considered to be ineffective and the specific gains or losses on or cash flows relating to the hedging instrument, which are excluded from the assessment of the effectiveness of the hedge, are charged or credited to "Finance Costs" or "Finance Income", respectively, in the consolidated statement of profit or loss.
When hedge accounting is discontinued, any cumulative loss or gain at that date recognised under “Valuation Adjustments - Hedges” is retained under this heading until the hedged transaction occurs, at which time the loss or gain on the transaction is adjusted. If a hedged transaction is no longer expected to occur, the gain or loss recognised under the aforementioned heading is transferred to the consolidated statement of profit or loss. f) Treasury sharesThe treasury shares held by the TUBACEX Group at 31 December 2014 and 2013, which amounted to EUR 7,850 thousand, were recognised at acquisition cost as a reduction of “Equity - Shareholders' Equity” in the consolidated balance sheet. g) InventoriesInventories are measured at the lower of cost (which comprises all costs of purchase, costs of conversion and direct and indirect costs incurred in bringing the inventories to their present location and condition) and net realisable value (which is the estimated selling price of inventories in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale). The formula used by the Group to calculate the cost of each class of inventories is as follows: a.
Goods held for resale: at acquisition cost calculated using the weighted average cost method.
b.
Raw materials and goods held for processing: at weighted average cost.
c.
Finished goods and work in progress: at weighted average cost of raw and other materials used, including costs directly related to the units produced, as well as a systematically allocated portion of the fixed and variable indirect costs incurred during conversion of the inventories.
In the measurement of inventories, costs linked to low production or idle plant were not capitalised. The cost of inventories is written down where cost exceeds net realisable value. For these purposes, net realisable value is taken to be:
Raw materials and goods held for processing: replacement cost. However, the Group does not write down raw materials and other supplies if the finished products in which they will be incorporated are expected to be disposed of at or above production cost;
Goods held for resale and finished goods: estimated selling price less the costs necessary to make the sale;
Work in progress: the estimated selling price of the related finished goods less the estimated costs of completion and selling costs.
Inventory write-downs and reversals are recognised under "Changes in Inventories of Finished Goods and Work in Progress" and "Procurements" in the consolidated statement of profit or loss for the year.
16
h) Foreign currency transactions and other obligationsThe foreign currency asset and liability balances of consolidated foreign companies were translated to euros as explained in Note 2-f. The other non-monetary foreign currency asset and liability balances were translated at the exchange rate prevailing at each year-end, and the positive and negative exchange differences between the exchange rate used and the year-end exchange rate were recognised in profit or loss. Foreign currency transactions for which the TUBACEX Group decided to arrange financial derivatives in order to mitigate the foreign currency risk are recognised as described in Note 3-e. i) Current/Non-current classificationIn the accompanying consolidated balance sheet debts are classified on the basis of their maturity at year-end. Current debts are those due to be settled within twelve months and non-current debts are those due to be settled within more than twelve months. j) Government grantsThe Group companies recognise government grants received as follows: 1)
Non-refundable grants, donations and legacies related to assets: these are measured at the fair value of the amount or the asset received, based on whether or not they are monetary grants, and they are taken to income in proportion to the period depreciation taken on the assets for which the grants were received or, where appropriate, on disposal of the asset or on the recognition of an impairment loss.
2)
Refundable grants: while they are refundable, they are recognised as a liability.
3)
Grants related to income: grants related to income are credited to income when granted, unless their purpose is to finance losses from operations in future years, in which case they are allocated to income in those years. If grants are received to finance specific expenses, they are allocated to income as the related expenses are incurred.
Also, grants, donations and legacies received from the shareholders or owners do not constitute income and must be recognised directly in equity, regardless of the type of grant involved, provided that they are not refundable. k) Employee benefit obligationsPension obligations The Group assumed certain obligations to employees which qualify for classification as defined benefit plans and take the form of contributions to a pension fund. Another part of these obligations was covered in prior years by arranging a single-premium insurance policy. At 31 December 2014, these obligations amounted to EUR 6,177 thousand (31 December 2013: EUR 5,354 thousand) and were recognised under "Employee Benefits" in the accompanying consolidated balance sheet (see Note 21). Hand-over contracts At 31 December 2014, "Employee Benefits" in the accompanying consolidated balance sheet included EUR 2,610 thousand (31 December 2013: EUR 4,719 thousand) relating to the present value estimated by the Parent's directors of future payments to be made to employees with hand-over contracts in December 2014 and 2013. The increase in the interest cost relating to this provision was recognised with a credit of EUR 145 thousand to “Staff Costs - Wages and Salaries” in the consolidated statement of profit or loss for 2014 (2013: decrease in interest cost of EUR 227 thousand) (see Notes 21 and 25).
17
Profit-sharing and incentive plans The Group grants incentives or shares in profits which it recognises with a charge to the consolidated statement of profit or loss when contractually obliged to do so or when an implicit obligation is created and the value of which can be reliably estimated. At 31 December 2014, these obligations amounted to EUR 819 thousand (31 December 2013: EUR 678 thousand) and were recognised under "Short-Term Provisions - Other Employee Benefits" in the accompanying consolidated balance sheet (see Note 17). Other long-term employee benefits At its meeting of 25 March 2013, the Parent's Board of Directors approved a long-term incentive plan for the members of the Group's Management Committee, who are senior executives of the Tubacex Group (see Note 25). The plan consists of multiannual remuneration linked to the achievement of the main targets included in the 2013-2017 Strategic Plan (see Note 21), and of a share option plan (see Notes 3-l and 16-f), in accordance with the terms and conditions approved by the shareholders at the General Meeting of 29 May 2013. Also, under the obligations assumed by certain subsidiaries to their employees, the Group is obliged to award long-service bonuses upon retirement and other benefits agreed upon with the employees which are paid more than twelve months after the end of the period in which they accrue. The Group recognised in the accompanying consolidated financial statements for the year ended 31 December 2014 liabilities arising from these obligations amounting to EUR 4,707 thousand under “NonCurrent Liabilities - Employee Benefits” in the consolidated balance sheet (31 December 2013: EUR 1,786 thousand) (see Note 21), with a charge of EUR 3,090 thousand to “Staff Costs” in the accompanying consolidated statement profit or loss for 2014 (2013: EUR 700 thousand) (see Note 25). Actuarial gains and losses arising from the Group's benefit obligations to its employees are recognised immediately in the consolidated statement of comprehensive income. l) Share-based paymentThe Group recognises, on the one hand, the goods and services received as an asset or as an expense, depending on their nature, when they are received and, on the other, the related increase in equity, if the transaction is equity-settled, or the related liability if the transaction is settled with an amount based on the value of the equity instruments. In the case of equity-settled transactions, both the services rendered and the increase in equity are measured at the fair value of the equity instruments granted, by reference to the grant date. However, in the case of cash-settled share-based payments, the goods and services received and the related liability are recognised at the fair value of the latter, with reference to the date on which the requirements for their recognition are met. In the case of equity-settled share-based payments, this fair value is charged on a straight-line basis over the vesting period to “Staff Costs” in the consolidated statement of profit or loss and with a credit to “Other Equity Instruments” in the consolidated balance sheet (see Note 16-f), based on the Group's estimate of the shares that will eventually vest. Fair value is measured using the market prices available on the measurement date, taking into account the characteristics of the related plan. If market prices are not available, generally accepted valuation techniques for measuring financial instruments of this nature are used (see Note 16-f). The Group recognised in the accompanying consolidated financial statements for 2014 the liability arising from this obligation relating to the share option plan amounting to EUR 332 thousand under “Other Equity Instruments” in the consolidated balance sheet (31 December 2013: EUR 166 thousand)
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(see Note 16-f) with a charge of EUR 166 thousand to “Staff Costs” in the accompanying consolidated statements profit or loss for 2014 and 2013 (Note 25).
m) Termination benefitsUnder current legislation, the Group is required to pay termination benefits to employees terminated under certain conditions. Therefore, termination benefits that can be reasonably quantified are recognised as an expense in the year in which the decision to terminate the employment relationship is taken. The accompanying consolidated financial statements do not include any material provision in this connection since no situations of this nature are expected to arise. n) Income taxOn 26 December 2013, the provincial tax authorities of Álava received notification of the intention of the Parent and certain subsidiaries, located in the Basque Country and subject to the Álava Income Tax Regulation, to file consolidated tax returns from 1 January 2014 in accordance with Álava Income Tax Regulation 37/2013, of 13 December, of the Provincial Government of Álava. Tubacex, S.A. is the parent of the tax group. Companies that file consolidated tax returns apply the criteria provided for under the Resolution issued by the Spanish Accounting and Audit Institute (ICAC) of 9 October 1997 in order to recognise the accounting effects of inclusion in a consolidated tax group (see Note 22). The other Group companies file separate income tax returns in accordance with the tax regimes applicable to them on the basis of the locations of their registered offices. The expense for Spanish corporation tax and similar taxes applicable to the consolidated foreign companies is recognised in the consolidated statement of profit or loss, unless it arises from a transaction whose results are recognised directly in equity, in which case the related tax is also recognised in equity. The current income tax expense is calculated by aggregating the current tax arising from the application of the tax rate to the taxable profit (tax loss) for the year, after deducting the tax credits allowable for tax purposes, plus the change in deferred tax assets and liabilities, and any tax loss and tax credit carryforwards. Deferred tax assets and liabilities include temporary differences measured at the amount expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and their tax bases, and tax loss and tax credit carryforwards. These amounts are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled. Deferred tax liabilities are recognised for all taxable temporary differences, unless, in general, the temporary difference arises from the initial recognition of goodwill. Also, deferred tax assets recognised for tax loss and tax credit carryforwards and temporary differences are only recognised if it is considered probable that the consolidated companies will have sufficient future taxable profits against which they can be utilised. Pursuant to IFRSs, deferred tax assets and deferred tax liabilities are classified as non-current assets and liabilities, respectively.
19
o) Provisions and contingenciesWhen preparing the consolidated financial statements the TUBACEX Group’s directors made a distinction between: a) Provisions: credit balances covering present obligations arising from past events with respect to which it is probable that an outflow of resources embodying economic benefits that is uncertain as to its amount and/or timing will be required to settle the obligations; and b) Contingent liabilities: possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more future events not wholly within the Group's control. The consolidated financial statements include all the provisions with respect to which it is considered that it is more likely than not that the obligation will have to be settled. Contingent liabilities are not recognised in the consolidated financial statements but rather are disclosed, unless the possibility of an outflow in settlement is considered to be remote. The compensation to be received from a third party on settlement of the obligation is recognised as an asset, provided that there are no doubts that the reimbursement will take place, unless there is a legal relationship whereby a portion of the risk has been externalised as a result of which the Group is not liable; in this situation, the compensation will be taken into account for the purpose of estimating the amount of the related provision that should be recognised. Provision for emission allowancesThe expenses relating to greenhouse gas emissions are recognised systematically with a credit to the provision for emission allowances which is reversed on delivery of the related allowances granted by public authorities for no consideration or acquired in the market (see Note 17). The provision is calculated on the basis that the obligation will be settled:
Firstly, using the emission allowances transferred to the Parent's credit account at the National Emission Allowance Registry under a National Allocation Plan. The expense corresponding to this part of the obligation is determined on the basis of the carrying amount of the emission allowances transferred.
Then, by using the remaining emission allowances recognised. The expense corresponding to this part of the obligation is determined using the average price or weighted average cost of these emission allowances.
Since the Group has sufficient emission rights, it did not need to recognise any additional provisions for the need to acquire additional rights.
20
p) Revenue recognitionRevenue from sales and services rendered is measured at the fair value of the assets or rights received as consideration for the goods and services provided in the normal course of the Group companies' business, net of discounts and applicable taxes. Sales of goods Sales of goods are recognised when substantially all the risks and rewards of ownership of the goods have been transferred, the Group does not retain control over them, revenue can be measured reliably and is likely to be received and the transaction costs incurred or to be incurred can be measured reliably. Interest and dividends Interest income from financial assets is recognised using the effective interest method and dividend income is recognised when the shareholder's right to receive payment has been established. Interest and dividends from financial assets accrued after the date of acquisition are recognised as income. q) Environmental mattersThe Group recognises environmental investments at acquisition or production cost, net of the related accumulated depreciation, and classifies them by nature in the appropriate “Property, Plant and Equipment” accounts (see Notes 8 and 29). Expenses incurred in order to comply with the applicable environmental legislation are classified by nature under “Other Operating Expenses” in the accompanying consolidated statement of profit or loss (see Note 29). Expenses arising from greenhouse gas emissions (Law 1/2005, of 9 March) are recognised at their fair value or at the cost of the rights allocated or acquired with a credit to the related provision account when these gases are emitted during the production process. r) Consolidated statement of cash flowsThe following terms are used in the consolidated statement of cash flows, which was prepared using the indirect method, with the meanings specified:
Cash flows. Inflows and outflows of cash and cash equivalents, which are short-term, highly liquid investments that are subject to an insignificant risk of changes in value.
Operating activities. The principal revenue-producing activities of the TUBACEX Group companies and other activities that are not investing or financing activities.
Investing activities. The acquisition and disposal of long-term assets and other investments not included in cash and cash equivalents.
Financing activities. Activities that result in changes in the size and composition of the equity and liabilities that are not operating activities.
The Group classifies interest received as cash flows from investing activities and interest paid as cash flows from financing activities. Dividends paid are classified as financing activities.
21
s) Earnings per shareBasic earnings per share are calculated by dividing the net profit for the year attributable to the TUBACEX Group by the weighted average number of ordinary shares outstanding in the year, excluding the average number of TUBACEX shares held in the year. Diluted earnings per share are calculated by dividing the net profit or loss for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding in the year, adjusted by the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares of the Parent. At 31 December 2014 and 2013, basic earnings per share coincided with diluted earnings per share, since there were no potential shares outstanding during the years then ended (see Note 23). t) Discontinued operationsA discontinued operation is a sufficiently significant line of business that it has been decided to abandon and/or sell, whose assets, liabilities and net profit or loss can be distinguished physically, operationally and for financial reporting purposes. Income and expenses of discontinued operations are presented separately in the consolidated statement of profit or loss. No line of business or business segment was discontinued in 2014 or 2013. u) Related party transactionsIn all the transactions the Group performs with related parties, it fixes transfer prices in line with the OECD guidelines governing transactions with Group companies and associates. These transfer prices are adequately supported in contractual terms. Therefore, the Parent’s directors consider that there are no material risks in this connection that might give rise to significant unrecognised liabilities in the future. 4.
Distribution of the profit of the Parent The distribution of the Parent's profit for 2014 proposed by the directors that will be submitted to the shareholders for approval at the Annual General Meeting is as follows:
Distribution Dividends To reserves Total
Thousands of euros 9,504 904 10,408
The Board of Directors at its meeting on 18 December 2014 approved an interim dividend out of profit for 2014 amounting to EUR 3,000 thousand which were recognised under “Equity - Interim Dividend” in the consolidated balance sheet as at 31 December 2014. The interim dividend was paid on 20 January 2015, and EUR 3,000 thousand were recognised under “Current Financial Liabilities - Other Financial Liabilities” in the accompanying consolidated balance sheet. The provisional accounting statement (unaudited) prepared in accordance with legal requirements evidencing the existence of sufficient liquidity for the distribution of the dividends was as follows (in thousands of euros):
22
Profit from 1 January to 30 November 2014 Revenue from the rendering of services Forecast expenses (staff costs, operating expenses and finance costs) Depreciation and amortisation charge Forecast profit before tax Estimate of income tax payable Maximum amount for possible distribution Forecast interim dividend Available liquidity at the date of the resolution 5.
Provisional accounting statement at 30 November 2014 2,295 8,861 (1,221) (130) 9,805 (2,438) 7,367 3,000 32,134
Financial risk management policy and other The TUBACEX Group engages in activities that are exposed to various financial risks: market risk (including foreign currency risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The financial risk management policy adopted by the TUBACEX Group focuses on the uncertainty of financial markets and aims to minimise the potential adverse effects on the Group’s financial performance. The Group uses derivatives to hedge certain risks. Risk management is controlled by the Group's Financial Department in accordance with the policies approved by the Board of Directors. This department identifies, assesses and hedges financial risks in close cooperation with the Group’s administrative and financial departments. The Board of Directors sets policies for global risk management, as well as for specific matters such as foreign currency risk, interest rate risk, liquidity risk, the use of derivative and non-derivative instruments and investment of surplus liquidity. a) Market riska.1) Foreign currency riskThe Group operates in the international market and, therefore, is exposed to foreign currency risk on the transactions performed by it in foreign currencies, particularly the US dollar. Foreign currency risk arises on future commercial purchases of raw materials and sales of products in foreign currencies, recognised assets and liabilities and net investments in foreign operations. At 31 December 2014, if the euro had depreciated by 10% against the US dollar, with all other variables remaining unchanged, consolidated profit after tax would have been EUR 5,170 thousand higher (2013: EUR 6,562 thousand higher), without taking into account the Group's hedging policy. The Group companies use forward foreign currency contracts arranged with banks to hedge the foreign currency risk arising from future commercial purchases of raw materials and sales of products in foreign currencies and recognised assets and liabilities. Foreign currency risk arises when the future commercial transactions and recognised assets and liabilities are denominated in a currency other than the Group’s functional currency. The Group’s Financial Department is responsible for managing the net position in foreign currencies using external foreign currency forward contracts. Note 12 contains a detail of the forward foreign currency purchase and sale contracts at 31 December 2014 and 2013. For reporting purposes, Group management designates external foreign currency contracts as foreign currency risk hedges on certain assets, liabilities or future transactions.
23
The Group has various investments in foreign operations the net assets of which are exposed to foreign currency translation risk, especially in US dollars. The Group assumes the foreign currency risk on the net assets of its foreign operations since it is not representative of total assets. At 31 December 2014, net assets held in the US amounted to approximately EUR 47,187 thousand (2013: approximately EUR 39,438 thousand). a.2) Commodity price riskThe Group mainly uses two mechanisms to control commodity price risk. For sales orders negotiated at a fixed price, since March 2007, the Group has used commodity price futures contracts whose expected maturity is in line with the commencement of production of each order so as to ensure the margins set on arrangement of the sale are obtained. However, in the case of sales orders negotiated at a variable price, commodity price risk is significantly offset by the implicit hedge provided by the alloy surcharges that the Group passes on to its customers in the selling price. At 31 December 2014, had the price of nickel risen or fallen by 10%, consolidated purchases would have risen or fallen by approximately EUR 9,133 thousand (2013: approximately EUR 7,133 thousand). Additionally, had commodity prices as a whole risen or fallen by 10%, consolidated purchases would have risen or fallen by approximately EUR 17,287 thousand (2013: approximately EUR 14,223 thousand). In 2014 the Group hedged 8% (2013: 12%) of total nickel purchases in the year through commodity price futures contracts. a.3) Available-for-sale financial assetsMarket risk arises mainly from investments in investment funds classified as held for sale. The main objective of the Group’s investment policy is to maximise returns on investments, while keeping risks under control. a.4) Investments in works of artThe Group is also exposed to market risk due to its investments in works of art, which are recognised under "Intangible Assets" (see Note 7). The Group regularly commissions independent third party appraisals in order to identify potential unrealised losses. b)
Credit riskThe Group does not have any material credit risk concentration. In order to hedge the credit risk on sales, the Group implements a prudent hedging policy mainly with credit insurance companies in the event that sales are not made to highly solvent customers. Derivatives transactions and spot transactions are only carried out with banks with high credit ratings. The Group has policies to limit the amount of risk with any given bank. At 31 December 2014, the exposure of the Group's assets to this risk is limited mainly to the committed collection rights recognised under "Trade Receivables for Sales and Services", which total EUR 70,526 thousand (2013: EUR 103,580 thousand). Impairment losses amounting to EUR 2,759 thousand (2013: EUR 3,119 thousand) were recognised on part of these committed collection rights since the Group considered the recovery thereof as doubtful (see Note 14).
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At 31 December 2014, the past-due unimpaired committed collection rights recognised under these headings amounted to approximately EUR 33,482 thousand (2013: approximately EUR 27,394 thousand). The majority of these collection rights are less than two months past due and the Group does not consider their recovery to be doubtful, since normal business operations occasionally result in collection delays for reasons other than the risk of default. At the date of formal preparation of these consolidated financial statements, the Group had collected most of the past-due receivables. c)
Liquidity riskThe Group exercises prudent management of liquidity risk based on the maintenance of sufficient cash and marketable securities, the availability of financing through a sufficient level of committed credit facilities and sufficient capacity to settle market positions. The Group’s Financial Department aims to maintain funding flexibility by making draw-downs against the credit facilities arranged.
Notes 18 and 19 provide a detail, by maturity, of the non-current financial liabilities:
Loans and other interest-bearing liabilities relate mainly to credit facilities that are renewed after three years.
Current income tax liabilities will be settled approximately seven months after 31 December 2014.
The detail of “Trade and Other Payables”, by maturity, is as follows:
Thousands of euros 2014 2013 Within three months Between three and twelve months
d)
95,736 7,241 102,977
103,012 2,620 105,632
Cash flow and fair value interest rate riskSince the Group does not have any significant interest-earning assets, most of the income and cash flows from the Group’s operating activities are largely unaffected by changes in market interest rates. The Group's interest rate risk arises from current and non-current borrowings. Debt issued at floating rates exposes the Group to cash flow interest rate risk. This risk is hedged using mainly interest rate swaps. Fixed-rate loans expose the Group to fair value interest rate risk. Current loans and other interest-bearing liabilities amounted to EUR 139,359 thousand at 31 December 2014 (2013: EUR 133,558 thousand). In 2014 the average balance of current bank borrowings was approximately EUR 162 million (2013: approximately EUR 164 million). Taking into account the drawn-down balance, in 2014 a 5% rise or fall in the market interest rates would have given rise to a fall or rise, respectively, of EUR 669 thousand in profit before tax (2013: EUR 722 thousand). The fair values of the various consolidated balance-sheet categories do not differ substantially from their carrying amounts at 31 December 2014 and 2013.
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6.
Segment reporting a) Basis of segmentation As described below, the Group is internally organised by operating segments, which are the strategic business units. The strategic business units have various products and services and are managed separately because they require different technology and market strategies. Information on the Tubacex Group's product portfolio, the markets in which it operates and its general sales conditions is provided on the Group's corporate website. As at 31 December 2014 and 2013, the Group comprised the following operating segments, the main products and services of which are as follows:
Seamless stainless steel pipes
Carbon steel pipes
b) Basis and methodology for segment reporting The performance of the segments is measured on the basis of their profit or loss before tax. Segment profit is used as a measure of performance since the Group considers that this information is the most relevant when assessing the results of certain segments in relation to other groups operating in these businesses. In accordance with the basis for primary segment reporting set forth in IFRSs (IFRS 8, Operating Segments), the Tubacex Group considered the two aforementioned business units as operating segments, since it considers that their organisational and management structures and their systems of internal reporting to their managing and executive bodies are such that the risks and returns are affected predominantly by the fact that their operations are performed in one or the other business area, taken to be all of the related products and services. Therefore, through segment reporting, the identifiable components of the Tubacex Group characterised by being subject to risks and returns of a different nature to those corresponding to other operations carried on in other areas are identified. In this respect, based on historical experience, the following segments were defined:
Seamless stainless steel pipes
Carbon steel pipes
Segment information about the businesses is presented below:
26
Stainless steel pipe segment 2014 2013 Total segment revenue Depreciation and amortisation charge Inventory write-downs/reversals (Note 13) Finance income Finance costs Share in profits of companies accounted for using the equity method Exchange differences Segment profit (loss) before tax Income tax expense Profit (Loss) for the year Segment assets Investments accounted for using the equity method Total segment assets Non-current investments in fixed assets Total segment liabilities
Thousands of euros Carbon steel pipe segment 2014 2013
527,887 (20,260) 919 1,236 (12,989)
536,806 (19,507) 1,206 370 (14,211)
18,763 (213) 642 (383)
13 472 31,435 (9,004) 22,431 664,516 775 665,291 28,231 405,791
65 (1,417) 15,783 (1,739) 14,044 598,956 1,474 600,430 41,745 361,770
1,215 (385) 830 34,977 34,977 32 9,376
17,343 (241) 512 (226) 826 (235) 591 36,690 36,690 830 11,919
Total consolidated 2014 2013 546,650 554,149 (20,473) (19,748) 919 1,206 1,878 882 (13,372) (14,437) 13 65 472 (1,417) 32,650 16,609 (9,389) (1,974) 23,261 14,635 699,493 635,646 775 1,474 700,268 637,120 28,263 42,575 415,167 373,689
The business segments are managed at global level since the Group operates throughout the world, its main markets being Europe and the US. The main activities in Europe are carried on in Spain, Germany, Austria, France, Italy, the Netherlands and the United Kingdom. In geographical segment reporting, revenue and segment assets are based on the geographical location of customers and of assets, respectively. The information based on geographical location is as follows: a)
The breakdown of sales by geographical area as at 31 December 2014 and 2013 is as follows (in thousands of euros):
Geographical area Spain Rest of Europe United States Other countries Total sales b)
2014 37,440 267,515 75,783 165,912 546,650
% 6.85% 48.94% 13.86% 30.35% 100%
2013 39,974 291,853 79,808 142,514 554,149
% 7.2% 52.7% 14.4% 25.7% 100%
The distribution, by geographical area, of net investments in non-current assets as at 31 December 2014 and 2013 is as follows (in thousands of euros):
27
Geographical area Spain Rest of Europe United States Other countries Total non-current assets
2014 189,921 75,938 20,991 414 287,264
% 59.6% 32.7% 7.6% 0.1% 100%
2013 189,128 75,180 17,373 1,233 282,914
% 67.2% 26.6% 6.1% 0.1% 100%
7. Intangible assets The detail of “Intangible Assets” and of the changes therein in 2014 and 2013 is as follows (in thousands of euros):
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Goodwill
Thousands of euros Other Greenhouse Works intangible gas emission of art assets allowances
Total
CostCost at 01/01/13 Additions Disposals Transfers Cost at 31/12/13 Additions Disposals Transfers (Note 8) Cost at 31/12/14
18,375 18,375 18,375
5,784 4 5,788 5,788
23,733 2,580 (1) 26,312 4,190 (1,880) (696) 27,926
-
-
Net impairment lossesAccumulated net impairment losses Impairment losses (recognised)/reversed in the year
-
(737) -
-
Net intangible assets at 31/12/13 Net intangible assets at 31/12/14
18,375 18,375
5,051 5,051
10,710 12,722
1,045 171 (301) -
48,937 2,755 (302) -
915 128 (304) 739
51,390 4,318 (2,184) (696) 52,828
Accumulated amortisationAccumulated amortisation at 01/01/13 Charge for the year Disposals Translation differences Accumulated amortisation at 31/12/13 Charge for the year Disposals Translation differences Accumulated amortisation at 31/12/14
a)
(14,167) (1,428) 1 (8) (15,602) (1,621) 1,875 144 (15,204)
-
(14,167) (1,428) 1 (8) (15,602) (1,621) 1,875 144 (15,204)
-
-
(737)
915 739
35,051 36,887
GoodwillGoodwill arose mainly from the acquisition of the SBER Group and was allocated to the cashgenerating unit composed of the companies located in Austria, which form a geographical cashgenerating unit (known as "traditional CGU"). The goodwill arising on the acquisition of the aforementioned group amounted to EUR 18,275 thousand in 2014 and 2013.
The recoverable amount of the cash-generating unit was determined on the basis of the calculation of its value in use. These calculations use cash flow projections based on five-year financial budgets approved by the directors. The directors determined the budgeted gross margin on the basis of past performance and expectations regarding the evolution of the market. Specifically, the directors forecast that sales will be maintained in 2015 and that annual growth for subsequent years will be 4% with a gradual improvement in the margin of five percentage points in five years, based on a growth
29
strategy for high value-added products, a search for efficiency in the production process using predefined and approved management plans, and adaptation of investment in working capital. In 2014 and 2013 cash flows for periods beyond five years were extrapolated using an estimated perpetuity growth rate of 0%. The post-tax discount rate used in the cash flow projections was 7.8% in 2014 (2013: 8.3%) and reflected the specific risks of the cash-generating unit. This post-tax discount rate was equal to a pre-tax discount rate of 11.1% (2013: 11.5%). This discount rate, which was estimated by management, was compared to and consistent with an average of discount rates used by specialists. The Group's directors consider that weighted average growth rates are consistent with the projections contained in industry reports and that the pre-tax discount rates used in the cash-flow projections are the same as those used by non-Tubacex Group analysts and reflect the specific risks of the related cash-generating units (traditional CGU in the case of goodwill). Based on the estimates and forecasts available to the Group's directors, the projected net cash flows attributable to this cash generating unit support the carrying amount of the goodwill recognised. Additionally, an increase of 100 basis points in the discount rate would not give rise to an impairment of the goodwill recognised. Similarly, a 15% reduction in the assumptions used for annual sales growth or a one percentage point reduction in the margin improvement assumption would not give rise to any impairment of the goodwill recognised. b)
Emission allowancesThe detail of the fair value and initial value of the non-monetary grants relating to emission allowances received by the Group companies in 2014 and 2013 is as follows:
Thousands of euros 2014
2013
Fair value
Initial value
Fair value
Initial value
197
128
134
171
The changes in the number of allowances in 2014 and 2013 were as follows:
Number of allowances Balances as at 31 December 2013 Additions Disposals Balances as at 31 December 2014
98,964 27,166 (32,917) 93,213
30
c)
Works of artWorks of art comprise those belonging to the Parent. The Tubacex Group commissions, periodically, an independent expert appraisal of these works of art and the market valuation arising therefrom is in line with that recognised as at 31 December 2014 and 2013. Works of art are not depreciated since it is considered that they do not suffer decline in value from the passage of time.
Additions for 2014 relate mainly to work performed to develop a new cost analysis management tool and other research and development work on new products or more efficient work methods in production plants. In 2014 additions for research and development amounted to approximately EUR 2,510 thousand (2013: EUR 92 thousand) At 2014 year-end the Group had no firm intangible asset purchase commitments (2013 year-end: EUR 2 thousand). At 2014 year-end the Group had fully amortised intangible assets in use (mostly computer software) amounting to EUR 9,901 thousand (2013 year-end: EUR 11,648 thousand). Of the Group’s intangible assets, at the end of 2014 and 2013 the following items were not being used directly in operations: 2014
Cost Works of art
Thousands of euros Valuation adjustments
5,788
(737)
Total 5,051
2013
Cost Works of art
Thousands of euros Valuation adjustments
5,788
(737)
Total 5,051
31
8. Property, plant and equipment The detail of “Property, Plant and Equipment” in the consolidated balance sheet and the changes therein in 2014 and 2013 is as follows:
Land
Buildings
Thousands of euros Other fixtures, tools, furniture and other items of Plant and property, plant machinery and equipment
Advances and property, plant and equipment in the course of construction
Total
CostCost at 01/01/13 Additions Disposals Transfers Translation differences Cost at 31/12/13 Additions Disposals Transfers (Note 7) Translation differences Cost at 31/12/14 Accumulated depreciation-
19,921 346 (14) 20,253 184 20,437
Accumulated depreciation at 01/01/13 Charge for the year Disposals Translation differences Accumulated depreciation at 31/12/13 Charge for the year Disposals Transfers Translation differences Accumulated depreciation at 31/12/14
-
Net impairment lossesAccumulated net impairment losses Impairment losses (recognised)/reversed in the year
-
Net property, plant and equipment at 31/12/13 Net property, plant and equipment at 31/12/14
20,253 20,437
83,698 1,260 (1) 2,853 (131) 87,679 601 (101) 880 89,059
402,917 28,930 (10,278) 11,690 (1,095) 432,164 13,963 (1,002) 10,819 3,190 459,134
28,846 2,547 (3,632) 1,378 29,139 3,042 (3,819) 666 137 29,165
20,122 6,737 (15,921) (208) 10,730 6,339 (337) (10,790) 87 6,029
555,504 39,820 (13,911) (1,448) 579,965 23,945 (5,259) 695 4,478 603,824
(61,751) (1,343) 61 (63,033) (1,417) 43 (410) (253) (65,070)
(298,282) (13,971) 10,305 598 (301,350) (14,424) 991 (1,601) (1,520) (317,904)
(21,711) (3,006) 1,841 (22,876) (3,011) 1,938 2,011 (186) (22,124)
-
(381,744) (18,320) 12,146 659 (387,259) (18,852) 2,972 (1,959) (405,098)
-
24,646 23,989
-
130,814 141,230
-
6,263 7,041
-
10,730 6,029
32
-
192,706 198,726
The most significant investments in 2014 were an investment made by Tubacex Services, S.L. in new shot-peening machinery, the continuation of investments made in 2013 and 2012 in Amurrio to increase the Group's capacity in oil country tubular goods (OCTG), other investments to complete the development of strategic products (such as umbilical pipes) and the development of new products using the organisation's research resources. The main projects carried out were the development of new OCTG goods and the upgrade of press equipment. In 2014 a project was carried out to control and follow-up on various phases in the production process. In 2013 the most significant investments related to the continuation of those initiated in 2012, such as investments made in Amurrio to increase the Group's capacity in OCTG goods through the launch of a new cold-rolling line, which will enable the Group to improve productivity and quality and reduce delivery times and intermediate stocks. Other noteworthy investments in 2013 related to the policies and projects for improving the efficiency of the key facilities of the Group's various industrial plants. The disposals in 2014 and 2013 related mainly to idle items of fully depreciated property, plant and equipment. Umbilical pipes plant In 2010 a new umbilical pipe production plant in Austria entered into operation. This plant is used for the exploration for and extraction of oil under critical conditions in terms of pressure, temperature and corrosion. As at 31 December 2014, the carrying amount of this plant amounted to approximately EUR 29.4 million (31 December 2013: EUR 31.2 million). As indicated in Note 3-c, at each reporting date, the Tubacex Group reviews the carrying amounts of its non-current assets to determine whether there is any indication that these assets might have suffered impairment. Since this plant did not reach expected levels of production in 2014, the Group estimated the recoverable amount of this asset. As in the case of the test for the impairment of goodwill (see Note 7), the recoverable amount of this cashgenerating unit (known as "umbilical CGU") was calculated on the basis of its value in use. These calculations use cash flow projections based on five-year financial budgets approved by management. Management determined the budgeted gross margin for this plant on the basis of expectations regarding the evolution of the market. Specifically, management forecasts 26.5% annual sales growth, based on the CGU's activity, since it relates to a very complex, high value-added product. A set of very stringent accreditations is required in order to manufacture this product, which the Group has already obtained, together with the first orders, and production and sale thereof has also begun. For all of these reasons, and given the outstanding and expected backlog, the Group's directors consider that the prospects comfortably exceed the investment. In 2014 and 2013 cash flows for periods beyond five years were extrapolated using an estimated perpetuity growth rate of 0%. The post-tax discount rate used in the cash flow projections was 7.8% in 2014 (2013: 8.3%) and reflected the specific risks of the cash-generating unit. This post-tax discount rate was equal to a pre-tax discount rate of 11.1% (2013: 11.5%). This discount rate, which was estimated by management, was compared to and consistent with an average of discount rates used by specialists. The Group's directors consider that weighted average revenue growth rates are consistent with the projections contained in industry reports and that the pre-tax discount rates used in the cash-flow projections are the same as those used by non-Tubacex Group analysts and reflect the specific risks of the related cash-generating units. Based on the estimates and forecasts available to the Group's directors, the projected net cash flows attributable to this cash generating unit support the value of the non-current assets of the umbilical pipe production plant in Austria. Additionally, an increase of 100 basis points in the discount rate would not give rise to an impairment loss at the umbilical cash-generating unit. Similarly, a 2,000 basis point reduction in the assumption of annual sales growth, assuming 5% annual growth, would not give rise to an impairment of the umbilical CGU.
33
As at 31 December 2014 and 2013, the Group had the following investments in property, plant and equipment located abroad (in thousands of euros): 2014
Gross carrying amount Land and buildings Plant and machinery Other items of property, plant and equipment Property, plant and equipment in the course of construction Total
Accumulated Accumulated valuation depreciation adjustments
37,230 160,586 7,300 4,354
(18,630) (98,311) (5,585) -
-
209,470
(122,526)
-
2013
Gross carrying amount Land and buildings Plant and machinery Other items of property, plant and equipment Property, plant and equipment in the course of construction Total
Accumulated Accumulated valuation depreciation adjustments
36,127 149,224 6,678 4,214
(17,415) (91,142) (5,196) -
-
196,243
(113,753)
-
At the end of 2014 and 2013 the Group had fully depreciated items of property, plant and equipment still in use, the detail being as follows (in thousands of euros): 2014
Gross carrying amount Buildings Plant and machinery Other items of property, plant and equipment Total
47,634 203,051 11,185 261,870
34
2013
Gross carrying amount Buildings Plant and machinery Other items of property, plant and equipment Total
43,183 197,204 13,041 253,428
Other disclosures As indicated in Note 9, at the end of 2014 and 2013 the Group held various items of property, plant and equipment under a finance lease. As a result of the impairment test conducted by the Group, the directors consider that there was no indication of impairment of the Group’s other assets as at 31 December 2014 or 2013. As at 31 December 2014, the amount payable by the Group to non-current asset suppliers was EUR 3,077 thousand (31 December 2013: EUR 3,880 thousand), and this amount was recognised under "Trade and Other Payables" in the accompanying consolidated balance sheet (see Note 20). At 2014 year-end the Group had firm property, plant and equipment purchase commitments amounting to approximately EUR 4,141 thousand (2013 year-end: EUR 4,295 thousand). As at 31 December 2014 and 2013, the Group had pledged items of property, plant and equipment for an amount of EUR 31,274 thousand as security for mortgage loans (see Note 18). The Group takes out insurance policies to cover the possible risks to which its property, plant and equipment are subject. At 2014 and 2013 year-end these risks were adequately covered. The Group did not have any items of property, plant and equipment measured at fair value as at 31 December 2014.
35
9. Leases Finance leases As at 31 December 2014, the Group, as the lessee under finance leases, had recognised leased assets with a carrying amount of EUR 1,736 thousand (31 December 2013: EUR 1,825 thousand) under "Property, Plant and Equipment - Plant and Other Items of Property, Plant and Equipment". The agreement entered into in 2013 with the bank Caja Rural de Navarra for the acquisition of the main machine for the new OCTG business line (see Note 8) gave rise to the recognition of these assets under finance lease at 2014 and 2013 year-end. As at 31 December 2014 and 2013, the Group had arranged with the lessor for the following minimum lease payments (including any purchase options), based on the lease currently in force, without taking into account the charging of common expenses, future increases in the CPI or future contractual lease payment revisions (in thousands of euros):
Minimum finance lease payments
2014
Within one year Between one and five years Total
182 602 784
2013 174 784 958
Operating leases As at 31 December 2014 and 2013 the Group had contracted with lessors for the following minimum lease payments, based on the leases currently in force, without taking into account the charging of common expenses, future increases in the CPI or future contractual lease payment revisions (in thousands of euros):
Minimum operating lease payments Within one year Between one and five years After five years Total
2014 484 1,935 1,691 4,110
2013 543 1,995 1,957 4,495
The main leases giving rise to the minimum payments for the Group are as follows:
Leases of industrial buildings, warehouses or offices where Group companies carry on their activity, and vehicle full-service leases ("renting").
On 14 October 2013, the Parent entered into an agreement with Suelo Industrial Marina Medio Cudeyo, 2006 S.L. for the construction of the industrial building where the Group company Tubacex Services, S.L. (see Note 2-f) carries on its production activity and for the lease with a purchase option on the industrial building and the land on which it is constructed. This lease has a minimum term of 15 years from the date of delivery of the industrial building to the lessee, which is extendible for three periods of three years each, unless this is contrary to the lessee's will. The annual rent stipulated in the lease agreement amounts to EUR 187,920. The purchase option established in the agreement is exercisable between the first and sixth years of the lease and the agreed-upon purchase price is EUR 2,748,018. As at 31 December 2014, the directors of the Parent had not taken any decision on whether the purchase option will finally be exercised. For these reasons, the Group did not recognise any liability in the accompanying consolidated balance sheet as at 31 December 2014 in relation to this lease.
36
This lease also includes an option to transfer the status as lessee to another Tubacex Group company; this possibility was used to effect the transfer of ownership of the Tubacex S.A. lease to Tubacex Services S.L. The lease expense in this respect in 2014 was EUR 188 thousand recognised under "Other Operating Expenses" in the accompanying consolidated statement of profit or loss. The detail of the operating lease payments recognised as an expense in 2014 and 2013 is as follows (in thousands of euros):
2014 Minimum lease payments Contingent rents paid Total
2013
484 484
464 464
10. Investments in companies accounted for using the equity method The detail of the investments accounted for using the equity method at the end of 2014 and 2013 and of the changes therein in 2014 and 2013 is as follows: 2014
Beginning balance Schoeller-Bleckmann AS (SB Prag) Schoeller-Bleckmann Edelstahlorhr Deutschland, Gmbh (Sberd) Schoeller-Bleckmann Tube France (SBTF) Schoeller-Bleckmann Edelstahlorhr Phonix, kft. Total
Thousands of euros Share of results of companies accounted for using the equity method (1) Liquidation Dividends
293
(123)
425 127 629 1,474
150 3 (17) 13
(612) (612)
Ending balance
-
170
(100) (100)
475 130 775
(1) Although the Tubacex Group exercises control over the above-mentioned companies, they were accounted for using the equity method due to their scant significance in relation to the fair presentation of the Tubacex Group.
In 2014 the company Schoeller-Bleckmann Edelstahlorhr Phönix kft. located in Hungary was liquidated for an amount equivalent to its carrying amount, with no significant impact on profit or loss.
37
2013
Beginning balance Schoeller-Bleckmann AS (SB Prag) Schoeller-Bleckmann Edelstahlorhr Deutschland, Gmbh (Sberd) Schoeller-Bleckmann Tube France (SBTF) Schoeller-Bleckmann Edelstahlorhr Phonix, kft. Total
Thousands of euros Share of results of companies accounted for using the equity method (1) Dividends
Ending balance
283
10
-
293
530 125 672
(105) 2 (43)
-
425 127 629
1,610
(136)
-
1,474
(1) Although the Tubacex Group exercises control over the above-mentioned companies, they were accounted for using the equity method due to their scant significance in relation to the fair presentation of Tubacex, S.A. and Subsidiaries.
11. Financial assets The detail of “Financial Assets” in the consolidated balance sheet as at 31 December 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Non-current: Equity instruments Available-for-sale financial assets Bank loans Other financial assets Current: Held-for-trading financial assets recognised at fair value Other financial assets
284 672 5,008 5,964
283 672 982 14 1,951
59,078 9,283 68,361
3,395 12,187 15,582
On 31 October 2014, an agreement was reached for the purchase of 65% of the share capital of the Italian company IBF S.p.A. for approximately EUR 29.7 thousand. On this date Tubacex prepaid EUR 5 million which are recognised as at 31 December 2014 in "Non-current Financial Assets - Other Financial Assets". The acquisition of this company was completed at the beginning of 2015 (see Note 31). In 2014 the loan granted by the Brazilian subsidiary recognised as at 31 December 2013 under "Noncurrent Financial Assets - Loans" was repaid. The financial assets classified as non-current available-for-sale investments relate to financial investments in medium- and long-term fixed-income investment funds. The carrying amount of the aforementioned investment funds is their fair value.
38
In 2014 the Group received financing in the amount of EUR 55 million from various banks to make the investments established in the Strategic Plan (see Note 31). Until such investments are made the Group has invested this amount in investment funds which generated finance income due to changes in fair value in the amount of EUR 535 thousand recognised under "Finance Income" in the accompanying consolidated statement of profit or loss as at 31 December 2014. These financial instruments are classified, in accordance with the categories established in IFRS 7, in Level 1 of the fair value measurement hierarchy, which corresponds to quoted prices in active markets. The detail of the net gains and losses on financial assets is as follows: Thousands of euros 2014
Finance income applying the amortised cost method Change in fair value Impairment Net gains/(losses) recognised in profit or loss
2013
Availablefor-sale financial assets
Held-fortrading financial assets (derivatives)
Loans and receivables
150 535 (140)
577 -
616 -
766 1,112 (140)
(161) -
545
577
616
1,738
(161)
Total
Availablefor-sale financial assets
Held-fortrading financial assets (derivatives)
Loans and receivables
Total
175 -
707 (464)
707 14 (464)
175
243
257
12. Derivative financial instruments The detail of the derivative financial instruments as at 31 December 2014 and 2013 is as follows: 2014
Notional amount Amount in thousands Unit
Thousands of euros Assets Liabilities NonNoncurrent Current current Current
Total speculative derivatives Forward sales of USD Forward sales of GBP Forward purchases of USD
25,864 1,316 19,923
USD GBP USD
-
-
Hedging derivatives Cash flow hedges Interest rate swaps Forward sales of USD
99,764 500
Euros USD
-
-
577 577
577
-
(496) (24) (520)
(536) (536) (536)
(572) (9) (581) (1,101)
39
2013
Notional amount Amount in thousands Unit Total speculative derivatives Forward sales of USD Forward sales of GBP Forward purchases of USD
Hedging derivatives Cash flow hedges Interest rate swaps Forward sales of USD Forward sales of GBP Forward purchases of USD
12,800 1,400 12,747
60,159 1,750 4,296 10,941
USD GBP USD
Euros USD GBP USD
Thousands of euros Assets Liabilities NonNoncurrent Current current Current
-
175
-
(25) (226) (251)
(182) (182) (182)
(576) (42) (151) (769) (1,020)
175
-
40 40 215
These financial instruments are classified in accordance with the value measurement hierarchy established in IFRS 7, as they reflect other than quoted prices based on observable market data. a)
Forward foreign currency purchase and sale contractsTo manage foreign currency risk the Group has arranged various forward foreign currency purchase and sale contracts for its import and export transactions, respectively. As at 31 December 2014, the Group had forward foreign currency sale contracts amounting to EUR 23,916 thousand (2013: EUR 11,110 thousand) that did not qualify for hedge accounting. The notional amount of the foreign currency held for trading was USD 25,864 thousand (2013: USD 12,800 thousand) and GBP 1,316 thousand (2013: GBP 1,400 thousand). In all cases, these derivatives were arranged as foreign currency sale hedges. The detail as at 31 December 2014 and 2013 of the notional amounts of forward foreign currency sale contracts, by residual maturity and currency, is as follows:
Thousands of euros 2014 US dollars Within one year
22,254
2013 Pounds sterling 1,662
US dollars 9,457
Pounds sterling 1,653
As at 31 December 2014, the speculative forward foreign currency sale contracts gave rise to unrealised losses of EUR 520 thousand (31 December 2013: unrealised gains of EUR 175 thousand and unrealised losses of EUR 25 thousand).
40
As at 31 December 2014, the forward foreign currency sale contracts to which the Group applied hedge accounting gave rise to unrealised losses of EUR 9 thousand (31 December 2013: unrealised gains and losses of EUR 40 and 42 thousand, respectively). Since these hedges were accounted for as cash flow hedges and the forecast hedged sales had not yet been recognised in the balance sheet at the reporting date, all the changes in value of these derivatives were recognised in equity. Also, as at 31 December 2014, the Group had entered into speculative forward foreign currency purchase contracts with a notional amount of EUR 15,826 thousand (2013: EUR 9,913 thousand). As at 31 December 2014, the value of the foreign currency held for speculative purposes was USD 19,923 thousand (31 December 2013: USD 12,747 thousand). In all cases, these derivatives were arranged as foreign currency purchase hedges. The detail as at 31 December 2014 and 2013 of the notional amounts of forward foreign currency purchase contracts, by residual maturity and currency, is as follows:
Thousands of euros US dollars 2014 2013 Within one year
15,826
9,913
As at 31 December 2014, the speculative forward foreign currency purchase contracts gave rise to unrealised gains of EUR 577 thousand (31 December 2013: unrealised losses of EUR 226 thousand). Also, as at 31 December 2014, the Group has no purchase agreements to which future cash flow hedge accounting is applied (31 December 2013: unrealised losses of EUR 151 thousand). Since these hedges were accounted for as cash flow hedges and the forecast hedged purchases had not yet been recognised in the balance sheet at the reporting date, all the changes in value of these derivatives were recognised in equity. The fair values of these forward foreign currency purchase and sale contracts were estimated by discounting the cash flows on the basis of forward exchange rates available in public domain sources. b)
Commodity futuresTo hedge the risks of volatility in the prices of the nickel used in its production process, the Group arranges futures contracts on the price of this commodity. As at 31 December 2014 and 2013, the Group did not have any outstanding nickel futures contracts. The fair values of these nickel swaps were estimated by discounting cash flows, taking into account the difference between the market prices of this commodity available in public domain information sources as at 31 December and the corresponding guaranteed fixed price in each contract. As at 31 December 2014 and 2013, the Group did not have any commodity futures contracts qualifying as hedges.
c)
Interest rate swapsThe Group uses fixed-for-floating interest rate swaps to manage its exposure to changes in interest rates. The detail of the swaps outstanding as at 31 December 2014 and 2013 is as follows:
41
2014
Notional amount in thousands of euros 2,750 2,304 7,000 3,325 750 3,508 2,000 8,000 4,000 6,738 2,167 35,000 10,000 2,222 5,000 5,000
Commencement date
Expiry date
Interest rate
20/01/13 20/01/13 20/11/14 30/09/14 22/12/11 01/01/13 20/06/14 06/05/15 27/01/13 20/08/14 30/09/13 17/07/14 12/11/14 29/06/10 01/01/12 02/01/12
20/07/17 20/07/17 20/05/19 30/06/19 22/06/16 01/08/17 19/06/19 06/05/17 27/07/17 20/02/17 30/06/17 17/07/19 16/11/20 01/04/15 31/12/16 30/12/16
0.990% 0.645% 0.720% 0.355% 2.320% 1.240% 0.690% 0.355% 0.830% 0.800% 1.350% 0.520% 0.360% 1.55% 1.78% 1.79%
Commencement date
Expiry date
Interest rate
29/06/10 01/01/12 02/01/12 20/01/13 20/01/13 19/02/13 02/01/12 22/12/11 01/01/13 27/01/13 25/01/13 30/01/14 30/09/13
01/04/15 31/12/16 30/12/16 20/07/17 20/07/17 03/08/15 30/12/14 22/06/16 01/08/17 27/07/17 25/07/17 31/07/17 30/06/17
1.5500% 1.7800% 1.7900% 0.9900% 0.6450% 0.7400% 2.1480% 2.3200% 1.2400% 0.8300% 0.9600% 0.9400% 1.3500%
2013
Notional amount in thousands of euros 6,667 5,000 5,000 3,000 2,500 6,750 5,000 1,292 2,765 4,000 7,500 8,085 2,600 d)
Cash flow hedgesThe amount of cash flow hedges was transferred in full from equity to profit or loss and the detail of the related lines in the consolidated statement of profit or loss in which the amounts were recognised are as follows:
42
Thousands of euros Gains/(Losses) 2014 2013 Interest rate swaps: - Finance income/costs Commodity price swaps: - Raw materials used Foreign currency hedges: - Exchange differences
e)
350 (144) 206
(616) 97 307 (212)
Adoption of IFRS 13As a result of its adoption of IFRS 13, the Group was required to change its valuation techniques for obtaining the fair value of its derivatives. The Group includes a credit risk adjustment in order to reflect its own risk and that of the counterparty in the fair value of the derivatives using generally accepted valuation models. Specifically, the adjustment for credit risk was calculated by applying a technique based on simulations of expected total exposure (including both current and potential exposure) adjusted by the probability of default over time and by the loss severity (or potential loss) assigned to the Group and to each of the counterparties. The total expected exposure of the derivatives is obtained by using observable market inputs, such as interest rate, exchange rate and volatility curves based on the market conditions at the measurement date. Disclosures on the fair value hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. Upon inception, the fair value of the derivatives arranged by the Group equals their transaction price in their principal market (the retail market). For financial reporting purposes, the fair value measurements are classified into Level 1, 2 or 3 depending on the degree to which the inputs used are observable and their importance for measuring fair value in its entirety, as described below:
Level 1 - These inputs are based on quoted prices (unadjusted) for identical instruments traded in active markets.
Level 2 - These inputs are based on quoted prices for similar instruments in active markets (not included in Level 1), quoted prices for identical or similar assets or liabilities in markets that are not active, and techniques based on valuation models for which all the significant inputs are observable in the market or may be corroborated by observable market data.
Level 3 - The inputs are generally observable and, in general terms, they reflect estimates of the market assumptions for determining the price of the asset or liability. The unobservable data used in the valuation models are significant in the fair values of the assets and liabilities.
43
The Group concluded that most of the inputs used for determining the fair value of the derivative financial instruments are at Level 2 of the hierarchy, including the data used for calculating the credit risk adjustment of the Group and the counterparty. Although the Group made this determination, the credit risk adjustments used Level 3 inputs, such as the credit estimates based on credit ratings or on comparable companies in order to assess the likelihood of default by the company or the company's counterparties. The Group assessed the significance of the credit risk adjustments in the total valuation of the derivative financial instruments and determined that they are not significant. In particular, as a result of the adoption of IFRS 13, the value of the liabilities relating to derivatives recognised as at 31 December 2013 decreased by approximately EUR 1,000. The application of IFRS 13 may affect the effectiveness of the hedges. However, in 2014 the hedges continued to be highly effective, with little impact on the accounting ineffectiveness that would be reflected in the consolidated statement of profit or loss. 13. Inventories The detail of "Inventories" in the accompanying consolidated balance sheet as at 31 December 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Goods held for resale Raw materials and other supplies Work in progress and semi-finished goods Finished goods Advances to suppliers Write-downs
13,207 76,719 61,619 68,451 431 (11,455) 208,972
12,637 61,468 63,715 58,257 823 (10,536) 186,364
The changes in raw materials used, other consumables and goods held for resale in 2014 and 2013 were as follows:
Thousands of euros 2014 2013 Raw materials used, other consumables and goods held for resaleNet purchases Changes in inventories
307,170 (14,526) 292,644
259,403 11,321 270,724
44
The changes in the write-downs of inventories in the accompanying consolidated balance sheet were as follows (in thousands of euros): 2014
Beginning balance Goods held for resale, raw materials and goods held for processing Work in progress Finished goods Inventory write-downs
3,655 1,502 5,379 10,536
Additions
1,117 744 1,861
Reversals
(570) (160) (212) (942)
Ending balance
4,202 1,342 5,911 11,455
2013
Beginning balance Goods held for resale, raw materials and goods held for processing Work in progress Finished goods Inventory write-downs
4,488 1,613 5,641 11,742
Additions
214 1,491 1,705
Reversals
(1,047) (111) (1,753) (2,911)
Ending balance
3,655 1,502 5,379 10,536
Net purchases include those made in the following currencies other than the euro:
Currency US dollars Canadian dollars Pounds sterling Other
Thousands of euros 2014 2013 85,859 10 3
92,069 17 102 1,106
45
14. Trade and other receivables The detail of "Trade and Other Receivables" in the accompanying consolidated balance sheet is as follows:
Thousands of euros 2014 2013 Trade receivables for sales and services Trade receivables from companies accounted for using the equity method (Note 26) Sundry receivables Tax receivables (Note 22) Current tax assets (Note 22) Less-Write-downs Total trade and other receivables
70,526
103,580
175 4,206 21,455 442 96,804 (2,759) 94,045
180 3,936 28,862 763 137,321 (3,119) 134,202
The changes in the write-downs of trade and other receivables were as follows:
Thousands of euros 2014 2013 Balance as at 1 January Write-down for uncollectibility (Note 24) Reversals (Note 24) Amounts used Translation differences Balance as at 31 December
3,119 647 (1,005) (15) 13 2,759
2,797 874 (410) (100) (42) 3,119
The detail of the balances receivable from public authorities at December 2014 and 2013, is as follows:
Thousands of euros 2014 2013 Sundry tax receivables: VAT receivable Other items
19,884 1,571 21,455
26,670 2,192 28,862
15. Cash and cash equivalents The detail of “Cash and Cash Equivalents” in the consolidated balance sheet as at 31 December 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Cash on hand and at banks
40,230 40,230
16,914 16,914
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“Cash and Cash Equivalents” includes basically the Group's cash, short-term bank deposits and promissory notes with an initial maturity of three months or less. The bank accounts earn interest at market rates. There are no restrictions on the use of the balances. 16. Equity and shareholders’ equity a)
Share capitalAt 31 December 2014 and 2013, share capital was represented by 132,978,782 fully subscribed and paid shares of EUR 0.45 par value each. All the shares carry the same voting and dividend rights, except for treasury shares, the voting rights of which are suspended and the dividend rights of which are attributed proportionally to the other shares. All the Parent's shares are listed on the Spanish stock market interconnection system. There are no restrictions on the transferability of the shares. At 31 December 2014, the shareholders Jose María Aristrain de la Cruz and Amber Capital UK LLP held ownership interests of 11% and 6.85%, respectively, in the Parent's share capital.
b)
Share premiumThis reserve is unrestricted.
c)
Legal revaluation reservesThe detail of the legal revaluation reserves is as follows:
Thousands of euros 2014 2013 Revaluation reserve Álava Regulation 4/1997
3,763
3,763
As permitted under corporate and commercial law, at 31 December 1996 the Group revalued its property, plant and equipment. Since the period in which the balance of this reserve could be reviewed by the tax authorities elapsed, the balance of this account may be used, at no tax cost, to: -
Offset prior years’ losses.
-
Increase capital, once the prior years' losses in the balance sheet have been offset and the related appropriations have been made to the legal reserve.
-
Make appropriations to restricted reserves, using the unused portion of the account balance.
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d)
Other reservesThe detail of "Other Reserves" at 31 December 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Legal reserve Voluntary reserves: Other reserves of the Parent Consolidated reserves Total other reserves
11,968
11,968
57,480 114,083 183,531
53,806 109,687 175,461
Legal reserveUnder the Spanish Limited Liability Companies Law, 10% of net profit for each year must be transferred to the legal reserve until the balance of this reserve reaches at least 20% of the share capital. The legal reserve can be used to increase capital provided that the remaining reserve balance does not fall below 10% of the increased share capital amount. Otherwise, until the legal reserve exceeds 20% of share capital, it can only be used to offset losses, provided that sufficient other reserves are not available for this purpose. This reserve had reached the legally required minimum at 31 December 2014. Other reserves of the ParentThese consist of unrestricted voluntary reserves. Consolidated reservesOf the total reserves of consolidated companies, EUR 24,850 thousand related to restricted reserves at 31 December 2014 (31 December 2013: EUR 24,538 thousand). e)
Treasury sharesAt 2014 year-end the consolidated Group companies held the following shares of the Parent:
No. of shares Treasury shares at 2014 year-end
3,142,975
Par value (Thousands of euros) 1,414
Average Total cost of acquisition acquisition price (Thousands (euros) of euros) 2.497
7,850
No changes occurred with respect to 31 December 2013. At the date of preparation of these consolidated financial statements, the Board of Directors had not taken any decision regarding the ultimate use of the aforementioned treasury shares.
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f)
Other equity instrumentsOn 25 March 2013, the Board of Directors of the Parent approved, within the framework of a longterm incentive plan (see Note 3-k), a share option plan for the CEO and eight members of the Group's Management Committee, who are senior executives of the Group (see Note 25). On 29 May 2013, this decision was approved by the shareholders at the Annual General Meeting of the Parent. This share option plan was implemented through a series of agreements with identical characteristics entered into with each of the beneficiaries. The plan grants 1,460,000 share options in total. In all cases, the exercise price is the Tubacex share price at 28 January 2013. The plan establishes various exercise periods at the discretion of each beneficiary, subject to certain conditions:
A voluntary exercise period from 15 January 2016 to 31 March 2016, provided that the Tubacex share price at 31 December 2015 has increased by at least 40% with respect to the share price on 28 January 2013. If the share price has not increased by this percentage at 31 December 2015, the plan will be cancelled and it will not be possible to exercise the options at a future date.
A voluntary exercise period from 15 January 2017 to 31 March 2017, provided that the Tubacex share price at 31 December 2016 has increased by at least 50% with respect to the share price on 28 January 2013. If the share price has not increased by this percentage at 31 December 2016, the plan will be cancelled and it will not be possible to exercise the options at a future date.
A voluntary exercise period from 15 January 2018 to 31 March 2018, provided that the Tubacex share price at 31 December 2017 has increased by at least 60% with respect to the share price on 28 January 2013.
Furthermore, in order to exercise the option rights, the beneficiary must have a continued connection with Tubacex through an employment or commercial relationship until the moment of exercising the option rights in each of the periods described above. The compensation obtained by the beneficiary as a result of the exercise of the options will be determined as the difference between the market price of the shares and the exercise price. In order to value this plan, the Group used binomial trees (Cox, Ross and Rubinstein model). This process assumes that movements in share prices consist of a large number of binomial movements. The model is widely used in financial practice to value transactions, with the aim of including the effect of market conditions in the valuation of equity instruments that have been granted. The main assumptions used in the valuation were as follows:
The five-year interest rate was 1.201%. In order to determine the dividends distributed per share, it was assumed that the dividend yield in 2013 would be maintained in subsequent years. The historical volatility of the last 252 trading sessions was used to determine share price volatility.
To determine the total cost of the plan and the cost to be charged in 2013, the Parent's directors considered that:
All the beneficiaries will meet the requirements to receive the shares. The vesting period will be for five years and, therefore, entitlement will arise in 2018.
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In accordance with the above, the total valuation of the plan at the grant date was estimated to be EUR 830 thousand. As described in Note 3-l, the services provided by the beneficiaries were recognised on an accrual basis by the Group under “Staff Costs”, allocating the fair value of the equity instruments delivered over the term of the plan, which led to a charge of EUR 166 thousand to “Staff Costs” in the accompanying consolidated income statements for 2014 and 2013 (see Note 25) and a credit to “Equity - Other Equity Instruments” in the accompanying consolidated balance sheets as at 31 December 2014 and 2013. g)
Valuation adjustmentsDetail and changesThe detail of and changes in the accounts included in other comprehensive income in 2014 and 2013 were as follows:
Translation differences Balances as at 31 December 2012 Income and expense recognised in the year Transfers to profit or loss Balances as at 31 December 2013 Income and expense recognised in the year Transfers to profit or loss Balances as at 31 December 2014
1,606 (1,657) (51) 5,551 5,500
Thousands of euros Cash flow Tax hedges effect (919) (94) 212 (801) (96) (206) (1,103)
234 26 (59) 201 27 58 286
Net 921 (1,725) 153 (651) 5,482 (148) 4,683
The tax effect relates to the cash flow hedges. Translation differencesThe Group availed itself of the exemption relating to translation differences in IFRS 1, First-time Adoption of International Financial Reporting Standards and, accordingly, the reserves for translation differences included in other comprehensive income are those generated on or after 1 January 2004. h)
Dividends and restrictions on the distribution of dividendsAt its meeting of 18 December 2014 the Board of Directors of the Parent approved the distribution of an interim dividend out of 2014 profit amounting to EUR 3,000 thousand, which was paid in full to the shareholders in January 2015 (see Note 31). These dividend distributions respected the distribution restrictions established in the financing agreements (see Note 18).
i)
Capital management policyThe objectives of the Group's capital management are to safeguard its ability to continue operating as a going concern so that it can continue to provide returns to shareholders, benefit other stakeholders and maintain an optimum capital structure to reduce the cost of capital. In order to maintain and adjust the capital structure, the Group may vary the amounts of the dividends payable to the shareholders, return capital, issue shares or sell assets to reduce debt.
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In line with other groups in the industry, TUBACEX controls its capital structure on the basis of its leverage ratio. This ratio is calculated by dividing net financial debt by equity. Net debt is calculated as the total amount of current and non-current interest-bearing loans and other liabilities, less cash and cash equivalents and current financial assets. The ratios in 2014 and 2013 were calculated as follows:
Thousands of euros 2014 2013 Total financial debt (Note 18) Less - Cash and cash equivalents and current financial assets (Notes 11 and 15) Net debt Equity Debt ratio
260,092
227,080
(108,591) 151,501 285,101 53%
(32,496) 194,584 263,431 74%
The debt ratio decreased significantly in 2014 and 2013 as a result of the efforts made by the Group to reduce current assets (mainly inventories and accounts receivable) and to generate cash for reducing bank borrowings. 17. Provisions Long-term provisionsThe TUBACEX Group has recognised provisions for the estimated amount of tax debts and probable or certain third-party liability arising from litigation in progress, indemnity payments or obligations of an indeterminate amount and collateral and other similar guarantees, the exact amount of which cannot be determined or whose date of payment is uncertain, since this depends on the fulfilment of certain conditions. The amount recognised in this connection at both 31 December 2014 and 2013 was EUR 4,277 thousand (see Note 22-d). In 2013 a reversal of the provision amounting to EUR 1,400 thousand was recognised under "Other Operating Expenses" in the accompanying consolidated statement of profit or loss. Also recognised under this heading are provisions for possible environmental damage totalling EUR 535 thousand (31 December 2013: EUR 331 thousand) (see Note 29).
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Short-term provisionsThe changes in “Short-Term Provisions” in 2014 and 2013 were as follows (in thousands of euros):
Balance as at 31/12/12 Charge for the year Amounts used for their intended purpose Reversals Balance as at 31/12/13 Charge for the year Amounts used for their intended purpose Reversals Balance as at 31/12/14
Other employee benefits 2,499 626 (2,227) (221) 677 819 (677) 819
Emission allowances 260 286 (260) 286 309 (286) 309
Other short-term provisions 3,690 2,178 (1,448) (1,201) 3,219 2,948 (1,192) (204) 4,771
Total 6,449 3,090 (3,935) (1,422) 4,182 4,076 (2,155) (204) 5,899
"Other Short-Term Provisions" includes provisions for possible contingencies relating to trading relationships totalling EUR 3,897 thousand at 31 December 2014 (31 December 2013: EUR 2,464 thousand). The amount ultimately payable will be depend on the final outcome of discussions with the related customers.
Guarantees providedThe TUBACEX Group has provided bank guarantees amounting to EUR 10,865 thousand (2013: EUR 9,894 thousand) to secure the successful completion of certain transactions performed in the ordinary course of its business. The Group's directors consider that the probability of a material liability arising as a result of these guarantees is remote. 18. Current and non-current bank borrowings The detail of these headings in the accompanying consolidated balance sheet as at 31 December 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Non-currentBank loans Long-term credit lines and loans
CurrentDebt instruments and other marketable securities (Note 31) Short-term credit lines and loans Short-term maturities of long-term loans Discounted bills and notes Import and export financing Interest
120,733 120,733
26,197 60,750 32,404 1,205 17,494 1,309 139,359
56,034 37,488 93,522
15,539 72,394 936 43,751 938 133,558
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In 2014 the Tubacex Group obtained financing amounting to EUR 55 million in order to meet the investment commitments budgeted for in the 2015 Strategic Plan (see Note 31). Also, in 2014 the Parent launched a commercial paper issue programme in the Alternative Fixed-Income Market maturing in twelve months with a limit of EUR 29.9 million. At 31 December 2014, EUR 26,197 thousand had been subscribed. This amount is recognised under “Debt Instruments and Other Marketable Securities” on the liability side of the accompanying consolidated balance sheet. In January 2015 the Parent increased the limit of the commercial paper issue programme to EUR 75 million and extended the issue deadline from 12 to 24 months (see Note 31). The amount recognised for loans and other interest-bearing liabilities approximates their fair value. The effective weighted average interest in 2014 of the loans arranged with banks was approximately Euribor + 3% (2013: Euribor + 4.15%). The remaining maturities of the loans and other interest-bearing liabilities under the related agreements at 31 December 2014 and 2013 were as follows:
Thousands of euros 2014 2013
Maturity Within one year Within two years Within three years Within four years Within five years Other
139,359 39,726 33,717 24,013 18,176 5,101 260,092
133,558 69,631 13,938 9,743 210 227,080
The repayment of a portion of the loans and credit facilities amounting to EUR 3,000 thousand (2013: EUR 7,890 thousand) granted by banks to various Group companies is secured by a mortgage on part of the property, plant and equipment. Also securing repayment of a portion of the debt are machinery, inventories and accounts receivable of the Austrian subsidiary amounting to EUR 31,274 thousand, EUR 60,362 thousand and EUR 22,095 thousand, respectively (31 December 2013: EUR 31,274 thousand, EUR 39,517 thousand and EUR 31,802 thousand). The Group has been granted foreign trade and other credit facilities with the following limits (in thousands of euros):
2014 Undrawn Limit amount Foreign trade credit facilities Credit facilities Total
73,250 82,955 156,205
55,756 22,208 77,964
2013 Undrawn Limit amount 76,200 96,067 172,267
32,449 43,040 75,489
The effective weighted average interest of the credit facilities in 2014 was approximately 2.55% (2013: 4.25%). The Group has arranged certain interest rate swaps to exchange the floating rate of several of its credit facilities and loans in order to guarantee a fixed interest rate for the hedged balances (see Note 12).
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19. Other non-current financial liabilities The detail of "Other Non-Current Financial Liabilities" at 31 December 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Non-currentLoans repayable at long term Other
7,062 9,179 16,241
7,468 4,753 12,221
Loans repayable at long term relate to those granted by the Spanish Ministry of Science and Technology to two Group companies, with grace periods of between two and five years in the repayment of the principal, to finance various research and development projects at the two companies. These loans do not bear interest. The remaining long-term maturities of these loans under the related agreements at 31 December 2014 and 2013 were as follows:
Maturity Within two years Within three years Within four years Within five years Other Less- Interest cost
Thousands of euros 2014 2013 1,322 1,307 1,307 1,230 4,240 9,406 (2,344) 7,062
1,307 1,307 1,291 1,256 4,727 9,888 (2,420) 7,468
“Other ” in the table above includes at 31 December 2014 a loan granted by the Basque Finance Institute (Instituto Vasco de Finanzas) amounting to EUR 5,706 thousand maturing in 2025.
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20. Trade and other payables The detail of "Trade and Other Payables" at 31 December 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Trade payables: Third parties Investments accounted for using the equity method (Note 26) Other payablesRemuneration payable Social security taxes payable (Note 22) Payable to public authorities (Note 22) Short-term maturities of repayable loans Other Current tax liabilities (Note 22)
73,996
69,094
342 74,338
325 69,419
8,580 2,406 14,269 853 1,403 27,511 695 102,544
8,971 2,104 17,693 487 6,958 36,213 588 106,220
Disclosures on the payment periods to suppliers. Additional Provision Three. “Disclosure obligation” provided for in Law 15/2010, of 5 July Set forth below are the disclosures required by Additional Provision Three of Law 15/2010, of 5 July, applicable solely to the Group companies located in Spain:
Paid in the maximum payment period Remainder Total payments made in the year Weighted average period of late payment (days) Average payment period Payments at year-end not made in the maximum payment period
Amounts paid and payable at year-end (Thousands of euros) 2014 Amount %
Amounts paid and payable at year-end (Thousands of euros) 2013 Amount %
145,363 159,175 304,538
153,697 147,586 301,283
48% 52% 100%
21 81 3,811
51% 49% 100%
22 3,302
The figures shown in the foregoing table in relation to payments to suppliers relate to suppliers that because of their nature are trade creditors for the supply of goods and services and, therefore, they include the figures relating to “Payable to Suppliers” and “Other Accounts Payable - Sundry Accounts Payable” under “Current Liabilities” in the consolidated balance sheet.
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Weighted average period of late payment was calculated as the quotient whose numerator is the result of multiplying the payments made to suppliers outside the maximum payment period by the number of days of late payment and whose denominator is the total amount of the payments made in the year outside the maximum payment period. The average payment period was calculated as the average period from the date of the invoice up to payment thereof, weighted by the amount of each of the payments in the year. Law 11/2013, of 26 July, established from the date it entered into force a maximum payment period of 30 days, except where a longer period had been agreed to, which under no circumstance shall exceed 60 days. 21. Employee benefits The changes in the obligations to employees in 2014 and 2013 were as follows (in thousands of euros):
Hand-over contract obligations (Note 3-k) Balances as at 31 December 2012 Reversals Expense for the year (Note 25) Benefits paid Balances as at 31 December 2013 Reversals Expense for the year (Note 25) Interest cost relating to provisions Benefits paid Balances as at 31 December 2014
7,137 (227) (2,191) 4,719 (145) (1,964) 2,610
Long-term defined benefit obligations (Note 3-k) 5,574 478 (698) 5,354 (51) 484 712 (322) 6,177
Other longterm employee benefits (Note 3-k) 1,131 700 (45) 1,786 (67) 3,090 (102) 4,707
Other 671 185 (60) 796 370 (42) 1,124
Total 14,513 (227) 1,363 (2,994) 12,655 (212) 4,605 (2,430) 14,618
Hand-over contract obligations In prior years certain Group companies reached agreements with their employees, establishing various plans for the termination of employees who met certain conditions. The liability accrued by these plans was calculated by means of accepted actuarial methods, taking into account mortality assumptions based on the most recent tables in the country in question at 31 December 2014. The discount rate applied was 0.5% (2013: 1.5%) and the salary increase rate assumption was estimated for each company, at an average rise of 3%. Based on the estimates available to the Group's directors, the amount of the obligations for hand-over contracts assumed by the Group applying a change of 1% to the discount rate would not have a significant impact. The obligations for hand-over contracts assumed by the Group amounted to EUR 2,610 thousand at 31 December 2014 (31 December 2013: EUR 4,719 thousand). The estimated amount payable in 2015 totals EUR 2,242 thousand (31 December 2013: estimated amount payable in 2014 of EUR 2,472 thousand). Insofar as the companies domiciled in Spain are concerned, the updated mortality tables on the date of the appraisal, legally recommended for this type of obligation, the PERM 2000 for men and the PERF 2000 for women based on experience in Spain, were used.
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Long-term defined benefit obligations This heading also includes certain statutory obligations to the employees of the SBER sub-group who joined the company prior to 1 January 2003 and that will arise on the date of retirement or when they leave the company for other reasons, pursuant to current legislation in Austria. The total liability accruing on this defined benefit plan was calculated by means of accepted actuarial methods, taking into account the mortality assumptions based on the most recent tables in Austria, and amounted to EUR 6,177 thousand for 31 December 2014 (31 December 2013: EUR 5,354 thousand). The discount rate applied was 2% (2013: 3.50%) and the salary increase rate assumption was 2.60% (2013: 2.75%). Other long-term employee benefits As indicated in Note 3-k, on 25 March 2013 the Parent's Board of Directors approved an incentive plan for the members of the Group's Management Committee who form part of the Group's senior management (see Note 25), which includes the right to receive a multiannual bonus to be calculated as a percentage of the increase in the company’s value between 31 December 2012 and 31 December 2017 (or 31 December 2015 if the group of executives unanimously resolves that the bonus is to be paid in three years). The company's value is defined on the basis of a formula the variables of which are directly linked to the achievement of the objectives of the 2013-2017 Strategic Plan. Also included is the estimate of the accrued amounts payable in the future for certain retirement bonuses to the employees of the SBER sub-group payable upon completing 25, 35 and 40 years of service to the company and consisting of one, two and three months' salary, respectively. Under certain circumstances, Austrian employment legislation allows employees who meet certain conditions to take partial retirement. Employees who avail themselves of this arrangement work 50% of the working day until the date of retirement and are paid 75% of their salary for a full working day, the additional 25% of the salary being borne by the Austrian social security authorities. According to the directors' best estimates, the liability accrued in this connection at 31 December 2014 amounted to EUR 4,707 thousand (31 December 2013: EUR 1,786 thousand), which was recognised with a charge to “Staff Costs” in the accompanying consolidated statement of profit or loss for 2014 amounting to EUR 3,090 thousand (31 December 2013: EUR 700 thousand) (see Note 25) and a credit to “NonCurrent Liabilities - Employee Benefits” in the accompanying consolidated balance sheet as at 31 December 2014. 22. Tax matters At the General Meeting on 29 May 2013, the shareholders of the Parent approved the inclusion in a consolidated tax group of the Parent and certain subsidiaries, located in the Basque Country and subject to the Álava Income Tax Regulation, to file consolidated tax returns from 1 January 2014 in accordance with Title VI, Chapter VI of Álava Income Tax Regulation 37/2013, of 13 December, of the Provincial Government of Álava. The consolidated tax group (no. 01/14/A) is composed of Tubacex, S.A., as Parent, and the Group companies Acería de Álava, S.A.U., Tubacex Tubos Inoxidables S.A.U., Tubacex Taylor Accesorios S.A.U., Comercial de Tubos y Accesorios Especiales S.A.U., Tubacoat S.L., Red Distribuidora de Tubos y Accesorios, S.A.U. and CFT Servicios Inmobiliarios, S.A.U.
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a)
Current tax receivables and tax payables
The detail of the current tax receivables and payables is as follows (in thousands of euros):
Thousands of euros 2014 2013
b)
VAT refundable Other tax receivables Current tax assets Total tax receivables
19,884 1,571 442 21,897
26,670 2,192 763 29,625
VAT payable Accrued social security taxes payable Personal income tax withholdings payable Other payables Income tax payable Total tax payables
11,028 2,406 2,538 703 695 17,370
10,513 2,104 6,254 926 588 20,385
Reconciliation of the accounting profit to the taxable profit
The consolidated income tax expense recognised in 2014 and 2013 was as follows:
Thousands of euros 2014 2013 Current tax Deferred taxesOrigination and reversal of temporary differences
2,761
2,866
6,628 9,389
(892) 1,974
The reconciliation of the consolidated profit before tax to the income tax expense (benefit) is as follows:
Thousands of euros 2014 2013 Consolidated profit before tax Estimated cumulative income tax expense at the tax rate of the Parent (28%) Permanent differences Difference of income tax rates at subsidiaries Current year tax credits and tax relief Tax loss carryforwards taken not recognised in prior years Adjustment of prior years' taxes Total consolidated tax expense (benefit) recognised
32,650
16,609
9,142 917 621 (5)
4,651 258 417 (3,004) (31) (317) 1,974
(1,288) 9,389
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The nature of the tax credits recognised in 2014 and 2013 was as follows:
Thousands of euros 2014 2013 Investments in new non-current assets Contributions to supplementary pension schemes Employee training Other
c)
5 5
2,759 145 28 72 3,004
Deferred tax assets and liabilities
The detail at 31 December 2014 and 2013 of deferred tax assets and liabilities by type is as follows:
Assets 2014 Due to provisions Due to obligations to employees Due to other items Tax loss carryforwards Unused tax credits and tax relief Derivative financial instruments
91 2,546 1,491 17,252 23,532 44,912 44,912
Thousands of euros Liabilities 2013 2014 2013 91 2,871 710 25,139 22,729 51,540 192 51,732
(4,068) (4,068) (286) (4,354)
(3,619) (3,619) (10) (3,629)
In recognising deferred tax assets the Group bears in mind the following:
The Group considers it most likely that sufficient profits will be made in the future to enable it to offset the tax loss carryforwards recognised and, in this connection, the plan drawn up by the Group forecasts an increase in productivity, in sales volumes and, accordingly, in the profitability of the Group's core business. The Group will go ahead with the strategic investments envisaged in its 2013-2017 Strategic Plan, with the development of new products with high added value in the oil, gas, electricity production and nuclear energy industries, which ensure a highly robust competitive position, once the international crisis has been overcome.
The business plan used by the Group to make the estimates that justify and support the recoverability of its deferred tax assets is in line with the market scenario and the specific features of the business.
Based on the foregoing, Group management considers that the recognition of these tax loss and tax credit carryforwards is justified and that they will be used in a period not exceeding ten years.
The Group's directors consider this criterion to be appropriate.
The detail of the changes in deferred tax assets and liabilities by type, recognised against the income tax benefit/expense in the consolidated statement of profit or loss, is as follows:
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Assets 2014 Due to provisions and other items Due to obligations to employees Tax loss carryforwards Unused tax credits and tax relief Total
781 (325) (7,887) 803 (6,628)
Thousands of euros Liabilities 2013 2014 2013 59 (67) (1,689) 2,589 892
(449) (449)
7 7
At 31 December 2014, deferred tax liabilities increased by EUR 400 thousand due to changes in exchange rates (2013: decrease of EUR 112 thousand). At the 2014 and 2013 reporting dates, the detail of the tax loss and tax credit carryforwards recognised in the accompanying consolidated balance sheet, is as follows: 2014
Year arising 2009 2010 2011 2012 2013
Amount (Thousands of euros) 3,986 7,299 4,482 535 950 17,252
2013
Year arising 2008 2009 2010 2011 2012 2013
Amount (Thousands of euros) 1,690 9,015 8,190 4,482 535 1,227 25,139
The total amount of current and deferred income tax, relating to items directly charged or credited to other comprehensive income in 2014 and 2013, is as follows:
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Thousands of euros 2014 2013 Cash flow hedges (Note 12) d)
85
(33)
Years open for review and tax audits
Under current legislation, taxes cannot be deemed to have been definitively settled until the tax returns filed have been reviewed by the tax authorities or until the four-year statute-of-limitations period has expired. At 2014 year-end the Group had 2010 and subsequent years open for review by the tax authorities for income tax, VAT and direct tax withholdings on residents, and the last four years open for all other taxes applicable to it. The Group’s directors consider that the tax returns for the aforementioned taxes have been filed correctly and, therefore, even in the event of discrepancies in the interpretation of current tax legislation in relation to the tax treatment afforded to certain transactions, such liabilities as might arise would not have a material effect on the accompanying consolidated financial statements. Pursuant to the Income Tax Regulation of Álava, where the Parent is domiciled, if under the applicable rules for calculating the tax base, the latter is negative, its amount may be offset without any time limit in Álava and Vizcaya (eighteen years initially and successively after the year in which the loss was incurred at companies with registered offices in other parts of Spain), for which the amount may be apportioned in the proportion deemed fit. The tax loss will be offset when the income tax return is filed, without prejudice to the tax authorities' inspection powers. However, with effect from 1 January 2014, on the approval of Álava Income Tax Regulation 37/2013, of 13 December, a fifteen-year time limit was established for offsetting tax losses (both those generated prior and subsequent to the date of entry into force of the regulation). The Group's directors consider that this tax legislation does not have an impact on the recoverability of the tax loss and tax credit carryforwards that it had recognised at 31 December 2014, since it estimates their recovery within ten years, in accordance with current accounting standards. The legislation for the settlement of 2014 income tax applicable to Tubacex, S.A., Acería de Álava, S.A.U., Comercial de Tubos y Accesorios Especiales, S.A.U., Tubacex Taylor Accesorios, S.A.U., Tubacex Tubos Inoxidables, S.A.U. and Tubos Mecánicos Norte, S.A.U. is Álava Regulation 24/1996, of 5 July, which was in force at 31 December 2014, despite the various appeals filed in this connection, on which a final decision has not yet been issued. On 20 October 2014, the provincial government of Álava notified the Parent, Tubacex, S.A. and the subsidiary Tubacex Tubos Inoxidables, S.A.U. of the commencement of general review and investigation procedures to check compliance with their obligations and duties to the aforementioned administration with respect to the following taxes and years:
Income tax, VAT, and direct tax withholdings on residents for the years 2010 to 2013. Non-statute-barred taxable events relating to non-resident income tax withholdings, transfer tax and stamp duty.
At the end of 2014, this review was still underway, although the Group considers that no additional liabilities would arise from the procedures that would have a significant effect on the consolidated financial statements taken as a whole.
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23. Earnings (loss) per share a)
Basic earningsBasic earnings per share are calculated by dividing the profit/loss for the year attributable to the Parent's shareholders by the weighted average number of ordinary shares outstanding during the year, excluding treasury shares.
2014 Earnings/Loss attributable to the Parent's ordinary shareholders Weighted average number of ordinary shares outstanding (Note 16) Basic earnings per share (euros)
23,761
2013
15,014
129,835,807 129,835,807 0.183 0.116
The average number of ordinary shares outstanding was calculated as follows:
Ordinary shares outstanding at 1 January 2014 and 2013 Effect of treasury shares (Note 16) Weighted average number of ordinary shares outstanding at 31 December 2014 and 2013 b)
132,978,782 (3,142,975) 129,835,807
Diluted earningsDiluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to reflect the conversion of all the dilutive potential ordinary shares. The Parent does not have any dilutive potential ordinary shares.
24. Other operating income and expenses The detail of “Other Operating Income” in the consolidated statements of profit or loss for 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Grants related to income Transfer of grants to income (Note 3-a) Excessive provisions Other income
50 1,353 5,238 6,641
135 1,052 72 5,122 6,381
“Other Income” in 2014 and 2013 includes the losses sustained from the fires that took place in the production facilities of a TUBACEX Group company in 2014 and 2013, less the compensation agreed to with the insurance company.
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The detail of “Other Operating Expenses” in the consolidated statements of profit or loss for 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Operating lease expenses Repair and upkeep expenses Independent professional services Transport Insurance premiums Utilities Taxes other than income tax Other expenses Change in operating allowances (Note 14)
1,065 15,933 7,137 12,923 1,932 33,453 844 14,958 (274) 87,971
1,059 15,314 6,946 12,364 1,702 31,063 612 21,792 464 91,316
25. Staff costs The detail of “Staff Costs” in 2014 and 2013 is as follows:
Thousands of euros 2014 2013 Wages, salaries and similar expenses Contributions to pension plans Social security costs Other employee benefit costs Provisions for employee benefits and long-term incentive plan (Notes 16-f and 21)
82,738 1,839 27,397 3,406
83,419 1,935 24,776 3,176
3,692 119,072
1,529 114,835
The average number of Group employees, by professional category, in 2014 and 2013 was as follows:
Professional category Senior executives Line personnel and middle management Clerical staff Manual workers Total
2014 9 167 388 1,363 1,927
2013 8 162 396 1,381 1,947
63
Also, the distribution of the workforce, by gender and category, at the end of 2014 and 2013 was as follows:
2014 Professional category
Men
Directors Managers Graduates Line personnel and middle management Clerical staff Manual workers Total
2013 Women
10 9 81 123 187 1,268 1,678
Men
1
Women
10 8 75 102 163 1,314 1,672
24 22 143 66 256
1 21 22 135 78 257
26. Related party transactions and balances Related party transactions The detail of the transactions with related parties in 2014 and 2013, the effects of which were not eliminated on consolidation (see Note 10), is as follows: 2014
Revenue Schoeller-Bleckmann Group
Procurements
Other operating income
Other operating expenses
Finance income
Finance costs
996
-
108
-
-
-
996
-
108
-
-
-
Other operating expenses
Finance income
Finance costs
2013
Revenue Schoeller-Bleckmann Group
Procurements
Other operating income
952
-
358
-
-
-
952
-
358
-
-
-
Related party balances The amount of the related party balances in the consolidated balance sheets as at 31 December 2014 and 2013 is as follows (in thousands of euros):
64
2014
Balances receivable
Schoeller-Bleckmann Group
Balances payable Current financial liabilities Derivative Bank financial borrowings instruments
Other noncurrent financial assets (Note 11)
Trade and other receivables (Note 14)
Derivative financial instruments
Other current financial assets
Cash and cash equivalents
Non-current financial liabilities Bank borrowings
-
175
-
-
-
-
-
-
(342)
-
175
-
-
-
-
-
-
(342)
Trade and other payables (Note 20)
2013
Balances receivable Trade and other receivables (Note 14)
Derivative financial instruments
Other current financial assets
Cash and cash equivalents
-
180
-
-
-
-
-
-
(325)
-
180
-
-
-
-
-
-
(325)
Other noncurrent financial assets Schoeller-Bleckmann Group
Balances payable Current financial liabilities Derivative Bank financial borrowings instruments
Non-current financial liabilities Bank borrowings
Trade and other payables (Note 20)
27. Remuneration of executives The remuneration earned by the key executives in the years ended 31 December 2014 and 2013 was as follows:
Thousands of euros 2014 2013 Current employee remuneration, executives Post-employment benefits
2,173 104 2,277
1,842 101 1,943
In addition, as a result of the introduction of a long-term incentive scheme for certain senior executives approved by the shareholders at the General Meeting of 29 May 2013 (see Notes 3-k, 3-l, 16 and 21), an additional liability amounting to EUR 1,782 thousand arose in 2014 (2013: EUR 469 thousand). At 31 December 2014 and 2013, the Group's senior executives had not been granted any advances or loans. Post-employment benefits relate mainly to contributions made to a defined contribution plan at a voluntary community pension entity (EPSV). 28. Disclosures relating to the Parent's directors a)
Remuneration of and balances with the Parent's directorsIn 2014 the members of the Board of Directors earned remuneration amounting to EUR 771 thousand in the form of fixed fees and fees for attendance at the board meetings. In 2013 this amount totalled EUR 883 thousand in the form of fees for attendance at Board and committee meetings, and bylawstipulated emoluments. At the General Meeting of 29 May 2013, the shareholders modified the remuneration of the Board of Directors. The variable items for fixed fees were eliminated, the unit amount of the fee for attendance at Board meetings was updated and that for committee meetings was eliminated. These amounts do not include in any case the additional remuneration earned by directors who perform representative or executive tasks, which in 2014 amounted to EUR 1,636 thousand (2013: EUR 874 thousand), of which EUR 1,102 thousand related to the introduction of the long-term incentive plan for certain senior executives, approved by the shareholders at the General Meeting of 29 May 2013 (2013: EUR 284 thousand) (see Notes 3-k, 3-l, 16 and 21), and EUR 28 thousand related to post-employment benefits (primarily contributions to a defined contribution plan defined in a voluntary community pension entity (EPSV)) (2013: EUR 28 thousand). Lastly, in 2014 the members of the Board of Directors earned EUR 134 thousand (2013: EUR 135 thousand) in the form of attendance fees and bylaw-stipulated emoluments in relation to boards of directors of other companies of the consolidated group. At 31 December 2014 and 2013, they had no balances of advances or loans from the Group. At 31 December 2014 and 2013, the Group did not have any pension or life insurance obligations to the former or current members of the Parent's Board of Directors, nor had it assumed any obligations in the form of guarantees on their behalf.
66
b)
Transactions outside the normal course of business or not on an arm’s length basis performed by the members of the Parent’s directorsIn 2014 the Parent’s directors did not perform any transactions with the Company or the Group companies that were outside the normal course of business or were not on an arm’s length basis.
c)
Ownership interests and positions held in other companies by the Parent's directors and persons related to themAt the end of 2014, none of the members of the Board of Directors of Tubacex, S.A., or individuals related to them, as provided for in the Spanish Limited Liability Companies Law, had entered into relationships with other companies which, due to their activities, were in conflict with their or the Parent's interests, and neither were the Board of Directors or the other directors informed of any situation of conflict of interest in accordance with Article 229 of the aforementioned law. Accordingly, these consolidated financial statements include no disclosures in this connection.
29. Information on the environment The Group's operations are governed by the laws on environmental protection (“environmental laws”) and workers' safety and health (“occupational safety laws”). The Group considers that such laws are substantially complied with and it also has procedures in place aimed at fostering and ensuring compliance. In the year ended 31 December 2014, the Group made investments for a net amount of approximately EUR 2,793 thousand (2013: EUR 1,664 thousand) and incurred expenses of EUR 2,431 thousand (2013: EUR 1,993 thousand) in environmental protection, consisting mainly of the removal of acids, repairs and upkeep, as well as advisory and audit services provided by independent professionals. The Group did not receive any grants related to environmental protection in 2014 or 2013. At 31 December 2014, except for a provision totalling EUR 569 thousand, recognised under "Long-Term Provisions" and "Short-Term Provisions" in the accompanying consolidated balance sheet (2013: EUR 430 thousand) relating to one of the subsidiaries domiciled in the US, to cover the risk of water pollution (see Note 17), the amount of which was appraised by an independent valuer, the Group had not recognised any other provisions for possible environmental liabilities, since the directors consider that there are no material contingencies relating to possible lawsuits, indemnifications or similar circumstances. 30. Fees paid to auditors In 2014 the fees for financial audit and other services provided by the auditor of the Group’s consolidated financial statements, Deloitte, S.L., or by firms in the Deloitte organisation, and the fees billed by the auditors of the separate financial statements of the consolidated companies, and by companies related to these auditors as a result of a relationship of control, common ownership or common management, were as follows (in thousands of euros):
2014 Audit services Other attest services Total audit and related services Tax advisory services Other services Total audit and related services
278 40 318 37 154 509
2013 348 10 358 13 44 415
67
Also, fees billed by other auditors for audit services in 2013 amounted to EUR 87 thousand (2013: EUR 32 thousand). 31. Events after the reporting period Acquisition of IBF, S.p.A. On 9 January 2015, Tubacex, S.A. completed the acquisition of 65% of the Italian company IBF S.p.A., and gained control over the company on that date. The new TUBACEX Group company has industrial installations in Vittuone (tubes) y San Nicoló (industrial pieces and accessories), both of which are located in the north of Italy. IBF, S.p.A. has a workforce of approximately 300 employees and its revenue in 2014 was around EUR 148 million (2013: approximately EUR 135 million). The transaction is part of the growth strategy envisaged in TUBACEX's 2013-2017 Strategic Plan, and will enable the Group, inter alia, to supplement its product range, progress the value chain, raise its presence in the oil and gas and energy industries and increase its presence in the Asian market. The consideration given for the acquisition of 65% of the shares of IBF, S.p.A. amounted to EUR 29.7 million, of which EUR 5 million were paid on 31 October 2014, recognised under “Non-Current Financial Assets - Other Financial Assets” in the accompanying consolidated balance sheet as at 31 December 2014; the outstanding amount was paid on 9 January 2015. This amount is subject to adjustments following its completion which are habitual in transactions of this kind. TUBACEX has a purchase option for the remaining 35%. The directors of the TUBACEX Group are currently performing the necessary assessments in order to apply the acquisition method to account for this business combination. Agreement for the acquisition of Prakash Steelage Limited On 13 February 2015, the TUBACEX Group entered into a binding agreement to acquire 67.53% of the Indian company Prakash Steelage Limited's seamless stainless steel tubes business. This company has a workforce of 250 employees and its revenue in 2014 was approximately EUR 25 million. It engages mainly in the manufacture of tubes for the petrochemical and oil and gas industries. This transaction is expected to be completed in the coming months, once the conditions precedent established in this type of transaction have been fulfilled. This acquisition reinforces TUBACEX's position in the developing and fastest-growing markets, where the Group continues to increase its commercial presence. The transaction will give rise to a payment of INR 2,000 million (EUR 27.4 million at 13 February 2015) although this amount is subject to potential adjustments on completion of the transaction. 2014 interim dividend On 20 January 2015, the Parent distributed an interim dividend amounting to EUR 3 million out of profit for 2014, which was approved by the Board of Directors on 18 December 2014. Extension of the commercial paper issue programme in the Alternative Fixed-Income Market (MARF) On 21 January 2015, the TUBACEX Group increased the limit of its commercial paper issue programme up to EUR 75 million. As well as increasing the programme's economic limit, it has also extended the issue period from 12 to 24 months. The TUBACEX Group is using this initiative to diversify its sources of financing beyond traditional banks in order to optimise its finance costs.
68
32. Explanation added for translation to English These consolidated financial statements are presented on the basis of the regulatory financial reporting framework applicable to the Group (see Note 2-a). Certain accounting practices applied by the Group that conform with that regulatory framework may not conform with other generally accepted accounting principles and rules.
69
APPENDIX Page 1 of 2
TUBACEX, S.A. AND SUBSIDIARIES INFORMATION RELATING TO THE SUBSIDIARIES IN THE YEAR ENDED 31 DECEMBER 2014
Percentage of ownership
Company
Thousands of euros
Share capital
Reserves and other equity items
Income statement
Interim dividend
Total shareholders' equity
Carrying amount
Dividend received 2014
Location / Registered office
Line of business
Auditor
Direct
Indirect
Total
Álava (Spain)
Manufacture of steel
Deloitte
99.99
-
99.99
7,300
39,579
2,514
-
49,393
21,271
Comercial de Tubos y Accesorios Especiales, S.A.U. CFT Servicios Inmobiliarios, S.A.U. Newco Metals B.V. Special Steels do Brasil
Álava (Spain) Álava (Spain) The Netherlands Brazil
Marketing of tubes Marketing of tubes Holding company Marketing of tubes
100.00 100.00 -
51.00 40.80
100.00 100.00 51.00 40.80
1,142 60 800 927
7,015 (654) (6) (1,060)
794 (1,340) (882)
-
8,951 (1,934) 794 (1,015)
1,306 60
-
Red Distribuidora de Tubos y Accesorios, S.A.U. (R.T.A.) Schoeller - Bleckmann Edelstahlrohr Inmobilien AG Schoeller - Bleckmann Edelstahlrohr AG (subgroup)
Álava (Spain) Ternitz (Austria) Ternitz (Austria)
100.00 100.00 100.00
-
100.00 100.00 100.00
76 70 3,500
4,349 4,378 42,875
133 (114) 1,244
-
4,558 4,334 47,619
3,197 3,151 55,553
-
Ternitz (Austria) Ternitz (Austria) Prague (Czech Republic) Düsseldorf (Germany) Paris (France) Budapest (Hungary) New York (USA)
Marketing of tubes Property development Manufacture and marketing of tubes Technical assistance services Technical assistance services Marketing of tubes Marketing of tubes Marketing of tubes Marketing of tubes Holding company
Deloitte n/a n/a Grant Thornton n/a Deloitte Deloitte
100.00
100.00 100.00 100.00 100.00 80.00 100.00 -
100.00 100.00 100.00 100.00 80.00 100.00 100.00
Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup 21,344 2,230 41,668 5,106
-
Pennsylvania (USA)
Manufacture of tubes
-
100.00
100.00
Included in “Tubacex America Holding Corporation” subgroup
Houston (USA)
Marketing of tubes
-
100.00
100.00
Included in “Tubacex America Holding Corporation” subgroup
Álava (Spain) Álava (Spain)
100.00 99.99
-
100.00 99.99
8,891 15,028
6,003 35,388
296 8,975
Deloitte
100.00
-
100.00
5,437
19,334
831
Álava (Spain)
Manufacture of fittings Manufacture and marketing of tubes Manufacture and marketing of carbon steel tubes Marketing of carbon steel tubes
Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Grossman Yanak & Ford Grossman Yanak & Ford Grossman Yanak & Ford Deloitte Deloitte
Deloitte
-
100.00
100.00
Soissons (France)
Marketing of tubes
KPMG
100.00
-
100.00
500
1,707
Tubacex Innovación, AIE Tubacoat, S.L.
Álava (Spain) Vizcaya (Spain)
n/a n/a
91.67 75.00
-
91.67 75.00
6 30
Tubacex Services, S.L.
Cantabria (Spain)
Innovation Industrial development and marketing of long steel products Manufacture and marketing of special steel tubes
n/a
81.00
-
81.00
3,704
Acería de Alava, S.A.U.
Schoeller - Bleckmann Technisches Service GmbH Schoeller - Bleckmann Technisches Service GmbH & Co. KG Schoeller - Bleckmann AS Schoeller - Bleckmann Edelstahlrohr Deutschland GmbH Schoeller - Bleckmann Tube France Schoeller - Bleckmann Edelstahlrohr Phönix Kft Tubacex America Holding Corporation (subgroup)
Salem Tube Inc.
Tubacex America, Inc.
Tubacex Taylor Accesorios, S.A.U. Tubacex Tubos Inoxidables, S.A.U. Tubos Mecánicos, S.A.U. (subgroup) Tubos Mecánicos Norte, S.A.U. Metaux Inox Services, S.A.S.
Barcelona (Spain)
18,094
-
(3,000)
15,190 56,391
11,877 15,025
-
-
25,602
7,547
-
1,082
-
5 23
-
3,000
-
1,000
Included in “Tubos Mecánicos Norte” subgroup 347
-
2,554
(1,364) (41)
37 (22)
-
(1,321) (33)
2,792
(191)
-
6,305
128,203
1,000
This Appendix is an integral part of Note 1 to the consolidated financial statements for 2014 and should be read in conjunction therewith.
69
APPENDIX Page 2 of 2
TUBACEX, S.A. AND SUBSIDIARIES INFORMATION RELATING TO THE SUBSIDIARIES IN THE YEAR ENDED 31 DECEMBER 2013
Percentage of ownership
Company
Thousands of euros
Share capital
Reserves and other equity items
Location / Registered office
Line of business
Auditor
Direct
Indirect
Total
Acería de Alava, S.A.U. Comercial de Tubos y Accesorios Especiales, S.A.U. CFT Servicios Inmobiliarios, S.A.U. Newco Metals B.V. Special Steels do Brasil
Álava (Spain) Álava (Spain) Álava (Spain) The Netherlands Brazil
Manufacture of steel Marketing of tubes Marketing of tubes Holding company Marketing of tubes
99.99 100.00 100.00 -
51.00 40.80
99.99 100.00 100.00 51.00 40.80
7,300 1,142 60 800 927
39,920 6,642 13 (6) (130)
Red Distribuidora de Tubos y Accesorios, S.A.U. (R.T.A.) Schoeller - Bleckmann Edelstahlrohr Inmobilien AG Schoeller - Bleckmann Edelstahlrohr AG (subgroup)
Álava (Spain) Ternitz (Austria) Ternitz (Austria)
100.00 100.00 100.00
-
100.00 100.00 100.00
76 70 3,500
4,210 4,221 45,649
Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte
100.00 100.00 99.99
100.00 100.00 100.00 100.00 80.00 100.00 100.00 100.00 100.00 -
100.00 100.00 100.00 100.00 80.00 100.00 100.00 100.00 100.00 100.00 100.00 99.99
Deloitte
100.00
-
100.00
Álava (Spain)
Marketing of tubes Property development Manufacture and marketing of tubes Technical assistance services Technical assistance services Marketing of tubes Marketing of tubes Marketing of tubes Marketing of tubes Holding company Manufacture of tubes Manufacture of tubes Marketing of tubes Manufacture of fittings Manufacture and marketing of tubes Manufacture and marketing of carbon steel tubes Marketing of carbon steel tubes
Deloitte Deloitte n/a n/a Grant Thornton n/a Deloitte Deloitte
Deloitte
-
100.00
100.00
Soissons (France)
Marketing of tubes
KPMG
100.00
-
100.00
500
Tubacex Innovación, AIE Tubacoat, S.L.
Álava (Spain) Vizcaya (Spain)
n/a n/a
91.67 75.00
-
91.67 75.00
6 30
Tubacex Services, S.L.
Cantabria (Spain)
Innovation Industrial development and marketing of long steel products Manufacture and marketing of special steel tubes
n/a
81.00
-
81.00
3,704
Schoeller - Bleckmann Technisches Service GmbH Schoeller - Bleckmann Technisches Service GmbH & Co. KG Schoeller - Bleckmann AS Schoeller - Bleckmann Edelstahlrohr Deutschland GmbH Schoeller - Bleckmann Tube France Schoeller - Bleckmann Edelstahlrohr Phönix Kft Tubacex America Holding Corporation (subgroup) Altx Inc. Salem Tube Inc. Tubacex America, Inc. Tubacex Taylor Accesorios, S.A.U. Tubacex Tubos Inoxidables, S.A.U. Tubos Mecánicos, S.A.U. (subgroup) Tubos Mecánicos Norte, S.A.U. Metaux Inox Services, S.A.S.
Ternitz (Austria) Ternitz (Austria) Prague (Czech Republic) Düsseldorf (Germany) Paris (France) Budapest (Hungary) New York (USA) New York (USA) Pennsylvania (USA) Houston (USA) Álava (Spain) Álava (Spain) Barcelona (Spain)
18,094
8,891 15,028 5,437
Income statement
Interim dividend
Total shareholders' equity
Carrying amount
(341) 373 (667) (973)
-
46,879 8,157 (594) 794 (176)
21,271 1,306 60 -
-
139 157 (2,774)
-
4,425 4,448 46,375
3,197 3,151 55,553
-
Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup Included in “Schoeller - Bleckmann Edelstahlrohr AG” subgroup 17,810 3,534 39,438 5,106 Included in “Tubacex America Holding Corporation” subgroup Included in “Tubacex America Holding Corporation” subgroup Included in “Tubacex America Holding Corporation” subgroup 5,747 256 14,894 11,877 29,569 6,819 51,416 15,025 18,743
Dividend received 2013
591
-
24,771
1,000
-
1,000
7,547
-
1,082
-
5 23
-
3,000
-
Included in “Tubos Mecánicos Norte” subgroup 1,581 (726) (14) 2,796
126
-
2,207
(638) (27)
-
(1,358) (11)
(4)
-
6,496
128,203
2,000
This Appendix is an integral part of Note 1 to the consolidated financial statements for 2013 and should be read in conjunction therewith.
70
Translation of a report originally issued in Spanish. In the event of a discrepancy, the Spanish-language version prevails.
Tubacex, S.A. and Subsidiaries composing the TUBACEX Group Consolidated Directors' Report for the year ended 31 December 2014 Following a slight slowdown in the world economy in 2013, there was a certain degree of improvement in 2014 from the macroeconomic standpoint, with global growth at year-end expected to be above 3%. This positive trend was observed in practically all the benchmark economies, albeit with sharp differences in different geographical areas. The United States recovered at a good rate in 2014, ending the year with growth of around 2.5% and an economy that has consolidated growth quarter by quarter. As for the euro zone, growth was slower and at very different rates in different countries. While growth in Spain accelerated at the end of 2014, Germany grew at a more moderate rate and the Italian economy contracted again. The emerging economies, for their part, continued to post significant growth, albeit well below historical rates. The block of emerging economies ended 2014 with growth of 4.4%, slightly below the level registered in 2013 (+4.7%) but far from that of 2012 (+6.2%). This block continued to be led by China, which continued to record growth rates above 7% despite a slight slowdown. Disparities between the emerging countries also increased, with the relative stability of India and Mexico contrasting with the uncertainties in Russia and Brazil. In this context of the global economy, investment in the oil, energy and petrochemical industries in 2014 increased with respect to 2013. The positive trend in the variables that determine the performance of investments in these industries (mainly the levels of energy demand and access to financing by project promoters) persisted in 2014, leading to a boost in end demand for the products manufactured by the Tubacex Group for these industries. The macroeconomic imbalances between the United States and the euro zone, which are discussed above, have led to a depreciation of the euro since the middle of 2014, and the currency ended the year down by 12%. Although Tubacex has a natural hedge of the exchange differences arising from the sales it makes in dollars and the raw material purchases that are also indexed to the US currency, the Company normally has a positive exposure to the dollar and, accordingly, the strength of that currency benefits it. In the commodity markets, particularly in the case of the basic raw materials used in the business (nickel, stainless steel scrap, molybdenum and chromium), prices surged at the beginning of the year before levelling out during the second half. Average nickel prices, based on average market prices on the London Metal Exchange (LME) stood at USD 16,932 per tonne, up 12% on the average price in 2013, which was USD 15,079 per tonne. Over the year as a whole, nickel started 2014 at USD 14,000 per tonne and, after rising by 34% until June, started falling back continuously to end the year at USD 15,025 per tonne, a rise of 7.3% on the price at the beginning of the year. The other two alloys with a significant weight in the Group's procurements for the manufacture of stainless steel are molybdenum and chromium, and the prices of both performed similarly to that of nickel. The price of molybdenum, which started the year with a sharp rise that levelled out in the second half, leaving an average price of USD 28,238 per tonne, 9% above the average price for 2013. After a slight rise in the second quarter of 2014, chromium prices slid back gradually over the rest of the year. Similarly, the price of stainless steel scrap also followed the same positive path in the first half, only to suffer a correction in the second half of the year and end 2014 with a slight increase over 2013. The fall in oil prices that started in the third quarter intensified in the fourth. Brent ended the year at USD 55.5 a barrel, down 50% in the year. This trend continued in the first few weeks of 2015, when Brent hit a four-year low of around USD 45, although in February it seemed to have stabilised at around USD 60 a barrel. TUBACEX considers that current price levels are not structural and, accordingly, has restated its full confidence in its commitment to the upstream sector and the sound outlook for investment in the oil and gas industry in the medium term.
New orders increased in 2014 compared to 2013, due especially to the positive performance of oil and gas related industries However, the aforementioned sharp fall in oil prices in the last quarter of the year led to a slight slowdown in new orders in that period. The improvement in the product mix, due to the performance of the projects market, coupled with intense efforts carried out by the Group to improve its competitiveness and enhance its efficiency, enabled it to end 2014 with major growth in its results and margins.
1.
GROUP BUSINESS PERFORMANCE IN 2014 To provide a detailed analysis of the performance of the main business variables in 2014, changes in the main headings in the consolidated statement of profit or loss are examined below, together with the most significant events of the Group's financial, sales and industrial activity. 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.1
Analysis of the Group's consolidated statement of profit or loss. Financial activity. Risk management policy. Commercial activity. Industrial activity. Strategic Plan. Competitiveness programme. Analysis of the Group's consolidated statement of profit or loss
For comparison purposes, the main headings of the consolidated statements of profit or loss for 2014, 2013 and 2012 (in millions of euros) are discussed below.
% 2014 Net sales 546.65 Other income 9.44 Changes in inventories 7.73 Total operating amount 563.82 Procurements and purchases -292.64 Staff costs -119.07 Outside and operating expenses -87.97 Gross profit from operations 64.13 Depreciation and amortisation charge and -20.47 impairment losses Net profit from operations 43.66 Financial loss -11.48 Exchange differences 0.47 Profit from ordinary activities 32.65 Income tax -9.39 Net profit for the year 23.27 Non-controlling interests 0.50 Profit attributable to the Parent 23.76
%
100.00 1.73 1.41 103.14 -53.53 -21.78 -16.09 11.73 -3.75
2013 554.15 9.04 -35.05 528.14 -270.72 -114.84 -91.32 51.26 -19.75
7.99 -2.10 0.09 5.97 -1.72 4.26 0.09 4.35
31.52 -13.49 -1.42 16.61 -1.97 14.63 0.38 15.01
%
100.00 1.63 -6.32 95.31 -48.85 -20.72 -16.48 9.25 -3.56
2012 532.42 5.89 30.39 568.71 -333.19 -108.58 -81.16 45.78 -19.24
100.00 1.11 5.71 106.8 -62.60 -20.39 -15.24 8.60 -3.61
5.69 -2.43 -0.26 3.00 -0.36 2.65 0.07 2.71
26.54 -13.41 0.01 13.13 -1.04 12.09 -0.23 11.86
4.98 -2.52 0.00 2.47 0.20 2.66 -0.04 2.23
In terms of trends, following is an analysis of the most noteworthy of the changes in the consolidated statement of profit or loss: -
Sales fell by 1.4% in 2014, compared with the 2013 figure. This was due to the slight decrease in volumes billed and the price pressure on the Group's products and commodities
-
The ratio of cost of procurements to net sales increased from 48.9% at 2013 year-end to 53,5%, although if this ratio were calculated on net sales plus changes in inventories, it would stand at 52.8%, which is in line with the 52.2% for 2013.
2
-
Staff costs increased by 3.7%. The Group's headcount fell from an average of 1,947 in 2013 to an average of 1,927 in 2014, a net reduction of 20 people. Salaries at Tubacex, Tubacex Tubos Inoxidables and Acería de Álava rose in line with the increase in CPI (negative in 2014) and, therefore, the increase in staff costs was due to the rise in higher-cost employees and the increase in overtime.
-
The Group's "Other Operating Expenses" decreased by 3.7% with respect to 2013, and their percentage of sales improved from 16.5% in 2013 to 16.1% at 2014 year-end.
-
The Group's bank borrowings decreased markedly over the year, despite the increase in the level of business activity. The intense efforts made by the Group to reduce working capital led to a EUR 43.1 million reduction in net borrowings (calculated as explained in section 1.2 of this report) in 2014.
-
This reduction in net borrowings enabled the Group's financial losses to be reduced to EUR 11.48 million, down 14.9% on 2013.
-
In the past, Tubacex had a natural hedge of exchange rate fluctuations since a major proportion of its procurements are denominated in US dollars although there has always been a slight positive exposure to the dollar. Therefore, the impact of the sharp depreciation in the euro in 2014 is low but positive: EUR 0.47 million.
-
In the income tax line, the effective tax rate stood at 28.8%.
1.2
Financial activity
The equity attributable to the Parent stood at EUR 282.2 million at the 2014 reporting date, representing 40.3% of total equity and liabilities (2013: 40.8%). The Parent's level of net debt (loans and other current and non-current credit lines less current financial assets and cash and cash equivalents) to equity stood at 53.7%, compared with 74.9% in 2013. These ratios show the financial soundness of the Tubacex Group, which managed to reduce its level of borrowings and increase its activity at the same time. As usual, given the production dynamics of the Group, which manufactures most of its products to order, the most significant portion of its borrowings is used to finance its operating working capital. At the 2014 reporting date, this (non-financial) working capital amounted to EUR 202.4 million, thereby amply covering the EUR 151.5 million of the Group's net borrowings at that date. The Group's long-term financial debt at 31 December 2014 amounted to EUR 120.7 million, which represents 46.4% of the total debt, compared to 41% in 2013. In 2014, the stock market price of Tubacex's shares increased by 7.3%, a better performance than that of Spain's main stock market index, the IBEX-35, which rose by 3.7%, and significantly better than the performance of the IBEX MEDIUM CAP (which includes market capitalisation values more similar to that of Tubacex), which declined by 1.8% in the year. Tubacex's share price rose from EUR 2.89 per share at the end of 2013 to its 2014 closing price of EUR 3.10 per share. The share price peaked in September at EUR 4.33 per share, whereas the lowest price was in January, at EUR 2.75 per share. In 2014 a total of 162.0 million shares were traded on the stock market, up 50% on the volume traded in 2014 (108.1 million shares). The volume traded indicates a rotation of 122% of the Parent's total number of shares, numbering 132.98 million. Actual trading in 2014 amounted to EUR 539.7 million, double the amount traded in 2013, when the value of shares traded in the year stood at EUR 271.9 million. The Parent's stock market capitalisation at 31 December 2014 amounted to EUR 412.2 million, representing an increase of 7.3% with respect to the end of 2013, when its capitalisation amounted to EUR 384.3 million. In 2013 Tubacex's shares were included in the "IBEX MEDIUM CAP" index, comprising the 20 securities with the highest adjusted free-float capitalisation other than the thirty-five securities in the "IBEX 35". As mentioned previously, this index fell by 1.8% in 2014.
3
1.3
Risk management policy
It should be highlighted that in 2014 the Group stepped up its efforts to establish and monitor active risk management policies which, designed to mitigate the Company's exposure to the main risks associated with its activity, therefore continued to be of major relevance in the current complex macroeconomic climate. The main specific measures used by the Group to control its exposure to the risks associated with its activity are as follows: - Commodity price risk. The Group uses commodity price swaps with maturities that are arranged to match the programmed start of production for each order with a view to ensuring that the margins set when the sale is agreed are obtained. This control is particularly important for hedging fixed price orders. - Foreign currency risk. The Group operates internationally and is therefore exposed to foreign currency risk in transactions denominated in foreign currencies, particularly the US dollar. The Group companies use forward foreign currency contracts arranged with banks to hedge the foreign currency risk arising from future commercial purchases of raw materials and sales denominated in foreign currencies. The dollar appreciated significantly against the single currency throughout 2014, and although the purchases and sales it makes in US currency give it a natural hedge, the Group always has a positive exposure to the dollar, therefore its rise in value had a small but positive impact on the Group's profitability. - Liquidity risk. The Group exercises prudent management of liquidity risk based on the maintenance of sufficient cash and marketable securities, the availability of financing through a sufficient level of committed credit facilities and sufficient capacity to settle market positions. - Interest rate risk. The Group's interest rate risk arises from current and non-current borrowings. Debt issued at floating rates exposes the Group to cash flow interest rate risk. This risk is hedged mainly through IRSs. Fixedrate loans expose the Group to fair value interest rate risk.
Also worthy of mention is that the information that must be disclosed in the directors' report under Law 31/2014, of 3 December, amending the Consolidated Spanish Limited Liability Companies Law to improve corporate governance is that the Group's average payment period is 85 days. This period exceeds the maximum payment period set by Law 11/2013, of 26 July, although this is for administrative reasons that will foreseeably be corrected in the short term. 1.4
Commercial activity
The Group's consolidated sales amounted to EUR 546.65 million in 2014, 1.4% down on 2013. The main reasons for this performance are explained in point 1.1. above. The Group's sales by geographical area over the last three years were as follows (in millions of euros):
2014
2013
2012
2014/2013
Europe US Other countries
304.96 75.78 165.91
331.83 79.81 142.51
337.89 64.77 129.76
-8.1% -5.0% +16.4%
Total sales
546.65
554.15
532.42
-1.4%
4
According to these figures, by market, 56% of sales are made in the European market, 14% in the US and 30% in the rest of the world. In 2013 this distribution was 60%, 14% and 26% respectively. As may be seen, growth was particularly notable in the rest of the world. This growth was linked to the improved performance of the projects segment, particularly the oil and gas extraction industry in geographical areas that are richer in these natural resources. Another variable to be taken into account in the geographical distribution of revenue and which explains why Europe accounts for a high percentage of sales, is that in sales made by the Group to new facilities in the oil, gas and energy industries, the Group client engineering the project or manufacturing the equipment is frequently European (and therefore Europe is the sale destination) even though the final destination of the product may be a different geographical area.
1.5
Industrial activity
The investments made in property, plant and equipment in 2014 amounted to approximately EUR 23.9 million, as a whole, compared with EUR 39.8 million in investment in 2013. The most important investments made in 2014 related to the Group's positioning strategy in higher valueadded products which are necessary to ensure the quality required in this type of product and to improve the efficiency of these product lines. Also, the investments to improve the efficiency at the Group's key industrial plants continued with the renewal and maintenance of equipment, firmly established procedures for preventive maintenance at facilities and strict compliance with environmental and industrial safety legislation.
1.6
Strategic Plan
In 2013 the Tubacex Group unveiled its 2013-2017 Strategic Plan, which aims to achieve four major objectives:
Double the Group's value Reduce market volatility Be a benchmark supplier for customers Be the company where people want to work
The achievement of these four strategic objectives by Tubacex will depend on two cornerstones: the change in the product mix towards higher value-added products, and operational excellence. The change in product mix will lead to a sharper focus on the projects market and, specifically, segments with higher expected growth such as oil and gas extraction, and electricity generation. In turn, operational excellence will enable the Group to increase its productivity and efficiency, which are variables that become even more sensitive because of the high quality standards required of the new products. The four strategic objectives will be achieved gradually, in three distinct phases clearly defined by Tubacex. In an initial phase (2013-2014), the Group's priority will be cash generation, which will arise from the improvement in margins as a result of the increased weight of higher value-added products and of the restructuring of working capital. The second phase (2015-2016) will be a growth phase, in which the gradual rise in results and the reduction in net debt will enable the Group to consider various forms of growth, both organic and M&A. Lastly, as from 2017, the Group would enter a phase of consolidation and maintenance of the objectives reached. Early fulfilment of the objectives of Phase I of the Plan enabled Phase II (growth) to start in 2014. As part of this Phase, in October 2014 Tubacex announced the acquisition of the Italian company IBF. This acquisition allows TUBACEX to take another step towards its strategic objective of becoming a global provider of tubular solutions.
5
The transaction is part of the growth strategy envisaged in TUBACEX's Strategic Plan, and will enable the Company, inter alia, to supplement its product range, progress the value chain, raise its presence in the oil and gas and energy industries and increase its presence in the Asian market. The acquisition of IBF makes TUBACEX the only manufacturer of seamless stainless steel tubes capable of offering the full range of sizes, while at the same time entering the tube and pipe fittings manufacturing market (fittings, elbows, tees, caps, etc.) with a leadership position. This strengthens its position by enabling it to provide a combined offering of tubes and fittings.
1.7. Competitiveness programme As a result of the new Strategic Plan, the Tubacex Group has assumed the principles of operational excellence, by fostering the concepts of quality and continuous improvement of products, processes and systems, as a fundamental part of its management strategy. To this end, the Group has redefined its management model in order to mobilise the entire organisation to progress towards excellence in the management of the Group. In short, it aims to encourage everyone's participation and align their efforts towards the recently implemented model, which is based on the company project (mission, vision and values) in order to ensure achievement of the objectives of the 20132017 Strategic Plan. Together with the exponential improvement programmes and our annual management plan, the Group has defined a production system, the TxPS (Tubacex Production System) as key components for progressing along the path to operational excellence. The driving force behind all these initiatives is continuous improvement, focussed on customer satisfaction, economic efficiency and employees' commitment to participate. TxPS involves launching various continuous improvement tools and activities using a common management method for use worldwide while at all times respecting and encouraging local initiative. In 2014 the management tools of the first level of TxPS were implemented at the SBER I, SBER II and SALEM TUBE plants. A considerable improvement was observed in production management, as well as progress in resolving problems, which led to considerable improvements. At the same time the standardisation project was implemented to improve control of processes at the Acerálava, TTI Amurrio and TTI Llodio plants and the 5S methodology was implemented at the SBER I and SBER II plants. In 2015 these systems and tools will be rolled out at the plants that have recently joined the Group, headway will be made at the other Group units at worldwide level in order to consolidate TxPS Level 1 (data management, management cycles, resolution of problems and 5S) and the introduction of Level 2 (standardisation) tools will be advanced in order to make step-by-step progress towards excellence based on continuous improvement.
2.
GROUP SITUATION In recent years, and particularly since the publication of the 2013-2017 Strategic Plan, TUBACEX has increased its positioning in the oil and gas industry by committing itself to the development of premium, high value-added products. Since the summer of 2014 there has been a plunge in the oil price (more than 50%), which has fallen to its lowest level since 2009, although in the first few weeks of 2015 the downward trend has levelled out and oil seems to have found stability at around USD 60 a barrel. In view of this situation, the market environment in 2015 will be difficult, since the fall in the oil price is causing delays in certain investments. However, TUBACEX is fully committed to its strategy of becoming a benchmark solution provider for the oil and gas industries and is confident that current oil price levels are not sustainable. The significant improvements attained in Phase I of the Strategic Plan puts us in a better position to face this unfavourable market, and we are in no doubt that, underpinned by our business strategy, with the focus on premium products, and by our operational strategy centred on continuous improvement, and applying our strict cost control policy, we will emerge from this crisis stronger.
6
3.
SIGNIFICANT EVENTS FOR THE GROUP AFTER THE REPORTING PERIOD After the reporting period, Tubacex announced that it had entered into an agreement with the Indian company Prakash to acquire 68% of its seamless stainless steel tubes business. This transaction is part of the current, growth, phase of the Strategic Plan and ties in completely with Tubacex's strategy since it enables the Group to continue completing its product range and strengthens its position in the markets with higher growth, with particular emphasis on Asia.
4.
OUTLOOK AND FUTURE PERFORMANCE OF THE GROUP'S BUSINESS LINES Following the disappointing end to 2014 from the macroeconomic standpoint, 2015 should be a year of increased global growth, stimulated by the fall in the oil price, although the fall impacts oil importing and oil exporting countries very differently. Most noteworthy among the advanced economies is the United States, where growth rebounded more than expected in 2014 and unemployment fell gradually. Growth is expected to exceed 3% in 2015 based on strong domestic demand, underpinned by cheaper oil, the moderate fiscal adjustment and the support of its monetary policy. In the euro zone, following a weaker-than-expected end to 2014, activity will foreseeably be supported by the fall in oil prices, a looser monetary policy and the recent depreciation of the euro. But these factors will be offset by the weakening of investment prospects and this will mean that the recovery will be slower than initially predicted (+1.2% in 2015 and +1.4% in 2016). Growth in the emerging market and developing countries' economies will remain more or less stable at 4.3% in 2015 and rise to 4.7% in 2016, according to the International Monetary Fund. It must be stated that a portion of the expected growth in 2015 will come from the stimulus provided by the fall in the price of oil, an industry in which most of the products manufactured by the Tubacex Group are sold. Although the prices of oil futures point to a partial recovery in oil prices, the sharp fall in Brent in the last few months of 2014, which worsened at the beginning of 2015, suggest an unfavourable environment for Tubacex's business activities. Against this backdrop, the Tubacex Group believes that 2015 will be a good year with a difficult start and that the outlook will improve to the extent that oil prices stabilise. Although the higher value-added business tied to oil gas extraction and production might be affected by the current uncertainty in the industry, the Group's exposure to electricity generation and the refining industry enable its negative effect to be mitigated.
5.
RESEARCH AND DEVELOPMENT ACTIVITIES 2014 was the year in which the actions identified in the 2013 Strategic Plan were rolled out and consolidated. Sales of new products increased significantly compared to 2013, exceeding 30% of sales of manufactured tubes, as a result of the commercial success of projects developed in previous years. Also, significant accreditations were obtained with potential customers, which will enable sales of high-value products to be increased in the future. As regards innovation efforts, mention must be made of the opening of a new laboratory dedicated specifically to R&D in the Zamudio Technology Park. From the innovation management standpoint, 2014 was an intense year in the deployment of corporate processes and systems for the management of innovation at the Group's industrial units. This will, on the one hand, enable innovation to be managed more efficiently, harnessing synergies between companies, and, on the other, it will enable the Group to have a scalable management system that is ready for the inclusion of new industrial units.
7
6.
ENVIRONMENTAL ACTIVITIES The improvement in environmental results continues to be a priority strategy for TUBACEX. To this end, it systematically implements, in all the Group’s business units and in all operational situations, including emergencies, actions designed to minimise the environmental impact associated with its activity (waste, atmosphere, water, noise, energy, land, etc.). At the same time, also in relation to environmental impacts, environmental surveillance and monitoring programmes are managed in accordance with current legislation and other specifications laid down by the competent authorities. In this regard, planned environmental expenses amounting to EUR 1.5 million were incurred in 2014. The subsidiaries Tubacex Tubos Inoxidables (2001), Acería de Álava (2002), Schoeller-Bleckmann Edelstahlrohr (2006) and Salem Tube (2008) have in place an environmental management system under standard ISO 14001 certified by an accredited standardisation and certification body. Accordingly, the entire production process of the TUBACEX Group's plants in Llodio, Amurrio, Ternitz (Austria) and Greenville (US), from the receipt of raw materials and preparation of the stainless steel to the dispatch of the manufactured tubes, has been approved with regard to environmental management by an accredited body. The main lines of action in 2014 were as follows:
7.
Work continued on the effective integrated environmental authorisations for TTI Llodio, TTI Amurrio and Acería de Álava. All the environmental vectors associated with the plants' new processes and operations have been assessed and managed.
The environmental surveillance programmes implemented by the plants arising from requirements defined in the integrated environmental authorisations are being conducted without incident.
The planned environmental improvements that have a direct effect on the environmental results/indicators include most notably: 1.
Review and adaptation of work facilities, processes and methodologies in order to reduce the risk of outside environmental impact. Worthy of note were the investments made in the control of effluents.
2.
The identification and implementation of more sustainable options (in environmental and economic terms) for managing waste. The increase in recovered waste is a priority environmental objective each year.
3.
The redesign and implementation of tools that ensure more efficient management
TREASURY SHARE ACQUISITIONS The number of treasury shares did not change in 2014 and amounted to 3,142,975 shares, representing 2.36% of the share capital.
8.
PROPOSED DISTRIBUTION OF PROFIT The proposed distribution of the profit of Tubacex, S.A. that the Board of Directors will submit for approval at the Annual General Meeting is as follows:
Dividends To reserves Total
Euros 9,504,400 903,652 10,408,052
8
9.
INFORMATION ON FINANCIAL INSTRUMENTS Note 12 to the consolidated financial statements provides detailed information on the foreign currency and commodity purchase and sale forward contracts, as well as interest rate swaps held by the Tubacex Group at 31 December 2014.
10. OTHER DISCLOSURES 10.1
Fees paid to auditors
The audit fees for the professional services rendered at the Tubacex Group (at Spanish companies) amounted to a total of EUR 210 thousand in 2014.
11. ANNUAL CORPORATE GOVERNANCE REPORT The full texts of the 2014 Annual Corporate Governance Report and the 2014 Annual Remuneration Report, consisting of 47 and 14 pages, respectively, are set out below. Both texts were approved by the Board of Directors of Tubacex, S.A. and are an integral part of the 2014 Consolidated Directors' Report.
9
ANNEX I
STANDARD ANNUAL REPORT ON THE CORPORATE GOVERNANCE OF PUBLICLY TRADED COMPANIES COMPANY IDENTIFICATION/IDENTIFICATION DETAILS OF THE ISSUER
END OF BUSINESS YEAR
31/12/2014
VAT Number/C.I.F
A-01003946
CORPORATE NAME TUBACEX, S.A. REGISTERED OFFICE TRES CRUCES, 8, (LLODIO) ALAVA
NOTICE: This document is a translation of a duly approved Spanish-language document, and is provided for informational purposes only. In the event of any discrepancy the Spanish original will prevail.
STANDARD ANNUAL REPORT ON THE CORPORATE GOVERNANCE OF PUBLICLY TRADED COMPANIES
A. OWNERSHIP STRUCTURE OF THE COMPANY A.1. Complete the following table about the share capital of the company: Date of last change 25/05/2001
Share capital (Euros )
Number of shares
59,840,451.90
132,978,782
Number of voting rights 132,978,782
State whether there are different classes of shares with different rights attaching thereto: NO A.2. Breakdown of direct and indirect holders of significant shareholdings in the company as of the end of the fiscal year, excluding directors:
Individual or corporate name of shareholder CARTERA INDUSTRIAL REA, S.A. ITZARRI, EPSV ECOFIN LIMITED ECOFIN WATER&POWER OPPORTUNITIES PLC MR. JOSE MARIA ARISTRAIN NORGES BANK AMBER CAPITAL UK LLP
Number of direct voting rights 6,648,940
Number of indirect voting rights
Individual or corporate name of indirect holder of the interest ECOFIN LIMITED MR. JOSE MARIA ARISTRAIN MR. JOSE MARIA ARISTRAIN AMBER CAPITAL UK LLP
Through: Individual or corporate name of direct holder of the interest)
% of total voting rights 0
5,000
6,566,997 0 6,648,940
0 6,422,504 0
4,940 4,830 5,000
0 4,052,656 0
14,627,666 0 9,111,590
11,000 3,050 6,850
ECOFIN WATER&POWER OPPORTUNITIES PLC CORPORACION ARISTRAIN SL CORPORACION JMAC BV SARL AMBER SOUTHERN EUROPEAN EQUITY
Number of direct voting rights 6,422,504 13,297,878 1,329,788 9,111,590
Indicate the most significant changes in the shareholding structure that have occurred during the fiscal year:
Individual or corporate name of shareholder BAGOETA, S.L. AMBER CAPITAL UK LLP CORPORACION ARISTRAIN, SL NORGES BANK
Date of transaction
Description of transaction
05/02/2014 05/02/2014 05/02/2014 05/02/2014
Has falled below 3% of share capital Has exceded 5% of share capital Has exceded 10% of share capital Has exceded 3% of share capital
A.3. Complete the following tables about members of the Board of Directors of the Company who have voting rights attaching to shares of the Company:
Individual or corporate name of director Mr. JESUS ESMORIS Mr. ÁLVARO VIDEGAIN Mr. ANTONIO GONZÁLEZADALID Mr. GERARDO ARÓSTEGUI Mr. XABIER DE IRALA Mr. IGNACIO MARCO GARDOQUI Mr. DAMASO QUINTANA Mr. JOSE TORIBIO
Individual or corporate name of indirect holder of the interest Mr. JESUS ESMORIS Mr. ÁLVARO VIDEGAIN Mr. GERARDO ARÓSTEGUI
Number of direct voting rights 0 138,225 34,700
Number of indirect voting rights (*) 900 9,400
% of total voting rights 0,000 0.110 0.026
0 23,000 43.500
32,680 0 10,411
0.030 0,020 0.030
1,000 1,000
0 0
0.000 0.000
Through: Individual or corporate name of direct holder of the interest OTHER SHAREHOLDERS OTHER SHAREHOLDERS OTHER SHAREHOLDERS
Total percentage of voting rights held by the board of directors
Number of direct voting rights 900 9,400 32,680 0.220
Complete the following tables about members of the Company’s board of directors who hold rights to shares of the Company: A.4. Describe, if applicable, the family, commercial, contractual or corporate relationships between significant shareholders, to the extent known to the Company, unless they are immaterial or result from the ordinary course of business: A.5. Describe, if applicable, the commercial, contractual or corporate relationships between significant shareholders and the Company and/or its group, unless they are immaterial or result from the ordinary course of business: A.6. Indicate whether the company has been notified of any shareholders’ agreements pursuant to articles 530 and 531 of the Corporate Enterprises Act (“LSC”). Provide a brief description and list the shareholders bound by the agreement, as applicable
YES Parties of Shareholders Agreement CORPORACION JMAC BV SARL CORPORACION ARISTRAIN SL AMBER CAPITAL UK LLP
Percentage of affected capital: 17.850 Brief description: th
On 2014, February 4 shareholders Amber Capital and Mr. Jose Mª Aristrain signed a shareholder agreement to set up actions aimed at the appointment of directors at the Annual General Meeting , voting favorably to the proposed appointments of two proprietary directors of Corporación Aristrain SL.
Indicate whether the Company is aware of the existence of concerted actions among its shareholders. If so, briefly describe them: NO Expressly indicate whether any of such agreements, arrangements or concerted actions have been modified or terminated during the fiscal year. NO A.7. Indicate whether there is any individual or legal entity that exercises or may exercise control over the Company pursuant to Section 4 of the Securities Market Law. If so, identify it: NO A.8. Complete the following tables about the Company’s treasury stock: As of year-end:
Number of direct shares 3,142,975
Number of indirect shares (*)
Total % of share capital 0
2.364
(*) Through: Total
0
Describe any significant changes, pursuant to the provisions of Royal Decree 1362/2007, that have occurred during the fiscal year: Gains/(Losses) on the Company’s own stock transferred during the period
0
A.9. Describe the terms and conditions and the duration of the powers currently in force given by the shareholders acting at the General Shareholders’ Meetings to the Board of Directors in order to acquire or transfer Company stock: Authorize the Board of Directors, all in accordance with the article 146 and concordant terms of the Spanish Corporations Law, to proceed with the derivative acquisition of shares of “TUBACEX, S.A.” by the own “TUBACEX, S.A.” and its investees subsidiaries during the maximum term of 5 years, leaving without effects the agreement on the non executed matters adopted by the General Shareholders th Meeting of May 27 2010. Such acquisitions shall be executed in the following conditions: a) Modality: sale, swap, loan or transfer in payment or any other means allowed by Law. b) Maximum number of shares to acquire, sum to the already owned by TUBACEX, S.A and its subsidiaries: until 10% of the subscribed capital. c) Maximum and minimum prices: 15% above or below the closing price in the last market trading session, in all events adjusting to the regulations and uses of the Stock markets. d) Term of authorization: five (5) years from the date of this agreement. Authorize the Board of Directors to carry out the derivative acquisition of the shares of TUBACEX, S.A. in the terms exposed and for it to destine, totally or partially, the already acquired owned shares and those acquire by virtue of the previous authorization for the execution of the compensation systems that consist in or have as object the delivery of shares or rights of option over shares of TUBACEX, S.A. to the personnel, Senior Management and Directors that exercise their executive duties in accordance with the established in section 1.a) of article 146 of the Modified Text of the Spanish Corporations Law.
A.10. Indicate, if applicable, any legal or bylaw restrictions on the exercise of voting rights, and any legal restrictions on the acquisition or transfer of interests in share capital. NO
A.11. Indicate whether the shareholders acting at a General Shareholders’ Meeting have approved the adoption of breakthrough measures in the event of a public tender offer pursuant to the provisions of Law 6/2007: NO If applicable, describe the approved measures and the terms on which the restrictions will become ineffective.
A.12 Indicate whether the company has issued securities not traded in a regulated market of the European Union. NO If so, identify the various classes of shares and, for each class of shares, the rights and obligations they confer.
B. GENERALSHAREHOLDERS’ MEETING B.1. Indicate and, if applicable, explain whether there are differences with the minimum requirements set out in the Companies Law in connection with the quorum needed to hold a valid General Shareholders’ Meeting. NO
B.2. Indicate and, if applicable, explain whether there are differences with the rules provided by the Companies Law for the adoption of corporate resolutions. NO Describe the differences with the rules provided by the Companies Law.
B.3. Explain the rights of the shareholders regarding general shareholders’ meetings which are different from the rights provided in the Companies Law. Pursuant to the Companies Law and Articles 4 and 19 of the Regulations of the Shareholders General Meeting, the approval of any amendment to the bylaws is the exclusive competence of the General Meeting of Shareholders and Resolutions shall be adopted by the affirmative vote of a majority of the voting capital present or represented at the Meeting, without prejudice reinforced quorum and voting as established by law or in bylaws.
B.4.Indicate the data on attendance at the general shareholders’ meetings held during the fiscal year referred to in this report and the year before:
Date of General Shareholders’ Meeting
% of shareholders present in person
Attendance data % of shareholders represented by proxy
% distance voting
Electronic voting
Other
Total
29/05/2013
32.150
17.870
0,000
0,000
50.020
28/05/2014
17.220
30.830
0,000
0,000
48.050
B.5. Indicate whether there are any bylaw restrictions requiring a minimum number of shares to attend the General Shareholders’ Meeting. NO B.6 Indicate whether decisions involving afundamental corporate change (“subsidiarisation”, acquisitions/disposals of key operating assets, operations that effectively entail the company’s liquidation) must be submitted to the general shareholders’ meeting for approval or ratification even when not expressly required under company law. YES B.7. Indicate the address and manner for accessing corporate governance content on your website. All documents regarding the corporate governance of the company is available on corporate website. (www.tubacex.com)
C. STRUCTURE OF THE COMPANY’S MANAGEMENT C.1. Board of Directors C.1.1. Describe the maximum and minimum number of Directors set forth in the bylaws:
Maximum number of directors Minimum number of directors
12 5
C.1.2. Complete the following table identifying the members of the Board of Directors:
Individual or corporate name of directors
Representative
Position
Date first appointment
Date last appointment
Election procedure
Mr. ÁLVARO VIDEGAIN
--
PRESIDENT
15/07/1992
28/05/2013
VOTE AT GENERAL SHAREHOLDERS’ MEETING
Mr. JESUS ESMORIS
--
CEO
28/05/2013
28/05/2013
Mr. JUAN ANTONIO GARTEIZGOGEASCOA
--
VICEPRESIDENT
21/09/1994
28/05/2009
Mr. ANTONIO GONZÁLEZADALID
--
BOARD MEMBER
28/05/2009
28/05/2009
Mrs. CONSUELO CRESPO
--
BOARD MEMBER
28/05/2009
28/05/2009
Mr. GERARDO ARÓSTEGUI
--
BOARD MEMBER
25/06/1991
25/05/2006
Mr. JUAN RAMÓN GUEVARA
--
BOARD MEMBER
21/09/1994
28/05/2009
Mr. IGNACIO MARCOGARDOQUI I
--
BOARD MEMBER
23/05/2012
23/05/2012
Mr. XABIER DE IRALA
--
BOARD MEMBER
28/05/2009
28/05/2009
Mr. DAMASO QUINTANA
--
BOARD MEMBER
28/05/2014
28/05/2004
Mr. JOSE TORIBIO
--
BOARD MEMBER
28/05/2014
28/05/2004
VOTE AT GENERAL SHAREHOLDERS’ MEETING VOTE AT GENERAL SHAREHOLDERS’ MEETING VOTE AT GENERAL SHAREHOLDERS’ MEETING VOTE AT GENERAL SHAREHOLDERS’ MEETING VOTE AT GENERAL SHAREHOLDERS’ MEETING VOTE AT GENERAL SHAREHOLDERS’ MEETING VOTE AT GENERAL SHAREHOLDERS’ MEETING VOTE AT GENERAL SHAREHOLDERS’ MEETING VOTE AT GENERAL SHAREHOLDERS’ MEETING VOTE AT GENERAL SHAREHOLDERS’ MEETING
Total number of directors
11
Indicate vacancies on the Board of Directors during the period: Individual or corporate name of directors BAGOETA SL Mr. JUAN JOSE IRIBECAMPOS
Type of director at fall date Proprietary Proprietary
Fall date 05/02/2014 05/02/2014
C.1.3. Complete the following table about the members of the Board and each member’s status: EXECUTIVE DIRECTORS Individual or corporate name of
directors
Mr. JESUS ESMORIS ESMORIS
Committee that has proposed the director’s appointment APPOINTMENTS AND REMUNERATIONS COMMITTEE
Position within the Company’s structure CEO
Total number of executive directors Total % of Board of Directors
1 9.090
EXTERNAL PROPRIETARY DIRECTORS Individual or corporate name of
directors
Mr. ANTONIO GONZÁLEZ-ADALID Mr. DAMASO QUINTANA Mr. JOSE TORIBIO
Committee that has proposed the director’s appointment APPOINTMENTS AND REMUNERATIONS COMMITTEE APPOINTMENTS AND REMUNERATIONS COMMITTEE APPOINTMENTS AND REMUNERATIONS COMMITTEE
Total number of proprietary directors Total % of Board of Directors
Individual or corporate name of the significant shareholder represented by the director or that has proposed the director’s appointment CARTERA INDUSTRIAL REA, S.A. Mr. JOSE MARIA ARISTRAIN Mr. JOSE MARIA ARISTRAIN
3 27.270
EXTERNAL INDEPENDENT DIRECTORS Individual or corporate name of director Mr. JUAN ANTONIO GARTEIZGOGEASCOA Profile A graduate in Economics (UPV). He holds a Master’s in Quantitative Management (from the San Sebastián Higher Business School) and a Master’s in Tax Consultancy (from the Madrid Business Institute). He has worked at Helisold S.A. and TALDE S.A., a venture capital company, and has been a board member of a number of the investee companies in this Group. In 1987 he founded FORETAX S.A., a company providing tax planning and consultancy, of which he is the main partner. He lectured on the Tax Consultancy Master’s course at the University of Deusto. In 2005 he was appointed
Deputy Chair of the Board of Directors of TUBACEX. He has been a director of TUBACEX since 1994. Individual or corporate name of director Mrs. CONSUELO CRESPO Profile Originally from Barcelona, she obtained a Bachelor of Science in Biology, and a Master's Degree in International Decentralized Cooperation "Peace and Development within the United Nations Framework" (University of the Basque Country - UPV). After working for years as a coordinator in the Barcelona slums and with immigrant women in Vizcaya, she started volunteer work with UNICEF in 1993. From 1994 to 2005 she was the President of the UNICEF Committee in the Basque Country and from 2005 to 2014 she was the President of UNICEF- Spain. She was a member of Acciona S.A.'s Board of Directors. She is a member of the Jury of the Prince of Asturias Awards for International Cooperation and of the Governing Council of the University of Deusto. She is a director at TUBACEX since 2009. Individual or corporate name of director Mr. GERARDO ARÓSTEGUI Profile Bachelor of Economics and Business Administration (University of Deusto). He began his career in TUBACEX S.A., where he held several positions until becoming General Sub-secretariat. He was Deputy General Director of BBV bank. In 1985 he joined Plus Ultra as Counselor-General Manager, a company in which he was appointed CEO in 1990. He has been the Executive President at Aviva Grupo Corporativo and Aviva Vida y Pensiones, President of Aseval, Bia Galicia, Unicorp Vida, Caja España Vida and General Vida. He was also the member of the Advisory Board of the Dirección General de Seguros y Fondos de Pensiones and a Counselor of the Consorcio de Compensación de Seguros, of Nacional de Reaseguros and the UNESPA. He is Chairman of Tinsa and Qualitasa, and Director of Resolution Ltd. and Resolution Holdings (Guernsey) Ltd. He is a director at TUBACEX since 1991.
Individual or corporate name of director Mr. JUAN RAMÓN GUEVARA
Profile Lawyer. From 1985 to 1991 he was the Basque Government Minister for the Presidency, Justice and Autonomous Development. During this period he also held the positions of Representative of the Basque Autonomous Community in the Conference of Local and Regional Authorities of the Council of Europe, a member of the Standing Committee and the Bureau of the Assembly of European Regions and Joint President of the Euskadi-Aquitaine Interregional Cooperation Committee. He left politics in 1991 are returned to his law practice. He is an honorary member of the International Institute for the Sociology of Law in Oñati and of the Basque Institute of Criminology. He has been a director of TUBACEX since 1994. Individual or corporate name of director Mr.
IGNACIO MARCO-GARDOQUI
Profile Bachelor of Economics and Business Administration (University of Deusto). He started his professional career in Brussels in the DG III of the European Commission. He has been the Sales Director of Tubacex Taylor Accesorios (TUBACEX Group), General Secretary of SPRI and Managing Director of EVE. He was also Executive Director at Morgan Stanley, Private Banking Director of La Caixa and Professor at the Deusto Business School. He has been an economic commentator for Grupo Vocento since 1991, a member of the Deusto University Governing Board and Member of the Boards of Schneider Electric España, Viscofan, Minersa and Iberdrola Ingeniería y Construcción. He is a director at TUBACEX since 2012. Individual or corporate name of director Mr. XABIER DE IRALA Profile Industrial Engineer and MBA by the La Salle University (The Philippines). He is a director for Iberdrola, Alestis Aerospace, Barceló and Deusto Business School; and President of BBK Bank. He is Honorary President and Founder of Exceltur,member of the Board of Directors of Innobasque and of the Board of Regents of APD. He has been the President of Bilbao Bizkaia Kutxa (BBK) and the Fundación Vasco-Navarra de Cajas de Ahorro, President of Iberia Airlines, Executive Vice Chairman of Grupo ABB (Madrid), Vice Chairman of Finance of General Electric CGR (Paris, London), CEO of GE Portuguesa (Lisbon) and CEO of General Eléctrica Española (Bilbao). He has been the
President of the International Air Transport Association (IATA) and of European Airlines Association (AEA). He is a director at TUBACEX since 2009.
Total number of independent directors Total % of Board of Directors
6 54.55
Indicate whether any director considered an independent director is receiving from the company or from its group any amount or benefit under any item that is not the remuneration for his/her directorship, or maintains or has maintained over the last year, a business relationship with the company or any company in its group, whether in his/her own name or as a significant shareholder, director or senior manager of an entity that maintains or has maintained such a relationship. None of independent directors of the company perceives from the company or its consolidated group or any other remuneration different from the one regarding his position as Director. Where applicable, include a reasoned statement from the board with the reasons why it deems that this director can perform his/her duties as an independent director.
OTHER EXTERNAL DIRECTORS Individual or corporate name of directors Mr. ALVARO VIDEGAIN
Committee that has proposed the director’s appointment
Total number of independent directors Total % of Board of Directors
1 9.090
APPOINTMENTS AND REMUNERATIONS COMMITTEE
Describe the reasons why they cannot be considered proprietary or independent directors as well as their ties, whether with the company, its management or its shareholders. Because he has been CEO of TUBACEX since 1992 until January of 2013.
C.1.4 Complete the following table on the number of female directors over the past four years and their category:
Executive Proprietary Independent Other externals total
Number of females 2014 2013 2012 2011 0 0 0 0 0 0 0 0 1 1 1 1 0 0 0 0 1
1
1
1
2014 0.000 0.000 16.670 0.000
% of females 2013 2012 0.000 0.000 0.000 0.000 16.670 16.670 0.000 0.000
2011 0.000 0.000 16.670 0.000
9.090
8.330
8.330
8.330
C.1.5 Explain the measures, if any, that have been adopted to try to include a number of female directors on the board that would mean a balanced presence of men and women. The Board of Directors of Tubacex SA in 2009 adopted appropriate measures to encourage the incorporation of women in the Board of Directors entrusted the Nominating and Compensation Committee to include prestigious candidates in the selection process and to ensure specially for gender equality. C.1.6 When, despite the measures taken, there are few or no female directors, explain the reasons: Explanation of reasons The Nomination and Remuneration Committee has expressly delegated the responsibility of ensuring equality and promoting the integration of women in the Board of Directors. C.1.7 Explain how shareholders with significant holdings are represented on the board The significant shareholders are proportionally represented in the Board of Directors in relation to the distribution of social capital. C.1.8. Describe, if applicable, the reasons why proprietary directors have been appointed at the proposal of shareholders whose shareholding interest is less than 5% of share capital. State whether formal petitions for presence on the Board have been received from shareholders whose shareholding interest is equal to or greater than that of others at whose proposal proprietary directors have been appointed. If so, describe the reasons why such petitions have not been satisfied. NO C.1.9. State whether any director has withdrawn from his/her position before the expiration of his/her term of office, whether the director has given reasons to the
Board and by what means, and in the event that he/she gave reasons in writing to the full Board, describe at least the reasons given by the director: Name BAGOETA S.L. Reason: Sale of share capital Name Mr. JUAN JOSE IRIBECAMPOS Reason: Sale of share capital
C.1.10. Indicate the powers delegated to the CEO(s), if any: Individual or corporate name of director MR. JESUS ESMORIS Brief description The CEO has all the powers of the Board except those that those than can not ne delegated. C.1.11. Identify the directors who are managers or directors of companies within the listed company’s group, if any: Individual or corporate name of director Mr. ÁLVARO VIDEGAIN Mr. ÁLVARO VIDEGAIN Mr. ÁLVARO VIDEGAIN Mr. ÁLVARO VIDEGAIN Mr. ÁLVARO VIDEGAIN Mr. ÁLVARO VIDEGAIN Mr. ÁLVARO VIDEGAIN Mr. ÁLVARO VIDEGAIN Mr. ÁLVARO VIDEGAIN Mr. JUAN ANTONIO GARTEIZGOGEASCOA Mr. JUAN ANTONIO GARTEIZGOGEASCOA Mr. JUAN ANTONIO GARTEIZGOGEASCOA Mr.IGNACIO MARCO-GARDOQUI Mr.IGNACIO MARCO-GARDOQUI Mr.IGNACIO MARCO-GARDOQUI Mr. JESUS ESMORIS Mr. JESUS ESMORIS Mr. JESUS ESMORIS Mr. JESUS ESMORIS Mr. JESUS ESMORIS Mr. JESUS ESMORIS Mr. JESUS ESMORIS Mr. JESUS ESMORIS
Corporate name of entity within the group ACERÍA DE ÁLAVA. S.A. COMERCIAL DE TUBOS Y ACCESORIOS ESPECIALES, S.A. METAUX INOX SERVICES, SAS SALEM TUBE, INC SCHOELLER BLECKMANN EDELSTAHLROHR, GmbH TUBACEX TAYLOR ACCESORIOS, S.A. TUBACEX TUBOS INOXIDABLES, S.A. TUBOS MECÁNICOS, S.A. TUBOS MECÁNICOS NORTE, S.A.
Position PRESIDENT PRESIDENT PRESIDENT PRESIDENT PRESIDENT PRESIDENT PRESIDENT PRESIDENT PRESIDENT
TUBACEX TUBOS INOXIDABLES, S.A.
BOARD MEMBER
SALEM TUBE INC
BOARD MEMBER
TUBACEX AMERICA HOLDING
BOARD MEMBER
TUBACEX TUBOS INOXIDABLES, S.A. SALEM TUBE INC TUBACEX AMERICA HOLDING CO ACERÍA DE ÁLAVA. S.A. COMERCIAL DE TUBOS Y ACCESORIOS ESPECIALES, S.A. METAUX INOX SERVICES, SAS SALEM TUBE, INC SCHOELLER BLECKMANN EDELSTAHLROHR, GmbH TUBACEX TAYLOR ACCESORIOS, S.A. TUBACEX TUBOS INOXIDABLES, S.A. TUBOS MECÁNICOS, S.A.
BOARD MEMBER BOARD MEMBER BOARD MEMBER CEO CEO BOARD MEMBER BOARD MEMBER BOARD MEMBER CEO CEO BOARD MEMBER
Mr. JESUS ESMORIS Mr. JESUS ESMORIS
TUBOS MECÁNICOS NORTE, S.A. TUBACEX SERVICES S.L.
BOARD MEMBER PRESIDEN – CEO
C.1.12. Identify the directors of your company, if any, who are members of the Board of Directors of other companies listed on official stock exchanges in Spain other than those of your Group, that have been reported to your company: Individual or corporate name of director Mr. ALVARO VIDEGAIN Mr. ANTONIO GONZALEZ ADALID Mr. ANTONIO GONZALEZ ADALID Mr. ANTONIO GONZALEZ ADALID Mr. IGANCIO MARCO-GARDOQUI Mr. XABIER DE IRALA
Listed company ADVEO GROUP INTERNATIONAL S.A. PAPELES Y CARTONES DE EUROPA, S.A. CARTERA INDUSTRIAL REA, S.A. MECALUX, S.A. VISCOFAN, S.A. IBERDROLA, S.A.
Position BOARD MEMBER BOARD MEMBER VICEPRESIDENT-CEO BOARD MEMBER BOARD MEMBER BOARD MEMBER
C.1.13. Indicate and, if applicable, explain whether the Company has established rules regarding the number of boards of which its directors may be members: YES Description of rules Article 28 of the Code of Conduct for the Board of Directors stipulates that in order to guarantee the dedication of board members, the Code of Conduct for the Board of Directors establishes that they can only belong to a maximum of five boards, and must request permission from the Appointments and Remunerations Committee to be able to exceed this limitation. For this purpose, the Boards of Directors of Group subsidiary companies or similarly operating structures will not be counted. C.1.14. In connection with recommendation number 8 of the Unified Code, indicate the Company’s general policies and strategies reserved for approval by the full Board: The investment and financing policy The definition of the structure of the group of companies The corporate governance policy The corporate social responsibility policy The strategic or business plan, as well as management objectives and annual budgets The policy regarding compensation and evaluation of performance of senior management The risk control and management policy, as well as the periodic monitoring of the internal information and control systems The dividend policy, as well the treasury stock policy and, especially, the limits thereto
YES YES YES YES YES YES YES YES
C.1.15. Complete the following tables regarding the aggregate compensation of Directors accrued during the fiscal year:
Compensation of directors ( in thousands of Euros)
1,468 28
Overall compensation of directors (in thousands of Euros)
1,496
Amount of overall remuneration corresponding to the rights accumulated by directors with respect to pensions (€k)
C.1.16. Identify the members of the Company’s senior management who are not executive directors and state the total compensation accruing to them during the fiscal year: Individual or corporate name Mr. GUILLERMO RUIZ-LONGARTE Mr. ANTON AZLOR Mr. MANUEL SARABIA
Position CHIEF OPERATING OFFICER VICE PRESIDENT SALES & MARKETING HUMAN RESOURCES MANAGER & CHIEF OPERATIN OFFICER´S ASSISTANT PURCHASING AND PROCUREMENT MANAGER – GENERAL MANAGER OF COTUBES, S.A. SPAIN OPERATIONS MANAGER GENERAL MANAGER OF SBER Gmbh INNOVATION MANAGER GENERAL MANAGER OF SALEM TUBE INC. TUBACEX ASIA MANAGER
Mr. PEDRO CARBAJO Mr.CELESTINO DANIS Mr. WERNER HORVATH Mr. DIEGO HERRERO Mr. RUFINO ORCE MR. AJAY SAMBRANI
Total senior management compensation (in thousands of Euros)
2,277
C.1.17.Indicate the identity of the members of the Board of Directors, if any, who are also members of the board of directors, managers or employees of companies that hold a significant interest in the listed company and/or in companies within its Group: Individual or corporate name director Mr. ANTONIO GONZÁLEZ-ADALID
of
Individual or corporate name of significant shareholder CARTERA INDUSTRIAL REA, S.A.
Position VICEPRESIDENT AND CEO
C.1.18. State whether the Regulations of the Board of Directors have been amended during the fiscal year: YES The Regulations of the Board of Directors was modified to adapt to ECC/46172013 Ministerial Order and other technical improvements of the texts. C.1.19. Indicate the procedures for the appointment, re-election, evaluation and removal of Directors. List the competent bodies, the procedures to be followed and the criteria applied in each of such procedures.
Appointment of board members Board members shall be appointed directly by the AGM or by proposal from the Board of Directors in accordance with the provisions stipulated in the Joint Stock Company Act. Appointment proposals should be preceded by the corresponding proposal from the Appointments and Remunerations Committee. The Board of Directors and the Appointments and Remunerations Committee, within the remit of their authority, shall endeavor to ensure that persons of trustworthiness, ability and experience appoint the candidates, making sure that the procedure for appointing independent board members is highly rigorous. The Board will try to ensure that independent Board members account for at least sixty percent of its total members at all times, thereby ratifying the Company's historical policy of having a professional and mostly independent Board. The Board of Directors may not propose or appoint persons to the post of independent board member who have any relationship with the company's management or who are found to have family, professional or commercial links to the executive directors or to other members of the company's top management. In particular, the following persons may not be proposed or appointed as independent board members: persons who hold or have held executive posts in the Company in the last two years; persons who are or have been partners in the external auditor of the Company or any Group company in the last three years; family members of anyone who is or has been an executive director or top manager in the Company in the last two years; persons who have or have had an important business relationship with the Company on his/her own behalf or through a company in which he/she has a significant stake in the last year; persons, who directly or indirectly, through companies in which they have a significant stake, have made donations to or have received payments from the Company in the last three years that might compromise their independence; persons who have other relationships with the Company that, in the opinion of the Appointments and Remunerations Committee, could affect their independence; persons who have not been proposed for appointment or renewal by the Appointments and Remunerations Committee. Reappointment of Board members Proposals for the reappointment of Board members that the Board of Directors decides to submit to the AGM are subject to a formal process. A report issued by the Appointments and Remunerations Committee will be an essential part of this process and will evaluate the quality of work and commitment to the post of the Board members proposed during the previous term of office.
The Board of Directors shall try to organize the work in a way that the external Board members who are reappointed are not always assigned to the same committee. Term of office Board members shall carry out their duties for a maximum period of six years and can be reappointed for the same length of time. A person cannot be appointed to the Board if aged 65 or over at the time of proposal. Board members designated for co-option shall carry out their duties until the date of the first AGM that ratifies their appointment. Board members who come to the end of their term of office or for whatever other reason finish in their post, shall not be able to work for any other entity whose corporate purpose is similar to that of the Company's for a period of two years. The Board of Directors, if it considers appropriate, can exempt the outgoing member from this obligation or shorten its length of application. C.1.20. Indicate whether the board has evaluated its performance during the year: YES Explain, if applicable, to what extent this evaluation has prompted significant changes in its internal organisation and the procedures applicable to its activities: Description of amendments Self-assessment. Since 1999 the Board of Directors has been conducting regular annual assessments of the President and since 2002 self-assessment of their own actions. At least one of the meetings of the Board aims to assessment of the work of the President and CEO as well as the Board and its committees. The session concerning the financial year 2014 will be held in the first quarter of 2015. With the conclusions an annual plan of action is established. . C.1.21. Indicate the circumstances under which the resignation of Directors is mandatory. Board members should offer their resignations to the Board of Directors and should formalize, if the Board deems it appropriate, their corresponding resignation in the following cases: a) When the term of office concludes after having reached 65 years of age. b) When the executive posts to which their appointments were associated finish.
c) When they are found to be involved in any of the incompatible or banned situations previously mentioned. d) When they are prosecuted for a supposedly criminal event or when the supervising authorities decide that they are responsible for a serious or very serious mistake. e) When the Audit and Compliance Committee seriously caution them for having broken their obligations as Board members. f) When their presence on the Board might jeopardize the interests of the company or when the reasons for which they were appointed disappear C.1.22 Explain whether the powers of the top executive of the Company are vested in the Chairman of the Board. If so, indicate the measures that have been taken to mitigate the risks of accumulation of powers in a single person: NO
Indicate and, if applicable, explain whether rules have been established whereby one of the independent directors is authorized to request that a meeting of the Board be called or that other items be included on the agenda, to coordinate and hear the concerns of external directors and to direct the evaluation by the Board of Directors.
Description of the rules The duty of the Deputy Chair is to replace the Chairman in case of absence or illness. The Deputy Chair must be designated from among the independent Board members and will be authorized to request any information, as well as to call the Board of Directors so as to hold meetings. C.1.23. Are qualified majorities, different from the statutory majorities, required to adopt any type of decision? NO Describe the method used by the Board of Directors to adopt resolutions, including at least the minimum quorum required to hold a valid meeting and the majorities required to adopt resolutions
C.1.24.Explain whether there are specific requirements, other than the requirements relating to Directors, to be appointed Chairman. NO
C.1.25 Does the Chairman have a tie-breaking vote? YES Matters on which a tie-breaking vote may be cast If there is a tie, the Chairman's vote shall be the casting vote. C.1.26. Indicate whether the bylaws or the Regulations of the Board of Directors set forth any age limit for directors: YES Age limit for the Chairman: 65 Age limit for the CEO: 65 Age limit for Directors: 65 C.1.27 Indicate whether the bylaws or the Regulations of the Board of Directors establish any limit on the term of office for independent directors: NO
C.1.28 Indicate whether the bylaws or the board regulations establish specific standards for proxy voting in the board of directors, the way this is done and, in particular, the maximum number of proxies a director may have, and whether it is mandatory to grant proxy to a director of the same type. If so, briefly give details on such standards Article 18.1 of the Regulations of the Board of Directors provides that directors shall make every effort to attend the meetings of the Board of Directors and, if they can not do it personally, they shall ensure that the representation granted in another member of the Council to respond to another in the same group and includes the appropriate instructions.
C.1.29 Indicate the number of meetings that the Board of Directors has held during the fiscal year. In addition, specify the number of meetings, if any, at which the Chairman was not in attendance: Number of meetings of the Board Number of meetings of the Board at which the Chairman was not in attendance
10 0
Indicate the number of meetings held by the different committees of the Board of Directors during the fiscal year: Number of meetings of the Audit and Compliance Committee Number of meetings of the Nominating and Compensation Committee Number of meetings of the Strategy and Investments Committee
5 3 3
C.1.30 Indicate the number of meetings held by the Board of Directors during the fiscal year at which not all of its members have been in attendance. Proxies granted without specific instructions must be counted as absences: Number of attendances of directors during the fiscal year % of absences over total votes during the fiscal year
7 97,19%
C.1.31. Indicate whether the annual individual financial statements and the annual consolidated financial statements that are submitted to the Board of Directors for approval have been previously certified: NO Identify, if applicable, the person/persons that has/have certified the annual individual and consolidated financial statements of the Company for preparation by the board:
C.1.32. Explain the mechanisms, if any, adopted by the Board of Directors to avoid any qualifications in the audit report on the annual individual and consolidated financial statements prepared by the Board of Directors and submitted to the General Shareholders’ Meeting. Without affecting the other tasks assigned by the board, the Audit and Compliance Committee has the following basic responsibilities:
a) Review the company's accounts, monitor compliance with legal requirements and the correct application of generally accepted accounting principles, as well as report on proposals for the modification of accounting principles and criteria suggested by management. b) Act as a communication channel between the Board of Directors and the auditors; assess the results of each audit and the management team's response to the recommendations. If discrepancies arise, mediate between the auditors and the management team in relation to the principles and criteria applicable in the preparation of financial statements. c) Supervise compliance of the audit contract and ensure that opinions on the annual accounts and the main points of the audit report are written clearly and precisely. C.1.33. Is the Secretary of the Board of Directors a Director? NO C.1.34. Describe the procedures for appointment and removal of the Secretary of the Board, stating whether the appointment and removal thereof have been reported upon by the Nominating Committee and approved by the full Board. Procedure for appointment and removal
The Board of Directors will appoint a secretary, who does not necessarily need to be a Board member. Both the appointment and the dismissal of the Secretary must be notified by the Appointments and Remunerations Committee and approved in a plenary session by the Board. The secretary shall assist the Chairman in his/her work and shall ensure that the board operates effectively, taking charge in particular of providing the Board members with advice and necessary information, looking after company documents, reflecting the development of the sessions correctly in the minutes and witnessing the board's agreements (Article 12 of the Regulations of the Board). Does the Nominating Committee report on the appointment? Does the Nominating Committee report on the removal? Does the full Board approve the appointment? Does the full Board approve the removal?
YES YES YES YES
Is the secretary of the Board especially responsible for ensuring compliance with good governance recommendations? YES
C.1.35. Indicate the mechanisms, if any, used by the Company to preserve the independence of the auditors, the financial analysts, the investment banks and the rating agencies. Articles 15.4 and 41 of the Code of Conduct for the Board of Directors contemplate the grounds for action in this sense, both of the Audit and Compliance Committee and of the Board of Directors itself, aimed at preserving the independence of the auditor and transparency in relations with analysts and financial institutions. C.1.36. Indicate whether the Company has changed the external auditor during the fiscal year. If so, identify the incoming and the outgoing auditor: NO C.1.37. Indicate whether the audit firm performs other non-audit work for the Company and/or its Group. If so, state the amount of the fees paid for such work and the percentage they represent of the aggregate fees charged to the Company and/or its Group. YES
Amount of other non-audit work (thousands of Euros) Amount of non-audit work / Aggregate amount billed by the audit firm (%)
Company 37.40
191
Group 41 8.100
Total 232 45.500
C.1.38. State whether the audit report on the Annual Financial Statements for the prior fiscal year has observations or qualifications. If so, state the reasons given by the Chairman of the Audit Committee to explain the content and scope of such observations or qualifications. NO
C.1.39. Indicate the consecutive number of years for which the current audit firm has been auditing the annual financial statements of the Company and/or its Group. In addition, state the percentage represented by such number of years with respect to the total number of years in which the annual financial statements have been audited:
Number of consecutive years Number of years audited by the current audit firm / Number of years in which the company has been audited (%)
Company
3 8.82
Group
3 9.09
C.1.40. Indicate the interests of members of the Board of Directors in the share capital of companies that engage in the same, similar or complementary activities, both with respect to the company and its group, and which have been reported to the company. In addition, state the position or duties of such Directors in such companies: YES Description of procedure Article 25 of the Code of Conduct for the Board of Directors confers the fullest powers to directors to gather information concerning any aspect of the Company. Any requests for information shall be channeled through the President or Secretary who will atend them. This procedure will be the same for internal information and for external advisory if Directors saw it necessary.
C.1.41. Indicate whether there is any procedure for Directors to hire external advisory services, and if so, describe it: Article 25 provides the broadest powers to directors of information on any aspect of the company. Such requests must be channeled through the Chairman or Secretary. C.1.42. Indicate whether there is any procedure for Directors to obtain sufficiently in advance the information required to prepare for meetings of management-level decision-making bodies and, if so, describe it: YES Description of procedure Regarding the reporting duties of the Director, Article 36 of the Regulation provides that the Directors also must inform the Company of all positions held and activities carried out in other companies or entities, and, in general, of any fact or event that may be relevant to their performance as of society.
C.1.43. State whether the Company has established any rules requiring Directors to inform the Company —and, if applicable, resign from their position— in cases in which the credit and reputation of the Company may be damaged. NO Indicate whether the board of directors has analysed the case. If so, explain the grounds for the decision taken as to whether or not the director should retain his/her directorship or, where applicable, describe the actions taken or planned to be taken by the board of directors on the date of this report. C.1.44. Detail significant agreements reached by the Company that come into force, are amended or concluded in the event of a change in the control of the company stemming from a public takeover bid, and its effects. They did not exist C.1.45. Identify, on an aggregate basis, if there are indemnity or “golden parachute” provisions for the benefit of senior management, including executive directors, of the Company or its Group in the event of dismissals or changes of control. Indicate whether such agreements must be reported to and/or approved by the decisionmaking bodies of the Company or its Group: Number of beneficiaries: 2 Type: Chairman and CEO Board of Directors Decision-making body approving the provisions
YES
Shareholders (at the General Shareholders’ Meeting) NO
C.2. Committees of the Board of Directors C.2.1. List all the committees of the Board of Directors and the members thereof: STRATEGY AND INVESTMENTS COMMITTEE Name Mr. ÁLVARO VIDEGAIN
Mr. ANTONIO GONZÁLEZ-ADALID Mr. JUAN ANTONIO GARTEIZGOGEASCOA Mr. DAMASO QUINTANA
% executive directors % proprietary directors
Position
PRESIDENT MEMBER MEMBER MEMBER
25.000 50.000
Class
EXECUTIVE PROPIETARY INDEPENDENT PROPIETARY
% independent directors % other external directors
0.000 25.000
APPOINTMENTS AND REMUNERATIONS COMMITTEE Name Mr. JUAN RAMÓN GUEVARA Mr. GERARDO ARÓSTEGUI Mr. IGNACIO MARCO GARDOQUI
Position
Class
PRESIDENT MEMBER MEMBER
% executive directors % proprietary directors % independent directors % other external directors
INDEPENDENT INDEPENDENT INDEPENDENT
0.000 0.000 100.000 0.000
AUDIT AND COMPLIANCE COMMITTEE Name Mr. JUAN ANTONIO GARTEIZGOGEASCOA Mrs. CONSUELO CRESPO
Position
Class
PRESIDENT MEMBER MEMBER MEMBER
Mr. XABIER IRALA Mr. JOSE TORIBIO % executive directors % proprietary directors % independent directors % other external directors
INDEPENDENT INDEPENDENT INDEPENDENT PROPRIETARY
0.000 25.000 75.000 0.000
C.2.2. Complete the following table on the number of female directors on the various board committees over the past four years:
STRATEGY AND INVESTMENTS COMMITTEE
2014 year NUMBER % 0 0.000
Number of female directors 2013 year 2012 year number % number % 0 0.000 0 0.000
2011 year number % 0 0.000
APPOINTMENTS AND REMUNERATIONS COMMITTEE
0
0.000
0
0.000
0
0.000
0
0.000
AUDIT AND COMPLIANCE COMMITTEE
1
33.330
1
33.330
1
33.330
1
33.330
C.2.3. State whether the Audit Committee has the following duties:
Supervise the process of preparation and the integrity of the financial information relating to the Company and, if applicable, to the Group, monitoring compliance with legal requirements, the proper delimitation of the scope of consolidation, and the correct application of accounting principles. Periodically review the internal control and risk management systems, in order for
YES
YES
the main risks to be properly identified, managed and made known. Ensure the independence and effectiveness of the internal audit area; make proposals regarding the selection, appointment, re-election and withdrawal of the head of the internal audit area; propose the budget for such area; receive periodic information regarding its activities; and verify that senior management takes into account the conclusions and recommendations contained in its reports. Establish and supervise a mechanism whereby the employees may give notice, on a confidential basis and, if deemed appropriate, anonymously, of any potentially significant irregularities, especially of a financial and accounting nature, that they notice at the Company. Submit to the Board proposals for the selection, appointment, re-election and replacement of the external auditor, as well as the contractual terms under which it should be hired. Regularly receive from the external auditor information regarding the audit plan and the results of the implementation thereof, and verify that senior management takes its recommendations into account. Ensure the independence of the external auditor. In the case of groups of companies, favor the auditor of the group as the auditor responsible for audit work at the companies that form part thereof.
YES
YES
YES YES YES YES
C.2.4. Describe the rules of organization and operation of, and the duties assigned to, each of the Board committees. The functioning of the Board of Directors and their committees is regulated in accordance with the Social and Regulation of the Board Bylaws. Each of the committees has delegated one explicit skill set by the Board of Directors and the obligation to report for approval and raise the proposals for the various materials. C.2.5. Indicate, if applicable, the existence of regulations of the Board committees, where such regulations may be consulted and the amendments made during the fiscal year. Also indicate if any annual report of the activities performed by each committee has been voluntarily prepared. The Board Committees are governed by the Regulations of the Board of Directors. Activity is evaluated annually developed by the Board as well as the different committees.
C.2.6. Indicate whether the composition of the Executive Committee reflects the participation of the different directors in the Board of Directors based on their category: NO
If no, explain the composition of your Executive Committee It does not exist. D. RELATED-PARTY TRANSACTIONS D.1. D.1 Identify the competent body and explain the procedure, if any, for approving related parties and intra-group transactions. Competent body for approving related-party transactions The Board of Directors previously informed by Audit and Compliance Committee Procedure for approving related-party transactions Article 34 of Regulation Board stipulates: 1.- Board members or their relatives may not receive personal benefit from a business opportunity in the company unless this is previously offered to the company and the company refuses to exploit it and the benefit is authorized by the Board, after a report by the Audit and Compliance Committee is issued. 2.- For the purposes described in the previous section, a business opportunity is understood as any possibility to make an investment or commercial transaction which may arise or may have been detected in relation to the performance of the post by board members or through the use of the company resources and information or under circumstances which may reasonably lead to believe that the third party offer was in fact aimed at the company. State whether the approval of related-party transactions has been delegated,indicating the body or parties in which said approval has been delegated, if any. The approval of related party transactions and all those involving conflict of interest must be approved by the Board of Directors. D.2 Detail any significant transactions, entailing a transfer of a significant amount or obligations between the company or its group companies, and the company’s significant shareholders: D.3. Detail any significant transactions entailing a transfer of a significant amount or obligations between the company or its group companies, and the directors and/or senior managers: D.4. Detail the significant transactions in which the company has engaged with other companies belonging to the same group, except those that are eliminated in the process of drawing up the consolidated financial statements and that do not form part of the company’s habitual traffic with respect to its object and conditions.
In any event, provide information on any intra-group transaction with companies established in countries or territories considered tax havens: D.5. State the amount of the transactions carried out with other related parties. D.6. Detail the mechanisms established to detect, determine and resolve possible conflicts of interest between the company and/or its group, and its directors, managers and/or significant shareholders. Article 31 of the Code of Conduct for the Board of Directors establishes the following as regards conflict of interests: Board members should refrain from contributing to or interfering in deliberations that affect issues in which they have a personal interest. A Board member will also be considered to have a personal interest when the issue affects his/her spouse, direct family members, or when the issue affects a company where the Board member or the aforementioned members of his/her family holds an executive post or has a significant share in the company. D.7. Is more than one company of the Group listed in Spain? NO
E. RISK CONTROL SYSTEMS E.1 Explain the scope of the company’s Risk Management System. TUBACEX Group has operated in a global market and as a multinational with a worldwide presence. As a result, the Group has progressively developed policies, procedures, tools and resources, both human and technological, to face up to the risks arising from its operations in this global environment. The necessary controls, both preventative and detective, have been implemented. By focusing on a continual improvement approach towards its corporate governance policies, the Group has emphasized to a greater extent the development of this process. Currently, the Group's reporting and control systems and its different business unit systems are oriented towards preventing and mitigating the potential affect of business risks. In 2007 the Board of Directors of Tubacex decided to provide the corporate Internal Audit function with additional resources to enable it to carry out its mission effectively. Among its objectives, the Internal Audit function has been assigned the task of helping to implement a more effective risk management and control model. Consequently, one of the main starting points for the Triennial Internal Audit Plan 2008-2010 was the
drawing up of new risk matrices that have been used as the basis for hierarchizing the tasks to be carried out within this Plan. Within the group of risks inherent to the TUBACEX activity, the Group's governance bodies, including the Board of Directors, the Audit and Compliance Committee, Corporate Finance Management, and the finance and administrative management teams in each of the business units, focus their control activity on the risks detailed in E.3. E.2 Identify the corporate bodies responsible for drawing up and enforcing the Risk Management System As noted in the previous section, the Internal Audit function is tasked to assist the implementation of more effective management and risk control model. For its part, the work of risk control is done from the Board of Directors, Audit Committee, Corporate Finance Department and the finance and administrative departments in the field of each business unit. E.3 Indicate the main risks that could prevent business targets from being met. Credit risk This is one of the company's most important risks as it affects the total business turnover figure. The general policy is to hedge the largest number of operations with credit insurance for which the Group has entered into a number of annual agreements in this respect. Letters of credit or sufficient collateral guarantees cover the operations not included in the aforementioned agreements. The Group's general policy is to maintain minimum levels of exposure to credit risk. This policy has given rise to historic, exceptionally low non-payment percentages. Currency risk The Group is exposed to currency fluctuations. There are two effects arising from product sales transactions and raw material purchasing transactions: On the one hand, there is a risk relating to the potential variation in the profit margin generated through the sale from the moment of sale to its collection and also there is another risk in the value of the products purchased in dollars, mainly raw materials. On the other hand, there is a risk related to the consolidation of results from group subsidiaries operating outside the euro zone (the closing rate method applies) whose financial statements are in dollars. The greatest exposure corresponds to US dollars, although there is also exposure in pounds sterling and Canadian dollars. The group's general policy is not to speculate with open positions, compensating inflows (collections) with outflows (payments) in foreign currency within the estimated terms; for those remaining open positions, having taken into account both the balance position and the risk taken on in the order book, exchange insurance agreements are entered into in order to mitigate the Group's exposure, always following a conservative approach.
Interest rate risk The loans and credit accounts entered into by the group are mainly indexed to the Euribor index and to a lesser extent to the USA Libor index, based on different contract and settlement periods, thus exposing the Group's financial cost to potential variations in interest rates. The group undertakes fixed rate hedging on interest rates in order to mitigate the aforementioned exposure. Risk of volatility in the price of raw materials The group is exposed to variations in the price of the main raw materials used in the production of stainless steel, such as nickel, chromium, molybdenum and stainless scrap metal, whose price is indexed mainly in accordance with the cost of nickel. The most significant effect arises from the price of nickel, whose price is listed daily on the London Metal Exchange (LME) and its impact on the cost of scrap, as well as that of chromium and molybdenum. The group's general policy is to effectively purchase raw materials relating to both steel and tube orders at a fixed price, so that they are isolated from potential fluctuations prior to their collection. E.4 Identify whether the entity has a risk tolerance level. The company has a policy of taking risks with conservative and non-speculative approach. E.5 State what risks have occurred during the year. During the year there has been no risks affecting the Company and / or its group. E.6 Explain the response and supervision plans for the principal risks faced by the company. The TUBACEX group has developed a credit risk control policy that is basically summarized in the need to have the coverage of credit insurance companies in all sales and where there is no coverage, due to country risk or other circumstances, to use secure sales methods, such as letters of credit, documentary credit or bank guarantees, which are always on an irrevocable and first demand basis or advanced payments prior to the delivery of the material. Compliance with this policy means very close credit control in all transactions, in order not to slow down commercial activity and at the same time to guarantee that clients without cover or with exceeded cover are not included. It is also important to bear in mind that given the significant volume of transactions carried out with large distributors, the TUBACEX group's degree of coverage with insurance companies is usually around 80-85% of requests. The specific credit control tools are integrated into the Group's transactional systems and allow the dynamic and on-line analysis of current and forecasted positions of our different clients' orders. These automated systems allow the analysis of our clients' future risk development through a combination of functions such as amount invoiced,
orders pending invoicing, the future collection of both and the level of risk covered by insurance companies. As we have described in the previous chapter, the following controls are carried out in order to cover currency risk: -Dynamic analysis (daily) of all actual and forecasted currency inflows and outflows, including both balance positions (clients and suppliers) as well as the expected future flows arising from orders and expected future payments for the purchasing of raw materials. -Calculation of net exposure in all aforementioned periods and flow matching (implicit cover). -Undertaking of exchange insurance in residual positions. -In order to define the currency hedging strategies for imports and exports, an independent advisor is used who is not linked to any financial entity. Likewise, this advisor notes on-line the amounts and quotes of transactions to be carried out through the spot and forward sale and purchasing of currencies, or through variations in the exchange insurance terms. -Based on the advisor's guidance, all transactions are quoted through different firstrate financial companies, directly buying or selling on the corresponding treasury desks at the best possible market price. The group's general policy in this respect is to maintain the expected and generated commercial margin in each transaction and in this way no speculative action is carried out within the field of currency management. Likewise, the fact that within the TUBACEX group there are companies outside the euro zone, mainly in the USA, means that due to the application of the "closing rate consolidation method", fluctuations in the euro/dollar quotation become a potential risk when integrating the aforementioned subsidiaries result into the Group's consolidated result. The TUBACEX group is exposed in different ways to fluctuations in interest rates depending on whether the group as a whole or individual subsidiaries are being considered. In terms of deposits, the Group's general policy in this respect is, in any case, to not be exposed to possible fluctuations in the equities market, therefore using only interest-bearing deposits. In terms of funding, the group opts for variable interest rate funding, using fixed rate IRS or FRAS hedging. These hedging practices are used both in long term funding positions, as well as in those funding positions renewed on a yearly basis and which as a result, have an effect on the availability of funds. The hedging policies used are based on: -General policy of variable/fixed exposure on an approximate 80/20 basis. -Dynamic follow up both in terms of structured funding, as well as funding levels of working capital through credit accounts or other financial instruments.
-The use of financial hedging instruments quoted in organized markets (not using OTC transactions). -Not undertaking derivatives transactions of a speculative nature. -The use of an independent advisor to develop the hedging strategy. -Market trading with world-class and reputable financial companies. Regarding the volatility in the price of raw materials the basic raw material is nickel, a metal that is listed on the “London Metal Exchange” (LME) and which has a high level of volatility due to the fact of being subjected to the tensions of supply and demand between producers and consumers, but at the same time, is also affected by the interference of investment funds that act speculatively on the price of this material. The appearance of China as a consumer and producer of stainless steel at a world level has increased to an even greater extent this material's levels of volatility. Another material of major importance in the cost structure of raw materials is molybdenum, which will be listed in the London Metal Exchange (LME) from February 2010, a fact that we hope will provide liquidity and visibility to its price, facilitating its management and coverage. This year molybdenum has undergone a profound correction in its price, which has led to a continuous monitoring in order to minimize its impact in the Group's income statement.
F. SYSTEMS OF INTERNAL RISK MANAGEMENT AND INTERNAL CONTROL OVER FINANCIAL REPORTING (ICFR) Describe the mechanisms comprising the risk management and control systems for financial reporting (ICFR) in the entity. F.1 The entity’s control environment Give information, describing the key features of at least: F.1.1. Which bodies and/or functions are responsible for: (i) the existence and maintenance of an adequate and effective ICFR; (ii) its implementation; and (iii) its supervision. The responsibility for the existence and appropriate maintenance of an effective Internal Control System in regards to the Financial Reporting process, as well as its implementation and supervision, corresponds to the Audit and Compliance Committee, a department that has delegated the tasks of designing and verifying the correct implementation of the Internal Control over Financial Reporting on the Internal Audit and Risks Assessment Departments. In this regard, the Regulations of the Board of Directors expressly includes the direction and supervision of the activity of the Internal Audit and Risks Management Department among the responsibilities of the Audit and Compliance Committee, in
addition to the awareness of the financial reporting process and internal control systems of the Group. The scope of the Internal Audit Department, in compliance with the provisions established in the “Regulatory Standard of the Tubacex Group Internal Audit Function”, is the assessment and evaluation of the effectiveness and appropriateness of the internal control system in Tubacex Group, ensuring the reliability and integrity of financial reporting and management, and the criteria and systems used to identify, measure, classify and communicate this information, among other matters.
F.1.2. Whether, especially in the process of drawing up the financial information, the following elements exist: Departments and/or mechanisms responsible for: (i) the design and review of the organizational structure; (ii) the clear definition of lines of responsibility and authority, with an adequate distribution of tasks and functions; and (iii) ensuring that sufficient procedures exist for their correct dissemination within the entity. The Group has a unique organizational structure, approved and disclosed in the Group's Website. Each business unit has its own organizational structure that has been properly documented, formalized and disclosed by each Human Resources department and approved by each General Manager. The organizational structure includes, generically, the scope and responsibility of each department and its members. As regards the scope of the Internal Control over Financial Reporting, in 2011 the Group identified the main controls established in the most important companies in the Basque Country, to manage in a timely manner and mitigate to a reasonable level the main risks associated with the financial reporting generation process and issuance, as well as those persons responsible for the effective implementation of each of these controls. Among 2014 has continued with this process, which has been directed by the Internal Audit and Corporate Risks Management Department, that has been supported by the Corporate Finance Department and overseen by the Audit and Compliance Committee
Code of conduct, approval body, degree of dissemination and instruction, principles and values included (indicating whether specific mention is made of recording the transactions and drawing up of the financial information), body in charge of analyzing non-compliance and proposing corrective measures and sanctions.
The Group has a "Internal Rules of Conduct in the scope of the Securities Markets" (hereinafter, the Regulation), which was approved by the Board of Directors in 2004 that sets out the principles that should govern the behavior of members of the Board of Directors and Senior Management TUBACEX, S.A. and Group companies. This Regulation is posted on the Spanish Securities Exchange Commission (CNMV) Website. In order to verify the adherence of persons subjected to it, the Control and Supervision Department keeps an updated list of these people. In this regard, among other things, the regulation establishes that “the content of the communication [of relevant information to the Spanish Securities Exchange Commission (CNMV)] must be truthful, clear, complete and, where required by the nature of the information, quantified, so that it does not lead to confusion or deception.” The regulation defines relevant information as “all information, the knowledge of which may reasonably affect an investor to acquire or transfer the securities and instruments affected by the Regulation [the securities issued by the Company and/or any of its group companies that are traded in a market or organized trading system, and financial instruments and contracts of any kind which grant the right to acquire the aforementioned instruments], and therefore may have a significant influence on their quotation on a secondary market”. The department responsible for monitoring compliance with the provisions of the Regulation is Tubacex, S.A. Control and Monitoring Department. In 2013 the Board of Directors adopted a Code of Conduct which reflected the standards of behavior due to all internal and external reviewers Tubacex Group. Among 2014 this Code of Conduct has been defunded and the communication channel has been working. Whistle-blower channel, to allow financial and accounting irregularities to be communicated to the audit committee, as well as possible non-compliance with the code of conduct and irregular activities in the organisation, reporting where applicable if this is confidential in nature. The Code of Conduct adopted foreseed a channel for reporting unethical and unlawful conduct regulated in the Code of Conduct. This communication channel is managed by the Compliance and a ultimately by the Audit and Compliance Committee by delegation of the Board of Directors. Periodic training and refresher courses for employees involved in preparing and revising the financial information, and in ICFR assessment, covering at least accounting standards, audit, internal control and risk management. Each company has defined and formalized training programs. The Human Resources Departments prepare annual plans which provide for the needs of specialization and
establish the training schemes for the different staff levels. These plans are submitted for approval to the General Manager of each company. F.2 Financial reporting risk assessment Give information on at least: F.2.1. The key features of the risk identification process, including error and fraud risks, with respect to: Whether the process exists and is documented. The Group has a documented and formalized business and operations Risks Map, which is regularly updated and provides a basis for the work of the Internal Audit Department. Regarding the risks identifying process regarding the financial information generation and emission process, it is framed within the responsibilities of the Corporate Internal Audit Department designated by the Audit and Compliance Committee. The risks identification process conducted throughout 2014 has, in summary, the following characteristics: • Analysis of the consolidated annual accounts to identify the items in the financial • •
statements and the relevant itemization, Based on this information, the procedures by which transactions are processed, which ultimately are reflected in the aforementioned sections and itemizations are identified, Finally, we have identified and prioritized the relevant risks for each of these processes that can lead to errors in the financial information generation and disclosure processes. In this sense, each identified risk is related to one or more potential errors in the generation and disclosure of financial information processes, such as Integrity, Accuracy, Existence and Occurrence, Cut, Valuation and Presentation.
The financial information Risks Map has been submitted to the Audit and Compliance Committee for approval. Whether the process covers all the objectives of financial reporting (existence and occurrence; completeness; valuation; presentation, disclosure and comparability; and rights and obligations), whether the information is updated and with what frequency. Audit and Compliance Committee by expressed delegation of the Board of Directors. The existence of a process for identifying the consolidation perimeter, taking into account aspects including the possible existence of complex corporate structures, instrumental or special purpose vehicles. Monthy the Secretary of the Board of Directors must report about all corporate transactions. Whether the process takes into account the effects of other types of risks (operational,
technological, financial, legal, reputational, environmental, etc) insofar as they impact the financial statements. The process accepts qualitative assessments. Which of the entity's governance bodies supervises the process. Audit and Compliance Committee.
F.3 Control activities Give information on the main features, if at least the following exist: F.3.1. Procedures for review and authorisation of the financial information and the description of the ICFR, to be published on the securities markets, indicating who is responsible for it, and the documentation describing the activity and controls flows (including those concerning risk of fraud) for the different types of transactions that may materially impact the financial statements, including the procedure for closing the accounts and the specific review of the relevant judgements, estimates, valuations and projections. The process of preparation and review of financial information to publish in the stock market is structured on the basis of the closure and publication of annual accounts schedule, for each period of publication, established by the Corporate Finance Department. According to this schedule: The financial statements of Tubacex, S.A., and the consolidated financial statements of Tubacex, S.A. and Subsidiaries are prepared by the Corporate Finance Department. The financial statements are prepared and submitted to the General Director, who proceeds to review them prior to their submission to the Board of Directors. Once the accounts are reviewed by the General Director, the annual accounts are submitted to the Board of Directors a few days before the Board Meeting so that they may review them prior to the formulation of the accounts. Once the annual statements have been formulated by the Board of Directors, the Secretary General, upon delegation by the Secretary of the Board of Directors, proceeds to send the financial information to the Spanish Securities Exchange Commission (CNMV). Regarding the publication of relevant information, and as described above, the Group's "Internal Code of Conduct in relation to the Stock Markets" defines what constitutes relevant information and establishes the guidelines to be followed for their distribution. Specifically, it states that “communication to the Spanish Securities Exchange Commission (CNMV) should be made prior to its dissemination by any other means and as soon as the fact is known, the decision is taken or the agreement or contract with third parties is formalized", furthermore, "The Company will also disseminate this information on their Websites“. Monitoring of the compliance with these obligations is the responsibility of the Control and Monitoring Department that, together with the Corporate Finance Department, drafts the relevant information for its communication to the Spanish Securities Exchange Commission (CNMV). Tubacex Group, and the most important companies in the Basque Country, has identified the key controls that allow for the proper management and impact
mitigation, if any, of each of the risks in relation to the process of generation and issuance of the financial information identified and documented in the Group's financial information Risks Matrix. For each of these controls, the Group has identified the person responsible for their execution and the supporting evidence for its operativeness that will support the internal control review tasks to be performed annually. This information has been documented and structured through the appropriate Risk-Control Matrices, which are annually reviewed in the abovementioned internal control review process. The accounting closing process is documented in the more relevant companies in the Basque Country through an accounting checklist, which includes the major tasks to be developed in the process and the persons responsible for implementing each of these tasks. This checklist is properly completed by each of the persons involved in each accounting closing process (on a monthly basis). With respect to procedures and controls established in relation to the relevant assessments, estimates and projections, the Group, through its Risks-Control Matrix, identifies the main risks related to these aspects, and the controls established to ensure their proper management. Specifically, we have identified the main areas exposed to the assessments and estimates, which are related to: The assessment of the recoverable value of inventories and accounts receivables; The valuation of inventory is in progress and finished as well as derivative financial instruments; and The registration of supplies of every kind, with special attention to provisions resulting from long-term obligations with the employees. In summary, the controls established in this regard can be summarized in the clear identification of responsibilities regarding the identification of potential liabilities, the drafting of the corresponding estimates and their review. Tubacex Group has documented processes for "Financial information reporting (scope, timing, method, etc.).", "Recognition of Income and Expenditure in Goods and Products", "Inventory" and "Obsolescence and Net Realizable Value in Stocks.”
F.3.2. Internal control procedures and policies for information systems (among others, access security, change control, their operation, operational continuity and segregation of functions) that support the relevant processes in the entity with respect to the drawing up and publication of the financial information. The Group has formally approved and formalized procedures in the field of Information Technology, including regular analysis of the evolution of all systems, as a whole.
F.3.3. Internal control procedures and policies designed to supervise the management of activities subcontracted to third parties, and those aspects of the valuation, calculation and assessment outsourced to independent experts, which may materially impact the financial statements. The identification procedure of the operations from which the transactions are processed, which are ultimately reflected in the aforementioned relevant sections and itemizations, as well as the relevant risks for each of them that may result in errors during the financial information generation and issuance processes, does not include
the activities outsourced to third parties that could have a material impact in the financial statements. With respect to the valuations of financial derivatives, the Corporate Finance Department obtains the corresponding assessments from various financial institutions that provide these products. These assessments are reviewed by the Corporate Finance Department, who make their own estimates using an internally developed financial model and compare them with the results obtained by the financial institutions. In case of discrepancy, they contact the financial institutions to clarify these assessments and, obtain new assessments, if appropriate. The aforementioned financial model to value derivative financial instruments, is periodically revised by an independent third party to adapt the model to regulatory changes. Likewise, in relation to the estimated actuarial liabilities arising from the commitments of this nature undertaken by the Group, the Corporate Finance Department obtains the relevant actuarial report from an independent expert third party. This report is subject to review by the Corporate Finance Department, which submits it to timely review by the external auditor, prior to its recording in the relevant accounting entries.
F.4 Information and communication Give information on the main features, if at least the following exist: F.4.1 A specific function to define and keep the accounting policies updated (accounting policy department or area) and deal with queries or conflicts stemming from their interpretation, ensuring fluent communication with those in charge of operations in the organisation, and an up-to-date manual of accounting policies, communicated to the units through which the entity operates. The responsibility of defining and maintaining the Group's accounting policies updated are attributed to the Corporate Finance Department that, for this purpose, it performs the activities below, among other tasks: • Celebration of an annual meeting with the external auditors to update to the accounting innovations and new information itemization in annual accounts. • Celebration of an annual meeting with financial officers and the management of the subsidiaries to transfer the major developments in terms of accounting. • Resolution of any accounting questions that may arise within the Group companies. F.4.2 Mechanisms to capture and prepare the financial reporting in standardized formats, for application and use by all the units of the entity or the group, that support the main financial statements and the notes, and the information detailed on ICFR. The Group's reporting and consolidation process is the responsibility of the Corporate Finance Department and, more specifically, of the Consolidation Manager. Thus, on a monthly basis, the Consolidation Manager submits a reporting schedule to the financial and administrative managers of the Groups companies, in order to ensure reception of the information with sufficient time for the preparation of consolidated financial statements in accordance to the established schedule.
The information of the subsidiaries is reported by the same, employing a "Consolidation Reporting Package" standardized in Excel, which is sent by the Consolidation Manager. Every year, prior to sending the reporting instructions to the subsidiaries for closing the financial year, the person Responsible for Consolidation shall meet with the external auditors so that they may revise the contents of the "Consolidation Reporting Package" and that these are updated, if appropriate, in compliance with the information requirements for annual accounts. The reporting packages received from the subsidiaries for the preparation of the Group's consolidated financial statements for the financial year are audited by external auditors. Likewise, these consolidation packages are reviewed by the Consolidation Manager.
F.5 Supervision of the system's operation Give information, describing the key features of at least: F.5.1 The ICFR supervision activities carried out by the audit committee and whether the entity has an internal audit function whose powers include support to the committee in its task of supervising the internal control system, including the ICFR. Likewise, give information on the scope of the ICFR assessment carried out during the year and of the procedure by which the person in charge of performing the assessment communicates its results, whether the entity has an action plan listing the possible corrective measures, and whether its impact on the financial reporting has been considered. The responsibilities undertaken by the Audit and Compliance Committee include the regular review of the internal control and risks management systems, so that key risks are identified, managed and disclosed appropriately. Likewise, their responsibilities include the oversight of the preparation and the integrity of financial reporting, monitoring compliance with regulatory requirements, the proper delimitation of the scope of consolidation and the correct application of accounting principles. To fulfill these functions, the Audit and Compliance Committee is supported by the Corporate Internal Audit Department, formally constituted and approved in 2007, to which it reports directly. The activity of the Corporate Internal Audit Department within the Tubacex Group is performed in compliance with the principles and procedures defined in the "Regulations Governing Internal Audits" which provides support for the Audit Committee in their supervisory functions, by means of the periodic review of the internal control system, and providing the necessary assistance for the implementation of a management and risk control model, among other goals. The scope of Internal Audit Department, therefore, is the examination and evaluation of the effectiveness and appropriateness of the internal control system of Tubacex Group, understood as the controls that Management has designed and implemented to ensure the reliability and integrity of financial reporting and management, and the
criteria and systems used to identify, measure, classify and communicate this information, among others. The development of these activities is structured in the annual Internal Audit Plan approved by the Audit and Compliance Committee. This Audit Plan is prepared considering the risks identified in the organization's Risks Map, so that the different risks are addressed over time. The results of the review and the suggested action plans are presented to the Audit and Compliance Committee in their quarterly meetings. The Committee approves and monitors the implementation pursuant to the suggested actions. As regards to the Internal Control over Financial Reporting supervision tasks, the main activities developed by the Audit and Compliance Committee are the following: Understanding the Internal Control System model in relation to the Financial Reporting (Internal Control over Financial Reporting) issuance process, suggested by the Spanish Securities Exchange Commission (CNMV), as well as reporting requirements to be included in the Annual Corporate Governance Report, and approval of the decision to adapt our Internal Control over Financial Reporting. Understanding the Group's financial information Risks Map and the content of the Risks Control Matrices developed for the most important companies in the Basque Country. Moreover, the Audit and Compliance Committee meets once a year with our external auditors to learn the most important aspects highlighted in the financial audit process. Currently, the Corporate Internal Audit Department is in the process of developing the 2014 Internal Audit Plan that, among other things, aims to further progress in improving our risks management and internal control systems and, in particular, our Internal Control over Financial Reporting. F.5.2 Whether there is a discussion procedure by which the auditor (in line with the technical auditing notes), the internal audit function and other experts can inform the senior management and the audit committee or the directors of the entity of significant weaknesses in the internal control encountered during the review processes for the annual accounts or any others within their remit. Likewise, give information of whether there is an action plan to try to correct or mitigate the weaknesses observed. Unless there were reasons that required the implementation of extraordinary meetings, the Tubacex Group Audit and Compliance Committee meets annually with the external auditors. At that meeting they review the financial statements and analyze the weaknesses, if any, identified by the external auditors in their review process of the main business processes and general controls that are implemented in the Group as well as the suggested corrective actions suggested. Additionally, as we described above, the Audit and Compliance Committee approves the annual Internal Audit Plan submitted by the Corporate Internal Audit Department
and meets quarterly with the Head of Corporate Internal Audit who presents a report on the developed work and the suggested action plans. F.6 Other relevant information F.7 External auditors report Report of: F.7.1 Whether the ICFR information disclosed to the markets has been submitted to review by the external auditor, in which case the entity must attach the corresponding report as an annex. Otherwise, explain the reasons why it was not. Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain. In the event of a discrepancy, the Spanish-language version prevails.
AUDITORS' REPORT ON THE INFORMATION RELATING TO THE SYSTEM OF INTERNAL CONTROL OVER FINANCIAL REPORTING (ICFR) OF TUBACEX, S.A. AND SUBSIDIARIES ("THE TUBACEX GROUP") FOR THE YEAR ENDED 31 DECEMBER 2014
To the Directors of Tubacex, S.A.: In accordance with the request of the Board of Directors of Tubacex S.A. ("the Entity"), the Parent of the group to which it belongs, together with its subsidiaries ("the TUBACEX Group"), and with our proposalletter of 15 December 2014, we have applied certain procedures to the accompanying "Information relating to the ICFR system" in the Annual Corporate Governance Report of Tubacex, S.A. for the year ended 31 December 2013, which summarises the internal control procedures of the Entity in relation to its annual financial reporting. The Board of Directors is responsible for adopting the appropriate measures in order to reasonably guarantee the implementation, maintenance and supervision of an adequate internal control system and for making improvements to that system and for preparing and establishing the content of the accompanying Information relating to the ICFR system. It should be noted in this regard, irrespective of the quality of the design and operational effectiveness of the internal control system adopted by the Entity in relation to its annual financial reporting, that the system can only permit reasonable, but not absolute, assurance in connection with the objectives pursued, due to the limitations inherent to any internal control system. In the course of our audit work on the financial statements and pursuant to Technical Auditing Standards, the sole purpose of our assessment of the internal control of the TUBACEX Group was to enable us to establish the scope, nature and timing of the audit procedures to be applied to the TUBACEX Group's consolidated financial statements. Therefore, our assessment of internal control performed for the purposes of the aforementioned audit of financial statements was not sufficiently extensive to enable us to express a specific opinion on the effectiveness of the internal control over the regulated annual financial reporting. For the purpose of issuing this report, we applied exclusively the specific procedures described below and indicated in the Guidelines on the Auditors’ Report on the Information relating to the System of Internal Control over Financial Reporting of Listed Companies, published by the Spanish National
Securities Market Commission on its website, which establishes the work to be performed, the minimum scope thereof and the content of this report. Since the work resulting from such procedures has, in any case, a reduced scope that is significantly less extensive than that of an audit or a review of the internal control system, we do not express an opinion on the effectiveness thereof, or on its design or operating effectiveness, in relation to the TUBACEX Group's annual financial reporting for the year ended 31 December 2014 described in the accompanying Information relating to the ICFR system. Therefore, had we applied procedures additional to those established in the aforementioned Guidelines or performed an audit or a review of the internal control over the regulated annual financial reporting, other matters or aspects might have been disclosed which would have been reported to you. Also, since this special engagement does not constitute an audit of financial statements and is not subject to the Consolidated Spanish Audit Law, approved by Legislative Royal Decree 1/2011, of 1 July, we do not express an audit opinion in the terms provided for in that Law. The procedures applied were as follows: 1.
Perusal and understanding of the information prepared by the Entity in relation to the ICFR system – disclosure information included in the directors’ report- and assessment of whether this information addresses all the information required in accordance with the minimum content described in the model Annual Corporate Governance Report established in CNMV Circular no. 5/2013, of 12 June 2013.
2.
Questioning of personnel responsible for the drawing up of the information detailed in point 1 above: (i) to obtain an understanding of the process that goes into drawing up the information; (ii) to obtain information that permits an evaluation of whether the terminology used complies with the framework definitions; and (iii) to obtain information on whether the control procedures described are in place and functioning at the TUBACEX Group.
3.
Review of the explanatory documents supporting the information detailed in point 1 above, including documents furnished directly to the personnel in charge of preparing the ICFR descriptive information. In this respect, the aforementioned documentation includes reports prepared by the Internal Audit Department, senior executives or other internal or external experts providing support functions to the Audit Committee.
4.
Comparison of the information detailed in point 1 above with the knowledge on the TUBACEX Group's ICFR system obtained through the procedures applied during the financial statement audit work.
5.
Perusal of minutes of meetings of the Board of Directors, the Audit Committee and of other Group committees in order to assess the consistency between the ICFR issues addressed therein and the information detailed in point 1 above.
6.
Obtainment of the representation letter in connection with the work performed, signed by those responsible for preparing and formulating the information detailed in point 1 above.
The procedures applied to the information relating to the ICFR system did not disclose any inconsistencies or incidents that might affect the information. This report has been prepared exclusively in the framework of the requirements of Spanish Securities Market Law 24/1988, of 28 July, amended by Sustainable Economy Law 2/2011, of 4 March, and by CNMV Circular no. 5/2013, of 12 June 2013, for the purposes of the description of the ICFR system in Annual Corporate Governance Reports. DELOITTE, S.L. Alberto Uribe-Echevarría Abascal 25 February 2015
G. DEGREE TO WHICH CORPORATE GOVERNANCE RECOMMENDATIONS ARE FOLLOWED Indicate the company’s degree of conformance to the recommendations of the Unified Good Governance Code. If the company does not comply with any of such recommendations, please explain the recommendations, standards, practices or criteria applied by the company. 1. The bylaws of listed companies do not limit the maximum number of votes that can be cast by a single shareholder, or impose other obstacles to the takeover of the company by means of the acquisition of its shares on the market. See sections: A.9, B.1.22, B.1.23 and E.1, E.2.
Complies 2. When both the parent company and a company controlled by it are listed companies, they both provide detailed public disclosure on: a) Their respective areas of activity, and any business dealings between them, as well as between the controlled listed company and other companies belonging to the group; b) The mechanisms in place to resolve any conflicts of interest that may arise. See sections: C.4 and C.7
Not applicable 3. Even if not expressly required under applicable commercial Laws, transactions involving a structural change of the company and, in particular, the following, are submitted to the shareholders at the General Shareholders’ Meeting for approval: a) The transformation of listed companies into holding companies through “subsidiarization,” i.e., reallocating core activities to controlled entities that were previously carried out by the company itself, even if the latter retains full ownership of the former; b) The acquisition or disposal of key operating assets, when it involves an actual change in the corporate purpose; c) Transactions whose effect is tantamount to the liquidation of the company. Complies 4. Detailed proposals of the resolutions to be adopted at the General Shareholders’ Meeting, including the information to which recommendation 28 refers, are made public at the time of publication of the notice of call to the General Shareholders’ Meeting.
Complies 5. Matters that are substantially independent are voted on separately at the General Shareholders’ Meeting, in order to allow the shareholders to express their voting preferences separately. This rule applies, in particular: a) To the appointment or ratification of directors, which shall be voted on individually; b) In the event of amendments of the bylaws, to each article or group of articles that are substantially independent of one another. See section: E.8
Complies 6. Companies allow split votes so financial intermediaries who are recorded as having shareholder status but act for the account of different clients can divide their votes in accordance with the instructions given by such clients. See section: E.4
Complies 7. The Board performs its duties with a unity of purpose and independent judgment, affording equal treatment to all shareholders in furtherance of the corporate interests, which shall be understood to mean the optimization, in a sustained fashion, of the financial value of the Company. It likewise ensures that in its dealings with stakeholders, the Company abides by the laws and regulations, fulfils its obligations and contracts in good faith, respects the customs and good practices of the industries and territories in which it carries on its business, and upholds any other social responsibility standards to which it has voluntarily adhered. Complies 8. The Board assumes responsibility, as its core mission, for approving the company’s strategy and the organization required to put it into practice, and to ensure that Management meets the objectives set while pursuing the company’s interest and corporate purpose. As such, the full Board reserves for itself the right to approve: a) The company’s policies and general lines of strategy, and in particular: i) The strategic or business Plan as well as the management targets and annual budgets; ii) The investment and financing policy; iii) The design of the structure of the corporate group; iv) The corporate governance policy; v) The corporate social responsibility policy; vi) The policy for compensation and assessment of the performance of senior managers;
vii) The risk control and management policy, as well as the periodic monitoring of internal information and control systems. viii) The dividend policy and the policy regarding treasury stock and, especially, the limits thereto. See sections: B.1.10, B.1.13, B.1.14 and D.3
b) The following decisions: i) At the proposal of the chief executive of the Company, the appointment and, if applicable, removal of senior managers, as well as their severance packages. See section: B.1.14.
ii) The compensation of directors and, in the case of executive directors, the additional compensation to be paid for their executive duties and other terms of their contracts. See section: B.1.14.
iii) The financial information that the Company must periodically make public due to its status as listed company. iv) Investments or transactions of all kinds which are strategic in nature due to the large amount or special characteristics thereof, unless approval thereof falls upon the shareholders at the General Shareholders’ Meeting. v) The creation or acquisition of interests in special-purpose entities or entities registered in countries or territories regarded as tax havens, as well as any other transactions or operations of a similar nature whose complexity might impair the transparency of the group. c) Transactions made by the company with directors, with significant shareholders or shareholders with Board representation, or with other persons related thereto (“related-party transactions”). However, Board authorization need not be required in connection with relatedparty transactions that simultaneously meet the following three conditions: 1. They are governed by standard-form agreements applied on an across-theboard basis to a large number of clients; 2. They are conducted at prices or rates generally set by the party acting as supplier of the goods or services in question; 3. The amount thereof is no more than 1% of the Company’s annual revenues. It is recommended that related-party transactions only be approved by the Board upon the prior favorable report of the Audit Committee or such other committee handling the same function; and that the directors affected thereby should neither exercise nor delegate their votes, and should withdraw from the meeting room while the Board deliberates and votes on the transaction. It is recommended that the powers granted herein to the Board are conferred without the power of delegation, except for those mentioned under b) and c) above, which may, for urgent reasons, be adopted by the Executive Committee subject to subsequent ratification by the full Board. See sections: C.1 and C.6
Complies 9. In order to operate effectively and in a participatory manner, the Board ideally is comprised of no few than five and no more than fifteen members. See section: B.1.1
Complies 10. External directors, proprietary and independent, occupy an ample majority of the Board and the number of executive directors is the minimum necessary number, bearing in mind the complexity of the corporate group and the percentage interest held by the executive directors in the Company’s share capital. See sections: A.2, A.3, B.1.3 and B.1.14.
Complies 11. Among external directors, the relation between the number of proprietary directors and independent directors reflects the proportion existing between the share capital of the company represented by proprietary directors and the rest of its capital. This strict proportionality standard can be relaxed so that the weight of proprietary directors is greater than would correspond to the total percentage of the share capital that they represent: 1. In large cap companies where few or no equity stakes attain the legal threshold as significant, but there are shareholders holding interests with a high absolute value. 2. In companies with a plurality of shareholders represented on the Board but not otherwise related. See sections: B.1.3, A.2 and A.3
Complies 12. The number of independent directors represents at least one-third of the total number of directors. See section: B.1.3
Complies 13. The status of each director is explained by the Board at the General Shareholders’ Meeting at which the shareholders are to make or ratify their appointment and that such status is confirmed or reviewed, as the case may be, annually in the Annual Corporate Governance Report, after verification by the Nominating Committee. Said report also discloses the reasons for the appointment of proprietary directors at the proposal of shareholders controlling less than 5% of the share capital, as well as the reasons for not having accommodated formal petitions, if any, for presence on the
Board from shareholders whose equity stake is equal to or greater than that of others at whose proposal proprietary directors have been appointed. See sections: B.1.3 and B.1.4 Complies 14. When women directors are few or non-existent, the Board explains the reasons for this situation and the measures taken to correct it; and in particular, the Nominating Committee takes steps to ensure that, when new vacancies are filled: a) Selection procedures do not have an implied bias that hinders the selection of women directors; b) The company deliberately looks for women with the target professional profile and includes them among the potential candidates. See sections: B.1.2, B.1.27 and B.2.3.
Complies 15. The Chairman, as the person responsible for the effective operation of the Board, ensures that directors receive adequate information in advance of Board meetings; promotes debate and the active involvement of directors during Board meetings; safeguards their rights to freely take a position and express their opinion; and, working with the chairmen of the appropriate committees, organizes and coordinates regular evaluations of the Board and, where appropriate, the Chief Executive Officer. See section: B.1.42
Complies 16. When the Chairman of the Board is also the chief executive of the company, one of the independent directors is authorized to request the calling of a Board meeting or the inclusion of new business on the agenda; to coordinate and hear the concerns of external directors; and to lead the Board’s evaluation of the Chairman. See section: B.1.21
Not applicable 17. The Secretary of the Board takes particular care to ensure that the Board’s actions: a) Adhere to the letter and the spirit of laws and their implementing regulations, including those approved by the regulatory authorities; b) Comply with the company’s bylaws and the Regulations for the General Shareholders’ Meeting, the Regulations of the Board and other regulations of the company; c) Are informed by those good governance recommendations included in this Unified Code as the company has subscribed to. And, in order to safeguard the independence, impartiality and professionalism of the Secretary, his appointment and removal are reported by the Nominating Committee
and approved by the full Board; and that such appointment and removal procedures are set forth in the Regulations of the Board. See section: B.1.34
Complies 18. The Board meets with the frequency required to perform its duties efficiently, in accordance with the calendar and agendas set at the beginning of the fiscal year, and that each Director is entitled to propose items of the agenda that were not originally included therein. See section: B.1.29
Complies 19. Directors’ absences are limited to unavoidable cases and quantified in the Annual Corporate Governance Report. And when there is no choice but to grant a proxy, it is granted with instructions. See sections: B.1.28 and B.1.30
Complies 20. When directors or the Secretary express concerns about a proposal or, in the case of the directors, regarding the running of the company, and such concerns have not been resolved at a Board meeting, such concerns are recorded in the minutes at the request of the person expressing them. Complies 21. The full Board evaluates the following on a yearly basis: a) The quality and efficiency of the Board’s operation; b) On the basis of a report submitted to it by the Nominating Committee, how well the Chairman and chief executive of the company have carried out their duties; c) The performance of its Committees, on the basis of the reports furnished by them. See section: B.1.19
Complies 22. All directors are able to exercise the right to request any additional information they require on matters within the Board’s competence. Unless the bylaws or the Regulations of the Board provide otherwise, such requests are addressed to the Chairman or the Secretary of the Board. See section: B.1.42
Complies
23. All directors are entitled to call on the company for the advice they need to carry out their duties. The company provides suitable channels for the exercise of this right, which, in special circumstances, may include external advice at the company’s expense. See section: B.1.41
Complies 24. Companies organize induction programs for new Directors to rapidly and adequately acquaint them with the Company and its corporate governance rules. Directors are also offered refresher training programs when circumstances so advise. Complies 25. Companies require that directors devote sufficient time and effort to perform their duties efficiently, and, as such: a) Directors apprise the Nominating Committee of their other professional duties, in case they might detract from the necessary dedication; b) Companies lay down rules about the number of boards on which their directors may sit. See sections: B.1.8, B.1.9 and B.1.17
Complies 26. The proposal for the appointment or re-election of directors that the Board submits to the shareholders at the General Shareholders’ Meeting, as well as the interim appointment of directors to fill vacancies, are approved by the Board: a) On the proposal of the Nominating Committee, in the case of independent directors; b) Subject to a prior report from the Nominating Committee, in the case of other directors. See section: B.1.2
Complies 27. Companies post the following director information on their websites, and keep such information updated: a) Professional and biographical profile; b) Other Boards of Directors of listed or unlisted companies on which they sit; c) Indication of the director’s classification, specifying, for proprietary directors, the shareholder they represent or to whom they are related; d) Date of their first and subsequent appointments as a company director; and e) Shares held in the company and options thereon held by them. Complies
28. Proprietary directors tender their resignation when the shareholder they represent sells its entire shareholding interest. The appropriate number of them do likewise when such shareholder reduces its interest to a level that requires the reduction of the number of its proprietary directors. See sections: A.2, A.3 and B.1.2
Complies 29. The Board of Directors does not propose the removal of any independent director prior to the expiration of the term, set by the bylaws, for which he was appointed, except for good cause is found by the Board upon a prior report of the Nominating Committee. In particular, good cause shall be deemed to exist whenever the director has failed to perform the duties inherent in his position or comes under any of the circumstances described in section III.5 (Definitions) of this Code. The removal of independent directors may also be proposed as a result of Tender Offers, mergers or other similar corporate transactions that entail a change in the equity structure of the Company, when such changes in the structure of the Board follow from the proportionality standard mentioned in Recommendation 12. See sections: B.1.2, B.1.5 and B.1.26
Complies 30. Companies establish rules obliging directors to report and, if appropriate, to resign in those instances as a result of which the credit and reputation of the company might be damaged and, in particular, they require that such directors report to the Board any criminal charges brought against them, and the progress of any subsequent proceedings. If a director is indicted or tried for any of the crimes described in Section 124 of the Companies Law, the Board examines the matter as soon as practicable and, in view of the particular circumstances thereof, decides whether or not it is appropriate for the director to continue to hold office. And the Board provides a substantiated account thereof in the Annual Corporate Governance Report. See sections: B.1.43 and B.1.44
Complies 31. All directors clearly express their opposition when they feel that any proposed resolution submitted to the Board might be contrary to the best interests of the company. And in particular, independent directors and the other directors not affected by the potential conflict of interest do likewise in the case of decisions that could be detrimental to the shareholders lacking Board representation. When the Board adopts material or reiterated resolutions about which a director has expressed serious reservations, such director draws the pertinent conclusions and, if he chooses to resign, sets out the reasons in the letter referred to in the next Recommendation.
This Recommendation also applies to the Secretary of the Board, even if he is not a director. Complies 32. Directors who give up their place before their tenure expires, through resignation or otherwise, explain the reasons in a letter sent to all members of the Board. Without prejudice to such withdrawal being communicated as a significant event, the reason for the withdrawal is explained in the Annual Corporate Governance Report. See section: B.1.5
Complies
33. Compensation paid by means of delivery of shares in the company or companies that are members of the group, share options or instruments indexed to the price of the shares, and variable compensation linked to the company’s performance or pension schemes is confined to executive directors. This recommendation shall not apply to the delivery of shares when such delivery is subjected to the condition that the directors hold the shares until they cease to hold office as directors. See sections: A.3 and B.1.3
Complies 34. The compensation of external directors is such as is necessary to compensate them for the dedication, qualifications and responsibility required by their position, but is not so high as to compromise their independence. Complies 35. The compensation linked to company earnings takes into account any qualifications included in the external auditor’s report that reduce such earnings. Not applicable 36. In the case of variable compensation, compensation policies include technical safeguards to ensure that such compensation reflects the professional performance of the beneficiaries thereof and not simply the general performance of the markets or of the industry in which the company does business or circumstances of this kind. Complies
37. When there is an Executive Committee (hereinafter, “Executive Committee”), the breakdown of its members by director category is similar to that of the Board, and its secretary is the Secretary of the Board. See sections: B.2.1 and B.2.6
Not applicable 38. The Board is always kept informed of the matters dealt with and the resolutions adopted by the Executive Committee, and all members of the Board receive a copy of the minutes of the meetings of the Executive Committee. Not applicable 39. In addition to the Audit Committee mandatory under the Securities Market Law, the Board of Directors forms a single Nominating and Compensation Committee as a separate committee of the Board, or a Nominating Committee and a Compensation Committee. The rules governing the make-up and operation of the Audit Committee and the Nominating and Compensation Committee or committees are set forth in the Regulations of the Board, and include the following: a) The Board appoints the members of such Committees, taking into account the background knowledge, qualifications and experience of the Directors and the responsibilities of each Committee, discusses its proposals and reports, and receives a report, at the first meeting of the full Board following the meetings of such committees, on their activities and the work done. b) These Committees are formed exclusively of external directors and have a minimum of three members. The foregoing is without prejudice to the attendance of executive directors or senior managers, when expressly resolved by the members of the Committee. c) Committee Chairmen are independent directors. d) They may receive external advice, whenever they feel this is necessary for the discharge of their duties. e) Minutes are prepared of their meetings, and a copy sent to all Board members. See sections: B.2.1 and B.2.3
Complies 40. Supervising compliance with internal codes of conduct and corporate governance rules is entrusted to the Audit Committee, the Nominating Committee or, if they exist separately, to the Compliance or Corporate Governance Committee. Complies 41. The members of the Audit Committee and, particularly, the Chairman thereof, are appointed taking into account their background knowledge and experience in accounting, auditing and risk management matters.
Complies 42. Listed companies have an internal audit function which, under the supervision of the Audit Committee, to ensure the smooth operation of the information and internal control systems. Complies 43. The head of internal audit presents an annual work plan to the Audit Committee; reports to it directly on any issues arising in the execution of such plan; and submits an activities report to it at the end of each fiscal year. Complies 44. Risk control and management policy specifies at least: a) The different types of risk (operational, technological, financial, legal, reputational, etc.) the company is exposed to, including contingent liabilities and other off-balance sheet risks among financial or economic risks; b) The determination of the risk level the company sees as acceptable; c) Measures in place designed to mitigate the impact of the risks identified, should they materialize; e) The internal reporting and control systems to be used to monitor and manage the above risks, including contingent liabilities and off-balance sheet risks. See section: D
Complies 45. The Audit Committee’s role is: 1. With respect to the internal control and reporting systems: a) To monitor the preparation and the integrity of the financial information relating to the company and, if appropriate, to the group, checking compliance with legal requirements, the appropriate demarcation of the scope of consolidation, and the correct application of accounting standards. b) To periodically review internal control and risk management systems so main risks are properly identified, managed and disclosed. c) To ensure the independence and efficacy of the internal audit function; propose the selection, appointment, reappointment and removal of the head of the internal audit service; propose the department’s budget; receive regular reports on its activities; and verify that senior management takes into account the findings and recommendations of its reports. d) To establish and supervise a mechanism whereby staff can report, confidentially and, if appropriate, anonymously, potentially significant irregularities within the company that they detect, in particular financial or accounting irregularities. 2. With respect to the external auditor: a) To make recommendations to the Board for the selection, appointment, reappointment and replacement of the external auditor, and the terms of its engagement.
b) To receive regular information from the external auditor on the audit plan and the results of the implementation thereof, and check that senior management takes its recommendations into account. c) To monitor the independence of the external auditor, to which end: i) The company reports a change of auditor to the CNMV as a significant event, accompanied by a statement of any disagreements with the outgoing auditor and the reasons for the same; ii) The Committee ensures that the company and the auditor adhere to current regulations on the provision of non-audit services, the limits on the concentration of the auditor’s business and, in general, all other regulations established to safeguard the independence of the auditors; iii) In the event of resignation of the external auditor, the Committee investigates the circumstances that may have given rise thereto. d) In the case of groups, the Committee favors the auditor of the group assuming responsibility for the audits of the companies that form part thereof. See sections: B.1.35, B.2.2, B.2.3 and D.3
Complies
46. The Audit Committee may cause any company employee or manager to appear before it, and even order their appearance without the presence of any other manager. Complies 47. The Audit Committee reports to the Board, prior to the adoption thereby of the corresponding decisions, on the following matters specified in Recommendation 8: a) The financial information that the Company must periodically make public due to its status as a listed company. The Committee should ensure that interim financial statements are prepared under the same accounting standards as the annual financial statements and, to this end, consider whether a limited review by the external auditor is appropriate. b) The creation or acquisition of interests in special-purpose entities or entities registered in countries or territories considered tax havens, and any other transactions or operations of a comparable nature whose complexity might impair the transparency of the group. c) Related-party transactions, unless such prior reporting duty has been assigned to another supervision and control committee. See sections: B.2.2 and B.2.3
Complies 48. The Board of Directors seeks to present the financial statements to the shareholders at the General Shareholders’ Meeting without reservations or qualifications in the auditor’s report and, in the exceptional instances where they do
exist, both the Chairman of the Audit Committee and the auditors give a clear account to the shareholders of the content and scope of such reservations or qualifications. See section: B.1.38
Complies 49. The majority of the members of the Nominating Committee –or of the Nominating and Compensation Committee, if one and the same– are independent directors. See section: B.2.1
Complies 50. The Nominating Committee has the following duties, in addition to those stated in the earlier Recommendations: a) To assess the qualifications, background knowledge and experience necessary to sit on the Board, defining, accordingly, the duties and qualifications required of the candidates to fill each vacancy, and decide the time and dedication necessary for them to properly perform their duties. b) To examine or organize, in the manner it deems appropriate, the succession of the Chairman and the chief executive and, if appropriate, make proposals to the Board for such succession to take place in an orderly and well-planned manner. c) To report on senior manager appointments and removals that the chief executive proposes to the Board. d) To report to the Board on the gender diversity issues discussed in Recommendation 14 of this Code. See section: B.2.3
Complies 51. The Nominating Committee consults with the Company’s Chairman and chief executive, especially on matters relating to executive directors. And that any board member may request that the Nominating Committee consider possible candidates to fill vacancies for the position of director, if it finds them suitably qualified. Complies 52. The Compensation Committee is responsible for the following duties, in addition to those set forth in the earlier recommendations: a) To propose to the Board of Directors: i) The compensation policy for directors and senior managers; ii) The individual compensation of executive directors and other terms of their contracts; iii) The basic terms and conditions of the contracts with senior managers. b) To ensure compliance with the compensation policy set by the company. See sections: B.1.14 and B.2.3
Complies 53. The Compensation Committee consults with the Chairman and chief executive of the Company, especially on matters relating to executive directors and senior managers. Complies H. OTHER INFORMATION OF INTEREST 1. If you consider that there is any material aspect or principle relating to the Corporate Governance practices followed by your company that has not been addressed in this report and which is necessary to provide a more comprehensive view of the corporate governance structure and practices at the company or group, explain briefly. 2. You may include in this section any other information, clarification or observation related to the above sections of this report. Specifically indicate whether the company is subject to corporate governance legislation from a country other than Spain and, if so, include the compulsory information to be provided when different to that required by this report. 3. Also state whether the company voluntarily subscribes to other international, sectorial or other ethical principles or standard practices. If applicable identify the Code and date of adoption. At the close of 2014 under the Companies Act three directors lose there status as independent. This affects the composition of the board of directors and of its committees. This and other law modifications have been treated by the Board of Directors and its result will be reflected in the proposals to be submitted to the next AGM. This annual corporate governance report was approved by the Board of Directors of the Company at its meeting on February 24th, 2015. Indicate whether any Directors voted against or abstained in connection with the approval of this Report. NO
ANNEX I
ANNUAL REPORT ON THE REMUNERATION OF DIRECTORS OF LISTED COMPANIES
COMPANY IDENTIFICATION/IDENTIFICATION DETAILS OF THE ISSUER
END OF BUSINESS YEAR
VAT Number/C.I.F
31/12/2014
A-01003946
CORPORATE NAME TUBACEX, S.A.
REGISTERED OFFICE TRES CRUCES, 8, (LLODIO) ALAVA
NOTICE: This document is a translation of a duly approved Spanish-language document, and is provided for informational purposes only. In the event of any discrepancy the Spanish original will prevail.
1
REPORT TEMPLATE OF ANNUAL REPORT ON THE REMUNERATION OF DIRECTORS OF LISTED COMPANIES A. REMUNERATIONS POLICY OF THE COMPANY FOR THE CURRENT YEAR A.1. Explain the company’s remuneration policy. This section will include information regarding
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General principles and foundations of the remuneration policy. Most significant changes made to the remuneration policy from the policy applied during the prior financial year, as well as changes made during the financial year to the terms for exercising options granted. Used criteria and composition of comparable groups of companies whose remuneration policies have been reviewed to establish the remuneration policy of the Company. Relative importance of variable compensation items with respect to fixed compensation items and criteria followed to determine the different components of the remuneration package of the directors (remuneration mix).
Explain the remuneration policy Article 26 of the Board of Directors Regulations regarding to the remuneration of the directors establishes the following: 1. - Board members will be entitled to receive the remuneration set out by the Board of Directors according to the Articles of Association provisions and guidelines set by the Appointments and Remunerations Committee. 2. - The Board will ensure that Board member remunerations are moderate in relation to market demands, taking into account Company commitment and responsibility attached. 3. - The Board of Directors will draft an annual report regarding remunerations for Board members according to legal terms and conditions, which will be made available to shareholders during the AGM meeting and subject to vote as a separate item on the agenda. In this sense, the remuneration policy of the Board of Directors was modified in 2013 th by agreement of the General Shareholders Meeting when it met last 29 May 2013 since, until the financial year 2012 the remuneration of directors limited exclusively the remuneration through attendance fees for Board meetings and its Committees, as well as through statutory benefits when permitted by the consolidated results of the Company and by the established in the Bylaws. Currently, and in line with the tendencies on remuneration matters followed by other listed companies, the Board of Directors has removed the variable remuneration by results, including the fixed amounts for membership to the Board and to the different Committees as a stable form of remuneration for its members. Likewise, it keeps the concept of accrual of attendance fees for Board meetings as long as the attendance takes effect and 2
removing this concept for the meetings of its Committees. On the other hand, for those positions which perform representative or executive tasks shall bear additional remunerations. The modification of the system was reflected in Article 16 of the Bylaws which restates the following: 16.4 The Director position is paid, and the remuneration will comprise a fixed annual amount established by the General Meeting, which will remain in force until the Board decides to modify it. The remuneration of the Directors shall comprise a fixed amount for being part of the Board and the existing Committees, in addition to the allowances accrued for their effective attendance to the meetings of the Board of Directors. Both concepts will involve an amount that may be higher for those Directors holding certain positions, taking into consideration their dedication, duties and the responsibilities that they have assumed. This remuneration can be complemented with provisions to social security systems. Likewise, and within the terms agreed at the General Meeting, they may also be paid with shares, share options or instruments related to their trading. 16.5 This remuneration system is valid for each twelve-month financial year. The accrual of the remuneration will be at month end; therefore the retribution of each Director shall be proportional to the time that the Director has exercised their position during the financial year for which the remuneration was set. 16.6 This retribution system for Directors will be compatible with the fact that Directors with executive duties in the Company, regardless of the legal nature of the relationship, may receive other payments aside from those that correspond to them as Directors, based on the aforementioned executive responsibilities, and, where appropriate, service lease, senior management or similar relationships that are established between the Company and these Directors, which may consist of compensations, variable remunerations, pensions, pension plans and insurances, social security or compensations of any class. The Annual General Meeting of Shareholders of 2013 fixed the maximum limit remunerations for Board of Directors up to 980 thousand euros and it will remain in force unless Annual General Meeting of Shareholders decides to modify it. To this effect, remunerations regarding representative and executive functions do not apply.
A.2. Information regarding preparatory work and the decision-making process followed to determine the remuneration policy, and any role played by the Remuneration Committee and other control bodies in the configuration of the remuneration policy. This information shall include any mandate given to the Remuneration Committee, the composition thereof, and the identity of external advisors whose services have been used to determine the remuneration policy. There shall also be a statement of the nature of any directors who have participated in the determination of the remuneration policy.
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Explain the process to determine the remuneration policy The Appointments and Remunerations Committee is the body in charge of ensuring that the remuneration policy of the Board of Directors, as well as that of the Senior Management, is adequate to the market and consistent with the evolution of the results of the Company. Such Committee shall be formed by four non executive members, the majority being of independent nature. Furthermore, its Chairman shall be appointed always amongst its independent members. According to article 16 of the Board Regulations, notwithstanding other tasks assigned by the Board, the Appointments and Remunerations Committee has the following basic responsibilities: a) Formulate and review the criteria governing the composition of the Board of Directors and the appointment of candidates; b) Provide the Board of Directors with reports and proposals for the appointment of Board members. The board can directly appoint them (co-option) or consider for approval at the AGM; c) Plan the succession of the Chairman and the Chief Executive Officer, if applicable; d) Propose the system and level of remuneration for Board members, managing directors and management committees to the Board of Directors; e) Periodically review the remuneration system, considering its performance and efficiency; f) Ensure that selection procedures do not hinder gender diversity and try to include female members with appropriate professional profile among the potential candidates in each case; 3. - The Committee should take into account suggestions made by the Chairman, Board members, directors or the company shareholders. 4. - The Appointments and Remuneration Committee shall meet every time the Board, or its Chairman requests that a report be issued or a proposal adopted and in any case, the Committee shall meet whenever required to ensure the good performance of its functions. In any case, the Committee shall meet once a year to prepare information on the Board members' remuneration that the Board of Directors and the Management must approve and include in the annual public documentation. At 31st December 2014, the Appointments and Remunerations Committee is formed by three independent directors: Mr. Juan Ramón Guevara Saleta (Chairman) Mr. Ignacio Marco-Gardoqui Ibañez (member of the board) Mr. Gerardo Aróstegui Gomez (member of the board) During 2014 remunerations policy of Board of Directors has continued in the same line of 2013 after remuneration items being modified, eliminating variable remunerations and fixing retribution for memberships to the BOD and its committees. Likewise attendance fees to the Board meetings keep applying.
A.3. State the amount and nature of the fixed components, with a breakdown, if applicable, of remuneration for the performance by the Executive Directors, of the duties of Senior Management, of additional remuneration as chair or member of a committee of the Board, of attendance fees for participation on the Board and the committees thereof or other fixed remuneration as director, and an
4
estimate of the annual fixed remuneration to which they give rise. Identify other beneficiaries that are not paid in cash and the basic parameters upon which such benefits are provided. Explain the fixed components of remuneration th
The General Shareholders Meeting held the 29 May 2013 approved a maximum remuneration limit for the Board of Directors of 980 thousand Euros. Such amount shall remained in force as long as the General Shareholders Meeting does not agree its modification, only being able to be reduced by agreement of the Board of Directors, these being independent and not computed for these purposes the direct or indirect remunerations by the Directors with executive powers by virtue of contracts of services rendered, Senior Management contracts, labor contracts or those signed with the Company. In this context, the remuneration system of the Board of Directors covers two types of fixed amounts, one of 40,000 annual Euros for the membership to the Board and another of 10,000 annual Euros for the membership to any of its Committees, being 15,000 Euros of the latter for the Chairman thereof. Meanwhile, the amount for the attendance fees to the Board meetings comes to 2,700 Euro per meeting, which shall only accrue when the attendance takes effect and is exclusive to meetings of the Board of Directors. Additionally, the directors who perform additional representation or executive tasks have an additional fixed remuneration. A.4. Explain the amount, nature and main features of the variable components of the remuneration systems. In particular: – Identify each of the remuneration plans of which the directors are beneficiaries, the scope thereof, the date of approval thereof, the date of implementation thereof, the date of effectiveness thereof, and the main features thereof. In the case of share option plans and other financial instruments, the general features of the plan shall include information on the conditions for the exercise of such options or financial instruments for each plan. – State any remuneration received under profit-sharing or bonus schemes, and the reason for the accrual thereof; – Explain the fundamental parameters and rationale for any annual bonus plan. – The classes of directors (executive directors, proprietary external directors, independent external directors or other external directors) that are beneficiaries of remuneration systems or plans that include variable remuneration. – The rationale for such remuneration systems or plans, the chosen standards for evaluating performance, and the components and methods of evaluation to determine whether or not such evaluation standards have been met, and an estimate of the absolute amount of variable remuneration to which the current remuneration plan would give rise, based on the level of compliance with the assumption or goals used as the benchmark. – If applicable, information shall be provided regarding any payment deferral periods that have been established and/or the periods for retaining shares or other financial instruments.
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Explain the variable components of the remuneration systems The only member of the Board of Directors that is beneficiary of remuneration systems that include variable remuneration part is the Chief Executive by virtue of his contract of th engagement granted with the Board of Directors the 28 January 2013. Such variable remuneration is divided in a variable annual remuneration and a multiannual based on a bonus and a plan of share rights. The variable annual remuneration of all the executive team is measured in terms of quantitative objectives; it counts with demanding limits for its activation and an application curve annually reviewed by the Appointments and Remunerations Committee. For its part, the object of stock option plan consists in 500.000 rights over shares which, in case th of exercising the purchase it shall be the market value of 28 January 2013 and shall be linked st th to by 31 December 2015 the market value shows an increase of 40% with respect to 28 January 2013. Such plan was approved by the first executive and other members of the Senior th Management by agreement of the General Shareholders Meeting held 29 May 2013 and reported in due to the CNMV. A.5. Explain the main features of the long-term saving systems, including retirement and any other survival benefit, either wholly or partially financed by the company, and whether funded internally or externally, with an estimate of the equivalent annual amount or cost thereof, stating the type of plan, whether it is a defined-contribution or -benefit plan, the conditions for the vesting of economic rights in favor of the directors, and the compatibility thereof with any kind of termination payment for advanced or early termination of the labor relationship between the company and the director. Also state the contributions on the director’s behalf to defined-contribution pension plans; or any increase in the director’s vested rights, in the case of contributions to defined-benefit plans. Explain the long-term saving systems The members of the Board of Directors of the Company are not beneficiaries of any long-term saving system. Exclusively the positions of Chairman and CEO due to their additional tasks have attached/entail supplementary compensations amongst which there is an annual contribution plan and a defined benefit plan. Such contribution is performed annually and is totally compatible with any termination benefits on their contracts.
A.6. State any termination benefits agreed to or paid in case of termination of duties as a director. Explain the termination benefits Only the positions of Chairman and CEO have termination benefits in the event of being terminated in advanced from their positions by a legally declared agreement of the General Shareholders Meeting or the Board of Directors for a reason other than the non compliance of the tasks inherent to their positions. A.7. State the terms and conditions that must be included in the contracts of executive directors performing senior management duties. Include information regarding, among other things, the term, limits on termination benefit amounts, continuance in office clauses, prior notice periods, and payment in lieu of prior notice, and any other clauses relating to hiring bonuses, as well as benefits or golden parachutes due to advanced or early termination of the contractual relationship between the company and the executive director. Include, among other things, any post-contractual clauses or agreements on non-competition, exclusivity, continuance in office or loyalty, and non-competition. 6
Explain the terms of the contracts of the executive directors The Board of Directors Regulations regulates the terms of appointment and obligations of the Director as follows: ARTICLE 28. - General board member duties.1. - Pursuant to the provisions of Arts. 5, 6 and 7, the role of a board member is to guide and monitor the company management to maximize the company value in favor of shareholders. 2. - While performing their duties, board members must act diligently as an organized employer and loyal representative, and are bound in particular to: a)
Be informed and appropriately prepare any meetings of the Board and delegated bodies he/she is part of; b) To attend meetings of bodies he/she is part of playing an active part in discussions to make his/her criteria effectively count in decision making processes. If due to reasonable circumstances, a board member fails to attend the meetings to which he/she was convened, he/she must appoint another board member to represent them. To guarantee the commitment of Board members, they can be part of a maximum of five Boards of Directors and are required to request authorization from the Appointments and Remunerations Committee to increase the above mentioned number. For this purpose, the Boards of Directors of Group subsidiaries or similarly operating structures will be excluded. c)
To carry out any specific task ordered by the Board of Directors and reasonably included in his/her dedication commitment. d) To investigate any irregularity in the company management which may have come to their attention and monitor any risk situation. e) To encourage people empowered to convene to call an extraordinary Board meeting or to include any issues he/she may consider relevant in the agenda of the first meeting to be held. ARTICLE 29. - Confidentiality obligation of board members.1.- Board members will uphold secrecy regarding any discussions of the Board of Directors and delegated bodies he/she are part of and in general board members should refrain from revealing any information they may have accessed during the exercise of their post. 2. - Confidentiality obligation shall remain even after the post held has finished. ARTICLE 30. - Non- competition obligation.1. - Board members must not render professional services for companies whose corporate purpose is wholly or partially equivalent to that of the company. Posts which can be performed in the Group's companies are an exception. 2. - Before accepting any executive post in another company or institution, the board member must consult the Appointments and Remunerations Committee. 7
ARTICLE 31. - Conflicts of interest.1. - Board members should refrain from contributing to or becoming involved in discussions related to issues where they have a personal interest. A Board member will also be considered to have a personal interest when the issue affects his/her spouse, direct family members, or when the issue affects a company where the Board member or the above mentioned members of his/her family holds an executive post or has a significant share in the company.
A.8. Explain any supplemental remuneration accrued by the directors in consideration of services provided other than those inherent in their position. Explain the supplemental remuneration There are no existent supplemental remuneration in consideration of services provided other than those inherent to their position. A.9. State any remuneration in the form of advances, loans or collateral provided, with an indication of the interest rate, main features, and amounts potentially returned, as well as the obligations assumed on their behalf as a guarantee. Explain the advances, loans or collateral provided The remuneration system does not provide for advance, loans or collateral provided. A.10. Explain the main features of remunerations in kind Explain the remunerations in kind Exclusively the positions of Chairman and CEO are entitled to receive remunerations in kind consisting of the vehicle renting at the Company’s expense during their term of office by reason of their respective representation and executive duties as well as a life insurance and a contribution to a employment and security plan. A.11. State the remuneration accrued by the director by virtue of payments made by the listed company to a third party to which the director provides services, if such payments are intended to provide remuneration for the services thereof in the company. Explain the remunerations accrued by the director by virtue of the payments made by the listed company to a third party to which the director provides services None. A.12. Any item of remuneration other than those listed above, of whatever nature and provenance within the group, especially when it is deemed to be a related-party transaction or when the making thereof detracts from a true and fair view of the total remuneration accrued by the director.
8
Explain the other items of remuneration None. A.13. Explain the actions taken by the company regarding the remuneration system in order to reduce exposure to excessive risk and align it with the 16 long-term goals, values, and interests of the company, including any reference to: measures provided to ensure that the remuneration policy takes into account the long-term results of the company, measures establishing an appropriate balance between the fixed and variable components of remuneration, measures adopted with respect to those categories of personnel whose professional activities have a significant impact on the entity’s risk profile, recovery formulas or clauses to be able to demand the return of the variable components of remuneration based on results if such components have been paid based on data that is later clearly shown to be inaccurate, and measures provided to avoid, if applicable, any conflicts of interest. Explain actions taken to reduce risks The Board of Directors of the Company approved in 2013 the new Strategic Plan of the Company with 2017 horizon, in which the risks reduction to what the Company is exposed have an essential role and therefore the annual individual objectives concerning the management and minimization of the risks of every Department are intimately linked to the variable remuneration of the Senior Management. The conflicts of interests, as mentioned in the Corporate Governance Annual Report, are regulated by article 34 and shall be analyzed by the Board of Directors upon a report to that effect of the Audit and Compliance Committee. B. REMUNERATION POLICY FOR FUTURE FINANCIAL YEARS B.1. Provide a general forecast of the remuneration policy for future financial years that describes such policy with respect to: fixed components and attendance fees and remuneration of a variable nature, relationship between remuneration and results, benefits systems, terms of the contracts of executive directors, and outlook for more significant changes in remuneration policy as compared to prior financial years. General forecast of remuneration policy The directors remuneration policy is oriented to stability insofar as the circumstances that foster its modification are maintained. In any event, the obligation to annually submit to consultative vote by the General Shareholders Meeting, demands an annual review of its adaptation to the market and Company’s circumstances. Nevertheless, in line with the historical evolution of the remuneration systems of the Board of Directors of the Company, it is estimated that the concepts and amounts will not be modified in the following years except for the annual updates regarding to the CPI that could be applied to the compensations of the executives.
B.2. Explain the decision-making process for configuring the remuneration policy for future financial years, and any role played by the Remuneration Committee. Explain the decision-making process for configuring the remuneration policy Pursuant to article 5.3.e of the Board of Directors Regulations, The Appointments and Remunerations Committee has a leading role in advising in Board of Directors matters and in 9
proposing changes in the remuneration system derived from the strict annual review executed over the adaptation of the system to the Company’s environment. To do this, the Committee meets annually, on the score of the close of the fiscal year, and analyzes the level of achievement of the objectives of the Company and the evolution of the variable remuneration associated with these objectives. With its conclusions, the Committee reports to the Board of Directors the maintenance or system modification proposals as well as the update of the salaries. B.3. Explain the incentives created by the company in the remuneration system to reduce excessive risks and to align them with the long-term goals, values and interests of the company. Explain the incentives created to reduce risks The remuneration policy of the Board of Directors was modified to adequately remunerate the permanent responsibility of the directors in the governance of the company. In this sense and since the Board of Directors is responsible for setting its degree of risk tolerance, annually the Appointments and Remuneration Committee reviews whether the remuneration policy meets the long term objectives and values of the society.
C.
OVERALL SUMMARY OF THE APPLICATION OF THE REMUNERATION POLICY DURING THE FINANCIAL YEAR JUST ENDED
C.1 Summarize the main features of the structure and items of remuneration from the remuneration policy applied during the financial year just ended, which give rise to the breakdown of individual remuneration accrued by each of the directors as reflected in section D of this report, as well as a summary of the decisions made by the board to apply such items. Explain the structure and items of remuneration from the remuneration policy applied during the financial year The remuneration policy applied during 2014 is the one approved by the General Shareholders Meeting and applied with effect from 2013 for all the members of the Board has consisted in fixed fees for the membership to the Board and its Committees, besides an updated effected attendance fee to the ten meetings held by the Board of Directors during the financial year. Additionally, the positions of Chairman and CEO received an additional remuneration as retribution of their representative and executive duties respectively. In addition, and on the score of an annual audit, it has begun the provision of 1102 thousand Euros as accrue of the th long-term incentive plan approved by the General Shareholders Meeting at last 29 May.
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D. BREAKDOWN OF INDIVIDUAL REMUNERATION ACCRUED BY EACH OF THE DIRECTORS
Name
Class
Accrual Period
Other non-executive Independent
From 01/01/2014 through 31/12/2014 From 01/01/2014 through 31/12/2014
Mr. GERARDO AROSTEGUI
Independent
From 01/01/2014 through 31/12/2014
Mrs. CONSUELO CRESPO
Independent
From 01/01/2014 through 31/12/2014
Mr. XABIER DE IRALA
Independent
From 01/01/2014 through 31/12/2014
Proprietary
From 01/01/2013 through 31/12/2013
Mr. JUAN RAMON GUEVARA
Independent
From 01/01/2014 through 31/12/2014
Mr. JUAN JOSE IRIBECAMPOS
Proprietary
From 01/01/2014 through 31/12/2014
Independent
From 01/01/2014 through 31/12/2014
Proprietary
From 01/01/2014 through 31/12/2014
Executive
From 01/01/2014 through 31/12/2014
Mr. DAMASO QUINTANA
Proprietary
From 01/01/2014 through 31/12/2014
Mr. JOSE TORIBIO
Proprietary
From 01/01/2014 through 31/12/2014
Mr. ALVARO VIDEGAIN Mr. JUAN ANTONIO GARTEIZGOGEASCOA
Mr. ANTONIO GONZALEZ-ADALID
Mr. IGNACIO MARCO-GARDOQUI BAGOETA, S.L. Mr. JESUS ESMORIS
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D.1 Complete the following tables regarding the individualized remuneration of each of the directors (including the remuneration for the financial year for executive duties) accrued during the financial year. a) Accrued remuneration at the company covered by this report: i) Cash remuneration (in thousands of €) Name
Salary
Fixed remuneration
Attendance fees
Short-term variable remuneration
Long-term variable remuneration
Remuneration for belonging to committees of the board
Termination benefits
Other items
Total financial year 2014
Total financial year 2013
Mr. ANTONIO GONZALEZ-ADALID
0
40
27
0
0
10
0
0
77
77
Mr. JUAN RAMON GUEVARA Mr. IGNACIO MARCO-GARDOQUI Mr. XABIER DE IRALA Mrs. CONSUELO CRESPO Mr. GERARDO AROSTEGUI Mr. JUAN ANTONIO GARTEIZGOGEASCOA Mr. ALVARO VIDEGAIN Mr. JESUS ESMORIS Mr. DAMASO QUINTANA
0 0 0 0 0 0
40 40 40 40 40 40
27 24 24 27 27 27
0 0 0 0 0 0
0 0 0 0 0 0
15 10 15 10 10 10
0 0 0 0 0 0
0 0 0 0 0 0
84 74 79 77 77 77
82
137 275 0
0 40 36
27 27 22
0 150 0
0 0 0
00 10 0
0 0 0
13 15 0
177 517 58
0
36
16
0
0
0
0
0
52
MR. JOSE TORIBIO
77 80 77 77 80 320 429 0
0
ii) Share-based remuneration systems
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iii) Long-term savings systems Name
Contribution for the year by the Company (€ thousands)
Amount of accumulated funds (€ thousands)
Financial year 2014
Financial year 2013
Financial year 2014
Financial year 2013
Mr. JESUS ESMORIS
14
14
28
14
Mr. ALVARO VIDEGAIN
11
11
163
152
14
b) Remuneration accrued by directors of the company for belonging to boards at other companies of the group: i) Cash remuneration (in thousands of €)
Name
Salary
Fixed remuneration
Attendance fees
Short-term variable remuneration
Mr. ALVARO VIDEGAIN
0
0
63
0
Mr. JESUS ESMORIS
0
0
56
Mr. JUAN ANTONIO GARTEIZGOGEASCOA
0
0
Mr. IGNACIO MARCOGARDOQUI
0
0
Long-term variable remuneration
Termination benefits
Other items
Total financial year 2014
0
Remuneration for belonging to committees of the Board 0
Total financial year 2013
0
0
63
63
0
0
0
0
0
56
57
8
0
0
0
0
0
8
8
8
0
0
0
0
0
8
20
ii) Share-based remuneration systems iii) Long-term savings systems
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c) Summary of remuneration (in thousands of €): The summary should include the amounts for all items of remuneration included in this report that have been accrued by the director, in thousands of Euros. In the case of long-term saving systems, include contributions or funding for these types of systems: Name
Accrued remuneration at the Company Total cash remuneratio n
Amounts of shares provided
Gross profit on options exercised
Accrued remuneration at the Company Group
Total 2014 contribution for the year by the company
Total cash remuneration
Amounts of shares provided
Gross profit on options exercised
Totals
Total by the Group for financial year 2014
Total financial year 2014
Total financial year 2013
Contributions to saving systems during the year
Mr. ANTONIO GONZALEZADALID
77
0
0
77
0
0
0
0
77
0
0
Mrs. CONSUELO CRESPO
77
0
0
77
0
0
0
0
77
0
0
Mr. JUAN RAMON GUEVARA
82
0
0
82
0
0
0
0
82
0
0
Mr. JUAN JOSE IRIBECAMPOS
7
0
0
7
0
0
0
0
7
77
0
BAGOETA, S.L.
7
0
0
7
0
0
0
0
7
77
0
Mr. XABIER DE IRALA
80
0
0
80
0
0
0
0
80
0
0
Mr. GERARDO AROSTEGUI
79
0
0
79
0
0
0
0
79
80
0
Mr. ALVARO VIDAGAIN
177
0
0
177
63
0
0
63
240
38
11
Mr. JESUS ESMORIS
517
0
0
517
56
0
0
56
574
429
14
Mr. IGNACIO MARCOGARDOQUI
74
0
0
74
8
0
0
8
82
97
0
Mr. JUAN ANTONIO GARTEIZGOGEASCOA
77
0
0
77
8
0
0
8
85
80
0
Mr. DAMASO QUINTANA
58
0
0
58
0
0
0
0
58
0
0
52
0
0
52
0
0
0
0
56
0
0
1,361
0
0
1,361
329
0
0
329
1,497
1,532
25
Mr. JOSE TORIBIO
TOTAL
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E.
BREAKDOWN OF INDIVIDUAL REMUNERATION ACCRUED BY EACH OF THE DIRECTORS
D.2. Report the relationship between remuneration obtained by the directors and the results or other measures of the entity’s performance, explaining how any changes in the company’s performance may have influenced changes in the remuneration of the directors. The Board of Directors considers the remuneration policy applied during the financial year 2014 is correct and appropriate to the evolution of the businesses of the Company in the last financial years and that it remunerates more appropriately the work of the Directors. D.3 Report the results of the consultative vote of the shareholders on the annual remuneration report for the preceding financial year, indicating the number of votes against, if any: Number
% of total
60,752,112
48.05%
Number
% of total
Votes against
11,790,374
19.40%
Votes in favor
48,957,438
80.58%
Abstentions
4,300
0.01%
Votes cast
F.
OTHER INFORMATION OF INTEREST
If there are any significant aspects regarding director remuneration that could not be included in the other sections of this report, but should be included in order to provide more complete and wellreasoned information regarding the remuneration structure and practices of the company with respect to its directors, briefly describe them. There are no significant aspects to include in this section. This annual remuneration report was approved by the board of directors of the company at its meeting of 24 February 2015. State whether any directors voted against or abstained in connection with the approval of this Report. Yes
No X
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