SUSTAINABILITY REPORTYEARS 2013 AND 2014

SUSTAINABILITY REPORTYEARS 2013 AND 2014

CONTENTS

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FERALPISUSTAINABILITY REPORT

Message from the Chairman

Corporate Boards

Group highlights

PART TWOSOCIAL RESPONSIBILITY COMMITMENTS AND GUIDELINES

PART ONEGROUP PROFILE

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1. Identity, missionand strategy

2. Structure

3. Governance

3.1 Supervisory Board activities

3.2 Establishment of the Sustainability Committee

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1. The Group’s CSR policy

2. The Feralpi Group’s stakeholders

3. Stakeholder dialogue

4. Stakeholder engagement objectives and programmes

4.1. Role of the Sustainability Committee

4.1.1. Engagement of personnel in workplace safety programmes

4.1.2. Initiatives aimed at the development of corporate welfare

4.1.3.Initiatives linking school, work and orientation to the job market

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PART THREEECONOMIC RESPONSIBILITY

1. The Group’s role in the target markets

2. Creation of consolidated value added

3. Distribution of consolidated value added

4. Investments in the environment and safety

5. Research and development

5.1. Feralpi Siderurgica

5.2. ESF Elbe-Stahlwerke Feralpi

PART FOURSOCIAL RESPONSIBILITY

1. Employees

1.1. Protection of employment and use of shock absorbers

1.2. Remuneration of human resources 1.3. Work organisation and work environment quality

1.4. Workers’ health and safety

1.5. Personnel training

1.6. Gender equality

1.7. Safeguard of protected employee categories

1.8. Protection of workers’ rights and labour relations 1.9. Employees’ opinions in the Company Climate Survey

2. Shareholders

3. Customers

3.1. Product range and customers

3.2. Quality objectives

3.3. Participation in sector events

4. Suppliers

4.1. Suppliers and quality

4.2. Scrap suppliers

4.3. Energy suppliers 4.4. Contractors that work at the plants

4.5. Partnerships with suppliers

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5. Public Authorities

5.1. The European Union

5.2. States

5.3. Local authorities 5.4. Public supervisory bodies

6. The local communities

6.1. Local community support

6.2. The fourth edition of the Riesa general public opinion survey

PART FIVEENVIRONMENTAL RESPONSIBILITY

1. The production process

2. The plants and their location

2.1. The Lonato del Garda plant

2.2. The Calvisano plant

2.3. The Riesa plant

2.4. The Ecoeternit controlled landfill

2.5. Sites with lower environmental impact

3. Environmental performance indicators

3.1. Input materials

3.2. Energy consumption and savings

3.3. Generation and treatment of waste and by-products

3.4. Use of water and liquid emissions

3.5. Atmospheric emissions

3.6. Greenhouse gas emissions

Notes

Methodology note

Content Index

Independent auditor’s report

Colophon

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“Wehumanbeingsarenotonlythebeneficiariesbutalsothestewardsofothercreatures.Thanks to our bodies, God has joined us so closely to the world around us that we can feel thedesertificationofthesoilalmostasaphysicalailment,andtheextinctionofaspeciesasapainfuldisfigurement.Letusnotleaveinourwakeaswathofdestructionanddeathwhich will affect our own lives and those of future generations”

Papa Francesco, Evangelii gaudium 215.

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MESSAGEFROM THE

CHAIRMAN

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Promoting a corporate culture is the responsibility of leaders. We believe that the role of business enterprises is even more strategic today, in a world where value is measured not only in monetary terms but also in the ability to efficiently meet the needs of society and of the environment in which companies operate as part of a collective and shared heritage.The Feralpi Group has decided to face the change openly and to integrate the values of sustainable development within its business strategy, aiming to pursue growth while fully respecting the communities and the environment in which it operates. In its sixth annual Sustainability report, covering the 2013-2014 two-year period, our Group once again states its commitment to becoming increasingly capable of combining the manufacturing activities typical

of heavy industry with the diverse interests of different stakeholders.The figures provided in this document are the result of this vision: although highly satisfactory, these data should be considered, rather than an accomplishment, a starting point to achieve even more ambitious goals. This performance was made possible by the adoption of the most advanced technologies available and the best management and control systems - two factors without which we would not have been able to achieve continuous improvement in terms of environment, safety, welfare and training.Therefore, I am pleased to present real and objective data demonstrating that sustainability can be a measurable and verifiable factor in the steel industry.

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We have prepared this Sustainability Report in accordance with the new GRI-G4 (Global Reporting Initiative) Guidelines . The Report is organised into five chapters. The first two present the Group’s profile and the sustainability commitments it has undertaken; the next three chapters contain detailed descriptions of our actions and achievements in terms of economic, social and environmental responsibility. For an in-depth analysis, readers are referred to the final explanatory notes.We have also established a Sustainability Committee responsible for the periodic sharing of guidelines in the area of Corporate Social Responsibility.For the sake of consistency with our environmental goals, in 2014 Feralpi Siderurgica S.p.A obtained the registration of its EMAS environmental statement, in continuity with Feralpi Stahl (Riesa, Germany) which achieved the same prestigious validation in 2012.We are also aware that the strength of businesses rests not only on technology, but also on the work of its employees: this is why we renewed our commitment through a climate survey directed to all Group personnel.Respect for the territory is a vital issue for Feralpi. In continuity with the listening approach adopted with the residents of Riesa, Germany, we commissioned an external survey to collect opinions and remarks on our activities. As sustainability means maximising productive processes and minimising raw material consumption, we have invested in technologies and in research and development to reduce energy and water consumption and to recover heat from our production processes. We also place great emphasis on recovery activities, including the recovery of metallurgical slags from steel smelting processes: through a patented treatment, slag is transformed into Green Stone

2+, a by-product that can be used for road construction, asphalt concrete, cement concrete and drainage layers.This is our interpretation of change: not only actions and initiatives in companies, but also the ability to seize business opportunities in other sectors (as in the case of the acquisition of the Caleotto (Lecco) plant, which produces special steels) and in other areas in the world (as demonstrated by the creation of Feralpi Algérie in Oran), while continuing to honour our Corporate Social Responsibility values wherever we operate.We are aware that fulfilling these commitments means leveraging our ability to keep in step with change, and perhaps anticipate it. It is up to us to lead our Group into the future, because today is the time to start building the world of tomorrow. I would like to express my sincere thanks to all those who have worked with passion and pro-fessionalism on this Sustainability Report, and a heartfelt welcome to the Feralpi world.

Giuseppe PasiniChairman, Feralpi Group

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MESSAGE FROM THE CHAIRMAN

CORPORATE BOARDS OF FERALPI HOLDING

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Board of Directors

Chairman Giuseppe Pasini

Deputy Chairman Cesare Pasini

Managing Director Giovanni Pasini

Directors Maria Giulia Pasini Marco Leali Andrea Tolettini Alessandra Tolettini Guido Corbetta

Board of Statutory Auditors

Chairman Giancarlo Russo Corvace

Auditors Alberto Soardi Stefano Guerreschi

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GROUPHIGHLIGHTS

31.12.2013 31.12.2014 % CHANGE

Shareholders’ equity (€,000) 364,003 363,006 - 0.3

Profit/loss for the year (€,000) - 12,053 - 575 -

Turnover (€,000) 943,902 971,153 + 2.9

Steel produced (t,000) 1,900.8 2,092.7 + 10.1

Number of sites 9 9 -

Net Global Value Added (€,000) 59,849 79,041 +32.1

Environmental protection costs (€,000) 17,289 15,448 - 10.6

End-of-period workforce (no. of employees) 1,260 1,248 - 1.0

Training hours delivered 19,648 21,741 + 10.7

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+32.1%Net Global Value Added

Net Global Value Added

+10.7%Training hours delivered

(€,000)33,043

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GROUP PROFILEPART ONE

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the company’s motto, “Producing and growing through respect for man and the environment”.

Feralpi’s vision is historically based on founder Carlo Nicola Pasini’ motto: “Producing and growing through respect for man and the environment”, based on the belief that industrial production should be guided by principles of social and environmental sustainability in order to be a source of well-being for the people who participate in it with their work.

11. Identity, mission and strategy

The Feralpi Group was founded in 1968 at the initiative of Carlo Nicola Pasini who, along with a group of Brescia entrepreneurs, anticipated the market potential of construction steel taking advantage of a favourable location and the application of cutting-edge technology in the use of the electric arc furnace. The mini steel mill technology allows for relative production flexibility and, despite high energy consumption, its environmental impact is far lower than that of the available alternatives.Since its beginnings, the Group has been ahead of its time in pursuing environmental protection objectives, with an awareness that the local indu-strial culture only started to develop much later. The first flue gas cleaning system was adopted in 1974. Along with environmental protection, another pillar of corporate strategy is the pro-tection of workers health and safety, reflecting

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Already in 1992, thanks to its solidity and the cohesiveness of its corporate structure, the Group was able to establish itself as an international organisation. Seizing the opportunity provided by the fall of the Berlin wall, Feralpi built a new steel mill in Riesa: the long metal working tradition of this Eastern German town was thus renewed and made competitive by Italian investments and expertise. In 2004, because of progressive geographic and sector diversification, Feralpi had to adopt a new corporate structure through the creation of a holding company in charge of co-ordinatingthe different businesses.In 2008, in addition to celebrating the 40th anniversary of its foundation, the Group recorded the peak of its production. In the following years, Feralpi weathered the crisis relying on a long-term strategy based on efficiency improvements through significant production investments, diversification and increasing closeness to end customers in an attempt to seize the opportunities offered by the economic situation.Considering the reporting scope adopted, the Feralpi Group currently operates in four European Union countries: Italy, Germany, Czech Republic and Hungary. A commercial subsidiary in Algeria is planned to become fully operational in 2015, in support of the country’s now well-established development. Algeria is the industry’s third largest market after Germany and Italy.The construction steel sector is structurally characterised by a strongly cyclical pattern.This requires flexibility in production organisation and financial solidity on the part of the company. This is the model adopted by Feralpi, and this is the reason why profits are primarily allocated to reserves, in order to support development and the constant pursuit

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of innovation in three strategic areas: production efficiency, plant safety and environmental protection.

FERALPI’S MISSION:• to help enhance the multiple uses of steel

by diversifying production towards higher value added steels;

• to strengthen internal know-how through the acquisition of new skills downstream of the production chain;

• to keep the Italian steel manufacturing tradition alive and competitive through constant innovation, respect for the environment, and economic and social sustainability;

• to boost international operations so as to seize global market opportunities.

The Group confirms the long-term strategies adopted so far: diversification, use of the best available technologies, vital importance of investments in research and development, personnel training, environmental and workplace safety protection, and active assumption of corporate social responsibility, as a vision that integrates the various aspects of business activity.At production level, development is pursued through:a) entry into the special steels segment;b) acquisition of productions downstream of traditional construction material productions;

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c) the search for new markets in emerging regions, to compensate for the persistent crisis in the Italian market.Use of the best technology is reinforced by constant in-house research, often in partnership with qualified Italian and international external centres and organisations. After modernising the plants and achieving important goals in terms of greater production phase integration, as a

response to the crisis, the Group is now engaged in projects to optimise processes in support of production. In particular, these include processes involving the recovery of materials and energy from the production process. These strategic objectives have a dual purpose of making the process more efficient while reducing the environmental impact of processes.

PART ONE

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Risks and opportunities arising from business activities,including social and environmental reputational risks.

Feralpi operates in the steel industry and is also marginally engaged in other sectors, like ecology and the environment. For this reason, in addition to the economic, financial and commercial risks typical of business activities and specifically described in the annual report (in accordance with article 2428, paragraph 2 point 6 bis of the Italian Civil Code), the company addresses and controls operational risks related to such issues as: safety of the workplace and the environment inside and outside production sites; handling of a large amount of equipment; waste treatment; changes in legislation; uncertainty con-cerning interpretation and consequent application by supervisory authorities.

Steel smelting plants require constant monitoring of air emissions through advanced systems for redu-cing fumes and the dust deposits resulting from this process. The plant is classified as at risk of major accidents according to Italian Legislative Decree no. 334/99, as amended, because of the zinc oxide and lead compound concentrations in the dust.

Potential risks and opportunities also include climate change and its possible consequences for the company. Although the possible financial impact of climate change on the company’s operations have not been estimated in quantitative terms, the management is aware of these implications and takes them into account when shaping the Group’s strategies.

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Being fully recyclable, Feralpi products have a minimal environmental impact; however, the production process requires high energy consumption, and therefore its indirect impact on the environment is significant and may contribute to climate change.As described in the section dedicated to environmental policies, the company adopts the best available technologies and conducts research to save energy and reuse scrap.This strategy allows Feralpi to take advantage of opportunities that may arise in a sector whose technology, while mature, continues to show significant margins for improvement in terms of consumption, productivity, quality and safety.

To ensure the conduct of social and environmental risk analysis and to develop an integrated strategy in these areas, Feralpi has recently established a Sustainability Committee, whose activities are described in the section dedicated to governance.

PART ONE

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subsidiaries EDF Elbe-Drahtwerke Feralpi GmbH, Feralpi Logistik GmbH and Feralpi Stahlhandel GmbH, which in turn controls Feralpi Praha S.R.O., operating in the Czech Republic, and Feralpi Hungaria K.F.T., operating in Hungary);

b) the Diversified Investments business unit, consisting of various sub-holding companies, including the financial company Feralpi Farm S.r.l. which coordinates a number of businesses operating in the environmental innovation sector, and Due I. Investimenti S.r.l. which controls Ecoeternit S.r.l. The recently established Feralpi Algérie Sarl is one of the subsidiaries through FER-PAR S.r.l.

22. Structure

The Group’s parent company is named Feralpi Holding S.p.A., with registered office in Brescia at 15 Via Aurelio Saffi, and head office at 11 Via Carlo Nicola Pasini, Lonato del Garda, Brescia. The Group has production sites in four countries: Italy, Germany, Czech Republic and Hungary. In 2014 Feralpi established a commercial company in Algeria, whose impact on the Group’s economic, social and environmental dimensions as reported herein is not yet significant at the end of the reporting period.For the purposes of this document, the Group’s structure is described in simplified form, mentioning only the subsidiaries. Information about the associates is contained in the report on operations accompanying the financial statements at 31.12.2014, to which reference is made.

The Group’s structure is divided into a core bu-siness, which focuses on metalworking and steel production activities, and a number of companies engaged in the management of equity invest-ments in a variety of sectors, including environ-mental services:

a) the Iron and Steel business unit, coordinated by Feralpi Siderurgica S.p.A., which acts as sub-holding company for the entire business unit. The latter in turn is subdivided into an Italian hub, consisting of Feralpi Siderurgica S.p.A. located in Lonato del Garda (BS), Acciaierie di Calvisano S.p.A. based in Calvisano, (BS), Nuova Defim S.p.A. based in Anzano del Parco (CO), and Dieffe S.r.l. based in Pomezia, Rome, and a German hub which includes all the companies located abroad and operating under the Feralpi Stahl brand (ESF Elbe-Stahlwerke Feralpi GmbH, headquartered in Riesa, Saxony, and the

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2014Fig. 1 - Structure of the Feralpi Group at 31 December 2014

Mittel SpA

EDF GmbH

Feralpi Stahlhandel GmbH

Feralpi Logistik GmbH

Feralpi Hungaria KFT

Feralpi Praha SRO

Feralpi Recycling SRO

FeralpiSiderurgica SpA

FERALPIHOLDING SPA

Finanziariadi Valle Camonica SpA

Feralpi Farm Srl

ECO-TRADING Srl

Faeco Ambiente Srl

Agroittica SpA

FAR Energia Srl

Omega Srl

Beta SA

ESF GmbH

Media Steel Srl

Immobiliare Feralpi Srl

Nuova DE.FI.M. SpAOrsogril

Dieffe Srl

Acciaierie di Calvisano SpA DI.MA. Srl

Comeca SpA

Feralpi Algérie Sarl

Due I. Srl Ecoeternit Srl

FER-PAR Srl

LEG

EN

D

Control

Interest

Steel business

Cold drawn steel – downstream products

Metal structural work Trading

Waste Disposal

Environment

Fish-Farming

Finance

Equity Investment Management

Other

COMPANY ORGANISATION CHART 2014

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members. Board members’ compensation, which during the reporting period did not change from the previous year, is based on the combination of three criteria: levels of responsibility, time dedicated to their duties, and expertise acquired.The Board of Directors draws up the Group’s economic strategies and approves the strategies proposed by the Sustainability Committee on social and environmental issues. In this capacity, every two years the Board approves the Sustainability Report, the key document identifying the Group’s environmental and social impacts and the relevant risks and opportunities, in order to take strategic decisions aimed at their control. The Board of Directors’ performance on economic, environmental and social issues is assessed by the Shareholders’ meeting on an annual basis. At least once a year, the Board assesses the effectiveness of the processes implemented for the management of these risks, in consultation with the Sustainability Committee.

33. Governance

Feralpi Holding is the financial company that coordinates and controls the group and owns the operating companies, also through sub-holding companies on a cascading basis. The Group’s governing body is the Holding Company’s Board of Directors, elected by the Shareholders’ Meeting and composed of eight directors, among whom are elected the chairman, vested with operational powers and strategic information responsibilities, the deputy chairman and the managing director. The Board is the historical expression of family control over the company and most of the offices are held by representatives of the major shareholders, who also serve in managerial positions. The interests of minority shareholders are also represented in the Board. Except for the independent director who serves on the Board of Feralpi Holding, the Board members, whose term of office is three years, are selected among company managers on the basis of skills and experience gained at Feralpi and of gender considerations. Only the Shareholders’ Meeting can appoint Board

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The Board of Statutory Auditors consists of three members supported by a Secretary. The Board of Directors appoints the Supervisory Board and, starting in April 2014, the Sustainability Commit-tee, led by chairman of the Board of Directors of the Holding Company. The remuneration of se-nior managers and executives (middle managers) includes incentives linked to business results and the achievement of specific objectives.

The Group’s governance structure

The organisational model adopted by Feralpi is in accordance with the provisions of Italian Legislative Decree No. 231/2001 on the administrative liability of legal entities; in compliance with these provisions the company drew up a Code of Ethics whose principles, since 2007, have inspired the daily conduct of all personnel, from senior management to the staff operating in the various departments and offices (http://www.feralpigroup.it/upload/codice%20etico%20ok_2014.pdf).

SustainabilityCommittee

Shareholders’ Meeting

Board ofStatutoryAuditors

Auditingfirm

Board ofDirectors

SupervisoryBoard

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General principles of the Code of Ethics with respectto stakeholders

Following the approval of Law No. 190/2012 containing “Provisions for preventing and combating corruption and illegal activities in Public Administration”, the introduction of new offences has resulted in expanded administrative liability of legal entities and the need to update the Company Code of Ethics accordingly; a revised version of the Code was approved by the Board of Directors of Feralpi Holding on 27 February 2014 and was later extended to all Group companies.The Code of Ethics provides for anonymous and protected channels for the reporting of violations of the rules and principles contained therein.

HONESTYRESPECT

TRUST AND LOYALTYFAIRNESS

ENVIRONMENTAL PROTECTIONSUSTAINABLE DEVELOPMENT

COMMUNITY

COLLABORATION

DILIGENCE AND PROFICIENCY

TRUTHFULNESSTRANSPARENCY

COLLABORATION

TRANSPARENCY CUSTOMERS

PERSONNEL

SHAREHOLDERS

SUPPLIERS

PUBLICADMINISTRATION

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3.1. Supervisory Board activities

Since the end of 2012, three Supervisory Boards (SB) have operated within the Group: the SBs of Feralpi Holding and Feralpi Siderurgica are collegiate bodies composed of three members, while the SB of Acciaierie di Calvisano is a single-member body. The collegiate SBs consist of a company employee acting as controller and two external members, among whom is appointed the Chairman.

The Chairman of the Holding Company’s Supervisory Board is a professional with specific legal expertise, in charge of providing updates on regulatory developments on an on-going basis; these apply to all the associated companies, because of the cross-company functions of the holding company.

The Chairman of the SB of Feralpi Siderurgica has specific expertise on environmental and workplace safety issues. The SB of Acciaierie di Calvisano is composed of a single member selected from outside the company, with expertise in workplace safety and in regulatory and environmental affairs. The expertise of external SB members allows the company to receive updated advice on ethical behaviour.

SB members remain in office for three years and, upon expiry of their term, cease from office as soon as a new SB is appointed. In the course of the 2013-2014 period the SBs functioned on a continuous basis, providing recommendations and guidance to the respective Governing Bodies, while no actions or behaviours involving conflicts of interest or, more generally, potential Company Code of Ethics violations were reported.In particular, the Supervisory Board of Feralpi Holding and Feralpi Siderurgica held six meetin-gs both in 2013 and in 2014, all duly recorded, as well as informal meetings and inspections carri-ed out by individual members. The Supervisory Board of Acciaierie di Calvisano also performed five inspections both in 2013 and in 2014, all duly recorded.

PART ONE

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3.2. Establishment of the Sustainability Committee

The Feralpi Group’s Sustainability Committee, composed of Italian and German function leaders, became operational in March 2014. Because of its responsibilities, the Committee plays a strategic role in the Group’s governance and reports directly to the Board of Directors in matters relating to social and environmental responsibility. Its functions are to promote a continuous improvement process towards sustainability, which for the company also means greater competitiveness and stronger Group identity. Given the importance that CSR has for Feralpi, starting from 2015 all the Sustainability Committee’s activities will be periodically reported to the Board of Directors.One of the first activities in which the Sustainability Committee engaged was the creation of a materiality matrix. The Committee members have been involved in this process both as part of a specific focus group which discussed the economic, social and environmental aspects most relevant to the company, and in the process for the approval of the materiality matrix, which was presented and validated during the Committee meeting held in September 2014.Committee meetings are held on a quarterly basis and may be attended by outside consultants. At each meeting, the members are required to present specific initiatives in all areas relevant to the development of a Group CSR policy. The Sustainability Committee assists the Board of Directors in assessing the social and environmental risks arising from the Group’s activities.

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PART ONE

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SOCIALRESPONSIBILITY COMMITMENTS AND GUIDELINESPART TWO

11. The Group’s CSR policy

Feralpi CSR policy is inspired by the principles expounded and advocated by the Sodalitas Foundation, of which it is an active member: threefold sustainability (economic, social and environmental); the belief that companies should not be mere economic players, but also social and cultural players; a multi-stakeholder approach; attention to the younger generations; local roots and dissemination of an industrial culture based on the values of commitment and hard work.

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The Company pursues its objectives in the areas of representation of entrepreneurs’ interests, technology innovation, establishment of industry standards, applied research and the pursuit of shared social respon-sibility values, also through membership and active participation in various trade associations.

Within the scope of the representation of interests, the Italian Group companies have joined the Confindustriale system through the industry association Federacciai, the trade union federation Federmeccanica and the local associations of the areas where the plants are located (Associazione Industriale Bresciana and Unione industriali di Como).

The Feralpi Group is also a member of Ramet, a Consortium for Environmental Research for Metallurgy that studies and monitors the impact of production activities on work environments and the territory. The German subsidiaries are members of the federation of steel industries, Wirtschaftsvereinigung Stahl (the German counterpart of Federacciai), of the industrial association of Saxony, Industrieverein Sachsen Chemnitz and of the local association of enterprises Vereinigtes Wirtschaftsforum Riesa.

These associations act on behalf of members for the development of public policies. Feralpi Stahl also joins Deutscher Ausschuss für Stahlbeton e.V., Berlin, the committee for the definition of German industry standards (DIN), for the improvement and dissemination of construction products. Feralpi Holding is a member of Associazione italiana aziende familiari (Aidaf), whose mission is to protect and promote the family tradition of Italian entrepreneurship.

Within the scope of technical associations, Feralpi regularly cooperates with Riconversider,Federacciai’s consulting company, specialized in business organization, technological innovation andmanagement of funds provided by European and national laws, and with Unsider, an Italian steelstandardisation body specialized in the dissemination of knowledge of international standards.

Feralpi Holding, together with ther enterprises, has established the CSR Foundation - National StudyCenter for the control and management of corporate risks - whose goal isto foster the dissemination of a culture of safety.

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Within the scope of research, the company FeralpiSiderurgica is a member of the Italian Metallurgy Association, whose mission is the dissemination of the science and technology of materials and their applications, and of Sismic, a technical association for the promotion of steels for seismic reinforced concrete, and of Ente nazionale italiano di unificazione (Italian National Standardization Body -UNI), an association that studies voluntary technicalstandards in all sectors of activity.

Feralpi Siderurgica and Acciaierie di Calvisano are part of the REACH Ferrous Slag Consortium, which supports member companies in the Echa registration process. Echa is the European Union agency that promotes the safe use of chemicals and is responsible for the registration, evaluation, authorisation and restriction of chemicals according to their level of hazardousness and the risks involved.

ESF is a member of FEhS-Institut Duisburg (Institute for construction materials); is part of BDSV Bunde-svereinigung Deuscher Stahlrecycling-und Entsorgungsunternehmen (Confederation of German Steel Recycling and Waste Management Companies) and of ESN Entsorgergemeinschaft der Deutschen Stahl-und IT-Metall-Recycling-Wirtschaft. ESF is also a member of the Berlin Council of Economics (Beirat der Wirtschaft Berlin) and of the Saxony Harbour and Traffic Association (Sächsischer Hafen-und Verkehrsve-rein e.V. Dresden)

Since 2004, Feralpi Holding has been a member of CSR Manager Network Italy and Europe, an associa-tion of professionals and managers responsible for Corporate Social Responsibility (CSR) with the aim of disseminating the culture of sustainability as a driver of business competitiveness.The Association aims to promote behaviours in line with the concept of CSR in the international business community by offering its members opportunities for sharing and developing knowledge, skills and best practices. It also facilitates relationship between Italian and foreign CSR professionals, taking an active role in international networks and developing relationships with the world’s leading research centres. Feralpi Holding is a partner of the Institute for Business Values (Istituto per i valori d’impresa - ISVI), which promotes socially oriented business development, and a member of the Sodalitas Foundation, the largest Italian association for the dissemination of corporate social responsibility principles and practices.

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22. The Feralpi Group’s stakeholders

The stakeholders with whom Feralpi has developed and pursues commitments (sometimes on mutually agreed basis), have been identified over time partly on the basis of opportunity cost analysis, partly through the monitoring of opinions expressed by the

stakeholders (periodic company climate and local population opinion surveys on plants and their social and environmental impact), and partly taking into account requests made directly by them.For many years, the Feralpi Group has adopted a key stakeholder engagement approach. This approach has been a distinctive feature of its corporate identity since the Company was founded, and has developed according to a gradual inclusion strategy extended from personnel and the local communities to all stakeholders, including suppliers. Alongside a progressive expansion of dialogue and cooperation, from 2004 the Company has also implemented more systematic engagement initiatives through a number of tools relating to the preparation of the two-year Sustainability Report, culminating in the recent establishment of the Sustainability Committee, responsible for strategic decisions regarding the frequency, content and procedures for stakeholder engagement on the basis of their relevance.

PART TWO

Fig. 2- The Feralpi Group’s stakeholders

PUBLIC AUTHORITIES

LOCAL COMMUNITIES

CUSTOMERS

SHAREHOLDERSCOMPANYPERSONNELSUPPLIERS

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STAKEHOLDER COSTS OPPORTUNITIES TOOLS OF DIALOGUE CRUCIAL TOPICS

Shareholders

Need to reinvest the generated resources and to postpone shareholder remuneration

Small group of historical shareholders interested the Company’s long-term growth

Board of Directors

Personnel

Corporate commitment to protecting employment and development of initiatives in support of personnel, with particular attention to the insight provided by periodical company climate surveys

Motivation, personal loyalty; investment in the development of human capital and workplace safety

Climate survey, Verde Feralpi house organ, Intranet Dedicated initiatives for the employees

Application of social safety nets (shock absorbers), assessment of company services

Suppliers

Supply chain control, significant disparities in environmental and social awareness between suppliers

Growth potential for social responsibility through cooperation on targeted projects, as shown by seminars and group meetings held and planned with selected suppliers

Next implementation of activities related to supply chain

Corporate Social Responsibility related issues

Customers

Weak market for long rolled section because of the continuing crisis in the Italian construction industry and the need for new market outlets, both abroad and in the special steels segment

Development of new markets outside Italy and equity investments in activities downstream of production

Customer satisfaction

Local communities

Need to maintain constant relationships with local communities and to respond to their needs. Monitoring of local public opinion through a periodic survey on the views of Riesa residents, which highlighted some critical issues in the past

Strengthening of company’s positive image and virtuous exchanges with representatives of the local authorities. Revival of the “open doors” approach, e.g. through new editions of the Open Day event

Local initiatives Inspections Periodic survey on Riesa residents’ opinion

Environmental impact of the Riesa plant

Public AuthoritiesGrowing costs arising from taxation and regulatory uncertainties.

Enhancement of the Group’s reputation through cooperation with public technical bodies. Revival of initiatives involving local authorities.

Initiatives involving meetings with public administration agencies

Identificationofopportunitycostsassociatedwitheachstakeholder

35

33. Stakeholder dialogue

Dialogue with all stakeholders is essential to Feralpi: over the years, the Group has developed communication and consultation channels that are now an established tradition in business practices.Verde Feralpi, the company newsletter started in 2005 at the voluntary initiative of a group of employees, has grown into a publication addressed to all personnel and to key customers and suppliers.The company climate survey, described in greater detail in the chapter dedicated to personnel relations, is now at its fifth edition. Conducted every two years, the survey monitors the opinions of all employees on issues ranging from job satisfaction to rating of company services and the Group’s social and environmental policies.Significant innovations in in-company communication channels were introduced during the two-year reporting period. In April 2014, the Feralpi Group launched the web portal “Share/HR”, enabling all staff to access part of the Human Resources documentation through a personal account. This allows each employee to view, collect and store files concerning them. This platform is constantly expanded and updated with new information and documents concerning safety, environment and occupational medicine, as well as agreements concluded for the staff’s benefit.To allow those who do not have an Internet connection and a PC to access the Share/HR Portal, special Feralpi Service Points (FSFs) are being set up for the provision of this service. These workstations will be equipped with a PC and a printer designed exclusively for accessing the Share/HR Portal, and will be placed in easily accessible areas.

In Germany, Feralpi Stahl’s management is constantly engaged in relations with public bodies, advisory committees and policy makers on matters concerning sector regulations, production issues and relationships with local communities. In particular, on-going relationships are maintained with the Riesa municipal government, the Mayor, the Saxony government and the Saxony Department of the Environment and Agriculture (SMUL).

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36

12

45

3

Feralpi Siderurgica participates in the IEFE - Bocconi University Green Economy Observatory, which aims to develop the key issues in the debate on the Green Economy through research and analysis, creating a platform for dialogue, discussion and cooperation with institutional and business stakeholders. In particular, Feralpi participates in the work of the management steering group (together with other important companies such as Tenaris Dalmine, Italcementi and Sogin).The steering group’s purposes are to:

- develop knowledge of innovative approaches and tools to improve businesses’ competitive, managerial and organisational abilities with respect to Green Economy opportunities;

- provide support in identifying and monitoring the most significant changes in the industry, and in particular in intermediate and consumer markets, to promote the development of sustainable products; - provide an environmental environment in which to test the applicability of cutting edge tools for the management of sustainability;

- interpret regulatory changes in order to assess their strategic and operational implications for businesses;

- create a permanent home for stimulating the exchange of experience and good practices between participants.

Also in Germany, the periodical survey on the residents’ opinion, commissioned every two years from a leading survey firm, monitors the views of the residents of Riesa on the Company’s role in the local economy and community, and collects ratings on the policies adopted by Feralpi Stahl in matters of environmental protection, employment support and growth of local wealth through investments.VALORIZZAZIONE DEL BILANCIO PUBLICISING THE FERALPI

PUBLICISING THE FERALPI SUSTAINABILITY REPORT

On 2 October 2014, Feralpi’s Sustainability Report was presented at the Dalmine Foundation during a Steelmaster seminar entitled “The CSR report of steel sector companies: Rationale and results.”Feralpi participated in the second edition of the CSR event held on 7 and 8 October 2014 at the Bocconi University, where 15 where companies at the forefront of sustainability reporting presented their reports.

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38

4

% VALUES HOLDING SIDERURGICA CALVISANO NUOVA DEFIM RIESA TOTAL

Participated 19.4 8.5 7.5 6.0 3.4 6.6

Is familiar with them 51.6 49.5 50.9 34.0 25.2 38.0

Has heard about them 19.4 30.9 30.2 38.0 41.2 35.2

Is not familiar with them 9.7 11.2 11.3 22.0 30.3 20.2

Total respondents 31 188 53 50 238 560

Tab. 1 – Levels of employees’ awareness of and participation in CSR programmes

Source: 2015 Company Climate Survey

4. Stakeholder engagement objectives and programmes

In the course of the 2013-2014 period, special attention was paid to the further improvement of employees’ working conditions through the launch of the “Zero Injuries” programme. The reporting period also saw the start of the first initiative of a corporate welfare development programme, considered to be an important aid to employees’ families in Italy, given the continuing economic crisis in the country.

From the second half of 2014, objectives stakeholder engagement and dialogue objectives and programmes have been included within the Sustainability Committee’s activities.

4.1. Role of the Sustainability Committee

The Feralpi Group’s Sustainability Committee held its kick-off meeting on 28 March 2014 and later met regularly on a quarterly basis (18 June, 30 September and 10 December).The Committee has proposed, discussed and led the main sustainability initiatives undertaken during the year. Several initiatives span across multiple years, and therefore the company’s

commitment continues over next period.The first initiatives concerned two steps preliminary to CSR reporting for the 2013-2014 period: a) assessment of materiality matters, as set out in the GRI G4 guidelines, according to their specific risk profile for the company; b) start of the CSR reporting data collection and construction process through the Oracle|Hyperion Financial Management (HFM) platform. The EFSP (Feralpi Environmental and Social Program) was then developed with the objective of improving the standardisation, integration, quality and collection of the data required for

Thanks to the excellent results

achieved, on 24 May 2013 the “Zero Injury”

programme received the prestigious Sodalitas Social

Award in the category “Individual development and

work protection”.

preparing the Feralpi Group’s sustainability report. Starting from the Deloitte G3 Corporate Social Responsibility Starter Kit, built on the HFM platform, GRI G4 indicators were integrated and updated, and Group-specific data collection sheets were prepared. Training courses for the use of the FESP application were also organised and delivered to part of the Italian and German personnel.In the following months the Committee promoted a series of initiatives aimed at the protection of employees’ health beyond the work environment. The programme focused on eating habits and other behaviours that can improve health in daily life, e.g. smoking cessation and reduction of the risk of chronic cardiovascular diseases. This activity, specifically reported in the chapter devoted to personnel relations, resulted in the staff undergoing voluntary screenings.The major initiatives conducted in 2013 and those approved or managed during 2014 as part of the Sustainability Committee are described below.

4.1.1. Engagement of personnel in workplace safety programmes

For the Feralpi Group, safety is a basic principle of social responsibility towards its people. For this reason, initiatives have been launched over the years to improve workplace safety. One example is the “Zero Injuries” programme started in 2012 at Acciaierie di Calvisano and replicated the fol-lowing year at Feralpi Siderurgica.The goal is to minimise the number of accidents, and it can be pursued gradually, not only by inve-sting in the most advanced technology with the support of the Group’s experience and research, but also by involving the “human factor”, which re-mains a decisive element in achieving the highest safety standards.

In particular, the aim was to stimulate individual responsibility and extending it to the team di-mension, where everyone is responsible for the safety of others as well. This led to the creation of the “Safety Tutors”, chosen by employees for the safety of employees safety, whose role is to assist the supervisor in promoting a culture of safety through good communication and relatio-nal skills, and fostering the correct dissemination of safety knowledge and awareness across the company. In addition to greater involvement of employees, which leads to higher satisfaction and improved well-being, there has been a decline in the number of accidents reported in the period following the months in which the programme was carried out.

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40

4.1.2. Initiatives aimed at the development of corporate welfare

A number of agreements were concluded in 2014, with operational effects in 2015, between the Feralpi Group and local retailers for the benefit of the employees, who can thus take advantage of discounts and special deals reserved for them. This structured system of arrangements has been set up for the purpose of increasing the purchasing power of employees’ households.Under Feralpi Siderurgica’s new supplementary labour agreement (effective for the 2014-2016 period), which provides, inter alia, for an annual performance bonus up to € 5,000.00, also includes immediately usable benefits in kind concerning fuel vouchers up to € 200.00.

4.1.3. Initiatives linking school, work and orientation to the job market

In the belief that the active contribution to strengthening the staff welfare is a full member of one of the Company’s social obligations, the Group Feralpi triggered a series of initiatives, aware of the importance of the work intended as a primary value.As part of its attention to the younger generations, in 2014 the Group launched a project named Feralpi Bootcamp, which aims to help young people to receive appropriate training for a successful job placement.The programme includes 3 complementary initiatives: Orientamento Giovani (“Make the Right Choice!”), qualified School-Work Alternation, and Higher Training Courses.In particular, in September 2014 Feralpi implemented the initiative named “Make the Right Choice! Vocational guidance for the children of employees”, a three half-day

course held at the Group’s Lonato del Garda headquarters. The course was attended by 29 young people aged 18 to 29 years.Developed in collaboration with the Randstad agency, the course started from aptitude guidance to provide participants with the necessary awareness of their knowledge, skills, motivational factors, values and working styles. The objective of the second step was to provide guidance to the job market and to help the participants familiarise with the skills in demand on the labour market, contract terms and work abroad. The third theme covered by the programme was transferability. The participants received information on the techniques and tools for active employment searches, in particular through social networks and personal branding.The success of this initiative was demonstrated by the participants’ degree of satisfaction, which was rated as “extremely high” by 91% of the respondents, and the absence of any critical issues. This indicator progressively increased up to 98% with each subsequent module delivered.

The participants’ level of satisfaction with “Make the Right Choice! Vocational guidance for the children of employees” was consistently above 90%. The company climate survey, conducted in March 2015, also showed a level of satisfaction with this initiative of 84.2% of all personnel.

41

A policy of strong interaction between school and work also underlies the “School-Work Alternation” educational project, launched by Feralpi in 2014 with operational effects in 2015. Ten students were given the opportunity to put into practice in the workplace what they learned at school. The selected students attend the fourth year of the Cerebotani Higher Education School of Lonato del Garda, with which Feralpi has long partnered. The spirit of social support that underlies the agreement allows the school

to offer its students hands-on experience. At the same time, Feralpi offers its own knowledge to increase the level of specialization of the young people who are about to enter the job market. In view of the positive results of the initiative, Feralpi has decided to make it permanent and to bring up to 15 the number of young people involved in the next edition.The students, who attend the school’s mechanical, electronic and IT study programmes, will receive training in the company’s departments for a total for eight weeks throughout the year. The programme is particularly innovative as it includes 110 hours of training related to the technical aspects of steel manufacturing, the development of cross-disciplinary skills, and workplace health and safety issues.

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42

In 2014 the annual Innovascuola Award, established by Confindustria,was assigned to the Feralpi Group for the professional training apprenticeship programme successfully implemented in thelast few years.

Over the years, the significant experience of the Apprenticeship Programme (Course for Senior Steel Plant Management Technicians), delivered by the Feralpi Group in three two-year courses during the 2007-2011 period was leveraged in experimental Higher Training Courses.Today, Feralpi is part of local Technical Scientific Committees (TSCs) and Technical Professional Panels (TPPs) and is actively involved in the definition of training profiles relating to higher technical education and training courses (Istruzione e Formazione Tecnica Superiore - IFTS). Activities conducted within this framework include, for example, a partnership implemented as part of the Higher Technical

43

Education and Training course offered to teach “Installation and maintenance techniques of mechanical metallurgy and steel industry equipment” in the years 2014/2015 (starting in October 2014 and ending in July 2015). The training project, led by Fondazione A.I.B - Castel Mella Training Centre, is a partnership between educational institutions, companies and institutions, in which Feralpi is a member of the related Temporary Association (Associazione Temporanea di Scopo - ATS). The aim of the project is to promote the job placement within mechanical, steel and metallurgical industries of the Brescia province of qualified high school graduates, through a theoretical and practical training process

focused on the acquisition of specialized technical and professional skills necessary to perform the tasks of a civil and industrial systems installation and maintenance technician.Feralpi ensured an active partnership thanks to the cooperation of eight highly professional company technicians who provided many hours of specialised technical training in the classroom.

44

ECONOMIC RESPONSIBILITYPART THREE

45

Against this backdrop of continued difficulties, Feralpi responded by flexibly adapting to the demand for specific products. In particular, increased demand for stretched coil and mesh, both in Italy and in Germany, has partly offset the drop in demand for rebar. Acquisitions were carried out downstream of the production process to stabilise demand and diversify market sectors.

11. The Group’s role in the target markets

The reporting period saw a slowdown in global steel production. For the first time in 2014 China, the world’s largest steel manufacturer, failed to increase its production. Conversely, in the EU production grew by 1.8% compared to the prior year. Within the EU, Germany’s growth was a modest 0.7%, while Italy recorded a 1.6% decrease from 2013, which in turn ended with a negative result (source: World Steel – Federacciai).

72%of Feralpi’s turnover comes from exports

22. Creation of consolidated value added

The Feralpi Group’s greatest direct economic impacts on the market occur both through the purchase of goods and services from suppliers and through Business to Business (B2B) offering of steel products. This direct impact can be measured on the basis of income statement data through the determination of revenues (market impact of steel products) and costs (impact on supply chain).The creation of value added allows for the determination of income generated for internal stakeholders (personnel and shareholders) as well as for external stakeholders, such as the central and local public administration or the reference communities.

The transfer of economic value to stakeholders in turn generates indirect economic benefits for the local economy through the purchase of goods and services from local suppliers and employees’ expenditure for their households’ sustenance.

In 2014, the company generated net overall value added of 79 million, up by 32.1% compared to the previous year, with a strong recovery from the 41.1% decline in 2013.

117.5 million value added created in 2014

In general, the decline in domestic demand for long sections was offset by the German market holding up well, and to a greater extent by the growth of the Algerian market, which has confirmed its role as a primary export market that appreciates EU quality.

€ * 1,000 2012 2013 2014

Italy 406,103 301,302 271,142

Germany 334,864 329,180 361,291

Rest of EU 143,124 104,897 112,693

Rest of the world 218,733 208,523 226,027

Total 1,102,824 943,902 971,153

Tab.2 - Sales revenues by destination area

46

47

(€ THOUSANDS) 2012 2013 2014

Revenues from sales and services 1,102,824 943,902 971,153

Changes in inventory of work in progress 26,459 -35,925 -4,573

Increase in fixed assets for in-house work 2,127 3,459 2,287

Other revenues and income 3,637 3,319 3,861

A) VALUE OF PRODUCTION 1,135,047 914,755 972,728

Consumption of raw materials (scrap) 696,159 556,110 579,239

Energy 105,549 79,558 74,955

Consumable materials and supplies 122,424 95,075 101,849

Cost of services 91,255 87,114 92,546

Hire, purchase and leasing charges 2,192 2,276 3,163

Provisions for risks 123 0 1,000

Other provisions and write-downs 1,206 0 990

Other operating expenses 739 1,059 1,180

B) COSTS OF PRODUCTION 1,019,647 821,192 854,922

GROSS CHARACTERISTIC VALUE ADDED 115,400 93,563 117,806

Financial income 915 326 274

Adjustments to financial assets -1,013 +1,313 -674

Accessory and extraordinary items -98 1,639 -400

Extraordinary income 26,196 1,496 2,796

Extraordinary expenses -5,594 -2,866 -2,657

Balance of accessory management 20,602 -1,370 139

GROSS OVERALL VALUE ADDED 135,904 93,832 117,545

Amortisation and depreciation for the year 34,328 33,983 38,504

NET OVERALL VALUE ADDED 101,576 59,849 79,041

PARTE TERZA

Tab. 3 – Production of consolidated value added

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33. Distribution of consolidated value added

The value added generated by business activity is distributed to personnel through wages, salaries and contributions and awarded to the beneficiaries entitled to it by law (the State and local governments, in the form of taxes) or handed over to the local community in the form of sponsorships and donations. As the year-end accounts do not show profits, the company does not distribute dividends, as in previous years.

Therefore, the greatest portion of the created value (65.8% of the total) is allocated to person-nel. The second largest beneficiary, also in 2014, was the public administration (22.3% of value added) and remuneration of interest which takes up 8.2% of the total. 2.4% is distributed to local

(€ THOUSANDS) 2012 2013 2014

Wages and salaries 47,434 47,427 49,368

Employee severance indemnity 2,026 1,859 1,797

Other costs 1,139 835 859

A – PERSONNEL 50,599 50,121 52,024

Taxes 5,142 -1,833 4,148

Social security contributions 13,240 13,173 13,491

B – PUBLIC ADMINISTRATION 18,382 11,340 17,639

Provisions 2,223 1,577 1,530

Non-distributed profit/loss 21,162 -12,053 -575

C – RISK CAPITAL 23,385 -10,476 955

Distributed profit 0 0 0

Financial expenses 7,530 7,148 6,493

D – CREDIT CAPITAL 7,530 7,148 6,493

Charity 227 139 132

Sponsoring of sports/recreational activities 1,453 1,577 1,798

E - LOCAL COMMUNITIES 1,680 1,716 1,930

NET OVERALL VALUE ADDED 101,576 59,849 79,041

Tab.4 – Allocation of consolidated value added

49

PART THREE

communities, while 1.2% is earmarked for provi-sions and loss for the period.

Fig.4 – Change in the destination of net global value added

Fig.3 – Breakdown of net overall value added in 2014 by stakeholder

A comparison with the value added breakdown in previous years points to an absolute increase in labour remuneration despite employment decline, a marked upturn in business returns in 2014 compared to the previous year thanks to a

significant loss reduction, an increase in tax levy, a progressive decrease in interest on credit capi-tal and a steady rise in support to local communi-ties in the form of sponsorships and donations.

65,8

2,4

0,0

8,2

22,3

1,2

Publicadministration

Personnel

Credit capital

Localcommunities

Risk capital

Shareholders

Personnel

60,000

50,000

40,000

30,000

20,000

10,000

0

-10,000

-20,000

50,5

99

Riskcapital

Public administration

Creditcapital

Local communities

Shareholders

50,1

2152

,024

23,3

85-1

0,47

695

5 18,3

8211

,340

17,6

39

7,14

86,

493

7,53

0

1,68

01,

716

1,93

0

0 0 0

2013

2012

2014

50

44. Investments in the environment and safety

This section presents a detailed description of investments in environmental protection and personnel safety which are directly relevant to CSR reporting. These investments are part of the broader technological upgrading projects set out in the annual report, to which readers are referred.With regard to the Environmental and Safety Management System, activities were carried out during the two-year reporting period at the Lonato Feralpi Siderurgica site for the maintenance of ISO 14001 and OHSAS 18001 certifications, including constant review of the Risk Assessment Document; in 2013, preliminary procedures were started for EMAS registration, obtained in December 2014; a process was initiated for certification in Class 2+ of the Green Stone by-product for the use of EAF for road embankments. Furthermore the project aimed at separating civil from industrial waters was continued.The company decided to take voluntary action as early as 2013 for the disposal of hazardous waste under the SISTRI, in order to test its systems before compliance with the new regulation becomes mandatory.

During 2014, investments were made for further improving the environmental conditions inside the plant (large operating areas were asphalted and paved; workshop aspiration systems were overhauled and new dedicated aspirator units were installed) and achieving greater energy savings (application of heat protection films to the windows of administrative and technical offices, definition of the project for the construction of an internal district heating network and laying of the pipes for the new

district heating system). An additional tool for the measurement of stack emissions has been included in the emission monitoring system, and a new portal has been added for the detection of radioactivity in materials in transit to weighing. Action was taken to improve personnel health and safety (completion of a project related to work safety at height, aimed at improving the working conditions of operators on runways and other high-altitude locations; continuation of area segregation projects in rolling and continuous casting units; automation of manual load handling operations through the installation of special handling robots; installation of a rolling stand handling truck in a dedicated area; installation of new life lines on the roofs of several buildings; design and installation of an external footbridge for high altitude access to the steelworks shed runways; building of a new emergency stairway in the office building; continuation of the multi-year programme for the disposal of asbestos roofing).A new system for injecting lime into the EAF furnace has been set up, and the relevant changes have been made to the injectors and the cooled panels, with the aim to reduce overall lime consumption while improving lime effectiveness on slag chemistry.A new tower has been built for the loading of EBT sand to the electric arc furnace, eliminating the need for operators to climb onto the furnace and perform a manual operation for each casting, and reducing the amount of sand required for this process.The installation of a new LF pulpit cabin has improved the overall operating conditions of ladle furnace operators.Sound-deadening panels have been installed on the top part of the east side of the steelworks shed.

51

At Acciaierie di Calvisano, work continued in 2013 on the updating of the Risk Assessment Document (RAD). A project to improve the safety of the continuous casting machine has also been underway. A thermal camera ladle monitoring system has been implemented to optimise refractory consumption control.Continuous sampling of dioxins stack emissions was implemented in 2014; this investment is an example of over-compliance in that the constant control of emissions exceeds regulatory requirements.

In the area of environmental protection, in 2013 research and application of the best technology to reduce emission levels well below legal limits continued at ESF Elbe-Stahlwerke Feralpi GmbH. Certifications were obtained according to the EMAS (Eco Management and Audit Scheme) standard, the highest environmental recognition, and according to the DIN EN ISO 14001:2009 and DIN EN ISO 50001:2011

PART THREE

energy management standards. The company also participated in the Saxony Ministry for the Environment’s national technological innovation and energy efficiency programme, which supports investments in this field.In the area of safety, intensive courses on the safe use of forklifts, cranes and diggers have been organised for apprentices; courses on gas measuring technique and first aid have been intensified, and improvements have been made to the safety of company systems.

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5

A project was started at EDF in 2014 for the reduction of noise emissions from the shredder by enclosing the equipment with bulkheads and installing mobile doors. Additionally, the electrical system that serves the dedusting system has been upgraded for a more timely response, and a new system has been installed for the treatment of rolling mill cooling water.Also at EDF, the noise from two straightening machines was reduced by means of full coverage and the inclusion of a recycling and reintroduction system.

5. Research and development

During the reporting period, the Feralpi Group continued to conduct research and development programmes started in previous years or launched with specific investments thanks to the support of external funds.

5.1. Feralpi Siderurgica

An R&D programme named Target Fluff, completed in 2013 at the Lonato site, was carried out in partnership with the Fiat Research Centre, the Recovery and Service Centre and the Scrap Centre, and was funded in accordance with Ministerial Decree of 27/03/2008 published in the Official Journal of 20/05/2008. The project assessed the possibility of recovering matter and energy from a light residue from ferrous scrap shredding, called “fluff”. The activities involved the testing of experimental pyrolysis, pyrogasification and mechanical separation technologies.The CONSTOX research project started in 2011, carried out in partnership with research centres and steelworks and partially funded by the European Community (RFCS), was completed

in 2014, also at the Lonato site. The programme concerns control of oxidation during billet heating in the rolling mill furnaces, through the optimisation of operating practices and the adoption of new combustion technologies and alternative fuels.2014 saw the completion of the LAM1 furnace monitoring programme, initiated in 2011 in collaboration with the Materials Development Centre (Centro Sviluppo Materiali). The research and development programme concerns the monitoring of the Rolling Mill 1 heating furnace 1, and aims to determine the furnace’s operation in terms of energy, environment and qualitative impact on materials.The Rolling Mill Safety Implementation programme, carried out entirely within the company, continued with the aim to improve safety levels in the rolling department by identifying controlled rolling mill segregation areas, through the design, prototyping, testing and implementation of innovative solutions.

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A project named Sustainability Performance, started in 2013, was carried out in collaboration with the University of Brescia and the Ramet Consortium. The project, due to end in 2015, is divided into four areas (air, noise, water and scrap) and is aimed at improving the sustainability performance of the overall production process.Feralpi participates in the research consortium for the SILC-WHAVES project, funded by the European Commission through the SILC call. The project is a feasibility study for the standardisation of the components of a plant for the recovery of thermal and electric energy from the fumes of the electric arc furnace, possibly supplemented with other waste energy from the steel manufacturing process. The programme was launched in 2013 and will be completed in 2017.

Other programmes managed entirely within the Lonato plant included:• the Sixth Casting Line project, started in 2011 and completed in 2013, aimed to identify technological and design solutions for the extension of the sixth continuous casting line;• the “Safety at Heights” project, launched in 2012 and completed the following year, aimed to improve the working conditions of operators on runways and other high-altitude locations;• the Shredding Waste Treatment Pilot Facility project, carried out during the 2013-2014 period, aimed to design and test a pilot plant for the treatment of shredding waste;• the Lime Injection to Furnace System project, carried out in 2013-2014, aimed to design and test a system for injecting lime into the furnace;• the Automation project, aimed at the expansion of automation applications, was launched in 2013 and will continue in 2015. Systems for the management and optimisation of EAF operation modes and systems for the collection and processing of energy consumption data were developed in the reporting period;• the CC Safety programme, launched in 2013 and due to end in 2015, aims to improve the level of operational safety in continuous casting by identifying segregation areas and safety automation actions through dedicated supervisors;• the “new LF pulpit” project aims to design and build the new LF pulpit with special attention to noise reduction profiles and higher safety levels. The project will continue in 2015.

PARTE TERZA

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The following new projects were also started in 2014:• a three-year research programme called Rimfoam, partly funded by the European Community (RFCS), concerning the evaluation and use of waste materials containing both metal oxides and hydrocarbons, as foaming agents in the EAF. The program will end in 2017;• a preliminary study on the reuse of white dross and refractories in the EAF; the project will continue in 2015;• definition of the rolled billet cutting process called “quadrislitting”; the preliminary study was conducted during the year. The project will continue in 2015;• study and development of a rolling process for developing a new product for application in cold recoiling or for direct use by profilers and folders; the study of process parameters and some initial testing were conducted during the year. The project will continue in 2015;• search for design and manufacturing solutions for sealing the EBT tap hole using automated systems with the assistance of video camera systems; the project was completed and has been validated during the period;• development of a scrap cleaning process to reduce drops in steel production, improve process performance due to the reduction of dirt, reduce process by-products and check the supplier reliability. The project will continue in 2015;• construction of an internal district heating system based on heat recovery from the flue gas cooling system. The project will continue in 2015;• construction of a system of in internal district cooling system by applying a heat engine that recovers heat from rolling mill heating fumes; the project is intended to provide air conditioning in the production plant electric cabinets. The project will continue in 2015;

• design of construction solutions and appropriate materials to make insulated covers for the containers in which hot materials are transported by road from one site to another. The project was completed during the year;• creation of a software program for the monitoring of operation parameters of rolling mill heating profiles, aimed at optimising production consumption; the project will continue in 2015 with the implementation of the identified solutions;• study aimed to install measurement systems and to design a data collection system for monitoring consumption and possible feedback on compressors; the potential for optimisation through the use of intelligent SW was evaluated during the year. The project will continue in 2015;• study to identify the best ladle heating conditions aimed to reduce consumption; in particular, the best available technologies, the characteristics and the attainable results were analysed during the year; a consumption detection system was installed. The project will continue in 2015.

5.2. ESF Elbe-Stahlwerke Feralpi

ESF Elbe-Stahlwerke Feralpi GmbH has participated since 2013 in the “H-REII DEMO” project, coordinated by Turboden as project leader, carried out in partnership with Comeca for the development of technological components and co-funded by the European Commission’s Life+ programme. The project aims to develop within the steel industry the first prototype of an EAF heat recovery system using ORC technology, fully integrated in a fume extraction system, resulting in a significant reduction of total energy consumption and improved performance of the flue gas cleaning plant in energy intensive industrial applications. The project also aims to promote the creation of a European technology platform on energy efficiency and environmental sustainability in the industrial sector, through a well-established network of contacts and the participation of project partners in dedicated national and European working groups. The role of ESF in the project is to present a “case study”, having developed and built the world’s first system for the recovery of heat from steelworks fumes for the generation of steam used in an integrated industrial process that generates electricity through an ORC turbine.

All systems were completed in 2013, and the Level 1 section for the production of saturated steam was made fully operational. The activities continued in 2014 with the implementation of Level 2 (for the production of superheated steam) and the ORC system (for electricity generation).The multi-year project for fluff treatment with an experimental microwave process continued in 2013. The experiment involved high-temperature testing by microwave-assisted pyrolysis, performed in a specially designed laboratory-scale plant.The experiment resulted in the production of three different fractions: a gaseous fraction, a solid fraction containing recoverable ferrous and non-ferrous metals, and a fraction of highly calorific condensed oils, which might be reusable as fuel for heat and energy generation.ESF participates in a programme supported by the Federal Ministry of Environment, entitled “Innovative combination of process engineering in a high-power steel mill with attached rolling mill, intended to reduce environmental pollution”. The purpose of the project is to connect the so-far separate steel mill and rolling mill technological processes and to optimise them within an integrated logic, and seeks to increase direct charge by 80% and achieve a charge temperature of 950° C. ESF also participates, along with Feralpi Siderurgica, in the WHAVES project mentioned above.

The “Innovative combination of process engineering in a high-power steel mill with attached rolling mill, intended to reduce environmental pollution” project is compliant with the Industrie 4.0 guidelines promoted by the German Federal Government in agreement with national industry representatives, for the development of the fourth industrial revolution.

55

56

SOCIAL RESPONSIBILITY

1. EMPLOYEES

PART FOUR 1.1

57

1.11.1. Protection of employment and use of shock absorbers

In the two-year reporting period, because of the crisis in the Italian steel sector and the drop in business demand for finished products, which continues to be below installed capacity, both Feralpi Siderurgica and Acciaierie di Calvisano were forced to revise their business operations and reduce their total workforce accordingly.In addition to the suspension of staff turnover, voluntary non-job preserving shock absorbers have been applied, albeit to a lesser extent, since 2009.In the same period there was a more frequent use of shock absorbers and contractual provisions remaining from previous years in order to make the necessary workforce adjustments in response to significant market swings, with consequent changes to production

planning and workers’ shifts, even for short periods.In particular, in the last two years the following measures involving Feralpi Siderurgica and Acciaierie di Calvisano have been put in place: ordinary redundancy fund, extraordinary redundancy fund, job security agreement, mobility procedure, increased use of contractual provisions remaining from previous years.In addition, intra-group transfers involving 15 employees seconded from Calvisano in Lonato were agreed with the staff. This measure allowed the Group to tackle the temporary misalignment between the two sites’ workforces, thus avoiding an additional structural personnel surplus at the Calvisano plant.

58

As regards the 2014-2016 period, in view among other things of the continuing seriousness of the macroeconomic situation in Italy, it is not realistic to expect a turnaround for the steel sector. In this perspective, therefore, the overall number of employees employed by the Lonato site is unlikely to increase, while employment trends in

Calvisano will depend in part on the quantity of special steels absorbed by the Caleotto rolling mill. Conversely, employment trends in Riesa have benefited from a more favourable econo-mic situation in Germany and in Eastern Europe-an countries, which did not require the adoption of shock absorbers.

TOTAL WORKFORCE (EMPLOYEES) 2013 2014

Men 1,180 1,164

Women 80 84

Total 1,260 1,248

Men 9 8

Women 26 5

Total 10 8

PERSONNEL TURNOVER RATE IN THE PERIOD UNDER EXAM1 (%)

Fig. 5 – Number of Feralpi Group employees at year-end

Tab.5 – Workforce and total Group turnover

¹Turnoverrate:exits/totalworkforce*100

2012 20142013

1,340

1,320

1,300

1,280

1,260

1,240

1,220

1,200

1,248

1,260

1,324

59

1.2. Remuneration of human resources

In 2014, labour remuneration resulted in payment of €49.4 million gross salaries (up 4.1% compared to the previous year). Feralpi attributes to performance recognition and skills development a strategic value for growth and competitiveness. The performance recognition system is based on requests made by personnel managers, which are then checked for appropriateness by applying a combined analysis of the position held, job title assigned, salary level reached and performance assessment.

Alongside remuneration in the form of salaries and wages, employees enjoy a number of benefits that are part of the so-called corporate welfare. These benefits are provided to all staff regardless of whether they are hired on a permanent or temporary basis, full-time or part-time, although they may vary depending on the collective agreement applied.

Corporate welfare measures vary depending on the country where the Group operates, so as to take into account the collective agreement and the legislation in force. In all adequately large sites, the company offers a canteen service, which workers can use against payment of with a contribution of less than 50% of the costs. Service quality is constantly monitored by a joint committee comprising workers representatives of workers, and which is subject to periodic rating by each worker during the Company Climate Survey.

In addition to compulsory insurance against occupational injuries, the company has entered into a supplementary policy for all personnel with a pool of insurance companies, as a further protection against injuries, disability and death. For the staff employed in the sites located in the Brescia province, agreements are in place with hospitals for urgent medical examinations and the immediate release of radiology and ophthalmology reports.

PART FOUR

4.1%growth of gross labour remuneration

60

1.3. Work organisation and work environment quality

To face often unexpected developments in demand, in a highly volatile market, Feralpi has increased work organization flexibility in order to respond promptly to requests. In any case, collective organisational changes are always subject to prior negotiation with the unions, although collective agreements do not provide for a minimum notice period for operational changes concerning suspension of operations, the performance of tasks and the organisation of shifts. The time required to implement organisational changes or transfers to new positions is agreed directly with the employee concerned.

Fig. 6 – Personnel turnover rates1 (%) by geographic area

1 Exits/totalworkforce*100

Italy Germany

2013

5 10 6

61

The multi-year project to remove all shed roofing made of asbestos-containing materials continued in the 2013-2014 period. After conducting a complete survey of the presence of this material, which only concerns the roofings, a periodic assessment of their state of maintenance using instrumental and qualitative methods, with the assistance of external experts. The results of the assessment conducted in the Lonato and Calvisano sites, applying the procedure prescribed by the Lombardy region, allow for the planning of safe removal works.

Fig. 7 – Severity rate1 by area and gender

1 Severityrate=(numberofdayslost/numberofhoursworked)*200,000

98.2%of Feralpi personnel are hired on a permanent basis

2014

8

MEN

WO

MEN

TOTA

L

155.2 54.4 41.8

0.0

51.2148.8

ITALY

96.5 98.9 0.0 0.0 90.8 92.9

GERMANY

2013 2014

MEN

WO

MEN

TOTA

L

PART FOUR

62

1.4. Workers’ health and safety

All Group sites comply with the legislation in force in the various countries concerning the training and operation of health and safety committees. As a result, the Group’s production units in Italy designated one or more worker safety representatives (WSRs), in accordance

with article 47 of Italian Legislative Decree no. 81/2008. WRSs are elected or appointed by the workers from among in-company union representatives. Overall, the health and safety committees cover 100% of the workforce, while 93% directly elect their representatives.

The role of safety and health in enterprise bargainingSecond-level bargaining concerning Feralpi Siderurgica S.p.A and Acciaierie di Calvisano S.p.A. provides for the establishment of joint commissions that include the employer’s representative, the Health and Safety Manager (RSPP), the physician and the workers’ safety representative (RLS), as provided for by art. 35 of Italian Legislative Decree No. 81/2008. Periodic meetings are held to assess risks and related prevention and safety measures, adequacy of personal protection equipment, and personnel training and information programmes. The company’s labour agreement also provides for a bonus linked to injury prevention performance and compliance with occupational safety regulations by individual workers.

INJURY RATE 2013 2014

Italy

Men 3.82 2.66

Women 3.80 0

Total 3.82 2.51

Germaniy

Men 3.86 2.75

Women 0 0

Total 3.63 2.58

Tab. 6 – Injury frequency rates1 by region and by gender

1Rate=(numberofaccidents/no.ofhoursworked)*200,000Injuries involving more than 3 days’ absence are considered.

63

A nurse and the competent physician are present four days a week at the Group’s larger sites and are available on call. At the Feralpi Siderurgica plant in Lonato del Garda, the systematic collection of health surveillance data since 1996 has allowed the monitoring of long-term improvements in the working environment, due to the constant application of the best technologies and the most effective measures for the protection of workers’ health.

Between 1996 and 2013, lead exposure levels of Lonato site workers decreased significantly, with the mean blood lead level dropping from 21 μg/dL to 6 μg/dL (reference value of non-exposed adult population: 0.5-10 μg/dL, IBE ACGIH: 30 μg/dL, action level in accordance with Italian Legislative Decree no. 81/2008: 40 μg/dL, limit value: 60 μg/dL). Between 2001 and 2013 the mean value of the PAH (polycyclic aromatic hydrocarbons) exposure indicator nearly halved, dropping from 0.70 to 0.37 μg/g of creatinine (reference value of non-exposed adult population: 0.03-0.70 μg/g). Spirometry tests, which at the beginning of the period already showed normal values in more than 80% of cases, have further improved in recent years, reaching a percentage of normal values of approximately 95% when last checked.

In 2013, the Group’s Health Service offered cardiac screening to all Feralpi Holding, Feralpi Siderurgica and Acciaierie di Calvisano employees. 231 employees took part in the initiative (182 blue collars and 49 white collars), or 44% of the three sites’ staff. The screening included cardiological examination, basal ECG and echocardiogram for all employees, as well as an exercise electrocardiogram for some selected cases that had significant risk factors for ischemic heart disease.

The electrocardiogram results showed alterations in 20.7% of cases, while echocardiogram abnormalities affect 30.6% of cases. General cardiovascular diseases risk factor (mainly smoking, overweight, sedentary lifestyle and age) were compared against levels of exposure to possible risk factors in the workplace. The study shows that alterations are attributable to non-occupational risk factors, rather than to exposure in the workplace.

In 2014, the Feralpi Group launched the Well-being at work project in collaboration with the Chair of Occupational Medicine at the University of Brescia and the Sirmione Thermal Baths’ Health Service. The aim of the project is to evaluate the efficacy of crenotherapy in the prevention of osteoarticular and musculoskeletal disorders in subjects exposed to excessive burden on the osteoarticular and muscle-tendon system.

Feralpi Siderurgica has renewed the OHSAS 18001 certification, which attests to the voluntary application, beyond compliance with the regulations in force, of a system that ensures effective monitoring of workers’safety and health.

PART FOUR

64

WHP - Worplace Health PromotionThe WHP programme has been developed within the framework of the European Network for Workplace Health Promotion. In this context, all Group companies operating in Italy have joined the regional Lombardy WHP Network, which aims to promote health in the workplace and is part of a broader local programme promoted by the Lombardy Region. The plan, also announced by the Brescia Industrial Association - Confindustria and supported at the various stages by local health units (ASL), was developed through an integrated series of initiatives to reduce major risk factors for workers’ health, particularly those most related to chronic diseases (heart disease, diabetes, stroke, heart attack), for an overall improvement of the quality of life of those involved.

Initiatives for the promotion of health in general, and specifically of workplace health, bring positive effects to the entire community. Scientific literature shows that investing in these programmes helps to reduce diseases, with positive effects on the reduction of occupational risks, lower absenteeism and greater satisfaction, motivation and productivity.

To launch the project, the employees were administered – with the assistance and coordination of ASLs – an anonymous questionnaire to learn their behaviours with regard to certain risk factors within the 6 identified theme areas (smoking, diet, exercising, road safety and mobility, alcohol and substances, perception of personal and social well-being).

65

20142015

2016

Based on the results of the survey, which involved 84.6% of the Group’s Italian workers, the ASL indicated the theme areas to be addressed in the three-year action plan.

Feralpi’s WHP project action plan:

2014 promotion of correct eating habits, promotion of smoking cessation;

2015 promotion of physical activity, personal and social well-being and work-life balance;

2016 road safety and sustainable mobility, alcohol and substances.

The activities carried out in 2014 included:

a) a project in partnership with the canteen for the development of healthy menus based on the nutritional characteristics of the different foods;b) a project dedicated to vending machines, in collaboration with company suppliers, which resulted in the inclusion of at least 30% “WHP products” (e.g. yoghurt, fruit, and low-sodium crackers and focaccia with olive oil) in the vending machines and their customisation with messages about proper nutrition; c) voluntary participation in group treatment meetings; d) conduct of educational campaigns dedicated to correct eating habits and smoking cessation.

Buona Pasqua!

MEZZE PENNE PROFUMATE CON CUORI DI CARCIOFI E FINOCCHI

Ingredienti per 4 persone:4 carciofi,2 finocchi,

2 spicchi d’aglio,2 rametti di timo fresco,

300 gr. di pennette o mezze penne,1 manciata di foglie di menta fresca,

olio extravergine d’oliva, sale

PREPARAZIONE: Pulire con cura sia i carciofi che i finocchi e tagliare entrambi in sottili spicchi. Sbucciare e tritare l’aglio, rosolarlo velocemente in una larga padella insieme a 3-4 cucchiai di olio e il timo sfogliato. Aggiungere carciofi e finocchi, salare, coprire e cuocere per 20 minuti circa fino a rendere morbide le verdure bagnandole quando serve con un poco di acqua per non farle attaccare. A parte lavare, asciugare e tritare velocemente le foglie di menta, lessare la pasta al dente, condirla con le verdure cotte e servirla aggiungendo in ultimo la menta fresca.Completare decorando con alcuni semi di sesamo nero.

PASQUA... TRA GUSTO E LEGGEREZZA

CartolinaFeralpi_WHP_PASQUA.indd 1 11/03/15 17.07A6_Pasqua.indd 1 11/03/15 17.11

Involtini di tacchino al radicchioIngredienti: 4 fette di fesa di tacchino 2 cespi di radicchio trevigiano tardivo 4 fettine sottili di formaggio (a piacere)4 fettine di prosciutto crudo sgrassate

4 foglie di salvia, aceto balsamico, olio extravergine di oliva, sale e pepeLava i cespi di radicchio, asciugali e tagliali in 4 parti, nel senso della lunghezza.

Grigliali uniformemente su una piastra. Disponi le fette di tacchino tra 2 fogli di carta da forno, appiattiscile

con un batticarne e tagliale a metà, in modo da ottenere 8 fettine regolari.Adagia su ciascuna fetta di tacchino mezza fetta di formaggio, mezza di prosciutto,

una foglia di salvia un quarto di radicchio e arrotolale. Lega ogni involtino con spago

da cucina, regola di sale e pepe e cuocili sulla piastra calda, girandoli su tutti i lati

e completa la cottura per qualche minuto in forno già caldo a 180°.Emulsiona in una ciotola 3 cucchiai di olio, 2 cucchiai di aceto balsamico

e unisci un pizzico di sale e di pepe. Condisci gli involtini.

Portata: Secondo piattoDifficoltà: FacileTempo di preparazione: 15 minutiTempo di cottura: 5/10 minuti

rICETTADEL GIORNO

PART FOUR

66

67

PART FOUR

According to the company, some work areas may involve the risk of hearing loss. This risk is effectively managed through the mandatory use of personal protection equipment (ear protectors). No cases of occupational disease were observed in the two-year reporting period. In 2013, Feralpi Siderurgica S.p.A. received an occupational disease claim concerning an employee who worked for the company from 1975 to 1996. The company is not aware of claims relating to physical ailments or diseases from family members of employees, nor from the residents of the areas adjacent to the production sites. Taking into account the results of monitoring regularly conducted on personnel and given that, in the present state of scientific knowledge, risks of this type are not reasonably foreseeable, the Company has put in place any programmes for the control and prevention of these specific circumstances.

Initiatives for the protection of employees’ health and well-being have also been carried out in Riesa, Germany. General manager Frank Jürgen Schaefer said that “employees’ health should be considered not only as a resource, but also and more importantly pursued as good in itself. Therefore, giving everyone the opportunity to take periodic preventive checks during working hours is the right thing to do”.Health Day, celebrated in Riesa on 1 October 2013, saw the participation of AOK, the largest health insurance company in Saxony, which presented its initiatives in the area of nutrition and health prevention. The company’s safety clothing supplier described the most effective and comfortable ways to wear personal protection equipment. Other presentations focused on diets and menus designed to ensure healthy nutrition through the intake of fruit, vegetables and whole grains with a high fibre and vitamin content. Roughly 150 staff members took part in these events.On 14 September 2014, Feralpi Stahl in cooperation with the German Accident Prevention Organization, held a one-day event dedicated to the spine, entitled “Think of me, I am your back!” The participating employees were presented behaviours that can prevent spinal pain and suggested exercises to strengthen back muscles. The topics discussed during the educational event were developed by the Wood and Metalworking Industry Authority (BGHM), the AOK PLUS insurance company, the Riesa MEDIC PLUs service and the Elten safety shoes manufacturer. Approximately 180 employees participated in the initiative.

68

1.5. Personnel training

In the two-year reporting period, training activities were carried out at all major plants to improve personnel skills, with a view to meeting the increasingly higher qualification requirements imposed by business development. The training covered, among other things, one-to-one or group foreign language conversation courses (available in English, German and Italian). Courses were held to strengthen the technical skills of maintenance and production technicians, both on-site and at specialized external entities. Within the framework of lifelong learning programmes, training activities were carried out in support of the protection of employees’ health and safety. A refresher course on product quality as well as information technology courses were held at Feralpi Siderurgica, in conjunction with the upgrade of the corporate IT system, to enhance the staff’s computer skills. This program included basic and advanced courses on the new infrastructure and the most frequently used software, and was designed to progressively involve all users of the company’s IT systems.

In 2014, the number of training hours increased by

10.7%.

At Feralpi Stahl vocational training includes both collective learning and individual training programmes, typically linked to continuing technical and professional education. Courses held at Nuova Defim sites included an intermediate English course for Customer Service and Quality Managers; a metallurgy group course for Technical Directors and Production, Planning and Quality Managers; and safety education refresher courses. As regards executives training, university-level master’s degrees were offered in management control and industrial maintenance.

69

PART FOUR

Since all the Group’s plants are located in the European Union and subject to strict regulations and stringent institutional controls, Feralpi has deemed it unnecessary to offer training hours specifically devoted to the respect of human rights, in the belief that this aspect is well-established in organisational practices and in the rigorous application of company regulations, as well in the shared corporate culture. However, dedicated human rights training is part of the more general training package for new hires, which presents the Company Code of Ethics and its central role in the Group governance system.With regard to human rights training addressed to security personnel, all Group sites outsource these services to leading specialised companies, which provide their own staff training.

The Feralpi Group believes that the skills and experience of its staff are the company’ most important asset. This is why it is committed to taking all appropriate measures to retain and motivate its employees, encouraging them to invest in their job and to become an active part of the production organisation. However, production needs and technological opportunities may involve measures aimed at ensuring that personnel can be employed for different tasks or even in different locations. In the two-year reporting period, the company did not invest in lifelong learning programmeslearning.

Fig. 8 – Training hours per capita by geographic area

2013

20 13

2014

21 15

Italy Germany

70

1.6. Gender equality

The steel industry is traditionally characterized by a prevalence of male employment.The gender composition of Feralpi personnel is no exception to this rule, as female employees only account for 6.7% of the total workforce. However, the number of females as a percentage of total employees is slowly but steadily growing. Women are employed mainly in administrative and staff duties.

As stated in the Company Code of Ethics, Feralpi undertakes to avoid all kinds of discrimination and to establish employee relations based on principles of fairness and equality of treatment. Personnel selection procedures adopt inclusive

2013 2014

Men Women Men Women

Entitled to parental leave 100% 100% 100% 100%

Used parental leave 2 2 2 3

Work resumptions 2 2 1 1

Are working af ter 12 months of work resumption

2 1 2 2

Tab. 7 -Use of parental leaves and resumption of work by gender

Fig. 9 – Female employees as a percentage of total Group personnel

6.86.66.46.2

65.85.65.45.2

2011 20132012 2014

5.7

5.9

6.7

6.3

criteria in line with a gender equal opportunities policy. The company shall ensure that harassing behaviours and comments that may upset a person’s sensitivity are avoided in interpersonal relationships.

71

Two important labour agreements were signed in Italy and Germany in 2004

PART FOUR

1.7. Safeguard of protected employee categories

In all the countries where it operates, Feralpi complies with the national legislation on the protection of certain categories of workers with disabilities, with the workplace safety as the only binding condition. Here again, the company ‘s behaviour is guided by the Code of Ethics, which prohibits any discrimination and differentiated treatments based on any other consideration than merit.To facilitate disabled people, in the two-year reporting period the company removed any architectural barriers preventing access to spaces open to the public.

1.8. Protection of workers’ rights and labour relations

Feralpi has always fully respected employees’ rights of association and representation, and has established a permanent and constructive dialogue with the labour unions present at the Group’s sites. All personnel working in Italy and in Germany is covered by collective bargaining.During 2014, negotiations were successfully conducted for the renewal of Siderurgica S.p.A.’s company labour agreement, which expired on 31 December 2013. Thanks to second-level bargaining, which involves economic benefits over and above minimum contractual wages, in 2014 newly hired personnel (third level) received a significantly higher remuneration than the minimum wage set out in the national collective bargaining agreement (CCNL).Internal communication sees a strong involvement of trade union representatives in a number of joint committees, established by law or as a result of free negotiations between the parties: Workers’ Safety Representatives Committee, Environment Committee, Canteen Committee, Social Fund Committee,

72

Professionalism Committee, Performance Bonus Committee, Contracts and Independent Contractors Committee. In Germany, the Factory Committee represents the workers’ interests, and union representatives’ working groups have been duly informed by the management when managers are not part of such working groups.The new collective agreement, signed with the representatives of the IG Metall trade union, applicable to all employees and not just the unionized ones, was introduced in 2014 in the Germany-based companies.Communications with and direct involvement of trade union representatives took place through monthly meetings with the management, participation in working groups on economic issues concerning the company, matters relating to the return of workers after illness leaves, work environment improvements, the organisation of the Feralpi Cup (football and cycling competitions), and organisation of the Dragon’s Boat sports initiative.

1.9. Employees’ opinions in the Company Climate Survey

The fifth edition of the biennial company climate survey, addressed to all Feralpi employees in Italy and in Germany, was held in March 2015 at the Group’s plants. Overall results show consensus on medium to high levels of job satisfaction at all sites. 79.0% personnel said they were satisfied with their jobs.

73

PART FOUR

The survey showed that Feralpi employees ap-preciate the policies adopted to protect jobs at the Italian sites, which have been most affected by the crisis in the sector, and strongly believe that employment with the Feralpi Group is safer compared to other companies in the area.

Fig.10 – Job satisfaction among Feralpi personnel(%ofthosewhosaytheyaresatisfied)

Fig. 11– Percentage of those who believe that employment with Feralpi is safer compared to other companies of the area

Source: Feralpi climate survey, 2015 edition

Source: Feralpi climate survey, 2015 edition

10095908580757065605550

20112009 2013 2015

82.984.6

68.6

84.382.7

88.2

83.3

60.0

80.777.073.374.876.9

94.6

93.8

69.1

71.9 76.7

86.0

75.0

90.0

87.1

71.2

46.0

100,0

90,0

80,0

70,0

60,0

50,0

40,0

30,020152013

60.0

83.3

38.2

64.8

Holding

Riesa

Siderurgica

Calvisano

Nuova Defim

Holding

Riesa

Siderurgica

Calvisano

Nuova Defim

2007

74

Employees’ awareness that the Feralpi Group is better equipped to face the crisis in the sector is on the rise (66.5% said they were convinced of this, from 57.5% in the 2013 survey). There has been a marked improvement in the ratings (from 32.5% in 2013 to 46.4% in 2015), particularly among German employees.In general, 66.5% of respondents (with a peak of 88.9% among Feralpi Siderurgica S.p.A. personnel), faced with the crisis “the company is doing better than other companies of the sector”.

Fig. 12 – Levels of satisfaction with the company’s services

Source: Feralpi climate survey, 2015 edition

15,5 53,5 22,6 8,4 0

8,4%

22,6%

53,5%

15,5%

100%

CH

ANG

ING

RO

OM

S

53.5

15.58.4

22.6

21,8 53 19,8 5,4 0

5,4%

19,8%

53,0%

21,8%

REFR

ESH

MEN

T AR

EAS

19.8

5.421.8

53.0

26,9 40,6 21,4 11,1 0

11,1%

21,4%

40,6%

26,9%

CAR

PARK

S26.9

21.4

11.1

40.6

25,5 48,5 19,5 6,5 0

6,5%

19,5%

48,5%

25,5%

TRAI

NIN

G

48.5

19.5 25.56.5

43,3 49,6 6,1 0,9 0

0,9%6,1%

49,6%

43,3%

INFI

RMAR

Y

49.6

6.10.9

43.3

17,4 53 24 5,7 0

5,7%

24,0%

52,9%

17,4%

BATH

ROO

MS

53.0

24.05.7

17.4

24,10 47,5 20,1 8,3 0

8,3%

20,1%

47,5%

24,1%

CAN

TEEN

47.5

20.1

8.324.1

A lot Not at allModerately A little

100%100%100%100%100%100%

75

2PART FOUR

2. Shareholders

Feralpi shareholders are the members of the entrepreneurial families who gathered around the founder Carlo Nicola Pasini in the 1960s. The company is managed in part by the successors of the founding families and in part by an external management team.When control passed into the hands of the next generation, the owners confirmed the historical strategy based on constant capitalisation of the Company in a long-term perspective. Control by a concentrated group of shareholders, characterised by long-term stability and willingness to invest even during negative market cycles, has always allowed the Group to respond to the cyclical nature of the industry and is a guarantee of solidity in the face of the current prolonged economic crisis in Europe.At 31 December 2014 the approved share capital of Feralpi Holding is € 55 million, of which € 50 million fully paid up and divided into 5 million shares with a nominal value of € 10.00 each. The remaining € 5 million consists of convertible bonds entirely held by shareholders.

(€ MILLION) SHAREHOLDERS’ EQUITY PROFIT/LOSS DISTRIBUTED PROFIT

2012 377.85 21.16 0

2013 364.00 - 12.05 0

2014 363.01 - 0.58 0

Tab.8-ChangesintheGroup’sshareholders’equity,consolidatedprofitsanddistributedprofits

The shares are stably divided among 14 shareholders including natural as well as legal persons. In the course of the 2013-2014 period there were no changes in the shareholder composition. The members of the holding company’s Board of Directors belong to the controlling families, except for one independent director. As to gender composition, the holding company’s Board of Directors includes two female members. The directors’ independence requirements are laid down in article 4.1 of the Code of Ethics, which states: “Non-executive directors are considered independent only if: 1. they do not entertain and have not entertained in the last two years relationships of a financial nature with Feralpi Group companies; 2. they do not hold company shares in a large enough number to influence their decision; 3. they are not related by blood or marriage with those who are in any of the conditions described above.”In the last three years there have been no dividend distributions to shareholders.

76

Feralpi offers a constantly expanding range of immediately available products

33.Customers3.1.Product range and customers

Because of its hardness, strength, ductility and toughness, steel has been used in all its varieties since antiquity for a wide range of applications. It contributed to human progress and played a major role in the industrial revolution. Today, steel is an essential material for the comfort of our everyday life and, despite the invention of new alternative materials, continues to be popular for its cost-effectiveness, and to an increasing extent for its full recyclability over time.Feralpi traditionally produces high-quality construction steel and has recently expanded its production range to special steels for the metalworking industry.

The company’s development has been accompanied by progressive product diversification, notably through the acquisition of activities downstream of production. This diversification allows Feralpi to optimise upstream production stages and to offer customers an increasingly broad array of products. The acquisition of phases downstream of the production chain and the relative verticalisation of activities has also allowed the Group to move closer to end-users. Today, Feralpi’s production offers an impressively large assortment of products:

• Billets:billets are semi-finished products which the Feralpi Group transforms into rebar, coils or wire rod. High-quality steel billets are used for rolling or forging various types of semi-finished products or special pre-finished parts intended for use in a number of industries including mechanical, oil and gas, electrical and electronic, automotive and transports, appliances, furniture, energy, security systems and more.

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Billets produced by the Feralpi Group by type of steel:- reinforced concrete steels according to major international standards- non-alloy steels for structural uses (carbon steels)- quenched and tempered steel- spring steels- screw steels- forging steels- casehardening steel- surface hardening steels- hot work creep resistant steels- low alloy steels

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• Rebar and stretched coils:finished product for reinforced concrete. High ductility characteristics make it particularly suited for construction, even in seismic areas. This product is sold to distributors, located at precast manufacturers, and processing centres that provide services to construction companies.

• Coils and stretched coils:product obtained from cold working of hot rolled coils. It meets higher requirements in terms of weight, development length, workability and safety; along with hot rolled coils and bars it is intended for use by transformation centres providing services to construction companies and for direct use by the latter.

• Wire rod:Semi-finished product transformed into ribbed drawn wire, employed mainly in the construction sector, or into smooth drawn wire for use in agriculture and the mechanical industry.

• Cold drawn wire:used directly in strirrup benders and straighteners or for the production of electrowelded mesh and lattice girder.

• Standard or cut to size black welded wire mesh:

finished product used for paving and for prefabricated structures.

• Lattice girders and spacers: finished products for small and medium sized steel structures constituting the metal component of clay floor slabs or creating space between different frameworks.

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• Welded mesh fence:used for the safety of construction sites, sports events and exhibitions or installations of various kinds.

• High-tech industrial and residential fencing and sports facilities fencing.

• Anti-crack welded mesh and special mesh used in construction rehabilitation works.

• Galvanised steel grids for construction:vertical and horizontal grid panels, fence linings and welded mesh.

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Feralpi serves four categories of customers:• companies that process the billets for industrial purposes typical of the mechanical sector;• construction companies and precast manufacturers that directly reuse products intended for buildings and infrastructures;• processing or shaping centres, which transform bars and coils into products to be supplied to construction sites;• distributors, who mainly purchase rebar and welded mesh and resell them to small and medium-sized end users.

Over the last two years, a persistently weak market in Italy has led to significant changes in the composition and geographical distribution of the customer portfolio. In Germany, the market remained strong and showed substantial continuity with the previous year. Additionally, 2014 has also saw a growth in demand for construction mesh, due to a temporary upturn in the public and private building sector.

In Italy, the lower demand for rebar was partly offset by rising demand for coils and welded mesh, and to a greater extent by increased sales in North Africa, which confirmed the upward trend that has characterised the last few years. Acquisitions of equity investments in downstream entities also contributed to a positive performance by ensuring greater stability in orders. This was the rationale behind the acquisition of equity investments in key customers like Presider, a Piedmont company specialised in the supply, processing and installation of iron for reinforced concrete, and Metallurgica Piemontese Lavorazioni, which supplies and processes girders and other long sections for the construction industry.

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Feralpi’sexperience demonstrates that qualityis essential also when it comes to standard products, such as steel for construction

3.2. Quality objectives

The Group has always regarded the achievement of high quality product levels as a decisive factor on the market. This belief was not only confirmed but strengthened during the management of the long and difficult period that characterised the years following 2008. The pursuit of quality is, in turn, based on the attention focused on the customer, which is periodically monitored with a three-yearly survey targeted at our most important customers.

The Customer Satisfaction surveyThe levels of customer satisfaction, established by the periodic survey carried out in late 2014, confirmed a decent level of overall satisfaction with the domestic and international market, and particular satisfaction for the “respect for the specifications” of the products and for the pre- and post-sales communications and assistance service.

With the development of special steel at the Calvisano plant, product quality has taken on even greater strategic relevance as it represents a condition for operating on the market in a very competitive sector, but one that also has greater value added. Mechanically-constructed quality or special steel is produced according to the product specifications requested by the customer. The penetration of the Feralpi Group in this market segment has resulted in an ad hoc training programme for the steelworks personnel. The opening of the North African markets has resulted in improvements in product quality also as regards the traditional production of steel for use in construction. More specifically, Feralpi seeks to supplement the product with services and for the Algerian market the quality has been refined to guarantee particularly narrow size tolerance margins.In Italy, as well as the quality certification, there are numerous market requests for assurances regarding the minimum content of recycled steel and the procurement of raw materials from a distance of no further than 350 km away. It is this focus on this wide range of quality aspects that underpins the Feralpi Group’s success in penetrating new markets.During the two-year period under examination two important pieces of product quality certification were attained:• ICMQ ECO voluntary sustainable product certification, awarded to companies that certify the performance and environmental sustainability characteristics of their products, such as the presence of recycled materials and the emission of harmful substances for people and the environment during the production process;

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• certificate of conformity of the Feralpi quality system with the requirements of regulation CE 333/2011, which establishes the criteria that make it possible to no longer consider scrap metal as waste once it has been treated by the plant’s apparatus (crushers and shears). The applied and certified system makes it possible to guarantee the complete transparency of scrap management processes, guaranteeing its traceability and quality.

Since 2010 Feralpi Siderurgica and ESF have participated in the SustSteel project promoted by Eurofer, the European Confederation of Iron and Steel Industry, a series of European companies that are able to demonstrate the monitoring of environmental, product and workplace health and safety performances. The process of monitoring the parameters is entrusted to a third-party company, Bureau Veritas, while the coordination process is the remit of the ESSCPC, the Eurofer Sustainability for Steel Construction Products Committee.

Feralpi products arecertified as sustainableand respectful of the environment and the health and safety of workers.

In accordance with legislation, each product is associated with a label bearing an ID which is connected with information relating to size and weight, the production process, the barcode, the main quality characteristics, as per the regulations, and the logos of the certificates of the standard institutions.

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The company has the UNI EN 10204:2005 test certificate for the various types of products and a qualification certificate which provide indications on the specifics of the product’s compliance in terms of both chemical-physical and regulatory aspects. Feralpi also brands its products as a guarantee of their origin. The company also pays constant attention to the correct preparation and packaging of the product. The aim is to meet safe handling and unpacking requirements at the customer site. For this reason, deliveries are also accompanied by specific indications and legal references for the safe use of the product.

As regards the small proportion of products used directly by the end customer, like the pro-duction of gates at subsidiary Nuova Defim, all sold products, CE UNI EN 13241-1 certified, are accompanied by an installation, user and main-tenance booklet which illustrates the procedures relating to the entire life cycle of the product, through to its demolition and disposal. The booklet also contains safety regulations, a usage risk assessment and ways of preventing risks. In the period accounted for, no cases of non-compliance as regards health and safety issues in the use of the products were reported to the company. In the same period, the com-pany was not penalised for any non-compliance with regulations regarding the use of products and their labelling and the supply of information. Neither did it receive any documented complain-ts regarding the loss of information on customers or the violation of their privacy.

3.3. Participation in sector events

In the two-year period under examination, Feralpi once again participated in Made in Steel, the important international trade fair held in Fieramilano City on 3-5 April 2013. Every year this important event welcomes the biggest manufacturers in the sector. Feralpi also kept up to speed with the important North African market, participating with its own stand at the two editions of the Salon International du Bâtimatec des materiaux de construction et des traveaux publics, held in Algiers on 4-8 May 2013 and 4-8 May 2014.

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44. Suppliers

The Feralpi Group’s activities mainly take place during the preliminary phase of the construction product supply chain. The upstream phases pri-marily concern three flows stemming, respecti-vely, from the collection and marketing of scrap iron, from energy sources and from ancillary materials produced by iron and steel processing.In 2014 the Feralpi Group paid its suppliers € 851.8 million (+ 4.1% compared with 2013).Its most important suppliers remain the compa-nies that collect and market scrap. In the 2014 financial year, 67.8% of overall manufacturing costs were absorbed by the value of the scrap.

The energy sources, the majority of which non-renewable, are available on the domestic and international free market, characterised by important players, some of whom adopted a CSR strategy some time ago and, like Feralpi, are the-refore interested in reducing the environmental impact of their manufacturing processes.The systematic upgrading of the plants, a stra-tegic company decision, also gives technology suppliers a particularly relevant role. Consolida-ted technology partnership relations have been developed in this field.With the development of special steels, the company has also partially repositioned itself in a different, longer and more structured value chain that belongs to the industry of products used in mechanics.

In 2014 Feralpi paid for € 851.8 million worth of supplies.

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4.1.Suppliers and quality

Feralpi adopts stringent selection and verifica-tion criteria as regards the quality of its suppliers, which centre on the checking of their technical and professional requisites, the correctness of their contributions, and the application of appli-cable legislation for the respect and the health and safety of supplier company personnel.All suppliers must be familiar with the Feralpi Code of Ethics, with which they are presented.In the selection and retention of its suppliers Feralpi therefore takes into account respect for corporate, fiscal, environmental, tax, union and worker health and safety regulations, and identifies key CSR aspects in the sector of the procurement of ferrous scrap. For this reason all incoming material is systematically controlled at the entrance gates, which identify any eventual radioactive anomalies. The presence of radio-active material may be a cause of serious danger right along the supply chain. Non-compliant material is 100% rejected.

Fig. 13 –% breakdown of Feralpi suppliers by turnover in 2014

68.0 8.8

10.9

12.0

0.4

Ancillary materials

Scrap

Services

Energy

Other suppliers

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In 2014 a draft questionnaire on the spread of good sustainability practices was produced to send to the company’s main suppliers. The questionnaire seeks to monitor the adoption of sustainability policies and is split into four sections: governance and accounting, quality management, environmental management, personnel management and human rights. The survey is expected to be completed by the end of 2015.Feralpi has launched a training programme aimed at external supplier companies regarding safety and regulatory environmental compliance parameters based on the GRI indicators, version G4. The programme is due to launch in 2015.

COMPANY TYPE OF SUPPLY CODE OF CONDUCT SUSTAINABILITY AC-COUNTING

ENI Natural gas YES YES

AIR Liquide Industrial gases YES YES

Terna Electricity YES YES

ABB Technologies YES YES

Tab. 9 - Corporate social responsibility of some of Feralpi’s main suppliers

4.2. Scrap suppliers

Unlike the German market, which meets the scrap supply requirements of Feralpi Stahl and on which large and well-established companies operate, the scrap market in Italy is characterised by a greater presence of microbusinesses and the less efficient traceability of the origins of the scrap.Feralpi has evaluated the risks that the company’s reputation may be subject to by a supply chain that is not sufficiently transparent and has decided to adopt a series of measures to help streamline the sector. More specifically, Feralpi has continued to interface with the

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in Europe (in Germany, for example, a discount was applied to the cost of the MWh in 2014, which remains around 40% lower than it does in Italy). Feralpi has renewed its interruptible contract with Terna for the Lonato and Calvisano plants and participates in the Interconnector project to obtain direct procurement from European countries where energy costs are lower.

4.4. Contractors working at the plants

Feralpi uses external contractors for ordinary and extraordinary maintenance, for the upgrading of plants and for the commissioning and handling of materials. In all cases in which external personnel have access to the company premises, Feralpi adopts particularly strict control procedures that involve the monthly delivery, on the part of the contractor, of documentation regarding the calculation of social security contributions and their regular payment, a declaration of respect for the sector’s national collective labour agreement, certification relating to the number of hours worked, and a guarantee that no minors are employed. 4.5. Partnerships with suppliers

In recent financial periods Feralpi has made important technology investments that have led to significant partnerships with system suppliers. In fact, the relationships with companies that supply technologically advanced equipment result in the development of co-design and partnership agreements in which the Feralpi technical experts work with the technical staff of the suppliers to create the most suitable solutions for the specific systems. The innovative nature of this collaboration leads to the sharing of knowhow which is developed for the benefit of both parties.

main suppliers in the sector with the aim of illustrating the principles of environmental and social sustainability, an integral part of the commitments that suppliers must undertake. In 2014 Feralpi also promoted an initiative to foster the creation of important stakeholders in the scrap supply chain. This operation involved other important industrial partners in the sector and led to the creation of the Media Steel company dedicated to the marketing of scrap.

Media Steel S.r.l., a company owned by Feralpi Siderurgica S.p.A. with Duferco Italia Holding S.p.A., is a consultancy firm that markets ferrous scrap in Italy, provides consultancy for the evaluation and enhancement of materials, and complies with the principles of environmental and social sustainability. For this reason it launched the procedure for the application of the organisational model established by law 231/2001, in the name of transparent and responsible governance.

4.3. Energy suppliers

Feralpi’s energy costs have fallen significantly in the last few financial periods mainly thanks to the reduction of its electricity bill and also, to a lesser degree, to the results of its consistently pursued energy saving measures. Feralpi adopts strategies for the selection of suppliers on the free energy market with the goal of fully exploiting international opportunities and limiting the penalising conditions of the Italian market, which remains by far the most expensive

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55. Public Authorities

The Feralpi Group has structured relationships with the Public Authorities at all levels, in all of the countries in which it operates. These relationships are based on the principles of transparency, honesty, loyalty and respect, as established by the Company Code of Ethics, recently updated to include the measures and conduct designed to prevent the crimes outlined in the recent anti-corruption legislation. With the introduction in Italy of the crimes pursuant to art. 319 quater of the Criminal Code, the

directors of Feralpi Holding and of Feralpi Siderurgica, and the sole director of Acciaierie di Cavisano, approved the revision of the organisational model on 31 March 2014 with the aim of implementing the necessary measures for preventing these types of crimes.During the two-year period accounted for, the company was not aware of any facts or complaints regarding corrupt behaviour in the relationships between employees or collaborators and the Public Authorities.

Regulatory costsThe public, local, national and European authorities play an important role as reference stakeholders because they contribute at various levels to generating the so-called regulatory costs, i.e. the costs that businesses have to bear to respect industry legislation.Given the importance of these costs for the countries of the EU, where businesses have to bear particularly high costs to guarantee the protection of shareholders, consumers, competitors, the environment and workers, the European Commission has commissioned a study to estimate these costs, generated by European legislation, and to assess their impact on the immediate profitability of businesses, and therefore their overall competitiveness.

As regards the steel industry, eight areas were examined: general policies, the regulation of the mar-ket, climate change, competition, energy, environment, marketing and the service life of the product. The results underline how in the case of the steel industry, regulatory costs represent 20-30% of EBITDA. However, as the sector is characterised by strong procyclical trends, during periods of crisis regulatory costs exceed the company EBITDA on average, as was the case in 2009 for example.(taken from Steel Action Plan by the European Commission, Brussels document of 24 June 2014)

5.1. The European Union

The Feralpi Group’s production activities take place in five European countries and Europe is also the main market for its products.The European Union is therefore an important stakeholder that influences its activities in direct and indirect ways through industry regulations,

imposing constraints and opportunities on the market. The influence of the European Commission mainly regards anti-trust legislation, the limitation of state aid and European requirements in terms of the protection of the environment, subsequently transposed in national laws.

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5.2. States

In 2014, the Group companies contributed 22.3% of the overall consolidated net value added they generated to the states in which they operate, the equivalent of around € 17.6 million. This overall figure is formed by summing the € 13.5 million of social security contributions made with the € 4.1 million of taxes paid. In the previous year the same percentage was 26.8%.

In the two-year period under examination, the Group companies benefitted from public funding for training and, more especially, from the advantages stemming from the application of shock absorbers, which made it possible to supplement temporarily reduced salaries. More specifically, subsidiary Feralpi Stahl received co-financing of € 578,164 in 2013 and € 550,127 in 2014 from the German Ministry of the Environment to fund the research project “An innovative combination of processes for reducing environmental impact in a large steelworks with annexed hot rolling mill”.

5.3.Local authorities

As part of the Group’s relations with the local authorities, the participation of its companies in the WHP project promoted by the Region of Lombardy is an example of positive collaboration between the company and the local public authorities in the pursuit of goals of social relevance. As illustrated in the specific section dedicated to relations with personnel, this initiative saw Feralpi adhere to the WHP Manual drafted by the Region of Lombardy and involved the collaboration of the Feralpi Siderurgica company doctor and the Local Health Authorities of Brescia and Como for the administration, in two phases, of individual questionnaires on health risk factors.

5.4. Public supervisory bodies

In accordance with the laws in force, the stakeholders responsible for monitoring the environmental impact of the Group’s plants have established a consolidated partnership with Feralpi, explicitly regarded as an active, honest and reliable entity. More specifically, these stakeholders are the Dresden Regional Environment Office, which monitors the plants in Germany, and ARPA of the Province of Brescia and the Region of Lombardy for the plants in Italy.These bodies are systematically involved in the projects and innovative proposals undertaken by the company to protect and respect the surrounding territory.

In 2014 Feralpi paid € 4.1 millionin taxes

66. The local communities

Feralpi has always traditionally been very attentive to the quality of its relationship with the community and has developed stable channels of dialogue and interaction on the main themes of the environment, employment, and professional training. The systematic analysis of the economic conditions of the territory, which takes place through the survey into the satisfaction levels of employee families and their perception of the main social problems in the area, forms part of the company’s focus on the local communities.

Through the periodic company climate survey, Feralpi is able to monitor the perception of local social problems

According to the findings of the fifth edition of the company climate survey, carried out in March 2015, for the first time since the economic crisis of 2008 there are signs of improvement in the conditions subjectively perceived. The number of families finding it possible to save increased, there was a reduction in the percentage of respondents that defined their family’s economic condition as “modest”, and there was a rise in the percentage of those who said they could find work easily in the local area.

Pre-season retreat. Guest Coach Giovanni Trapattoni, 28th and 29 th January 2015, Mandello (SO)

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Through the opinions of employees it was possible to identify the perceived level of seriousness of the problems in the area and the specific local issues of relevance.The periodic monitoring of these issues enables the company, in turn, to establish its priority action areas when it comes to the local communities.

Fig.14 – Economic conditions of employee families in Italy

Source: Feralpi climate survey, 2015 edition

Source: Feralpi climate survey, 2015 edition

Fig. 15 –The most local serious problems perceived by employees in Italy and Germany

Italy Germany

ECO

NO

MIC

CRI

SIS

LOW

INCO

ME

SPRE

AD O

F D

RUG

S

ALCO

HO

LISM

CRI

ME

IMM

IGRA

TIO

N

POLL

UTI

ON

CORR

UPT

ION

23.93.9 22.5 43.8 26.8 14

20.115.3

34.3 11.2 39 11 42.9 29.333.8

4.3

Modest family conditions

Feralpi the only source of

income

Could easily find a job

Able to set aside some money

504540353025201510

50

2007 20112009 2013 2015

33.1

43.4

15.0

42.0

12.7

30.3

19.1

6.9

33.9

43.047.5

26.3

40.4

38.3

32.231.8

43.7

38.5

38.4

45.0

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6.1. Local community support Of all the stakeholders to whom the Group com-panies pay particular attention, the communities in the areas in which they are located are given primary importance. This is why, also in the 2013-2014 two-year period and in line with previous years, numerous activities were carried out with the aim of promoting the cultural aspects of the individual areas with particular focus on the typical aspects of the industrial culture of which Feralpi wishes to act as the mouthpiece.The activities were structured on a one-to-one basis and were also shaped by the requests expressed directly or indirectly by the commu-nity, by people, and by local authorities and bodies, with whom Feralpi instilled a dialogue that took account of their specific needs.

The company’s support for culture took the form of numerous initiatives. To contribute to the conservation of the local architectural heri-tage, Feralpi Siderurgica supported the historic restoration of the bell tower of San Antonio Abate church in Lonato del Garda by helping to strengthen it. To contribute to the growth of ar-tistic culture, Feralpi Siderurgica sponsored the “Moretto, Savoldo, Romanino, Ceruti” exhibition held in Brescia in March 2014 which, for the first time, brought together 100 masterpieces from private collections dating from the 15th to the 18th centuries.

Promoting culture also means familiarising the young with their local area. This explains Acciaierie di Calvisano’s support, in both 2013 and 2014, of the “Che storia” initiative, a historic walk held in Brescia aimed at primary and lower secondary school pupils from Calvisano and its hamlets, Isorella and Viadana, together with their families. The initiative gave the children the chance to discover the history of the Lom-bard city, from Roman times through to the Re-naissance and not forgetting medieval Brescia, by visiting monuments, squares and buildings.Feralpi Siderurgica and Acciaierie di Calvisa-no are members of Ramet, a consortium for

(THOUSANDS OF €) 2012 2013 2014

Sports sponsorships 1,453 1,577 1,798

Charity 227 139 132

Total investment 1,680 1,716 1,930

Tab.10 – Investment in the community

Progetto Scuole - Istituto Comprensivo Ugo da Como,Lonato del Garda (BS)

environmental research into metallurgy foun-ded by Associazione Industriale Bresciana, and support its initiatives aimed at promoting the industrial culture also towards younger sections of society. In order to involve the students and clearly and directly illustrate what industry in the third millennium means, Feralpi Siderurgica and Acciaierie di Calvisano joined the Ramet project, opening their doors (on 29 April and 8 May 2014 respectively) to a number of high school and professional school classes. It was a unique opportunity to interact with the students around topical issues such as the sustainability of industry, the positive function of recycling materials due to the use of scrap as a raw mate-rial, and the use of the best available technolo-gies for environmental improvement.

In another initiative to promote culture, com-bined with a highly technical training activity, Feralpi Siderurgica supported the 35th national conference of the AIM, the Italian Metallurgy Association, of which the company is a member. The partnership with AIM also translated into support for various theory training activities with visits to the production plants. These in-cluded the “Plastic deformation of steel” course (Feralpi Siderurgica, 20 March 2013) and the “Smelting machine” course (Feralpi Siderurgica, 5 June 2014).Training, once again of a technical nature, was also one of the assets for the Nuova Defim sub-sidiary which organised, in November 2013 and April 2014, two meetings with the entire Italian and international workforce to improve the te-chnical-metallurgy culture surrounding the solu-tions proposed to the market by the company, also seeking to leverage on the concept of “team spirit” borrowed from the sporting arena.

For the companies of the Feralpi Group, the focus on the community and its needs meant contributing to the development of many initiatives launched in the municipalities in which they operate with gifts and donations.For example, in May 2014, Acciaierie di Calvisano made its contribution to the “Children’s locomotive” project promoted by the Circolo Acli of Calvisano in collaboration with the comprehensive school and other local associations to create a space, set up in the rooms of the train station, in which the children could do their summer homework and, at the same time, take part in creative workshops and recreational and expressive activities.In 2013, Nuova Defim actively supported the initiative promoted by Consorzio Como Turistica and Amici di Como (of which Nuova Defim forms part), supplying the initial and final parts of the walkway along the lakeside at Como with a specially designed parapet for the project. In 2014 it also provided electrowelded mesh enclosures as a replacement for the wooden fences positioned along the lakeside in Como. Thanks to their transparent nature, these once again enabled the public to enjoy a good view of the lake. In both 2013 and 2014, meanwhile, Nuova Defim supplied free mobile enclosures as part of its contribution to the organisation of the “Città dei Balocchi” event held in Como at Christmas, a major festival for the city and the local area dedicated to children and their families and designed to offer both educational and recreational activities.

Feralpi and Nuova Defim will be contributing to the creation of “The Life Electric”, a monu-ment by architect Daniel Libeskin dedicated to Alessandro Volta, which will be erected in the middle of the first basin of Lake Como.

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The Group companies also supported cultural projects outside Italy such as the 8th Italian Lan-guage in the World Week that was held in Algiers from 20 to 26 October 2013 and organised by the Italian Cultural Institute in Algiers. In 2014 in the same North African city, Feralpi Algérie contributed to the “Italian Architecture” show held on 1-20 December in the Palais de la Cultu-re Moufdi Zakaria.

For Feralpi sport means the ability to transmit the values of commitment and respect to the younger generations. In fact, sport represented another important chapter also in 2013-2014 thanks mainly to the sponsorship of Feralpisalò, a club that competes at Lega Pro level, Virtus Feralpi Lonato and the Feralpi Cycling Team.In 2014 Feralpi financed the complete renovation of the press office, the secretary’s office and the changing rooms of the Lino Turina stadium in Salò.

Thanks to its incredible passion for sport and its social commitment, it wanted to redevelop the facilities, enabling the community to access, in a short period of time, a top-quality venue that can also be used by other sports associations in the area. Feralpi believes that sport is the ideal chan-nel for transmitting the values of commitment, cooperation, respect for rules and healthy com-petition through initiatives and events. Feralpi supported the project “Sometimes a click is not enough. Protecting yourself from cyberbullying” organised by Feralpisalò with the youth teams of the Leoni del Garda, supported by the “Per una vita migliore” association and the Brescia police headquarters. The project involved five meetings for training educators, i.e. coaches and parents, and youngsters so that they are well aware of the world they explore and its inherent risks.

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Feralpi also supported the “Schools Project” initiative developed by Feralpisalò in association with a number of comprehensive schools in the province of Brescia and with the support of other local sports clubs such as “Canottieri Garda”, “Rugby Calvisano” and “Atletica Robur Barbara-no”. The aim of the initiative is to teach sporting values to children through various activities orga-nised under the motto “Sport, not just football”.Combining its focus on the area it serves and its support for sporting activities, Feralpi Siderur-gica organised the Memorial event for the 90th anniversary of the Virtus Feralpi Lonato football club, honouring a footballing tradition whose deep roots in the lakeside municipality go back almost a century. Virtus Feralpi Lonato have bor-ne the Feralpi logo and colours since 1974.Held on 1 June 2014 on the new pitch in via Roma in Lonato del Garda, the event was prece-ded by a series of youth tournaments with teams from all over the province in order to remember the glory years, the names, the dizzy heights (the

last appearance in Serie D from 2007 to 2009 be-fore the merger with Salò) and the great players that have worn famous shirts without ever cutting their ties with Lonato.

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The festival comprised seven days of football and concluded with the “Mario Gambaretti” memorial dedicated to the Juniors category. The initiative was also a chance to encourage the community and fans to contribute to the reconstruction of the history of football in Lonato with the recovery of material and historic pho-tographs in order to document the club’s long footballing history.

Another passion with deep roots in the area is cycling. In fact, Feralpi has continued to support the Feralpi Monteclarense Cycling Team (formed on 7 March 2013 from the merger between the Feralpi Cycling Team and ASD Monteclarense) with special focus on the younger age groups in order to teach them the basics, the rules and, above all, the necessary lifestyle required to practice such a demanding and traditional sport. Of particular interest each year is the Trofeo Fe-ralpi which, once again in 2013 and 2014, proved to be one of the most important of the season among the Juniors.On 13 November 2014 the Feralpi Monteclaren-se Cycling Team was awarded the prestigious “Cycling Real Time Award” for organising one of the most important races in the Junior category, the Trofeo Feralpi - Memorial Carlo Pasini.

In June 2014 an initiative was organised that saw several Feralpi Siderurgica employees cover the 1000 km that separate the Lonato del Gar-da plant from the ESF Elbe-Stahlwerke Feralpi plant in Riesa, Saxony entirely by bicycle. Passing through Bolzano, Innsbruck, Munich, Regen-sburg and Weiden, the journey also sought to symbolically strengthen the union of the German and Italian cultures, which share a strong indu-strial and iron and steel identity and tradition in particular.

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As well as cycling and football, Acciaierie di Calvisano supported rugby and volleyball clubs through its sponsorship of Rugby Calvisano and the PiùVolley Amateur Sports Association. On behalf of the community and also for its social va-lue, Acciaierie di Calvisano also supported local football by sponsoring AC Calvina Sport.

Subsidiary Nuova Defim also contributed to sup-porting the activities of sports clubs sponsoring, in particular, ASD Pontelambrese, a Como-based football club with a large fanbase, for the 2013-2014 and 2014-2015 seasons.In addition, in 2013 it was involved in the Como Nuoto project, supporting this sports association with the aim of promoting swimming among the young, giving everyone the concrete possibili-ty of practising this sport, providing lessons to younger children and supporting competitive swimmers in a relaxed and healthy atmosphere.

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In its relations with the city of Riesa, Feralpi Stahl developed a series of initiatives in the educatio-nal, sporting, cultural and artistic spheres.Feralpi supports two local private crèches, one Lutheran and the other Catholic, and cooperates with two other primary schools and three secon-dary schools in Riesa and the district of Meissen for the development of training projects that supplement the standard curriculum.In the sporting arena, Feralpi Stahl regularly supports the activities of local youth associations such as the aerobic gymnastics association, the Cheerleader group, Dragon Boat, the local youth football team, and the rowing, rugby, swimming and volleyball associations. Since 2011 Feralpi has been the main sponsor of Fussballakademie, the youth football training centre.In the social sphere, Feralpi supports the Sprun-gbrett initiative, which helps the most disadvan-taged children in the Gr district, which is located close to the plant.In terms of culture, the company has supported two concerts a year by the Elbland Philarmonie orchestra and the Riesa band. Since 2013 Feralpi has supported the International Schostakowitsch Tage Gohrisch Festival, which promotes the mu-

sic of the most important Russian musician of the 20th century. More specifically, in 2013 Feralpi sponsored the Rapsody in School project, which took musicians and actors to the region’s schools so pupils could appreciate and get to know more about classical music.Together with the Italian Culture Institute of Ber-lin (Italienisches Kultuinstitut Berlin), in 2013 and 2014 Feralpi supported Italiencentrum (Centre of Italy), promoted by Dresden University of Technology, sponsoring a cultural programme dedicated to Italian literature, from Dante to the present, and conferences on music, painting and Italian theatre. Since 2013 Feralpi has suppor-ted Wirtschaftstag des Landkreises Meissen, an initiative of the Dresden Chambers of Commerce (Industrie und Handelskammer Dresden) and Meissen Council. This important conference brings together 250 local decision makers to discuss the district’s economic problems. In 2013 the conference was dedicated to the energy transition (Energieewende), while in 2014 it was dedicated to the key values of society (Werteka-non der Gesellschaft). Feralpi participates at the conference with a dozen or so managers.

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In December 2014, Feralpi Siderurgica joined the Consorzio Orgoglio Brescia (Brescia Pride Consortium) created by the AIB (Associazione Industriale Bresciana - Brescia Industrial Association), which in July of the same year replied to the Public Notice for the Manifestation of Interest in the search for Sponsors for the Italy Pavilion at Expo Milano 2015, expressing its complete willingness to take part in the project as a Technical Sponsor together with businesses from the Brescia area, and offering its contribution, pro-ducts, know-how and supplies for the design, creation and erection of the iconic “Tree of Life” work.The Tree of Life represents Brescia – the Province that is home to the head office of the Feralpi parent company - across the board, displaying the expertise, tenacity and skills of the businesses of Brescia and its workers in the international context of Expo Milano 2015.

More specifically, Feralpi Siderurgica contributed by supplying both the rebar used for the base of the Tree of Life and, through subsidiary Nuova Defim, the grids used for the internal stairs and the external ledges. Nuova Defim also contributed to other installations constructed at Expo Milano 2015. These in-cluded the Brazil Pavilion (with the cor-ten steel walls) and the China Pavilion (with the heavy grid for the terrace and stairs).

6.2. Fourth edition of the Riesa resi-dents’ opinion survey

In order to update similar initiatives carried out in past years on a two-yearly basis, Feralpi Stahl commissioned IM Field GmbH to carry out an opinion survey, which took place in May 2015, with the aim of gathering the opinions of the citizens of Riesa on the role and activities of Fe-ralpi Stahl. Assigned by Feralpi Stahl, the survey was developed and assessed by INWT Statistics GmbH. It was carried out via telephone interviews with a representative sample of citizens living in the municipalities of Riesa, Glaubitz and Zeithain. As with the previous editions, the goal of the survey was to establish the level of awareness and the assessment that citizens express as regards the company’s economic impact (jobs, tax revenues, sponsorships), social impact (participation in the Open House initiative, visits to the website, spon-sorship of social and cultural activities, support for sports initiatives) and environmental impact (atmospheric emissions, traffic congestion and noise).

The periodic survey of the opinions of the residents of Riesa shows a positive image of the company and its activities as regards the environment

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58.5% of interviewees stated that they know Fe-ralpi Stahl employees personally (+1.2% compa-red with the 2013 edition). 28.5% had a chance to visit the plants (+6.3%). 46.8% declared that they knew about Feralpi Stahl’s social and cultural initiatives. 51.1% of interviewees know about the EMAS certification obtained by Feralpi Stahl (- 4.2%). The assessment of the company’s initiatives and impact was carried out by asking interviewees to give their opinion on a scale of 1 (completely po-sitive answer) to 5 (completely negative answer).

The survey showed a lower level of awareness of the company’s activities among those un-der 25 years of age, together with more critical opinions. As a result the company is assessing specific communications initiatives aimed at the younger age group with the aim of aligning their opinions with the more favourable opinions of the general population.

Source: INWT Statistics GmbH, April 2015

Fig. 16 – Riesa residents’ evaluation of the economic, social and environmental impact ofFeralpi Stahl on the surrounding area

PART FOUR

2013 2015

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1.4 1.39 1.2 1.28 2.2 2.212.1 2.07 1.521.4