Financial highlights Figures in €m 2011 2012 2013 2014 2015 2016* 2017 Number of employees as at 31 December 52,526 51,966 45,169 44,909 45,453 60,424 59,054 Sales volumes Cement and clinker (million tonnes) 87.8 89 78.1 81.8 81.1 102.8 125.7 Aggregates (million tonnes) 254.1 243 230.6 243.6 249.2 272.0 305.3 Ready-mixed concrete (million cubic metres) 39.1 39.1 34.9 36.6 36.7 42.5 47.2 Asphalt (million tonnes) 9.5 8.6 8.4 9.3 9.1 9.4 9.6 Income statement Total Group revenue 12,902 14,020 12,128 12,614 13,465 15,166 17,266 Result from current operations before depreciation and amortisation (RCOBD1)) 2,321 2,477 2,224 2,288 2,613 2,887 3,297 Result from current operations (RCO2)) 1,474 1,604 1,519 1,595 1,846 1,928 2,188 Profit for the financial year 534 529 933 687 983 831 1,058 Group share of profit 348 285 736 486 800 657 918 Dividend per share in € 0.35 0.47 0.6 0.75 1.30 1.60 1.903) Earnings per share in € 1.86 1.52 3.93 2.59 4.26 3.40 4.62 Investments Investments in intangible assets and PP&E 874 831 861 941 908 1,040 1,035 Investments in financial assets 85 35 379 184 94 2,999 243 Total investments 959 866 1,240 1,125 1,002 4,039 1,278 Depreciation and amortisation 847 873 704 693 767 959 1,109 Free cash flow Cash flow from operating activities 1,332 1,513 1,167 1,480 1,449 1,874 2,038 Cash flow from investing activities -758 -582 -1,037 -973 493 -2,321 -837 Balance sheet Equity (incl. non-controlling interests) 13,569 13,708 12,514 14,245 15,976 17,792 16,052 Balance sheet total 29,020 28,008 26,276 28,133 28,374 37,120 34,558 Net debt 7,868 7,092 7,352 6,957 5,286 8,999 8,695 Ratios RCOBD1) margin 18.0% 17.7% 18.3% 18.1% 19.4% 19.0% 19.1% RCO2) margin 11.4% 11.4% 12.5% 12.6% 13.7% 12.7% 12.7% Net debt / equity (gearing) 58.0% 51.7% 58.7% 48.8% 33.1% 50.6% 54.2% Net debt / RCOBD 3.39x 2.86x 3.31x 3.04x 2.02x 3,12x 2,64x * Amounts were restated, see the Notes on page 124 f. 1) RCOBD = Result from current operations before depreciation and amortisation 2) RCO = Result from current operations 3) The Managing Board and Supervisory Board will propose to the Annual General Meeting on 9 May 2018 the distribution of a cash dividend of €1.90. Overview of Group areas Figures in €m 2016 2017 Western and Southern Europe Revenue 3,928 4,701 Result from current operations before depreciation and amortisation1) 526 613 Investments in property, plant, and equipment 297 327 Employees as at 31 December 15,781 15,497 Northern and Eastern Europe-Central Asia Revenue 2,425 2,836 Result from current operations before depreciation and amortisation 445 539 Investments in property, plant, and equipment 124 144 Employees as at 31 December 13,107 13,531 North America Revenue 4,027 4,345 Result from current operations before depreciation and amortisation1) 978 1160 Investments in property, plant, and equipment 301 274 Employees as at 31 December 8,444 8,726 Asia-Pacific Revenue 2,907 3,155 Result from current operations before depreciation and amortisation1) 705 652 Investments in property, plant, and equipment 215 209 Employees as at 31 December 14,956 14,039 Africa-Eastern Mediterranean Basin Revenue 1,314 1,586 Result from current operations before depreciation and amortisation1) 327 367 Investments in property, plant, and equipment 102 81 Employees as at 31 December 7,602 6,856 Group Services Revenue 1,078 1,301 Result from current operations before depreciation and amortisation1) 24 31 Investments in property, plant, and equipment Employees as at 31 December 534 405 1) 2016 amount was restated Financial highlights | Overview of Group areas 1 – To our shareholders To our shareholders To 3 Letter to the shareholders 1 8 Report of the Supervisory Board 14 Managing Board 16 HeidelbergCement in the capital market 2 – Combined management report of HeidelbergCement Group and HeidelbergCement AG Combined management report 20 Fundamentals of the Group 28 2017 economic report 2 50 Additional statements 53 Non-financial statement 54 Employees and society 59 Environmental responsibility 63 Compliance 65 Procurement 66 Outlook 73 Risk and opportunity report 1) Governance Corporate 3 – Corporate Governance 3 86 Corporate Governance statement 89 Remuneration report 98 Supervisory Board and Managing Board 4 – Consolidated financial statements 103 Consolidated income statement 104 Consolidated statement of comprehensive income 105 Consolidated statement of cash flows Consolidated financial statements 106 Consolidated balance sheet 4 108 Consolidated statement of changes in equity 110 Segment reporting/part of the Notes 112 Notes to the 2017 consolidated financial statements 200 Independent auditor's report 206 Responsibility statement 5 – Additional information 208 Group/Global functions and Country Managers Additional information 210 Glossary 5 212 Imprint Back Cover: Cement capacities as well as aggregates reserves and resources 1) Part of the combined management report of HeidelbergCement Group and HeidelbergCement AG Contents 1 To our shareholders 3 Letter to the shareholders 8 Report of the Supervisory Board 14 Managing Board 16 HeidelbergCement in the capital market 16 Overview 16 Development of the HeidelbergCement share 17 Earnings per share 17 Dividend 17 Shareholder structure and trading volume 18 Bonds and credit ratings 18 Investor Relations HeidelbergCement | Annual Report 2017 To our shareholders To 1 Combined management report 2 Dr. Bernd Scheifele, Chairman of the Managing Board Dear Shareholders, Dear Employees and Friends of HeidelbergCement, Corporate Governance Corporate 3 In 2017, HeidelbergCement once again delivered what it had promised at the start of the financial year: – Sales volumes, revenue, and result from current operations improved in comparison with the previous year and reached historic highs despite significantly negative exchange rate effects. – Earnings per share rose disproportionately by 36% in spite of a substantial negative non-recurring effect connected with the US tax reform. – We reduced net debt considerably and improved the key financial ratios. – Once again, we earned a premium on our cost of capital. We are particularly satisfied with our achievements in 2017 because the external conditions were challenging. Consolidated financial statements Worldwide, our operating units faced a rapid and significant rise in energy prices. We responded 4 quickly and consistently to this challenge by optimising the fuel mix in our plants and by successfully implementing additional price increases in many countries. In our most important market, the USA, the extreme weather conditions in some regions posed a particularly tough challenge. The two hurricanes Harvey and Irma as well as extremely wet weather on the west coast of the USA affected our business activities considerably. In Europe, the uncertainty surrounding the continuing Brexit discussions had a negative impact, especially in our core market of London, and led to a significant decline in income for our British subsidiary. In our Asian core markets of Indonesia, Thailand, and Malaysia, we encountered sustained competitive Additional information pressure. 5 Finally, the surprising strength of the euro resulted in considerable exchange rate losses. Contents 3 1 To our shareholders | Letter to the shareholders For the capital markets, 2017 was a successful year. The HeidelbergCement share performed positively, and at €90.25 at the end of December 2017 was €1.62 (+1.8%) higher than the closing price of 2016. Although this figure was below the development of the German benchmark index DAX (+12.5%) in the last year, over the last four years we significantly exceeded both the DAX (+31%) and the MSCI World Construction Materials Index (+22%) with an increase of 49% in our share. 2017 – new record figures In its history stretching back over 140 years, HeidelbergCement has never sold more cement, concrete, gravel, and sand than in 2017. New record figures were also achieved in revenue and result from current operations. In 2017, Group revenue increased to €17.3 billion, corresponding to a rise of 14%. After adjustment for exchange rate effects and changes in the scope of consolidation, revenue was 2% higher than in the previous year. Result from current operations rose by €261 million (+14%) to €2,188 million; on a comparable basis, the increase amounted to 10%. The additional ordinary result improved by €191 million in comparison with the previous year. This primarily reflects the fact that the restructuring costs for the integration of Italcementi were lower than originally planned. The financial result improved by €102 million to €-391 million. This improvement was largely due to lower interest expenses and the elimination of charges in the other financial result. The tax expense increased by €292 million in comparison with the previous year to €606 million, particularly as a result of non-recurring, non-cash charges connected with the US tax reform. We expect to benefit from the US tax reform from the 2019 financial year. The profit for the financial year rose by €227 million to €1.1 billion. The development of the earnings per share was particularly pleasing; it improved from €3.40 to €4.62. At 36%, the increase in earn- ings per share was significantly higher than the revenue growth. This sends a clear message: we have fulfilled the promise we made when we announced the Italcementi acquisition, which was to build shareholder values ! Net debt was reduced by €304 million to €8,695 million.