TABULACIÓN Y REGISTROS

> Successful Launch of the Speedmaster XL 105

> Business Processes Further Optimized

In nearly all countries, during the reporting year we were successful in expand- ing our volume of business to a greater extent than expected. The print media industry continued its upswing – print shops have a need to catch up with their investments. We recorded significantly above-average growth, particularly in the emerging markets – for example, in China. This was attributable on the one hand to Heidelberg’s broad range of attractive product offerings. On the other hand, our local sales capabilities have a broad geographic coverage, a consider- able distribution density, and are operated by a highly motivated team.

We further optimized and standardized business processes in the area of sales and service during the reporting year – for example, by establishing ‘Shared Service Centers’ and standardized software applications.

Europe, Middle East and Africa: Sustained Upward Trend

The financial year was highly successful in this region – our largest. Although incoming orders had grown at an extremely rapid pace in the previous year due to drupa 2004, during the reporting year we were even successful in increasing orders by an additional 2 percent!

Our sales grew by 9 percent. We are particularly pleased with the success- ful market introduction of the Speedmaster XL 105, which was very well received, especially in Germany. Strong medium-format sales of the Speed- master CD 74 as well as the Suprasetter’s clear improvement also contributed to the solid growth.

InGermany,where incoming orders were auspiciously high, we were able to strengthen our market position. Our A3 Inforum at the beginning of the reporting year and the open house events in the autumn attracted considerable interest. The increasing demand for printing presses shows that the investment backlog of recent years is slowly dissolving. We expect increasing numbers of print shops to decide in favor of new investments in order to maintain their competitiveness. We reduced our local sales costs by merging our eight branches into five sales regions without reducing direct contact with customers. This year, we will further advance the opti- mization of marketing structures.

Net sales I N C O M I N G O RD E RS A N D N E T SA LE S1) Figures in € millions 2005/2006 2004/2005 Incoming orders 1,529 + 2 % Net sales 1,488 + 9 % Incoming orders 1, 498 _1,52 9 1, 4 8 8 1, 3 6 4 50 0 1, 000 1,50 0 1)_{Continuing operations}

In the UKas well, numerous customer events contributed to the high level of incoming orders. The IPEX trade show in April 2006 marked this year’s first highpoint.

The comprehensive restructuring measures undertaken in recent years

are paying off in France.Under new management, we won over our customers

through quality and intensive support. Incoming orders are on the rise.

Spainand Scandinavia,which generated excellent business figures, also performed outstandingly well. We achieved significant growth in Southern Europe, especially in Finishing. Replacement capital investments in highly automated modern printing presses were generally on the rise. Projects involv-

ing complex printing presses for special applications were sold in Africaas

well. We were successful in expanding our business volume in the markets of the Middle East.

Eastern Europe: Restrained Development of Business

An economic upswing was evident in almost all countries in our Eastern Europe region during the reporting year. This development was especially noticeable in Poland and the Czech Republic – for the print media industry as well. Conditions in Russia, however, where declining foreign investments and sluggish privatization efforts hampered an economic upswing, were difficult. We had to defend our market position in the entire region under difficult conditions, with our competitors vehemently striving to expand their position.

We sustain a local presence with customers to better maintain our market position. We took advantage of the Polygraphinter trade show in Moscow to exhibit the comprehensive range of Heidelberg products. We presented the Speedmaster XL 105 at our open house presentation in Vienna to visitors from Austria and neighboring countries with considerable success.

Attributable primarily to the impact of conditions in Russia, incoming orders in the region declined by 12 percent. Additionally, as a result of severe competition, a trend towards consolidation has led to restraint among print shops in their investments in new printing presses – they tended to rely more on used printing presses, which of course had an impact on business with new printing presses. Our sales, which were supported by a high order backlog at the beginning of the reporting year, rose by 5 percent.

Net sales I N C O M I N G O RD E RS A N D N E T SA LE S1) Figures in € millions 2005/2006 2004/2005 Incoming orders 384 – 12 % Net sales 384 + 5 % Incoming orders 43 5 38 4 38 4 366 10 0 200 30 0 40 0 50 0 1)_{Continuing operations}

North America: Wait-and-See Stance

The ongoing strong economic situation in North America caused a gradual acceleration in printing volume during the financial year. The weakness of the Japanese yen vis-à-vis the euro created a marked price advantage for our Japanese competitors in the dollar region. The share of this region in the sales of the Heidelberg Group decreased again – in financial year 2000/2001, the US had been by far our most important single market. This development was attributable to the sale of two former divisions – ‘Web Systems’ and ‘Digital’ – which had their principal sales market in the US, as well as to the vigor in the emerging markets.

The Print 05 trade show in Chicago reflected a slight upward trend of the US print media industry. Also highly popular was our Prinect Experience Tour, which permitted visitors to acquaint themselves with the entire work- flow management package based on the example of a production process. Our Customer Center at Kennesaw, near Atlanta, which we opened in May 2005, has already established itself as a popular forum for know-how and solutions.

Although key figures for our industry improved in the US as well, our cus- tomers’ capacity utilization only rose towards the end of the reporting year, reaching 79 percent in March. Since printers continue to have a wait-and-see attitude, a greater volume of new investment has yet to occur. However, the current situation offers a good point of departure for investments in the current financial year. Our incoming orders in the region declined by 6 per- cent. By contrast, demand for Heidelberg solutions in the Canadian market remained stable. We were successful in generating a substantial, 14 percent growth in sales in this region.

We continued to implement our package of cost-reduction and efficiency- boosting measures during the reporting year – with initial successes, as our profitability in the region has improved considerably.

Latin America: Substantial Increases

The upward trend in the Latin America region continued during the report- ing year. In particular the strengthening of local currencies had a favorable impact on overall market conditions. Our customers were once again in a posi- tion to undertake investments – which was also due to the superior financing opportunities offered by the Financial Services staff. As in the past, our cus- tomer financing was an important argument in making purchasing decisions.

Net sales I N C O M I N G O RD E RS A N D N E T SA LE S1) Figures in € millions 2005/2006 2004/2005 Incoming orders 553 – 6 % Net sales 593 + 14 % Incoming orders 58 7 553 59 3 51 8 200 40 0 60 0 Net sales I N C O M I N G O RD E RS A N D N E T SA LE S1) Figures in € millions 2005/2006 2004/2005 Incoming orders 169 + 17 % Net sales 186 + 36 % Incoming orders 14 4 16 9 186 13 7 50 10 0 15 0 200 1)_{Continuing operations} 1)_{Continuing operations}

The Imprexpo trade show in Mexicorepresented an exceptional startup for us in the reporting year, with orders transacted at the trade show laying a corner- stone for a successful year. Many of our customers reported favorable business developments, which were reflected in a higher volume of incoming orders for Heidelberg.

The continuing stable economic growth in Brazilhad a stimulating impact

on the print media industry of the entire region. The presentation of the Speedmaster XL 105 at an open house presentation in Brazil was favorably received.

Overall incoming orders in the region rose by 17 percent, with sales up by even 36 percent over the previous year!

Asia/Pacific: Continuing Strong Impetus

The upward trend in the Asian region continues. In line with economic growth, the business volumes of our customers are continuously rising. Although China is still our principal engine for growth, we were successful in defending our high market share and generating high growth rates in Japan and Australia as well. In a difficult competitive environment, we were successful in asserting our position as market leader for Sheetfed Offset printing presses throughout the Asian region.

Overall incoming orders rose by 15 percent over the previous year, with sales up by 14 percent. To a large degree, this success was the result of the trade shows China Print, Pacprint in Australia, and JGAS in Japan.

The region also continued to be our key market for the A1 format during the reporting year. The Speedmaster XL 105, which we successfully introduced in Australia, China, Japan, and Singapore, was well received by our customers. We foresee solid sales and a favorable outlook for the new folder generation Stahlfolder KH/TH. Feedback from customers has been highly positive.

We are establishing a production site in Shanghai in order to benefit even more from the enormous Chinese growth in the future.

A strong market is developing in India, which is quite promising for us due to the rising demand for printed products. During the current financial year we will establish a Print Media Academy in Chennai in order to satisfy the increasing requirements of our customers.

Net sales I N C O M I N G O RD E RS A N D N E T SA LE S1) Figures in € millions 2005/2006 2004/2005 Incoming orders 970 + 15 % Net sales 935 + 14 % Incoming orders 844 97 0 93 5 82 2 200 40 0 60 0 80 0 1, 000 1)_{Continuing operations}

Employees – Obtaining Needed Qualifications