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  1. FERROVIAL IN 2014
  2. SOCIAL AND RELATIONSHIP CAPITAL

SOCIAL AND RELATIONSHIP CAPITAL

Social contribution.

As an infrastructure manager, Ferrovial plays a fundamental role in the development of the local economies where it operates.

Social contribution

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.

LOCAL 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).

COMMUNITY INVESTMENT

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:

  • Social infrastructure: Development and cooperation projects for water and sanitation, in partnership with a prominent NGO and involving Ferrovial employees, both in Latin America and Africa.
  • Accessibility to public spaces and buildings: adapting public spaces and buildings for people with mobility problems.
  • Restoration of historic monuments: reconstruction and restoration of heritage buildings.
  • Social action in Spain: repurposing buildings for food distribution to those at risk of exclusion.

The company bases its investment decisions on the following criteria:

  • The continuity of projects through medium and long-term partnerships with third sector institutions of demonstrable repute and transparency. Ferrovial is an active member of numerous cross-sector non-profit organizations.
  • Financial and institutional project sustainability, preventing dependency in the communities that benefit from support.
  • The multiplier effect. Sharing experience and good practices in social investment via forums, providing an example to other institutions. Running awareness campaigns for global issues, conducting case studies based on the social infrastructure program.
  • Encouraging employee involvement in the company’s social engagement, via corporate volunteering, as part of the Social Infrastructure Program (4th edition in 2014), and matching donation initiatives, such as the “Juntos Sumamos” (Stronger Together) program.

MAIN PROGRAMS AND INITIATIVES

Social Infrastructure Program

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.

“Juntos sumamos” Donation Program

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.

Social Action Program in Spain

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.

USAMexicoColombiaPeru;BoliviaBrazilIrelandUnited KingdomSpainPortugalPolandIndiaEthiopia

USA: 45 projects

  • Technological innovation Massachusetts Institute of Technology (MIT): 7 innovation projects
  • Young People and Education National Math & Science Initiative

MEXICO: 1 project

  • Cooperation and Development Water and Sanitation in Oaxaca with Cesal

COLOMBIA: 3 projects

  • Cooperation and Development Water and Sanitation in Chocó with Ayuda en Acción
  • Cooperation and Development Water and Sanitation in Córdoba with Acción contra el Hambre
  • Cooperation and Development Water and Sanitation in Antioquia with Asamblea de Cooperación por la Paz

PERU: 3 projects

  • Cooperation and Development Water and Sanitation in Cajamarca with Plan España
  • Cooperation and Development Water and Sanitation in Cuzco with ECODES
  • Cooperation and Development Water and Sanitation in Ica with Cesal

BOLIVIA: 1 project

  • Cooperation and Development Construction of schools in Machareti with World Vision

BRAZIL: 1 project

  • Art and Culture Congress of DCD Converged Sao Paulo 2014

IRELAND: 2 projects

  • Young People and Education Cycling Training in schools

UNITED KINGDOM: 45 projects

  • Technological innovation Innovate sponsorship program
  • Young People and Education Duke of Edinburgh Support (support to vulnerable Young people)
  • Young People and Education Community Involvement Days

SPAIN: 123 projects

  • Art and Culture Participation in foundations: Teatro Real, Museo Guggenheim
  • Support for vulnerable groups Social Action Spain: Cáritas Española
  • Technological innovation Center for Intelligent Infrastructure Innovation Programs
  • Social and labor integration of vulnerable groups Adecco Foundation, Integra Foundation, Special Employment Center, Ampans Foundation
  • Environment Programs with WWF, Green Business Council
  • Environment Biodiversity Foundation , Grefa y Conama
  • Environment Wildlife Recovery Center
  • Environment Patron of the Provincial Energy Agency of Alicante (environmental defense in the energy sector)

PORTUGAL: 2 projects

  • Young People and Education Support to adapted athletics

POLAND: 2 projects

  • Young People and Education Road safety courses for children
  • Childhood and Health Strefa Rodzica (Area for parents at children’s hospitals)

INDIA: 1 project

  • Cooperation and Development Construction of homes in Anantapur with Vicente Ferrer Foundation

ETHIOPIA: 3 projects

  • Cooperation and Development Water and Sanitation in Woeyta with Oxfam Intermón
  • Cooperation and Development Water and Sanitation in Afar with Amref
  • Cooperation and Development Assistance to refugees in Addis Ababa with Entreculturas
 
 
 
 
  • 233Community support projects
  •  6.9 M€Social investment in the community
  • 426,278Beneficiaries in social 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.

Value creation (M €)

Economic value generated201420132012 *
a) Revenue
Turnover 8,802 8,166 7,686
Other operating revenue 9 10 17
Financial revenue 25 22 34
Disposal of fixed assets 0 108 115
Income by the equity method 159 396 222
8,995 8,702 8,074
Distributed economic value201420132012 *
b) Consumption and expenses 1
Consumption 1,131 1,181 1,299
Other operating expenses 4,122 3,710 3,335
c) Payroll and employee benefits
Personnel expenses 2,575 2,351 2,142
d) Financial expenses and dividends
Dividends to shareholders2 278 476 734
Treasury share repurchase3   235 0 -
Financial expenses 430 412 371
e) Taxes
Corporate income tax 4 131 127 108
8,899 8,257 7,989
Retained economic value 201420132012 *
96 445 85

(*) 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.

  • Distributed economic value8,907million €
  • Generated economic value 8,995 million €

Tax contribution

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:

  • Expressly sets out the general commitment of Ferrovial, S.A. and its subsidiary companies (the “Group”) to comply with fiscal regulations in Spain and other countries where they operate.
  • Incorporates development and implementation of best practices in such matters as part of Ferrovial’s Corporate Governance rules.

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:

  • Fiscal risk prevention: Without prejudice to good company management, the Group will adhere to the principles of an ordered, diligent tax policy in the pursuance of its activities:
    • Promoting practices aimed at preventing and reducing significant fiscal risks.
    • Reducing conflicts deriving from the interpretation of applicable regulations, by the use of instruments established to this effect by tax legislation (prior consultation with fiscal authorities, prior valuations agreements, etc.).
    • Avoiding the use of opaque structures for tax purposes. Such structures are understood to be those that, via the intervention of companies as instruments located in tax havens or countries that do not cooperate with the tax authorities, are designed to prevent the relevant tax authorities from identifying those who have end responsibility for the activities, or who are the ultimate owners of the assets or rights involved.
  • Relationships with tax authorities: The Company’s relationships with the relevant tax authorities shall be governed by principles of transparency and mutual trust, with the Group undertaking to adhere to the following good taxation practices:
    • To collaborate with the relevant tax authorities in detecting and finding solutions to fraudulent fiscals practices that may be present in the markets in which the Company operates, in order to eradicate them and prevent them from spreading,
    • To provide fiscally relevant information and documentation, as requested by relevant tax authorities, in the shortest time and fullest form possible,
    • To make use of all the possibilities arising from the conflictive nature of the inspection procedure, strengthening agreements with the relevant tax authorities in all procedural stages where possible.
  • Information to the Board of Directors: Prior to preparing the annual accounts and presenting its corporation tax return, Ferrovial’s head of fiscal affairs will inform the Board of Directors, directly or through the Audit and Control Committee, of the fiscal policies adopted by the Company during the financial year, particularly regarding the level of compliance with the Policy of Compliance and Good Practices in Taxation. 

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. 

  • Reporting to the market regarding policy compliance: The Company’s Annual Corporate Governance Report will indicate the Company’s effective compliance with this Policy.

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.