Activity Report 2006

Transcription

1 With the sun... we produce thermoelectric and photovoltaic electric energy With biomass... we produce ecologic fuels and animal feed With wastes... we produce new materials by recycling, and we also treat and desalt water to achieve a sustainable globe With Information Technology we transform data into knowledge, providing effective operational and business real-time decision making for traffic, transport, energy and environment With engineering... we construct and operate conventional and renewable energy power plants, power transmission systems and industrial infrastructures Activity Report 2006 Your Partner in Resources and Technical Solutions Printed on recycled paper

2 Summary 2006 ABENGOA Activity Report

3 Summary Activity Report 2006 ABENGOA

4 Summary Index 2006 Our Commitment Highlights Summary Development towards a Sustainable World Current Configuration and Nature of Busines Evolution of the 2006 Financial Year Results Share Performance Evolution since Initial Public Offering in 1996 Business Units in Solar Bioenergy Environmental Services Information Technologies Industrial Engineering an Construction Management Structure ABENGOA Activity Report

5 Summary Activity Report 2006 ABENGOA

6 Our Commitment In Abengoa, we believe that the globe requires Solutions that allow our development to be more sustainable. Scientists tell us that Climate Change is a reality and from Abengoa, we believe the time has come to pursue and put these solutions into practice. More than ten years ago, Abengoa decided to focus its growth on the creation of new technologies that contribute to Sustainable Development by: Generating Energy from renewable resources. Recycling Industrial Wastes and Water production and management. Creating Infrastructures that prevent new investments in assets that generate emissions. Creating Information Systems that assist in ensuring more efficient management of existing infrastructures. Establishing New Horizons for development and innovation. To this end, we invest in Research, Development and Innovation, R&D&I, Globally extend 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 this, 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 globe a better and more sustainable place for future generations. ABENGOA Activity Report

7 Summary Activity Report 2006 ABENGOA

8 Highlights Summary 2006 Economic Data Profit and Loss Account (Millions ) Sales Net Earnings attrib to Parent Company Gross Cash Flows from Operating Activities Significant Variables Margin (% Gross Cash Flows/Sales)) Gross Cash Flows/Financial results Return on equity (ROE) (%) (**) Data per share: - Earnings per Share ( ) - Dividend per Share ( ) (*) CAGR: Compound Annual Growth Rate. (**) Net earnings/ Shareholders funds , %Variation (06-05) , % CAGR (96-06) (*) Diversification Evolution Business Engineering Company 5 Business Units Sales % Gross Cash Flows % Sales % Gross Cash Flows % - Solar Bioenergy Environmental Services Information Technologies Industrial Engineering and Construction Geography % % % USA and Canada Latin America Europe (excluding Spain) Africa Asia Oceania Total Abroad Total Spain Consolidated Total ABENGOA Activity Report

9 Summary Activity Report 2006 ABENGOA

10 Summary 2006 Summary 2006 ABENGOA Activity Report

11 Summary 2006 Utilizing solar energy, biomass, wastes, information technologies, and engineering, Abengoa applies technological and innovative solutions for sustainable development The rational use of natural resources and our concern for ensuring that future generations may be able to use them as we ourselves have done is Abengoa s roadmap for the future. Moreover, as far as Abengoa is concerned, what is known nowadays as sustainable development does not exclusively mean preservation of the environment. Abengoa goes beyond that vision and raises its commitment to the social and human side of things. In Abengoa, we have come to understand that out traditional engineering activity is nothing more than a valuable tool by which we can build a more sustainable world. In addition, over the past decade Abengoa s strategic plan has been much more intense and this is clearly demonstrated by the fact that we have undertaken an array of activities, among which the following are of note: Solar In 2006, construction was completed on the world s largest tower and heliostat field technology 11 MW solar thermal power plant, and on a 1.2 MW double concentration photovoltaic power plant. These plants are located in the municipal district of Sanlucar la Mayor (Seville, Spain) and are part of a future platform of solar thermal and photovoltaic power plants that will eventually produce more than 300 MW. Abengoa is the leader on the home market in electricity generation from solar energy, with a development plan for more than 300 MW over the next few years With the sun... we produce thermoelectric and photovoltaic electric energy. Bioenergy In 2000, start-up of the first Bioethanol facility in Spain with an initial production capacity of 100 M liters/year currently 150 M liters/year), which required a 93.8 M investment. In 2002, acquisition of High Plains Corporation (now Abengoa Bioenergy Corporation), the fifth largest bioethanol producer in the United States (current production capacity of 108 M gal/year), by means of a 100 M takeover bid. Start-up of the second Bioethanol facility in Spain (Bioetanol Galicia), with a 126 M liters/year production capacity (currently 176 M liters/year), which required a 92.1 M investment. Also in 2002, Abengoa was awarded by the United States Department of Energy (DOE) an R&D&I project to enhance ethanol production process technology, utilizing biomass to improve the economy of process and increase energy yield from ethanol production and, thereby, reduce the production cost thereof and make it more competitive with gasoline. The total investment, co-funded by the DOE, is 35.4 M $US, from 2003 to In 2003, commencement of the construction of the third Bioethanol facility in Spain, in Babilafuente, which produces 200 M liters/year of Bioethanol for direct blending in gasoline. The raw materials will be grain, wine alcohol and biomass, the latter in a Bioethanol production facility that will be the first of its kind worldwide. In 2005, commencement of the construction of the fourth bioethanol facility in Nebraska (US) which will produce 330 million liters per year. Agreement with Cepsa for the construction of a biodiesel production plant on the lands of Cepsa s 10 Activity Report 2006 ABENGOA

12 Summary 2006 Gibraltar Refinery, in San Roque (Cadiz). The foreseen investment for the plant is 42 M. In 2006, work commenced on the construction, in Lacq (France) of a 250 million liter/year capacity bioethanol production plant. It will be Europe s first corn-based bioethanol production facility, something that is very common in the US. Abengoa is Europe s largest bioethanol producer and fifth in the US. With biomass... we produce ecologic fuels and animal feed. Environmental Services. In 2000, a 300 M investment to acquire Befesa through a takeover bid. Recently, during the last quarter of 2006, Befesa acquired the company B.U.S., Europe s largest industrial waste recycler. Abengoa has increased desalination capacity to more than 1,000,000 m 3 /day, which will enable supply for a population of 4.8 million. Abengoa is international leader in industrial waste treatment and environmental engineering. With wastes... we produce new materials by recycling, and we also treat and desalt water to achieve a sustainable globe. Information Technologies The technologies developed by Telvent allow highperforming companies to make real-time business decisions utilizing data acquisition and control systems and advanced operational applications that provide secure actionable information delivery to the enterprise in four industry segments considered essential for sustainable development: Energy, Traffic, Transport and the Environment. In 2003, Telvent acquired Metso Corporation s Network Management Solutions Division, now called Telvent Canada and Telvent USA, which put Telvent in a leading position at international level in the Real- Time Control and Information Systems market for the oil, gas, and electricity sectors, and for the water sector. In 2004, in order to facilitate the continuity of the expansion strategy for the Information Technology activity, while also increasing its potential through the development of R&D&I activities, Telvent GIT commenced its effective listing on the American NASDAQ technological market. In the same year, the North American company Miner & Miner Consulting Engineers Incorporated (M&M), one of the world leaders in the development and implementation of Geographic Information Systems (GIS) software, was acquired. In 2005, the Perth based Australian company Almos Systems (now Telvent Australia), a leading provider of meteorological solutions, was acquired. In 2006, work continued under the strategy adopted several years ago with the acquisition of Blue Shield, PB Farradyne, and Maexbic. Abengoa is international leader in the energy, traffic, transport and environment sectors With Information Technology we transform data into knowledge, providing effective operational and business real-time decision making for traffic, transport, energy and environment. ABENGOA Activity Report

13 Summary 2006 Industrial Engineering and Construction In Abengoa, we have come to understand that out traditional engineering activity is nothing more than a valuable tool by which we can build a more sustainable world. Many of the engineering products we develop are focused on sectors related with renewable energies, biofuels, industrial waste management and desalination. We are putting our trust in improving energy efficiency through cogeneration power plants. Abengoa produces more than 2,000,000 MW/h per year by this method. In 2006, with the aim of strengthening our sustainable energy project execution capacity, the Poland based company Energoprojekt Gliwice, dedicated to engineering and consultancy services in the energy and industry sectors was acquired. Abengoa is the leader in Industrial Engineering and Construction projects in Spain and Latin America. With engineering... we construct and operate conventional and renewable energy power plants, power transmission systems and industrial infrastructures. New Horizons In Abengoa, we are convinced that the innovative company, within a context of change and global competition, is an efficient and essential instrument for enabling progress towards a sustainable development society. The constant generation of new development and innovation horizons is one of our main strategic pillars. of energy systems based on the production and storage of this gas as an energy vector. ZeroEmissions Technologies: a new company established by Abengoa to agglutinate the activities focused on the fight against climate change. The activities developed are as follows: 1. R&D&I focused on developing alternative solutions that enable the elimination of highcapacity greenhouse effect gases. Their total elimination would mean the meeting of the most demanding reduction goals laid down internationally. 2. R&D&I in CO 2 sequestration and capture technologies as the first step towards the horizon of new CO 2 free generation plants. In this respect, Abengoa is participating in different national and international platforms and projects that are the first of their kind in this material. 3. CDM/JI Projects (Clean Development Mechanisms and Joint Implementation). By means of these two mechanisms developed in the Kyoto Protocol, countries that need to reduce emissions can achieve attainment of reduction commitments utilizing projects executed in other countries. 4. Participation in Carbon Funds: as a further step towards the attaining of Sustainable Development, Abengoa has decided to support diverse initiatives developed by Multilateral Institutions, different countries and important European companies. Abengoa has already committed itself to participating in the Spanish Carbon Fund (World Bank) and the Multilateral Carbon Credit Fund (EIB-EBRD). Hydrogen Technologies: with a clear perception of the need to search for new clean energy sources, in Abengoa we promote the development of hydrogen and fuel cell technologies by means of the design, development and construction 12 Activity Report 2006 ABENGOA

14 Summary 2006 Development towards a sustainable world Abengoa s strategic development is based on the generation of future options that are necessary to attain a sustainable world. This is achieved basically by: The strengthening of the geographic diversification of existing products The introduction of new products that help combat climate change The intensification of R&D&I activities The commitment to social and human progress As a result of said strategy and as a consequence of the investment plan underway, Abengoa offers a combination of activities that represent greater diversification in markets and customer portfolio, while also consolidating its capacities as regards its original Engineering business. Evolution Business Engineering Company 5 Business Units Sales % Gross Cash Flows % Sales % Gross Cash Flows % - Solar Bioenergy Environmental Services Information Technologies Industrial Engineering and Construction Geography % % % USA and Canada Latin America Europe (excluding Spain) Africa Asia Oceania Total Abroad Total Spain Consolidated Total ABENGOA Activity Report

15 Summary 2006 The strengthening of the geographic diversification of existing products by reinforcing the markets in which, a priori, the best possibilities for expansion exist and in which Abengoa is already operating, with these being basically the United States, Canada, China, India, Brazil, Mexico, Northern Africa, and Europe. Activity Abroad CAGR (96-06) Exportation and Local Company Sales M % M % M % % - USA and Canada - Latin America - Europa (excluding Spain) - Africa - Asia - Oceania Total Abroad Total Spain Consolidated Total , , , , , The introduction of new products that help combat climate change by means of an investment plan, especially in the sectors related to Bioenergy (new bioethanol production plants in Europe and the United States), Solar (with a solar power plant construction program that will eventually reach a total installed output of more than 300 MW), Desalination (with desalination plants under construction in Algeria, India and Spain), High Voltage Line Concession Contracts (in Latin America and Asia) as well as future concession contracts for Public Buildings in Spain and abroad, and also in other more mature sectors such as Environmental Services (with the recent acquisition of Europe s largest industrial waste recycling company) and Information Technologies. The intensification of R&D&I activities, focused on results that allow diversification to be increased by creating new products and services and developing new markets by increasing differentiation, improving and adapting existing products and enhancing processes. Main Projects M (P) % / Sales M % / Sales M % / Sales Solar Energy Biomass convertion to bioethanol Enhancement bioethanol efficiency (residual starch) Hydrogen Technology. Fuel Cells Electricity, environmental, oil and gas control centers Road and rail traffic, and ticketing systems Public Administration support systems Geographic Information Systems (GIS) Vitrification Environmental Technology Center Desalination Enhancement aluminum efficiency Other Projects Total Investment R&D&I % % % 14 Activity Report 2006 ABENGOA

16 Summary 2006 The commitment to social and human progress while at the same time contributing to environmental preservation is, in Abengoa, one of the essential pillars on which Corporate Social Responsibility is based. Through the Focus-Abengoa Foundation the company s social activity policies are brought into practice. This is done in a non-profit making manner with objectives being of general interest, focused on assistance, educational, cultural, scientific, research and technological development work. In 2006, Abengoa allocated 5.8 M to these activities that strengthen the company s commitment to society and sustainable development. Current Organization and Nature of Business There are two types of products in Abengoa: Integrated Product: in which the responsibility is global, including from the active promotion of the business, with or without investment in the capital, to the providing of financing solutions, the defining and design of the technologies to be applied, the turnkey construction and subsequently the Business Operation, Maintenance and Management Service. With these products there is a clear recurrence that endows more stability on Abengoa s financial statements (business induced). Conventional Product: in which a specific item or service is sold and the investment in which goes against the customer s balance sheet and, in addition, in which we are not responsible for the management thereof. Abengoa is a technological company that applies innovative solutions for sustainable development in the infrastructures, environment and energy sectors. It is present in more than 70 countries, where it operates with its five Business Units: Solar, Bioenergy, Environmental Services, Information Technology, and Industrial Engineering and Construction. Solúcar Abengoa Bioenergía Befesa Telvent Abeinsa Solar Bioenergy Environmental Services Information Technologies Industrial Engineering and Construction Sustainable Development Information and Knowledge Society Creation of Infrastructures ABENGOA Activity Report

17 Summary 2006 It provides solutions for: Sustainable development: Abengoa produces 619 million liters of bioethanol per year which avoids the emission of 1,691,486 tons of CO 2 to the atmosphere, which is equivalent to the annual emissions from a fleet of 700,000 vehicles. Abengoa produces 2, MW/h per year of electricity from cogeneration, which means the prevention of the emission of 983,963 tons of CO 2 were this energy to be produced by conventional carbon thermoelectric power plants. Abengoa has a production plan for more than 300 MW of electric energy using the sun, equivalent to the annual consumption by a population of 500,000, which will prevent the emission of 742,900 tons of CO 2 per year. Abengoa treats more than 2,563,140 tons of industrial wastes, dedicating them to the production of new materials through the recycling of more than 1,297,000 tons. Abengoa has increased desalination capacity to more than 1,000,000 m 3 /day, which will enable supply for a population of 4.8 million. The Information and Knowledge Society: Our solutions: Manage more than 60% of the movements of hydrocarbons in pipelines in North and Latin America. Transport and distribute more than 140,000 GW/h that provide electricity for a population of more than 80 million. Control vehicle traffic at more than 6,000 intersections that are used by more than 170 million people per day. Manage the displacements of more than 2,500 million passengers per year on train and metro networks. On a yearly basis, provide real-time traffic information on the state of roads and traveling times in response to 405,000 telephone enquiries and 5,000,000 monthly website visits. Provide landing and take-off security and efficiency for more than 700 million passengers a year at more than 150 airports. 16 Activity Report 2006 ABENGOA

18 Summary 2006 Manage water distribution for a population of more than 30 million throughout Europe, North America, Latin America and the Middle East. Monitor and report on the quality of the air inhaled by more than 20 million people in Europe and Latin America. For more than 30 million European citizens, facilitate access and e-business management with their public administrations and with other organizations and institutions. Reduce the patient waiting list by 15% in more than 250 health centers managed by more than 40,000 Health professionals. Verify the integrity and veracity of the passports of more than 18 million passengers per year. Enable 13 million users at more than 4,000 universities and research centers throughout Europe to exchange information. Provide the technological infrastructure from which news is distributed 24 hours a day to more than 400 million Spanish speaking inhabitants worldwide. Ensure the correct distribution of more than 1,000 million liters of gasoline per month, sufficient to fill the fuel tanks of more than 22 million cars. Creation of Infrastructures: Abengoa has constructed energy generation plants that, with a global installed rating of more than 5,000 MW, supply electric energy for a population of more than 4 million on four continents. Abengoa possesses 4,406 km of high-voltage lines under concession contracts in Latin America, with a capacity of almost 9,300 MW, equivalent to the annual needs of a population of 10 million. In Spain, in 2006, Abengoa has installed almost 140,000 new ADSL lines that allow more than 600,000 people to have broadband access to new value-add services. In 2006, Abengoa conducted maintenance works, in Spain, on approximately 2,275,000 telephone lines (voice, data and video) with 24-hour SLA, providing coverage to some 5 million subscribers (11% of the population) ABENGOA Activity Report

19 Summary 2006 Evolution of 2006 Financial Year Results M Variation % % of total M % of total % CAGR / /06 Sales 2, Net Profit atributable to Parent company Gross Cash Flows from Operating Activities The consolidated sales to 31/12/06 reached 2,677.2 M, which is a 32.3% increase on the previous year s figure. All Abengoa s Business Units increased their sales figure over 20%. Sales M %Variation (06-05) - Bioenergy Environmental Services Information Technology Industrial Engineering and Construction 1, Total 2, It is important to consider the company s efforts in R&D&I activities, whose impact on the financial statements goes from 18.3 M in 2005 to 23.2 M in 2006 (up 26.8%). The after tax result attributable to the parent company is M which is a 52.0% increase on the 2005 financial year figure (66.0 M ). The above result means a profit of 1.11 per share as against the 0.73 per share obtained in The Gross Cash Flows from Operating Activities reached M, which represents a 71.5 M increase on the previous year (+ 33.0%) Among the contributions to these Gross Cash Flows, of note is that from the Industrial Engineering and Construction business unit which increased considerably to M (98.9 M the previous year), which represents a 39.1% increase, and also that from the Environmental Services business unit with 58.0 M (40.4 M the previous year), which represents a 43.7% increase. Gross Cash Flows from Operating Activities M %Variation (06-05) - Bioenergy Environmental Services Information Technology Industrial Engineering and Construction Total The non-recourse financing applied to projects has risen 86.9%, from M in 2005 to 1,253.9 M in Abengoa s Net Debt in 2006 is M (net cash position) as against M (net cash position) in Activity Report 2006 ABENGOA

20 Summary 2006 Share Performance According to the data supplied to Abengoa by Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores S.A. (Securities Recording, Clearing and Settlement Management Company) for the last Ordinary General Meeting held on April 9, 2006, Abengoa, S.A. had 6,663 shareholders. As on December 31, 2006, the company believes the free float to be 43.96% if the shareholding of Inversión Corporativa I.C.S.A. and its subsidiary Finarpisa (56.04%) is deducted. According to the figures supplied to the company by Sociedad Rectora de la Bolsa de Valores de Madrid (Governing Body of the Madrid Stock Exchange) 118,874,315 shares were traded in The average volume of daily trading over the year was 468,009 shares. Minimum, maximum and average listed share prices in 2005 were euro, euro and euro, respectively. The last closing price quoted for Abengoa shares in 2006 was euro, 124% up on that of December 31, 2005, and 1,207% higher than the share price established for the Public Offering on November 29, Evolution since Initial Public Offering in 1996 As a historical reference, since Abengoa s Initial Public Offering on November 29, 1996, the company s shares have revalorized 1,207% which is times the initial price. During this same period, the Madrid Stock Exchange has revalorized 285% and the select IBEX 35 has gone up 203%. Evolution Since % 1400% 1300% 1307% 1200% 1100% 1000% 900% 800% 700% 600% 500% 400% Split 3x Split 4x % 300% 303% 200% 100% 0% Abengoa IGBM Ibex 35 ABENGOA Activity Report

21 Summary Business Units 2006 In its search for synergies and cross-selling to achieve the creation of value and growth, Abengoa is organized into five business units, Latin America as a stable market as well as a corporate area. With the sun... we produce thermoelectric and photovoltaic electric energy Sustainable Development Solar Bioenergy With biomass... we produce ecologic fuels and animal feed Environmental Services With wastes... we produce new materials by recycling, and we also treat and desalt water to achieve a sustainable globe 20 Activity Report 2006 ABENGOA

22 Summary Business Units 2006 Information and Knowledge Society Information Technologies With Information Technology we transform data into knowledge, providing effective operational and business real-time decision making for traffic, transport, energy and environment Creation of Infrastructures Industrial Engineering and Construction With engineering... we construct and operate conventional and renewable energy power plants, power transmission systems and industrial infrastructures ABENGOA Activity Report

23 Summary Activity Report 2006 ABENGOA

24 Solar Sustainable Development Solucar Energía is its holding company. This Business Unit s activity focuses on the design, promotion, finance attainment, construction and operation of electric energy generating plants that utilize the sun as their primary energy source. It possesses the know-how and technology required for thermoelectric solar power plants: plant receiver systems, parabolic cylinder and parabolic dish collectors, and for photovoltaic plants, with and without concentration. With the sun... we produce thermoelectric and photovoltaic electric energy Leader on the home market in electricity generation from solar energy, with a development plan for more than 300 MW over the next few years

25 Solar Sustainable Development As a result of more than twenty years investing in solar energy research and development projects, Abengoa has established a specific business unit called Solucar to conduct its solar energy electricity generating activity. Abengoa, through Solucar, currently occupies a privileged position in the solar energy exploitation sector as it has compatibilized, during the course of its activity in this field, the dedication to the two technologies that allow electricity generation utilizing solar energy: thermal and photovoltaic technologies. In the respect, Solucar is currently capable of designing, constructing and operating efficient and dependable solar thermal power plants with central receiver systems (tower and heliostats), and also with parabolic trough collector systems. Moreover, the company is vastly experienced in the development of photovoltaic projects, with and without concentration, that directly convert solar radiation into electricity through the use of photovoltaic cells and modules. Within this new business unit, design, promotion, construction and operation activities are being conducted for energy production plants that utilize the sun as their primary energy source. In addition, research and development activities are being carried out on solar technologies to achieve continuous reduction of costs for general improvement of existing technologies. During the course of 2006, the promotion and construction activities related to solar thermal and photovoltaic power plants were consolidated in Spain, while the first international projects were undertaken. In forthcoming years, we expect continuous growth in the promotion and construction activity in Spain and in the international market too, and we also expect to be able to offer more efficient in-house technologies in both solar thermal and photovoltaic fields. Solúcar PV: Its activity focuses on the promotion, construction and operation of solar photovoltaic power plants in Spain. Solúcar R&D: A company dedicated to the design, research and development of new thermal and photovoltaic technologies. Solúcar Inc: A recently constituted company responsible for developing the solar business in the United States. Solúcar Solar: It concentrates the resources dedicated to the development of new businesses. Solucar is formed by several companies: Solúcar Energía: It promotes, constructs and operates, in Spain, electric energy production plants that utilize the sun as their primary energy source. 24 Activity Report 2006 ABENGOA

26 Solar Sustainable Development Promotion in Spain (Solúcar Energía and Solúcar PV) In Spain, Solucar operates with two clearly differentiated solar technologies, as in the case of solar photovoltaic energy and solar thermal energy, and possesses an extensive MW output portfolio in both technologies. Solucar s main activities are dedicated to the promotion of projects and the obtaining of permits up to financial closure stage, the construction of plants with supervision of the turnkey contracted works and operation of plants in production. Over the next eight years, plans are for a Solar Platform is to be constructed in the vicinity of Sanlucar la Mayor (Seville). This complex of solar thermal and photovoltaic facilities will eventually exceed 300 MW output. The company is thereby putting its trust in the potential of solar energy for electricity production purposes, while also contributing to sustainable development and conservation of the environment and natural resources. The most important references in 2006 are those related to the construction, and start-up of the first commercial solar thermal power plant in Europe, PS10; the commencement of the construction of PS20; and the advance in Solnova 1 and Solnova 3 promotion operations. The last two are 50 MW parabolic trough power plants on which construction is scheduled to commence in Also of note is the signing of an agreement with Sepides and the IDEA for the joint development a 20 MW plant in Almacen. As regards photovoltaic energy, several facilities have been, or are being, constructed in the south of Spain. In addition, Solucar continues to work on the development of new sites for new solar thermal and photovoltaic power plants that will expand its project portfolio. Solar thermal technology projects PS10 Power Plant On June 28, 2004, the foundation stone laying ceremony for the PS10 power plant took place and work continued throughout 2005 on the construction and assembly of the different components. The site of the solar facilities is within the property of the Sanlucar la Mayor solar platform, in the province of Seville (Spain). During 2006, construction of the PS10 plant was completed and the testing stage thereof commenced towards year-end. The 11.0 MW rated, PS10 plant, has been designed to supply approximately 6,000 homes under the Special Regime for electricity production, and it will also prevent the emission of 18,000 tons of CO 2 per year. ABENGOA Activity Report

27 Solar Sustainable Development PS10 comprises a large field of heliostats, mobile mirrors that reflect and concentrate solar radiation onto a receiver on top of a 115 m tower. Each one of the 120 m 2 reflective area heliostats reflects a cavity of approximately 200 m 2 of water cooled energy exchange surface area onto the receiver; the thermal energy required to produce steam. This is forwarded to the turbine where it expands to generate, by means of the corresponding connection to an alternator, the electricity. Following several years of Research and Development by Abengoa, this project represents the launching of the technology known as tower and heliostat field employed for electric exploitation of the renewable solar resource. The main contribution by the PS10 project to the development of this technology is the fact that it is the first solar thermal power plant in the world that will produce electricity in a stable and commercial manner. This project has become a reality thanks to the collaboration received from public and private institutions including, among others, Ciemat, the IDEA, and the University of Seville. PS20 Power Plant Once all the necessary permits had been obtained, work commenced during the second half of 2006 on the construction of the PS20 power plant. This plant is the second with tower and heliostat field technology to be included in the Sanlucar la Mayor Solar Platform, and will have twice the PS10 output. The solar radiation capturing area comprises more than 1,000 two-axis sun tracking heliostats, each of 120 square meters. This field of heliostats will concentrate solar radiation onto the receiver on top of a tower approximately 165 meters high. The plant s electricity production capacity will enable energy supply to approximately 12,000 homes and will prevent the emission of a million tons of CO 2 over its 25-year useful life. This project represents continuity in the launching of tower and heliostat field projects, following the experience gained from the PS10 project. In fact, PS20 represents a second generation of this technology with important improvements to critical elements such as the receiver, which will enable progression to more efficient tower technology plants in the future. Solnova One and Three Power Plants Early in 2007, work will commence on the construction of the 50 MW rated Solnova One solar thermal power plant that will utilize parabolic trough collector technology. It will comprise a large field of collectors, designed by Solucar, that reflect and concentrate the solar radiation they receive onto an axis in which the heat-carrying fluid circulates. The steam produced is then forwarded to the turbine where it expands, by means of the corresponding connection to an alternator, to generate electric energy. In addition, the plant will have a thermal storage system that will contribute stability for energy production. Construction is scheduled to begin early in the second half of 2007 on the Solnova Three power plant, of the same technical characteristics as Solnova One. Both plants will form part of the Sanlucar la Mayor Solar Platform. 26 Activity Report 2006 ABENGOA

28 Solar Sustainable Development Almaden 20 Power Plant During the second half of 2006, the company Almaden Solar was jointly constituted with Sepides, a subsidiary of the SEPI Group responsible for business development, and the IDEA, the Ministry of Industry s Institute for Energy Diversification and Saving. The Almaden Solar project contemplates the development of a 20 MW tower technology solar thermal power plant in the municipal district of Almaden. The power plant, with a configuration very similar to the PS20 plant already under construction in Seville, will consist of a field of more than 1,000 heliostats that will enable concentration of the solar radiation received onto a receiver located on the upper part of a 155 meter tower. The construction and operation of this plant will contribute greatly to strengthening industrial development and employment in the area, as estimates are for the creation of 250 to 300 local jobs per year associated with the manufacturing and construction stage, and a further 25 jobs for operation and maintenance of the plant over its 25-year useful life. This will contribute to the industrialization of an area that is in search of initiatives to activate its development. The entry into operation of this plant will contribute to the generation of clean electricity to supply a total of 12,000 homes while also preventing the annual emission of 35,100 tons of CO 2. The 1.2 MW Sevilla PV solar photovoltaic power plant utilizes low concentration (1.5X and 2.2X) and twoaxis sun tracking concepts. It will produce electricity and prevent emission into the atmosphere of 1,800 tons of CO 2 per year, which means it will have prevented the emission of 45,000 tons of CO 2 at the end of its useful life, estimated to be 25 years. With the data collected, electricity production from this plant at the end of December 2006 had successfully met production estimates. The Sevilla PV power plant has 154 tracking devices, each with an opening of 100 m 2, that combine in almost equal parts the capturing area of photovoltaic modules and mirrors. The facility is included in the Sanlucar la Mayor Solar Platform complex. Solar photovoltaic technology projects Sevilla PV Solucar has constructed, together with the IDEA which holds a 20% stake, the first commercial photovoltaic power plant, with concentration, in Europe. Early in 2006, works were completed on the engineering, connection of the project s most important supplies, photovoltaic modules, inverters, mirrors and trackers and field assembly of all the equipment, up to connection to the grid. The plant was brought into operation in July ABENGOA Activity Report

29 Solar Sustainable Development Other photovoltaic projects During 2006 and 2007 work has been and will continue to be carried out on the construction, together with Emasesa, the city of Seville water management company, of several photovoltaic plants (Copero). Moreover, in 2007, work will commence on the construction of several plants at the Sanlucar Solar Platform complex and in other locations in the south of Spain. International Promotion In 2006, Solúcar began to develop its first activities outside Spain and, to-date these have resulted in two projects: The setting up of a small team in the United States responsible for developing the Solar business. With the objective of achieving rapid implantation, several people with a long history in the American solar thermal market have joined Solucar and the business of the company IST dedicated to the design and installation of parabolic trough collector systems to supply steam to industries and large buildings was acquired. This system can also be used to provide solar origin air-conditioning. Solucar will participate in the construction and operation of the first combined gas-solar power plant that Abengoa will construct in Algeria. R&D&I Activities (Solúcar R&D) Throughout 2006, the development of R&D&I projects under way continued and new lines of technological research and development were launched. In addition, the execution of a series of demonstration and experimentation construction projects was undertaken. Demonstration and Experimentation Projects Parabolic trough demonstration facility: During 2006 and early 2007 work has continued on the construction of a demonstration facility for parabolic trough collectors that utilize oil as their thermal fluid. This facility will serve for the conducting of a series of projects focused on improving Solucar s parabolic trough collector technology. Installation of 7 Stirling Dishes (Aznalcollar TH): In 2006 and 2007, seven in-house design Stirling Dishes are being installed at the Sanlucar Solar Platform complex. These 7 dishes will serve to prove the efficiency and durability of different designs and components. Solar Thermal Concentration R&D&I Projects E-2: Design and testing of a new parabolic trough collector that is more efficient that that currently in use. Medcal: Systems to Improve the Precision of Sun Targeting, and Increase Efficiency in Solar Power Plants. Almeria Solar GDV: A 5 MW Parabolic Trough Collector Plant with Direct Steam Generation, in Almeria. Photovoltaic R&D&I Projects Fresnel PV-5x: Development of the Medium Concentration Photovoltaic Concept at Values between 5X and 10X. CAC-30x: Development of a Controlled Atmosphere Photovoltaic Concentrator of around 30X. Hicon PV: Development of a High Concentration Photovoltaic Concentrator (1,000X). 28 Activity Report 2006 ABENGOA

30 Bioenergy Sustainable Development Abengoa Bioenergía is its holding company. The Business Unit is dedicated to the production and development of biofuels for transport, bioethanol and biodiesel, among others that utilize biomass (cereals, cellulosic biomass, and oleaginous seeds) as the raw material. The biofuels are utilized for ETBE production (gasoline additive), or for direct blending in gasoline or gas oil. Given that they are renewable energy sources, biofuels reduce CO 2 emissions and contribute to the security and diversification of the energy supply while reducing the dependency on fossil fuels utilized in the transport sector and helping towards compliance with the Kyoto Protocol. With biomass... we produce ecologic fuels and animal feed Europe s largest bioethanol producer (340 million liter production capacity) and fifth in the US (415 million liters) ABENGOA Activity Report

31 Bioenergy Sustainable Development Organization The Business Unit comprises the management of the following companies: Abengoa Bioenergía, S.A. Ecocarburantes Españoles, S.A. Bioetanol Galicia, S.A. Biocarburantes de Castilla y León, S.A. Ecoagrícola, S.A. Bioener Energía, S.A. AB Bioenergy France, S.A. AB Bioenergy Hannover, GMBH Abengoa Bioenergía San Roque, S.A. Abengoa Bioenergy UK, Ltd Abengoa Bioenergy Netherlands B.V. Abengoa Bioenergy Belgium N.B Abengoa Bioenergy Trading B.V. Abengoa Bioenergy U.S. Holding, Inc. Abengoa Bioenergy Corporation Abengoa Bioenergy Trading U.S., LLC Abengoa Bioenergy Engineering & Construction, LLC Abengoa Bioenergy of Nebraska, LLC Abengoa Bioenergy of Kansas, LLC Abengoa Bioenergy of Indiana, LLC Abengoa Bioenergy R&D, Inc. Greencell, S.A. Europe The main milestones achieved during the year 2006 in the European Operations scope have been: Biocarburantes Castilla y León start-up. Bioethanol Supply of 190 Ml to the European Exports Markets (France, Germany and Sweden). Ecoagrícola starts operating in Europe through contracts with producers in the United Kingdom and Germany. Abengoa Bioenergy France obtains additional tax exempt amounts of 60,000 t and 20,000 t. Abengoa Bioenergy France obtains the construction permit in March and Production permit at the end of June. The Abengoa Bioenergy France Plant begins construction in Lacq. Launching of the project of a biodiesel manufacturing plant within the boundaries of the Cepsa Refinery Gibraltar in San Roque (Cádiz), with a capacity of 200,000 t. New sites in Europe being identified for the development of future projects. Development and promotion of Flexible Fuel Vehicles FFV (e85) in Spain. Commercial agreements with Ford, General Motors, and Saab. United States The Bioethanol industry continues to experience rapid growth in the United States, and Abengoa Bioenergy played a significant part in this growth, achieving the following milestones in the United States during 2006: Plant expansion activities were completed at both Portales, New Mexico and Colwich, Kansas plants, and record daily production volumes have been achieved at each facility. Construction of the new Ravenna, Nebraska plant is well under way with expected start up in early Initial evaluation and development of several new bioethanol production projects, with preliminary permitting filed for two new projects which could start construction in Partnership with General Motors and Kroger Stores was initiated to supply e85 bioethanol fuel to Dallas and Houston Texas. Restructure of the U.S. organization to facilitate future growth was completed and effective January 1, 2007, creating separate companies for the operating facilities, the new projects, and marketing and developmental functions. Initiation of training partnerships with local colleges, and continued implementation of internal competency, development and compensation programs strengthen and protect key employee base. 30 Activity Report 2006 ABENGOA

32 Bioenergy Sustainable Development Research and Development Abengoa Bioenergy R&D, Inc. is a subsidiary of Abengoa Bioenergy Corp (ABC). ABRD s efforts are focused on four high priority projects: Improve actual production process yields and coproduct quality at existing drymills. Increase bioethanol capacity and develop new feed co-products. Develop and demonstrate cost competitive technologies for new biomass facilities. Develop demonstration programs which permit an increase in the field of bioethanol utilization (i.e., e-diesel and hydrogen fuel cells). ABRD is leveraged by grants from the U.S. Department of Energy, the European Union and various ministries within the Spanish Government. Greencell, our affiliate in Spain, is responsible for the management of our European activities, reporting to ABRD. Operations in Europe Introduction Abengoa Bioenergy is the European leader in the production of bioethanol for use as a biofuel, and currently operates with three plants in Spain, Ecocarburantes Españoles, in Cartagena (Murcia), Bioetanol Galicia in Teixeiro (La Coruña), and Biocarburantes Castilla y León (Babilafuente), which have a total installed capacity of 150, 176, and 200 million liters annually, respectively. It has also begun the construction of its fourth plant in Europe, through Abengoa Bioenergy France, in the Petro- Chemical Complex in Lacq, Pyrénées Atlantiques (France). Ecocarburantes Españoles Ecocarburantes Españoles, S.A. is the holding company of a bioethanol production plant in Escombreras, en Cartagena (Murcia). This company is owned 95% by Abengoa Bioenergía, S.A., and 5% by the Instituto para la Diversificación y Ahorro Energético IDAE (Institute for Diversification and Energy Saving). The main facts of this plant are: 70 million euro investment. Began operating in the year The produced bioethanol is destined to the production of ETBE Annual installed capacity of 150,000 m 3 of bioethanol and 110,000 t of Eco-protein. 300,000 t of cereal consumption annually. Bioetanol Galicia A second plant, property of Bioetanol Galicia, S.A., is operating in Teixeiro (La Coruña), with an annual bioethanol production capacity of 176 million liters. This company is owned 90% by Abengoa Bioenergía, and 10% by Xes Galicia. Below are the main facts for the facility: 85 million euro investment. Begun operating in the year The produced bioethanol is destined to the production of ETBE Annual installed capacity of 176,000 m 3 of bioethanol and 120,000 t of Eco-protein. 340,000 t of cereal consumption annually. Biocarburantes de Castilla y León The third plant, property of Biocarburantes de Castilla y León, S.A. in Babilafuente (Salamanca), with an annual bioethanol production capacity of 200 million liters, of which 5 millions will be obtained from the conversion of cereal biomass into bioethanol by means of a new technology under development by Abengoa Bioenergy R&D. ABENGOA Activity Report

33 Bioenergy Sustainable Development This plant will be the first of its kind in the world with the possibility of producing bioethanol from biomass, in particular from cereal straw, with Enzymatic Hydrolysis technology. The company Biocarburantes de Castilla y León is owned 50% by Abengoa Bioenergía, S.A., and 50% by Ebro Puleva, the largest nutritional group in Spain. The startup with grain took place on April 7th, 2006, passing the working capacity tests in the month of July. Below are the main facts for the facility: 170 million euro investment. Began operating in the year The produced bioethanol is destined to directblending with 5% bioethanol (e5). Annual installed capacity of 200,000 m 3 of bioethanol and 120,000 t of Eco-protein. 585,000 t of cereal consumption annually. Abengoa Bioenergy France Abengoa Bioenergy France has been conceived as a Specific Purpose Company for the promotion, construction and production of a bioethanol manufacturing plant from corn and alcohols of lower quality (wine alcohol, and others), located in the Petro-Chemical complex in Lacq. Abengo Bioenery France is owned 64% by Abengoa Bioenergía; 8% by Oceol, grouping of the main regional agricultural corporations and industries; 35% by Euralis and Maisadür; and 1% by AGPM. The main facts of this plant are: The total capacity of the projected annual production is 197,500 t of Anhidric Ethanol, on a 335 days per year production basis, of which 158,000 t will use corn as raw material, and 39,500 t derived from the destillation of lower quality alcohols (wine alcohol and others). Estimated annual cereal consumption (corn) around 500,000 t. Estimated annual consumption of wine alcohol and other alcohols around 40,000 t. Estimated annual Ecoproteine production around 145,000 t. 200 million euro total investment. First Phase starting date of comercial production using wine alcohol and other alcohols early in 2007, and the plant as a whole by mid Abengoa Bioenergía San Roque Abengoa Bioenergía San Roque, S.A. has begun the construction of a new biodiesel plant in San Roque (Cádiz), in an area adjacent to Cepsa s Gibraltar Refinery, with the objective to produce 200,00 t annually. The plant will be operative in 2008 and will consume 200,000 t of vegetable oils (rape, soy, and palm) Ecoagrícola Ecoagrícola is the company within the Abengoa Bioenergy Business Group, dedicated to the management of grain purchases and DDGS commercialization (proteic animal feed), which acts as a cereal receiver (wheat, barley, and corn) to convert it into Bioethanol and proteic feed in Abengoa Bioenergy s plants (currently Ecocarburantes Españoles, Bioetanol Galicia, and Biocarburantes Castilla y León, and later AB Bioenergy France y other future plants in Europe). For the past eight years Ecoagrícola has contracted the cereal supply for the plants, both by purchases in the Free Market, and by direct contracts with farmers in accordance to the CAP programs. In particular, this last approach started offering contracts for Set-Aside Lands and continued with 32 Activity Report 2006 ABENGOA

34 Bioenergy Sustainable Development contracts for Energy Crops, since the policies regulating these were not in place up until the year Hence, Ecoagrícola has accumulated a wide experience in the different fields, both in large cereal purchases in the market, and second, in establishing contracts directly with the farmers, thereby ensuring the cereal supply to the business group plants. It also holds a great knowledge of the applicable policies in order to proceed legally within the EU legislation. Cereal Supply 2006 Purchases (t) Spain Europe Total Free Market Set-Aside Lands Energy Crops Total Cereal Wheat Barley Wheat Barley Wheat Barley 575, ,800-13, , ,000 11,000 64,000 48, , ,000-11,300 64,000 55, ,000 1,074,800 20,500 1,095,300 Since Ecoagrícola started purchasing cereal in 1998, the growth in contracts has been progressive, and since nowadays the Abengoa Bioenergy Business Group is the European leader in Bioethanol production, Ecoagrícola is equally the European leader in Cereal Contracts for energy use, offering farmers the possibility to benefit from the special incentives established by the recent Common Agricultural Policy. In the same manner, Ecoagrícola contracts production from the lands farmers leave uncultivated by imperatives in the CAP, these are referred as Set- Aside Lands. Ecoagrícola guarantees farmers a harvest purchase price through a contract and offers necessary technical assistance through its purchasing cooperators. Ecoagrícola has been developing its activity in Spain since 1998, and has recently initiated operating in Europe. The numbers below clearly reveal its leading position in the cereal market under the EU incentives programs DDGS Commercialization 2006 Sales (t) Ecocarburantes Españoles Bioetanol Galicia Biocarburantes Castilla y León Wheat DDGS Ecoagrícola has lead for years cereal contracting for biofuel production in Spain, proof of this the 10,000 farmers that currently contract directly with the company. Equally relevant are the offered services, since it is present in all 41 provinces in Spain, apart from United Kingdom and Germany, altogether coordinated through its own network of cooperators to a total of 140 agents. Ecoagrícola holds a vast knowledge of international cereal markets, which allows the company to forecast the prices the farmer will receive should the harvest be destined to biofuel production, hence guaranteeing him a production final price and future income, even before planting the crops. Ecoagrícola controls each and every single operation necessary for the execution of the contracted goods, from the origin to its destiny in the plants warehouses, offering services for the whole process: land and sea transport, storage, quality controls, etc ,000 87,000 Barley 130, Total DDGS 331,000 ABENGOA Activity Report

35 Bioenergy Sustainable Development As regards the upcoming new projects and the Bioenergy business group s expected growth in forthcoming years, its become utterly necessary Ecoagrícola s presence in the cereal originating countries to ensure a regular supply for the plants, since the purchases needs in the next few years will be considerably increased. Therefore, the knowledge of the raw material markets from its origin to our plants shall reinforce Ecoagrícola s position within the business group as the main source of origin and imports of cereal from EU countries. This practice has already been started during the year Abengoa Bioenergy Trading Abengoa Bioenergy has incorporated in 2006 the company Abengoa Bioenergy Trading (ABT), 100% owned by AB, to articulate the bioethanol marketing through a trading company with European wide activity, integrated service, risk management and infrastructures capabilities. ABT is incorporated in The Netherlands with offices located in Rotterdam. ABT will provide services to Abengoa Bioenergy (AB) in Europe by: Marketing bioethanol produced by AB and by any third party with whom it has previously signed a marketing agreement (volume mix). Managing on behalf of AB s facilities in Europe the contracts for exceeding capacity over LT contracts and those LT or spot contracts which are not linked to special detax regimen, under pool system. Supplying & pricing management based on same average CIF price for customers (pool). Invoicing to be made and controlled by each production company directly to customers. Originating bioethanol for trading purposes and raw alcohol to be processed in Europe. Managing the control and coordination of the logistics involved in the marketing of the bioethanol, including freights and storage/ handling. Developing terminals to improve logistics capabilities. Achieved Milestones Industry Exports of bioethanol to France, Germany, and Sweden of 190 million liters. Development and promotion of Flexible Fuel Vehicle FFV (e85) fleet in Spain. Commercial agreements with For, General Motors, and Saab. Legislation Approval of mandatory objectives and/or tax exemptions in Spain, Netherlands, United Kingdom, France, and Italy. Development of mandatory objectives and/or tax exemptions in Germany, Sweden, Belgium, and Poland. Internal Biocarburantes de Castilla y León Plant in Salamanca start-up. Beginning of construction of the Abengoa Bioenergy France Plant in Lacq. Launching of the project of a biodiesel manufacturing plant within the boundaries of the Cepsa Refinery Gibraltar in San Roque (Cádiz). Agreements towards the development of Energy Crops and Set-Aside Lands in Europe by Ecoagrícola. World Biofuels Conferences took place for the fifth year, consecutively. Operational Results Operational results of the plants (bioethanol, DDGS, and production of electricity). Production Bioethanol (m 3 ) DDGS (t) Exported Electricity (Mwh) Ecocarburantes 129, , ,256 Bioetanol Galicia 159, , ,011 New Projects Abengoa Bioenergy s Business Plan includes the promotion and construction of a new bioethanol plant in Bilbao s Harbor, in the town of Zierbana, under the company named Bioener Energía, S.A., owned 50% by Abengoa Bioenergy, and 50% by Biocarburantes Castilla y León 106,907 89,061 88, Activity Report 2006 ABENGOA

36 Bioenergy Sustainable Development the Basque Energy Entity (Ente Vasco de la Energía). The project is in the phase of promotion and shall be operative in the year Furthermore, Abengoa Bioenergy s Business Development Plan in Europe includes the promotion and construction of three new bioethanol plants from cereal, which are currently in the phase of permits acquisition. The new production capacity will be installed in countries where the demand and the legislation allow a fast and effective bioethanol development, under the approved guidelines in the European Directives for Promotion and Taxation of Biofuels. Environmental Studies The transportation sector is responsible for 25% of the world s energy-related greenhouse gas emissions. In 2005 the Spanish Government published an audit of the life-cycle greenhouse gas emissions of bioethanol from Abengoa Bioenergy s first two bioethanol plants in Spain, and compared them with the emissions produced from petrol made in a typical Spanish oil refinery. It presented the results by comparing the emissions of a representative car running on pure petrol, with the same car using a 5% bioethanol blend in petrol (e5) and also with an 85% blend of bioethanol with petrol (e85). Under its base case scenario the results were as follows: Pure petrol emits 206 grams of Greenhouse gases (fossil CO 2 equivalent) / kilometer; e5 blend emits 198 grams of greenhouse gases / kilometer (a 3% saving); and E85 blend emits 61 grams of greenhouse gas / kilometer (a 70% saving). US Operations Introduction Abengoa Bioenergy is currently the 5th largest producer of Bioethanol in the United States. We presently have approximately 110 million gallons of installed capacity from three plants in operation and have a 4th plant under construction which is expected to add another 88 million gallons of capacity in early During 2006 we have continued to improve the strength and quality of our customer base, broadening our existing relationships and adding new customers. We still market most of our product in the form of e10, but we have developed new relationships and significantly increased sales into the e85 market. Total sales of bioethanol into these markets totalled over 102 million gallons in In order to strengthen the U.S. organizational structure and to provide a better platform for rapid growth and development of new projects, U.S. Bioenergy operations were reorganized in The three existing plants continue to be owned by Abengoa Bioenergy Corporation, but separate companies have been created for each new project, as well as for the trading and marketing functions, and the engineering and construction divisions of the company. Since bioethanol contains no fossil fuel, we can deduce from these results that each liter of bioethanol made from our Spanish plants saves more than 80% of the greenhouse gases coming from petrol. ABENGOA Activity Report

37 Bioenergy Sustainable Development Abengoa Bioenergy Trading U.S., LLC was formed to manage the critical functions of grain procurement, ethanol and DDGS co-product marketing, and hedging and risk management for all commodities, including energy needs. Similarly, the technical development and construction supervision of new projects is seen as a key function which needs to be controlled and administered uniformly throughout the U.S. organization. Abengoa Bioenergy Engineering & Construction, LLC has been formed to accomplish those tasks. Achieved Milestones Industry The U.S. bioethanol industry continued its rapid expansion during 2006 with 14 new plants coming on line and several expansion projects completed. Operating plants now total 106 in number with installed capacity in excess of 5 billion gallons. This represents an increase of approximately 800 million gallons since January Even more dramatic growth is expected during 2007 with an additional 48 plants representing additional capacities of 3.5 billion gallons per year currently under construction. Legislation The Energy Bill (including its Renewable Fuels Standard, or RFS) passed by the U.S. Congress in July of 2005 was a major factor driving the growth of the U.S. bioethanol industry during In late 2006 the Environmental Protection Agency (EPA) published its proposed rules for the establishment of the banking and trading program for bioethanol credits within this program, which solidifies the program and enhances the value of both cellulosic bioethanol, and ethanol produced from waste energy resources such as the landfill gas utilized at our Colwich, Kansas facility. Much additional legislation has been proposed and discussed which would further expand and enhance the RFS, and strengthen the bioethanol industry. A new Farm Bill is expected to receive high priority in the 2007 congress, and strong support for bioethanol and renewable fuels is already being considered through an Energy Title to the Farm Bill. The Democratic Party s control of both houses of the U.S. Congress resulting from the 2006 elections is expected to continue this strong support of biofuels into the 2007 congress. State legislation also continues to favour renewable fuels. While no new legislation was passed in 2006 to further restrict the use of MTBE, refiners moved strongly in 2006 to reduce the use of that product on a nationwide basis, primarily replacing MTBE volumes with ethanol. At the end of 2006, legislation in individual states provided the following support for the ethanol industry: 25 states have passed bans or restrictions on the use of MTBE. 4 states have adopted state RFS usage requirements 12 states incentivize the use of bioethanol blends and e states have bioethanol production incentive programs 37 states have passed laws eliminating negative pump labelling requirements for bioethanol blends. Plant Operations Results Production York, NE Colwich, KS Portales, NM Total Bioethanol (mm gals) DDGS (Dry tons) , , , , Activity Report 2006 ABENGOA

38 Bioenergy Sustainable Development Bioethanol and Co-Product Market Overview Bioethanol prices in 2006 were higher than expected. Significantly higher crude oil prices, concerns regarding global stocks of gasoline and other refined products (in part due to the still lingering 2005 US hurricane season, less than adequate refining capacity and tremendous global demand) have resulted in a significant improvement in bioethanol prices for This coupled with the passage of the Energy Bill in August 2005, which virtually eliminated the usage of MTBE as an oxygenate for gasoline blending component in favor of bioethanol, provided never seen before values due in part to an already constrained logistical system, inadequate infrastructure and high demand in the spring of the year both on the East Coast and Gulf Coast. Abengoa Bioenergy has continued it s strong presence in the marketplace by maintaining and growing relationships with the leading refiners and marketers in the country. We have ongoing discussions with these energy sector leaders with over 70% of our current production volume sold to these industry leaders. We are extremely please with our continued 100% customer satisfaction rating in 2006 with no customer complaints and our consistent on time delivery of product. We are proud to say that we received the ultimate in support of that customer satisfaction commitment when the scheduling group at one of these energy sector leaders indicated they wished all their bioethanol supply could be purchased from Abengoa Bioenergy Corp. New Projects Construction on the Ravenna, Nebraska project has progressed substantially and the initial start-up of the 88 million gallon per year facility is still expected in the first quarter of Additional projects are also being developed for 2007 that could further increase our presence and supply possibilities for the American Market. Several potential sites have been identified, and initial permitting proposals have been submitted for two specific sites which could be started in Our plans to strengthen our leadership position in the U.S bioethanol industry and to substantially increase our production volumes are well under way, and we expect to significantly increase our market presence in 2007, with growth in both volume and increased market penetration through our e85 programs. Co-Product Sales and Marketing in the US continues to be an important contributor to company revenues. Distillers grains are increasing domestic market share in traditional cattle markets and making headway into hog and poultry rations. Continued improvements in quality and consistency of distillers are combining with high corn prices to increase demand. ABENGOA Activity Report

39 Bioenergy Sustainable Development Research and Development Introduction The mission of Abengoa Bioenergy R&D, Inc. is to develop and demonstrate new technology solutions through science and innovation to achieve Agengoa Bioenergy s Strategic Business Plan Objectives. Main Strategic Milestones Achieved Starch Program Various process improvements were identified in 2005 to achieve bioethanol yield of 2.9 gallons per bushel of corn. Pilot plant experiments were conducted to validate the yield improvements in detailed experimental investigations. Due to low price of corn, process improvements are being evaluated using EBITDA model rather than purely ethanol yield. Based on the validation work, one of the process improvements is being implemented in the York facility. The process improvement will be validated at pilot scale in York facility in the first quarter of Work will continue to validate other process improvements using the EBITDA model in In addition to process improvements, pilot plant experiments were also conducted to evaluate new enzymes and their impact on yield improvements. Work is in progress to implement better performing enzymes in plants. ABRD also concluded all the work with wheat, rye and barley program. Based on the pilot plant work, recommendations were transferred to European plants for implementation. significant improvements being obtained. Efforts are underway to secure intellectual property protection for the novel processing methods. Biomass Enzymatic Hydrolysis Process Development ABRD developed an AspenPlus simulation model for the fractionation and conversion of lignocellulosic biomass to ethanol and co-products. This model forms the design basis for a commercial hybrid cereal and biomass production facility recently proposed to the US DOE. ABRD is also evaluation dry corn fractionation technology as front-end processing for bioethanol plants. This work will continue in Co-Products Novel processing methods have been developed to enhance the nutritive content and value of distiller s co-products. To date, results are very positive with 38 Activity Report 2006 ABENGOA

40 Bioenergy Sustainable Development Biomass Pilot Plant Design and Construction ABRD develops P&IDs, process and functional descriptions, equipment layout, equipment specifications, and purchase all the equipment. A local mechanical contractor was hired to install the equipment. Phase 1 equipment (biomass preparation and pretreatment areas) and 80% of Phase 2 equipment (fractionation, enzymatic hydrolysis, fermentation, and co-product recovery) are expected to be installed by the end of Biocarburantes de Castilla y León The detailed engineering design is essentially complete. Construction of the 5-million L/yr strawto-ethanol commercial demonstration plant is in progress. Installation of the large fermentors and heat exchangers was completed. Purchasing and fabrication of the remaining equipment is in progress. Installation of the feedstock storage building, equipment foundations, pretreatment building, control room, lab, and yeast propagation building is in progress. Gasification and Catalysis Accomplished activities for the development of a bioethanol synthesis catalyst under the ACES project. A project for bioethanol synthesis catalyst improvement selected for award by DoE. Process design and analysis. Techno-economical and environmental assessments. Synthesis reactor studies: Biocomb project, funded under the Spanish National Plan for Research and Development. Feasibility study of natural gas substitution by biomass gasification. that actions are targeted in process design, catalyst research and reactors studies in a parallel scheme. First, regarding catalysis development, Aces project has been accomplished, and a first screening of several metal combinations has been done. Some promising catalytic pathways have been identified. The developed catalysts will be tested at different conditions by the Industrial Research Association of Andalusía (AICIA), in both fixed bed and slurry flow reactors, within the Renew project (funded by the European Commission 6th Framework Programme) and the Biocomb project (supported by the Spanish Ministry of Education and Science) As for the process approach, several technologies and process configurations are designed and studied to identify the best cases and prospects of the technology, to design the production technology and to evaluate the advances in the catalysis research. Furthermore, a feasibility study is being made, in order to assess the possibility of installing biomass gasifiers in bioethanol plants, so that the natural gas consumption is reduced. Several technologies and scenarios have been considered, in principle in the US bioethanol plants. Background project information: The technology for bioethanol production from biomass via termochemical processes is being developed based in an integrated approach, so ABENGOA Activity Report

41 Bioenergy Sustainable Development Fleet Demonstration (e-diesel, FFV, e95) Continue e-diesel laboratory and engine tests at UCLM to select stable blends Determine the implementation costs of e-diesel in captive fleets Implement e-diesel in a captive fleet Background project information: E-diesel is a blend of bioethanol and diesel that could be used in diesel engines without modifications, in order to improve the environmental performance of the engines and to increase the bioethanol market. Other activities accomplished are: Establish agreement with the public transport of Seville (buses) to test e-diesel in several buses Contact with other fleet operators (Rotterdam, Azvi, Ciudad Real, Belgium) Project supported by the European Commission to carry out a state of the art study of bioethanol diesel blends. Bioethanol Reforming The target of this project was to design, construct and operate a 300 kw (at fuel cell outline) bioethanol reformer plant, with high energy integration and a gas cleaning and conditioning system associated able to produce a gas useful for PEM (polymer electrolyte membrane) fuel cells. The initial objectives of the project have been accomplished and a second phase to design and build a compact system will be initiated next year: The design, construction and start up were met in accordance with all the specifications. The reformer produced high quality hydrogen with less than 20 ppm in CO content, suitable for PEM fuel cells. bioethanol reforming is a promising way to produce hydrogen from a renewable source using a patented catalyst, owned by Abengoa Bioenergy. This is the first time that a bioethanol reformer, at such scales (medium size), works with an integrated energy management system at high efficiency, using the heat of the flue and process gases for water and bioethanol evaporation and reheating. Singular Strategic Project (PSE) on energy crops Selection of starch energy crops for bioethanol production: new varieties of cereals Sugar energy crops: stalks of Jerusalem artichoke and sweet sorghum Lignocellulosic energy crops Background project information: Abengoa Bioenergy, Ecoagricola and Greencell are taking part in this project, awarded by the Spanish Government to develop energy crops for different applications (heat, electricity and biofuels). Abengoa Bioenergy leads the development of starch crops for bioethanol production. 40 Activity Report 2006 ABENGOA

42 Bioenergy Sustainable Development Other partners of this subproject are Ecoagricola and the Agrarian Technological Institute of Castilla y León. An evaluation of the subsector of herbaceous crops (cereals) for bioethanol production has been carried out by Abengoa Bioenergy with the participation of the consulting company Deloitte. Interesting and useful results have been obtained that will help the Administration evaluate the benefits and barriers of energy crops in Spain. Also under this subproject Ecoagricola has evaluated the potential of barley and wheat straw as raw material for the biomass-to-bioethanol plant in Salamanca. Abengoa Bioenergy is leading another subproject dealing with J. Artichoke and sweet sorghum as potential sugar crops to produce bioethanol. To implement these crops it is first necessary to determine crop procedures, harvesting periods and sugar yield. New Projects I+DEA Project The I+DEA project has been presented to the Cenit call for The budget reaches 33 M The Consortium is formed by 25 partners 27 research centers carry out part of the research work. Bioscopes State of the art study about bioethanol-diesel blends for the European Commission Background project information: The study has been awarded to Ecofys and Greencell by the European Commission with the aim to evaluate the potential of e-diesel as biofuel for diesel engines. VTT and O2Diesel are collaborators to perform the study. The final report will be published by the beginning Biosynergy Advanced physical/chemical fractionation of biomass Conceptual design of a biorefinery plant Demonstration at pilot scale at Babilafuente Background project information: Biosynergy aims to use biomass for the synthesis of bio-products chemicals and/or materials together Background project information: Greencell is leading the project in pursuit of three main objectives: Develop energy crops for both the current technology and second generation technologies Catalyst selection and design and integration of the gasification and catalytic bioethanol synthesis process Develop bioethanol market through e10, e85, e100, e-diesel and bioethanol-biodiesel-diesel blends. The consortium is formed by important companies, such as Syngenta, KWS, Oryzon Genomics, Cepsa, Derbi, Ros Roca, Idiada... ABENGOA Activity Report

43 Bioenergy Sustainable Development with the production of secondary energy carriers transportation fuels, power and/or CHP through the biorefinery approach. The research is focused on the development of advanced and innovative fractionation and conversion processes combining both biochemical and thermo-chemical pathways, and process development from lab-scale to demonstration at pilot-scale. The coordinator of the project is ECN and the Consortium is formed by companies such as DoW Europe, VTT, Biorefinery.de, CRES, Universities of Aston and Delft, The objective of Abengoa Bioenergy activities is to generate data necessary for the evaluation of various options for physical or chemical fractionation of pretreated feedstock and post-treated materials. These data are necessary for developing process configuration and selecting appropriate equipment for the biorefinery plant. Also to develop a conceptual design of a biorefinery plant that converts agricultural residues of energy crops into bioethanol and value-added co-products. Hybrid Project ABRD has prepared and submitted to DoE a proposal for a large Biorefinery demonstration plant. The total investment cost would be ca. $ 200 Million, with $80 Million (40%) coming from a potential DoE award. The biorefinery would be collocated with a starch bioethanol plant, to form a hybrid complex. The biorefinery will have a conversion capacity of minimum 700 dry metric tons/day and consist of two parts: an Enzymatic Hydrolysis (EH), and a Gasification part. The EH part will convert biomass (400 dry metric tons/day) to bioethanol, lignin, and biomass animal feed. The Gasification part will convert 300 tons per day biomass to syngas, which will be combusted for steam generation. The steam will be used internally in the biomass facility, with the excess being sold to the adjacent starch plant. Partnerships New Partnerships Dyadic Investment As part of the Abengoa Bioenergy R&D (ABRD) strategy to develop an enzymatic hydrolysis technology to convert agricultural residues and energy crops, ABRD made a strategic investment into an emerging enzyme production company. The present business model used by the enzymes companies in grain conversion does not provide an opportunity to capture value on the enzyme production side, an integral part of the enzymatic process and pathway to future production cost reductions. The objective of the Dyadic investment is to capture value on the future growth of the enzyme business and secure an enzyme system for the biomass process on a prefer basis. Existing Partnerships O2 Diesel: ABRD entered into a strategic alliance last year with O2 Diesel to provide funding and commercial support for the development of the oxygenated diesel market in Europe. ABRD maintains numerous partnerships to achieve our strategic objectives. Some of our partners are: Novozymes (enzyme application), Genencor (enzyme supplier), Auburn University (analytical support), NREL (pretreatment, AspenPlus Model, NIR Rapid Analysis), NatureWorks (fermentation) and Taylor Biomass Energy (gasification). 42 Activity Report 2006 ABENGOA

44 Environmental Services Sustainable Development Befesa Medio Ambiente, the holding company of Abengoa s environmental services Business Unit, focuses its activity on providing environmental services for industry and on the construction of environmental infrastructures, while conducting aluminum waste recycling, zinc recycling, industrial waste management and environmental engineering activities. With wastes... we produce new materials by recycling, and we also treat and desalt water to achieve a sustainable globe International leader in industrial waste treatment and environmental engineering

45 Environmental Services Sustainable Development Introduction 2006 has been a very important year for Befesa, both for the excellent results which consolidate the growth from previous years, as well as for the 330 million euro acquisition of the recycling company Bus which has made Befesa the European leader in industrial waste recycling. During 2006 Befesa has continued to treat higher volumes of industrial waste, totalling more than 2,536,140 tons, representing a 34.percent increase compared to Furthermore, its seawater desalination capacity has also increased to more than one million cubic metres per day, equivalent to supplying more than 4.8 million people. This year the Aluminium Waste Recycling Unit has been characterised by the strong revaluation in the prices of raw materials as a result of growing world demand and the increase in energy costs. The unit managed 361,000 tons of aluminium, a 12 percent increase on the previous year. This year has also seen strong growth in the Technology Division at Befesa Aluminio Bilbao which as well as supporting the unit s plants has won important new contracts, including three orders to supply ingot lines to the primary aluminium producers Slovalco, Aluminum Bahrain and Sohar Aluminum. In addition, the Zinc Waste Recycling unit has successfully completed the Environmental Upgrading and Improvement Project at its Asua-Erandio facility which commenced back in Of note among the most relevant activities is the substitution of the old Waelz kiln by a new larger and more technologically advanced one. This operation is part of Befesa Zinc s environmental strategy and is a consequence of the Voluntary Agreements signed the Basque Government s Territorial and Environment Development Department and the companies from the ferrous smelting, non-ferrous smelting and non-ferrous metallurgy sector. During the year, this unit managed 226,603 tons of wastes. Another important event was the signing of the purchase agreement for 100% of the share capital of the Swedish company B.U.S Group AB for 330 million by Aser Recuperación del Zinc, S.L, a wholly owned subsidiary of Befesa Medio Ambiente, S.A. The Swedish company has five operational plants in Europe dedicated to recycling waste from the iron and steel industry generated from the manufacture of common and stainless steel. The agreement became effective on 4 December following the approval of the German antitrust authorities. This acquisition complements Befesa s business carried out by Befesa Zinc Aser in Spain, it strengthens its leadership position in the national environmental sector and it consolidates its presence in the European market through its Zinc Waste Recycling division. The acquisition was financed through a non-recourse loan from Barclays Capital. 44 Activity Report 2006 ABENGOA

46 Environmental Services Sustainable Development It has also been an important year for the Industrial Waste Management business which saw the merger of the cleaning and waste units in September to form a single company called Befesa Gestión de Residuos Industriales. This has allowed Befesa to provide a more comprehensive service to the industry and to maintain its leadership position having treated 1,040,924 tons of hazardous and non-hazardous waste during the year, 10% more than in the previous year. In 2006 Befesa launched its integral management service for agricultural plastic waste (GIRPA) via its Plásticos subsidiary, which provides the company, a specialist plastic pellet manufacturer, with the raw materials required for its production process was also a very strong year for the Environmental Engineering business both nationally and internationally, achieving sales of 285 million and valuing the order book at year end at 413 million. This year the works has continued on the desalination plant at Skikda in Algeria; financing has been finalised and construction has begun on the desalination plant at Benisaf (Algeria); and the capacity of our plants in Algeria has increased to 500,000 m 3 /day. Furthermore, Befesa was awarded the contract for the desalination plant at Bajo Almanzora (Almeria) with a capacity of 60,000 m 3, which forms part of the Spanish government s A.G.U.A. plan. The company also set up a joint venture with the town of Qingdao to construct and operate a 30,000 m 3 desalination plant which can be increased to 100,000 m 3. In relation to Latin America, Befesa has continued to operate well in Argentina, Chile and Peru. Most notably, Mexico has obtained all the licences necessary to construct the industrial waste confinement and treatment centre as well as finalising financing using a project finance scheme. The centre, which is already under construction, is scheduled to come on line in the first half of During 2006 we have continued to develop our strategic R&D&I plan which we launched the previous year and which has allowed us to continue driving our strategy in this field. The projects undertaken are designed to maintain our leadership in desalination and waste water treatment; to develop new technologies for managing industrial waste; and to keep Befesa technologically competitive in the aluminium and zinc industry. Befesa is aware of its responsibility to society and is very conscious of the need for sustainable development. It has to ensure that industrial and financial progress is compatible with environmental stability. This is evidenced by the environmental and quality standards ISO 9001 and ISO that virtually all companies in the Group already hold. This effort is also reflected in the Andalucía environment award presented by the Department of the Environment of the regional government of Andalusia. The award is given to recognise those people, groups or companies in the region who excel in their work to defend environmental values and that have significantly contributed to the preservation, protection and awareness of these values. Every Befesa company has also achieved certification for occupational risk prevention according to the OHSAS standard, highlighting the concern and growing interest by the company to stay at the forefront of occupational health for its employees. ABENGOA Activity Report

47 Environmental Services Sustainable Development Summary of activities Aluminum Waste Recycling This Business Unit is dedicated to the recycling of Aluminum wastes, recycling of salt slags, sale of machinery, and development of aluminum-related technologies. Aluminum waste recycling The most important destinations for the aluminum waste recycling activity for the production of alloys are the manufacturing of components for the automobile industry and the construction sector. The year 2006 was characterized by a strong revalorization of the prices of raw materials, as a consequence of the growing demand worldwide, and the increase in energy costs. Befesa consolidated medium and long-term agreements with customers and providers which guarantee a stable growth and profitability framework. In addition, Befesa Aluminio concluded the final objectives of its restructuring and investment program, which have endowed it with a costs structure and profitability levels that suit market demands. All the activities undertaken during the year focused on increasing the productivity of the different facilities, the reduction of operating costs, and enhancement of our customer service. In 2006, almost 140,000 tons of different aluminum wastes were recycled, with record production and sales of 96,000 tons of alloys. Aluminum slag recycling Salt slag is a hazardous waste generated in secondary aluminum refineries. It is formed by the contaminants contained in the raw materials utilized and by the fluxes added in the casting and refining process. Befesa possesses two plants for the complete valorization of this waste: Befesa Escorias Salinas, located in Valladolid, with a 130,000 ton/year capacity, which provides services for the entire sector in Spain, and Befesa Salt Slags, located in Whitchurch-Shropshire (United Kingdom), with a 70,000 ton/year capacity, which provides a service for all the secondary aluminum foundries in the United Kingdom. Moreover, these plants are prepared for the management of other solid wastes from the aluminum industry; including aluminum slags and the powders generated in the crushing process, filter powders, etc. Befesa is leader in Spain and the United Kingdom in the management of these wastes, and treated an overall of 221,000 tons in 2006, which is a 12 percent increase on the previous year s figure, thereby consolidating a two-figure sustained growth rate in the last few years. Of special note is the growth experienced by the United Kingdom plant and its consolidation as a profitable unit within the suite of Befesa companies. The solvency of the business in Spain and the United Kingdom allows us to consider new challenges to maintain our growth and profitability levels. These include the enlargement of the capacity of our facility in Spain to 150,000 tons/year of salt slags, the development of new processes that allow other wastes from the aluminum industry to be valorized, and the marketing of other aluminum wastes in the United Kingdom. Sale of Machinery and Technology Befesa Aluminio Bilbao s Technology Division, in addition to providing technical assistance to the Business Unit s plants, carries out the design, construction, assembly and start-up of turnkey 46 Activity Report 2006 ABENGOA

48 Environmental Services Sustainable Development facilities for the aluminum and zinc industries. The Division possesses a large list of references for more than 100 facilities in 40 countries. The Division s main products are: - Automated lines for the production of 5-25 kg aluminum ingots. - Running out wheels: these are the links between the kiln and the ingoting line that ensure uniform and foam-free filling of molds. They are part of the ingoting line, but are also designed for existing lines. - Truck loader: an automatic continuous system for loading trucks with the recently produced ingot stacks has been designed. - Rotating kilns: these are very productive, low energy consumption kilns, especially suitable for low metallic content materials. - Slag coolers: for this process, there is an installation whose efficiency has been proven worldwide. It cools the slags and classifies them according to their metal content in accordance with the customer s needs. This process is important to prevent the emission of fumes and combustion of the metal, so that the average value of the resulting slag is increased. In 2002, a new slag cooling system was patented: the compactor, of greater constructive simplicity than the previous system, together with a more compact end product. - Slag treatment facilities: Befesa has developed a system to enrich slags with a minimum loss of metal. The crushing process respects the metal portion and only pulverizes the non-metallic portion. - Design and manufacturing of an ingoting line for Slovalco, Slovakia. The novelty of this 25 ingot per minute capacity production line was the predefined cooling programs in function of the alloy batch. - Sale of two pouring lines with trailer loader for Alba, Bahrain, which are under construction and will be brought into operation during the first half of Sale to Hillside, a Billiton Group company, of the project to integrate into its five ingoting lines, supplied in 1996, the main innovations that have been developed since then. The 2006 trading year was consolidated at exceptional activity levels and the backlog of business guarantees similar levels up to Zinc Waste Recycling The Zinc Waste Business Unit, with all its production centers located in Biscay (Spain), is formed by the following companies: Befesa Zinc Aser, S.A., dedicated to the valorization of steel powders from electric arc kilns and foundries at its plant in Asua (Eradio); Befesa Zinc Comercial, S.A., responsible for the marketing and sale of the primary zinc castings from the Waelz Oxide fabricated by the former; Befesa Zinc Sondika, S.A., dedicated to the recycling of zinc wastes, the majority of which are from the galvanizing industry, to obtain high purity zinc oxide; Befesa Zinc Amorebieta, S.A., which does the same with other zinc wastes and scrap to manufacture rough cast zinc ingot and electrolytic zinc ingot, as The main activities in the 2006 trading year were: - Construction and sale of a 25 ton rotating kiln for the South African company Goswell, responsible for treating all the slags from the Billiton Group. - Design and manufacturing of an ingoting line for Nordural, Iceland. This 27 ton/hour capacity production line included the treatment of the cooling water and was brought into operation in May Design and manufacturing of a stripping system that has been implemented in the Asua plant. ABENGOA Activity Report

49 Environmental Services Sustainable Development well as fine zinc ashes; and Befesa Desulfuración, S.A., whose facilities in Baracaldo produce sulfuric acid and oleum (compound rich in SO 3 ) from residual sulfur recovered in petrochemical sector plants. This year, Befesa Zinc Aser treated 95,273 dry tons of steel powders from electric arc kilns and foundries, and 2,930 tons of other wastes with high zinc content, from which it obtained 39,875 dry tons of Purified Waelz Oxide (D.L.W.O.), with average zinc content above 65 percent. Most of the total volume of wastes from the home market was received thanks to the framework agreements signed with Oñeder and Arcelor for Befesa Zinc Aser to manage the powders generated in the main Basque Region steelworks. Up until now, Befesa Zinc Aser has recycled approximately 1,785,000 moist tons of powders that contained 400,000 tons of zinc and 25,000 moist tons of other wastes rich in this metal, with which 635,000 dry tons of Waelz Oxide with an average of 60 percent zinc, have been produced, which represents some 380,000 tons of recovered zinc metal. Befesa Zinc Comercial has sold practically all the Purified Waelz Oxide manufactured by Befesa Zinc Aser over the period. Of note is that this product has gone to the traditional customers from the zinc electrolysis sector, such as Asturiana de Zinc and Umicore. Befesa Zinc Sondika recycled 11,800 tons of different zinc wastes, most of which came from the galvanizing industry; this figure is a 2 percent increase on the previous year. The increase in treated volume is due to agreements reached with large national producers of this type of waste, which have enabled the supply of zinc mattes for the manufacturing of ZnO to be increased by 30 percent on the previous year. Of the mattes acquired in 2006, some 1,491 tons were supplied by Befesa Zinc Amorebieta and the rest were supplied directly by galvanizers or intermediaries. The production of zinc oxide (ZnO) reached 11,600 tons, a quantity similar to that registered the previous year, and 2,800 tons of by-products were obtained. Throughout 2006, Befesa Zinc Sondika strengthened its position in the market with its current customers and with the inclusion of new customers, with great growth potential, in its portfolio. Product sales were 11,023 tons. In 2006, Befesa Zinc Amorebieta recycled 11,500 tons of zinc wastes, of note among which are 2,412 tons of cast zinc ashes and 2,800 tons of zinc scrap, which represents a 35 percent increase on the previous year; thanks to the penetration in new raw material supply markets abroad. The total volume of product and by-product manufacturing was 11,300 tons. Of note were the 3,346 tons of cast zinc ingots and 159 tons of electrolytic zinc ingots. The production of fine zinc ashes rose to 2,778 tons. Befesa Zinc Amorebieta s overall sales rose to 12,600 tons, of which 9,450 tons were finished products. 48 Activity Report 2006 ABENGOA

50 Environmental Services Sustainable Development Befesa desulfuración processed 105,000 tons of sulfur from desulphurization wastes to obtain a production of 321,600 tons of acid equivalent, with an associated generation of electric energy of 82,000 MWh which, following deductions for selfconsumption resulted in the sale of 54,000 MWh surplus energy. As regards the origin of the sulfur, the supply from Repsol Derivados increased from 65 percent in 2005 to the current 77 percent, to the detriment of the supply from France. The supply of sulfur in liquid state also increased to 22 percent of the total. In 2006, Befesa Zinc Aser successfully concluded the Upgrading and Environmental Enhancement Project for its Asua-Erandio facility that commenced back in Over this period, the company has invested more than 22 million euro. The most significant activities include the substitution of the old Waelz kiln by another larger-sized and more technologically advanced one, the installation of a new cleaning system for the gases from the Waelz plant with activated carbon injection for the retaining of dioxins and mercury, and the replacement of the Waelz Oxide drying kiln by a radiant product drying system by infrared. The remaining investments were used for relocating and redimensioning the plant s production units to be able to meet the increase in capacity due to the functioning of the new Waelz kiln. This project was developed in harmony with the Company s environmental strategy, the main priorities of which include fulfillment of the Voluntary Agreements signed with the Basque Government s Department of Territorial Planning and Environment and with the main companies from the Ferrous Casting, Non- Ferrous Casting and Non-Ferrous Metallurgy sectors, prior to the coming into force of Act 16/2002, of July 1, on Integrated Pollution Prevention and Control (IPPC). The investments made by Befesa Desulfuración, in 2006, focused especially on the conditioning of the process and turbo-generator control systems, the reactive power regulation systems for optimizing electricity billing, and the purchase of spare parts for the process equipment On December 4, Befesa acquired BUS Group AB, once the German competency authorities gave their authorization for the transaction. This went ahead following the valorization of BUS in 330 million euro. The BUS Group conducts two activities: recycling of steel powders from electric arc kilns and smelting processes, and recycling of steel powders from the stainless steel industry. The first of these activities coincides with that conducted by Befesa Zinc Aser and consists of the valorization of steel powders from electric arc kilns and the obtaining of a zinc oxide known as Waelz Oxide with from 55 to 65 percent zinc content. Its treatment capacity is 450,000 tons at its three facilities; two of which are in Germany, in Duisburg and Freiburg, and the other in France, in Fouquiére-lez-Lens. The recycling of steel powders from stainless steel processes is done, basically, under a fee regime with the producers of stainless steel. By treating the stainless steel powders different materials such as nickel are obtained, and these are returned to the steel producers for use in the process. Its treatment capacity is 125,000 tons at two plants, one in Garvelines (France), and the other in Landskrona (Sweden). BUS s operations were incorporated in Befesa during the course of the last month of the 2006 trading year and, therefore, the contribution in treated tons is not yet significant compared to the Company s total, although, in the 2006 trading year, BUS group treated more than 400,000 tons of steel powders and more than 125,000 tons of steel powders from the stainless steel industry. With this acquisition, Befesa is now Europe s leader in the treatment of steel powders from electric arc kilns, which allows it to reduce costs and jointly develop new technologies in this field, while also opening up the possibility of new business opportunities in Eastern Europe. ABENGOA Activity Report

51 Environmental Services Sustainable Development Industrial Waste Management In September, the cleaning and waste units were merged and this gave rise to a single company, Befesa Gestión de Residuos Industriales. With this merger a more complete integral service is provided for industry with the objective being to recycle and valorize, and the goal customer satisfaction while respecting the environment. Wastes Division This Division s activities are related to the treatment of hazardous and non-hazardous wastes, their transportation and treatment, as well as environmental assessment. It works with public and private customers and provides services for both the small and large producer. Bgri maintained its noteworthy position as a final manager during the year. Its Nerva, Palos, and Cartagena centers managed more than 400,000 tons. The non-hazardous activity was reinforced with urban solid wastes and industrial wastes integral treatment plants in Torija (Guadalajara), Utrera (Seville), Gador (Almeria), and Cevico de la Torre (Palencia), and with the Ajalvir (Madrid) and Alcala de Guadaira sorting plants. As regards contaminated lands, in 2006, Bgri treated more than 100,000 m 3 with the following operations: Plastificantes de Luchana (Bilbao), Former Tussam Bus Depots (Seville), lands in Cartagena for the construction of a hospital, and the former Fertiberia facilities in Seville Port. Another noteworthy activity is the integral management services. This year, the confidence in, and the made to measure service provided by Befesa for its customers resulted in an increase in the number of integral management services. This year, the Lucena (Cordoba) hazardous waste transfer center, specialized in timber and sister wastes came into operation, and complements the existing Ajalvir (Madrid), Alovera (Guadalajara), Paterna (Valencia) and Puebla de Alfinden (Zaragoza) transfer centers. The Deba (Guipuzcoa) center will provide services for companies in the north of Spain as of from next year. Following the acquisition of 100 percent of the shares of Albega, the center is now called Palos Center. It is here that the conditioning of organic and inorganic wastes is conducted for the subsequent valorization thereof. In 2006, Bgri experienced a 24 percent increase in management activities, and reached the figure of 766,000 tons of industrial wastes due to the contribution from the urban solid wastes and nonhazardous industrial wastes integral treatment plants, and to the consolidation and loyalty of its customers. Cleaning Division The Industrial Cleaning Division conducts its activities in the industrial services sector for public and private sector customers, through a wide-ranging offer that includes solids, liquids and sludge suction and blowing operations, high pressure cleaning works, the utilization of water at very high pressures for demolition, cutting and specialized cleaning operations, changing of catalyst beds, tank and pipe cleaning, management and treatment of wastes at the customers own facilities, and tank cleaning services in refineries and large oil facilities. The company s customer portfolio includes large companies such as oil companies and multinationals from the chemical and electric sectors, and small companies, individuals and municipalities. The situation in the company s objective market is characterized by the tendency of companies to 50 Activity Report 2006 ABENGOA

52 Environmental Services Sustainable Development and telecommunication conduits, articles such as flower pots, large baskets and decanter cases, and to obtain modified asphalts. Its production capacity, together with the constant and homogeneous quality of its pellets, has made the company the leading supplier of recycled pellets in Spain and the European Union, where 80 percent of its total production is exported to. outsource services that are not directly related to production, a stricter legislative and statutory environment, and a production model that seeks to be more agile and flexible. Thus, the Cleaning Division continued to develop a strategy designed to consolidate an enterprise model capable of providing specialized industrial services and of adapting to the needs of the market. During the past two years the company structuring and operation organization processes were concluded, technical and human resources brought in, and contracting ratios were improved. The position of the company in the market has been consolidated and the company participated in the main stoppage processes in the petrochemical sector in Spain and has established a dynamic organization to satisfy the needs of large customers from the petrochemical, paper, cement, energy and siderurgy sectors. In addition, the bases have been laid to undertake gradual international development which will capitalize on the experience gained on projects executed at home. Of note, in 2006, was the growth in the mechanical cleaning, tank cleaning, mobile plant, special cutting and chemical cleaning fields of activity. Plastics Befesa Plásticos specializes in the manufacturing of special low density polyethylene pellets by recycling plastic sheeting that has been used as greenhouse covering. The marketed pellets are utilized in different applications, of note among which are the manufacturing of sheeting for the construction sector (waterproofing and protection), large-sized sacks and rubbish bags, signal meshes, irrigation pipes, electric Befesa has brought a service called Integral Management of Plastic Agricultural Wastes (Girpa, in Spanish) into operation. This provides the company with the raw material required for its production process and an extremely attractive and rigorous integral waste management service (guarantee of traceability, issuing of waste management certificates, organization, etc.) for potential customers. This service has been implemented in the Costa Tropical Association of Towns and Villages, in Granada, in the Bajo Guadalquivir Association (Seville), in the Union of Cooperatives of Extremadura Unexca, in Axarquia, in Malaga, as well as in certain agricultural companies. Throughout 2006, Befesa Plásticos recycled 12,780 tons of sheeting and used irrigation pipes, and produced 9,100 tons. PCB Befesa Gestión de PCB, S.A. is specialized in providing efficient collection, transportation and disposal services for PCB-contaminated materials while recovering all the reusable materials and disposing of the contaminated ones, utilizing the most advanced technology. In 2006, Befesa Gestión de PCB treated more than 2,900 tons of PCB-contaminated devices and materials, an increase on the 2005 figure. Befesa Gestión de PCB is the reference company in PCB treatment in the electric sector. During the year, it continued operations for its main customers; Iberdrola Distribución Eléctrica, with whom it has renewed the PCBs management contract; and Endesa. Furthermore, HC Energía chose Befesa to manage its contaminated transformers. In addition, ABENGOA Activity Report

53 Environmental Services Sustainable Development equipment from companies and institutions involved in a wide range of production sectors and from all the Autonomous Regions was treated. The importing of PCB-contaminated equipment from Argentina was reactivated, an activity that was being carried out in collaboration with Befesa Argentina since the year During the year, imports from Portugal commenced with the collaboration of Befesa Gestión de Residuos Industriales. Environmental Engineering The Environmental Engineering activities focus on the construction and operation of infrastructures and the providing of services for integral water cycle and waste management. Activities and Positioning The Environmental Engineering unit conducts two lines of activities: Construction, in which Befesa Construcción y Tecnología Ambiental, Befesa Fluidos and Codesa are integrated. Befesa Construcción y Tecnología Ambiental covers the international market and the construction of the larger scope hydraulic infrastructures in Spain. In addition to the contracts awarded on the home market in 2006, Befesa commenced the setting up of international offices and permanent premises, the first phase of which is scheduled for completion in 2007 with a stable presence in the United States, Mexico, Nicaragua, Ecuador, China, India, Algeria and Morocco. in this field. The rest of its activity was conducted in its other lines of operation: hydraulic works and large pipeline systems, water supply and purification, hydroelectric plants, water treatment, automatic data and control systems, and waste plants. On the other hand, its R&D&I activity was consolidated in the Desalination field with six projects underway and its launching in the wastewater treatment sector commenced. Codesa is a company that specializes in water treatment, supply, purification, hydraulic and environmental measures activities, mainly for the public administration sector. Of note during the year was the strengthening of its collaboration activities with different Regional Government of Andalusia environmental management companies. Befesa Fluidos specializes in industrial water treatment for the private sector, input as well as process and wastewaters, and it complements this activity with others such as powder capturing, and the handling of fly-ash and slags in Thermal Power Plants. Operation. In the water sector, the activity is conducted through Befesa s participation in the company Agua y Gestión, S.A. The companies During the year, Befesa consolidated its leading position in the global market, at home and internationally, in the desalination sector, thanks to the contracts that were awarded over the last few years for large desalination plants with reverse osmosis technology. In the irrigation sector, the different projects executed and new contracts awarded during the year under the National Irrigation Plan confirmed its leadership 52 Activity Report 2006 ABENGOA

54 Environmental Services Sustainable Development Iniciativas Hidroeléctricas, S.A., concessionaire of the operation of the Cerrato (Palencia) fall, and Procesos Ecológicos Vilches, S.A., proprietor of the pig slurry treatment plant in the locality of the same name in Jaen province, also operate in this line of activity. Construction. Main Activities in 2006 A significant event in 2006 was Befesa s consolidation in the international market, which had commenced in previous years, especially in the Desalination sector. The signing of the financing agreement for the second of the three desalination plants contracted for execution in Algeria through the Spanish consortium Geida, the enlargement of the capacity initially foreseen for two of these plants up to a total capacity of 500,000 m 3 /day in the country, together with another project in Morocco a seawater lead line for industrial use, and the recently awarded contract for Qingdao desalination plant in China, are a clear reflection of the company s aforementioned consolidation and set the foundations for its expected solid sustained growth. Once the three desalination plants are operating in Algeria, which represent an overall investment of 460 million dollars, the Spanish consortium will be capable of providing drinking water to a population of more than 2,500,000, and expectations are for revenues in excess of 2,850 million dollars for water sales over their 25 years of operation. Desalination Capacity enlargement and financing agreements for desalination plants in Algeria. The 150,000 m 3 / day Beni Saf project was awarded to the Spanish consortium Geida in In 2006, negotiations were completed with the Algerian Government to enlarge said plant s capacity to 200,000 m 3 /day and the project contracts and financing agreements for the operation were also signed. In addition, the consortium was also awarded the enlargement contract for the Tlemcen-Hounaine desalination plant, the capacity of which will be increased from 150,000 m 3 /day to 200,000 m 3 /day. Bajo Almanzora (Almeria) desalination plant. The contract includes its construction, operation and maintenance for 15 years. The plant s desalination process will be reverse osmosis and it will be provided with the most efficient energy recovery technology currently available: isobar chambers. A total of 15 municipalities and more than 12,031 hectares of agricultural land will benefit from the plant s 60,000 cubic meter per day production capacity. Qingdao (China) desalination plant: During the fourth quarter of 2006, Befesa established a joint venture with Qingdao City Council for the design, construction and operation of a desalination plant to be located in said city. The desalination plant, with reverse osmosis technology, will be capable of producing, in a first phase, 30,000 cubic meters of industrial and drinking water per day. This could be enlarged to 100,000 cubic meters/day in a second phase. Befesa will be solely responsible for the construction and 25-year operation of the plant. New Cartagena Canal desalination plant: In 2006, with the commissioning of all the reverse osmosis modules following completion of the brine discharge outlet works, the plant reached its 65,000 m 3 /day nominal capacity and it can now contribute to the hydraulic system of the Canales del Taibilla Association, responsible for the primary network water supply to 77 municipalities in Murcia, Alicante and Albacete, a water volume equivalent to the consumption of a population of more than 250,000. ABENGOA Activity Report

55 Environmental Services Sustainable Development Irrigation Systems Canal de Navarra Irrigation Area. Canal de Navarra chose the consortium formed by, among other companies, Caja de Navarra and Befesa, for the construction and operation of the first phase infrastructures of the Navarra canal irrigation area, that is to say, up to the river Aragon, a tributary of the Ebro. Upgrading of Carlet (Valencia) Irrigation Area. In October 2006, the Ministry of Agriculture inaugurated the upgrading works of the El Carlet irrigation systems constructed by Befesa. These works allowed hectares to be changed from traditional irrigation to drop irrigation, from which 1,200 irrigation subscribers are benefiting, and up to 40 percent water saving is being achieved. Hydraulic Works and Large Pipelines Jorf Lasfar Lead Line (Morocco). The company Maroc Phosphore awarded Befesa the contract for the seawater lead line to feed the cooling system and the rest of the services of the new phosphoric acid production lines at its manufacturing complex in Jorf Lasfar, a locality on the Atlantic coast of Morocco. The work will comprise a canal to transport 75,000 m 3 /h of seawater, connection between tanks, a pumping station with three 7,500 m 3 /h capacity motor pumps (enlargeable to double) and the plate lined concrete pipeline network to distribute 45,000 m 3 /h from the pumping station to the production lines. Retortillo-Ecija (Seville) pipeline. These works will guarantee the supply to the municipalities of the Ecija Consortium, with 200,000 inhabitants. They consist of the replacement of 34 kilometers of pipeline, mostly 1,200 millimeter diameter, two pumping stations for water circulation and the corresponding offtake. The works were awarded to Befesa in 2006 by Egmasa, a Regional Government of Andalusia company. Drive pipeline for Segriá Sud (Lerida) irrigation system. In 2006, works were completed on the two flow pumping stations and the drive pipeline for Regs de Catalunya, a public company under the Regional Government of Catalonia. Overall, a flow of 3.2 cubic meters per second is raised to a height of 297 meters. Ugarte-Kareaga (Biscay) Collector. Aguas de Bilbao Consortium awarded Befesa the construction of the Ugarte-Kareaga wastewater collector and the array of interceptors required to collect the district s wastewaters. It is the first hydraulic works contract for the public water sector to have been awarded to Befesa in this Autonomous Community. Hydroelectric plants for the Negratin-Almanzora Connection (Almeria). In the last quarter of 2006, Tijol and Los Manueles hydroelectric power plants included within the scope of the Negratin-Almanzora Connection works, which by means of a 120 km pipeline transport up to 50 Hm 3 per year between both basins, were brought into operation. New Security Reservoir and Elevating Station for Torrealta (Murcia-Alicante) DWTP (Drinking Water Treatment Plant). Towards the end of 2006, the Canales de Taibilla Association, a body under the Ministry of the Environment, awarded Befesa the contract for these works. The objective is to expand the facilities that supply raw water to Torrealta DWTP, so that there is sufficient storage capacity to guarantee the supply of drinking water in the event of 126 to 171-hour maximum duration cut-offs from the supply canal Valmayor and Pedrezuela (Madrid) hydroelectric power plants. Befesa was awarded the contract for these two power plants for Canal de Isabel II de Pedrezuela and Valmayor, to be constructed at their respective dam toes. They are designed for a three cubic meter per second flow with a maximum fall of 54 Activity Report 2006 ABENGOA

56 Environmental Services Sustainable Development meters for Pedrezuela and meters for Valmayor. Supply and potabilization Enlargement of the El Conquero (Huelva) Drinking Water Treatment Plant (DWTP). With these works, awarded to Befesa by the state-owned company Hidroguadiana, the plant will increase its current treatment capacity from 45,000 m 3 /day to 90,000 m 3 /day. The scope includes, among others, an ozonization and remineralization treatment process. The works respond to the need to meet the demand from the city of Huelva s increasing population and the treatment plant will be conditioned to meet the quality parameters established in current legislation. Supply to the Ojá-Tirón (La Rioja) system. Befesa will construct the infrastructures required to solve the water supply problems in this area, which will include the water capturing system, drinking water treatment plant, more than 200 kilometers of distribution pipeline network (145 kilometers of which will require new pipes), four pumping stations and all the complementary installations to guarantee system operation to supply a population that is expected to be around 76,000 by the year Supply to Sallent, Avinyó and other Barcelona municipalities. Befesa was awarded this contract by the Regional Government of Catalonia s company Agencia Catalana del Agua. The objective is to solve the water supply problems of the Barcelona municipalities of Sallent, Avinyó, Artés and Calders and the rural nuclei of the Morisco mountain range, providing a supply service for a population of more than 11,000. The works include water capturing from the river Llobregat, its potabilization and subsequent distribution, with four pumping stations and two reservoirs. Treatment and Reutilization Tertiary treatment at Alcoy (Alicante) wastewater treatment plant (WWTP). With these works, awarded in 2006 by Entidad Pública de Saneamiento de Aguas Residuales de la Comunidad Valenciana, local industries will be able to reutilize the water treated in this WWTP, some 15,000 m 3 /day, for their production processes. Almonte, Rociana del Condado and Bollullos (Huelva) WWTPs. The construction of the collectors and treatment plants of Almonte, Rociana del Condado and Bollullos Par del Condado, localities situated in the surrounding areas of Doñana National Park, will guarantee the treatment levels of the discharge waters required for environmentally sensitive areas, from a population that is expected to grow to more than 40,000. Corral de Almaguer and Cabezamesada (Toledo) WWTPs. These two treatment plants, that will serve a population of 21,000, will be constructed for the Council of Communities of Castilla-La Mancha, through the entity Aguas de Castilla-La Mancha. The towns involved are characterized by the differences in population in summer and winter seasons, and this conditions the process that is to be developed. Bornos (Cadiz) WWTP and Durcal y Nigüelas (Granada) WWTP. In 2006, the Regional Government of Andalusia, through Egmasa, awarded Befesa the contract for these two projects. Overall, they will serve a population of around 15,000. Industrial water Treatment of Leachate at Montalban (Cordoba) Waste Plant. In 2006, Epremasa, the Provincial Company for Wastes and the Environment, awarded Befesa the construction contract for a leachate treatment plant for the Montalban Plant, where the wastes produced in 52 municipalities with a population of more than 450,000 are treated. The capacity of the leachate plant will be 29,000 m 3 /year (11,000 generated in Montalban and the rest in other centers) by means of MBR (Membrane Bio Reactor) aerobic biological process, ultrafiltration and, finally, a reverse osmosis phase that enables the reutilization of the treated leachate in other activities. ABENGOA Activity Report

57 Environmental Services Sustainable Development La Paloma (Madrid) leachate plant. Also contracted in 2006, it will be located at the La Paloma biomethanization facility in Valdemingomez Environmental Complex, the Autonomous Community of Madrid s current dump. This plant will treat a daily flow of 110 cubic meters. Leachate plant for the waste sorting plant in Zaragoza. It will treat a daily flow of 200 cubic meters utilizing the same process as indicated above. Arcelor (Asturias) wastewater treatment plant. Befesa was awarded the works to reform the wastewater treatment plant at the Arcelor complex in Gijon. Befesa will construct a physicochemical type facility that will allow treatment of the different flows from the different steel production processes. Operation. Main activities in 2006 Since the 2003 trading year, Befesa holds a more than 35 percent stake in the company Agua y Gestión de Servicios Ambientales, S.A. Throughout this period, Aguas y Gestión has managed the Municipal Services of El Ejido (Elsur), Almeria, and the services of Aguas de Baena, in Cordoba, San Jose del Valle, Barbate and Vejer, in Cadiz, Herrera, in Seville, and Puebla de D. Fadrique and Ugíjar, in Granada. In addition, in 2006, the company was awarded a 73 million euro contract to manage the supply and treatment services for the 17,000 inhabitants of the Extremaduran municipality of Zafra for 20 years. This contract, which is a giant step in Agua y Gestión s strategy, a company whose presence is everincreasing inside and outside Andalusia and which is now providing services, including this municipality, for a population of more than 200,000. Furthermore, the pig slurry treatment activity continues through the operation of Vilches Treatment Plant (Jaen). Latin America Befesa is present in the following countries: Argentina, Chile, Peru and Mexico, where it is dedicated to industrial waste management and environmental engineering. Befesa Argentina Most significant works: Conditioning, exportation and final disposal of transformers contaminated with polychlorate biphenyls (PCBs): In 2006, Befesa Argentina managed to reinitiate the exportation of PCB-contaminated transformers, with a first shipment of 22 tons that was sent to Befesa Gestión de PCB s facilities in Cartagena, to be suitably treated. Works in progress: Oil Company Sector: 1. - Operation of the Alfa Laval Plant and US Filter Plant in Repsol YPF s La Plata Refinery: two horizontal centrifuges owned by Befesa Argentina and installed in the effluent treatment plant (US Filter) are operating, and operation of the Alfa Laval Plant, owned by Repsol YPF, is being conducted. These plants operate 24 hours a day, 365 days a year Slop Oil Unit, Tank 265, Repsol YPF s La Plata Refinery: Work continues on the plant installed by Befesa Argentina for the recovery of hydrocarbons by means of the separation into three phases of the product contained in tank 265. This 100,000 m 3 capacity tank functions as a receiver of the slops from the Refinery s other tanks. In the 28 months it has been operating, Befesa has processed 70,034 m 3 of product, and has delivered to Repsol YPF, as byproducts, 79 percent of the treated volume as clean water, four percent as solids and the remaining 17 percent as HC leachate under specification. This plant comprises two Horizontal Decanter centrifuges and two vertical centrifugation modules, Alfa Laval make, an Analysis Laboratory and Workshop modules, store, canteen and dressing rooms. 20 people are involved in this project that operates 24 hours a day, 365 days a year. 56 Activity Report 2006 ABENGOA

58 Environmental Services Sustainable Development Transportation, incineration, inerting and final disposal: as regards the transportation and treatment of special wastes, the main customers are: - Automobile Industry: Daimler Chrysler, Ford, Peugeot-Citroen, Toyota Argentina and Volkswagen, for whom transportation and final disposal services by security dump back landfill of maintenance wastes, paint slurry, cataphoresis sludge, oils, empty containers, etc., are provided. - Oil Industry: Esso, Repsol YPF and Shell CAPSA, for whom transportation, incineration and final disposal services by security dump back landfill of maintenance wastes, coke carbon, insulators, spent catalysts, contaminated land, etc., are provided.. - Pharmaceutical Laboratories: Bayer Argentina SA, Lanxess SA, Raffo, GlaxoSmithKline Argentina and Cardinal Health, for whom transportation, incineration and final disposal services by security dump back landfill of out-of-date medicines, products outside specification, raw material packings, etc., are provided. - Chemical Industry: Rohm & Haas, TFL, Procter & Gamble, for whom transportation, incineration and final disposal services by security dump back landfill of maintenance wastes, effluent plant slurry, raw materials outside specification, etc., are provided. Contracted Works Transportation, treatment and final disposal of foundry waste from the company Acebrag. The contract includes treatment of an important volume of passive and of the uninterrupted generation process slag from the filters. Enlargement of Facilities During 2006, investments were made in enlarging Befesa Argentina s facilities, mainly its Security Dump, situated in the locality of Campana. Works commenced in June on the enlargement of the second phase of the Security Dump and the same are scheduled for completion prior to the end of the year. On the other hand, the new offices at the Campana facility were inaugurated in November. These improve working conditions with the commodities and equipment required owing to the growth thereof. Befesa Chile The activities of Befesa Chile can be divided into two fields. The first is the providing of Environmental Engineering services, and the development of several projects commenced, of note among which are: - Elaboration of detailed engineering, economic assessment and profiling of technical specifications for BHP Billiton s Minera Escondida and for Sanitary Backfill and non-hazardous industrial wastes dump. - Elaboration and presentation to the environmental authorities of the Environmental Impact Statement study for the Minera Escondida Sanitary Backfill and Industrial Wastes Dump project, to obtain the necessary construction and operation permits for the same. - For BHP Billiton s Cerro Colorado mining company, the basic Engineering Study and elaboration of the Hazardous Waste Treatment Plan pursuant to the new legislation, was carried out. - The detailed engineering for the Sanitary Backfill and the preparation of the Operating Manual for suitable handling was also done for the same mining company. The second field of activity focused on General Coordination of activities dedicated to bringing about the execution of Proyecto Soluciones Ambientales del Norte (Northern Region Environmental Solutions Project), the objective of which is the treatment and disposal of hazardous and non-hazardous industrial wastes. The following activities are of note: management of land purchasing with Chile State, consolidation of mining properties, elaboration of terms of reference, tendering, and coordination of the project construction detailed engineering, and development of commercial outlook and deed of incorporation. ABENGOA Activity Report

59 Environmental Services Sustainable Development Befesa Peru Having completed its third year in operation, Befesa Peru continues to increase its customer portfolio, this time by a 40 percent on 2005, and it now carries out operations for 190 customers. This has been reflected in the 37 percent increase in sales for treatment and final disposal of industrial wastes. Befesa also commenced operations in the field of direct waste collection and transportation services, with the purchase of its first truck 15 ton capacity which is being utilized on the La Pampilla Refinery Waste Management project (Repsol). In addition, the intention is, with a view to enhancing the efficiency of this service, to purchase a six-ton trailer to partially free the truck to provide services for other customers. This year, pursuant to the company s development plan, a conditioning service commenced for PCBcontaminated electric equipment with a view to commencing exportation thereof early in The company s main customers include: Repsol, Hunt Oil, Newmont, Xstrata, BHP Billiton, Pluspetrol, Goodyear, Petroperú, Basf and Endesa. In 2006, the company dedicated more than one percent of its annual billing to an integral support program for the communities in the vicinity of the deposit, focusing mainly on assistance activities, of note among which is the electrification of the water pump for the well of the Papa Leon XIII community. In 2006, Befesa México managed to meet three objectives in the construction project for a hazardous industrial wastes treatment and disposal center in Mexico (called Sustainable Development Systems ), which were: the obtaining of all the permits required for the construction of the same, the closure of non-recourse financing under the Project Finance scheme, and commencement of construction of the center These position Befesa as a reference company for forthcoming years in industrial waste management in the Republic of Mexico saw the company enter the fields of remediation and industrial cleaning with the presentation of several bids to Pemex. In parallel to the aforementioned activities, work commenced on advance studies for the development of a social responsibility project focused on the communities in the vicinity of our project. Befesa México Since 2001, Befesa México is promoting the implementation of the industrial waste management activities Befesa carries out in other countries, with the exception of those conducted by Befesa Construcción y Tecnología Ambiental. The reference project is the promotion, construction and operation of a treatment and final disposal center for hazardous industrial wastes and, as complementary activities, the remediation of environmental passives and industrial cleaning operations. 58 Activity Report 2006 ABENGOA

60 Information Technologies Information and Knowledge Society Telvent, the holding company of Abengoa s businesses in the Information Technology sector, provides high value-added solutions in four industrial sectors (Energy, Traffic, Transport, and the Environment). Its technology allows companies to make real-time business decisions utilizing data control and acquisition systems, as well as leading-edge operational applications that provide companies with secure and efficient information. With Information Technology we transform data into knowledge, providing effective operational and business real-time decision making for traffic, transport, energy and environment International leader in the energy, traffic, transport and environment sectors ABENGOA Activity Report

61 Information Technologies Information and Knowledge Society Energy Oil and Gas In 2006, the energy markets worldwide were spending at extremely high levels to keep up with increasing consumer demand. This demand has subsequently driven the price of energy products to record levels. This trend, which is expected to carry forward and increase momentum, has resulted in a significant increase in capital budgets for energy sector participants in This factor, combined with the anticipated continuing rapid pace of mergers and acquisitions has created new opportunities for technology solution providers such as Telvent. During the past year, energy companies have been targeting infrastructure growth, given the high energy prices. This rapid growth has placed a focus on cost reduction and better decision making, enabling companies to better cope with growth and ongoing business changes. Given the need for cost management, combined with a shrinking experienced work pool and increased regulatory pressures, energy companies have come to realize that automation and information management technology is the most efficient way of achieving these goals. Based on product and services demand, and customer feedback, Telvent s solutions have clearly demonstrated their ability to meet those customer requirements. In 2006, Telvent continued to focus on transitioning from a data acquisition and control application supplier into an enterprise level integrated solution provider of business applications and IT infrastructure, a focus which has been highly supported by our Energy customers. This in turn has enabled Telvent s oil, gas and electric utility customers to transition their operations into a secure, truly RealTime IT enabled business. This strategic shift was made possible not only through continuous improvements in Telvent s products and services, but also the added strength and flexibility contributed by the strategic alliances that Telvent has developed with SAP, ESRI, Symantec, OSIsoft and other technology partners. It is quite evident that the global energy industry continues to look at the direction, initiatives and projects of the North American energy sector as a blueprint for their future investments and success. Telvent s strong performance in North America and abroad during 2006 signifies an increasingly important role for this company in terms of leveraging the energy infrastructure investments for existing and new customers. Electricity In 2006, Telvent achieved exceptional results in the Spanish electric sector, as we continued to capitalize on the ongoing investments being made by the main electric utilities in both distribution and transmission. Renewable energy also took on considerable importance during the year, with special emphasis on biomass plants and solar power stations. Focusing on the rest of Europe, attention should be drawn to the major progress made on the Automated Meter Reading (AMR) project, commissioned by Vattenfall (Sweden) in The start-up, pilot tests and initial results from the system s deployment all met the client s expectations. Vattenfall s high level of satisfaction with Telvent s efforts resulted in a year-end signing of two new extensions of the contract for an additional 200,000 meters. This will result in the total number of residential consumers using Telvent technology to increase to 500,000 by early Activity Report 2006 ABENGOA

62 Information Technologies Information and Knowledge Society In Latin America, we maintained our market share in both Mexico and Brazil, winning major contracts, particularly in the transmission sector. Our success in new sectors of the Mexican energy market, including hydroelectric power and traction, which are projected to experience significant growth in coming years, was particularly noteworthy. In the rest of Latin America, we remained active with new projects in Chile, Bolivia, Costa Rica and Venezuela, where the project to modernize the state utility Cadafe s distribution network is already underway. This particular project is especially important, as it will include use of our Electric Suite of applications, which unifies and integrates all Telvent products for the electrical power distribution sector: ArcFM, Responder, Telvent DMS and OASyS DNA. In North America, the Telvent SAGE 3030 substation automation platform has gained rapid acceptance in the electric utility community. The SAGE 3030 is designed to facilitate the integration of (Intelligent Electronic Devices) IEDs within the substation, while providing a robust platform for the development of operational applications within the substation environment. As an indication of the increasing popularity of the SAGE 3030, sales in the North American substation automation sector during 2006 have increased 20% over the previous year. The client base for the ArcFM Solution continued to grow as well with an addition of 44 new accounts during this past year, with the majority of these coming from the international market, resulting from the combined efforts of Telvent s distributor network and Telvent s global office network. Most Relevant Projects Within the Energy segment, the most significant project awards during 2006 include the following: In Europe: Project for Adif, in Spain, for the supply, installation and commissioning of the telecontrol equipment for the substations that supply electricity for the Madrid-Segovia high-speed rail line. This equipment was developed entirely with Telvent technology, based on more than 20 years of experience in the railway transport business. Project for REE, for the design, engineering, supply, installation and commissioning of the Integrated Control System for the Benejama Substation. This system was developed entirely with Telvent technology in accordance with the demanding functional and electromagnetic compatibility standards that were mandated for this system implementation. Project for Endesa in Spain for the supply, installation and commissioning of the integrated control and protection systems included in the Tramontana Plan. This plan entails the modernization and construction of over 40 substations in the distribution zone administrated by Fecsa Endesa. Contract with Sodean (the Energy Agency of Andalusia) in Spain for the implementation of the SINEA (Andalusian Energy Information System) installation. This project will be carried out as a joint venture with Sadiel and Isotrol and includes the tools necessary for the Andalusian provincial government to manage its regional energy resources. Contract with Abener for the supply, installation and commissioning of a distributed control system for the bioethanol facility that Abener is constructing in Lacq, France. Contract with Abener for the supply, installation and commissioning of a distributed control system for managing the electric energy generated from a biomass production plant in the province of Salamanca, Spain. Contract with Abeinsa, in Spain, for the supply of a delegated dispatch for the Abengoa- ABENGOA Activity Report

63 Information Technologies Information and Knowledge Society owned Generating Plants. With this system, the management of these plants is guaranteed pursuant to the recently published legislation. The contract is financed by Telvent and will be repaid by system operational revenues produced over a ten year period. Telvent was awarded a contract with CEZ in the Czech Republic for ArcFM licenses to support their electric distribution system. CEZ has 7 million customers and serves the majority of the country. Telvent s ArcFM product was selected by several large gas distribution utilities in the United Kingdom, including Wales and West Utilities, Ltd., Scotia Gas Networks Ltd., and Northern Gas Networks. Thames Water also selected ArcFM to help manage their water distribution network. In North America: Contract with EPCOR Transmission Inc. to upgrade its existing SCADA system from OASyS 6.0UX to OASyS DNA. Contract with Southern California Gas Company (SoCal), in Los Angeles, California, to upgrade the SCADA system at the utility s transmission control center. Enterprise agreement with Pembina Pipeline Corporation to deploy SimSuite Pipeline for three natural gas liquids pipelines and up to five additional crude lines. Contract with Buckeye Partners, LP to upgrade their OASyS system, commissioned in 1997, to OASyS DNA. Contract with Hydro Ottawa to upgrade their existing SCADA system to OASyS DNA. Consumers Energy, a utility in Michigan serving 1.8 million customers, awarded Telvent a contract for the implementation of Responder OMS to support their outage management operations. The project will interface with various systems including SAP, SCADA, and workforce management. Georgia Power, the largest of five electric utilities that make up Southern Company, selected Designer, a GIS-based design application from Telvent. The implementation of Designer, which includes embedded ArcFM tools for asset and facilities management, will assist the investorowned utility in more efficiently providing electricity to their 2.1 million customers in the state of Georgia. Public Service Company of New Mexico (PNM) and Texas-New Mexico Power (TNMP), both wholly owned subsidiaries of PNM Resources, Inc., selected Telvent s ArcFM Solution for their Texas and New Mexico operations. The companies chose ArcFM and Designer to replace their existing GIS systems for facilities management and graphic work design. Pepco Holdings, Inc, chose to standardize their graphic design solution on Designer and implement it for Atlantic City Electric (ACE) and Delmarva who, combined, serve over 1 million customers in the New Jersey and Delaware area. Contact with TXU Energy to provide SAGE RTUs for substations in the Greater Dallas / Fort Worth Texas Area. This is part of an ongoing plan for TXU to upgrade their existing substation infrastructure. Contract with Conectiv to replace their existing CDC remotes with Telvent SAGE RTUs. Conectiv provides electricity and telecommunications to southern New Jersey, Delaware, Maryland, and Virginia, as well as natural gas to northern Delaware. Contract with National Grid to provide SAGE RTUs as part of a multi-year initiative to upgrade and retrofit old Landis and Gyr RTU installations. National Grid provides electricity to 3.4 million customers in a four state area of the northeastern US. Contract with Grand River Dam Authority (GRDA) to provide SAGE RTU retrofits of existing Harris and Westronics M3 RTUs. GRDA maintains approximately 2,000 miles of electric transmission lines and 200 electric substations across its service 62 Activity Report 2006 ABENGOA

64 Information Technologies Information and Knowledge Society area, which includes 24 counties in Northeast Oklahoma. Contract with CenterPoint Energy to provide a large quantity of SAGE RTUs for pole-mounted feeder automation installations in the greater Houston, TX area, which will result in improved overall reliability of the distribution system. CenterPoint Energy is the nation s third largest combined electricity and natural gas delivery company, with more than 5 million metered electric and natural gas customers. In Latin America: Contract with Trinidad & Tobago Electric (T&TEC) to upgrade their existing SCADA system to OASyS 6.3UX. The project includes upgrading T&TEC s LAN speed and the eventual installation of an offsite back-up system. Contract with the Grand Bahama Power Company to upgrade their existing SCADA system to OASyS DNA and their current RTUs to SAGE 2300 and SAGE 1350 models. Contract with Cadafe, in Venezuela, for the supply, installation and commissioning of an integrated operation system for the national electricity distribution network of Venezuela, including the functions of incident management and electricity grid management. Contract with CAF for the data telecontrol and management applications integration project for the suburban metro section between Buenavista and Cautitlan, in Mexico FD, to be constructed by a consortium of Spanish companies, of which CAF is a member. Contract with Abengoa Chile for the supply of control and protection systems for the San Luis substation belonging to Endesa in Chile. The project scope includes engineering, panel construction, system configuration and commissioning. Contract with Inabensa for the telecommand project for the new suburban metro section between Buenavista and Cautitlan, Mexico. The project includes the supply, integration and testing of the system, which provides coverage from the control center to the catenary remotes. Contract with Abener México to supply the Distributed Control System (DCS) for the Baja California Sur II Power Plant. This project, the end-customer for which is the Comisión Federal de Electricidad (CFE), includes the control engineering, supply, testing and commissioning of the system that will control the power plant s different subsystems, which will help ensure dependable and efficient overall operations. In Asia-Pacific: Contract with the PetroChina Pipeline Company (PetroChina) to upgrade the existing SCADA system, controlling the Shanshan-Lanzhou oil pipeline, to OASyS DNA. The 1,500 km pipeline runs from the city of Shanshan in the western region of China, to the city of Lanzhou in the northwest. Contract with Taiwan Power Company to enlarge the Lungmen Nuclear Power Plant. Transport Telvent has continued to strengthen its leading position in national and international markets for the traffic and transportation sectors, providing a large offering of products, applications and services for the Intelligent Traffic Systems (ITS), both in urban and interurban settings. In addition, the company is providing global solutions for urban traffic management, as well as the control, surveillance and management of highways, aimed at maximizing traffic flow efficiency, increasing vehicular safety, and optimizing bus and train transit management. During 2006, Telvent increased its presence in key strategic areas in China and the USA, through the acquisition of two leading companies in the traffic market. In addition, a third company, located in Spain and possessing extensive expertise in bus ticketing systems, was also purchased. ABENGOA Activity Report

65 Information Technologies Information and Knowledge Society - Beijing Blue Shield, in China, was acquired in March 2006, providing Telvent with a significant presence in that market, as well as a highly skilled group of traffic and software engineers focused on urban traffic systems. - PB Farradyne, in the USA, was acquired in July 2006, providing Telvent with extensive expertise in consultancy, systems development and projects in the U.S. and Canada, with a local presence in 23 states. - Maexbic, in Spain, was acquired in November 2006, providing Telvent with significant expertise in equipment and solutions for bus ticketing management systems, along with important references in the Spanish market. With the integration of these three companies, Telvent strengthens its leadership in products and geographies, consolidating itself as a global market leader. In the international traffic sector, the year 2006 has included contracting and execution of a high number of projects, strengthening Telvent s presence in North American and European areas, and also including the updating and extension of systems previously installed in Latin America, China and south-east Asia. The Spanish market has maintained its consolidation with a number of recurring projects, based on operational and maintenance services, as well as important projects in new road infrastructures. In public transport and ticketing systems, 2006 saw the consolidation of Telvent solutions, applications and equipment, for which extensive investments in technology have been made during previous years. It also confirmed Telvent s road to future growth established for this business area. Telvent has put in action the e-trans platform, as the payment platform for transport systems, providing the market with products such as Mobifast and Web.Park, positioning them as the leading solutions for the Spanish and international markets. In Spain, the sales volume with recurring customers such as Metro de Madrid, Metro de Bilbao, FEVE, Adif and Cintra has increased through new products and solutions for station and railway signaling control systems, access control systems and automatic transport ticket vending machines, and parking lot control systems. In the railway control and signposting industry, the development of a new applications line for the automatic regulation of trains (SAREF Project) continues in collaboration with specific strategic customers. This is in addition to, and complements, the current line of products for Railway Traffic Control Centers and Telecontrol of equipment and stations. In the international market, the completion of passenger information systems and fixed equipment management provides new opportunities and additional references for future projects. Also, the successful inauguration of ticketing systems for Tianjin Metro and the new railway from Caracas to Cua positions Telvent as a leader in TSC technology. The previously mentioned acquisition of Maexbic consolidates and complements the available products and services for the on-board ticketing for bus and light-train applications, allowing the development of a complete product line for tariff integration in multimodal transit, which has become a requirement for this marketplace. Most Relevant Projects Within the Transport segment, the most significant project awards during 2006 include the following: In Europe: Completion, for Oresund concessionaire, of the upgrade for the SCADA system controlling the 64 Activity Report 2006 ABENGOA

66 Information Technologies Information and Knowledge Society tunnel and bridge, between Sweden and Denmark, using OASyS-DNA technology. Contracts with the Spanish Traffic Authority for: - New equipment and system adaptation for the Spanish Speed Limit Violation Network, complementing the system provided in Technical services and maintenance of systems and equipment for the Traffic Control Centre in Seville. - The migration of system hardware and software and the installation of the new Madrid Traffic Control Centre. - The maintenance of mobile traffic counting equipment. Completion, for the Madrid City Council, of the SICTRAM project, including the integration of traffic data and a top-level GIS-based information system. Completion, for the Catalan Government, of the Tunnel Control Center in Vic, and the upgrading of the tunnel control systems Completion, for the Tabasa-Cadi concessionaire, of the new Tunnel control system in Tabasa. Inauguration, for Metro de Madrid, of the security and control center for lines 3 and 5, together with the extension of ticket vending machines. Contract, with MINTRA, for the supply and installation of 57 new ticket vending machines, 20 of which, featuring electronic payment. Contract, with MINTRA, for the supply and installation of vending machines and toll access control to be used in light-trains in Colonia Jardin- Pozuelo and Colonia Jardin-Boadilla. Contract, with RENFE Cercanías, for the supply and installation of access control solution in the Recoletos, Parla and Las Rozas stations, including combined use of magnetic and contact-free technologies. Completion, with FEVE, of the updated Railway CTC system in Santander, based on TR3000 solutions. Contract, with Inabensa, for the supply of a Passenger Information System and a Trains Identification System to be implemented in the new Metro Norte of Metro de Madrid, including 57 message signs and 15 beacons. Contract, with Electrans, for the supply and installation of fixed equipment control system for the new light-train of Alicante. Contract, with Cobra Instalaciones y Servicios S.A., for the supply and installation of the parklot management system in Santiago de Compostela Airport. Completion, for the Guipuzcoan Interurban Bus consortium, of the ticketing and tariff integration center, using contact-free and ultralight cards. In North America: Contract with the Chicago Skyway Concession, in the United States, for the implementation of the latest generation technological solution for integral toll management (SmartTOLL), which will enable real-time monitoring of traffic flow and traffic incidents. Contract with the Traffic Department of the State of Virginia to provide operation and consultancy services for the Smart Traffic Control Center in northern Virginia, for a five year period. Contract with the Department of Transport for the State of Missouri, United States, to provide operation management support for its traffic control system, known as Gateway Guide, in Saint Louis, Missouri, United States. Over a maximum of four years, Telvent will provide system operation and monitoring personnel, and continuous training on incident management techniques, basic procedures and advanced operational techniques to enhance the techniques employed in the Traffic Control Center. Completion of the San Francisco Bay Area s Metropolitan Transportation Commission s TravInfo 511 traveler information system, and a two-year extension of the contract to operate and enhance the system. The system features travel information, including drive times, via a public website and a 511 interactive voice response telephone system. Delivery of a regional traveller information sharing system for the New York City metropolitan region through the TRANSCOM organization. This system features use of Telvent s SmartNET software platform. It also serves a 16 state region through the I-95 Corridor Coalition. Delivery of a fog warning system for the Pennsylvania Turnpike Commission. This system features Telvent s MIST software platform, and received the Best New Product or Service ABENGOA Activity Report

67 Information Technologies Information and Knowledge Society award at the 2006 ITS America Annual Meeting. In a key subcontracting role, awarded the development of enhancements to the Maryland State Highway Administration s CHART Software, continuing Telvent s relationship with this client and support of this system, which began in Awarded contracts to operate traffic management centers in Hudson Valley, NY; Northern Virginia; and St. Louis, Missouri. Telvent is now providing traffic management system operations services in 10 locations across the US. Awarded a contract by the Michigan Department of Transportation to install a traffic management system in eastern Michigan. This project extends the array of services that Telvent offers it clients to include field installation and integration. In Latin America: Contract, with the Transport Secretariat of Sao Paolo, in Brazil, for the upgrade of the traffic control system in zones CET3 and CET4, including management of 300 critical intersections, based on ITACA traffic control system. Completion, for the Rosario City Council, in Argentina, of the red-light and speed enforcement system, together with the urban traffic control maintenance contract. Completion, for the City Council of Belo-Horizonte, in Brazil, of the new ITACA traffic control system, with 270 intersection, cameras and message signs. Contract, with Centrovías, in Brazil, for Phase II of the Traffic Management System, including new equipment and facilities. Contract, with Rodovía das Colinas, in Brazil, for Phase II of the Traffic Management System, including new equipment and facilities. Operational start-up of the ticketing system, with contact-free technology, and implementation of the passenger information system for the railway line Caracas-Cua, in Venezuela. Inauguration of the TR3000-STA system for Metro de Valencia, in Venezuela, allowing lift/escalator control, energy, ventilation and video-monitoring in stations, based on Telvent s OASyS DNA software solution. Contract, with Siemens AG, in Mexico, for the supply and installation of a complete ticketing solution in the Metro of Monterrey L2, and implementation of contact-free solutions for the L1 and L2 zones. Contract, with Metro de Sao-Paolo, Brazil, for the supply and installation of a complete digital communications solution in Line C, including, access control, telephony, and radio. In Asia Pacific: Contract, with the JinCheng City Council, in China, for the new urban traffic control system, based on the ITACA adaptive solution. Completion, for the Fushun City Council, in China, of the new ITACA adaptive urban control center, and camera monitoring and red-light enforcement system. Extension of the access control, video-monitoring and inspection systems for the Shenzhen International Airport, in China. Contract with Nava Thai Kruang Sanam Co. Ltd, of Thailand, for the implementation of a latestgeneration system for detecting red traffic light infractions, in Bangkok. Completion, in Kuala-Lumpur, Malaysia, of the Integrated Traffic Control System, based on the ITACA solution. Contract, with Bayannur City Council, for the provision of an ITACA adaptive traffic control system, video-monitoring, red-light enforcement and GPS monitoring. Inauguration, for Tianjin Metro L1, in China, of the ticketing management system, with contact-free cards, including tariff integration for intermodal transport companies (bus, light-train, metro and taxis). Environment In 2006, in the Environmental Area, Telvent managed to consolidate its international presence, strengthen its position in new markets and ensure the loyalty of its main Spanish clients. 66 Activity Report 2006 ABENGOA

68 Information Technologies Information and Knowledge Society Accumulated sales were up 50% from the previous year. Among the most important projects awarded in the area of aeronautical meteorology were the modernization of the Spanish and Moroccan weather radar networks and the contracts for the supply of weather observation systems for eleven of the largest airports in Venezuela and five of the largest airports in Argentina. Attention must likewise be called to the supply of a weather data extraction system in the Netherlands, as it is the first reference of its kind for Telvent. Another flagship project awarded in 2006 was the contract for the supply of an information system to manage and guarantee the drinking water supply in the Turkish city of Bursa. In the same vein, the Catalan Water Agency awarded Telvent a contract for maintenance of the regional water control system it manages, which marks Telvent s entrance into the Catalan water market. With regard to environmental protection, attention should be called to the major contract awarded for maintenance of the Andalusian environmental quality monitoring networks, both for its scope and economic importance. Finally, as regards the integration of the company Almos Systems, acquired in 2005, it should be noted that Telvent rose to the challenge, transforming the company into one of its main competitive advantages in the aeronautics sector. It was thus able to enlarge its market both geographically and strategically, increasing its presence in Europe and penetrating such attractive emerging markets as Asia. Most Relevant Projects Within the Environmental sector, the most important project awards in 2006 include: In Europe: Contract with the General Directorate of the Bursa Water and Sewerage Administration (BUSKI) in Turkey to provide an information system that will manage and guarantee the supply of drinking water to the city. Telvent will install, operate and maintain an information and communications system for the water supply network that serves the metropolitan area of Bursa, an important agricultural and industrial city located 100 kilometers from Istanbul. The project will significantly improve the quality of drinking water in Bursa. Contract with the Spanish National Meteorological Institute (INM) to modernize its radar observation system. The project involves the supply, installation and commissioning of the hardware and software systems for the control and processing of data from INM s fifteen weather radar sites in Spain. The project moreover includes the supply of a National Center to concentrate the data from all radars and other information sources (satellites, etc.) and generate enhanced meteorological products. It is the most important project and largest outlay made by the INM in its Observation Network in recent decades and consolidates Telvent s position as leader in Weather Information Systems. Contract with the Government of Andalusia s Department of the Environment in Spain for maintenance of the Andalusian Environmental Quality Monitoring and Control Network ( ). Telvent was awarded the contract for Andalusia s Air and Water Quality Monitoring Network (RVCAH), the largest and best-equipped environmental quality monitoring network in Spain. In strategic terms, the contract affords Telvent the key reference of overseeing the maintenance of the country s foremost RVCAH. Contract with LVNL (the Dutch ATC) for the implementation of a weather data extraction system. The system will receive data through the meteorological information channel, process them and deliver the information to a PC. This is the first time Telvent has provided such a system, and the reference thus opens up a new array of opportunities for similar projects. Contract with the Catalan Water Agency in Spain for maintenance of the Muga, Fluviá and Bajo Ter river basin water control systems. The services include preventive, corrective and evolutionary maintenance of the comprehensive stations used to measure water levels, flow rates and other water management data. The contract marks ABENGOA Activity Report

69 Information Technologies Information and Knowledge Society the start of work on a new service model for hydrometeorological networks. This SLA-based outsourcing model, which Telvent has used with other projects in the past, is geared toward the purchase of quality-certified data rather than payment for the infrastructure and related maintenance services. Contract with the Spanish National Meteorological Institute for the installation of two weather information systems at Madrid-Barajas Airport. The new equipment, which incorporates the latest technological advances and meets all World Meteorological Organization (WMO) and International Civil Aviation Organization (ICAO) operating recommendations, will optimize aircraft landing and take-off maneuvers even in conditions of extremely low visibility. It moreover enables the display of information in the control towers. The project is one of the largest investments ever in such a system in Spain and makes Madrid-Barajas one of the best equipped airports in Europe. Contract with Systems Interface Ltd. for the supply and installation of the double-base RVR systems for Robin Hood Airport in Doncaster-Sheffield and John Lennon Airport in Liverpool, England. Both airports will be equipped with systems comprised of one server and 2 clients to show the data supplied by the RVR. Telvent will provide the systems, see to the commissioning, hold training courses and conduct acceptance testing. This is a major contract, as it is one of the first references for Revolver in Western Europe. Contract with AENA for the supply, installation and commissioning of an air quality control center and three emission monitoring stations at Barcelona airport. The control center s management system will provide information on air quality in the airport s proximity directly to the Catalan government s Directorate General for Environmental Quality. Contract with Aeropuertos Españoles y Navegación Aérea (AENA) in Spain for the supply and turnkey installation of an automatic VOLMET (Meteorological Information for Aircraft in Flight) system. The system collects the meteorological data from airfields and generates voice messages that are broadcast automatically by radio to aircraft en route within the air space controlled by the Air Traffic Services. Extension of the contract for maintenance of the Spanish National Meteorological Institute s (INM s) weather radar network until December 31, Telvent has been providing this service continuously since The service includes maintenance of the fifteen radar sites that comprise the INM s current network, as well as the radar information systems at the regional meteorological centers and national headquarters in Madrid. Contract with the Spanish National Meteorological Institute (INM) for the supply and installation of aeronautical meteorology equipment for the replacement and enhancement of airfield weather observation systems. With this project, INM will standardize and upgrade the instruments and weather observation systems at all forty airfields. Contract with the U.K.-based System Interface Ltd. for the installation of an AWOS at the American Al Rasheed Air Force Base in Iraq. Al Rasheed Air Force Base is eleven kilometers southeast of Baghdad and 8,300 feet long. The AWOS supplied by Telvent will be comprised of a weather station, basic sensors and a combined server/client system. Contract with the Swedish Meteorological and Hydrological Institute (SMHI) for the supply of the new central data acquisition software (Project Nemo). Contract with the Dutch Air Force in Holland for the supply, installation and commissioning of an airport information system (ATIS) at Eindhoven airport, used for both civilian and military traffic. The contract includes the provision of maintenance services for 15 years and hardware upgrades at 7 and 12 years. In North America: S331 Pumping Plant for South Florida Water District, through the Corps of Engineers. This job will see Telvent work with the Corps of Engineers to design, build and install the first of several pumping plant control systems for the water district. The system will be used as a prototype for the future plants and will integrate with the present OASyS system while providing new functionality. City of Calgary upgrade for the water control system. Telvent continues its long relationship with the City of Calgary by being awarded a contract 68 Activity Report 2006 ABENGOA

70 Information Technologies Information and Knowledge Society to upgrade the distribution system for the new treatment plant distribution system. This system is being installed in the new plant to handle the expanding distribution system and also be available for back-up emergency operations of the other Telvent control system should there be a major power failure. In Latin America: Contract with the Ministry of the Environment and Natural Resources of the Bolivarian Republic of Venezuela within the framework of the National Hydrometeorology Forecasting System Modernization Program (Project Venehmnet) for the supply of weather observation systems to eleven of the country s largest airports. The systems will be installed at Barcelona, Barquisimeto, Maracaibo, Porlamar, Puerto Ordaz, Maiquetía, Valencia, El Vigía, Charallave and San Cristóbal airports, as well as at Libertador Air Force Base (Palo Negro Maracay, Aragua State). For Telvent, this project, along with the recent opening of Telvent Venezuela, reaffirms its commitment to growth and reinforces its South American presence. Contract with the International Civil Aviation Organization (ICAO) in Argentina for the supply of automated weather observation systems (AWOS), with visibility and runway visual range (RVR) measuring, to the Argentine Aeronautics Authority. Under this contract, Telvent will equip Argentina s five largest airports (Mar del Plata, Mendoza, Córdoba, Resistencia and Eizeiza) with state-of-theart weather observation systems. The contract allows Telvent to enter the Argentine meteorology sector and reaffirms its position as the sector s leading provider. Contract with Furnas Centrais Eléctricas S.A. in Brazil for the supply, operation and maintenance of an air quality and weather data monitoring station. This is the first contract awarded to Telvent in the Brazilian air quality sector and is thus a major opportunity for growth in a market that has yet to be tapped. In Asia-Pacific: Contract with FESA (Fire Emergency Services Authority) in Australia for the one-year renewal of the service outsourcing contract. Telvent Australia and FESA have once again renewed, for one year, the contract for maintenance and enlargement of the SCADA fire alarm system deployed throughout the state of Western Australia, as well as for the related administrative management and customer billing. This service began in 1998 with a 5- year contract that has been renewed for three additional, consecutive years, offering proof of the trust placed by clients in Telvent Australia and allowing us to retain a major reference for our service outsourcing strategy. Contract with Melbourne International Airport in Australia for the supply, maintenance and guarantee of six Revolver transmissometers for its installations. Contract with the India Meteorological Department (IMD) in India for the supply of an automated weather observation system (AWOS), a terminal information system (ATIS) and three RVR systems at Mumbai airport. This contract forms a part of a major project for the installation of AWOS systems at seven Indian airports. Middle East and Africa: Contract with the Directorate General of Civil Aviation (DGCA) in Kuwait to extend the current contract for the supply of a meteorological dataprocessing (MDP) system. The contract signed by Telvent Australia with the DGCA for the supply of an MDP system was extended to include the provision of specialized training for DGCA personnel in order to familiarize them further with the settings and technical design of the solution we are developing. Contract with the Directorate General of Civil Aviation (DGCA) in Kuwait to provide operation and maintenance services for the low-level wind-shear alert system (LLWAS) at Kuwait City International Airport for one year. Contract with the Border Guard s Department of Aviation Affairs in Saudi Arabia for the supply of four automated weather observation systems (AWOS) and the RVR system at four Saudi Arabian airports: Batha, Shabitah, Ardah and Thabaloten. Contract with the Direction de la Météorologie Nationale (National Meteorology Office) in Morocco for the modernization of its weather radar network. The contract includes the supply, ABENGOA Activity Report

71 Information Technologies Information and Knowledge Society installation and commissioning of the control and data-processing hardware and software systems for the five weather radar sites comprising the Moroccan National Radar Network, equipping them with the latest technology on the market. This project is one of the largest contracts to be awarded to Telvent at international level for the upgrade of a full weather radar network. Public Administrations Through its projects in the field of e-government, Telvent carved out a strategic position for itself in 2006 in relation to the technological evolution and development initiatives being undertaken by the different Spanish public authorities. These are major projects with high social impact and entail a decisive step forward for these institutions. The transition from the traditional model of government to an e-government model will allow them to enhance the efficiency of their relationships both among themselves and with citizens. With projects such as the development and implementation of the corporate e-signature and authentication system for the Central Administration (currently the only platform able to authenticate the electronic version of the Spanish ID document (DNI)) and Avanza Padrón (Advance Census a single integrated information system covering all functions involved in local census management), Telvent has consolidated its position as a leading technology provider for Public Administration in the development of comprehensive solutions tailored to current needs- -that is, closer, more agile and more efficient services for citizens and other administrations. In 2006, Telvent also entered several new market niches. One such niche is that of information systems relating to statistics management. Through the largescale project for the replication of statistical data deemed critical by the Spanish National Institute of Statistics (INE), the doors have been opened to similar implementations in the future with high potential for diversification overseas. Telvent likewise improved its positioning in the market for information systems applied to citizen security and defense, specifically in the border checkpoint sector. The project for the Spanish Directorate General of Police, entitled Document Authentication System, will be submitted to the European Union by the Directorate itself. Its current deployment means Spain will spearhead the European Union in this field, making it leader in a border-control systems applicable to all of Europe. With regard to Health, thanks to its TiCares product strategy, Telvent has strengthened its presence in the Spanish market. In 2006, Telvent developed projects to provide internationally acclaimed, high-level, global solutions in the sphere of healthcare information and management systems, and it continues its work in this field today. The company has likewise built up the hospital applications park in Andalusia through the Andalusian Health Service (SAS), thereby consolidating a line of infrastructure in which it is already the regional leader. Through its PACS Radiology Imaging system, Telvent will make it possible for the SAS to manage the medical imaging of over seven million people, making it one of the largest such systems in terms of storage volume worldwide. Finally, mention must be made of the Cantabrian Health System, where TiCares will be used to manage regional residents complete medical records, from check-ups to surgery, in addition to all multimedia records (sound, graphics, images and video) contained in their clinical history. Through these and other projects designed in keeping with the new philosophy of e-government, Telvent positioned itself in 2006 as a reliable technological partner for the Public Administration s digital processes. Most Relevant Projects Within the Public Administration sector, the most important project awards in 2006 include: In Europe: Contract with Curia Bética de la Orden Hospitalaria de San Juan de Dios (Hospital Order of St. John, Bética Curia) in Spain for the upgrade of the Hospital Management Systems at 14 hospitals in Andalusia. This project marks the first comprehensive implementation of Telvent s TiCares solution for integral hospital management. 70 Activity Report 2006 ABENGOA

72 Information Technologies Information and Knowledge Society Contract with the Andalusian Health Service (SAS) in Spain to provide support to Telvent hospital applications through the global TiCares suite at 16 Andalusian hospitals. Among the systems to be maintained, three key areas stand out: PAS, the Patient Administration System; CIS, the Clinical Information System; and DIS, the Departmental Administration System. The project further establishes Telvent s hospital applications park in Andalusia. Contract with Virgen del Rocío Teaching Hospital to supply the new center with information and communication technologies, wiring and backbone. This contract entails the complete renovation of the hospital s technological infrastructure, affecting all current services and enhancing the communications network and data-processing center, which will become Andalusia s largest communications network and data-processing center at the hospitalwide level. Contract with the Cantabrian Health Service for the development of an Outpatient Management System in Cantabria, Spain. Through this project, which entails the provision of global healthcare information system solutions in the Autonomous Community of Cantabria, Cantabria seeks to become a national and international leader in the implementation of healthcare information and management systems. Contract with the Guadalquivir River Basin Authority (CHG) in Spain for enlargement of the online public regional information system: Geoportal al Ciudadano. The contract includes the design and commissioning of CHG s spatial information infrastructure and the development of a geo-portal to facilitate access by citizens and other public and private bodies to the basin s regional and geospatial data and applications. This contract extends and consolidates Telvent s first major reference in the area of Geographical Information Systems for the Spanish River Basin Authorities. Contract with the Spanish Ministry of Public Administration for the creation of a nationwide corporate e-signature platform for future implementation in all Autonomous Communities. The leap to the European Union is expected to be made in The platform is the result of an agreement signed between the Andalusian Government and the Ministry of Public Administration (MAP). Telvent s e-signature platform is already in place at the corporate level in the Andalusian Government. In light of its success, it will begin to be implemented in the MAP and may be extended to the Central Administration and the rest of the Autonomous Communities. Currently, it is the only platform capable of authenticating the electronic version of the Spanish national ID document (DNI). Contract with the Innovation and Employment Agency of Seville in Spain to develop a joint Geographical Information System for those of the city s municipal companies that participate in the provision of municipal services to citizens (EMASESA, EMVISESA, LIPASAM and TUSSAM). The development of specific geographical information solutions for each member company of the Seville Economic Interest Grouping will likewise be sought. Contract with the Spanish National Institute of Statistics (INE) for replication of those statistical data deemed critical for the INE. This project opens the door for similar implementations in the future and has high potential for diversification in the foreign market. Contract with the Ministry of Industry, Technology and Science in Spain for the study, design and development of the Avanza Padrón (Advance Census) project. This project includes the development of a single database to allow the Spanish National Institute of Statistics (INE) to manage the census at the national level, as well as a local census application. Outsourcing One of the most important acts of 2006 was the integration of all outsourcing services into an outsourcing and consultancy only business. In this way, a strategic segment for Telvent was concentrated, consolidated and promoted as a single unit. ABENGOA Activity Report

73 Information Technologies Information and Knowledge Society Telvent has now a more fully-developed outsourcing services structure that will enable the company to provide better services and a fully integrated technology outsourcing experience over the whole life cycle of the service. This is possible due to the full development of the consulting and technology integration services, which are now central in Telvent s portfolio. Most Relevant Projects Within the Outsourcing segment, the most significant project awards during 2006 include the following: In Europe: Contract with Ferrovial, in Spain, for the outsourcing of its computer systems. The project lies in moving one part of the computer systems from Ferrovial to the facilities that Telvent has in Madrid so that the customer can perform his usual activities using bigger and better quality systems than currently. This contract allows Telvent to continue its introduction into the building market with Ferrovial being one of the main infrastructure groups in the world, due to profitability and stockmarket compounding. Contract with ING Group, S.A. in <, for platform accommodation to offer contingency services and in this way be able to provide continuity to the systems business and jobs contingency. This project is dependent on Telvent having one of the main banks in its installations, once again proving the confidence that the financial sector is putting in Telvent. Contract with Rabobank in M2 for platform accommodation to give contingency services and in this way be able to provide continuity to the systems business and jobs contingency. Contract with Electronic Trade Transactions in Internet (TICE, S.A.) to offer a global outsourcing service of the technologic architecture that gives support to entradas.com business. The project necessitates that the customer switch from its current supplier and represents an example of the kind of global outsourcing projects that Telvent is doing. Contract with University Cooperation Office, in Spain, to install the computing platforms of the Polytechnic University of Madrid, Alcalá de Henares, Juan Carlos King, Carlos III and Pablo Olavide in Valgandre centre. Contract with Huawei Technologies Spain, in Spain, for the accommodation of a laboratory and a technical centre. Contract with Seville City Council in Spain for the Support and Continuity Centre BRS to house Seville City Council computer teams and technical assistance. Contract with Business Public Organization Red.es in Madrid for operation and management services for the systems that allow Red.es to optimize and improve the quality of the services rendered to the citizens. These services along with others that Telvent renders to this organization prove the confidence that Red.es has in Telvent for the outsourcing of its operation. To these projects we can add the ones carried out with Skandia STC AIE, Autonomous IT Entity of the Regional Government of Madrid, Randstad, The National Energy Commission, National Security Commission, Maroc Connect and Minister of Interior. 72 Activity Report 2006 ABENGOA

74 Industrial Engineering and Construction Creation of Infrastructures Abeinsa is Abengoa s holding company for this Business Unit, whose activity focuses on engineering, construction and maintenance of electric, mechanical and instrumentation infrastructures for the energy, industry, transport and services sectors: Promotion, construction and operation of industrial and conventional (cogeneration and combined cycle) power plants, and renewable energy (bioethanol, biodiesel, biomass, wind, solar and geothermal) power plants. Turnkey telecommunication networks and projects. With engineering... we construct and operate conventional and renewable energy power plants, power transmission systems and industrial infrastructures Leader in Spain and Latin America ABENGOA Activity Report

75 Industrial Engineering and Construction Creation of Infrastructures In Abeinsa we base our growth on the correct complete development of the energy integrated product and the construction of Bioenergy facilities, as well as strong sustained growth in the infrastructure, concessions, singular projects and installations activities with higher value-add and a high degree of internationalization, offering our customers integral solutions in the Energy, Transport, Telecommunications, Industry, Services and Environment sectors. Part of the success achieved by this Business Unit in consolidating its growth is fundamentally due to the basic foundations of the strategic plan, such as: customer satisfaction, internationalization, profitability, innovation, human resource development, and social involvement. This all ensures that our customers are provided with the best possible service, and the company maintains, at all times, a voluntary commitment to all the groups of interest with whom it operates, thereby maintaining its current growth and profitability levels. Throughout 2006, and as part of our commitment to the environment, we continued to develop a wide range of research activities in the hydrogen and fuel cell sectors and in CO 2 capturing and, through our subsidiary Hynergreen Technologies, we are represented on the Advisory Council of the European Hydrogen and Fuel Cell Technological Platform, while also Chairing its analogue Spanish Platform. In addition, we participate in the Spanish Technological Platform for CO 2 Reduction, Capture, Transport and Storage, by means of an active presence in different work groups. On the other hand, through the constitution of the company ZeroEmissions Technologies, S.A., the intention is to conduct activities focused on the fight against Climate Change, such as R&D&I in eliminating high-capacity greenhouse effect gases, R&D&I in CO 2 sequestration and capture, and CDM/JI projects. This strategic development has positioned us as a leading group at world level in the activity sectors in which we operate. In fact, according to the latest information published in Engineering News Records, Abeinsa is the world s number three in international contracts related to the construction of energy infrastructures. Overall, this important internationalization process resulted in Abeinsa being awarded the 2006 Alas Prize by the Regional Government of Andalusia (Spain) for its international implantation. As regards construction, in 2006, Abeinsa marked many milestones, of note among which are the following: Completion of the construction of the 459 km power transmission line linking Colinas and Sobradinho, in Brazil, and the commencement of construction of the 937 km power transmission line linking Maraba, Itacaiunas and Colinas, as well as Itacaiunas and Carajas, in Brazil. Start-up of the world s largest tower technology power plant, with total installed output of 11 MW, located in Sanlucar la Mayor (Seville, Spain). This project is the first of its kind to be constructed on our continent for commercial operation. Construction also commenced on a second 20 MW solar thermal power plant with the same technology at the same site. 74 Activity Report 2006 ABENGOA

76 Industrial Engineering and Construction Creation of Infrastructures Completion of the construction of the bioethanol facility in Babilafuente (Salamanca, Spain) which, with an annual production capacity of 200 million liters, is currently the largest in Europe in operation. Completion of the turnkey construction of the 37.5 MW internal combustion power plant in Baja California (Mexico). Completion of the remodeling of the MW Emilio Portes Gil thermal power plant, in Mexico. Completion of the construction of Palmar, Cobanos, and Cahuitas kv substations in Costa Rica, for Instituto Costarricense de Electricidad. The fulfillment of these commitments, together with many others, means that we gained our customers confidence in the execution thereof and in the integrated solutions we provided, which are suited to their needs. This allowed us to increase the development of the enterprise with new contracts, of note among which are: The construction and operation of a 150 MW hybridsolar combined cycle power plant in Hassi R mel (Algeria), where one of the world s main natural gas reserves is located. Construction of the second tower technology solar thermal power plant, 20 MW output at the Sanlucar la Mayor Solar Platform, which will eventually have a total installed output of more than 300 MW, and the construction of a 50 MW parabolic trough technology power plant, the same being said Platform s third solar thermal power plant. Execution of Package 2 of the SIEPAC project, Central America Countries Power Interconnection System, comprising a 230 kv s/c power transmission line. The package awarded will interconnect Panama, Nicaragua, and Costa Rica with Honduras, El Salvador, and Guatemala. It is of approximately 900 kilometers. Construction of a 245 million liter capacity bioethanol production facility, in Lacq (France). Construction of a 200 thousand ton capacity biodiesel production facility in Algeciras (Spain). Construction of the 88 kilometer, 525 kv Bateias- Curitiba transmission line in the state of Parana, Bateias substation with 525/230 kv transformation, and Curitiba substation with 525/230 kv transformation, as well as the 48 kilometer, 230 kv Canoihas-Sao Mateus transmission line in the states of Santa Catarina and Parana, in Brazil. Construction of the 88 kilometer, 230 kv Londrina- Maringa transmission line in the state of Parana, Londrina substation with 525/230 kv transformation, as well as the 44 kilometer, 230 kv Jaguaraiva-Itarare II transmission line, in the states of Parana and Sao Paulo, and Itarare substation with 230/138 kv transformation, in Brazil. Construction of the 68 kilometer, 230 kv Campos Novo-Videira transmission line in the state of Santa Catarina, Videira substation with 230/138 kv transformation, as well as the 62 kilometer, 230 kv Dona Francisca-Santa Maria 3 transmission line, in the state of Rio Grande do Sul, in Brazil. Execution of the generation, transformation, transmission and/or sub-transmission and distribution project for Guapi 16 MW hydraulic power plant, in Colombia. Award of the new framework contract for works, modifications and dismantling of overhead high voltage lines for RTE EDF Transport, S.A., in France. Here-below, a more detailed description is given of the achievements during the year in the fields of activity in which we operate: Energy, Installations, Telecommunications, Marketing and Ancillary Manufacturing, and Latin America. ABENGOA Activity Report

77 Industrial Engineering and Construction Creation of Infrastructures Energy Activity in the energy sector focuses, mainly, on the promotion, construction and operation of industrial plants and conventional (cogeneration and combined cycle) and renewable (bioethanol, biodiesel, biomass, solar and geothermal) energy power plants, and the conducting of businesses and activities related to the production of electric energy utilizing fuel cells and the sustainable use of hydrogen as an energy vector. This field of activity is led by the company Abener Energía, S.A. which, in 2006, consolidated its lines of products in the biofuels and solar areas and also completed emblematic projects that utilize the aforementioned technologies and established a demanding expansion program for forthcoming years. In the solar thermal power plant sector, Europe s largest tower technology plant located in Sanlucar la Mayor (Seville, Spain), with a total installed output of 11 MW, was brought into operation. This project is the first of its kind to be constructed on our continent for commercial operation, and work has also commenced on the construction, at the same site, of a second solar thermal power plant, 20 MW installed output with the same technology, scheduled to be brought into operation in By the year 2013, upon completion of the project, the Sanlucar la Mayor Solar Platform, with an installed output of more than 300 MW and an overall investment of more than 1,200 million euro, will be the largest solar platform anywhere in the world dedicated to the production of solar energy for supply to the public grid. This line of solar thermal projects is backed by Abengoa s strategic plan for this technology utilizing in-house promotion for new facilities and a new export market. In this respect, it has been awarded the project for the promotion, construction and operation of the 150 MW Hassi R mel (Algeria) solar hybrid combined cycle power plant which will be a world reference for its technology, while consolidating Abener as the world s first constructor to possess references in all the solar thermal technologies under development. In the industrial sector, work was completed on the construction of the bioethanol (alcohol produced by fermentation of grains and subsequent distillation to be utilized as fuel) facility in Babilafuente (Salamanca, Spain) which, with an annual production of 200 million liters, is currently the largest in operation in Europe and the third Abener has constructed in Spain. Moreover, work continued on the construction of the 5 million liters per year biomass to bioethanol production facility adjacent to the aforementioned facility in Babilafuente. Finally, construction commenced on the 180 million liters per year bioethanol facility for Abengoa Bioenergy, in Lacq, France. As regards new developments in the biodiesel facility sector, construction commenced on a 200 million kilo facility at Cepsa s Refinery in Algeciras, jointly promoted with Abengoa Bioenergy. In Mexico, construction works continued on the two projects underway for the Federal Electricity Commission; the construction of the 37.5 MW Baja California Sur II (Baja California Sur, Mexico) internal combustion power plant and the remodeling of the MW Emilio Portes Gil (Tamaulipas, Mexico) thermal power plant. 76 Activity Report 2006 ABENGOA

78 Industrial Engineering and Construction Creation of Infrastructures Finally, Abener consolidated its presence in Europe with the acquisition of the Polish engineering company Energoprojekt Gliwice, the country s third largest company in its sector which, due to its geographic location and potential, will greatly strengthen Abener s execution capacity with a view to the growth challenges it has to face. Early 2007 will also see Abener undertake the execution of new large-sized projects. During the course of the first quarter, Abener s portfolio will include projects underway for three corn-based bioethanol facilities in Europe, in Holland, England, and Germany, each with an annual capacity of 400 million liters. An important milestone in Abener s history will be its entry in the United States market with the construction of a bioethanol facility during the first quarter of the year. In the solar thermal power plant sector, work will also commence during the first quarter of 2007 on a 50 MW parabolic trough technology power plant. It will be the Sanlucar la Mayor Solar Platform s third solar thermal power plant. In the hydrogen sector, of note is Hynergreen technologies, S.A., a company dedicated to hydrogen as a fuel vector, and fuel cells as an electric energy production system. Committed to the Environment and sustainable development, it offers solutions based on these technologies for different sectors thanks to its continuous R&D&I operations. It has developed, and continues to develop, projects that are especially focused on demonstrating the economic and technical feasibility of hydrogen and fuel cells as a sustainable and Environmentallyfriendly binomial. To this end, the company s facilities in Seville include a Fuel Cell Testing and Characterization and Advanced Hydrogen Technologies Laboratory. In the CO 2 field, of note is ZeroEmissions Technologies, S.A., a company constituted to cover the new economy Zero Emissions of CO 2 the development of the Kyoto protocol and the growing concern that scientific studies on global warming are arousing internationally. Abener Energía The main projects executed by Abener Energía in 2006 are detailed here-below: 11 MW tower technology Solar Thermal Power Plant in Seville (Spain) Abener completed the turnkey construction of an 11 MW installed output tower technology solar thermal power plant that was brought into commercial operation towards year-end This power plant is the first of its kind in Europe to be constructed for commercial operation. The power plant comprises 624 heliostats, each with 121 m 2 surface area, that are suitably arranged on a site known as a solar field and which automatically track the sun s position and concentrate its rays on an acuotubular receiver located on top of a 114 meter tower, where steam is generated and conveyed to a turboalternator, where it expands and 11 MW of electricity is thus delivered to the grid. ABENGOA Activity Report

79 Industrial Engineering and Construction Creation of Infrastructures 20 MW tower technology Solar Thermal Power Plant in Seville (Spain) Around mid-year 2006, construction commenced on a 20 MW solar thermal power plant on a site adjacent to that currently occupied by the 11 MW solar thermal power plant. The power plant will consist of a 1,255 unit heliostat field, each with 121 m 2 surface area. The field will cover 80 hectares and estimates are for the plant to generate 45,000 MWh of electricity per year. 150 MW Solar Thermal Hybrid Power Plant in Hassi R mel (Algeria) The power plant will have a 25 MW parabolic trough solar field and will deliver complementary thermal energy to a 130 MW combined cycle. The solar field s reflective surface area will exceed 180,000 m 2, with the novelty of the project being the electric harnessing of the heat generated in the steam turbine itself which, in turn, exploits the residual heat from the gas turbine. Commercial operation of the plant is scheduled for Cereal-based 200 Ml annual capacity Bioethanol Production Facility in Salamanca (Spain) Abener completed the Salamanca construction project. This is the third bioethanol facility Abener has constructed in Spain under the turnkey modality and is Europe s largest capacity facility with 200,000 m 3 /year, following the completion of the previous projects for Ecocarburantes Españoles (Murcia, 100,000 m 3 /year) and Bioetanol Galicia (La Coruña, 126,000 m 3 /year) which are in operation since 1999 and 2002, respectively. 5 Ml Biomass to Bioethanol Production Facility in Salamanca (Spain) As part of the bioethanol project for Salamanca, the novelty of this facility, and which makes it a first in the world at industrial scale, lies in the bioethanol production process, which utilizes lignocellulosic biomass to produce the fuel. The biomass to bioethanol conversion process is achieved by means of dilute sulfuric acid pretreatment and highpressure steam, followed by enzymatic hydrolysis with celluloses and subsequent fermentation of the sugars liberated with commercially available yeasts. Plant production capacity is 5 million liters per year of bioethanol. 245 Ml Bioethanol Production Facility in Lacq (France) A corn-based bioethanol production facility project, with a 400,000 t/year capacity to produce 200 million liters of bioethanol from corn and a further 45 million liters from wine alcohol. The project represents Abener s first incursion into the French marketplace with a product for which Abener possesses the main references for facilities constructed in Europe. 200 thousand ton biodiesel facility in Algeciras (Spain) In the second half of 2006, work commenced on the 200,000 t/year production capacity (possible increase to 400,000 t/year) crude oils to biodiesel production facility Project. The project consolidates Abener as the leading constructor of renewable fuels facilities. The facility is scheduled to be brought into operation during the first half of Activity Report 2006 ABENGOA

80 Industrial Engineering and Construction Creation of Infrastructures 37.5 MW Internal Combustion Engine Power Plant in Baja California Sur (Mexico) This project was contracted with the Federal Electricity Commission (FEC) of Mexico and comprises the design, supply, installation, tests and commissioning of a 37.5 MW (±15%) net total capacity internal combustion engine power plant, including the 230 kv substation and fuel and water supply systems. The process will consist of the burning of liquid fuel in an internal combustion engine, generating exhaust gases that will be delivered to a heat recovery boiler where they will generate steam to heat the fuel system. The power plant will be fitted with a seawater evaporation system to produce distilled water to feed the heat recovery boilers and closed cooling water circuits, fire fighting and general services systems. Remodeling of the MW Emilio Portes Gil Thermal Power Plant (Mexico) The upgrading of the Emilio Portes Gil Thermal Power Plant was the first power plant remodeling project to be undertaken by Abener for the Federal Electricity Commission (FEC). The project comprises the upgrading, supply, installation and construction of a heat recovery system and its integration into the combined cycle together with its equipment and ancillary systems, and all the necessary conditioning works to the existing installations and systems to allow integral and reliable combined cycle operation of the power plant s existing 150 MW gas turbine and 37.5 MW steam turbine. The O&M Division conducts this activity at seven different plants (four cogeneration plants and three generating plants in operation at gas fields). It also provides technical assistance for O&M operations at another cogeneration plant. Of note is that three of these plants sell their surplus energy in the electric energy production market (the so-called electric pool ). The management of the sale of this energy to maximize operating revenues in accordance with market regulations has been incorporated as a further task to be carried out by the O&M Division. The Division also provides these same services for two plants belonging to the Bioenergy business unit. The annual volume of energy managed for these five facilities is 1,225 GWh. In 2006, a team from Abener s Operation and Maintenance Division participated in the start-up works of the PS10 Tower Technology Solar Thermal Power Plant and the Sevilla PV Power plant, both of which are part of the Sanlucar la Mayor Solar Platform. This was done with a view to future operation and maintenance contracts for both facilities. Given its vast experience and recognized success at the plants it already operates, this new challenge will not cause any difficulty for this Division. Operation and Maintenance The Operation and Maintenance (O&M) line of activity applied to generating plants includes preventive, programmed and corrective maintenance of equipment and systems as well as their operation to achieve reliability of the performance of the facility and assure design service levels in terms of power, availability and load factor. ABENGOA Activity Report

81 Industrial Engineering and Construction Creation of Infrastructures Hynergreen Throughout 2006, Hynergreen expanded its laboratory activity, thereby increasing its resources and dedication to Research and Development activities in a novel and revolutionary sector, and the company now occupies a leading position on the home and international fields in which it operates. Some examples are provided here-below: Project Aquila. The aim is to analyze the different possibilities of distributed electric energy generation on-board planes utilizing different technology fuel cells, and also to study the possibility of storing the hydrogen on-board or of producing it while the plane itself is consuming it, utilizing different alternatives for this purpose. The project is supported by the CTA. Project EpiCo. The main objective of Project EpiCo is to coordinate the research efforts of the main Spanish companies involved in the development of polymer membrane fuel cells (PEM). A total of 5 partners are participating: Ajusa, Cegasa, Cidetec, INTA and Hynergreen. The project is supported by the Ministry of Education and Science. Project PlasmaGen. It pursues the perfecting of a reforming process based on plasma technologies for the production of hydrogen in a cleaner and more efficient manner. The project is supported by the Andalusia Innovation and Development Agency (IDEA). Project Hercules. The objective is to establish a renewable hydrogen service station in Sanlucar la Mayor (Seville), where the hydrogen will be produced utilizing solar energy; in addition, a fuel cell powered electric vehicle that will use the hydrogen supplied by said service station is being developed. The overall budget for the same exceeds 9 million euro, and the project is supported by the Andalusia Innovation and Development Agency (IDEA), and the Ministry of Education and Science, which has catalogued it as a Singular Project of a Strategic Nature. Project Hercules is an Andalusian initiative globally coordinated by Hynergreen and promoted by a total of 8 partners. Five companies, a public agency and two research centers are collaborating on it: Solucar R&D, Santana Motor, Carburos Metálicos, GreenPower, Andalusia Energy Agency, INTA and AICIA. Hynergreen has an individual and institutional commitment to the Environment and is currently developing works and projects focused on the production of renewable hydrogen, the efficient use of fuel cells, the promotion of clean hydrogen as an alternative fuel, the dissemination of results through conferences and seminars and, in short, the development of more environmentally friendly systems that improve the current local, national and international energy situation. With a view to collaborating on the rapid development of the technologies it focuses on, Hynergreen participates in associations and platforms that promote the standardization, dissemination and implementation of fuel cells and hydrogen as an 80 Activity Report 2006 ABENGOA

82 Industrial Engineering and Construction Creation of Infrastructures energy vector. The following are some noteworthy examples for the year: Active participation on the Technical Subcommittee for Fuel Cell Standardization, answerable to AENOR s Technical Committee for Electric Energy Production Standardization (AEN/CTN206/SC105). Participation in the Spanish Hydrogen Association (AeH2) where it is the Management Board s Spokesperson on Engineering. In addition, it currently holds the Vice-chairmanship of Appice, the Spanish Fuel Cell Association. Chairmanship of the Spanish Hydrogen and Fuel Cell Technology Platform which is supported by the Ministry of Education and Science. The platform s objective is to facilitate and accelerate the development and utilization, in Spain, of fuel cell and hydrogen based systems, with different technologies, for their application in the transport, stationary and portable sectors, taking the entire R&D&I chain into consideration. Participation on the Advisory Council and Implementation Panel of the European Hydrogen and Fuel Cell Platform, promoted by the European Commission. Participation, as a member with full rights, in Raitec (Andalusia Innovation and Technology Network), participating in said network as a Technological Agent, in the Technology Based Company category. ZeroEmissions Technologies As part of the range of solutions provided by Abengoa for Sustainable Development, the company ZeroEmissions Technologies, S.A. has been constituted to carry out activities in the fight against Climate Change. The objective is to cover the new economy Zero Emissions of CO 2 the development of the Kyoto protocol and the growing concern that scientific studies on global warming are arousing internationally. The activities to be carried out are: R&D&I in eliminating high-capacity greenhouse effect gases; R&D&I in CO 2 sequestration and capture, and CDM/JI projects. Installations This line of activity is led by the company Instalaciones Inabensa, S.A. and includes the activities related to electric, mechanical and instrumentation installations, large HV lines, railways, maintenance, communications, and the manufacturing of cabinets and boards, the leading activities in Abengoa since It is also dedicated to the installation of insulation, refractory and passive fire protection materials. As regards strategic markets, in 2006, operations were intensified in Central America, the Maghreb region and northern Africa, and the subsidiary companies in France and India made important advances. In addition to the rational growth of activities in the electric transportation and distribution sectors, there was also an important increase in the communications, ancillary manufacturing and service concession activities. Inabensa The word that defines Inabensa s activity in 2006 is strategy. The development of the actions defined in the strategic plan has allowed the company to not only meet the objectives established in the annual program but to also lay down the bases required to successfully undertake the important growth challenge foreseen for forthcoming years. The contracting figure reached the 500 million euro threshold, with a year-end portfolio of million euro, with sales exceeding the 363 million euro mark and results having increased 12 percent on the previous year s figure. ABENGOA Activity Report

83 Industrial Engineering and Construction Creation of Infrastructures During the year, operations were intensified in Central America, the Maghreb region and northern Africa, and the subsidiary companies in France and India made important advances. Moreover, there was a progressive increase in the electricity transportation and distribution sectors, and significant development in communications, ancillary manufacturing and service concessions activities. Work continued on the Management Excellence process, the commitment to which, and the level achieved, are clearly demonstrated by the recognition obtained as first finalist of the 7th edition of the Andalusia Business Excellence Awards, in the Large Company category. Activities also continued on the promotion of the professional training program for management, technical experts and assistants, with more than 40,000 hours having been dedicated thereto during the year to provide personnel with the know-how required to increase productivity as a key growth element. Among the works initiated, continued or completed by Inabensa in 2006 in its different activity sectors, the following are of note: Electric Installations The installations activity, in the electric sector, was, once again, a basic foundation stone of the company s growth. In said sector, in addition to the continuity of the electric energy distribution works for Fecsa (Catalonia), Iberdrola (North and Levant regions), and Gesa (Balearic Isles), of note are the turnkey construction works on H.V. subterranean lines (Majorca), the installation of equipment in the 220/66 kv Ca s Tresorer substation, for ABB, and the reforming of the 66/15 kv Calvia substation, for Endesa Distribución Eléctrica. Also noteworthy are the predictive analysis of M.V. cables, the laying of the 220 kv Mata R.S. Sant Adria R.S. subterranean line, for Fecsa-Endesa; the stringing of the 220 kv Motores R.S. Hospitalet R.S. line; and the works carried out by the L.V. line maintenance brigade in Constante (Tarragona) and Peñaflor (Zaragoza), for REE. In addition, also worthy of mention are the works for Adif at the 66/3.3 kv, 2 x 6.6 MVA Majarabique traction substation, the 30/3.3 kv, 2 x 1.3 MVA Salomo traction substation, the 3.3 kv Tudel-Veguin paralleling center, and the 66/10/0.420 kv, 2 x 25 MVA substation, for the Rnh plant in Huelva, for Cepsa. Furthermore, works of special relevance were carried out in the overhead high voltage line field of activity, such as the completion of the raising of supports and the stringing of section II of the 400 kv Cabra-La Roda line, the composition of which, pursuant to Red Eléctrica de Esapña s new standards, is double circuit triplex. Likewise, different works were executed on existing lines, also for REE, of note being the alternative arrangement of the 400 kv Mequinenza- Rubi line on its route through Castellbisbal; the changing of duplex conductors on the Nueva Escombreros-Rocamora line and the substitution of grounding cable for a cable comprising groundoptics with the installation being carried out under live conditions on the 220 kv Pinar-Costasol and Pinar-Tarifa lines. Collaboration on this type of very specialized works was thus continued. In the industrial sector, the year 2006 saw significant activities, of note being the installations for the new handling and measurement center and new transformation center for Mallorca Estudios de Producción, S.A., for Construcciones JMJ Olivers. Also of note is the fact that the execution of electric 82 Activity Report 2006 ABENGOA

84 Industrial Engineering and Construction Creation of Infrastructures installations continued at the El Pozo slaughterhouse, owned by Industrias Fuertes, in Alhama, Murcia, and on the affected services at Llobregat substation, for Corsan-Corvian. The installations executed in the automobile industry for Renault and Peugeot-Citroen at their factories in Seville, Valladolid, Palencia, Vigo, and Mangualde (Portugal), and for the ancillary automobile industry at the Sogama, Faurecia, GKN Driveline, Gestamp, Valeo, Begano, and Gonvarri factories, the automation for PSA Vigo, PSA Mangualde, Mitsubishi, in Tramagal, Gestamp, in Averio (Portugal), and Faurecia, in Vigo, and the renovation and enlargement of the installations at Disa factories on the Canary Islands and electric installations for the cold system of the Emicela industrial complex, on Gran Canaria, are also noteworthy. Of note in the services sector are the city of Barcelona public space Integral Enhancement Plan for ; new In the services sector, we would mention the new salesroom and repairs shop for Concesur, in Seville; installation of public lighting and traffic light systems under a JV with Telvent, and the illumination of the Arona municipal stadium, on Tenerife; the new administrative building for Konecta, in Bollullos de la Mitacion (Seville); enlargement of the electric and air-conditioning systems in the Fan-Cowls warehouse of Centro Bahia Cadiz, for Eads-Casa; H.V. and L.V. electric installations, air-conditioning, firefighting, telecommunications, plumbing and compressed air systems for CIL Torrecuellar, in Seville; H.V. and L.V. electric installations for the Campus de la Salud hospital complex, in Granada. Likewise of note are the L.V. installations, for Siemens, at Sagunto (Valencia) cogeneration plant; the H.V. and L.V. installations for IFEBA, in Badajoz, the new furnace in Financiera y Minera s cement factory in Malaga;; the installations for the new post sorting center in Merida (Badajoz); the H.V. and L.V. installations in Heineken España s new Cruzcampo brewery, in Seville, and the H.V. installations, T.C. generating sets at the new Eads-Casa plant, in Seville, for the FAL A-400 M Project. As regards singular buildings for public administrations, of note were the construction of the indoor municipal swimming pool and spa complex for La Nucia Town Council, and the cultural equipment program for the Cavalry Section Human Evolution Museum, for the Regional Government of Castilla and Leon (Department of Culture), and the JV construction of a children s educational school for Huesca Town Council. Works continued on the Campus de la Salud hospital (Granada); the Malaga City of Justice for the Regional Government of Andalusia; the Almanjayar (Granada) administrative building; the new center for the Badajoz Fair Institute (IFEBA); the new faculty of Law, in Seville; remodeling of offices for the Department of Justice, in Seville; remodeling of Puerta Navarra building, in Plaza España; remodeling of the New Zealand pavilion, in Isla de La Cartuja, and the new Emasesa building, in Seville. In the airport sector, of note were the installation works for the south platform, aircraft parking area in Barcelona airport, as well as the emergency generating station for the new area terminal at the same airport. Railways The important references in 2006 include the electrification works for the Adif High Speed O.C.W. and associated systems project for the Segovia Valdestillas section of the new railway access to Spain s north and northwestern regions, Madrid Valladolid line; the upgrading of the Brinkola Beasain O.C.W on the Madrid Hendaya line; the conditioning of catenary in station point section areas on the 2nd Phase of the Palencia Leon section: Sahagun-Leon section of the Palencia-La Coruña line; the catenary upgrading works on the Montcada- ABENGOA Activity Report

85 Industrial Engineering and Construction Creation of Infrastructures Bifurcación-Vic section of the Montcada Bifurcación line; the replacement of C.W., critical elements and partial rehabilitation of catenary on the El Escorial-Avila-Villalba-Segovia line; integral maintenance of the overhead contact wire on the Madrid-Lleida section of the Madrid-Zaragoza- Barcelona-French Border high speed line; and the conditioning of critical catenary elements and upgrading of the grounding network and installation of electric shockproof fences on the Ariza-Casetas section of the Madrid-Barcelona line, A-1 Network. For Metro de Madrid, S.A., the important works executed were the 1,500 V electrification on the remodeling of line 3 and the 600 V electrification and energy distribution works in the Hortaleza coach sheds for lines 1 and 4, and the installation of section 3 of the 1,500 V electrification in the Canillejas coach sheds, on line 7. Of note for TUSSAM were the electric installation works for Phase 1 of the city of Seville light train metro system, Prado de San Sebastian-Plaza Nueva. Mechanical Installations Works were completed on the construction and corresponding assembly of the process and ancillary piping systems for bioethanol production at the facility Abener has constructed in Babilafuentes, for BCL. Likewise, construction and assembly was completed, with positive results, of the 1.2 MW rated Sevilla PV photovoltaic power plant, for Solucar. Also of note is the construction and assembly project for the radar tower, for Aena, at Malaga airport, and the completion of phases II A and II B for the new gas bottle filling facility Cepsa has built in San Roque. In addition, Work commenced for Petroleum & OIL Gas swampland project on the new installations at wellheads C5 and C7, and on the construction of an interconnection gas pipeline. Refractory / Insulation / Passive Fire Protection As regards refractory lining activities, works were executed on the repair and maintenance of the furnaces, boilers and conduits at the Dow Chemical plant, in Tarragona, and on the furnaces and boilers of RSU Tersa s plant, in San Afria del Besos (Barcelona). As regards thermal insulation, lagging works were carried out on the equipment and pipes at Castelnou combined cycle power plant, and insulation material was supplied and installed for the emission capacity enlargement to 1,350,000 N/m 3 /h at Enagas facility in Palos de la Frontera (Huelva). Acoustic insulation is an activity to which special efforts were dedicated during 2006, with the result being the successful completion of, among others, the acoustic conditioning works at the Sniace cogeneration plant, in Torrelavega. We would especially mention, within the passive fire protection activity, the fireproofing works carried out on metallic structures, equipment skirts and bearer plates, cable trays and valve actuator boxes at the Fenol III plant, for Ertisa, in Palos de la Frontera (Huelva). Maintenance and Instrumentation In the electric sector, electric and instrumentation maintenance works continued at Almaraz and Trillo nuclear power plants; as did maintenance under live conditions at substations for Gesa Endesa; maintenance of H.V. lines for Fecsa Endesa, in 84 Activity Report 2006 ABENGOA

86 Industrial Engineering and Construction Creation of Infrastructures Catalonia; cleaning, under live conditions, of insulation on 40 kv lines, for REE; and maintenance of substations in the Andalusia region, for REE. In the industrial sector, maintenance works continued for General Electric Plastics at its Lexan 1 and Lexan 2 Compounding plants, in Cartagena; at Cepsa s refinery facilities, in La Rabida; integral maintenance at Enagas plant, in Huelva; maintenance of Bioetanol Galicia s facility, in Teixeiro (La Coruña); data network at GKN Driveline, Faurecia, Vigo; and lighting and power at Cepsa s refinery, in Algeciras. As regards instrumentation installations, of note were the electric and instrumentation installation works at the RNL plant, for Cepsa, in Huelva; pumping capacity enlargement at Huelva pumping station for the Rota-Zaragoza oil pipeline, for CLH; commissioning of the instrumentation at the Escombreras combined cycle plant, for AES; the electric and instrumentation installation works for the C5 and C7 gas wellheads; the enclosure for Petroleum, the installation for the new granulation line in Sabiñanigo; and the new PVC dryer in Monzon, for Ercros-Aragonesas. Service Concessions Works continued on the Tajo Hospital complex, in Aranjuez, and on the Olot, Cerdanyol del Valles, and Santa Coloma de Gramanet courthouses, in Barcelona, for the Infrastructure Management Department of the Regional Government of Catalonia. Both projects are being executed according to the planned schedule and will be completed within the established time schedules during the course of 2007, at which time they will be brought into service. In addition, this Division commenced the turnkey construction of different power rated photovoltaic power plants, which includes the locating and identification of optimal lands for this purpose, management of the required administrative permits and licenses processes, construction of the plant in question and subsequent operation and maintenance thereof. Manufacturing As the most important works, we mention, for REE substations, the supplies of relay racks; ancillary services boards which in 2006 number more than 600 for the PIA project; and for other substations such as Morvedre, Quintos, Sentmenat, Escatrón, Eriste, Sesué, La Fortunada, Gausa, Boimente, Eliana, Rocamora and Grijota. In the generation sector, for Endesa, the delivery of 6 kv cabinets was completed for Tirajana, Castresorer and As-Pontes combined cycle power plants, as well as the motor control centers (MCCs) for Salinas, Ibiza, Los Guinchos, Melilla, and Punta Grande diesel-fired power plants; for Union Fenosa, the 6 kv cabinets for the desulphurization area of Sabon thermal power plant; and the delivery of the cabinets for Plana de Vent combined cycle power plant was also completed, for Gas Natural. In the chemical and refineries sector, MCCs and cabinets were delivered for the bioethanol facilities in Babilafuente, Galicia, and Lacq, in France; for Cepsa, in Huelva, 6 and 12 kv cabinets and transformation centers, as well as the MCCs for the Aromax and Morfhilain projects; power centers for Repsol, in Puertollano; and for CLH, the MCCs for Loeches and for storage in Huelva. Of note in the services sector are the ancillary services boards for line 5 of Metro de Madrid; at Heineken s brewery, we completed the supply of power boards, command stations, protection and control racks; and for Renault, 25 kv cells. ABENGOA Activity Report

87 Industrial Engineering and Construction Creation of Infrastructures Activities continued in the nuclear power plant sector with support being provided for reloading processes, participation in retrofitting, enlargements and new equipment supplies for Almaraz, Trillo, Vandellos, and Asco nuclear power plants; heliostat control boxes were supplied for solar photovoltaic and solar thermal power plants. At the Alcala de Henares electronics factory, for the urban traffic control and regulation sector, numerous units were manufactured for the home and international markets. As regards the national market, manufacturing commenced on a new generation of traffic regulators, of 16 and 32 unit systems. As a novel product, we mention the TAC (access control equipment, or bollards). In the transport sector, ticketing and access control equipment was supplied for important projects such as the payment and passenger information system for IAFE Caracas, Madrid and Palma de Majorca metro systems, Adif, Bilbao metro system, and Euskotren. In other fields of activity, remote stations were manufactured for phase II of the Cordoba-Malaga AVE (high speed line), as were different control, centralization and interconnection systems for REE and Endesa, as well as equipment related to data management systems for the energy and environment sectors. In the defense sector, for GDSBS, work continued on the manufacturing of control electronics for both the turret and body of the Leopard combat vehicle, and participation in the manufacturing of prototypes of the new Pizarro armored vehicle and on the control electronics for the 150 mm howitzer feeder. Activities continued in the electromedicine field with the supply of electrocardiogram recording equipment. Abroad The activities developed abroad resulted in the expansion and consolidation of the company s presence in new markets in accordance with the objectives established in its strategic plan. The following are of note among the most important works on the international scene, commenced, continued or completed in 2006: In the energy transportation sector, of note were the awarding of package 2 of the SIEPAC project (Electric Interconnection System for Central America Countries), consisting of a 900 kilometer, 230 kv s/c power transmission line that will interconnect Panama, Nicaragua, and Costa Rica with Honduras, El Salvador and Guatemala; the construction of Palmar, Cobanos, and Cahuitas kv substations, in Costa Rica, for Instituto Costarricense de Electricidad; and the awarding, by FONADE, of the Guapi hydraulic power plant project, in Colombia. In Morocco, the 225 kv Chichaoua-Agadir transmission line was handed over to ONE, and the 400 kv Mediouna-Qualili transmission line is under construction. In Libya, work continued, for Gecol, on the construction of the 500 kilometer, 400 kv Misurata Sirte-Ras Lanouf-Adjabiya line that runs along the Gulf of Sidra. In Algeria, work continued on the 400 kv Hadjerat Ennous el Affroun II transmission line, and works commenced on the 230 kv Naama Poste-Naama Centrale 1 and 2 transmission lines, for Sonelgaz. Finally, in India, works were completed on the construction project of the 800 kv Sipat-Seoni line, and works commenced on the 400 kv Raichur-Gooty line, both for Power Grid. As regards mechanical assemblies, installation maintenance works were completed at the 60,000 m 3 capacity oil product storage depot in the port of Nouakchott, Mauritania. In the railway sector, of note are the construction works and machinery supply works carried out for railway operations for Tianjin Binhai Mass Transit Development, in China, and the continuation of maintenance works on the Basmane-Menemen- Aliaga and Alzancak-Cumaovasi lines, for TCDD, in Turkey. 86 Activity Report 2006 ABENGOA

88 Industrial Engineering and Construction Creation of Infrastructures The ancillary manufacturing works for abroad also continued at an excellent pace throughout 2006, with the manufacturing of traffic regulators for the Nanning, Chan Chung, Xin Ziang, and Urumqui projects, in China, and for the project for Beirut, Lebanon, being of note. Gas turbine and generator excitation and control equipment was manufactured for export to China and Nigeria, and M.V. cabinets, MCCs, power and ancillary services boards were manufactured for Sonatrach s PC3 compression station, in Algeria. Inabensa Maroc Within the framework of the global rural electrification program (PERG), several contracts with the Office National de l Electricité (ONE), were completed, and these, together with those executed previously, have resulted in the electrification of an overall total of 1,459 towns and villages throughout Morocco, with Inabensa Maroc currently being one of the leading companies at national level in this sector. As regards the development of the mobile telephone network for Meditelecom, the program for the construction of rural and urban mobile telephone GSM sites was completed, with the construction of 209 turnkey sites (between Greenfield, Rooftop and Outdoor), which is 20% of the entire GSM network. In addition, works commenced on the installation of the urban fiber optic loops for Meditel, in Casablanca and Rabat. As part of Inabensa Maroc s diversification strategy, works were executed on the installations for the Casablanca Call Center for the Spanish company Konecta. It has been designed to house more than 350 operators. Inabensa France 2006 was a year in which our activity in the French market was clearly consolidated by our subsidiary Inabensa France. A notable contribution in this sense was the signing of the framework construction and maintenance contract for RTE s electric system for As regards execution, works of very different natures were executed during the year, of note among which is the heightening of a stay portico on the 400 kv Dambron-Verger line, which was done in the presence of a large number of technical experts from RTE to their complete satisfaction, and the company was congratulated on the works by the customer. Another important project is the construction of the 400 kv Chafford-Grand Ille line, in the TERAA region, Lyon, which is currently at the civil work and support raising stages, and we also mention different works carried out on the 225 kv Beautor-La Capelle line, TENE region, Lille, which required the deployment of a large workforce to meet the customer s requirements. In addition, works of a lesser entity were also carried out such as the installation of new supports, the strengthening of bars, retightening of cables, etc. on different lines of the French grid. The company also participated in the Rose-6 program for RTE with the installation of 36 kilometers of OPGW on the 400 kv Boismorand-Gauglin 1 line, 85 kilometers on the 400 kv Bayet-Sant Eloi 2 line, and 19 kilometers on the 400 kv Tabarderie-Chesnoy line, all of them with one of their two circuits live. Finally, of note once again was Inabensa France s participation as an invited company in RTE s internal prevention and safety conferences that were held in ABENGOA Activity Report

89 Industrial Engineering and Construction Creation of Infrastructures Lyon, where it presented, upon request by RTE, an improvement action focused on the conducting of OPGW stringing works. Inabensa Bharat Within Inabensa s strategy, Inabensa Bharat continued to handle the business activities in India and nearby countries. In this sense, of note was the assistance provided for the study and presentation of the first bid Abengoa and Inabensa, as a consortium, presented for en electric energy transportation line concession contract, in India. The civil work on the support foundations, the armoring and raising and stringing of a four conductor per phase circuit with the corresponding grounding cable of the 800 kv Sipat-Seoni line Power Grid awarded to Inabensa in 2004 was completed. As part of the same line construction activity, Inabensa Bharat is also executing the civil works, raising and stringing of two-circuit conductors, with four conductors per phase, on the 400 kv Raichur-Gooty line, for Power Grid. Inabensa Portugal Throughout 2006, Inabensa Portugal participated in an Aplein Ingenieros pilot project for EDP, and installed and assembled a transformer explosion prevention system (Transformer Protector) at Queluz substation. In addition, works continued on the PLC technology deployment project for ONI, and communications equipment was installed and EDP s M.V. and L.V. distribution network development works were executed, and maintenance of the same installations is being carried out. there was a large increase in the provision and maintenance of Broad Band ADSL and its entire range of associated products, mainly Imaging (TV through ADSL). In addition, work was carried out on the integration of telecommunications networks and the development of new products, such as the implantation of the PLC system on electricity distribution networks. Abentel In the development of the global contract (for 2002 to 2006) with Telefónica de España S.A.U., the volume of works carried out for this customer was higher than the previous year, which consolidated our leading position as regards contracted volume and implementation works in provinces, as we carried out activities in a total of 10 provinces (Alicante, Badajoz, Barcelona, Cadiz, Las Palmas, Jaen, Madrid, Seville, Tenerife, and Valencia). Several of these works were the most important at national level as regards volume of activity. In addition, we remained among the leaders in terms of quality levels throughout the year, with scores above the average for the global contract. This was a result of the policy employed in the previous four years and which was further developed and expanded this year in relation to achieving high customer satisfaction quality levels. Telecommunications Activity in the telecommunication sector focuses, mainly, on the integration of networks and turkey projects. Throughout 2006, the classic activity of external plant construction and maintenance continued, as did the provision and maintenance of loops and customer equipment. Within the latter activity, 88 Activity Report 2006 ABENGOA

90 Industrial Engineering and Construction Creation of Infrastructures Among the activities carried out in this sense, the following are of note: Continuation and consolidation of the enhancement teams formed by personnel from different levels and specialties, where improvement actions are analyzed, objectives are established and the results thereof are monitored. As a consequence of these projects, several improvement actions were proposed. Centralization and globalization of the breakdown center, with a single work distribution office (DCA) for all the activities and the entire national territory. The DCA has been given responsibility for monitoring and diagnosing the tests carried out on the works performed by the technical experts. With the collaboration of our Information Systems Department we have provided the DCA with important improvements in computerized tools, for both dispatching and filling in the work orders. Collaboration with Telefónica on the analysis, testing and implementation of the ODISEA tool. Said integral management tool for maintenance and provision activities will replace the existing GIA tool, and will allow integral management of the work reception activity, the dispatching thereof to the field technical experts and the closure of the activity. At year-end, the tool was at the implementation phase and had been brought into operation in a Branch Office. Furthermore, in 2006, the cable operators department conducted supply operations for Auna, in Madrid and Barcelona, by supplying active and passive materials for the customer. Inabensa s Communications Division Activities continued on the construction of infrastructures for telephone operators, with an important participation in the e-gsm project focused on the upgrading of rural telephone systems in towns with a population of less than 250. The projects for the upgrading of the communications and control installations for line 3 of Madrid s metro system and the provision of an equivalent system for Metronorte s new line were of note. In the radio installations sector, GSM and UMTS coverage was provided for singular buildings and locations such as Barajas airport s new T4 terminal, Renfe s suburban railway line tunnels and those of the new M30 roadway (Madrid-Principe Pio) subterranean node. Of note in the sector abroad was the deployment of PLC systems (Power Line Communication System) on the distribution networks of AWEA, emirate of Abu Dhabi, and for ONI, in Portugal Development of new computerized management applications for the activity and upgrading of the existing ones. Of note among all the applications is the Simpa application which obtains a control panel of the Customer Vision quality indexes at any level, including the technical level. Said tool is operational for the entire Provision and Maintenance activity and has been greatly strengthened with a view to execution and productivity reports. The number of in-house technical experts and management personnel was increased. For this purpose, a great effort was made in training, for technical experts, employees, and management personnel. In addition, the number of programmed training hours for the year was quintupled, with almost 20,000 hours having been dedicated thereto. ABENGOA Activity Report

91 Industrial Engineering and Construction Creation of Infrastructures Marketing and Ancillary Manufacturing Our leadership in Spain was maintained and our international presence consolidated as suppliers of electric, instrumentation and communications material for the chemical and petrochemical industries, refineries, combined cycle, nuclear and thermal power plants, and the heavy industry in general. Moreover, our outsourcing activity increased in volume by accessing new locations and products. In addition, work continued on the manufacturing of reticulate steel structures such as pylons for power lines, telecommunication towers, and substations, and with the manufacturing of fine plate derived products such as panels, signposts and telephone kiosks. On the other hand, work is being carried out on the design of future structures for solar power plant collector systems. Nicsa The results for the 2006 financial year have been most satisfactory, and this success is due to the implementation of a growth strategy based on three fundamental aspects: maintain and expand traditional businesses, internationalization of the activity, and execution of engineering and turnkey projects. Of note among the most important references for the year in Spain, are: Repsol Ypf: Maintenance of the framework agreement for the supply of medium and low voltage power cables, as well as the annual orders for the supply of lighting and grounding systems. Cepsa: Framework agreement for the supply of electric material and instrumentation for all its production centers. The materials within the scope of this agreement are: low and medium voltage power cables, instrumentation cables, lighting, control stations, current collectors, cable trays, junction boxes, glands, and manhole plates. Plana del Vent JV (Ferrovial-Técnicas Reunidas), Endesa s Plana del Vent C.C.TPP, in Tarragona. Supply of grounding systems, instrumentation and fiber optic cables, low voltage cables, conduits, trays, glands, lighting system (engineering and supply), distribution boards, CCTV, mechanical workshop. Fenol Cumeno II JV (Intecsa Uhde-Ecolaire), Ertisa, Huelva. Supply of grounding system, medium and low voltage cables, trays, conduits, junction boxes and glands, handling stations, current collectors, intercommunication and public address system (turnkey). As regards international projects: Retarded coking at the Aconcagua refinery in Chile, where the JV formed by Foster Wheeler Iberia and Initec has awarded us orders for low voltage cables, lighting systems, and cable trays. Técnicas Reunidas group projects in Saudi Arabia; Ju aymah, enlargement of the gas fractioning plant and Petrorabigh, new refinery, both for Aramco, where the company has been awarded orders for lighting panels, lighting systems, junction boxes, handling stations, glands, current collectors, alarm panels, stack beaconing systems. Técnicas Reunidas, upgrading of Tupras Kirikkale refinery, in Turkey, where orders were forthcoming for lighting systems, glands, junction boxes, lighting panels, handling stations, current collectors, fiber optic cable. 90 Activity Report 2006 ABENGOA

92 Industrial Engineering and Construction Creation of Infrastructures As regards the activity of subsidiaries, of note is that, in Mexico, Nicsamex SA de CV concluded the supply, for Construcciones Mecánicas de Monclova, of electric, instrumentation, industrial safety material and packages of equipment for the construction project Pemex has underway for three oil platforms. Also of note is the important participation in the project Dragados Industrial is executing to reconfigure Pemex Minatitlan refinery, where we were awarded orders for low and medium voltage cables, trays, conduits and accessories, electrical assembly material, lighting systems, push-button panels, current collectors, and intercommunication and public address system. As regards the US subsidiary, Nicsa Industrial Supplies, the office transfer process to Houston, Texas was completed and a new structure to allow the company to successfully exploit the business opportunities it will have at this new location has been established. Abencor In general, the Market in 2006 evolved favorably and, therein, Abencor s activity. We can say that, in relative terms, it was the year with the best result over the last decade. The market sectors in which the activity was carried out were the energy sector, from a traditional and renewable energies point of view, the transportation sector and the large industries sector. The volume of outsourcing activities increased through the accessing of new locations and products. Thus, the following electric material supplies were made or are in progress for: Endesa, power transformers for Marcén and Pitarco substations, 150 MVA autotransformers for Sabiñánigo and Los Leones, different power transformers for the Tramontana Plan and for distribution in the Catalonia region, HV cables and MV terminals; Hidrocantábrico, transformers for Cansacaballos substation; Iberdrola, meters; Asco Vandellos, special cables; Elecnor, MV cables for lines 1, 4, 5, 11 and 66 kv cable for the Jerez de la Frontera Speed Festival; Semi, dry transformers for line 3 of Madrid metro system; Semelcosur joint venture, contact wire for the Cordoba-Malaga AVE (high speed line); Cobra, MV cable for light Metro distribution; and Inabensa, contact wire for Maxico suburban train network. On the other hand, Store outsourcing works continued for the following customers: Endesa, for its Generation, Transportation and Distribution materials for the Andalusia and Canary Islands regions, REE, Inabensa and Eucomsa. Endesa is developing a radio-frequency materials tracking control system, the pilot plan of which is being utilized in Abencor s store in Seville. Abencor s Organization Chart was modified in 2004 and remains in force. There are four Sales Divisions; the first dedicated to the traditional energy sector, the second to the Installer sector, the third to alternative energies, and the fourth to store outsourcing. These Divisions are supported by the General Administration and general services departments, and by the Environmental Quality Control and Occupational Risk Prevention Department. On October 7, Abencor celebrated sixty years in the Spanish market. Throughout this time it has been supplying the market, without interruption, with the products related with its activities. The same shareholding structure has also been maintained. Eucomsa Eucomsa s activity in 2006 continued along the lines of products manufactured by its two Divisions, Structures and Plate, with sales for the year similar to those of Nonetheless, there were significant facts within the budgetary estimates. In the Structures the fabrication of towers for mobile telephone networks was undertaken and there are important prospects for next year in this sector. ABENGOA Activity Report

93 Industrial Engineering and Construction Creation of Infrastructures There were two relevant events in the Plate Division during the year. Large orders for telephone kiosks from Telefónica were filled and there was an important increase in the supply of fiber optic distribution cabinets. The most important works executed were: 400 kv pylons for REE s Tordesillas-Segovia line; 220 kv pylons for Endesa s Cartuja-Pto. de Sta. Mª line; 220 kv pylons for Endesa s D.Rodrigo-Santiponce line; pylons for the Penamacor-Ferro line, for CME, in Portugal; pylons for different lines in Ireland for the ESB; mobile telephone towers for Inabensa/ Telefónica; mobile telephone towers for Inabensa Maroc; 400 kv Cabra substation for REE, 400 kv Brovales substation for REE; testing of towers for different customers such as RTE, Made, Gam-E- Arak, Tecgra, Andel, Jovir, etc.; supply of various standardized towers; supply of telephone kiosks for Telefónica; supply of fiber optic distribution cabinets for Telefónica and other customers; supply and installation of signposts for different customers, including the Regional Government of Andalusia, Egmasa, construction companies, town councils, etc. Eucomsa participates in a work group established by Abengoa to optimize the design of future structures for solar energy power plants by the collector system. This product is strategic for the Company in the near future and should signify an advance for the growth of the structures activity. The Plate Division is also working on the creation of new products that could likewise result in sustained growth of the activity. Latin America In this strategic market in which our presence has been stable for more than 30 years now through local companies in Argentina, Brazil, Chile, Mexico, Peru, and Uruguay, we have consolidated our position as leaders in the construction sector, mainly in energy and infrastructure related activities. In the prestigious Engineering News Record magazine, Abeinsa is listed as the sixth largest construction company in Latin America, in spite of the fact that our activity focuses mainly on the energy sector. Among our main operations, of note is the activity conducted in Brazil on the construction and operation of power transmission lines, which consolidated us as one of the country s leading companies. With an investment of almost 3,000 million Brazilian reales, more than 3,000 km of lines have been constructed. During the year, the construction of the 937 kilometer power transmission line between Colinas and Sabradinho was completed, and construction works commenced on the 459 kilometer power transmission line that connects Maraba, Itacaiunas and Colinas, as well as Itacaiunas and Carajas, in Brazil. Moreover, the awarding towards year-end of the construction contract for three new concession lines with an overall length of approximately 1,033 kilometers was also noteworthy. Also of note is the execution of the fiber optic works for Project Sur in Mexico, the objective of which is the removal of guard cable and the supply and installation of fiber optic guard cable on 1,706 kilometers of power transmission lines, and the supply, installation and commissioning of optical equipment, management systems, synchronization systems, peripheral electronic equipment on 21 optical links. In addition, we also mention the civil work activity carried out in Uruguay and the diversification in forest services and urban wastes, with which good profitability levels have been achieved. 92 Activity Report 2006 ABENGOA

94 Industrial Engineering and Construction Creation of Infrastructures Noteworthy in Argentina was the construction of the 181 km, 500 kv Mendoza-San Juan HV line. Also of note is the completion of the Palmucho Project which basically comprises a 32 MW hydroelectric power plant that exploits the ecological flow discharged at the foot of the Ralco dam, and the electric link that connects it to the Central Interconnected System. Teyma Abengoa The main works executed, or in progress, were for the following customers: Línea Minera 500 kv Mendoza San Juan HVTL for Fondo Fiduciario para el Transporte de la Energía Eléctrica. The work comprises the electric interconnection by 500 kv HVTL that will connect the localities of Barriales, in the Province of Mendoza (Gran Mendoza T.S.) and Villa Krause, in the Province of San Juan (future San Juan T.S.), with the construction of approximately 181 kilometers of line. The work also includes the connection section to the San Miguel transformer station by means of a 220 kv high voltage line with double circuit structures, with only one circuit being fitted at first, and the connection section to the Gran Mendoza substation by means of a 220 kv high voltage line. In addition to the 220 kv enlargements in Gran Mendoza transformer station, belonging to Transener S.A. and in the San Miguel transformer station, belonging to Distrocuyo S.A., the work also includes the supply and installation of an integrated telecommunications system by HVPL and between the aforementioned transformer stations, and all the civil and services work required for the construction and correct functioning of the interconnection. Construction of the 500 kv Colonia Elia transformer station for Comisión Técnica Mixta de Salto Grande. It includes the design, supply, construction and shipping of the material required to execute the civil works, porticos, support structure and 500 and 132 kv connection for the execution of the enlargement works for the third section of the Colonia Elia substation. Laying of 132 kv subterranean cable for Aluar Aluminio Argentino. Design, manufacturing, engineering, tests, packing, shipping of conductors, laying, sundry installations including connections, construction of associated civil works, commissioning, etc., corresponding to the supply of unipolar dry insulation type XLPE 132, 34.5 and 6.6 kv subterranean cables, including all their terminals, construction of channels and conduits (only where necessary), supports, trays, hangers, made of galvanized steel for internal and external use and, in general, all the associated equipment required for correct functioning and operation. Befesa Argentina In 2006, the most important project executed was the conditioning, exportation and final disposal of transformers contaminated with Polychlorate Biphenyls (PCBs). Befesa Argentina reinitiated the exportation of PCB contaminated transformers with a first shipment of 22 tons to Befesa Gestión de PCB s facilities, in Cartagena, for suitable treatment thereof. In the oil company services sector the following projects are in progress: Operation of the Alfa Laval Plant and the US Filter Plant at Repsol YPF s La Plata Refinery Two Befesa Argentina owned horizontal centrifuge units that are installed in the discharge treatment plant (US Filter) are being operated and the Repsol YPF owned Alfa Laval Plant is also being operated. Slop Oil Unit, Tank 265, Repsol YPF s La Plata Refinery. Operation continues on the equipment Befesa Argentina has installed for recovering hydrocarbons, through a three-phase separation of the content in Tank 265. This 10,000 m 3 capacity tank functions as a receiver of the slops from the refinery s other tanks. ABENGOA Activity Report

95 Industrial Engineering and Construction Creation of Infrastructures In the collection, incineration, inerting and final disposal sector, the following are in progress for: Automotive Industry. Collection, incineration and final disposal at a safety backfill depot of maintenance wastes, paint slurry, cataphoresis sludge, oils, empty containers etc., for customers such as Daimler Chrysler, Ford, Peugeot Citroen, Toyota Argentina, and Volkswagen. Oil Industry. Collection, incineration and final disposal at a safety backfill depot of maintenance wastes, coke carbon, insulators, spent catalysts, contaminated soil, etc., for Esso, Repsol YPF and Shell CAPSA. Pharmaceutical Laboratories. Collection, incineration and final disposal at a safety backfill depot of outof-date medicines, products outside specification, raw material packing, etc., for customers such as Bayer Argentina, S.A., Lanxess, S.A., Raffo, GlaxoSmithKline Argentina, and Cardinal Health. Chemical Industry. Collection, incineration and final disposal at a safety backfill depot of maintenance wastes, effluent plant sludge, raw materials outside specification, etc., for Rohm & Haas, TFL, and Procter & Gamble. On the other hand, in 2006, the collection, treatment and final disposal of foundry waste was contracted with the company Acerbrag. The contract includes the treatment of an important volume of passive, as well as the uninterrupted generation process slag from the filters. Abengoa Chile The most important works executed in 2006 were: the construction of the Wastewater Treatment Plant in Coelemu, for Empresa de Servicios Sanitarios del Bío Bío, ESSBÍO S.A; the construction of the Wastewater Treatment Plant in Chimbarango, for Empresa de Servicios Sanitarios del Bío Bío, ESSBÍO S.A; MCC 023 Project El Mauro, 220/23 kv Substations, 220 kv and 23 kv lines for Minera Los Pelambres; the relocating of 220 kv and 110 kv feeders, Botadero Sector 85 for Codelco Chile División Norte; the supply, construction and installation of the 1 x 220 kv Charrua Chillan line, for Hqi Transelec Chile S.A.; CPL-70 Palmucho, 13,2/66/220 kv substation, Caida area, 220 kv interconnection line with SIC and 66 kv line for Endesa Chile, S.A.; the construction and installation of the Reactive Static Compensation (RSC) in Puerto Montt substation, in consortium with Abb Chile, for Hqi Transelec Chile S.A.; and high voltage maintenance and line works in the Metropolitan Region, for Chilectra S.A. Moreover, the following projects were contracted and are in progress: Supply and Construction Modification at San Luis substation, and changing of the interrupter and current transformer at Quillota substation, for Endesa Chile S.A. The scope of the contract includes the works required to change the single bar San Luis substation to an interrupter and half configuration to ensure greater dependability given the increase in power that results from the arrival, at this substation, of the supply from the two units at San Isidro II. In addition, the aforementioned increase in power means that the existing interrupters and current transformers of the San Luis Quillota have to be changed for new higher capacity interrupters and current transformers in Quillota substation. Enlargement of the 154 kv Itahue San Fernando Lines, to strengthen the Central Interconnected System, for Hqi Transelec Chile S.A. The work consists, basically, of the changing of the existing copper 400 MCM conductor for another Greeley make, aluminum alloy MCM, which involves the replacing of four structures with higher capacity ones, and also the strengthening of eight towers and some other modifications. With this change, the energy transfer from the aforementioned line sector is increased from 128 MVA to 198 MVA per circuit. Construction of the Alternative Electric Arrangement for the High Voltage Itahue San Fernando line, for Constructora Nilahue S.A. Project 94 Activity Report 2006 ABENGOA

96 Industrial Engineering and Construction Creation of Infrastructures for the supply of materials (structures, mountings and insulation), construction and assembly of structures and dismounting of the existing installations for replacement by a 154 kv double circuit line that will be the variant of the actual Itahue San Fernando line in the sector where the future Convento Viejo reservoir is to be located. Construction and Assembly of reinforcements and conductors to increase the transmission capacity of the 2 x 220 kv San Luis Quillota Line, for Endesa Chile S.A. The objective of the project is to modify the existing 220 kv line between San Luis substation and Quillota substation to allow the transmission line power to be increased. Contract 193/06-IOV Improvement of Drinking Water, Héroes del Mar, Area «A» Blocks » for Empresa Sanitaria de Valparaíso, Esval S.A. Construction project contract to improve the Valparaiso Drinking Water System, including the supply and installation of pipelines and the construction of two reinforced concrete reservoirs, completing works that were executed by Abengoa Chile in a first phase. Civil Works, Electric Works and Minor Equipment for the Florida, El Carmen and Ninhue Wastewater Treatment Plants, for Empresa de Servicios Sanitarios del Bío Bío, ESSBÍO S.A The works at the three plants are basically: the construction of a pretreatment system, lining of the aeration lagoon and the settlement ponds, operating and chlorination areas, a contact chamber and the supply of chlorination, elevation and flow metering equipment, and the electric habilitation works for the new systems. Befesa Chile In Antofagasta, Befesa is currently developing the construction and operation project for the North Hazardous Waste Treatment Center to be located in the municipality of Sierra Gorda. It will be the first hazardous and non-hazardous solid waste management company to respond to the needs of the mining industry, other industries and, in general, the companies in Segunda Región del Norte, while favoring environmental protection. Its processing capacity is approximately 53,700 tons per year, of which 43,200 tons/year are hazardous wastes and 10,500 tons/year non-hazardous wastes. The foreseen useful life of the Center is 45 years. This is a project that is included within the concept of Integral Management as, in addition to confining the hazardous wastes in a safety backfill dump, the aim is also to market the waste materials which, due to their characteristics, could be used by third industries as raw materials. For this purpose, management of the minimization stages, such as waste valuation and recovery, will be provided. Teyma Uruguay 2006 was a very good year for Teyma. It achieved the maximum levels of activity ever in its history - consolidating the leading position it has held in the Construction market in Uruguay for more than 20 years now and established a human team and management model that allows it to now look towards new growth and profitability horizons for the future. The construction activity increased billing to 65% above the company s maximum historic figure, and this was also backed by profitability levels above the average. Good levels of activity and profitability were also achieved in the diversification activities in forestry and urban waste services and the expected development for forthcoming years in these activities was consolidated. ABENGOA Activity Report

97 Industrial Engineering and Construction Creation of Infrastructures Worthy of special mention, in the second half of the year, is the fact that the company began its participation in the management of construction projects for new Biofuel Plants for Abengoa Bioenergía, the first of which will be Lacq (France) and San Roque (Cadiz). Expectations for 2007 are for new plants in other European countries and the US to be added to these. Of note among the works executed in 2006 or currently in progress are: Execution of the electric and instrumentation works for the Fiber Line, Evaporation Plant, Heat Recovery Boiler and Lime Kiln sectors at Botnia s Cellulose Plant in Fray Bentos, for Andritz/Botnia The supply and installation of metallic structures, towers, poles, masts for telephone antennae, and the installation as well as the dismounting of Antelowned structures. The installation of a Rehabilitation, Physical Therapy and Sports Medicine Center for Asociación Española Primera de Socorros Mutuos (AEPSM). For Botnia s Cellulose Plant in the city of Fray Bentos: the civil works for the drying, packing and storage sector, including the foundation bases for prefabricated buildings, machinery foundation bases, construction of industrial roads, tunnel and drainage piping works, as well as the works for the Effluent Treatment Plant. Construction of the Le Parc buildings in Punta del Este, a 24-storey apartment tower with a surface area of 850 m 2 per floor, plus a 7,000 m 2 services area; Marina 12 in Punta del Este and Torre de la Bahia for Banco Hipotecario de Uruguay. Execution of the earthmoving works for the construction of the Cellulose Plant Ence intends to construct in M bopicua, Fray Bentos. Upon completion of the initial phase, which was also executed by the Company, Ence awarded us the second phase that includes all the excavation, backfilling and compacting works for the entire 70 hectares the plant is to be located on. Enlargement of approximately 2,300 m 2 split into two wings, each with five levels and the enlargement of two levels of the existing Hogar Español building, in Montevideo. Works were completed on the new building for the Pasteur Institute of Montevideo, its only headquarters in Latin America. It is a three-storey building with an overall surface area of 8,000 m 2. For Administración de las Obras Sanitarias del Estado (O.S.E.). Civil Work and Electromechanical Installations for Enlargement and Rehabilitation of the Aguas Corrientes Drinking Water Treatment Plant; Execution and Construction Project for the Wastewater Treatment Plant of the city of Canelones. Rehabilitation of the Arteaga Sewage System for the Municipal Administration of Montevideo. Turnkey supply and installation of an ASTM no. 2 Draw-off System, on three sections, from La Tablada Fuel Distribution Depot. Design and installation of polyethylene conduits, operative assistance and associated works in the city of Montevideo, for Gaseba. As regards electricity distribution works we were awarded two contracts for; Execution of Distribution, Supply and Enhancement Works in the Geographical Area of Central Management Atlantida and Pando District, and Remodeling and Extension Works for the Distribution Network in the Geographical Area of East Management Works 1 Maldonado District. Enlargement of the Solis Theater for the Municipal Administration of Montevideo. 96 Activity Report 2006 ABENGOA

98 Industrial Engineering and Construction Creation of Infrastructures Abengoa México In the year in which Abengoa celebrated the 25th Anniversary of its presence in Mexico, the company Abengoa Mexico maintained its leading position as one of the main integration companies of Transmission Lines, Electric Substations and Electromechanical Works for the Federal Electricity Commission, Petróleos Mexicanos, National Water Commission (through its operating bodies) and Private Initiative, maintaining a high degree of competence, quality and customer satisfaction. In 2006, works on the following Project were completed: For the Federal Electricity Commission: The construction and installation of a 115 kv Transmission Line, of approximately 2.96 kilometers and 2 distribution substations, 115 and 13.8 kv, with an overall capacity of 30 MVA, 1.8 Mvar, and 7 feeders located in the State of Quintana Roo. The construction and installation of a 230 kv Transmission Line, of approximately 0.8 kilometers, and 9 Transformation Substations with voltages of 230, 161, 115, 34.5 and 13.8 kv and an overall capacity of 300 MVA, 18.0 Mvar, and 47 High and Medium Voltage feeders to be located in the States of Baja California, Sinaloa and Sonora. The construction and installation of 4 Transmission Lines, voltages 400 and 115 kv, and an overall length of approximately 37.8 km, and three 400 and 115 kv Transformation Substations, total capacity 225 MVA, and 6 High and Medium Voltage feeders to be located in the State of Mexico. The removal of the guard wire and supply and installation of fiber optic guard cable on 1,706 kilometers of transmission lines, and the supply, installation and start-up of optical equipment, management systems, synchronization systems and peripheral electronic equipment on 21 optic links to be located in the State of Quintana Roo. In addition, Abengoa México will execute, jointly with other companies, with a 30% share, two contracts related to the removal of guard wire and the supply and installation of fiber optic guard cable on transmission lines, total length in excess of 3,000 km and the supply installation and start-up of peripheral optic equipment, management systems, synchronization systems, and peripheral electronic equipment, on the FON North Project and FON Center Project. The construction and installation of six 400 kv Electric Substations, total capacity 1,150 Mvar, inductive reactive compensation, to be located in the State of Mexico. The construction and installation of two 115 kv sub-transmission lines, overall length approximately 60.3 km, and one distribution substation with voltages of 115 and 13.8 kv, overall capacity 30 MVA, 1.8 Mvar medium voltage compensation; 7 high and medium voltage feeders to be located in the State of Oaxaca. For Pemex, A project for the supply and construction of the Light Crude Oil Heating System at Dos Bocas Maritime Terminal on the premises of Pemex Exploración y Producción, in Paraiso, in the State of Tabasco. The objective of the project is the design, manufacturing and start-up of a light crude oil heating system, itsmo type that extracts from the sea bed, with the use of thermal plate exchangers which is a unit that heats the product directly. The heating system will be designed to be installed and operate with maximum flexibility pursuant to the condition ranges provided by the customer. ABENGOA Activity Report

99 Industrial Engineering and Construction Creation of Infrastructures In addition, Abengoa México, together with Inabensa, has been selected by the Spanish company Construcciones y Auxiliar de Ferrocarriles (CAF) to execute the construction of the electric energy system and the installation of catenary on the first 27 kilometers of the Suburban Rail Line, the first stage of which will commence with the Cautitlan Buenavista section; first segment under development with private investment. It will have 2 terminals (Buenavista in the heart of Mexico City and Cautitlan in the municipality of the same name in the State of Mexico), and 5 intermediate stations (Fortuna, Tlalnepantla, San Rafael, Lecheria, and Tultitlan). There will be a connection with 2 lines of the City of Mexico metro system. Comemsa Activities in 2006 continued to focus on the Mexican market for lattice towers for transmission lines, which continues to be the main contracting source. Activities continued with a view to penetration in the US and Central America markets. In the US, two orders were received from Southern California Edison, a Los Angeles, California, based utility, for 300 and 900 tons. In Central America, contacts have been established in all countries and a booth was organized at the IEEE s annual conference for Central America and Panama, in San Salvador, Salvador. Of note among the most important supplies filled in 2006 were: TLS 801, Altiplano (Phase 1) and substation 811 Northwest, supplied to Areva T&D, for a total of 3,600 tons; TLS 703 Northeast, supply to Sadeven, for a total of 1,550 tons; TL 806 Bajio (Phase 2), supplied to Cobra, a total of 3,100 tons; TLS 701 West (Phase 2), supplied to Isolux, a total of 1,150 tons; Replacing of pylons damaged by hurricanes Emily, Wilma and Lane, for FEC, a total of 3,600 tons; TLS 1001 RT Baja Nogales, supplied to Edemtec, a total of 1,100 tons; 400 kv Rancho Vista TL, contracted with Southern California Edison, for a total of 880 tons; TLS 801 Altiplano (Phase 2), contracted with Abengoa México, for a total of 700 tons; and TLS 702 Southeast Peninsular (Phase 2), contracted with Abengoa México, for a total of 400 tons. Befesa México Since 2001, Befesa México is promoting the implementation of the industrial waste management activities Befesa carries out in other countries. In 2006, Befesa México managed to meet three objectives in the construction project for a hazardous industrial wastes treatment and disposal center in Mexico (called Sustainable Development Systems ), which were: The obtaining of all the permits required for the construction of the same, the closure of non-recourse financing under the Project Finance scheme, and commencement of construction of the center. In parallel to the aforementioned activities, work commenced on advance studies for the development of a social responsibility project focused on the communities in the vicinity of our project. Abengoa Perú In an election year, Abengoa Perú maintained its level of activity in eletromechanical, civil and hydraulic works in the Energy, Mining, Industry, Oil & Gas, and Services sectors. Of note in 2006 was the successful completion of the civil works on the Atocongo - Conchan Transporter Belt project, a work that has led to the Company s consolidation as a civil works contractor; the contracting of the Water Treatment Plant for EMAPA Huancavelica, which opened up an activity with a great future ahead of it in the country. The most important works carried out in 2006 were: Cementos Lima: Execution of civil works on the Atocongo Conchan Transporter Belt Ecological Project, which comprises the installation of 6.5 km 98 Activity Report 2006 ABENGOA

100 Industrial Engineering and Construction Creation of Infrastructures of tunnel utilizing prefabricated concrete and the construction of 8.5 km of track. Banco de Materiales: Edification of 1,512 single family houses, sewage and paving works for the Mirador de Pachacutec pilot project. Edegel: Alternative arranging of 60 kv lines 2nd Stage. Electrocentro S.A.: Remodeling of Valle del Mantaro MV and LV networks. Electrocentro S.A.: Remodeling of MV and LV networks in the Historic Area of the city of Huamanga; conditioning of the AP System to the NTCS sector type II Part II and Quality Enhancement (Osinerg Observations) Part I. Electronoroeste S.A.: Remodeling and Extension of Piura and Tumbes Networks. Empresa Térmica de Ventanilla S.A.: Supply and construction of the raw water pressure pipeline, electric conduits and related works; these works are part of the of the Ventanilla Combined Cycle Thermal Power Plant construction works. Praxair Perú: Construction of an oxygen plant in the city of Pisco. Electronoroeste S.A.: Remodeling of Piura and Tumbes networks, Stage II. Empresa Municipal de Agua Potable y Alcantarillado de Huancavelica: rehabilitation and enlargement works on collectors, pipelines, water treatment plants, storage and conduction; the project comprises the river Ichu beheading works, rehabilitation of the Callqui behead, a new 11.5 km, 355 mm pipeline from the Ichu behead to the new treatment plant, rehabilitation of the pipeline from the Callqui behead to the existing treatment plant, the construction of a new 50 l/s treatment plant, construction of a 1,000 m 3 support reservoir, optimization of the existing plant, rehabilitation of the 400 mm diameter pipeline from the existing treatment plant to the existing 1,700 m 3 reservoir, and conduction pipeline from the 1,000 m 3 reservoir to the distribution network.. La Pampilla Refinery: Construction of the On-shore installations for the New Multiboyas No. 03 Port Terminal Project. La Pampilla Refinery: Foundations for new HVGO tanks. Red de Energía del Perú: Supply and execution of variants and assembly of Line L2208; the project comprises the supply of materials, construction of the variants and installation of the second circuit of the almost 49 km long, 220 kv San Juan Chilca L2208 Line, constructed with vertical configuration double circuit self-supporting metallic towers. Cementos Pacasmayo: Complementary works in the Rotating Kiln and Powder Collection Area Project Bongara. Cementos Pacasmayo: Civil works in Area No. 3 Spalling, Pelletization and Storage Project Bongara. Duke Energy: Detailed Engineering, Complementary Supply, Transportation, Works, Assembly, Testing and Start-up of San Carlos Hydroelectric Power Plant. Minera Milpo: Construction of the Desalinated Water Lead Line for the Minero Cerro Lindo Project. This project will be the first desalinated water line to be constructed in Peru for a mining project. Befesa Perú Having completed its third year in operation, Befesa Peru continues to increase its customer portfolio, this time by a 40 percent on 2005, and it now carries out operations for 190 customers. This has been reflected in the 37 percent increase in sales for treatment and final disposal of industrial wastes. ABENGOA Activity Report

101 Industrial Engineering and Construction Creation of Infrastructures Befesa also commenced operations in the field of direct waste collection and transportation services, with the purchase of its first truck 15 ton capacity which is being utilized on the La Pampilla Refinery Waste Management project (Repsol). In addition, the intention is, with a view to enhancing the efficiency of this service, to purchase a six-ton trailer to partially free the truck to provide services for other customers. This year, pursuant to the company s development plan, a conditioning service commenced for PCBcontaminated electric equipment with a view to commencing exportation thereof early in Bargoa In 2006, Bargoa s sales increased 19% on the previous year, thereby ratifying its continuous growth over the last four years, with an accumulated rate of 573%. In the local market, the most active customers were Telemar and Telefónica de Sao Paulo. In addition, there was significant growth with Brasil Telecom and Embratel. As regards the foreign market, in spite of the unfavorable currency exchange rate, of note are Telefónica de Argentina, Telecom Argentina and its traditional customers from Korea and Japan. Homologation was obtained with Telefónica de España for the suite of Sealed Overhead Jointing Closures and work continues on the homologation process for other products. With a view to meeting the demands of the North America and Canada markets, the UL certification Body is in the process of certifying products. Of note is the improvement in productivity, up 13% on the previous year. The enlargement and improvement works were completed at both Lagoas Plant and Camorin Plant, which resulted in a great improvement in office, storage, medical care, and canteen and staff dressing room facilities. Abengoa Brasil During 2006, Abengoa Brasil continued its Power Transmission Line Construction and Operation activity, and consolidated its position as one of the country s leading companies. In March, the ATE III contract was signed, the objective of which is 594 km of lines and four substations in the States of Tocantin and Para in the country s northern region. This project is currently in progress and is scheduled to be brought into operation early in As regards the ATE II project, the works were completed in 2006 and it is expected to be brought into operation three months prior to the contractual date. A summary of Abengoa s activity in the Electricity Transmission sector in Brazil is provided in the following table. 100 Activity Report 2006 ABENGOA

102 Industrial Engineering and Construction Creation of Infrastructures Project Length Investment (R$) Stake Situation Expansion 575 km 366 million 25 % Operation Dec/02 ETIM 212 km % Jun/04 NTE 386 km % Jan/04 STE 389 km % Jul/04 ATE 370 km % Oct/05 ATE II 937 km 1, % Construction ATE III 459 km % Construction Sao Mateus 85 km % Awarded Londrina 132 km % Awarded Campos Novos 131 Km % Awarded Total 3,676 km 3,739 million In addition, In December 2006, 3 new construction contracts were awarded, which will allow us to maintain our position as one of the main electric energy operators in Brazil. Expansion Expansion, Abengoa s first line project in Brazil, with a 25% stake, comprised the 295 km, 500 kv Samambaia Itumbiara and the 280 km, 500 kv Samambaia Emborcação lines. Samambaia substation is the main substation in the vicinity of the Federal Capital, Brasilia and is also one of the main substations on Brazil s energy backbone, the North South system; these two lines connect Emborcação and Itumbiara hydroelectric power plants to this substation. There are two reactor benches in Samambaia substation and one bench in Itumbiara to facilitate voltage regulation. The two lines were brought into commercial operation on 23/12/2002. NTE The second line was NTE, a company in which Abengoa has a 50% stake. It consisted of the 200 km, 500 kv Xingó Angelim line and the 186 km, 230 kv Angelim - Campina Grande line. In Angelim substation, we have two 500/230 kv transformers and also a 50 Mvar reactor bench. In the center of the Chesf system, this line reinforces the Angelim substation system with the energy from Xingo hydroelectric power plant STE Abengoa s third investment in Brazil, also with a 50% stake, was STE, in the south of the country, which consisted of the 386 km, 230 kv Uruguaiana - Maçarambá - Santo Angelo - Santa Rosa line that connects Uruguaiana thermoelectric power plant to Santo Angelo substation, where Brazil has a connection to Argentina s electric system via the CIEN project. There is one 30 Mvar manobravel reactor in Maçambará substation. ABENGOA Activity Report

103 Industrial Engineering and Construction Creation of Infrastructures ETIM This was followed by ETIM, in which Abengoa has a 25% stake, consisting of the 212 km, 500 kv Itumbiara Marimbondo line, representing the connection of Marimbondo hydroelectric power plant on the North South system. There is one 100 Mvar manobravel reactor in Marimbondo substation. ATE In 2004, Abengoa alone was awarded the contract for the 364 kilometer, 500 kv Londrina Assis, and Assis Araraquara lines, where we have a 525 kv/440 kv transformer bench interconnecting Itaipu hydroelectric system with the 440 kv system, one of Brazil s main electric energy systems, responsible for supplying Sao Paulo. We still have two reactor benches in Assis and Araraquara substations, connected to the two lines, to facilitate voltage regulation. This line was brought into commercial operation on 27/10/2005. ATE II In 2005, the concession contract for the 500 kv North-Northeast electric interconnection project was signed. The project comprises a 937 km line between Colinas substation in the state of Tocantis and that of Sobradinho in the state of Bahia. Its route takes it through the new Ribeiro Gonzalez substation in the state of Piaui, and the existing Sao Joao de Piaui substation, in the same state. This line was brought into operation in December New projects Construction of the 37 kilometer, 525 kv Bateias- Curutiba transmission line in the state of Parana, the 525/230 kv Bateias transformation substation, as well as the 48 kilometer, 230 kv Canoihas-Sao Mateus transmission line in the states of Santa Catarina and Parana.. Construction of the 88 kilometer, 230 kv Londrina- Maringa transmission line in the state of Parana, the 525/230 kv Londrina transformation substation, as well as the 44 kilometer, 230 kv Jaguaraiva-Itarare II transmission line, in the states of Parana and Sao Paolo, and the 230/138 kv Itarare transformation substation. Construction of the 68 kilometer, 230 kv Campos Novo-Videira transmission line in the state of Santa Catarina, the 230/138 kv Videira transformation substation, as well as the 62 kilometer, 230 kv Dona Francisca-Santa Maria 3 transmission line, in the state of Rio Grande do Sul. ATE III During the course of 2006, construction commenced on the North-South, Section I, interconnection line. The project includes the construction of three 500 and 230 kv lines, overall length 459 kilometers, plus a new 500 kv substation in Itacaiunas, state of Para y Tocantins, to the north of the country. 102 Activity Report 2006 ABENGOA

104 Management Structure Management Structure ABENGOA Activity Report

105 Management Structure Address Telephone Fax Chairman: Chairman: Corporate Services Financial Director Felipe Benjumea Llorente Javier Benjumea Llorente Amando Sánchez Falcón - Estructured Financing Vicente Jorro de Inza - Corporate Financing Jesús Ángel García-Quílez Gómez Appointements and Remunerations Director José Marcos Romero Investor Relations Director Controller Juan Carlos Jiménez Lora Asier Zarraonandía Ayo (*) Fron 01/01/07, the structure shall be as follows: - Internal audit: Luis E. Pizarro Maqueda - Consolidation: Enrique Borrajo Lovera General Secretary Miguel Ángel Jiménez- Velasco Mazarío - Legal Department Julián Aguilar García - Risk Management Rogelio Bautista Guardeño - Communications Department Cristina Poole Quintana Seville Avda. de la Buhaira, abengoa@abengoa.com Madrid Gral. Martínez Campos, 15-5º Seville Avda. de la Buhaira, Organisation, Quality and Budgeting Director Technical Secretary Director Corporate Strategy and Development Director Human Resources Management Computer Systems Management Jesús Viciana Cuartara (*) In 2007, for retirement reasons, this post will be taken up by Luis Fernández Mateo José Antonio Moreno Delgado Seville Avda. de la Buhaira, Santiago Seage Medela Madrid Gral. Martínez Campos, Gestión Integral de Recursos Humanos, S.A Seville Tamarguillo, Telvent Outsourcing, S.A Bioenergy Abengoa Bioenergía, S.A. Corporative President and Chief Executive Officer Javier Salgado Leirado Chesterfield, St. Louis MO 63017, USA Chief Financial Officer Ignacio García Alvear 1400 Elbridge Payne Road Suite abengoabioenergy@ abengoa.com IT Corporate Director Juan José Lallave García Madrid Pº Castellana, nº 31-3 P Ecocarburantes Españoles,S.A. President Eduardo Sánchez-Almohalla Serrano Cartagena Carretera Nacional 343, Chief Executive Officer Javier Salgado Leirado Executive Vice President Antonio Vallespir de Gregorio Plant Manager David Galindo Cascales (Murcia) km 7,5 Valle de Escombreras ecocarburantes@ abengoa.com Bioetanol Galicia, S.A. President Chief Executive Officer Executive Vice President Plant Manager Ecoagrícola, S.A. President Chief Executive Officer Executive Vice President José B. Terceiro Javier Salgado Leirado Antonio Vallespir de Gregorio Tomás Blanco Parra Antonio Navarro Velasco Javier Salgado Leirado Ginés de Mula González de Riancho Teixeiro-Curtis (La Coruña) Polígono Industrial Teixeiro Ctra. Nacional 634, km 664, Seville Avda. de la Buhaira, nº bioetanolgalicia@ abengoa.com ecoagricola@ abengoa.com Activity Report 2006 ABENGOA

106 Management Structure Address Telephone Fax Biocarburantes Castilla y León, S.A. President Chief Executive Officer Executive Vice President Plant Manager Abengoa Bioenergía San Roque, S.A. President & Chief Executive Officer Biodiesel Program Director Biodiesel Operations Director Plant Manager Abengoa Bioenergy France, S.A. President & Chief Executive Officer Executive Vice President Chief Operations Officer Abengoa Bioenergy Netherlands B.V. President & Chief Executive Officer Chief Operations Officer Ginés de Mula González de Riancho Javier Salgado Leirado Antonio Vallespir de Gregorio Juan Taín Varela Javier Salgado Leirado Gerardo Novales Montaner Jorge Osborne Cologan Juan Carlos Muñoz Javier Salgado Leirado Francisco A. Morillo León Vincent Bovis Javier Salgado Leirado Rob Groeliker Seville Avda. de la Buhaira, nº Madrid Pau Cedex, 9 (France) Abengoa Bioenergy Trading B.V. President & Chief Executive Officer Javier Salgado Leirado 3012 Róterdam (Netherlands) Executive Vice President Pedro Carrillo Donaire Abengoa Bioenergy Corporation President & Chief Executive Officer Executive Vice President & General Counsel Chief Operations Officer Colwich Plant Manager Portales Plant Manager York Plant Manager Abengoa Bioenergy Nebraska President & Chief Executive Officer Executive Vice President Chief Operations Officer Abengoa Bioenergy Kansas President & Chief Executive Officer Executive Vice President Chief Operations Officer Abengoa Bioenergy Indiana President & Chief Executive Officer Executive Vice President Abengoa Bioenergy Illinois President & Chief Executive Officer Executive Vice President Abengoa Bioenergy Engineering & Construction President & Chief Executive Officer Executive Vice President Javier Salgado Leirado Christopher Standlee Danny Allison Craig Kramer Timothy Wilson Mitch Stuhr Javier Salgado Leirado Joaquín Alarcón de la Lastra Todd Church Javier Salgado Leirado Salvador Martos Barrionuevo Craig Kramer Javier Salgado Leirado Salvador Martos Barrionuevo Javier Salgado Leirado Salvador Martos Barrionuevo Javier Salgado Leirado Joaquín Alarcón de la Lastra Pº Castellana, nº 31-3 P 2, Avenue du Président Pierre Angot Madrid Pº Castellana, nº 31-3 P. Chesterfield, St. Louis MO 63017, (USA) Colwich, KS 67030, (USA) Portales, NM 88130, (USA) York, NE 68467, (USA) Ravena, NE 68869, (USA) Chesterfield, St. Louis MO 63017, (USA) Chesterfield, St. Louis MO 63017, (USA) Chesterfield, St. Louis MO 63017, (USA) Chesterfield, St. Louis MO 63017, (USA) biocarburantes@ abengoa.com abengoabioenergy@ abengoa.com abengoabioenergy@ abengoa.com abengoabioenergy@ abengoa.com Weena abengoabioenergy@ abengoa.com 1400 Elbridge Payne Road, suite abengoabioenergy@ abengoa.com East Union Ave Industrial Dr Road O Navaho Rd Elbridge Payne Road suite Elbridge Payne Road suite Elbridge Payne Road, suite Elbridge Payne Road, suite abengoabioenergy@ abengoa.com abengoabioenergy@ abengoa.com abengoabioenergy@ abengoa.com abengoabioenergy@ abengoa.com abengoabioenergy@ abengoa.com ABENGOA Activity Report

107 Management Structure Address Telephone Fax Abengoa Bioenergy Trading US President & Chief Executive Officer Javier Salgado Leirado Chesterfield, St. Louis Executive Vice President Ron Finck MO 63017, (USA) Abengoa Bioenergy R&D President & Chief Executive Officer Executive Vice President Greencell President & Chief Executive Officer Executive Vice President Program Director Javier Salgado Leirado Gerson Santos-León Javier Salgado Leirado Gerson Santos-León Ricardo Arjona Antolín Chesterfield, St. Louis MO 63017, (USA) 1400 Elbridge Payne Road, suite Elbridge Payne Road, suite Seville Avda. de la Buhaira, nº abengoabioenergy@ abengoa.com abengoabioenergy@ abengoa.com abengoabioenergy@ abengoa.com Befesa Medio Ambiente, S.A. - Chairman Javier Molina Montes Vice-Chairman Manuel Barrenechea Guimón Luchana-Baracaldo (Biscay) Buen Pastor s/n befesa@befesa. abengoa.com Corporate Services - Legal Counsel Antonio Marín Hita - Consolidation & Audit Juan Albizu Etxebarría - Finance Ignacio García Hernández - Human Resources Elías de los Ríos Mora - Communication Patricia Malo de Molina Meléndez Aluminum Waste Recycling Aluminum Waste Recycling Federico Barredo del Arenal - Aluminum Manuel Barrenechea del Arenal - Salt Slags Carlos Ruiz de Veye - Marketing Fernando Zufía Sustacha - Production José Ángel Corral Ruiz - Technology & Machinery Sales Francisco Sáez de Tejada Picornell - Economic-Finance Juan Carlos Torres Romero - Quality, Safety & the Environment Oskar de Diego Rodríguez Madrid Paseo de la Castellana, 31-3º Erandio (Biscay) Ctra. Luchana-Asúa, befesa@befesa. abengoa.com aluminio.bilbao@befesa. abengoa.com Befesa Aluminio Bilbao, S.L. Federico Barredo Ardanza Erandio (Biscay) Ctra. Luchana-Asúa, aluminio. bilbao@befesa. abengoa.com Befesa Aluminio Valladolid, S.A. Pablo Núñez Ortega Valladolid Ctra. de Cabezón, s/n aluminio. valladolid@befesa. abengoa.com Deydesa, 2000, S.L. Ion Olaeta Bolinaga Legutiano (Villarreal de Álava) Intersplav Víctor Ivanovich Boldenkov Sverdlovsk (Ukraine) Donsplav Alexander Shevelev Donetsk (Ukraine) Pol. Ind. Gojain San Antolín, olaeta@deydesa2000.com Luganskaya Oblast is@interplav.vom.ua Yugosslavkaya Str.Nº donsplav@donsplav.dn.ua Befesa Escorias Salinas, S.A. Carlos Ruiz de Veye Valladolid Ctra. de Cabezón, s/n escorias.salinas@befesa. abengoa.com Befesa Salt Slags, Ltd. Adrian Platt Shropshire S y 13 3PA (United Kingdom) Fenns Bank Whitcurch enquiries@remetaltrp.com Zinc Waste Recycling Zinc Waste Recycling Manuel Barrenechea Guimón Asier Zarraonandia Ayo Luchana-Baracaldo (Biscay) Asúa-Erandio (Biscay) Buen Pastor s/n befesa@befesa. abengoa.com Ctra. Bilbao-Plencia, zinc.aser@befesa. abengoa.com Activity Report 2006 ABENGOA

108 Management Structure Address Telephone Fax Befesa Zinc, S.L. - General Manager Manuel Barrenechea Guimón Asier Zarraonandia Ayo Asúa-Erandio (Biscay) - Controller Marta Deprit García - Legal Counsel Birke Fuchs Befesa Zinc Aser, S.A. Manuel Barrenechea Guimón - General Management Asier Zarraonandia Ayo - Marketing Ana Martínez de Urbina Abrisqueta - Supplies & Plant Administration Íñigo Urcelay González - Economic-Finance Isabel Herrero Sangrador - R&D&I, Quality & the Environment Iker Dañobeitia Sierra - Technological Development Iñaki Aurrekoetxea Aguirre Asúa-Erandio (Biscay) Ctra. Bilbao-Plencia, zinc.aser@befesa. abengoa.com Ctra. Bilbao-Plencia, zinc.aser@befesa.abengoa. com Befesa Zinc Sondika, S.A. Joseba Arrospide Ercoreca Sondica (Biscay) Sangroniz Bidea, zinc. sondika@befesa.abengoa. com Befesa Zinc Amorebieta, S.A. - Economic Finance Joseba Arrospide Ercoreca Josu Goitia Villelabeitia Amorebieta (Biscay) - Quality, the Environment & Prevention Itziar Alcerreca Unzurrunzaga BUS Group A.B. Oliver Jäger Landskrona - Economic-Finance Jürgen Sübe (Sweden) - Marketing Uwe Lüke Duisburg - Logistics Dirk Witte (Germany) BUS Steel Services GmbH Oliver Jäger Duisburg (Germany) BUS Metall GmbH Eckhard von Billerbeck Duisburg (Germany) BUS Zinkrecycling Freiberg GmbH Uwe Hasche Freiberg (Germany) BUS Valera SAS Marc Wauters Gravelines (France) BUS Scandust AB Ulf Helgesson Landskrona (Sweden) Recytech S.A. Xabier Mareschal de Charentenay Fouquierés-lez- Lens (France) Befesa Desulfuración, S.A. Manuel Barrenechea Guimón - Technical - Production José Ángel Elizalde Ruiz de Larramendi - Economic - Finance José Pérez Trigo - Quality, the Environment & Prevention Karmele Calvo Díaz Luchana-Baracaldo (Biscay) Barrio Euba, s/n zinc.sondika@befesa. abengoa.com Box 204 (46) (46) Albert-Hahn-Strasse 1 (49) (49) Albert-Hahn-Strasse 1 (49) (49) Richard-Seiffert-Strasse 1 (49) (49) Alfred-Lange-Strasse 10 (49) (49) Route Duvigneau (33) (33) Z.I.P. des Huttes P.O. Box 204 (46) (46) , Route de Noyelles (33) (33) Buen Pastor s/n desulfuracion@befesa. abengoa.com Industrial Waste Management Business General Manager Santiago Ortiz Domínguez Seville Benito Mas y Prat, bgri@befesa.abengoa.com - Hazardous Wastes Representative Antonio Rodríguez Mendiola - Industrial Hazardous Wastes Leopoldo Sánchez del Río Castiello - Non-Hazardous Wastes Álvaro de Rojas Marín - Industrial Cleaning Sergio Nusimovich Kolodny - Industrial Cleaning Assist. Apolinar Abascal Montes - Quality & the Environment Carmen Gordillo Marín - Economic - Finance Íñigo Molina Montes - Environmental Initiatives Juan Contreras Casas Madrid Paseo de la Castellana, 31 3ª planta bgri@befesa.abengoa.com ABENGOA Activity Report

109 Management Structure Address Telephone Fax General Manager, Planning & Corporate Development - New Projects Daniel González Martín Madrid - Integral Management Ignacio Carrizosa Vila - Technical Office/New Technologies Javier González del Valle - Land Management Miguel Maíz Ramírez - R&D&I José Manuel Benítez Fernández - Financial Management David Carbajosa Fernández Befesa Plásticos, S.L. Manuel Roca Blanco Alfredo Velasco Erquicia Seville Avda. de la Buhaira, Paseo de la Castellana, 31 3ª planta Seville Benito Mas y Prat, Alhama de Murcia (Murcia) Befesa Gestión PCB, S.A. Manuel Roca Blanco Cartagena (Murcia) Parque Ind. Las Salinas c/ Las Salinas, s/n Pol. Ind. Cabezo Beaza Avda. de Bruselas, bgri@befesa.abengoa.com bgri@befesa.abengoa.com befesaplasticos@ befesa.abengoa.com befesa.pcb@befesa. abengoa.com Environmental Engineering Environmental Engineering Guillermo Bravo Mancheño Seville Avda. de la Buhaira, Befesa.cta@befesa. abengoa.com Befesa Construcción y Tecnología Ambiental, S.A. - Managing Director Guillermo Bravo Mancheño - General Manager José Marañón Martín - Economic-Finance Miguel Ángel Marín Fidalgo National Market Salvador Soler Salcedo Seville Avda. de la Buhaira, befesa.cta@befesa Production Federico Barceló Pinzón abengoa.com - Contracting Miguel Ángel Moñino García - Bids Ramón Rubio Vicente - Technical Office Jesús Vega Escudero Central Region Rep. Juan Ignacio García de Miguel Madrid Quintana, 29, 6º decha Northern Region Rep. Rafael González García Gijón (Asturias) Ctra. Villaviciosa, Catalonia-Aragon Rep. Lluis Homdedeu Pérez Barcelona Entenza, 95, 6ª planta Valencia Rep. Luis Francisco García Poveda Valencia Játiva, 15-Pta Murcia Rep. Pedro Rodríguez Hernández Murcia Molina del Segura, 5 bloq.3-1ºc Southeast Region Rep. Federico Barceló Pinzón Malaga Puerto,14 5º Southwest Region Rep. Juan Peña López-Pazo Dos Hermanas (Seville) Abroad Carlos Cosín Fernández - Production Rodrigo Segovia Yuste - Marketing & Business Development Joaquín Fernández de Piérola - Administration José Ramón Alcántara Fernández - Technical Office Francisco Bernaola Echevarría Bda. Fuente del Rey-Prolongación C/ D. Remondo, s/n Madrid Fernando el Santo, befesacta.exterior@ befesa.abengoa.com Befesa Fluidos, S.A. Santiago Martínez Mansilla Madrid Fernando el Santo, befesa.fluidos@ befesa.abengoa.com Codesa, S.A. Juan Peña López-Pazo Dos Hermanas (Seville) Latin America Bda. Fuente del Rey-Prolongación C/ D.Remondo, s/n codesa@codesa.com Latin America Juan Abaurre Llorente Seville Avda. de la Buhaira, Befesa Argentina, S.A. Befesa Peru, S.A. José Giménez Burló Jorge Carlos León León Percy Andrés Irribarren Ibañez C1063ACU Buenos Aires (Argentina) Paseo de Colón,728 Piso 10 San Isidro- Lima (Peru) Canaval y Moreyra, 654, piso info@befesa.com.ar befesa@ abengoaperu.com.pe Anexo Activity Report 2006 ABENGOA

110 Management Structure Befesa Mexico, S.A. de C.V Norberto del Barrio Brun Mexico F.D. (Mexico) Juan Ramón Barcala Address Bahía de Santa Bárbara, 174 Col. Verónica Anzures Befesa Chile Gestión Ambiental Limitada Alejandro Conget Inchausti Santiago (Chile) Las Araucarias, 9130 Miguel Murua Saavedra Telephone abengoamexico.com.mx befesa@abengoa-chile.cl Fax Information Technologies Telvent Chairman and Chief Executive Officer Chief Financial Officer & Investor Relations Chief Accounting Officer Chief Reporting Officer Legal Counsel Press Officer Human Resources Chief Operating Officer Chief Technology Officer Business Development Internal Auditing Gestión Integral de Recursos Humanos Manuel Sánchez Ortega Ana Plaza Arregui Raúl Agüera Infante Bárbara Zubiría Furest Lidia García Páez Cristina Poole Quintana Aránzazu Amaya Caja Enrique Rodríguez Izquierdo Francisco Cáceres Salazar José Ignacio del Barrio Gómez Carmen González Alcobendas (Madrid) Valgrande, Managing Director Álvaro Polo Guerrero Seville Tamarguillo, Telvent Energy President Larry Stack SW Calgary, Alberta Executive Vice President Ignacio González Domínguez Canada T2W 3X6 Telvent Environment Executive Vice President Javier Garoz Neira Alcobendas (Madrid) Southport Road Valgrande, Telvent Transport President José Montoya Pérez Alcobendas Valgrande, Executive Vice President José María Flores Canales Telvent Public Administrations Executive Vice President Adolfo Borrero Villalón (Madrid) Seville Tamarguillo, Telvent Outsourcing Executive Vice President José Ignacio del Barrio Gómez Alcobendas (Madrid) Valgrande, Telvent North America Chairman Dave Jardine SW Calgary, Alberta Canada T2W 3X6 Telvent Mexico Chairman Luis Rancé Comes Mexico D.F. Managing Director José Ramón Salgado Rodríguez (Mexico) Telvent Brazil CEP Chairman Marcio Leonardo Río de Janeiro RJ (Brazil) Southport Road Bahía de Santa Bárbara, 174 Col. Verónica Anzures Estrada do Camorim, 633 Jacarepagua Telvent China Chairman Carlos Dai Yue Pekin (China) No 18-2 BDA International Enterprise Avenue, Nº. 2 JingYuanBeiJie BDA Telvent Australia Managing Director José Antonio Álvarez Dodero Western Australia 4/41 King Edward Rd Osborne Park, 6916 Perth /7/8/ ABENGOA Activity Report

111 Management Structure Address Telephone Fax Telvent Venezuela Managing Director George Galaz Caracas - (Venezuela) Avenida Francisco de Miranda Edif. Parque Cristal Torre Oeste, Piso 3, Ofic Telvent Argentina Managing Director Ignacio Llorente 1063 Buenos Aires, Av. Paseo Colón, 728 Piso (Argentina) Telvent Holanda Culemborg Landzichtweg 70, 4105 DP (Netherlands) Telvent Escandinavia Östertund (Sweden) Prästgatan, 38 SE Telvent Turkey Ankara (Turkey) Telvent Thailand Bangkok (Thailand) Koza Sokak 74/10 Gaziosmantasa Lardprao Rd. Wangtonglang, 1725 Soi Lardprao Abeinsa Chairman Alfonso González Domínguez Business Group Managers Director of Engineering and Industrial Construction Alfonso González Domínguez Seville Avda. de la Buhaira, abeinsa@abengoa.com Director of Latin America Enrique Barreiro Nogaledo Consolidation and Auditing Director José Fernando Giráldez Ortiz Engineering and Industrial Construction Energy Abener General Director Manuel J.Valverde Delgado - Assistant General Director. Solar Division Director José Luis Burgos de la Maza - Industrial Division 1 Director José Luis Gómez Expósito - Industrial Division 2 Director Javier Reina Salguero - Poland Division Francisco Pérez Olmo - USA Division Florencio Ferrera Saldaña - Singular Projetcs Bioetanol Holanda Pedro Rodríguez Ramos Bioetanol UK Victor J. Hidalgo Vega Bioetanol Germany Pablo Infante Cossio Seville Avda. de la Buhaira, Project Control Department Director Antonio González Casas - Financial Department Director Natalia Cebolla Zarzuela - Legal Department Director Armando Zuluaga Zimmerman - Operations Dep.Director Javier Pariente López - Project Design and Tenders Department Director Ana Cristina González de Uña - Quality, Environment and OPR Department Director Maribel Torres Castro Partner Companies Director Juan Antonio Gutiérrez del Pozo Aprovechamientos Energéticos Furesa Cogeneración Villaricos Enernova Ayamonte Puerto Real Cogeneración Sniace Cogeneración Seville Avda. de la Buhaira, abener@abengoa.com Activity Report 2006 ABENGOA

112 Management Structure Address Telephone Fax Abroad Abener Mexico Chairman Jaime I. García Muñoz Mexico F.D. General Director Florencio Ferrera Saldaña (Mexico) Abener Energo ProjektGliwice Chairman Artur Mermon Gliwice CEO Francisco J. Pérez Olmo (Poland) Hynergreen Technologies Bahía de Santa Bárbara, 174 Col. Verónica Anzures (52) Ul. Zygmunta Starego (52) Director José Javier Brey Sánchez Seville Avda. de la Buhaira, hynergreen@hynergreen. abengoa.com Zero Emissions Techonologies Director Emilio Rodríguez-Izquierdo Seville Avda. de la Buhaira, abeinsa@abengoa.com Installations Inabensa General Director Eduardo Duque García Assistant General Manager Jorge Santamaría Mifsut Comercial/Tender Manager José Javier González Solano Exports Manager José Antonio Amigueti Tosso Seville Manuel Velasco Pando, Operations and Logistics Manager Mª José Esteruelas Aguirre inabensa@abengoa.com Strategic Development Manager Isidro Montoro Mantilla Economic-Financial Manager Juan Carlos Deán García Adámez Studies and Development Manager Javier Valerio Palacio Installations 1 Director Francisco Galván Gómez - Maintenance, Electricity and Instrumentation Manager Juan Carlos Torres Torres Seville Manuel Velasco Pando, Southem Regional Manager Antonio Núñez García - Mechanical Assembles Manager Francisco Martínez Gómez - Manager Protisa Isaac Criado Montero Madrid Gral. Martínez Campos, 15-6º y 7º protisa@abengoa.com - Central Regional Manager Vicente Castiñeira García Madrid Marqués de Encinares, Regional Manager Galicia José Macías Camacho Corujo (Vigo) Bajada a la Gándara, nave Regional Manager Canary Islands Fernando Celis Bautista Las Palmas Castillo, Railways Manager José Luis Álvarez Sancho Madrid Marqués de Encinares, Installations 2 Director Rafael González Reiné Seville Manuel Velasco Pando, Regional Manager Levante José Ignacio Muñoz Donat Valencia Poeta Altet, 18 -bajo Regional Manager Catalonia Pedro Clares del Moral Barcelona Peru, Regional Manager Balearic Isles Francisco Pérez-Roldán Oller Palma Gremio Zapateros, 51-1º de Majorca Polg. Son Castello - Grid Manager Alberto Pizá Granados Seville Manuel Velasco Pando, Northem Rigional Manager Íñigo Astigarraga Aguirre Etxebarri Santa Ana, 26 - Polg. Barrondo (Biscay) Manufacturing Director Gonzalo Gómez García Seville Manuel Velasco Pando, Seville Workshop Manager Antonio Jiménez Rodríguez - Alcalá de Henares Workshop Manager Felipe Collado Yoldi Alcalá de Henares ( Madrid) Ctra. M-300, km 28, ABENGOA Activity Report

113 Management Structure Address Telephone Fax Communications Director José Luis Montells García Alcobendas Valgrande, ( Madrid) Licenses Director Mª José Esteruelas Aguirre Seville Manuel Velasco Pando, inabensa@abengoa.com Abroad Inabensa France Director Milagros Ramón Jerónimo GVio Parc de la Bastide Blanche (33) (33) Vitrolles (France) Batiment D2 inabensafrance@ inabensa. com Inabensa Maroc Director Hamza Chebaa Casablanca (Morocco) - Representative Agadir José Manuel Arroyo Perfumo Agadir (Morocco) Inabensa Bharat Director G.C. Tather Nueva Delhi (India) 179, Av. Moulay Hassan I 1º étage - Esc. A Avenue Hassan II Immeuble Oumlil - 1er étage Flat no 902, 9th Floor - Eros Corporate Tower - Nehru Place (212-22) (212-22) (212-22) abengoa@casanet.net.ma (212-48) (212-48) (91-11) inabensa@de13.vsnl.net.in (91-11) Inabensa Costa Rica Director José Marset Rams San José (Costa Rica) 100m. Sur del Automercado de los Yoses - Casa esquinera gris (506) inabensa@abengoa.com (506) Inabensa Portugal Director Crispim Manuel Gouveia dos Santos Ramos 2685/338 Prior Velho- Lisbon (Portugal) Inabensa Libia Director Ignacio Ranero Herrero Trípoli (Libya) Rua Profesor Henrique de Barros, 4 Edificio Sagres, 6ºC Gurji road nearby Hai Al-Andalus souk - above Al-Gumhuria Bank 1st floor, flat nº 3 (351) inabensa@abengoa.com (351) (218) (218) Inabensa Abu-Dhabi Director Francisco Manuel Luque Ramírez Abu Dhabi (United Arab Emirates) 112 Activity Report 2006 ABENGOA Al Falah street (passport road) Saeed Hilal - Al Dhahiri the Building no 160 mezzanine Floor flat nº 2 (971) (971) Servicios Integrales de Mantenimiento y Operación, S.A. ( Simosa) Director Ignacio Sabido Castilla Seville Avda. de la Buhaira, simosa@simosa.abengoa. com CT Palmas Altas, S.A. Director Manuel Molina Trujillo Seville Avda. de la Buhaira, Communications Abentel Telecomunicaciones, S.A. General Director Vicente Chiralt Siles Alcobendas (Madrid) - Asistance Manager Alfonso Benjumea Alarcón - Economic-Financial Manager José Ignacio Santiago Jover - Quality and Environment Manager Luis Giráldez González - Information Systems Manager Alberto Benjamín Hernández - Regional Manager Andalusia I, Extremadura and Levante Diego Leal del Ojo González - Regional Manager Central Spain and Catalonia Eduardo González Pinelo - Regional Manager Andalusia II and Canary Islands Manuel Torres Moral Valgrande, abentel@abengoa.com Seville Tamarguillo, 29-4ª Planta

114 Management Structure Address Telephone Fax Marketing and Manufacturing Abencor Suministros, S.A. General Director Rafael Gómez Amores Seville Tamarguillo, 29-1ª Planta Nicsa General Director José Carlos Gómez García Madrid Gral. Martínez Campos, Abroad Nicsa Industrial Supplies Sergio Vicario Pérez Florida (USA) 1786 North Commerce Parkway Weston Nicsamex David Gómez García Mexico F.D. (Mexico) Nicsa Suministros Industriales José Ángel Pérez Gil C1063ACU Buenos Aires (Argentina) Bahía de Santa Barbara 174 Col. Verónica Anzures Paseo de Colón 728 piso 10 (1-954) (52) (5411) (1-954) (52) (5411) Eucomsa Manager Luis Garrido Delgado - Manager Structures Division Sergio Tarazona Rodríguez - Manager Sheet Metal Division José Esteban del Corral Sánchez - Manager Technical Department Structures Division José Pérez Jara - Head of Administration Rafael Lecaroz Muñoz - Human Resources Egberto Pacho Martín Utrera (Seville) Ctra. A-376 km 22 Apartado eucomsa@abengoa.com Latin America Teyma Abengoa (Argentina) Director Alejandro Conget Inchausti - Operations Director Emilio Manuel Dopacio - Administration and Financial Director Pablo Maximiliano Verdile C1063ACU Buenos Aires (Argentina) Paseo de Colón, 728 piso 10 (5411) info@teyma abengoa.com.ar (54 11) Abengoa Chile Director Alejandro Conget - Operations Director Miguel Murua Savedra - Administration and Financial Director Miguel Ángel Fernández Moreno Santiago (Chile) Las Araucarias, Quilicura (56-2) abengoa@abengoa-chile.cl (56-2) Befesa Chile Directors Alejandro Conget/ Miguel Murua Santiago (Chile) Las Araucarias, 9130 Quilicura Teyma Uruguay/Teyma Paraguay Director Brandon Kaufman Montevideo - General Subdirector Alejandro Fynn (Uruguay) (56-2) abengoa@abengoa-chile.cl Avenida Uruguay, nº 1283 (598-2) teyma@teyma.com.uy (56-2) (598-2) Abengoa Brazil Director Antonio Merino Ciudad - Operations Director Luciano Paulino Junqueira - Construction Director Ernesto H. Saralegui - Development Director Rogerio Ribeiro Abreu Dos Santos - Administration and Financial Director Hernán Tálamo CEP Río de Janeiro (Brazil) Befesa Argentina Director José Giménez Burlo C1063ACU Buenos Aires (Argentina) Avenida Marechal Cámara, 160, salas (55-21) abengoabrazil@ abengoabrazil.com Paseo de Colón, 728 piso 10 (5411) info@befesa.com.ar (55-21) (54 11) Abengoa Peru Director Ignacio Baena Blázquez - Operations Manager Martín Huamán Quispe - Administration and Financial Director Martín Paco Solimano Lima 27 (Peru) Avda. Canaval y Moreyra, 654 piso 7º San Isidro (51-1) abengoaperu@ abengoaperu.com.pe (51-1) ABENGOA Activity Report

115 Management Structure Address Telephone Fax Befesa Peru Director Jorge León León Lima 27 (Peru) Avda. Canaval y Moreyra, 654 piso 7º San Isidro Bargoa (Brazil) Director José Calvo Sebastián CEP Río de - Administration and Financial Director Ángel Laffón Benjumea Janeiro (Brazil) Comemsa Estrada do Camorin, 633 Jacarepaguá (51-1) befesa@abengoaperu. com.pe (55-21) bargoa@bargoa.com.br (51-1) (55-21) Chairman Norberto del Barrio Brun Director Antonio Manzano Parras Guanajuato (Mexico) - Commercial Director Dhiman Roy Autopista Querétaro-Celaya, km 16. Calera de Obrajuelos. Municipio de Apaseo - El Grande (52-442) comemsa@ comemsa.com.mx (52-442) Abengoa Mexico Chairman Norberto del Barrio Brun Director Javier Muro de Nadal - Operations Director Emilio Alberto Riesco - Administration and Financial Director David Fernández Fuentes - Legal Department Director Manuel Granados Morales - Critical Projects Manager Rolando Vázquez Ancona - Electric Sector and Water Division Ricardo Sánchez Guerrieri Mexico, F.D. (Mexico) Bahía de Santa Bárbara, 174 Col. Verónica Anzures (52-55) abengoa@ abengoamexico.com.mx (52-55) Petroleum and Gas Division Fernando López de Carrizosa - Industrial Plants, Concessions and Delegations Division Jorge Lobatón de la Guardia - Abengoa Servicios Manager Julián Márquez Juárez Solar Business Unit Chairman Santiago Seage Madrid General Martínez Campos,53, 1º Izquierda solucar@ solucar.abengoa.com Solúcar Energía CEO Pedro Robles Sánchez - Project Promotion Officer Antonio Esteban Garmendia Seville Avda. de la Buhaira, Construction Supervision Officer Teodoro López del Cerro solucar@ - Head of Administration Ricardo Abaurre Llorente solucar.abengoa.com - New Projects Promotion Officer Antonio Cañas Rojano - Photovoltaic Business Officer Fernando Celaya Prieto Madrid General Martínez Campos, solucar@ solucar.abengoa.com Solúcar R&D General Director Rafael Osuna González-Aguilar - Technical Office Manager Valerio Fernández Quero Seville Avda. de la Buhaira, Solucar Inc (USA) General Director Emiliano García Sanz Madrid Eloy Gonzalo 27, 5ª Planta Focus-Abengoa Foundation Anabel Morillo León Seville Plaza de los Venerables, focus@abengoa.com Activity Report 2006 ABENGOA

116 Management Structure ABENGOA Activity Report

117 Management Structure The 2006 Annual Report is available on the web: This document is printed on recycled paper. Design: Rafael Lozano Printers: Artes Gráficas Gandolfo D.L. SE Printed on recycled paper 116 Activity Report 2006 ABENGOA

118 Corporate Social Responsibility Report 2006 Your Partner in Resources and Technical Solutions Printed on recycled paper

119 Abengoa. Your Partner in Resources and Technical Solutions ABENGOA Corporate Social Responsibility Report

120 Abengoa. Your Partner in Resources and Technical Solutions 2 Corporate Social Responsibility Report 2006 ABENGOA

121 Abengoa. Your Partner in Resources Index and Technical Solutions Letter from the Chairmen Abengoa. Your Partner in Resources and Technical Solutions Corporate Structure Main Activities Strategy, Organization and Management Systems Action Principles and Values Organization Management Systems Commitment to Quality Commitment to the Environment Continuous Improvement Commitment to the Future R&D&I Abengoa Social Performance Internal Action External Action Economic Performance Environmental Performance Dialogue with Interested Groups Corporate Governance Report Audit and Control Committee Appointments and Remuneration Committee Index of GRI Contents Reader`s Opinions ABENGOA Corporate Social Responsibility Report

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123 ABENGOA For the third consecutive year, we present Abengoa s Corporate Social Responsibility Report in accordance with the criteria of the Global Reporting Initiative. The rational use of natural resources and our concern for ensuring that future generations may be able to use them as we ourselves have done is Abengoa s roadmap for the future. Moreover, as far as Abengoa is concerned, what is known nowadays as sustainable development does not exclusively mean preservation of the environment. Abengoa goes beyond that vision and raises its commitment to the social and human side of things. In Abengoa, we have come to understand that out traditional engineering activity is nothing more than a valuable tool by which we can build a more sustainable world. Utilizing solar energy, biomass, wastes, information technologies and engineering, Abengoa applies technological and innovative solutions for sustainable development and, in parallel, channels its most socially committed management through the Focus-Abengoa Foundation. In Abengoa, we are convinced that the innovative company, within a context of change and global competition, is an efficient and essential instrument for enabling progress towards a sustainable development society. The constant generation of new development and innovative horizons is one of our main strategic pillars. Abengoa s commitment to social and human progress while contributing to preservation of the environment is one of the essential pillars on which Corporate Social Responsibility is based. Through the Focus-Abengoa Foundation the company s social activity policies are brought into practice. This is done in a non-profit making manner with objectives being of general interest, focused on assistance, educational, cultural, scientific, research and technological development work. This Report has been prepared in acordance with the 2002 GRI Guidelines. It represents a balanced and reasonable presentation of our organization s economic, environmental and social performance. Through our web page ( we are open to any idea or opinion that might assist us in attaining these objectives. Felipe and Javier Benjumea Llorente Chairmen of Abengoa

124 Abengoa. Your Partner in Resources and Technical Solutions 6 Corporate Social Responsibility Report 2006 ABENGOA

125 Abengoa. Abengoa. Your Your Partner Partner in in Resources Resources and and Technical Technical Solutions Solutions Corporate Structure Main Activities With the sun... we produce thermoelectric and photovoltaic electric energy With biomass... we produce ecologic fuels and animal feed With wastes... we produce new materials by recycling, and we also treat and desalt water to achieve a sustainable globe With Information Technology we transform data into knowledge, providing effective operational and business real-time decision making for traffic, transport, energy and environment With engineering... we construct and operate conventional and renewable energy power plants, power transmission systems and industrial infrastructures ABENGOA Corporate Social Responsibility Report

126 Abengoa. Your Partner in Resources and Technical Solutions Corporate Structure Corporate Structure Abengoa is a technological company that applies innovative solutions for sustainable development in the infrastructures, environment and energy sectors. It is present in more than 70 countries where it operates through its five Business Units: Solar, Bioenergy, Environmental Services, Information Technology, and Industrial Engineering and Construction. Solar, whose holding company is Solucar Energía. Solucar s activity focuses on the design, promotion, closing of financing arrangements, construction and operation of electricity generating plants utilizing the sun as the primary energy source. In addition, the company conducts solar technology research and development activities to achieve constant reduction of costs for general enhancement of existing technologies. The company possesses the necessary know-how and technology for solar thermal power plants: central receiver, parabolic trough and parabolic dish collector systems, as well as for solar photovoltaic plants, with and without concentration. Solucar is an international leader in solar energybased electricity generating plants, with a construction and operation plan for more than 300 MW in Sanlucar la Mayor (Seville, Spain) over the next few years. Bioenergy, whose holding company is Abengoa Bioenergía, focuses on the production and development of biofuels for the transport sector, including bioethanol and biodiesel, utilizing biomass as the raw material (cereals, cellulosic biomass, oil-bearing seeds). The biofuels are utilized in ETBE production (gasoline additive), or are directly blended with gasoline and gas oil. Given that they are renewable energy sources, biofuels reduce CO 2 emissions, contributing to the security and diversification of energy supply, while reducing the dependency on fossil fuels used in the automotive sector and collaborating in the attainment of the Kyoto Protocol. Environmental Services. Befesa Medio Ambiente focuses on providing environmental services for industry and the construction of environmental infrastructures. It develops aluminum waste recycling, zinc recycling, industrial waste management, and environmental engineering (desalination, water treatment and drives) activities. Befesa, established in 1993, is listed on the Madrid, Bilbao Stock Exchanges, and closed 2006 with treasury stock in excess of 693 million euro. Information Technology. Telvent is Abengoa s holding company in the Information Technology sector. It manages high value-add solutions in four industrial sectors (Energy, Traffic, Transport, and the Environment). Its technology enables companies to take real-time business decisions utilizing data control and acquisition systems, and leading-edge operational applications that provide the enterprise with secure and effective information. Telvent is listed on the North America NASDAQ Stock Exchange since October 21, It closed 2006 with treasury stock of million US dollars. Industrial Engineering and Construction. Abeinsa is Abengoa s holding company in this field of activity: design engineering, construction and maintenance of electric, mechanical and instrumentation infrastructures for the energy, industry, transport and services sectors. Its activities also extend to the promotion, construction and operation of industrial plants and conventional (cogeneration and combinedcycle) and renewable energy (bioethanol, biomass, wind, solar and geothermal) power plants, and turnkey telecommunication networks and projects. 8 Corporate Social Responsibility Report 2006 ABENGOA

127 Abengoa. Your Partner in Resources and Technical Solutions Main Activities of the Business Units Main Activities of the Business Units Solar Abengoa is dedicated to the generation of electricity utilizing solar energy: Solucar is formed by the following companies: Solúcar Energía: in Spain, it promotes, constructs and operates electric energy production plants utilizing the sun as the primary energy source. Solúcar PV: its activity focuses on the promotion and construction of solar photovoltaic power plants, in Spain. Solúcar R&D: dedicated to the design, research and development of new technologies, both thermal and photovoltaic. Solúcar Inc: a recently established company, responsible for developing the solar business in the United States. Solúcar Solar: it concentrates the resources dedicated to the development of new businesses. This recently created business unit is the result of more than 20 years of investing in solar energy research and development projects. Abengoa currently occupies a privileged position in the solar energy exploitation sector as it has known how to compatibilize, during the course of its activity in this field, dedication to the two technologies that allow electricity generation utilizing solar energy: thermal and photovoltaic technologies. Therefore, it is vastly experienced in the different thermal exploitation techniques: central receiver, parabolic trough and parabolic dish collector systems. In all these technologies, thermal energy is transferred to a liquid by means of solar radiation optic concentration systems. It is also vastly experienced in the development of photovoltaic projects, with and without concentration, that directly convert solar radiation into electricity with the use of photovoltaic cells and modules. It plans to construct, over the next eight years, a Solar Platform close to Sanlucar la Mayor (Seville, Spain). The nominal rating of this complex of solar thermal and solar photovoltaic facilities will exceed 300 MW. Trust is thereby being put in the potential of solar energy for electricity production purposes, while also contributing to sustainable development and environmental protection and preservation of natural resources. Bioenergy Abengoa Bioenergy produces and markets bioethanol, a renewable substitute for gasoline, obtained from cereal, and used as biofuel. Its production reduces consumption of fossil fuels, and emissions of many tons of CO 2 to the atmosphere, because the CO 2 emitted by vehicles has been captured from the air by the cereal, through the process of photosynthesis and the plant s chlorophyll. Bioethanol production also allows manufacturing of other beneficial by-products, from an environmental point of view, such as distillery grain solubles, highprotein-content compounds used as animal feed. The use of bioethanol instead of gasoline offers the following advantages: Renewable fuel source of national origin. Reduced dependency on oil imports Cleaner fuel source. Low cost of fuel octane increment. Usable in almost all vehicles. Easy production and storage. Greenhouse gases emissions reduced by 40% to 80% in the use of biofuels instead of fossil fuels. Bioethanol is superior to all other types of fuel form an environmental point of view. Other advantages include: Reduction of acid rain. Better quality of urban air. Less pollution of water. Less generation of waste. ABENGOA Corporate Social Responsibility Report

128 Abengoa. Your Partner in Resources and Technical Solutions Main Activities of the Business Units On the other hand Abengoa Bioenergy has begun contructing a new biodiesel plant in Cádiz (Spain), that will use vegetable olis as raw material. Biodiesel is a renewable biofuel obtained from a chemical reaction of methanol (or bioethanol) and vegetable oils (rape, sunflower, soy, palm). It contains no sulfur, and compared to those of diesel derived from oil, it decreases the emissions of greenhouse effect gases (CO 2, among others), carbon dioxide (CO), PM particles, and other polluting substances. Furthermore, biodiesel is suitable for use as fuel, totally or partially susbtituting gas oils, in diesel engines, without any conversions, adjustments or special regulations, in the vehicle s engine. It also increments the engine s lubricity and the point of ignition, reducing danger of explosions caused the gas emissions. Bioethanol and biodiesel are renewable and clean energy sources that contribute to reducing soil contamination due to their biodegradable and nontoxic nature. Their utilization reduces energy dependency on fossil fuels and contributes to the security of energy supply. Their production creates new opportunities of sustainable rural development within the framework of a more market-focused agricultural policy, given that it encourages the development of energy crops and the creation of agro-industries, which contribute to the maintaining of employment and income levels in the rural environment. This Business Unit bases its growth on production increase through the construction of new facilities, its participation and presence in new projects and markets, and on continuous trust in technological innovation as a basis of its strategy, by making important financial and human resource investments in R&D&I projects, basically in areas related with the enhancement of process performances, bioethanol production from cellulosic biomass and biomass gasification, and the development of new bioethanol-based products (e-diesel, hydrogen). Highlights Bioenergy Sales (M ) ,2 Gross Cash Flow from Operating Activities. (M ) ,9 Ethanol production (millions of liters) Workforce Abengoa currently operates 6 facilities that produce bioethanol from cereal grains in Europe and the United States, with an overall production capacity of 248 million gallons (944 million liters). In 2006, a new production facility became operational in Spain (50 Mgal.), that soon will include a production unit prototype based on cellulosic biomass (cereal straw). Abengoa s biofuels are currently marketed in Germany, Spain, France, Sweden and the US. The Business Unit s corporate headquarters is in Saint Louis, Missouri (USA). Abengoa is Europe s leading bioethanol producer and number five in the United States, and it is the only producer that operates in both markets. The new biodiesel project allows Abengoa Bioenergy to get to be known in this biofuel market and, in addition, become a reference for the construction and operation of biodiesel facilities. This strengthens Abengoa s capacities in the bioethanol sector and consolidates its involvement in the development of a global transport biofuels market. 10 Corporate Social Responsibility Report 2006 ABENGOA

129 Abengoa. Your Partner in Resources and Technical Solutions Main Activities of the Business Units Environmental Services Abengoa provides environmental services for industry and constructs environmental infrastructures throughout the following areas: Aluminum Waste Recycling, Zinc Waste Recycling, Industrial Waste Management, and Environmental Engineering. Aluminum Waste Recycling. Providing of diverse content aluminum waste collection and treatment services, manufacturing and marketing of aluminum alloys and design, manufacturing and installation of equipment related with the recycling of this metal. In addition, salt slags which are managed by this Business Unit are a hazardous toxic waste originating from the aluminum waste recycling process. The recovery of salt slags is the alternative to dumping and the objective is to separate the metallic aluminum, the salt and the aluminum oxide to enable reutilization of all the components. This activity enables complete closure of the recycling cycle and integral exploitation of wastes with aluminum content. Zinc Recycling. Recycling and recovery of residual powders (steel powders) originating in the electric arc kiln steel manufacturing and casting process. The services provided by Befesa s companies in the zinc sector are a fundamental link in the zinc recovery cycle. They prevent the useless loss of tons of this metal, reduce dumping and contribute to reducing extractions of zinc mineral from nature. It is the only company in Spain that offers the integral steel powders collection and treatment service for valorization purposes and the only alternative, offering the optimal environmental solution for treatment of steel powders. Highlights Environmental Services Sales (M ) Gross Cash Flow from Operating Activities (M ) Treated production (millions of liters) 1,374 1,654 2,536 Workforce 1,249 1,348 1,533 In addition, this Business Unit conducts a Desulfurization activity that applies the cleanest and safest process for residual sulfur exploitation, and provides services for petrochemical facilities that resolve the desulfurization waste problems that arise from their production processes. Industrial Waste Management focuses, on the one hand, on providing an integral service for industrial waste producers following a treatment hierarchy, the priority of which is minimization, reutilization, recycling, valorization (energy or material exploitation of the wastes), and waste disposal in accordance with national and European environmental legislation and, on the other hand, it provides a wide range of industrial cleaning services that cover almost all industrial sectors. Environmental Engineering. Befesa s Environmental Engineering activities focus on the design, construction and operation of infrastructures for the integral water cycle and waste management. Of note is the desalination activity in which the company is one of the world s leaders with plants in operation and/or under construction with a global production capacity of more than 900,000 cubic meters of desalinated water per day. ABENGOA Corporate Social Responsibility Report

130 Abengoa. Your Partner in Resources and Technical Solutions Main Activities of the Business Units Information Technology Through Telvent, Abengoa manages real-time Information Technology solutions in the Energy, Traffic, Transport, and Environment sectors in Europe, North America, Latin America, the Asia-Pacific region, and the Middle East and Africa. The solutions offered facilitate complete real-time integration of the information from the missioncritical applications, in the suite of corporate systems of the companies for which we work. In the Energy Sector work is conducted in the Oil and Gas sectors, where a wide range of engineering software for oil, refined product and natural gas derived liquid pipeline systems are offered, as are leading-edge applications for operational, measurement and commercial process management. The technological applications developed by Telvent, utilized by more than 35 oil pipeline operators, enable functions as diverse as the control of hydrocarbon flow levels, leak detection or a wide range of measurement processes that facilitate the commercial operation of the pipelines. In the Electric Sector, real-time automation solutions are developed for the electric services sector. Telvent is the electric market leader in Spain and one of the most important providers of Control and Communications Solutions for the electric market in Latin and North America. Telvent s activity in the Traffic Sector focuses on applications, products and services related with Intelligent Traffic Systems (ITS). Telvent provides global solutions for city traffic problems and motorway and highway control, monitoring and management to ensure safety and optimize flow conditions. Highlights Information Technology Sales (M ) Gross Cash Flow from Operating Activities. (M ) Contracting Portfolio (M ) Workforce 2,124 2,373 3,118 Telvent s objective is the promotion, execution and management of infrastructure installation projects for control and communications in the traffic sector. For this purpose, state-of-the-art technologies and real-time applications, that provide efficient solutions for the day-to-day needs that arise in cities and interurban areas, are utilized. In the Transport Sector, Telvent offers solutions for rail traffic control, toll management, ticketing, automatic vehicle identification, video monitoring, navigation systems and simulators for maritime traffic training purposes. Telvent has developed, among others, leading-edge solutions for toll management and control for highway, tunnel and bridge concessionaires, ticket sale and cancellation management and control systems for passenger traffic in stations, and rail transport control systems. Telvent s activities in the Environment are developed in the water and meteorology business areas. Telvent has developed systems that enable real-time and historic measurement of all the parameters that affect water management and which enable flood prediction and warning, remote control of irrigation systems or water management for the same. Telvent has been providing technological solutions in the weather observation sector for more than 20 years. Almost all of Spain s airports have been equipped or upgraded with Telvent-developed Automated Weather Observation Systems (AWOS). The company also offers solutions for surface weather observation and provides tele-detection instruments for early detection and nowcasting of adverse weather phenomena. 12 Corporate Social Responsibility Report 2006 ABENGOA

131 Abengoa. Your Partner in Resources and Technical Solutions Main Activities of the Business Units In addition to the above consolidated activities, in which Telvent is a world leader, there are two new areas that are becoming ever more important for Telvent and are fruit of our continuous efforts in innovation. These are Health and Public Administrations. Finally, Telvent offers a wide range of Information System outsourcing services. These services include the engineering, project management, installation, operation, systems technique, monitoring, administration, maintenance, security, technical assessment and 24x7 help desk back-up. Telvent s professional services also offer data centers for mission-critical information systems. Telvent has four strategic centers at which these services are provided in Madrid, Barcelona, Seville and Lisbon. Industrial Engineering and Construction Abengoa, through Abeinsa, the holding company of the Industrial Engineering and Construction Business Unit, develops this line of business in five activity areas: Energy, Installations, Telecommunications, Marketing and Industrial Manufacturing, and Latin America. There is a common objective, that of achieving customer satisfaction by offering integrated solutions in the Energy, Transport, Telecommunications, Industry, Services, and Environment sectors. The experience accumulated over more than 60 years in the creation of infrastructures has put Abeinsa at the forefront in Spain and Latin America, with a large portfolio of both institutional and private customers. Within the range of solutions provided by Abengoa for Sustainable Development, Abeinsa agglutinates the activities focused on the fight against Climate Change: R&D&I in emission reduction and elimination technologies (high-capacity greenhouse effect gases, CO 2 sequestration and capture), as well as the promotion of emission reduction projects, CO 2 trading and participation in carbon funds. Highlights Industrial Engineering and Construction Sales (M ) ,169.4 Gross Cash Flow from Operating Activities. (M ) Contracting Portfolio (M ) ,135 Workforce 5,576 6,921 8,304 Energy: Promotion, construction and operation of industrial plants and conventional (cogeneration and combined-cycle) and renewable energy (bioethanol and biomass) and geothermal power plants; exploitation of businesses and activities related with electricity production utilizing fuel cells. Of note is the activity conducted in the promotion, design, engineering, construction, operation and maintenance of energy generating plants such as conventional plants, combined-cycle plants, cogeneration plants, biomass plants (forest, agriculture), waste incineration plants (urban, agricultural, livestock) and bioethanol plants. Also of note in the solar energy sector, in pursuit of sustainable development, is the activity developed in the construction of solar power plants for energy production and sale purposes. In addition, in this Division, another objective is the organization and development of activities and projects related with the production of electricity utilizing fuel cells based on different technologies, and the use of hydrogen. Research, development and innovation work is conducted, especially, in four important lines of activity: the production of clean hydrogen from renewable energy sources; the pursuit of new applications for different technology fuel cells (installations for telecommunications, residential and transport applications); the development of new, reversible, compact and direct, fuel cells; and ABENGOA Corporate Social Responsibility Report

132 Abengoa. Your Partner in Resources and Technical Solutions Main Activities of the Business Units renewable energy integration projects in which hydrogen in produced utilizing solar energy or wind power. Installations: Design engineering, construction and maintenance of electric, mechanical and instrumentation infrastructures for the energy, industry, transport, and services sectors; installation of insulating and passive fire protection materials. Of note in the Installations Division is the activity developed mainly in relation to the following sectors and products: The services developed in the electric installations sector cover almost any activity associated with applied engineering, construction and fitting out for the creation of infrastructures, with the main fields of activity focusing on: hydroelectric, thermal and combined-cycle power plants; substations and transformation centers; airport infrastructures; industrial infrastructures; singular and public-use buildings; shopping and large surface area centers; maritime and rail transport; housing and industrial estates; and hospital, educational and hightechnology buildings. On the other hand, the mechanical activities cover the design, supply, manufacturing, assembly and testing of mechanical systems associated with hydroelectric power plants, thermal power plants, combined-cycle power plants, cogeneration plants, gas and chemical and petrochemical industry plants. As regards insulating, refractory and passive fire protection materials, the following activities are conducted: thermal and acoustic insulation; supply and installation of refractory materials; fire protection systems; and smoke sectoring screens. In addition, in relation to instrumentation and maintenance, the customer is provided with an integral installations and infrastructures service by the providing of specialized personnel and equipment. With more than 60 years experience, the company participates in line projects, executing medium, high and very high voltage projects, up to 800 kv, worldwide. In addition, in relation to railway installations, we have long-running experience that goes back to 1944, and have installed more than 4,000 km of catenary throughout Spain and, as of from 1998, abroad. Telecommunications: Integration of turnkey telecommunication networks and projects. Of note in this Division is the classic activity of external plant construction and maintenance; that of providing customer loop and equipment, as well as specialization in providing engineering and Telecommunication Networks integration services. Likewise, the Division offers a full range of products and services for the deployment and operation of telecommunication networks: design and engineering, infrastructure construction, equipment supply, installation and testing, operation and maintenance. In short, it is fully capacitated to execute Turnkey Projects. Marketing and Ancillary Manufacturing: Marketing of products related with the remaining Business Unit activities, such as the manufacturing of ancillary elements for the energy and telecommunication sectors. In the Marketing area, the company maintains its leading position on the home market as a provider of electric, instrumentation and communications material in the chemical, energy, telecommunications, and industrial sectors. Likewise, in the Ancillary Manufacturing area, complex materials and products are manufactured and sold to the energy, industrial, services and telecommunications sectors. Low and high voltage cabinets and distribution boards, power electronics and control electronics for remote stations, control and protection panels and ancillary services electric panels for all types of industrial, energy and services installations are designed and manufactured; steel reticulated structures such as power line pylons, telecommunication towers, substations and wind machine towers are manufactured; fine plate-derived products, such as panels, signals and telephone booths are manufactured; and products applied in outdoor telephone networks are manufactured. Latin America: A market where our presence has been stable for over 30 years now, through local companies that conduct all the Business Unit s activities related with Energy, Installations, Telecommunications, and Marketing and Ancillary Manufacturing, in an independent manner, while applying Abengoa s global management standards. 14 Corporate Social Responsibility Report 2006 ABENGOA

133 Strategy, Organization and Management Systems Strategy, Organization and Management Systems Action Principles and Values Organization Management Systems Commitment to Quality Commitment to Environment Continuous Improvement Commitment to the Future, R&D&I ABENGOA Corporate Social Responsibility Report

134 Strategy, Organization and Management Systems Action Principles and Values Action Principles and Values Mission Abengoa is a technological company that applies innovative solutions for sustainable development in the infrastructures, environment and energy sectors. It is present in over 70 countries where it operates through its five Business Units: Solar, Bioenergy, Environmental Services, Information Technology, and Industrial Engineering and Construction. The focal points of Abengoa activity are its customers, the professional development and welfare of its employees, and the creation of value for its shareholders. Approach Abengoa believes that a mandate for innovation in a market economy context is an efficient and necessary instrument for becoming a sustainable development company. Values Throughout its history, Abengoa has continued to develop on the basis of a series of shared values. These principles constitute the structure of our ethical code. Through all of its channels, Abengao promotes its awareness and applications, as well as providing control and revision mechanisms to ensure adherence and updating. The most important points underlying this set of values are summarized below. Integrity. Pride in professional performance forms part of the very identity of Abengoa and is evident in all undertakings of our staff, both on and off site. Uncompromising integrity is seen as credibility by our customers, suppliers, shareholders and other third parties with whom we have dealings. Integrity also generates value both at the individual and company level. Law Abiding. Law abidance is not just an external requirement, it is also a personal and company obligation. The law provides a secure framework for company undertakings and also serves to reduce risks in business dealings. Professional Rigour. The concept of professionalism in Abengoa is closely linked to our service culture in activity development, performance and business project involvement. All undertakings in the performance of allocated functions must be guided by professional responsibility and governed by the principles provided for by common management systems. Confidentiality. Abengoa expects discretion and caution from the people attached to its organisation when communicating and dealing with third parties. Adequate steps shall also be taken to safeguard information in the company s possession. Quality. Abengoa is committed to quality in all aspects of its performance - internal and external alike. This task is assigned neither to a specific group of people nor to senior management as it concerns all members of the organisation in a day-to-day capacity. Abengoa has specific quality standards in place, which have developed from awareness, common sense, rigour, order and responsibility. Strategy In Abengoa, corporate social responsibility is regarded as a strategic factor. It is one of the essential pillars which upholds our current and future strategy. We have generally incorporated this factor into our strategy through our environment, quality and human resources policies, and have also integrated it into all company management systems. In support of this strategic factor, Abengoa maintains a presence in those forums which are involved in sustainable development. In addition, in 2002, Abengoa signed with the United Nations World Business Leadership Pact. The purpose of this agreement is to contribute to the adoption of shared values and principles which give the world market a more human face. The World Pact involves the institution of its principles in the strategy and operation of the signatory company, through a process of dialogue, transparency in information and training. These principles consist of the following: In the sphere of human rights, adherence means to support and uphold the protection of internationally proclaimed human rights and avoid circumstances involving infringement. In the area of labour rights, adherence means to uphold freedom of association and effective recognition of the right to collective negotiation, to eradicate all forms of forced and obligatory labour, and to eliminate discrimination in employment and occupation practices. With regard to the environment, adherence means to support a cautious approach to environmental issues, to adopt initiatives to promote greater environmental responsibility and to encourage the development and diffusion of environmentally-friendly technologies. Abengoa, together with the other signatory companies, actively participates in action to promote the World Pact in Spain. Abengoa recently its World Compact Progress Report 2006, and it has been published in the sapnish World Compact web. ( 16 Corporate Social Responsibility Report 2006 ABENGOA

135 Strategy, Organization and Management Systems Action Principles and Values Human Resource Strategy The Human Resource Strategy responds to Abengoa s mission, vision and values, and its operational strategy and, therefore, it has to be directed towards and aligned, at all times, with its strategic objectives and their attainment through the execution of the Strategic Plan. In Abengoa, it is its human capital that makes the attainment of its objectives possible by providing the differential competitive values through talent, skill and work performance. Therefore, when speaking of the employee, the suitability concept becomes a key factor. The pursuit of this suitability is, in effect, one of the fundamental objectives of the Human Resource Policy; suitability of the employee for the position, from a technical and generic point of view, and suitability of his/her working conditions, from a material and immaterial point of view. Said pursuit of suitability inspires the policy as regards training and selection, and the work performance measurement policy inspires the segmentation by position and responsibilities, and the remuneration and conditions policy impregnates each of the sections as regards employee development. In order to achieve this, Abengoa utilizes a human resource management model based on competencies that enable this sought-after alignment between strategic objective, position and person (suitability) and which allows it, at the same time, to identify and detect talent. Abengoa is aware that in the current environment characterized by innovation and change, the performance of its professionals and its capacity for attracting, developing and retaining talent is the key to success for any company and, for this reason, it has firmly decided on a Human Resource Policy with a two-fold objective: To strengthen, exploit, transmit and manage the knowledge and experience of its highest level professionals and guide the development of competencies. To continuously provide the human resource organization with suitable means, in quantity and quality, for the development and implementation of Abengoa s strategy. The need to create the required suitable conditions that enable the above must be integrated into the Human Resource Scheme and, to this end, the following is conducted: Career plan development Constant study of remuneration conditions and their adjustment to results and the market Periodic assessment of work performance Required constant training by profile and position And those related with Corporate Social Responsibility to develop, strengthen and remunerate the human resources so that they may contribute their very best and so that this contribution may be in line with Abengoa s needs. Abengoa considers employee commitment, initiative and proactivity to be fundamental. Therefore, Abengoa utilizes an Integral and Integrated Management System: Integral, as it covers the definition, description and classification of posts, recruitment and selection to attract the best professionals in the marketplace, training and development, with the consequent career plans, performance assessment and management and remuneration, as well as internal communication and social action. Integrated, as it contemplates interrelated processes. The synergies of the different processes must be exploited and continuity pursued, in spite of the autonomy of each one (Selection, Training, Assessment, etc.) They must all pursue a common goal which is none other than to enable Strategic Plan fulfillment. This human resource management system is the means for Abengoa to overcome the challenges it has to face, through constant enhancement that enables it to maintain and develop a sustained competitive advantage, by aligning its human resources with its strategy and pursuing excellent work performance. As regards the organization model, Abengoa opted to establish an in-house and specialized Services Company: Gestión Integral de Recursos Humanos (GIRH), with a much defined mission which is none other than to offer efficient and effective Human Resource management, utilizing quality and innovation processes to enable the enhancement of the operativity and competitiveness of the different Companies. ABENGOA Corporate Social Responsibility Report

136 Strategy, Organization and Management Systems Organization Organization Abengoa is organized into five Business Units: Solar, Bioenergy, Environmental Services, Information Technology, and Industrial Engineering and Construction, and a corporate services area. All the company s social action is channeled through the Focus-Abengoa Foundation. The corporate area provides Management Control, Financing, Risk Control, Strategy, Human Resource, Legal Counsel and Systems services with the aim of capturing management synergies and providing a common management philosophy by: Focusing the Business Units on the creation of value Providing back-up in the defining of strategies and business development Driving the R&D&I activities Providing common tools for planning, management control, risk control and management in general Coordinating finance management Defining common human resource policies Providing quality and environment systems Abengoa is organized into five Business Units and a Corporate Area. Corporate Strategic Development Corporate Area Solúcar Abengoa Bioenergía Befesa Telvent Abeinsa Corporate Services Solar Bioenergy Sustainable Development Environmental Services Information Technology Information and Knowledge Society Industrial Engineering and Construction Creation of Infrastructures Human Resources Economic/Finance Systems and Organization Focusing the Business Units on the creation of value Driving the R&D&I activities Providing support in the defining of strategies and the development of the businesses Providing common tools for planning, management control, risk control, and management in general Coordinating finance management Defining common human resource policies Providing Quality and Environment Systems Legal and Risks Corporate Functions 18 Corporate Social Responsibility Report 2006 ABENGOA

137 Strategy, Organization and Management Systems Management Systems Management Systems Commitment to Quality Since its founding, Abengoa has been convinced of the need for its processes, products, services and systems to pursue full customer satisfaction. The current common management system was introduced in It is structured around a set of compulsory internal rules designed to unify the managements of the companies making up Abengoa. Quality systems have also been put in place in all companies of the group as a strategic objective which goes beyond certification. In accordance with standard ISO 9001:2000, there must be a mechanism in place that controls the mandatory design and implementation of quality management systems. Based on solid management leadership, these systems provide the training and resources necessary for employees to contribute to constant improvement in their day-to-day activities. The principles that underpin this Quality policy are: Rational use of resources, error avoidance and minimization, through implementation of constant improvement programs and goal and objective setting. Promotion of active and responsible involvement of all members of the organization and provision of adequate ongoing training, allowing for participation in the constant improvement process of the system. Fostering of team work and sharing of necessary information, for raising the quality of our activities. Compliance with regulations currently in force and any other commitment subscribed to by the company. Reinforcementof innovation, new ideas, new methods and updating of resources, which are vital components of the constant improvement process, the results of which are threefold - Customer satisfaction: identification of key attributes and minimization of failure rates; process control and improvement. - Employee satisfaction: development and training programs; responsible participation; and achievement recognition. - Improvement of economic results: increase in earnings via differentiation; reduction in the resulting cost of poor quality and an increase in competitiveness in the markets in which Abengoa operates. Structure and Quality Organization Each company under the Abengoa umbrella is capable of structuring and organizing itself according to its needs. The determination of resources necessary to implement the company s commitment to quality is the responsibility of the management teams. As an instrument for developing this commitment, each company is specifically organized in view of its needs and dedicated to the development and maintenance of the Quality Management System. The reporting flow in each company is targeted directly at the applicable management team, on either a company or business group basis. In each case, the management team is comprised of fully qualified personnel with the appropriate academic and specific training in the relevant areas. The companies devoted to engineering and industrial construction have a decentralized structure, with activities in specific works or projects, both on the permanent site (branch or regional management) and in the main office (which reports to general management). At the company level and reporting directly to the Abengoa Chair, there is a corporate management structure for organization, quality and environment, each with its own resources. In the sphere of quality, the purpose of this area of responsibility is to inform the Abengoa Chair as to the evolution and position ABENGOA Corporate Social Responsibility Report

138 Strategy, Organization and Management Systems Management Systems of the quality management systems in the different companies of the group. This supervision is led by the general coordinator for quality and environment and Occupational Risk Prevention, who verifies attainment of these objectives and capitalization on synergism through spot checks and follow-up. The functions of the environment and quality organizations mainly consist of managing and developing the documentation of the systems; keeping it updated as required under applicable national and international standards; proposing and developing the annual plan for internal audits; assuming the role of secretary to the quality and environment committee, where the objectives, indicators and goals are proposed for the company, areas and departments; responding to consultations and requests for advice from the areas and departments; collaborating on training programs; evaluating suppliers; acting as supervisor in the application of problem solving (PSR) and improvement action (IA) initiative; and collaborating with general management on the annual revision of the systems, in order to determine proposals for improvement Accumulated spot check and follow-up on Quality Spot checks and follow-up performed Objective (Planned) January February March April May June July August September October November December UNE-EN ISO 9001 and 9004 These international standards are used by Abengoa as a basic reference for the development and introduction of Quality Management Systems. The percentage distribution of the companies bearing Quality certificates by Business Group is detailed in the attached graphics: Quality Management Systems The progressive introduction of the quality management systems in the Abengoa group of companies is one of the strategic objectives of the group s commitment to quality. This objective revolves around the quality management model which conforms to ISO 9001 and ISO 9004 and the EFQM excellence model.odel. % Percentage of Companies with ISO 9001 Certificates % Percentage of Companies with ISO 9001 Certificates by Business Unit 83 Bioenergy Environmental Services Information Technologies 100 Industrial Engineering & Construction 50 Solar 20 Corporate Social Responsibility Report 2006 ABENGOA

139 Strategy, Organization and Management Systems Management Systems It is important to stress that the need to integrate the Quality, Environment and Occupational Risk Prevention Systems has been established as a medium term objective. Accordingly, seven companies have developed and implemented integrated Quality, Environment and Occupational Risk Prevention Systems to date, which have been certified by the international certifying entity and, a further three companies have integrated the Quality and Environment systems. EFQM Model The EFQM Excellence Model is a non-prescriptive work framework focused on achieving the sustained excellence of an organization, based on the following principles: - Results orientation - Customer focus - Leadership and constancy of purpose - Management by processes and facts - People development and involvement - Continuous learning, innovation and improvement - Partnership development - Corporate social responsibility The EFQM Excellence Model includes a structure of criteria and sub-criteria that includes the best practices and the best organizations together with a powerful assessment, scoring, continuous improvement and recognition system. In addition, the EFQM model is a complete model that considers all the management aspects of an organization and therefore allows the integration of other specific management systems focused on Quality, the Environment, Innovation, etc. This model has already been implemented in the Information Technologies Business Unit and its implementation in the other Business Units is nearing completion. Throughout 2006, the Information Technologies Business Unit continued to conduct self-assessments, based on the EFQM model, in all its companies in Spain, Brazil, Mexico and North America, utilizing the simplified tool Profile under licenses from the Excellence in Management Club, and commenced use of the advanced tool REDER in the Energy and Environment and the Traffic and Transport sectors. As regards participation in competitions of renowned prestige, in 2006, Telvent presented candidatures for the 11th Prince Felipe Award for Industrial Quality, the ALAS Award for International Implantation (organized by the Regional Government of Andalusia), and the First Edition of the Madrid Excellence for Customer Satisfaction Award in the Energy and Environment sectors, the 7th Andalusia Excellence Award, the 2006 Prize for Encouraging Innovative Business Management, Quality management modality (organized by the Institute for Economic Development of the Principality of Asturias), and the 2nd Castilla Leon Management Excellence Award in the Traffic and Transport sector. As a result of the introduction through the EFQM of the Excellence recognition levels associated with statutory external assessments, Telvent presented its candidature in the Energy and Environment sector and was awarded, in 2004, the European Excellence seal of recognition (Silver Seal), which was revalidated in 2006 with a notable increase in the ratings in almost all the sub-criteria. Furthermore, the Industrial Engineering and Construction Business Unit, Instalaciones Inabensa, drew up an EFQM report that was presented for the 7th Edition of the Andalusia Business Excellence Awards and received first finalist recognition in the Large Companies category. Commitment to the Environment Abengoa is fully conscious of the fact that its services, systems, processes and products must be environment-friendly in order to meet current-day needs, and that it must identify and control the associated activities and possible environmental impacts in order not to endanger the capacity for meeting future needs. This commitment to the environment is reflected by the very structuring of the business. Two business groups, Environmental Services and Bioenergy actively work for the environment. Together with the environmental perspective of the remaining areas, the group has a clear environmental orientation ABENGOA Corporate Social Responsibility Report

140 Strategy, Organization and Management Systems Management Systems The Environmental Management Systems are supported by solid leadership from management, who provides training and necessary resources so that all Abengoa employees can help to improve the environment through their day-to-day activities. The principles underpinning Abengoa environmental policy are: - Compliance with legal standards in force from time to time, requirements occurring within the company, demands made by our customers or interested parties and goals and objectives set - Prevention and/or minimization of harmful or negative repercussions on the environment - Reduction in consumption of energy and natural resources by using, to the greatest extent possible, sources which can be renewed or regenerated - And finally, constant improvement of environmental behavior Structure and Environmental Organization For the Abengoa group of companies the following obligations, pertinent to structure and environmental organization, flow from the development of internal management standards: for this area. In every case, fully qualified personnel with the necessary academic and environmental training make up the teams that are responsible for the environmental management system. Likewise, these teams are responsible for specific environmental management activities such as: identification of legal requirements; proposal and development of annual plans of internal auditing; assumption of the role of secretary to the quality and environment committee, where objectives, indicators and goals are proposed for the company, areas and departments; response to consultations and requests for advice from the areas and departments; collaboration on training programs; evaluation of suppliers; assumption of a supervisory role in the application of problem solving (PSR) and improvement actions (IA); and collaboration with general management on the annual revision of the systems in order to determine proposals for improvement. The organization of the environmental management systems is the basically the same as the quality management systems. Accumulated spot checks and follow-up of environmental management systems - Constitution of a quality and environment committee, representative of the whole organization and presided over by company management. Its function is to be the governing body of the environmental management system. - Provision of structure and environmental organization necessary for fulfillment of the environmental commitment expressed in the standard. The application of this standard, which is the responsibility of management, must be in proportion to the needs of the company. Each company is specifically organized to suit its needs and is dedicated to developing and upholding the environmental management system. As a general rule, these organizations report directly to the Managements of the companies, or in some areas to a specific management of the business group pot checks and follow-up performed Objective (Planned) January February March April May June July August September October November December 22 Corporate Social Responsibility Report 2006 ABENGOA

141 Strategy, Organization and Management Systems Management Systems Environmental Management Systems The progressive introduction of the Environmental Management Systems in the Abengoa group of companies is one of the strategic objectives included in the commitment to the environment of the group. The objective revolves around two environmental management models: the international standard ISO and the Eco-Management and Audit Scheme (EMAS). The former is the international standard that Abengoa has set as a reference for the development and introduction of environmental management systems. Below is a representation of the evolution of these systems, certified by certification bodies: European Eco-Management and Audit Scheme (EMAS) Regulation At present, three Environmental Services Business Unit companies, three Industrial Waste Management centers, and one Information Technologies Business Unit company have obtained the Verification Certificate for Environmental Management System conformity to the requirements of the European Eco- Management and Audit Scheme Regulation (EMAS). Over forthcoming years, the objective of several of the companies from the abovementioned Business Units and from other Business Units will be to achieve listing in said register. Percentage of Companies with ISO Certificate % Percentage of Companies with ISO Certificate by Business Unit 67 Bioenergy 100 Environmental Services 85 Information Technologies 71 Industrial Engineering & Construction 50 Solar ABENGOA Corporate Social Responsibility Report

142 Strategy, Organization and Management Systems Management Systems Continuous Improvement Abengoa bases its evolution on continuous improvement in the development of its management systems and the following instruments, which it considers to be strategic: Six Sigma, Trouble-Shooting Reports (TSRs) and Improvement Actions. Six Sigma In 2003, Abengoa opted for Six Sigma as a tool for constant improvement in the important processes of the business with an irregular or unsatisfactory track performance. Six sigma is a methodology that applies statistical techniques from Project management to control and reduce variables affecting global performance; the results of which are threefold: - Customer satisfaction: the identification of the key attributes of their demands, minimization of failure rates and better control of processes - Employee satisfaction: through participation in development and training programs which allow individuals to participate responsibly and gain recognition for achievements - Improvement of economic results: increase in earnings by differentiation and reduction of the costs associated with of poor quality output. Since 2004, as a consequence of the above, each Business Unit has commenced the preparation of human teams of Black Belts and Green Belts, managers that act as Champions, and different projects that have now been completed were undertaken. During this trade year, work continued on the application of this improvement tool for and different projects including the following were undertaken: Optimization and reduction of traveling costs. Software Maintenance Optimization. Reduction in number of provider complaints. Reduction in fuel consumption. Reduction in telephone costs. Documental management improvement. Reduction of points pending in construction. Reduction of approval time for providers invoices. Reduction in manufacturing time for motor control center containers for combined cycle power plants. Elimination of internal suck-ins in aluminum alloys. Trouble-Shooting Reports and Improvement Actions As strategic tools for improving Management of Quality and Environmental Management Systems, new versions of two computer applications have been installed in all Abengoa companies, one for management and Trouble-Shooting (TSR) and the other for processing Improvement Actions (IA). The essential aspect of these applications is that problem management and solution and improvement actions alike can be proposed at the most relevant level to the problem, in such a way that problem detection (TSR) and solutions or improvement proposals (IA) go from low to high. Full utilization of these tools can be enormously advantageous in the day-to-day handling of problems. This type of constant improvement is designed to be redundant in view of the efficiency of the system. Below is the comparison, broken down by business group, of the results obtained in 2003, 2004, 2005 and 2006 relative to problem detection and proposals for improvement actions, as well as the distribution of the problems detected and proponed improvement actions Bioenergy Bioenergy TSRs generated by Business Unit 1031 Environmental Services Information Technologies IAs generated by Business Unit 553 Environmental Services Information Technologies Industrial Engineering & Construction Industrial Engineering & Construction Solar Solar 24 Corporate Social Responsibility Report 2006 ABENGOA

143 Strategy, Organization and Management Systems Management Systems Commitment to the future. R+D+I In Abengoa, we believe that the innovative company within a context of global change and competitiveness is an efficient and necessary tool to enable advancement towards a sustainable development society. Innovation is not an end in itself, as Research can be in many cases. Innovation has an essential role to play and that is to lead society towards a better world. The objective is to make our socioeconomic system, which is not sustainable or for everyone, evolve into one that is sustainable and also for everyone. This is our commitment to the future was a year of special importance for the push given to R&D&I at all levels. Of note in the EU was the intention of doubling the R&D budget for the period 2007 to In particular, Spain has been allotted a 2,000 M Technological Fund for business R&D to be invested over this period. In Spain, investment in R&D reached 1.13% of the GNP, a figure that, although still far off those of our European and American reference countries, represents an accumulative annual growth of more than 10% over the past ten years. In September, the EU published the Scoreboard with a Ranking of the European companies that invested most in R&D&I in Abengoa is listed as fifth among the Spanish companies. Innovation Strategy Abengoa s policy focuses on the creation of value and its sustainment. Innovation is focused on results, in pursuit of three groups of tangible objectives: diversification, through the development of new products and services, differentiation, through improvement and adaptation of existing products, and services for the improvement of processes. In addition, the intangible objective pursued in Abengoa is the acquisition of essential skills, and above all, the generation of future options. This last point is especially related to value through prospects of growth and development of new businesses. Innovation is carried out in Abengoa in several forms. It is put into practise internally, and designed to provide specific customers with solutions or integrated into their own development efforts. It is also put into practise externally based on collaboration agreements with universities, research centres, and third parties, with the execution typically shared between the participants. On other occasions, technology is acquired, and additionally, as has taken place in the past strategic shareholdings have been acquired in technology firms. With regard to financing, Abengoa also has external resources (taxation, grants, universities research centres, shared or customer R&D) and well as its own internal resources. During its innovative history, Abengoa has received recognition in multiple business and academic forums on account of its R&D&I activities. Some of the prizes it has received over the last ten years are listed below: Alas 2005 (5th edition) for International Implantation. Abeinsa. Regional Government of Andalusia th Andalusia Environment Prize. Environmental Management Modality. Befesa. Regional Government of Andalusia EOI. Business School and Public Foundation of the Ministry of Industry and other companies. Abengoa, for its efforts in the field of sustainable development th City of Seville Awards. Energy Agency of Seville. Prize for the Best Business Initiative, to Solucar, for the Sanlucar la Mayor Solar Platform rd Ricardo Carmona Awards. Chamber of Commerce and Industry of Almeria. To Solucar R&D, Prize for Technological Innovation for its works towards the development of solar thermal energy th Andalusia Business Excellence Award. Inabensa. Regional Government of Andalusia Best of European Business for Innovation. Abengoa Bioenergy. Roland Berger and the Financial Times City of Seville Prize. Mention of Honor for Hynergreen. Seville City Council National Mare Nostrum Computer Science Prize. Telvent. Ministry of Education and Science Abengoa Bioenergy awarded the Best Energy Website Prize. The Web Marketing Association, USA Andalusia Prize for Excellence 2004 awarded to Telvent. Regional Government of Andalusia. The State of Rio de Janeiro Best Company Award in the electric and electronic sector, to Bargoa. The Miguel Calmon Institute ABENGOA Corporate Social Responsibility Report

144 Strategy, Organization and Management Systems Management Systems Excellence and Best Practices Award for Technological Innovation, to Sainco Telvent. AENA ComputerWorld Prize for Technological Innovation in Andalusia, to Telvent Outsourcing Nebraska Business Innovation Award (USA), to Abengoa Bioenergy Corporation Technological Innovation Prize in the Recovery Sector, to Deydesa Spanish Recovery Association Best Project Prize for the year, to Hynergreen. Eighth Grove Fuel Cell Symposium Dilectae Academy Prize (First Edition), in recognition of its innovative trajectory: Abengoa. Engineering Academy, December AEC Prize, for its work in R&D&I related to Environmental Protection: Abengoa. Asociación Española de Científicos AEC, Madrid, November Greatest Value Innovation Prize: Sainco s Velflex Product. European Wind Energy Conference, Copenhagen, June European Union Prize for the Best Industrial Initiative in the Use of Renewable Energies, for the use of bioethanol in the Renewable Energy for Europe. Camping for Take-Off project: Abengoa, Repsol-YPF and Cepsa. European Union, Toulouse, October Innovative Tractor Projects The Demonstration Project Abengoa believes that the Demonstration Project is the key instrument that enables the execution of an innovation policy focused on developing new products for the market. The Demonstration Project achieves the operational validation of an innovative product, system or process and its market proving. It also facilitates knowledge of its cost in order to set a first true price which could be subsequently reduced by means of the experience curve. On the other hand, demonstration projects produce a real demand of the Public R&D Systems that enables Science to continue to serve the needs of society. Therefore, Abengoa s companies always have multiple demonstration projects under way, which are market oriented and focused on the creation of value. These are usually carried out in collaboration with multiple scientific institutions and different technological agents. Many of these projects incorporate public support. We would especially mention, in the Bioenergy sector, the research being done on the production of bioethanol from lignocellulosic biomass (this is currently achieved from cereals). The objective of this project is to convert corn stover and the straw from other cereals (as well as other agricultural wastes) into bioethanol. This will result in new benefits for farmers, will lower the cost of production bringing it closer to that of petrol and reduce the greenhouse effect through the absorption of CO2 by plants raw material for bioethanol production through the chlorophyll function. The project, with a foreseen investment of 35,478,775 US$ over five years, has received significant financial backing from the Department of Energy of the Federal Government of the United States, the DOE, amounting to 17,739,380 US$, 50% of the total investment. We here-below offer a selection of other innovation projects our companies have been carrying out throughout Solar Energy Fresnel PV-5x. Development of the Medium Photovoltaic Concentration Concept at Values between 5x and 10x. This project, developed by Solúcar, Gamesa Solar and the University of Lerida, has received funding from the Ministry of Industry, Tourism and Trade, the Andalusia Development Institute (now the IDEA Agency) and the R&D Programs of the Regional Government of Andalusia. CAC-30x. Development of a Controlled Atmosphere Photovoltaic Concentrator of around 30x. As part of the project, in which the Ciemat, Fachhochschule Gelsenkirchen and Solartec are participating, two prototypes have been manufactured; one is being tested in Gelsenkirchen (Germany) and the other in Seville. Funding is under the 5th Framework Program. Hicon PV. Development of a High Concentration Photovoltaic Concentrator (1,000x). A prestigious group of European companies and institutions are participating. They are coordinated and led by Solúcar. They include RWE Solar Space Power, EdF Electricité de France, the German aerospace institute DLR, the Fraunhofer Institute for Solar Energy Systems (ISE), the German center PSE Gmbh Forschung Entwicklung, the Spanish energy research center Ciemat, and the Universities of Ben-Gurion (Israel) and Malta. 5th Framework Program Funding. Medcal. Systems to Improve the Precision Sun Targeting and Increase Solar Power Plant Efficiency. Profit Program Funding. Aznalcóllar TH. 80 kw Solar Thermoelectric Plant with Parabolic Dish Reflectors and Stirling Motors. The Project is being supported by the Regional Government of Andalusia through its Renewable Energies Incentives Order. Almería Solar GDV. 5 MW Plant comprising Parabolic Cylinder Collectors and Direct Steam Generation, in Almeria, with the collaboration of the Ciemat, Iberdrola, Sener, IDEA and the University of Almeria. CCP Loops. Repower CCP loops for Solar Tower Power Plant with steam store 26 Corporate Social Responsibility Report 2006 ABENGOA

145 Strategy, Organization and Management Systems Management Systems Bioenergía Advanced Biorefining of Distillers Grain and Corn Stover Blends. In 2003, the United States Department of Energy (DOE) and Abengoa Bioenergy R&D signed a 4-year contract to develop the biorefining technology for the project. Abengoa Bioenergy R&D heads the work group for the development of the novel biomass derivatives process technology, which utilizes the advanced biorefining of distillers grain and corn stover blends to obtain a greater production of bioethanol while, at the same time, maintaining the protein nutritional value. This technology is going to enable a more sustainable and economic industry, will reduce the petrol consumed per liter of produced bioethanol, and augment the availability of bioethanol. DOE Financed. BCyL demonstration plant. The world s first commercial-scale biomass plant built by Abengoa Bioenergy to demonstrate the biomass to ethanol conversion technology. It will process 70 tons per day of agricultural waste, such as wheat straw, to produce more than 5 million liters of fuel ethanol per year. The end objective is the development of production technologies that are gasoline competitive. Subsidy under the EU s 5th Framework Program. E-diesel. Abengoa Bioenergy is researching the utilization of e-diesel. E-diesel is a carburant that is obtained by adding ethanol to conventional gas oil at a percentage that can vary between 5 and 15%, plus an additive that ensures the stability of the blend. It can be used in any diesel engine. Collaboration with the Cidaut and the United States e-diesel Consortium. Funding from the Ministry of Education and Science. Agrobihol. Energy crops are fast growth crops that are utilized specifically to produce energy (electricity or liquid fuels) from all, or part, of the plant. The objective of Abengoa Bioenergy is to produce fuel ethanol from crops grown in Spain, be it from cereals with a high starch content, lignocellulosic matter such as cereal straw, or from other herbal or lignose crops. Under the Agrobihol project, Abengoa Bioenergy is researching the feasibility of producing bioethanol from sweet sorghum and Jerusalem artichoke. In addition, this project proves the use of bioethanol as an alternative fuel, in ethanol-gasoline and ethanol-gas oil blends, in conventional vehicles, and also the production of hydrogen for fuel cells. Funding from the Ministry of Education and Science. Ethanol reforming. Abengoa Bioenergy is making an important effort in development to bring hydrogen generating from bioethanol systems to perfection. For this purpose, it is working on ethanol reforming, a chemical process in which hydrogen is generated through a reaction with steam and in the presence of a catalyst. To this end, it is participating in research projects that have led to the obtaining of an ethanol reforming catalyst and the construction of two pilot plants that have already been in operation for thousands of hours. A demonstration facility has been completed for this technology. It has facilitated the gaining of in depth knowledge on the design, operation and costs associated with this technology and will determine the aspects that have to be dealt with for optimization purposes. The project has received funding through the Spanish Navy. ACES. A research project that is being carried out in collaboration with the CSIC in the ICP s (Catalysis and Petrochemical Institute) facilities, in Madrid, where other ABRD projects are also being carried out. The main objective of the ACES project is to develop a catalyst capable of producing ethanol from syngas, consisting basically of hydrogen and carbon monoxide. This step is the key to the thermochemical conversion of biomass to ethanol. Fully financed by Abengoa Bioenergy. DoE project to develop an ethanol catalyst. This year DoE/NETL chose the group integrated by ABRD for the development of an ethanol catalyst. This program consists of a joint effort by a group of participants: two participants from the industrial sector with ethanol production, catalyst development and ethanol reforming activities (Abengoa Bioenergy R&D leads the project), and the catalyst and engineering processes developer (UOP), two National Laboratories (Argonne National Laboratory and Pacific Northwest National Laboratory), two universities (Washington University and Lehigh University), as well as two research organizations (GTI and Avantium). The total budget will be $ 3,570,000, with a 20% contribution from the partners (mainly Abengoa Bioenergy Research and Development) and the remaining 80% funded by the DoE. The program comprises laboratory research focused on an ethanol synthesis and characterization catalyst, rapid screenings and tests in the reaction systems, elucidation of reaction mechanisms and kinetics, durability tests, and simulation and development processes. The main objective is to develop a catalyst that can execute ethanol synthesis of singas in an economic manner. An addition objective is to demonstrate, to GTI in Chicago, ethanol reforming utilizing the catalyst developed beforehand by Abengoa. RENEW. The objective of the RENEW project is to develop, compare, demonstrate (partially) and prove a range of automotive fuel production chains. This project is coordinated by Volkswagen AG (Germany), and Abengoa Bioenergy is one of the key partners. Its contribution is to optimize the production of bioethanol from biomass via two processes: 1) enzymatic ABENGOA Corporate Social Responsibility Report

146 Strategy, Organization and Management Systems Management Systems hydrolysis, and 2) gasification and thermochemical catalysis, and the production of coproducts. The Chemical Engineering Department of Aicia, University of Seville, is collaborating with Abengoa Bioenergy on these tasks. The project is financed by the European Commission s 6th Framework Program. Environmental Services Befesa Change of raw material treatment process. Befesa Aluminio. Objective: To remove organics from profiles, trimmings, turnings and other complex raw materials that are difficult to recycle. In-house financing. Enhancement of Paval by studying the reactivity of the slags. The aim is the computerized prediction of the advance of the reaction of the salt slags. The theory phase was completed in March. This year, the previous works have been successfully confirmed upon the model having been applied to the reactors in Valladolid and Wales, for aluminum. Next year, the idea is to consider the composition of the gases, and their treatment in each case. Treatment of SPL in collaboration with Alcoa. Objective: The aim of the project is to find an application for the carbonous part of the spent electrolysis cells (SPL) in primary aluminum production. It is an environmental service for the facilities that require the recycling of this material. Production of new materials and alternative fuels. The project is aimed at validating valorization methods for inorganic industrial wastes as replacement materials for raw materials in industrial processes such as the manufacturing of cement and other construction materials. It also pursues the valorization of organic wastes as an alternative fuel to fossil fuels for industry. Pretreatment of fuel for vitrification. The project consists of the design of the waste pretreatment process at entry to the vitrification process to achieve a fuel to feed the process that ensures good functioning of the process and allows valorization of the synthesis gas obtained in the process. Production of alternative fuels utilizing surplus energies from Sewage Treatment Work (STW) sludge. The project consists of the valorization of STW sludge as alternative fuel by means of thermal drying thereof with the surplus energy from a cogeneration plant. Pilot Plant for High Desalination Efficiency: Objective: To reduce energy consumption in reverse osmosis desalination processes to less than 2.5 kwh/ m 3. In short, to obtain drinking water from seawater at reasonable cost, a fundamental factor for sustainable development. To this end, the high pressure pumping systems, reverse osmosis membranes and energy recovery systems are being analyzed. The project is subsidized by the Department of Innovation, Science and Enterprise of the Regional Government of Andalusia. Development of advanced pretreatment systems for desalination. Design of an optimal pretreatment system for desalination plants that enables minimization of the investment and operating costs while guaranteeing the quality of the product water as well as the dependability and availability of the facility. For this purpose, technologies for physical and chemical processes will be developed, as will the combination thereof for application to desalination. In short. The aim is to contribute to the reduction of the end cost of a cubic meter of desalinated water, thereby favoring access to this resource while also contributing to sustainable development. The project is subsidized by the Department of Innovation, Science and Enterprise of the Regional Government of Andalusia. Study of the brine dilution phenomenon. The aim of this project is to gain an in-depth understanding of the physics of the brine dilution phenomenon on a sea bed by developing simulation tools for said phenomenon validated with real results, to develop optimal diffusion systems and to develop an uninterrupted measurement system that enables monitoring of the dilution or rejection of brine in desalination plants. DeReDes: Development of Desalination with Renewable Energies. The general aim of the project is to encourage enterprise activity in the field of desalination by means of renewable energies at design, installation and systems maintenance level. To achieve this objective, a comparative technical-economic assessment of the different technologies is being conducted and three pre-commercial plants established as the most suitable for three scenarios with different characteristics will be designed. Both seawater and brine desalination are being considered, in both industrialized areas and areas that are isolated from the conventional electricity grid. The project is subsidized by the Ministry of Industry, Commerce and Tourism under the Technical Research Development Program (Profit). Information Technologies. Telvent ArcFM Solution. ArcFM is a collection of GIS applications for utilities. In 2006, TM&M liberated versions and SP1. Among other improvements, these versions have developed the possibility of synchronizing a personal/local database with a centralized database, thereby enhancing solution mobility. The possibility also exists now of establishing routes to a destination or note-taking as you go utilizing a digital pencil. 28 Corporate Social Responsibility Report 2006 ABENGOA

147 Strategy, Organization and Management Systems Management Systems Designer. The Designer Workflow Manager is now capable of receiving and processing external CIM Common Information Model type messages. Responder. The Archive Explorer was introduced in It is an application for reports and historic treatment of incidents. It allows the user to create an archive of incidents, calls from customers, tags, work team activity and incident resolving. Icaro. Centralized urban traffic control system that combines artificial vision with calculation-specific algorithms, an expert system for traffic optimization and the implementation of a communications process between modules. Funding from the Ministry of Industry of the Regional Government of Catalonia. SatTOLL. Design and development of a new toll system based on positioning via satellite (GNSS) and cellular telephony (CN). Intek, Basque Government and Profit Program funding. InTrasy. Advanced modular structure urban traffic control and management system, capable of adapting to very different operational specifications. In-house and Regional Government of Catalonia Financing. VisiTraf. Image viewing and treatment system for traffic systems with the reading of license plates being the fundamental technology. Funding from the Madrid Regional Government. SaReF. Design and development of an integrated on-line railway traffic regulating system, employing in-house technology, for joint use with CTC systems that enable optimal global operation of the lines under criteria. Madrid Regional Government Funding. Genio. Development to provide transport ticket vending machines with an oral interface that enables the requesting of any product or service by means of a natural language dialogue. Financing from Fagor and Intek and the Basque Government. WebPark. Internet-based advanced parking lot management system. SmartTouch. Public transport access and payment system by mobile phone with NFC technology. European collaboration project within the framework of the Eureka-ITEA program, subsidized by the MIT&C and the Basque Government. Avandis. Project to develop Advanced DA/DSM Infrastructures for Efficient Electricity Distribution Network Management. It is a project aimed at exploring and demonstrating the benefits from using advanced DA/DSM (Distribution Automation/Demand Side Management) functions. Profit Program Funding. Comed. Modeling of control and metering devices for substation automation systems 61850). Project subsidized by the Dept. of Innovation, Science and Education of the Regional Government of Andalusia. GasCAT. Remote telecontrol station adapted to the needs of the Oil and Gas sector, including flow computer (with certified calculations for custody transference) and valve control functions. Revolver. Development of a Telvent brand transmissometer. This optical instrument that measure the transmissivity from which runway visibility is deduced is an essential element for measuring visibility conditions on airport runways. The developed transmissometer has already been installed at some airports. Ceilometro. Development of a Telvent brand cloud ceiling level sensor (or ceilometer). The ceilometer, also used for aeronautical purposes at airports, is an optical instrument that measures the height at which the lowest layers of clouds are by means of the reflection of an incident ray. Beftel (Optimized control system for desalination plants). Development of an advanced control system that enables optimization of the functioning of a desalination plant, from the point of view of energy efficiency and quality of the product water, by integrating for this purpose the latest control and simulation technologies into the most advanced desalination systems, new pretreatments and new energy recovery systems. It is being jointly developed with Befesa CTA with the support of the College of Engineers of Seville for the simulation tool. It is receiving public funding from the MIT&C, the Technological Corporation of Andalusia, and the Department of Innovation of the Regional Government of Andalusia. Terwis. Project to develop a global real-time information system that will predict the influence the weather will have on road transport. Profit Program Funded. Health-Intercom. The aim is to define, develop and implement a system for transferring a patient s relevant clinical information between the different health service providers, in an inter-autonomous region environment, the objective being to enhance the support for clinical decision taking, improve the quality of services provided and guarantee privacy and security of patient related sensitive health information. Subsidized by the MIT&C. PMAI (Image Assisted Medical Processes). This project is being jointly developed with Telefónica R&D and the research teams from Juan Ramon Jimenez Hospital in Huelva and University Hospital San Cecilio in Granada. Its objectives focus on 3D medical image modeling and the provision of tools for manipulating the models, which are a valuable source of information that is utilized by medical personnel to back medical diagnosis decisions. The project is grant-aided by the Technological Corporation of Andalusia. eqecm (equirófano: Multimedia Collaboration Environment). The aim of the project is the development of a multimedia integrated virtual classroom for surgery and hospital practice services. Telvent is participating in this Telefónica ABENGOA Corporate Social Responsibility Report

148 Strategy, Organization and Management Systems Management Systems R&D led project together with the company ICR and the research teams from University Hospital Virgen de las Nieves of Granada, the IVANTE Foundation, and the University of Granada. Subsidized by the Technological Corporation of Andalusia. EmComPAs. Multiannual program in which fifteen companies and five countries are collaborating. It is an open initiative aimed at accelerating the deployment of broadband networks through the development of advanced products and applications for the residential environment, creating new multimedia services, home automation and remote control, security and monitoring, developing international standards and processes. Profit Funding. Eureka Program. Families. Consolidation of the CMMI (Capability Maturity Model Integration) standards, security in dynamically deployable distributed systems, quality variability techniques in the dynamic derivation of applications, case studies on the development of suites based on Model Driven Architecture (MDA), suite integration processes, recovery of third party assets based on open source. Profit Funding/Eureka Program. Cosi. Project aimed at specific architecture and software modules different to the commodity-type software based on open sources, and applying them to enhance organization and business processes. Eureka/Profit Program Funding. Osiris. Project executed in collaboration with European partners within the framework of the Eureka-ITEA program, led by Telvent, and focused on the development of free code service platforms for distributed environments. Osiris is being subsidized by the MIT&C. Nuadu. It is a European collaboration project within the framework of the Eureka-ITEA program. It deals with the technical risks of providing a residential environment intelligence system and in mobility for services in the health and welfare sector to improve the quality of life of the users with effective and efficient solutions from the service providers. Subsidized by the MIT&C. Passepartout. Project aimed at the convergence of systems and digital applications in the domestic environment. Eureka/Profit Program Funding. Prometeo. Telvent, together with the ESI (European Software Institute), is leading the embedded systems technological platform, Prometeo (National Technological Platform for Embedded and Distributed Intelligence). This national initiative, subsidized by the Ministry of Industry, Tourism and Commerce, has a provisional 10-year horizon and includes all the important role-players in the sector. Atenea. The aim of the project, which is being developed along with 17 partners, is to develop a common vision of future challenges and base technologies by covering the three transversal domains identified in the Strategic Research Agenda of the Prometeo Platform; Architecture, Middleware and Methods/design tools. The project has received subsidized backing from the Ministry of Industry, Tourism and Commerce. Abeinsa (Industrial Engineering and Construction) Project Wi-Pac. Developed in collaboration with APIF Moviquity, S.A., the University of Castilla-La Mancha, and Intercentros Ballesol, S.A. This innovative project will improve the quality of life for those suffering from Alzheimer s in hospitals, geriatric or similar centers, through the development of a wireless location and control management system. The project is being financed by the Ministry of Industry, Tourism and Trade. Project EPiCo. Development, in Spain, of PEM type Fuel Cells. Financed as a Singular Project of a Strategic Nature by the Ministry of Education and Science s Profit Program. Other participants in this project are Cegasa, Ajusa, David Fuel Cell Components, the Cidetec Foundation, and the INTA. Project PlasmaGen. Development of a Clean Hydrogen Production Process with plasma reactors. The ICMSE-CSIC is participating and funding is by the Regional Government of Andalusia. Project Aquila. Development of Fuel Cell based Electric Energy Generators for the Aeronautical Sector. With a 1.4 million euro budget, and supported by the Technological Corporation of Andalusia, the CSIC and College of Engineers of the University of Seville are collaborating on the project. Project PlasmaGen. Development of a Clean Hydrogen Production Process by jeans of Plasma Reactors. The duration of the Project is 24 months, from February 2005 to January The overall budget is more than 300,000 euro, with financing from the Innovation and Development Agency of Andalusia (IDEA), within the framework of the Incentives Order dated May 24, 2005, for R&D projects, issued by the Department of Innovation, Science and Enterprise of the Regional Government of Andalusia. The ICMSE-CSIC id collaborating on the development of the Project. Project Hercules. The objective is to demonstrate the production of renewable hydrogen utilizing solar energy. On the one hand, the aim is to establish a prototype production plant in Sanlucar la Mayor and a renewable hydrogen service station capable of supplying the gas to vehicles that use it as fuel; on the other, the design and construction of an electric vehicle that utilizes hydrogen as fuel, employing fuel cell technology for this purpose. Project Hercules is an Andalusia initiative globally coordinated by Hynergreen and promoted by a total of 8 partners. These collaborators are five companies, a public agency and two research centers: Solúcar R&D, Santana Motor, 30 Corporate Social Responsibility Report 2006 ABENGOA

149 Strategy, Organization and Management Systems Management Systems Carburos Metálicos, GreenPower, Andalusia Energy Agency, INTA and AICIA. The duration of the project is 42 months, from January 2006 to June 2009 and the worksite is the Sanlucar la Mayor Solar Platform. The overall budget is more than 9 million euro, with financing from the Innovation and Development Agency of Andalusia (IDEA), within the framework of the Incentives Order for R&D projects, issued by the Department of Innovation, Science and Enterprise of the Regional Government of Andalusia, and also from the Ministry of Education and Science, which has catalogued it as a Singular Project of a Strategic Nature. Project Multionda PV: design of a high performance 30 kva rated photovoltaic inverter. Solúcar Energía, S.A. and Green Power Technologies, S.L. are collaborating on this project which has received financing through the Profit Program (Technical Development Research Program) of the Ministry of Education and Science s National Scientific Research, Development and Innovation Plan, under file number FIT Project RES2H2: The Cluster Pilot Project for the integration of Renewable Energy Sources into European Energy Sectors using Hydrogen aims at the integration of wind power with hydrogen storage, fuel cell and reverse osmosis technologies, within the European Union s 5th Framework Research Program. The budget for the RES2H2 project is 536, euro, with a subsidy of 268, euro (50%) under the European Union s 5th Framework Research Program, under file ENK5-CT Project Motronic: new technology in Motor Control Centers. Project Motronic focuses on the Development of software and the implementation of a remote microelectronic system for governing motor control centers (MCCs), under the Profit Program, with Inabensa as the leading company, and in collaboration with the Superior College of Engineers of Seville, through its Electronic Technology Work Group. Abengoa s Investment in R&D&I Main Projects M (Est.) % / Sales M % / Sales M % / Sales Solar Energy Biomass convertion to bioethanol Enhancement bioethanol efficiency (residual starch) Hydrogen Technology. Fuel Cells Electricity, environmental, oil and gas control centers Road and rail traffic, and ticketing systems Public Administration support systems Geographic Information Systems (GIS) Vitrification Environmental Technology Center Desalination Enhancement aluminum efficiency Other Projects Total Investment R&D&I % % % ABENGOA Corporate Social Responsibility Report

150 Strategy, Organization and Management Systems 32 Corporate Social Responsibility Report 2006 ABENGOA

151 Abengoa in 2006 Abengoa in 2006 Social Action Internal Social Action External Social Action Economic Performance Environmental Performance Dialogue with Interested Parties ABENGOA Corporate Social Responsibility Report

152 Abengoa in 2006 Social Action Social Action In today s climate of constant change and global competition, Abengoa regards the innovative company as an efficient and necessary tool to achieve a sustainable development society. With this in mind, we have incorporated corporate social responsibility values in our everyday activity, naturally integrating them into our company strategy, its culture and its organisation. Not only do we actively work for economic progress, we also want to make a positive contribution to social and environmental improvements in the interests of humanity. Using solar energy, biomass, residue, information technology and engineering, Abengoa applies innovative technological solutions to attain sustainable development. At the same time, the company uses the Focus-Abengoa Foundation as a channel to express its commitment to society. Created in Abengoa in the year 1982, the foundation s mission is to put its social action policies into practice. It is a non-profit organisation with objectives of general interest that focuses its efforts on the areas of assistance, education, culture, science, research and technological development, with a particular emphasis on aiding disabled persons. The Focus-Abengoa Foundation has become a valuable instrument within the company, sending forth its initiatives with strength and impact from its headquarters in the Hospital de los Venerables of Seville, which has become a cultural symbol. In this report on social initiatives, we wish to stress the attention we have given to our staff, their training and development, their quality of life, their social and professional welfare and family life. At the same time, these initiatives have also connected with the new sensitivities and concerns of society as a whole; the impact of effective management of intangible assets actually benefits and is propagated by company s values and objectives. We have selected two focal points based on specific groups that aid us in structuring our efforts and channelling our concerns to be of greater assistance to them. The first is internal social action within the company itself, and the second is external social action in benefit of society. Internal Social Action During 2006, Abengoa s staff amounted to an average of 13,608 employees, which represents an increase of 23%. By Business Groups, employees are distributed as follows Business Groups % Solar Bioenergy Environmental Services 1,348 1, Information Technologies 2,373 3, Industrial Engineering and Construction 6,921 8, Total 11,082 13, By December 31, 2006 the number of employees increased in 14,605 people, which means a net increase of 2,359 employees regarding December 31, 2005 (an increase of 19.3% from December 31, 2005 to December 31, 2006). By geographical location, and taking into account the criteria applied in Spain and abroad, the average staff in Spain increased to 6,631 employees, which means 49,1% regarding the average staff of employees abroad (America, Asia, Africa, Oceania and rest of Europe) Employees % Employees % Spain 6, , Abroad 5, , Corporate Social Responsibility Report 2006 ABENGOA

153 Abengoa in 2006 Social Action Headcount broken down by countries Average 2005 Average Spain Portugal France United Kingdom Germany Poland Argentina Uruguay Chile Peru Mexico Brasil Canada USA China Morocco India Costa Rica Libya Arab Emirates Australia Holland Sweden Argelia Continent No. Employees % /Total Spain 6, Europe North America 1, Latin America 5, Africa Asia Oceania * Logarithmic Scale ** With regard to acquisitions in new Geographical Areas, the average calculation is based on the number of months the acquired company belongs to Abengoa. Distribution by Countries ABENGOA Corporate Social Responsibility Report

154 Abengoa in 2006 Social Action Por modalidad contractual Abengoa Undefined Works Temporary Undefined Works Temporary Nº of hired employees 4,433 3,827 2,822 9,055 3,651 1,899 Percentage Data valid until December 31 st With regard to the distribution between Men and Women in Abengoa, the following is a detail of the percentage of employees and regarding the total. Percentage of Women (/Total) 85,3% Women Men Percentage of Women (/Employees) 74,3% Women Men 14,7% 25,7% Regarding the age, we must point out the balance between the distribution sections. This is an indication of a constant growth with a remarkable quantity of young professional workers hired. They are supported by the huge professional experience of the rest of the staff. Age Pyramid 2,3% >60 13,7% ,9% ,7% ,4% % 15% 10% 5% 0% 5% 10% 15% 20% 36 Corporate Social Responsibility Report 2006 ABENGOA

155 Abengoa in 2006 Social Action Human Resources Policy- Human Resources policy is in line with the Mission, Vision and Values of Abengoa and its operational strategy, and therefore, it is oriented and continuously adjusted to its strategic goals. The fulfillment of the strategic goals, by means of the execution of the Strategy Plan, is the raison d être of the company s structure and its human team. Required adjustment between Human Resources and the Strategic Goals Active in more than 70 countries in the five continents, and with more than 14,000 employees, Abengoa is an international and multi-cultural company with a clear business focus on sustainability through innovation Abengoa has started a successful model that positioned the company as the leader and a reference in the activity industries and markets where it operates. This successful model is based on a clever strategy and appropriate management model, but above all, in having the right human team to achieve the defined strategic goals. Abengoa believes that it stands out as a company thanks to its people. Its staff cannot be copied by the competitors, and its people, with their preparation and commitment, define the real difference in the results obtained by the company. We think that people are the real investment, an asset that creates value and wealth, and therefore, the Human Resources Policies in Abengoa emphasize the creation of the right conditions for their development, for their talent to come up and achieve Excellence in performance. Growth is the result of the excellent performance of people. Human Capital makes it possible to achieve targets and adds distinguishing competitive values by the application of talent, skills and excellence in performance. Therefore, the concept of suitability is key when talking about employees: Commitment, Motivation, Talent, Initiative, Skills, and the continuous search for performance excellence must be the grounds of professionals in Abengoa. The search for suitability is therefore one of the fundamental goals of the Human Resources Policy; suitability to the position, suitability to the mission, technical and general suitability. Not in vain that search for suitability and adequacy is the inspiration of training and selection policies, as well as the performance measurement policy, the segmentation by positions and responsibilities, the compensation packages, and it is present in everything related to the development of employees. To achieve this goal, Abengoa bets on a Human Resources model based on skills. A model that enables the intended alignment between the strategic goal, the position and the person (suitability), and that makes it possible to identify and detect talent. Abengoa is aware of the current environment, defined by innovation and change. The action of its professional employees and the capability to attract, develop and keep talent are key elements to success for any company, and therefore, we definitely bet on a Human Resources policy that involves a two-fold target: ABENGOA Corporate Social Responsibility Report

156 Abengoa in 2006 Social Action To strengthen, benefit, transmit and manage knowledge; the experience of its top-level professionals, and to guide the development of skills, trying to always provide Abengoa with the ideal professionals for each position, mission and responsibility. To turn Abengoa into a company with the required conditions for the development of talent, with interesting conditions and environment, as well as an interesting staff management model. To attract, develop and keep talent are key elements to success To develop, strengthen, and compensate for human resources that can provide the most from themselves, with this contribution being in line with the requirements of Abengoa. In Abengoa we are aware of the importance of motivation. The sense of belonging to the Company, to feel part of the project, to participate, the capacity to affect events, provide solutions, to benefit from opportunities these are clear professional motivation elements. With this, valuable staff needs no constant exogenous motivation, they become self-motivated, for it is part of the capacity to develop in the professional and personal fields. Aware of this, part of Abengoa s culture is the participation of employees in continuous improvements; their participation at every level and improvement in all fields. The whole organization is to take the initiative to improve business processes, working conditions, environmental conditions, the solution of problems. For that purpose different programs and action groups for collective improvement divided by activities are encouraged (Six Sigma, Competitive). Tools for Problem Solution Report and Improvement Action (IRP/AM) are supplied. Permanent Suggestion places are provided through the Portal. Climate Surveys are performed to measure the degree of satisfaction and therefore, working issues are detected where correction is required. Commitment Employees commitment is also a key element: initiative, pro-activity. The company must provide the required elements, but once the resources and conditions are provided, the employees must undertake their responsibility and commitment, and react not only with their participation, but with excellence in their performance. Performance becomes the backbone of the system Talent without appropriate performance is not profitable Natural supporters of Performance Excellence are Commitment, Motivation, Perseverance and Tension in day to day operations. Within all this culture, Abengoa must be and is- committed with Information and Communication. This is another face of the polyhedron, a required one, for we cannot understand the aforementioned without sharing and informing. So, Abengoa is always doing its best to improve communication channels, being the flow of information key in our enterprise culture. Sharing information enriches, joins, and creates opportunities. Sharing information creates opportunities For this reason, Abengoa, bets on an Integrated Management System: This is an Integrating system, for it covers all the Human Resources issues: the definition, description, and classification of work positions, recruitment and selection to attract the best professionals in the market, training and development, with the corresponding career plans, assessment, performance management and payment schemes, as well as internal communication and social action. 38 Corporate Social Responsibility Report 2006 ABENGOA

157 Abengoa in 2006 Social Action This is also an Integrated system, for it includes not only inter-related processes, but the whole world of Abengoa formed by the various Companies, regardless their industry, geographical area and the Business Group they belong to. Gestión Integral de Recursos Humanos. GIRH Gestión Integral de Recursos Humanos, S.A. (GIRH) is the company specialized in management and development of employees in Abengoa, serving its Companies in the area of Human Resources. Its Mission is to guarantee the required policies, strategies and actions, in the area of Human Resources, to enable the fulfillment of the Abengoa s Strategy Plan, mainly by: Attracting, hiring and keeping the right professionals for each position, mission and responsibility. Strengthening, benefiting and transmitting knowledge. Developing talent and skills. Turning Abengoa into a Company with the required conditions for personal and professional development, with attractive working conditions, environment and an employee management model. Its management model for each of the Companies is based on the outsourcing model premises, i.e., on service supply contracts and quality level agreements with customers, enabling a precise control by means of indicators designed for that purpose. Their services are vertically structured: Selection Training Personnel Administration Labor Relations Quality, Environment, and Labor Risk Prevention Development Social Action Currently, GIRH has established sites in Spain (mainly in Madrid and Seville), Central Europe (Rotterdam), North America (Saint Louis) and Mexico (D.F. and Querétaro) and globally coordinates -in its corporate and horizontal responsibilities- the Human Resources activity within the whole world of Abengoa. Training As previously indicated, we are aware of the fact that in the current environment, which is defined by innovation and change, the action and talent of our professionals are the key distinguishing competitive element. Therefore, attracting, developing and keeping talent are key elements to success. Training is therefore one of the main elements. Training in Abengoa includes subjects identified as required to keep a team of highly-qualified professionals in line with the corporate culture and the best market practices that we indicate next: Corporate Training, understood as training that transmits the common culture, internal rules, strategy, financial models, corporate identity, and the values it represents. ABENGOA Corporate Social Responsibility Report

158 Abengoa in 2006 Social Action General Training, that is, training that looks for the professional improvement of employees, by teaching the new working tools, new techniques, updating professional contents, and management methods, among others. Training in Prevention of Labor Risks, that involves not only training about the health and safety levels required to work and the use of both individual and collective protection elements, but also to train Prevention Technicians at different levels (basic, medium and higher levels). This requires specific training regarding the in force legislation and its interpretation rules, as well as an official authorization to undertake certain responsibilities in this subject. Languages, a key element in an international growth model such as Abengoa s, that requires professional employees to be prepared to tackle and develop projects in any location worldwide. In order to efficiently satisfy the new and growing needs in this field, in Abengoa we have bet on combining presence training with methods based on the new technologies: e-learning. This bet is intended to standardize messages to the whole organization, to speed up knowledge transmission by allowing each employee to manage his/her own learning pace based on capacity and previous knowledge, and choosing the right time for training. It is also designed to optimize costs by cutting indirect dedication times (such as traveling), and avoiding incompatibilities with critical times in business. Such initiative is consolidated in Abengoa s C@mpus. C@mpus is the virtual space, located in Abengoa s Employee Portal, where the different on-line training contents will be hosted: corporate and technical training, language training and labor risk prevention training, among others. C@mpus will enable tutor guidance, virtual academic forums, learning assessment, training follow-up and register. Abengoa, in its professional development model, has agreed a series of professional itineraries based on training itineraries that intend to form professionals highly qualified in key business disciplines, in line with the corporate culture and the best market practices. They are the so-called the Professional Programs of Abengoa: Project Manager Program: now with Promotions in Spain (2), Central and South America, and China, with more than one hundred professionals following the program. Project Leader Program: started in October 2006, with the first Promotion (Spain, 22 students), and two new Promotions on their way with other 50 professionals by the beginning of Works Leader Program: next launch to happen at the beginning of 2007 with around fifty students). Other Professional Programs are in the design phase, such as those of Proposals and Marketing, Quality, Environment, and Prevention, among others. Regarding Abengoa s Training Plan for 2006, we confirm that it was successfully executed, achieving the proposed goals in each of the subjects, both regarding the number of participants and the hours. 40 Corporate Social Responsibility Report 2006 ABENGOA

159 Abengoa in 2006 Social Action Summary Participants Training Hours Corporate Training 7,868 52,866 General Training 24, ,928 Languages training 1,202 74,850 Worforce training 29, ,735 Totales 63, ,379 Next we show the evolution of both parameters regarding previous years: Nomber of Attending Employees Training Hours Results of Evaluation Questionnaire of courses given in ,00 4,00 3,00 2,00 1,00 0,00 Trainer and metodology Didactic Means Technical Means Organization and teaching Global assessment ABENGOA Corporate Social Responsibility Report

160 Abengoa in 2006 Social Action The following chart represents, by Business Groups, the average training hours per employee and per Business Group in the last five years: Training hours per employee Bioenergy Industrial Engineering and Construction Environmental Services Solar Information Technologies Media In the various graphs, a comparison of the evolution of training hours and the number of attending people in the last five years, per Business Group, is presented. Training Hours by Business Group Bioenergy Industrial Engineering and Construction Environmental Services Solar Information Technologies Number of attending employees by Business Group Bioenergía Industrial Engineering and Construction Environmental Services Solar Information Technologies Corporate Social Responsibility Report 2006 ABENGOA

161 Abengoa in 2006 Social Action The following graphs present a comparison -during the last four years- of hours and attending employees by type of executed Training Hours by Training Type Hours 2003 Hours Hours 2004 Hours 2006 Languages Corporate Workforce General Labor Legislation All Abengoa s employees are now under the scope of application of a labor legislation that goes beyond the company, according to the nature of activities and the countries where they are performed. Furthermore, under the legal protection of each country, the legal coverage is especially relevant through the Collective Labor Agreements of the industry, territory, or the own agreements of the company, signed by workers or their Union representatives, as it corresponds. We must point out the Behavior Code of Abengoa, that is applied to everybody and that is based on the idea that it is fundamental for the reputation and success of the Company the honesty, integrity and the right judgment of employees, managers and directors in their relations with customers and prospects, colleagues, competitors and the Administration entities, with the media, and with all the other parties or institutions with which the Company has contact Atending employees by Training Type Languages Corporate Workforce General Abengoa respects and supports the free association of its employees, and does not consider it necessary to establish a specific policy, for it is deemed an inalienable right. Furthermore, the dialog with workers representatives is permanent, keeping them informed about all the areas of interest. Compulsory work and children exploitation are rejected by Abengoa. We support all the initiatives that lead to the eradication of children work. In this respect, Abengoa is signatory of the United Nations Agreement that considers this issue as one of its nine principles. Safety and Health According to the obligations established by the Labor Risk Prevention Legislation of application to various countries, and the Labor Risk Prevention Policy of Abengoa during 2006, relevant steps have been taken for the Continuous Improvement of the implemented Risk Prevention System. The development of the goals planned along the year in the companies, the integration and participation of workers in the development of prevention activities, the follow-up and control of the system made by the Top Management, and the advising made by the preventive organizations created in the companies, enable the development of a Labor Risk Prevention culture in Abengoa that has a significant influence on the reduction of work accidents and professional illness, and on the continuous improvement of safety conditions at work sites. All the Abengoa companies have designated specific persons, with partial or total dedication to the development, management and control of the prevention system. The organization models implemented in Risk Prevention are adjusted to the legal requirements of each country where Abengoa operates and the solution chosen by Abengoa is to have its Own Prevention Services, which means to hire technicians specialized on this matter. In all the Companies, following Abengoa s Risk Prevention Policy and the Common Management Rules, Prevention Committees have been created as the entities in charge of the follow-up and control of the Risk Prevention System. The Risk Prevention Committee is made up by the Top Management of ABENGOA Corporate Social Responsibility Report

162 Abengoa in 2006 Social Action the Company, the people in charge of each Area, and the Prevention Service Technicians. The Committee has periodic meetings to approve goals and followup actions are performed; the evolution of the labor accident rate is analyzed and statistical indicators are created, the annual planning of preventive activities (PAP) in accordance with the results of risk evaluation, the IRP and AM, the reports of internal audits, the published legislation, etc. In the end, an analysis of the results is made through the Revision by the Top Management, to start again the continuous improvement cycle. As established by the Risk Prevention Policy Statement, prevention training is a fundamental issue of the Risk Prevention Management System. Contents of training actions are intended to ensure that employees are qualified to identify labor risks at their work position, so they know the prevention, protection and emergency measures implemented for their elimination or control. There is a special focus on workers subjected to serious risks and the newcomers. Labor accident rates in Abengoa are quite low: an Incidence rate of and a Seriousness rate of 0.43, taking into account the characteristics of risk and danger of a great deal of companies and comparing with data from similar industries published by the Ministry of Work and Social Affairs of Spain: Construction: Incidence rate of 153 (2005) and Seriousness rate of 2.01 (2004) and Industry: Incidence rate of 102 (2005) and Seriousness rate of 1.27 (2004). Each company is in control of the work accidents and professional sickness that occur at their work centers (official report, sick leave certificates, etc.), as well as the research reports made by technicians of Risk Prevention Services, or other elements of the preventive organization, according to an internal management regulation and the general procedure of the Risk Prevention System, PGP-000/08. This information is monthly communicated to GIRH in order to prepare the corresponding indicators by company, and the consolidated reports, so that an efficient follow-up and control can be made for the Improvement Action proposal, if this is the case. According to the aforementioned management rule, serious accidents are immediately communicated to the Presidency, the Director of the Business Group, the Human Resources Director and the person in charge of Risk Prevention. An analysis and research of the particular circumstances are performed right away, by means of the two already indicated paths: the Event and/or Accident Investigation Report, and the corresponding Problem Solution Report. Some data from 2006: The total percentage of absenteeism in Abengoa (sanction, sickness, accident, justified and unjustified absence) is 2.66%. Absenteeism due to sickness and labor accidents is 2.0%. The number of labor accidents with medical leave of more than one day is 514, out of which 27 had occurred going to or coming from work. These accidents have resulted in 8,956 labor days lost, out of which 444 correspond to commuting accidents. In 2006 a casualty occurred. The victim was a worker from Inabensa. The promotion of participation, personal or group initiative, pro-activity, in summary the implication and commitment of everybody with the continuous improvement of the Risk Prevention System at each of the Abengoa companies is still one of the biggest goals and something to change regarding the traditional system of formal character and vertical operation. Computer applications for Trouble-Shooting Reports (TSRs) and those designed to process Improvement Actions (IAs) are strategic tools that facilitate this goal. Everybody at the Companies has access to these tools, and it is the responsibility of the Management to strengthen their use in all the Organization TSRs 2004 IAs 201 Evolution of the TSRs and IAs 1, , Corporate Social Responsibility Report 2006 ABENGOA

163 Abengoa in 2006 Social Action As a support to the documentation of the PRL Management System, there is a very useful computer application for companies and the various Risk Prevention Services of the Group. It is managed by the Associated Prevention Service in its company scope. Common Management Rules in Abengoa establish as a strategic goal for all the Companies, the implementation and certification of Prevention Management models according to the OHSAS 18001:1999. The next graph displays until December the evolution of the percentage of certified Companies Percentage of Certified Companies. Comparison 2004, 2005 and % 13.43% OHSAS 18001:99 Certified December % 73.24% December 2005 Uncertified 24.29% 75.71% December 2006 To verify the safety conditions under which the activities of the work centers and work sites are developed, 690 visits were made to work sites and 230 hygienic measurements. From detected defects and anomalies, the corresponding Trouble-Shooting Reports (TSRs) and Improvement Actions (IAs) were created. The implemented Check List self-assessment system is being promoted; it allows the people in charge of work centers and work sites to know the missing things in the application of the Risk Prevention System. According to the goals and programs, 223 internal audits were made in companies and organization units. Regarding the non-conformities and recommendations made, the corresponding IRPs and AMs have been created at the companies. Training in Health and Safety is detailed in the previous Training section, but we must stress the 385 Basic Technical courses. These courses amounted to 52,600 hours. execution of 67 High Level Technical courses, 21 courses on Ergonomics, Safety and Health, and 385 Basic Technical courses. These courses amounted to hours Quality of Life A series of actions have begun in Abengoa with the aim of making the environment more human and pleasant by increasing life quality at work and enabling the conciliation of family and professional life. Among the implemented initiatives, we highlight the following: Promotion of physical activity and sports. To contribute to the quality of life of their employees, Abengoa has created gymnasia in its work centers; they are equipped with all the necessary for physical fitness, as well as the required space for the various activities (dance, step, aerobic, etc.) These installations are operating continuously at the centers in Seville (Buhaira and Tamarguillo), and Madrid (Valgrande), as well as in Calgary (Canada). Nursery. Another project that is part of the Quality of Life Policy in Abengoa and also another action for the conciliation of professional and personal life is the financed Nursery Service for kids of up to three years, of the workers of the Valgrande building in Madrid. This is also included in the project for the new site in Seville (Palmas Altas). Accumulation of leaves for breast-feeding. In accordance with the Spanish labor legislation, fathers or mothers of children less than nine months have the right to one-hour paid leaves for breast-feeding. However, in Abengoa we go beyond the legal legislation with the purpose of improving the conciliation of professional and personal life for everybody by offering fathers or mothers the possibility to accumulate those leaves totally or partially; in practice this is the equivalent, for example, to extend the maternity leave approximately one month. Work schedule flexibility. Abengoa has established in its work timetables different alternatives for the entry time in the morning, the lunch time, and entries and exits in the evening, so that the employees can adapt to the timetable that best suits their personal and family life. Social Assistance to Employees. This is a project to build human nature relations, where the employee can pose specific and very diverse situations, such as the need to be heard, to receive support and orientation, to get information, or to control specific family, medical, social or economic problems. The Focus- Abengoa Foundation, through GIRH, has Social Funds to provide economic aids in necessity situations. ABENGOA Corporate Social Responsibility Report

164 Abengoa in 2006 Social Action Medical Services. In the field of strengthening coverage to employees, we have a policy to provide a Medical Service to our work centers with more than 300 people. Currently the work centers in Buhaira, Tamarguillo, Valgrande, Velasco Pando, Mexico D.F. among others) have their own Medical Service, attended by specialized personnel equipped with the required health-care material. 25th Anniversary Recognition of employees who celebrate 25 years of continuous employment in the company is given during the celebration of an inspirational ceremony held at corporate headquarters in Seville, Brazil, Chile, Mexico and Uruguay. This year, the ceremony in Seville was held at the Church of Los Venerables, headquarters of the Focus-Abengoa Foundation, which served as the backdrop to a commemoration that attempts to recognise the efforts of persons who collaborate with and participate in the company s developmental and growth processes. Palmas Altas Technology Centre Abengoa s future Technology Centre, located in the area of Seville known as Palmas Altas, will be the future headquarters for businesses belonging to the group that are located in the Andalusian capital. To this end, Abengoa organised an International Contest of Architectural Ideas for the centre; the project was awarded to a team led by Richard Rogers, a global leader in sustainability, energy efficiency, business parks and institutional headquarters. The design for the project, which will be up and running by 2008, is similar to a university campus in its layout and includes various buildings placed around a central plaza, which will be the centre of a service area (restaurants, nursery, health care services, etc.). These various elements will combine to present an innovative and avant-garde space that will breathe new life into the southern sector of Seville. Social Welfare La Antilla Residence The acquisition in 1972 of an appealing architectural complex on the beach of La Antilla, in Lepe (Huelva) consolidated what has come to be known as Operation Summer Holiday. This programme began in the sixties and its objective continues to be the use and enjoyment of these installations as a place of relaxation and friendly co-habitation for Abengoa personnel. This year saw the finalisation of the plan for the remodelling of the complex, in compliance with current fire safety standards, as well as the completion of other installations such as lifts, kitchen, bathrooms and entrances. These measures will offer users a greater degree of comfort in the various apartments, enhancing the well-being of the many families who enjoy them and increasing the number of employees who put in requests to use them. In 2006, 3,000 people vacationed at the complex, of which 338 were retired employees invited by Abengoa. The aforementioned objectives also motivated Abengoa to make a significant investment in 2006 to acquire a new 1,100 m2 plot adjoining the existing complex. This additional land will make it possible to build more residences and common areas, thus increasing the housing capacity of this facility that Abengoa puts at the disposal of its employees, retirees and their families for the purposes of relaxation, coexistence and leisure. Activities in the Hospital de los Venerables Concern for the human development of the employees, retirees and pensioners of Abengoa s various companies has motivated the design of a cultural programme exclusively for their benefit, through which they can participate in and benefit from the diverse cultural activities organised at the Foundation s headquarters. Said programme includes free visits to the historic monument and temporary exhibitions, and special prices and discounts on admission to the concerts and organ recitals held at the Foundation as well as on the purchase of publications produced by the Foundation. Social External Action he company s commitment to society is also evidenced in other activities and is carried out in different ways via the Focus-Abengoa Foundation. Since its creation in 1982 by Abengoa, the Foundation has remained an integral part of the company s essence as its active instrument for the implementation of Abengoa s social initiatives. The Foundation s primary objective is the promotion of culture in its diverse artistic and scientific manifestations, focusing mainly on the conservation, dissemination and development of Seville s historic and cultural heritage and of its Latin American implications. In addition, it organises activities that encompass social acceptance and reintegration projects, cooperation with the defence of environmental heritage, and other projects that support technological and social progress, with a particular emphasis on disabled individuals. Since 1991, the Foundation s headquarters have been located in the Hospital de Los Venerables Sacerdotes (the Venerable Priests) of Seville, a historic and artistic monument dating from the 17th century and temporarily loaned to Abengoa by the Brotherhood of Los Venerables and the Archbishopric of Seville. After a long and expensive restoration process, which included not only the architectural elements but also the paintings, sculptures, gold and silver articles, 46 Corporate Social Responsibility Report 2006 ABENGOA

165 Abengoa in 2006 Social Action and woodcarvings housed in the interior, the Focus- Abengoa Foundation was able to return this unique building to the city and to future generations. Since that time, the hospital has become one of the bestpreserved examples of Spanish Baroque heritage, and has once again come alive as a centre of active learning by means of multiple activities that are intertwined with the Foundation s objectives and goals. Preservation and Maintenance of the Hospital de los Venerables The most solid asset under the guardianship of the Foundation is the Hospital de Los Venerables building, which directly implies the need to safeguard its intangible worth and cultivate respect for its authenticity. For this reason, responsibility for its upkeep and reparation are an essential part of the process of preserving this palpable heritage. Each year, the major action plan consists, on one hand, of foreseeing and preventing any possible deterioration of the building s architectural composition and of its artistic elements; and, on the other hand, of improving or substituting the technical and museographic installations that allow visitors to access, use and enjoy this monument, thus consolidating the building s empathy with society. Education and Training Training Programme for the Disabled Abengoa s history has been marked by a constant concern for school, special and physical education and the social reintegration of disabled individuals. Intense action is carried out in marginalised regions with high poverty levels in Argentina and Peru, which can now boast schools with running water, electrical power, kitchens, dining halls, gymnasiums, health care and nutrition, etc. In 2006, the new and extended corporate purpose document of the Foundation was approved. Subsequently, and with the goals of providing professional training, opening up the job market and creating job opportunities for people with disabilities, a company belonging to the Abengoa family, namely Gestión Integral de Recursos Humanos (GIRH), organised a specific Training Programme for the disabled. The objectives of said programme are: - To train and prepare disabled individuals for jobs in the fields where Abengoa is currently active. - To find jobs for the disabled in Abengoa companies or other organisations. - Workplace reinsertion in areas suffering from extreme poverty and social marginalisation. - To advance and develop Abengoa s strategy of corporate social responsibility. - To comply with and go beyond the requirements stipulated in the Act on Social Integration of the Disabled The following initiatives have been set in motion: Administrative Secretary Occupational Training Course for people with disabilities, organised in collaboration with the Safa Foundation, the Department of Employment of the Regional Government of Andalusia and the European Social Fund. The first course, which was widely publicised in the national media, was a success with regard to applicant response. Of those who applied, fifteen students were chosen and guaranteed a six-month employment contract at the end of the course. Other courses currently being planned include a Programming Course, a Course on Designing Blueprints and a Course for ADSL Installers. Efforts are also being made to adapt some of the courses to cater to the special needs of autistic individuals. In order to attain the proposed objectives, collaboration agreements have been signed with the most important organisations and public authorities related to people with disabilities. Some of these entities are: the Department of Employment of the Regional Government of Andalusia, the Safa Foundation, Sisters of the Cross, the Konecta Foundation, the National Autism Confederation and the Integra Foundation. To the same end, other agreements are currently being negotiated with the Department of Equality and Social Welfare of the Regional Government of Andalusia, the Adecco Foundation, the Andalusian Confederation of Businessmen and Women, the ONCE Foundation, the Association of Persons with Physical and Sensorial Disabilities of Sanlúcar la Mayor (Adefisal), the University of Seville and others. Prizes, Grants and Aid Individual training and education is perhaps the most interesting aspect of social responsibility, both for the company and for Abengoa s employees. Promoting learning, supporting research and granting recognition to activities related to these fields are priority objectives, which are actively supported by an ample School Funding Programme that attempts to lighten the economic burden of further education on the families of employees. This effort has led to the granting of 1,534 study scholarships for various educational levels during the academic year, distributed among 1,196 Spanish and Latin American families, with an emphasis on special education programmes. ABENGOA Corporate Social Responsibility Report

166 Abengoa in 2006 Social Action In order to motivate scholarship among young people, the company has created a series of awards including End of Studies Prizes, Grants and Financial Aid for study-abroad programmes, others for complementary studies completed by Vocational Training students, prizes for results obtained by participating in professional advancement courses, and a Research Grant. The solemn prize-giving ceremony, held in the Hospital de Los Venerables, is a unique occasion of great significance to both Abengoa and its Foundation. Since 1982, this annual gathering has provided an opportunity to interact with the award winners, which inspires us to renew our commitment to promote this historic social initiative. Focus-Abengoa Internship Programme With the purpose of promoting and complementing training and integration of students in the labor world, Educational Cooperation Agreements have been signed with several national and international educational institutions that support the inclusion of students in Abengoa s Companies. The beneficiaries of these practical learning scholarships acquire their first professional experience, and the possibility to become future employees of Abengoa, and at the same time, they guarantee a very innovative and qualified staff for the development of activities. The information is summarized in the following charts: Signed Agreements Teaching Inst. 29% Agreements under Study Teaching Inst. 30% Signed Agreements Universities 49% Agreements under Study Private 2% Private 22% Universities 68% In 2006 a total of 337 scholarship holders have benefited from the Focus-Abengoa Program, which is supported by several Educational Cooperation Agreements that the Foundation undertakes with different national and international educational institutions. In 2006, 15 Institutions have been added to the 63 Institutions that were already included, thus making a total of 78 Agreements. Also, we have to point out that the Focus-Abengoa Foundation is currently involved in the process of formalization and negotiation with other 57 institutions. 48 Corporate Social Responsibility Report 2006 ABENGOA

167 Abengoa in 2006 Social Action Main Collaboration Agreements signed between Focus-Abengoa and several educational institutions: Universities Alfonso X El Sabio (Madrid) Alcalá de Henares (Madrid) Autónoma (Madrid) Antonio de Nebrija (Madrid) Camilo José de Cela (Madrid) Carlos III (Madrid) Complutense (Madrid) Europea de Madrid (Madrid) Francisco de Vitoria (Madrid) Politécnica (Madrid) Pontificia Comillas (Madrid) Addendum Pontificia Comillas (Madrid) Rey Juan Carlos (Madrid) San Pablo-CEU (Madrid) UNED (Madrid) Facultad CC. Físicas (Univ. Seville) ( Seville) Pablo de Olavide ( Seville) Universidad de Seville ( Seville) Politécnica (Barcelona) Universidad de Barcelona (Barcelona) Centro Universitario Jovellanos (Santander) Universidad del País Vasco (Several) Universidad Politécnica de Cartagena (Murcia) Universidad de Huelva (Huelva) Universidad de Córdoba (Córdoba) Universidad Zaragoza (Zaragoza) Universidad de Castilla La-Mancha (Several) Universidad Politécnica de Valencia (Valencia) Universidad Santiago de Compostela (La Coruña) Universidad de Oviedo (Asturias) Universidad de Salamanca (Salamanca) Instituto Tecnológico y de Estudios Superiores de Monterrey (Mexico) Universidad Tecnológica de Querétaro (Mexico) Saint Louis University (United States.) Universidad Católica de Peru (Peru) Universidad Piura (Peru) Universidad San Ignacio de Loyola (Peru) Universidad Nacional del Callao (Peru) Secondary Schools Santa María del Castillo (Madrid) Palomeras-Vallecas (Madrid) Ntra. Sra. del Pilar (Madrid) Heliópolis (Seville) Almudeyne (Seville) Velázquez (Seville) Politécnico (Seville) Altair (Seville) Nervion (Seville) Lucus-Solis (Seville) IES Jesuitas (Biscay) IES Barakaldo (Biscay) IES Salesianos (Biscay) San Juan Bosco (Murcia) El Bohío (Murcia) IES Carlos III (Murcia) IES Politécnico (Murcia) CEP-CEU (Seville) Sancti Petri (Cadiz) Vázquez Díaz (Huelva) Corona de Aragón (Zaragoza) Vicente Blasco Ibánez (Valencia) Instituto Libertador O Higgins (Chile) Private Institutes Escuela de Finanzas Aplicadas (Madrid) Fundación Carolina (Madrid) Centro de Estudios Financieros (Madrid) Centro de Formación Empresarial (Madrid) Cesma (Madrid) Colegio de Abogados de Madrid (Madrid) ESIC (Madrid) Centro de Estudios El Monte (Seville) CEA (Seville) SAFA (Seville) CEADE (Seville) Fundación Pablo de Olavide (Seville) EOI (Seville) ESEUNE (Vizcaya) San Pablo CEU (Seville) CES San Valero (Zaragoza) Fundación San Telmo (Seville) ABENGOA Corporate Social Responsibility Report

168 Abengoa in 2006 Social Action Among the main Agreements being studied we highlight the following: Universities OTRI (Uned) (Madrid) Universidad Rovira i Virgili (Tarragona) Universidad Oberta de Cataluña (Several) Universidad de Murcia (Murcia) Universidad de Cádiz (Cádiz) Universidad de Málaga (Málaga) Universidad A Coruña (La Coruña) Universidad Vigo (Pontevedra) Universidad de Valladolid (Valladolid) Universidad de Navarra (Navarra) Washington Univ. (United States) Universidad Cándido Mendes (Brazil) Universidad Estació de Sá (Brazil) Universidad Santa Úrsula (Brazil) Universidad Católica de Río de Janeiro (Brazil) Universidad Anáhuac (Mexico) Universidad Intercontinental (Mexico) Universidad Del Valle de Mexico (Mexico) Universidad La Salle (Mexico) Universidad Autónoma Metropolitana (Mexico) Instituto Politécnico Nacional (Mexico) Universidad Nacional Autónoma (Mexico) Universidad de Ciencias Aplicadas (Peru) Condefi (Chile) Universidad de los Andes (Chile) Universidad Católica Argentina (Argentina) Universidad Austral (Argentina) Universidad Tecnológica Nacional (Argentina) Universidad El Salvador (Argentina) Universidad Industrial de Beijing (China) University of Calgary (Canada) University of Alberta (Canada) University of British Columbia (Canada) University of Victoria (Canada) Thomsom River University (Canada) Universidad de Cantabria (Cantabria) Universidad Técnica de Praga (Czech Republic) Universidad Tecnológica de Cracovia (Poland) Universidad Tecnológica de Silesia (Gliwice) (Poland) Secondary Schools Virgen de la Paloma (Madrid) Los Viveros (Seville) Alixar (Seville) San José de la Rinconada (Seville) Albert Einstein (Seville) Albaidar (Seville) Santísima Trinidad (Seville) Fuentezuelas (Jaen) Salesianos (Cadiz) IES Mata-Jove (Asturias) Tartanca (Biscay) Talarrubias (Badajoz) Mislata (Valencia) La Misericordia (Valencia) La Candelaria (Tenerife) La Guancha (Tenerife) Cesar Manrique (Tenerife) In 2006, training programs have been carried out at several Abengoa Companies through the current Scholarship Program. A total of 337 students were involved, out of which 164 continued the program by the end of 2005, and 172 finalized them along the year. Abengoa s Scholarship program is made up around the concept of a tutor; a professional of the company in charge of the follow-up and guidance of the scholarship holder, so that his/her training period during the scholarship is the best possible, collaborating in the assigned tasks during that period, which are supervised by the tutor. Forja XXI (Seville) Private Institutes 50 Corporate Social Responsibility Report 2006 ABENGOA

169 Abengoa in 2006 Social Action At the end of the process, the performance of the scholarship holder is evaluated, and this mark is key to recommend his/her inclusion as an employee of the company. 65% scholarship holders with a mark above 8 (a mark that implies a correct performance) are included as employees of Abengoa. Abengoa s Scholarship Program in 2006 had a cost of 784 thousand Euros, which was financed by the companies and involved more than 10 countries and 40 different Abengoa companies. Scholarship holders by qualifications Scholarship holders by qualifications Other Medium Level Degrees 6% Chemical Eng. 5% Other Universities Degrees 26% Electronics-Tech. Train 0% Industrial Eng. 27% Other Tech. Train. 4% Masters 2% Lawyers 2% Entrep. DegreeLdo. Admón. Emp. 8% Tech. Eng. 4% Itech. Computer Eng. 2% Telecomm. Eng. 7% Computer Eng. 7% Scholarship holders by Educational Institution Scholarship holders by Educational Institution Private Inst. 1% University 91% The Rest 38% University Scholarship holders by Autonomous Communities University Scholarship holders by Autonomous Communities 7% Universities in Madrid Secondary Educ. 8% Universities in Andalusia 55% ABENGOA Corporate Social Responsibility Report

170 Abengoa in 2006 Social Action Focus-Abengoa Painting Prize This international award of long-standing tradition and prestige allows us to renew our commitment to contemporary art, and to the preoccupations and aspirations of its creators, by contributing to the creation of an exchange of artistic experiences beyond our frontiers. This prize is also a means of acquiring public recognition for the artists and serves as an incentive to continue along their chosen professional path. In its 24th edition, the Jury of specialists selected the winning works, with undeniable objectivity and rigour, from a total of nearly four hundred paintings received from both the European Union and the Americas. The selected paintings were later exhibited at the Hospital de Los Venerables. First Prize, with a cash endowment of 24,000 euros, was awarded to Garikoitz Cuevas Abeledo for his canvas entitled Unintentional Apostles, and the two Runner-up Prizes, worth 6,000 euros each, went to Aurora Perea Macías for her painting Private Secret and to Kimberly Squaglia for her work Scend. The three paintings have become part of Focus-Abengoa s permanent collection of painting and graphic works. Prize for the Best Doctoral Thesis on a Sevillian Theme Established in 1983, the notable prestige of this prize has grown and become consolidated over the years. In 1987, it was decided that in addition to the cash endowment of 3,000 euros, this prize would also include the publication of the chosen thesis, with a view to obtaining a greater degree of dissemination and recognition. This year s prize was awarded to Rocío Fernández Berrocal for her thesis on Juan Ramón Jiménez and Seville. Javier Benjumea Puigcerver Prize for Research The Social Council of the University of Seville and the Focus-Abengoa Foundation established this prize in the year 2003, for the purpose of recognising the efforts of members of the university community and their willingness to participate in projects that might meet the needs of businesses and other organisations in the areas of research and development. The award, endowed with a cash prize of 18,000 euros, was born of a sincere desire to support scientific activities and, above all, of a desire to encourage researchers who dedicate their lives to such activities. In this third edition, the prize was given to University of Seville tenured professor José López Barneo, for his work Autologous transplant of carotid body cells in Parkinson s disease. The Javier Benjumea Chair of Economic and Business Ethics he Universidad Pontificia de Comillas and the Focus-Abengoa Foundation created the Javier Benjumea Chair of Economic and Business Ethics in 2002, with the goal of promoting a new educational venue capable of contributing, by means of coordinated and continuous actions, to unravel what is known as Corporate Social Responsibility. One of its objectives is the use of research and education to achieve the realisation and dissemination of responsible theoretical and practical knowledge in the field of business ethics, which can help institutionalise these applications in businesses and organisations. Throughout the academic year, the Chair has carried out a wide variety of academic and research activities. There are two main pillars upon which the majority of the Chair s annual activities rest. The first and foremost of these is the Standing Seminar, with scheduled sessions from October to May. The second institutionalised element is the course that the Chair organises and teaches as part of the Complutense Communication Cycle. These sources are the basis for the educational and research projects that the Chair may carry out; an example of one such activity is the organisation of the Business Conferences on Corporate Social Responsibility, which have been held at the ICADE headquarters since Abengoa Master in International Finance and Corporate Finance Management In this year 2005, the Carolina Foundation and Focus-Abengoa signed a collaboration agreement with the aim of providing specialised training and education for Latin American students, as well as funding any other academic or cultural activity that strengthens the ties between Spain and other countries of the Ibero-American Community of Nations. Financial aid is provided in the form of ten study grants that covered 100% of the costs of enrolment, travel expenses, medical insurance, etc. The technical aspects of this course are handled by the Spanish Institute of Financial Analysts through its Financial Studies Foundation. Welfare Efforts Educational Grants and Aid for the Integration of Disabled Persons in Latin America A notable feature of the Latin American scope of Focus-Abengoa s social purpose is the intense efforts being made on behalf of disabled people in marginalised areas of Argentina and Peru, especially areas with high poverty rates. These initiatives focus on the construction and maintenance of school centres equipped with a steady supply of drinking water, electrical installations, and kitchens, dining halls and multi-functional meeting halls or gymnasiums. In addition, other efforts are concentrated on the areas of nutrition, health care and especially on special and physical education, seeking social reintegration for women and youth. 52 Corporate Social Responsibility Report 2006 ABENGOA

171 Abengoa in 2006 Social Action In Argentina, the Teyma-Abengoa company collaborates with the Congregation of the Sisters of the Cross in two activity centres located in the towns of Quimilí and Monte Quemado in the province of Santiago del Estero. An important part of this initiative is the implementation of the project Bodily Practices: Every Person s Right, which is based on the importance of physical education for disabled people. In this regard, we would like to highlight that a book by the author and journalist José María Javierre entitled A Girl from the Salamanca District: Holy Mother of the Cross was presented at the headquarters in December. This book is a biography of the Holy Mother of the Cross, who occupied the position of Mother Superior of the Sisters of the Cross congregation for twenty-two years. His Eminence Cardinal Carlos Amigo Vallejo presided over this book presentation ceremony. This event also evidenced Abengoa s solid and committed relationship with the congregation once led by the heroine of this book a relationship that is kept alive and active through the company s two foundations in Argentina, as we mentioned previously. Additionally, Abengoa Peru collaborates with the Institute of the Josephine Sisters of Charity in Peru. This organisation has four centres (three geriatric units and one nursery) located in Lima, Chiclayo and Cerro de Pasco. Abengoa s initiatives strive to improve the living conditions of the people who attend the congregation. San Rafael Retirement Home The placement and care of the elderly is a primary concern in today s society. With this concern in mind, a retirement home was created in 1989 in response to the lack of centres offering specialised care for the elderly. The high level of demand of this often ignored segment of society with limited economic resources led to the construction of the San Rafael Retirement Home, which was officially opened in November His Holiness Pope John Paul II visited the home on 13 June 1993, on the occasion of the 45th International Eucharistic Congress that was held in Seville. The building, located in the town of Dos Hermanas in the province of Seville, is currently home to approximately seventy individuals who have discovered there the warmth of a true home in the twilight of their lives. Abengoa, which has been involved in this project since its inception, renews its commitment each year by contributing to the upkeep, improvement and modernisation of the centre s installations, which in turn benefits the quality of life of these individuals and their loved ones. La Milagrosa Foundation The welfare efforts made by Abengoa as part of its Foundation s corporate purpose were extended this year with a collaboration agreement signed by Focus- Abengoa and the La Milagrosa Foundation. The aim of this organisation is to carry out welfare efforts in San Roque, in the province of Cadiz, on behalf of the elderly, as well as to provide long-term occupational training for young people and the unemployed and to work with disadvantaged or needy members of society. This project was devised by a group of individuals and Abengoa several years ago to counter the negative effects of property development in the area and motivated by concern about the marked ageing of the population in neighbouring towns. In response to this problem, the founders began to build a retirement home in San Roque. The building is now close to completion, and the official unveiling is expected to take place in The San Rafael and La Milagrosa retirement homes are staffed by members of the Josephine Sisters of Charity, a religious institution that is also affiliated with Abengoa in Peru. Seminars and Conferences International Conference on Naturalism EWithin the context of the exhibition From Herrera to Velázquez: Early Naturalism in Seville, the Focus-Abengoa Foundation considered it necessary to organise conferences that would enhance the visitors experience to the exhibition as well as encourage debates and reflections on this topic within the scientific community. For this reason, a conference was held in February that brought together a group of professors, curators and museum directors, whose diverse areas of expertise and multifaceted sensitivities served to enrich the significant thematic content of this meeting of artists and artwork. The basic theme of the conference is Naturalist painting in Seville during the first third of the 17th century and the importance of this movement in the international artistic context. Participants in the conference series included Mina Gregori, director of the Longhi Foundation, professor at the University of Florence and the world s foremost authority on the paintings of Caravaggio; Gabriele Finaldi, director of Conservation and Research at the Museo Nacional del Prado; Jean Luis Augé, director of the Musée Goya in Castres (France); Manuela B. Mena Marqués, from the Museo Nacional del Prado; and Benito Navarrete Prieto, curator of the exhibition and professor at the University of Alcalá. The conference ended with a round table discussion about new lines of research in the study of Naturalism, ABENGOA Corporate Social Responsibility Report

172 Abengoa in 2006 Social Action with the participation of Alfonso E. Pérez Sánchez and Benito Navarrete, the exhibition curator, Ignacio Cano, director of the Museo de Bellas Artes of Seville, and Enrique Valdivieso and Luis Méndez from the University of Seville. The Focus-Abengoa Foundation University Schools In the year 2004, Focus-Abengoa and the Menéndez Pelayo International University signed a collaboration agreement for the creation of two university schools, one dedicated to technology and the other to the Baroque. These schools will carry out their educational and academic activities on the grounds of the Hospital de los Venerables over the course of three consecutive years. With regard to their educational content, credits obtained at both schools are accepted by the University of Seville, Pablo de Olavide and all other universities with which the UIMP has signed credit validation agreements. The second seminar of the School of Technology was held from 7 to 11 March under the title Technology and Society: Future Visions. The course was directed by Prof. Eduardo Punset, an internationally renowned expert in the analysis of the society of information, and was designed to offer a multidisciplinary perspective of the impact of technology on different areas of human behaviour and social life. Another goal of the seminar was to attain a better understanding of the role of technology and innovation processes in the society of knowledge, and their impact on both increased productivity and the level of competitiveness of corporations and countries in global markets. Some of the international lecturers included Alun Anderson, editor-in-chief of New Scientist magazine; Richard Jones, professor of physics at the University of Sheffield; Daniel Thalmann, director of the Virtual Reality Lab at the Federal Polytechnic of Lausanne; and Andrew Pickering, professor of sociology at the University of Illinois. Experts in the area of global economy and the competitive challenge that such a market implies also participated in this school, such as Juan Pérez Mercader, director of the Centre of Astrobiology; Javier Echeverría Ezponda, researcher for the Higher Council of Scientific Research; Santiago Grisolia, secretary of the Valencian Foundation of Higher Education and winner of the Prince of Asturias Prize; José López Bareno, professor of physiology at the University of Seville and winner of the 3rd Javier Benjumea Puigcerver Prize for Research; José María O Kean, professor of applied economics at the Pablo de Olavide University; and Antonio-Miguel Bernal, professor of economic history at the University of Seville. This past autumn, the third edition of the Focus-Abengoa Foundation School of the Baroque was held from 13 to 16 November under the title The Triumph of Europe: Society and Power in the Baroque Era. This course was organised and directed by Miguel Artola Gallego, Professor Emeritus at the Autonomous University of Madrid and member of the Royal Academy of History. His keynote lecture on The Power of the Crown made it clear that to speak of power in the 17th century is to speak of the Crown and the King. This King, however, was not free to govern his subjects and territories arbitrarily, according to his personal whims and fancies, given the existence of a historical constitution this King exercised his power through the institutions of the State. Some of the most important representatives of the international academic community who participated as lecturers were James Amelang, from the Autonomous University of Madrid; Giulia Calvi, from the European University Institute in Florence; Aurelio Musi, from the University of Salerno; and Jean- Paul Le Flem, from the Sorbonne University of Paris. National lecturers included recognised specialists in this field such as José Manuel Sánchez Ron, of the Royal Spanish Academy; Álvaro Fernández Villaverde y de Silva, the Duke of San Carlos and member of the diplomatic corps; Bartolomé Clavero, from the University of Seville; Maximiliano Barrio from the University of Valladolid; Fernando Rodríguez de la Flor from the University of Salamanca; and Pedro González Trevijano, dean of the King Juan Carlos I University. Isabel Lobato and José Ignacio Martínez from the University of Seville were the acting secretaries. While the School was in session, the Foundation also offered a series of recitals by young organists entitled Power and Society in the European Baroque Period: The Secular Organ, a detailed description of which can be found in the chapter dedicated to music. A visit to the monument of the Hospital de los Venerables, one of the best-preserved examples of Baroque architecture, was also offered and directed by the University of Seville professor Ramón Queiro Filgueira the architect responsible for restoring this historical building. The outcome of the sessions of both schools, held at the Hospital de Los Venerables, was very satisfactory, with students actively participating in the debates. Communication between professors and students, more fluid than usual, was positively valued by all participants International Conference on Biofuels Within the framework of the Forum for Reflection on the Environment and Sustainable Development created by the Foundation as a thought-provoking tool that promotes understanding and the creation of public opinion on such a vital topic, the International Conference on Biofuels celebrated its fifth consecutive 54 Corporate Social Responsibility Report 2006 ABENGOA

173 Abengoa in 2006 Social Action year in Held last spring at the Hospital de los Venerables, the event sparked a debate between the most important figures of the global biofuels market, including representatives of public administrations, industry, agriculture, the petroleum sector, the automobile market and the sphere of technology. The conference also analysed the present-day market situation and its long-term limitations, and engaged in a joint exploration of different opportunities for this sector. 13th International SolarPACES Symposium Abengoa s commitment to sustainable development also found a channel for expression in the 13th International SolarPACES (Solar Power and Chemical Energy Systems) Symposium, held from 20 to 23 June. This important event took place at the Advanced School for Engineers of Seville and the Hospital de los Venerables. The seminar s objective is to inform and promote thermo-solar technologies of medium and high temperature concentrations, an area in which Abengoa currently enjoys a position of leadership thanks to its solar energy plant projects at the Casaquemada Solar Complex in Sanlúcar la Mayor (Seville). The symposium brought together representatives of twenty-five countries to sit on the committee of solar energy experts. During this gathering, the participants visited the PS10 plant in Sanlúcar la Mayor (the first thermo-electrical plant with solar tower technology) and the Sevilla PV plant (the largest commercial photovoltaic solar energy plant), both of which are expected to become operative in the second half of the present year. Some of the most prestigious participants included Nobel physics laureate Carlo Rubbia; the director of the European Renewable Energy Council, Alfonso González Finat; the general director of CIEMAT, Juan Antonio Rubio; and the dean of the University of Seville, Miguel Florencio Lora, among others. Music As in previous years, the Foundation s diverse musical activities have focused on the organ, an instrument installed in the Chapel of the Hospital de los Venerables by the Foundation in Since then, our headquarters have become a cultural centre for organ music and musicians in Seville, a pivotal city in the history of the organ in Spain and its subsequent spread to Latin America. The Focus-Abengoa Foundation has invested in intense educational efforts aimed at various social groups, which, with specifically designed actions, pursue the advancement of young musicians, the further education of organ professors and students, and especially the stimulation of musical interest in secondary school and conservatory students. This educational approach materialises in a series of recitals by young organists, a Master Organ Course given by a professional organist of international renown, and a Series of Didactic Recitals aimed at school children. The recitals by young organists were offered as part of a series entitled Power and Society in the European Baroque Period: The Secular Organ. This year s series presented an ample selection of pieces that highlighted the organ s prominent role in secular music, which took Renaissance ideals as a starting point for embarking upon a process of evolution that eventually broke with its strict rules and muted expressivity. New musical forms were created, and instruments were selected according to their suitability to their intended audience or purpose in the religious, aristocratic or popular arena. The organ was not a component of popular music, but it did play a major role in concert halls, opera houses and royal salons. This is evidenced by the vast secular repertoire of chaconnes and canzonas, dance suites and pavanes written for the organ that proliferated in every European region. The recitals were given by three young and accomplished Spanish organists Susana García Lastra (Seville), Eudald Dantí Roura (Barcelona) and Juan María Pedrero (Granada) and Sarah Bishop accompanying on the English horn. This concert series was part of the seminar held a few days earlier at the Foundation s headquarters, The Triumph of Europe: Society and Power in the Baroque Era. This season saw an increased number of Didactic Recitals as a result of the Foundation s desire to expand its activities, reaching out not only to higherlevel secondary school students but also to the students of various Elementary Conservatories in Seville. Around 1,500 students from a variety of Sevillian educational centres have benefited from this instructive activity. The students are able to broaden their musical and artistic horizons through a greater understanding of the organ, its nature and its unique sound, which is why these recitals have become one of the most eagerly anticipated and carefully planned activities of the Foundation. Additionally, and for the sixth consecutive year, the Foundation offered the Master Organ Course, which on this occasion studied the work of Olivier Messiaen (the Bach of the 20th Century) and was directed by Prof. Olivier Latry, tenured organist of the Notre-Dame Cathedral in Paris and organ professor at the Cité de la Musique (Paris). Over a period of three days, organists and students from around Spain participated in this course with great interest and reaped many professional benefits as a result. This course is also supported by the Superior Conservatory of Music of Seville. ABENGOA Corporate Social Responsibility Report

174 Abengoa in 2006 Social Action On another level, the demands of organ music aficionados were answered with the presentation of some of the greatest organists of our time in the Master Concerts series. In February, three great 20th-century French composers (J. Langlais, J. Alain and O. Messiaen) were performed by the foremost interpreters of each respective repertoire: Marie-Louise Langlais, student and wife of the first; Marie-Claire Alain, heir of the Alain family s musical legacy; and Olivier Latry, Messiaen s favourite disciple. The musical programme ended in May with two traditional concerts. This first was given by José Enrique Ayarra, tenured organist of Los Venerables and the Cathedral of Seville, together with the Chamber Orchestra of the Royal Symphonic Orchestra of Seville. The other was the concert held on the day of St. Ferdinand, patron saint of the Chapel of Los Venerables, which this year boasted the participation of the Capella Giulia choir from St. Peter s Basilica in the Vatican, directed by that Basilica s canon and chapel master, Pablo Colino (in his first performance in Seville), accompanied by our tenured organist. All of these concerts were later broadcast by Spanish National Radio on its Classical Radio station. An extraordinary activity that took place this year was the presentation ceremony of a UNESCO certificate granting Seville the title of City of Music, held at the Foundation s headquarters. The event ended with a piece that the Foundation commissioned in 1993 by the recently deceased Sevillian composer Manuel Castillo, Altarpieces of Los Venerables, performed by José Enrique Ayarra. Exhibitions From Herrera to Velázquez: Early Naturalism in Seville EOn 28 February, the exhibition entitled From Herrera to Velázquez was brought to a close at the Hospital de los Venerables. The exhibition, coproduced by the Focus-Abengoa Foundation and the Museo de Bellas Artes of Bilbao, was inaugurated by H.R.H. Princess Elena on 29 November Dedicated to Sevillian painting from the first third of the 17th century, the exhibition was displayed in the halls of the Hospital de los Venerables of Seville, headquarters of the Focus-Abengoa Foundation, and has been visited by over 70,000 people from the general public, cultural and educational centres, and the Spanish and international scientific community, making this the most successful exhibition in terms of visitors in the Foundation s history. Due the high degree of interest in this exhibit, Focus-Abengoa made an additional effort during the last 20 days of the exhibition, extending visiting hours to accommodate everyone. In addition, the Foundation organised a cultural and educational programme of tours that were given by volunteer graduates of Art History and senior university students from the Departments of Geography and History at the University of Seville and Pablo de Olavide University. Curated by the Honorary Director of the Museo del Prado, Alfonso E. Pérez Sánchez, and by Professor Benito Navarrete Prieto from the University of Alcalá, the exhibition was endowed with an important thematic and didactic content. It can also boast a rigorous standard of scientific excellence, thanks to significant contributions from project leaders who, among other accomplishments, were able to identify the true authors of various works for the first time, as well as provide a new look at early Sevillian Naturalism. The 62 works of art representing the artistic process carried out in Seville between 1600 and 1630 follow the path that leads from the paintings of Mannerist rhetoric, influenced by the Flemish school, to works characterised by Italian-style chiaroscuro Naturalism, a movement inspired by Caravaggio and his school. This change transpired over a period of less than thirty years and took place in the thriving, cosmopolitan Seville of the first third of the 17th century. At that time the city was in full artistic bloom and popular among collectors; it was a point of departure and arrival for both travellers and painters, where the contributions of Flemish painting met and mingled with Italian styles and influences an exchange of ideas which found its ultimate artistic expression in the early work of Velázquez. The artwork exhibited came from many important Spanish and international museums as well as private collections and organisations both in Spain and abroad. Special mention must be made of the important contribution of the Archbishopric of Seville, many of whose works had never been exhibited publicly before and were restored especially for the exhibition. The exhibition brought together key pieces for understanding the transition from the contrived images of late Mannerism to those of experienced reality, such as the Adoration of the Shepherds, from the National Gallery in London. This painting, formerly attributed to Velázquez, was exhibited in Spain for the first time since leaving in the 19th century. Other works on display in our country for the first time since leaving Seville include Saint Catherine Appearing to the Family of Saint Bonaventure, by Herrera the Elder, from Bob Jones University (North Carolina, USA); The Last Supper, by the same artist from a private collection; Head of an Apostle, by Velázquez, also from a private collection; Saint Peter, by a follower of Velázquez, on loan from the Nelson Atkins Museum (Kansas City, USA); or St. John in the Wilderness by Alonso Cano, from The Art Institute of Chicago, attributed to Velázquez but proven by the scientific catalogue research to actually be the work of the painter Alonso Cano, who shared many of the Sevillian master s styles and preferences. Other significant works by Velázquez, such as 56 Corporate Social Responsibility Report 2006 ABENGOA

175 Abengoa in 2006 Social Action Kitchen Scene, from The Art Institute of Chicago, Head of a Young Man in Profile, on loan from the State Hermitage Museum of Saint Petersburg, and The Luncheon, from the Szépmüvészeti Múzeum in Budapest, or The Three Musicians, from the Gemäldegalerie of Berlin, in addition to canvases by painters such as Zurbarán, Ribera, Francisco de Herrera the Elder, Tristán, Alonso Cano, Guy Romano, Orazio Borgianni, Roelas, Caravaggio and their disciples, etc., complete this overview of extraordinary beauty and artistic and historical interest. After closing on 28 February in Seville, the exhibition travelled to the Museo de Bellas Artes of Bilbao, where it graced the halls of that institution from 20 March to 18 June and was extended for three additional weeks given the tremendous public response. The opening ceremonies were presided over by the Mayor of Bilbao, and the presidents of Focus-Abengoa, representatives of the Basque Regional Government and the cultural arena, and the curators of the exhibit were also in attendance. Restoration of Spain s artistic heritage In addition, this exhibition has constituted a major effort to recover the artistic heritage of Spain with the restoration of numerous paintings and the creation of a Restoration Workshop at the Hospital de los Venerables, the Foundation s headquarters, for this purpose. The restoration work was funded by Focus- Abengoa and the Museo de Bellas Artes of Bilbao, and was performed on seven paintings by Herrera the Elder, Juan de Roelas, Orazio Borgianni, Bartolomé Cavarozzi and others. These canvases are owned by the Archbishopric of Seville and were brought from churches and monasteries throughout the diocese to be restored and finally displayed in the exhibition. In addition to the restorations performed in the Los Venerables Workshop, the exhibition motivated the restoration of other important artworks, carried out at various institutions such as the Museo del Prado, which restored The Penitent Saint Jerome by Caravaggio, from the Museo de Montserrat; the Patrimonio Nacional Workshop, which restored The Penitent St. Francis of Assisi and Saint Peter and Saint Francis, both by Luis Tristán; and the Museo de Bellas Artes of Córdoba Workshop, which restored four paintings by Francisco de Herrera the Elder: Saint John, Saint Phillip, James the Greater and James the Lesser. Seeing Seville: Five Perspectives through One Hundred Engravings From 31 May through 16 July, the Hospital de los Venerables hosted the exhibition entitled Seeing Seville. Five Perspectives through One Hundred Engravings, comprised of approximately one hundred engravings and lithographs belonging to the Focus-Abengoa Foundation s Collection of Engravings. The exhibit was structured around five different sections the geographer s perspective, the passer-by s perspective, the festive perspective, the archaeologist s perspective, and the romantic perspective and offered a historical and artistic tour through the city of Seville and its medieval kingdom, by means of images engraved between the 16th and 20th centuries that presented a new and intriguing view of the city. The exhibition discourse was designed by Prof. Alberto Oliver and the museographic work fell to Gustavo Torner. As has become standard practise, the Foundation also organised a programme of educational visits for Andalusian educational centres, audioguides in various languages and free admission every Sunday afternoon throughout the year to the visiting public. Focus-Abengoa Collection: Selected Works The conference entitled Pivotal Points of Art in the 20th Century was given on 3 October at the Church of the Hospital de los Venerables by Jaime Brihuega, professor of contemporary art at the Complutense University of Madrid. Prof. Brihuega s main lines of research include works on Spanish historic vanguards and Sociology and iconology of mass visual communication. The lecture was offered to celebrate the public opening of the exhibition Focus-Abengoa Collection: Selected Works, which remained on display in our exhibition halls until 10 December. A total of thirty-eight pieces were selected from the Focus- Abengoa Collection, including works by influential artists such as Gustavo Torner, Fernando Botero, Carmen Laffón, Antonio López, Manuel Sánchez Arcenegui and Juan Sánchez Avila. This exhibition was directed and coordinated by Alfonso E. Pérez Sánchez, the Focus-Abengoa artistic advisor and honorary director of the Museo del Prado. The educational work that habitually accompanies exhibitions organised by the Foundation was amplified in this case because, in addition to the regular guided tours by student volunteers, a drawing workshop was also offered for children enrolled in primary schools and special education programmes. This initiative expanded the didactic activities to include a sector of the public that had not previously been offered special attention. The guided tours adapted in content and vocabulary to appeal to children were accompanied by a drawing workshop where the children were invited to draw the themes and concepts they saw in the exhibition. In addition to 600 schoolchildren from the city and province of Seville, a total of 7,500 individuals visited this exhibition. Short-listed Works for the 2006 Focus-Abengoa Painting Prize Another important event in this category was the exhibition of the twenty-seven paintings that were short-listed for this year s prize, out of a total of four hundred pieces presented by artists from Spain, the European Union and the Americas. The three winning paintings and other works selected from among the pieces shown in the halls of Los Venerables are now part of the Focus-Abengoa Collection of painting and graphic works. ABENGOA Corporate Social Responsibility Report

176 Abengoa in 2006 Social Action Focus-Abengoa Collection: Painting and Graphic Works At present, the Focus-Abengoa Collection is comprised of 142 canvases acquired through various activities, including the Painting Prize, monographic exhibitions featuring outstanding artists of the contemporary artistic panorama, various private purchases and donations. In 2004, the Collection was enlarged thanks to a donation of twenty-five canvases belonging to Abengoa, by artists such as Andrés Cortes, José García Ramos, Benjamín Palencia, and Carmen Laffón. The Foundation also acquired the work The Museo del Prado through the Eyes of Twelve Contemporary Artists, a collection of prints and lithographs that constitutes the sole element of graphic art in the Collection and includes creations by some of the most important artists of the latter half of the 20th century who, in addition to paintings, also produced prints and engravings Saura, Chillida, Rivera, Torner, Tàpies, Barceló and others. The Collection is always open to new acquisitions as expression of our continuing interest in contemporary painting. Some of these works are temporarily on loan and exhibited in different company branches of Abengoa in Spain and the United States as integral components of corporate culture. Sevillian Topics Library Once the current headquarters were completely restored, the bibliographic heritage safeguarded by the Foundation since the Sevillian Topics Library was created in 1981 was installed in the former refectory and chapterhouse of the Hospital de los Venerables. Here, over six thousand volumes dating from the 16th century to the present day are preserved for posterity, all of which are united by a common thread: ties to the history of Seville and its medieval kingdom, or authorship by Sevillian writers. The enrichment of this archive continues every year with new acquisitions of documents and books. The Library, which is open to researchers and academics, has facilitated access to its volumes with the installation of the Biblio 3000 programme on the Internet, which allows this living cultural heritage to be shared and spread around the world. Room of Engravings The Foundation, which since its creation in 1982 has had a large number of prints and etchings in its possession, decided that this delicate heritage of graphic art required installations that would guarantee both their conservation and their utility for scientific research. This Collection is unique because of its particular focus on Sevillian iconography, and also because it is the only collection of its kind, whether in Spain or abroad. It is comprised of three hundred works of graphic art ranging from the 16th to the 20th centuries, which are available to researchers and academics wishing to study them. Publications From Herrera to Velázquez: Early Naturalism in Seville Focus-Abengoa and the Museo de Bellas Artes of Bilbao published this book on the occasion of the exhibition From Herrera to Velázquez. During this past holiday season, Abengoa distributed this book as an institutional gift to over six thousand five hundred people in Spain and around the world. This literary initiative describes the research and scientific preparation effected by the curators, Alfonso E. Pérez Sánchez, Honorary Director of the Museo del Prado and Professor Benito Navarrete Prieto, and also includes texts by Salvador Salort Pons Pons Artistic Relations between Italy and Seville ; Enrique Valdivieso, Juan de Roelas in 17th Century Seville ; Antonio Martínez Ripoll Francisco de Herrera the Elder, a Young Painter in Search of Modernity ; and Odile Delenda with Benito Navarrete Prieto, The Collection of St. Bonaventure as an Exponent of Naturalism. The final chapter describes the artistic heritage restoration efforts that were carried out at four different workshops specifically for this exhibition. Velázquez and Sevillian Culture Written by Luis Méndez Rodríguez, this book was co-published by the University of Seville s Secretariat of Publications. The work won the Prize for Best Doctoral Thesis on a Sevillian Theme in 2002 and is the 19th addition to the Focus- Abengoa Collection. In this book, the author reflects on the years that the great painter spent in Seville ( ), reconstructing the circumstances of his personal and professional life with new documentary evidence that provides a new and different look at this first period of his artistic career. Creation of complex-structure nanoparticles using electrohydrodynamics This monograph by Prof. Antonio Barrero Ripoll was the winner of the second Javier Benjumea Puigcerver Prize for Research, and its publication represents the continuance of the editorial collaboration between the Social Council of the University of Seville and Focus-Abengoa. The aim of this joint effort is to obtain the maximum publicity for a research project that combines scientific excellence and innovations with industrial and agricultural applications. The aforementioned publication is number 20 in the Focus-Abengoa Collection. 58 Corporate Social Responsibility Report 2006 ABENGOA

177 Abengoa in 2006 Social Action Other publications Over the past year, issues 68 through 71 of the News Bulletin have been published, providing information about the Foundation s activities and events related to its objectives. Other publications include the Catalogue of Short-listed Works for the 2006 Focus-Abengoa Painting Prize and the second edition of the Bulletin of the Focus-Abengoa Schools of Technology and the Baroque corresponding to the academic year. Distinctions and Awards Patronage and Sponsorship Prize awarded to the Focus-Abengoa Foundation On 13 December 2005, the Department of Culture of the Regional Government of Andalusia announced the winners of the prizes which it bestows every two years on individuals or organisations in various artistic spheres. On that occasion, Focus-Abengoa was announced as the recipient of the Patronage and Sponsorship Prize, awarded by a jury presided by Juan Manzano Fernández-Heredia. In the official communiqué, special mention was made of the advances and cultural promotion efforts they have made since [the Foundation s] creation, and especially for their activities in the areas of promoting, developing and encouraging interest in our historical and cultural heritage, in the artistic disciplines of music, congresses, conferences and publications of great cultural value. The awards were presented in a solemn ceremony held on 13 July 2006 at the Teatro Central of Seville. The president of the Regional Government of Andalusia presided over the event, and numerous eminent figures and authorities from the Andalusian world of culture were also in attendance. Collaborations and agreements with other entities In different ways, Abengoa orients its annual efforts and assistance towards other different and plural institutions that provide services of general interest. Association of Self-Generators of Electric Energy Association of Andalusian Foundations Association of Renewable Energy Generators Spanish Association of Foundations European Bioethanol Fuel Association New Horizons Association The Energy Club. Technological Corporation of Andalusia European Forum for Renewable Energy Sources Carmen Pardo-Valcarce Foundation Spain-China Council Foundation Cotec Foundation Foundation for Drug-Addiction Assistance Foundation for Co-operation in Development and Promotion of Welfare Activities Foundation for Applied Economics Studies Sociological Studies Foundation Business and Society Foundation Spain-U.S. Foundation Euroamerica Foundation European Energy Foundation Integra Foundation La Milagrosa Foundation Prince of Asturias Foundation Pro-Spanish Royal Academy Foundation Valencian Foundation for Higher Education Catholic Institute of Art and Industry _ I.C.A.I. Regional Development Institute Musical Youth Global Agreement Platform Promotion of assistance-related activities Project Man Royal Academy of Fine Arts ÅgSaint Elizabeth of HungaryÅh Royal Academy of Medicine Royal Academy of Quality Liberal Arts of Seville San Rafael Residence University of Seville Pontificia University of Salamanca Foundation for the Technological Corporation of Andalusia Focus-Abengoa became a Founding Trustee of this Foundation, created in 2005, whose primary purpose is the promotion of R+D+I (Research, Development and Innovation) activities in the Region of Andalusia. Promoted by the Department of Innovation, Science and Technology of the Regional Government of Andalusia, the Foundation is comprised of the public administration itself via the Research and Development Agency of Andalusia, thirty-three top companies in strategic sectors involved in R+D+I activity, nine financial institutions, the Andalusian Council of Universities and the region s top research groups. ABENGOA Corporate Social Responsibility Report

178 Abengoa in 2006 Social Action Agreement with the University of Seville. Last year, the Dean of the University and the President of Abengoa signed a framework agreement for scientific and technical co-operation, which served to strengthen and augment existing relations and cooperative activities. This agreement hopes to achieve its goal by reinforcing technological research and development activities, exchange of expertise, and personnel training, as well as by using and marketing to third parties the technologies developed by University institutes, departments or research groups, which will in turn lead to specific agreements where appropriate. Social responsibility programmes in Abengoa companies It is no coincidence that many Abengoa companies have initiated specific corporate social responsibility programmes in response to the economic, social and cultural situations and needs of the countries where Abengoa is active. These activities reflect our determination to grow alongside surrounding communities and environments, creating new ties that are mutually beneficial to society and the company in the long-term in other words, what we call sustainable development. This corporate strategy is about commitment to provide economic resources for specific activities and interventions that contribute to the endogenous development of each town or people. Abengoa s CSR Actions ( ) Company Country Action Beneficiaries ATE Brazil Patronage publishing book Environmental education Donation tractor Ethnological study Bargoa Brazil Medical assistance, family hampers, football pitch Bargoa employees Ate II Abengoa México Brazil Mexico Construction Rural School Patronage Play Construction waste collection center Land conservation, by reforestation Green area maintenance (gardening, replacing plants ) Several pending assignation Society in general Tierra de Arariba Indian community Tierra de Arariba Indian community Tierra de Arariba Indian community Line installation communities Community in Canto de Buriti district Reservoir community, Maranhao State Citizens Mexico City and vicinities Residents Abengoa Mexico building Pending assignation Comemsa Mexico Education center, with teacher (completion primary educ.) Comemsa personnel Abengoa Perú Befesa Perú Teyma Uruguay Teyma Abengoa Befesa Argentina Peru Peru Uruguay Argentina Water installations in geriatric Home Donations to, and repair works in Homes Presents for parents of children with Down s syndrome Talks on health, communal activities, church repair works, Christmas festivities Presents for parents of children with Down s syndrome Contribution Deres (entity promoting CSR) founder s fee Center for children with Cerebral Paralysis. Youth Center Food, health, training and education assistance Works: construction gym, dining hall, enlargement of several facilities Instituto Hermanas Josefinas de la Caridad Instituto Hermanas Josefinas de la Caridad Abengoa Peru personnel Agro-fishery Rural Colony Pope Leon XIII Model City Befesa Perú personnel Society in general Hermanas Misioneras Franciscanas Sisters of the Cross Sisters of the Cross Argentina Training and integration of children suffering from Down s syndrome Cascos Verdes Association 60 Corporate Social Responsibility Report 2006 ABENGOA

179 Abengoa in 2006 Social Action-Economic Performance Abengoa s CSR Actions ( ) Company Country Action Beneficiaries Inabensa France Abengoa Bioenergy Abener Abener Solúcar France Nursery, gymnasium and sport activities Purchase office material for associations for the handicapped Inabensa France employees Associations for the handicapped USA Sporting events, activities for the young, education Charity associations, civil communities Mexico Spain Spain Donation of wood packing for School shades Organization party in Abener offices and Christmas presents Association for the handicapped Photography competition Cultural Activities Celebration Andalusia s Day Patronage of Three Kings Parade Outdoor lighting, Saint Maria s church State/Rural Primary School, Baja California Orphans from Casa Cuna/Mexico FD Association for the handicapped Abener workforce Society in general Village of Sanlucar la Mayor Village of Sanlucar la Mayor Village of Sanlucar la Mayor Solúcar R&D Spain Cultural, educational and social events (including Solar Paces Congress) Society in general Abencor Spain Annual financial donation Sisters of the Cross and Sisters of the Poor Enernova Spain Patronage of Three King s Parade Village of Ayamonte Telvent TyT Telvent GIT Biocarburantes CyL Spain Spain Spain Sponsorship sports association Sponsorship sports association Sponsorship Summer courses in El Escorial Employer s contribution to Spain-China Council Foundation Care and integration of intellectually challenged youngsters Collaboration Babilafuente city council Collaboration Huerta city council Collaboration Civil Guard (Saint Pilar s Day) Collaboration Babilafuente Football Club Cerro del Aguila Sports Association (Seville) Nervion Sports Association (Seville) Society in general Telvent GIT Carmen Pardo-Valcarce Foundation Babilafuente town Huerta town Civil Guard Babilafuente town Ecocarburantes Spain Collaboration neighborhood associations; business associations Neighboring towns and villages Economic Performance In 2006, Abengoa obtained a consolidated net income of million euros, which represents an increase of 52.0% on last year. Annexed to the Abengoa Annual Report, is the Abengoa Profit and Loss Statement, forming part of the Abengoa Financial Statements Report and Management Report at December 31, We would like to draw your attention to the incoming amount recognised in the sales and services rendered item, in the last two years, data in millions of euros (EC1): 2005= 2,023.5 M 2006= 2,677.2 M A series of indicators are listed below which may prove to be descriptive of Abengoa 2006 economic performance. ABENGOA Corporate Social Responsibility Report

180 Abengoa in 2006 Economic Performance Products or range of products in which the national market share per country exceeds 25%. Products or range of products in which the national market share per country exceeds 25% Bioethanol for use as fuel in Spain 100% 100% Power transmission lines in Spain 40% 40% Treatment of salt slags in Spain 100% 100% Treatment of salt slags in the United Kingdom 100% 100% Treatment of sulfur from refining in Spain 35% 38% Decontamination of equipment with PCB in Spain 50% 50% Transforming of greenhouse plastics in Spain 40% 40% Treatment of steel powders in Spain 100% 100% Repowering of power plants in Mexico 75% 75% Construction of motor plants in Mexico 60% 60% Construction of bioethanol plants in Spain 100% 100% Construction of oil pipelines in Uruguay - 50% Water works, mains and treatment plants in Uruguay 30% 36% Mobile telephone infrastructures in Uruguay 32% 65% LV and MV electricity distribution in Uruguay 26% 29% Supply of bay work pylons for power transmission lines in Mexico 25% 25% Supply of connection and protection accessories for telephone exchanges and networks in Brazil 35% 40% Road traffic control in Spain 33% 33% Substation control in Spain 45% 45% Oil and gas pipeline control in North America 60% 60% Oil and gas pipeline control in Latin America 50% 50% Airport meteorological assistance in Spain 90% 90% Railway ticketing systems in Spain 40% 40% Integrated Oil Terminal Control Systems in Mexico 80% 80% Border Control Systems in Spain - 50% Public Administration electronic signature systems in Spain - 50% Environmental Quality Networks in Spain - 30% Cost of all raw materials and procured commodities, and all contracted services Cost of raw materials (M ) Consumable and other cost 1, ,664.9 Consumable and other operathing cost Corporate Social Responsibility Report 2006 ABENGOA

181 Abengoa in 2006 Economic Performance Percentage of contracts settled under terms of agreement, excluding stipulated penalties The volume of purchases made by each business group is as follows: Volume of purchases made by each Business Unit (in millions of euro) Bioenergy Environmental Services Information Technologies Industrial Engineering and Construction Distribution of bank loans: The breakdown of the debts with credit institutions is as follows: Net Debts Long term debts with credit entities 530, ,158 Short term debts with credit entities 166, ,774 Financial Investments (379,734) (481,739) Treasury (435,366) (1,027,972) Total Net Debt (118,399) (153,779) Non-recourse long term financing ,068 Non-recourse short term financing ,802 Total salary expenses broken down by country or region Salary expenses for the last two years were as follows: Salary expenses for the last two years (in millions of euro) Salary expenses Wages and salaries Social Charges Action Plan Total salary expenses Distribution among capital providers, broken down by interest on debt and loans, and dividends on shares of any description, with specification of any arrears on the preferred dividends. Dividends:: During the 2005 and 2006 periods, Abengoa distributed an annual dividend to its shareholders of 13.6 million in each period at the rate of 0.15 per share. For 2006, the Board of Directors intends to propose, to the General Shareholders Meeting, a 14.5 million dividend distribution at the rate of 0.16 per share. Financial assistance received, broken down by country Consolidated data in millions of euro Subsidies in capital transferred to results Operating subsidies Detail of taxes paid, broken down by country List of Countries (M ) Spain 49, ,560.6 Brazil 24, ,863.6 United States 3, ,606.8 Canada ,434.4 Argentina ,944.5 Uruguay ,774.7 France ,626.2 Peru ,197.8 Chile 2, Poland Netherlands Portugal Australia India China Germany United Kingdom ABENGOA Corporate Social Responsibility Report

182 Abengoa in 2006 Economic Performance List of Countries (M ) Belgium Lebanon Costa Rica Sweden Colombia Denmark Thailand Romania (0.2) 0.0 Morocco (1,672.8) (846.5) Mexico (8,611.8) (10,292.0) Total taxes paid 75, ,330.2 Of the total taxes paid in 2006, fifty-seven percent (57%) corresponds to the retaining of pay-as-you-earn employee taxes made by the different companies and subsequently paid to the Tax Authorities. In addition, a further twenty-five percent (25%) of the total is for indirect taxes charged for conducting different commercial and financial operations and are tax payments that have mainly been made in Brazil. Donations to community, professional company and other groups, in cash and in kind broken down by group kind Social Responsibility Figures in millions of euro 2006 (R) 2007 (Est.) Internal social action: Abengoa 1, ,063.0 External social action Society in general 4, ,889.0 Total 5, ,952.0 Internal Social Action: Abengoa Figures in millions of euro 2006 (R) 2007 (Est.) Education Human Relations Social Wellbeing 1, Culture Total 1, ,063.0 External Social Action: Society in general External Social Action: Society in general Figures in millions of euro 2006 (R) 2007 (Est.) Hospital de los Venerables Training and Education Assistance Works ,576.5 Seminars and Conferences Music Exhibitions Focus-Abengoa Collection. Painting and Graphic Work Publications Collaboration and Agreements with other Entities Total 4, , Corporate Social Responsibility Report 2006 ABENGOA

183 Abengoa in 2006 Economic Performance Environmental Performance Abengoa activity, via its five business groups, makes an important contribution to sustainable development in the areas where it operates, which we would like to highlight. Bioenergy Abengoa manufactures and markets bioethanol, a renewable product obtained from cereals and a substitute for gasoline. Bioethanol production avoids the consumption of fossil fuels and the emission of many tonnes of CO 2 into the atmosphere, as the level released by the vehicles has been previously set by cereals through the chlorophyll function. During manufacture other coproducts of high environmental value are also produced, such as DGS, compounds with a high protein content for animal feed. Bioethanol contributes positively to air cleanness in cities, as it is a oxygenated fuel it avoids the formation of combustion CO. Furthermore, as the octane rate is raised, it is of great interest for leadfree gasolines. Bioethanol also makes great demands on agriculture, creating much work in the rural world and helping population settlement. It also plays a part in reducing energy dependence, by substituting imports. Abengoa is the leading bioethanol producer in the European Union and the fifth producer in the United States, as well one of the major world players. The summary of the contribution to sustainable development of this business in 2006: Bioetanol produced 619,265 t Eco-protein produced 648,015 t Crude Sustituted 399,590 t Tonnes of CO 2 avoided 1,691,486 t Direct jobs 400 Indirect jobs mainly in the rural word in agriculture 6,194 Environmental Services Through its different companies, Befesa carries on an industrial activity which is designed to favour environmental protection and recovery, with technologically advances and financially profitable operations. Its activities are integrated into the following business areas: Recycling of waste aluminium Recycling of salt slag Recycling of zinc waste and desulphurisation Management of industrial waste Industrial cleaning and hydrocarbons Environmental engineering These businesses have very positive environmental results, as they save raw materials and energy, reduce CO 2 emissions, and protect the environment by recycling, eliminating and controlling waste. Environmental engineering also devotes considerable effort to infrastructures and water cycle management. For reference purposes and without being exhaustive, we will comment on the contribution made by secondary aluminium to the environment. This recycled aluminium avoids the consumption of primary aluminium. Production of one kilogram of primary aluminium consumes approximately 12 kwh, while obtaining one kilogram of recycled aluminium only consumes 0.5 kwh. In addition to energy savings, savings are also made in raw materials and CO 2 emissions are avoided. Most secondary aluminium is destined for the automobile industry. Every kilogram of aluminium that is incorporated into a vehicle avoids approximately 20 kilograms of CO 2 emissions, on average over its useful life, and an equivalent reduction in biofuel consumption, and at the end of its life 95% will be recycled. We also must highlight desalination activity. Abengoa has built a desalination plant in Carboneras, the largest in the European Union. Desalination is the best promise for sustainable development. Desalination of seawater is energy consuming and this consumption accounts for the bulk of the cost. However, technological development is pushing this cost down reasonably quickly to its lowest technical levels. In 1998, desalination of one litre of seawater consumed 6 kwh. The desalinator of Carboneras consumes 4 kwh and probably during this decade the consumption level will manage to be reduced to 2 kwh. This is important news for developing countries, as cheap desalinated water will contribute extraordinarily to agricultural development, population settlement and healthier cities. Abengoa is in the construction process of four big desalination plants in developing countries. Engineering and Industrial Construction The contribution made by this business group to sustainable development is materialised in avoided CO 2 emissions, through its cogeneration plants, renewable energy plants, development of hydrogen technologies, and infrastructures in developing countries. Abengoa owns eleven cogeneration plants. Electric energy generated: MWh Steam delivered to host industry: t Net CO 2 emissions: t Avoided CO 2 emissions: t** ** Estimation of emissions avoided in accordance with the substitution criteria of electric energy generation in coal-fired thermal power stations. ABENGOA Corporate Social Responsibility Report

184 Abengoa in 2006 Economic Performance This business group promotes and constructs renewable energy plants, especially solar and biomass plants. It also builds biofuel plants. It builds energy infrastructures preferably in the electric sector: generation stations, and transport and distribution infrastructures. A fair number of these infrastructures are built in developing countries. It also contributes to sustainable development in the social results, as it contributes to the development and modernisation of Latin American countries, especially through the creation of electric, environmental, industrial and telecommunications infrastructures among orders. The first permanent Abengoa installation was in Argentina in At the end of 2006 Abengoa has concesions in kilometers of high tensión cables in Latin America. In 2006, Abeinsa has promoted the company ZeroEmission Technologies which provides global solutions for the fight against Climate Change in the fields related to the development of projects to reduce emissions (CDM/JI), CO 2 capture, CO 2 trading and R&D&I in greenhouse gas elimination, which has a higher global warming capacity than CO 2, as part of Abengoa s total commitment to Sustainable Development.Abeinsa Information Technologies Telvent is the holding company of a group of technological companies, largely geared to control systems that design and construct infrastructures for the information and knowledge society. The basic technologies are digital electronics, real-time computing, modern telecommunications and Internet technologies and of its contents and management systems. They contribute to the improvement and rationalisation of the management of services and public administrations and of highly industrial companies. They are at the base of modernisation and socio-economic progress. Some environmental indicators that measure the Abengoa environmental performance To get a more precise idea of how the environmental impact of all of Abengoa s companies is distributed, one must consider the fact that 48.9% of the workforce is Spain based while the other 51.1% works abroad (America, Asia, Africa, Oceania and the rest of Europe). For the calculation of the indicators, our work centers, their associated activities and all projects promoted directly by Abengoa have been taken into consideration. For all other projects, the magnitudes derived from our activity, and not the raw materials, consumptions or wastes attributable to the promoters of said projects, have been taken into consideration. Neither have the maintenance or operation activities conducted at our customers facilities been taken into account. Pursuant to its Environmental Policy on the sustainable use of energy and natural resources, Abengoa has developed, in its Common Management Standards, the implementation of Environmental Management Systems as a strategic objective in accordance with the requirements of the standard ISO in all its Companies. It is in this framework where specific objectives for the reduction of natural resource consumption or the generation of wastes and emissions are established. With the aim of improving the dependability of the environmental indicators, improvements have been made in the data acquisition and aggregation process. Some values for previous years have been corrected pursuant to the revised estimation and calculation criteria. All indicators cited below have been defined and calculated with the aim of being able to track their evolution in successive years. Raw Materials: Due to the nature and variety of Abengoa s activities, it is almost impossible to provide an exhaustive list of all the raw materials used. For this reason, the data available have been aggregated and consolidated in such a way that they provide a clear and true picture of our environmental impact. In a group with an important activity in the engineering sector, paper has been the traditional means utilized for data support purposes. In order to reduce the consumption thereof, in recent years, different strategies have been adopted: the use of recycled paper, printing of documents on both sides and, above all, the extensive use of a corporate network so that all personnel from the different companies, and distributed in more than seventy countries on five continents, may share information. Telvent is an international leader in four industrial sectors: Energy, Traffic, Transport and Environment. 66 Corporate Social Responsibility Report 2006 ABENGOA

185 Abengoa in 2006 Economic Performance Paper Consumption in Offices (Tons) 2004 % 2005 % 2006 % Total Paper Consumption Recycled Paper Consumption An important range of raw materials in Abengoa s overall activities is of agricultural and livestock breeding origin: Pig slurry for treatment and transformation, grain for bioethanol production and eco-proteins for animal feed, surplus wine alcohol, also utilized for bioethanol production as a component of the ecological fuels. Furthermore, in the latter process, different chemical substances are utilized. Pig Slurry Treatment (Tons) Pig slurry* 105,000 50,184 53,040 (*)Pig slurry is a waste from the livestock breeding activity Bioethanol Production (Tons) Raw materials of agricultural origin Grain (wheat, corn and barley) 1,228,770 1,491,190 1,906,963 Wine alcohol 87,221 75,775 47,686 Chemical substances utilized Enzymes 1,274 1,644 1,997 Antibiotics Other Chemical substances* 10,011 13,521 20,585 (*)Caustic solution, sulfuric acid, phosphoric acid, sulfamic acid, ammonia, etc. A large variety of raw materials are utilized in the industrial construction and industrial wastes recycling fields of activity, of note, due to their importance, are the metallic products. In the industrial construction sector, iron is mainly used to construct metallic structures for power transmission lines. Zinc is utilized for galvanizing metallic structures. Main Metals employed in the Industrial Engineering and Construction sector (Tons) Iron 19,637 29, Zinc 1,057 1, Copper ABENGOA Corporate Social Responsibility Report

186 Abengoa in 2006 Economic Performance In the Environmental Services sector, the companies dedicated to the recycling of industrial wastes by treatment, valorization and recovery, obtain products such as secondary aluminum, concentrated aluminum blocks, Waelz oxide with 65% zinc content, secondary zinc and zinc oxide. It is in this sector where the possibility of recovering the sold products is most significant with, in most cases, 100% being achieved. The main industrial wastes treated and additives utilized are: Industrial Waste Recycling (Tons) Salt Slags 138, , ,905 Steel plant and casting powder 105,390 93,934 95,925 Desulphurization wastes (sulfur) 104, , ,000 Aluminum metallic waste 88,767 94, ,088 Aluminum slag 11,195 12,277 19,900 Different zinc wastes 22,661 25,830 27,129 Addition elements (Si, Cu, Mg, Mn) 4,526 4,869 6,328 The companies dedicated to waste Management and Treatment are included in the Environmental Services activity. The wastes indicated below are presented according to their classification as hazardous or nonhazardous and to the treatment they receive. Wastes for Management and Treatment (Tons) Hazardous Wastes to Physical-Chemical treatment 7,722 14,023 25,396 Wastes to Energy Valorization treatment 37,090 27,249 43,720 Wastes to Inerting treatment 233, , ,450 Wastes to Recovery regeneration treatment 2,495 4,959 5,800 Wastes to hazardous Deposit treatment 140,590 93,798 84,877 Wastes to Thermal treatment 7,651 7,322 6,660 Wastes to Evapo-condensation treatment 8,596 7,378 13,306 Wastes to PCBs treatment Wastes to reactive Segregation treatment ,110 Subtotal 438, , ,675 Non-Hazardous Wastes to non-hazardous Deposit treatment 62, , ,764 Wastes to inert Deposit treatment 8 1,776 1,461 Wastes to non-hazardous energy Valorization treatment 105 4,080 3,100 Wastes to non-hazardous Reuse/recycling treatment 1,319 9,906 16,036 Wastes to non-hazardous Physical-Chemical treatment 397 6,046 8,523 Subtotal 64, , ,884 TOTAL 502, , , Corporate Social Responsibility Report 2006 ABENGOA

187 Abengoa in 2006 Economic Performance Industrial Cleaning (Tons) Tank cleaning wastes n.a Oily products treated in Centrifuges n.a. 52,817 59,700 Wastes from Catalyst Loading n.a. 1,600 1,870 Biological Wastes in filters n.a. 59,513 50,600 Wastes treated in Mobile Plant n.a. 8,100 9,700 Subtotal 122, ,215 Another activity of the Environmental Services Business Unit is PCB-contaminated equipment management, the aim being its elimination while recovering the reusable materials. PCB (Tons) PCB-contaminated electric equipment 2,799 3,083 3,941 Most of the consumption of plastic as a raw material originates from the recycling of sheeting used as greenhouse covering. Plastics (Tons) Plastic Waste from Agricultural Activity 12,770 11,884 11,996 Here-below, we list some of the highest consumption chemical substances utilized in the different production processes within the framework of the aforementioned industrial construction and environmental services activities. One must bear in mind that a very wide range of substances is utilized and most are in nonrepresentative quantities. Different Chemical Substances utilized in Production Processes (Tons) Sodium Bicarbonate 2,704 2,950 2,640 Sulfuric Acid 1, Chlorohydric Acid Caustic Solution Sodium Hypochlorite ABENGOA Corporate Social Responsibility Report

188 Abengoa in 2006 Economic Performance Energy: The grid electricity consumption data is provided for the stable work centers, for production centers as well as offices, and for the projects directly promoted by Abengoa. In the energy balance, the most important elements that appear are the fuels consumed in the different production processes such as grain driers, casting kilns, machinery, etc. Also of note is the consumption associated with the cogeneration activities. Finally, the vehicle fleet consumption is reflected. Energy (GJ) Electricity from the grid* 806,552 1,074, ,366 Self-consumption electricity 124, ,039 23,281 Fossil fuels: Gasoline 21,813 43,400 51,839 Gas oil 1,776, , ,713 Gas 28,495,145 32,810,194 21,779,275 Other oil derivatives 1,594,944 1,379,332 1,248,504 Total energy 32,820,113 36,419,612 24,785,978 The indirect consumption of energy corresponding to electricity from the grid, in accordance with AIE data for the different countries in which Abengoa operates is as follows: Indirect energy consumption by primary sources (GJ) Carbon 1,164,169 1,650,701 1,628,272 Natural Gas 163, , ,432 Oil products 135, , ,411 Crude Biomass 6,933 12,265 11,673 Solar Wind 6,248 11,567 11,080 Geotermal 6,262 6,982 6,853 Hydraulic 104, , ,779 Nuclear 739,771 1,130,628 1,103,153 Total 2,326,975 3,381,791 3,327, Corporate Social Responsibility Report 2006 ABENGOA

189 Abengoa in 2006 Economic Performance Water Two of the cogeneration plants have open circuit cooling systems that utilize seawater, returning approximately 95% of the input flow in the conditions indicated in the discharge section. Water Consumption (m 3 ) Process water 1,409,806 1,997,312 2,882,080 Cooling water from waterways or mains 2,780,385 3,402,476 3,784,174 Cooling water from the sea n.a. 6,113,869 4,625,210 Sanitary 103, , ,380 Biodiversity: There is no owned, administered or rented land in biodiversity-rich habitats. No significant impact on biodiversity stemming from group activities has been identified either. Emissions, Discharges and Wastes: The data indicated refers to direct emissions. Emissions (Tons) Emissions of Greenhouse Effect Gases CO 2 1,266,743 1,262,626 1,300,785 CH N 2 O HFC PFC SF NO x, SO x and other Atmospheric Emissions NO X 20,719 13,059 12,178 Particles SO X n.a. data not available There are no significant emissions of ozone layer reducing substances. ABENGOA Corporate Social Responsibility Report

190 Abengoa in 2006 Environmental Performance Without taking into account the waste treated by the Environmental Services Business Unit, which have been included in the raw materials section, Abengoa, in its normal activity, produces a large variety of wastes, most of which are monitored through the different Environmental Management Systems implemented in each company. The most important data in terms of quantity and impact is given here-below: Other Wastes (Tons) Destino Paper Recycled Scrap metal 6,589 8,063 10,180 Recycled Plastics Recycled Used oils Recycled Sludge 5,586 5,840 13,203 Deposit Aluminum Oxide 30,460 32,270 11,918 Deposit Ammonium Sulfate 2,208 1,872 0 Fertilizer At the two cogeneration plants located in Almeria and Cadiz, the water returned to the sea has a slightly higher temperature (2 or 3 degrees) and slightly higher salinity as 5% of the total is desalinated for delivery to the host industry. Discharges (m 3 ) Public network 684, , ,332 Surface waters 631, ,973 1,277,728 Seawater discharges 5,950,000 6,144,601 4,626,775 There have been no important discharges of chemical substances, oils or fuels. Products and Services: Almost all of Abengoa s activities are subject to some Environmental Management System as required under the standard ISO and, therefore, as a fundamental requisite of these systems, all significant environmental impacts are identified in accordance with each company s internal procedures. The significant environmental impacts are described at the beginning of the chapter. Compliance: During the course of 2006, three incidents related to an unauthorized emission and a discharge resulted in fines totaling (United States), and with a warning for non-compliance with the environmental impact statement (Mexico). 72 Corporate Social Responsibility Report 2006 ABENGOA

191 Abengoa in 2006 Dialogue with Interested Parties Dialogue with Interested Parties Abengoa attaches great importance to the relationship with social groups with an interest in the activity and management of the company being transparent and balanced, and it having communications channels to respond to the requests for information that have been described throughout this report. In addition, there are also other internal and external communications channels which are detailed below: The main Interested Parties are: our own people (employees), customers, providers, investors as stock listed company, Public Administrations as contractors as well as legislators and sources for subsidies, the media and society in general. Internal Communication Communication is an essential component in Abengoa philosophy while being key for the involvement of people forming Abengoa, and for fulfillment of mission, objective and customer-focused culture. Among the most important means for the communication s function are the following: Portal for the employee. In 2003, the Abengoa Portal was launched. It distributes, internally, quickly and universally, all the information and knowledge referring to the Business Units, companies and persons that make up the organization. The Portal is an element of communication and internal information, which aims to be the professional desktop of all employees, where, apart from having dynamic and statistical information from the Business Units and companies, all necessary management systems can be accessed for professional performance as well as different human resource processes from a management and employee point of view. The Portal is divided up by business areas, in each of which there area sections with information relative to organization charts, history, important events, quality and environment, innovation projects and activities of each of the companies. There is also a virtual notice board, a meeting place for the different employees (news of special interest for employees, announcements and suggestions). The Portal includes a work area where we can directly access all Abengoa corporate applications used on a daily basis, converting it into a quick and agile entrance to the work tools used by all employees. In addition, the Portal is an element of communication capable of diffusing and generating knowledge, making human capital structural and conveying corporate values. Welcome and Integration Handbook. Abengoa has prepared Welcome and Integration Plans for its Business Units for the purpose of welcoming new employees, facilitating their adaptation and offering them a global vision. These Welcome Handbooks offer useful and valuable information for new employees, as they present the company, its activities, structure and internal regime in a brief and simple way. To enable easy and updated access to the content of the handbooks of the different companies, a new specific section has been created within the Human Resources area of the Abengoa Portal Employee Self-service. In 2004, an Employee Self-service section was brought into operation. In this initial phase, the implemented processes are as follows: Viewing and printing of pay slips (latest and historic). Viewing of work calendars. Option of modifying bank data. Option of distributing pay over several bank accounts (including directly percentage or amount). Viewing of company insurance with the option of modifying beneficiaries. Viewing of PAYE, issuance of certificate and option of increasing the legal rate. Consultation and Frequently Asked Questions (FAQ) service in all areas Internal Newsletter. Abengoa publishes a by-monthly newsletter which gathers together not only the main activities of its Business Units and Companies, but also technical articles, news of quality, the environment and related with human resources. The newsletter is based on collaboration between employees, and is published in Spanish and English with a print run of approximately 15,000 copies. This internal publication is also available to all employees in the employee portal and on the corporate website. ( ). External Communication ABENGOA Corporate Social Responsibility Report

192 Abengoa in 2006 Dialogue with Interested Parties Abengoa s main channel of communication with its external public is its corporate website. In addition, each Business Unit has its own website. The Abengoa Website. Abengoa put its first website on the internet in 1995 and, since then, it has been continually updated to adapt to the group s new activities, as well as to new techniques and trends in design and navigation, which are increasingly adapted to surfers needs. The Abengoa website presents transparent information geared to investors. It has three main sectors: Who we are, Legal and Financial Information, and News. Who we are. It is a commercial introduction to Abengoa activities, structured into its different Business Units: Solar, Bioenergy, Environmental Services, Information Technology, and Industrial Engineering and Construction. In addition, it includes comparisons with previous years, consolidated financial data, activity in Spain and abroad. Legal information: Information on Corporate Governance, capital structure, Information transmitted to the SEC (Securities Exchange Commission), Annual General Shareholders Meetings, and a Shareholder ServicesSection. Financial Information: It provides access to the Annual Reports of the last three years, information on share listings, financial calendar, quarterly/halfyear financial information, and information on dividend distribution. On the Abengoa website, there are links to the websites of the Business Units. Annual Report. Abengoa publishes its Annual Report which includes: the Business Unit Activity Report, a Sustainability Report, Information on its R&D&I activity, Information from the different Committees, the management Structure, and Legal and Economic-Financial Information, which includes the Auditor s Report and the Consolidated Annual Financial Statements, and the Consolidated Management Report. In addition, each Business Unit publishes its own Annual Report, with identical content or Activity Report. This year is the second consecutive year in which this Corporate Social Responsibility Report is being published in accordance with GRI (Global Reporting Initiative) guidelines. Shareholder Services Department. In order to facilitate the existence of constant contact with the shareholders of the company, Abengoa has established a Shareholder Services Department, headed by the General Secretary. The objective is to establish fluid and transparent communication with shareholders and permit their access to information, in time and form, together with the institutional investors who are ensured of equal treatment. Special care is taken to communicate accurate and useful information on important events, press releases and periodic economic-financial information. On the website ( there is also a shareholders services post box available. Investor Relations Department. With the exact same purpose as the Shareholders Services Department but in relation to investors, the Company has an Investor Relations and Market Analysts Department headed by the Investor Relations Officer in coordination with the Finance Officer, who are responsible for the design and implementation of the communication program with the national and international financial markets so as to disclose the Company s highlights and strategic actions. News. Reports on Business Unit activities, new contracts, on the progress and conclusion of projects, alliances, actions. There is a subscription service to news items published on the Abengoa website, in financial-legal matters and also contact addresses: for general matters, communication issues and for shareholders. 74 Corporate Social Responsibility Report 2006 ABENGOA

193 Corporate Governance Report

194 Corporate Governance Report Corporate Governance Report a. Introduction. b. Company Shareholding Structure. i) Significant Shareholdings. ii) Shareholdings of Members of the Board of Directors. iii) Shareholders Agreements. iv) Treasury Stock. c. Company s Administrative Structure. i) The Board of Directors. i.1) Composition: number and identity of members. i.2) Condition and Representation. i.3) Rules governing organization and operation. - Duties. - Appointments. - Meetings; frequency. - Duties of Directors. - The Chairman. - The Secretary to the Board of Directors. i.4) Remuneration and other rights. ii) The Advisory Board to the Board of Directors. ii.1) Composition. ii.2) Rules governing organization and operation iii) The Committees. iiii.1) The Audit Committee. - Composition. - Duties. - Rules. iii.2) The Appointments and Remuneration Committee. - Composition. - Duties. - Rules. iii.3) The Strategy Committee. iii.4) Stock Exchange Internal Rules. iii.5) Professional Code of Conduct. d. Inter-group and related transactions. i) Transactions with significant shareholders ii) Transactions with administrators and senior management. iii) Significant inter-group transactions. e. Risk Control Systems. i) Common Management Systems. ii) Internal Audit. f. General Shareholders Meetings. i) Rules of Operation. ii) Information from last General Meeting. iii) Information Tools. Web g. Degree of Monitoring of Recommendations relating to Corporate Governance. h. Information Tools. i) Web. ii) Shareholder Service Department. iii) Investor Relations Department. 76 Corporate Social Responsibility Report 2006 ABENGOA

195 Corporate Governance Report a. Introduction Corporate Governance The coming into force of the Financial System Reform Act and the publication of the report on Security and Transparency in the markets elaborated by the Aldama Commission and the recent Transparency Act, and at last resort the Unified Code of Corporate Governance of the Listed companies, have amended and improved, in so far as Corporate Governance practices are concerned, through a ensemble of rules and regulations, some of which are of a clearly innovative nature, the system that was in force, or recommended, at the time. And there are still more innovations pending development in the near future. Thus, from a formal perspective, Corporate Governance in small and medium sized listed companies was understood, until the aforementioned reforms, to be the minimum requirements needed to allow a complete response to the questionnaire that the National Securities Market Commission demanded as a result of the Olivencia Report and the recommendations included in it. Today, following the reform, listed companies can not merely take a passive or explanatory stance.some of the Aldama Report recommendations have already been incorporated into prevailing law and must be complied with. The current measures, rulings and recommendations to date, form a single coherent and complete group, whose objective is to offer a real and transparent representation of the listed company, as an additional element for the investor to consider. Corporate Governance, as an ensemble of practices required by law as well as being undertaken voluntarily of each company in relation to the structure, organization, operation, competences and supervision of its governing bodies, is bound together in a fundamental principle, that is none other than the principle of the capital markets: the general principle of information; transparent, real, balanced, true and complete information. Only in this way can shareholders and potential investors be guaranteed an equality of treatment and opportunities. There are two sides to the information obligation: Accounting or financial information Relevant events Capital structure, shareholders - The objective side: Corporate Governance Legislation what is reported Annual Corporate Governance Report Periodic financial information Relevant events - The subjective side: Significant shareholdings how to report it Issued and submitted brochures Website, etc. Abengoa has made a significant effort within its company structure and its different components, to adapt itself and incorporate the initiatives put in place by the new legislation. Below we will briefly present each of these aspects and the innovations implemented by the company: a) Accounting / financial information. The periodic information obligations (quarterly, half-yearly and annual) remain based on an information model created by the CNMV which, from the second quarter 2002, can only be submitted telematically (in coded electronic format), implemented voluntarily by Abengoa two years ago. b) Relevant Events. The Financial System Reform Act has modified the previous definition of this concept, establishing it as the information whose knowledge thereof could reasonably lead an investor to purchase or transfer securities and therefore may appreciably influence the price. Nevertheless, the relevant event concept continues to be non-specific and open (signifying that conducts or actions that ABENGOA Corporate Social Responsibility Report

196 Corporate Governance Report warrant this consideration are not specified, partly because it is an almost impossible exercise due to the varied practices of corporate decisions that may be relevant but where a certain degree of legal uncertainty remains). There are two criteria that are used complementarily to determine the content of this concept: i) the practice followed by the CNMV on previous occasions, and ii) the practice followed by companies themselves on similar occasions. Here the basis of good governance is deduced; consistency; not only is the existence of internal and casuistic regulations of value but the consistency between this and the real conduct of the company and its administrators and senior management. c) Related Transactions. c.1) These are transactions carried out between the company and its shareholders, administrators or directors that entail the transfer of business resources, obligations or business opportunities. The related transactions have a dual information channel: a) Those that are relevant are individually reported as a relevant event. b) All transactions are summarized in the half-yearly information report. c.2) Related transactions may potentially be a source of so-called conflicts of interest. In these cases, good governance practice recommends a series of measures in resolving them whenever possible: i) the abstention from voting for the adoption of the corresponding resolution by the persons affected by the conflict of interest; ii) complete, clear and real-time distributed information, and iii) independent evaluation. Aware of the limitations imposed on it by its individual characteristics arising from its history and its composition, Abengoa has adopted these transparency criteria and the criteria for the resolution of these potential conflicts. To this end, on February 24, 2003, the Board of Directors modified the Board of Directors regulations and the Advisory Board s regulations. The Audit Committee, composed in its most by independent members of the Board of Directors, is the responsible body for the supervision of these transactions. d) Annual Corporate Governance Report. The questionnaire on the level of take-up of the Olivencia Report s recommendations proposed by the CNMV to be carried out by all listed companies has been fulfilled through the obligation to create and disseminate an Annual Corporate Governance Report. The Annual Report reflects the specific principles of the company s governance structure (who and how decisions are made and what decision making is based on) in the same way that the periodic financial reporting is a summary of the main economic characteristics of the company for the period under consideration, collated in the balance sheet and the profit and loss account for this period. Abengoa implemented this recommendation in 2002, and a specific chapter relating to the Company s governance was therefore included in the 2002 Annual Report and we have been doing so in subsequent years completed with the new items included in the Aldama Report and in the Financial System Reform Act, distinguishing the actions already taken from those that were being finalized for their upcoming implementation. Therefore: a) On December 2, 2002, the Audit Committee was constituted. b) On February 24, 2003, the Appointments and Remuneration Committee was constituted. c) On the same day, February 24, 2003, the Board of Directors drafted a proposal modifying the Company Bylaws for the purpose of incorporating the provisions relating to the 78 Corporate Social Responsibility Report 2006 ABENGOA

197 Corporate Governance Report Audit Committee, the proposal relating to the Regulation on the administration of shareholders meetings, the partial amendments to the Regulations of the Board of Directors and the Regulations of the Advisory Board and, finally, the rules governing the Internal Regulations of the Audit Committee and the Appointments and Remunerations Committee, approved by the General Meeting of June 29, Finally, following another of the Aldama Report recommendations, the Internal Corporate Governance Regulation was rewritten as a complete single text and was duly notified to the CNMV and is available since then on Abengoa s website. shareholders in particular and to the general public, which is subjected to a continuous process of revision, enhancement and updating. In conclusion, we should say that both the available information and its actual distribution portal the website are continuously updated; Corporate Governance, the rules that regulate it and the laws that govern or recommend it continue, and will continue to constantly develop. In the same way that all companies engaged in growing must adapt and anticipate the development of the markets, so must they also be forward-looking, in relation to self regulation (that is, adopt their own code of conduct so that their operation and decisions may be evaluated from the outside), development, transparency and information in order to reassure market confidence and with it, their growth. e) Website ( The obligation to provide the market with useful, truthful, complete and balanced information in real time would not be sufficient if the appropriate means of transmitting this information are not adequate, guaranteeing that it is disseminated effectively and usefully. Therefore, as a result of new technology, the Aldama Report, the Financial System Reform Act and the Transparency Act recommend and impose the use of listed companies websites as an information tool (including historical, qualitative and quantitative company data in it) and as a distribution tool (including current or personalized information in real-time that may be accessed by investors). Abengoa therefore introduced a new website at the end of the first quarter 2002, characterized firstly by a more direct, rapid and efficient onscreen presentation and secondly by a wideranging and comprehensive information content and documentation, made available to the ABENGOA Corporate Social Responsibility Report

198 Corporate Governance Report b. The Company s Shareholding Structure. i) Significant shareholdings. Abengoa S.A. s share capital is represented by book-entry records managed by Iberclear (Sociedad de Gestión de los Sistemas de Registro, Comparación y Liquidación de Valores, S.A.), and comprises 90,469,680 shares of 0.25 euro nominal value of the same class and series, representing 22,627,420 euro of share capital. All the shares are admitted to official trading on the Madrid and Barcelona Stock Exchanges and in the Spanish Stock Exchange Interconnection System as of November 29, The latest modification to the share capital was made by resolution approved at the Ordinary General Shareholders Meeting of June 24, 2001, in relation to splitting of the face value of the shares, from 1 euro to 0.25 euro per share, with the resulting modification to the number of issued shares, from 22,627,420 to the current number of 90,469,680, and, as a consequence, the modification of articles 6 and 21 of the Company Bylaws in order to adapt them to the new number of shares and their face value, with the simultaneous exclusion of the previous shares and admission to listing of the new ones. Date Last Modificat. Share Capital (Euro) Number of shares ,617,420 90,469,680 Tax or VAT No. (*) Through: Shareholder Number of direct shares Significant movements during the financial year. Number of indirect shares (*) %/ Share Capital A Inv. Corporativa 45,234,723 5,465,183 (*) A Finarpisa 5,465,183 (*) 6.04 Tax or VAT Shareholder Number of direct shares %/ Share Capital A Finarpisa 5,465, Tax or VAT no. Shareholder Transaction date Description State Street Bank Low significant share. The number of registered shareholders at the General Shareholder s Meeting held on April 9, 2006, was 6,663. The Company is not aware of the existence of any agreements between shareholders undertaking neither to adopt, by means of joint voting, a common policy regarding the management of the company nor to significantly influence it. As the capital is represented by book-entry records, there is no shareholders registry separate to the significant shareholdings communications and the list (X-25) provided by Iberclear on the occasion of General Shareholders Meetings. Pursuant to this information (Shareholders List as of April 4, 2006, provided by Iberclear) and the notification of Significant Shareholdings, the situation is as follows: - Inversión Corporativa, I.C., S.A.: 50.00% - Finarpisa, S.A. (Grupo Inversión Corporativa): 6.04% 80 Corporate Social Responsibility Report 2006 ABENGOA

199 Corporate Governance Report ii) Shareholdings of members of the Board of Directors. In accordance with the register of significant shareholdings the company maintains and pursuant to the Internal Conduct Regulation in relation to the Stock Market, the administrators shareholdings in the company s capital as at December 31, 2006 are as follows: % Direct % Indirect % Total Felipe Benjumea Llorente Javier Benjumea Llorente José Joaquín Abaurre Llorente José Luis Aya Abaurre José B. Terceiro Lomba Ignacio de Polanco Moreno Daniel Villalba Vilá Carlos Sebastián Gascón Mercedes Gracia Díez Total ID or Tax no. Director Date first appointment Date last appointment Number of direct shares Number of indirect shares %/ Share Capital Felipe Benjumea Llorente , Javier Benjumea Llorente , José Joaquín Abaurre Llorente , José Luis Aya Abaurre , José Terceiro Lomba , , Ignacio de Polanco Moreno F Daniel Villalba Vilá , A Carlos Sebastián Gascón V Mercedes Gracia Díez iii) Shareholders Agreements. The company has no evidence of the existence of any shareholders agreements or syndication agreement among its shareholders. Indication as to whether any fiscal or judicial person may exercise control in accordance with article 4 of the Stock Exchange Act (LMV). Tax or VAT no. A Denomination Inversión Corporativa, I.C., S.A. Observations In accordance with art. 4 LMV Inversión Corporativa holds more than 50% of the share capital. ABENGOA Corporate Social Responsibility Report

200 Corporate Governance Report iv) Treasury Stock. At , the company does not possess any of its own shares as treasury stock, nor has it acquired any of its own shares during the 2006 financial year. The General Shareholders Meeting, held on April 9, 2006, agreed to authorize the Board of Directors to make derived acquisitions, through purchases, of shares in the company that may be made either directly or via subsidiary companies or investors up to the maximum limit specified under current provisions at a price of between three euro cents (0.03 euro) per share minimum and one hundred and twenty euro and twenty cents ( euro) per share maximum, being able to make use of this facility during a period of eighteen (18) months from that very date and subject to that specified in Section Four of Chapter IV of the Revised Text of the Spanish Companies Act, expressly revoking the authorization conferred to the Board of Directors, for the same purposes, by virtue of the agreement adopted by the Shareholders General Meeting held on June 26, To date, the Board of Directors has not made use of the above authorization. Treasury Stock: Number of direct shares Details of significant variations: Date Number of indirect shares % of Share Capital Number of direct shares Results obtained by treasury stock Number of indirect shares % of Share Capital Thousands of euro 0 0 The General Shareholders Meeting held on October 16, 2005, agreed to authorize The Board of Directors, with the purpose of executing, in its case, The Stock Acquisition Plan by Directors of the Company or any other that consider opportune, the possibility of proceeding the derivative acquisition, by sale-purchase or any other onerous bond, of shares of the Company itself, either directly or through Subsidiary Companies or underlying companies up to the maximum limit established in the provisions in force at a price ranging between three euro cents (0.03 euro) minimum and one hundred and twenty euro and twenty euro cents ( euro) maximum per share. Use of this authorization may be made for a period of eighteen (18) months as of from the date hereof, and subject to what is specified in Section Four of Chapter IV of the Amended Text of the Companies Act. The Board of the Directors has not made use of the previous authorization till the date. c. Company s Administrative Structure. i) The Board of Directors. i.1) Composition: number and identity of members. Following the modification of Article 39 of the Company Bylaws by agreement of the General Shareholders Meeting held on June 26, 2005, the maximum number of seats on the Board of Directors, which to date has been seven, was increased to nine. The aim of this modification was fundamentally intended to provide this administrative body with the number of directors that would on the one hand allow for a potentially more diverse composition and, on the other, facilitate delegation, attendance and the adoption of resolutions with minimum attendance and which would guarantee a multiple and plural presence on the Board of Directors. Maximum number of directors 9 Minimum number of directors 3 82 Corporate Social Responsibility Report 2006 ABENGOA

201 Corporate Governance Report The Board s composition, in accordance with the recommendations established in the Aldama Report and in the Unified Code of Corporate Governance of the Listed companies, takes the company s shareholding structure into account, so that it may firmly represent the highest possible percentage of the share capital and protect the general interests of both the Company and its shareholders, while also being granted the degree of independence that is appropriate to the professional practices and requirements of any company. The Board s current composition is as follows: Abaurre Llorente, Jose Joaquín. Aya Abaurre, Jose Luis. Benjumea Llorente, Felipe. Benjumea Llorente, Javier. Gracia Díez, Mercedes. Polanco Moreno, Ignacio de Sebastián Gascón, Carlos. Terceiro Lomba, José B. Villalba Vilá, Daniel. Secretary Non-director and Legal Advisor: Miguel A. Jimenez-Velasco Mazarío. Table with the members of the Board of Directors: ID or Tax no José Luis Aya Abaurre José Joaquín Abaurre Llorente Name Representative Position Director. Member Appoint. & Remuneration Committee Director. Member Audit Committee Date 1st Appoint. or Date last Appointment Election Procedure Share. Meet Share. Meet Felipe Benjumea Llorente Chairman Share. Meet Javier Benjumea Llorente Chairman Share. Meet V Mercedes Gracia Díez Ignacio de Polanco Moreno A Carlos Sebastián Gascón José Terceiro Lomba F Daniel Villalba Vilá Director. Member Audit Committee Director. Member Appoint. & Remuneration Committee.(*) Director. Chairman Appoint. & Remuneration Committee.(*) Director. Member Audit Committee and of the Appoint. & Remuneration Committee Director. Chairman Audit Committee Cooptation Share. Meet Share. Meet Share. Meet Share. Meet Cooptation Share. Meet. (*) Carlos Sebastián Gascón substituted Ignacio Polanco Moreno as Chairman of the Appointment and Remuneration Committee, October 19, 2006, as a result of an agreement in the Committee. Both of them are independent members of the Board of Directors. 9 Total number of directors 9 ABENGOA Corporate Social Responsibility Report

202 Corporate Governance Report i.2) Condition and Representation. The total number of board members is considered to be sufficient in order to ensure the proper representation and effective operation of the Board of Directors. Notwithstanding the fact that independence is a quality that must be common to all directors without exception, regardless of their origins or the reason for their appointment, and that they must be judged on the reliability, integrity and professionalism of their performance, pursuant to the guidelines included in the Olivencia and Aldama reports, Law 26/2003 and Ministerial Order 3722/2003, and in the Unified Code of Corporate Governance of the Listed companies, the current administrators are classified as follows: Felipe Benjumea Llorente - Executive (Chairman). Javier Benjumea Llorente - Executive (Chairman). José Joaquín Abaurre Llorente - External, Dominial. Member of the Audit Committee.. José Luis Aya Abaurre - External, Dominial. - Member of the Appointments and Remuneration Committee. Daniel Villalba Vilá - Independent; - Chairman of the Audit Committee.. José B. Terceiro Lomba - Independient. - Chairman Advisory Board. - Chairman Advisory Board. - Member of the Appointments and Remuneration Committee. Ignacio de Polanco Moreno (*) - Independient. - Member of the Appointments and Remuneration Committee. Carlos Sebastián Gascón (*) - Independent. - Chairman of the Appointments and Remuneration Committee. Mercedes Gracia Díez - Independent. - Member of the Audit Comité. (*) Carlos Sebastián Gascón substituted Ignacio Polanco Moreno as Chairman of the Appointment and Remuneration Committee, October 19, 2006, as a result of an agreement in the Committee. Both of them are independent members of the Board of Directors. As a result, the Board comprises a majority of external, non-executive directors. The first four directors listed are also members of the Board of Directors of Inversión Corporativa IC, S.A., a reference shareholder of Abengoa (56% share), and their appointment as directors was made at the proposal of this shareholder. Tables with the members of the Board of Directors and their different condition: Executive Directors: ID or Tax no Name Felipe Benjumea Llorente Javier Benjumea Llorente Committee that proposed him Board of Dir. (*) Board of Dir. (*) Chairman Chairman Position (*) Prior to the existence of the Appointments and Remuneration Committee. 84 Corporate Social Responsibility Report 2006 ABENGOA

203 Corporate Governance Report Dominial external directors: ID or Tax no Name José Joaquín Abaurre Llorente Committee that proposed him Board of Dir. (*) Represented shareholder Inversión Corporativa, I.C., S.A. Shareholder s Tax no. A José Luis Aya Abaurre Board of Dir. (*) Inversión Corporativa, I.C., S.A. A (*) Prior to the existence of the Appointments and Remuneration Committee. Independent external directors ID or Tax no. Name Committee that proposed him Profile V Mercedes Gracia Díez Appointments Independent Ignacio de Polanco Moreno Appointments Independent A Carlos Sebastián Gascón Appointments Independent José Terceiro Lomba Appointments Independent F Daniel Villalba Vilá Appointments Independent Facultades delegadas: Director s ID no. Name Description Felipe Benjumea Llorente Delegation of powers Javier Benjumea Llorente Delegation of powers Directors that are members of other listed companies: ID or Tax no. Name Listed Company Position José Terceiro Lomba U.Fenosa Member of Board of Directors José Terceiro Lomba Iberia Member of Board of Directors, Member of the Executive Commitee Member of Board of Directors, Chairman of the José Terceiro Lomba Grupo Prisa Audit Commitee Ignacio de Polanco Moreno Grupo Prisa Member of the Board of Directors ABENGOA Corporate Social Responsibility Report

204 Corporate Governance Report iii.3) Rules governing organization and operation. The Board of Directors is governed by the Board Regulations, the Company Bylaws and the Stock Exchange Code of Conduct. The Board Regulations were initially approved at the meeting of the Board of Directors held on January 18, 1998, with the clear aim of anticipating the current Good Governance regulations and ensuring effective internal regulation. They were last modified on June 29, 2003, in order to incorporate provisions relating to the Audit Committee established in the Financial System Reform Act. - Structure: The Board of Directors currently has nine members. The Rules governing the Board of Directors rule the duties and internal organization of the administration body. The Advisory Board to the Board of Directors has twelve members and is an auxiliary board for advising the Board. It has its own internal Rules. Additionally, there exists the Internal Conduct Regulation in relation to the Stock Market, with which the members of the Board of Directors, senior management and all employees affected due to their duties or title have to comply. The Rules of the General Shareholders Meetings governs the formal aspects and the internal regime of the holding of the Shareholders Meetings. Finally, the Board of Directors is assisted by the Audit and Appointments and Remuneration Committees, both with their own Internal Regime Rules. All these Rules, put together into the joint body of Corporate Governance Internal Rules is available on the Company s web site, - Duties: in order to achieve these targets, and ensure the future viability and competitiveness of the company, along with the presence of a suitable management and leadership team, supervising the development of the Company s business - Appointments: The General Meeting or, where applicable, the Board of Directors, within the powers and limits set out in law, is the competent body for appointing members of the Board of Directors. In addition to meeting the requirements set out in law, appointees shall demonstrate that they are known to be trustworthy and have the knowledge, reputation and professional references that are relevant to the performance of their duties. Directors shall be appointed for a maximum of four years, without prejudice to the possible renewal of their appointment or their re-election. - Removal: Directors shall be removed from their position at the end of their tenure and under any other circumstance set out in law. They must furthermore relinquish their seat in cases involving their incompatibility, veto, serious sanction or any breach of their obligations as directors. - Meetings: As per article 42 of the Company Bylaws, the Board of Directors shall meet whenever it is required in the interest of the Company and, at least, three times a year, the first meeting to be held during the first quarter. During 2006 it met on a total of eight occasions. It is the duty of the Board of Directors to take any action that may be necessary in order to pursue the Company s corporate objective, and it is empowered to establish the Company s financial targets, agree any relevant measures proposed by Senior Management 86 Corporate Social Responsibility Report 2006 ABENGOA

205 Corporate Governance Report - Duties of Directors: It is the duty of Directors to participate in the direction and monitoring of the company s management in order to maximize the value of the Company to the benefit of its shareholders. Each Director shall act with the proper care of a dedicated professional and loyal representative, guided by the interests of the Company, with complete independence, defending and protecting the interests of all shareholders to the best of their abilities. By virtue of their appointment, Directors are under the following obligation: - To gather information and prepare properly for each meeting session. - To attend and participate actively in meetings and the decision-making process. - To avoid the occurrence of any conflict of interest and notify the Board of any potential conflict of interest, where applicable, through the Secretary. - Not to undertake duties with competitor companies. - Not to use company information for private purposes. - Not to use the company s business opportunities for their own interests. - To maintain the confidentiality of any information received as a result of their appointment. - To abstain in any voting on resolutions that may affect them. the Board of Directors. He/she is responsible for implementing the decisions taken by the company s administrative body, by virtue of the powers permanently delegated to him/her by the Board of Directors, which he represents in all its aspects. The Chairman also has the casting vote on the Board of Directors. The position of chief executive falls on the Chairman. The measures adopted to prevent the accumulation of powers are: Measures to limit risks In accordance with that established in article 44 bis of the Company Bylaws, on December 2, 2002 and February 24, 2003, the Board of Directors proceeded to constitute the Audit Committee and the Appointments and Remuneration Committee, respectively. The powers of these Committees inherent to the commitments they have assigned by Law and the Company Bylaws and their respective internal regime Regulations cannot be delegated, and the committees are constituted as control and monitoring bodies for matters of their competence. Both shall be chaired by an independent, nonexecutive, director, and shall be composed of a majority of independent, non-executive, directors. - The Chairman: In addition to the duties set out in law and in the Company Bylaws, the Chairman is the company s most senior executive, and as such is responsible for the effective management of the company, though always in accordance with the decisions and criteria established by the General Shareholders Meeting and ABENGOA Corporate Social Responsibility Report

206 Corporate Governance Report - The Secretary: It is the Secretary s duty to exercise the powers attributed to him/her in law. At present, the titles of Secretary to the Board and Legal Advisor fall on the same person, who is responsible for ensuring that notice is given of meetings and that resolutions are adopted by the company s administrative body in a valid manner. In particular, he/she will advise members of the Board regarding the legality of their deliberations and any resolutions they adopt, and on compliance with the Internal Corporate Governance Regulations, as both formal and material guarantor of the principle of legality which governs the actions of the Board of Directors. The Secretary to the Board, as a specialized guarantor of the formal and material legality of the Board s actions, has the full support of the Board in performing his/her duties entirely independently of any criteria or the constancy of his/her position, and he/she is also entrusted with defending the internal Corporate Governance regulations. - Resolutions: Resolutions are adopted by a simple majority of the board members present (either in person or by proxy) at each session, with the exception of those cases specifically set out in law. deducted, and may have their travel expenses reimbursed when such expenses relate to work carried out at the behest of the Board. The payments made during the 2006 financial year to all the members of the Board of Directors in their capacity as members of both the Board and the Advisory Board to the Board of Directors of Abengoa, S.A. amounted to 1,578 thousands of euro in the form of allocations and expenses, and 211 thousands of euro for other concepts. In addition, the payment made during the 2006 financial year to the company s senior management, this being understood to include the group of fifteen people who form part of the Chairman s Office, the Strategy Committee and the Directors of the Corporate Departments amount in total, including both fixed and variable amounts, to 7,882 thousands of euro. Table with the aggregate Remuneration of the Directors earned during this financial year, in the individual company which is the object of this report (Abengoa, S.A.): Remunerated concept Data in thousands of euro Set remuneration 1,998 Variable remuneration 2,450 Expense allowances 597 Statutory issues Options on shares and/or other financial instruments Others Total: 5,045 i.4) Remuneration and other rights. - Remuneration: The position of Director is paid, pursuant to the contents of Article 39 of the Company Bylaws. The amount paid to directors may consist of a fixed amount agreed by the General Meeting, though it is not necessary that this amount be the same for all of them. They may also receive a share of the company profits of between 5 and 10% maximum of annual profits, after dividends have been Other Benefits Data in thousands of euro Advance payments Loans provided Pension Funds and Plans: Contributions Pension Funds and Plans: Acquired obligations Life insurance premiums 2 Constitutive guarantees by the company in favor of the directors 88 Corporate Social Responsibility Report 2006 ABENGOA

207 Corporate Governance Report Table with the aggregate Remuneration of the Directors earned during this financial year, upon them being members of other Boards of Directors and/ or of senior management, of group Companies: Remunerated concept Data in thousands of euro Set remuneration 18 Variable remuneration Expense allowances 1 Statutory issues Options on shares and/or other financial instruments Others Total: 19 Other Benefits Advance payments Loans provided Pension Funds and Plans: Contributions Pension Funds and Plans: Acquired obligations Life insurance premiums Constitutive guarantees by the company in favor of the directors Data in thousands of euro Table with the total aggregate (all the directors) Remuneration (all concepts) by director typology; Figures in thousands of euro: Director typology Abengoa Group Executive 4,176 Dominial External Independent External Other External Total: 5, Table showing the percentage the total Remuneration (for all the concepts) and aggregate (all the directors) represents in relation to the Profit attributed to the Parent Company; Figures in thousands of euro: Total Remuneration Directors (in thousands of euro) 5,066 Total Remuneration Directors / profit attributed to the Parent Company (expressed as a %) 5.05% ABENGOA Corporate Social Responsibility Report

208 Corporate Governance Report Name Expense allowances by attendance and Other Remunerations as Directors Remuneration as Member of the Committeesof the Board of Directors Remuneration as Director of Other Companies in the Group Table identifying the members of senior management, that are not executive directors, indicating the total remuneration earned by them during the financial year: Remuneration by Duties Senior Management- Executive Directors Felipe Benjumea Llorente 111 1,849 1,960 Javier Benjumea Llorente 111 2,105 2,216 José Luis Aya Abaurre José Joaquín Abaurre Llorente José B. Terceiro Lomba Ignacio de Polanco Moreno Daniel Villalba Vilá Carlos Sebastián Gascón Mercedes Gracia Díez ,954 5,066 Total ID or VAT no. Name or company Position Javier Salgado Leirado Manager, Bioenergy Business Unit Javier Molina Montes Manuel Sánchez Ortega Manager, Environmental Services Business Unit Manager, Information Technologies Business Unit Alfonso González Domínguez Manager, Industrial Engineering and Construction Business Unit Salvador Martos Hinojosa Manager, Latin America Business Unit Santiago Seage Mandela Manager Solar Business Unit Manager Corporate Strategy and Development José Antonio Moreno Delgado Manager, Technical Secretariat Álvaro Polo Guerrero Manager, Human Resources Amando Sánchez Falcón Finance Manager José Marcos Romero Manager, Appointments and Remuneration Juan Carlos Jiménez Lora Manager, Investor Relations Dept Asier Zarraonandia Ayo Controller Miguel Ángel Jiménez Velasco Mazario Jesús Viciana Cuartara General Secretary Manager, Organization, Quality and Budgets Senior Management s total remuneration (in thousands of euro) 3, Corporate Social Responsibility Report 2006 ABENGOA

209 Corporate Governance Report ii) The Advisory Board to the Board of Directors. The Advisory Board to the Board of Directors of Abengoa was established, by agreement of the Extraordinary General Meeting held in January 1998, as an advisory body whose duties include the provision of professional advice to facilitate the adoption of decisions by the company s administrative bodies, and whose powers include examining the development of the company s business through consultations submitted by the Board of Directors and through proposals presented for its consideration. The creation of the Advisory Board in January 1998, again with the clear aim of anticipating and opening up new channels of internal selfregulation in pursuit of the effective, transparent and professional management of the company, involved the regulation of a process for the channeling of information provided by the company management, in order to ensure that this information was accurate, verifiable and complete The Advisory Board is configured as a management and decision-making body with complete autonomy. It has powers of consultation and specific technical assessment duties governed by criteria of independence and professionalism. The majority of its members are of known reputation, experience and qualifications and have no significant relationship with the company s executive management, in order to underline the independence inherent in the Advisory Board. The Advisory Board contributes effectively to the defense of the company s general interests, independently of the company s actual management team, and its main duty is to provide professional and independent models and criteria so that the Board of Directors may make a proper evaluation and take the correct decisions. ii.1) Composition Advisory Board, the Advisory Board is currently composed of the following members: José B. Terceiro Lomba Chairman. Mª Teresa Benjumea Llorente Member. Maximino Carpio García Rafael Escuredo Rodríguez José M. Fernández-Norniella Álvaro Fernández-Villaverde y de Silva José Luis Méndez López Luis Solana Madariaga Ignacio Solís Guardiola Fernando Solís Martínez-Campos Carlos Sundheim Losada Cándido Velázquez-Gaztelu Ruiz Secretary non-director: Miguel Ángel Jiménez-Velasco Mazarío ii.2) Condition and Representation. - Appointment: At the proposal of the Board of Directors, the Advisory Board comprises a maximum of twelve members, and it currently has ten, of which more than half must be independent, something which is fulfilled by the present members, as per the list above. The appointment of Luis Solana Madariaga to the Advisory Board, in the 2006 financial year, has consolidated the professional and independent nature of the Board inherent since its initial establishment in Term: Each member s appointment remains valid for a period of four years, without prejudice to the renewal of the position or the member s re-election. Removal may occur upon expiry of the term, resignation or removal, among other reasons. Pursuant to the contents of Article 46 of the Company Bylaws, Article 26 of the Board Regulations and Articles 3 and 6 of the Rules governing the Internal Regulation of the ABENGOA Corporate Social Responsibility Report

210 Corporate Governance Report - Remuneration: The position of Board Member is a paid position, the amount of their remuneration being established for each financial year by the Board of Directors, pursuant to the contents of Article 39 of the Company Bylaws. This amount is shown in the Annual Financial Statements. In addition, any expenses incurred as a result of work carried out at the behest of the Board are reimbursed. (See point II, a.4) above). - Meetings: The Advisory Board meets at least once a quarter, and on any occasion that it is asked to do so by the Chairman in order to deal with urgent or extraordinary matters. The Board met five times during the 2006 financial year. - Resolutions: Resolutions are adopted by simple majority of the board members present (either in person or by proxy) at each session. iii) Committees formed by the Board of Directors. iii.1) The Audit Committee. Pursuant to the provisions of the Financial System Reform Act, on December 2, 2002, Abengoa s Board of Directors established an Audit Committee and at the same time approved the Internal Regulations governing the Committee s operation. These Rules were ratified by the General Shareholders Meeting on June 29, 2003, which at the same time approved the modification of Article 44 of the Company Bylaws, in order to incorporate the provisions relating to the operation, composition and organization of this Committee. Composition. Following the inclusion as independent committee member of Mercedes Gracia Díez, the Audit Committee currently comprises the following members: - Daniel Villalba Vilá Chairman and independent non-executive director. - José B. Terceiro Lomba Member and independent non-executive director. - Mercedes Gracia Díez Member and independent non-executive director. - José J. Abaurre Llorente Member and dominial non-executive director. - Secretary non-director: Miguel A. Jimenez-Velasco Mazarío As a consequence, the Audit Committee is entirely composed of non-executive directors, thus surpassing the requirements set out in the aforementioned Financial Systems Reform Act. Furthermore, the position of Chairman of the Committee must be held by a non-executive director, as set out in Article 2 of its Internal Regulations. 92 Corporate Social Responsibility Report 2006 ABENGOA

211 Corporate Governance Report Duties. The duties and powers of the Audit Committee are as follows:: 1. To announce the Annual Financial Statements as well as the quarterly and half-yearly financial statements, which must be submitted to the bodies that regulate or supervise the markets, with reference to any internal monitoring systems, the monitoring procedures followed and compliance through internal auditing processes, including where applicable, the accounting criteria applied. 2. To inform the Board of any change to the accounting criteria and any risks, whether on or off the balance sheet. 3. To inform the General Shareholders Meeting regarding any questions raised by shareholders on issues falling within its competence. 4. To propose the appointment of external Accounts Auditors to the Board of Directors, so that the latter may submit this proposal to the General Shareholders Meeting. 5. To supervise internal auditing procedures. The Committee shall have complete access to the internal auditing process, and shall provide information during the process for the selection, appointment, renewal and removal of its director, and when his or her payment is being established, with the duty to provide information about this department s budget. relating to the procedure followed in order to audit the company s accounts. 8. To summon the Directors it considers appropriate to Committee meetings so that they may provide any information that the Audit Committee itself deems relevant. 9. To prepare an Annual Report on the activities of the Audit Committee, which must be included in the Management Report. Organization and operation. The Audit Committee shall meet as frequently as is necessary in order to carry out its duties, and at least once a quarter. The Audit Committee shall be considered validly formed when a majority of its members are present. Attendance may only be delegated to a non-executive Director. Its resolutions shall be validly adopted when voted for by a majority of the Committee members present or represented. In the event of a tie, the Chairman shall have the casting vote. Amounts paid to the Audit firm for other works; Figures in thousands of euro: Company Group Total Amount for works other than auditing Previous / Total amount billed (%) 4% 18% 22% To have knowledge of the company s financial information procedure and its internal monitoring systems. 7. To maintain relations with the company s external auditors in order to remain informed regarding any matters that may place the independence of said auditors at risk, and regarding any other matters Nº. of years audited by the firm / Total no. of years in which it has been audited Company Group 16 (since 1990) 16 (since 1990) 100% 100% ABENGOA Corporate Social Responsibility Report

212 Corporate Governance Report iii.2) The Appointments and Remuneration Committee. The Appointments and Remuneration Committee was established by Abengoa s Board of Directors on February 24, 2003, and its Internal Regulations were approved at the same time. Composition. The Committee currently comprises the following members: - Carlos Sebastián Gascón Chairman and independent non-executive, director - José B. Terceiro Lomba Member and independent non-executive, director - Ignacio de Polanco Moreno Member and independent non-executive, director - José Luis Aya Abaurre Member and dominial non-executive, director - José Marcos Romero Secretary and non-director (*) Carlos Sebastián Gascón substituted Ignacio Polanco Moreno as Chairman of the Appointment and Remuneration Committee, October 19, 2006, as a result of an agreement in the Committee. Both of them are independent members of the Board of Directors As a consequence, the Appointments and Remuneration Committee is entirely composed of non-executive directors, thus surpassing the requirements set out in the Financial Systems Reform Act. Furthermore, the position of Chairman of the Committee must be held by a non-executive director, as set out in Article 2 of its Internal Regulations. iii.3) Duties. The duties and powers of the Appointments and Remuneration Committee are as follows: 1. To inform the Board of Directors regarding the appointment, re-election, removal and payment of members of the Board of Directors and the Advisory Board, and the positions held on these Boards, and to provide information on the general payment and incentive policy for members of these boards and for senior management. 2. To provide prior information regarding all the proposals prepared by the Board of Directors for the General Shareholders Meeting in relation to the appointment or removal of Directors, including cases of co-option by the Board of Directors itself. 3. To prepare an Annual Report on the activities of the Appointments and Remuneration Committee, which must be included in the Management Report. Organization and operation. The Appointments and Remuneration Committee shall meet as frequently as is necessary in order to carry out the foregoing duties, and at least once every six months. The Appointments and Remuneration Committee shall be considered validly formed when a majority of its members are present. Attendance may only be delegated to a non-executive Director. Its resolutions shall be validly adopted when voted for by a majority of the Committee members present or represented. In the event of a tie, the Chairman shall have the casting vote. The Strategy Committee. This comprises the managers of the Business Units, the manager of Organization, Quality and Budgets, the Technical Secretary, the manager of Human Resources, the Manager of the Corporate and Strategy Development, the General Secretary, and the Chairman of the Board of Directors. 94 Corporate Social Responsibility Report 2006 ABENGOA

213 Corporate Governance Report iii.4) iii.5) It meets on a monthly basis. The Stock Exchange Internal Code of Conduct. This was implemented in August It applies to all directors, members of the Strategy Committee and to other employees on the basis of the activities they carry out and the information to which they have access. It establishes obligations regarding the protection of information, the duty of secrecy, relevant aspects relating to stages prior to decision-making and publication, establishing the procedure for the maintenance of internal and external confidentiality, the registration of share ownership and transactions relating to securities and conflicts of interest. The monitoring and supervising body is the General Secretary office. The Professional Code of Conduct. At the request of the Human Resources department, during year 2003 the company implemented a Professional Code of Conduct, modified in the financial 2005 with the intention of incorporating several common elements to the different companies that form Abengoa, attending to the geographical, cultural and legal varieties, which establishes the fundamental values that should govern the actions of all the company s employees, regardless of their position or responsibilities. Integrity of conduct, the strict observance of the law in force, professional rigor, confidentiality and quality have formed part of Abengoa s culture since its establishment in 1941, and these values still form an essential part of the company s corporate identity. Code of conduct A. I. General Philosophy The honesty, integrity and sound judgment of Abengoa employees, officers and directors is essential to Abengoa s reputation and success. This Code of Conduct governs the actions and working relationships of Abengoa s employees, officers and directors with current and potential customers, fellow employees, competitors, government and self-regulatory agencies, the media, and anyone else with whom Abengoa has contact. These relationships are essential to the continued success of Abengoa. When this Code of Conduct refers to Abengoa», it includes Abengoa, S.A. and each of its subsidiaries. This Code of Conduct: Requires the highest standards for honest and ethical conduct, including proper and ethical procedures for dealing with actual or apparent conflicts of interest between personal and professional relationships; Requires full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed or submitted by Abengoa with governmental agencies or in other public communications made by Abengoa; Requires compliance with applicable laws, rules and regulations; Addresses potential or apparent conflicts of interest and provides guidance for employees, officers and directors to communicate those conflicts to Abengoa; ABENGOA Corporate Social Responsibility Report

214 Corporate Governance Report Addresses misuse or misapplication of Abengoa s property and business opportunities; Requires the highest level of confidentiality and fair dealing within Abengoa and outside Abengoa; and Requires prompt internal reporting of violations of this Code of Conduct and proper reporting of any illegal behavior. II.- Corporate Culture and Common Management Systems Quality Abengoa is dedicated to quality in all of its activities, both internal and external. This task is not assigned to a specific group of people, or to upper management, rather it affects all members of the organisation in their daily work. Abengoa has specific quality norms, which are the result of carrying out activities with knowledge, common sense, rigour, order and responsibility. Abengoa values its corporate culture and Common Management Systems as key assets. They define the way Abengoa does business, establishing a series of Required Compliance Norms (RCN). Following them correctly is a source of profitability and security in Abengoa s activities. Non-compliance with the Common Management Systems is classified by the Board of Directors and, through delegation, by its President, the delegated commissions or, as appropriate, the delegated Management. In any case, non-compliance in any area that directly affects the results of the activity or assumes uncontrolled risks is considered a very grave offence. Professionalism The concept of professionalism at Abengoa is closely linked to the service vocation when carrying out any activity and to implication with the business project carried out. All actions carried out in conjunction with the assigned functions must be presided by professional responsibility and guided by the principles established in this Code. B. Conflicts of Interest A conflict of interest occurs when your private interest in any way interferes or appears to interfere with the interests of Abengoa. You are expected to avoid all situations that might lead to a real or apparent material conflict between your self-interest and your duties and responsibilities as an employee, officer or director of Abengoa. Employees, officers or directors that have questions or concerns about a potential conflict of interest should contact the Secretary of the Board of Directors. C. Confidentiality Nonpublic information regarding Abengoa or its business, employees, customers and suppliers is confidential and as an employee, officer or director, you are trusted with such confidential information. You are only to use such confidential information for the intended business purpose of Abengoa. You are not to share confidential information with anyone outside of Abengoa, including family and friends, or with other employees of Abengoa who do not need the information to carry out their duties. Your obligation to keep all information confidential continues even if your employment with Abengoa ends. The following is a non-exclusive list of confidential information: 96 Corporate Social Responsibility Report 2006 ABENGOA

215 Corporate Governance Report Material, non-public financial information regarding Abengoa or any of its subsidiaries or affiliates; Trade secrets, which include any business or technical information, such as a program, method, technique, compilation or information that is valuable because it is not generally known; All rights to any invention or process developed by an employee using Abengoa s facilities or trade secrets, resulting from any work for Abengoa, or relating to Abengoa s business, that belongs or is assigned by law to Abengoa; and Proprietary information such as customer lists. All public and media communications involving Abengoa must have prior clearance by the Board of Directors or the Chairman of the Board of Director, or compliance officer. D.Gifts and Entertainment In many industries and countries, gifts and entertainment are common practices used to strengthen business relationships. Throughout the world, Abengoa s position is clear. No gifts, favor, or entertainment should be accepted or provided if it will obligate or appear to obligate the person who receives it. Receiving or giving gifts of cash or cash equivalents is never allowed. Abengoa employees may accept or give gifts, favors, and entertainment only if they meet all of the following criteria: They are not against the law or the policy of the other party; They are consistent with customary business practices in the country or industry; They are reasonably related to business relationships; They are consistent with any existing business guidelines; They cannot be construed as a bribe, payoff, or improper influence; and They do not violate Abengoa s business values or ethics in any other manner. E. Financial Reporting You are required to report timely to Abengoa s Secretary of the Board of Directors all information in your possession that may be necessary to ensure that Abengoa s financial reports and disclosures, as filed with or submitted to the Securities and Exchange Commission or in other public communications are full, fair, and accurate. F. Insider Trading Buying, selling, trading or participating in any other way in operations that affect Abengoa s assets goes against this Code of Conduct, as well as being illegal, while in possession of material information concerning Abengoa that has not been released to the general public, but which when released may have an impact on the market price of Abengoa s securities. It also goes against this Code of Conduct and is illegal to buy, sell, trade or otherwise participate in transactions involving the securities of any other company while in possession of similar non-public material information concerning such company. Any questions concerning the propriety of effecting a transaction in Abengoa s (or other company s) securities should be directed to Abengoa s General Counsel or compliance officer. G. Outside Business Relationships Before agreeing to act as a director, officer, consultant or advisor for any other business organization, you should notify your immediate supervisor. Directors should disclose all new directorships or potential directorships to the Chairman of the Nominating and Retribution Committee. H. Fair Dealing Each employee, officer and director should undertake to deal fairly with Abengoa s customers, suppliers, competitors and employees. ABENGOA Corporate Social Responsibility Report

216 Corporate Governance Report I. Legality Complying with the law is not only an external requirement and, therefore, an obligation of the organisation and its personnel. The law provides security to our activities and reduces the risks to our business. Any action that breaks the law is expressly and firmly prohibited. When in doubt about the legality of any action, it is essential to consult with the Legal Department beforehand. J. Reporting of Illegal or Unethical Behavior Abengoa requires its employees, officers and directors to talk to supervisors, managers or other appropriate personnel to report and discuss any known or suspected criminal activity involving Abengoa or its employees. If, during the course of your employment, you become aware of any suspicious activity or behavior, including concerns regarding questionable accounting or auditing matters, you must report violations of laws, rules, regulations or this Code of Conduct to Abengoa s Secretary of the Board of Directors. Reporting the activity will not subject the employee to discipline absent a knowingly false report. All reports will be treated confidentially and will receive a full inquiry. K. United States Foreign Corrupt Practices Act / Political Contributions In addition to the provisions of this Code of Conduct and other policies of Abengoa, employees working with any governmental entity in any country have an obligation to know, understand and abide by the laws and regulations that apply to the conduct of business with government entities. If a government agency, whether national, state or local, has adopted a more stringent policy than Abengoa s policy regarding gifts and gratuities, Abengoa s employees and representatives must comply with that more stringent policy. Specifically, the U.S. Foreign Corrupt Practices Act ( FCPA ) makes it a crime for companies as well as their officers, directors, employees, and agents, to pay, promise, offer or authorize the payment of anything of value to a foreign official, foreign political party, officials of foreign political parties, candidates for foreign political office or officials of public international organizations for the purpose of obtaining or retaining business. Similar laws have been, or are being, adopted by other countries. Payments of this nature are strictly against Abengoa s policy even if the refusal to make them may cause Abengoa to lose business. The FCPA also requires covered companies to maintain accurate books, records and accounts and to devise a system of internal accounting controls sufficient to provide reasonable assurance that, among other things, Abengoa s books and records fairly reflect, in reasonable detail, transactions and dispositions of its assets. Abengoa will not give or encourage anyone else to give inducements of any kind to any government employee, or to any supplier under government or nongovernmental contracts or subcontracts, in order to gain any business advantage or contract. L. Administration, Enforcement and Waiver of Code of Conduct This Code of Conduct shall be administered and monitored by Abengoa s Board of Directors. Any questions and further information on this Code of Conduct should be directed to Abengoa s Secretary of the Board of Directors. Employees, officers and directors of Abengoa are expected to follow this Code of Conduct at all times. In rare circumstances, situations may arise in which a waiver may be appropriate. Waivers will be determined on a case-by-case basis by Abengoa s Board of Directors for directors and officers. Any waiver for directors or officers, and the grounds 98 Corporate Social Responsibility Report 2006 ABENGOA

217 Corporate Governance Report therefore, shall be disclosed to stockholders in accordance with applicable laws and regulations. Failure to comply with this Code of Conduct may result in disciplinary action up to and including termination, depending on the nature and severity of the violation. In addition, any supervisor, manager, officer or director who directs, approves or condones infractions, or has knowledge of them and does not promptly report and correct them, will be subject to disciplinary action up to and including termination. d. Inter-group and related transactions in the 2005 financial year. i) Transactions with significant shareholders. During 2006 there were no relevant transactions of this kind. ii) Transactions with administrators and directors. During 2006 there were the following transactions between the company and its administrators or senior management: Director s Tax no. Name Company s Tax no J.B. Terceiro Lomba B J.B. Terceiro Lomba B Name Nature Type Aplicaciones Digitales, S.L. in Abengoa, S.A, Barinas Gestión y Asesorías, S.L. in Bioetanol Galicia, S.A. Consultancy Services Consultancy Services Annual Agreement Annual Agreement Thousands of euro ABENGOA Corporate Social Responsibility Report

218 Corporate Governance Report iii) Significant inter-group transactions. Abengoa, S.A. is, and operates as, the parent company of a group of entities. As such, it performs a certain amount of activities and roles that complement the integral product that one or several Business Units jointly offer to their clients. Thus, different companies and Business Units share customers and they jointly develop their businesses acting one or other companies as head, on a case by case basis. This gives rise to cross-selling between the companies (inter-group). Moreover, Abengoa co-ordinates and manages the financial resources through a centralized administration system, allowing the optimization of said resources in those non-recourse financed businesses that arise out of the collection/ payment cycle by using factoring and confirming procedures. As a consequence of the on-market conditions commercial operations, fulfilled in light of the above and arising out of the ordinary business, or as a consequence of the financing operations, the resulting balances appear on the balance sheets of the affiliate companies, though they are eliminated in the annual accounts consolidation process. e. Risk Control Systems. Abengoa s risk control structure is based on two foundations: the common management systems and the internal audit services, whose definitions, objectives, characteristics and functions are described below. i) Common Management Systems Definition Abengoa s common management systems develop the internal rules of the company and its methodology for evaluating and controlling risks and represent a genuine guide for managing Abengoa s businesses, sharing the accumulated knowledge and setting criteria and operational standards. Objectives - To identify possible risks that, although associated with all business, must be minimized, upon being aware of them. - To optimize day-by-day management, applying procedures designed for financial efficiency, cost reduction, and information and management systems homogenization and compatibility. - To foment the synergy and the creation of value for the different Business Units of Abengoa, working in a collaborative ambience. - To reinforce the corporate identity, respecting the shared values of all the companies within Abengoa. - To grow through strategic development seeking innovation and new options for the medium and long terms. The systems cover the whole organization at three levels: - all business units and business lines; - all levels of responsibility; - all types of transactions. In a group such as Abengoa, with more than 200 companies, a presence in over 70 countries and more than 9,000 employees, it is essential to define a common system for managing the business that allows work to be done in an efficient, coordinated and consistent way. 100 Corporate Social Responsibility Report 2006 ABENGOA

219 Corporate Governance Report In the 2004 financial year, Abengoa has commenced an alignment project of its Risk Management model with the conceptual framework established by the Sabarnes-Oxley (SOX) Act, with the aim of furthering the continuous enhancement of its control processes. Although the aforementioned Act corresponds with the rules of obligatory fulfillment for companies and groups listed on the North American market, according to instructions from the Securities and Exchange Commission (SEC), Abengoa believes that, not only must its subsidiary Telvent GIT, S.A., listed on the NASDAQ, comply with these obligations, but all the other group companies must do so also, given that it leads to advances being made in the enhancement of control and risk mitigation processes. Nowadays, the SOX requisites are being established in all Abengoa s Business Groups, so that all the processes that affect to the different points of the situation s balance and of the result s account are being analized and documented, identifying the risks that affect the different activities that compound each process, detailing the existing control objectives in order to diminish them and its control activities to do. The defined procedures are interrelated to the existing Functioning Rules, so that unify the controls to the management of the businesses with the own controls for the acquisition of the financial information. Likewise, and as part of the recommendation of the SOX, the General Control is being revised: procedures and policies, corporate culture of internal control, Ethical Codes, etc in order to adequate to the requisites of the mentioned law. ii) Internal Audit Definition The function of Abengoa s internal audit is structured around the Pooled Audit Services that encompass the audit teams of the companies, business units and corporate services that act in a coordinated way and which are responsible to the Audit Committee of the Board of Directors. General Objectives - To anticipate the audit risks of the group s companies, projects and activities, such as frauds, financial damages, inefficient operations and risks that may affect the healthy operation of business in general. - To control the application of, and promote the development of adequate and efficient management rules and procedures in accordance with the common Corporate Management Systems. - To create value for Abengoa, promoting the construction of synergies and the monitoring of optimal management practices. To co-ordinate the criteria and the focus of the external auditors work, seeking the best efficiency and profitability of both functions. Specific Objectives - To evaluate the audit risk of Abengoa s companies and projects in accordance with an objective procedure. - To define various types of standard audit and internal control tasks in order to develop the corresponding Work Plans with the appropriate scope for each situation. This classification, which is linked to the Audit Risk Assessment, determines the Work Plans to be used and implies a type of appropriate recommendation and report and should therefore be used explicitly in these documents. - To steer and coordinate the planning process for audit work and internal control in the companies and business groups, to define a notification procedure for these tasks and communication with the affected parties and to establish a method of coding these tasks for their adequate control and monitoring. ABENGOA Corporate Social Responsibility Report

220 Corporate Governance Report - To define the communication process of each audit job s results, the people that are affected and the format of the documents in which they appear. To review the application of the plans, the adequate implementation and supervision of the tasks, the timely distribution of the results and the monitoring of the recommendations and their corresponding implementation. The Audit Committee Pursuant to Article 47 of Law 44/2002 of December 22, of the Financial System Reform Measures, Abengoa s Board of Directors has appointed an Audit Committee whose functions include the supervision of the internal audit services and the understanding of the financial reporting process and the company s internal control systems. The Corporate Internal Audit manager reports systematically to this committee in relation to his own responsibilities of: - the Annual Internal Audit Plan and its degree of completion; - the level of implementation of the issued recommendations; - a sufficient description of the principle areas reviewed and the most significant conclusions; - other more detailed explanations that the Audit Committee may require. There are Audit Committees in other group companies to which the Internal Audit manager of the corresponding Business Unit reports. f. General Shareholders Meetings. i) Rules of Operation. Following the recommendation of the Special Commission for the Promotion of Transparency and Security in Financial Markets and Listed Companies, in March 2003 the Board of Directors drafted a structured and systematic regulation for the holding of shareholders meetings, that was subject to approval at the General Shareholders Meeting held on June 29, 2003, which unanimously approved the aforementioned regulation; a resolution that was notified to the CNMV on June 30, In addition to the provisions included in the Spanish Companies Act this regulation incorporates a basic group of rules for the good order and functioning of shareholders meetings guaranteeing at all times, the right to information, to attend, to vote and the right to representation for shareholders. The complete text of the Rules of Operation of the General Shareholders Meetings is available on Abengoa s website at (Legal and Financial / Corporate Governance / Internal Corporate Governance Rules Information).. In accordance with that established under article 19 of the Company s Bylaws, there is no limitation on the shareholders right to vote based on the number of shares held. The right to attend General Meetings is limited to a holding of 1,500 shares, without prejudice to the right to representation and grouping that applies to all shareholders. Quorum to Constitute: At first calling: 25% of the share capital. At second calling, any amount of the share capital. These amounts are the same as those established by Company law. In the event of issues related to matters under art. 103 of Company Law, the quorum is also that established by the Law. 102 Corporate Social Responsibility Report 2006 ABENGOA

221 Corporate Governance Report Quorum for adopting resolutions: by simple majority of the votes present or represented at the General Meeting. In the event of issues related to matters under art. 103 of Company Law, the quorum is also that established by the Law. Shareholders rights: Right to information in accordance with the applicable legislation, right to receive, free of cost, the documentation related to the General Meeting, right to vote in proportion to his/her shareholding with no maximum limit, right to attend upon holding a minimum of 1,500 shares, economic rights (dividend, if it were the case, and to the share out of company assets), right to representation and delegation, to grouping, and to taking legal actions that fall to the shareholder. Measures to promote the participation of the shareholders: making the documentation related to the General Meeting available to be forwarded, free of cost, to the shareholders, as well as its inclusion on the website at the time of notice of the General Meeting. Possibility of delegation and remote voting, through the completion of the attendance cards to this effect in an accredited manner. The Company Bylaws do not limit the maximum number of votes in one shareholder, or have restrictions that make difficult the control taking by means of the acquisition of shares. The proposals about the agreements which are going to be exposed in the General Meeting are published in the same moment of the calling of the aforementioned meeting and are included in the web sites of the company and CNMV. legitimized as shareholders and act instead of different customers in a way that they can emit their votes according to the individual instructions of each one of them. The Company Bylaws specify that the chairmanship of the General Meeting shall be taken up by the Chairman or Vice-chairman of the Board of Directors, as agreed by the Board itself. In accordance with this, the General Shareholders Meetings are chaired by the Vicechairman of the Board of Directors. The Operation Regulations for the General Shareholders Meetings, approved by the General Meeting of June 29, 2003, regulates the calling, operating, exercise of rights and resolution adoption procedures at the general Meeting, and establishes a precise and imperative framework for the holding of the General Meetings. Likewise, the General Meeting is normally attended by a Notary Public who checks fulfillment of all the necessary requirements for the valid constitution of the meeting and the adoption of resolutions, and who issues the corresponding minutes upon completion of the Meeting. Likewise, the Secretary to the Board (nondirector), in accordance with the Company Bylaws and the Regulations of General Meetings, acts as Secretary at the same and is responsible for ensuring compliance with all legal and statutory obligations upon the calling, holding and adoption of resolutions by the General Meeting. Those subjects included in the agenda which are essentially independent are separately voted in the Meeting, in a way that the shareholders can separately exercise their preferences to their vote, in special when it is about the appointment or ratification of members of the Board of Directors. The company allows the fraction of that votes emited by financial mediators who appear ABENGOA Corporate Social Responsibility Report

222 Corporate Governance Report ii) Information on the last General Shareholders Meeting. The Abengoa Ordinary General Shareholders Meeting of April 9, 2006, was held with the attendance of 480 shareholders (85 present and 395 represented) of a total 6,663 registered shareholders. The number of shares, present or represented was 62,572,399 or % of the total share capital. The resolutions adopted, all by the favorable vote of the whole of the share capital present or represented, were the following: 1º -Approval of the Financial Statements (composed by Balance, Profit and Loss Account and Report) and the Management Report for the 2005 financial year of Abengoa, S.A. 2º - Approval of the Financial Statements of the Consolidated Group (composed by Balance, Profit and Loss Account and Consolidated Report) and the Consolidated Management Report for the 2005 financial year. 3º - Approval of the activities and actions of the Board of Directors during the aforesaid financial year and the remuneration of its members, as well as that of the members of the Advisory Board to the Board of Directors of the 2005 financial year, as it has been said in the Financial Statements. 5º - The General Meeting repeats its previous agreements in the sense of approving the management of the Board of Directors related to the purchase of shares of Xfera Móviles, S.A.. Taking into account that the reasons that led to the aforementioned purchase are still lasting, just as it can be deduced from the business done in the last years. Acceptance of the decision of Inversión Corporativa, I.C., S.A. to constitute inmediatly the guarantees derived from the Contrato de Indemnidad, dated October 27, 2000, in such a way that any damage will be derived, which means that the purchase of these shares must be beneficial for Abengoa and, hence that nothing will be demanded in the procedure that is followed before the Criminal Judge of the National High Court. Empower Felipe Benjumea Llorente, Javier Benjumea Llorente and the Secretary to the Board, Miguel Ángel Jiménez-Velasco Mazarío, so that any of them, without distinction, formalize the store of the Financial Statements and Management Report of the Company and its Consolidated Group in the Commercial Register, in the terms foreseen by the Law, identifying them with their signatures and signs of its purpose. 4º - Approval of the following distribution of the 2005 results whose dividend will be distributed from July 4, 2006 onwards: Euros Balance of the Profit and Loss Account 13,626, Application: To voluntary reserves 56, To dividend 13,570, Total 13,626, Corporate Social Responsibility Report 2006 ABENGOA

223 Corporate Governance Report 6º - Postpone the appointment of the Account Auditor of the company and its businesses units, in a year, for the present financial 2006, pursuant to the contents of article 204 of The Revised Text of the Spanish Companies Act, to the company Pricewaterhouse Coopers Auditores, S.L., with tax number B , located in Madrid, 43 Paseo de la Castellana, registered in the Commercial Register of Madrid, volume 9,267, book 8,054, third section, number 87,250 and in the Account Auditors Official Register number S º - Agree the ratification of the appointment of Mercedes Gracia Díez as member of the Board of Directors, during a period of four years (she is of age, married, Spanish, ID V, Economic Analisis Proffesor, with address in Madrid, 9 Doctor Laguna Square), ellected by cooptation by the Board of Directors, in its meeting held on December 12, 2005, who is present in that meeting and ratifies her acceptance, done in the same date, and states that she is not involved in any legally foreseen incompatibility. 8º - Modify article 24 of the Company Bylaws, related to the calling of the General Shareholders Meeting, with the intention of increasing the announcement of the General Meeting from fifteen to thirty days beforehand, according to the new essay of article 97 of the Spanish Companies Act given by the Final Resolution 1st, point 3, of the Law 19/2005, November 14, about the European Companies Act with address in Spain. Modify equally article 5 of Rules of Operation of the General Shareholders Meeting in the same sense. 9º - Ratify the delegation in the Board of Directors, pursuant to the contents of Article b) of the Revised Text of the Spanish Companies Act, the faculty to increase the share capital, in once or more times, so that the amount of eleven millions and three hundred and eight thousand, seven hundred and ten euros (11,308,710 euro) equivalent to the fifty per cent (50 %) of the share capital in the precise moment of the authorization, by means of money contributions, with or without emission bonus, adopted by the Ordinary General Shareholders Meeting, held on June 26, 2005, in the quantity and chance that the Board of Directors determines and without the need of seeking advice on the General Meeting. Likewise, according to that established in article 159, section 2 of the Revised Text of the Spanish Companies Act, ratify the delegation in the Board of Directors, the faculty to decide, in its case, the exclusion or not, of the right of preferential subscription in relation to the extensions that could be agreed from the present agreement, when the foreseen circumstances compete in the section 1 of the aforementioned article, related to the social interests and whenever, in case of exclusion, the nominal value of the shares that are going to be emited, plus, in its case, the quantity of the emission bonus corresponds with the real value that results from the report of the account auditors of the company, made for that purpose, at the request of the Board of Directors. Equally, authorize the Board of Directors to give new essay of article 6th of the Company Bylaws, related to the share capital, once the increase have been carried out, depending on the actually subscribed and paid out quantities. Likewise, authorize the Board of Directors to request and negotiate, before the National Securities Market Commission, Governing Body of the Stock Exchange and with the mediation of any other Stock Exchange Company, the admission to negotiate in any of the Stock Exchange of the quoted shares, in relation to the shares emited according to the previously adopted agreements, when the Board of Directors consider it appropriate, with as much requirements as current provisions demand. According to that established in article 27 of the rules of the Official Market Stock Exchange, the declarations of the shareholders regarding this agreement will be recorded in minutes. ABENGOA Corporate Social Responsibility Report

224 Corporate Governance Report 10º - Ratify and postpone in all the terms and in a legal term of five years the agreement adopted in the Ordinary General Shareholders Meeting of June 27, 2004, authorizing the Board of Directors, according to that established in articles 282 and followings of the Spanish Companies Act, and within a period of five years set by the same, to proceed to the emission of bonds, debentures and any other shares, with any denomination, representative of a loan, convertible or changeable in shares of the company or non convertible, towards the maximum quantity predicted by the Law, equivalent to the share capital paid out, plus the reserves that are exposed in the balance, dated December 31, 2003, the last one approved in the General Meeting duly inspected, and serves as the basis for the present agreement, and the regulation and update of balance accounts, when they have been accepted by the Ministry of Economy, by an amount of two hundred sixty one thousand and five hundred and eighty five millions of euro (261,585 M euro) according to the terms and conditions included in the Board of Directors Report, dated April 26, º - Authorize the Board of Directors to the derivative acquisition, by sale-purchase, of shares of the Company itself, either directly or through Subsidiary Companies or underlying companies up to the maximum limit established in the provisions, at a price ranging between three euro cents (0.03 euro) minimum and one hundred and twenty euro and twenty euro cents ( euro) maximum per share. Use of this authorization may be made for a period of eighteen (18) months from that very date and subject to that specified in Section Four of Chapter IV of the Revised Text of the Spanish Companies Act. Expressly revoking the authorization conferred to the Board of Directors, for the same purposes, by virtue of the agreement adopted by the General Shareholders Meeting held on June 26, iii) Web The company maintains its bilingual (Spanish and English) website permanently updated at The agreements adopted by the last General Meeting held on April 9, 2006 are recorded on this site. Likewise, the full text of the notice of the meeting, the agenda and the resolutions that were proposed for the Meeting s approval were incorporated on the website on March 9, On the occasion of future notice of meetings, the Company will keep the information available on them updated, for the purpose of supporting the right to information, and with this, the right to vote, of the shareholders, on equal terms. Finally, with the regulatory and technical progress to be established, the right to vote or to electronic delegation will be guaranteed under the protection of specific legal certainty. g. Level of monitoring of the recommendations relating to Corporate Governance. In the measure by which the information contained in the recommendation reports is less detailed and developed than the current Annual Corporate Governance Report, we defer to it for the issues set out therein. Said Report is available at Likewise, pursuant to the Ministerial Order of December 22, 1999, actioned by Circular 1/2000 of the CNMV relating to the business development and prospects of listed companies assigned to the New Market segment, the company annually remits the relevant information required, similarly at the time of the notice of the Ordinary General Shareholders (April 9, 2006). Said information is available at (Legal and Financial 106 Corporate Social Responsibility Report 2006 ABENGOA

225 Corporate Governance Report Information / Reports to CNMV / Relevant Events; Other Communications h. Information Tools. i) Web ( The obligation to provide useful, true, complete and balanced information to the market in real-time would not be sufficient if the suitable methods for transmitting this information were not appropriate, guaranteeing that it is distributed effectively and usefully. As a result, the Aldama Report and the Financial System Reform Act recommend, as a result of new technologies, the use of listed companies websites as an information tool (including historical, qualitative and quantitative company data in it) and a distribution tool (including timely or individualized information in real-time that may be accessed by investors). At the end of the first quarter 2002, Abengoa therefore implemented a new company website, characterized on the one hand by a more direct, quick and efficient on-screen presentation, and on the other hand, with information content and documentation made available to the general public, focused on three fundamental aspects: a) Commercial: the presentation of the Company and its Business Units, news releases, newsletters, etc. b) Legal: communications, relevant events, Corporate Governance internal regulations, etc. c) Economic: periodic reporting, financial statements, share price, etc. Both the information available as well as it actual distribution portal the website are continually updated; Corporate Governance, ii) the rules that regulate it and the continually developing legislation that governs it or recommends it, is adhered to, and will be adhered to. Today there is a special, farreaching concept that is being developed in a regulatory field; the regulation of shareholders rights (information, voting, etc.) by nonhabitual methods. Similar to all companies engaged in growing, Abengoa must adapt itself and anticipate, as in fact it has been doing, to the development of the markets as well as towards self-regulation (that is, adopting it own Code of Conduct by which its actions and decisions can be evaluated from outside the company), progress, transparency and information, which have to be anticipated in order to reassure the confidence of the market and therefore the Company s growth. Shareholder Service Department In order to facilitate permanent contact with the company s shareholders, the Company has a Shareholder Service Department whose manager is the General Secretary, with the objective of establishing a transparent and smooth communication with its shareholders and to allow access to the same timely and formatted information together with the institutional investors whose equal treatment is guaranteed. The distribution of true and reliable information on relevant events, news releases and the periodic financial-economic information are supervised in particular. A Shareholders mail box is available at the website ( ABENGOA Corporate Social Responsibility Report

226 Corporate Governance Report iii) Investor Relations Department With the same objective as the Shareholder Service but in relation to investors, the Company has an Investor Relations Department and stock market analysts responsible to the Director of Management Information Systems, assisted by the Finance Director, who is responsible for the design and implementation of the program for communication with the national and international financial markets for the purpose of understanding the principal characteristics and strategic actions of the company. This Annual Corporate Governance Report was approved by the Board of Directors of Abengoa, S.A. at its meeting on February 27, Corporate Social Responsibility Report 2006 ABENGOA

227 Abengoa Audit and Control Committee Abengoa Audit and Control Committee ABENGOA Informe de Responsabilidad Social Corporativa

228 Abengoa Audit and Control Committee 1. Composition and Appointments.. Abengoa s Audit Committee was created by the Board of Directors of Abengoa, S.A. on December 2, 2002 under article 44 of the By- Laws, in order to meet the provisions on the Audit Committee set forth in Law 44/2002 on the Reform of the Financial System. Its Internal Regime Regulations were approved by the Board of Directors on February 24, Both these events were duly notified to the Stock Market National Commission as relevant facts. The Audit Committee is, in its totality, formed by non-executive Board Members, its current composition, together with the dates of appointment, being as follows: Chairman Daniel Villalba Vilá February 28, 2005 Member José B. Terceiro Lomba February 24, 2003 Member José J. Abaurre Llorente February 24, 2003 Member Mercedes Gracia Díez December 12, 2005 Secretary Miguel Angel Jiménez-Velasco February 24, 2003 For the Board of Directors to perform its functions in a strong and efficient manner, specialized Commissions must be created within the Board, in order to diversify the work and ensure that, in certain important issues, the proposals and resolutions have previously been approved by a specialized independent body that is able to filter and obtain information on its decisions, so as to strengthen the guarantee that the resolutions are objective and have been given due consideration. 2. Activities Executed. During the year 2006, the Audit Committee met 4 times. To comply with its essential function of acting as support to the Board of Directors, the main activities that have been handled and analysed by the Audit Committee can be grouped in four different areas of competence: Financial Reporting Quarterly Information to Stock Exchange Appropriate accounnting policies Other requeriments External Audit Appointment and remuneration Scope of the audit work Independence requirements Significant audit point Review of the E.A. actions Audit Committee Main Areas Risk and Internal Control Analysis of main areas of risk Efficiency of controls Risk of fraud Internal Audit Rules, reponsibility and resourses scope of the audit work Implementation of I.A. Eficiency A.I. 110 Informe de Responsabilidad Social Corporativa 2006 ABENGOA

229 Abengoa Audit and Control Committee 2.1. Reporting Financiero. The Group s financial information consists basically of the consolidated financial statements, drawn up quarterly, and the full consolidated Annual Accounts, drawn up annually. This information is prepared on the basis of the account reporting that all the Group companies are obliged to submit for this purpose. The information reported by each one of the individual companies is verified by both the Group s internal auditors and the external auditors, in order to ensure that the information is true and provides an accurate picture of the company. Over recent years, Abengoa has made a significant effort to reduce the periods required for presenting the Group s financial information, an area where continuous improvement is deemed possible, meaning that a reduction in these periods is constantly being sought through new tools and information systems. One of the recurrent and most important activities of the Audit Committee is the verification of the economic and financial information prepared by the Group, prior to its submission to the Board of Directors of Abengoa and the Stock Market regulatory bodies (Stock Market National Commission). Furthermore, in connection with these tasks of reviewing the financial statements and the processes followed in preparing them, the Committee has been informed of all the relevant changes in international accounting and financial reporting standards Risk and Internal Audit and Control. The Audit Committee s functions include to supervise the internal audit services and to know the financial information and to know the company s financial information system and internal control systems. In order to supervise the adequacy, adaptation and efficient functioning of the internal control systems, the Committee has been systematically informed during financial year 2006 by the person responsible within Corporate Internal Auditing, in relation to the following activities: - the Annual Internal Audit Plan and the extent to which it is met; - the extent to which the recommendations issued have been implemented; - an adequate description of the main areas reviewed and the most significant conclusions: - any other more detailed explanations that the Audit Committee may require. In the year 2006, the Audit Committee recorded and supervised the Internal Audit Department s execution of a total of 484 missions, the Annual Audit Plan fixed for the year being 481 missions. The additional missions not provided for in the Plan relate mainly to general reviews of companies that had not been included in the initial planning. As a consequence of these tasks, 244 major recommendations were issued, 101 of which have already been implemented, while the remainder are in the process of implementation by the different companies. A factor that has had a decisive influence on the increase in the number of recommendations issued compared to previous years, has been the completion for the first time in 2006 of SOX compliance audits in certain Business Groups, as part of the process of adaptation of the internal control structure on the preparation of financial information to the requisites established by the Sarbanes-Oxley Act (Section 404) which the Group is currently undergoing. The Audit Committee has been informed during 2006 of these works. ABENGOA Informe de Responsabilidad Social Corporativa

230 Abengoa Audit and Control Committee The table set out below shows the monthly evolution by Business Groups of the work carried out in 2006: January February March April May June July August September October November December Bioenergía Environmental Services Information Technologies Industrial Engineering & Construction 2.3. External Audit. The Audit Committee s functions include ensuring the independence of the external auditor, proposing the appointment or renewal thereof to the Board of Directors and approving its fees. The statutory auditor of Abengoa, S.A. and of its consolidated accounts is Pricewaterhouse Coopers, which is also the Group s main auditor. However, a significant part of the group, basically the part corresponding to the Environmental Services (Befesa) and Information Technologies (Telvent) Businesses, are audited by Deloitte. In addition, other audit firms also provide their services in small companies, both in Spain and abroad, although their scope cannot be called significant The policy in Abengoa is that all group companies be externally audited, even if they are not required to do so by law. 112 Informe de Responsabilidad Social Corporativa 2006 ABENGOA

231 Abengoa Audit and Control Committee The global amount of the fees agreed with the external auditors for the audit of the year 2006, including the review of the periodic information and the audit of the company listed in the USA applying US GAAP and SOX, and the distribution thereof is shown in the chart below: Firm Fees Companies Spain PwC 428, Spain Deloitte (*) 1,158, Spain Others firms 44, Abroad PwC 238, Abroad Deloitte 557, Abroad Others firms 118,854 7 Total 2,546, (*) Including, among others, the fees for the quarterly review of financial statements under US GAAP and SOX audit of the subsidiary listed on the stock exchange in the US The external auditor has attended the Audit Committee meetings when required to do so, in order to inform on matters within its competency, basically relating to: The review of the financial statements of the consolidated group and its companies and the issuance of an audit opinion thereon. Although the scope of the opinion is the financial statements as of December 31 each year, the work performed by the auditors in each company includes a review of a previous accounting period end, usually that of the third quarter of the year (September), in order to anticipate any significant matters or operations that have arisen up to that date. In addition, reviews were performed of the quarterly financial statements prepared in order to present the information required by official bodies. Likewise, we highlight the fact that the consolidated financial statements of the following parent companies of their respective business groups (and subsidiaries) have likewise been audited: Abeinsa, Befesa, Telvent GIT and Abengoa Bioenergia. Evaluation of the Internal Controls. The advanced approach to auditing practice considers this to be part of an auditor s work, since this approach places more emphasis on the evaluations of the company s controls than on the substantive proof. In addition to their standard professional opinion, external auditors must issue an internal control report that is the basis of their presentation to the Audit Committee. This fact will be reinforced by the implementation of the SOX, which regulate the type of report and the scope and performance of the company auditor s activities. Matters of special interest. For certain specific matters or operations, an advancement of the auditors opinion on the accounting principles adopted by the company is required, in order to reach a prior agreement on that principles. ABENGOA Informe de Responsabilidad Social Corporativa

232 Abengoa Audit and Control Committee 3. Audit Committee Internal Regime Regulations. The egime Regulations of the Audit Committee were approved by the Board of Directors on February 24, They state that: Composition and Appointment: It shall be formed permanently by three members of the Board of Directors as a minimum. At least two of them will be non-executive Board Members, thus complying with the majority of non-executive members provided for in Law 44/2002. Members shall be appointed for a maximum term of office of four years, which may be renewed for further terms of the same duration. Chairman and Secretary: The Audit Committee will initially elect its Chairman from among all its members who are non-executive Board Members. The Secretary to the Board of Directors shall act as Secretary to the Committee. Functions and Competencies: The functions and competencies of the Audit Committee are as follows: 1. To inform on the Annual Accounts and the six-monthly and quarterly Financial Statements that must be sent to the market regulatory or supervisory bodies, mentioning the internal control systems, the control of the monitoring thereof and compliance therewith through internal audit and, when appropriate, the accounting principles applied. 2. To inform the Board of any change in accounting principles and the balance sheet and off-balance sheet risks. 3. To inform the General Shareholders Meeting on the issues raised thereat by shareholders in relation to matters that fall within its competency. 4. To propose the appointment of the external Account Auditors to the Board of Directors, in order for the proposal to be submitted to the General Shareholders Meeting. 5. To supervise the Internal Audit services. The Committee will have full access to the Internal Audit and will inform during the process of choosing, appointing, renewing and/or removing the manager thereof and fixing his remuneration, likewise informing on the budget of this Department. 6. To know the company s financial information system and internal control systems. 7. To be in contact with the external auditors to receive information on any issues that may jeopardize said auditors independence and/or any other issues related to the account auditing process. 8. To call the Board Members it sees fit to attend to the Committee meetings, so that they can inform to the extent decided by the Committee. 9. To prepare an annual report on the Audit Committee s activities, which must be published together with the Annual Accounts for the year. 114 Informe de Responsabilidad Social Corporativa 2006 ABENGOA

233 Abengoa Audit and Control Committee Meetings and Notice: The Audit Committee shall meet on the occasions required to perform the functions stated in the preceding article, which must be at least once a quarter. In general, the meetings will be held at the company s registered office, although the members may designate a different place for a specific meeting. The Audit Committee shall also meet whenever a meeting is called by the Chairman, at his own initiative or at the request of any member of the Committee. Members of the Committee may, in any case, inform the Chairman of the advisability of including a certain matter on the Agenda of the following meeting. Notice shall be given sufficiently in advance, not less than three days, and in writing, including the Agenda. However, a meeting of the Audit Committee will be valid when all its members are present and they agree to hold the meeting. Quorum: The Audit Committee shall be considered to have a valid quorum when a majority of its members are present. Attendance may only be delegated to a non-executive Board Member. Its decisions will be validly adopted when the majority of the Committee members in attendance vote in favour. In the event of a tie, the Chairman shall have the casting vote. 4. The Risk Management Model in Abengoa. In a Group like Abengoa, with more than 300 companies, presence in more than 70 countries and more than 14,450 employees, it is indispensable to define a common business management system that allows it to work efficiently on a coordinated and consistent basis. Abengoa manages its risks using the following model, which is intended to identify any potential risks that may arise in a business. Environmental Risk Catastrophic Losses Internal Procedures Risk Operations Managemeent Compliance / Environment Authority Product Failures Comunicaciones Interrupctions Information Processes Efficiency Access Human Resourses Availability Erosion of the Comercial framework Relevance Integrity Desicion-Marking information Risk Operations Financial Contractual Undertaking Regulator Report Price Setting Erroneous Information Taxes Relations with Shareholders Financial Credit Currency Liquidity Strategic Environm. Evaluation Strategic Planning ABENGOA Informe de Responsabilidad Social Corporativa

234 Abengoa Audit and Control Committee The procedures aimed at eliminating the above business risks identified are instrumented through the so-called Common Management Systems. The Common Management Systems perform both the identification of the risks included in the present model and the control activities that mitigate them. They therefore put the internal rules for action into practice and represent a common culture in the management of Abengoa s businesses. Through the Common Management Systems, it is also possible to: - Optimize day-to-day management, applying procedures favouring financial efficiency, a reduction in expenses and the standardization and compatibility of information and management systems. - Promote synergies and value creation by Abengoa s business groups, working in an environment of co-operation. - Reinforce the corporate identity, with all the Abengoa companies respecting the shared values. - Attain growth by strategic development seeking innovation and new options in the medium- and long-term. The Systems cover the whole organization at three levels: - all the Business Groups and areas of activity - all levels of responsibility - all kinds of operations Meeting the provisions of the Common Management Systems is compulsory for the whole organization and, therefore, they must be known to all the members thereof. Any exceptions to the fulfillment of these Systems must be made known to the person concerned and appropriately authorized. The Common Management Systems are submitted to a permanent updating process, which allows the best practices to be included in each one of its fields of action. The successive updates to which they are submitted are immediately notified to the organization using computing media, which greatly facilitates the dissemination thereof. Those responsible for each one of the rules that form the Common Management Systems must verify and certify compliance with said procedures. Each certification for the preceding year is issued and submitted to the Audit Committee in January each year. In addition, since 2004 Abengoa has been bringing its financial reporting internal control structure into line with the requirements of the Sarbanes Oxley Act (SOX Section 404). Although, according to the instructions of the Securities and Exchange Commission (SEC), the above-mentioned law is mandatory for companies and groups that are listed on the North American market, Abengoa considers it necessary to comply with these requirements not only in the case of its subsidiary listed on Nasdaq but for all the companies, as it entails completing its risk control model. Abengoa considers that an appropriate internal control system must ensure that all the relevant financial information is reliable and known to Management. Thus it is considered that the model developed in the SOX complements and completes our Common Management Systems, the main purpose of which is to control and mitigate business risks. 116 Informe de Responsabilidad Social Corporativa 2006 ABENGOA

235 Abengoa Audit and Control Committee The conceptual reference framework taken is the COSO, which is the most similar to the approach required by the SOX and defines internal control as the process carried out in order to provide a reasonable degree of security in relation to the attainment of objectives such as compliance with laws and regulations, reliability of the financial information and effectiveness and efficiency in the operations. Processes to determinate whether the internal controls are suitably designed, executed and effective (Disclosure Committee and Internal Audit.). Processes that ensure relevant information is identified and reported in manner and time (training, policies and procedures, internal circulars, etc.). Control procedures to ensure the efficient achieving of the previously indicated objectives (segregation of functions, conciliations, computerized controls, etc.). Risk management process (identification, measuring, monitoring and control). Existing general control guidelines in the Company (Ethics, policies and procedures, corporate internal control culture, etc.). Accordingly, the requirements of SOX are currently being implemented gradually in all of Abengoa s Business Groups, analysing and documenting all the processes that affect the different headings on the Group s balance sheet and profit and loss account, identifying the risks associated to the different activities that make up each process, detailing the control objectives being pursued and the corresponding control activities to mitigate those risks. We highlight the fact that the procedures defined are interrelated with the existing Operating Rules in such a way that the controls for business management are combined with the controls related to obtaining financial information. Furthermore, as part of the SOX recommendations, a review of the entire General Control environment is being carried out: Policies and Procedures, Corporate Internal Control Culture, Codes of Ethics, etc., in order to adapt it to the requirements of said Act. Supervision and Control of the Risk Management Model. The Abengoa supervision and control of the risk management model are structured around the Joint Audit Services, which include the audit teams of the Companies, Business Groups and Corporate Services and act in a coordinated manner, reporting to the Audit Committee of the Board of Directors. ABENGOA Informe de Responsabilidad Social Corporativa