HOCHTIEF: Building value on sound foundations
Annual Financial Statements ofHOCHTIEF Aktiengesellschaft, as of December 31, 2003
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Annual Financial Statements of HOCHTIEF Aktiengesellschaft, as of December 31, 2003
Balance Sheet ..................................................................4
Statement of Earnings ......................................................5
Movements in Fixed Assets ..............................................6
Notes to the Financial Statements ....................................8
Proposal by Executive Board for Use of
Net Profit ........................................................................18
Report of Independent Auditors ......................................19
Subsidiaries, Associates and
Other Significant Participating Interests ..........................20
Boards ............................................................................22
The 2003 Annual Financial Statements and Management
Report of HOCHTIEF Aktiengesellschaft are published in
the German Federal Bulletin (”Bundesanzeiger”) and are
submitted to the commercial registry of the Essen District
Court under registered number HRB 279. The Management
Report has been compiled jointly for HOCHTIEF Aktienge-
sellschaft and the HOCHTIEF Group; the combined Man-
agement Report starts on page 75 of our Annual Report.
The combined list of the Group’s and HOCHTIEF Aktien-
gesellschaft’s subsidiaries, associates and other participat-
ing interests, pursuant to Sections 285 (11) and 313 (2)
1-4 of the German Commercial Code (HGB) is deposited
at the commercial registry of the Essen District Court.
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Balance Sheet of HOCHTIEF Aktiengesellschaft
(EUR thousand) See note Dec. 31, 2003 Dec. 31, 2002
Assets
Fixed assets (1)
Property, plant and equipment 175,580 183,648
Financial assets 1,513,425 1,351,177
1,689,005 1,534,825
Current assets
Inventories
Construction work in progress 114,319 182,519
Less: Progress payments received 56,360 57,959 118,809 63,710
Other inventories (2) 136 149
58,095 63,859
Trade receivables andother receibvables (3) 496,398 634,094
Marketable securities (4) 343,211 193,307
Cash and cash equivalents (5) 314,828 90,502
1,212,532 981,762
Prepaid expenses (6) 3,330 2,573
2,904,867 2,519,160
Liabilities and Shareholders’ Equity
Shareholders’ equity (7)
Subscribed capital 179,200 179,200
Reserves 1,104,499 1,019,270
Unappropriated net profit 45,500 38,500
1,329,199 1,236,970
Special account withreserve characteristics (8) – 275
Provisions (9) 523,254 560,975
Liabilities (10) 1,052,414 720,940
2,904,867 2,519,160
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Statement of Earnings of HOCHTIEF Aktiengesellschaft
(EUR thousand) See note 2003 2002
Sales (12) 159,356 119,037
Change in the level ofconstruction work in progress (68,200) 36,063
Other operating income (13) 184,427 380,686
Materials (14) (44,743) (172,820)
Personnel costs (15) (61,479) (67,788)
Depreciation and amortization (16) (6,190) (16,781)
Other operating expenses (17) (121,290) (193,636)
Income from financial assets (net) (18) 137,220 263,893
Interest (expense)/income (net) (19) (13,958) (1,691)
Depreciation and write-downs on financialassets and marketable securities (20) (57,971) (288,852)
Profit from ordinary activities 107,172 58,111
Income taxes (21) 19,736 (3,385)
Net profit before changes in reserves 126,908 54,726
Net profit brought forward 3,821 3,478
Changes in revenue reserves (7) (85,229) (19,704)
Unappropriated net profit 45,500 38,500
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Movements in Fixed Assets
Cost of acquisition or production
Jan. 1, 2003 Additions(EUR thousand)
Property, plant and equipment
Land, similar rights and buildings,including buildings on land owned by third parties 308,211 2,081
Technical equipment and machinery, transportation equipment 3,420 106
Other equipment, office equipment and small equipment 9,181 1,449
Prepayments and assets under construction 1,336 –
322,148 3,636
Financial assets
Shares in affiliated companies 835,532 191,374
Long-term loans to affiliated companies 24,759 –
Other participating interests 121,903 –
Long-term loans to companies in which the company has participating interests 39,198 –
Long-term securities investments 658,802 2,609
Other long-term loans 1,705 –
1,681,899 193,983
Total Fixed Assets 2,004,047 197,619
*Includes a EUR 49,000,000 asset write-up.
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Cost of acquisition or production Depreciation, Of which: Book value Book value
cumulative depreciation
Disposals Reclassifications in 2003 at Dec. 31, 2003 at Dec. 31, 2002
15,325 24 123,837 5,079 171,154 179,445
224 – 648 252 2,654 2,826
2,515 – 6,471 859 1,644 1,225
– (24) 1,184 – 128 152
18,064 – 132,140 6,190 175,580 183,648
3,071 – 72,632 33,307 951,203 796,208
201 – – – 24,558 24,759
5 – 118,215 23,520 3,683 27,208
3,572 – – – 35,626 39,198
16,684 – 148,037* 334 496,690 462,099
40 – – – 1,665 1,705
23,573 – 338,884 57,161 1,513,425 1,351,177
41,637 – 471,024 63,351 1,689,005 1,534,825
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Notes to the Financial Statementsof HOCHTIEF Aktiengesellschaft
General principles
These Annual Financial Statements have been prepared in
accordance with the German Commercial Code (HGB) and
Stock Corporations Act (AktG). For the sake of clarity of
presentation, a number of items in both the Balance Sheet
and the Statement of Earnings have been aggregated. Such
aggregated items are sub-classified into their constituents
and commented on in these Notes. The Statement of Earn-
ings classifies expenses by their nature, using what is also
known as the “type of expenditure format”. The financial
statements are denominated in euros, and all sums of money
in these Notes are cited to the nearest thousand euros,
unless specifically stated otherwise.
The Executive Board and Supervisory Board have issued
a declaration of compliance with the German Corporate
Governance Code pursuant to AktG Sec. 161, and this is
available for shareholders to view at all times in the Annual
Report and on the HOCHTIEF website.
Accounting and valuation principles
Property, plant and equipment are stated at cost of pur-
chase or production (at the amount required to be capital-
ized under tax law), less scheduled depreciation and write-
downs by impairment. Borrowing costs are not recognized
as part of purchase or production cost for property, plant
and equipment. Depreciation on property, plant and equip-
ment is made to the full extent permissible under tax law.
Property, plant and equipment are depreciated using the
declining balance method as far as tax law permits, switch-
ing to the straight-line method once this yields higher depre-
ciation amounts. Providing tax law permits, depreciation
on additions to movable assets during the first and second
half of the year is calculated using full or half-year rates
respectively. Low-value assets are fully written down in the
year of acquisition. As in the prior year, in light of legislative
changes contained in the Reduction of Tax Benefits Act
(StVergAbG), no new allocations have been made in 2003
to the special account with reserve characteristics permit-
ted by Sec. 6b of the German Income Tax Act (EStG).
Financial assets are generally reported at cost of acquisition.
Certain shares in affiliated companies and participating
interests are posted at fair value if this is lower. Long-term
securities investments are stated at the lower of acquisition
cost or their current stock market price or fair value. Non-
interest-bearing loans and low-interest loans to third-party
entities are reported at their present value.
Inventories are stated at cost of purchase or production (at
the legally required capitalized amount). Cost of production
of construction work in progress includes direct costs of
material and production. Progress payments received from
clients are deducted from inventories up to the amount of
the cost of production for each project. Advance payments
which exceed these amounts are reported as liabilities.
The valuation of receivables and other current assets
includes appropriate provision for specific doubtful accounts.
They have also had a lump sum charged against them to
cover general credit risks and allow for their failure to yield
interest.
Marketable securities are reported at the lower of cost or
market/fair value.
If the cost of purchase or production of any assets is higher
than their fair value on the balance sheet date, their value
is written down accordingly.
Provisions for pensions, long-service bonuses, and semi-
retirement programs for older employees are determined
using actuarial tables. The discount factor applied is 3.5
percent.
Other provisions are allocated in an appropriate amount to
cater for all recognizable risks; the amount provided reflects
the anticipated future charge.
Liabilities are invariably reported as the amount due.
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Currency translation
Assets and liabilities in foreign currency are reported in the
financial statements at the central rate or the daily rate
applicable at the time of initial entry into the accounts.
Losses due to changes in exchange rates are recognized
as expense.
Explanatory Notes to the Balance Sheet
1. Fixed assets
The aggregated fixed assets categories reported in the
balance sheet are sub-classified, with details of changes in
each item relative to the prior year, in the statement of Move-
ments in Fixed Assets on page 6 and 7.
The EUR 191,374,000 increase in stakes in affiliated com-
panies essentially comprises payments into the capital
reserve at Deutsche Bau- und Siedlungs-Gesellschaft
mbH, Essen (EUR 158,200,000) and HOCHTIEF Americas
GmbH, Essen (EUR 32,771,000).
In the course of restructuring the HOCHTIEF Group’s Devel-
opment division, Deutsche Bau- und Siedlungs-Gesellschaft
mbH transferred ownership of certain of its real estate
assets to newly founded project companies in the prior
year, at those assets’ fair values.
In the process of establishing a new holding structure,
implemented in the previous year, the equity stake in
HOCHTIEF USA INC., Wilmington, Delaware, was trans-
ferred to HOCHTIEF Americas GmbH, Essen, while the
stake in HOCHTIEF Australia Limited, Sydney, was trans-
ferred to HOCHTIEF Asia Pacific GmbH, Essen. The trans-
fer of these equity holdings took place at their carrying
amounts.
A list of the main subsidiaries, associates and other partici-
pating interests of the HOCHTIEF Group is provided on
pages 20-21. The complete list of HOCHTIEF Aktienge-
sellschaft’s equity interests has been deposited at the
Essen commercial registry.
Long-term securities investments to the value of EUR
4,417,000 consist of mutual fund units linked to a deferred
compensation plan to provide a supplementary pension for
employees. The fund units attributed to the employees
have been pledged to their benefit.
2. Other inventories
(In Tsd. EUR) 2003 2002
Raw materials andsupplies, spare parts 43 56
Advance payments 93 93
136 149
3. Trade receivables and other receivables
Receivables from affiliated companies are largely connected
with intra-Group financial management.
Other receivables include entitlements from real property
sales, short-term loans, interest receivables from securities
and fixed-term deposit investments, reinsurance and pen-
sion liability insurance entitlements, tax refund entitlements,
prepayments on wages, salaries and travel expenses, dam-
age claims, other non-trade receivables and other assets.
4. Marketable securities
Besides own shares, our securities are predominantly fixed-
interest investments. As of the balance sheet date, this
item also included 6,947,930 (2002: 6,951,780) of our
own common shares, with a carrying amount of EUR
159,802,000 (2002: EUR 90,373,000).
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(EUR thousand) 2003 Of which: with 2002 Of which: with
residual term residual term
above 1 year above 1 year
Trade receivables 11,332 139 33,324 –
Receivables fromconstruction joint ventures 1,705 – 2,041 –
Receivables fromaffiliated companies 421,164 – 540,355 1,919
Receivables from companiesin which the company has participating interests 1,470 – 166 –
Other receivables 60,727 20,588 58,208 10,150
496,398 20,727 634,094 12,069
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5. Cash and cash equivalents
This consists mostly of euro bank balances.
6. Prepaid expenses
The expenses involved are rents, insurance premiums
and taxes applicable to later accounting periods.
7. Shareholders’ equity
HOCHTIEF Aktiengesellschaft’s nominal capital of EUR
179,200,000 is divided into 70,000,000 no-par-value
shares.
The capital reserve contains the premiums received when
the Company issues new stock.
Conditional capital has been authorized with a nominal value
of up to EUR 3,584,000.00, to issue up to 1,400,000 new
no-par-value shares to members of the Executive Board,
and such managerial employees of HOCHTIEF Aktienge-
sellschaft and of certain of its affiliates as are selected for
participation by the Executive Board. The Supervisory Board
and/or Executive Board have been empowered to grant
the specified group of managers options to purchase up to
1,400,000 no-par-value shares, in execution of the 1999
and 2000 Long Term Incentive Plans (LTIP’s).
812,170 shares were repurchased under the authorization
granted at the General Shareholders’ Meeting of June 21,
1999 to provide for stock options awarded under the 1999
and 2000 LTIP’s.
Following the exercise of 3,850 stock options, we sold a
corresponding number of shares in March 2003 to the
holders of the option rights, at prices of EUR 11.68 per
share. These shares constitute EUR 9,856 of the nominal
capital stock (0.006 percent of the total).
In resolutions of the General Shareholders’ Meeting on
June 21, 1999 and June 28, 2000, the Company was
authorized to repurchase its own stock, in order to be able
to offer stock for the purposes of acquiring companies or
equity interests therein and for the purpose of entering into
mergers, or in order to retire stock. Together with the
(EUR thousand) Amount Dividends Net profit Transfers to Amount
on Jan. 1, distributed for the year revenue on Dec. 31,
2003 reserves 2003
Subscribed capital 179,200 – – – 179,200
Capital reserve 400,806 – – – 400,806
Revenue reservesStatutory reserve 1,492 – – – 1,492
Reserve for own stock 90,373 – – 69,429 159,802
Other revenue reserves 526,599 – – 15,800 542,399
Total reserves 1,019,270 – – 85,229 1,104,499
Unappropriated net profit 38,500 (34,679) 126,908 (85,229) 45,500
1,236,970 (34,679) 126,908 – 1,329,199
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stock already acquired under the terms of the authoriza-
tion in force from June 21, 1999 through June 27, 2000,
the total stock authorized for repurchase is restricted to a
maximum of ten percent of the overall capital stock (i.e., to
7,000,000 no-par-value shares). 6,139,224 shares were
repurchased for the purposes stated above. A further 386
were repurchased in order to offer them for sale to per-
sons employed by the Company or one of its affiliates.
These shares made up the holdings of own stock, as
defined in Section 160 (1) 2 of the Stock Corporations Act
(AktG), at December 31, 2003. They constitute EUR
17,787,000 of the nominal capital stock, or 9.93 percent
of the total. The shares were repurchased in 1999, 2000,
and 2001.
The purchase options granted under the 1999 and 2000
Long Term Incentive Plans, pursuant to Sec.192 (2) 3 of
the German Stock Corporations Act (AktG), up to the last
balance sheet date are:
Of the total stock options granted pursuant to AktG Sec. 192
(2) 3, the number issued to members of the Executive Board
was 129,000, and the remainder were granted to selected
managerial employees of the Company and its affiliates.
In accordance with a Supervisory Board resolution, the
Long Term Incentive Plan 2003 (LTIP 2003) introduced
stock appreciation rights (SARs) in 2003 for members of
the Executive Board and upper managerial employees of
HOCHTIEF Aktiengesellschaft and its domestic and foreign
affiliates.
The SARs have a two-year lock-up period and a three-
year term.
The 1,010,900 SARs created under the first issue in 2003
still existed in their full amount as of the balance sheet
date. The conditions for exercising them are that the
HOCHTIEF stock price must rise at least ten percent by
the exercise date (absolute performance) and must do bet-
ter than the CDAX Construction Price Index for ten con-
secutive days in the same period (relative performance).
The relative target is waived if HOCHTIEF’s stock gains 20
percent or more.
Options originally Options in force Options lapsed Options Options in force
granted on Dec. 31, 2002 in 2003 exercised on Dec. 31, 2003
1999 LTIP 336,600 272,270 268,420 3,850 –
2000 LTIP 537,520 462,800 7,050 – 455,750
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Provided the targets are met, SARs can be exercised any
day after expiration of the lock-up period save a short peri-
od before business data is published. How many can be
exercised depends on how far HOCHTIEF’s stock has
risen from the price laid down when the SARs were
issued, with a 10, 15 or 20 percent price gain respectively
permitting the exercise of 25 percent, 60 percent or all
SARs. When SARs are exercised, the issuing enterprise
pays out the difference between the current stock price
and the issue price. The payout is capped at 100 percent
of issue price.
The LTIP exercise conditions stipulate that the amount due
on exercise of the SARs can be paid out in HOCHTIEF
stock. In the case of holders not employed by HOCHTIEF
Aktiengesellschaft, expenses incurred on SARs being exer-
cised are borne by the affiliate concerned.
A transfer of EUR 69,429,000 supplemented reserves for
own stock to EUR 159,802,000 in FY 2003 in line with the
increased carrying amount of the stock (2002 saw with-
drawals of EUR 20,296,000). An amount of EUR 15,800,000
was transferred to other revenue reserves from net profit
before changes in reserves (2002: EUR 40,000,000).
8. Special account with reserve characteristics
The EUR 275,000 special reserves accumulated in earlier
years pursuant to Sec. 52 (16) of the German Income Tax
Act (EStG) were released in full in the year under review.
The impact of changes in this item was to increase the net
profit of HOCHTIEF Aktiengesellschaft by EUR 275,000.
9. Provisions
Provisions for pensions are created for obligations arising
from entitlements to future pension benefits and ongoing
payments to current and former employees and their sur-
vivors. Ongoing pension payments during the reporting
year were EUR 22,439,000 (2002: EUR 22,854,000).
Other provisions cover items such as risks in real estate
and equity holdings, costs of order processing and follow-
up costs on contracts already invoiced, anticipated losses
related to pending transactions not considered elsewhere,
costs of preparing the financial statements, contribution to
a mutual pension fund, outstanding employee vacation time,
restructuring costs, costs of semi-retirement programs for
older employees, payments for damages, and other uncer-
tain liabilities.
(EUR thousand) 2003 2002
Provisions forpensions 309,056 319,340
Provisions fortaxes 29,879 51,031
Otherprovisions 184,319 190,604
523,254 560,975
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10. Liabilities
EUR 105,100,000 has been deposited in a time deposit at
a Luxembourg bank to secure a bank loan.
Amounts due to affiliated companies are largely connected
with intra-Group financial management.
Other liabilities include tax liabilities, payroll liabilities, social
insurance liabilities, other non-trade payables and other
obligations.
11. Contingencies, commitments and other financial
obligations
Guarantees and sureties have been provided primarily as
security for bank loans, contract performance, warranty
obligations, and progress and advance payments. As of the
balance sheet date, we had provided guarantees primarily
for participating interests and construction joint ventures.
We are also jointly and severally liable for all construction
joint ventures in which we participate.
(EUR thousand) 2003 2002
Liabilities fromguarantees, suretiesand letters ofsupport 669,867 1,082,793
Of which: foraffiliatedcompanies 470,567 816,257
(EUR thousand) 2003 Of which: with 2002 Of which: with
residual term residual term
of up to 1 year of up to 1 year
Amounts due to banks 227,595 105,320 60,362 7,382
Advance payments received 3,372 3,372 11,342 11,342
Trade payables 6,085 6,085 14,074 14,074
Amounts due to construction joint ventures 759,403 759,403 590,734 590,734
Amounts due to companies in which thecompany has participating interests 1,056 1,056 1,012 1,012
Other liabilities 54,903 53,044 43,416 43,416
Of which: from taxes [34,282] [34,282] [26,055] [26,055]
Of which: from socialinsurance contributions [769] [769] [845] [845]
1,052,414 928,280 720,940 667,960
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HOCHTIEF Aktiengesellschaft furnished US insurance com-
panies with an unlimited bonding guarantee for the Turner
group in 2003. Bonding is a statutory form of security used
in the US to guarantee performance of public projects. It is
also used with other selected customers. The current total
bonding amount is USD 2,222 million. No recourse has ever
been made to these guarantees, which were previously
limited to USD 295 million.
Marketable securities with a nominal value of EUR 10,938,000
(2002: EUR 84,551,000) have been pledged as surety bonds
for the proper execution of construction work as per con-
tract and for progress and advance payments received.
In order to offset currency and interest rate fluctuations, we
enter into forward foreign exchange transactions and use
other derivative financial instruments in our international
transactions and financing arrangements. We have estab-
lished guidelines that are binding for all Group companies
to clearly regulate the use of these transactions, set up
separate controlling measures, and specify responsibilities.
Derivatives must be tied to underlying transactions. They
may only be used to hedge risks. The counterparties in
hedging transactions are invariably banks with a first-rate
credit standing.
Underlying transactions are valued as a unit with their cor-
responding hedging transactions when the two types are
objectively and intentionally complementary in both use and
function, to the extent that gains and losses from the under-
lying and the hedging transaction are highly likely to cancel
each other out.
The nominal amount of EUR 233,390,000 (2002: EUR
55,001,000) relates to exchange rate hedging transac-
tions. The nominal amount allows inferences to be drawn
as to the overall use made of derivatives, but does not
reflect the level of risk attendant upon their use. The net
market value was EUR -2,640,000 (2002: EUR -2,009,000)
as of December 31, 2003.
Explanatory Notes to the Statement of Earnings
12. Sales
Following the reorganization of HOCHTIEF Aktiengesell-
schaft as a strategic management holding company in
2001, which involved spinning off construction operations
into the legally autonomous HOCHTIEF Construction AG,
the sales posted now essentially comprise income from
processing older contracts in Germany, which fall within
the Construction division’s sphere of responsibility, togeth-
er with income from carrying out holding-company func-
tions. The international share of sales was EUR 78,299,000
(2002: EUR 1,653,000)
13. Other operating income
This category primarily includes income from the disposal
of fixed assets, corporate headquarters charges, sales of
securities, reversal of provisions, insurance payments received
for damages, foreign exchange gains and write-ups on finan-
cial assets and marketable securities. The high prior-year
figure was caused by the sale of our interest in Monachia
Grundstücks-Aktiengesellschaft, Munich (EUR 111,350,000)
and the transfer of certain real estate assets at fair value to
newly founded project companies (EUR 59,525,000).
EUR 69,479,000 of the write-ups relate to own stock and
EUR 49,000,000 to special-purpose funds. In the course
of establishing HOCHTIEF’s new holding structure, the
value of the equity interest in HOCHTIEF Australia Ltd. of
Sydney, Australia, was written up by EUR 66,801,000 in
2002 to match the value assessed for tax purposes. Income
from releasing the special account with reserve character-
istics totaled EUR 275,000 (2002: EUR 69,437,000).
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14. Materials
15. Personnel costs
16. Depreciation and amortization
The depreciation and amortization applies entirely to fixed
assets, and is charged to the extent permitted by tax law.
There were no writedowns by impairments in 2003.
17. Other operating expenses
Other operating expenses primarily include changes in
provisions for risks in real estate and equity holdings and
for anticipated losses from pending transactions, costs
involved in order processing, insurance premiums, costs of
semi-retirement programs for older employees, write-downs
of receivables, costs of materials for administrative purposes,
rentals and lease rentals, travel and other business ex-
penses, foreign exchange losses, costs of preparing the
financial statements, and other social benefits payable that
are not reported elsewhere. The high prior-year figure was
due to recognition of provisions for risks in real estate and
project development.
The “other taxes” subitem reported here comes to EUR
717,000 (2002: EUR 1,614,000).
18. Income from financial assets (net)
(EUR thousand) 2003 2002
Raw materials,supplies and pur-chased goods 4,394 4,790
Purchasedservices 40,349 168,030
44,743 172,820
(EUR thousand) 2003 2002
Wages andsalaries 41,288 43,683
Social insuranceand support 4,853 5,118
Pensions 15,338 18,987
61,479 67,788
Employees
(average for the year) 2003 2002
Waged/industrialemployees 11 15
Salaried/officeemployees 390 419
Total 401 434
(EUR thousand) 2003 2002
Income from profit/ loss transferagreements 96,630 228,509
Income from partici-pating interests 34,910 97,093
Of which:from affiliatedcompanies [34,211] [91,065]
Expenses fromtransfer of losses (1,674) (71,412)
Income from othersecurities and long-term loans 7,354 9,703
Of which:from affiliatedcompanies [1,461] [1,782]
137,220 263,893
17
The high prior-year figures for income from profit/loss trans-
fer agreements largely came from Deutsche Bau- und Sied-
lungs-Gesellschaft mbH, Essen, which transferred part of
its real estate portfolio at fair value to a newly established
project company.
The high prior-year figures for expenses from the transfer
of losses mostly derived from HOCHTIEF Construction AG,
Essen.
19. Interest (expense)/income (net)
20. Depreciation and write-downs on financial assets
and marketable securities
This item consists of adjustments to valuations of partici-
pating interests in affiliated companies and other partici-
pating interests, and in the prior year a writedown of own
stock and other securities holdings to end-of-period mar-
ket price.
EUR 23,520,000 (2002: EUR 58,857,000) of the total charge
is a writedown on the participating interest in Ballast Nedam
N.V., Nieuwegein, Netherlands. EUR 193,357,000 of the
prior-year figure was a write-down on special-purpose
investment funds.
21. Income taxes
Income taxes include German trade income taxes, foreign
taxes on profits, tax refunds relating to earlier periods and
reversals of provisions for taxes. Other taxes are disclosed
under other operating expenses.
22. Total compensation for Supervisory Board and
Executive Board
Total compensation for the Executive Board in FY 2003 was
EUR 3,099,000 (2002: EUR 2,493,000). The total divides
into EUR 1,707,000 (2002: EUR 1,639,000) in fixed com-
pensation plus a performance-related component of EUR
1,392,000 (2002: EUR 854,000) for all the members com-
bined. The 2003 Long Term Incentive Plan adopted by the
Supervisory Board Human Resources Committee adds stock
appreciation rights (SARs)—a pay component combining a
long-term incentive effect with an element of risk. If perform-
ance thresholds in the 2003 Long Term Incentive Plan are
attained by the end of a two-year performance period, the
members of the Executive Board have a financial claim
against the company based on their SARs. Once stipulated,
the performance thresholds cannot be changed. The total
value of SARs is limited to approximately EUR 1.7 million
for the Executive Board as a whole so that the figures remain
appropriate even in the event of extraordinary or unforeseen
developments.
(EUR thousand) 2003 2002
Other interest andsimilar income 34,011 34,882
Of which: fromaffiliatedcompanies [21,895] [25,339]
Interest and similar expenses (47,969) (36,573)
Of which: toaffiliatedcompanies [(33,241)] [(26,230)]
(13,958) (1,691)
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Compensation for the Supervisory Board came to EUR
836,000 (2002: EUR 417,000). Pension payments to for-
mer members of the Executive Board or their survivors
were EUR 1,800,000 (2002: EUR 1,614,000).
A total of EUR 18,670,000 (2002: EUR 19,099,000) has
been provided to cover future pension obligations to for-
mer members of the Executive Board or their survivors.
HOCHTIEF Aktiengesellschaft
The Executive Board
Essen, February 2004
Proposal by Executive Board for Use of Net Profit
We propose that the unappropriated net profit of EUR
45,500,000.00 available for distribution be used to pay a
dividend of EUR 0.65 per no-par-value share on the capital
stock of EUR 179,200,000.00, subdivided into 70,000,000
no-par-value shares.
The dividend amount that would otherwise have been
payable on own stock held by the Company on the date
of the General Shareholders’ Meeting—this stock is barred
from receiving a dividend by Section 71b of the Stock Cor-
porations Act (AktG)—will be carried forward to the new
fiscal year.
19
Independent Auditor’s Report
We have audited the Annual Financial Statements, together
with the bookkeeping system, and the combined Manage-
ment Report of HOCHTIEF Aktiengesellschaft and the
HOCHTIEF Group for the business year from January 1 to
December 31, 2003. The maintenance of the books and
records and the preparation of the Annual Financial State-
ments and Management Report in accordance with German
commercial law are the responsibility of the Company's
management. Our responsibility is to express an opinion
on the Annual Financial Statements, together with the
bookkeeping system, and the combined Management
Report based on our audit.
We conducted our audit of the Annual Financial Statements
in accordance with Sec. 317 of the German Commercial
Code (HGB) and German generally accepted standards for
the audit of financial statements promulgated by the Institut
der Wirtschaftsprüfer (IDW). Those standards require that
we plan and perform the audit such that misstatements
materially affecting the presentation of the net assets,
financial position and results of operations in the Annual
Financial Statements in accordance with principles of
proper accounting and in the Management Report are
detected with reasonable assurance. Knowledge of the
business activities and the economic and legal environ-
ment of the Company and evaluations of possible mis-
statements are taken into account in the determination of
audit procedures. The effectiveness of the accounting-
related internal control system and the evidence support-
ing the disclosures in the books and records, the Annual
Financial Statements and the combined Management Report
are examined primarily on a test basis within the framework
of the audit. The audit includes assessing the accounting
principles used and significant estimates made by man-
agement, as well as evaluating the overall presentation of
the Annual Financial Statements and Management Report.
We believe that our audit provides a reasonable basis for
our opinion.
Our audit has not led to any reservations.
In our opinion, the Annual Financial Statements of HOCHTIEF
Aktiengesellschaft give a true and fair view of the net assets,
financial position and results of operations of the Compa-
ny in accordance with principles of proper accounting. On
the whole the combined Management Report provides a
suitable understanding of the Company's position and suit-
ably presents the risks of future development.
Essen, February 18, 2004
PwC Westdeutschland
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Schwarzhof Kunst
Wirtschaftsprüfer Wirtschaftsprüfer
(German Public (German Public
Auditor) Auditor)
20
Subsidiaries, Associates and Other SignificantParticipating Interests of the HOCHTIEFGroup at December 31, 2003
Percentage Shareholders’ equity Profit/(loss)of stock held Local currency EUR thousand for the year
in % (thousand) (EUR thousand)
I. Affiliated companies included in the Consolidated Financial Statements
Airport Division
HOCHTIEF AirPort GmbH, Essen 100 135,000 – *
Airport Partners GmbH, Düsseldorf 60** 146,063 3,580
HAP Hamburg Airport Partners GmbH & Co. KG, Hamburg 80** 396,090 14,243
Sydney Airport Intervest GmbH & Co. KG, Essen 100** 132,605 17,395
Construction Division
Deutsche Bau- und Siedlungs-Gesellschaft mbH, Essen 100 175,690 – *
DEBAUSIE Immobilien GmbH & Co. KG, Essen 100** 79,655 355
HOCHTIEF Projektentwicklung GmbH, Essen 100 7,670 – *
HOCHTIEF Facility Management GmbH, Essen 100 1,093 – *
Construction Services Americas Division
HOCHTIEF Americas GmbH, Essen 100 542,524 – *
The Turner Corporation, Dallas, Texas, USA 100** USD 405,186 320,814 30,005
HOCHTIEF CANADA Inc., Toronto, Canada 100 CAD 53,181 32,759 (2,668)
HOCHTIEF do Brasil S.A., Sa~o Paulo/Brazil 91.50 BRL 2,620 719 (3,415)
Construction Services Asia Pacific Division
HOCHTIEF Asia Pacific GmbH, Essen 100 705,025 – *
Leighton Holdings Limited, Sydney, Australia 50.07** AUD 852,456 507,356 105,734
Construction Services Europe Division
HOCHTIEF Construction AG, Essen 100 203,662 – *
STREIF Baulogistik GmbH, Essen 100** 31,659 – *
Dipl. Ing. Hugo Durst GmbH, Vienna, Austria 100** 6,741 269
HOCHTIEF (UK) CONSTRUCTION Ltd.,Swindon, UK 100** GBP 1,292 1,833 724
HOCHTIEF Polska Sp. z o.o., Warsaw, Poland 99** PLN 71,297 15,164 (1,373)
HOCHTIEF VSB a.s., Prague, Czech Republic 94.66 CZK 627,713 19,365 4,360
***
***
21
Percentage Shareholders’ equity Profit/(loss)of stock held Local currency EUR thousand for the year
(thousand) (EURthousand)
Corporate Headquarters
VERBAU Gesellschaft zur Vermittlung vonBauversicherungen mbH, Essen 100 779 – *
Contractors’ Casualty & Surety ReinsuranceCompany S.A., Steinfort, Luxembourg 100** USD 3,500 2,771 –
Builders’ Credit Reinsurance Company S.A.,Steinfort, Luxembourg 100** USD 3,000 2,375 –
II. Associated companies consolidatedat equity
Airport Division
Flughafen Düsseldorf GmbH, Düsseldorf 50** 113,090 52,520
Athens International Airport S.A., Athens, Greece 39.94** 304,622 14,261
Flughafen Hamburg GmbH, Hamburg 49** 63,760 – *
Construction Services Americas Division
AECON Group Inc., Toronto, Canada 48.39** CAD 131,554 81,036 145
KITCHELL CORPORATION, Phoenix, Arizona, USA 31.18** USD 75,686 59,926 8,375
Construction Services Asia Pacific Division
Concor Limited, Johannesburg, South Africa 49.99 ZAR 181,235 21,763 2,488
Corporate Headquarters
Ballast Nedam N. V., Nieuwegein, Netherlands 48 56,000 (143,000)
P. T. Ballast Indonesia Construction, Jakarta, Indonesia 47.44 USD 6,472 5,124 1,060
* Profit/loss transfer agreement ** Indirect participating interest *** Consolidated result for group
22
Boards
Supervisory Board
Dr. jur. Dietmar Kuhnt
Essen, Chairman,
Former Chairman of the Executive Board of RWE AG, Essena) Allianz Versicherungs-AG
Dresdner Bank AGHapag-Lloyd AGmg technologies agRWE AG TUI AG
Gerhard Peters *
Butzbach, Deputy Chairman, Administrative Officera) HOCHTIEF Construction AG
Alois Binder *
Wyhl, Construction Plant Operator
Detlev Bremkamp
Munich, Member of the Executive Board of Allianz AG, Municha) Allianz Global Risks Rückversicherungs AG (Chairman)
Asea Brown Boveri AGb) ACIF
AGF RAS Holding B.V. (Chairman)Allianz Financial & Insurance Services GmbHAllianz General Insurance Company S.A.Allianz Life Insurance Company S.A.Allianz Risk TransferAllianz, Compania de Seguros y Reaseg. S.A. (Chairman)Assurances Générales de FranceElmonda Assistance (Chairman)Lloyd AdriaticoRAS International II B.V.RAS International N.V.RINV (NewCo) (Chairman)Royal Nederland VerzekeringsgroepZwolsche Algemeene N.V.
Günter Haardt *
Frankfurt am Main, Executive Manager, Vermögensverwal-
tungs- und Treuhandgesellschaft mbH der Industriegewerk-
schaft Bauen-Agrar-Umwelt (the asset management and trust
company of the Construction, Agricultural and Environmental
Employees’ Union), Frankfurt am Maina) HOCHTIEF Construction AGb) apm alpha print medien AG
Ulrich Hartmann
Düsseldorf, Chairman of the Executive Board of E.ON AG,
Düsseldorfa) Deutsche Bank AG
Deutsche Lufthansa AGE.ON Energie AG (Chairman)IKB Deutsche Industriebank AG (Chairman)Münchener Rückversicherungs-Gesellschaft AG (Chairman)
b) ARCELORHenkel KGaA
Josef Hess *
Vilshofen, Warehousekeeper and Works Council Chairman
(in Munich)
Dipl.-Ing. Gerhard Hilke *
Rödermark-Urberach, Management Chairman,
Southwest Division of HOCHTIEF Construction AG
Dr. rer. pol. h. c. Martin Kohlhaussen
Frankfurt am Main, Chairman of the Supervisory Board of
Commerzbank AG, Frankfurt am Maina) Bayer AG
Commerzbank AG (Chairman)Heraeus Holding GmbHInfineon Technologies AGSchering AGThyssenKrupp AG
b) Verlagsgruppe Georg von Holtzbrinck GmbH
Udo Paech *
Berlin, Technical Employee
Dr. jur. Dr.-Ing. E. h. Heinrich v. Pierer
Munich, Chairman of the Executive Board of Siemens AG,
Berlin & Municha) Bayer AG
Münchener Rückversicherungs-Gesellschaft AGVolkswagen AG
b) Siemens AG Österreich (Austria)
Prof. Dr. Jürgen Strube
Ludwigshafen, Chairman of the Executive Board of
BASF AG, Ludwigshafen
– until June 4, 2003; offices listed as of June 4, 2003 –a) Allianz Lebensversicherungs-AG
BASF Aktiengesellschaft (Chairman)Bayerische Motoren Werke AktiengesellschaftBertelsmann AGCommerzbank AGHapag-Lloyd AGLinde AG
Dr. phil. Klaus Sturany
Dortmund, Member of the Executive Board of RWE AG,
Essena) Commerzbank AG
Hannover Rückversicherungs-AGHeidelberger Druckmaschinen AGRAG AG RWE Dea AGRWE Power AGRWE Solutions AG
b) Innogy Holdings plc.RWE Trading GmbHThames Water plc.
* Supervisory Boardmember representingemployees
a) Membership in othersupervisory boards pre-scribed by law
b) Membership in compa-rable domestic andinternational corporategoverning bodies
Fritz Voelkner *
Duisburg, Assistant Foreman
Dr.-Ing. E. h. Heinrich Weiss
Hilchenbach-Dahlbruch,
Chairman of the Executive Board of SMS AG, Düsseldorfa) Commerzbank AG
Deutsche Bahn AGFerrostaal AGJ.M. Voith AGSMS Demag AG (Chairman)
b) Concast Holding AG (President)Concast AG (President)Thyssen-Bornemisza Group
Klaus Wiesehügel *
Frankfurt am Main,
National Chairman of the Construction, Agricultural and Envi-
ronmental Employees’ Union, Frankfurt am Maina) Zusatzversorgungskasse des Baugewerbes VVaG, Wiesbaden (Chairman)
Jan Zilius
Essen, Member of the Executive Board of RWE AG, Essen
– from June 4, 2003 –a) Heidelberger Druckmaschinen AG
RWE Energy AGRWE Systems AG (Chairman)RWE Umwelt AG (Chairman)
Supervisory Board Committees
Mediation Committee pursuant to Sec. 27(3) of the
Codetermination Act (MitbestG)
Dr. jur. Dietmar Kuhnt (Chairman)
Josef Hess
Dr. rer. pol. h.c. Martin Kohlhaussen
Gerhard Peters
Human Resources Committee
Dr. jur. Dietmar Kuhnt (Chairman)
Dr. rer. pol. h.c. Martin Kohlhaussen
Gerhard Peters
Audit Committee
Dr. rer. pol. h.c. Martin Kohlhaussen (Chairman)
Gerhard Hilke
Gerhard Peters
Dr. phil. Klaus Sturany
Dr.-Ing. E.h. Heinrich Weiss
Executive Board
Dr.-Ing. Dr.-Ing. E. h. Hans-Peter Keitel
Essen, Chairmana) HOCHTIEF Construction AG (Chairman)
IVECO MAGIRUS AG National-Bank AGViterra AG
b) Ballast Nedam N.V. Leighton Holdings LimitedThe Turner Corporation
Hans-Wolfgang Koch
Meerbuscha) Flughafen Düsseldorf GmbH (Chairman)
HOCHTIEF Construction AGIV-AG Immobilien AktiengesellschaftSchefenacker Vision Systems International AG
b) AECON Group Inc.The Turner CorporationTurner Construction – International LLC
Dr.-Ing. Herbert Lütkestratkötter
Bad Vilbel
– ab 1. Dezember 2003 –a) ThyssenKrupp Elevator AG
Dr. rer. pol. Peter Noé
Essenb) Leighton Asia Limited
Leighton Holdings Limited
Dr. rer. pol. Hans-Georg Vater
Ratingena) HOCHTIEF Construction AG
SAB Spar- und Anlageberatung AGb) Athens International Airport S.A.
Representative Directors
Albrecht Ehlers
Dortmund
Henning Mähl
Essen
Hartmut Paulsen
Düsseldorf
* Supervisory Boardmember representingemployees
a) Membership in othersupervisory boards pre-scribed by law
b) Membership in compa-rable domestic andinternational corporategoverning bodies
23
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