Annual Report 2012 1873 2013 Financial highlights Figures in €m 2006 2007 2008 2009 2010 2011 2012 Number of employees as at 31 December 40,983 67,916 60,841 53,302 53,437 52,526 51,966 Sales volumes Cement and clinker (million tonnes) 79.7 87.9 89.0 79.3 78.4 87.8 89.0 Aggregates (million tonnes) 85.8 179.6 299.5 239.5 239.7 254.1 243.0 Asphalt (million tonnes) 4.8 12.1 10.0 9.1 9.5 8.6 Ready-mixed concrete (million cubic metres) 24.9 32.7 44.4 35.0 35.0 39.1 39.1 Income statement Total Group revenue 7,997 10,862 14,187 11,117 11,762 12,902 14,020 Operating income before depreciation (OIBD) 1) 1,890 2,423 2,946 2,102 2,239 2,321 2,477 Operating income (OI) 1) 1,429 1,850 2,147 1,317 1,430 1,474 1,613 Profit for the financial year 1,026 2,119 1,920 168 511 534 545 Group share of profit 951 2,022 1,808 43 343 348 301 Dividend per share in € 1.25 1.30 0.12 0.12 0.25 0.35 0.47 4) Earnings per share in € 8.22 17.11 14.55 0.30 1.83 1.86 1.61 Investments Investments in intangible assets and PP&E 505 1,039 1,101 796 734 874 831 Investments in financial assets 2) 316 11,735 150 24 138 85 35 Total investments 821 12,774 1,251 820 872 959 866 Depreciation and amortisation 461 573 799 785 809 847 864 Free cash flow Cash flow from operating activities 1,259 1,911 1,523 1,164 1,144 1,332 1,513 Cash flow from investing activities 2) -665 -10,677 1,113 -539 -648 -758 -582 Balance sheet Shareholders’ equity and non-controlling interests 5,828 7,519 8,261 11,003 12,884 13,569 13,713 Balance sheet total 12,318 29,201 26,288 25,508 27,377 29,020 28,005 Net debt 3) 3,081 14,608 11,566 8,423 8,146 7,770 7,047 Ratios OIBD margin 23.6% 22.3% 20.8% 18.9% 19.0% 18.0% 17.7% OI margin 17.9% 17.0% 15.1% 11.8% 12.2% 11.4% 11.5% Net debt / shareholders’ equity (gearing) 3) 52.5% 193.4% 139.8% 76.5% 62.9% 57.0% 51.3% Net debt / OIBD 1.63x 6.03x 3.93x 4.01x 3.64x 3.35x 2.84x 1) 2006: figures have been restated as a result of the reclassification of emission rights and pension interest (IAS 19). 2) 2006–2008: including decrease / increase in ownership interests in subsidiaries 3) Without adjustment to IAS 32.18 b) Non-controlling interests with put options in the amount of €45 million (2012), €98 million (2011), €96 million (2010), €37 million (2009), €50 million (2008), €86 million (2007), €106 million (2006) 4) The Managing Board and Supervisory Board will propose to the Annual General Meeting on 8 May 2013 the distribution of a cash dividend of €0.47. Overview of Group areas Figures in €m 2008 2009 2010 2011 2012 Western and Northern Europe Revenue 4,936 3,848 3,811 4,318 4,201 Operating income before depreciation 1,014 687 683 734 577 Investments in property, plant, and equipment 248 178 193 177 Employees as at 31 December 15,770 14,640 14,302 13,693 13,438 Financial highlights | Overview of Group areas Financial highlights | Overview of Group Eastern Europe-Central Asia Revenue 2,046 1,282 1,138 1,392 1,435 Operating income before depreciation 718 361 299 327 317 Investments in property, plant, and equipment 270 202 240 181 Employees as at 31 December 11,556 9,481 9,959 9,693 9,435 North America Revenue 3,958 2,892 3,033 3,035 3,441 Operating income before depreciation 676 340 448 473 577 Investments in property, plant, and equipment 152 146 159 162 Employees as at 31 December 15,739 12,601 11,899 11,586 11,001 Asia-Pacific Revenue 2,177 2,211 2,609 2,957 3,477 Operating income before depreciation 462 612 718 711 887 Investments in property, plant, and equipment 96 174 215 231 Employees as at 31 December 15,044 14,030 13,682 14,039 14,686 Africa-Mediterranean Basin Revenue 974 837 938 1,023 1,135 Operating income before depreciation 182 157 156 164 203 Investments in property, plant, and equipment 28 34 67 80 Employees as at 31 December 2,680 2,499 3,539 3,460 3,349 Group Services Revenue 701 475 709 652 828 Operating income before depreciation 22 30 20 11 22 Investments in property, plant, and equipment Employees as at 31 December 52 51 55 55 57 140 Years 140 Financial highlights | Overview of Group areas Quality and reliability for the past 140 years – Financial highlights | Overview of Group areas Financial highlights | Overview of Group that is HeidelbergCement. From our start as a local cement manufacturer in southern Germany, we have grown to become one of the world’s largest building materials companies with around 52,000 employees in over 40 countries. We are number one in sand and gravel, as well as one of the leading manufacturers of cement and concrete. High product quality, extensive raw material reserves, close customer relationships, and eco- logical sustainability are important pillars of our success. And these are values that haven’t changed since 1873. Review 2012 New cement mill in Bangladesh Q1 Opening of a new cement mill with a capacity of 0.8 million tonnes at the cement grinding plant in the port city of Chittagong. New government infrastructural projects lead to increased demand for cement. Liquidity and Group financing secured The syndicated credit facility of €3 billion is extended to 31 December 2015 and serves primarily as a liquidity reserve. The proceeds from a bond amounting to €300 million are used for general Group financing purposes. Completion of capacity expansion in Poland The commissioning of HeidelbergCement’s largest cement mill in Europe with a capacity of 1.4 million tonnes supplements clinker capacity, which had been increased in the previous year. Cement capacity in Poland increases to 5.6 million tonnes. Modernisation of the cement kiln in Tanzania Q2 By modernising cement kiln no. 3, clinker capacity increases by 250,000 tonnes to 1.1 million tonnes. Tanzania is HeidelbergCement’s second largest market in Africa. Expansion of cement activities in Togo Q3 Construction of a clinker plant with a capacity of 1.5 million tonnes near the town of Tabligbo, around 80 km northeast of the capital Lomé, and a cement grinding facility with a capacity of 200,000 tonnes in Dapaong, located 600 km to the north. Expensive clinker imports from overseas are replaced by domestic production. New cement mill in Ghana inaugurated Q4 The new cement mill at the Tema cement grinding plant increases capacity in Ghana by 1 million tonnes to 3.7 million tonnes. The strong economic growth in the country has also been driven by oil production since 2011. Premier presentation of the Quarry Life Award The first round of the Quarry Life Award competition was a huge success with 300 project entries in 18 countries for the preservation and enhancement of biodiversity. The three first places in the international competition were awarded to projects from the Czech Republic, Ghana, and the United Kingdom. Expansion of cement capacity in central India HeidelbergCement increases its cement capacity in India by 2.9 million tonnes to 6.2 million tonnes. After successful test runs, the new production facilities at the Damoh and Jhansi locations in central India officially start operation in February 2013. Contents To our shareholders 1 Letter to the shareholders 18 Report of the Supervisory Board 22 Managing Board 28 HeidelbergCement in the capital market 30 Combined management report 2 of HeidelbergCement Group and HeidelbergCement AG Core activities and organisational structure 38 Strategy, management control, and targets 39 2012 business trend 42 Additional statements 74 Risk report 79 Sustainability 94 Employees and society 95 Environmental precaution 102 Research and technology 105 Procurement 111 Outlook 112 Corporate Governance 1) 3 Corporate Governance statement 124 Remuneration report 129 Supervisory Board and Managing Board 139 Consolidated financial statements 4 Consolidated income statement 147 Consolidated statement of comprehensive income 148 Consolidated statement of cash flows 149 Consolidated balance sheet 150 Consolidated statement of changes in equity 152 Segment reporting 154 Notes to the 2012 consolidated financial statements 156 Audit opinion 242 Responsibility statement 243 Additional information 5 Global functions and Country Managers 246 Glossary and index 248 Photo captions 250 Imprint 252 Cement capacities and aggregates reserves back cover 1) Part of the combined management report of HeidelbergCement Group and HeidelbergCement AG A regional company takes the lead in Germany 1873 In the 140 years since its foundation in 1873, HeidelbergCement has grown from a regional cement manufacturer with one plant in Heidelberg to one of the world’s leading building materials groups with 2,500 locations in over 40 countries. For the first hundred years, expansion of the company was largely limited to the South of Germany. At the end of the 1950s, HeidelbergCement added the production of ready-mixed concrete to its business activities – still a relatively new business segment at that time and HeidelbergCement was one of its pioneers.