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 May 2024

 

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 x                                                                 Form 40-F ¨

 

 

 

 

 

 

2024 Annual General Meeting of Ferroglobe PLC

 

On May 20, 2024, Ferroglobe PLC ("Ferroglobe" or the "Company") released its Notice of 2024 Annual General Meeting ("2024 AGM") and Annual Report and Accounts for the fiscal year ended December 31, 2023. The 2024 AGM will be held at 13:00 British Summer Time (BST) on Tuesday, June 18, 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 dated May 20, 2024
     
99.2   Ferroglobe PLC Annual Report and Accounts for the fiscal year ended December 31, 2023
     
99.3   Extracts from the 2023 Annual Report on Form 20-F
     
99.4   Form of Proxy Card for the 2024 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: May 21, 2024
  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)

 

20 May 2024

 

2024 Annual General Meeting of Shareholders of Ferroglobe Plc (“Ferroglobe” or the “Company”)

 

Dear Shareholder

 

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 13:00 (British Summer Time) on Tuesday, 18 June 2024 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, 17 June 2024.

 

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 8 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 favor 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 2024 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, 18 June 2024 at 13:00 (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 8 of this Annual General Meeting notice and additional information on voting at the Annual General Meeting can be found on pages 8 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 2023

 

1THAT the directors’ and auditor’s reports and the accounts of the Company for the financial year ended 31 December 2023 (the “U.K. Annual Report and Accounts”) be received.

 

Directors’ 2023 Remuneration Report

 

2THAT the directors’ annual report on remuneration for the year ended 31 December 2023 (excluding, for the avoidance of doubt, any part of the Directors’ remuneration report containing the directors’ remuneration policy), as set out on pages 35 to 36 and 50 to 61 of the U.K. Annual Report and Accounts be approved.

 

Authority for certain donations and expenditure

 

3THAT, in accordance with Part 14 of the Companies Act and in substitution for any previous authorities given to the Company (and its subsidiaries), the Company (and all companies that are subsidiary of the Company at any time during the period for which this resolution has effect) be authorized to: (i) make political donations to political parties or independent election candidates; (ii) make political donations to political organizations other than political parties, and (iii) incur political expenditure, in each case, as such terms are defined in the Companies Act, provided that with respect to each of the foregoing categories, any such donations or expenditure made by the Company, or a subsidiary of the Company, do not in the aggregate exceed £100,000. Such authority shall expire at the conclusion of the Company’s next annual general meeting. For the purposes of this resolution, the authorized sum may comprise sums in different currencies that shall be converted at such rate as the Board may in its absolute discretion determine to be appropriate.

 

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Authority to Make Purchases of Own Shares Off-market

 

4THAT, for the purposes of section 694 of the Companies Act, the terms of the buyback contract to be entered into between the Company and any or all of J.P. Morgan Securities LLC, BMO Capital Markets Corp. and Santander US Capital Markets LLC, respectively (in the forms produced to this meeting and made available at the Company's registered office for not less than 15 days ending with the date of this meeting) are approved and the Company be authorized to undertake off-market purchases (within the meaning of section 693(2) of the Companies Act) of its ordinary shares of US $0.01 pursuant to such contracts, provided that (i) the maximum aggregate number of ordinary shares hereby authorized to be purchased is 37,776,463, representing approximately 20% of the issued ordinary share capital, and (ii) additional restrictions under applicable U.S. securities laws are substantially complied with, including (but not limited to) the pricing limitations under Rule 10b-18(b)(3) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), the volume limitations under Rules 10b-18(b)(4) and 10b-18(c)(2) of the Exchange Act, the timing limitations under Rules 10b-18(b)(2) and 10b-18(c)(1) and the requirements with respect to the use of brokers or dealers under Rule 10b-18(b)(1) of the Exchange Act.

 

Such authority shall expire at the close of business on the fifth anniversary of the passing of this resolution, but during this five year period the Company may agree to purchase ordinary shares pursuant to any such approved contract, even if such purchase would, or might, be completed or executed wholly or partly after the authority ends and the Company may purchase such ordinary shares pursuant to any such approved contract as if the authority had not ended. This authority shall apply from the conclusion of the Annual General meeting until a date which is five years from the date of the Annual General Meeting.

 

Directors’ Re-election

 

5THAT Javier López Madrid be re-elected as a director.

 

6THAT Marco Levi be re-elected as a director.

 

7THAT Marta de Amusategui y Vergara be re-elected as a director.

 

8THAT Bruce L. Crockett be re-elected as a director.

 

9THAT Stuart E. Eizenstat be re-elected as a director.

 

10THAT Manuel Garrido y Ruano be re-elected as a director.

 

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

 

12THAT Belen Villalonga Morenés be re-elected as a director.

 

13THAT Silvia Villar-Mir de Fuentes be re-elected as a director.

 

14THAT Nicolas De Santis be re-elected as a director.

 

15THAT Rafael Barrilero Yarnoz be re-elected as a director.

 

Re-appointment of Auditor

 

16THAT KPMG LLP be re-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

 

17THAT the Audit Committee of the Board be authorized to determine the auditor’s remuneration.

 

Thomas Wiesner

Company Secretary
20 May 2024

 

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Explanatory notes to the resolutions

 

Resolution 1 (U.K. Annual Report and Accounts 2023)

 

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 2023, 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 2023. The directors’ remuneration report is set out on pages 35 to 36 and 50 to 61 of the U.K. Annual Report and Accounts. It provides information on the remuneration of the directors for 2023 and that proposed for 2024; 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.

 

Resolution 3 (authority for certain donations and expenditure)

 

The Company is seeking authority under this resolution to allow the Company and any of its subsidiaries to make political donations or incur political expenditure up to a limit of £100,000 for each category of donation or expenditure set out in the resolution. It is not the Company’s policy or intention to make political donations or expenditures, and no political donations were made in the year ended 31 December 2023. However, it is possible that certain routine activities undertaken by the Company and its subsidiaries might unintentionally fall within the scope of the provisions controlling political donations and expenditure, which are very broad and open to interpretation. Any political donations or expenditure regulated by the Companies Act must be approved by shareholders at a general meeting and must be disclosed in the annual report for the year ending 31 December 2024. Accordingly, in common with many other UK public companies, the directors seek shareholders’ approval for political donations and expenditure to be made by the Company and its subsidiaries, to avoid inadvertently contravening the Companies Act. The authority being sought will take effect from the end of the Annual General Meeting until the end of next year’s annual general meeting (or, if earlier, 15 months from the date of the Annual General Meeting), until renewed, revoked or varied by the Company in a general meeting.

 

Resolution 4 (authority to make purchases of own shares off-market)

 

The Board considers that share buybacks are an important means of returning value to shareholders, managing capital resources and maximizing sustainable long-term growth in earnings per share.

 

As the Nasdaq is not a recognized investment exchange for the purposes of section 693(2) of the Companies Act, any repurchases by Ferroglobe of its own shares on or through Nasdaq would constitute “off-market” repurchases for the purposes of the Companies Act. Such repurchases may only be made pursuant to a form of share repurchase contract, the terms of which have been approved by shareholders in accordance with section 694 of the Companies Act.

 

Ferroglobe is seeking the approval by shareholders of off-market purchases in accordance with this resolution in order to enable share repurchases on or through Nasdaq pursuant to section 694 of the Companies Act, provided that (i) the maximum aggregate number of ordinary shares hereby authorized to be purchased is 37,776,463, representing approximately 20% of the issued ordinary share capital), and (ii) additional restrictions under applicable U.S. securities laws are substantially complied with, including (but not limited to) the pricing limitations under Rule 10b-18(b)(3) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), the volume limitations under Rules 10b-18(b)(4) and 10b-18(c)(2) of the Exchange Act, the timing limitations under Rules 10b-18(b)(2) and 10b-18(c)(1) and the requirements with respect to the use of brokers or dealers under Rule 10b-18(b)(1) of the Exchange Act.

 

This resolution specifies the counterparties which may each enter into a separate repurchase contract with Ferroglobe, in each case in the form approved by the shareholders. Repurchases may be undertaken following a specific, one-off instruction from the Company to the counterparty or pursuant to a share trading plan under which the Company instructs the counterparty to purchase a set number of shares at a maximum and/or minimum price over a set period of time.

 

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The approval of the terms of the form of share repurchase contract, if granted, will be valid until the fifth anniversary of the date of approval. However, if this resolution is approved, the Company may agree to purchase ordinary shares pursuant to any such contract, even if such purchase would, or might, be completed or executed wholly or partly after the authority ends and the Company may purchase such ordinary shares pursuant to any such contract as if the authority had not ended.

 

It is common for English incorporated public limited companies to have a standing authority that would permit the making of share repurchases should the Company be able and decide to do so in the future. The Board considers that having the right to make such repurchases would be in the Company’s and its shareholders’ best interests. A market announcement would be made if the Company did decide to commence repurchases in accordance with this authority.

 

Under the Companies Act, ordinary shares bought back may be held in treasury or may be cancelled. Shares held in treasury may be either sold for cash or transferred for the purposes of an employee shares scheme. Ferroglobe therefore has a choice of either holding or cancelling any shares it may purchase. If Ferroglobe buys back any of its shares under this resolution, we will decide at the time of purchase whether to cancel them immediately or to hold them in treasury. In relation to treasury shares, we would also have regard to any investor guidelines regarding the purchase of shares intended to be held in treasury and their holding or resale. In the event that (i) the Company repurchases the maximum number of shares possible pursuant to this authority, (ii) its majority shareholder, Grupo Villar Mir S.A.U. (“GVM”), does not participate in the share purchase program and (iii) all shares purchased are cancelled, the percentage holding of GVM in the Company may increase to a maximum of 50.1%.

 

Copies of the forms of contracts which shareholders are being asked to approve will be made available for shareholders to inspect at Ferroglobe’s registered office at 5 Fleet Place, London, EC4M 7RD for the period from 3 June 2024 until the date of the AGM. Copies of the forms of contracts will also be available for inspection at the Annual General Meeting.

 

Resolutions 5 to 15 (directors seeking 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.

 

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.

 

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Marta de Amusategui y Vergara

 

Marta de Amusategui y Vergara was appointed to the Board 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 the Board 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 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. In 2021, he was appointed as a member of the Board of Advisors of the Western Colorado University Graduate Business School.

 

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.

 

Stuart E. Eizenstat

 

Stuart E. Eizenstat was appointed to the Board 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

 

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2001 until 2018.

 

Mr. Eizenstat was a member of board of directors of Globe Specialty Metals 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 Hillary Clinton and then Secretary of State John 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 served on the Defense Policy Board in the Obama administration from 2014-2017. He currently serves as Special Adviser on Holocaust Issues to Secretary of State Antony Blinken and as Chairman of the Council of United States Holocaust Memorial Museum, appointed by President Biden. 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”, “President Carter: The White House Years”, and "The Art of Diplomacy: How American Negotiators Reached Historic Agreements that Changed the World".

 

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 the Board 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 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 has been 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 the Board 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 has served as Chairman and 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.

 

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Belen Villalonga Morenés

 

Belen Villalonga Morenés was appointed to the Board 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 finance, with a special focus on family-controlled companies. Her award-winning research has been cited over 18,000 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 the Board 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 the Board 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 corporate vision & strategy, disruptive innovation, global branding, business model innovation, sustainability and corporate culture transformation.

 

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 Megavision® Enterprise Futurising System - A revolutionary method to develop long term strategic vision for corporations.

 

Rafael Barrilero Yarnoz

 

Rafael Barrilero Yarnoz was appointed to the Board 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

 

7

 

 

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 16 (re-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. KPMG LLP has served as the Company’s statutory auditor since 27 June 2023 and the Board proposes to re-appoint KPMG LLP.

 

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 17 (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 LLP 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 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 entitled to attend, speak and vote at the Annual General Meeting. “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 21 May 2024. 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 21 May 2024 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.If two or more shareholders jointly hold shares in the Company, each shareholder may attend, speak and vote at the Annual General Meeting. However, if more than one joint holder votes, the only vote will count is the vote of the joint holder whose name is listed first on the register of members of the Company.

 

8

 

 

7.Any Shareholder of record attending the Annual General Meeting has the right to speak and to ask questions.

 

8.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.

 

9.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.

 

10.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.

 

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

 

12.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.

 

13.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.

 

14.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 appoint and 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.

 

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Appointing a proxy in this way will ensure that your vote is recorded but will not prevent you from attending and voting at the meeting in person or electronically. As set out below, the attendance of the Annual General Meeting in person will constitute a revocation of appointment of proxy.

 

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, 17 June 2024. 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, 17 June 2024.

 

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 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.

 

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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. Copies of the forms of buyback contracts which shareholders are being asked to approve will be made available for shareholders to inspect at Ferroglobe’s registered office at 5 Fleet Place, London, EC4M 7RD for the period from 3 June 2024 until the date of the Annual General Meeting. Copies of the forms of contracts will also be available for inspection at the Annual General Meeting.

 

By order of the Board,

 

Thomas Wiesner

Company Secretary

 

20 May 2024

 

11

 

 

Exhibit 99.2

  

 

Ferroglobe PLC

Annual Report and Accounts 2023

 

 

 

 

Company Registration No. 09425113

 

Ferroglobe PLC

 

Annual Report and Accounts

 

Year ended 31 December 2023

 

 

 

 

Ferroglobe PLC

 

Annual Report and Accounts 2023

 

 

Contents Page No.
   
Glossary and definitions 2
   
Officers and professional advisers 5
   
Introduction 6
   
Chairman’s letter to shareholders 7
   
Strategic report (including section 172 statement) 9
   
Directors’ report 24
   
The Board of Directors 29
   
Directors’ remuneration report 35
   
Independent auditor’s report to the members of Ferroglobe PLC 62
   
Consolidated financial statements 70
   
Notes to the consolidated financial statements 76
   
Parent company financial statements 143
   
Notes to the parent company financial statements 146
   
Appendix 1 — Non-IFRS financial metrics 153

 

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):

 

“2023” the financial year ended 31 December 2023;
   
“2022 the financial year ended 31 December 2022;
   
“2024 AGM the Annual General Meeting of the Company, to be held in 2024;
   
“2023 Form 20-F” the Company’s Form 20-F for the fiscal year ended 31 December 2023;
   
“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 2023;  
   
“Articles” the Articles of Association of the Company, from time to time;
   
“Auditor” KPMG LLP., the Company’s independent U.K. statutory auditor;
   
“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;
   
“Companies Act” the U.K. Companies Act 2006;

 

2

 

 

“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 2023;
   
“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;  
   
“Ferroglobe Spain Metals” or “Predecessor” Ferroglobe Spain Metals (formerly 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;
   
“Ferroglobe USA” or “Globe” or “GSM” Ferroglobe USA (formerly 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 (excluding factoring programs), debt instruments,  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;
   
“Subactivity” incremental cost incurred at the plants in special circumstances, such as unscheduled shutdowns due to an unexpected breakdown that needs to be repaired, and idling facilities/mothball;
   
“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 2023, 2022 and 2021 and for each of the years ended 31 December 2023, 2022 and 2021, 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 2023

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  
KPMG LLP  
Statutory Auditor  
15 Canada Square
E14 5GL 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 2023 and ending 31 December 2023), which together comprise our U.K. annual reports and accounts for the period ended 31 December 2023 (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 2023 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 2023 Form 20-F to assist shareholders in assessing the Group’s performance and results. Investors may obtain the full 2023 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 capitalized 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,

 

First, I want to thank our most valuable asset, the employees, for their strong commitment and contribution to Ferroglobe. Your dedication has enabled the company to continue providing excellent service to our customers across the globe, and with your resilience, we have made significant progress as a company. Together, we are building a stronger, more efficient, competitive and sustainable Ferroglobe. I would be remiss if I didn’t also thank our partners, suppliers and shareholders who have continued to support our journey over the past years.

 

Across the globe, 2023 was another year of significant uncertainties and challenges on multiple fronts, both geopolitical and economic. The war continued in Ukraine, a new conflict erupted in the Middle East, and inflation led central banks to increase interest rates with many countries experiencing slowing economic growth. In spite of these difficulties, we remain steadfast in our mission to drive innovation of critical materials essential to a sustainable future..

 

2023 PERFORMANCE

 

After the record-breaking performance in 2022, we had another successful year in 2023 despite declining prices throughout most of the year.

 

For the full year, consolidated revenue decreased 36%, from $2,598 million in 2022 to $1,650 million in 2023, adjusted EBITDA fell from $860 million in 2022 to $315 million in 2023, and consolidated operating profit of $660 million in 2022 contracted to $197 million in 2023 due to soft market conditions, which affected prices and volumes.

 

Even though our profitability declined in 2023, we still posted a solid EBITDA and, more importantly, continued to deliver strong cash flow during the year with an operating cash flow of $178 million and free cash flow of $95 million. These strong results were made possible by the strategy we began executing in prior years to optimize our footprint, focus on continuous improvement, and embrace commercial excellence while rightsizing our cost structure.

 

There are more details on the Company’s key performance indicators on page 153.

 

STRENGTHENING OUR BALANCE SHEET

 

Ferroglobe strengthened its financial position during the year by successfully executing its strategy to reduce debt. By redeeming $150 million of senior secured notes in July, we ended the year with $252 million of adjusted gross debt, representing a debt reduction of $207 million during 2023.

 

In February 2024, we reached a significant milestone by eliminating the remaining $148 million of these senior secured notes, reducing our adjusted gross debt to less than $100 million, while maintaining a comfortable cash position. Continued strong cash flow generation also allowed us to implement a quarterly dividend with an initial quarterly dividend of $0.013 per share, which was paid on March 2024.

 

Our liquidity is further bolstered by our $100 million asset-based revolving credit facility with the Bank of Montreal. This covenant-light credit facility is undrawn, providing the flexibility we need to execute our plan.

 

DELIVERING ON ESG

 

We are proud to announce that we published our second Global ESG Report in 2023. We are making great strides in our environmental, social and governance disclosure as we continue to enhance our approach and improve our reporting and tracking of key metrics. The report outlines our ESG strategy which is built upon four fundamental pillars:

 

·Strengthening our governance framework;

 

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·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 have made great progress over the last years on various important ESG initiatives to reduce Ferroglobe’s greenhouse gas emissions and increase our usage of electricity from renewable sources, which is a critical part of our mission to be a responsible, sustainable corporate citizen. It is highly important in our value chain, from suppliers to our customers, to manage our carbon footprint to satisfy the needs of all our constituents. We are proud of the progress we have made in a short period of time.

 

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

 

The markets remain challenging into 2024 with macroeconomic uncertainty still present. However, we have seen our customers restocking and some price recovery in the early part of the year. It’s likely that some of the price recovery has been helped by supply disruptions due to a silicon plant fire in Norway and interruptions in normal shipping routes through the Suez Canal. We believe the European markets for our products reached the trough in September 2023 and have shown steady price improvement since that time. The US market was slower to recover with its trough likely occurring in December 2023 with modest price appreciation in the first part of 2024.

 

We are in an excellent position with our diversified footprint to take advantage of global demand growth in the coming years as an increasing number of countries accelerate their green transition through solar energy or electric vehicle adoption utilizing advanced silicon composite or silicon-rich battery technology. We believe this secular trend, with the support of governments' onshoring encouragement, will see significant long-term growth.

 

On behalf of our board of directors, I would like to express my sincere gratitude to all our stakeholders for your continued support, dedication and confidence in our company. We will remain agile and resilient, adjusting to the evolving market environment. Together, we will strive to create more value for all our shareholders, partners and employees.

 

Javier López Madrid

Executive Chairman

 

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Strategic report

 

This strategic report for the financial year to 31 December 2023 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 2023 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 impacts all the functional areas of our Company as we seek to drive changes that ensure competitiveness throughout the cycle. Since 2021, the Company has successfully been delivering on its strategic EBITDA improvement projects, yielding positive EBITDA of $270,472 thousand, $742,106 thousand and $128,714 thousand, for the years ended December 31, 2023, 2022 and 2021, respectively. These consecutive positive results reflect the Company’s turnaround and commitment to executing on its strategic plan, which is driven by the following key areas:

 

·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. Prospectively, 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 procurement: Our centralized procurement process enhances the effectiveness of our spending efforts, improves our ability to schedule purchases and enables 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. In addition to cost reductions, our campaign to spend better will reduce supply chain risk, supporting continuous quality and service improvement, fostering better decision-making about suppliers and optimizing resource allocation.

 

·Other operating expenses 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 discipline for deploying best practices to drive sound spending decisions without compromising our overall performance.

 

·Working capital improvement: The Company continues to focus on and improve its 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.

 

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 2023 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 2023 Form 20-F included in the separate attachment provides a fair review of the Company’s business and its development and performance during 2023.

 

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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 in terms of cost as a percentage of sales. 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. For example, at certain plants, production must be modulated to reduce consumption of energy in peak hours or in seasons with higher energy prices, in order for us to maintain profitability. In general, high or volatile energy costs in the countries in which we operate could lead to erosion of margins and volumes, leading to a potential reduction in market share.

 

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.

 

Ferroglobe benefits from antidumping and countervailing duty orders and laws that protect its business and products by imposing special duties on unfairly traded imports from certain countries. See “Item 4.B.—Information on the Company—Business Overview—Regulatory Matters—Trade” for additional information.

 

These orders may be subject to revision, revocation or rescission at any time, including through periodic governmental reviews and proceedings. Current antidumping and countervailing duty orders thus (i) may not remain in effect and continue to be enforced from year to year, (ii) may change the covered products and countries under current orders, and (iii) may reassess duties.

 

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 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 2023 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 2023 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 2023 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

 

·Adjusted Gross Debt

 

·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 2023. Refer to Appendix 1 for reconciliations of these non-IFRS measures.

 

Adjusted
EBITDA
  Adjusted
EBITDA
Margin
  Working
Capital
  Free Cash-
Flow
($m)     ($m)  ($m)
315.2  19.1%  510.7  94.7
(2022: 860.0)  (2022: 33.1%)  (2022: 705.9)  (2022:352.9)

 

Reported
EBITDA  
  Net
Income
  Adjusted Gross
Debt
  Net Debt to
Total Assets
  Net Debt to
Capital
($m)   ($m)   ($m)        
262.9   98.5   252.0   6.5%   11.6%
(2022: 732.1)   (2022: 443.8)   (2022: 459.0)   (2022: 6.9%)   (2022:15.2%)

 

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 2023, 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 35.

 

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 2023, the Group had:

 

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

 

·315 senior managers, of whom 240 are male and 75 are female; and

 

·3,184 employees, of whom 2,857 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 2023 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 2023 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 partnerships, 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.

 

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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 2023 four representative directors on the Board through whom views and input can 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.

 

Non-Financial and Sustainability Information Statement

 

Ferroglobe Plc (hereinafter referred to as Ferroglobe or the Company) is a leading global producer of advanced metallurgical products. The Company is the largest merchant producer of silicon metal in the Western World, and a leading global producer of silicon-based alloys and manganese-based alloys. The Company’s main activity is to transform minerals into advanced materials that are critical in modern society, and sell those products worldwide, to a varied range of industries, including the manufacturing of steel, iron, aluminium and semiconductors and silicone compounds, among others. Ferroglobe’s worldwide operations include assets in Argentina, Canada, China, France, Venezuela, Norway, South Africa, Spain, and the United States. Production sites include 18 mining sites, 23 electrometallurgical plants, an electrode production plant and two hydro stations, with corporate offices in London and Madrid.

 

Regarding the supply chain, Ferroglobe’s operations depend on two main types of raw materials: carbon reductants, such as coal, wood, charcoal, metallurgical coke, petroleum coke and anthracite; and minerals, such as quartz and manganese ore. At the Company’s mining sites, raw materials such as metallurgical coal and quartz are extracted, partially covering production demand. When local mining production cannot fulfil that demand, the Company relies on a network of qualified suppliers in each geographical region to ensure reliable access to high quality and sustainable raw materials.

 

a.A description of governance arrangements of the company in relation to assessing and managing climate-related risks and opportunities

 

In 2022, the ESG Steering Committee was established with the mission of overseeing and managing the implementation of the Ferroglobe’s ESG strategy, including the management of climate-related risks and opportunities within the purview of the Sustainability Area's management.

 

The Sustainability Area, within the Technology and Innovation division, leads the identification and assessment of climate-related risks and opportunities. Furthermore, the Finance division works in tandem with the Sustainability Area in coordinating the integration of climate change risks results into the Company's Enterprise Risk Management (ERM), and presents them annually to the Audit Committee (AC) and to the Board of Directors

 

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b.A description of how the company identifies, assesses, and manages climate-related risks and opportunities.

 

The methodology considered for identifying and assessing climate-related risks and opportunities is semi-quantitative and aligned with IPCC technical guidelines. It has been applied at the group level but has taken into consideration each of the Company’s production sites. This analysis is required to be updated annually.

 

The first step was to identify the current and potential risks and opportunities to which the Company may be exposed. This involved obtaining a preliminary list of risks and opportunities through a review of standards and regulations, as well as a benchmarking process and professional expertise. For physical climate risks, the EU Taxonomy (climate act) was taken as the key anchor. For transition risks and opportunities, the Task Force for Climate-related Financial Disclosure (TCFD) was the main reference.

 

The second step was to calculate the inherent and residual level of risk for physical and transition risks. For physical risks, the considered factors have included the following variables: impact, exposure, vulnerability, and adaptation; and for transition risks, the considered variables include impact, probability, and mitigation. In the case of opportunities, the factors considered were benefits and probability to determine the level of success.

 

Finally, risks have been prioritised according to the residual level obtained for physical and transition risks. In the case of opportunities, the prioritisation was based on the level of success.

 

The results of the analysis of climate-related risks and opportunities are expected to be overseen specifically by the ESG Steering Committee and included in the annual reports presented to the Board. Additionally, they will be integrated into the Corporate Risk Matrix, in accordance with the Company’s Enterprise Risk Management (ERM) Framework.

 

c.A description of how processes for identifying, assessing, and managing climate-related risks are integrated into overall risk management process in the company

 

Ferroglobe applies a group-wide approach to managing risks through an ERM framework, which is largely based upon the ISO 31000 – Risk Management Standard. The Company’s purpose is to continuously develop its risk management approach through a systematic framework geared towards the most inherent risks. Taking this approach provides greater visibility and increased risk awareness, ensures the appropriate management of risks, enables risks to be aggregated and allows the Company to take a portfolio approach to risk management.

 

Ferroglobe’s ERM framework allows the Company to proactively identify, assess and manage risks related to its broad range of activities. The prioritised risks are defined according to a specific ranking obtained through the assessment of each risk’s likelihood, expected impact and the strength of current controls, based on specific thresholds and criteria. As a result, risk control/mitigation involves one of four possible actions: tolerate, treat, transfer, or terminate the risk. Risk owners are responsible for the coordination of efforts to mitigate and manage those risks, as well as providing updates and identifying new risks.

 

Regarding the climate-related risks identified and assessed by the methodology described in the previous section (point b), the prioritised ones are then expected to be included in the globalised risk matrix.

 

d.A description of:

 

i.The principal climate-related risks and opportunities arising in connection with the operations of the company

 

 

ii.The time periods by reference to which those risks and opportunities are assessed

 

Physical risks: After screening the 28 climate-related hazards included in the Commission Delegated Regulation (EU) 2021/2139, of 4 June 20211, a total of 14 physical hazards were identified as considered relevant to Ferroglobe’s business (heat stress, temperature variability, heat waves, cold waves, wildfires, cyclones, storms, tornadoes, rainfall, sea level rise, water stress, drought, heavy precipitation, and floods).

 

 

1 The regulation establishes the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives. The list of climate-related hazards included is non-exhaustive and constitutes only an indicative list of most widespread hazards that are to be considered. 

 

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The physical hazards were assessed using climatic variables and their evolution over time under various climate scenarios. The time periods were defined in alignment with those considered by the Intergovernmental Panel on Climate Change (IPCC) in its studies and publications; short-term (2023-2040), medium-term (2041-2060), and long-term (2081-2100). The analysed climate scenarios were SSP2 – 4.5 (“medium emissions”) and SSP5 – 8.5 (“high emissions").

 

After applying the methodology previously described, sea level rise in the long term and drought in the short term have been identified as the most relevant physical risks. The former has been modelled using global projections of the extreme sea level rise. The latter has been modelled using available public water stress levels and projections for future dry spells which could result in low water levels and have effects in our operations such as reduced income due to water scarcity in operational processes, increased European coal prices, reduced the cooling operation of nuclear reactors in France, increasing energy costs and reduced production of hydroelectric dams, increasing energy costs in affected energy markets.

 

Nevertheless, in the past, the Company has experienced non-material direct impacts as a result of weather-related incidents in recent years. For example, heavy rains in Colombia occasionally create issues with transporting coal, an important raw material for our production. Flooding in South Africa and the United States has occasionally delayed transportation of raw materials or finished goods. Similarly, snow events have temporarily delayed transportation. Heat wave incidents have required the Company to adapt working conditions and operating hours.

 

Therefore, the Company has not identified or experienced any material2 physical effects of climate change on its operations or results, including, as a result of severe weather, weather-related damages to our property or operations, indirect weather-related impacts affecting major customers or suppliers, or material weather-related impacts on the cost or availability of insurance.

 

Moreover, any weather-related damages have been de minimis and represented substantially less than 1% of the other operating expense line item in each of the years ended December 31, 2020, 2021, 2022, and 2023, which reflect the immaterial nature of any such incidents. The Company has prepared and reviewed an internal analysis of potential risk factors associated with climate. Although climate could present an impact in the long-term, in the near future, we do not expect a material impact on our business.

 

Regarding adaptive capacity, Ferroglobe assesses and manages the effects of natural disasters and extreme weather conditions through its integrated, company-wide control and risk management process. Moreover, the Company conducts preparedness planning and implements measures designed to maintain business continuity and mitigate the financial impacts of natural disasters and extreme weather conditions, which may include physical climate-related risks. Specifically, Ferroglobe’s sites and operations have already organically developed adaptive measures such as installation of pumps, or construction of protective infrastructure to manage flooding, air conditioning, increased stock capacity, and implementation of transportation and logistic alternatives.

 

Transition risks: After screening the 15 climate-related transition risks by the Task Force on Climate-Related Financial Disclosures (TCFD), a total of 10 transition risks were identified as considered particularly relevant to Ferroglobe’s business.

 

The transition risks were assessed using the International Energy Agency´s (IEA) Stated Policies Scenario (STEPS) and the Net Zero Scenario in the short term (2023-2030) and long term (2050). After applying the methodology described in point b, as a result, the following 3 transition risks were prioritised, all of them related to increased cost or raw materials and market forces:

 

Reduced income and increased costs of production due to rising electricity prices and their impact in operations.
Possible increased cost of critical raw materials (as defined by the EU, the USA, Quebec): coking coal and manganese ore.

 

 

2 Material: Rule 405 under the Securities Act defined the term “material” as follows: “When used to qualify a requirement for the furnishing of information as to any subject, [materiality] limits the information required to those matters to which an average prudent investor ought reasonably to be informed before purchasing the security registered.”

 

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Possible increased costs associated with a worldwide rise in the demand for wood, which is a substitution for biocarbon instead of coal as a carbon reductant.

 

In terms of mitigative capacities, Ferroglobe has developed the Decarbonization Plan (2024 – 2030)3, which is mainly based in substituting the carbon needed in the electrometallurgical process from fossil (coal) to biological sources (bio reductants), improving and maintaining the most efficient process performance, related to energy consumption, through the KTM (Key Technical Metrics) project, and increasing the renewable and low carbon energy mix. These actions are also expected to reduce exposure to carbon pricing risks.

 

Opportunities: After screening 21 climate-related opportunity categories by the Task Force on Climate-Related Financial Disclosures (TCFD), a total of 4 opportunities were identified to be particularly relevant to Ferroglobe’s business.

 

The opportunities were assessed using the Stated Policies Scenario (STEPS) and the Net Zero Scenario in the short term (2023-2030) and long term (2050) from the International Energy Agency (IEA). After applying the methodology described in point b, as a result, the following 3 opportunities were prioritised:

 

Use of lower-emission sources of energy: Reduction in costs due to the deployment of renewable energy sources in operations.
Development of new products, markets and applications through R&D and innovation: Increased revenue associated with development and deployment of lighter products for transport sector (battery technology including use of high purity silicon anodes), facilitating the substitution of steel and other carbon-intensive metals.
Development and/or expansion of low emission products: Increased revenue associated with the deployment of silicon-based products for energy storage and other transition technologies. In addition, given that Ferroglobe supplies silicon metal to manufacturers of photovoltaic products, increased demand for generation and transmission of energy from solar energy tends to increase demand for Ferroglobe’s silicon metal products.

 

e.A description of the actual and potential impacts of the principal climate-related risks and opportunities on the business model and strategy of the company

 

Based on historical data on operations, Ferroglobe has identified that physical risks such as heavy rains, floods, snow, and heat waves are the most recurring. They have impacted mainly production plants and mines, generating a loss of profit derived from ceasing operations and/or increasing costs in repairments and capital expenditures.

 

These events have encouraged Ferroglobe to develop and implement adaptive and migration measures to better respond to those risks. Therefore, the Company has organically included climate-related issues as an input to its financial planning process through CapEx investments and funds for specific use in climate adaptation and mitigation, prioritising adaptation plans to better adequate sites to previously occurring natural phenomena.

 

In terms of resilience, the Company's strategies may be confronted with disruptions in financial performance. Such disruptions include reduced revenue due to halted operations or increased costs and expenses related to raw material and carbon prices, as well as changes in financial position due to assets exposed to climate risks. Moreover, as already described, the Company has already conducted a climate change analysis and has established an organisational area responsible for identifying, assessing, and managing climate-related risk and opportunities to inform the Company when an alert would be necessary. Until now, the climate-related impacts have been short-term, and no operational contingency plans have been needed to be employed, the effects of the incidents have not been tracked or analysed by the Company, and Ferroglobe is unable to separately quantify any related costs.

 

f.An analysis of the resilience of the business model and strategy of the company, taking into account consideration of different climate-related scenarios

 

To assess the risk level for each climate-related risk, specific scenarios were used depending on whether they were physical or transition-related.

 

 

3 Details about the Ferroglobe’s Decarbonization Plan are expected to be included in the Global ESG Report for the fiscal year 2023.

 

20

 

 

For physical climate risks, IPCC scenarios SSP2-4.5 and SSP5-8.5 were followed. These correspond to scenarios integrating socioeconomic (SSP4) and emission concentration pathways (RCP5), to evaluate the behaviour of different climatic variables in the short term (2023-2040), medium term (2041-2060), and long term (2081-2100).

 

RCPs describe possible concentrations of greenhouse gases in the atmosphere and their impact on radiative forcing. In turn, SSPs have been built to model the evolution of socioeconomic factors based on assumptions about demographic and socioeconomic development, technological evolution, energy and land use, as well as emissions of greenhouse gases and air pollutants.

 

Specifically, data for each scenario and timeframe was mainly obtained from IPCC and Copernicus, as key scientific public data. Furthermore, additional data from other agencies, such as the Spanish and French ministries for Ecological Transition, the US Environmental Protection Agency, and NASA’s Earth Observation Program, World Bank (Think Hazard) were also obtained. These data were used to model exposure of Ferroglobe’s assets at their specific locations to climatic variables (temperature, precipitations, among multiple other variables). Following the mentioned methodology (refer to point b), those exposure values were then integrated with the impact and vulnerability to calculate the inherent risk level for each asset.

 

For transition risks, the IEA World Energy Outlook (2023) Net Zero Emissions by 2050 Scenario and the Stated Policies Scenario (STEPS) were used to model key legislative and economic variables in the short term (2024-2030), and long-term (2050). These scenarios present relevant hypothetical, consistent, and plausible futures of the evolution of greenhouse gas emissions and their main drivers, based on assumptions regarding policy, macroeconomics, and demographic studies. Based on the evolution of those variables in each scenario, potential impact and probability levels were established to conduct a qualitative analysis, following the methodology described in point b.

 

Under the above described scenarios, once the inherent risk level was calculated for each risk, both physical and transitional, the Company’s adaptation and mitigation actions were assessed in terms of availability and coverage to evaluate the possible reduction of the inherent risk level. The level of inherent risk was then attenuated using the resulting adaptive or mitigative capacity of each of the sites to obtain the residual risk level, which in turn would be used to prioritise the risks. As mentioned in a previous section, all Ferroglobe sites contemplate organically developed adaptive measures and in terms of mitigative capacities, Ferroglobe has developed and approved a Decarbonization Plan (2024 – 2030).

 

g.A description of the targets used by the company to manage climate-related risks and to realise climate-related opportunities and of performance against those targets

 

Ferroglobe’s Decarbonization Plan is expected to be included in the Global ESG Report for the fiscal year 2023. Therefore, some targets related to the different levers of the plan will be included: % of renewable or low carbon energy in operations, % of substitution of coal by bio reductants, specific energy efficiency indicators and energy recovery.

 

With regard to opportunities, the Technology and Innovation Division has invested in a variety of projects. In 2022, the Company invested $5.7M towards cutting-edge research and $7.6 M for process improvement and innovation. Ferroglobe has joined several partnership and cooperation agreements with recognised universities and research centres in Spain, France, and other countries worldwide. Furthermore, our efforts have received support from European, national and regional public research programs. Notably, the European Commission recognised the strategic significance of our Silicon for Batteries Project under the Important Projects of Common European Interest (IPCEI) Program in 2021.

 

h.The key performance indicators used to assess progress against targets used to manage climate-related risks and realise climate-related opportunities and a description of the calculations on which those key performance indicators are based

 

The following Key Performance Indicators (KPIs) are expected to be implemented, measured, and tracked in order to assess Company progress in relation to climate-related risks and opportunities.

 

 

4 Shared Socio-economic Pathways

5 Representative Concentration Pathways

 

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Type Category KPIs
Physical climate risks Chronic Historical total financial impacts in the past rolling 3 years6
Acute
Transition climate
risks
GHG emissions Scope 1, 2 and 3 emissions (tons CO2e)
Purchases or sales of carbon credits or offsets Price in the fiscal year (€/tCO2e)
Cost or availability of insurance Difference between insurer’s earned premiums and expenses and claims.
Changes in raw material cost Wood, manganese ore, and coking coal (%)
Technology developments CapEx (M€)
Climate - related
opportunities
Renewable energy Electricity consumption derived from renewable energy sources (%)
New products/services Increased revenue associated with development and deployment of lighter products for the transport sector.
Product deployment towards use in transition technologies Increased revenue associated with the deployment of silicon-based products for energy storage and other transition technologies.

 

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.

 

 

6 Financial impacts are defined as total economic impact including damages and losses due to a cease in operations.

 

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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;
·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 2023 has been reviewed and approved by the Board on 20 May 2024.

 

Javier Lopez Madrid

 

Director

 

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Directors’ report

 

The Directors present their report and the audited financial statements of the Group and Company for the year ended 31 December 2023. The Directors do not need to comply with Corporate Governance requirements.

 

The Directors’ Report comprises these pages (24 to 28) 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 23). 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 2023, 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       Non-Executive Director
Silvia Villar-Mir de Fuentes Non-Executive Director
Belén Villalonga Morenés Non-Executive Director

 

The biographies of our directors as at the date of this report are set out on pages 29 to 34. Details of the directors standing for election or re-election at our 2024 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 2023 and 2022 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.

 

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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 2018, 2019, 2020, 2021, 2022 and 2023 is included in Table 2 in this report. As in the period 2018-2022, the 2023 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 partnerships 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:

 

·Electricity purchased or produced by Ferroglobe facilities

 

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·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 2023

 

Global GHG emissions data for period 1 January 2023 to 31 December 2023

 

Emissions From: Tonnes of CO2e
   

Combustion of fuel and operation of facilities

1,705,504*
Electricity, heat, steam and cooling purchased for own use 1,617,429

Company’s chosen intensity measurement:

Emissions reported above normalized to per tonne of product output

5.10

 

*In line with DEFRA Guidance, 1.0 million 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 2018-2023

 

Global GHG emissions data for period 1 January to 31 December 2020-2023

 

Emissions From: 2020 2021 2022 2023
  Tonnes of CO2e

Combustion of fuel and operation of facilities

 

1,701,763

***

2,197,734

****

2,028,556

*****

1,705,504

*****

Electricity, heat, steam and cooling purchased for own use 1,282,333 1,228,600 1,184,366 1,617,429
Energy Consumption (MWh) 5,365,791 6,854,806 6,479,769 5,832,331

Company’s chosen intensity measurement:

Emissions reported above normalized to per tonne of product output

4.92 4.42 4.50 5.10

 

The emissions and energy consumption correspond to Ferroglobe´s plants and mining operations all outside the United Kingdom.

 

*In line with DEFRA Guidance, 1.5 million tonnes of CO2e are not included in the above table, due to being biogenic in nature.

**In line with DEFRA Guidance, 944,997 tonnes of CO2e are not included in the above table, due to being biogenic in nature.

*** 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.

**** In line with DEFRA Guidance, 1.0 million tonnes of CO2e are not included in the above table, due to being biogenic in nature.

 

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.

 

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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

 

Full redemption of the Company’s remaining 9.375% Senior Secured Notes Due 2025

 

In February 2024, the Company completed the full redemption of the 9.375% Senior Secured Notes due 2025 at 102.34375% of the principal amount plus accrued interest. The issuers elected to redeem an aggregate principal amount of $147,624 thousand of the Notes, the entire amount outstanding as of the redemption date, plus accrued and unpaid interest and call premium of $4,075 thousand. The Notes were fully redeemed from the Company’s cash and cash equivalents.

 

Dividend payment

 

In March 2024, the Company distributed dividends to its ordinary shareholders totaling $2,428 thousand.

 

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 2023 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.

 

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 2023 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 2023 is set out at Note 13 to the Consolidated Financial Statements.

 

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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.

 

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 20 May 2024

 

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

 

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.

 

29

 

 

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.

 

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 Specialty Metals 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 Hillary Clinton and then Secretary of State John 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 served on the Defense Policy Board in the Obama administration from 2014-2017. He currently serves as Special Adviser on Holocaust Issues to Secretary of State Antony Blinken and as Chairman of the Council of United States Holocaust Memorial Museum, appointed by President Biden. 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”, “President Carter: The White House Years”, and "The Art of Diplomacy: How American Negotiators Reached Historic Agreements that Changed the World".

 

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 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 has been 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.

 

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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.

 

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 has served as Chairman and 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.

 

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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 18,000 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 corporate vision & strategy, disruptive innovation, global branding, business model innovation, sustainability and corporate culture transformation.

 

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 Megavision® Enterprise Futurising System - A revolutionary method to develop long term strategic vision for corporations.

 

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.

 

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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.

 

Directors’ responsibilities

 

The directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under current U.K. law, the directors have elected to prepare the Group financial statements in accordance with UK-adopted international accounting standards and applicable law and they have elected to prepare the parent Company financial statements in accordance with UK accounting standards and applicable law, including FRS 101 Reduced Disclosure Framework.

 

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 parent Company and of the Group’s profit or loss for that period. In preparing each of the Group and parent Company financial statements, the directors are required to:

 

·     select suitable accounting policies and then apply them consistently;

 

·     make judgements and estimates that are reasonable, relevant and reliable, and, in respect of the parent Company financial statements only, prudent;

 

·     for the Group financial statements, state whether they have been prepared in accordance with UK-adopted international accounting standards;

 

·     for the parent Company financial statements, state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

 

·     assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

 

·     use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

 

Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report and a Directors’ Report that complies with that law and those regulations.

 

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The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The responsibility statement was approved by the Board and signed on its behalf.

 

By order of the Board on 20 May 2024

 

Javier Lopez Madrid

 

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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 2023. 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 2023; 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 37 to 49 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 2022 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 2023

 

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.

 

Short term incentive awards for 2023

 

The annual short term incentive objectives for the Executive Chairman and CEO in 2023 were EBITDA in relation to 50% of the award, net cash flow in relation to 50%. The Executive Directors achieved performance of (75.64%) of their target bonus opportunities. We believe these outcomes are justified by the exceptional performance of the Company during a year that experienced deterioration in market conditions for the Company’s products. Management took exceptional measures to promptly react to such market deterioration and preserve the Company’s financial condition and results of operations. Moreover, in 2023 the Board took some exceptional decisions that impacted net cash flow, one of the key financial performance indicators that had been set for the 2023 short term incentives. During 2023 the Company repaid $232 million of its long-term debt, an exceptional accomplishment. For purposes of evaluating the 2023 short-term incentive performance conditions, net cash flow was adjusted by $90 million to reflect excess debt repayment over the amount that had been previously budgeted, as well as by $154 million related to the French energy rebate that was recognized in 2023 with cash received in January 2024. See the ARR for more on the 2023 short term incentive outturn.

 

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LTIPs vesting in 2023

 

No awards under the EIP vested during the year ended 31 December 2023.

 

Awards granted to our Executive Directors in 2021 under the EIP came to the end of their performance period on 31 December 2021 and vested in 1 January 2024. The Committee assessed their performance at 100% of target, and the awards vested and became exercisable. As of December 31, 2023, the awards to our Executive Chairman and our CEO have not been exercised.

 

Non-Executive Directors and their remuneration

 

No changes to NED fees were proposed during 2023. 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 2024

 

We care deeply about our workforce and our role in and our local and global communities. Throughout the year the Committee has carefully considered the wider economic climate and fairness of our remuneration policies. In order to promote the Company’s safety environment and broader ESG goals, we instituted an ESG-related performance measure to the long term incentive plan grant for the first time in 2022 with a safety measure, and in 2023 we employed an ESG performance indicator tied to execution of the broader ESG strategy. For the 2024 grant under the EIP, which is expected to be approved in the coming months, we will again include an ESG-related performance indicator.

 

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 the Policy tends to provide limits significantly in excess of grants actually made. For example, while the Policy provides that short term incentive awards cannot be more than 500% of salary, the Committee has consistently applied a maximum limit of 150% to awards to our Executive Directors in recent years.

 

In 2024, the Committee and the Board approved an increase in the base salary of the Executive Chairman, Javier Lopez Madrid, in the amount of £18,000 (3%) annually, and an increase in the base salary of the CEO, Marco Levi, in the amount of €25,000 (3%) annually effective as of 1 April 2024. In both cases, the increases were in line with increases for the general workforce and consistent with market practice for the Company’s industry.

 

During 2023, the Company continued to increase engagement with shareholders with increased participation in investor conferences and many more meetings with investors than in prior years. 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 2024 AGM.

 

Signed on behalf of the Board.

Chairman of the Compensation Committee

20 May 2024

 

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The Policy

 

This section of the Directors’ Remuneration Report on pages 37 to 49 sets out the Directors’ Remuneration Policy which was 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.

 

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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.

 

 

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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 2024 financial year.

 

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In respect of the remuneration of the Executive Chairman:

 

 

 

In respect of the remuneration of the CEO:

 

 

 

 

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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 6.3% of base salary for Javier Lopez Madrid and 4.7% 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, and long-term incentives of 200% of base salary, for the Executive Chairman and the CEO.

 

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 2023 no such awards have been made to the Executive Directors and none is to be made in respect of 2023.

 

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.

 

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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.

 

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.

 

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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.

 

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.

 

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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.

 

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 2022 Policy has been formulated taking into account the Company’s understanding of current shareholder views on the Company’s remuneration policy and practices.

 

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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.  
       
    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.  

 

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Purpose and link
to strategy

Operation and maximum
opportunity
Performance framework
and recovery
       
Element      
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.  

 

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 2023 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.

 

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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.

 

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Annual Report on Remuneration

 

Implementation of the Directors’ Remuneration Policy for the year ending 31 December 2023

 

This section sets out how the Committee intends to implement the Policy for the year ending 31 December 2023.

 

Base salary

 

Javier López Madrid was appointed as Executive Chairman with effect from 31 December 2016. Javier López Madrid’s salary was reviewed in 2024 and was increased from £599,400 ($745,902) to £617,400 ($768,046) per annum effective 1st April 2024.

 

Marco Levi's base salary as CEO was reviewed in 2024 and was increased from EUR816,000 ($882,341) per annum to EUR841,000 ($909,978) per annum effective April 1, 2024.

 

Neither Javier Lopez Madrid nor Marco Levi received any additional fees or compensation for their respective roles on the Board. See “Looking forward to 2024” 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. In addition, they receive health insurance, income protection and life assurance benefits to the value of approximately 6.3% of salary for the Executive Chairman and 4.7% 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 2024 annual short-term incentives were determined by the Compensation Committee and the Board on 22 February 2024. 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 significantly below limits in the Policy. The performance indicators for the Executive Directors are 2024 adjusted EBITDA, accounting for 50% weighting, and 2024 adjusted free cash flow, accounting for 50% weighting.

 

Long-term incentives

 

The 2024 long-term incentive grant has not yet been approved by the Compensation Committee and the Board, which are expected to do so in the coming weeks or months. The awards are expected to be 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 expected to be 100% of base salary as target and 200% of base salary as maximum in the case of the Executive Directors. Performance conditions are expected to comprise long-term key financial indicators and relative total shareholder return relative to a comparator group. All performance conditions are expected to be measured over the January 1, 2024 to December 31, 2026 period. In addition, the grants are expected to be subject to a multiplier, which multiplier can both reduce or increase the total amount of payouts.

 

Like in 2022 and 2023, the relative TSR performance condition is expected to be 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.

 

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The inclusion of earnings and cash flow measures in both the short term incentive and long term incentive grants for 2024 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 in early 2024.

 

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 2024 are the same as those for 2023, 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 Nominations and Governance Committee £15,500 ($19,172)
Member of Corporate Governance Committee £12,000 ($14,843)
Member of Nominations Committee1   £1,500 ($1,855 per meeting, subject to an annual cap of £10,000 ($12,369))
Committee Chairperson Two times committee membership fee
   
Extraordinary meetings (per meeting)  
In person meetings £2,500 ($3,092)
Meetings by videoconference/telephone £1,250 ($1,546)
   
Travel fee (per meeting)  
Intercontinental travel £3,500 ($4,329)
Continental travel £1,500 ($1,855)

 

Notes:

 

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

 

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Remuneration paid in respect of the year to 31 December 2023

 

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 2023 and 31 December 2022. The emoluments shown for 2023 have been converted to USD at the Group’s average rate for year to 31 December 2023 of GBP1:USD1.244. Those for 2022 were converted at the rate of GBP1:USD1.2369 in accordance with the 2022 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:USD1.0813 and to GBP at the Group’s rate of €1:GBP0.86979.

 

   Salary1
(USD 000s)
   Benefits 2
(USD 000s)
   Pension3
(USD 000s)
   Short-term
incentives
(USD 000s)
   Long-term
incentives4
(USD 000s)
   Total
(USD 000s)
 
Executive Director  2023   2022   2023   2022   2023   2022   2023   2022   2023   2022   2023   2022 
Javier López Madrid   746    685    196    181    149    137    565    986    0    0    1,656    1,989 
Marco Levi   882    842    41    27    176    168    668    1,209    0    0    1,767    2,246 

 

   Total
Fixed Remuneration
   Total
Variable Remuneration
   Total
Remuneration
 
Executive Director  2023   2022   2023   2022   2023   2022 
Javier López Madrid   1,091    1,003    565    986    1,656    1,989 
Marco Levi   1,099    1,037    668    1,209    1,767    2,246 

 

(1)For Javier López Madrid, benefits include an expatriate allowance of 20% of salary (£119,180 ($149,180 in 2023), and medical insurance and life assurance coverage as benefits. For Marco Levi, benefits include medical and life assurance coverage as benefits.
(2)For 2023 the pensions for Javier López Madrid and Marco Levi are 20% of base salary, paid as a cash supplement.
(3)No long-term incentive awards had performance periods concluding in either 2023 or 2022. The performance period of the 2021 long-term incentive awards ended on 31 December 2021 and the awards vested on 1 January 2024 as to 100%. The performance period of the 2020 long-term incentive awards ended on 31 December 2020 and are expected to vest on 16 December 2024. The performance conditions of the 2020 awards were previously assessed at 31.92%.

 

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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 2023 and 31 December 2022.

 

   Fees ($’000)   Benefits ($’000)1   Total ($’000) 
Non-Executive Directors  2023   2022   2023   2022   2023   2022 
Bruce L Crockett   219    204    22    22    241    226 
Stuart E Eizenstat   113    107    9    9    122    115 
Manuel Garrido y Ruano   99    103    5    5    104    108 
Rafael Barrilero   135    128    9    9    144    137 
Nicolas de Santis   124    111    -    -    124    111 
Juan Villar-Mir de Fuentes   91    88    4    4    95    92 
Marta Amusategui   139    129    9    9    148    138 
Silvia Villar-Mir de Fuentes 2   102    107    7    7    109    114 
Belén Villalonga Morenes   147    124    22    22    169    146 

 

(1)Benefits exclusively comprise travel allowances.

 

Short-term incentives for the financial year to 31 December 2023 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 2023 for each are detailed in the tables below. Final bonuses were approved by the Compensation Committee and Board on 206 and 27th February 2024and paid at 75,77%% of target for the Executive Chairman and CEO.

 

Performance targets and performance for the Executive Directors in 2023 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
 
Adjusted EBITDA   50%  $159 million   $345 million   $495 million   $315 million    91%
Adjusted Net cash-flow1   50%  $91 million   $191 million   $300 million   $109 million    57%

 

1.For purposes of evaluating the 2023 short-term incentive performance conditions, net cash flow was adjusted by the Committee to reflect (1) $142 million excess debt repayment over budget expectations; and (2) $154 million French energy rebate recognized in 2023 with cash received in January 2024.

 

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Long term incentive awards for the financial year ended 31 December 2023 – 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 2023 or that vested during 2023.

 

Awards granted in financial year 2023

 

On 30 May  2023 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 $745,902  $4.4515   222,623   333,935  $1,486,512  30 May 2026  1 January 2023 through 31 December 2025 
Marco Levi  Nil-cost option  200% of salary of $882,341  $4.4515   261,521   392,281  $1,746,240  30 May 2026  1 January 2023 through 31 December 2025 

 

2.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.
3.Converted at GBP1:USD1.24 and EUR1:USD1.07, being the exchange rate on the date of grant.
4.The share value at grant was determined based on the average of the closing prices of the 20 trading days prior to grant.
5.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.
6.See below for details of the performance conditions applicable to the awards.

 

The 2023 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 $353 million representing minimum and 60% payout, $588million representing target and 100% payout, and $822 million representing maximum and 150% payout. Results below $353 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 $649 million representing minimum and 60% payout, $1,082 million representing target and 100% payout, and $1,622 representing maximum and 150% payout. Results below $649 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.

 

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In addition, the grants are subject to a multiplier for successful completion of the Company’s ESG action plan 2023-2025 which can both reduce or increase the total amount of payouts. If 60% or less of the ESG action plan is completed by the end of 2025, awards will be subject to a multiplier of 90%. If 80% of the ESG action plan 2023-2025 is completed by the end of 2025, awards will be subject to a multiplier of 100%. If 100% of the ESG action plan 2023-2025 is completed by the end of 2025, 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 2023. 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
   Shareholding as
a % of base
salary
   Percentage of
Executive
Director’s
salary held as
shares as at
31 December 
20233
 
Javier López Madrid   278,538    802,288    523,366    -    245%
Marco Levi   100,000    489,465    631,802    -    76%
Bruce L. Crockett   46,000    2,527    -    372%     
Stuart E. Eizenstat   61,845    -    -    500%     
Manuel Garrido y Ruano   870    -    -    7%     
Marta de Amusategui y Vergara   78,220    -    -    633%     
Juan Villar Mir de Fuentes   -    -    -    0%     
Belen Villalonga   -    -    -    0%     
Nicolas De Santis   -    -    -    0%     
Silvia Villar Mir de Fuentes   49,400    -    -    400%     
Rafael Barrilero   -    -    -    0%     

 

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 and 2023 LTIP grants.
3.Measured by reference to beneficially owned shares only and using the closing share price on 29 December 2023 of $6.51 and the annual salaries of the Executive Directors in USD as disclosed in this U.K. Annual Report and Accounts.

 

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The Directors’ outstanding share awards as at 31 December 2023 were as detailed below:

 

Director   Award
type
  Grant
date
  Outstanding1     Subject to
performance
conditions2
  Exercisable
as of 31
December 2023
  Exercised
during the
year to 31
December 2023
    Future
vesting
    Vesting
date
 
Javier López Madrid   LTIP Nil cost option   24.11.16     28,1173     Yes   Yes             -       -       24.11.19  
    LTIP Nil cost option   01.06.17     70,4643     Yes   Yes     -       -       01.06.20  
    LTIP Nil cost option   21.03.18     46,7773     Yes   Yes     -       -       21.03.21  
    Deferred Bonus Award: Nil cost option   14.06.18     23,0663     No   Yes     -       -       14.06.21  
    LTIP Nil cost option   13.03.19     110,1133     Yes   Yes     -       -       28.04.22  
    LTIP Nil cost option   16.12.20     138,1403     Yes   No     -       138,140       16.12.24  
    LTIP Nil cost option   09.09.21     385,6114     Yes   No     -       385,611       01.01.24  
    LTIP Nil cost option   21.09.22     189,4315     Yes   No     -       189,431       22.09.25  
    LTIP Nil cost option   30.05.23     333,9355     Yes   No     -       333,935       30.05.26  
                                                 
Marco Levi   LTIP Nil cost option   16.12.20     130,3604     Yes   No     -       130,360       16.12.24  
    LTIP Nil cost option   09.09.21     359,1054     Yes   No     -       359,105       01.01.24  
    LTIP Nil cost option   21.09.22     239,5215     Yes   No     -       239,521       22.09.25  
    LTIP Nil cost option   30.05.23     392,2815     Yes   No     -       392,281       30.05.26  
                                                 
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.
2.Subject to performance conditions and continued employment in the case of awards to the Executive Directors. See page 54 for performance conditions applicable to the awards granted in 2023.
3.Performance conditions and service conditions for these awards have been satisfied and the number of shares which are vested but not exercised as at 31 December 2023 are reflected as “outstanding”.
4.Performance conditions for these share awards have been satisfied and the number of shares expected to vest in the future are reflected in “outstanding” and “future vesting” columns.
5.These awards are subject to satisfaction of performance conditions and service conditions in the future and are yet to be vested.

 

56

 

 

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. 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 2023. 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.

 

 

Payments for loss of office - Audited

 

There were no payments made to any director for loss of office in the year ended December 31, 2023.

 

Payments made to past directors – Audited

 

There were no payments made to any past directors in the year ended December 31, 2023.

 

 

57

 

 

Executive Chairman remuneration table (in thousands)

 

   2023  2022  2021  2020
   Javier López
Madrid1
  Javier López
Madrid2
  Javier López
Madrid3
  Javier López
Madrid4
Executive Chairman’s remuneration5  $1,656  $1,989  $5,635  $2,007
Annual variable pay (including as a % of maximum)6  $565 (33%)   $989 (50%)   $4,518 (80%)   $972 (48%)
LTIP awards with performance period ending in the relevant year7  N/A   N/A   100%  31.92%

 

1At the exchange rate of 1 GBP: 1.244 USD used in the FY23 Report
2At the exchange rate of 1 GBP: 1.2369 USD used in the FY22 Report
3At the exchange rate of 1 GBP: 1.3757 USD used in the FY21 Report
4At the exchange rate of 1 GBP: 1.2838 USD used in the FY20 Report
5Remuneration comprises total remuneration
6Annual variable pay is the short term incentive amounts 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.

 

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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 2021, 2022 and 2023.

 

2023  Javier
López
Madrid
   Marco
Levi
   José
María
Alapont
(1)
   Bruce L
Crockett
   Stuart E
Eizenstat
   Manuel
Garrido y
Ruano
   Rafael
Barrilero
(2)
   Nicolas
de Santis
(2)
   Juan
Villar
Mir de
Fuentes
   Marta
Amusategui
   Silvia
Villar-
Mir de
Fuentes
   Belén
Villalonga
Morenes
   Average
employee
pay
 
Salary and fees (USD 000s)   9%   5%   -    7%   6%   -4%   5%   12%   3%   8%   -5%   19%     
All taxable benefits (USD 000s)   8%   11%   -    0%   0%   0%   0%   -    0%   0%   0%   0%     
Annual bonuses    -43%   -45%   -                                                   
Total   -17%   -21%   -    7%   5%   -4%   5%   12%   3%   7%   -4%   16%   -4,7%
2022                                                                 
Salary and fees (USD 000s)   -10%   19%   -    1%   -10%   -9%   49%   50%   -8%   -2%   -6%   46%     
All taxable benefits (USD 000s)   -10%   4%   -    57%   100%   100%   125%        100%   100%   58%   340%     
Annual bonuses    -12%   20%   -                                                   
Total   -11%   18%   -    4%   -3%   -4%   52%   50%   -4%   5%   58%   62%   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   66%   68%   -55%   45%   -4%   5%   -    -    7%   112%   -    -    0%

 

  1José María Alapont resigned from the Board on 30 April 2021.
  2Belen Villalonga, Silvia Villar-Mir de Fuentes, Nicolas De Santis, and Rafael Barrilero Yarnoz joined the board of directors effective 13 May 2021.

 

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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 2023 to
31 December 2023
   1 January 2022 to
31 December 2022
   1 January 2021 to
31 December 2021
Employee costs   $305,859,000   $314,810,000   $ 280,917,000
Average number of employees    3,539    3,470   3,294

 

External directorships during financial year 2023

 

Javier López Madrid

 

·Chief Executive Officer of Grupo VM.

 

·Non-Executive Chairman and investor of Siacapital S.L.

 

Marco Levi

 

·Non-executive director of 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 2023.

 

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

 

From 1 January 2023 until 26 May 2023, our Compensation Committee consisted of four directors: Mses. Amusategui and Villar-Mir de Fuentes and Messrs. Barrilero (Chair) and De Santis. Since 26 May 2023, our Compensation Committee has consisted of four directors: Ms. Amusategui and Messrs. Barrilero (Chair), Eizenstat and De Santis.

 

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, neither Ms Villar-Mir de Fuentes nor Mr. Villar-Mir de Fuentes participated in discussions, or votes, 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 2023 were £6,400($7,962) (excluding VAT), with such fees paid on a per-service basis.

 

60

 

 

Statement of shareholder voting

 

The following table shows the results of the advisory vote on the 2022 Remuneration Report at the Annual General Meeting of 27 June 2023.

 

   For   % of votes
cast
   Against   % of votes
cast
   Withheld 
Remuneration Report   132,987,943    98.72    1,665,009    1.24    53,462 

 

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

20 May 2024

 

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FERROGLOBE PLC

 

1 Our opinion is unmodified

 

We have audited the financial statements of Ferroglobe PLC (“the Company” or “the Parent Company”) for the year ended 31 December 2023 which comprise the Consolidated Statements of Financial Position, Consolidated Income Statements, Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Changes in Equity, Consolidated Statements of Cash Flows, Parent Company Balance Sheet, Parent Company Statement of Changes in Equity, and the related notes, including the accounting policies in note 4 of the consolidated financial statements and in note 1 of the Parent Company financial statements.

 

In our opinion:

 

·the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2023 and of the Group’s profit for the year then ended;
·the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
·the Parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 101 Reduced Disclosure Framework; and
·the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

Basis for opinion

 

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

 

2 Key audit matters: our assessment of risks of material misstatement

 

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including 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. In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:

 

Accounting treatment for Quebec Silicon Limited Partnership (QSLP) and WVA Manufacturing, LLC (WVA)

 

Refer to page 81 (Critical accounting estimates, assumptions and judgments), and pages 107 (financial disclosures).

 

The Risk – Accounting treatment

 

The Group entered into partnership agreements in 2009 and 2012 in respect of QSLP and WVA, whereby 51% of the ownership interest in the entities is owned by the Group and 49% of the ownership interest is held by Dow Corning Corporation (“Dow”).

 

Whilst the Group has the majority holding in each entity, the assessment of whether the Group has control is judgemental in the context of the rights given to the respective partners within the various legal agreements established between them and, in the case of rights given to Dow, assessing whether the rights are substantive in nature or can be adjudged to be protective.

 

The Group has made the judgement that the Group controls both QSLP and WVA and hence has consolidated the net assets and results of the entities and shown Dow’s interest as a non-controlling interest.

 

There are factors that indicate both control and joint control and therefore, as part of our first year audit, this has been an area of focus, with significant auditor judgement being required to assess whether the Group’s judgement is acceptable.

 

62

 

 

Our response

 

We performed the tests below rather than seeking to rely on any of the Group’s controls because the nature of the balances is such that we would expect to obtain audit evidence primarily through the detailed procedures described.

 

Our procedures to address the risk included:

 

Accounting analysis:

 

·We inspected and assessed the Group’s accounting papers and evaluation of the arrangements.
·We critically assessed management’s conclusions by inspecting the shareholder and partnership agreements and the output and supply agreements to obtain an understanding of both parties’ contractual rights, including in relation to appointing key management personnel, and to inform our assessment of what the relevant activities of QSLP and WVA were.
·We also inspected board meeting minutes for both entities and assessed whether these indicated that the Group had the ability to direct the relevant activities of QSLP and WVA; and
·Having assessed that the Group's accounting analysis gave more weight to arguments favouring control, we assessed the acceptability of these arguments based on our understanding of the contractual arrangements and rights available to the both the parties.

 

Assessing transparency: We assessed whether the Group’s disclosures about the judgement involved and factors considered by the Group in reaching the judgement are adequate.

 

Carrying amount of property, plant and equipment for the Polokwane and Puertollano cash-generating units

 

(Combined carrying value of the Polokwane and the Puertollano CGUs $43.62 million)

Refer to page 84 (accounting policy), and pages 100-101 (financial disclosures).

 

The Risk – Forecast-based assessment and subjective valuation

 

The Group identified impairment indicators in certain CGUs based on the financial performance in FY 2023. In particular, the Group has determined the recoverable amount for the Polokwane CGU as the value in use, and for the Puertollano CGU as the fair value less costs of disposal. The recoverable amount of both CGUs is subjective due to the inherent uncertainty in forecasting cash flows for Polokwane and in determining the fair value of specialised assets for Puertollano.

 

Subjective auditor judgment was required to evaluate whether the Group’s assumptions related to EBITDA projections, discount rate and terminal growth rate for the Polokwane CGU fall within an acceptable range.

 

Subjective auditor judgment was also required to evaluate the acceptability of the methodology and assumptions used to estimate the fair value of the Puertollano CGU due to the specialised nature of certain of the assets.

 

The effect of these matters is that, as part of our risk assessment, we determined that, in aggregate, the value in use of Polokwane CGU and fair value less cost of disposal of Puertollano CGU have a high degree of estimation uncertainty, with a potential range of reasonable outcomes in aggregate greater than our materiality for the financial statements as a whole. The financial statements (note 8) disclose the Group’s assessment of the sensitivity of the carrying amounts of the two CGUs.

 

In addition, specialised skills and knowledge were also required to assess the acceptability of the recoverable amount of both CGUs.

 

Our response

 

We performed the tests below rather than seeking to rely on any of the Group’s controls because the nature of the balances is such that we would expect to obtain audit evidence primarily through the detailed procedures described.

 

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Our procedures to address the risk included:

 

For the Polokwane CGU:

 

Benchmarking Assumptions: We evaluated the EBITDA projections by comparing them against the current and historical performance of other CGUs, the Group as a whole and other companies in similar industries. In addition, we evaluated revenue projections, which form part of the EBITDA projections, against third-party forecasted future market prices.

 

Our sector experience: We involved corporate valuation professionals, with specialised skills and knowledge, who assisted us in:

 

·evaluating the Group’s discount rate by developing an independent estimate using publicly available market data for comparable entities; and
·evaluating the Group’s terminal growth rate by developing an independent estimate using external market forecasts of relevant long-term growth rates.

 

For the Puertollano CGU:

 

Our sector experience:

 

·We involved real estate valuation professionals with specialised skills and knowledge who assisted us in evaluating the Group’s estimated fair value of certain real estate in the Puertollano CGU based on comparable transactions.
·We involved personal property valuation professionals with specialised skills and knowledge who assisted us in evaluating the valuation methodology used by the Group with reference to market practice. We also, with the assistance of these professionals, evaluated the Group’s estimated fair value of certain industrial equipment in the Puertollano CGU based on comparable transactions and our knowledge of the industry.

 

For both CGUs:

 

Assessing transparency: We assessed the adequacy of the Group’s disclosure about the combined estimation uncertainty in relation to the impairment assessment for the Polokwane and Puertollano CGUs.

 

Recoverability of cost of investment in subsidiary

 

(Investments in subsidiaries: $645.09 million)

Refer to pages 146 (accounting policy) and page 148 (financial disclosures).

 

The risk – Low risk, high value

 

The carrying amount of the Parent Company’s investment in subsidiary represents 87% of the Parent Company’s total assets. Its recoverability is not at a high risk of significant misstatement or subject to significant judgement. However, due to its materiality in the context of the Parent Company financial statements, this is considered to be the area that had the greatest effect on our overall Parent Company audit.

 

Our response

 

We performed the tests below rather than seeking to rely solely on any of the Parent Company’s controls because the nature of the balance is such that we would expect to obtain audit evidence primarily through the detailed procedures below.

 

Our procedures included:

 

Tests of detail: Comparing the carrying amount of the investment in subsidiary with the subsidiary’s draft balance sheet to identify whether its net assets, being an approximation of its minimum recoverable amount, were in excess of its carrying amount.

 

As the Parent Company’s investment is in a holding company, to assess the reasonableness of the recoverability assessment, we also compared the carrying amount of the Parent Company’s investment with the aggregated net assets of the underlying trading groups as per their draft balance sheets to identify whether their net assets were in excess of the Parent Company’s investment carrying amount.

 

Comparing valuations: assessing the reasonableness of the recoverability assessment by comparing the carrying amount of the investment in the subsidiary to the Group’s market capitalisation, being an approximation of the recoverable amount of the investment.

 

64

 

 

3 Our application of materiality and an overview of the scope of our audit

 

Materiality for the Group financial statements as a whole was set at $15,000,000, determined with reference to a benchmark of normalised Group revenue of $2,008 million, of which it represents 0.75%. We normalised Group revenue by averaging over 3 years to account for cyclical fluctuations in the Group's performance. We consider revenue to be a more appropriate benchmark than Group profit before tax as Group profit before tax is a less stable measure year on year, having significantly fluctuated in recent years, including fluctuating between a profit and a loss.

 

Materiality for the Parent Company as a whole was set at $6,000,000 determined with reference to a benchmark of the Parent Company total assets, of which it represents 0.81%.

 

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole.

 

Performance materiality was set at 65% of materiality for the financial statements as a whole, which equates to $9,750,000 for the Group and $3,900,000 for the Parent Company. We applied this percentage in our determination of performance materiality based upon our understanding of the control environment obtained as part of our first year audit.

 

We agreed to report to audit committee any corrected or uncorrected identified misstatements exceeding $750,000 for the Group and $300,000 for the Parent Company, in addition to other identified misstatements that warranted reporting on qualitative grounds.

 

We subjected three components to full scope audits for Group purposes. We subjected two components to audits of account balances over Sales, Raw material and energy consumption for production, property, plant and equipment, and inventory; for one of these components, we also performed an audit of cash and cash equivalents. We subjected three components to specified risk-focussed audit procedures over Sales and Raw material and energy consumption for production; for one of these components, we also performed specified risk-focused audit procedures over property, plant and equipment and inventory; for another of these components, we also performed specified risk-focused audit procedures over cash and cash equivalents.

 

The components for which we performed work other than full scope audits for Group reporting purposes were not individually significant but were included in the scope of our Group reporting work in order to provide further coverage over the Group's results.

 

The components within the scope of our work accounted for the percentages in the table below.

 

   Number of
components
   Group
Revenue
   Total Profits
and Losses
That Made Up
Group Profit
Before Tax
   Group
Total
Assets
 
Full scope audits   3    61%   49%   52%
Audit of specific account balances   2    11%   10%   15%
Specified risk focused audit procedures   3    17%   10%   8%
Total   8    89%   69%   75%

 

Additionally, the Group team performed procedures over the Group’s impairment testing of property, plant and equipment centrally

 

The remaining 11% of total Group revenue, 31% of total profits and losses that made up Group profit before tax and 25% of Group total assets is represented by a large number of reporting components, none of which individually represented more than 7% of any of total Group revenue, total profits and losses that made up Group profit before tax or total Group assets. For these residual components, we performed analysis at an aggregated Group level to re-examine our assessment that there were no significant risks of material misstatement within these.

 

65

 

 

The Group team instructed component auditors as to the significant areas to be covered, including the relevant risks detailed above and the information to be reported back.

 

The Group team approved the component materialities, which ranged from $5,000,000 to $8,500,000, having regard to the mix of size and risk profile of the Group across the components. The work on all in-scope components was performed by component auditors. The audit of the Parent Company was performed by the Group team.

 

The scope of the audit work performed was predominately substantive as we placed limited reliance upon the Group’s internal control over financial reporting.

 

The Group team visited seven component locations in Spain, Canada and USA to assess the audit risk and strategy. Video and telephone conference meetings were also held with all component auditors. At these visits and meetings, the findings reported to the Group team were discussed in more detail, and any further work required by the Group team was then performed by the component auditors.

 

The Group audit team also inspected component auditors’ key work papers using remote technology capabilities to evaluate the quality of execution of the work performed on the components, with a particular focus on significant risk areas.

 

4 Going concern

 

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Parent Company or to cease their operations, and as they have concluded that the Group’s and the Parent Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).

 

We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to its business model and analysed how those risks might affect the Group’s financial resources or ability to continue operations over the going concern period.

 

The risk that we considered most likely to adversely affect the Group’s available financial resources over this period is an adverse impact on the Group’s trading, profitability and liquidity as a consequence of a reduction in demand and price of the finished goods or increase in cost of production.

 

We considered whether this risk could plausibly affect the liquidity or covenant compliance in the going concern period by assessing the directors’ sensitivities over the level of available financial resources and covenant thresholds indicated by the Group’s financial forecasts taking account of severe, but plausible adverse effects that could arise from this risk.

 

Our procedures also included:

 

·Critically assessing assumptions in the going concern forecasts and the impact on forecast liquidity, particularly in relation to revenue projections, by comparing to third-party forecasted future market prices. We also assessed the assumptions used against our knowledge of the Group and the sector in which it operates, overlaying our knowledge of the Group’s plans based on approved budgets.
·Obtaining confirmation letters for the cash balances as at 31 December 2023, and inspecting the credit facilities agreement for committed financing facilities.
·Considering whether the going concern disclosure in the note 3.1 of the consolidated financial statements and note 1 of the Parent Company financial statements gives a full and accurate description of the directors’ assessment of going concern.

 

Our conclusions based on this work:

 

·we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;
·we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Group’s or Parent Company’s ability to continue as a going concern for the going concern period; and
·we found the going concern disclosures in note 3.1 of the consolidated financial statements and note 1 of the Parent Company financial statements to be acceptable.

 

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Parent Company will continue in operation.

 

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5 Fraud and breaches of laws and regulations – ability to detect

 

Identifying and responding to risks of material misstatement due to fraud

 

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

 

·Enquiring of directors, the audit committee, internal audit as to the Group’s high-level policies and procedures to prevent and detect fraud, including the internal audit function, and the Group’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud.

 

·Reading Board and audit committee minutes.

 

·Considering remuneration incentive schemes and performance targets for management and directors.

 

·Using analytical procedures to identify any unusual or unexpected relationships.

 

·Involvement of forensic specialists to assist us in identifying key fraud risks. This included attending the Risk Assessment and Planning Discussion, holding a discussion with the engagement partner, engagement manager and engagement quality control reviewer, and assisting with designing relevant audit procedures to respond to the identified fraud risks.

 

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit. This included communication from the Group audit team to component auditors of relevant fraud risks identified at the Group level and request to component auditors to report to the Group audit team any instances of fraud that could give rise to a material misstatement at the Group level.

 

As required by auditing standards, and taking into account possible pressures to meet profit targets and our overall knowledge of the control environment, we perform procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular the risk that Group and component management may be in a position to make inappropriate accounting entries, the risk of bias in accounting estimates such as impairment assessments related to property, plant and equipment, and the risk that revenue is overstated through recording revenues in the wrong period. We did not identify any additional fraud risks.

 

We performed procedures including:

 

·Identifying journal entries and other adjustments to test for all full scope components based on risk criteria and comparing the identified entries to supporting documentation. These included those posted to seldom used accounts, entries created by seldom posters, entries posted to revenue accounts with an unusual account combination, and entries created and posted by the same user.
·Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.

 

Identifying and responding to risks of material misstatement related to compliance with laws and regulations

 

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, through discussion with the directors and other management (as required by auditing standards), and from inspection of the Group’s regulatory and legal correspondence and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations.

 

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. This included communication from the Group audit team to component auditors of relevant laws and regulations identified at the Group level, and a request for component auditors to report to the Group audit team any instances of non-compliance with laws and regulations that could give rise to a material misstatement at the Group level.

 

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The potential effect of these laws and regulations on the financial statements varies considerably.

 

Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

 

Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or loss of one of the Group’s licenses to operate. We identified the following areas as those most likely to have such an effect: health and safety, data protection laws, anti-bribery, employment law, anti-money laundering laws, environmental law, other taxation legislation, competition legislation and licenses relating to the mining and energy generation recognising the nature of the Group’s activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

 

Context of the ability of the audit to detect fraud or breaches of law or regulation

 

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.

 

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

 

6 We have nothing to report on the other information in the Annual Report

 

The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

 

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.

 

Strategic report and directors’ report

 

Based solely on our work on the other information:

 

·we have not identified material misstatements in the strategic report and the directors’ report;
·in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
·in our opinion those reports have been prepared in accordance with the Companies Act 2006.

 

Directors’ remuneration report

 

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

 

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7 We have nothing to report on the other matters on which we are required to report by exception

 

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

 

·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 and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or
·certain disclosures of directors’ remuneration specified by law are not made; or
·we have not received all the information and explanations we require for our audit.

 

We have nothing to report in these respects.

 

8 Respective responsibilities

 

Directors’ responsibilities

 

As explained more fully in their statement set out on page 33, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and 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 they either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

 

Auditor’s responsibilities

 

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 our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

 

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

 

9 The purpose of our audit work and to whom we owe our responsibilities

 

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.

 

Lynton Richmond (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London

E14 5GL

 

20 May 2024

 

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FERROGLOBE PLC

 

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Consolidated Financial Statements as of December 31, 2023 and 2022 and for each of the three years ended December 31, 2023, 2022 and 2021

 

Consolidated Statements of Financial Position as of December 31, 2023 and 2022   71
Consolidated Income Statements for the years ended December 31, 2023, 2022 and 2021   72
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021   73
Consolidated Statements of Changes in Equity for the years ended December 31, 2023, 2022 and 2021   74
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021   75
Notes to the Consolidated Financial Statements   76

 

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FERROGLOBE PLC AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2023 AND 2022

 

(In USD thousands) 

 

   Notes   2023   2022 
ASSETS               
Non-current assets               
Goodwill   Note 6    29,702    29,702 
Intangible assets   Note 7    138,345    111,797 
Property, plant and equipment   Note 8    501,396    486,247 
Other financial assets   Note 9    19,792    14,186 
Deferred tax assets   Note 24    8,760    7,136 
Receivables from related parties   Note 25    1,658    1,600 
Other non-current assets   Note 11    22,156    18,218 
Restricted cash and cash equivalents   Note 9        2,133 
Total non-current assets        721,809    671,019 
Current assets               
Inventories   Note 10    383,841    500,080 
Trade and other receivables   Note 9    310,243    425,474 
Receivables from related parties   Note 25    2,772    2,675 
Current income tax assets   Note 24    15,977    6,104 
Other financial assets   Note 9    2    3 
Other current assets   Note 11    186,477    30,608 
Assets and disposal groups classified as held for sale            1,067 
Restricted cash and cash equivalents   Note 9    1,179    2,875 
Cash and cash equivalents   Note 9    136,470    317,935 
Total current assets        1,036,961    1,286,821 
Total assets        1,758,770    1,957,840 
EQUITY AND LIABILITIES               
Equity               
Share capital        1,962    1,962 
Share Premium        86,220    86,220 
Reserves        800,662    353,454 
Translation differences        (231,799)   (242,623)
Valuation adjustments        8,354    10,735 
Result attributable to the Parent        82,662    440,314 
Equity attributable to the Parent        748,061    650,062 
Non-controlling interests        121,825    106,751 
Total equity   Note 12    869,886    756,813 
Non-current liabilities               
Deferred income   Note 14    26,980    3,842 
Provisions   Note 15    19,970    22,124 
Provisions for pensions   Note 15.1    29,805    25,546 
Bank borrowings   Note 16    14,913    15,774 
Lease liabilities   Note 17    20,304    12,942 
Debt instruments   Note 18    149,015    330,655 
Other financial liabilities   Note 19    65,231    38,279 
Other obligations   Note 22    35,883    37,502 
Other non-current liabilities   Note 23    199    12 
Deferred tax liabilities   Note 24    32,582    35,854 
Total non-current liabilities        394,882    522,530 
Current liabilities               
Provisions   Note 15    122,757    145,327 
Provisions for pensions   Note 15.1    169    180 
Bank borrowings   Note 16    31,635    62,059 
Lease liabilities   Note 17    8,083    8,929 
Debt instruments   Note 18    5,765    12,787 
Other financial liabilities   Note 19    16,052    60,382 
Payables to related parties   Note 25    2,429    1,790 
Trade and other payables   Note 21    183,375    219,666 
Current income tax liabilities   Note 24    8,351    53,234 
Other obligations   Note 22    14,183    9,580 
Other current liabilities   Note 23    101,203    104,563 
Total current liabilities        494,002    678,497 
Total equity and liabilities        1,758,770    1,957,840 

 

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 20, 2024
Signed on its behalf by:
Dr. Marco Levi
Director

 

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FERROGLOBE PLC AND SUBSIDIARIES

 

CONSOLIDATED INCOME STATEMENTS FOR THE YEARS 2023, 2022 AND 2021

 

(In USD thousands, except share and per share data)

 

   Notes   2023   2022   2021 
Sales   Note 27.1    1,650,034    2,597,916    1,778,908 
Raw materials and energy consumption for production1   Note 27.2    (879,286)   (1,285,086)   (1,184,896)
Other operating income   Note 27.3    100,992    147,356    110,085 
Staff costs   Note 27.4    (305,859)   (314,810)   (280,917)
Other operating expense   Note 27.5    (270,090)   (346,252)   (296,809)
Depreciation and amortization charges   Note 27.6    (73,532)   (81,559)   (97,328)
Impairment (loss) gain   Note 27.8    (25,290)   (56,999)   137 
Other (loss) gain        (29)   (19)   2,206 
Operating profit        196,940    660,547    31,386 
Finance income   Note 27.7    5,422    2,274    253 
Finance costs   Note 27.7    (38,793)   (61,015)   (149,189)
Exchange differences        (7,551)   (9,995)   (2,386)
Profit (Loss) before tax        156,018    591,811    (119,936)
Income tax (expense) benefit   Note 24    (57,540)   (147,983)   4,562 
Total Profit (Loss) for the year        98,478    443,828    (115,374)
                     
Profit (loss) attributable to the Parent        82,662    440,314    (110,624)
Profit (loss) attributable to non-controlling interests   Note 12    15,816    3,514    (4,750)
                     
Earnings per share                    
                     
         2023    2022    2021 
Numerator:                    
Total Profit (Loss) attributable to the Parent (U.S.$'000)        82,662    440,314    (110,624)
Denominator:                    
Weighted average number of basic shares outstanding        187,872,191    187,815,672    176,508,144 
Weighted average number of dilutive shares outstanding        190,289,808    189,625,195    176,508,144 
Basic earnings (loss) per ordinary share (U.S.$)   Note 13    0.44    2.34    (0.63)
Diluted earnings (loss) per ordinary share (U.S.$)   Note 13    0.43    2.32    (0.63)

 

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

 

1In 2023, includes a net energy credit of $28,651 as described further in Note 27.2

 

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FERROGLOBE PLC AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR 2023, 2022 AND 2021

 

(In USD thousands)

 

   Notes  2023  2022  2021 
Total Profit (Loss) for the year     98,478  443,828  (115,374)
              
Items that will not be reclassified subsequently to income or loss:             
Remeasurement (losses) gains on defined-benefit obligations  Note 15  (5,620) 9,779  2,566 
Tax effect  Note 24  1,500  (2,082) 139 
Total income and expense that will not be reclassified subsequently to income or loss     (4,120) 7,697  2,705 
              
Items that may be reclassified subsequently to income or loss:             
Cash flow hedge accounting     2,245     
Translation differences     11,730  (17,178) (20,393)
Tax effect  Note 24  (767)    
Total income and expense that may be reclassified subsequently to income or loss     13,208  (17,178) (20,393)
              
Items that have been reclassified to income or loss in the period:             
Cash flow hedge accounting     83    (922)
Total items that have been reclassified to profit (loss)     83    (922)
              
Other comprehensive Profit (loss) for the year, net of income tax     9,171  (9,481) (18,610)
              
Total comprehensive Profit (loss) for the year     107,649  434,347  (133,984)
              
Total comprehensive Profit (loss) attributable to the Parent     91,105  430,219  (131,413)
Total comprehensive Profit (loss) attributable to non-controlling interests     16,544  4,128  (2,571)

 

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

 

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FERROGLOBE PLC AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR 2023, 2022 AND 2021
(In USD thousands, except issued shares in thousands)

 

      Total Amounts Attributable to Owners       
      Issued  Share  Share     Translation  Valuation  Result for  Non-controlling    
   Notes  Shares  Capital  Premium  Reserves  Differences  Adjustments  the Year  Interests  Total 
      (Thousands)  US$'000  US$'000  US$'000  US$'000  US$'000  US$'000  US$'000  US$'000 
Balance at January 1, 2021     170,864  1,784    696,774  (206,759) 5,755  (246,339) 114,504  365,719 
Comprehensive (loss) profit for the year 2021             (20,559) (230) (110,624) (2,571) (133,984)
Issue of share capital     18,019  178  86,220                 86,398 
Share-based compensation           3,627          3,627 
Recording of 2020 (loss) in reserves           (246,339)     246,339     
Dividends paid non-controlling interests                    (5,880) (5,880)
Other changes              4,151             4,151 
Balance at December 31, 2021     188,883  1,962  86,220  458,213  (227,318) 5,525  (110,624) 106,053  320,031 
Comprehensive profit (loss) for the year 2022             (15,305) 5,210