Complete Annual Report - Uralita

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The situation in some markets and higher crude prices affected Group margins The European construction market in 2005 presented a very different picture. In Germany the number of homes constructed fell for the fifth straight year, dropping to approximately 215,000 building permits per year, which represents the same level of housing construction as in the 1940s. This decline had a significant impact on insulation sales in this region and, consequently, on the profitability of the business. Portugal’s construction market also performed poorly: another year passed without signs of a recovery and there was no indication of a turnaround in the immediate future. Nonetheless, other countries of key importance to the Uralita Group such as Russia, posted double-digit growth in housing permits, resulting in a highly satisfactory level of demand for insulation in those markets. Along with the slump in the Central European construction market, the external factor that most affected the Uralita Group was the rise in oil and oil-based raw materials prices. This increase has a significant impact on the Group in the short term since it is major energy consumer due to the type of production processes that it carries out and the fact that some of the main raw materials used are derived from oil, most notably plastics. The rise in the costs of these materials increases manufacturing unit costs, but, due to the competitive dynamics of the sectors in which the Group operates, it is unable to pass these added costs on to the final customers with the necessary ease and speed. One insulating product, XPS, was especially impacted. Its main raw material, polystyrene, accounts for more than 50% of the total cost of the product, and the price of this raw material increased significantly in 2005. Furthermore, the increase in fuel prices had a major impact on transport costs, an important factor when we consider that the Uralita Group moves approximately 900 lorries of finished goods daily. 17
Macroeconomic indicators and construction activity in Uralita Group’s core markets New construction: Renovation: 2005 Spain Germany France Russia Poland Portugal Population (millions) 43.8 82.5 60.2 142.9 38.2 10.5 GDP (% annual change) 3.4 0.9 1.4 5.9 3.2 0.3 CPI (% annual change) 3.7 2.1 1.8 11.0 0.8 2.5 Housing starts (thousands) 729.7 (1) 215.0 (2) 398.0 440.0 (3) 100.0 67.5 (2) Building (% annual change) 4.0 -7.9 6.5 15.9 5.5 -5.7 Residential (% annual change) 4.8 -9.8 10.3 15.5 2.5 -7.5 Non-residential (% annual change) 2.2 -4.9 1.2 16.0 5.1 -2.5 Civil work (% annual change) 6.9 -8.0 1.1 13.8 16.4 2.0 Building (% annual change) 3.7 -1.3 1.5 9.6 3.5 1.9 Residential (% annual change) 4.4 -1.4 1.5 6.7 4.0 2.0 Non-residential (% annual change) 2.4 -1.0 1.5 10.1 3.1 1.5 Civil work (% annual change) 4.2 -3.6 1.5 5.1 4.5 2.0 Source: INE; BBVA; Federal Statistical Office Germany; EC; ISTAT; Bank of Portugal; Euroconstruct, CIA (1) Source: Ministerio de Fomento (2) Figures given are for building permits due to the lack of figures for housing starts (3) Completed housing LINES OF ACTION IN 2005 During 2005 the Group concentrated on four lines of action in order to respond to the economic situation In response to the complex macroeconomic conditions in which it operates, the Uralita Group focused primarily on four lines of action in 2005: completing the divestment process, improving the business operating efficiency, redesigning the organisational structure and continuing to establish a common culture of execution in the Group. 1. Completion of the divestment process The divestment process laid out in the 2004-2006 Strategic Plan was divided into two phases: i) Immediate disposal of non-core businesses which had negative profitability and which, upon analysis, were identified as having no potential for recovering profitability in the medium term. This phase of the process was executed in 2003 with the sale of six businesses and the closure of two others. 18
Page 1 and 2: Annual Report 2005 CORPORATE SPIRIT
Page 3 and 4: Uralita Group Mejía Lequerica, 10
Page 5 and 6: Letter from the Chairman Dear Share
Page 8 and 9: Uralita Group Overview of the Urali
Page 10 and 11: From left to right: Mr. Javier Eche
Page 12 and 13: Overview of the Uralita Group Urali
Page 14 and 15: In the late 1980s and the 1990s, Ur
Page 16: Main markets The Group embarked on
Page 19: The Uralita Group in 2005 ECONOMIC
Page 23 and 24: Now that all the divestments are co
Page 25 and 26: As a consequence, the organisationa
Page 27 and 28: Respect for and continuous developm
Page 29 and 30: STRATEGIC PRIORITIES FOR 2006 Incre
Page 32 and 33: Uralita Group Management Report by
Page 34 and 35: Annual Report 2005 Uralita Group In
Page 36 and 37: BUSINESS PERFORMANCE IN 2005 Market
Page 38 and 39: Financial highlights Million euros
Page 40 and 41: Annual Report 2005 Uralita Group Gy
Page 42 and 43: Unlike the plasterboard market, the
Page 44 and 45: 2005 Results In 2005 the Gypsum Bus
Page 46 and 47: Annual Report 2005 Uralita Group Ro
Page 50 and 51: Financial highlights Million euros
Page 52 and 53: Annual Report 2005 Uralita Group Pi
Page 56: MILESTONES FOR 2006 The main object
Page 59 and 60: The Uralita Group on the Stock Mark
Page 61 and 62: Annual highs, lows and closing pric
Page 64 and 65: Uralita Group Corporate Governance
Page 66 and 67: A. SHARE CAPITAL STRUCTURE A.1. Sha
Page 68 and 69: A.8. Own shares. During the year 20
Page 70 and 71:
Resignations from the Board of Dire
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B.1.6. Directors who are also execu
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B.1.9. Remuneration of Senior Manag
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Both the aforementioned Committee a
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Number of meetings of the different
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B.1.31. Stakes held by members of t
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Nomination and Remuneration Committ
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C. RELATED PARTY TRANSACTIONS C.1.
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• To obtain the Risk Portfolio so
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In particular, the following measur
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E.12. Address and access to the cor
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The delegation of exclusive powers
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Recommendation 14. AGE OF DIRECTORS
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Uralita’s Board of Directors seek
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In application of the policies of t
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Corporate Social Responsibility 1.
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3. Responsibility for the Environme
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Uralita’s commitment to its share
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5.3. Training 5.3.1. Human Resource
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5.3.4. URSA invests in Human Resour
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) 477 employees from the Group Corp
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6.2. Third-party training The Urali
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Uralita Group Annual Financial Stat
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Translation of consolidated financi
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Translation of consolidated financi
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and Social Measures. Note 4 sets ou
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Equity at 31 December 2004 Attribut
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d. Changes in consolidation scope I
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4. Main accounting principles The m
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Where the carrying amount exceeds t
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• Trade and other payables Trade
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Provisions for guarantees Provision
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4.19. Consolidated cash flow statem
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• The business plans prepared are
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The movement in this heading in the
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The sale of cash-generating units r
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At 31 December 2005, the parent com
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Thousands of euros 2005 2004 Uralit
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The private bond placement was held
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16. Guarantees As of 31 December 20
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Other operating expenses The detail
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• Pipes • Chemicals The busines
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Revenues Profit (loss) before taxes
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In 2004, as profit estimates by the
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2004 Board of Nomination Audit TOTA
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APPENDIX 1 - Subsidiaries - 2005 By
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Results at the Gypsum Business show
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Mejía Lequerica, 10 28004 Madrid (
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Complete Annual Report - Uralita

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