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Market position strengthened in all units

The division’s four operational units—HOCHTIEF PPP So- lutions, HOCHTIEF Facility Management, HOCHTIEF Pro- jektentwicklung and Deutsche Bau- und Siedlungs-Ge- sellschaft (Debausie)—further expanded their market-leading positions in 2005.

HOCHTIEF PPP Solutions

The new company has functioned as the nexus for HOCHTIEF’s years of experience in the public-private part- nership (PPP) segment since early 2005. First and foremost, it focuses on building and operating public infrastructure with private financing. Its market segments include public buildings/social infrastructure and toll roads/transport in- frastructure, with individual projects ranging from schools and administrative buildings to bridges and tunnels. HOCHTIEF PPP Solutions is the Group company respon- sible for PPP projects in Europe and South America.* HOCHTIEF made a strategic debut in 2005 in the UK and Irish PPP markets, landing two project contracts in the countries’ respective education property segments. The company is the preferred bidder for four additional projects. The UK boasts Europe’s largest and most well-developed PPP market. Twenty percent of all public projects in the re- gion are already handled on a PPP basis. Substantial growth is also expected going forward—HOCHTIEF intends to make the most of these opportunities.

With its PPP contracts, HOCHTIEF PPP Solutions harnesses the synergy potential anchored in HOCHTIEF’s portfolio of services, working closely with HOCHTIEF Construction and HOCHTIEF Facility Management.

The forward-thinking method of having private partners re- furbish and operate schools has met with positive re- sponse from public-sector clients. The strain on public coffers is considerably reduced through the use of PPP

models. Public officials view the cooperation on projects and high standard of quality very favorably. The PPP busi- ness is solid proof that HOCHTIEF is winning clients over with individual and integrated solutions.

Project highlights

Public buildings market segment

In Cologne, the company is financing, refurbishing and op- erating seven schools at five locations on the basis of a PPP contract. The project company set up for this purpose, HOCHTIEF PPP Schulpartner Köln P1 GmbH & Co. KG, is in charge of handling the EUR 125 million, 24-year project. HOCHTIEF Construction is performing the refurbishing work. An additional PPP project commenced in Leverkusen, where HOCHTIEF PPP Solutions is financing, refurbishing and set to operate for 29 years three vocational colleges that are under a preservation order. The contract volume is approximately EUR 70 million. A total of EUR 26 million will be invested in the refurbishing work. Construction will be handled in full by HOCHTIEF Construction. Another partner from the HOCHTIEF Group, HOCHTIEF Facility Man- agement, will assume facility management duties for the school complex. HOCHTIEF’s PPP portfolio in Germany now includes three school projects covering 60 schools plus one city hall project. The combined volume is EUR 649 million.

In Manchester, UK, HOCHTIEF PPP Solutions (UK) Ltd. and a partner are scheduled to finance and build the Wright Robinson Sports College and then operate it for 25 years. The contract volume is around EUR 170 million. A total of EUR 50 million will be spent on construction. This project marks the company’s successful debut in the UK’s extremely fast-growing PPP market.

The division analy zes locations and develops, designs, finances, builds, manages, operates and markets real est ate and infrast ructure projects. In 2 0 0 5 grow t h was par ticularly fast- paced in t he new HOCHTIEF PPP Solutions unit and at HOCHTIEF Facilit y Management .

For further information, please visit: www.hochtief-pppsolutions.com www.hochtief- facilitymanagement.com www.hochtief- projectdevelopment.com

*For additional information on our airport and PPP port- folios beyond that provided in the Management Report, turn to pages 20-23. A list of Leighton’s, Aecon’s and Concor’s concession proj- ects is given on page 23.

To O u r S h C o rp o ra te G o ve rn a n c e H O C H T IE F S to c k M a n a g e m e n t R e p o rt c ia l S ta te m e n ts a n d N o te s

HOCHTIEF Development Division:

Market position further expanded

In the Cork School of Music, HOCHTIEF PPP Solutions (UK) Ltd., again working with a partner, acquired the com- pany’s first project in Ireland. The contract volume is some EUR 210 million, with approximately EUR 68 million ear- marked for construction. Once the project is finished, the partners will operate the music school for 25 years.

Toll roads market segment

The Herren Tunnel in Lübeck opened to traffic right on schedule in August 2005, bringing construction of one of Germany’s first PPP toll roads to a close. Herrentunnel Lübeck GmbH & Co. KG, a joint project company of HOCHTIEF PPP Solutions and a partner, designed, financed and built the EUR 179 million project and will now operate the tunnel until 2035. At that point, the rights to operate the tunnel will pass to the city of Lübeck.

In 2005, HOCHTIEF bid on the first pilot project for an A- model* highway: construction and operation of a segment of the A8 between Munich and Augsburg. A decision on the contract award is expected in 2007.

In early 2006, the Vespucio Norte Express toll road in San- tiago de Chile opened. HOCHTIEF PPP Solutions helped finance and build the highway and will now operate it until 2032. HOCHTIEF Construction was responsible for the road’s construction as a member of a joint venture. The in- vestment outlays will be recouped at an attractive rate of return through tolls. With Lübeck’s Herren Tunnel, the Ves- pucio Norte Express beltway in Santiago de Chile and the Puentes del Litoral toll link in Argentina, three toll road proj- ects from HOCHTIEF PPP Solutions are now in operation. HOCHTIEF Facility Management

The company’s positive performance continued in the year under review. Both in winning new clients and expanding business with its existing client base, HOCHTIEF Facility Management made good headway. The increased focus on select, particularly profitable market segments proved to be a key success factor. In its segments, HOCHTIEF Facility Management is considered an expert partner for integrated facility management. Clients are very receptive to the integrated, tailor-made packages along the value

chain. HOCHTIEF Facility Management consistently offers solutions that meet clients’ evolving needs.

Efforts are currently focused on further expansion in the high-growth markets of Eastern and Southeastern Europe as well as in the UK and Ireland. The company’s goal is to become Europe’s top provider of integrated facility man- agement by 2010.

Project highlights Airports/Aviation segment

In recognition of its excellent work, HOCHTIEF Facility Management received a five-year contract extension to continue its management of the Lufthansa Flight Training Center in Frankfurt am Main. The contract at Athens Air- port was also renewed: HOCHTIEF Facility Management will perform service and maintenance on the technical in- stallations at Athens International Airport Eleftherios Veni- zelos for another four years.

Automotive segment

HOCHTIEF Facility Management is boosting its position in the automotive segment, having won the contract to man- age the production facilities of French automotive equip- ment supplier Faurecia. The contract runs for 36 months.

Financial service providers/real estate investors segment

The key deals in this segment in 2005 included the follow- on contract from the KfW, the state-backed Reconstruc- tion Loan Corporation: With the head office in Berlin already in its portfolio, the company will now also manage the bank’s office in Frankfurt am Main. Südwestbank hired HOCHTIEF Facility Management to provide technical services to its headquarters in Stuttgart as well as 26 branches in Baden- Württemberg for four years.

Additional project highlights

Business with PPP projects was extremely positive. Syn- ergies and the close networking among HOCHTIEF’s companies helped HOCHTIEF Facility Management se- cure contracts to manage 50 schools in Offenbach, the Wright Robinson Sports College in Manchester, UK, and

* see glossary on page 134

the Cork School of Music in Cork, Ireland, in cooperation with HOCHTIEF PPP Solutions. HOCHTIEF Facility Man- agement is thus well represented in the education proper- ty market and intends to harness additional sales and earnings potential in this segment.

HOCHTIEF is also solidly positioned in the energy savings contracting segment through subsidiary HOCHTIEF Facility Management Energy. The latter has assumed integrated energy management for the Federal Research Center for Nutrition and Food in Kiel. A ten-year contract secures the client annual cost savings of 42 percent over its past ener- gy and water expenses.

HOCHTIEF Facility Management enjoyed success in the sports facilities and event arenas segment in 2005, acquir- ing the contract to manage the Franken-Stadion in Nurem- berg, one of the venues for 2006 World Cup soccer. HOCHTIEF Projektentwicklung

A large number of pre-sales and pre-lease commitments prior to construction created a firm foundation for starting numerous new projects in the year under review. In this way, HOCHTIEF Projektentwicklung solidified its leading position in the office property and hotel development seg- ments. Many of the projects are being built by HOCHTIEF Construction, thus creating attractive added value both for clients and the Group. After entering the Czech and Polish markets, HOCHTIEF Projektentwicklung (HTP) founded HTP Hungária in the reporting year in order to establish a presence in the growing Hungarian market at an opportune time. Activities in the country got off to a good start with a land acquisition deal in Budapest.

As of December 31, 2005, in all 18 projects with a total project value of EUR 735 million were in the construction phase. The total rentable space involved is 210,800 square meters. More than 50 percent of this space had been let as of the balance sheet date. Measured in terms of total project value, 80 percent of the projects have been pre- sold to final investors. Altogether, HOCHTIEF Projektent- wicklung sold EUR 594 million in properties in the period under review.

Project highlights

The “Blue Heaven” hotel, which opened in November 2005, was sold to Danish investment company Keops Investor- Partner A/S in the period under review.

In Eschborn, near Frankfurt am Main, 75 percent of the “Helfmann Park” development’s third phase, which offers 16,700 square meters of office space, had been let before its completion in spring 2006. Commerz Grundbesitz In- vestmentgesellschaft mbH (CGI) was acquired as the final investor.

A ten-year lease was signed for 11,500 square meters of office space at the “Constantin Höfe” in Cologne’s Deutz district. This means that 77 percent of the facility had been let before the cornerstone was laid. Atradius Kreditversi- cherung will use the space for its German headquarters starting in late 2006.

In “ConventParc,” Hamburg is gaining an exclusive office complex, one outstanding feature of which is a forward- thinking energy concept. Just under half of the total 8,300 square meters of office space was already let to Lloyd Fonds AG prior to the beginning of construction. Both the “Constantin Höfe” and “ConventParc” were sold to AMB Generali in the period under review.

In Munich, construction of the “Laimer Würfel” office prop- erty began. DAB Bank AG has already signed a ten-year lease to occupy 60 percent (14,200 square meters) of the total space. Completion of the building is expected in Jan- uary 2007.

By mid-2007, the “WilhelmGalerie” shopping center will be erected on a tract of land acquired by HOCHTIEF Projekt- entwicklung in the heart of Ludwigsburg. The total rental area will be 17,600 square meters.

To O u r S h C o rp o ra te G o ve rn a n c e H O C H T IE F S to c k M a n a g e m e n t R e p o rt c ia l S ta te m e n ts a n d N o te s Asset management

Debausie ensures the value-driven strategic management of HOCHTIEF’s real estate portfolio. External clients also profit from its services. The company falls back on the Group’s expertise and offers an integrated service package that includes property analysis and appraisal, action plans to optimize operations for the long term, management of the plans’ implementation and the sale of properties.

A case in point was an international investor’s acquisition of Hamburg’s Economic Center from Debausie, an office building with some 29,000 square meters of rental area.

The division’s key figures

On the whole, new orders followed a positive, high-level trend. With 2004 marked by nonrecurring items (the acqui- sition of Siemens’ and Lufthansa’s facility management companies) and the unusually substantial amount of new orders from the PPP school project in Offenbach, the 2005 figure fell short of the prior year’s by EUR 140.9 million. HOCHTIEF PPP Solutions in particular contributed consid- erably to the EUR 1,156.5 million in new orders with its school projects in Cologne and Leverkusen. As a result, the order backlog had climbed 11.1 percent by year-end. With business progressing so well, work done was up EUR 90.1 million from a year earlier to EUR 928.7 million. Growth in the areas of facility management and PPP fac- tored heavily into this gain. External sales also benefited from the successful expansion, increasing EUR 201.1 mil- lion compared with 2004 to close the year at EUR 924.9 million. Operating earnings fell to EUR 39.7 million due to high acquisition costs at HOCHTIEF PPP Solutions and the planned reduction in real estate sales. Profit before taxes stood at EUR 38.6 million and was lower than the prior-year figure as projected. The sharp drop in capital expenditure stemmed from the purchases made in the facility management sector in the prior year as well as the higher investments in equipment for project development during that period. The increase in the average number of

employees relates to the robust growth at HOCHTIEF PPP Solutions and the fact that 2005 marked the first time Lufthansa Gebäudemanagement employees were on the books for the full year.

Outlook

The positive performance of the Development division will continue, a forecast supported by the increased demand among major real estate companies and portfolio owners for advice and services from a single source. Integrated facility management services and PPP projects will serve as key growth engines.

Key figures for HOCHTIEF Development

(EUR million) 2005 2004

New orders 1,156.5 1,297.4

Work done 928.7 838.6

Order backlog 1,934.0 1,741.5

External sales 924.9 723.8

Operating earnings (EBITA) 39.7 50.6

Profit before taxes 38.6 41.7

Cash flow 11.2 (14.7)

Capital expenditure 51.5 125.7

RONA* (%) 7.7 8.2

Net assets* (December 31) 768.7 901.3

Employees (average over the year) 5,065 3,866

*The RONA return on capital metric was intro- duced in 2005. For pur- poses of comparison, all prior-year figures were adjusted to reflect the new system. Further in- formation on RONA is available on pages 46– 48.

HOCHTIEF Construction Services