In 2014, global growth forecasts had to be revised downward again given the disappointing behavior in both emerging economies and the majority of developed countries.

The consequences of the global financial crisis continued to hamper growth. At the same time, new challenges emerged in the first half of the year which had global repercussions in the second half, including geopolitical conflicts such as the crisis in Ukraine, the Ebola virus epidemic and the fall in oil prices. The countries expected to boost the world economy showed mixed performance. India and Brazil held general elections with different results. The new Indian prime minister, Narendra Modi, managed to revitalize international relations and modernize the country’s image, while Dilma Rousseff’s reelection did not allay doubts about Brazil’s future. China tackled structural reforms that seemed to streamline the vigorous growth it has seen in previous years. The Russian economy witnessed a particularly turbulent year due to the impact of the fall of oil prices and international sanctions in the wake of the conflict in Ukraine. These sanctions directly affect Russia and its area of influence but also, lest we forget, its trade relations with the Eurozone, which grew at a slower rate.

At the macroeconomic level, the International Monetary Fund (IMF) has identified four deciding factors in 2014:

• One. The fall of oil prices, especially in the last quarter (-55% between September and December). This drop stemmed from weak demand in some major economies and the OPEC’s decision to maintain production levels by lowering the price in order to offset the effects of fracking, deployed on a large scale in the United States to strengthen its energy independence.

• Two. The uneven performance among major economies. On the one hand, the United States, the UK and Spain witnessed strong recovery, growing above forecasts. On the other, China, Russia, the Eurozone and Japan had to be revised downward

• Three. The appreciation of the dollar against the euro and other currencies in the last quarter of 2014, when the end of the monetary stimulus in the United States coincided with the European Central Bank policy. Likewise, as a result of the fall in demand for raw materials, the currencies of many emerging markets were weakened.

• Four. The increase in interest rates and risk spreads in emerging economies — especially raw material exporters — had a great impact on high-yield bonds and other financial products exposed to energy prices.

In this context, world trade is recovering very slowly. The gross trade volume grew only 2.8% in 2014, below the global GDP rate (3.4%), accumulating, according to the World Trade Organization a “disappointing” 2.4% average increase in the last three years. This indicator seems to confirm that the momentum of globalization of just a decade ago seems to have stopped.

Although the potential growth of advanced economies was already slowing down before the crisis, in the years ahead other structural factors such as population aging and stagnating productivity will continue hampering growth. Likewise, a set of factors are also surfacing in emerging markets, such as lower income and slower productivity gains, which are converging to significantly reduce the potential for future growth. The dimmer prospects in turn result in spending cuts and a slowdown of the economy. It is therefore not surprising that major international organizations have also adjusted their forecasts for 2015 and 2016.

As far as the Roca Group is concerned, we can consider 2014 to have been very positive. Our total sales figure reached 1,646 million euros, almost 5% more than the previous year and the best result since 2008, when the impact of the economic crisis had not yet hit the business in our domestic markets.

This increase in sales is the result of a remarkable effort by the entire organization. The sales teams have increased their intensity in the various channels, continuing to strengthen existing agreements with distributors and making headway with new ones. The work done by the Marketing units in coordination with Design, Production and Logistics, has allowed us to expand our offer in the various markets. We have worked intensely in the field of industrial research and development, which has brought about a remarkable increase in the release of competitive products and innovative solutions in all categories.

As noted later in this report, other key indicators also point to positive results. EBITDA remained at 13.4% over turnover and net result amounted to 53 million euros, similar to last year despite the fact that in 2014 the amount paid by way of corporation tax was more than double. We achieved these results despite the devaluation of most currencies against the euro (depreciation of the Argentine peso by more than 30%, the Russian ruble by 17%, the Brazilian real by 8% and the Indian rupee by 4%) and, most significantly, the standstill of Brazil’s economy and the collapse of Russia’s. In fact, if we exclude the effect of exchange rates on the consolidation of foreign operations in euros, turnover would have grown in real terms by 9.8% to 1,726 million euros, the second best result in the Group’s history.

In terms of solvency, our ratios continue to improve, which allows us to enjoy the trust of banks who do not hesitate to provide us with capital for our business project. In December 2014, we signed an advance renewal of the syndicated loan totaling 375 million euros with truly advantageous conditions.

In short, the events of 2014 seems to confirm that we are steadily returning to the path of growth and profitability, maintaining a financial structure based on a prudent combination of shareholders’ equity and external financing.

We therefore consider that the company is advancing to compete in a highly complex and uncertain environment. The reforms undertaken have boosted the organization’s capability and, above all, its quick responsiveness.

Globally, we see the acceleration of major trends that are affecting the development of the industry, which we could summarize in three points:

• Concentration of large industrial groups to gain critical mass, recover solvency and acquire know-how.

• Promotion of innovation: greater electronics presence, development of new materials, more hygienic and eco-friendly solutions, and facility streamlining.

• Divergence in the demand structure: the survival of traditional channels at the local level coexists with the consolidation of the large, transnational distributors.

As will be noted later in this report, the Group has made significant strides in each of the three areas listed above. Indeed, 2014 has been an intense year of achievements. We have accelerated our inroads in key markets where we had no presence through agreements of various kinds with strategic distributors, we have optimized the industrial structure and its coordinated operation, we have reduced time-to-market, and launched new, truly innovative products and solutions.

To be competitive in such a vast, diverse and changing environment, our strategy hinges on how to reconcile efficiency and flexibility, which are the real driving forces behind the company’s expansion. Only if we uphold the best efficiency indicators but produce and manage flexibly will we be able to deliver a winning value proposal to the different markets and leverage more opportunities.

However sophisticated the market becomes, however much technology and communications advance and societies around the world converge — at different rates — in their bathroom preferences, we believe that long-term vision will always be the essential requirement to operate successfully in this sector. The Roca Group is an industrial corporation with family business roots that has forged a “system” in its European home countries and extended it worldwide. This system aligns the values and principles of the family business — its irrevocable entrepreneurial outlook — with the needs and concerns of its customers. This distinctive way of doing business — responsible, based on proximity and trust — is well-known and respected throughout the industry.

We believe in the concept of creating shared value to provide stability to all our relationships. What we call the “Roca System” is worth disseminating because it adds value and safeguards the full freedom of all Roca stakeholders involved in varying degrees according to the agreements reached and their own interests. Architects, interior designers and decorators, developers, distributors, suppliers, designers, engineers, employees and shareholders — we are part of a complex but cohesive and flexible group, always seeking success and strong results.

We are once again privileged to thank all of you, members of this system of doing things, for sharing this business vision based on effort, loyalty and ethics.