Annual Report WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 2007 10,000 1,000 1,200 1,400 2,000 4,000 6,000 8,000 200 400 600 800 0 0 Revenue by 2007 sector Revenue by region2007 (in €million) base /capital Equity * Based on NL GAAP **Excluding competition* Based onNLGAAP fine***Proposal (in €million) Revenue 7% 5% 3 4 05 03* 04 3 40 06 05 03* 04 441 9% 41%

Equity Capital base Capital Equity 7.7707,770 584 5%

27% 435 7.4937,493 1% 2%

5% 556 2%

14% 582 7,425 790 42% 40% 693 06 8.6468,646 940

07 994 07 8,954 1,266 0.0 0.6 1.2 1.8 2.4 3.0 144 216 288 360 72 0 Order bookby 2007 sector (fully diluted) Net result per share 03* shareholders Net result attributable to 3 4 05 03* 04 /

*0* 0 06 05 ** 04** 0.68 34% 56.0

1.21 4%

(in €1.-) 7.493106.4 (in €million) 2% 1% 21% 1.28 153.3 38% 06 1.04 137.0 8.646 07 2.60 07 349.0 Consultancy andengineeringConsultancy M &Econtracting Public-private partnerships Civil engineering Property Construction Margin results by region United States Germany Ireland Belgium United Kingdom Netherlands Margin results by region Worldwide 10,000 12,000 14,000 2,000 4,000 6,000 8,000 1.0 0.0 0.2 0.4 0.6 0.8 0 (in €1.-) Dividend share per ordinary (in €million) Year-end order book 03 04 05 06 05 03 04 0.31 06 05 03* 04 9,100

0.31 8,900

0.40 10,400 13,0% 39,8% -0,9% 2007 2007 7,3% 5,6% 3,2% 2,3% 9,4% 3,4% 3,8% 3,9% 5,0% 4,5% 0.45 13,100 07*** -15,2% 11,8% -1,2% 2006 2006 2,2% 4,2% 3,1% 3,6% 6,8% 9,7% 3,8% 4,7% 4,2% 4,2% 0.90 07 13,800 Key

WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf figures

Contents

Key figures (in € million, unless otherwise indicated) 3 Foreword 5 Outlook 2007 2006 6 Organisational structure and offices Revenue 8,954 8,646 8 Mission, vision, ambition and goals Operating result 1 340.7 262.6 10 Royal BAM Group nv shares Result before tax 428.1 228.4 14 Report by the Supervisory Board to the Net result attributable to shareholders 349.0 137.0 shareholders 22 Remuneration report Revenue from continued operations 8,539 8,150 26 Particulars of the Supervisory Board members Operating result from continued operations 1 327.2 237.2 28 Particulars of the Executive Board members Result before tax from continued operations 341.8 209.8 Net result from continued operations 268.3 124.8 Report by the Executive Board 29 Financial results Earnings per share (x €1.-) 34 Acquisitions and disposals - basic 2.80 1.11 35 Corporate governance - basic, from continued operations 2.15 1.01 40 Decision on article 10 Takeover Directive - fully diluted 2.60 1.04 45 Risk and risk management - fully diluted, from continued operations 2.01 0.95 49 Corporate social responsibility 50 Human resources management Dividend per ordinary share (in €1.-) 2 0.90 0.45 51 Works Councils 1 Payout ratio (as percentage) 34 41 51 Construction industry barometer Number of issued ordinary shares 55 Construction 2007 as at year-end (x 1,000) 129,906 123,758 63 Property Total number of issued shares 67 Civil engineering as at year-end (x 1,000) 136,016 136,012 75 Public-private partnerships Closing price ordinary shares on 31 December (in €1.-) 16.10 14,69 77 Mechanical and electrical contracting 79 Consultancy and engineering Equity attributable to shareholders 993.5 692.6 Capital base 1,265.8 939.8 Financial Statements 2007 81 Contents of Financial Statements Order book 3 13,800 13,100 82 Consolidated balance sheet as at 31 December 83 Consolidated income statement Net addition to tangible fixed assets 131.7 119.2 84 Consolidated statement of equity Depreciation/amortisation: 85 Consolidated cash flow statement - Tangible assets 93.6 96.5 86 Notes to the consolidated financial statements - Intangible assets 7.7 3.4 147 Statutory balance sheet as at 31 December Cash flow before dividend 450.3 236.9 147 Statutory income statement 148 Notes to the statutory financial statements Average number of employees 28,007 28,330 Number of employees at year-end 27,578 30,338 Other information 156 Proposed appropriation of profit for 2007 Ratios (in %) 156 Provisions of the Articles of Association concerning Result before tax as % of income 1 4.8 2.7 profit appropriation Result before tax, as % of income from 157 Anti-takeover measures continued operations 1 4.0 2.6 159 Auditors’ report Net result as % of revenue 3.9 1.6 160 Principal subsidiaries and associates Net result as % of average equity 41.4 21.5 161 Royal BAM Group executive officers 162 Ten year key figures Capital ratios: 164 Key financial dates - equity attributable to shareholders as % of total assets 14.2 10.7 - capital base as % of total assets 18.1 14.7

1 2006: excluding fines. 2 Dividend proposal 2007. 3 The order book comprises both signed contracts and verbally agreed upon orders. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Shopping centre Lilien-Carré near Wiesbaden central station (BAM Deutschland in joint venture).

2 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Annual Report 2007

Foreword

Royal BAM Group nv can look Employer of choice back on a successful financial BAM has expressed its desire to be the employer of choice in year in 2007. Sustained by the construction sector. In light of the loyalty of the consistenly favourable workforce and our ability to attract new employees, BAM circumstances in our five takes pride in being a good employer. One of the areas European home markets, where we can undoubtedly make further progress is that of BAM achieved a net profit of ‘women in the building industry’. We are endeavouring to €349 million on a turnover of strike a more proportionate balance between men and approximately €9 billion. We women, including in managerial positions. With all the have also taken many steps in attention being paid to cultural changes and innovation in the past year towards the our sector, BAM should be at the forefront of creating career objectives we set out in the strategic agenda for 2009. opportunities for women. We hope that BAM, as a Group, The successes are a substantial incentive for us to continue will make clear progress in this regard during 2008. developing on our strategic course during 2008. We explain the key points of our Strategic Agenda 2007-2009 on page 8 Expectations of this Annual Report. BAM is doing well, and our entire organisation - from construction operatives to management – is making an The net profit includes a figure of €72 million from the sale enormous effort and displaying great enthusiasm for the of our American operating company Flatiron. This sale fits in continued development and improvement of performance. with our Strategic Agenda because one of the main policy The Board is deeply grateful to all BAM Group employees 3 lines is to strengthen the Group’s European base, as is for their efforts. Based on current information and in light apparent from the acquisition of the Belgian project of the quality of the order book, Royal BAM Group expects 2007 developer Kaïros and the Belgian infrastructure contractor to achieve a turnover in the region of €9 billion for 2008, Betonac. and deems a net profit of at least €250 million feasible.

Share price Bunnik, Netherlands, 19 March 2008 The mood on the European stock exchanges was depressed J.A.P. van Oosten during the second half of 2007, partly because of the continuing credit crunch, and BAM shares unfortunately could not escape the effects. BAM’s share price rose by approximately 10 percent in 2007, thus outperforming the Midkap (minus 3 percent) and the Netherlands Construction and European Construction sectors (minus 20 percent and minus 1 percent respectively).

Sustainability Report 2007 was not only succesful for BAM in the financial sense. For example, our determined efforts focused on safety improvement in all of our activities has yielded improved performance in our statistics for the fourth year in a row. However, our commitment to sustained improvement of safety performance remains a priority. The importance that we attach to safety and other aspects of sustainable corporate social responsibility justify a more extensive report than would be appropriate in the confines of this annual report. To allow a report on sustainability issues and corporate social responsibility in the most transparent manner possible, BAM has published a separate sustainability report. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Surtees Bridge, Stockton-on-Tees (Nuttall).

4 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Outlook

Royal BAM Group started 2008 with a healthy order book regulations and making resources available to tackle of €13.8 billion (year-end 2006: €12.2 billion on a deprived areas, will probably lead to a further increase in comparable basis). This increase, of about 12 percent, was residential construction. It is expected that BAM will be in achieved throughout the Group. Of the total order book, a position to benefit from such an increase. Royal BAM Group expects to carry out contracts amounting to €7.5 billion in 2008 and €6.3 billion in Euroconstruct forecasts growth in all of the Group’s home subsequent years. The quality of the order book has markets in the Civil engineering sector, with the exception improved slightly in relation to the position one year ago. of Belgium. Central government investment remains high in the Netherlands. Mobility projects in the next few years Based on current information and in light of the quality of will provide a marked stimulus, with part of the work the order book, BAM expects to achieve a turnover in the being carried out in public private partnerships. The region of €9 billion for 2008, and deems a net profit of at anticipated growth in the British and German markets is least €250 million feasible. based to a significant extent on further investments in road and railway construction projects. Infrastructure The net investments in and depreciation on tangible fixed investment in Ireland is also increasing as a result of assets are expected to be about the same in 2008 as they investment programmes announced previously by the were in 2007 (€113 million and €88 million respectively, government. The Belgian infrastructure market is excluding Flatiron). expected to shrink somewhat in 2008, mainly as a result of diminishing government investment in infrastructure. Euroconstruct's forecasts of construction volumes for 5 2008 to 2010 indicate a positive trend in the Group’s Royal BAM Group will continue its disposal programme in principal European markets. relation to PPP projects in 2008 as part of the Group’s 2007 long-term strategy to use the resources that are released Forecasts for non-residential construction work in the as a result of this programme to support the active policy Construction and Property sectors indicate healthy and increasing number of tenders at BAM PPP. At present, growth in volumes in all of the Group’s home markets. several bids for PPP contracts involving the Group are The private sector’s willingness to invest is expected to pending in various countries. BAM is in an excellent remain stable in the Netherlands. Demand from the public position to profit from this growing market. sector also remains substantial, especially in the educational and health & welfare sectors. Prospects are The Group’s 21.5 percent interest in the Van Oord dredging positive in the United Kingdom, partly because of the company means that it is involved in the worldwide large numbers of projects either planned or in progress dredging market. BAM is investigating the possibilities of there. The number of public-private partnerships carrying selling its minority stake in Van Oord. This investigation is out non-residential construction projects is increasing expected to lead to conclusions in the course of 2008. rapidly in Germany and Belgium. The Irish non-residential construction market is benefiting from the ‘National The Group’s turnover in 2008 is forecast as follows: Development Plan 2007-2013’, which includes plans for investment Table 1 Turnover forecast for 2008 per sector, as a percentage of total turnover* in the healthcare and education sectors. It is also anticipated that Non- demand for new office and retail residential Residential Civil engi- premises will be sustained in construction construction Property neering Other Total Ireland. Netherlands 8 10 13 14 3 48 United Kingdom 16 1 8 25 Prospects for residential Ireland 2 3 5 construction – where BAM is Germany 6 3 9 especially active in the Netherlands Belgium 4 1 3 8 – remain excellent. Consumer Worldwide 325 demand for (new-build) homes 36 10 15 34 5 100 remains high in the Netherlands, partly because of the shortage of * Turnover forecast based on the activity mixes of the different operating companies, excluding new build. Current government intercompany sales eliminations. This may vary from the primary segmentation in the financial policy, which is aimed at simplifying statements. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Organisational Royal BAM Group structure

Construction Property Civil engineering PPP

BAM PPP

Netherlands BAM Utiliteitsbouw BAM Civiel Mechanical and electrical contracting

BAM Vastgoed BAM Infratechniek BAM Techniek

BAM Woningbouw BAM Rail

Fort Unitbouw BAM Wegen Heilijgers

Pennings

Betonac

Belgium CEI-De Meyer Immo BAM CEI-De Meyer

Galère Galère

Interbuild Kaïros

6 United Kingdom HBG UK HBG Properties Nuttall 2007

Ireland Rohcon Ascon Property Developments Ascon

Germany BAM Deutschland W&F Projektentwicklung W&F Ingenieurbau

Worldwide Interbeton Interbeton Consultancy and engineering

Tebodin

AM (51%) Van Oord (21,5%)

Operating company

Active in this sector

Associated company WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Offices

United Kingdom Construction HBG Properties - London - Birmingham - Ireland Bristol - Glasgow - Leeds - Manchester Ascon - Kill, Co. Kildare - Little Island, Cork - Netherlands Galway BAM Utiliteitsbouw - Bunnik - Almere - Ireland Amsterdam - Arnhem - Breda - Capelle aan Ascon Property Developments - Dublin - Germany den IJssel - The Hague - Eindhoven - Kill, Co. Kildare - Little Island, Cork Wayss & Freytag Ingenieurbau - Emmen - Enschede - Groningen - Frankfurt am Main - Berlin - Düsseldorf - Leeuwarden - Maastricht - Roermond - Germany Hamburg - Kamsdorf - Munich - Stuttgart Tiel - Utrecht - Zwolle Wayss & Freytag Projektentwicklung - BAM Advies & Engineering - Bunnik Frankfurt am Main - Berlin - Düsseldorf Worldwide BAM HABO - The Hague Interbeton - Gouda - Abu Dhabi - Accra - Nelis Bouw & Onderhoud - Amsterdam Al Khuwair - Cairo - Daar es Salaam - Dubai - Civil engineering Schakel & Schrale - Amsterdam - Roermond Doha - Jakarta - Karratha - Limbe - Tripoli

BAM Woningbouw - Bunnik - Alkmaar - Netherlands Public-private partnerships Amsterdam - Breda - Capelle aan den IJssel - BAM Civiel - Gouda - Amsterdam - Breda - The Hague - Deventer - Groningen - Elsloo - Zuidbroek Leeuwarden - Utrecht - Weert BAM Betontechnieken - Schiedam BAM PPP - Bunnik - Glasgow - BAM Grondtechniek - Schiedam Birmingham - Dublin - Frankfurt am Main Fort Unitbouw - Raamsdonksveer, Puurs BAM Project Support - Amsterdam (Belgium) Mechanical and electrical contracting BAM Infratechniek - Culemborg - Heilijgers - Amersfoort Barendrecht - Halfweg - ’s-Hertogenbosch - Nieuwleusen - Ootmarsum - Raalte - Netherlands 7

Bouwbedrijf H. Pennings en Zn. - Rosmalen Schiphol - Sittard - Utrecht - Valkenswaard BAM Techniek - Bunnik - Amsterdam - 2007 BAM Leidingen & Industrie - Nieuwleusen - Apeldoorn - Benningbroek - Capelle aan den BAM Materieel - Lelystad - Kesteren - Culemborg IJssel - Emmen - Enschede - Groningen - Nederweert Van den Berg Infrastructuren - Raamsdonksveer - Roermond - Zwammerdam - Amsterdam - Montfoort - Veenendaal - Zoetermeer Belgium Zoeterwoude Interflow - Wieringerwerf Interbuild - Wilrijk VTN Verkeers- & Besturingstechniek - Culemborg - Wateringen Consultancy and engineering United Kingdom HBG UK Ltd - London BAM Rail - Breda - Dordrecht - Eindhoven - HBG Construction - London - Bristol - Rotterdam Worldwide Cardiff - Coventry - Exeter - Glasgow - Tebodin Consultants & Engineers - Leeds - Manchester - Edinburgh - BAM Wegen - Utrecht - Apeldoorn - The Hague - Deventer - Eindhoven - Newcastle - St. Albans Barendrecht - Bergen op Zoom - The Hague - Groningen - Hengelo - Maastricht - HBG Facilities Management - Glasgow - Drachten - Hardinxveld-Giessendam - Rotterdam - Velsen - Bergen op Zoom - Coventry Helmond - Sittard - Tiel - Tynaarlo - Zwijndrecht - Gelsenkirchen - Hamburg - Zaandam Leuna -Schwarzheide - Wiesbaden - Ireland Warsaw - Gdansk - Katowice - Lód´z - Rohcon - Kill, Co. Kildare - Little Island, BAM Infraconsult - Gouda - Culemborg - Pozna´n - Szczecin - Wroclaw - Kaunas - Cork - Galway The Hague Bratislava - Kosice - Prague - Ostrava - Pardubice - Budapest - Szeged - Belgrade - Germany Belgium Bucharest - Cluj-Napoca - Moscow - St. BAM Deutschland - Stuttgart - Berlin - Betonac - Sint-Truiden Petersburg - Ekatarinburg - Irkutsk - Kiev - Dresden - Düsseldorf - Frankfurt am Lviv - Abu Dhabi - Dubai - Doha - Manama - Main - Göttingen - Nürnberg CEI-De Meyer - Brussels - Eke (Nazareth) Muscat - Shanghai - Chennai

Galère - Chaudfontaine, Charleroi Property Associates United Kingdom Netherlands Edmund Nuttall - Camberley - Netherlands BAM Vastgoed - Bunnik - Amsterdam - Berkhamsted - Cambridge - Cardiff - Exeter - AM (51%) - Nieuwegein Capelle aan den IJssel - ’s-Hertogenbosch - Glasgow - Halesowen - Leeds - Maidstone - Zwolle Newcastle upon Tyne - Northwich - Worldwide Southampton Van Oord (21,5%) - Rotterdam Belgium Nuttall Finchpalm - Wembley - Erith Immo BAM - Brussels Nuttall Hynes - Tunbridge Wells Nuttall John Martin - Thetford Kaïros - Wilrijk Ritchies - Glasgow - Clevedon - Wigan - Erith - Dublin WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Mission, vision, ambition and goals

Mission conceptual strength; sustainability is the key word in concept development. Royal BAM Group unites operating companies providing • Expansion of facility management (partly through high-value supplies in relation to the maintenance, partnerships) leading to continued relationships after renewal and expansion of the built environment, from project finalisation. both quantitative and qualitative perspectives. • Maintaining a solid financial structure through strong capital ratios (2009: > 20 percent) and risk The activities of Royal BAM Group are concentrated management as a core competency. primarily in European construction markets, with BAM • BAM maintains a markedly decentralised structure; relying on a strong regional presence. operating companies managed by management teams appointed under the Articles of Association report to the Executive Board; staff divisions at Group level are Vision limited in size but international in terms of experience and composition. Royal BAM Group acknowledges that society judges • Emphasis on the importance of corporate social construction companies by their capacity to create value. responsibility, expressed, for example, in our safety and That is why the Group’s orientation is undergoing a shift environmental policy and a transparent organisation. from production to performance. It is no longer • Strengthening of the BAM brand. automatically the case in the construction industry that there will be fixed roles. It is difficult to have a fixed 8 distribution of tasks – for example between main and Goals for 2009 subcontractors, suppliers and architects or engineering

2007 firms – and the borderlines between one party’s tasks and Financial another’s are becoming increasingly blurred. Privatisation BAM has formulated financial goals for 2009. These and partnering, coupled with the demand for better targets assume healthy economic development and apply products at lower lifetime costs, mean that the Group has to the Group as a whole; the targets may vary from one to operate throughout the entire value chain. The individual operating company to another. complexity of larger projects is increasing, but in addition • Profit before tax: 4 percent of turnover. Improved the clients for all projects are rightly demanding that the margins should result in a further increase of profit services provided should go further than implementing per share. prepared designs. This requires constant expansion and • Capital ratio based on capital base: >20 percent. intensification of knowledge and business activities. Royal • Return on shareholders equity: >20 percent. BAM Group wants to anticipate these developments. Market position BAM has prepared a strategic agenda for 2007-2009, the • Maintaining our position at the top of the European key features of which are explained briefly below. market implies a turnover level of approximately €10 billion. • Top positions in the United Kingdom, Ireland, Ambition in the longer term the Netherlands and Belgium. • A healthy position in Germany. • Strengthening of our European base; expansion of activities in the present home markets and The Group undertakes specialist construction and civil neighbouring countries. engineering projects in niche markets on a worldwide basis • The top position, as regards creation of value and via Interbeton. The extensive office network of engineering turnover. consultant Tebodin is crucially important when it comes to • The top position in home markets, with a complete providing the highest standard of service to ‘global’ clients package of products and services. with their international operations. The international spread • Confining our activities outside Europe to profitable of these two operating companies makes a significant niche markets. contribution to the technical and technological knowledge • Expansion of activities higher up the process chain; within the Group. They also offer Group employees BAM more frequently taking the initiative with its challenging international career opportunities. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Four areas of potential growth 2. Corporate social responsibility It is BAM's wish to be a responsible member of society. BAM operating companies are active principally in the five This implies that further development of policy in the area present home markets: Belgium, Germany, Ireland, the of corporate social responsibility is high on our agenda. Netherlands and the United Kingdom. The Group does not provide its full service package in each of these home 3. Human resources countries. Improvement in margins, along with volume BAM’s further development is inseparably linked with the growth, will be realised in four possible areas. BAM will be availability of the most professional and motivated taking further steps in all four areas – discussed below in employees – from management to site operatives – who sequence of significance – during the forthcoming policy all consider BAM to be their employer of choice. BAM will period. continue to make the most strenuous efforts to recruit 9 1. A number of operating companies can achieve growth these professionals, to retain them and to stimulate them in turnover and profit from their present activities in towards further development. 2007 the current home market. The first course of action is to expand on these opportunities further. 2. The second area to explore is the introduction of BAM Implementation of the strategic agenda activities in home markets, where the activities in in 2007 question do not yet form part of the BAM package. These activities are not new to BAM, therefore, but are BAM made an energetic start during the last financial year new to the market in question. on implementation of the strategic agenda for the 2007- 3. The third area is the development of activities with 2009 policy period. For example, the Group successfully improved returns, as a result of initiatives for new expanded its activities upstream in the process chain, products and new concepts for our clients in the home partially through the acquisition of De Wilgen Vastgoed markets. This implies collaboration between operating (AM; March 2007; company specialises in developing companies throughout the Group. BAM will be setting property projects in inner city areas in the western urban up so-called concept teams in order to investigate these region of the Netherlands (the Randstad), as well as opportunities in greater detail. through the acquisition of the Belgian property developer 4. The fourth and last area is the possible introduction of Kaïros (March 2007; company specialises in developing BAM core activities in a new sixth home market. We will high-quality offices, especially in Brussels and Flanders), only follow this path after thorough investigation of and the acquisition of IPMMC Vastgoed (AM; June 2007; both the country and the potential partners. development, consultancy and management of commercial property projects in the Netherlands). The European base was strengthened through the previously Guideline topics mentioned acquisition of Kaïros, the acquisition of the Belgian civil engineering company Betonac (Belgium) and BAM works on implementing the strategic agenda on the the disposal of Flatiron (United States). basis of three guideline topics or key elements. Initiatives were developed during the financial year, in line with the implementation plan, for the exchange of best 1. Primary process practices in strategic policy areas among the operating BAM is continually striving for improvement of its own companies and for the joint elaboration of new initiatives. performance in relation to its core activities. This relates to techniques applied by BAM, but also to the management of processes, projects and associated risks. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Royal BAM Group nv shares

Stock exchange listing Volume of trade

The shares of Royal BAM Group nv have been listed on the The liquidity of the Royal BAM Group ordinary share has Euronext Amsterdam stock exchange since 1959. The continued to increase throughout 2007. The numbers of BAM ordinary share has formed part of the Amsterdam traded ordinary shares increased by more than 17 percent Midkap index (AMX) since 2004. The share is also included in the financial year, to a total of 216.3 million shares in the Euronext NEXT-150 Index and the Dow Jones (2006: 184.4 million). The average daily trade was STOXX 600 Index. In addition to the ordinary shares, 848,000 ordinary shares (2006: 723,000). Graph 2 cumulative financing preference shares in BAM are also shows the fluctuation in the daily average turnover of the listed on Euronext Amsterdam. Royal BAM Group share ordinary shares in 2007. options have also been traded by Euronext.liffe, the The trade in financing preference shares dropped further Euronext Amsterdam derivatives division, since 20 June in 2007 to an average of 190 shares per day (2006: 500), 2006. mainly as a result of the large number of preference shares The total stock exchange value (market capitalisation) of converted into ordinary shares since 2004. ABN AMRO, the Group stood at approximately €2.2 billion at the end ING, Kempen & Co. and Rabobank act as liquidity of 2007, an increase of 10 percent on the position at the providers for the trade in ordinary shares. end of 2006 (€2.0 billion).

Share price 10

The closing price for the ordinary shares in 2007 was

2007 €16.10, which was an increase of 10 percent compared with the 2006 close (€14.69). This means that the share once again outperformed both the AEX and the Midkap index. The share has only lagged behind both those indices once in the past eight years (2006). The total price increase of the BAM share has amounted to approximately 480 per cent over the last five years. As a comparison, the Midkap index has increased by 110 per cent over the same period, and the AEX by 60 per cent. Graph 1 shows the history of the BAM ordinary share price over the past five years.

Price of ordinary shares Number of ordinary shares traded in 2007 (in €1.-) (average per day; x 1,000)

24 1200 22 20 1000 18 16 800 14 12 600 10 8 400 6 4 200 2 0 0 2003 2004 2005 2006 2007 jfmamjjasond

BAM sector NL sector Eur Midkap ordinary trade moving large blocks average WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Movements in the number of outstanding The shares issued as a result of conversion are included on shares a time-weighted basis. This brings the average number of ordinary shares in 2007 to 124,825,079 (2006: The number of outstanding ordinary shares increased by 123,295,593). about 5 per cent during 2007, to approximately 129.9 million. This increase was the result of conversion of convertible financing preference shares into ordinary Distribution of share ownership shares during the financial year. The distribution of share ownership changed significantly In total, about 6.2 million convertible preference shares during 2007 in comparison to the previous year. Foreign were converted into ordinary shares in 2007. The number share ownership diminished for the first time in five years. of remaining outstanding convertible preference shares as At the close of 2007, about 56 percent of the issued at the end of 2007 was approximately 5.6 million. During shares were held abroad, as opposed to 63 percent at the the initial months of 2008 no convertible preference end of 2006. As a comparison, at the close of 2002, this shares were converted into ordinary shares. percentage was still below the ten percent level. Despite an increase in the United Kingdom, the total share The number of outstanding non-convertible preference ownership in Europe fell in 2007. Share ownership in the shares as at the end of 2007 was approximately 0.5 United States remained constant. The same applies to million. There continue to be plans to repurchase all institutional share ownership. The vast majority of the remaining non-convertible preference shares, after which shares have been held by institutional investors for many 11 the listing of these securities can be terminated. At the years. time of writing, the company had repurchased 390,000 2007 shares. Table 3, which shows the spread of share ownership, is based on statements from various stock deposit banks The development of the number of outstanding shares in and the results of a survey of institutional share 2007 (including the percentage of the total represented ownership. by each type of share) is shown in table 2.

Table 2 Number of outstanding shares in 2007

Preference shares Preference shares Ordinary shares convertible non-convertible Total Shares in issue as at 1 January 123,758,414 11,780,581 473,275 136,012,270 (91.0%) (8.7%) (0.3%) (100%) Conversion of preference shares 6,147,861 (6,144,047) – 3,814 Shares in issue as at 31 December 129,906,275 5,636,534 473,275 136,016,084 (95.5%) (4.2%) (0.3%) (100%)

Table 3 Spread of share ownership

(as a percentage) Institutional Retail Total 2007 2006 2007 2006 2007 2006 Netherlands 36 29 8 8 44 37 United Kingdom 25 21 25 21 Rest of Europe 23 34 23 34 United States 8 8 8 8 92 92 8 8 100 100 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf According to the register kept under the Dutch Act on Dividend policy Disclosure of Major Holdings in Listed Companies (Wet Melding Zeggenschap, or Wmz 2006), six institutional Royal BAM Group strives to distribute between 30 percent investors hold interests of 5 percent or greater. and 50 percent of the net profit as dividends on the Movements may have occurred within the different ordinary shares. As a rule, dividends are paid out in cash. disclosure thresholds. The proposal is for a cash dividend of €0.90 per ordinary Table 4 shows the interests of 5 percent or above share for 2007 (2006: €0.45) in part due to the result on according to the register kept under Wmz 2006. the sale of Flatiron. The proposal corresponds to a payout of 33.5 percent based on the net result of €349 million for 2007. A total of €116.9 million will be distributed to Earnings per share after conversion holders of ordinary shares (based on the number of outstanding ordinary shares as at 31 December 2007). Conversion of convertible preference shares affects both The dividend yield on the ordinary shares amounts to the result attributable to holders of ordinary shares 5.6 percent, based on the dividend proposal and the (savings on the preference dividend) and the number of closing price for 2007 (2006: 3.1 percent). For the ordinary shares ranking for dividend. Table 5 below convertible and non-convertible financing preference shows these influences on the earnings per share for shares, cash dividends of €0.37086 and €0.38346, 2007. respectively, will be paid out per share. More information on the proposed dividend for 2007 can be found in the Executive Board’s report on page 31. 12 2007

Table 4 Interests of 5 percent or more according to the Wmz 2006 register

(as a percentage) Ordinary Preference Interest above Total shares shares 5% since A. van Herk 9.8 9.8 - October 2005 Delta Lloyd Levensverzekering (Aviva) 6.0 2.1 3.9 December 2002 ING Groep 5.5 5.5 - February 1992 Capital Research & Management 5.3 5.3 - January 2007 Fortis 5.2 5.2 - February 1992 AllianceBernstein 5.2 5.2 - October 2006

Table 5 Earnings per share 2007 after conversion

Results attributable to Average number holders of ordinary Net result per of ordinary shares shares (x € million) ordinary share (in €) Before conversion 124,825,079 349.0 2.80 Conversion preference shares 10,716,382 4.0 - After conversion 135,541,461 353.0 2.60 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Nineteen holiday homes, ship hall and harbour office in Terherne, the Netherlands (BAM Utiliteitsbouw).

Investor relations

Royal BAM Group attaches great importance to the provision of transparent and identical information to all investors. BAM’s investor relations policy is geared to informing investors about the Group’s strategy, objectives, performance and prospects in good time, fully and in clear and unambiguous terms. As part of this policy, BAM strives for an open and lively debate with shareholders and potential shareholders, analysts and the financial media. The aim of this dialogue is to take note of the views of shareholders and to improve awareness of the BAM share throughout the financial world. Results achieved on projects will not be adequately reflected in the value of the share unless there is a high quality of communication with investors.

All press and analysts’ meetings in connection with the publication of the annual and half-yearly 13 figures are accessible to everyone via the 2007 Internet (webcast). The meetings will be held in Dutch. It will also be possible to opt for a simultaneous English interpretation of the analysts’ meeting. Anyone can access any conference call with press and analysts in connection with the publication of first quarter and third quarter figures. These conference calls, which are in Dutch, are also available with a simultaneous English interpretation. More information on this can be found on the company's website.

The significant interest from investors is also expressed in the large numbers of contacts in the form of roadshows, participation in seminars and presentations for investment clubs. In 2007, there were over 220 such events (2006: over 170). All dates and locations of roadshows, seminars and the like are published on the company’s website.

For questions or more information concerning Royal BAM Group, please visit the company's website at www.bam.nl. Shareholders and financial analysts can address any questions to the Investor Relations Manager of Royal BAM Group, Mr P. Juge, email [email protected], telephone +31 (0)30 659 86 01. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Information per ordinary share (in €1, unless otherwise indicated) 1

2007 2006 2005 2004 2003 2 Number of ordinary shares ranking for dividend as at year-end 129,906,275 123,758,414 122,371,460 91,582,210 73,825,310 Average number of ordinary shares ranking for dividend during the year 124,825,079 123,295,593 105,040,639 85,704,735 73,825,310 Net result 2.80 1.16 1.46 1.53 0.89 Net result excluding fine 2.80 1.11 1.46 1.06 0.52 Net result from continued operations 2.15 1.01 1.46 1.06 0.52

Average number of ordinary shares ranking for dividend (fully diluted) 135,541,461 135,509,643 125,857,967 118,375,435 118,049,465

Net result (fully diluted) 2.60 1.09 1.28 1.21 0.68 Net result excluding fine (fully diluted) 2.60 1.04 1.28 0.87 0.45 Net result from continued operations (fully diluted) 2.01 0.95 1.28 0.87 0.45

Cash flow 3.61 1.92 2.47 2.35 3.05 Equity attributable to shareholders 7.65 5.58 4.74 2.87 3.27 Dividend 3 0.90 0.45 0.40 0.31 0.31 14 Payout ratio (as percentage) 34 41 32 31 73 Dividend yield (as percentage) 4 5.6 3.1 2.8 4.2 7.2 2007

Highest closing price 22.58 18.49 15.46 7.45 4.65 Lowest closing price 13.79 12.93 7.05 4.29 1.97 Price on 31 December 16.10 14.69 14.18 7.40 4.29 Average daily turnover (in number of shares) 848,000 723,000 590,000 354,000 236,000 Marchet capitalisation at year-end 5 (x €1,000) 2,196,373 1,998,737 1,933,418 961,972 559,581

Figures per financing preference share (in €1, unless otherwise indicated) 1

2007 2006 2005 2004 2003 Convertible shares Number of shares in issue 5,636,534 11,780,581 13,081,135 32,670,700 39,285,715 Conversion price 4.20 4.20 4.20 4.20 4.20 Price on 31 December 18.15 15.11 14.97 7.40 5.00 Dividend 3 0.37 0.37 0.37 0.37 0.37

Non-convertible shares Number of shares in issue 473,275 473,275 473,275 8,333,335 8,333,335 Price on 31 December 5.45 5.75 5.00 5.10 4.65 Dividend 3 0.38 0.38 0.38 0.38 0.38

1 Adjusted for share split 1:5 as at 11 May 2006. 2 Based on NL GAAP. 3 Dividend proposal 2007. 4 Based on share price at year-end. 5 Based on total number outstanding ordinary shares and financing preference shares. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Report by the Supervisory Board to the shareholders

Financial statements and dividend proposal The Central Works Council has announced that it does not wish to exercise its right to recommend individuals for We hereby present the 2007 financial statements, duly appointment to the Supervisory Board in connection with prepared by the Executive Board, to the General Meeting the vacancy caused by Mr Dekker stepping down from the of Shareholders for approval. Board. The financial statements have been audited by the Group’s external auditor, PricewaterhouseCoopers During the 2007 financial year, the Supervisory Board Accountants NV; the auditor’s unqualified report is consisted firstly of seven members, and then of six from included on page 159 of the annual report. The Supervisory the beginning of May 2007 onwards. The Supervisory Board has discussed the financial statements with the Board takes the view that around six to seven members is Executive Board in the presence of the external auditor. an appropriate number in the present circumstances, The Supervisory Board is of the opinion that the financial given the size and the international nature of the Group. statements and the report by the Executive Board provide a true and fair picture of the state of affairs within the There is a profile of the Supervisory Board, which Group and form a good basis on which to hold the shareholders may examine at the company’s office and Executive Board accountable for the management policies that is also published on the company's website. This pursued and the Supervisory Board accountable for its profile was discussed with shareholders at the General supervision of the management policies pursued. Meeting of Shareholders on 9 May 2005 in the context of the recommendations of the Dutch corporate governance The General Meeting of Shareholders to be held in code (hereafter the Code). In the Board’s assessment, its 15 Amsterdam on 7 May 2008 will be invited to declare a composition is balanced and in line with its profile. The dividend for 2007 of €0.90 (2006: €0.45) in cash per members possess the experience that is needed to 2007 ordinary share. A cash dividend of €0.37086 per share will function effectively in a large construction group with be paid on the convertible financing preference shares. international operations, as well as being able to assess A cash dividend of €0.38346 per share will be paid on the the main points of overall policy, act critically and non-convertible Class F preference shares. independently with regard to the other members of the Supervisory Board and the members of the Executive Board, perform the tasks of the Supervisory Board as laid Composition of the Supervisory Board down by law and by the company’s Articles of Association, and provide the Executive Board with solicited and On 8 May 2007, the General Meeting of Shareholders unsolicited opinions as well as advice. reappointed Mr W.K. Wiechers to the company’s The Board has among its members a financial expert with Supervisory Board. After the Chairman of the Supervisory experience of both finance and accounting in a listed Board, Mr G-J. Kramer, stepped down on 8 May 2007, the company. Other, specific criteria applied by the Board to Supervisory Board appointed Mr W.K. Wiechers as its composition are a general, broad-based understanding Chairman and Mr A. Baar as Vice-Chairman of the Board. of business, knowledge of the construction industry, experience in the management of large, preferably In 2008, it is the turn of Mr J.A. Dekker to resign by international companies and expertise relating to issues rotation as member of the Supervisory Board, in with a social dimension and concerning society at large. connection with the end of his terms of appointment. In the absence of any nominations from the General The retirement schedule for the members of the Meeting of Shareholders, the Supervisory Board intends Supervisory Board is shown on page 27 of the annual to propose Mr Dekker for reappointment by the General report, and is also published on the company’s website. Meeting of Shareholders as one of the company's In accordance with the Code, Supervisory Board members supervisory directors. As the former director of a major can in principle serve a maximum of three four-year terms company, Mr Dekker has a great deal of experience and of office. Their reappointment for another term of office expertise relevant to management, board membership will obviously be put forward to shareholders on each and organisation. His technical background is also well occasion. suited to a company like BAM. For instance, Mr Dekker is very well acquainted with the construction sector and with this company in particular. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The particulars of the members of the Supervisory Board Executive Board are shown on page 27 of the annual report, and constitute part of the Supervisory Board’s report. During the financial year, the Executive Board consisted of four members. As matters stand, this number was The remuneration of the Supervisory Board members deemed suitable, in light of the present circumstances, does not depend on the company’s results, or on any and considering the Group’s size and international change of control in the company. The shareholders’ character. meeting on 16 May 2003 set the annual remuneration of Mr A.J.D. Franklin has retired with effect from 8 May 2007 the members of the Supervisory Board at €40,000 for the and has resigned as a member of the Executive Board. chair, €35,000 for the deputy chair and €30,000 for the On 7 May 2008, Mr J. Ruis, Chief Financial Officer and other members of the Board, with a bonus of €5,000 for member of the Executive Board, will step down as a members of the audit commitee. The shareholders’ member of the Executive Board on the expiry of his four meeting on 9 May 2005 has set this bonus for each years’ term of membership. The Supervisory Board, member who is on any of the Committees set up by the having consulted with the members of the Executive Supervisory Board, with a maximum of one bonus per Board, confirms that Mr Ruis is an outstanding CFO with member. The shareholders’ meeting of 9 May 2005 also substantial knowledge of financial matters and the approved the company’s proposal not to place the construction sector. The Supervisory Board therefore remuneration of the members of the Supervisory Board proposes to re-nominate Mr Ruis as CFO and member of on the agenda for shareholders’ meetings unless any the Executive Board for a period of four years. proposals were submitted to adjust this remuneration. 16 The Supervisory Board is proposing to appoint Mr R.P. van During the General Meeting of Shareholders scheduled for Wingerden as a member of the company’s Executive

2007 7 May 2008, the Supervisory Board intends to submit a Board for a period of four years with effect from 7 May proposal to adjust the annual remuneration for Supervisory 2008. Mr Van Wingerden joined Royal BAM Group in 1988 Board members, adopted in 2003. The growth achieved and has fulfilled a number of managerial positions at the since 2003 has dramatically changed the company and Group’s operating companies. He currently chairs the justifies a change in remuneration. It will be proposed to management board at BAM Woningbouw. Mr Van increase the annual remuneration for Supervisory Board Wingerden has a great deal of management experience in members by €10,000 with effect from 1 January 2008. The the construction industry, gained both at home and previously mentioned bonus for participation in abroad. Supervisory Board committees will remain unchanged. The Supervisory Board believes that this adjustment will bring The appointment of Mr Van Wingerden will bring the the remuneration in line with those of companies number of members of the Executive Board to five for the comparable to the Group in terms of nature and size. time being. An Executive Board consisting of four or five members is regarded as appropriate in today’s climate, The Supervisory Board members do not have any other certainly in light of the Group’s size and international relationships of a business nature with the company. In nature. We will consider over the next few years whether the opinion of the Supervisory Board, the requirement of persisting with an Executive Board of five members seems the Code with regard to independence is met. In the correct. person of Mr Van Vonno, as former Chairman and former member of the Executive Board, the company has one During the financial year 2007, the Supervisory Board has member of its Supervisory Board who is not independent again assessed the performance of the Executive Board in the meaning of the Code, which does not present any and of the individual members of that Board. The conflicts with the Code. Supervisory Board considers that the Executive Board None of the Supervisory Board members is a member of performed well in 2007, which is also apparent from the the Supervisory Board of more than five Dutch listed company’s excellent financial results for the 2007 financial companies. year. The Supervisory Board is not aware of any conflicts of This also applies to the individual members of the interest between the company and members of the Executive Board. Supervisory Board, or between the company and natural persons or legal entities that hold at least 10 percent of the shares in the company. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Members of the Executive Board are appointed for a Preparations were also made for the Annual General period of four years. They retire after the conclusion of the Meeting of Shareholders, and the AGM was discussed first Annual General Meeting of Shareholders to be held in after it had taken place. the fourth year after the year in which they were appointed. The contractual agreements with members of The Supervisory Board gave its approval for the 2008 the Executive Board who were appointed before the Code operational plan, which sets out the Group’s financial came into effect will be honoured; their appointment is targets, the strategy aimed at realising those targets and for an indefinite period. the preconditions to be observed in connection with that strategy. The retirement schedule for the members of the Executive Board is shown on page 28 of the annual report, and is In line with the 2007-2009 strategic agenda, which was also published on the company’s website. discussed and approved during the 2006 financial year, the Supervisory Board turned its attention to a number of The Executive Board rules are published on the company’s aspects of this agenda, including the portfolio, synergy website. and the future structure of the Group. An explanation of the Group’s strategic agenda can be examined at page 8 The remuneration of the members of the Executive Board of the annual report. is presented on page 22 of this annual report. The meetings in the absence of the Executive Board were The members of the Executive Board are not members of devoted to the operation of the Supervisory Board itself 17 the Supervisory Boards of any listed companies. (both as a whole and the individual members), the composition and profile of the Supervisory Board, its 2007 The Supervisory Board has no evidence of any conflicts of relationship to the Executive Board, the Executive Board’s interest between the company and members of the composition and performance (both as a whole and the Executive Board. individual members) and the remuneration of the members of the Executive Board (including determination of the variable portion). The Supervisory Board finalised The Supervisory Board’s activities the remuneration report compiled by the Remuneration Committee. The Supervisory Board held eight meetings in the year The remuneration report is included on page 22 of the under review, in the presence of the Executive Board. The annual report as part of the report by the Supervisory Supervisory Board also met a number of times without Board. the Executive Board being present. The meetings were almost always fully attended. Each of the meetings of the At its quarterly meetings, as usual, the Supervisory Board Supervisory Board featured a report on what had been discussed the course of business and prospects of the discussed in meetings of the Board’s committees. In Group as a whole and of the respective sectors and the addition, the Executive Board reported in each case on the individual operating companies, on the basis of written state of affairs, the financial situation and market reports and accompanying presentations. Areas of developments for the operating companies and the risks attention included the risks attached to the enterprise, that they face, each report being based on the operating the internal management and control systems, and the plan for the relevant financial year. Matters also discussed results of the appraisal of the Executive Board in light of included the financial statements for 2006, the quarterly these systems. The implications of the matters addressed statements for 2007, reserve and dividend policy and the in these contexts at the meetings of the Supervisory dividend proposal for 2006, corporate governance, the Board are discussed elsewhere in this report, including on situation relating to the operating companies in Germany, page 24. the various effects of IFRS (International Financial The Board has satisfied itself that the Group has internal Reporting Standards) on the Group’s financial reports, the risk management and internal control systems, financial Group’s existing anti-takeover measures, compensable reporting manuals and procedures for drawing up such losses available within the Group and the most important reports and an established monitoring and reporting claims and legal proceedings involving parts of the Group. system. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf During the financial year, both the Executive Board and The Supervisory Board exchanged thoughts with the the external accountant in particular kept the Supervisory Executive Board at a number of meetings regarding Board up to date on the course of business at BAM progress with the proposed sale of the operating company Deutschland. This involved closely monitoring whether Flatiron in the United States. The Supervisory Board gave its the measures adopted at the end of 2006 and the start of approval to the outcome of the negotiations regarding this 2007, in relation to the losses sustained by Wayss & sale. Flatiron was transferred to the new owner early Freytag Schlüsselfertigbau during the 2006 financial year, December. The Supervisory Board also approved the were having the required effect. The Supervisory Board acquisition of the Belgian project development company discussed the conclusions of the reports on the losses Kaïros and the Belgian civil engineering company Betonac. prepared at the company’s request by PricewaterhouseCoopers and Ernst & Young. The Supervisory Board, together with the Executive The Supervisory Board is convinced that the measures Board, spent several days visiting a number of Dutch adopted have proven adequate and that control over the operating companies in September 2007, and took the organisation of the residual part of the former Wayss & opportunity to exchange views with the management of Freytag Schlüsselfertigbau, now incorporated within BAM those companies. The Supervisory Board visits some of Deutschland, has been restored. the Group’s operating companies every year, while working visits are also occasionally made to current The developments on the markets in which the Group projects. Thus, a visit was made to the St. Jobsveem operates, management development and the quality of project in Rotterdam in February 2007, where a discussion management were also discussed. took place with the project management team. 18

The Supervisory Board again considered extensively The Supervisory Board exchanged views with the

2007 during this financial year on developments in the Group's Executive Board on a number of occasions concerning PPP activities. The discussions covered a range of issues, liquidity levels, the equity position and the Group's capital including how the Group is involved in facility ratios. In this context, the Supervisory Board discussed management and the desirable level of investment in PPP refinancing the Group with the Executive Board. The activities. The Board also discussed the opportunities for Supervisory Board approved refinancing by means of a transferring currently operating PPP projects to investors. senior facility agreement in the amount of €550 million In this context, the Supervisory Board took note of the and a €50 million increase in the existing subordinated staged transfer of BAM’s holding in four SPEs in the United loan to €200 million, as well as the security guarantees to Kingdom to a joint venture set up with Dutch be issued in this regard by Royal BAM Group and a number Infrastructure Fund. of the operating companies. There were also regular discussions with the Executive Board on the desired risk policy for assets invested in real The Supervisory Board also approved the amendment of estate. the company’s Articles of Association to enable the use of electronic media for communicating with shareholders. The Supervisory Board was informed about the The General Meeting of Shareholders on 8 May 2007 reorganisation of a number of business units within BAM approved the amendment of the company’s Articles of Woningbouw, i.e. Villaforte, Houtskeletbouw and the Association. The Articles of Association were subsequently Betonfabriek (concrete factory). amended on 16 May 2007. The Board also approved an amendment to the BAM The Supervisory Board took cognizance of the reports of Regulations 2005 in connection with the holding of and the external auditor and the 2006 management letter and trade in shares, this amendment being required as a result discussed these documents with the external auditor and of the Dutch Financial Supervision Act coming into effect. the Executive Board. The Supervisory Board also discussed the follow-up to the external auditor’s findings with the Delegations from the Supervisory Board, consisting of Executive Board. The Supervisory Board also considered different members on each occasion, again took part in the relationship with the external auditor and prepared two consultation meetings with the Central Works the proposal to the general meeting of shareholders to Council. The usual informal annual meeting of the charge PricewaterhouseCoopers with the audit of the Supervisory Board and the Executive Board with the financial statements for the financial year 2007. Central Works Council was held in September 2007. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The Supervisory Board rules and The Committee met four times during the year with the committees external auditor present (for part of the meeting) on each occasion. The Chairman and the Chief Financial Officer The Supervisory Board has a set of rules, governing the from the Executive Board were also invited. composition, duties and procedures of the Board and its The principal topics addressed at these meetings were the dealings with the Executive Board, the General Meeting of financial reporting on the 2006 annual figures and the Shareholders and the Central Works Council. The rules of 2007 quarterly figures; the 2006 management letter; the the Supervisory Board and those of the Supervisory Board follow-up to the external auditor’s recommendations; the committees mentioned below, as well as the composition risks and risk management and control systems, including of those committees, can be found on the company’s those concerning property development, public-private website. partnerships and the developments at the German operating companies; the Group’s dividend policy and tax The Supervisory Board has three permanent committees, planning; the activities and fee of and the relationship namely an Audit Committee, a Remuneration Committee with the external auditor; the audit plan for 2007; the and a Selection and Appointments Committee. It is the 2008 operational plan; the ICT policy; the Group’s funding task of these committees to support and advise the and solvency; the movement of the liquidity level; the Supervisory Board concerning the activities that are the available compensable losses within the Group, committees’ responsibility and in preparing the particularly in Germany; the financial and administrative Supervisory Board’s decisions regarding those activities. organisation, the forensic investigation at Wayss & The Supervisory Board as a whole remains responsible for Freytag Schlüsselfertigbau and any impact of IFRS on 19 the way in which it performs its tasks and for the financial reporting, including the method of accounting preparatory work carried out by the committees. The for goodwill on acquisitions. 2007 committees submitted reports of all their meetings to the The Audit Committee also held discussions with the Supervisory Board. Executive Board about the Group’s refinancing, which was completed during 2007. The Audit Committee consists of Messrs Abrahamsen, The audit committee met with the external auditor on Dekker, Van Vonno (with effect from May 2007) and one occasion without the Executive Board being present, Wiechers (until May 2007), with Mr Dekker being the and reported to the Supervisory Board on the relationship Chairman. The composition of the Audit Committee is in with the external auditor. line with the provisions of the Code. The Audit Committee supports the Supervisory Board in The Remuneration Committee consists of Messrs Baar, the performance of its tasks and drafts proposed Kramer (until May 2007) and Wiechers (with effect from decisions of the Supervisory Board in respect of a number May 2007), with Mr Baar being the Chairman. The of matters, which include: composition of the Remuneration Committee is in line • the operation of the internal risk management and with the Code. control systems; • the provision of financial information on the company’s One of the tasks of the Remuneration Committee is to part, including the financial statements, the quarterly make proposals to the Supervisory Board with regard to figures and the process through which this information company remuneration policy, as well as the is generated; remuneration structure, the level of remuneration and the • compliance with recommendations and follow-up to terms of employment of the members of the Executive comments from the external auditor; Board and the remuneration of the members of the • the external audit process and the audit plan; Supervisory Board. The Committee also consults the • the relationship with the external auditor; Chairman of the Executive Board about the policy on • the process through which the company monitors terms of employment for operating company managers compliance with laws and regulations and with its own and executives of equivalent rank. The Remuneration code of conduct; Committee also proposes a remuneration report on the • policy in respect of tax planning; way in which remuneration policy has been implemented • the application of ICT; in practice. • Group financing; and • the financial and administrative organisation. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The Remuneration Committee met three times during the The Committee prepared the reappointment of one past financial year. The Chairman of the Executive Board member of the Supervisory Board and the appointment was present at these meetings. The Committee members of one member of the Executive Board during the consulted with each other a number of times outside of financial year. the context of a formal meeting. The Committee also held separate (assessment) meetings The Remuneration Committee made a proposal regarding with each member of the Executive Board. company remuneration policy for 2007 and subsequent years. The Committee prepared a proposal for the Supervisory Board for amendment of the remuneration of Corporate governance the members of the Supervisory Board. The Remuneration Committee also discussed conditions relating to the The company’s corporate governance structure was remuneration of operating company management teams discussed with the shareholders during the General and staff directors. The Committee submitted a proposal Meeting of Shareholders on 9 May 2005, at which to the Supervisory Board relating to the remuneration of meeting the proposals to bring the company’s Articles of members of the Executive Board, and criteria for the Association into line with the Code were also approved. variable remuneration in 2008. The Remuneration The Articles of Association were amended shortly Committee also prepared the remuneration report. The thereafter. Remuneration Committee did not use external advisers during the financial year. The Supervisory Board made a further study of the company's corporate governance structure during the 20 The Selection and Appointment Committee consists of financial year 2007. This also included consideration of the Messrs Baar, Kramer (until May 2007) and Wiechers (with corporate governance views of some institutional

2007 effect from May 2007), with Mr Kramer acting as chair investors. None of this led to any substantial amendments until May 2007 and Mr Wiechers acting as chair with to the company's corporate governance structure. It was effect from 2007. One of the tasks of the Selection and satisfying to note that the company would score Appointments Committee is to make proposals to the outstandingly well in any comparable investigation Supervisory Board with regard to: relating to this topic in the Netherlands. • selection criteria and appointment procedures with regard to members of the Supervisory Board and The Supervisory Board and Executive Board are convinced members of the Executive Board; that Royal BAM Group’s corporate governance is well • the size and composition of the Supervisory Board and organised, not least because of the application of the the Executive Board and a profile of the Supervisory corporate governance code. Board; • assessment of the performance of individual members Please refer to the explanation provided on page 35 of the of the Supervisory Board and members of the Executive annual report concerning the company’s compliance with Board; the Code. • (re-)appointment of members of the Supervisory Board and members of the Executive Board; • an Executive Board member’s acceptance of membership of the Supervisory Board of a listed company; • possible conflicts of interest arising in connection with the acceptance of other positions by members of the Supervisory Board.

During the financial year, the Committee discussed the current and future size and composition of the Supervisory Board and the Executive Board. The Supervisory Board also discussed these issues without the Executive Board being present. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Extension and renovation 145-metre high Finance Towers, Brussels (Interbuild)

External auditor

Both in its discussion of the 2006 annual figures and its discussion of the 2007 semi-annual figures, the Supervisory Board – as is usual – called on the external auditor to provide additional information. The Board noted that the external auditor had received the financial information on which the quarterly figures, the interim results, the results and the other interim financial reports were based and that he had been given the opportunity to respond to that information. The external auditor was present at the General Meeting of Shareholders on 8 May 2007. As part of its consideration of the 2007 annual report and financial statements, the Supervisory Board assessed the relationship with the external auditor based on a report from the Executive Board and the Audit Committee.

Given the Board’s good experience with the external auditor and the external auditor’s expertise with regard to 21 the construction industry in general and the Group in particular, the Supervisory Board sees no reason to 2007 propose to the shareholders that the external auditor be changed. A proposal will therefore be put to the shareholders’ meeting on 7 May 2008 that PricewaterhouseCoopers Accountants N.V. be re- appointed as external auditor, responsible for auditing the Group’s 2008 financial statements.

The Supervisory Board has established to its satisfaction that the measures adopted within BAM Deutschland have had the desired effect. One of the consequences of these measures is that the Group’s result for 2007 recovered well compared to the result for 2006. As anticipated, BAM Deutschland achieved a break-even result for the financial year. The position with the German operating companies will continue to receive our full attention during 2008. Once again, the operating results from the rest of the Group for the 2007 financial year were at a good level. In light of these positive developments and also due to the dedication and commitment of so many people within the Group, the Supervisory Board therefore has every confidence in the future of Royal BAM Group.

The Supervisory Board would like to express its considerable appreciation to the Group’s Executive Board, managers and employees with regard to their efforts during the year under review.

Bunnik, Netherlands, 19 March 2008 Supervisory Board WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Remuneration report

The following remuneration report from the Supervisory been fixed at 60 percent. A variable remuneration of Board contains a report on the manner in which the 50 percent of regular annual salary has been awarded for remuneration policy has been put into practice during the the achievement of the long-term objectives in 2007, in past financial year. The report includes summaries of line with the long-term bonus plan. The company has not information concerning remuneration received in 2007, allocated any options or shares to members of the and also contains a summary of the remuneration policy Executive Board, operating company managers or provided by the Supervisory Board for the coming employees. financial year and subsequent years. Remuneration of the members of the Supervisory Board The annual remuneration for a members of the Board, in Remuneration in 2007 accordance with the policy adopted at the shareholders’ meeting on 16 May 2003, amounts to €40,000 for the The Remuneration Committee is a permanent committee chair, €35,000 for the deputy chair and €30,000 for the of the Supervisory Board consisting of at least two other members of the Board, with a bonus of €5,000 which members who are appointed and dismissed by the has applied since the shareholders’ meeting on 9 May 2005 Supervisory Board. for each member who is on any of the Committees set up The Remuneration Committee is subject to rules by the Supervisory Board, with a maximum of one bonus established by the Supervisory Board. During the past per member. financial year, the committee consisted of Mr Baar (chairman), Mr Kramer (until May 2007) and Mr Wiechers The Supervisory Board intends to propose to the General 22 (with effect from May 2007). The Remuneration Meeting of Shareholders to be held on 7 May 2008 that Committee met three times during the past financial year. the annual remuneration for members of the Supervisory

2007 Board should be increased by €10,000 with effect from Annual salary of the members of the Executive Board 1 January 2008. The bonus mentioned above will not be The salaries of the Dutch members of the Executive Board changed. The Supervisory Board has discovered that a were adjusted during the course of 2007, and brought comparison with businesses of a similar size to the more closely into line with the salaries in the relevant company shows scope for an increase in remuneration for remuneration market. the members of the Supervisory Board. The Supervisory Mr Franklin’s salary was increased by 5 percent as at Board also considers that the growth achieved since 2003 1 January 2007, in line with developments in the and expected over the next few years also justifies an appropriate employment market. A summary of the increase in the remuneration for the members of the remuneration of the individual members of the Executive Supervisory Board. Board can be found in table 6. The remuneration of the Supervisory Board members Variable remuneration of the members of the Executive Board does not depend on the company’s results, nor on a The variable remuneration for the financial year 2007 has change of control in the company.

Table 6 Remuneration of the individual members of the Executive Board

(x € 1.000) Gross salary Bonus Long-term Pension premiums 2007 2006 2007 2006 bonus ’05-’07 2007 2006 J.A.P. van Oosten 555 513 330 225 277 83 122 N.J. de Vries 493 463 295 203 246 77 94 A.J.D. Franklin (until 8 May 2007) 221 608 123 275 103 74 120 P.B. Brooks (with effect from 8 May 2007) 352 - 196 - 163 90 - J. Ruis 430 410 258 180 215 71 110 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Remuneration policy from 2007 onwards Remuneration package The total remuneration of the members of the Executive The Supervisory Board draws up the remuneration policy Board of Royal BAM Group consists of an annual salary, a for the members of the Executive Board on the basis of variable remuneration, a pension and other secondary recommendations by its Remuneration Committee. The conditions as well as redundancy compensation schemes General Meeting of Shareholders of Royal BAM Group then in the event that they are made redundant. It was decided formally adopts the remuneration policy. No changes are to use the level of the median of the aforementioned predicted in the current financial year in the remuneration remuneration market for this total remuneration. The policy for 2007 and subsequent years, as adopted at the company does not distribute shares to members of the General Meeting of Shareholders held on 8 May 2007. Executive Board or to anyone else working in the Group, Once the remuneration policy has been adopted, the nor are they given any entitlements (options) on shares. Supervisory Board determines the remuneration for the The company does not have any remuneration rules that individual members of the Executive Board, again on the are related to a change of control of the company. basis of recommendations by its Remuneration Committee. The regulations of the Remuneration Annual salary Committee are published on the website of Royal BAM Upon appointment, the annual salary of the individual Group. member of the Executive Board originating from this organisation is usually less than the standard salary for Assumptions this Board appointment. The Supervisory Board The remuneration policy is geared to attracting and determines the salary development, the principle being 23 retaining qualified people and motivating them to achieve that the difference between starting salary and the Royal BAM Group’s objectives. Particular emphasis is standard salary will be bridged in several years with 2007 placed on experience of the Group’s (international) proper performance from the Board Member. activities and the necessary management qualities. The policy is also aimed at safeguarding growth of the The annual evaluation and change in the annual salary enterprise’s value, motivating individuals and increasing generally takes places on 1 January of each year. The the enterprise’s attraction for highly qualified executives, evaluation considers personal performance, the results of including those from other industries, so as to interest the past year, the extent to which the Board Member’s them in Royal BAM Group as an employer. The current salary is less than the standard salary and general remuneration level and structure are based partly on the changes in the remuneration market. development of results, as well as other developments that are relevant to the company. Variable remuneration In order to achieve these points of departure, the policy is Each member of the Executive Board is eligible for variable geared to placing remuneration at a competitive level for remuneration, with the level depending on the the general Dutch remuneration market for directors of achievement of targets agreed beforehand between the large companies. In the case of members of the Executive Supervisory Board and the Executive Board that support Board the equivalent remuneration possibilities in their the execution of Royal BAM Group’s strategic agenda. country of residence are also taken into account. The Supervisory Board will regularly check the remuneration The maximum annual variable remuneration is sixty package to ensure that it complies with the assumptions percent of the Board member’s annual salary. This is underlying the remuneration policy. The remuneration designed to allow alignment with the relevant remuneration policy will also be checked regularly; changes in the policy market and the levels of variable remuneration appropriate will be put forward for adoption at the General Meeting of for senior officials of Royal BAM Group. Shareholders. The variable remuneration depends on the achievement of previously set, measurable targets. The portion of the variable remuneration that is related to financial targets is a maximum of forty percent of the member’s annual salary. The annual result of Royal BAM Group is decisive for this. If the agreed annual results are achieved, the variable remuneration is a maximum of forty percent, with a proportionate reduction if the budgeted results are WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf not realised. If the annual result is a great deal less than The Supervisory Board also has the power to amend the the budgeted figure, this part of the Board Member’s existing conditional awards of variable remuneration with remuneration is not paid out. A maximum of twenty quantified performance criteria if, in its opinion, applying percent of the member’s annual salary is related to the award without amendment would have an objectives derived from Royal BAM Group’s strategic unreasonable or unintended outcome. The Supervisory agenda. The strategic agenda defines, among other Board would only use these powers as a last resort. All things, objectives that stimulate long-term value creation necessary provisions will be included in the new for the shareholders, such as further growth in specific remuneration contracts with the directors. market segments, product development, risk management (including safety), staff development, Pensions knowledge management and corporate social With respect to pensions, the sector regulations will be responsibility. The position in relation to these topics is adopted wherever possible, with surplus schemes based also that they are formulated and evaluated as far as on existing premiums and contributions from the possible as measurable targets. The variable remuneration participants. Members of the Executive Board are subject consists of an annual cash payment and is paid out in the to the new pension scheme and transitional arrangements following year. The Supervisory Board determines the with effect from 1 January 2006, as applicable from that level of the variable remuneration based on advice from date within Royal BAM Group following the introduction the Remuneration Committee. of the Act concerning accelerated retirement and life- course savings schemes (wet VPL). The new scheme does In order to achieve long-term aims, a place has been not apply to Mr Franklin, whose existing scheme will be 24 found for a long-term bonus plan in the remuneration continued. policy for members of the Executive Board. Under the

2007 current long-term bonus plan, if a 3.5 percent margin Other secondary conditions of employment (before tax and before amortisation of goodwill) is As for all the other employees, Royal BAM Group has a realised on Group turnover, each member of the Executive competitive package of secondary conditions of Board will be eligible for an additional variable employment for the members of the Executive Board. This remuneration in that year of fifty percent of his annual includes such matters as schemes for healthcare insurance salary. No payments will be made if this profit margin is and disability, personal accident insurance, a car scheme not achieved. The plan lasted for three years and came to and directors’ liability insurance. Royal BAM Group does an end on 31 December 2007. In 2008 a new cycle has not give loans, warrants and the like to members of the started under the same conditions based on the Group Executive Board or to other employees, except for the turnover margin of 4 percent before tax as stated in the arrangements set out below. strategic agenda. Current and former members of the Supervisory Board and The way in which the remuneration package is made up current and former members of the Executive Board are – a fixed salary and limited variable remuneration covered by the indemnity, under the Articles of Association, elements – provides a payment ceiling. against claims made against them in respect of actions or omissions after 1 January 2005 in the performance of the In cases where the variable remuneration is awarded on duties of their position, unless said actions or omissions the basis of inaccurate (financial) data, the Supervisory constituted wilful, deliberately reckless or seriously culpable Board has the possibility of adjusting (that part of) the conduct. This facility applies to all employees and former remuneration accordingly and the company is entitled to employees of Royal BAM Group. reclaim any variable remuneration paid to a director on the basis of incorrect (financial) information. The company has taken out directors’ and officers’ liability insurance under standard market terms and conditions for In the case of new awards of variable remuneration to the members of the Supervisory Board, the members of directors, based on quantified performance criteria, the the Executive Board, the operating company managers Supervisory Board has the right to amend the awards in and all other directors and officers in Royal BAM Group. relation to the level of previous years if it considers that there would be an unreasonable outcome, partly based on the remuneration policy adopted by the shareholders. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Employment contracts A four-year contract of employment is concluded with Members of the Executive Board are appointed for a new members who join the Executive Board from outside period of four years. The contractual agreements with the Group. The statutory terms of notice apply for those members of the Executive Board who were appointed members of the Executive Board who were appointed before the Dutch Corporate Governance Code came into before 1 January 2004. The members of the Executive effect will be honoured; their appointment is for an Board appointed after 1 January 2004 have a term of indefinite period. notice of six months for the company and three months If the company prematurely terminates the contract of a for the members of the Executive Board. The company Board member appointed after 1 January 2004, the regards a notice period of three months as suitable for a redundancy payment will be one year’s salary. If that is director. The notice period for the company is twice the clearly unreasonable for a member of the Executive Board length of the notice to be given by a director. This is in line who is made redundant during his first term on the Board, with the statutory rules on notice periods in employment that Board member will be eligible for a redundancy contracts. payment of a maximum of twice his annual salary. The On Mr Brooks’ appointment, the rules set out in his Supervisory Board can decide on a higher payment if the employment agreement with Edmund Nuttall Ltd. were Board member concerned, prior to his appointment as a continued. member of the Executive Board, has been employed by Royal BAM Group Rules governing securities for a long period of time. See table 7. The company has rules relating to the possession of and The company has no other remuneration rules, beyond trading in securities; these rules also include regulations 25 the remuneration package mentioned above, in relation for members of the Executive Board and the Supervisory to payments on the departure of members of the Board relating to the possession of and trading in 2007 Executive Board or members of the Supervisory Board, securities other than those issued by the company. These nor are there any other rights to one-time payments. rules are published on the company’s website.

The contracts of employment for members of the Bunnik, Netherlands, 19 March 2008 Executive Board are for an indefinite period of time. Supervisory Board

Table 7 Contracts of employment/appointments of the members of the Executive Board

Company’s Period of Year of Date of Period of Contract period of notice for Redundancy employment appointment appointment type notice Board member scheme

J.A.P. van Oosten 1976 08.06.1995 Unlimited Indefinite 6 months 3 months Not agreed N.J. de Vries 1977 28.05.1998 Unlimited Indefinite 6 months 3 months Not agreed P.B. Brooks 1979 08.05.2007 4 years Indefinite 24 months 24 months Not appliclable J. Ruis 1971 07.05.2004 4 years Indefinite 6 months 3 months €800.000,- WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Particulars of the Supervisory Board members

Ir. W.K. Wiechers (67), Chairman Mr Baar was appointed as a member of J.A. Dekker (68) Mr Wiechers graduated in technical the company’s Supervisory Board in Mr Dekker graduated from the physics at the Technical University of 2001, and re-appointed in 2005. Technical University of Delft with a Delft. Mr Wiechers began his career in Mr Baar was appointed as Vice- degree in engineering physics. 1966 at KEMA in Arnhem where he held Chairman of the Supervisory Board in Mr Dekker began his career in 1964 at a number of positions, including Head 2007. AKZO where he worked in the area of of the Electrical Approvals Division, research and production before Deputy Director and Director. In 1987 R.J.N. Abrahamsen (69) becoming International Project Mr Wiechers joined the Board of Mr Abrahamsen graduated from Manager and General Manager of a Directors of PNEM (Provinciale Erasmus University Rotterdam with a subsidiary in Nigeria. In 1981 Noordbrabantse Energie Maatschappij) degree in economics and spent a year Mr Dekker joined the management of and he remained on the Board until studying international economics at the GTI Holding as Chairman of the Board 1997. In 1998 Mr Wiechers became University of Wisconsin in the United of Directors, a position that he held Chairman of the Executive Board of the States of America. until 1995. In 1995 Mr Dekker became PNEM-MEGA Group and in December Mr Abrahamsen, who began his career Chairman of the Executive Board of 1999, after the merger with EDON, he at Nedbank in Johannesburg, South TNO. He held that position until he became Chairman of the Executive Africa, has spent most of his working life reached retirement age in 2003. Board of Essent, in which position he in the financial world. In 1989 he joined Mr Dekker is currently Chairman of the remained until his early retirement as of what was then the Algemene Bank Royal Institution of Engineers in the 1 July 2003. Nederland in Amsterdam. By the time Netherlands. 26 Mr Wiechers is a Dutch national. he left ABN Amro Bank in 1994, he had Mr Dekker is a Dutch national. Other offices: chairman of the become Senior Executive Vice President Other offices: member of the

2007 Supervisory Board of KEMA; member of for the General Global Clients Supervisory Board of ASML; member the Supervisory Board of Bank Directorate and the General Asset of the Executive Board of De Baak; Nederlandse Gemeenten; member of Management & Trust Directorate. In member of the Executive Committee the General Energy Council in the 1994, Mr Abrahamsen joined the KLM of Stichting Continuïteit Ctac; Netherlands; Chairman of the Royal Dutch Airline as a member of the Chairman of the Executive Board of Benchmark Committee of Borssele Board of Directors, with special Syntens; miscellaneous positions in the nuclear power station. responsibility for financial policy. He healthcare sector. Mr Wiechers was first appointed to the held that position until he reached Mr Dekker was first appointed to the Supervisory Board in 1999 before being retirement age in 2001. Supervisory Board in 2000 before being re-appointed in 2003. Mr Wiechers was Mr Abrahamsen is a Dutch national. re-appointed in 2004. appointed as Vice-Chairman of the Other offices: chairman of the Supervisory Board in 2004 and as Supervisory Board of Optimix Chairman in 2007. Vermogensbeheer; chairman of the Supervisory Board of Trans Link A. Baar (64), Vice-Chairman Systems; member of the Supervisory Mr Baar has spent almost his entire Board of ANP; member of the working life in the construction sector. Supervisory Board of Bank Nederlandse Having started at a young age as a Gemeenten (BNG); member of the construction worker, he went on to hold Supervisory Board of Fluor Daniel; many different management positions member of the Supervisory Board of (both executive and administrative) at Port of Rotterdam; member of the various levels. He held senior Supervisory Board of Madurodam; management positions at Van Wijnen member of the Supervisory Board of and at the Amstelland Group, for Pon Holdings; member of the example. While working for Amstelland Supervisory Board of TNT; member of he also acquired experience abroad in the the Supervisory Board of Vitens. United States of America. Mr Baar was Mr Abrahamsen was first appointed to the Chairman of the Management Board of Supervisory Board in 2002 before being NBM-Amstelland from 1990 to 2000. re-appointed in 2006. Mr Baar is a Dutch national. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf H. van Rompuy (60) Mr Van Rompuy earned a degree in philosophy at the University of Leuven, where he also completed a degree in economic sciences. Mr Van Rompuy has spent a large part of his life working for the Belgian government. He has also pursued a career in Belgian politics, which led to him becoming State Secretary at the Belgian Ministry of Finance and SME in 1988 and Deputy Prime Minister and From the left: W.K. Wiechers, A. Baar, R.J.N. Abrahamsen, J.A. Dekker, Minister for the Budget in the Belgian H. van Rompuy and W. van Vonno. Government from 1993 to 1999. Mr Van Rompuy is currently a Member of the Belgian Parliament and W. van Vonno (67) Council of Kempen & Co.; member of Honorary Minister in Belgium. He was Mr Van Vonno graduated as a physical the Board of Directors of Stichting elected Chairman of the Chamber of sciences engineer in 1965 and in 1968 Continuïteit ING Groep; member of the Representatives in the Belgian he was admitted to the Degree of Board of Directors of NEN; member of Parliament in 2007. Doctor of Technical Sciences, both the Board of Directors of Stichting 27 Mr Van Rompuy is a Belgian national. qualifications being gained at the Bescherming TNT; member of the Other offices: member of the Supervisory Technical University of Delft. investment committee of NPM Capital; 2007 Board of Dexia Bank; lecturer at the From 1968 to 1973, Mr Van Vonno arbitrator for the Stichting Raad van VLEKHO Business School, Brussels. worked for Raadgevend Technisch Buro Arbitrage voor Metaalnijverheid en - Mr Van Rompuy was appointed as a Van Heugten in Nijmegen. From 1973 to Handel. member of the company’s Supervisory 1982 he worked for Bredero in Utrecht Mr Van Vonno was appointed to the Board in 2001 and re-appointed in 2005. as operating company director and later Supervisory Board in 2006. as divisional director. Mr Van Vonno was Chairman of the Executive Board of Royal BAM Group from 1982 to 1 January 2006. Mr Van Vonno is a Dutch national. Other offices: member of the Supervisory Board of AM; chairman of the Supervisory Board of Convest; chairman of the Supervisory Board of CTP Property; chairman of the Supervisory Board of DHV Group; member of the Supervisory Board of Van Oord; member of the Supervisory Board of Optimix Vermogensbeheer; member of the Supervisory Board of Van Bolderik Group; member of the Supervisory Board of Schiphol Area Development Retirement schedule Company (SADC); member of the as at May 2008 Current Supervisory Board of Bank voor de term Bouwnijverheid; member of the W.K. Wiechers 2011 2 Supervisory Board of Van Nieuwpoort A. Baar 2009 2 Group; member of the Supervisory R.J.N. Abrahamsen 2010 2 Board of Mammoet; chairman of the J.A. Dekker 2008 2 Supervisory Council of AKD Prinsen Van H. van Rompuy 2009 2 Wijmen; member of the Advisory W. van Vonno 2010 1 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Particulars of the Executive Board members

he was appointed CEO of Nuttall and Chairman of of the British group company HBG UK. He was awarded the status of Chartered Engineer (CEng) in 1996 Mr Brooks is also a Fellow of the Institution of Civil Engineers (FICE), a Fellow of the Institution of Civil Engineering Surveyors (FInstCES) and an Associate of the Chartered Institute of Building (ACIOB). Mr Brooks has been a member of the Executive Board of Royal BAM Group since 2007. He is a From the left: J.A.P. van Oosten, N.J. de Vries, P.B. Brooks and J. Ruis. British national.

J. Ruis (57) Ir. J.A.P. van Oosten (59), Chairman a member of the Executive Board of Mr Ruis joined BAM in 1971 and held a Mr Van Oosten graduated as a civil Royal BAM Group since 1998. He is a number of different financial positions. engineer from the Technical University Dutch national. Mr Ruis has been on Royal BAM Group’s of Delft in 1974. Other offices: member Executive Executive Board since 2004 (chief Mr Van Oosten joined BAM in 1976 as a Committee of Bouwend Nederland; financial officer). He is a Dutch national. 28 Planning Engineer, before becoming chairman Netherlands Association of Project Manager, Works Manager and International Contractors (NABU);

2007 Project Implementation Manager at BAM member Executive Board International Vastgoed (property). He was appointed Chamber of Commerce The deputy director of BAM Vastgoed in 1985 Netherlands; member Executive and director in 1986. His appointment as Committee Stichting Raad van director of BAM Utiliteitsbouw followed Arbitrage voor de Bouw. in 1992. Mr Van Oosten has been a member of the Executive Board of Royal P.B. Brooks CEng, FICE, FInstCES, BAM Group since 1995. Mr Van Oosten ACIOB (61) was appointed as chairman of the Mr Brooks is a civil engineer. He joined Executive Board in 2005. He is a Dutch the British group company Edmund national. Nuttall in 1979, after having been Other offices: member Regieraad Bouw; employed for ten years by Nuttall’s member ambassadors’ network Glazen subsidiary Mears Construction. In 1988 Plafond. Mr Brooks was appointed director civil engineering contracts, in 1991 deputy Ir. N.J. de Vries (56), Vice-Chairman managing director and in 1994 Mr De Vries completed an architecture managing director of Nuttall. In 2004 foundation course in 1971. He went on to earn a degree in civil engineering from the Technical University of Delft in 1977. Retirement schedule In 1977 Mr De Vries joined BAM as a Date of Period of planning engineer, after which he held appointment appointment 1 positions as project manager, works J.A.P. van Oosten 08.06.1995 Unlimited manager and branch director. In 1986 N.J. de Vries 28.05.1998 Unlimited he was appointed deputy director and P.B. Brooks 08.05.2007 Four years in 1990 director of BAM Utiliteitsbouw, J. Ruis 07.05.2004 Four years followed in 1995 by his appointment as sector director of Civil Engineering for 1 From 2004 onwards, new members of the Executive Board will be appointed Royal BAM Group. Mr De Vries has been or re-appointed for a period of four years. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Report by the Executive Board

Financial results turnover was approximately 1 percent. Turnover in the Mechanical and electrical contracting sector grew by • 2007 an outstanding year for BAM around 8 percent, with the increase being achieved entirely • Net result for 2007: €349 million (2006: €137 million) in the Netherlands. A significant proportion of the increase • Net result excluding book profit on sale of Flatiron: in turnover for the Consultancy and engineering sector, of €277 million around 7 percent, was achieved by branches in the Middle • Profit margin before tax and Flatiron book profit: East and Central and Eastern Europe. 4.0 percent (2006: 2.7%) • Recovery of results in Germany Result • Strong order book €13,800 million at year-end 2007 Net profit rose to €349.0 million (2006: €137.0 million), • Proposed dividend €0.90 in cash per ordinary share with contributions to the increase coming from virtually (2006: €0.45) every sector. The increase in the results is also associated • Capital ratio based on capital base: 18.1 percent with the recovery of results in Germany and the proceeds (2006: 14.5 percent) from the sale of the American activities. • Renewed financing facilities in 2007 to the value of €750 million The net results for the two years can be broken down as follows: Turnover In the year under review (2007) Royal BAM Group achieved (x €1 million) 2007 2006 a turnover of €8,954 million, which is approx. 4 percent Operating result before 29 higher than in 2006 (€8,646 million). If the American depreciation/amortisation, operations, which were sold in 2007, are not taken into impairment and fines 442.0 362.5 2007 consideration, turnover increased by nearly 5 percent to Amortisation and depreciation -/- 102.3 -/- 98.9 €8,539 million (2006: €8,150 million), around 1 percent of Impairments 1.0 -/- 1.0 which resulted from acquisitions. The impact of currency Bitumen fines - -/- 7.4 fluctuations on the growth in turnover for 2007 was Operating result 340.7 255.2 negligible. Finance income 40.6 25.7 Finance expense -/- 74.6 -/- 73.3 Turnover can be divided as follows across the sectors: Result from associates 49.2 20.8 Result from sale of (x €1 million) 2007 2006 discontinued operations 72.2 - Construction 3,791 3,393 Result before tax 428.1 228.4 Property 1,304 1,376 Income tax -/- 77.1 -/- 90.8 Civil engineering 3,927 3,842 Minority interests -/- 2.0 -/- 0.6 Public -private partnerships 73 70 Net result 349.0 137.0 Mechanical & electrical contracting 206 191 Consultancy and engineering 219 204 The profit margin before income tax and the sale of the Less: inter-company sales -/- 566 -/- 430 American activities increased to 4.0% (2006: 2.7%) and is 8,954 8,646 accordingly equal to the margin target for 2009 as formulated in the Strategic Agenda 2007-2009. Most of the increases in turnover in the Construction sector were achieved in the United Kingdom, although increases The increase in the results from associates is the result of were also recorded in the Netherlands, Belgium and a significantly higher contribution from the participating Germany. Turnover fell by about 5 percent in the Property interest in the dredging company Van Oord and sector, despite the positive impact of acquisitions in the favourable results in the PPP sector. Netherlands and Belgium (+4.7 percent). The UK volume reduced from the exceptional high in 2006. Turnover also During 2007, the tax burden was lower than during the decreased in comparison with the previous year in the same period last year, as a result of the recovery of results in Netherlands. Turnover in the Civil engineering sector grew Germany, a one-off tax gain in the United Kingdom by approximately 5 percent (excluding Flatiron) as a result (stemming from the sale of commercial property of increased activities in Ireland, Germany and the United developed in-house in 2006) and the untaxed result on the Kingdom. The impact of acquisitions on the increase in sale of Flatiron. The results from the sale of the WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf discontinued operations relate to the sale of Flatiron in Order book 2007. Turnover and results from this American civil The order book remains at a high level, and as at 31 engineering company were consolidated up to the end of December 2007 totalled €13,800 million (year-end 2006: Q3 2007. The book profit on the sale, after deduction of €12,200 million, not including Flatiron). 3 percent of the costs and provisions, was more than €72 million. The sale increase of more than 12 percent in comparison with the of all of the American operations fits in with the Group’s situation at the end of 2006 reflects the result of strategy of enhancing its European base. The resources acquisitions. The negative impact of currency fluctuations released from the sale were partially applied during 2007 on the growth of the order book was about 4 percent, towards acquisitions in the Netherlands and Belgium. principally due to the depreciation of the British pound. The rate of growth in the order book in 2007 was at its The bitumen fines item in the 2006 accounts relates to an most marked in Belgium, although there were also additional provision taken in connection with the significant increases in the Netherlands and the United uncertainty regarding whether the bitumen fines imposed Kingdom. Of the total order book, it is expected that by the European Commission are tax-deductible. An €7,500 million will be carried out in 2008 and €6,300 appeal has been lodged against the imposition of this fine. million in subsequent years. This means that over 80 percent of the anticipated turnover for 2008 is assured. A Results by sector year ago, a similar percentage of the budgeted turnover The breakdown of pre-tax turnover and results according for 2007 was assured. The quality of the order book to the various sectors is shown in the table below. The improved slightly in comparison with the situation at the percentages reflect the result in relation to turnover. end of 2006. 30

For comments on the results of the various sectors, please Result per ordinary share

2007 refer to the appropriate explanatory notes elsewhere in The average number of profit-sharing ordinary shares rose this annual report. slightly, compared with 2006, to 124.8 million (2006: 123.3 million shares). This increase was the result of the conversion of convertible preference shares into ordinary shares. Around 6.1 million convertible preference shares were converted during 2007 (2006: 1.3 million shares). At present, around 5.6 million convertible preference shares remain outstanding. Shares issued as a consequence of conversion count on a time-weighted basis in calculating the average number of ordinary shares ranking for dividend.

(x €1 million) 2007 2006 Result % turnover Result % turnover Construction 88.3 2.3% -/- 39.7 -/- 1.2% Property 95.8 7.3% 93.6 6.8% Civil engineering 125.6 3.2% 138.4 3.6% Public-private partnerships 29.2 39.8% 2.2 31% Mechanical and electrical contracting 11.6 5.6% 8.0 4.2% Consultancy and engineering 28.4 13.0% 24.2 11.8% Pensions/eliminations 1 0.7 29.0 Total for sectors 379.6 4.2% 256.1 3.0% Group overhead -/- 16.1 -/- 4.5 Group interest charge -/- 47.1 -/- 39.2 Operational activities 316.4 212.4 Dredging 39.5 23.9 Result before tax 2 355.9 4.0% 236.3 2.7%

1 With effect from 2007, all results on pensions will be allocated to the sectors. 2 Excluding the results from the sale of discontinued operations (2007) and bitumen fines (2006). WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The net profit attributable to the holders of ordinary shares Equity capital attributable to shareholders increased by amounts to €349.0 million (2006: €137.0 million), which €301 million and, at year-end, amounted to €994 million coincides with a profit per share of €2.80 (2006: €1.11). If (year-end 2006: €693 million). In addition to the net result the result of more than €72 million on the sale of the for 2007 (€349 million), the main movements in the American operations is disregarded, then the net result for shareholders’ equity were the dividend payout of €56 2007 equates to €2.22 per ordinary share. Assuming full million for 2006 to holders of ordinary shares, the €27 conversion of the convertible financing preference shares, million in conversion of preference shares into ordinary the net result per ordinary share is €2.60 (2006: €1.04). shares, and the negative foreign exchange fluctuations of Excluding the yield from the sale of Flatiron, the ‘fully €24 million. diluted’ net result per ordinary share is €2.07. The capital base also grew as a result of the increase in the Dividend policy and proposed dividend for 2007 subordinated loan. BAM further enhanced the financing Royal BAM Group endeavours to achieve a dividend structure in 2007 by extending the term to maturity of the distribution on ordinary shares of between 30 percent and €150 million subordinated loan by two years, i.e. until 50 percent of the net profit. As a rule, dividends are paid 2013, simultaneously raising the facility by €50 million to out in cash. The proposal to the General Meeting of €200 million. The other conditions for the subordinated Shareholders, to be held on 7 May 2008 in Amsterdam, is loan have also been improved. The Group also concluded a to declare a cash dividend for 2007 of €0.90 per ordinary new committed financing facility of €550 million with a share (2006: €0.45) in part due to the result on the sale of duration of five years. Part of this facility is being used to Flatiron. The proposal corresponds to a payout of 33.5 redeem uncommitted bilateral lines of credit. In addition to 31 percent based on the net results for 2007 of €349 million. the committed long-term facility, BAM retained €180 A total of €116.9 million will be distributed to holders of million worth of bilateral credit facilities. The Group trusts 2007 ordinary shares (based on the number of outstanding that this structure will provide optimum support for its ordinary shares as at 31 December 2007). The dividend operations and strategy over the next few years. yield on the ordinary shares amounts to 5.6 percent, based on the closing price for 2007 (2006: 3.1 percent). At a more detailed level, the following should be noted in connection with the balance sheet for the close of 2007. A dividend for 2007 will be proposed of €0.37086 in cash for the convertible cumulative preference shares, and The book value of tangible assets fell on balance to €435 €0.38346 in cash for the non-convertible cumulative million (year-end 2006: €442 million) as a result of the sale preference shares. This dividend has been charged directly of the American activities. Net investments amounted to to the result as a financing charge in 2007. Based on the roughly €132 million in 2007 (2006: €119 million). About average number of outstanding preference shares in 2007, €19 million of this can be attributed to discontinued this financing charge is approximately €4.0 million. operations (2006: €24 million). Depreciation on tangible However, as a result of conversions of convertible assets remained at a similar level in 2007 to that of the preference shares in 2007, this financing charge is higher previous year, and stood at about €95 million (2006: than the actual dividend payable to the holders of €96 million). Depreciation in relation to the discontinued preference shares, which totals €2.1 million (based on the operations amounted to about €7 million in 2007 (2006: number of outstanding preference shares at year-end €9 million). 2007). The book value of intangible assets increased by about Financing and investments €105 million to €905 million (year-end 2006: €800 million), The capital base increased by €326 million in the reporting partly due to the recognition of goodwill and other year to €1,266 million (year-end 2006: €940 million), intangible assets linked to a range of acquisitions in the primarily due to the increase in equity capital attributable Netherlands and Belgium (about €76 million). Investments to shareholders. At the end of 2007, the capital ratio based in concessions (toll highways in Ireland and Germany) also on the capital base was 18.1 percent (year-end 2006: 14.5 resulted in an increase of about €59 million to the balance percent). This marks a clear step towards the capital ratio sheet entry in 2007. Concessions in terms of which the target of at least 20 percent for 2009, as set out in the Group is entitled to charge the users for using public Strategic Agenda 2007-2009. facilities are recognised as intangible assets. Finally, the sale of Flatiron and the associated disposal of goodwill led to a WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf fall of about €25 million in the intangible assets. At year-end 2007, the company’s balance sheet included Depreciation on intangible assets amounted to around projects in progress for third parties with, on balance, €353 €8 million in 2007 (2006: €3 million). million in prepayments (year-end 2006: €419 million in prepayments). Depending on the total costs (including The PPP receivables on the consolidated balance sheet fell results) and the instalments invoiced, the projects have in 2007 to €469 million (at year-end 2006: €540 million) been accounted for as either short-term receivables or partly due to the commencement of an active programme current liabilities. Investments of €1,013 million had been of disposals in 2007. The objective of this is to cash in on made in property development at the end of 2007 (year- the value created in PPP investments after a few years of end 2006: €832 million). AM in particular increased its operation. The resources released have been applied investment during 2007 in sites and property development towards supporting the PPP policy and an increased positions, partly through the takeover of De Wilgen number of tenders. The joint venture between BAM PPP Vastgoed and IPMMC Vastgoed. A significant proportion of and the investment fund DIF (Dutch Infrastructure Fund) the gross asset investment in property development is was set up towards the close of 2007. BAM PPP has financed using project financing (largely non-recourse). transferred four ongoing PPP contracts to the joint venture, Project financing arrangements totalling €690 million have in which it currently holds a 75 percent interest. The been deducted from the net investment (year-end 2006: resulting de-consolidation of a quarter of the four PPP €519 million). Depending in part on the financing positions contracts mentioned above, along with the transfer of a and the sales volumes, the individual property PPP contract at the request of a British client, resulted in a development projects are accounted for as inventories, drop in PPP receivables. The PPP receivables have suffered a receivables or liabilities. The project financing that has been 32 further adverse impact through negative foreign exchange contracted is accounted for as long-term or current fluctuations, principally resulting from the devaluation of liabilities.

2007 the pound sterling. Working capital (excluding cash and cash equivalents and On balance, the total intangible and financial assets current bank overdrafts) increased by €449 million to associated with the PPP contracts fell by €11 million to €494 million (year-end 2006: €45 million). The growth in €602 million (close of 2006: €613 million). The non- the working capital resulted mainly from the increased recourse PPP loans increased slightly to € 570 million (at investment in property development (especially by AM). year-end 2006: €560 million). At present, BAM has a A substantial part of the investment was financed by newly portfolio of 27 PPP contracts in the Group's five home attracted project finance (partly non-recourse). This project markets, of which twenty are operational. The net finance does not, however, form part of the working investment commitment for the PPP contracts on the capital. In addition, the reduction in the pre-financing of portfolio, i.e. the balance of PPP assets less non-recourse ongoing projects for third-party clients, mentioned above, PPP loans and other liabilities, amounts to about led to an increase in working capital. €160 million (year-end 2006: €120 million. Of this, some €76 million had actually been invested by 31 December The net cash position, i.e. the balance of cash and cash 2007 (year-end 2006: €82 million). equivalents (€773 million) minus current bank credit (€207 million), rose by €15 million to €566 million (at The book value of the participating interests increased by year-end 2006: €551 million). The net impact of €34 million in the reporting year to €155 million (year-end acquisitions on the cash position was about €142 million 2006: €121 million), principally because of the higher book (negative) in 2007, consisting of the takeover prices paid value of the participating interest in the dredging company less the cash positions acquired. The sale of the American Van Oord. The reduction of €61 million to €67 million (year- activities had a positive net impact on the cash position, of end 2006: €128 million) for the other financial assets relates about €97 million, mainly consisting of the price received mainly to the settlement of the financing preference shares less Flatiron’s cash position. Part of the net cash position in Van Oord. This settlement amounted to a figure of €35 represents the company’s share in the cash held by joint million, at book value, in 2007. The shares remaining at the ventures and other forms of partnership (year-end 2007: close of 2007, with a book value of €35 million, are €170 million, year-end 2006: €239 million). included as current because of the settlement for them in March 2008. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Burns, Neonatal and Education Centre, Birmingham Children’s Hospital (HBG UK).

Interest-bearing liabilities increased by €242 million to €2,199 million (year-end 2006: €1,957 million). This increase stems primarily from the increased funding of PPP and property operations, takeovers in the Netherlands and Belgium, and the €50 million increase in the subordinated loan as part of the renewal of the Group’s financing facility. The vast bulk of the interest-bearing debt consists of non-recourse PPP loans and project funding (€1,010 million), recourse project funding (€489 million) and the subordinated loan (€200 million). The net debt position, i.e. the balance of interest- bearing debts less cash and cash equivalents, is in line with the increase in interest-bearing debts and amounted to €1,426 million at the end of 2007 (2006: €1,195 million).

33 The employee benefit obligations, less the pension plan assets, fell by €43 million to €113 million (year-end 2006: 2007 €156 million). This reduction is mainly due to supplementary payments to the company pension funds in the United Kingdom (of about €28 million). The balance sheet entry for Provisions decreased by €37 million to €168 million (year-end 2006: €205 million), mainly due to the reduction in warranties and other provisions. The balance of the deferred tax liabilities and assets in the balance sheet fell by €48 million to €51 million (year-end 2006: €99 million). This reduction is largely associated with the accelerated payment of corporate income tax in the Netherlands, resulting from the amended fiscal valuation of work in progress.

Minority interests increased by €7 million to €11 million (year-end 2006: €4 million) partly because of the acquisition of Kaïros. There are minority interests in a number of the Belgian property company’s projects. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Acquisitions and disposals Betonac is the leading company for the construction of concrete motorways in Belgium. The company has its own Acquisitions laboratory for road construction work and its own asphalt production plant. De Wilgen Vastgoed bv The takeover of Betonac represents a significant addition to AM acquired the property company De Wilgen Vastgoed the Group’s civil engineering activities in the Belgian market. bv, which is based in Rotterdam, on 19 March 2007. De Wilgen Vastgoed has a development portfolio of City Projects bv approximately 2,000 homes and 50,000m2 of commercial After the balance sheet date, AM took over City Projects in property. The company has a staff of 17 and sells about Brussels, which specialises in the development of high-value 200 homes per year. The takeover of De Wilgen Vastgoed residential projects, sometimes combined with commercial is part of AM's growth strategy as a full-service land property, in Brussels, Ghent and elsewhere. This takeover developer. provides AM with access to the Belgian market. City Projects currently has seven projects under development, Kaïros nv and these are being sold by its in-house brokerage Royal BAM Group acquired the Belgian property company organisation, City Property, which was also included in the Landsbeeck nv and its subsidiary Kaïros nv on 29 March takeover. Turnover for City Projects over the next few years 2007; henceforth they will trade under the name of is expected to be between €20 million and €50 million. Kaïros. The companies are based in Wilrijk and have been active since 1989 as developers of high quality offices, 34 particularly in Brussels, Antwerp and the other urban Disposals areas of Flanders. The portfolio includes some 15 projects

2007 that are in progress and various specific projects that are Flatiron Construction Corp. scheduled for a later date. The company is one of the On 6 December 2007, Royal BAM Group completed the sale largest and most successful operators in the Belgian of the American operating company Flatiron Construction property sector. Corp. to Hochtief AG, which is based in Essen, Germany. Hochtief purchased all of the shares in Flatiron for a cash IPMMC Vastgoed bv sum of approximately €173 million (USD 245 million). After AM acquired the property company IPMMC Vastgoed bv, deducting costs and provisions, BAM achieved a book profit which is based in Utrecht, on 5 June 2007. IPMMC of more than €72 million. BAM has consolidated turnover Vastgoed is an independent specialist property company and results from Flatiron up to and including the third focusing on development, consultancy and management quarter of 2007. The sale is part of the implementation of of commercial property projects in the Netherlands. the 2007-2009 Strategic Agenda, in which one of the policy IPMMC has a development portfolio of approximately aims is to enhance the Group’s European base. 550,000m_ of commercial property such as offices, shopping centres and car parks. The company, which was Timber-framed house building activities founded in 1995, has a staff of 45. The takeover also At year-end 2007, BAM Woningbouw bv closed down the involved IPMMC Consult, IPMMC Concepts and 2BUILD, activities of its subsidiary Villaforte (residential construction interim management for the property sector. for private clients) in Woudrichem. BAM Woningbouw also sold its timber-framed house building activities, based in Betonac nv Nederweert, to two private entrepreneurs in December Royal BAM Group acquired Betonac nv, which is based in 2007. The 35 or so employees moved to the new business Sint-Truiden, Belgium, on 14 September. Betonac’s annual as a result. The timber-framed house building activities did turnover amounts to approximately €100 million, with not fit in sufficiently well with the other commercial good profits. The company has a staff of approximately activities at BAM Woningbouw. 350. Betonac was founded in 1910 and specialises in laying concrete and asphalt roads and the construction of Concrete factory infrastructure such as bridges, tunnels, viaducts, marine After the balance sheet date, BAM Woningbouw announced engineering works, ground work, sewerage treatment its intention to sell the Concrete Factory, based in Weert, to stations and noise barriers. Bruil of Ede. The new company will take on the 90 or so employees. BAM Woningbouw is selling the concrete factory due to insufficient fit with its other commercial activities. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Corporate governance the Executive Board reports on the operation of the internal risk management and control systems and makes The Executive Board and the Supervisory Board are a substantiated statement regarding the extent to which responsible for the company’s corporate governance these systems are adequate and effective and the areas in structure and for compliance with that structure. The which improvements are planned. main lines of this corporate governance structure are explained every year in the annual report. The Executive Board is subject to a set of rules approved by the Supervisory Board, laying down the details of how The Supervisory Board and the Executive Board subscribe the Executive Board operates and its relationship with the to the principles and best practice provisions of the Dutch Supervisory Board, the shareholders and the Central corporate governance code (hereafter the Code). The Works Council. The Executive Board rules have been Executive Board and the Supervisory Board only have published on the company’s website. reservations in one area and the provisions in that regard are therefore not (entirely) applied. This concerns the The Supervisory Board appoints members of the Executive following provisions: II.2 (performance criteria for variable Board. The Supervisory Board notifies the General remuneration), II.2.6 and III.7.3 (the rules governing Meeting of Shareholders of its intended appointments to transactions in ‘other’ shares) and II.2.7 (maximum the Executive Board. The Supervisory Board nominates remuneration in the event of dismissal). See also the one of the members of the Executive Board as Chairman. further details given below regarding the company’s compliance with and implementation of the Dutch Observing provision II.1.1 of the Code, members of the 35 corporate governance code. No substantial changes are Executive Board are appointed for a maximum period of being proposed to the company's corporate governance four years. They retire after the conclusion of the first 2007 structure. Annual General Meeting of Shareholders to be held in the fourth year after the year in which they were appointed. Executive Board Members of the Executive Board can be re-appointed for a The Supervisory Board and the Executive Board share the further period of four years. premise of the code that the Executive Board, apart from The contractual agreements with members of the looking after the day-to-day management of the Executive Board who were appointed before the Code company, is also responsible for formulating and came into effect will be honoured; their appointment is achieving corporate objectives, for corporate strategy and for an indefinite period. policy and for the ensuing results. The Executive Board Members of the Executive Board retire as a rule accounts for its activities to the Supervisory Board and to immediately after the Annual General Meeting of the General Meeting of Shareholders. In performing its Shareholders in the year in which they reach the age of 62. duties, the Executive Board is guided by the interests of The contracts of employment of members of the the company and the related enterprise, weighing the Executive Board are for an indefinite period of time. A justifiable interests of the various stakeholders against four-year contract of employment is concluded with new each other. The Code’s best practice provisions evolving members who join the Executive Board from outside the from this premise are supported. Group.

The members of the Executive Board jointly manage the The Code’s provisions relating to the amount of the company and are jointly and severally liable for that remuneration payable to members of the Executive Board management. Subject to the approval of the Supervisory and the composition of the remuneration package as well Board, the members of the Executive Board share out as the disclosure of these details are supported. their activities. The Chairman manages the Executive Board. The Chief Financial Officer (CFO) is specifically The Supervisory Board draws up a proposal – prepared by charged with financial tasks. The Chairman and other the Remuneration Committee – regarding the company’s members of the Executive Board manage the companies remuneration policy. This remuneration policy is put that are entrusted to their supervision. forward for approval at the General Meeting of Shareholders. The Supervisory Board also compiles an The Executive Board ensures proper provision of annual remuneration report, which is also prepared by the information to the Supervisory Board. In its annual report, Remuneration Committee. The remuneration report WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf confirms the manner in which the remuneration policy accumulated within the Group into account when has been followed in practice during the financial year. determining the level of severance pay. It also contains details of the remuneration of members of What is stated above in relation to current agreements the Executive Board and a summary of the remuneration also applies with regard to members of the Executive policy to be adopted by the shareholders for the coming Board who were appointed before the Code came into financial year and ensuing financial years. effect. The company believes that existing rights should The remuneration report is incorporated into the annual be respected. report and is also published on the company's website. The Supervisory Board determines the remuneration of The company does not have any share or options plans, the members of the Executive Board within the and there are no serious plans to introduce such plans. If framework of the remuneration policy. the company ever decided to introduce them, the Code’s recommendations would be followed. Principle and best- The principle is that the variable element of the practice provisions relating to conflicts of interest are remuneration for members of the Executive Board to supported. predetermined and measurable goals which are subject to their influence. Any form or appearance of conflicting interests between It will not always be possible to carry out such a the company and members of the Executive Board must measurement, for example in the case of non-financially be avoided. Decisions to enter into transactions that oriented performance assessment criteria. Restraint will involve conflicts of interest between the members of the be shown in respect of publication of performance Executive Board and that are of material importance to 36 assessment criteria that relate to the performance of the company and/or the Executive Board member in other companies. The Supervisory Board believes that question must be approved by the Supervisory Board. The

2007 priority should be given to further improving the profit Executive Board’s rules set out in detail what action margin, and that the profit development, in particular, should be taken in the event of possible conflicts of should serve as the performance criterion. interest. These rules govern such matters as what situations might constitute conflicts of interest, the The regulations referred to in provision II.2.6, laying down manner in which members of the Executive Board are to rules for the ownership of and transactions in securities by report conflicts of interest, the impartiality of the members of the Board other than with regard to those Executive Board member concerned in relevant decisions securities issued by the company, were included in the and the approval procedure of the Supervisory Board. BAM Regulations, amended in January 2008, for the ownership of and transactions in securities. In order to Supervisory Board keep the implementation of provision II.2.6 practical, and The duty of the Supervisory Board is to exercise partly in light of the safeguards offered by the statutory supervision of the Executive Board’s policies and the framework, it has been decided that this scheme will only general affairs of the company and the related enterprise. apply to listed companies with their registered office in The role of the Supervisory Board is also to advise the the Netherlands and which are active in sectors or related Executive Board. The Supervisory Board, too, is guided by sectors where the Group is active, including companies the interests of the company and the related enterprise, that are active as subcontractors, consultants or suppliers weighing the justifiable interests of the various in the construction industry in the widest possible sense stakeholders against each other. of the term. The principles and best-practice provisions relating to the Supervisory Board are supported. Provision II.2.7 sets the maximum remuneration in the event of dismissal at one year’s salary, and if this would be At its periodic meetings with the Executive Board, the manifestly unreasonable – during the Board member’s Supervisory Board discusses a number of subjects, first term of office – at a maximum of twice the annual including the general state of affairs (e.g. order book, salary. This provision has been observed from the date major tenders, special projects, problem areas, major when the Code came into operation, to the extent claims and legal proceedings) and financial reporting possible under Dutch employment law. If the new based on the operational plan for the year in question member of the Executive Board comes from within the (quarterly reports, balance sheet, profit and loss account, company, the company reserves the right to take rights cash and cash equivalents, capital investment and WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf warranties). The agenda of Supervisory Board meetings entire Supervisory Board once the Works Council has had also includes subjects such as major investments (both as the opportunity to give its opinion, and determines the regards acquisitions and disposals and as regards fixed Supervisory board members’ remuneration. assets), human resources, the dividend proposal, quarterly and half-yearly reports, the auditor’s report, the In relation to the independence of Supervisory Directors, external auditor’s management letter and follow-ups to as detailed in best practice provision III.2.1, it should be that management letter, setting the operational plan with pointed out that all of the current members of the the operational and financial goals for the following Supervisory Board qualify as being independent within financial year (set once a year), and approval of the the meaning of the Code, apart from one member of the strategic plan and the related parameter conditions (every Board, which is also in line with the Code. third year).At least once a year, the Supervisory Board discusses the strategy and the risks connected to the The Supervisory Board has created a profile, which was business, the Executive Board’s assessment of the discussed with the shareholders at the General Meeting of organisation and operation of the internal risk Shareholders on 9 May 2005. The Supervisory Board management and control systems, as well as any appoints one of its members to be chairman. significant changes to those systems. A statement that these discussions took place is included in the report by The company will provide an introduction programme for the Supervisory Board. directors appointed to the Supervisory Board for the first The Supervisory Board is subject to a set of rules laying time as referred to in provision III.3.3. This provision will down the details of how it operates and its relationship also be met by arranging working visits to the Group’s 37 with the Executive Board, the shareholders and the operating companies and presentations by operating Central Works Council. The Supervisory Board’s rules can company managers for the Supervisory Board. 2007 be found on the company’s website. The Supervisory Board has three committees, namely an The company is obliged by law to operate the two-tier Audit Committee, a Remuneration Committee and a regime. The members of the Supervisory Board are Selection and Appointments Committee. The composition appointed by the General Meeting of Shareholders on the and role of these committees is in line with the relevant recommendation of the Executive Board, that provisions of the Code. Details about the members and recommendation being made on the basis of the profile. the activities of the committees can be found in the The Board discusses the profile when it is first drawn up Report by the Supervisory Board elsewhere in the Annual (and in the event of any changes) with the General Report. Meeting of Shareholders and with the Works Council. The General Meeting of Shareholders and the Works Council Principle and best-practice provisions relating to conflicts are entitled to recommend candidates for inclusion in the of interest are supported. The matters set out above in proposal made by the Supervisory Board. connection with the Executive Board apply equally to the The General Meeting of Shareholders can reject the members of the Supervisory Board. The Supervisory candidates put forward by the Supervisory Board, in Board rules set out in detail what action should be taken which case the Supervisory Board must draw up a new list in the event of possible conflicts of interest. of proposed candidates. The Works Council has an extended right of recommendation in respect of one third As regards provision III.7.3 – rules governing transactions of the membership of the Supervisory Board. If the in shares issued by other companies – what is stated Supervisory Board rejects the recommended candidate or above with regard to the implementation of provision candidates the Board and the Works Council consult with II.2.6 is applicable by analogy to members of the each other and the Works Council makes a new Supervisory Board. recommendation. If the Supervisory Board and the Works Council fail to reach agreement, then the matter is submitted to the Enterprise Section of the Amsterdam Court of Appeal for a ruling. If the Supervisory Board adopts the Works Council’s recommendation, the General Meeting of Shareholders may still reject it. The General Meeting of Shareholders may dismiss the WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Shareholders voice to be heard in meetings that they are unable to The principles and best-practice provisions relating to attend, so that the company can note their views. When shareholders are also supported. Royal BAM Group does shareholders’ meetings are convened, the company not have any provisions limiting voting rights. One vote invites shareholders to use their option to vote by proxy, may be cast for every share held. The company’s capital and ensures that voting instruction forms can be obtained consists of ordinary shares, Class F preference shares and and that these forms are also available electronically. Class B preference shares (not issued at present). The Shareholders will also be offered the possibility of lodging ordinary and the Class F preference shares are listed on proxies with an independent third party prior to the Euronext in Amsterdam. The ordinary share is also listed meeting. Shareholders are also advised of their option to on the Amsterdam option exchange, Euronext.liffe. give a proxy electronically. The company invites shareholders to submit any questions to the company As a large company with a two-tier board, best-practice prior to the meeting, which will then be answered by the provision IV.1.1 (restriction of the right to make binding company at the meeting itself. recommendations for appointments to the Executive Board or Supervisory Board) does not affect Royal BAM Prior approval from the General Meeting of Shareholders Group. is required for decisions concerning any important changes in the identity or nature of the company or the The Supervisory Board and the Executive Board believe it business, including the entire or near-entire transfer of to be very important that as many shareholders as ownership of the business, entry into long-term possible take part in the decision-making process in partnerships that have a significant effect on the company 38 shareholders’ meetings. The company’s Articles of and acquiring or disposing of a participating interest Association allow for a registration period to be set, thus worth at least a third of the amount of the assets

2007 reducing the period of time in which shareholders do not recognised on the consolidated balance sheet. have their shares at their disposal. The Executive Board In the event that a serious private bid has been announced applies this option. Notices convening shareholders’ for part of the business or a participating interest, and meetings, agendas and documentation to be discussed that bid is at least a third of the amount of the assets are generally published approximately one month prior to recognised on the consolidated balance sheet, the the meeting, and placed on the company’s website. Executive Board will publicly announce its standpoint in A shorter period may be applied for Extraordinary respect of the bid, together with its reasons, as soon as Meetings of Shareholders. The website also holds an possible. anonymous list, broken down by agenda item, of the votes cast by proxy received by the company prior to the Shareholders are entitled to put items on the agenda of meeting. shareholders’ meetings. Shareholders who on their own Remote voting and voting by proxy also play a role in or jointly represent at least (i) 1 percent of the issued increasing shareholder participation. The Act to promote capital or (ii) shares worth €50 million can place items on the use of electronic communication media came into the agenda of the General Meeting of Shareholders effect on 1 January 2007. One of the facilities offered by subject to the condition that the company receives a this Act is to enable shareholders to participate in request to that effect at least sixty days before the date of meetings of shareholders and to cast their votes at such the meeting. The Supervisory Board and the Executive meetings without being physically present. The company Board may only refuse to put an item on the agenda if has incorporated the facilities offered by law for using doing so would be counter to a weighty company interest. electronic communication media into the Articles of In addition, shareholders who represent at least 10 percent Association. The company considers that the manner in of the company’s issued capital are entitled to call a which shareholders take part in their meetings and cast shareholders’ meeting. votes at such meetings will require a meticulous procedure. There must accordingly be sufficient certainty, The General Meeting of Shareholders is asked each year to before the company starts to use electronic authorise the Executive Board – subject to the approval of communication media in future, that these the Supervisory Board – to issue shares or share options. communication media operate satisfactorily. This authorisation is limited in time to a period of In addition, voting by proxy continues to provide eighteen months. It is also limited in scope in respect of shareholders with a good mechanism for allowing their ordinary shares and Class F preference shares to 10 percent WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf of the issued capital, plus an additional 10 percent, which These directors and officers are fully up to date regarding additional 10 percent may be used exclusively for mergers all relevant information – whether or not it is already known and acquisitions by the company or by operating on the market – and they ensure that the information is companies. The General Meeting of Shareholders is also provided in a clear and unambiguous manner. Should any asked – subject to the approval of the Supervisory Board – price-sensitive information be provided by mistake during to exclude or limit pre-emptive rights to issued shares and any contact with the press, investors or analysts, a press to exclude or limit the issuing of ordinary share options. release will be issued immediately. The Shareholders’ Meeting is also asked each year to authorise the Executive Board for a period of eighteen As regards the protective provisions against undesirable months to repurchase shares in the company, within developments that might affect the independence, statutory limitations. continuity and/or identity of the Group, the company has the facility for issuing Class B preference shares. A call Reports of shareholders’ meetings are provided to option was issued to Stichting Aandelenbeheer BAM shareholders, as stipulated in the Code. Within fifteen Groep in 1993 for Class B preference shares. calendar days after each shareholders’ meeting, the Information relating to this is provided on page 156 of the results of the votes, broken down by agenda item, are annual report. published on the company’s website. Financial reporting and the role of the auditor Principle IV.2 and the ensuing best-practice provisions The principles and best-practice provisions relating to concern the issue of depositary receipts for shares. No financial reporting are supported. 39 depositary receipts of shares in the company have been The Executive Board is responsible for the quality and issued with the company’s cooperation. completeness of the financial reports that are published. 2007 The Supervisory Board ensures that the Executive Board Principle IV.3 concerning the provision of information is carries out this responsibility. supported. The Supervisory Board and the Executive Board believe that is very important to make every effort to The principles and best-practice provisions regarding the achieve equal provision of information to investors, taking role, appointment, remuneration and assessment of the into account the exceptions provided for by law. Royal BAM performance of the external auditor are also supported. Group applies this principle as follows. All press and A particular point of note is that the external auditor will analysts’ meetings in connection with the publication of be present at the Annual General Meeting of Shareholders financial statements and half-yearly figures are accessible to answer questions from shareholders about his report to everyone via the Internet. Anyone can call in to any regarding the truth and fairness of the financial conference call with press and analysts in connection with statements. the publication of first-quarter and third-quarter figures. Shareholders’ Meetings are open to the press. All dates and The company does not have an internal audit department. locations of roadshows, seminars and the like are Bearing in mind the project-oriented nature of a building published on the company’s website. No substantive company's activities, and the large number of projects comments will be made to investors or analysts for six being undertaken both at home and abroad by divisions weeks prior to each annual report and three weeks prior to of the Group, the audit process is carried out for reasons each quarterly and half-yearly report. of efficiency by an external auditor in conjunction with employees from the central finance division and auditors The company does not review analysts’ reports or at the operating companies. Clearer arrangements have valuations by analysts in advance, nor add comments or been made in relation to this collaboration. correct them, except for matters of fact. The company does not pay any fees to any parties for carrying out The external auditor attends the meetings of the investigations for analysts’ reports, nor for writing or Supervisory Board at which the financial statements and publishing such reports, with the exception of credit rating the half-yearly figures are discussed. The external auditor firms. As a rule, only the Chairman of the Executive Board reports the same information from the findings of his and the Chief Financial Officer (who is a member of the audit of the annual accounts to the Executive Board and Executive Board), with the assistance of the investor the Supervisory Board. The external auditor is also present relations manager, will speak to investors and analysts. when the Audit Committee discusses the financial WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf statements, the half-yearly figures and the quarterly Decision on article 10 Takeover Directive figures. The external auditor may ask the chair of the Audit Committee for permission to attend other meetings The following information and explanation relate to the of the Audit Committee. The external auditor receives the provisions of the Decree of 5 April 2006, implementing financial information on which the quarterly and half- article 10 of Directive number 2004/25/EU from the yearly figures are based and is given the opportunity to European Parliament and the Council of the European react to that information. The partner in the external Union dated 21 April 2004. audit company who performs the required audits is allowed to audit the Group’s financial statements for a Capital structure maximum of seven consecutive years. Table 8 below may be used as a reference for the company's capital structure. The Supervisory Board and Executive Board are convinced that Royal BAM Group’s corporate governance is well No rights apart from those arising under statute are organised, not least because of the application of the attached to the shares into which the company's capital is corporate governance code. divided, apart from the scheme specified in article 32 of This corporate governance structure was discussed with the Articles of Association concerning the application of the shareholders during the General Meeting of the profit in relation to Class B and Class F preference Shareholders on 9 May 2005. The company will continue shares. A brief summary of article 32 of the Articles of to state the corporate governance structure in the Annual Association is provided below. Report and will submit any material changes in the main From the profit realised in any financial year, an amount 40 points of the corporate governance structure in each case will first be distributed, where possible, on the class B to the shareholders for discussion. cumulative preference shares, calculated by applying the

2007 percentage stated below to the amount mandatorily paid up on those shares as at the start of the financial year for which the distribution is made. The percentage referred to above will be equal to the average of the EURIBOR rates for money market loans with a maturity of twelve months – weighted according to the number of days for which these rates prevailed – during the financial year for which the distribution is made, plus one percentage point. EURIBOR refers to the Euro Interbank Offered Rate as determined and published by the European Central Bank.

Subsequently, if possible, a dividend will be distributed on each financing preference share of a certain series and subseries, with due consideration of the following provisions of this paragraph, equal to an amount calculated by applying a percentage to the nominal amount of the financing preference share concerned at the start of that financial year, plus the amount of share premium paid in on the financing preference share issued in the series and sub-series concerned at the time of initial issue of the financing preference shares of that series and sub-series, less the amount paid out on each financing preference share concerned and charged to the share premium reserve formed at the time of issue of the financing preference shares of that series and sub-series prior to that financial year. If and to the extent that a distribution has been made on the financing preference shares concerned in the course of the year and charged to the share premium reserve formed at the time of issue of WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf the financing preference shares of the series and sub- Limitation on the transfer of shares series concerned, or partial repayment has been made on The company has no limitation, in terms of the Articles of such shares, the amount of the distribution will be Association or by contract, on the transfer of shares or reduced pro rata over the period concerned according to depositary receipts issued with the company’s the amount of the distribution charged to the share cooperation, apart from the restriction on the transfer of premium reserve and/or the repayment with respect to preference shares contained in the Articles of Association. the amount referred to in the preceding sentence. The Article 13 of the company’s Articles of Association calculation of the dividend percentage for the financing stipulates that approval is required from the company's preference shares of a certain series will be made for each Supervisory Board for the transfer of Class B and Class F of the series of financing preference shares, referred to preference shares, excluding those Class F preference below, in the manner set forth for the series concerned. shares already in issue. The scheme is included in order to offer the company the Series FP1-FP4 facility – because of the specific purpose of issuing these The dividend percentage will be calculated by taking the shares, namely the acquisition of finance or achieving arithmetical mean of the yield to maturity on euro protection – of offering the holders of these shares an government loans issued by the Kingdom of the alternative in the event that they wish to dispose of their Netherlands with a remaining term matching as closely as shares. possible the term of the series concerned, as published in As regards the Class B preference shares, the company the Official Price List of Euronext Amsterdam, plus two and Stichting Aandelenbeheer BAM Groep have agreed percentage points. the company will not proceed to issue these shares or to 41 grant any rights to purchase them to anyone other than Series FP5-FP8 the said foundation without the foundation's permission. 2007 The dividend percentage will be equal to the average of The foundation will not dispose of or encumber any Class the EURIBOR rates for money market loans with a B preference shares, nor renounce the voting rights maturity of 12 months – weighted according to the relating to them, without permission from the company. number of days for which these rates prevailed – during Reference is made to pages 156 and 157 et seq of the the financial year for which the distribution is made, plus annual report in relation to the reasons behind protecting two percentage points. the company and the manner in which this is done. The above percentages may be increased or reduced by an amount of no more than three hundred basis points.

The Supervisory Board shall determine, on the basis of a proposal by the Executive Board, what part of the profit remaining after application of the provisions referred to above should be added to reserves. The part of the profit that remains after application of the provisions referred to above shall be at the disposal of the General Meeting of Shareholders, subject to the provision that no further dividends may be distributed on the preference shares.

Table 8 Number of outstanding shares in 2007

Preference shares Preference shares Ordinary shares convertible non-convertible Total Shares in issue as at 1 January 123,758,414 11,780,581 473,275 136,012,270 (91.0%) (8.7%) (0.3%) (100%) Conversion of preference shares 6,147,861 (6,144,047) – 3,814 Shares in issue as at 31 December 129,906,275 5,636,534 473,275 136,016,084 (95.5%) (4.2%) (0.3%) (100%) WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Act on reporting controlling interests Appointment and dismissal of members of the Executive The company is aware of the following interests in its Board and of members of the Supervisory Board equity, which are now reported under the provisions The company is obliged by law to operate the two-tier concerning the reporting of controlling interests in terms structure. The General Meeting of Shareholders appoints of the Act on reporting controlling interests (Wet melding the members of the Supervisory Board, on a zeggenschap), 2006. See table 9. recommendation from the Supervisory Board. The Supervisory Board appoints the members of the Executive Special control rights Board. The Supervisory Board notifies the General The shares into which the company's equity is divided are Meeting of Shareholders of its intended appointments to not subject to any special control rights. the Executive Board. The paragraph headed Corporate governance on page 37 Employee share plan or employee option plan of the report by the Executive Board provides a more The company does not have any employee share or detailed explanation of the appointment and dismissal of employee option plans. members of the Supervisory Board and members of the Executive Board. Voting right Each share in the company provides entitlement to the Powers of the Executive Board casting of one vote at shareholders’ meetings. There are The company is managed by an Executive Board. The no restrictions on the exercise of the voting right. The Executive Board's powers are those arising from company's Articles of Association contain the usual legislation and regulations. Reference is made to page 35 42 provisions in relation to intimation for the purpose of of the Executive Board's report, in the paragraph headed being acknowledged as a proxy at shareholders’ Corporate Governance, for a more detailed description of

2007 meetings. the Executive Board's duties. Where the company's Articles of Association mention The Executive Board was authorised by the General holders of depositary receipts or depositary receipt Meeting of Shareholders held on 8 May 2007 to proceed holders, whether named or bearer, this is understood to with the issue of shares and/or the granting of options to mean holders of depositary receipts issued with the purchase shares, subject to approval from the Supervisory company's cooperation and also individuals who, under Board. This authorisation is limited in duration to eighteen the terms of articles 88 or 89, Book 2 of the Dutch Civil months. It is also limited in scope, in respect of ordinary Code, have the rights accorded to holders of depositary shares and Class F preference shares, to 10 percent of the receipts for shares issued with the company's cooperation. issued capital, plus an additional 10 percent, which additional 10 percent may be used exclusively for mergers Shareholders’ agreements and acquisitions by the company or by operating The company is not aware of any agreements involving companies. one of the company's shareholders and which might provide reasons for (i) restricting the transfer of shares or of depositary receipts issued with the company's cooperation, or (ii) restricting the voting rights.

Table 9 Interests of 5 percent or more according to the Wmz 2006 register

(in percentages) Ordinary Preference Interest above Total shares shares 5% since A. van Herk 9.8 9.8 - October 2005 Delta Lloyd Levensverzekering (Aviva) 6.0 2.1 3.9 December 2002 ING Groep 5.5 5.5 - February 1992 Capital Research & Management 5.3 5.3 - January 2007 Fortis 5.2 5.2 - February 1992 AllianceBernstein 5.2 5.2 - October 2006 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The General Meeting of Shareholders also authorised the significant negative influence in connection with a Executive Board – subject to the approval of the withdrawal of Royal BAM Group from the stock market or Supervisory Board – to exclude or limit pre-emptive rights a takeover of Royal BAM Group by third parties. to issued shares and to exclude or limit the issuing of ordinary share options. A change of control clause is not unusual in important The Shareholders’ Meeting held on 8 May 2007 also collaboration agreements over a longer period, where granted authority to the Executive Board for a period of the parties include parts of the Group. Partly because of eighteen months to repurchase shares in the company, the total size of the Group, these clauses are not within the statutory limitations that apply in this respect. considered significant within the meaning of the The General Meeting of Shareholders is asked to grant Decision on Article 10. these authorisations each year. Resolutions for amendment of the Articles of Association, Change of control provisions in employment agreements or for the dissolution of the company, may only be taken No agreement has been concluded with directors or by the General Meeting of Shareholders on the basis of a employees of the company, providing for a severance proposal from the Executive Board, approved by the payment on termination of employment resulting from a Supervisory Board. public bid for the company.

Change of control provisions in important agreements A change of control clause relating to Royal BAM Group is included in the agreement concluded among the 43 shareholders of the dredging company Van Oord nv, in which the company has a 21.5 percent indirect holding. 2007 This clause specifies that Royal BAM Group will be obliged to offer the ordinary shares in Van Oord held by the Group to the other shareholders of Van Oord if there is a transfer of control over Royal BAM Group to a third party as defined in article 1.1.d of the SER decree on merger rules, in terms of which that third party has a direct or indirect majority of the control in a business regarded as a significant competitor of Van Oord. In such a case, Royal BAM Group would no longer be able to exercise rights of control in Van Oord and would not be entitled to dividends relating to the ordinary shares in Van Oord. A similar rule applies as soon as it comes apparent that any third party, not being an institutional investor, is directly or indirectly holding more than 15 percent of the ordinary shares or depositary receipts for the shares in the equity of Royal BAM Group, and is at the same time direct or indirect holder of, and/or otherwise has an economic interest in and/or control of more than 15 percent of the issued shares or depositary receipts for the shares in the equity of a company whose business is regarded as a significant competitor of Van Oord.

In the agreement concluded among the shareholders, including indirect shareholders, of AM nv, in which Royal BAM Group has an indirect 51 percent holding, Royal BAM Group has undertaken to its co-shareholder in AM to take over that co-shareholder's indirectly held interest of 49 percent in AM, in the event that it might reasonably be expected that Royal BAM Group's position will suffer a WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Restoration and extension Royal Dutch Mint and Money museum, Utrecht (BAM Utiliteitsbouw – Schakel & Schrale).

44 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Risk and result in the systems being improved or expanded. The risk management internal risk management and control systems described below, and the way in which they work, have been Construction inevitably involves discussed by the Executive Board with the Audit risks. For Royal BAM Group these Committee and the Supervisory Board. risks are not exceptionally high and they are no different in General management measures nature from those that are The Group’s risk management and control systems involve customary in the industry. The the use of various instruments. One general management Group applies a stringent policy instrument consists of instructions from Royal BAM Group designed to manage and limit to the management of the operating companies. These both existing and future risks as far as possible. This policy instructions set out such matters as limits for is explained in the following section. commitments to be entered into in connection with Financial risk factors (namely currency, credit, debtor, investments and the acceptance of new projects. These liquidity and interest risks) are addressed explicitly in the guidelines also define the powers invested in the financial statements on page 99. operating company managers and lay down quality requirements for fundamental management measures. In addition to general management measures, such as These management instructions are reviewed annually, internal procedures and instructions, the Group has also and if necessary adjusted. implemented specific measures aimed at controlling 45 defined risks. These measures go hand-in-hand with an A second general management instrument consists of the adequate reporting system and short lines of guidelines for the design of the financial reports of the 2007 communication. In the Executive Board’s opinion, the operating companies, and for the procedures to be general and specific systems intended for managing and followed in connection with those reports. controlling risks are sound and effective, in the sense that they provide a reasonable degree of assurance that the A third general management instrument employed by the financial reports do not contain any material Group involves budgeting, reporting and (internal) control misstatements. The risk management and control systems. The entire Group uses uniform guidelines and systems have operated properly during the year under accounting policies, which serve as the basis for all review and no shortcomings were found in these systems, financial and management reporting. In addition to the or how they operated, which might have material extensive quarterly reports, which include detailed consequences in the 2007 financial year or the current monitoring of the forecast and results already achieved by financial year. the operating companies, the operating companies It can be concluded that the measures taken towards the provide interim reports of any deviations from the end of 2006 and during the financial year as regards the expected financial results and movements in cash losses during the 2006 financial year at Wayss & Freytag positions, working supplies, turnover and results. Schlüsselfertigbau, which was subsumed within BAM Besides general management measures, the Group has Deutschland with effect from 1 January 2007, have had also implemented specific measures. These are focused the desired effect. Implementing these measures at BAM primarily on risks relating to market, reputation, safety, Deutschland has restored control over the organisation of projects, currency, credit, debtors, interest and liquidity the residual element of the former Wayss & Freytag positions. These risks are discussed in greater detail either Schlüsselfertigbau. As anticipated, BAM Deutschland below or on page 99 of the financial statements, along achieved a break-even result for the 2007 financial year. with the management measures that the Group has taken. It is reasonable to assume that there are no indications of any prospective failures in the risk management and Market risk control systems during the financial year 2008. The Group Royal BAM Group generates income in various geographic cannot however guarantee that no such risks will arise. markets and by carrying out a range of different types of Similarly, it does not mean that the risk management and activities. The Group’s financial performance depends control systems do not require further improvement. largely on the economic climate in the countries in which Optimising internal risk management and control systems Royal BAM Group operates, as a considerable portion of remains an important issue for the Executive Board. It may the projects are commissioned by government bodies. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The enterprise aims to limit its sensitivity to the economic Audits are carried out in order to monitor whether the climate by focusing even more emphatically on long-term safety management systems of the operating companies contracts generating more predictable cash flows. This is are in accordance with the guidelines laid down by the shown by the increase in the number of PPP contracts in Executive Board. The audits also highlight areas where the which the Group is involved. safety management system could be improved.

Risk to reputation Project risks The confidence that principals, shareholders, credit Prior to any project, the operating companies assess the suppliers, construction partners and employees place in risk factors, both in qualitative and in quantitative terms. Royal BAM Group is essential for ensuring the continuity Uncertainties may be related to financial and contractual of the enterprise. The Group accordingly adheres to aspects, safety, construction materials, plant and generally accepted standards and values and complies equipment, location (including site conditions and with local statutory and other rules and regulations, building permits), the construction period and the work particularly with respect to the acquisition and execution schedule as well as to clients, subcontractors and of contracts. This basic position is affirmed in the Code of construction partners. Conduct for the Integrity of Royal BAM Group. All A quantitative analysis is carried out of the risk factors, employees are required to act fairly, to honour based on historical data. This analysis is used to make agreements and to act with care in respect of principals adjustments to the project planning or construction and business partners, such as suppliers and methods, in order to reduce the project risks. The analysis subcontractors. may also result in adjustments to the risk mark-up to the 46 In order to make integrity a fundamental part of day- contract price. today activities, the subject is regularly revisited. The Bids for major projects or projects involving exceptional

2007 Executive Board has appointed a Central Compliance risks are submitted to the Executive Board for prior Officer. This officer promotes compliance with the code of approval. During the implementation phase, the project conduct, and provides advice with respect to issues team periodically and systematically assesses the involving integrity. opportunities and risks attached to the project. If The operating companies, too, have their own compliance necessary, the project team takes measures to mitigate officers, to whom breaches of the code of conduct can newly identified risks with particular attention being paid and must be reported. In addition to the code of conduct, to the quality of the construction work to be completed, the Group also has a ‘whistle-blower scheme’. The Group avoidance of construction faults and timeliness of believes it to be important that employees are able to completion. Project Managers submit reports on blow the whistle on wrongdoing at work, and that they progress, the main possibilities and risks associated with are able to report such matters without fear of reprisals. the project, the quality and the financial aspects to their Employees have easy access to both the code of conduct regional office manager, who in turn reports at least on a and the whistleblower procedure. For example, they can monthly basis to the operating company managers. They, be found on the Group’s intranet site and on its website. in turn, report to the Executive Board, through the information systems described above. Safety risks Royal BAM Group attaches a great deal of importance to Whether or not projects, once taken on, are completed safe and healthy working conditions for its employees. successfully, depends to a great extent on the quality of The Group is aware of the hazards of injury at the staff and the management. Royal BAM Group pays construction sites in particular and therefore takes all particular attention to its human resources policy – as feasible measures to prevent accidents, occupational described on page 50 of this Annual Report – in order to diseases and damage. ensure that it consistently and effectively attracts talented employees and continues to provide them with challenges Safety and health risks are controlled as much as possible and development opportunities. by using sensible designs, preparing projects systematically and providing employees with proper In order to limit legal risks, the legal documentation instructions about working methods. A Group-wide safety required for the projects is based on standard documents management guideline provides operating companies as far as possible. Where a non-standard contract is used, with a framework with which their own safety Royal BAM Group lawyers will assess the contract management systems must comply. Safety Awareness beforehand. Standard contracts include clauses stating WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf that any increase in wage and plant and equipment costs advance. These contracts ensure as far as possible that during the construction period can be passed on to the payments made by the client match at least the cost client. Clients can also buy off these risks. incurred on the completed portion of the work. In the case of projects carried out in emerging markets and In the construction sector it is usual for the operating developing countries, adequate security is agreed or company of the construction company that has won the export credit insurance is taken out before the start of the contract to have a guarantee issued as collateral for project to cover the political and payment risk. proper execution of the project. This guarantee may be provided by the parent company, or alternatively by Acceptance of project development risks requires the prior external parties such as banks or surety institutions. Royal approval of the Executive Board in all cases. For projects in BAM Group has stringent procedures to guarantee that the Netherlands, the position is that the Executive Board’s the contractual terms and conditions of guarantees decision is based partly on the advice given by a central comply with the company’s specific guidelines. property committee, which operates in the Netherlands independently from the operating company concerned and Over 70 percent of Royal BAM Group’s annual turnover assesses the specific risks of the project in question. In this comes from work done by suppliers and subcontractors. risk assessment, Royal BAM Group applies the general rule These parties have a major impact on the projects, both in that construction does not start on residential or other financial and in technical terms. The Group aims to projects until a substantial number of units have been sold maintain good relations with suppliers and or a large part of the project has been let or sold. Also, the subcontractors in order to ensure that the construction average price paid for development land, or the price at 47 process runs smoothly. Cooperation should also minimise which it can be acquired, does not exceed market value the overall costs and at the same time produce a high (allowing for the time until the expected commencement 2007 quality product. For cooperation and management of of construction work). project risks to work well, suppliers need to be involved in the project at an early stage. This cooperation is set out in No PPP or concession contracts may be accepted without framework contracts, which set out agreements about the prior approval of the Executive Board. In its assessment fees and conditions (such as times to delivery, invoicing, of the risks attached to PPP and concession contracts, the risks and bonus discounts). Project specific orders can Executive Board is assisted by the management of BAM then be placed under the framework contracts. PPP. This operating company was incorporated in 2004 to optimise the utilisation of the know-how and experience The operating companies’ broad range of expertise and available within the Group, both for acquiring new projects experience allows Royal BAM Group to independently and and for properly assessing the specific risks connected with successfully carry out large-scale projects. Nonetheless, it concessions. can be advantageous – including from the point of view of spreading the risks – to work in a joint venture when Insurance policies dealing with larger projects. In the Netherlands this Insurance is an important part of Royal BAM Group’s risk usually involves establishing a general partnership. This is management strategy. A department of specialists ensures a legal form under which all parties are jointly and that all construction-phase risks that can be included in the severally liable for mutual commitments connected with central insurance policies are actually covered in those the performance of the project. Royal BAM Group policies and that adequate liability cover is also taken out. mitigates the resulting risk associated with construction Royal BAM Group’s insurance coverage is a frequent partners by only entering into joint ventures with solid subject of discussion with professional insurance brokers. and solvent partners. However, if the risk presented by the partner is still considered too great, either before or Other risks during the construction phase, the Royal BAM Group Companies working in the construction industry are operating company will require other guarantees which involved in discussions about the financial arrangements can take the form of a bank guarantee or of the partner for construction projects, e.g. less/more work, the leaving sufficient cash invested in the joint venture. completion date and the required quality level for the work. Most of these discussions are concluded to the Operating companies minimise the payment risks satisfaction of all concerned. However, in some cases it is associated with the execution of projects by means of impossible to avoid a discussion ending in legal payment schedules that are contractually agreed in proceedings. Royal BAM Group, too, is involved in a WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf number of legal proceedings. A provision is usually taken infringements in connection with the market conduct of in the case of legal proceedings where a financial claim is several firms in the bitumen sector, both on the made against the Group, unless the claim in question is production side and on the procurement side. One of the completely lacking in substance. Financial claims that the company’s operating companies is involved in this Group has pending against third parties are in principle investigation, as a purchaser of bitumen. In September not capitalised unless it is reasonably certain that the 2006, the European Commission confirmed amount in question will be paid. infringements of competition law and imposed fines on The Group devotes a lot of effort towards avoiding such the companies involved. The fine pertaining to the Group legal proceedings by implementing quality programmes operating company concerned amounts to €20.7 million and providing training for its employees. Some examples and is fully covered by provision. An appeal has been of major legal proceedings involving Royal BAM Group are lodged against the imposition of this fine. given briefly below.

At the end of 1996 AGIV Real Estate sold the German construction company Wayss & Freytag to HBG. Part of the sale involved AGIV taking over rental guarantees given by Wayss & Freytag. These guarantees concerned Wayss & Freytag development projects from before 1997 where the buyers had been guaranteed a certain rental income. AGIV failed to fulfil its obligations towards Wayss & 48 Freytag after 2003. In legal proceedings before the German court, Royal BAM Group – having owned HBG

2007 since November 2002 – successfully claimed fulfilment by AGIV of its commitments in respect of Wayss & Freytag. Early in 2005, AGIV was declared bankrupt. As a result, the legal proceedings pending against AGIV have been suspended. The receiver has commenced a number of legal actions, including one against a former shareholder of AGIV. The settlement of these proceedings and of AGIV’s bankruptcy is expected to take several years. Based on current information, the Group believes that there will be no substantial negative financial consequences in the future.

In 2005, during the construction of a bored tunnel for the SMART North Tunnel in Kuala Lumpur, Wayss & Freytag Ingenieurbau was confronted by ground conditions at variance with the information supplied by the client. Wayss & Freytag terminated the contract at the start of 2006 as a result of the client’s failure to fulfil its payment obligations and refusal to deal with Wayss & Freytag’s claims for an extension of the construction period and reimbursement of costs. The client in turn also terminated the contract in January 2006. Wayss & Freytag lodged a claim against the client for more than €20 million as compensation for costs incurred. The client lodged provisional counterclaims amounting to €5 million. Based on the present state of knowledge, the Group considers that the provision that has been made is adequate.

In 2002, the European Commission commenced an investigation into possible competition-law WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Corporate social responsibility measures taken by BAM generate understanding and involvement, and therefore social control of building sites. Policy The award-winning experiences of the British operating Royal BAM Group is conscious of the part it plays in companies HBG UK and Nuttall are an example and society. Along with many other organisations, BAM makes inspiration in this area for its sister companies. a contribution to society's development. The Group’s efforts are focused on making this a socially responsible In 2006, BAM listed the most important topics for the contribution. The Group places an increasing emphasis on Group in the field of corporate social responsibility. They corporate social responsibility, with a focus on the are safety, community relations, education/training, environment, social and ethical issues and results being waste, energy/climate change, responsible use of balanced with and corresponding to the expectations of materials, air quality, innovation, customer-oriented stakeholders in the enterprise. construction and transport/accessibility. These topics, In this context, the Executive Board has appointed a along with other important subjects like integrity and Director of Corporate Social Responsibility with a view to diversity, are presented comprehensively in the BAM further intensifying and structuring the Group’s policy Sustainability Report. and performance in the areas of sustainability and corporate social responsibility. The appointment of this official also contributes towards increased awareness of corporate social responsibility within BAM.

49 To allow the most transparent report possible on sustainability issues and corporate social responsibility, 2007 Royal BAM Group is producing a separate sustainability report in addition to the normal annual report. Interested parties can download this report from the BAM website or ask the company for a printed copy. Please refer to this separate sustainability report for a more thorough explanation of the various key areas formulated by BAM in relation to corporate social responsibility.

While BAM has long been a pioneer in certain areas, such as the important field of safety, the Group’s corporate social responsibility policy still continues to develop. Operating companies and BAM employees nonetheless put the principles of corporate social responsibility into practice on a daily basis in a wide range of areas. BAM's efforts are focused on playing a pre-eminent role in the sector, and its wish is to continue to fortify this position in future.

Key elements The importance that the Executive Board attaches to corporate social responsibility is partly reflected in a strict safety and integrity policy and a transparent organisation. Operating company management teams pay special attention to safety and environmental management in this context. These responsibilities are increasingly being shifted to the constructing party or parties in infrastructure and construction projects. Open communication with local residents and other interested parties in relation to possible inconvenience and the WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Human resources management Performance management and talent management Employee involvement within Royal BAM Group is Building means depending on people. The qualities of our enhanced by performance management, in which the employees decide the quality of the Group’s projects and consequences of formulated commercial goals are thereby also our market position and returns. Royal BAM translated in terms of individual positions. Performance Group’s human resources policy focuses on retaining and management also includes career development paths for further developing the ‘human capital’ under the motto more successful job performance. A third mainstay of ‘BAM: Building on People’. performance management is assisting employees to achieve their career aims. The further development of The cornerstones of the Group’s human resources essential professional qualities and competences plays an management are: important part in this respect. • retaining good employees by offering good working conditions, in which personal attention and short lines The introduction of talent management at the operating of communication are crucial, combined with companies was also continued. Talent management is • an attractive employment conditions package; aimed at the early recognition of (future) key employees, • a proactive approach to the labour market to bring the offering them challenging positions and valuable Group to the attention of talented people in all fields; development opportunities and thus preparing them for • ‘steering’ performance by means of clear agreements their future positions. Such employees may include about results-related targets and commercial goals as project managers and other professionals in line positions, well as about the development of personal qualities as well as specialist staff employees and employees in 50 such as expertise, experience and personal general management positions. competences; The BAM Business School has been given an important

2007 • training programmes for employees at all levels, part to play in this process. This employee training focusing in particular on themes such as expertise and institute is discussed in greater detail in the separate entrepreneurship; Sustainability Report. • a concrete career development and management development policy with scope for job rotation, the Knowledge management development of personal qualities and the timely As a result of the Group’s size and diversity there is a great discovery of talents in the Group. deal of in-house expertise in numerous fields. It is important that individual employees acquire this Communication with the labour market knowledge and that the knowledge is transferred to the Royal BAM Group communicates systematically with the locations where it can be used to serve the clients. The labour market, including regular visits to educational BAM Plaza intranet has been set up as the digital establishments, taking part in company fairs, giving guest knowledge carrier and knowledge disseminator in the lectures and organising company excursions. Every year, a Group. Information is recorded in a Document number of young business graduates take part a selection Management System. The Group is working on making procedure to gain entry to the Group’s trainee this Document Management System available to all programme where they have the opportunity to employees so that everyone can use it to record all kinds familiarise themselves with various operating companies. of knowledge and to retrieve and disseminate the information. International agreement on the rights of employees Royal BAM Group and Building and Woodworkers International (BWI) concluded a framework agreement on the protection of employees’ rights throughout all of the Group’s business units in 2006. By doing so, BAM confirmed current practice within the Group. The agreement was also signed by the trade unions FNV Bouw and Hout- en Bouwbond CNV. The agreement covers, for example, the right of all employees to be a member of a trade union, the ban on child labour and the promotion of healthy and safe working conditions. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Works Councils The construction industry barometer

European Works Council Economic growth in the Group’s five home markets (the Matters discussed in the European Works Council included Netherlands, the United Kingdom, Belgium, Germany and the Annual Report for 2006 and the BAM Safety Ireland) amounted to an average of 3.1 percent in the Awareness Audit, as well as the details of the framework reporting year. This growth is in line with the forecast in agreement concluded by the Group in 2006 with the last year’s Annual Report, which indicated that economic International Federation of Building and Woodworkers growth would tail off slightly over the next few years to an (BWI). average of 3 percent per annum. Growth in the United Kingdom, Germany and Belgium slightly exceeded The executive committee of the European Works Council expectations. consists of A. van Beusekom (Netherlands, chair), and deputy chairmen F. Dausener (Germany) and W. van Average annual growth of 2.5 percent is expected for the Dessel (Belgium). five countries for the 2008-2010 period. The American credit crunch and the associated slow-down in growth in Central Works Council the United States are also expected to put the brakes on In the Netherlands, the Central Works Council devoted economic growth in Europe. However, prospects for the considerable attention to the amendments to the pension European economy remain positive, partly because of the scheme arising from Wet aanpassing fiscale behandeling sustained growth in the global economy and increased VUT/prepensioen en introductie Levensloopregeling exports to developing nations. The low unemployment 51 (VPL). The range of other topics discussed included the rates and the healthy state of consumer and 2007 Annual Report, the Social Annual Report for 2006, manufacturing confidence also provide a solid foundation 2007 the evaluation of the 2006 code of conduct, the strategic for further economic growth. agenda for 2007-2009, and the consequences of the Wet Harrewijn (a Dutch Act on the disclosure of information Netherlands on top executive incomes.) The construction industry was again one of the most important cornerstones of economic growth in the In March 2008, the Central Works Council consists of Netherlands in 2007. According to the Economic Institute Mr J. van Akkeren, Mr H.C. Beeren, Mr A.A.J. van den Bosch, for the Building Industry (EIB), production in the industry Mr P.T.J. van den Broek, Mr E. Dedden (chair), increased by 6 percent. The Dutch economy grew by Mr H.J. van der Donk, Mr J. Dijkstra, Mr J.L.M. van Gent, almost three percent in the same period. Once more, Mr G.J.M. van der Goes, Mr J. van Groesen, Mr I. Hallema, growth in construction volumes was widespread. The Mr T. Innemee, Mr F. Klasen, Mr A. Kromdijk, Mr J.H. Matze, most pronounced growth occurred in the residential and Mr H. Oosterbeek, Mr E.A.G. Oudejans, Mr F. Oudendorp, non-residential markets, but the civil engineering market Mr W.L.H. Philippens, Mr J. de Pinth, Mr J. Prins, also made a healthy contribution to overall growth. Mr J.P. Schallig, Mr H. Vanmulken (secretary) and Mr O.L.O. Wiegand. According to the EIB, housing production increased by almost 8 percent in 2007, mainly as a consequence of the further increase in residential new build. Some 75,000 new homes were handed over in 2007, which represents a slight increase on the previous year (2006: approximately 72,000 homes). However, the number of homes handed over once again fell below the previously indicated government target of at least 80,000 for 2007. Government policy in recent years has focused mainly on encouraging housing production by simplifying regulations and making resources available to tackle the problems in deprived neighbourhoods. The government’s coalition agreement states that between 80,000 and 100,000 new homes should ultimately be added to the housing stock every year. Despite the disappointing WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf recent production figures, current government policy is focus on maintaining roads and railways over the next few expected to result in a further increase in residential years. construction. However – since the major Vinex sites will be exhausted in due course – such an increase in United Kingdom residential construction will require a switchover to new British construction increased by about two percent (large) sites. during the financial year despite the slump in the Consumer demand for (new-build) homes remains high, residential construction market. The British housing in part as a consequence of the shortfall in new build. market has been under pressure since 2007 as a result of According to the Dutch Statistical Office, the prices for increased (mortgage) interest rates and the tougher existing residential property increased by more than lending requirements imposed by banks in response to 4 percent in 2007, which is in line with average increases the credit crunch. The growth in construction during the over the past four years. However, recent price increases financial year was, however, sustained to a large extent by mean that property is becoming less and less affordable the favourable development of the non-residential for first-time buyers. construction market.

The non-residential sector has recovered in recent years The British non-residential construction market grew by from the trough during the 2002-2005 period. Following about four percent during the financial year, partly modest growth in 2006, non-residential production because of substantial growth in the office market. increased by more than 9 percent during the last financial Medium-term prospects remain positive for the United year. This growth was fuelled by the market sector and the Kingdom market sector, partly because of the large 52 budget sector. Within the market sector, the office number of projects either planned or already in progress. market was one of those to undergo substantial growth. Demand from investors for commercial properties in

2007 prime locations is also expected to remain constant, The take-up of office space has increased markedly. While despite the recent unrest in the financial markets. there is still an excess of supply in some segments, the Demand from the budget sector remains substantial, demand for office property in prime locations remains high partly due to significant government investment in the with end users and investors alike. Willingness to invest in education and healthcare sectors. Despite the slow start the market sector is also expected to remain constant to the long-term investment programme ‘Building because of the favourable economic outlook. Demand Schools for the Future’, this government initiative will from the budget sector remains strong, but the growth in provide an extra impetus over the next few years. construction for healthcare and welfare, as well as Euroconstruct predicts further growth of more than three education, is expected to tail off slightly over the next few percent per annum in the British non-residential years. construction sector between 2008 and 2010. The proportion of non-residential production taken up by renovation and maintenance work is expected to continue The British civil engineering market grew for the first time increasing, partly because of the growing stock of in five years, although the increase in construction, at one buildings and the fact that those buildings are ageing. percent, was modest. Prospects for the coming years are favourable. Euroconstruct forecasts a further recovery in Production volume in the Dutch civil engineering market the British civil engineering market for 2008-2010, with increased by about three percent in 2007, which was an average annual growth rate of 4 percent. The slightly less than in the previous year. Central government anticipated growth in the civil engineering market is investment remains high. Government policy is focused based to a significant extent on attracting further road on increasing the quality of the main infrastructure in the and railway construction. Major civil engineering projects Netherlands, through both extension and improvement. for the coming years include work for the Olympic Games The Mobility Policy Document, which was presented in in 2012, the phased widening of the M25 motorway and 2005, will provide a marked stimulus in the next few the Crossrail project in London. years, with part of the work being carried out in public- private partnerships. Calls for tenders for two major Germany infrastructure projects are expected over the next couple The German construction industry appears to have finally of years: ‘Room for the River’ (Ruimte voor de Rivier) and left behind its lengthy period of recession from 1995 to the ‘Main Port Development’ (Mainportontwikkeling) in 2005. For the second year in a row, construction Rotterdam. In addition, the government will continue to increased, albeit not as strongly as in the previous year. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Residential production fell slightly in 2007. By contrast, The Irish non-residential construction market grew growth in the non-residential construction and civil strongly for the third year in succession. Demand for new engineering markets accelerated. The outlook for the office and retail property remains high, especially in and medium term is moderately positive, with anticipated around Dublin and Cork. The non-residential construction annual growth in building production of less than market is also benefiting from the ‘National Development 2 percent for 2008-2010. Plan 2007-2013’, which includes plans for investment in the healthcare and education sectors. Forecasts for the During the financial year, non-residential building sector remain favourable, partly because of this production grew by nearly five percent, mainly because of investment programme. Growth in the non-residential the improved economic situation in Germany. The market construction market is not expected to level off until sector’s willingness to invest has increased sharply in recent 2010. years, and demand from the budget sector is also gathering pace. There is a rapid increase in the number of non- There was modest growth of 2 percent in the Irish civil residential PPP construction projects being completed in engineering market in 2007. The outlook for the medium this sector. Calls for tenders are expected for a large term still remains favourable. Infrastructure investments number of PPP projects in the education sector, in are expected to continue increasing, mostly because of particular, during the next few years. Euroconstruct the previously announced investment programmes forecasts further growth in the non-residential construction ‘Transport 21’ and the ‘National Development Plan 2007- market of more than 2 percent per annum for 2008-2010. 2013’. Calls for tenders for a number of major civil engineering projects are expected over the next few 53 The German civil engineering market grew by more than years, including a range of road-building projects and four percent in 2007. The strongest increases were to be metro and light rail projects in Dublin. Euroconstruct 2007 seen in the construction of roads and railways, but there forecasts average growth in the civil engineering market were also positive developments in the energy sector. of approximately 10 percent annually for 2008-2010. Prospects for the next few years remain moderately positive, partly due to planned investments in the German Belgium civil engineering and energy sectors. The civil engineering The Belgian non-residential construction market investments will concentrate mainly on extending and developed well once again in 2007, growing by almost improving the road and rail networks. A proportion of 5 percent. However, this has not entirely restored these investments will be financed by the toll charges construction volume to its level before the sharp fall at the introduced for freight vehicles in 2005. Calls for tenders start of the new millennium. The outlook for the medium are expected in the energy sector over the next few years term is positive with average annual growth of for several power stations. Increasing numbers of projects approximately 3 percent in the 2008-2010 period. It is will also be carried out under PPP arrangements in the expected that an increasing number of projects, including civil engineering market. Euroconstruct predicts annual hospitals and schools, will be carried out under PPP growth in the civil engineering market of an average of arrangements. 2 percent for the next few years. The Belgian civil engineering market showed a decline in Ireland the financial year, following positive development in 2005 The boom in the Irish building industry seems to have and 2006 when demand increased temporarily in the come to a halt for the time being in 2007. Building budget sector, in the run-up to the local elections at the production fell for the first time in fourteen years in this end of 2006. Prospects for the coming years are past financial year. There was a drop of roughly 1.5 percent moderately favourable. Euroconstruct forecasts a slight in production, caused entirely by reduced production of contraction in 2008, mainly as a result of reduced residential properties. However, this slump was offset to a government investment in civil engineering works. significant extent by a rapid acceleration of growth in the However, the civil engineering market is expected to non-residential construction market. Total building recover from 2009 onwards. production is expected to fall again this year, but there are forecasts of a revival in building production from 2009, partly fuelled by a recovery in the residential construction market. Long-term demand for homes remains high in Ireland. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Development and construction of the SAP office, ‘s-Hertogenbosch (BAM Utiliteitsbouw; architect: Hans Goverde/Kraaijvanger Urbis).

54 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Construction

because of the unremitting demand for new houses, although there are some regional differences. The private sector’s willingness to invest is expected to remain stable in the Dutch non-residential construction sector. The demand for offices and commercial accommodation in good locations remains high with end-users and investors alike. Increased economic uncertainty resulting from the global credit crisis does not yet appear to be having any major consequences for the Dutch residential and non-residential construction markets.

In the United Kingdom, HBG UK has made an excellent contribution to the results, despite pressure on margins resulting from markedly increased sub-contractor and supplier prices. The British operating company further Royal BAM Group is reporting separately on its construction consolidated its position in the non-residential construction activities and on its property activities from the 2007 market during 2007. Turnover increased strongly and the financial year onward. BAM expects that this separate current order book is substantial and of high-quality. reporting will provide clearer information about the A large number of contracts were secured in 2007, Group’s operational and financial situation. The return and particularly in the budget sector. An increasing (and large) 55 risk profiles for construction and property operations are proportion of turnover is being undertaken for public different. The principle remains that the activities are clients. Prospects in the British non-residential construction 2007 closely interrelated, frequently even within the same market remain favourable, partly due to the large number operating company. of projects either planned or in the construction phase, including work in the educational and healthcare sectors. In Royal BAM Group is active in the Construction sector in the the medium term, increased economic uncertainty in the Netherlands, Belgium, Germany, the United Kingdom and UK may result in a temporary slowdown in private sector – via the civil engineering company Ascon – also in Ireland. awards. The turnover in the Construction sector during the year under review was €3,791 million (2006: €3,393 million). In Belgium, Interbuild again achieved an excellent result The result was €88.3 million (2006: €39.7 million negative). with a significantly higher turnover. Profit margins were The order book was €5,512 million (2006: €4,747 million). further improved, and are now at an outstanding level. Prospects for the office market in Brussels and Flanders Results from the Construction sector increased sharply in remain favourable for Interbuild. comparison with the previous year, partly due to the recovery of results in Germany. Most of the increases in In line with expectations, BAM Deutschland concluded the turnover and on the order book were realised in the United first financial year of the new company with a modest profit Kingdom, although increases were also recorded in the (€1 million). The measures adopted towards the end of Netherlands, Belgium and Germany. 2006 led to a recovery in the results. The merger of the German non-residential construction activities was The Dutch operating companies made a sound contribution successful in 2007, and the bulk of the loss-making projects to the results despite sustained pressure on margins from from 2006 have been completed. A positive result is again markedly increased sub-contractor and supplier prices and expected in 2008, considering the quality of the current a strained labour market. Price increases are persisting for order book. the time being, although the increases are slowing. Drastically increased construction costs mean that our tenders are more often failing to fall within the budgets available to our clients. Together with time-consuming spatial planning procedures, this is causing delays or even the cancellation of contracts. Long-term prospects for the Dutch residential construction market remain favourable WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 36 W&R houses for urban renewal in the Ondiep district of Utrecht.

Extension and renovation of the Westraven office for the Directorate-General for Public Works and Water Management, Utrecht.

BAM Utiliteitsbouw specialises in the development, BAM Woningbouw operates in the Dutch residential preparation and construction, management and construction market from 10 regional offices. There were maintenance of non-residential construction works in the about 2,300 employees working on roughly 150 Netherlands. The company has a staff of around 1,800. In construction projects in 2007, across a wide range of housing order to stay close to its customers, BAM Utiliteitsbouw types. At the end of 2007, the company handed over the operates from 10 regional offices and has a national business seven millionth new-build home in the Netherlands, in the unit for Major Projects. Schuytgraaf district in Arnhem. BAM Woningbouw focuses on all areas of the residential market, namely development, Buildings handed over in 2007 included the premises for the new build, maintenance and renovation and also the Dutch Tax & Customs Administration in Apeldoorn, the head redesignation of buildings. The specialist national business office of SAP in Den Bosch (development and construction), units W&R (an optimised construction process based on co- the new build for the Overspaarne nursing home in Haarlem, making) and Engineering & Consulting (construction physics, the Spuimarkt project in The Hague and the new build and architectural drawings, structural designs and architectural renovation at the Westraven office building in Utrecht. consultancy) offer support to the regional companies in their regional markets, in close proximity to the clients. The ten 56 The extensive order book also includes large projects in the thousandth house based on the W&R concept was handed education, healthcare and recreational sectors. Offices form over in early 2008. A substantial part of turnover (80 percent)

2007 an important part of the work in progress. is repeat and negotiated business.

Schakel & Schrale is the recognised restoration company BAM Woningbouw sold 297 houses it had developed itself in within BAM Utiliteitsbouw. Completed restoration projects in 2007 (2006: 420 houses). The in-house development 2007 included the Royal Dutch Mint and the Mint Museum in portfolio is an important factor in the company’s ability to Utrecht, and also the Academy of Architecture in operate successfully in the residential construction market, Amsterdam. and to be a fully-fledged partner for BAM Vastgoed, other project developers and housing corporations. Examples of The in-house consultancy and engineering department, BAM projects developed in-house include the Victorie Quarter in Advies & Engineering, offers architectural, structural and Alkmaar and Hof van Ostade, which is part of the Transvaal project management expertise, providing BAM urban renewal plan in The Hague. The St. Job project - Utiliteitsbouw with significant added value and benefits of involving the transformation of an immense dockland efficiency. warehouse into an apartment complex - was completed successfully in conjunction with BAM Vastgoed. BAM Utiliteitsbouw offers clients a range of product concepts, which are part of the company’s efforts to secure The residential market is witnessing a shift from new-build upstream and downstream integration within the projects in outlying areas to inner-city multi-functional construction process chain. Anticipating the rapid changes in renewal projects. The market is extremely active on other the care sector, BAM Utiliteitsbouw is offering fronts as well. To maintain the success of its operations, BAM accommodation and property solutions to care providers in Woningbouw is concentrating on innovative forms of the VitaalZorgVast project. Office-Up is about the collaboration. . redesignation and redevelopment of office premises. The BAM Woningbouw launched a number of initiatives in business unit BAM Gebouwbeheer was set up in conjunction relation to ‘corporate social responsibility’. For instance, a with group company BAM Techniek in 2007 and provides collaborative arrangement was entered into with the complete technical management and maintenance for. Stichting Natuur & Milieu (Nature & Environment Schoolcompagnie offers customised solutions for new Foundation) and the Sustainable Housing Improvement accommodation, on a long-term operating basis, to Toolkit is being developed. Development work is under way, institutions in primary and secondary education. BAM in conjunction with BAM Vastgoed, on the first project based Facilicom Duet provides complete building management as on the Passive House concept. Passive Houses consume only well as facilities services to (owner-)occupiers of buildings. a very small amount of energy. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Development and construction of the head office for The Phone House in the sound barrier alongside the A1, Amersfoort.

88 units as the temporary De Horst residential and care centre in Emmen.

Fort Unitbouw which is based in Raamsdonksveer, Heilijgers which is based in Amersfoort, has now been produces, sells and leases semi-permanent units. The active as a regional builder for over a hundred years. business has a large lease fleet. Fort Unitbouw supplies Amersfoort and its immediate surroundings form the clients in sectors such as healthcare (nursing and residential principal sphere of operations for its property development, care homes, GPs’ surgeries) and education (schools). The construction, management and maintenance work. The units can also be deployed as office or living space in the operating company has some 225 employees. There were case of large-scale renovation of residential areas or nursing 10 projects in progress in 2007. A total of 144 homes were homes and care centres. Fort has been supplying traditional sold from in-house development projects. units for accommodation on construction sites since time immemorial. Fort Unitbouw has around 100 employees. Heilijgers handed over the unique office for The Phone The wide deployability of the Fort units was shown in 2007 House Netherlands in 2007 (situated in a prominent high- when they were used for the town hall in Blaricum, the visibility position in the acoustic barrier alongside the A1 FC Zwolle supporters’ suite, instruction premises for the motorway). A number of residential construction projects Royal Dutch Army in Bussum, various temporary offices were also handed over, including the first phase of the Amor (e.g. at the Efteling in Kaatsheuvel and the St. Jansdal Forte station site in Amersfoort (a development in 57 Hospital in Harderwijk), temporary school buildings in Goes, collaboration with NS Poort) and 28 rental apartments for Soest and Zwolle, the booking office at RAI Amsterdam and Woonpalet in Zeewolde. Seven ultra luxurious houses were 2007 various assisted living centres. handed over for sale in Oudewater. The first phase of the De Koningsvogel project in Soest, consisting of a total of 140 houses and apartments in a grand architectural style, was handed over. The second phase of the project is currently in progress, as is the Het Parck project, 22 single- person homes in the Schuilenburg area of Amersfoort, and – under a contract from BAM Vastgoed – five homes in the Historical Village in Hilversum. Heilijgers is also building VerreSigt in Zeewolde, which is a complex of nineteen luxury apartments. The construction of the ‘Between’ office project, one of the last new-build sites on the southern side of Amersfoort town centre, is proceeding steadily. Heilijgers is collaborating with NS Poort on the development of the second phase of Amor Forte, and with AM and others on the Euryza project in Zwijndrecht. Euryza comprises some 280 new apartments and houses and approximately 4,000 m2 of commercial space. AM and Heilijgers are also working together (with third parties) on the development of Puntenburg in Amersfoort, where Heilijgers is building 120 rental apartments.

In addition to its own development projects, Heilijgers also completed a number of residential construction projects as contractor for third parties, including 38 houses at De Velden in Vathorst. A total of 102 apartments are currently being built for the Timmerwerf Dichterswijk project in Utrecht. With the municipality of Amersfoort as client, Heilijgers is undertaking all of the work required to preserve the Elleboogkerk. This church used to house the Armando Museum and was devastated by fire in October 2007. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 32 houses at Vlindervallei, Oosterhout.

New build and renovation of the Prinsenhof Hotel (95 rooms) and underground car park, Bruges.

Bouwbedrijf H. Pennings en Zn is involved in the entire Interbuild which is based in Wilrijk, undertakes non- process of planning and project development, residential residential construction projects for both private and public and non-residential construction, renovation and customers. Interbuild’s work as a partner in construction maintenance. The business is located in Rosmalen, and has consists primarily of new build and renovation of offices and approximately 170 employees. distribution and shopping centres in Brussels and Flanders. The company employs approximately 300 people and has Pennings is being asked more and more often to play the an average of twenty construction projects in progress at role of consultant in the initial phase of complex any given time. Many of these projects are very striking, maintenance projects, which partly explains the marked such as renovating the 145-metre Finance Towers in increase in the maintenance division’s order book during Brussels. 2007. Pennings is also increasingly involved at an earlier stage in the elaboration of plans for new-build projects. This Interbuild completed a range of projects during 2007, involvement allows the company to offer its clients the including the five-star Prinsenhof Hotel in Bruges, the optimum price/quality ratio within their budgets. Antwerp City Festival Hall and the RAC in Hasselt. The new projects secured by Interbuild include the new 58 The projects undertaken by Pennings during 2007 included Pericles office building for KBC Real Estate in Brussels, the building a total of 400 new homes in Arnhem, Hendrik-Ido- renovation of the WTC II towers in Brussels, the renovation

2007 Ambacht, Utrecht, Hilversum and Oosterhout. The company of the Marquis Building in Brussels and the City-Link office also completed 8,000 m2 of office and commercial space in project in Antwerp. Eindhoven and Culemborg. Projects in the renovation and maintenance markets included the renovation of more than During 2007, Interbuild reached the topping out stage for 350 houses that were still occupied and the renovation of a the Jean Jacobs and Arlon 80 office projects in Brussels. The shopping centre in Hoofddorp. Bayreuth Building, in The Corporate Village on the Brussels Ring near Zaventem, will be handed over in March 2008. Work on the KBC office complex in Louvain, the Finance Towers in Brussels and the new Hekla precinct police station in Edegem is also nearing completion.

In Brussels, in a joint venture with CEI-De Meyer and others, Interbuild has secured the contract for the demolition work in preparation for the construction of a permanent new BAM Materieel supplies general plant and material and headquarters for NATO. This work will be completed in mid- ancillary services for all of the construction projects 2008. carried out by BAM in the Netherlands. The sizeable range of plant and material available and the extensive package of services are managed and organised from three sites: Lelystad, Kesteren and Nederweert. BAM Materieel has approximately 450 employees.

BAM Materieel has acquired an adjacent 15,000 m2 site in Lelystad, which is being used to house tower cranes and construction hoists. A warehouse and a maintenance workshop for the Cranes & Hoists business unit are also being built on this site. A new steel workshop in Lelystad The activities of CEI-De Meyer and Galère – which was also used for the first time in 2007, one of the jobs also operates in the Flemish construction and property being to manufacture the formwork for the patented market – are described in more detail in the section on the Xbloc breakwater component. Civil Engineering sector on page 71. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Clydebank College, Glasgow.

Innercity development St. Stephen’s in Hull.

HBG UK is active in non-residential construction, project Central project in London, along with Argent and Mann development, design, engineering and facility Island in Liverpool for Neptune Developments and management in the United Kingdom and is one of the Countryside Properties. HBG UK’s completions in 2007 leading construction and property companies, with included the St. Stephen’s Shopping Centre in Hull for ING approximately 2,500 employees. Real Estate and Willow Place in Corby for Land Securities.

More complex, higher-value construction contracts were During 207, HBG UK again secured a number of added to HBG UK’s construction order book in 2007. A prestigious projects, including the Riverside Transport total of 79 projects were completed during the year. Museum in Glasgow, designed by the internationally Twenty of the newly acquired projects were from renowned architect Zaha Hadid, the molecular biology established clients such as Argent, the University of Bath laboratory in Cambridge for the Medical Research Council and Asda. and a further extension to the Great Ormond Street Children’s Hospital in London. In the retail sector, HBG UK was able to continue its excellent working relationships with many of the largest The real estate activities of subsidiary HBG Properties are 59 supermarket chains, including ASDA, Sainsbury’s, Marks & explained in more detail in the section devoted to the Spencer, Morrisons and Tesco. A range of renovation and Property sector on page 65. 2007 new-build projects are in progress across the United Kingdom. HBG Facilities Management is developing steadily. The bulk of its work is associated with projects for BAM PPP Once again, the education sector was the largest market and involves the provision of services such as catering, for HBG UK, followed by the retail sector. HBG UK cleaning, maintenance and security. HBG Facilities undertook work for 17 universities during 2007. The Management also secured its first independent contract in British government continued with its programme 2007, for the catering at a school in Bristol. ‘Building Schools for the Future’, in which HBG UK is an established partner. Under the programme, the company HBG UK works on a number of projects in collaboration handed over two secondary schools in Bromsgrove, and with its civil engineering sister company Nuttall, with the three more are nearing completion. The construction of combined knowledge and skills of the two companies four schools in Solihull is proceeding steadily. providing added value for the customers.

HBG UK is also active in the care sector. The company was declared ‘best care contractor’ for the Essex Cardiothoracic Centre project when the Building Better Healthcare Awards were announced in November 2007. HBG UK was involved in 41 projects - at various stages of completion - under the P21 care programme in England. These projects include building a centre for burns’ victims, newborn babies and teaching at the Birmingham Children’s Hospital. The company also occupies a strong position in the care programme in Wales, with five projects in progress including three acquired during 2007 for the construction of two local hospitals and a psychiatric juvenile health centre. The activities of Ascon – which operates via Rohcon and Ascon Property Developments in the Irish HBG UK works for several project developers and has an construction and property markets – are explained in increasing involvement in substantial, multi-functional more detail in the section on the Civil Engineering sector inner-city renewal projects, such as the King’s Cross on page 72. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Mövenpick Hotel Stuttgart Airport (326 rooms).

BAM Deutschland concluded the first year of its operations with a small profit. The merging of the operations of the former operating companies Müller- Altvatter and Wayss & Freytag Schlüsselfertigbau was successfully completed on 1 January 2007. The company is managed by the former management team of Müller- Altvatter, a company that had proved in recent years that it could operate profitably in the German non-residential construction market. BAM Deutschland is one of the leading companies in the non-residential construction sector in Germany. The operating company has approximately 700 employees and operates from premises in Stuttgart, Berlin, Dresden, Düsseldorf, Frankfurt am Main, Göttingen and Nuremberg. 60

BAM Deutschland offers a total service for non-residential

2007 construction across the whole of Germany. With its two subsidiaries, HBM Stadien- und Sportstättenbau and Müller-Altvatter Gebäudemanagement, it can be on hand for its clients at every stage of the construction process. Its experience and expertise in the area of stadium projects make HBM Stadien- und Sportstättenbau a much sought-after partner in the international arena as well. The company is with Interbeton closely involved in two stadium projects in South Africa.

BAM Deutschland is also involved in a number of PPP accommodation projects. PPP contracts were signed in 2007 to build a multi-functional sports complex for the town of Ludwigsburg and a football ground in Dresden. BAM does not participate in the equity for these projects.

BAM Deutschland’s fine reputation for high-rise construction was once again confirmed when the company won the construction contract for Frankfurt Hoch Vier, a 135-metre-high office block with a remarkable design. BAM Deutschland is also building a large data centre for Citigroup in Frankfurt, in collaboration with third parties.

With Varioffice, the operating company has a concept for realising office space for a non-variable and attractive construction price. An office building in Essen (the fourth Varioffice project) was handed over at the end of 2007. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The Roland Levinsky Building, University of Plymouth (HBG UK; architect: Henning Larsen with Building Design Partnership).

61 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Conversion of former warehouse St Jobsveem into 109 loft apartments, Rotterdam (BAM Vastgoed and BAM Woningbouw).

1

62 2007

1. BAM Vastgoed (in joint venture) transformed in Arnhem a listed office building into apartment building De Grote Enk (69 apartments). WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Property

Prospects for the residential construction market remain favourable despite increased economic uncertainty resulting from the global economic crisis. Consumer demand for homes remains as high as ever, in part as a consequence of the shortfall in new build, although there are some regional differences. Budget problems caused by increased construction costs and time-consuming spatial planning procedures are also delaying projects. Production in the residential construction market is expected to increase slightly over the next year or two, partly because of the recent government action plan on residential production. Since the major sites designated by the government for future urban development (Vinex sites) will be exhausted in due course, any such increase in residential construction will Royal BAM Group is reporting separately on its construction require a prompt switchover to new (large) sites. The Group activities and on its property activities from the 2007 sold a total of 5,334 houses from its own development in financial year onward. BAM expects that this separate 2007 (2006: 5,376). It is expected that the number of house reporting will provide clearer information about the Group’s sales from own development will again increase slightly operational and financial situation. The return and risk during 2008. The Group’s stock of unsold and unlet premises profiles for construction and property operations are in the Netherlands is small (27 homes and around 3,000 m2 63 different. However, the principle remains that the activities of office space). The Group’s total development potential in are closely related, frequently even within the same the Netherlands currently stands at about 75,000 homes. 2007 operating company. Royal BAM Group is active in the Property sector in the As was previously announced, the sale of a package of office Netherlands, Belgium, the United Kingdom and – albeit on development projects to an investor made a substantial a smaller scale – also in Germany and Ireland. contribution to turnover and results in the United Kingdom. The turnover in the Property sector during the year under Nevertheless, turnover slipped in comparison with the review was €1,304 million (2006: €1,376 million). The result previous year because of a higher volume of commercial was €95.8 million (2006: €93.6 million). The order book was property sales in 2006. Demand from investors for high- € 3,125 million (2006: €3,208 million). value commercial properties in prime locations is expected to remain constant, despite the recent unrest in the financial Outstanding results were achieved in the Property sector. markets. The British property company, HBG Properties, will Improvement of the profit margin was achieved primarily in continue with very selective investment in new property the Netherlands. Turnover fell by about 5 percent, despite development positions. the positive impact of acquisitions in the Netherlands and Belgium (+4.7 percent). The UK volume reduced from the The Belgian developer Kaïros, acquired at the start of 2007, exceptional high in 2006. Turnover also decreased in performed in line with expectations. Turnover and results comparison with the previous year in the Netherlands. have been consolidated with effect from 1 April 2007. Kaïros signifies a real extension and fortification of BAM’s property- In the Netherlands, outstanding results were secured from related activities in Belgium. housing development. AM and BAM Property once again contributed substantially to the results. Turnover fell slightly The property company performed well in Ireland, despite because of a slight drop in the number of homes sold from the downfall in the Irish residential construction market. in-house development. The reduction in turnover was also Starts on new development projects have been temporarily associated with the gradual introduction of a practice postponed, and one development project already underway whereby the development and construction elements are has been suspended (with our share amounting to around separated in contractual terms. The separation of the 30 homes). The demand for homes is expected to remain property sale and construction contracts put pressure on high in the long term. turnover, while at the same time boosting the profit margin. The volume of the commercial property activities remained In Germany, Wayss & Freytag Projektentwicklung has stable. Promising new property development positions have reported a loss of several million euros, mainly caused by the been added to the portfolio. write-down of capitalised interest and development costs. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Artist’s impression City-Link, Antwerp.

The project Harbour Quarter includes 140 homes and restaurants in the centre of Oud-Beijerland near Rotterdam.

BAM Vastgoed has 120 employees and is active in the Kaïros has been active in the high-end office development residential market with six regional teams and in the market market since 1989. The company is one of the largest and for commercial property with specialist project teams. BAM most successful operators in the Belgian property sector. Vastgoed is one of the leading project developers in the BAM acquired Kaïros in early 2007, as part of BAM’s growth Netherlands, and as such focuses on all segments of the strategy. Kaïros signifies a real extension and strengthening property market: multi-functional area development, of BAM’s property development activities in Flanders and residential property of all types and in all price brackets, retail Brussels. outlets, offices and leisure facilities (sports complexes and Kaïros’ activities are focused mainly in Brussels, Antwerp and entertainment facilities). the other urban areas in Flanders. The majority of the projects are developed in joint ventures with other parties, The development portfolio includes positions throughout the particularly local ones. The portfolio includes some 15 Netherlands in a wide range of project types of different projects that are in progress and various concrete projects sizes, in both inner city and large-scale suburban areas. BAM that are scheduled for a later date. Vastgoed is also participating in a number of development partnerships for multi-functional area development. 64 Examples include the GETZ entertainment centre at the ArenA Boulevard in Amsterdam; Stationsplein in Eindhoven

2007 (started in 2007 with the development of 70,000 m2 of office space, residential property and catering outlets); and the refurbishment of the Groot Ziekengasthuis site (5 ha.) in the centre of ’s-Hertogenbosch. Work also started on the De Saen shopping and mall facility in Saendeft in Assendelft in 2007, and the De Fonteyne shopping and residential complex in Vlissingen was handed over.

Post-war areas in the major cities are being redeveloped into prosperous residential areas in conjunction with housing corporations. Examples of this urban regeneration include 110 Morgen (Rotterdam), De Banne (Amsterdam) and Duindorp (The Hague). The transformation of existing buildings and sites also falls within its sphere of operations and these projects currently include the Harbour Quarter in Oud-Beijerland, Dongenburgh de Vesting in Geertruidenberg and Het Bordes in Ridderkerk. BAM Vastgoed’s real estate concepts are designed to meet specific requirements in the market, such as ‘Living à la Carte’ for maximum freedom of choice for residential consumers and ‘Golden Years’ for the senior citizens’ market. Studies are also being conducted, along with other market players, under the name ‘Vilavie’, into the feasibility of larger-scale residential programmes for older people. BAM Vastgoed plays a pre-eminent role in the development and implementation of sustainable concepts in the field of energy and the environment. BAM Vastgoed’s pre-eminent role is also evident from the number of Passive House projects actually developed and completed by BAM Vastgoed as one of the first developers. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Artist’s impression Rosenthaler Hof, Berlin.

The Building, Chiswick, London.

HBG Properties is a subsidiary of HBG UK. HBG Properties Wayss & Freytag Projektentwicklung is a modest further consolidated its position in the British property organisation focussed on finishing off its old German project development market during 2007. The highlight for HBG development portfolio, and on developing several new Properties was the sale of a portfolio of seven office projects, especially offices. development projects in outstanding regional locations Construction work is progressing well on the Rosenthaler throughout the UK to the German investment fund Hof, which is a new office project from the old property manager, IVG Immobilien. These property projects were all portfolio for the Association of Medical Expenses Insurers at different stages of development and will be managed by (AOK) at a site in Berlin. Wayss & Freytag Projektentwicklung HBG Properties until handover and through the leasing has sold this project to a German real estate fund. process. HBG Properties either acquired or started construction on more than 52,500 m2 of property and sold more than 33,000 m2 of office space in 2007. HBG Properties holds more than 56,000 m2 for further development. In addition to the partnership with IVG, the company’s further development space includes retail and 65 commercial development projects in Scotland, and in the South West, South East, Northwest and Midlands regions of 2007 England as well as the capital London. As part of its corporate social responsibility agenda, all developments by HBG Properties achieved a very good or excellent BREEAM rating.

Property developer AM made a substantial contribution to profits in 2007. BAM has held a 51 percent interest in AM since 1 February 2006. The company operates independently and under its own identity, at arm’s length from BAM. AM sold a total of approximately 3,500 homes from its own development projects in 2007. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Fourth waste incineration line at AZN in Moerdijk (BAM Civiel and BAM Techniek).

66 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Civil engineering

Nuttall has once again had a good year despite strong competition and increasing complexity of contract types. The operating company is one of the leading civil engineering companies in the UK. The order book is very healthy. Volume on the civil engineering market in the UK is expected to remain high, thanks in part to good prospects for road and rail construction and the work to be carried out for the 2012 Olympic Games.

The Belgian operations contributed well to the result. Turnover showed a clear increase, partly because of the acquisition of Betonac. The turnover and result from this road construction company have been consolidated with effect from 1 September 2007. The prospects on the Belgian civil engineering market are moderately positive, due in part Royal BAM Group operates in the Dutch, Belgian, British, to the tenders for several major infrastructural contracts, Irish and German civil engineering markets. Interbeton including some PPP projects. The Group is in a favourable undertakes specialised non-residential and civil engineering position in Belgium, partly because of the strong order projects internationally. book. The Group achieved a civil engineering turnover of €3,927 67 million in 2007 and from continued operations €3,512 In Ireland, Ascon made a good contribution to the result. million (2006: €3,842 million and €3,346 million Turnover and results improved again. Prospects for the civil 2007 respectively). The result for the Civil engineering sector was engineering and non-residential construction markets €125.6 million and the result from continued operations remain favourable, despite the recent economic slowdown. €111.4 million (2006: €138.4 million and €119.7 million In particular, the demand from the budget sector in both of respectively). This order book was €5,003 million these markets is expected to remain high. The investment (2006: €4,616 million). programmes ‘Transport 21’ and ‘National Development Plan 2007-2013’, both of which were announced some time ago, Good results were achieved almost across the board in the will provide an extra impetus over the next few years. civil engineering sector. Nevertheless, results were less than in 2006, partly because of the loss of the profit contribution Results from the German operating company, Wayss & from several major infrastructural projects in the Freytag Ingenieurbau, showed a minor loss, in line with the Netherlands. Turnover grew by approximately 5 percent forecast (€3 million loss). Turnover and the order book both (excluding Flatiron) principally as a result of increased increased significantly through the award of several major activities in Ireland, Germany and the United Kingdom. The contracts. Prospects for the next few years are impact of acquisitions on the increase in turnover was predominantly positive, partly due to planned investments approximately 1 percent. The sector’s order book grew by in the German civil engineering and energy sectors. about 8 percent, with 3.5 percent of this accounted for by the acquisition of Betonac in Belgium. Interbeton – which is active in niche markets outside Europe – again achieved an excellent result. Turnover grew because The Dutch civil engineering companies performed up to of an increase in activity, principally in the Gulf States and standard in 2007. The road construction, energy and South Africa. There is a good-quality, well-filled order book. telecommunications sectors showed particularly good The American civil engineering company Flatiron was sold in results. The major projects taken on during the 2005-2006 2007. Its turnover and results were consolidated up to the period only made modest contributions to the result, in part end of the third quarter of 2007. The book profit on the sale, as a result of the sharp increases in prices charged by after deduction of costs and provisions, amounted to about subcontractors and suppliers. Volume in the Dutch civil €72 million. The sale of all of the American operations fits in engineering market remains stable. Price levels for new with the Group’s strategy of enhancing its European base. contracts in the civil engineering market improved slightly The proceeds from the sale were used among others for during 2007, but cannot yet be described as satisfactory. acquisitions in the Netherlands and Belgium in 2007. Legislation (e.g. on air quality) is causing more and more civil engineering projects to be delayed or postponed. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Harbour wall, Euromax terminal, the first in the Netherlands to be constructed as a deep wall, Maasvlakte.

Laying two 80 m long underwater pipes for a drinking water pipeline project at Hoorn.

BAM Civiel specialises in the design, development, With about 1,700 employees, BAM Infratechniek construction, management and maintenance of civil and (civil engineering technology) principally concentrates on industrial projects in the Netherlands. The company’s the Dutch market for designing, constructing and servicing activities include marine engineering structures, such as cable and pipe networks for telecommunications, data, immersed tube tunnels, both in the Netherlands and (waste) water, electricity, gas and heat. The company’s key elsewhere in Western Europe. competencies also include traffic systems, tunnelling BAM Civiel has approximately 1,000 employees and is based technology systems and industrial pipe and storage in Gouda, which is also where BAM Civiel Projecten (large systems. BAM Infratechniek’s most significant niche multi-disciplinary projects) is based. There are regional markets include specialist environmental technology, offices in Amsterdam, Breda, Elsloo and Zuidbroek. Specialist heat/cold storage systems, pipe renovation technology work is undertaken by BAM Grondtechniek, BAM and digital recording. Betontechnieken, BAM Project Support and BAM Civiel Prefab Beton. BAM Civiel works closely with BAM Infraconsult BAM Infratechniek is organised around three regional for consultancy and engineering services. Delta Marine companies (Mid-West, North-East and South) and three Consultants (DMC) and Multiconsult merged to become BAM companies that operate at the national level (BAM 68 Infraconsult with effect from 1 January 2008. BAM Leidingen en Industrie, VTN Verkeers- & Infrabeheer provides management and maintenance services Besturingstechniek, and Van den Berg Infrastructuren).

2007 for the Civil Engineering sector. Principal clients include Eneco, Essent, Gasunie, Nuon, Evides, Vitens, KPN, Reggefiber, @Home, Casema, UPC, BAM Civiel is carrying out a wide range of major energy ProRail and the Directorate-General for Public Works and projects, such as the fourth waste incineration line at AZN in Water Management (Rijkswaterstaat). Moerdijk, two transformer stations for the new BritNed high voltage link and the third incineration line for Twence The company has shown marked growth over recent years. Afvalverwerking in Hengelo. BAM Infratechniek is increasingly winning complex contracts on the basis of its own design activities, In the Netherlands, BAM Civiel is the market leader in major including for long-term management and maintenance concrete and marine construction projects. For example, the work. Under the BAM Infra trademark, the company is company is part of a joint venture that has won a contract to currently carrying out a range of multidisciplinary build a concrete multi-functional towing barge for offshore contracts with its sister companies BAM Civiel, BAM Wegen platforms. Project milestones were reached in the Hubertus and BAM Rail , including AZN Moerdijk, the Sloelijn goods Tunnel in The Hague (completion of the drilling process) and railway line and several major road building projects. the ‘s-Hertogenbosch ring road (commissioning of two As an established partner for the energy and water subway passages in the railway viaduct over the A2 industries in the Netherlands, BAM Infratechniek took on motorway). Handovers included the deepened cellars and many large and small-scale projects in 2007, frequently on concrete receiving pits for the New Rijksmuseum, the a design-and-construct basis. innovative Euromax harbour wall and the doubling of the size BAM Infratechniek has a pre-eminent position in the of the N31 highway/Wâldwei (PPP project; in joint-venture). optical fibre market for Fibre-to-the-Home and Fibre-to- the-Business. Its market position was enhanced during the With its sister companies, BAM Civiel is involved in the year under review with new contracts, including in (underground) car park market. Contracts were recently Amersfoort, Amsterdam, Breda, Helmond, Valkenswaard. won for car parks in Nijmegen, Sittard-Geleen, Utrecht, Goes, Nijverdal and The Hague. BAM Grondtechniek BAM Infratechniek has an extensive network of branches in commissioned a new drilling rig during the past year. This the Netherlands, allowing it to provide an optimum service crane causes less noise nuisance and is therefore particularly to local and national clients. The factors in its success are well suited to boring piles in inner city areas. As part of a reliability, in-house engineering capacity, knowledge of joint venture, BAM Betontechniek applied a heat resistant management and maintenance, in-house fault-clearing coating to the Hubertus Tunnel in The Hague, using a services and a sizeable operating organisation. concrete spray robot. This innovative technique offers

protection against extreme heat loads. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Extension of depot (with Ascon) for LUAS light rail’s Red Line in Dublin.

Ground and road works in and near the Hubertus Tunnel, The Hague.

BAM Rail offers a complete service package as an all- The key activities of BAM Wegen (roads) include round railway construction company, from engineering to design and construction of asphalt works, ground works, comprehensive construction and maintenance of rail links. sewer systems and environmental activities and noise ProRail, the company that runs the Dutch rail network, is reduction. BAM Wegen employs around 1,700 employees BAM Rail’s most important client. BAM Rail also carries out who carry out approximately 2,500 projects every year in the aforementioned activities on tram and metro lines the Netherlands. The operating company has seven throughout the western urban region of the Netherlands regional offices and eight specialist subsidiaries, which are (the Randstad) and on railway and crane tracks for industry. active in a range of fields including noise barriers, BAM Rail has a service department that provides 24-hour environmental technology, landscaping, sports grounds, assistance to its customers for functional repairs and mechanical road construction and crash barriers. maintenance requirements. BAM Rail has about 1000 employees, has its head office in Breda and also has BAM Wegen has a range of substantial highway renewal branches in Dordrecht (rolling stock company), Eindhoven projects in progress. The busy A9 motorway in North and Rotterdam. All new-build and renovation projects are Holland has been given a new surface, lighting and crash carried out from Breda, while minor renovation, barriers, in conjunction with sister companies. This 69 maintenance and functional repairs are carried out from ‘Kosmos’ project was carried out under a contract with Eindhoven and Rotterdam. the Directorate-General for Public Works and Water 2007 Management using an innovative contract format known BAM Rail was involved with the extension and renovation of as ‘system-oriented contract management’. the national and local rail infrastructure, including building A joint contract was won, with BAM Civiel and BAM the new tram line 19 in The Hague and tram line 5 in Infratechniek, to widen the A2 between Zaltbommel and Amsterdam, constructing the third platform at the NS the bridge over the River Maas. BAM Infraconsult provided station in Breda, the reconstruction of RandstadRail, track the design. In addition to the surfacing work, BAM Wegen duplication and modifications to sections of track, is also modernising a number of service stations on both improvements to the safety of road flyovers and improving sides of the motorway and putting up various transparent and adapting train safety and train management systems. or ‘green’ noise barriers. A range of challenging projects have been won for 2008, such as the new build of the Sloelijn, reconstruction of the In Nieuwveen (in the municipality of Nieuwkoop), BAM yard in Maastricht and a four-year contract for large-scale Wegen has started laying a 27-hole golf course. The track renewal in the South Netherlands area. company has also completed the largest environmental Opportunities are being created, in conjunction with street in the Netherlands in Hendrik-Ido-Ambacht. Queues various Dutch and foreign sister companies, to undertake have become a thing of the past, thanks to a new logistical railway works at home and abroad, both in heavy rail and concept. BAM Wegen subsidiary HABO GWW undertook urban transport. Results of this collaboration have included the renovation of the Buitenhof square in The Hague. the extension to the tram depot for the LUAS line in Ireland and an extension to the harbour railway line in Antwerp. At its head office in Utrecht, BAM Wegen has set up a central laboratory to serve the Technology & Safety is an absolute priority for BAM Rail. Promoting safety Development Department, which is the company’s among rail workers has proved to be a further incentive for knowledge base. Innovative products and technologies innovation. For example, BAM Rail has developed its own have been applied in a large number of projects, such as in mobile workshop for minor maintenance work, allowing BAM Wegen’s entry for the ‘Cleaner, Quieter and More track workers to work in greater safety and comfort. BAM Homogenous‘ competition (‘Schoner, Stiller en Rail also has a track vehicle with video inspection Homogener’), which was an initiative of the Directorate- equipment, and a second such vehicle has been ordered. In General for Public Works and Water Management. BAM addition to significantly less disruption to rail traffic from Wegen has also developed a screen that improves air track inspections, this inspection vehicle also provides quality because the types of plants used in the screen greater safety for the inspectors. absorb some of the dust particles, exhaust gases, nitrogen and carbon compounds present in the air. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The new concrete apron at Brussels South Airport was commissioned in December.

BAM Infraconsult is the consultancy and engineering Betonac which is based in Sint-Truiden, Belgium, office for Royal BAM Group’s civil engineering sector. Its specialises in laying concrete and asphalt roads and building services are aimed principally at support for BAM Civiel, infrastructure such as bridges, tunnels, viaducts, marine BAM Infratechniek, BAM Rail and BAM Wegen, but BAM engineering works, ground work, sewerage treatment Infraconsult also works for sister companies in other stations and noise barriers. The business was set up in 1910 sectors and for outside clients. BAM Infraconsult’s and has approximately 350 employees. Betonac has a extended package of services includes management recently refurbished laboratory for testing concrete and consultancy, advice, design and engineering, inspection asphalt mixes, as well as its own design office for work such and consultancy on management and maintenance, as stability studies. managing permits, projects, contracts, operation and risk, and Reliability, Availability, Maintainability &Safety Betonac has been involved in the construction of virtually (RAMS) analyses. every single motorway in Belgium. Laying major concrete The company covers the entire process, from planning, roads and motorways is one of the company’s specialties. design and calculation phases through to implementation Betonac is a market leader in this field. The operating and the construction aftercare process. BAM Infraconsult company has three mobile concrete plants. Betonac also 70 has 170 employees spread over branches in Gouda (head constructs concrete aprons for airfields. During 2007, the office), Apeldoorn, Culemborg, The Hague, Dongen and company had ongoing activities at the Charles de Gaulle

2007 Singapore. Airport in Paris and Bierset Airport in Liège. Surfacing work was undertaken in conjunction with Galère at Gosselies, BAM Infraconsult undertook the systems engineering which is also known as Brussels South Airport. The total design and risk and permit management for the large- concrete apron area involved was in excess of 250,000 m2. scale design-and-construct contracts to widen the A4 A new and ultra-modern asphalt plant was commissioned in Burgerveen-Leiden motorway, build the Hanzelijn 2007 to assist with road works in asphalt concrete; the plant Nieuweland railway line, widen the A73 motorway, and is situated in Wanze (near Liège) and produces all of the build the A2 rail crossing at Den Bosch and the A2 mixes including recycled asphalt. Zaltbommel-Maas section. BAM Infraconsult also provides support in the preparation of tender submissions, such as In addition to road construction, Betonac also undertakes the tender for the complex urban and civil engineering A2 other civil engineering work, ranging from water purification Maastricht project. plants to tunnels, bridges and locks. Various projects are in progress in the context of the GEN Project (Gewestelijk As far as marine engineering is concerned, BAM Express Net (Regional Express Net) in and around Brussels, Infraconsult was involved in the installation of the for the Belgian rail network manager Infrabel and for Tuc innovative Xbloc breakwater component in Caladh Mor Rail. (Ireland) and Port of Poti (Georgia), and in designing the harbour wall for the port extension in Sohar (Oman). Betonac has a modern plant yard. The anti-skid pavers and asphalt sets are equipped with satellite navigation and what are called ‘total plants’ for custom work. The machines are loaded with three-dimensional design data, which enables the most efficient operation possible and avoids deviations in layer thicknesses. This system also allows Betonac to provide its clients with very meticulous reports, which render test core drilling superfluous. One of the places where these modern techniques have been used is in the reconstruction of the motorways in the Ardennes where Betonac has laid about 400,000 m2 of continuous reinforced road concrete in the past two years. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 1.2 kilometre long Snepkaai railway viaduct at Ghent, to double the track between Ghent and Bruges.

Galère and Bateau jointly building the waste water purification plant in Louvain-la-Neuve.

The new organisation, CEI-De Meyer, succeeded in Galère is primarily active in the French-speaking part of winning a range of substantial infrastructure projects in Belgium. The business operates from Liège, and also has 2007 – the first full year after the merger took place. The an office in Charleroi. The operating company has grown company’s position in the non-residential and industrial very strongly over the past 15 years and is a market leader construction sectors has also been enhanced. in the French-speaking part of Belgium. Galère makes up BAM Wallonië along with Balteau and FFK. The companies CEI-De Meyer has two divisions: Civil Engineering (which employ more than 1,000 workers. operates from the office in Eke, near Ghent) and Buildings (which has offices in Brussels and Ghent). CEI-De Meyer has Galère’s Civil Engineering division completed various approximately 600 employees. projects in 2007, such as BioWanze, a 300,000 m3 bio- ethanol plant in Wanze on the banks of the River Maas, The Civil Engineering division completed various substantial and the major waste-water purification plant in Oupeye projects in 2007, including the construction of the (Liège), construction of the Grouft Tunnel in Luxemburg Vandenheuvel metro station in Anderlecht, the connecting (along with Wayss & Freytag Ingenieurbau) and curve in the railway line at Louvain and various marine construction of a range of track sections for the high 71 engineering works for the Leie line in Kortrijk. speed train line in Wallonia (the French-speaking part of CEI-De Mayer’s work in progress includes the renovation of Belgium). 2007 platforms, tracks and tunnels at the station in Bruges, the third phase of renovations at the Snepkaai in Ghent and the Galère has had a Buildings division since about 1990 for erection of a new bridge over the Albert Canal in non-residential building work. The major contracts in this Vroenhoven. CEI-De Mayer, in a joint venture with its sister sector include a range of industrial projects, such as the company Wayss & Freytag Ingenieurbau and others, has also construction of laboratory facilities and offices in started work on the Diabolo Project, which involves the Rixensart for GlaxoSmithKline Biologicals and a large new expansion of the Brussels Airport (Zaventem) railway station data centre for Crystal Computing (Google) in Baudour and the boring of two 1,080 metre long tunnel tubes near Mons. underneath the airport. Galère has for some years had its own restoration division, Completed projects in the industrial sector included BASF in which started on the restoration of four monument Antwerp and ArcelorMittal in Ghent. Projects in progress frontages of properties on the Grote Markt in Brussels at include one at BP in Geel and the power station in Ghent. the end of 2007.

Projects in progress in the Buildings division in 2007 Balteau specialises in designing and constructing electro- included the construction of a combined convalescent and mechanical systems for purifying, treating and pumping care home in Zwijndrecht, school buildings in Laken and water. Galère and Balteau have been working together on Brussels, renovation and new build for the museum site in projects for waste-water purification plants since 2000. Louvain, the Royal Military School in Brussels and the De FFK, which is a specialist in bored pipes, was fully Singel cultural centre in Antwerp. CEI-De Meyer is integrated during 2007 and now carries out a range of constructing apartment and shopping complexes for a projects along with the Civil Engineering division. number of project developers in Aalst, Bruges, Ninove and Brussels, as well as other places. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 26 kilometre long guided busway, Cambridge.

Visitor centre at the Cliffs of Moher on the Irish west coast.

Edmund Nuttall is one of the leading companies in the UK Ascon Contractors is one of the largest and most for concrete works, road, marine engineering and railway successful construction companies in Ireland. Operating in construction. The operating company’s activities cover every the civil engineering market under the name ‘Ascon’, it is the aspect of the civil engineering market. The company delivers market leader. The company also undertakes non-residential a nationwide service through a wide network of regional construction projects under the name ‘Rohcon’. Since 2004, offices. The organisation also includes the subsidiary Ritchies, Ascon and its subsidiary, Ascon Property Developments Ltd., which specialises in geotechnology, including blasting work have been active in property development. in stone quarries. Nuttall employs a total of more than 3,000 people. Ascon has a wide range of substantial road construction projects in progress, including the construction of the N25 While the bulk of Nuttall’s turnover comes from roads, rail Waterford Bypass under a PPP contract, the construction of and marine engineering work, the company is also the N6/phase 2 between Athlone and Kinnegad and the successfully penetrating new growth markets such as Carlow ring road. Handovers included the first phase of the sustainable energy, nuclear decommissioning projects, N6 road project (this length of road between Kilbeggan and energy recovery from waste materials and substantial Kinnegad was opened to traffic in May 2007), the waste 72 infrastructure projects. water purification plant in Donegal Bay, the lengthening of the harbour wall at the Belview container terminal in the

2007 Nuttall has a number of very prestigious contracts in port of Waterford and Adamstown roads project on the progress, including earthworks and soil decontamination at outskirts of Dublin. New Ascon projects include the Mulroy the Olympic Park in Stratford (East London), a substantial Bay Bridge in County Donegal, the Portlaoise Bypass PPP improvement to a train depot for London Underground, the project, the Ballymore Eastace water treatment plant in reopening of the rail line between Airdrie and Bathgate in County Kildare and the construction of the N9 road between Scotland, the Brit-Ned gas pipeline project (also involving its Waterford and Knocktopher, in the south west of Ireland. sister company BAM Civiel), a further extension to the Humber Sea Terminal (on the east coast of England) and In 2007, Rohcon completed the construction of the Horse various framework contracts with Network Rail, Southwest Racing Ireland head office at the Curragh, County Kildare, Water and Cheshire County Council, Ministry of Defence. the Gorey shopping centre in Wexford and the Clasac cultural centre in Dublin. Current projects include the faculty A number of projects were completed during 2007, including building for Information Technology at the University of the replacement of the Surtees Bridge on the A66 trunk road Cork and the cultural centre in Carlow. Rohcon has near Stockton-on-Tees (Northeast England) and the soil commenced construction of two municipal care homes in decontamination at the Rochester Riverside development Dublin (with the Health Services Executive as client), as well site beside the River Medway. as the new Orthopaedic Hospital in North Dublin and the extension to Lily’s pharmaceutical factory in Kinsale, County The company’s commitment to the development of Cork. employees at every level within the organisation is evident from participation in National Vocational Qualifications for The property projects currently under way include the Linn building site workers and in training programmes for Dubh Development in Cork. Residential construction will students, as well as from the intensive management recommence here as soon as the housing market shows development programme. The company’s long held signs of recovery. certification under the Investors in People programme was renewed. The company also pays a great deal of attention to ‘responsible business’, e.g. by entering into long-term partnerships within the process chain, driving down accident statistics (‘Beyond Zero’), implementing environmental protection measures and being involved in the community WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf North-South metro line, Cologne: more than 3 km of tunnel with 1 above-ground and 6 underground stops.

Two-kilometre-long quay wall in the Omani port of Sohar, with service jetty and transhipment platform.

The Group has a leading position in the German civil Royal BAM Group undertakes projects outside Europe under engineering market via Wayss & Freytag Ingenieurbau. the flag of operating company Interbeton. Interbeton This operating company is based in Frankfurt am Main and has more than twenty projects in progress around the world has about 700 employees. Wayss & Freytag Ingenieurbau (both building and civil engineering projects). Interbeton has a good reputation as regards bored tunnels and has four subsidiaries, which are active in the countries where complex civil engineering projects and is therefore a much the operating company continually wins contracts: Higgs & sought after partner for joint ventures, both in Germany Hill Dubai, PT Decorient Indonesia, Interbeton bv Libya and in other countries, where it often works with local Branch and Interbeton bv Ghana Accra Office. The company group companies. focuses on specialist niche markets using a selective contracting policy. Wayss & Freytag Ingenieurbau won a number of substantial contracts in 2007. For instance, the company was involved In early 2007, Interbeton in a joint venture with Grinaker-LTA in the construction of the Finne Tunnel, 25 km north of won a contract for two football stadiums in South Africa: Weimar. The Finne Tunnel is a railway tunnel consisting of Soccer City in Johannesburg (94,700 seats) and the stadium two tubes, each 6.8 km long, and forms part of the new rail in Port Elizabeth (45,000 seats). Interbeton is also active 73 link between Erfurt and Leipzig. Wayss & Freytag is part of elsewhere on the African continent. For example, the the consortium constructing a 4.8 km long railway tunnel company has built a 700 m long breakwater in Limbe, 2007 in Zürich between the Central Station and the stations at Cameroon. In Libya, in addition to contracts for mechanical Altstetten and Oerlikon. Work has commenced in Austria and electrical work in the oil and gas sectors, Interbeton has on the construction of the 1.1 km long Lilienberg Tunnel for won a contract to repair a jetty and breakwater in Zueitina road traffic near Völkermarkt. A start has also been made Harbour. In Ghana, Interbeton has been responsible for on the construction of the 7.7 km long Hengsberg Tunnel, building a 45 km long road between Sefwi Wiawso and which forms part of the Koralm track for the high-speed Benkyema and for the construction of a cocoa processing line. The two tunnel drilling machines, which were factory in Tema. deployed for the construction of the 9.3 km long Katzenberg Tunnel (in the far south of Germany), have In Indonesia, where the sister company Decorient is active broken through successfully. primarily in the non-residential and industrial construction Early 2008 the company has won a contract in Hamburg for sectors, various projects have been completed and handed the civil engineering work on a 1,640 MW power station. over and various new contracts have recently been won. Wayss & Freytag Ingenieurbau is also responsible for the construction of the Bernburg power generation system, The Middle East market continues to flourish. The subsidiary which will process 550,000 tonnes of residual waste each company Higgs & Hill Dubai is constructing the office and year. hotel complex Ibn Battuta Gate. More than 10,000 blocks have already been produced and installed to lengthen the Wayss & Freytag Ingenieurbau is part of an international harbour wall as part of the harbour extension at Sohar, consortium that won the first German civil engineering PPP Oman since the work started in 2006. In mid-2007, contract. The contract involves widening the A8 motorway Interbeton won the contract for the inlet and outlet pipes for near Munich over a 37 km section. a water purification plant in Sur, also in Oman. Interbeton is working on three architecturally distinctive buildings in Work on the new cruise and ferry terminal in Kiel has been Qatar. completed. The renovation of the Gablenz Bridge, the most important link for traffic between Kiel city centre and the The second LNG jetty, constructed near Karratha on the eastern suburbs, is also proceeding steadily. Australian west coast using the floating crane IB909, was Wayss & Freytag is also involved in the civil works for a transferred to the client, Woodside, in April 2007. substantial new hospital complex in Stuttgart. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Widening of the N31 Wâldwei over thirteen kilometres and building of various structural works (with third parties).

2

1

74 2007

1. North Bromsgrove High School (for about 1,100 pupils), one of five new schools in Bromsgrove, United Kingdom. 2. Waterford Bypass, Ireland. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Public-private partnerships

BAM PPP represents Royal BAM Group in the public-private announcement of the preferred bidder for this project is partnership sector. This sector accounts for the revenue expected later this year. and results from the operational PPP activities. BAM PPP’s profit for 2007 increased to €29.2 million (2006: €2.2 In Ireland, the Celtic Roads Group (with BAM PPP as one of million) because of substantially higher operating results, the partners) is now the most successful consortium in the returns from the disposal of part of the portfolio to a joint National Roads Authority's toll highway programme, after venture and the transfer at the request of the client of a the CRG won the M7/M8 motorway project near Portlaoise. concession in the United Kingdom. At year-end 2007, the Celtic Roads Group now has three motorway concessions, order book totalled €513 million (2006: €338 million). including the fully operational M1 bypass around Dundalk Construction and maintenance activities associated with and the N25 ring road around Waterford, which is currently PPP projects are accounted for in the relevant sector. The under construction. BAM PPP is part of the consortium that results of these activities were also positive in 2007. has pre-qualified to tender for the Dublin Metro North project, which is a substantial and complex project BAM PPP employs 75 people and has offices in Bunnik, requiring the involvement of various BAM companies. Glasgow, Birmingham, Dublin and Frankfurt am Main. The Group focuses on PPP projects in all European home In Germany, BAM PPP is part of the a+ consortium, which markets. In 2007, tenders were submitted in the won the first contract in the ‘A Model’ programme in 2007. Netherlands, Belgium, Germany, the United Kingdom and The first contract involves widening the A8 motorway near Ireland. Munich over a 37 km section. BAM PPP is also involved in the growing accommodation sector. A range of possibilities 75 BAM PPP is a partner in various consortia, which have are being examined in close collaboration with BAM PPP’s project bids outstanding worth a total construction value in sister company, BAM Deutschland. 2007 excess of €2.5 billion. If the consortia concerned were to win all of these contracts, the Group’s financial interest In most of the Group’s non-residential construction would amount to around €125 million. projects BAM PPP strives for a majority interest in the assets. In contrast, BAM carries out the more complex civil In the Netherlands, BAM PPP has submitted a bid – as a engineering projects in consortia. BAM PPP will continue consortium partner – for the Kromhout Barracks near this policy and further strengthen the Group’s portfolio of Utrecht. BAM has a majority interest in the Poort van Den PPP investments in 2008. Bosch consortium, which holds the concession for the A59 in the province of Noord-Brabant. 2007 was the first fully BAM PPP and DIF (Dutch Infrastructure Fund) set up a joint operational year for the A59 trunk road. The Group is part venture in 2007, which then took over four British of the Infraspeed consortium, which is preparing for operational projects from BAM PPP. At the start, DIF had a commissioning of the HSL South, the high-speed line 25 percent stake in the joint venture, with both parties between Amsterdam and the Dutch-Belgian border. The agreeing that this interest would be extended to 50 percent widening of the N31 national highway by the Wâldwei.com by the end of 2009. This disposal marks the start of an consortium was completed in December 2007. active portfolio management programme, aimed at liquidating the value created by BAM PPP’s investments, BAM PPP is part of a consortium tendering for the new after a few years of operation. The proceeds are then Liefkenshoek railway tunnel near Antwerp. The applied towards supporting the active policy and increasing announcement of the preferred bidder is expected within numbers of tenders. the next few months.

BAM PPP has ten fully operational accommodation projects in the United Kingdom. BAM PPP won the West Dunbartonshire Schools contract in 2007; the contract is the Group’s largest school project to date in the United Kingdom. This contract, for four schools, is expected to generate construction turnover of about €150 million. BAM PPP is currently involved in the final round of tenders for the Barnsley Building Schools for the Future (BSF) project. The WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Building installations (design & construct) at the Biovalue bio-diesel plant in Eemshaven, the Netherlands.

2

1 3

76 2007

1. New build, Dianet dialysis centre, Amsterdam. 2. New build, Campina dairy factory, Lutjewinkel, the Netherlands. 3. Renewal of fittings and light lines at Zaandam NS railway station. 4. New build, Houtrustweg sports hall, The Hague, for BAM Habo. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Mechanical and electrical contracting

BAM Techniek achieved a good result In the industrial field, BAM Techniek provided the of €11.6 million in 2007 (2006: €8.0 internal building systems for Biovalue at Eemshaven, the million). Turnover amounted to €206 first major bio-diesel plant in the Netherlands, based on a million (2006: €191 million). The design and construct contract. operating margin was 5.6 percent (2006: 4.2 percent). At year-end 2007, The Technical Management department provides the order book totalled €275 million multidisciplinary installation management services. (year-end 2006: €213 million). These activities are generally performed on a contract basis. BAM Techniek assumes responsibility for ensuring BAM Techniek is one of the leading that clients’ technical installations operate around the companies in the Netherlands as clock at optimum efficiency (these clients range from 4 regards technical installations, housing corporations to investors and from offices to technical management, energy systems health care institutions and commercial complexes). and cleanroom technology. BAM Techniek offers single-discipline and also multi- BAM Techniek has gathered together its know-how and disciplinary solutions for the design, supply, installation, experience with energy systems in the Energy Systems commissioning, service and maintenance of high-value Knowledge Centre, which specialises in the design and technological systems. The company has about 1,300 development of sustainable energy concepts and in employees and a decentralised organisational structure, energy management. The operating scope was with a widespread network of regional sites. In addition expanded during 2007, with project developers being 77 to a central organisation in Bunnik, BAM Techniek also advised in the early stages of projects on the options for has a further 12 sites spread throughout eight regions in sustainable energy provision. 2007 the Netherlands. BAM Techniek undertakes new-build and renovation Operating under the name Interflow, BAM Techniek is projects in the non-residential construction, industry, active in the cleanrooms, operating theatres and civil engineering and residential construction sectors. laboratory facilities market. Interflow also manufactures Clients also receive support from the knowledge centres laminar airflow units at its own production facility. In maintenance, energy systems, security, fire-safety 2007, Interflow supplied the new cleanroom for the systems, ICT, high purity systems, technical Nanotechnology Department at the Zernike Institute for computerisation, cleanrooms and operating theatres. Advanced Materials of the University of Groningen.

BAM Techniek focuses primarily on services in the BAM Techniek set up BAM Duurzaam (sustainable) in technical installations market. The regional offices 2007. The company’s operating field includes investing specialise in the installation and maintenance of all in, operating, designing, constructing and long-term building-related electrical systems, telecommunication maintenance of systems for the application of and data communication systems, mechanical sustainable energy in houses, offices and other installations, security systems, automated systems for commercial buildings. This is the answer provided by industrial and other technical applications and ICT BAM Techniek to the growing demand for energy networks. In 2007, for example, BAM Techniek installed concepts based on storing energy in the ground. BAM the electro-technical and mechanical systems for the Duurzaam is working for the development company G4 renovation of the Vrijhof teaching building at the (one of whose partners is BAM Vastgoed) on a central University of Twente in Enschede. In The Hague, BAM system for heat and cold storage in 2 multi-storey Techniek supplied the electro-technical and mechanical residential blocks at Euroborg in Groningen. systems and also sprinkler systems for the multifunctional Spuimarkt complex. BAM Techniek BAM Techniek and BAM Utiliteitsbouw set up the completed the mechanical systems for the Sport business unit BAM Gebouwbeheer in 2007 to provide full Sciences Institute at the Hanze University of Professional technical management and maintenance for clients that Education in Groningen, the mechanical systems for the operate at the national level. new build for the Public Prosecution Service in Lelystad and the electro-technical and mechanical work for the renovation of the historical Caesarea Care & Reception Centre in Apeldoorn. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Extension and modernisation of Pilsner Urquell brewery in Plzen, Czech Republic.

1 3 2

78 2007

1. Development and adaptation of baggage handling systems (including baggage robot) at Schiphol Airport, Amsterdam. 2. Development and extension of Michelin tyre factory at Olsztyn, Poland. 3. LF Specials project for Sabic Innovative Plastics in Bergen op Zoom, the Netherlands. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Consultancy and engineering

Tebodin Consultants & Engineers is an independent Europe) and positive operating results. Various projects, multidisciplinary consultancy and engineering firm that for clients such as Shell, have been successfully operates worldwide. Tebodin’s turnover for 2007 increased completed. by 7 percent to €219 million (2006: €204 million). One of the contracts secured by the Tebodin office in The results before tax increased by some 17 percent, to Belgium was the capacity expansion project at BASF. The €28.4 million (2006: €24.2 million). The number of number of employees has increased significantly. employees is over 3,000. Projects currently in progress by the Tebodin offices in Tebodin has more than 50 offices throughout Western, Poland include engineering, procurement and Central and Eastern Europe, the Middle East and Asia. The construction management for a rubber production company has continued its international expansion. The factory for the tyre manufacturer Michelin. In addition to year 2007 was the first year in which Tebodin achieved the property market, contracts have also been won in more than half of its profits outside the Netherlands. other sectors, for example for glass producer Euroglass. Tebodin’s widely spread office network is important for Tebodin Czech Republic has been working for major providing optimal assistance not only to single-country multinationals such as SAB Miller, Foxconn, ACG Flatglass clients, but also to global clients who operate in several Europe (with Tebodin Russia) and Skoda Auto. The office countries. in Romania completed projects in the property market and also in the oil and gas sector, for clients including Tebodin carries out about 30 percent of its turnover for GTC and Petrom. clients in the industrial sector, with 10 percent in property 79 and 25 percent in oil and gas. The health and nutrition Tebodin has signed a framework contract in Russia with industry represents about 10 percent of turnover, as do Castorama, an international chain in construction 2007 utilities and environmental contracts. Infrastructure materials. Various other contracts have also been won, projects account for about 5 percent of turnover. The including from the cement producer Holcim and Shell. remaining 10 percent is made up of various projects in Tebodin Russia has a range of contracts currently in other market areas. progress, such as the construction of an automotive plant for Nissan in St Petersburg and a new float glass plant for Tebodin's development in 2007 was once again good. Guardian in the city of Ryazan. The Tebodin office in the Strong market growth proved favourable to the company, Ukraine served a number of clients in the cement industry which extended its office network. The first office in India and by doing so has attained a strong position in this was opened in Chennai; this branch has since won its first market segment. Projects are also in progress in various contracts. The Polish network now consists of seven other market segments, such as the reconstruction of a offices, following the opening of a new branch in Katowice. retail network for Shell. An outstanding market position has been built up in nearly all the countries in which Tebodin has a presence. The Tebodin offices in the Middle East (Abu Dhabi, Dubai, Bahrain, Oman and Qatar) showed strong growth during Tebodin has maintained its strong position in the 2007. The number of employees increased to more than Netherlands with many projects for established clients. 650. Long-term relationships were maintained with The contract with LOP VOF (a joint-venture between clients in the oil and gas industry, water distribution and Tebodin, HAK and GTI), covering all onshore gas property development. Projects were also carried out in reclamation projects, has been extended for a further the region for global clients, such as a float glass plant for 2.5 years. The contract with DSM in the southern region Guardian. Tebodin continued its relationship with PDO in has also been extended. Other long-term relationships are Oman, by winning a long-term conceptual engineering continuing, with contracts for Sabic, EdeA, Gasunie, Corus services contract. and MSD. Projects have also been carried out for Nuon, Vopak and Sabic Innovative Plastics. New clients include In the third year of operations for the office in China Abener and Sensus. (Shanghai), projects were carried out for clients such as Dumex (Nutricia), DSM and Michelin. Various projects The German activities showed a strong recovery in 2007. were completed successfully, including for Pollmann and The improvement measures taken in 2006 showed results. for Heidelberg Druckmaschinen, with Tebodin acting in Tebodin Germany is back on track, with more than 25 new the latter case as client representative in the construction clients (including Uhde, Essent, Südchemie and Takenaka of a new factory. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 55, Baker Street, London (HBG UK).

80 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Financial Statements 2007 Contents

82 Consolidated balance sheet as at 31 December 83 Consolidated income statement 84 Consolidated statement of equity 85 Consolidated cash flow statement

86 Notes to the consolidated financial statements 86 1. General information 86 2. Business model 87 3. Summary of significant accounting policies 99 4. Financial risk management 103 5. Critical accounting estimates and judgements 104 6. Segment information 107 7. Overview of projects 109 8. Property, plant and equipment 111 9. Intangible assets 113 10. PPP receivables 114 11. Associates 115 12. Other financial assets 116 13. Inventories 116 14. Trade and other receivables 117 15. Cash and cash equivalents 118 16. Share capital 81 119 17. Reserves

119 18. Capital base 2007 120 19. Borrowings 126 20. Derivative financial instruments 126 21. Employee benefit assets and obligations 131 22. Provisions 132 23. Deferred tax 133 24. Trade and other payables 134 25. Personnel expenses 134 26. Finance income and expense 135 27. Income tax expense 135 28. Earnings per share 136 29. Dividends 137 30. Contingencies 138 31. Commitments 138 32. Business combinations 141 33. Non-current assets held for sale and discontinued operations 142 34. Related-party transactions 144 35. Joint ventures 144 36. Service concession arrangements 146 37. Government grants 146 38. Research and development 146 39. Events after balance sheet date

147 Statutory balance sheet as at 31 December 147 Statutory income statement 148 Notes to the statutory financial statements 156 Other information 159 Auditors’ report WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Consolidated balance sheet as at 31 December (x €1,000)

2007 2006

8 Property, plant and equipment 434,692 442,124 9 Intangible assets 905,358 799,647 10 PPP receivables 460,726 530,022 11 Associates 154,642 120,916 12 Other financial assets 66,576 128,392 20 Derivative financial instruments 14,239 10,751 21 Pensionplan assets 60,176 32,906 23 Deferred tax assets 21,344 19,695 Non-current assets 2,117,753 2,084,453

13 Inventories 1,671,386 1,313,165 14 Trade and other receivables 2,401,988 2,284,668 Current income tax receivable 21,008 51,434 20 Derivative financial instruments 365 205 15 Cash and cash equivalents 772,804 761,329 33 Non-current assets held for sale 168 1,555 Current assets 4,867,719 4,412,356

82 Total assets 6,985,472 6,496,809 2007

16 Share capital 447,889 422,916 17 Reserves (35,063) (14,860) Retained earnings 580,723 284,577 Equity attributable to the Company's shareholders 993,549 692,633 Minority interest 10,802 4,216 Group equity 1,004,351 696,849

19 Borrowings 1,826,607 1,544,000 20 Derivative financial instruments 16,892 22,926 21 Employee benefit obligations 173,495 188,588 22 Provisions 84,399 109,609 23 Deferred tax liabilities 72,660 118,643 Non-current liabilities 2,174,053 1,983,766

19 Borrowings 372,016 412,726 24 Trade and other payables 3,299,712 3,238,528 20 Derivative financial instruments 2,274 16 22 Provisions 83,381 95,340 Income tax payable 49,685 69,584 Current liabilities 3,807,068 3,816,194

Total equity and liabilities 6,985,472 6,496,809

18 Capital base 1,265,795 939,836

The notes on pages 86 to 146 are an integral part of these consolidated financial statements. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Consolidated income statement (x €1,000)

2007 2006

Continuing Discontinued Continuing Discontinued operations operations Total operations operations Total

6 Revenue 8,538,555 415,200 8,953,755 8,150,179 495,952 8,646,131

Raw materials and consumables (1,460,963) (124,621) (1,585,584) (1,213,439) (172,802) (1,386,241) Subcontracted work and other external charges (4,809,986) (175,495) (4,985,481) (4,789,778) (189,569) (4,979,347) 25 Personnel expenses (1,538,926) (90,092) (1,629,018) (1,417,857) (100,204) (1,518,061) 8. 9 Amortisation and depreciation (95,707) (6,547) (102,254) (90,261) (8,640) (98,901) 8. 9. 33 Impairments 1,000 - 1,000 (1,005) - (1,005) Other operating expenses (305,450) (5,043) (310,493) (395,204) (6,865) (402,069) Exchange rate differences (1,346) 156 (1,190) 1,945 112 2,057 Competition law fine - - - (7,347) - (7,347) Total operating expense (8,211,378) (401,642) (8,613,020) (7,912,946) (477,968) (8,390,914)

Operating result 327,177 13,558 340,735 237,233 17,984 255,217

83 26 Finance income 40,276 309 40,585 24,991 755 25,746

26 Finance expense (74,943) 324 (74,619) (73,203) (99) (73,302) 2007 11 Result from associates 49,243 - 49,243 20,785 - 20,785 33 Result from sale of discontinued operations - 72,234 72,234 - - - Result before tax 341,753 86,425 428,178 209,806 18,640 228,446

27 Income tax (71,462) (5,677) (77,139) (84,368) (6,442) (90,810) Net result for the year 270,291 80,748 351,039 125,438 12,198 137,636

Attributable to: Shareholders of the company 268,275 80,748 349,023 124,757 12,198 136,955 Minority interest 2,016 - 2,016 681 - 681 270,291 80,748 351,039 125,438 12,198 137,636

Earnings per share for net result attributable to shareholders of the Company 1 (in € per share)

2007 2006

Continuing Discontinued Continuing Discontinued operations operations Total operations operations Total

28 Basic 2.15 0.65 2.80 1.01 0.10 1.11 28 Fully diluted 2.01 0.59 2.60 0.95 0.09 1.04

The notes on pages 86 to 146 are an integral part of these consolidated financial statements. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Consolidated statement of equity (x €1,000)

Attributable to shareholders Minority Group of the Company interest equity Share Retained capital Reserves earnings

At 1 January 2006 417,271 (34,911) 199,360 2,301 584,021

20 Fair value cash flow hedges - 28,454 - - 28,454 Exchange rate differences - (8,403) - 7 (8,396) Net result recognised directly in equity - 20,051 - 7 20,058 Net result for the year - - 136,955 681 137,636 Total result - 20,051 136,955 688 157,694

16 Conversion of preference shares 5,282 - 637 - 5,919 29 Dividend paid 363 - (49,418) (503) (49,558) Other movements - - (2,957) 1,730 (1,227) 5,645 - (51,738) 1,227 (44,866)

At 31 December 2006 422,916 (14,860) 284,577 4,216 696,849 84

20 Fair value cash flow hedges - 3,512 - - 3,512

2007 Exchange rate differences - (23,715) - (18) (23,733) Net result recognised directly in equity - (20,203) - (18) (20,221) Net result for the year - - 349,023 2,016 351,039 Total result - (20,203) 349,023 1,998 330,818

16 Conversion of preference shares 24,957 - 1,901 - 26,858 29 Dividend paid 16 - (55,707) (451) (56,142) 32 Acquisition of subsidiaries - - - 5,039 5,039 Other movements - - 929 - 929 24,973 - (52,877) 4,588 (23,316)

At 31 December 2007 447,889 (35,063) 580,723 10,802 1,004,351

The notes on pages 86 to 146 are an integral part of these consolidated financial statements. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Consolidated cash flow statement (x €1,000)

2007 2006

Net result for the year 351,039 137,636 Adjustments for: 27 - Taxation 77,139 90,810 8 - Depreciation of property, plant and equipment 94,532 95,456 9 - Amortisation of intangible assets 7,722 3,445 8 - Impairment of property, plant and equipment (1,000) 1,000 9 - Impairment of intangible assets - 5 33 - Result on sale of discontinued operations (72,234) - - Result on sale of property, plant and equipment (5,282) (3,342) 26 - Finance income (40,585) (25,746) 26 - Finance expense 74,619 73,302 11 - Result from associates (49,243) (20,785) 21.22 Changes in provisions (78,296) (24,204) Changes in working capital (excluding net liquidities) (202,242) 37,019 Cash flow from operating activities 156,169 364,596

Interest paid (112,872) (95,121) Income tax paid (117,728) (53,195) 85 Net cash generated from operating activities (74,431) 216,280 2007

32 Acquisition of subsidiaries (141,798) (305,388) 8 Investments in property, plant and equipment (157,566) (137,824) 9 Investments in intangible assests (62,565) (1,294) 10.11.12 Investments in financial assets (106,454) (131,242) 33 Disposal of subsidiaries 96,813 - 8 Divestments in property, plant and equipment 31,148 19,837 9 Divestments in intangible assets 429 - 10.11.12 Divestments in financial assets 100,063 106,721 Non-current assets held for sale 1,331 - Interest received 35,133 21,637 11.26 Dividends received (including preference dividend) 18,476 13,516 Net cash flow from investing activities (184,990) (414,037)

16.19 Purchase of non-convertible preference shares - (130) 19 New long term borrowings 808,146 581,409 19 Repayment of long term borrowings (449,749) (406,966) 29 Dividends paid (including preference dividend) (60,076) (53,486) Dividends paid to minority interests (451) (503) Net cash flow from financing activities 297,870 120,324

Increase/decrease in net cash position 38,449 (77,433) 15 Net cash position at beginning of the year 551,163 632,332 Exchange rate difference on net cash position (23,351) (3,736) 15 Net cash position at end of the year 566,261 551,163

The notes on pages 86 to 146 are an integral part of these consolidated financial statements. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Notes to the consolidated financial statements

1. General information

Royal BAM Group nv (´the Company´) was incorporated under Dutch law, and is domiciled in the Netherlands. The consolidated financial statements for the year 2007 cover the Company and its subsidiaries (referred to together as ´the Group´), and its share in joint ventures.

Royal BAM Group is a public limited liability company with a listing on Euronext Amsterdam.

These consolidated financial statements cover the year 2007 and were approved for publication by the Executive Board on 19 March 2008. The 2007 financial statements were approved by the Supervisory Board on 19 March 2008 and will be submitted for adoption to the annual General Meeting of Shareholders on 7 May 2008.

2. Business model

This paragraph presents a summary of the activities of the Group from an accounting point of view. It should be borne in mind that the information set out here is limited to that subject and that it is not part of the summary of significant accounting policies as described in paragraph 3.

The Group’s activities can be summarised as follows: 86 • Construction contracts for projects with third parties; • Projects for the Group’s own risk (property development);

2007 • Public-private partnership (PPP) projects; • Rendering of services and other activities.

The majority of the Group’s activities consist of construction contracts with third parties. Revenues and results from these contracts are accounted for in the income statement based on the progress of the work. Construction contracts are presented in the balance sheet as receivables from or payables to customers, depending on the balance of cost incurred (including results recognised) and invoiced instalments. Please refer to Notes 3.10, 3.11 and 3.22.

Projects that are initiated at the Group’s own risk (property development) are treated as inventory on the balance sheet. From the moment of whole or partial transfer of the equitable title to third parties, revenue and result are recognised in the income statement. From that moment, the transferred projects are also presented in the balance sheet as receivables from or payables to customers, consistent with construction contracts with third parties. Non-recourse borrowings for projects are presented separately under borrowings. Please refer to Notes 3.9, 3.11 and 3.22.

The activities under public-private partnerships mainly consist of projects whereby (public) facilities and services are provided to third parties. Income is often related to the availability of the facility and in some cases to its actual use. These projects are accounted for in the balance sheet as financial fixed assets (PPP-receivables) and intangible assets (concessions) respectively. Non-recourse PPP-loans relating to these projects are stated separately under borrowings. When income depends on the availability of the facility, cash inflows consist of payments and interest income with regards to PPP-receivables and (deferred) concession revenue. When income is related to the actual use of the facility, cash inflows consist of actually received payments for using the facility. Cash outflows consist of the repayments on borrowings and the cost of concession activities. The interest result, concession result and depreciation expense are accounted for in the income statement. PPP-projects are treated as construction contracts during the construction phase. Please refer to Notes 3.7, 3.16, 3.22.

Services mainly consist of maintenance for third parties. Revenue is recognised and results are accounted for in the income statement. Please refer to Notes 3.10 and 3.22.

If it is probable that total contract cost will exceed total contract revenue, the expected loss will be recognised as an expense.

Costs of acquiring new projects are initially recognised in the income statement. If there is adequate certainty that the project will be awarded to the Group, these cost are capitalised from that moment. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3. Summary of significant accounting policies

3.1 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards (IFRS) as endorsed by the European Union.

The statutory accounts of Royal BAM Group nv have been prepared in accordance with the statutory provisions set out in Title 9 Book 2 and Section 402 of Book 2 of the Netherlands Civil Code. These financial statements have also been prepared in accordance with the facility presented in Section 362(8) of Book 2 of the Netherlands Civil Code, to base the statutory financial statements on the accounting policies as adopted in the consolidated financial statements.

The consolidated financial statements have been prepared based on the historical cost convention. All non-currents and financial instruments that are valued at amortised cost are subject to impairment testing and adjusted downward if required. Derivatives are stated at fair value. Financial liabilities are initially recognised at fair value and subsequently stated at amortised cost.

The consolidated balance sheet as at 31 December 2006 contains a number of reclassifications. It has also been adjusted for two proportionate consolidatied Irish joint ventures (PPP contracts). This resulted in an increase of intangible assets 87 of €73.4 million, an increase in long-term borrowings of €59.8 million and a decrease of associates with €13.6 million.

Because of the minimal impact, the figures in the consolidated income statement 2006 have not been adjusted. These 2007 adjustments have no impact on the shareholders’ equity at year-end 2006 and the results for 2006.

The Group applied IFRS 7 (Financial instruments: Disclosures) and the additional provisions in IAS 1 (Presentation of financial statements) for the first time in 2007. The adoption provides a better understanding of the nature and extends of the risks inherent in the Group’s financial instruments. This adoption did not affect the accounting policies for valuation and presentation of the financial instruments.

The Group studied the effects of IFRIC 14 (IAS 19 – The limit on a defined benefit asset, the minimum funding requirements and their interaction). This interpretation governs defined benefit pension plans where the fair value of the pension assets is larger than the pension liabilities. This interpretation has no consequences for the Group.

The Group is currently evaluating the impact of IAS 23 (Borrowing cost), IFRS 8 (Operating segments) and IFRIC 12 (Concession arrangements) on the Group’s operations.

The Group is currently evaluating the possibility to adopt IFRS requirements before they enter into effect, and will disclose the implications of IFRS requirements which are to be applied retrospectively in the following year. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3.2 Consolidation

a) Subsidiaries Subsidiaries include all entities over which the Group directly or indirectly has the power to control the financial and operational policies, generally accompanied by the possession of more than one half of the voting shares and taking into account the potential voting rights which are exercisable at the balance sheet date.

Subsidiaries are fully consolidated from the date on which the Group obtains control. They are deconsolidated from the date that control is relinquished.

The purchase method of accounting is used to account for the Group’s acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets acquired, equity instruments issued at the acquisition date and liabilities incurred or assumed, plus costs directly attributable to the acquisition.

Identifiable assets and acquired (contingent) liabilities are initially measured at fair value at the acquisition date, irrespective of the extent of any minority interest. If the cost exceeds the fair value of the Group’s share in the net identifiable assets acquired, the difference is recorded as goodwill. If the cost is less than the fair value of the net identifiable assets acquired, the difference is taken directly to the income statement.

b) Associates Associates are all entities over which the Group has significant influence but no control, generally accompanied by the possession of more than one fifth of the voting shares and taking into account the potential voting rights which are exercisable at the balance sheet date.

88 Investments in associates are initially recognised at cost and subsequently accounted for based on the equity method. Investments in associates include goodwill (net of any accumulated impairment losses) identified on acquisition. The

2007 Group recognises its part of the associates’ changes in reserves and attributable results in the carrying amount of the participating interest. The Group’s share in the participating interest’s results is recognised in the income statement. The Group’s share in the participating interest’s changes in reserves after the acquisition date is recognised in the Group’s reserves. The Group does not recognise any losses exceeding the carrying amount of the investment (including other unsecured receivables), unless it has an obligation to do so.

Associates are recognised from the date on which the Group obtains significant influence, until the date on which that significant influence ceases to exist.

c) Joint ventures The Group’s interests in entities, in which control is contractually exercised jointly with third parties, are accounted for based on proportional consolidation. The Group combines its share in the joint ventures’ individual revenues and expenses, assets and liabilities on a line-by-line basis with corresponding items in the Group’s financial statements.

d) Elimination of inter-company transactions Inter-company transactions, assets and liabilities and unrealised gains on transactions between subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction results in a demonstrable impairment of the asset transferred.

Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in the participating interest or joint venture. Unrealised losses are also eliminated unless the transaction results in a demonstrable impairment of the asset transferred.

The accounting policies applied by subsidiaries, associates and joint ventures have been adjusted where necessary to ensure consistency with the policies adopted by the Group. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3.3 Segment reporting

A business segment is a part of operations engaged in providing similar products or services that are subject to risks and returns that are different from those of other business segments. The Group’s primary segments consist of the following sectors: Construction, Property, Civil engineering, Public-private partnerships, Mechanical & electrical contracting and Consultancy and engineering. These segments also reflect the management and reporting structure of the Group. Geographical segments are based on products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments. The Group is active in the following geographical segments: the Netherlands, the United Kingdom, Belgium, Germany, Ireland and Other (worldwide). In 2007 the Group discontinued its operations in the United States of America.

3.4 Foreign currency translation a) Functional and reporting currency Items included in the financial statements of the Group’s companies are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements of the Group are presented in euros (€), which is the Group’s functional and reporting currency. Amounts are presented in thousands of euros (x €1,000) unless stated otherwise. b) Subsidiaries with financial statements denominated in foreign currencies The results and financial positions of all the subsidiaries that have a functional currency different from the reporting currency are translated into the reporting currency as follows: 89 (i) assets and liabilities for each balance sheet are translated at the closing rate at the date of that balance sheet;

(ii) income and expenses for each income statement are translated at average exchange rates; and 2007 (iii) all resulting exchange differences are recognised as a separate component of equity.

Goodwill and fair value adjustments arising on the acquisition of foreign entities are treated as assets and liabilities of the foreign entity and translated at the closing rate. c) Subsidiaries with transactions denominated in foreign currencies Foreign currency transactions are translated into the functional currency using the exchange rate at the date of the transaction. At each balance sheet date, monetary items denominated in foreign currencies are translated using the closing rate. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end are recognised in the income statement. d) Exchange rates The euro exchange rates used for the more important foreign currencies of the Group are as follows:

2007 2006 Spot rate on balance sheet date US dollar 0.678933 0.761093 Pound sterling 1.355197 1.490980

Average rate US dollar 0.729469 0.797282 Pound sterling 1.458627 1.465387

The following exchange rates are used with respect to discontinued activities, regarding the disposal of Flatiron: US dollar: €0.706964 (spot rate on balance sheet date) and €0.743416 (average rate). WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3.5 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and/or impairment losses. Cost includes expenditure that is directly attributable to the acquisition or construction of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits will flow to the Group and the cost of the item can be measured reliably. Other costs are charged to the income statement during the financial period in which they are incurred. Depreciation on property, plant and equipment is calculated using the straight-line method, taking into account their residual values over their estimated useful lives, as stated below. Land is not depreciated.

Land (improvements) 10% to 25% Buildings 3% to 10% Equipment owned by contracting companies 12.5% to 25% Hire fleet equipment 12.5% to 25% Plant & equipment 15% to 50% Office equipment 10% to 25% Computers and other hardware 10% to 25% Transport equipment 25% Houses 2%

When an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for separately for depreciation purposes. 90

The assets’ useful lives and residual values are reviewed annually, and adjusted if required. 2007

Gains and losses on disposals are included in the income statement by comparing the proceeds with the book amount.

Leases of property, plant and equipment for which the Group has taken over substantially all the risks and rewards of ownership are classified as financial leases. The leased assets are capitalised at the lease’s inception, based on the lower of the asset’s fair value or net present value of the minimum lease payments. The lease payments are divided into repayments and financing costs. The financing costs are accounted for in the income statement. Property, plant and equipment under financial leases are depreciated over the lower of their estimated useful lives or lease term.

3.6 Intangible assets

a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share in the identifiable assets and liabilities of the acquired subsidiary at the date of acquisition. Goodwill is carried at cost less accumulated impairment losses.

For the purpose of impairment testing the goodwill is allocated to the cash flow generating units that are expected to benefit from the acquisition which generated the goodwill. Cash flow generating units are recognised for the primary reporting segments of the Group.

Goodwill on acquisitions of associates is included in investments in associates.

Gains and losses on disposals of entities include the carrying amount of goodwill relating to the entity sold and are recorded in the income statement.

b) Non-integrated software Non-integrated software is stated at cost, less accumulated amortisation and impairment losses. Amortisation on non-integrated software is calculated using the straight-line method over their estimated useful life (4 to 10 years), taking into account their residual values. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The assets’ useful lives and residual values are reviewed annually and adjusted if required. c) Concessions Concessions consist of rights obtained from the government to charge users for the use of public facilities (toll roads), based on actual usage. They are accounted for at cost less cumulative depreciation. Concessions are depreciated to residual value in line with the use of the public facility.

Revenues and depreciation of concessions are reviewed annually and adjusted if required. d) Other intangible assets Other intangible assets regard market positions, including brand names and management of acquired subsidiaries and are stated at cost, less accumulated amortisation and impairment losses. Amortisation on other intangible assets is calculated using the straight-line method over their estimated useful life (4 years), taking into account their residual values.

The assets’ useful lives and residual values are reviewed annually and adjusted if required.

3.7 PPP receivables

PPP receivables are concession payments to be received from the government in relation with PPP projects, based upon the availability of the facility. PPP receivables are accounted for as financial assets. They are initially recognised in the financial statements at fair value and subsequently measured at amortised cost.

91 3.8 Other financial assets 2007

Other financial assets are non-derivative receivables and investments that are not quoted in an active market. The not-quoted receivables, with fixed or determinable payments, are initially recognised at fair value and subsequently measured at amortised cost.

Investments in entities where the Group has no significant influence in governing the financial and operating policies are classified as financial assets. They are recognised at fair value through profit and loss, or at cost if the fair value cannot be measured reliably and the difference between the investment and fair value is assessed as not being material to the consolidated financial statements.

3.9 Inventories a) Land and building rights Inventories of land and building rights are stated at the lower of cost or net realisable value. The Group capitalises interest as part of the cost when the land is assigned for construction and active development starts. b) Property development Inventories with respect to property development are stated at the lower of cost or net realisable value. The Group capitalises interest and other cost as part of the cost of property development. Capitalisation of interest cost starts at the beginning of development, is suspended during the period in which active development is interrupted and ceases when the project is completed or sold.

If the equitable title of a project is transferred in whole or in part to a third party, the capitalised cost of the project is accounted for in the income statement and the related revenue is recognised. On the balance sheet, such projects are accounted for as construction contracts. c) Raw materials and consumables Inventories of raw materials and consumables are stated at the lower of cost or net realisable value. Cost is based on the first-in, first-out (FIFO) principle and includes expenditure incurred in acquiring the inventories and in bringing them to their existing location and condition. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The net realisable value of this inventory is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses. Assets qualify as inventory if they are used in the normal course of business.

3.10 Construction contracts

The Group carries out construction contracts based on specifically negotiated agreements with third parties to construct assets. Contract costs are recognised when incurred. If the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over the period of the contract. If the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent that the contract costs incurred are likely to be recovered. If it is probable that the total contract cost will exceed the total contract revenue, the expected loss is recognised as an expense.

The Group uses the ‘percentage of completion method’ to determine the appropriate amount to be recognised in a given period. The stage of completion is measured by reference to the contract cost incurred as percentage of total actual or estimated project cost. Revenues and result are recognised in the income statement based on this progress. Costs incurred during the year that relate to future activity on a contract are excluded from the measurement.

On the balance sheet, projects are presented as receivables from or payables to customers for contract work. If the costs incurred (including the result recognised) exceed the invoiced instalments, the contract is presented as a receivable. If the invoiced instalments exceed the costs incurred (including the result recognised) the contract is presented as a liability.

92 Contracts containing the construction of a project and the possibility of subsequent long-term maintenance of that project as separate components, or for which these components could be negotiated individually in the market, are

2007 accounted for as two separate contracts. Revenue and results are recognised accordingly in the income statement as construction contracts for third parties and rendering services.

3.11 Trade and other receivables

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost, less impairments. Impairments are accounted for if there is objective evidence that the Group is unable to collect the amount receivable. Imminent corporate bankruptcy, financial reorganisations or overdue payments are considered to be indicators for possible impairments. Impairments amount to the difference between the anticipated reduced value of the return and the book value. The difference is recorded in the income statement and credited against the trade and other receivables on a special account for impairments. At the moment that the amount to be received is really uncollectible, receivable and related provision are written off and the difference is accounted for in the income statement.

Trade and other receivables are expected to be settled within the normal course of business, normally within twelve months. The fair value of the receivables and the amounts expected to be settled after more than twelve months are disclosed as such in the notes to the financial statements.

3.12 Cash and cash equivalents

Cash and cash equivalents include cash in bank, cash in hand and deposits held at call with banks, if repayable on demand and forming an integral part of the Group’s cash management. Bank overdrafts in current accounts are shown within current liabilities. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3.13 Non-current assets held for sale

Non-currents are classified as being held for sale if the book amount is to be recovered through a sale transaction rather than through continuing use. They are stated at the lower book amount or fair value less selling expenses. The liabilities related to the assets held for sale are presented separately as current liabilities. Depreciation stops as soon as assets are classified as assets held for sale.

3.14 Impairments

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation, as well as other assets, are reviewed for impairment whenever events or changes in circumstances indicate that the book value may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less selling expenses and the value in use. When applying value in use, impairments are assessed at the level of the cash flow generating unit.

Assets, excluding goodwill, that have been impaired are reviewed annually with regard to the possible reversal of the impairment. The maximum reversal is to the amount of the original impairment, and never higher than the carrying amount of the assets as though it was never subject to impairment.

3.15 Equity attributable to the Company’s shareholders

93 a) Share capital

Ordinary shares are classified as equity. Convertible and non-convertible financing preference shares are classified as 2007 liabilities. The equity component of the convertible financing preference shares is represented by the difference between the issue price and the fair value of the liability component, and is recognised as such in equity.

Costs directly attributable to the issue of new shares are shown in equity as a deduction (net of tax) from the proceeds.

If the Group or any subsidiary purchases shares in the Company’s share capital, the consideration paid – net of any directly attributable costs and taxes – is deducted from equity. If such shares are subsequently sold or reissued, any consideration received is included in equity, net of any directly attributable and taxes. b) Reserves Included are the reserves for cashflow hedges and currency translation adjustments. c) Retained earnings These regard the cumulative previous year earnings less dividends payable to holders of ordinary shares in the Company. Dividends are recognised as liabilities upon declaration. Dividends on financing preference shares are recognised as interest expenses in the income statement and as liabilities in the balance sheet. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3.16 Borrowings

The principle amount of the subordinated loan is subordinated to all other creditors. The interest payments are not subordinated.

Financing preference shares are classified as liabilities, less the equity component that is recorded under reserves in equity. The dividends on financing preference shares are recognised as an interest expense in the income statement.

Non-recourse loans are directly related to the corresponding assets (concessions, PPP receivables and property development).

Other project financing is also directly related to the corresponding assets but with limited additional securities.

The AM shares held by third party shareholders are classified as liabilities. The dividend is recognised as an interest expense in the income statement.

Financial lease obligations (net of finance charges) are classified as liabilities. The interest element in the lease payments is recognised as an expense in the income statement.

Bank overdrafts are classified as current liabilities and recognised at fair value.

Borrowings are initially recognised at fair value (net of incurred transaction costs) and subsequently measured at amortised cost.

94 Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability until at least 12 months after the balance sheet date. 2007

3.17 Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating and financing activities. Derivatives are only used as hedging instruments in the case of open future cash flows in foreign currencies and in the case of floating interest rates on (non-recourse PPP) loans.

Derivatives are initially recognised at fair value at the date on which they are entered into and are subsequently measured at their fair value at the reporting date. The method of recognising the resulting gain or loss depends on whether hedge accounting has been applied and the hedge relation is effective.

At inception of the transaction the Group documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group documents its assessment, at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are effective in offsetting changes in cash flows of hedged items. If effective, the movement is recognised in equity; otherwise it is accounted for in the income statement. The movement in equity consist of: (i) additions with regards to new derivatives, (ii) the increase of the value of existing derivatives and (iii) the release to the income statement, at the moment the related transaction is recognised in the income statement.

The Group documents all hedges regarding interest rate swaps, and forward exchange hedges with an equivalent value of more than €1 million.

The fair values of various derivative instruments used for hedging purposes are disclosed in the notes to the financial statements. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3.18 Employee benefits a) Pension liabilities The Group has both defined benefit and defined contribution schemes. The schemes are generally funded through payments to multi-employer funds, insurance companies or trustee-administered funds. A defined benefit scheme is a pension scheme that defines the amount of the pension benefits that an employee will receive on retirement, usually dependent on factors such as age, years of service and compensation. A defined contribution scheme is a pension scheme under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligations to pay further contributions, if the fund or insurance company does not hold sufficient assets to pay all present and future pension benefits. Defined benefit schemes in multi-employer funds are recognised as defined contribution schemes.

Defined benefit schemes The assets and liabilities recognised in the balance sheet in respect of defined benefit pension schemes are the present value of the obligations at the balance sheet date less the fair value of scheme’s assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms to maturity of the related pension liability. The Group applies the corridor method for actuarial gains and losses arising from changes in actuarial assumptions. Actuarial gains and losses exceeding 10 percent of the higher of the scheme’s assets or defined benefit obligation (the maximum corridor) are charged or credited to the income statement over the employees’ expected average remaining working lives. Past service costs are recognised immediately in the income statement, unless the changes 95 to the pension scheme are conditional on the employees’ remaining in service for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight-line basis over the vesting period. 2007

Defined contribution schemes For defined contribution schemes, the Group pays contributions to insurance companies or trustee-administered funds on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as personnel expense when they are due. Prepaid contributions are recognised as an asset to the extent that cash refunds or reductions in the future payments are available. b) Other long-term employee obligations These regard jubilee benefits, temporary leaves and similar arrangements and have a non-current nature. These obligations are stated at present value. c) Termination benefits Termination benefits are liabilities with regard to termination of employment before the normal retirement date. The Group recognises termination benefits when it is demonstrably committed to terminating the employment of employees according to a formal and irrevocable plan. Benefits are discounted to present value. The liability is recorded and disclosed as such under current and non-current provisions. d) Bonus and profit-sharing schemes The Group recognises a liability for bonuses and profit-sharing, based on the relevant performance schemes. The liability is recorded and disclosed as such under other liabilities. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3.19 Provisions

Provisions are recognised if the Group has a legal or constructive obligation as a result of past events and if an outflow of resources is probable and can be estimated reliably. No provisions are formed for future operating losses. The amount recognised as a provision is the best estimate of the outflow of cash to settle the present obligation. If the effect of the time value of money is material, the amount of the provision equals the net present value of the outflow.

a) Warranties This provision relates to estimated liabilities and current procedures with respect to disputes regarding completed projects.

b) Reorganisation A provision for reorganisation is recognised if the Group has approved a detailed and formal reorganisation plan and the reorganisation has commenced or has been announced publicly. Future operating losses are not provided for.

c) Rental guarantees Included are the estimated commitments arising from rental guarantees issued to third parties.

d) Other This covers other legal and constructive obligations, for example for environmental matters (soil pollution) and continuing rent commitments.

3.20 Deferred taxes 96

Deferred tax assets and liabilities are provided for temporary differences arising between the tax bases of assets and

2007 liabilities and their book values in the consolidated financial statements. However, deferred taxes arising from initial recognition of an asset or liability in transactions (other than business combinations) that at the time of the transaction affects neither accounting nor taxable profit or loss are not accounted for. Deferred taxes are determined using tax rates (and laws) that have been substantially enacted on the balance sheet date and that are expected to apply when the related deferred tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the timing differences and the available losses can be utilised.

Deferred taxes are provided on timing differences arising on investments in subsidiaries and associates, except if the timing of the reversal of the timing difference is controlled by the Group and it is not probable that the timing difference will reverse in the foreseeable future.

Deferred taxes are netted if it is legally permitted to offset deferred tax assets against deferred tax liabilities and if the deferred tax is levied by the same tax authority on the same tax liable entity.

Deferred tax assets and liabilities are classified as such and presented on the balance sheet as non-current assets and non-current liabilities. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3.21 Trade and other payables

Trade payables and other debts are stated at cost.

Trade payables and other debts are expected to be settled within the normal course of business, normally within twelve months. The fair value of the payables and the amounts expected to be settled after more than twelve months are disclosed as such in the notes to the financial statements.

3.22 Revenue a) Construction contracts The Group recognises revenue associated with construction contracts. Revenue consists of the initially agreed amount and the variations in contract work, claims and incentive payments.

If the outcome of the contract can be estimated reliably, project revenue and cost are accounted for in the income statement based on the progress of the work performed. This is the case when: (i) the total contract revenue can be measured reliably; (ii) it is probable that future economic benefits will flow to the Group; (iii) the cost to complete the contract and the stage of contract completion can be reliably measured; and (iv) the contract cost can be identified and measured reliably so that the actual cost can be compared with prior estimates. Revenue and cost are recognised by reference to the stage of completion of the project activity at the balance sheet date.

If the outcome of a contract cannot be estimated reliably, revenue is only recognised to the extent of contract cost incurred that are probably recoverable. 97 b) Property development 2007 The Group recognises revenue with regard to property development. Revenue consists of the agreed amounts of the transaction. No revenue is recognised until the risks and rewards relating to the equitable title are transferred to a third party. Revenue is recognised from the moment of transfer of the equitable title to a third party. Transfer takes place when (as a minimum): (i) total contract revenue can be measured reliably; (ii) it is probable that future economic benefits will flow to the Group and (iii) the cost to complete the contract can be reliably measured. Revenue and cost are recognised by reference to the stage of completion of the project activity at the balance sheet date and if and in so far as equitable title has been transferred.

The transfer of the equitable title is considered to be effective, when and as far as risks and rewards attached to ownership are transferred to the customer. This may relate to the total project or to significant parts thereof, if the related risks and rewards are transferred. This can be the case with land transfers. c) Concessions PPP projects are accounted for as construction contracts during the construction of the asset concerned. With regard to the income statement, this means that project revenue and cost are accounted for based on the progress of the work performed.

During the operational phase, revenue from concession management depends on the availability or the actual usage of the facility. When income depends on the availability of the facility, revenue consists of (i) the fair value of the rendering of contractually agreed services and (ii) interest income related to the capital investment in the project. When income depends on the actual usage of the facility, revenue consists of actual received payments for the use of the facility. In both cases, revenue is recognised when the related services are rendered. Amounts received in advance of rendering the services are recognised as a liability, and recognised as revenue when the related services are rendered. Interest is recognised as revenue in the period to which it relates. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf d) Sales of goods and services Revenue from sales of goods is recognised when products are delivered to the customer, the customer has accepted the products and collectibility of the related receivables is reasonably assured. Revenue consists of the amount agreed for the related transaction.

Revenue from rendering of services is recognised when the outcome of the transaction can be measured reliably. Revenue associated with the transaction is recognised by reference to the stage of completion. If the outcome of a transaction cannot be estimated reliably, revenue is only recognised to the extent that it is probable that the cost is recoverable.

e) Other Other revenue includes rental income received under operational lease or sublease of property, equipment or installations. The income received (net of any incentives granted to the lessee) is recognised in the income statement.

3.23 Expenses

a) Tender costs Tender costs are initially recognised in the income statement. If there is sufficient certainty that the project will be awarded to the Group, the costs are capitalised from that moment onwards.

b) Operational lease payments Payments made under operational lease (net of any incentives) are recognised in the income statement on a straight- line basis over the term of the lease. 98

c) Financial lease payments

2007 Financial lease payments are partly accounted for as liabilities and partly as financing cost. The financing costs are charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability.

d) Government grants Grants from the government are recognised at their fair value if there is reasonable certainty that the grant will be received and the Group will comply with all the conditions attached to it. Government grants relating to costs are recognised in the income statement in the period in which the related costs are accounted for.

e) Research and development Expense with regards to research and development and directly related to projects, is recognised in the cost price of these projects. Expenses with regards to other research and development are recognised and accounted for in the income statement in the period in which they occurred.

f) Financing income and expense Financing income consists of interest income and dividend income. Financing expense consist of interest costs on borrowings and financial lease arrangements as well as dividend paid on preference shares, less capitalised interest on PPP projects in the construction phase and on property development.

When the variable interest rate is fixed by means of an interest rate swap, the variable interest charge, as well as the value adjustment of the related interest rate swap is recognised in the income statement. Because of this financing expenses are fixed. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 4. Financial risk management

The Group recognises financial risk factors with regards to foreign exchange rate, interest rate, credit and liquidity. These financial risks are not exceptionally or different in nature from those that are customary in the industry. The Group applies a stringent policy designed to manage and mitigate these risks as far as possible. This involves the use of general management measures, such as internal procedures and instructions, as well as specific measures and/or financial instruments. These measures are accompanied by efficient reporting systems and short lines of communication. The Group’s financial risk factors, control measures and the residual risk are described below.

4.1 Financial risk factors a) Foreign exchange risks The Group has substantial activities in the United Kingdom and other non-euro countries. Up and until the third quarter-end 2007 the Group was also active in the United States. Results and shareholders’ equity are therefore affected by foreign exchange rates. Generally the Group is active in the above mentioned markets through local subsidiaries. The exchange risk is therefore limited, because income and expenditure are largely in the same currency.

A limited number of subsidiaries are active in markets where contracts are denominated in a different currency than their functional currency. Group policy is that costs and revenues from these projects are mainly expressed in the same currency, thus limiting foreign exchange risks. The Group hedges the residual exchange risk on a project-by- project basis, using forward exchange contracts. This involves hedging of unconditional project-related exchange risks in excess of €1 million as soon as they occur. Additional exchange risks in the tender stage and arising from contractual amendments are assessed on case-by-case basis. 99 Once costs and revenues in the same currency have been balanced against each other and any residual exchange risk has been hedged using forward exchange contracts, exchange rate fluctuations have no major effect on the result of 2007 the Group.

Procedures are established to ensure that the hedge transactions are properly determined. Systems are set up to perform and regularly analyse the necessary measurements of hedge effectiveness. b) Interest rate risks The Group’s interest rate risk is associated with interest-bearing receivables and cash and cash equivalents on the one hand and interest-bearing borrowings on the other hand. If the interest is variable, this presents the Group with a cash flow interest rate risk. If the interest rate is fixed, there is a fair value interest rate risk.

The Group mitigates the cash flow interest rate risk as far as possible through the use of interest swaps, under which interest liabilities based on a variable rate are converted to fixed rates. The Group does not use interest swaps under which fixed-rate interest liabilities are converted to variable rates in order to hedge the fair value interest rate risk.

The analysis of the cash flow interest rate risk takes into account of cash and cash equivalents, the net debt position and the usual fluctuations in the Group’s working capital requirements. Various alternatives are studied and hedges are considered. Under Group policy, cash flow interest rate risks with respect to long-term borrowings are largely hedged by interest swaps (in particular subordinated and PPP loans). Herewith the Group is not entirely insensitive to movements in interest rates. At year-end 2007, approximately half of the interest on the Group’s net debt position was fixed (2006: same). The part not covered consists almost entirely of short-term project financing.

If the interest rates (EURIBOR and LIBOR) in 2007 had been an average of 100 base points higher during 2007, the Group’s post-taxation results (under the assumption that all other variables remain equal) would have been about €2 million lower (2006, about €1 million lower). WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf c) Credit risks The Group has credit risks with regards to financial assets including PPP receivables, trade receivables, cash and cash equivalents and bank deposits.

The PPP receivables and a substantial proportion of the trade receivables consist of contracts with governments or government bodies. Therefore, credit risk inherent in these contracts is limited. Furthermore, a significant proportion of the trade receivables is based on contracts involving prepayments or payments proportionate to progress of the work, which limits the credit risks to the balances outstanding.

The credit risk from PPP receivables and trade receivables is monitored by the relevant subsidiaries. Clients’ creditworthiness is analysed in advance and then monitored during the performance of the project. This involves taking account of the client’s financial position, previous collaborations and other factors. Group policy is designed to mitigate these credit risks through the use of various instruments, including retaining ownership until payment has been received, prepayments and the use of bank guarantees.

The credit risk associated with cash and cash equivalents and bank deposits is minimal, as a result of the Group’s policy to work only with acknowledged banking institutions.

The carrying value of the financial assets involving a credit risk is as follows.

2007 2006

Non-current assets 10 PPP receivables 460,726 530,022 100 12 Financial assets 3,631 3,476 20 Derivatives 14,604 10,956 2007

Current assets 14 Net trade receivables 1,156,262 1,061,930 14 Retentions 113,488 120,437 14 PPP receivables 8,453 9,559 15 Cash and cash equivalents 772,804 761,329 2,529,968 2,497,709

None of the PPP receivables are overdue either at the end of 2007 or 2006, and no provisions were accounted for impairments.

At year-end approximately €470 million of the trade receivables is overdue (2006: approximately €530 million), for which a provision for impairment of approximately €107 million has been recorded (2006: approximately €99 million). Of this amount approximately €95 million is overdue for more than one year (2006: €115 million), for which a provision for impairment of approximately €70 million has been recorded (2006: approximately €70 million).

No impairments have been recognised for any other financial assets.

d) Liquidity risk Liquidity risks can occur if the performance of new projects stagnates and less payments (and prepayments) are received, or if investments in land, property development or working capital would have a large effect on the available financing resources and/or operational cash flow. The size of individual transactions can cause relatively large short- term fluctuations in the liquidity position. The Group has sufficient credit and current account facilities to manage these fluctuations. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The Group’s policy is designed to ensure continuity of its activities.

To manage liquidity risks subsidiaries prepare monthly detailed cash flow projections for the coming twelve months. Analysis of the liquidity risk takes account of cash and cash equivalents, credit facilities and the usual fluctuations in the Group’s working capital requirements. This provides the Group with sufficient opportunities to use its available liquidities and credit facilities as flexible as possible, and to indicate any shortfalls in a timely manner.

The first possible expected outgoing cash flows from financial liabilities as at the end of the year and settled on a net basis, consist of (contractual) repayments and (estimated) interest payments. The total expected net outflow for 2008 amounts to €3.8 billion (including trade and other payables), and about €2.3 billion for 2009 and thereafter.

The first possible expected outgoing cash flow from derivatives settled, on a gross basis, amounts to €80 million at the end of 2007 (2006: €24 million). Incoming cash flows as at year-end 2007 amounts to €79 million (2006: €22 million). These derivatives relate to forward exchange contracts with terms to maturity of less than one year; these cash flows are directly related to the cash flows from the Group’s operational activities.

The expected outgoing cash flows are offset by the incoming cash flows from operational activities. Besides that, the Group has syndicated and bilateral credit facilities available of €550 million and €180 million respectively.

4.2 Capital risks

The Group’s aim is for a financing structure that ensures continuing operations and minimises cost of equity. For this, flexibility and access to the financial markets are important conditions. 101

As usual within the industry, the Group monitors its financing structure using a solvency ratio among others. Solvency 2007 is calculated as the capital base divided by total assets. The Group’s capital base consists of equity attributable to the company’s shareholders, the subordinated loan, the preference shares and third-party shareholders in AM.

The Group considers a solvency ratio of 15 percent as a minimum requirement. This percentage was also agreed upon in the financing ratios with the banks in the completion of the Group’s refinancing in 2007. The Group has the ambition to achieve a solvency ratio of at least 20 percent by the end of 2009. The solvency ratio was 18.1 percent at the end of 2007 (2006: 14.5 percent). WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 4.3 Financial instruments by categories

The Group has four categories of financial instruments. These financial instruments are presented in various line items of the balance sheet. Some of the balance sheet items can be classified entirely as financial instruments. The following summary indicates the values for which financial instruments are included for each relevant balance sheet item.

Financial instruments Loans and Fair value Derivatives No receivables / through profit used for financial liabilities and loss hedging instruments Total

2007 10 PPP receivables 460,726 - - - 460,726 12 Other financial fixed assets - 3,631 - 62,945 66,576 20 Derivatives - - 14,604 - 14,604 14 Trade and other receivables 1,278,203 - - 1,123,785 2,401,988 15 Cash and cash equivalents 772,804 - - - 772,804 2,511,733 3,631 14,604 1,186,730 3,716,698

19 Borrowings 1,992,080 - - 206,543 2,198,623 20 Derivatives - - 19,166 - 19,166 24 Trade and other payables 1,224,260 - - 2,075,452 3,299,712 3,216,340 - 19,166 2,281,995 5,517,501

102 2006 10 PPP receivables 530,022 - - - 530,022

2007 12 Other financial fixed assets - 3,476 - 124,916 128,392 20 Derivatives - - 10,956 - 10,956 14 Trade and other receivables 1,191,926 - - 1,092,742 2,284,668 15 Cash and cash equivalents 761,329 - - - 761,329 2,483,277 3,476 10,956 1,217,658 3,715,367

19 Borrowings 1,747,010 - - 209,716 1,956,726 20 Derivatives - - 22,942 - 22,942 24 Trade and other payables 1,143,365 - - 2,095,163 3,238,528 2,890,375 - 22,942 2,304,879 5,218,196

4.4 Fair value estimation

The fair value of financial instruments not quoted in an active market is measured using valuation techniques. The Group is using various techniques and makes assumptions based on market conditions as per balance sheet date.

One of these techniques is the calculation of the net present value of the expected cash flows (DCF-method). Additionally a valuation from bankers is requested for interest rate swaps. The fair value of the interest rate swaps is calculated as the net present value of the expected future cash flows. The fair value of the forward exchange contracts is measured based on the ‘forward’ currency exchange rates on balance sheet date. It is assumed that the nominal value (less estimated adjustments) of trade receivables and trade payables is close to their fair value. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 5. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that reasonably may occur based on the current situation.

5.1 Critical accounting estimates and assumptions in the financial statements

The Group makes estimates and assumptions concerning the future. Estimates will, by definition, seldom be identical to the actual results. Estimates and assumptions are based on historical experience and other factors, including expectations of future events that may occur based on the current situation. Estimates and judgements are continuously evaluated. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are disclosed in the notes to the financial statements.

If the result of a contract can be reliably estimated, revenues and costs are accounted for over the period of the contract according to the ‘percentage of completion method’ in relation to the progress of the activities. If it is probable that the total contract cost will exceed the total contract revenue, the expected loss is recognised as an expense. This system is based on periodic assessments by the project teams using project accounts, project files and the expertise of those involved. Estimates are an inherent part of this process and they may differ from the subsequent reality, especially for long-term projects. However, historical experience has also shown that estimates are in general sufficiently reliable.

103

5.2 Critical judgements in applying the entity’s accounting policies 2007

As disclosed, the Group recognises revenue and result based on (partial) transfer of equitable title to third parties (IAS 18 Appendix 9). This accounting principle is currently being evaluated by the international regulatory authorities. The IFRIC draft interpretation on this subject, D21 (Sale of property), appeared on 5 July 2007. This interpretation provides additional guidelines for determining the point at which the sale of an (as yet uncompleted) property project may be regarded as realised. The Group will start to apply this interpretation within the financial year in which it comes into effect. This is presently expected to be in 2008.

Pension plan obligations are considered to be cost in a normal course of business but relate to liabilities that will have to be fulfilled at some distant future date. Pension charges are determined on the basis of actuarial principles. These are based on a number of underlying assumptions such as staffing changes, discount rates, mortality rates, pensionable age, expected return on plan assets, future salary increases and the associated indexation of the payments. These assumptions are generally reassessed at the start of every financial year. Actual circumstances may deviate with these assumptions, giving rise to an altered pension obligation, which may then lead to an extra income or expense in the consolidated income statement. Changes in the relevant pension costs may occur in future as a result of adjusted assumptions.

Except for the above and the elements as included in the notes to the financial statements there are no critical accounting estimates or assumptions in applying the Group’s accounting policies which require further disclosure. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 6. Segment information

Primary reporting - segments

Mechanical & Consultancy Dis- Other Revenue and Civil electrical and continued including results per sector Construction Property engineering PPP contracting engineering operations eliminations 1 Total

2007 Third party revenue 3,317,199 1,303,884 3,446,874 73,411 180,408 213,441 415,200 3,338 8,953,755 Sector revenue 473,669 - 65,226 - 24,970 5,692 - (569,557) - Revenue 3,790,868 1,303,884 3,512,100 73,411 205,378 219,133 415,200 (566,219) 8,953,755

Operating result 60,277 102,652 93,994 47,075 10,693 27,959 13,559 (15,474) 340,735 Net finance cost 27,997 (15,755) 17,041 (21,794) 907 452 633 (43,515) (34,034) Results from associates - 8,917 395 3,969 - - - 35,962 49,243 Result from sale of discontinued operations ------72,234 - 72,234 Result before tax 88,274 95,814 111,430 29,250 11,600 28,411 86,426 (23,027) 428,178 Tax (77,139) Net result for the year 351,039

2006 Third party revenue 3,024,377 1,375,897 3,305,816 70,319 169,817 199,924 495,952 4,029 8,646,131 Sector revenue 368,483 - 39,917 - 21,081 4,322 - (433,803) - Revenue 3,392,860 1,375,897 3,345,733 70,319 190,898 204,246 495,952 (429,774) 8,646,131 104

Operating result (53,063) 118,780 103,182 27,950 7,600 24,859 17,987 7,922 255,217

2007 Net finance cost 23,049 (24,839) 15,086 (26,657) 394 259 656 (35,504) (47,556) Results from associates - (451) 616 908 - - - 19,712 20,785 Result before tax (30,014) 93,490 118,884 2,201 7,994 25,118 18,643 (7,870) 228,446 Tax (90,810) Net result for the year 137,636

Mechanical & Consultancy Dis- Other Balance sheet segmentation Civil electrical and continued including Construction Property engineering PPP contracting engineering operations eliminations 1 Total 2007 Assets 1,591,789 2,521,921 2,389,961 755,796 95,525 150,157 - (674,319) 6,830,830 Associates 1,153 4,943 5,902 3,994 - - - 138,650 154,642 Total assets 1,592,942 2,526,864 2,395,863 759,790 95,525 150,157 - (535,669) 6,985,472

Liabilities 1,134,188 2,104,264 1,637,100 635,644 71,344 79,447 - 319,134 5,981,121 Group equity ------1,004,351 1,004,351 Group equity and liabilities 1,134,188 2,104,264 1,637,100 635,644 71,344 79,447 - 1,323,485 6,985,472

2006 Assets 1,913,007 1,676,258 2,269,402 725,921 83,776 147,734 209,417 (649,622) 6,375,893 Associates 999 3,670 5,782 58 - - - 110,407 120,916 Total assets 1,914,006 1,679,928 2,275,184 725,979 83,776 147,734 209,417 (539,215) 6,496,809

Liabilities 1,484,385 1,444,916 1,510,093 628,871 58,566 75,549 131,763 465,817 5,799,960 Group equity ------696,849 696,849 Group equity and liabilities 1,484,385 1,444,916 1,510,093 628,871 58,566 75,549 131,763 1,162,666 6,496,809

1 Inclucing non-operational assets and liabilities. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Mechanical & Consultancy Dis- Other Civil electrical and continued including Other sector information Construction Property engineering PPP contracting engineering operations eliminations 1 Total

2007 Investments 2 36,135 53,037 109,584 60,962 4,093 3,154 25,927 3,277 296,169 Amortisation and depreciation 20,332 5,019 58,872 1,666 1,769 2,090 6,547 5,959 102,254 Impairment losses reversed 1,000 ------1,000

Employees, average 8,098 570 14,136 74 1,270 2,629 952 278 28,007 Employees, year-end 8,140 614 14,476 76 1,290 2,705 - 277 27,578

2006 Investments 2 31,535 229,954 76,128 49 1,940 4,322 25,082 5,011 374,021 Amortisation and depreciation 19,269 1,369 59,591 10 1,839 1,869 8,640 6,314 98,901 Impairments 1,000 ------51,005

Employees, average 8,130 470 14,696 52 1,333 2,275 1,090 284 28,330 Employees, year-end 8,122 497 16,362 55 1,338 2,512 1,172 280 30,338

Secundary reporting - geographical 105

Mechanical & Consultancy Dis- Other 2007 Revenue per Civil electrical and Continued including Geographical area 3 Construction Property engineering PPP contracting engineering operations eliminations 1 Total 2007 Netherlands 1,550,404 1,049,812 1,280,558 4,177 204,402 110,127 - (356,626) 3,842,854 United Kingdom 1,524,204 170,376 863,206 67,869 - - - (193,994) 2,431,661 Belgium 176,051 43,819 408,403 - 153 1,609 - - 630,035 Germany 522,690 - 204,059 1,365 654 24,831 - 15,531 769,130 Ireland - 39,877 463,197 - 3 - - (31,413) 471,664 United States - - 655 - - - 415,200 - 415,855 Other (worldwide) 17,519 - 292,022 - 166 82,566 - 283 392,556 3,790,868 1,303,884 3,512,100 73,411 205,378 219,133 415,200 (566,219) 8,953,755

2006 Netherlands 1,320,098 1,119,509 1,351,389 8,287 189,507 124,280 - (164,957) 3,948,113 United Kingdom 1,407,757 239,109 827,295 62,032 33 - - (257,730) 2,278,496 Belgium 154,283 - 357,655 - 222 427 - (93) 512,494 Germany 507,059 996 162,289 - 1,097 16,682 - 3,503 691,626 Ireland - 16,283 384,389 ----(10,550) 390,122 United States - - 24 - 30 - 495,952 - 496,006 Other (worldwide) 3,663 - 262,692 - 9 62,857 - 53 329,274 3,392,860 1,375,897 3,345,733 70,319 190,898 204,246 495,952 (429,774) 8,646,131

1 Inclucing non-operational assets and liabilities. 2 Gross investments in tangible and intangible assets. 3 Geographical allocations based on location of projects. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Assets per geographical area 1 2007 2006

Netherlands 3,561,468 3,265,758 United Kingdom 1,788,400 1,812,326 Belgium 576,361 325,071 Germany 532,436 453,940 Ireland 574,286 467,275 United States - 201,816 Other (worldwide) 247,183 226,690 Eliminations, associates and not allocated assets (294,662) (256,067) 6,985,472 6,496,809

Investments per geographical area 2 2007 2006

Netherlands 86,404 284,240 United Kingdom 16,660 14,051 Belgium 63,946 9,225 Germany 30,930 16,284 Ireland 58,098 9,086 United States 26,396 25,082 Other (worldwide) 13,735 16,053 296,169 374,021

106

1 Geographical allocations based on location of the assets.

2007 2 Gross investments in tangible and intangible assets based on geographical location.

Other reporting

Revenue per category 2007 2006

Construction contracts 6,917,076 6,460,223 Property development 1,303,884 1,388,021 Concessions 73,411 70,319 Services and other 244,184 231,616 Discontinued operations 415,200 495,952 8,953,755 8,646,131 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 7. Overview of projects

Construction contracts and property development These projects reflect an important part of the Group’s activities and are presented in various line items of the balance sheet. In addition to the disclosures and to enhance the insight in the Group’s overall position the relevant line items are stated below:

Third Property party development projects Total

2007 Land and building rights, property development 1,646,815 - 1,646,815 Amounts due from customers 157,978 434,859 592,837 Total assets 1,804,793 434,859 2,239,652

Non-recourse loans 440,158 - 440,158 Other project related financing 249,365 - 249,365 Amounts due to customers 101,922 787,980 889,902 Total liabilities 791,445 787,980 1,579,425

At 31 December 1,013,348 (353,121) 660,227

2006 107 Land and building rights, property development 1,287,215 - 1,287,215

Amounts due from customers 156,231 380,208 536,439 2007 Total assets 1,443,446 380,208 1,823,654

Non-recourse loans 305,149 - 305,149 Other project related financing 214,209 - 214,209 Amounts due to customers 92,113 799,195 891,308 Total liabilities 611,471 799,195 1,410,666

At 31 December 831,975 (418,987) 412,988

The accumulative costs (including result) and accumulative invoiced instalments of third party projects recorded in the balance sheet at year-end 2007 amount to €10,289 million (2006: €11,373 million) and €10,642 million (2006: €11,792 million) respectively. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf PPP projects The total position of the PPP projects in which the Group is involved is as follows:

Non-current Current Total

2007 Intangible assets (concessions) 132,383 - 132,383 PPP receivables 460,726 8,453 469,179 Non-recourse PPP loans (537,162) (32,653) (569,815) 55,947 (24,200) 31,747 Net assets and liabilities (16,287) 44,370 28,083 PPP projects (subsidiaries) 39,660 20,170 59,830 PPP projects (associates and non-current receivables) 16,621 - 16,621 Net investment as at 31 December 56,281 20,170 76,451

2006 Intangible assets (concessions) 73,425 - 73,425 PPP receivables 530,022 9,559 539,581 Non-recourse PPP loans (544,325) (15,437) (559,762) 59,122 (5,878) 53,244 Net assets and liabilities (17,016) 32,735 15,719 PPP projects (subsidiaries) 42,106 26,857 68,963 PPP projects (associates and non-current receivables) 12,685 - 12,685 Net investment as at 31 December 54,791 26,857 81,648 108 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 8. Property, plant and equipment

Plant, equipment Other Land and and tangible buildings installations fixed assets Total

AtPer 1 1 January januari 200620 CostKostprijs 210,841 467,500 122,520 800,861 Accumulatedbijzondere waardeverminderingen depreciation and impairment (52,605) (265,991) (64,488) (383,084) NetBoekwaarde book amount 158,236 201,509 58,032 417,777

2006 NetBoekwaarde book amount 1 januari at 1 January 158,236 201,509 58,032 417,777 AdditionsInvesteringen 10,554 93,352 33,918 137,824 AcquisitionVerwerving ofvan subsidiaries dochterondernemingen - - 1,539 1,539 DisposalsDesinvesteringen (2,481) (10,891) (3,123) (16,495) TransfersHerrubriceringen between tussen categories categorieën 1,445 4,080 (5,525) - ImpairmentBijzondere waardeverminderingen losses recognised (1,000) - - (1,000) DepreciationAfschrijvingen charge (10,076) (63,745) (21,635) (95,456) ExchangeValutakoersverschillen rate differences (234) (1,483) (348) (2,065) NetBoekwaarde book amount 31 december at 31 December 156,444 222,822 62,858 442,124

AtPer 31 31 December december 2006 2006 109 CostKostprijs 230,686 519,716 169,549 919,951

AccumulatedCumulatieve afschrijvingen depreciation and en impairment (74,242) (296,894) (106,691) (477,827) 2007 NetBoekwaarde book amount 156,444 222,822 62,858 442,124

2007 NetBoekwaarde book amount 1 januari at 1 January 156,444 222,822 62,858 442,124 AdditionsInvesteringen 14,178 96,534 46,854 157,566 AcquisitionVerwerving ofvan subsidiaries dochterondernemingen 382 9,351 2,159 11,892 DisposalsDesinvesteringen (3,029) (20,771) (2,066) (25,866) DisposalVerkoop vanof subsidiaries dochterondernemingen (7,478) (34,145) (10,520) (52,143) TransfersHerrubriceringen between tussen categories categorieën 1,445 4,493 (5,938) - ImpairmentTeruggenomen losses bijzondere reversed waardevermindering 1,000 - - 1,000 DepreciationAfschrijvingen charge (9,326) (62,199) (23,007) (94,532) ExchangeValutakoersverschillen rate differences (1,104) (3,194) (1,051) (5,349) NetBoekwaarde book amount 31 december at 31 December 152,512 212,891 69,289 434,692

AtPer 31 31 December december 2007 2007 CostKostprijs 229,076 504,474 179,003 912,553 AccumulatedCumulatieve afschrijvingen depreciation and en impairment (76,564) (291,583) (109,714) (477,861) NetBoekwaarde book amount 152,512 212,891 69,289 434,692 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The impairment loss reversed in 2007 (€1 million) relates to the impairment loss accounted for in the Construction sector in 2006. The recoverable amount of these assets was determined using the best information available to reflect the fair value less selling expenses.

The book value of the remaining tangible assets includes €21 million (2006: €8 million) for expenses relating to tangible assets in the course of construction. These are mainly related to equipment, machines and installations. Please refer to Note 31 for the contractual obligations in relation to tangible assets.

The fair value of the property, plant and equipment as at year-end 2007 amounts to €545 million (2006: €550 million, including Flatiron).

The amount of property, plant and equipment (not leased under financial lease) is not pledged as security for borrowings (2006: €22 million, with regards to Flatiron).

The net book amount of the property, plant and equipment leased under finance leases is presented below:

2007 2006

Land and buildings 25,497 26,307 Plant, equipment and installations 21,209 19,930 Other tangible fixed assets 64 5,920 At 31 December 46,770 52,157

The related payment commitments are included in current and non-current borrowings. Please refer to Note 19. 110 Financing expense and depreciation are included in the income statement. 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 9. Intangible assets

Non- integrated Goodwill software Concessions Other Total AtPer 1 1 January januari 20062006 CostKostprijs 503,650 14,358 - - 518,008 AccumulatedCumulatieve afschrijvingen amortisation anden impairmentbijzondere waardeverminderingen (5,408) (10,044) - - (15,452) NetBoekwaarde book amount 498,242 4,314 - - 502,556

2006 NetBoekwaarde book amount 1 januari at 1 January 498,242 4,314 - - 502,556 AdditionsInvesteringen - 1,294 - - 1,294 Acquisition of subsidiaries 232,903 - - 2,000 234,903 ImpairmentBijzondere waardeverminderingen losses recognised - (5) - - (5) AmortisationAfschrijvingen charge - (2,779) - (666) (3,445) ExchangeValutakoersverschillen rate differences (140) (6) - - (146) OtherOverige movements mutaties (8,935) - 73,425 - 64,490 NetBoekwaarde book amount 31 december at 31 December 722,070 2,818 73,425 1,334 799,647

AtPer 31 31 December december 2006 2006 CostKostprijs 727,478 15,406 75,397 2,000 820,281 111 AccumulatedCumulatieve afschrijvingen amortisation anden impairmentbijzondere waardeverminderingen (5,408) (12,588) (1,972) (666) (20,634) 2007 NetBoekwaarde book amount 722,070 2,818 73,425 1,334 799,647

2007 NetBoekwaarde book amount 1 januari at 1 January 722,070 2,818 73,425 1,334 799,647 AdditionsInvesteringen - 2,040 60,525 - 62,565 AcquisitionVerwerving ofvan subsidiaries dochterondernemingen 49,639 291 - 26,108 76,038 DisposalsDesinvesteringen (25,168) (109) - - (25,277) AmortisationAfschrijvingen charge - (2,232) (1,567) (3,923) (7,722) ExchangeValutakoersverschillen rate differences 122 (15) - - 107 NetBoekwaarde book amount 31 december at 31 December 746,663 2,793 132,383 23,519 905,358

AtPer 31 31 December december 2007 2007 CostKostprijs 752,071 17,561 135,922 28,108 933,662 AccumulatedCumulatieve afschrijvingen amortisation anden impairmentbijzondere waardeverminderingen (5,408) (14,768) (3,539) (4,589) (28,304) NetBoekwaarde book amount 746,663 2,793 132,383 23,519 905,358

9.1 Goodwill

The goodwill as at 31 December 2007 mainly relates to the acquisition of HBG in 2002 and AM in 2006. The book value of the goodwill in HBG amounts to €429 million as at 31 December 2007 (2006: €454 million). The decrease in 2007 relates to the goodwill of Flatiron. The book value of the goodwill in AM remained unchanged and amounts to €228 million.

The goodwill with regard to acquisition of subsidiaries in 2007 relates to the acquisitions of De Wilgen Pacific Vastgoed bv, Landsbeek nv (Kaïros), IMPMC Vastgoed bv and Betonac nv. The disposal under goodwill relates to the sale of Flatiron. Please refer to Notes 32 and 33. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The other movements with regard to goodwill in 2006 relates to realised tax loss carry-forwards in the Civil engineering sector, that were not recognised at the time of the acquisition of HBG.

The allocation of the goodwill to the sectors of the Group is as follows:

2007 2006

Construction 132,246 132,246 Property 330,874 297,833 Civil engineering 234,333 242,752 Mechanical and electrical contracting 1,857 1,857 Consultancy and engineering 47,353 47,382 At 31 December 746,663 722,070

The goodwill is tested for impairment by comparing the carrying amount of the cash generating units, including the allocated goodwill, with the recoverable amount of these cash generating units. The recoverable amounts are determined based on calculations of forecasted cash flows, based on revenue and profit margin (before tax) forecasts approved by management covering a five-year period. The forecasts are based on past performance and expectations about the market development in the different sectors. The forecasted cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market situation, an assessment of the time value of money and the risks specific to the asset. The pre-tax discount rate used reflects the risks specific to the sectors and varies between 9.0 percent and 11.3 percent (2006: 8.5 percent and 11 percent respectively).

112 At the end of 2007, this test did not result in any impairment of the goodwill. If the pre-tax discount rate would have been 1 percent higher on average, it would still not have resulted in an impairment. 2007

9.2 Concessions

Concessions consist of PPP projects (toll roads) in Ireland and Germany. These concession agreements have durations of between 15 and 30 years.

The investments during 2007 related to the PPP projects Waterford and Portlaoise in Ireland and the A8 motorway in Germany.

The other movements in 2006 relate to the consolidation of the two Irish joint ventures Celtic Roads Group (Dundalk and Waterford).

The concessions are pledged as security for the corresponding non-recourse PPP loans, which are included under current and non-current liabilities. Please refer to Note 19.

Please refer to Note 36 for further information regarding concession agreements.

9.3 Other

In 2007, value was assigned to the market positions, including (brand) names and management of the businesses that were acquired. Please refer to Note 32. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 10. PPP receivables

2007 2006

At 1 January 539,581 543,244 Disposals (63,670) - Consolidations and deconsolidations 9,039 - Receivables granted 81,000 78,672 Repayment of receivables (48,797) (8,924) Exchange rate differences (47,974) 13,034 Other movements - (86,445) At 31 December 469,179 539,581

PPP receivables are shown in the balance sheet as follows:

Non-current 460,726 530,022 Current 8,453 9,559 469,179 539,581

PPP receivables consist of the amounts receivable with respect to concession arrangements in the Netherlands and the United Kingdom. The current part of the PPP receivables is presented in trade and other receivables.

The average duration of the receivables is 23 years. Approximately €420 million of the non-current part has a duration of 113 more than 5 years (2006: €480 million). 2007

The interest rates on the PPP receivables are in line with the interest rates (after hedging) of the related PPP loans. The interest rates are fixed for the entire duration. The average interest rate on PPP receivables is 5.5 percent (2006: 5.1 percent).

The disposals during 2007 relate to the transfer of four existing PPP entities into a new founded joint venture with Dutch Infrastructure Fund (DIF). The total PPP receivables for these entities amounted to €255 million at the time of transfer. As DIF has an interest of 25 percent in the joint venture, the disposal, so far as the Group is concerned, amounts to €63.7 million. The Group has an interest of 75 percent in the joint venture and accordingly retains €191 million of these PPP receivables.

The repayment of receivables 2007 include the transfer of a British PPP contract as requested by the client.

The other movement in 2006 consists of the transfer of a part of the PPP receivables from one concession agreement to Bank Nederlandse Gemeenten. The corresponding non-recourse loan for this concession agreement was netted. Please refer to Note 19.

PPP receivables are pledged as security for the corresponding non-recourse PPP loans, which are included under current and non-current liabilities.

Please refer to Note 36 for further information regarding concession arrangements. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 11. Associates

2007 2006

AtPer 1 1 January januari 120,916 110,316 InvestmentsInvesteringen 155 6,239 DisposalsDesinvesteringen - (264) ConsolidationsConsolidaties en and deconsolidaties deconsolidations (6) (8,090) ShareAandeel in resultin resultaat 49,243 20,785 ResultWinstuitkeringen distributions en and ontvangen dividends dividend received (12,795) (9,316) ExchangeValutakoersverschillen rate differences 973 (794) OtherOverige movements mutaties (3,844) 2,040 AtPer 31 31 December december 154,642 120,916

The table below specifies the Group’s interests in its principal (unlisted) associates. The amounts relate to the interest of the Group in the balance sheets of the respective companies and the Group’s share in revenues and result for the respective years.

Country of incorporation % interest Assets Liabilities Net assets Revenues Result

2007 Van Oord nv Netherlands 21.49 354,130 215,658 138,472 354,975 35,962 114 Infraspeed (Holdings) bv Netherlands 21.50 121,076 117,082 3,994 3,609 3,969 Railpro bv Netherlands 10.00 6,083 3,342 2,741 9,658 (104)

2007 481,289 336,082 145,207 368,242 39,827 Other 9,435 9,416 At 31 December 154,642 49,243

2006 Van Oord nv Netherlands 21.49 322,396 212,080 110,316 325,748 19,712 Infraspeed (Holdings) bv Netherlands 21.50 226,552 226,527 25 734 - Railpro bv Netherlands 10.00 5,435 2,547 2,888 15,198 364 554,383 441,154 113,229 341,680 20,076 Other 7,687 709 At 31 December 120,916 20,785

Included are associates in which the Group holds less than twenty percent of the potential voting power, but over which the Group has significant influence through memberships of boards of management and/or supervisory boards.

For some associates there are significant restrictions on the ability to transfer funds. This mainly relates to terms on the basis of which repayment of external debt has priority over dividend distribution.

The other participations in 2007 relate to the Group’s interests in a range of project-related entities.

An amount of €32 million (2006: €32 million) of goodwill is included in the invested amount in associates. None of the goodwill is impaired. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 12. Other financial assets

Non-current receivables Other Total

PerAt 1 1 January januari 20062006 90,673 4,857 95,530 InvesteringenInvestments - 108 108 ConsolidatiesConsolidations en and deconsolidaties deconsolidations 12,480 382 12,862 VerstrekteLoans granted leningen 41,091 - 41,091 AflossingenRepayment ofleningen loans (11,088) - (11,088) ValutakoersverschillenExchange rate differences (45) - (45) OverigeOther movements mutaties 497 (593) (96) 133,608 4,754 138,362 WaarvanOf which kortlopend:current: (9,970) - (9,970) PerAt 31 31 December december 2006 2006 123,638 4,754 128,392

InvesteringenInvestments - 93 93 ConsolidatiesConsolidations en and deconsolidaties deconsolidations (655) 135 (520) VerstrekteLoans granted leningen 16,979 - 16,979 AflossingenRepayment ofleningen loans (41,768) - (41,768) ValutakoersverschillenExchange rate differences (29) - (29) OverigeOther movements mutaties 6,716 (73) 6,643 114,851 4,909 119,760 WaarvanOf which kortlopend:current: (53,184) - (53,184) 115 PerAt 31 31 December december 2007 2007 61,667 4,909 66,576 2007

The fair value of the non-current receivables at the end of 2007 amounts to €120 million (2006: €140 million). The interest rate is 9.0 percent (2006: 6.4 percent).

The column Other consists of interests in (unlisted) associates over which the Group has no significant influence.

The repayment of loans in 2007 includes an amount of €35 million, at book value, relating to the purchase of financing preference shares by Van Oord. The shares remaining at year-end 2007, with a book value of €35 million, are accounted for as current because of a similar repayment in March 2008. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 13. Inventories

2007 2006

Land and building rights 815,838 654,375 Property development 830,977 632,840 Raw materials and consumables 19,303 20,894 Work in progress and semi-manufactures 612 498 Finished products 4,656 4,558 1,671,386 1,313,165

The increase in land and building rights and property development include the effects of the acquisitions in 2007.

Within the normal course of business, the duration of land and building rights is generally non-current (longer than one year). The major part of the property development inventory is current (less than one year).

The other inventories are mainly current. In 2007 €55 million (2006: €65 million) of other inventories is recognised in the income statement. There were no inventory write-downs recorded during the year.

14. Trade and other receivables

116 2007 2006

2007 Trade receivables 1,263,039 1,160,698 Less: impairment of receivables (106,777) (98,768) Trade receivables - net 1,156,262 1,061,930 Amounts due from customers 592,837 536,439 Amounts due from associates 64,575 32,520 Retentions 113,488 120,437 Prepayments and accrued income 85,233 64,180 PPP receivables 8,453 9,559 Other receivables 381,140 459,603 2,401,988 2,284,668

The fair value of the trade and other receivables is almost equal to the nominal value, due to the current nature of those receivables. Normally these receivables will be paid within the normal course of business (less than one year), except for approximately €69 million (2006: €29 million). The fair value of this non-current part amounts to approximately €63 million (2006: €27 million) and is calculated with an interest rate of 5.5 percent (2006: 4.0 percent).

There is no significant concentration of credit risk with respect to trade receivables, as the Group has a large number of national and international customers. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The movement of impairments is as follows:

2007 2006

At 1 January 98,768 82,909 Included in the income statement: - additional provisions 21,523 17,766 - release of unused provisions (9,804) (1,130) Used during the year (13,015) (782) Reclassifications 1 9,324 - Exchange rate differences (19) 5 At 31 December 106,777 98,768

1 Consist of reclassification of provisions (please refer to Note 22).

Amounts due from customers concern construction contracts for third parties and consists of the positive balance of cost incurred (including result recognised) and invoiced instalments. Please refer to Note 7.

The retentions concern amounts retained by the customers on the invoiced instalments. In the United Kingdom and Germany in particular, it is common practice to retain an agreed percentage upfront until the completion of the project.

15. Cash and cash equivalents

117 2007 2006 2007

Cash at bank and in hand 319,927 329,585 Short term bank deposits 452,877 431,744 Cash and cash equivalents 772,804 761,329

Cash is at free disposal of the Group. The bank deposits have a term of maturity no later than 31 January 2008. Included in cash and cash equivalents is the Group's share in cash in joint ventures, amounting to €170 million (2006: €239 million). This is not at free disposal of the Group.

Cash and cash equivalents are not offset against the bank overdrafts, considering their geographical position at year-end. It is the policy of the Group to offset these as far as possible during the year.

The details of the net cash position are as follows:

2007 2006

Cash and cash equivalents 772,804 761,329 Less: bank overdrafts (206,543) (210,166) Net cash position 566,261 551,163

The average effective interest rate on short-term bank deposits is 4.2 percent (2006: 3.2 percent). The deposits have an average term to maturity of approximately two weeks (2006: approximately two weeks). WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 16. Share capital

Number of Convertible shares Ordinary preference Share issued shares shares premium Total

AtPer 1 1 January januari 20062006 135,925,870 12,237 43 404,991 417,271 ConversionConversie van of preferencepreferente aandelenshares - 130 (4) 5,156 5,282 DividendBetaald dividend paid 86,400 9 - 354 363 AtPer 31 31 December december 2006 2006 136,012,270 12,376 39 410,501 422,916

ConversionConversie van of preferencepreferente aandelenshares - 615 (20) 24,362 24,957 DividendBetaald dividend paid 3,814 - - 16 16 AtPer 31 31 December december 2007 200711 136,016,084 12,991 19 434,879 447,889

1 Number of issued shares as at 31 December 2007 including 389,955 non convertible preference shares repurchased on the stock exchange.

Please refer to Note 7 of the statutory financial statements for further details on the number of issued shares.

118 16.1 General

2007 The total authorised number of ordinary shares at year-end 2007 is two hundred million (2006: two hundred million) and the number of preference shares is three hundred million (2006: three hundred million), all at par value of €0.10 per share (2006: €0.10 per share). All issued shares have been fully paid up.

A call option was granted to the Stichting Aandelenbeheer BAM Groep in 1993 for Class B preference shares. For further information, please refer to the Other Information section of the statutory financial statements.

16.2 Ordinary shares

in 2007 the number of issued ordinary shares increased by 6,147,861 in 2007 (2006: 1,386,954) to 129,906,275 (2006: 123,758,414). The increase included the conversion of 6,144,047 (2006: 1,300,554) convertible financing preference shares into ordinary shares. In addition, the number of ordinary shares increased by 3,814 in 2007 (2006: 86,400) as a result of a limited amount of preference dividend being distributed in the form of ordinary shares.

16.3 Financing preference shares

In 2007, the number of convertible financing preference shares decreased by 6,144,047 to 5,636,534 shares following conversion into ordinary shares. During 2006, 1,300,554 convertible financing preference shares were converted into ordinary shares.

The number of non-convertible financing preference shares remained unchanged during 2007, at 473,275. The number of convertible financing preference shares repurchased via the stock exchange remained in 2007 at 389,955. The Group also intends to repurchase the remaining shares in the same manner.

Financing preference shares are classified as liabilities (please refer to Note 19). The dividends on preference shares are accounted for as an interest expense in the income statement. Please refer to Note 26. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 17. Reserves Currency translation Hedging adjustments reserve Total

PerAt 1 1 January januari 20062005 2,526 (37,437) (34,911) Kasstroomafdekkingen:Cash flow hedges: -Effective Reële-waardemutatie part: in boekjaar - FairBelasting value opmovement reële-waardemutatie in year - 39,925 39,925 Valutakoersverschillen:- Tax on fair value movement - (11,471) (11,471) -Exchange Dochterondernemingen rate differences: - SubsidiariesDeelnemingen (7,609) - (7,609) Per- Associates 31 december 2005 (794) - (794) (8,403) 28,454 20,051 Kasstroomafdekkingen: -At Reële-waardemutatie 31 December 2006 in boekjaar (5,877) (8,983) (14,860) - Belasting op reële-waardemutatie Valutakoersverschillen:Cash flow hedges: -Effective Dochterondernemingen part: - FairDeelnemingen value movement in year - 8,705 8,705 Per- Tax 31 on december fair value movement2006 - (2,220) (2,220) Ineffective part: - Fair value movement in year - (3,990) (3,990) - Tax on fair value movement - 1,017 1,017 119 Exchange rate differences:

- Subsidiaries (24,688) - (24,688) 2007 - Associates 973 - 973 (23,715) 3,512 (20,203)

At 31 December 2007 (29,592) (5,471) (35,063)

In 2007, the net fair value movement of the hedge reserve amounted to €3.5 million positive (2006: €28.5 million positive). The movement relates to new interest rate swaps amounting to €4.4 million negative (2006: €3.4 million positive) and already existing interest swaps amounting to €7.9 million positive (2006: €25.1 million positive).

An exchange rate difference of €3.9 million was recognised in the income statement in 2007, associated with the sale of Flatiron.

The restrictions on distributable reserves are determined by reserves required by law and by Articles of Association that are part of the statutory financial statements.

18. Capital base 2007 2006

Equity attributable to the Company's shareholders 993,549 692,633 Subordinated loan 200,000 150,000 Preference shares 23,246 48,203 Third party shareholders AM 49,000 49,000 1,265,795 939,836 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 19. Borrowings

2007 Non-current Current Total

Subordinated loan 200,000 - 200,000 Preference shares 22,896 350 23,246 Third party shareholders AM 49,000 - 49,000 Non-recourse PPP loans 537,162 32,653 569,815 Non-recourse project financing 352,555 87,603 440,158 Other project financing 225,584 12,977 238,561 Loan Terra Amstel 137,500 25,000 162,500 Loan AM 250,000 - 250,000 Financial lease liabilities 45,124 5,141 50,265 Other loans 6,786 1,749 8,535 Bank overdrafts - 206,543 206,543 1,826,607 372,016 2,198,623

Not later than 1 year 372,016 Later than 1 and not later than 5 years 1,272,882 Later than 5 years 553,725 2,198,623

2006 Non-current Current Total

120 Subordinated loan 150,000 - 150,000 Preference shares 47,853 350 48,203

2007 Third party shareholders AM 49,000 - 49,000 Non-recourse PPP loans 544,325 15,437 559,762 Non-recourse project financing 269,410 123,276 392,686 Other project financing 188,790 21,631 210,421 Loan Terra Amstel 162,500 25,000 187,500 Loan AM 80,000 - 80,000 Financial lease liabilities 40,820 13,977 54,797 Other loans 11,302 2,889 14,191 Bank overdrafts - 210,166 210,166 1,544,000 412,726 1,956,726

Not later than 1 year 412,726 Later than 1 and not later than 5 years 1,074,728 Later than 5 years 469,272 1,956,726 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 19.1 Subordinated loan

On 6 August 2007 the Group contracted a new subordinated loan of €200 million with a consortium of banks. The new subordinated loan reinforces the solvency of the Group, has more favourable (interest) conditions and a longer maturity period. The loan was partly used for early repayment of the old €150 million subordinated loan. The maturity period of the new subordinated loan is two years longer than the maturity period of the old subordinated loan. €100 million of the principal amount of the new subordinated loan has to be repaid on the principal amount in July 2012 and the remainder in July 2013. The interest on the new subordinated loan is based on the Group’s recourse leverage ratio and is equal to EURIBOR plus a margin, which can vary between a minimum of 230 and a maximum of 320 base points. The margin was 250 base points at year-end 2007. Interest on the old subordinated loan was six-month EURIBOR plus 280 base points.

An interest swap for a sum of €150 million was contracted at the start of 2006 to hedge the interest risk on the old subordinated loan. The interest swap was based on the initial repayment schedule for the old subordinated loan, namely €75 million repayable in June 2010 and the balance in June 2011. In 2007, this loan was repaid early, breaking the hedge relationship, and the value of the interest swap is accounted for in the income statement (please refer to Note 26). After balance sheet date, the Group adjusted the interest swap to the new subordinated loan. The new interest swap fixes EURIBOR at 3.99 percent. Including a margin at year-end 2007, the interest for the subordinated loan amounts to 6.49 percent.

Ratios were agreed with the syndicate of banks in the loan agreement. These ratios are recourse leverage, recourse interest coverage and recourse solvency. At year-end 2007, the Group complied with these requirements.

121 19.2 Preference shares 2007

In December 2002, 39,285,715 convertible financing preference shares and 8,333,335 non-convertible financing preference shares were issued. During an initial period of eight years (until year-end 2010), the dividend on the financing preference shares is fixed, namely at 8.83 percent annually for the convertible preference shares and 9.13 percent annually for the non-convertible preference shares, both to be paid over the issue price of €4.20 per share.

Convertible financing preference shares At the request of the holder, the convertible financing preference shares may be converted into ordinary shares, with immediate effect, for a price equalling the issue price (€4.20). In 2007, 6,144,047 shares were converted (2006: 1,300,554 shares). At year-end, 5,636,534 convertible financing preference shares were still in issue (2006: 11,780,581 shares).

The fair value of the liability component, included in non-current liabilities, was calculated using a market interest rate equal to the dividend percentage on the non-convertible financing preference shares. This fair value was calculated at €4.062 per convertible financing preference share.

The difference of €0.138 per share between the issue price of €4.20 per share and the fair value of the liability component, representing the value of the equity component, is included in shareholders’ equity in the reserves. The balance sheet value of the convertible financing preference shares is as follows:

2007 2006

Face value at 1 January 49,478 54,941 Equity component at 1 January (1,625) (1,806) Liability component at 1 January 47,853 53,135 Conversion of shares (24,957) (5,282) Liability component at 31 December 22,896 47,853 Equity component at 31 December 778 1,625 Face value at 31 December 23,674 49,478 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Financing expense on the convertible financing preference shares is calculated using the effective interest method by applying the effective interest rate of 9.13 percent to the liability component.

Non-convertible financing preference shares The number of non-convertible financing preference shares remained unchanged in 2007, at 83,320. The Group intends to repurchase these remaining shares via the stock exchange. 24,650 non-convertible financing preference shares were repurchased in 2006. The majority of the non-convertible financing preference shares were repurchased in 2005.

The non-convertible financing preference shares are recognised as a financial liability in the balance sheet.

The details of this entry are shown below. The movement in the liability during the year is as follows:

2007 2006

Liability at 1 January 350 453 Repurchase of shares - (103) Liability at 31 December 350 350

Financing expense on the non-convertible financing preference shares is calculated using the effective interest method by applying the effective interest rate of 9.13 percent.

19.3 Non-recourse PPP loans 122

These relate to PPP projects in the United Kingdom, Ireland, the Netherlands and Germany. The related financial assets

2007 (PPP receivables) and intangible assets (concessions) amount to €602 million (2006: €613 million) and are pledged as security for the lenders.

The average term to maturity of the PPP loans is 23 years. Of the non-current part approximately €450 million has a term to maturity of more than five years (2006: approximately €460 million).

The interest rates on PPP loans are variable, but have been fixed using interest rate swaps at interest rates equal to the corresponding PPP receivables. The average interest rate on PPP loans is 5.5 percent (2006: 5.1 percent).

In 2006, one of the PPP loans was netted against part of the related PPP receivables. This netting relates directly to the transfer of the PPP receivables to the Bank Nederlandse Gemeenten. Please refer to Note 10.

19.4 Non-recourse project finance

These loans are contracted to finance land for property development and also ongoing property development projects. The carrying amount of the related assets amounts to about €630 million at year-end 2007 (2006: about €490 million). The assets are pledged as security for the lenders.

19.5 Other project finance

These loans are also contracted to finance land for property development and ongoing property development projects. The security for the lenders is provided not only by the assets, but there are also additional (limited) securities. The carrying amount of the related assets amounts to about €280 million at year-end 2007 (2006: about €245 million). WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 19.6 Loan Terra Amstel

In 2006, the Group contracted a loan of €200 million from a consortium of banks to finance the acquisition of AM. The term of the loan is five years with an annual repayment of €25 million. The remaining €75 million has to be repaid at the end of the term. The loan is subject to an interest rate of six-months EURIBOR plus 95 basis points. To hedge the interest risk an interest rate swap was arranged for an amount of €175 million. This part of the loan is subject to 4.5 percent interest. At year-end, the book value of the loan amounted to €162.5 million of which €137.5 million has been hedged.

Under the loan agreement the Group is required to comply with a previously agreed interest coverage ratio. At year-end 2007 the Group complied with this requirement.

19.7 Loan AM

AM has a committed credit facility amounting to €250 million, which has been fully withdrawn at year-end 2007. The credit facility is used in the normal course of business.

An interest rate of one-month EURIBOR plus 75 basis points is applied to the part of the loan which is drawn. In order to hedge the interest risk, an interest rate swap is contracted for an amount of €50 million. This part of the loan is subject to 3.6 percent interest.

With regard to the credit facility certain requirements are to be met. The most important requirements are the ratios concerning solvability, interest coverage and loan to value. At year-end 2007 AM complied with all requirements.

123

19.8 Third party shareholders in AM 2007

A consortium of investors led by ING Corporate Investment Participations bv obtained an interest in shares worth €49 million (49 percent) in Terra Amstel Holding bv (TAH) through the Houdstermaatschappij Terra Amstel Holding bv (HTAH) for the acquisition of AM. As HTAH has rights to a fixed compensation of annually 8.9 percent, these shares are presented as non-current liabilities.

The Group has the right to buy the 49 percent interest of HTAH in the period from 1 February 2009 to 1 February 2011 for a price of between €63 million and €75 million, assuming that no dividend has been paid as from 1 February 2006.

After February 2011, HTAH has the right to sell the interest of 49 percent in Terra Amstel Holding bv to the Group at a price of €75 million, assuming that no dividend has been paid as from 1 February 2006. If a dividend is paid each year after 1 February 2006, the acquisition price of the 49 percent interest amounts to €49 million.

In 2007, dividend over 2006 has been paid by TAH. Therefore, this amount is deducted from the acquisition price as stated above. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Financial lease agreements

These mainly consist of financing arrangements of buildings and equipment. The maturity of the financial lease liabilities is as follows:

2007 2006

Not later than 1 year 5,424 16,630 Later than 1 year and not later than 5 years 50,725 39,159 Later than 5 years 246 5,190 56,395 60,979 Future finance charges on financial leases (6,130) (6,182) Present value of financial lease liabilities 50,265 54,797

The present value of the financial lease liabilities is as follows:

2007 2006

Later than 1 year and not later than 5 years 44,890 35,679 Later than 5 years 234 5,141 45,124 40,820 Not later than 1 year 5,141 13,977 50,265 54,797 124

2007 19.10 Other borrowings

The other loans relate to the financing of buildings and equipment. The assets are not pledged as security for the lenders.

19.11 Credit facilities

The Group reinforced its financing structure in 2007 by means of a newly committed credit facility of €550 million. The facility is partly used to repay existing uncommitted bilateral credit lines.

The facility can be used for both the usual working capital financing and any other activities that may arise. The facility has a maturity of five years. Variable interest rates apply to the drawn part of the facility, with a margin between 30 and 85 base points. At year-end 2007, the margin was 50 base points. The same ratios apply to this committed financing facility as to the new subordinated loan. The Group has provided securities for the facility by way of guarantees from the major subsidiaries. At year-end 2007, the Group has drawn an amount of €140 million of the facility.

In addition to the committed long-term facilities, the Group retains €180 million in bilateral credit facilities (2006: €490 million) of which €66.5 million had been drawn down at year-end 2007. (2006: €210.2 million). WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 19.12 Other information

The carrying amounts of the loans are not significantly different from the fair value.

The effective interest rates were as follows:

2007 2006 Pound Pound Euro US dollar sterling Euro US dollar sterling

AchtergesteldeSubordinated loan lening 6.1% - - 5.7% - - PreferentePreference aandelenshares 9.1% - - 9.1% - - DerdenThird party aandeelhouders shareholders AM AM 8.9% - - 8.9% - - Non-recourse PPPpps-leningen loans 4.6% - 6.7% 3.6% - 5.9% Non-recourse projectprojectfinancieringen financing 5.0% - 6.6% 4.1% - 6.1% OverigeOther project projectfinancieringen financing 5.1% - - 4.3% - - LeningLoan Terra Terra Amstel Amstel 4.9% - - 4.1% - - LeningLoan AM AM 4.5% - - 3.9% - - Financiële-leaseovereenkomstenFinancial lease liabilities 5.3% - 5.7% 5.8% 5.6% 5.7% OverigeOther loans leningen 4.6% - - 4.0% 7.1% -

The Group contracted interest rate swaps to mitigate the exposure of borrowings to interest rate fluctuations and contractual changes in interest rates. At 31 December 2007 the position of the Group is as follows:

125

Not later 1-5 Later than 2007 than 1 year years 5 years Total

Total borrowings 372,016 1,272,882 553,725 2,198,623 Hedged with interest rate swaps (57,653) (396,333) (453,329) (907,315) At 31 December 2007 314,363 876,549 100,396 1,291,308

Total borrowings 412,726 1,074,728 469,272 1,956,726 Hedged with interest rate swaps (40,437) (430,820) (403,739) (874,996) At 31 December 2006 372,289 643,908 65,533 1,081,730

Furthermore, a concession grantor contracted an interest rate swap for a PPP project to hedge the related PPP loan of approximately €33 million (2006: €51 million).

The carrying amounts of the Group's borrowings are denominated in the following currencies:

2007 2006

Euro 1,708,496 1,309,796 US dollar - 22,319 Pound sterling 490,127 624,611 2,198,623 1,956,726 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 20. Derivative financial instruments

2007 2006 Assets Liabilities Fair value Assets Liabilities Fair value

Interest rate swaps 14,203 16,892 (2,689) 10,740 22,926 (12,186) Forward exchange contracts 401 2,274 (1,873) 216 16 200 14,604 19,166 (4,562) 10,956 22,942 (11,986)

Of which current: 365 2,274 (1,909) 205 16 189

20.1 Interest rate swaps

At 31 December 2007, interest rate swaps were outstanding to hedge the interest rate risk on the subordinated loan, non-recourse PPP loans, the Terra Amstel loan and the AM loan with a variable interest rate.The fair value of the outstanding interest rate swaps was a negative amount of €2.7 million (2006: €12.2 million negative). All interest rate swaps have terms to maturity longer than one year.

At year-end 2007, the fixed interest rates of these swaps vary from 3.6 percent to 6.3 percent (2006: 3.6 percent to 6.3 percent). The variable interest rates of the corresponding loans are based on EURIBOR or LIBOR plus a margin.

In 2007, the old subordinated loan has been repaid early, breaking the associated hedge relationship, and the value of the 126 interest swap is accounted for in the income statement (please refer to Note 26). The other derivative financial instruments provide an effective compensation at year-end 2007 for movements in cash flows from the hedged positions, on which basis

2007 the value adjustments are included into shareholders’ equity.

20.2 Forward exchange contracts

At 31 December 2007 the total of forward exchange contracts amounts to €80.9 million (2006: €24.3 million) with a fair value of €1.9 million positive (2006: €0.2 million positive). The terms to maturity of these contracts were up to maximum one year (€80.4 million) and in between one and two years (€0.5 million). At year-end 2006 all contracts amounted to €23.8 million and €0.5 million respectively.

21. Employee benefit obligations

2007 2006

Retirement benefit asset for defined benefit schemes 60,176 32,906

Retirement benefit obligation for defined benefit schemes 152,914 167,425 Other non-current employee benefits 20,581 21,163 173,495 188,588

The Group makes contributions to a number of defined benefit pension schemes both at home and abroad, which provide pension benefits for employees upon retirement. The application of the ‘corridor method’ results in long-term pension assets within some of the schemes. The fair value of the plan assets does not exceed the defined benefit obligation in any of these funds. The requirements prescribe that this type of pension assets must be presented separately in the balance sheet.

The actuarial assumptions and amounts recognised in the balance sheet and income statement are as follows: WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 2006 United Netherlands Kingdom Belgium Germany Ireland Total

Net balance sheet obligation Balance sheet obligation (58,397) (49,164) (1,377) (43,976) - (152,914) Balance sheet assets 37,456 20,580 - - 2,140 60,176 At 31 December 2007 (20,941) (28,584) (1,377) (43,976) 2,140 (92,738)

Charged to the income statement (10,029) (18,367) (274) (2,631) (3,611) (34,912)

Change in benefit obligation: At 1 January 2007 (849,921) (603,468) (2,670) (66,713) (82,472) (1,605,244) Exchange rate difference - 54,957 - - - 54,957 Service cost (10,569) (18,810) (162) (452) (3,698) (33,691) Interest cost (38,357) (28,674) (109) (2,981) (3,904) (74,025) Plan participants contribution (1,999) (6,906) (71) - (958) (9,934) Curtailments, settlements and plan amendments 8,204 ----8,204 Benefits paid 29,646 11,952 141 3,797 549 46,085 Actuarial gain/loss 36,104 9,084 223 7,410 9,343 62,164 At 31 December 2007 (826,892) (581,865) (2,648) (58,939) (81,140) (1,551,484)

Change in fair value of plan assets At 1 January 2007 789,668 479,643 1,808 18,478 67,663 1,357,260 Exchange rate difference - (43,682) - - - (43,682) 127 Expected return on plan assets 38,159 30,080 94 906 4,536 73,775

Employer contribution 14,597 46,756 192 3,101 5,227 69,873 2007 Plan participants contribution 1,999 6,906 71 - 958 9,934 Curtailments, settlements and plan amendments (5,757) ----(5,757) Benefits paid (28,983) (11,952) (141) (3,797) (549) (45,422) Actuarial gain/loss (21,968) 4,001 (29) (121) (9,944) (28,061) At 31 December 2007 787,715 511,752 1,995 18,567 67,891 1,387,920

Balance sheet obligation Funded status (39,177) (70,113) (653) (40,372) (13,249) (163,564) Unrecognised net actuarial gain/loss 18,236 41,529 (724) (3,604) 15,389 70,826 At 31 December 2007 (20,941) (28,584) (1,377) (43,976) 2,140 (92,738)

Components of net periodic benefit cost Service cost (5,549) (18,810) (162) (452) (3,698) (28,671) Interest cost (38,357) (28,674) (109) (2,981) (3,904) (74,025) Expected return on plan assets 38,159 30,080 94 906 4,536 73,775 Past service cost (5,020) (409) - - - (5,429) Amortisation of actuarial gain/loss (1,709) (554) 25 (104) (545) (2,887) Other including curtailments or settlements 2,447 - (122) - - 2,325 Net periodic benefit cost (10,029) (18,367) (274) (2,631) (3,611) (34,912)

Assumptions as of 1 January 2007 Discount rate 5.5% 5.6% 5.5% 5.5% 5.5% Expected return on plan assets 5.4% 5.8% - 6.4% 4.6% 5.0% 5.9% Rate of compensation increase 2.0% 4.0% - 4.2% 1.0% - 3.0% 2.0% 4.5% Rate of benefit increase 0% - 2.0% 3.2% 2.0% 2.0% 1.5% - 2.75% WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 2006 United Netherlands Kingdom Belgium Germany Ireland Total

Net balance sheet obligation Balance sheet obligation (58,555) (63,130) (1,294) (44,446) - (167,425) Balance sheet assets 32,382 - - - 524 32,906 At 31 December 2006 (26,173) (63,130) (1,294) (44,446) 524 (134,519)

Charged to the income statement 11,554 (24,194) (190) (2,518) (3,885) (19,233)

Change in benefit obligation: At 1 January 2006 (794,963) (528,739) (3,183) (76,045) (74,254) (1,477,184) Benefit obligation acquired through business combinations (76,001) ----(76,001) Exchange rate difference - (12,300) - - - (12,300) Service cost (3,191) (21,586) (207) (474) (3,793) (29,251) Interest cost (32,013) (26,752) (119) (2,960) (3,148) (64,992) Plan participants contribution (2,086) (7,865) (70) - (806) (10,827) Curtailments, settlements and plan amendments 9,762 - 101 - (128) 9,735 Benefits paid 28,944 13,133 496 7,771 348 50,692 Actuarial gain/loss 19,627 (19,359) 312 4,995 (691) 4,884 At 31 December 2006 (849,921) (603,468) (2,670) (66,713) (82,472) (1,605,244)

Change in fair value of plan assets 128 At 1 January 2006 681,347 400,520 2,011 21,437 56,422 1,161,737 Plan assets acquired through

2007 business combinations 69,254 ----69,254 Exchange rate difference - 9,316 - - - 9,316 Expected return on plan assets 33,430 30,168 126 1,167 3,917 68,808 Employer contribution 12,244 34,619 177 3,800 4,555 55,395 Plan participants contribution 2,086 7,865 70 - 806 10,827 Curtailments, settlements and plan amendments 4,582 - 10 - 2,311 6,903 Benefits paid (28,944) (13,133) (496) (7,771) (348) (50,692) Actuarial gain/loss 15,669 10,288 (90) (155) - 25,712 At 31 December 2006 789,668 479,643 1,808 18,478 67,663 1,357,260

Balance sheet obligation Funded status (60,253) (123,825) (862) (48,235) (14,809) (247,984) Unrecognised net actuarial gain/loss 34,080 60,695 (432) 3,789 15,333 113,465 At 31 December 2006 (26,173) (63,130) (1,294) (44,446) 524 (134,519)

Components of net periodic benefit cost Service cost (3,191) (21,586) (207) (474) (3,793) (29,251) Interest cost (32,013) (26,752) (119) (2,960) (3,148) (64,992) Expected return on plan assets 33,430 24,881 126 1,167 3,917 63,521 Past service cost (18,193) - - - (128) (18,321) Amortisation of actuarial gain/loss (1,016) (737) 10 (251) (733) (2,727) Other including curtailments or settlements 32,537 ----32,537 Net periodic benefit cost 11,554 (24,194) (190) (2,518) (3,885) (19,233)

Assumptions as of 1 January 2006 Discount rate 4.6% 5.1% 4.2% 4.1% 4.8% Expected return on plan assets 4.9% 5.7% - 6.4% 5.0% 6.0% 6.4% Rate of compensation increase 2% - 2.5% 4.0% - 4.2% 1% - 3% 2.0% 4.3% Rate of benefit increase 0% - 2.0% 2.7% 2.0% 1.8% 1.5% - 2.75% WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The various funds invest in equities, index-related and fixed-rate investments. The risk profiles of the various portfolios is in line with the requirements as set out in the particular pension schemes, and can be classified as ranging from average to low. The composition of the plan assets is as follows:

United Netherlands Kingdom Belgium Germany Ireland Total

Cash and other 94,345 24,548 1,995 1,474 8,723 131,085 Index-related bonds - 74,726 - 10,936 - 85,662 Fixed-rate bonds 500,231 68,668 - - 8,730 577,629 Equities 193,139 343,810 - 6,157 50,438 593,544 At 31 December 2007 787,715 511,752 1,995 18,567 67,891 1,387,920

Cash and other 72,069 31,957 1,808 820 8,274 114,928 Index-related bonds - 62,178 - 11,093 - 73,271 Fixed-rate bonds 514,957 57,741 - - 6,696 579,394 Equities 202,642 327,767 - 6,565 52,693 589,667 At 31 December 2006 789,668 479,643 1,808 18,478 67,663 1,357,260

The following table gives an overview of the composition of the net balance sheet obligation for defined benefit schemes over the past 4 years.

2007 2006 2005 2004 Funded status: 129 Benefit obligation (1,551,484) (1,605,244) (1,477,184) (1,848,639)

Fair value of plan assets 1,387,920 1,357,260 1,161,737 1,548,464 2007 (163,564) (247,984) (315,447) (300,175)

Unrecognised net acturial gain/loss: Unrecognised net acturial gain/loss previous year 113,465 153,462 106,379 - Unrecognised net acturial gain/loss benefit obligation (62,164) 4,884 177,379 181,042 Unrecognised net acturial gain/loss plan assets 28,061 (25,712) (95,881) (74,663) Amortisation of acturial gain/loss (2,887) (2,727) (338) - Other including curtailments/settlements (5,649) (16,442) (34,077) - 70,826 113,465 153,462 106,379

Net balance sheet obligation (92,738) (134,519) (161,985) (193,796)

Employers’ contributions for each geographical area are not expected to differ significantly in 2008 from 2007.

Netherlands Pension benefits for prior year services are partly accrued within the company pension funds of former legal entities. The plans executed by these company pension funds are all closed to new participants. The basic pension for every employee is covered by multi-employer funds for the accrual of future pension benefits. Specifically, these are the industry pension funds for Construction and Metal & Technology. Both of the funds operate an index-linked average pay plan. As these funds are not equipped to provide the required information on the Group’s proportionate share of pension liabilities and fund investments, the defined benefit plans are accounted for as defined contribution schemes. The Group is obliged to pay the predetermined premium for these plans. The Group may not reclaim any excess payment and is not obliged to make up any deficit, except by way of the adjustment of future premiums. The coverage rates of these funds were in excess of 130 percent at the close of 2006. Therefore, the Group does not expect significant increases in premiums in the near future. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Compensating payments are to be made on a conditional basis until 2021 for historical plans, via the BAM supplementary plans. The impact of the change in the plans and transfer of claims to industry pension funds was largely accounted for in the financial results in 2006.

The transfer and disposal of existing company pension funds proceeded during 2007. The BAM NBM Pension Fund was liquidated in 2007. Procedures have been initiated for the liquidation of the Wilma and HBG Pension Funds, and these are expected to be complete by the end of 2008.

The Group has initiated a consultation with representatives from the Central Works Council and from the Social Economic Committee of the Association of BAM Pensioners, in the context of giving account for the Group’s past and future pension policy, including surcharges and investment results.

The pension liabilities and fund investments from the acquisition of subsidiaries, balancing at €6.7 million in 2006, relate to the acquisition of AM. Please refer to Note 32.

United Kingdom In the United Kingdom, the Group makes contributions to defined benefit plans as well as defined contribution plans, which are executed by multi-employer funds, company pension funds and external insurance companies. Two defined benefit pension schemes executed by a company pension fund are closed to new participants. In their place, the Group opened a defined contribution scheme for new employees, which is executed by an outside insurance company. Several defined benefit schemes are accounted for as defined contribution schemes due to the fact that external parties administering them are not able to provide the required information. These schemes have limited numbers of members, however. The Group is obliged to pay the predetermined premium for these plans. The Group may not reclaim any excess payment and is not obliged to make up any deficit, except by way of the adjustment of future premiums. 130

Supplementary payments are being made into the corporate pension funds between 2006 and 2010 as a result of the

2007 existing financing deficits within these funds. The scale of these additional payments has been established following consultation with the membership councils. The supplementary payment amounted to €28.4 million in 2007 (2006: €11.6 million). The amounts for 2008, 2009 and 2010 will be approximately €18.4 million, €13.6 million €6.8 million respectively.

Belgium In Belgium, the Group makes contributions to a relatively small defined benefit scheme that is executed by an external insurance company. The Group has also made arrangements for employees to participate in a defined contribution scheme.

Germany In Germany the Group operates several defined benefit schemes. These schemes are financed by the employer and partly executed by a corporate pension fund. The Group closed several schemes to new participants and intends to close the remaining schemes as well. Since 2006, the Group has been making contributions to a defined contribution scheme, into which employees have the opportunity to contribute on an individual basis.

Ireland The Group has a defined benefit scheme in Ireland, executed by a corporate pension fund. The multi-employer pension scheme was fully converted from a defined benefit scheme to a defined contribution scheme with effect from 1 January 2006. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 22. Provisions

Reorgani- Rental Other Warranties sation cost guarantees provisions Total

At 1 January 2007 94,073 23,610 30,635 56,631 204,949 Charged to the income statement: - additional provisions 34,319 4,266 6,566 3,290 48,441 - release of unused provisions (12,959) (2,890) - (4,881) (20,730) Used during the year (27,353) (11,263) (4,980) (15,046) (58,642) Consolidations and deconsolidations 730 - - (2,672) (1,942) Reclassifications 1 (9,324) - - (9,324) Changes in discounted value 2,205 473 1,282 1,688 5,648 Exchange rate differences (338) - - (282) (620) At 31 December 2007 81,353 14,196 33,503 38,728 167,780

1 Consist of reclassification to impairments of receivables. Please refer to Note 14.

Provisions are classified in the balance sheet as follows:

2007 2006

Non-current 84,399 109,609 131 Current 83,381 95,340

167,780 204,949 2007

The provision for warranties concerns estimated liabilities and pending proceedings related to disputes concerning completed projects. Costs incurred under warranties are charged to this provision. Periodically, the amount of the provision is tested, based on an estimate of the risks. Approximately half the provision has a current nature.

The provision for reorganisation concerns to the cost related to reorganisations already initiated. Reorganisation provisions are formed as soon as the decision to make organisational changes has been made and announced. The provisions relate to reorganisations in the Netherlands and decreasingly in Germany. These provisions have a predominantly current nature.

The rental guarantee provision consists of commitments arising from rental guarantees issued to third parties (mainly Germany), taking into account expected revenue resulting from subleases. The rental guarantee obligations in Germany consist of several objects, have a predominantly non-current nature. For three objects the remaining duration of the rental guarantee obligation is long, respectively 2010, 2014 and 2017.

The other provisions mainly consists of provisions that cover risks regarding the wind down of old project development activities, claims and legal obligations in Germany, environmental provisions (mainly soil pollution) and continuing rental commitments resulting from (temporarily) unused premises. Approximately half the provision has a current nature.

The non-current part of the provisions has been discounted at an interest rate of about 5 percent. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 23. Deferred taxes

2007 2006 Deferred tax assets: - To be recovered after more than 1 year 16,801 10,509 - To be recovered within 1 year 4,543 9,186 21,344 19,695

Deferred tax liabilities: - To be recovered after more than 1 year 62,885 42,121 - To be recovered within 1 year 9,775 76,522 72,660 118,643

Net amount of assets and liabilities 51,316 98,948

The gross movement in the net amount of assets and liabilities is as follows: 2007 2006

At 1 January 98,948 88,049 Charged / (credited) to income statement (48,504) (31,960) Charged / (credited) to equity 1,203 11,471 Acquisition of subsidiaries (1,913) 30,930 Disposal of subsidiaries (74) - 132 Exchange rate differences 1,656 458 At 31 December 51,316 98,948 2007

The movement in deferred taxes, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Deferred tax assets Tax Fair value Provisions losses gains Other Total

At 1 January 2006 33,133 26,021 14,491 (226) 73,419 (Charged) / credited to the income statement (11,612) (21,772) - 4,715 (28,669) (Charged) / credited to equity - - (8,529) - (8,529) Acquisition of subsidiaries 2,813 1,264 - - 4,077 Exchange rate differences 721 (1,049) - 13 (315) At 31 December 2006 25,055 4,464 5,962 4,502 39,983

(Charged) / credited to the income statement (4,549) 448 - 129 (3,972) (Charged) / credited to equity - - (1,746) - (1,746) Acquisition of subsidiaries - - - 2,346 2,346 Disposal of subsidiaries - (2,732) - 35 (2,697) Exchange rate differences (1,737) (218) - - (1,955) At 31 December 2007 18,769 1,962 4,216 7,012 31,959 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Deferred tax liabilities Construc- Accele- Fair tion rated tax value contracts depreciation gains Other Total

At 1 January 2006 157,895 2,978 - 595 161,468 Charged / (credited) to the income statement (83,031) 3,722 - 18,680 (60,629) Charged / (credited) to equity - - 2,942 - 2,942 Acquisition of subsidiaries 35,007 - - - 35,007 Exchange rate differences 500 - - (357) 143 At 31 December 2006 110,371 6,700 2,942 18,918 138,931

Charged / (credited) to the income statement (56,801) (2,282) - 6,607 (52,476) Charged / (credited) to equity - - (543) - (543) Acquisition of subsidiaries 433 - - - 433 Disposal of subsidiaries - (74) - (2,697) (2,771) Exchange rate differences (14) (285) - - (299) At 31 December 2007 53,989 4,059 2,399 22,828 83,275

Deferred tax is not recognised when it is not probable that the Group has the availability over taxable income to realise the temporary differences and unused tax losses in the future.

Deferred tax is incorporated for temporary discrepancies arising on investments in subsidiaries and associates, unless the 133 Group is not in a position to determine the timing and likelihood of the end of the temporary discrepancy. For this reason, the Group has not recognised the available tax losses in Germany in the sum of around €1.1 billion (2006: approximately 2007 €1.1 billion). Based on relevant German tax regulations, the use of tax losses is limited. In any year, fiscal profits up to maximum €1 million can be fully offset with previously unused tax losses, fiscal profits above €1 million can only be offset for 60 percent with previously unused tax losses. The Group is investigating the possibility of undertaking a valuation of the German fiscal position in the fullness of time.

24. Trade and other payables

2007 2006

Trade payables 1,224,260 1,143,365 Amounts due to customers 889,902 891,308 Amounts due to associates 52,496 36,605 Social security contributions and other taxation 114,521 104,868 Pension premiums 17,228 15,911 Cost on completed projects 124,742 112,579 Other current liabilities 876,563 933,892 3,299,712 3,238,528

The fair value of the trade and other payables is almost equal to the nominal value, due to the current nature of these liabilities. Normally these payables will be paid in the normal course of business (less than one year), except for an amount of approximately €37 million (2006: €23 million). The fair value of this non-current part amounts to €34 million (2006: €21 million) and is calculated with an interest rate of 5 percent (2006: 4 percent).

Amounts due to customers regarding construction contracts for third parties and consist of the negative balance of cost incurred (including result recognised) and instalments invoiced. Please refer to Note 7. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 25. Personnel expenses

2007 2006

Wages and salaries 1,331,565 1,241,048 Social security cost 192,081 189,916 Pension cost (defined contribution schemes) 70,460 67,864 Pension cost (defined benefit schemes) 34,912 19,233 1,629,018 1,518,061

The pension costs for 2006 included a gain of €24 million. This concerns the balance of a partial release of pension provisions formed under IFRS, the transfer of defined benefit pension schemes to third parties and the effect of the VPL (early retirement and life-course savings scheme) legislation and the new construction industry scheme on existing defined benefit pension plans in the Netherlands.

At year-end 2007, the Group employed 27,578 employees (2006: 30,338) and had an average number of 28,007 (2006: 28,330) employees.

Please refer to Note 21 for further information regarding pension cost.

26. Finance income and expense 134

2007 2006

2007 Finance income: - Interest income 32,096 21,537 - Dividend income 3,637 4,209 - Fair value result on cash flow hedges 4,852 - 40,585 25,746 Finance expense: - Subordinated loans 10,562 8,610 - Cost of subordinated loan 2,422 450 - Preference shares 4,009 4,576 - Third party AM shareholders 4,306 4,046 - Non-recourse PPP loans 32,951 29,893 - Other non-recourse loans 17,958 13,342 - Banks 20,521 17,502 - Financial leases 2,453 3,108 - Other borrowings 21,836 15,804 - Capitalised interest on the Group's own projects (33,486) (24,575) - Capitalised interest on PPP projects (6,004) (2,796) - Result on cash flow hedges (2,909) 3,342 74,619 73,302

Net finance cost (34,034) (47,556)

In 2007, the old subordinated loan was repaid early, breaking the hedge relationship, and the value change of the interest swap is accounted for in the income statement.

Please refer to Note 19 for a detailed overview of the weighted average interest rates for the capitalisation of interest. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 27. Income tax expense

2007 2006

Current tax 125,643 122,770 Deferred tax (48,504) (31,960) 77,139 90,810

Income tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated companies. The difference is specified as follows:

2007 2006

Profit before tax 428,178 228,446

Tax calculated at Netherlands tax rate 109,185 67,621 Effect of different tax rates in various countries 564 (17,209) Tax-free positive results and non-offsettable losses in various countries on balance 6,240 52,748 Bitumen fines - 520 Effect of Dutch tax rate cut on deferred taxes (396) (13,939) Reduction of deferred tax liabilities as a result of final assessments and previously non-recognised temporary differences, on balance (2,751) 2,390 Participation exemption (3,626) - 135 Goodwill impairment (33,783) (5,852)

Dividend preference shares to be paid/received, net 1,207 1,359 2007 Others, including non-deductible expenses 499 3,172 Tax charge 77,139 90,810

Tax charge percentage 18.0% 39.8%

The weighted average applicable tax rate was 25.6 percent (2006: 22.1 percent). The change can be attributed to the lowered tax rate in the Netherlands and a different spread of results in the respective countries.

28. Earnings per share 2007 2006

Weighted average number of ordinary shares in issue (x 1,000) 124,825 123,296

Net result attributable to shareholders 349,023 136,955 Basic earnings per share (€) 2.80 1.11

Net result from continuing operations attributable to shareholders 268,275 124,757 Basic earnings per share from continuing operations (€) 2.15 1.01

Net result from discontinued operations attributable to shareholders 80,748 12,198 Basic earnings per share from discontinued operations (€) 0.65 0.10

Shares that have been issued as a consequence of conversion, do not count fully in determining the weighted average number of ordinary shares, but on time-weighted basis. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Allowing for dilution, the earnings per share is as follows:

2007 2006

Weighted average number of ordinary shares in issue (x 1,000) 124,825 123,296 Impact of conversion of convertible cumulative financing preference shares 10,716 12,214 Weighted average number of ordinary shares (diluted) (x 1,000) 135,541 135,510

Net result attributable to shareholders 349,023 136,955 Dividend on convertible cumulative financing preference shares (after tax) 3,977 4,540 Net result attributable to shareholders (diluted) 353,000 141,495

Fully diluted earnings per share (€) 2.60 1.04

Net result from continuing operations attributable to shareholders (diluted) 272,252 129,297 Fully diluted earnings from continuing operations per share (€) 2.01 0.95

Net result from discontinued operations attributable to shareholders (diluted) 80,748 12,198 Fully diluted earnings from discontinued operations per share (€) 0.59 0.09

No convertible financing preference shares have been converted into ordinary shares since the balance sheet date.

136 29. Dividends

2007 The cash dividends paid to holders of ordinary shares in 2007 and 2006 were €55.7 million (€0.45 per share) and €49.1 million (€0.40 per share) respectively.

The cash dividends paid to holders of convertible financing preference shares in 2007 and 2006 were €4.4 million (€0.37086 per share) and €4.4 million (€0.37086 per share) respectively. Besides cash dividends paid on convertible financing preference shares, a limited amount of the preference dividend has been distributed in ordinary shares. As a result, the number of ordinary shares increased in 2007 and 2006 with 3,814 and 86,400 ordinary shares respectively.

The cash dividends paid to holders of non-convertible financing preference shares in 2007 and 2006 were €0.03 million (€0.38346 per share) and €0.1 million (€0.38346 per share) respectively.

The company proposes to pay a cash dividend of €0.90 per share on the ordinary shares in respect of the 2007 financial year. This involves an amount of approximately €116.9 million. The dividend distributable under the dividend proposal has not yet been charged to the retained earnings of the equity.

It is proposed that the holders of convertible financing preference shares be paid a dividend of €2.09 million (€0.37086 per share) in 2008 (for the 2007 financial year). It is proposed that the holders of non-convertible financing preference shares be paid a dividend of €0.03 million (€0.38346 per share) in 2008 (for the 2007 financial year). The dividend payable to the holders of financing preference shares amounts to €2.12 million and has been provided for as a current liability on the balance sheet at year-end 2007. Conversion of convertible cumulative financing preference shares in 2008 before the ‘ex-dividend’ date will entitle the new holders of ordinary shares to ordinary dividend in respect of 2007. For these shareholders, the dividend on the cumulative preference shares will not apply. This may give rise to differences between the proposed dividend distributions and the eventual dividend payments. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 30. Contingencies

The Group is claiming considerable amounts under pending proceedings and disputes with clients. It is not possible to reasonably determine extend and timing of possible inflow of economic benefits. In direct relation with this these rights are not recognised.

In the ordinary course of business guarantees are issued to (prospective) clients. These liabilities are not recognised in the balance sheet. It is not expected that any material risks will arise from these contingent liabilities. The guarantees are issued by the Group itself (corporate guarantees) or by third parties (banks, surety companies). The guarantees issued by third parties are on demand or on default. The Group has issued corporate guarantees of €333 million (2006: €332 million) in total. Guarantees issued by third parties amount to €1,268 million (2005: €1,331 million). In addition, surety bonds for the amount of €190 million have been issued (2006: €950 million, including Flatiron).

Total liabilities toward third parties of companies for which the Group bears joint and several liability, such as general partnerships, amounted to €2,643 million at year-end 2007 (2006: €1,454 million). The Group’s share in these liabilities, amounting to €1,530 million (2006: €655 million), has been included in the consolidated balance sheet. The increase relates to the PPP Projects Celtic Roads Group (Dundalk and Waterford), the newly founded joint venture with Dutch Infrastructure Fund and joint ventures regarding to property development.

Relating to the transaction with Van Oord Group nv in December 2003 concerning the sale of the dredging activities, guarantees have been issued in respect of certain BHD balance sheet positions.

The company will be obliged to offer the ordinary shares in Van Oord held by the Group to the other shareholders of 137 Van Oord if there is a transfer of control over the company to a third party as defined in article 1.1.d of the SER decree on merger rules, in terms of which that third party has a direct or indirect majority of the control in a business regarded as a 2007 significant competitor of Van Oord. In such a case, the company would no longer be able to exercise rights of control in Van Oord and would not be entitled to dividends relating to the ordinary shares in Van Oord. A similar rule applies as soon as it comes apparent that any third party, not being an institutional investor, is directly or indirectly holding more than 15 percent of the ordinary shares or depositary receipts for the shares in the equity of the company, and is at the same time direct or indirect holder of, and/or otherwise has an economic interest in and/or control of more than 15 percent of the issued shares or depositary receipts for the shares in the equity of a company whose business is regarded as a significant competitor of Van Oord.

In the agreement concluded among the shareholders, including indirect shareholders, of AM nv, in which the company has an indirect 51 percent holding, the company has undertaken to its co-shareholder in AM to acquire that co-shareholder's indirectly held interest of 49 percent in AM, in the event that it might reasonably be expected that the company’s position will suffer a significant negative influence in connection with a withdrawal of the company from the stock market or an acquisition of the company by third parties.

Please refer to Article 10 of the Decision on Takeover Directive as included in the report by the Executive Board. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 31. Commitments

At year-end 2007, the Group has commitments for capital expenditure of tangible assets for an amount of €5 million (2006: €11 million). These commitments relate primarily to equipment, machines and installations.

The Group has contractual obligations to acquire land for property development activities for an amount of €290 million (2006: €320 million).

The Group leases various company cars, buildings, offices, plant and equipment from third parties under non-cancellable operational lease agreements. The leases have varying durations, escalation clauses and renewal rights. The lease expenditure, including received lease bonuses, forms a linear charge against the income statement during the term of the lease. In the financial year, the costs of operational leases amounted to €77 million (2006: €71 million).

The total minimum lease payments to be received are as follows:

2007 2006

Not later than 1 year 82,607 71,048 Later than 1 year and not later than 5 years 162,729 147,282 Later than 5 years 32,624 49,179 277,960 267,509

The Group leases buildings and installations to third parties under non-cancellable operational lease agreements. The leases have varying durations, escalation clauses and renewal received rights. The book amount of the related assets 138 amounts to €18 million (2005: €11 million). The lease income, including lease bonuses, is recognised as revenue in the income statement. 2007

The total minimum lease payments to be received are as follows:

2007 2006

Not later than 1 year 6,812 6,080 Later than 1 year and not later than 5 years 15,328 14,289 Later than 5 years 5,734 3,601 27,874 23,970

32. Business combinations

2007

Details of net assets, liabilities and goodwill acquired under acquisitions are as follows:

2007

Cash paid for acquiree's total equity 181,958 Direct costs relating to the acquisitions 985 Contingent earn-out fees 11,281 Fair value of net assets acquired (144,585) Goodwill 49,639 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf - WorldReginfo

2007 139 Fair 135 985 value 3,839 (1,926) 11,892 26,108 99,389 50,516 41,145 49,639 (41,145) (36,422) (50,091) 141,798 181,958 144,585 ------Fair 578 value value (1,103) 39,809 26,108 14,226 ajustments - 135 (823) 3,839 11,892 85,163 49,938 41,145 (36,422) (50,091) amount 104,776 Carrying Property its subsidiary via AM on BV Vastgoed Pacific activities De Wilgen of the project development The Group acquired all of the of in the west property of areas projects in inner-city in the development specialises 2007. De Wilgen 19 March and 50,000m2 of about 2,000 homes The portfolio South Holland. contains of the province in primarily Netherlands, property. commercial been €1.7 million goodwill has €42.1 million and approximately was direct including cost The acquisition price acquired, and with benefits the activities, were of which nature with the highly profitable This is associated identified. and presence market improved to are linked benefits synergetic These are expected be realised. which to synergy of during 2007. or results turnover impact on the Group’s no material The acquisition has scale. of benefits is which property Landsbeeck nv, in the Belgian the shares company acquired all of 2007, the Group On 29 March high of a developer 1989 as active since been has The company Kaïros. of the trading name under operate to continuing some 15 The portfolio Flanders. includes of urban areas Antwerp and the other particularly in Brussels, quality offices, management The present date. a later for are scheduled projects that specific and various are in progress projects that with the Belgian closely works its projects, Kaïros of the execution 2010. For least at until with Kaïros will remain team 1998. part since been the Group of has which Interbuild, construction company non-residential 31 December at as paid been €80.9 million had which €93.7 million, of to is expected amount to The acquisition price the activities were from results which on future commercial €12.8 million is dependent the remaining of 2007. Payment About €16 million goodwill has liabilities. current 2007 within 31 December at as is recognised acquired. This amount the activities, were of which nature with the highly profitable during the acquisition. This is associated identified been to are linked benefits synergetic These are expected be realised. which to synergy of acquired, and with benefits scale. of and benefits presence market improved and €0.7 million respectively. €43.8 million to in 2007 amount and results turnover towards Contributions Property, plant and equipment plant Property, assets fixed Intangible assets Financial tax assets Deferred Inventories receivables and other Trade equivalents and cash Cash Borrowings tax liabilities Deferred payables and oher Trade acquired assets Net combinations Goodwill acquired through business equivalents or cash in cash settled consideration Puchase acquisitions the to relating Direct costs acquired in subsidiaries equivalents and cash Cash on acquisitions outflow Cash The aquired total assets and liabilities as per acquisition dates are as follows: are as dates acquisition per as and liabilities assets The aquired total The Group acquired all of the shares in the property company IPMMC Vastgoed, via its subsidiary AM, on 5 June 2007. IPMMC Vastgoed is an independent specialist property company focusing on development, consultancy and management of commercial property projects in the Netherlands. The acquisition price was €22.4 million, and there is also a contingent additional payment depending on future operating results from the activities, which were acquired. About €15.3 million goodwill has been identified. This is associated with the highly profitable nature of the activities which were acquired, and with benefits of synergy which are expected to be realised. These synergetic benefits are linked to improved market presence and benefits of scale. The acquisition has no material impact on the Group’s turnover or results during 2007.

The fair value of the net assets and liabilities from all of the abovementioned acquisitions amounts to a total of €125.2 million, as against a book value of €92.9 million (including cash and cash equivalents of €38.6 million). Of the fair value adjustments €18.6 million relates to the valuation of brand names and client files (intangible assets) and €13.1 million relates to the valuation of current projects.

Civil engineering

The Group acquired all of the shares in the Belgian civil engineering company Betonac nv on 14 September 2007. The management owned the shares. Betonac is the main building company involved in the building of concrete motorways in Belgium. The company has its own laboratory for roadwork and its own asphalt production plant. The company has a staff of approximately 350. The acquisition price is expected to be €36 million. About €16.6 million goodwill has been identified. This is associated with the highly profitable nature of the activities that were acquired, and with benefits of synergy which are expected to be realised. These synergetic benefits are linked to improved market presence and benefits of scale. 140 Contributions towards turnover and results in 2007 amount to €29.0 million and €0.2 million respectively.

2007 The fair value of the net assets and liabilities from this acquisition amounts to a total of €19.4 million, as against a book value of €11.9 million (including cash and cash equivalents of €2.5 million). Adjustment to fair value is associated with the market positions (intangible assets).

2006

Property

In 2006 and following a public offer, the Group acquired nearly all of the shares and all warrant rights in AM nv, via its subsidiary Terra Amstel Holding nv. Following the termination of AM nv’s stock exchange listing in 2006, Terra Amstel secured the remaining shares using a buy-out procedure in 2007.

The public takeover offer amounted to €10.15 per share and €2.30 per warrant. Based on this and AM’s total share capital (including warrants), the public offer amounted to €952.3 million in total. The direct costs associated with the acquisition amounted to €14.2 million.

The Group financed Terra Amstel with equity of €51 million (51 percent) and a subordinated loan of €100 million. In addition, a consortium of investors, consisting primarily of banks, holds the remaining 49 percent equity in Terra Amstel Holding, worth €49 million. The remainder of the purchase price was financed by a consortium of banks and with cash and cash equivalents available at that time. The investor’s consortium is paid a fixed fee on its shares, which are therefore classified as borrowings under IFRS, instead of equity, and the related fee as interest expense. Accordingly, the Group consolidates Terra Amstel without a third party share. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf AM sold its subsidiary AM Development to Morgan Stanley Real Estate Fund in 2006 for a price of €479 million, in connection with the public takeover offer. Following this sale, the fair value of the net assets and liabilities acquired by the Group amounted to a total of €738.3 million, as against a book value of €745.2 million (including cash and cash equivalents of €697.9 million). The fair value adjustments relate partly to the valuation of the brand name, current projects and the net pension liabilities under defined benefit plans. Goodwill of €228 million has been identified during the acquisition. This is associated with the highly profitable nature of the activities that were acquired, and with benefits of synergy which are expected to be realised. These synergetic benefits are linked to improved market presence and benefits of scale.

Civil engineering

The Group acquired all of the shares in the Belgian company Balteau sa, via its subsidiary Galère sa, on 20 March 2006. The acquisition price was €5.4 million. Goodwill worth a total of €3.3 million has been recognised in connection with this acquisition. The company designs and builds electromechanical water purification plants. The company’s annual turnover is approximately €13 million. Balteau contributed about €0.7 to the results in 2006. Balteau has approximately sixty employees.

Consultancy and engineering

At the end of 2006 the Group acquired the remaining 49 percent of the shares in Sindat Engineering s.r.o. via the Group’s subsidiary Tebodin Czech Republic s.r.o. The total acquisition price was €0.5 million. As part of the acquisition, the current participating interest was reassessed and approximately €0.4 million worth of goodwill was identified. Because of 141 the timing of the acquisition, the contribution to turnover and results from this additional interest was negligible in

2006. 2007

On 1 January 2006 the Group acquired the remaining 20 percent of the shares in its subsidiary SAP Projekt Sp. Z.o.o. via the Group’s subsidiary Tebodin Consultants & Engineers. The acquisition price was approximately €1.1 million. As part of the acquisition, the existing interest was reassessed and approximately €1 million of goodwill was identified. Because of the size of the acquisition, the contribution to turnover and result from this additional interest was negligible in 2006.

At the start of 2006, Tebodin took over the Doebel & Folger engineering consultancy firm in Germany. Doebel & Folger mainly designs production facilities for chemical and pharmaceutical companies and achieves an annual turnover of approximately €3.5 million with 55 employees. No goodwill was identified as part of the acquisition.

At the end of 2006, Tebodin acquired the remaining 50 percent interest in the Belgian subsidiary SmitsTebodin. SmitsTebodin achieves an annual turnover of approximately €1.2 million, with approximately 10 employees. No goodwill was identified as part of the acquisition.

33. Non-current assets held for sale and discontinued operations

The assets held for sale at the close of 2007 relate to the civil engineering sector.

The non-current assets held for sale at the end of 2006 are property and plant in the Civil engineering sector. This includes premises worth €1.6 million, for which the current lessee has an option to purchase.

Discontinued operations in 2007 regard the American subsidiary Flatiron, over which the Group ceased to have the power to control the financial and operational policies on 28 September, the date on which the letter of intend with Hochtief was signed. The sale has been closed on 6 December 2007. The acquisition price amounts to approximately €173 million in cash. After deducting cost and provisions, the Group realised a book profit of approximately €72 million. The Group has consolidated revenue and result from Flatiron up to and including the third quarter of 2007 and presents these separately as discontinued operations. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Flatiron’s balance sheet on the date of sale is as follows:

2007 2006

VasteNon-current activa assets 54,108 43,286 VlottendeCurrent assets activa 127,537 84,544 LiquideCash and middelen cash equivalents 68,286 53,961 249,931 181,791

EigenShareholders’ vermogen equity 51,470 30,056 LanglopendeNon-current liabilities verplichtingen 22,259 12,139 KortlopendeCurrent liabilities verplichtingen 176,202 139,566 249,931 181,761

Flatiron’s result and cash flow are as follows: 2007 2006

OperationeelOperating results resultaat 8,514 12,198 BoekwinstResult from beëindigde sale of discontinued activiteiten operations 72,234 - 80,748 12,198

Netto-kasstromenNet cash flow from uit operating bedrijfsactiviteiten activities 9,084 (3,656) NetNetto-kasstromen cash flow from uit investing investeringsactiviteiten activities 6,019 (22,772) NetNetto-kasstromen cash flow from uit financing financieringsactiviteiten activities 6,784 7,827 142 ForeignValutakoersverschillen exchange rate differences (5,822) (6,433) 96,813 (12,836) 2007

At the end of 2007 the Group has discontinued the activities of Villaforte in Woudrichem (house construction for private clients) and sold the activities regarding Houtskeletbouw (timber-frame construction) and the production of precast elements, based in Nederweert. These transactions had no material effect on the Group’s revenue and results.

34. Related-party transactions

The Group identifies the following related parties: joint ventures, associates, the Executive Board and Supervisory Board and the third parties which execute the Group’s pension plans.

Joint ventures and associates

A major part of the Group’s activities is carried out in joint ventures. Important transactions in this context include the assignment and/or the financing of land and also carrying out projects for third parties. Please refer to Note 35 for a more detailed explanation of the Group’s share of the revenues and balance sheets of the joint ventures.

The Group carried out transactions with associates with regard to sale of goods and services for €20.7 million (2006: €17.1 million) and purchase of goods and services for €3.6 million (2006: €2.3 million).

The year-end balance of receivables and liabilities arising from aforementioned transactions with associates amounts to €0.3 million (2006: €0.2 million). The Group recognises €35 million (2006: €70.4 million) for loans to associates. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Executive Board

The following salaries, bonuses and pension premiums were charged to the income statement.

2007 2006 Long- Long- Gross term Pension Gross term Pension salary Bonus bonus premium salary Bonus bonus premium

J.A.P. van Oosten 555 330 277 83 513 225 - 122 N.J. de Vries 493 295 246 77 463 203 - 94 P. B. Brooks 1 352 196 163 90 ---- J. Ruis 430 258 215 71 410 180 - 110 A.J.D. Franklin 2 221 123 103 74 608 275 - 120

1 With effect from 8 May 2007, gross salary 2007 based on £241, pension premium based on allowance to salary. 2 Gross salary 2007 based on £152 and 2006 based on £415, resigned with effect from 8 May 2007.

The maximum amount of the variable remuneration amounts to 60 percent of the annual salary. The variable remuneration depends on the achievement of predetermined measurable targets. The part of the variable remuneration which depends on financial targets amounts to maximum of 40 percent of the annual salary. With respect to this variable remuneration the financial result of the Group is leading. A maximum of 20 percent of the annual salary is related to targets derived from the strategic agenda of the Group.

143 Based on these considerations, the variable bonuses for the 2007 financial year have been determined at 60 percent of the annual salary (2006: 45 percent). A variable remuneration of 50 percent of regular annual salary has been awarded 2007 for the achievement of the long-term objectives, in line with the long-term bonus plan.

Supervisory Board

The remuneration of the members of the Supervisory Board charged to the income statement amounts to €0.239 million (2006: €0.243 million).

2007 2006

W.K. Wiechers, chairman 1 44 40 A. Baar, vice chairman 1 39 35 R.J.N. Abrahamsen 35 35 J.A. Dekker 35 35 H. van Rompuy 30 30 W. van Vonno 2 34 23 G-J. Kramer 1 23 45

1 Up to and including 8 May 2007 Mr Kramer chairman, Mr Wiechers vice chairman plus thereafter Mr Kramer resigned. 2 With effect from 3 May 2006.

No option rights for shares have been granted to the members of either the Executive Board or the Supervisory Board. The members of the Executive Board and of the Supervisory Board do not hold any shares in the company. No loans or advances have been granted to these officers.

Other related parties

The Group has not entered into any other material transaction with other related parties. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 35. Joint ventures

A major part of the Group’s activities is carried out in joint ventures. This applies to all activities and all countries in which the Group operates. The Group participates in approximately 530 joint ventures (2006: 550). These collaborative arrangements remain in place until the project is finished, and are accordingly finite; the duration of many joint ventures is limited in practice to a period of between about 1 and 3 years. None of the joint venture interests are regarded as being of material significance in the sense of the requirements set out in the Note to the annual financial statements.

The Group’s share in the revenue of these joint ventures amounts to approximately €1.1 billion as per year-end 2007 (2006: approximately €1.3 billion) or approximately 12 percent of the Group’s revenue (2006: 15 percent). In 2007, as well as in 2006, the share of the net result realised in joint ventures is above average as compared to the total net result of the Group.

The Group’s share in the balance sheets of joint ventures is as follows:

(€ x million) 2007 2006 Activa:Assets: - Non-currentvaste activa assets 418 122 - Currentvlottende assets activa 1.179 661 1.597 783 Verplichtingen: Liabilities: - Non-currentlanglopende liabilitiesverplichtingen 737 62 144 - Currentkortlopende liabilities verplichtingen 793 654 1.530 716 2007

EigenNet assets vermogen 67 67

The increase in 2007 mainly concerns joint ventures regarding PPP projects, the joint venture with Dutch Infrastructure Fund and the joint ventures for project development.

The Group has no contingent liabilities or investment obligations under joint ventures.

36. Service concession arrangements

The Group operates various service concession arrangements. These activities are frequently undertaken in seperate legal entities, either alone or with outside parties. If the Group has (joint) control, the entities are (proportionally) consolidated. When the Group has significant influence but not the power to control, the entity is accounted for as an associate.

The PPP contracts in which the Group is involved regarding the following categories and countries:

2007 2006 Accom- Infra- Accom- Infra- modation structure Total modations structure Total Netherlands -33 -33 United Kingdom 12 1 13 12 1 13 Belgium 2-22-2 Ireland -33 -22 Germany 5165-5 19 8 27 19 6 25

Operational 15 5 20 14 3 17 Under construction 437538 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Operational concessions realised a revenue of €73.4 million in 2007 (2006: €70.3 million) with a profit before tax of €29.3 million (2006: €2.2 million). Please refer to Note 6.

The Group’s total net investment in PPP projects at year-end 2007 ammounts to €76.5 million (year-end 2006: €81.6 million). Please refer to Note 7.

Revenue yet to be realised from construction activities on PPP projects currently in the construction phase amounts to approximately €470 million.

A more detailed disclosure of the operational concessions is as follows.

Accommodation

These concessions regard schools, police stations, hospitals, a sports complex and a laboratory building. The concession payments are entirely dependent on the availability of the accommodation. The actual use of the accommodation has no impact on the payments. The concessions sometimes include support services for the accommodation, such as maintenance and facility management. Revenue and results are recognised on the basis of the (fixed) fees received from the government. When the fee is related to the support services, the fee is accounted for pro rata to the services rendered.

The concessions started between 2000 and 2007, for periods varying between 15 and 30 years. During the concession periods, the fee is based on the availability of the accommodation and the support services. The majority of the concession arrangements contain indexation clauses. (Some of) the services are periodically benchmarked against the 145 market, generally once every 5 years. The relevant parts of the fees can be adjusted on this basis. However, the volatility of the total revenue and result is limited. 2007

The PPP contract for West Lothian College was terminated at the client’s request in 2007. The Group also transferred four operational PPP contracts into a newly-founded joint venture with Dutch Infrastructure Fund. At year-end 2007, the Group’s stake in this joint venture amounts to 75 percent. Please refer to Note 10.

Of the 15 accomodations, ten are government owned, with the remaining five due to be transferred to the government at the end of the concession period. Three of these five are leased and the Group owns the other two.

Infrastructure

These concessions relate to highways and a railway line in the Netherlands and in Ireland, and a coastal defence scheme in the United Kingdom.

The concession fees in the Netherlands and the UK are based on the availability of the related infrastructure. This availability is tested against contractually established criteria. These criteria cover the intensity of usage, temporary closures and maintenance. When the availability does not meet the contractual criteria, the concession fee can be (temporally) adjusted. Revenue and results are recognised on the basis of fees received from the government. The volatility of the revenue and results is limited. In Ireland, the concession fees are directly based on the volume of traffic (toll collection). The revenue and results from this entity are depending on road traffic, and are therefore volatile to a certain degree.

The concessions started between 2004 and 2007, for periods varying between 15 and 30 years. All of the infrastructural facilities are owned by the government. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 37. Government grants

The government grants received during the financial year amount to approximately €3 million (2006: approximately €2 million). The government grants are mainly related to education, research and development and wages. Received government grants have been offset against the costs incurred.

38. Research and development

Research and development costs, which are predominantly related to projects, are recognised in the cost of the project. Other research and development costs, at approximately €2 million (2006: approximately €2 million), are recognised directly in the income statement.

39. Events after balance sheet date

In 2008, the Group acquired City Projects in Brussels through its subsidiary AM. City Projects is a specialised property developer, concentrating on the development of housing projects, sometimes combined with commercial real estate. The expected revenue 2008 of City Projects amounts to approximately between €20 million and €50 million.

146 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Statutory balance sheet as at 31 December (before profit appropriation, x €1,000)

2007 2006

2 MateriëleTangible assets vaste activa 26,532 27,342 3 ImmateriëleIntangible assets vaste activa 491,656 483,315 4 FinanciëleFinancial assets vaste activa 1,803,245 1,408,901 VasteNon-current activa assets 2,321,433 1,919,558

5 VorderingenReceivables 68,146 71,443 6 LiquideCash and middelen cash equivalents 143 30 VlottendeCurrent assets activa 68,289 71,473

TotaalTotal assets activa 2,389,722 1,991,031

GestortIssued and en opgevraagdpaid up capital kapitaal 13,010 12,415 AgioreserveShare premium reserve 434,121 408,915 StatutaireReserve pursuant reserve to Articles of Associaiton 758 1,586 ValutakoersverschillenreserveExchange differences / hedging reserve (35,063) (14,860) AndereOther legal wettelijke reserves reserves 41,649 14,522 OverigeOther reserves reserves 190,051 133,100 ResultaatResult for boekjaarthe year 349,023 136,955 7 Shareholders'Eigen vermogen equity 993,549 692,633

8 EmployeePersoneelsgerelateerde benifit obligations voorzieningen 8,485 7,936 147 8 ProvisionsVoorzieningen - 229

8,485 8,165 2007

9 Non-currentLanglopende liabilities verplichtingen 233,332 208,589 Non-current liabilities 233,332 208,589

Borrowings 175,155 188,315 Other current liabilities 979,201 893,329 10 Current liabilities 1,154,356 1,081,644

Total equity and liabilities 2,389,722 1,991,031

Statutory income statement (x €1,000)

2007 2006

Result of participating interests after tax 390,422 136,236 Other income and expense after tax (41,399) 719 Net result 349,023 136,955

Bunnik, Netherlands, 19 March 2008

Supervisory Board: Executive Board: W.K. Wiechers J.A.P. van Oosten A. Baar N.J. de Vries R.J.N. Abrahamsen P.B. Brooks J.A. Dekker J. Ruis H. van Rompuy W. van Vonno WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Notes to the statutory financial statements

1. Summary of significant accounting policies

1.1 General

The statutory financial statements of Royal BAM Group nv are included in the consolidated financial statements and are prepared in accordance with legal requirements of Part 9, Book 2, of the Netherlands Civil Code. In preparing these financial statements the provision of Article 2:362 subsection 8 of the Civil Code is applied to prepare the statutory financial statements in accordance with accounting policies as adopted in the consolidated financial statements.

If no other policies are mentioned the applicable policies are those of the consolidated financial statements of Royal BAM Group nv. The consolidated financial statements of Royal BAM Group nv should be consulted for an appropriate interpretation of the statutory financial statements.

The consolidated financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union.

1.2 Financial fixed assets

Subsidiaries Subsidiaries include all entities over which Royal BAM Group nv has directly or indirectly the power to control the financial and operational policies. Subsidiaries are accounted for based on the equity method. The equity value is measured by valuation of assets, provisions and liabilities and determination of results based on the accounting policies of the consolidated financial statements. 148

Associates with significant influence

2007 Associates are all entities over which Royal BAM Group nv has significant influence but no control, are accounted for based on the equity method. Initial recognition in the financial statements is at cost. Subsequently this is adjusted for Royal BAM Group’s share in the results of the associate, based on the accounting policies of the consolidated financial statements. Furthermore the valuation of the associate is adjusted for Royal BAM Group’s share in other movements in the equity of the associate after acquisition date.

Associates: recognition of losses When the share in losses, attributable to Royal BAM Group nv, exceeds the carrying amount of the investment (including separately presented goodwill and other unsecured receivables), further losses will not be recognised, unless the Group has provided securities to the associate, committed to liabilities or paid on behalf of the associate. In that case the excess will be provided for.

1.3 Shareholders’ equity

Reserves pursuant to Articles of Association Pursuant to Articles of Association, Royal BAM Group nv has to form a reserve for the outstanding convertible cumulative financing preference shares. As a consequence of the policies applied in accordance with the consolidated financial statements, the convertible cumulative financing preference shares are presented as a liability. Except for the option price which represents the liability component, the reserve pursuant to the Articles of Association is only recognised for this equity component.

Other legal reserves Included are reserves for fair value adjustments from deferred result regarding cash flow hedges and reserves for associates as required by law. No distribution to shareholders could be made against this reserve. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 2. Tangible assets

Land Other and tangible buildings fixed assets Total

At 1 January 2006 Cost 26,267 5,848 32,115 Accumulated depreciation and impairment (3,755) (4,661) (8,416) Net book amount 22,512 1,187 23,699

Movements in book value Additions 4,235 1,621 5,856 Depreciation charge (1,562) (651) (2,213) Net movements 2,673 970 3,643

At 31 December 2006 Cost 30,187 3,916 34,103 Accumulated depreciation and impairment (5,002) (1,759) (6,761) Net book amount 25,185 2,157 27,342

Movements in book value Additions 274 1,033 1,307 Disposals - (12) (12) 149 Depreciation charge (1,226) (879) (2,105)

Net movements (952) 142 (810) 2007

At 31 December 2007 Cost 30,461 4,057 34,518 Accumulated depreciation and impairment (6,228) (1,758) (7,986) Net book amount 24,233 2,299 26,532 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 3. Intangible assets

Non- integrated Goodwill software Total

At 1 January 2006 Cost 496,262 7,732 503,994 Accumulated amortisation and impairments (5,300) (5,155) (10,455) Net book amount 490,962 2,577 493,539

Movements in book value Amortisation charge - (1,289) (1,289) Other movements (8,935) - (8,935) Net movements (8,935) (1,289) (10,224)

At 31 December 2006 Cost 487,327 7,732 495,059 Accumulated amortisation and impairments (5,300) (6,444) (11,744) Net book amount 482,027 1,288 483,315

Movements in book value Additions 32,569 - 32,569 Disposal of subsidiaries (22,940) - (22,940) 150 Amortisation charges - (1,288) (1,288) Net movements 9,629 (1,288) 8,341 2007

At 31 December 2007 Cost 496,956 7,732 504,688 Accumulated amortisation and impairments (5,300) (7,732) (13,032) Net book amount 491,656 - 491,656

The goodwill shown above represents goodwill on directly acquired subsidiaries. For the annual impairment test this goodwill is allocated to the relevant cash flow generating units. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 4. Financial assets

Shares Receivables Other Other loans in from participating and amounts subsidiaries subsidiaries interests receivable Total

At 1 January 2006 591,314 353,518 95,843 70,171 1,110,846 Net result 116,520 - 19,716 - 136,236 Dividend received (136,956) - (4,314) - (141,270) Adjustments in group structure 110,006 - - - 110,006 Capital contributions 150,964 - - - 150,964 Loans granted / repayments - 25,128 - (87) 25,041 Exchange rate differences (7,586) - (817) - (8,403) Movement hedge reserve 25,481 - - - 25,481 At 31 December 2006 849,743 378,646 110,428 70,084 1,408,901

Net result 354,460 - 35,962 - 390,422 Dividend received (125,403) - (8,834) - (134,237) Adjustments in group structure (6,289) - (25) - (6,314) Acquisitions of subsidiaries 86,303 - - - 86,303 Capital contributions 10,000 - - - 10,000 Repayment of capital (1,356) - - - (1,356) Loans granted / repayments - 136,621 - (69,996) 66,625 151 Exchange rate differences (24,611) - 1,028 - (23,583)

Movement hedge reserve 6,484 - - - 6,484 2007 At 31 December 2007 1,149,331 515,267 138,559 88 1,803,245

No provisions are deemed necessary for the amounts receivable as at the balance sheet date. For a breakdown of the principal subsidiaries and associates, please refer to Other information.

5. Receivables

2007 2006

Amounts due from subsidiaries 11,005 14,139 Amounts due from other participating interests 37,173 7,388 Taxation and social security contributions - 30,747 Other amounts receivable, prepayments and accrued income 19,968 19,169 68,146 71,443

The maturity of the receivables is less than one year. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 6. Cash and cash equivalents

2007 2006

Cash at bank 143 30 143 30

Cash is at free disposal.

7. Shareholders’ equity

The total authorised number of ordinary shares at year-end 2007 is two hundred million (2006: two hundred million) and the number of preference shares is three hundred million (2006: three hundred million), all at par value of €0.10 per share (2006: €0.10 per share). All issued shares have been fully paid up.

in 2007 the number of issued ordinary shares increased by 6,147,861 in 2007 (2006: 1,386,954) to 129,906,275 (2006: 123,758,414). The increase included the conversion of 6,144,047 (2006: 1,300,554) convertible financing preference shares into ordinary shares. In addition, the number of ordinary shares increased by 3,814 in 2007 (2006: 86,400) as a result of a limited amount of preference dividend being distributed in the form of ordinary shares.

The movement of the number of issued shares is as follows: 152

Non-

2007 Convertible convertible Ordinary preference preference shares shares shares Total

At 1 January 2006 122,371,460 13,081,135 473,275 135,925,870 Conversion preference shares 1,300,554 (1,300,554) - - Dividend paid 86,400 - - 86,400 At 31 December 2006 123,758,414 11,780,581 473,275 136,012,270

Conversion preference shares 6,144,047 (6,144,047) - - Dividend paid 3,814 - - 3,814 At 31 December 2007 129,906,275 5,636,534 473,275 136,016,084

The total number of issued ordinary shares increased by 6,147,861 in 2007 (2006: 1,386,954) to 129,906,275 (2006: 123,758,414). The increase included the conversion of 6,144,047 (2006: 1,300,554) convertible preference shares into ordinary shares. In addition, the number of ordinary shares increased by 3,814 in 2007 (2006: 86,400) as a result of a limited amount of preference dividend being distributed in the form of ordinary shares. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The specification of movement in shareholders’ equity for 2006 and 2007 is stated below:

Exchange Issued and Share Reserve differences/ Other Unappro- paid up Premium pursuant hedging statutory Other priated capital reserve to articles reserve reserves reserves results Total

AtPer 1 1 January januari 20062006 12,280 403,229 1,762 (34,911) - 46,018 153,342 581,720 ProfitResultaat for theboekjaar year ------136,955 136,955 AppropiationVerdeling winst of voorgaandthe result of boekjaar the preceding year -----153,342 (153,342) - PreferencePreferente aandelenshares: - inkooppurchase niet-converteerbare non-convertible shares preferente aa-----(27) - (27) - preferenceconversie share conversion 126 5,332 (176) - - 637 - 5,919 DividendBetaald dividend paid 9 354 - - - (49,418) - (49,055) MovementMutatie reële in fairwaarde value kasstroom hedges afdekkingen - - - 28,454 - - - 28,454 ExchangeValutakoersverschillen rate differences - - - (8,403) - - - (8,403) OtherOverige movements mutaties ----14,522 (17,452) - (2,930) AtPer 31 31 December december 2006 2006 12,415 408,915 1,586 (14,860) 14,522 133,100 136,955 692,633

ProfitResultaat for theboekjaar year ------349,023 349,023 AppropiationVerdeling winst of voorgaandthe result of boekjaar the preceding year -----136,955 (136,955) - PreferencePreferente aandelenshares: - inkooppurchase niet-converteerbare non-convertible shares prefere------preferenceconversie share conversion 595 25,190 (828) - - 1,901 - 26,858 153 DividendBetaald dividend paid - 16 - - - (55,707) - (55,691)

MovementMutatie reële in fairwaarde value kasstroomafdekkingen hedges - - - 3,512 - - - 3,512 2007 ExchangeValutakoersverschillen rate differences - - - (23,715) - - - (23,715) OtherOverige movements mutaties ----27,127 (26,198) - 929 AtPer 31 31 December december 2007 2007 13,010 434,121 758 (35,063) 41,649 190,051 349,023 993,549

The exchange differences reserve amounts to €29.6 million negative (2006: €5.9 million positive) and the hedging reserve amounts to €5.5 negative (2006: €9.0 million negative).

The restriction in distributable reserves amounts to €42.4 million (2006: €16.1 million). The restriction of other reserves amounts tot €35.1 million (2006: €14.9 million).

The company proposes to pay a cash dividend of €0.90 per share on the ordinary shares for the 2007 financial year. This amounts to approximately €116.9 million and is not yet reflected in the financial statements.

Conversion of convertible cumulative financing preference shares in 2008 before the ‘ex-dividend’ date will entitle the new holders of ordinary shares to ordinary dividend in respect of 2007. For these shareholders, the dividend on the cumulative financing preference shares will not be paid. This may give rise to differences between the proposed dividend distributions and the final dividend payments.

Result appropriation The cash dividends paid to holders of ordinary shares in 2007 and 2006 were €55.7 million (€0.45 per share) and €49.1 million (€0.40 per share) respectively.

The cash dividends paid to holders of convertible cumulative financing preference shares in 2007 and 2006 were €4.4 million (€0.37086 per share) and €4.4 million (€0.37086 per share) respectively. Besides cash dividends paid on convertible financing preference shares, a limited amount of the dividend was distributed in ordinary shares. As a result, the number of ordinary shares increased in 2007 and 2006 with 3,814 and 86,400 ordinary shares respectively.

The cash dividends paid to holders of non-convertible cumulative financing preference shares in 2007 and 2006 were €0,03 million (€0.38346 per share) and €0.1 million (€0.38346 per share) respectively. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 8. Provisions

2007 2006

Employee benefit obligations 8,485 7,936 Reorganisation provision - 229 8,485 8,165

9. Non-current liabilities

2006 2005

Subordinated loans 200,000 150,000 Convertible preference shares 22,896 47,853 Financial lease liabilities 10,436 10,736 233,332 208,589

For more information on non-current liabilities, please refer to the Notes to the consolidated financial statements.

10. Current liabilities

154 2007 2006

2007 Bank overdrafts 174,505 186,416 Preference shares 350 350 Financial lease liabilities 300 1,549 Amounts due to subsidiaries 897,756 865,176 Taxation and social security contributions 45,457 - Other current liabilities 35,988 28,153 1,154,356 1,081,644

11. Employees

During the year 2007, Royal BAM Group nv employed 174 (2006: 178) employees on average.

12. Executive Board and Supervisory Board members

For a specification of the remuneration of Executive Board and Supervisory Board members, please refer to Note 34 to the consolidated financial statements. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 13. Contingencies

Third-party liability

The Company has joint and several liability for the debts of Netherlands-based subsidiaries arising from legislation in Section 403 of Book 2 of the Netherlands Civil Code. Please refer to the Notes to the consolidated balance sheet.

The Company has issued corporate guarantees, mainly to clients commissioning projects, instead of bank guarantees. As at year-end 2007, this concerns an amount of €334 million (year-end 2006: €331 million).

The Company is the parent company of the Dutch fiscal unities for corporation tax and VAT, and is jointly and severally liable for the tax liabilities of these fiscal unities.

Bunnik, Netherlands, 19 March 2008

Supervisory Board: Executive Board: W.K. Wiechers J.A.P. van Oosten A. Baar N.J. de Vries R.J.N. Abrahamsen P.B. Brooks J.A. Dekker J. Ruis H. van Rompuy W. van Vonno

155 2007 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Other information

Proposed appropriation of profit for 2007

The net result for 2007, in the sum of €349.0 million, has been accounted for in shareholders’ equity.

Pursuant to the provisions of the Articles of Association concerning profit appropriation, the Executive Board has decided to award the holders of cumulative financing preference shares a dividend in respect of the financial year on the basis of a yield of 8.83 percent per annum for the convertible preference shares and 9.13 percent per annum for the non- convertible preference shares. This is equivalent to €0.37086 per convertible financing preference share and €0.38346 per non-convertible financing preference share. In total, this involves a sum of approximately €2,1 million.

The Company intends to pay out a cash dividend on ordinary shares for 2007, to the amount of €0.90 per share. This corresponds to an amount of approximately €116,9 million.

Provisions of the Articles of Association concerning profit appropriation

(Brief summary of Article 32 of the Articles of Association)

From the profit realised in any financial year, an amount will first be distributed, where possible, on the class B cumulative preference shares, calculated by applying the percentage stated below to the amount mandatorily paid up on those shares as at the start of the financial year for which the distribution is made. The percentage referred to above will be equal to the average of the EURIBOR rates for money market loans with a maturity of twelve months – weighted according to the number of days for which these rates prevailed – during the financial year for which the distribution is made plus one percentage point. EURIBOR refers to the Euro Interbank Offered Rate as determined and published by the 156 European Central Bank.

2007 Subsequently, if possible, a dividend will be distributed on each financing preference share of a certain series and sub- series, with due consideration of the following provisions of this paragraph, equal to an amount calculated by applying a percentage to the nominal amount of the financing preference share concerned at the start of that financial year, plus the amount of share premium paid in on the financing preference share issued in the series and sub-series concerned at the time of initial issue of the financing preference shares of that series and sub-series, less the amount paid out on each financing preference share concerned and charged to the share premium reserve formed at the time of issue of the financing preference shares of that series and sub-series prior to that financial year. If and to the extent that a distribution has been made on the financing preference shares concerned in the course of the year and charged to the share premium reserve formed at the time of issue of the financing preference shares of the series and sub-series concerned, or partial repayment has been made on such shares, the amount of the distribution will be reduced pro rata over the period concerned according to the amount of the distribution charged to the share premium reserve and/or the repayment with respect to the amount referred to in the preceding sentence. The calculation of the dividend percentage for the financing preference shares of a certain series will be made for each of the series of financing preference shares referred to below in the manner set forth for the series concerned.

Series FP1-FP4: The dividend percentage will be calculated by taking the arithmetic mean of the yield to maturity on euro government loans issued by the Kingdom of the Netherlands with a remaining term matching as closely as possible the term of the series concerned, as published in the Official Price List of Euronext Amsterdam, plus two percentage points.

Series FP5-FP8: The dividend percentage will be equal to the average of the EURIBOR rates for money market loans with a maturity of 12 months – weighted according to the number of days for which these rates prevailed – during the financial year for which the distribution is made, plus two percentage points.

The above percentages may be increased or reduced by an amount of no more than three hundred basis points. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The Supervisory Board shall determine, on the basis of a proposal by the Executive Board, what part of the profit remaining after application of the provisions referred to above should be added to reserves. The part of the profit that remains after application of the provisions referred to above shall be at the disposal of the General Meeting of Shareholders, subject to the provision that no further dividends may be distributed on the preference shares.

Anti-takeover measures

The Company has taken the following measures to protect itself against any undesired developments that might have an impact on the independence, continuity and/or identity of the Group.

Pursuant to a resolution passed by the General Meeting of Shareholders held on 12 June 1972, the Articles of Association include the possibility of issuing preference shares. In connection with this, Stichting Aandelenbeheer BAM Groep (hereafter referred to as the Foundation) was founded in 1978.

The object of the Foundation is to look after the interests of the Company and the companies that are held by the Company and the group of companies associated with the Company. Specifically, the Foundation seeks to ensure that the interests of the Company and of those companies and all their stakeholders are safeguarded as well as possible and that influences which could undermine the independence and/or continuity and/or identity of the Company and those companies in conflict with those interests are averted to the best of the Foundation’s ability. The Foundation attempts to achieve its object by acquiring, including by exercising the option referred to above, and holding class B cumulative preference shares in the Company’s capital and by exercising the rights connected with those shares.

157 As announced at the General Meeting of Shareholders held on 4 June 1992, and considered at the General Meeting of

Shareholders on 8 June 1993, the Company granted the Foundation an option to acquire class B cumulative preference 2007 shares in the Company’s capital on 17 May 1993. This option was granted up to such an amount as the Foundation might require, subject to a maximum of a nominal amount that would result in the total nominal amount of the class B cumulative preference shares in issue and not held by the Company equalling ninety-nine point nine percent (99.9 percent) of the nominal amount of the issued share capital in the form of shares other than class B cumulative preference shares and not held by the Company at the time of exercising the right referred to above. The Executive Committee of the Foundation has the exclusive right to determine whether or not to exercise this right to acquire class B cumulative preference shares.

The Foundation's Executive Committee consists of three members, namely one category A director and two category B directors. The category A director is appointed by the Company's Executive Board, subject to approval by the Supervisory Board. The category A director may not be a member of the Executive Board or Supervisory Board of the Company or any of its subsidiaries.

The category B directors are appointed by the Foundation’s Executive Committee, subject to the approval of the Executive Board, for which the latter for its part requires the approval of the Supervisory Board. A category B director may not be affiliated to the Company as referred to in the, meanwhile expired Appendix X to the General Regulations Amsterdam Stockmarket, Rulebook II.

The current composition of the Executive Committee is: J. Kleiterp, chairman (A) G.H. Heida (B) S.E. Beelaerts van Blokland (B)

Each member of the Foundation’s Executive Committee receives an annual fee of €3,000. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf The particulars of the Executive Committee members are:

J. Kleiterp (74), chairman Member of the Foundation’s Executive Committee since 2004 and Chairman since 2005. Dutch national. Former Chairman of the Executive Board of MeesPierson. Mr Kleiterp holds two other positions: Chairman of the Advisory Council of Deloitte and member of the Supervisory Board of Stichting Vangnet HBO.

G.H. Heida (54) Member of the Foundation’s Executive Committee since 2000. Dutch national. Former member of the Executive Committee of ING Asset Management. Currently an independent financial consultant specialising in investments. Mr Heida is a member of the Supervisory Board of six investment funds of Kempen Capital Management and is a member of or adviser to the investment committee of several institutional investors.

S.E. Beelaerts van Blokland (63) Member of the Foundation’s Executive Committee since 2004. Dutch national. Former Chairman of UBS Investment Bank (Netherlands). Currently Chairman of the Supervisory Board of Deloitte and De Goudse Verzekeringen, Chairman of the Executive Committee of Stichting continuïteit TKH and member of the Executive Committee of Stichting continuïteit ICT.

No class B cumulative preference shares have been issued at this time.

158 The Supervisory Board and the Executive Board reserve the right, in the interests of the Company and its associated companies, to resolve to take measures other than the issue of class B preference shares in order to protect the Company

2007 against influences that might be regarded by the Supervisory Board and the Executive Board, after balancing the interests of the Company and all of the stakeholders in the Group, as being potentially damaging to the independence, continuity and/or identity of the Group. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Auditors' report

To the General Meeting of Shareholders of Royal BAM Group nv

Report on the financial statements control. An audit also includes evaluating the We have audited the accompanying financial statements appropriateness of accounting policies used and the 2007 of Royal BAM Group nv, as set out on pages 81 to 155. reasonableness of accounting estimates made by the The financial statements consist of the consolidated Executive Board, as well as evaluating the overall financial statements and the company financial statements. presentation of the financial statements. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 2007, the We believe that the audit evidence we have obtained is profit and loss account, statement of changes in equity, sufficient and appropriate to provide a basis for our audit cash flow statement for the year then ended and a opinion. summary of significant accounting policies and other explanatory notes. The company financial statements Opinion with respect to the consolidated financial statements comprise the company balance sheet as at 31 December In our opinion, the consolidated financial statements give 2007, the company profit and loss account for the year then a true and fair view of the financial position of Royal BAM ended and the notes. Group nv as at 31 December 2007, and of its result and its cash flows for the year then ended in accordance with Executive Board’s responsibility International Financial Reporting Standards as adopted by The Executive Board of the company is responsible for the the European Union and with Part 9 of Book 2 of the preparation and fair presentation of the financial Netherlands Civil Code. statements in accordance with International Financial Reporting Standards as adopted by the European Union Opinion with respect to the company financial statements 159 and with Part 9 of Book 2 of the Netherlands Civil Code, In our opinion, the company financial statements give a and for the preparation of the Executive Board's report in true and fair view of the financial position of Royal BAM 2007 accordance with Part 9 of Book 2 of the Netherlands Civil Group nv as at 31 December 2007, and of its result for the Code. This responsibility includes: designing, year then ended in accordance with Part 9 of Book 2 of the implementing and maintaining internal control relevant Netherlands Civil Code. to the preparation and fair presentation of the financial statements that are free from material misstatement, Report on other legal and regulatory requirements whether due to fraud or error; selecting and applying Pursuant to the legal requirement under 2:393 sub 5 part appropriate accounting policies; and making accounting e of the Netherlands Civil Code, we report, to the extent estimates that are reasonable in the circumstances. of our competence, that the directors' report is consistent with the financial statements as required by 2:391 sub 4 Auditor's responsibility of the Netherlands Civil Code. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in Amsterdam, Netherlands, 20 March 2008 accordance with Dutch law. This law requires that we PricewaterhouseCoopers Accountants N.V. comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the Mr.drs. J. van Hees RA financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Principal subsidiaries and associates

Construction % • BAM Utiliteitsbouw bv*, Bunnik (Netherlands) 100 • BAM Woningbouw bv*, Bunnik (Netherlands) 100 • Fort Unitbouw bv*, Raamsdonksveer (Netherlands) 100 • Heilijgers bv*, Amersfoort (Netherlands) 100 • Bouwbedrijf H. Pennings en Zn. bv*, Rosmalen (Netherlands) 100 • BAM Materieel bv*, Lelystad (Netherlands) 100 • Interbuild nv, Wilrijk-Antwerp (Belgium) 100 • HBG UK Ltd, Colindale, London (United Kingdom) 100 • BAM Deutschland AG, Stuttgart (Germany) 90

property • BAM Vastgoed bv*, Bunnik (Netherlands) 100 • Kaïros nv, Wilrijk-Antwerp (Belgium) 100 • Wayss & Freytag AG Projektentwicklung, Frankfurt am Main (Germany) 100 • AM nv, Nieuwegein (Netherlands) 51

Civil engineering • BAM Civiel bv*, Gouda (Netherlands) 100 • BAM Infratechniek bv*, Culemborg (Netherlands) 100 160 • BAM Rail bv*, Breda (Netherlands) 100 • BAM Wegen bv*, Utrecht (Netherlands) 100

2007 • BAM Infraconsult bv*, Gouda (Netherlands) 100 • Interbeton bv*, Gouda (Netherlands) 100 • Betonac nv, Sint-Truiden ( Belgium) 100 • CEI-De Meyer nv, Brussels (Belgium) 100 • Galère sa, Liège (Belgium) 100 • Edmund Nuttall Ltd, Camberley, Surrey (United Kingdom) 100 • Ascon Contractors Ltd, Kill, Kildare (Ireland) 100 • Wayss & Freytag Ingenieurbau AG, Frankfurt am Main (Germany) 100

Public-private partnerships • BAM PPP bv, Bunnik (Netherlands) 100

Mechanical and electrical contracting • BAM Techniek bv*, Bunnik (Netherlands) 100

Consultancy and engineering • Tebodin bv*, The Hague (Netherlands) 100

Associates • Van Oord nv, Rotterdam (Netherlands) 21.5 • Infraspeed (Holdings) bv, Haarlem (Netherlands) 21.5 • Wâldwei.com bv, Leeuwarden (Netherlands) 33.3 • Railpro bv, Hilversum (Netherlands) 10 • Celtic Roads Group (Dundalk) Ltd, Dublin (Ireland) 33.3 • Celtic Roads Group ( Waterford) Ltd, Dublin (Ireland) 33.3 • Celtic Roads Group ( Portlaoise) Ltd, Dublin (Ireland) 33.3

A list of associates as referred to in Sections 379 and 414, Book 2, of the Netherlands Civil Code, has been deposited at the Office of the Trade Register in Utrecht.

* In respect for these subsidiaries Royal BAM Group nv has deposited a declaration of joint and several liability pursuant

to Section 403, Part 9, Book 2, of the Netherlands Civil Code. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Royal BAM Group nv executive officers (as at 19 March 2008)

Royal BAM Group nv Civil engineering

Bunnik (Netherlands) J.A.P. van Oosten, chairman Netherlands N.J. de Vries, vice chairman BAM Civiel, Gouda W.R. Remmelts P.B. Brooks C.A. van ‘t Hoog J. Ruis, CFO BAM Infratechniek, M. de Rooij R.P. van Wingerden 1 Culemborg H.G. Kuipers BAM Rail, Breda K.W. Talsma T.P.L.M. van Beek, human resources en S.H. van Royen corporate social responsability BAM Wegen, Utrecht W. Konings H. Bree, Property investments J.P.G. Ramler P.F. Jaeger, legal affairs A.J. Kroezen, finance Belgium G.J. Maas, strategy Betonac, Sint-Truiden ir. A. Vautmans CEI-De Meyer, Brussels G. Loix Construction M. Peeters P. Depreter Netherlands Galère, Chaudfontaine G. Loix BAM Utiliteitsbouw, Bunnik H.W.J. Bol Ph. Goblet J.J. Kempkens V. Pissart BAM Woningbouw, Bunnik R.P. van Wingerden 1 P.M.L. Born United Kingdom M.J.S. Broos Edmund Nuttall, M.J. Rogers Fort Unitbouw, Raamsdonksveer A. Barnhoorn Camberley D.K. Belsham 161 Heilijgers, Amersfoort H.J.A. Oskamp S.C. Fox

Bouwbedrijf H. Pennings en Zn., M.A. van Dulmen R. Treadgold 2007 Rosmalen F.J.H.M. van Vuuren BAM Materieel, Lelystad J.W. Carton Ireland Ascon Contractors, J.B. Barrett Belgium Kill B.G. Murphy Interbuild, Wilrijk-Antwerp E.E.L.A. Verbeeck T.M. Cullinane B.P.Y. De Landsheer L.F. Harmon W. Tahon Germany United Kingdom Wayss & Freytag J.J. Wenkenbach HBG UK, London R.A. Gregory Ingenieurbau, R. Bailey Frankfurt am Main J.R. Burke G. Cash Worldwide Interbeton, Gouda D. Langbroek Germany N. Dirkzwager BAM Deutschland, Stuttgart F. Berner G.K. Mazloumian S. Currle A. Häberle Public-private partnerships (PPP) M. Hager A. Naujoks BAM PPP, Bunnik, Glasgow D.J. Wilson R. Fielder Property Mechanical and electrical contracting Netherlands BAM Vastgoed, Bunnik R. Vollebregt Netherlands A. Bolks BAM Techniek, Bunnik J.F.M. Al P. Esveld H.A. van Harn (until 1 September 2008) J.A. Hazeleger (as from 1 October 2008) Belgium C. Franchimon Kaïros, Wilrijk-Antwerp E.E.L.A. Verbeeck R.A.C. van Zijl (as from 1 April 2008) B.P.Y. De Landsheer Consultancy and engineering Germany Wayss & Freytag Projekt- F. Samuel Worldwide entwicklung, Frankfurt am Main Tebodin Consultants & P.L.C.A. Koolen Engineers, The Hague P. Bilek A.M. van der Velden 1 The Supervisory Board is proposing to appoint Mr R.P. Van Wingerden

member of the Executive Board with effect from 7 May 2008. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Ten year key figures (in € million, unless otherwise indicated)

2007 2006 2005 2004 2003 1 IFRS IFRS IFRS IFRS NL GAAP

Revenue 8,954 8,646 7,425 7,493 7,770 Operating result excluding fines 340.7 262.6 235.3 232.7 172.6 Operating result 340.7 255.2 235.3 192.7 145.2 Result before tax 428.1 228.4 229.9 172.3 112.6 Net result attributable to shareholders 349.0 137.0 153.3 106.4 56.0 Net result attributable to holders of ordinary shares 349.0 137.0 153.3 91.1 38.2

Revenue from continuing operations 8,539 8,150 7,425 7,493 7,770 Operating result from continuing operations 327.2 237.2 235.3 192.7 145.2 Result from continuing operations before tax 341.8 209.8 229.9 172.3 112.6 Net result from continuing operations before tax attributable to shareholders 268.3 124.8 153.3 106.4 56.0

Earnings per ordinary share (in €1) 2.80 1.11 1.46 1.06 0.52 Fully diluted result per ordinary share (in € 1) 2.60 1.04 1.28 0.87 0.45 Dividend per ordinary share (in €1) 3 0.90 0.45 0.40 0.31 0.31

Equity attributable to shareholders 993.5 692.6 581.7 435.1 441.1 Subordinated loans 4 200.0 150.0 155.1 121.3 125.9 Preference shares 23.3 48.2 53.6 - - Third-party shareholders AM 49.0 49.0 - - - 162 Suborbinated convertible bond loan 4 - ---17.4 Capital base 1,265.8 939.8 790.4 556.4 584.4 2007

Net additions to property, plant and equipment 131.7 119.2 101.0 92.9 86.0 Depreciation/amortisation/impairment of: - Property, plant and equipment 93.6 96.5 97.6 92.5 134.1 - Intangible assets 7.7 3.4 8.0 2.7 35.4 Cash flow before dividend 450.3 236.9 259.9 201.6 225.4

Order book 5 13,800 13,100 10,400 8,900 9,100

Average number of employees 28,007 28,330 26,914 26,801 29,551 Number of employees as at year-end 27,578 30,338 27,190 26,651 26,837

Ratios (in %) Result before tax, amortisation of goodwill and fines as % of revenue 4.8 2.7 3.1 2.8 2.3 Result before tax and amortisation of goodwill as % of revenue 4.8 2.6 3.1 2.3 1.9 Result from continuing operations before tax and goodwill amortisation as % of revenue 4.0 2.6 3.1 2.3 1.9 Net result as % of revenue 3.9 1.6 2.1 1.4 0.7 Net result as % of average equity 41.4 21.5 37.8 28.2 13.2

Capital ratios: - Equity attributable to shareholders as % of total assets 14.2 10.7 11.7 9.2 14.1 - Capital base as % of total assets 18.1 14.5 15.9 11.7 18.7

Current ratio 1.28 1.16 1.09 0.99 0.92

1 With effect from 2003, interest on property development has been capitalised; previous year figures are not restated. 2 In 1999 and previous years results on projects were recognised based on completed contract method. 3 Dividend proposal 2007. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf 2002 2001 2000 1999 2 1998 2 NL GAAP NL GAAP NL GAAP NL GAAP NL GAAP

3,579 2,916 1,510 1,093 957 Revenue 75.7 60.3 39.4 29.5 37.2 Operating result excluding fines 75.7 60.3 39.4 29.5 37.2 Operating result 70.2 60.6 39.5 29.2 22.7 Result before tax 46.7 39.4 29.1 19.5 15.0 Net result attributable to shareholders 45.9 39.4 29.1 19.5 15.0 Net result attributable to holders of ordinary shares

3,579 2,916 1,510 1,093 957 Revenue from continuing operations 75.7 60.3 39.4 29.5 37.2 Operating result from continuing operations 70.2 60.6 39.5 29.2 22.7 Result from continuing operations before tax Net result from continuing operations before tax 46.7 39.4 29.1 19.5 15.0 attributable to shareholders

0.87 0.78 0.58 0.41 0.36 Earnings per ordinary share (in €1) 0.74 0.66 0.50 0.36 0.31 Fully diluted result per ordinary share (in € 1) 0.31 0.31 0.23 0.16 0.14 Dividend per ordinary share (in €1) 3

404.1 131.2 100.8 69.6 58.1 Equity attributable to shareholders 30.5 34.0 34.0 - - Subordinated loans 4 -----Preference shares -----Third-party shareholders AM 163 33.2 38.5 38.6 38.6 38.6 Suborbinated convertible bond loan 4

467.8 203.7 173.3 108.2 96.7 Capital base 2007

54.3 21.2 17.8 14.1 10.4 Net additions to property, plant and equipment Depreciation/amortisation/impairment of: 43.5 33.6 19.7 14.9 13.4 - Property, plant and equipment 8.7 4.6 3.4 - - - Intangible assets 98.8 77.7 52.3 34.4 28.4 Cash flow before dividend

10,200 4,543 3,587 1,588 1,361 Order book 5

14,972 12,744 7,546 6,136 5,669 Average number of employees 30,588 13,248 12,824 6,360 5,598 Number of employees as at year-end

Ratios (in %) Result before tax, amortisation of goodwill and 2.2 2.2 2.8 2.7 2.4 fines as % of revenue 2.2 2.2 2.8 2.7 2.4 Result before tax and amortisation of goodwill as % of revenue Result from continuing operations before tax and goodwill 2.2 2.2 2.8 2.7 2.4 amortisation as % of revenue 1.3 1.4 1.9 1.8 1.6 Net result as % of revenue 29.2 34.0 34.2 30.6 26.5 Net result as % of average equity

Capital ratios: 10.5 14.6 12.2 18.7 17.7 - Equity attributable to shareholders as % of total assets 12.1 22.6 21.0 29.1 29.5 - Capital base as % of total assets

0.77 1.15 1.11 1.23 1.23 Current ratio

4 Subordinated loans including the current part. 5 The order book comprises both signed contracts and verbally agreed upon orders. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Key financial dates

7 May 2008 General Meeting of Shareholders

9 May 2008 Ex-dividend listing 13 May 2008 Record-date dividend rights 15 May 2008 Declaration of dividend

29 May 2008 Publication first quarter results 28 August 2008 Publication half-year results 27 November 2008 Publication third quarter results

5 March 2009 Publication of annual results 2007 22 April 2009 General Meeting of Shareholders

28 May 2009 Publication first quarter results 27 August 2009 Publication half-year results 19 November 2009 Publication third quarter results

The General Meeting of Shareholders will be held on wednesday 7 May 2008 at 3.00 p.m. at the NH Barbizon Palace Hotel, Prins Hendrikkade 59 - 72 in Amsterdam, Netherlands.

164 2007

Acknowledgements

Layout: Boulogne Jonkers, Zoetermeer, Netherlands

Printing: RotoSmeets GrafiServices, Utrecht, Netherlands

Illustrations: abv+architecten, De Beeldredaktie, Brian Borrett, Michael Boulogne, Jon de Bruijne, Imre Csany/Studio Csany, Jean-Luc Deru/Daylight sprl, Jan Derwig, Marc Detiffe, Ernst Fesseler, Ben de Haas, Chris Henderson, Rob Hoekstra Fotografie, Jeroen Kleijn, Lex Klimbie, Hans Koppelmans, Ian McMahon/Studio Lab, Janice O' Connell/f22 photography, Isabelle Pateer/Otherweyses Photography, Raum Visionen, Bas Sooths, Werner Tuchscherer, Jan de Vries, Dirk Verwoerd/ Lighthouse Productions.

08.04.2008 WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf Royal BAM Group nv Runnenburg 9 3981 AZ Bunnik P.O. Box 20 3980 CA Bunnik The Netherlands

Telephone +31 (0)30 659 89 88 [email protected] www.bamgroup.org

Established at Bunnik. Trade Register Utrecht Number 30058019.

This is an English translation of the original Dutch-language report. Should different interpretations arise, the Dutch version prevails. WorldReginfo - 41b92370-e491-4424-8ce0-355552a5baaf