Company: Tubacex, S.A.
Industry: Metalworking industry
Country: Spain
Sector: Materials
Company type: Public limited company
Revenue (EUR): 852000000.4
Employees: 2500

Reported EU Taxonomy activities:
Manufacture of iron and steel

EU Taxonomy KPIs (currency: EUR, units: millions)
Turnover:
totalTurnover: value: 852.392
percentage: 100
eligibleTurnover: value: 92.185
percentage: 10.81
alignedTurnover: value: 92.185
percentage: 10.81
nonEligibleTurnover: value: 760.28
percentage: 89.19
CapEx:
totalCapex: value: 86.9697
percentage: 100
eligibleCapex: value: 3.264
percentage: 3.75
alignedCapex: value: 3.264
percentage: 3.75
nonEligibleCapex: value: 83.706
percentage: 96.25
OpEx:
totalOpex: value: 22.765900000000002
percentage: 100
eligibleOpex: value: 4.84508
percentage: 21.28
alignedOpex: value: 4.84508
percentage: 21.28
nonEligibleOpex: value: 17.92082
percentage: 78.72

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Image /page/0/Picture/1 description: The image shows the logo for TUBACEX GROUP. The word "TUBACEX" is in large, white, sans-serif letters. Above the "A" is a red curved line. Below "TUBACEX" is the word "GROUP" in smaller, white, sans-serif letters. The background is black.

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Image /page/3/Picture/1 description: The image shows a white recycling symbol above the text "100% RECYCLED PAPER" on a black background. The recycling symbol consists of three arrows forming a triangle, indicating the continuous loop of recycling. The text is stacked below the symbol, with "100%" on the top line, "RECYCLED" on the second line, and "PAPER" on the bottom line.

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Our mission is to promote human development, meeting new challenges with cutting-edge industrial products and services.

We are a supplier of advanced, **high value added solutions** for the **energy** and **mobility sectors.**

Image /page/4/Picture/2 description: The image shows the logo for TUBACEX GROUP. The word "TUBACEX" is in large, bold, black letters. Above the "A" is a red curved line. Below "TUBACEX" and slightly to the right is the word "GROUP" in smaller, bold, black letters.

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# INDEX

#### LETTER TO SHAREHOLDERS <sup>8</sup>

| 1 | ORGANIZATIONAL PROFILE | 1.1. | Corporate presentation            | 12 |
|---|------------------------|------|-----------------------------------|----|
|   |                        | 1.2. | Corporate Governance              | 20 |
| 2 | STRATEGY               | 2.1. | Photography of the market         | 26 |
|   |                        | 2.2. | Business strategy                 | 28 |
|   |                        | 2.3. | Risk management                   | 34 |
| 3 | SUSTAINABILITY         | 3.1  | Commitments and Initiatives       | 40 |
|   |                        | 3.2  | Relationship with stakeholders    | 44 |
|   |                        | 3.3  | Materiality analysis              | 46 |
|   |                        | 3.4  | «Ambition 2030»                   | 48 |
| 4 | BUSINESS SITUATION     | 4.1. | Business evolution                | 62 |
|   |                        | 4.2. | Market situation                  | 66 |
| 5 | RESULTS                | 5.1. | Profit for the year               | 70 |
|   |                        | 5.2. | Tubacex Share Performance in 2023 | 74 |
|   |                        | 5.2. | European taxonomy                 | 76 |

#### BUSINESS DIRECTORY <sup>79</sup>

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#### Our Business Philosophy

*In a rapidly evolving world, Tubacex is forging its own path.* 

*Embracing challenges with commitment and integrity, there are no limits to our ambition.*

*Starting as tube manufacturers, we have evolved into a leader in advanced industrial products and services for energy and mobility.*

*Driving the world forward, innovation, competitiveness, and sustainability are at the heart of our mission.*

*Committed to environmental stewardship, we champion a decarbonized, circular economy.* 

*Investing in talent without barriers or limitations, Tubacex builds a business that cares deeply for humanity's advancement.*

*By providing solutions at the forefront of technical achievement, Tubacex stands as a global entity.* 

*Our progress is measured by contributions to the wellbeing and empowerment of people, communities, and the planet.* 

*Tackling new challenges, we offer advanced industrial products and services that drive human progress.*

*Because this is how we understand Tubacex.*

Image /page/6/Picture/11 description: The image shows a dark background with two translucent, curved shapes in the upper portion of the frame. The shapes are a reddish-pink color and appear to overlap slightly. The overall impression is abstract and minimalist, with the contrast between the dark background and the lighter shapes creating a sense of depth.

Image /page/6/Picture/12 description: The image shows the logo for TUBACEX GROUP. The word "TUBACEX" is in large, bold, black letters. Above the "A" is a red curved line. Below "TUBACEX" is the word "GROUP" in smaller, bold, black letters.

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Image /page/7/Picture/0 description: The image shows a series of curved, parallel lines in shades of purple, blue, and teal against a black background. The lines appear to be flowing or bending, creating a dynamic and abstract composition. The color transitions are smooth, and the overall effect is visually striking.

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# LETTER TO SHAREHOLDERS

Image /page/8/Picture/1 description: The image shows the logo for TUBACEX GROUP. The word "TUBACEX" is in large, bold, white letters. Above the "A" is a red curved line. Below "TUBACEX" is the word "GROUP" in smaller, bold, white letters.

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Image /page/9/Picture/7 description: The image shows two men in circular frames against a dark blue background with colorful streaks of light. The man on the left is wearing glasses, a white shirt, and a blue tie with a pattern. He has gray hair and a light complexion. The man on the right has dark hair, a beard, and is wearing a blue suit with a striped tie. He has a slightly darker complexion. The background is a mix of dark blue and purple, with streaks of light in various colors, including blue, purple, and green.

CHAIRMAN **FRANCISCO J. GARCÍA SANZ** CEO **JESÚS ESMORÍS ESMORÍS**

## NT2: THE DRIVING FORCE BEHIND TUBACEX'S NEW STRATEGIC CYCLE IN THE ENERGY TRANSITION

We are at the beginning of a transformative period in our company's history, driven by our strategic plan NT2, "A New Tubacex in the Energy Transition," which we presented at the Capital Markets Day on November 21, 2023, in Madrid. This new phase is transforming our organization into a provider of advanced industrial products and services for the energy and mobility sectors.

As we present the 2023 annual report, we are proud to highlight that this has been a year of historic achievements for Tubacex. We recorded a notable turnover of 852.4 million euros, reflecting a 19.3% increase from the previous year, and our EBITDA grew by 35.6%, reaching 125.2 million euros. This significant improvement is marked by an EBITDA margin of 14.7%, the best in Tubacex's history.

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Image /page/10/Picture/0 description: The image shows a dark background with streaks of light in various colors, including blue, purple, and gold. The streaks of light are arranged in a circular pattern, creating a sense of movement and energy. The overall effect is abstract and visually striking.

During this fiscal year, we exceeded our established forecasts, registering remarkable growth in key product and service segments and achieving a historic order book worth 1.6 billion euros. This robust performance results from our commitment to diversification, innovation, and our ability to anticipate market needs, particularly in the low-carbon segment.

In this context, the launch of NT2 is particularly noteworthy, renewing our commitment to growth, innovation, sustainability, and the security of energy supply. The updated strategic plan establishes the creation of Tubacex's low-carbon division, based on technologies such as CCUS (Carbon Capture, Utilization, and Storage) and hydrogen.

Our goal is to lead the low-carbon segment, reduce our exposure to the oil & gas sector to one-third, and achieve a turnover between 1.2 and 1.4 billion euros by 2027, with an EBITDA exceeding 200 million euros and a debt/ EBITDA ratio of less than 2 times.

Diversification and international expansion, including over 30 long-term agreements and the new CRA OCTG plant in Abu Dhabi, are highlights of our strategy.

In this context, our share price increased by 75.2% in 2023, reaching 3.5 euros per share, proposing a gross dividend of 14.5 million euros, with a payout of 40%.

The Tubacex Foundation continues to be our vehicle for social traction, working on training, diversity (equity and equality), CO2 impact reduction, and community support.

Tubacex continues to deploy its roadmap aligned with the Paris Agreement, called Ambition 2030. This plan aims to mitigate the environmental impact of our industrial activity with the ultimate goal of achieving carbon neutrality by 2050.

Finally, we extend our most sincere gratitude to the entire Tubacex team for their effort and dedication, which have been fundamental in achieving these exceptional results.

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# ORGANIZATIONAL PROFILE

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1.1 CORPORATE PRESENTATION

ORGANIZATIONAL

1.2 CORPORATE GOVERNANCE

Image /page/12/Picture/2 description: The image shows the logo for TUBACEX GROUP. The word "TUBACEX" is written in large, bold, white letters. Above the "A" in "TUBACEX" is a red curved line. Below "TUBACEX" is the word "GROUP" in smaller, white letters.

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1.1

CORPORATE
PRESENTATION

NTS AMEGA ALASKA

NTS AMEGA CANADA

TUBACEX DURANT

NTS AMEGA HOUSTON
NTS AMEGA MIDLAND
NTS AMEGA BROUSSARD
NTS AMEGA OKLAHOMA
TSS HOUSTON

HEADQUARTERS
ACERALAVA
TTI LLODIO
TTI AMURRIO
TTI OCTG
ΤΤΑ
TUBACOAT
TUBACEX SERVICES
TSS CENTRAL WAREHOUSE
TXUT

SALEM TUBE
TSS PA

NTS AMEGA GUYANA

TBX UPSTRI
DO BRASIL
TSS BRASIL

Tubacex is at the forefront of the global
market in the design, manufacture and
installation of advanced industrial high
value added products and services, focusing
on the energy and mobility sectors.

Sales of
852.4
millon €

24
production
plants

14
service
centers

2,500
employees
as of december 2023

KEY FIGURES 2023

THE COMPANY IS
PRIMARILY FOCUSED ON
THE PROJECT MARKET
BUT HAS A SPECIALIZED
UNIT FOR THE
DISTRIBUTION MARKET
(TUBACEX SERVICE
SOLUTIONS, TSS).

1 | ORGANIZATIONAL PROFILE

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Image /page/14/Figure/0 description: This image shows a world map with the locations of various manufacturing plants, service centers, and sales representatives. The map includes the names of the locations, such as SS NORWAY, EGA PROMET, TSS FRANCE, SBER, SBER PU, TSS CENTRAL EUROPE, TUBACEX IBF KAZAKHSTAN, NTS AMEGA SAUDI, IBF PIPES, IBF FITTINGS, TSS NEA, TSS INDIA, TTP TUBACEX INDIA, TBX UPSTREAM UAE, NTS AMEGA UAE, TSS MIDDLE EAST, TAT AWAJI STAINLESS, and NTS AMEGA SINGAPORE. The map also includes a legend that indicates the symbols used to represent manufacturing plants, service centers, and sales representatives.

Tubacex is a global leader in the manufacture of high value added products in advanced stainless steels and special alloys for the energy and mobility sectors. With a commitment to innovation and excellence, our fully integrated value chain spans from research and development to the delivery of the end-product. This integration guarantees cutting-edge technology, superior quality, and a focus on sustainability and circularity that sets industry standards. We specialize in a range of advanced materials, including corrosion-resistant alloys (CRA), and offer a suite of advanced machining services.

Tubacex operates production facilities and service centers across over 30 countries, ensuring valuable service delivery to its clients worldwide. Its commitment to sustainability and environmental stewardship is recognized and validated by top ESG certification authorities. This includes adherence to Science-Based Targets (SBT) for reducing emissions, to the Carbon Disclosure Project (CDP), and meeting the sustainability criteria set by S&P. More information in www.tubacex.com.

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## MISSION

Tubacex is an innovative multinational industrial group that is a leader in the global market for advanced industrial solutions.

It aims to satisfy customers through a constantly evolving portfolio of products and services.

The company is reliable, consistently fulfilling its commitments to both external and internal clients.

Tubacex grows in a profitable and sustainable manner.

It is committed to effectively managing the return on its investments and appropriately compensating shareholders (in 2023, the Board of Directors approved a payout of 40%).

The company rigorously manages its processes and systematically applies continuous improvement to achieve excellence.

Tubacex is firmly committed to permanently promoting a safe and pleasant work environment while always respecting the environment.

It seeks to contribute to the development of society and its suppliers by training its professionals and staff, working as a team, and continuously measuring its results.

Image /page/15/Picture/10 description: A man wearing a white hard hat and dark blue work clothes is leaning against the railing of a ship. He has a beard and is looking out at the ocean. The ship is gray and has pipes running along the top. The sky is a light orange color.

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Tubacex aspires to be the global leader and benchmark in innovative industrial solutions with advanced materials, excelling in management and service. While striving to meet and exceed customer expectations, it also focuses on maintaining sustainable profitability and the personal development of its employees.

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# VISION VALUES

Image /page/16/Picture/4 description: The image is a collage of nine different images, each representing a different business concept. The first image is of a person speaking into a microphone, representing leadership. The second image is of a hand checking off boxes on a list, representing results orientation. The third image is of two people shaking hands, representing customer satisfaction. The fourth image is of a hand touching a network of interconnected nodes, representing creativity and innovation. The fifth image is of three people working together, representing teamwork. The sixth image is of a person walking up a staircase, representing continuous improvement. The seventh image is of a hand manipulating a graph, representing value creation and profitability. The eighth image is of two hands reaching out to each other, representing diversity and dignity at work. The ninth image is of a statue of Lady Justice, representing business ethics.

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# ADVANCED INDUSTRIAL SOLUTIONS

The Group's diversification is evident in the five major sectors in which it operates: Industrial (35%), E&P Gas (24%), E&P Oil (19%), new markets (15%), and Powergen (7%).

It has a robust portfolio of products with nearly limitless application areas and high value added services provided under long-term agreements with strategic clients.

Image /page/17/Figure/3 description: The image is a donut chart showing the distribution of different sectors. Industrial accounts for 35%, E&P Gas accounts for 24%, E&P Oil accounts for 19%, New markets accounts for 15%, and Powergen accounts for 7%.

Image /page/17/Picture/4 description: The image shows three gray rectangles with the numbers 1, 2, and 3 written in white on them.

#### Stainless steel & high nickel alloys bars and billets

Long stainless-steel products, specialized in ingots, bars and billets, rolled and forged (120-600 mm)

PIPES & BARS / FLANGES / VALVES / INDUSTRIAL / HOLLOW BARS & OTHER METAL MECHANICAL APPLICATIONS

#### Seamless stainless-steel pipes & tubes

Seamless stainless-steel pipes & tubes (extrusion, piercing and cold finishing) – up to 8'''

Forged and machined tubular components, fittings and special connections

#### Application sector: Application sector: Application sector:

E&P OF OIL & GAS / OFFSHORE SUBSEA / INDUSTRIAL / CHEMICAL / NUCLEAR POWERGEN / AEROSPACE / LOW CARBON SOLUTIONS

NUCLEAR POWERGEN / INDUSTRIAL & PETROCHEMICAL / E&P OF OIL & GAS

Image /page/17/Picture/16 description: The image shows a piece of metal being processed in a machine. The metal is glowing orange and yellow from the heat. The machine has several rollers that are pressing down on the metal. The background is dark, which makes the metal stand out.

Image /page/17/Picture/17 description: A worker in a hard hat and safety gloves is moving pipes in a warehouse. The pipes are stacked in rows and have red caps on the ends.

Image /page/17/Picture/18 description: The image shows a large metal pipe in a factory setting. The pipe is silver and has a T-shaped joint in the middle. The background of the image is a factory with large windows and machinery.

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Image /page/18/Picture/0 description: An aerial shot captures a large, red cargo ship cutting through the deep blue sea. The ship, prominently positioned on the left side of the frame, leaves a trail of white foam in its wake, contrasting sharply with the surrounding water. The sea itself occupies the majority of the image, its surface textured with subtle ripples and waves, conveying a sense of vastness and depth.

Image /page/18/Picture/1 description: The image contains a large, white number "4" against a gray background. The number is positioned towards the right side of the image, with a portion of the gray background visible on the left.

#### High precision machining

Complex mechanical solutions for high grade alloy equipment that supports drilling, wellbore evaluation, completions, production, and upstream O&G operations

#### Value added operation & services

Image /page/18/Picture/5 description: The image shows the numbers 4, 5, and 6 in white font on a gray background. Each number is in its own separate box.

Stock, service & trading Master stockist in seamless stainless steel tubes and pipes

#### Application sector: Application sector: Application sector:

E&P OF OIL & GAS / OFFSHORE SUBSEA / OFFSHORE SUBSEA / DRILLING TOOLS

TUBE THREADING / WELDING & BENDING / TOOL RENTAL & REPAIR / HEAT TREATMENT / COMPONENT MACHINING / COATINGS

ALL INDUSTRIES AND ENERGY SECTOR / STOCK MANAGEMENT / SERVICE CENTERS

Image /page/18/Picture/13 description: The image contains three separate pictures. The first picture shows a close-up of a silver metal machine part. The second picture shows two people wearing orange uniforms and white hard hats, looking up at an oil rig. The third picture shows a rack of metal pipes.

ANNUAL REPORT 2023

17

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Image /page/19/Picture/0 description: A construction worker in a yellow safety vest and white hard hat is guiding a large metal pipe being lifted by a crane. The pipe is suspended by chains and has green straps around it. In the background, there are buildings and construction cranes against a blue sky with some clouds.

# 2023 MILESTONES

**Three significant events stand out during this year:**

#### 1. Strategic Plan Update

The first significant event is the early achievement of the 2022- 2025 Strategic Plan, two years ahead of schedule, prompting the company to update it for the 2024-2027 period (chapter 2). Under the name NT2 (Driving the New Tubacex towards the Next Transition), the new roadmap maintains the five pillars of the previous plan: leadership in sustainability, net debt reduction, operational stability and profitability, competitiveness, efficiency, and diversification. However, it sets more ambitious goals supported by the energy transition, aiming to achieve a turnover of between 1.2 billion euros and 1.4 billion euros, an EBITDA of over 200 million euros, and a Net Financial Debt/EBITDA ratio below 2 times (currently 2.5), according to the Group's estimates.

The presentation of this updated Strategic Plan took place at the Capital Markets Day held in Madrid on November 21, 2023. Following this event, the company's shares began a rally, increasing by more than 30% by the end of the year and by 70% compared to the end of 2022 (chapter 5).

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Image /page/20/Picture/0 description: A man wearing a white hard hat and black earmuffs is seen from the back, wearing a black jacket with yellow stripes and the words "TUBACEX GROUP" on the back. He is standing on a platform with a blue sky in the background.

#### 2.Record Results

This milestone is only achievable following another significant accomplishments the record-breaking results (chapter 5). These include record sales of 852.4 million euros (+19.3%), an EBITDA of 125.2 million euros (+35.6%), and an EBITDA margin of 14.7%. Additionally, the order backlog was maintained at a historic level of 1.6 billion euros.

#### 3. Low Carbon

In terms of sustainability, within the framework of its "Ambition 2030" program, Tubacex promotes a decarbonization plan that allows it to meet the emission reduction targets set by the European Union and offers sustainable solutions to help its clients achieve these goals, thus anticipating their needs. Tubacex is reducing emissions through improvements in manufacturing and recycling processes, while also helping its clients reduce their emissions by enhancing efficiency, lifespan, and lifecycle.

A third significant milestone is the promotion of the Low Carbon division, poised to become the spearhead of the company as a global leader in the energy transition. This division develops solutions for new sustainable technologies, such as the growing CCUS (carbon capture, utilization, and storage) business by providing tubular solutions for CO2 capture, transport, and sequestration, and the emerging hydrogen market as a substitute for fossil fuels.

All these measures are supported by prominent ESG certification bodies, including Science Based Targets (SBT) commitments for emission reduction and S&P sustainability standards.

These milestones highlight how the company aims to anticipate global trends, positioning itself as a leader not only in sectoral changes but also in social advancements.

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Image /page/21/Picture/0 description: A group of five people are standing in front of a dark brown wall with the number 8 on it. The people are all wearing suits and ties, except for the woman on the right, who is wearing a tan suit. The people are all looking at the camera. The man on the left is wearing a gray suit with a blue tie. The man in the middle is wearing a black suit with a red tie. The man on the right is wearing a blue suit with a blue tie. The woman on the right is wearing a tan suit with a gold pin on her lapel.

# CORPORATE GOVERNANCE 1.2

#### 1.2.1. Board of Directors

The year 2023 marked the second full year for the Chairman of the Board of Directors, who, as an independent director, succeeded Mr. Álvaro Videgain in 2021. The Board has established several committees to assist in its duties and ensure proper governance of Tubacex. Specifically, these committees are the Audit and Compliance Committee, the Appointments and Remuneration Committee, the Sustainability and Good Governance Committee, and the Strategy and Monitoring Committee.

With these committees, the Tubacex Board of Directors strengthens its commitment to transparency, integrity, and sustainability, ensuring efficient and responsible management that benefits all its stakeholders.

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Image /page/22/Picture/0 description: A group of seven people are standing in a row. The group consists of four women and three men. All of the people are wearing business attire. The men are wearing suits and ties, and the women are wearing blazers and pants or skirts. The background is a dark wall.

Composition of the Board of Directors at 31st December 2023

| Maider<br>Cuadra<br><b>Secretary</b> | Francisco J.<br>García Sanz<br><b>Chairman</b> | Manuel<br>Moreu<br><b>Vicepresident</b> | Jesús<br>Esmoris<br><b>CEO</b> |
|--------------------------------------|------------------------------------------------|-----------------------------------------|--------------------------------|
| NON MEMBER                           | INDEPENDENT                                    | INDEPENDENT                             | EXECUTIVE                      |
| Isabel<br>López                      | Gema<br>Navarro                                | Nuria López<br>de Guereñu               | Iván<br>Martén                 |
| Antonio Ma<br>Pradera                | Jorge<br>Sendagorta                            | José<br>Toribio                         | Gracia<br>López                |

**BOARD MEMBERS PROPRIETARIES**

BOARD MEMBERS PROPRIETARIES BOARD MEMBERS INDEPENDENTS

#### Audit and Compliance Committee

The Board of Directors also approved specific regulations for the Audit and Compliance Committee, which had previously been governed by the Regulations of the Board of Directors. These regulations incorporated all the responsibilities assigned to this delegated body by the Capital Companies Act, best practices for listed companies, and the recommendations of the Good Governance Code for listed companies approved in 2020.

Among its functions, notable responsibilities include the supervision of the process for preparing and presenting both financial and non-financial information, as well as the oversight of non-financial risks.

#### Appointments and Remunerations Committee

Similarly, the company's highest decision-making body approved new regulations for the Appointments and Remuneration Committee, incorporating the content provided for this committee in the Capital Companies Act and the CNMV Technical Guide. By doing so, Tubacex adopts the best practices in this area, reinforcing the role of this committee in relation to the Board concerning the executive team, for whom it establishes policies on appointments, remuneration, and dismissals. Additionally, the committee plays a key role in managing conflicts of interest.

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#### Commission on Sustainability and Good Governance

To strengthen the governance structure and in line with existing recommendations and best practices, the Board of Directors of Tubacex agreed in 2021 to establish a new Sustainability and Good Governance Committee. The functions of this committee are outlined in the "Regulations of the Sustainability and Good Governance Committee" and consist of:

- 1. Promoting the company's ESG policies to ensure they are geared towards value creation through sustainable behaviors.
- 2. Ensuring that the Group's Strategic Plan integrates and develops ESG policies.
- 3. Understanding, supervising, and evaluating the relationship processes with various stakeholders.
- 4. Ensuring that ESG-related risks are adequately integrated into the Group's risk management and control models.
- 5. Determining the guidelines, criteria, and general principles that should govern the content of the Non-Financial Information Statement and any other equivalent reporting system.
- 6. Collaborating with the Tubacex Foundation to identify elements of the Group's strategy that can be promoted

through specific ESG projects, making the Foundation an instrument of sustainability policy.

7. Encouraging the Group's compliance with the 17 Sustainable Development Goals (SDGs) approved by the United Nations.

#### Strategy and Monitoring Committee

The Regulations of the Strategy and Monitoring Committee were approved in 2022. This committee is chaired, as usual, by the Chairman of the Board of Directors.

In all committee meetings, the secretary of the Board of Directors acts as the secretary to ensure the required coordination as mandated by the Board's Regulations.

At the end of 2023, following the annual evaluation exercise of the Board, the work of each committee for 2024 has been planned, along with the calendar for the entire year. This annual evaluation has been conducted by the Board of Directors since 2002 to continuously improve the functioning of the Board, its delegated bodies, and its main statutory roles, namely the chairman, the CEO, and the secretary of the Board.

As a novelty, the most recent evaluation was conducted internally, following an external evaluation the previous year, thereby applying the best corporate governance practices for listed companies.

Image /page/23/Picture/15 description: The image shows a stack of white pipes. The pipes are arranged in a neat and orderly fashion, creating a visually appealing pattern of circles. The white color of the pipes gives the image a clean and modern look. The pipes are stacked tightly together, suggesting that they are being stored or transported. The image is well-lit, and the pipes are in focus, making them the main subject of the image.

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#### 1.2.2.Management Committee

Tubacex is composed of a group of companies, coordinated at the group level by the management team, which represents the various units and functional areas.

Image /page/24/Picture/2 description: A man with short, curly brown hair and a beard is wearing a blue suit and a blue and white striped tie. He is standing in front of a blurred background of vertical lines.

**Jesús Esmoris** CEO

Image /page/24/Picture/3 description: The image shows a close-up of a man with a beard and mustache, wearing a blue suit and a patterned tie. He is smiling and looking directly at the camera. The background is blurred, but appears to be an outdoor setting with light-colored walls or columns.

**Antón Azlor** Corporate Commercial Director

Image /page/24/Picture/4 description: A man in a dark blue suit and white shirt with a red tie is shown in a close-up shot. He has short, dark hair and a serious expression. The background is blurred, but appears to be a building with light-colored walls.

**Guillermo Ruiz-Longarte** Corporate Financial Director

Image /page/24/Picture/6 description: The image shows two headshots of men in suits. The man on the left has dark hair and a beard, and he is wearing a blue suit and tie. The man on the right has short dark hair and glasses, and he is also wearing a blue suit and tie.

**Manuel Sarabia** Corporate HR Director Managing Director Advanced Solutions **Diego Herrero** Corporate Innovation Director

Image /page/24/Picture/8 description: A man in a suit and tie is smiling at the camera. He has dark hair and a light complexion. The background is blurred, but it appears to be an outdoor setting.

**Miguel Gómez Lacabex** Corporate Business Development Director Managing Director Low Carbon

Image /page/24/Picture/10 description: The image shows a group of six people, likely professionals, standing in a row. They are all dressed in business attire, such as suits and ties, suggesting a formal or corporate setting. The background appears to be a building facade with vertical lines, possibly windows or architectural elements. The lighting is bright and even, illuminating each person clearly. The individuals have varying skin tones and hair colors, and they are all facing forward, creating a sense of unity and professionalism.

**Ana López de Mendoza**

Corporate Risk and Internal Control Director

**Celestino Danis** Managing Director Steel & Extrusion

**Iker Azkagorta** Managing Director Special Components **Ajay Sambrani** Managing Director Asia

**Javier Lorenzo** Managing Director Americas

Image /page/24/Picture/23 description: The image shows a close-up of a man wearing a dark suit and a red tie. The text "Juan" is located at the bottom of the image.

**Gomez-Cordobés** Managing Director Middle East

Image /page/24/Picture/19 description: The image is a QR code. It is a square grid of black and white squares. There are three larger black squares in the corners of the QR code.

(The composition of the members of these committees can be consulted on the website www.tubacex.com or in the corresponding Non-Financial Information Report for the year 2023)

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# STRATEGY 2

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2.1 PHOTOGRAPHY OF THE MARKET

2.2 BUSINESS STRATEGY

2.3 RISK MANAGEMENT

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**The geopolitical tensions generated from the wars between Russia and Ukraine, as well as between Gaza and Israel, along with attacks in the Red Sea, the lingering effects of COVID-19 in China, and the subsequent reopening of its economy, and the still persistent inflation with consequent interest rate hikes to curb it, are some of the uncertainties that have marked 2023. Although the scare of recession has faded, the global economic growth remains weak and is trending downward as we head into the new fiscal year.**

This year, the industrial sector has experienced a decline in energy and raw material prices, following the significant increase registered the previous year due to the war in Europe. Currently, the industry is focusing on the evolution of demand and metal prices, influenced by the tightening of financing conditions and the instability of international trade.

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Image /page/28/Picture/1 description: A person wearing a yellow welding mask and brown gloves is welding a metal pipe. The person is standing in front of a red metal structure and a metal can. The background is dark and blurry.

In the backdrop, the mandated decarbonization of economies requires significant investments to undertake the energy transition and agility to adapt to the new 'green' regulatory framework.

In this context, Regulation 2023/956, dated May 10, 2023, establishes the Carbon Border Adjustment Mechanism (CBAM), a mechanism that, when fully implemented, will require importers of goods into the European Union to purchase certificates equivalent to the carbon price they would have paid if the goods had been produced under EU carbon pricing rules. To comply with this regulation, Tubacex is developing an adaptation project to address the first phase (transition period) of this regulation and report quarterly the emissions generated in its imports.

Within the regulatory framework directly impacting Tubacex's business, there are positive news following the extension until March 2025 of the suspension of rebalancing tariffs on U.S. steel and aluminum products by the European Union, in exchange for the U.S. reviewing Section 232 and replacing it with a quota system.

Additionally, Tubacex's European production centers benefit from the European Commission's decision to extend the import protection regime by one more year (until June 2024).

There are also positive regulatory developments from China, as the anti-dumping tariffs on tubes originating from the Chinese giant are under review, with a possible extension in 2024 for an additional five years.

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**Despite macroeconomic and geopolitical uncertainty, in 2023, Tubacex achieved a milestone that highlights the value of the roadmap designed after the pandemic to strengthen the Group and prepare it for sustainability with a key role in the energy transition, contributing to energy supply security. This milestone is the achievement of the objectives of its 2022-2025 Strategic Plan two years ahead of schedule, leading the company to update it for the 2024-2027 period.**

Throughout the year, the strong performance of the industrial sector, combined with the competitiveness and high performance of the company's advanced industrial solutions, has not only ensured revenue stability but also resulted in excellent outcomes accompanied by a solid order backlog valued at 1.6 billion euros. The current plan estimated sales of between 1 billion euros and 1.2 billion euros for 2025, but the quarterly results of 2023 indicate the company's positive momentum and suggest an upward revision of the targets.

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Image /page/30/Figure/0 description: The image shows three risk matrices representing climate change risks over time: Short Term (2025), Mid Term (2030), and Long Term (2050). Each matrix plots Impact against Probability, with different icons indicating various types of risks. The risks include Acute physical risks, Chronical physical risks, Risks of market transition, Technical transition risks, Reputational transition risks, and Policy & Legal transition risks. The positions of these icons within the matrices shift over time, indicating changes in the perceived impact and probability of each risk category.

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Under the name NT2 (Driving the New Tubacex towards the Next Transition), the new Strategic Plan retains the essence of the previous one, setting more ambitious goals based on energy transition and the transformation of the company with the Low Carbon business unit, along with a strong commitment to diversification as a spearhead.

Thus, by 2027, the company aims to achieve a turnover of between 1.2 billion euros and 1.4 billion euros, an EBITDA of over 200 million euros, and a Net Financial Debt/EBITDA ratio below 2 times (currently 2.5).

The plan sets new targets to address the challenges of energy transition and business transformation, paving the way for a new Tubacex. To understand the challenges of NT2, it is essential to recall the foundations and key aspects of its predecessor.

#### 2.2.1 Strategic Plan (2022-2025): Key supplier for energy and mobility sectors

Having regained financial stability and strategic momentum (efficiency, expansion, and diversification) after the impact of COVID-19, Tubacex closes a cycle focused on the design and manufacture of comprehensive tubular solutions and opens a new one with a Strategic Plan (2022-2025) aimed at becoming a provider of sophisticated industrial products and high

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value added services, primarily for the energy and mobility sectors. This plan is supported by three essential pillars: sustainability, profitability, and competitiveness.

The company targets the energy transition at a time when its order backlog stands at 1.6 billion euros, the highest in the last four years. The Strategic Plan projects sales of 1 billion euros by the end of the period, leveraging the expansion cycle of traditional businesses and the growth of low-emission energy and mobility sectors.

The ultimate goal is to prepare the business for 2030 to be divided into three pillars:

**Support for Decarbonization:** Helping clients on their path to energy transition by developing powerful solutions that promote carbon emission reductions and improve process efficiency. This includes segments like CRA OCTG (Oil Country Tubular Goods), which encompasses tubular products used in the oil and gas industry (exploration and extraction activities), and SURF (subsea), which includes subsea applications, umbilicals, risers, and flowlines for offshore energy generation.

**Low Emission Energy:** Laying the foundations for what is set to become the crown jewel of the new Tubacex, the Low Carbon division, which is propelled by NT2 and focuses on innovating with technologies necessary for the energy transition.

**Growth Opportunities:** Developing and/or seeking new businesses in energy and mobility through organic and inorganic growth.

#### 2.2.2 NT2 Strategic Plan (2024-2027): Driving the New Tubacex towards the Next Transition

Presented on November 21, 2023, at the Capital Markets Day held in Madrid, NT2 builds upon the foundations of the previous Strategic Plan but leverages corporate transformation and the energy transition to respond to emerging trends and the need for a balanced coexistence between conventional and renewable energies.

In addition to being a leader in sustainability, Tubacex's new roadmap aims to reduce the cyclicality of its activities and decrease its exposure to oil and gas.

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#### Growth Drivers: five strategic pillars

Inherited from the previous strategic cycle, Tubacex has redesigned a roadmap based on five pillars to guide and support its transformation while ensuring revenue stability, improving competitiveness, and increasing diversification. This is evidenced by the historic annual results recorded in 2023 (chapter 5) and the solid order backlog mentioned earlier.

**1. Sustainability:** With the aim of contributing to human progress by promoting responsible business activity, the sustainability plan is supported by four key areas:

- Advancing towards energy neutrality and enhancing business circularity.
- Contributing to the development of innovative solutions in energy transition.
- Caring for people and local ecosystems where the company operates.
- Promoting transparency.

**2. Debt reduction:** Throughout 2023, net debt was reduced to 2.2x Net Financial Debt/EBITDA, compared to 3.1x at the end of 2022. This decrease results from the positive sector cycle, allowing the company to focus on cash generation through six actions:

- Optimization of working capital requirements.
- Optimal inventory levels per plant.
- Divestment from non-strategic businesses.
- Discipline and rigor in capital investment (CAPEX).
- Cash pooling strategy.
- Maintaining a net debt to EBITDA ratio of 2-3 times.

**3. Business stability:** To mitigate fluctuations and, therefore, cyclicality, Tubacex diversifies its product mix with premium solutions and its business geographically, covering raw materials and energy, and especially through long-term contracts with top-tier clients (over 30 signed already), providing high revenue visibility. Examples include two CRA OCTG contracts with ADNOC in Abu Dhabi and Petrobras in Brazil and one in the umbilical tubes sector with Aker Solutions in Norway. In the subsea business, there are several framework agreements with strategic clients in the aerospace, petrochemical, and H&I (Hydraulic and Instrumentation) sectors.

**4. Competitiveness and Efficiency:** The common denominator for reducing debt and maintaining business stability is the effort to be competitive. As indicated at the beginning of this chapter, the pandemic's impact

Image /page/32/Picture/16 description: The image shows a close-up of a complex mechanical device, possibly a jet engine or turbine. The device is made of various metal components, including pipes, gears, and blades. The blades are arranged in a circular pattern and appear to be glowing with heat. The overall impression is one of power and complexity.

ANNUAL REPORT 2023

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forced Tubacex to undergo a restructuring to prepare for the 2022-2025 Strategic Plan and adapt to the new market situation: strict control of operating costs and raw materials and scrap management, and operational excellence supported by digitalization. Actions in this area include the Lean Manufacturing model through:

- Operational efficiency supported by digital capabilities.
- Continuous improvement through the TxPS system.
- Workforce flexibility.
- Cost reduction.

**5. Diversification:** Aligned with decarbonization requirements, the company accelerates its diversification plan to achieve a more balanced business mix, focusing on gas as a transition energy towards green energy and an alternative to coal, and its Low Carbon business unit as a fundamental lever in this balance. This is done without neglecting the traditional aerospace and nuclear sectors.

#### Key Points of the New Strategic Plan

**Low Carbon:** This business unit emerges as a central pillar, developing support solutions to advance sustainability and energy transition through carbon capture, utilization, and storage (CCUS) and hydrogen technologies. CCUS has become an ally in the path to sustainability as one of the few technologies capable of reducing CO2 emissions from industries such as steel and cement. This aligns with the goal of achieving zero emissions, where Tubacex has a portfolio of projects delivering advanced industrial solutions, currently focusing on the CO2 injection process. By 2027, revenues of 100 million euros are expected.

**Financial objectives:** Tubacex projects an EBITDA of over 200 million euros for 2027, with estimated sales between 1.2 billion euros and 1.4 billion euros. The company also aims to maintain a Net Financial Debt (NFD) / EBITDA ratio below 2 times, reflecting a continuous trend towards financial deleveraging and strengthening cash flow.

**Reducing dependence on Oil & Gas:** The plan aims to reduce exposure to these energy sources to less than one-third of total activity, mainly in the case of oil.

**Shareholder remuneration policy:** Maintaining an attractive remuneration policy with a payout ratio of 30% to 40%.

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THE NEW STRATEGIC PLAN (NT2) PROJECTS ESTIMATED SALES OF BETWEEN 1.2 AND 1.4 BILLION EUROS BY 2027

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**Future Vision:** Position Tubacex as a global leader in advanced solutions for energy and mobility, with all businesses contributing significantly to the Group's growth.

#### Implementation

The NT2 plan is deployed in three simultaneous cycles:

**1. Strengthening traditional products and services:** Focusing on decarbonization and efficiency in high-profitability segments. This involves supporting clients in their decarbonization processes with products and services from traditional and new markets that minimize environmental impact and improve efficiency. Concurrently, Tubacex continues to consolidate its leadership position in high-profitability segments.

**2. Focus on low-emission energies:** Developing clean solutions. Under the Low Carbon business unit, innovative technological solutions are developed for the generation, storage, and transportation of energy in emerging hydrogen and CCUS markets.

**3. Diversification and growth:** Exploring expansion opportunities in energy and mobility. To sustain growth through diversification, the company does not rule out growth through M&A operations alongside organic growth. Expansion opportunities in the energy and mobility sectors will be analyzed, with a special emphasis on fostering new businesses. The portfolio of businesses aligned with diversification encompasses three main blocks:

- *Core Business:* Includes traditional businesses like Oil & Gas E&P or energy generation, along with diversification businesses such as aerospace.
- *Low Carbon Business:* Tubacex already has a presence in this key growth area after developing specific materials and alloys, translating into advanced industrial products for energy generation and storage, as well as projects related to CCUS, storage and utilization, hydrogen, circular economy, and renewable energies.
- *New Businesses:* Focused on analyzing growth opportunities in the energy and mobility sectors through the development of new businesses in-house or through inorganic operations.

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## RISK MANAGEMENT

**To implement the Strategic Plan, a roadmap is necessary to prevent, monitor, and address potential risks of any kind. This roadmap is embodied in the General Risk Control and Management Policy.** 

During the 2023, the Tubacex Board of Directors updated this document to include the basic principles and general action framework, materialized through a comprehensive risk control and management system. This system is based on an adequate definition and allocation of functions and responsibilities at the operational and supervisory levels and on procedures, methodologies, support tools, and information systems adapted to the various stages and activities of the system.

The General Risk Control and Management Policy is structured into three levels of protection and defense to address and manage significant risks:

Image /page/35/Picture/5 description: A man wearing a hard hat, safety glasses, and ear protection is inspecting metal cylinders. The cylinders are stacked on top of each other and have numbers written on them. The man is holding a piece of paper and appears to be comparing the numbers on the paper to the numbers on the cylinders. The man is wearing a black vest with yellow and green stripes. The background is blurry and appears to be a warehouse or factory.

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FOR THE FIRST TIME, THE AENOR CERTIFICATE WAS OBTAINED, CERTIFYING THE AVAILABILITY OF A RISK MANAGEMENT SYSTEM IN ACCORDANCE WITH THE UNE-ISO 31000:2018 STANDARD

- **Audit and Compliance Committee:** Periodically reviews internal control and risk management systems, including tax-related risks, to adequately identify, analyze, and report the main risks. In terms of ESG, this function is performed in coordination with the Sustainability and Good Governance Committee, as established in the company's Board of Directors Regulations.
- **Internal Audit Directorate:** Informs, advises, and reports to the Committee on risks and the functional activity areas regarding the identification, measurement, and existing control over these risks.
- **Management Committee:** Responsible for carrying out integrated risk management and control within business processes and decision-making.

Additionally, the policy identifies risk factors, indicating that these may vary depending on business conditions and evolution, mentioning the following:

a) Business risks.

b) Market risks.

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- c) Operational, technological, environmental, social, and legal risks.
- d) Corporate governance, ethics, and compliance risks.

e) Credit risks.

- f) Strategy and innovation risks.
- g) Regulatory and political risks.
- h) Reputational risk.

Annually, within the framework of the strategic reflection process, the Group updates the corporate risk map to identify and measure the risks it is exposed to, providing an analytical view of the underlying causal relationships and offering a broad perspective on the organization's overall exposure.

Risk identification is carried out through questionnaires and personal interviews with the heads of various business units and relevant corporate areas (primarily members of the Management Committee). Once identified, risks are evaluated based on their probability of occurrence and impact on strategic objectives.

The projects defined by management within the framework of their strategic plan mitigate identified risks and allow for their monitoring.

Risk and control functions include:

- •Coordinating the process of risk identification, evaluation, and quantification for the subsequent preparation/update of the risk map.
- Ensuring proper control and monitoring of risk management to keep it within acceptable levels.
- Ensuring appropriate reporting to the Management Committee, Audit and Compliance Committee, and Board of Directors.

Image /page/37/Picture/14 description: The image shows a green hydrogen production facility with wind turbines in the background. The facility includes a large, white cylindrical tank with the symbol "H2" in green letters on its side. Next to the tank is a series of white electrical boxes. To the right of the tank is a large, green cylindrical container with the words "H2 GREEN HYDROGEN" in white and black letters on its side. In the background, there are three wind turbines. The sky is blue and the ground is covered in green grass.

#### 2 STRATEGY

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An important milestone in 2023 was the issuance of the AENOR certificate, which confirms that Tubacex has a Risk Management System in accordance with UNE-ISO 31000:2018, thus meeting an internal milestone and reinforcing the organization's commitment to risk management.

The audit required for certification was conducted in line with corporate processes, reviewing activities associated with risk management such as:

- Activities related to determining context and stakeholders.
- Processes related to communication and consultation.
- Activities linked to risk identification.
- Processes related to risk evaluation.
- Activities related to risk treatment plans.
- Activities associated with risk monitoring and measurement.
- Activities linked to registration and reporting.
- Risk management in activities within the scope of certification.

Along with the corporate risk map, progress was made in the previous fiscal year on developing a specific ESG risk map, which was further strengthened in 2023. The double materiality analysis, conducted in accordance with the recommendations of the European Financial Reporting Advisory Group (EFRAG), served as a source for identifying risks and opportunities. This analysis helps identify sustainability-related impacts (positive and negative) and measure their economic impact in case of realization (chapter 3).

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# SUSTAINABILITY 3

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3.1 COMMITMENTS AND INITIATIVES

3.2 RELATIONSHIP WITH STAKEHOLDERS

3.3 MATERIALITY ANALYSIS

3.4 AMBITION 2030

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# COMMITMENTS AND INITIATIVES 3.1

**Aware of the nature of its activities and the environmental impact primarily associated with emissions and waste generation, Tubacex has designed a roadmap aligned with the Paris Agreement, named Ambition 2030. This plan ambitiously aims to mitigate its environmental impact with the ultimate goal of achieving carbon neutrality by 2050.**

Tubacex has set the following ambitious goals for 2030:

- Reduction of Emissions: 60% reduction in Scope 1 and 2 emissions, and 30% reduction in Scope 3 emissions.
- Green Energy Usage: Over 40% of energy consumed to be from renewable sources.
- Net Zero by 2050: Achieve net-zero carbon emissions by 2050.
- Waste Management: Over 95% of waste to be recycled by 2030.
- Supplier Evaluation: 100% of suppliers to be evaluated on ESG criteria.

To achieve these goals, the company has implemented actions focused on reducing its carbon footprint, improving water resource management, increasing efficiency in waste management, and enhancing supply chain traction, among other initiatives. This roadmap also supports clients in their energy transition journey.

#### 3 SUSTAINABILITY

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#### MORE THAN 50 PROJECTS LAUNCHED ACROSS THE TUBACEX GROUP

SOME ENERGY RELATED INITIATIVES

#### EFFICIENCY

- 1. Energy efficiency improvements
- 2. ISO 50001. Energy efficiency certification for all plants

#### RENEWABLES

1. PPA European facilities powered by green energy sources

#### CIRCULARITY

- 1. Corporate waste management model
- 2. Scrap recovery model (>80% waste recycled)
- 3. Slag and Refractory Recycling

#### DECARBONIZATION OF OUR STEEL MILL

The defined roadmap incorporates technologies such as oxycombustion, electrification, CO<sup>2</sup> capture, and hydrogen.

*Vision: To be the European leader in the production of green stainless steel*

Image /page/42/Figure/14 description: This image shows a graph with the y-axis labeled "CO2 %" and the x-axis labeled "t". The graph shows the reduction of CO2 emissions over time with different methods. The methods listed are efficiency, oxy-combustion, CO2 capture, H2 blending, and electrification. The graph shows that by 2025, there will be an approximate 30% reduction in CO2 emissions. By 2030, there will be an approximate 60% reduction in CO2 emissions. The graph also shows that with I+D, there will be an approximate 100% reduction in CO2 emissions.

Image /page/42/Picture/15 description: This is a high-angle shot of a road cutting through a dense forest. The road is dark and narrow, winding its way through the trees. The trees are mostly green, with some variation in color and texture. The forest is dense and lush, with the trees growing close together. The overall impression is one of nature and tranquility.

The vector of Tubacex's Strategic Plan (chapter 2) is to become a leader in sustainability. By 2030, the company aims to base its business on three pillars: supporting decarbonization, driving new technologies necessary for the transition (such as hydrogen and carbon capture, utilization, and storage (CCUS)) through its Low Carbon unit, and identifying new growth opportunities in energy and mobility.

Tubacex's commitment to sustainability and environmental management is recognized and validated by leading certification authorities. Additionally, its sustainability and environmental policies for emission reduction are backed by Science Based Targets (SBT), an initiative in collaboration with the CDP, the UN Global Compact, the World Resources Institute, the World Wildlife Fund, and S&P sustainability standards.

Each year, the company undertakes actions to advance towards these goals. In 2023, Tubacex implemented numerous policies and manuals focused on ESG to reduce its environmental impact, promote social actions, and improve governance. These efforts build upon the initiatives launched in previous years.

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#### Policies and Manuals Available:

#### Initiatives Approved in 2023

**Integrated Environmental Policy:** Aims to expand commitments in environmental management, addressing climate, water, pollution, circularity, and biodiversity aspects.

**Equality, Diversity, and Equity Policy:** Enhances commitment to full equality in relationships within the company and between employees and external entities. This policy covers and integrates aspects of equality and inclusion:

- •Integrating gender equality across all organizational areas.
- •Preventing workplace, sexual, and gender-based harassment, as well as other forms of gender violence.
- •Preventing any form of harassment.
- •Promoting diversity and eliminating all types of discrimination, including biases, roles, and stereotypes based on gender, race, nationality, age, sexual orientation, gender identity, etc.
- •Providing necessary adaptations to facilities for people with disabilities.
- •Using inclusive language and corporate images.

#### **Training and Professional Development Policy:**

Provides a framework for employees to develop their knowledge and acquire new skills in a competitive environment. Tubacex commits to:

- •Providing material and intellectual resources to ensure necessary knowledge and skills acquisition for job performance and promoting personal and professional development.
- •Continuing to develop programs to improve skills and social and environmental awareness in line with the ESG objectives outlined in the Corporate Sustainability Policy.
- •Providing an organized structure with clear distribution of functions and responsibilities to facilitate professional development transparently.
- •Ensuring adherence to principles of equality, equity, and non-discrimination.
- •Maintaining open dialogue with employees and/or their representatives to ensure training needs are met.
- •Promoting employee training and awareness in sustainability.
- •Ensuring compliance with regulations related to training in occupational health and safety and other applicable areas.

**Occupational Health and Safety Policy:** Promotes the company's commitment to:

- •Providing necessary material, economic, and technical resources to create safe workspaces.
- •Having a clear organizational structure with defined roles and responsibilities.
- •Promoting employee consultation and participation in decision-making related to safety.
- •Developing and promoting a safety culture where each professional understands their responsibility in preventing accidents and injuries.
- •Maintaining open communication channels on safety issues and encouraging the identification and reporting of risks.
- •Investigating all incidents and accidents to understand causes and prevent recurrence, using this information to improve safety processes and practices.
- •Ensuring employee well-being and health through wellness programs promoting physical and mental health.

**Social Action Policy:** Aims to generate positive impact, supported by principles of sustainability, collaboration, solidarity, and social commitment.

**Code of Conduct:** Updated by the Board of Directors, this code outlines the principles and guidelines intended to steer the company's actions and behaviors in alignment with its corporate ethics and compliance with local, national, and international laws and regulations. It encompasses the set of principles and rules that govern the organization's internal operations and its relationships with partners, customers, suppliers, and society at large. The Code of Conduct provides a reference framework for all 

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individuals involved in Tubacex's business activities. For customers, the Code emphasizes the Group's commitment to continuous improvement, industrial and commercial excellence, and the provision of high-quality products and services while ensuring safety and innovation.

**Equality Plan:** Equality plans are implemented at the various production plants within the Group. In 2023, new plans were approved for the Basque Country plants, TTI, and Aceralava. Other plants without such plans have specific protocols against psychological, sexual, or gender-based harassment and physical violence (TSS), manuals with sections focused on non-discrimination (NTS and Tubacex India), or comply with federal and state laws promoting non-discrimination (USA, Saudi Arabia, Singapore).

**Sustainability Policy:** Incorporates a commitment to minimizing environmental impacts from Tubacex's activities, aligning with international initiatives for promoting the circular economy, and fostering practices for energy transition and climate neutrality through reducing and offsetting greenhouse gas emissions. This policy also includes commitments to influencing suppliers.

**Human Rights Policy:** Demonstrates the company's commitment to fostering an organizational culture that supports internationally recognized human rights and seeks to avoid complicity in human rights violations.

Image /page/44/Picture/5 description: A tractor is spraying crops in a field. The tractor is red and white, and it has a large tank on the back. The crops are green and leafy, and they are planted in rows. The sky is blue and there are some clouds.

ANNUAL REPORT 2023

**UBACEX**
GROUP

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## RELATIONSHIP WITH STAKEHOLDERS

**Tubacex has identified five major stakeholder groups: shareholders and the financial community, employees, customers, suppliers, and society. These primary groups are further divided into secondary and tertiary levels, resulting in over 50 subgroups of stakeholders in total.**

Various stakeholders engage through regular communication channels to understand their expectations and interests, allowing the establishment of specific action plans tailored to address these needs.

**• Shareholders and Financial Community:** Shareholders support the company's business project, making it crucial for Tubacex to generate and maintain their trust through long-lasting and stable relationships. The financial team also maintains permanent and transparent relationships with key groups essential for accessing financing sources, such as banks, investors, managers, and analysts.

**• Customers:** Tubacex's strategy is based on offering advanced industrial solutions with comprehensive value propositions that meet the highest quality standards and are tailored to customer needs. Consequently, all areas of the Group are customer-oriented, each contributing from their respective functions.

**• Suppliers:** They play a vital role in the company's business success. Tubacex has a panel of stable, sustainable, and ethical suppliers, who are evaluated to assess potential risks during the procurement processes.

**• Human Team:** This group includes employees, their representatives, families, and other related groups. They represent a strategic asset that contributes to

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sustainable value creation through their work and talent. Tubacex boasts a multicultural team of professionals with diverse affinities, united by a common goal: to grow the company and meet the needs of customers, shareholders, and society at large.

**• Affected Communities:** This group comprises regulatory bodies, educational institutions, and civil society. They are key stakeholders in consultation processes concerning the routine operations of plants and especially in new development centers.

Currently, the company is reviewing and analyzing the subgroups of stakeholders to incorporate them into a matrix that assesses their level of influence and interest. This effort aims to enhance stakeholder management and relationship processes.

| Stakeholder Groups (SG)                           | Information Sources                                                                                                                   |
|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
| Shareholders and<br>Financial Community           | General Shareholders' Meeting<br>Meetings<br>Shareholder Channel                                                                      |
| Customers                                         | Satisfaction surveys<br>Commercial indicators<br>Visits<br>Participation in forums<br>Trade fairs<br>Customer's Day<br>Market studies |
| Suppliers                                         | Meetings<br>Participation in forums<br>Alliances                                                                                      |
| Human Team                                        | Satisfaction<br>EFQM<br>Suggestions<br>Key forums<br>Training                                                                         |
| Society<br>Training centers,<br>diversity-focused | Key forums<br>Training<br>Meetings                                                                                                    |

organizations, NGOs, media,

regulatory bodies

Board of Trustees Alliances Key projects

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Image /page/47/Picture/0 description: The image shows the text "3.3 MATERIALITY ANALYSIS" in large, bold letters. The text is positioned on the left side of the image, with the number "3.3" appearing above the words "MATERIALITY ANALYSIS". The background of the image is a blurred, out-of-focus image of what appears to be a series of pipes or tubes. The pipes are arranged in parallel rows, and there are some blue clamps or fasteners visible on some of the pipes.

**The Corporate Sustainability Reporting Directive (CSRD) and the methodology developed by the European Financial Reporting Advisory Group (EFRAG) establish common standards for presenting non-financial information. According to these standards, a material aspect is one that can impact people or the environment and/or have financial effects on the business.**

To identify potentially material issues, Tubacex uses a benchmarking analysis with other companies, the most relevant aspects of the 2030 agenda. As a new element in 2023, the company stablishes the SASB standards from the International Sustainability Standards Board (ISSB), which identify financially important ESG information to evaluate how an organization creates business value.

From the resulting catalog of issues, Tubacex prioritizes them through the following activities:

**1. Impact Materiality Analysis:** Each impact (positive or negative, potential or real) is analyzed and assessed considering its severity and reversibility (only for negative impacts) and probability (for potential impacts). A sustainability issue includes those caused or contributed to by the company, directly related to its operations, products, and services, and through its business relationships.

**2. Financial Materiality Analysis:** For financial materiality analysis, the probability of occurrence and the magnitude of potential financial effects are assessed, suitable to the size and volume of the company.

After evaluating each parameter, the results are analyzed separately, and the materiality of each element is assessed.

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Image /page/48/Figure/0 description: The image shows a scatter plot titled "Short term". The x-axis is labeled "Financial materiality Internal Stakeholder Groups", and the y-axis is labeled "Impact Materiality External Stakeholder Groups". The y-axis ranges from 0 to 10, and the x-axis ranges from 0 to 20. There are several data points plotted on the graph. The data points are (1,1), (6,3), (6,4), (6,7), (7,6), (7,7), (7,8), (9,1), (9,6), (10,2), (12,1), (13,4), (13,6), (14,2), (15,7), (16,4), (16,8), (18,1), (18,6), (18,8). There are text boxes around the plot that say "Impact of the company's activities on its social and environmental context", "Severity\* occurrence of the impact on the social and environmental context", "Severity\* occurrence of the impact on the economic value of the company", "Impact of the context on the", and "A sustainability issue or aspect meets the criteria of Double Materiality if it is material from: 1. The perspective of impact 2. The financial perspective 3. Or from both perspectives".

| Sustainability item                           | Impact materiality | Financial materiality |
|-----------------------------------------------|--------------------|-----------------------|
| Data privacy                                  | Critical           | Critical              |
| Cybersecurity                                 | Critical           | Critical              |
| Energy transition                             | Critical           | Critical              |
| Mitigating and adapting to climate change     | Critical           | -                     |
| Sustainable management of suppliers           | Critical           | Significant           |
| Waste management                              | Significant        | Critical              |
| Sustainable water management                  | Significant        | Significant           |
| Fiscal transparency                           | Critical           | Minimum               |
| Respect for labor rights                      | Critical           | Minimum               |
| Equality and diversity                        | Critical           | Minimum               |
| Occupational health and safety                | Critical           | Important             |
| Quality of the products and services supplied | Critical           | -                     |
| Ethics and compliance                         | Critical           | -                     |
| Risk management                               | Critical           | -                     |
| Environmental management                      | Critical           | -                     |
| Compliance with environmental regulation      | Critical           | -                     |
| Customer satisfaction                         | Critical           | -                     |
| Talent attraction and retention               | Critical           | -                     |
| Customer health & safety                      | Critical           | -                     |
| Development of local communities              | Critical           | -                     |
| Employee training                             | -                  | Critical              |
| Circular economy                              | -                  | Significant           |
| Sustainable energy management                 | -                  | Significant           |
| Sustainability performance                    | -                  | Significant           |
| Sustainable innovation                        | -                  | Significant           |

ANNUAL REPORT 2023

**TUBACEX**
GROUP

**economic value of the company**

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Image /page/49/Picture/0 description: The image shows the number 3.4. The number 3 is on the left, followed by a decimal point, and then the number 4.

AMBITION

2030

**For the past two decades, Tubacex has actively participated in the United Nations Global Compact, the most significant voluntary initiative for promoting human rights, labor standards, environmental** 

**protection, and anti-corruption measures.**

By signing the Global Compact, Tubacex commits to advancing the fundamental pillars necessary to address the major challenges of sustainable development. This involves promoting the 10 universal principles and annually reporting progress on these commitments. Additionally, Tubacex demonstrates its dedication to addressing the significant challenges of sustainable development through the 2030 Agenda and its Sustainable Development Goals (SDGs), from which all other proposals, policies, and strategies of international sustainability frameworks are derived.

CONTRIBUTING TO HUMAN PROGRESS BY DRIVING RESPONSIBLE BUSINESS

Image /page/49/Picture/4 description: A man wearing a white hard hat, safety glasses, and gloves is inspecting a metal structure. The man is wearing a blue jumpsuit with a patch on the sleeve. The background shows the interior of a building with metal beams and supports.

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Image /page/50/Figure/0 description: The image is a circular diagram divided into four sections, each representing a different aspect of a company's sustainability and responsibility efforts. Section 1, titled "Advancing towards neutrality and enhancing business circularity," includes statistics such as "<60% Intensity of emissions," "40% Green energy," and "95% Of waste circularity." Section 3, labeled "Caring for our people and local environment," shows "<75% Accidents," "< 2% Pay Gap," and "1% Profit invested In social action." Section 2, "Contributing to the development of innovative solutions for energy transition," presents figures like "€50M Billed to new energy source," "80% R&D energy transition projects," and "1%-2% Of sales invested in R&D," along with the terms "Corporate policies" and "Remuneratio link to esg." Section 4, "Doing what is right and promoting transparency," mentions "Sustainable financing" and "Risk management."

Image /page/50/Figure/1 description: The image shows a circular chart divided into four quadrants. The top-left quadrant is dark blue, the bottom-left is light pink, the bottom-right is light gray, and the top-right is white. In the center of the circle is the number 1.

#### 3.4.1 Advancing towards neutrality and enhancing business circularity

#### Decarbonization

In 2023, Tubacex continues its decarbonization plans to enhance its climate performance. Aceralava is the primary recipient of these investment plans due to its nature and high energy consumption. This decarbonization plan is part of the Ambition 2030 climate roadmap, aiming to reduce GHG emissions (Scopes 1 and 2) by 60% by 2030 and achieve net-zero emissions by 2050.

#### Circularity

The company continues to make progress in recovering all the scrap generated in the steel mill, extending the recovery project to other Group production plants. In this regard, it advances with the revaluation process of slag, the main waste from the steel mill, at a recovery plant in Europe specializing in treating products from the stainless steel industry. This initiative prevents the disposal of around 15,000 tons per year in landfills, recovering minerals that re-enter the manufacturing process and are used in road asphalt products. These projects are in addition to existing ones for using recycled material or other improvements in waste management and water consumption diagnostics.

#### Responsible supply chain

Regarding the evaluation of the supply chain, the company has already assessed 829 suppliers on ESG criteria through its pilot supplier risk management tool. This highlights the review of its management processes to drive its supply chain within the framework of its sustainability commitments.

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#### Climate Risks

Tubacex has integrated physical and transition risks into its global risk model. The evaluation is conducted according to the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). This involves assessing both physical risks (acute and chronic) resulting from the effects of climate change on operations, and transition risks arising from the impacts of transitioning to a low-carbon economy.

The risks are analyzed across three different time horizons: short-term (2025), medium-term (2030), and long-term (2050). For each type of risk, potential sources are identified, and their probability of occurrence is evaluated under RCP 4.5 and 8.5 scenarios, along with the possible impact on the business and the timeframe for their realization.

| Sustainability<br>issue                  | Items / Material Aspect                           | Strategic Lines                                                                                                                           | SDG                      |
|------------------------------------------|---------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|
| Energy transition and<br>climate change  | Energy transition                                 | Moving forward in decarbonization<br>and energy efficiency                                                                                | Image: SDG 7 and 13      |
| Energy transition and<br>climate change  | Sustainable energy management                     | Moving forward in decarbonization<br>and energy efficiency                                                                                | Image: SDG 7 and 13      |
| Energy transition and<br>climate change  | Climate change mitigation<br>and adaptation to it | Moving forward in decarbonization<br>and energy efficiency                                                                                | Image: SDG 7 and 13      |
| Regulatory<br>compliance                 | Compliance with<br>environmental regulation       | Adhering to the highest ethical<br>and compliance standards                                                                               | Image: SDG 16 and 8      |
| Responsible<br>Supply Chain              | Sustainable management<br>of suppliers            | Sustainable supply chain                                                                                                                  | Image: SDG 12            |
| Water consumption<br>and water resources | Sustainable water management                      | Fostering business circularity                                                                                                            | Image: SDG 12, 6, and 13 |
| Circular Economy<br>and waste management | Waste management                                  | Fostering business circularity                                                                                                            | Image: SDG 12            |
| Circular Economy<br>and waste management | Circular economy                                  | Fostering business circularity                                                                                                            | Image: SDG 12 and 13     |
| Environmental<br>management              | Environmental management                          | Moving forward in decarbonization<br>and energy efficiency                                                                                | Image: SDG 7, 12, and 13 |
| Biodiversity                             | Impact on biodiversity                            | Sustainable supply chain.<br>Working with our customers on the<br>development of innovative<br>solutions that facilitate their transition | Image: SDG 15            |

Image /page/51/Picture/5 description: The image shows a stack of metal pipes with red caps on the ends. The pipes are arranged horizontally and are held together with blue straps. The background is a light blue sky.

#### 3 SUSTAINABILITY

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Image /page/52/Picture/1 description: The image shows a dense forest of green trees. The trees are of varying heights and shades of green, creating a textured and layered effect. The top of the image has the text "CONTRIBUTING TO THE DEVELOPMENT OF INNOVATIVE SOLUTIONS FOR ENERGY TRANSITION" and the number "2".

# 2

#### 3.4.2

Contributing to the development of innovative solutions for energy transition

| Sustainability<br>issue                 | Items/<br>Material Aspect                           | Strategic Lines                                                                                                                                                                            | SDG                                         |
|-----------------------------------------|-----------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|
| Quality                                 | Quality of the<br>products and<br>services supplied | Working with our customers on the<br>development of innovative solutions that<br>facilitate their transition                                                                               | Image: SDG 2, SDG 9, SDG 12, SDG 13         |
| Sustainability<br>strategy              | Sustainable<br>Innovation                           | Participating in leading initiatives for<br>transition Facilitating the industrialization<br>of high-impact innovative technology<br>solutions, moving towards business<br>diversification | Image: SDG 7, SDG 9, SDG 11, SDG 13, SDG 17 |
|                                         | Sustainability<br>performance                       | Working with our customers on the<br>development of innovative solutions that<br>facilitate their transition                                                                               | Image: SDG 9, SDG 12                        |
| Energy transition and<br>climate change | Sustainable energy<br>management                    | Moving forward in decarbonization<br>and energy efficiency and<br>Fostering sustainable financing                                                                                          | Image: SDG 7, SDG 13                        |

#### Comprehensive value propositions

The company's strategy is based on offering comprehensive value propositions tailored to the needs of its clients:

**Development of innovative solutions for energy transition.** In the framework of energy transition and the need to support and contribute to clients' decarbonization goals, Tubacex has incorporated a specific action axis within its Strategic Plan with the following strategic lines:

- Participation in leading transition initiatives: Acting as a key player in the hydrogen industry and carbon capture and storage (CCUS) processes.
- Facilitating the industrialization of high-impact innovative solutions: Promoting business diversification through the development and implementation of advanced technologies.
- Collaborating with clients: Developing solutions that enhance material performance in activities related to new energy sources.

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Image /page/53/Picture/1 description: The image shows an aerial view of a forest with a clearing in the shape of a cloud. Inside the cloud shape, the letters CO2 are written. The text "Low Carbon business unit: scope" is at the bottom left of the image. Below the forest scene are the numbers 1, 2, 3, and 4.

#### **Hydrogen**

- Specific materials and products developed for Hydrogen applications.
- Stainless-Steel high-pressure tubing for most applications.
- To develop components for electrolyzers.

#### **Carbon capture**

- Unique premium tubular solution for all stages of Carbon Capture.
- Integrated OCTG premium solution for CO2 injection.
- Development of specific Steel grades for Carbon Capture applications.

#### **Fertilizers & ammonia**

- Development of special products and welding technologies for fertilizer applications.
- Unique value proposition to serve the urea market.

#### **Circular economy**

- Improved processes efficiency.
- Waste-to-energy applications.
- To reduce our customers' CO2 emissions.

Image /page/53/Picture/17 description: The image shows an aerial view of a forest with patches of fog or smoke obscuring parts of the trees. The forest appears dense with varying shades of green, suggesting different types of trees or foliage. The fog or smoke is concentrated in certain areas, creating a hazy effect that partially obscures the view of the forest below.

#### 3 SUSTAINABILITY

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Image /page/54/Picture/1 description: A man in an orange jumpsuit and white hardhat stands on a ship, looking out at another ship in the ocean. The man is facing away from the camera, and his jumpsuit has the word "BACEX" on the back. The ship he is standing on has a green and white deck. The other ship is red and yellow, and it is in the distance. The ocean is blue, and there are some clouds in the sky.

Image /page/54/Picture/2 description: The image shows a white circle with the number 3 in the center. The circle is surrounded by a larger circle that is divided into four quadrants. One of the quadrants is pink, and the other three are white.

#### 3.4.3. Caring for our people and local environment

| Sustainability<br>issue                           | Items / Material<br>Aspect          | Strategic Lines                                                    | SDG                                     |
|---------------------------------------------------|-------------------------------------|--------------------------------------------------------------------|-----------------------------------------|
| Stable and quality<br>employment                  | Respect for<br>labor rights         | Fostering a culture of prevention and<br>wellbeing                 | Image: SDG 8                            |
| Occupational Health<br>and Safety                 | Occupational<br>Health and Safety   | Fostering a culture of<br>prevention and wellbeing                 | Image: SDG 8                            |
| Talent Management                                 | Talent attraction<br>and retention  | Strengthening the link between our team<br>and the TUBACEX project | Image: SDG 4 and SDG 8                  |
|                                                   | Employee Training                   | Fostering an inclusive, diverse<br>and equitable culture           | Image: SDG 4, SDG 5, SDG 8, and SDG 10  |
| Equality and diversity                            | Equality and diversity              | Fostering an inclusive, diverse<br>and equitable culture           | Image: SDG 5, SDG 8, and SDG 10         |
| Protection of<br>consumer safety<br>and wellbeing | Customer Health<br>and Safety       | Fostering a culture of prevention<br>and wellbeing                 | Image: SDG 3, SDG 8, SDG 12, and SDG 17 |
|                                                   | Customer<br>Satisfaction            | Fostering a culture of prevention<br>and wellbeing                 | Image: SDG 3, SDG 8, SDG 12, and SDG 17 |
| Community                                         | Development of local<br>communities | Fostering social development<br>and respect for human rights       | Image: SDG 11, SDG 16, and SDG 10       |

Within the social pillar of ESG, Tubacex prioritizes the well-being of its employees, aiming to retain and attract new talent by offering safe and pleasant working environments. The company is committed to promoting the principles of equality, equity, and inclusion throughout its operations.

On the other hand, as part of Tubacex's goal to strengthen employee commitment to the business project, the company conducted its first employee experience survey in 2023. The results showed an overall rating of 3.65 out of 5.

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#### AVERAGE WORKFORCE BY COMPANY

|                                               | 2023         | 2022         |
|-----------------------------------------------|--------------|--------------|
|                                               |              |              |
| Acería de Álava                               | 205          | 198          |
| Tubacex Tubos Inoxidables                     | 423          | 409          |
| Schoeller Bleckmann                           | 362          | 364          |
| Schoeller Bleckmann Technisches<br>Service    | 42           | 43           |
| Tubacex Taylor Accesories                     | 26           | 27           |
| Salem Tube                                    | 100          | 97           |
| Tubacex Service Solutions                     | 81           | 64           |
| Tubos Mecánicos                               | 0            | 0            |
| Tubacex S.A. Tubacex Servicios de<br>Gestión. | 40           | 42           |
| Tubacex Innovación                            | 15           | 15           |
| Oficinas comerciales                          | 41           | 38           |
| Previous perimeter                            | 1,336        | 1,297        |
|                                               | 2023         | 2022         |
| IBF                                           | 169          | 183          |
| Tubacex Tubes and Pipes                       | 216          | 199          |
| Tubacex Services                              | 13           | 11           |
| Tubacoat                                      | 2            | 3            |
| Tubacex Logistics                             | 3            | 2            |
| Tubacex Awaji Thailand                        | 99           | 91           |
| Tubacex Upstream Technologies                 | 10           | 8            |
| Grupo NTS                                     | 338          | 290          |
| <b>TOTAL</b>                                  | <b>2,186</b> | <b>2,084</b> |
| Tubacex Durant                                | 88           | 94           |
| Amega West                                    | 212          | 167          |
| TSS Norway                                    | 18           | 15           |
| <b>TOTAL</b>                                  | <b>2,504</b> | <b>2,360</b> |

#### Safety and Health

Safety and health at work are absolute priorities for the company and constitute a strategic line of work in management. The objective is to carry out activities safely and responsibly, always prioritizing the value of human life over any other consideration. Tubacex implements a series of measures and tools in its plants to ensure

continuous improvement in safety performance and the promotion of occupational health. The company holds ISO 45001 certification in the following production facilities:

### ISO 45001

| Aceralava  | TTP              |
|------------|------------------|
| TTI        | Tubacex Services |
| IBF        | SBER             |
| SALEM TUBE | TSS NORWAY       |
| TSS        | NTS ME           |

#### WORK ACCIDENTS (frequency and severity) BROKEN DOWN BY GENDER

|                                 | 2023 |       |       | 2022  |       |       |
|---------------------------------|------|-------|-------|-------|-------|-------|
|                                 | Men  | Women | Total | Men   | Women | Total |
| Accidents with<br>sick leaves   | 41   | 9     | 50    | 51    | 2     | 53    |
| Accidents without<br>sick leave | 69   | 15    | 84    | 78    | 4     | 82    |
| Total number of<br>accidents    | 110  | 24    | 134   | 129   | 6     | 135   |
| Frequency[1]                    | 9.03 | 11.78 | 9.42  | 11.99 | 3.27  | 10.89 |
| Severity[2]                     | 0.43 | 0.84  | 0.49  | 0.34  | 0.17  | 0.32  |

\*100% of the Group's companies are included

[1] Number of accidents with leave per million hours

[2] Number of days lost per accident with leave divided by number of hours worked per thousand

#### Talent attraction and retention

Actively seeking the best professionals and maintaining their commitment to the business project are key aspects for the Group. To achieve this, Tubacex works with processes and systems that allow it to anticipate and adapt to new trends in talent attraction and retention. This approach promotes professional development, communication, and participation among members of the organization, enhancing their satisfaction and commitment to the business project.

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Image /page/56/Picture/1 description: A woman wearing a white hard hat and safety glasses is pointing at a chart on a wall. She is wearing a dark blue jumpsuit with yellow reflective stripes on the sleeves. The chart appears to be a bar graph. There are other charts and papers on the wall behind her.

#### Equality and Diversity

In its commitment to promoting equal opportunities and diversity, Tubacex creates and fosters diverse and inclusive work environments that help achieve corporate and business objectives while preventing discrimination in the workplace and in pay. This commitment to diversity is embedded in the company's DNA due to its multinational and multicultural nature, and it is preserved and promoted across all business units.

|                 | 2023  |       |       | 2022  |       |       |
|-----------------|-------|-------|-------|-------|-------|-------|
|                 | Men   | Women | Total | Men   | Women | Total |
| Spain           | 633   | 134   | 768   | 612   | 130   | 742   |
| Austria         | 364   | 45    | 410   | 368   | 44    | 412   |
| Italy           | 154   | 18    | 172   | 169   | 17    | 186   |
| India           | 220   | 10    | 230   | 202   | 10    | 212   |
| UAE             | 146   | 24    | 171   | 136   | 22    | 158   |
| United States   | 289   | 57    | 346   | 267   | 51    | 317   |
| Saudi Arabia    | 118   | 24    | 141   | 98    | 9     | 106   |
| Thailand        | 74    | 25    | 99    | 70    | 21    | 91    |
| Norway          | 43    | 9     | 51    | 40    | 8     | 47    |
| France          | 8     | 2     | 10    | 7     | 1     | 8     |
| China           | 3     | 3     | 6     | 3     | 3     | 6     |
| Brazil          | 18    | 5     | 23    | 9     | 2     | 11    |
| Germany         | 1     | -     | 1     | 1     | 0     | 1     |
| The Netherlands | 3     | 1     | 4     | 3     | 2     | 5     |
| Singapore       | 25    | 7     | 32    | 19    | 6     | 25    |
| Korea           | 1     | -     | 1     | 1     | 0     | 1     |
| Canada          | 32    | 8     | 39    | 26    | 6     | 31    |
| Total           | 2,131 | 372   | 2,503 | 2,030 | 330   | 2,360 |

#### EMPLOYEES BY COUNTRY AND GENDER

#### Training

Employee training is also a crucial aspect for a technologically advanced company like Tubacex. Throughout 2023, a high level of training activities has been maintained, with a particular focus on safety and health. There has also been a significant number of training hours dedicated to developing and updating technical skills, as well as enhancing digital training. Additionally, there have been numerous training sessions to deepen knowledge in product areas, regional insights, and commercial positioning.

#### TRAINING HOURS\*

|                                                  | 2023   | 2022   |
|--------------------------------------------------|--------|--------|
| Management                                       | 3,241  | 1,718  |
| Middle management and<br>supervisors             | 2,728  | 1,522  |
| Technicians and professionals                    | 7,008  | 4,455  |
| Operations staff                                 | 23,148 | 26,027 |
| Total number of training hours                   | 36,125 | 33,722 |
| Average number of training<br>hours per employee | 14.4   | 14.3   |

\*100% of the Group's companies are included.

**UBACEX**
GROUP

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DOING WHAT IS RIGHT AND PROMOTING TRANSPARENCY

Image /page/57/Picture/1 description: The image shows two workers in a factory setting. The workers are wearing yellow hard hats and blue work uniforms. The background of the image shows stacks of metal rods and wooden supports. The number 4 is in the upper left corner of the image.

# 4

#### 3.4.4. Doing what is right and promoting transparency

| Sustainability<br>issue                       | Items / Material<br>Aspect | Strategic Lines                                              | SDG                            |
|-----------------------------------------------|----------------------------|--------------------------------------------------------------|--------------------------------|
|                                               | Ethics and<br>compliance   | Adhering to the highest ethical<br>and compliance standards  | Image: SDG 16                  |
| Good governance,<br>ethics and integrity      | Human rights               | Fostering social development<br>and respect for human rights | Image: SDG 8                   |
|                                               | Fiscal transparency        | Developing an internal and external<br>communication model   | Image: SDG 16 and 17           |
| Risk management                               | Risk management            | Fostering an active risk management<br>culture               | Image: SDG 8, 9, 11, 16 and 17 |
| Cybersecurity, privacy<br>and confidentiality | Information privacy        | Fostering information governance<br>and ESG management       | Image: SDG 12                  |
| and confidentiality                           | Cybersecurity              | Fostering an active risk management<br>culture               | Image: SDG 9                   |

Ethics and integrity are two pillars on which Tubacex bases its interactions with stakeholders, using the highest professional standards to guide its relationships within the operational environment.

#### Ethical channel

With the enactment of the new Law 2/2023 on whistleblower protection, transposing Directive (EU) 2019/1937 in Spain, Tubacex has updated and adapted its whistleblowing channel to meet the new regulatory requirements. The goal is to strengthen the culture of reporting as a mechanism to prevent and detect threats to the public interest and provide adequate protection against reprisals for those who report potential violations.

This mandatory and confidential reporting, investigation, and inquiry channel connects with the organization's criminal compliance model. An independent company provides the technical support for the platform, which is hosted on secure servers external to the

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Image /page/58/Picture/1 description: Two people wearing yellow hard hats and blue work shirts are standing in front of shelves of metal rods. The person on the left is smiling and wearing glasses. The person on the right is also wearing glasses. The shelves behind them are full of metal rods of various sizes. There are also some wooden supports for the shelves.

company. Tubacex exclusively handles the analysis of the communications' content, with specialized external advisors as needed.

#### Human Rights

Tubacex is fully committed to respecting human rights, always guided by the fundamental principles set out in the Universal Declaration of Human Rights, as expressed in its code of conduct. These principles form the basis of the applicable legislation across all business units.

To affirm this commitment, the company's Board of Directors approved its Human Rights Policy in 2023. This policy represents the organization's dedication to developing a culture that implements internationally recognized human rights support policies and seeks to avoid complicity in human rights violations.

In parallel, Tubacex has identified the key human rights issues affecting the company, particularly those related to economic rights, and has analyzed them individually to identify opportunities and impacts. These aspects have also been incorporated into the materiality analysis. The key human rights issues identified include:

- Job creation.
- Respect for labor rights.
- Establishing responsible and transparent labor relations.
- Occupational health and safety.
- Attraction and retention of talent.
- Employee training.
- Equality and diversity.
- Child labor.
- Indigenous peoples' rights.
- Development of local communities.

#### Tubacex Foundation

In February 2016, the Tubacex Foundation was established as an entity closely aligned with the company's business strategy and the United Nations 2030 Agenda. The Foundation serves as a fundamental channel for promoting projects in three major areas of action: quality education, corporate diversity, and social action.

Through the Foundation, support programs for society are defined, and common lines of work are established for the rest of the Group's business units, aligned with the identified material aspects:

- **Quality Education:** Focused on attracting and retaining talent while promoting youth employment and employability. Through quality education, action plans are implemented to invest in future generations and professionals.
- **Corporate Diversity:** In addition to promoting gender equality through various plans and policies, the Group, through the Foundation, promotes the socio-labor integration of people with diverse talents. This includes collaboration with entities specialized in hiring people with disabilities.

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Image /page/59/Picture/1 description: The image shows the logo for TUBACEX foundation. The word "TUBACEX" is written in large, bold, black letters. Below it, the word "foundation" is written in smaller, black letters. To the right of the text is a red, circular shape that resembles a flower.

**• Development of Local Communities:** The company supports the development of communities where it operates through direct and indirect employment and by promoting collaboration projects with NGOs.

In 2023, the focus on education and corporate diversity was reactivated after being affected in the previous two years by the situation in plants that housed the largest number of students. Additionally, the Foundation continues to support social action programs in developing countries, as well as the aid program for Ukrainian refugee families that began in 2022 due to the Russian invasion.

#### Actions Developed During 2023

#### Social Action

Through the NGO Colabora Birmania, the Tubacex Group continues to support educational centers to promote the development of displaced Burmese children. This program focuses on promoting comprehensive education, covering the entire development cycle of the child: from orphanages and nurseries to schools and access to the labor market in adulthood.

A specific action in 2023 is the proposed construction of a new building on the grounds of a school (KM 42) to accommodate secondary education students.

Image /page/59/Picture/8 description: A high-angle shot captures a large group of children, all smiling and holding up peace signs. The children are closely packed together, creating a sense of unity and joy. Their faces are partially covered with a white substance, possibly makeup or face paint, adding a unique element to their appearance. The background is blurred, drawing focus to the children and their expressions.

#### 3 SUSTAINABILITY

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#### DOING WHAT IS RIGHT AND PROMOTING TRANSPARENCY

Image /page/60/Picture/1 description: A group of children are standing in front of a sign that says "KM42". The children are all smiling and have their hands raised in the air. The sign is yellow with a black border and red text. The children are wearing a variety of clothing, including t-shirts, shorts, and jeans. The background is a light gray wall.

#### KM 42 School:

- 225 children.
- 12 teachers.
- Proposed construction of a building for secondary education, currently halted due to the death of the landowner and ongoing negotiations with heirs.
- Currently, 25 children are studying secondary education at this center.

Image /page/60/Picture/7 description: Four young girls are standing together and laughing. They are all wearing casual clothes, and they appear to be happy and carefree. The background is a simple wall with a window.

#### Heavenly Home Orphanage:

- 59 children studying in Thai schools.
- 19 children studying in "Migrant Learning Centers" (funded by NGOs).
- 5 children with mental disabilities studying in special centers.
- 4 caregivers.
- 7 volunteers.

Image /page/60/Picture/14 description: The image shows a classroom with students sitting at desks and working. The students are wearing white shirts and are focused on their work. There is a mural on the wall behind the students that says "KEN SCHOOL".

4

#### Chicken School:

- 123 children.
- 5 teachers.
- Primary education following the same curriculum as KM 42 School.
- 26 students participate in the nonformal primary education program.
- Educational system regulated by Myanmar (families intend to return to their home country).

#### Training

In the area of training, international scholarships promoted in collaboration with the Basque Government are noteworthy. In the 2022/2023 edition, five engineers applied for vacancies in Austria, Thailand, and the USA, of which two remained on staff after their internship period. The 2023/2024 edition offers vacancies in Thailand, Italy, the USA, and Austria.

Another training initiative includes dual programs that combine learning at educational centers and workplaces. In Austria, these programs are developed at a dedicated center (FutureZone), training 18 apprentices in 2023. In Spain, eight students participate in this training modality.

As an extension and novelty in this area, a program to attract international talent was activated in 2023. Although it did not result in the recruitment of talent, it helped refine the proposal for candidates for 2023/2024.

#### Emergency Aid: SOS Ukraine

In response to the humanitarian crisis caused by the Russian invasion of Ukraine, Tubacex launched an aid program in 2022, primarily targeting workers and families of a partner company located in a war-torn region with close commercial ties to Tubacex.

A total of five families were relocated from the Hungarian border to the Basque Country. Thanks to the support and collaboration of the SOS Ukraine organization, they were initially integrated into foster homes.

In 2023, after completing the transition period in foster homes, four families returned to regions near the Ukrainian border or other destinations, while one family remained in the Basque Country, soon joined by a second family. Both families are now housed in rental apartments funded by the Tubacex Foundation and integrated into Basque society.

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Image /page/61/Figure/0 description: The image shows a large, white number 4 against a dark background with subtle, swirling patterns. The number is formed by straight lines, with the vertical line extending beyond the horizontal one. The overall impression is modern and minimalist.

# BUSINESS SITUATION

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4.1 BUSINESS EVOLUTION

4.2 MARKET SITUATION

Image /page/62/Picture/2 description: The image shows the logo for TUBACEX GROUP. The text "TUBACEX" is in large, bold, white letters. Above the "U" is a red curved line. Below "TUBACEX" is the word "GROUP" in smaller, white letters. The background is dark with vertical purple lines.

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Image /page/63/Picture/0 description: The image shows the number 4.1 in a simple, minimalist font. The number 4 is on the left, followed by a period, and then the number 1 on the right.

## BUSINESS EVOLUTION

**Despite the complex and challenging environment described in chapter 2, Tubacex achieved the best results in its history in 2023 (chapter 5), with revenues of 852.4 million euros (+19.3%), EBITDA of 125.2 million euros (+35.6%), and an EBITDA margin of 14.7%. Additionally, the company maintained a historic order backlog of 1.6 billion euros.** 

These record results represent the consolidation of pre-pandemic activity levels and demonstrate the success of the Group's strategic diversification in products, services, and geographic areas, as well as its strategic focus on providing premium solutions to clients, anticipating their needs, and becoming a key player in the energy transition.

The business evolution is influenced by the macroeconomic environment, including interest rate hikes to curb inflation, which caused a slowdown in sales of lower value added products.

Significant progress was made in gas upstream activity in Asia and the Middle East, with sustainable orders and strong positioning with strategic clients through long-term agreements.

#### Products and services

Three key drivers significantly impacted the 2023 income statement: the shift towards renewable energies in response to decarbonization, increased air traffic, and the positive evolution of the oil and gas

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Image /page/64/Picture/0 description: The image shows a cargo ship transporting containers filled with hydrogen. The containers are stacked on the deck of the ship, and the ship is sailing on the ocean. The containers are labeled with the chemical formula for hydrogen, H2. The ship has a sign that says "NO SMOKING".

exploration and production (upstream) market. All of these drivers increased their share in the Group's mix.

Regarding the trend towards sustainability, increased activity in two energy sources that provide stability and visibility for the medium and long-term business is notable. These transition energies include gas, which accounts for a significant portion of high value added products, and nuclear energy, which has experienced significant growth.

In parallel, there is potential growth with the development of new sustainable solutions through hydrogen and carbon capture, utilization, and storage (CCUS)

with injection wells, where orders have already been received. Tubacex's roadmap for positioning as a leader in the energy transition is outlined in the new NT2 2024-2027 strategic plan (Driving the New Tubacex towards the Next Transition) (chapter 2), with a focus on the Low Carbon division, the motor of this new phase, projecting sales of 100 million euros by 2027.

In traditional sectors, the aerospace one stands out, with record orders for high-tech products, and the upstream activity leading the post-pandemic recovery, with the price of oil stabilizing around 80 dollars per barrel. Despite the uncertain economic and geopolitical context, energy companies present a good financial situation, with ambitious expansion plans and solid medium and long-term viability prospects for the projects presented. This translates into a significant increase in the CRA OCTG portfolio, particularly umbilicals, supported by long-term supply contracts with key clients.

The year saw two distinct periods, with the second half experiencing an acceleration in the project market, compensating for a slight cooling in tubular solutions for distributors (through the business led by TSS), more focused on maintenance. This improvement, coupled with Tubacex's strategic positioning to support and add value to the client with long-term supply contracts, is key to achieving the historic order volume that will be reflected in sales in the coming quarters, ensuring stability in results

#### Sector dynamics

#### Industrial (35%)

Throughout 2023, Tubacex increased its positioning in premium products in China and India, countries with strong refining capacity growth forecasts, while the LNG and Gas Processing sectors maintained high levels of activity and visibility, particularly in North America and the Middle East.

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Image /page/65/Picture/0 description: The image shows a pie chart titled "SECTOR BREAKDOWN". The pie chart is divided into five sectors: Industrial (35%), E&P Gas (24%), Powergen (7%), New markets (15%), and E&P Oil (19%). The pie chart is superimposed on a background image of a green, hilly landscape.

In the fourth quarter, the Mid&Downstream segment showed a reactivation in the awarding of large projects, especially in the Middle East and Asia, although orders for lower value added products slowed due to increasing macroeconomic uncertainty and high interest rates.

#### E&P Gas (24%) & E&P Oil (19%)

*Upstream:* In America, operations continue in Brazil's deep waters, where Tubacex has already supplied equipment to 10 wells in the Búzios field. Continued operations by Petrobras are expected in the coming months with comprehensive solutions supplied from the Macaé hub. In the Middle East, the construction of the new CRA OCTG plant in Abu Dhabi continues as part of the 10 year project signed with ADNOC, marking the largest contract in the company's history. The drilling and special machining segments also performed well.

*Subsea***:** This segment registered a record order intake, with key strategic projects on all five continents. The offshore segment has proven to be one of the most resilient and geopolitically stable markets for state energy security. It has a backlog with delivery times exceeding 12 months in some cases, indicating positive medium-term prospects. Additionally, significant discoveries are being made in new locations: Namibia, Suriname, Guyana, Brazil (Amazon Basin), and Tanzania. Tubacex has established strategic agreements with leading umbilical manufacturers. The creation of a joint venture between SLB and AKER (SLB Onesubsea) offers Tubacex an opportunity to strengthen its positioning in E&P Gas.

#### New Markets (15%)

*Low Carbon:* Tubacex positions this unit as the flagship of sustainability, projecting sales of 100 million euros by 2027. In 2023, significant orders for CCUS (carbon

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Image /page/66/Picture/0 description: The image shows a pie chart titled "FINAL DESTINATION BREAKDOWN". The pie chart is divided into four sections: 43% Asia & ME, 33% America, 3% Africa, and 21% Europe.

capture, utilization, and storage) were secured in the U.S., a leader in this sustainable path, and in Malaysia, where the first order was captured in the Asian market.

Under this area, Tubacoat, an innovative tubular solution with ceramic coating for critical applications that contribute to energy efficiency and CO2 emissions reduction in refineries, received significant orders in the United States (Exxon, Marathon, Motiva, and BP), Europe (Hellenic Energy), and Saudi Arabia (SATORP and Jazan).

Tubacex supports hydrogen as a replacement for fossil energies and secured its first order with the Dutch fertilizer and methanol producer OCI.

**Aerospace:** A new business avenue opened in this sector for the development of complex materials and solutions.

**H&I (Hydraulic and Instrumentation):** Increased market share following record production in 2023.

**Fertilizers:** Secured several high value added projects for this industry.

#### Powergen (7%)

Tubacex is shifting away from conventional coal projects to focus on the circular economy and energy transition. In 2023, the nuclear segment performed well, particularly in Europe, where a long-term agreement was signed with the French energy company EDF for the maintenance of its existing plants and the construction of future ones. There are also promising prospects for the SMR (Small Modular Reactors) market, especially in Canada, the U.S., and Europe, and for Ultra Super Critical (USC) power plants in China and India. Tubacex is collaborating with several engineering firms for the development of design and materials.

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Image /page/67/Picture/0 description: The image shows the number 4.2 in a simple, minimalist style. The numbers are drawn with thin, black lines against a light gray background. The decimal point is a small, solid black circle.

MARKET

SITUATION

**Tubacex's local manufacturing strategy brings the company closer to key markets with operational presence in Guyana, Brazil, and Kazakhstan, where the company has directly engaged with end users in implementing its solutions, resulting in order intake growth.** 

These new production facilities add to the Group's existing 24 plants and 14 service centers worldwide. This presence is complemented by a network of commercial offices in five major geographical areas (Europe, America, Asia, the Caspian region, and the Middle East) and agents covering the global market.

#### Geographical Market Situation

The strength of the American market continues to gain ground in the geographical mix and in 2023, it already doubles the pre-pandemic share, while the Asian market (including the Middle East) more than recovers the dynamism lost in 2022. In Europe, the robust Norwegian market continues. This diversified global presence ensures regional balance, increasing

Image /page/67/Picture/6 description: Two scientists are working in a lab. One scientist is looking through a microscope and holding a red object. The other scientist is working on a computer. Both scientists are wearing white lab coats.

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Image /page/68/Picture/0 description: The image shows a close-up of several metal T-shaped pipes. The pipes are arranged in rows and columns, and they are all the same size and shape. The pipes are made of a shiny metal, and they have a smooth surface. The background is blurred, which makes the pipes stand out. The image is well-lit, and the colors are accurate.

Tubacex's resilience and protection against potential geopolitical tensions.

The 2023 fiscal year was characterized by the good performance of the American market and the deepening of the strategy to strengthen key markets with local implementation. Notable is the ongoing project to develop production capacity in Abu Dhabi.

#### **Asia & ME (43%)**

Tubacex's largest contract ever, with a minimum committed value of 1 billion dollars, for gas production in Abu Dhabi, began execution and in 2023, the construction of a CRA OCTG tube finishing and threading plant started. Operations are expected to begin at the end of 2024. This order marks a turning point in the company's growth and global positioning, becoming the world's leading supplier in the CRA OCTG segment.

Medium and long-term growth expectations in this region are solid. East Asia experienced an improvement over 2022, thanks to increased sales in India, where there are good prospects in premium products and the nuclear sector, and the recovery of China, particularly in the petrochemical sector.

#### **America (33%)**

In 2023, the American market performed well again, with record sales levels. Four key drivers stand out: At the sector level, the aerospace business records a historic volume of orders, and the energy sector boosts its momentum thanks to the global leadership of the U.S. and Canada in the demand for Tubacex's deep CO2 storage solutions through injection wells and the high volume of material and service sales for offshore extraction activities by Brazilian Petrobras. Lastly, there is strong growth in the sales of instrumentation tubes.

From a production perspective, the capacity of the Salem Tube, Tubacex Durant, and NTS Amega West plants is consolidated.

#### **Europe (21%)**

Strong sales growth continues in Norway, with high demand for complex machined products and distribution projects through TSS Norway. Other notable aspects in Europe include long-term contracts with umbilical manufacturers, opportunities in the nuclear segment in France, and good prospects for gas processing plants in the Caspian Sea.

#### **África (3%)**

New offshore projects in Tanzania, Namibia, Mozambique, and South Africa.

#### Subsidiaries

Among the various subsidiaries, in 2023, Tubacex Service Solutions (TSS), a distributor of seamless stainless steel tube, stood out with a high turnover volume, more intense in the first half. Any slight decline in order volumes was offset by an increase in the project market order book.

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Image /page/69/Picture/0 description: The image shows the number 5 in white, with the word "RESULTS" in pink below it. The background is a blue and green abstract pattern.

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5.1 PROFIT FOR THE YEAR

5.2 TUBACEX SHARE PERFORMANCE IN 2023

5.3 EUROPEAN TAXONOMY

Image /page/70/Picture/3 description: The image shows the logo for TUBACEX GROUP. The word "TUBACEX" is in large, bold, white letters, with a red curved line above the "A". Below that, the word "GROUP" is in smaller, white letters.

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Image /page/71/Picture/0 description: The image shows the text "5.1 PROFIT FOR THE YEAR" on the left side of the image. On the right side of the image, there is a stack of metal pipes.

**In 2023, two years after the significant impact caused by the pandemic on the Group's accounts, with its most negative consequences reflected in the 2021 figures, Tubacex achieved the best results in its history.**

Record Sales, EBITDA, and EBITDA Margin. In addition to these achievements, the company also maintained a historic order backlog volume of 1.6 billion euros.

The 2023 results were recorded in an environment of macroeconomic and geopolitical uncertainty, with high-interest rates, demonstrating the success of the restructuring undertaken following the pandemic and the effective diversification of activities and business as outlined in the 2022-2025 Strategic Plan (chapter 02). The Group achieved the plan's objectives two years ahead of schedule, prompting an update in November 2023 for the 2024-2027 period under the name NT2 (Driving the New Tubacex towards the Next Transition), focusing on two pillars: energy transition and mobility.

#### Profit and loss account

Sales grew by 19.3% compared to 2022, which had already set a revenue record, and more than doubled the figures from 2021, reaching 852.4 million euros in 2023.

Regarding the breakdown of revenue by sectors, 35% of the Group's product revenues originated from the Industrial sector, 24% from gas E&P, 19% from oil E&P, 15% from new markets, and 7% from Powergen.

As for the final destinations of sales, there is significant geographical diversification in revenue sources: 43% of sales were generated in Asia and the Middle East (where the Group has substantial exposure to the gas segment, both for extraction and processing), 33% in America (with a growing importance of the instrumentation and control tube segment and record orders in the aerospace and aeronautical sector), 21%

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#### PROFIT FOR THE YEAR

| (€M)                    | FY 2022 | FY 2023 | % variation |
|-------------------------|---------|---------|-------------|
|                         |         |         |             |
| Sales                   | 714.7   | 852.4   | 19.3%       |
| EBITDA                  | 92.3    | 125.2   | 35.6%       |
| EBITDA margin           | 12.9%   | 14.7%   |             |
| EBIT                    | 44.5    | 80.7    | 81.6%       |
| EBIT margin             | 6.2%    | 9.5%    |             |
| Profit before tax       | 26.9    | 49.6    | 84.5%       |
| Margin                  | 3.8%    | 5.8%    |             |
| Attributable Net Profit | 20.2    | 36.3    | 79.5%       |
| Net margin              | 2.8%    | 4.3%    |             |

| (€M)                             | 31/12/2022 | 31/12/2023 | €M variation |
|----------------------------------|------------|------------|--------------|
| Circulating Capital              | 230.0      | 234.5      | +4.5         |
| Working Capital / Sales          | 32.2%      | 27.5%      |              |
| Net Financial Debt               | 287.1      | 280.7      | -6.4         |
| Net Financial Debt / EBITDA      | 3.1x       | 2.2x       |              |
| Structural Net Financial Debt(1) | 57.1       | 46.2       | -10.9        |

(1) Total Net Financial Debt - Working Capital

in Europe (with strong demand for complex machined products in the North Sea and long-term agreements with umbilical manufacturers), and the remaining 3% in Africa (with new offshore projects in Tanzania, Namibia, Mozambique, and South Africa).

The favorable market conditions and strategic positioning with key clients have enabled Tubacex to consolidate EBITDA growth to historic levels. This indicator rose to 125.2 million euros, a 35.6% increase over the previous year. The EBITDA margin stands at 14.7%, also the highest level recorded by the company. The positive evolution of these two metrics in recent years is attributable to an improved product mix, a commitment to innovation, a strategic repositioning of client types, increased productivity, and cost reduction.

As a result, the net attributable profit increased by 79.5%, reaching 36.3 million euros.

Image /page/72/Picture/7 description: The image shows a close-up of several metal pipes. The pipes are arranged in a pile, with some pipes partially obscuring others. The pipes are cylindrical and have a smooth, metallic surface. The ends of the pipes are visible, revealing the hollow interior. The lighting in the image is soft and diffused, creating a subtle contrast between the light and shadow on the pipes.

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Image /page/73/Picture/0 description: A person wearing a green welding helmet is welding metal. Sparks are flying from the welding torch, and the person is wearing protective clothing.

Image /page/73/Figure/1 description: The image is a bar chart titled "Evolution of (EBITDA) (€M)". The x-axis represents the years from 2019 to 2023, and the y-axis represents the EBITDA in millions of euros. The bar chart shows the following EBITDA values for each year: 2019: 67.1, 2020: 38.1, 2021: 17.5, 2022: 92.3, 2023: 125.2.

(1) The 2020 EBITDA includes restructuring costs incurred during the year to adapt the Group's structure to the new business environment, in addition to an extraordinary provision made voluntarily..

Image /page/73/Figure/3 description: The image is a bar chart showing sales from 2019 to 2023. In 2019, sales were 613.5. In 2020, sales were 479.6. In 2021, sales were 365.0. In 2022, sales were 714.7. In 2023, sales were 852.4.

Sales performance (€M)

Consolidated figures

Image /page/73/Figure/6 description: This image shows a bar chart titled "Evolution of Net Profit (€M)". The x-axis shows the years from 2019 to 2023, and the y-axis shows the net profit in millions of euros. In 2019, the net profit was 11.1 million euros. In 2020, the net profit was -25.3 million euros. In 2021, the net profit was -32.2 million euros. In 2022, the net profit was 20.2 million euros. In 2023, the net profit was 36.3 million euros.

(2) The Net Profit for 2020 includes extraordinary negative adjustments made voluntarily, with no cash impact, amounting to a total of 20.3 million euros.

#### 5 RESULTS

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#### Balance Sheet and Financial Position

Despite significant sales growth, Tubacex made substantial efforts throughout the year to contain working capital, which stands at 234.5 million euros, representing 27.5% of sales, below the strategic target of 30%.

Within the working capital, inventory amounts to 411.1 million euros, mostly corresponding to work in progress and finished products already sold but not yet invoiced.

Regarding financial debt, Tubacex continues its trend of deleveraging and strengthening its financial solidity. Consequently, the debt ratio (Net Financial Debt/ EBITDA) is 2.2 times at the end of the fiscal year, once again meeting the strategic objective, with a forecast for further reduction in upcoming periods as outlined in the Strategic Plan update.

This has been achieved despite substantial investments aimed at acquiring minority stakes in Saudi Arabia and Norway, the commencement of the Abu Dhabi plant construction, and the dividend payment to shareholders based on 2022 results. These operations, along with CAPEX, have led to a cash outflow of over 55 million euros. Nevertheless, the Group's strong cash flow generation capability has balanced the situation, reducing net financial debt to 280.7 million euros as of December 31, 2023, down from 287.1 million euros at the end of the previous fiscal year (3.1 times NFD/EBITDA).

Thus, the company's liquidity position exceeds 300 million euros, with 179 million euros in cash.

Thanks to the visibility of order volumes, the company is expected to continue improving cash flow generation over the coming quarters.

Image /page/74/Figure/7 description: This image is a bar chart showing the net operating income from 2019 to 2023. The x-axis shows the years, and the y-axis shows the net operating income. In 2019, the net operating income was 187.2. In 2020, the net operating income was 206.8. In 2021, the net operating income was 222.5. In 2022, the net operating income was 230.0. In 2023, the net operating income was 234.5.

working capital (€M)

Consolidated figures

Image /page/74/Figure/10 description: The image is a bar chart showing net financial data from 2019 to 2023. The y-axis ranges from 0 to 400 in increments of 50. The x-axis shows the years 2019, 2020, 2021, 2022, and 2023. The corresponding values for each year are as follows: 2019: 253.6, 2020: 298.1, 2021: 336.2, 2022: 287.1, and 2023: 280.7.

debt (€M)

Consolidated figures Consolidated figures

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### TUBACEX SHARE PERFORMANCE IN 2023

5.2

#### Stock Market Overview

As of the end of 2023, Tubacex's stock appreciated by 75.2%, reaching 3.5 euros per share. The performance has been very positive, and according to the consensus of analysts covering the company, there is still significant growth potential.

The highest peak was recorded on December 27th, at 3.66 euros per share, while the lowest point was on January 3rd, at 2.01 euros per share. From the beginning of the year, the stock price has shown an upward trend, albeit marked by volatility, reflecting market uncertainty due to geopolitical tensions, inflation trends, and interest rate developments. The stock experienced a rally in the last two months of the year, increasing by 32% following the Capital Markets Day and the Strategic Plan update.

The market capitalization reached 442.9 million euros at the end of the fiscal year.

#### Share Capital

with a nominal value of 0.45 euros each. The entire share capital of the company is traded on the continuous market of the Madrid Stock Exchange, where it has been listed since 1970. Currently, it is included in the Ibex Medium Cap index, which comprises the 20 most important companies after the Ibex 35.

#### Dividends

In 2023, an ordinary dividend of 0.0659 euros per share was paid out, based on the 2022 results, amounting to a total disbursement of 8.0 million euros. Based on the 2023 results, the Board of Directors proposes a total gross dividend distribution of 14.5 million euros, payable in 2024, representing a payout ratio of 40%.

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#### TUBACEX STOCK MARKET PERFORMANCE

|                            | 2021   | 2022   | 2023   |
|----------------------------|--------|--------|--------|
| Share capital (€M)         | 58.04  | 58.04  | 56.94  |
| Share par value (€)        | 0.45   | 0.45   | 0.45   |
| Listed shares (€M)         | 128.98 | 128.98 | 126.55 |
| Share price (€)            |        |        |        |
| Maximum                    | 2.00   | 2.62   | 3.66   |
| Minimum                    | 1.31   | 1.55   | 2.01   |
| Latest                     | 1.50   | 2.00   | 3.50   |
| Annual evolution (%)       | 9.6%   | 33.0%  | 75.2%  |
| Trading frequency (%)      | 100%   | 100%   | 100%   |
| Trading volume             |        |        |        |
| • Million shares           | 78.4   | 51.2   | 43.4   |
| • Million euro             | 125.4  | 103.8  | 120.3  |
| Turnover (times capital)   | 0.6    | 0.4    | 0.3    |
| Market capitalisation (€M) | 193.7  | 257.7  | 442.9  |

Image /page/76/Figure/2 description: The image shows a line graph of share price performance in 2023, along with a pie chart showing the percentage of different groups. The line graph shows the share price from December 2022 to December 2023. The share price in December 2022 was 2.01€, and the share price in December 2023 was 3.66€. The line graph also shows a dotted line that represents a 75.2% increase. The pie chart shows that the largest group is "Rest" with 68.7%, followed by Grupo Aristrain with 11.6%, Torre Rioja-Madrid S.A. with 5.1%, and EDM Gestión with 5.2%. There are also bar graphs with the values 376.3, 102.7, 193.6, 257.7, and 442.9.

Image /page/76/Figure/8 description: The image shows a bar graph with the years 2019, 2020, 2021, 2022, and 2023 on the x-axis. The corresponding values on the y-axis are 182.2, 193.7, and 257.7. There is also a pie chart with the text "68.7% Rest".

Fluctuations in market capitalisation (€M)

ANNUAL REPORT 2023

Tubacex Shareholders 31-12-2023

Source: CNMV

3.4% Itzarri EPSV 3.1% Santander AM 2.9% Treasury stock

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# EUROPEAN TAXONOMY 5.3

**The Regulation (EU) 2020/852 establishes a framework to facilitate sustainable investments and sets the requirements to classify an economic activity as environmentally sustainable. This involves substantially contributing to one or more environmental objectives, not significantly harming any other environmental objective, complying with minimum social safeguards, and meeting the technical screening criteria.**

#### Taxonomically eligible activities

Within this framework, technical selection criteria are established to determine the conditions under which an economic activity is considered to substantially contribute to climate change mitigation or adaptation. The regulation defines what is known as a taxonomically eligible activity. This refers to an economic activity described in the delegated acts, which establish the technical criteria for activities with the potential to mitigate climate change, regardless of whether the economic activity meets some or all of the technical selection criteria.

Image /page/77/Picture/4 description: A person is using a microscope to examine a red cylindrical object. The microscope is white and blue, and the person's hand is dark-skinned. The object is sitting on a clear glass slide, and the person is holding it in place with their fingers. The background is blurry, but it appears to be a laboratory setting.

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Image /page/78/Picture/0 description: The image is an abstract, out-of-focus shot featuring a gradient of blues and grays. The left side of the image is lighter, with a swirling, circular pattern that fades into darker shades of blue and gray on the right. A faint, diagonal line of light cuts across the lower right portion of the image.

In line with this definition, Tubacex assesses whether the Group's activities fall within the scope of the Regulation. The criteria established in 2022 for the eligibility analysis are maintained, considering steel manufacturing activities (Aceralava) and excluding other subsidiaries engaged in the production of tubes and other tubular products, machined products, or additional complementary services added to the final product.

Simultaneously, following the approval of the Environmental Delegated Regulation on June 13, 2023, by the European Commission, which defines complementary activities in accordance with the remaining four environmental objectives (sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; and protection and restoration of biodiversity and ecosystems), the company analyzes whether its activities are covered by the said Delegated Regulation. It concludes that they are excluded as they do not adhere to the descriptions of the incorporated activities.

#### Taxonomically Aligned Activities

A taxonomically aligned economic activity meets all the requirements set forth in the aforementioned Regulation:

- Substantially contribute to one of the environmental objectives: Climate change mitigation and adaptation, water and marine resources protection, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.
- Do not significantly harm other objectives: The assessment ensures that the taxonomy itself does not include economic activities that undermine any of the other five environmental objectives.
- Meet minimum social safeguards: Compliance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights is required.

In accordance with the criteria defined for the eligibility analysis, the scope of alignment evaluation focuses on the stainless-steel long products manufacturing activity carried out by the Group's steel plant, Aceralava, and the products from this plant commercialized through TSS. Compliance is achieved in this case using scrap in EAF furnaces, with over 70% of fine steel production derived from scrap consumption.

#### Results

For the calculation of indicators, Tubacex considers eligible and, according to the analysis performed, aligned sales from Aceralava to third parties, as well as sales from the trading companies (TSS) of steel (eligible activity) versus other products (non-eligible activity), considering TSS sales "by material origin" (Aceralava). For CAPEX and OPEX, the corresponding entries from Aceralava and the proportion of TSS used for the related activity are taken into account.

For denominators, the calculation is based on the following criteria. The percentages of eligibility and alignment in revenue, OPEX, and CAPEX for the climate change mitigation objective are detailed below, as no activities associated with the other environmental objectives have been identified.

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|                  |                 | Sales (%)  | Sales (€ thousand) |
|------------------|-----------------|------------|--------------------|
| 2023             |                 |            |                    |
| Elegible         | Aligned (1)     | 10.81      | 92,185             |
|                  | Non-aligned (2) |            |                    |
| Non-eligible (3) |                 | 89.19      | 760,280            |
| <b>TOTAL</b>     |                 | <b>100</b> | <b>852,392</b>     |
| 2022             |                 |            |                    |
| Elegible         | Aligned (1)     | 11.2       | 80,195             |
|                  | Non-aligned (2) |            |                    |
| Non-eligible (3) |                 | 88.8       | 634,520            |

| CAPEX            |                 |           |                    |
|------------------|-----------------|-----------|--------------------|
| 2023             |                 | CAPEX (%) | CAPEX (€ thousand) |
| Elegible         | Aligned (1)     | 3.75      | 3,264              |
|                  | Non-aligned (2) |           |                    |
| Non-eligible (3) |                 | 96.25     | 83,706             |
| TOTAL            |                 | 100       | 86,969.7           |
| 2022             |                 | CAPEX (%) | CAPEX (€ thousand) |
| Elegible         | Aligned (1)     | 10.7      | 2,902.2            |
|                  | Non-aligned (2) |           |                    |
| Non-eligible (3) |                 | 89.3      | 24,289.8           |
| TOTAL            |                 | 100       | 27.192             |

#### OPEX

| 2023             |                 | OPEX (%) | OPEX (€ thousand) |
|------------------|-----------------|----------|-------------------|
| Eligible         | Aligned (1)     | 21.28    | 4,845.08          |
|                  | Non-aligned (2) |          |                   |
| Non-eligible (3) |                 | 78.72    | 17,920.82         |
| TOTAL            |                 | 100      | 22,765.90         |
| 2022             |                 | OPEX (%) | OPEX (€ thousand) |
| Eligible         | Aligned (1)     | 25.3     | 6,713.8           |
|                  | Non-aligned (2) |          |                   |
| Non-eligible (3) |                 | 74.7     | 19,826.2          |

*(1) Revenue / CAPEX / OPEX from environmentally sustainable activities (aligned with the taxonomy).*

*(2) Revenue / CAPEX / OPEX from activities eligible under the taxonomy but not environmentally sustainable (not aligned with the taxonomy).*

*(3) Revenue / CAPEX / OPEX from activities not eligible under the taxonomy.*

*The reduction in eligible CAPEX for 2023 compared to 2022 is due to the inclusion of CAPEX related to Tubacex's growth project in the Middle East and the greater weight it represents within the Group. Meanwhile, following our eligibility criteria, the numerator considers the steel manufacturing activities of Aceralava.*

*In the recalculated OPEX information for 2022 in 2023, the entry corresponding to leases has been excluded as it involves intercompany transactions.*

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# BUSINESS DIRECTORY

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## BUSINESS DIRECTORY

#### MANUFACTURING PLANTS

#### **T.T.I. LLODIO**

Tres Cruces 8 PO Box 22 01400 LLODIO (ÁLAVA), SPAIN Phone: +34 94 671 93 00 E-mail: sales@tubacex.com

#### **T.T.I. AMURRIO**

Polígono Industrial Saratxo 01470 AMURRIO (ÁLAVA), SPAIN Phone: +34 94 671 93 00 E-mail: sales@tubacex.com

#### **T.T.I. OCTG**

Polígono Industrial Saratxo 01470 AMURRIO (ÁLAVA), SPAIN Phone: +34 94 671 93 00 E-mail: sales@tubacex.com

#### **SALEM TUBE**

951 Fourth Street GREENVILLE (PA) 16125, USA Phone: +1 724 646 43 01 E-mail: sales@salemtube.com

#### **TUBACEX DURANT**

362 Country Club Rd. Durant, OK 74701 Phone: +1 724 646 43 01 E-mail: sales@tubacexdurant.com

#### **SBER**

Rohrstrasse 1 A-2630 TERNITZ, AUSTRIA Phone: +43 2630 3160 E-mail: office@sber.co.at

#### **SBER PU**

Rohrstrasse 1 A-2630 TERNITZ, AUSTRIA Phone: +43 2630 3160 E-mail: office@sber.co.at

#### **ACERALAVA**

Polígono Industrial Saratxo 01470 AMURRIO (ÁLAVA), SPAIN Phone: +34 945 89 14 61 E-mail: aceralavasales@tubacex.com

#### **T.T.A.**

Barrio Arenaza 10 01474 ARTZINIEGA (ÁLAVA), SPAIN Phone: +34 945 39 60 30 E-mail: ttasales@tta.es

#### **IBF Fittings Division**

Via Bonina Est 20 29010 SAN NICOLO (PIACENZA), ITALY Phone: +39 0523 76641 E-mail: sales@ibfgroup.it

#### **IBF Tubes Division**

Via Gandhi 17/19 20010 VITTUONE (MILAN), ITALY Phone: +39 02 9025131 E-mail: sales@ibfgroup.it

#### **TTP**

Unit-II, Survey No.131/1, Umbergaon Sanjan Road, UMBERGAON-396171. DIST. VALSAD- GUJARAT, INDIA Phone: +91 22 40015300 E-mail: sales@tubacexindia.com

#### **AWAJI Steinless**

10/20 Moo 8, Tambon Tai-Ban Mai, Amphur Muang-Samutprakarn, SAMUPRAKAM PROVINCE 10280, THAILAND Phone:+66 02-701-5069 E-mail: sales-tat@tubacex.com

#### **PROMET**

Risavika Havnering 109 4056 TANANGER, NORWAY Phone: +47 51 71 81 50 E-mail: sales@promet.no

#### **TBX UPSTREAM**

178 Al Maknoun St, Abu Dhabi Industrial City, ICAD II PO Box: 106255, Abu Dhabi UNITED ARAB EMIRATES Phone: +971 2 666 97 24

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#### **NTS MIDDLE EAST**

JAFZA Round 13, Jebel Ali Free Zone 262210 DUBAI, UNITED ARAB EMIRATES Phone: +971 4870 4888 E-mail: sales@ntsgroupco.com

#### **NTS SAUDI**

Block 42, Lot Number 348. South of 2nd Industrial Area, Dhahran Abqaiq Highway 34521-3055 DHAHRAN, SAUDI ARABIA Phone: +971 2 6144 444 E-mail: info.ksa@ntsgroupco.com

#### **NTS Amega West Singapore**

32 Tuas Avenue 4 639381, SINGAPORE Phone: +65 8872 7852 E-mail: sales@ntsgroupco.com

#### **NTS Amega West Houston**

18601 Intercontinental Crossing Drive., Houston, TX-77073, USA Phone: +1.281.821.4800 E-mail: sales@ntsamega-west.com

#### **NTS Amega West Broussard**

102 Thruway Park Road, Broussard, LA-70518, USA Phone: +1.337.839.8074 E-mail: AWbroussarddispatch@ntsamega-west.com

#### **NTS Amega West Odessa**

800 South Faudree Road, Odessa, TX-79765, USA Phone: +1.432.563.0614 E-mail: AWmidlanddispatch@ntsamega-west.com

#### **NTS Amega West Nisku**

2201 8th Street, Nisku, AB T9E 7Z1, CANADA Phone: +1.780.979.0799 E-mail: salescanada@ntsamega-west.com

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# BUSINESS DIRECTORY

#### SALES OFFICES

#### **TUBACEX EUROPE**

Brieltjenspolder 28 4921 MADE, NETHERLANDS Phone: +31 0 162 690 430 E-mail: salesnetherlands@tubacex.com

#### **TUBACEX CZECH REPUBLIC**

Rudnik 4. Areal MZ Liberec 543-72 RUDNIK, CZECH REPUBLIC Phone: +420 603 817 985 E-mail: salesczechia@tubacex.com

#### **TUBACEX FRANCE**

9 rue du 11 Novembre 93600 AULNAY SOUS BOIS, FRANCE Phone: +33 1 48 79 30 50 E-mail: salesfrance@tubacex.com

#### **TUBACEX GERMANY**

Am Wasserturm 6 40668 MEERBUSCH, GERMANY Phone: +49 2150 70 567-0 E-mail: salesgermany@tubacex.com

#### **TUBACEX ITALY**

Via Vitruvio 43 20124 MILAN, ITALY Phone: +39 02 669 55 05 E-mail: salesitaly@tubacex.com

#### **TUBACEX AMERICA**

15990 North Barkers Landing Road Suite 175 Houston, TX 77079, USA Phone: + (1) 713 856 2700/13 E-mail: sales@tubacex-usa.com

#### **TUBACEX NORTH EAST ASIA**

The Place, Room 2801, Block B No.100 Zunyi Road, Chang ning District 200051 SHANGHAI, CHINA Phone: +86-21-5298-0242 E-mail: tubacexasia@tubacex.com.cn

#### **TUBACEX MIDDLE EAST**

Dubai Airport Free Zone Area Building 1w, Office 209, P.O. Box: 293692. DUBAI, UAE Phone: +971 4 701 72 12 E-mail: salesmiddle-east@tubacex.com

#### **TUBACEX SOUTH EAST ASIA**

2 Venture Drive, 09-04 Vision Exchange Singapur 608521, SINGAPUR Phone: (+65) 6100 6126 E-mail: sales-sg@tubacex.com

#### **TUBACEX KOREA**

RM#302, SK V1 Tower, Yeonmujang 5Ga-Gil 25, Seongdong-Gu, 04782 SEOUL, REPUBLIC OF KOREA Phone: +82-10-4800-5080 E-mail: saleskorea@tubacex.com

#### **TUBACEX INDIA**

402 A, 4th floor, Plot C 59, Platina G-Block Bandra Kurla Complex, Bandra East, 400 051 MUMBAI, INDIA Phone: +91 22 40015 300 E-mail: sales@tubacexindia.com

#### **KAZKHSTAN**

"Adal" Business Centre, office 805, Studencheskaya Str. 52, Atyrau 060000, KAZAKHSTAN E-mail: saleskazakhstan@tubacex.com

#### **NORUEGA**

Headoffice Espehaugen 45, 5258 Blomsterdalen, NORWAY E-mail: post@tssnorway.no

#### **TBX BRAZIL - SP**

Rua Adib Auada, N 35, Bloco A, Sala 117 Jardim Lambreta – CEP 06710-700 Cotia, São Paulo, Brazil Phone: + 55 12 99258-7221 E-mail: comercial.br@tubacex.com

#### **TBX BRAZIL - RJ**

Av. Almirante Barroso, N 81 – 33º Andar Centro – CEP 20031-004 Rio de Janeiro, Rio de Janeiro, Brazil Phone: + 55 21 98105-9228 E-mail: comercial.br@tubacex.com

#### **TBX UPSTREAM**

Blue Sky Tower 602, Capital Centre, PO Box: 106255, Abu Dhabi UNITED ARAB EMIRATES Phone: +971 2 666 97 24

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#### SERVICE CENTERS

#### **TUBACEX SERVICE SOLUTIONS (TSS)**

Polígono Industrial Saratxo 01470 AMURRIO (ÁLAVA), SPAIN Phone: +34 945 39 36 00 E-mail: tss@tubacex.com

#### **TSS FRANCE**

Z.A.C. des Chesnes Nord Rue des Combes, 38290 SATOLAS & BONCE, FRANCE Phone: +33 474 94 00 64 E-mail: tssfrance@tubacex.com

#### **TSS CENTRAL EUROPE**

Rohrstrasse 1, A-2630 TERNITZ, AUSTRIA Phone: +43 2630 316 301 ó 300 E-mail: tsscentraleurope@tubacex.com

#### **TSS INDIA**

208 First Floor, Vdrindavan SDF Complex, Phas-II. Kandla Special Economic Zone GANDHIDHAM (Gujarat), INDIA Phone: +91 22 40015324 E-mail: tssindia@tubacex.com

#### **TSS HOUSTON**

5430 Brystone Drive, HOUSTON, TEXAS 77041, USA Phone: +1 713 856 27 00 E-mail: tsshouston@tubacex.com

#### **TSS PA**

951 Fourth St. Greenville, PA 16125 Phone: + (1) 724 646 4301 E-mail: tsspenn@tubacex.com

#### **TSS MIDDLE EAST**

Jebel Ali Free Zone PO Box: 293692, DUBAI UNITED ARAB EMIRATES Phone: +971 4 701 72 12 E-mail: tssmiddle-east@tubacex.com

#### **TSS NORWAY**

Gamle Forusveien 11, 4031 Stavanger, NORWAY E-mail: post@tssnorway.no

#### **TUBACEX SERVICES**

Avenida de Orejo 3, 39719 OREJO, MARINA DE CUDEYO (CANTABRIA), SPAIN

#### **TBX BRAZIL - RJ**

Alameda Tenente Célio, N 60 - Area A Granja dos Cavaleiros – CEP 27930-120 Macaé, Rio de Janeiro, Brazil Phone: + 55 22 99797-1877 E-mail: logistica.br@tubacex.com

#### **TBX BRAZIL - SP**

Rua Princesa Isabel, N 515 Cidade Nova – CEP 12414-270 Pindamonhangaba, São Paulo, Brazil Phone: + 55 11 94392-1125 E-mail: logistica.br@tubacex.com

#### **TSS NEA**

Zunyi Road, Unit 2801, Tower B, The Place 100 Shanghai 200051, China Phone: +86 21 5298 0242

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Image /page/85/Picture/0 description: The image shows a recycling symbol above the text "100% RECYCLED PAPER".

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Image /page/86/Picture/0 description: The image is a dark, abstract composition with a gradient of black and dark gray dominating the left side. On the right, there are curved, blurred lines of light blue, suggesting a sense of movement or energy. The overall impression is one of depth and mystery, with the contrast between the dark background and the light blue lines creating a focal point.

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Image /page/87/Picture/0 description: The image shows the logo for TUBACEX GROUP. The word "TUBACEX" is in large, bold, white letters. Above the "U" is a red curved line. Below "TUBACEX" is the word "GROUP" in smaller, white letters. The background is dark with some vertical pinkish-purple streaks.

Tres Cruces 8 01400 Llodio (Álava) SPAIN +34 946 719 300 www.tubacex.com