2010 Annual Report

www.arteche.com

2010 Annual Report

ARTECHE> 2010 Annual Report

Contents >

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Message from the President

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Strategy and Outlook A Key Year

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Organization Orientation by Business

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Corporate Responsibility Commitment and Ethics

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Innovation Distinguishing Mark

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Customers and Solutions Markets

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Social Commitment Team

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Message from the CEO

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Context

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New Companies and Partnerships

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New Management Model

29
Featured Projects

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Projects

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Performance

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The Group Performance

30
Participation in Professional Organizations and Associations

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46
Health and Safety

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Quality and Sustainability

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48
Training

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49
Work-Life Balance

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Community Support

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The year 2010 can be considered the year during which the trend in the world economy changed. The crisis is still ongoing, especially in Europe and, to lesser degree, in the United States. Other areas, such as Latin America and Asia, are growing at a very fast pace. Our business has been impacted by this situation. However, as in all sectors, the market is also affected (in addition to the general economic situation) by specic variables that evolved in 2010. Governmental backing of infrastructure investments and the electricity tariff regulation, support for investment in renewable energies, the rise of the Smart Grid, and the search for energy efciency in the current grids are factors that stimulate growth in our business. Capital investment has varied country. In Europe, and specically in Spain, the economic situation and lack of clear regulation regarding renewable generation and electricity tariffs have hindered investment. In other countries, primarily the so-called emerging economies, there is a denite commitment to investment in electrical infrastructure, renewable generation, and the refurbishment of the grid. Within this context, just as in previous years, the effort towards globalization combined with geographic and business diversication has made it possible to not only escape the current crisis that is affecting many companies in Spain, but also to close a nancial year with highly satisfactory results. With a view to keeping our growth path sustainable, in 2010 we developed a strategic plan that will guide our operations over the next four years. It is a course that we hope will strengthen our position as a leading company in our target markets. In a global corporate environment as competitive as todays, none of this can be achieved without a rm commitment to innovation, competitiveness, quality, and service. Innovation has always been a key part of our strategy and as a result, we have been able to expand our operations and product offering. During this new phase, with technological changes on the horizon, innovation is even more important. The Arteche Technology Center and the Groups new technology plan are the essential tools for continued growth in products and solutions and for taking advantage of the new opportunities that arise in our sector. In this new cycle that we are beginning in 2011, the people who comprise ARTECHE are indispensible for our continued growth and our ability to adapt to the tasks and changes we will face. We have signicant challenges ahead that will require a comprehensive outlook, conviction, effort, and on occasion, sacrice. I am condent that if we work with the same ambition, attitude, and perseverance that we have demonstrated up to now, we will be successful.

2010, Inguide ourwe developed a strategic plan that will operations over the next four years. It is a course that we hope will strengthen our position as a leading company in our target markets

Jos Javier de Arteche

President of the ARTECHE Group

Within a general context of crisis and economic difculties for most business sectors, 2010 has been a key year for the future of the ARTECHE Group. The obtained results show that our commitment to globalization and innovation has achieved the desired outcome. Thanks to this strategy, based on anticipation, we have been able to strengthen our position of competitiveness and create the basis for becoming established in our markets and facing other challenges with condence, both geographically as well as in relation to products and services. The gures speak for themselves. We have grown 25%, both with regard to orders and sales, and we have seen a 35% improvement in protability, thus establishing a path of sustained growth and a solid nancial position. The main drivers of our growth have been South America and, more moderately, North America and Europe. We have taken advantage of the optimal time to invest in countries like Brazil and Mexico, but our market share has also grown in Europe and America. In addition, in 2010, very important innovation projects have been planned for our future, like the acquisition of new capabilities in optical measurement technology and the launch of our new solution lines for the future Smart Grid. There have also been corporate projects, like the establishment of our activity related to turn key solutions as an independent company in Brazil, our partnership with the Japanese company Nissin Electric to manufacture transformers for gas-insulated switchgear substations, our entry into Chile, and the reorganization of our operations in China. But 2010 is now in the past. The foundation that has been created during recent years has made it possible for us to face the future with optimism. However, we must do so with the same ambition and decisive spirit that has characterized us up to now. We must be watchful of the threats and opportunities that arise in our markets, identifying the areas of improvement and the lines which will make it possible for us to continue growing in a protable and sustainable manner.

2011 with a new organization We beginbusiness and with a new corporate oriented by structure that supports it. The goals are to signicantly improve our customer service and increase efciency

Basing ourselves on the foundations built during these recent years, and aware of the changes in the markets that support our operations, we must continue resolutely fullling our commitment to growth and international positioning. We must continue to carry out our strategy to expand and enhance our offering of products and solutions, strengthen our competitiveness, and maintain management focus. Looking to the immediate future, America and Europe are the main market objectives throughout our businesses, while Asia is our medium- to long-term goal. China is our primary industrial base in Asia, but we continue taking steps towards identifying opportunities to become established in countries that are key to our future, such as India. We begin 2011 with a new organization oriented by business, a new corporate structure that supports it, and a new management system based on the SAP tool, which has already been implemented in the Groups main businesses. Thus, we are looking to focus more on the businesses, signicantly improve our customer service, increase the efciency of our organization, and reduce costs. The good results obtained in recent years are due to the skill and ability of our professionals to dene and implement a strategy that is appropriate during times of economic hardship, as well as to everyones effort and dedication to a group project that extends beyond geographic borders or each of their businesses. We are a company with international presence, but our strength lies in our approachability and the close relationships we have with our customers, which is something our attitude and style must always reect.

Alexander Arteche
CEO of the ARTECHE Group

ARTECHE> 2010 Annual Report

Strategy and Outlook

A Key Year for Our Future
> Our sector is not immune to the difculties that business typically faces with an ongoing economic crisis. Nevertheless, the ability of ARTECHEs professionals to anticipate, as well as dene and implement a strategy that is appropriate during times of economic hardship, have made it possible for us to not only escape the effects of the crisis, but also successfully close a nancial year, establish ourselves as a leader in the sector, and become stronger through our nancial growth, team synergy, quality, service... in short, our future. We are staying on a path of sustained growth and a solid nancial position, coupled with an increase in sales and improved protability. The investment policy has changed the prole of the businesses, with greater international implementation and an operations structure that provides greater stability. The rm commitment to innovation has been critical in the acquisition of new technological capabilities and the launch of new solutions.

> Looking towards 2013, we developed a strategic plan that will guide us in the upcoming years. Aware that the business environment has changed, we continue with our commitment to a focus on growth and international positioning, as well as to the expansion and enhancement of our offering and the focus of our management. Thanks to the implementation of the New Management Model, we can continue improving our customer service, increasing efciency, and reducing costs. New steps towards identifying implementation opportunities in countries that are signicant to our future. The new technological plan and the Arteche Technology Center are tools that are essential for continued growth in relation to products and solutions and for taking advantage of the new opportunities in our industry.

ARTECHE> 2010 Annual Report

Strategy and Outlook

A Solid Position
> ARTECHE has substantially increased and strengthened its presence in the electrical market in recent years. This position is the result of a combination of multiple factors, such as growing market penetration, both in traditional areas and through new developments; the incorporation of new companies with extensive experience in their geographic environments; the carrying out of new marketing proposals in solutions and equipment; nancial, technological and management independence which has been maintained throughout our history. Thanks to the new capabilities developed in recent years, we have been able to properly position ourselves in growth industries such as automation, quality of distribution and transport services, and turn- key solutions in the electrical sector. The Americas have become our primary market and we have obtained a leadership position in many of its countries. In 2010, we redesigned and launched our new protection, measurement, and control line, gathering all of the experience that ARTECHE has acquired in the over 30 years of operating this business. These activities, combined with regional expertise, make it possible for us to look forward to the opportunities that arise in the growth of renewable power generation and the development of the Smart Grid. It is time to build upon our ability to adjust to market conditions and our determination to maintain the close relationships that we have with our customers.

> Orders:

280.7 million
28% South America: 42% North America: 24% Asia/Pacic and Africa: 6%
Europe:

By market

By business line STK:

23% 17% 53%

Power Quality:

Instrument Transformers: Smart Grid:

7%

300

280.7

224.4 168.5 millions 180.1

232.9

2006

2007

2008

2009

2010

SUSTAINED GROWTH We have quadrupled our revenue in the last ten years. Of the last six years, 2010 has been the year with the greatest growth.

> People:

2,128

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ARTECHE> 2010 Annual Report

Organization
Orientation by Business
> We closed 2010 with the denition of a new organization laid out within a corporate structure (Financial and Legal, Social and Corporate Reputation, and Business Development and Organization) aimed at strengthening the Groups cohesion and development, and with four primary Business Units: Instrument Transformers, Turn Key Systems, Smart Grid, and Power Quality.

CEO > Alexander Arteche

Corporate Units
Financial and Legal > Lander Arteche Social and Corporate Reputation > Inazio Iribar Business Development and Organization > Santiago Rementeria

Business Units
Instrument Transformers > Roberto Ortiz de Zrate Turn Key Systems > Iaki Ruiz de Azua

Smart Grid > Mikel Fernndez de Gamboa

Power Quality > Santiago Barcn

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ARTECHE> 2010 Annual Report

Organization

New Companies and Partnerships

We have acquired new technological capabilities and are committed to new corporate projects
> The focus on growth, which is a priority within the business strategy, has been based on an investment policy that has contributed to a change in the prole of the Groups company structure in 2010. This investment policy has been and continues to be aimed at achieving greater international penetration and the expansion of our operations through innovation, the acquisition of new companies, and strategic partnerships. The new companies and partnerships are an important basis and a distinguishing mark for the Group in order to tackle new developments and minimize our weaknesses with partners that complement our businesses. Thanks to all our capabilities within the strategic framework dened by the ARTECHE Group, we are able to respond to our customers needs in a better and more exible manner.

Arteche Nissin
We have adopted GIS technology through one of the world leaders in voltage transformers for gas-insulated switchgear substations
> In 2010, we entered into a partnership agreement with the Japanese company Nissin Electric for the incorporation of Arteche Nissin, a new industrial plant dedicated to the manufacture and marketing of voltage transformers for gas-insulated switchgear (GIS) substations.

EXCLUSIVE MANUFACTURER Arteche Nissin is the only manufacturer in Spain of voltage transformers for GIS substations, which places us in an outstanding position in this market which has signicant growth potential.

With this new project, which has been in operation since the beginning of 2010, we are expanding our offering to include GIS technology through one of the world leaders in this segment (with more than 20,000 gas-insulated transformers in operation all over the world) and entering into a market with high growth potential. Advanced GIS technology has important advantages due to its light and compact design and safety characteristics. It also provides highly-reliable insulation and requires simple maintenance.

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ARTECHE> 2010 Annual Report

Organization

Eurogruas Arteche
A complement to our offering in wind farm installations in South America
> As part of our strategy to assist with the development of renewable power generation in the Americas and provide our customers with a complete solution, we have incorporated Eurogruas Arteche together with the company Eurogruas, each owning 50%. Through this company, we are entering into the business of assembling and starting-up wind turbines and maintaining wind farms. Wind Power Generation in Brazil is a growing business in an emerging market.. With this partnership, we supplement our offering in the building of wind farms. Companies such as Gestamp, Gesa, Multiner, Alstom, GE and Suzlon have already entrusted us with their wind power infrastructure projects.

WIND POWER GENERATION WITH THE COMPANY EUROGRUAS ARTECHE Just in Brazil, the company has been responsible for installing more than 400 wind turbines, with a total power generation of almost 700 MW.

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ARTECHE> 2010 Annual Report

Organization

AS Qualitas
Power Quality in Chile
> The Power Quality Unit continues its international expansion. After the implementation in Mexico, the United States, and Brazil, we entered Chile through the formation of AS Qualitas in 2010. This was accomplished through an agreement with Schaffner, a Chilean company primarily involved in the manufacture of electrical substations and conductors. The new business will offer power quality solutions featuring ARTECHEs products and technology. This market offers great potential in the mining industry, given that it is in the worlds leading copper-producing country, and in the wind power sector, thanks to its effort to diversify its energy base. Due to the prole of its generation systems, very far from the consumption centers, the need for reactive energy compensation is very important.

IMPROVING THE POWER SUPPLY QUALITY Through this business ARTECHE aspires to become a world benchmark in solutions to improve the quality of the power supply, a leadership position which it already holds in Mexico.

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ARTECHE> 2010 Annual Report

Organization

Smart Digital Optics - SDO

Application of optical technologies for advanced measurement solutions
> With the acquisition agreement reached with the Australian company Smart Digital Optics, we are adding optical measurement technology to our offering of high-voltage transformers. This is a new step that complements our current offering of instrument transformers, with which we are incorporating ourselves into an exclusive technological niche within the reach of few manufacturers in the world.

INNOVATIVE REINFORCEMENT In 2010, very important innovation projects have been planned for our future, such as the acquisition of new capabilities in optical measurement technology and the launch of our new solution lines for the future Smart Grid.

Smart Digital Optics

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ARTECHE> 2010 Annual Report

Organization

Qgrid
Customized solutions for improving the power supply
> An agreement has been signed with Gamesa for the incorporation of Qgrid Technologies, which is dedicated to the design, development, industrialization, and marketing, at a global level, of power electronics for the quality of the power supply in power grids, aimed at integrating renewable energies into the grid and improving the power quality of large industrial consumers. We have started the activity with products from the portfolio of both companies, and are now undertaking our own manufacturing and the development of R&D&I capabilities.

IDEAL POSITION FOR FACING FUTURE CHALLENGES Thanks to our agility in decision-making, due to the full autonomy of our corporate model, and our rm commitment to growth, we are in an excellent position to face our industrys challenges.

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ARTECHE> 2010 Annual Report

Corporate Responsibility
Commitment and Ethics
> At ARTECHE, we have made a commitment to contribute to the progress and well-being of the communities to which we belong and of the groups involved in the business, by means of honest behavior. We are aware of the responsibility involved in the carrying out of our activity and we assume it completely and fully. Our courses of action are based on our corporate values, which guide our activities within an ethical, social, and environmental framework. From this responsibility stems requirements that we adopt through our corporate management decisions, the organization of the corporation, behavior in the market, commercial decisions, etc. and which strengthen us as a socially-responsible company.

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ARTECHE> 2010 Annual Report

Corporate Responsibility

Moving Towards a New Management Model

Value for the organization, the groups involved in the business and the corporate environment
> In 2010, we began the implementation of the Groups New Management Model, which favors the establishment of the new organization, resource optimization, improved customer service, and cost savings. One single information system replaces the previous applications. SAP is the tool selected to support the new management model. The implementation of the SAP tool will happen in stages. Spain went live with the new tool at the beginning of the year and Argentina and Mexico implemented the tool during the last quarter. We began 2011 with a new management model implemented in over 50% of the group, which will result in greater efciency and better customer service.

Quality and Sustainability

> Quality information was adapted to the SAP environment as an essential step in the implementation of the new management system at the end of 2010. All of ARTECHEs production centers have national and international quality certicates. The activity of the professionals that work as part of the Group is carried out under Total Quality criteria. This policy extends to business management, product control, and essential respect for the environment. In addition, quality is assured through internal and external mechanisms, such as approved testing levels tailored to the customers request, Quality Agreements with electricity companies, in-house physicochemical and electrical laboratories for approval testing in accordance with any international standard, standard testing protocols issued by the worlds leading laboratories, international professional bodies, and international laboratories for special testing (KEMA, CESI, LAPEM, RENARDIRES, etc). In addition, there are the continuous improvement processes, internal and external training plans, and the advanced development of Knowledge Management. We drive environmental sustainability both in the management of our plants (ISO 14001: 2004) and in the development of new products with compact designs, minimal energy consumption, and environmentally-friendly materials.

A COMPLEX CUSTOMIZED SYSTEM The new implemented operating systems support the activity of more than 2,000 people all over the world.

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ARTECHE> 2010 Annual Report

Innovation
Distinguishing mark
> Technological innovation, combined with quality, global production, and global commercialization, has been and continues to be one of ARTECHEs main areas of development. Because of the profound and incessant transformation of the market, we must stay constantly alert, developing new ways to continue being competitive. In 2010, around 4% of the total sales gure was dedicated to activities of applied research, technological and product development, as well as innovation. These tasks were aimed at developing or acquiring new technologies, improving design and production processes, and creating innovative, competitive, environmentally-advanced, and exible equipment. This innovative effort has signied a true transformation for ARTECHE in recent years and must continue being the key to future development.

2001 No. of production plants Traditional products New businesses Product families % of sales Traditional products New businesses 100% 32 5

2010 5 6 55 59% 41%

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ARTECHE> 2010 Annual Report

Innovation

Featured Projects
Monitoring of dynamic parameters in high-voltage power lines
> Real-time knowledge of the thermal conditions of high-voltage lines makes it possible for companies to optimize their power ow management. ARTECHE has developed the equipment and software necessary for this new application and provides complete solutions based on physical models that integrate the electrical information with meteorological data. In 2010, we incorporated new functionalities into the product, such as temperature and current measurement, GPRS communication, and online parameter setting. We also carry out pilot installations at electrical utilities in Europe as well as North and South America, making us one of the leading manufacturers in this new market niche. In addition, last year Endesa entrusted ARTECHE with the complete service of monitoring a set of lines belonging to its subsidiary, Chilectra.

Low-power sensors for distribution switchgears

> With a view to reinforcing our leadership in the area of electrical measurement, we are developing a new family of current sensors (Rogowski coils and low-powered forklifts) and voltage sensors (resistive and capacitive dividers combined with power line communications (PLC) couplers). In addition to rounding off our offering in medium-voltage measuring equipment, the sensors are key components of the smart grids.

Monitoring of transformation centers

> The new systems for distributing electrical power combine the traditional infrastructure with modern information and communication technologies. The aim is to ensure the optimal use of a grid that must assimilate the growing demand and new forms of use, while at the same time ensuring a high-quality supply and better customer service. Conrming our active presence in the world of smart grids, in 2010 we made progress in the design, manufacturing, and installation of monitoring equipment, sensors and PLC couplers for secondary distribution. ARTECHE was selected by Iberdrola to contribute its new developments to the smart grid project, in which more than one thousand transformation centers will be monitored and automated.

Transformers for auxiliary power supply in high-voltage towers

> ARTECHEs technical capabilities in the development of high-voltage measurement solutions have been proven once again with the design of different auxiliary supply transformers, which have various uses in the world of electrical transport. In 2010, prototypes of 72 and 145 kV were built, which have passed the respective laboratory tests and have been installed in the eld for their nal validation.

High-voltage optical current transformer

> The optical measurement of currents and voltages is a technological alternative and provides a market complement to the conventional inductive or capacitive transformer. Today, thanks to the experience accumulated during years of R&D and the incorporation into the group of the company Smart Digital Optics, ARTECHE has a rst-rate international current measurement technology that is patent-protected. In 2010, a new work team was formed with specialists in this eld dedicated to improving and industrializing the current solution. This year also saw the start of the installation of optical current sensors at Spanish and Mexican substations. Thus, ARTECHE joined an exclusive technological niche that is within the reach of few manufacturers all over the world.

IN SEARCH OF MORE EFFICIENT SOLUTIONS In 2010, we allocated more than 6.5 million euros to technical activities.

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ARTECHE> 2010 Annual Report

Innovation

Active International Collaboration

ACTIVE PLAYER IN THE DESIGN OF THE NEW GRIDS OF THE FUTURE ARTECHEs experience and knowledge is present in more than twenty of the sectors leading forums.
> Throughout 2010, we have increased our participation in the sectors main events, including CIGR, IEEE PES, World Energy Forum and MATELEC. The recognition of our professionals talent has also increased, with an obvious rise in the number of speeches requested by the organizing committees on ARTECHEs experiences and cases, making it possible for us to transform the appropriate use of knowledge into a competitive edge. We have also continued collaborating with various technological, engineering, and university centers, for both technological transfer and product development, as well as in joint R&D&I projects that are part of national and international public programs.

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ARTECHE> 2010 Annual Report

Customers and Solutions

Conquering New Markets
> Our rm commitment to globalization has turned out to be a strategic factor for the strengthening of our corporate project: a path that continues today with a greater presence of the ARTECHE brand beyond our borders. With orders of 281 million euros in 2010, ARTECHE has quadrupled its revenue in the last 10 years. The South American market already represents 42% of sales.

New Reality, New Solutions

> In our long history as a company, we have evolved with the times, trying to adapt to what the industry, and society in general, have required at any given time. We know just how necessary sharing our knowledge and experience is in order to be able to offer more efcient solutions that help our customers reach their business objectives.

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ARTECHE> 2010 Annual Report

Customers and Offering

800 kV Instrument Transformers

Entering India and Strengthening Our Presence in Russia
> We have entered the Indian market through the award of a contract from Reliance Group, the largest company in Indias private sector, for almost 80 capacitive voltage transformers and current transformers of 800 kV. The plants of Mungia (Spain) and China are responsible for their manufacture. This contract conrms the Chinese plants status as an UHV (ultra high voltage) factory. In addition, in 2010 we strengthened our presence in Russia in ultra high voltage lines through the award of the contract for 53 capacitive voltage transformers and current transformers of 765 kV for the new substations of the Russian national company, Inter RAO, in Gribovo, Belozerskaya, and Dorokhovo.

PARTICIPATION IN LARGE PROJECTS ARTECHEs experience with large transmission lines is a key value with which to participate in future energy exchanges between countries and continents.

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ARTECHE> 2010 Annual Report

Customers and Offering

High-Voltage Instrument Transformers Approved by RTE

One of the strictest specications in the world
> During the rst four-month period of 2010, we completed the product approval for current transformers of 245 and 420 kV at RTE (Rseau de Transport dElectricit), the electricity transmission system operator of France that has one of the strictest specications in the world for instrument transformers. This is a milestone for the company that establishes the ARTECHE brand as a benchmark in high-voltage instrument transformers at the global level. It also opens the door for new business opportunities, as we are able to begin supplying instrument transformers to the French market.

CFE approves the new family of protection relays

The rst protection relays are delivered in Mexico
> At the beginning of 2010, the Laboratory for Testing Equipment and Materials (LAPEM by its initials in Spanish) of the Federal Electricity Commission (CFE) of Mexico approved ARTECHEs family of smART P500 protection relays, after passing the performance tests. This step makes it possible to begin selling these protection relays, developed in just two years by the Groups Automation and Distribution Business Unit. One month later, the protection relay was presented at the 23rd Summer Meeting of Power, Industrial Applications and Industrial Exhibition organized by the Institute of Electrical and Electronics Engineers (IEEE Mexico Section). This is a scenario that precedes the attainment of the rst protection relay project in Mexico, Project Km 0.

smART RC establishes itself in America and begins its penetration into Europe
The design of the installation in Europe signies a radical revision of the solutions proposed up until now in the market
> The year 2010 marks the further establishment of ARTECHEs range of reclosers in the North and South American markets and begins its expansion into Europe with the installation of the rst smART RC recloser. Specically, ARTECHE has proposed a new solution to the company Central Elctrica de Pozo Lorente in Albacete (Spain) to update their installations, including the new smART RC recloser model. It is a minimally-invasive installation that makes it possible to provide remote control solutions in a local manner and signies a 70% cost reduction for this type of installation, in comparison with the solutions proposed to date in the market. Moreover, 2010 saw the rst sales of reclosers with our own protection in Brazil.

IMMERSED IN A TRANSFORMATION THAT WILL ENHANCE OUR COMPETITIVENESS In addition to our tradition as transformer and relay manufacturers of renowned quality (operating in over 150 countries), there is now a growing recognition in the market of ARTECHE as a supplier of new solutions.

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ARTECHE> 2010 Annual Report

Customers and Offering

Benchmarks in the Brazilian Wind Power Market

Exponential progress in turn key solutions

> The activity of turn key solutions for the design, building, and start-up of wind power plants continues to advance. The signing of new EPC contracts for four wind farms with an installed power of 373 MW for Brazilian developers solidies ARTECHEs reputation in this market niche. There are also contracts for the assembly of wind turbines for three additional wind farms in Brazil. All in all, 272 windmills totaling 418 MW installed with General Electric, Vestas, and Alstom technology.

LEADERSHIP POSITION IN BRAZIL ARTECHE participates in 42 % of the wind power installed in Brazil, giving the Group a leadership position in wind farm installations.

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Customers and Offering

Our Automation Solutions Are Implemented in South America

The MV switchgear exceed the strictest specications set by Petrobras

> In 2010, we nalized the delivery of the largest MV switchgear package to the Brazilian powerhouse Petrobras, a global benchmark that demands the strictest specications. The order totaled over 10 million euros.

Automation and protection systems in Brazil and Paraguay

> These two countries have entrusted us with the automation and protection system for two hydroelectric plants. Specically, we are developing an innovative solution for UHE MAU in collaboration with ABB. The work carried out at the Paraguayan UHE ACARAY is the rst project using substation refurbishment engineering.

WE PROVIDE MORE SOLUTIONS A total of 40% of the revenue generated in 2010 was related to products and services incorporated in the last eight years.

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Social Commitment
Integrating people, creating a team
> People are one of ARTECHEs essential assets. We are committed to a company model that integrates people and fosters their personal and professional development, all in an environment of trust and participation.

> People:

2,128
Europe: 625 North America: 712 South America: 597 Asia-Pacic: 194

We continue growing
> A total of 114 professionals joined the ARTECHE team in 2010, 45 of whom have higher education degrees. We are a multicultural team committed to the Groups objectives and able to effectively respond to any challenge.

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Social Commitment

Performance Management and Evaluation

Enhancement of satisfaction, motivation, and commitment
> During 2010, various practical initiatives were carried out by Human Resource management in order to foster professional development, identify improvement actions, motivate, facilitate communication, and reinforce commitment. These initiatives include the start-up of the 360 Evaluation Plan amongst the management staff, with a view to evaluating their key skills and determining their potential. More than 180 people have been evaluated in Europe, North America, and South America, all of which have received personalized feedback with the evaluations results. Also in this exercise, in line with the organizations ongoing evaluation process, an audit has been carried out of the Groups Human Resources in order to evaluate its human capital. The results show that of the 300 people audited, almost half have a prole with excellent performance and high potential.

DEVELOPING TALENT We encourage the constant development of our professionals. Our commitment shows through the implementation and completion of actions aimed at creating valuable proposals for the employee.

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Social Commitment

A Safe Work Environment

Continuous and effective participation at all levels of the organization
> The health and safety of the people who comprise the organization is a fundamental and priority principle at ARTECHE. The constant evolution of the risk prevention systems is an essential element of the occupational health and safety policy and a way to contribute to the ongoing improvement of the safety levels of the work centers and employees. A legal audit of the Management System for occupational risk prevention was carried out in 2010. Its conclusions report highlights that the commitment undertaken by ARTECHEs management is made evident after the integration of prevention in the production system, achieving clear reinforcement in the Occupational Risk Prevention policy through the effective participation of all the levels that comprise the company.

Training: ongoing commitment, permanent priority

A valuable training tool for our team
> Training is a key element of the companys improvement strategy. In 2010, we started a project to determine our training needs, in order to dene a biannual training plan for the years 2010/2012 aimed at adding value and strengthening the levels of excellence in the quality of the service of the organizations professionals. Likewise, we consider the constant incorporation into the Group of recent graduates to be a fundamental factor. Thus, we actively participate in the training of the professionals of tomorrow. An example of this is our participation in 2010 of six job fairs in North America, in which candidates were picked to be added to the databases of potential future employees, in order to cover ARTECHEs open selection processes.

OBJECTIVE: RISK CONTROL AND IMPROVEMENT OF HEALTH AND SAFETY The year 2010 saw the establishment of a project to obtain the OHSAS 18001:2007 certication at the plants in Spain and Argentina. Adding Mexico to the same system will be the next objective.

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Social Commitment

Occupational and Personal Harmony, a Collaborative Effort

Confebask includes ARTECHEs experience of balancing work and personal life into its Good Practices Guide
> Providing support for balancing personal, family, and work life has been a part of ARTECHEs culture since the very beginning. Achieving the best work environment requires responsibility and commitment on the part of everyone in the organization. Flexible management is the rst step in dening a plan consisting of measures for balancing personal and work life. In 2010, this plan earned the recognition of Confebask (Basque Business Confederation), which has included our experience in its Good Practices Guide. Some of the measures are aimed primarily at spatial and temporal exibility and to permits, licenses and vacations. But other issues are considered as well, like professional support and the fostering of training, family nancial aid, medical care aid, support for sports activities, dining rooms and transport, etc.

Support for socioeconomic development

We want to contribute to the well-being and progress of the communities in which we operate
> Because of our steadfast intention to perform our work in a responsible and honest manner, we continue striving to carry out measures that contribute to the economic and social progress of the communities where we conduct business. ARTECHEs professionals benet from medical care programs. We continue to collaborate in the creation of new business projects related to social economy through activities associated with training and technological research and development. Throughout 2010, we have continued our collaboration with Special Employment Centers.

RURAL ELECTRIFICATION IN MEXICO ARTECHEs experience in carrying out a rural electrication process using auxiliary voltage transformer services in the town of Tubares in the state of Chiguagua (Mexico) was selected in 2010 as a success story to be presented at the World Energy Congress (WEC) and CIGR.

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