Activity Report 2008 Contents Main Figures 3 Our Commitment 6 Report from the Chairman 8 Our Business Model 12 Consolidated Analytical Report 14 Activities by Bussines Unit 2008 32 Solar 32 Bioenergy 46 Environmental Services 76 Information Technologies 96 Industrial Engineering and Construction 116 Abengoa and Innovation 145 Organizational Structure & Management Team 165 Activity Report 08 1 Principales Magnitudes Main Figures Activity Report 08 3 Main Figures During the period 1998-2008 Abengoa’s revenue has grown at a compound annual rate of 18%, the gross operating cash flow has increased by 25% and earnings per share have increased by 22%. Economic - Financial 2008 % Variation 2007(1) 1998 (1) %CAGR Data (M€ ) (07-08) (98-08)(2) Profit and Loss Account Sales 3,114.5 17.3 2,655.8 601 17.9 Gross Cash Flows(3) 545.3 39.3 391.5 59.3 24.8 EBITDA(4) 459.3 42.2 322.9 59.3 22.7 Net Profit 140.4 16.6 120.4 19.9 21.6 Balance Sheet Total Assets 9,794.6 20.8 8,110.2 984.6 25.8 Equity 627.5 (21.3) 797.5 184.5 13.0 Net Debt (Cash) ex Project Finance 486.4 - 285.2 (52.9) - Significant Variables Margin (% EBITDA/Sales) 14.7 - 12.2 9.9 - Return on Equity (ROE)(5) 26.4 - 17.0 10.8 - Data per Share Earning per Share (€ ) 1.55 16.6 1.33 0.22 21.6 Dividend per Share (€ ) 0.18 5.9 0.17 0.07 9.9 (1) Pro forma information for making consistent comparisons with 2008, in which Telvent appears as a discontinued activity. (2) CAGR: Compound Annual Growth Rate. (3) Earnings before interest, tax, depreciation and amortization, adjusted by the works flows done for own fixed assets. (4) Earnings before interest, tax, depreciation and amortization. (5) Net Earnings / Shareholders’ funds. With the goal of improving the comparability and understanding of the financial information shown in this report, the figures corresponding to the balance sheets and the income statements of the years 2008 and 2007 are presented excluding the Information Technologies Bussiness Unit, as stated in note 14 (Non current Assets an liabilities held for sales) of the Consolidated Finacial Statements of Abengoa. 4 Activity Report 08 Main Figures Bussiness Units, Geographies and Types of Activities Evolution 1998-2008 4 business units Engineering Company (1) Business Units 2008 1998 Gross Cash Gross Cash Sales % Flows(2)% Sales % Flows(2)% Solar 2.1 7.4 - - Bioenergy 26.7 20.5 - - Environmental Services 28.0 28.9 9.3 5.1 Industrial Engineering 43.2 43.2 90.7 94.9 and Construction Consolidated Total 100.0 100.0 100.0 100.0 Geography % % % % United States 11.2 6.7 - - Latin America 25.3 33.9 44.6 27.6 Europe (excluding Spain) 16.1 18.8 3.1 4.2 Africa 10.0 5.3 0.8 1.7 Asia 2.8 0.7 2.7 4.9 Spain 34.6 34.6 48.8 61.6 Consolidated Total 100.0 100.0 100.0 100.0 Types of Activities % % % % Concession and Recurrent 15.5 48.5 4.7 1.8 Businesses Businesses Involving Risk in Terms 39.1 27.4 - - of Price of Raw Materials Rest of Engineering Businesses 45.4 24.1 95.3 98.2 Consolidated Total 100.0 100.0 100.0 100.0 (1) Pro forma information for making consistent comparisons with 2008, in which Telvent appears as a discontinued activity. (2) Gross Cash Flows: Earnings before interest, tax, depreciation and amortization adjusted by the works flows done for own fixed assets. Activity Report 08 5 Nuestro Compromiso Our Commitment 6 Activity Report 08 Our Commitment Our Commitment At Abengoa, we believe that the world needs solutions that will allow our development to be more sustainable. Scientists tell us that climate change is a reality, and at Abengoa we believe the time has come to pursue solutions and put them into practice. More than ten years ago, Abengoa decided to focus its growth on the creation of new technologies that contribute to sustainability by: UÊiiÀ>Ì}Êenergy from renewable resources. UÊ,iVÞV}Ê`ÕÃÌÀ>Êwaste and water production and management. UÊ Ài>Ì}Êinfrastructures that prevent new investments in assets that generate emissions. UÊ Ài>Ì}Êinformation systems that aid in ensuring more efficient management of existing infrastructures. UÊ ÃÌ>LÃ }Ênew horizons for development and innovation. To this end, we invest in Research, Development and Innovation, R&D&i, globally expand the technologies with the greatest potential, and attract and develop the necessary talent. Moreover, through the Focus-Abengoa Foundation, we dedicate human and economic resources to promoting social action policies that contribute to social and human progress. By doing so, we create long-term value for our shareholders, contribute to the development of society in the areas in which we conduct our activities, and help to make the world a better and more sustainable place for future generations. Activity Report 08 7 Nuestro Compromiso Report from the Chairman 8 Activity Report 08 Report from the Chairman The year 2008 was yet another one of profitable growth for Abengoa. We ended the year with pro forma sales (including Telvent) totaling 3,769 M€ up 17% from 2007; a pro forma gross operating cash flow of 627 M€ (+39%), pro forma EBITDA of 541 M€ (+41%), and a net profit of 140 M€ (+17%). At the end of 2008 we put Abengoa’s majority stake in Telvent up for sale. Telvent is the subsidiary through which we consolidate most of our information technology business. This decision reflects the strategy of accentuating our activity in sustainability and the opportunity proffered in terms of enhanced resource availability. This potential divestiture would enable us to drive forward our plans for businesses with a high potential, such as solar energy and water, areas in which we will create more value for our shareholders. Recording Telvent as an “interrupted” activity, as required by the accounting criteria we apply, our activities brought in a total of 3,115 M€ (+17% from 2007) in revenue, 545 M€ (+39%) in gross operating cash flow, EBITDA totaling 459 M€ (+42%), and a net profit of 140 M€ (+17%). Thanks to this progress, Abengoa has stepped up its activity in high-growth businesses based on offering innovative solutions for sustainability. We are concentrated on three major global markets with a high potential for growth: solar power, bioenergy and environmental services (including water and industrial waste recycling), areas in which sales have increased by 26%, making up 57% of the total figures; with operating cash flow totaling 310 M€ , up by 45%. We maintain our industrial engineering and construction activity involving both our own and third-party projects. Abengoa continues to diversify geographically, with higher growth in America and Africa and lower growth in Spain, representing 35% of total consolidated revenue. Latin America totals 25%; Europe (excluding Spain), 16%; the United States, 11%; Africa, 10%; and Asia, 3%. As far as risk profile diversification is concerned, Abengoa currently has a highly diversified portfolio that combines businesses and geographical areas involving a low degree of co-related risk and enables us to maintain a profile of growth and cash flow generation with a low level of volatility: UÊ,iVÕÀÀiÌ]ÊÜÀÃÊLÕÃiÃÃiÃ]ÊÃÕV Ê>ÃÊÃ>ÀÊiiÀ}Þ]ÊÜ>ÌiÀÊ>`Ê`iÃ>>ÌÊ«>ÌÃÊ>`ÊiiVÌÀV>Ê>ÃÃiÌÃÊ (primarily transmission lines and cogeneration plants) which we hold either through ownership or concession account for 49% of gross cash flow. UÊBusinesses involving risk in terms of the price of raw materials, where we include our bioenergy business and some metal recycling businesses, make up 27%. UÊRemainder of our engineering businesses, which are subject to the standard risks involved in the contract and execution of projects using technologies in which we have a great deal of expertise make up 24% of cash flow. Financing new projects has become more difficult and costly, and various geographical locations where we operate have shown a slowdown in growth. The impact on our businesses has been limited until now, but if the financial crisis, which has already turned into an economic crisis, proves to be deep and broad enough, it will have an effect on our engineering and construction businesses, as well as some waste recycling businesses, and it will slow down the rate of launching new projects. The impact in 2009 will be limited, however, as a result of our diversification of businesses and geographies. At Abengoa we have made the decision to operate under the assumption that the economic situation is not going to show improvement in Europe and North America in 2009, and will be characterized by significant decreases Activity Report 08 9 Report from the Chairman in gross domestic product and investment, as well as lower growth in Latin America and Asia. We are facing this context from a very favorable position and through a solid strategy that does not require substantial modifications to the way in which we manage our businesses. We believe that we must uphold our strategy because the chief sustainability-related markets in which we operate (solar power, bioenergy, desalination, recycling) will continue to grow in most geographical locations, thereby benefiting the industrial engineering and construction business. The world has a need to ensure that development is sustainable and to combat climate change. A more complicated financial and economic scenario does not alter that need in any way. In what we refer to as our Horizon 1 businesses (cash flow and short-term profitability generators), where we include industrial engineering and construction and industrial waste recycling, we are proceeding under the assumption that the economic situation will affect us in 2009.