Annual Report 2013 - HOCHTIEF Berichte

Transcrição

Annual Report
2013
My
Infrastructure
our
solutions
Turning Vision into Value.
Contents
Information for Our Shareholders
Letter from the CEO...................................................... 8
Report of the Supervisory Board.................................. 11
Executive Board............................................................ 16
Supervisory Board........................................................ 17
HOCHTIEF on the capital markets................................ 21
Segment Reporting
Corporate divisions:
HOCHTIEF Americas.................................................... 100
HOCHTIEF Asia Pacific................................................. 104
HOCHTIEF Europe........................................................ 109
Looking Ahead, Risk, Opportunities, and
Post-balance-sheet Events
Looking ahead.............................................................. 115
Risk report.................................................................... 119
Opportunities................................................................ 129
Combined HOCHTIEF Aktiengesellschaft and
Group Management Report
Group structure and business activities........................ 28
Markets and operating environment............................. 32
Orders and work done in 2013...................................... 40
Strategy........................................................................ 43
Sustainability................................................................. 48
Research and development.......................................... 53
Employees.................................................................... 59
Procurement................................................................. 62
Measuring return on capital: Return on net assets........ 64
Financial review............................................................. 67
HOCHTIEF Aktiengesellschaft (holding company):
Financial review............................................................. 81
Explanatory report of the Executive Board .................. 88
Corporate governance.................................................. 91
Cover page:
HOCHTIEF ranks among the
world’s leading construction
groups. Our subsidiaries and
associated companies carry
out complex and sophisticated
infrastructure projects across
the globe, shaping the city
scape of modern metropolises
such as Essen in Germany,
HOCHTIEF’s headquarters.
Forward-looking statements......................................... 132
Post-balance-sheet events........................................... 133
Financial Statements and Notes
Contents of the HOCHTIEF Group consolidated
financial statements...................................................... 136
Consolidated statement of earnings............................. 137
Consolidated statement of comprehensive income...... 138
Consolidated balance sheet......................................... 139
Consolidated statement of cash flows.......................... 140
Consolidated statement of changes in equity............... 141
Responsibility statement............................................... 142
Auditors’ report............................................................. 143
Notes to the Consolidated Financial Statements
Accounting principles................................................... 144
Explanatory notes to the consolidated statement
of earnings.................................................................... 160
Explanatory notes to the consolidated balance sheet..... 166
Other disclosures.......................................................... 193
Further Information
Index............................................................................. 218
Glossary........................................................................ 219
Five year summary........................................................ 221
Publication details and credits...................................... 223
Financial calendar......................................................... 223
HOCHTIEF stands for transparency,
sustainability, and innovation.
Our Company at a Glanc
To underscore these aspirations and commitments,
HOCHTIEF is a member of various organizations and
complies with their guidelines and standards. Here is
a selection:
Transparency International
Member since 1999
International Labour Organization (ILO)
Member since 2000
United Nations Global Compact
Member since 2008
HOCHTIEF Americas Division
The HOCHTIEF Americas division coordinates the activities of
HOCHTIEF’s companies in the USA and Canada.
Through our subsidiary Turner, we are the number one general
builder in the USA. Turner has long been the leading player in
Global Reporting Initiative
HOCHTIEF’s sustainability reporting adheres to
the Guidelines of the Global Reporting Initiative
(GRI).
the key market segments for education and healthcare properties. The same goes for sustainable “green” building, where the
tradition-steeped company ranks among the pioneers and drivers in that country.
Through our majority stake in the Canadian company Clark
Builders, HOCHTIEF has now stepped up activities in the Canadian construction market.
The services provided by civil engineering company Flatiron
complement our portfolio in North America. Ranking among
German Sustainability Code
HOCHTIEF made a compliance declaration
regarding the German Sustainability Code
in May 2013.
the top providers in U.S. transportation infrastructure construction, the company has operations in both the USA and Canada.
In Flatiron, HOCHTIEF has created a mainstay in the publicprivate partnership growth market for U.S. infrastructure projects.
With E.E. Cruz and Company, HOCHTIEF has enhanced its
position in the civil engineering infrastructure market in the New
York metropolitan area.
encord
In 1989, HOCHTIEF was a founding member of
encord, the European Network of Construction
Companies for Research and Development.
*For further information on the HOCHTIEF divisions, please see
www.hochtief.com.
3
Annual Report 2013
ce in 2013
HOCHTIEF Aktiengesellschaft Corporate Headquarters (strategic management holding company)*
HOCHTIEF Asia Pacific Division
HOCHTIEF Europe Division
Through its majority share in the Leighton Group, HOCHTIEF
The HOCHTIEF Europe division oversees the Group’s business
holds the leading position in the Asia-Pacific region’s infrastruc-
in Europe and selected growth regions around the world. This
ture construction market. Its activities are pooled within the
division operates under the leadership of HOCHTIEF Solutions
HOCHTIEF Asia Pacific division.
AG, which provides services primarily for infrastructure projects,
Leighton’s product and service spectrum includes construction,
contract mining, operation and maintenance as well as services
in the raw materials segment. In addition, Leighton has a strong
building construction, and public-private partnerships (PPP),
as well as engineering services. Its focus is on the transportation,
energy, and social and urban infrastructure segments.
presence in the energy and transportation infrastructure business
For public infrastructure measures, HOCHTIEF Solutions acts
segment as well as in construction and development of real
as a partner in PPP projects to deliver services such as financ-
estate, and services.
ing, design, and operation in addition to construction services.
The Leighton Group’s main operational units are Leighton Con-
In many regions, HOCHTIEF Solutions is highly regarded as a
tractors, Thiess, John Holland, and Leighton Properties in Aus-
market and innovation leader. Its outstanding technical exper-
tralia, Leighton Asia, India and Offshore in Hong Kong and South-
tise and engineering services count among the company’s top
east Asia, and the Habtoor Leighton Group in the Arab countries.
strengths and have earned it an excellent international reputa-
Leighton Group companies are among the leading players in
tion.
Our company at a glance
their sectors and enjoy excellent reputations.
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Annual Report 2013
Turning Vision into Value.
HOCHTIEF is one of the leading global construction groups.
We focus on complex projects in the fields of transportation,
energy, social and urban infrastructure as well as the contract
mining business. Here, we draw on our experience in development, construction and operation gained over the past 140-plus
years. The global HOCHTIEF network enables us to be present on all
the world’s major markets. We operate on a sustainable basis
and embrace responsibility. Our company’s expert staff create
value for clients, shareholders, and HOCHTIEF alike. We stand out in the market with our innovative, one-of-a-kind
solutions and attach great importance to a partnership-based
approach in all our dealings with stakeholders. The know-how
transfer as well as the close cooperation within our Group create
additional potential for us. In this way, we grow our company’s
profitability and ensure sustainable growth.
The breadth of projects shown in the photo spreads of this
Annual Report serves to underscore HOCHTIEF’s evolution
into the world’s most relevant infrastructure construction group.
Annual Report 2013
5
Transportation infrastructure—
a focus of our business
activities
MY
WORK
6
Annual Report 2013
Information
Informationfor
forOur
Our
Shareholders
Shareholders
OUR
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All over the globe, HOCHTIEF is realizing transportation infrastructure such as the Northeast A
nthony
Henday Drive highway project in Edmonton, Canada.
Annual Report 2013
7
Information for Our
Shareholders
with a clear focus on our core competencies. We will
use the sale proceeds to invest in our core business,
reduce net debt, and allow our shareholders to share
adequately in HOCHTIEF’s success. We are thus proposing an increased dividend of EUR 1.50.
In this context, we launched a stock buyback program
and purchased a total of 4,313,000 no-par-value shares
in HOCHTIEF Aktiengesellschaft—some 5.6% of our
capital stock—on the stock market at a total purchase
price (excluding incidental purchase costs) of approxi
mately EUR 255.6 million. In 2013, HOCHTIEF also inMarcelino Fernández Verdes,
Chairman of the Executive
Board
creased its stake in Leighton Holdings Limited to 57.94%
(as of December 31, 2013) by acquiring 15.3 million
shares. We are convinced of Leighton’s strength and
Welcome to HOCHTIEF’s 2013 Annual Report! As you
see the stock purchase as a strategic move and an
will see, our Group’s performance has been strong.
investment in our core business.
Last year, I promised you that we would start to leverage HOCHTIEF’s hidden potential to boost the value
In our effort to boost profitability and competitiveness
of the Group and offer an attractive remuneration to all
in Europe, we initiated the next step which was to stream-
our shareholders. We set ourselves the goal of devel-
line structures and improve processes. These meas
oping HOCHTIEF into the most relevant infrastructure
ures have already been largely implemented as part
construction group driven by sustainable, profitable
of realigning the European business consolidated at
growth. In 2013, we worked with great determination
HOCHTIEF Solutions AG. The company now com
toward this goal and have already made significant
prises the four operational units HOCHTIEF Building,
progress.
HOCHTIEF Infrastructure, HOCHTIEF Engineering, and
HOCHTIEF PPP Solutions. These units assume entre-
At the start of the year under review, we presented
preneurial responsibility for their business activities in
various projects and initiatives to help us reach our ob-
their markets. We are thus combining the advantages
jective. These included focusing HOCHTIEF’s activities
of operating more like a small- or medium-sized com-
on our core business of delivering complex infrastructure
pany with the service range of an international construc-
and building construction projects. We divested both
tion group, and will work much more efficiently going
our airport business and our European service business
forward. Once the restructuring measures have been
line. As planned, we also sold the telecommunications
completed, we expect the realignment of HOCHTIEF
activities of our Group company Leighton. On January
Solutions to generate annual cost savings of approxi-
31, 2014, we were able to announce that we have
mately EUR 40 to 60 million.
reached agreement on the sale of aurelis Real Estate.
8
Annual Report 2013
We continue to actively examine ways to release further
We also took steps in our HOCHTIEF Americas and
capital from our remaining real estate activities in Eu-
HOCHTIEF Asia Pacific divisions to further enhance
rope including the potential incorporation of strategic
profitability. For instance, we improved the earnings
partners or buyers. All of these steps go hand in hand
performance at our U.S. subsidiary Flatiron by making
Information for Our
Shareholders
management changes and operational adjustments,
HOCHTIEF’s operating performance in 2013 was posi-
alongside other measures. Leighton has made sub-
tive. We generated sales of EUR 25.69 billion—adjusted
stantial progress with its “Stabilize, Rebase, Grow”
for sizeable exchange rate effects, this marked an in-
strategy and is working on five key initiatives to drive
crease of 8.6% on the prior year. Work done reached a
the expansion of its margins.
good level at EUR 29.05 billion. While this constitutes a
2.2% decrease on the prior year, on an exchange rate
Furthermore, our key focus is on generating cash and
adjusted basis work done is up by EUR 1.69 billion,
reducing earnings volatility. We aim to considerably
representing growth of 5.7%. Due to the planned adjust-
boost our profitability for the long term, and are work-
ment to the market situation and the sale of non-core
ing actively to reduce net debt and release capital tied
activities, new orders showed an exchange rate adjust-
up in non-core activities. At the same time, we make sure
ed reduction of 9% compared to the very strong order
our financing structure is balanced and takes a long-
intake of the prior year. At EUR 39.94 billion, our order
term approach. A corporate bond we issued in March
backlog is 19.8% below the prior-year figure. Adjusted
2013 again reflected the confidence placed in us by
for exchange rate and deconsolidation effects, however,
investors both in Germany and internationally. The EUR
the shortfall is only 3.3%. The order backlog corresponds
750 million, seven-year bond saw very high demand,
to a 17-month forward order book. HOCHTIEF signifi-
and we were therefore able to place the issue at attrac-
cantly improved earnings in 2013. Group operational
tive terms. This transaction broadened our investor
earnings (EBITA) went up compared with the prior year
base considerably.
(EUR 803 million) by EUR 371.6 million to EUR 1.17 billion. Profit before taxes increased relative to the prior
We restructured risk management throughout the Group
year (EUR 541.4 million) to EUR 799.8 million and con-
and are introducing new systems for this purpose. By
solidated net profit rose relative to the prior year (EUR
lowering earnings volatility, we plan to sustainably in-
155.2 million) to EUR 171.2 million. Adjusted for one-
crease returns. In the future, we will respond faster to
time items such as the impacts produced by the sale
changing markets and give greater emphasis to employ-
of the airport and service business lines at HOCHTIEF,
ing the most suitable staff for each project. On the whole,
the sale of the telecommunications activities at Leighton,
our more entrepreneurial approach will allow risks to
restructuring expenses, impairment losses on invest-
be identified and eliminated earlier, or managed better.
ments, and other items, we generated operating profit
Notably in large-scale contracts, we have significantly
before taxes of EUR 597.6 million and operating con-
improved risk transparency in all project phases.
solidated net profit of EUR 207.5 million—in line with or
slightly exceeding guidance. These results represent a
All measures we have initiated, and in some cases
significant improvement on the previous year; the ad-
already implemented, contribute to the success of our
justed 2012 figures show a profit before taxes of under
Company. They support our strategy of developing
EUR 400 million, or below EUR 100 million at the level
HOCHTIEF into the most relevant infrastructure con-
of consolidated net profit.
struction group in the core markets of transportation,
energy, social and urban infrastructure, and contract
mining, a group that is growing both sustainably and
profitably. Sustainability also plays a key strategic role
in this effort. All of these initiatives aim to ensure that
our economic, environmental, and social activities are
optimally balanced. Details concerning HOCHTIEF’s
sustainability efforts are outlined in our Sustainability
Report, which will be published concurrently with this
Annual Report.
Annual Report 2013
9
Information for Our
Shareholders
All divisions contributed to the HOCHTIEF Group’s suc-
With our continued focus on cash, we also aim to fur-
cess. Our subsidiaries in Europe, North America, and
ther strengthen the balance sheet and end the year
Australia secured attractive infrastructure contracts in
with a net cash position. The Group’s new orders and
their markets.
work done are likely to normalize at a lower level in
2014, due partly to exchange rate effects, but we ex-
At HOCHTIEF Americas, Turner and Flatiron turned in
pect to end the year with our order backlog close to
solid performance despite the strained fiscal situation
the high levels of December 2013.
in the United States. Our building construction contracts
include healthcare facilities, educational buildings, com-
2013 was a year of change for HOCHTIEF. We took
mercial properties, sports facilities, and airports. In the
crucial decisions with an eye to long-term success and
civil engineering business, the changes we made at
made tangible progress. This was possible only be-
Flatiron resulted in improved earnings. We were again
cause our employees shared in shouldering and shap-
awarded attractive road and rail construction contracts
ing this change. On behalf of the Executive Board, I
in 2013.
would like to thank all HOCHTIEF employees for their
commitment and outstanding efforts in 2013.
The HOCHTIEF Asia Pacific division was moving further
towards regaining its former strength in the year under
Going forward, we will focus firmly on our core compe-
review. Despite the difficult situation in the economy as
tency of construction. HOCHTIEF’s clear focus, heri-
a whole and the raw materials sector in particular in the
tage, and experience can, and will, propel the Group
first half-year, Leighton confidently asserted its position.
to further growth and new strength in the international
Earnings performance was very positive in the reporting
arena. At the top of our priority list is sustainable cash
year. Both operational earnings and profit before taxes
profitability and stability—which will benefit our share-
improved. In the infrastructure and mining businesses,
holders. It is my unequivocal goal to systematically pur-
Leighton again booked large-volume, long-term proj-
sue the path we have taken to increase HOCHTIEF’s
ects. The internal realignment involving strategic and
value.
structural changes is gaining traction. With the sale of
the Nextgen Networks, Metronode, and Infoplex tele-
I am already looking forward to presenting the results
communications holdings, Leighton withdrew from the
of our efforts to you in the coming year. The Executive
non-core telecommunications services business as
Board wishes to thank you, the HOCHTIEF sharehold-
planned.
ers, employees, clients, and business partners, for your
confidence in our Group!
The HOCHTIEF Europe division displayed a favorable
performance and also achieved important new orders
Essen, February 26, 2014
in all infrastructure construction segments. The realignment of HOCHTIEF Solutions began in the year under
review and has already been significantly completed.
In 2014, the Group expects to achieve further progress
with an operating Group net profit in the range of EUR
225-250 million, compared with EUR 207.5 million in
2013. We anticipate that this will be achieved with improved profit margins in all our divisions.
10
Annual Report 2013
Marcelino Fernández Verdes
Information for Our
Shareholders
Report of the Supervisory Board
the Supervisory Board was in constant contact with the
Chairman of the Executive Board, enabling events of
exceptional importance for the position and development
of the HOCHTIEF Group to be addressed immediately.
Shareholder and employee representatives met separately on a regular basis ahead of Supervisory Board
meetings to discuss agenda items for the meetings.
When necessary, the Supervisory Board met without
the Executive Board.
Focuses of consultation. The Supervisory Board dealt
with a number of issues in 2013. Considerable time and
attention was given over to the new corporate strategy,
Thomas Eichelmann, Chairman
of the Supervisory Board
which also includes the sale of non-core operations
Throughout 2013, the Supervisory Board performed the
comprising HOCHTIEF AirPort GmbH and the service
tasks required of it by law, under the Company’s Articles
activities of HOCHTIEF Solutions AG. The latter were
of Association, and under the Supervisory Board’s Code
brought together immediately before the sale in HTFM
of Procedure. The Supervisory Board regularly advised
GmbH, which was specially established for the purpose.
and continuously oversaw the Executive Board in its
Improvements to risk management systems were also
management of the Company and was involved in all
discussed in depth.
decisions of fundamental importance. The Executive
Board provided the Supervisory Board with regular, time-
At its extraordinary meeting on February 7, 2013, the
ly, and comprehensive reports, both written and verbal,
Supervisory Board dealt with the Executive Board’s ini-
on all key aspects of the performance of the business.
tial thoughts on setting the new corporate strategy. Key
The Supervisory Board also received full information
features presented as part of the new strategy included
on the current earnings situation, the risk position, and
reducing project risks and improving risk management.
risk management.
The Supervisory Board also addressed the revised corporate planning for 2013, where deviations from plans
It held four ordinary meetings and one extraordinary
and targets drawn up earlier were explained by the Ex-
meeting in the reporting period. With one exception due
ecutive Board. The placement of a second non-rated
to illness, all members of the Supervisory Board have
bond was also discussed.
attended at least half of the meetings during their term
in office. The Supervisory Board made its decisions on
At the financial statements meeting on February 27, 2013,
the basis of the detailed reports and proposed resolu-
the Supervisory Board primarily concerned itself with
tions submitted by the Executive Board. The latter also
the annual and Consolidated Financial Statements as
reported outside of meetings on particularly significant
of December 31, 2012. This is reported on in detail below.
or urgent projects and transactions. The Supervisory
In the context of the report on the business situation,
Board adopted resolutions as required by law and the
the Supervisory Board turned its attention to the Group’s
Articles of Association, where necessary by written
earnings performance in 2012. As expected, the earn-
procedure or in committee meetings. The Chairman of
ings achieved by the HOCHTIEF Asia Pacific division in
Annual Report 2013
11
Information for Our
Shareholders
2012 exceeded the prior-year figure. In this context,
ecutive Board. The Supervisory Board also addressed
the Supervisory Board kept abreast of significant opera
the increase in the shareholding in Leighton Holdings
tional and non-operational effects on earnings. Special
Limited by up to 6% of the share capital and adopted
emphasis was also given to means of improving trans-
the necessary resolutions.
parency at Leighton, most of all with regard to critical
projects. The point of focus in the HOCHTIEF Europe
At the Supervisory Board meeting on September 11,
division was the concluded negotiations regarding the
2013, the Executive Board reported in detail on the busi-
reorganization of the Elbe Philharmonic Hall project. Activ-
ness situation. Firstly, a current update was provided on
ities aimed at the sale of the airports business and
the closing conditions for the sale of HOCHTIEF AirPort
Leighton’s telecommunications business were also dis-
GmbH and of the service activities of HOCHTIEF Solu-
cussed. In addition, the Supervisory Board adopted
tions AG. Further topics included HOCHTIEF Group cash
the agenda for the Company’s General Shareholders’
planning and in-depth information on the Habtoor Leigh-
Meeting on May 7, 2013 and the required annual Com-
ton Group.
pliance Declaration pursuant to Section 161 of the German Stock Corporations Act (AktG). Finally, the Super
A further meeting of the Supervisory Board was held
visory Board concerned itself with the proposals submitted
on November 21, 2013. This meeting was initially taken
by the Human Resources Committee as well as with
up with the Executive Board’s detailed report on the
the Executive Board’s compensation and adopted the
business situation. Firstly, the Supervisory Board received
necessary resolutions. Again, the Group strategy was
an explanation of the impact on earnings of the com-
also a topic of discussion, and it was noted that improved
pany disposals completed in 2013. The Supervisory
risk management—for example, by establishing a risk
Board was provided with updated data on the status
committee for new large-scale projects—and rigorous
of the stock buyback program and the increase in the
capital management are key elements of the new strat
shareholding in Leighton. Turning to the position of the
egy. The European business is also to be reduced in
HOCHTIEF Asia Pacific division, Leighton was analyzed
complexity.
and the situation at the Habtoor Leighton Group also
discussed in detail. In considering the financial perform
12
Annual Report 2013
At the Supervisory Board meeting preceding the Gen-
ance of the HOCHTIEF Americas division, the focus
eral Shareholders’ Meeting on May 7, 2013, the Execu-
was on Flatiron. When examining the HOCHTIEF Europe
tive Board reported on the current situation of the Group.
division, attention focused on the definition of the re-
The Supervisory Board obtained detailed information
structuring measures based on the division’s new struc-
about the agreement reached on March 28, 2013 re-
ture. In addition, the Supervisory Board concerned it-
garding the sale of Leighton’s telecommunications busi-
self with the compliance-related accusations currently
ness. The Executive Board also explained the balance
being levied against Leighton Holdings Limited in the
sheet impact of the sale of HOCHTIEF AirPort GmbH.
Australian press and the pending class actions. The Super-
Another major topic of discussion was the signing of
visory Board also dealt in detail with the corporate plan-
the contract for the reorganization of the Elbe Philhar-
ning. Deviations from plans and targets drawn up earlier
monic Hall project in the first quarter of 2013. The report
were explained in depth by the Executive Board. Fol-
on the first quarter of 2013 was discussed (prior to publi-
lowing discussion, the Supervisory Board received and
cation) by the Supervisory Board together with the Ex-
approved the corporate planning submitted by the Ex-
Information for Our
Shareholders
ecutive Board. Finally, the Supervisory Board decided
The Audit Committee met three times in 2013. It looked
to carry out its next examination of efficiency in accord
in detail at the quarterly reports as well as the annual
ance with the German Corporate Governance Code in
Financial Statements and discussed them with the Execu
the first half of 2014.
tive Board prior to their publication. The Audit Com
mittee also prepared to issue the auditors with the audit
With one exception, compliance at HOCHTIEF was on
engagement, at the same time setting out the focal points
the agenda at all meetings. Focal points included im-
of the audit and the fee agreement. It devoted special
proving the organizational structure and introducing new
attention to the Group risk management system and the
organizational processes. The Executive Board report-
internal control system in relation to the financial report-
ed on measures to implement these changes.
ing process. The Audit Committee additionally dealt with
compliance-related issues as well as Internal Auditing’s
The Supervisory Board continuously monitored the
audit findings and audit planning. The wide range of other
implementation of requirements under the German Cor-
topics on committee meeting agendas in the reporting
porate Governance Code and the development of cor-
period included reports on key projects in the HOCHTIEF
porate governance standards. In accordance with Sec-
Americas, HOCHTIEF Asia Pacific, and HOCHTIEF
tion 3.10 of the German Corporate Governance Code,
Europe divisions.
the Executive Board provides a joint Executive Board
and Supervisory Board report on corporate g
overnance.
The Human Resources Committee met twice. It
That report is published together with the Declaration
prepared the Supervisory Board’s personnel-related
on Corporate Governance on the Company’s website
decisions and also dealt with the amount of Executive
and in the Annual Report.
Board compensation and the compensation system.
The Supervisory Board has six committees whose
The Nomination Committee held one meeting and
members are listed on page 19. The committees are
suggested suitable candidates to the Supervisory
tasked with preparing topics and resolutions on the
Board for the nominations the latter would put to the
agenda at Supervisory Board meetings. In some cases,
General Shareholders’ Meeting in May 2013 for the
they also exercise decision-making powers transferred
election of successor members of the Supervisory
to them by the Supervisory Board. The committee chair-
Board.
persons regularly informed the Supervisory Board about
the committees’ work.
The Strategy Committee met twice. It devoted attention to the corporate strategy and the Group’s onward
The Executive Committee met six times in 2013. It
development from a strategic viewpoint.
made preparations for the Supervisory Board’s discussions and for Supervisory Board meetings, particularly
Once again, there was no need to convene a meeting
with regard to the corporate strategy. In addition, the
of the Mediation Committee pursuant to Section 27
Executive Committee was regularly briefed by the Ex-
(3) of the Codetermination Act (MitbestG) in 2013.
ecutive Board about significant transactions.
Annual Report 2013
13
Information for Our
Shareholders
Conflicts of interest. Under the recommendations of
thoroughly examined the annual Financial Statements,
the German Corporate Governance Code and related
the Consolidated Financial Statements, the combined
provisions in the Supervisory Board’s Code of Procedure,
Company and Group Management Report, and the pro-
members of the Supervisory Board are required to
posal on the use of net profit, and concluded on com-
disclose any conflicts of interest immediately. No such
pletion of its examination that there were no o
bjections
disclosures were made in the year under review.
to be raised.
Annual Financial Statements 2013. The annual
Following its own appraisal and taking account of the
Financial Statements prepared for HOCHTIEF Aktien
Audit Committee’s report, the Supervisory Board ap-
gesellschaft by the Executive Board in accordance
proved the results of the auditors’ audit of the annual
with the German Commercial Code (HGB), the Consoli-
Financial Statements and Consolidated Financial State-
dated Financial Statements prepared in accordance
ments. The Supervisory Board has approved and thus
with International Financial Reporting Standards (IFRS),
adopted the annual Financial Statements and approved
and the combined HOCHTIEF Aktiengesellschaft and
the Consolidated Financial Statements. It concurs with
Group Management Report for 2013, together with the
the proposal on the use of net profit submitted by the
bookkeeping system, were audited by and received an
Executive Board.
unqualified auditors’ report from Deloitte & Touche GmbH
Wirtschaftsprüfungsgesellschaft, the auditors appointed
Report in accordance with Section 312 of the
by the General Shareholders’ Meeting on May 7, 2013
Stock Corporations Act (AktG). The report on rela-
and instructed by the Supervisory Board to perform
tionships with affiliated companies prepared by the
the audit of the annual Financial Statements and Con-
Executive Board in accordance with Section 312 of the
solidated Financial Statements. The auditors also deter-
Stock Corporations Act (AktG) was audited by the audi-
mined that the Executive Board had established a suitable
tors. This report and the auditors’ report were sent to
early warning system for risk. The above-mentioned
all members of the Supervisory Board in good time
statements, the Annual Report, the proposal on the use
ahead of the financial statements meeting on February
of net profit, and the auditors’ reports were sent to all
26, 2014. The auditors who signed the audit report took
members of the Supervisory Board in good time prior
part in the Supervisory Board’s discussions on these
to the meeting of the Audit Committee on February 25,
documents and reported on the main findings of the
2014 and the Supervisory Board’s financial statements
audit. The Supervisory Board examined the report on
meeting on February 26, 2014. The E
xecutive Board
relationships with affiliated companies and found it to
also provided verbal explanations at those meetings.
be in order.
At the same meetings, the auditors responsible reported
The auditors issued the auditors’ report required by
on the main findings of the audit and were available to
Section 313 (3) AktG as follows:
provide further information. The Audit Committee scrutinized these statements and reports prior to the Super
“On completion of our audit and assessment in accord
visory Board’s meeting and recommended that the Super
ance with professional standards, we confirm that the
visory Board approve the annual Financial Statements,
factual statements in the report are correct.”
the Consolidated Financial Statements, and the combined Management Report. The Supervisory Board
14
Annual Report 2013
Information for Our
Shareholders
The Supervisory Board received for inspection and ap-
The Supervisory Board thanks the departing members
proved the auditors’ audit findings. On completion of its
of the Supervisory Board for their dedicated and con-
examination, the Supervisory Board does not raise any
structive work as well as their commitment to the well-
objections to the declaration issued by the Executive
being of the Company.
Board at the end of the report regarding relationships
with affiliated companies.
The Supervisory Board expresses its thanks and appreciation to the Executive Board, the Group company
Changes on the Supervisory Board. Dr. Michael
management teams, and all employees for their work
Frenzel and Dr. Jan Martin Wicke were appointed to the
in 2013.
Supervisory Board as shareholder representatives and
Mr. Elmar Rommerskirchen as an employee represen-
tative by decision of Essen Local Court on March 12,
On behalf of the Supervisory Board
2013.
In connection with the sale of HTFM GmbH, which
previously belonged to the Group, Mr. Ulrich Best, Mr.
Johannes Lang, Mr. Gerrit Pennings, and Mr. Elmar
Rommerskirchen stepped down from the Supervisory
Board on September 6, 2013 due to their being employees of the sold company.
Mr. Klaus Wiesehügel resigned his position as a member
Thomas Eichelmann
of the Supervisory Board with effect from September
Chairman
30, 2013.
Mr. Siegfried Müller stepped down as an employee
representative member of the Supervisory Board due
to the termination of his employment in October 2013.
Mr. Carsten Burckhardt, Dr. Thomas Krause,
Mr. Matthias Maurer, Mr. Udo Paech, Mr. Nikolaos
Paraskevopoulos, and Mr. Klaus Stümper were appointed to the Supervisory Board as employee representatives by decision of Essen Local Court on November 13, 2013.
At its meeting on November 21, 2013, the Supervisory
Board elected Mr. Gregor Asshoff to succeed Mr. U
lrich
Best as its Deputy Chairman.
Annual Report 2013
15
Information for Our
Shareholders
Executive Board
The HOCHTIEF Aktiengesellschaft Executive Board:
(Chairman of the Executive
Board) and Peter Sassenfeld.
b)Membership in comparable
domestic and international
corporate governing bodies
(as of December 31, 2013)
Marcelino Fernández Verdes (58), CEO
Peter Sassenfeld (47), CFO
Düsseldorf, Chairman of the Executive Board of
Duisburg, Member of the Executive Board and Labor
HOCHTIEF A
ktiengesellschaft, Essen
Director of HOCHTIEF Aktiengesellschaft, Essen
b) Flatiron Holding, Inc.
b) Flatiron Holding, Inc.
HOCHTIEF AUSTRALIA HOLDINGS Ltd.
HOCHTIEF AUSTRALIA HOLDINGS Ltd.
Leighton Holdings Limited
Leighton Holdings Limited
The Turner Corporation
The Turner Corporation
Marcelino Fernández Verdes took over as Chairman
Peter Sassenfeld joined the HOCHTIEF Aktiengesell-
of the Executive Board (CEO) of HOCHTIEF Aktien
schaft Executive Board in November 2011. The Chief
gesellschaft on November 21, 2012. In this capacity,
Financial Officer (CFO), who holds a degree in business
the construction engineer is in charge of the HOCHTIEF
administration, is responsible for the Mergers & Acquisi-
Americas, HOCHTIEF Asia Pacific, and HOCHTIEF
tions, Controlling, Finance, Capital Markets Strategy/
Europe divisions. He is additionally responsible for the
Investor Relations, Accounting, Tax, and Insurance
corporate departments Human Resources, Corporate
Management departments and is Labor Director.
Development, Corporate Communications and Corporate
Governance including the Legal, Auditing and Corporate
Compliance departments, and for bid and contract strategy as well as risk management at HOCHTIEF. He was
a member of the Executive Board of HOCHTIEF Aktien
gesellschaft and the company’s Chief Operating Officer
(COO) from April to November 2012.
16
Annual Report 2013
Information for Our
Shareholders
Supervisory Board
Thomas Eichelmann
Carsten Burckhardt*
Munich, Chairman of the Supervisory Board of
Dortmund, Member of the Federal Executive Committee
HOCHTIEF Aktiengesellschaft, Chief Executive Officer
of the Construction, Agricultural and Environmental
of ATON GmbH, Munich
Employees’ Union (from November 13, 2013)
a)
b)
a) Zusatzversorgungskasse des Baugewerbes AG
ATON Engineering AG
FFT GmbH & Co. KGaA
HAEMA AG
V-Bank AG
Wüstenrot & Württembergische AG
ATON US, Inc.
Bankhaus Ellwanger & Geiger KG (Chairman)
OrthoScan, Inc.
J.S. Redpath Holdings, Inc.
Gregor Asshoff*
Frankfurt am Main, Deputy Chairman of the Supervisory
Board (from November 21, 2013), attorney-at-law and
head of the Policy and Fundamental Issues department,
Federal Executive Committee of the Construction,
Agricultural and Environmental Employees’ Union
a) HOCHTIEF Solutions AG
Zusatzversorgungskasse des Gerüstbaugewerbes VVaG
José Luis del Valle Pérez
Madrid, Board Member, Director and General Secre-
*Supervisory Board member
representing employees
a)Membership in other supervisory boards prescribed by
law (as of December 31,
2013)
tary of ACS, Actividades de Construcción y Servicios,
S.A., Madrid
b)
ACS Servicios y Concesiones, S.L.
ACS Servicios, Comunicaciones y Energía, S.L.
Clece, S.A. (Chairman)
Cobra Gestión de Infraestructuras, S.A.
Dragados, S.A.
Reporting date for memberships: December 31, 2013, or
date of departure if membership ended during the course
of the year
Dr. Michael Frenzel
Burgdorf, Chairman of the Supervisory Board of TUI
Deutschland GmbH, Hanover (from March 12, 2013)
a) AXA Konzern AG
TUIfly GmbH (Chairman)
TUI Deutschland GmbH (Chairman)
Abdulla Abdulaziz Turki Al-Subaie
Doha, Managing Director of Qatar Railways, Group
Dr. rer. pol. h. c. Francisco Javier Garcia Sanz
CEO B
arwa Real Estate Group
Braunschweig, Member of the Board of Management
b)
of Volkswagen Aktiengesellschaft, Wolfsburg
Barwa Bank
Barwa International (Chairman)
Qatar Construction & Engineering Company
Qatar Rail
Qatar Real Estate Company
Ángel García Altozano
Madrid, Corporate General Manager of ACS,
Actividades de Construcción y Servicios, S.A., Madrid
b)
ACS Servicios y Concesiones, S.L.
Dragados, S.A.
Iridium Concesiones de Infraestructuras, S.A.
Xfera Móviles, S.A. (Chairman)
a)
b)
AUDI AG
Dr. Ing. h. c. F. Porsche Aktiengesellschaft
CAIXAHOLDING, S.A.
FAW-Volkswagen Automotive Company, Ltd.
Porsche Holding Stuttgart GmbH
Scania AB
Scania CV AB
SEAT, S.A.
Shanghai-Volkswagen Automotive Company Ltd.
VfL Wolfsburg-Fußball GmbH
Volkswagen (China) Investment Company Ltd.
Volkswagen Group of America, Inc.
Dr. Thomas Krause*
Bremen, Executive Vice President of HOCHTIEF Infra-
Ulrich Best*
structure GmbH International (from November 13, 2013)
Cologne, Deputy Chairman of the Supervisory Board
(until September 6, 2013), former Chairman of the Group
Johannes Lang*
Works Council and Deputy Chairman of the Central
Königs Wusterhausen, former Member of the Works
Works Council, HOCHTIEF Solutions AG (until Septem-
Council, HOCHTIEF Solutions AG, Facility Manage-
ber 6, 2013)
ment, Works Council Northeast (until September 6,
2013)
Annual Report 2013
17
Information for Our
Shareholders
*Supervisory Board member
representing employees
Pedro López Jiménez
Elmar Rommerskirchen*
Madrid, Member of the Board and of the Executive
Dorsten, former Commercial Business Segment Manager,
a)Membership in other supervisory boards prescribed by
law (as of December 31,
2013)
Committee of ACS, Actividades de Construcción y
Building Installations and Services, HOCHTIEF Solutions
Servicios, S.A., Madrid
AG (March 12, 2013 to September 6, 2013)
b)
Klaus Stümper*
ACS Servicios y Concesiones, S.L. (President-in-Office)
Dragados, S.A. (President-in-Office)
Leighton Holdings Limited (Alternate Director)
Matthias Maurer*
Reporting date for memberships: December 31, 2013, or
date of departure if membership ended during the course
of the year
Hamburg, carpentry foreman, Works Council of
HOCHTIEF Solutions AG (partly released from duties)
(from November 13, 2013)
Nikolaus Graf von Matuschka*
Aldenhoven/Jüchen, Member of the Executive Board,
HOCHTIEF Solutions AG (until February 19, 2013)
Siegfried Müller*
Duisburg, former Chairman of the Works Council Corporate Headquarters, HOCHTIEF Aktiengesellschaft
(until October 21, 2013)
Udo Paech*
Berlin, technical employee, Works Council of HOCHTIEF
Solutions AG (Northeast division) (from November 13,
2013)
Nikolaos Paraskevopoulos*
Bottrop, Deputy Chairman of the Group Works Council,
HOCHTIEF Aktiengesellschaft (from November 13, 2013)
Gerrit Pennings*
Lohmar, technical employee, Works Council of
HOCHTIEF Solutions AG (West division)
(from November 13, 2013)
Olaf Wendler*
Sülzetal, Head of Human Resources Coordination
Shell Construction/Industrial Construction, HOCHTIEF
Solutions AG
Dr. Jan Martin Wicke
Stuttgart, Member of the Executive Board of Wüstenrot &
Württembergische AG, Stuttgart (from March 12, 2013)
a)
b)
Württembergische Versicherung AG
Württembergische Lebensversicherung AG
Wüstenrot Bank AG Pfandbriefbank
Wüstenrot Bausparkasse AG
W&W Service GmbH (Chairman)
V-Bank AG (Chairman)
Wüstenrot stavební spořitelna a.s.
Wüstenrot hypoteční banka a.s.
Wüstenrot životní pojišt’ovna a.s.
Wüstenrot pojišt’ovna a.s.
BWK GmbH Unternehmensbeteiligungsgesellschaft
Klaus Wiesehügel*
Königswinter, former National Chairman of the Construction, Agricultural and Environmental Employees’
Union, Frankfurt am Main (until September 30, 2013)
a) Zusatzversorgungskasse des Baugewerbes AG (Chairman)
b) Landwirtschaftliche Rentenbank
Kirchheim, former Works Council Chairman, HOCHTIEF
Solutions AG, Facility Management, South Region (until
Christine Wolff
September 6, 2013)
Hamburg, management consultant, former Senior Vice
President and Managing Director Europe & Middle East,
URS Corporation (until January 31, 2013)
18
Annual Report 2013
Information for Our
Shareholders
Supervisory Board Committees
Nomination Committee
Executive Committee
Thomas Eichelmann (Chairman)
Dr. Michael Frenzel (from May 7, 2013)
Gregor Asshoff
Christine Wolff (until January 31, 2013)
Carsten Burckhardt (from November 21, 2013)
Mediation Committee pursuant to Sec. 27 (3) of
Olaf Wendler
the German Codetermination Act (MitbestG)
Klaus Wiesehügel (until September 30, 2013)
Gregor Asshoff (deputy from November 21, 2013)
Audit Committee
Ulrich Best (deputy until September 6, 2013)
Ángel García Altozano (Chairman)
Carsten Burckhardt (from November 21, 2013)
Gregor Asshoff (Deputy Chairman)
Johannes Lang (until September 6, 2013)
Matthias Maurer (from November 21, 2013)
Nikolaos Paraskevopoulos (from November 21, 2013)
Gerrit Pennings (until September 6, 2013)
Dr. Jan Martin Wicke (from May 7, 2013)
Strategy Committee
Gregor Asshoff (deputy from November 21, 2013)
Johannes Lang (until September 6, 2013)
Siegfried Müller (until October 21, 2013)
Udo Paech (from November 21, 2013)
Nikolaos Paraskevopoulos (from November 21, 2013)
Gerrit Pennings (until September 6, 2013)
Klaus Stümper (from November 21, 2013)
Olaf Wendler
Dr. Jan Martin Wicke (from May 7, 2013)
Human Resources Committee
Matthias Maurer (from November 21, 2013)
Olaf Wendler
Klaus Wiesehügel (until September 30, 2013)
Annual Report 2013
19
Information for Our
Shareholders
Arriving earlier: Port Mann Bridge
Our U.S. subsidiary Flatiron built Port Mann Bridge in
Canada in the space of four years. The new cable-stayed
bridge has doubled previous capacity—instead of five,
there are now ten lanes crossing the Fraser River. That
a lleviates congestion and boosts efficiency, reducing
commuters’ average daily travel times by 30 percent. Tolls
collected at the bridge will finance the project. The contract
also included upgrading 37 kilometers of Highway 1 on
either side of the river.
20
Annual Report 2013
Information for Our
Shareholders
HOCHTIEF on the capital markets
Stock market
HOCHTIEF stock: Historical performance
After globally rising stock prices in 2012, the positive
Key figures
stock market trend continued throughout the year
under review. The 2013 stock market year was shaped
by a continuation of the expansionary monetary policy
by the U.S. and European central banks and the resulting low interest rate environment.
2013
Number of shares
Market capitalization
million
EUR million
77.0
4,778.6**
2012
(restated)*
77.0
3,382.6**
EUR
EUR
EUR
68.41
45.48
62.06
55.36
35.14
43.93
EUR
EUR million
EUR
202,866
1.50***
115
2.37
189,826
1.00
77
2.11
which is thus an important benchmark for our company.
High
Low
Close
Shares traded
(average per day
on Xetra)
Dividend per share
Total dividends
Earnings per share
The MDAX grew by 39% in 2013.
**as of year-end ***proposed dividend per share
There was a similar picture in the USA, where the U.S.
HOCHTIEF is listed in the Prime Standard segment on
S&P 500 increased by 30% in 2013.
the Frankfurt Stock Exchange and therefore a constituent
Germany’s DAX index remained above its close at the
end of December 2012 throughout 2013, reaching its
annual high at year-end. The DAX closed 2013 at 9,552
points, 25% higher than its close at the end of December 2012 (7,612 points). HOCHTIEF is listed in the MDAX,
* Restated for IAS 19R. For
notes on the adjustment, please
see pages 155 and 156.
member of the MDAX index, in which it ranked 30th
The pan-European markets and Australian share indices
with a weighting of 1.25% (2012: 28th, with a weighting
also performed positively. The Euro STOXX 50 climbed
of 1.40%).
by 18% and the Australian ASX All Ordinaries by 15%.
The STOXX Europe 600 Construction & Materials Index,
Key data on HOCHTIEF stock
which reflects the share price performance of the biggest companies in the European construction industry,
ISIN
Stock symbol
rose 22% above its close at the end of 2012. The con-
Ticker symbol
struction sector’s performance was therefore similar to
DE 0006070006
HOT
Reuters: HOTG.DE,
Bloomberg: HOT GY/HOT GR
that of the European market as a whole.
Trading segment at
Frankfurt
Indexed performance of international stock
The year under review saw HOCHTIEF’s stock price
indexes in 2013
sustain the strong positive trend begun at the end of
Prime Standard
2012, climbing by EUR 18.13 (41%) over the course
Jan.
140 %
140
130 %
130
120 %
120
110 %
110
Feb.
Mar.
Apr.
May
Jun.
Jul.
Aug. Sep.
— MDAX
— DAX 30
— Stoxx Europe 600 Construction & Materials
— Euro Stoxx 50
— ASX All Ordinaries
— S&P 500
Oct.
Nov. Dec.
of the year to EUR 62.06 at the year-end. Our stock
reached a high of EUR 68.41 in November 2013, up
56% compared with the closing price at the end of
2012.
The strength of the HOCHTIEF stock price during 2013
was to a significant degree a reflection of the positive
capital market response to our strategy as presented
100 %
100
090 %
90
at the end of February 2013 as well as its subsequent
consistent and successful delivery. The HOCHTIEF stock
price also benefited from the strong upward trend on
Annual Report 2013
21
Information for Our
Shareholders
Indexed performance of HOCHTIEF stock in 2013
Jan.
Feb.
Mar.
Apr.
May
Jun.
Jul.
Aug.
Sep.
Oct.
Nov.
Dec.
160 %
160
— HOCHTIEF
— MDAX
— DAX 30
150 %
150
140 %
140
130 %
130
120 %
120
110 %
110
100 %
100
090 %
90
the stock markets during 2013. The share price increase
rates in Asia and the resulting more cautious outlook
is also notable in view of the performance of shares in
for the resources sector—which is important both to
our Group company Leighton, which is listed on the Aus-
Australia and to Leighton. Leighton stock ended the
tralian Securities Exchange in Sydney. The performance
year with a closing price of AUD 16.11. This represents
of Leighton shares was hit by falling economic growth
a net decline of around 10% over the whole of 2013.
Absolute performance and trading volumes of HOCHTIEF stock in 2013
Jan.
70
Feb.
Mar.
Apr.
May
Jun.
Jul.
Aug.
Sep.
Oct.
70
Nov.
Dec.
68.41
66.94
64.89
65
60
64.80
60
58.20
57.47
55.54
55
55.27
54.08
53.20
53.68
52.23
50
50
48.95
47.47
45
40
48.28
45.49
Annual Report 2013
46.30
40
 H
OCHTIEF stock: Month range (based on end-of-day prices) (EUR)
22
50.92
50.10
60.20
57.96
— End-of-day prices (EUR)
55.04
64.65
59.05
Information for Our
Shareholders
HOCHTIEF Stock
HOCHTIEF listed in sustainability indexes
Shareholder remuneration
HOCHTIEF’s eligibility for inclusion in the respected
Stock buyback
Dow Jones Sustainability Index was reaffirmed in the
Following the General Shareholders’ Meeting’s resolu-
reporting year and the company is also present in sev-
tion in May 2012 allowing HOCHTIEF to buy back up to
eral other sustainability indices:
10% of its own shares, the Executive Board of HOCHTIEF
Aktiengesellschaft resolved in June 2013 to put into effect
Sustainability indexes listing HOCHTIEF*
a stock buyback program and to repurchase, on the
• Advanced Sustainability Performance Index (ASP)
stock market, up to 4,313,000 no-par-value shares (about
• Climate Disclosure Leadership Index (CDLI)
5.6% of the capital stock) at a total purchase price (ex-
• Climate Performance Leadership Index (CPLI)
cluding incidental purchase costs) of up to EUR 260 mil-
• Dow Jones Sustainability Index Europe
lion. 4,313,000 shares were bought on the stock ex-
• Ethibel Sustainability Index Excellence Europe
change between June 17 and December 5, 2013. The
• MSCI ESG Index
repurchased shares can be used for all purposes pro-
• STOXX® Global ESG Leaders Index
vided for in the authorizing resolution of the General
* More information on the differ
ent indices can be found in our
sustainability report and on our
website www.hochtief.com.
Shareholders’ Meeting of May 7, 2013.
Sustainability index listings are a recognition from the
financial market for our commitment to sustainability in
Dividends
line with standards of good economic, ecological, and
A key objective for HOCHTIEF is to adequately remu-
social conduct. HOCHTIEF stock can thus appeal to
nerate our shareholders in line with the success of our
investors who structure their portfolios in compliance
business. The Executive Board and the Supervisory
with strict sustainability criteria or make this an impor-
Board of HOCHTIEF Aktiengesellschaft are proposing
tant consideration.
to distribute a dividend for 2013 of EUR 1.50 per share
(2012: EUR 1.00). This expresses our confidence in the
Analyst recommendations
future development of our business.
At the end of 2013, the company was covered by 21
analysts (2012: 20). Four analysts rated HOCHTIEF stock
at “buy” (2012: 13) as of the year-end, and eleven at
“hold” (2012: seven). Six analysts placed HOCHTIEF at
“sell” (2012: none). The more restrained recommendations compared with the prior year reflect the fact that
HOCHTIEF stock has already put in a very positive performance in the year under review. As of the same date,
analysts covering us had set our target share price on
average at EUR 62.28.
Annual Report 2013
23
Information for Our
Shareholders
Ownership structure (as of December 2013)
Free float 29.66%
Treasury stock 9.99%
In terms of regions, investors in Spain accounted for
51% of shares, primarily due to ACS’s shareholding.
Shareholders in Germany held some 19% of capital
stock, including HOCHTIEF Aktiengesellschaft’s treas
Qatar Holding 10.00%
ury stock. 10% is attributable to Qatar due to the second major shareholder, 8% to investors in North America,
and the remaining 12% primarily to other European investors.
ACS* 50.35%
*ACS ACTIVIDADES DE CONSTRUCCIÓN Y SERVICIOS, S.A., Madrid
Successful issue of second corporate bond
Ownership structure
In light of the success of our first corporate bond issue
At the end of the reporting year, there were 76,999,999
in the first quarter of 2012 as well as the ongoing im-
issued shares. Of these shares, 50.35% were held by
provement and diversification of HOCHTIEF’s financing
ACS Actividades de Construcción y Servicios, S.A.,
structure, we effected a second bond issue in the first
10.00% were held by Qatar Holding, and 9.99% were
quarter of 2013.
held by HOCHTIEF Aktiengesellschaft as treasury
stock. Free float HOCHTIEF stock, according to the
The bond issue, which has a seven-year term to maturity
definition of Deutsche Börse AG, amounted to 29.66%
until March 2020, has a nominal value of EUR 750 million
as of December 31, 2013. This definition includes all
and a coupon of 3.875% per annum. Strong demand
shares except those held by ACS, Qatar Holding, and
from national and international investors ensured that,
by HOCHTIEF as treasury stock.
at more than EUR 4 billion, the bond was upward of five
Regional distribution (estimated as of
turity. As with the 2012 transaction, the order book was
December 2013)
dominated by banks, retail intermediaries and invest-
times oversubscribed and issued with a 4% yield to ma-
Rest of Europe 0.3%
Rest of world 1.1%
France/Benelux 2.4%
Switzerland 2.6%
Scandinavia 2.9%
Germany
18.5%
Annual Report 2013
This once again underscores the confidence the capital markets place in our Group. We are using the prother expand our position in attractive growth markets
North America 8%
24
issued by first-time purchasers of HOCHTIEF bonds.
ceeds to long-term refinance existing facilities and fur-
UK/Ireland 3.2%
Qatar 10.0%
ment funds. Some 40% of the purchase orders were
benefiting from the low interest environment.
Spain 51.0%
Information for Our
Shareholders
HOCHTIEF Stock
Structure of the bond issue
Structure of the bond issue by region
Investor relations
(at time of issue in March 2013)
graded, strengthened, and brought under the new
Others 2%
Italy 2%
Germany,
Austria
59%
The investor relations function at HOCHTIEF was upCapital Markets Strategy corporate department during
the year under review. Our objective is to further inten
sify our dialog with investors and analysts worldwide as
Benelux 4%
well as to communicate the Group’s new strategy trans-
France 7%
parently and efficiently.
UK, Ireland
7%
We place great emphasis on intensive contact with in-
Switzerland 19%
stitutional and private investors. During the course of
2013, we presented HOCHTIEF’s strategy and business
Structure of the bond issue by investor
development in meetings, in conference calls, on road-
(at time of issue in March 2013)
shows as well as at investment conferences. The Execu
Banks/
Retail intermediaries 60%
tive Board also used three conference calls for timely
reporting on key current developments of our company.
On the HOCHTIEF website, we publish all annual and
interim reports, the latest analyst forecasts, and all the
Insurance companies 2%
Others 4%
Companies 4%
presentations used. To contact HOCHTIEF Investor
Funds/asset
managers 30%
Relations or see the events planned in the financial calendar, please visit www.hochtief.com/investor-relations.
Annual Report 2013
25
Energy infrastructure—
a focus of our business
activities
MY
FUTURE
26
Annual Report 2013
Group Situation
OUR
POWER
HOCHTIEF is building advanced hydroelectric power
stations like the Cheves plant in Peru. The electricity
generated here helps to ensure a continuous energy
supply from a renewable source.
Annual Report 2013
27
Group Situation
Combined HOCHTIEF Aktiengesellschaft
and Group Management Report
Group Structure and Business Activities
Group structure 2013
Corporate Headquarters (strategic management holding company)
Divisions
HOCHTIEF
Americas
HOCHTIEF
Asia Pacific
HOCHTIEF
Europe
Turner
Leighton Group
HOCHTIEF Solutions
Flatiron
**For further information on the
divisions’ business activities,
please see pages 3 and 4 as
well as pages 102 to 113.
*For further information, please
see pages 3 and 4 as well as
pages 30 and 31.
***See glossary on page 220.
Group structure 2013
Business activities of the HOCHTIEF Group**
HOCHTIEF delivers its services worldwide through the
HOCHTIEF is an international construction group that
three divisions HOCHTIEF Americas, HOCHTIEF Asia
carries out projects in the transportation, energy, and
Pacific, and HOCHTIEF Europe. HOCHTIEF’s structure
social and urban infrastructure sectors as well as con-
reflects the operating focus of our business as well as
tract mining. The company and its clients alike benefit
the Group’s presence in key national and international
from HOCHTIEF’s many years of experience and our
regions and markets.*
capabilities in development, construction, and operation. Our focus is on complex infrastructure projects,
HOCHTIEF’s strategic management holding company
which we also implement on the basis of concession
has concentrated on Group management and control.
models —because our end-to-end approach yields
The Executive Board and Group corporate departments,
particularly good results in public-private partnership
which comprise the control level, are responsible for
projects.*** We generate further added value through
the strategic, organizational, and operational develop-
internal knowledge transfer and close collaboration
ment of the HOCHTIEF Group. The holding company
between divisions. In addition, we work with highly
includes the corporate departments Legal, Governance/
qualified business partners, whom we select using
Compliance, Auditing/Organization, Human Resources,
transparent criteria such as fulfilment of our standards.
Development, Mergers & Acquisitions, Communications,
Controlling, Finance, Capital Markets Strategy/Investor
Relations, Accounting as well as Tax and Insurance.
28
Annual Report 2013
Group Situation
For clients, HOCHTIEF is a long-term, dependable part-
Key performance indicators at HOCHTIEF
ner known for great flexibility, innovation, and outstand-
HOCHTIEF uses a range of key performance indicators
ing quality. Most of our projects are unique assignments
for management purposes:
for which we develop and implement custom solutions.
• New orders
HOCHTIEF is committed to sustainability as an integral
• Work done*
part of our corporate strategy and promotes the rela-
• Order backlog
tionship between business, environmental, and social
• Profit before taxes
responsibility.
• Consolidated net profit
*See glossary on pages 219
and 220.
• Return on Net Assets (RONA)
The HOCHTIEF Group is present in all the world’s major
• Cash flow*
construction markets including large parts of Europe,
• Net financial assets
the Americas, Australia as well as the Asia-Pacific and
Gulf regions. We generate 92.2% of sales outside of Germany. This global footprint enables us to make up for
regional market fluctuations.
Annual Report 2013
29
HOCHTIEF around the world:
HOCHTIEF Americas
Activities in more than 20 countries and 30 U.S.
states
Group Situation
A selection of the many companies and
projects in our divisions shows HOCHTIEF’s
Turner (USA, Canada)
global presence with the Group structure
Flatiron (USA, Canada)
from 2013.
E.E. Cruz (USA)
Clark Builders (Canada)
30
Annual Report 2013
HOCHTIEF Asia Pacific
Activities in more than 20 countries
HOCHTIEF Europe
Activities in more than 26 countries
Leighton Holdings (Australia)
HOCHTIEF Solutions (Germany)
Leighton Contractors (Australia, Botswana,
New Zealand, Papua New Guinea)
HOCHTIEF Building (Germany)
Group Situation
Business Activities and Group Structure
HOCHTIEF Infrastructure (Austria, Bulgaria, Chile,
Czech Republic, Germany, Greece, Latvia, Netherlands, Norway, Peru, Poland, Qatar, Romania,
Russia, Serbia, South Africa, Sweden, Switzerland,
Turkey, UK)
Thiess (Australia, India, Indonesia)
John Holland Group (Australia, Hong Kong,
New Zealand, Singapore)
Leighton Properties (Australia)
HOCHTIEF Engineering (Germany, India, Q
atar)
Leighton Asia, India and Offshore
(Cambodia, China, Hong Kong, India, Indonesia,
Laos, Macau, Malaysia, M
ongolia, Philippines,
Singapore, Thailand, Vietnam)
HOCHTIEF PPP Solutions (Canada, Chile,
Germany, Greece, Ireland, Netherlands, UK, USA)
HOCHTIEF ViCon (Germany, Qatar)
HOCHTIEF Projektentwicklung (Austria, Czech
Republic, Germany, Poland, Switzerland, Turkey)
Habtoor Leighton Group (Iraq, Kuwait, Oman,
Qatar, Saudi Arabia, United Arab Emirates)
formart (Austria, Germany, Luxembourg)
aurelis (Germany)
HOCHTIEF Property Management (Germany)
Streif Baulogistik (Austria, Germany, Poland, Qatar,
Russia, Ukraine)
The companies featured here by way of example
illustrate HOCHTIEF’s national and international
lineup. Some activities are carried out through
branches, offices or separate companies. For
more on the corporate divisions, turn to fold-out
pages 3 and 4 and the segment reporting on
pages 100–113. Alongside HOCHTIEF Aktien
gesellschaft, the consolidated financial statements take in 483 fully consolidated companies
and 286 equity-accounted companies. This organizational presentation goes together with legal
information given in the list of subsidiaries, associates and other companies on pages 216 and
217.
Leighton Holdings
For the address and contact information of our
subsidiaries and associates as well as their
branches and offices, please see our website
www.hochtief.com.
Annual Report 2013
31
Group Situation
Markets and Operating Environment
Date: January 2014
Global economic environment and trends
Overall real economic growth (GDP) in key
The global economy grew by 3.0% in fiscal 2013. This
HOCHTIEF regions (in percent)
growth is still relatively slow and down 0.1 percentage
points on the prior year. However, the downward trend
slowed compared with the prior-year period of 2011 to
2012, when growth slowed by 0.7%. Recently, the rate
2.6
2.8
0.7
1.8
Canada
markets has also been slower than in prior years, while
several industrial nations saw a slight acceleration in
Germany
growth at the end of 2013. Nevertheless, emerging and
Netherlands
developing economies are still responsible for the major
Norway
and developing economies.
For the near future, experts at the International Mon
etary Fund (IMF) expect global growth to be affected by
1.7
2.2
-0.8
1.5
0.5
1.6
-1.2
0.5
1.7
2.7
Sweden
1.1
2.6
Switzerland
1.6
2.5
UK
1.7
2.4
USA
1.9
2.8
Industrialized economies*
1.3
2.2
two current trends: Firstly, it is probable that U.S. mon
etary policy will soon reach a turning point and become
Bahrain
4.4
3.3
less expansionary. This could have a far-reaching im-
Chile
4.3
4.4
pact on global capital markets. Secondly, China’s growth
China
7.7
7.5
is likely to continue at a moderate pace in the months
ahead. For the time being, the IMF paints a positive picture in its forecasts for 2014, predicting an acceleration
in economic growth world-wide (3.7%). In particular, the
experts anticipate a further stabilization of the European
Source: International Monetary
Fund: World Economic Outlook
(Date: January 2014); UN Development Policy and Analysis
Division: World Economic Situa
tion and Prospects 2014 R
eport
(Date: January 2014)
Australia
Czech Republic
tions stood at 1.3% in 2013 and at 4.7% in emerging
2014E
Austria
of economic growth in many emerging and developing
ity of global growth. Economic growth in industrial na-
*Listed countries plus complete
euro zone, Japan, South Korea,
Taiwan, Hong Kong, Singapore,
Israel, Denmark, New Zealand,
Iceland, and San Marino
**Central and Eastern Europe,
Commonwealth of Independent
States (former Soviet Union),
Asia excluding Japan, Latin
America and Caribbean, Middle
East, North Africa, Afghanistan
and Pakistan, Sub-Saharan
Africa
2013
Hungary
0.2
2.0
India
4.4
5.4
Indonesia
5.7
5.6
Peru
5.3
6.1
Poland
1.2
2.5
Qatar
5.1
5.0
General economic environment and trends in
United Arab Emirates
4.0
3.9
HOCHTIEF regions
Emerging and developing
economies**
4.7
5.1
World
3.0
3.7
economy.
The U.S. economy grew by 1.9% in 2013. That was less
than in 2012 (2.8%). The main reason for this was the
budgetary squeeze, which relaxed significantly following the agreement of a temporary suspension of the
fiscal ceiling at the end of 2013. Combined with the still
Economic growth in Canada in 2013 was almost iden-
supportive monetary policy, this could lead to an im-
tical to that in the USA and thus on a par with the prior-
proved situation in the USA. Based on this, economic
year level (1.7%). The IMF experts anticipate a positive
growth is expected to reach 2.8% in 2014.
trend for 2014 with growth of 2.2%.
After a 0.7% decrease in 2012, Europe saw its economy
slightly contract again in 2013 with negative growth of
0.4%. While the recession continued to affect Italy,
32
Annual Report 2013
Among the countries in the Middle East served by
HOCHTIEF regions saw positive economic growth. The
HOCHTIEF, Qatar and the United Arab Emirates recorded
German and Austrian economies grew more slowly
substantially positive growth rates in fiscal 2013 (5.1%
than in 2012, though these countries were not really
and 4.0%, respectively), although these were lower than
affected by the recession caused by the European
in 2012. For 2014, a slight slowdown in growth is fore-
debt crisis. As Europe’s largest market, Germany notched
cast for the two countries.
Group Situation
Spain, Greece, and Portugal in particular, the key
economic growth of 0.5%; this is forecast to increase to
1.6% in 2014. Apart from the Czech Republic, HOCHTIEF’s
In Latin America, average economic growth was some-
key economies outside of the euro zone grew slightly in
what down on the prior-year level in 2013. Despite the
the past year and, according to forecasts, will see a
slowdown, Chile’s economy grew by 4.3% and Peru’s
minor acceleration in this growth in 2014. The Czech
by 5.3%. These economies are two of the fastest grow-
Republic is expected to return to positive economic
ing in Latin America. For 2014, faster economic growth
growth. In general, the IMF forecasts a positive trend
is again forecast for Peru and Chile, as for the entire
for all European countries in 2014, increased growth
region.
rates, and an end to the recession in the euro zone.
Trend in markets served by HOCHTIEF
In 2013, economic growth in the emerging Asian econo
HOCHTIEF is represented worldwide in the following
mies was at the same level as in the prior year (6.5%
markets with its core competencies: transportation,
compared with 6.4% in 2012). Although the economies
energy, social and urban infrastructure, and contract
in these countries still grow at a much faster pace than
mining.
those in other regions, a slowdown in growth has become
apparent over the last few years. This notably applies
Increase in total construction sector investment
to China, which is the driving force behind the econom-
by region
ic growth in Asia. Given the significance of the Chinese
(percentage changes compared with the previous year,
market, this slowdown will be relevant for the entire global
measured in U.S. dollars)
economy. Overall, the forecast for emerging Asian econo
mies in 2014 is similar to that for 2013, with experts anti
8%
2013
2014
cipating growth of 6.7%.
6%
Australia’s GDP grew by 2.6% in 2013, a significant
slowdown on 2012. For 2014, the IMF predicts growth
4%
Source: IHS Global Insight:
Global Construction Outlook,
Q4 2013
of 2.8% and hence stable, positive development of the
2%
-4%
World
Asia/Pacific
Eastern Europe
Latin America
Middle East and Africa
-2%
North America
0%
Western Europe
Australian economy.
Except as otherwise stated, the
following is based on information from IHS Global Insight, an
information and analytics company which provides a global
construction database with
economic development forecasts for countries and sectors
of industry.
Annual Report 2013
33
Group Situation
Growth in HOCHTIEF’s regional construction markets
(percentage changes compared with the previous year, measured in 2010 U.S. dollars)
Region
Residential
construction
Civil engineering
Overall market
Commercial building
construction
Residential
construction
Civil engineering
Overall market
Austria
0.2
0.5
0.2
0.3
3.7
1.9
2.1
2.3
-1.9
0.3
0.8
-0.1
5.6
3.4
3.6
3.9
Norway
3.7
7.4
0.9
4.5
3.8
3.6
4.5
3.9
Sweden
1.5
1.5
2.3
1.9
3.8
3.2
2.9
3.3
UK
2.3
4.5
3.8
3.3
4.4
5.7
6.6
5.2
Western Europe
-1.4
-2.4
-0.7
-1.7
2.3
0.9
1.9
1.6
Czech Republic
-9.4
-10.8
-8.4
-9.2
6.4
6.7
-2.3
2.3
-13.4
-13.2
-18.3
-15.1
2.3
3.3
3.5
2.9
-4.9
-2.9
-6.3
-4.9
1.5
2.3
3.3
2.3
Australia
4.6
2.0
4.6
3.8
6.4
5.1
4.6
5.1
Canada
3.2
-0.4
8.1
2.7
1.5
0.3
3.6
1.5
Chile
4.2
3.8
5.3
4.8
5.7
4.5
5.0
4.9
Peru
8.6
8.4
7.6
8.2
4.0
3.4
5.6
3.9
Qatar
6.3
5.0
7.6
6.3
7.0
4.8
7.8
6.4
Germany
Poland
Eastern Europe
United Arab Emirates
Source (table on the right):
IHS Global Insight: Global Construction Outlook, Q4 2013
USA
World
6.6
2.1
5.0
5.3
6.6
2.8
5.3
5.5
-3.5
17.7
0.1
4.4
6.0
15.2
2.5
8.7
1.5
2.6
3.0
2.4
4.5
4.4
5.2
4.7
Transportation infrastructure
34
Annual Report 2013
2014E
Commercial building
construction
2013
The markets for transportation infrastructure in the UK,
Germany, Austria, Norway, and Sweden grew in the
Development in civil engineering markets by
past year. The UK and Norwegian markets in particular
country and region
significantly outperformed the western European aver-
The situation in Europe is still shaped by the euro crisis
age with growth rates of 6.1% and 5.9% respectively,
and the associated recession, which have a negative
and will grow even more strongly in 2014 (11.5% and
impact on the construction markets. In western Europe,
7.5%). The Norwegian government has thus announced
total construction spending fell by 1.7% in 2013. The
major investments in this area. Alongside the UK and
countries that HOCHTIEF serves, and thus also their
Norway, Germany, too, plans to invest in transportation
construction markets, are not as severely affected by
infrastructure over the next few years, which will lead to
the crisis.
growth of 5.4% in that country.
A positive outlook is projected for Europe overall since
The transportation infrastructure markets in the Middle
the end of the recession is now in sight. A major factor
East are performing well. Both Qatar and the United
here is that fears of a collapse of the monetary union or
Arab Emirates recorded growth in this segment in 2013
the exit from it of individual countries, such as Greece,
(2.2% and 4.0%, respectively) and are expected to
have been substantially alleviated—due above all to the
achieve double-digit growth rates in 2014. This is made
monetary policy of the European Central Bank. In the
possible by massive investments in both countries, with
wake of this positive overall economic trend, the markets
the aim of driving forward economic growth. Notably in
for transportation infrastructure will see stronger growth
Qatar, the infrastructure required for the FIFA World
in the coming years.
Cup in 2022 is to be built.
In North America, the situation on the transportation
PPP transportation infrastructure projects
infrastructure markets is divided: Public spending in
Public-private partnership infrastructure projects repre-
Canada has led to distinct growth (up 6.9%), which will
senting an investment volume of EUR 2.4 billion were
also continue, if at a reduced rate, in the coming year.
awarded in Germany between 2007 and 2013. Further
At the same time, the U.S. government’s austerity drive
projects worth a total of EUR 2 billion are expected in
is making itself felt, with the market recording a slight
the period to 2015.
Group Situation
decline (of 0.8%) in 2013. The forecast for 2014 predicts a slight decline of 1.5% in the USA.
The PPP market in the Netherlands is developing very
well. By 2015, two to three projects per year are planned
There are also attractive growth markets in the trans-
in the road sector with a total volume of around EUR 6
portation infrastructure segment in Latin America:
billion.
The Peruvian and Chilean markets grew by 6.8% and
4.8%, respectively, in 2013 and will maintain this level
In the North American market, the potential for PPP
in the coming year. Notably in Peru, there is pent-up
road construction projects remains high. The total in-
demand for transportation infrastructure which, given
vestment volume in the PPP sector from 2014 to 2016
the strength of economic growth, has not yet been
amounts to almost EUR 9 billion overall in the USA and
adequately developed.
to more than EUR 14 billion in Canada, with this investment primarily relating to large-scale projects.
In Australia, the trend is positive: The market for transportation infrastructure grew by 2.6% in 2013, and will
Attractive project opportunities could also arise for the
accelerate further in 2014. Most recently, the Australian
HOCHTIEF Group in the future in Latin America,
government invested heavily in developing rail trans-
e specially in Chile and Peru, where investments of
port. In the medium term, the volume of investments in
more than EUR 20 billion are planned.
transportation infrastructure will be positively impacted
notably by congestion in inner cities, a huge backlog of
A large number of PPP projects planned in the road and
projects, and the healthier situation in public finances.
rail segments in Australia opens up the possibility of
winning contracts within these projects.
Annual Report 2013
35
Group Situation
Energy infrastructure
In North America and Australia, the energy infrastructure markets grew by 3.0–7.1% in 2013. In the
Development in energy markets by country and
USA, growth is expected to accelerate substantially in
region
2014 (12.0%). One driver of this expansion is the fast-
The energy infrastructure market in western Europe saw
growing oil and gas production in the USA. In Canada,
a positive development over the past year (up 2.0%). Of
the market has grown mainly due to the extraction of
the countries served by HOCHTIEF, Sweden (up 1.0%)
natural resources. However, this growth will slow in
and the UK (up 1.8%) recorded slightly positive growth.
2014. In order to compensate for this trend, the gov-
For 2014, slight growth is predicted in the overall mar-
ernment has begun to invest in renewable energies.
ket for western Europe (0.7%). By its very nature, the
energy market is strongly influenced by technical and
The trend for Latin America over the past year was
political developments as well as by the availability of
also much more positive than in the prior year. Chile
natural resources. The EU Commission is currently
and Peru recorded growth rates of between 6.1% and
driving forward the expansion of energy infrastructure
9.6% on the energy infrastructure markets; in 2012,
in Europe, with 250 large-scale projects in the pipeline.
these markets had shrunk substantially. Further growth
is forecast for 2014, albeit at a slower rate.
In Germany, the planned switchover to renewable
energy has not yet helped to boost growth in the renew-
The Australian energy infrastructure market is domi-
able energies market. By 2020, the German govern-
nated by the extraction of liquefied natural gas (LNG).
ment aims to install a total of 6.5 gigawatts of wind
Billions of dollars are being invested in large-scale proj-
power capacity in German waters.
ects in this segment. Planning for some of these projects
stretches into 2018 (see also the following section “Oil
Another aspect of the switchover to renewable energy
and gas”).
is the increasing volatility of electricity generation, since
the electricity available from solar and wind energy does
Like all construction markets in this region, the energy
not always match demand. Pumped storage power
infrastructure markets in the Middle East are charac-
plants provide a proven and efficient solution for tem-
terized by strong growth. Major construction projects
porary energy storage. The market for these projects is
and general economic growth will multiply demand for
currently developing.
energy over the coming years, which in turn will boost
demand for services in the energy infrastructure seg-
Norway is Europe’s biggest natural gas and oil pro-
ment. In Qatar, the market grew by 7.8% over the past
ducer. However, national oil extraction has reached a
year. For 2014, growth of 7.7% is expected. In the United
peak and will fall over the coming years. Partly for this
Arab Emirates, growth is somewhat slower at 5.1%
reason, the market for energy infrastructure in Norway
(2013) and 4.4% (forecast for 2014).
is currently largely stagnating.
Sweden continues to rely on nuclear power and exhibits
positive growth rates in energy infrastructure, as in all
other construction segments. This is primarily attributable to the strength of Sweden’s public finances and the
investments made possible as a result.
36
Annual Report 2013
Oil and gas
continue to be felt. The residential construction markets
Global demand for oil and gas continues to increase.
grew by 0.3–7.4% overall in 2013. This is forecast to
Demand for oil rose by 1% in 2013 and, according to
continue in the coming year.
forecasts, will maintain this rate over the next few years,
growing on average by 1.3% per year until 2018. The
The commercial building construction markets in North
slight fall in demand in OECD* countries will be offset
America showed a mixed picture in 2013, with a con-
by the accelerated growth in demand in non-OECD
traction of 3.5% in the USA contrasting with growth of
countries, especially China. In 2014, for the first time,
3.2% in Canada. While slower growth is forecast for
less oil will be consumed in OECD countries than in
Canada in 2014, the U.S. market is expected to grow
non-OECD countries.
by 6.0% in the same period. This is primarily due to
*Organisation for Economic
Cooperation and Development
the fact that the U.S. government is expected to r elax
In contrast to the global trend, oil production in Australia
its tough austerity policy.
fell in the past year, a development that looks set to
continue in the coming years mainly due to lower pro-
The Australian market is expected to grow by 6.4%
duction volumes in the major oil fields.
in 2014, after already growing by 4.6% in 2013.
As in the past, global gas production will continue to
Qatar and the United Arab Emirates show s table
grow at a relatively fast pace in the years until 2018,
growth rates of 6.0–7.0% in the commercial building
primarily due to increased production in the USA, Aus-
construction markets because they, too, are planning
tralia, and Africa. In the medium term, the USA and
huge investments over the next few years. Only the
Russia will remain the biggest gas producers in the world.
residential construction market there is growing at a
slightly slower pace compared with the other con-
Australia’s gas production is growing exponentially and,
struction markets.
by 2014, will have more than doubled compared with
2011. This is mainly due to the large number of lique-
PPP building construction projects
fied natural gas (LNG) projects. LNG accounts for around
In Germany, a total of 174 building construction proj-
half of Australian gas production. Australia exports al-
ects representing an investment volume of around EUR
most 80% of this to Japan, which has by far the great-
5.1 billion have been carried out on a public-private
est demand for LNG in the world. Since the tsunami in
partnership basis since 2002. Four projects worth EUR
2011, Japan has been closing many of its nuclear power
117 million were completed in the reporting period.
stations and thus relies almost entirely on LNG for its
Twenty-five projects are currently at the tender or prepa
energy supply.
ration stage.
Social and urban infrastructure
Furthermore, a positive trend is emerging in the social
infrastructure segment in Poland and the Netherlands:
Development in building construction markets by
Since 2009, 18 PPP projects in public-sector building
country and region
construction have been carried out in Poland with a
In 2013, the commercial building construction markets
volume of EUR 145 million, of which three projects worth
in western Europe (with the exception of Germany),
EUR 29 million were carried out in the reporting year.
which is important for HOCHTIEF, recorded slightly posi-
Another 21 projects are currently at the tender or prepa
tive growth rates of between 0 and 4.0%. The German
ration stage.
market shrank by 1.9%. In western Europe overall, the
market shrank by 1.4%, but this is likely to change in
the coming year (up 2.3%). In general, the effects of the
euro crisis and the adverse macroeconomic climate
Annual Report 2013
37
Group Situation
Group Situation
In the Netherlands, a total of eleven contracts for build-
However, the rate of growth has now slowed: In 2013,
ing construction projects representing a volume of around
the export volume grew by 7.7%, compared with 27.5%
EUR 1.2 billion have been concluded on a public-private
in the prior year.
partnership basis since 2004. Two of these projects
worth EUR 350 million were completed in the reporting
The recent signs of a downturn in the economic devel-
period. At present, two projects are at the tender stage
opment of key Asian buyer countries have led to a dis-
and another five at the preparation stage.
tinct drop in the global market price for coal. This has
also led to decreases in production.
The UK has the best developed PPP market in the world.
Over 700 social infrastructure PPP projects have been
Australia is still the world’s largest exporter in the iron
carried out there since the early 1990s. As part of the
ore market and will remain so for the foreseeable future.
“Building Schools for the Future” initiative, there are plans
Global demand for iron ore continues to rise. The greatest
for programs to build new and refurbish existing schools
demand by far comes from China, and will continue to
in England, Scotland, and Northern Ireland by 2020,
increase over the next few years despite the slowdown
with a project investment volume of more than EUR 5
in the country’s economic growth. Australia’s export
billion.
volume rose by 18.2% in the past year and will increase
further in the coming year.
PPP projects in the USA and Canada play an ever more
important role. In Canada, a total of 92 PPP projects
have been completed since 1992, the majority of them
in the healthcare sector. In the period to 2016, annual
Million
tons
growth in the social infrastructure segment is expected
500
to be 3.6%.
450
Export of thermal coal
 Australia
 Indonesia
400
In Australia, too, a large number of PPP projects are
350
being realized in the social and urban infrastructure
300
segment, especially for schools and hospitals. Here,
250
there is the possibility of carrying out projects as part
200
of large-scale PPP contracts.
150
100
Contract mining
Development in resources markets by country
050
000
*Source: BREE Resources and
Energy Quarterly (Sept./Dec.
2013)
and region*
world. The HOCHTIEF Group company Leighton is the
Million
tons
**See glossary on page 219.
world’s largest contract mining** company and operates
1,600
in a number of areas in the Asia-Pacific region.
1,400
Demand for commodities continues to rise around the
2013
2014
2015
2016
2017
Iron ore trading volumes
 Global trading volumes
 Australian share (export)
1,200
Australia is an important exporter of thermal coal. The
export volume rose in fiscal 2013 and is expected to
continue rising in the next few years due to the growing
demand for energy worldwide. It grew by 7.5% in 2013.
1,000
800
600
400
38
Annual Report 2013
Indonesia, still the world’s largest producer of thermal
200
coal, is also constantly increasing its export volumes.
000
2013
2014
2015
2016
2017
Greek toll road projects restructured
Transformation of energy supplies in Germany
In the two Greek toll road projects, Maliakos-Kleidi
The intense public debate in election year 2013 sur-
(HOCHTIEF share: 35%) and Elefsina-Patras-Tsakona
rounding Germany’s energy transition course, fueled
(HOCHTIEF share: 17%), major progress was made: In
by concerns over soaring electricity prices, rattled in-
December 2013, the two project companies and their
vestors in the renewable energy sector. Offshore wind
shareholders sealed restructuring negotiations with the
power was effected most. The new government’s co-
Greek government and the financing banks, with the
alition agreement, however, extended the arrangement
EU and European Investment Bank playing a key part.
granting investors higher feed-in tariffs under the Ger-
The agreed project restructuring plans take account of
man Renewable Energy Act for the first few years of a
the continuing current low traffic and revenue levels.
wind farm’s operation to the end of 2019. This signifi-
The projected trends in income, which remains toll-
cantly improved the outlook for the offshore industry,
dependent, are based on official, moderate growth
whose long-term projects make lasting, stable operat-
rate forecasts for Greece. With the commercial and
ing conditions a necessity.
Group Situation
Legal and Economic Environment
financial close of project restructuring came the release
of substantial state funding in December 2013, along
Selective grid expansion and smart grid management
with capital injections from the financing banks and from
constitute one way to meet the government green en-
shareholders. This enables construction work on both
ergy targets. A key factor in the new energy market will
projects to be resumed to the full extent in early 2014.
be means of storing renewables-generated electricity,
with pumped storage power plants the most efficient
U.S. economic policy
and well-proven technology. The industry expects the
The U.S. economy grew slowly in 2013. This slow growth
new government to provide the stable operating environ-
was a result of budgetary difficulties that caused a de-
ment needed for long-term investment in systems of
gree of insecurity among retail investors and companies
this kind.
with regard to investments. The political compromises
to suspend the fiscal ceiling in late 2013 went a long way
Green, carbon-neutral energy generation is in growing
toward easing the situation. Along with Federal Reserve
demand the world over. Developments in hydro power,
monetary policy that continues to promote investment,
for example, are therefore attracting increasing attention
these compromises may spell a better outlook for the
from governments as well as from investors with long-
USA. Based on this, stronger economic growth is ex-
term profitability targets providing business opportuni-
pected for 2014. It nonetheless remains to be seen
ties for HOCHTIEF.
whether the Fed’s current monetary policy is indeed
retained. The fact that, at the start of 2014, the Fed
Additional factors
tapered purchases of Treasury bonds and mortgage-
No further relevant legal or economic factors affecting
backed securities was taken by experts as the first sign
HOCHTIEF business came to our attention.
of a possible end to exceptionally loose monetary
policy.
The MAP-21 funding, providing federal funds for transportation infrastructure is set to expire in 2014. Publicprivate partnerships (P3s) are a potential solution to meet
the need for capital financing for infrastructure projects
but they have not been widely established as of yet.
Annual Report 2013
39
Group Situation
Orders and Work Done in 2013
Work done and order backlog stable
HOCHTIEF further extended its position as a global
HOCHTIEF Europe came in below the prior-year level
leading infrastructure construction group in the year
with a reduction of 15.2%. This is mainly due to the
under review. The Group delivered a satisfactory perform
sale of the service business line and a decrease in large-
ance in terms of orders and work done over the course
scale projects. The reduction came to EUR 0.26 billion
of the year. New orders were short of the prior-year rec
in Germany and EUR 0.25 billion internationally.
ord but still marked a high level. Based on the solid
*See glossary on page 220.
level of new orders and the completion of large-scale
Work done: Continuity from projects delivering
projects, work done* was up on the prior year on an
sustained productivity
exchange rate adjusted basis. As expected, the order
Group work done attained a good level at EUR 29.05
backlog is below the all-time record set in the prior
billion to the end of the year. The 2.2% shortfall on the
year, but nonetheless represents a sound foundation
prior year relates entirely to exchange rate movements.
for future performance growth.
Adjusting for exchange rate effects—primarily against
the U.S. dollar and the Australian dollar—gives an in-
New orders: Planned adjustment to market
crease of EUR 1.69 billion, or 5.7%.
situation
**Percentages calculated on
EUR million basis.
At an absolute total of EUR 26.49 billion, the Group’s
HOCHTIEF Asia Pacific held work done at a high level
new orders in 2013 were 15.9%** down on the prior-
with the execution of large-scale, multi-year contracts
year figure. Adjusted for exchange rate effects, new orders
in the contract mining and infrastructure segments.
reached EUR 28.65 billion, trimming the decrease to
The division’s work done was below the prior-year figure
9.0%. In Germany, new orders were EUR 0.26 billion or
in nominal terms but showed an increase of approxi-
12.1% down on the prior-year figure. New orders were
mately EUR 1 billion, or 5.4%, on an exchange rate ad-
likewise lower internationally, with an absolute decrease
justed basis.
of EUR 4.74 billion or a relative decrease of 16.1% (exchange rate adjusted: 8.8%). New orders secured out-
As a result of working through the large order backlog
side Germany accounted for 93% of the total for the
from the prior year, the HOCHTIEF Americas division
year.
comfortably surpassed its prior-year performance with
a record figure of EUR 8.55 billion in work done for the
HOCHTIEF Asia Pacific once again added large-scale,
year under review. Adjusted for negative exchange rate
long-term contract mining, infrastructure, and gas deposit
effects against the U.S. dollar, work done in the report-
development contracts to its order books in 2013. New
ing year was 9.4% up on the prior year. The additional
orders were nonetheless down on the high prior-year
amount was generated in both building construction
figure, largely due to exchange rate effects. The de-
and civil engineering.
crease amounts to EUR 2.37 billion (12.9%; exchange
rate adjusted: 2.5%).
The slight decrease (of 2.9%) in the HOCHTIEF Europe
division is mostly due to the service business line only
HOCHTIEF Americas was likewise below the prior-year
being included for part of the reporting year. Adjusted
figure, which was boosted by large-scale projects in the
for this, work done went up by 5.0%. Group work done
urban and transportation infrastructure segments. Turner
in Germany, at EUR 2.13 billion, was broadly level with
and Flatiron, the division’s two main companies, still
the prior year (up 0.8%).
performed well in the markets they serve. New orders
came to EUR 7.46 billion, down 22.1% (exchange rate
Internationally, the Group recorded work done of EUR
adjusted: 19.9%) on the prior-year figure.
26.92 billion. This represents a decrease of 2.3% on
the prior-year record. International work done made up
just under 93% of Group work done. HOCHTIEF once
40
Annual Report 2013
New orders by
region
New orders
EUR billion
31.49
26.49
25.37
again secured a top position in the annual Top 225 Inter-
Group Situation
29.63
22.47
national Contractors ranking by industry publication
Engineering News-Record.
Order backlog: Impact of exchange rate effects
and divestments
New orders were some EUR 2.56 billion lower than Group
2009
2010
2011
2012
2013
work done in the year under review. This led to a decline
Asia/Pacific/Africa 60.6 %
America 28.5 %
Germany
7.1 %
Eastern Europe1.7 %
Rest of Europe
2.1 %
100 % = EUR 26.49 billion
in the order backlog. Negative exchange rate effects
against the U.S. dollar and changes in the consolidated
group compounded this development.
At an absolute total of EUR 39.94 billion, the order back-
Work done
by region
Work done
EUR billion
log is 19.8% down on the prior-year figure. The operat29.69
ing decrease of EUR 2.56 billion was further amplified
by exchange rate effects against the Australian dollar
and the U.S. dollar (a negative effect of EUR 6.12 billion).
29.05
25.79
23.23
20.56
The divestment of HOCHTIEF Service Solutions and
the Leighton telecommunications business has caused
an additional reduction of EUR 2.41 billion. Adjusted for
exchange rate effects and divestments, however, the
Group’s order backlog is only slightly down (3.3%) on
the prior-year figure.
2009
2010
2011
2012
2013
Due to the low level of new orders, the order backlog
Asia/Pacific/Africa
America Germany
Eastern Europe
Rest of Europe
59.3 %
29.7 %
7.3 %
1.5 %
2.2 %
in Germany is a substantial 37.2% below the prior-year
level.
Based on current work done, the order backlog represents a forward order book of 17 months.
Order backlog
EUR billion
47.49
48.67
Order backlog
by region
49.79
39.94
35.37
Asia/Pacific/Africa66.4 %
America 23.9 %
Germany
6.3 %
Eastern Europe1.3 %
Rest of Europe
2.1 %
2009
2010
2011
2012
2013
For the detailed five-year summary, please see pages
221 and 222.
HOCHTIEF’s order statistics are based on the definition by
the Central Federation of the German Construction Industry.
For further information, please see www.bauindustrie.de
(in German only).
Annual Report 2013
41
The best route to Amsterdam: The A1 and A6 highways
From Almere to Amsterdam to Schiphol Airport: Over 20
kilometers of highway are being built as part of a key route
Group Situation
to the Dutch capital. HOCHTIEF is working with partner
companies on this concession project, which marks our
entry into the growing PPP market in the Netherlands. We
will design, finance, and build this project and subsequently
operate it for 25 years. The contract also includes the
construction of two highway bridges, an aqueduct, and a
rail bridge.
42
Annual Report 2013
HOCHTIEF is one of the world’s leading construction
gree of reliability when executing our projects—which
groups. We have been delivering our core competency
includes staying on budget, on quality, and on schedule.
of construction for more than 140 years. We want to be
We believe success depends on always focusing on
a real partner to our clients, to serve them in the best
sustainable profits and cash generation in the context of
possible way, and to carry out projects as effectively
project work. Together, these aspects form the basis for
and efficiently as possible. At the same time, we never
our strategy, the aim of which we stated clearly in early
want to lose sight of the fact that our shareholders are
2013:
Group Situation
Strategy
entitled to participate appropriately in the company’s success. Our corporate action is shaped by a sustainable
We want to become the world’s most relevant infra-
approach—we are aware at all times of our responsibil-
structure construction group driven by sustainable,
ity to our clients, shareholders, and employees, as well
profitable growth. We have adapted our strategic align-
as to our social and natural environment.
ment accordingly. Our focus is on complex infrastructure projects, which we also implement on the basis of
Strategy: Basis and focus
concession models. We focus on the segments of trans-
In order to position HOCHTIEF for the future in the best
portation, energy, social and urban infrastructure, and
possible way, we are accelerating the Group-wide trans-
contract mining. The emphasis of our strategy is on
formation towards a culture of greater entrepreneurship:
systematically developing the HOCHTIEF Group to boost
There is now greater decision-making authority at op-
its profitability and efficiency as well as on strengthen-
erational level. In addition, we attach great importance
ing the balance sheet by reducing net debt.
to good communication with our clients and a high de-
HOCHTIEF
aims to become the world’s most relevant infrastructure
construction group driven by sustainable, profitable growth.
Use our core
Financial strength
competencies
Focus on
Strategic focus of
the HOCHTIEF
Group
infrastructure
• Development
• Increased profitability
• Transportation infrastructure
• Construction
• Higher positive cash flow
• Energy infrastructure
• Operation
• Increase balance sheet strength
• Social and urban infra-
• Improved risk management approach
structure
• Contract mining
Basis:
• high level of innovation
• qualified employees
Strategic initiatives of the HOCHTIEF Group—Value creation for our shareholders
Annual Report 2013
43
Group Situation
Our objective is to become the world’s most relevant
The HOCHTIEF Group is among the world’s leading
infrastructure construction group. In order to achieve
providers when it comes to sophisticated transporta-
this, we pursue the following strategic initiatives:
tion infrastructure projects. We aim to set ourselves
even further apart from the competition in this promising market: Our expertise and experience, excellent
Focus on and invest in the core business of
engineering services, and high quality standards put us
building in infrastructure projects and PPP
in an ideal position to meet these challenges. It is our
• Transportation, energy, social and urban infra
goal to be one of the most profitable providers in our
structure segments, and contract mining
regional markets.
• Divestments
• Restructuring
– Energy infrastructure
Today’s industrial nations and emerging economies have
*United Nations Environment
Programme
Sustainable optimization of financial strength
a strong demand for energy. There is a huge need for
• Focus on cash generation
investment, especially due to the expansion of renewable
• Capital investment
energies. In 2012 alone, some USD 244 billion were in-
• Diversification of financing instruments
vested in renewable energies worldwide (UNEP*). Pumped
• Constructive working relationship with investors
storage power plants, which are vital in ensuring stable
grids, are suitable for temporary storage of renewable
Improved risk management as a driver of
energies. In addition to renewable energies, there are
profitability
many other ways to generate energy that are essential
for reliable power supplies, including hydroelectric power
Differentiation through one-of-a-kind solutions
stations as well as fossil-fuel plants.
HOCHTIEF: an attractive place to work
HOCHTIEF carries out all kinds of energy infrastructure
projects across the globe. Our product and service portfolio coupled with the special equipment already at our
Focus on the core business of building in
disposal mean we have the ideal setup for these areas
infrastructure projects and PPP
and can operate flexibly. For example, the jack-up vessels
• Transportation, energy, social and urban
used in the erection of offshore wind power installations
infrastructure segments and contract mining
**German Federal Ministry of
Transport and Digital Infrastructure
***American Society of Civil
Engineers
can also be used in projects for the drilling and transport
Drawing on our expertise, we will go on helping to
of gas and oil. We also aim to establish a strong global
master the challenges modern societies face.
position in the energy infrastructure segment.
– Transportation infrastructure
– Social and urban infrastructure
Global growth in demand for mobility calls for world-
Demographic change and the megatrend toward urbani
wide investments in infrastructure, which McKinsey
zation pose huge challenges for cities. As a result, there
studies suggest will reach an estimated USD 57 trillion
is a great need to invest in shaping social infrastructure,
(approximately EUR 42.8 billion) by 2030—above all, this
such as hospitals and educational institutions. A good
includes projects such as roads, bridges, tunnels, ports,
half of the roughly 150,000 schools, kindergartens, and
rail lines, and airports. Many countries, including Ger-
daycare centers in Germany, for example, are in urgent
many, are currently pursuing projects to maintain and
need of renovation (BMVI**). Studies suggest there is
expand their transportation networks.
also a pressing need for the modernization of school
buildings in the USA (ASCE***). Notably for such social
infrastructure projects, the public-private partnership
model offers a good alternative to conventional financing
44
Annual Report 2013
and enables projects to get off the ground—for in-
• Divestments
stance, PPP projects in public-sector building con-
As announced at the presentation of our strategy in early
struction in North America are expected to grow by
fiscal 2013, we have now divested the activities that
3.6% per year by 2016.
are no longer part of our core business:
Urban infrastructure includes residential real estate
In March 2013, Leighton agreed the sale of some major-
and urban quarters with a mix of rented and owned
ity shareholdings in telecommunications companies
properties, nursing care facilities, and commercial
Nextgen Networks, Metronode, and Infoplex, which
properties. According to studies, the global volume of
was completed in June for a price of some EUR 475
commercial property transactions stood at a good
million.
Group Situation
Strategy
USD 436 billion in 2012 alone (Jones Lang LaSalle).
In May, HOCHTIEF agreed the sale of its airports busiHOCHTIEF carries out social and urban infrastructure
ness to a subsidiary of the Public Sector Pension Invest-
projects all over the world. Our aim is to achieve good
ment Board of Canada (PSP Investments), which was
margins on attractive projects in all our markets with
completed in September. All shares in HOCHTIEF AirPort
the building construction units within the HOCHTIEF
GmbH, Essen, were transferred with economic effect
Group. In North America in particular, we are looking to
as of January 1, 2013. The total cash inflow from the
significantly increase returns over the next years.
transaction was approximately EUR 1.1 billion.
– PPP business
Also in September, we completed the sale agreed in
Our PPP business is clearly part of HOCHTIEF’s core
June of HOCHTIEF Solutions’ Services business to
offering—this work makes HOCHTIEF a sought-after
SPIE S.A., Cergy-Pontoise, France. The selling price
partner and source of expertise in complex building con-
was around EUR 250 million.
struction and infrastructure projects. We will continue
to systematically grow these activities. In general, we
On January 31, 2014, we were able to announce that
only take on PPP projects for which we also carry out
we have reached agreement on the sale of aurelis Real
the construction work. In 2013, we generated a con-
Estate. Our remaining real estate activities in Europe,
struction volume of around EUR 300 million Group-wide.
namely HTP and formart, are also no longer part of
In future, we plan to achieve an annual construction
our core business. We are searching for strategic part-
volume of around EUR 1 billion through PPP projects.
ners or potential buyers for these to reduce tied-up
capital.
– Contract mining
Natural resources for use in production, including iron
• Restructuring
ore, coal, copper, gold, and other raw materials, are in
We aim to make HOCHTIEF more competitive in Europe
great demand among emerging economies and today’s
going forward and to increase profitability by creating
industrial nations. Although growth has slowed slightly in
lean structures and efficient processes. We made sub-
the resources market, demand for resources is expected
stantial progress in this respect in 2013:
to remain strong over the long term. The Australian
export volumes for thermal coal and iron ore are also
The restructuring of HOCHTIEF Solutions is on track
expected to continue to rise over the next few years. It is
with the establishment of the three operating subsidiar-
our aim to exploit growth opportunities in contract min-
ies Building, Infrastructure, and Engineering alongside
ing and to assert our position as the world’s leading con-
the existing subsidiary PPP Solutions. These subsidiaries
tract miner.
will assume entrepreneurial responsibility for their business activities in their markets and will have a strong
customer focus. We are thus combining the advantages
Annual Report 2013
45
Group Situation
of operating more like a small- or medium-sized company
• Capital investment
with the service range of an international construction
– Stock buyback program
group. Very much committed to HOCHTIEF’s home mar-
HOCHTIEF concluded its stock buyback program as
ket, Germany, we intend to achieve good returns on
planned by the Executive Board in June 2013. Between
attractive projects, both, domestically and internation-
June 17, 2013 and December 5, 2013, 4,313,000 no-
ally.
par-value shares in HOCHTIEF Aktiengesellschaft
have been acquired at an average price (excluding in-
At HOCHTIEF Americas, we are also currently working
cidental acquisition costs) of EUR 59.25 per share.
on further improving profitability. Measures include reduc-
This corresponds to a 5.6% share of the company’s
ing administrative expenses and obtaining higher-margin
capital stock. The total purchase price (excluding in-
projects.
cidental acquisition fees) was approximately EUR 255.6
million. This has been a further step in delivering on
Within the HOCHTIEF Asia Pacific division, Leighton con-
our strategy which is aimed at rewarding our sharehold-
tinues to work on five fundamental initiatives to drive
ers. After having completed the program, HOCHTIEF’s
the expansion of margins under its “Stabilize, Rebase,
capital stock stands at just under 10% of its shares.
Grow” strategy. In the current rebase phase the five initiatives focus on working capital improvement, strategic
– Stake increase in Leighton
procurement, group shared services, asset manage-
As a clear commitment and being convinced of
ment* and management structures. The strategy program
Leighton’s strength we increased our stake in Leighton
takes a long-term view to position Leighton for future
Holdings Ltd. to 57.94% (as of December 31, 3013).
profitable growth and will move into its next phase in
We see this measure as a strategic investment in
2014.
our core business. Leighton has excellent growth
opportunities and a unique competitive position.
Sustainable optimization of financial strength
• Focus on cash g
eneration
– Bolt-on acquisitions
It is our primary financial objective to create value for our
We are considering bolt-on acquisitions in certain
company and shareholders. We aim to substantially
key strategic markets where we already have an
reduce the volatility seen in our cash flow in the last
established presence.
few years and to improve profitability.
• Diversification of financing instruments
We have significantly reduced net debt in 2013 and aim
At the same time, HOCHTIEF continues to pursue the
to achieve a net cash position in fiscal 2014. Among
strategic aim of optimizing its financial structure. To this
measures undertaken to attain this, we are selling busi-
end, we rely above all on diversifying the financial instru-
ness activities that are no longer part of HOCHTIEF’s
ments available and in particular increasing the range of
strategic core business as well as continuing to scale
sources of long-term debt financing outside of the tra-
back business areas that are capital-intensive and
ditional banking market. Notably capital market trans-
generate lower returns. The proceeds from the sale of
actions are included in the diversification strategy. In
non-strategic business activities, including the sale of
addition, we are working continuously to improve the
the airports business and the Services business at
maturity profile of our financial liabilities.
HOCHTIEF S
olutions in 2013, will be used among other
things to expand the core business of construction and
PPP as well as repay debt.
46
Annual Report 2013
• Constructive working relationship with investors
Differentiation through unique solutions
It is our aim to present HOCHTIEF to capital market
We believe that the way to convince our clients is by
participants by providing constant, open, and transpar-
harnessing our technical excellence and innovation to
ent information. We explain risks and rewards and offer
set ourselves apart through unique solutions. When it
forward-looking prospects for establishing trust-based
comes to complex infrastructure projects, HOCHTIEF
cooperation with existing and potential investors. Among
wants to be the first port of call in the competitive arena.
Group Situation
Strategy
other things, our investor relations experts provide market participants with information tailored to their specific
As the solutions we create in our complex project busi-
needs. This work is geared to continuing to foster the
ness are unique, HOCHTIEF is constantly called upon
value of HOCHTIEF in the future.
to develop and implement innovative ideas. We meet
this challenge with alternative proposals and expert
Improved risk management as a driver of
engineering services. We harness our experts’ skills
profitability
throughout the Group and share best-practice knowl-
It is one of HOCHTIEF’s strategic aims to continuously
edge internationally. This will enable us to continue
improve our risk management*. By reducing risks and
generating added value for our clients in the future, to
managing them effectively, we plan to sustainably in-
set new standards, and to enhance the quality of our
crease returns. In order to achieve this, the risk man-
work.
*For more information on risk
management, see page 119 et
seq.
agement of operational projects in particular is being
adjusted.
HOCHTIEF: an attractive place to work
HOCHTIEF is an attractive place to work for its almost
The risk management approach within the HOCHTIEF
81,000 employees also in the future. The excellent work
Group is being adjusted. Based on past experience and
of our employees is a key factor in HOCHTIEF’s success-
best-practice sharing, optimized standards for project
ful business. As a global Group, we champion the best
controls and methods of execution are currently being
possible secure working conditions and occupational
implemented Group-wide. Stricter criteria have been
safety and health. We ensure that our employees have
defined for selecting projects, which include countries,
constant opportunities to gain further qualifications. To
market segments, and project sizes. Going forward, we
attract and retain the right workforce for our company
aim to exit markets more quickly when conditions deterio
worldwide, we rely on sustainable recruitment and de-
rate. In addition, new approval and reporting processes
velopment programs.
are being introduced, especially for large-scale projects:
The focus is on greater transparency and an improved
We are aware at all times of our responsibility toward
understanding of risk for all project phases. Furthermore,
the people who work at HOCHTIEF—even in times of
there will be regular, detailed reviews by management.
change, we make sure that changes are made in a way
A department is being established at Group level to
that is as socially responsible as possible.
manage risk on large-scale projects.
In 2013, we revised our Corporate directive on risk
management governing the consistent Group-wide recording and management of risks. The directive also
includes clear organizational procedures that describe
the binding control loop of risk management.
Annual Report 2013
47
Group Situation
Sustainability
*By sustainability, we at
HOCHTIEF mean the interplay
between business, environmental, and social responsibility.
Sustainability* and corporate responsibility (CR) go
1. Sustainable products and services
back a long way at HOCHTIEF and represent the guid-
In the reporting year, HOCHTIEF was again able to chalk
ing principles of HOCHTIEF’s corporate strategy. Taking
up numerous green building successes. Investors and
economic, ecological, and social concerns into balanced
building occupants alike value the advantages of prop-
consideration in decision-making processes is a busi-
erties designed to meet sustainability criteria. The poten-
ness challenge that we are faced with daily.
tial for slashing operating and energy costs as well as
non-financial aspects such as the positive impact on
The capital market recognizes and rewards our com-
indoor climate, air quality, and the well-being of users
mitment to sustainability. In 2013, HOCHTIEF was again
are the chief arguments in favor of clients investing in
accepted into the Dow Jones Sustainability Index Eu-
sustainable buildings.
rope—for the eighth time in succession and still as the
sole German construction group. HOCHTIEF’s mem-
Many green projects constructed by our subsidiaries all
bership in the STOXX® Global ESG Leaders indices
over the world received prestigious certifications in the
was confirmed for the third year running in the period
process. Thus far, 38 of the properties we have devel-
under review. This means that HOCHTIEF shares are
oped and constructed in Germany have gained German
***See glossary on page 219.
also suitable for investors who structure their portfolios
Sustainable Building Council (DGNB)*** precertification
**For further information, please
see the section on HOCHTIEF
shares on page 23.
in line with strict sustainability criteria.**
or certification. These include the WaterHouses in Hamburg, which were completed for the 2013 International
Focus areas for sustainability
Building Exhibition and in October became the first resi-
Our sustainability strategy is based on six focus areas
dential project ever awarded a gold DGNB certificate.
for sustainability we defined back in 2008. In 2013, we
****See glossary on page 220.
Cumulative number of
certified “green” buildings
constructed by HOCHTIEF
at Dec. 31, 2013:
26
35
21
27
13
Our subsidiary Turner was once again one of the mar-
results confirm that our sustainability strategy is headed
ket leaders in the U.S. green building segment in 2013.
in the right direction: The respondents continued to rank
To date, 656 Turner projects have either received the
all of our focus areas as extremely significant or very sig-
recognized LEED**** award from the U.S. Green Build-
nificant for HOCHTIEF.
ing Council or have been registered for the award, including Barbara and Jack Davis Hall, a classroom and
In the year under review, we also worked systematically
laboratory building at the University at Buffalo in New
to improve the quality and completeness of our CR data-
York state. Mainly recycled and local materials were
base. The key tool used here was the IT-based CRedit
used to build this Turner project, which earned LEED
reporting system in which quantitative and qualitative
Gold certification in 2013. It also features a green roof
data on our focus areas are collected.
as well as highly efficient heating and cooling systems,
which enable the building to outperform comparable
17
7
conducted a stakeholder survey in this connection. The
efficiency standards by 30% overall.
11
In 2013, HOCHTIEF Solutions added climate-neutral con192
240
306
349
2010
2011
2012
2013
struction to its range of sustainable building services—
and received a certificate from TÜV Nord for its efforts.
EU (DGNB, LEED, BREEAM)
Australia (Green Star, LEED)
USA (LEED)
(For details, please see glossary
on pages 219 and 220.)
48
Annual Report 2013
The concept behind the quality seal entails HOCHTIEF
green building experts working with clients to identify,
agree, and subsequently implement CO 2 reduction
3. Resource protection
emissions then remain are offset by purchasing credits
HOCHTIEF’s business affects the natural environment.
for certified climate protection projects. In 2013, the
Together with our partners, we are developing solutions
certificate was awarded for the first time to an office
for keeping the impact of our activities on soil, water, air,
property in Berlin.
climate, and biological diversity to a minimum as well as
avoiding environmental damage. HOCHTIEF has es-
2. Active climate protection
tablished minimum requirements in this area in a Group
HOCHTIEF’s goal is to actively combat climate change.
directive. The divisions have also integrated environmen-
In particular, energy efficiency and conservation such
tal and climate protection into the entire project process.
as in cooling, heating, and otherwise managing build-
They maintain management systems based on interna-
ings are the key drivers here. This is where HOCHTIEF
tional standards (ISO 14001, ISO 50001). In the year
takes action.
under review, the proportion of projects with environ-
HOCHTIEF Europe division:
Share of corporate units
certified (ISO 14001/EMAS/
SCC) measured in terms of
staff headcount (in %)
79.9
80.0
77.7
2011
2012
2013
65.0
mental management certification (ISO 14001; EMAS/
At the same time, HOCHTIEF devotes its core compe-
SCC) thus stood at 77.7% in the HOCHTIEF Group.
tency to expanding a sustainable, future-proof energy
infrastructure. In the year under review, HOCHTIEF
Materials usage for HOCHTIEF projects is planned early
Solutions again undertook a variety of activities geared
on and in detail to avoid or minimize waste. Methods of
to increasing the supply of electricity on the basis of
waste disposal are laid down in project-specific plans.
renewable energies. The company is helping to build
The volume of waste requiring disposal in 2013 amounted
offshore wind farms in Germany, and in 2013 commis-
to 3,011,091 metric tons (Group coverage: 94%), while
sioned the jack-up vessel Vidar as the newest piece of
the Group-wide recycling rate was 81% (2012: 75%).
2010
special-purpose equipment in its fleet. The reporting
period saw the launch of another project for the devel-
The key factor for a successful, accident-free project
opment of pumped storage power plants in which energy
from an environmental perspective is to identify and
from renewable sources can be temporarily stored.
assess the relevant environmental and climate risks early
HOCHTIEF Solutions has identified a suitable location
on. Environmental protection experts at HOCHTIEF are
in the district of Lippe in North Rhine-Westphalia in
involved in project processing as early as the bid phase
which a 320-megawatt plant could begin operating in
to coordinate the necessary measures and implement
2020.
them in the construction phase. The relevant issues are
then tracked continually during project operations, and
Our climate protection policy has been recognized exter-
the activities adjusted as necessary. A case in point is
nally as well: In 2013, HOCHTIEF was again listed in the
Calaveras Dam, which our U.S. subsidiary Flatiron is
Carbon Disclosure Project (CDP)*. We qualified for a place
currently building in northern California. The project team
in the Climate Disclosure and Climate Performance
there includes an industrial hygiene specialist and an en-
Leadership Index 2013 for Germany, Austria, and Switzer
vironmental biologist who address the special challenges
land because we were not only among the top scorers
facing this large-scale project as a result of naturally
on climate disclosure, but also significantly cut total
occurring asbestos as well as endangered flora and fauna.
emissions year on year.
Annual Report 2013
49
Group Situation
measures for the building construction phase. What
Group Situation
Despite all the precautions taken, incidents affecting
5. Corporate citizenship
the environment cannot be fully ruled out. Any resulting
As an international construction group, HOCHTIEF
environmental damage as well as “near misses” are
designs living spaces all over the world and therefore
recorded and assessed using a graduated reporting
interacts closely with the people with whom and for
system.
whom we work.
4. Attractive working environment
In the year under review, the Group directive on dona-
Accident rate: Accidents
per million man-hours
One of HOCHTIEF’s primary goals is to create the best
tions and sponsoring was rewritten for stronger em-
possible working conditions for the Group’s nearly 81,000
phasis on the international focus and current structure
1.79
employees worldwide and to offer them occupational
of the HOCHTIEF Group. The thematic priorities of
safety and health protection to match. In 2013, we suc-
these activities were redefined, responsibility assigned,
ceeded in keeping the accident rate for the Group as a
and reporting processes and obligations specified
whole at a low level and even achieve a further reduc-
more clearly. HOCHTIEF’s donation and sponsoring
tion. The figure was 1.53 accidents per million man-
activities are geared toward two main issues: educat-
hours worked (2012: 1.74).
ing and promoting young talent as well as shaping and
2010
1.55
2011
1.74
2012
1.53
2013
maintaining living spaces. They have special meaning
see the Employees section
starting on page 59.
An important part of our personnel strategy is to train
for the company and its business activities and have a
our employees, promote their development, and foster
sustained effect.
their loyalty.*
A major sponsorship we pursued once again in 2013
HOCHTIEF sees not only immense potential but also a
was our cooperation with the non-profit organization
competitive advantage in employee diversity. Diversity
“Bridges to Prosperity” (B2P), which builds pedestrian
and equal opportunity are key elements of our corporate
bridges in remote locations all over the world, thereby
culture. Depending on the relevant culture, the focus in
helping local communities obtain better access to trade,
this area varies from division to division. For instance, the
education, and medical care. Our U.S. subsidiaries have
Leighton Group in Australia runs a number of programs
supported B2P projects in Central and South America
and initiatives aimed at training and employing Indigenous
for some years now; HOCHTIEF joined these efforts in
Australians and involving local communities in its proj-
2012 from Germany and Europe to help B2P construct
ects. In addition, through its Gender Pay Equity program,
bridges in Rwanda. In 2013, four new bridges were built.
Leighton is working to equalize the salaries of men and
For all of the projects we finance, we have a group of
women. Initial data from pilot projects in the Group’s
employees on site who play an active part in building
operating units was compiled in 2013. Our U.S. subsidi
the bridges.
ary Turner does not just value diversity among its staff,
but also promotes diversity among its subcontractors
and in the construction industry in general. In 2013,
Turner was named one of the “Top 50 Organizations for
Diversity” for the fourth consecutive time, honoring its
commitment to this issue. The proportion of women in
the Group workforce as a whole at the end of the reporting year was 14.7% (2012: 15.5%).
50
Annual Report 2013
6. Compliance*
For us, it is very important to make employees aware
It is HOCHTIEF’s aim to steer the Group in line with a
of compliance issues and inform them of the regulations
value-driven strategy and the company has anchored
applicable. To this end, HOCHTIEF harnesses various
this idea in its corporate guiding principles. The com-
tools for disseminating information and training employ-
pliance system helps us to achieve this goal.
ees, including the intranet, in-person presentations as
see page 92.
well as training using e-learning and online programs.
We have enshrined the HOCHTIEF Code of Conduct**
All managerial staff are required to complete the learn-
in our corporate culture as a set of binding rules for all
ing programs. In 2013, each corporate department in
employees. Whether we are competing in the market,
the holding company received training in basic and
awarding contracts, or conducting regular business
current compliance issues. The HOCHTIEF Europe divi-
activities, we attach utmost importance to fairness,
sion again held an international meeting of compliance
honesty, objectivity, and transparency. We are continu-
managers for the purpose of sharing information and
ously working to refine and improve the compliance
experiences and above all to discuss country-specific
system within the company to avoid the risk of criminal
issues.
or civil liability along with the damage to our reputation
**For further information on the
Code of Conduct, please see
www.hochtief.com/corporategovernance.
Total donations and
sponsorship (EUR million)
0.45
0.37
3.26
6.30
5.20
x,xx
4.77
3.43
3.00
4.06
4.19
2010
2011
2012
0.33
0.36
and competitive disadvantages that would ensue from
In order to provide stakeholders with transparent infor-
non-compliance. In the year under review, we revised
mation on the subject of sustainability, HOCHTIEF has
and further optimized the process for carefully select-
been publishing a sustainability report since as early
ing and monitoring business partners at HOCHTIEF
as 2005. The report complies with the Guidelines of the
Solutions AG.
Global Reporting Initiative (GRI) as well as the principles
of the UN Global Compact. The 2013 Sustainability Report was published parallel to this Annual Report.
EU
Australia
2013
USA
Percentage and number of business units reviewed for corruption risk
Measured on Transparency
International’s Corruption
Perception Index (CPI)
HOCHTIEF’s Group fully
consolidated companies
mostly operate in countries
with low or very low corruption risk.
300
250
No. of
companies
200
150
K 2010
K 2011
K 2012
K 2013
100
50
www.transparency.de
0
0–24
25–49
50–74
75–100
CPI
Additional information about
sustainability at HOCHTIEF is
available at www.hochtief.
com/sustainability.
Annual Report 2013
51
Group Situation
Sustainability
Tunnels keep things flowing: Stuttgart 21
5
Eleven meters below the city streets, HOCHTIEF is working
with partners to build new tunnels for the Stuttgart 21 railway
Group Situation
project. Some six kilometers of tunnel will run from downtown
Stuttgart to the northern district of Bad Cannstatt. We are
building new high-speed lines which, starting in 2019, will
Rosenstein tunnel—
Neckar portal
• Contour follows terrain
• Open-cut tunnel for 56 meters
• Connection of both two-track tunnel
tubes
accommodate long-distance trains moving at speeds of up
to 250 kilometers per hour. We are also expanding the commuter rail network. An innovative raising technique was used
to prevent the adjacent buildings from settling. HOCHTIEF’s
share of the contract amounts to some EUR 120 million.
4
2
2
Rosenstein tunnel—long-distance
and commuter trains
• Two-track tubes for both lines
• Equalize height difference from
crossover to portal
Heilbronner Strasse
safety structures
• Ventilation tunnel and
ventilation shaft underground
• Underground ventilation
building, 26 x 14 meters
• Separate cross passage
between the tunnel tubes
3
3
Ehmannstrasse crossover
and bifurcation structures
• Starting excavation for
Rosenstein tunnel
• Total excavation approxi
mately 130 x 30 meters,
up to 22 meters deep
• Frame structures finally
connect all tubes
1
1
Kriegsberg
bifurcation structures
• Underground
construction and separation
• Bifurcates north tube and
south tube
• Continuation of outer Cannstatt tunnel
tube downward
• Connection of Feuerbach tunnel tubes under
preparation
2
1
52
Annual Report 2013
3
4
5
Innovation for added value
The second level of the HOCHTIEF innovation man-
HOCHTIEF undertakes challenging building construc-
agement system deals with divisional innovation. These
tion and infrastructure projects for national and interna-
projects are developed, financed, and implemented by
tional clients. Most projects are one of a kind and call
the units and companies themselves.
For further information on R&D
and innovation projects, please
see www.hochtief.com/rd, our
Sustainability Report and www.
hochtief.com/sustainability.
for a wide range of research and development (R&D)
work. The powerful innovative drive of the HOCHTIEF
The third level targets project-specific innovations, with
workforce plays a key part in our ability to deliver to
all necessary R&D work carried out during contract
clients’ exacting standards. Many of the alternative pro-
bidding and execution. The expenses incurred are ac-
posals we put forward to clients go on to be implemented,
counted for directly as part of project cost and so are
generating measurable added value and clearly setting
not registered at Group level. Most of the development
us apart from competitors.
at HOCHTIEF takes place at this third level. Research
Number of R&D projects
46
50
39
33
expenditure at this level is consequently many times
Successful innovation management
higher than first-level R&D spending.
HOCHTIEF is among the innovation leaders in the construction industry, offering new, custom-tailored solu-
Active workforce involvement
2010
tions. We achieve this through our systematic Group-
A key feature of our innovation management system in
wide, cross-divisional innovation management system.
Germany is Ideas Management, which addresses sug-
Number of R&D projects
completed
That system paves the way for us to keep on extending
gestions for improvement from the workforce. These
and reinforcing our market position. Our teams work day
activities center around the Ideas Room, a transparent
in, day out to make internal workflows and processes
tool that allows employees to submit suggestions directly
even more efficient. We also deploy R&D to develop
online. As in past years, many employees made use of
strong, new business segments.
the tool during the reporting year to help improve internal workflows and processes. Overall, 461 ideas were
Innovation management on three levels
2011
16
2012
2013
17
18
2012
2013
11
2010
2011
published.
Innovation at HOCHTIEF is managed on three levels:
Number of R&D projects started
The first level, central innovation management, focuses
The ten best suggestions for 2012 were awarded prizes
on cross-divisional issues. The emphasis here is on in-
at the annual conference in April 2013. This time, two
novations that benefit operating activities throughout
compelling ideas tied for first place. In one of these,
the Group. Innovation management is centrally coordi-
employees came up with an alternative design for the
nated by HOCHTIEF Corporate Development. This de-
pile stopper used as a temporary bearing structure on
partment picks out promising innovations and initiates
offshore wind turbines. The second was a control sys-
and supports their implementation. The Innovation Com-
tem for offshore wind power plants. Specifically, the
mittee, which is made up of members from the opera-
suggestion involved a surveying system for the place-
tional units and Corporate Headquarters, decides in
ment of foundation elements (see “Innovation projects
each case whether to go ahead with an innovation
in 2013” on page 54).
29
15
8
6
2010
2012
2013
Investment volume of R&D
projects (EUR million)
6.2
4.9
project.
2011
5.2
4.9
Ideas Workshops gain more ground
HOCHTIEF spent around EUR 4.9 million on first-level
Ideas Workshops—local events where suggestions are
R&D projects in the year under review. Some 60 em-
collected within operational units in face-to-face dialog—
ployees worked on a total of 39 projects. We launched
have been further cemented and are now a permanent
six new projects in 2013, and brought 18 to comple-
feature of Ideas Management in Germany. Three work-
tion.
shops were held in the year under review. The suggestions were published in the Ideas Room so that they can
be refined and used throughout the Group. In view of
2010
2011
2012
2013
The statistics in the charts relate to the first-level innovation
projects only.
their success and the positive feedback from participants,
Annual Report 2013
53
Group Situation
Research and Development
Group Situation
Innovation projects in 2013
Almost all our projects feature technology and process
improvements. The following projects showcase the
outstanding innovative capacity of the HOCHTIEF Group.
Level 1: Central innovation management
Improved construction method for foundation
structures
In the energy infrastructure segment, HOCHTIEF began
an innovation project during the reporting year in which
it is developing an alternative design for pile stoppers.
A pile stopper is a temporary bearing structure used for
the foundation of an offshore wind turbine on top of
piles in the sea floor. The new design means that foundations can be produced at lower cost and makes for
easier installation. Successfully implemented, the idea
Award-winning ideas: The best
ideas of the HOCHTIEF employees in Germany are honored at
the annual ideas management
conference.
greater use is to be made of Ideas Workshops in the
offers cost savings of some EUR 5 million per wind farm.
future.
It also avoids risky diving work.
Turner Innovation Series
Improved material removal with tunnel excavator
The year under review saw our U.S. subsidiary Turner
Differing geological strata considerably slow down tunnel-
organize the fourth installment of the Turner Innovation
ing progress due to the need to switch between mechani-
Series—a series of conferences on innovation for col-
cal excavation and blasting. To address this, HOCHTIEF
leagues and industry peers staged in various countries.
developed an excavator bucket during the reporting year
The three conferences held throughout the Middle East
that increases the digging force of a tunnel excavator.
in Doha (Qatar), Dubai and Abu Dhabi during October
The bucket design has been improved so that even hard
2013 addressed Building Information Modeling (BIM),
rock can be removed using a tunnel excavator. Blasting
Lean Construction, and Advanced Project Management
is thus avoided, removing the need for time- and effort-
for efficient development and construction processes.
intensive switching between blasting and mechanical
The Turner Innovation Series is now an established plat-
excavation. Model calculations for a 550-meter tunnel
form for marketing experience and new developments
showed savings of roughly EUR 320,000.
as well as for networking within the industry.
New finance model methods
Turner innovation awards
In PPP projects especially, the finance model is a key
Turner gives out the Construction Company Award for
costing and project controlling tool, as it brings together
Innovation to employees who have achieved exceptional
cash flows, tax effects, and accounting impacts from
successes in projects through their own ideas. The 120
diverse project areas such as development, construc-
entries submitted in the reporting year covered numerous
tion, operation, and financing. In an in-house innovation
innovative ideas on safety, sustainability, knowledge
project, HOCHTIEF is piloting the use of operations re-
transfer as well as finance and marketing processes. The
search methods to enable integrated improvement of
development of intranet-based daily construction reports
finance models. This integrated improvement taking the
and the idea to add employee videos to bids won first
impact on all project areas into account is the only way
place in the USD 10,000 award.
to achieve an optimum project outcome. The approach
tested is suitable for use both with projects in the bidding
54
Annual Report 2013
Innovative, effective, and reusable: The steel truss system
developed by our American
subsidiary Turner makes concrete pouring faster.
Preventing accidents and damage to machinery: Our Austral
ian Group company Thiess developed the Isolation Protection
Electrical Upgrade (ISPU), a technique for automatically isolating
electrical circuits on excavators
in case of improper use (right).
phase and with existing projects. Depending on the de-
Optimizing excavator fleet performance
ployment, benefits come in terms of competitiveness,
Leighton subsidiary Thiess has developed an Isolation
profitability or other ratios.
Protection Electrical Upgrade (ISPU) for Liebherr excavators. Designed to reduce the risk of electrical fires,
Modular small-scale biogas plants
the system automatically isolates electrical circuits
During 2013, HOCHTIEF took part in an innovation proj-
when certain operating conditions are detected. This
ect in the small-scale biogas plant business: In coopera
significantly enhances operator safety and avoids dam-
tion with the University of Bonn, we are developing
age to electrical components. Thiess plans to use the
small-scale biogas plants with a standardized, certified
system on other excavators, too. It represents a further
design for rapid assembly and with a small space foot-
innovation from Thiess to improve fleet availability,
print. The energy source is slurry which, unlike crops
reliability, and productivity.
such as corn, is generally available free of charge. By
making use of residual material in this way, energy gen-
Nuclear power plant decommissioning
eration in the biogas plants complies with new German
HOCHTIEF has developed considerable expertise in
government requirements. Within the project, we take
nuclear power plant decommissioning since the mid-
account of the differing needs of beef and hog farmers
1990s. In-house technological innovations deployed in
as well as farming operations. As such operations are
this work include the HOCHTIEF heavy-duty undercut
highly diverse and individual, HOCHTIEF is exploring a
anchor system which can be used to transport large de-
choice of business models. This opens up several mar-
molished parts, and the DECON surface removal sys-
ket opportunities at the same time—as developer, as
tem, a high-powered tool for the removal of contaminated
construction company, as project manager, and as plant
surfaces. HOCHTIEF is one of the few providers that
operator. Here, HOCHTIEF can draw on expertise from
have all relevant certificates for decommissioning nuclear
several corporate units.
power plants. In light of the planned greening of Germany’s energy supplies, HOCHTIEF set up a project
group with the aim—operating through a dedicated
business segment—of providing clients at an early stage
with integrated solutions for planning and subsequently
Annual Report 2013
55
Group Situation
Group Situation
A first for Germany: The entire
length of the 1,000-meter
L ennetal Bridge, a project of
HOCHTIEF Solutions’ bridge
building experts, will be moved
across into place on completion
(visualization).
implementing the impending decommissioning tasks
Measurement system for wind turbines
and with support in solution development.
A standardized measurement system for use in the
placement of foundation elements for offshore wind
Level 2: Innovation by the divisions
turbines has so far been lacking. Nor has there so far
Best practices at Turner
been any means of fully documenting the associated
In the reporting year, U.S. subsidiary Turner launched a
data. As part of a HOCHTIEF Offshore project, HOCHTIEF
new collaboration platform. “Learning Tree” is a system
developed its own measurement and positioning sys-
to capture, organize, and make available best practices.
tem comprising a program and a set of coordinated
Employees can also use the online platform to post
sensors. This makes the work considerably easier and
questions which will subsequently be answered by ex-
gives HOCHTIEF a competitive edge in the offshore
perts from the company-wide network. This innovative
market.
solution will further improve knowledge management at
Turner as well as connectivity and employee engage-
Faster concrete pour
ment and satisfaction. Plans are to also open up the
In the year under review, employees at our American
system for other HOCHTIEF divisions, resulting in a
subsidiary Turner developed a reusable, collapsible
Group-wide knowledge exchange network.
steel truss system for concrete pouring work. The mobile formwork, which is moved along a rail system,
Level 3: Project-specific innovation
speeds up the pouring process and requires less labor.
Building—and moving—a bridge
In the strategic transportation infrastructure segment,
Improved dozer blade
HOCHTIEF is implementing an innovative solution for a
Leighton subsidiary Thiess has improved the design of
bridge project on Germany’s A45 freeway. We are build-
dozer blades used in coal mining. The new “Spade
ing a new 1,000-meter bridge parallel to the existing
Blade” reduces operating costs and increases pro-
Lennetal bridge. Once the old bridge has been torn
ductivity. The new design also provides more options
down, the new bridge will on completion be moved some
for strip mining overburden removal. Used for the first
30 meters across into its final position to replace the
time at Lake Vermont Coal Mine in Queensland, the
previous structure. This special approach will help avoid
system is to be rolled out for other projects in the future.
tailbacks. Five lanes will stay open for the entire construction period. It will be the first lateral bridge repositioning on this scale ever to be undertaken in Germany.
56
Annual Report 2013
Reconfiguring bridges without
closures: In reconfiguring the
Beecroft Road Bridge in Sydney,
our Australian Group company
Leighton Contractors harnessed
new solutions to minimize the
vibrations caused by moving
traffic.
Innovative blasting technique
for challenging mines: For the
Mount Owen Coal Mine in New
South Wales, Australia, our Group
company Thiess used computer
modeling to develop a blasting
technique that leaves coal seams
virtually undamaged (right).
Working on bridges without disrupting traffic
“through seam” blasting method. The technique allows
Leighton Contractors once again demonstrated its in-
for simultaneous fragmentation of the overburden and
novating prowess in bridge building in 2013. Under its
inter-burden material while minimizing disturbance to
contract to upgrade and widen the M2 Motorway, the
the coal seams. Over the years, Thiess has perfected
Beecroft Road Bridge, which spans the M2, had to be
the technique with the aid of computer modeling, with
reconfigured from a three-span bridge to a two-span
the result that the company is now market leader in this
structure. This involved the construction of new center
segment.
supporting columns and new support beams within
the horizontally curved bridge superstructure, all without
International cooperation
disrupting the flow of traffic on the bridge, or on the M2
HOCHTIEF’s R&D accomplishments are to a large extent
below. The M2 is one of Australia’s busiest roads. A spe-
due to the great innovating capabilities of the HOCHTIEF
cial super-flowable concrete mix was poured through
workforce. Another key factor is the global cooperation
core holes in the bridge deck and steps were taken to
network that HOCHTIEF has built up over the years: We
limit the vibration impact of live traffic on concrete curing.
work closely with national and international universities,
This facilitated stitch pours connecting the new strength-
researchers, and associations. As a member of the Euro-
ening beams and anchor blocks to the existing struc-
pean Construction Technology Platform, HOCHTIEF
ture. The company also used an innovative formwork
makes an active contribution toward maintaining the
system to construct the new bridge beams and to help
high technical standards of the European construction
minimize vibration. This type of bridge conversion was a
industry. We are also a member of ENCORD, the Euro-
first for Australia.
pean forum for industry-led research, development, and
innovation in the construction sector. Benefits from our
Smart blasting technique
membership include best-practice exchange on issues
Operation of the Mount Owen Coal Mine in New South
such as bridge construction and tunneling, lean con-
Wales poses special technical challenges for Thiess
struction, virtual construction, corporate responsibility,
because it has multiple seams that vary in thickness
and work safety.
and dip at angles up to 45 degrees. Thiess consequently
developed terrace mining on the basis of a special
Annual Report 2013
57
Group Situation
Partnering for success: Schools in Alberta
HOCHTIEF secured the contract to design, build, and finance
a total of 22 schools in Alberta, Canada, on the basis of a
Group Situation
PPP model, and will also operate the schools for the next 30
years. We previously entered the PPP market in Canada with
the Alberta II contract. The first ten schools were completed
in 2012. In 2013, we were awarded Alberta III, the follow-on
contract for an additional twelve schools. Including the Alberta
projects, HOCHTIEF provides space for over 90,000 students to learn and grow at a total of 123 schools around the
world.
58
Annual Report 2013
Human resources strategy
Restructuring of HOCHTIEF Solutions AG
HOCHTIEF’s human resources strategy is derived from
In 2013, the course was set for the realignment of
the corporate strategy. After all, as our most important
HOCHTIEF Solutions AG. The new organization, which
resource, our employees are a key factor in HOCHTIEF’s
focuses on stronger entrepreneurial thinking, clear re-
success. That is why one of our strategic goals is to
sponsibilities, improved allocation of resources as well
find the best employees for the company, to help them
as leaner structures, impacts on the human resources
develop further, and to gain their loyalty to HOCHTIEF.
strategy and human resources management. We attach
We see diversity as a benefit and success factor.
great importance to preparing our employees for changes
Group Situation
Employees
as far as possible and to supporting them in taking on
Number of employees
new or different tasks.
The positive trend of the last few years continued in
2013. HOCHTIEF employed 80,912 people on average
Staff restructuring is unavoidable in order to increase effi-
in the year under review. Once again, more people
ciency and to be able to work successfully on the Euro-
worked in the HOCHTIEF Asia Pacific and HOCHTIEF
pean market again. It is our declared aim to achieve the
Americas divisions in 2013 than in the prior year. Suc-
required reduction in employee numbers by means of
cessful international projects account for the further
individual, mutual agreements. The Executive Board of
increase in both divisions. Only the HOCHTIEF Europe
HOCHTIEF Solutions, the codetermination bodies of
division employed 5,404 fewer people than in the prior
HOCHTIEF and the trade union IG BAU have agreed a
year (as of December 31). This is due to the sale of the
package of measures so that a socially responsible
Service Solutions business with the facility and energy
solution can be found for the employees affected by
management activities, as well as workforce adjustments
the upcoming restructuring. A collective agreement
in connection with the restructuring of HOCHTIEF Solu-
was jointly signed in October 2013. The program pro-
tions AG. Following the realignment of the division, these
vides for arrangements such as semi-retirement, the set-
areas now no longer belong to the core business of
up of an employment company, and severance awards.
HOCHTIEF Europe. In Germany, this process led to a
reduction in the workforce by 4,446 employees (minus
Recruiting and talent search
44%; as of December 31).
For a number of years, the Internet has been the most
important channel for addressing new employees. In
Germany, for example, nearly 70% of the applications
Number of employees at HOCHTIEF
are made online, with university graduates generally
80,912
79,987
75,449
73,001
70,657
69,876
applying exclusively online. In light of this fact, the career pages of the HOCHTIEF website have been further
65,118
improved in the year under review and new career videos
59,836
have been added. Our U.S. subsidiaries in particular are
also relying increasingly on social media channels, such
as the careers network LinkedIn and public recruiting
videos on a YouTube channel. At Leighton, too, the application process is conducted almost entirely online
and in part through social media channels. Around one
10,821
10,331
10,111
7,911
in ten vacancies in the year under review was filled via
the LinkedIn portal alone and applications were also
2010
2011
2012
2013
received via Facebook. Various recommendation programs offer Group employees the chance to put forward
Average for the year
N Total N International employees N Employees in Germany
Annual Report 2013
59
Group Situation
people from their personal network for a position in the
the restructuring of HOCHTIEF Solutions AG and the
company. Large numbers of qualified applicants find
related sale of the service business.
their way to us in this way: At Turner alone, 167 positions
were filled through the recommendation program in the
Structured staff development
year under review.
At HOCHTIEF, we attach great importance to lifelong
learning. Alongside the advancement of talent and
We start the search for talent well before potential appli-
annual structured employee interviews, continuing
cants graduate from high school or university: By engag-
education is one of the three pillars of our staff devel-
ing with promising candidates via university contacts,
opment. In order to give employees the best possible
internships, and work-study placements, we give them
training and support, we pool training events in many
the chance to get to know HOCHTIEF as an employer.
units. The majority take place at the HOCHTIEF Academy,
This often provides exciting insights into national and
the Turner University, and the Flatiron Construction Uni-
international business. Flatiron’s internship program in-
versity. Leighton maintains various fixed partnerships
cludes additional motivation in the shape of mini com-
with external providers. On top of this, there are job rota-
petitions between interns, in which they can win prize
tion programs such as Flatiron’s Engineer Rotation
money and scholarships for their innovative ideas or
Program and individual courses tailored to specific
especially successful YouTube clips. Following an in-
departments.
ternship, HOCHTIEF maintains contact with good students via a “Student Talent Program”—which has not
We invest in the advancement of our talent by means
infrequently led to such students subsequently being
of programs in each division. HOCHTIEF continuously
hired.
develops the potential of its employees in talent pools,
so that they can be deployed in the long term accord-
We also keep up with former employees. Our U.S. sub-
ing to their expectations and skills. In this way, we
sidiary Turner, for example, has established an “Alumni
ensure sustainable personnel planning for expert and
Circle.” In this way, the company has the opportunity
management roles. Participants are trained in general
to win back these candidates at a later date.
areas such as leadership and decision-making capabil
ities and also receive individual training.
Thorough professional training
see the Americas section starting on page 100.
60
Annual Report 2013
In many units both nationally and internationally, HOCHTIEF
HOCHTIEF: an attractive employer
offers young people attractive opportunities for training
HOCHTIEF is seen internationally as an attractive em-
and studying. In Germany alone, there are 19 career
ployer. This is borne out by a number of prestigious
training options and dual study programs. The highly
rankings and awards. In Germany, we were once again
dedicated managers responsible for training invest a
named among the top employers for engineers, among
great deal of time into passing on professional expertise
other things. In addition, the jury of the “Preferred Em-
as well as methodical and social skills. This is comple-
ployers 2013” ranking of the “forum Nachhaltig Wirt
mented by internal and external training measures, such
schaften” magazine and the Internet platform “CSR Jobs”
as exam preparation courses, foreign language train-
placed HOCHTIEF among the top 20 German compa-
ing, and IT training. In the year under review, 94.6% of
nies. Our U.S. subsidiary Turner was one of the best
trainees succeeded in passing their final exams. At the
employers of 2013 in the Universum ranking. In the year
same time, 73 young people began their training, bring-
under review, “Globe and Mail” named Flatiron as one
ing the number of trainees in Germany to a total of 215
of the “Best Workplaces in Canada” for the second time
by year-end 2013. The training quota therefore stood at
in a row*. For the fifth year in a row, Clark Builders,
3.8%. The decrease in the number of trainees and in
Turner’s Canadian subsidiary, won recognition as one
the number of career training options is mainly due to
of the 50 Top Places to Work in Canada. We are also
using image and employee surveys to actively seek
Occupational safety and health
feedback from stakeholders and employees. Leighton,
Occupational safety and health are part of the fabric at
our Group company active in the Asia-Pacific region,
HOCHTIEF. The center for occupational safety, health
for example, conducted its first company-wide employee
and environmental protection (OSHEP), a cross-discipli
engagement survey in the year under review. And the
nary competence team, coordinates the issues, devel-
results were very positive: Of those surveyed, 85%
ops central guidelines as well as occupational safety
were highly engaged with Leighton which was higher
requirements, and provides support in practical imple-
than the industry average. Employees were especially
mentation. The center’s staff are involved in projects
pleased with collaboration among colleagues, and be-
right from the bid phase and update the security con-
lief in company goals and readiness to go beyond the
cepts as the projects progress. Their work is based on
call of duty were particularly strong.
a methodical project analysis for identifying risk factors
Group Situation
Employees
and developing preventive measures. HOCHTIEF SoluPerformance-aligned compensation
tions AG and our U.S. subsidiary Turner also use the in-
Economic feasibility, competitiveness, attractiveness,
novative Building Information Modeling, which enables
and fairness shape HOCHTIEF’s compensation policy.
the experts to map out all project phases in detail be-
Each of the companies adheres to appropriate stand
fore construction begins. This pays off: Like Flatiron and
ards for fixed and variable compensation components,
Leighton, Turner won several awards in the year under
which are reviewed at regular intervals.
review for excellent security safety standards and accident-free projects.
Work-life balance
A work-life balance is an important factor not only in em-
Certifications are an important step for establishing
ployees’ choice of workplace but also in motivating them.
standardized processes and requirements. Relative to
HOCHTIEF promotes a work-life balance notably by offer-
the workforce number, 67.8% of operational units Group-
ing flexible scheduling models and teleworking. Addi-
wide are certified according to the management sys-
tional help is offered in the form of workshops—for ex-
tems BS 18001 OHSAS and Safety Certificate Contrac-
ample, on self-organization.
tors (SCC). In addition, division-specific programs bring
the subject of occupational safety and health to the
Promoting diversity
company by means of training and events.
Diversity is a success factor for the HOCHTIEF Group.
That is why there are special measures with differences
Thanks to employees and employee
in focus. Turner, for example, requires its employees
representatives
to take part in annual training in this area and has for
The loyalty, commitment, qualifications, and motivation
years specifically promoted the advancement of women
of our employees are crucial to HOCHTIEF’s success
and minorities in the construction industry. At Leighton,
and good performance. The company’s management
numerous scholarship and advancement programs
therefore wishes to express its sincere thanks to all our
focus in particular on Indigenous Australians; in addition,
staff and employee representatives for their hard work.
there are a number of initiatives for women in the construction and mining business. In Germany, there is a
special emphasis on equal opportunities for people
with severe disabilities.
Annual Report 2013
61
Group Situation
Procurement
Further information on the subject of procurement is available
on the Internet at www.hochtief.
com/procurement.
At HOCHTIEF, procurement strategy follows corporate
Three-tier procurement organization introduced
strategy. In 2013, we purchased supplies and services
In the year under review, the restructuring of HOCHTIEF
worth a total of approximately EUR 17.68 billion, the
Solutions AG also set the course for a realignment of
equivalent of almost 61% of Group work done. Effi-
our procurement activities. Products and services are
cient procurement is key to HOCHTIEF’s overall suc-
now procured on three levels: centrally at Group level,
cess. The aim of all procurement processes is to
at the level of the three divisions, as well as individually in
achieve optimum conditions for the desired quality for
operational units and projects. This allows HOCHTIEF
HOCHTIEF and our clients. Sustainability criteria in
to reinforce its project-driven approach in procurement
partner and subcontractor selection, evaluation, and
as elsewhere. The companies benefit from the closer
development as well as in procured products play a
proximity of purchasing experts to operations and re-
major role along with innovations.
gional procurement markets. In addition, the close interconnectedness of the corporate center units ensures
Organizational structure of procurement in the HOCHTIEF Group
Strategic procurement at HOCHTIEF Group level
• Authority to issue directives • Development of strategic initiatives
• Ensuring adherence to compliance requirements
that favorable terms can be negotiated, even beyond
company and country boundaries, thanks to a continual
exchange of information about existing and future needs.
Strategic procurement at Group level
Going forward, strategic procurement for the HOCHTIEF
Group will be the responsibility of a corporate center,
Strategic procurement at divisional level
• Implementation of Procurement Directive • Governance/compliance/processes
• Group and division framework agreements • Information exchange/networking
which is part of HOCHTIEF Solutions AG. It is tasked with
developing strategic initiatives, spreading best-practice
examples throughout the Group, and ensuring that the
entire Group adheres to the Procurement Directive and
procurement-related compliance requirements.
Decentralized procurement at project level
• Project-driven procurement • Project expertise
• Extensive penetration of regional procurement markets
Strategic procurement at divisional level
As a result of the reorganization at HOCHTIEF Solutions,
the procurement activities of the HOCHTIEF Europe
division are being aligned with the existing structures in
the HOCHTIEF Americas and HOCHTIEF Asia Pacific
divisions: Each division now has a centralized strategic
procurement unit, which is responsible for implementing the procurement strategy at divisional level. This includes coordinating procurement activities within the
division, leveraging synergies, and developing bestpractice solutions. Moreover, the strategic procurement managers act as the interface to other procurement experts within the Group. By constantly trading
knowledge firstly with the operational units and secondly
62
Annual Report 2013
Procurement challenges
of other divisions, the experts guarantee the continual
Unlike in the past, procurement activities now include
availability of key information. This in turn allows us to
providing long-term support throughout the entire proj-
consolidate procurement activities: For instance, sign-
ect life cycle. This challenge is considerably more com-
ing framework agreements gives us purchasing advan-
plex than simply providing materials and services for
tages and enables us to optimize cooperation with key
construction projects. As a result, our company today
suppliers. Such advantages are evident for example, in
procures and installs products such as efficient lighting,
IT procurement.
ventilation, and safety systems for tunneling solutions.
Group Situation
with the international strategic procurement managers
Another example is in the healthcare properties segment,
Decentralized procurement at project level
where Turner equips clinics with medical equipment,
Procurement on an individual project basis is the third
furnishings, and consumables, all of which it also procures.
level of HOCHTIEF’s procurement organization. Projectdriven procurement allows our experts to achieve ex-
The growing demand for sustainably designed proper-
tensive regional procurement market penetration in order
ties, for instance, with LEED or DGNB* certification also
to best meet the needs of specific projects. Turner has
drives related demand for certified building materials,
already gained significant advantages by procuring
service providers, and suppliers. Through close coopera
materials directly from manufacturers, for example. Ad-
tion in our global network, we have direct access to
ditionally, cooperation with key subcontractors in the
experts in sustainability. Environmental and sustainabil-
USA has been strengthened; a direct result of this ini-
ity issues such as recycling are playing an increasing
tiative was the award of the construction contract for
role in transportation infrastructure projects as well.
the new Hertz headquarters. Thanks to its distributed
Accordingly, our procurement experts arranged for
structure, the procurement organization is flexible and
proper disposal or recycling of some 28,000 tons of
operates similarly to a small- or medium-sized company.
reinforcing steel generated when the approximately 8.5-
It also benefits from cross-divisional or Group-wide
kilometer Saale-Elster Viaduct was torn down and re-
activities within the HOCHTIEF Group.
built by HOCHTIEF.
Procurement strategies improved further
Whenever our specialists face particular challenges in
Continuous improvement of the international purchasing
highly complex projects, Procurement selects and hires
network is part of the procurement strategy. We secure
third-party professionals who work with us to find inno-
good terms by combining orders for key merchandise
vative solutions for our unique situation.
* See glossary on page 219.
groups. For school projects in the PPP (public-private
partnership) segment, for instance, some standardized
products such as doors and windows are used in large
quantity—and HOCHTIEF’s clients benefit from the more
favorable prices we are able to obtain. Cross-divisional
agreements with major suppliers and subcontractors
were signed for merchandise groups including IT and
elevators.
Annual Report 2013
63
Group Situation
Measuring Return on Capital: Return on Net
Assets
***See page 67 for the derivation of operating earnings
(EBITA).
Value-driven management system for Group-
HOCHTIEF Group: Return on net assets (RONA)
wide transparency
(EUR million)
Operating earnings (EBITA)***
+ Interest income
Return
Shareholders’ equity
(including minority interests)
+ Pension provisions
+ Financial liabilities
Our prime focus is on sustained growth in profitability
and value. Accordingly, we base management of the
Group on our proven, value-driven management system.
Integrated into all Group company reporting and
planning systems, the return on net assets (RONA)
performance metric makes value growth visible. This
ensures Group-wide transparency with regard to the
success of our business. It also provides the basis
for assessing the profitability of investment decisions.
Value-based performance measures are used along-
side indicators focused on earnings and cash flow*
– Deferred tax assets
+ Deferred tax liabilities
Net assets at December 31
Average net assets
Return on net assets (RONA)
Value created (absolute)
2013
1,174.6
53.6
1,228.2
2012
803.0
62.6
865.6
3,293.7
242.5
3,695.8
4,243.8
309.6
4,456.5
125.2
126.1
257.9
92.7
7,232.9
8,038.8
15.3
426.1
8,844.7
8,371.1
10.3
25.1
as key components of our management system.
HOCHTIEF generated a return of EUR 1,228.2 million,
To promote a value-driven approach, our top manage-
significantly more than in the prior year (EUR 865.6 mil-
ment compensation is linked to the attainment of profit-
lion). This positive outcome largely reflects the substan-
ability targets.
tial improvement in Leighton’s core operating business
and the fact that earnings are no longer impacted by
Return on net assets (RONA)
projects such as Airport Link and Victorian Desalination
The two main control parameters relating to return on
Plant or the Elbe Philharmonic Hall. The return was also
capital are RONA and value created.
boosted by the sale of non-core activities. Average net
assets decreased from EUR 8.4 billion to EUR 8.0 bil-
**A detailed calculation of our
cost of capital is provided online
at www.hochtief.com/rona.
If RONA** exceeds weighted average cost of capital
lion year on year. This was largely due to the rise in the
(WACC)**, value created is positive and the Group is
Australian dollar and U.S. dollar exchange rates in 2013
creating value. Expressed in absolute terms, value cre-
as well as the elimination of minority interests on dis-
ated is RONA, minus WACC, times average net assets.
posal of HOCHTIEF AirPort GmbH.
HOCHTIEF Group performance
HOCHTIEF Group value created was EUR 426.1 million,
The HOCHTIEF Group generated a 15.3% return on
a marked increase on the prior year (EUR 25.1 million).
net assets in 2013 (versus 10.3% in 2012). We well ex-
We thus once again attained our goal of increasing value.
ceeded our target of earning our cost of capital in the
reporting year.
64
Annual Report 2013
HOCHTIEF Americas
HOCHTIEF Europe
Group
Return
RONA
WACC
2013
(EUR million)
118.4
766.4
180.9
Net assets
(avg.)
2013
(EUR million)
757.5
4,291.2
1,779.5
2013
(%)
15.6
17.9
10.2
2013
(%)
11.4
11.8
10.2
Value
created
2013
(EUR million)
31.8
261.8
0.0
1,228.2
8,038.8
15.3
10.0
426.1
Group Situation
Divisions
Value
created
2012
(EUR million)
(6.7)
82.1
(60.4)
25.1
Divisional value created and returns
HOCHTIEF Europe generated RONA of 10.2% and was
To allow the performance and competitiveness of
thus able to cover its divisional cost of capital. A notable
HOCHTIEF’s divisions to be better measured and com-
positive factor in the good return was the sale in 2013
pared, the latter are managed with reference to division-
of the HOCHTIEF Solutions Services business line to
specific costs of capital.
SPIE S.A., Cergy-Pontoise (France). The Elbe Philharmonic Hall project, which had a negative impact on
Value created in the HOCHTIEF Americas division
value created in the prior year, has also been put back
was back into positive figures, improving from minus
on track after agreement was reached with the City
EUR 6.7 million in the prior year to EUR 31.8 million in
of Hamburg during the reporting year.
the year under review. Much of the improvement is attributable to the civil engineering business, even though
At the level of HOCHTIEF Corporate Headquarters, the
earnings in that segment did not yet meet our expecta-
sale of the airport business also contributed substan-
tions. In the building construction segment, our sub
tially to return and hence to the positive figure for value
sidiary Turner once again generated good earnings as in
created.
the prior year. RONA in the HOCHTIEF Americas division, at 15.6% in the year under review, was once again
Outlook
well above the 11.4% cost of capital.
HOCHTIEF generated a 15.3% return on net assets in
2013, well above its cost of capital. This demonstrates
The HOCHTIEF Asia Pacific division generated value
the success of our corporate strategy geared to sus-
created of EUR 261.8 million in the reporting year (2012:
tained value growth. The Group returned a positive figure
EUR 82.1 million), marking a major contribution to the
for value created. We want to further increase our profit-
success of the HOCHTIEF Group. RONA went up from
ability targets and value in the future. To this end, we will
13.6% in the prior year to 17.9% in the year under review,
continue to expand our core business of building while
significantly above the 11.8% divisional cost of capital.
reducing net debt and tied-up resources.
The strong return on net assets is largely due to the significant improvement in Leighton’s core operating business and the sale of the telecommunications business.
Net assets shrank in the reporting year, principally because of the drop in the Australian dollar exchange
rate.
Annual Report 2013
65
All from a single source: Contract mining at Solomon Hub
Our Australian Group company Leighton Contractors is delivering whole-of-mine management at the Solomon Hub in
Western Australia since 2012. Iron ore is strip-mined there—
over 60 million metric tons a year at full capacity. Leighton
Contractors is responsible for design and operation. This includes maintaining the extraction and processing facilities as
well as the equipment fleet, and keeping the infrastructure
running smoothly. The contract was extended in 2013, raising its total volume to approximately EUR 2 billion—the largest
single contract in the company’s history.
66
Geschäftsbericht 2012
Financial Review
Operational Statement of Earnings
HOCHTIEF realized sales of EUR 25.69 billion in 2013,
surpassing prior-year sales (EUR 25.53 billion) by EUR
165.5 million. The good operating performance was
countered by large negative exchange rate effects, which
hit sales by EUR 2.02 billion. Adjusted for this, Group
sales were up by a substantial 8.6%.
The Leighton Group once again generated large sales
in 2013 based on a large order backlog and new contract awards. Compared with the prior year (AUD 18.89
billion), sales climbed 8.9% to AUD 20.58 billion. However, the weak performance of the Australian dollar in
the year under review relative to the Group currency,
the euro, made for a large negative exchange rate effect
of EUR 1.77 billion. Stated in euros, at EUR 14.77 billion,
HOCHTIEF Asia Pacific division sales consequently show
a slight decrease of 2.7% on the prior-year figure of
2013
(EUR million)
Profit from operating
activities
+ Net income from participating interests
– Non-operating earnings
Operating earnings (EBITA)
Net investment and interest
income
Non-operating earnings
Profit before taxes
Income taxes
Profit after taxes
Of which: HOCHTIEF Group
Of which: Minority interest
2012
(restated)*
859.1
595.1
210.4
(+) 105.1
186.4
(+) 21.5
1,174.6
803.0
(269.7)
(105.1)
(240.1)
(21.5)
799.8
(254.4)
541.4
(158.7)
545.4
171.2
374.2
382.7
155.2
227.5
EUR 15.18 billion. Turner and Flatiron, the subsidiaries
development business. As a result, sales in the HOCHTIEF
operating in the HOCHTIEF Americas division, contin-
Europe division were slightly higher at EUR 2.86 billion
ued to be successful in their core business segments
compared with EUR 2.85 billion in the prior year.
Financial Review
Earnings
despite a tough market environment in the North American construction sector. The HOCHTIEF Americas divi-
With its product and service portfolio as a global infra-
sion brought in total sales of EUR 7.94 billion in 2013,
structure construction group, HOCHTIEF is on the map
an increase of 7.7% on the prior year (EUR 7.37 billion).
in all the world’s major markets. By far the largest slice
Thanks to a relatively stable U.S. dollar exchange rate
of sales in 2013 thus came together in markets outside
in 2013, exchange rate effects only had a moderate nega
of Germany, and the international share of total sales,
tive impact of EUR 231.4 million on HOCHTIEF Ameri
at 92.2%, was still very high compared with the prior year
cas division sales. The HOCHTIEF Europe division, where
(92.7%).
we pool HOCHTIEF’s German and European activities,
saw the launch of measures to reorganize and focus on
core business segments in the year under review. As
part of these changes, we divested the non-core serv
ice business of HOCHTIEF Solutions AG. Given that
the disposal took place part way through the year, sales
from this business are only included in HOCHTIEF Group
sales pro rata for the period January to August. The resulting drop in sales was made up for, however, by sales
growth in Classic Solutions as well as in the property
Annual Report 2013
67
Financial Review
Earnings substantially improved on prior year
on the comparative prior-year figure (EUR 74.3 million).
HOCHTIEF generated earnings well into positive figures
Measures launched at Flatiron in the prior year in re-
in the year under review, with an improvement on the
sponse to pressure on margins and performance short-
prior year. Alongside the nonrecurring effect of non-core
falls on individual projects started showing positive re-
transactions, this also reflected good operational earn-
sults in the 2013 reporting year. Major improvements
ings performance in our business units. Operational
were achieved even though Flatiron still faced a very
earnings/EBITA for the Group as a whole climbed as
tough market environment. However, despite the posi-
a result to EUR 1.17 billion, up EUR 371.6 million on the
tive trend, the earnings performance of our U.S. civil
prior year (EUR 803 million). EUR 105.1 million in ex-
engineering subsidiary in 2013 was still not satisfactory.
penses not attributable to operational earnings was ad-
Turner defended its position as number one U.S. gen-
justed for in non-operational earnings and mostly re-
eral builder and held its lead in numerous segments.
lated to restructuring expenses in the HOCHTIEF Europe
While operating conditions have continued to get tougher
and the HOCHTIEF Asia Pacific divisions.
here, too, the company has an attractive contract portfolio. EBITA in our American building construction busi-
Leighton sold approximately 70% of its interests in the
ness was slightly above its prior-year level.
telecommunications companies Nextgen Networks,
Metronode, and Infoplex to an outside investor in 2013.
In the HOCHTIEF Europe division, we launched a com-
The transaction brought a substantial positive EBITA
prehensive program for reorganizing and restructuring
contribution of EUR 154.3 million. Also in the reporting
business in 2013. Our goal is to boost profitability and
period, Leighton took over the remaining shares in Leigh-
significantly improve competitiveness. To achieve this,
ton Welspun Contractors—accounted for until then as
we are realigning our German and European business
a jointly controlled entity—and increased its interest in
and focusing on our core construction operations. The
the company to 100%. The transition from equity method
process includes divesting non-core activities. In con-
accounting to full consolidation resulted in expenses of
sequence, we have sold the service business line of
EUR 56.2 million. Impairments in the real estate portfo-
HOCHTIEF Solutions AG to SPIE S.A., Cergy-Pointoise,
lio at Leighton subsidiary Devine Limited had an addi-
France. The transaction had a substantial positive effect
tional impact of EUR 55.3 million. The restructuring pro-
on earnings. This is countered by expenses in connec-
cess at Leighton incurred expenses of EUR 42.2 million.
tion with the restructuring, with a negative impact on
As a net outcome, the HOCHTIEF Asia Pacific division
earnings. Further adverse impacts relate to a smaller
boosted EBITA in 2013 to 744.7 million. Comparing with
earnings contribution from the real estate business,
the prior year—when EBITA was EUR 593.6 million—
from project losses, and from under-recovery of over-
this marked a significant, 25.5% improvement out of
heads. As a net result, the HOCHTIEF Europe division
the operating business. In 2012, there were still impacts
increased EBITA by EUR 60.3 million to EUR 152.5 mil-
from the Airport Link project in Brisbane and the Victo-
lion. The prior-year figure (EUR 92.2 million) was nota-
rian Desalination Plant project in Melbourne, which were
bly affected by the proceeds from the sale of the stake
partly offset by the proceeds from the sale of the invest-
in the Vespucio Norte Express toll route and, in the op-
ment in Thiess Waste Management Services. With Turner,
posite direction, accounting provisions for the large-
which spearheads the building construction business,
scale Elbe Philharmonic Hall project.
and Flatiron Corp., which specializes in civil engineering, the HOCHTIEF Americas division generated EBITA
of EUR 115.1 million. This represents a 54.9% increase
68
Annual Report 2013
Net income from participating interests in 2013 sus-
HOCHTIEF sold the non-core airport business during
tained the upward trend started in the prior year. Higher
the year under review to a subsidiary of the Public Pen-
income from participating interests in the HOCHTIEF
sion Investment Board of Canada (PSP Investments).
Asia Pacific and the HOCHTIEF Americas divisions lifted
The two parties signed the contract of sale on Septem-
net income from participating interests in the HOCHTIEF
ber 27, 2013. All shares in HOCHTIEF AirPort GmbH
Group to EUR 210.4 million, EUR 24 million higher than
transferred to the acquirer on signing. The assets of the
in the prior year (EUR 186.4 million). The HOCHTIEF
airport business were accounted for until then in accord
Asia Pacific division put in an especially strong perform
ance with IFRS 5 as assets held for sale (comprising a
ance, achieving turnaround in 2013 after negative net
disposal group), with dividends from the airport com-
income from participating interests in the prior year. Net
panies distributed up to that point recognized in the
income from participating interests reached EUR 50
HOCHTIEF Group Statement of Earnings. HOCHTIEF’s
million, an improvement of EUR 87.7 million on 2012 (a
net income from participating interests for 2013 included
negative EUR 37.7 million). The weak prior-year figure
a resulting contribution to income of EUR 96.2 million.
largely reflected extra costs incurred in the now com-
The comparative prior-year figure was significantly higher
pleted Victorian Desalination Plant project. Likewise,
at EUR 140 million, as the airport business still belonged
the HOCHTIEF Americas division further boosted net
to the HOCHTIEF Group for the full year in 2012.
Financial Review
Financial Review
income from participating interests, comfortably surpassing the prior-year figure (EUR 26 million) with an in-
We used the capital released by the sale of operations
crease of EUR 19.6 million to EUR 45.6 million. There
where possible to pay down existing financing arrange-
was a marked rise in income from jointly controlled en-
ments. Additionally, after the first bond issue in our cor-
tities at Flatiron, where infrastructure projects are deliv-
porate history in the prior year, HOCHTIEF issued a fur-
ered in collaboration with consortium partners. In the
ther non-rated bond in 2013 for a principal amount of
HOCHTIEF Europe division, net income from partici-
EUR 750 million maturing in March 2020. This enabled
pating interests in 2013 was mainly determined by de-
us to rebalance the maturity profile of HOCHTIEF’s loans
velopments at aurelis Real Estate GmbH & Co. KG as
portfolio and further diversify the investor base. Net
well as in the PPP segment. Operational earnings at
investment and interest income was dominated in
aurelis were once again good but fell short of the large
2013 by interest expense on new borrowings, going
prior-year figure. In light of the advanced stage of the
from minus EUR 240.1 million in the prior year to minus
sale process, assets in connection with aurelis were
EUR 269.7 million in the year under review.
reclassified in accordance with IFRS 5 as a disposal
group and the previously higher carrying amount was
reduced to fair value less costs to sell. By contrast, net
income from participating interests in the PPP business
line improved through the sale of two foreign schools
projects and higher income from jointly controlled entities. In total, the HOCHTIEF Europe division generated
net income from participating interests of EUR 18.7 million, compared with EUR 58.1 million in the prior year.
Annual Report 2013
69
*The full Consolidated Statement of Cash Flows appears on
page 140, in the Consolidated
section of this Annual Report.
HOCHTIEF earnings performance firmly on track
The Group generated profit before taxes of EUR
799.8 million in 2013, a significant increase of EUR
258.4 million on the comparative prior-year figure (EUR
541.4 million). Alongside the good operating perform
ance, notable factors here were nonrecurring effects
from sales of non-core activities as well as the impact
on earnings of restructuring expenses from reorganiza-
Financial Review
tion in the European business and at Leighton.
The tax expense came to EUR 254.4 million in the reporting period, compared with EUR 158.7 million in the
prior year. The extra amount mainly related to the deferred tax expense of EUR 136.6 million, which was EUR
70.3 million up on the prior year (EUR 66.3 million). Be-
Statement of Cash Flows for the HOCHTIEF Group
(Summary)*
(EUR million)
Net cash provided by operating
activities
Net cash used for investment
activities
Net cash provided by/(used in)
financing activities
Net cash increase/(decrease)
in cash and cash equivalents
Cash and cash equivalents
at year-end
Of which: Included in assets
held for sale
Of which: Cash and cash equiva
lents as per Consolidated
Balance Sheet
2013
2012
206.8
1,005.7
595.4
(1,452.3)
(1,115.7)
728.5
(313.5)
281.9
2,035.3
2,525.5
–
[10.7]
[2,035.3]
[2,514.8]
sides the sale of telecommunications activities at Leighton, this partly reflected the impact of changes on the
Cash flow
balance sheets at Group companies. Additionally, in
Consolidated statement of cash flows
2012, the project losses incurred at Leighton had led to
The development of our liquidity in 2013 was largely
a correspondingly lower deferred tax expense. Current
shaped by nonrecurring items, notably as a result of
tax in the HOCHTIEF Group amounted to EUR 117.8
strategic measures. As well as the sales transactions,
million, EUR 25.4 million more than in the prior year
these included the stock buyback program at HOCHTIEF
(EUR 92.4 million).
Aktiengesellschaft and additions to our equity interest
in Leighton.
HOCHTIEF made profit after taxes of EUR 545.4 million in 2013, a substantial increase of EUR 162.7 million
Net cash provided by operating activities repre-
on the prior-year figure (EUR 382.7 million). Consolidated
sented a cash inflow of EUR 206.8 million. The figure
net profit—the proportion of profit after taxes attribut-
was nonetheless a substantial EUR 798.9 million down
able to HOCHTIEF shareholders—came to EUR 171.2
on 2012 (EUR 1.01 billion). The one-time items from
million. This was EUR 16 million more than consolidat-
divestments, which had a net positive impact on profit
ed net profit in the prior year (EUR 155.2 million). The
after taxes but did not relate to operating activities, are
proportion of profit after taxes attributable to minority
shown in net cash provided by investing activities, under
interests, at EUR 374.2 million, was significantly higher
proceeds from divestments. Another factor reducing
than in the prior year (EUR 227.5 million). The share of
cash flow was a further year-on-year increase—by EUR
proceeds attributable to minority owners on the sale of
304.9 million—in resources tied up in working capital
the investment in Sydney Airport had a positive impact
(net current assets). Most of this increase was in trade
here.
receivables, including change orders on large-scale
projects. In addition, cash was reduced by a contractually required payment into capital at the BrisConnections project company early in the year.
70
Annual Report 2013
HOCHTIEF generated a large cash inflow of EUR 595.4
tal expenditure on financial assets at HOCHTIEF Ameri
million in net cash provided by investing activities
cas (EUR 38.2 million) was mostly accounted for by
in the year under review. The prior-year figure was highly
jointly controlled entities at Flatiron. The HOCHTIEF
negative, with net cash used in investing activities total-
Europe division invested most of its EUR 13.7 million
ing EUR 1.45 billion. The marked difference between the
total spending on financial assets in real estate activ
two reporting periods is accounted for by cash inflows
ities. Prior-year expenditure on financial assets mainly
generated in 2013 from the disposal of the non-core
related to spending on the Leighton investment portfo-
airport business and the service business line in the
lio—including a payment into capital at the Victorian
HOCHTIEF Europe division as well as the majority of the
Desalination Plant joint venture—as well as Turner’s ac-
investment in Leighton’s telecommunications activities.
quisition of a majority stake in Clark Builders, Canada.
Adding in proceeds from disposals of property, plant
Investment in securities holdings and financial receiv-
and equipment, proceeds from asset disposals and
ables produced a cash outflow of EUR 534.1 million in
divestments came to EUR 2.58 billion. The prior-year
the reporting period. This included EUR 539.4 million in
figure was significantly lower at EUR 504.8 million, with
investments in bond funds by HOCHTIEF Aktiengesell-
EUR 444.6 million accounted for by Leighton. The main
schaft. In the prior year, additions to the securities port-
factor in 2012 was the sale of Thiess Waste Management
folio at Turner and at the Luxembourg fund manage-
Services. Total capital expenditure on property, plant
ment companies produced a cash outflow of EUR 232.3
and equipment and financial assets across the HOCHTIEF
million. HOCHTIEF recorded a cash outflow of EUR
Group was scaled back by EUR 346.8 million to EUR
16.7 million under changes in cash and cash equivalents
1.43 billion in 2013 (2012: EUR 1.78 billion). The growing
due to consolidation changes in 2013. This mostly re-
challenges in the delivery of complex infrastructure
lates to the disposal of the HOCHTIEF Group’s airport
projects once more drove investment in plant and equip-
and service activities and hence of the cash and cash
ment during 2013. Much of this spending in the year
equivalents still held in those activities. In 2012, initial con-
under review was once again in the HOCHTIEF Asia
solidation of Clark Builders had produced a cash inflow
Pacific division. As in the prior year, most of it com-
of EUR 56.6 million reflecting its holdings of cash and
prised purchases of plant and equipment for the capital-
cash equivalents at the time of its inclusion in the
intensive contract mining business at Leighton. At EUR
HOCHTIEF Group.
Financial Review
Financial Review
846.5 million (2012: EUR 1.11 billion), however, capital
expenditure on property, plant and equipment was
On the financing side, we took further steps toward
lower in 2013, as Leighton’s contract mining business
optimizing HOCHTIEF’s financial firepower on a lasting
saw client-driven reductions in output below the levels
basis as part of implementing our strategic initiatives.
originally agreed and because more efficient capacity
The cash from divestments was used to repay loan lia-
utilization can be achieved by pooling the plant and equip-
bilities on a large scale and to limit new borrowing to
ment in a single entity. HOCHTIEF Group capital expendi
the prior-year level. Net cash used in financing activ-
ture on intangible assets and property, plant and equip-
ities consequently came to EUR 1.12 billion in 2013,
ment fell as a result by EUR 301.1 million to a total of
compared with net cash provided by financing activities
EUR 913.6 million (2012: EUR 1.21 billion). Investment in
of EUR 728.5 million in 2012. Alongside mainstream
financial assets went down only slightly, by EUR 45.7 mil-
bank borrowing, proceeds from new borrowing included
lion, to EUR 521 million (2012: EUR 566.7 million). The
the successful issue of HOCHTIEF’s second corporate
focus here, with an amount of EUR 469.1 million, was
bond in early 2013 with a principal amount of EUR 750
on investment in the Leighton investment portfolio. Capi-
million. Leighton additionally secured the refinancing of a
Annual Report 2013
71
three-year EUR 460 million syndicated cash advance
changes was a substantial negative figure of EUR 176.8
facility and increased its size to EUR 766 million (AUD 1
million (2012: minus EUR 37 million).
Financial Review
billion) in response to strong investor demand. New borrowings in the HOCHTIEF Group came to EUR 2.62
Free cash flow—the balance of net cash provided by
billion in the reporting period, close to the EUR 2.52 bil-
operating activities and net cash provided by investing
lion prior-year figure. Service of debt, on the other hand,
activities—is an indicator of the financial resources
generated a cash outflow of EUR 2.76 billion. Debt serv
generated by the HOCHTIEF Group out of operating
ice thus went up by a very substantial sum of over EUR 1
transactions. Free cash flow was well into positive
billion compared with the prior year, when loan repay-
figures at EUR 802.2 million in 2013, an improvement
ments came to EUR 1.66 billion. The largest share, an
of EUR 1.25 billion on the prior-year figure (minus
amount of EUR 1.63 billion, related to loan repayments
EUR 446.6 million).
at Leighton, while paying down borrowings at HOCHTIEF
Aktiengesellschaft accounted for EUR 668.1 million.
Group fi nancing was further diversified and
Dividend payments made for a significantly larger out-
secured for the long term: HOCHTIEF’s second
flow of cash than in the prior year, partly in connec-
long-end corporate bond issue
tion with the sale of the airport business. Dividends to
Following the successful, early refinancing of a syndi-
HOCHTIEF’s and minority shareholders went up from
cated credit and guarantee facility* totaling EUR 2 billion
EUR 151.2 million in 2012 to EUR 431.2 million in 2013.
in December 2011 and the strong bond debut in March
The increase mainly results from the distribution of the
2012, the Group was further diversified and secured its
profit attributable to minority shareholders from the sale
financing with the successful issue of HOCHTIEF’s
of Sydney Airport. Disposal of the airport holdings also
second corporate bond.
led to EUR 124.9 million in payments out of equity to minority shareholders. This was countered by EUR 33.8
HOCHTIEF Aktiengesellschaft issued its second cor-
million in payments into equity by minority shareholders
porate bond with a principal amount of EUR 750 million
at project companies (2012: EUR 19.9 million). The stock
as of March 20, 2013. The bond featuring a 3.875% an-
buyback program launched by HOCHTIEF in mid-2013
nual coupon and a term of seven years was issued in
was completed to schedule in December. EUR 255.6
collaboration with a banking syndicate comprising
million in cash was deployed. We also increased our
Commerzbank, Deutsche Bank, and HSBC. Both do-
equity stake in Leighton by 4.52 percentage points to
mestic and international investors showed great inter-
57.94% over the course of the year, a strategic invest-
est in the investment based on the high name recogni-
ment for which we paid out EUR 198.4 million.
tion, retail-friendly denominations of EUR 1,000, and
attractive conditions with regard to documentation and
72
Annual Report 2013
The Consolidated Balance Sheet showed cash and cash
pricing. Some 40% of orders came from investors not
equivalents of EUR 2.04 billion at the December 31,
in the order book for HOCHTIEF’s debut transaction the
2013 balance sheet date, a decrease of EUR 479.5 mil-
previous March. The positive price performance of both
lion compared with the prior year-end (EUR 2.51 billion).
bonds on the secondary market further demonstrates
Largely due to the weak performance of the Australian
the solid ongoing demand from institutional and non-
dollar through the year, the effect of exchange rate
institutional investors.
Financial Review
HOCHTIEF Aktiengesellschaft had already refinanced a
Taken together, the various borrowing instruments secure
syndicated facility for a total of EUR 2 billion ahead of
long-term, broadly diversified funding for the Group, on
term in December 2011. Made up of a guarantee facility
borrowing terms and conditions that continue to be
tranche totaling EUR 1.5 billion and a credit facility tranche
acceptable and attractive to HOCHTIEF. None of the
for EUR 500 million drawable on a revolving basis, the
borrowing instruments taken out by HOCHTIEF is secured
syndicated facility matures at the end of 2016. Drawings
and all are pari-passu, with all lenders having equal se-
on the guarantee facility were EUR 1.02 billion as of the
niority.
made flexibly as needed and are at zero as of the re-
The syndicated and bilateral facilities are supplemented
porting date. The terms can be considered attractive in
with project-related borrowing as needed. Such bor-
the current market.
rowings are each negotiated and agreed on the basis of
Financial Review
reporting date. Drawings on the credit facility tranche are
a specific project, can be put to flexible use, and are
A promissory note loan issued in 2008 for an initial princi-
repaid out of the proceeds when the project is sold. If
pal amount of EUR 200 million was redeemed as planned
at all, loans are secured against project assets them-
in July 2013. Part of the promissory note loan issued in
selves and, in almost all cases, any recourse to the
2011 was also redeemed ahead of term at the request
HOCHTIEF Group is expressly precluded.
of investors. Deducting the contractual maturity settlement and the partial redemption ahead of term, we have
As in the prior year, there are loans in place on a local
now a total funding of EUR 422.1 million in issue domes-
basis for the HOCHTIEF Americas and HOCHTIEF Asia
tically and internationally in this attractive finance seg-
Pacific divisions. The U.S. bonding facility is very impor-
ment.
tant in this regard. This covers a total of approximately
EUR 4.7 billion (USD 6.5 billion) and as before represents
HOCHTIEF Aktiengesellschaft also has bilateral, short-
the cornerstone of our funding for the U.S. business. Both
term credit facilities to furnish operational units with
the Turner and the Flatiron Group use this facility for
sufficient cash resources to finance day-to-day busi-
bonding purposes. Bonding is a statutory form of secu-
ness. These facilities have to be renewed annually and
rity used in the U.S. to guarantee performance of public
run to a total of around EUR 336 million. Over 70% of
projects. It is also used with selected other clients. A
the facilities have written bank confirmation for up to a
facility of this magnitude is necessary in the U.S. mar-
year. The terms are in keeping with the high credit stand-
ket, where construction projects often have to be bonded
ing of the HOCHTIEF Group.
with 100% of the contract value, in contrast to other
jurisdictions where 10% performance guarantees are
Drawings on these short-term credit facilities were zero
generally required. The local surety bonding facility is
as of the reporting date. The syndicated guarantee fa-
the subject of a Group guarantee from HOCHTIEF Aktien
cility is supplemented with bilateral guarantee facilities.
gesellschaft. Flatiron additionally maintains bilateral ar-
These placed roughly an additional EUR 983 million at
rangements with banks in the form of both credit and
the disposal of HOCHTIEF Aktiengesellschaft as of year-
guarantee facilities. These are primarily used in Canadian
end 2013. Here, too, the terms accord with the ongoing
activities, where bank guarantees are frequently required
good credit standing of the HOCHTIEF Group.
rather than surety bonds. In this connection, a CAD 240
million syndicated credit facility was successfully placed
Annual Report 2013
73
Financial Review
for Flatiron with Canadian banks in the year under re-
bonds) from the date of change of control expires with-
view. This made it possible to repay short-term bilateral
out agreement. Comprehensive ring-fencing clauses
credit facilities ahead of time, and the three-year term
for transactions with ACS have also been retained or built
of the new facility significantly extended the maturities
into new credit facilities as well as into the offering pro-
profile.
spectus for the second corporate bond as applicable.
The strong standing of Leighton Holdings in the inter-
With the exception of the promissory note loan issues
national capital market remains undiminished, as was
currently in place as well as the short-term credit and
reflected in the confirmation of the external agency rat-
guarantee facilities, which have to be renewed annually,
ings by Moody’s (Baa2) and S&P (BBB-) in early June
we had no borrowing arrangements falling due in 2013.
2013. Leighton Holdings carries out borrowing activities
The principal amount of the promissory note loan falling
on a bilateral or syndicated basis. Due to strong inves-
due in 2014 is EUR 30 million.
tor demand, an AUD 700 million syndicated credit facility placed with banks in May of the year under review
As in the year under review and prior years, we will addi-
was increased to a total principal amount of AUD 1 bil-
tionally continue to keep a close watch on the financial
lion in June 2013. The facility, which has a three-year
and capital markets and take advantage of any oppor-
term, refinances and augments a facility that expired in
tunities to maintain and further diversify the Group’s
December 2013. As before, no security or underwriting
secure long-term financing.
is provided by HOCHTIEF Aktiengesellschaft or any other
Group company for the USD 500 million bond issued
by Leighton in November 2012.
The documentation for the syndicated facilities as well
as the promissory note loan issues and the two HOCHTIEF
Aktiengesellschaft corporate bonds feature identical
change-of-control conditions as in the prior year. Change
of control takes effect when a 30% shareholding in
HOCHTIEF Aktiengesellschaft is exceeded (ACS Group
companies excepted). Creditors have a right to terminate their loan commitments for cause if a negotiation
period of 60 days (syndicated credit documentation
and promissory note loan issues) or 68 days (corporate
74
Annual Report 2013
Financial Review
Substantial impact on HOCHTIEF Consolidated
Consolidated Balance Sheet (EUR billion)
Balance Sheet from sale of non-core activities
Assets
Balance sheet
16.96
14.76
14.76
16.96
Liabilities
and exchange rate effects
2.20
airport business, the telecommunications businesses
Financial assets
0.78
at Leighton, and the service business at HOCHTIEF
Other non-current assets
and deferred taxes
0.80
Europe, accounted for as a disposal group as of De-
1.02
cember 31, 2012 and part way into the reporting year.
on the assets side to augment asset holdings and on
the liabilities side for purchases of treasury stock, to in-
2.87
7.13
Inventories, trade receivables
and other current assets
Current assets
debt. Exchange rate effects—mostly from the fall in the
Australian dollar—also had a substantial, EUR 1.41 billion negative impact on total assets. Total assets consequently went down relative to the 2012 year-end
(EUR 16.96 billion) by EUR 2.2 billion to EUR 14.76 billion.
Marketable securities, cash
and cash equivalents
0.83
Provisions
2.91
Other non-current
liabilities and
deferred taxes
0.97
Provisions
8.01
Other current
liabilities
0.92
7.49
crease our equity interest in Leighton, and to pay down
Shareholders’
equity
3.29
0.75
The cash inflow from the transactions was put to use
4.24
1.19
Non-current
liabilities
ed in the deconsolidation of assets and liabilities of the
Intangible assets, property,
plant and equipment, and
investment properties
3.14
6.93
Current liabilities
the Consolidated Balance Sheet. The disposals result-
Non-current
assets
2.63
under review had a major impact on the structure of
3.16
Assets held for sale
1.85
0.33
2013
2012
2013
2012
Non-current assets decreased in the reporting period
by EUR 1.06 billion to EUR 3.78 billion. The compara-
deployment at Leighton during the year. Leighton has
tive figure at the end of 2012 was EUR 4.84 billion. In-
centralized plant and equipment management in a sin-
tangible assets mostly consist of goodwill on fully con-
gle company that furnishes operating units with such
solidated subsidiaries, concessions and similar rights,
assets as needed. Greater use was made of operating
as well as company names recognized on initial con-
leases in the procurement of plant and equipment in
solidation. Goodwill increased, mainly in connection with
the year under review, with the result that these assets
the acquisition of the remaining shares in Leighton
are no longer included in Leighton’s balance sheet.
Welspun Contractors, by EUR 123.4 million to EUR 612.9
Another factor was the significantly lower Australian
million. Concessions likewise show a slight rise linked
dollar exchange rate as of the 2013 balance sheet date
to Leighton’s purchase of construction projects from its
compared with the prior year. This meant the carrying
group company Macmahon. In total, intangible assets
amount of property, plant and equipment as translated
went up by EUR 116.5 million to EUR 829.8 million. Prop-
into euros was substantially down on the prior year, as
erty, plant and equipment came to EUR 1.36 billion as
Leighton accounts for by far the largest share (82%) of
of December 31, 2013, EUR 541.7 million below the com-
property, plant and equipment in the HOCHTIEF Group.
parative figure as of the prior year-end (EUR 1.9 billion).
Investment properties relate entirely to properties in the
One of the main causes of the decrease was the effi-
Asset Management business at the HOCHTIEF Europe
ciency overhaul of mining equipment procurement and
division. At EUR 16 million, the figure was slightly down
Annual Report 2013
75
Financial Review
The divestments of non-core businesses in the year
Financial Review
on the prior year (EUR 19.3 million). Financial assets were
Current assets decreased by a very substantial EUR
notably affected by restructuring in the Leighton busi-
1.14 billion, from EUR 12.12 billion at the start of the
ness portfolio, the sale of the airport business, and re-
year to EUR 10.98 billion at the 2013 year-end. Along-
classification of the carrying amount of the investment in
side raw materials and supplies for the operating busi-
aurelis Real Estate GmbH & Co. KG to assets held for
ness, the main item in inventories is work in progress
sale. Financial assets at Leighton were down as a net
from the real estate project business. Due to the sale of
result of acquisitions, divestments, and exchange rate
development projects in the real estate business at the
effects by EUR 169.1 million to EUR 595.4 million. In addi-
HOCHTIEF Europe division, impairment losses taken
tion, the carrying amount of the investment in Athens
on real estate projects at Leighton subsidiary Devine
Airport was reclassified from financial assets at the be-
Limited, and exchange rate effects, the HOCHTIEF
ginning of the year to assets held for sale in view of the
Group’s inventories decreased by EUR 276.1 million to
specific negotiations for the sale of the entire airport
EUR 1.15 billion. Current financial receivables changed
business, and was deconsolidated from the HOCHTIEF
little, with a small decrease of EUR 8.4 million to EUR
Group on completion of the sale transaction. Regard-
126.9 million. In contrast, trade receivables increased
ing the planned sale of Group company aurelis Real
by EUR 674 million to EUR 5.98 billion as a result of op-
Estate GmbH & Co. KG, specific negotiations were
erating sales growth. This was largely a result of work
held with a potential acquirer toward the end of the year.
done on large-scale projects at Leighton and Turner. The
In accordance with IFRS 5, the carrying amount of the
sale of HOCHTIEF Europe’s service business had a
investment in the company was therefore reclassified
EUR 133.9 million negative impact on trade receivables.
from financial assets to the disposal group. At a total of
Other receivables and other assets fell by EUR 35.2
EUR 773.8 million, financial assets as of December 31,
million to EUR 190.2 million (2012: EUR 225.4 million),
2013 were consequently EUR 413.9 million down on
mainly reflecting a decrease in prepaid expenses at
the prior-year figure (EUR 1.19 billion). The non-current
Leighton. HOCHTIEF used part of the cash inflow from
financial receivables mainly relate to loans to compa-
the sales transactions completed in the reporting period
nies in the Leighton business portfolio. At EUR 526.7
to augment asset holdings in marketable securities.
million, the figure decreased by EUR 108.6 million com-
Most purchases related to shares in bond funds for the
pared with the prior year (EUR 635.3 million). Aside from
HOCHTIEF Aktiengesellschaft securities portfolio. This
the decrease at Leighton, this also reflected the partial
boosted marketable securities by EUR 494.5 million, from
repayment of loans granted to companies in the real estate
EUR 628.8 million to EUR 1.12 billion. Besides helping
business at the HOCHTIEF Europe division. Other re-
to fund the operating business, the remainder of the extra
ceivables and other assets fell slightly, by EUR 7.7 million,
cash was used to increase the equity interest in Leighton,
to EUR 93.8 million. Current income tax assets rose by
for the stock buyback program at HOCHTIEF Aktien
EUR 33.1 million to EUR 57 million. This mostly com-
gesellschaft, for capital expenditure, and to repay debt.
prises refund entitlements at Leighton from foreign tax
Cash and cash equivalents decreased as a result com-
authorities. The EUR 132.8 million decrease in deferred
pared with the prior year (EUR 2.51 billion) by EUR 479.5
tax assets to EUR 125.2 million is largely due to the sale
million to EUR 2.04 billion. The Consolidated Balance
of telecommunications activities at Leighton.
Sheet as of December 31, 2012 included EUR 1.85 billion in assets held for sale. EUR 1.34 billion of this related
to the airport business and EUR 516.4 million to the
76
Annual Report 2013
Leighton telecommunications activities. The sales trans-
Non-current liabilities, at EUR 3.62 billion at the end
actions for these businesses were completed in the
of 2013, were EUR 122 million below the prior-year fig-
course of 2013 and the assets deconsolidated out of
ure (EUR 3.74 billion). Non-current financial liabilities, at
assets held for sale. Assets from the mining business
EUR 2.7 billion, showed little change relative to the prior
at Leighton and aurelis Real Estate GmbH & Co. KG were
year (EUR 2.75 billion), with line items within the total
reclassified to the disposal group as of the 2013 year-
figure canceling out. While bonds increased with the
end in view of the ongoing intention to sell. Assets held
second corporate bond issue by HOCHTIEF Aktien
for sale consequently amount to EUR 333.8 million as
gesellschaft, amounts due to banks went down due to
of December 31, 2013.
repayments, as did sundry other financial liabilities due
Financial Review
Financial Review
to lower lease liabilities. The reduction in lease liabilities
HOCHTIEF’s shareholders’ equity stood at EUR 3.29
relates to the increased use of operating leases follow-
billion as of December 31, 2013. This marks a EUR 950.1
ing the overhaul of procurement management in the
million decrease on the comparative prior-year figure
mining business at Leighton. Non-current provisions
(EUR 4.24 billion). Other changes not recognized in the
decreased, mainly due to the sale of the service busi-
Statement of Earnings account for a EUR 742.2 million
ness at HOCHTIEF Europe, by EUR 85 million to EUR
reduction in shareholders’ equity. This relates to EUR
747.7 million. Provisions for pensions and similar obliga-
300.5 million in minority interests on the sale of the air-
tions accounted for EUR 242.5 million of this figure
port business, EUR 255.6 million for the HOCHTIEF stock
(2012: EUR 309.6 million). Other non-current provisions
buyback program, and EUR 198.4 million for the increase
stood at EUR 505.2 million (2012: EUR 523.1 million)
in HOCHTIEF’s equity interest in Leighton. Dividends to
and chiefly related to personnel and insurance-related
HOCHTIEF’s and minority shareholders deducted EUR
obligations. This marked a slight reduction of EUR 17.9
431.2 million from shareholders’ equity. Currency trans-
million. The EUR 20.6 million drop in other liabilities to
lation differences and changes in fair value of financial
EUR 42.6 million mostly reflects lower liabilities under
instruments also had a EUR 340.3 million negative im-
derivative financial instruments. Deferred tax liabilities
pact on shareholders’ equity. By contrast, shareholders’
increased, mainly at the Luxembourg reinsurance com-
equity was increased by profit after taxes (EUR 545.4
pany and in line with construction progress at real
million) and changes from remeasurement of defined
estate project companies, by EUR 33.4 million to EUR
benefit plans (EUR 18.2 million).
126.1 million.
The equity ratio (shareholders’ equity to total assets)
We significantly reduced current liabilities in 2013.
was slightly down, at 22.3% as of the December 31,
Total current liabilities were scaled back by EUR 1.13
2013 balance sheet date (December 31, 2012: 25%).
billion, from EUR 8.98 billion to EUR 7.85 billion. This
was largely a result of deploying cash inflows from divestments. Leighton and HOCHTIEF Aktiengesellschaft repaid debt on a large scale, considerably reducing bank
borrowings. Total current financial liabilities fell as a
result by EUR 711 million to EUR 995.5 million. The
HOCHTIEF Group’s trade payables were likewise below
the prior-year figure (EUR 5.75 billion) with a decrease
Annual Report 2013
77
of EUR 338.3 million to EUR 5.41 billion. As a large proportion of trade payables relate to Leighton and Turner,
an increase from the operating business was more
than offset by exchange rate effects. Other current
liabilities went up by EUR 55.3 million to EUR 440.6
million. By contrast, current provisions, at EUR 915.9
million, were EUR 58.9 million down on the prior year
(EUR 974.8 million). Additions to provisions for restrucGroup Management Report
Financial Review
turing measures were countered here mostly by lower
tax provisions at Leighton. The HOCHTIEF Consolidated
Balance Sheet as of the end of 2012 showed EUR 155.2
million in liabilities associated with assets held for sale
relating to the airport business and the Leighton telecommunications activities. These were derecognized
on completion of the sale transactions in 2013. The
liabilities associated with assets held for sale in the
HOCHTIEF Consolidated Balance Sheet as of December 31, 2013 relate to the mining business at Leighton.
78
Annual Report 2013
Report on relations with affiliated companies
by the Chairman of the Executive Board
in accordance with Section 312 of the German
HOCHTIEF delivered a positive operating performance
Stock Corporations Act (AktG)
in 2013, with substantial earnings improvements—among
As there is no control agreement with our major share-
others as a result of nonrecurring factors from the sale
holder ACS Actividades de Construcción y Servicios
of non-core activities—in operational earnings (EBITA)
S. A., the Executive Board of HOCHTIEF Aktiengesell-
and profit before taxes. All divisions contributed to this
schaft is required to prepare a report on relations with
success. Each secured attractive infrastructure projects
affiliated companies in accordance with Section 312 of
in the markets served. Focus has further sharpened on
the German Stock Corporations Act (AktG). This report
the goal of developing HOCHTIEF into the most relevant
concludes with the following statement from the Execu-
infrastructure construction group driven by sustainable,
tive Board:
Financial Review
Summary assessment of the business situation
profitable growth in its core markets of transportation,
energy, social and u
rban infrastructure, and contract
“There were no reportable transactions at HOCHTIEF
mining. This has included measures to realign the Euro-
Aktiengesellschaft in relation to the controlling company
pean business spearheaded by HOCHTIEF Solutions
or its affiliates in the reporting period January 1 to De-
AG by creating four operating enterprises that indepen-
cember 31, 2013.
dently serve their respective markets. Lower earnings
No actions were undertaken or refrained from at the in-
volatility paves the way for sustained higher returns. The
struction or in the interest of the controlling company or
sales of the airport holdings, the Service Solutions busi-
its affiliates.”
ness line in Europe, and the telecommunications interests at Leighton have been successfully completed.
The resulting influx of cash was deployed via a stock
buyback program at HOCHTIEF Aktiengesellschaft to
repurchase some 5.6% of the Company’s capital stock
on the stock market, increase the equity interest in
Leighton Holdings Limited to 57.94% (as of December
31, 2013), and reduce net debt.
With regard to guidance for fiscal year 2014, the Group
expects to achieve further progress with an operating
consolidated net profit in the range of between EUR
225–250 million. We anticipate that this will be achieved
with improved profit margins in all divisions. With our
continued focus on cash, we also aim to further strengthen
the balance sheet and end the year with a net cash
position.
Annual Report 2013
79
New landmark on the Hamburg skyline:
The Elbe Philharmonic Hall
The Elbe Philharmonic Hall is being built by HOCHTIEF. Located
mid-port with its footing on a historical quayside warehouse,
the architecturally spectacular culture complex is to be completed in 2016 at a fixed price of EUR 575 million. Inside, it
will feature concert halls, a luxury hotel, and exclusive owneroccupied apartments. A 4D model visualizes the project down
to the last detail, replicating the progress of the entire construction project and enabling plans to be updated and coor-
Financial Review
dinated quickly across all trades.
80
Annual Report 2013
HOCHTIEF Aktiengesellschaft
(Holding Company): Financial Review
HOCHTIEF Aktiengesellschaft heads the HOCHTIEF
Statement of Earnings (Summary)
2013
37.2
2012
37.0
(2.3)
63.5
(16.8)
(29.3)
(5.2)
(184.8)
434.1
(74.2)
(0.7)
58.9
(14.6)
(33.4)
(5.7)
(90.3)
(21.9)
(45.3)
(1.9)
220.3
(1.0)
(2.3)
(118.3)
4.0
219.3
3.4
(107.2)
115.5
(114.3)
6.9
184.4
77.0
company. Its profits are therefore mostly determined by
net income from participating interests as well as by
revenues and expenditure relating to its function as a
holding company. In addition, HOCHTIEF Aktiengesellschaft has made adjustments to the business portfolio
in connection with the strategic realignment of its activ
Financial Review
(EUR million)
Sales
Changes in the balance of
construction work in progress
Other operating income
Materials
Personnel costs
Depreciation and amortization
Other operating expenses
Net income from financial assets
Net interest income
Writedowns on financial assets
and marketable securities
Profit from ordinary activities
Income taxes
Net profit/(loss) before
changes in reserves
Net profit brought forward
Changes in revenue reserves
Unappropriated net profit
Group’s divisions as a strategic management holding
ities. This had a major effect on certain items in the Balance Sheet and the Statement of Earnings.
The HOCHTIEF Aktiengesellschaft annual financial statements are prepared in accordance with the German
Commercial Code (HGB) and Stock Corporations Act
(AktG) and have been given an unqualified auditors’
report by auditors Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft. There are no recognition and
measurement changes relative to the prior year. The
2013 Annual Financial Statements and Management
Report of HOCHTIEF Aktiengesellschaft are published
in the Bundesanzeiger (Federal Official Gazette).
Earnings
HOCHTIEF Aktiengesellschaft’s sales of EUR 37.2 mil-
HOCHTIEF Aktiengesellschaft Balance Sheet (Summary)
Dec. 31,
2013
Dec. 31,
2012
30.0
1,981.6
2,011.6
36.6
2,301.1
2,337.7
751.5
1,110.4
746.5
1,498.0
77.9
1,188.3
17.6
16.0
Total assets
3,527.2
3,542.0
Provisions
Liabilities
Total liabilities
1,571.2
74.0
1,882.0
3,527.2
1,680.5
94.8
1,766.7
3,542.0
(EUR million)
Fixed assets
Intangible assets and property,
plant and equipment
Financial assets
Current assets
Inventories, receivables and other
assets, and prepaid expenses
Cash and cash equivalents, and
marketable securities
Excess of plan assets over
obligations
lion (2012: EUR 37 million) relate to remuneration for
administration and other services, and notably rental
and lease revenue. Other operating income, at EUR
63.5 million, was slightly up on the EUR 58.9 million prioryear figure and mainly relates to corporate headquarters
charges and reversals of provisions. Other operating
expenses were heavily impacted by the sale of the airports business and rose by EUR 94.5 million compared
with the prior year (EUR 90.3 million) to EUR 184.8 million. The increase mostly reflected the loss on the sale
of HOCHTIEF AirPort GmbH as well as the transaction
costs incurred in connection with the sale process. These
expenses were countered, however, by the EUR 198.5
million profit transfer from HOCHTIEF AirPort GmbH for
the 2013 short fiscal year; this figure is reported in net
income from financial assets and is largely accounted
for by the sale of Sydney Airport. Due to substantially
higher income from profit/loss transfer agreements and
lower expense from transfer of losses, net income from
financial assets, at EUR 434.1 million in the reporting
period, was well into positive figures and represented a
Annual Report 2013
81
marked improvement on the prior year (a net negative
There is virtually no change in the capital reserve, at
amount of EUR 21.9 million). Alongside the profit trans-
EUR 784.3 million (2012: EUR 784.1 million). Revenue
fer from HOCHTIEF AirPort GmbH, the increase also
reserves decreased from EUR 631 million to EUR 493.9
includes a substantial profit transfer from HOCHTIEF
million. The decrease was accounted for by EUR 244.3
Insurance Broking and Risk Management Solutions
million charged against equity for acquisition costs on
GmbH, Essen, Germany. This was chiefly a result of
purchases of treasury stock and EUR 107.2 million credit-
remeasuring assets in connection with the reorganization
ed to equity for the appropriation of net profit to revenue
of the insurance activities. The expenses from transfer
reserves.
Financial Review
of losses mostly related to HOCHTIEF Solutions AG,
Essen. The larger prior-year figure contained risk provi-
Shareholders’ equity came to the equivalent of 44.5%
sioning for the Elbe Philharmonic Hall project and im-
of total assets (2012: 47.4%).
pairments of participating interests. Net interest income
decreased to minus EUR 74.2 million (2012: minus EUR
Liabilities amount to EUR 1.88 billion (2012: EUR 1.77
45.3 million). This was a product of lower interest in-
billion) and include promissory note loans issued in
come, higher interest expense, and lower income from
previous years totaling EUR 403.5 million. The coupon
pension plan assets.
on each of the promissory note loan issues is in line
with market conditions at the time of issue and is either
Balance sheet
equal to six-month EURIBOR plus an appropriate mar-
In keeping with its function as a holding company,
gin or is made up of a combination of fixed and variable
HOCHTIEF Aktiengesellschaft’s balance sheet is dom-
rates. In addition, liabilities include a carrying amount of
inated by financial assets and receivables from affiliated
EUR 772.8 million for a bearer bond issued in March of
companies. The strategic changes had a major impact
the reporting year and a carrying amount of EUR 521.3
on these items, reducing their share of total assets from
million for a bearer bond issued in March 2012. These
94.6% in the prior year to 75.4% in the year under review.
bonds mature in March 2020 and 2017 and carry a
In financial assets, additions to shares in affiliated com-
3.875% and 5.5% coupon respectively. There are no
panies from the increase in the shareholding in Leighton
drawings on the EUR 500 million syndicated revolving
Holdings and payments into the capital reserve at a
credit facility as of the reporting date (2012: drawings of
subsidiary in the insurance business were countered by
EUR 200 million). Amounts due to affiliated companies
reductions due to the disposal of the shareholding in
are largely connected with intra-Group financial manage-
HOCHTIEF AirPort GmbH, Essen, Germany. The loan
ment and remain virtually unchanged at EUR 149.5
to the latter subsidiary included in the prior year was
million (2012: EUR 149.9 million).
also paid off in connection with the sale of the airports.
Purchases of bond funds increased marketable secu
HOCHTIEF Aktiengesellschaft’s net profit before changes
rities by EUR 532.7 million to EUR 543.9 million. The
in reserves for 2013 was EUR 219,358 thousand. Includ-
cash and cash equivalents amounting to EUR 202.6
ing the appropriation to revenue reserves (EUR 107,245
million (2012: EUR 66.7 million) primarily consist of bank
thousand) and profit carried forward from the previous
balances.
year (EUR 3,387 thousand), unappropriated net profit
comes to EUR 115,500 thousand.
HOCHTIEF Aktiengesellschaft’s subscribed capital is
divided into 76,999,999 no-par-value shares and has a
nominal value of EUR 197.1 million. Deducting treasury
stock still held and the amount of capital stock it represents, subscribed capital stands at EUR 177.4 million.
82
Annual Report 2013
HOCHTIEF Aktiengesellschaft (Holding Company): Financial Review
Executive Board proposal for the use of net profit
Disclosures pursuant to Sections 289 (4)/315 (4)
The Executive Board proposes a resolution on the use
of the German Commercial Code
of net profit as follows:
Composition of subscribed capital:
HOCHTIEF Aktiengesellschaft’s subscribed capital of
The unappropriated net profit of HOCHTIEF Aktien
EUR 197,119,997.44 is divided into 76,999,999 no-par-
gesellschaft for 2013 in the amount of EUR 115,499,998.50
value bearer shares. Each share accounts for EUR
will be used to pay a dividend of EUR 1.50 per eligible
2.56 of capital stock.
appropriated net profit that would have been payable
The capital reserve comprises premium on shares
on non-eligible shares, amounting to EUR 11,535,847.50,
issued by HOCHTIEF Aktiengesellschaft and the book
will be carried forward.
gain on the sale of treasury stock.
The dividend is payable on the day following the Gen-
The Executive Board is unaware of any restrictions on
eral Shareholders’ Meeting.
voting rights or on transfers of securities.
The amounts given here for the profit distribution and
Holdings of more than 10% of voting rights:
for the profit to be carried forward take into account the
On June 17, 2011, we were notified by ACS, Actividades
69,309,434 no-par-value shares with dividend entitle-
de Construcción y Servicios, S.A., Madrid, Spain, pur-
ment for 2013 that exist at the time of the profit appro-
suant to Section 21 (1) of the German Securities Trading
priation proposal. The number of eligible shares may
Act (WpHG), that its voting share in HOCHTIEF Aktien
change by the date of the General Shareholders’ Meet-
gesellschaft exceeded the threshold of 50% on June 16,
ing. In this case, while the distribution of EUR 1.50 for
2011 and on that day amounted to 50.16%. Of these
each no-par-value share with dividend entitlement for
voting rights, 46.11% of the voting rights were, accord-
2013 will stay the same, an adjusted proposal for the
ing to the notification, attributable to ACS pursuant to
appropriation of the profit will be made to the General
Section 22 (1) Sentence 1 No. 1 WpHG via the subsidi
Shareholders’ Meeting.
aries within the meaning of Section 22 (3) WpHG named
Financial Review
no-par-value share for 2013, and the amount of the un-
in the following (including 4.46% of voting rights in
HOCHTIEF Aktiengesellschaft from treasury shares in
HOCHTIEF Aktiengesellschaft). The subsidiaries concerned were, according to the notification, Cariátide S.A.,
Major Assets S.L., and Corporate Statement S.L., all
of Madrid, Spain. On September 24, 2012, subsidiary
Cariátide S.A. additionally informed us pursuant to Section 21 (1) WpHG that its voting share exceeded the
threshold of 30% of voting rights on September 19, 2012
and on that day amounted to 30.69%. On April 25, 2013,
subsidiary Major Assets S.L. additionally informed us
pursuant to Section 21 (1) WpHG that its voting share
exceeded the thresholds of 10% and 15% of voting
rights on April 24, 2013 and on that day amounted to
18.12%.
Annual Report 2013
83
Financial Review
On March 23, 2011, we were notified by the State of
Executive Board authorization to issue new
Qatar, acting by and through the Qatar Investment
shares: Pursuant to Section 4 (5) of the Articles of Asso-
Authority, Doha, Qatar, pursuant to Section 21 (1) WpHG
ciation, the Executive Board is authorized, subject to
that the State of Qatar’s voting share exceeded the
Supervisory Board approval, to increase the capital stock
threshold of 10% on March 23, 2011 and on that day
by issuing new no-par-value bearer shares for cash
amounted to 10.000001%. All of these voting rights
and/or non-cash consideration in one or more issues up
are attributed to the State of Qatar pursuant to Sec-
to a total of EUR 35,840 thousand by or before May 10,
tion 22 (1) Sentence 1 No. 1 WpHG. The attributed
2015 (Authorized Capital I). Similarly, there is an authori
voting rights are held via the Qatar Investment Authority,
zation to increase capital by up to EUR 23,296 thou-
Doha, Qatar and Qatar Holding LLC, Doha, Qatar, both
sand by or before May 11, 2016 under Section 4 (6) of
of which are controlled by the State of Qatar. We received
the Articles of Association (Authorized Capital II). De-
corresponding voting rights notifications from the two
tailed provisions are contained in the stated section of
above-mentioned controlled entities on the same day.
the Articles.
On September 29, 2011, Qatar Holding Luxembourg II
S.à.r.l., Luxembourg, additionally informed us pursuant
Pursuant to Section 4 (4) of the Articles of Association,
to Section 21 (1) WpHG that its voting share likewise
the Company’s capital stock has been conditionally
amounted to 10.000001% on September 28, 2011.
increased by up to EUR 49,280 thousand divided into
up to 19,250,000 no-par-value bearer shares (condi-
There are no shares with special control rights. The
tional capital). Detailed provisions are contained in the
Executive Board is not aware of any employee shares
stated section of the Articles.
where the control rights are not exercised directly by
the employees.
Authorization to repurchase shares: The Company
is authorized by resolution of the General Shareholders’
Appointment and replacement of members of
Meeting of May 7, 2013 to repurchase its own shares in
the Executive Board/changes to the Articles of
accordance with Section 71 (1) 8 of the German Stock
Association: The appointment and replacement of
Corporations Act (AktG). The authorization expires on
Executive Board members is governed by Sections 84
May 6, 2018. It is limited to 10% of the capital stock at
and 85 of the German Stock Corporations Act (AktG)
the time of the General Shareholders’ Meeting resolution
and Section 31 of the Codetermination Act (MitbestG)
or at the time of exercising the authorization, whichever
read in conjunction with Sections 9 (2) and 7 (1) of the
figure is smaller, with the quantity of shares able to be
Company’s Articles of Association. Statutory rules on the
acquired by the use of call options limited to a maximum
amendment of the Articles of Association are contained
of 5% of the capital stock at the time of the resolution.
in Section 179 et seq. and Section 133 AktG. In instances
The authorization can be exercised directly by the Com-
where the Act requires a majority of the capital stock
pany or by a company in its control or majority owner-
represented at the time of the resolution in addition to a
ship or by third parties engaged by the Company or
majority of votes cast, Section 23 (3) of the Articles of
engaged by a company in its control or majority owner-
Association provides that a simple majority will suffice
ship and allows the share repurchase to be executed in
unless there is a mandatory requirement stipulating a
one or more installments covering the entire amount or
different majority. Under Section 15 of the Articles of
any fraction. The repurchase may be effected through
Association, the Supervisory Board is authorized to
the stock exchange or by public offer to all shareholders,
make amendments that only affect the wording of the
or by public invitation to all shareholders to tender shares
Articles of Association.
for sale, or by issuing shareholders with rights to sell
shares, or by the use of call options. The conditions gov-
84
Annual Report 2013
erning the repurchase are set forth in detail in the reso-
boards and general management of companies under
lution.
its control within the meaning of Section 17 of the Gerpast employees of the Company or of a company
May 7, 2013, the Executive Board is authorized, subject
under its control within the meaning of Section 17 AktG.
to Supervisory Board approval, in the event of a sale of
Such transfers are only permitted for the purpose of
treasury shares effected by way of an offer to all share-
settling the transferees’ variable compensation entitle-
holders, to issue subscription rights to the shares to
ments in place of cash settlement. Further conditions
holders of warrant-linked and/or convertible bonds is-
of transfer are detailed in the resolution. Where shares
sued by the Company or by any subordinate Group
are issued to members of the Executive Board of the
company. The Executive Board is also authorized, sub-
Company, the decision to issue the shares is taken
ject to Supervisory Board approval, to sell treasury
solely by the Supervisory Board.
Financial Review
man Stock Corporations Act (AktG), and to current or
By resolution of the General Shareholders’ Meeting of
shares other than through the stock exchange and other
than by way of an offer to all shareholders, provided
Shareholders’ statutory subscription rights to such shares
that the shares are sold for cash at a price not sub-
are barred pursuant to Sections 71 (1) 8 and 186 (3) and
stantially below the current stock market price for Com-
(4) of the German Stock Corporations Act (AktG) to the
pany shares of the same class at the time of sale.
extent that the shares are used in exercise of the authori
zations set out above.
The HOCHTIEF Aktiengesellschaft Executive Board is
also authorized, subject to Supervisory Board approval
The Executive Board is also authorized, subject to Super-
and the conditions set out in the following, to offer and
visory Board approval, to retire repurchased shares
transfer treasury shares to third parties other than through
without a further resolution of the General Sharehold-
the stock exchange and other than by way of an offer
ers’ Meeting being required for the share retirement it-
to all shareholders. Such transactions may take place
self or its execution.
in the course of acquisitions of business enterprises in
whole or part and in the course of mergers. They are also
The conditions governing awards of subscription rights
permitted for the purpose of obtaining a listing for the
and the sale, transfer, and retirement of treasury stock
Company’s shares on foreign stock exchanges where
are set forth in detail in the General Shareholders’ Meet-
it is not yet listed. The shares may also be offered for
ing resolution.
purchase by employees or former employees of the Company or its affiliates. Holders of bonds which the Company or a Group company subordinate to it issues or
has issued under the authorization granted at the General Shareholders’ Meeting of May 12, 2011 (agenda
item 8) may also be issued with the shares upon exercising the warrant and/or conversion rights and/or obligations attached to the bonds.
The shares may also, on condition that they be held for
at least two years after transfer, be transferred to (current
or past) members of the Executive Board of the Company and to (current or past) members of the executive
Annual Report 2013
85
Financial Review
Change-of-control clauses in connection with
edent if negotiations with the borrower to continue the
loan agreements and financing instruments:
facility have failed, such negotiations having given con-
On March 23, 2012, HOCHTIEF Aktiengesellschaft is-
sideration to the credit standing of the party taking con-
sued its first corporate bond. The bond issue is for a
trol, the risk of any change in corporate strategy, and
principal amount of EUR 500 million, matures in 2017,
the risk of the lenders being restricted in any way in pro-
and has a coupon of 5.5% p.a. On March 20, 2013,
vision of the facilities. The condition precedent is satis-
HOCHTIEF Aktiengesellschaft issued another corporate
fied if a party, or group of parties acting in concert, se-
bond. The bond issue is for a principal amount of EUR
cures control of the borrower within the meaning of
750 million, matures in March 2020, and has a coupon
Section 29 (2) of the German Securities Acquisition and
of 3.875% p.a. The bond terms include change-of-con-
Takeover Act (WpÜG). Lenders may give notice of termi-
trol clauses entitling each holder to require early redemp-
nation of their credit exposure within 70 days of it be-
tion of the bonds held at their principal amount together
coming known to HOCHTIEF Aktiengesellschaft that
with interest accrued provided that the holder submits
the condition precedent has been satisfied, subject to
a completed exercise notice within 68 days of the issuer*
a minimum of ten days to consider the options available.
publishing the put event notice. A change of control is
As before, the outlined change-of-control clauses do not
defined in this context as the acquisition of control
apply for shareholder ACS and its affiliates; the compre-
within the meaning of Section 29 (2) of the German
hensive ring-fencing clauses agreed with the lenders with
Securities Acquisition and Takeover Act (WpÜG) over
regard to transactions with ACS were likewise retained.
HOCHTIEF Aktiengesellschaft by a party or a group of
The ring-fencing includes an undertaking by HOCHTIEF
parties acting in concert within the meaning of Section
Aktiengesellschaft not to enter into any contractual
30 (2) WpÜG—excluding shareholder ACS (ACS Activi-
agreement with ACS that would weaken HOCHTIEF’s
dades de Construcción y Servicios, S.A.) and its affili-
credit standing; this would include any control agree-
ates—or entering into a profit and loss transfer agree-
ment. Lenders have a special right of termination for the
ment, control agreement or other intercompany agreement
event that any such contracts are nevertheless entered
within the meaning of Sections 291 and 292 of the Ger-
into.
man Stock Corporations Act (AktG) to the extent that
the agreement results in the issuer becoming a domi-
HOCHTIEF Aktiengesellschaft signed a promissory
nated company. Comprehensive ring-fencing clauses
note loan agreement (Schuldscheindarlehen) for ini-
for transactions with ACS were also built into the bond
tially EUR 50 million with a German bank on July 4, 2008.
documentation.
It also signed a five-year promissory note loan agreement with a German bank for EUR 30 million on May 25,
HOCHTIEF Aktiengesellschaft successfully arranged a
2009. It additionally signed two five-year promissory
syndicated credit and guarantee facility** for a total
note loan agreements, one for initially EUR 180.5 million
of EUR 2 billion with an international banking syndicate
and one for initially EUR 59.5 million, with two German
on December 13, 2011. The syndicated facility runs to
banks on May 26, 2010. A further promissory note loan
December 2016, consists of a EUR 1.5 billion guarantee
for initially EUR 120.6 million was arranged on Novem-
facility tranche and a EUR 500 million credit facility
ber 25, 2011.
tranche, and also contains change-of-control clauses.
Lenders may each withdraw from their credit exposure
early subject to satisfaction of an agreed condition prec-
86
Annual Report 2013
HOCHTIEF Aktiengesellschaft also extended a EUR 100
control within the meaning of Section 29 (2) of the Ger-
million global credit facility with a German bank on
man Securities Acquisition and Takeover Act (WpÜG)
February 19/28, 2013, as well as the term of a global credit
over HOCHTIEF Aktiengesellschaft by a party or a group
facility for initially EUR 175 million with a German bank
of parties acting in concert within the meaning of Sec-
on November 22/26, 2013. All of these agreements con-
tion 30 (2) WpÜG—excluding shareholder ACS and its
tain a substantively identical provision under which, in
affiliates—or entering into of a profit and loss transfer
the event of a change of control, HOCHTIEF Aktiengesell
agreement, control agreement or other intercompany
schaft must repay the loan early if it and the lender do
agreement within the meaning of Sections 291 and 292
not reach agreement on the loan’s continuation within
of the German Stock Corporations Act (AktG) to the
60 days of announcement of the change of control, and
extent that the agreement results in the issuer becom-
the lender demands early repayment within ten days of
ing a dominated company. Comprehensive ring-fencing
the 60-day period expiring. In this context, a change of
clauses agreed with the lenders with regard to transac-
control is defined as a party, or group of parties acting
tions with ACS were also built into the documentation.
Financial Review
in concert within the meaning of Section 30 (2) of the
German Securities Acquisition and Takeover Act (WpÜG),
On September 30, 2011, HOCHTIEF Aktiengesellschaft
securing control of HOCHTIEF Aktiengesellschaft within
signed an agreement amending a general counter
the meaning of Section 29 (2) WpÜG. The outlined
indemnity arranged with seven U.S. surety companies
change-of-control clauses for the foregoing loans do not
to secure a USD 6.5 billion bonding line provided by
apply for shareholder ACS and its affiliates, in exchange
the surety companies. As before, the amended general
for which comprehensive ring-fencing clauses have been
counter indemnity contains a change-of-control provi-
agreed with lenders with regard to dealings and trans-
sion giving the surety companies the right, if an agreed
actions with ACS. The ring-fencing includes an under-
condition precedent is satisfied, to require HOCHTIEF
taking by HOCHTIEF Aktiengesellschaft not to enter into
Aktiengesellschaft to submit up to USD 500 million in
any contractual agreement with ACS that would weaken
cash by way of security; under the agreed terms, this
HOCHTIEF’s credit standing; this would include any
sum is reduced by the amount of any bank guarantees
control agreement with ACS. Lenders have a special
already provided as security for the bonding facility.
right of termination for the event that any such contracts
The condition precedent is satisfied if a party, or group
are nevertheless entered into.
of parties acting in concert within the meaning of Section 30 (2) of the German Securities Acquisition and Take-
Alongside the syndicated promissory note loans,
over Act (WpÜG) (with the exception of shareholder
HOCHTIEF negotiated a four-year, EUR 50 million bi-
ACS and its affiliates), acquires in total 30% or more of
lateral promissory note loan with a foreign bank on
all shares in HOCHTIEF Aktiengesellschaft, or if share-
December 11, 2012. The bilateral loan agreement con-
holder ACS and its affiliates acquire in total 75% or more
tains a change-of-control clause entitling the lender to
of all shares in HOCHTIEF Aktiengesellschaft. The se-
require early redemption of the note held at its principal
curity payment must then be made within 30 bank work-
amount together with accrued interest if the lender and
ing days of notification that it is required.
HOCHTIEF do not reach agreement on the loan’s continuation within 60 days of announcement of the change
of control, and the lender demands early repayment
within ten days of the 60-day period expiring. A change
of control is defined in this context as the acquisition of
Annual Report 2013
87
Financial Review
Further agreements conditional on a change of
Explanatory report by the Executive Board of
control: The terms of the D&O insurance* taken out by
HOCHTIEF Aktiengesellschaft pursuant to Sec-
HOCHTIEF Aktiengesellschaft provide for a limitation of
tions 175 (2) and 176 (1) of the German Stock Cor-
insurance cover if HOCHTIEF Aktiengesellschaft is ab-
porations Act (AktG) on the disclosures pursuant
sorbed by another company by merger, takeover, or
to Sections 289 (4) and 315 (4) of the German
similar action or if another company other than ACS or
Commercial Code (HGB) as of the balance sheet
another third party gains control of HOCHTIEF Aktien
date December 31, 2013
gesellschaft. In such event, unless otherwise agreed,
The Executive Board provides the following explanatory
the insurance solely covers claims relating to breaches
notes on disclosures provided in the combined Group
of obligations that took place before the change took
and HOCHTIEF Aktiengesellschaft Management Report
legal effect. Insurance cover terminates in the foregoing
and required under Sections 289 (4) and 315 (4) of the
instances on expiration of the insurance period.
German Commercial Code:
Above and beyond the mandatory disclosures under
Our disclosures relate to the situation in 2013 up to the
Sections 289 (4) 8/315 (4) 8 of the German Commercial
time the combined Management Report was prepared.
Code, other Group companies are party to further agree-
The disclosures consist of information on the Compa-
ments that are conditional upon a change of control. The
ny's subscribed capital, direct and indirect holdings ex-
following is an abridged and non-exhaustive presentation:
ceeding 10% of voting rights, statutory rules, and rules
In the PPP segment, project contracts frequently accord
contained in the Company’s Articles of Association about
the client substantial rights that make it difficult to effect
the appointment and replacement of E
xecutive Board
a change of ownership structure in the project company.
members as well as about amendment of the Articles of
Association, powers of the Company’s Executive Board
As of the balance sheet date, there are no longer any
including, in particular, any powers in relation to the issu-
agreements with members of the Executive Board or
ing or buying back of shares, and any significant agree-
employees providing for compensation in the event of a
ments to which the Company is a party that are condi-
takeover offer.
tional upon a change of control of the Company following
a takeover bid.
The structure of the Company's subscribed capital and
rights attaching to no-par-value bearer shares in the
Company are determined, among other things, by the
Company's Articles of Association. The shareholdings
held by ACS, Actividades de Construcción y Servicios,
S.A. and its subsidiaries are known from the published
voting rights notifications of June 17, 2011, September 24,
2012, and April 25, 2013. The shareholdings held by
the State of Qatar and the entities it controls are known
from the published voting rights notifications of March
23, 2011 and September 29, 2011.
Restrictions on voting rights attaching to those shares
may result from the provisions of the German Stock Corporations Act (AktG). For example, there are circumstances in which shareholders are prohibited from voting (Section 136 AktG). The Company also has no voting
88
Annual Report 2013
rights with regard to treasury stock (Section 71b AktG).
By way of an additional disclosure for informational
No agreements are known to us that may result in re-
purposes, in supplement to the mandatory disclosures
strictions on voting rights or on the transfer of securities.
under the stated sections of the German Commercial
The information in accordance with Section 289 (4) 3
Code, other Group companies are party to further
and Section 315 (4) 3 of the German Commercial Code
agreements that are conditional upon a change of con-
on direct or indirect shareholdings exceeding 10% of
trol. The following is an abridged and non-exhaustive
voting rights is included in the Notes to the (Consolidated)
presentation:
appointment and replacement of Executive Board mem-
In the PPP segment, project contracts frequently accord
bers conforms to the substance of the German Stock
the client substantial rights that make it difficult to effect
Corporations Act and the Company's Articles of Asso-
a change of ownership structure in the project company.
Financial Review
Financial Statements. The information provided on
ciation, as does the information on amendment of the
Articles of Association.
The remaining disclosures required under Sections 289
(4) and 315 (4) of the German Commercial Code relate to
The Executive Board's powers in relation to the issuing
circumstances that do not apply to HOCHTIEF Aktien
or buying back of shares are based in their entirety on
gesellschaft. We do not therefore cover these points in
authorizations granted by resolution of the General Share-
detail in the combined Group and HOCHTIEF Aktien
holders' Meeting in 2010, 2011, and 2013 relating to
gesellschaft Management Report. There are no limitations
conditional and authorized capital as well as other mat-
on voting rights, no restrictions on the exercise of vot-
ters, including the authorization to repurchase and utilize
ing rights attached to employee shares, no agreements
the Company's own shares. The information provided
between the Company and members of the Executive
on these powers conforms to the authorizations grant-
Board or the Company's employees providing for com-
ed by resolution of the General Shareholders' Meeting.
pensation in the event of a takeover bid, and no securities carrying special rights with regard to control of the
Significant agreements to which the Company is a party
Company.
that are conditional upon a change of control of the Company following a takeover bid, and the effects of such
Essen, February 2014
agreements, are accurately described. If lenders were
to exercise their right of termination under these agreements according to the conditions stated, the corresponding borrowing needs of HOCHTIEF Aktiengesellschaft and the HOCHTIEF Group would have to be met
by other means.
Peter Sassenfeld
Annual Report 2013
89
Designing and building in parallel: Martin Army
Community Hospital
The U.S. Army hospital at Fort Benning in Georgia is a shining
example of efficient construction. The medical facility for mili
tary personnel and their families was a design/build project.
That allowed our U.S. subsidiary Turner to start construction
while design work was still in progress. Reliable 3D models
created with the Building Information Modeling (BIM) method
helped coordinate the work in advance. And a wealth of sus-
Financial Review
tainable elements ensure energy efficiency.
90
Annual Report 2013
Corporate Governance
Good corporate governance at HOCHTIEF is a
In last year’s compliance declaration from February 2013,
commitment taking in all parts of the Group. The
we had stated that, in four cases, HOCHTIEF does not
recommendations of the German Corporate Gov-
comply or only complies to a limited extent with the
ernance Code are our benchmark in this regard.
changed recommendations. These relate to the chair-
In the following section, the Executive Board re-
manship of the Audit Committee (Section 5.3.2, last
ports jointly with and on behalf of the Supervisory
sentence of the Code); the objectives regarding the com-
Board on corporate governance at HOCHTIEF in
position of the Supervisory Board (Section 5.4.1 [2] and
accordance with the Code.
[3] of the Code); the information required by the Code
recommended by the Supervisory Board for election to
and regulatory framework by which companies are man-
the General Shareholders’ Meeting; and the recommen-
aged and monitored. This is generally understood to
dation of the Code regarding performance-related com-
mean responsible and transparent enterprise manage-
pensation for Supervisory Board members (Section 5.4.6
ment and control geared to long-term financial suc-
[2] Sentence 2 of the Code). The Executive Board and
cess. The principles of good corporate governance and
Supervisory Board have once again reviewed these
control are defined in the German Corporate Govern
departures from the recommendations of the Code and
ance Code, on which we base our actions. Good cor-
remain of the opinion that, within the meaning of the
porate governance is the foundation for confidence
Code’s preamble, they are well-founded. The reasons
among investors, clients, the workforce, and the public
for not applying the Code provisions are explained indi-
in the management and supervision of the business.
vidually in the Compliance Declaration printed below.
In February 2014, the Executive Board and Supervisory
Apart from these exceptions, we comply with the recom-
Board published the annual Compliance Declaration
mendations of the Code as currently amended in all
(see page 96 et seq.) pursuant to Section 161 of the
other respects.
Financial Review
pursuant to Section 5.4.1 [4] to [6] on the candidates
The term “corporate governance” refers to the principles
German Stock Corporations Act (AktG).
According to the recommendations of the Code, diverFor further information about our corporate governance
sity must be respected when appointing the Supervi-
practices, please see our website, www.hochtief.com/
sory Board and, in particular, an appropriate proportion
corporate-governance. Other information provided in-
of women members must be ensured. The composi-
cludes our Code of Conduct, all past compliance dec-
tion of the Supervisory Board is already highly interna-
larations, and the current Declaration on Corporate
tional with Messrs. Al-Subaie, García Altozano, Garcia
Governance pursuant to Section 289a of the German
Sanz, López Jiménez, and del Valle Pérez. Unfortunately,
Commercial Code (HGB).
the Board does not at present include any female members. The Supervisory Board intends to encourage the
In 2013, the Government Commission on the German
election of women into its ranks at the next elections in
Corporate Governance Code developed the code fur-
2016—both as employee and shareholder representa-
ther. The main amendments include additional rules re-
tives. With regard to the shareholder side, however, the
lating to executive board compensation. HOCHTIEF
decision on this ultimately remains with the General
complies with these new recommendations. With regard
Shareholders’ Meeting. The Supervisory Board is com-
to one of the new provisions, we have incorporated a
posed in such a way that its members as a group pos-
clarifying addition into the compliance declaration printed
sess the knowledge, ability, and expert experience re-
below.
quired to properly complete its tasks.
Annual Report 2013
91
HOCHTIEF shares and related financial instruments held
here to our compliance standards and we address this
directly or indirectly by members of the Executive Board
in the HOCHTIEF Code of Conduct for Business Partners.
or Supervisory Board account for less than 1% of the
total share capital.
Internally, Group directives bring the substance of the
HOCHTIEF Code of Conduct into sharper focus. They
Financial Review
*For further information,
please see page 51.
Compliance* has long been an essential management
aim, among other things, to help HOCHTIEF employees
and supervisory responsibility at HOCHTIEF. HOCHTIEF
differentiate between customer care within the legally
aims to steer the company in line with a value-driven
permissible framework and corruption that is punishable
strategy, and has anchored this commitment in its guid-
under criminal law as well as to conduct themselves
ing principles. Our business ethics and our integrity con-
within the bounds of the law in their daily business activ
tribute significantly to our credibility. To enable us to meet
ities. Contact personnel within the compliance organi-
this commitment, one of the focuses of corporate govern
zation support employees by providing selective infor-
ance activities in the year under review was refining the
mation, personal advice, and training. The directives
compliance system at HOCHTIEF. It is the job of the com-
are reviewed regularly and aligned as necessary with
pliance organization to put the necessary precautions in
current conditions. In the year under review, HOCHTIEF
place to secure compliance with the rules on the part of
substantially revised and optimized the process for
the company, its decision-making bodies, and the work-
carefully selecting and monitoring business partners at
force for the purpose of avoiding economic crime, notably
HOCHTIEF Solutions AG. New, more extensive com-
corruption.
pliance requirements for selecting business partners
were adopted.
Newly formed in 2008, the compliance organization is
headed by the Chairman of the Executive Board of
We report additionally on Leighton’s code of ethics and
HOCHTIEF Aktiengesellschaft. The Chief Compliance
code of conduct on page 105.
Officer of HOCHTIEF Aktiengesellschaft reports regularly to the Chairman or, in urgent cases, immediately.
He also reports annually to the Supervisory Board Audit
Committee. In the HOCHTIEF divisions, compliance officers have assumed responsibility in this regard and liaise
with the compliance organizations of the individual divisions. They report directly to the Chief Compliance Officer of HOCHTIEF.
HOCHTIEF has a tradition of combining corporate action
with ethical principles. The HOCHTIEF Code of Conduct
reflects these corporate principles, consolidates our corporate responsibility rules, and sets forth binding regulations for internal dealings within the company as well as
for external relations with business partners, subcontractors, and public authorities. We have further undertaken to comply with the standards of the International
Labor Organization (ILO) and to uphold the values of the
UN Global Compact. These standards are likewise enshrined in the HOCHTIEF Code of Conduct. We also expect our clients, business partners, and suppliers to ad-
92
Annual Report 2013
Compensation report
The resulting variable compensation is settled in
Executive Board compensation for 2013
three equal parts as follows:
The Executive Board compensation system is geared
toward long-term, sustainable management goals.
a. Cash settlement (short-term incentive component)
Total compensation for members of the Executive
b. Transfer of shares in HOCHTIEF Aktiengesell-
Board is set by the Supervisory Board. The compensa-
schaft in the net amount, subject to a two-year
tion system for the Executive Board is also decided
bar (long-term incentive component* I)
Supervisory Board’s Human Resources Committee
c. Grant of an annual long-term incentive plan (longterm incentive component II).
Financial Review
and regularly reviewed by the Supervisory Board. The
prepares the relevant motions for resolution by the full
Supervisory Board.
4. In connection with the appointment of Mr. Fernández
The compensation for the Executive Board members
Verdes as Chairman of the Executive Board, a con-
for 2013 comprises
tractual pension arrangement was agreed with Mr.
Fernández Verdes with retroactive effect as of the
1. Fixed compensation
date he joined the Company. For this reason, the pen-
2. Non-cash benefits and other additional benefits
sion contribution to set up a private pension plan for
3. Variable compensation
the pro-rata year 2012 was not paid out. The respec-
4. Old-age pension plan.
tive contractual pension arrangements for both Execu
tive Board members provide for a minimum pension
1. The fixed compensation is paid in equal monthly
amounts.
age of 65. The amount of the pension is determined
as a percentage of fixed compensation, the percentage rising with the number of years in office. The maxi-
2. The non-cash benefits comprise amounts to be rec-
mum amount the Executive Board member can re-
ognized for tax purposes for private use of company
ceive is 65% of his final fixed compensation. Surviving
cars and other non-cash benefits. In addition, rental
dependants receive 60% of the pension.
costs and travel costs for homeward flights were assumed for Mr. Fernández Verdes until April 2013. Mr.
In accordance with statutory requirements in Australia
Sassenfeld received a special bonus for 2013 of
the Executive Board members have received pen-
EUR 200 thousand.
sion awards for their work on the Leighton Board.
Leighton incurred an expense of EUR 12 thousand
3. The variable compensation is computed on the basis
for Mr. Fernández Verdes and EUR 12 thousand for
of the following equally weighted components: RONA
Mr. Sassenfeld. No further compensation is paid out
(absolute), RONA delta, consolidated net profit (ab-
to members of the Executive Board, or offset against
solute), and consolidated net profit delta. Target attain-
Executive Board compensation, for service on deci-
ment for all four components can range between zero
sion-making bodies of other companies in which
and 200% of the budgeted figure. In addition to these
HOCHTIEF has a direct or indirect shareholding.
financial targets, the Supervisory Board annually stipu
lates up to four strategic targets that apply uniformly
Arrangements in the event of termination of
for all members of the Executive Board. The Super-
contract
visory Board has the right to adjust overall target
If their contract is not extended, Executive Board mem-
attainment with regard to the financial targets upward
bers receive a severance award equaling one year's
or downward according to its assessment of the
fixed annual compensation. For the severance award
attainment of those strategic targets.
to be payable, an Executive Board member must on
termination of contract be in at least the second term
of office as a member of the Executive Board and be
Annual Report 2013
93
under the age of 65. If an individual's service on the Executive Board is prematurely terminated, severance
awards will not exceed the value of two years' annual
compensation (severance cap) and compensation will
not be payable for more than the remaining term of the
contract.
Financial Review
On the basis of the above, compensation for the individual members of the Executive Board was as follows:
Cash compensation
Fixed
salary
(EUR thousand)
Fernández Verdes*
Sassenfeld
Executive Board
total
Non-cash
and other
additional
benefits
Variable pay components combining a longterm incentive effect with an element of risk
Short-term incentive component
(cash-settled)
Long-term incentive
component I (sharebased with two-year
bar)
Old-age pension
Long-term incentive
Pension benefits/Transfers
component II (granted to pensions provisions
as long-term incentive
plan)**
Service cost
Interest
expense
Pension
contribution
Total compensation includ
ing pension
benefits
2013
900
64
846
846
846
1,010
0
–
4,512
2012
391
78
285
285
285
0
0
128
1,452
2013
600
233
564
564
564
310
21
–
2,856
2012
550
26
401
401
401
212
9
–
2,000
2013
1,500
297
1,410
1,410
1,410
1,320
21
–
7,368
***2012
941
104
686
686
686
212
9
128
3,452
*
Executive Board member since April 15, 2012/CEO since November 21, 2012
** Value at grant date
*** Prior-year figures do not include the figures for the Executive Board member who departed in 2012
The present value of pension benefits for current and
former Executive Board members is EUR 78,668 thousand (2012: EUR 77,226 thousand).
Payments to former members of the Executive Board
and their surviving dependants were EUR 17,011 thousand (2012: EUR 15,199 thousand). Pension obligations
to former members of the Executive Board and their
surviving dependants totaled EUR 75,792 thousand
(2012: EUR 71,199 thousand).
94
Annual Report 2013
Present value of
pension benefits
(EUR thousand)
Fernández Verdes*
Sassenfeld
Executive Board
total
2013
2012
2013
2012
2013
**2012
1,844
–
1,032
598
2,876
598
* Executive Board member since April 15, 2012/CEO since November 21, 2012
**Prior-year figures do not include the figures for the Executive Board member
who departed in 2012
Executive Board compensation for past years
ciation rights and 4,036 stock awards, in each case
For 2012, the Supervisory Board has granted Mr.
worth EUR 154 thousand at the date of grant. Mr. Sas-
Fernández Verdes, in connection with his appointment
senfeld was granted 21,667 stock appreciation rights
to Chairman of the Executive Board as of November 21,
and 5,261 stock awards, in each case worth EUR 200
2012, fixed compensation of EUR 39,773, EUR 22,775
thousand at the date of grant. Additional information on
short-term incentive, EUR 22,775 long-term incentive I
the plans is provided in the Notes to the Consolidated
and EUR 22,775 long-term incentive II. Due to a new
Financial Statements, on pages 179 to 182.
benefits arose for Mr. Fernández Verdes in 2012. In
The long-term incentive plans granted to Executive Board
connection with the pension arrangement concluded
members in the last few years resulted in the following
with Mr. Fernández Verdes with retroactive effect as of
expense:
Financial Review
tax assessment, an additional EUR 16,783 in non-cash
April 15, 2012, retrospective service costs for 2012 of
EUR 813 thousand were incurred in 2013.
In addition, in February 2013, the Supervisory Board
adopted a Long-term Incentive Plan 2013 (LTIP 2013)
for the Executive Board members to satisfy the longterm incentive component II from 2012. This comprises
grants of stock appreciation rights (SARs) and stock
awards (phantom stock). If the applicable exercise targets are met after a four-year waiting period, the 2013
stock appreciation rights grant the Executive Board
members a monetary claim against the Company, which
Expenses under longterm incentive plans
(EUR thousand)
Fernández Verdes*
Sassenfeld
Executive Board
total
2013
2012
2013
2012
2013
**2012
75
–
130
10
205
10
* Executive Board member since April 15, 2012/CEO since November 21, 2012
**Prior-year figures do not include the figures for the Executive Board member
who departed in 2012
they can exercise over the then following three years.
The amount of the claim depends on the development
of the share price within the waiting and exercise periods.
In addition, relative and absolute performance targets,
which cannot be modified retroactively, have to be met.
The terms of the 2013 stock awards provide that after
the four-year waiting period, those entitled have, for each
stock award and for a further two-year exercise period,
a monetary claim against the Company equal to the
closing price of HOCHTIEF stock on the last day of stock
market trading prior to the exercise date. The value of
all entitlements under Long-term Incentive Plan 2013 is
capped (at a 50% increase in the share price) so that
the amount of compensation stays appropriate in the
event of extraordinary, unforeseeable developments.
Mr. Fernández Verdes was granted 16,621 stock appre-
Annual Report 2013
95
Supervisory Board compensation
Supervisory Board compensation is determined at the
Compensation for 2013 based on the use of net profit
General Shareholders’ Meeting and is governed by
proposed for approval at the General Shareholders’
Section 18 of the Company’s Articles of Association.
Meeting in May 2014 is shown in the table below.
(EUR thousand)
Fixed remuneration
Attendance fees
Total
Thomas Eichelmann
36,000
210,000
13,000
259,000
Ulrich Best
16,400
95,667
6,000
118,067
Gregor Asshoff
18,667
108,889
12,000
139,556
24,000
140,000
14,500
178,500
Abdulla Abdulaziz Turki Al-Subaie
12,000
70,000
7,000
89,000
2,267
13,222
1,500
16,989
18,000
105,000
12,000
135,000
Dr. Michael Frenzel
13,533
78,944
3,500
95,977
1,633
9,528
2,000
13,161
18,000
105,000
7,500
130,500
1,600
9,333
1,500
12,433
Johannes Lang
12,300
71,750
6,000
90,050
133,500
Carsten Burckhardt
Nikolaus Graf von Matuschka
Financial Review
Variable remuneration
Dr. Thomas Krause
18,000
105,000
10,500
Matthias Maurer
2,267
13,222
1,500
16,989
Siegfried Müller
13,500
78,750
0.00
92,250
Udo Paech
2,267
13,222
1,500
16,989
Nikolaos Paraskevopoulos
2,267
13,222
1,500
16,989
Gerrit Pennings
Elmar Rommerskirchen
Klaus Stümper
Olaf Wendler
12,300
71,750
7,500
91,550
5,833
34,028
2,000
41,861
2,267
13,222
1,500
16,989
18,000
105,000
13,000
136,000
101,477
Dr. Jan Martin Wicke
13,533
78,944
9,000
Klaus Wiesehügel
13,500
78,750
6,000
98,250
1,500
8,750
0.00
10,250
279,634
1,631,193
140,500
2,051,327
Christine Wolff
Supervisory Board total
Compliance Declaration
pursuant to Section 161 of the German Stock Corporations Act
After due appraisal, the Executive Board and Supervisory Board of HOCHTIEF Aktiengesellschaft submit their compliance declaration as follows:
In the period since submission of the last compliance declaration in February 2013 up to June 10, 2013, HOCHTIEF Aktiengesellschaft, with
the following exceptions, complied with all recommendations of the Government Commission on the German Corporate Governance Code
dated May 15, 2012 and published on June 15, 2012 by the German Ministry of Justice in the official section of the Bundesanzeiger (Federal
Official Gazette). Since June 11, 2013, HOCHTIEF Aktiengesellschaft has complied with the recommendations of the Code published on June
10, 2013, also with the following exceptions:
• Since 2012, Section 5.3.2, last sentence, of the Code has contained a recommendation that the Chairman of the Audit Committee should
be independent. To comply with this recommendation, the Supervisory Board would have had to vote out of office the current Chairman of
the Audit Committee, Mr. Ángel García Altozano. The Supervisory Board is of the opinion that it is in the interests of the Company for Mr.
García Altozano to remain Chairman of the Audit Committee despite his business relations with ACS, Actividades de Construcción y Servicios,
S.A. This assessment is based on the fact that Mr. García Altozano has been a member of the Audit Committee since 2007 and its Chairman since May 2010. In its decision, the Supervisory Board took into account Mr. García Altozano’s considerable expertise and experience
from having held leading positions in international companies.
96
Annual Report 2013
•T
he Supervisory Board has determined that it includes what it considers to be an adequate number of independent members within the
meaning of Section 5.4.2 of the Code. In departure from Section 5.4.1 paragraphs 2 and 3 of the Code however, it did not take into account
the number of independent Supervisory Board members within the meaning of Section 5.4.2 when specifying concrete objectives regarding its composition. The Supervisory Board has furthermore specified objectives which, while considering the specifics of the enterprise,
take into account the international activities of the enterprise, potential conflicts of interest, the age limit specified by the Supervisory Board
for its members, and diversity. In view of residual uncertainty regarding the required level of concreteness of the objectives to be specified, in
order to avoid the risk of resolutions being challenged on this basis in court, a departure from Section 5.4.1 paragraphs 2 and 3 is therefore
declared as a precautionary measure. The Supervisory Board will continue to comply with the statutory requirements in its election recommendations to the General Shareholders’ Meeting, placing the priority on the professional and personal qualification of candidates. It goes
without saying in this connection that allowance will also be made for the international activities of the enterprise, potential conflicts of interest, the number of independent Supervisory Board members, an age limit for Supervisory Board members, and diversity.
to 6 of the Code (disclosure of the personal and business relations of each individual candidate with the enterprise, the executive bodies of
the Company and with any shareholder holding a material interest in the Company) are not applied. In practice, there is currently still legal
uncertainty regarding the nature and scope of the circumstances to be disclosed in election recommendations. It is therefore to be feared
that the specificity problem with this new Code recommendation may be used to challenge resolutions in court. The Supervisory Board will
watch developments in this regard and re-examine the question of applying the new Code recommendations in the next fiscal year.
• Section 5.4.6 paragraph 2, second sentence, of the Code provides that any profit-based compensation for members of the Supervisory
Board must be oriented toward sustainable growth of the enterprise. The terminological resemblance between this wording and the provisions
of the German Stock Corporations Act on Executive Board compensation suggests that the Code requires a multi-year assessment basis
for profit-based Supervisory Board compensation in the same way as the Stock Corporations Act requires for Executive Board compensation. Under Article 18, paragraphs 1 and 2 of the Articles of Association of HOCHTIEF Aktiengesellschaft, members of the Supervisory
Board receive profit-based compensation alongside their fixed compensation. The profit-based compensation consists of a bonus based
on the annual dividend. However, in departure from the aforesaid interpretation of Section 5.4.6 paragraph 2, second sentence, of the Code,
no use is made, in the Articles of Association, of a multi-year assessment basis. The composition of compensation for Supervisory Board
members laid down in the Articles of Association was adopted by resolution of the General Shareholders’ Meeting in June 2003 and complied with the German Corporate Governance Code until the amendments came into force in June 2012. In the current fiscal year, the Executive
Board and the Supervisory Board will once again review whether a corresponding amendment and revision in line with the modified Code
recommendation should be proposed to the General Shareholders’ Meeting.
With regard to the recommendation given in Section 4.2.3, second paragraph, sixth sentence of the Code (as amended in June 2013)—that
the amount of compensation be capped, both overall and for variable compensation components—we note that the contracts with the members of our Executive Board, as well as providing for a fixed salary, include caps on the amounts of all variable compensation elements. Supplementary to this, the Supervisory Board has reserved the right, in addition to the fixed annual salary and the variable compensation components, to grant a one-off payment for exceptional performance. The contracts also provide for normal fringe benefits (private use of company
car, accident insurance, etc.). There is no cap on the amount of any one-off payment for exceptional performance or on the value of fringe
benefits because it does not appear necessary for such amounts to be capped in accordance with the letter and spirit of the Code recommendation and, in our legal appraisal, the Code recommendation does not extend to this. For the same reason, such payments and benefits
are not covered by any cap on the amount of overall compensation.
Essen, February 2014
For the Supervisory Board
Thomas Eichelmann
For the Executive Board
Peter Sassenfeld
In accordance with Section
317 (2) sentence 3 of the HGB,
the Corporate Governance
Declaration issued pursuant
to Section 289a HGB is not
included in the audit of the
financial statements.
Annual Report 2013
97
Financial Review
• The Code’s recommendations on election recommendations to the General Shareholders’ Meeting contained in Section 5.4.1 paragraphs 4
Social and urban
infrastructure—a focus of
our business activities
MY
COLLEGE
98
Annual Report 2013
Segment Reporting
OUR
CAMPUS
HOCHTIEF delivers social and urban infrastructure—
for example contemporary educational properties like
Dortmund U, one of Germany’s biggest schools designed to accommodate around 6,000 students.
Annual Report 2013
99
Divisional Reporting
For further information, please
see:
www.turnerconstruction.com
www.flatironcorp.com
www.eecruz.com
www.clarkbuilders.com
The HOCHTIEF Americas division unites and coordi-
Our civil engineering subsidiary Flatiron has also earned
nates HOCHTIEF’s activities in the North American
recognition in a number of categories, including sev-
market. We serve the USA and Canada—the world’s
enth place in highways and sixth place in bridges. The
largest construction market—through four companies:
civil engineering market in past years has seen stron-
Turner, Flatiron, E.E. Cruz, and Clark Builders. With
ger competition which has led to increased pressure
their respective focal areas, these four companies
on contracting margins at Flatiron. This was addressed
together cover the building construction, civil engineer-
in 2012 with improvements in risk management, and
ing, and infrastructure construction segments.
efficiency improvement measures, which are now delivering results. Flatiron’s focus on risk management in-
The HOCHTIEF Americas division performed solidly
cludes fine-tuning project selection criteria, tightening
during the reporting period despite a challenging mar-
selection criteria as regards project risk, and efficient
ket environment. The Canadian economy showed
contract management. Project reporting was also im-
growth of 1.7% (in 2012 also 1.7%). The U.S. economy
proved by developing new IT tools.
Segment Reporting
grew by 1.9% in 2013. That was less than in 2012
(2.8%) and the lowest annual growth since the 2008–
HOCHTIEF has an outstanding overall position with its
2009 recession. We are confident the market climate
subsidiaries in the American market—including as an
will improve.
employer. This is underscored by a clutch of recent
awards. Flatiron was once again named a 2013 Best
In 2013, federal funding for infrastructure remained at
Workplace in Canada. Based on employee feedback
current levels. State and local governments, which ac-
on a wide range of topics, like management credibility,
count for 75% of infrastructure spending in the U.S.,
fairness, pride and camaraderie, the recognition is widely
are thus seeking their own solutions to fund much needed
regarded as the most prestigious employer award in
infrastructure projects, looking to public-private part-
the nation. Flatiron was also chosen as one of the top
nerships, new taxes, user fees and tolls to offset an ex-
employers in British Columbia on Canada’s Top 100
pected decline in federal funding in the coming years.
Employers Competition and as a Top Employer for Young
In Canada, state investment is likely to increase, and the
People in Canada. A key issue for all construction com-
use of public-private partnerships also continues to
panies is safety. Flatiron continues to maintain accident
expand.
statistics 25% below the national industry average.
Given the challenging market environment, our North
Our subsidiary Turner was likewise recognized a top
American subsidiaries still delivered good results for the
quality employer and featured in the Universum 2013
year. Capitalizing on their reputation and market position,
Ideal Employers ranking.
they secured attractive new orders. Turner continued
to hold its own as number one U.S. general builder,
For the fifth straight year, Clark Builders has been rec-
as reflected in the latest ranking from Engineering News-
ognized as one of the best companies to work for in
Record. The company is also ranked first in the green
Canada by Aon Hewitt Consulting.
building, healthcare, education, offices, industrial, cultural facilities, sports facilities, and hotels categories.
HOCHTIEF aims to continue reaping synergies in the
North American market through Group-wide cooperation and shared know-how. Close collaboration between
our companies is already showing results in three current public-private-partnership (PPP) projects. In these
HOCHTIEF PPP Solutions projects—two road projects
100 Annual Report 2013
in Canada and California and a Canadian school proj-
ect—the construction services are provided by our
Education segment
North American subsidiaries Flatiron, Clark Builders,
Clark Builders is constructing a new research center for
and Turner respectively.
the Northern Alberta Institute of Technology under a
contract worth almost EUR 157 million. Turner, too, is
The award to the Lean Construction Institute of the 2013
providing construction management services for a
Henry C. Turner Prize for construction industry innova-
technology center at the New Jersey Institute of Tech-
tion reflects Turner’s vision: The company is system-
nology. The project includes 4,500 square meters of
atically integrating lean construction methods into its
extra floor space for classrooms, labs, and offices.
business practices. To this end, construction, supply,
logistics, and communication processes are continually
The HOCHTIEF subsidiary also won three new school
assessed for efficiency and modified as needed. This
contracts totaling in excess of EUR 100 million. The larg-
improves productivity, costs, safety, communication,
est of these is Concord-Carlisle High School in Massa-
and cooperation—and thus quality in execution across
chusetts. On completion, the facility will provide space
the board.
for some 1,225 students. In Mountain House, California,
pletion in 2014; the company only recently completed a
struction services is a similar case in point. Turner is
new high school in the same location. The third project
one of the leading companies in the application and
is an elementary school in Alexandria, Virginia, to be
development of virtual construction. Building Informa-
ready for the 2014/15 school year. With roughly 11,600
tion Modeling (BIM) allows risks to be identified and
square meters of space, the school will accommodate
controlled at an early stage and workflows to be orga-
up to 800 pupils.
Segment Reporting
Turner is building an elementary school slated for comThe rollout and promotion of virtual planning and con-
nized more efficiently. This benefits both the company
and its clients.
Healthcare properties segment
In March 2013, Modern Healthcare magazine ranked
Turner is also market leader in green building and
Turner Construction Company the number one U.S.
was recognized as such for the sixth time running by
construction manager for healthcare buildings for the
the Building Design and Construction magazine. The
sixth consecutive year. As an established and capable
HOCHTIEF subsidiary has the largest LEED*-accredited
partner to the healthcare industry, the HOCHTIEF sub-
staff in the industry. In total, Turner generated some
sidiary secured further large-scale contracts in this mar-
EUR 2.66 billion in sales in this market segment in 2013.
ket segment during the period under review. In one
major contract, from Genesis Health Care Systems, Turner
Project highlights
is consolidating two hospitals into one in Zanesville,
With public buildings, office properties, sports facilities,
Ohio. This involves a major renovation to the existing
hospitals, roads and bridges, the HOCHTIEF Group
campus followed by the addition of new buildings and
subsidiaries in America shape the cityscapes of major
extensions. The project is to be completed by the start
urban areas and have a hand in the development of
of 2015.
transportation and social infrastructure.
In Washington, D.C., Turner received the go-ahead for
construction of the New Sibley Memorial Hospital. The
facility will include an emergency department, maternity
ward, and intensive care unit. The plans envision the
43,500-square-meter hospital serving up to 45,000
Annual Report 2013
101
patients a year. In a further contract, Turner is providing
Residential segment
the Advocate Illinois Masonic Medical Center in Chicago
Turner is currently constructing new student accom-
with a large new outpatient facility and a cancer center.
modation at the University of Morgantown in West Virginia. One six-story and one seven-story building will
Commercial property segment
house 250 students. Also part of the contract is con-
Turner is building a new retail center in Texas for Nebraska
struction of retail space and parking for more than
Furniture Market. There are two parts to the contract:
200 vehicles.
The retail center itself is to be built first, followed by a
2,075-space parking garage.
In Portland, Oregon, American Assets Trust is planning
the Lloyd Superblocks project comprising four mixed-use
Together with joint venture partners, Turner is construct-
residential properties. Turner is building an underground
ing a new headquarters for the airport operating com-
garage to begin with in phase one and then expects the
pany at Dallas/Fort Worth International Airport. The con-
follow-on contract for the second phase.
tract covers the three-story building with approximately
14,000 square meters of space together with parking.
Sports facilities segment
Segment Reporting
Turner is a major name in sports facility construction
A growing share of work in the commercial properties
across the U.S. The company once again secured
segment relates to data centers. More and more com-
new contracts in this segment during the period under
panies are upgrading server farms and technical facil
review. These include the modernization of the Lincoln
ities. In all, Turner tallied five large new orders in this
Financial Field Stadium in Pennsylvania, the home of
segment in 2013, with a total value exceeding EUR 120
the Philadelphia Eagles.
million.
The City of Orlando has selected Turner to carry out
Office properties
extensive renovation work at the Florida Citrus Bowl
Turner won further contract awards during 2013 for
Stadium. The project includes extra seating for specta-
office buildings—another segment in which it is market
tors as well as modernization of locker rooms, rest-
leader. The company’s new projects include 222 Sec-
rooms, press box, and technical facilities.
ond Street in San Francisco. This is a 26-story office
tower being built to sustainability standards. The build-
ing will seek LEED Gold certification. Alongside some
HOCHTIEF’s civil engineering subsidiary Flatiron was
41,500 square meters of office space, the project also
commissioned with a number of road building projects
includes retail units. Parking is provided on two levels
in the past year. For instance, Flatiron was awarded the
below ground.
contract to construct a new six-kilometer parkway for
the South Carolina Department of Transportation. The
Another significant project undertaken by Turner in Cali-
more than EUR 71 million project includes new highway
fornia is the Wilshire Grand Center in Los Angeles. The
with five bridges in Myrtle Beach, South Carolina. Com-
73-story complex will offer luxury hotel rooms, retail,
pletion is slated for 2016.
restaurants, and offices. Construction will focus on utilizing green building techniques and materials including
innovative lighting and climate systems which will significantly reduce overall energy consumption.
tract to construct the new Northeast Anthony Henday
Drive in Edmonton, Alberta. The contract is worth more
than EUR 350 million for Flatiron. This massive project
includes 27 kilometers of new and reconstructed freeway, including 47 bridges. The project is slated for
completion in 2016.
Flatiron is also upgrading Interstate 25 in Colorado.
Due for completion in 2015, the work includes ten kilo
meters of new managed, High Occupancy Vehicle
lanes, reducing traffic congestion in and out of downtown Denver.
2013
(EUR million)
New orders
Work done
Order backlog
Divisional sales
External sales
Profit before taxes
Capital expenditure
RONA** (%)
Net assets (December 31)
7,457.3
8,546.3
9,278.8
7,943.8
7,943.8
115.1
94.0
57.6
15.6
755.2
2012
(restated*)
9,577.7
8,037.6
10,900.1
7,374.9
7,374.6
74.3
57.1
106.2
10.5
759.8
9,295
8,397
Employees (average over the year)
In North Carolina, Flatiron successfully delivered the
The HOCHTIEF Americas division’s key figures
second segment of the EUR 114 million I-85/Yadkin River
New orders totaled EUR 7.46 billion in 2013, some
Bridge, opening the southbound bridge to traffic on
EUR 2.12 billion down on the prior year. This is mostly
schedule after three years of construction. Each north-
an effect of the exceptionally strong prior-year figure,
bound and southbound bridge contains four new lanes
which was bolstered by large order volumes in building
to accommodate the interstate’s more than 60,000
construction and the roads segment.
*Restated for IAS 19R. For
notes on the adjustments,
please see pages 155 and 156.
see page 64.
Segment Reporting
The company is also in its second of a four-year con-
average daily commuters.
Work done went up in the period under review by
In 2013, E.E. Cruz continued work on the USD 31 mil-
6.3% to EUR 8.55 billion and external sales by 7.7%
lion contract involving the construction of two bridges
to EUR 7.94 billion. The HOCHTIEF Americas division
over the Bronx River and the Metro-North Railroad tracks
achieved its highest level of work done for any fiscal
in New York. The project will be completed in February
year to date. Both building construction and civil engi-
2015. E.E. Cruz also continues to work on the fit-out of
neering contributed to the increase. This is partly a
the station, entrances, and ancillary structures for the
result of the division working its way through the very
96th Street station of the Second Avenue subway in
large order backlog from the prior year.
New York City.
The order backlog, at EUR 9.28 billion, was 14.9%
Turner and Flatiron are also involved in the development
down on the prior-year record. Although new orders
of transportation infrastructure with projects in the air-
were lower in 2013, the size of the order backlog means
ports sector. In San Diego, California, Turner is construct-
that full capacity utilization for 2014 is largely assured
ing five jet hangars together with two terminal buildings
in a similar way to prior years. The order backlog is
and apron. Terminal 4 is being refurbished at Los Angeles
equivalent to 13 months in forward orders.
International Airport. A four-story baggage facility is
being constructed between Terminal 4 and the Interna-
Both operational earnings (EUR 115.1 million) and
tional Terminal. Turner is also refurbishing a check-in
profit before taxes (EUR 94.0 million) showed a marked
hall for Columbus Regional Airport Authority without
increase on the prior year. Much of the improvement is
closing the building to the public.
attributable to the civil engineering business, even though
earnings in that segment did not yet fully meet our expectations.
Annual Report 2013
103
The significant drop in capital expenditure by EUR
the commercial building construction market and the
48.6 million came about because the prior year included
transportation infrastructure market—both contracted
the acquisition of the majority stake in Clark Builders.
in 2013.
The average total number of employees increased to
9,295, mostly due to the large number of projects in
According to projections from IHS Global Insight for 2014,
progress.
prospects are now better at least for the building construction market. IHS Global Insight likewise forecasts
HOCHTIEF Americas division outlook
growth for the Canadian construction industry, most of
The measures implemented, including improvements to
all in the transportation infrastructure segment. Assum-
risk management at our subsidiary Flatiron, delivered
ing a stable U.S. dollar exchange rate, we expect profit
results in 2013 and will be continued in 2014. The U.S.
before taxes in 2014 above the prior-year level.
Segment Reporting
construction markets served by HOCHTIEF Americas—
see www.leighton.com.au.
HOCHTIEF is majority owner of the Australian Leighton
HOCHTIEF further increased its stake in Leighton Hold-
Group*, which together with its subsidiaries holds a
ings Limited during the course of the reporting year.
leading position in the Australian, Asian, and Middle East
The equity interest rose to 57.94% as of December 31,
construction markets and has operations in more than
2013. This reflects confidence on the part of HOCHTIEF
20 countries. Leighton’s operating units include Leighton
in the further improvements of Leighton’s business.
Contractors, Thiess, John Holland, and Leighton Prop-
The Group views its investment in the Leighton Group of
erties, the Leighton Asia, India and Offshore Group, and
companies as a contribution to its core business with
the Habtoor Leighton Group. Through these companies,
excellent growth opportunities and a very good market
the Leighton Group boasts a broad portfolio of capabil-
position.
ities for the infrastructure, resources and real estate
market, and is also the world’s largest contract miner.
A key aspect of the strategic reorientation is the disposal
of non-core activities from the Leighton portfolio. During
Leighton had a successful 2013. After a difficult year
the reporting period, Leighton sold approximately 70%
in 2012, the group is on course back to its accustomed
of its telecommunications assets, including the subsidi
strength. Leighton showed substantial improvements
aries Nextgen Networks, Metronode and Infoplex to
notably in its core operating business. The strategic re-
Ontario Teachers’ Pension Plan. The EUR 475 million
orientation decided in 2012 and the transformation pro-
(AUD 620 million) transaction was closed in June 2013.
cess launched to implement it were systematically moved
Leighton will continue providing services in the network
forward through the reporting period and delivered vis
expansion and maintenance segments with its remain-
ible results. The overarching goal is to gear the business
ing subsidiaries in the sector, Visionstream and Silcar.
more strongly toward higher margins and better returns
on capital.
The capital freed up by focusing on the core business
will be used primarily to strengthen the balance sheet
and reduce debt, as well as for investment in growth
segments.
Part of the new strategy for Leighton is to foster clearly
The press articles concentrated on matters that are the
defined core competencies in its operating units. In this
subject of either an ongoing confidential investigation
context, the contract mining business under John Hol-
by the Australian Federal Police or litigation commenced
land was transferred during the reporting year to sister
by Leighton Holdings. Leighton is not aware of any new
company Leighton Contractors.
allegations or instances of breach of Leighton’s ethics
In the third quarter of 2013, Leighton subsidiary Thiess
cles.
or Code of Business Conduct being raised by the artiacquired 100% ownership of telecommunications,
energy and infrastructure services company Silcar Pty
The Leighton Board and management condemn any
Ltd. Silcar was previously a 50-50 joint venture between
form of corrupt or fraudulent behavior.
Thiess and Siemens. With this acquisition, Leighton has
added to its service capabilities and consolidated Thiess’s
During the past two years, the Leighton Group has
leading position in infrastructure services in Australia.
worked hard to reset its strategic direction. A major
taken, including refreshing its values of discipline, in-
Welspun Group a 39.9% stake in the Indian joint ven-
tegrity, safety and success. These strategic and cultural
ture Leighton Welspun India, following a decision by
changes are embedded in Leighton’s strategy to “Stabi-
the Welspun Group to focus more closely on its core
lize, Rebase and Grow” the business. They have further
business (textiles and steel). The company continues
strengthened the Leighton Group and brought a new
as a wholly-owned subsidiary named Leighton India.
governance rigor for the benefit of all stakeholders.
Leighton agreed to acquire a total of ten construction
Project highlights
projects from Macmahon Holdings Limited for roughly
In 2013, the Leighton Group once again secured nu-
EUR 25 million in the first quarter of 2013. The bulk of
merous attractive, new, large-volume contracts in the
the contracts transitioned to Leighton subsidiary John
energy, transportation, and social and urban infra-
Holland.
structure segments, made successful progress with
Segment Reporting
cultural and business transformation has been underIn December 2013, Leighton reacquired from the
existing work and brought a number of projects to
In the second quarter of the reporting year, Leighton
completion.
secured the refinancing of a three-year EUR 460 million
syndicated cash advance facility. In a reflection of the
company’s credit standing, strong investor demand
Sustained investment in coal seam gas fields and in
meant that the offering was heavily oversubscribed. In
the expansion of liquefied natural gas (LNG) capacity in
response, Leighton opted to increase the facility to
Australia presented many new business opportunities
EUR 766 million (AUD 1 billion).
for the Leighton Group in the year under review.
Between October and November 2013, allegations were
For instance, Leighton subsidiary Thiess was awarded
made in the Australian media centered around the Leigh-
a contract worth some EUR 1.3 billion for the construc-
ton Group’s international business. The Leighton Group
tion of gas compression facilities and other works for coal
takes all allegations or suggestions of impropriety seri-
seam gas producer QGC in the Surat Basin in Queens
ously. The Leighton Group is deeply concerned about
land. Thiess had already won the third contract in a
inaccuracies in the reports and the sensational nature
row—worth EUR 165 million—at the Gorgon LNG proj-
of the media reporting on the matter.
ect in Western Australia back in the first quarter of 2013.
Annual Report 2013
105
On the same project, an existing contract with sister
tract, Thiess has been commissioned to construct a
company Leighton Contractors was expanded by EUR
coal handling and preparation plant at the Boggabri
750 million to reflect additions to scope.
coal mine in New South Wales, Australia. The contract
is worth EUR 138 million for Leighton.
In Abu Dhabi, the Habtoor Leighton Group secured a
EUR 52 million contract for design and construction of
an accommodation camp and associated utilities as
In the second quarter of 2013, a joint venture between
part of an oilfield development.
Thiess (50%), John Holland (25%) and Dragados (25%)
was awarded the contract for an EUR 894 million proj-
Contract mining
ect in Sydney. The consortium will construct twin 15-kilo-
Despite a decline in the outlook for the resources sec-
meter tunnels and excavate five new underground sta-
tor, which is important to both Australia and Leighton,
tions for the North West Rail Link. These will be the
the Leighton Group secured an especially large volume
longest rail tunnels ever built in Australia.
of new, long-term contracts in that sector. These deliver
the necessary planning certainty and pave the way for
In Hong Kong, the Leighton Asia, India and Offshore
a sustained performance trend.
subsidiary was awarded a contract worth EUR 501 million
Segment Reporting
to build a complex component of a rail project between
The new awards in contract mining include the Isaac
the Shatin and Central districts. This is the seventh con-
Plains Coal Mine in Bowen Basin, Queensland. Leighton
tract from MTR Corporation in the past three years. The
Contractors is to strip mine some 2.7 million metric tons
contract includes extensive modification works to an
of coal there per year. The EUR 182 million contract runs
existing station as well as to platforms and tunnels.
for three years.
A further contract for a total of EUR 240 million was
The year under review also brought a number of large-
secured in Singapore. There, as part of a joint venture,
scale contract renewals and extensions: Leighton Con-
John Holland and the Leighton Asia, India and Offshore
tractors was awarded a EUR 1 billion contract variation
subsidiary will construct a subway station and a two-
to mine the Kings iron ore deposit at the Solomon Hub
kilometer rail tunnel.
in Western Australia. This takes the value of work under
the contract to EUR 2.2 billion, the largest single con-
At Melbourne Airport in Victoria, Leighton Contractors,
tract award in the history of Leighton Contractors. The
working as part of a joint venture, clinched a EUR 270
five-year contract includes operating and maintaining
million contract to construct a new terminal and addi-
the open cut mining facilities, mine planning, ore pro-
tional infrastructure buildings. This includes a seven-sto-
cessing facilities, associated infrastructure such as the
ry car park, access roads, an underground service
airport and village, and quality control. Solomon Hub
tunnel, and an electrical substation. At Perth Airport
will produce some 60 million metric tons of iron ore each
in Western Australia, Leighton Contractors is part of
year and employ more than 1,000 people.
an alliance contracted for a large-scale project worth
around EUR 740 million to expand the road network
Alongside the contract mining business, Leighton com-
around the airport. Leighton Contractors has a 68%
panies also once again took on various construction
share in the project.
contracts for mine infrastructure in 2013. These include
a EUR 143 million iron ore wharf extension project in
The operator of Abu Dhabi Airport awarded the Habtoor
Western Australia by John Holland. In a joint venture con-
Leighton Group a contract for various construction works
in connection with the airport’s expansion. In total, the
Healthcare properties segment
project is worth approximately EUR 124 million.
The Leighton Group once again secured new contracts
in the healthcare sector during the reporting period.
For example, John Holland was awarded a contract in
Office and commercial buildings segment
joint venture to redevelop the Royal Hobart Hospital in
Leighton Properties chalked up several office and com-
Tasmania. The EUR 268 million project includes con-
mercial property sales during the reporting period. In
structing a new building with two ten-story towers to
November 2013, the company announced the sale of
accommodate operating theaters and specialty clinics,
177 Pacific Highway in Sydney for EUR 302 million. The
refurbishing existing clinical areas, as well as upgrading
30-story, 40,000-square-meter commercial building will
infrastructure across the site. Leighton Asia is to design
be completed by Leighton Contractors in 2016. Back in
and build a 12-story hospital in Hong Kong. That con-
the first quarter of 2013, 567 Collins Street, a 26-story
tract is worth some EUR 203 million.
364 million. In Perth, the company sold three towers
Hotels segment
totaling 53,000 square meters of office and retail space
In Macau, the Leighton Asia, India and Offshore subsidi
to be built at Kings Square in the CBD. At EUR 333 mil-
ary is to build a further project for Wynn Resorts. The
lion, this is the largest commercial property pre-sale in
new luxury hotel resort comprises multiple buildings
Western Australia. Building work undertaken by John
with a total of more than 450,000 square meters of
Holland and Broad Construction Services, a wholly
floor space. The contract is worth EUR 2.1 billion.
Segment Reporting
office property in Melbourne, was sold for some EUR
owned subsidiary of Leighton Contractors, commenced
in mid-2013.
Telecommunications/network expansion segment
Urban development also includes the rollout of broad-
In October, the Habtoor Leighton Group (HLG) signed
band networks for communication. In the first quarter
an agreement to construct the next phase of the Jafza
of 2013, Leighton Contractors subsidiary Visionstream
One-Jafza Convention Centre. The EUR 57 million con-
was awarded a contract worth EUR 259 million to roll
tract includes construction work on the tower as well
out Australia’s National Broadband Network in Victoria,
as adjoining road works.
Queensland and southern New South Wales. Visionstream was also awarded a contract extension worth
HLG also secured an approximately EUR 320 million
over EUR 300 million to expand New Zealand’s UFB*
contract to build Al Habtoor City Residential Towers in
network in the greater Auckland area.
*Ultra Fast Broadband
Dubai. The project comprises two apartment towers
with 75 stories each, and one with 52 stories, as well
Industrial services segment
as associated retail and parking space.
In Sydney, Thiess won a five-year contract valued at
EUR 141 million to provide operational and facilities
maintenance services for Sydney Water. Thiess is also
to upgrade and maintain the electrical distribution network throughout metropolitan Perth in Western Australia.
The new performance-based contract has a value of
some EUR 99 million over an initial two-year term.
Annual Report 2013
107
with operational earnings climbing by 40.5% and profit
see page 64.
(EUR million)
New orders
Work done
Order backlog
Divisional sales
External sales
Profit before taxes
Capital expenditure
RONA* (%)
2013
16,044.1
17,159.3
26,524.9
14,767.0
14,767.0
744.7
499.8
1,315.6
17.9
3,826.0
58,715
2012
18,414.5
18,223.5
32,486.4
15,179.8
15,179.8
593.6
411.1
1,532.6
13.6
4,756.3
55,959
before taxes by 36.1%—despite impairment losses and
negative effects on: the investments in Leighton India,
Macmahon, and Cross City Tunnel; impairment losses
on various development projects at Devine; and restructuring expenses, which were partly offset by the oneoff gain on the (partial) sale of Leighton’s telecommunications activities.
Capital expenditure decreased by 14.2% (exchange
rate adjusted: 3.9%). A reduction in spending on property, plant and equipment to EUR 808.1 million (down
24.8%) was countered by a slight rise in expenditure on
The HOCHTIEF Asia Pacific division’s key figures
financial assets to EUR 469.1 million (up 11.2%) mainly
New orders totaled EUR 16.04 billion in 2013, some
due to equity contributions to existing joint ventures.
Segment Reporting
EUR 2.37 billion or 12.9% down on the prior year. The
decrease is mainly due to exchange rate effects. On
The average number of employees grew as a result of
an exchange rate adjusted basis, new orders were only
project activities by 4.9% to 58,715.
slightly (2.5%) below their prior-year level.
HOCHTIEF Asia Pacific division outlook
Work done and external sales were likewise down on
Despite falling resource prices in 2013 and consequent
the comparative prior-year figures in nominal terms; ex-
partial cuts in production, mostly of thermal coal, Leigh-
cluding the negative exchange rate effect, both showed
ton’s subsidiaries were able to keep operating at high
substantial increases—work done by 5.4% and external
capacity levels in contract mining**. The utilization of de-
sales by 8.9%. This reflected the division working its way
ployed mining equipment will be further optimized and
through large-scale contracts from prior years with an
efficiency improved in 2014. The LNG sector continues
average three-year contract execution period.
to present good opportunities for the infrastructure side.
A significantly weaker Australian dollar at the 2013 year-
The role of Leighton Holdings Ltd as a strategic man-
end similarly hit the order backlog (down 18.4% on
agement company will be further extended, leading to
prior year). Adjusted for this effect, the order backlog
standardization and streamlining of key processes, no-
nearly matched its prior-year level (down 0.9%). The
tably in capital-intensive equipment management within
sale of around 70% of Leighton’s telecommunications
the Leighton Group.
business also reduced the order backlog by a corresponding amount. Eliminating this and the exchange rate
For 2014, we anticipate operating profit before taxes at
effect, the order backlog was slightly up on the prior
a similar level to 2013, subject to market developments.
year.
Earnings performance was strongly positive compared
to the prior year. Both operational earnings and profit
before taxes went up significantly compared with the
prior-year period (by 25.5% and 21.6%, respectively). The
return to the accustomed strong level of earnings is even
more clearly visible on a constant exchange rate basis,
The HOCHTIEF Europe division combines the core
to achieve good returns on attractive projects in a com-
business in Europe and selected high-growth regions
petitive market. In our core business, we see potential
around the world. The division’s main company is
for expansion and growth: We are expanding our activ-
HOCHTIEF Solutions AG, which offers customers a full
ities in attractive international markets and intend to in-
range of construction and construction-related services
crease our exposure to Scandinavia, the Netherlands,
for infrastructure projects, real estate, and facilities.
and the UK, for example. With efficient structures and
For further information,
please see
www.hochtief-solutions.com.
processes, we will operate close to the customer and
In light of HOCHTIEF Europe’s volatile earnings in recent
be optimally involved in market activities. In October
years, a fundamental reorganization of HOCHTIEF Solu-
2013, we signed a collective agreement with the codeter
tions AG was initiated in the reporting period with the aim
mination bodies of HOCHTIEF and the trade union IG
of steering the unit to sustained profitability. To achieve
BAU so as to effect the job cuts associated with the
this aim, we are focusing on the core business, decen-
reorganization in a socially responsible manner.
tralizing more responsibilities, creating lean structures,
and pooling technical expertise in centers of excellence.
HOCHTIEF Solutions’ realignment is now at advanced
completed, we expect to generate annual cost savings
business, which was no longer part of the core business,
of at least EUR 40 to 60 million.
Segment Reporting
stage. Once the restructuring measures have been
In this context, we sold HOCHTIEF Solutions’ Services
to SPIE S.A., Cergy-Pontoise, France. The sale was completed in September at a price of approximately EUR
The Elbe Philharmonic Hall project in Hamburg, which
250 million.
had negatively impacted the HOCHTIEF Europe division’s
earnings in 2012 due to substantial risk provisioning,
On January 31, 2014, we were able to announce that
was on track after an agreement was reached with the
we have reached agreement on the sale of our stake
City of Hamburg in the reporting period: The continua-
in aurelis Real Estate. For the other, likewise non-core
tion of building work was officially decided in spring 2013
real estate activities in Europe, namely HOCHTIEF Projekt
and the parties signed the contracts in April. HOCHTIEF
entwicklung, HOCHTIEF Property Management, and
will complete the building for an agreed fixed price. The
formart, we are seeking strategic partners or potential
new structure is working and building work is already
buyers in order to decrease funds employed in these
making clear progress.
activities.
HOCHTIEF Solutions is a recognized source of expertise
From January 2014, operating activities have been con-
and provides its public-sector partners with integrated,
ducted by four subsidiaries under the single roof of
intelligent, and innovative solutions for PPP projects in the
HOCHTIEF Solutions AG: HOCHTIEF Building, HOCHTIEF
roads and social infrastructure segments. In future, we
Infrastructure, HOCHTIEF Engineering and HOCHTIEF
will generally only offer PPP services if HOCHTIEF also
PPP Solutions. The aim is to operate quickly and effi-
assumes responsibility for some of the construction work
ciently in their markets, while leveraging HOCHTIEF’s
so that greater value can be created for our company.
expertise to make a winning impression in delivering
We are already generating volumes of approximately EUR
complex projects. We are thus combining the advan-
300 million a year from construction services on PPP
tages of operating more like a small- or medium-sized
projects. We intend to increase that figure going forward.
company with the service range of an international construction group. At the same time, we are very much
committed to our home market, Germany, and intend
Annual Report 2013
109
Segment Reporting
Project highlights
The reporting period saw the launch of further projects
for the development of pumped storage power plants:
In the Netherlands, a consortium including HOCHTIEF
HOCHTIEF Solutions has identified a suitable location
will construct, expand, and subsequently operate an
in the German town of Lügde in the district of Lippe. Con-
important section of highway between Amsterdam and
struction could begin in 2016 once the regional planning
Almere. The consortium is to design, finance, build, and
process has been completed and official planning per-
then operate for 25 years a section of the A1 and a sec-
mission granted. The 320-megawatt plant could then
tion of the connecting A6 on the basis of a public-private
potentially start operating in 2020. Design work has also
partnership contract worth more than EUR 1 billion in
commenced for the construction of a pumped storage
total. The stretch of over 20 kilometers is part of one of
power plant in the Kyffhäuserkreis district. Construction
the most important highway spur routes to the Dutch
on this, the third HOCHTIEF project, with a potential
capital, Amsterdam. Lanes are being added and com-
capacity of up to 500 megawatts near Sondershausen,
plex bridge structures, an aqueduct, and a rail bridge
could begin in 2017, with the plant then becoming
built. The design-build-finance-maintain (DBFM) project
operational in 2021. Initial planning for a forth project in
on behalf of the Dutch government is the first of four proj-
the German state of Baden-Württemberg has already
ects to improve transportation links to Schiphol airport.
begun.
In September 2013, ground was broken on the Lenne-
In the offshore segment our special equipment contin-
talbrücke project. By 2018, HOCHTIEF Solutions is to
ues to be in demand. The new jack-up vessel Vidar, for
build a new structure to replace the 1,000-meter-long
example, was booked for work on the Global Tech I
bridge on the A45 highway at Hagen. The new bridge
wind farm in the North Sea even before it became opera
will initially be constructed alongside the existing bridge
tional in December 2013. The Odin jack-up platform
structure and then moved across and into position in
was also chartered for the first time by the oil and gas
one step—the first operation of this size ever to be car-
industry for work on its platforms. This shows the di-
ried out in Germany. The technically challenging con-
verse range of applications for which HOCHTIEF’s own
struction project is worth over EUR 88 million.
fleet can be used.
By 2014, a consortium including HOCHTIEF Solutions
is to renew the infrastructure at Riga International Airport.
HOCHTIEF Solutions is one of the leading builders and
While airport operations continue, we will provide taxi,
developers of high-quality real estate in Europe. Above
apron, and runway rehabilitation and extension works,
all, this includes modern office and residential proper-
build two new halls, and install new lighting. HOCHTIEF’s
ties. We had 59 projects worth EUR 1.46 billion in prog-
share of the contract amounts to around EUR 25 million.
ress at the end of 2013. HTP and formart sold real estate
valued at EUR 954.6 million during the reporting period.
We thus exceeded the prior-year figure on this perform
New contracts include the municipal waste incineration
ance indicator by EUR 77.2 million. This was nonethe-
plant at Poznań, Poland, which HOCHTIEF Solutions is
less short of our expectations for earnings growth. Our
involved in designing and building under a joint venture.
Group company aurelis Real Estate sold properties
The contract covers the facility itself together with trans-
worth EUR 358.2 million in 2013. EUR 70.2 million of in-
portation and supply infrastructure. Design work has
come was generated from rentals.
commenced and construction is set to start in the second quarter of 2014.
Office and commercial buildings segment
Residential segment
In August 2013, the HOCHTIEF project developers cele-
The “StilLeben am Zoo” residential complex in Hanover
brated the laying of the foundation stone at Frankfurt’s
comprising more than 3,800 square meters of residen-
Börsentor, an office property with retail space. The seven-
tial space was fully marketed by HOCHTIEF residential
story building is set to be completed by summer 2014
developer formart in the reporting period—all 30 con-
and to receive a silver certificate from the German Sus-
dominiums were sold. The four-story block will be com-
tainable Building Council (DGNB)*. The property was sold
pleted by summer 2014.
*Siehe Glossar Seite 219.
even before construction commenced.
In Berlin, HOCHTIEF Solutions in its role as general conIn Munich, HOCHTIEF Projektentwicklung sold the
tractor is to build some 400 rental apartments by the fall
smarthouse. Approximately 90% of the 22,000 square
of 2015. The contract for the residential development is
meters in the seven-story property has been leased.
worth approximately EUR 46 million. The energy-efficient
The building was awarded gold-standard certification by
residential units will be approximately 30% better than
the DGNB, thereby demonstrating that it stands for sus-
required by the German Energy Saving Ordinance (EnEV).
tainability and cost efficiency.
of 61 apartments with a sustainable energy concept by
has been constructing the DreiEins office and commer-
summer 2015. The student residence project worth a
cial building in Düsseldorf as part of a joint venture. The
total of around EUR 15 million is based on the collabo
seven-story building has already received silver precer-
rative PreFair contracting model.
Segment Reporting
In Hamburg, HOCHTIEF Solutions is to construct a total
Since September 2013, HOCHTIEF Projektentwicklung
tification from the DGNB. Construction work is expected
to be completed at the end of 2014. In November 2013,
In downtown Düsseldorf, HOCHTIEF Solutions is con-
the DreiEins building was sold for EUR 15 million.
structing the shell for the prestigious Andreasquartier in
nine sections under a contract worth just over EUR 20
In Munich’s new “Am Hirschgarten” urban quarter,
million. The construction project is special in that it in-
HOCHTIEF Projektentwicklung completed an office and
cludes the integration of the historic facade with pro-
commercial center by the end of 2013. The ensemble
tected status.
comprising two buildings, up to 60% of which has already been leased, was sold in December 2013. The
At the Holbeinviertel residential quarter in Frankfurt,
new building is part of the quarter development by
HOCHTIEF Projektentwicklung completed the core and
aurelis Real Estate Management. It received silver pre-
shell work on five segments with 12 multi-family and 38
certification from the DGNB.
single-family units. A total of 83% of the apartments have
already been sold. In addition, all 45 owner-occupied
HOCHTIEF Property Management was able to secure
apartments in Vivente, part of a new residential quarter,
various multi-year extensions to existing contracts as
were sold. Letting of a further 111 rental apartments
well as the extension of other contractual relationships.
has begun.
Allianz Real Estate entrusted the company with endto-end property management for the Skyper property
Cultural/event facilities segment
in Frankfurt. As, however, this positive effect was coun-
Under a contract worth around EUR 40 million, HOCHTIEF
tered by a number of discontinued contracts, overall
Solutions is to construct the shell for the Berliner Schloss—
profitability was not satisfactory.
Humboldtforum by mid-2015. Streif Baulogistik is providing a total of seven cranes and two three-story container systems on this project.
Annual Report 2013
111
Shopping center segment
The HOCHTIEF Europe division’s key figures
By the end of 2014, HOCHTIEF Solutions is to construct
The strategy of organizational streamlining and divesting
the Mercaden shopping center in Böblingen on a turn-
non-core activities announced by HOCHTIEF Solutions
key basis. HOCHTIEF’s share of the contract amounts
AG early in 2013 has to a large extent already been put
to more than EUR 50 million. Over a gross floor area of
into effect. The Service Solutions business line combining
78,000 square meters, the center will house a mix of
the company’s facility and energy management activities
some 100 retail, catering, and services businesses.
was thus sold to SPIE S.A. of France. From January 1,
2014, the Building, Infrastructure, and Engineering busi-
In Poland, HOCHTIEF is undertaking a design and build
ness lines each operate as a standalone entity incorpo-
contract for the Supersam shopping mall in Katowice.
rated as a German limited company (GmbH). These go
The six-story building with just under 43,000 square
together with HOCHTIEF PPP Solutions GmbH, which
meters of floor space will house over 100 stores, res-
was already in existence, to make up the main substance
taurants, a movie theater, a gym, and ample parking.
of the HOCHTIEF Europe division. The restructuring
Construction work will be completed in September
expenses are taken into account in profit before taxes.
2015.
The HOCHTIEF Europe division expects the restructuring
will deliver future cost savings of at least EUR 40 to 60
Segment Reporting
Educational facilities segment
termintreu
kostensicher
transparent
ÖPP = public-private partnership (PPP)
million a year.
Among the PPP projects in the social infrastructure
segment, HOCHTIEF has won a 25-year contract
New orders in the HOCHTIEF Europe division, at EUR
worth around EUR 23 million to design, build, and oper-
2.88 billion in the year under review, were down EUR
ate six daycare centers for the City of Leverkusen. The
514.9 million (15.2%) on the prior-year figure. Besides the
daycare centers, which were opened in January 2014,
decrease due to the sale of the service business line,
will cater to 480 children.
major projects were not secured on the same scale as
in the prior year. Overall, the orders situation does not
Under a PPP contract, the company is constructing the
meet expectations. This goes equally for the German
special-needs center for the Paul Moor School in Nurem-
market and international activities.
berg on a site measuring 20,000 square meters. This
contract includes construction of the new special-
Work done, at a total of EUR 3.24 billion, was EUR
needs center built to the German passive house stand
96.9 million (2.9%) below the prior-year figure. Exclud-
ard, a sports building, and open-air sports facilities.
ing the service business line, which because of the sale
The construction work worth over EUR 26 million is
is only included for part of the reporting year, work done
due to be completed in September 2014. The facilities
went up by 5.0% relative to the prior-year figure adjusted
will be operated over a period of 25 years.
on a like basis.
In September 2013, construction work began on the
Divisional and external sales were 0.5% and 0.7%
Dortmunder U—Das Viertel project, where a joint ven-
up on the prior-year figures respectively. Correcting
ture is to construct two vocational training institutes, a
once again for the service business line, the increases
creative business center, and a parking garage on the
were 12.9% and 12.6% relative to the prior year.
site of former brewery Dortmunder Union-Brauerei by
the end of 2015. The campus will be one of Germany’s
largest schools, accommodating around 6,000 students.
HOCHTIEF Europe division outlook
(EUR million)
New orders
Work done
Order backlog
Divisional sales
External sales
Profit before taxes
Capital expenditure
RONA* (%)
2013
2,879.0
3,235.1
4,138.1
2,870.2
2,864.6
152.5
62.8
59.3
10.2
1,766.5
12,662
2012
3,393.9
3,332.0
6,419.7
2,856.2
2,845.3
92.2
28.7
138.5
6.9
1,792.5
15,320
With our four independently operating companies
HOCHTIEF Building, HOCHTIEF Infrastructure, HOCHTIEF
Engineering, and HOCHTIEF PPP Solutions, we will
boost the profitability of our division on a sustained basis
and further reduce debt, while gaining leaner structures
and greater flexibility to better serve clients’ needs and
wishes. The division continues to pursue its goal of
forging strategic partnerships with other investors in the
Real Estate business line in order to reduce tied-up
capital.
see page 64.
Excluding nonrecurring items from disposals and rePrimarily due to the sale of the service business line, the
structuring, we therefore expect a lasting improvement
order backlog fell to EUR 4.14 billion, which represents
in operational earnings in 2014.
Segment Reporting
a solid forward order book of almost 18 months.
Operational earnings climbed by a substantial EUR
60.3 million (65.4%) in the period under review relative
to the prior-year figure. This was mainly accounted for
by the boost to earnings from the sale of the service business line. Taking into account net investment and interest income together with negative non-operational earnings in connection with the HOCHTIEF Europe division’s
restructuring and the streamlining of its overall organizational structure, profit before taxes rose by EUR
34.1 million to EUR 62.8 million in the year under review.
The year-on-year decrease in capital expenditure
(by EUR 79.2 million) reflects lower capital expenditure
on financial assets (down EUR 52.5 million) and property,
plant and equipment (down EUR 26.7 million), as spending in the reporting period on our PPP activities and
offshore business in particular was below its previous
level.
The 17.3% drop in the average number of employees
mainly reflects the sale of the service business line.
Annual Report 2013
113
Built on trust: The Australian Embassy in Indonesia
HOCHTIEF’s Group company Leighton constructed the Australian Embassy in Jakarta over two decades ago. In a followup contract, Leighton is now rebuilding the complex in line
with stringent security requirements as part of a joint venture. The project comprises a five-story chancery, an official
residence for the Head of Mission, accommodation for the
staff, four guard stations as well as recreational facilities.
The Embassy will occupy a 40,500-square-meter site.
Looking ahead
General economic environment for 2014
Assessment of the current business situation
The International Monetary Fund (IMF) forecasts that
by the Executive Board
economic growth will pick up speed in 2014. Most of
Group new orders stood at EUR 26.49 billion in 2013
all, it is expected that the euro zone recession will be
(2012: EUR 31.49 billion) as projected, below the record
brought to an end. The IMF projects global economic
prior-year figure, which was swelled by very large new
growth of 3.7% in 2014, largely influenced by an end
orders in infrastructure and contract mining. New orders
to expansionary monetary policy in the USA and slacker
were also reduced by exchange rate effects and the
market growth in China. Growth will tend to be stron-
sale of non-core activities in the year under review. At
ger in emerging and developing economies than in in-
EUR 39.94 billion, the order backlog, too, was below
dustrialized nations. For the USA, the IMF forecasts
the prior-year record, mainly because of the sharp appre-
growth of 2.8%, marking a slight economic recovery in
ciation of the Australian dollar over the euro. Despite
2014. Notable factors here include a continuation of
large exchange rate effects and the sale of the service
growth-supportive monetary policy and an expected
business line at HOCHTIEF Europe, work done was
easing of the U.S. fiscal situation in 2014. Looking to
once again very healthy in the year under review, total-
Australia, the IMF continues to predict a stable positive
ing EUR 29.05 billion (2012: EUR 29.69 billion). Adjusted
trend and growth of 2.8%. Regarding the Middle East,
for these effects, work done even exceeded the prior-
growth rates are expected to soften slightly relative to
year figure.
the prior year. The markets in Asia and the emerging
economies—first and foremost China, India, Indonesia,
All divisions made a positive contribution to earnings in
and Hong Kong—are forecast to grow by 5.1% in 2014.
2013 and chalked up attractive infrastructure contracts
in the markets they serve. HOCHTIEF improved on prior-
Growth in the target regions and markets relevant to
year earnings with profit before taxes of EUR 799.8 mil-
HOCHTIEF will vary and we keep a close watch on
lion (2012: EUR 541.4 million). The EUR 171.2 million
how they develop.
consolidated net profit attributable to HOCHTIEF shareGroup Management Report
Forecast, Risk Report, Opportunities
and Post-balance-sheet Events
holders likewise marked an improvement on the prioryear figure (2012: EUR 155.2 million). Adjusted for nonoperating effects (produced by the sale of the airport
and service business lines at HOCHTIEF, the sale of
telecommunications activities at Leighton, restructuring
expenses, impairment* losses on investments, and other
items, with a total positive impact of EUR 202 million on
profit before taxes and a total negative impact of EUR
*For further information on
impairments on Leighton
investments, please see
page 108.
36 million on consolidated net profit) operating profit
before taxes was EUR 597.6 million and consolidated
operating net profit was EUR 207.5 million—in line with
or slightly exceeding guidance.
Annual Report 2013
115
These operating results for 2013 represent a significant
the HOCHTIEF Europe division, we expect a significant
improvement on the previous year; the adjusted 2012 fig-
improvement in operational earnings as a result of the
ures show a profit before taxes of under EUR 400 million,
fundamental repositioning and streamlining of the busi-
or below EUR 100 million at the level of consolidated
ness.
net profit.
In terms of the Group, in 2014 we expect to achieve
In the HOCHTIEF Americas division, Turner and Flatiron
further progress with an operating consolidated net
turned in a positive performance despite the strained
profit in the range of EUR 225-250 million, compared
fiscal situation in the USA. New building construction
with EUR 207.5 million in 2013. We anticipate that this
contracts won by Turner encompass healthcare facili-
will be achieved with improved profit margins in all our
ties, educational buildings, commercial properties, and
divisions.
sports facilities. In the civil engineering business, Flatiron
once again garnered attractive road and rail projects in
With our continued focus on cash, we also aim to fur-
2013.
ther strengthen the balance sheet and end the year
with a net cash position. The Group’s new orders and
The Leighton Group is on course in the HOCHTIEF Asia
work done are likely to normalize at a lower level in
Pacific division, back to its accustomed strength after
2014, due partly to exchange rate effects, but we ex-
a tough year in 2012. Despite the difficult situation in
pect to end the year with our order backlog close to
the economy as a whole and the raw materials sector
the high levels of December 2013.
in particular, Leighton once more secured large-volume, long-term contracts in the infrastructure and con-
Our strong presence in American and Asia-Pacific mar-
tract mining businesses. The Leighton Group also
kets means that the Group’s projected earnings may
made good progress with its strategy program. Non-
be impacted by exchange rate trends.
core activities were divested from the portfolio as
planned.
Our planning is based on the assumption that there will
not be a sharp slowdown in the global economy, an
The HOCHTIEF Europe division showed positive devel-
escalation of the financial and debt crisis, or any action
opment, notching up numerous new orders in all infra-
on the part of individual governments that impacts sig-
structure construction segments. The strategic realign-
nificantly on HOCHTIEF’s business.
ment at HOCHTIEF Solutions is advancing to plan. We
disposed of the non-core service business line in Sep-
Dividend
tember 2013.
HOCHTIEF aims to let shareholders participate adequately
in the company’s earnings performance. The Executive
Overall assessment of future developments
Board and the Supervisory Board of HOCHTIEF Aktien
We will continue to focus on our strategy to structurally
gesellschaft are proposing to distribute a dividend for
improve Group profitability and cash performance in
2013 of EUR 1.50 per share.
2014. For HOCHTIEF Americas, including our international Group companies Turner and Flatiron, we expect
that operational earnings will be higher than in the prior
year. Looking to the Leighton Group, we anticipate firm
operational earnings performance in local currency
terms, despite a challenging environment. Regarding
Looking Ahead
Strategic realignment of Group divisions
in telecommunications, energy, and infrastructure
A fundamental reorganization of the HOCHTIEF Europe
services company Silcar Pty. Ltd. to 100% (previously
division was implemented in the year under review
50%).
with the aim of steering the unit to sustained profitability.
Starting January 2014, operating activities will be
The civil engineering market has seen stronger compe-
conducted by four subsidiaries under the single roof of
tition in recent years, which has led to increased pres-
HOCHTIEF Solutions AG: HOCHTIEF Building, HOCHTIEF
sure on contracting margins at our U.S. subsidiary Flat-
Infrastructure, HOCHTIEF Engineering, and HOCHTIEF
iron in the HOCHTIEF Americas division. This was
PPP Solutions. In this context, we sold HOCHTIEF
addressed in 2012 with improvements in risk manage-
Solutions’ service business line, which was no longer
ment and efficiency enhancement measures, which are
part of the core business, to SPIE S.A., Cergy-Pontoise,
now delivering results and will contribute once more to
France. On January 31, 2014, we were able to announce
the company’s profitable growth.
that we have reached agreement on the sale of our
shares in aurelis Real Estate. We are seeking strategic
2013 also saw us attain our strategic goal of divesting
partners or potential buyers for the other non-core real
our airport business, with the sale to a subsidiary of the
estate activities in Europe, namely HOCHTIEF Projekt
Public Sector Pension Investment Board of Canada
entwicklung, HOCHTIEF Property Management, and
(PSP Investments) successfully completed. All shares in
formart.
HOCHTIEF AirPort GmbH, Essen, were transferred
with economic effect as of January 1, 2013. The total
In the HOCHTIEF Asia Pacific division, Leighton con-
cash inflow from the transaction was approximately
tinues to work on five fundamental initiatives to drive an
EUR 1.1 billion.
“Stabilize, Rebase, Grow” strategy. The focus in the
Focus on profitability and cash generation
current rebase phase is on working capital improvement,
Our strategy is geared to enhancing the profitability and
strategic procurement, company shared services, asset
value of HOCHTIEF. We aim to substantially cut the
management, and management structures. The strate-
volatility seen in our cash flows in the last few years. At
gy program takes a long-term view in order to deliver
the same time, our top priority is on reducing tied-up
profitable future growth for Leighton.
capital. To attain this, we will scale back segments that
improvement of the Leighton Group’s margins under its
are capital-intensive without generating suitable returns.
In connection with its strategic realignment, Leighton
In parallel, we will continue to improve risk management.
sold approximately 70% of its telecommunications assets
during the reporting period, including subsidiaries
We aim to further increase the Group’s balance sheet
Nextgen Networks, Metronode, and Infoplex. The EUR
strength in 2014 and to continue making our portfolio
475 million transaction was closed in June 2013. With
less capital-intensive, giving us not only extra scope
the remaining subsidiaries in this sector—Visionstream
to enter attractive segments but also greater flexibility
and Silcar—Leighton plans to continue providing services
for our activities. The proceeds from the sale of non-
in the segments of network expansion and network
strategic segments will be used among other things to
maintenance. In making the divestment, it has solely
expand the core business of construction and PPP,
surrendered the role of network operator. Leighton sub-
strengthen the balance sheet, and repay debt.
sidiary Thiess added to its service capabilities in the
third quarter of 2013 by raising its ownership interest
Annual Report 2013
117
Diversification of financing instruments
Investment in the core business
HOCHTIEF retains its top credit standing and has
Our capital spending is geared toward reinforcing and
always operated a conservative financial strategy. This
continuously extending HOCHTIEF’s top international
has given us a secure position at all times, including
competitive position. Capital expenditure in 2013 totaled
through the financial crisis in the euro zone.
EUR 1.43 billion (2012: EUR 1.78 billion). As in the prior
year, one focus of investment spending was on replac-
After successfully completing the first bond issue in its
ing and modernizing contract mining plant and equip-
corporate history for a principal amount of EUR 500
ment as well as construction plant to undertake com-
million in March 2012, HOCHTIEF issued a second cor-
plex projects in the infrastructure business.
porate bond in March 2013. The bond issue is for a
principal amount of EUR 750 million, has a seven-year
Alongside this, expenditure targeted strategic additions
term to maturity, and carries a coupon of 3.875% p.a.
to the business portfolio. HOCHTIEF further added to
Strong demand from national and international investors
its stake in Leighton Holdings Limited over the reporting
meant the bond was more than five times oversub-
year. The ownership interest increased to 57.94% as of
scribed at over EUR 4 billion. Tapping once again into
December 31, 2013.
the international capital market in this way brought a
further diversification of HOCHTIEF’s borrowing sources
We anticipate that capital expenditure in 2014 will be
and lessened dependence on the mainstream banking
below the prior-year level. A large share of the total will
sector. The long-term financing arrangement also ex-
once more be in the HOCHTIEF Asia Pacific division,
tended the maturity profile of the Group’s debt portfolio
which incurs capital expenditure in the profitable, capi-
through to 2020.
tal-intensive contract mining business. The utilization
of mining equipment will be further optimized and imThe second quarter of the reporting year additionally saw
proved in 2014 by the established mining contract serv
Leighton secure the refinancing of a three-year EUR
ices company (“FleetCo”). Strategic acquisitions are
460 million syndicated cash advance facility. This offer-
also planned in selected key markets where we already
ing, too, was heavily oversubscribed thanks to strong
have a presence.
investor demand, prompting Leighton to expand the facility to EUR 766 million (AUD 1 billion).
It is notably these aspects of our financing strategy that
give the HOCHTIEF Group the leeway and security to
implement our strategic goals.
Risk Report
Risk management at HOCHTIEF encompasses all
and lays down the Group-wide framework for risk
o rganizational processes designed to detect risk as
management. To supplement this directive, the Group
well as to develop and implement suitable counter-
divisions have produced their own organizational in-
measures. A risk is defined as any contingency with a
structions for the identification, assessment, and man-
potential negative impact on the attainment of qualitative
agement of risks, developed with their specific circum-
or quantitative business goals, particularly earnings or
stances in mind.
liquidity.
Corporate Auditing, as an independent function, reviews
Our risk management processes enable the active
and assesses compliance with requirements and the
management of identified risks to ensure the Group’s
effectiveness of the installed systems and processes.
continuing ability to operate as a going concern,
The audit departments carry out compliance, risk, and
maintain jobs, and secure HOCHTIEF’s onward devel-
organizational audits on the basis of risk-focused audit
opment; risk management is thus an integral part of
plans and additionally assess the effectiveness of the
our overall management system. We concentrate on
installed systems and processes. The program is sup-
optimized risk awareness throughout the workforce
plemented by ad-hoc special audits. As material foreign
by improving organizational processes at all levels and
subsidiaries, Turner and Leighton additionally have
communicating risk in an open manner.
their own independent audit functions. The audit findings are used to optimize the early detection and
Improving risk management
management of risk.
risk management at HOCHTIEF as we consider a well
Risk inventories and forecasts are compiled three times
functioning risk management system to be a key driver
a year at project level and the resulting information is
of profitability. Our goal is to sustainably increase re-
aggregated to Group level. This approach brings in
turns by reducing risks and managing them effectively.
managers at all levels of the corporate hierarchy. The
This involves fine-tuning the selection criteria for pro-
risk report contains information on the potential impact
cessing acquisition offers and project bids as well as
of a risk, its probability of occurrence, the risk category,
making additional improvements to the subsequent
the possible time scale, and any measures that have
project monitoring throughout the Group by implement-
already been taken to avert the risk.
We have upheld our focus on ongoing optimization of
ing best-practices solutions, all of which ensures that
we will be even more effective in avoiding loss-making
Above and beyond the quantitative risk assessment,
projects. We will also respond faster to changing mar-
HOCHTIEF considers it particularly important for risks
kets and give greater emphasis to employing the most
to be discussed openly by management. A Risk Man-
suitable staff for each project. On the whole, a more
agement Steering Committee, which includes represen-
entrepreneurial approach will allow risks to be identi-
tatives of the divisions and the corporate departments,
fied and eliminated earlier, and managed better. To this
has been established for this purpose. The Steering
end, new approval and reporting processes will be in-
Committee looks at reported risks from the perspective
troduced for large-scale projects in order to enhance
of both the divisions and the HOCHTIEF holding com-
transparency and risk awareness in all phases of the
pany, coordinating and adopting countermeasures in
project. A department is being established at Group
the process. The Steering Committee’s findings are
level to manage risk on large-scale projects.
prepared for the Executive Board by Corporate Controlling. The risk position is discussed at scheduled
HOCHTIEF Group early warning system
intervals at the meetings of the Supervisory Board’s
A Group Risk Management directive that is accessible
Audit Committee. Risk scenarios are also generated
to all employees sets forth uniform guidelines for deal-
routinely in the course of forecasting and planning as
ing with risk, describes the structure and procedures,
well as in specific cases.
Annual Report 2013
119
Project risk management
project. This likewise applies to clients, owners, and
end users requesting coverage for risks such as fire
and interruptions to business after construction work
Acceptance
AbnahmeAudit
audit
Risk Management Solutions portfolio is rounded out
Contract
Review
Committee
by its subsidiary, Builders Reinsurance S. A. in Luxembourg, which primarily offers reinsurance for construction work, subcontractor default, and liability risk. The
ce ser vic
Develop
Build
KonzesBau
company has been awarded an A- (“excellent”) rating
Bid audit
Operate
Dienst-
relation to the financial reporting process
leistungen
Ris
ent t
Risk m a n ag e me men
i ko m a n a g
LiquiditätsLiquidity
Management
management
from A. M. Best Rating.
Internal control and risk management system in
es
In s
sionen und
Betrieb
ce ser vic
ura n
Entwicklung
u ra n
Sorgfältige
Careful
Auswahl
selection der
of
Partner
partners
has finished. The HOCHTIEF Insurance Broking and
Ins
Evaluation
länderspeziof countryfispecifi
schercRisiken
risks
Investment
Investitionsausschuss
Committee
c
Va l u e r ea t ion
c
We r t s h ö p f u n g
AusführungsExecution
Audit
audit
es
The chart shows the elements of risk management
at HOCHTIEF. Key among
these are the Investment
Committee for risk avoid
ance, the Risk Management
Steering Committee for
monitoring and managing
identified risks, and the divisional contract review committees.
Contract
review
Credit
Bonitätsprüfung
check
Reliable and accurate financial reporting is of key significance in making management decisions as well as in
providing investors and lenders with information. Risks
associated with the Group financial reporting process
are dealt with in a variety of ways at the HOCHTIEF
Group. To ensure uniform financial reporting and meas
**International Financial
Reporting Standards
Project risk management
urement throughout the Group, IFRS** Accounting
The risk situation is subject to ongoing monitoring.
Guidelines based on the current IFRSs as endorsed by
New, material risks arising at short notice are reported
the EU are updated each year. A set of German Com
to risk managers separately from the standardized
mercial Code (HGB accounting guidelines is also
process.
updated annually for the German Group companies.
Working in close consultation with Corporate Account-
Within the HOCHTIEF risk management system, the
ing, our subsidiaries are responsible for adhering to the
Investment Committee plays a key role in risk avoidance.
Group-wide accounting policies in their financial state-
This committee ensures that all equity stakes and in-
ments.
vestments are assessed in line with uniform, generally
accepted principles and are only approved if they meet
Accounting for deferred taxes and financial instruments
strict criteria.
is carried out in close consultation with the Tax corporate department and Corporate Finance in order to
*For more detailed information,
please see “Opportunities” on
page 129.
In addition to risks, the planning and forecast reports
guarantee the reliability and accuracy of the figures
submitted to the Executive Board also outline the
processed by these departments as well. The measure-
opportunities HOCHTIEF faces. There is no offsetting
ment of derivative financial instruments is additionally
of risks and opportunities*.
supported by a treasury management system established throughout the industrial and banking sectors.
HOCHTIEF Insurance Broking and Risk Manage-
HOCHTIEF also makes use of external service providers,
ment Solutions as a part of Group-wide manage-
for example, for the measurement of pensions obliga-
ment of insurance and risk
tions.
As a HOCHTIEF subsidiary under the direct ownership
of the holding company, HOCHTIEF Insurance Broking
The correct performance of capital, liability, expense,
and Risk Management Solutions ensures that the nec-
and income consolidation and interim profit elimination
essary insurance cover is in place in all phases of our
is ensured by IT-supported preparation of the consoli-
projects and is thus a part of Group-wide risk manage-
dated financial statements and systems for validating
ment. The insurance protection covers infrastructure
the figures generated. Should inconsistencies none-
projects, real estate, and facilities alike—before, during,
theless emerge, these are investigated and remedied
and after construction. The company also offers its
by Corporate Accounting. In addition, the consolida-
services to third parties, primarily those involved in a
tion system utilized by the Group is access-protected
Annual Repor
Risk Report
to ensure that employees are only able to access the
liquidity risks through existing holdings of cash resources.
data of relevance to them. The consolidation system
We are also continuing to implement the measures in-
has been reviewed by the internal audit function. The
troduced to reduce tied-up capital.
latter also performs a Group-wide review of the internal control, management, and monitoring systems in
In light of this analysis, there is no identifiable risk to
all divisions using a risk-based approach, notably tak-
HOCHTIEF’s future financial position and results of
ing into account uniform application of the existing
operation that might raise doubt about the entity’s
IFRS and HGB guidelines.
ability to continue as a going concern.
Risk classification
The overall risk identified at HOCHTIEF primarily re-
In the following, risks are classified according to ex-
lates to the risk categories covered in the following.
pected value as “low”, “medium”, and “high”. A risk’s
expected value is its probability of occurrence times
Project and contract risk
its potential impact on the Group’s financial position,
Most project and contract risks arise in the main-
financial performance, and cash flows.
stream construction activities and the mining business
in HOCHTIEF’s divisions. HOCHTIEF Solutions AG is
Risk position at the HOCHTIEF Group
also exposed to risk in its real estate development ac-
The overall risk position of the HOCHTIEF Group is
tivities and its PPP projects. All projects are subject to
determined by adding the expected individual risk ex-
cost risk.
posures and comparing them with projected earnings
and the liquidity forecast. In addition, expected risk ex-
Acquisitions of equity stakes, real estate investments,
posures are aggregated at Group level by division and
development projects, PPP projects, and outsourcing
risk category. The Risk Management Steering Com-
projects are carefully appraised in a structured process.
mittee assesses the interactions between individual
Projects above a certain volume or risk level must also
risks and takes this into account in risk quantification.
undergo this approval process. HOCHTIEF attaches
A high level of transparency results from the ongoing
importance to operating practical, effective mechanisms.
evaluation of the risk situation during the course of the
year, which enables early identification of any changes
The early warning system at our U.S. subsidiaries Turner
in risk structure.
and Flatiron is supplemented by the Contract Review
Flatiron, which fulfill a role similar to that of the Contract
the sale of the airports business to a subsidiary of the
Review Committee in HOCHTIEF’s Europe division.
Public Sector Pension Investment Board of Canada
Monthly business risk analyses are compiled in all of
(PSP Investments), which meant that the Group was
Turner’s business units and collated in a risk memoran-
no longer exposed to the associated risks. In addition,
dum. Risk management has been improved at Flatiron
an agreement was reached with the City of Hamburg
by fine tuning the criteria for selecting projects, tightening
regarding the Elbe Philharmonic Hall project, which had
the selection criteria as regards project risk, enhancing
negatively impacted earnings in 2012. The continuation
the efficiency of contract management, and implement-
of building work at an agreed fixed price was officially
ing new IT project reporting tools in particular. At Flatiron,
decided on in the spring of 2013, and the parties signed
monthly earnings meetings are held on all significant
the contracts in April. The risk associated with our Greek
projects for early detection of risks. The intensified com-
toll road projects has been reduced substantially based
petition in the civil engineering market had previously
on our agreement with the Greek government on re-
been weighing on Flatiron’s margins. Individual project
structuring the projects in the year under review.
risks exist, for example, in connection with the Canadian
Committee at Turner and the Bid Review Committee at
The risk situation in 2013 improved in particular due to
ILM project, a joint venture for the construction of aboveOur financing and liquidity situation, which was sub-
ground transmission lines. Here, cost increases led to
jected to intense scrutiny against the backdrop of the
claims for change orders against clients, planning offices,
euro crisis and the financial crisis, remains on a sound
and subcontractors. We classify the risk of not being
basis. HOCHTIEF is able to compensate for any identified
able to fulfill change orders as low.
Annual Report 2013
121
In HOCHTIEF’s Asia Pacific division, the division’s main
among the contract parties. Projects are not approved
company Leighton lays down directives for the risk
until there are binding offers from subcontractors for
management system that are in line with the Group direc-
key trades and materials. As a rule, escalator clauses
tive. As a key component of Group governance, Leigh-
reduce the risk of price increases. This approach sup-
ton’s risk management system was further revised in the
ports HOCHTIEF in its aim to further reduce risk in the
reporting year. Substantial improvements in risk identi
mainstream construction business through partner-
fication, appraisal, and control have been achieved by
ship-based contracting models.
appointing a Chief Risk Officer and establishing a Tender
Review and Risk Committee. Leighton’s risk management
In the HOCHTIEF Europe division, the Elbe Philharmonic
focuses on early risk detection in its operating subsidi
Hall project in Hamburg is on track after an agreement
aries. Project committees decide on the basis of a wide
was reached with the City of Hamburg during the re-
range of project-specific criteria whether a project is
porting period following the official decision in the spring
approved, conditionally approved, or declined.
of 2013 on the continuation of construction and the
signing of the related contracts in April by the parties
Substantial cost increases relating to the Gorgon
involved. The ongoing legal proceedings were there-
Jetty & Marine STR project led to corresponding claims
fore closed.
against the client that are currently being negotiated.
These claims for change orders have been recognized
Although HOCHTIEF generates a high volume of sales
in the consolidated financial statements at their ex-
with individual trading partners, it is not dependent on
pected recoverable amount. The same applies to the
any one client or supplier. Credit risk is reduced through
residual claims from two projects for the Iraqi oil in-
client credit checks and by obtaining guarantees for
dustry. We assess the probability of occurrence as
amounts owed. HOCHTIEF’s procurement management
low.
ensures that only capable operating partners are select-
ed. By maintaining a constant watch over the market and
All prospective acquisitions and bids likewise undergo a
close contact with suppliers and institutions, we ensure
risk classification procedure in the HOCHTIEF Europe
that we can quickly spot changes on the procurement
division, with all bids being assessed by a Contract
market and respond accordingly.
Review Committee made up of competent specialists.
Risk auditors watch over projects from bid preparation
Contracts usually specify which risks lie with the client.
through contract award to handover to the client. In
Risks arise for HOCHTIEF if the value of change orders
addition, the internal audit function regularly analyzes
cannot be recouped. Moreover, the project execution
domestic and international projects for technical,
phase also poses the risk of not being able to meet
commercial, and legal risk.
ambitious completion dates.
We saw further success with our restructuring meas
Earnings from a project can be impacted during the
ures in 2013. Restructuring of HOCHTIEF Solutions is
execution phase by factors such as unexpected circum-
proceeding according to plan as seen in the establish-
stances on the ground differing from those in the bid
ment of the operating subsidiaries HOCHTIEF Building,
invitation. Project and contract risks are generally rec-
HOCHTIEF Infrastructure, HOCHTIEF Engineering, and
ognized in the HOCHTIEF Group as set forth in the
the existing HOCHTIEF PPP Solutions. Margins on
applicable accounting guidelines as well as during on-
new projects have improved, and risk is fairly distributed
going project assessment. The commercial viability of
Risk Report
projects often depends on the extent to which claims
is combating economic crime. The HOCHTIEF Code of
for supplementary work can be billed on to the client.
Conduct and various Group directives and circulars
lay down the conduct expected from employees. Em-
Risk arising from legal disputes and third-party
ployees are provided with comprehensive information
claims
on compliance topics, both on the intranet and through
HOCHTIEF aims to avoid court cases wherever possible.
web-based e-learning programs with which employ-
We are party to various lawsuits and arbitrations both
ees are required to take training. There is also regular
in Germany and abroad. The outcome of legal disputes
classroom-based training. All members of the work-
is difficult to predict. We consider the provisions recog-
force are called upon to play an active part in imple-
nized for ongoing cases to be adequate.
menting the compliance program within their area of
responsibility. In addition, the compliance program is
A class action is pending against Leighton Holdings
reviewed on a regular basis and adapted where nec-
Limited alleging that insufficient information was sup-
essary.
plied to the capital markets pursuant to the disclosure
obligations of the 2001 Australian Corporations Act.
HOCHTIEF also expects compliance with certain stand
Leighton Holdings Limited has categorically denied
ards of conduct from suppliers and other contracting
this accusation. In October and November 2013, alle-
parties in order to avoid corruption risk. This minimizes
gations relating to the Leighton Group’s international
risk due to criminal acts.
business practices were made in the Australian media.
The Leighton Group takes all allegations or sugges-
Investment risk
tions of impropriety s eriously. It is deeply concerned
In May 2013, HOCHTIEF agreed on the sale of its air-
about inaccuracies in the news coverage and the sen
ports business to a subsidiary of the Public Sector
sational nature of the media reporting on the matter.
Pension Investment Board of Canada (PSP Investments).
in HOCHTIEF AirPort GmbH, Essen, were transferred
the subject of either an ongoing confidential investiga-
with economic effect as of January 1, 2013.
The sale was completed in September and all shares
The press articles concentrated on matters that are
tion by the Australian Federal Police or litigation commenced by Leighton Holdings. Leighton is not aware
Only the change-of-control risk arising from the articles
of any new allegations or instances of any breach of
of association of the consortium company for the
Leighton’s ethical guidelines or Code of Business Con-
Budapest Airport thus may continue to exist as a ma-
duct being raised by the articles.
terial risk. Under the provisions of the consortium company’s articles of association, fellow members along-
The Leighton Board and management condemn any
side the former HOCHTIEF AirPort GmbH—which was a
form of corrupt or fraudulent behavior.
wholly owned subsidiary of HOCHTIEF Aktiengesellschaft
until finalization of the disposal of its airport holdings on
Our compliance* program reduces antitrust and cor-
September 27, 2013—were entitled to exercise a put
ruption risk as well as ensuring that the organizational
option and hence to offer their investment in the consor-
precautions are in place to secure compliance with
tium for sale to the former HOCHTIEF AirPort GmbH at
the rules by the Company, its decision-making bodies,
a price to be determined based on agreed procedures if
and its workforce. Another top priority for HOCHTIEF
a change of control occurred at the level of HOCHTIEF
Annual Report 2013
123
Aktiengesellschaft. One fellow member declared its
We cannot preclude the eventuality that it may be neces-
exercise of the put option and filed for arbitration. Arbi-
sary to recognize impairment losses on our subsidiar-
tration proceedings have been pending since 2011. It is
ies and associated companies in isolated cases in the
not yet possible to state precisely when the arbitrator’s
future, both in the consolidated financial statements
decision can be expected. There is a risk that if the exer-
and in the annual financial statements of HOCHTIEF
cise of the put option and the resulting selling price pay-
Aktiengesellschaft.
ment is found to be legally effective, this will negatively
*For more detailed information
on our markets, please see
pages 32 to 39 and the Segment Report on pages 100 to
113.
impact our profitability and earnings and liquidity posi-
Market risk*
tion. We assess such risk as medium.
Global economic growth of 3.0% was registered in the
reporting year, representing a decline of 0.1 percentage
Within the HOCHTIEF Europe and HOCHTIEF Asia
points from the prior year. In 2014, the global economy
Pacific divisions, concession projects, which generally
is predicted to grow by 3.7%. However, forecasts for
have a very long contract term, pose specific risks,
the individual countries vary greatly. We keep a close
among other things due to the need to estimate future
watch on developments in our target markets. The over-
business growth as well as to cost operation and
all economic situation poses risks notably due to the
maintenance expenditure. On concession projects in
persisting debt crisis in the euro area, ongoing political
the transportation infrastructure segment, HOCHTIEF
unrest in the Arabian region and in Indonesia, and ex-
either guarantees a particular level of availability or
change rate movements.
assumes the risk relating to future utilization levels.
We assess possible concession risks as low.
Despite the recent signs of an economic growth slowdown
in key Asian markets for thermal coal and the attendant
The risk associated with our Greek toll road projects
fall in the price of this commodity, the contract mining
(HOCHTIEF Europe) has been reduced substantially
segment in the HOCHTIEF Asia Pacific division has report-
based on our agreement with the Greek government
ed new contracts and significant renewals of ongoing
on restructuring the projects in 2013, which resulted
contracts. On the whole, the market outlook is viewed
in a tenable, long-term solution. We have classified the
as positive.
residual risk as low.
Demand for infrastructure projects depends heavily on
In the HOCHTIEF Asia Pacific division, impairment
individual countries’ budgetary situation. In particular,
losses were recognized on individual Leighton invest-
the U.S. government’s austerity drive is making itself felt.
ments in the year under review. The situation stabilized
Should these austerity measures continue, the risk
in the reporting year following the impairment losses
exists that our planned level of new orders will not be
still recognized on the Habtoor Leighton Group in the
fully achieved.
previous year. The company succeeded in winning
numerous new, large-scale contracts, making us opti-
Based on our good market position and our broad
mistic about its future performance. For example, the
international market lineup, we estimate the general
Habtoor Leighton Group secured a contract worth approx-
market risk for HOCHTIEF to be low.
imately EUR 320 million to construct the Al Habtoor City
Residential Towers in Dubai in addition to a contract for
various construction works in connection with the expansion of Abu Dhabi Airport, where the project volume
totals around EUR 124 million. Despite these numerous
new contracts, we cannot rule out additional impairment losses on the carrying amount of the investment
or on loan receivables. We assess this risk as low.
Risk Report
Regulatory risk
After issuing the first bond in its corporate history for
Changes in the legal framework at national or European
a principal amount of EUR 500 million in March 2012,
level entail risks that may impact our earnings situa-
HOCHTIEF issued a second corporate bond in March
tion. In legal systems with tendering regulations that
2013 for a principal amount of EUR 750 million and a
mostly prohibit two companies from the same group
term of seven years. The bond carries a coupon of
from bidding (e.g. Canada and the USA), there is a risk
3.875% per annum.
that only one company from the ACS Group may be
allowed to participate.
This continuing utilization of the international capital
market has increased the diversification of HOCHTIEF’s
HOCHTIEF’s business activities also include public-
lenders, thus reducing its dependence on the banking
sector contracts. To undertake such contracts, con-
sector even more and lowering the HOCHTIEF Group’s
tractors are required to provide a wide range of sure-
liquidity risk.
ties. In the USA, these are provided by surety companies
on the basis of the HOCHTIEF Group’s credit stand-
Financial covenants** on the syndicated and bilateral
ing. In terms of the size of the commitment, HOCHTIEF’s
credit facilities that trigger lenders’ rights to call in loans
bonding capacity is among the largest bonding facil
if violated are monitored continually, and are currently
ities in the USA. On the basis of HOCHTIEF’s credit
rated as non-critical. No financial covenants are featured
standing, a new surety program was established with
in the bond documentation to the HOCHTIEF corpo-
a larger facility during the year under review.
rate bonds.
We have classified the regulatory risk for HOCHTIEF
The Group also has bilateral, short-term credit facil
as low.
ities to finance day-to-day business and prevent liquidity
Financial risk*
newed annually for a year at a time. New lenders are
Coordinating financial requirements within the Group
recruited for the provision of short-term funds as re-
and safeguarding its long-term financial independence
quired. The cash position is continuously monitored,
is a central task in the financial management process.
and our cash planning is supplemented with stress
HOCHTIEF achieves this goal with sound Group financ-
tests.
*For further information on our
financial risk management system, please see pages 193 et
seq.
ing secured for the years ahead and by limiting financial risk.
Most HOCHTIEF subsidiaries largely operate in a single
currency region and therefore do not face any material
Financial activities in the HOCHTIEF Group are con-
currency risk.
ducted on the basis of a Group-wide financial framework directive. Alongside this general d
irective, there is
Transaction risks on transfers of profits from interna-
a financial risk directive that is supplemented by further
tional subsidiaries to HOCHTIEF Aktiengesellschaft
individual, function-specific operating directives. In addi-
are promptly hedged by entering into appropriate for-
tion, responsibilities within the Group are strictly sepa-
ward foreign exchange contracts.
rated between financing and trading activities on the one
hand and the corresponding control and settlement
We minimize market risk, particularly the risk of inter-
activities on the other. All trading transactions are com-
est rate changes, by locking in interest rates for the
pulsorily subject to dual control at minimum. Compli-
longest available terms. Any variable-rate borrowing
ance with all directives and requirements is checked and,
that may be necessary is hedged in each instance by
if necessary, fine-tuned by the internal audit function at
selective use of interest rate derivatives with matching
least once a year.
maturities. Project-related borrowing is hedged as
needed in accordance with term and volume.
Annual Report 2013
125
shortfalls. These short-term liquidity facilities are re-
Derivative financial instruments such as interest-rate
Personnel risk
swaps and currency options are not permitted to be
Particularly in the case of large-scale projects, our fi-
used for speculative purposes. These are used solely
nancial success depends on the extent to which we
to hedge potential risks from existing transactions.
succeed in gaining the loyalty of experienced engineers and qualified specialist personnel. The aim of
Risk can arise at HOCHTIEF from investments in
our human resources strategy is to improve our em-
stocks and funds. We minimize this risk through con-
ployees’ qualifications and motivation and retain them
stant market monitoring and analysis. This enables
long-term. Employee surveys leverage the potential
timely, active management of the risk relating to the
for improvement within the company. The findings of
investments.
these surveys are acted upon, and a tailored development plan is offered in order to prevent the risks asso-
The Group’s main long-term financing agreements con-
ciated with employee dissatisfaction.
tinue to include change-of-control clauses which, however, do not apply in the case of ACS Group companies.
Occupational safety, health, and environmental pro-
The existing, comprehensive ring-fencing clauses for
tection are given high priority at HOCHTIEF and are
transactions with ACS have been either r etained unmodi-
coordinated centrally by the OSHEP Center. The aim
fied or built into new credit facilities and the bond doc-
is to further reduce accident and health risks for em-
umentation. The ring-fencing includes an undertaking
ployees, subcontractors, and third parties.
by HOCHTIEF to lending banks and bondholders not to
enter into any agreement with ACS that would weaken
see pages 73 to 74 and pages
86 to 89.
see pages 86 to 89.
We assess the possible personnel risk as low.
HOCHTIEF’s credit standing.*
Risk arising from pension obligations
Subject to certain conditions, a change of control**
No material risks are currently apparent with regard to
may necessitate early refinancing or additional financ-
HOCHTIEF’s company pensions. The associated risk
ing within the HOCHTIEF Group.
is therefore classified as low. The switch from defined
benefit pension plans to defined contribution arrange-
****For further information,
please see pages 152 and 183
et seq.
***For further information,
please see pages 86 to 89.
Certain financing agreements concluded by HOCHTIEF
ments, where the costs to the company are predictable,
and project agreements entered into by subsidiaries
was made several years ago. Pension obligations in
contain change-of-control provisions that, subject to
Germany are largely covered by HOCHTIEF Pension Trust
certain conditions, grant the other parties to those
e. V. and pension liability insurance, and are backed by
agreements certain rights, including rights of termina-
sound assets.**** All new pension commitments at
tion, put and call options, or a right to cash collat
Leighton, Turner, and Flatiron follow the defined contri-
eral.***
bution model.
Thanks to our efficient financial management, we
assess our financial risk as low.
Risk Report
Risk associated with information security
Executive Board’s overall assessment of risks
HOCHTIEF counters IT risks by working together with
The HOCHTIEF Group’s approach to risk management
capable service providers. IT service categories are
is currently being restructured and recalibrated. In
clearly set out in service certificates forming part of our
2013, we introduced numerous initiatives to improve risk
service contracts. Compliance with availability and
management and put initial measures in place. As part
data security service levels is ensured by stipulating
of best-practice solutions, optimized standards for proj-
measurable targets. We see to it that business-critical
ect controls and methods of execution are currently
systems have a high level of availability. The deploy-
being implemented Group-wide. Notably in large-scale
ment of modern hardware and software combined
projects, we have significantly improved risk transpar-
with digital and physical access control protect data
ency in all project phases. On the whole, this more en-
from unauthorized access. Key data is kept in certi-
trepreneurial approach will allow risks to be identified
fied, redundant, geographically separate data centers.
and eliminated earlier, or managed better, in order to
Regular external penetration tests verify the ability of
lower earnings volatility and increase returns on a
our firewall systems to withstand attacks from the Inter-
lasting basis.
net. Confidential data and files are protected by using
encryption systems covering areas such as data stor-
The Group’s overall risk slightly improved in 2013 com-
age and e-mail.
pared with the prior year. The risk from equity holdings in particular has fallen due to the sale of our air-
Our IT security directive, which applies to the HOCHTIEF
ports business. From today’s perspective, there are
Europe division as well as to the HOCHTIEF Americas
no risks that might cast doubt on the HOCHTIEF
division with respect to security aspects, is continu-
Group’s ability to continue as a going concern based
ously refined with the support of experts and verified by
on the probability of occurrence and impact of the
audits both in Germany and internationally.
risks described. We assess the Group’s risk-bearing
capacity as sound based on our good financial position and results of operations.
In cooperation with the Group’s Data Security Officer,
our service providers ensure that personal data are
only processed in accordance with the requirements
of the German Federal Data Protection Act. HOCHTIEF
has not yet had any notable IT incident. We estimate
that the risk will continue to remain low also in the
future.
Annual Report 2013
127
Quality supreme: The JW Marriott Hotel
Our U.S. subsidiary Turner took charge of construction management for the JW Marriott Hotel in Vietnam’s capital Hanoi.
With over 450 beds and a total area of 75,000 square meters,
the five-star-plus establishment stands on a pedestal over
an expanse of water. The idea for the design of this outstanding luxury property was inspired by figures from Asian mythology, and the silhouette of the complex echoes the shape
©Carlos Zapata Studios
of a dragon.
Opportunities
Opportunities in key HOCHTIEF markets*
and this will likely continue in 2014 with an overall growth
We see numerous opportunities to expand our core
increase of 5.4%.
business in the key markets most relevant to HOCHTIEF.
Our successful strategic positioning puts us among the
Middle Eastern countries continue to present promising
leaders in the competitive field. As one of the industry’s
opportunities for new business. Qatar above all is
most internationally oriented players, we are on the map
becoming one of the most important markets as con-
in all the world’s major construction markets. These in-
struction activity picks up ahead of the 2022 FIFA
clude large parts of Europe, the Americas, Australia, Asia-
World Cup. Construction business is therefore expected
Pacific, and the Gulf region. We generate more than
to boom there over the next ten years. The government
90% of sales outside Germany. This global footprint
is promising to invest in buildings and infrastructure
means HOCHTIEF can balance out regional market
projects, with the lion’s share going into mega projects
fluctuations.
in the tourism, transportation infrastructure, healthcare,
see the Markets section on
pages 32 to 39.
education, and residential construction sectors. We are
The latest forecasts for Europe’s construction market
strategically positioned with numerous subsidiaries and
make us optimistic for the future. After negative growth in
associated companies in the region and have already
2013, European construction markets are expected to
built up a very good reputation with construction work
regain a positive trend in 2014, thus bringing to an end
and services in various large-scale projects.
the recession in Europe. We expect additional business
in our European units due to closer collaboration among
If the markets relevant to us develop better than expected,
the companies brought together under the new
this could have a positive impact on our sales, earn-
HOCHTIEF Solutions AG as well as through cooperation
ings, and cash flows, thus enabling us to exceed our
with other Group subsidiaries. HOCHTIEF Solutions will
guidance.
also continue to exploit market opportunities outside of
Europe, such as in the Gulf region and South America.
Opportunities from focus on core business
in the profitability and efficiency of HOCHTIEF, the ob-
is unchanged relative to the prior year. For 2014, the
jective being to become the world’s most relevant infra-
experts at IHS Global Insight forecast a growth surge in
structure construction group. We focus on the segments
the U.S. construction market, most of all in commercial/
of transportation, energy, social and urban infrastructure,
industrial construction, as well as in energy infrastructure.
and contract mining. These strategic segments offer
The Canadian construction market is projected to grow
all Group divisions attractive business opportunities and
at a faster rate overall in 2014 than in the prior year. The
development potential. In the year under review,
North American market continues to hold great poten-
HOCHTIEF’s operational units once again won and
tial, especially for new public-private partnership projects.
successfully delivered numerous projects in our core
We expect this trend will persist in the years ahead and
business.
Our strategy is all about achieving a sustained increase
The trend on the overall construction market in the USA
that we will be able to step up our activities in the fastgrowing market segment for PPP infrastructure projects.
Worldwide, our companies and units build roads, bridges,
The Asia-Pacific region is still one of the world’s most
tunnels, ports, railroads, and airports, putting in place
promising growth markets, with the outlook once again
the infrastructure necessary for our society’s growing
bright for India and the South-East Asia region in par-
mobility requirements. Transportation infrastructure
ticular in 2014. The construction sector in these countries
projects are heavily dependent on the budgetary situa-
remains on a growth path. This harbors many opportu-
tion of individual governments. We see major growth
nities for our Group company Leighton. The construction
potential in Europe, notably in light of the positive over-
market in Australia also showed a positive trend in 2013,
all economic trend and the foreseeable end to the re-
Annual Report 2013
129
cession in the euro zone. Within the HOCHTIEF Europe
driven by growing oil and gas production and partly by
division, there are many opportunities for our European
Canadian government investment in renewable energy.
subsidiaries to secure new contracts in the transportation
infrastructure segment.
In the HOCHTIEF Asia Pacific division, the Leighton Group
is delivering numerous highly advanced energy infra-
In the HOCHTIEF Americas division, Turner and Flatiron
structure projects. Sustained investment in the extraction
contribute with numerous projects to the development of
of coal seam gas as well as in the expansion of lique-
transportation infrastructure. There is an ongoing strong
fied natural gas capacity presented many new business
need for transportation infrastructure projects across
opportunities in the year under review. Further large-
North America. While demand in the USA is down
scale projects offer yet more opportunities.
because of the government austerity program, there is
large growth potential in Canada thanks to high levels
of government investment.
We also have positive news to report from the social and
urban infrastructure segment. The trend toward urbani
The companies in the HOCHTIEF Asia Pacific division are
zation is creating strong demand for solutions that create
currently involved in a number of trailblazing transpor-
contemporary, cutting-edge living and work spaces.
tation projects and have succeeded in securing further
The work of HOCHTIEF Group subsidiaries Turner and
attractive large-scale infrastructure projects. In the
Flatiron shapes the cityscapes of major conurbations
medium term, the level of investment in transportation
in America. Our subsidiary Turner has been among the
infrastructure in Australia will be driven up most of all
leading providers in the U.S. green building segment
by inner city congestion, a huge backlog of projects, and
for years. The Leighton Group contributes to the devel-
a healthier situation in public finances.
opment of cities in Australia through a range of projects.
Shaping major cities offers the HOCHTIEF Group a raft
If government investment means that demand for trans-
of business opportunities. We identified the potential
portation infrastructure grows faster than currently
here early on and expect the positive trend in this mar-
expected, this could have a positive effect on our sales,
ket segment to continue in the years ahead. This will
earnings, and cash flows.
enable us to secure large numbers of new contracts
across all divisions.
HOCHTIEF Solutions has consolidated its position in
Contract mining
the energy infrastructure segment in Europe. By nature,
Demand for commodities continues to rise across the
the energy market is strongly influenced by technical
globe. Our Group company Leighton is the world’s
and political developments as well as by the availability
largest contract miner. In Australia and Asia, we primarily
of natural resources. The EU Commission is currently
mine iron ore and coal. We once again won major new
driving forward the expansion of energy infrastructure
awards in the contract mining business during the re-
in Europe, with 250 large-scale projects in the pipeline.
porting year despite a decline in the outlook. Thanks to
In Germany, the outlook for the offshore sector has im-
their long contract terms, these projects deliver plan-
proved with the acceleration model for feed-in tariffs
ning certainty and lay the cornerstone for a sustained
on offshore wind farms extended to the end of 2019
performance trend.
under the new government coalition agreement.
The slowdown in economic growth across key Asian
We launched numerous new projects during the report-
economies in 2013 resulted in a significantly lower world
ing period for the development of pumped storage
market price for coal, with an attendant fall in produc-
power plants. This market is currently just evolving and
tion. In contrast, demand for iron ore continues to grow.
offers a wealth of opportunities.
Demand from China in particular has shot up in recent
years and is likely to increase further in the years to come.
We also see many opportunities in the energy infrastructure segment in North America. These are partly
Leighton will benefit substantially from this growth.
Opportunities
If demand for resources increases faster than expected,
Opportunities through a successful workforce
this could have a positive effect on our sales, earnings,
The performance, qualifications, and motivation of our
and cash flows.
employees are crucial to HOCHTIEF’s future commercial success. The company’s long-term projects call for
Growth opportunities through internal partner-
a focused human resources strategy to foster enduring
ships
loyalty in suitable employees as well as to provide indi-
National and international collaboration between our
vidual support for especially qualified and talented staff.
companies opens up additional growth potential for
It is our aim to further establish HOCHTIEF nationally
HOCHTIEF and creates added value for clients. This is
and internationally on the careers market as an attractive
particularly true of PPP projects. Close collaboration
employer and to offer appealing development prospects
between our companies is showing results right now in
for employees.
three projects on the North American market. In two
road projects in Canada and California as well as a
If we succeed in implementing our human resources
Canadian school project by HOCHTIEF PPP Solutions,
strategy better than expected, this could have a positive
the construction services are provided by our subsidi
impact on our business performance.
aries Turner, Flatiron, and Clark Builders respectively.
Sustainability sharpens competitive edge
Should the number of such cooperation projects in-
As a growth-oriented company, we step up to our re-
crease, this could have a positive effect on our sales,
sponsibilities toward society and the environment. With
earnings, and cash flows.
its projects, HOCHTIEF brings space to life. In doing so,
we impact the people who use them and the natural
Innovation as a key success factor
environment that surrounds them. Acting responsibly is
HOCHTIEF undertakes challenging building construc-
our obligation to the community—to present and future
tion and infrastructure projects for national and interna-
generations alike.
tional clients.
tegral part of our corporate strategy. The capital market
competition through top quality standards, innovative
likewise acknowledges our commitment to sustainability.
solutions, and a flexible approach. Our Group has long
In the reporting year, HOCHTIEF thus once again quali-
been one of the innovators in the construction industry
fied for inclusion in the respected Dow Jones Sustain-
and wins over clients time and again with new, tailored
ability Indexes. We are still the sole German construction
developments. Most HOCHTIEF projects are unique
group to be listed in the Europe Index. This means our
assignments shaped by custom solutions. Our projects
shares continue to be suitable for investors who base
incorporate a wide range of research and development
their portfolio decisions on sustainability criteria.
see our Sustainability Report
published concurrently with this
Annual Report or visit our website at www.hochtief.com/
sustainability.
Sustainability* accordingly has a long tradition as an inWe therefore endeavor to set HOCHTIEF apart from the
outcomes. HOCHTIEF will go on systematically promoting innovation management in 2014. We will also use
Forward-looking statements
ideas management to harness the potential of employee
Please see the next page for further information on for-
ideas for leveraging market opportunities and sustain-
ward-looking statements.
ing the Group’s onward development.
Annual Report 2013
131
This Annual Report contains forward-looking statements.
tions described or implied in such statements due to,
These statements reflect the current views, expectations
among other things, changes in the general economic,
and assumptions of the Executive Board of HOCHTIEF
sectoral and competitive environment, capital market
Aktiengesellschaft concerning future events and devel-
developments, currency exchange rate fluctuations,
opments relating to HOCHTIEF Aktiengesellschaft and/
changes in international and national laws and regula-
or the HOCHTIEF Group and are based on information
tions, in particular with respect to tax laws and regula-
currently available to the Executive Board of HOCHTIEF
tions, the conduct of other shareholders, and other
Aktiengesellschaft. Such statements involve risks and
factors. Any information provided on dividends is addi-
uncertainties and do not guarantee future results (such
tionally subject to the recognition of a corresponding un-
as profit before taxes or consolidated net profit) or devel-
appropriated net profit in the published separate finan-
opments (such as with regard to possible future divest-
cial statements of HOCHTIEF Aktiengesellschaft for the
ments, general business activities or business strategy).
fiscal year concerned and the adoption by the competent
Actual results (such as profit before taxes or consolidated
decision-making bodies of HOCHTIEF Aktiengesellschaft
net profit), dividends and other developments (such as
of appropriate resolutions taking into account the pre-
with regard to possible future divestments, general busi-
vailing situation of the Company. Aside from statutory
ness activities or business strategy) relating to HOCHTIEF
publication obligations, HOCHTIEF Aktiengesellschaft
Aktiengesellschaft and the HOCHTIEF Group may there-
does not assume any obligations to update any forward-
fore differ materially from the expectations and assump-
looking statements.
Post-balance-sheet events
On January 31, 2014, HOCHTIEF signed an agreement
There were no other material events to report between
for the sale of its equity interest in aurelis Real Estate
the close of 2013 and the editorial deadline for this
(43%) to an investor consortium led by funds managed
Annual Report.
and advised by affiliates of Grove International Partners
LLP, New York. Under the agreement, HOCHTIEF’s remaining 7% stake in aurelis Real Estate is sold to an independent investor. Grove is a private equity firm that
controls the other 50% of aurelis Real Estate. The sale
price is close to the carrying amount as of December 31,
2013. The sale of the stakes in aurelis Real Estate is
subject to approval by the competent German antitrust
authorities. The transaction is expected to close in the
first half of 2014.
It marks another significant step in the delivery of
HOCHTIEF’s strategy.
Annual Report 2013
133
Contract mining—
a focus of Leighton’s
business activities
MY
RESOURCE
HOCHTIEF’s Group company Leighton is the world’s
largest contract miner. Leighton’s subsidiary Thiess,
for example, operates the Melak Coal Mine in Indonesia.
Annual Report 2013
135
Financial
Statements
and Notes
Notes
to the
Consolidated
Financial Statements
OUR
RESERVES
HOCHTIEF Group Consolidated Financial
Statements as of December 31, 2013
Consolidated statement of earnings..........................................................................................................................137
Consolidated statement of comprehensive income................................................................................................138
Consolidated balance sheet........................................................................................................................................139
Consolidated statement of cashflows........................................................................................................................140
Consolidated statement of changes in equity..........................................................................................................141
Responsibility statement.............................................................................................................................................142
Independent auditors’ report......................................................................................................................................143
Notes to the consolidated financial statements.......................................................................................................144
Accounting policies...........................................................................................................................................................144
Explanatory notes to the consolidated statement of earnings...........................................................................................160
Explanatory notes to the consolidated balance sheet.......................................................................................................166
Other disclosures..............................................................................................................................................................193
Consolidated Statement of Earnings
Sales
Changes in inventories
Materials
Personnel costs
Other operating expenses
Profit from operating activities
Share of profits and losses of equity-method associates and jointly
controlled entities
Net income from other participating interests
Investment and interest income
Investment and interest expenses
Profit before taxes
Note
2013
2012
(restated)*
(1)
25,693,245
(77,851)
608,365
(17,680,296)
(5,472,911)
(734,891)
(1,476,550)
859,111
25,527,722
91,552
378,702
(17,311,983)
(5,535,747)
(918,738)
(1,636,448)
595,060
(7)
(7)
(8)
(8)
152,877
57,535
77,348
(347,052)
799,819
81,244
105,160
89,930
(329,970)
541,424
(9)
(158,728)
382,696
[155,230]
[227,466]
2.11
(2)
(3)
(4)
(5)
(6)
Income taxes
Profit after taxes
Of which: Consolidated net profit/(loss)
(10)
(254,460)
545,359
[171,196]
[374,163]
Earnings per share (EUR)
Diluted and undiluted earnings per share
(32)
2.37
(EUR thousand)
Annual Report 2013
137
Consolidated Statement of
Comprehensive Income
2013
2012
(restated)*
545,359
382,696
(365,648)
(45,129)
(144,079)
19,034
806
5,851
150,382
(4,685)
18,244
(322,067)
223,292
[53,712]
[169,580]
(83,465)
(126,622)
256,074
[39,285]
[216,789]
(EUR thousand)
Profit after taxes
Items that may be reclassified subsequently to profit or loss
Currency translation differences
Changes in fair value of financial instruments
Primary
Derivative
S
hare of profits and losses of equity-method associates and jointly controlled
entities recognized directly in equity
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans
Other comprehensive income (after taxes)
Total comprehensive income after taxes
Of which: HOCHTIEF Group
Consolidated Balance Sheet
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Equity-method investments
Other financial assets
Financial receivables
Other receivables and other assets
Non-current income tax assets
Deferred tax assets
Current assets
Inventories
Trade receivables
Current income tax assets
Marketable securities
Assets held for sale*
Liabilities and Shareholders’ Equity
Attributable to the Group
Subscribed capital
Capital reserve
Revenue reserves
Of which: Deduction for treasury stock
Accumulated other comprehensive income
Unappropriated net profit
Note
Dec. 31, 2013
Dec. 31, 2012
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
829,835
1,357,539
15,996
698,508
75,268
526,730
93,831
57,047
125,175
3,779,929
713,359
1,899,207
19,331
1,095,940
91,752
635,283
101,516
23,929
257,941
4,838,258
(20)
(16)
(21)
(17)
(18)
(22)
(23)
1,149,540
126,934
5,983,132
190,162
34,947
1,123,258
2,035,251
333,773
10,976,997
14,756,926
1,425,655
135,285
5,309,120
225,406
33,130
628,800
2,514,782
1,851,904
12,124,082
16,962,340
197,120
784,326
1,484,243
[344,450]
(315,574)
115,500
2,265,615
1,028,085
3,293,700
197,120
784,050
1,800,131
[89,138]
(217,939)
77,000
2,640,362
1,603,445
4,243,807
(26)
(27)
(28)
(29)
(19)
242,471
505,202
2,700,235
42,648
126,149
3,616,705
309,647
523,082
2,749,980
63,240
92,713
3,738,662
(27)
(28)
(30)
(29)
(31)
915,889
995,517
5,410,953
440,644
15,402
68,116
7,846,521
14,756,926
974,803
1,706,480
5,749,301
385,380
8,747
155,160
8,979,871
16,962,340
(24)
Minority interest
Non-current liabilities
Provisions for pensions and similar obligations
Other provisions
Financial liabilities
Other liabilities
Deferred tax liabilities
Current liabilities
Other provisions
Trade payables
Other liabilities
Current income tax liabilities
Liabilities associated with assets held for sale*
*For further information,
please see page 147.
(EUR thousand)
Assets
Annual Report 2013
139
Consolidated Statement of Cash Flows
(EUR thousand)
Profit after taxes
Depreciation, amortization, impairments, and impairment reversals
Changes in provisions
Changes in deferred taxes
Gains/(losses) from disposals of non-current assets and marketable securities
Other non-cash income and expenses (primarily equity accounting) and deconsolidations
Changes in working capital (net current assets)
Changes in other balance sheet items
Net cash provided by operating activities
Intangible assets, property, plant and equipment, and investment properties
Purchases
Proceeds from asset disposals
Acquisitions and participating interests
Purchases
Proceeds from asset disposals/divestments
Changes in cash and cash equivalents due to consolidation changes
Changes in securities holdings and financial receivables
Net cash provided by/(used in) investing activities
Payment for repurchase of treasury stock
Payments received from sale of treasury stock
Payments for the purchase of additional shares in subsidiaries
Payments out of equity to minority shareholders
Payments into equity by minority shareholders
Dividends to HOCHTIEF’s and minority shareholders
Proceeds from new borrowing
Service of debt
Net cash provided by/(used in) financing activities
Net cash increase/(decrease) in cash and cash equivalents
Effect of exchange rate changes
Overall change in cash and cash equivalents
Cash and cash equivalents at the start of the year
Of which: Included in assets held for sale
Of which: Cash and cash equivalents as per Consolidated Balance Sheet
Cash and cash equivalents at year-end
Of which: Included in assets held for sale
Of which: Cash and cash equivalents as per Consolidated Balance Sheet
* Restated for IAS 19R. For notes on the adjustment, please see pages 155 and 156.
Note 36
2013
2012
(restated)*
545,359
797,563
101,428
136,593
(27,740)
(374,902)
(971,902)
375
206,774
382,696
950,156
228,995
66,334
(133,876)
152,382
(666,997)
25,993
1,005,683
(913,569)
437,063
(1,214,630)
250,129
(520,969)
2,143,722
(16,720)
(534,138)
595,389
(566,732)
254,679
56,573
(232,329)
(1,452,310)
(255,552)
517
(198,390)
(124,862)
33,820
(431,221)
2,617,671
(2,757,684)
(1,115,701)
–
1,036
–
–
19,935
(151,178)
2,522,501
(1,663,800)
728,494
(313,538)
(176,754)
(490,292)
281,867
(37,044)
244,823
2,525,543
[10,761]
[2,514,782]
2,035,251
–
[2,035,251]
2,280,720
[15,899]
[2,264,821]
2,525,543
[10,761]
[2,514,782]
Consolidated Statement of Changes in Equity
Subscribed
capital of
HOCHTIEF
Aktien
gesellschaft
Capital
reserve of
HOCHTIEF
Aktien
gesellschaft
Revenue Remeasurereserves* ment of defined benefit
plans
(EUR thousand)
Balance as of Jan.
1, 2012
Dividends paid
Profit after taxes
and changes
in fair value of
financial instruments
Changes from
remeasurement
of defined benefit
plans
Total comprehen
sive income
Transfer to revenue
reserves
Other changes not
recognized
in the Statement of
Earnings
Balance as of
Dec. 31, 2012/
Jan. 1, 2013**
Dividends paid
Profit after taxes
and changes
in fair value of
Changes from
remeasurement
of defined benefit
plans
Total comprehen
sive income
Transfer to revenue
reserves
Other changes not
recognized
in the Statement of
Earnings
Balance as of
Dec. 31, 2012
Accumulated other
comprehensive income
Currency
Changes
translation
in fair value
differences
of financial
instruments
Unappropriated net
profit
Attribut
able to the
Group
Attribut
able to
minority
interest
Total
197,120
783,552
1,712,794
(156,444)
174,050
(119,600)
6,916
2,598,388
1,511,976
4,110,364
-
-
-
-
-
-
155,230
155,230
(151,178)
227,466
(151,178)
382,696
-
-
-
-
(25,174)
(7,432)
-
(32,606)
(10,551)
(43,157)
-
-
-
(83,339)
-
-
-
(83,339)
(126)
(83,465)
-
-
-
(83,339)
(25,174)
(7,432)
155,230
39,285
216,789
256,074
-
-
85,146
-
-
-
(85,146)
-
-
-
-
498
2,191
-
-
-
-
2,689
25,858
28,547
197,120
-
784,050
-
1,800,131
-
(239,783)
-
148,876
-
(127,032 )
-
77,000
(73,613 )
171,196
2,640,362
(73,613 )
171,196
1,603,445
(357,608)
374,163
4,243,807
(431,221)
545,359
-
-
-
-
(230,326)
94,604
-
(135,722)
(204,589)
(340,311)
-
-
-
18,238
-
-
-
18,238
6
18,244
-
-
-
18,238
(230,326)
94,604
171,196
53,712
169,580
223,292
-
-
59,083
-
-
-
(59,083)
-
-
-
-
276
(374,971)
19,849
-
-
-
(354,846)
(387,332)
(742,178)
197,120
784,326
1,484,243
(201,696)
(81,450)
(32,428)
115,500
2,265,615
1,028,085
3,293,700
*As of December 31, 2013, treasury stock with a purchase cost of EUR 344,450 thousand (2012: 89,138 thousand) was accounted for as a deduction from revenue reserves.
** Restated for IAS 19R. For notes on the adjustment, please see pages 155 and 156.
Annual Report 2013
141
Note 24
Responsibility Statement
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group,
and the Group management report, which is combined with the management report of HOCHTIEF Aktiengesellschaft, includes a fair review of the development and performance of the business and the position of the Group,
together with a description of the material opportunities and risks associated with the expected development of
the Group.
The Executive Board
Peter Sassenfeld
Independent Auditors’ Report
We have audited the consolidated financial statements—comprising Group statement of earnings, consolidated
statement of comprehensive income, Group balance sheet, statement of cash flows, statement of changes in equity,
and notes to the consolidated financial statements, prepared by HOCHTIEF Aktiengesellschaft, Essen/Germany,
as well as the group management report, which has been combined with the parent company’s management
report for the financial year from January 1, to December 31, 2013. The preparation of the consolidated financial
statements and the group management report in accordance with International Financial Reporting Standards
(IFRS), as applicable in the EU, and the regulations under German commercial law as complementarily applicable
under § 315a (1) German Commercial Code (HGB) is the responsibility of the Company’s Executive Board. Our
responsibility is to express an opinion on the consolidated financial statements and the group management report
based on our audit.
We conducted our audit of the consolidated financial statements in accordance with § 317 German Commercial
Code (HGB) in compliance with German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany). 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 consolidated financial statements in accordance with applicable accounting regulations and in the group management report are detected with reasonable assurance. Knowledge of
the business activities and the economic and legal environment of the Group and evaluations of 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 consolidated financial statements and
the group management report are examined primarily on a test basis within the framework of the audit. The audit
includes assessing the annual financial statements of the companies included in consolidation, the determination
of the companies to be included in consolidation, the accounting and consolidation principles used and significant
estimates made by the Executive Board, as well as evaluating the overall presentation of the consolidated financial
statements and the group 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, which is based on the results of our audit, the consolidated financial statements of HOCHTIEF
Aktiengesellschaft, Essen/Germany, comply with the IFRS, as applicable in the EU, and the regulations under German commercial law as complementarily applicable under § 315a (1) German Commercial Code (HGB) and convey a true and fair view of the Group’s net assets, financial position and results of operations in accordance with
these regulations. The group management report is consistent with the consolidated financial statements, conveys,
in the aggregate, a true and fair view of the Company’s and Group’s position and suitably presents the risks and
opportunities of future development.
Düsseldorf, February 21, 2014
Deloitte & Touche GmbH
Wirtschaftsprüfungsgesellschaft
(Schlereth) (Bedenbecker)
Wirtschaftsprüfer (German Public Auditor)
Wirtschaftsprüfer (German Public Auditor)
Annual Report 2013
143
Notes to the consolidated financial
statements
Accounting policies
General information
The Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the EU and with supplementary provisions of German commercial law applicable under Section 315a (1) of the German Commercial Code (HGB). The same accounting policies applied in the prior year.
Alongside the Consolidated Statement of Earnings, the Consolidated Statement of Comprehensive Income, the
Consolidated Balance Sheet, and the Consolidated Statement of Cash Flows, the Consolidated Financial Statements also include a Consolidated Statement of Changes in Equity. Segment reporting is provided in these Notes.
For purposes of clarity, a number of items are combined in the Balance Sheet and in the Statement of Earnings.
These items are broken down into their constituents and commented on elsewhere in these Notes. The Statement
of Earnings is presented using the nature of expense method of analysis.
The Consolidated Financial Statements are presented in euros.
As an independent listed group, HOCHTIEF Aktiengesellschaft, Essen, Germany, publishes its own consolidated
financial statements, which are also included in the consolidated financial statements of ACS Actividades de Construcción y Servicios, S.A., Madrid, Spain (ACS).
The Consolidated Financial Statements relate to the 2013 fiscal year, comprising the reporting period from January
1 to December 31, 2013.
The Executive Board of HOCHTIEF Aktiengesellschaft released the financial statements for publication on February 21, 2014. They will be approved at the Supervisory Board meeting on February 26, 2014.
Basis of consolidation
The Consolidated Financial Statements include HOCHTIEF Aktiengesellschaft and all significant domestic and foreign
subsidiaries in which it directly or indirectly holds the majority of voting rights. This generally goes hand in hand
with a majority shareholding. Three companies are consolidated by virtue of contractual arrangements. Significant
associates and jointly controlled entities are accounted for using the equity method. Companies in which HOCHTIEF
Aktiengesellschaft holds a majority of voting rights but over which it exercises joint control by contractual arrange-
ment with other owners are likewise accounted for using the equity method.
Holdings in subsidiaries or associated companies or jointly controlled entities deemed to be of minor overall significance from a Group perspective are not consolidated and are accounted for in accordance with IAS 39.
The list of subsidiaries, associates, and other equity interests held by the HOCHTIEF Group (pursuant to Section
313 (2) 1-4 of the German Commercial Code) is published in the electronic Bundesanzeiger (Federal Official Gazette).
The main consolidated subsidiaries and equity-method investments are listed on page 216 et seq.
A number of the subsidiaries included in the Consolidated Financial Statements make partial use of the exempting
provisions in either Section 264 (3) or Section 264b of the German Commercial Code. A list of the companies that
make use of these exemptions is included on page 214 et seq.
The Consolidated Financial Statements as of December 31, 2013 include HOCHTIEF Aktiengesellschaft and a total
of 74 German, 409 foreign consolidated companies and, as in the prior year, five special-purpose funds. The number
of consolidated companies showed an increase of three over the previous year. Twenty German and 40 foreign companies were consolidated for the first time in 2013. The additions are mainly in the HOCHTIEF Europe division (26),
the HOCHTIEF Asia Pacific division (25), and the HOCHTIEF Americas division (7). The majority are project companies. Thirteen domestic and 44 foreign companies have been removed from the consolidated group. The companies removed from the consolidated group were in the HOCHTIEF Asia Pacific division (26), the HOCHTIEF Europe division (19), and the HOCHTIEF Americas division (6); six were in the airport business. An entity is generally
added to or removed from the consolidated group at the time the equity stake in the entity is acquired or disposed of.
Seventy-two affiliated companies of minor overall significance to the Group’s financial position and results of opera
tions were not consolidated in the year under review. Their combined sales represented less than 1% of consolidated sales.
Twenty-three domestic and 263 foreign associates were accounted for using the equity method. This number
showed an increase of 24, with 51 companies added and 27 removed from the category. Most of the companies
added and removed are or were project companies in the HOCHTIEF Asia Pacific division (39 companies added,
13 removed). Five companies in the airport business were also removed in the year under review. Due to their
minor overall significance, a further 27 companies were not accounted for using the equity method.
A total of EUR 98,732 thousand (2012: EUR 48,981 thousand) was expended in 2013 under asset deals and for
purchases of companies consolidated for the first time; for EUR 19,797 thousand (2012: EUR 48,981 thousand),
the expenditure was made in cash.
The acquisitions mainly relate to the purchase of 39.9% of Leighton Welspun Contractors for EUR 78,935 thousand, increasing Leighton Holdings’ equity interest in that company to 100% as of December 27, 2013. A strategic
alliance has existed since 2010. The sale was largely driven by Welspun’s decision to realign its infrastructure sector
and its core business focused around textiles, pipes, energy, and steel. The acquisition included EUR 31,472
thousand in non-current assets, EUR 191,668 thousand in current assets (including trade receivables with a fair value
of EUR 172,150 thousand for which there is no indication of impairment), EUR 180,936 thousand in liabilities. The
fair value of the previous equity interest was EUR 119,021 thousand. The transaction as a whole resulted in the
recognition of EUR 155,752 thousand in goodwill and in a negative impact of EUR 56,199 thousand on profit before taxes mainly due to reclassification of currency translation differences.
In addition, the remaining 50% of Silcar Pty. Ltd was acquired on July 29, 2013. This was a joint venture between
Thiess and Siemens AG. For both parties, the purpose of the transaction was strategic portfolio streamlining. On
April 12, 2013, Leighton Contractors acquired Enpower Solutions Pty. On February 27, 2013, the Leighton Group
acquired the Macmahon Construction Business. Both of these are strategic business acquisitions involving the
purchase of a 100% equity interest.
Annual Report 2013
145
The business combinations in the year under review affected earnings and the balance sheet as follows:
(EUR thousand)
Non-current assets
Current assets excluding cash and cash equivalents
Assets
Provisions
Other liabilities
Liabilities
Sales
Profit before taxes
2013
2012
71,000
254,622
5,216
330,838
21,716
268,002
289,718
128,695
(63,289)
20,237
90,461
56,573
167,271
3,270
130,914
134,184
423,338
12,711
A total of EUR 187,396 thousand in goodwill was recognized as of December 31, 2013 in connection with acquisitions during the year under review (2012: EUR 30,501 thousand).
Consolidation policies
The financial statements of domestic and international companies included in the Consolidated Financial Statements
are prepared in accordance with uniform Group accounting principles. All business combinations (acquisitions) are
accounted for using the acquisition method. Business combinations are measured at the acquisition date by allocating the consideration given to the acquired subsidiary’s net assets measured at fair value. Transaction costs
arising in connection with such acquisitions are recognized directly as expense. All assets, liabilities, and contingent
liabilities of an acquired subsidiary that satisfy the recognition criteria are measured at full fair value regardless of
any minority interest. Intangible assets are recognized separately from goodwill if they are separable from the accounting entity or arise from contractual or other legal rights. Any goodwill then left is recognized as an asset.
Goodwill is not amortized, but is tested instead for impairment in accordance with IAS 36 on an annual basis and
whenever there are indications that it may be impaired. Negative goodwill arising on initial measurement is recognized immediately in income. On divestment, a pro rata share of the divesting division’s goodwill is taken into
account when measuring disposal proceeds.
Goodwill increased by EUR 123,434 thousand in the year under review, from EUR 489,511 thousand to EUR
612,945 thousand.
Income, expenses, receivables, and liabilities between consolidated companies are eliminated. Unrealized intercompany profits and losses are eliminated unless they are of minor significance. Any impairment losses recognized for consolidated companies in their separate financial statements are reversed.
The same policies apply for equity-method investments. These include the Group’s associates and jointly controlled
entities. Any goodwill increases the carrying amount of an investment. Like other goodwill, goodwill on equitymethod investments is not amortized. Reductions in carrying amount due to impairment are reported in the share
of profits and losses of equity-method associates and jointly controlled entities. The financial statements of all equitymethod investments are prepared in accordance with uniform Group accounting and valuation principles.
Non-current assets held for sale (disposal group)
In view of the advanced stage of the sale process, aurelis Real Estate GmbH & Co. KG in the HOCHTIEF Europe division is reported in accordance with IFRS 5 in assets held for sale (disposal group). Assets of PT Thiess Contractors
Indonesia (HOCHTIEF Asia Pacific division) are likewise, in view of the intention to sell, reported as assets held for sale.
Under IFRS 5, equity-method adjustments cease and the assets held for sale are carried at the lower of carrying
amount and fair value less costs to sell. Negotiations with the potential acquirer of aurelis Real Estate GmbH & Co.
KG have resulted in recognition of a EUR 34,200 thousand impairment loss on the carrying amount of the investment in the company; the impairment loss is charged to profit from equity-method investments.
The assets and liabilities classified as held for sale are presented separately in the Balance Sheet. The table below
shows the major classes of assets and liabilities held for sale. The airport and telecommunications interests were
included on a corresponding basis as of December 31, 2012. These had intra-Group liabilities with regard to
HOCHTIEF Group companies in the amount of EUR 919,985 thousand. A cumulative amount of minus EUR 1,914
thousand (2012: EUR 19,200 thousand) is recognized in other comprehensive income.
Dec. 31, 2013 Dec. 31, 2012
(EUR thousand)
130,896
Intangible assets and property, plant and equipment
Financial assets
Other assets
Total assets
Liabilities
132,307
70,570
333,773
68,116
485,348
974,746
391,810
1,851,904
155,160
In 2013, HOCHTIEF Aktiengesellschaft completed the sale of its Athens, Budapest, Düsseldorf, Hamburg, Sydney,
and Tirana airport holdings to a subsidiary of the Public Sector Pension Investment Board of Canada and the sale of
telecommunications businesses at Leighton Holdings. The deconsolidation proceeds are included in the Statement
of Earnings under other operating income.
Currency translation
For currency translation purposes, the following exchange rates have been used for the main Group companies
outside the euro area:
(All rates in EUR)
2013
2012
1 US dollar (USD)
1 Australian dollar (AUD)
1 British pound (GBP)
100 Polish zloty (PLN)
100 Qatari riyal (QAR)
100 Czech koruna (CZK)
100 Russian rubles (RUB)
100 Chilean pesos (CLP)
0.75
0.72
1.18
23.73
20.65
3.84
2.35
0.15
0.77
0.80
1.23
23.99
21.27
3.98
2.49
0.16
Daily average at
reporting date
2013
2012
0.73
0.65
1.20
24.07
19.95
3.65
2.21
0.14
0.76
0.79
1.23
24.55
20.84
3.98
2.48
0.16
Annual average
In their separate financial statements, Group companies disclose transactions denominated in foreign currency
using the average exchange rate on the day of recording the transaction. Exchange gains or losses up to the reporting date on the measurement of foreign currency-denominated monetary assets or liabilities are included in other
operating income or other operating expenses at the average exchange rate on the reporting date. Currency translation differences relating to a net investment in a foreign company are accounted for in accumulated other comprehensive income until the company is sold. This includes foreign currency receivables from fully consolidated
Group companies for which settlement is neither planned nor likely to occur in the foreseeable future and which
therefore resemble equity.
Annual Report 2013
147
Financial statements of foreign companies are translated by applying the functional currency approach. As all companies outside the euro area operate autonomously in their own national currencies, their balance sheet items are
translated into euros using the average exchange rate prevailing on the reporting date in accordance with official
requirements. The same method is used to translate the annual valuation of the shareholders’ equity of equitymethod foreign associates. Differences from the previous year’s translated valuation are recognized in other comprehensive income and are reversed to income or expense on sale of the equity interest. Goodwill of commercially
independent foreign Group entities is translated at the exchange rate prevailing on the reporting date. Income and
expense items are translated into euros using the annual average exchange rate.
Accounting policies
Intangible assets are reported at amortized cost. All intangible assets have a finite useful life with the exception
of company names recognized as assets on initial consolidation and of goodwill. Intangible assets include concessions and other licenses with useful lives of up to 30 years. These are amortized according to the pattern of consumption of economic benefits. They also include future earnings from additions to the order backlog arising from
business acquisitions; these are amortized over the period in which the corresponding work is billed. Intangible
assets further encompass software for commercial and engineering applications, which is amortized on a straightline basis over three to five years, and entitlements to various financing arrangements with banks amortized over
terms of up to 60 months in accordance with the term of the arrangement. Estimated useful lives and amortization
methods are reviewed annually.
Company names and goodwill are not amortized. They are tested instead for impairment in accordance with IAS
36 on an annual basis and whenever there are indications that they may be impaired. The company names recognized as intangible assets in the HOCHTIEF Americas and HOCHTIEF Asia Pacific divisions are recognized with
an indefinite useful life as they do not have a product life cycle and are not subject to technical, technological, or
commercial depletion or any other restriction.
Capitalized development costs in the HOCHTIEF Group are reported in intangible assets as licenses and amortized on a straight-line basis over three to five years.
Property, plant and equipment is stated at depreciated cost. Only amounts directly attributable to an item of
property, plant or equipment are included in its cost. Borrowing costs are included in cost in the case of qualifying
assets. Property, plant and equipment is normally depreciated on a straight-line basis except in the contract mining business, where depreciation is mostly recognized on an activity basis.
Items of property, plant, machinery and equipment typically encountered in the HOCHTIEF Group are depreciated
on a straight-line basis over the following uniform useful lives:
No. of years
Buildings and investment properties
Technical equipment and machinery; transportation equipment
20–50
3–10
Other equipment and office equipment
3–8
Estimated useful lives and depreciation methods are reviewed annually.
Items of property, plant and equipment on finance leases are recognized at fair value or the present value of the
minimum lease payments, whichever is lower, and are depreciated on a straight-line basis over their estimated
useful life or over a shorter contract term if applicable.
Investment properties are stated at amortized cost. Transaction costs are included on initial measurement. The
fair values of investment properties are disclosed in the Notes. These are assessed using internationally accepted
valuation methods, such as taking comparable properties as a guide to current market prices or by applying the
discounted cash flow method. Like property, plant and equipment, investment properties are normally depreciated
using the straight-line method.
Impairment losses are recognized for intangible assets (including goodwill), property, plant and equipment, or
investment properties if their recoverable amount falls below their carrying amount. The recoverable amount of an
asset or cash-generating unit is normally defined as net selling price or value in use, whichever is higher. Impairment testing may require assets and in some cases liabilities to be grouped into cash-generating units. For goodwill, impairment testing is performed on cash-generating units corresponding to the HOCHTIEF divisions that feature in segmental reporting. For any asset that is part of an independent cash-generating unit, impairment is
determined with reference to the recoverable amount of the unit. If the recoverable amount of a cash-generating
unit falls below its carrying amount, the resulting impairment loss is allocated first to any goodwill belonging to the
unit and then to the unit’s other assets, normally pro rata on the basis of the carrying amount of each asset. Except in the case of goodwill, impairment charges are reversed (up to a maximum of amortized cost) when the impairment ceases to exist.
Equity-method investments are stated at cost, comprising the acquired equity interest in an associate or jointly
controlled entity plus any goodwill. The carrying amount is increased or decreased annually to recognize the Group’s
share of after-tax profits or losses, any dividends, and other changes in equity. The full carrying amount is tested
for impairment in accordance with IAS 36 whenever there are indications that it may be impaired. If the recoverable
amount of an equity-method investment is less than its carrying amount, an impairment loss is recognized for the
difference. Any subsequent reversal of an impairment loss is recognized in profit or loss.
Jointly controlled entities are a type of joint venture. Joint ventures are contractual arrangements under which two
or more parties undertake an economic activity which is subject to joint control. In addition to jointly controlled
entities accounted for using the equity method, joint ventures also include jointly controlled operations and construction joint ventures. The latter are accounted for as follows in accordance with IAS 31: As a party to a jointly
controlled operation or construction joint venture, HOCHTIEF recognizes the assets it controls, the liabilities it
enters into, and the expenses it incurs, and reports its share of earnings from the activity under sales. Assets and
liabilities remaining in jointly controlled operations and construction joint ventures (e.g. due to contracts awarded to
subcontractors) lead to a share of earnings that is accounted for using a method equivalent to the equity method
and included in receivables from or liabilities to construction joint ventures.
Annual Report 2013
149
All other financial assets, comprising interests in non-consolidated subsidiaries, other participating interests, and
non-current securities, are classed as held for sale and are measured at fair value where a fair value can be reliably
estimated. In the case of publicly listed financial assets, fair value is determined as the market price. If there is no
active market, fair value is calculated using the most recent market transactions or a valuation method such as the
discounted cash flow method. In cases where fair value cannot be measured reliably, financial assets are reported
at cost (less any impairments). Initial measurement is performed as of the settlement date. Unrealized gains or losses
are accounted for, after adjusting for deferred taxation, in other comprehensive income and are reversed to income
or expense on disposal of the asset. If there is objective evidence of impairment, the carrying amount of an asset is
reduced and the impairment loss recognized as an expense. Such evidence includes a significant or prolonged
decline in fair value below cost.
Receivables and other assets are measured at amortized cost using the effective interest rate method (accounting for factors such as premiums and discounts). An impairment loss is recognized if there is any objective material
evidence that a financial asset may be impaired. Objective evidence for impairment includes, for example, downgrading of a debtor’s credit rating and related interruptions in payment or potential insolvency. Impairment losses
are recognized according to actual credit risk. “Receivables” comprise financial receivables, trade receivables, and
other receivables. Sales are shown net of VAT and other taxes and expected reductions such as trade discounts
and rebates. Sales of goods are recognized when:
• The significant risks and rewards of ownership of the goods have been transferred to the buyer
• The HOCHTIEF Group retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold
• The amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measured
reliably
• It is probable that the economic benefits associated with the transaction will flow to the HOCHTIEF Group.
Revenue from transactions involving the rendering of services is recognized by reference to the stage of completion. Revenue under construction contracts is recognized as described below.
Long-term loans are stated at amortized cost. Loans yielding interest at normal market rates are reported at face
value, and non-interest-bearing and low-interest-bearing loans are discounted to present value. Discounting is always
done using a risk-adjusted discount rate.
Construction contracts are reported using the percentage of completion (POC) method. Cumulative work done to
date, including the Group’s share of net profit, is reported under sales on a pro rata basis according to the percentage completed. The percentage of completion is measured by reference to the stage of completion; that is, as
the ratio of performance delivered up to the end of the reporting period to total contract performance. Construction
contracts are reported in trade receivables and trade payables, as “Gross amount due from/to customers for/from
contract work (POC).” If cumulative work done to date (contract costs plus contract net profit) of contracts in progFinancial Statements and Notes
ress exceeds progress payments received, the difference is recognized as an asset and included in amounts due
from customers for contract work. If the net amount after deduction of progress payments received is negative,
the difference is recognized as a liability and included in amounts due to customers from contract work. Anticipated
losses on specific contracts are accounted for on the basis of the identifiable risks. Construction contracts handled
by construction joint ventures are also accounted for using the POC method. Trade receivables from construction
joint ventures include pro rata entitlements to contract net profit. Anticipated losses are immediately recognized in
full in contract net profit. Contract income on construction contracts undertaken by the Group independently or in
construction joint ventures is recognized in accordance with IAS 11 as the income stipulated in the contract plus
any claims and variation orders. Construction contract receivables are realized as part of the HOCHTIEF Group’s
operating cycle. In accordance with IAS 1, they are therefore included in current assets even though they are not
expected to be realized within twelve months of the balance sheet date.
The POC method is used primarily in the mainstream construction business, construction management, and contract mining.
Deferred taxes arising from temporary differences between the IFRS accounts and tax base of individual Group
companies or as a result of consolidation are recognized as separate assets and liabilities. Deferred tax assets are
also recognized for tax refund entitlements resulting from the anticipated use of existing tax loss carryforwards in
subsequent fiscal years provided it is sufficiently certain that they will be realized. Deferred tax assets and liabilities
are offset within each company or group. Deferred taxes are measured on the basis of tax rates applying or expected to apply in each country when they are realized. For domestic operations, as in the prior year, a tax rate of
31.5% is assumed taking account of corporate income tax plus the German “solidarity surcharge” and the average
rate of municipal trade tax faced by Group companies. For all other purposes, deferred taxes are measured on the
basis of the tax regulations in force or enacted at the reporting date.
Inventories are initially stated at cost of purchase or production. Production cost includes costs directly related to
the units of production plus an appropriate allocation of materials and production overhead, including productionrelated depreciation charges. Borrowing costs for inventories that are qualifying assets are capitalized as part of cost.
Most materials and supplies are measured on a FIFO or moving-average basis. Inventories are written down to net
realizable value if their recoverable amount is less than their carrying amount at the reporting date. If the recoverable amount of inventories subsequently increases, the resulting gain must be recognized. This is done by reducing materials expense.
All marketable securities are classed as held for sale and measured at fair value. They mainly comprise securities held in special-purpose and general investment funds as well as fixed-income securities with a residual term of
more than three months at the time of acquisition and where there is no intention to hold the securities to maturity.
Initial measurement is performed as of the settlement date and includes any transaction costs directly attributable
to the acquisition of the securities. Unrealized gains or losses are reported in other comprehensive income and are
reversed to income or expense on disposal. If there is objective evidence of impairment, the carrying amount of an
asset is reduced and the impairment loss recognized as an expense. Such evidence includes a significant or prolonged decline in fair value below cost.
Cash and cash equivalents consist of petty cash, cash balances at banks, and marketable securities with maturities of no more than three months at the time of acquisition that are subject to an insignificant risk of changes in
value.
Non-current assets held for sale and associated liabilities are measured in accordance with IFRS 5 and reported as current assets. To be classed as assets held for sale, assets must be available for immediate sale and
their sale must be highly probable. Assets held for sale can be individual non-current assets, groups of assets held
for sale (disposal groups), or discontinued operations. Liabilities that are disposed of with assets in a single transaction are part of a disposal group or discontinued operation and are likewise reported separately under current
liabilities as liabilities associated with assets held for sale. Non-current assets held for sale cease to be depreciated or
amortized, and are measured at their carrying amount or at fair value less costs to sell, whichever is lower. Gains
or losses arising on the measurement of discontinued operations at fair value less costs to sell, profits or losses of
Annual Report 2013
151
discontinued operations, and gains or losses on their disposal are reported under results of discontinued operations. Gains or losses arising on the measurement of individual assets held for sale or of disposal groups are reported under results from continued operations until their ultimate disposal.
Share-based payment transactions are measured in accordance with IFRS 2. Stock option plans are accounted for Group-wide as cash-settled share-based payment transactions. Provisions for obligations under the Longterm Incentive Plans, the Top Executive Retention Plans, and the Retention Stock Award Plans are recognized in
the amount of the expected expense that is or was spread over the stipulated waiting period. The fair value of stock
options is measured using generally accepted financial models, the value of the plans being determined with the
Black/Scholes option pricing model. The specific problem of valuing the plans in question is solved using binomial
tree methods. The computations are performed by an outside appraiser.
Provisions for pensions and similar obligations are recognized for current and future benefit payments to
active and former employees and their surviving dependants. The obligations primarily relate to pension benefits,
partly for basic pensions and partly for optional supplementary pensions. The individual benefit obligations vary
from one country to another and are determined for the most part by length of service and pay scales. The Turner
Group’s obligations to meet healthcare costs for retired staff are likewise included in pension provisions due to
their pension-like nature.
Provisions for pensions and similar obligations are computed by the projected unit credit method. This determines
the present value of future entitlements, taking into account current and future benefits already known at the reporting date plus anticipated future increases in salaries and pensions and, for the Turner Group, in healthcare costs.
The computation is based on actuarial appraisals using biometric accounting principles. Plan assets as defined in
IAS 19 are shown separately as deductions from pension obligations. Plan assets comprise assets transferred to
pension funds to meet pension obligations, shares in investment funds purchased under deferred compensation
arrangements, and qualifying insurance policies in the form of pension liability insurance. If the fair value of plan
assets is greater than the present value of employee benefits, the difference is reported—subject to the limit in
IAS 19—under other non-current assets.
Remeasurements of defined benefit plans are recognized directly in other comprehensive income in the period
during which they arise. The current service cost is reported under personnel costs. The net interest component,
comprising the interest element of the increase in pension obligations less expected returns on plan assets (each
calculated using the discount rate for the pension obligations), is reported in net investment and interest income.
Tax provisions comprise current tax obligations. Income tax provisions are offset against tax refund entitlements
if they relate to the same tax jurisdiction and are congruent in nature and reporting period.
Other provisions account for all identifiable obligations as of the reporting date that result from past business
transactions or events but are uncertain in their amount and/or settlement date. Provisions are stated at the estimated settlement amount, i.e. after making allowance for price and cost increases, and are not offset against any
rights to reimbursement. For obligations with a settlement probability exceeding 50%, the amount set aside is calculated on the basis of the most likely settlement outcome. A provision can only be recognized on the basis of a
legal or constructive obligation toward third parties. Long-term provisions with a term of more than one year are
stated at the present value of the estimated settlement amount as of the reporting date and are reported under
noncurrent liabilities.
Liabilities are reported at amortized cost using the effective interest rate method (accounting for factors such as
premiums and discounts). Finance lease liabilities are initially recognized at fair value at the inception of the
lease or the present value of the minimum lease payments, whichever is lower.
Derivative financial instruments are measured at fair value regardless of their purpose and reported under other
receivables and other assets or other liabilities. Initial measurement is as of the settlement date. All derivative financial instruments are measured on the basis of current market rates as of the balance sheet date. The recognition
of changes in fair value depends on the purpose for which a derivative is held. Derivatives are only ever used in the
HOCHTIEF Group for hedging purposes. Hedges are structured for maximum effectiveness. A cash flow hedge is
a hedge of the exposure to variability in cash flows from a hedged item, as with the hedging of variable rate loans
to counter variations in payment amounts due to interest rate changes. Unrealized gains and losses are initially
recognized in equity, taking account of deferred taxes. The portion of the changes in value initially recognized in
equity is reclassified to income or expense as soon as the hedged item is recognized in income or expense. If a
hedged planned transaction subsequently results in recognition of a financial asset or a financial liability, gains or
losses recognized in equity in the meantime are reclassified to income or expense in the period when the financial
asset or financial liability affects income. If a hedged planned transaction subsequently results in recognition of a
nonfinancial asset or liability, gains or losses recognized in equity in the meantime are taken out of equity and subtracted from or added to the initial cost of the asset or liability. In the cases described, only the portion of changes
in value that are determined to be effective for hedging purposes are recognized in equity. The ineffective portion
is recognized directly as income or expense. In the HOCHTIEF Group, only cash flow hedges are currently recognized. Derivatives are also used for economic hedging purposes where no hedge accounting is applied. In such
cases, changes in fair value are recognized in income or expense.
Contingencies, commitments, and other obligations are possible or current obligations, based on past
transactions, that are unlikely to lead to an outflow of resources. They are disclosed separately and are not included
in the Balance Sheet unless assumed in the course of a business combination. The amounts stated for contingent
liabilities reflect the extent of the liabilities as of the reporting date.
Annual Report 2013
153
Judgments made by management in applying the accounting policies primarily relate to the following
issues:
• Leases must be assessed to determine whether the substantial risks and rewards of beneficial ownership transfer to the lessee.
• Securities may be grouped in different categories.
• Assets earmarked for sale must be assessed to confirm that they are available for immediate sale and their sale
is highly probable. If the result of this assessment is positive, they and any liabilities to be disposed of in the same
transaction must be reported and accounted for as assets held for sale and liabilities associated with assets held
for sale.
• It is necessary to determine whether construction revenue is accounted for under IAS 11 or IAS 18.
The decision made by the HOCHTIEF Group for general application in each instance is set out under Accounting
Policies in these Notes.
Preparation of the IFRS Consolidated Financial Statements requires Group management to make estimates
and assumptions that affect the reported amount of assets, liabilities, income and expenses, and disclosures of
contingencies, commitments, and other obligations. The main estimates and assumptions relate to the following:
• Assessing projects on a percentage of completion basis, in particular with regard to accounting for change orders,
the timing of profit recognition, and the amount of profit recognized.
• Estimating the economic life of intangible assets, property, plant and equipment, and of investment properties.
• Accounting for provisions.
• Testing goodwill and other assets for impairment.
• Testing deferred tax assets for impairment.
All estimates and assumptions are based on current circumstances and appraisals. Forward-looking estimates
and assumptions made as of the balance sheet date with a view to future business performance take account of
circumstances prevailing on preparation of the Consolidated Financial Statements and future trends considered
realistic for the global and industry environment. Actual amounts can vary from the estimated amounts due to
changes in the operating environment that are at variance with the assumptions and lie beyond management control. If such changes occur, the assumptions and, if necessary, the carrying amounts of affected assets and liabil
ities are revised accordingly.
New accounting pronouncements
Adoption by the International Accounting Standards Board (IASB) and IFRS Interpretations Committee (IFRS IC) of
amendments to IFRS and IFRIC pronouncements and of new IFRS and IFRIC pronouncements has resulted in
changes to accounting policies in those instances where the pronouncements have been adopted by the EU
and their application is mandatory for the reporting period January 1 to December 31, 2013 either because their
application is mandatory for that period or because HOCHTIEF elected early application.
Changes in IFRS and IFRIC affecting the HOCHTIEF Group are as follows:
IFRS 13 Fair Value Measurement: The IASB published IFRS 13 on May 12, 2011. The new standard sets out in
a single IFRS a framework for measuring fair value where other IFRS require fair value measurements or disclosures.
The IFRS establishes a three-level fair value hierarchy for all purposes. Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date under current market conditions (i.e., the exit price). The standard also requires additional
disclosures in the Notes on items measured at fair value. IFRS 13 applies for annual periods beginning on or after
January 1, 2013. The changes apply prospectively. The standard was endorsed by the EU in December 2012.
First-time application mainly results in additional disclosures.
Amendments to IAS 1 Presentation of Financial Statements: The IASB published “Presentation of items of
Other Comprehensive Income (OCI): Amendments to IAS 1” on June 16, 2011. The amendments require items of
OCI to be classified into items that may be reclassified (recycled) subsequently to profit or loss and items that will
not be reclassified. If items of OCI are presented before tax, the requirement also applies for tax. The amendments
apply for annual periods beginning on or after July 1, 2012. The amendments were endorsed by the EU in June
2012. The change in presentation of OCI items has been complied with by the HOCHTIEF Group.
Amendments to IAS 19 Employee Benefits: The amendments published on June 16, 2011 brought to completion the IASB’s project to improve the accounting for pensions and other post-employment benefits. The amendments relate to the elimination of an option to defer recognition of actuarial gains and losses (the corridor method),
measurement of changes in the net defined benefit liability/asset, and the recognition of plan amendments and
curtailments, and require additional disclosures on characteristics and risks of defined benefit plans. Also changed
in IAS 19 is the treatment for termination benefits, specifically the point in time when an entity would recognize a
liability for termination benefits. The revised IAS 19 applies for annual periods beginning on or after January 1, 2013.
The amendments were endorsed by the EU in June 2012. The changes associated with IAS 19 only had a material
impact on the return on plan assets to be recognized in profit or loss. This is now determined based on the rate
used to discount the defined benefit liability. Elimination of the corridor approach and the immediate recognition of
past service cost in profit or loss, had no impact on the HOCHTIEF Consolidated Financial Statements, as actuarial
gains and losses were already recognized in other comprehensive income and all past service cost was already
recognized in profit or loss. There is therefore no change to the balance sheet items as of January 1, 2012.
Restatement of the prior-year Statement of Earnings resulted in an increase in investment and interest expenses by
EUR 4,991 thousand to EUR 329,970 thousand. This reduced tax expense by EUR 2,112 thousand to EUR
158,728 thousand. Profit after taxes and consolidated net profit decreased as a result by EUR 2,879 thousand, to
Annual Report 2013
155
EUR 382,696 thousand and EUR 155,230 thousand respectively. Earnings per share fell by EUR 0.04 to EUR 2.11.
The change in profit after taxes was countered by changes in revenue reserves as a result of remeasurements of
defined benefit plans. These changes are shown in the Consolidated Statement of Comprehensive Income as
items that will not be reclassified to profit or loss. Additional disclosures have been included in the Notes.
Amendments to IAS 36 Impairment of Assets: The IASB published “Recoverable Amount Disclosures for
Non-Financial Assets” on May 29, 2013, which modifies the disclosure requirements amended in IFRS 13. Existing
disclosure requirements relating to the recoverable amount consequently only apply to non-financial assets for
which an impairment has been recognized or reversed in the reporting period. There are also additional disclosure
requirements in instances where an impairment has been recognized or reversed for an asset and the recoverable
amount is based on fair value less costs of disposal. The amendments apply on a retrospective basis for annual
periods beginning on or after January 1, 2014. The amendments were endorsed by the EU in December 2013. An
entity may apply the amendments earlier to any period in which it also applies IFRS 13 and they are applied accordingly by the HOCHTIEF Group.
Amendments to IFRS 7 Financial Instruments: Disclosures: The amendments published by the IASB on December 16, 2011 introduce additional disclosures where financial assets and financial liabilities are subject to offsetting
under a netting agreement. The amendments are effective for annual periods beginning on or after January 1,
2013 and retrospective application is required. The amendments were endorsed by the EU in December 2012.
They do not result in any significant change in disclosures for the HOCHTIEF Group.
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine: The IASB published IFRIC 20 on
October 21, 2011. The interpretation clarifies when production stripping should lead to recognition of an asset and
how that asset should be measured initially and in subsequent periods. The interpretation applies for annual periods
beginning on or after January 1, 2013. The interpretation was endorsed by the EU in December 2012. It does not
result in any significant change in disclosures for the HOCHTIEF Group.
The IASB also published an omnibus standard as part of its annual improvements process on May 17, 2012.
This involved small, non-urgent but necessary changes to a total of five standards. The standard was endorsed by
the EU in March 2013. It has no material impact on the presentation of the financial position and financial perform
ance of the HOCHTIEF Group.
The remaining IFRS pronouncements applicable for the first time in the reporting period had no significant impact
on the HOCHTIEF Consolidated Financial Statements.
Other new accounting pronouncements issued by the International Accounting Standards Board (IASB) and the
IFRS Interpretations Committee (IFRS IC) take the form of standards and interpretations that affect the HOCHTIEF
Consolidated Financial Statements but do not have to be applied for the 2013 fiscal year and in some cases have
not yet been endorsed by the EU.
IFRS 9 Financial Instruments: The IASB issued IFRS 9 on November 12, 2009. This represents the first phase
of a three-phase project to replace IAS 39 and relates to the classification and measurement of financial instruments. As the remaining phases are completed, new requirements will be incorporated into IFRS 9 and the corresponding parts of IAS 39 withdrawn. Under the new standard, there will be only two measurement categories for
financial instruments:
• At fair value through profit or loss
• Amortized cost.
For an investment in an equity instrument not held for trading, the entity may make an irrevocable election at the
time of initial recognition to present subsequent changes in the fair value of the investment, including proceeds on
disposal, in other comprehensive income. The sole exception from this rule relates to dividends received from such
investments, which are recognized in profit or loss.
On October 28, 2010, in the second phase of the complete overhaul of IAS 39, the IASB added requirements on
accounting for financial liabilities and on derecognition to IFRS 9. With regard to financial liabilities, the two existing
categories—amortized cost and at fair value through profit or loss—are retained. The only change relates to the fair
value option, where changes in the fair value of a financial liability are no longer always to be recognized in profit or
loss. Changes in the fair value of a liability due to changes in the entity’s own credit risk are presented in other comprehensive income. The special accounting treatment does not apply for financial liabilities for which measurement
at fair value through profit or loss is not optional, such as derivatives outside of hedging. The derecognition model
in IFRS 9 is carried over from IAS 39 as it currently stands.
In the third phase, the IASB published new rules on hedge accounting with amendments to IFRS 7, IFRS 9, and
IAS 39 on November 19, 2013. The amendments enable financial statements to better reflect risk management
activities in connection with financial instruments. With the distinction between financial and non-financial hedged
items removed, it is possible to hedge risk components of non-financial items where such components can be
identified. There are also changes in accounting for hedges, in the conduct of effectiveness assessments, and
the rules on rebalancing.
The complete overhaul of IAS 39 through IFRS 9 results in additional disclosure requirements.
The mandatory effective date of January 1, 2015 has been removed from IFRS 9. A new date will be determined
when IFRS 9 is close to completion. EU endorsement is still pending. The changes will result in a reclassification of
financial assets in the HOCHTIEF Group. The new rules on financial liabilities will probably have no effect on the
HOCHTIEF Group. The remaining implications of IFRS 9 and its amendments cannot be assessed until final endorsement by the EU.
Annual Report 2013
157
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, in conjunction with Amendments to IAS 27 Separate Financial Statements and
IAS 28 Investments in Associates and Joint Ventures as well as corresponding IAS Amendments to IFRS
10, IFRS 11, and IFRS 12: On May 12, 2011, the IASB published three new and two amended standards on accounting for business combinations.
IFRS 10 replaces the previous control approach in IAS 27 and SIC-12 with a uniform approach applicable to all business combinations. The rules for separate financial statements remain in IAS 27. The new control approach has
three elements:
• Power over the investee
• Variable returns
• Ability to use the power over the investee to affect the amount of the variable returns.
IFRS 11 replaces IAS 31 and abolishes proportionate consolidation. The core principle of IFRS 11 is the rule that a
party to a joint arrangement classifies the arrangement either as a joint operation or a joint venture by assessing its
rights and obligations arising from the arrangement. With a joint operation, each party accounts for the assets, liabilities, revenues, and expenses relating to its interest in the joint operation, together with its share of such items
held or incurred jointly, in accordance with the applicable IFRSs. With a joint venture, each party accounts for its
investment in the joint venture using the equity method in accordance with the amended IAS 28.
IFRS 12 brings together the revised disclosures under IFRS 10, IFRS 11, IAS 27, and IAS 28 in a separate standard.
On June 28, 2012, the IASB published amendments to IFRS 10, IFRS 11 and IFRS 12, clarifying their transitional
provisions. The amended standards all apply for annual periods beginning on or after January 1, 2014. Earlier application is solely permitted for all standards in combination. The amended standards were endorsed by the EU in
December 2012 and April 2013. IFRS 10 is not currently expected to have a significant impact on the HOCHTIEF
Group. IFRS 11, on the other hand, will result in reclassifications from equity-method jointly controlled entities to
joint operations. IFRS 12 results in additional disclosures.
Amendments to IAS 19 Employee Benefits: On November 21, 2013, the IASB published “Defined Benefit Plans:
Employee Contributions,” clarifying that contributions from employees or third parties to defined benefit plans,
where the contributions are set out in the plan terms and are linked to service but their amount is independent of
the number of years of service, may be attributed to periods of service. The amendments are effective for annual
periods beginning on or after July 1, 2014. Earlier application is permitted. EU endorsement is still pending. The
amendments are not currently expected to have a significant impact on the HOCHTIEF Consolidated Financial
Statements.
Amendments to IAS 32 Financial Instruments: Presentation: On December 16, 2011, the IASB published
amendments clarifying the requirements for the offsetting of financial assets and financial liabilities. The amendments
clarify that the right of set-off must be currently available as of the reporting date, must not be contingent on a future
event, and must be legally enforceable. The amendments are effective retrospectively for annual periods beginning
on or after January 1, 2014; early application is permitted. Endorsed by the EU in December 2012, they are not
currently expected to have a significant impact on the HOCHTIEF Group.
Amendments to IAS 39 Financial Instruments: Recognition and Measurement: “Novation of Derivatives and
Continuation of Hedge Accounting,” published by the IASB on June 27, 2013, allows hedge accounting to be continued in circumstances in which a derivative designated as a hedging instrument is novated to a central counterparty (CCP) as a result of laws or regulations. The amendments apply retrospectively for annual periods beginning
on or after January 1, 2014; early application is permitted. The amendments were endorsed by the EU in December 2013. The HOCHTIEF Group does not currently anticipate any significant impact.
IFRIC 21 Levies: On May 20, 2013, the IASB published IFRIC 21 on accounting for public levies that are not income taxes under IAS 12. The question addressed is when to recognize a liability to pay a levy. The interpretation
applies for annual periods beginning on or after January 1, 2014; early application is permitted. EU endorsement is
still pending. The HOCHTIEF Group does not currently anticipate any significant impact.
The IASB also published two omnibus standards on December 12, 2013, as part of its annual improvements
process. These involved small, non-urgent but necessary changes to a total of eleven standards. Annual Improvements Cycles 2010-2012 and 2011-2013 apply for annual periods beginning on or after July 1, 2014. EU endorsement is still pending. The changes are not currently expected to have a significant impact on the presentation of
the financial position and financial performance of the HOCHTIEF Group.
The amendments to IFRS 10, IFRS 11, and IFRS 12 “Investment Entities”, which are not yet applicable in 2013,
are not expected to have a significant impact on the HOCHTIEF Consolidated Financial Statements in future periods.
Annual Report 2013
159
Explanatory Notes to the Consolidated Statement of Earnings
1. Sales
The EUR 25,693,245 thousand (2012: EUR 25,527,722 thousand) sales figure comprises, firstly, contract sales
recognized under the percentage of completion (POC) method in the mainstream construction business, construction management, and contract mining, plus products and services provided to construction joint ventures, the
Group’s share of profits from construction joint ventures, and other related services. Secondly, the sales figure includes revenues from services such as construction planning, project development, logistics, asset management,
facility management, property management, energy management, and insurance and concessions business.
Sales recognized under the percentage of completion method came to EUR 23,173,287 thousand (2012: EUR
23,198,305 thousand).
Sales figures provide only an incomplete view of work done* during the fiscal year. For additional information, work
done by the Group is presented below, including the Group’s share of work done in construction joint ventures.
The Group’s total operating performance by divisions is as follows:
(EUR thousand)
HOCHTIEF Americas
HOCHTIEF Europe
Corporate Headquarters/Consolidation
2013
2012
8,546,316
17,159,255
3,235,074
108,594
29,049,239
8,037,576
18,223,497
3,331,987
100,309
29,693,369
2. Other operating income
(EUR thousand)
Proceeds from divestitures
Income from reversal of provisions
Foreign exchange gains
Income from the disposal of intangible assets, property, plant and equipment, and investment
properties
Sundry other operating income
2013
2012
445,273
60,495
34,468
135,712
49,413
17,759
16,511
51,618
608,365
110,722
65,096
378,702
Proceeds from divestitures in the year under review are mainly from the sales of our airport, service, and telecommunications interests and relate to the HOCHTIEF Asia Pacific division (EUR 154,432 thousand), the HOCHTIEF
Europe division (EUR 168,140 thousand), and Corporate Headquarters (EUR 122,701 thousand). The proceeds include
EUR 46,141 thousand from the remeasurement of remaining investments. The prior-year proceeds mostly related
to the sale of the stake in the Chilean Vespucio Norte Express toll highway in the HOCHTIEF Europe division.
The prior-year income from disposals of property, plant and equipment mostly resulted from the sale of Thiess
Waste Management Services business in the HOCHTIEF Asia Pacific division.
Sundry other operating income includes lease and rental income, income from insurance claims, and income from
changes in the fair value of derivatives.
160
Annual Report 2013
3. Materials
(EUR thousand)
Raw materials, supplies, and purchased goods
Purchased services
2013
2012
4,320,045
13,360,251
17,680,296
4,225,437
13,086,546
17,311,983
4. Personnel costs
(EUR thousand)
Wages and salaries
Social insurance, pensions, and support
2013
2012
4,967,298
505,613
5,472,911
4,988,028
547,719
5,535,747
Expenditure on pensions totaled EUR 306,774 thousand (2012: EUR 336,509 thousand). This mostly consists of
new entitlements accrued during the year under defined benefit pension plans and payments into defined contribution pension schemes. Payments to state pension insurance funds are included in social insurance.
Personnel costs in 2013 include restructuring expenses of EUR 35,542 thousand in the HOCHTIEF Asia Pacific
division and of EUR 1,758 thousand in the HOCHTIEF Americas division.
Employees (average for the year)
Waged/industrial employees
Salaried/office employees
2013
2012
41,269
39,643
80,912
35,726
44,261
79,987
An average of 261 (2012: 339) persons were employed for the purposes of their occupational training.
5. Depreciation and amortization
(EUR thousand)
Intangible assets
2013
2012
33,660
700,897
334
734,891
34,414
883,920
404
918,738
As in the prior year, there were no impairment charges on intangible assets or investment properties in the fiscal
year. Impairment losses of EUR 1,069 thousand (2012: EUR 716 thousand) were recorded on property, plant and
equipment.
Annual Report 2013
161
6. Other operating expenses
(EUR thousand)
Rentals and lease rentals
Insurance expenses
Technical and business consulting
External organization and programming
Travel expenses
Restructuring and adjustment costs/severance benefits
Court costs, attorneys’ and notaries’ fees
Deconsolidation expense
Office supplies
Marketing
Currency losses
Commission
Impairment losses and losses on disposal of current assets (except inventories)
Mail and funds transfer expenses
Legal costs
Expenses from derivative financial instruments
Sundry other operating expenses
2013
2012
361,583
210,273
162,117
96,718
81,655
65,145
59,514
56,199
49,648
26,508
25,339
23,803
15,813
14,342
5,017
1
222,875
1,476,550
422,540
216,836
237,471
82,301
103,726
33,035
52,698
1,335
60,577
31,162
27,550
19,944
28,976
16,272
6,893
38,953
256,179
1,636,448
The insurance expenses mainly relate to project risk management in the Turner Group. Insurance covers of T
urner
and other project stakeholders such as suppliers and clients are combined to minimize project execution risks to
Turner and its clients. The insurance expenses are counterbalanced by insurance revenue reported in sales.
The deconsolidation expenses follow from the acquisition of additional equity interests in and the resulting transition
to full consolidation of a company in the HOCHTIEF Asia Pacific division.
The prior-year expenses from derivative financial instruments mainly related to the measurement of equity verification guarantees given in the HOCHTIEF Europe division.
Sundry other operating expenses mostly comprise order processing, costs of materials for administrative purposes,
costs of preparing the annual financial statements, losses incurred on disposal of property, plant and equipment,
and other expenses not reported elsewhere. Also included under this heading are sundry taxes amounting to EUR
18,587 thousand (2012: EUR 23,933 thousand).
Including personnel and material expenses, a total of EUR 4,891 thousand was spent on Group-wide research
and development projects by the central innovation management function in 2013 (2012: EUR 6,157 thousand).
7. Net income from participating interests
Net income from participating interests includes all income and expenses relating to equity-method investments
and participating interests. Entities presented as assets held for sale in accordance with IFRS 5 cease to be subject to equity-method adjustments. Net income from participating interests includes profit distributions from such
entities during the year under review up to the date of deconsolidation.
162
Annual Report 2013
Net income from participating interests is made up as follows:
2013
2012
Share of profits and losses of equity-method associates and jointly controlled entities
Of which: Impairment
152,877
[(50,705)]
81,244
[(29,784)]
Net income from non-consolidated subsidiaries
Net income from other participating interests
Income from the disposal of participating interests
Expenses on disposal of participating interests
Income from long-term loans to participating interests
Expenses relating to long-term loans to participating interests
Other income from participating interests
335
[(70)]
10,596
[(13,332)]
8,171
(11)
38,869
(425)
57,535
210,412
(413)
[(1,987)]
43,674
[(250)]
20,605
(1,751)
43,710
(665)
105,160
186,404
(EUR thousand)
The share of profits and losses of equity-method associates and jointly controlled entities consists of EUR 31,504
thousand (2012: minus EUR 6,246 thousand) relating to associates and EUR 121,373 thousand (2012: EUR 87,490
thousand) relating to jointly controlled entities. The improvement in net income from participating interests mainly
relates to the HOCHTIEF Asia Pacific division, which accounted for a contribution to net income from participat
ing interests of EUR 42,080 thousand (2012: minus EUR 58,751 thousand). The improvement is partly accounted for by
higher income from participating interests and partly by the fact that net income from participating interests in the
prior year was still heavily affected by the now completed Victorian Desalination Plant project. The share of profits
accounted for by the airport holdings came to EUR 59,714 thousand* (2012: EUR 77,377 thousand). Impairments
included in the share of profits and losses of equity-method associates and jointly controlled entities come to
*Dividends included up to the
sale in September 2013.
EUR 50,705 thousand (2012: EUR 29,784 thousand). These mostly relate to the entity accounted for in accord
ance with IFRS 5 in assets held for sale in the HOCHTIEF Europe division and partly to associates and jointly
controlled entities in the HOCHTIEF Asia Pacific division.
Net income from other participating interests includes EUR 21,920 thousand* (2012: EUR 44,166 thousand) in distributed profits of Southern Cross Airports Corporation Holdings Ltd. from the ownership interest in Sydney Airport.
Participating interests measured at cost—less impairments—and disposed of in the fiscal year had a carrying
amount of EUR 225 thousand (2012: EUR 290 thousand). Disposals realized a net loss on sale of EUR 11 thousand in
2013 (2012: net gain of EUR 19,910 thousand). As of the balance sheet date, there are no other plans to sell participating interests measured at cost.
(EUR thousand)
Interest and similar income
Other investment income
Investment and interest income
Interest and similar expenses
Interest component of increase in non-current provisions
Of which: Net interest (expense)/income on pension obligations
Other investment expenses
Investment and interest expenses
2013
2012
(restated)**
53,622
23,726
77,348
(312,629)
(12,627)
[(9,829)]
(21,796)
(347,052)
(269,704)
62,596
27,334
89,930
(297,600)
(10,735)
[(6,387)]
(21,635)
(329,970)
(240,040)
** Restated for IAS 19R. For
notes on the adjustment,
Annual Report 2013
163
8. Net investment and interest income
Interest and similar income consists of interest on cash investments, interest-bearing securities, and other long-term
loans, plus profit shares and dividends from current and non-current securities. Interest and similar expenses represent all interest incurred. Net interest income—the balance of interest and similar income and expenses—is negative,
at minus EUR 259,007 thousand (2012: negative EUR 235,004 thousand).
Interest income of EUR 48,600 thousand was recorded in the 2013 fiscal year for financial instruments not carried
at fair value through profit or loss (2012: EUR 59,464 thousand). Interest expenses of EUR 312,629 thousand were
recorded for financial instruments not carried at fair value through profit or loss (2012: EUR 297,600 thousand).
Net interest expense/income from pension obligations—an amount of minus EUR 9,829 thousand (2012: minus
EUR 6,387 thousand)—consists of EUR 37,674 thousand (2012: EUR 41,959 thousand) in annual interest on the
net present value of long-term pension obligations rolled over into the new fiscal year, offset against EUR 27,845
thousand (2012: EUR 35,572 thousand) in interest income on plan assets.
Investment and interest income and expenses not included in interest and similar income and expenses or in the
interest component of increases in long-term provisions are reported as other investment income and expenses.
These mostly comprise income and expenses relating to sales of securities and to derivatives, and expenses relat
ing to impairment losses on securities.
9. Income taxes
2013
2012
(restated)*
117,867
136,593
254,460
92,394
66,334
158,728
(EUR thousand)
Current income taxes
Deferred taxes
Current income taxes include EUR 300 thousand (2012: EUR 48 thousand) net tax income relating to prior periods.
Tax expense is derived from the theoretical tax expense. The theoretical tax rate applied to profit before taxes is
31.5%, as in the prior year.
2013
2012
(restated)*
Profit before taxes
799,819
541,424
Theoretical tax income, at 31.5%
Difference between the above and foreign tax rates
Tax effects on:
Tax-exempt income
Non-tax-allowable expenditure
Equity accounting of associates and jointly controlled entities, including impairment of
associates and jointly controlled entities
Unrecognized deferred tax assets for tax loss carryforwards
Other
Effective tax charges
Effective rate of tax (percent)
251,943
(7,173)
170,549
(29,607)
(107,182)
63,748
(37,026)
68,378
4,313
51,257
(2,446)
254,460
31.8
(11,067)
50,668
(53,167)
158,728
29.3
(EUR thousand)
164
Annual Report 2013
The tax-exempt income item mainly relates to income from the sale of the airport activities and the Service Solutions business line.
The “Other” item mainly contains future tax relief in connection with research and development expenditure in
Australia and—in the reporting year—increased tax expense resulting from the sale of the telecommunications
activities at Leighton.
10. Minority interest
The EUR 374,163 thousand (2012: EUR 227,466 thousand) minority interest in consolidated net profit represents
the balance of profits totaling EUR 375,334 thousand (2012: EUR 241,751 thousand) and losses totaling EUR 1,171
thousand (2012: 14,285 thousand). The profits include EUR 125,553 thousand (2012: 161,219 thousand) for minority
shareholders in the Leighton Group and EUR 228,484 thousand (2012: EUR 39,957 thousand) for minority shareholders in airport companies sold in September 2013. The increase in profits for minority shareholders in the air-
port business mainly relates to the Sydney Airport sale.
Annual Report 2013
165
Explanatory Notes to the Consolidated Balance Sheet
11. Intangible assets
The table below shows the composition of and changes in intangible assets on the Consolidated Balance Sheet
for 2013 and the previous year:
(EUR thousand)
Concessions, industrial
property and similar
rights and assets, and
licenses in such rights
and assets
Goodwill arising
on consolidation
Cost of acquisition or production
Jan. 1, 2013
Additions or disposals due to consolidation changes
Additions
Disposals
Reclassifications
Currency adjustments
Dec. 31, 2013
346,143
2,082
41,648
(1,527)
2,316
(42,692)
347,970
489,511
182,496
–
–
–
(59,062)
612,945
835,654
184,578
41,648
(1,527)
2,316
(101,754)
960,915
Cumulative amortization
Jan. 1, 2013
Amortization
Disposals
Reclassifications
Impairment reversals
Dec. 31, 2013
122,295
(9,871)
33,660
(1,471)
(1,468)
(12,065)
–
131,080
–
–
–
–
–
–
–
–
122,295
(9,871)
33,660
(1,471)
(1,468)
(12,065)
–
131,080
Carrying amounts as of Dec. 31, 2013
216,890
612,945
829,835
Jan. 1, 2012
Additions
Disposals
Reclassifications
Dec. 31, 2012
304,697
(3,612)
47,977
(1,940)
7
(986)
346,143
480,126
29,932
–
–
(15,675)
(4,872)
489,511
784,823
26,320
47,977
(1,940)
(15,668)
(5,858)
835,654
Jan. 1, 2012
Amortization
Disposals
Reclassifications
Dec. 31, 2012
91,573
(914)
34,414
(1,765)
(6)
(1,007)
–
122,295
–
–
–
–
–
–
–
–
91,573
(914)
34,414
(1,765)
(6)
(1,007)
–
122,295
223,848
489,511
713,359
Intangible assets do not include any capitalized development costs (2012: EUR 2,008 thousand).
As in the prior year, there were no impairment charges on intangible assets in the reporting year.
Total
Intangible assets include EUR 50,017 thousand (2012: EUR 54,895 thousand) for company names recognized on
initial consolidation, accounted for by EUR 34,456 thousand (2012: EUR 36,015 thousand) in the HOCHTIEF
Americas division and EUR 15,561 thousand (2012: EUR 18,880 thousand) in the HOCHTIEF Asia Pacific division.
The changes relative to the prior year relate to currency adjustments. The company names are not subject to systematic amortization, but are tested for impairment annually and if there is any indication of impairment. Impairment testing is performed in accordance with IAS 36 as described below for goodwill. As in the prior year, no impairment was identified in the year under review. Future earnings from acquired order backlogs amount to EUR
491 thousand as of the year-end (2012: EUR 5,299 thousand).
Goodwill recognized for consolidated companies on initial consolidation is allocated to cash-generating units at
segment level for the purposes of impairment testing as described in the following. The cash-generating units correspond to the divisions used in segment reporting.
Annual impairment testing of goodwill at segment (division) level is performed at HOCHTIEF in the fourth quarter of
each year. In impairment testing, the recoverable amount of a division is compared with its carrying amount.
The recoverable amount for the HOCHTIEF Americas and HOCHTIEF Europe cash-generating units is measured
separately for each unit as value in use. Value in use is the present value of future cash flows expected to arise
from a cash-generating unit. It is determined from an internal Group perspective using the discounted cash flow
method. This is carried out on the basis of cash flow budgets derived from the three-year budget for the detailed
planning horizon as approved by the Executive Board and current at the time of impairment testing. The forecasts
incorporate past experience and expected future market developments Cash flows are assumed to remain constant in subsequent years. Weighted average cost of capital (WACC) is used for cost of capital data. Value in use is
first measured on an after-tax basis by discounting the cash flows with an after-tax WACC determined separately
for each cash-generating unit. The pretax discount rate is then found by iteration for the purposes of the Notes disclosures.
The discount rates used for cash-generating units in impairment testing are between 10.1 and 11.8% before tax
(2012: between 9.3 and 11.7%).
The recoverable amount for the HOCHTIEF Asia Pacific cash-generating unit is measured as fair value based on
Leighton Holdings’ market capitalization.
As in the prior year, comparison of the divisions’ recoverable amounts with their carrying amounts has not revealed
any impairment of goodwill.
(EUR thousand)
HOCHTIEF Americas
HOCHTIEF Europe
Jan. 1,
2013
Currency
adjustments
Consolidation
changes
Dec. 31,
2013
270,730
167,266
51,515
489,511
(11,750)
(47,312)
–
(59,062)
856
187,396
(5,756)
182,496
259,836
307,350
45,759
612,945
Changes in goodwill by division in 2013 were as follows:
The changes in goodwill due to consolidation changes result from acquisitions in the HOCHTIEF Asia Pacific division—primarily Leighton Welspun Contractors—from the sale of the Service Solutions business line in the HOCHTIEF
Europe division.
Annual Report 2013
167
12. Property, plant and equipment
Land, similar rights
and buildings,
including buildings
on land owned by
third parties
(EUR thousand)
Jan. 1, 2013
Additions or disposals due to
consolidation changes
Additions
Disposals
Reclassifications
Dec. 31, 2013
Cumulative depreciation
Jan. 1, 2013
Depreciation
Disposals
Reclassifications
Dec. 31, 2013
Jan. 1, 2012
Additions
Disposals
Reclassifications
Dec. 31, 2012
Cumulative depreciation
Jan. 1, 2012
Depreciation
Disposals
Reclassifications
Dec. 31, 2012
Technical
equipment
and machin
ery, transportation
equipment
Other
equipment and
office equipment
Prepayments
and assets
under con
struction
Total
224,364
3,839,476
291,632
3,430
4,358,902
561
31,472
(34,626)
(464)
(27,679)
193,628
7,594
807,441
(984,314)
(360,964)
(425,563)
2,883,670
(19,773)
29,895
(24,958)
(1,664)
(7,069)
268,063
(1,138)
3,100
(356)
(1,022)
(10)
4,004
(12,756)
871,908
(1,044,254)
(364,114)
(460,321)
3,349,365
99,849
2,176,333
183,512
1
2,459,695
169
13,882
(7,454)
(391)
(11,938)
–
94,117
(7,294)
659,157
(598,760)
(246,587)
(259,207)
–
1,723,642
(13,229)
27,856
(19,544)
272
(4,800)
–
174,067
(478)
2
–
475
–
–
–
(20,832)
700,897
(625,758)
(246,231)
(275,945)
–
1,991,826
99,511
1,160,028
93,996
4,004
1,357,539
280,753
4,127,518
269,511
4,296
4,682,078
–
51,232
(50,971)
(57,925)
1,275
224,364
–
1,073,595
(796,927)
(532,223)
(32,487)
3,839,476
6,269
37,234
(19,953)
408
(1,837)
291,632
–
4,592
(2,870)
(2,654)
66
3,430
6,269
1,166,653
(870,721)
(592,394)
(32,983)
4,358,902
120,189
2,152,605
174,148
–
2,446,942
–
14,669
(33,763)
(1,685)
439
–
99,849
1
841,906
(682,258)
(116,793)
(19,128)
–
2,176,333
(8)
27,344
(16,721)
144
(1,395)
–
183,512
–
1
–
–
–
–
1
(7)
883,920
(732,742)
(118,334)
(20,084)
–
2,459,695
124,515
1,663,143
108,120
3,429
1,899,207
Property, plant and equipment includes EUR 361,890 thousand (2012: EUR 638,696 thousand) in lease-financed
assets. These largely comprise plant and machinery at Leighton Holdings. The decrease mainly relates to the
efficiency overhaul in the procurement and deployment of mining equipment and the associated changeover from
finance leases to operating leases.
The reclassifications under “Technical equipment and machinery, transportation equipment” in both 2013 and
2012 mainly relate to assets held for sale.
Impairment losses of EUR 1,069 thousand (2012: EUR 716 thousand) were recorded on property, plant and equipment in the reporting year.
Property, plant and equipment notably in the HOCHTIEF Asia Pacific division is subject to restrictions in the
amount of EUR 126,419 thousand (2012: EUR 171,718 thousand).
13. Investment properties
Jan. 1, 2013
Additions
Disposals
Dec. 31, 2013
47,002
13
(5,114)
–
41,901
Jan. 1, 2013
Amortization
Disposals
Dec. 31, 2013
27,671
334
(2,100)
–
–
25,905
15,996
Jan. 1, 2012
Additions
Disposals
Dec. 31, 2012
51,339
–
(4,337)
–
47,002
Jan. 1, 2012
Amortization
Disposals
Dec. 31, 2012
29,612
404
(2,345)
–
–
27,671
19,331
(EUR thousand)
As in the prior year, there were no impairment losses on investment properties in the year under review.
Annual Report 2013
169
The fair values of investment properties came to EUR 22,698 thousand as of December 31, 2013 (2012: EUR 24,862
thousand). These are assessed as in the past using internationally accepted valuation methods, such as taking
comparable properties as a guide to current market prices or by applying the discounted cash flow method. Of
this total, as in the prior year, EUR 1,793 thousand is accounted for by fair value adjustments following independent external appraisals.
Rental income from investment properties in the reporting year totaled EUR 1,164 thousand (2012: EUR 1,230
thousand). Direct operating expenses totaling EUR 1,801 thousand (2012: EUR 2,323 thousand) consisted of
EUR 674 thousand (2012: EUR 849 thousand) in expenses for rented and EUR 1,127 thousand (2012: EUR 1,474
thousand) in expenses for unrented investment properties.
As in the prior year, investment properties are not subject to any restrictions.
14. Equity-method investments
(EUR thousand)
Equity-method associates
Equity-method jointly controlled entities
Dec. 31, 2013
Dec. 31, 2012
330,750
367,758
698,508
504,245
591,695
1,095,940
Associates
The following tables show the Group’s share of main items of the balance sheets and statements of earnings of
equity-method associates:
(EUR thousand)
Assets
Liabilities
Net assets
Dec. 31, 2013
[of which:
IFRS 5]
Consolidated
Balance Sheet
–
–
–
1,337,333
(1,006,583)
330,750
1,337,333
(1,006,583)
330,750
Dec. 31, 2012
[of which:
IFRS 5]
3,716,995
(2,737,465)
979,530
(EUR thousand)
Sales
Profit
[1,931,851]
[(1,456,566)]
[475,285]
Consolidated
Balance Sheet
1,785,144
(1,280,899)
504,245
2013
2012
770,936
31,504
1,419,377
(6,246)
The fair value of equity-method associates for which there are published prices was EUR 59,064 thousand as of
December 31, 2013 (2012: EUR 112,896 thousand).
The profit from equity-accounted associates includes EUR 10,764 thousand in impairment charges (2012: EUR 29,784
thousand). These relate to the HOCHTIEF Asia Pacific division.
As in the prior year, investments in associates are not subject to any restrictions.
The main associates in the HOCHTIEF Group are:
Name
Domicile
Activities
Shareholding (%)
Al Habtoor Engineering Enterprises Co. L.L.C.
(Habtoor Leighton Group)
Sedgman Limited
Dubai , United Arab
Emirates
Brisbane, Australia
Construction
Construction
45
36
HOCHTIEF Europe
Sociedad Concesionaria Túnel San Cristobal S.A.
Santiago de Chile, Chile
Development
50
Jointly controlled entities
The Group’s share of the items of the balance sheets and statements of earnings of equity-method jointly controlled entities are presented below:
Dec. 31, 2013
(EUR thousand)
Non-current assets
Current assets
Current liabilities
Net assets
1,672,257
1,138,911
(1,295,357)
(1,015,746)
500,065
Dec. 31, 2012
[of which:
IFRS 5]
Consolidated
Balance
Sheet
[252,533]
[289,953]
[(198,016)]
[(212,163)]
[132,307]
1,419,724
848,958
(1,097,341)
(803,583)
367,758
2,371,889
1,100,430
(1,655,432)
(1,124,721)
692,166
[of which:
IFRS 5]
Consolidat
ed Balance
Sheet
[455,089]
[53,543]
[(348,468)]
[(59,693)]
[100,471]
1,916,800
1,046,887
(1,306,964)
(1,065,028)
591,695
2013
2012
2,603,001
(2,481,628)
121,373
3,017,903
(2,930,413)
87,490
(EUR thousand)
Income
Expenses
Profit
Profit from equity-method jointly controlled entities includes EUR 39,941 thousand (2012: EUR –) in impairment
losses. These mainly relate to a jointly controlled entity in the HOCHTIEF Europe division.
Shares in jointly controlled entities are pledged in the amount of EUR 1,279 thousand (2012: EUR 3,256 thousand).
The main jointly controlled entities in the HOCHTIEF Group are:
Domicile
Activities
Richmond, Canada
Construction
28
City West Property
Nextgen Group Holdings
Thiess Degremont
WRAP Southbank Unit Trust
Sydney, Australia
Melbourne, Australia
Wonthaggi, Australia
Melbourne, Australia
Development
Telecommunication
Construction
Development
50
30
65
50
Larissa, Greece
Eschborn
Lübeck
Bremen
Athens, Greece
Development
Development
Development
Construction / Development
Development
35
50
50
50
17
Haar near Munich
Development
50
Eisenach
Development
50
HOCHTIEF Europe
Aegean Motorway Concession Company S.A.
aurelis Real Estate GmbH & Co. KG*
Herrentunnel Lübeck GmbH & Co. KG
HGO InfraSea Solutions GmbH & Co. KG
Olympia Odos Concession Company S.A.
Süddeutsche Geothermie-Projekte GmbH &
Co. KG
Via Solutions Thüringen GmbH & Co. KG
Shareholding (%)
* Presented in the Balance
Sheet as assets held for sale.
Annual Report 2013
171
Name
HOCHTIEF Americas
Kiewit / Flatiron (Port Mann Bridge)
15. Other financial assets
(EUR thousand)
Dec. 31, 2013
Dec. 31, 2012
6,436
68,572
260
75,268
7,417
84,075
260
91,752
Non-consolidated subsidiaries
Other participating interests
Non-current securities
An amount of EUR 70 thousand was recognized in impairment losses on non-consolidated subsidiaries in the
year under review (2012: EUR 1,987 thousand) and EUR 13,332 thousand on other participating interests (2012:
EUR 250 thousand).
As in the prior year, other financial assets are not subject to any restrictions.
16. Financial receivables
(EUR thousand)
Long-term loans to non-consolidated subsidiaries and to
participating interests
Financial receivables from non-consolidated subsidiaries
Financial receivables from participating interests
Interest accruals
Other financial receivables
Dec. 31, 2013
NonCurrent
current
442,556
7,394
43,868
–
32,912
526,730
31,664
21,437
33,435
38,969
1,429
126,934
Dec. 31, 2012
NonCurrent
current
577,440
12,423
10,329
–
35,091
635,283
32,244
29,250
45,031
26,998
1,762
135,285
Long-term loans to non-consolidated subsidiaries and to participating interests include EUR 373,990 thousand
(2012: EUR 402,500 thousand) for a loan to the Habtoor Leighton Group. In the prior year, the item also included
EUR 88,459 thousand for a loan to aurelis Real Estate GmbH & Co. KG that in the year under review is included at
EUR 38,459 thousand in assets held for sale.
Receivables from equity-accounted companies total EUR 527,038 thousand (2012: EUR 619,228 thousand).
Other financial receivables do not include any finance lease receivables in the year under review (2012: EUR 2,565
thousand in finance lease receivables). The prior-year figure was made up as follows:
Finance lease receivables
Dec. 31, 2012
(EUR thousand)
Due in up to 1 year
Due in 1–5 years
Due after 5 years
Minimum lease
payments
Discount
Present value
790
2,032
344
63
374
164
727
1,658
180
17. Other receivables and other assets
Dec. 31, 2013
Non-current
Current
(EUR thousand)
Prepaid expenses
Entitlements from sales of participating interests
Derivative receivables
Pension fund credit balances
Tax receivables (excluding income taxes)
Entitlements from real estate sales
Sundry other assets
2,396
–
15,506
10,296
–
–
65,633
93,831
83,590
39,238
11,981
–
7,485
1,096
46,772
190,162
Dec. 31, 2012
Non-current
Current
2,658
–
10,189
7,815
–
–
80,854
101,516
106,160
37,251
5,173
–
10,233
4,700
61,889
225,406
Prepaid expenses consist of insurance premiums, rents applicable to later accounting periods, and prepayments
for maintenance and services. They also include commission paid by HOCHTIEF insurance companies for insurance arranged by direct insurers. Such commission is reversed to expense over the lifetime of the policy.
Sundry other assets are not subject to any restrictions in the year under review (2012: EUR 3,500 thousand).
18. Income tax assets
The EUR 91,994 thousand (2012: EUR 57,059 thousand) in income tax assets comprises amounts receivable from
domestic and foreign revenue authorities. These consist of EUR 57,047 thousand (2012: EUR 23,929 thousand)
classified as non-current assets and EUR 34,947 thousand (2012: 33,130 thousand) classified as current assets.
19. Deferred taxes
Deferred tax assets and liabilities break down as follows:
Dec. 31, 2013
Non-current assets
Current assets
Pension provisions
Other provisions
Sundry non-current liabilities
Current liabilities
Other provisions
Sundry current liabilities
Losses carried forward
Gross amount
Offsetting item
Reported amount
Deferred tax
liabilities
Deferred tax
assets
Deferred tax
liabilities
127,746
58,896
125,194
345,458
168,320
13,060
103,526
185,049
107,340
58,459
5,928
10,716
84,780
1,224
130,914
68,742
8,579
9,147
71,597
–
101,071
46,834
506,274
146,063
652,337
527,162
125,175
248
85,691
653,311
–
653,311
527,162
126,149
95,076
83,548
568,239
56,814
625,053
367,112
257,941
1,287
89,219
459,825
–
459,825
367,112
92,713
(EUR thousand)
Dec. 31, 2012
Deferred tax
assets
Annual Report 2013
173
Deferred tax assets and deferred tax liabilities are offset within each company or group. The EUR 652,337 thousand (2012: EUR 625,053 thousand) gross amount of deferred tax assets includes the following tax refund entitlements arising from the expected future use of tax loss carryforwards and tax credits:
(EUR thousand)
Corporate income tax
German municipal trade tax
Dec. 31,
2013
139,650
6,413
146,063
Dec. 31,
2012
50,401
6,413
56,814
There is adequate assurance that the tax loss carryforwards will be realized. Tax loss carryforwards for which no
deferred tax assets have been recognized amount to EUR 1,149,129 thousand (2012: EUR 970,282 thousand) in
respect of corporate income tax and EUR 1,376,328 thousand (2012: EUR 1,229,886 thousand) in respect of German municipal trade tax.
Deferred tax assets are recognized for tax-deductible temporary differences if it is probable that taxable profit will
be available against which the deductible temporary differences can be utilized.
Group companies that generated losses in the past fiscal year or previous years have EUR 19,181 thousand
(2012: EUR 12,933 thousand) in deferred tax assets resulting from temporary differences or tax loss carryforwards
found not to be impaired. Additionally, deferred tax assets in the amount of EUR 9,196 thousand were not recognized for material tax losses at foreign Group companies.
Deferred tax liabilities totaling a gross amount of EUR 653,311 thousand (2012: EUR 459,825 thousand) are entirely due to taxable temporary differences, mostly from adjustments to ensure uniform Group-wide compliance
with IFRS valuation principles.
EUR 16,720 thousand was charged to equity (2012: EUR 1,764 thousand credited to equity) for deferred tax relating to exchange differences from translation of foreign entity financial statements. EUR 3,851 thousand (2012:
EUR 3,553 thousand) was charged to equity for deferred tax on amounts recognized in equity for changes in the
fair value of derivative and non-derivative financial instruments. EUR 24,491 thousand was charged to equity (2012:
please see pages 155 and
156.
EUR 39,639 thousand credited to equity*) for deferred tax relating to actuarial gains and losses. As of the balance
sheet date, deferred tax from the measurement of financial instruments credited to equity amounted to EUR 5,992
thousand (2012: EUR 9,843 thousand), while EUR 112,006 thousand (2012: EUR 136,497 thousand*) was credited
to equity in connection with actuarial gains and losses.
20. Inventories
(EUR thousand)
Raw materials and supplies, spare parts
Work in progress
Finished goods
Prepayments
Dec. 31,
2013
212,077
922,631
11,959
2,873
1,149,540
Dec. 31,
2012
259,675
1,143,933
19,129
2,918
1,425,655
Borrowing costs of EUR 16,240 thousand were capitalized under work in progress in accordance with IAS 23 in
2013 (2012: EUR 18,668 thousand). The borrowing costs were determined on the basis of interest rates of between 1.7 and 9.0% (2012: between 1.2% and 12.1.%).
Work in progress also includes properties under development that are subject to restrictions in the amount of
EUR 422,276 thousand (2012: EUR 699,284 thousand).
174
Annual Report 2013
21. Trade receivables
(EUR thousand)
Trade receivables
Gross amount due from customers for contract work (POC)
Less: progress payments received
From construction joint ventures
Other
From non-consolidated subsidiaries
From participating interests
Dec. 31,
2013
Dec. 31,
2012
6,418,816
(2,891,214)
3,527,602
172,616
2,253,517
5,953,735
9,250
20,147
5,983,132
5,642,221
(2,683,995)
2,958,226
164,456
2,144,102
5,266,784
20,323
22,013
5,309,120
The figure of EUR 3,527,602 thousand (2012: EUR 2,958,226 thousand), representing the gross amount due from
customers for construction work (POC) less progress payments received, relates to construction contracts where
contract costs incurred (including shares of contract net profit) exceed progress payments received from customers. The combined total of POC contract costs (including net profit shares) reported under trade receivables and
trade payables is EUR 6,950,534 thousand (2012: EUR 6,061,807 thousand). The combined total of progress payments received and offset against the gross amounts due to and from customers for contract work (POC) in the
year under review is EUR 3,596,325 thousand (2012: EUR 3,257,193 thousand).
Various fully consolidated companies in the HOCHTIEF Group have been granted service concession or similar
arrangements. These arrangements are mostly accounted for as financial assets and reported as part of the gross
amount due from customers for contract work (POC). The service concession arrangements, which are in the social infrastructure/public buildings segment, are agreements to build and modernize, operate, and maintain schools
and other public buildings. Construction work and improvements are on schedule. These activities broke even with
sales of EUR 38,573 thousand (2012: EUR 39,914 thousand). The HOCHTIEF Group companies concerned are
required accordingly to perform their obligations under the service concession arrangements and are granted
the rights necessary to do so in each case. At the end of the period of a service concession arrangement, the infrastructure to which the arrangement relates is returned to the public-sector client. The assets associated with a
service concession arrangement generally remain public property for the entire duration of the arrangement. The
sole termination option provided for in the service concession arrangements relates to termination for cause.
Some arrangements have renewal options.
Trade receivables include EUR 423,695 thousand (2012: EUR 408,188 thousand) in contractual retention amounts.
Trade receivables also include properties under development that are subject to restrictions in the amount of
EUR 304,457 thousand (2012: EUR 162,841 thousand).
Receivables from equity-accounted companies total EUR 8,906 thousand (2012: EUR 11,693 thousand).
22. Marketable securities
The marketable securities totaling EUR 1,123,258 thousand (2012: EUR 628,000 thousand) mainly consist of securities held in special-purpose and general investment funds and fixed-income securities with maturities at the time
of acquisition of more than three months where there is no intention to hold the securities to maturity. The increase
mainly relates to purchases of investment fund units by HOCHTIEF Aktiengesellschaft during the year under review.
Annual Report 2013
175
All marketable securities are classified as available for sale and are carried at fair value. The carrying amount
decreased due to fair value adjustments by EUR 17,733 thousand (2012: EUR 5,892 thousand).
Marketable securities are pledged in the amount of EUR 19,936 thousand (2012: EUR 22,683 thousand) as security
for employee benefit entitlements under semi-retirement programs. Marketable securities are subject to restrictions in the amount of EUR 223,602 thousand (2012: EUR 255,577 thousand).
Outside of externally managed investments, direct investment activities are exclusively restricted to the purchase
* See glossary on page 219.
of bonds from top-class issuers* with broad diversification to ensure that concentration risks relative to specific
issuers are strictly avoided.
23. Cash and cash equivalents
Cash and cash equivalents total EUR 2,035,251 thousand (2012: EUR 2,514,782 thousand) and comprise petty
cash, cash at banks, and marketable securities with maturities at the time of acquisition of no more than three
months. Cash and cash equivalents are subject to an insignificant risk of changes in value. Cash and cash equivalents to the value of EUR 65,553 thousand are subject to restrictions (2012: EUR 50,222 thousand).
24. Shareholders’ equity
The Consolidated Statement of Changes in Equity is shown on page 141.
HOCHTIEF Aktiengesellschaft’s subscribed capital is divided into 76,999,999 no-par-value shares and has a total
value of EUR 197,120 thousand. Each share accounts for EUR 2.56 of capital stock.
The capital reserve comprises premium on shares issued by HOCHTIEF Aktiengesellschaft.
The Executive Board is unaware of any restrictions on voting rights or on transfers of securities.
There are no shares with special control rights. The Executive Board is not aware of any employee shares where
the control rights are not exercised directly by the employees.
Statutory rules on the appointment and replacement of Executive Board members are contained in Sections 84
and 85 and statutory rules on the amendment of the Articles of Association in Sections 179 and 133 of the German Stock Corporations Act (AktG). Under Section 7 (1) of the Company’s Articles of Association, the Executive
Board comprises at least two individuals. Section 23 (1) of the Articles of Association provides that resolutions of
the General Shareholders’ Meeting require a simple majority of votes cast unless there is a statutory requirement
stipulating a different majority. In instances where the Act requires a majority of the capital stock represented at
the time of the resolution in addition to a majority of votes cast, Section 23 (3) of the Articles of Association pro-
vides that a simple majority will suffice unless there is a mandatory requirement stipulating a different majority.
Pursuant to Section 4 (5) of the Articles of Association, the Executive Board is authorized, subject to Supervisory
Board approval, to increase the capital stock by issuing new no-par-value bearer shares for cash and/or non-cash
consideration in one or more issues up to a total of EUR 35,840 thousand by or before May 10, 2015 (Authorized
Capital I). Similarly, there is an authorization to increase capital by up to EUR 23,296 thousand by or before May
11, 2016 under Section 4 (6) of the Articles of Association (Authorized Capital II). Detailed provisions are contained
in the stated section of the Articles.
Pursuant to Section 4 (4) of the Articles of Association, the Company’s capital stock has been conditionally increased
by up to EUR 49,280 thousand divided into up to 19,250,000 no-par-value bearer shares (conditional capital). Detailed provisions are contained in the stated section of the Articles.
Authorization to repurchase shares:
The Company is authorized by resolution of the General Shareholders’ Meeting of May 7, 2013 to repurchase its
own shares in accordance with Section 71 (1) 8 of the German Stock Corporations Act (AktG). The authorization
expires on May 6, 2018. It is limited to 10% of the capital stock at the time of the General Shareholders’ Meeting
resolution or at the time of exercising the authorization, whichever figure is smaller, with the quantity of shares able
to be acquired by the use of call options limited to a maximum of 5% of the capital stock at the time of the General
Shareholders’ Meeting resolution. The authorization can be exercised directly by the Company or by a company in
its control or majority ownership or by third parties engaged by the Company or engaged by a company in its control or majority ownership and allows the share repurchase to be executed in one or more installments covering
the entire amount or any fraction. The repurchase may be effected through the stock exchange, or by public offer
to all shareholders, or by public invitation to all shareholders to tender shares for sale, or by issuing shareholders
with rights to sell shares, or by the use of call options. The conditions governing the repurchase are set forth in detail in the resolution.
By resolution of the General Shareholders’ Meeting of May 7, 2013, the Executive Board is authorized, subject to
Supervisory Board approval, in the event of a sale of treasury shares effected by way of an offer to all shareholders, to issue subscription rights to the shares to holders of warrant-linked and/or convertible bonds issued by the
Company or by any subordinate Group company. The Executive Board is also authorized, subject to Supervisory
Board approval, to sell treasury shares other than through the stock exchange and other than by way of an offer to
all shareholders, provided that the shares are sold for cash at a price not substantially below the current stock
market price for Company shares of the same class at the time of sale.
The HOCHTIEF Aktiengesellschaft Executive Board is also authorized, subject to Supervisory Board approval and
the conditions set out in the following, to offer and transfer treasury shares to third parties other than through the
stock exchange and other than by way of an offer to all shareholders. Such transactions may take place in the course
of acquisitions of business enterprises in whole or part and in the course of mergers. They are also permitted for
the purpose of obtaining a listing for the Company’s shares on foreign stock exchanges where it is not yet listed.
The shares may also be offered for purchase by employees or former employees of the Company or its affiliates.
Holders of bonds which the Company or a Group company subordinate to it issues or has issued under the authorization granted at the General Shareholders’ Meeting of May 12, 2011 (agenda item 8) may also be issued with the
shares upon exercising the warrant and/or conversion rights and/or obligations attached to the bonds.
The shares may also, on condition that they be held for at least two years after transfer, be transferred to (current
or past) members of the Executive Board of the Company and to (current or past) members of the executive boards
and general management of companies under its control within the meaning of Section 17 of the German Stock
Corporations Act (AktG), and to current or past employees of the Company or of a company under its control within
the meaning of Section 17 AktG. Such transfers are only permitted for the purpose of settling the transferees’ variFinancial Statements and Notes
able compensation entitlements in place of cash settlement. Further conditions of transfer are detailed in the resolution. Where shares are issued to members of the Executive Board of the Company, the decision to issue the
shares is taken solely by the Supervisory Board.
Shareholders’ statutory subscription rights to such shares are barred pursuant to Sections 71 (1) 8 and 186 (3) and
(4) of the German Stock Corporations Act (AktG) to the extent that the shares are used in exercise of the authorizations set out above.
Annual Report 2013
177
The Executive Board is also authorized, subject to Supervisory Board approval, to retire repurchased shares without a further resolution of the General Shareholders’ Meeting being required for the share retirement itself or its
execution.
The conditions governing awards of subscription rights and the sale, transfer, and retirement of treasury stock are
set forth in detail in the General Shareholders’ Meeting resolution.
As of December 31, 2013, HOCHTIEF Aktiengesellschaft held a total of 7,690,565 shares of treasury stock as
defined in Section 160 (1) 2 of the German Stock Corporations Act (AktG). These shares were purchased over the
course of 2008 for the purposes provided for in the resolution of the General Shareholders’ Meeting of May 8,
2008 and from June to December 2013 for the purposes provided for in the resolution of the General Shareholders’ Meeting of May 7, 2013. The holdings of treasury stock represent EUR 19,687,846 (9.99%) of the Company’s
capital stock.
Between June 17 and December 5, 2013, 4,313,000 shares of treasury stock were purchased for a total price of
EUR 255,552,165 (an average price of EUR 59.25 per share) as part of the stock buyback program decided upon
on June 13, 2013 for the purposes provided for in the authorizing resolution of the General Shareholders’ Meeting
of May 7, 2013. These shares represent EUR 11,041,280 (5.60%) of the Company’s capital stock.
In May 2013, 9,178 shares of treasury stock were transferred to (serving and former) members of the Executive Board
of the Company and to (former) members of executive boards of companies under its control within the meaning
of Section 17 of the German Stock Corporations Act (AktG) at a price of EUR 56.39 per share on condition that the
shares be held for at least two years after transfer. The transfer settled the transferees’ variable compensation entitlements in place of cash settlement. These shares represent EUR 23,496 (0.01%) of the Company’s capital stock.
Eighteen shares were taken back into treasury stock in 2013. It was ultimately not possible to transfer these shares
to employees of the Company or its affiliates in connection with the issue of employee shares because the issue
conditions were not met by the entitled individuals. These shares represent EUR 46 (0.00%) of the Company’s
capital stock.
Unappropriated net profit is identical for HOCHTIEF Aktiengesellschaft and the HOCHTIEF Group.
A dividend of EUR 73,613 thousand was paid out in the year under review (2012: EUR –).
The minority interest in the shareholders’ equity of consolidated Group companies totals EUR 1,028,085 thousand (2012: EUR 1,603,445 thousand); EUR 895,019 thousand (2012: EUR 1,098,505 thousand) of this relates to
the Leighton Group. The decrease relative to the prior year mainly relates to the sale of the airport activities.
Accumulated other comprehensive income is part of revenue reserves. It includes amounts recognized in equity
for changes in the fair value of primary and derivative financial instruments and exchange differences from translation of foreign entity financial statements. Accumulated other comprehensive income also includes the Group’s
share of changes recognized directly in the other comprehensive income of equity-method associates and jointly
controlled entities, plus the portion of other comprehensive income from the remeasurement of defined benefit
plans that will not subsequently be reclassified to profit or loss. The changes in other comprehensive income are
presented on a year-on-year basis in the following table:
Changes in other comprehensive income
Dec. 31, 2013
(EUR thousand)
Changes in other comprehensive income for the period
Amounts reclassified to profit or loss
Dec. 31, 2012
(restated)*
(414,988)
49,340
(365,648)
(41,409)
(3,720)
(45,129)
(390)
(143,689)
(144,079)
6,320
(5,514)
806
20,224
(1,190)
19,034
2,783
3,068
5,851
Remeasurement of defined benefit plans
4,788
145,594
150,382
18,244
(4,685)
–
(4,685)
(83,465)
Other comprehensive income after taxes
(322,067)
(126,622)
Changes in fair value of financial instruments – primary
Changes in fair value of financial instruments – derivative
Share of profits and losses of equity-method associates and jointly
controlled entities recognized directly in equity
156.
The tax effects relating to changes in other comprehensive income are distributed as follows:
Dec. 31, 2013
Before taxes
Taxes
After taxes
Before taxes
Taxes
After taxes
(365,648)
–
(365,648)
(45,129)
–
(45,129)
(147,523)
3,444
(144,079)
1,345
(539)
806
26,329
(7,295)
19,034
8,865
(3,014)
5,851
150,382
–
150,382
(4,685)
–
(4,685)
33,608
(15,364)
18,244
(123,104)
39,639
(83,465)
(302,852)
(19,215)
(322,067)
(162,708)
36,086
(126,622)
(EUR thousand)
Currency translation
differences
Changes in fair value of
primary
Changes in fair value of
derivative
Share of profits and losses
of equity-method associates
and jointly controlled entities
recognized directly in equity
Remeasurement of defined
benefit plans
Other comprehensive
income
Dec. 31, 2012
(restated)*
25. Share-based payment
The following Group-wide share-based payment systems were in force for managerial staff of HOCHTIEF Aktien
gesellschaft and its affiliates in 2013:
Long-term Incentive Plan 2008
The Long-term Incentive Plan intended for issue in 2008 was already launched as the Long-term Incentive Plan
2008 (LTIP 2008) by resolution of the Supervisory Board in November 2007 and is open to Executive Board members and upper managerial employees of HOCHTIEF Aktiengesellschaft and its affiliates. Alongside grants of stock
appreciation rights (SARs), LTIP 2008 also provided for grants of stock awards.
The plan ended in 2013.
Annual Report 2013
179
The SARs could only be exercised if, for at least ten consecutive stock market trading days before the exercise date,
the ten-day average (arithmetic mean) stock market closing price of HOCHTIEF stock was higher relative to the
issue price compared with the ten-day average closing level of the MDAX index relative to the index base (relative
performance threshold) and, additionally, return on net assets (RONA) in the then most recently approved set of
consolidated financial statements was at least 10% (absolute performance threshold). The relative performance
threshold was waived if the average stock market price of HOCHTIEF stock exceeded the issue price by at least
10% on ten consecutive stock market trading days after the end of the waiting period.
Provided that the targets were met, the SARs could be exercised at any time after a two-year waiting period except
during a short period before publication of any business results. When SARs were exercised, the issuing entity
paid out the difference between the then current stock price and the issue price. The difference was capped at
50% of the issue price.
The LTIP conditions for stock awards stipulated that for each stock award exercised within a two-year exercise
period following a three-year waiting period, entitled individuals received at HOCHTIEF Aktiengesellschaft’s discretion either a HOCHTIEF share or a compensatory cash amount equal to the closing price of HOCHTIEF stock on
the last stock market trading day before the exercise date. The gain on each stock award was limited to 150% of
the stock market closing price on the day before the issue date.
The SARs could not be exercised in 2013.
Retention Stock Awards 2008
In May 2008, the Supervisory Board adopted a resolution to launch for members of the Executive Board, on the
basis of LTIP 2008 (stock awards), a Retention Stock Award plan (RSA 2008) consisting of three tranches and running for seven years, and granted a first tranche of awards under the plan. The conditions for the first tranche of
RSA 2008 differ from LTIP 2008 (stock awards) solely with regard to the cap, which is set at EUR 160 per stock
award. The second tranche was granted in March 2009. The conditions for the second tranche differ from LTIP
2008 (stock awards) solely in the time frame being one year later and with regard to the cap, which is set for the
second tranche at EUR 66.50 per stock award. The third tranche was granted in March 2010. The conditions for
the third tranche differ from LTIP 2008 (stock awards) solely in the time frame being two years later and with regard
to the cap, which is set for the third tranche at EUR 133.12 per stock award.
The first tranche was exercised in full by the members of the Executive Board in 2011.
Top Executive Retention Plan 2008
The Executive Board also resolved in June 2008 to launch a Top Executive Retention Plan 2008 (TERP 2008) for
selected managerial employees.
This plan is likewise based on stock awards and consists of three tranches. The first tranche was granted in July
2008, the second in July 2009, and the third in July 2010.
The total term of the plan is ten years. The waiting period after the granting of each tranche is three years. The
exercise period is between five and seven years, depending on the tranche.
The conditions stipulate that, after the waiting period, entitled individuals receive for each stock award either a
HOCHTIEF share or, at HOCHTIEF Aktiengesellschaft’s discretion, a compensatory cash amount equal to the
closing price of HOCHTIEF stock on the last stock market trading day before the exercise date. The gain is capped
for each year of the exercise period. The cap rises annually up to a maximum gain at the end of the term. The
maximum gain is set to EUR 160 per stock award for the first tranche, EUR 81.65 for the second tranche, and EUR
166.27 for the third tranche.
The Long-term Incentive Plan 2009 (LTIP 2009) was launched by resolution of the Supervisory Board in 2009 and
is open to Executive Board members and upper managerial employees of HOCHTIEF Aktiengesellschaft and its
affiliates. The conditions do not differ in any material respect from those of LTIP 2008. The maximum gain is set to
EUR 40.10 per stock award.
The SARs have been exercised in full.
The Long-term Incentive Plan 2010 (LTIP 2010) was launched by resolution of the Supervisory Board in 2010 and
is open to Executive Board members and upper managerial employees of HOCHTIEF Aktiengesellschaft and its
affiliates. Except for the longer waiting period (four years instead of two) for the SARs, the conditions do not differ
in any material respect from those of LTIP 2009. The maximum gain is set to EUR 81.83 per stock award.
The Long-term Incentive Plan 2011 (LTIP 2011) was launched by resolution of the Supervisory Board in 2011 and is
open to Executive Board members and upper managerial employees of HOCHTIEF Aktiengesellschaft and its affili
ates. The conditions do not differ in any material respect from those of LTIP 2010. The maximum gain is set to
EUR 98.01 per stock award.
open to Executive Board members and upper managerial employees of HOCHTIEF Aktiengesellschaft and its affili
ates. The plan conditions differ from those of LTIP 2011 in two points:
1. Return on net assets (RONA) as per the most recently approved Consolidated Financial Statements must be at
least 15%.
2. The waiting time for stock awards was extended from three to four years and the total term of the plan accordingly from five to six years.
The maximum gain is set to EUR 75.81 per stock award.
open to Executive Board members. The plan conditions differ from those of LTIP 2012 in only one point:
The number of SARs that can be exercised depends on attainment of the planned value range for adjusted free
cash flow. This value range is set in the business plan for each exercise year.
The maximum gain is set to EUR 73.83 per stock award.
Other information
The conditions of all plans stipulate that on the exercise of SARs or stock awards—and the fulfillment of all other
requisite criteria—HOCHTIEF Aktiengesellschaft normally has the option of delivering HOCHTIEF shares instead of
paying out the gain in cash. Where the entitled individuals are not employees of HOCHTIEF Aktiengesellschaft, the
expense incurred on exercise of SARs or stock awards is met by the affiliated company concerned.
Annual Report 2013
181
The quantities of SARs and stock awards granted, expired, and exercised under the plans are as follows:
Originally Outstanding at
granted Dec. 31, 2012
Granted in
2013
Expired in
2013
Exercised/
settled in
2013
Disposal/sale
2013
Outstanding at Dec.
31, 2013
LTIP 2008 – SARs
304,575
194,695
–
194,695
–
–
–
LTIP 2008 – stock awards
101,985
14,425
–
1,525
12,900
–
–
TERP 2008/Tranche 1
130,900
41,300
–
–
36,500
–
4,800
TERP 2008/Tranche 2
359,000
133,200
–
–
38,300
9,400
85,500
TERP 2008/Tranche 3
174,100
159,500
–
–
132,600
–
26,900
RSA 2008/Tranche 2
347,478
187,104
–
–
106,916
–
80,188
RSA 2008/Tranche 3
146,884
146,884
–
–
106,824
–
40,060
273,400
1,600
–
–
600
500
500
LTIP 2010 – SARs
353,200
247,200
–
11,700
–
33,000
202,500
166,000
114,750
–
500
100,750
2,900
10,600
LTIP 2011 – SARs
275,250
219,300
–
9,400
–
29,650
180,250
124,850
94,100
–
3,750
5,500
12,550
72,300
LTIP 2012 – SARs
457,406
439,406
–
35,800
–
63,100
340,506
82,991
79,631
–
5,985
7,447
11,370
54,829
LTIP 2013 – SARs
–
–
38,288
–
–
–
38,288
–
–
9,297
–
–
–
9,297
Provisions recognized for the stated share-based payment arrangements totaled EUR 20,095 thousand as of the
balance sheet date (2012: EUR 21,456 thousand). Further provisions totaling EUR 1,850 thousand were reported in
the prior year as part of liabilities associated with assets held for sale. The total expense recognized for the stated
arrangements in 2013 was EUR 17,334 thousand (2012: EUR 10,949 thousand). The intrinsic value of SARs exercisable at the end of the reporting period was EUR 7,658 thousand (2012: EUR 7,589 thousand).
26. Provisions for pensions and similar obligations
Defined benefit plans
Under defined benefit plans, the Company’s obligation is to provide agreed benefits to current and former employees.
The main pension obligations in Germany consist of direct commitments under the current 2000+ pension plan
and deferred compensation plans. The 2000+ plan in force since January 1, 2000 consists of a basic pension in
the form of a modular defined contribution plan and a supplementary pension linked to company performance.
The size of the basic pension component depends on employee income and age (resulting in an annuity conversion factor) and a general pension contribution reviewed by HOCHTIEF every three years. The size of the supplementary pension component depends on growth in IFRS-basis profit after taxes. The basic pension can be supplemented in this way by up to 20%. The pension amount at retirement is the sum total of the pension components
vested each year. The pension arrangements in force until December 31, 1999 featured benefit groups based on
collective agreements. These legacy benefits were frozen and integrated into the new system of retirement benefits. In this way, the impact of salary increases was largely eliminated. In isolated instances, length-of-service and
final salary pension arrangements are still in existence for executive staff, although except at Executive Board level
such arrangements have no longer been offered since 1995. Benefits comprise an old-age pension, an invalidity
pension, and a surviving dependants’ pension, and in almost all cases are granted as a lifelong annuity.
Up to December 31, 2013, employees in Germany additionally had the option of deferred compensation in a company pension plan. The deferred compensation was invested in selected investment funds. The pension amount is
based on the present value of acquired fund units at retirement, subject to a minimum of the deferred compensation amount plus an increment that is guaranteed by HOCHTIEF and ranges from 3.50% down to 1.75% p.a. There
is a choice at retirement between a lump sum payment and an annuity for five or six years.
Outside of Germany, there are defined benefit plans at Turner in the USA and HOCHTIEF UK in the United Kingdom. The plan at Turner was frozen as of December 31, 2003, and no new entitlements can be earned under it.
Benefits comprise an old-age pension, an invalidity pension, and a surviving dependants’ pension. There is a choice
at retirement between a lifelong annuity and a lump sum payment. Commitments at Turner also include post-employment benefits in the form of medical care for pensioners. HOCHTIEF UK has a length-of-service, final salary
pension plan. For each year of service, 1/75th of the eligible final salary is granted as a monthly pension. Benefits
comprise an old-age pension, an invalidity pension, and a surviving dependants’ pension.
Defined benefit obligations in the HOCHTIEF Group were made up as follows as of December 31, 2013:
(EUR thousand)
Active members
Final salary
Not final salary
Vested benefits
Current benefit payments
Similar obligations
Total
Duration in years (weighted)
Germany
131,025
[16,973]
[114,052]
129,228
459,716
82
720,051
13.1
USA
76,456
[76,456]
48,555
77,728
38,909
241,648
8.1
UK
8,495
[8,495]
12,012
12,943
33,450
22.0
Plan assets
There are no statutory or regulatory minimum funding requirements for pension plans in Germany. Domestic pension obligations are largely funded, with a small portion financed through accounting provisions. The funded plans
take the form of a contractual trust arrangement (CTA). The transferred assets are administered in trust by HOCHTIEF
Pension Trust e. V. and serve exclusively to fund pension obligations. The transferred cash is invested in the capital
market in accordance with investment principles set out in the trust agreement. The investment guidelines and decisions are based on the findings of an asset liability matching (ALM) study compiled by outside specialists at regu
lar intervals of three to five years. This uses Monte Carlo simulation to model the development of the pension lia
bilities and other key economic factors over a very long forward horizon and in numerous combinations. Based on
the ALM study, a range of criteria are then applied to determine the optimum asset allocation in order to ensure
that pension liabilities can be met in the long term. To assure an optimum conservative risk structure, we have also
established risk overlay management using the services of a professional external overlay manager who is given a
fixed risk budget and works fully autonomously in a clearly structured risk overlay management process. HOCHTIEF
aims to ensure full funding of pension obligations and to fund new vested benefits on the basis of current service
cost annually or at least on a timely basis. The companies pay in additional amounts from time to time in the event
of any shortfall. Pension commitments in Germany in excess of the contribution assessment ceiling applied in the
statutory pension insurance scheme are additionally covered using pension liability insurance. Pension liabilities
from deferred employee compensation are funded by the purchase of retail fund units. Funding of the obligations
served by HOCHTIEF Pension Trust e.V. as of December 31, 2013 is about 71%; the figure for Germany as a whole
is about 75%. It should be noted in this connection that the size of pension obligations has increased significantly
Annual Report 2013
183
in recent years due to the low level of market interest rates and that the funding ratio will go up again when interest
rates recover.
The frozen defined benefit obligations in the Turner Group are likewise managed in a pension fund. Plan assets are
administered in trust by BNY Mellon and serve exclusively to fund the plan. The trust’s independence is reviewed
annually and attested to by auditors. Investment decisions are not made by the trust but by a special committee.
The investment of plan assets is based on a regularly compiled ALM study. The investment objectives are to maximize the funding ratio and reduce volatility in the funding ratio. With the pension obligations fully funded, high-risk investments in equities are to be reduced in favor of fixed-interest bonds. These ideally perform in line with plan liabilities, thus ensuring full funding. There is no statutory minimum funding requirement, but low funding levels result
in higher contributions to the Pension Benefit Guarantee Corporation, hence maximum funding is aimed for. The
funding of obligations covered by plan assets at Turner as of December 31, 2013 is about 96%; funding at Turner
overall is about 80%. Funding of plan assets at HOCHTIEF UK is likewise on a trust basis. Statutory minimum funding
requirements apply. If funding is insufficient to make up a funding shortfall, an additional restructuring plan is drawn
up. Plan funding is reviewed at least once every three years. Funding of pension obligations at HOCHTIEF UK is
about 86% as of December 31, 2013.
Defined benefit obligations are covered by plan assets as follows:
Coverage of defined benefit obligations by plan assets
(EUR thousand)
Uncovered by plan assets
Partially covered by plan assets
Incompletely covered by plan assets
Fully covered by plan assets
Total
Dec. 31, 2013
Defined benefit
Plan assets
obligations
44,707
894,256
938,963
56,186
995,149
Dec. 31, 2012
Defined benefit
Plan assets
obligations
–
696,492
696,492
66,482
762,974
54,348
983,169
1,037,517
55,872
1,093,389
–
727,870
727,870
63,687
791,557
Actuarial assumptions
The size of pension provisions is determined on an actuarial basis. This necessarily involves estimates. Specifically,
the actuarial assumptions used are as follows:
2013
(Percent)
* weighted average
Discount factor*
Salary increases
Pension increases*
Health cost increases
Germany
USA
UK
2012
Germany
3.50
3.25
2.00
–
4.65
–
–
5.00
4.60
2.20
4.52
–
3.50
3.00
2.00
–
USA
3.45
–
–
5.00
The discount factors are derived from the Mercer Pension Discount Yield Curve (MPDYC) model, taking into account
the company-specific duration of pension liabilities. Salary and pension increases ceased to be taken into account
in the USA (Turner Group) in 2004 due to the changeover in pension arrangements. Biometric mortality assumptions are based on published country-specific statistics and experience. Domestically, they are determined using
the Prof. Dr. Klaus Heubeck 2005 G tables. Turner uses the RP-2000 Mortality Table for employees and HOCHTIEF
UK uses the S1PxA CMI_2013 [1%] year of birth mortality tables.
Changes in the present value of defined benefit obligations and of the market value of plan assets are as
follows:
Changes in the present value of defined benefit obligations
(EUR thousand)
Defined benefit obligations at
start of year
Current service cost
Past service cost
Interest expense
Remeasurements
Actuarial gains/(losses) arising from changes
in demographic assumptions
Actuarial gains/(losses) arising from changes
in financial assumptions
Actuarial gains/(losses) arising from
experience adjustments
Benefits paid from Company assets
Benefits paid from fund assets
Employee contributions
Effect of transfers
Consolidation changes
Defined benefit obligations at end of year
Reclassification as liabilities associated with
assets held for sale
Defined benefit obligations at end of year
after reclassification
Domestic
2013
Interna
tional
Total
Domestic
2012
Interna
tional
Total
817,209
9,841
813
27,032
279,475
2,089
–
10,642
1,096,684
11,930
813
37,674
681,292
8,641
1,599
31,070
261,935
1,632
–
10,889
943,227
10,273
1,599
41,959
–
3,963
3,963
–
(577)
(577)
265
(26,806)
(26,541)
136,633
23,508
160,141
3,882
(594)
(36,721)
842
(120)
(102,398)
–
720,051
131
(2,103)
(13,030)
189
–
31,069
(10,521)
275,098
4,013
(2,697)
(49,751)
1,031
(120)
(71,329)
(10,521)
995,149
(7,087)
(726)
(35,860)
1,599
(98)
146
–
817,209
2,354
(1,957)
(12,794)
–
–
–
(5,515)
279,475
(4,733)
(2,683)
(48,654)
1,599
(98)
146
(5,515)
1,096,684
–
–
–
(3,295)
–
(3,295)
720,051
275,098
995,149
813,914
279,475
1,093,389
Changes in the market value of plan assets
770,348
35,572
(927)
–
–
–
17,840
13,561
16,250
15,477
31,727
–
48,046
842
(8)
(36,721)
(89,633)
–
540,833
(11)
717
189
–
(13,030)
26,490
(8,113)
222,141
(11)
48,763
1,031
(8)
(49,751)
(63,143)
(8,113)
762,974
–
2,503
1,599
(8)
(35,860)
53
–
602,115
–
4,372
–
–
(12,794)
–
(3,785)
191,612
–
6,875
1,599
(8)
(48,654)
53
(3,785)
793,727
–
–
–
(2,170)
–
(2,170)
540,833
222,141
762,974
599,945
191,612
791,557
Total
Domestic
602,115
20,471
793,727
27,845
–
(927)
(4,279)
Domestic
(EUR thousand)
Plan assets at start of year
Interest on plan assets
Plan expenses paid from plan assets recognized in profit or loss
Remeasurements
Return on plan assets not included in net
interest expense/income
Difference between plan expenses expected
and recognized in profit or loss
Employer contributions
Employee contributions
Effect of transfers
Benefits paid
Consolidation changes
Plan assets at end of year
Reclassification as liabilities associated with
assets held for sale
Plan assets at end of year after
reclassification
Total
156.
589,549
28,029
2012
(restated)*
Interna
tional
180,799
7,543
2013
Interna
tional
191,612
7,374
Annual Report 2013
185
Investing plan assets to cover future pension obligations generated actual returns of EUR 41,406 thousand in 2013
(2012: EUR 67,299 thousand).
The pension provisions are determined as follows:
Reconciliation of pension obligations to provisions for pensions and similar obligations
(EUR thousand)
Defined benefit obligations
Less plan assets
Funding status
Adjustments arising from the limit in IAS 19.58
Assets from overfunded pension plans
Provision for pensions and similar obligations
Dec. 31, 2013
Dec. 31, 2012
995,149
762,974
232,175
–
10,296
242,471
1,093,389
791,557
301,832
–
7,815
309,647
The fair value of plan assets is divided among asset classes as follows:
Composition of plan assets
Dec. 31, 2013
(EUR thousand)
Stock
U.S. equities
European equities
Emerging market equities
Other equities
Bonds
U.S. government bonds
European government bonds
Emerging market government bonds
Corporate bonds
Other bonds
Investment funds
Real estate
Insurance policies
Commodities
Cash
Other
Total
Fair value
Quoted in an Not quoted in an
active market
active market
Total
%
46,595
88,720
48,679
16,231
–
18,616
–
–
46,595
107,336
48,679
16,231
6.11
14.07
6.38
2.13
–
118,979
39,442
169,035
43,505
38,342
15,606
115
625,249
–
–
–
11,822
–
–
33,391
73,792
–
–
104
137,725
–
118,979
39,442
180,857
–
43,505
33,391
73,792
38,342
15,606
219
762,974
–
15.59
5.17
23.70
–
5.70
4.38
9.67
5.03
2.04
0.03
100.00
Dec. 31, 2012
(EUR thousand)
Stock
U.S. equities
European equities
Emerging market equities
Other equities
Bonds
U.S. government bonds
European government bonds
Emerging market government bonds
Corporate bonds
Other bonds
Investment funds
Real estate
Insurance policies
Commodities
Cash
Other
Total
Fair value
Quoted in an Not quoted in an
active market
active market
Total
%
64,706
91,080
28,196
23,513
–
18,616
–
–
64,706
109,696
28,196
23,513
8.17
13.86
3.56
2.97
18,889
185,317
36,239
118,566
17,859
32,460
–
–
29,310
13,815
166
660,116
–
–
–
11,199
–
–
32,681
63,196
–
–
5,749
131,441
18,889
185,317
36,239
129,765
17,859
32,460
32,681
63,196
29,310
13,815
5,915
791,557
2.39
23.41
4.58
16.39
2.26
4.10
4.13
7.98
3.70
1.75
0.75
100.00
As of December 31, 2013, anticipated pension payments for future years are as follows:
(EUR thousand)
Due in 2014
Due in 2015
Due in 2016
Due in 2017
Due in 2018
Due in 2019 to 2023
55,884
56,867
57,862
58,530
59,356
290,967
Pension expense under defined benefit plans is made up as follows:
Domestic
Interna
tional
Total
Domestic
Interna
tional
Total
9,841
813
10,654
27,032
(20,471)
2,089
–
2,089
10,642
(7,374)
11,930
813
12,743
37,674
(27,845)
8,641
1,599
10,240
31,070
(28,029)
1,632
–
1,632
10,889
(7,543)
10,273
1,599
11,872
41,959
(35,572)
6,561
3,268
9,829
3,041
3,346
6,387
–
17,215
927
6,284
927
23,499
–
13,281
–
4,978
–
18,259
(EUR thousand)
Current service cost
Past service cost
Total personnel expense
Interest expense for accrued benefit obligations
Return on plan assets
Net interest expense/income (net investment and interest income)
Plan expenses paid from plan assets recognized in profit or loss
Total amount recognized in profit or loss
*Restated for IAS 19R. For
156.
2012
(restated)*
2013
Annual Report 2013
187
In addition to the expenses recognized in profit or loss, the Consolidated Statement of Comprehensive Income includes EUR 62,585 thousand in actuarial gains recognized in 2013 before deferred taxes and after consolidation
156.
changes and exchange rate adjustments (2012: EUR 123,104 thousand* actuarial losses). Before deferred taxes,
the cumulative amount of actuarial losses is EUR 313,815 thousand (2012: EUR 376,400 thousand).
The Turner Group’s obligations to meet healthcare costs for retired staff are included in pension provisions due to
their pension-like nature. The defined benefit obligation as of December 31, 2013 came to EUR 38,909 thousand
(2012: EUR 45,028 thousand). Healthcare costs accounted for EUR 1,838 thousand (2012: EUR 1,569 thousand)
of the current service cost and EUR 1,614 thousand (2012: EUR 1,692 thousand) of the interest expense.
Sensitivity analysis
Pension obligations in the HOCHTIEF Group are subject to various risks. The main risks result from general changes
in interest and inflation rates; there is no unusual risk inherent in the pension obligations.
One major risk is interest rate risk. For defined benefit plans, (notional) contributions are calculated into benefits
using a table of fixed interest rates, independent of the current market interest rate. HOCHTIEF thus bears the risk
of general capital market interest rate changes with regard to the determination of benefits. Pension obligations
have increased significantly in recent years due to the generally low level of capital market interest rates. The correspondingly large impact is due to the relatively long term of the obligations.
There is also inflation risk. By law, company pensions in Germany must be raised level with the inflation rate at
least every three years. German company pensions under the 2000+ plan rise at a fixed 1% p.a., hence only older
pension commitments are subject to inflation risk in the pension phase. Turner plans are free from inflation risk as
the main defined benefit plan was frozen and no more adjustments to the company pension are made.
In addition, there is longevity risk. The granting of lifelong pensions means that HOCHTIEF bears the risk of
pensioners living longer than actuarial calculations predict. This risk normally cancels out collectively across all
pension plan members and only comes into play if general longevity is longer than expected.
The impact of the stated risks on the defined benefit obligations under a corresponding change in actuarial
assumptions is shown in the sensitivity analysis that follows.
Impact on the defined benefit obligation
(EUR thousand)
Discount rate +0.50% / -0.50%
Discount rate +1.00% / -1.00%
Salary increases +0.50% / -0.50%
Pension increases +0.25% / -0.25%
Medical costs +1.00% / -1.00%
Life expectancy +1 year
Domestic
Increase
Decrease
(43,509)
49,666
(83,023)
104,909
557
(438)
16,324
(15,565)
–
–
28,164
n/a
Dec. 31, 2013
International
Increase
Decrease
(12,732)
13,193
(25,066)
26,912
369
(342)
818
(638)
2
(3)
5,605
n/a
Total
Increase
Decrease
(56,241)
62,859
(108,089)
131,821
926
(780)
17,142
(16,203)
2
(3)
33,769
n/a
Defined contribution plans
Under defined contribution plans, the Company pays into a state or private pension fund voluntarily or in accord
ance with statutory or contractual stipulations. It has no obligation to pay further contributions.
There are defined contribution plans at Turner, Flatiron, and E.E. Cruz in the USA as well as at Leighton in Australia.
Turner changed over from defined benefit to defined contribution plans with effect from January 1, 2004. Depending on length of service and salary level, between 3% and 6% of an employee’s salary is paid into an external fund.
In addition, Turner employees have an option to pay up to 25% of their salaries into an investment fund as part of a
401 (k) plan. Turner tops up the first 5% of the deferred compensation by up to 100% depending on length of service.
Employees can join the plan after three years’ service. Tax relief is granted on payments into the fund; the investment risk is borne by employees. The defined contribution plans at Flatiron and E.E. Cruz are likewise 401 (k) plans.
All non-union employees are entitled. Flatiron pays a contribution in the amount of 6.0% of the wage or salary, while
E.E. Cruz doubles one-third of employee contributions, in each case up to the statutory maximum. In Australia,
since July 1, 2013 Leighton has paid 9.25% (previously 9.0%) of the wage and salary total into the statutory pension
(superannuation) scheme. The contribution rate is expected to rise incrementally up to 12.0% by 2021. Employees
have a choice of investment funds and bear the investment risk. They are able to pay top-up contributions on a
voluntary basis. Tax relief is granted on top-up contributions.
EUR 293,045 thousand was paid into defined contribution plans in 2013 (2012: EUR 323,187 thousand), mostly in
the Leighton Group (EUR 260,134 thousand; 2012: EUR 290,108 thousand) and the Turner Group (EUR 29,572 thousand; 2012: EUR 28,502 thousand). An additional EUR 86,617 thousand was paid into state pension schemes in
2013 (2012: EUR 83,834 thousand). Costs of defined contribution plans are reported as part of personnel expenses.
27. Other provisions
(EUR thousand)
Provisions for taxes
Personnel-related provisions
Provisions for insurance claims
Restructuring costs
Warranty obligations
Litigation risks
Sundry other provisions
Other provisions
Noncurrent
–
Dec. 31, 2013
Current
183,806
127,588
3,635
–
–
190,173
505,202
505,202
Total
49,045
49,045
Noncurrent
–
445,439
37,192
67,981
62,054
11,699
242,479
866,844
915,889
629,245
164,780
71,616
62,054
11,699
432,652
1,372,046
1,421,091
213,247
141,101
5,687
–
–
163,047
523,082
523,082
Dec. 31, 2012
Current
Total
79,625
79,625
463,622
40,724
50,564
68,058
17,467
254,743
895,178
974,803
676,869
181,825
56,251
68,058
17,467
417,790
1,418,260
1,497,885
The personnel-related provisions mainly consist of provisions for stock option schemes, long-service awards,
leave entitlements, and early retirement arrangements.
The size of provisions for insurance claims is computed annually by an actuary.
Items covered by sundry other provisions include contract administration, contract costs incurred subsequent to
invoicing, investment risk, preparation of annual financial statements, payments for damages, and other uncertain
liabilities.
Annual Report 2013
189
Statement of provisions
Allocations to
provisions
Reversal of
provisions
Consolidation
changes, currency
adjustments, reclassifications, and
transfer
79,625
20,634
(2,439)
(23,113)
(25,662)
49,045
676,869
567,824
(4,499)
(85,134)
(525,815)
629,245
181,825
559,566
1,418,260
1,497,885
11,071
259,526
838,421
859,055
(3)
(55,993)
(60,495)
(62,934)
(7,537)
(83,003)
(175,674)
(198,787)
(20,576)
(102,075)
(648,466)
(674,128)
164,780
578,021
1,372,046
1,421,091
(EUR thousand)
Provisions for taxes
Personnel-related provisions
Provisions for insurance
claims
Sundry other provisions
Other provisions
Use of
Balance at
provisions Dec. 31, 2013
Balance
at Jan. 1,
2013
28. Financial liabilities
(EUR thousand)
Bonds or notes issued
Amounts due to banks
Financial liabilities to non-consolidated
subsidiaries
Financial liabilities to participating interests
Lease liabilities
Sundry other financial liabilities
Dec. 31, 2013
Non-current
Current
Dec. 31, 2012
Non-current
Current
1,991,006
498,339
292,217
299,360
1,483,824
685,695
157,670
1,027,774
–
–
174,942
35,948
2,700,235
1,723
298,813
97,346
6,058
995,517
–
–
562,516
17,945
2,749,980
2,945
338,487
170,668
8,936
1,706,480
The bonds or notes issued relate to both HOCHTIEF Aktiengesellschaft and Leighton Holdings.
A EUR 750,000 thousand bearer bond issued by HOCHTIEF Aktiengesellschaft in March 2013 has a carrying amount
of EUR 764,771 thousand. The bond matures in March 2020. It carries a coupon of 3.875%. Interest is payable on
March 20 each year. A EUR 500,000 thousand bearer bond issued by HOCHTIEF Aktiengesellschaft in March
2012 has a carrying amount of EUR 517,421 thousand (2012: EUR 516,189 thousand). The bond matures in March
2017. It features a fixed coupon of 5.50%. Coupon payments are made on March 23 each year.
A U.S. dollar bond issued by Leighton Holdings in 2012 with a principal amount of USD 500,000 thousand has a
carrying amount of EUR 354,907 thousand (2012: EUR 371,912 thousand). The bond has a fixed coupon of 5.95%
and matures in November 2022. A U.S. dollar bond issued by Leighton Holdings in 2010 with a principal amount of
USD 350,000 thousand has a carrying amount of EUR 251,689 thousand (2012: EUR 263,987 thousand). The bond
is repayable in three installments in 2015, 2017, and 2020. The installments each carry a different rate of interest
ranging from 4.51 to 5.78%. The bonds or notes issued item also includes EUR 181,538 thousand (2012: EUR 220,265
thousand) for a further bond issued by Leighton Holdings in 2009. This has a principal amount of AUD 280,000
thousand, is for five years, and has a 9.5% fixed coupon. In 2008, Leighton Holdings issued a U.S. dollar private
placement with a principal amount of USD 280,000 thousand. The first tranche was repaid in 2013. Two further
tranches are repayable in 2015 and 2017. The installments each carry a different rate of interest ranging from 7.19
to 7.66%. The carrying amount of the U.S. dollar private placement at December 31, 2013 is EUR 121,760 thousand (2012: EUR 211,422 thousand). Finally, bonds or notes issued contain EUR 91,137 thousand (2012: EUR
57,719 thousand) under five further Leighton Holdings notes issues with a variable coupon.
Amounts due to banks include a EUR 50,000 thousand portion of a bilateral promissory note loan arranged on
December 13, 2012. The loan has an initial term of four years and has a fixed interest rate. The item also includes a
EUR 44,500 thousand portion of a EUR 120,600 thousand five-year promissory note loan issue placed in the market on November 25, 2011. The loan was placed with national and international banks. The coupon is based on
six-month EURIBOR plus an appropriate margin. There is also a EUR 240,000 thousand promissory note loan issue
put out by HOCHTIEF in 2010 and consisting of two tranches, for EUR 59,500 thousand and EUR 180,500 thousand respectively. This loan has an initial term of five years and a coupon equal to six-month EURIBOR plus an
appropriate lending margin. The four promissory note loans taken out in 2009 for a total of EUR 300,000 thousand and with terms of three and five years split halfway with part-fixed, part-variable interest have an outstanding
principal amount of EUR 30,000 thousand at the balance sheet date. Repayment of one of the two promissory
note loans taken out in 2008 was completed on schedule at the end of the loan term with an outstanding amount
of EUR 154,750 thousand paid during the year under review. The other is for a nominal amount of EUR 39,000
thousand with an initial term of seven years and carries a coupon equal to six-month EURIBOR plus an appropriate lending margin.
An international banking syndicate provided HOCHTIEF on market terms with a five-year credit facility comprising
a EUR 1.5 billion guarantee tranche and a EUR 500,000 thousand cash tranche. The cash tranche is undrawn at
the balance sheet date (2012: drawings of EUR 200,000 thousand).
EUR 117,981 thousand (2012: EUR 326,794 thousand) of amounts due to banks concerns borrowings by Leighton
Holdings.
Amounts due to banks at the balance sheet date comprise EUR 208,065 thousand (2012: EUR 824,092 thousand)
subject to variable rates of interest and EUR 589,634 thousand (2012: EUR 889,377 thousand) subject to fixed
rates of interest. The average interest rate on the variable-interest portion stood at 2.27% (2012: 3.57%). The average interest rate on the fixed-interest portion was 3.78% (2012: 2.76%).
As in the prior year, the average term was one-and-a-half years. Trade payables due to companies accounted for
using the equity method were EUR 298,755 thousand (2012: EUR 338,483 thousand). This mainly related to obligations to make payments into capital in connection with project companies in the HOCHTIEF Asia Pacific division.
The EUR 272,288 thousand (2012: EUR 733,184 thousand) in lease liabilities mainly relates to plant and equipment under finance leases at Leighton Holdings.
The minimum lease payments for liabilities under finance leases break down as follows:
Finance leases
Dec. 31, 2013
Due in up to 1 year
Due in 1–5 years
Due after 5 years
Nominal value
Discount
110,149
185,066
–
12,803
10,124
–
97,346
174,942
–
Nominal value
Discount
Present
value
199,471
622,154
203
28,803
59,838
3
170,668
562,316
200
(EUR thousand)
Dec. 31, 2012
Present
value
Annual Report 2013
191
Sundry other financial liabilities mostly contain loans and other debt.
29. Other liabilities
(EUR thousand)
Liabilities to employees
Deferred income
Tax liabilities (excluding income taxes)
Liabilities under derivative financial instruments
Social insurance liabilities
Sundry other liabilities
Dec. 31, 2013
Non-current
–
34,021
–
8,107
–
520
42,648
Current
210,158
20,410
38,688
19,195
14,809
137,384
440,644
Dec. 31, 2012
Non-current
–
38,707
–
24,533
–
–
63,240
Current
199,309
27,198
64,627
23,331
8,529
62,386
385,380
Deferred income mainly comprises insurance premiums received in advance for subsequent years (these are
reversed to income over the life of the policies) and rental payments.
EUR 14,712 thousand (2012: EUR 32,872 thousand) of the liabilities under derivative financial instruments relates to
interest-rate swaps held by HOCHTIEF Aktiengesellschaft.
Sundry other liabilities comprise other non-trade payables.
30. Trade payables
(EUR thousand)
Trade payables
Gross amount due to customers from construction work (POC)
Progress payments received
To construction joint ventures
Other
Advance payments received
From non-consolidated subsidiaries
From participating interests
Dec. 31, 2013
Dec. 31, 2012
(531,718)
705,111
173,393
91,922
5,119,922
5,385,237
18,138
290
7,288
5,410,953
(419,586)
573,198
153,612
99,066
5,454,725
5,707,403
24,363
493
17,042
5,749,301
The EUR 173,393 thousand (2012: EUR 153,612 thousand) gross amount due to customers from construction
work (POC) represents such amounts where the progress payments received from customers exceed the incurred
contract costs including a pro rata allocation of contract net profit.
Trade payables due to companies accounted for using the equity method were EUR 5,496 thousand (2012:
EUR 5,374 thousand).
31. Current income tax liabilities
The EUR 15,402 thousand (2012: EUR 8,747 thousand) in current income tax liabilities comprises amounts payable to
domestic and foreign revenue authorities.
Other disclosures
32. Undiluted and diluted earnings per share
Undiluted earnings per share are calculated by dividing the consolidated net profit attributable to the Company’s
stock by the average number of shares in circulation. This indicator can become diluted as a result of potential
shares (mainly stock options and convertible bonds). HOCHTIEF’s share-based payment arrangements do not
have a dilutive effect on earnings. Consequently, diluted and undiluted earnings per share are identical.
Consolidated net profit (EUR thousand)
Number of shares in circulation in thousands (weighted average)
Earnings per share (EUR)
Dividend per share (EUR)
Proposed dividend per share (EUR)
2013
2012
(restated)*
171,196
72,105
2.37
155,230
73,598
2.11
1.00
1.50
33. Reporting on financial instruments
Financial instruments include financial assets and liabilities as well as contractual claims and obligations relating to
exchanges and transfers of financial assets. Financial instruments can be derivative or non-derivative.
Non-derivative financial assets mostly comprise cash and cash equivalents, marketable securities, receivables,
and other financial assets. Marketable securities are carried at fair value. The fair values of available-for-sale financial assets are established with reference to market prices or determined using accepted valuation methods.
Non-derivative financial liabilities are mostly current liabilities measured at amortized cost.
According to their fair value, derivative financial instruments are reported either in other receivables and other assets
or in other liabilities. Derivatives are used in the HOCHTIEF Group for hedging existing transactions and in asset
management.**
** See glossary on page 219.
Holdings of non-derivative and derivative financial instruments are carried on the Balance Sheet; the maximum risk
of loss or default is equal to total financial assets. Any such risk identified in respect of financial assets is accounted
for with an impairment loss.
Risk management
All financial activities in the HOCHTIEF Group are conducted on the basis of a Group-wide financial framework
directive. This is fleshed out by individual, function-specific operating directives on issues such as currency and
collateral management. These directives lay down principles for dealing with the various classes of financial risk.
Trading, control, and settlement activities are divided within Corporate Finance between front, middle, and back
offices. This ensures effective operational risk management in that monitoring and settlement of front office external trading activities are performed by a separate and independent back office. All external trading actions are also
subject to at least dual control. Internal authorizations to give instructions are strictly limited in number and mon
etary amount, and are reassessed at least once a year and adjusted as necessary.
Annual Report 2013
193
Management of liquidity risk
HOCHTIEF uses predominantly centralized liquidity structures—in particular cash pooling—to pool liquidity at Group
level, among other things to avoid liquidity bottlenecks at the level of individual entities. The central liquidity position is calculated at regular monthly intervals and budgeted in a bottom-up process over a rolling 18-month period.
Liquidity budgets are supplemented with monthly stress testing. Liquidity budgets are used by HOCHTIEF in active
management of the securities portfolio and loans portfolio.
Issuance of a second corporate bond with a principal amount of EUR 750,000 thousand and a seven-year term
to maturity in March 2013 enabled the Group once again to spread borrowing over a larger range of national
and international lenders and further extend the maturity profile of the debt portfolio.
The tables below show maximum payments. The tables show the worst-case scenario for HOCHTIEF, i.e. the earliest possible contractual payment date in each case. Creditors’ rights of termination are taken into account. Foreign
currency items are translated using the closing rate as of the balance sheet date. Interest payments on variable
rate items are translated uniformly using the last interest rate fixed prior to the balance sheet date. Both primary
and derivative financial instruments (for example, forward exchange contracts and interest rate swaps) are taken
into account. Credit facilities granted but not yet drawn in their full amount are also included, as are financial guarantees given by the Group.
The maximum payments shown in the following tables (worst case scenario) are offset by contractually fixed receipts in the same periods that are not shown here (for example, from trade receivables). These cover most of the
cash outflows shown.
Maximum payments as of December 31, 2013
(EUR thousand)
Primary financial liabilities
Derivative financial instruments
Loan commitments and financial guarantees
2014
2015
2016-2017
after 2017
Total
6,387,209
19,195
69,237
6,475,641
746,705
6,262
–
752,967
1,017,501
1,445
–
1,018,946
1,467,055
400
–
1,467,455
9,618,470
27,302
69,237
9,715,009
2013
2014
2015-2016
after 2016
Total
7,502,338
23,331
67,533
7,593,202
795,548
15,949
–
811,497
999,187
7,949
–
1,007,136
1,548,604
635
–
1,549,239
10,845,677
47,864
67,533
10,961,074
Maximum payments as of December 31, 2012
(EUR thousand)
Primary financial liabilities
Derivative financial instruments
Loan commitments and financial guarantees
In addition, Group liquidity is adequately secured with cash in hand and on deposit, marketable securities holdFinancial Statements and Notes
ings, and undrawn revolving credit facilities. The following table shows the main liquidity instruments:
(EUR thousand)
Cash in hand and on deposit
Undrawn revolving credit facilities
Dec. 31,
2013
Dec. 31,
2012
1,687,297
1,162,121
1,961,306
4,810,724
1,998,628
816,472
1,676,930
4,492,030
The revolving credit facilities include a credit facility tranche with a facility amount of EUR 500,000 thousand under
the syndicated guarantee and credit facility that runs to December 2016. The credit facility was undrawn as of December 31, 2013 (2012: 40% drawn). There are also short-term, bilateral, revolving money market facilities with a
total facility amount of EUR 336,656 thousand (2012: EUR 457,600 thousand); these are undrawn as of the balance sheet date (2012: EUR 243,300 thousand drawn). Some of the facilities are subject to creditors’ rights of termination in connection with financial covenants, which are continuously monitored as part of corporate planning. In
light of the successful refinancing ahead of schedule in December 2011 and the broad international syndication in
each instance combined with the further bilateral credit and guarantee facilities, there is no refinancing risk with regard to long-term guarantee and credit facilities. As a further precautionary measure, there is appropriate scope
for raising additional capital under resolutions adopted at the 2011 General Shareholders’ Meeting.
HOCHTIEF also has sufficient revolving guarantee facilities, which play an important role for the Group. The guarantee facilities have a total size of EUR 11.86 billion (2012: EUR 12.54 billion) and are 67% drawn (2012: 73%).
Management of currency risk
HOCHTIEF is exposed to currency risk (in the form of transaction risk) from receivables, liabilities, cash and cash
equivalents, securities, and pending transactions in currencies other than the functional currency of the Group
company concerned in each case. Currency derivatives, mainly forward exchange contracts, are used to hedge
against fluctuations in these payments or items caused by exchange rates. HOCHTIEF normally hedges all currency risk.
Hedges for Group companies—with the exception of hedges in the Leighton Group—are mainly administered via
HOCHTIEF Aktiengesellschaft. Binding guidelines clarify their use and separate controls and responsibilities for all
Group companies. Currency derivatives are normally only used to hedge risk. Any form of speculation is ruled out
under a binding, Group-wide risk directive. The counterparties for derivatives entered into externally are banks with
a top credit rating.
(EUR thousand)
Assets
Forward exchange contracts/currency swaps
for hedging purposes (cash flow hedges)
for hedging purposes (but not hedge accounted)
Liabilities and shareholders’ equity
Forward exchange contracts/currency swaps
for hedging purposes (but not hedge accounted)
Dec. 31,
2013
Dec. 31,
2012
8,199
4,132
12,331
5,294
1
5,295
3,470
1,380
4,850
9,866
1,505
11,371
The following table shows the fair values of currency derivatives:
The maximum residual term of currency derivatives in cash flow hedges as of December 31, 2013 is 35 months
(2012: 47 months). As of December 31, 2013, the maximum residual term of currency derivatives for which hedge
accounting is not applied is 19 months (2012: 15 months).
Where hedge accounting is used, unrealized gains and losses on hedges are initially recognized in other comprehensive income, taking into account deferred tax. Gains and losses are not realized until a hedged item affects income. Derivatives are measured on the basis of current market rates as of the balance sheet date. When interpreting positive or negative fair value changes relating to derivatives, it is important to remember that they balance
hedged items whose values move in the opposite direction. A net EUR 9,301 thousand was charged to equity in
Annual Report 2013
195
2013 (2012: EUR 1,976 thousand credited) for market value changes on the above derivatives in cash flow hedges.
Where hedge accounting is not applied, all unrealized gains and losses on the hedged item are recognized immediately in profit or loss; in 2013 this related to a net gain of EUR 4,256 thousand (2012: net loss of EUR 8,873 thousand).
The following sensitivity analyses demonstrate the impact on HOCHTIEF Group equity and profit that would result
from a 10% fluctuation in foreign currencies relative to each Group company’s functional currency. The analysis is
based on holdings as of the balance sheet date.
(EUR thousand)
Change in equity due to market value fluctuations of currency
derivatives used for hedging (cash flow hedges)
Functional currency
Foreign currency
EUR
CHF
EUR
PLN
EUR
USD
EUR
GBP
AUD
EUR
AUD
JPY
AUD
USD
Change in profit or loss due to unhedged currency exposures in
primary financial instruments and to market value fluctuations in
derivative financial instruments (not hedge accounted)
Functional currency
Foreign currency
EUR
PLN
EUR
USD
EUR
RON
AUD
HKD
AUD
USD
CZK
EUR
QAR
EUR
USD
GBP
USD
CAD
Dec. 31, 2013
Exchange rate
10%
10%
increase
decrease
Dec. 31, 2012
Exchange rate
10%
10%
increase
decrease
1,229
(3,997)
(2,184)
444
(43)
–
84
(1,488)
3,988
2,181
(506)
43
–
(84)
3,907
114
(1,158)
(447)
(145)
(16)
(623)
(4,895)
(114)
1,367
340
145
16
623
460
5,673
(5,964)
2,046
13,540
(1,844)
6,175
1,100
3,079
(460)
(8,037)
5,964
(2,046)
(13,540)
1,844
(6,175)
(1,310)
(3,740)
(57)
863
(3,604)
1,575
10,477
(2,262)
4,179
22
52
(57)
247
3,604
(1,575)
(10,320)
2,259
(4,179)
(101)
(21)
Management of interest rate risk
HOCHTIEF is exposed to interest rate risk through financial items primarily consisting of interest-bearing marketable
securities on the assets side and financial liabilities on the liabilities side of the Balance Sheet. Two approaches are
used to minimize this risk. Firstly, the Company uses natural hedging, meaning that it eliminates contrary interest
rate risk from primary financial instruments on the asset and liabilities side. The second method is to use interest
rate derivatives. These generally take the form of interest rate swaps used in accordance with the Group financing
strategy to manage cash flow risk from changes in interest rates for variable-rate financial items.
As with currency derivatives, hedges for Group companies—with the exception of hedges in the Leighton Group—
are mainly administered via HOCHTIEF Aktiengesellschaft. There are also parallel regulations and guidelines, and
derivatives are used solely for hedging (i.e. not speculatively) as a matter of principle. The counterparties for derivatives entered into externally are generally banks with a top credit rating.
The following table shows the fair values of interest rate derivatives:
(EUR thousand)
Assets
Interest rate swaps
for hedging purposes (but not cash flow hedge accounted)
Interest rate futures
not for hedging purposes (for asset management structuring)
Liabilities and shareholders’ equity
Interest rate swaps
for hedging purposes (but not cash flow hedge accounted)
Interest rate futures
not for hedging purposes (for asset management structuring)
Dec. 31,
2013
Dec. 31,
2012
–
–
6
184
250
250
48
238
10,777
4,724
26,663
7,705
294
15,795
–
34,368
The maximum residual term of interest rate swaps both in cash flow hedges and otherwise as of December 31,
2013 is 43 months (2012: 47 months). The interest rate futures have a maximum residual term of 36 months (2012:
three months).
EUR 15,880 thousand was credited to equity in 2013 (2012: EUR 5,141 thousand) for market value changes on interest rate derivatives in cash flow hedges. This included EUR 1,190 thousand reclassified to profit or loss (2012: EUR
1,190 thousand reclassified as a charge to profit or loss). There was no hedge ineffectiveness. A net EUR 2,705
thousand was recognized in profit or loss (2012: EUR 452 thousand) for market value changes on the remaining interest rate derivatives.
The following sensitivity analyses demonstrate the impact that a 1% fluctuation in the respective market interest
rate would have had on equity and on profit or loss. The analysis is based on holdings as of the balance sheet date.
Dec. 31, 2012
Market interest rate
1% increase
1% decrease
(6,481)
3,365
(10,111)
7,542
3,824
(3,866)
(12,190)
14,057
(EUR thousand)
Change in equity due to market value fluctuations
of interest rate derivatives used for hedging (cash
flow hedges) and of fixed-interest securities meas
ured at fair value through equity
Change in profit or loss due to unhedged variable
rate interest rate exposures on primary financial
instruments and to market value fluctuations
in derivative financial instruments (not hedge
accounted)
Dec. 31, 2013
Market interest rate
1% increase
1% decrease
Annual Report 2013
197
Management of other price risk
Other price risk results at HOCHTIEF through investing in current and non-current non-interest-bearing securities,
chiefly shares and funds, that are classified as available for sale and therefore measured at fair value through equity.
Other price risk stems from participating interests that are classified as available for sale to the extent that they are
measured at fair value. Such items are shown in the following table. Participating interests measured at amortized
cost because their fair value cannot be reliably measured are not included.
(EUR thousand)
Price risk exposure on non-current assets
Price risk exposure on current assets
Dec. 31,
2013
60,371
81,979
Dec. 31,
2012
76,897
110,852
HOCHTIEF actively manages price risk. Continuous monitoring and analysis of the markets make it possible to
marshal investments at short notice. This allows the Company to detect negative developments on the capital
market at an early stage and take appropriate action. Derivatives are only used to control price risk in exceptional
instances.
To hedge our share-based compensation plans, stock-based derivatives were entered into with a maximum residual
term of 63 months as of December 31, 2013 (2012: 75 months). These derivatives are not subject to hedge accounting, but are deployed as a natural hedge. Gains and losses in the fair value of these derivatives are contained in
personnel costs.
The following table shows the fair values of equity options, stock forward contracts, and index-based options:
(EUR thousand)
Assets
Equity options and stock forward contracts for hedging purposes (but not hedge accounted)
Index-based options, not for hedging purposes
Liabilities and
shareholders’ equity
Forward purchase contracts for hedging purposes (cash flow hedges)
Equity options and stock forward contracts for hedging purposes (but not hedge accounted)
Options written, not for hedging purposes
Dec. 31,
2013
Dec. 31,
2012
14,906
–
14,906
9,829
–
9,829
–
712
5,945
6,657
–
2,125
–
2,125
No market value changes on the above forward contracts in cash flow hedges were recognized in equity in the
year under review (2012: EUR 4,258 thousand charged to equity). A net EUR 545 thousand was charged to
profit or loss (2012: EUR 42,313 thousand) for market value changes on equity options, stock forward contracts,
index-based options not in hedges, and on the written options.
The following sensitivity analyses demonstrate the impact that a 10% fluctuation in the market value of primary and
derivative financial instruments would have had on equity and on profit or loss. The analysis is based on holdings
as of the balance sheet date.
(EUR thousand)
Change in equity due to market value fluctuations
of derivatives used for hedging (cash flow hedges)
Change in profit or loss due to market value fluctuations of derivatives to which hedge accounting
is not applied
Change in equity due to changes in market price
of unimpaired securities
Change in equity due to changes in value of
unimpaired participating interests measured at
fair value
Change in equity due to increases in the market
price of impaired securities
Change in equity due to increases in the value of
impaired participating interests measured at fair
value
Change in profit or loss due to reductions in the
market price of impaired securities
Change in profit or loss due to decreases in the
value of impaired participating interests measured
at fair value
Dec. 31, 2013
Market value
10%
10%
increase
decrease
Dec. 31, 2012
Market value
10%
10%
increase
decrease
–
–
–
–
5,365
(5,196)
6,366
(6,227)
8,197
(8,197)
11,085
(11,085)
5,790
(5,790)
47,631
(47,631)
–
–
–
–
222
–
255
–
–
–
–
–
–
(222)
–
(255)
Management of credit risk
The HOCHTIEF Group is exposed to credit risk from operations and from certain financing activities.
HOCHTIEF performs risk management for operations by continuously monitoring trade receivables at divisional
level. If a specific credit risk is detected, it is countered by recognizing an individual impairment.
The HOCHTIEF Group has given third parties financial guarantees in respect of companies accounted for using
the equity method. Financial guarantees are only given in respect of companies with top credit standing, restricting
to a minimum the probability of the guarantees being drawn upon. Loan commitments are only given to companies
accounted for using the equity method.
Annual Report 2013
199
The maximum credit risk exposure of financial assets is equivalent to their carrying amounts in the Balance Sheet.
The actual credit risk exposure is lower, however, due to collateral given in favor of the HOCHTIEF Group. The
maximum risk exposure on financial guarantees given by HOCHTIEF is the maximum amount to be paid by HOCHTIEF.
The maximum credit risk for loan commitments is the amount of the commitment. The maximum credit risk from
financial guarantees and loan commitments amounted to EUR 69,237 thousand as of December 31, 2013 (2012:
EUR 67,533 thousand).
The probability of the financial guarantees and loan commitments being drawn upon is very small as of the reporting date. HOCHTIEF accepts collateral to secure contract performance by subcontractors, subcontractors’ warranty obligations, and claims to remuneration. Such collateral includes guarantees relating to warranty obligations,
contract performance, advance payments, and receivables. Acceptance of collateral is governed by a HOCHTIEF
directive. Among other things, this covers the contractual drafting, implementation, and management of all agreements. The detailed rules vary according to factors such as the country jurisdiction and applicable case law. In the
case of credit risk, HOCHTIEF examines the credit rating of the party providing the collateral for all guarantees accepted. HOCHTIEF uses external specialists (for example, rating agencies) to assess credit ratings where possible.
The fair values of accepted collateral are not disclosed as they often cannot be measured reliably.
The following table shows unimpaired financial assets that are past due:
(EUR thousand)
Trade receivables
Current financial
receivables
Other current receivables
and other current financial
assets
Up to 30
days
Dec. 31, 2013
31 to 60
61 to 90
days
days
Over 90
days
Up to 30
days
Dec. 31, 2012
31 to 60
61 to 90
days
days
Over 90
days
113,127
33,495
14,362
105,669
126,043
49,424
44,833
86,152
–
455
274
11,347
199
729
192
10,042
29
113,156
–
33,950
–
14,636
–
117,016
179
126,421
–
50,153
–
45,025
181
96,375
The age structure of financial assets that are past due is shaped by industry-specific factors. Receipt of payment
depends on acceptance (inspection) and invoice checking, which can often take a relatively long time, especially
for large-scale projects. Most of the unimpaired financial assets that are past due are from public-sector clients
and industrial companies with top credit ratings.
Individually impaired financial assets are shown below:
(EUR thousand)
Trade receivables
Non-current
Current
Other current receivables and
other current financial assets
Securities
Gross carrying amount
106,517
Dec. 31, 2013
Impairment
72,062
Net carrying
amount
34,455
Gross carrying amount
120,572
42,727
18,615
31,051
16,574
11,676
2,041
1,949
21,391
191,199
397
6,630
126,714
1,552
14,761
64,485
Dec. 31, 2012
Impairment
91,033
Net carrying
amount
29,539
30,485
9,336
19,987
8,343
10,498
993
1,265
–
161,658
957
–
120,320
308
–
41,338
The impairments in trade receivables mostly consist of impaired contracting-related claims as is typical for the
industry.
The following table shows changes in impairments on financial assets in 2013 and in the prior year:
Reconciliation of changes in impairments
(EUR thousand)
Trade receivables
Non-current
Current
Other current receivables and other current
financial assets
Securities
Jan. 1, 2012
Changes*
Dec. 31,
2012/
Jan. 1, 2013
84,039
6,994
91,033
(18,971)
72,062
19,867
8,004
120
339
19,987
8,343
11,064
8,231
31,051
16,574
822
–
112,732
135
–
7,588
957
–
120,320
(560)
6,630
6,394
397
6,630
126,714
Changes*
Dec. 31,
2013
*Changes result from allocations, reversals, utilizations,
curreny adjustments and
consolidation changes.
With regard to financial assets that are neither past due nor impaired, there are currently no indications of any
need to recognize impairments for reasons relating to credit ratings.
Capital risk management
The HOCHTIEF Group manages capital with the aim of ensuring that all Group companies can continue to operate
as a going concern. The Group keeps the cost of capital as low as possible by optimizing the balance between equity
and debt as the need arises. These measures serve to maximize shareholder earnings.
The Group’s capital structure consists of the Balance Sheet items comprising net debt (current and non-current
liabilities less cash and cash equivalents) and shareholders’ equity. The Risk Management Steering Committee
assesses and examines the Group’s capital structure at regular intervals, taking into account the risk-adjusted cost
of capital.
The overall capital risk management strategy did not change in 2013 compared with the prior year.
Additional information on financial instruments
The table overleaf shows carrying amounts and fair values for each class of financial instrument and carrying
amounts for each IAS 39 category as of December 31, 2013 and December 31, 2012:
Annual Report 2013
201
2013
Carrying amount by category
Financial assets
Not belonging to any category
Available for
sale
Held for
trading
Loans and
receivables
Held for
trading
At amortized
cost
Hedge
accounting and
finance leases
Not covered by
IFRS 7
Total carrying amounts
Dec. 31, 2013
Total fair
value
Dec. 31,
2013
60,371
14,897
75,268
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60,371
14,897
75,268
60,371
N/A
60,371
–
–
–
–
–
–
526,730
126,934
2,455,530
–
–
–
–
–
–
–
–
–
–
–
3,527,602
526,730
126,934
5,983,132
526,730
126,934
5,983,132
–
–
–
–
14,948
–
–
14,948
–
1
–
1
–
–
–
–
–
–
–
–
558
–
–
558
–
–
78,324
78,324
15,506
1
78,324
93,831
15,506
1
78,324
93,831
–
–
–
–
1,123,258
–
4,340
–
–
4,340
–
–
–
76,206
–
76,206
–
2,035,251
–
–
–
–
–
–
–
–
–
–
–
–
7,641
–
–
7,641
–
–
–
–
101,975
101,975
–
–
11,981
76,206
101,975
190,162
1,123,258
2,035,251
11,981
76,206
101,975
190,162
1,123,258
2,035,251
–
–
–
–
–
–
–
–
–
–
–
–
2,525,293
898,171
5,219,422
174,942
97,346
–
–
–
191,531
2,700,235
995,517
5,410,953
2,784,768
995,517
5,410,953
–
–
–
–
–
–
–
–
–
–
–
–
3,020
–
–
3,020
–
–
–
–
5,087
–
–
5,087
–
–
34,541
34,541
8,107
–
34,541
42,648
8,107
–
34,541
42,648
–
–
–
–
–
–
–
–
–
–
–
–
10,035
–
–
10,035
–
135,268
–
135,268
9,160
–
–
9,160
–
–
286,181
286,181
19,195
135,268
286,181
440,644
19,195
135,268
286,181
440,644
(EUR thousand)
Assets
At fair value
At amortized cost
Non-current
Current
Trade receivables
Other receivables and
other financial assets
Non-current
At fair value
At amortized cost
Not covered by IFRS 7
Current
At fair value
At amortized cost
Securities
Liabilities and
s hareholders’ equity
Non-current
Current
Trade payables
Other liabilities
Non-current
At fair value
At amortized cost
Current
At fair value
At amortized cost
2012
Carrying amount by category
Financial assets
Not belonging to any category
Available for
sale
Held for
trading
Loans and
receivables
Held for
trading
At amortized
cost
Hedge
accounting and
finance leases
Not covered by
IFRS 7
Total carrying amounts
Dec. 31, 2012
Total fair
value
Dec. 31,
2012
76,897
14,855
91,752
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
76,897
14,855
91,752
76,897
N/A
76,897
–
–
–
–
–
–
633,445
134,558
2,350,894
–
–
–
–
–
–
1,838
727
–
–
–
2,958,226
635,283
135,285
5,309,120
635,283
135,285
5,309,120
–
–
–
–
9,709
–
–
9,709
–
34,161
–
34,161
–
–
–
–
–
–
–
–
480
–
–
480
–
–
57,166
57,166
10,189
34,161
57,166
101,516
10,189
34,161
57,166
101,516
–
–
–
–
628,800
–
354
–
–
354
–
–
–
87,693
–
87,693
–
2,514,782
–
–
–
–
–
–
–
–
–
–
–
–
4,819
–
–
4,819
–
–
–
–
132,540
132,540
–
–
5,173
87,693
132,540
225,406
628,800
2,514,782
5,173
87,693
132,540
225,406
628,800
2,514,782
–
–
–
–
–
–
–
–
–
–
–
–
2,187,464
1,535,812
5,571,326
562,516
170,668
–
–
–
177,975
2,749,980
1,706,480
5,749,301
2,917,436
1,706,480
5,749,301
–
–
–
–
–
–
–
–
–
–
–
–
7,742
–
–
7,742
–
–
–
–
16,791
–
–
16,791
–
–
38,707
38,707
24,533
–
38,707
63,240
24,533
–
38,707
63,240
–
–
–
–
–
–
–
–
–
–
–
–
3,593
–
–
3,593
–
61,187
–
61,187
19,738
–
–
19,738
–
–
300,862
300,862
23,331
61,187
300,862
385,380
23,331
61,187
300,862
385,380
(EUR thousand)
Assets
At fair value
At amortized cost
Non-current
Current
Trade receivables
Other receivables and
other financial assets
Non-current
At fair value
At amortized cost
Current
At fair value
At amortized cost
Securities
Liabilities and
s hareholders’ equity
Non-current
Current
Trade payables
Other liabilities
Non-current
At fair value
At amortized cost
At fair value
At amortized cost
Current
Annual Report 2013
203
Because current financial instruments have short residual terms and are measured at market value, their carrying
amounts correspond to market value as of the balance sheet date. Non-current securities in the available-for-sale
category are measured at fair value through equity and, as such, their carrying amounts also correspond to fair
value.
Shares in non-consolidated subsidiaries and other participating interests are measured at fair value if fair value can
be reliably determined. Otherwise, such items are measured at cost in the available-for-sale category.
In the disclosures on the fair value hierarchy for financial instruments measured at fair value, fair value is defined as
the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions (i.e., the exit price). For non-financial
assets, fair value is measured assuming the highest and best use of the asset by market participants. A three-level
hierarchy is applied that reflects the observability of the given inputs to valuation techniques used to measure fair value.
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; e.g. quoted securities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices); e.g. interest rate swaps and forward exchange contracts.
Level 3: No relevant observable inputs available, hence unobservable inputs are determined as an exit price from
the perspective of a market participant that holds the asset or owes the liability; e.g. investments measured at fair
value to be determined by business valuation.
Disclosures relating to the fair value hierarchy for financial instruments measured at fair value
(EUR thousand)
Assets
Non-current
Current
Liabilities
Other liabilities
Non-current
Current
Level 1
Dec. 31, 2013
Level 2
Level 3
Level 1
Dec. 31, 2012
Level 2
Level 3
311
962
59,098
1,510
314
75,073
–
–
1,048,332
15,506
11,981
74,926
–
–
–
–
–
549,941
10,189
5,173
78,859
–
–
–
–
–
8,107
13,250
–
5,945
–
–
24,533
23,331
–
–
There were no transfers of assets measured at fair value between Level 1 and Level 2 of the fair value hierarchy.
There were therefore likewise no changes in Level 3.
The fair value of investments in unlisted entities and of debt instruments not traded in an active market is measured
using the discounted cash flow method and investment value based on the core and top slice approach. Any discounting is done using current market interest rates. A seven-year tenancy duration and a multiplyer of 19% are
assumed.
Reconciliation of beginning to ending balances for Level 3 measurements of financial instrument fair values
(EUR thousand)
Other liabilities
Non-current
Current
(EUR thousand)
Other liabilities
Non-current
Current
Balance as
of Jan. 1,
2013
75,073
Currency
adjustments
(12,900)
–
–
–
–
Balance as
of Jan. 1,
2012
48,755
Currency
adjustments
42
–
30,700
–
–
Gains/(losses) recog- Other
nized in profit or loss changes
(13,307)
10,232
–
(5,945)
Balance as
of Dec. 31,
2013
59,098
–
–
–
(5,945)
Gains/(losses) recog- Other
nized in profit or loss changes
–
26,276
Balance as of
Dec. 31, 2012
75,073
–
(38,724)
–
(69,424)
–
–
The EUR 19,252 thousand in losses (2012: EUR 38,724 thousand) recognized in profit or loss are included in other
operating expenses; the remaining changes are not recognized in profit or loss. A 0.3% increase in the discount
rate would cause a 1% reduction in the multiplier.
Financial assets with a carrying amount of EUR 613,548 thousand are provided as collateral for recognized financial liabilities and unrecognized contingent liabilities as of December 31, 2013 (2012: EUR 494,823 thousand).
The following table shows the net profit from financial instruments by IAS 39 category:
Net profit from financial instruments
(EUR thousand)
Available for sale
Held for trading
Loans and receivables
Liabilities at amortized cost
2013
2012
32,160
4,587
68,872
(312,629)
(207,010)
76,964
(43,497)
67,544
(297,600)
(196,589)
The calculation of net profit from financial instruments includes interest income and expenses, impairments and
impairment reversals, income and expenses from currency translation, dividend income, gains and losses on
disposal, and other changes in the fair value of financial instruments recognized in income.
Impairments of financial assets totaling EUR 29,576 thousand (2012: EUR 21,866 thousand) were recognized in 2013.
EUR 96 thousand of this figure (2012: EUR 2,237 thousand) relates to the carrying amounts of non-consolidated
subsidiaries and other participating interests measured at cost where a fair value is not available. In the prior year,
an additional EUR 13,306 thousand (2012: –) related to the carrying amounts of non-consolidated subsidiaries and
other participating interests measured at fair value. Impairments of EUR 425 thousand (2012: EUR 120 thousand)
were recorded on non-current financial receivables in the reporting year. Impairments of EUR 8,562 thousand
(2012: EUR 1,236 thousand) were recognized for current financial receivables. Impairments of EUR 7,143 thousand
(2012: EUR 18,122 thousand) were recognized for trade receivables and impairments of EUR 44 thousand (2012:
EUR 151 thousand) were recognized for other current receivables and other current financial assets.
Annual Report 2013
205
34. Contingencies, commitments, and other financial obligations
(EUR thousand)
Obligations under guarantees and letters of comfort
Dec. 31, 2013
9,379
Dec. 31, 2012
8,842
These commitments and potential obligations 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 and construction joint ventures. HOCHTIEF is also jointly and severally liable for all construction joint
ventures in which it has an interest.
The syndicated guarantee facility for EUR 2 billion taken out in December 2011 continues to be a central long-term
financing instrument for HOCHTIEF Aktiengesellschaft. The syndicated facility has a tranche with a facility amount
of EUR 1.5 billion, drawings on which amounted to EUR 1.02 billion as of December 31, 2013 (2012: EUR 1.07 billion) and a EUR 500,000 thousand cash tranche, which is undrawn as of December 31, 2013 (2012: drawings of
EUR 200,000 thousand). The facility permits the furnishing of guarantees for ordinary activities, mainly of the
HOCHTIEF Europe division. The guarantee and credit facility runs for five years to December 13, 2016.
In addition, the HOCHTIEF Group has available a further EUR 5.64 billion (2012: EUR 6.11 billion) in guarantee facilities provided by insurance companies and banks. This includes the EUR 908,735 thousand syndicated guarantee
facility negotiated by Leighton Holdings in the prior year. The latter facility has an initial term of three years and is
drawn in the amount of EUR 690,862 thousand.
HOCHTIEF Aktiengesellschaft has provided an unlimited bonding guarantee in favor of U.S. insurance companies
in respect of obligations of the Turner Group and the Flatiron Group. Bonding is a statutory form of security used in
the U.S. to guarantee performance of public projects. It is also used with other selected customers. The total bonding
amount is USD 6,500 million as in the prior year. USD 4,027 million was utilized in the year under review (2012: USD
5,191 million). No recourse has ever been made to this guarantee provided by HOCHTIEF, and none is currently
anticipated for the future.
Group order exposure from awarded capital expenditure projects is EUR 137,395 thousand (2012: EUR 412,523
thousand) and mostly relates to mining activities at the Leighton Group.
Cash call commitments on financial assets totaled EUR 36,817 thousand (2012: EUR 26,733 thousand). EUR 22,141
thousand (2012: EUR 11,000 thousand) of this amount relates to joint ventures in the HOCHTIEF Europe division and
EUR 14,676 thousand (2012: EUR 15,733 thousand) to PPP project companies in the HOCHTIEF Asia Pacific division.
The term breakdown of minimum lease payments under operating leases is as follows:
Operate Leasing
(EUR thousand)
Due within 1 year
Due in 1–5 years
Due after 5 years
Dec. 31, 2013
Dec. 31, 2012
Nominal value
Nominal value
346,770
841,209
64,929
286,271
619,277
48,642
The obligations from operating leases mainly relate to technical equipment and machinery leased by the Leighton
Group. Lease payments under operating leases were EUR 315,974 thousand in 2013 (2012: EUR 352,720 thousand).
Amounts due under long-term tenancies are EUR 217,252 thousand (2012: EUR 229,286 thousand). The term for
which such tenancies cannot be terminated is between two and 14 years (2012: two and 15 years). The amounts
due under tenancies are partly offset by anticipated rental income of EUR 101,422 thousand (2012: EUR 117,561
thousand).
Other financial obligations include EUR 101,100 thousand (2012: EUR 74,703 thousand) in commitments under
long-term contracts for the supply of goods and services.
Legal disputes
HOCHTIEF Group companies are involved in various legal disputes in the context of their operating activities. Potential negative impacts could arise from the ongoing arbitration proceedings in connection with the exercise of a
put option by a member of the Budapest Airport consortium, described in more detail on page 123 et seq.
HOCHTIEF does not anticipate that the remaining disputes will have any material negative impact on the Group’s
business and financial situation.
35. Segment reporting
HOCHTIEF’s structure reflects the operating focus of our business as well as the Group’s presence in key national
and international regions and markets. Segmental reporting in the HOCHTIEF Group is based on the Group’s divisional operations. The breakdown mirrors the Group’s internal reporting systems.
The Group’s reportable segments* (divisions) are as follows:
HOCHTIEF Americas encompasses the construction activities of operational units in the USA and Canada.
*Detailed information on the
various operating segments is
included in the Management
Report on pages 100 to 113.
HOCHTIEF Asia Pacific pools the construction activities and contract mining in the Asia-Pacific region. Its telecommunications interests were sold to Ontario Teachers’ Pension Plan in the year under review.
HOCHTIEF Europe brings together the core business in Europe as well as selected other regions and designs,
develops, builds, operates, and manages real estate and infrastructure. The non-core service business line was
sold in the third quarter of 2013.
The Corporate Headquarters/Consolidation unit comprises Corporate Headquarters, other activities not assigned
to separately listed divisions, including management of financial resources and insurance activities, plus consolidation effects. Insurance activities are managed from Corporate Headquarters under the responsibility of HOCHTIEF
Insurance Broking and Risk Management Solutions GmbH together with a subsidiary in Luxembourg. Through this
subsidiary HOCHTIEF provides various insurance and reinsurance offerings primarily for builders’ risk, contractor
default, third party liability, and workers’ compensation insurance. The airport holdings under HOCHTIEF Aktien
gesellschaft in the prior year were sold in the year under review.
Annual Report 2013
207
Divisions
156.
External sales
Intersegment sales
Sales by division (external
plus intersegment)
2013
2012
2013
2012
2013
2012
7,943,785
14,767,005
2,864,559
7,374,647
15,179,789
2,845,316
–
–
5,770
300
24
10,890
7,943,785
14,767,005
2,870,329
7,374,947
15,179,813
2,856,206
117,896
25,693,245
127,970
25,527,722
8,944
14,714
12,269
23,483
126,840
25,707,959
140,239
25,551,205
(EUR thousand)
HOCHTIEF Americas
HOCHTIEF Europe
Corporate Headquarters/
Consolidation
HOCHTIEF Group
Divisions
Consolidated net profit
2013
2012
(restated)*
59,447
183,851
31,780
42,529
152,662
(53,588)
26,803
666,641
36,650
(103,882)
171,196
13,627
155,230
3,727
733,821
(EUR thousand)
HOCHTIEF Americas
HOCHTIEF Europe
Consolidation
HOCHTIEF Group
Divisions
Depreciation/
amortization
2013
2012
Share of profits and losses
of equity-method associates
and jointly controlled entities
Impairment losses
2013
2012
28,439
848,818
37,059
1,069
29,811
34,297
116
29,784
2,837
3,706
918,022
–
65,177
–
32,737
Carrying amount of equitymethod investments
Purchases of intangible
assets, property, plant,
equipment, and investment
properties
2013
2012
2013
2012
2013
2012
45,643
42,080
5,441
25,965
(58,751)
36,653
70,742
535,308
92,458
63,359
688,187
218,519
19,344
846,534
45,633
27,458
1,110,745
72,337
59,713
152,877
77,377
81,244
–
698,508
125,875
1,095,940
2,058
913,569
4,090
1,214,630
(EUR thousand)
HOCHTIEF Americas
HOCHTIEF Europe
Consolidation
HOCHTIEF Group
Regions
External sales by
customer location
Property, plant
and equipment
Intangible assets
2013
2012
2013
2012
2013
2012
2,010,602
710,836
8,137,208
2,872,942
11,961,035
622
25,693,245
1,857,265
750,012
7,563,255
2,868,129
12,486,599
2,462
25,527,722
115,691
34,498
90,984
372,663
743,703
–
1,357,539
123,242
38,637
109,954
544,855
1,082,519
–
1,899,207
56,396
1,584
313,624
140,730
317,501
–
829,835
70,558
1,616
334,766
564
305,855
–
713,359
(EUR thousand)
Germany
Rest of Europe
Americas
Asia
Australia
Africa
HOCHTIEF Group
EBITDA
Profit before taxes
2013
2012
2013
2012
2013
2012
(restated)*
67,742
652,624
72,718
48,298
631,241
12,550
143,015
1,411,079
189,147
102,817
1,442,405
129,833
115,143
744,750
152,498
74,262
593,587
92,174
94,045
499,776
62,803
57,134
411,124
28,694
66,027
859,111
(97,029)
595,060
165,910
1,909,151
46,677
1,721,732
162,181
1,174,572
42,971
802,994
143,195
799,819
44,472
541,424
Non-cash expenses
Interest and similar
income
2013
2012
Interest and similar
expenses
2013
2012
2013
2012
2013
2012
–
1,435
–
–
–
603
107,066
484,680
260,411
72,486
634,204
225,388
3,294
21,620
28,433
3,376
25,867
33,662
19,522
224,426
47,233
17,103
208,330
65,997
–
1,435
–
603
57,315
909,472
79,625
1,011,703
275
53,622
(309)
62,596
21,448
312,629
6,170
297,600
Purchases of
financial assets
Total purchases
Total assets
(balance sheet total)
Gross debt
2013
2012
2013
2012
2013
2012
2013
2012
38,208
469,071
13,690
78,692
421,873
66,140
57,552
1,315,605
59,323
106,150
1,532,618
138,477
2,778,101
7,738,590
3,037,883
2,676,042
8,961,934
3,371,406
2,469,800
5,561,170
2,297,164
2,386,094
6,601,276
2,727,372
–
520,969
27
566,732
2,058
1,434,538
4,117
1,781,362
1,202,352
14,756,926
1,952,958
16,962,340
1,135,092
11,463,226
1,003,791
12,718,533
Carrying amount of equitymethod investments
Total assets
(balance sheet total)
Profit/(loss) from operating
activities (segment result)
2013
2012
Purchases
2013
2012
2013
2012
2013
2012
54,134
11,525
96,695
328,598
207,556
–
698,508
184,901
139,436
82,630
429,720
259,253
–
1,095,940
2,799,543
1,164,337
2,844,329
2,760,187
5,188,530
–
14,756,926
3,794,024
1,187,936
2,773,061
3,222,040
5,985,279
–
16,962,340
48,640
6,497
63,730
376,504
939,167
–
1,434,538
76,957
26,944
142,659
358,313
1,176,489
–
1,781,362
Annual Report 2013
209
Explanatory notes to the segmental data
Intersegment sales represent revenue generated between divisions. They are transacted on an arm’s length basis.
External sales mainly comprise revenue recognized using the percentage-of-completion method in the mainstream
construction business, construction management, and contract mining, in the amount of EUR 23,173,287 thousand (2012: EUR 23,198,305 thousand). The sum of external sales and intersegment sales gives total sales rev
enue for each division.
The share of profits and losses of equity-method associates and jointly controlled entities comprises income and
expenses, including impairment losses relating to companies accounted for using the equity method.
Depreciation and amortization relate to intangible assets with finite useful lives, property, plant and equipment, and
investment properties.
The impairment losses relate to intangible assets, property, plant and equipment, investment properties, and financial
assets.
Purchases comprise additions to intangible assets, property, plant and equipment, investment properties, equitymethod investments (excluding equity-method adjustments), subsidiaries, and participating interests.
Total assets are equivalent to the divisions’ totals in the Consolidated Balance Sheet. Gross debt equals total assets
minus consolidated shareholders’ equity.
Operating earnings (EBITA) are derived from earnings from operating activities as follows:
2013
2012
859,111
210,412
(+) 105,049
1,174,572
595,060
186,404
(+) 21,530
802,994
(EUR thousand)
Earnings from operating activities
+ Net income from participating interests
– Non-operating earnings
The derivation of operating earnings from earnings from operating activities is based on the following considera
tions:
Net income from participating interests contains all income and expense from equity stakes held for operational
purposes and is thus an integral part of the Group’s operating earnings.
Income and expenses classified as exceptional items for business management purposes or resulting from exceptional transactions hinder analysis of ordinary operations and should be attributed to non-operating earnings. ConFinancial Statements and Notes
solidated earnings from operating activities were adjusted in the year under review by non-operating earnings of
EUR 105,049 thousand (2012: EUR 21,530 thousand). The non-operating earnings item consists of restructuring
expenses mainly relating to the HOCHTIEF Europe and the HOCHTIEF Asia Pacific divisions.
36. Notes to the Consolidated Statement of Cash Flows
The Consolidated Statement of Cash Flows classifies cash flows into operating, investing, and financing activities.
Exchange rate effects are eliminated and their influence on the cash position is disclosed separately. Changes in
cash and cash equivalents due to acquisitions and disposals of consolidated companies are shown separately
under cash used in or provided by investing activities. The EUR 16,720 thousand decrease (2012: EUR 56,573 thousand increase) in cash and cash equivalents due to consolidation changes is the balance of EUR 21,936 thousand
(2012: EUR –) in cash and cash equivalents disposed of in divestments and EUR 5,216 thousand (2012: EUR
56,573 thousand) in cash and cash equivalents from acquisitions.
The EUR 2,035,251 thousand (2012: EUR 2,525,543 thousand) year-end total for cash and cash equivalents
shown on the cash flow statement matches the cash and cash equivalents item on the balance sheet after deducting the figure of EUR 10,761 thousand contained in assets held for sale. The total comprises EUR 1,942 thousand (2012: EUR 2,688 thousand) in petty cash, EUR 1,750,908 thousand (2012: EUR 2,046,162 thousand) in
cash balances at banks, and EUR 282,401 thousand (2012: EUR 465,932 thousand) in marketable securities with
maturities of no more than three months at the time of acquisition. Cash and cash equivalents to the value of EUR
65,553 thousand are subject to restrictions (2012: EUR 50,222 thousand).
Net cash provided by operating activities represented a cash inflow of EUR 206,774 thousand. The cash inflows
generated from the disposal of the airport business, the service business line in the HOCHTIEF Europe division,
and investments in Leighton Holdings’ telecommunications activities meant that, despite large capital expenditure on property, plant and equipment and financial assets, net cash provided by investing activities constituted
a large cash inflow of EUR 595,389 thousand. The use of the influx of cash for debt service, for purchases of treas
ury stock, to increase the equity interest in Leighton Holdings, and for dividend payments made up the main factors in the cash outflow of EUR 1,115,701 thousand comprising net cash used in financing activities. Including exchange rate changes, cash and cash equivalents decreased overall by EUR 490,292 thousand.
All non-cash income and expense and all income from asset disposals or arising on deconsolidation is eliminated
in net cash provided by or used for operating activities.
Net cash used in operating activities included:
• Interest income of EUR 42,899 thousand (2012: EUR 66,758 thousand),
• Interest expenses of EUR 312,629 thousand (2012: EUR 297,600 thousand),
• Income tax paid amounting to EUR 119,165 thousand (2012: EUR 76,761 thousand).
After deducting the non-cash component of income from equity-accounted interests, net income received (as dividends) from such interests was EUR 245,605 thousand (2012: EUR 298,440 thousand).
Divestments relate to the deconsolidation of fully consolidated subsidiaries. This reduced non-current assets by
EUR 1,953,357 thousand (2012: EUR 65,848 thousand) and current assets by EUR 334,6610 thousand (2012: EUR
770 thousand). Noncurrent liabilities decreased by EUR 32,837 thousand (2012: EUR 1,694 thousand) and current
liabilities by EUR 324,588 thousand (2012: EUR 44,531 thousand). As of the balance sheet date, EUR 2,131,612
thousand (2012: EUR 9,439 thousand) of the EUR 2,131,612 thousand (2012: EUR 25,914 thousand) sale proceeds were settled in the form of cash and cash equivalents.
Annual Report 2013
211
Dividends of EUR 73,613 thousand (2012: EUR –) were paid to HOCHTIEF’s shareholders in the year under review.
Dividends paid to minority shareholders totaled EUR 357,608 thousand (2012: 151,178 thousand). The increase in
dividend payments largely relates to the cash outflow in connection with the sale of the airport business.
The servicing expense for existing debt was EUR 2,757,684 thousand (2012: EUR 1,663,800 thousand), compared
with EUR 2,617,671 thousand (2012: EUR 2,522,501 thousand) in new borrowing.
Financial assets and financial liabilities are made up as follows:
(EUR thousand)
Dec. 31, 2013
Dec. 31, 2012
2,035,251
1,123,258
260
3,158,769
3,080,922
272,288
3,353,210
(194,441)
2,514,782
628,800
260
3,143,842
3,354,963
733,184
4,088,147
(944,305)
Non-current securities
Total financial assets
Bonds or notes issued, and amounts due to banks
Lease liabilities
Net financial liabilities
Financial assets are subject to certain restrictions on their use. Other than by financial liabilities, net financial assets
are offset by advance payments from customers, cash call commitments on financial assets, and order exposure
from awarded capital expenditure projects. Advance payments from customers came to EUR 173,393 thousand
(2012: EUR 153,612 thousand) and serve to fund contract costs. Cash call commitments on financial assets totaled
EUR 36,817 thousand (2012: EUR 26,733 thousand), notably for jointly controlled entities in the HOCHTIEF Europe
division. Group order exposure from awarded capital expenditure projects is EUR 137,395 thousand (2012: 412,523
thousand) and mostly relates to the Leighton Group’s mining activities.
37. Related party disclosures
Significant related parties include ACS, the parent company of HOCHTIEF Aktiengesellschaft. No material transactions were entered into between HOCHTIEF Aktiengesellschaft or any Group company and ACS or its affiliates
during the year under review.
Further significant related parties comprise companies accounted for using the equity method that are material to
the Group: Sociedad Concesionaria Túnel San Cristobal S.A., aurelis Real Estate GmbH & Co. KG, and the Habtoor Leighton Group. Leighton Welspun Contractors is also included here pending its transition to a fully consolidated subsidiary. Material related parties also included Athens International Airport S.A., Flughafen Düsseldorf
GmbH, Flughafen Hamburg GmbH, and Budapest Airport Zrt. up to their deconsolidation.
Transactions with material related parties gave rise to amounts in the financial statements as follows:
(EUR thousand)
Loans
Receivables
Payables
Sales
Goods and services purchased
Interest income
2013
2012
412,449
68,744
2,219
33,650
2,422
181
37,638
800,560
74,843
2,693
33,067
2,682
601
44,027
The loans mostly relate to the Habtoor Leighton Group (as well as Budapest Airport in the prior year) and aurelis
Real Estate GmbH & Co. KG.
All transactions with related parties were conducted on an arm’s length basis, with the exception of an interest-free
loan for EUR 75,040 thousand (2012: EUR 76,063 thousand) to an associate in the HOCHTIEF Asia Pacific division.
No other material transactions were entered into between HOCHTIEF Aktiengesellschaft or any Group company
and Executive or Supervisory Board members or persons or companies close to them during 2013. There were no
conflicts of interest involving Executive Board or Supervisory Board members.
38. Total Executive Board and Supervisory Board compensation
The Compensation Report on pages 93–96 of this Annual Report outlines the principles applied when determining
Executive Board compensation at HOCHTIEF Aktiengesellschaft and explains the amount and composition of that
compensation. The principles applied and the amount of Supervisory Board compensation are also described. The
Compensation Report is based on the recommendations of the German Corporate Governance Code.
On the basis of the above, compensation for the individual members of the Executive Board was as
follows:
Cash compensation
Fixed
salary
(EUR thousand)
Fernández Verdes*
Sassenfeld
Executive Board
total
Non-cash
and other
additional
benefits
Variable pay components combining a longterm incentive effect with an element of risk
Short-term incentive component
(cash-settled)
Long-term incentive
component I (sharebased with two-year
bar)
Old-age pension
Long-term incentive
Pension benefits/Transfers
component II (granted to pensions provisions
as long-term incentive
plan)**
Service cost
Interest
expense
Pension
contribution
Total compensation includ
ing pension
benefits
2013
900
64
846
846
846
1,010
0
–
4,512
2012
391
78
285
285
285
0
0
128
1,452
2013
600
233
564
564
564
310
21
–
2,856
2012
550
26
401
401
401
212
9
–
2,000
2013
1,500
297
1,410
1,410
1,410
1,320
21
–
7,368
***2012
941
104
686
686
686
212
9
128
3,452
Annual Report 2013
213
*
** Value at grant date
*** Prior-year figures do not include the figures for the Executive Board member who departed in 2012
The present value of pension benefits for current and former Executive Board members is EUR 78,668 thousand
(2012: EUR 77,226 thousand).
Payments to former members of the Executive Board and their surviving dependants were EUR 17,011 thousand
(2012: EUR 15,199 thousand). Pension obligations to former members of the Executive Board and their surviving
dependants totaled EUR 75,792 thousand (2012: EUR 71,199 thousand).
Fernández Verdes*
Sassenfeld
Executive Board total
*
** Present value of pension benefits
2013
1,844
2012
–
2013
1,032
2012
598
2013
2,876
**2012
598
(EUR thousand)
Prior-year figures do not include the figures for the Executive Board member who departed in 2012
Total compensation for the members of the Supervisory Board came to EUR 2,051,327 (2012: EUR 1,614,337).
39. Auditing fees
Fees for services provided by auditors Deloitte & Touche were paid and recognized as expenses as follows:
2013
2012
6,221
[1,257]
576
[339]
381
[–]
125
[19]
7,303
6.820
[1,520]
583
[337]
346
[30]
852
[18]
8,601
(EUR thousand)
Financial statement audits
Of which in Germany
Other assurance services
Of which in Germany
Tax consulting
Of which in Germany
Other services for HOCHTIEF Aktiengesellschaft or subsidiaries
Of which in Germany
The fees for services provided in Germany relate to services of the appointed Group financial statement auditors
Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft and its affiliates within the meaning of Section 271 (2) of
the German Commercial Code. The fees for financial statement audits mostly relate to fees charged by Group auditors
Deloitte & Touche for auditing the HOCHTIEF Group consolidated financial statements, the combined HOCHTIEF
Group and HOCHTIEF Aktiengesellschaft management report, and the financial statements of HOCHTIEF Aktien
gesellschaft and its domestic and international subsidiaries. Tax consulting encompasses all services provided in
connection with tax matters, mostly for HOCHTIEF Aktiengesellschaft’s international subsidiaries.
40. Declaration pursuant to Section 161 of the German Stock Corporations Act
The declaration on corporate governance required by Section 161 of the German Stock Corporations Act (AktG)
* For further information on
corporate governance at
HOCHTIEF, please see
www.hochtief.com/
corporategovernance.
has been made available for the general public to view at any time on the HOCHTIEF website.*
41. Events since the balance sheet date
A material event during the subsequent events period comprises the signing of an agreement on the sale of the
equity interests in aurelis Real Estate GmbH & Co. KG, Eschborn. Further information is provided in the “Post-
balance-sheet events” section on page 133.
42. Use of the exempting provisions in Section 264 (3) (and Section 264b) of the German Commercial
Code
The following domestic fully consolidated subsidiaries made partial use of the exempting provisions in 2013:
A.L.E.X.-Bau GmbH, Essen,
AVN Chile Vierte Holding GmbH, Essen,
AVN Chile Fünfte Holding GmbH, Essen,
Deutsche Baumanagement GmbH, Essen,
Deutsche Bau- und Siedlungs-Gesellschaft mbH, Essen,
Eurafrica Baugesellschaft mbH, Essen,
Europaviertel Baufeld 4d GmbH & Co. KG, Essen,
forum am Hirschgarten Nord GmbH & Co. KG (formerly: MK 3 Nord GmbH & Co. KG), Essen,
forum am Hirschgarten Süd GmbH & Co. KG (formerly: MK 3 Süd GmbH & Co. KG), Essen,
GVG mbH & Co. Objekt RPU Berlin 2 KG, Essen,
HOCHTIEF Ackerstraße 71–76 GmbH & Co. KG, Berlin,
HOCHTIEF Americas GmbH, Essen,
HOCHTIEF Asia Pacific GmbH, Essen,
HOCHTIEF Asset Services GmbH (formerly: HOCHTIEF Property Management Residential GmbH), Essen,
HOCHTIEF Aurestis Beteiligungsgesellschaft mbH, Essen,
HOCHTIEF Building GmbH, Essen,
HOCHTIEF Construction Erste Vermögensverwaltungsgesellschaft mbH, Essen,
HOCHTIEF Engineering GmbH, Essen,
HOCHTIEF Global One GmbH, Essen,
HOCHTIEF Infrastructure GmbH, Essen,
HOCHTIEF Insurance Broking and Risk Management Solutions GmbH, Essen,
HOCHTIEF ÖPP Projektgesellschaft mbH, Essen,
HOCHTIEF Offshore Crewing GmbH, Essen,
HOCHTIEF PPP Europa GmbH, Essen,HOCHTIEF PPP Solutions GmbH, Essen,
HOCHTIEF PPP Schulpartner Braunschweig GmbH, Essen,
HOCHTIEF Projektentwicklung GmbH, Essen,
HOCHTIEF Projektentwicklung „Helfmann Park“ GmbH & Co. KG, Essen,
HOCHTIEF Property Management GmbH, Essen,
HOCHTIEF Solutions AG, Essen,
HOCHTIEF Solutions Real Estate GmbH, Essen,
HOCHTIEF ViCon GmbH, Essen,
HTP Immo GmbH, Essen,
HTP Projekt 1 (eins) GmbH & Co. KG, Essen,
HTP Projekt 2 (zwei) GmbH & Co. KG, Essen,
I.B.G. Immobilien- und Beteiligungsgesellschaft Thüringen-Sachsen mbH, Erfurt,
LOFTWERK Eschborn GmbH & Co. KG, Essen,
Maximiliansplatz 13 GmbH & Co. KG, Essen,
MK 1 Am Nordbahnhof Berlin GmbH & Co. KG, Essen,
Moltendra Grundstücks- und Vermietungsgesellschaft mbH & Co. Objekt Mainoffice KG, Frankfurt am Main,
Projektgesellschaft Börsentor Frankfurt GmbH & Co. KG, Essen,
Projektgesellschaft Konrad-Adenauer-Ufer Köln GmbH & Co. KG, Essen,
Projektgesellschaft Marco Polo Tower GmbH & Co. KG, Hamburg,
Projektgesellschaft Quartier 21 mbH & Co. KG, Essen,
SCE Chile Holding GmbH, Essen,
Spiegel-Insel Hamburg GmbH & Co. KG, Essen,
Streif Baulogistik GmbH, Essen,
Tivoli Garden GmbH & Co. KG, Essen,
Tivoli Office GmbH & Co. KG, Essen.
Annual Report 2013
215
43. Subsidiaries, associates, and other significant participating interests of the HOCHTIEF Group at
December 31, 2013
The HOCHTIEF Annual Report 2013 including the auditor’s report contains the complete list of subsidiaries, associates, and other significant participating interests and is published in the electronic Bundesanzeiger (Federal Official Gazette) as well as on our website.
Percentage
stock held
Profit/(loss) for the
Local currency
EUR
(thousand)
thousand year (EUR thousand)
I. Affiliates included in the Consolidated
Financial Statements
HOCHTIEF Americas GmbH, Essen
The Turner Corporation, Dallas, USA
Flatiron Construction Corp., Wilmington, USA
E. E. Cruz and Company Inc., Holmdel, USA
HOCHTIEF Asia Pacific GmbH, Essen
Leighton Holdings Limited, Sydney, Australia
HOCHTIEF Solutions AG, Essen
formart GmbH & Co. KG, Essen
Streif Baulogistik GmbH, Essen
HOCHTIEF Hamburg GmbH, Hamburg
HOCHTIEF (UK) Construction Ltd., Swindon, UK
HOCHTIEF CZ a.s., Prague, Czech Republic
HOCHTIEF Polska S.A., Warsaw, Poland
OOO HOCHTIEF, Moscow, Russia
HOCHTIEF Solutions Middle East Qatar W.L.L.,
Doha, Qatar
Deutsche Bau- und Siedlungs-Gesellschaft mbH,
Essen
HOCHTIEF Projektentwicklung GmbH, Essen
HOCHTIEF Aurestis Beteiligungsgesellschaft mbH,
Essen
HOCHTIEF PPP Solutions GmbH, Essen
HOCHTIEF PPP Solutions (UK) Limited,
Swindon, UK
Corporate Headquarters
HOCHTIEF Insurance Broking and Risk Management
Solutions GmbH, Essen
Builders Reinsurance S.A.,
Steinfort, Luxembourg
100
100
100
100
100
57.94
100
100
100
70
100
100
100
100
49
2)
2)
2)
2)
USD
USD
USD
685,441
267,589
67,423
AUD 3,215,510
2)
2)
2)
100
2)
–
(1.076)
–
1,801
1,247
702
4,196
86
1)
3)
106,769
12,328
17,508
7,784
–
–
1)
6,570
32,540
–
–
1)
19,062
7,242
257,497
–
189,550
24,701
2)
2)
1)
5)
535,263
GBP
15,892
100
100
–
337,908
3)
QAR
100
100
100
100
1,588,005
2,084,873
5)
3)
10,185
997,508
118,704
158,689
2)
2)
1)
GBP
CZK
PLN
RUB
2)
2)
–
61,220
(18,009)
12,181
208,665
100,897
31,659
10,818
12,217
36,369
28,573
3,501
2)
2)
5)
610,159
497,020
194,032
48,889
USD
261,409
1)
1)
1)
1)
Profit/(loss) for the
Percentage Local currency
EUR
stock held (thousand)
thousand year (EUR thousand)
II. Equity-method investments
1
Profit/loss transfer agreement
2
Indirect shareholding
3
Consolidated result for group
4
Fiscal 2012 figures
5
Consolidated in Turner/Flatiron
6
Reported in the Balance Sheet as part of assets held for sale
50
50
2) 6)
2)
301,392
23,314
4)
4)
65,165
(342)
3)
4)
4)
aurelis Real Estate GmbH & Co. KG, Eschborn
HGO InfraSea Solutions GmbH & Co. KG, Bremen
Annual Report 2013
217
Index
Further Information
Analyst recommendations.............................................. 23
Auditors’ report............................................................. 143
Balance sheet..................................................75, 139, 166
Building Information Modeling (BIM)........................54, 101
Business activities........................................................... 28
Capital expenditure............................................. 44, 46, 71
Clark Builders......................................................3, 61, 101
Climate protection........................................................... 49
Combined management report...................................... 28
Committees.................................................................... 19
Compensation report................................................... 93ff.
Compliance..........................................................51, 62, 92
Compliance declaration.................................................. 96
Consolidation policies................................................... 146
Contract mining.................................3, 38, 40, 45, 71, 104
Corporate citizenship...................................................... 50
Corporate governance.................................................... 91
Currency translation.......................................................147
Dividend..................................................................... 8, 23
E.E. Cruz................................................................... 3, 103
Educational facilities............................................... 101, 107
Employees................................................................... 59ff.
Employer....................................................................47, 59
Energy infrastructure.............. 36, 44, 49, 54, 105, 110, 130
Equity....................................................................... 77, 141
Executive Board.............................................................. 16
Financial calendar......................................................... 223
Financial instruments.......................... 153, 156ff., 193, 201
Financial review............................................................... 67
Financial statements..................................................... 148
Five year summary........................................................ 221
Flatiron................................................................ 3, 60, 102
Forword-looking statements..........................................131
Free float......................................................................... 24
Glossary........................................................................219
Green building........................................................ 48, 100
Group consolidated financial statements...................... 136
Group structure.............................................................. 28
Healthcare properties...................................... 63, 101, 107
HOCHTIEF Americas.................................................... 100
HOCHTIEF Asia Pacific................................................. 104
HOCHTIEF Europe........................................................ 109
Investor relations............................................................. 25
Leighton.................................................................... 4, 104
Long-term incentive plan...................................93ff., 179ff.
Management report........................................................ 28
Markets........................................................................ 32ff.
Net income from participating interests.............69, 81, 162
Net investment and interest income.........................67, 163
Notes to the Consolidated Financial Statements.......... 148
Office properties.............................................102, 107, 111
Opportunities................................................................ 129
Orders and work done.................................................... 40
Ownership structure....................................................... 24
Post-balance-sheet events........................................... 133
Procurement................................................................... 62
Provisions...................................................77, 81, 152, 182
Publication details and credits...................................... 223
Public-private partnership (PPP)...................... 28, 101, 112
Pumped storage power plant.........................................110
Research and development............................................ 53
Resource protection....................................................... 49
Restructuring.................................. 8, 44, 59, 68, 108, 109
Return on net assets (RONA).......................................... 64
Risk report..................................................................119ff.
Sales.................................................................. 67, 81, 137
Segment reporting..................................................... 100ff.
Social and urban
infrastructure..........................28, 37, 44, 101, 107, 110, 129
Stock buyback....................... 8, 12, 23, 46, 70, 77, 84, 177
Statement of cash flows................................................ 140
Statement of earnings........................................ 67, 81, 137
Stock.............................................................................. 21
Strategy....................................................................... 43ff.
Subsidiaries and associated companies..................30, 216
Supervisory Board...........................................................17
Sustainability................................................................ 48ff.
Transportation
infrastructure...................................... 33, 44, 102, 106, 110
Turner........................................................................ 3, 100
Value created.................................................................. 64
Wind energy.................................................................... 36
Glossary
BREEAM
BREEAM (Building Research Establishment Environmental
Assessment Method) is a UK-developed, internationally
used environmental assessment method for buildings.
Based on a straightforward scoring system with eight cat
egories (management, health and wellbeing, energy, transport, water, material and waste, land use and ecology, and
pollution), BREEAM assigns assessed buildings an overall
rating in one of four rating bands.
Carbon Disclosure Project
The Carbon Disclosure Project (CDP) is an initiative launched
by institutional investors. CDP holds the largest collection
globally of self-reported climate change data. Each year,
thousands of the world’s biggest companies report their
greenhouse gas emissions, energy consumption as well
as climate change risks and opportunities. The data is
used by over 700 institutional investors around the world
to make investment choices with a view to sustainable
development.
Cash flow
One of the key figures used to assess a company’s financial position. Represents the net inflow of funds from sales
and other operating activities.
Contract mining
In contract mining, a mine owner contracts out certain
operations to a service provider. HOCHTIEF’s Australian
Group company Leighton extracts commodities such as
ores and coal under long-term contract to mine owners. Its
services also include mine development and renaturalization after mine closure.
DGNB (German Sustainable Building Council)
Established in 2008, the German Sustainable Building
Council (DGNB) awards DGNB certification to projects
that are environmentally compatible, economically effi
cient, and user-friendly. The certification system addresses
all areas relevant to green building. The main criteria are
environmental performance, economy, sociocultural and
functional aspects, technology, processes, and location.
The focus is on life cycle analysis (LCA) and life cycle cost
ing (LCC). Certification is awarded in gold, silver, or
bronze. HOCHTIEF is a founding member of DGNB.
Directors and officers (D&O) insurance
D&O insurance is consequential loss insurance taken out
by a company for its decision-making boards. The insur
ance covers the boards’ personal liability risk from their
work for the company under company-law liability obligations.
Financial covenants
Financial indicators which are negotiated with a loan and
with which the borrower is required to comply.
Green Star
Green Star is a rating system developed in 2003 by the
Green Building Council of Australia that evaluates the environmental performance of buildings. The main criteria are
Management, Indoor Environment Quality, Energy, Transport, Water, Materials, Land Use & Ecology, Emissions,
and Innovation. Up to six stars are awarded.
Issuer
An issuer of securities is a company in the case of shares
and a company, public body, the state, or other institution
in the case of bonds.
Further terms and explanations are provided in the Investor Relations section of the
HOCHTIEF website,
www.hochtief.com. Here, you
will find a detailed glossary.
Annual Report 2013
219
Further Information
Asset management
Asset management means all activities involved in man
aging buildings and properties. This includes rent account
ing, tenant administration, utility billing and support, systems maintenance, energy management, coordinating
repairs and refurbishing, as well as short-to-medium-run
planning of all cash flows relating to the property.
LEED
LEED (Leadership in Energy and Environmental Design),
established in 1998, is the United States Green Building
Council rating system for green building projects. Its thematically grouped main criteria are Sustainable Sites,
Water Efficiency, Energy & Atmosphere, Materials & Resources, Indoor Environmental Quality, and Innovation &
Design Process. LEED certification is awarded in the four
categories Platinum, Gold, Silver, and Certified.
Long-term incentive plan (LTIP)
A long-term incentive plan is an incentives system or pay
component offered to selected managerial staff so that
they participate in the company’s long-term success, thus
securing their loyalty to the company.
Public-private partnership (PPP)
Cooperation between the public sector and usually wellcapitalized private-sector firms. A characteristic feature of
such cooperation is that the parties pursue common objectives and interests as regards the project itself even
though they differ in terms of their broader functions.
Further Information
Syndicated guarantee facility
A loan facility structured by an international banking syndicate in order to furnish financial guarantees by way of assurance for clients.
Work done
This reporting term covers all construction work completed
by the company itself, together with its fully consolidated
subsidiaries, and by joint ventures on a pro rata basis, plus
all other sales generated by non-construction operations
during the reporting period.
Five Year Summary
2009
2010
2011
22,473
1,919
20,554
20,566
2,284
18,282
35,374
2,996
32,378
29,627
2,524
27,103
23,234
1,804
21,430
47,486
3,726
43,760
Number
66,178
11,135
55,043
External sales
Increase/(decrease) on prior year
Materials
Materials ratio
Personnel costs
Payroll ratio
Profit from operating activities
Net income from participating interests
Net investment and interest income
Profit before taxes
Of which: Americas
Asia Pacific
Concessions**
Europe
Pre-tax return on sales
Profit after taxes
Return on equity
Consolidated net profit/(loss)
EBITDA
Of which: Americas
Asia Pacific
Concessions**
Europe
EUR million
%
EUR million
%
EUR million
%
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
%
EUR million
%
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
Earnings per share
Dividend per share
Dividends paid
New orders
domestic
international
Of total:
domestic
international
Work done
Employees (average for year)
Of total:
Our five year summary
Free cash flow1)
26,492
1,870
24,622
29,049
2,130
26,919
39,940
2,507
37,433
70,657
10,821
59,836
75,449
10,331
65,118
79,987
10,111
69,876
80,912
7,911
73,001
18,166
-2.9
12,563
69.0
3,501
19.2
501
525
227
(155)
597
94
433
75
74
3.3
405
12.4
192
1,265
764
110
536
110
99
20,159
11.0
13,764
67.8
4,081
20.1
679
715
223
( 181)
757
126
513
84
83
3.8
546
12.8
288
1,626
948
134
653
113
113
23,282
15.5
15,572
67.3
4,864
21.0
783
626
(585)
( 168)
(127)
142
(285)
–
(9)
– 0.5
(168)
– 4.1
(160)
845
62
148
(168)
–
47
25,528
9.6
17,312
67.6
5,536
21.6
919
595
186
(240)
541
57
411
–
29
2.1
383
9.0
155
1,722
803
74
594
–
92
25,693
0.6
17,680
69.0
5,473
21.4
735
859
211
(270)
800
94
500
–
63
3.1
545
16.5
171
1,909
1,175
115
745
–
152
EUR
EUR
EUR million
2.88
1.50
105
4.31
2.00
154
( 2.18)
– – 2.11
1.00
77
2.37
1.50***
115
%
13.8
15.1
1.8
10.3
15.3
EUR million
101
65
(251)
(447)
802
EUR million
Order backlog at year-end
Of total:
RONA
25,368
2,286
23,082
25,790
2,017
23,773
48,668
4,048
44,620
EUR million
Of total:
2013
2012
(restated)*
31,488
2,127
29,361
29,693
2,129
27,564
49,794
3,991
45,803
EUR million
domestic
international
domestic
international
Restated for IAS 19R. For notes on the adjustment, please see pages 155 and 156.
The division was redistributed to the Europe division and to Corporate Headquarters with effect from January 1, 2012.
The figures for fiscal 2011 have been adjusted accordingly.
***
Proposed dividend per share
*
**
1)
Free cash flow: Net cash provided by operating activities and net cash used for investing activities
Annual Report 2013
221
Assets
Intangible assets
Financial assets
Other non-current assets
Non-current assets
As % of total assets
Inventories
Receivables and other assets
Marketable securities and cash and cash
equivalents
Assets held for sale
Current assets
Total assets
Liabilities and Shareholders’ Equity
Attributable to the Group
Minority interest
As % of non-current assets
Non-current provisions
Non-current financial liabilities
Other non-current liabilities
Current provisions
Current financial liabilities
Other current liabilities
Current liabilities
Total assets
Property, plant and equipment ratio2)
Total capital expenditure, including acquisitions
Of total: Intangible assets
Of total: Property, plant and equipment
Of total: Investment properties
Of total: Financial assets
Capital expenditure ratio3)
Depreciation and amortization ratio4)
2009
2010
2011
2012
2013
504
1,492
38
2,251
821
5,106
40.8
1,116
3,703
583
1,807
24
2,511
943
5,868
39.2
1,268
4,461
693
2,235
22
1,098
1,166
5,214
33.0
1,287
5,182
713
1,899
19
1,188
1,019
4,838
28.5
1,426
5,703
830
1,358
16
774
802
3,780
25.6
1,150
6,335
2,577
– 7,396
59.2
12,502
3,389
– 9,118
60.8
14,986
2,657
1,456
10,582
67.0
15,796
3,143
1,852
12,124
71.5
16,962
3,158
334
10,977
74.4
14,757
EUR million
2,164
1,100
3,264
26.1
63.9
409
2,048
296
2,753
22.0
906
796
4,783
6,485
51.9
12,502
2,965
1,299
4,264
28.5
72.7
544
2,577
252
3,373
22.5
959
646
5,744
7,349
49.0
14,986
2,598
1,512
4,110
26.0
78.8
640
2,302
257
3,199
20.3
957
1,493
6,037
8,487
53.7
15,796
2,640
1,604
4,244
25.0
87.7
833
2,750
155
3,738
22.0
975
1,706
6,299
8,980
53.0
16,962
2,266
1,028
3,294
22.3
87.1
748
2,700
169
3,617
24.5
916
995
5,935
7,846
53.2
14,757
%
11.9
12.1
14.1
11.2
9.2
EUR million
EUR million
EUR million
EUR million
EUR million
%
%
968
14
812
–
142
22.1
60.7
1,128
22
902
–
204
19.5
73.5
2,023
31
1,474
1
517
27.3
52.0
1,781
48
1,166
–
567
23.2
75.7
1,435
42
872
–
521
21.0
80.4
5.1
1.5
5.5
1.5
5.4
1.5
5.1
1.6
4.6
1.6
( 78)
408
( 653)
(944)
(194)
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
Receivables turnover 5)
Total assets turnover 6)
Net financial assets/(liabilities)
2)
Property, plant and equipment ratio: Property, plant and equipment as a percentage of total assets
3)
4)
EUR million
Capital expenditure ratio: Capital expenditure on intangible assets, property, plant and equipment and investment properties as a
percentage of cumulative cost of acquisition
Depreciation and amortization ratio: Depreciation and amortization as a percentage of intangible assets, property, plant and equipment and
investment properties
5)
Receivables turnover: Ratio of external sales to average trade receivables
Total assets turnover: Ratio of external sales to average total assets
6)
Annual Report 2013
222
Publication Details
and Credits
Financial Calendar
Published by:
May 7, 2014
General Shareholders’ Meeting
Opernplatz 2, 45128 Essen, Germany
10.30 a.m., Grugahalle Essen, Norbertstrasse, Essen
Tel.: +49 201 824-0, Fax: +49 201 824-2777
[email protected], www.hochtief.com
May 7, 2014
Quarterly Report at March 31, 2014
Investor relations contact:
Conference Call with Analysts and Investors
HOCHTIEF Investor Relations
August 13, 2014
Tel.: +49 201 824-2127
Half-Year Report at June 30, 2014
[email protected]
Analysts’ and Investors’ Conference
Project management/editors-in-chief:
November 11, 2014
HOCHTIEF Corporate Communications:
Interim Report at September 30, 2014
Lisa Zindler-Roggow, Verena Blaschke
Conference Call with Analysts and Investors
Design, text, layout, and editing:
February 26, 2015
HOCHTIEF corporate departments
Business Results Press Conference
Analysts’ and Investors’ Conference
English adaptation:
Burton, Münch & Partner, Düsseldorf
May 6, 2015
General Shareholders’ Meeting
Photographer:
10.30 a.m., Congress Center Essen, Entrance West,
Christoph Schroll, HOCHTIEF, Essen
Norbertstrasse, Essen
Other photo credits:
All pictures not listed below: HOCHTIEF photo archive, Essen;
cover top left: istockphoto/GlobalStock, right: Oli Keinath;
Flatiron (p. 3); Leighton Holdings (p. 4 left); Oscar Durand (p. 4 right);
This annual report is a translation of the original German
istockphoto/Shotbydave (p. 6); Flatiron/Alberto Alvarez-Rea (p. 7);
version, which remains definitive.
Flatiron (p. 20); gettyimages/REB Images (p. 26); Oscar Durand (p. 27);
zja.nlandokra.nl (p. 42); HOCHTIEF ViCon (p. 52); Turner (p. 55 left);
For the online version of this annual report, please see
Thiess (p. 55 right); Straßen.NRW-RNL Südwestfalen (p. 56); Leighton
www.hochtief.com/ar13.
Contractors Pty Limited (p. 57 left); Thiess (p. 57 right); HOCHTIEF PPP
North America (p. 58); Leighton Holdings (p. 66); Ekkehard Viefhaus
The editorial deadline for this annual report was February 26, 2014;
(p. 80); Turner (p. 90); istockphoto/CE Futcher (p. 98); Gerber Architekten
the report was published on February 27, 2014.
Dortmund (p. 99); Leighton Holdings (p. 114); Carlos Zapata Studios
(p. 128); Corbis/David Leahy (p. 134); Leighton Holdings (p. 135)
Imaging work, typesetting and prepress:
Creafix GmbH, Solingen
This annual report is printed on eco-friendly
Printed by:
Maxi Silk coated paper certified in accord
Druckpartner, Essen
ance with the rules of the Forest Stewardship
Council (FSC).
This Annual Report contains forward-looking statements. These statements reflect the current views, expectations and assumptions of the Executive Board of HOCHTIEF Aktiengesellschaft concerning
future events and developments relating to HOCHTIEF Aktiengesellschaft and/or the HOCHTIEF Group and are based on information currently available to the Executive Board of HOCHTIEF Aktiengesellschaft. Such statements involve risks and uncertainties and do not guarantee future results (such as profit before taxes or consolidated net profit) or developments (such as with regard to possible
future divestments, general business activities or business strategy). Actual results (such as profit before taxes or consolidated net profit), dividends and other developments (such as with regard to possible
future divestments, general business activities or business strategy) relating to HOCHTIEF Aktiengesellschaft and the HOCHTIEF Group may therefore differ materially from the expectations and assumptions described or implied in such statements due to, among other things, changes in the general economic, sectoral and competitive environment, capital market developments, currency exchange
rate fluctuations, changes in international and national laws and regulations, in particular with respect to tax laws and regulations, the conduct of other shareholders, and other factors. Any information
provided on dividends is additionally subject to the recognition of a corresponding unappropriated net profit in the published separate financial statements of HOCHTIEF Aktiengesellschaft for the fiscal year
concerned and the adoption by the competent decision-making bodies of HOCHTIEF Aktiengesellschaft of appropriate resolutions taking into account the prevailing situation of the Company. Aside
from statutory publication obligations, HOCHTIEF Aktiengesellschaft does not assume any obligations to update any forward-looking statements.
Annual Report 2013
223
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