Half-Year Report January to June our. My Life. Turning Vision into Value.

Transcription

1 Half-Year Report January to June 2013 My Life our Quality Turning Vision into Value.

2 The HOCHTIEF Group *Restated for IAS 19R. For notes on the adjustment, please see pages 18 and 19. **Note: The percentage changes are calculated at the level of precision used in the interim financial statements (thousands of euros). (EUR million) H H Percentage change Q Q Full year 2012 New orders 11, , , , ,487.8 Work done 14, , , , ,693.4 Order backlog 45, , , , ,793.6 Divisional sales 12, , , , ,551.2 External sales** 12, , , , ,527.7 Operational earnings (EBITA)** Profit before taxes** Consolidated net profit/(loss)** (50.6) 82.7 (15.7) Earnings per share (EUR) 1.72 (0.69) 1.13 (0.21) 2.11 Capital expenditure** , ,781.4 Net assets 9, , , , ,844.7 Employees 86,241 (End H1 2013) 80,213 (End H1 2012) ,241 (End Q2 2013) 80,213 (End Q2 2012) 79,987 (2012 average) HOCHTIEF stock Kursentwicklung 150 % im ersten Halbjahr 2005 HOCHTIEF MDAX DAX % 130 % 120 % 110 % 100 % 090 % July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Cover image: Showpiece: There are many good reasons why the WaterHouses in Hamburg are part of the 2013 IBA international building exhibition. This development by HOCHTIEF Solutions gives shape to a whole new type of urban planning concept, a spectacular new way of living with water. Comprising the WaterTower and four triplex houses at the heart of an open river basin, the residential property brings occupants directly in contact with the aquatic element. Spacious terraces offer access to the water, the underwater gardens can be individually designed, and living at water level even has the advantage of being able to tie up a canoe or two. What s more, this HOCHTIEF project has a rather compelling inside story. An innovative energy concept substantially reduces the buildings energy needs, which are largely met from renewable sources. Little wonder that the property, completed in 2013, has already been awarded Gold precertification by the German Sustainable Building Council. 2

3 To Our Shareholders 3 Interim Management Report 5 Interim Financial Statements 14 Responsibility Statement 21 Financial Calendar 23 Dear Shareholders, Marcelino Fernández Verdes, Chairman of the Executive Board The first half of the year was a good one for HOCHTIEF. The very substantial increase in our earnings is not only a result of improved operational earnings in all divisions. We also had a one-off positive effect from the sale of the telecommunications business at Leighton. With an order backlog in excess of EUR 45 billion we have the equivalent of 18 months in forward orders. We thus have every reason to continue looking forward to the remainder of the fiscal year with optimism. HOCHTIEF s repositioning is proceeding successfully. In the first months of the fiscal year, we formulated a clear strategy for the HOCHTIEF Group: We aim to develop HOCHTIEF into the global leader in infrastructure construction with profitable and sustained growth. To achieve this aim, various measures were decided, which we are now implementing systematically. In the second quarter of 2013, we reached some important milestones on our journey: It was important for us to be able to offer good future prospects for employees of both businesses sold. We succeeded in both cases: The new owners are longterm investors who will further develop the business in a responsible manner. Both transactions are expected to close in the second half of As early as in March 2013, Leighton agreed the sale of some majority shareholdings in telecommunications companies Nextgen Networks, Metronode, and Infoplex. This sale was completed on June 28 at a price of approximately EUR 475 million (AUD 620 million). We are seeking strategic partners for our property development operations in Europe, namely aurelis, HTP, and formart. In this segment, we aim to reduce the amount of tied-up capital by cooperating with long-term investors. Talks with potential partners are going well. We sold the Service Solutions business of HOCHTIEF Solutions AG, which was no longer part of our core business, to the French company SPIE S.A. The agreement with retroactive economic effect as of January 1, 2013 was signed on June 28. With a selling price of approximately EUR 250 million, subject to closing adjustments, the transaction will have a significant positive impact on earnings. The sale will see nearly 6,000 employees of the Service Solutions business, which combines the facility and energy management activities, move to SPIE. In May, we sold our airport business: The agreement with a subsidiary of Canada s Public Sector Pension Investment Board (PSP Investments) for the sale of all shares in HOCHTIEF AirPort GmbH, Essen, was signed on May 7. The transaction, with proceeds of approximately EUR 1.1 billion subject to closing adjustments, will have retroactive economic effect as of January 1, 2013 and lead to the deconsolidation of around EUR 1.5 billion of assets, including around EUR 0.4 billion of minority interests. We do not expect the sale to have a significant impact on earnings. By making these successful disposals, we have already taken a significant step toward refocusing on our core business. HOCHTIEF s financial position will continue to improve and the Group will be able to strengthen its competitive position. We will use the sale proceeds to reduce net debt, invest in our core business, and allow our shareholders to share adequately in HOCHTIEF s success. We are translating these objectives into action: In June, the HOCHTIEF Executive Board decided on a stock repurchase program. On the stock market, HOCHTIEF Aktiengesellschaft is to buy back up to 4,313,000 no-par-value shares in HOCHTIEF Aktiengesellschaft, or around 5.6% of the capital stock, at a total purchase price (excluding incidental purchase costs) of up to EUR 260 million. HOCHTIEF has also increased its stake in Leighton Holdings Ltd. to 54.96% by purchasing around 4.8 million shares (by end of June 2013). We are convinced of our subsidiary s strength and see this step as a strategic investment. By raising our interest, we are also investing in our core business: HOCHTIEF and Leighton pursue coordinated, com- 3

4 plementary business strategies and work together in a partnership of trust. We intend to further increase the stake in Leighton going forward. Group outlook For fiscal year 2013, we continue to anticipate that new orders, work done, and the order backlog will normalize. The other projected strategic measures are currently being implemented systematically: To sharpen our competitive edge in Europe, we are completely reorganizing the business operated by HOCHTIEF Solutions. With leaner structures, we aim to be more flexible in addressing customers needs and requirements in future. To achieve this, we are transferring more responsibilities and accountability to our operational units. Alongside process improvements, we expect significant reductions in cost. In all this, we always have the interests of our workforce in mind: All considerations and decisions are undertaken in close consultation with the bodies comprising the employee representatives. The implementation of the new organization plan has just started. As planned, risk management is currently being fine-tuned across the Group and new systems are being introduced. Implementing this will take a certain amount of time, but from then on, it will help to reduce earnings volatility on a sustainable basis. We are well on course to implement our strategy and position HOCHTIEF as an infrastructure group. This new, strong HOCHTIEF Group, creating sustained value, will benefit our shareholders considerably. Our customers trust in the core competency developed by HOCHTIEF, which we have demonstrated on countless projects all over the globe. Attractive new contracts were again a feature of business operations in the second quarter. The highlights included an additional contract for contract mining at an iron ore mine in Pilbara, Australia. Worth EUR 2.2 billion in total, the project is the largest single contract award in the history of Leighton Contractors. The project gains in North America include various healthcare and educational properties, such as hospital buildings in Washington, D.C., and Ohio. In June, the foundation stone was laid for the Stadtschloss in Berlin HOCHTIEF is to provide shell construction services for this prestigious project. We confirm the increased profit guidance for fiscal 2013 announced in the report for the first quarter. For operational earnings, we expect profit before taxes of EUR 580 million to EUR 660 million, and consolidated net profit of EUR 160 million to EUR 200 million. This guidance does not include the respective earnings contributions from HOCHTIEF AirPort and now also from the sold Service Solutions business of HOCHTIEF Solutions. By year-end, we expect the closing of both transactions with effect from January 1, The earnings contributions currently still included in current figures will be deconsolidated then. Implementation of our strategy is proceeding to plan. We have made further progress with the sale of non-core activities. Leighton successfully completed the sale of telecommunications assets in the second quarter. We expect to close both the Airport and the Services transactions no later than the year end. The restructuring of our European business continues to take shape and will boost our competitiveness in the long term. Currently we estimate a target range of EUR 70 million to EUR 90 million restructuring costs. These non-operational effects (such as one-off effects of agreed divestments and costs of restructuring measures) are not included in our operational guidance and will have a significant positive net effect on profit before taxes and on consolidated net profit in After successful completion of the restructuring measures we currently estimate recurring cost savings of EUR 40 million to EUR 60 million per annum. We announced that 2013 would be a year of change. We are now systematically putting our strategy into action. Every day, we move a step closer to our goal of creating sustained value for all our shareholders. Join us on our journey! Yours, Marcelino Fernández Verdes Chairman of the Executive Board 4

5 To Our Shareholders 3 Interim Management Report 5 Interim Financial Statements 14 Responsibility Statement 21 Financial Calendar 23 Interim Management Report Orders and work done New orders came to EUR billion in the half year ending June 30, 2013, down EUR 4.73 billion or 29%* on the figure of a year earlier. This mainly relates to the HOCHTIEF Asia Pacific division (down EUR 4.48 billion), where changes on the resources markets had a visible impact on the orders situation. The comparative period still featured large-scale projects in the coal and gas sector. HOCHTIEF Americas was also down on the prior-year figure (with a decrease of EUR 0.45 billion). The prior-year figure included large contracts in the roads segment. The HOCHTIEF Europe division (up EUR 0.18 billion) exceeded the prior-year figure thanks to new orders in Germany and international markets. Work done, at EUR billion as of the reporting date, was slightly higher than in the prior-year period (up 3.5%). As a result of working through large-scale projects on its order book, the HOCHTIEF Asia Pacific division was on a par with the prior-year period (up 0.02 billion). The HOCHTIEF Americas division (up EUR 0.40 billion) generated growth in both building construction and civil engineering, attaining the highest level of work done in the first half of any fiscal year to date. HOCHTIEF Europe (up 0.05 billion) surpassed its level of a year earlier. The order backlog, at EUR billion as of June 30, 2013, was 14.4% down on the high level reached at the same point in the previous year. This includes EUR 4.13 billion (almost 10%) in negative exchange rate effects, mainly relating to the Australian and the US dollar. Even with work done at a sustained high level, the order backlog continues to represent a forward order book of 18 months. Financial Review Earnings The good start to the year continued during the second quarter with sales again at a high level. The HOCHTIEF Group made sales of EUR billion in the first half of 2013 against EUR billion in the same period the year before. The sales growth of approximately EUR 600 million (5%) was mainly driven by a high work done figure. Exchange rate effects had a negative impact of EUR million on sales in the first half of 2013, mostly due to the fall in the Australian dollar against the euro, the Group currency. The HOCHTIEF Asia Pacific division contributed EUR 7.42 billion to Group sales. Sales in that division are thus at a sustained high level slightly above the prior-year period (EUR 7.22 billion). The HOCHTIEF Americas division generated sales of EUR 3.83 billion in the first half of 2013 compared with EUR 3.43 billion a year earlier. Alongside an increase in civil engineering, the sales growth of EUR million was notably due to a strong orders situation in building construction business at Turner. Sales in the HOCHTIEF Europe division, at EUR 1.3 billion, were on a par with the prior-year period (EUR 1.31 billion). Lower sales in the Infrastructure Solutions and Real Estate Solutions businesses were made up for here by higher sales in Classic Solutions and the services business. The proportion of sales generated internationally was once again above average in the first half of 2013 at 92.6%, as it was in the first half of the prior year (93.1%). The progress in earnings performance made at the start of the year has been maintained. Operational earnings (EBITA) came to EUR million in the period January to June 2013, EUR million better than the prior-year period (EUR million). Prior-year earnings were notably affected by the Airport Link, Victorian Desalination Plant and Elbe Philharmonic Hall projects as well as by failure to cover overhead costs at Flatiron and in the European business. Our Australian subsidiary Leighton Holdings markedly improved its earnings situation. This partly came from the EUR 165 million earnings boost from the sale of telecommunications assets completed at the end of June. HOCHTIEF Asia Pacific division operational earnings climbed as a result to EUR million, up EUR million on the prioryear period (EUR million). The profitability measures introduced in our American business during the prior year started delivering results in the reporting period. These measures focused on Flatiron, our civil engineering subsidiary. The HOCHTIEF Americas division increased operational earnings (EBITA) by a significant 57.6% in the reporting period (EUR 47.6 million) compared with the prior-year period (EUR 30.2 million). In the HOCHTIEF Europe division, we recorded positive operational earnings (EBITA) of EUR 7 million for the first six months of fiscal The prior-year loss of EUR 59.8 million mainly resulted from provisioning in connection with the reorganization of the Elbe Philharmonic Hall project and from failure to cover overhead costs. HOCHTIEF generated EUR million in net income from participating interests in the first half of This marked a EUR 60.2 million increase on the comparative prior-year figure (EUR 54.1 million). Net income from participating interests was up across all operating divisions. The HOCHTIEF Asia Pacific division achieved the biggest increase. Whereas the prior-year period item was still well into negative figures at minus EUR 68.9 million *Calculated on basis of figures in EUR million. Figures in table form are provided in the interim financial statements starting on page 14. 5

6 due to losses on the Victorian Desalination Plant project completed at the end of 2012, the division had net income from participating interests back into the positive range at EUR 5.4 million in the reporting period. Net income from participating interests in the HOCHTIEF Americas division was EUR 27.3 million in the period January to June 2013, up EUR 4.6 million on the prior-year figure of EUR 22.7 million. This reflected improved net income from participating interests in jointly controlled entities at Flatiron. The HOCHTIEF Europe division increased net income from participating interests to EUR 17.4 million, EUR 7.5 million higher than in the prior-year period (EUR 9.9 million). While the contribution from the real estate business was slightly weaker compared with the prior-year period, income from the sale of a schools project abroad had a strong positive impact in the PPP business line. HOCHTIEF signed an agreement in May 2013 with a subsidiary of Canada s Public Sector Pension Investment Board (PSP Investments) for the sale of all shares in HOCHTIEF AirPort GmbH, Essen, Germany. The airport holdings continue to be accounted for in the HOCHTIEF Group as assets held for sale (comprising a disposal group) in accordance with IFRS 5 until the transaction is finally put into effect closing is scheduled for the second half of 2013 and the sale is completed retrospectively as of January 1, This now once again includes the stake in Athens Airport, which we had reclassified from the disposal group to financial assets as of September 30, 2012 in light of the macroeconomic problems in Greece. The Athens stake was put back in the disposal group at the start of the second quarter of 2013 as the sale process had taken on more concrete form and was substantively well advanced. Only dividends distributed by and income from long-term loans to the airport holdings were included in HOCHTIEF s net income from participating interests for the first half of Net income from participating interests generated by the airports business came to EUR 64.2 million in the reporting period, compared with EUR 90.3 million in the prior-year period. The prior-year figure was positively impacted by a large dividend distribution from Athens Airport. Net investment and interest income came to minus EUR million in the first half of 2013, compared with minus EUR million in the corresponding period of the prior year. The main impact here was from higher interest expense from the use of different financing sources. The foremost goal of our financing strategy is to secure a diverse liquidity position for the Group in the long term. Alongside bank finance through credit facilities and promissory note loans, we have placed our financing on a broader basis by successfully issuing corporate bonds since the onset of the financial crisis. After the success of the first issue (for EUR 500 million) a year earlier, HOCHTIEF placed a non-rated bond issue (for EUR 750 million) for the second time in its corporate history in March Following up on the positive earnings figures presented in the first quarter of 2013, HOCHTIEF improved its earnings performance once again in the second quarter. HOCHTIEF generated profit before taxes of EUR million for the period January to June 2013 compared with EUR 72.7 million in the same period of the prior year. The HOCHTIEF Group incurred a tax expense of EUR million in the first half of The comparative prioryear figure was EUR 51.1 million. The tax expense included a deferred tax expense of EUR million, a significant increase on the prior-year period (EUR 15.7 million). The amount reported for the period under review mainly relates to changes on the balance sheets of individual Group companies and in the HOCHTIEF Asia Pacific division as a result of the sale of telecommunications activities at Leighton. Profit after taxes was EUR million in the period under review, EUR million higher than the prior-year figure (EUR 21.6 million). HOCHTIEF shareholders profited especially from this with a consolidated net profit of EUR million. In the prior-year period, substantial impacts on earnings had resulted in a consolidated net loss of EUR 50.6 million. The amount allocated to minority interest out of profit after taxes was EUR million (H1 2012: EUR 72.2 million allocated to minority interest). Cash flow Net cash used in operating activities came to EUR million in the first six months of fiscal The figure for the comparative period of the prior year was significantly lower at EUR 96.2 million. This primarily related to a rise in working capital, which was up EUR million on the prior-year figure. The main factor here was the increase in trade receivables as a result of business expansion in the HOCHTIEF Americas and HOCHTIEF Asia Pacific divisions. 6

7 To Our Shareholders 3 Interim Management Report 5 Interim Financial Statements 14 Responsibility Statement 21 Financial Calendar 23 Leighton s first-quarter capital injection into the BrisConnection project also negatively impacted cash flow. to cash resources on the initial consolidation of Clark Builders. Net cash used in investing activities amounted to EUR million in the first half of The amount of cash required for investing activities was thus a substantial EUR million lower than in the prior-year period (EUR 1.04 billion). Total capital expenditure included in this item reached EUR million (H1 2012: EUR 1.03 billion). Purchases of intangible assets and property, plant and equipment, at EUR million, were at a high level, only slightly down on the prior-year period (EUR million). The majority of this, an amount of EUR million, was spent in the HOCHTIEF Asia Pacific division on additions and maintenance to plant and equipment, notably for the contracting mining business. HOCHTIEF Asia Pacific s use of funds for capital expenditure on property, plant and equipment was thus EUR 17.5 million down on the prioryear figure of EUR million. Expenditure on financial assets was substantially lower in the reporting period than in the prior-year period. Capital expenditure on financial assets went down by EUR million from EUR million in the prior-year period to EUR 274 million in the reporting period and was focused in the HOCHTIEF Asia Pacific division. Alongside EUR million invested by Leighton in its own business portfolio, the HOCHTIEF Group also further increased its shareholding in Leighton. For this purpose, the Group purchased some 4.8 million shares in the Australian company for EUR 76.4 million. HOCHTIEF s shareholding in Leighton thus increased to 54.96% as of the end of June Alongside capital injections by Leighton in its business portfolio, the focus in the prior year was on the acquisition of a majority stake in Clark Builders, Canada. In the opposite direction, proceeds from asset disposals and divestments meant a large cash inflow of EUR million (H1 2012: EUR 183 million). The largest share of this, some EUR 475 million, was generated at Leighton from the sale of telecommunications activities. Changes in securities holdings and financial receivables likewise produced a cash inflow (EUR 10.1 million), in contrast with the prior-year cash outflow (of EUR million). Whereas additions to the securities portfolio at Turner and the Luxembourg fund management companies took up cash in the prior year, so far this year there has been a cash inflow from sales of fixed-income securities at Turner. In the prior year, net cash used in investing activities also included a EUR 56.2 million addition The financial transactions entered into by HOCHTIEF in the first half of 2013 resulted in EUR million in net cash provided by financing activities (H1 2012: EUR million). New borrowing generated a EUR 1.57 billion cash inflow for the HOCHTIEF Group. Of this amount, EUR 750 million came from the corporate bond issued by HOCHTIEF AG. In the course of replacing a financing agreement approaching maturity, Leighton also arranged a new EUR million (AUD 1 billion) credit facility on improved terms. Drawings so far stand at EUR million (AUD 200 million). New borrowing came to EUR 1.83 billion in the comparative prior-year period. Part of the new borrowings in 2013 have been used to repay existing loan liabilities. This made for a EUR million cash outflow under service of debt in the first half of 2013, compared with EUR million in the prior-year period. Additionally, cash resources totaling EUR million (H1 2012: EUR 89.9 million) were used for the payment of dividends to HOCHTIEF and minority shareholders. Payments under HOCHTIEF s stock buy-back scheme came to EUR 22.6 million by June 30, Cash and cash equivalents stood at EUR 2.15 billion as of the June 30, 2013 balance sheet date, a reduction of EUR million compared with December 31, 2012 (EUR 2.51 billion). The effect of exchange rate changes was a negative EUR 66.4 million, in particular due to the weak trend in the Australian dollar against the euro. The EUR million net cash used in operating activities combined with the EUR million net cash used in investing activities produced a EUR million negative free cash flow in the first half of 2013, substantially lower than in the first half of 2012 (H1 2012: EUR 1.14 billion negative free cash flow). Balance sheet The progress achieved with HOCHTIEF s strategic realignment in the first half of 2013 also affected the structure of the Consolidated Balance Sheet. The assets of the now non-core HOCHTIEF Airport and HOCHTIEF Service Solutions businesses are accounted for as a disposal group in accordance with IFRS 5. Leighton also completed the sale of majority interests in the telecommunications business 7

8 during the period under review and deconsolidated the assets concerned. The first half of 2013 saw our total assets decrease by a slight 1.8% from EUR billion as of December 31, 2012 to EUR billion as of the June 30, 2013 balance sheet date. This included a EUR 619 million negative exchange rate effect, mainly from the drop in the Australian dollar against the euro. Non-current assets were down compared with the end of the prior year (EUR 4.84 billion) by EUR million to EUR 4.57 billion. The intangible assets of EUR million notably include concessions and similar rights in addition to goodwill recognized on the initial consolidation of fully consolidated subsidiaries. Property, plant and equipment came to EUR 1.86 billion as of June 30, 2013, EUR 42.7 million below the comparative figure as of December 31, 2012 (EUR 1.9 billion). Alongside a slight reduction at Leighton due to the exchange rate effect, this reflected the reclassification to assets held for sale of property, plant and equipment belonging to the services business in the HOCHTIEF Europe division. As a result, at EUR 1.12 billion as of June 30, 2013, financial assets were EUR 64.4 million down on December 31, 2012 (EUR 1.19 billion). While there was an increase in financial assets notably at Leighton due to investment in the business portfolio, there was a larger decrease as the carrying amount of the investment in Athens Airport was reclassified to the disposal group at the start of the second quarter in light of the more advanced stage reached in negotiations for the sale of all airport assets. Financial receivables, at EUR million, showed little change relative to December 31, 2012 (EUR million). As before, most of this figure relates to long-term loans to Leighton Group companies and to companies in the Real Estate business line. Other receivables and other assets likewise stayed constant at EUR million. The EUR million decrease in deferred tax assets to EUR 97.4 million is largely due to the sale of telecommunications activities at Leighton. Current assets went down slightly, by EUR 40.2 million from EUR billion as of December 31, 2012 to EUR billion as of June 30, Inventories rose by EUR 22.2 million to EUR 1.45 billion with the development of real estate projects in the Real Estate Solutions business line. Current financial receivables went up slightly by EUR 12.5 million to EUR million at the end of the reporting period. Trade receivables increased as a result of operating growth during the first half of 2013 by EUR million to EUR 5.81 billion. The comparative figure at the prior year-end was EUR 5.31 billion. Most of the increase related to business at Leighton and Turner. In the HOCHTIEF Europe division, by contrast, reclassification of assets from the services business to assets held for sale resulted in a reduction in trade receivables. Other receivables and other assets fell by EUR 47.6 million to EUR million, mainly reflecting a decrease in prepaid expenses. The HOCHTIEF Group s marketable securities decreased by EUR 42.4 million to EUR million, primarily due to sales of fixed-income securities at Turner. Expenditure to finance ongoing operating growth and capital expenditure during the first half year reduced cash and cash equivalents by EUR million to EUR 2.15 billion. Assets held for sale comprise assets of our airports business and the services business of the HOCHTIEF Europe division. These assets stood at EUR 1.73 billion at the end of the reporting period. In the comparative figure as of December 31, 2012 (EUR 1.85 billion), the disposal group also included in addition to the airports business assets (other than the investment in Athens Airport) the assets of Leighton s telecommunications business. The latter were deconsolidated on completion of the sale as of June 30, Shareholders equity came to EUR 4.1 billion as of June 30, 2013, EUR million below the figure as of December 31, 2012 (EUR 4.24 billion). Profit after taxes (EUR million) and changes from remeasurement of defined benefit plans (EUR 6 million) had a positive impact on shareholders equity. These were countered by reductions in shareholders equity as a result of currency translation and changes in the fair value of financial instruments (EUR million), dividends paid (EUR million), and other changes not recognized in the Statement of Earnings (EUR 78.4 million). The equity ratio (shareholders equity to total assets) of 24.6% remains on a solid basis and was only slightly down on December 31, 2012 (25%). Non-current liabilities increased during the first half of 2013 by EUR million to EUR 4.57 billion. This was substantially due to changes in non-current financial liabilities, which went up by a total of EUR million to EUR 3.63 billion as a result of the bond issue by HOCHTIEF Aktiengesellschaft and borrowing by Leighton. Non-current provisions decreased relative to December 31, 2012 (EUR million) by EUR 45.6 million to EUR million. The main factor here was the reclassification of provisions to liabilities associated with assets held for sale due to the planned sale of the services business line in the HOCHTIEF 8

9 To Our Shareholders 3 Interim Management Report 5 Interim Financial Statements 14 Responsibility Statement 21 Financial Calendar 23 Europe division. Provisions for pensions and similar obligations amounted to EUR million at the end of the reporting period. Other non-current provisions, mostly relating to personnel and insurance-related obligations, stood at EUR million. Other liabilities, at EUR 52.7 million, and deferred tax assets, at EUR million, showed no significant change compared with the 2012 fiscal year-end. In the first six months of fiscal 2013, we reduced current liabilities by a substantial EUR million, mainly with a decrease in payables and provisions. As a result, current liabilities stood at EUR 7.99 billion as of June 30, 2013, compared with EUR 8.98 billion as of December 31, Part of the funds generated by the HOCHTIEF corporate bond issue were used to repay bank borrowing. Current financial liabilities decreased as a result by EUR 477 million to EUR 1.23 billion. The HOCHTIEF Group s trade payables were likewise significantly below the 2012 fiscal year-end figure (EUR 5.75 billion) with a decrease of EUR million to EUR 5.39 billion. There were significant reductions in trade payables at Leighton partly due to exchange rate effects as well as in the HOCHTIEF Europe division due to the services business being accounted for in the disposal group. For the same reason, current provisions decreased by EUR million to EUR million, while other liabilities went down by EUR 51.7 million to EUR million. Liabilities associated with assets held for sale mainly relate to the services business in the HOCHTIEF Europe division and increased by EUR 28 million to EUR million. subject to continuous assessment as part of our risk management system. Despite extensive control mechanisms and ongoing project reviews, we cannot rule out the future necessity in individual instances of recognizing impairment losses on investments within the portfolio. Report on forecasts and other statements relating to the company s likely future development For fiscal year 2013, we continue to anticipate that new orders, work done, and the order backlog will normalize. We confirm the increased profit guidance for fiscal 2013 announced in the report for the first quarter. For operational earnings, we expect profit before taxes of EUR 580 million to EUR 660 million, and consolidated net profit of EUR 160 million to EUR 200 million. This guidance does not include the respective earnings contributions from HOCHTIEF AirPort and now also from the sold Service Solutions business of HOCHTIEF Solutions. By year-end, we expect the closing of both transactions with effect from January 1, The earnings contributions currently still included in current figures will be deconsolidated then. Implementation of our strategy is proceeding to plan. We have made further progress with the sale of non-core activities. Leighton successfully completed the sale of telecommunications assets in the second quarter. We expect to close both the Airport and the Services transactions no later than the year end. Risk and opportunities report The presentation of the opportunities and risks* of likely future developments given in the combined company and Group management report as of December 31, 2012 continues to apply. There has been no material change in the situation of the Group from that presented in our 2012 Annual Report with regard to the general economic environment and to the company-specific risks presented in this report. The overall economic situation poses risks notably due to the continuing debt crisis in the euro zone and primarily the situation in Greece, the developments in Hungary, the ongoing political uncertainties in the Arabian region, and exchange rate movements. We monitor and assess these risks on a continuous basis. From today s perspective, they raise no doubts about the HOCHTIEF Group s ability to continue as a going concern. The economic situation is The restructuring of our European business continues to take shape and will boost our competitiveness in the long term. Currently we estimate a target range of EUR 70 million to EUR 90 million restructuring costs. These non-operational effects (such as one-off effects of agreed divestments and costs of restructuring measures) are not included in our operational guidance and will have a significant positive net effect on profit before taxes and on consolidated net profit in After successful completion of the restructuring measures we currently estimate recurring cost savings of EUR 40 million to EUR 60 million per annum. Post balance-sheet events After the end of Q2, the HOCHTIEF Group has further increased its shareholding in Leighton. As of July 18, 2013, the share was 56.39%. *Our risk report is provid ed starting on page 119 of our 2012 Annual Report and on our website, 9

10 Divisions HOCHTIEF Americas Division (EUR million) H H Percentage change Q Q Full year 2012 New orders 3, , , , ,577.7 Work done 4, , , , ,037.6 Order backlog 11, , , , ,900.1 Divisional sales 3, , , , ,374.9 External sales 3, , , , ,374.6 Operational earnings (EBITA) Profit before taxes Capital expenditure Net assets Employees 9,408 (End H1 2013) *Restated for IAS 19R. For notes on the adjustment, please see pages 18 and 19. 8,534 (End H1 2012) ,408 (End Q2 2013) 8,534 (End Q2 2012) 8,397 (2012 average) The HOCHTIEF Americas division had a successful second quarter New orders for the first half of 2013 were nonetheless 10.5% down on the prior-year period. This is largely due to the exceptionally high prior-year figure with several large-scale orders in the roads segment. However, the EUR 3.88 billion new orders total was well up on the comparable figure from Work done and external sales surpassed expectations in the reporting period, growing by 10.7% and 11.7% respectively. Building construction and civil engineering projects both contributed to this success. The division generated its highest level of work done for the first half of any fiscal year. The order backlog, at EUR billion, showed a slight decrease on the record figure from the first quarter of 2013 but beat the comparative prior-year figure by some 7.8%. Hospital, Washington, D.C., a 43,500-square-meter, 200 all-private bed hospital complete with emergency department, postpartum rooms, and special care nursery. Once in operation, the hospital will serve 45,000 patients a year. The project is registered for LEED Silver certification from the U.S. Green Building Council. Turner was also selected as Construction Manager by Genesis Health Care Systems to consolidate two hospitals into one in Zanesville, Ohio. This will result in a major renovation and addition to the campus with various new buildings and extensions. The work began in May 2013 will last until early Turner has once again secured a range of new contracts in its role as specialist for education buildings in the US. In Mountain House, California, the company is to build the Altamont Elementary School. The new elementary school comprising seven buildings is due to be handed over in the summer of It is in the same district as the Mountain House High School, which is likewise being built by Turner. At Sacred Heart University in Fairfield, Connecticut, Turner is constructing a new three-story building to be shared by the College of Business and the Department of Communications. HOCHTIEF s subsidiary is building a new headquarters for the airport operating company at Dallas/Fort Worth International Airport in Texas. Turner is working with a joint venture partner to construct the nearly 14,000-square-meter, three-story building, which includes parking space. The HOCHTIEF Americas division reported solid operational earnings of EUR 47.6 million and profit before taxes of EUR 38.0 million for the first half of 2013 as expected, a substantial increase on the prior-year period. Most of the improvement in earnings was generated in the civil engineering segment. The measures introduced here in 2012 continued to be systematically applied. Earnings include a positive nonrecurring item from the reversal of risk provisioning that is no longer required. Capital expenditure, at EUR 38.2 million, was down on the prior-year figure, which was very high due to the purchase of the majority stake in Clark Builders. The number of employees increased to 9,408, primarily due to the increased volume of work done. HOCHTIEF s American subsidiaries secured attractive new orders for exciting projects in the second quarter of 2013 and underscored their leading position in multiple segments of the market. Turner was given the go-ahead to proceed with construction of the New Sibley Memorial Subsidiary Flatiron secured two notable transportation infrastructure projects in the reporting period. The civil engineering specialists were awarded the contract to extend the light rail trolley network in San Diego, California. The project includes construction of a new transit center and reconstruction of existing transit centers. The contract also features reconstruction and improvements to track infrastructure and eleven station platforms. The project is worth EUR 44 million. In Fullerton, Los Angeles, California, Flatiron is undertaking a range of bridge and road construction works to separate road and rail traffic as well as to improve traffic flow. The EUR 35 million Orangethorpe Avenue Grade Separation project is scheduled to take three years. Both of HOCHTIEF s US subsidiaries featured in the Engineering News-Record trade journal during the reporting period Turner among other things as the biggest US general contractor, while Flatiron ranked number 51 in the Top 400 Contractors listing. 10

11 To Our Shareholders 3 Interim Management Report 5 Interim Financial Statements 14 Responsibility Statement 21 Financial Calendar 23 Outlook HOCHTIEF Americas In light of the large order backlog and the positive trend in the civil engineering segment in the first half of 2013, the HOCHTIEF Americas division continues to expect a good pretax profit. The guidance figure for profit before taxes of EUR 80 million to EUR 100 million in fiscal 2013 remains unchanged. HOCHTIEF Asia Pacific Division The first half of 2013 has shown that the HOCHTIEF Asia Pacific division is well on the way back to its accustomed strength after completion of the two loss-making projects, Airport Link and Victorian Desalination Plant. Even without the EUR 165 million non-recurring effect from the sale of telecommunications businesses at Leighton, profit before taxes is well into positive figures, confirming the division s operating strength. While the difficult overall operating environment, most of all in the resources sector, did not significantly affect earnings in the first half year, there was a visible impact on new orders. Compared with the prior-year period, when the division benefited from a number of large-scale contracts in the coal and gas sector, new orders were down by a substantial 42.2%. Work done and sales are roughly on a par with the prioryear period. The order backlog decreased as a result to EUR billion, but nevertheless remains at an outstandingly high level. Capital expenditure in the first half of 2013 was slightly down on the prior-year period, mainly due to lower investment in financial assets. Due to the large number of new large-scale projects secured in the prior year where project delivery did not commence in most cases until 2013, the number of employees increased by 8.8% year on year. HOCHTIEF increased its stake in Leighton Holdings Limited during the reporting period to 54.96% acquiring around 4.8 million shares. The Group views Leighton as a strategic investment and as a core business with excellent growth opportunities and a very good market position. HOCHTIEF intends to further increase its shareholding in the Leighton Group subject to prevailing market conditions and provisions of Australian Corporations Act. During the period, S&P and Moody s affirmed Leighton s investment grade ratings (S&P: BBB-/A-3 Outlook Stable; Moody s: Baa2). (EUR million) H H Percentage change Q Q Full year 2012 New orders 6, , , , ,414.5 Work done 8, , , , ,223.5 Order backlog 27, , , , ,486.4 Divisional sales 7, , , , ,179.8 External sales 7, , , , ,179.8 Operational earnings (EBITA) Profit before taxes Capital expenditure ,532.6 Net assets 4, , , , ,756.3 Employees 61,041 (End H1 2013) (End H1 2012) Leighton completed the sale of approximately 70% of its non-core telecommunications assets to Ontario Teachers Pension Plan. The sale is worth a total of EUR 475 million (AUD 620 million) and the proceeds will be used to strengthen Leighton s balance sheet and reduce gearing. Leighton also completed the refinancing of a three-year EUR 460 million Syndicated Cash Advance Facility. The offering was heavily oversubscribed due to strong investor demand. In response, Leighton decided to increase the facility to EUR 766 million (AUD 1 billion). A highlight for the second quarter of 2013 was the award of a EUR 894 million contract to deliver a major transportation infrastructure project. In the project, a joint venture between Thiess (50%), John Holland (25%) and Dragados (25%) will construct twin 15-kilometer tunnels and excavate five new underground stations for the North West Rail Link in Sydney. These will be the longest rail tunnels ever built in Australia. The provision of social and urban infrastructure continues to provide opportunities for the Leighton Group. John Holland has been appointed head contractor for the construction of a new, 34,000-square-meter facility for the University of Sydney Business School in New South Wales. This contract is worth EUR 140 million. In Darwin, John Holland has been awarded a EUR 87 million contract to develop Robertson Barracks. Under the contract, the company will provide ,041 (End Q2 2013) 56,117 (End Q2 2012) 55,959 (2012 average) 11

12 new buildings totaling nearly 50,000 square meters, a 2.2- kilometer access road and 67,000 square meters of pavements. In Perth, Leighton Properties has entered into an agreement to sell three commercial buildings planned within the Kings Square development. At EUR 333 million, this is the largest commercial property pre-sale in Western Australia. The towers will have nearly 53,000 square meters of office and retail space. Construction commenced in mid- 2013, undertaken by John Holland and Broad Construction Serv ices, a 100% owned subsidiary of Leighton Contractors. In New Zealand, Leighton Contractors subsidiary Visionstream was awarded a contract extension worth over EUR 300 million to continue construction of New Zealand s Ultra Fast Broadband (UFB) network in the greater Auckland region. Thiess is to upgrade and maintain an electrical distribution network throughout metropolitan Perth as well as in regional Western Australia. The new performance-based contract has a value of some EUR 99 million over a twoyear term with options for two further one-year extensions. In energy infrastructure, the Habtoor Leighton Group has secured a EUR 52 million contract for the design and construction of an accommodation camp and associated utilities as part of an oilfield development in Abu Dhabi. In contract mining, Leighton Contractors was awarded a EUR 1 billion contract variation to mine the Kings iron ore deposit at the Solomon Hub in Western Australia. This takes the total value of work under the agreement to EUR 2.2 billion, the largest single contract award in the history of Leighton Contractors. The five-year contract includes operating and maintaining the open cut mining fleet, mine planning, ore quality control, ore processing facilities, and associated infrastructure, such as the airport and village. Solomon Hub will produce some 60 million tons of iron ore each year and employ more than 1,000 people. Leighton subsidiary Thiess decided to suspend operations of the Senakin and Satui coal mines in Indonesia on April 26, 2013 as it pursued the client for the payment of receivables to which Leighton has a contractual entitlement. At the Peak Downs coal mine in Queensland, Leighton Contractors agreed to cease mining operations which resulted in a reduction in work in hand over the remaining two years to 2015 of approximately EUR 199 million. Outlook HOCHTIEF Asia Pacific Leighton s strength lies in its size, diversity and the international reach of its portfolio. The results for the period indicate that the Leighton Group is on track to deliver solid results in the second half of 2013 despite a more challenging macroeconomic environment in Australia, especially in contract mining. Leighton continues to expect operating profit after taxes of AUD million (EUR million). HOCHTIEF Europe Division (EUR million) H H Percentage change Q Q Full year 2012 New orders 1, , ,393.9 Work done 1, , ,332.0 Order backlog 6, , , , ,419.7 Divisional sales 1, , ,856.2 External sales 1, , ,845.3 Operational earnings (EBITA) 7.0 (59.8) 4.5 (57.8) 92.2 Profit before taxes (17.9) (85.3) (5.8) (71.6) 28.7 Capital expenditure Net assets 2, , , , ,792.5 Employees 15,513 (End H1 2013) 15,222 (End H1 2012) ,513 (End Q2 2013) 15,222 (End Q2 2012) 15,320 (2012 average) The second quarter of 2013 marked an initial milestone for the HOCHTIEF Europe division in starting to implement the strategy announced in February 2013 of focusing HOCHTIEF Solutions AG on its core competency of building infrastructure projects and thus selling off non-core businesses. On June 28, an agreement was signed with SPIE S.A., France, for the sale of HOCHTIEF Solutions service activities with economic effect as of January 1, Worth some EUR 250 million, the transaction will close by the end of 2013 at the latest. This means the positive one-off earnings effect which is expected to result from this is not yet included in the figures shown here for the first half of New orders ran to EUR 1.55 billion in the first half of 2013, significantly up on the prior-year figure by EUR million (13.1%). An increase was recorded both in Germany (9.0%) and in international markets (19.9%). This was despite the fact that large-scale projects notably in the Gulf region were further delayed. Work done increased slightly, by EUR 54.5 million (3.6%) to EUR 1.59 billion, with delays in the infrastructure segment due to the long, hard winter in Europe not yet fully made up for. Both divisional and external sales were a slight 0.6% down on the prior-year figures respectively. At EUR 6.20 billion (down 0.7%), the order backlog 12