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ANNUAL REPORT

2011


Moving together


04

05

Strategy and Outlook

Organization

Corporate Responsibility

Innovation

Customers and Offering

Social Commitment

STRATEGIC PLAN | 9

RENEWAL | 15

COMMITMENTS | 23

TRANSFORMATION | 27

CUSTOMERS AND MARKETS | 37

TEAM | 47

CONTEXT AND OUTLOOK | 10

NEW FACILITIES | 17

QUALITY AND SUSTAINABILITY | 24

PROJECTS | 28

ECONOMIC SUMMARY | 11

NEW PARTNERSHIPS | 20

TRAINING | 48 KEY PROJECTS | 38

INVESTMENT INSTRUMENTS | 34 ORGANIZATIONS | 35

SAFETY AND HEALTH | 49


2011 became a year of imbalance in the global economy. While countries like Brazil, Russia, China or India, to cite some of the markets in which ARTECHE has a presence, grew at a significant rate, while others, such as the Euro Zone, and particularly the Spanish economy, experienced especially difficult moments. Although we are evidently not foreign to the economic situation, our international position, developed over many years, allows us to continue to grow. Today, ARTECHE has a worldwide presence. We have the confidence of our customers in 150 countries, and we have an industrial presence on four continents. The international market today represents more than 90% of our turnover. Our global presence and range of products and solutions have allowed us to grow 22% in 2011. And we did it, moreover, in all lines of business, creating jobs and maintaining a solid and profitable financial position. We have also moved forward in the development of our strategic plan, both in regard to market development and in strengthening our capacity and our organization.

Today, ARTECHE has a worldwide presence. We have the confidence of our customers in more than 150 countries, and we have an industrial presence on four continents.

We grew 22% in 2011. And we did it, moreover, in all lines of business, creating jobs and maintaining a solid financial position.

This is evidenced by the notable sales growth in Europe, our leadership in the wind energy sector in Brazil and the consolidation of our international position in ultra high voltage, where the construction of our new laboratory will be a landmark in the sector, in addition to the international development of energy quality activities, where we already have a presence in North America, Mercosur and Europe, and an increase in the distribution solutions we offer in Brazil. Add to this the conclusive bid for the future smart grid, endowed with an ambitious investment plan that reinforces our technological capacities, some of which will materialize in 2012. In a sector as demanding as electricity, this cannot be achieved without a qualified human team and an extensive and reliable range of products and solutions. Therefore, in 2011 we continued to fortify our team of professionals and our technological position in all areas of the business. An example is the standardization of new ranges of transformers for customers in Europe and Asia, the launch of a new range of protections and automation solutions, or the development and authorization of new relays aimed at the demanding railway sector. And let’s not forget the development of new network monitoring solutions, or the improvement of our catalogue of medium-voltage cells and interrupters.

Alexander Arteche

José Javier de Arteche

Chief Executive Officer of the ARTECHE Group

Chairman of the ARTECHE Group

In 2011, we also completed a deep corporate reorganization of the Group, initiated in prior years, in an effort to reaffirm our customer-orientation, ensure the management focus of each of the businesses and empower and facilitate alliances with potential partners that reinforce our strategic vision. A reorganization project that, as is fitting for a global company, includes the establishment of new management systems and involves great effort and investment that we expect to culminate in the coming year. With this basis, and with our team of professionals united around a shared project, we set the goal of continued growth in 2012, a new fiscal year that, despite the uncertainty that weighs on some markets, we face with great excitement. This excitement is based on the conviction that, with the effort and dedication of all, we can take advantage of the opportunities that arise in our sector to continue to grow and generate wealth for all those who are a part of the ARTECHE project. A shared project we reinforce with our new trademark attitude, MOVING TOGETHER. A slogan we hope will strengthen our commitment to advance arm in arm with our customers, seeking to understand and respond together to the needs of the future. To advance with the people who are a part of ARTECHE, seeking a project that permits professional development and the satisfaction of each one of us. And, of course, to move forward with the society of which we are a part, seeking ways to create stable employment and sustainable wealth in all of the countries in which we are present. It won’t be easy, but we do not lack the excitement, desire and commitment.


STRATEGIC PLAN

Strategy and Outlook

We continue to move forward on the development of our strategic plan, a program of growth and consolidation of our international position in all businesses of the Group. For this purpose, we have an ambitious investment plan, focusing on the acquisition of technological capacity, the increase and improvement of our production capacity and international development. In this regard, it is worth noting:

The international growth in high voltage, positioning us in the most demanding technology sector: ultra high tension. The new research laboratory we are building in Mungia will be a global reference.

The acquisition of technological capacities aimed at the control and protection of electrical networks. This is an investment we are going to allow to move forward together with our customers in the development of the future intelligent network.

The internationalization of the complete solutions we offer, beginning with the bases already consolidated in Brazil.

All of this without forgetting that our sector is changing and that our customers need new solutions that respond to their needs. In order to respond to them, we maintain a decided investment in the ARTECHE Technology Center, our new R&D&I center, and a breeding ground for new products and business.

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9


01 STRATEGY AND OUTLOOK

CONTEXT AND OUTLOOK Although a certain decline has been produced from the European financial crisis, investment in the electrical sector has been maintained. Our main markets, with the exception of Spain, continue to grow in electrical infrastructure investment, related to both generation, new lines and networks, and to the upgrade and automation of those already in place. The future intelligent network is beginning to become a reality in some countries, and for some customers. In this context, we see growth opportunities for ARTECHE in 2012:

The time for investment in the generation of renewable energy and in transport and distribution network in Brazil and other South American countries.

Our increased participation in the United States and Europe.

The market launch of new business lines such as shielded substation transformers, the new protection and control line or air distribution reclosers, with growing penetration in North and South America, and now also in Europe.

01 STRATEGY AND OUTLOOK

ECONOMIC SUMMARY The new businesses developed in recent years make up 40% of our sales turnover.

CONTRACTING (millions of €) 308

2011 has been a good year for ARTECHE. Our figures grew by two digits and we have met most of our objectives

281

224

This growth objective should always be accompanied, more so than in the current situation, by basic criteria such as: maintaining strict management, continuing to reinforce our financial structure and our commitment to the continuous development of our team of professionals.

Our EBIDTA also grew, while we have restructured some activities in order to improve our position with a view to the future.

233

180

A task that is fundamental in a difficult economic environment and in a very competitive market.

2007

CONTRACTING BY BUSINESS UNIT (millions of €)

2008

2009

2010

CONTRACTING BY MARKETS (millions of €) 308

308

281

281

180 7 21 17

15 40 21

233

66

36 38 19

224 58

47 21

22

22

180

52

13

148

140

147

156

39

10

Annual Report | 2011

2008

2009

2010

124

17 119 80

2011

64

77 67

101

85

2007

233

43 49

135

20

19

72

224

2011

72

2007

2008

2009

76

87

2010

2011

Instrument Transformers

Smart Grid

Europe

North America

Power Quality

Turnkey Solutions

South America

Asia/Pacific-Africa

Annual Report | 2011

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01 STRATEGY AND OUTLOOK

01 STRATEGY AND OUTLOOK

EBITDA (millions of €)

NET FINANCIAL DEBT

CAPEX (millions of €)

TOTAL EMPLOYEES

13% year on year EBIDTA growth in the last 5 years.

A solid financial position that allows us to continue growing.

Continued efforts in investment focused on the growth and improvement of the service.

We continue to grow. A multicultural, educated and committed team.

69,1 34,2

26,4

35,2

2,48

2,40

228

17,1 16,1

54,8

535

50

47,8

25,8

2.157

66,7

2,11 11,4

1,88 19,3

11,6

733

11,7

1,72 1,46

661

1,14

1,15

0,88 0,72

2007

2008

2009

2010

2011

2007

2008

Net Debt (millions of €)

12

2009

2010

2011

2007

2008

2009

2010

2011

Europe

South America

North America

Asia/Pacific-Africa

Net Debt/EBITDA Net Debt/Own Funds

Annual Report | 2011

Annual Report | 2011

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WE ARE RENEWED > New reality, new brand

Organization

An image reflective of our distinguishing features and our proposal to the electrical sector and to society. The strong dynamism ARTECHE’s activities have experienced in the last decade, both in matters of investment, incorporation of companies and product and service innovation, as well as in the management plan and internal organization, show the need to update our image. A brand that reflects the real identity of an International Group that is in permanent evolution. As a result of this reflection, in 2011 we initiated a meticulous process of analysis and the definition of an identity for a renewed ARTECHE that responds to our interest in evolving as a company, accepting new challenges, an intense and exciting job that has allowed us to record the start of a new stage for the transformation of the Group.

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02 ORGANIZATION

A NEW STAGE ‘MOVING TOGETHER’ We begin on a new road in which our priority is to maintain and reinforce closeness and confidence, making us authentic companions on the journey. This is really what differentiates us; our capacity to offer quality personalized solutions, to conquer our goals, to open frameworks of partnership and to grow together through the years. This is the essence of the project of the future represented in our new brand.

> More eficiency and better service with the new management model The scaled implementation of the new advanced management model as anticipated, which allows us to continue improving customer service, efficiency and cost savings.

management model implemented in more than 60% of the Group. It will be extended to the rest of the organization throughout 2012.

We close 2011 with the new corporate organization in place and with the new

NEW FACILITIES > New plant in Curitiba (Brazil) In accordance with our policy of development and continuous upgrade, in 2011 we transferred the activity of ARTECHE in Brazil to a new facility in Curitiba, in the southern part of the country, in order to optimize the production process.

its activity on the design and manufacturing of distribution and protection cells, motor control centers, automation switchboards, substation control and protection, hydroelectric plants and wind farms, lightning rods, reclosers and capacitor banks.

The new plant has a square footage of 20,000 m2, employs 250 people and focuses

Annual Report | 2011

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02 ORGANIZATION

02 ORGANIZATION

> Inauguration of ARTECHE NISSIN With the startup of the plant, we incorporated a new product line into our offerings that allowed us to enter a market segment with large growth potential. As a result of a partnership agreement with the Japanese ďŹ rm NISSIN ELECTRIC, global leaders in current transformers for insulated (GIS) substations, in March of 2011 we inaugurated ARTECHE NISSIN, a new industrial plant dedicated to the

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manufacture and marketing in Europe of transformers for Gas insulated substations (GIS) up to 550kV.

growth potential, due to the reduction of required space and reduced visual impact, which allows them to be constructed in urban areas.

The new facilities, located in Vitoria-Gasteiz (Spain), are near the central headquarters of the ARTECHE Group; they involved an investment in excess of 4 million euros and have the capacity to produce approximately 2,000 units a year. With its entry into operation we became the only manufacturer in Spain of this type of transformer, which grants us a key position in this market with an outlook of notable

Voltage transformers for Gas insulated substations provide signiďŹ cant advantages based on their light, compact design, and also in relation to the safety of their advanced technology.

Annual Report | 2011

Annual Report | 2011

AN EXCLUSIVE LABORATORY A highlight of the ARTECHE NISSIN facilities is its laboratory, unique in Spain, with the capacity to run all the routine test under service conditions for GIS voltage transformers. We are hereby ready to compete on the same level as the leaders in this type of products with a solid base.

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02 ORGANIZATION

02 ORGANIZATION

NEW PARTNERSHIPS > QEC Plant (Vietnam)

> ARTECHE INAEL (Brazil)

> Gridclone (Holland)

A stimulus to the presence of ARTECHE in Asia.

Compact cubicles solutions.

Technology for digital communications, a new need demanded by the market.

We have intensified the partnership we maintain with the local partners ITD (Tien Phong Group) and QMC (Quartz Mechanical & Electrical Corporation) in Vietnam for the marketing of our brand of products. This effort has materialized through the signing at the end of 2011 of an alliance for the transfer of technology to the new QEC plant (Quartz Electrical Equipment Corporation), dedicated to the manufacture of medium voltage instrument transformers in Vietnam. This agreement allows us to profit from the investment in technology and drives our implementation strategy in key countries for the future.

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Based in Curitiba, the company ARTECHE INAEL, a 50% investment with Inael Electrical System, has been established.

In November of 2011, we became a part of the Dutch company GRIDCLONE with 30% of shares.

The purpose of the new company is to produce sulfur hexafluoride (SF6) insulated cubicles, which are used as interruption media at medium voltage. Their main application is in sites with restricted physical space, such as malls, high-density population areas and wind towers, among others.

Its activity centers on the development and marketing of network behavior and electrical substation analyzers and simulators in relation to communications with IEC 61850 protocols, the communications standard of the coming years.

The incorporation of this product line complements the offerings in the range of switching technologies of ARTECHE EDC in Mercosur.

With this operation, we ensure that we will have cutting edge technology for digital communications and support for the implementation of these protocols on the protection, control and measurement equipment that the market is starting to demand.

Annual Report | 2011

Annual Report | 2011

WE ACCESS CUTTING EDGE TECHNOLOGY FROM THE HANDS OF PIONEERS The new company incorporated, GRIDCLONE, is one of the first companies in the world dedicated to the development of IEC 61850 equipment. The technology acquired reinforces the development of the Group’s Smart Grid Unit.

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Corporate Responsibility

FIRM, HONEST AND ABSOLUTE COMMITMENT All of us that make up part of The ARTECHE Group assume our commitment to society and the environment in which we work. As a result, we declare our ďŹ rm will to carry out our work with responsibility and honesty, contributing to the wellbeing and economic and social progress of the communities where we carry out our activities, as well as respecting and protecting the environment. Corporate responsibility is part of our strategic plan, which includes as one of its goals the consolidation of our organization as an ethical, responsible and sustainable company, aimed at reinforcing our commitment to satisfy the expectations and needs of our interest groups. A commitment we always have in mind in our decisions and actions and that we strive to fulďŹ ll through continuous improvement, the search for excellence, the creation of value and integral behavior.

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03 CORPORATE RESPONSIBILITY

QUALITY AND SUSTAINABILITY Everyone involved in the ARTECHE Group works within and in agreement with the criteria established in our quality, environmental and workplace health and safety policy. A compendium of regulated procedures, common to the entire organization, and based on communication, teamwork, preventive analysis and

continuous improvement; achieving an adequate balance between respect for the environment, promotion of progress and the creation of permanent value.

WE EXCEED ENVIRONMENTAL STANDARDS

We also try to strengthen these criteria through plans to stimulate and attract talent, with advanced development of knowledge management.

At ARTECHE, we have reduced to a minimum the use of aggressive materials, exceeding the limits established by the current environmental standards. In addition, we work to continuously reduce energy consumption and waste generation.

> Quality and Environment ›

Advanced criteria for sustainability in production and in the conception and development of new products.

Compact designs, with minimum energy consumption and environmentally friendly materials.

Quality agreements arranged with electric companies.

Our own physicochemical and electrical laboratories for approval tests under any international standards.

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Protocols for type tests issued by internationally accredited laboratories such as KEMA, CESI, LAPEM, RENARDIÈRES, etc.

Official authorizations in more than one hundred electrical companies.

ISO 9001:2008 and ISO 14001:2004 certified companies.

Annual Report | 2011


TRANSFORMATION CAPACITY During 2011, we have continued to reinforce the strategic attitude of the Group toward innovation, an example of our participation as an active agent in the growth of the electrical sector and our commitment to our customers. Encouraging technological development ensures that we will advance in parallel to the changes and demands of the market. Technological innovation is summarized in the following aspects:

Innovation

Expanded offering of products and services supporting differential elements.

Realization and consolidation of the strategic orientation of the companies.

Suitability of the current offering from the perspective of sustainability (compaction of substations and equipment, technological alternatives, energy efficiency, etc.).

Development of new segments that balance the cycles of the companies.

Taking advantage of the new opportunities that arise.

An innovative strategy based on our capacity for change, on a non-conformist attitude that seeks improvement and the search for solutions to new challenges and a vocation of collaboration with international technology partners. Innovation is the key to our future development and the key to remain competitive.

2,8

2,75%

INVESTMENT IN R+D+i ACTIVITIES (% of sales)

2,7 2,61% 2,58%

2,6

2,5 2,44% 2,4

2,37%

2,32%

2,3 2006

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2007

2008

2009

2010

2011

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04 INNOVATION

04 INNOVATION

PROJECTS > Monitoring and control of assets of the distribution network The relevance of the automation of distribution has special significance in the field of intelligent networks. At ARTECHE, we have a highly qualified team that works exclusively on the development of solutions in this area. In the context of Project STAR of Iberdrola, during 2011, we reached an agreement with one of the main distribution cubicle manufacturers on the Spanish market for the joint development of compact transformer automation equipment. The equipment allows the monitoring and automation of transformer work on the three distribution lines. In addition, the sensor system is a key technology in these solutions, and in this

> New boundary point meter In order to meet the new demands of the electrical market, significantly the effect of disruptions in energy quality, its impact on billing and on the quality of the electrical supply, we have designed the DM9300 meter.

line, it has continued with the improvement of the range of sensors, whether or not associated with this equipment or previously developed monitoring equipment. Its result is a design fully adapted to the most demanding operation and maintenance needs, which has become one of the star projects of Project STAR.

Among its qualities, the complete record of energy quality events stands out. Other new features include the regulatory “flicker” analysis and analysis of interharmonics.

WE PARTICIPATE IN THE CONSTRUCTION OF THE FUTURE ELECTRICAL NETWORK

LEADERS IN MEXICO IN HIGH RANGE SUBSTATION METERS En 2011 ARTECHE In 2011, ARTECHE became the preferred supplier of boundary meters for the CFE, with a 70% market share.

Our participation in Iberdrola’s Project Star, an ambitious initiative working toward a technological transformation of the energy distribution system on a global level, confirms our pioneering character and qualification in the field of intelligent networks.

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This development gives us the possibility of keeping our meters positioned in first place in Mexico, expanding the gap with our nearest competitors. It also allows us to reinforce our penetration in the most demanding markets with a high yield and very competitive product.

Annual Report | 2011

Annual Report | 2011

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04 INNOVATION

04 INNOVATION

> The highest ultra-high voltage laboratory in Spain

> New gas or oil-paper insulated voltage transformers for auxiliary services

In 2011, we initiated the new ultra-high tension laboratory project, which will be installed in the Group’s plant in Mungia (Spain), and will be built in 2012.

Auxiliary services voltage transformers combine the benefits of a power transformer with distribution transformer applications.

Prototypes at different voltage levels from 72.5 kV to 420 kV have been developed, manufactured and approved.

ARTECHE has gone one step further in the scope of solutions with the launch of a new range of gas insulated voltage transformers. This is the SVR model for substation auxiliary services, which makes available the supply of low-voltage, monophasic power, between 25 and 50 kVA.

In addition, the development of the oil-paper insulated UTP model, up to 362 kV, which provides power between 100 and 333 kVA per phase, has moved forward, and several units have already been supplied for Project CREZ in Texas (USA).

Among the main equipment the laboratory will have, the 4800 kV / 480 kJ impulse generator and the 1500 kV / 3x500 kV resonant AC booster system.

With an investment in excess of 5 million euros, it will have the capacity to test equipment up to 1200 kV, becoming the laboratory with the highest voltage level in Spain, and an international reference in the electrical testing field.

A UNIQUE WORK FOR A NECESSARY SERVICE The increased market in ultra-high voltage and the ARTECHE Group’s preferred position in that market made it necessary for us to have our own electrical laboratory to validate the design of our transformers and the production quality at this voltage level. We anticipate its implementation during the last quarter of 2012.

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Annual Report | 2011

Annual Report | 2011

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04 INNOVATION

04 INNOVATION

> Line of relays for railways with a broad range of loads

> Validation of the effectiveness of smART NOTCH technology on Pemex drilling equipment

We have reinforced ARTECHE’s presence in the railway sector, developing the FF line of relays, certified for the most dependable (SIL4) use in applications for an expanded range of loads, as well as those at very low power.

Oil platforms present a significant challenge in relation to the quality of energy on their installations. The electrical systems, because of the frequent use of speed-variable drives, present elevated harmonics and voltage notching content, which makes it impossible to use traditional thyristors because of the existence of different zero crossings, in less than one cycle, since the sine wave is completely distorted.

The new equipment also meets the specific railway regulatory requirements related to toxicity and opacity of combustion smoke, aimed at passenger safety.

The smART NOTCH, with a global patent, resolves this problem through the use of advanced algorithms that allow the trigger signal to be sent exactly in the zero crossing, avoiding thyristor failures. The technology has been verified in the field, and is working successfully on the Pemex installations.

INNOVATIVE EFFORT In 2011, we allocated 2.75% of our spending to investment in R+D+i activities.

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Annual Report | 2011

Annual Report | 2011

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04 INNOVATION

04 INNOVATION

INVESTMENT INSTRUMENTS

ORGANIZATIONS > Members of innovative initiatives

> Technological antenna and business opportunities

We turn knowledge into a competitive factor that increases market recognition of our brand.

Active vigilance and investment instrument serving our new initiatives.

This is a practice we have continued out our participation in different forums and events. We have also strengthened our participation in pioneering and innovative initiatives.

One of the lines of action on which our new Technology Plan is based is the diversification of the Group’s activity in a search for new business areas. In this context, we have opened a new pathway with the structuring of internal funds to invest in projects that, although not key at this time, deserve our attention. In this line, in 2011 we have begun our participation in two initiatives:

ÁMBAR Venture Capital – A risk-oriented capital fund to technology startups, in which we participate as an industrial expert in the energy sector and as a member of the advisory committee on technology and M2M businesses.

INNVIERTE Program – driven by the Spanish Ministry of Science and Innovation for the selection of private capital initiatives for the creation of public-private partnerships that channel investment to Small and Medium Sized Businesses and entrepreneurs. We have been selected as a driving company of the Energy and Environmental sector.

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Rockwell Automation, a global leader in automation and control, has selected ARTECHE to be incorporated as a member of its Encompass Program in the field of reactive energy compensation, both under low and high voltage, a unique organization in this category. We have also joined the Southern Europe Cleantech Hub, as founding members, forming part of its Committee of Experts. The program involves an initiative where leading companies combine their abilities to develop innovative business opportunities in the clean technology field.

Annual Report | 2011

Annual Report | 2011

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Customers and Offering

GROWING TOGETHER ARTECHE’s track record over recent years shows our willingness to transform, putting our trust decidedly in growth, international positioning and the development of innovative solutions. In a continuously evolving sector, we remain attentive to the signs of the environment, to ensure that we progress to the same degree, and in the same direction, as the needs of our customers and changes in the market. In generation, transmission, distribution or industry, we have become a key partner in the search for responses to new challenges, a positioning we sustain through a deep knowledge of the international electrical systems and an agile, customer-oriented organization. In a competitive environment led by large corporations, our priority is to maintain and reinforce our distinguishing features: proximity, reliability, capacity to offer personalized, quality solutions and to achieve new goals, open frameworks of partnership and to grow together.

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05 CUSTOMERS AND OFFERING

05 CUSTOMERS AND OFFERING

KEY PROJECTS > Strengthening our international presence in high voltage We provide instrument transformers for the highest power transmission line in Peru. In April of 2011, the first 500 kV transmission line was inaugurated in Peru, in which ARTECHE participated, supplying current transformers. This is the first electrical transmission system of that dimension, in which more than 100 millions of euros have been invested. The project contains three substations with a transformation capacity of 2,200 MW and 300 km of transmission lines, for which we provided CA-500 and CA-245 transformers. ARTECHE thus marks its participation in a “historical milestone of for electrical energy in Peru”, as defined by the president of the Republic, Alan Garcia, during the official inauguration.

> Key international companies in the sector intensify their confidence in our products

Strengthening our presence in India with the homologation of Reliance and new contracts with Power Grid.

COMISIÓN FEDERAL DE ELECTRICIDAD (Federal Electricity Commission, Mexico) The complete range of metal clad cubicles, including the 38 kV class, have successfully surpassed the strict regulatory requirements of the Comisión Federal de Electricidad. In addition, in 2011, we initiated a partnership with CFE to increase the safety of its operators, providing cells on which the internal arc (Arc Flash) tests of various protection manufacturers have been performed.

We have successfully finalized the necessary homologation of the CA-765 and DFK765 required by Reliance, one of the major corporations in India, for the first order for 800 kV transformers in that country. The requirements of the Hindu company have made it necessary for us to create a new design for the devices that have become a new technological challenge for ARTECHE. The plants in China and Spain have taken over the manufacturing of the current transformers and capacitive voltage transformers, respectively. Both have passed independent laboratory type tests. This presence in the Indian market has been reinforced by the subsequent attainment of various orders for new substations from the electrical transmission company, Power Grid Co. Ltd. of India, totaling more than 300 units.

NATIONAL GRID (Reino Unido) National Grid has entrusted us with a significant portion of the renovation of the instrument transformer park installed on its network.

TRANSELEC (Chile)

We consolidate our presence in the French market with the supply of current transformers to RTE (Réseau de Transport d’Electricité), the French electrical network that has one of the most demanding specifications in the world, following the approval efforts of previous years.

We have acquired full approval for 525 kV voltage and current transformers, complying with its demanding seismic standards.

We signed the first period contract with a German electric company for the supply of 123 and 245 kV instrument transformers. Heavy investment in the networks is anticipated in the region over the coming years, as a result of the close of nuclear centers that will be replaced by another type of generation technology.

Annual Report | 2011

In September of 2011, we signed a global agreement to supply auxiliary relays with Schneider in Energy Automation. This partnership will facilitate our presence in new markets.

RTE (France)

50 Hz (Germany)

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SCHNEIDER

Annual Report | 2011

SEC (Arabia Saudi) We initiated the homologation process with SEC, the leading electric company in the Middle East, a zone with significant growth expectations.

REE (España) We have developed, manufactured and approved gas isolated voltage transformers at different voltage levels, from 72.5 kV to 420 kV, for the operator of the Spanish electrical system.

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HOLLAND

CHINA SPAIN USA

VIETNAM MEXICO

THAILAND

BRAZIL

ARGENTINA

CHILE

> Throughout the world GROUP COMPANIES PARTICIPATING COMPANIES CORPORATE DELEGATIONS

AUSTRALIA

SPAIN

Mungia

ARGENTINA

Vitoria-Gasteiz

Córdoba

BRAZIL

Curitiba

THE ARTECHE GROUP

ARTECHE NISSIN

AIT

ARTECHE EDC

ELECTROTÉCNICA ARTECHE HERMANOS

Madrid

Buenos Aires

ARTECHE TURNKEY SOLUTIONS

ARTECHE POWER QUALITY

Seville

ARTECHE INAEL

Barcelona

AUSTRALIA

ARTECHE SMART GRID

Sydney ARTECHE SMART DIGITAL OPTIC

ARTECHE CENTRO DE TECNOLOGÍA

Fortaleza EUROGRUAS ARTECHE Sao Paulo

CHILE

Santiago de Chile

MEXICO

ARTECHE SCHAFFNER

CHINA

México DF

Dalian

INELAP

ARTECHE DYH

ESCO ARTECHE

HOLLAND

Tepejí del Rio ARTECHE TRANSFORMADORES Y TECNOLOGÍA

Duiven GRIDCLONE

THAILAND

USA

Miami ARTECHE USA

Guadalajara ARTECHE MEDICIÓN Y TECNOLOGÍA

Bangkok ARTECHE ASIA&PACIFIC

Milwaukee ARTECHE PQ

VIETNAM

Ho Chi Minh City QEC

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Annual Report | 2011

Annual Report | 2011

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05 CUSTOMERS AND OFFERING

> Supply of high voltage capacitor bank in Brazil Has the lowest failure index per year worldwide. In 2011, we supplied 230 kV capacitor banks to the Brazilian company CEEE Geraçao e Transmissao for the Lajeado substation in the Rio Grande do Sul region in southern Brazil. These banks are made up of monophasic high voltage capacitors in star connection and have the lowest failure index per year worldwide, as well as a design appropriate to their outdoor installation. At ARTECHE, we have the capacity to manufacture this type of bank for voltages between 4.16 and 230 kV, at capacities of 1200 KVAR and greater.

>Supply of equipment for FACTS, HVDC and protection of capacitor banks

05 CUSTOMERS AND OFFERING

> Advanced solutions for effective operation of the electrical system 2011 marked a significant turning point in the roll out of our new products in the facilities of various international electric companies. It involves a new family of sensors aimed at applications such as optical current measurement on extra high voltage lines, temperature and dynamic load capacity measurement on transport lines, measurement of very high continuous current in industrial facilities and electrical parameters at medium voltage with low power sensors, both in transformation centers and in aerial distribution lines.

We have participated in multiple projects together with the global leaders in these technologies. In recent years, the development of FACTS (Flexible AC Transmission System) HVDC (High Voltage DC) and capacitor bank technologies has been strong.

Launch of pilot projects with optical technology in leading companies on the international market.

During 2011, the ARTECHE Group supplied hundreds of current transformers for these applications, many through global leaders in these technologies, such as ABB, Siemens or Alstom. In order to meet the particular needs of these projects, we have designed specific models and adapted some existing ones.

The incorporation of optical measurement technology to our offerings of high voltage transformers places us in a technological niche within the reach of few manufacturers in the world. During 2011, we have enhanced our product and have implemented projects with leading electric companies in our markets. With Iberdrola, we have installed three pieces of equipment in the Benavente (Spain) substation, with optimal operation. The positive results obtained after a year of project development with the Comisión Federal de Electricidad (CFE) in Mexico

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Annual Report | 2011

will be presented as a success story in the next meeting of the CIGRÉ, one of the main forums in the sector. With the New Zealand company Transpower, we have installed twelve pieces of equipment for high voltage subterranean cable protection. This is an application that, until now, has not had a technical solution, and has now been resolved in an economically viable manner with this technology, raising the interest of other electric companies. In China, approval tests have been performed in an official national laboratory, and approval is expected in 2012.

Monitoring of aerial lines (SMT) in Bulgaria

Launch of P500 smART protection in Mexico and Brazil.

In 2011, we developed a solution for the National Electric Company in Bulgaria based on an advanced monitoring system of 47 high voltage lines distributed across four regions to calculate the maximum capacity distributed at any moment, and to thereby guaranty the safety of the electrical lines and to avoid saturations, imbalances and even blackouts.

More than 2,000 units of P500 smART protection have been supplied in its first year of commercial availability in Mexico and Brazil.

Through this solution, the operator can query, in real time, the dynamic parameters of the line to manage it even in emergency situations. It involves a very favorable from both environmental and economic perspectives.

This protection entails one of the key elements for the introduction of the RC smART reconnector in both regions.

Annual Report | 2011

In addition, official approvals have been acquired in significant clients in said countries, in addition to Morocco.

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05 CUSTOMERS AND OFFERING

> Leaders in the Brazilian wind energy market New projects awarded confirm ARTECHE’s reputation in this market niche. The signing of new contracts for wind farms in Brazil reinforces our leadership in key solutions on hand for electrical installations in this country. In 2011, we successfully completed the largest contract in our history in this activity for a final value of 28.70 million euros. It involves the Cerro Chato I, II and III Wind Park project for the leading Brazilian company, Eletrosul. With 90 MW of installed power, located in the state of Rio Grande do Sul, in the south

of the country, generating energy that will be distributed in Brazil and Uruguay. The cubicles and voltage transformers, protection panels, measurement and control and their engineering are from ARTECHE. We can highlight the contract for Suzlon for the122 MW installed capacity Taiba e Icarai Wind Farm. Products from other business units of the Group are also included in supply scope for this project.

30% OF THE WIND POWER INSTALLED IN BRAZIL ARTECHE has provided key items for 30 substations, 16 wind farms (more than 900 MW of installed power) and the installation of more than 340 wind turbines.

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Annual Report | 2011


Social Commitment

WE ARE MORE

> An educated and committed multicultural team Our business philosophy is based on the development of a multicultural human team, made up of professionals committed to the goals of the Group. Professionals capable of responding efficiently to any challenge, who share their knowledge freely and actively, in a climate of conďŹ dence and participation, in order to create value for the organization, for the groups involved in the business, and for the social environment. The human factor is a fundamental aspect of our Group that, united with efficient and transparent management, drive the participation of all, which allows us to continue to develop the backgrounds of our professionals and the organization as a whole. In 2011, the ARTECHE team has continued to grow, reaching a ďŹ gure of 2,157 professionals.

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06 SOCIAL COMMITMENT

06 SOCIAL COMMITMENT

TRAINING

SAFETY AND HEALTH

> Evaluation and education, two valuable training tools

> Constant improvement in safety levels, a collective obligation

In 2011, we continued the 360° Evaluation Plan among management personnel that was started during the previous year el personal in order to evaluate their key competencies and to diagnose their potential. At this time, the process has taken place in Group facilities in Brazil, the members of which have provided a report with the results of their evaluation.

Guaranteeing a safe and healthy work environment to all those who work within the activities of the Group is an unavoidable principle that governs the development of our actions. Constant improvement of safety and health levels for our work centers and requires continuous and effective participation at all levels of the organization, so it is a universal commitment for the entire ARTECHE team.

In addition, we have tackled a program to provide defibrillators to all of our facilities, as well as training in their use to numerous groups of workers.

In line with the improvement strategy of our organization, during 2011 we undertook various actions in this scope. Thus, the OHSAS 18001: 2007 certification process began in our facilities in Spain, Argentina and Mexico. An integrated safety monitoring plan was also implemented in six of the plants.

A report has been requested from the European Central Electrotechnical Laboratory to confirm the degree of conformity of the ARTECHE’s electrical testing facilities.

We have also started a personal leadership training program with a total of 76 participants from Brazil, Mexico and Europe. The results of the process indicated a high degree of satisfaction among the participants, and a rating of 4.5 out of 5 in relation to the applicability of the contents and proposals of the program.

> Close to future professionals In 2011, we initiated a plan to approach and strengthen contact with universities and professional education centers in the regions where we have a presence in order to detect synergies, open partnership pathways and combine forces in the training and development of future professionals.

This year, we enhanced relationships with educational centers in Spain (Mondragon Unibertsitatea and Politeknika Ikastegia Txorrierri), Argentina (Universidad Nacional, Universidad Tecnológica Nacional, Universidad Católica and Instituto Universitario, all in Córdoba) and in Brazil (Universidad Tecnológica de Paraná).

And various investments have been made with the main objective of decreasing safety risks in general, electrical risk in particular, and some specific hygiene risks (elimination of exposure to noxious substances).

PERMANENT EMPLOYMENT It is a priority for ARTECHE. In the last 5 years Group’s growth allowed us to increase our staff 21%.

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Annual Report | 2011

Annual Report | 2011

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Moving together


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