Felipe Benjumea Llorente
Executive Chairman of Abengoa
Last year, 2013, was better than expected, offering glimpses of growth possibilities that will help to put the financial crisis behind us. However, climate change continues to lie at the heart of the problems facing mankind. The UN’s Intergovernmental Panel on Climate Change is warning that the planet’s average temperature is increasing while glaciers melt, sea levels rise and CO2 emissions grow, all of which are attributed to humankind with 95 % certainty. The Stern Report states that thereis still no trend in emissions reductions, meaning that global warmingg will continue and that, by 2100, hundreds of millions of people would have abandoned their homes.
According to the World Energy Outlook for 2013, the decision facing the world requires greater emphasis on energy efficiency. Our sector will play a fundamental role in whether climate change targets are achieved or not. The current trend is taking us towards a 3.5 ºC long-term rise in the planet’s temperature. To avoid this we have to accelerate the rate of renewable energy growth, currently around 2.5 % per annum.
Our company has viable solutions to these challenges. Knowledge creation and a commitment to technology form the basis of our competitive advantage in the energy and environment sectors, enabling Abengoa to become a scientific and technological leader in our business areas and a privileged place for training professionals in R&D and innovation.
Abengoa Research (AR), the research institute launched in 2011, is making highly significant progress in producing and storing solar power at competitive prices, transforming municipal solid waste into bioethanol (W2B), promoting energy vectors such as hydrogen or second-generation bioethanol, the desalination and reuse of industrial water and water from other sources, and developments related to enzymes and biomass.
Abengoa has also increased the number of technology patents it holds to 261 and is acknowledged as the leading Spanish company in the international patent applications ranking. These achievements are the result of the work carried out by the company’s team of 781 researchers, as well as investment in R&D and innovation projects totaling € 426 M during the year.
We are implementing the scheduled investments in our strategic plan, arranging financing for the corresponding projects and working with partners that can make our investments sustainable.
Abengoa’s projects map has expanded this year to include countries such as Israel, Sri Lanka, Ukraine and Angola, while we have consolidated our leadership position in countries like Brazil, USA, South
Africa, Chile, Mexico, Peru and Uruguay.
Abengoa’s global presence enables us to make the most of our opportunities for growth. This year revenues have grown by 17 % to € 7,356 M compared to 2012, and this growth is also reflected in our results, with an 44 % increase in EBITDA to € 1,365 M.
At the financial level, this year we have successfully completed our listing on the NASDAQ stock exchange in the USA through a capital increase of € 517.5 M, we have raised € 1,280 M from five bond issuances and made divestments totaling € 804 M, all of which have enabled us to cover the company’s financing requirements for 2014, reduce our dependency on the banking market following the partial repayment of the syndicated loan, and to extend the maturity profile of our debt.
Corporate net debt at the end of 2013 was 2.2 times corporate EBITDA, totaling € 2,124 M. We ended the year with a cash position of € 3,878 M, which will allow us to meet our investment and debt commitments scheduled for 2014.
We believe that Abengoa will continue to grow in 2014, strengthening its financial structure and consolidating a sustainable asset rotation program.
Engineering and construction
Revenues have grown by 27 % to € 4,808 M, bringing the backlog at the end of the year to € 6,796 M. In the USA we have commissioned the world’s largest solar-thermal plant, Solana, in Arizona, which uses a pioneering system that provides six hours of energy storage for when there is no sun. Work also continues on construction of the solar-thermal plant in California, which has the same capacity. Furthermore, the US power company Portland General Electric (PGE) has selected Abengoa to develop a 440 MW combined cycle plant.
We have also been selected to construct the largest combined cycle plant in Poland, transmission lines in Europe, Latin America, Africa and Australia, and new desalination plants in the Middle East and North Africa.
We have generated more than 5,700 GWh of power in solar, hybrid and cogeneration plants during 2013, as well as commissioned three new plants in Abu Dhabi (Shams 1), USA (Solana) and Spain (the Extremadura Platform) with a total installed capacity of 480 MW. We have also produced 102.1 ML of desalinated water.
The total capacity (installed and under construction) of our power plants in the USA, Abu Dhabi, South Africa, Algeria, Israel, Mexico, Brazil, Uruguay, Spain, India and the Netherlands is 2,912 MW. At present, we are also constructing new desalination plants in Algeria and Ghana, and electricity transmission lines in Brazil, Peru and Chile.
The construction in Hugoton, Kansas (USA), of the first industrial plant to produce second-generation ethanol using Abengoa’s proprietary technology and the development of the first Waste to Biofuels pilot plant in Salamanca (Spain) are two examples of our research and innovation work from recent years becoming a reality.
Growth and diversification
The growth model is based on simultaneously managing businesses with different profiles and characteristics. The cash flows from our traditional activities are reinvested in growing our emerging businesses. Rotating our investments is part of our business model and we have numerous options for the future that will evolve through to maturity. Abengoa Hydrogen and Abengoa Energy Crops are two such possibilities, in addition to other technological opportunities that Abengoa Research and the business groups are obtaining from their research.
The company’s international activities account for 84 % of total revenues, including our businesses in USA with 28 %, Latin America that represent 29 %, Asia 4 %, Europa 12 % and Africa 11 %.
Human capital, employment and safety
At Abengoa we know that the future depends on the creativity of the present, which in turn relies on the training and performance of the people that are part of the company. We are well aware of this fact and place special emphasis on our employees’ professional development and training. In 2013 we carried out more than 1.8 M hours of training, many in collaboration with some of the world’ most prestigious universities.
It is also important to highlight the constant preoccupation in our corporate culture for the safety of our teams and operations around the world, which is managed through a strict system of quality and occupational health and safety at every level of the organization.
In line with our commitment to transparency and diligence, we have subjected our internal control system to an independent valuation process, in accordance with PCAOB auditing principles. The Annual Report therefore includes five independently verified reports on the following areas: financial statements, SOX (Sarbanes Oxley) internal control system, Corporate Social Responsibility Report, Corporate Governance Report and the design and application of the company’s risk management system in accordance with the specifications of the ISO 31000 standard.
Corporate social responsibility and sustainable development
In a future defined by innovation and the challenges associated with sustainable development, Abengoa is committed to responsible management to reduce the negative impacts of its activities, contribute to developing the communities where we are present and building trusted partnerships with stakeholders. As a result of this commitment, in 2008 Abengoa designed a strategic corporate social responsibility plan and in 2013 we invested more than €9.1 M in social action through the Focus-Abengoa Foundation.
During 2013 we have intensified our partnerships with suppliers to reduce their impact and improve operations across the whole value chain.
Once again we have used the Corporate Social Responsibility Report, prepared in accordance with the principles of the Global Reporting Initiative (GRI) and the AA1000 sustainability assurance standard, to report on our social, environmental and financial performance during 2013, as well as the objectives, challenges and areas for improvements for the coming years.
We offer and use the Corporate Social Responsibility e-mail address (firstname.lastname@example.org), our website (www.abengoa.com), our Twitter and Linkedin profiles and our corporate blog (blog.abengoa.com) for this purpose.