Letter from the Chairman and CEO

I am pleased to present our Sustainability Report 2018, in which we have sought to reflect and summarize the main data and events of this financial year.

Jon Riberas

Chairman and CEO

Dear readers,

As in every year since 2014, I am pleased to present our Sustainability Report 2018, in which we have sought to reflect and summarize the main data and events of this financial year. The Report was prepared under the Global Reporting Initiative Standard (GRI) guidelines. We have also renewed our commitment to the UN Global Compact.

2018 has been a tough year for us mainly due to changes in energy policies in some countries, several currency devaluations, and the commencement difficulties in the Amarillo plant (USA). All of the above have directly affected the Company’s production levels and economic performance, with a more adverse impact on some countries. However, our financial statements are still healthy, which allows us to look to the future with optimism.

Changes in energy policies have mainly affected plants located in India and South Africa, causing the temporary suspension of many wind projects and a production downtime during several months. On the other hand, plants in China, Brazil and Spain, mainly in Galicia, had a remarkable output.

In 2018, we conducted a structural change, which lead me to assume the responsibilities of Chief Executive Officer.

Investment spending (CAPEX) reached 60 million euros, primarily focusing on the improvement and development of new facilities. This reflects our investment efforts, which let us accompany our customers to new wind markets.

In this financial year, particularly noteworthy is the startup of GRI Towers India II and GRI Flanges China IV in the last quarter of the year. Moreover, the GRI Towers Sevilla offshore factory shipped the 4 first towers, weighing 380 tons and 85 meters long each. This is the Company’s largest manufactured product until the date.

Regarding the environment, recent Intergovernmental Panel on Climate Change (IPCC)’s reports illustrate climate change negative effects on different regions, as well as their consequences, including more frequent hurricanes and typhoons, the rise of sea levels and more prolonged droughts; whose effects are faster than expected.

Therefore, society is demanding more changes, greater investments and improvements to support this fight against the climate change through favorable energy policies. In this context, renewable energies play a key role in the reduction of CO2 emissions.

At GRI Renewable Industries, we have also reinforced our contribution to the Sustainable Development Goals (SDG), in particular as follows:

SDG 4: Quality education

The downtime in South Africa and India directly affected their professionals. However, at GRI Renewable Industries, we keep our firm belief to have stable employment. Consequently, we developed many initiatives to minimize this impact.

A clear example is how we promote the mobility of professionals from different plants, thus improving their experience and expertise thanks to these temporary relocation periods while they keep their jobs. In 2018, 179 professionals were relocated.

Similarly, I would like to highlight the initiative developed by GRI Towers South Africa. After the temporary business suspension, an agreement was reached between the employees, the trade unions, the management and the administration to apply a voluntary training scheme called “Training LAY-OFF”.

This scheme allows employees to keep their jobs, while they receive a subsidy and obtain benefits from a training plan which also helps them improve their skills and competences. Thanks to this initiative, all employees resumed their work when the plant started operating again at the end of 2018.

The measures applied are reflected in the final headcount, which grew by 3.3%, thus reaching 3,530 professionals.  This figure does not include the plants in Argentina, India II and China IV, since they started operating just recently. However, they will be included in the scope of the report of 2019.

Also noteworthy is the training effort we have made, where we put in 12% more global hours. In terms of Occupational Health and Safety our working conditions improved by 11.5% (according to the Occupational Risk Prevention Index). Particularly excellent in this matter were our plants in Brazil and Turkey.

SDG 9: Innovation and infrastructure

We have an avant-garde position in terms of innovation, as it is key to our growth.

We are proud to have received the approval for Elcano Innovation and University Training Center at the Port of Seville, led by Universidad de Sevilla and the universities of Evora and Algarve, and endorsed by the port authority.

In it GRI Renewable Industries plays a main role in the development of research projects for wind components and in the training of future professionals of our sector.

We adapt to the market’s new trends and to our clients’ needs. For such purpose, we firmly believe that manufacturing costs must be reduced by improving the efficiency of our processes and by building taller towers which can better adapt to the conditions of new more powerful and efficient wind turbines.

In this area, supplier management crucial, as the costs linked to procurement are the most relevant in our business. We have therefore developed a “Supplier Portal”. This platform optimizes the controls and standardization and assessment requirements, while it includes information related to ethics, sustainability, human rights, safety, environment and conflict minerals.

SDG 13: Climate action

Our business (manufacturing components for the wind industry) allows us to contribute to the reduction of CO2 emissions and to create local wealth by bringing power to hard-to-reach remote places. We estimate the production of our towers prevented the emission of 245,472 tons CO2 in 2018.

Likewise, we made some progress in the project started in 2015, “A tower, a tree”. In this context, we conducted four reforestation projects where our professionals and their families around the plants in Seville, Galicia, Iraeta, Zestoa and the office in Madrid planted 2,710 trees which will absorb 525 tons CO2.

After this tough year, we have bright expectations for 2019, with relevant new projects, thus guaranteeing an innovative high-quality product according to our clients’ needs.

Finally, I would like to thank the team for their support and sustained commitment in this difficult stage, which actively contributes to our leadership and growth.

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