Annual Report 2010 Financial highlights Figures in EURm 2004 2005 2006 2007 2008 2009 2010 Number of employees as at 31 December 42,062 41,260 40,983 67,916 60,841 53,302 53,437 Sales volumes Cement and clinker (million tonnes) 65.2 68.4 79.7 87.9 89.0 79.3 78.4 Aggregates (million tonnes) 69.5 77.2 85.8 179.6 299.5 239.5 239.7 Asphalt (million tonnes) 4.8 12.1 10.0 9.1 Ready-mixed concrete (million cubic metres) 19.5 21.8 24.9 32.7 44.4 35.0 35.0 Profit and loss accounts Total Group turnover 6,929 7,803 7,997 10,862 14,187 11,117 11,762 Operating income before depreciation (OIBD) 1) 1,243 1,547 1,890 2,423 2,946 2,102 2,239 Operating income 1) 759 1,051 1,429 1,850 2,147 1,317 1,430 Profit/loss for the financial year -333 471 1,026 2,119 1,920 168 511 Group share -366 415 951 2,022 1,808 43 343 Dividend in EUR per share 0.55 1.15 1.25 1.30 0.12 0.12 0.25 4) Investments Investment in tangible fixed assets 466 548 506 1,039 1,101 795 734 Investment in financial fixed assets 45 389 315 11,735 150 25 138 Total investment in fixed assets 511 937 821 12,774 1,251 820 872 Free cash flow Cash flow from operating activities 937 795 1,259 1,911 1,523 1,164 1,144 Cash flow from investing activities 2) -309 -747 -665 -10,677 1,113 -539 -648 Balance sheet Shareholders' equity and minority interests 3,936 5,058 5,828 7,519 8,261 11,003 12,884 Balance sheet total 10,716 11,935 12,318 29,201 26,288 25,508 27,377 Net debt 3) 3,668 3,545 3,081 14,608 11,566 8,423 8,146 Ratios OIBD margin 17.9 % 19.8 % 23.6 % 22.3 % 20.8 % 18.9 % 19.0 % Net debt/shareholders’ equity (gearing) 3) 92.7 % 70.1 % 52.5 % 193.4 % 139.8 % 76.5 % 62.9 % Net debt/OIBD 3) 2.95x 2.29x 1.63x 6.03x 3.93x 4.01x 3.64x Earnings per share (EUR) -3.64 3.74 8.22 17.11 14.55 0.30 1.83 1) 2004 - 2006: figures have been restated as a result of the reclassification of emission rights and pension interest (IAS 19). 2) 2004 - 2008: including decrease/increase in ownership interests in subsidiaries 3) Without adjustment to IAS 32.18 b) Puttable Minorities in the amount of EUR 96 million (2010), EUR 37 million (2009), EUR 50 million (2008), EUR 86 million (2007), EUR 106 million (2006) 4) The Managing Board and Supervisory Board will propose to the Annual General Meeting on 5 May 2011 the distribution of a cash dividend of EUR 0.25. Overview of Group areas Figures in EURm 2008 2009 2010 Western and Northern Europe Turnover 4,936 3,848 3,811 Operating income before depreciation 1,014 687 683 Investment in tangible fixed assets 357 248 178 Employees as at 31 December 15,770 14,640 14,302 Eastern Europe-Central Asia Turnover 2,046 1,282 1,138 Operating income before depreciation 718 361 299 Investment in tangible fixed assets 321 270 202 Employees as at 31 December 11,556 9,481 9,959 North America Turnover 3,958 2,892 3,033 Operating income before depreciation 676 340 448 Investment in tangible fixed assets 199 152 146 Employees as at 31 December 15,739 12,601 11,899 Asia-Pacific Turnover 2,177 2,211 2,609 Operating income before depreciation 462 612 718 Investment in tangible fixed assets 161 96 174 Employees as at 31 December 15,044 14,030 13,682 Africa-Mediterranean Basin Turnover 974 837 938 Operating income before depreciation 182 157 156 Investment in tangible fixed assets 61 28 34 Employees as at 31 December 2,680 2,499 3,539 Group Services Turnover 701 475 709 Operating income before depreciation 22 30 20 Investment in tangible fixed assets 2 Employees as at 31 December 52 51 55 Global market leadership in sand and gravel, operational excellence, customer proxim- ity, successful refinancing, performance-oriented em- ployees: HeidelbergCement is ideally positioned for further growth and a successful future. Review of 2010 events 1 2 3 4 5 HeidelbergCement presses ahead with loan repayment from June 2009 January – By issuing two Eurobonds to institutional investors in Germany and abroad, the com- pany is generating proceeds of EUR 1.4 billion in total. The proceeds will be exclusively used for the repayment of the syndicated loan. Liquidity secured until end of 2013 April – Arrangement of a new EUR 3 billion syndicated credit line with 17 banks and a term running until the end of 2013. Thus, the remaining liabilities from the credit agreement entered into with 60 banks in June 2009 will be repaid. The new credit line serves primarily as a liquidity reserve. Full acquisition of Pioneer North Queensland in Australia (1) May – With the acquisition of the remaining 50 % in Pioneer North Queensland, Heidelberg- Cement secures its market position in Australia. The company operates two sand pits, two crushed rock quarries, an asphalt plant and a ready-mixed concrete facility. Expansion of cement capacity in Africa May – Agreement with IFC, a member of the World Bank Group, and its financial partners to promote the expansion of infrastructure in the countries in Sub-Saharan Africa by increasing local cement capacities. IFC acquires a minority interest in our African business; in return, we are expanding cement capacities in Liberia, Ghana and other countries. HeidelbergCement joins DAX index (2) June – HeidelbergCement is the first German company in the construction and building materials sector to be listed on the DAX. On the day of admission, the company holds position 22 with respect to market capitalisation and order book turnover. Cement grinding capacity expanded in Indonesia (3) August – By commissioning two new cement mills in the Cirebon production site, cement capacity of Indocement increases by 1.5 to 18.6 million tonnes. An additional cement mill is also set to be constructed at the Citeureup location, with a capacity of 2 million tonnes, by beginning of 2013. Africa business expanded to Democratic Republic of Congo (4) September – HeidelbergCement acquires the majority in three cement plants. One is located near the capital city of Kinshasa and the other two in the east of the country. Over the next few years, we plan to increase the cement capacity from 500,000 tonnes to more than 1.4 million tonnes. Majority in cement plant in Russian Republic of Bashkortostan (5) October – CJSC “Construction Materials” is located approximately 150 km south of Ufa and operates a cement plant with a capacity of 2 million tonnes and 600 employees. The modern plant is situated in the most important investment district in Russia. 6 Contents 1 To our shareholders Contents 22 Letter to the shareholders 26 Report of the Supervisory Board 32 Managing Board 34 HeidelbergCement in the capital market 2 Combined management report of HeidelbergCement Group and To our our To shareholders HeidelbergCement AG 1 42 Core activities and organisational structure 43 Strategy, management control and targets 46 2010 business trend 78 Additional statements 83 Risk report 96 Sustainability at HeidelbergCement 98 Employees and society 104 Environmental precaution Combined Combined management report 106 Research and technology 2 111 Prospects 1) 3 Corporate Governance 122 Corporate Governance statement 128 Remuneration report 137 Supervisory Board and Managing Board Corporate Corporate Governance 4 HeidelbergCement annual accounts 3 145 Group profit and loss accounts 146 Group statement of comprehensive income 147 Group cash flow statement 148 Group balance sheet 150 Group statement of changes in equity 152 Segment reporting 154 Notes to the 2010 Group annual accounts 228 Audit opinion 229 Responsibility statement HeidelbergCement annual accounts 4 5 Additional information 232 Global functions and Country Managers 234 Glossary and index 236 Imprint Cement capacities and aggregates reserves (back cover) 1) Part of the combined management report of HeidelbergCement Group and HeidelbergCement AG 7 Additional information 5 We are number one in the world for sand, gravel and crushed rock Bridgeport aggregates plant,Texas Bridgeport aggregates / US 5 4 3 2 1 Additional HeidelbergCement Corporate Combined To our Contents information annual accounts Governance management report shareholders We invest in the future – cement for growing markets Citeureup cement production site, West Java/Indonesia site,West cementproduction Citeureup 5 4 3 2 1 Additional HeidelbergCement Corporate Combined To our Contents information annual accounts Governance management report shareholders We are a strong team of outstanding specialists – regionally and internationally Contents To our our To shareholders 1 We are a strong team of outstanding Combined management report specialists – regionally 2 and internationally Corporate Corporate Governance 3 HeidelbergCement HeidelbergCement annual accounts 4 Additional Additional information 5 Since 1873 in the market – since 2010 in the DAX 5 4 3 2 1 Additional HeidelbergCement Corporate Combined To our Contents information annual accounts Governance management report shareholders We don’t just talk about biodiversity – it’s a daily focus at our quarries Nesting holesforsand martins 5 4 3 2 1 Additional HeidelbergCement Corporate Combined To our Contents information annual accounts Governance management report shareholders Customer proximity – at all times, in every market Frankfurt Airrail Center Airrail Frankfurt / Germany 5 4 3 2 1 Additional HeidelbergCement Corporate Combined To our Contents information annual accounts Governance management report shareholders 1 To our shareholders 20 Contents To our our To shareholders 1 22 Letter to the shareholders 26 Report of the Supervisory Board 32 Managing Board 34 HeidelbergCement in the capital market 34 Overview Combined Combined management report 34 Development of the HeidelbergCement share 2 36 Earnings per share 36 Dividend 36 Shareholder structure and trading volume 37 Bonds and credit ratings 38 Investor Relations Corporate Corporate Governance 3 HeidelbergCement HeidelbergCement annual accounts 4 21 Additional information 5 1 Letter to the shareholders Dr.