LETTER FROM THE CHAIRMAN

Jon Riberas

President

Dear readers,

It is a pleasure to present the 2017 Sustainability Report of Gonvarri Steel Services, in which the most relevant information and data regarding our performance is shown, following the guidelines of the new standard of the Global Reporting Initiative (GRI). Furthermore, we have renewed our commitment to the United Nations Global Compact.

This year the 50th anniversary of the first plant of the group, “Gonvarri Burgos”, was celebrated. In 1967, D. Francisco

Riberas, my father, started his professional adventure in his country with few resources, great enthusiasm and a great vision, which is being shown, step by step, by Gonvarri Steel Services at present. At this event, we had the attendance of the complete team of Gonvarri Burgos, important figures of the local authorities, customers and providers, collaborators and friends who wished to share this emotive event with us.

This year the Report has a new design and focus, with some changes from the structure of previous years, of which we highlight:

・ The new development of content following our Management Model “Drive”, with a roadmap based on five focal points: Growth, Innovation, Efficiency, People and Sustainability. This allows us to adapt the Report to our vision, strategy and real management, integrating indicators (GRI) and material aspects into it.

・ The importance that the Sustainability Development Goals (SDG) have for Gonvarri. For this reason, we included more detailed information about our performance in these objectives that we most actively support, such as:

-The active contribution to reducing injuries and deaths by traffic accidents (SDB 3.6) and to having safer types of transport in place (SDG 11.2).

-The improvement of our products and processes through innovation and the use of the best technology (SDG 9.4).

-The contribution to the fight against climate change and to reducing energy consumption, mainly through our initiatives in Energy Efficiency (SDG 7.3).

-The improvement of the training and education of our professionals, mainly in less developed countries, enabling them to benefit from future projects (SDG 4.4).

・ The amplification and improvement of our methodology to understand the opinion of our stakeholders, through a technological data and information analysis tool, which counts with the direct participation of the direction, employees, customers and providers, assessing material issues by their importance and the perception of these identified issues.

Regarding our business, Gonvarri Steel Services shows, for another year, sustainable growth. As reflected by our financial results, with a total Income that has risen to 3,038 million euros (+30%), an EBITDA of 210 million euros (+35%) and a Net Profit of 99 million euros (+13%), allowing us to face new challenges. Moreover, in this year we have made important investments and acquisitions, which have enabled us to strengthen our position in some countries and to grow in others.

In China, the plants Gonvvama Shenyang (Northeast), Changshu (East) and Chongqing (West) have begun operating, and we have also increased our presence in Mexico with the new Gonvarri Baja California plant. In Europe, the new Laser Automotive Valencia plant has come into operation.

At the beginning of 2018 saw the acquisition of the Constructor Group with which the warehousing and logistics business was further amplified and the acquisition of the Spanish engineering company Suports Desarrollo y Soluciones, which specializes in aluminium solutions for photovoltaic installations on the roofing of buildings, car parks and ground for the Solar Steel division.

2017 has been a key year in ethics and compliance; we have made significant progress in the new Compliance Model. In September the Board of Directors approved the new Code of Ethics and Conduct, as well as the structure of the new Ethical Committee. In 2018 an ambitious dissemination and training plan for all plants of the group has been designed.

Additionally, we have undertaken numerous initiatives related to the project “Emotional Driving”, which focusses

on road safety, where one of our priorities is to contribute to the reduction of the number of accidents and their negative impact through the encouragement of a “Road safety” culture, aligned to our commitment with the Objectives for Sustainable Growth (SDG 3.6 and 11.2).

In this context, we have given special weight to initiatives related to education and early sensitization. We have designed a brochure which summarizes what, why and how we do Emotional Driving and we have implemented several activities focused on different interest groups such as employees, youths and children.

Among others, we participate together with the Foundation LQDVI in 8 national congresses in collaboration with Movistar, where the message of responsible use of the mobile phone is transmitted to more than 10,000 youths. In a partnership with AESLEME, we visited numerous schools and study centers in the Community of Madrid, underscoring the importance of driving in a safe manner, as well as cooperating and transmitting these lessons learned and the importance of not having distractions at the wheel to their parents, To close the year, Emotional Driving presented the “on Christmas, forget about the mobile phone at the wheel” campaign, with the aim to raise awareness about the risk and dangers of using the mobile phone while driving. The campaign, aligned with SDG 3.6, was very well received by the employees of the company and had a strong impact on the social networks, being a video shared by leading institutions with regard to road safety, on a national and international level: DGT, Ponle Freno and Fesvial, to name but a few.

Just as in previous years, we maintain an active role against climate change and we continue to minimize our energy consumption through our project of Energy Efficiency and through the development of highly efficient photovoltaic solar structures and through savings derived from energy efficiency measures, we have indirectly contributed to avoiding 223,572 tons of CO2.

We continue to advance and to grow with a team of strong and committed professionals, that together form the great family of Gonvarri Steel Services and I would like to thank them for their enthusiasm and dedication.

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