UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

 

For the Month of June 2023

 

Commission File Number: 001-37668

 

FERROGLOBE PLC

(Name of Registrant)

 

13 Chesterfield Street,

London W1J 5JN, United Kingdom

(Address of Principal Executive Office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F xForm 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):         ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):         ¨

 

 

 

 

 

 

2023 Annual General Meeting of Ferroglobe PLC

 

On June 2, 2023, Ferroglobe PLC ("Ferroglobe" or the "Company") released its Notice of 2023 Annual General Meeting ("2023 AGM") and Annual Report and Accounts for the fiscal year ended December 31, 2022. The 2023 AGM will be held at 14:00 British Summer Time (BST) on Tuesday, June 27, 2023 at Ferroglobe PLC, 13 Chesterfield Street, London, W1J 5JN, United Kingdom.

 

Exhibits

 

Reference is made to the Exhibit Index included hereto.

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
99.1   Notice of Annual General Meeting
99.2   Ferroglobe PLC Annual Report and Accounts for the fiscal year ended December 31, 2022
99.3   Extracts from the 2022 Form 20-F
99.4   Form of Proxy Card for 2023 Annual General Meeting

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Date: June 2, 2023
  FERROGLOBE PLC
   
  by /s/ Marco Levi
    Name: Marco Levi
    Title: Chief Executive Officer (Principal Executive Officer)

 

 

 

 

Exhibit 99.1

 

 

 

FERROGLOBE PLC

 

(a public limited company having its registered office at 5 Fleet Place, London, EC4M 7RD, United 

Kingdom and incorporated in England and Wales with company number 9425113)

 

30 May 2023

 

Dear Shareholder

 

2023 Annual General Meeting of Shareholders of Ferroglobe Plc (“Ferroglobe” or the “Company”)

 

I am pleased to invite you to attend Ferroglobe’s annual general meeting of its shareholders (the “Annual General Meeting” or “AGM”), to be held at 14:00  (British Summer Time) on Tuesday, 27 June 2023 at the Company’s offices at 13 Chesterfield Street, London, W1J 5JN, United Kingdom. The accompanying notice of Annual General Meeting (“Notice”) describes the meeting, the resolutions you will be asked to consider and vote upon and related matters.

 

Your vote is important, regardless of the number of shares you own. Whether or not you intend to attend the Annual General Meeting, please vote as soon as possible to make sure that your shares are represented. You may vote via the internet, by phone or by mail by signing, dating and returning your proxy card in the envelope provided. To ensure your vote is counted, please ensure that your proxy vote is submitted through the relevant channels by not later than 00:01 BST on Monday, 26 June 2023.

 

Recommendation

 

We consider all resolutions proposed to shareholders at the Annual General Meeting to be standard business. You will find an explanation of each resolution within the Explanatory Notes on pages 3 to 10 of this pack. The Company’s board of directors (the “Board”) considers that all the resolutions to be put to the Annual General Meeting are in the best interests of the Company and its shareholders as a whole and are most likely to promote the success of the Company. The Board unanimously recommends that you vote in favour of each of the proposed resolutions, as the members of the Board intend to do in respect of their beneficial holdings.

 

Thank you for your continued support of Ferroglobe.

 

Yours sincerely,

 

Javier López Madrid 

Executive Chairman

 

 

 

 

 

 

FERROGLOBE PLC

 

(a public limited company having its registered office at 5 Fleet Place, London, EC4M 7RD, United 

Kingdom and incorporated in England and Wales with company number 9425113)

 

NOTICE OF 2023 ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

To the holders of ordinary shares of Ferroglobe Plc (“Ferroglobe” or the “Company”):

 

Notice is hereby given that Ferroglobe’s Annual General Meeting of shareholders will be held on Tuesday, 27 June 2023 at 14:00  (British Summer Time), at the offices of the Company at 13 Chesterfield Street, London, W1J 5JN, United Kingdom (“U.K.”).

 

The business of the Annual General Meeting will be to consider and, if thought fit, pass the resolutions below. All resolutions will be proposed as ordinary resolutions. Explanations of the resolutions are given in the explanatory notes on pages 3 to 10 of this Annual General Meeting notice and additional information on voting at the Annual General Meeting can be found on pages 9 to 10. All resolutions will be put to vote on a poll, where each shareholder has one vote for each share held.

 

Certain of the resolutions that shareholders of the Company will be asked to consider may not be familiar to them because, unlike many companies with shares traded on the Nasdaq Capital Market (“Nasdaq”), the Company is incorporated under the laws of England and Wales and is therefore subject to the U.K. Companies Act 2006 (the “Companies Act”). The Companies Act obliges the Company to propose certain matters to shareholders for approval that would generally not be subject to periodic approval by shareholders of companies incorporated in the United States but would be considered routine items for approval by shareholders of companies incorporated in England and Wales.

 

ORDINARY RESOLUTIONS:

 

U.K. Annual Report and Accounts 2022

 

1THAT the directors’ and auditor’s reports and the accounts of the Company for the financial year ended 31 December 2022 (the “U.K. Annual Report and Accounts”) be received.

 

Directors’ 2022 Remuneration Report

 

2THAT the directors’ annual report on remuneration for the year ended 31 December 2022 (excluding, for the avoidance of doubt, any part of the Directors’ remuneration report containing the directors’ remuneration policy), as set out on pages 32 to 33 and 46 to 60 of the U.K. Annual Report and Accounts be approved.

 

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Directors’ Re-election

 

3THAT Javier López Madrid be re-elected as a director.

 

4THAT Marco Levi be re-elected as a director.

 

5THAT Marta Amusategui be re-elected as a director

 

6THAT Bruce L. Crockett be re-elected as a director.

 

7THAT Stuart E. Eizenstat be re-elected as a director.

 

8THAT Manuel Garrido y Ruano be re-elected as a director.

 

9THAT Juan Villar-Mir de Fuentes be re-elected as a director.

 

10THAT Belen Villalonga be re-elected as a director.

 

11THAT Silvia Villar-Mir de Fuentes be re-elected as a director.

 

12THAT Nicolas De Santis be re-elected as a director.

 

13THAT Rafael Barrilero Yarnoz be re-elected as a director.

 

Appointment of Auditor

 

14THAT KPMG Auditores, S.L. be appointed as auditor of the Company to hold office from the conclusion of the Annual General Meeting until the conclusion of the next general meeting at which accounts are laid before the Company.

 

Remuneration of Auditor

 

15THAT the Audit Committee of the Board be authorised to determine the auditor’s remuneration.

 

Thomas Wiesner 

Company Secretary

 

30 May 2023

 

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Explanatory notes to the resolutions

 

Resolution 1 (U.K. Annual Report and Accounts 2022)

 

The Board is required to present at the Annual General Meeting the U.K. Annual Report and Accounts for the financial year ended 31 December 2022, including the Directors’ Report and the Auditor’s Report on the U.K. Annual Report and Accounts and on those parts of the Directors’ Remuneration Report which have been audited.

 

Resolution 1 is an advisory vote and in accordance with its obligations under English law, the Company will provide shareholders at the Annual General Meeting with the opportunity to receive the U.K. Annual Report and Accounts and ask any relevant and appropriate questions on the U.K. Annual Report and Accounts of the Board and or auditors in attendance at the Annual General Meeting.

 

Resolution 2 (directors’ annual remuneration report)

 

Resolution 2 is an advisory vote to approve the directors’ annual remuneration report for the year ended 31 December 2022. The directors’ remuneration report is set out on pages 32 to 33 and 46 to 60 of the U.K. Annual Report and Accounts. It provides information on the remuneration of the directors for 2022 and that proposed for 2023; it includes a statement by the Chairman of the Compensation Committee but excludes the Remuneration Policy which was approved by shareholders at the AGM in 2022.

 

Resolutions 3 to 13 (directors seeking election or re-election)

 

In line with best practice in corporate governance, all our directors retire annually and, if agreed with them that they will continue in office, they offer themselves for re-election by the shareholders. Any director appointed by the Board since the last Annual General Meeting must stand for election at the next Annual General Meeting.

 

The biographies of the directors standing for re-election at the Annual General Meeting are set out below to enable shareholders to make an informed decision on their re-election. The biographies give the date of appointment of each director to the Board or Committees of Ferroglobe. Certain of our directors have also held roles at Grupo FerroAtlántica S.A.U. (“FerroAtlántica”) or Globe Speciality Metals, Inc. (“Globe”). On 23 December 2015 FerroAtlántica merged with Globe through corporate transactions (the “Business Combination”) to form the Ferroglobe group of companies under Ferroglobe’s ownership.

 

Javier López Madrid

 

Javier López Madrid has been Executive Chairman of the Company since December 31, 2016 and was Chairman of our Nominations Committee from January 1, 2018 until May 29, 2023. He was first appointed to the Board on February 5, 2015 and was the Company’s Executive Vice-Chairman from December 23, 2015 until December 31, 2016.

 

He has been Chief Executive Officer of Grupo VM since 2008, is member of the Board of several non profit organizations. He is the founder and largest shareholder of Financiera Siacapital and founded Tressis, Spain’s largest independent private bank. Mr. López Madrid holds a Masters in law and business from ICADE University.

 

Marco Levi

 

Marco Levi was appointed Chief Executive Officer of the Company on January 10, 2020 and appointed to its Board of Directors on January 15, 2020. Dr Levi previously served as President and CEO of Alhstrom-Munksjö Oyj, a global fiber materials company listed in Finland, where he led a successful transformation of the business by refocusing its product portfolio towards value-added specialty products. Prior to that, Dr. Levi was Senior Vice President and Business President of the $3 billion emulsion polymers division of chemicals manufacturer Styron, including during the period in which Styron division was acquired by Bain Capital from Dow Chemical Company. Dr. Levi previously had spent over twenty-two years at Dow in various departments and roles, ultimately serving as general manager of the emulsion polymers business.

 

Dr Levi is also a Non-Executive Director of Mativ Holdings, Inc, the leading global performance materials company, listed on the New York Stock Exchange. Dr Levi holds a doctorate in industrial chemistry from the Università degli Studi di Milano, Statale, in Italy.

 

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Marta de Amusategui y Vergara

 

Marta de Amusategui y Vergara was appointed to our Board of Directors as a Non-Executive Director on June 12, 2020. She has been a member of our Audit Committee from that date and a member of the Compensation Committee since June 23, 2021.

 

Ms. Amusategui has substantial experience in executive and non-executive roles, with a background in business strategy, banking and finance. She is founder and partner of Abrego Capital S.L, providing strategic and financial advisory services, and co-founder of Observatorio Industria 4.0, the professional forum leveraging knowledge and experience to assist businesses, specifically those in the secondary sector, in their digital transformation. She began her career in management consulting and investment banking, serving as Country Executive Officer and General Manager with Bank of America in Spain from 2003 to 2008.

 

Ms. Amusategui has been a member of the Board of Eland Private Equity, S.G.E.I.C., S.A., a private equity management company specializing in renewable energies, since 2009. Since 2020, she has been a member of the board of directors of Eccocar Sharing S.L. She has also held other Board positions in the past, including that of Telvent GIT S.A. (NASDAQ TLVT), the global IT solutions and business information services provider, where she became an independent director from early 2010 until its de-listing following acquisition in December 2011. She is currently a member of the McKinsey Alumni Council in Spain.

 

Ms. Amusategui holds an Industrial Engineering degree (MSc equivalent) from Universidad Pontificia de Comillas, Madrid, Spain, and an MBA from INSEAD, Fontainebleau, France. She has held a number of academic appointments, lecturing in Financing at the Three Points Digital Business School, Grupo Planeta, in Barcelona, in Managerial Competencies in CUNEF, in Madrid, and in Risk Management on the Non-Executive Directors Program at ICADE Business School, also in Madrid.

 

Bruce L. Crockett

 

Bruce L. Crockett was appointed to our Board of Directors as a Non-Executive Director on December 23, 2015. He has been a member of our Audit Committee from that date and was Chair of the Audit Committee since June 4, 2020 and served on our Compensation Committee from January 1, 2018 until June 23, 2021. Mr. Crockett was appointed on May 13, 2021 as our Senior Independent Director and on June 23, 2021 as Chair of the Corporate Governance Committee until May 29, 2023, on which date he was appointed as a member of the Nominations and Governance Committee.

 

Mr. Crockett holds a number of other Board and governance roles. He has been Chairman of the Invesco Mutual Funds Group Board of Directors and a member of its Audit, Investment and Governance Committees, serving on the board since 1991, as Chair since 2003 and on the Board of predecessor companies from 1978. Since 2013, he has been a member of the Board of Directors and, since 2014, Chair of the Audit Committee and since 2021 member of the Governance Committee of ALPS Property & Casualty Insurance Company. He has been Chairman of, and a private investor in, Crockett Technologies Associates since 1996. He is a life trustee of the University of Rochester.

 

Mr. Crockett was a member of the Board of Directors of Globe from April 2014 until the closing of the Business Combination, as well as a member of Globe’s Audit Committee. He was formerly President and Chief Executive Officer of COMSAT Corporation from 1992 until 1996 and its President and Chief Operating Officer from 1991 to 1992, holding a number of other operational and financial positions at COMSAT from 1980, including that of Vice President and Chief Financial Officer. He was a member of the Board of Directors of Ace Limited from 1995 until 2012 and of Captaris, Inc. from 2001 until its acquisition in 2008 and its Chairman from 2003 to 2008.

 

Mr. Crockett holds an A.B. degree from the University of Rochester, B.S. degree from the University of Maryland, an MBA from Columbia University and an Honorary Doctor of Law degree from the University of Maryland.

 

In 2021 he was appointed as a member of the Board of Advisors of the Western Colorado University Graduate Business School.

 

Stuart E. Eizenstat

 

Stuart E. Eizenstat was appointed to our Board of Directors as a Non-Executive Director on December 23, 2015. He

 

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was a member of the Company’s Corporate Governance Committee from January 1, 2018 until May 29, 2023 and served on our Nominations Committee from May 16, 2018 until May 29, 2023, on which date he was appointed as a member of the Compensation Committee.

 

Mr. Eizenstat has been a Senior Counsel at Covington & Burling LLP in Washington, D.C. and headed its international practice for many years after joining the firm in 2001. He has served as a member of the Advisory Boards of GML Ltd. since 2003 and of the Office of Cherifien de Phosphates since 2010. He was a trustee of BlackRock Funds from 2001 until 2018.

 

Mr. Eizenstat was a member of Board of Directors of Globe from 2008 until the closing of the Business Combination and Chair of its Nominating Committee. He was a member of the Board of Directors of Alcatel-Lucent from 2008 to 2016 and of United Parcel Service from 2005 to 2015. He has had an illustrious political and advisory career, including serving as Special Adviser to Secretary of State Kerry on Holocaust-Era Issues from 2009 to 2017 and Special Representative of the President and Secretary of State on Holocaust Issues during the Clinton administration from 1993 to 2001. He was Deputy Secretary of the United States Department of the Treasury from July 1999 to January 2001, Under Secretary of State for Economic, Business and Agricultural Affairs from 1997 to 1999, Under Secretary of Commerce for International Trade from 1996 to 1997, U.S. Ambassador to the European Union from 1993 to 1996 and Chief Domestic Policy Advisor in the White House to President Carter from 1977 to 1981. He is the author of “Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II”; “The Future of the Jews: How Global Forces are Impacting the Jewish People, Israel, and its Relationship with the United States” and “President Carter: The White House Years.”

 

Mr. Eizenstat holds a B.A. in Political Science, cum laude and Phi Beta Kappa, from the University of North Carolina at Chapel Hill, a J.D. from Harvard Law School and nine honorary doctorate degrees from colleges and universities, high honors from the United States, French (Legion of Honor), German, Austrian, Belgian and Israeli governments, and over 75 awards from various organizations.

 

Manuel Garrido y Ruano

 

Manuel Garrido y Ruano was appointed to our Board of Directors as a Non-Executive Director on May 30, 2017. He was a member of our Nominating and Corporate Governance Committee from May 30, 2017 until December 31, 2017, and served on our Corporate Governance Committee from December 31, 2017 until May 29, 2023.

 

Mr. Garrido y Ruano has been Chief Financial Officer of Grupo Villar Mir since 2003 and he is currently member of the Board of its subsidiary in the energy sector, and member of the steering Committee of its real estate subsidiary. In June 2021 he was appointed non executive Chairman of Fertial SPA the Algerian fertilizers subsidiary of the Group.

 

He is Professor of Corporate Finance of one Graduate Management Program at the Universidad de Navarra, and has also been Professor of Communication and Leadership of the Graduate Management Program at CUNEF in Spain.

 

Mr. Garrido y Ruano was a member of the steering committee of FerroAtlántica until 2015, having previously served as its Chief Financial Officer from 1996 to 2003. He worked with McKinsey & Company from 1991 to 1996, specializing in restructuring, business development and turnaround and cost efficiency projects globally.

 

Mr. Garrido y Ruano holds a Masters in Civil Engineering with honors from the Universidad Politécnica de Madrid and an MBA from INSEAD, Fontainebleau, France.

 

Juan Villar-Mir de Fuentes

 

Juan Villar-Mir de Fuentes was appointed to our Board of Directors as a Non-Executive Director on December 23, 2015.

 

Mr. Villar-Mir de Fuentes is currently Chairman of Inmobiliaria Espacio, S.A and Grupo Villar Mir, S.A.U. In both companies he served as Vice Chairman since 1996 and since 1999 respectively. He is currently Second Vice Chairman of Obrascon Huarte Lain, S.A and has been serving as a member of the Board of Directors since 1996, first as a member of the Audit Committee and, later, as a member of its Compensation Committee. He was a Board Director and member of the Compensation Committee of Inmobiliaria Colonial, S.A from June 2014 to May 2017. He also was a member of the Board of

 

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Directors and of the Compensation Committee of Abertis Infraestructuras, S.A. between 2013 and 2016.

 

Mr. Villar-Mir de Fuentes is Patron and member of the Patronage Council of Fundación Nantik Lum and of Fundación Santa María del Camino.

 

Mr. Villar-Mir holds a Bachelor’s Degree in Business Administration and Economics and Business Management from the Universidad Autónoma de Madrid.

 

Belen Villalonga Morenés

 

Belen Villalonga Morenés was appointed to our Board of Directors as a Non-Executive Director on May 13, 2021. She has been a member of the Audit Committee from that date and served as a member of the Corporate Governance Committee from June 23, 2021 until May 29, 2023, on which date she was appointed to the Nominations and Governance Committee.

 

Ms. Villalonga is a Professor of Management and Organizations, a Yamaichi Faculty Fellow, and a Professor of Finance (by courtesy) at New York University’s Stern School of Business. Between 2001 and 2012 she was a faculty member at the Harvard Business School. During 2018-2019 she was a Visiting Professor at Oxford University’s Said Business School. Her teaching, research, and consulting activities are in the areas of corporate governance, strategy, and finance, with a special focus on family-controlled companies. Her award-winning research has been cited over 17,000 times in scholarly articles and international media outlets.

 

Professor Villalonga is an independent director at Banco Santander International (Santander group’s private banking subsidiary in the United States), as well as at Mapfre USA (insurance). She was also an independent director for many years at three global companies publicly listed in Spain: Acciona (renewable energy and infrastructure), Grifols (biopharma), and Talgo (high-speed trains).

 

Ms. Villalonga holds a Ph.D. in Management and an M.A. in Economics from the University of California at Los Angeles, where she was a Fulbright Scholar. She also holds a Ph.D. in Business Economics from the Complutense University of Madrid.

 

Silvia Villar-Mir de Fuentes

 

Silvia Villar-Mir de Fuentes was appointed to our Board of Directors as a Non-Executive Director on May 13, 2021. She served as a member of the Compensation Committee from June 23, 2021 until May 29, 2023. Ms. Villar-Mir de Fuentes currently serves on the board of directors of Grupo Villar Mir, a privately held Spanish group with investments across a broad range of diversified industries, which is the beneficial owner of approximately 40% of the Company’s share capital.

 

Mrs. Villar-Mir de Fuentes is a summa cum laude graduate in Economics and Business Studies, with concentration in finance and accounting, from The American College in London, United Kingdom.

 

Nicolas De Santis

 

Nicolas De Santis was appointed to our Board of Directors as a Non-Executive Director on May 13, 2021. He has been a member of the Compensation Committee since June 23, 2021 and served as a member of the Nominations Committee from June 23, 2021 until May 29, 2023, on which date he was appointed as Chair of the Nominations and Governance Committee. Mr. De Santis is a technology entrepreneur, strategist and author with substantial experience in executive and non-executive roles. Mr. De Santis is currently the Chief Executive Officer of De Santis Corporate Vision Strategists Ltd, a strategy and innovation consultancy and incubator. De Santis advises multinational corporations and start-ups on digital business transformation (including artificial intelligence and machine learning), business strategy, branding, business model innovation, sustainability strategies and corporate culture change.

 

Previously Mr. De Santis served on the board of publicly traded Lyris Technologies (acquired by AUREA Software in 2015). He began his management career at Landor Associates (now WPP Group). As a technology entrepreneur, he co-founded several high-profile start-ups, including opodo.com, one of Europe’s most successful start-ups, reaching $1.5 billion in gross sales.

 

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Mr. De Santis is a regular lecturer at business schools and universities on business strategy, global branding, business model innovation and culture transformation, including IE Business School, Madrid and the University of Wyoming. He is the author of Futurising Companies® - A systematic approach to win the future by managing culture as the operating system of organisations.

 

Rafael Barrilero Yarnoz

 

Rafael Barrilero Yarnoz was appointed to our Board of Directors as a Non-Executive Director on May 13, 2021. He was appointed Chair of the Compensation Committee and served as a member of the Nominations Committee from June 23, 2021 until May 29, 2023.

 

Mr. Barrilero Yarnoz is a senior advisor at Mercer Consulting. Mr. Barrilero Yarnoz has developed his career as a partner of the firm and as a member of the executive committee, leading the advisory talent and reward service for the boards of the main companies and multinationals. He has also led the business throughout the EMEA. Previously, he led the Watson Wyatt consulting firm in Madrid. He began his career as a lawyer at Ebro Agricolas focused on labour law, before serving as Ebro’s head of human resources. In January 2022 he joined the board of directors of AltamarCAM and Grupo Hedima, as a permanent Senior Advisor. He collaborates with the HAZ foundation, whose mission is to ensure transparency and good corporate governance.

 

Mr. Barrilero Yarnoz has a law degree from Deusto and a Masters in Financial Economics from ICADE, as well as a masters in human resources by Euroforum-INSEAD.

 

Resolution 14 (appointment of auditor)

 

At each general meeting at which accounts are laid before the shareholders, the Company is required to appoint an auditor to serve until the next such meeting. On May 29, 2023, the Board resolved to submit to the next annual general meeting of the shareholders the appointment of KPMG Auditores, S.L. as external auditors of the Company and its subsidiaries for the 2023 financial year. The Audit Committee selected KPMG to be the auditors of Ferroglobe PLC and its subsidiaries, at its meeting held the same day, pursuant to the authority granted by the Board in the Committee’s Terms of Reference and following a tender process.

 

If this resolution does not receive the affirmative vote of a majority of the shares entitled to vote and represented by proxy or, where appropriate, present in person at the Annual General Meeting, the Board may appoint an auditor to fill the vacancy.

 

Resolution 15 (remuneration of auditor)

 

Under the Companies Act, the remuneration of the Company’s U.K. statutory auditor must be fixed in a general meeting or in such manner as may be determined in a general meeting. The Company asks its shareholders to authorise the Audit Committee to determine the remuneration of KPMG Auditores, S.L. in its capacity as the Company’s U.K. statutory auditor under the Companies Act.

 

Further notes:

 

1.Some of the resolutions are items that are required to be approved by shareholders periodically under the Companies Act and generally do not have an analogous requirement under United States laws and regulations. As such, while these resolutions may be familiar and routine to shareholders accustomed to being shareholders of companies incorporated in England and Wales, other shareholders may be less familiar with these routine resolutions and should review and consider each resolution carefully.

 

2.In accordance with the Articles, all resolutions will be taken on a poll. Voting on a poll will mean that each Ordinary Share represented in person or by proxy will be counted in the vote.

 

3.All resolutions will be proposed as ordinary resolutions, which means that such resolutions must be passed by a simple majority of the total voting rights of shareholders who vote on such resolutions, whether in person or by proxy. The results of the shareholders’ vote on resolutions 1 and 2 regarding receipt of the U.K. Annual Report and Accounts and approval of the Directors’ Annual Remuneration Report will not require the Board or any Committee

 

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thereof to take (or refrain from taking) any action. The Board values the opinion of shareholders as expressed through such resolutions and will carefully consider the outcome of the votes on these resolutions.

 

4.Shareholders of record” are those persons registered in the register of members of the Company in respect of Ordinary Shares at 23:59 (British Summer Time) on 10 May 2023. If, however, Ordinary Shares are held for you in a stock brokerage account or by a broker, bank or other nominee, you are considered the “beneficial owner” of those Ordinary Shares.

 

5.Beneficial owners of Ordinary Shares as at 23:59 (British Summer Time) on 10 May 2023 have the right to direct their broker or other agent on how to vote the Ordinary Shares in their account and are also invited to attend the Annual General Meeting. However, as beneficial owners are not Shareholders of record of the relevant Ordinary Shares, they may not vote their Ordinary Shares at the Annual General Meeting unless they request and obtain a legal proxy from their broker or agent.

 

6.Any Shareholder of record attending the Annual General Meeting has the right to ask questions. The Company must cause to be answered any questions put by a Shareholder of record attending the meeting relating to the business being dealt with at the Annual General Meeting unless to do so would interfere unduly with the business of the meeting, be undesirable in the interests of the Company or the good order of the meeting, involve the disclosure of confidential information or if the information has already been given on the Company’s website.

 

7.In accordance with the provisions of the Companies Act, and in accordance with the Articles, a Shareholder of record who is entitled to attend and vote at the Annual General Meeting is entitled to appoint another person as his or her proxy to exercise all or any of his or her rights to attend and to speak and vote at the Annual General Meeting and to appoint more than one proxy in relation to the Annual General Meeting (provided that each proxy is appointed to exercise the rights attached to different Ordinary Shares). Such proxies need not be Shareholders of record, but must attend the Annual General Meeting and vote as the Shareholder of record instructs. Further details regarding the process to appoint a proxy, voting and the deadlines therefor are set out in the “Voting Process and Revocation of Proxies” section below.

 

8.Pursuant to section 527 of the Companies Act 2006, shareholders meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to:

 

(a)the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the AGM; or

 

(b)any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Companies Act 2006.

 

The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to the Company’s auditor no later than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes any statement that the Company has been required under section 527 of the Companies Act 2006 to publish on a website.

 

9.The results of the polls taken on the resolutions at the Annual General Meeting and any other information required by the Companies Act will be made available on the Company’s website as soon as reasonably practicable following the AGM and for a period of two years thereafter.

 

10.A copy of this Annual General Meeting notice can be found at the Company’s website, www.ferroglobe.com.

 

11.Recipients of this notice and the accompanying materials may not use any electronic address provided in this notice or such materials to communicate with the Company for any purposes other than those expressly stated.

 

12.To be admitted to the Annual General Meeting, please bring the Admission Ticket that you will have received through the post. You will need to be able to provide your photo identification at the registration desk.

 

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13.On arrival at the Annual General Meeting venue, all those entitled to vote will be required to register and collect a poll card. In order to facilitate these arrangements, please arrive at the Annual General Meeting venue in good time. You will be given instructions on how to complete your poll card at the Annual General Meeting.

 

VOTING PROCESS AND REVOCATION OF PROXIES

 

If you are a Shareholder of record, there are three ways to vote by proxy:

 

·By Internet – You can vote over the Internet at www.envisionreports.com/GSM by following the instructions at such web address. You will need to enter your control number, which is a 15-digit number located in a box on your proxy card. We encourage you to vote by Internet even if you received this Annual General Meeting notice in the mail.

 

·By Telephone – You may vote and submit your proxy by calling toll-free 1-800-652-8683 in the United States and providing your control number, which is a 15-digit number located in a box on your proxy card.

 

·By Mail – If you received this Annual General Meeting notice by mail or if you requested paper copies of the Annual General Meeting notice, you can vote by mail by marking, dating, signing and returning the proxy card in the postage-paid envelope.

 

Telephone and Internet voting facilities for Shareholders of record will be available 24 hours a day and will close at 00:01 (British Summer Time) on Monday, 26 June 2023. Submitting your proxy by any of these methods will not affect your ability to attend the Annual General Meeting in-person and vote at the Annual General Meeting.

 

If your shares are held in “street name”, meaning you are a beneficial owner with your shares held through a bank or brokerage firm, you will receive instructions from your bank or brokerage firm, which is the Shareholder of record of your shares. You must follow the instructions of the Shareholder of record in order for your shares to be voted. Telephone and Internet voting may also be offered to shareholders owning shares through certain banks and brokers, according to their individual policies.

 

The Company has retained Computershare to receive and tabulate the proxies.

 

If you submit proxy voting instructions and direct how your shares will be voted, the individuals named as proxies must vote your shares in the manner you indicate.

 

A shareholder who has given a proxy may revoke it at any time before it is exercised at the Annual General Meeting by:

 

·attending the Annual General Meeting and voting in person;

 

·voting again by Internet or Telephone (only the last vote cast by each Shareholder of record will be counted), provided that the shareholder does so before 00:01 (British Summer Time) on Monday, 26 June 2023.

 

·delivering a written notice, at the address given below, bearing a date later than that indicated on the proxy card or the date you voted by Internet or Telephone, but prior to the date of the Annual General Meeting, stating that the proxy is revoked; or

 

·signing and delivering a subsequently dated proxy card prior to the vote at the Annual General Meeting.

 

You should send any written notice or new proxy card to Proxy Services, c/o Computershare Investor Services, PO Box 30202 College Station, TX 77842-9909, USA.

 

If you are a registered shareholder you may request a new proxy card by calling Computershare at 1-866-490-6057 if calling from the United States, or +1-781-575-2780 from outside the United States, or you may also send a request via email to web.queries@computershare.com.

 

ANY SHAREHOLDER OWNING SHARES IN STREET NAME MAY CHANGE OR REVOKE PREVIOUSLY GIVEN VOTING INSTRUCTIONS BY CONTACTING THE BANK OR BROKERAGE FIRM HOLDING THE SHARES OR BY OBTAINING A LEGAL PROXY FROM SUCH BANK OR BROKERAGE FIRM

 

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AND VOTING IN PERSON AT THE ANNUAL GENERAL MEETING. YOUR LAST VOTE, PRIOR TO OR AT THE ANNUAL GENERAL MEETING, IS THE VOTE THAT WILL BE COUNTED.

 

Location of Annual General Meeting:

 

 

 

DOCUMENTS AVAILABLE FOR INSPECTION

 

Forms of appointment of the Non-Executive Directors, as well as a memorandum setting out the terms of the Executive Director’s contracts, will be available for inspection at the Company’s registered office during normal business hours and at the place of the Annual General Meeting from at least 15 minutes prior to the start of the meeting until the end of the Annual General Meeting.

 

By order of the Board,

 

Thomas Wiesner 

Company Secretary

 

30 May 2023

 

10

 

 

 

Exhibit 99.2 

 

 

 

Ferroglobe PLC

 

Annual Report and Accounts 2022

 

 

 

 

Company Registration No. 09425113

 

Ferroglobe PLC

 

Annual Report and Accounts

 

Year ended 31 December 2022

 

 

 

 

Ferroglobe PLC

 

Annual Report and Accounts 2022

 

Contents Page No.
   
Glossary and definitions 3
   
Officers and professional advisers 5
   
Introduction 6
   
Chairman’s letter to shareholders 7
   
Strategic report (including section 172 statement) 9
   
Directors’ report 19
   
The Board of Directors 26
   
Directors’ remuneration report 32
   
Independent auditor’s report to the members of Ferroglobe PLC 61
   
Consolidated financial statements 74
   
Notes to the consolidated financial statements 80
   
Parent company financial statements 153
   
Notes to the parent company financial statements 157
   
Appendix 1 — Non-IFRS financial metrics 180

 

1 

 

 

Ferroglobe PLC

 

GLOSSARY AND DEFINITIONS

 

Unless the context requires otherwise, the following definitions apply throughout this U.K. Annual Report and Accounts (including the Appendix, save as set out below):

 

“2022” the financial year ended 31 December 2022;
   
“2021 the financial year ended 31 December 2021;
   
“2023 AGM the Annual General Meeting of the Company, to be held in 2023;
   
“2022 Form 20-F” the Company’s Form 20-F for the fiscal year ended 31 December 2022;
   
“ABL RCF”

the Credit and Security Agreement for a new $100 million North American asset-based revolving credit facility dated as of 30 June 2022, entered into between Globe and QSIP Canada ULC, as borrowers, and Bank of Montreal., as lender;

 

“ABL Revolver”

credit available under the ABL RCF;

 

“Adjusted EBITDA” earnings before interest, tax, depreciation and amortisation, adjusted in accordance with Company’s adjustments announced as part of its earnings reports. Alternative Performance Measures are reconciled at Appendix 1;
   
“Alternative Performance Measures” the non-IFRS financial metrics reconciled at Appendix 1;
   
“Aon” Aon Plc;
   
“ARA”

this annual report and accounts for the financial year ended 31 December 2022;

 

“Articles” the Articles of Association of the Company, from time to time;
   
“Auditor” Deloitte LLP, the Company’s independent U.K. statutory auditor;
   
“Aurinka” Aurinka Photovoltaic Group, S.L.;
   
“Blue Power” Blue Power Corporation, S.L.;
   
“Board” the Company’s board of directors;
   
“Business Combination” the business combination of Globe and FerroAtlántica as the Company’s wholly owned subsidiaries on 23 December 2015;
   
“Business Combination Agreement” the definitive transaction agreement entered into on 23 February 2015 (as amended and restated on 5 May 2015) by, among others, the Company, Grupo VM, FerroAtlántica and Globe;
   
“Capital” net debt plus total equity. Alternative Performance Measures are reconciled at Appendix 1;
   
“CEO”, “Chief Executive Officer” or “Chief Executive the Chief Executive Officer of the Company, or where the context requires, of the relevant company or organization;

 

2 

 

 

“Companies Act” the U.K. Companies Act 2006;
   
“Company” or “Ferroglobe” Ferroglobe PLC, a company incorporated in England and Wales with registered number 09425113 and whose registered office is at 5 Fleet Place, London EC4M 7RD, United Kingdom or, where the context requires, the Group;
   
“Consolidated Financial Statements” (save in the supplemental attachment when it will have the meaning given below) these consolidated financial statements for the year ended 31 December 2022;
   
“Compensation Committee” the compensation committee of the Company;
   
“EBITDA” earnings before interest, tax, depreciation and amortisation;
   
“EIP the Ferroglobe PLC Equity Incentive Plan, adopted by the Board on 29 May 2016 and approved by shareholders on 29 June 2016;
   
“EU” the European Union;
   
“Exchange Act” the U.S. Securities Exchange Act of 1934 (as amended);
   
“Executive Chairman” the executive chairman of the Company;
   
“Executive Directors” or “Executives”

the executive directors of the Company;

 

“FerroAtlántica” or “Grupo FerroAtlántica” or “Predecessor” Grupo FerroAtlántica, S.A.U. a joint stock company organised under the laws of Spain, including (where the context so requires), its subsidiaries and subsidiary undertakings;
   
“Free cash-flow” operating cash-flow less property, plant and equipment cash flows. Alternative Performance Measures are reconciled at Appendix 1;
   
“Globe” or “GSM” Globe Specialty Metals, Inc., a Delaware corporation, including (whether the context requires) its subsidiaries and subsidiary undertakings;
   
“Group” the Company and its subsidiaries;
   
“Grupo VM” Grupo Villar Mir, S.A.U.;
   
“IASB” International Accounting Standards Board;
   
“IFRS” International Financial Reporting Standards;
   
“KPI” key performance indicator;
   
“NASDAQ” the NASDAQ Global Select Market;
   
“NASDAQ Rules” the NASDAQ Stock Market Rules;
   
“Net debt” bank borrowings, debt instruments, obligations under finance leases, and other financial liabilities, less cash and cash equivalents. Alternative Performance Measures are reconciled at Appendix 1;
   
“Non-Executive Directors” or “NEDs” the non-executive directors of the Company;

 

3 

 

 

Reinstated Senior Notes”   refer to the notes issued in exchange of 98.588% of the 9.375% Senior Notes due 2022 issued by Ferroglobe Finance Company PLC and Globe due December 2025; 
   
“Super Senior Notes” refer to the 9% senior secured notes due 2025 issued by Ferroglobe Finance Company, PLC and redeemed in July 2022;
   
“Ordinary Shares” the ordinary shares of $0.01 each in the capital of the Company;
   
“Policy” the directors’ remuneration policy in force from time to time;
   
“SHA” the amended and restated shareholders agreement between Group VM and the Company dated 22 November 2017, as amended on 23 January 2018, 13 May 2021 and 29 July 2021;
   
“SEC” the U.S. Securities and Exchange Commission;
   
“SOX” the U.S. Sarbanes-Oxley Act of 2002;
   
“U.K.” the United Kingdom of Great Britain and Northern Ireland;
   
“U.S.” the United States of America;
   
“Working capital” inventories and trade and other receivables, less trade and other payables. Alternative Performance Measures are reconciled at Appendix 1;
   
“$” U.S. dollars.
 
In the separate attachment hereto only (and for the avoidance of doubt, not in the remainder of this U.K. Annual Report and Accounts), the following phrase has the meaning given below:
   
“Consolidated Financial Statements” the audited consolidated financial statements of Ferroglobe and its subsidiaries as of 31 December 2022, 2021 and 2020 and for each of the years ended 31 December 2022, 2021 and 2020, including the related notes thereto, prepared in accordance with IFRS, as filed  on SEC Form 20-F.

 

4 

 

 

Ferroglobe PLC

 

U.K Annual Report and Accounts 2022

Officers and professional advisers

 

Directors  
Javier López Madrid  
Marta Amusategui  
Rafael Barrilero Yarnoz  
Bruce Crockett  
Stuart Eizenstat  
Marco Levi  

Nicolas de Santis

Manuel Garrido y Ruano

 
Belén Villalonga  
Juan Villar-Mir de Fuentes  
Silvia Villar-Mir de Fuentes  
Company Secretary  
Thomas Wiesner  
Registered Address  
5 Fleet Place  
London  
EC4M 7RD  
Auditor  
Deloitte LLP  
Statutory Auditor  

1 New St. Square

 
EC4A 3HQ London  

 

5 

 

 

Ferroglobe PLC

 

Introduction

 

Ferroglobe PLC is a public limited company incorporated under the laws of England and Wales under Company Number: 09425113. Ferroglobe PLC and subsidiaries (the “Company” or “Ferroglobe”) is among the world’s largest producers of silicon metal and silicon-based alloys, important ingredients in a variety of industrial and consumer products. The Company’s customers include major silicone chemical, aluminum and steel manufacturers, auto companies and their suppliers, ductile iron foundries, manufacturers of photovoltaic solar cells and computer chips, and concrete producers. Additionally, the Company was operating hydroelectric plants (hereinafter “energy business”) in Spain until 2019 and is still operating in France.

 

The Company was incorporated in 2015 and its Ordinary Shares are listed for trading on the NASDAQ in U.S. dollars under the symbol “GSM”.

 

The Company is subject to disclosure obligations in the U.S. and the U.K. While some of these disclosure requirements overlap or are otherwise similar, some differ and require distinct disclosures. Pursuant to the requirements of the Companies Act, this document includes our directors’ strategic report, directors’ report, remuneration report and required financial information (including our statutory accounts and statutory auditor’s report for the reporting period commencing 1 January 2022 and ending 31 December 2022), which together comprise our U.K. annual reports and accounts for the period ended 31 December 2022 (the “U.K. Annual Report and Accounts”).

 

We are also subject to the information and reporting requirements of the Exchange Act, regulations and other guidance issued by the SEC and the NASDAQ listing standards applicable to foreign private issuers. In accordance with the Exchange Act, we are required to file annual and periodic reports and other information with the SEC, including, without limitation, our 2022 Form 20-F. Certain other announcements made by the Company are furnished to the SEC on Form 6-K. Our status as a foreign private issuer requires the Company to comply with various corporate governance practices under SOX, as well as related rules implemented by the SEC. In addition, NASDAQ Rules permit foreign private issuers to follow home country practice in lieu of the NASDAQ corporate governance standards, subject to certain exemptions and except to the extent that such exemptions would be contrary to U.S. federal securities law.

 

We have provided as a separate attachment to the U.K. Annual Report and Accounts extracts from the 2022 Form 20-F to assist shareholders in assessing the Group’s performance and results. Investors may obtain the full 2022 Form 20-F, without charge, from the SEC at the SEC’s website at www.sec.gov or from our website at www.ferroglobe.com. Unless expressly stated otherwise, the information on our website is not part of this U.K. Annual Report and is not incorporated by reference herein.

 

The capitalised terms used throughout the U.K. Annual Report and Accounts are defined in the Glossary and Definitions section of this U.K. Annual Report unless otherwise indicated. In the following text, the terms “we,” “our,” “the Company”, “our Company” and “us” may refer, as the context requires, to Ferroglobe or collectively to Ferroglobe and its subsidiaries. Throughout the U.K. Annual Report, rounding has been applied and numbers given and totals aggregated may differ in consequence.

 

6 

 

 

Chairman’s Letter to Shareholders

 

Dear Fellow Shareholders,

 

I want to start this year’s letter by thanking our employees for their hard work and dedication during the year. 2022 was a year of significant challenges across the globe, with the war in Ukraine, high inflation and other economic uncertainty, volatile markets and the lingering impact of COVID-19. Our people have shown resilience, demonstrated our values and have embodied what makes Ferroglobe the company we are today, one that delivers for our customers, our communities and of course you, our shareholders.

 

In spite of the global volatility and uncertainty around us, we continue to make progress on a number of fronts, refining our knowledge and expertise in areas crucial for our green transition. During the year we added low-cost production capacity for silicon metal, generated additional cost savings for our value creation plan and continue to position the company to capitalize on trends that will drive additional and sustainable growth for silicon metal, more of which I will cover later in this letter.

 

2022 PERFORMANCE

 

The first half of 2022 saw unprecedented pricing levels across our portfolio and through a combination of price, operational agility, commercial excellence, and cost discipline, we delivered the strongest set of results in our 100-year history.

 

For the full year, consolidated revenue increased 46%, from $1,779 million in 2021 to $2,598 million in 2022, adjusted EBITDA increased from $179 million in 2021 to $860 million in 2022 and consolidated operating profit of $31 million in 2021 improved to a consolidated operating profit of $660m in 2022.

 

Alongside the structural improvements from the value creation plan we started in 2020, we showed how our flexible asset footprint can optimize profitability. Against a backdrop of high energy costs in Europe, we moved some of our production to low-cost plants outside of Europe. This played a key part in helping us achieve a record consolidated operating cashflow of $405 million for 2022, which represents a significant improvement over 2021, when consolidated operating cashflow was negative $1 million.

 

During the year we were able to leverage our operational footprint to capitalize on the increasing demand for silicon metal, by successfully adding 22,000 tons of capacity at our Selma plant and a further 55,000 tons at our plant in Polokwane, South Africa with minimal capital investment. These efforts also demonstrate our ability to meet the increasing demand for silicon metal in a sustainable and low-cost manner. There is more on the Company’s performance in respect of its key performance indicators in 2022 at page 181.

 

STRENGTHENING OUR BALANCE SHEET

 

Ferroglobe’s underlying business and fundamentals are strong, and we have the strategy and the structure to capitalize on the exciting growth opportunities which lie ahead. A key component is our balance sheet wherein 2022 we made good progress with reducing our gross debt levels. During the second quarter we purchased $19 million of our senior secured notes in the open market. Furthermore, in the third quarter we redeemed all $60 million of the 9% super senior secured notes due in 2025.

 

Meanwhile, in June 2022 the Group signed a new $100 million asset-based revolving credit facility with Bank of Montreal. The new ABL helps bolster our balance sheet and liquidity position and its covenant-light nature provides the flexibility we need to execute our plan.

 

DELIVERING ON ESG

 

This year our people have impressed me, navigating the impact of the war in Ukraine on our industry, supply chain disruption and ongoing challenges from the pandemic. Alongside these challenges we are gaining real momentum on

 

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environmental, social and governance (ESG) issues. In July we achieved a significant milestone by publishing our first global ESG report. The report outlines our ESG strategy which is built upon four fundamental pillars:

 

·Strengthening our governance framework;

 

·Promoting solid and honest engagement with our people and the communities where we operate;

 

·Reinforcing the role of sustainability through our value chain; and

 

·Improving our environmental footprint to enable sustainable development.

 

Our teams are currently working across many critical initiatives which contribute not only to Ferroglobe building a sustainable future, but also for our customers – as we are seeing ever-increasing demand for products that help our customers reduce their own environmental impacts throughout their supply chains, particularly in carbon.

 

CORPORATE GOVERNANCE IMPROVEMENTS

 

On 26 May 2023, the Board of Directors made important improvements to our corporate governance by eliminating the prior structure of the separate Nominations and Corporate Governance Committees, replacing them with a new combined Nominations and Governance Committee. This new committee consists of three independent directors: Nicolas De Santis (Chair), Belen Villalonga and Bruce Crockett. In addition, Silvia Villar-Mir de Fuentes resigned from the Compensation Committee, with Stuart Eizenstat joining that committee. As a result of these changes, all three standing committees of the Board are comprised exclusively of independent directors, reflecting best industry practices. We believe that these changes will strengthen our corporate governance framework and contribute to the long-term success of our company.

 

LOOKING AHEAD

 

Macroeconomic conditions remain challenging, with subdued levels of demand in some of our markets in early 2023. We are confident that our markets will recover, and therefore we will continue with the implementation of our strategy. Fundamentally, we have a strong, global business platform in attractive end markets with excellent long-term growth prospects.

 

Our growth prospects are underpinned by megatrends that are impacting the entire globe, none more so than the green transition and society’s need to increase energy efficiency. We are already seeing the impact of government-led initiatives in North America and Europe on the solar and battery value chains, by accelerating the rate at which countries are onshoring key industries. Coupled with the increased focus on local sourcing and production, Ferroglobe’s ability to develop high purity silicon metal provides numerous value-added opportunities in high-demand end markets that are expected to drive high margins and strong growth for the foreseeable future.

 

As I look back on what was an extraordinary year for the company, I would like to thank our board, our customers and our shareholders for their continued support.

 

Javier López Madrid

Executive Chairman 

 

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Strategic report

 

This strategic report for the financial year to 31 December 2022 has been prepared in compliance with Section 414C of the Companies Act to provide an overview of the Group’s business and strategy. It contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

 

For a supplementary description of our business (including our model, strategy and competitive strengths), risks associated with our business and our results of operations, see the following sections of the 2022 Form 20-F: Part I, Item 3, Section D, Risk factors; Item 4, Information on the Company; Item 5, Operating and Financial Review and Prospects; Item 7, Major Shareholders and Related Party Transactions and Item 11, Quantitative and Qualitative Disclosures About Market Risk. These sections are set out in a separate attachment to this U.K. Annual Report.

 

Nature of the business

 

Through its operating subsidiaries, Ferroglobe is one of the world’s largest producers of silicon metal, silicon-based alloys and manganese-based alloys. Additionally, Ferroglobe currently has quartz mining activities in Spain, the United States, Canada, and South Africa, low-ash metallurgical quality coal mining activities in the United States, and interests in hydroelectric power in France. Ferroglobe controls a meaningful portion of many of its raw materials and captures, recycles and sells most of the by-products generated in its production processes.

 

We sell our products to a diverse base of customers worldwide, in a varied range of industries. These industries include aluminum, silicone compounds used in the chemical industry, ductile iron, automotive parts, renewable energy, photovoltaic (solar) cells, electronic semiconductors and steel, all of which are key elements in the manufacturing of a wide range of industrial and consumer products.

 

We are able to supply our customers with the broadest range of specialty metals and alloys in the industry from our production centers in North America, Europe, South America, Africa and Asia. Our broad manufacturing platform and flexible capabilities allow us to optimize production and focus on products most likely to enhance profitability, including the production of customized solutions and high purity metals to meet specific customer requirements. We also benefit from low operating costs, resulting from our ownership of sources of critical raw materials and the flexibility derived from our ability to alternate production at certain of our furnaces between silicon metal and silicon-based alloy products.

 

Business model and strategy

 

As part of the strategy for delivering the objectives of the Company, the Group develops new products or new specifications on a continual basis. As a consequence of these efforts, investments may be made in facilities that allow the production of new products, such as higher-grade silicon metal, solar grade silicon metal or new foundry products.

 

In 2020 we conducted a deep and broad evaluation of our Company with the goal of designing a strategic plan focused on bolstering the long term competitiveness of the business and returning the Company to profitability by fundamentally changing the way we operate, both operationally and financially. The multi-year turnaround plan we developed essentially impacts all the functional areas of our Company as we seek to drive changes that ensure competitiveness throughout the cycle. In the last 2 years, the Company set a target of achieving $225 million in EBITDA improvement. We achieved $188 million in cost savings and met our commercial excellence target of $50 million. The key value drivers of our strategic plan were the following:

 

 ·Footprint optimization: One of the Company’s core advantages is our large and diverse production platform. While our asset footprint provides flexibility, at times we are restricted in our ability to quickly adapt to changing market conditions due to inherent constraints in curtailing capacity, particularly for shorter durations. Going forward, our goal is to ensure that the operating platform is more flexible and modular so shifts in production, based on needs and relative costs, are incorporated swiftly. Through this value creation driver we aim to shift our capacity footprint by optimizing production to the most competitive assets.

 

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·Continuous plant efficiency: We will continue to build on the success of our existing key technical metrics (KTM) program, which consists of specific initiatives aimed at enhancing our process, minimizing waste, and improving the overall efficiency to drive down costs. The Company maintains a pipeline of initiatives developed through the sharing of best practices amongst our numerous sites and through new improvements identified by our research and development team. Moreover, we have implemented developing tools to track our key performance indicators in an ongoing effort to improve furnace level performance.
   
 ·Commercial excellence: We have implemented commercial best practices to maximize profitable revenue, aiming at improving and reinforcing our pricing, account management, salesforce effectiveness, and product portfolio and customer focus. We have strengthened our customer relationships by developing a target portfolio prioritization, re-designing our commercial coverage and operating model, and structuring our account planning, with the definition of clear objectives for each of our customers and a sustained focus on long-term partnership building. We have implemented a range of digitally-enabled tools and processes across the entire commercial function, bringing our team’s performance to the next level. Through our new customer relationship management tool, we have reinforced our account management and front-line effectiveness, as well as our customer service and quality management. On pricing, we have redesigned our governance process and introduced new tools to maximize profitability and provide margin transparency for every sale. Furthermore, we have re-designed our product management function, empowering this role to create customer value and act as a consistent source of information and cross-functional coordination.

 

·Centralized purchasing: We have adapted our operating model such that the purchase of our key inputs is done centrally and to support a purchase culture centered on buying better and spending better. This will enable us to improve its tracking of needs, enhance our ability to schedule purchases and enable us to benefit from bulk purchases. Buying better is a supply-led effort that focuses on price and volume allocation, negotiating prices and terms, managing price risks, pooling volumes and contracts, shifting volumes to best-price suppliers and leveraging procurement networks. Spending better is an operation-led effort to control demand, enforce compliance, reduce complexity, and perform value engineering to foster efficient spending. Through the principles of buying better and spending better, we aim to attain more than just cost reduction. Through the new organization, we seek to reduce supply chain risk, supporting continuous quality and service improvement, fostering better decision-making about suppliers and optimizing resource allocation.

 

·Selling, general and administration & corporate overhead reduction: During our corporate review, we identified significant opportunities for further cost improvement through permanent cost cutting at our plants, as well as the corporate centers. By tracking these costs vigorously and increasing accountability, we aim to bolster the overall cost structure at various levels. Through this, we aim to create a culture focused on cost control and disciplines for deploying best practices to drive sound spending decisions without compromising our overall performance.

 

·Working capital improvement: We have improved substantially our net working capital by establishing targets and improving our Supply Chain processes. This will allow us to sustain competitive levels of working capital throughout the cycle – and while we have recently witnessed a peak, due to slowdown of demand and margin compression, we are taking measures to correct it and return to previous values.

 

There is more information on the Group’s business, risks, key financials and organizational structure in Part I, Item 3, Item 4, Item 5 Information on the Company of the 2022 Form 20-F (as set out in the separate attachment to this U.K. Annual Report and not forming part of our financial statements). This, together with the information in this Strategic Report, and the Operating and Financial Review and Prospects section of the 2022 Form 20-F included in the separate attachment provides a fair review of the Company’s business and its development and performance during 2022.

 

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Principal risks and uncertainties

 

Key Risks

 

We operate in a highly competitive industry.

 

The silicon metal market and the silicon-based and manganese-based alloys markets are global, capital intensive and highly competitive. Our competitors may have greater financial resources, as well as other strategic advantages, to maintain, improve and possibly expand their facilities, and, as a result, they may be better positioned than we are to adapt to changes in the industry or the global economy. Advantages that our competitors have over us from time to time, new entrants that increase competition in our industry, and increases in the use of substitutes for certain of our products could have a material adverse effect on our business, results of operations and financial condition.

 

Our business is particularly sensitive to increases in energy costs, which could materially increase our cost of production.

 

Electricity is one of our largest production components. The price of electricity is determined in the applicable domestic jurisdiction and is influenced both by supply and demand dynamics and by domestic regulations. Changes in local energy policy, increased costs due to scarcity of energy supply, climate conditions, the termination or non-renewal of any of our power purchase contracts and other factors may affect the price of electricity supplied to our plants and adversely affect our results of operations and financial conditions.

 

Because electricity is indispensable to our operations and accounts for a high percentage of our production costs, we are particularly vulnerable to supply limitations and cost fluctuations in energy markets.

 

Our business benefits from antidumping and countervailing duty orders and laws that protect our products by imposing special duties on unfairly traded imports from certain countries. If these duties or laws change, certain foreign competitors might be able to compete more effectively.

 

The current antidumping and countervailing duty orders may not remain in effect and continue to be enforced from year to year, the products and countries now covered by orders may no longer be covered, and duties may not continue to be assessed at the same rates.

 

Similarly, export duties imposed by foreign governments that are currently in place may change. For example, duties on Chinese exports of types of ferroalloys produced by Ferroglobe could be reduced.

 

Changes in any of these factors could adversely affect our business and profitability. Finally, at times, in filing trade actions, we arguably act against the interests of our customers. Certain of our customers may not continue to do business with us as a result.

 

Our business operations may be impacted by various types of claims, lawsuits, and other contingent obligations.

 

We are involved in various legal and regulatory proceedings including those that arise in the ordinary course of our business. We estimate such potential claims and contingent liabilities and, where appropriate, record provisions to address these contingent liabilities. The ultimate outcome of the legal matters currently pending against our Company is uncertain, and although such claims, lawsuits and other legal matters are not expected individually to have a material adverse effect, such matters in the aggregate could have a material adverse effect on our business, results of operations and financial condition. Furthermore, we could, in the future, be subject to judgments or enter into settlements of lawsuits and claims that could have a material adverse effect on our results of operations in any particular period. While we maintain insurance coverage in respect of certain risks and liabilities, we may not be able to obtain such insurance on acceptable terms in the future, if at all, and any such insurance may not provide adequate coverage against such claims.

 

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Other risks and uncertainties

 

In addition to the key risks above, the Company is exposed to a number of risks which are monitored on an ongoing basis and which are 12 summarized in the supplementary attachment. There is more information on the Group’s, risks, in Part I, Item 3 Key Information on the Company of the 2022 Form 20F (as set out in the separate attachment to this U.K. Annual Report).

 

Internal control environment

 

We did not maintain an effective control environment to enable the identification and mitigation of the risk of the existence of potential material accounting errors. We have identified deficiencies in the principles associated with the control environment component of the COSO framework. There is more information on the Group’s controls and procedures in Part I, Item 15 Controls and Procedures of the 2022 Form 20F (as set out in the separate attachment to this U.K. Annual Report)

  

Key Performance Indicators (“KPIs”)

 

The Board considered that the most important KPIs during 2022 were those set out below. Certain of these KPIs will also be a core area of focus during 2023.

 

At the corporate level, the principal KPIs that we use for measuring the overall performance of our business are:

 

·EBITDA

 

·Adjusted EBITDA

 

·Adjusted EBITDA margin

 

·Working capital improvement

 

·Free cash-flow

 

·Net Debt to Total Assets

 

·Net Debt to Capital; and

 

·Net Income.

 

Some of these measures are also part of our compensation structure for the key executives, as follows:

 

·Adjusted EBITDA: EBITDA, adjusted in accordance with Company’s adjustments announced as part of its earnings reports.
   
 ·Free cash-flow, which represents net cash provided by operating activities less payments for property, plant and equipment.

 

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The following table sets out the Company’s performance in respect of these financial and non-IFRS measures in 2022. Refer to Appendix 1 for reconciliations of these non-IFRS measures.

 

Adjusted

EBITDA

Adjusted

EBITDA

Margin

Working

Capital

Free Cash-

Flow

($m)   ($m) ($m)
860.0 33.1% 705.9 352.9
(2021: 179.3) (2021: 10.1%) (2021: 464.9) (2021: (28.9))

 

Reported 

EBITDA 

Net
Income
Net Debt to
Total Assets
Net Debt to
Capital
($m) ($m)    
742.1 443.8 11.2% 22.4%
(2021: 128.7) (2021: (115.4)) (2021: 33.3%) (2021: 61.3%)
       

 

In addition to these financial KPIs, there are a number of non-financial performance measures which the Company uses to gauge its success such as customer attrition, inventory rotation /obsolescence, benchmark against competitors and others. Some of these are reflected in the annual bonus and equity plan objectives for senior management and are reviewed each year to ensure their continued relevance. In the financial year ended 31 December 2022, the annual bonus was subject to meeting certain financial conditions related to net cash flow and EBITDA. Further information on performance in respect of these performance measures is in the Directors Remuneration Report at page 32.

 

Details of the Group’s anti-bribery and corruption and environmental policies are below and details of its employment policies and greenhouse gas emissions are set out below and in the Directors’ Report.

 

Employees

 

As of 31 December 2022, the Group had:

 

·9 directors, of whom 6 are male and 3 are female;

 

·288 senior managers, of whom 222 are male and 66 are female; and

 

·3,173 employees, of whom 2,846 are male and 327 are female.

 

Environment and other social matters

 

Ferroglobe is committed to conducting its business in compliance with all applicable laws and regulations in a manner that has the highest regard for human rights, the environment and the health and safety and well-being of employees and the general public. During the year under review the Group’s employees were each asked to re-confirm in writing their commitment to the Company’s Code of Conduct which emphasizes the Group’s commitment to the highest standards of integrity, ethical behavior, transparency, safety and corporate citizenship. The Code of Conduct incorporates the Group’s key policies on matters including whistleblowing, anti-bribery and corruption, environmental impacts, health and safety and respect in the workplace and the conduct of national and international trade.

 

Section 172 (1) Statement

 

This section of the U.K. Companies Act sets out a number of matters to which directors of a U.K. company must have regard in discharging their duty to promote the success of the Company. The strategic report must include a statement which describes how the directors have had regard to those matters when performing their duties. The Board welcomes this opportunity to throw more light on its governance structures and on how input from its stakeholders has informed and shaped its decision-making. In 2022 the Board exercised all their duties with regard to these and other factors as they reviewed and considered proposals from senior management and governed the Company through the Board and its Committees.

 

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The factors which the directors must take account of can be summarised as:

 

· the likely consequences of any decision in the long term
· taking account of the interests of the Company’s employees and fostering business relationships with customers, suppliers and other relevant stakeholders, such as regulatory bodies, governments and local authorities
· the impact of operations on the community and the environment
· maintaining a high standard of business conduct
· acting fairly between its members

 

In order to take account of these factors, the Board must be informed of them. This takes place directly and indirectly, through collaborative working with management and direct and indirect feedback, as illustrated below. The Company’s internal control framework, including the Company’s Sarbanes Oxley controls, and the work of the Internal Audit team assists in providing assurance to the Board on the information made available to it.

 

The likely consequences of any decision in the long-term

 

The governance structures of the Company include delegation of certain responsibilities of the Board to its key Committees and delegation of the Board’s authority for the executive management of the Company to its executive team, subject to clearly defined limits and regular monitoring by the Board and subject also to the reservation to the Board of any matter not expressly delegated in this way.

 

The management team bring their annual budget to the Board for approval each year. This includes forecasts, expected revenues, costs and major expenditure and projects for the year ahead. Each year the Board typically also takes a day out of its board calendar to consider, with the majority of the management team, the Company’s strategic plan. The Board held an extensive strategy day in June 2022 and subsequently approved the Company’s medium-term strategy in September 2022.

 

Throughout the year, the Board has received a number of reports on the Company’s capital structure and financing arrangements. Reports were made regularly to the Board by the management team members responsible for each function and region on their area of responsibility, their performance, priorities and key decisions and risks for the immediate future and medium term, giving assurance that proper consideration is made to the longer-term in decision making throughout the business.

 

Staying informed on employee, customer, supplier, investor and other key stakeholders’ views

 

Our relationships with those who work for the Company and with the Company are key to our success. The Board stays up to date with views of our employees through a number of means: key members of the management team, usually attend the management presentation made at each Board meeting when their input is regularly solicited. They are also consulted in less formal settings. Prior to the Covid-19 pandemic, Directors had an annual schedule of visits to our facilities which enable them to spend time with our people on the ground and receive their direct feedback. One output of these pre-Covid site visits led to an increased focus at Board level on the importance of driving a unified brand and culture for Ferroglobe. There are other channels through which the Board or its Committees receives reports on employee views; these include the Chief People & Culture Officer’s normal attendance at Compensation Committee meetings; and the confidential whistleblowing hotline, reports to which are in turn reported to the Audit Committee at its scheduled meetings. In 2022 the CEO continued with town hall meetings, face to face and virtually, with employees across the Group to keep them updated on our financial and operational performance; employees are encouraged to raise questions as part of those sessions.

 

We build strong relationships with our customers and suppliers, including our joint venture partners, spending a lot of time with them to best understand their goals and how to develop our business in our respective interests. The Board is aware that many of our relationships are long-term and depend on mutual trust and collaboration. The Board gets feedback on customer and supplier issues on a regular basis: through the input of the Chief Commercial Officer and Marketing and VP Supply Chain Management who normally attend management presentations in the scheduled Board meetings and through presentations each has made to the Board on their areas of responsibility, priorities and challenges.

 

The Board is aware that the Company relies on the support of its shareholders and their views are important to it. The Board’s interactions with these stakeholders take place through a variety of channels. The Company’s major shareholder, Grupo VM, had during 2022 four representative directors on the Board through whom views and input can

 

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be provided or sought. The Board receives feedback from other shareholders and the investment community through the Company’s quarterly results presentations. The VP Investor Relations is a regular attendee at Board meetings and shares themes or commentary made to the Executives and management by the Company’s investors and certain other stakeholders. Shareholders typically have the opportunity to attend the general meetings of the Company, including the AGM, and put questions to directors formally at the meeting and in a more relaxed environment before and afterwards. The Company also maintains an investor relations email address on its corporate website, questions posed to which are directed to its VP Investor Relations and, where relevant, would then be raised by them with the other management team members or the Board.

 

Engaging with community and the environment

 

We engage with communities, government and regulators in the areas and countries in which we operate through a range of industry consultations, membership in several trade and industry associations, participation in conferences, forums and meetings. We have engaged with local charities and community groups. We also routinely consult with the local, regional and central governments and their agencies on the proposed changes in conditions of operations of our production facilities. These matters are reported to the Board, which is kept updated on the status of these discussions and their progress.

 

We identify and assess the potential impacts that our business has on the environment and work with relevant authorities and industry experts to manage and minimise these impacts. The Audit Committee of the Board receives regular updates on any allegations of non-compliance by the business with environmental laws and regulations. There is more on this in Note 25 of our financial statements.

 

Sustainability has been identified by management as a top priority. First and foremost, we recognize the criticality of the company to take an active role in leading and driving change for the betterment of society. Furthermore, given the growing focus on sustainability amongst our stakeholders we need to create more transparency around our performance and the action plan to drive the changes required to meet our goals. In 2022 we issued the first ESG report on the 2021 financial year as the commencement of our new approach to sustainability disclosure.

 

In 2022 we approved Ferroglobe’s ESG Strategy 2022-2026 which sets the roadmap that makes sustainability a strategic pillar for the organization at the global level.

 

The ESG Strategy is aimed at being progressively implemented from 2022 to 2026, and has been defined based on four Strategic lines:

 

1.Strengthening our governance framework
2.Promoting a solid & honest engagement with our people and local communities where we operate
3.Reinforcing the role of sustainability through our value chain
4.Improving our environmental footprint to enable materials which are vital for sustainable development.

 

A specific ESG Committee has been designated to adopt and implement the ESG Strategy through 5 specific working groups to engage all business and corporate leaders to adopt and implement the ESG responsibilities set forth in the strategy.

 

The ESG Committee reports to the Management Team and The Board of Directors, which is ultimately responsible for the Company´s ESG performance.

 

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The ESG working groups are responsible for monitoring and coordinating the development of the 40 measures that have been established within the strategy, as well as establishing and tracking targets to measure the degree of implementation of each of them.

 

We have defined our ESG Strategy 2022-2026 in alignment with the United Nations Sustainable Development Goals (SDGs), identifying for each of the defined measures the specific targets to which it contributes to. In this sense, we have determined 8 out of the 17 SDGs, which are the most relevant in our activities and on which we shall focus our efforts.

 

 

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The measures set for each strategic line are summarized as follows:

 

· Strengthening our governance framework: Measures aimed at integrating sustainability into the Group's strategy, governance tools and organizational structure and also starting reporting through an annual ESG report.
· Promoting a solid & honest engagement with our people and local communities where we operate: Measures aimed at achieving a corporate culture by harmonizing procedures for people management, guided by the fundamental values of collaboration, leading change, respect and ownership. Focusing on Health & Safety as a top priority and guiding principle in all our operations and promoting diversity, equality and inclusion as part of Ferroglobe´s core value of respect by setting a “DEI Roadmap”.
· Reinforcing the role of sustainability throughout our value chain: Measures to promote the integration of sustainability among Ferroglobe’s value chain, both upstream and downstream by assessing our suppliers according to the ESG approach and coordinating the procedures to respond to customer´s needs in terms of ESG performance. The environmental footprint of our products will also be assessed developing specific Life Cycle Assessment studies.
· Improving our environmental footprint to enable materials which are vital for sustainable development: Measures focused at reducing the environmental impacts of products and processes and integrate the environmental risks management approach to strengthen our resiliency and sustainability. Extending the environmental and energy management systems certification according to ISO standards in our production sites. Boosting energy efficiency through technological and processes improvement. Setting a Corporate Climate Change Framework and setting specific emission reduction targets. Promoting circularity principles for waste and water management trough specific programs in the plants to reduce the global environmental footprint.

 

ESG Risk Management Approach

 

Under the Governance strategic line, ESG risks have been integrated in the Company´s risk management system, and we have started the Climate Change Risks & Opportunities Assessment aligned with the TCFD recommendations. 

 

Maintaining a high standard of business conduct

 

On behalf of the Company, the Board has adopted a number of policies which articulate the Company and the Board’s commitment to the highest standards of integrity, ethical behaviour, transparency, safety and corporate citizenship. These include, as their mainstay, the Company’s code of conduct which sets out the Company’s policies on bribery and corruption, whistleblowing, conflicts of interest and political and charitable contributions, as well as the importance of safeguarding the wellbeing of its employees and protecting its resources. The Code of Conduct is supported by further policies on whistleblowing, data protection and statements on trade compliance, tax and modern slavery. The Board has also adopted a corporate governance policy statement to protect the interests of minority shareholders (on which there is more on “Acting fairly between members” sections that follows).

 

The Code of Conduct is reviewed regularly and every employee of the Company and all of its Board members are asked to confirm their personal commitment to the Code on joining the Company and to re-confirm it each year thereafter. Employees have the opportunity to report suspected breaches of the Code, for which purpose a secure and confidential hotline has been established, administered by an independent third party. Allegations of breaches of the Code are normally reported to the Audit Committee at each of its scheduled meetings and regular updates on the status of follow-up actions and outcomes given.

 

Acting fairly between members

 

A significant number of the Company’s shares are held by Grupo VM, its major shareholder. The Company has a number of checks and balances in place throughout the Company’s governance framework to ensure that the interests of the majority and the minority shareholders are respected and the Board is very cognisant of its duties in this regard. These checks and balances include:

 

· the Company’s shareholders agreement with Grupo VM which regulates Board appointments, including those nominated by Grupo VM, Grupo VM’s rights to transfer and pledge its shares, its pre-emption rights and standstill obligations and the confidentiality agreement with Grupo VM which regulates the use, disclosure and security of confidential information shared with Grupo VM or its representatives;

 

17 

 

 

· the Company’s Articles of Association which, among other things, require the approval of a majority of independent directors to any agreement or arrangement between the Company and Grupo VM;
· the Board’s corporate governance policy first adopted in October 2017 under which the Board commits to maintain a majority of independent directors on the Board. This policy was most recently renewed in November 2021 for a period of 24 months;
· the workings and functions of the Board’s key fully independent Audit and majority independent Compensation Committees;
· the Company’s related parties’ policy which stipulates how and in what way proposed related party transactions are to be submitted for consideration and approval by the Audit Committee of the Board and the Company’s register of related party transactions which is submitted to each scheduled meeting of the Audit Committee;
· the presence of directors on the Board who were nominated by Grupo VM.

 

The Chief Legal Officer and Group Company Secretary has primary responsibility for advising the Board on its duties and on the Company’s governance framework and normally attends all meetings of the Board and its Committees.

 

The Strategic Report for the financial period ended 31 December 2022 has been reviewed and approved by the Board on 30 May 2023.

 

Javier Lopez Madrid

 

Director

 

18 

 

 

Directors’ report

 

The Directors present their report and the audited financial statements of the Group and Company for the year ended 31 December 2022. The Directors do not need to comply with Corporate Governance requirements.

 

The Directors’ Report comprises these pages (19 to 25) and the other sections and pages of the Annual Report cross-referred below which are incorporated by reference.

 

The financial statements have been prepared under the going concern basis of accounting, with additional details provided in note 3.1 of the financial statements

 

As permitted by legislation, certain disclosures normally included in the Directors’ Report have instead been integrated into the Strategic Report (pages 9 to 19). These disclosures include information relating to the Group’s principal risks and uncertainties.

 

Directors

 

The directors of the Company, who held office at any time during the year to 31 December 2022, were as follows:

 

Javier López Madrid Director and Executive Chairman
Marco Levi Director and Chief Executive Officer
Rafael Barrilero Yarnoz Non-Executive Director
Bruce L. Crockett Non-Executive Director
Stuart E. Eizenstat Non-Executive Director
Manuel Garrido y Ruano Non-Executive Director
Nicolas de Santis Non-Executive Director
Marta Amusategui Vergara Non-Executive Director

Juan Villar-Mir de Fuentes  

Silvia Villar-Mir de Fuentes 

Belén Villalonga Morenés 

Non-Executive Director 

Non-Executive Director 

Non-Executive Director 

 

The biographies of our directors as at the date of this report are set out on pages 26 to 30. Details of the directors standing for election or re-election at our 2023 AGM will be set out in the notice of that meeting.

 

Directors’ indemnities

 

As required by the Articles, each director is indemnified in connection with his role as a director, to the extent permitted by law. As permitted by the Articles, the Company has purchased and maintained throughout the year under review directors’ and officers’ liability insurance.

 

Share repurchases

 

During 2022 and 2021 the company did not perform any share repurchase.

 

Dividends

 

The Company has not declared any dividends during the year under review.

 

Political donations

 

During the year under review the Company has not made any political donations, incurred any political expenditure or made any contributions to an EU or non-EU political party.

 

19 

 

 

Employee policies

 

Ferroglobe has a culture of continuous improvement through investment in people at all levels within the organisation. Its Code of Conduct (“Code”), which applies to all directors and employees of the Group, sets out Ferroglobe’s commitment to protecting, respecting and supporting its workforce. The Code was revised in 2017 to bring together Ferroglobe’s policies on key ethical, behavioral and compliance matters. Its roll-out across the Group globally was initiated in 2017, supported by mandatory training for all employees. Subsequently and on an annual basis, Group personnel have been requested to re-certify their knowledge of and continued compliance with the Code. The adoption of and training provided on the Code is consistent with our evolution to an organization with an integrated approach to human relations policies across the five continents in which the Group operates.

 

Those key policies include:

 

· Health and safety, where Ferroglobe places high value on the well-being of all personnel and is committed to providing a healthy and safe working environment;

 

· Respect in the workplace, promoting equality and diversity, rejecting harassment and bullying and supporting work-life balance;

 

· Striving to conduct operations in a way that respects the human rights of personnel, suppliers and others with whom Ferroglobe works, including local communities;

 

· Encouraging the reporting of wrongdoing or of any suspicions or concerns as to wrongdoing, any of which can be raised in confidence through the whistleblowing hotline which Ferroglobe has established in all countries in which it operates where it is lawful to do so.

 

Ferroglobe is committed to providing equal opportunities for all Group personnel and to creating an inclusive workforce by promoting employment equality. This includes pursuing equality and diversity in all its employment activities, including recruitment, training, career development and promotion and ensuring there is no bias or discrimination in the treatment of people. Ferroglobe opposes all forms of unlawful or unfair discrimination on the grounds of race, age, nationality, religion, ethnic or national origin, sexual orientation, gender or gender reassignment, marital status or disability. Wherever possible, vacancies are filled from within Ferroglobe and efforts are made to create opportunities for internal promotion.

 

Greenhouse gas emissions

 

The UK Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013 requires UK-based quoted companies to report global greenhouse gas (“GHG”) emissions data in the Annual Report and Accounts. Comparison year data for 2017, 2018, 2019, 2020, 2021 and 2022 is included in Table 2 in this report. As in the period 2017-2021, the 2022 GHG inventory was prepared in accordance with the Ferroglobe PLC Greenhouse Gas Inventory Management Plan (2017), prepared in consultation with ERM Group, Inc. and its UK affiliate (the “IMP”).

 

The Company has selected the Operational Control approach and criteria as the basis for reporting GHG emissions data, defining “Operational Control” to encompass facilities the Group owns and operates, facilities it leases and operates, and joint venture facilities it operates. All facilities within Ferroglobe’s Operational Control that are material to its Group-wide GHG emission inventory are included in reported figures. This approach means that the operations for which emissions are reported are substantially coextensive with operations comprised by Ferroglobe’s consolidated financial reporting. The Company does not have responsibility for any emission sources that are not included in its financial reporting.

 

Table 1 sets forth the Company’s consolidated greenhouse gas emissions expressed in metric tonnes of carbon dioxide equivalent (CO2e). The figures reported below include all material direct (Scope 1) and indirect (Scope 2) emission sources for facilities within the Company’s Operational Control. Principal sources of Scope 1 emissions from operations at, or Scope 2 emissions imputed to, Ferroglobe-controlled facilities include:

 

20 

 

 

·Electricity purchased or produced by Ferroglobe facilities
·Fuels purchased for consumption in stationary sources on-site at Ferroglobe facilities (e.g., natural gas, diesel, LPG)
·Fuels purchased for consumption in mobile sources owned and operated by Ferroglobe
·Process emissions associated with electric arc furnaces used for the production of silicon metal and ferroalloys.

 

Table 1. Company-wide Scope 1 and Scope 2 Emissions for 2022

 

Global GHG emissions data for period 1 January 2022 to 31 December 2022

 

Emissions From: Tonnes of CO2e
   

Combustion of fuel and operation of facilities 

 

2,028,556*
Electricity, heat, steam and cooling purchased for own use 1,184,366
Total Scope 1 & Scope 2 emissions 3,212,922

Company’s chosen intensity measurement:

Emissions reported above normalized to per tonne of product output

4.50

 

*In line with DEFRA Guidance, 924,028 tonnes of CO2e are not included in the above table, due to being biogenic in nature.

 

Table 2. Company-wide Scope 1 and Scope 2 Emissions Comparison for 2020-2021-2022

 

Global GHG emissions data for period 1 January to 31 December 2020-2022

 

  2020

2021

Tonnes of CO2e

2022
Emissions From: Tonnes of CO2e Tonnes of CO2e
     

Combustion of fuel and operation of facilities (Scope 1)

 

1,701,763

*

2,197,734

**

2,028,556

***

Electricity, heat, steam and cooling purchased for own use (Scope 2) 1,282,333 1,228,600 1,184,366

 

 

Total gross Scope 1 & Scope 2 emissions

2,984,096 3,426,334 3,212,922
Energy Consumption (MWh)

5,365,791

 

6,854,806

 

6,479,769

Company’s chosen intensity measurement:

Emissions reported above normalized to per tonne of product output

4.92 4.42 4.50

 

* In line with DEFRA Guidance, 788,321 tonnes of CO2e are not included in the above table, due to being biogenic in nature.

** In line with DEFRA Guidance, 977,204 tonnes of CO2e are not included in the above table, due to being biogenic in nature.

*** In line with DEFRA Guidance, 924,028 tonnes of CO2e are not included in the above table, due to being biogenic in nature

 

21 

 

 

Since 2020 the company has launched a specific project on energy efficiency called the “KTM project”, focused on increasing both energy efficiency and raw materials yields in our furnaces and operations. The implementation of the Key Technical Metrics methodology is based on our technical know-how, expertise, comprehensive assessment of processes, operational rigor and continuous improvement, therefore implementing both operational and organizational measures. It includes a detailed on-site performance monitoring plan, especially on the energy specific consumption.

 

Methodology

 

In preparing the IMP and this report, the Company has adhered to the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard – Revised Edition (2004) (the “GHG Protocol”) and the UK DEFRA’s Environmental Reporting Guidelines: Including mandatory greenhouse gas emissions reporting guidance (June 2013) (“DEFRA Guidance”). The Company reports material emissions of three out of the six Kyoto GHGs, viz. carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O). A fourth, sulfur hexafluoride (SF6), is present in electrical breakers at some Company facilities, but no emission of SF6 of have been observed. The two remaining Kyoto gases, perfluorocarbons (PFCs) and hydroflurocarbons (HFCs), are not reported since Company facilities do not emit or use materials containing them.

 

Post year-end events

 

REINDUS Loan

 

On January 19, 2023, a new resolution was signed by the Ministry terminating the total reimbursement procedure initiated in January 2022. Once that procedure was definitively closed, the company decided to proceed with the foreseen partial early repayment of €16.3 million on February 10, 2023.

 

Grupo Villar Mir

 

On February 28, 2023 Grupo Villar Mir has reduced the number of shares owned from 81,924,822 to 76,265,434 shares, representing approximately 40.72% of the capital of the company.

 

Reinstated Senior Notes

 

On March 1, 2023, Globe Specialty Metals, Inc. repurchased $25.7 million of the Reinstated Senior Notes and the corresponding accrued interest coupon amounting to $207 thousand as of the purchase date. The fair value of the Notes at the purchase date was $26.1 million and the purchase price was $1.01 per bond.

 

Corporate Governance Improvements

 

On 26 May 2023, the Board of Directors made important improvements to our corporate governance by eliminating the prior structure of the separate Nominations and Corporate Governance Committees, replacing them with a new combined Nominations and Governance Committee. This new committee consists of three independent directors: Nicolas De Santis (Chair), Belen Villalonga and Bruce Crockett. In addition, Silvia Villar-Mir de Fuentes resigned from the Compensation Committee, with Stuart Eizenstat joining that committee.

 

Future developments

 

As part of its strategy to serve customers better, the Group develops new products or new specifications on a continuous basis. As a consequence of these efforts, investments have been made in facilities that allow the production of new products, such as higher-grade silicon metal, solar grade silicon metal, electrodes for use in silicon metals furnaces, high-value powders for use in Li-on batteries or new foundry products. Please see Part I, Item 4, Information on the Company of the 2022 Form 20-F by way of example of how the Group has developed proprietary technologies and has pursued innovation in the development of new products.

 

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Research and development

 

Ferroglobe focuses on developing new products, production processes and continuous improvement to create further value for our stakeholders and to follow global megatrends, including the green energy transition. Ferroglobe has dedicated teams for R&D and continuous improvement, but it also has cooperation agreements in place with various universities and research institutes in Spain, France and other countries around the world.

 

Please refer to Part I, Item 4, Information on the Company of the 2022 Form 20-F (as set out in the separate attachment to this U.K. Annual Report) for information on Ferroglobe’s research and development activities and opportunities.

 

Overseas branches

 

The Company has no overseas branches.

 

Share capital structure and change of control provisions

 

The Company’s share capital comprises ordinary shares of $0.01 each, all of which bear the same rights and obligations. The Company’s issued share capital at 31 December 2022 is set out at Note 13 to the Consolidated Financial Statements.

 

The rights attaching to the Ordinary Shares are set out in the Articles, a copy of which can be obtained from the Company Secretary on request. Each Ordinary Share has one vote attaching to it for voting purposes and all holders of Ordinary Shares are entitled to receive notice of and attend and vote at the Company’s general meetings. The Articles vest power in the directors to refuse to register transfers of Ordinary Shares in certain circumstances including where the instrument of transfer is not stamped or is in favor of more than 4 transferees. There are also restrictions in the Articles affecting the terms of tender offers and any scheme of arrangement, consolidation, merger or business combination designed to protect minority shareholders while Grupo VM and its associates hold ten percent or more of the Ordinary Shares.

 

Significant agreements affected by a takeover

 

There are no agreements between the Group and any of its employees or any director of the Company that provide for compensation to be paid to the employee or director for termination of employment or for loss of office as a consequence of a takeover of the Company, other than provisions that would apply on any termination of employment.

 

Reinstated Notes

 

In 2021, Ferroglobe PLC, the UK Issuer and Globe offered to eligible holders of the Old Notes the opportunity to exchange any and all of the Old Notes for new 9⅜% senior secured notes due 2025 issued by the UK Issuer and Globe.

 

The Reinstated Notes are governed by an indenture (the “Reinstated Notes Indenture”) entered into by, among others, Ferroglobe and Globe, as issuers, GLAS Trustees Limited, as trustee, Global Loan Agency Services Limited, as paying agent, GLAS Trust Corporation Limited, as security agent, and the guarantors named therein. The Reinstated Notes are guaranteed on a senior basis by Ferroglobe and each subsidiary of Ferroglobe that guarantees the UK Issuer’s obligations under the Super Senior Notes (other than Globe) (the “Reinstated Notes Guarantors”).

 

The Reinstated Notes Indenture require us to offer to repurchase all or any part of each holder’s Reinstated Notes upon the occurrence of a change of control, as defined in the Reinstated Notes Indenture, at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest thereon, to the date of purchase. A change of control will occur upon the acquisition of 35% or more of the total voting power of our shares by persons other than certain permitted holders including Grupo VM and such permitted holders “beneficially own” directly or indirectly in the aggregate the same or a lesser percentage of the total voting power of our shares than such other “person” or “group” of related persons. However, the Reinstated Notes Indenture states that no change of control shall occur or be deemed to occur by reason of:

 

1.       any enforcement of rights or exercise of remedies under the GVM Share Pledge, including any sale, transfer or other disposal or disposition of the shares in Ferroglobe in connection there with;

 

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2.       any disposal by Grupo VM of its shares in Ferroglobe where the purpose of that transaction is to facilitate the repayment or discharge (in full or in part) of the GVM Loan and the proceeds of sale are promptly applied towards such repayment or discharge; or

 

3.       any mandatory offer (or analogous offer) required under the City Code on Takeovers and Mergers or any analogous regulation applied in any jurisdiction as a consequence of a transaction under limb (1) or (2) above,

 

provided that, if any transaction under paragraphs (1) to (3) above occurs which, but for such paragraph(s), would be a “Change of Control” as a consequence of any person or persons (other than Tyrus) (x) acquiring any voting stock of Ferroglobe PLC (or any other successor company) or (y) being or becoming the “beneficial owner” of the voting power of any voting stock of Ferroglobe PLC (or any other successor company) (such person(s), the “Controlling Shareholder”):

 

· the Controlling Shareholder has within 60 days of that transaction and at its election:

 

o         paid to the Holders, on a pro rata basis, a fee in an aggregate amount equal to the product of(i) the aggregate principal amount outstanding of the Reinstated Notes, (ii) 0.02 and (iii)the number of years (or part-thereof, with any part of a year calculated on the basis of the number of days divided by 360) from the payment date of such fee to December 31, 2025; or

 

o         made an offer to all Holders to purchase one-third of the Notes on a pro rata basis at a price equal to 101% of the principal amount of such Notes plus accrued and unpaid interest; or

 

· either or both of the Issuers within 60 days of that transaction has made an offer to all Holders to repurchase or purchase (as applicable), or has otherwise redeemed, one-third of the Note son a pro rata basis at a price equal to 101% of the principal amount of such Notes plus accrued and unpaid interest, resulting in such repurchased, purchased or redeemed Notes being cancelled, and provided further that the Controlling Shareholder is not a Restricted Person.

 

Where:

 

“GVM Loan” means any financing provided by Tyrus to Grupo VM or owing by Grupo VM to Tyrus, from time to time.

 

“GVM Share Pledge” means any share pledge or charge or other similar security over the shares in Ferroglobe PLC held by Grupo VM granted by Grupo VM in support of or as collateral for its obligations under any Grupo VM Loan from time to time.

 

“Restricted Person” means any person that: (a) is listed on the United States Specifically Designated Nationals and Blocked Persons List; the European Union Consolidated List of Persons, Groups and Entities subject to EU Financial Sanctions; or the United Kingdom Consolidated List of Financial Sanctions Targets (each a “Sanctions List”); (b) is owned or controlled by a person identified on a Sanctions List, to the extent that such ownership or control results in such person being subject to the same restrictions as if such person were themselves identified on the corresponding Sanctions List; (c) is located in or incorporated under the laws of a country or territory that is the target of comprehensive sanctions imposed by the United States, which for the purposes of this Agreement, as at the date of signature of this Agreement by the last of its signatories are Iran, Syria, Cuba, the Crimea Region, and North Korea; (d) has, within the last five years, been prosecuted by a relevant authority in the United States, the United Kingdom or any member state of the European Union, in relation to a breach of securities laws (in so far as such prosecution relates to insider dealing, unlawful disclosure, market manipulation or prospectus liability) or criminal laws relating to fraud or anti-corruption, save for instances where the prosecution has concluded and did not result in any criminal or civil settlement or penalty being imposed in relation to such breaches; or (e) is a Subsidiary of a person described in (d) above.

 

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Statement of disclosure to the Company’s U.K. statutory auditor

 

In accordance with section 418 of the Companies Act, each director at the date of this Directors’ Report confirms that:

 

·so far as he is aware, there is no relevant audit information of which the Auditor is unaware; and

 

·he has taken all the steps he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Auditor is aware of that information.

 

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

 

By order of the Board on 30 May 2023

 

Javier Lopez Madrid

 

Director

 

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The Board of Directors

 

Details of the members of the Board as at the date of this ARA are below.

 

Javier López Madrid

 

Javier López Madrid has been Executive Chairman of the Company since December 31, 2016 and was Chairman of our Nominations Committee from January 1, 2018 until May 26, 2023. He was first appointed to the Board on February 5, 2015 and was the Company’s Executive Vice-Chairman from December 23, 2015 until December 31, 2016.

 

He has been Chief Executive Officer of Grupo VM since 2008, is member of the Board of several non profit organizations. He is the founder and largest shareholder of Financiera Siacapital and founded Tressis, Spain’s largest independent private bank. Mr. López Madrid holds a Masters in law and business from ICADE University.

 

Marco Levi

 

Marco Levi was appointed Chief Executive Officer of the Company on January 10, 2020 and appointed to its Board of Directors on January 15, 2020. Dr Levi previously served as President and CEO of Alhstrom-Munksjö Oyj, a global fiber materials company listed in Finland, where he led a successful transformation of the business by refocusing its product portfolio towards value-added specialty products. Prior to that, Dr. Levi was Senior Vice President and Business President of the $3 billion emulsion polymers division of chemicals manufacturer Styron, including during the period in which Styron division was acquired by Bain Capital from Dow Chemical Company. Dr. Levi previously had spent over twenty-two years at Dow in various departments and roles, ultimately serving as general manager of the emulsion polymers business.

 

Dr Levi is also a Non-Executive Director of Mativ Holdings, Inc, the leading global performance materials company, listed on the New York Stock Exchange. Dr Levi holds a doctorate in industrial chemistry from the Università degli Studi di Milano, Statale, in Italy.

 

Bruce L. Crockett

 

Bruce L. Crockett was appointed to our Board of Directors as a Non-Executive Director on December 23, 2015. He has been a member of our Audit Committee from that date and was Chair of the Audit Committee since June 4, 2020 and served on our Compensation Committee from January 1, 2018 until June 23, 2021. Mr. Crockett was appointed on May 13, 2021 as our Senior Independent Director and on June 23, 2021 as Chair of the Corporate Governance Committee until May 26, 2023, on which date he was appointed as a member of the Nominations and Governance Committee.

 

Mr. Crockett holds a number of other Board and governance roles. He has been Chairman of the Invesco Mutual Funds Group Board of Directors and a member of its Audit, Investment and Governance Committees, serving on the board since 1991, as Chair since 2003 and on the Board of predecessor companies from 1978. Since 2013, he has been a member of the Board of Directors and, since 2014, Chair of the Audit Committee and since 2021 member of the Governance Committee of ALPS Property & Casualty Insurance Company. He has been Chairman of, and a private investor in, Crockett Technologies Associates since 1996. He is a life trustee of the University of Rochester.

 

Mr. Crockett was a member of the Board of Directors of Globe from April 2014 until the closing of the Business Combination, as well as a member of Globe’s Audit Committee. He was formerly President and Chief Executive Officer of COMSAT Corporation from 1992 until 1996 and its President and Chief Operating Officer from 1991 to 1992, holding a number of other operational and financial positions at COMSAT from 1980, including that of Vice President and Chief Financial Officer. He was a member of the Board of Directors of Ace Limited from 1995 until 2012 and of Captaris, Inc. from 2001 until its acquisition in 2008 and its Chairman from 2003 to 2008.

 

Mr. Crockett holds an A.B. degree from the University of Rochester, B.S. degree from the University of Maryland, an MBA from Columbia University and an Honorary Doctor of Law degree from the University of Maryland.

 

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In 2021 he was appointed as a member of the Board of Advisors of the Western Colorado University Graduate Business School.

 

Stuart E. Eizenstat

 

Stuart E. Eizenstat was appointed to our Board of Directors as a Non-Executive Director on December 23, 2015. He was a member of the Company’s Corporate Governance Committee from January 1, 2018 until May 26, 2023 and served on our Nominations Committee from May 16, 2018 until May 26, 2023, on which date he was appointed as a member of the Compensation Committee.

 

Mr. Eizenstat has been a Senior Counsel at Covington & Burling LLP in Washington, D.C. and headed its international practice for many years after joining the firm in 2001. He has served as a member of the Advisory Boards of GML Ltd. since 2003 and of the Office of Cherifien de Phosphates since 2010. He was a trustee of BlackRock Funds from 2001 until 2018.

 

Mr. Eizenstat was a member of Board of Directors of Globe from 2008 until the closing of the Business Combination and Chair of its Nominating Committee. He was a member of the Board of Directors of Alcatel-Lucent from 2008 to 2016 and of United Parcel Service from 2005 to 2015. He has had an illustrious political and advisory career, including serving as Special Adviser to Secretary of State Kerry on Holocaust-Era Issues from 2009 to 2017 and Special Representative of the President and Secretary of State on Holocaust Issues during the Clinton administration from 1993 to 2001. He was Deputy Secretary of the United States Department of the Treasury from July 1999 to January 2001, Under Secretary of State for Economic, Business and Agricultural Affairs from 1997 to 1999, Under Secretary of Commerce for International Trade from 1996 to 1997, U.S. Ambassador to the European Union from 1993 to 1996 and Chief Domestic Policy Advisor in the White House to President Carter from 1977 to 1981. He is the author of “Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II”; “The Future of the Jews: How Global Forces are Impacting the Jewish People, Israel, and its Relationship with the United States” and “President Carter: The White House Years.”

 

Mr. Eizenstat holds a B.A. in Political Science, cum laude and Phi Beta Kappa, from the University of North Carolina at Chapel Hill, a J.D. from Harvard Law School and nine honorary doctorate degrees from colleges and universities, high honors from the United States, French (Legion of Honor), German, Austrian, Belgian and Israeli governments, and over 75 awards from various organizations..

 

Manuel Garrido y Ruano

 

Manuel Garrido y Ruano was appointed to our Board of Directors as a Non-Executive Director on May 30, 2017. He was a member of our Nominating and Corporate Governance Committee from May 30, 2017 until December 31, 2017, and served on our Corporate Governance Committee from December 31, 2017 until May 26, 2023.

 

Mr. Garrido y Ruano has been Chief Financial Officer of Grupo Villar Mir since 2003 and he is currently member of the Board of its subsidiary in the energy sector, and member of the steering Committee of its real estate subsidiary. In June 2021 he was appointed non executive Chairman of Fertial SPA the Algerian fertilizers subsidiary of the Group.

 

He is Professor of Corporate Finance of one Graduate Management Program at the Universidad de Navarra, and has also been Professor of Communication and Leadership of the Graduate Management Program at CUNEF in Spain.

 

Mr. Garrido y Ruano was a member of the steering committee of FerroAtlántica until 2015, having previously served as its Chief Financial Officer from 1996 to 2003. He worked with McKinsey & Company from 1991 to 1996, specializing in restructuring, business development and turnaround and cost efficiency projects globally.

 

Mr. Garrido y Ruano holds a Masters in Civil Engineering with honors from the Universidad Politécnica de Madrid and an MBA from INSEAD, Fontainebleau, France.

 

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Marta de Amusategui y Vergara

 

Marta de Amusategui y Vergara was appointed to our Board of Directors as a Non-Executive Director on June 12, 2020. She has been a member of our Audit Committee from that date and a member of the Compensation Committee since June 23, 2021.

 

Ms. Amusategui has substantial experience in executive and non-executive roles, with a background in business strategy, banking and finance. She is founder and partner of Abrego Capital S.L, providing strategic and financial advisory services, and co-founder of Observatorio Industria 4.0, the professional forum leveraging knowledge and experience to assist businesses, specifically those in the secondary sector, in their digital transformation. She began her career in management consulting and investment banking, serving as Country Executive Officer and General Manager with Bank of America in Spain from 2003 to 2008.

 

Ms. Amusategui has been a member of the Board of Eland Private Equity, S.G.E.I.C., S.A., a private equity management company specializing in renewable energies, since 2009. Since 2020, she has been a member of the board of directors of Eccocar Sharing S.L. She has also held other Board positions in the past, including that of Telvent GIT S.A. (NASDAQ TLVT), the global IT solutions and business information services provider, where she became an independent director from early 2010 until its de-listing following acquisition in December 2011. She is currently a member of the McKinsey Alumni Council in Spain.

 

Ms. Amusategui holds an Industrial Engineering degree (MSc equivalent) from Universidad Pontificia de Comillas, Madrid, Spain, and an MBA from INSEAD, Fontainebleau, France. She has held a number of academic appointments, lecturing in Financing at the Three Points Digital Business School, Grupo Planeta, in Barcelona, in Managerial Competencies in CUNEF, in Madrid, and in Risk Management on the Non-Executive Directors Program at ICADE Business School, also in Madrid.

 

Juan Villar-Mir de Fuentes

 

Juan Villar-Mir de Fuentes was appointed to our Board of Directors as a Non-Executive Director on December 23, 2015.

 

Mr. Villar-Mir de Fuentes is currently Chairman of Inmobiliaria Espacio, S.A and Grupo Villar Mir, S.A.U. In both companies he served as Vice Chairman since 1996 and since 1999 respectively. He is currently Second Vice Chairman of Obrascon Huarte Lain, S.A and has been serving as a member of the Board of Directors since 1996, first as a member of the Audit Committee and, later, as a member of its Compensation Committee. He was a Board Director and member of the Compensation Committee of Inmobiliaria Colonial, S.A from June 2014 to May 2017. He also was a member of the Board of Directors and of the Compensation Committee of Abertis Infraestructuras, S.A. between 2013 and 2016.

 

Mr. Villar-Mir de Fuentes is Patron and member of the Patronage Council of Fundación Nantik Lum and of Fundación Santa María del Camino.

 

Mr. Villar-Mir holds a Bachelor’s Degree in Business Administration and Economics and Business Management from the Universidad Autónoma de Madrid.

 

Belen Villalonga Morenés

 

Belen Villalonga Morenés was appointed to our Board of Directors as a Non-Executive Director on May 13, 2021. She has been a member of the Audit Committee from that date and served as a member of the Corporate Governance Committee from June 23, 2021 until May 26, 2023, on which date she was appointed to the Nominations and Governance Committee.

 

Ms. Villalonga is a Professor of Management and Organizations, a Yamaichi Faculty Fellow, and a Professor of Finance (by courtesy) at New York University’s Stern School of Business. Between 2001 and 2012 she was a faculty member at the Harvard Business School. During 2018-2019 she was a Visiting Professor at Oxford University’s Said Business School. Her teaching, research, and consulting activities are in the areas of corporate governance, strategy, and

 

28 

 

 

finance, with a special focus on family-controlled companies. Her award-winning research has been cited over 17,000 times in scholarly articles and international media outlets.

 

Professor Villalonga is an independent director at Banco Santander International (Santander group’s private banking subsidiary in the United States), as well as at Mapfre USA (insurance). She was also an independent director for many years at three global companies publicly listed in Spain: Acciona (renewable energy and infrastructure), Grifols (biopharma), and Talgo (high-speed trains).

 

Ms. Villalonga holds a Ph.D. in Management and an M.A. in Economics from the University of California at Los Angeles, where she was a Fulbright Scholar. She also holds a Ph.D. in Business Economics from the Complutense University of Madrid.

 

Silvia Villar-Mir de Fuentes

 

Silvia Villar-Mir de Fuentes was appointed to our Board of Directors as a Non-Executive Director on May 13, 2021. She served as a member of the Compensation Committee from June 23, 2021 until May 26, 2023. Ms. Villar-Mir de Fuentes currently serves on the board of directors of Grupo Villar Mir, a privately held Spanish group with investments across a broad range of diversified industries, which is the beneficial owner of approximately 40% of the Company’s share capital.

 

Mrs. Villar-Mir de Fuentes is a summa cum laude graduate in Economics and Business Studies, with concentration in finance and accounting, from The American College in London, United Kingdom.

 

Nicolas De Santis

 

Nicolas De Santis was appointed to our Board of Directors as a Non-Executive Director on May 13, 2021. He has been a member of the Compensation Committee since June 23, 2021 and served as a member of the Nominations Committee from June 23, 2021 until May 26, 2023, on which date he was appointed as Chair of the Nominations and Governance Committee. Mr. De Santis is a technology entrepreneur, strategist and author with substantial experience in executive and non-executive roles. Mr. De Santis is currently the Chief Executive Officer of De Santis Corporate Vision Strategists Ltd, a strategy and innovation consultancy and incubator. De Santis advises multinational corporations and start-ups on digital business transformation (including artificial intelligence and machine learning), business strategy, branding, business model innovation, sustainability strategies and corporate culture change.

 

Previously Mr. De Santis served on the board of publicly traded Lyris Technologies (acquired by AUREA Software in 2015). He began his management career at Landor Associates (now WPP Group). As a technology entrepreneur, he co-founded several high-profile start-ups, including opodo.com, one of Europe’s most successful start-ups, reaching $1.5 billion in gross sales.

 

Mr. De Santis is a regular lecturer at business schools and universities on business strategy, global branding, business model innovation and culture transformation, including IE Business School, Madrid and the University of Wyoming. He is the author of Futurising Companies® - A systematic approach to win the future by managing culture as the operating system of organisations.

 

Rafael Barrilero Yarnoz

 

Rafael Barrilero Yarnoz was appointed to our Board of Directors as a Non-Executive Director on May 13, 2021. He was appointed Chair of the Compensation Committee and served as a member of the Nominations Committee from June 23, 2021 until May 26, 2023.

 

Mr. Barrilero Yarnoz is a senior advisor at Mercer Consulting. Mr. Barrilero Yarnoz has developed his career as a partner of the firm and as a member of the executive committee, leading the advisory talent and reward service for the boards of the main companies and multinationals. He has also led the business throughout the EMEA. Previously, he led the Watson Wyatt consulting firm in Madrid. He began his career as a lawyer at Ebro Agricolas focused on labour law, before serving as Ebro’s head of human resources. In January 2022 he joined the board of directors of AltamarCAM and

 

29 

 

 

Grupo Hedima, as a permanent Senior Advisor. He collaborates with the HAZ foundation, whose mission is to ensure transparency and good corporate governance.

 

Mr. Barrilero Yarnoz has a law degree from Deusto and a Masters in Financial Economics from ICADE, as well as a masters in human resources by Euroforum-INSEAD.

 

Directors’ responsibilities

 

The directors are responsible for preparing the Company’s annual reports and financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the group financial statements in accordance with United Kingdom adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The financial statements also comply with International Financial Reporting Standards as issued by the IASB. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:

 

·properly select and apply accounting policies;

 

·present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

 

·provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and

 

·make an assessment of the entity’s ability to continue as a going concern.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.

 

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

Directors’ responsibility statement

 

To the best of each directors’ knowledge:

 

·the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and its undertakings included in the consolidation taken as a whole;

 

·this directors’ report and the strategic report include a fair review of the development or performance of the business and the position of the Company and its subsidiary undertakings taken as a whole, together with a description of the principal risks and uncertainties that they face;

 

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·the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.

 

The responsibility statement was approved by the Board and signed on its behalf.

 

By order of the Board on 30 May 2023

 

Javier Lopez Madrid

 

Director

 

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Directors’ Remuneration Report

Introduction

 

Dear Shareholder

 

As Chairman of the Compensation Committee (the Committee), and on behalf of the Board, I present the Directors’ Remuneration Report for the period ended 31 December 2022. It has been prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended.

 

This includes the following three sections:

 

·        This Annual Statement which summarises the work of the Committee during the year;

·       The Annual Report on Remuneration (the ARR) which provides details of the remuneration earned by directors for the period ended 31 December 2022; and

·        The Directors’ Remuneration Policy approved at the 2022 AGM.

 

This report sets out both the Company’s annual report on remuneration (the ARR) for 2022 and the directors’ remuneration policy (the 2022 Policy or the Policy), which was put to shareholders at the 2022 AGM on 30 June 2022 and approved by over 90% of the shareholders who voted on it. Thank you for your support. The 2022 Policy is included on pages 34 to 60 for your information and ease of reference.

 

The Companies Act 2006 requires the auditors to report to the shareholders on certain parts of the Directors’ Remuneration Report and to state whether, in their opinion, those parts of the report have been properly prepared in accordance with the Accounting Regulations. The parts of the annual report on remuneration that are subject to audit are indicated in that report. The statement by the chair of the Compensation Committee and the policy report are not subject to audit.

 

The Policy

 

Under English law, a directors’ remuneration policy requires shareholder approval not less than once in every three years. The Committee last concluded its review of the policy in 2021 and determined that the then current remuneration framework achieved an appropriate balance of performance and reward, and 2022 Policy was duly approved at the 2022 AGM.

 

Shareholder Engagement in 2022

 

During 2022, the Company consulted extensively with a large number of shareholders and other stakeholders. During the year we held over 100 meetings with shareholders and other stakeholders including labor unions representing our employees. In addition, we engaged with proxy advisors.

 

Annual Bonus awards for 2022 and 2021

 

The annual bonus objectives for the Executive Chairman and CEO in 2022 were EBITDA in relation to 35% of the award, net cash-flow in relation to 35% and an indicator related to the long term strategy plan in relation to 30%. The Executive Directors achieved performance of (143.58%) of their target bonus opportunities. We believe these outcomes are justified by the exceptional performance of the Company, which had the strongest results since its formation. Moreover, the targets were already ambitious at the time they were approved by the Committee and Board, and were nonetheless significantly exceeded thanks to both prudent management and market conditions. See the ARR for more on the 2022 annual bonus outturn.

 

LTIPs vesting in 2022

 

Awards granted to our Executive Directors in 2019 under the EIP came to the end of their performance period on 31 December 2021 and vested in 2022. The Committee assessed their performance at 16.083% of target (32.170% of

 

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maximum), and the awards vested and became exercisable. To date, the award to our Executive Chairman has not been exercised; the award to our former CEO was exercised in 2022.

 

Non-Executive Directors and their remuneration

 

In 2022, the Corporate Governance Committee reviewed the structure of NED fees and decided to propose an additional payment for extraordinary meetings in the amount of £2,500 for in-person meetings and £1,250 for meetings held by video conference or telephonically. Such changes were approved by the Board. Other than these two changes, they chose not to recommend any other adjustment to the level or principles underlying NED fees, which otherwise remain unchanged in quantum since 2016.

 

Looking forward to 2023

 

We care deeply about our workforce and continue to prioritize their safety and well-being. Throughout the year the Committee has carefully considered the wider economic climate and fairness of our remuneration policies. In addition, we instituted an ESG-related performance measure to the long term incentive plan grant for the first time in 2022. While that indicator was tied to the lost time injury frequency rate in our Group, the 2023 ESG indicator is tied to execution of the broader ESG strategy that was previously approved by the Board in 2022. Moreover, maximum achievement of this measure would require significantly speeding up this ESG plan, completing all 2026 initiatives by the end of 2025. In this way, the Committee seeks to align the interests of our Executive Directors and others in management with sustainability and related goals.

 

The Committee faces certain fundamental tensions in making remuneration determinations. In particular, we acknowledge that the Company’s practice is at times not fully aligned with market standards in the United Kingdom, where we are incorporated. As a company incorporated in the UK, with significant operations in both Europe and the United States, as well as listing on the Nasdaq stock market in the US, we must remain competitive in order to retain top talent to deliver the best results for our shareholders. As such, at times we design our remuneration features more in line with the US market, which tends to pay more than in the United Kingdom. Moreover, we note that while the Policy tends to provide limits significantly in excess of grants actually made. For example, the Policy provides that short term incentive awards cannot be more than 500% of salary, the Committee has applied a maximum limit of 150% to all awards in recent years.

 

In 2023, the Committee and the Board approved an increase in the base salary of the Executive Chairman, Javier Lopez Madrid, in the amount of £44,400 annually, and an increase in the base salary of the CEO, Marco Levi, in the amount of €16,000 annually effective as of 1 April 2023.

 

In the case of the Executive Chairman, his base salary had been unchanged since his executive appointment, and both of these modest increases were implemented by the Committee and Board in light of both the Executive Chairman and CEO’s excellent work in leading the Company through its transformation over the last three years.

 

While the CEO’s increase in 2023 is modest, it is acknowledged that the 33% increase in his base salary in 2022 was significant. In 2022 the Company engaged external consultants to undertake a thorough benchmarking of salaries of all roles throughout the Group against a group of peer companies in the metals and mining industry in Europe and the United States. As a result of this exercise, it was determined that the CEO’s base salary was significantly below the median of the selected peers. The increase in 2022 was designed to bring his compensation in line with the market.

 

While the Committee was pleased to have received over 90% approval of the Policy at the 2022 AGM, we received 86% approval of the Directors’ Remuneration Report. The Company significantly increased engagement during 2022 with both shareholders and other stakeholders, including labor unions and proxy advisory services. This year, shareholders will continue to have an advisory vote on the Directors’ Remuneration Report. I hope we will again receive your support for the resolutions relating to remuneration at the 2023 AGM.

 

Signed on behalf of the Board.

Chairman of the Compensation Committee

30 May 2023

 

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The Policy

 

This section of the Directors’ Remuneration Report on pages 34 to 60 sets out the Directors’ Remuneration Policy which will be put forward for shareholder approval at the 2022 AGM on 30 June 2022. The approved Policy can be found in the Company’s U.K. Annual Report and Accounts for the period ended 31 December 2021 and on the Company’s website. The Policy is set out below for information only.

 

Aim of the Policy

 

The overall aim of the Policy is to provide appropriate incentives that reflect the Company’s high-performance culture and values to maximize returns for shareholders.

 

In summary, our aim as regards Executive Directors is to provide remuneration which:

 

·attracts, retains and motivates high caliber, high performing employees;

 

·encourages strong performance and engagement, both in the short and the long term, to enable the Company to achieve its strategic objectives;

 

·link a very significant proportion of pay to performance conditions measured over the short term and longer term;

 

·set fixed pay levels at or around market norms to allow for a greater proportion of total remuneration opportunity to be in variable pay; and

 

·create strong alignment between the interests of shareholders and executives through both the use of equity in variable incentive plans and the setting of shareholding guidelines for Executive Directors.

 

There are no material differences in the Policy for Executive Directors compared to that of senior management other than in terms of quantum and levels of participation in incentive plans reflecting the higher weighting to variable pay and ability to influence performance outcomes. For the wider employee population, the Company aims to provide remuneration structures and levels that reflect market norms for the location at which they are based.

 

Operation of the Policy

 

Throughout the Policy, reference is made to the authority, powers and discretions vested in the Committee. It is the Committee’s practice that, in relation to any significant decision in relation to the compensation of the Company’s Executive Directors or the second tier of executive management below them, the Committee makes recommendations to the Board which determines the final decision of the Company on such matters.

 

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The following table summarizes the Policy as applied to Executive Director remuneration:

 

Components of remuneration for Executive Directors

 

    Purpose and link
to strategy
  Operation and maximum
opportunity
  Performance
framework and recovery
Element            
Salary   A fixed salary commensurate with the individual’s role, responsibilities and experience, having regard to broader market rates.   Reviewed annually, taking account of Group performance, individual performance, changes in responsibility, levels of increase for the broader employee population and market salary levels.   Not applicable.
             
Pension and retirement benefits   Attraction and retention of top talent; providing mechanism for the accumulation of retirement benefits.   Executive Directors may be paid a cash allowance in lieu of pension.
 
The maximum cash allowance is 20% of base salary. This includes contributions to the U.S. tax-qualified defined contribution 401(k) plan.
  Not applicable.
             
Benefits   Attraction and retention of top talent.   Benefits may include but are not limited to medical cover, life assurance and income protection insurance.   Not applicable.
             
        Relocation allowances may take into account a housing allowance, school fees, adviser fees for assistance with tax affairs and an expatriate allowance to cover additional expenditure incurred as a result of the relocation. Payment of such relocation allowances will be reviewed by the Committee on an annual basis    
             
        Benefits may include tax equalization provisions applicable if an Executive moves between jurisdictions with differing tax regimes at the Company’s request. If the Executive moves to an area of higher taxation, the Company may agree to make an annual or other regular payment in cash to compensate him or her for any additional tax burden. Where the Executive moves to a jurisdiction where his or her effective tax burden is lower than that to which he or she was subject prior to such move, the Executive’s compensation may be commensurately reduced to ensure that his or her net pay remains unaffected.    

 

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    Purpose and link
to strategy
  Operation and maximum
opportunity
  Performance
framework and recovery
      Benefits will be provided as the Committee deems necessary including to take into account perquisites or benefits received from a prior employer or as is customary in the country in which an executive resides or is relocated from.   
          
      Benefits provided by the Company are subject to market rates and therefore there is no prescribed monetary maximum. The Company and the Committee keep the cost of the benefits under review.   
          
      The Company provides all Executive Directors with directors’ and officers’ liability insurance and will provide an indemnity to the fullest extent permitted by the Companies Act.   
          
Annual and other bonuses  Short-term performance-based incentive to reward achievement of annual performance objectives.  The annual bonus plan and all payments and awards under it are at the discretion of the Committee. Subject as aforesaid, the Committee will determine an Executive Director’s actual bonus amount, subject to the achievement of quantitative and qualitative performance criteria.
 
At least two-thirds of the bonus will be based on financial metrics with any balance based on non-financial metrics.
 
The maximum annual bonus opportunity that may be awarded to an Executive Director is normally 200% of salary. If the Committee provides higher annual bonus opportunities in any year its rationale will be clearly explained in the Annual Report on Remuneration for the relevant year. In these and other exceptional circumstances the limit will be 500% of salary.
 
No more than 25% of the maximum annual bonus payable for each performance condition will be payable for threshold performance.
  The Committee will select the most appropriate performance measures for the annual bonus for each performance period and will set appropriately demanding targets.
 
Normally any bonus earned in excess of the target amount will be deferred for three years into shares in the Company. An Executive Director may be granted an additional long-term incentive award as described below of equal value (at maximum) to the amount of annual bonus deferred.
 
Recovery and recoupment will apply to all bonus awards for misstatement, error or gross misconduct.

 

36 

 

 

    Purpose and link
to strategy
  Operation and maximum
opportunity
  Performance
framework and recovery
      In addition or in place of an annual bonus, the Company may pay a retention bonus where it considers it necessary to retain key Executives in situations where the relevant Executive would otherwise leave the Company and his or her retention is critical to the Company’s performance and/or the achievement of strategic goals or key projects. The grant, terms and payment of any retention bonus are at the discretion of the Committee.    
          
      A retention bonus may be payable in cash or in shares and subject to such conditions as the Committee sees fit, including the Executive remaining with the Company for a defined period of time and/or meeting set performance criteria. The Committee would normally count any retention bonus awarded towards the 500% of salary limit.
   
          
Long-term incentive awards  Focus Executive Directors’ efforts on sustainable strong long-term performance of the Company as a whole, and to aid in retention with multi-year vesting provision. Improves alignment of Executive Directors’ interests with those of the Company and shareholders.  Executive Directors are eligible for awards to be granted as decided by the Committee under the Company’s long-term incentive plan. All awards are subject to performance targets as determined by the Committee for each grant, performance against which is normally measured over a three-year period. Awards usually vest three years from the date of their grant.  The Committee will select the most appropriate performance measures for long-term incentive awards for each performance period and will set appropriately demanding targets.
 
Recovery and recoupment will apply to all long-term incentive awards for misstatement, error or gross misconduct.
          
      The annual target award limit will not normally be higher than 300% of salary (based on the face value of shares at date of grant).   
          
      Maximum vesting is normally 200% of target (based on the face value of shares at date of grant).   
          
      There is an exceptional annual target award limit in recruitment, appointment and retention situations of 500% of salary.    

 

37 

 

 

    Purpose and link
to strategy
  Operation and maximum
opportunity
  Performance
framework and recovery
Share ownership guidelines  Increases alignment between the Executive Directors and shareholders.  Executive Directors are strongly encouraged to hold a percentage of their salary in shares. This holding guideline could be achieved through the retention of shares on vesting/exercise of share awards and may also (but is not required to) be through the direct purchase of shares by the Executive Directors.  Not applicable.

 

Performance Criteria and Discretions

 

Selection of Criteria

 

The Committee annually assesses at the beginning of the relevant performance period which corporate performance measures, or combination and weighting of performance measures, are most appropriate for both annual bonus and long-term incentive awards to reflect the Company’s strategic initiatives for the performance period. The Committee has the discretion to change the performance measures for awards granted in future years based upon the strategic plans of the Company. The Committee sets demanding targets for variable pay in the context of the Company’s trading environment and strategic objectives and taking into account the Company’s internal financial planning and market forecasts. Any non-financial goals will be well defined and measurable.

 

Discretions retained by the Committee in operating its incentive plans

 

The Committee operates the Group’s various plans according to their respective rules. In administering these plans, the Committee may apply certain operational discretions. These include the following:

 

·determine the extent of vesting based on the assessment of performance, including exercising its discretion to reduce payout as and where appropriate;

 

·determine “good leaver” status (as described below) and where relevant extent of vesting;

 

·where relevant determine the extent of vesting in the case of share-based plans in the event of a change of control in accordance with the rules of the various plans; and

 

·make the appropriate adjustments required in certain circumstances (e.g. rights issues, corporate restructuring events, variation of capital and special dividends).

 

The Committee, acting fairly and reasonably, and after consulting plan participants, may adjust the targets and/or set different measures and alter weightings for the variable pay awards already granted (in a way that the alterations are intended to create an equivalent outcome for plan participants) only if (i) an unexpected event (whether a corporate or outside event) occurs which causes the Committee to reasonably consider that the performance conditions would not achieve their original purpose without alteration and (ii) the varied conditions are materially no more or less difficult to satisfy than the original conditions. Any changes and the rationale for those changes will be set out clearly in the Annual Report on Remuneration in respect of the year in which they are made.

 

Remuneration scenarios for the Executive Directors

 

The charts below show the level of remuneration potentially payable to each of Javier López Madrid as Executive Chairman and Marco Levi as CEO under different performance scenarios for the 2023 financial year.

 

38 

 

 

In respect of the remuneration of the Executive Chairman:

 

 

 

In respect of the remuneration of the CEO:

 

 

 

39 

 

 

Assumptions

 

1.Fixed pay comprises base salary for 2023, benefits and a pension contribution of 20% of base salary for each of Javier Lopez Madrid and Marco Levi. Benefits comprise private health, income protection and life insurance arrangements at an estimated level of 5.46% of base salary for Javier Lopez Madrid and 4.52% of base salary for Marco Levi salary and an expatriate allowance of 20% of base salary in the case of Javier López Madrid.

 

2.On-target performance comprises fixed pay plus annual bonus of 100% of base salary and long-term incentives of 133% of base salary for the Executive Chairman and the CEO.

 

3.Maximum performance comprises fixed pay plus annual bonus of 150% of base salary for the Executive Chairman and the CEO and long-term incentives of 200% of base salary for each.

 

4.Maximum performance plus share price growth comprises the maximum performance scenario described above plus an assumed 50% share price growth over the performance period of the LTIP.

 

5.As described in the Policy, an additional long-term incentive award may be granted if part of the annual bonus is deferred, with the maximum value of such award equal to the amount of bonus deferred. As at 31 December 2022 no such awards have been made to the Executive Directors and none is to be made in respect of 2022.

 

Approach to Recruitment Remuneration

 

The Committee expects any new Executive Directors to be engaged on terms that are consistent with the Policy as set out above.

 

The Committee recognizes that it cannot always predict accurately the circumstances in which any new directors may be recruited. The Committee may determine that it is in the interests of the Company and shareholders to secure the services of a particular individual which may require the Committee to take account of the terms of that individual’s existing employment and/or their personal circumstances. Examples of circumstances in which the Committee expects it might need to do this are:

 

·where an existing employee is promoted to the Board, in which case the Company will honour all existing contractual commitments including any outstanding annual bonus or long-term incentive awards or pension entitlements and will provide other benefits consistent with those provided to senior leaders in that employee’s home country or place of residence prior to appointment to the Board;

 

·where an individual is relocating in order to take up the role, in which case the Company may provide certain one-off benefits in addition to benefits set out in the policy table such as reasonable relocation expenses, assistance with visa applications or other immigration issues and ongoing arrangements such as flights home and cost of education; and

 

·where an individual would be forfeiting fixed or valuable variable remuneration in order to join the Company, in which case the Committee may award appropriate additional compensation in addition to the limit set out in the policy table. The Committee would look to replicate the arrangements being forfeited as closely as possibly taking into account the nature of the remuneration, performance conditions, attributed expected value and the time over which any variable pay would have vested or been paid.

 

In making any decision on any aspect of the remuneration package for a new recruit, the Committee would balance shareholder expectations, current best practice and the requirements of any new recruit and would strive not to pay more than is necessary to achieve the recruitment. The Committee would give full details of the terms of the package of any new recruit in the next remuneration report. Award levels under the Company’s variable incentive plans would not exceed those set out in the policy table, but their proportions can be altered for the first three years of employment.

 

40 

 

 

Executive Directors’ Service Contracts and Policy on Cessation

 

In order to motivate and retain the Executive Directors and other senior executives, most of whose backgrounds are in the United States and Europe, the Committee has taken account of market practices in those countries in formulating the Policy, including (a) determining the treatment of annual and retention bonuses and long-term incentive awards in case of termination of their employment by the Company without cause, (b) referencing past annual bonuses in calculating the amount of payment in lieu of notice, (c) determining the extent of vesting of long-term incentive awards in the event of a takeover or change of control and (d) determining that all long-term incentive awards granted to an executive in any financial year will be subject to achievement of performance targets.

 

Service contracts

 

Subject to the Approach to Recruitment Remuneration above, Executive Directors have rolling service contracts for an indefinite term but a fixed period of notice of termination which would normally be 12 months. With respect to newly appointed directors, the Committee may, if it considers it necessary, agree a notice period in excess of 12 months (but not exceeding 24 months), provided it reduces to 12 months within a specified transition period of not exceeding 36 months. The service contract for Javier López Madrid is in accordance with this policy and his fixed period of notice of termination is 12 months. See below for more on Marco Levi’s service contract.

 

The Executive Chairman’s service contract may be terminated for cause without notice and without further payment or compensation, except for sums accrued to the date of termination. In other circumstances, the Company may terminate his employment with immediate effect and make a payment in lieu of notice in the amount equivalent to the aggregate of (i) base salary, (ii) the average of annual bonuses in the last three years prior to termination, (iii) pension allowance plus (iv) cost of benefits, for the notice period (or if a notice has been served, for the unserved notice period). He would be entitled to an equivalent payment in the event of his resignation for good reason (as defined in the service contract). Similar provisions may apply in the event that he leaves following a change of control of the Company, but no additional entitlements would be expected to be set out in the Executive Director’s service contract beyond those described above. An Executive Director may also be entitled to certain amounts with respect to annual or retention bonuses and long-term incentive awards, as described below.

 

Marco Levi is employed under a service contract made under Spanish law (and in particular, the provisions of the Royal Decree 1382/1985 1st of August regarding senior management (“Alta Dirección”)). Spanish employment law imposes a number of mandatory requirements, including in relation to termination. The CEO’s service contract may be terminated for cause (as defined in the service contract by reference to Spanish statutory law) without notice and without further payment or compensation, except for sums accrued to the date of termination. If the dismissal is declared null or unfair by a definitive court or labour tribunal ruling, the CEO is entitled to receive a severance payment equal to six months’ salary plus a payment equal to the Company’s costs in such six month period corresponding to the insurance and pension benefits in force at the time of termination. This severance compensation includes and absorbs the compensation and any statutory notice to which the Executive may otherwise be entitled by operation of law. In the event that the CEO is dismissed without cause, the CEO will similarly be entitled to receive a severance payment equal to six months’ salary plus an amount equal to the costs the Company would have incurred in providing pension, health insurance, income protection and life assurance benefits for the period of notice, in lieu of any statutory notice to which the CEO would otherwise be entitled. In addition, in accordance with Spanish law and as contemplated in the section Generally below, the CEO has enhanced post termination restrictive covenants. Under these provisions, the Company may be required to make an additional payment to ensure the enforceability of certain post-employment restrictions on competition for a period of six months from termination on terms which are customary in senior management employment relationships. The amount payable is 30% of the CEO’s salary at the date of termination and is deemed discharged at the rate of 15% of salary per annum throughout the employment relationship, such that on termination no further sums will be payable if an amount equal to 30% of salary has already been paid. The total amount payable on termination of the CEO’s service contract other than for cause is therefore less than 12 months’ salary and benefits.

 

Where an Executive Director’s service contract is terminated for “without cause” or for “good reason” as defined in the relevant director’s service contract, the provisions outlined below in relation to annual bonus awards and long-term incentive awards as described below will apply. Executive Directors’ service contracts (or a memorandum of the terms where the contract is unwritten) are available for inspection at the Group’s office at 13 Chesterfield Street, London, W1J 5JN during normal business hours and at the Annual General Meeting.

 

41 

 

 

Generally

 

As circumstances may require, the Committee may approve compensation payments in consideration of statutory entitlements, for a release of claims, enhanced post-termination restrictive covenants (for example, as outlined above) or transitional assistance, such as outplacement services and payment of legal fees in connection with termination, the costs of short term accommodation or leasing arrangements, home relocation expenses including tax related expenses and other ancillary payments thereto.

 

Annual bonus awards (including retention awards)

 

In the event that an Executive Director’s employment is terminated without cause, by resignation by the Executive Director for good reason, or by reason of death, injury, disability or his employing company or the business for which he works being sold out of the Group, the Company will pay an annual bonus amount in respect of the financial year in which termination occurs subject to performance conditions being met at the end of the period and with pro-rating of the award determined on the basis of the period of time served in employment during the normal vesting period but with the Committee retaining the discretion in exceptional circumstances to increase the level of vesting within the maximum annual bonus amount as determined by the performance conditions. The Committee may, if it considers it appropriate in exceptional circumstances, measure performance to the date of cessation. In other circumstances, payment will be at the Committee’s discretion. The Committee will consider the period of the year worked and the performance of the Executive Director during that period when considering how to exercise its discretion.

 

The terms of any retention bonus agreed to be paid to an Executive Director may provide for such bonus to be payable on that Executive Director’s employment being terminated without cause, by resignation by the Executive Director for good reason, or by reason of death, injury, disability or his employing company or the business for which he works being sold out of the Group. In any such case, the retention bonus will become payable in such circumstances.

 

Long-term incentive awards

 

As a general rule, any unvested long-term incentive award (except deferred bonus awards see below) will lapse upon an Executive Director ceasing to be an employee or director in the case of voluntary resignation or dismissal for cause. However, if the cessation is without cause, by resignation by the Executive Director for good reason, or because of his death, injury, disability or his employing company or the business for which he works being sold out of the Group or in other circumstances at the discretion of the Committee, and generally for any award granted in 2022 and beyond, then the award will normally vest in full on the date when it would have ordinarily vested subject to the performance conditions being met. Where an award vests at the discretion of the Committee that award may be pro-rated taking into account the period of time served in employment during the normal vesting period of the award. The Committee can for any cessation measure performance up to the date of cessation and permit awards to vest early in respect of which the same pro-ration principles noted above remain applicable. For awards granted in 2022 and beyond, good leaver treatment in relation to cessation without cause and/or by resignation of an Executive Director for good reason will be at the discretion of the Committee.

 

Deferred bonus awards vest in full upon cessation, other than in case of voluntary resignation by an Executive Director without good reason or dismissal for cause. Vested but unexercised awards held on cessation will remain capable of exercise for a limited period save in the case of dismissal for cause.

 

In the event of a takeover all awards will vest early to the extent that the performance conditions are determined as satisfied at that time on such basis as the Committee considers appropriate. In respect of awards granted in 2022 and beyond, in the event of a takeover awards may also be pro-rated at the discretion of the Committee.

 

External appointments

 

Executive Directors may retain fees paid for external director appointments. These appointments are subject to disclosure to and approval by the Board and must be compatible with their duties as Executive Directors.

 

42 

 

 

Matters taken into consideration in determining policy and differences in the remuneration policy of the Executive Directors and employees

 

It is not the Committee’s practice to consult with employees on matters relating to executive pay. However, the Committee will consider pay structures, practices and principles across the Group on a regular basis and take these into account in any review of the Executive Directors’ current Policy or implementation thereof.

 

The Committee will consider feedback from shareholders and take into account the results of both advisory and binding votes concerning executive pay at the Annual General Meeting as well as ensuring it engages with shareholders on executive pay matters. The 2021 Policy has been formulated taking into account the Company’s understanding of current shareholder views on the Company’s remuneration policy and practices.

 

Directors’ Remuneration Policy for Non-Executive Directors

 

The following table summarizes the 2022 Policy as applied to Non-Executive Director remuneration

 

   Purpose and link
to strategy
  Operation and maximum
opportunity
  Performance framework
and recovery
Element         
Non-Executive Directors fees including any Non-Executive Chairman  To appropriately remunerate the Non-Executive Directors  The Non-Executive Directors are paid a basic fee. Supplemental fees may be paid for additional responsibilities and activities, such as for the committee chairmen and other members of the main Board committees (e.g. audit, compensation, nominations and corporate governance) and the Senior Independent Director, to reflect the additional responsibilities as well as travel fees to reflect additional time incurred in travelling to meetings.  Not applicable
          
      These fee levels are reviewed periodically, with reference to time commitment, knowledge, experience and responsibilities of the role as well as market levels in comparable companies both in terms of size and sector.   

 

43 

 

 

   Purpose and link
to strategy
  Operation and maximum
opportunity
  Performance framework
and recovery
Element         
      The Company does not currently have a Non-Executive Chairman. If one were appointed his or her fee would be set at a level with reference to time commitment, knowledge, experience and responsibilities of the role as well as market levels in comparable companies both in terms of size and sector.   
          
      There is no maximum fee level or prescribed annual increase.   
          
Payment of expenses and benefits  To support the Non-Executive Directors in the fulfilment of their duties   Reasonable expenses incurred by the Non-Executive Directors in carrying out their duties may be reimbursed by the Company including any personal tax payable by the Non-Executive Directors as a result of reimbursement of those expenses. The Company may also pay an allowance in lieu of expenses and may arrange and pay for the provision of advice or assistance in relation to personal taxes for which the Non-Executive Director may be liable in connection with his or her appointment to the Board, if it deems this appropriate.   Not applicable
          
      The Company provides Non-Executive Directors with directors’ and officers’ liability insurance and an indemnity to the fullest extent permitted by the Companies Act.   

 

44 

 

 

Legacy Arrangements with Certain Non-Executive Directors

 

Prior to the Business Combination, in keeping with many other NASDAQ listed companies, Globe granted restricted stock units and share appreciation rights to its Non-Executive directors. Outstanding awards as at 31 December 2022 held by the Non-Executive Directors, who were previously Globe’s Non-Executive directors, are set out in the ARR.

 

It is noted that those Non-Executive Directors with restricted stock units and share appreciation rights may be regarded as not being independent by U.K. based proxy voting agencies although the Board considers them to be fully independent. It is a provision of this Policy that the Company may accelerate the vesting of or repurchase of these awards based on an independent valuation, if it deems it to be appropriate.

 

Letters of Appointment with Non-Executive Directors

 

The Company does not enter into service contracts with its Non-Executive Directors, rather the Company enters into letters of appointment for a rolling period of 12 months with each annual renewal being subject to re-election at each annual general meeting of the Company. No compensation for loss of office is payable in the event a Non-Executive Director is not re-elected. The Company may request that Non-Executive Directors resign with immediate effect in certain circumstances (including material breach of their obligations) in which case their appointment would terminate without compensation to the Non-Executive Director for such termination but with accrued fees and expenses payable up to the date of termination.

 

Appointment of Non-Executive Directors

 

For the appointment of a Non-Executive Chairman or other Non-Executive Directors, the fee arrangement would be in accordance with the approved Directors’ Remuneration Policy in place at that time.

 

Minor amendments

 

The Committee may make minor changes to the Policy, which do not have a material advantage or disadvantage overall to directors, to aid in its operation or implementation (including to take account of any change in legislative or regulatory requirements applicable to the Company) without seeking shareholder approval for a revised version of the Policy.

 

45 

 

 

Annual Report on Remuneration

 

Implementation of the Directors’ Remuneration Policy for the year ending 31 December 2022

 

This section sets out how the Committee intends to implement the Policy for the year ending 31 December 2022.

 

Base salary

 

Javier López Madrid was appointed as Executive Chairman with effect from 31 December 2016. Javier López Madrid’s salary was reviewed in 2023 and was increased from £555,000 ($685,289) to £599,400 ($740,112) per annum effective 1st April 2023.

 

Marco Levi's base salary as CEO was reviewed in 2023 and was increased from EUR800,000 ($842,400) per annum to EUR816,000 ($859,248) per annum effective April 1, 2023.

 

Neither Javier Lopez Madrid nor Marco Levi received any additional fees or compensation for their respective roles on the Board. See “Looking forward to 2023” in the Compensation Committee Chairman’s letter above for more information.

 

Pension and benefits

 

In accordance with the Policy, both Executive Directors receive a pension contribution at the rate of 20% of base salary, payable as a cash allowance, and health insurance, income protection and life assurance benefits to the value of approximately 6.5% of salary for the Executive Chairman and 3.3% for the CEO.

 

The Company provides directors’ and officers’ liability insurance and an indemnity to the fullest extent permitted by the Companies Act.

 

Variable Remuneration

 

Short Term Incentives

 

The objectives for the 2023 annual short-term incentives were determined by the Compensation Committee and the Board on 26 and 27 April 2023. For each of the Executive Directors, target is at 100% of base salary, with a maximum opportunity of 150% of base salary. As in past years and consistent with the Committee’s approach to incentive awards, the maximum opportunity has been set below limits in the Policy. The performance indicators for the Executive Directors are 2023 adjusted EBITDA, accounting for 50% weighting, and 2023 net cash flow, accounting for 50% weighting.

 

Long-term incentives

 

The 2023 long-term incentive grant was approved by the Compensation Committee and the Board on 30 May 2023. The awards are structured as performance share awards with awards vesting three years from grant subject to continued service and the achievement of performance conditions. The award levels are 100% of base salary as target and 200% of base salary as maximum in the case of the Executive Directors. Performance conditions comprise EBIT with a weighting of 40%, operational cash flow with a weighting of 40% and relative total shareholder return relative to a comparator group with a weighting of 20%. All performance conditions are measured over the January 1, 2023 to December 31, 2025 period. In addition, the grants are subject to a multiplier for completion of the Company’s ESG action plan initiatives by December 31, 2025, which multiplier can both reduce or increase the total amount of payouts.

 

Like in 2022, the relative TSR performance condition is based on a bespoke comparator group comprising Outokumpu, Imerys, Eramet, Jacquet Metals, Evonik Industries, Wacker, Thyssenkrupp, SGL Carbon SE, Amg Advanced Metallurgical Group, Elkem, Acerinox, Materion Corp., Minerals Technologies Inc., Schnitzer Steel Industries, Kaiser Aluminum, Ati Inc., Steel Dynamics Inc., Timkensteel, Century Aluminum Co. and Cleveland-Cliffs.

 

46 

 

 

The inclusion of earnings and cash flow measures in both the short term incentive and long term incentive grants for 2023 is designed by the Compensation Committee and the Board to ensure strong support of the Board’s strategy for the Company. The short-term incentive measures will continue to provide focus on in-year delivery, while the long term incentive measures will focus on cumulative and sustained performance over a three-year period. In all cases, measures are stretch targets based on the consensus view as it was determined at the beginning of 2023.

 

Non-Executive Director share ownership guidelines

 

In 2018, the Non-Executive Directors reviewed the guidelines under which they had voluntarily agreed to apply on a cumulative basis at least a quarter of their normal annual gross fees to acquire shares under arrangements designed to ensure that shares can be purchased on a regular basis over a period of eight years and agreed several points of clarification, including that:

 

·Where more or fewer shares are acquired in any year, the value of shares to be acquired in subsequent years may be reduced or increased respectively such that on a cumulative basis the 25% test is satisfied;
·Each Non-Executive Director agrees to retain his or her shares until the earlier of achieving a holding equal to twice his or her annual base fees being achieved or that director leaving the Board;
·Where a director holds outstanding and exercisable share-based or phantom restricted stock awards, the shares or notional shares under award are to be taken into account in determining the relevant director’s holding and may be exercised and disposed of at any time (with consequent effect on the director’s holding).

 

Fees for the Non-Executive Directors

 

Fees are set and payable in Pounds sterling. The fees for 2023 are the same as those for 2022, with the exception of the new Nominations and Governance Committee. On 26 May 2023, Board of Directors canceled both the Nominations Committee and the Corporate Governance Committee, replacing them with a new combined Nominations and Governance Committee and populating the new committee exclusively with independent Directors. Compensation to Non-Executive Directors for service on such committee was set in line with fees for the Compensation Committee.

 

Non-Executive Director base fee £70,000 ($86,583)
Senior Independent Director £35,000 ($43,291)
Member of Audit Committee £17,500 ($21,645)
Member of Compensation Committee £15,500 ($19,172)
Member of Corporate Governance Committee1 £12,000 ($14,843)
Member of Nominations Committee £1,500 ($1,855 per meeting, subject to an annual cap of £10,000 ($12,369))1
Member of Nominations and Governance Committee £15,500 ($19,172)
   
Extraordinary meetings (per meeting)  
In person meetings £2,500 ($3,092)
Meetings by videoconference/telephone £1,250 ($1,546)
Committee Chairman Two times committee membership fee
   
Travel fee (per meeting)  
Intercontinental travel £3,500 ($4,329)
Continental travel £1,500 ($1,855)

 

Notes:

 

1.No fees are payable to the Chair of the Nominations Committee while the individual in that role is also an Executive Director

 

47 

 

 

Remuneration paid in respect of the year to 31 December 2022

 

Single Figure of Remuneration for the period – Audited

 

The table below shows the aggregate emoluments earned by the Executive Directors of the Company who served at any time during either of the years ended 31 December 2022 and 31 December 2021. The emoluments shown for 2022 have been converted to USD at the Group’s average rate for year to 31 December 2022 of GBP1:USD1.2369. Those for 2021 were converted at the rate of GBP1:USD1.3757 in accordance with the 2021 U.K. Annual Report. Numbers given in Euros in any part of the Directors Remuneration Report are converted to USD at the Group’s rate of €1:USD1.0530 and to GBP at the Group’s rate of €1:GBP0.8528.

 

   Salary1 (USD 000s)   Benefits 2
(USD 000s)
   Pension3
(USD 000s)
   Annual Bonus
(USD 000s)
   Long-term
incentives4
(USD 000s)
   Total (USD 000s) 
Executive Director  2022   2021   2022   2021   2022   2021   2022   2021   2022   2021   2022   2021 
Javier López Madrid   685    764    181    200    137    153    986    1,121    0    3,397    1,989    5,635 
Marco Levi   842    710    27    47    168    141    1,209    1,009    0    2,455    2,246    4,362 

 

   Total Fixed Remuneration   Total Variable Remuneration   Total
Remuneration
 
Executive Director  2022   2021   2022   2021   2022   2021 
Javier López Madrid   1,003    1,117    986    4,518    1,989    5,635 
Marco Levi   1,037    898    1,209    3,464    2,246    4,362 

 

(1)For Javier López-Madrid, no change in salary has been made year on year, any difference resulting in changes in the GBP: USD exchange rate.
(2)For Javier López Madrid, benefits include an expatriate allowance of 20% of salary (£111,000 ($137,057 in 2022), and medical insurance and life assurance coverage as benefits. For Marco Levi, benefits include medical and life assurance coverage as benefits.
(3)For 2022 the pension for Javier López Madrid is 20% of base salary payable as a cash supplement.
(4)The performance period of the 2019 long-term incentive awards ended on 31 December 2021. As outlined below, the 2019 awards vested at 32.17% out of a maximum of 200%. The value of the 2019 LTIP, which forms part of the 2021 column, is calculated using the share price of $6.91 on 28 April 2022, the date of vesting. The performance period of the 2021 long-term incentive awards ended on 31 December 2021 and the awards are expected to vest on 1 January 2024 as to 100%. The value of the 2021 LTIP, which forms part of the 2021 column, is an estimate using the average share price over the last three months of 2021. The 2020 Long-term incentives column has been restated from the 2020 U.K. Annual Report to report awards during the year in which the performance period for the award was concluded.

 

48 

 

 

The table below shows the aggregate emoluments earned by the Non-Executive Directors of the Company who served at any time during the years ended 31 December 2022 and 31 December 2021.

 

   Fees ($’000)   Benefits ($’000)1   Total ($’000) 
Non-Executive Directors  2022   2021   2022   2021   2022   2021 
José María Alapont2   -    92    -    4    -    96 
Bruce L Crockett   204    203    22    14    226    217 
Stuart E Eizenstat   107    119    9    -    115    119 
Manuel Garrido y Ruano   103    113    5    -    108    113 
Rafael Barrilero   128    86    9    4    137    90 
Nicolas de Santis   111    74    -    -    111    74 
Juan Villar Mir de Fuentes   88    96    4    -    92    96 
Marta Amusategui   129    132    9    -    138    132 
Silvia Villar-Mir de Fuentes   107    72    7    -    114    72 
Belén Villalonga Morenes   124    85    22    5    146    90 

 

(1)Benefits exclusively comprise travel allowances.
(2)Mr. Alapont resigned from the Board on April 30, 2021.

 

Annual bonus for the financial year to 31 December 2022 for the Executive Directors – audited

 

The target annual bonus opportunity for each of the Executive Directors was 100% of salary, with a maximum opportunity of 150%, and the performance measures for 2022 for each are detailed in the tables below. Final bonuses were approved by the Compensation Committee and Board on 26 and 27 April 2023 and paid at 143.58% of target for the Executive Chairman and CEO.

 

Performance targets and performance for the Executive Directors in 2022 were as follows:

 

Measure  Weighting
(target % of
award)
   Threshold
performance
(0% of
target paid)
  Target
performance
(100% of
target paid)
  Stretch
performance
(150% of target
paid)
  Actual
Performance
  Bonus
outcome
 
EBITDA   35%  $502,402 thousand  $717,717 thousand  $933,032 thousand  $858,981 thousand   133.3%
Net cash-flow1   35%  $111,384 thousand  $159,120
thousand
  $206,856
thousand
  $206,000
thousand
   148.3%
Long Term strategy   30%  Board endorsement of strategy options by end of June 2022     Board approval of strategy by end of September 2022  Board approval of strategy on 22 September 2022   150.0%

 

49 

 

 

Long term incentive awards for the financial year ended 31 December 2022 – Audited

 

Awards vesting/performance period ending in financial year 2022

 

There were no long term incentive awards with performance periods ending in the year ended 31 December 2022.

 

2019 LTIP awards

 

The three-year performance period of the 2019 LTIP awards began on 1 January 2019 and ended on 31 December 2021. 60% of each award was determined by Ferroglobe’s Total Shareholder Return (TSR) performance. 50% of the TSR part of the award was calculated relative to a bespoke group of peers, and the other 50% relative to the S&P Global 1200 Metals and Mining Index in line with the prior year's award. Vesting of the remaining 40% of each award related to the Company’s return on invested capital (ROIC) over the performance period as compared with the bespoke comparator group of the Company’s peers and the Company’s net operating profit after tax (NOPAT) growth as compared to the same bespoke comparator group of the Company's peers. Vesting of these awards was calculated as follows:

 

   Weighting  Threshold (0%)  Target (100%)  Maximum
(200%)
  Actual  Vesting %
Total shareholder return relative to a bespoke group1  30%  Less than median (50th percentile)  50th percentile  90th percentile  45.2%  107.22%
TSR relative to the S&P 1200 Metals and Mining Index2  30%  Less than Index TSR  Equal to Index TSR  Equal to Index TSR + 25 percentage points  57.2%  0%
Relative return on invested capital ("ROIC")3  20%  Below percentile 25
(-79.9%)
  Median
(-68.1%)
  Percentile 75
(-30.6%) and above
  -150.2%  0%
Relative net operating profit after tax ("NOPAT") growth3  20%  Below percentile 25
(-99.3%)
  Median
(-88.6%)
  Percentile 75 (-74.9%) and above  -73.5%  0%
Weighted average (max 200%)                 32.17% (out of max 200%)

 

1        Between the 50th and 75th percentile, proportionate vesting of between target (100%) and 150% of target. Between 75th percentile and 90th percentile, proportionate vesting of between 150% and 200% of target

2        Equal to Index TSR + 15 percentage points, vesting of 150% of target. Straight line vesting between Index TSR and Index TSR +15 percentage points and between Index TSR+15 percentage points and Index TSR +25 percentage points

3        Percentile 25, vesting of 50% of target

 

50 

 

 

As a result, the following awards vested during 2022:

 

   Type
of
award
  Grant
date
  Vesting
date
  Number of shares
awarded at target
   Percentage
of target
award
vesting (0%
- 200%)
  Number of
shares to
vest 1
   Estimated
value to of
award to vest
(USD)2
 
Javier López Madrid  LTIP Nil-cost option  13 March 2019  28 April 2022   342,329   32.17% out of 200%   110,113    760,881 
Pedro Larrea Paguaga3  LTIP Nil-cost option  13 March 2019  28 April 2022   254,769   32.17% out of 200%   81,948    566,261 

 

1The number of shares shown excludes dividend equivalents to be awarded in the form of shares.
2The value shown in the table is calculated using the share value upon vesting on 28 April 2022 of $6.91.
3Pedro Larrea Paguaga is a ‘good leaver’ under the rules of the Equity Incentive Plan.

 

Awards granted in financial year 2022

 

2022 LTIP awards

 

On 21 September 2022 Javier López Madrid and Marco Levi were granted long-term incentive awards as set out in the table below.

 

   Type
of
award1
  Basis of
award (at
max)2
  Share
value
at
grant3
   Number
of shares
at target
   Number
of shares
at max
   Face value
of shares
at max4
   Vesting date  Performance
period5
 
Javier López Madrid  Nil-cost option  200% of salary of $632,700  $6.68    126,287    189,431   $1,265,399   22 September 2025  1 January 2022 through 31 December 2024 
Marco Levi  Nil-cost option  200% of salary of $800,000  $6.68    159,681    239,521   $1,600,000   22 September 2025  1 January 2022 through 31 December 2024 

 

1.No price is normally payable on the exercise of the nil-cost option although the Company reserves the right to require the payment of the nominal cost of the shares as a condition of exercise if required to enable the issue or transfer of the shares.
2.Converted at GBP1:USD1.14 and EUR1:USD1.00, being the exchange rate on the date of grant.
3.The share value at grant was determined based on the average of the closing prices of the 20 trading days prior to grant.
4.The value shown in this column has been calculated by multiplying the number of shares that would vest at max by the share value at grant.
5.See below for details of the performance conditions applicable to the awards.

 

The 2022 long term incentive awards are structured as performance share awards with awards vesting three years from grant subject to continued service and the achievement of performance conditions. The award levels are 100% of base salary at target and 200% of base salary at maximum in the case of the Executive Directors. The performance conditions are as follows:

 

-EBIT accounts for 40% weighting, with performance measured over a straight-line sliding scale with $887 million representing minimum and 60% payout, $1,267 million representing target and

 

51 

 

 

  100% payout, and $1,647 million representing maximum and 150% payout. Results below $887 million are below minimum and have no associated payout.
   
-Operational cash flow accounts for 40% weighting, with performance measured over a straight-line sliding scale with $778 million representing minimum and 60% payout, $1,112 million representing target and 100% payout, and $1,446 representing maximum and 150% payout. Results below $778 million are below minimum and have no associated payout.

 

-Relative TSR accounts for 20% weighting, with performance measured over a straight-line sliding scale with median (50th percentile) representing minimum and target, and 100% payout, and 75th percentile or greater representing maximum and 150% payout. Results below median are below minimum and have no associated payout.

 

The relative TSR performance condition is based on a bespoke comparator group comprising Outokumpu, Imerys, Eramet, Jacquet Metals, Evonik Industries, Wacker, Thyssenkrupp, SGL Carbon SE, Amg Advanced Metallurgical Group, Elkem, Acerinox, Materion Corp., Minerals Technologies Inc., Schnitzer Steel Industries, Kaiser Aluminum, Ati Inc., Steel Dynamics Inc., Timkensteel, Century Aluminum Co. and Cleveland-Cliffs.

 

In addition, the grants are subject to a multiplier for a health and safety measure which can both reduce or increase the total amount of payouts. If the lost time frequency rate for full year 2024 is 4.82 or more, awards will be subject to a multiplier of 90%. If the lost time frequency rate is 3.78, awards will be subject to a multiplier of 100%. If the lost time frequency rate is 3.42 or less, awards will be subject to a multiplier of 120%. Values falling between such points will be measured on a straight line basis.

 

Directors’ shareholding and share interests – Audited

 

The table below sets out the number of shares held or potentially held by directors (including their connected persons where relevant) as at 31 December 2022. The Company has share ownership guidelines in place under which it recommends that non-executive directors hold up to a number of shares in the Company equivalent to 200% of base salary.

 

Director  Beneficially
owned shares
   Number of shares
under long term
incentive awards
without performance
conditions1
   Number of shares
under long term
incentive awards
with performance
conditions2
   Target
shareholding
guideline (as a
% of salary or
average gross
annual fees as
applicable)
   Percentage of
Executive
Director’s
salary held as
shares as at
31 December
20223
 
Javier López Madrid   278,538    1,096,919    189,431    -    156%
Marco Levi   100,000    767,500    239,521    -    46%
Bruce L. Crockett   46,000    2,527    -    200%     
Stuart E. Eizenstat   61,845    -    -    200%     
Manuel Garrido y Ruano   870    -    -    200%     
Marta de Amusategui y Vergara   78,220    -    -    200%     
Juan Villar Mir de Fuentes   -    -    -    200%     

 

52 

 

 

Belen Villalonga   -    -    -    200%     
Nicolas De Santis   -    -    -    200%     
Silvia Villar Mir de Fuentes   49,400    -    -    200%     
Rafael Barrilero   -    -    -    200%     

 

1.Where performance conditions have already been tested by the Board, such amounts are reflected in the “without performance conditions” column with their expected vesting values.
2.Refers to the maximum number of shares to potentially vest under the 2022 LTIP grant.
3.Measured by reference to beneficially owned shares only and using the closing share price at 31 December 2022 of $3.85 and the annual salaries of the Executive Directors in USD as disclosed in this U.K. Annual Report and Accounts.

 

The Directors’ outstanding share awards as at 31 December 2022 were as detailed below:

 

Director  Award
type
  Grant
date
  Outstanding1  Subject to
performance
conditions2
  Exercisable
as of 31
December
2022
  Exercised
during the
year to 31
December
2022
  Future
vesting3
  Vesting
date
Javier López Madrid  LTIP Nil cost option  24.11.16  28,117  Yes  Yes  -  -  24.11.19
   LTIP
Nil cost option
  01.06.17  70,464  Yes  Yes  -  -  01.06.20
   LTIP
Nil cost option
  21.03.18  46,777  Yes  Yes  -  -  21.03.21
   Deferred Bonus Award:
Nil cost option
  14.06.18  23,066  No  Yes  -  -  14.06.21
   LTIP
Nil cost option
  13.03.19  110,113  Yes  No  -  -  28.04.22
   LTIP
Nil cost option
  16.12.20  432,771  Yes  No  -  432,771  16.12.24
   LTIP Nil cost option  09.09.21  385,611  Yes  No  -  385,611  01.01.24
   LTIP Nil cost option  21.09.22  189,431  Yes  No  -  189,431  22.09.25
                         
Marco Levi  LTIP
Nil cost option
  16.12.20  408,395  Yes  No  -  408,395  16.12.24
   LTIP Nil cost option  09.09.21  359,105  Yes  No  -  359,105  01.01.24
   LTIP Nil cost option  21.09.22  239,521  Yes  No  -  239,521  22.09.25
                         

 

53 

 

 

Pedro Larrea Paguaga  LTIP Nil cost option  13.03.19  81,948  Yes  No  81,948  -  28.04.22
                         
Donald G. Barger3  RSU/C  Various  23,741  No  Yes  -  -  -
                         
Bruce L. Crockett3   RSU/C  Various  2,527  No  Yes  -  -  -

 

1.Deferred share bonus awards granted to the Executive Directors only. Vested awards are shown with dividend equivalents. Where performance conditions have already been tested by the Board, the number of shares vested or expected to vest in the future are reflected as “outstanding”. Where performance conditions have been tested but the related awards have not yet vested, such amounts are also reflected in the “future vesting” column.
2.Subject to performance conditions and continued employment in the case of awards to the Executive Directors. See page 51 for performance conditions applicable to the awards granted in 2022.
3.These incentive awards are legacy awards which the Company is authorized to honor following shareholder approval of the Policy.

 

Total pension entitlements – Audited

 

Details of the value of pension contributions are provided in the Pensions column of the Single Figure of Remuneration table. Pension contributions are by way of a cash allowance or contribution to a 401(k) plan. There are therefore no specified retirement ages to disclose or consequences of early retirement.

 

Performance Graph

 

The graph below illustrates the Company´s TSR performance relative to the constituents of the S&P 1200 Metals & Mining index from the start of the first day of listing of Ferroglobe´s shares on 24th December 2015 to 31 December 2022. The graph shows the performance of a hypothetical $ 100 invested and its performance over that period. The index has been chosen for this table as the most appropriate comparator for the Company in this period as the Company is a constituent of this index and uses the constituents of this index for one of the TSR comparator groups for the long-term incentive awards.

 

 

 

54 

 

 

Payments for loss of office

 

There were no payments made to any director for loss of office in the year ended December 31, 2022.

 

Executive Chairman remuneration table (in thousands)

 

   2022   2021   2020   2019 
    Javier López Madrid1    Javier López Madrid2    Javier López Madrid3    Javier López Madrid4 
Executive Chairman’s remuneration5  $1,989   $5,635   $2,007   $1,078 
Annual variable pay (including as a % of maximum)6  $989 (50%)   $4,518 (80%)   $972 (48%)   $0 (0%) 
LTIP awards where vesting is determined by performance in the relevant year7   N/A    §     31.92%   19.40%

 

1At the exchange rate of 1 GBP: 1.2369 USD used in the FY22 Report
2At the exchange rate of 1 GBP: 1.3757 USD used in the FY21 Report
3At the exchange rate of 1 GBP: 1.2838 USD used in the FY20 Report
4At the exchange rate of 1 GBP: 1.2772 USD used in the FY19 Report
5Remuneration comprises total remuneration
6Annual variable pay is the bonus amounts in respect of 2019 and the percentage of maximum award it represents. Figures elsewhere in this report show bonus as a percentage of target.
7The number of shares subject to long term incentive awards where final vesting is determined by reference to performance ending in the year under review is shown as a percentage of maximum opportunity.
 §The performance period of the 2019 LTIP award ended on 31 December 2021 and vested at 32.17% out of a maximum opportunity of 200% of target. The performance period of the 2021 LTIP awards ended on 31 December 2021, was tested by the Committee and is expected to vest at 100% of maximum.

 

55 

 

 

Percentage increase or reduction in the remuneration of the Executive Directors

 

The following table shows the percentage change in remuneration of each director and European employees have been chosen as an appropriate group against to make the comparison, from financial year 2017 to 2022.

 

56 

 

 

2022  Javier López Madrid   Marco Levi
(1)
   Pedro Larrea Paguaga
(2)
   José María Alapont (3)   Bruce L Crockett   Stuart E Eizenstat   Manuel Garrido y Ruano   Rafael Barrilero
(4)
   Nicolas de Santis
(4)
   Juan Villar Mir de Fuentes   Marta Amusategui
(5)
   Silvia Villar-Mir de Fuentes (4)   Belén Villalonga Morenes
(4)
   Greger Hamilton
(6)
   Donald G Barger Jr
(7)
   Average employee pay 
Salary and fees (USD 000s)   -10%   19%             1%   -10%   -9%   50%   49%   -9%   -2%   48%   46%               
All taxable benefits (USD 000s)   -10%   4%             53%   100%   100%   120%        100%   100%   100%   358%               
Annual bonuses   -12%   20%                                                                      
Total   -32%   43%             54%   90%   91%   170%   49%   91%   98%   148%   404%             61%
2021                                                                                
Salary and fees (USD 000s)   7%   6%        -56%   39%   -1%   7%             7%   112%                         
All taxable benefits (USD 000s)   9%   14%        -28%   220%   -100%   -100%                                             
Annual bonuses   258%   233%                                                                      
Total   274%   253%        -84%   259%   -101%   -93%             7%   112%                       0%

 

57 

 

 

2020  Javier
López
Madrid
   Marco
Levi
(1)
   Pedro
Larrea
Paguaga
(2)
   José
María
Alapont (3)
   Bruce L
Crockett
   Stuart E
Eizenstat
   Manuel
Garrido
y Ruano
   Rafael
Barrilero
(4)
   Nicolas de Santis
(4)
   Juan
Villar
Mir de
Fuentes
   Marta
Amusategui
(5)
   Silvia
Villar-Mir de
Fuentes (4)
   Belén
Villalonga
Morenes
(4)
   Greger
Hamilton
(6)
   Donald G
Barger Jr
(7)
   Average
employee
pay
 
Salary and fees (USD 000s)   0%             -3%   10%   12%   1%             1%                  -61%   -47%     
All taxable benefits (USD 000s)   2%             -41%   -86%   -75%   -86%             -100%                  -100%   -83%     
Annual bonuses    100%                                                                           
Total   102%             -44%   -76%   -63%   -85%             -99%                  -161%   -130%   0%

 

1Marco Levi was appointed as CEO in January 2020.
2Pedro Larrea Paguaga stepped down on 10 January 2020.
3José María Alapont was appointed as Senior Independent Director and Chairman of the Corporate Governance Committee in January 2019. He resigned from the Board on 30 April 2021
4Belen Villalonga, Silvia Villar-Mir de Fuentes, Nicolas De Santis, and Rafael Barrilero Yarnoz joined the board of directors effective 13 May 2021.  
5Marta Amusategui was appointed as Non-Executive Director of the Company, effective 12 June 2020.
6Greger Hamilton joined the Board in December 2015 and decided to step down effective 31 May 2020.
7Donald G Barger Jr. resigned from the Board after the Company´s 2020 annual general meeting 2020.

 

58 

 

 

Relative importance of the spend on pay

The following table shows the Company’s actual spend on pay for all employees compared to distributions to shareholders in the financial year. No share dividends or buybacks have occurred in the referenced years.

  1 January 2022 to
31 December 2022
   1 January 2021 to
31 December 2021
   1 January 2020 to
31 December 2020
 
Employee costs  $314,810,000   $280,917,000   $214,782,000 
Average number of employees   3,509    3,434    3,317 

External directorships during financial year 2021

Javier López Madrid

·Chief Executive Officer of Grupo VM.
·Non-Executive Chairman and investor of Siacapital S.L.

Marco Levi

·Non-executive director of Schweitzer-Mauduit International, Inc and of its successor corporation, Mativ Holdings Inc

The Board was satisfied that under these arrangements the Executive Chairman and CEO had the necessary time to carry out his duties effectively during 2022.

Under the Policy, Executive Directors may retain fees paid for external director appointments. These appointments are subject to approval by the Board and must be compatible with their duties as Executive Directors.

Membership of the Committee

During 2022, our Compensation Committee consisted of four directors: Mses. Amusategui and Villar-Mir de Fuentes and Messrs. Barrilero (Chair) and De Santis.

On 26 May 2023, Silvia Villar-Mir de Fuentes resigned from the Committee, and Stuart Eizenstat was appointed to the Committee. As a result of these changes, the Committee is now comprised exclusively of independent directors.

The Executive Chairman, Chief Executive Officer, Chief People & Culture Officer and other members of the management team may be invited to attend meetings to assist the Committee. Other Non-Executive Directors are normally invited to attend meetings to assist the Committee in its deliberations as appropriate. No Executive, however, is present during any decision making in relation to their own remuneration. In addition, Ms Villar-Mir de Fuentes did not participate in discussions, or vote, regarding, the remuneration of Javier López-Madrid

External advisors

Aon provides independent advice to the Committee and was appointed by the Committee in early 2016. The Committee seeks advice relating to Executive remuneration and Non-Executive Director remuneration and the wider senior management population from Aon. Aon also provided advice to management, to enable their support of the Committee, primarily in relation to remuneration reporting and the operation of incentive plans but does not provide any other services to the Company except for insurance broking services.

The Committee is satisfied that the advice received from Aon in relation to executive remuneration matters is objective and independent. Aon is a member of the UK Remuneration Consultants Group and abides by the Remuneration Consultants Group Code of Conduct, which requires its advice to be objective and impartial. The fees paid to Aon for advice provided directly to the Committee in 2022 were £9,700 ($11,998) (excluding VAT), with such fees paid on a per-service basis.

Statement of shareholder voting

The following table shows the results of the advisory vote on the 2021 Remuneration Report at the Annual General Meeting of 30 June 2022.

59 

 

For % of votes
cast
Against % of votes
cast
Withheld
Remuneration Report 114,177,899 86.12 16,154,608 12.19 2,238,311

The following table shows the results of the binding vote on the 2022 Remuneration Policy at the Annual General Meeting of 30 June 2022.

For % of votes
cast
Against % of votes
cast
Withheld
Remuneration Policy 121,189,203 91.41 9,144,234 6.90 2,237,381

Approval

This Directors’ Remuneration Report, including both the Policy and Annual Report on Remuneration has been approved by the Board.

Signed on behalf of the Board.

Chairman of the Compensation Committee

30 May 2023

60 

 

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FERROGLOBE PLC

Report on the audit of the financial statements

1.Opinion

In our opinion the financial statements of Ferroglobe plc (the ‘parent company’) and its subsidiaries (the ‘group’):
 
·give a true and fair view of the state of the group’s and of the parent company’s affairs as of 31 December 2022 and of the group’s profit and parent company’s loss for the year then ended;
  
·have been properly prepared in accordance with United Kingdom adopted international accounting standards and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB); and
  
·have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

 

·the consolidated income statement;

·the consolidated and parent company statements of comprehensive income;
·the consolidated statement of financial position;
·the consolidated and parent company statements of changes in equity;
·the consolidated and parent company cash flow statement;
·the parent company balance sheet;
·the related notes 1 to 32 in respect of the group financial statements; and
·the related notes 1 to 15 in respect of the parent company financial statements.

The financial reporting framework that has been applied in their preparation is applicable law, United Kingdom adopted international accounting standards and IFRSs as issued by the IASB.

2.Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.

We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

61 

 

3.Summary of our audit approach
Key audit matters

The key audit matters that we identified in the current year were:

·      System of internal control;

·      Impairment of property, plant and equipment (‘PP&E’); and

·      Inventory valuation.

Materiality The materiality that we used for the group financial statements was $20.7m (2021: $14.2m), determined by reference to revenue. The assessed materiality represents approximately 0.8% of revenue (2021: 0.8%)
Scoping

As in the prior year, we focused our group audit scope primarily on the components in the following countries:

·      United States of America (‘USA’);

·      Canada;

·      France; and

·      Spain.

The components subject either to full scope audits or audits of specified balances represent 93% of the group’s revenue. FerroPem SAS in France, Grupo Ferroatlantica SAU in Spain and the parent company in the UK were all subject to full scope audit.

Lower materialities were applied to the procedures performed on components, ranging from $3.7m to $6.4m (2021: $1.4m to $4.3m).

Significant changes in our approach

Last year we included liquidity and going concern, refinancing and goodwill as part of the key audit matters. These are no longer key audit matters in the current year, given the improvement on the results of the Group and its cash position, as well as the completion of refinancing in the prior year.

Additionally, new key audit matters in respect to internal controls and inventory valuation have been identified in the current year.

4.Conclusions relating to going concern

 

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going concern basis of accounting included:

oWe assesed the information about management’s plans in respect of the Group’s ability to continue as a going concern.
oWe assessed the adequacy of support regarding the availability of financing, including existing arrangements for factoring receivables and the possible effects on management’s borrowing plans of existing restrictions on additional borrowing or the sufficiency of available collateral.
oWe considered external analyst reports, industry data and other external information to determine if it provided corroborative or contradictory evidence in relation to management's assumptions.
oWe assessed the reasonableness of management’s key assumptions for preparing prospective cash flow information, including projected results and forecasted future cash flows, with particular attention to assumptions that are especially sensitive or inconsistent with historical trends.
oWe inquired as to management’s knowledge of events or conditions beyond the period of management’s assessment that may cast significant doubt on the entity’s ability to continue as a going concern.
oWe evaluated the appropriateness of the disclosures in the financial statement.

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Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

5.Key audit matters

 

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

5.1.System of Internal Control

Key audit matter description

The directors are responsible for maintaining an effective system of internal control. The Group has equity listed on the NASDAQ in the United States, and as such is also subject to SEC regulations including complying with Sarbanes Oxley (“SOX”) requirements.

The Company’s system of internal control is subject to audit testing by us and our component auditors. The effectiveness of the system of internal control has a significant impact on our audit strategy, nature, extent and timing of our audit procedures. Reliance (or not) on the group’s internal controls, significantly influences the nature and extent of substantive audit procedures performed.

Material weaknesses in internal controls were identified from the results of our audit testing, specifically relating to:

-      Control environment: The Company identified deficiencies in the principles associated with the control environment component of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to the following principles: (i) the organization demonstrates a commitment to attract, develop, and retain competent individuals in alignment with objectives, and (ii) the organization holds individuals accountable for their internal control related responsibilities in the pursuit of objectives.

 

-       Control Activities: The Company identified deficiencies in the principles associated with the control activities component of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to the following principles: (i) the organization selects and develops control activities that contribute to the mitigation of risks to acceptable levels and (ii) the organization deploys control activities through policies that establish what is expected and procedures that put policies into action.

 

In addition, the COSO component material weaknesses described above contributed to the following material weaknesses within the Company’s system of internal control over financial reporting at the control activity level:

- Financial Closing and Reporting process: The Company did not design and operate effectively controls over the oversight of the financial closing and reporting process, and controls over the review of manual journal entries, due

 

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  to limited resources within its accounting and reporting team.
   
  - Impairment of Long-Life Assets: controls over the assumptions and external valuations used in our impairment evaluation of long-lived assets, which were not designed and/or did not operate effectively.
   
How the scope of our audit responded to the key audit matter

Group and component audit teams evaluated the design, implementation and operating effectiveness of internal controls over the Group’s key business process cycles, as well as evaluating entity-level controls and components of the COSO framework.

Our conclusions in respect of internal controls were a key input in our determination of performance materiality, which governs the scope of our audit testing. See materiality in section 6.

In addition, the results of our testing of internal controls informed the nature and extent of substantive audit procedures over account balances and disclosures, which increased as a result.

See also our Key Audit Matter in respect of Impairment of property, plant and equipment below.

Key observations We refer to the directors’ statement in the Strategic Report on the Internal control environment, which notes that the Company did not maintain an effective control environment to enable the identification and mitigation of the risk of the existence of potential material accounting errors. They identified deficiencies in the principles associated with the control environment component of the COSO framework.

 

5.2.Impairment of property, plant and equipment (‘PP&E’)
Key audit matter description

As described in Notes 3.5, 4.4 and 9 to the financial statements, the Group’s consolidated PP&E balance was $486 million as of December 31, 2022 (2021: $555 million). As mentioned in Note 9, impairments amounting to approximately $57 million were recorded during 2022 (2021: $2 million reversals) relating to certain assets in the Europe - Manganese segment and other assets in Spain that are affected by increased energy costs.

The Group’s evaluation of PP&E for impairment involves the identification of any impairment triggers and where triggers are identified, a comparison of the carrying amount of assets with their recoverable amount. The determination of the recoverable amount involves both fair valuation of assets less costs to dispose and value in use. The determination of the value in use of an asset requires significant judgement in selecting and applying key underlying assumptions concerning future market conditions (volumes, sale prices, cost structure, operating margins and capital expenditure - “capex”) for the periods projected, as well as the determination of an appropriate discount rate and terminal value. For certain assets, the recoverable amount has been determined at fair value less cost of disposal, which also involves judgement.

We identified impairment of PP&E relating to certain assets in the Europe - Manganese segment and other assets in Spain as a key audit matter because of the significant judgements involved in the assessment and the heightened risk of impairment due to high energy costs. This involved a high degree of auditor judgement and an increased extent of audit effort as a result of the significant deficiencies over controls related to the impairment assessment, and our response included the involvement of fair value specialists and an increase in

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  the nature and extent of our audit procedures.
How the scope of our audit responded to the key audit matter

Our audit procedures related to management´s assessment of PP&E for impairment included the following, among others: 

·We considered the accuracy of past forecasts developed by management to assess the reliability of the forecasting process.
·We considered key assumptions applied in the development of the discounted future cash flows for the periods projected.
·We evaluated the volumes and prices projected for the period 2023-2027 using historical data and independent sources of information (such as analyst and industry reports or prices reports, when available) and considered information that could be potentially contradictory to management's forecasts.
·With the assistance of our fair value specialists, we evaluated the discount rates (WACC), the long-term growth rates, the appropriate methodology for determination of terminal values and the underlying source information. Our fair value specialists also assisted in testing the mathematical accuracy of the calculations and developing a range of independent estimates and comparing those to management’s estimates.
·We have performed sensitivity analysis over PP&E impairment test by comparing the results of the impairment test with significant changes and modifications to the underlying inputs such as the net cash flows and the terminal value, the discount rates (WACC) and the long-term growth rate.
·For those assets for which recoverable amount was determined at fair value less cost of disposal, we evaluated the main assumptions used by the Company with the assistance of our fair value specialists.

Key observations

The deficiencies identified in internal controls over the assessment of impairment of PP&E assets related to instances of controls that were not designed effectively over the assumptions and inputs used in the impairment evaluation as well as ineffective controls. We re-evaluated the nature and extent of substantive audit procedures performed as a result of the deficiencies identified.

From our audit procedures performed, including our evaluation of the methodology, valuation and accuracy of the impairment test performed, we are satisfied that the Group’s PP&E assets at 31 December 2022 are recoverable.

 

5.3.Inventory valuation
Key audit matter description

As discussed in Notes 4.8 and 11 to the consolidated financial statements, the Group’s consolidated inventory balance was $500 million of December 31, 2022

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(2021: $ 290 million).

As disclosed in Note 3.5, inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The decreasing market prices and demand for the Group’s products experienced in the second half of the year exposes the Group’s inventory to valuation risk, and write-downs amounting to approximately $29 million were recorded at year end (2021: $xx million).

We identified the estimate of net realizable value of inventories as a key audit matter because of the judgements involved. This required an increased extent of audit effort when performing audit procedures to evaluate the reasonableness of management's estimation.

How the scope of our audit responded to the key audit matter

Our audit procedures related to the estimated net realizable value of inventories included the following, among others:

· We evaluated the reasonableness of the valuation methodologies and assumptions applied by management in their estimate;

· We tested the accuracy and completeness of the underlying data that served as the basis for the calculation of inventory valuation allowance;

· We performed inquiries with relevant finance and operations personnel, and reviewed the sales subsequent to December 31, 2022 to assess whether the selling price, net of selling costs, was greater than the carrying amount of the inventory sold.

Key observations From our audit procedures performed, including our evaluation of the accounting judgements, we are satisfied that the carrying amount of inventories as at 31 December 2022 is appropriate.

6.Our application of materiality

6.1.Materiality

 

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

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Group financial statements Parent company financial statements
Materiality $20.7m (2021: $14.2m) $10.1m (2021: $9.8m)
Basis for determining materiality

0.8% of Revenue (2021: 0.8%)

1% of Total assets, (2021: 1% of Total assets)

Rationale for the benchmark applied Revenue is considered to be the most appropriate and stable benchmark as the Group was loss making in the current year and prior years. As the parent company is a non-trading entity, we considered it appropriate to use total assets for determining materiality.

 

 

 

6.2.Performance materiality

 

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole.

Group performance materiality was set at $10.6m for the 2022 audit (2021: $7.1m), representing 51% of group materiality (2021: 50%). Parent company performance materiality was set at $7.1m (2021: $6.9m), representing 70% (2021: 70%) of parent company materiality.

In determining performance materiality, we considered the following factors:

a.trading performance of the Group in the current year and in previous year;

b.scale and complexity of the Group’s and the Parent company’s financial operations;

c.the quality of the control environment and the control deficiencies identified;

d.the nature, volume and size of misstatements (corrected and/or uncorrected) identified in the previous audit; and

e.the complexity of financial reporting matters and one-off transactions.

 

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6.3.Error reporting threshold

 

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of $1m (2021: $0.71m), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

7.An overview of the scope of our audit

7.1.Identification and scoping of components

 

The group comprises ten reportable segments as described in note 6 to the financial statements, which are based upon the Group’s management structure and how the Chief Operating Decision Maker (‘CODM’) is currently managing the business. .

Our audit scope was consistent with the prior year, with component audit teams in the following countries:

·United States of America (‘USA’);
·Canada
·France; and
·Spain.

Full scope audits were performed on Grupo Ferroatlantica SAU by Deloitte Spain, FerroPem SAS by Deloitte France and by Deloitte UK for the parent company in the UK.

Specified audit procedures were performed on the Group’s businesses in USA by Deloitte US and Canada by Deloitte Canada.

Analytical procedures were performed over the Group’s residual businesses and components by Deloitte Spain, with oversight performed by Deloitte UK. Additionally, audit procedures over internal controls and assessments of climate-related risks relevant to each component audit were performed each component audit team with additional assessment and procedures performed, including the oversight of component audit teams, by both Deloitte Spain and Deloitte UK. The materialities applied to component audits ranged from $3.7 million to $6.4 million (2021: $1.4 million to $4.2 million).

7.2.Our consideration of climate-related risks

As set out in the Strategic Report, the Company has published its first global ESG report in July 2022, where it outlined its ESG strategy, focused on four fundamental pillars:

 

·Strengthening our governance framework;
·Promoting solid and honest engagement with our people and the communities where we operate;
·Reinforcing the role of sustainability through our value chain; and
·Improving our environmental footprint to enable sustainable development.

The report sets out the roadmap for sustainability over the period 2022-2026. In addition, the directors have established an ESG Committee to implement the strategy, who report to the directors. ESG risks have been integrated into the Company’s risk management system and the director’s have started to consider climate change risks and opportunities assessment. Further information can be found in the Strategic Report.

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We applied these considerations in the performance of our audit procedures on impairment as set out in section 5.3 above.

We evaluated management’s disclosures, particularly those regarding impairment and accounting judgements and estimates, in the context of our audit work related to climate change. We also involved ESG specialists in the review of managements ESG disclosures. We considered whether there were any omissions that were material to the the financial statements as a whole, and communicated our findings to management.

We obtained specific written representations from management that their latest plans, intentions and expectations related to climate change were appropriately reflected in estimates of useful economic lives and impairment assessments.

7.3.Working with other auditors

 

The UK group audit team worked on an integrated basis with Deloitte Spain, directing and overseeing audit work performed by component teams and audit work performed directly by Deloitte Spain.

The integrated UK and Spanish audit teams planned, supervised and reviewed work performed by component auditors in France, USA and Canada. The level of direct involvement varied by location and included, attendance to key meetings with local engagement teams, including audit close meetings, and a detailed review of their reporting deliverables and underlying audit work documentation.

The coverage of our audit work across the group is shown below:

 

 

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8.Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

9.Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

10.Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

11.Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

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11.1.Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

·the nature of the industry and sector, control environment and business performance including the design of the group’s remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;

·results of our enquiries of management, internal audit, and the audit committee about their own identification and assessment of the risks of irregularities;

·any matters we identified having obtained and reviewed the group’s documentation of their policies and procedures relating to:

oidentifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

odetecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

othe internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

·the matters discussed among the audit engagement team including component audit teams and relevant internal specialists, including tax, valuations and IT specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the revenue recognition process at the end of the year. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the group operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act 2006 and tax regulations applicable in the key jurisdictions where the group operates.

In addition, we considered provisions of other laws and regulations, that do not have a direct effect on the financial statements but compliance with which may be fundamental to the group’s ability to operate or to avoid a material penalty. The key laws and regulations we considered in this context included employment law and environmental regulations.

11.2.Audit response to risks identified

As a result of performing the above, we did not identify any key audit matters related to the potential risk of fraud or non-compliance with laws and regulations.

Our procedures to respond to risks identified included the following:

·reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

·enquiring of management, the audit committee and in-house legal counsel concerning actual and potential litigation and claims;

·performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

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·reading minutes of meetings of those charged with governance and reviewing internal audit reports;

·in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business; and

·in addressing the risk of fraud in revenue recognition identified as a risk of cut-off, testing sales recorded in the last month of the year and in January 2023, by inspecting a sample of transactions and agreeing those to supporting documentation, in order to evaluate whether sales were recorded in the correct period in accordance with the agreed shipping terms.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, including internal specialists, and component audit teams, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Report on other legal and regulatory requirements

12.Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

·the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
·the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

 

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.

13.Matters on which we are required to report by exception

13.1.Adequacy of explanations received and accounting records

 

Under the Companies Act 2006 we are required to report to you if, in our opinion:

·we have not received all the information and explanations we require for our audit; or
·adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
·the parent company financial statements are not in agreement with the accounting records and returns.

 

We have nothing to report in respect of these matters.

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13.2.Directors’ remuneration

 

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

  

14.Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Nicola Barker, FCA (Senior statutory auditor)

For and on behalf of Deloitte LLP

Statutory Auditor

London, UK

30 May 2023

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FERROGLOBE PLC

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as of December 31, 2022 and 2021 and for each of the three years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Financial Position as of December 31, 2022 and 2021 75
Consolidated Income Statements for the years ended December 31, 2022, 2021 and 2020 76
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022, 2021 and 2020 77
Consolidated Statements of Changes in Equity for the years ended December 31, 2022, 2021 and 2020 78
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 79
Notes to the Consolidated Financial Statements 80

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FERROGLOBE PLC AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2022 AND 2021

 

Thousands of U.S. Dollars

 

      2022   2021 
   Notes  US$'000   US$'000 
ASSETS
Non-current assets             
Goodwill  Note 7   29,702    29,702 
Other intangible assets  Note 8   111,797    100,642 
Property, plant and equipment  Note 9   486,247    554,914 
Other non-current financial assets  Note 10   14,186    4,091 
Deferred tax assets  Note 23   7,136    7,010 
Non-current receivables from related parties  Note 24   1,600    1,699 
Other non-current assets  Note 12   18,218    18,734 
Non-current restricted cash and cash equivalents  Note 10   2,133    2,272 
Total non-current assets      671,019    719,064 
Current assets             
Inventories  Note 11   500,080    289,797 
Trade and other receivables  Note 10   425,474    381,073 
Current receivables from related parties  Note 24   2,675    2,841 
Current income tax assets  Note 23   6,104    7,660 
Other current financial assets  Note 10   3    104 
Other current assets  Note 12   30,608    8,408 
Assets and disposal groups classified as held for sale  Note 30   1,067     
Current restricted cash and cash equivalents  Note 10   2,875     
Cash and cash equivalents  Note 10   317,935    114,391 
Total current assets      1,286,821    804,274 
Total assets      1,957,840    1,523,338 
EQUITY AND LIABILITIES
Equity             
Share capital      1,962    1,962 
Reserves      439,674    544,433 
Translation differences      (242,623)   (227,318)
Valuation adjustments      10,735    5,525 
Result attributable to the Parent      440,314    (110,624)
Non-controlling interests      106,751    106,053 
Total equity  Note 13   756,813    320,031 
Non-current liabilities             
Deferred income      3,842    895 
Provisions  Note 15   47,670    60,958 
Bank borrowings  Note 16   15,774    3,670 
Lease liabilities  Note 17   12,942    9,968 
Debt instruments  Note 18   330,655    404,938 
Other financial liabilities  Note 19   38,279    4,549 
Other obligations  Note 21   37,502    38,082 
Other non-current liabilities  Note 22   12    1,476 
Deferred tax liabilities  Note 23   35,854    25,145 
Total non-current liabilities      522,530    549,681 
Current liabilities             
Provisions  Note 15   145,507    137,625 
Bank borrowings  Note 16   62,059    95,297 
Lease liabilities  Note 17   8,929    8,390 
Debt instruments  Note 18   12,787    35,359 
Other financial liabilities  Note 19   60,382    62,464 
Payables to related parties  Note 24   1,790    9,545 
Trade and other payables  Note 20   219,666    206,000 
Current income tax liabilities  Note 23   53,234    1,775 
Other obligations  Note 21   9,580    22,843 
Other current liabilities  Note 22   104,563    74,328 
Total current liabilities      678,497    653,626 
Total equity and liabilities      1,957,840    1,523,338 

 

Notes 1 to 32 are an integral part of the consolidated financial statements

 

The financial statements were approved by the Board of Directors and authorized for issue on May 30, 2023

Signed on its behalf by:

 

Dr. Marco Levi

Director

 

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FERROGLOBE PLC AND SUBSIDIARIES

 

CONSOLIDATED INCOME STATEMENTS FOR THE YEARS 2022, 2021 AND 2020

 

Thousands of U.S. Dollars

 

      2022   2021   2020 
   Notes  US$'000   US$'000   US$'000 
Sales  Note 26.1   2,597,916    1,778,908