Annual Report 2007

Transcription

Annual Report 2007

Annual Report 2007
1
Cover photo:
As technical leader of a joint venture,
HOCHTIEF Construction is building
an approximately three kilometer
long section of the Lainzer Tunnel in
Vienna. The twin-track tunnel is part
of the link which will speed up freight
and passenger traffic to Vienna from
2013. The tunneling work will be
completed by the end of 2010.
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Contents
Report of the Executive Board........................................................................4
Executive Board.................................................................................................5
Report of the Supervisory Board....................................................................6
Management Report.........................................................................................9
Business activities.................................................................................................9
Organization........................................................................................................ 10
Markets............................................................................................................... 12
Order and work done.......................................................................................... 15
Strategy.............................................................................................................. 17
Research and development................................................................................21
Employees..........................................................................................................22
Procurement.......................................................................................................23
Financial review................................................................................................... 24
Risk report.......................................................................................................... 24
Looking ahead....................................................................................................25
Projects of HOCHTIEF Construction AG, its subsidiaries and
business units.....................................................................................................27
Supervisory Board..........................................................................................38
Financial Statements and Notes...................................................................39
Financial statements of HOCHTIEF Construction AG for the fiscal year
January 1 – December 1, 2007...........................................................................39
Balance sheet.....................................................................................................39
Statements of earnings.......................................................................................40
Movements in fixed assets.................................................................................. 41
Notes to the 2007 financial statements of HOCHTIEF Construction AG............. 41
Explanatory notes on the balance sheet.............................................................44
Explanatory notes on the statement of earnings................................................. 47
List of holdings....................................................................................................50
Auditor‘s Report..............................................................................................51
3
Report of the Executive Board
HOCHTIEF Construction AG is an internationally active construction company. Through our innovative business models
and service portfolio, we are positioning ourselves more
and more as a service provider.
In the year under review, implementers of complex building
construction projects in Germany faced immense, unforeseen
problems. These difficulties were triggered by a slight upturn
in the construction sector which led to significantly stronger
demand and hence erratic spikes in the production costs of
turnkey buildings. This had an adverse impact on HOCHTIEF
Construction’s earnings.
We responded quickly and comprehensively to this trend
by launching a program to return our German building
construction segment to sustainable profitability. This is why
our traditional building portfolio now exclusively comprises
lucrative, higher-caliber business models that draw on
our expertise as early as the planning phase. In parallel,
HOCHTIEF Construction significantly raised its return on
investment targets and ratcheted up its risk management
procedures once again. FormArt, Shell Construction and
Residential became independent units during the course
of fiscal 2007, with structures modeled on those of midsize enterprises.
*You will find further information on the new organizational structure on pages 10
and 11.
This fundamental realignment is also reflected in a more
efficient organization.* For instance, we withdrew from a
number of regions and amalgamated numerous units. We
continue to expand our cooperation with other HOCHTIEF
Group companies. Here, we already benefited from broad
synergies in the past and, for example, in cooperation with
HOCHTIEF PPP Solutions generated a sales curve that
continues to rise. In the year under review, HOCHTIEF
Construction joined with Streif Baulogistik and HOCHTIEF
PPP Solutions in making inroads into the expansive geothermal energy market. Working in close harness with HOCHTIEF
Property Management, HOCHTIEF Energy Management
and HOCHTIEF Facility Management, we offer building
diagnosis services which help property owners boost the
value of their portfolios and sustainably reduce energy costs.
We are also optimistic as regards public sector construction.
To begin with, the government’s improved financial situation
creates an atmosphere of much greater readiness to engage
in new construction and refurbishment projects. Secondly,
4
more and more public sector clients are taking part in
a new tender procedure labeled “competitive dialog.” In
this new method of awarding contracts, which we very
much welcome, the deciding factor is not the construction
price alone but also the bidder’s expertise. We have already
received initial orders awarded on the basis of this new
procedure.
We are similarly gratified to report positive results in our
international business activities. In Russia, South Africa and
Chile, we won large-scale power station and hydro construction projects. On behalf of an Arabian investor, HOCHTIEF
Construction is giving shape to a nine kilometer long shopping
and commercial center in Doha. These are just a handful
of examples of the high demand for profitable, low-risk
construction management services. For this reason, we set
up our Building International unit in the reporting period.
HOCHTIEF Construction generated its highest sales and
profit growth in the FormArt segment with the development
of residential properties—an area in which the company
gained a strong foothold as one of the leading providers. It
looks likely that this positive trend is set to continue.
Following a difficult fiscal 2007, we can therefore now look
to the future with confidence. The restructuring measures
in the German building construction segment are already
giving rise to initial successes. This gratifying trend coupled
with the ongoing favorable developments in our infrastructure
and international business will contribute to sustainably
improving the profit situation at HOCHTIEF Construction.
We should like to express gratitude to our clients and business
partners for the cooperation we share in a spirit of partnership.
And we wish to thank our employees for their exceptional
commitment to the company. Together, we will shape our
future success.
Essen, February 15, 2008
Dipl.-Ing. Henner Mahlstedt
Executive Board
Executive Board of
HOCHTIEF Construction AG,
from left: Achmed Kadded,
Henner Mahlstedt, Heiner
Helbig
Dipl.-Ing. Henner Mahlstedt (born 1953), Essen,
Chairman of the Executive Board (since April 1, 2007)
studied civil engineering and joined HOCHTIEF Construction
AG in 2003 as Management Chairman of the East division.
Since October 2005, he has been a member of the Executive
Board of HOCHTIEF Construction AG where he was responsible for the Civil Europe division, HOCHTIEF Polska Sp.
z o.o., HOCHTIEF CZ a.s., HOCHTIEF Russia, HOCHTIEF
(UK) Construction Ltd., as well as market development and
relations and contract administration until March 31, 2007.
Since April 1, 2007 he has been Chairman of the Executive
Board and Human Resources Director of HOCHTIEF
Construction AG. His scope of responsibility includes the Civil
Europe division, HOCHTIEF Polska Sp. z o.o., HOCHTIEF
CZ a.s., HOCHTIEF Russia, HOCHTIEF (UK) Construction
Ltd., Durst-Bau GmbH as well as market development and
relations, risk management, personnel and communications.
Dipl.-Kfm. Heiner Helbig (born 1957), Hilden
holds a degree in business administration and joined
HOCHTIEF in 1998, assuming management responsibilities
at HOCHTIEF Construction AG’s Northwest division. He
went on to serve as member of the Management Board of
HOCHTIEF Development, Managing Director of HOCHTIEF
Projektentwicklung GmbH and HOCHTIEF PPP Solutions
GmbH, and member of the Supervisory Board of HOCHTIEF
Construction AG. Heiner Helbig joined the Executive Board
of HOCHTIEF Construction AG in October 2005 and is
responsible for finance, project financing, accounting, controlling, investment controlling, procurement, IT strategy,
legal affairs, auditing, tax, insurance as well as HOCHTIEF
Construction Trade Europe, Streif Baulogistik GmbH (until
March 31, 2007) and HOCHTIEF-Luxembourg S. A. (since
April 1, 2007).
Dipl.-Ing. Achmed Kadded (born 1961), Mettmann
studied civil engineering and began his career as a HOCHTIEF
site manager in 1989. Positions held by Achmed Kadded
include business unit manager in Münster and Berlin and
managing director of Streif Baulogistik GmbH. Kadded
became Management Chairman of the East division in 2002
and of the Northwest division in 2003, as well as of the
Southwest division in an acting capacity from September
2006. Effective September 1, 2006 he was appointed alternate member of the Executive Board while maintaining his
responsibilities. Since December 2006, he has been a regular
member of the Executive Board. On April 1, 2007 he took
charge of the Building division, HOCHTIEF Consult, Streif
Baulogistik GmbH and contract administration.
Dipl.-Ing. Dr.-Ing. E.h. Friedel Abel (born 1945),
Mettmann, Chairman of the Executive Board (until
March 31, 2007)
began his career with HOCHTIEF in 1972 after studying civil
engineering. He was appointed to the Executive Board of
HOCHTIEF Aktiengesellschaft in 1995. From July 2001 up
until his planned retirement, Friedel Abel was Chairman of
the Executive Board and Human Resources Director of
HOCHTIEF Construction AG. Until March 31, 2007, his scope
of responsibility included the Building division, HOCHTIEF
Consult, HOCHTIEF-Luxembourg S. A., Durst-Bau GmbH,
as well as personnel, communications and risk management.
5
Report of the Supervisory Board
Throughout the 2007 fiscal year, the Supervisory Board
closely supervised and advised on the Executive Board’s
management of the Company, and performed the tasks
and responsibilities incumbent upon it by law and under the
Company’s Articles of Association. The Executive Board
provided the Supervisory Board with comprehensive, timely
and regular verbal and written reporting on the financial
situation and development of the Company and its
subsidiaries, their business policy plans, enterprise planning,
risk management, and specific material transactions. The
Supervisory Board covered this reporting in depth at its
meetings, discussed it with the Executive Board, and made
all necessary decisions. There was no cause to institute
measures, such as inspection of the Company’s books or
documents, under the first clause of Section 111 (2) of the
German Stock Corporations Act (AktG).
The Chairman of the Supervisory Board additionally
maintained regular contact with the Executive Board outside
of meetings to keep abreast of the business situation and
key transactions.
At four meetings, the Supervisory Board held extensive
discussions on fundamental questions of business policy,
risk management, trends in orders and earnings, the
Company’s cash position and capital resources, as well
as the employment situation in the individual corporate
units. The Executive Board explained to the Supervisory
Board in detail any departures from the planned or targeted
course of business.
In three meetings, the Supervisory Board devoted close
attention to problems existing in the German building
construction segment. Its deliberations inevitably focused
on the negative project results together with an analysis of
the causes, on the market conditions as well as on the
action required for structural change. Difficulties here sprang
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mainly from price increases that affected long-running
projects as well as problems with subcontractors. The Board
examined and discussed in depth the Executive Board’s
reporting on a package of measures to restructure the Building
division.
As in previous years, the Board also discussed the development of the European construction markets and the European
competitive environment.
In particular, the Supervisory Board deliberated on the
strategic orientation of the domestic building construction
business and on the European competitive strategy. The
key issues were a reorganization of the German construction
business and the opportunities arising in Europe’s growth
markets—especially in Eastern Europe—and in selected
countries outside Europe that offer an advantageous
competitive climate.
With regard to human resources, the Supervisory Board
gave special attention to the situation of the workforce and
measures to provide them with training and continuing
education.
The Supervisory Board Human Resources Committee did
not meet in the 2007 fiscal year, but adopted resolutions
by way of circularization. It was not necessary to convene
a meeting of the Mediation Committee pursuant to Section
27 (3) of the Codetermination Act (MitbestG).
The annual Financial Statements and Management Report
for FY 2007 prepared for HOCHTIEF Construction AG by
the Executive Board, together with the bookkeeping, were
audited by and received an unqualified auditor’s report
from the Essen branch of PricewaterhouseCoopers Aktien
gesellschaft Wirtschaftsprüfungsgesellschaft, Frankfurt am
Main, Germany. The auditors were appointed at the General
Shareholders’ Meeting on May 7, 2007 and instructed by
the Supervisory Board to perform the audit of the annual
Financial Statements.
The Supervisory Board expresses its thanks and appreciation
to the Executive Board, company management teams and
all employees for their work in 2007.
The annual Financial Statements, the Management Report
and the auditor’s report were duly submitted to all members
of the Supervisory Board prior to the financial statements
meeting on March 11, 2008. The Executive Board also
provided verbal explanations at the financial statements
meeting. The auditors who signed the auditor’s report took
part in the Supervisory Board discussions regarding the
documents submitted, during which they reported on the
most significant results of the audit and were available to
provide additional information. Following its own appraisal,
the Supervisory Board approved the results of the auditor’s
examination of the annual Financial Statements.
Essen, March 11, 2008
Dr.-Ing. Herbert Lütkestratkötter
Chairman
On behalf of the Supervisory Board
The Supervisory Board reviewed the annual Financial
Statements and the Management Report. The review
concluded that there are no objections to be raised. The
Supervisory Board has approved the annual Financial
Statements, which are thus formally adopted.
Bernd Börgers retired from the Supervisory Board effective
May 7, 2007 and Professor Hans-Peter Keitel effective
September 15, 2007. The Supervisory Board thanks these
two gentlemen for their dedicated cooperation and expert
advice.
Matthias Donecker was elected to represent the employees
on the Supervisory Board effective May 7, 2007. Dr. Burkhard
Lohr was elected as a member of the Supervisory Board
at an Extraordinary Shareholders’ Meeting effective
September 16, 2007.
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HOCHTIEF Construction
Berlin has painstakingly
refurbished the Bero
linahaus in Berlin, built
between 1930 and 1932,
to plans of the architect
Peter Behrens. The main
tenant of the heritageprotected building in the
classic modernist style
is C&A, the fashion
store moving close to its
roots with its 17th Berlin
outlet. The company
opened its first German
store only a few steps
away from the prominent
address Alexanderplatz
1 in March 1911. The
completion of the Berolinahaus revives a piece
of city history.
8
Management Report
Business Activities
HOCHTIEF Construction AG brings together the
HOCHTIEF Group’s comprehensive range of
construction and construction-related services in
Europe. A subsidiary of HOCHTIEF Aktiengesellschaft, HOCHTIEF Construction has made a name
for itself at international level as an expert in complex infrastructure projects. The extremely high
quality of our services is upheld by our highly skilled
and motivated staff, enabling us to create added
value for our clients.
As a construction company, HOCHTIEF Construction creates something unique with every project, which means
we are constantly facing new engineering and construction
challenges. This is why each project passes through a production process tailored to its own specific requirements.
Strict quality controls and comprehensive risk management make for seamless processes, reduce the need for
renegotiations and increase the value created for our clients and for the company.
With our subsidiaries, business units and offices, we have
a presence both in Western Europe and in the highgrowth regions of Eastern Europe. In addition, we are
now also offering infrastructure and building construction
projects in selected markets outside Europe. Moreover,
our proximity to clients gives rise to competitive advantages.
• Consolidated,
with profit/loss transfer
Main subsidiaries of
HOCHTIEF Construction AG
HOCHTIEF Construction AG,
Essen, Germany
99.96 %
99.90 %
100 %
100 %
99.20 %
100 %
1,946
Durst-Bau GmbH,
Vienna, Austria
HOCHTIEF (UK) Construction Ltd.,
Swindon, UK
Streif Baulogistik GmbH,
Essen, Germany
HOCHTIEF Polska Sp. z o.o.,
Warsaw, Poland
HOCHTIEF CZ a.s.,
Prague, Czech Republic
agreement
•
Consolidated
•
4 ,916
Entreprise Générale de Construction
HOCHTIEF-Luxembourg S.A.
•
Work done (EUR million)
Employees (average over the
year)
36
116
44
Figures relating to work done and
employees in our reporting include
only fully consolidated companies
belonging to the HOCHTIEF Group,
and refer to the 2007 fiscal year.
162
64
315
91
389
289
815
303
1 ,639
HOCHTIEF Construction has thus far been responsible for
managing the two subsidiaries HOCHTIEF Polska and
HOCHTIEF CZ. Ownership of the two companies was also
transferred to HOCHTIEF Construction in the year under
review.
Thanks to our increasingly close collaboration with companies in other HOCHTIEF corporate divisions as well as with
our subsidiary Streif Baulogistik, we are in a position to
offer clients the full range of services at every link in the
construction value chain. HOCHTIEF designs, finances,
builds and operates a vast range of complex projects for
its clients.
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Organization
HOCHTIEF Construction Services Europe
Building
Turnkey
Construction
Berlin
Frankfurt
Hamburg
Leipzig
Munich
NorthrhineWestphalia
PPP
Residential
… North
… South
… West
FormArt
… BadenWürttemberg
… Bavaria
… Berlin/
Brandenburg
… Hamburg
Shell
Construction … Hanover
… Leipzig
… Berlin
… Northrhine… Frankfurt
Westphalia
… Hanover
… Rhine-Main
… NorthrhineHOCHTIEF
Westphalia Luxembourg
After Sales
Service
Civil Europe
Streif
Baulogistik
HOCHTIEF
Consult
Civil Engineering and Marine Works
Civil Engineering and Tunneling
Energy Europe
Infrastructure Alps Region
Civil Engineering and Environmental
Major European Projects
Transportation Projects and Tunneling
Construction
Machinery and
Equipment
Building Essen
Building Frankfurt
IKS Energy
Infrastructure
Marine Works
Materials
HOCHTIEF Construction Bulgaria
HOCHTIEF Construction Austria
HOCHTIEF Construction Romania
HOCHTIEF Construction Hungary
HOCHTIEF Construction Russia
Holdings and
International
Business
Technology and
Services
Durst-Bau
HOCHTIEF CZ
HOCHTIEF Polska
HOCHTIEF (UK) Construction
Building
International
The sweeping restructuring measures at HOCHTIEF
Construction in the year under review made it necessary to make certain organizational changes. These
adjustments have created a sound structural platform
for the company to generate greater value added and
minimize existing risks.
Building
The company is aware that the new selective order intake
will lead to lower building construction sales with external
clients. HOCHTIEF Construction AG has therefore once
again reduced the number of business units in the building
segment. The three business units Cologne, Düsseldorf and
Ruhr/Refurbishment and Upgrading have been amalgamated
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Scaffolding and
Formwork
to form the Northrhine-Westphalia business unit. The
Frankfurt and Rhine-Main business units have been merged
at the company’s Frankfurt location. The Kassel/Shopping
Centers, Sports Facilites and Healthcare Facilities units have
either been shut down or integrated into existing business
units. Closure of the competence centers is attributable to
the waning demand in Germany for such special purpose
properties as well as the unsatisfactory price level. Since this
move, the regional and international units have been focusing
on selected, high-margin projects in these segments. The
decision to close the Baden-Württemberg business unit
was prompted by strong competitive pressure compounded
by a lack of demand for high-caliber construction management services in the southern German construction market.
The Turnkey Construction units will in future concentrate
solely on designing and executing complex building construction projects as general contractor wherever the project
is accompanied by a preconstruction phase, as with the Elbe
Philharmonic Hall project in Hamburg. The Shell Construction
and Residential segments have therefore been separated
from the Turnkey Construction units in organizational terms.
Today, they are independent units with lean structures
modeled on those of mid-size enterprises.
The profitable real estate development activities marketed
by HOCHTIEF Construction under the brand name FormArt
are now also being operated as an independent unit. This
way, the experts at FormArt have the opportunity to act
autonomously and continue to strengthen their market image.
HOCHTIEF Construction will be the principal client of the
two units Shell Construction and Residential*. In addition,
selected external clients will benefit from the construction
expertise of these competence centers.
HOCHTIEF Construction AG responded to growing worldwide demand for its building construction expertise by
forming the Building International unit in fiscal 2007. However,
Building International does not offer any general contractor
services, focusing rather on the construction management
of major projects with very low risk potential and aboveaverage returns. In this, Building International is following the
successful example of HOCHTIEF’s US subsidiary Turner.
Construction AG has already enjoyed great success in these
countries in the past.
Streif Baulogistik
This HOCHTIEF Construction AG subsidary has made a
name for itself notably as a construction site infrastructure
and logistics service provider. With its integrated portfolio,
Streif Baulogistik serves both internal and external clients.
The company is resolutely making inroads into the European
market with its units in Poland, Ukraine, Denmark and Austria.
HOCHTIEF Consult
As one of Germany’s “biggest engineering consultancy
firms,” HOCHTIEF Consult has end-to-end experience and
know-how in all areas of turnkey building construction, civil
and structural engineering, transportation infrastructure and
the management of construction processes. Thanks to this
outstanding expertise, HOCHTIEF Consult is involved in
every project within the HOCHTIEF Group—for instance,
construction of the Elbe Philharmonic Hall in Hamburg.**
In addition, as a section of HOCHTIEF Construction AG,
HOCHTIEF Consult is working more and more frequently
for external clients. These clients profit from optimized
planning processes which have been proven in practice
and serve to minimize project risks.
*You will find further information on page 18.
**You will find further information on page 27.
Civil Europe
Civil Europe concentrates on infrastructure projects and
expansion in growth regions. In fiscal 2007, a business office
was hence set up in Sweden to push ahead with building
up Scandinavian business. The aim of the newly established
business office in St. Petersburg is to strengthen Civil Europe’s
position in Russia. In Austria, HOCHTIEF Construction
Austria came into being, a company focusing on civil engineering projects, the infrastructure segment and structural
engineering. At the same time, Civil Europe is once again
involved in projects in selected countries outside Europe.
These include Latin America (particularly Chile), South
Africa, the United Arab Emirates and India. HOCHTIEF
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Markets
Construction output grew by 2.0 percent in 2007 according to Euroconstruct, Europe’s leading construction business research group. This represented a
slight drop on the previous year’s sectoral growth
rate in Europe. Civil engineering accounted for most
of the increase. The Russian, Polish and Bulgarian
markets showed particularly compelling rates of
growth.
*The Euroconstruct area
consists of Austria, Belgium,
Denmark, Finland, France,
Germany, Ireland, Italy, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
Western Europe
The Western European construction sector continued to
gain ground in 2007, although not quite as fast as the year
before. This trend is set to continue in 2008. The countries
covered by the Euroconstruct research group* saw the
rate of increase in real construction output drop from 3.6
percent in 2006 to an estimated 1.7 percent in 2007.
Growth of 1.0 percent is projected for 2008 and 1.2 percent for 2009.
This growth affected individual segments to varying degrees: Non-residential construction—a segment relevant to
HOCHTIEF Construction—grew by 1.4 percent in 2007
and is set to gain another 0.6 percent in 2008 and 0.7 percent in 2009. Growth in civil engineering was 3.1 percent,
with a further 2.8 percent forecast for 2008, accelerating
to 3.2 percent the year after that. While the segments important to HOCHTIEF Construction show above-average
growth, a less than satisfactory gain in residential construction meant only a moderate rise in construction output
overall.
The European construction market: Regional growth,
2006 to 2008 (%)
8
M Germany
M Europe (except Germany)
Exchange rate adjusted figures
7
6
5
4
4.3
3.7
3
Source: Euroconstruct
2.2
1.6
2
1.0
1
0
12
2006
2007
1.3
2008E
In Austria, the construction industry saw its stable upward trend continue with the market expanding by 5.5 percent in 2007. Notable growth drivers were increased spending on civil engineering works and housing renovation. In
non-residential construction, the office and industrial construction segments benefited particularly strongly from a
positive trend in the Austrian economy. The Group will profit
from the dynamic growth in civil engineering and housing
renovation through its subsidiary Durst-Bau and through
HOCHTIEF Construction Austria which it launched in the
year under review.
After a poor year for construction activity in 2005, the
United Kingdom market returned to a slight positive
trend from 2006 onward. The gain in the year under review
was 2.3 percent. A 2.4 percent increase is projected for
2008 and 2.9 percent for 2009.
German construction activity continued to recover, gaining one percent in the year under review. Market researchers anticipate a further 1.6 percent growth in 2008
and 2.2 percent in 2009. The residential construction
market contracted by two percent in 2007. This was
partly due to the abolition of grants for home buyers in
Germany and a reduction in tax breaks. Projections for
the next two years show a slight decrease in 2008 followed by a return to modest growth in 2009. Despite the
low growth forecasts, HOCHTIEF benefits in residential
construction in particular with regard to high-quality residential real estate. Major growth impetus in 2007 came
from non-residential construction, where the industrial,
retail and logistics real estate segments accounted for the
lion’s share of a 4.9 percent increase. Civil engineering
likewise showed a strong upward trend, growing by 4.2
percent on the back of increased spending on road and
rail infrastructure. The positive trend is mirrored in strong
new orders in HOCHTIEF Construction’s infrastructure
activities. As a result of the healthy construction market,
sizeable construction groups in particular are noticing a
shortage of qualified personnel—primarily construction
engineers and skilled construction workers.
Eastern Europe
The countries of Eastern Europe reaffirmed their status in
2007 as particularly attractive markets with well above
average potential, as underscored by a regional growth
rate of 7.6 percent. The steep upward trend was mirrored by
the development of HOCHTIEF Construction’s business in
the region. Euroconstruct predicts a further 9.2 percent
growth in 2008 and 8.8 percent in 2009. This strong growth
sets Eastern Europe apart from the more moderate progress of the European construction market as a whole.
The Russian construction industry is booming in equal
measure across the residential construction, infrastructure
and industrial construction segments. HOCHTIEF Russia’s
contracting portfolio grew correspondingly strongly. Residential construction expanded by ten percent in 2007.
However, the strong demand is driving up real estate prices.
This means the uptrend will steady off slightly in 2008 and
2009 while remaining at a high level. Non-residential construction proved a growth driver in the year under review,
gaining by eleven percent. Demand was spread across all
segments but was particularly strong in hotels, offices, industrial buildings and education. Civil engineering likewise
showed compellingly dynamic growth, especially in road
and rail infrastructure construction. To better serve this growth
market, we converted our former Moscow business office
into a business unit.
The Polish construction industry achieved Europe’s strong
est growth rate in the year under review with a 13.1 percent increase in construction output. The forecasts are for
an even faster 15.2 percent growth in 2008 and 12 percent in
2009. Civil engineering will account for a major part of this
gain with double-digit growth rates. A further exceptional
boost is being provided by the European soccer championship due to be held in Poland in 2012. To expedite necessary spending, Poland’s Ministry of the Economy has improved conditions for private investors in the infrastructure
market. Strong demand in the residential construction segment has caused real estate prices in major Polish cities to
climb rapidly since 2006. Non-residential construction also
showed very satisfactory growth in the year under review.
HOCHTIEF Construction made use of this strong positive
trend and secured a large number of attractive contracts
during 2007.
Construction output in the Czech Republic grew by six
percent in 2007. Profits at HOCHTIEF CZ followed a similarly positive trend. Market researchers anticipate that the
strong overall construction industry growth of recent years
will tail off from 2008. Civil engineering is expected to gain
6.7 percent in 2008 after a 2.5 percent decline in the year
under review. Growth in residential construction, however,
is set to slow from 14.6 percent in 2007 to 2.5 percent in
2008. The projections for non-residential construction are
stronger. After a drop up until 2005, the sector will continue to recover on the back of rising foreign direct investment. HOCHTIEF CZ made use of the increase in construction output and secured several major contracts.
Segments
The energy sector sustained its dynamic trend through
fiscal 2007. Growth in renewables was particularly strong,
with EU directives leading almost all European countries to
continuously increase the share of electricity generation
accounted for by environmentally sustainable and resourcesaving renewable energy sources. Due to an ongoing shift
toward natural gas, demand has also risen sharply in Europe
for gas turbine, steam turbine and biomass power plants.
Twenty-three such plants, including 20 coal or gas fueled
facilities, were at the planning or construction stage at the
end of 2007. They are set to go into operation by 2011. A
similar surge in demand can be expected for hydro-geothermal power systems. HOCHTIEF is well placed to take
advantage of this trend and began construction of Germany’s first privately financed geothermal power plant in
2007.*
*You will find further information on pages 21 and 33.
Expenditure for the transport segment in Germany showed
a mixed growth pattern. Spending on expansion of the
German rail network remained at a low level. On the other
hand, the country’s federal transport infrastructure master
plan provides for EUR 12.5 billion in expenditure on rail network maintenance from 2006 to 2010. Like 2006, the year
under review saw a further increase in funds available for
roadbuilding. This reflected increased takings from Germa-
13
ny’s truck road charging system and higher tax revenues.
Some transport contracts are financed and carried out on
a public-private partnership (PPP) basis. HOCHTIEF Construction also notched up successes in this business with
its sister company HOCHTIEF PPP Solutions. The German
government plans to raise the share of contracts performed
on a PPP basis from 4 percent today to 15 percent in future.
Port construction benefited in the year under review as
in previous years from globalization and the associated ongoing rise in goods transport. Shifting logistics flows and
ever-larger container ships also require ports to be made
ready for greater volumes. The eastward expansion of the
EU brought extra growth stimulus. This is exemplified by
the container port that HOCHTIEF Construction has built in
Gdansk, Poland, and completed in 2007, as well as by
newly secured major contracts in Russia.
14
A sustained uptrend is likewise projected for the refurbishing and upgrading segment. The year under review
saw sales in this segment already exceed the new-builds
market. For 2008 alone, Euroconstruct market researchers
anticipate nearly EUR 634 billion in expenditure on refurbishing and upgrading properties in Europe. HOCHTIEF
Construction is well poised to meet this dynamically growing demand.
Orders and Work Done
New orders
At EUR 1,820 million in fiscal 2007, new orders were more
or less on a par with the EUR 1,817 million posted in 2006,
as anticipated. This outcome is attributable to several major
projects that were acquired in Germany. Among these, the
Elbe Philharmonic Hall in Hamburg stands out. The volume
of lucrative real estate development business also increased.
Orders and work done (EUR million)
New orders
HOCHTIEF Construction’s consistently implemented strategy, formulated to reinforce and expand the company’s
position in Eastern Europe, continued to bear fruit in the
reporting period. The new orders of the subsidiaries and
business units in this region climbed to nearly EUR 1.2 billion.
Work done
At EUR 1,946 million, work done in 2007 remained at about
the same level as the previous year. Work done totaled
EUR 1,960 million in fiscal 2006. The domestic and foreign
share of the 2007 total likewise remained more or less unchanged.
Work done
– 0.7 %
Order backlog
– 4.9 %
2,576
2,450
2007
1,960
1,946
1,817
1,820
New orders in Germany thus rose overall by 34.6 percent
to EUR 1,482 million.
Totaling EUR 338 million, new orders in the international
business were lower year on year. The prior-year figure of
EUR 716 million originated largely from a toll highway project, the Vienna northeastern bypass*, worth EUR 404 million.
+ 0.1 %
338
716
447
467
1,482
1,101
1,499
1,493
2006
2007
2006
Order backlog
The pattern traced by new orders and work done prompted
a slight year-on-year decrease in order backlog. The decline came to 4.9 percent.
913
1,022
1,537
1,554
2007
2006
M InternationalM
M Germany M
This corresponds to an absolute figure of EUR 126 million,
of which EUR 109 million is attributable to the international
and EUR 17 million to the domestic decrease in order backlog.
The forward order book contains around 15 months’ work.
Capacity utilization in the business units of HOCHTIEF Construction is therefore largely satisfactory.
15
is building a 15-story office complex of unusual
design and construction
in the Rheinauhafen area
of Cologne. The distinctive building is based on
the shape of a crane.
Behind its transparent
glass facades, attractive
offices are being created
covering a total of 21,000
square meters of gross
floor area. The project
is due for completion in
May 2008.
16
Strategy
During 2007, HOCHTIEF Construction embarked on a
strategic realignment of the company aimed at bringing the building construction segment in Germany
back into the black in the long term. The measures
already implemented during previous years were not
sufficient to achieve this goal. The unforeseen massive
price rises for materials and subcontractors as well
as low price levels as compared to the project risk
are important reasons behind our decision to focus
even more closely on profitable market segments
and to pursue further increases in efficiency.
Challenging operating conditions
The German construction market changed in 2006 and 2007.
Following 14 years of recession, there has been a resurgence
of construction activity. Rising demand has led to significant
price hikes as well as supply shortages for numerous
materials. At the same time, many partner companies and
suppliers also took advantage of the healthier market to
introduce not insubstantial price increases of their own. In
addition, competition with leading mid-sized enterprises in
the conventional building construction segment intensified.
HOCHTIEF Construction responded to these factors with
a range of measures that included organizational changes
to its purchasing activities* along with further optimized
risk management.**
Strategy based on a broader foundation
HOCHTIEF Construction is continuously adjusting its strategy
in line with current market trends. This is why, for example,
the network of local business units was streamlined and
competence centers established in the past. Business models
such as PreFair, under which cooperation with the client
starts as early as the planning phase, along with the ongoing
optimization of and systematic approach to client support
enable HOCHTIEF Construction to respond to new trends
in the market. In 2007, the company also launched a restructuring program in Germany. The program’s success will very
quickly be reflected in improved earnings and will guarantee
an attractive return in the medium term.
For an outline of the new organization introduced as part
of the restructuring program, please see page 10.
Cornerstones of the new strategy
The comprehensive reorientation of HOCHTIEF Construction
in Germany builds on numerous important changes that
have been implemented across all areas of the company.
These include the following:
HOCHTIEF Construction concentrates on higherquality business models
With regard to turnkey construction projects, the company
will engage exclusively in profitable segments, for example
in the PreFair business. Contracts that require HOCHTIEF
Construction to act as a general contractor in the traditional
sense will only be entered into if the project is accompanied
by a preconstruction phase. Put simply, the company must
be allowed to become involved in the planning process.
HOCHTIEF Construction strengthens its Shell
Construction unit
Shell Construction was separated from the business units
and expanded to create an independent unit with structures
modeled on those of mid-size enterprises. This type of
organization facilitates flat hierarchies, direct responsibilities
and specialization in just one segment. In addition, this
created the necessary conditions to enable the pooling of
strengths, more cost-effective purchasing as well as better
control over partner companies than was previously the case.
HOCHTIEF Construction makes a strategic entry into
the international building construction business
The new Building International business unit focuses on the
construction management of profitable large-scale projects
in those growth markets in which HOCHTIEF Construction
has not been active up to now. In this context, Building International is cooperating with Civil Europe, the HOCHTIEF
division concerned with infrastructure projects. Cooperation
with HOCHTIEF companies Leighton and Turner will also
be strengthened. To bolster its position in the high-growth
construction market in the United Arab Emirates, HOCHTIEF
Construction established a company in Qatar in 2007.
17
HOCHTIEF Construction expands real estate development and residential construction
Real estate development, referred to at HOCHTIEF Construction as FormArt*, and residential construction have been
systematically strengthened. The two units will operate independently in the future and are set to take advantage of
the excellent opportunities in special segments. Specifically,
these include the construction of high-quality apartments,
special-purpose properties and apartments for senior citizens.
The objectives are ambitious, with the company targeting a
significant boost in work done in the area of FormArt and
residential construction.
HOCHTIEF Construction further optimizes risk
management
In addition to our focus on contracts incorporating a preconstruction phase, our rigorous approach when it comes
to selecting projects helps to reduce the level of risk. Any
uncertainties that remain are discussed in detail with the
client and taken into account during the costing process.
Binding offers by subcontractors for key trades must also
be obtained before bids are submitted. Escalation clauses
integrated into the contracts enable price rises for materials
and subcontractors to be passed on to the client to a much
greater extent than was possible to date.
HOCHTIEF Construction launches quality offensive
on construction sites
Together with Porsche Consulting, the company developed
a program of measures aimed at achieving ongoing improvements and standardization of procedures on construction
sites. The objective of this continuous improvement process
is to take the zero-defect principle as used in the mass
production of automobiles and apply it to the construction
of unique buildings in the real estate sector. This quality initiative is also unique in the German construction industry.
HOCHTIEF Construction intensifies cooperation
with Group companies
Although HOCHTIEF is already executing numerous projects
with partners from within the Group, the company plans to
leverage these synergies to a greater degree than ever before.
Our stated goal is to cooperate much more closely with
HOCHTIEF PPP Solutions and HOCHTIEF Facility Manage-
18
ment in particular. Over the next three years, the work done
by HOCHTIEF Construction is set to increase as a result of
joint projects of this type. At the same time, the company
is also targeting a reduction in the contract volume for turnkey construction with external clients during this period.
Quality provider instead of discounter
Following the complete refocusing of the company’s activities, especially in Germany, HOCHTIEF Construction is
reinforcing its position as a quality provider that concentrates
on selected clients and projects in carefully chosen locations.
Additional consultancy services offered during the planning
phase are designed to provide clients with even greater
security and to help them make the right decisions before
construction commences rather than on the building site
itself. Longstanding partnerships between HOCHTIEF
Construction and highly qualified subcontractors who perform
to the highest standards ensure that our clients have access
to the necessary labor and material capacities—even in times
of resource shortages and rising prices.
In future, building construction clients in numerous countries outside Europe will be able to profit from the superior
quality of HOCHTIEF services.
Attractive growth potential
These challenging factors have also been accompanied by
some distinctly positive developments. For example, the
Refurbishing and Upgrading unit will experience extremely
positive development.** With building diagnosis services
that contribute to lowering energy costs and boosting the
value of properties, HOCHTIEF Construction, along with
the other HOCHTIEF subsidiaries, offers an integrated portfolio of services for this growing sector. Our building diagnosis
services can, for instance, identify the potential for optimizing
a property. They can also provide yield comparisons for
revitalization or refurbishment options of varying degrees
of complexity all the way to a completely new building.
HOCHTIEF Construction is therefore well placed to establish
itself as one of the leading consultancy and service compa-
nies operating in the area of energy-saving refurbishment
supported by the Federal Government.
Innovative concepts for the entire industry
Sustainable “green” building based on high ecological
standards is also set to increase significantly.* The issues
of environmental protection and energy conservation are
already established traditions on HOCHTIEF Construction
projects. And the company has accumulated a correspondingly high level of expertise in these fields as a result.
HOCHTIEF and its companies are playing an active role in
shaping the development of the construction industry. This
is why the Group is also one of the founding members of
the German Sustainable Building Council. Established in
June 2007, the organization has set itself the task of continuously furthering the causes of sustainable construction
and operation of buildings in Germany.
HOCHTIEF Construction is therefore optimistic that its complete refocusing can return building construction activities
in Germany and, with it, the company as a whole to profitability over the medium term. This positive expectation is
also supported by the current market situation in Germany,
where many clients are expressing a growing interest in
partnership-based contracting methods such as PreFair. In
addition, the—in some cases—cutthroat price competition
between construction service providers is increasingly giving
way to a yield-oriented approach and making the transition
to quality competition.
*You will find further information at www.hochtief.
com/sustainability as well
as in the HOCHTIEF Sustainability Report 2007.
The sustained positive business trend outside Germany
has prompted the company to pursue its process of internationalization.
HOCHTIEF became actively involved in ensuring—also in
the competitive dialog procurement procedure used for
awarding public-sector contracts—that the skills of the providers participating are a deciding factor in contract awards,
not just price. The new procedure for complex construction
projects enables cooperation between public-sector clients
and innovative suppliers in a spirit of partnership. And the
company has already acquired its first contracts—for example, to build the State Criminal Police Office for NorthrhineWestphalia in Düsseldorf.
Restructuring delivers first signs of success
Some of the measures aimed at steering HOCHTIEF Construction back to a position of economic strength have
already made an impact on the company’s performance in
the reporting year. Despite higher expected returns and
more stringent risk management, new orders remain at the
same level as the previous year.
19
In March 2007, construction work began on
InHaus2 in Duisburg.
The research project is
a joint effort by Fraunhofer-Gesellschaft in
association with
HOCHTIEF and other
partners to develop
intelligent and integrated
technologies for commercial buildings.
will erect the three-story
high-tech building in a
construction time of only
14 months.
20
Research and Development
As a forward-looking company, HOCHTIEF Construction gives high priority to research and development
(R&D). Operating independently and in conjunction
with other Group entities, the company developed
and rolled out further innovative technologies as well
as optimized existing processes in the reporting
period. The R&D activities also contributed to the
timely harnessing of attractive new market potential.
In the 2007 fiscal year, HOCHTIEF Construction conducted
R&D primarily in the fields highlighted below.
ViCon (Virtual Design and Construction)*
This process uses 3D computer models to simulate the
design, construction and operation of buildings. All parties
involved in execution thus receive information over the entire life cycle of the project in order to optimize processes.
Combining ViCon with the PreFair business model delivers
especially successful outcomes for both HOCHTIEF Construction and its clients.
In the year under review, the application range and customer
benefits associated with ViCon were further enhanced. A
new “virtual inspection” utility, for example, makes it possible to visualize rooms, floors, wall coverings and furnishings
digitally in the design phase, thus facilitating the decisionmaking process. In addition, the “building configurator” allows
planned apartments or offices to be furnished and experienced interactively in an online 3D model.
iBuild (Intelligent Building)
Together with HOCHTIEF Facility Management, Streif Bau
logistik and HOCHTIEF ViCon, HOCHTIEF Construction is
developing innovative ideas in order to position itself from the
outset in the fast-growing intelligent building segment. In
fiscal 2007, interest focused on the inHaus2** project. The
HOCHTIEF companies and other partners, such as the
Fraunhofer-Gesellschaft, are seeking to transfer intelligent
technologies to buildings. These include innovative cooling
systems, geothermal energy, the micro-reinforced high-performance concrete Ducon, and energy optimization.
InTun (Innovative Modules for Tunneling)
In 2007, HOCHTIEF Construction put into practice a series
of pioneering innovations—developed in-house—in the
tunneling segment. ATDS (Advanced Tunnel Drive Steering), for example, was employed in a pilot project in Cologne. The direct feedback between surface subsidence
measurements and the steering system of the tunnel driving machine permits low-subsidence tunneling.
Geothermal energy
In the reporting period, HOCHTIEF Construction joined
forces with other HOCHTIEF companies to continue the
successful activities surrounding its entry into the emerging geothermal energy*** market. Developed in concert
with partners, the concept for financing, designing, building and operating geothermal power plants was rolled out
for the first time toward the end of the year. Building work
started in Dürnhaar, Bavaria, on Germany’s first privately
financed geothermal power plant at the end of November
2007. The project owner is a company formed in the year
under review, Süddeutsche Geothermie-Projekte (SGG)
GmbH, in which HOCHTIEF holds a 40 percent interest.
Operating as a general contractor, HOCHTIEF Construction looks forward to implementing various projects in the
years ahead. Experts expect this market to develop vigorously.
Continuous Improvement Process (CIP)
The purpose of this program, developed in cooperation with
Porsche Consulting, is to enhance the efficiency of working on-site without compromising quality. Among the targets
are to minimize material inventories, reduce waiting times
and improve the coordination of subcontractors’ activities.
The envisioned benefits for HOCHTIEF Construction are
lower overall costs and the security of consistently high quality. CIP is patterned on the production procedures that
take place in the automotive industry and the zero-defect
principle that applies in series production. The CIP team at
HOCHTIEF Construction already oversaw numerous projects in 2007, and will be continuing its work in 2008.
*You will find further information on ViCon at www.
hochtief-vicon.com.
***You will find further information on pages 13 and 33.
**See photo opposite. You
will find further information
at www.inhaus-zentrum.de/
site_en/.
Patents
The number of patents remained unchanged at 133 in the
reporting period
21
Employees
Sustained, profitable growth can be achieved only
with highly motivated and exceptionally well qualified
staff. HOCHTIEF Construction is aware of this fact
and acts accordingly. Our personnel activities, which
were further enhanced in the reporting period, therefore seek to continuously increase the level of training and commitment of our staff. The company also
stepped up its drive to recruit new talent in 2007.
Rise in number of employees
On the balance sheet date, HOCHTIEF Construction AG
employed 4,990 staff. The year-on-year increase of 2.8
percent is largely attributable to the infrastructure segment.
The company’s complement of 330 trainees once again made
it the largest training enterprise in the HOCHTIEF Group.
Highly satisfied HOCHTIEF employees
At the start of 2007, the responses to the first pan-European
HOCHTIEF employee survey were evaluated. The survey
delivered very gratifying results. Eighty percent of those
polled indicated that they were happy to be working for
HOCHTIEF. The company has responded promptly to constructive criticism and taken appropriate measures to further
improve the working environment.
Action to overcome skill shortage
The competition to recruit talented skilled and managerial
staff has been getting tougher in the construction industry
for several years. HOCHTIEF Construction has taken a wide
variety of steps to address this trend. Back in 2000, for example, the in-house HOCHTIEF Academy was established. Since
2007, external students have also been able to enroll with,
and obtain a generally accepted bachelor’s degree from,
this institution, which is the only one of its kind in the German
construction industry.
During the company’s second “university day,” students
and lecturers from Germany’s foremost technical universities
took the opportunity to get to know HOCHTIEF—including
a visit to a construction site—and to meet the Executive
Board and other managers in person.
A program was initiated in 2007 to encourage existing members of staff to recruit suitable candidates for employment
from among their friends and acquaintances. The campaign
proved highly successful and gave rise to numerous perma22
nent appointments. In addition, a new vacancy notice concept
was developed for university graduates and specialists, in
which HOCHTIEF employees present their duties and responsibilities from a personal perspective.
Human resources activities focus on personnel
development
The company’s success is founded on its employees’ commitment and expertise. For this reason, personnel development is a matter of priority for HOCHTIEF Construction.
Its task is to continuously improve the employees’ skills
according to specific targets and to offer them attractive
development opportunities.
Raft of employee motivation measures
HOCHTIEF Construction motivates its employees not only
by way of individual development programs, a positive corporate culture and challenging tasks, but also with monetary
incentives. In fiscal 2007, for instance, staff were once again
given the opportunity to purchase employee shares. The
company firmly believes that a family-friendly personnel policy also encourages employees to perform especially well.
In July 2007, the HOCHTIEF Group was awarded the “berufundfamilie” (“career and family”) certificate of the charitable
Hertie Foundation in recognition of its exemplary work in
promoting a sensible work-life balance. The award was preceded by a comprehensive audit, performed by the Foundation, of the company’s activities to foster a better balance
between the demands imposed by working while raising a
family. The safety and environmental management regime
developed by HOCHTIEF has consistently reduced the work
accident rate in Germany for four years in a row.
A word of thanks to employees and staff
representatives
Without the willingness of the staff to remain loyal to the
company even in economically difficult times, HOCHTIEF
Construction would not have registered initial successes
with its restructuring within such a short time. It is thanks
to their commitment and resolute desire to generate profitable growth together that HOCHTIEF Construction can
take an optimistic view of the future.
The Executive Board therefore thanks all employees and
staff representatives for their exemplary conduct.
Procurement
In the 2007 fiscal year, HOCHTIEF Construction AG’s
procurement expenditure accounted for more than
80 percent of total operating performance. This illustrates the critical role played by efficient and effective purchasing in ensuring business success.
In the reporting period, the company systematically
pushed ahead with implementing the organizational
changes in purchasing that were initiated in 2006.
Lead buyer organization and supplier park
introduced
We began in 2007 to establish lead buyers for key services
and materials. These buyers act on behalf of all the divisions and are responsible primarily for procuring facade
engineering, technical building systems, steel and concrete. By pooling the company’s demand, this new organization gives us a strong position in the procurement market. In fiscal 2008, HOCHTIEF Construction is to deploy
lead buyers in other segments as well. In the year under
review, the lead buyers set up a supplier park for key
works—specifically facade engineering and technical
building systems. The company has thus taken an early
step to ensure long-term, partnership-based cooperation
with highly capable subcontractors. Such close collaboration simplifies processes and facilitates risk management.
Direct purchasing reinforces global sourcing
By way of the two trading companies HOCHTIEF Global
Trade and HOCHTIEF Procurement Asia Ltd., we have
since 2007 been developing enhanced opportunities for
purchasing favorably priced, high-quality supplies direct
from manufacturers worldwide. HOCHTIEF Construction is
also offering this service to external clients. HOCHTIEF
Global Trade was established in the reporting period by
merging two purchasing organizations, namely HOCHTIEF
Construction Trade Europe and Global One Trade. The
predecessor companies’ know-how was amalgamated in
HOCHTIEF Global Trade. Purchasing directly from manufacturers will enable us to benefit even more from numerous advantages in future. First, this practice eliminates the
customary mark-ups charged by subcontractors and
wholesalers. Second, direct purchasing reduces the risk of
material supply bottlenecks because we can order larger
volumes much earlier and independent of subcontractors.
In the year under review, HOCHTIEF Global Trade focused
its direct purchasing activities on air conditioning and ventilation, electrical engineering and the fit-out segment, including flooring and interior finishing products. The cost
economies achieved with the individual projects came to
between 10 and 20 percent. Against this background, we
will be integrating other product categories in the direct
purchasing program soon.
In August 2007, we founded HOCHTIEF Procurement Asia
as a 50 percent joint venture with the Chinese trading
company B.S.C. Industries Ltd. It focuses on procuring
building materials and fit-out elements directly from manufacturers in China. In future, the company intends to engage in purchasing activities throughout the whole of Asia.
We are thus able to respond efficiently to price trends in
Europe and the USA, and further safeguard our supply
chain. TÜV Rheinland, which among other things provides
inspection and certification services, continuously monitors the quality of the products. Ongoing supplier audits
similarly ensure that the materials comply with the high
standards required by HOCHTIEF. Besides its procurement activities, the joint venture identifies cost-saving alternatives to existing building materials on the Chinese market.
KaufPilot makes significant value contribution
The KaufPilot tool introduced in 2006 enables HOCHTIEF
Construction to also procure products attributable to indirect costs at a reasonable price without compromising
quality. The range of products includes office supplies and
furniture, tools and work safety equipment. The ability to
combine the purchase orders of the German HOCHTIEF
units and to conclude favorable master agreements gives
rise to considerable price benefits.
23
*Detailed information on
these topics is provided in
the HOCHTIEF Aktiengesellschaft 2007 Annual Report
and on the HOCHTIEF
Group website, www.
hochtief.com.
Financial Review
Risk report
HOCHTIEF Construction AG recorded a loss of EUR 197
million in fiscal 2007. The loss was made good by the
Company’s parent, HOCHTIEF Aktiengesellschaft, under
the existing profit/loss transfer agreement.
HOCHTIEF Construction has a comprehensive risk management system. As in previous years, we refined and improved this system on an ongoing basis during 2007. Our
Company is also integrated into the risk management system of the HOCHTIEF Group.*
HOCHTIEF Construction AG thus fell far short of its goal of
improving earnings. This represented a major setback.
The shortfall is mostly a result of losses on contracts in the
German building business.
The main causes of the substantial losses in German building construction lie in market-specific trends. These include exceptionally fierce price competition and major price
hikes in key trades such as core and shell work, facade
engineering and technical building services. The negative
situation was compounded by subcontractor insolvencies
and poor subcontractor performance.
Immediate action was taken to improve earnings on a sustained basis in the form of changes to costing and pricing
guidelines as well as to contract terms.
The Company framed a strategy at short notice to realign
its business model and the organization of its building
business. The resulting measures are now being implemented. The restructuring costs incurred due to this
realignment had a further adverse impact on earnings.
**Available funds:
HOCHTIEF AG cash pooling
account, other marketable
securities and cash and
cash equivalents less
amounts due to banks
24
Due to the loss situation and the fact that new advance
payments did not fully cover the amounts utilized from
past advances, funds available to the Company dropped
from EUR 806 million at the end of 2006 to EUR 678
million at December 31, 2007.**
Despite this decrease, HOCHTIEF Construction AG’s liquidity position remained healthy at the 2007 balance
sheet date, resulting in positive net income from financial
assets.
The Contract Review Committee remains a key element of
our risk management system. The Committee consists of
the HOCHTIEF Construction Executive Board and experienced HOCHTIEF Construction managers.
The risk minimization and risk control systems further improved in 2007 are primarily a response to the problems in
the German building construction business. We have taken
action on various fronts:
• An intensified selection process and longer processing
times when pursuing new business
• Specification of deal breakers in tender and contract
documents to ensure a fair spread of risks and opportunities between HOCHTIEF Construction and customers
• Implementation of new contracting models with a low
risk profile
• Development of early warning indicators during contract
performance
• No firm commitment on price to customers without previously obtaining binding offers for key trades from subcontractors
We have also raised the minimum return on new contracts
to above three percent.
The organizational framework for risk control was additionally improved when realigning the German building
construction business.
Looking Ahead
The thorough restructuring launched in fiscal 2007
aims to restore the German building business to its
former strength and generate profitable growth for
HOCHTIEF Construction. The action taken is already
showing signs of success. We are optimistic that
this positive trend will continue.
Overall economic situation
The Kiel Institute for the World Economy forecasts that
world economic growth will slow down in 2008.
Industry situation
The Central Federation of the German Construction Industry predicts further moderate growth in the German construction market in 2008. The strong demand in the Eastern European growth markets will likewise be sustained.
Use of the competitive dialog* procurement procedure is
also likely to have a positive impact on public-sector construction.
New orders
HOCHTIEF Construction’s new orders total in 2008 will be
dominated by major infrastructure contracts. This assumption is based among other things on promising negotiations that we are conducting jointly with HOCHTIEF PPP
Solutions to secure large-volume toll expressway contracts
in Greece. In turnkey construction, we will maintain the rigorous selectivity in pursuing new business adopted in 2007.
New orders in the development business and at HOCHTIEF
Construction’s subsidiaries and associates will match or
exceed the high level achieved in 2007. Overall, we expect
that new orders will increase in 2008 compared with the
prior year.
Work done
Based on the current order backlog and anticipated new
orders, our Company expects to increase work done in 2008
compared with the year under review. The current order
backlog means we are already more than 75 percent certain of achieving our goal of increasing work done. This
makes for a satisfactory level of capacity utilization overall.
Earnings and financial performance
After the sharp deterioration in its business results in 2007,
HOCHTIEF Construction expects a major improvement on
the bottom line in 2008. The strategic and operational realignment launched in the building construction business
and the improved risk management will contribute significantly toward this outcome. The success of the action taken
is already visible from the earnings quality on new contracts.
Further action with an adverse effect on earnings cannot
be ruled out in the course of realignment. We do not see
any additional risks for the Company beyond those that are
usual for the industry.
HOCHTIEF Construction is part of the HOCHTIEF Group’s
cash pooling system and expects that the liquidity position
in its operating business will remain stable in 2008. Purchases of shares in HOCHTIEF Polska and HOCHTIEF CZ
will reduce funds available to the Company.
25
again demonstrated its
contracting expertise
and regional know-how
with the turnkey construction of a challenging deep-water container
terminal on the northern
coast of Poland. The
newly created land area
for global container
shipping measures ap
proximately 44 hectares.
Seven million cubic meters of sea bed were
moved for the construction of the terminal.
26
Projects of HOCHTIEF Construction AG, its
Subsidiaries and Business Units
As a service-oriented construction company,
HOCHTIEF Construction AG focuses HOCHTIEF’s
130-plus years’ experience in the core business of
construction. The company is mainly engaged in
building construction, civil engineering, structural
engineering and airport construction in Europe. In
the year under review, the company began establishing a new business unit, Building International,
which is focused on construction management for
major international projects. At the same time,
HOCHTIEF Construction further expanded the product market segments of real estate development
and residential properties.
Cross-business synergies make it possible to realize projects which set us apart from the competition
and offer impressive levels of efficiency, innovation
and quality. These projects arise through partnership
and cooperation between the competence centers—
focused on the market segments—and the business
units and subsidiaries. This tight-knit network enables us to offer clients a full range of services at
every link in the construction value chain.
The following project highlights document the broad
capabilities of HOCHTIEF Construction.
Major project
Elbe Philharmonic Hall, Hamburg
A prominent landmark and one of the ten best concert
halls in the world is being built in Hamburg’s new HafenCity urban development zone—the Elbe Philharmonic Hall.
HOCHTIEF Construction is building the complex on top
of a 37 meter tall former quay warehouse. Alongside the
three concert halls, the EUR 241 million project includes
educational facilities aiding children’s musical advancement,
a 250-room five-star hotel, restaurants and a parking garage with more than 500 parking spaces. In addition,
HOCHTIEF Construction is building 43 exclusive freehold
apartments as a real estate developer and will also market
them. Construction work began in April 2007 and is scheduled for completion in early 2010. HOCHTIEF Facility Management will subsequently operate the Elbe Philharmonic
Hall.
Real estate development
Residential district, Düsseldorf
HOCHTIEF Construction is carrying out the Am Wildpark
project close to the Grafenberger Wald forest and the Düsseldorf racecourse. Due for completion in 2011, it includes a
total of 133 rental apartments, 106 condominiums and 33
townhouses with a total living area of 28,750 square meters, as well as a 383-space underground parking garage.
Ground will be broken on the EUR 80 million project in July
2008.
Residential development Schanzenstrasse,
Düsseldorf-Oberkassel
As a member of a project company, HOCHTIEF Construction is designing and building 76 apartments, 26 townhouses
and an underground parking garage with 179 parking spaces
on a former factory site. Phase one of the Neuraum residential development will be ready for occupation in March
2008. The overall project, worth EUR 38 million, is scheduled for completion in late 2008.
Semidetached houses, Bad Vilbel
In spring 2008, HOCHTIEF Construction will begin a further residential development, the Tannenweg project. With
an overall investment of EUR 10 million, the project comprises the construction of 18 upscale semidetached homes
as well as the sale of eight developed properties for duplex
houses and free-standing single-family homes.
Severin residential development, Cologne-Südstadt
HOCHTIEF Construction is a member of a project company
building a turnkey residential development in the Severin
district of Cologne, consisting of six buildings with 60 housing units and a shared underground parking garage. The
overall project, worth EUR 17.5 million, will be ready for occupation in late 2008.
27
SunSide city apartments, Erlangen-Röthelheimpark
In the Röthelheimpark district of Erlangen, HOCHTIEF Construction, acting as real estate developer, is designing and
building two attractive properties featuring two- to six-room
apartments. The apartments will be particularly energyefficient and thus meet the criteria for the KfW Energy-Saving House 60 funding program of KfW Bankengruppe. The
project is worth over EUR 8 million.
City apartments, Nuremberg-Mögeldorf, Am
Tiergarten
The ParcSide development is being built close to an extensive leisure and recreation area in Nuremberg. Divided
among seven city villas, the 37 luxury apartments make their
mark with exclusive architecture and upscale yet energysaving facilities. The project is worth over EUR 10 million.
Nursing home, Pattensen
This nursing home took shape as another of HOCHTIEF
Construction’s development projects. Construction of the
three-story property offering space for 106 senior citizens
began in January of the reporting period and was completed
in October 2007. The volume of the investment was around
EUR 8 million.
*By introducing the new
award procedure, the legislator has created a framework in which no longer
simply the price, but also
the bidders’ capabilities are
taken into account.
**You will find further information at www.hochtiefconstruction.com.
28
Office and commercial buildings
NRW State Criminal Police Office, Düsseldorf
Following a “competitive dialog”* and subsequent negotiation procedure, we were awarded the contract to design
and build the Northrhine-Westphalia State Criminal Police
Office in Düsseldorf in November 2007. This procedure
corresponds with the HOCHTIEF PreFair model.** The approximately 200 meter long, 80 meter wide and 22 meter
tall building has a total gross floor area of around 59,000
square meters. The project, worth EUR 80.2 million, will be
completed in November 2009.
Sky Office, Düsseldorf
Core and shell work on the 89 meter tall Sky Office began
in downtown Düsseldorf in October of the reporting year.
Offering more than 30,000 square meters of office space,
the 23-story building sets itself apart by its seemingly transparent facade and wing-shaped roof.
Retail building, Düsseldorf
Our company is acting as design-build contractor in the
Kö 18 project on Düsseldorf’s exclusive Königsallee shopping
boulevard. The Düsseldorf business unit is designing and
erecting the building. The contract also includes demolition
of the existing building. Construction work on the EUR 14.4
million project began in January 2007 and is scheduled for
completion in August 2008.
VHV-Versicherungen, Hanover
We are acting as the leader of a joint venture erecting an
office and administration building for insurance company
VHV-Versicherungen in Hanover. The property comprises
three individual buildings linked by a central entrance hall.
An underground parking garage will offer space for roughly
430 vehicles. Approximately 1,500 VHV employees will
move into the complex starting February 2009. The total
value of the contract is just under EUR 62 million.
CR Sechzehn, Hamburg
Construction work on the office and residential property in
the Neustadt area of Hamburg began in November 2007.
Two thirds of the offices are reserved for the roughly 650
head office employees of insurance broker Aon Jauch &
Hübner. The project worth some EUR 44 million includes
50 upscale apartments as well as a two-story underground
parking garage with 260 parking spaces.
Hitachi Power Office, Duisburg
The 800 employees of Hitachi Power Europe moved into
their new head office in September 2007. The ten-story office building complex worth EUR 31.4 million was built by
HOCHTIEF Construction together with a project developer.
Our company is also building a new coal-fired power plant
in Duisburg-Walsum for tenant Hitachi (see also page 31).
Electronic Arts (EA) Rheinauhafen, Cologne
HOCHTIEF Construction completed a further project in the
newly developed former port district of Cologne with this
office building offering nearly 9,100 square meters of gross
floor area. Our company is also building a 15-story office
property based on a crane design on the site, due for completion in May 2008. In addition, the RheinauArtOffice,
software company Microsoft’s future Northrhine-Westphalia office, will be completed on the site by August 2008.
Grey Campus, Düsseldorf
Our company is converting the historical building of the
former Ulanen barracks in the Northrhine-Westphalian
capital into what will become the “Ideas Embassy” of the
German section of international advertising agency Grey.
With a total area of 12,500 square meters, the heritageprotected complex is being augmented with a new
building. The 500 Grey employees will move into their new
offices in summer 2008.
Glückaufhaus, Essen
HOCHTIEF Construction is acting as general contractor for
the Glückaufhaus project for regular client Kölbl Kruse. With
the exception of the heritage-protected facade, the old
Glückaufhaus building will be completely demolished. The
work also includes construction of a new office building
with underground parking garage, movie theater, data center and restaurant. Work began in November 2007 and the
project is scheduled for completion in January 2009.
Apartment refurbishment, Halle-Neustadt
The Berlin and Leipzig business units were awarded a contract to plan and execute the refurbishment of 15 precast
concrete residential buildings in Halle-Neustadt in SaxonyAnhalt. The approximately 1,400 housing units will be provided, among other things, with a heat-insulated facade
and new sanitary installations in a project scheduled for
completion in December 2008. The contract is worth EUR
22.8 million.
Refurbishment and upgrading
Fruit and vegetable hall, Berlin
Following a “competitive dialog”* bidding contest, we were
awarded the contract to refurbish the fruit and vegetable
hall of Berlin-Mitte wholesale market. As leader of a joint
venture, HOCHTIEF Construction handled conceptual design, construction planning and structural engineering, as
well as carrying out the necessary work in the 29,000 square
meter hall while market operations continued. In addition,
we supported the client in organizing substitute areas during the refurbishment work. The EUR 10.3 million project
was completed in January 2008.
Shopping centers
Completed in the reporting year:
Six projects, across Germany
In 2007, HOCHTIEF Construction completed the Wilmersdorfer Arcaden in Berlin, the Schloss-Arkaden in Brunswick,
the Erlangen Arcaden, the expanded Alstertal shopping
center in Hamburg, the WilhelmGalerie in Ludwigsburg and
the Sebalder Höfe in Nuremberg. The Wilmersdorfer Arcaden is the first shopping center with a curved 180 meter
long three-story mall. For the Schloss-Arkaden, the destroyed facade of the former Welf dynasty’s castle had to
be reconstructed and integrated in the complex. In Ludwigsburg, too, we integrated the old facade into the project. The total value of the six projects came to EUR 329
million. As part of our realignment of the Building unit and
the resultant selective tapping of the market, the Kassel/
Shopping Centers business unit was closed.
Tempelhofer Hafen, Berlin
The contract to build the Tempelhofer Hafen shopping
center is worth approximately EUR 52 million. HOCHTIEF
Construction is not only building the new retail areas but
also refurbishing and finishing the heritage-protected warehouse building, where retail, restaurant and office units as
well as a medical center and parking decks with a total of
600 parking spaces are likewise taking shape.
29
**These are modern transport vessels in which the
cargo is driven onto the ship
(roll-on-roll-off ship).
30
Infrastructure projects
Rail lines and tunnels:
Truckenthal bridge, Sonneberg (Thuringia)
As a member of a joint venture, HOCHTIEF Construction is
building the 425 meter long and 50 meter high bridge for
the new high-speed ICE rail line from Ebensfeld to Erfurt
under a contract from DB Netz AG. In addition, we are
building two further small bridges and constructing a rail
cut involving the movement of two million cubic meters of
earth. Work on the project is scheduled for completion in
September 2009.
in April 2007 and is scheduled for completion at the end of
May 2010. The contract is worth just under EUR 185 million.
U 4 metro line HafenCity, Hamburg
As technical leaders of a joint venture with three other
partners, the Civil Engineering and Tunneling, and Civil Engineering and Marine Works business units are building
the new U 4 metro line. From summer 2011, it will connect
the HafenCity and Jungfernstieg station. The technical
challenges involved in the EUR 200 million project include
connecting the new tunnel to the already existing metro
line at Jungfernstieg.
Container terminal, Gdansk (Poland)
After a construction period of 24 months, Poland’s largest
deep-water container port was officially opened on October 3, 2007. The Civil Engineering and Marine Works and
HOCHTIEF Polska business units were responsible for the
turnkey construction of the terminal, one of the highlights
of which is an 800 meter long quay at which two large
container ships can be handled simultaneously. The terminal also has a loading ramp for RoRo ships**. In addition,
HOCHTIEF built two kilometers each of access roads and
rail lines as well as an administration building, container
loading station and workshop. The contract was worth
approximately EUR 117 million.
U 3 metro line, Nuremberg
The business units Transportation Projects and Tunneling,
and Infrastructure Alps Region assumed technical leadership of a joint venture set up to extend the U 3 metro line in
Nuremberg. This EUR 38.5 million project involves the construction of the 1,200 meter long tunnel as well as the expansion of two stations. HOCHTIEF Construction had pre
viously built a section of the Nuremberg metro network
extension between 2001 and 2005.
Ports:
Kaiserschleuse lock, Bremerhaven
As leader of a joint venture, HOCHTIEF was awarded the
contract to carry out Europe’s largest lock construction
project, the Kaiserschleuse lock in Bremerhaven. The new
lock in the overseas port of Bremerhaven will be 305 meters long, 55 meters wide and 13 meters deep. The contract was awarded for the first time by the competitive
dialog* method, meaning that we first had to convince the
client of our capabilities in detail. Construction work began
Flood protection, St. Petersburg (Russia)
A joint venture comprising HOCHTIEF Construction and
another partner is involved in an extensive flood protection
project in St. Petersburg. The two companies are building
a dam designed to protect the greater St. Petersburg area
from storm flooding. Inside the dam, a 730 meter long tunnel will be built for road traffic. The contract, due for completion in 2012, is worth a total of EUR 350 million.
Container terminal, St. Petersburg (Russia)
A consortium headed by HOCHTIEF Construction is to
build the Lomonosov Freight Terminal near St. Petersburg.
Under the agreement signed by the consortium in 2007,
the permit plan will first be drawn up before construction is
begun. The EUR 230 million project was launched in September 2007 and will be completed at the end of 2010. The
terminal will have a quay length of 1,000 meters for a turnover of a million containers per year, as well as a berth capable of handling 300,000 cars.
Container terminal Nqura, Port Elizabeth (South
Africa)
HOCHTIEF Construction is the technical leader of a joint
venture extending the Nqura deep-water port near Port
Elizabeth, South Africa. In a project due for completion in
November 2010, the quay wall is being extended by two
berths for a container terminal. The project is worth EUR
38.6 million. HOCHTIEF Construction had previously built
the port and two breakwaters in the industrial region at the
mouth of the Coega River with the same partner in 2006.
Schools:
Refurbishment, Frankfurt am Main
HOCHTIEF Construction is refurbishing four schools in the
German banking capital for HOCHTIEF PPP Solutions in a
project lasting until mid-2009. The contract is worth around
EUR 90 million. Our subsidiary Streif Baulogistik is providing temporary pavilions to allow school operations to continue during the construction work. HOCHTIEF Facility Management will subsequently operate the schools for 20
years.
Energy:
Coal-fired power plant, Duisburg-Walsum
Under a EUR 68 million contract from Hitachi Power Europe, HOCHTIEF Construction is building a 750 megawatt
coal-fired power plant in a project due for completion by
the end of 2009. It includes all process buildings as well as
a 181 meter tall natural draft cooling tower with integrated
flue gas discharge.
New school, Cologne-Rodenkirchen
In a EUR 40 million project for HOCHTIEF PPP Solutions
which got underway in October 2007, HOCHTIEF Construction is designing and building a new comprehensive
school in the Cologne suburb of Rodenkirchen. The school
will open to its approximately 1,200 students from fall
2009. HOCHTIEF Facility Management will manage the
completed property until the year 2034.
Substitute fuel plant, Frankfurt am Main
For Infraserv, the operator of the Hoechst industrial park,
HOCHTIEF Construction is carrying out core, shell and finishing work on Germany’s largest substitute fuel plant with a
throughput of 560,000 metric tons per year. The fuel consisting of non-recyclable plastics offers high economic and
ecological efficiency. The project, worth just under EUR 25
million, began in October 2007. The construction work will
be completed in September 2009.
Residential properties
Factory conversion, Baden-Baden
In a project scheduled for completion in mid-2008, we are
redeveloping the Batschari Palais in Baden-Baden. The
project includes the construction of 85 condominiums in
four different styles as well as 65 rental apartments. The
outer appearance of the former cigarette factory will be
preserved, including facade, roofing and wooden windows. The value of the contract is nearly EUR 10 million.
Public-private partnerships (PPP)
Toll roads:
A4 expressway, Gotha/Eisenach
Under a contract from an operator consortium led by
HOCHTIEF PPP Solutions and another partner, HOCHTIEF
Construction will build an approximately 45 kilometer long
toll road as a member of a joint venture. Work on the section of the A4 between Gotha and Eisenach began in October 2007 and is scheduled for completion in 2011. The
operator consortium will operate the PPP project for 30
years.
Wohnen an St. Gereon, Cologne
Under a EUR 9.1 million contract from AXA Investment
Managers, HOCHTIEF Construction is building 31 upscale
apartments in the center of Cologne in a project scheduled
for completion in June 2008. Cooperative cost optimization
in the bidding phase opened up attractive savings opportunities.
Special-purpose properties
Forensic psychiatric hospital, Cologne
Our Northrhine-Westphalia business unit is building a forensic psychiatric hospital on the site of a former barracks
in Cologne. The EUR 22.9 million project is being carried
31
In Austria, construction
was green-lighted on
the first PPP road project, the northeastern
bypass around Vienna.
HOCHTIEF Construction is involved in the
project as part of a joint
venture, building an approximately 51 kilometer long section of the
so-called Y project.
Streif Baulogistik is
providing the necessary
construction equipment.
32
out in accordance with the latest therapeutic and security
standards. Construction work began in December 2007.
Main subsidiaries of HOCHTIEF Construction AG
Streif Baulogistik GmbH
der
The subsidiary of HOCHTIEF Construction is focused on
construction as well as construction-related infrastructure
and logistics. The construction services provider is mainly
engaged in providing project-specific combinations of serv
ices for construction site installation, administration and
optimization of construction site operations. In doing so, it
unlocks major time and cost saving potential for clients.
Business at Streif Baulogistik in 2007 was characterized by
a slight improvement in construction activity in Germany.
The company performed better than expected. It succeeded
in driving forward its targeted expansion and increasing its
earnings in Germany. Work done in the rest of Europe countries increased according to plan. The international share
of total sales increased from 30 percent in 2006 to 34 percent in the reporting year.
Strategic partnerships coupled with the targeted entry into
further European markets were behind the expansion in
the reporting period. With the establishment of Streif Baulogistik Austria in Vienna in July 2007, the company strengthened its presence in the fast-growing Central and Eastern
European region. In Ukraine, the company bolstered its position in the crane hire business through two cooperation
agreements. To better manage an increasing number of
projects in Scandinavia, Streif Baulogistik opened a sales
office in Denmark in November 2007. The already existing
Streif Baulogistik Polska performed as expected in fiscal
2007 and further strengthened its position as market leader.
With the newly established innovation and development
center Streif Baulogistik Systems, the company presented
itself for the first time as a manufacturer of system formwork. This will not only open up new customer segments
but also make the company less dependent on other manu
facturers as a formwork hire company. The newly developed systems StreifLight and StreifTelos were launched on
the market in the reporting period.
Growth in the Logistics Consulting & Management unit
continued in 2007. The increasing importance of integrated, sustainable construction logistics was reflected in
rising orders. In consequence, the unit achieved the expected positive result.
In the reporting year, Streif Baulogistik rationalized its organizational structures, streamlined its business processes
and grew in a targeted way in Europe as well as in future
markets. The order backlog increased by roughly 70 percent from the prior year—a good platform for future success.
In 2008, a continuing slight improvement in building activity
in Germany and increasing international business are expected to promote growth. The strategic goals are to stabilize the core business and expand into further European
markets. In addition, Streif Baulogistik will optimize and expand its range of services. The company also intends to
establish itself in non-European markets via its Energy &
International Project Services unit.
Project highlights
Geothermal deep drilling system
In April 2007, Streif Baulogistik acquired a geothermal deep
drilling system for the construction of geothermal power
plants by HOCHTIEF Construction.* Streif Baulogistik assembles and disassembles, maintains and operates the
system, supplies electricity for drilling operations and takes
charge of energy supply and waste disposal.
*You will find further information on pages 13 and 21.
Shopping center, Poland
Until August 2008, Streif Baulogistik Polska is providing
five tower cranes for the construction of the Millennium Hall
shopping center in the Polish city of Rzeszów. Our company received the order directly from the investor Bogi and
thus succeeded in acquiring an additional new customer.
33
Residential construction, Ukraine
Under a contract from a Spanish-Ukrainian investor group,
Streif Baulogistik Ukraina is supplying three tower cranes
for the construction of an upscale residential complex in
the capital Kiev. The complex comprises five units, to be
built consecutively. The cranes will therefore be in operation until October 2010.
HOCHTIEF Polska Sp. z o.o.
Launched in 1996, HOCHTIEF’s Polish subsidiary is one of
the leading building contractors in Poland. Ownership of
HOCHTIEF Polska was transferred to HOCHTIEF Construction in the reporting year. HOCHTIEF Polska serves the
building construction and infrastructure markets. Its portfolio includes building offices, shopping centers, factories,
roads, bridges, rail lines and port facilities. An example of
the company’s work is Poland’s biggest deep-water container terminal, which went into service in the year under
review.*
HOCHTIEF Polska also further enhanced and extended its
position in construction management during the 2007 fiscal year. The company achieved another marked increase
in work done overall, exceeding expectations. This success
is mirrored in a series of accolades awarded to HOCHTIEF
Polska for many of its projects. In view of the favorable
economic environment, the company expects to sustain
the strong uptrend through fiscal 2008.
Project highlights
Shopping center, Poznań
The Galeria Malta shopping and leisure center in Poznań
will be completed by the end of 2008. The center will offer
153,000 square meters of floor space housing some 200
shops, various restaurants, a multiplex movie theater and a
fitness studio. There will also be parking for 2,000 cars.
HOCHTIEF Polska is general contractor in the EUR 100
million development.
34
Residential complex Warsaw
The luxurious residential complex Casa Verde being built
by HOCHTIEF Polska in the Mokotów district is one of the
most modern apartment complexes in the Polish capital.
Casa Verde includes 102 upscale apartments. The L -shaped
building with a floor area of approximately 15,000 square
meters has six floors on one side and nine on the other. The
EUR 8.7 million project will be completed in August 2008.
TV studio and offices, Warsaw
In spring 2008, TV broadcaster Canal+ moved into a new
five-story office building including TV studio, customer service, conference rooms and a three-story underground
parking garage. HOCHTIEF Polska developed and built the
EUR 12.7 million building, which has a gross floor area of
8,120 square meters (above ground) and 6,780 square meters (underground).
Office building, Warsaw
HOCHTIEF Polska commenced building work on Agdar
Plaza at the beginning of 2007. The ten-story office building in Warsaw’s booming Mokotów district will feature underground parking, a large fitness center, a restaurant and
a conference center accommodating up to 350 individuals.
Due for completion in August 2008, the contract is worth
some EUR 26 million.
Platinum Towers
HOCHTIEF is constructing the EUR 47 million plus 22-story
apartment building Platinum Towers in the center of the
Polish capital Warsaw in a project due for completion in
August 2009.
Logistics center, Swarzędz
In December 2007, HOCHTIEF Polska completed building
work on the expansion of a logistics center in the city of
Swarzędz, near Poznań. The project involved erecting prefabricated warehouse buildings and staff rooms including
the necessary installations. The contract was worth over
EUR 30 million.
HOCHTIEF CZ a.s.
HOCHTIEF’s Czech subsidiary is one of the six largest
building contractors in the Czech Republic. Part of the
HOCHTIEF Group since 1999, HOCHTIEF CZ changed its
name from HOCHTIEF VSB at the end of 2006. In the reporting year, ownership of HOCHTIEF CZ was transferred
to HOCHTIEF Construction. Fiscal 2007 saw the company
further boost sales and earnings, continue the restructuring
and strategic reorientation begun in the previous year as
well as secure a number of major new contracts.
Project highlights
Expressway ring road, Prague
A further section of the new Prague ring road was subcontracted with HOCHTIEF CZ in the year under review. The
contract worth a total of EUR 57.6 million poses various challenges for the company, among other things with road, rail
and tram traffic continuing throughout the building phase.
The work is set for completion by the beginning of 2011.
Radio station, Prague
HOCHTIEF CZ is the lead contractor in the modernization
and reconstruction of the historic Czech Radio building in
Prague. The aim is to retain the appearance of the old
building while bringing amenities up to standard for a modern radio station. The contract comes to EUR 19 million.
Business and administrative center, Prague
HOCHTIEF CZ is building the Trianon Center for HOCHTIEF
Development Czech Republic. The EUR 27.8 million contract will be completed at the beginning of 2009.
Office complex, Prague
HOCHTIEF CZ has secured the contract for a further prestige office complex, Prosek Point in the Czech capital,
Prague. The contract for the three nine-story buildings is
worth some EUR 31.7 million.
HOCHTIEF Russia
The Russian construction market continues to grow at a
rapid pace. For this reason, HOCHTIEF has converted the
former business office in Moscow into a business unit in
order to reflect our growing presence in Russia. HOCHTIEF
Russia is focused on infrastructure projects, such as airports and sea ports*, office properties, industrial and logistics buildings as well as retail centers, sports facilities and
upscale residential construction. In addition, HOCHTIEF
Russia operates as a construction manager in industrial
construction. In the reporting year, the HOCHTIEF business
unit significantly increased its workforce and acquired a
large number of new orders, above all in the infrastructure
sector. With a new independent unit, the company also
extended its operations beyond the previous main areas of
Moscow and St. Petersburg into the Russian regions.
Project highlights
Sheremetyevo airport and train station, Moscow
In December 2007, HOCHTIEF Russia was awarded the
contract to extend Terminal 2 of Sheremetyevo Airport.
The HOCHTIEF business unit was also commissioned to
handle general planning and turnkey construction of the
airport train station. The approximately EUR 190.5 million
project includes a four-track platform, parking deck, fivestory office building as well as a gallery linking the station
to Moscow’s airport. The new station connecting Shere
metyevo Airport with the center of Moscow will be completed in 2008. HOCHTIEF Russia had previously built the
airport’s 40,000 square meter Terminal C.
Various hydro construction projects
HOCHTIEF Russia worked on several major projects** in
fiscal 2007. Russian business is developing extremely positively for HOCHTIEF Construction in this area. HOCHTIEF
Russia is also operating as a construction manager on
several projects, including the construction of two cement
plants near Moscow and Yekaterinburg.
35
Durst-Bau GmbH
Established in 1948 and acquired by HOCHTIEF Aktien
gesellschaft in 1987, the Austrian building contractor, DurstBau, has been a subsidiary of HOCHTIEF Construction AG
since 2002. The company is headquartered in Vienna and
has a branch in Innsbruck. Its activities are focused on residential construction, refurbishing and upgrading as well as
the fast-growing real estate development business. In addition, the company has established itself as a key player
in civil engineering, sewerage and alpine construction projects in the Tyrol region.
Project highlights
Vienna Airport
In a joint venture with HOCHTIEF Construction, the company is expanding the airport in the Austrian capital. The
contract has a value of around EUR 61 million.
Hofmoklgasse/Rauchfangkehrergasse, Vienna
In February 2007, our Austrian subsidiary began building a
residential complex with 100 apartments and 100 parking
spaces—a contract worth EUR 12.1 million.
Landgutgasse, Vienna
As part of a joint venture, Durst-Bau began building a turnkey residential complex with 240 social housing apartments
and a doctor’s practice in early 2006. The 20,000 square
meter, EUR 21 million project will be completed at the beginning of 2008.
36
HOCHTIEF Construction Austria GmbH & Co. KG
In addition to subsidiary Durst-Bau, HOCHTIEF Construction has also had a business unit in Austria since 2005.
As a result of the successful acquisition of several major
projects by the Austria business unit, HOCHTIEF Construction Austria was established as an independent national company in 2007.
The new company is a wholly-owned subsidiary of HOCHTIEF
Construction focused on civil engineering, infrastructure
and structural engineering projects. HOCHTIEF Construction Austria therefore complements the building construction activities of Durst-Bau. Corporate integration creates a
foundation for increased involvement in the Southeastern
European region as a whole.
Project highlights
Lainzer Tunnel, Vienna
HOCHTIEF Construction is the technical leader of a joint
venture set up to build the Lainzer rail tunnel near Vienna in
a project running until 2010 (see cover picture). The joint
venture is building an approximately three kilometer long
twin-track tunnel. The special challenge for the project
team is that the rail line runs under an urban rail track and
ends in a densely populated area. The value of the contract for HOCHTIEF Construction is EUR 40.2 million.
Freeway project Y, near Vienna
HOCHTIEF Construction is planning and building a 51 kilometer long section of the first-ever Austrian PPP road
project—the Vienna northeastern bypass. HOCHTIEF PPP
Solutions is handling project “Y” as leader of a consortium
and will operate the road for 30 years after completion. The
value of the contract for HOCHTIEF Construction comes
to EUR 403.9 million.
HOCHTIEF (UK) Construction Ltd.
HOCHTIEF (UK) Construction has been a subsidiary of
HOCHTIEF Construction AG since 2002. In this time, the
company has established itself as a contractor with superior
problem-solving skills, above all in the road and rail building,
industrial construction and energy sectors. Together with
HOCHTIEF Construction, the company handles complex
tunnel and port projects, among others.
In fiscal 2007, HOCHTIEF (UK) Construction benefited from
the stable trend in the UK infrastructure market. Expansion
of the rail network, infrastructure improvements in the runup to the 2012 Olympic Games and steadily growing demand
for renewable energies will contribute to business.
Project highlights
Stratford Station, London
Work began in July 2007 on the upgrade of Stratford Station, one of the busiest train stations in the British capital.
HOCHTIEF (UK) is building new platforms, elevators and
stairs. In addition, the company is renewing existing platforms, electrical installations and communications systems.
The EUR 40.3 million project is part of the infrastructure
development for the 2012 Olympic Games.
Glendoe hydroelectric power station, Scotland
Together with HOCHTIEF Construction, HOCHTIEF (UK)
Construction has been building a hydroelectric power station near legendary Loch Ness since early 2006. After
completion in 2009, the plant will supply electricity to up to
250,000 homes. The EUR 206.2 million project includes
the building of a 900 meter long dam as well as extensive
underground works including several tunnels with a total
length of 16 kilometers.
Baglan paper mill, South Wales
HOCHTIEF (UK) Construction completed the infrastructure
and building works for this project in the year under review.
The mill was built for the Italian company Intertissue, which
is now one of the main suppliers of tissue products in the
UK. The contract was worth EUR 25 million.
HOCHTIEF-Luxembourg S.A.
A subsidiary of HOCHTIEF Construction AG since 2002,
HOCHTIEF-Luxembourg is focused on the development,
financing and marketing of real estate development projects.
The FormArt and residential real estate units continued their
positive performance in the reporting period. HOCHTIEFLuxembourg is optimistic that this trend will continue,
supported by the very favorable economic situation. The
residential real estate development business achieved
particularly high growth rates. Despite increased demand
and limited availability of building land, the company succeeded in acquiring additional real estate. HOCHTIEFLuxembourg will thus be able to market roughly 120 apartments in fiscal 2008. The company takes an integrated
approach to real estate development projects, not only
buying the land but also planning, selling and realizing the
projects, thereby guaranteeing high quality.
Project highlight
AGATH residential project, Luxembourg-Howald
In fiscal 2007, HOCHTIEF-Luxembourg acquired land in a
park-like green area in the district of Howald on which
roughly 40 apartments and 500 square meters of commercial space are to be developed. Construction on the project
worth over EUR 23 million is scheduled to start in mid-2008.
Docklands Light Railway Stratford Station, London
Rising passenger volumes and the forthcoming 2012
Olympics made it necessary to upgrade Docklands Light
Railway Stratford Station. The EUR 17.1 million project
included the construction of new platforms, bridges and
shelters. The station was successfully completed and
opened at the end of 2007.
37
Supervisory Board
Dr.-Ing. Herbert Lütkestratkötter
Essen, Chairman, Chairman of the Executive Board,
HOCHTIEF Aktiengesellschaft
Dr.-Ing. Dr.-Ing. E. h. Hans-Peter Keitel
Essen, former Chairman of the Executive Board,
HOCHTIEF Aktiengesellschaft (until September 15,
2007)
*Employee representative
Gerhard Peters*
Butzbach, Deputy Chairman, Administrative Officer,
Bernd Börgers*
Haldern/Rees, Executive Manager, Mülheim/Essen/
Oberhausen Regional Chapter of the German
Construction, Agricultural and Environmental
Employees’ Union (until May 7, 2007)
Matthias Donecker*
Backnang, Member of the Federal Executive
Committee, German Construction, Agricultural and
Environmental Employees’ Union (since May 7, 2007)
Rainer Eichholz
Unna, Chairman of the Management Board,
HOCHTIEF Development
Günter Haardt*
Frankfurt, Executive Manager, Vermögensverwaltungsund Treuhandgesellschaft mbH, (a trust fund of the
German Construction, Agricultural and Environmental
Employees’ Union)
Olaf Hasselmann*
Hanover, Chairman of the Management,
Shell Construction business unit,
Dr. jur. Wolfgang Kässer
Pullach, Attorney-at-law
Slawomir Lachowski
Warsaw, President of BRE Bank SA
Dr. Burkhard Lohr
Haltern am See, Member of the Executive Board of
HOCHTIEF Aktiengesellschaft (since September 16,
2007)
Hans Dietmar Sauer
Karlsruhe, former Chairman of the Board of
Directors, Landesbank Baden-Württemberg
Pietro Spano*
Sprockhövel, Foreman, HOCHTIEF Construction AG
Olaf Wendler*
Osterweddingen, Technician,
38
Financial Statements
of HOCHTIEF Construction AG, Essen,
for the Fiscal Year January 1 – December 31, 2007
The 2007 Financial Statements and Management Report of
HOCHTIEF Construction AG have been submitted to the
operator of and published in the electronic Bundesanzeiger
(Federal Official Gazette) in accordance with Section 325 of
the German Commercial Code (HGB).
Balance Sheet
(EUR thousand)
See
note
Dec. 31,
2007
Dec. 31,
2006
3,191
136,565
139,756
4,061
12,704
16,765
978,579
(825,223)
153,356
15,439
168,795
687,091
350,241
55,613
1,261,740
1,401,496
642,098
(547,223)
94,875
11,587
106,462
806,024
345,399
47,478
1,305,363
1,322,128
100,050
100,050
Assets
Fixed assets
Property, plant and equipment
Financial assets
(1)
Current assets
Inventories
Construction work in progress
Less: Progress payments received
Other inventories
Receivables and other current assets
Other marketable securities
Cash and cash equivalents
(2)
(3)
(4)
(5)
Liabilities and Shareholders’ Equity
Shareholders’ equity
Subscribed capital
(6)
Capital reserve
Provisions
Liabilities
(7)
(8)
103,615
103,615
203,665
203,665
460,152
737,679
1,401,496
435,074
683,389
1,322,128
39
Statement of Earnings
(EUR thousand)
Sales
See
note
Jan. 1 – Dec. 31,
2007
Jan. 1 – Dec. 31,
2006
(10)
1,085,087
2,089,714
336,481
(591,710)
53,538
(1,262,794)
(288,172)
( 4,280)
(124,327)
( 47)
0
12,834
57,536
(1,205,730)
(307,604)
(5,257)
(116,861)
(1)
163
29,274
Change in the balance of construction work
in progress
Other operating income
Materials
Personnel costs
Depreciation and amortization
Other operating expenses
Net income from participating interests
Net income from financial assets
Net interest income
(11)
(12)
(13)
(14)
(15)
(16)
(16)
(17)
Writedowns on financial assets and
marketable securities
(18)
Loss from ordinary activities
Transfer under profit/loss pooling agreement
Net profit before changes in
reserves/unappropriated net profit
40
(5,609)
(8,201)
(197,289)
( 58,677)
197,289
58,677
0
0
Notes to the 2007 Financial Statements of
Movements in Fixed Assets over the Period
Jan. 1 – Dec. 31, 2007
(EUR thousand)
Cost of purchase or production
Jan. 1, 2007
Additions
Disposals Cumulative depreciation
and amortization
Depreciation and
amortization
in 2007
Carrying
amount at
Carrying
amount at
Dec. 31,
2007
Dec. 31,
2006
Property, plant and equipment
Technical equipment and machinery, and transportation equipment
4,079
88
345
3,261
73
561
582
Other equipment, office furniture and equipment,
and small equipment
32,676
3,922
14,268
19,700
4,207
2,630
3,479
36,755
4,010
14,613
22,961
4,280
3,191
4,061
Financial assets
Shares in affiliated companies
Other participating interests
Other long-term loans
31,656
63
4
122,835
1,146
0
0
49
4
19,086
–
–
67
–
–
135,405
1,160
0
12,638
63
3
Total fixed assets
31,723
68,478
123,981
127,991
53
14,666
19,086
42,047
67
4,347
136,565
139,756
12,704
16,765
Notes on the changes in financial assets:
Additions to shares in affiliated companies primarily involved HOCHTIEF
Global Trade GmbH, Essen, where they related to an increase in
share capital, and OOO HOCHTIEF, Moscow, where they related to
the transfer, increase in share capital and acquisition of HOCHTIEF
CZ a. s. and HOCHTIEF Polska Sp. z o.o. An additional change was the
launch of HOCHTIEF Construction Austria GmbH & Co. KG, Vienna.
The figure for financial assets in the depreciation and amortization
column relates to a reduction to fair value on recognition of a writedown
on HOCHTIEF Global Trade GmbH, Essen.
41
General information
These annual financial statements are prepared in accord
ance with the German Commercial Code (HGB) and
Stock Corporations Act (AktG). HOCHTIEF Construction
AG has made use of the option provided by Section 265 (7)
of the Commercial Code to combine a number of items in
the balance sheet and the statement of earnings for purposes of clarity. Also in the interest of clarity and in line with
established practice, the statutory balance sheet disclosures are supplemented by two additional items stated in
these Notes: Receivables from joint ventures and amounts
due to joint ventures. These record the net amounts receivable from or payable to joint ventures after accounting for
products and services supplied, construction work done,
administration fees, cash advances paid, and HOCHTIEF
Construction AG’s share of joint venture profits or losses.
The Statement of Earnings is presented in vertical format
using the nature of expense method of analysis.
Monetary amounts in the text of these Notes are rounded
to the nearest thousand euros unless specifically stated
otherwise.
The Company is a wholly owned subsidiary of HOCHTIEF
Aktiengesellschaft, with which it has a Control and Profit
Transfer Agreement.
Accounting policies
Property, plant and equipment are stated at cost of purchase
or production (at the amount required to be capitalized
under tax law), less depreciation and writedowns due to
impairment. Borrowing costs are not included in purchase
or production cost.
Depreciation is charged on property, plant and equipment
to the full extent permissible under tax law. It is applied
using the declining balance method to the extent permitted
under tax law, switching to the straight-line method where
this results in higher depreciation charges. Low-value assets
are charged to income in the year of acquisition and shown
as disposals in the statement of movements in fixed assets.
In view of its limited significance, acquired software is
included in office furniture and equipment. All permissible
special tax depreciation allowances are used.
Shares in affiliated companies and participating interests
are measured at acquisition cost less writedowns for
impairment. Non-interest-bearing loans and low-interest
loans to third-party entities are reported at present value.
Other loans are reported at their nominal amount.
Inventories are stated at cost of purchase or production, or
at fair value if lower. The production cost of construction
work in progress includes direct costs of material and
production plus an appropriate proportion of overheads.
Expected losses on work in progress are taken into account
by recognizing a writedown on the cost of production. If the
expected losses exceed the capitalized cost of production,
the difference is accounted for by recognizing provisions.
These are estimated on the basis of the prospective future
performance of each contract until construction is completed,
assessing future income solely on the basis of figures
confirmed in writing by the client and future costs on the basis
of the estimated full cost up to completion.
42
Major additional expenditure was incurred in 2007 for
four long-term infrastructure projects due to unexpected
geological conditions. To present a true and fair view in the
2007 financial statements, the submitted claims amounting
to EUR 37.7 million have been recognized for accounting
purposes at their realistic contract value.
Other provisions are recognized in accordance with prudent
commercial judgment; with regard to a limited number of
project-related risks, provisions are recognized based on
legal appraisals, reflecting the level of risk that can realistically
be anticipated.
Liabilities are recognized at the settlement amount.
Progress payments received from clients are deducted
from inventories up to the amount of the cost of production
for each project. Advance payments in excess of these
amounts are reported on the liabilities side.
The valuation of receivables and other current assets, which
are initially recognized at their nominal amount, includes
appropriate provision for specific doubtful accounts. A
global allowance is also deducted to cover general credit
risk. Receivables from clients in other countries are largely—
to the extent possible—secured against political and
economic risks by Hermes guarantees.
Other marketable securities are reported at acquisition cost.
If the cost of purchase of any asset is higher than its fair
value on the balance sheet date, a writedown is recognized
on its carrying amount.
Sales figures include HOCHTIEF Construction AG’s share in
the net profits and losses of joint ventures.
Expenses for severance allowances to employees and other
taxes are reported as other operating expenses.
Currency translation
Foreign currency receivables are measured at the lower of
the central rate at initial recognition and the exchange rate
at the balance sheet date. Foreign currency payables are
measured at the higher of the spot rate at initial recognition
and the exchange rate at the balance sheet date. Losses
due to changes in exchange rates are recognized as expense.
Cash and cash equivalents are measured at their nominal
amount.
Subscribed capital is measured at its nominal amount.
Provisions for pensions, long-service bonuses, and semiretirement programs for older employees are determined
using actuarial tables. The discount factor applied is 3.5
percent. Pension provisions are determined using the Prof.
Klaus Heubeck 2005 G tables. These are generational
tables that state probabilities for pension factors such as
mortality, loss of earning capacity and marriage rates
classified by birth year as well as by age and sex.
43
Explanatory Notes on the Balance Sheet
1. Fixed assets
The combined fixed assets categories reported in the balance sheet are shown broken down into their component
items and with year-on-year changes on page 41. Shares
in affiliated companies and participating interests included
in financial assets are shown in the List of Holdings appended to these Notes.
2. Other inventories
(EUR thousand)
Dec. 31,
2007
Dec. 31,
2006
559
562
14,880
11,025
15,439
11,587
Raw materials
and supplies,
spare parts
Advance payments
3. Receivables and other assets
(EUR thousand)
Of which:
residual term
above 1 year
Dec. 31,
2006
Of which:
residual term
above 1 year
Trade receivables
Receivables from joint ventures
126,627
106,629
1,895
–
136,710
106,802
3,139
–
Receivables from affiliated companies
434,455
3,908
543,045
12,101
Receivables from companies in which the
Company has participating interests
Other receivables
Amounts due from affiliated companies mostly comprise
cash pool receivables, trade receivables, and loans.
44
Dec. 31,
2007
2,873
–
3,631
–
16,507
687,091
3,911
9,714
15,836
806,024
6,952
22,192
Other receivables include receivables under pension liability
insurance, interest receivables from securities, promissory
note loans (Schuldscheindarlehen), damage claims, short
and medium-term loan receivables from third-party entities,
advance contributions made to funds set up to compensate
construction employees during reduced working hours or
bad weather, foreign value-added tax receivables, amounts
receivable from project companies, amounts receivable
from employees for advances and short-term loans, and
other non-trade receivables and other assets.
4. Other marketable securities
The securities portfolio mostly consists of shares in bond
and equity funds and fixed-interest investments denominated in euros. Marketable securities with a carrying amount
of EUR 188,386,000 are legally owned by HOCHTIEF PensionTrust e.V.
Under a contractual trust arrangement (CTA) and by contractual agreement, HOCHTIEF Construction AG is party
to a legally separate pension fund set up to hold assets
used to fund pension benefit payments for HOCHTIEF
Construction AG. The Company retains beneficial ownership of the trust assets.
EUR 28,840,000 in marketable securities are pledged to
safeguard amounts accumulated in semi-retirement plans
against insolvency in accordance with Section 8a of the
German Semi-Retirement Act, and to secure credit balances on working time accounts. Securities with a carrying
amount of EUR 1,044,000 are pledged for construction
contracts.
5. Cash and cash equivalents
These consist mostly of euro bank balances. Cash and
cash equivalents to the value of EUR 4,866,000 are legally
owned by the pension fund.
6. Shareholders’ equity
(EUR thousand)
Subscribed capital
(nominal capital stock)
Capital reserve
Amount as of
Dec. 31,
2007
Amount as of
Dec. 31,
2006
100,050
100,050
103,615
203,665
103,615
203,665
7. Provisions
(EUR thousand)
Dec. 31,
2007
Dec. 31,
2006
Provisions for pensions
Other provisions
219,726
240,426
460,152
209,816
225,258
435,074
Provisions for pensions are recognized for current and future
benefit payments to active and former employees and their
surviving dependants.
Pension payments totaled EUR 5,354,000 in 2007 (2006:
EUR 4,614,000).
Other provisions cover items such as warranty obligations,
obligations for work pending completion, costs of order
processing and follow-up costs on contracts already invoiced,
provisions for onerous contracts, payments for damages,
costs of semi-retirement programs for older employees,
obligations under stock option plans for management,
outstanding employee leave, obligations for long-service
bonus payments, costs of organizational development,
contributions to occupational accident mutual indemnity
associations, costs of preparing the annual financial statements, and other uncertain liabilities.
Information on obligations secured by liens and similar
charges is provided in Note 4.
HOCHTIEF Construction AG’s nominal capital is divided
into 100,050,000 bearer shares of common stock with no
par value. The sole shareholder is HOCHTIEF Aktiengesellschaft, Essen, Germany.
45
8. Liabilities
(EUR thousand)
Dec. 31,
2007
Of which:
residual
term up to
1 year*
Dec. 31,
2006
Of which:
residual
term up to
1 year*
Amounts due to banks
Advance payments for orders
Trade payables
Amounts due to joint ventures
Amounts due to affiliated companies
34,318
244,862
303,512
78,236
7,827
26,540
244,862
303,504
78,236
7,827
25,179
218,035
309,868
52,120
25,483
17,590
218,035
309,868
52,120
25,483
* As in the prior year, there are
no liabilities with a residual
term of more than five years.
Amounts due to companies in which the Company has
participating interests
1,014
1,014
235
235
Other liabilities
Of which: from taxes
Of which: from social insurance contributions
67,910
[4,605]
[1,045]
737,679
67,910
[4,605]
[1,045]
729,893
52,469
[3,884]
[1,026]
683,389
52,469
[3,884]
[1,026]
675,800
Amounts due to banks are secured to the value of EUR
23.1 million (2006: EUR 17.6 million) by charges on real
property and assignment of purchase price receivables.
These guarantees and letters of comfort primarily serve as
security for bank loans, contract performance, warranty
obligations and advance payments. Most guarantees as of
the reporting date related to participating interests.
HOCHTIEF Construction AG is also jointly and severally
liable for all construction joint ventures in which it has an
interest.
Other liabilities include payroll liabilities, tax liabilities, social
insurance liabilities, other non-trade payables and other
obligations.
9. Contingencies, commitments and other financial
obligations
(EUR thousand)
Liabilities under
guarantees and letters
of comfort
Of which: for affiliated
companies
46
Dec. 31,
2007
Dec. 31,
2006
50,286
44,178
[50,286]
[43,277]
Under the centralized cash management system operated
by the parent company HOCHTIEF Aktiengesellschaft, the
Company bears secondary liability for the use of funds by
HOCHTIEF Aktiengesellschaft, provided that meeting the
assumed payment obligation does not affect the asset base
needed for capital maintenance at the time the payment
obligation is entered into.
Other financial obligations arise in connection with longterm tenancy agreements in the amount of EUR 78,949,000
of which EUR 23,628,000 are obligations to affiliated companies. Expenditure on rentals and lease payments totaled
EUR 20,149,000 in 2007 (2006: EUR 21,362,000).
Explanatory Notes on the Statement of Earnings
10. Sales
HOCHTIEF Construction AG’s sales totaling EUR
1,085,087,000 (2006: EUR 2,089,714,000) primarily consist
of contract amounts invoiced directly to clients, products
and services supplied to joint ventures, and the Company’s
share of joint venture profits and losses. The total sales figure
comprises EUR 1,078,539,000 generated domestically and
EUR 6,548,000 abroad. Because of the long-term nature
of construction contracts, the sales figures provide only an
incomplete picture of work done during the fiscal year
(including the Company’s share of work done in joint ventures). Work done is therefore broken down separately for
domestic and international operations below.
Work done
(EUR thousand)
11. Other operating income
This item primarily includes income from reversals of provisions, indirect utilization of provisions, insurance payments
received for damages, sales of securities, reimbursement
of administrative expenses, renting and leasing out, and
foreign exchange gains.
12. Materials
(EUR thousand)
Raw materials, supplies and purchased
goods
Purchased services
Jan. 1 – Dec.
31, 2007
Jan. 1 – Dec.
31, 2006
999,988
1,119,751
334,825
163,718
1,498,531
284,961
88,009
1,492,721
395,375
3,150
4,164
20,683
23,944
447,316
1,945,847
310,421
31,991
13,215
49,469
61,836
466,932
1,959,653
Jan. 1 – Dec.
31, 2007
Jan. 1 – Dec.
31, 2006
81,295
68,192
1,181,499
1,262,794
1,137,538
1,205,730
Domestic:
Subdivided by
sector
Commercial/industrial
Public sector
Residential
International:
Subdivided by
region
Europe
Asia
Africa
Americas
Australia
Total
47
13. Personnel costs
(EUR thousand)
Jan. 1 – Dec.
31, 2007
Jan. 1 – Dec.
31, 2006
Wages and salaries
231,688
245,746
Social insurance and
support
43,058
46,319
13,426
288,172
15,539
307,604
Pensions
Employees (average for the year)
2007
Waged/industrial
employees
1,487
2006
1,445
Salaried/office employees
3,429
3, 411
Total
4,916
4,856
16. Net income from participating interests and net
income from financial assets
(EUR thousand)
Jan. 1 –
Jan. 1 –
Dec. 31,
Dec. 31,
2007
2006
Net income from partici
pating interests
(47)
(1)
Income from profit/loss
transfer agreements
848
58
Expenses from transfer of
losses
(428)
0
Income from participating
interests
9
0
Loss from participating interests
(476)
(59)
[(16)]
[0]
0
163
Jan. 1 –
Dec. 31,
2007
Jan. 1 –
Dec. 31,
2006
27,407
41,937
[16,874]
[26,128]
14,573
12,663
[11,770]
12,834
[11,887]
29,274
Of which: affiliated
companies
Net income from
financial assets
17. Net interest income
14. Depreciation and amortization
This item applies entirely to property, plant and equipment,
which is depreciated to the full extent permitted by tax law.
15. Other operating expenses
Other operating expenses primarily include rentals and
lease payments, insurance premiums, including the cost
of Hermes insurance against foreign risks, court, attorneys’
and notaries’ fees, legal costs, marketing and travel
expenses, losses on disposal of financial assets, costs
of organizational development, costs of materials for
administrative purposes, foreign exchange losses, other
provisions, and other social benefits payable that are not
reported elsewhere. Other taxes included here come to
EUR 2,045,000 (2006: EUR 1,629,000).
48
(EUR thousand)
Other interest and similar
income
companies
Other interest and similar
expenses
companies
18. Writedowns on financial assets and marketable
securities
This expense mostly comprises EUR 5,542,000 in writedowns on marketable securities. It also includes a EUR
67,000 writedown which was recognized to adjust for the
loss before tax consolidation incurred at HOCHTIEF Global
Trade GmbH and was charged on transferring EUR 602,000
to the company’s capital reserve.
19. Total compensation for the Supervisory Board
and Executive Board
Total compensation for fiscal 2007 came to EUR 3,417,000
for the Executive Board and EUR 422,000 for the Supervisory
Board. The members of the Supervisory Board and Executive
Board are listed on pages 5 and 38.
Group affiliation
HOCHTIEF Aktiengesellschaft (Essen, Germany) is the sole
shareholder in HOCHTIEF Construction AG and is the parent
of both the largest and the smallest group of companies for
which consolidated financial statements are drawn up and
of which HOCHTIEF Construction AG is a member. Consolidated financial statements have not been prepared for
HOCHTIEF Construction AG because it and its subsidiaries
are included in the consolidated financial statements of
HOCHTIEF Aktiengesellschaft, which are submitted to the
operator of and are published in the electronic Bundesanzeiger (Federal Official Gazette).
The Executive Board
Essen, January 22, 2008
49
List of Holdings
Name and registered location
Percentage
stock held
Shareholders’ equity
(thousand)
Local currency
Income totaling EUR 848,000
was transferred to HOCHTIEF
Construction AG under the ex
isting profit/loss transfer
agreement.
Profit/(loss) for the year
(thousand)
Local currency
EUR
EUR
1
Losses totaling EUR 429,000
were transferred to HOCHTIEF
Construction AG under the ex
isting profit/loss transfer
agreement.
2
No current annual financial
statements available (estab
lished 2007)
3
Formerly “Kronen
Tausend179 GmbH”
4
Annual financial statements
as of December 31, 2006
5
No current annual financial
statements available
6
Formerly “Deukalion Einhun
dertdreiunddreißigste Ver
mögensverwaltungsgesell
schaft mbH,” Frankfurt am
Main
7
Affiliated companies
Hochtief-Luxembourg S.A., Luxembourg
DURST-BAU GmbH, Vienna, Austria
HOCHTIEF (UK) CONSTRUCTION Ltd.,
Swindon, UK
Streif Baulogistik GmbH, Essen 1
HOCHTIEF Construction Chilena Ltda.,
Las Condes, Santiago, Chile
HOCHTIEF Global Trade GmbH 2
RheinauArtOffice GmbH & Co. KG, Essen
ArtOffice GmbH, Essen
OOO HOCHTIEF, Moscow, Russia
HOCHTIEF Construction Austria GmbH & Co. KG, Vienna,
Austria
HOCHTIEF Construction Austria Verwaltungsges. mbH, Vienna,
Austria
HOCHTIEF Construction Qatar W.L.L., Doha, Qatar 3
HOCHTIEF CZ a.s., Prague, Czech Republic
HOCHTIEF Polska Sp. z o.o., Warsaw, Poland
Other participating interests
HOCHTIEF Canada Inc., Ontario, Canada
LLC HOCHTIEF Ukraine, Dnipropetrovsk, Ukraine 5
HOCHTIEF Construction AG Infrastructure
Polska sp.j., Warsaw, Poland 5
Bau und Grund AG, Metzingen 5
Projektgesellschaft für Grundstücksentwicklung in der Wiehre
Freiburg GmbH & Co. KG, Freiburg 5
Projektverwaltungsgesellschaft in der Wiehre mbH, Freiburg 5 Projektentwicklungsgesellschaft acht bis elf mbH, Cologne
Area of Sports GmbH & Co. KG, Mönchengladbach 5
Projektverwaltungsgesellschaft Mönchengladbach Area of Sports
mbH, Mönchengladbach 5
HOCHTIEF Construction Chiloe Ltda.,
Santiago, Chile 5
CONTUR Wohnbauentwicklung und Projektsteuerung GmbH &
Co. KG, Düsseldorf 5
CONTUR Wohnbauentwicklung GmbH,
Düsseldorf 5
SEVERINS WOHNEN GmbH & Co. KG, Cologne 5
Projektverwaltungsgesellschaft SEVERINS WOHNEN mbH,
Cologne 5
1. WohnArt Projektentwicklung GmbH & Co. KG, Hamburg 5
WohnArtVerwaltungsgesellschaft mbH, Hamburg 5
E. Pihl & Son A.S.–HOCHTIEF Construction AG sp. j.,
Warsaw, Poland 5
Skyliving GmbH & Co. KG, Hamburg 5
Skyliving VerwaltungsGmbH, Hamburg 5
Verwaltungsgesellschaft Lister Gracht GmbH, Hanover 5
Stadion Magdeburg GmbH & Co. KG, Magdeburg
Stadion Magdeburg Verwaltungsgesellschaft mbH, Magdeburg
Mélyépítő Budapest Kft., Budapest, Hungary 6
Uferpalais Verwaltungsgesellschaft mbH, Essen 3 7
RMZ-HOCHTIEF Construction (India) Private Ltd., Bangalore,
India 3
Südwestdeutsche Rohrleitungsbau GmbH, Frankfurt am Main 5
50
*
99.96 %
99.90 %
(2,549)
(2,061)
1,722
(3,131)
100 %
100 %
GBP
7,298
9,952
31,659
GBP
111
162
0
99.99 %
100 %
50.00 %
50.00 %
99.90 %
CLP
2,940,000
CLP
1,832,584
RUB
38,224
4,028
635
25
20
1,062
RUB
26
2,547
0
(733)
(4)
1
100 %
1,000
(44)
0
100 %
49 %
100 %
99.83 %
QAR
CZK
PLN
200
995,363
99,137
35
37
37,376
27,588
CZK
PLN
151,870
11,458
5,476
3,035
100 %
100 %
CAD
UAH
8,407
(3,443)
5,818
( 519)
CAD
UAH
(152)
(3,236)
(103)
(508)
70 %
70 %
PLN
9,482
2,475
(305)
PLN
17,255
4,425
(134)
60 %
60 %
51 %
50 %
25
23
21
10
2,445
(1)
(1)
17
50 %
25
0
50 %
CLP
513
1
CLP
(6,075)
(9)
49.50 %
25
(873)
50 %
50 %
18
25
(2)
(16)
50 %
50 %
50 %
24
25
25
(1)
(37)
0
50 %
50 %
50 %
100 %
49.50 %
49.40 %
29.60 %
50 %
PLN
50 %
45 %
INR
5,585
1,484
10
25
25
10
26
PLN
5,645
1,448
(1)
0
0
1
1
25
80
1
3,338
14
Auditors Report
We have audited the annual financial statements, comprising the balance sheet, the income statement and the notes
to the financial statements, together with the bookkeeping
system, and the management report of HOCHTIEF Construction AG, Essen, for the business year from January 1
to December 31, 2007. The maintenance of the books
and records and the preparation of the annual financial
statements and management report in accordance with
German commercial law are the responsibility of the Company‘s Executive Board. Our responsibility is to express an
opinion on the annual financial statements, together with
the bookkeeping system, and the management report
based on our audit.
We conducted our audit of the annual financial statements
in accordance with § (Article) 317 HGB (Handelsgesetz
buch: German Commercial Code) and German generally
accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer (Institute
of Public Auditors in Germany) (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net
assets, financial position and results of operations in the
annual financial statements in accordance with (German)
principles of proper accounting and in the management
report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal
environment of the Company and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence
supporting the disclosures in the books and records, the
annual financial statements and the management report
are examined primarily on a test basis within the framework
of the audit. The audit includes assessing the accounting
principles used and significant estimates made by the
Company‘s Executive Board, as well as evaluating the
overall presentation of the annual financial statements and
management report. We believe that our audit provides a
reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our audit, the annual financial statements comply with the legal requirements
and give a true and fair view of the net assets, financial
position and results of operations of the Company in accordance with (German) principles of proper accounting.
The management report is consistent with the annual financial statements and as a whole provides a suitable view of
the Company‘s position and suitably presents the opportunities and risks of future development.
Essen, January 22, 2008
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
(Dr. Martin Nicklis)
Wirtschaftsprüfer
(German Public Auditor)
(ppa. Bernhard Klinke)
Wirtschaftsprüfer
(German Public Auditor)
51
Published by:
Opernplatz 2, 45128 Essen, Germany
Telephone: +49 201 824-0,
Fax: +49 201 824-2777
info-construction@hochtief.de
www.hochtief-construction.com
This annual report is a translation
of the original German version,
which remains definitive.
As of: March 12, 2008
52

Annual Report 2007

Transcription

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