- FERROVIAL IN 2014
- SOCIAL AND RELATIONSHIP CAPITAL
SOCIAL AND RELATIONSHIP CAPITAL
As an infrastructure manager, Ferrovial plays a fundamental role in the development of the local economies where it operates.
The nature of its business makes Ferrovial a key player in reducing geographical imbalances, as the provision of infrastructure to a region is a determining factor for its economic development.
Generating employment. The company is active around the world, creating local jobs and optimizing sourcing from local suppliers. Ferrovial is currently present in 26 countries. Despite the economic situation, Ferrovial has continued to create jobs in the main markets where it operates.
Local sourcing: Ferrovial has a purchasing policy adapted to its international expansion, while maintaining the goal of strengthening longterm relations with suppliers and subcontractors. To this end, the centralized management required to supply all of the company’s projects is combined with a decentralized approach to ensure that local project managers can establish strong ties with local subcontractors who, in general, have less global exposure.
Local investment (LBG): The company runs social investment programs in the same areas where it operates. As a result, the countries most benefited from investment are Spain (38%), UK (23%) and USA (23%). These geographical regions also account for most of the company’s activities.
Local contribution-Taxes paid: Ferrovial is aware that it makes an important contribution to local economies and maintains a strict policy regarding tax payments in the countries where it operates (see note 21 on Tax Situation in the Financial Statements).
Ferrovial’s strategy is founded on an investment model fully coherent with its larger strategy and business model. Thus, Ferrovial is a proponent of social infrastructure: efficient, accessible, clean and humane, covering the full infrastructure cycle; through all phases, from design to construction, financing, operation and maintenance.
Three priority investment areas have been identified:
The company bases its investment decisions on the following criteria:
In 2011, Ferrovial launched the Social Infrastructure program, which now sets the standard for other companies in good social action practices. This came as continuation of the three-year project to build water and sanitation infrastructure in Tanzania, as part of the “Maji Ni Uhai” project (“Water is Life” in Swahili).
What distinguishes the Social Infrastructure Program is its approach to cooperation; based on a public-private partnership between a company, an NGO and regional or local governments. The company remains an active partner in cooperation, projects, reaching beyond the standard funding role to provide technical assistance, technology support and specialists to help implement projects.
Projects are managed collectively by all parties involved in a Joint Committee, made up of two representatives appointed freely by Ferrovial and two representatives appointed freely by the NGO. The Committee usually meets four times a year and its responsibilities include: ensuring that the partnership agreement runs correctly, establishing liability in the event of non-compliance, approving any budget variation in excess of 10% and any technical amendments to the project.
During 2014, the program ran nine projects in Ethiopia, Colombia, Peru and Mexico, in partnership with the NGOs Intermón Oxfam, Plan España, Ayuda en Acción, Ecología y Desarrollo, Amref Flying Doctors, Cesal, Acción contra el Hambre and Asamblea Cooperación por la Paz. These projects amount to total investment of over 1.5 million euro, with 83,124 beneficiaries and 26 volunteers.
Ferrovial has been running the “Juntos Sumamos” (Stronger Together) program since 2005. The aim is to share with employees its commitment to addressing global social needs and combating human rights violations. Under this initiative, Ferrovial employees can opt to donate a monthly amount to a social cause, which the company will then match.
This program has grown steadily since its launch. To date, the company and its employees have donated around 2 million euro to 22 projects.
In 2014, a total of 214 partnership proposals were submitted by different NGOs. After analyzing the technical aspects of said programs - the organizations’ solvency and transparency levels, experience in the sector, and the sustainability of their proposals - six projects were selected. Employees then voted to choose the four winners.
Inequality and social fragility in Spain has grown and intensified with the financial turmoil. Growing unemployment has seen a proportion of the population that previously enjoyed normal living standards impoverished, on the verge of social exclusion and competing for increasingly scarce social protection and support. As a result, social organizations urgently need to equip and repurpose a number of care premises in order to provide basic emergency aid, such as food distribution and social support centers.
As part of Ferrovial’s social commitment in Spain, the company is dedicated to supporting the refurbishment and repurposing of NGO centers, to help alleviate the impact had by the financial crisis on society’s underprivileged groups.
In 2014, Ferrovial supported a project aimed at improving the infrastructure and condition of food and care distribution centers run by the Spanish Food Bank Federation in Barcelona, Cantabria, Madrid and Murcia. The earmarked amount for the project is 100,000 euros.
USA: 45 projects
COLOMBIA: 3 projects
PERU: 3 projects
UNITED KINGDOM: 45 projects
SPAIN: 123 projects
POLAND: 2 projects
Data according to LBG. In 2011 the Dow Jones Sustainability Index recognized the London Benchmarking Group (LBG) methodology as good practice for reporting on corporate social action. Ferrovial has followed the methodology since 2007. It is an innovative, high-quality model that improves on and unifies criteria for classifying, managing, measuring and communicating initiatives in the community.
|Economic value generated||2014||2013||2012 *|
|Other operating revenue||9||10||17|
|Disposal of fixed assets||0||108||115|
|Income by the equity method||159||396||222|
|Distributed economic value||2014||2013||2012 *|
|b) Consumption and expenses 1|
|Other operating expenses||4,122||3,710||3,335|
|c) Payroll and employee benefits|
|d) Financial expenses and dividends|
|Dividends to shareholders2||278||476||734|
|Treasury share repurchase3||235||0||-|
|Corporate income tax 4||131||127||108|
|Retained economic value||2014||2013||2012 *|
(*) 2012 data has been recalculated due to adjustments made to the information reported, for comparison purposes, in the Annual Financial Statements for 2013 with respect to that year.
(1) The Group’s social action expenses, together with the Foundation’s expenses, are set out in the Social Commitment chapter.
(2) In addition to the proposed payment against earnings that year, by agreement of the Annual General Meeting of March 2013 a dividend was paid, charged against the merger premium, for a total of 183 million euro.
(3) Capital reduction through the redemption of treasury stock. (Note D. Consolidated statement of changes in net equity for the years 2014 and 2013).
(4) Corporate income tax charge against earnings before adjustment for fair value.
In 2004, the Board of Directors approved the Business Ethics Code, which was subsequently updated in 2014. This includes, as one of the fundamental principles of conduct for the company and its employees, adherence to applicable law.
The Policy of Tax Compliance and Good Practices was approved as a result of this principle, which:
This Policy includes recommendations from the Good Taxation Practices Code promoted by Spain’s Inland Revenue Service, which was adopted by the Company in November 2010 and adapted to the Group’s specific circumstances.
1. Compliance with tax rules: The Group sets out to comply with its fiscal obligations in all countries where it pursues its business activities, and to maintain an appropriate relationship with the relevant tax authorities.
2. Good Taxation Practices: In order to include in Ferrovial’s Corporate Governance its commitment to compliance, as well as the recommendations of the Good Taxation Practices Code, the Group undertakes to adhere to the following practices:
In the case of operations or issues that must be submitted for approval to the Board of Directors, the Board will be informed of any relevant fiscal consequences these may have.
3. Dissemination of the Policy of Compliance and Good Practices in Taxation: The Company’s Board of Directors is responsible for ensuring that the Group complies with all applicable laws and regulations, respects the customs and good practices of the sectors and countries where it operates, and observes the voluntary principles of social responsibility that it has adopted.
In the context of the above, the Company’s Board of Directors, through its Chairman, CEO and Senior Management, will drive the Group to adhere to the principles and good practices with regards to taxation.