Heidelberg Materials AG

Annual Report • Apr 8, 2008

Growth and integration

Annual Report 2007

Financial highlights

Figures in EURm	2003	2004	2005	2006 1)	2007
Number of employees2)	37,774	42,062	41,260	40,983	67,916
Turnover
Europe-Central Asia	3,116	3,132	3,446	4,230	5,732
North America	1,686	1,699	2,142	2,447	3,205
Asia-Australia-Africa-Mediterranean	492	1,007	1,057	1,302	1,909
maxit Group	1,021	1,053	1,118
Group Services	417	505	578	642	680
Inter-Group area turnover	-360	-467	-539	-623	-664
Total Group turnover	6,372	6,929	7,803	7,997	10,862
Operating income before depreciation (OIBD)	1,024	1,219	1,506	1,790	2,378
Operating income	391	735	1,010	1,329	1,805
Profit/loss for the financial year	133	-333	471	1,026	2,119
Group share	117	-366	415	951	2,022
Dividend in EUR per share	1.15	0.55	1.15	1.25	1.303)
Investments in tangible fixed assets	386	466	548	506	1,039
Investments in financial fixed assets	227	45	386	315	11,735
Total investments in fixed assets	612	511	934	821	12,774
Depreciation and amortisation	697	972	593	513	616
Tangible fixed assets	7,048	7,357	7,949	8,344	21,378
Financial fixed assets	1,178	926	1,158	1,163	1,020
Current assets	2,667	2,433	2,828	2,811	5,478
Assets held for sale & discontinued operations					1,406
Shareholders' equity and minority interests	4,185	3,963	5,058	5,828	7,519
Provisions	1,423	1,706	1,839	1,789	3,231
Liabilities	5,285	5,047	5,038	4,701	18,173
Liabilities in disposal groups & discontinued operations					359
Balance sheet total	10,893	10,716	11,935	12,318	29,282

1) The number of employees as well as the figures from the Group profit and loss accounts and Group cash flow statement have been adjusted following the presentation of maxit Group as discontinued operation (IFRS 5) and are therefore not comparable with the 2006 annual accounts

2) 2003 – 2005: average number of employees; 2006 and 2007: number of employees as at 31 Dec.

3) The Managing Board and Supervisory Board will propose to the Annual General Meeting on 8 May 2008 the distribution of a cash dividend of EUR 1.30

Growth and integration

The year 2007 was very special for HeidelbergCement. The Hanson takeover, one of the largest deals ever in the building materials industry, represented a decisive step towards significantly improving our position among the world's leading players in the sector. At the same time, by focussing on our new dual raw materials and global expansion strategy we have clearly set our sights on a future as a fully integrated building materials company. Important milestones in integrating Hanson were reached at the end of 2007, including the reorganisation of the North American and UK operations and important decisions concerning locations and their personnel. As the world's number one in aggregates, number three in cement and number two in ready-mixed concrete, we currently have a strong position in the important regions and metropolitan areas in the world.

HeidelbergCement and Hanson are a perfect match:

• The Hanson takeover has enabled us to secure an additional foothold in the raw materials sector which perfectly complements our cement business. The activities in North America and the United Kingdom, as well as new attractive markets such a Australia, Malaysia, Singapore, Spain and Israel, improve our geographical diversification.
• Cement and the raw materials sand, gravel and crushed rock form the foundation for concrete manufacturing and road construction. Downstream user-oriented services and products bring us closer to our customers.
• A sense of responsibilty for the environment and society is an integral part of our corpoarte strategy. The key aspects of our sustainabilty policy include a worldwide commitment to the conservation of the biological diversity at our quarries and sand and gravel pits, climate protection, and health and safety at the workplace.
• A significant level of agreement in the business culture, such as the focus on results and the customer, as well as closeness to operating activities, support the successful integration, which we hope to complete by the middle of 2008. Shared values unite our employees at the locations in 50 countries with a wide variety of cultures, which we appreciate and respect.

2007 – a milestone in the history of HeidelbergCement

• Strategic reorientation with the takeover of Hanson
• Turnover rises to around EUR 11 billion
• Operating income increases to EUR 1.8 billion
• Group share of profit exceeds EUR 2 billion
• Success through consistent and fast integration

Contents

Letter to the shareholders	2
Report of the Supervisory Board	7
Managing Board and Supervisory Board	10
HeidelbergCement share	14

Combined management report of HeidelbergCement Group and HeidelbergCement AG

	Core activities and organisational structure	18
	2007 business trend	18
	Additional statements	30
	Corporate Governance and compliance	33
	Risk management	37
	Employees	41
	Sustainable development and
	environmental precaution	43
	Research and technology	46
	Prospects	48
HeidelbergCement on the market
	Europe-Central Asia	52
	North America	55
	Asia-Australia-Africa-Mediterranean	58
	Group Services	61
HeidelbergCement annual accounts
	Group profit and loss accounts	64
	Group cash flow statement	65
	Group balance sheet	66
	Statement of recognised income and expense	68
	Reconciliation of changes in total equity	69
	Segment reporting	70
	Notes to the Group annual accounts	74
	Audit opinion	138
	Responsibility statement	139
Additional information
	Group functions and Country Managers	140
	Glossary and index	142

Letter to the shareholders

Dr. Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement

Dear Shareholders,

Dear Fellow Employees and Friends of HeidelbergCement,

We look back with pleasure on an eventful and extremely successful year 2007. In both a strategic and an operational sense, it has been one of the most significant in the 135-year history of HeidelbergCement. Our employees throughout the world are justifiably proud of what we have achieved together in the past year.

Strategic reorientation

As a result of the successful takeover of the Hanson Group in addition to the simultaneous sale of our business unit maxit and our minority participation in the French cement company Vicat, we have developed HeidelbergCement into a globally positioned building materials group with leading market positions worldwide in the core business areas of cement and aggregates, as well as in downstream ready-mixed concrete activities.

The strategy behind this reorientation is clear and convincing: Concrete, the building material for which there is most demand worldwide, is by far our most important end product. Concrete is composed of approximately 75% aggregates and approximately 10% cement. With the takeover of Hanson, one of the leading aggregates companies worldwide, our business is now supported by a second pillar in the raw materials and products segment. We are improving our position as a global, integrated supplier of building materials and are strengthening our raw material base for aggregates with well positioned, very extensive raw material deposits in the important markets of North America, the United Kingdom and Australia.

HeidelbergCement is strategically focusing on the production and distribution of cement and aggregates, the two essential raw materials for the end product of concrete. This is the focal area for future investment activity and the creation of value. Both business lines are characterised by high capital intensity and long-term capital commitment. They are classic, exchangeable "me-too" products, for which securing raw materials in the long term is a decisive factor for success. In addition, key competences include cost leadership, a strong local emphasis on customers and strength of implementation in the day-to-day business.

We are supplementing our product range with downstream activities such as ready-mixed concrete, concrete pipes, precast concrete parts, asphalt and other related products and services, particularly in the industrialised countries with an advanced degree of vertical integration. This brings us closer to the end consumer. In these product and service areas that are close to the customer, Hanson has leading market positions, a high level of expertise and first-class management competence. In terms of the emphasis on customers and product innovation, this will benefit the entire HeidelbergCement Group in the future.

The takeover of Hanson does not only make sense regarding the product strategy, however. The two companies are almost a perfect complement in a geographical sense: In the United Kingdom and the US, Hanson has a leading market position in the areas of aggregates and building products. HeidelbergCement has primarily focused on cement in these countries, and to some extent on ready-mixed concrete and aggregates in the US. Together, we are now the leading integrated supplier of building materials in both countries.

Letter to the shareholders

Hanson's strong vertically integrated market position in Australia ideally complements our presence in the world's fastest-growing region, Asia-Oceania. Hanson's market positions in Malaysia, Singapore, Hong Kong, Israel and Spain also noticeably strengthen HeidelbergCement's geographical diversification. Together, we operate in around 50 countries.

Balanced financing

The acquisition of Hanson with a financing volume of around EUR 14 billion – of which the purchase price accounted for EUR 11.7 billion – was a financial tour de force for HeidelbergCement. The compelling industrial logic of the Hanson takeover and the favourable capital market conditions at that time meant that we were able to agree attractive terms for the financing package. We took various refinancing measures:

In June 2007 and in February 2008, we successfully completed two capital increases, from which we received proceeds of more than EUR 1 billion. We subsequently placed our 35% participation in the French building materials company Vicat S.A. on the stock exchange in Paris in June 2007, netting well over EUR 1.4 billion. In autumn 2007 and spring 2008, in an extremely difficult financial market environment, we placed four- and ten-year bonds and carried out a bonded loan issue. In March 2008, the Group received the sale proceeds of more than EUR 2.1 billion from the disinvestment of maxit Group. We used the entirety of the funds received, totalling more than EUR 6.3 billion, to repay the acquisition loan.

We will continue to work consistently on repaying our debt with a balanced mix of the sale of peripheral activities and property, strong and stable cash flow, strict expenditure and investment discipline and suitable capital market measures. At the same time, however, we will not dispense with targeted investments that support our profit-oriented course for growth.

Clear and consistent integration process

Efficient, fast integration is the essence of a successful acquisition. The worldwide integration of Hanson is of paramount importance to us, and this has been emphasised by the creation of a new Managing Board position. Our goal is clear: The synergy effects from the integration will amount to more than EUR 400 million per year in 2010.

We are expecting the highest synergy potential in the US and United Kingdom. In these countries, we have already reorganised the management structures in the first 100 days following the takeover. At an early stage, we also made the important personnel decisions for top and senior management, and integrated the continental European countries of Hanson fully into the HeidelbergCement Group. At the same time, a large number of important areas of activity have been repositioned and combined:

• Our purchasing departments an important prerequisite for consistently exploiting the advantages of our worldwide procurement volume of more than EUR 10 billion.

• All our centralised functions in the Group, including the Finance, Tax and Legal departments, Internal Audit, Personnel and Communication, Group Development and Information Technology.

• Our shared service centers, which will be subject to Group-wide benchmarking in the future on the basis of uniform processes and standardised IT infrastructure, in accordance with best practice.

• Competence Center Materials, which brings together our expertise in the aggregates, ready-mixed concrete and asphalt business. This creates the basis for ongoing benchmarking and the identification and introduction of worldwide best practices.
• Significant parts of our remuneration systems for top and senior management, in order to quickly create a strong shared focus on performance and results.

We will maintain this intentionally high speed in the new financial year. The integration of Hanson will be largely completed by the middle of 2008. We will do our utmost to achieve the identified synergy goals of more than EUR 400 million by 2010.

Strong organic growth

In 2007, HeidelbergCement was also enormously successful in its operating activities. The following figures illustrate this clearly:

• Increase in operating income on a comparable basis: +27%
• Increase in profit for the financial year on a comparable basis: +52%

Once again, Europe-Central Asia made the biggest contribution to results. Compared with the already highly ambitious value of the previous year, the quality of results was improved significantly once again. In this Group area – with the exception of Germany – we benefited from a sustained high level of construction activity and, consequently, a considerable increase in cement demand.

In North America, our subsidiary Lehigh held its ground despite the strong decline in residential construction and the turbulence on the US financial markets. On US dollar basis, we were able to maintain the record profit level of the previous year, despite difficult market conditions.

The Asia-Australia-Africa-Mediterranean Group area developed dynamically in terms of sales volumes and results. This applies particularly to Asia, where the development of construction demand was extraordinarily positive in China as well as in Indonesia and India.

In Turkey, our joint venture Akçansa once again increased its sales volumes, turnover and results at a high level. We also made significant progress in the development of sales volumes and results in Africa.

Hanson's business development was satisfactory overall:

• In the United Kingdom, Hanson Aggregates and Hanson Building Products increased their operating incomes considerably in comparison with the previous year.
• Records were also achieved in Australia, Malaysia, Singapore and Israel in 2007.
• Development was varied in North America: Hanson Aggregates held its ground in a declining market and slightly exceeded the previous year's level in operating income. In contrast, the development of results for Hanson Building Products declined noticeably as a result of the slump in the property market.

Letter to the shareholders

Focus on sustainability

The goal of sustainable development is anchored in HeidelbergCement's corporate strategy. This underscores the fundamental importance of environmental protection and social responsibility for our business. As a result of the strategic reorientation of the Group, dealing carefully with raw material deposits in order to preserve species diversity has become particularly more important. Our renatured quarries and aggregates pits provide shelter for rare animal and plant species. The preservation of biological diversity is a particular concern for us. In order to achieve this goal, we are developing uniform guidelines and ensuring that they can be implemented systematically.

We protect the environment by maximising the energy efficiency of our production facilities and by reducing CO2 emissions through the increasing use of alternative raw materials and fuels. We have established high standards across the Group in the area of occupational health and safety. Hanson contributes extensive experience in safeguarding the safety and health of our employees worldwide.

As part of our social responsibility, we have established the focal areas of Building – Environment – Education, which are closely linked to our core business. We are committed to numerous projects in the areas surrounding our locations. We place a high value on promoting education: we are involved at all levels from the exchange between educational institutions and industry to the construction of schools in emerging countries.

Acknowledgement of extraordinary commitment

The exeptional year 2007 tested the limits of the dedication and loyalty of our employees throughout the world. Their performance was outstanding. I would therefore like to express sincere thanks and appreciation on behalf of myself and my colleagues on the Managing Board. We would especially like to thank the employees of Hanson, who faced exceptional challenges in the context of the takeover and subsequent integration.

I would also like to thank the employee representatives for their traditionally constructive cooperation at HeidelbergCement.

Our managers – and in this I explicitly include the managers from Hanson – have worked under tight deadlines and enormous pressure to succeed, without neglecting our customers or the day-to-day business. The disproportionately strong increase in operating income in 2007, and the fast and efficient integration of Hanson would not have been possible without them. Our goal is clear: Together, we want to form the best management team in the industry.

Shareholder structure as a competitive advantage

One of HeidelbergCement's specific strengths is the extremely solid shareholder structure, which is geared towards the long term. Our major shareholders have actively supported several capital measures with a volume of around EUR 1.6 billion since 2005. Without this support, the dynamic development of recent years and the strategic reorientation would not have been possible.

The high degree of confidence they have displayed on several occasions represents both an obligation and an incentive for us. We will not rest on our laurels. Success in the day-to-day business, which can soon become a habit, requires hard work every day from our employees throughout the world.

Prospects: Further increase in turnover and results

The forecast for the growth of the global economy in 2008 is somewhat complex. It is currently not clear whether the turbulence on the financial markets and the property crisis in the US will lead to a prolonged recession in North America. The consequences for Europe and Asia are equally difficult to predict.

At HeidelbergCement, we are confident overall: The takeover of Hanson has noticeably improved our geographical diversification. HeidelbergCement has become considerably less susceptible to cyclical fluctuations. At the same time, we have strategically broadened our raw material base and product portfolio. In this context, we hope to significantly increase turnover and results once again in 2008 and expand into a new dimension.

What is important is that despite all the changes and the new size of the Group, we remain true to ourselves: a down-to-earth approach, closeness to the business, consistent management, strict cost management and speed combined with strength of implementation continue to form the basis of our success.

Yours sincerely,

Dr. Bernd Scheifele Chairman of the Managing Board

Report of the Supervisory Board

Fritz-Jürgen Heckmann, Chairman of the Supervisory Board of HeidelbergCement

Ladies and Gentlemen,

The outstanding event of the 2007 financial year was the acquisition of the British Hanson Group. Besides the traditional core business of cement, aggregates – sand and gravel – became a second strategic pillar. The takeover of Hanson positioned HeidelbergCement as the most vertically integrated building materials manufacturer in the world. The Supervisory Board intensively followed and supported this step right from the beginning, and sincerely welcomes the 27,000 Hanson employees into the extended HeidelbergCement Group.

Consultation and monitoring

The Supervisory Board fulfilled its consultation and monitoring obligations in the interests of shareholders and employees and was involved in all decisions of fundamental importance for the Group. It received regular, prompt and detailed reports from the Managing Board about the intended business policies, fundamental issues of financial, investment and personnel planning, the progress of business and the profitability of the company. In addition, the topic of compliance was incorporated into the regular reporting catalogue. Documents compiled by the Managing Board were made available to the members of the Supervisory Board and discussed in detail in the plenary sessions. The Supervisory Board was also informed about differences between actual development and previously reported plans and assumptions. Investment, disinvestment and financing projects requiring authorisation were presented and discussed individually before decisions were made. Where these concerned investments in growth markets, the Supervisory Board also requested and received statements on and assessments of the existing political risks in particular. The Supervisory Board is satisfied that the Managing Board has installed an effective risk management system capable of recognising at an early stage any developments that could jeopardise the survival of the company. It has also had this opinion confirmed by the auditors. Outside the meetings, the Chairman of the Supervisory Board was in regular contact with the Chairman of the Managing Board.

In the reporting year, seven meetings of the Supervisory Board took place; the Personnel Committee met four times, the Audit Committee once. The plenary session in March primarily dealt with the 2006 annual accounts, the sale of the Vicat participation, decisions concerning the Corporate Governance Code and preparations for the 2007 Annual General Meeting. Two extraordinary meetings in April and May were devoted largely to the discussions and resolutions concerning the Hanson acquisition and related shareholders' equity and debt capital measures, while another extraordinary meeting in August dealt with the sale of the maxit Group as well as reporting on the status of the Hanson transaction. Ordinary meetings in May, September and December were used for discussions and resolutions on investments in Russia and Kazakhstan, the appointment of new members of the Managing Board, the authorisation of additional debt capital measures and the discussion of the compliance organisation, in addition to the quarterly reporting. In the meetings of the Personnel Committee, decisions on matters relating to Managing Board remuneration were made and a preliminary discussion took place on the appointment of new members of the Managing Board. In the Audit Committee's meeting in March 2007, a preliminary discussion was held on the plenary session's resolutions concerning the 2006 annual accounts and on the appointment of the auditors for 2007. The Arbitration Committee, formed in accordance with § 27, section 3 of the German Codetermination Law, did not meet during the reporting year. At the following meeting, the plenary session of the Supervisory Board was informed about the results of the committees' meetings.

Corporate Governance

The statement of compliance for the reporting year was submitted on 21 March 2007 and the date for submission of his year's statement of compliance is 17 March 2008. The adoption of further recommendations of the German Corporate Governance Code, passed in June 2007, into the Group's Corporate Governance Principles also occurs in the meetings of both the Managing Board and Supervisory Board on 14 March 2008.

To avoid repetition, the fundamentals of the remuneration system for the members of the Managing Board are detailed under Remuneration of the Managing Board in the Corporate Governance and Compliance chapter of the management report (page 33).

Dependent companies report

The Supervisory Board examined and approved the report on the relationships with affiliated companies compiled by the Managing Board in accordance with § 312 of the German Stock Company Act (Aktiengesetz). The Supervisory Board approved the statements of the independent auditors in their audit report on the Managing Board's dependent companies report. The audit opinion reads: "In accordance with our duly performed audit and assessment, we confirm that 1) the factual details of the report are correct, and that 2) the amount paid by the company with respect to the legal transaction presented in the report was not unreasonably high." After its own final examination, the Supervisory Board raised no objections to the declaration made by the Managing Board at the end of the dependent companies report, which was also included in the management report (page 32).

Auditing and approval of annual accounts

Before the contract for the auditing of the annual accounts of the Company and Group was awarded, the focal points for the audit, the content of the audit and the costs were discussed in detail with the auditors, Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Stuttgart. In December 2007, the auditors issued detailed information about the results of the pre-audit. The annual accounts of HeidelbergCement AG, the Group annual accounts as of 31 December 2007 and the combined management report for the Company and the Group, as prepared by the Managing Board, were examined by the independent auditors. The auditors gave the accounts the unqualified confirmation. The annual accounting documents and auditors' reports were sent to the members of the Supervisory Board. At first, the Audit Committee dealt intensively with the annual accounts in the presence of the auditors. The auditors reported on the main results of their audit. Then, the Supervisory Board discussed the annual accounts in detail, once again in the presence of the auditors. The Supervisory Board approved the audit results. It examined the Company and the Group annual accounts, the combined management report as well as the Managing Board's proposal for the use of net profit shown in the balance sheet. The Supervisory Board raised no objections to the final results of this examination. The Supervisory Board has therefore approved the Company and the Group annual accounts. The annual accounts have thus been adopted.

The Supervisory Board approved the Managing Board's proposal for the use of net profit shown in the balance sheet, including the payment of a dividend of EUR 1.30 per share.

Report of the Supervisory Board

Personnel matters

Mr Helmut S. Erhard retired from the Managing Board for reasons of age at the end of 2007. The Supervisory Board thanks Mr Erhard for his many years of strong and successful dedication to the Group, particularly in the last years in North America. The Supervisory Board has appointed Dr. Albert Scheuer to the Managing Board with effect from 6 August 2007, as well as Dr. Dominik von Achten and Mr Alan Murray with effect from 1 October 2007. Dr. Scheuer has belonged to the Group for many years and has recently been in charge of our activities in China. Dr. von Achten was a partner in the management consultancy firm The Boston Consulting Group and brings with him international experience in complex integration processes, among other expertise. Mr Murray was previously Chief Executive of Hanson.

Mr Heinz-Josef Eichhorn gave up his Supervisory Board mandate as of 29 September 2007. The Supervisory Board thanks him for his many years of involvement. In his place, the Local Court (Amtsgericht) of Mannheim appointed Mr Robert Feiger, a member of the Managing Board of the Trade Union for Building-Agriculture-Environment (IG BAU), as a member of the Supervisory Board on 2 January 2008 at the recommendation of this trade union. As of 31 December 2007, Mr Rolf Hülstrunk gave up his Supervisory Board mandate, which he accepted in 2001 following his position as Chairman of the Managing Board. This brought to an end almost 50 years of extraordinarily successful professional involvement with HeidelbergCement, for which the Supervisory Board is particularly obliged to Mr Hülstrunk. In his place, the Local Court appointed Mr Helmut S. Erhard as a member of the Supervisory Board to represent the shareholders on 19 February 2008.

The Supervisory Board thanks the Group's management and all the employees of the Group for their high level of personal dedication and their accomplishments during the 2007 financial year.

Heidelberg, 14 March 2008

On behalf of the Supervisory Board

Yours sincerely,

Fritz-Jürgen Heckmann Chairman

Managing Board

Dr. Bernd Scheifele

Born in Freiburg (Germany), aged 49 years. Studies in law at the universities of Freiburg, Dijon (France), and the University of Illinois (US).

Since 2005, Chairman of the Managing Board; in charge of Strategy and Development, Communication & Investor Relations, Human Resources, Legal, Compliance, and Internal Audit.

Dr. Dominik von Achten

Born in Munich (Germany), aged 42 years. Studies in law and economics at the German universities of Freiburg and Munich.

Since 1 October 2007, member of the Managing Board; in charge of the United Kingdom, Purchasing, worldwide coordination of Competence Center Materials, and Hanson integration.

Helmut S. Erhard (until 31 December 2007)

Born in Klingenbrunn (Germany), aged 64 years. Studies in mining engineering at Clausthal (Germany).

Joined HeidelbergCement in 1971. Member of the Managing Board since 1999; in charge of North America and worldwide coordination of Heidelberg Technology Center until the end of 2007.

Daniel Gauthier

Born in Charleroi (Belgium), aged 51 years. Studies in mining engineering at Mons (Belgium).

Since 1982 at CBR, the Belgian subsidiary of HeidelbergCement. Member of the Managing Board since 2000; in charge of Northern and Western Europe, Mediterranean, Africa, Group Services, and Environmental Sustainability.

Andreas Kern

Born in Neckarsteinach (Germany), aged 49 years. Studies in business administration at Mannheim (Germany).

Since 1983 at HeidelbergCement. Member of the Managing Board since 2000; in charge of Central Europe and Central Asia, Sales and Marketing, and worldwide coordination of secondary cementitious materials.

Alan Murray

Born in Liverpool (UK), aged 54 years. Degree in economics and marketing from Lancaster University (UK).

Joined Hanson in 1988. Member of Heidelberg-Cement's Managing Board since 1 October 2007; in charge of North America.

Dr. Lorenz Näger

Born in Ravensburg (Germany), aged 47 years. Studies in business administration at the German universities of Regensburg and Mannheim, and in Swansea (UK).

Since 2004, member of the Managing Board; in charge of Finance, Group Accounting, Controlling, Taxes, Insurance & Corporate Risk Management, IT, Shared Service Center and Logistics.

Dr. Albert Scheuer

Born in Alsfeld (Germany), aged 50 years. Studies in mechanical engineering/process technology at Clausthal (Germany).

Since 1992 at HeidelbergCement. Member of the Managing Board since 6 August 2007; co-responsible for the Hanson North America integration (until 31 March 2008) and in charge of Asia and Oceania (as of 1 April 2008) and worldwide coordination of Heidelberg Technology Center.

Managing Board

Alan Murray, Dr. Dominik von Achten, Daniel Gauthier, Dr. Bernd Scheifele (Chairman), Dr. Lorenz Näger, Helmut S. Erhard, Dr. Albert Scheuer, Andreas Kern (from left to right)

Supervisory Board

Fritz-Jürgen Heckmann

Chairman Stuttgart; Business Lawyer

Heinz Schirmer

Deputy Chairman Schelklingen; Chairman of the Council of Employees at the Schelklingen plant, HeidelbergCement AG

Theo Beermann

Ennigerloh; Deputy Chairman of the Council of Employees at the Ennigerloh plant, HeidelbergCement AG

Heinz-Josef Eichhorn

until 29 September 2007 Frankfurt; Department Head of the Executive Committee Section IV – Building Materials Industry, IG Bauen-Agrar-Umwelt

Helmut S. Erhard

since 19 February 2008 Allentown, Pennsylvania/US; until 31 December 2007 member of the Managing Board of HeidelbergCement AG

Robert Feiger

since 2 January 2008 Frankfurt; member of the Federal Executive Committee, IG Bauen-Agrar-Umwelt

Josef Heumann

Burglengenfeld; Chairman of the Council of Employees at the Burglengenfeld plant, HeidelbergCement AG

Gerhard Hirth

Ulm; Managing Director, SCHWENK group of companies

Rolf Hülstrunk

until 31 December 2007 Mainz; former Chairman of the Managing Board, HeidelbergCement AG

Heinz Kimmel

until 13 March 2008 Sulzheim; Chairman of the Council of Employees at the Sulzheim plant, Südharzer Gipswerk GmbH

Max Dietrich Kley

Heidelberg; Attorney

Hans Georg Kraut

Schelklingen; Director of the Schelklingen plant, HeidelbergCement AG

Senator h.c. Dr. med. h.c. Adolf Merckle Blaubeuren; Attorney

Ludwig Merckle

Ulm; Managing Director, VEM Vermögensverwaltung GmbH

Tobias Merckle

Leonberg; Managing Director of the association prisma – Initiative für Jugendhilfe und Kriminalprävention e.V.

Eduard Schleicher

Ulm; Partner with unlimited liability, SCHWENK group of companies

Heinz Schmitt

Heidelberg; Chairman of the Council of Employees at the headquarters, HeidelbergCement AG

Karl Heinz Strobl

Weiden; until 22 April 2007, member of the Federal Executive Committee, IG Bauen-Agrar-Umwelt

Supervisory Board

Supervisory Board Committees

Arbitration Committee, according to § 27, section 3 of the German Codetermination Law

Fritz-Jürgen Heckmann Chairman	Josef Heumann
	Heinz Schirmer
	Eduard Schleicher
Personnel Committee
Ludwig Merckle Chairman	Theo Beermann
	Fritz-Jürgen Heckmann
	Hans Georg Kraut
	Heinz Schirmer
	Eduard Schleicher
Audit Committee
Senator h.c. Dr. med. h.c. Adolf Merckle Chairman	Fritz-Jürgen Heckmann
	Heinz Schirmer
	Eduard Schleicher
	Heinz Schmitt
	Karl Heinz Strobl

HeidelbergCement share

Overview

Earnings per share in accordance with IAS 33 for the financial year 2007 were EUR 17.11 (previous year: 8.22). For continuing operations, earnings per share amount to EUR 15.92 (previous year: 7.29). The Managing Board and Supervisory Board will propose to the Annual General Meeting on 8 May 2008 the distribution of a dividend of EUR 1.30 per HeidelbergCement share.

On 31 December 2007, according to the notifications available to us in accordance with the German Securities Trading Law (Wertpapierhandelsgesetz), the main shareholders of HeidelbergCement AG were Spohn Cement GmbH with 60.59% of the shares, Senator h.c. Dr. med. h.c. Adolf Merckle with 17.98% (of which 17.78% is held via VEM Vermögensverwaltung GmbH) and Schwenk Beteiligungen GmbH & Co. KG with 7.2%. In free float were 14.23% of our shares.

With a year-end price of EUR 106.00, the Heidelberg-Cement share was listed 4.4 % lower than in the previous year. Market capitalisation decreased slightly in the course of the year from EUR 12.8 billion to EUR 12.7 billion.

Capital increase

To simplify the capital structure, the entire stock of 51,738 treasury shares previously acquired was cancelled in June 2007. As a result, the share capital was reduced to EUR 346.8 million and the number of shares to 115.6 million. We subsequently carried out a cash capital increase from authorised capital to strengthen the shareholders' equity base. VEM Vermögensverwaltung GmbH, which belongs

to the Merckle group, subscribed for around 4.4 million new shares. The subscription rights of the remaining shareholders were excluded. HeidelbergCement received around EUR 527 million from the capital increase, which was used to reduce its financial liabilities. The share capital rose by EUR 13.2 million to EUR 360 million and the number of shares to 120 million.

Development of the HeidelbergCement share

After varied share performance in the first few months, the HeidelbergCement share reached its highest level on 9 May and 4 June with EUR 119.95. In July and August, our share was also affected by the sharp price correction on the international share markets as a result of the US sub-prime crisis and finally reached its low on 14 September with EUR 101.57. From October onwards, the price recovered to an interim high of EUR 117.05 in November and closed at EUR 106.00 at the end of 2007.

Overall, the price of the HeidelbergCement share fell by 4.4 % in the course of the year, while DAX and MDAX increased by 22% and 4.9% respectively. The worldwide sector index, the MSCI World Construction Materials Index, recorded a decrease of 5.1%.

HeidelbergCement shares are represented in around 40 share indices and therefore rank among the most important building materials shares in Europe. Among others, they are included in the MDAX, Deutsche Börse Prime Construction Index, Dow Jones Stoxx, Dow Jones Euro Stoxx and in the Bloomberg Europe Building Materials Index. In addition, HeidelbergCement is included in

31 December 2007	360,000	120,000,000
Cash capital increase	13,181	4,393,749
Capital reduction by cancellation of treasury shares	-155	-51,738
1 January 2007	346,974	115,657,989
HeidelbergCement AG share capital: development 2007	Share capital EUR '000s	Number of shares

HeidelbergCement share

the Morgan Stanley Capital International (MSCI) indices. Measured in terms of its weighting in the HDAX share index, HeidelbergCement was at position 56 of the 110 largest quoted companies in Germany at the end of 2007. Our share is listed on the Prime Standard stock market segment of the Frankfurt stock exchange and on several regional German stock exchanges. We provide comprehensive information to institutional investors,

equity and credit analysts and private shareholders via our Internet site (www.heidelbergcement.com) and our shareholder hotline (+ 49 6221-481-696).

Earnings per share

The calculation of the earnings per share in compliance with IAS 33 is shown in the table below. Further comments are provided in the Notes under item 10.

Development of the HeidelbergCement share 2007 (ISIN DE0006047004, WKN 604700)

EUR	2007
Year-end share price 2006	110.93
Highest share price	119.95
Lowest share price	101.57
Year-end share price 2007	106.00
Shareholders' equity per share	62.66
Change compared with 31 Dec. 2006
HeidelbergCement share	-4.4%
DAX	22%
MDAX	4.9%
MSCI World Construction Materials Index	-5.1%
Market value on 31 Dec. 2007 (EUR '000s)	12,720,000

Earnings per share according to International Financial Reporting Standards (IAS 33)
EURm	2006	2007
Group share in profit	950.7	2,021.8
Number of shares in '000s (weighted average)	115,602	118,177
Earnings per share in EUR	8.22	17.11
Net income from continuing operations
– attributable to the parent entity	843.7	1,880.7
Earnings per share in EUR – continuing operations	7.29	15.92
Net income from discontinued operations
– attributable to the parent entity	107.0	141.1
Earnings per share in EUR – discontinued operations	0.93	1.19

Experts analyse

Management report

mmediately after the closing, joint expert teams visited two thirds of all Hanson locations in North America, Continental Europe, the United Kingdom, as well as in Australia and Malaysia. In the record time of three months, they gained comprehensive knowledge of processes and markets, and created the basis for benchmarking and the application of best practice. I

Combined management report of HeidelbergCement Group and HeidelbergCement AG

Core activities and organisational structure

The core activities of HeidelbergCement include the production and distribution of cement and aggregates, the two essential raw materials for concrete. We supplement our product range with downstream activities such as ready-mixed concrete, concrete products and concrete elements, as well as other related products and services. Cement and aggregates form the basis of our dual raw materials and growth strategy. In the cement activities, the focus is on growth markets, while in mature markets we concentrate on strengthening vertical integration and securing raw materials for aggregates.

As a result of the takeover of the British building materials manufacturer Hanson, we now operate on five continents as a fully integrated building materials company. We have adapted our reporting to the new positioning. The Europe-Central Asia Group area has been extended to include Spain and Israel. Besides Australia, the Asia-Australia-Africa-Mediterranean Group area now also includes Malaysia and Singapore. As before, North America includes the US and Canada. Our trading activities are grouped together in the Group Services business unit.

HeidelbergCement relies on an integrated management approach. Its success is based on a balance between local responsibility for the business, Group-wide standards and global leadership.

Our local operating units are crucial to the success of the business. Local management has full responsibility for production, market cultivation and the development of managers, with the aim of market and cost leadership. In order to support the local managers, the administrative functions are grouped together in national shared service centers on the basis of a standardised IT infrastructure for all business lines. All major management processes within the Group are standardised to ensure transparency, efficiency and quick implementation across the Group. Uniform Group-wide key performance indicators allow direct comparison. They are an important prerequisite for continuous benchmarking.

Change in consolidation scope

In order to ensure the comparability of operational development, the following significant consolidation-related changes have to be taken into account:

• Our new acquisition Hanson, whose takeover was completed on 23 August, has been included in the Group annual accounts since 24 August 2007.
• An agreement for the sale of maxit Group was signed at the beginning of August; as a discontinued operation in accordance with IFRS 5, it is no longer included in the 2006/2007 figures for continuing operations. For information regarding the business development of maxit Group see page 24.
• For the period from 17 May to 23 August 2007, results from participations include our participation in Hanson (at equity) and the contribution of Vicat until its sale on 18 June 2007.

2007 business trend

Economic environment

In 2007, global economic growth was at an overall resilient level of just under 5%, despite record oil prices, the massive increase in the value of the euro and the US property crisis. Considering the increased risks, however, the forecasts for this year have been reduced. In the past year, the euro zone experienced stronger growth than the US for the first time. Once again, the economic situation in the Central and Eastern European countries developed far more dynamically than the European average. In the United Kingdom, the impetus from the property market weakened significantly in the course of the year.

Management report

In Germany, the gross domestic product rose by around 2.5% due to increased domestic demand. Once again, the growth dynamics were strongest in the emerging countries of Asia, with growth rates of between 9% and 10%.

Building materials demand benefited from the sustained expansion of the economy. Cement consumption rose by around 8% worldwide. The markets in our Group areas developed positively for the most part; in the US, cement consumption declined by 10.0%, in Germany, it decreased by 5.9%.

2007 – a milestone for HeidelbergCement

The acquisition of the British building materials manufacturer Hanson and the resulting changes had a decisive influence on the development of HeidelbergCement in 2007. Group turnover for the whole of the year rose by 35.8% to EUR 10,862 million (previous year: 7,997). This was due mainly to the contribution of EUR 2,140 million resulting from the initial consolidation of Hanson on 24 August and the organic growth in the countries of Eastern Europe and Central Asia, as well as Norway, Africa, Asia and Turkey. Excluding exchange rate and consolidation effects, a significant operational increase of 10.7% was achieved.

During the past year, the cement and clinker sales volumes increased by 10.3% to 87.9 million tonnes. Excluding consolidation effects, they rose by 3.5%. The strongest volume growth was achieved in the Asia-Australia-Africa-Mediterranean Group area, followed by Europe-Central Asia. Deliveries of aggregates more than doubled, reaching 179.6 million tonnes (previous year: 85.8), with Hanson contributing 83.5 million tonnes. The countries of Northern

Group profit and loss accounts (short form)
EURm	2006 1)	2007	Change
Turnover	7,997	10,862	36%
Operating income before depreciation (OIBD)	1,790	2,378	33%
Amortisation and depreciation of intangible assets and tangible fixed assets	-461	-573	24%
Operating income	1,329	1,805	36%
Additional ordinary result	23	844	3500%
Results from participations	178	167	-7%
Earnings before interest and income taxes (EBIT)	1,531	2,815	84%
Financial results	-225	-472	110%
Profit before tax	1,306	2,343	79%
Taxes on income	-390	-369	-5%
Net income from continuing operations	916	1,974	115%
Net income from discontinued operations	110	144	31%
Profit for the financial year	1,026	2,119	106%
Group share in profit	951	2,022	113%

1) Figures have been adjusted following the presentation of maxit Group as discontinued operation (IFRS 5) and are therefore not comparable with the 2006 annual accounts

19

and Eastern Europe recorded also particularly pleasing increases in quantities. The same is true for ready-mixed concrete sales volumes, which rose by 31.4 % overall to 32.7 million cubic metres (previous year: 24.9). Excluding the consolidation of Hanson, the increase amounted to 3.2%.

Earnings position

In the 2007 financial year, the earnings position was significantly affected by the inclusion of the Hanson activities since 24 August 2007 as well as by one-off effects resulting from the sale of the participation in Vicat S.A. and Florida Rock Industries Inc.

The presentation of the Group's earnings before interest and income taxes (EBIT) and the operating incomes of our Group areas helps to clarify the consolidation effects of the Hanson acquisition. Operating income before depreciation (OIBD) rose by 32.8% to EUR 2,378 million (previous year: 1,790); Hanson accounted for EUR 255 million of this figure.

Operating income increased by 35.8% to EUR 1,805 million (previous year: 1,329), with Hanson contributing EUR 138 million. The marked organic growth of 27.2% is attributable to higher sales volumes, price adjustments and increases in efficiency. By far the biggest contribution to the increase in results came from Europe-Central Asia. The decline in North America is a result of currencyrelated factors; calculated in US dollars, the operating income remained stable.

In addition to the inclusion of Hanson, the increase in material costs by EUR 1,023 million to EUR 4,114 million is mainly attributable to rising costs of electricity and fuel, as well as freights. We were able to offset part of the rise in energy prices by further increasing the proportion of alternative fuels. We continued to optimise costs by pooling our purchasing activities and standardising our technical equipment. Personnel costs rose to EUR 1,694 million (previous year: 1,271). This reflects the increase in the number of employees.

The additional ordinary result of EUR 844 million (previous year: 23) is mainly characterised by the sales of our participations in Vicat S.A. and Florida Rock Industries Inc. The inclusion of Hanson PLC as an associated company until the full takeover of the business and the pro rata

Impact of Hanson consolidation on Group profit and loss accounts	HeidelbergCement exclud. Hanson		Hanson since	Combined	Change
EURm	2006	2007	08/24/2007	2007	2006/2007
Turnover	7,997	8,723	2,139	10,862	36%
Operating income before depreciation (OIBD)	1,790	2,123	255	2,378	33%
Amortisation and depreciation of intangible assets
and tangible fixed assets	-461	-456	-117	-573	24%
Operating income	1,329	1,667	138	1,805	36%
Additional ordinary result	23	898	-54	844	3500%
Results from other participations	178	143	24	167	-7%
Earnings before interest and income taxes (EBIT)	1,531	2,707	108	2,815	84%

Management report

profit for the financial year achieved by Vicat S.A. until its sale in June 2007 brought the overall results from participations to EUR 167 million (previous year: 178). The change of EUR 247 million in the financial results is essentially attributable to the additional financing required for the Hanson acquisition. Excluding the consolidated interest expenses from the Hanson Group and the acquisition expenses, the financial results even improved by around EUR 20 million.

As a result of the development described above, the profit before tax from continuing operations rose to EUR 2,343 million (previous year: 1,306); considering effects from the purchase price allocation, Hanson contributed

EUR 48 million to this increase. Taxes on income fell to EUR 369 million (previous year: 390); of which Hanson contributed EUR 19 million. The decline in tax expense is essentially attributable to the below-average taxation of capital gains, the disproportionately strong increases in profit in countries with a low tax ratio, e.g. in Eastern Europe, as well as tax optimisation measures. The net income from continuing operations improved to EUR 1,974 million (previous year: 916). The resulting return on turnover amounts to 18.2% (previous year: 11.5%). The Group share in profit rose to EUR 2,022 million (previous year: 951).

Operating income
EURm	2006	2007
Europe-Central Asia	645	1,026
HeidelbergCement	645	948
Hanson		78
North America	475	460
HeidelbergCement	475	435
Hanson		25
Asia-Australia-Africa-Mediterranean HeidelbergCement	193 193	304 269
Hanson		35
Group Services	15	15
HeidelbergCement	15	15
Hanson
Total	1,329	1,805
HeidelbergCement	1,329	1,667
Hanson		138

Earnings per share – Group share in profit – in accordance with IAS 33 increased to EUR 17.11 (previous year: 8.22). For continuing operations, the earnings per share amount to EUR 15.92 (previous year: 7.29).

In view of the development of results, the Managing Board and Supervisory Board will propose to the Annual General Meeting on 8 May 2008 the distribution of a dividend of EUR 1.30 (previous year: 1.25) per share.

Business trend in the Group areas

As a result of the inclusion of the Hanson activities, the Europe-Central Asia Group area has been extended to include Israel and Spain; the United Kingdom has also become considerably more important. In most countries of the Group area, the construction industry was the growth driver in the past year. Our cement and clinker sales volumes rose by 9.7% to 43.7 million tonnes (previous year: 39.8). Excluding consolidation effects – especially the first-time inclusion of SaqCementi in Georgia and Hanson's blast furnace slag activities in the United Kingdom - the increase amounted to 2.6%. The strongest growth was recorded by the countries of Eastern Europe and Central Asia; in Northern Europe and the Benelux countries, domestic demand developed in a pleasing way. In Germany, our cement sales volumes decreased. By constructing a new plant in Tula (Moscow area), increasing the cement capacity in the Cesla plant near

Saint Petersburg and establishing a central administrative office and a technical competence center in Moscow, we have taken further important investment steps on the rapidly growing Russian market. In Georgia, a new kiln line, which we relocated from the decommissioned German cement plant in Kiefersfelden, will commence operation in March. In Kazakhstan, we started construction of a new plant on the Caspian Sea.

The aggregates and concrete business line, which also includes asphalt production, was expanded considerably. This is particularly true in the United Kingdom, where we previously operated only in the cement business line. Aggregates sales volumes were up by 55.0% to 88.0 million tonnes (previous year: 56.8), with Hanson contributing 22.5 million tonnes. In the past year, we commissioned new production sites in Romania and Poland, and produced aggregates for the first time in the Ukraine, Russia and Kazakhstan. On 26 January 2008, Heidelberg-Cement sold its shares in the British joint venture United Marine Holdings Limited to the joint venture partner Tarmac Limited. Following the takeover of Hanson PLC, the sale had become necessary on the basis of the joint venture agreement.

Our deliveries of ready-mixed concrete grew by 28.9% to 17.6 million cubic metres (previous year: 13.7). Excluding Hanson, we achieved an increase of 3.2%. We expanded our market positions in the Czech and Slovak

Sales volumes
	2006	2007
Cement and clinker (million tonnes)	79.7	87.9
Aggregates (million tonnes)	85.8	179.6
Ready-mixed concrete (million cubic metres)	24.9	32.7

Management report

Republic, Romania, Belgium and the Netherlands by increasing participations, making acquisitions and commissioning new plants. In Kazakhstan, the first ready-mixed concrete plant will start production in spring 2008.

In the United Kingdom, there is a strong emphasis on the building products business line, in which we previously operated only in Germany and Sweden. Our Group companies there are market leaders in bricks and aircrete blocks. Leading market positions are held in wall cladding and flooring systems, pavers, roof tiles and chimneys. While turnover in the concrete products operating line rose in Germany, it declined in Sweden. The sales volumes of the German sand-lime brick plants experienced a slight cyclical decrease.

The turnover of the Europe-Central Asia Group area increased by 35.5% in 2007 to EUR 5,732 million (previous year: 4,230), with Hanson contributing EUR 878 million. The operational increase amounted to 11.9%.

As a result of the acquisition of Hanson, Heidelberg-Cement is one of the leading manufacturers of aggregates, ready-mixed concrete, cement, asphalt and building products in North America. Last year, construction activity in the US decreased considerably as a result of the decline in residential construction and the sub-prime crisis. This is also reflected in the decline in cement consumption, which dropped by 6.9 % to 118 million tonnes. The cement and clinker sales volumes of our plants developed significantly better than the market, falling by 0.7% to 14.9 million tonnes (previous year: 15.0). Excluding the consolidation of Hanson, the decrease amounted to 4.5%. We benefited in particular from the investments made by the energy and mining industries in western Canada and for the 2010 Winter Olympics in Vancouver, British Columbia.

In the aggregates operating line, the number of aggregates location increased fivefold to more than 250. Sales

volumes of aggregates amounted to 78.0 million tonnes (previous year: 28.9). Excluding the Hanson activities, the sales volumes increased by 5.4% to 30.4 million tonnes. Asphalt production, in which we operate at 40 locations in the US, is an important customer of aggregates. We have also expanded our network of ready-mixed concrete plants considerably. Deliveries of ready-mixed concrete increased by 10.3% in the reporting year to 9.9 million cubic metres (previous year: 8.9); excluding Hanson, the figure rose by 1.6%. The acquisition of Hanson is allowing us to take up leading positions on the US and Canadian markets in the building products sector. We are the largest manufacturer of bricks and one of the leading producers of pipes and other precast concrete parts.

The turnover in the North America Group area rose by 31.0% to EUR 3,205 million (previous year: 2,447), of which EUR 893 million were contributed by Hanson. Excluding consolidation and exchange rate effects, the increase amounted to 3.1%.

Following the takeover of Hanson, the Group area Asia-Australia-Africa-Mediterranean now also includes Malaysia and Singapore as well as Australia. We benefited from lively construction activity in almost all markets of the Group area. Our cement and clinker sales volumes rose by 17.8% to 29.4 million tonnes (previous year: 24.9). This is partly due to consolidation effects in India and capacity expansion in China. We have expanded the aggregates and concrete business line considerably as a result of the newly added production sites in Australia and Malaysia. In aggregates, a sector in which we previously did not operate in this Group area, we achieved sales volumes of 13.6 million tonnes. Deliveries of readymixed concrete more than doubled to 5.2 million cubic metres (previous year: 2.3). Excluding Hanson, the growth amounted to 9.7%.

Overall, the turnover of this Group area rose by 46.6% in 2007, reaching EUR 1,909 million (previous year: 1,302), with Hanson contributing EUR 370 million to this increase. Excluding the consolidation and exchange rate effects, the increase amounted to 16.9%

In Asia, the strong economic expansion continued. We have further strengthened our market position in Asia with the commissioning of the new Jingyang plant in the Chinese province of Shaanxi and the increase in the kiln capacity in the Citeureup plant in Indonesia.

In Tanzania, our second largest market in Africa in terms of sales volumes, we will modernise and expand our Tanzania Portland Cement Company cement plant by 2009 in order to meet demand in the coastal metropolis of Dar Es Salaam. As part of the reorientation of our Group, we have sold the participations in the Cement Company of Northern Nigeria in Nigeria and Société Nigérienne de Cimenterie in Niger. The transaction was completed in March 2008.

In Turkey, which belongs to the Mediterranean subarea, our joint venture Akçansa recorded stronger growth than the market as a whole. By purchasing the Ladik cement plant, the company expanded its presence to the Central Black Sea region and consolidated its leading market position in western Turkey. The market position will be strengthened further by the commissioning of a second kiln line in the Çanakkale plant in spring 2008.

Turnover in the Group Services business unit, which includes our trading companies, improved by 5.9% in 2007 to EUR 680 million (previous year: 642). In contrast, the trade volume of our subsidiary HC Trading decreased by 6.8% to 11.6 million tonnes (previous year: 12.4). The main causes are the increase in domestic demand in traditional export countries such as India or Turkey, the reduction of imports into the US and higher freight rates.

Discontinued operations

On 7 August 2007, HeidelbergCement signed an agreement for the sale of maxit Group for a price of EUR 2,125 million with the French building materials manufacturer Saint Gobain. The transaction was completed on 13 March 2008.

The market environment developed positively in most countries in which maxit Group operates. Germany was adversely affected by the decline in residential construction. Overall, turnover grew to EUR 1,338 million (previous year: 1,237) in 2007. The positive market development and improvement in cost efficiency contributed significantly to an increase in earnings.

Cash flow statement

The presentation of the cash flow statement was changed in the 2007 financial year so that the net income from continuing operations is taken as a basis for the calculation, rather than the operating income before depreciation (OIBD). The cash flow statement for the 2007 financial year is characterised primarily by the inclusion of the Hanson Group from 24 August 2007 and the separate presentation of the cash inflows and outflows from discontinued operations that relate to maxit Group.

The cash flow from operating activities from continuing operations increased by EUR 629 million to EUR 1,750 million, with Hanson contributing EUR 441 million.

The net cash used in investing activities from continuing operations rose by EUR 10,079 million to EUR 10,640 million; this amount results primarily from the purchase of shares in the Hanson Group totalling EUR 11,519 million, the acquisition of the cement activities in Georgia for EUR 72 million and the sale of the participations in Vicat S.A. for EUR 1,395 million and Florida Rock Industries Inc. for EUR 88 million. The net cash used in investments in intangible and tangible fixed assets increased by EUR 534 million to EUR 1,039 million, of

Management report

which EUR 210 million was connected with Hanson. The assumption of cash, of which EUR 447 million concerned Hanson, reduced the net cash used in investing activities from continuing operations by a total of EUR 483 million.

The net cash from financing activities from continuing operations rose by a total of EUR 10,250 million to EUR 9,512 million. The net proceeds from loans of EUR 9,162 million and the money inflow from the capital increase of EUR 527 million in June 2007 were primarily used to finance the Hanson acquisition. Dividend payments led to a cash outflow of EUR 177 million.

In the 2007 financial year, HeidelbergCement was able to meet its payment obligations at all times.

Group financial management

In 2007, the Group financial management was dominated by the structuring and syndication of the GBP 8.75 billion and EUR 3.4 billion syndicated loan financing for the acquisition of Hanson PLC, which was signed on 14 May 2007. The syndication process was executed in four weeks. 44 banks joined the initial two underwriters. The syndication was oversubscribed by 30%.

Shortly after the announcement of the acquisition, the equity of the company was increased by approximately EUR 527 million. In addition, EUR 1.5 billion of the acquisition facility were already repaid prior to the closing of the transaction following the sale of the stake in Vicat's share capital. In the fourth quarter 2007, HeidelbergCement issued sub-benchmark senior unsecured Eurobond targeted at private investors in Germany, Austria, Luxembourg, Switzerland and the Netherlands. The bond issued at 94% carried a coupon of 5.625% maturing in January 2018 and was well received in the capital

Group cash flow statement (short form)
EURm	2006 1)	2007	Difference
Cash flow	1,375	1,680	305
Changes in working capital	-254	70	324
Cash flow from operating activities	1,121	1,750	629
Investments (cash outflow)	-821	-12,774	-11,953
Other inflows of cash and cash equivalents	260	2,134	1,874
Cash flow from investing activities	-561	-10,640	-10,079
Capital increase		527	527
Dividend payments	-166	-177	-11
Long-term borrowings	-572	9,162	9,734
Cash flow from financing activities	-738	9,512	10,250
Changes in cash and cash equivalents – discontinued operations	3	-15	-18
Changes in cash and cash equivalents	-98	627	725

1) Figures have been adjusted following the presentation of maxit Group as discontinued operation (IFRS 5) and are therefore not comparable with the 2006 annual accounts

market, so that the issuance volume of EUR 480 million exceeded expectations significantly. In parallel, two certificates of indebtedness with tenors of five and seven years and overall volume of EUR 300 million and a SEK private placement out of our updated, increased and supplemented EUR 10 billion debt issuance programme (EMTN programme) were issued as well. The proceeds were used to repay parts of the acquisition facility.

During the process of integrating the Hanson financing into the central Group Treasury of HeidelbergCement, all commercial papers of Hanson were repaid and the programmes were cancelled. The existing syndicated bank credit facilities of Hanson, being USD 475 million and GBP 500 million, expired on 22 September 2007. The three outstanding SEC registered US Dollar bonds issued or guaranteed by Hanson, were de-listed from the London Stock Exchange and New York Stock Exchange and re-listed on the Euro MTF operated by Luxembourg Stock Exchange. Thereby, the SEC registration was terminated, which reduced reporting requirements. These measures ensured significant savings and pari-passu ranking of the capital markets debt within the new HeidelbergCement Group.

In the framework of the ongoing financial management, HeidelbergCement exercised its call to repay the remaining outstanding amount of the 2003/2010 7.375% high yield bond prior to its final maturity on 15 July 2007.

Key financial ratios
	2005	2006 1)	2007 1)
Assets and capital structure
Shareholders' equity/total capital	42.4%	47.9%	25.8%
Net financial liabilities/balance sheet total	29.7%	25.0%	49.9%
Long-term capital/fixed assets	104.7%	99.4%	108.0%
Gearing (net fin. liabilities/shareholders' equity)	70.1%	52.5%	193.4%
Earnings per shares
Price/earnings ratio	20.1	13.5	6.1
Earnings per share (EUR)	3.74	8.22	17.11
Profitability2)
Return on total assets before taxes	8.4%	12.9%	9.8%
Return on equity	8.2%	15.6%	26.1%
Return on turnover	6.2%	11.5%	18.2%

1) Without adjustment to IAS 32.18 b) Puttable Minorities in the amount of EUR 86 million (2007), EUR 106 million (2006)

2) Figures have been adjusted following the presentation of maxit Group as discontinued operation (IFRS 5) and are therefore not comparable with the 2006 annual accounts

Management report

Although the sub-prime crisis has spilled over to commercial paper issuance, HeidelbergCement was able to issue EUR 2.85 billion through the updated EUR 1 billion Euro Commercial Paper Programme. The Swedish SEK 3 billion Commercial Paper Programme was cancelled in order to streamline the administrative burden in June 2007.

Despite the increased leverage of the Group, HeidelbergCement was able to establish additional credit lines with significantly improved conditions. Most of these lines and the entirely existing EUR 1 billion revolving syndicated credit facility were undrawn as of the end of 2007 and secure liquidity.

The integration of Hanson's former treasury department into the Group Financial Management was completed in December 2007. All Hanson subsidiaries make now use of the Heidelberg based Group Treasury department. This department acts as in-house bank and secures full cash control and external financing on parent group level for the entire enlarged HeidelbergCement Group. The quick integration unlocked significant synergy potential in terms

of reduced personnel cost, process standardisation, netting of financial risk positions as well as realisation of economies of scale for banking services, e.g. cash management services and foreign exchange transactions.

Although the acquisition of Hanson was mostly debt financed, the rating agencies Standard & Poor's, Moody's and Fitch Ratings affirmed their corporate credit ratings within the investment grade range (BBB-/A-3, Baa3/P-3, BBB-/F3). The ratings were supported by the improved market positions as one of the leading global players in building materials, with an extended geographic diversity and strong cash flow generation.

Investments

In 2007, cash relevant investments in continuing operations amounted to a total of EUR 12,774 million (previous year: 821). EUR 1,039 million (previous year: 506) was invested in tangible fixed assets and intangible assets. As a result of the takeover of Hanson, investments in financial fixed assets rose to EUR 11,735 million (previous year: 315).

Fixed assets investments in continuing operations
EURm	2006	2007
Europe-Central Asia	263	492
North America	149	312
Asia-Australia-Africa-Mediterranean	94	234
Group Services	0	0
Financial investments	315	11,735
Total	821	12,774

Larger investments in tangible fixed assets related to the modernisation of the Beremend cement plant in Hungary, the expansion of capacities at our Wazo Hill plant in Tanzania, the construction of the new Jingyang cement plant in the Chinese province of Shaanxi, the purchase of the Ladik cement plant in Turkey and the construction of a second production line in the Çanakkale plant in Turkey. Other significant investments were used for the commissioning of a cement import terminal on the west coast of the US near Seattle, the installation of modern equipment at aggregates locations in the Canadian province of Manitoba, the construction of coal mills in Georgia and second production lines in the Fufeng and Jingyang cement plants in China, as well as the installation of equipment for the use of alternative fuels in Poland.

The acquisition of 100% of the shares in the British building materials manufacturer Hanson accounted for the majority – around EUR 11.5 billion – of the investments in financial fixed assets. The rest were divided between other acquisitions, including the purchase of a majority participation in the Georgian cement company SaqCementi.

Group balance sheet

As a result of the acquisition of Hanson, the balance sheet total rose to EUR 29.3 billion (previous year: 12.3).

On the assets side, the long-term assets increased considerably. A purchase price allocation led to fair value adjustments of EUR 1,109 million. These are counterbalanced, however, by identified risks and provisions of EUR 677 million accounted for in the balance sheet, leading to an increase of around EUR 432 million in the shareholders' equity.

On the liabilities side, the change in the balance sheet total is primarily attributable to the increase in financial liabilities to EUR 15,567 million (previous year: 3,421). A syndicated loan of GBP 8.75 billion and EUR 3.4 billion, in

Group balance sheet (short form)			Part of balance
EURm	31 Dec. 2006	31 Dec. 2007	sheet total
Intangible assets and tangible fixed assets	8,344	21,378	73%
Financial fixed assets	1,163	1,020	3%
Other long-term assets	208	531	2%
Short-term assets	2,603	4,947	17%
Assets & discontinued operations held for sale		1,406	5%
Shareholders' equity and minority interests	5,828	7,519	26%
Long-term provisions and liabilities	3,576	16,628	57%
Short-term provisions and liabilities	2,914	4,776	16%
Liabilities in disposal groups & discontinued operations		359	1%
Balance sheet total	12,318	29,282	100%

Management report

which 46 banks were involved, was used to finance the Hanson acquisition. To refinance this loan, we used the proceeds from the sale of our participation in Vicat S.A., which amounted to EUR 1.4 billion, and from a Eurobond of EUR 480 million, targeted primarily at private investors (additional measures in the Group financial management section on p. 25).

HeidelbergCement's shareholders' equity grew to EUR 7,519 million (previous year: 5,828). The most important factors were the increase in the profit for the financial year to EUR 2,119 million and the proceeds from a capital increase in June 2007 amounting to EUR 527 million. The development of exchange rates, particularly of the US dollar and the British pound, had a negative effect of around EUR 824 million on the shareholders' equity. In addition, a total of EUR 179 million in dividends was paid out to HeidelbergCement shareholders and minority shareholders.

Results of operations, assets positions and financial conditions of HeidelbergCement AG

In addition to the Group reporting, the parent company's development is described below:

In contrast with the Group annual accounts, the annual accounts of HeidelbergCement AG are prepared in accordance with German commercial law. HeidelbergCement AG's report to the shareholders is combined with that of the Group in accordance with § 315, section 3 of the German Commercial Code (Handelsgesetzbuch – HGB), as the business trend, economic position, and future opportunities and risks of the parent company are closely linked with the Group on account of their common activity in the building materials business.

As the controlling company, HeidelbergCement AG plays the leading role in the HeidelbergCement Group. In addition, it is operationally active in Germany in the cement and building products business lines with ten cement and grinding facilities and one lime plant.

In 2007, the turnover of HeidelbergCement AG fell slightly by 1.2% to EUR 471 million (previous year: 477); the decline in cement and clinker sales volumes resulting from the weakening of construction activity in Germany was not fully offset by the increase in cement prices. The rise in earnings before interest and income taxes (EBIT) to EUR 3,741 million (previous year: 169) is essentially attributable to income from disposals of financial fixed assets from the sale of the 35% participation in Vicat S.A. and internal restructuring within the Group in connection with the Hanson acquisition. As a result of this restructuring, the income from participations also escalated to EUR 3,762 million (previous year: 202). The profit for the financial year increased to EUR 7,511 million (previous year: 272) and the balance sheet profit to EUR 3,804 million (previous year: 149).

The acquisition of Hanson had a considerable effect on the balance sheet of HeidelbergCement AG. The balance sheet total rose to EUR 19.0 billion (previous year: 7.1). On the assets side, financial fixed assets more than doubled to EUR 10.3 billion (previous year: 4.8) as a result of the acquisition of Hanson, the resulting internal restructuring within the Group and the disbursement of long-term loans to affiliated companies. In current assets, the amounts owed by affiliated companies increased from EUR 1.8 billion to EUR 8.3 billion; this increase results essentially from the internal restructuring within the Group and the integration of Hanson's treasury activities into the central Group Financial Management department based at HeidelbergCement AG.

On the liabilities side, the shareholders' equity rose to EUR 11.4 billion (previous year: 3.5) because of the high balance sheet profit. As a result of the takeover of Hanson, liabilities increased to EUR 7.0 billion (previous year: 3.0); these include, in particular, the liabilities to banks, amounting to EUR 1.8 billion (previous year: 0.8) and to affiliated companies – primarily HeidelbergCement Finance B.V. – of EUR 4.8 billion (previous year: 2.0).

Summary of the economic position

According to the Managing Board's assessment, the economic position of the Group at the time of the preparation of the combined management report of the Group and HeidelbergCement AG is positive overall.

The 2007 financial year was characterised primarily by the takeover and integration of Hanson. The sharp increase in turnover and results was also supported by strong organic growth, particularly in the Europe-Central Asia and Asia-Australia-Africa-Mediterranean Group areas. In North America, we were able to hold our ground successfully despite the US property crisis. Targeted measures to reduce costs and increase efficiency were consistently continued.

Additional statements

Statements according to §§ 289, section 4, 315, section 4 of the German Commercial Code (HGB)

On 31 December 2007, the share capital of Heidelberg-Cement AG amounts to EUR 360,000,000 and is divided into 120,000,000 no-par value bearer shares. The Managing Board knows of no restrictions concerning voting rights or the transfer of shares. The following shareholders hold more than 10% of the voting rights in the company: Spohn Cement GmbH, Norderfriedrichskoog, with 60.59% of the voting rights and Senator h.c. Dr. med. h.c. Adolf Merckle, Blaubeuren, with 17.98% of the voting rights (of which 17.78% is held via VEM Vermögensverwaltung GmbH, Dresden). No holder of shares has been granted special rights giving powers of control. The company's Managing Board is appointed and discharged by the Supervisory Board. The Articles of Association may be amended by the Annual General Meeting with a simple majority of the share capital represented at the time of voting, except where a greater majority is required by law.

The Managing Board is authorised to increase, with the consent of the Supervisory Board, the Company's registered share capital by a total amount of up to EUR 60,818,753 – with the indicated amount having been reduced to EUR 45,818,753 as a result of the cash capital increase of February 2008 – by issuing new no-par value bearer shares in return for cash contributions on one or more occasions until 22 May 2011 (Authorised Capital I). Furthermore, the Managing Board is authorised to increase the Company's share capital, with the consent of the Supervisory Board, by up to EUR 74,000,000 by issuing new shares against contributions in kind until 22 May 2011 (Authorised Capital II). In addition, the Managing Board is authorised to acquire shares in the Company until 8 November 2008 with a proportional amount of

Management report

A summary of the company's significant agreements contingent on a change of control resulting from a takeover bid, and the effects thereof, is provided below in accordance with §§ 289, section 4 no. 8, 315 section 4 no. 8 of the German Commercial Code. Please note that we are disregarding agreements whose potential consequences for the company fall below the thresholds of EUR 50 million in a singular instance or EUR 100 million in the case of several similar agreements, as they will not normally affect the decision of a potential bidder. The existing change-of-control covenants are standard for this industry and type of transaction and have not been agreed with the intention of hindering any takeover bids. The following significant agreements of HeidelbergCement AG are contingent on a change of control resulting from a takeover bid:

• syndicated credit facility of 14 May 2007 for GBP 8.75 billion and EUR 3.4 billion with staggered terms ending on 14 May 2009, 14 May 2010 and 14 May 2012;
• bilateral credit lines of 26 June 2002, most recently amended in 2007, for EUR 100 million with staggered repayment on 28 June 2010, 28 June 2011 and 28 June 2012;

• bilateral credit lines of 24 June 2004, most recently amended in 2007, for EUR 60 million with a term ending on 30 November 2008, under which, in the event of a change of control, the contractual partner gains a right indirectly by means of a reference to the onset of an early repayment obligation from the corresponding agreement in the syndicated credit facility 2007/2012;

• 5.625% bond from 2007 for EUR 480 million with a term ending on 4 January 2018, issued by HeidelbergCement Finance B.V. and guaranteed by HeidelbergCement AG;

• bonded loans of 16 October 2007 with tranches of EUR 200 million (term ending on 16 October 2012) and EUR 100 million (term ending on 16 October 2014) issued by HeidelbergCement Finance B.V. and guaranteed by HeidelbergCement AG.

The relevant change-of-control clauses allow the contractual partner to demand immediate repayment of the outstanding loans or debenture bonds in the event of a change in the shareholder structure as defined variously below: The syndicated credit facility 2007/2012, the bilateral credit lines for EUR 60 million, the 5.625% bond and the bonded loans give the relevant contractual partner a right of early termination in the event of changes in the shareholder structure that lead to a change in the control of the company. An entity has control if it controls more than 50% of the subscribed capital or more than 50% of the voting rights contractually or by other means, whereby – in connection with a concept of "registered partner" – a change in control to (i) Spohn Cement GmbH or (ii) any partner of Spohn Cement GmbH including successors and legatees of partners of Spohn Cement GmbH and persons who are beneficial owners of shares in Spohn Cement GmbH, or (iii) any legal person or foundation or comparable institution managed by such persons to whom shares in HeidelbergCement AG were transferred by persons mentioned under (i) to (iii) is exempted from the regulation regarding a right of early termination. The bilateral credit lines for EUR 100 million give the contractual partner a right of early termination if a significant change of control of the company occurs which – in the reasonable assessment of the contractual partner – prejudices his interests significantly.

There are no compensation agreements between the company and members of the Managing Board or employees for the event of a takeover bid.

Regional branches

HeidelbergCement AG has no regional branches either domestically or internationally.

Dependent companies report

The Managing Board of HeidelbergCement AG compiled a report on the relationships between HeidelbergCement AG and its associated companies on the one hand and Spohn Cement GmbH and its associated companies on the other, and submitted it to the Supervisory Board in accordance with § 312 of the German Stock Company Act (AktG). A reportable legal transaction took place between HeidelbergCement AG and Spohn Cement GmbH. The Managing Board declares at the end of the report: "We confirm that – under the circumstances known to the Managing Board at the time at which the legal transaction took place – the company received an appropriate compensation for each legal transaction. We further confirm that no measures were taken, or not taken, in favour of or in the interests of Spohn Cement GmbH that adversely affected the company or its associated companies."

Events occurring after the close of the 2007 financial year

On 17 January 2008 (settlement on 25 January 2008), we issued a four-year Eurobond with a volume of EUR 1 billion via our EUR 10 billion European Medium Term Note (EMTN) programme.

On 14 February 2008, the Managing Board of HeidelbergCement AG decided on the conditions for carrying out a cash capital increase from authorised capital, with the consent of the Supervisory Board, following its resolution of 15 January 2008. VEM Vermögensverwaltung GmbH, Dresden, which belongs to the Merckle group, has subscribed for 5 million new shares at the near-market

subscription price of EUR 102.50 per share. The Group received EUR 512.5 million on 19 February from the capital increase.

On 7 August 2007, HeidelbergCement had reached an agreement with the French building materials manufacturer Saint Gobain regarding the sale of maxit Group. The transaction with a value of EUR 2,125 million was completed on 13 March 2008 with the approval of the cartel authorities.

The proceeds from all three measures were used to repay the syndicated loan taken out in connection with the Hanson acquisition.

Management report

Corporate Governance and compliance1)

Statement of compliance and amendments to Corporate Governance Principles

The management and supervisory structures at Heidelberg-Cement comply with the regulations under the German Stock Company Act and the German Codetermination Law. They are described in detail in the company's Articles of Association and the Group's Corporate Governance Principles, based on the German Corporate Governance Code (see www.heidelbergcement.com, About us, Corporate Governance).

The statement of compliance for the reporting year was published on 21 March 2007 and this year's will be published on 17 March 2008. HeidelbergCement meets the recommendations of the German Corporate Governance Code with the following exceptions:

• the Managing Board remuneration is not disclosed on an individualised basis;
• the Chairman of the Supervisory Board does not chair the Personnel Committee;
• there are no age limits for members of the Supervisory Board;
• an application made in February 2008 for the judicial appointment of a Supervisory Board member was not limited in time up to the next Annual General Meeting;
• the Supervisory Board remuneration does not contain a variable component;
• the shareholdings of members of the Supervisory Board are not disclosed.

In March this year, the Group's Corporate Governance Principles will be adapted to the latest amendments of the German Corporate Governance Code. The key issue is the fact that compliance is expressly mentioned for the first time as an independent management task and is included in the Managing Board's catalogue of reporting duties to the Supervisory Board as well as in the Audit Committee's catalogue of responsibilities.

Remuneration of the Managing Board

The remuneration determined by the Supervisory Board for the Managing Board of HeidelbergCement AG is adapted to the size and international activity of the Group, its economic and financial situation, and the amount and structure of the Managing Board remuneration in comparable companies. In addition, the tasks and contribution of the relevant member of the Managing Board, as well as the entire Managing Board, are taken into account. The remuneration is calculated in such a way that it is competitive on the market for highly qualified senior managers and provides an incentive for successful work in a business culture with a clear focus on performance and results.

The remuneration is made up of fixed and variable components. In connection with this, we are consciously aiming for a large variable element as part of the total remuneration in order to reflect, in a clear and direct way, the collective and personal performance of the Managing Board and the performance of the Group. The variable bonus depends on the achievement of specific financial goals set at the beginning of the financial year (target net profit). In addition, a long-term bonus based on the achievement of individually agreed goals is awarded. There are no stock options.

The total remuneration of the Managing Board in 2007 amounted to EUR 25.0 million (previous year: 20.1). EUR 4.0 million (previous year: 3.3) of this was paid in fixed remuneration, EUR 20.2 million (previous year: 16.7) in variable remuneration and EUR 0.8 million (previous year: 0.1) as part of other remuneration elements. The other remuneration elements consist of payments for committee activities at subsidiaries of HeidelbergCement AG

¹⁾ Also the Corporate Governance Report in accordance with point 3.10 of the German Corporate Governance Code, which was adopted by the Managing Board and Supervisory Board on 14 March 2008

and non-cash benefits arising from the provision of company cars. Allocations to provisions for pensions (current service cost) for current members of the Managing Board amounted to EUR 1.7 million (previous year: 1.4). EUR 5.2 million was charged to expense for redundancy payments in connection with the Hanson acquisition. Payments to former members of the Managing Board and their surviving dependants amounted to EUR 2.9 million (previous year: 3.8) in the reporting year. Provisions for pension obligations for former members of the Managing Board amounted to EUR 25.8 million (previous year: 28.1).

When comparing the figures with the total remuneration for 2006, it is important to bear in mind that the number of members of the Managing Board has increased from five to eight as a result of the Hanson acquisition. The variable remuneration elements also include the payment of the long-term bonus agreed for the 2006 and 2007 financial years for five members of the Managing Board. On a comparable basis, the total remuneration of the Managing Board did not increase.

In accordance with § 286, section 5 and § 314, section 2 sentence 2 of the German Commercial Code, the 2006 Annual General Meeting exercised their right to exempt the company from the obligation to publish the remuneration of each individual member of the Managing Board.

In 2007, no loans or advances were granted to members of the Managing Board of HeidelbergCement AG.

Remuneration of the Supervisory Board

The Supervisory Board remuneration is made up of fixed amounts and attendance fees. The dividend-related bonus, paid up to and including 2006, has been discontinued.

Each member receives EUR 21,000, with the Chairman receiving twice this amount and his Deputy one-and-a-half times. The members of the Audit Committee additionally receive EUR 7,000, the members of the Personnel Committee EUR 3,500, and the Chairmen of the Committees twice these respective amounts. In addition, an attendance fee of EUR 1,500 is paid for each meeting personally attended. This gives a total Supervisory Board remuneration of EUR 608,133 (previous year: 1,366,077) (see table below).

The employee representatives on the Supervisory Board remit a significant portion of their Supervisory Board compensation to the recuperation facility for the employees at HeidelbergCement AG and – with the exception of the representative of the senior managers – to the trade union-linked Hans Böckler Foundation.

Remuneration of the Supervisory Board

EUR	2007
Theo Beermann	33,500
Heinz-Josef Eichhorn	24,633
Fritz-Jürgen Heckmann	66,000
Josef Heumann	31,500
Gerhard Hirth	30,000
Rolf Hülstrunk	31,500
Heinz Kimmel	31,500
Max Dietrich Kley	28,500
Hans Georg Kraut	38,000
Senator h.c. Dr. h.c. Adolf Merckle	47,000
Ludwig Merckle	41,500
Tobias Merckle	27,000
Heinz Schirmer	55,500
Eduard Schleicher	43,500
Heinz Schmitt	40,000
Karl Heinz Strobl	38,500
	608,133

Management report

Directors' Dealings and shareholdings of Board members

In the reporting year, the company received the following disclosures in relation to transactions in securities in accordance with § 15a of the German Securities Trading Act (Directors' Dealings):

Directors' Dealings Director	Function	Type of transaction	Transaction date	Number/type of financial instruments traded		Transaction volume (EUR)
Dr. h.c. Adolf Merckle	SB 1)	Purchase *	05/10/2007	3,627,160	Shares	429,999,818.00
Dr. h.c. Adolf Merckle	SB	Sale *	05/31/2007	8,154	Shares	970,569.89
Dr. h.c. Adolf Merckle	SB	Capital increase *	05/29/2007	4,393,749	Shares	527,249,880.00
Dr. h.c. Adolf Merckle	SB	Sale *	06/01/2007	19,072	Shares	2,269,743.65
Dr. h.c. Adolf Merckle	SB	Sale *	06/01/2007	3,600	Shares	428,760.00
Dr. h.c. Adolf Merckle	SB	Sale *	06/04/2007	16,703	Shares	1,984,228.21
Dr. h.c. Adolf Merckle	SB	Sale *	06/08/2007	21,000	Shares	2,361,189.39
Dr. h.c. Adolf Merckle	SB	Sale *	06/06/2007	3,057	Shares	362,921.60
Dr. h.c. Adolf Merckle	SB	Sale *	06/05/2007	12,198	Shares	1,452,760.21
Dr. h.c. Adolf Merckle	SB	Sale *	06/08/2007	23,000	Shares	2,586,064.57
Dr. h.c. Adolf Merckle	SB	Sale *	06/11/2007	40,070	Shares	4,571,987.00
Ludwig Merckle	SB	Sale *	07/11/2007	55,500	Shares	6,135,203.10
Dr. Bernd Scheifele	MB 2)	Purchase	08/07/2007	5,000	Shares	527,200.00
Dr. Bernd Scheifele	MB	Purchase	08/07/2007	5,000	Shares	526,000.00
Dr. Lorenz Näger	MB	Purchase	08/07/2007	385	Shares	40,659.85
Dr. Lorenz Näger	MB	Purchase	08/07/2007	131	Shares	13,836.22
Dr. Lorenz Näger	MB	Purchase	08/07/2007	1,884	Shares	199,138.80
Dr. Lorenz Näger	MB	Purchase	08/07/2007	84	Shares	8,896.44
Dr. h.c. Adolf Merckle	SB	Purchase *	10/01/2007	50,000	Shares	5,169,200.00
Dr. h.c. Adolf Merckle	SB	Purchase *	10/12/2007	30,000	Shares	3,155,250.00
Dr. h.c. Adolf Merckle	SB	Purchase *	11/06/2007	660,616	Shares	71,346,528.00
Dr. h.c. Adolf Merckle	SB	Purchase *	11/06/2007	300,000	Shares	32,400,000.00
Dr. h.c. Adolf Merckle	SB	Sale *	11/06/2007	1,384,616	Shares	149,538,528.00

1) SB = Member of the Supervisory Board 2) MB = Member of the Managing Board

* The marked transactions were carried out by legal persons where the director or a closely connected person holds an executive function or a controlling stake

No member of the Managing Board directly or indirectly holds company shares or options to the extent of more than one per cent of the shares issued by the company. In addition, the total holding of all members of the Managing Board does not exceed one per cent of the shares issued by the company.

Compliance

The increasing complexity of the legal framework for companies calls for independent, comprehensive compliance management. During the reporting year, HeidelbergCement reorganised and further developed its compliance structures:

• The compliance responsibilities are allocated clearly at every level. A newly created independent compliance function at Group level co-ordinates the compliance efforts across the Group.
• A Code of Business Conduct and conduct guidelines for important compliance areas such as anti-corruption and competition legislation give the employees clear and comprehensible instructions for correct external and internal conduct in the performance of their tasks.
• The employees are informed of and familiarised with the content of the regulations by means of information and training measures. The use of interactive e-learning modules is to be extended and should increase the availability of learning content.
• The violation of regulations results in appropriate organisational and disciplinary action. Every employee knows that violations will not be tolerated.
• A compliance hotline offers every employee the opportunity to contact competent advisors with compliancerelated concerns in confidence and, if desired, anonymously.
• Regular and ad-hoc reporting as well as specific compliance audits form the management and supervisory instruments of the new compliance organisation. By producing consistent documentation, we ensure that evidence of the compliance measures taken can be provided if necessary.

Our compliance efforts focus on the area of cartel law. Every employee with market responsibility must be aware and be continually made aware that cartel law violations do not "pay off". The loss of confidence on the part of the customer and the high risk of fines or demands for damages, in some countries even the risk of criminal penalties extending to imprisonment for those personally responsible, outweigh any perceived benefit. In order to convey this message, we have further expanded our range of training courses with compulsory participation for relevant employees.

We also pay particular attention to advisor contracts. There is now a general suspicion surrounding these contracts that they are used to conceal bribes. We have therefore standardised detailed requirements for advisor contracts in a special anti-corruption guideline, which eliminates the risk of concealed cases of corruption.

The Supervisory Board's involvement in the monitoring of the compliance organisation corresponds to the new requirements of the Corporate Governance Code as follows: The Supervisory Board is informed about the compliance situation by the Managing Board as part of the regular reporting. The Audit Committee of the Supervisory Board reviews, on an annual basis, whether the compliance organisation satisfies the legal requirements and recognised best practices.

Management report

Risk management

Entrepreneurial activity is always forward-looking and therefore carries certain risks. HeidelbergCement's aim is not to avoid risks altogether, but to accept risks whenever they are balanced by the opportunities they present. Identifying risks, understanding them and reducing them systematically is the responsibility of the Managing Board and is a key task for all managers.

Our risk system, standardised across the Group, consists of a number of different elements, which are co-ordinated and systematically incorporated in our organisational structures and processes. It is based on the financial resources, operational planning and the risk management strategy established by the Managing Board.

Regular risk reporting at country level, aligned primarily with the geographical organisational structure of the Group, forms the foundation for this system. Appropriate thresholds for risk reporting have been established for the individual countries, taking into account their specific circumstances. The presentation and discussion of the risk report is an integral part of the quarterly meetings between the Managing Board and the national management teams. Short channels of communication and quick decisions allow prompt countermeasures to be taken. The Hanson Group was included in the risk reporting of the 2008–2010 operating plan. Hanson's existing risk reporting was adapted to HeidelbergCement standards as part of the integration, thus allowing uniform risk assessment for the enlarged Group.

The quarterly risk reports from each country are incorporated in the Group's central management reporting. The regular risk reports are supplemented by regulations for ad-hoc reports in the event of risks that arise suddenly or unexpectedly, particularly in connection with political events, developments on the financial markets or natural disasters.

The Group Insurance & Corporate Risk department is responsible for co-ordinating the risk management processes. All significant risks, both quantitative and qualitative, are summarised once a year in a central risk map at Group level.

In addition, the auditors carry out an examination of the risk management system as part of the annual audit to determine whether the monitoring system is capable of identifying in good time issues that could threaten the Group's existence.

After evaluation of the overall risk situation, there are, from today's perspective, deemed to be no identifiable risks, either at present or for the foreseeable future, that could threaten the existence of the Group or other significant risks whose occurrence would lead to a considerable deterioration of the Group's economic position.

Risks that may have a significant impact on our net assets, financial position and results in the 2008 financial year and in the foreseeable future after 2008 are divided into three categories based on the risk catalogue established in the Group.

Financial risks

Our significant financial risks are currency risks, interest rate risks, refinancing risks and credit risks. We manage these risks primarily as part of our ongoing business and financing activities and, when required, by using derivative financial instruments. These risk areas are monitored on a continuous basis by the Group Treasury department in accordance with our internal Group guidelines.

As part of our ongoing risk management, we manage the transaction risk, i.e. the risk of fluctuating prices (e.g. currency exchange rates, interest rates, raw material prices) that may affect the Group's earnings position.

Currency risks arising as a result of transactions with third parties in foreign currency (transaction risks) are hedged using derivative financial instruments with a hedging horizon of up to twelve months. We primarily use currency

swaps and forward exchange contracts for this purpose, as well as currency options in some individual cases. Currency risks arising from intra-Group transactions are not hedged, as the inflows and outflows in the various currency pairs cancel one another out at Group level to a large extent.

In general, we do not hedge currency risks arising from converting the annual accounts of foreign individual companies or subgroups (translation risks). The associated effects have no impact on cash flow, and influences on the Group balance sheet and profit and loss accounts are monitored on a continuous basis.

Interest rate risks exist as a result of potential changes in the market rate of interest and may lead to a change in fair value in the case of fixed interest-bearing financial instruments and to fluctuations in interest payments in the case of variable interest-bearing financial instruments. Interest rate risks are maintained within the parameters set by the Group's Chief Financial Officer. By using financial instruments, primarily interest rate swaps, we are able to hedge both the risk of fluctuating cash flows and the risk of value fluctuations.

Refinancing risks arise if a company is not able to procure the funds necessary to fulfil the obligations entered into in connection with financial instruments. In order to minimise the refinancing risk, we secure access to money and capital markets via a wide selection of financing instruments. We also perform extensive cash management. Besides the cash inflow from operating activities, we maintain sufficient cash and credit lines with first-class banks. In addition to a revolving syndicated credit facility of EUR 1 billion with a term ending in May 2012, other unused bilateral credit lines of a significant amount are available.

Credit risks exist when a contractual partner in a business cannot fulfil its obligations, or at least not within the stipulated period. We minimise the risk position arising from this by diversification and ongoing assessment of the creditworthiness of the contracting parties. Cash is only invested with financial institutions with first-class external rating classifications.

Credit risks from operating activities are monitored continuously as part of our receivables management. We apply strict standards with regard to the creditworthiness of our business partners. In this way – as well as by avoiding concentrations of positions – we are able to minimise the Group's credit risks.

In connection with credit agreements, we agreed to comply with various financial covenants, which were all met in the reporting period. The most important key financial ratios are the ratio of net indebtedness to EBITDA and the interest coverage ratio. Within the framework of the Group plan, compliance with the covenants is monitored consistently, with notification issued to the creditors on a half-yearly basis. In the event of a breach of the covenants, the creditors could, under certain conditions, accelerate corresponding loans irrespective of the contractually agreed terms. Depending on the volume of the relevant loan, this could lead to a refinancing risk for the Group.

Market and strategic risks

In the cement business line, 2007 was characterised by the strengthening of our leading market positions in Eastern Europe and Central Asia with two new construction projects in Russia and Kazakhstan, as well as capacity increases in Hungary and Georgia. Cement is our strategic focus in growth markets. The political risks and market risks connected with our presence in the CIS countries but also in other growth markets like India, China and Africa are, in our opinion, more than compensated for by the strong economic growth and heavy increase in cement consumption expected in these regions. With the sale of our activities in Nigeria and Niger, we improved our risk profile.

Management report

The acquisition of Hanson in the middle of 2007 represents a milestone in the Group's growth strategy: Aggregates now form our second strategic pillar. This focus on the refinement of raw materials not only supplements the existing core business, but also helps to balance risks in mature markets and in North America. The vertical integration of the cement and aggregates activities and the resulting extension of the value chain provide an efficient instrument for handling both international and local market risks. Clear competitive advantages in existing markets and arising from the country diversification are due to a better supply of raw materials, a greater number of locations and the exploitation of potential for cost reduction by means of economies of scale.

We believe that the existing risk of recession in the US is to be viewed in a differentiated way: On the one hand, residential construction is heavily affected by the sub-prime crisis but, on the other hand, the significance of this segment for our activities in the US has decreased considerably as a result of the takeover of Hanson. Only around 25% of our aggregates deliveries pertain to residential construction; the vast majority are used in road construction and other public infrastructural projects. While continued solid growth is expected in public construction, there remains the risk that, in the event of a significant cooling down of the US economy, the previously stable area of commercial construction will be affected. Our other core regions – Europe, Canada, Asia and Australia – continue to present a stable economic environment and economic growth.

Operating risks

The development of energy prices, particularly of fuel, electricity and natural gas, with a historic high having been reached, represents a significant risk for an energy-intensive company such as ours. We are therefore promoting the use of alternative fuels across the Group. Continuing

heavy fluctuations in freight rates and occasionally insufficient transport capacities may have a significant effect on our operating income. With the help of suitable risk management instruments, long-term supply agreements and an optimised purchasing organisation, in which our Group Services companies HC Trading and HC Fuels play a vital role, we are able to mitigate the effects of negative developments and keep possible financial burdens within the set limits. In addition, these risks are adequately taken into account in the 2008 Group operating plan.

Hanson has now been fully integrated into the Group's insurance management system. At the beginning of 2008, we introduced insurance concepts, optimised in terms of content and prices, for the extended Group. The strategic reorientation and restructuring of the insurance programmes initiated at the beginning of 2007 was continued as planned. After a thorough analysis of the loss experience, and taking into account the financial power and new size of the Group, we adjusted the self-insured retentions in an additional Group insurance programme. Synergy effects resulting from Hanson's integration into Heidelberg-Cement, in the form of noticeable savings in risk transfer costs, create a solid basis for smoothing out the higher level of risk volatility. The increase in the maximum compensation limits for natural disasters, including earthquakes, in 2007 will guarantee comprehensive coverage for all existing and new locations in heavily endangered regions of North America and Asia, both now and in the future.

The takeover of Hanson has changed the shape of HeidelbergCement's risk map, particularly in the operational environment. As part of the integration process, we have identified various risks in further areas:

In the course of the integration process, it became clear at an early stage that the departure of employees with key functions in North America and the United Kingdom represented a risk. As a result of bringing forward the decision regarding the reorganisation in these important

markets, clarity was created quickly and an unwanted fluctuation was prevented. In view of pension scheme commitments, an adjustment to provisions for pensions is needed in the United Kingdom.

The detailed implementation schedule until the final completion of the Hanson integration in 2008 contains further optimisation measures to manage and control the identified risks directly connected with the integration.

Besides the operating risks already described, the Hanson Group is subject to particular legal risks, disputes and tax risks relating to former activities. The most significant of the legal risks and disputes are the asbestos-related claims alleging bodily injury and involving various Hanson subsidiaries in the US. The manufacture of asbestos–containing products between 1973 and 1984 was prior to the time that these companies became member of the Hanson Group. In the US, these damage claims are being handled and intensively managed by a team of in-house lawyers together with insurance carriers and external consultants. Adequate provisions have been made on the basis of an extrapolation of the claims and reliable estimates of the development of costs.

Furthermore, there has been a substantial increase in environmental and product liability claims against former and existing participations in the US, which are not connected with the current business activity. There is sometimes insufficient insurance cover for law suits and liability loss claims relating to toxic substances such as coal byproducts or wood preservatives. In the US in particular, our subsidiaries may receive additional penalties over and above the amount of the damages; however, there is a possibility of concluding settlements. Sufficient financial provision has been made for this event.

The cartel proceedings against German cement companies initiated in 2002 are still pending. The initial court decision is not expected until the end of 2008 at the earliest. Likewise, no decision has yet been made regarding the action for damages brought by the Belgian company

Cartel Damage Claims SA, which is based on allegedly inflated cement prices as the result of a cartel between 1993 and 2002. HeidelbergCement believes that it has a good chance of defending itself successfully against the action. Irrespective of this, we will continue to take intensive internal precautions, particularly regular training measures, in order to avoid cartel law violations.

Management report

Employees

At the end of 2007, the number of employees in HeidelbergCement's continuing operations amounted to 67,916 (previous year: 40,983). The increase of 26,933 is largely due to the acquisition of Hanson. As Hanson's activities were only included since 24 August 2007, the annual average of headcounts amounted to 50,370. Expenditure on salaries, social security contributions, pension scheme contributions and social aid rose by 33.3% in comparison with the previous year to EUR 1,694 million (previous year: 1,271). This corresponds to a share in turnover of 15.6% (previous year: 15.9%).

Focus on integration

The key issue in 2007 was the acquisition and integration of Hanson. In recent years, HeidelbergCement has standardised its personnel management and created the necessary conditions for a uniform management culture by means of Group-wide guidelines. On the basis of this and the experience gained from the "win" optimisation programme, we were able to organise the integration process in the area of personnel in a transparent and consistent manner.

Immediately following the due diligence, we analysed Hanson's organisational structure in detail on the basis of our Group standards. In the most important countries, such as the United Kingdom and North America, we also collected details of all employees who could be assigned to the staff functions (for example Finance, Personnel, Purchasing). The results of the two subprojects provided a high level of transparency, a basic prerequisite for the development of the new organisation in the United Kingdom and North America.

Learning from each other creates added value for the Group and for our customers. For this reason, we have formed mixed working groups made up of employees

from HeidelbergCement and Hanson – not just for the technology and the market areas, but also in the Group staff units – whose task was to record in detail and evaluate their most important working processes and key performance indicators. The best practices determined were established as new Group standards. We benefited from Hanson's experience, particularly in the aggregates business.

Filling key functions fairly and openly

Internal management audits involving the top management of HeidelbergCement and Hanson ensured a fair and open process for filling key positions in the United Kingdom and North America. The integration was accelerated considerably by the establishment of the new organisational structures at an early stage and prompt personnel decisions. In the next stage, the structures at subsequent organisational levels are being established by local teams. The process of filling management positions will be characterised by openness and fairness at these levels as well.

Shared corporate culture

We have intensively dealt with the topic of corporate culture. We believe that the cultural fit, taking specific regional characteristics into account, is a fundamental criterion for the success of every international acquisition. In order to determine the core elements that shape our culture, we surveyed managers from HeidelbergCement and Hanson throughout the world. What is striking is the pleasingly high level of agreement in important areas. By introducing a package of measures, we aim to smooth out the existing differences in order to sustainably promote the development of a shared culture on the basis of our existing basic values and our understanding of management and leadership.

It is decisive for our success that the shared corporate culture is practised and demonstrated daily by all managers. The application of Group-wide standards, for example in

the key performance indicators or the method of capital expenditure budgeting are essential for the development of a shared culture. This also applies to the remuneration system, which is geared towards equal performance and results criteria, or performance management, which involves regular assessment of the performances of our managers according to the same standards. Concrete measures are being implemented already or are in the planning stage: For example, significant parts of the remuneration systems for top and senior management were already harmonised on 1 January 2008.

Communication as a factor for success

We have set ourselves the goal of informing all employees and managers continuously and openly about the integration process. By means of letters from the Chairman of the Managing Board, a special newsletter and numerous events, we have conveyed the key messages and provided information on the progress of the integration process. Regular electronic surveys allowed us to examine the perception of the employees involved regarding the individual integration steps. Above all, the results showed us in which areas we had to strengthen our communication and, in particular, the presence of our managers. The tireless and professional commitment of our top managers and integration teams on site made a significant contribution to the hitherto positive perception of the integration among the employees.

Advancement of future executives and management training

All training programmes at HeidelbergCement are tailored to the specific needs of our company. The integration of Hanson was at the forefront of our activities in 2007. Managers and experts from HeidelbergCement and Hanson who co-operated in the due diligence process were prepared for this task in advance by special training in the United Kingdom and North America. Besides businessspecific topics, a focal point of the training was dealing professionally with one another in international teams. This intensive preparation made a decisive contribution to allowing the integration process to be implemented so successfully and smoothly within a short period of time.

The advancement of future executives and management training were consistently continued in 2007. The focal points of the training were cost management, managing effectively, project management and dealing professionally with processes of change.

Succession planning

We are consciously pursuing the approach of filling management positions from among the existing employees as far as possible. The takeover of Hanson opens up additional outstanding potential, which we are incorporating into our talent management: operationally experienced managers, who know our business, with strong cost awareness and a focus on performance and results. Their personal integrity and leadership strength make them ideal candidates for assuming management responsibility in the enlarged Group.

To guarantee future growth, we also rely on young executives, whom we train specifically for assignments in our markets. In 2007, we strengthened our recruiting measures considerably, with a focus on growth markets. We have expanded our university and college marketing worldwide for this purpose. In our recruitment activities at universities, we not only rely on experienced managers but also deliberately use employees who have only been with our Group for a short time. This gives interested applicants an authentic view of HeidelbergCement and the people who work there. We have also pursued this approach with our new university and college marketing brochure, which earned us the gold medal from the renowned "League of American Communications Professionals" at the 2007 Spotlight Awards.

Management report

Sustainable development and environmental precaution

Sustainable development is firmly established in HeidelbergCement's corporate strategy. In the enlarged Group that now includes Hanson, the key areas – operating efficiently, considering the environmental impact of our activities, dealing fairly with customers and partners, and acting responsibly towards employees and at our locations – remain as valid as ever. Dealing carefully with raw material deposits in order to preserve species diversity is becoming increasingly important.

Our consistent work is recognised by our stakeholders. Once again, we were listed in the FTSE4Good this year. A variety of awards for local initiatives and projects is proof of this recognition (www.heidelbergcement.com).

Our concrete goals and measures essentially arise from our commitment to the Cement Sustainability Initiative, which operates under the auspices of the World Business Council for Sustainable Development (WBCSD), and are also brought to us by stakeholders. We published these in 2007 in our sustainability programme, thus advancing the programme that we formulated on a Group-wide basis for the first time in 2002.

By continually expanding our sustainable development management system, we ensure the systematic implementation of goals and measures in our daily business. We pressed ahead with the introduction of environmental management systems in 2007. In Ghana, HeidelbergCement's first African cement plant was certified in accordance with ISO 14001 at the beginning of 2008. Preparations were started for the certification of additional plants, e.g. Kryvyi Rih in Ukraine. At Castle Cement in the United Kingdom, as part of a broad-based study, a variety of possible steps to improve our sustainable activities were

determined on the basis of sustainability indicators. We will analyse the recommendations and draw up an agenda for action.

Preserving natural resources

Reducing the consumption of resources and increasing resource efficiency are the foundations of sustainable business. Therefore, we further intensified the use of alternative materials in 2007. We are particularly proud of our progress in countries where, until now, valuable alternative materials have almost exclusively been brought to dumping sites or simply dumped in an uncontrolled manner. Our dedication is contributing to the establishment of a waste removal industry with the required collection and sorting systems.

In 2007, our substitution rate for alternative raw materials further rose in many countries. We were thus able to continue the positive development of previous years. For example, at Kryvyi Rih Cement in Ukraine, we are replacing the raw material limestone with blast furnace slag to some extent. In the United Kingdom, Hanson is a leader in the production and utilisation of blast furnace slag. In the production of asphalt, waste glass and other materials are used as aggregates.

Last year, we achieved an alternative fuel ratio of 17%. We increased the proportions of biomass considerably in 2007, e.g. in the North American plants in Evansville, Mason City and Redding. In Indonesia, we were able to replace 20% of the fossil fuel in one kiln line with rice husks. In several plants in Belgium, Sweden, Poland and Turkey, we built or extended facilities for the processing, storage and metering of alternative fuels. In two German plants, we have created the necessary regulatory conditions for a substitution rate of 75%.

Reducing emissions to protect the climate

Climate protection has been one of the central topics of HeidelbergCement's sustainability strategy for several years. We have made a commitment to reducing specific net CO2 emissions by 15% by 2010 compared with 1990. The progress made in 2007 shows that we are on the right track for achieving our reduction targets. The exact CO2 data will be available on our website from the middle of the year.

In 2007, we intensively examined the possibility of undertaking further projects to reduce greenhouse gases – in addition to our CDM (Clean Development Mechanism) project in Indonesia – in accordance with the rules of Joint Implementation (JI) and Clean Development Mechanisms as described in the Kyoto Protocol. Several projects were identified and will be started in 2008.

The European Union has set ambitious reduction targets for the second trading period for CO2 certificates (2008–2012). Although we have achieved a significant reduction in CO2 emissions and further reduction measures are planned, the massive shortage of CO2 certificates in some EU countries may mean that we need to purchase additional certificates to some extent.

Reducing environmental pollution

HeidelbergCement is aware of its responsibility for the environment and has set ambitious reduction targets for dust, nitrogen oxides and sulphur oxides. We achieved considerable reductions in dust emissions by means of investments in the Kryvyi Rih plant in the Ukraine and the Radotin plant in the Czech Republic. At SaqCementi/ Georgia, we will install new dedusting filters in the six production lines by the end of 2008. In Tanzania, the emissions will fall considerably as a result of the replacement of the old kiln line: dust by 90%, nitrogen oxides by 45% and sulphur oxides by 65%.

To reduce nitrogen oxides (NOX) we use the SNCR (selective non-catalytic reduction) process, for example. SNCR systems were optimised or installed during the reporting year. In Schelklingen, for example, we improved the efficiency of the SNCR system, thus reducing the NOX emissions. An SNCR system was commissioned in Ennigerloh for the first time. Once again, the emissions data will be available on our website from the middle of the year.

Protecting species diversity

Nature and species conservation have a high priority at HeidelbergCement and Hanson. We want to make use of our opportunities to counteract the worldwide decrease in species diversity, by consistent measures in the extraction of raw materials and the renaturation of quarries. The development of Group-wide guidelines and uniform co-ordination create the foundations for systematic implementation of our goals. In 2007, we continued ongoing projects, e.g. in Slite, Sweden and Górazdze, Poland, and started projects in Ukraine and Georgia. The pilot project "Sustainability indicators for integrated raw material and nature management" developed at the German location Schelklingen is an example to other European locations.

Sustainable building

We also contribute directly to sustainable building with our products. For example, we produce the special cement TioCem®, which is able to absorb pollutants from the air. A series of products is being manufactured with an increasing proportion of recycled material. Hanson has designed a complete prefabricated eco house. The Hanson EcoHouseTM combines short construction times and flexible design with high energy efficiency. The house represents a decisive step on the road to a zeroenergy house.

Management report

Occupational health and safety

In 2007, we started our initiative "Safe work – Healthy life", which will last several years, with the focal areas of analysis, communication and management. For each of these three focal areas, we have identified individual measures, which we will implement in the next few years. Hanson contributes extensive experience in occupational health and safety. The integration has already progressed a long way in this area, and both sides are able to benefit. In 2008, the existing internal expert group, which until now has been largely dominated by the cement business line, will be adapted to the new structure.

In 2007, HeidelbergCement was able to further reduce both the frequency rate and severity of accidents suffered by Group employees; however, the fatality rate increased.

In the future, we want to counteract the increased level of serious accidents suffered by employees of contracting companies by means of specific guidelines.

Social responsibility

HeidelbergCement has made a commitment to numerous projects at its locations in accordance with the established focal areas of Building – Environment – Education. High value is placed on education projects in all countries. This involves co-operation with schools, colleges and universities, with a high level of personal commitment from employees, and even extends to the construction of schools as in Indonesia and Turkey. We support diverse social and cultural projects across the Group with donations of building materials.

Occupational health and safety
	2004	2005	2006	2007
Accident frequency rate 1)	8.1	11.9	6.0	5.6
Accident severity indicator 2)	167	169	169	129
Fatality rate 3)	2.4	2.0	0.4	1.1

1) Number of accidents (with at least one lost working day) suffered by Group employees per 1,000,000 working hours

2) Number of lost working days resulting from accidents suffered by Group employees per 1,000,000 working hours.

3) Number of fatalities of Group employees per 10,000 Group employees

Research and technology

Efficient networks

In the enlarged Group, which now includes Hanson, the range of tasks has expanded, particularly in the area of technology. In 2008, we will set up a Competence Center Materials (CCM) with branches in Europe and the US, to meet the increased requirements in the aggregates, readymixed concrete and asphalt business. The CCM ensures the knowledge transfer between Hanson and Heidelberg-Cement, provides operational support in day-to-day business and assists in the conception and construction of new production plants and the upgrading of existing facilities. Particular emphasis is placed on improving productivity and managing energy efficiently.

The Heidelberg Technology Center (HTC) supports the cement plants in all issues relating to production technology, facility planning and product quality. In addition to the existing branches in Europe and North America, the responsibility of the HTC Asia is being extended to Oceania. The close contact between the cement plants and the HTC means that optimisations and technological developments of existing applications are implemented quickly. In the HTC Europe, Group-wide performance comparisons, systematic networking of experts and innovative studies are being carried out in order to create the conditions needed to identify potential areas for improvement.

The research and development activities for the cement and concrete lines are also combined centrally in the HTC Europe. In close consultation with the local companies, new projects, applications, or research and improvement requirements are identified and quickly implemented in practice. The fundamental research activities involve close co-operation with numerous European universities. The HTC has close contact with leading European researchers in the field of cement science, particularly through the

Nanocem research network. Via our subsidiary Norcem, we are also involved in what is currently the largest national development programme in the field of building materials research, "COIN" (COncrete INnovation), in Norway.

In 2007, the Group's total expenditure for research and technology, involving 388 employees (previous year: 338), amounted to EUR 47 million (previous year: 31).

New construction and expansion of production facilities

Because of the strong cement demand in many countries, one area of focus in 2007 was increasing clinker and cement capacities. Projects were supervised in China, Turkey, Belgium, Estonia and Indonesia. We transferred a production line from our decommissioned plant in Kiefersfelden, Germany, to our Kartuli Cementi cement plant in Georgia. In 2008, the new construction projects in Tula, Russia (Moscow area) and in Shetpe in Western Kazakhstan on the Caspian Sea will be given priority. As a result of the heavy increase in electricity and fuel costs, we converted several cement plants from natural gas to coal in the last year. Coal grinding installations were constructed in record time in our Romanian plants in Bicaz and Deva and the two Georgian plants in Kaspi and Rustavi. Additional plants are being converted at present.

Innovative technologies

We used technology that generates electricity from kiln waste heat for the first time on a large scale in our Chinese plants in Jingyang, Fufeng and Zhujiang. Using waste heat from clinker coolers and kiln exhaust gases and converting water into steam can generate up to 9 MW electrical power. This corresponds to around a third of the total electricity consumption of a cement plant.

An essential goal of our research and development is to minimise the environmental impact of cement production. Besides the use of alternative raw materials and

Management report

fuels, reducing the proportion of clinker in our cement makes a significant contribution to lowering CO2 emissions and preserving natural raw materials. As blast furnace slag – a by-product of steel production – is only available in limited quantities, we are increasingly producing composite cements with other additives such as fly ash and pulverised limestone. We achieved remarkable progress in this area during the last year. In a number of countries, there is intensive collaboration with universities and colleges, public authorities and awarding authorities, allowing us to use composite cements in areas in which, previously, Portland cement varieties without additives were used exclusively. In 2007, HeidelbergCement produced already a total of more than 15 million tonnes of composite cements whose main components were materials other than clinker and blast furnace slag.

Besides methods for reducing and avoiding CO2 emissions, innovative technologies for separating CO2 off from the burning process were also investigated. The CO2 can then be disposed of underground. Through this process, known as sequestration, it is extracted from the atmosphere as a greenhouse gas. There are research collaborations in connection with this concept at the European Cement Research Academy and, via our subsidiary Cementa, in a Swedish research network.

In the Netherlands, ENCI is involved in a research programme called Kringbouw, which will last several years. This project aims to develop processes that allow waste concrete to be completely recycled. In this process, not only are the aggregates recovered, but the previously unusable fine cement stone content is returned into cement production. This creates a completely closed material cycle with no waste.

Concrete purifies the air

What sounds like science fiction becomes a reality with TioCem®. This photocatalytically active cement contains very fine nanoparticles of titanium dioxide. These act on the surface of the building material like the catalytic converter in a car. When activated by sunlight they break down air pollutants such as organic substances and nitrogen oxides into harmless compounds. Initial large-scale tests show that up to 50% of the low-level nitrogen oxides (NOX), the main cause of summer smog in cities, can be broken down in this way. This new building material has strong market potential, particularly in the context of the future European guidelines on air pollution control with tightened limits for NOX pollution.

Various concrete products with TioCem® are ready for the market. These include paving stones from our German joint venture Lithonplus, as well as roof tiles, finishing coatings and facade elements, which will be brought onto the German and European market in 2008. This new building material, which gives cement and concrete completely new functionality, is meeting with a high level of interest from the public and media.

Prospects

The expected future development of HeidelbergCement and the business environment in 2008 and 2009 is described below. As such, please note that this annual report contains forward-looking statements based on the information currently available and the current assumptions and forecasts of the Group management of Heidelberg-Cement. Such statements are naturally subject to risks and uncertainties and may therefore deviate significantly from the actual development. HeidelbergCement undertakes no obligation and furthermore has no intention to update the forward-looking statements made in this annual report.

Economic environment

As a result of the significant economic slowdown in the US and the sustained volatility on the financial markets, the general economic growth forecasts for 2008 were reduced at the beginning of the year. On the basis of a recovery trend in the US, a slight improvement in growth rates is forecast once again for the industrial countries in 2009.

For 2008, the International Monetary Fund anticipates global growth of well over 4 %, after a figure of just under 5% in 2007. This value still indicates overall satisfactory development. Development in emerging and developing countries remains sound. Above-average growth is also forecast in Central and Eastern Europe. In Germany, the general economic growth rate is expected to fall to a level below 2%, after a rise of 2.5% in 2007. The growth forecast for the US is 1.8%, as a hesitant recovery is not anticipated until the end of the year.

Turnover and results

Growth and integration – the main focuses of 2007 – will also define our development in 2008. The major steps towards the integration of Hanson will be completed by

the middle of 2008; responsibility will then pass to the line organisation.

For 2008, we expect a significant rise in turnover. This expectation is due to the full-year inclusion of Hanson as well as organic growth. We anticipate strong contributions once again from our markets in Europe-Central Asia and in the emerging countries – particularly in Asia – of the Asia-Australia-Africa-Mediterranean Group area. In North America, the property market continues to adversely affect construction activities in the US; we expect positive impetus from the infrastructure sector. In Canada, we expect the positive development to continue. The consistent exploitation of synergy potential from the integration of Hanson will contribute to solid growth in results.

In view of further rises in energy prices, we will extend the use of alternative fuels and increase the energy efficiency of our production sites.

Investments

In the cement business line, we are concentrating on major projects in growth markets, such as the construction of new plants in Russia, Kazakhstan and China, and the expansion of production capacities in Turkey and Tanzania. In the aggregates operating line, individual measures to supplement our position in regional markets and projects for securing raw materials are planned.

Expected financing

We will make flexible use of the capital markets once again in 2008 and 2009. As of 31 December 2007, our syndicated loan of EUR 1 billion and extensive bilateral credit lines were undrawn. The EUR 1 billion Euro Commercial Paper Programme is also available to us. In addition, HeidelbergCement has access to the capital market when required via the EUR 10 billion European Medium Term Note (EMTN) programme and is already firmly established on the USD bond market as a result of Hanson's three outstanding USD bonds. The attractive domestic market

Management report

for certificates of indebtedness also offers favourable refinancing options for HeidelbergCement, which can be used opportunistically when required.

Sustainability

We have defined concrete goals in our sustainability programme. Besides climate protection and occupational heath and safety, one focal area is our commitment to preserving biological species diversity. A Group guideline for recultivation and biodiversity is being compiled in order to ensure systematic implementation in the business processes.

Research and technology

In research and technology, the topics of reducing emissions and preserving resources will continue to play a vital role over the next few years. The range of applications of TioCem®, the concrete coating with air purifying properties, will be systematically expanded in collaboration with key customers. In addition, further projects for optimising the processing characteristics and durability of cementbased building materials are in the planning stage.

Employees

The harmonisation of instruments and processes in the area of personnel is supporting the rapid integration of Hanson and contributing to the exploitation of synergies. We will strengthen our talent management concept, with a focus on university and college marketing, in order to cover the growing need for qualified junior employees worldwide.

Estimates for 2008 and 2009 – risks and opportunities

In accordance with the detailed statements, Heidelberg-Cement anticipates a noticeable improvement in turnover and results in the next two years. First and foremost, risks are inherent in the fact that the turbulence on the financial markets is continuing and increasingly spreading to the real economy. The US government's package of economic measures is not expected to have positive effects on American domestic demand until the second half of 2008.

The sustained upturn in most building materials markets presents us with numerous opportunities. The Asian markets, Eastern Europe and Central Asia remain strong. This will undoubtedly benefit HeidelbergCement, the most vertically integrated building materials manufacturer in the world.

Broadening our market reach

On the market

e are a perfect match, in both our product range and our geographical positioning. Together, we are the leading aggregates company worldwide, number three in cement and number two in the ready-mixed concrete sector. Our aim is to fulfil our customers' requirements even more effectively at a local level. For us, being close to the customer is the decisive factor for success. W

HeidelbergCement on the market

Europe-Central Asia

In the Europe-Central Asia Group area, the integration of Hanson is reflected in the substantial expansion of the aggregates and ready-mixed concrete operating lines in Germany, Austria, the Benelux countries and the Czech Republic. The United Kingdom has become considerably more important; as a fully integrated building materials company, we employ around 8,600 people there in cement, aggregates, asphalt, ready-mixed concrete and building products. With the addition of Israel and Spain, the Group area now includes 25 countries. In most of these countries, HeidelbergCement is the market leader in the cement business.

The turnover of the Europe-Central Asia Group area increased by 35.5% in 2007 to EUR 5,732 million (previous year: 4,230). The operational increase amounted to 11.9%.

The construction industry as a growth driver

The upward economic trend weakened only slightly. In particular, most countries in Eastern Europe and Central Asia are showing hardly any decrease in dynamics. Private consumption offset the slowdown in investments and exports. The construction industry remains a growth driver in most countries. In Germany, the growth in construction investments fell to around 2%; residential construction is declining, while infrastructural projects and commercial construction increased. The continuing and robust economic improvement in the United Kingdom lost some momentum in the second half of the year. Residential and commercial property in particular is having a dampening effect on the construction sector, although the first large projects in the run-up to the 2012 Olympic Games in London have begun.

Cement business line

Double-digit growth rates in Eastern Europe and Central Asia

The positive development of the construction industry in most countries of the Europe-Central Asia Group area led to significant increases in the consumption of building materials. Overall, our cement and clinker sales volumes rose by 9.7% to 43.7 million tonnes (previous year: 39.8) and thus accounted for half of the Group sales volumes. Excluding new consolidations such as Georgia, Doncement in Ukraine and Hanson's blast furnace slag activities in the United Kingdom, sales volumes grew by 2.6%. Shipments in the Eastern European and Central Asian countries experienced a significant double-digit increase; domestic demand in Scandinavia and the Benelux countries also

Key data
EURm	2006	2007
Operating income	645	1,026
Investment in tangible fixed assets	263	492
Cement and clinker sales volumes (Mt)	39.8	43.7
Aggregates sales volumes (Mt)	56.8	88.0
Ready-mixed concrete sales vol. (Mm3 )	13.7	17.6
Employees (as of 31 Dec. 2007)	21,809	30,597

On the market

grew strongly. Exports – intended primarily for the North American market – were cut back. Cement sales

volumes in Germany decreased. In the United Kingdom,

they were at previous year's level. We are continuing our expansion in Russia: In Tula (Moscow area) we are building a new cement plant with a capacity of 2 million tonnes. In the Cesla plant near Saint Petersburg, important investment measures were taken to increase the cement capacity. Our new central administration office and new technical competence center in Moscow manage activities in the fast growing Russian market. In Georgia the production line, which we transferred from our decommissioned plant in Kiefersfelden, Germany, will start operation in March. On the Caspian Sea we began construction of a cement plant with a capacity of 2 million tonnes in order to expand our market position to Western Kazakhstan.

Modernisation, capacity expansion and increased use of alternative materials

In 2007, our investments in the cement business line focused on expanding and optimising capacities as well as improving our environmental protection. The use of alternative fuels was intensified. We increased the proportion of alternative fuels significantly, particularly in the cement plant in Slite, Sweden, in the Górazdze plant in Poland and in our Romanian plants. We expanded the alternative fuel facilities in the Paderborn and Schelklingen plants in Germany. In Georgia and Ukraine, filter systems are being replaced, allowing us to considerably reduce dust emissions. In Belgium, the modernisation of the Harmignies white cement plant was completed. In Bosnia, we strengthened our presence in the north of the country, which is experiencing strong growth, by constructing a cement terminal. In the Czech Republic, we started the expansion and modernisation of the Mokra plant. We are also modernising clinker production in the Beremend plant in Hungary.

Aggregates and concrete business line

Substantial expansion of raw material base for aggregates

Aggregates in the form of sand, gravel and crushed rock are used principally for concrete manufacturing or for road maintenance and construction. Following the acquisition of Hanson, this business line has taken on significant proportions as the second pillar of our raw materials activities. In the Europe-Central Asia Group area, this is most strongly reflected in the United Kingdom, with 90 aggregate production sites and substantial permitted raw material deposits. Other locations were added in Spain, Israel, Germany, Austria and the Czech Republic.

Overall, the sales volumes of aggregates in the Europe-Central Asia Group area rose by 55% to 88.0 million tonnes (previous year: 56.8) in the past year. Excluding Hanson, the increase amounted to 15.3%. Our plants in the Benelux countries and Poland recorded high doubledigit growth rates – partly as a result of the 100% inclusion of existing production sites and the commissioning of new ones. Shipments in Sweden and Norway recorded a welcome increase and the sales volumes of our German plants were also higher than in the previous year. The new countries, Israel and Spain, developed rather differently: While sales volumes increased considerably in Israel, there was a decrease in the quantities sold in Spain.

In 2007, we expanded our aggregates activities by capacity increases and the commissioning of new production facilities in Romania and Poland, as well as the purchase of new raw material sites: We produced aggregates in Ukraine, Russia and Kazakhstan for the first time in 2007. Quarrying is expected to begin in Georgia in 2009. In addition, we have modernised our production sites. In the United Kingdom, for example, we carried out four major quarry replants and equipped all our marine aggregate dredgers with new propulsion systems.

Asphalt production using recycled material

The aggregates and concrete business line also includes asphalt production. Asphalt is manufactured from a mixture of graded aggregates, sand, filler and bitumen. Apart from several production sites in Israel, Germany and the Czech Republic, our subsidiary Hanson operates 49 asphalt plants in the United Kingdom. As a result of limited public investments in road maintenance and construction, sales volumes there were only slightly above the previous year's level.

In 2007, five new or replacement asphalt plants were constructed in the United Kingdom and the efficiency of existing facilities was increased. Investments also focused on processing recycled material taken from worn-out roads and increasing the proportion of this material used in production.

Ready-mixed concrete network extended

By purchasing Hanson, HeidelbergCement extended the network of ready-mixed concrete plants in the Europe-Central Asia Group area to Israel, Spain and, in particular, the United Kingdom. With 240 locations, the United Kingdom has the highest density of plants after Germany. In 2007, the total sales volumes of our ready-mixed concrete plants grew by 28.9% to 17.6 million cubic metres (previous year: 13.7). Excluding Hanson, sales volumes increased by 3.2%. With the exception of Hungary, which saw a significant decline, all Eastern European countries recorded double-digit growth rates. The Northern European and Baltic countries experienced pleasing development, while Germany suffered considerable losses as a result of the weak construction activity.

In the past year, we further consolidated our market positions in the Czech Republic, Slovak Republic, Romania, Ukraine, Belgium and the Netherlands by increasing our stakes in participations, making acquisitions and commissioning new plants. In Kazakhstan the first ready-mixed concrete facility will start production in spring; additional plants are in the construction and planning stages. In the United Kingdom, we commissioned 18 new production plants, primarily on major construction sites, and increased the capacities of several plants.

Building products business line

Strong market position in the United Kingdom

The acquisition of Hanson expanded the building products business line, which previously mainly comprised the concrete products operating line in Germany and Sweden and the sand-lime brick operating line in Germany, to include the substantial activities in the United Kingdom. The Group companies are market leaders in bricks and aircrete blocks. Sales volumes of these products were heavily affected by weakening residential construction activity. Leading market positions are held in wall cladding and flooring systems, pavers, roof tiles and chimneys. All products are marketed throughout the United Kingdom. While the concrete products operating line in Germany recorded increases in turnover it declined in Sweden. The sales volumes of our German sand-lime brick plants decreased in the past year.

In 2007, a new precast concrete flooring plant and a new plant for concrete blocks started production in the United Kingdom. Construction work began on a state-ofthe-art production site for bricks. In the past year, Hanson also acquired one of the leading British masonry and bricklaying companies – Irvine Whitlock – with 900 employees. In addition, the business line was expanded following the acquisition of a manufacturer of structural cladding and precast concrete building systems.

On the market

North America

In the United States and Canada – the Group area North America – HeidelbergCement has expanded its market presence considerably with the acquisition of Hanson and is one of the leading manufacturers of aggregates, ready-mixed concrete, cement, asphalt and building products. The building products business line includes pipes, precast concrete parts, concrete paving, roof tiles, and bricks. In order to offer comprehensive customer service, an integrated market approach for cement, aggregates, asphalt and ready-mixed concrete will be pursued in the future in the four regions North, South, West and Canada. The building products are marketed regionally or nationally, depending on the product.

In 2007, turnover rose by 31% to EUR 3,205 million (previous year: 2,447) as a result of the new consolidations. In the national currency, it increased by 42.9% to USD 4,393 million (previous year: 3,074). Excluding the new consolidation of Hanson and exchange rate effects, turnover increased by 3.1%.

Decline in residential construction

At 2.2% in 2007, the growth in the US gross domestic product weakened considerably in comparison with 2.9% in the previous year. A general economic growth rate of 1.8% is expected for 2008. The main cause is the continuing decline in residential construction and the sub-prime crisis, which is also having an adverse effect on consumer confidence. The US Government and Federal Reserve Bank are supporting economic development with reductions in interest rates and an expenditure programme of more than USD 150 billion. Construction activity decreased by 3.2% overall in the US. The decline in residential construction of 18.1% overshadowed slight growth in other construction sectors. For 2008, the US Portland Cement Association PCA expects a contraction of 3.7% in total construction spending.

In Canada, economic growth was only slightly below the previous year's level, at 2.6%. An increase of 1.8% is expected for 2008. While residential construction activity also decreased in Canada, infrastructure and commercial construction remained sound. Overall, construction investment increased slightly in 2007.

Key data
EURm	2006	2007
Operating income	475	460
Investment in tangible fixed assets	149	312
Cement and clinker sales volumes (Mt)	15.0	14.9
Aggregates sales volumes (Mt)	28.9	78.0
Ready-mixed concrete sales vol. (Mm3 )	8.9	9.9
Employees (as of 31 Dec. 2007)	5,773	19,267

Turnover 2007: 3,205 EURm

Cement business line

Production still at record level

In 2007, cement consumption in the US dropped by 10.0% in comparison with the previous year to 114.5 million tonnes. Nevertheless, 24.7 million tonnes had to be imported in order to cover the demand. A further slight decline in cement demand is anticipated for 2008. In Canada, cement consumption rose by 1.9% in comparison with 2006 to 9.7 million tonnes and is expected to increase to 10 million tonnes in 2008. The high level of growth in Canada's western provinces more than compensated for the weakened demand in the east of the country.

Overall, the cement and clinker sales volumes of our plants in North America, which now include a further location in Northern California and a slag grinding plant in Florida as a result of the acquisition of Hanson, performed significantly better than the market: Including the new consolidation of Hanson, they decreased by 0.7% to 14.9 million tonnes (previous year: 15.0), excluding the new consolidation by 4.5%. We benefited in particular from the high level of investment by the energy and mining industries in Canada's Prairie Provinces and for the 2010 Winter Olympics in Vancouver, British Columbia. The decline in construction activity has also led to a fall in the sales volumes of white cement; nevertheless, very high capacity utilisation of the plants itself was achieved.

In order to ensure that our plants continue to be fully utilised, we have significantly restricted imports from other Group areas. Clinker production and kiln uptimes in all our plants reached overall record levels once again. The proportion of alternative fuels – particularly biomass – was greatly increased. This allowed us to compensate at least partially for the increase in fuel costs.

A new clinker cooler was installed in the cement plant in Mason City, Iowa, in 2007. New automation control systems were installed in Mason City, as well as in Evansville, Pennsylvania, and Tehachapi, California. The cement plant in Mitchell, Indiana, is expected to be completely modernised by 2012, with more than double its present production capacity. In order to improve market supply, we have commissioned a new import terminal with a loading capacity of 800,000 tonnes near Seattle, Washington. In addition, we have improved the loading system and rail link of the Union Bridge cement plant in Maryland.

Aggregates and concrete business line

Number of aggregates locations increased fivefold

With the Hanson acquisition, we have increased the number of our aggregates locations from 54 to more than 250. This makes HeidelbergCement one of the largest aggregates producers in North America. The newly added plants are located in 18 US states and Mexico. Sales volumes of aggregates amounted to 78 million tonnes (previous year: 28.9). Excluding Hanson's activities, the figure is 30.4 million tonnes, which corresponds to an increase of 5.4% in comparison with the previous year. Performance in the western provinces of Canada, which are rich in raw materials, was particularly pleasing. Rising demand in the northeast of the US led to an increase in production capacity. New facilities were installed, for example at locations in the Philadelphia area and in the state of New York, as well as in Pennsylvania. At the Santee location in Southern California, the entire production facility was relocated to a new, undeveloped part of the quarry.

New asphalt operating line

Hanson's 40 asphalt production sites are managed by the aggregates and concrete business line in North America. They are located primarily in the northeast of the US – New York and Pennsylvania – as well as in California and Arizona. Sales volumes rose as a result of the ongoing infrastructure projects in the northeast and in California.

On the market

Ready-mixed concrete network expanded

The network of our ready-mixed concrete plants has expanded to around 190 locations. The 55 newly added plants are located in the states of Arizona, California, New York and Ohio. In the reporting year, deliveries of ready-mixed concrete increased by 10.3% to 9.9 million cubic metres (previous year: 8.9). Excluding the new consolidation, the growth amounted to 1.6%. While the pleasing economic development in Western Canada led to increases in demand, we suffered losses in the other market regions.

Building products business line

New business line in North America

Through the acquisition of Hanson, HeidelbergCement has expanded its activities in the building products business line in North America considerably, with around 150 additional plants in the US and Canada. This makes HeidelbergCement the largest producer of bricks in North America and one of the leading manufacturers of pipes and other precast concrete parts. The market organisation varies according to the product: While concrete roof tiles, paving stones and bricks have a national market presence, the activities for pipes and precast concrete parts are structured regionally.

The business line expanded in 2007 as a result of the increase in capacities and the acquisition of new companies. In the heavily populated states of Florida, Texas, Arizona and California in the Southern US and in Ohio, five fully automated concrete pipe plants, some equipped with the latest technology available worldwide, commenced operation in the past year. In addition, several companies in the concrete pipes, precast concrete parts and paving blocks segments were acquired in the US and Canada.

Asia-Australia-Africa-Mediterranean

Following the takeover of Hanson, the combined Group area Asia-Australia-Africa-Mediterranean now includes besides Australia also Malaysia and Singapore. Whereas in Africa we only produce cement, in Asia, Australia and Turkey we also operate in the aggregates and ready-mixed concrete business. As a result of favourable market conditions and the inclusion of Hanson, turnover rose by 46.6% in 2007, reaching EUR 1,909 million (previous year: 1,302). Excluding consolidation and exchange rate effects, turnover increased by 16.9%.

Solid economic development continues

The emerging markets of Asia continued to experience a dynamic economic development in 2007. China's, gross domestic product (GDP) once again showed a doubledigit growth of 11.4%, despite government measures to cool the economy. The Indian economic expansion gathered pace, with an estimated GDP growth rate of 8.5%. In Indonesia, the largest economy in Southeast Asia, GDP growth amounted to around 6.3%. With an estimated GDP increase of 4.3%, Australia recorded its 16th successive year of growth. The Turkish economy experienced a similar level of expansion.

Cement business line

Heavy increase in cement sales volumes

In 2007, HeidelbergCement benefited from lively construction activity in almost all markets of this Group area. Cement and clinker sales volumes rose by 17.8% to 29.4 million tonnes (previous year: 24.9); consolidation effects in India and the expansion of our capacities in China contributed to this increase.

As a result of the takeover of Hanson, HeidelbergCement acquired a 25% participation in Cement Australia Pty Ltd. As this company is consolidated at equity as an

Key data
EURm	2006	2007
Operating income	193	304
Investment in tangible fixed assets	94	234
Cement and clinker sales volumes (Mt)	24.9	29.4
Aggregates sales volumes (Mt)		13.6
Ready-mixed concrete sales vol. (Mm3 )	2.3	5.2
Employees (as of 31 Dec. 2007)	13,353	17,999

Turnover 2007: 1,909 EURm

On the market

associated company, it is not included in the sales volume figures. Cement Australia operates four cement plants and a grinding facility in the states of Queensland and New South Wales on the east coast of Australia, as well as on the island of Tasmania.

Asia

In Indonesia, our subsidiary Indocement benefited from the recovery of private construction and the government's infrastructural projects. National cement consumption rose by 6.6% to 34.2 million tonnes in 2007. Indocement was able to increase its domestic sales volumes of cement by 7.9%. While cement exports fell considerably, clinker deliveries, e.g. to Bangladesh and Brunei, increased strongly. Overall, cement and clinker sales volumes grew by 10.6% to 14.6 million tonnes (previous year: 13.2).

The project started in the previous year to modernise and expand the kiln capacity at the Citeureup plant was completed in the second half of 2007. On top of an additional clinker capacity of 600,000 tonnes, it allows Indocement to use more alternative fuels.

In China, the largest cement market in the world, cement consumption rose to more than 1.3 billion tonnes in 2007. Thanks to the high level of demand for high-quality rotary kiln cement, the sales volumes of our joint venture China Century Cement in the southern province of Guangdong increased by 7.4%. At the end of June 2007, we commissioned the new Jingyang cement plant in the central province of Shaanxi. Like the Fufeng plant, we operate this unit in joint venture with the Chinese cement manufacturer Jidong Cement. The plant, which has a cement capacity of 2.3 million tonnes, primarily supplies the fast growing market around the provincial capital of Xi'an. As a result of the commissioning of the new plant, our joint ventures were able to expand their sales volumes in Shaanxi by 21.5%. Capacity of both the Jingyang and Fufeng plants will be doubled with a second line. Overall, our consolidated cement and clinker sales volumes in China rose by 11.4% to 3.8 million tonnes (previous year: 3.4).

In India, cement consumption is expected to reach 170 million tonnes in the fiscal year 2007 – an 11% increase compared to the previous year. The main growth drivers are residential construction and infrastructure projects. The cement and clinker sales volumes of our three Indian subsidiaries recorded a rise of 180%, mainly as a result of consolidations. Indorama Cement was consolidated as from 1 April 2006 and Mysore Cements as from 1 September 2006. The consolidation of Cochin Cements, a grinding facility in southern India, became effective 1 January 2007.

While our cement deliveries in Bangladesh just exceeded the previous year's level, we achieved a noticeable increase in sales volumes in the Sultanate of Brunei.

Overall, our cement and clinker sales volumes in Asia grew by 19.7% to 22.5 million tonnes (previous year: 18.8). Excluding consolidation effects, the increase amounted to 9.0%.

Africa

In Africa, our cement plants and grinding facilities recorded a significant rise in overall demand in 2007, with varied development in the individual markets. We realised significant volume increases in most countries. The highest increases in sales volumes were achieved by our subsidiaries in Tanzania, Togo and in our main market, Ghana. Total cement sales volumes from our African plants rose by 12.4% to 4.7 million tonnes (previous year: 4.2).

In Tanzania, our second largest market in Africa in terms of sales volumes, we will invest around USD 100 million by 2009 to modernise and expand our Tanzania Portland Cement Company (TPCC) plant. In order to cover the growing cement demand in the coastal metropolis of Dar es Salaam, the cement capacity of TPCC is being increased to around 1.2 million tonnes with a new kiln line and a cement mill.

As part of the reorientation of the Group, we sold our participations in the Cement Company of Northern Nigeria in Nigeria and Société Nigérienne de Cimenterie

in Niger. The sale of these activities also improves HeidelbergCement's risk profile. The transaction was completed in March 2008

Mediterranean

In Turkey, the growth in the construction industry and thus in cement consumption slowed down during 2007. Our joint venture Akçansa performed above the market average. Including the Ladik cement plant, the company increased domestic sales volumes by 18.4 %. Cement exports were cut back by 43% in order to meet domestic demand. Overall, the cement sales volumes grew by 11.6% to 5.4 million tonnes (consolidated: 2.1 million tonnes). With the purchase of the Ladik cement plant in the first half of 2007, Akçansa extended its presence to the central Black Sea region and secured its leading market position in Western Turkey. The market position will be strengthened further by the commissioning of a second production line in the Çanakkale plant, for which construction will soon be completed.

In the United Arab Emirates, we have management contracts with a cement plant in Ras al-Khaimah and a sales company in which we hold a stake of 40%.

Aggregates and concrete business line

Strengthening in Asia and Australia

The consolidation of Hanson's activities in Malaysia and, in particular, Australia significantly strengthens the aggregates and concrete business line in this Group area. HeidelbergCement now operates also in the aggregates business line in Asia and Australia. The sales volumes of aggregates for the Hanson locations included since 24 August 2007 amounted to 13.5 million tonnes; aggregates operations in Turkey and Indonesia added 0.1 million tonnes to this figure.

Deliveries of ready-mixed concrete more than doubled, to 5.2 million cubic metres (previous year: 2.3). Excluding Hanson's ready-mixed concrete activities, the growth amounted to 9.7%.

Asia

Following the acquisition of Hanson, HeidelbergCement now has around 50 ready-mixed concrete facilities and 20 aggregates locations in Malaysia. We also gained 17 Hanson asphalt plants in Malaysia and one in Singapore. Indocement acquired a majority participation in an aggregates company in West Java.

While demand for ready-mixed concrete declined in Malaysia, our deliveries in Indonesia and China increased considerably. Sales volumes of aggregates in Malaysia developed extremely positively.

Australia

HeidelbergCement gained a significant market position in Australia as a result of the acquisition of Hanson: We now operate more than 240 ready-mixed concrete and 60 aggregates plants on this continent. Both the aggregates and the ready-mixed concrete activities recorded pleasing development during the reporting year.

Turkey

Like the domestic sales volumes of cement, Akçansa's ready-mixed concrete sales volumes also experienced a substantial increase. Deliveries of Betonsa ready-mixed concrete reached 3.2 million cubic metres (consolidated: 1.3 million cubic metres), thereby exceeding the record sales volumes of the previous year by a further 10.8%.

On the market

Group Services

Group Services comprises the activities of HC Trading and HC Fuels. HC Trading is one of the largest international trading companies for cement and clinker. HC Fuels manages worldwide trading in fossil fuels, which are sold to Group-owned and third-party companies. The turnover of the two subsidiaries improved by 5.9% in 2007 to EUR 680 million (previous year: 642).

Thanks to the global trading network of HC Trading, which was expanded in 2007 to include a new office in Shanghai, we are able to better control the capacity utilisation of our plants and deliver the surplus from one country to another with higher demand.

While worldwide sea trading in cement and clinker decreased by an estimated 20% in 2007, the trade volume of HC Trading fell by just 6.8% to 11.6 million tonnes (previous year: 12.4). Three major causes contributed to the decline in international trading: Traditional export countries such as Turkey and India have decreased export quantities in order to meet domestic demand; imports to the US, the world's biggest cement importer, fell by around a third and, finally, freight rates rose by 100% in 2007 according to the Baltic Supramax Index.

HC Trading's deliveries to Group companies decreased by 3%, with lower exports to the US offset to some extent by higher deliveries to Africa and Europe. Just under two thirds of the total trade volume was purchased by Group companies; as a result of HC Trading's successful management of the sea freight contracts, the freight costs were 45% below the freight rate index.

Key data
EURm	2006	2007
Turnover	642	680
Operating income	15	15
Employees (as of 31 Dec. 2007)	48	52

Despite high freight rates, HC Trading managed to limit the decrease in shipments to third parties to 13%. They also achieved considerable savings at Group level by efficiently re-routing trading flows.

At the end of 2007, HC Trading became the first international cement and clinker trading company to be awarded the BSI ISO 9002 certification by the British Standards Institute for its high quality management system.

Our subsidiary HC Fuels, based in London, is responsible for the cost-effective purchase of fossil fuels on the international commodity markets. HC Fuels is able to counteract heavy price increases in the fuel sector by means of long-term supply agreements. The company is also entrusted with the task of trading CO2 emission rights on behalf of our Group companies in Europe.

Open communication

HeidelbergCement annual accounts

hanges always lead to uncertainties among employees. In order to counteract this, we have consistently reported openly and regularly on the progress of the integration, right from the beginning. Besides written communication, the personal dedication of the managers is needed in order to provide information and explain decisions directly on site. C

Group profit and loss accounts

Group profit and loss accounts

EUR '000s	Notes	2006 *	2007
Turnover	1	7,997,181	10,862,329
Change in stock and work in progress		18,722	-59,197
Own work capitalised		1,368	2,018
Operating revenue		8,017,271	10,805,150
Other operating income	2	198,885	204,973
Material costs	3	-3,091,257	-4,114,163
Employee and personnel costs	4	-1,270,971	-1,694,260
Other operating expenses	5	-2,064,082	-2,824,005
Operating income before depreciation (OIBD)		1,789,846	2,377,695
Depreciation of tangible fixed assets	6	-451,604	-558,504
Amortisation of intangible assets	6	-9,408	-14,363
Operating income		1,328,834	1,804,828
Additional ordinary income	7	209,662	1,061,762
Additional ordinary expenses	7	-186,224	-218,042
Additional ordinary result		23,438	843,720
Result from associated companies 1)	8	185,112	170,733
Results from other participations	8	-6,861	-4,125
Earnings before interest and taxes (EBIT)		1,530,523	2,815,156
Interest and similar income		58,936	73,663
Interest and similar expenses		-283,384	-539,565
Foreign exchange gains and losses		4,574	3,387
Financial result of puttable minorities		-4,768	-9,192
Profit before tax		1,305,881	2,343,449
Taxes on income	9	-389,586	-369,073
Net income from continuing operations		916,295	1,974,376
Net income from discontinued operations		110,005	144,404
Profit for the financial year		1,026,300	2,118,780
Thereof minority interests		-75,629	-96,998
Thereof Group share in profit		950,671	2,021,782
Thereof proposed dividend	41	144,508	162,500
Earnings per share in EUR (IAS 33)	10
Earnings per share attributable to the parent entity		8.22	17.11
Earnings per share - continuing operations		7.29	15.92
Earnings per share - discontinued operations		0.93	1.19
1) Net result from associated companies		151,955	126,124

* Figures have been adjusted following the presentation of maxit Group as discontinued operation (IFRS 5) and are therefore not comparable with the 2006 annual accounts

HeidelbergCement annual accounts

Group cash flow statement

Group cash flow statement		*
EUR '000s	Notes	2006	2007
Net income from continuing operations		916,295	1,974,376
Taxes on income		389,586	369,073
Interest income/expenses		224,448	465,902
Dividends received	11	36,104	77,803
Interest paid	12	-210,451	-495,574
Taxes paid		-335,378	-406,266
Elimination of non-cash items	13	354,582	-305,803
Cash flow		1,375,186	1,679,511
Changes in operating assets	14	-204,723	321,819
Changes in operating liabilities	15	-49,399	-251,360
Cash flow from operating activities - continuing operations		1,121,064	1,749,970
Cash flow from operating activities - discontinued operations		137,762	161,261
Cash flow from operating activities		1,258,826	1,911,231
Intangible fixed assets		-4,213	-46,641
Tangible fixed assets		-501,177	-992,246
Financial fixed assets		-315,872	-11,735,400
Investments (cash outflow)	16	-821,262	-12,774,287
Proceeds from fixed asset disposals	17	189,167	1,651,204
Cash from changes in consolidation scope	18	71,266	482,693
Cash flow from investing activities - continuing operations		-560,829	-10,640,390
Cash flow from investing activities - discountinued operations		-104,614	-36,121
Cash flow from investing activities		-665,443	-10,676,511
Capital increase		374	527,208
Dividend payments - HeidelbergCement AG	19	-132,938	-144,508
Dividend payments - minority shareholders	20	-33,344	-32,100
Proceeds from bond issuance and loans	21	605,162	13,704,606
Repayment of bonds and loans	22	-1,176,987	-4,543,210
Cash flow from financing activities - continuing operations		-737,733	9,511,996
Cash flow from financing activities - discountinued operations		-30,162	-125,768
Cash flow from financing activities		-767,895	9,386,228
Net change in cash and cash equivalents - continuing operations		-177,498	621,576
Net change in cash and cash equivalents - discontinued operations		2,986	-628
Net change in cash and cash equivalents	23	-174,512	620,948
Effect of exchange rate changes		76,535	5,949
Cash and cash equivalents at 1 January		316,816	218,839
Reclassification of cash and cash equivalents from discontinued operations			-14,151
Cash and cash equivalents at 31 December		218,839	831,585

* Figures have been adjusted following the presentation of maxit Group as discontinued operation (IFRS 5) and are therefore not comparable with the 2006 annual accounts

Group balance sheet

Assets
EUR '000s	Notes	31 Dec. 2006	31 Dec. 2007
Long-term assets
Intangible assets	24	2,802,535 1)	10,943,310
Tangible fixed assets	25
Land and buildings		2,048,053	4,962,660
Plant and machinery		2,916,338	4,481,000
Fixtures, fittings, tools and equipment		197,138	219,237
Payment on account and assets under construction		379,799 1)	771,804
		5,541,328	10,434,701
Financial fixed assets	26
Investments in associates	27	850,561	761,864
Financial investments	28	234,493	152,609
Loans to participations	29	32,052	79,770
Other loans and derivative financial instruments	29	45,416	25,993
		1,162,522	1,020,236
Fixed assets		9,506,385	22,398,247
Deferred taxes	9	132,829 1)	157,408
Other long-term receivables	29	75,932	353,991
Long-term tax assets			19,781
		9,715,146	22,929,427
Short-term assets
Stock	30
Raw materials and consumables		504,088	663,131
Work in progress		91,095	145,247
Finished goods and goods for resale		283,881	741,381
Payments on account		16,970	21,135
		896,034	1,570,894
Receivables and other assets	31
Short-term financial receivables		100,818	189,114
Trade receivables		1,024,255	1,746,691
Other short-term operating receivables		291,497 1)	429,072
Current tax assets		56,516	138,261
		1,473,086	2,503,138
Financial investments and derivative financial instruments	32	19,261	40,968
Cash at bank and in hand	32	214,919	831,585
		2,603,300	4,946,585
Assets held for sale and
discontinued operations			1,406,300
Balance sheet total		12,318,446	29,282,312

1) The retrospective adjustments for the year 2006 due to the application of IFRS 3.62 would decrease goodwill by EUR '000s 7,783, decrease tangible fixed assets by EUR '000s 195, increase deferred tax asset by EUR '000s 10,804, decrease other short-term operating receivables by EUR '000s 528, decrease deferred tax liability by EUR '000s 125, increase trade payables by EUR '000s 249 and increase other short-term operating liabilities by EUR '000s 2,174

HeidelbergCement annual accounts

Liabilities
EUR '000s	Notes	31 Dec. 2006	31 Dec. 2007
Shareholders' equity and minority interests
Subscribed share capital	33	346,974	360,000
Share premium	34	2,462,144	2,973,392
Profit and loss reserve	35	2,845,682	4,761,976
Currency translation		-303,455	-1,098,404
Treasury shares		-2,934
Equity attributable to shareholders		5,348,411	6,996,964
Minority interests	36	479,511	521,861
		5,827,922	7,518,825
Long-term provisions and liabilities
Provisions	37
Provisions for pensions	38	678,906	648,360
Deferred taxes	9	506,583 1)	1,103,934
Other long-term provisions	39	459,597	1,199,235
		1,645,086	2,951,529
Liabilities	40
Debenture loans		748,207	2,312,166
Bank loans		694,061	10,547,677
Other long-term financial liabilities		475,307	389,312
		1,917,575	13,249,155
Other long-term operating liabilities		13,327	140,328
Long-term tax liabilities			287,533
		1,930,902	13,677,016
		3,575,988	16,628,545
Short-term provisions and liabilities
Provisions	39	143,762	280,358
Liabilities	40
Debenture loans (current portion)		672,400	30,140
Bank loans (current portion)		437,943	1,365,933
Other short-term financial liabilities		392,869	921,335
		1,503,212	2,317,408
Trade payables		657,362 1)	1,010,724
Current income taxes payables		72,646	188,548
Other short-term operating liabilities		537,554 1)	979,262
		2,770,774	4,495,942
		2,914,536	4,776,300
Provisions and liabilities associated with assets held for sale and discontinued operations			358,642
Balance sheet total		12,318,446	29,282,312

2) Includes puttable minorities with an amount of EUR '000s 85,977 (previous year: 105,974)

Statement of recognised income and expense

Statement of recognised income and expense
EUR '000s	2006	2007
IAS 39 Financial Instruments: Recognition and Measurement	3,814	-27,584
IAS 19 Employee Benefits	5,053	68,771
IFRS 3 Business Combinations	32,634 1)
IAS 32 Financial Instruments: Presentation	-14,653 1)
Currency translation	-160,786	-823,997
Other consolidation adjustments	2,773	7
Income and expense directly recognised in equity	-131,165	-782,803
Profit for the financial year	1,026,300	2,118,780
Total earnings for the period	895,135	1,335,977
Relating to minority interests	44,318	70,124
Relating to HeidelbergCement AG shareholders	850,817	1,265,853

1) Adjustment of profit and loss reserve and minority interests at 1 January 2006

HeidelbergCement annual accounts

Reconciliation of changes in total equity/Notes to the annual accounts

Reconciliation of changes in total equity	Subscribed	Share	Profit	Currency	Treasury	Equity	Minority	Total
EUR '000s	share capital	premium	and loss reserve	translation	shares	attrib. to shareholders	interests	equity
1 January 2006	296,065	2,512,679	1,999,286	-174,938	-2,936	4,630,156	427,709	5,057,865
Effect of adopting
IFRS 3 Business Combinations			15,777			15,777	16,857	32,634
IAS 32 Financial Instruments:
Presentation							-14,653	-14,653
1 January 2006 (restated)	296,065	2,512,679	2,015,063	-174,938	-2,936	4,645,933	429,913	5,075,846
Profit for the financial year			950,671			950,671	75,629	1,026,300
Capital increase
from issuance of new shares	20	354				374		374
out of revenue reserves	50,889	-50,889
Issuance of treasury shares					2	2		2
Dividends			-132,938			-132,938	-35,062	-168,000
Changes without effects on results
Consolidation adjustments			2,796			2,796	42,523	45,319
IAS 19 Employee Benefits			5,337			5,337	-284	5,053
IAS 39 Financial Instruments:
Recognition and Measurement			4,753			4,753	-939	3,814
Exchange rate				-128,517		-128,517	-32,269	-160,786
31 December 2006	346,974	2,462,144	2,845,682	-303,455	-2,934	5,348,411	479,511	5,827,922
1 January 2007	346,974	2,462,144	2,845,682	-303,455	-2,934	5,348,411	479,511	5,827,922
Profit for the financial year			2,021,782			2,021,782	96,998	2,118,780
Capital increase
from issuance of new shares	13,181	514,027				527,208		527,208
Withdrawal of treasury shares	-155	-2,779			2,934
Dividends			-144,508			-144,508	-34,450	-178,958
Changes without effects on results
Consolidation adjustments			-1,572			-1,572	8,255	6,683
IAS 19 Employee Benefits			68,584			68,584	187	68,771
IAS 39 Financial Instruments:
Recognition and Measurement			-27,992			-27,992	408	-27,584
Exchange rate				-794,949		-794,949	-29,048	-823,997
31 December 2007	360,000	2,973,392	4,761,976	-1,098,404		6,996,964	521,861	7,518,825

Segment reporting/Notes to the annual accounts

Group areas (Primary reporting format under IAS 14 No. 50 ff.)

EURm	Europe-Central Asia		North America
	2006	2007	2006	2007
External turnover	4,135	5,642	2,447	3,205
Inter-Group areas turnover	95	90
Turnover	4,230	5,732	2,447	3,205
Change to previous year in %		35.5%		31.0%
Operating income before depreciation (OIBD)	926	1,346	574	613
as % of turnover	21.9%	23.5%	23.5%	19.1%
Depreciation	-281	-320	-99	-153
Operating income	645	1,026	475	460
as % of turnover	15.3%	17.9%	19.4%	14.3%
Results from participations	162	133	8	31
Impairments	-24	-17
Reversal of impairments	9	2
Other additional result
Additional ordinary result	-15	-15
Earnings before interest and taxes (EBIT)	792	1,144	483	491
Capital expenditures 1)	263	492	149	312
Segment assets 2)	4,444	9,842	1,477	7,959
OIBD as % of segment assets	20.8%	13.7%	38.9%	7.7%
Segment liabilities 3)	1,938	3,127	479	2,015
Number of employees as at 31 December 4)	21,809	30,597	5,773	19,267
Average number of employees 5)	21,820	25,407	6,028	10,523

Business lines (Secondary reporting format under IAS 14 No. 68 ff.) EURm		Cement		Aggregates and concrete
	2006	2007	2006	2007
External turnover	4,721	5,349	2,948	4,455
Inter-business lines turnover	649	702	24	43
Turnover	5,370	6,051	2,972	4,498
Changes to previous year in %		12.7%		51.3%
Capital expenditures 1)	358	590	145	381
Segment assets 2)	6,263	6,466	1,106	13,507

1) Capital expenditures = in the segment columns: tangible fixed assets and intangible assets investments; in the reconciliation column: financial fixed assets investments

2) Segments assets = tangible fixed assets and intangible assets

3) Segment liabilities = liabilities and provisions; the financial liabilities are recorded in the reconciliation column

4) Number of Hanson Group employees as at 31 Dec. 2007 = 27,415

5) Includes Hanson Group employees for four months

HeidelbergCement annual accounts

Asia-Australia Continuing Discontinued Africa-Mediterranean Group Services Reconciliation operations operations 2006 2007 2006 2007 2006 2007 2006 2007 2006 1,221 1,823 195 192 7,997 10,862 1,237 81 86 448 488 -623 -664 1,302 1,909 642 680 -623 -664 7,997 10,862 1,237 46.6% 5.9% 35.8% 274 404 15 16 1,790 2,378 185 21.0% 21.1% 2.4% 2.3% 22.4% 21.9% 14.9% 14.9% -80 -99 -1 -1 -461 -573 -53 -28 193 304 15 15 1,329 1,805 131 14.9% 15.9% 2.3% 2.2% 16.6% 16.6% 10.6% 9 2 178 167 2 -9 -12 -33 -28 8 10 9 47 862 47 862 -9 -3 47 862 23 844 1 193 303 15 15 47 862 1,531 2,815 134 234 11,913 12,952 94 315 821 112 1,530 3,541 38 36 7,489 21,378 855 17.9% 11.4% 40.6% 43.6% 23.9% 11.1% 21.6% 326 648 39 48 3,421 15,567 6,203 21,405 288 13,353 17,999 48 52 40,983 67,916 4,943 13,077 14,389 53 52 40,979 50,370 4,979
							2007
							1,338
							1,338 8.2%
							200
							172 12.8%
							1
							1
							174
							73
							896
							22.3%
							300
							5,218
							5,196

							Continuing		Discontinued
Building products		Group Services		Reconciliation		operations			operations
2006	2007	2006	2007	2006	2007	2006	2007	2006	2007
131	840	197	218			7,997	10,862	1,237	1,338
8	4	446	462	-1,127	-1,211
139	844	642	680	-1,127	-1,211	7,997	10,862	1,237	1,338
	507.1%		5.8%				35.8%		8.2%
3	68			315	11,913	821	12,952	112	73
84	1,370	37	36			7,489	21,378	855	896

Increasing efficiency

he potential for synergies is high: EUR 400 million. By merging the national organisations in North America and the United Kingdom, creating shared service centers and grouping together our purchasing activities, we are achieving significant cost savings. These savings are supplemented by strict benchmarking and the application of best practice solutions in the operational business units. On top of this, we are able to exploit synergies in the markets. T

Notes to the 2007 Group annual accounts

General information

HeidelbergCement AG is a public limited company based in Germany. The company has its registered office in Heidelberg, Germany. Its address is: HeidelbergCement AG, Berliner Strasse 6, 69120 Heidelberg.

The core activities of HeidelbergCement include the production and distribution of cement, aggregates, concrete and building products. Further details are given in the management report.

Accounting and valuation principles

Accounting principles

The Group Annual Accounts of HeidelbergCement AG were prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union and the additional requirements of German Commercial Law pursuant to § 315a, section 1 of the German Commercial Code. All binding IFRSs for the 2007 financial year adopted into European law by the European Commission, as well as the announcements of the International Financial Reporting Interpretations Committee (IFRIC) were applied.

The previous year's figures were determined according to the same principles. The Group Annual Accounts are prepared in Euros. The Annual Accounts show a true and fair view of the financial position and performance of the HeidelbergCement Group.

Where the presentation has been changed, these changes are explained in the notes for each respective item. Explanations of prior year restatements, in accordance with IAS 8.22 are also given in the relevant parts of the text.

In accordance with the internationally accepted structure for group accounts, the profit and loss accounts make up the first part of the reporting. Besides the profit and loss accounts and the balance sheet according to IAS 1 (Presentation of Financial Statements), the annual accounts contain a cash flow statement according to IAS 7 (Cash Flow Statements), a statement of recognised income and expense, a presentation of changes in shareholders' equity and minority interests and a segment report in accordance with the provisions of IAS 14 (Segment Reporting).

For reasons of clarity, some individual items have been combined in the profit and loss accounts and in the balance sheet. Explanations of these items are contained in the notes. To improve the level of information, the additional ordinary result is shown separately on the face of the profit and loss accounts and in the segment report. The profit and loss accounts classify the expenses according to their nature.

In the Group Annual Accounts, certain estimates and assumptions must be made, which affect the amount of assets and liabilities, contingent liabilities and income and expenses accounted for in the reporting period. The actual values may differ from these estimates. At HeidelbergCement, estimates are made particularly for the valuation of assets, liabilities and contingent liabilities acquired through business combinations, as well as in the measurement of provisions for pensions, provisions for claims, environmental risks, recultivation as well as tax risks, the impairment tests according to IAS 36 (Impairment of Assets) and deferred tax assets on loss carried forward.

Consolidation principles

The consolidation is performed using the purchase method in accordance with IFRS 3 (Business Combinations). For business combinations, the acquirer measures all assets, liabilities and contingent liabilities at their fair values at the acquisition date.

The acquiring entity's investment is eliminated against the revalued shareholders' equity of the newly consolidated subsidiary at acquisition date. The residual difference between the fair value of the cost of acquisition and the fair value of acquired assets and liabilities is shown as goodwill if it cannot be recognised as an intangible asset according to IAS 38 (Intangible Assets). Goodwill is tested for impairment according to IAS 36 (Impairment of Assets) at least once a year or upon the occurrence of significant events or changes in circumstances that indicate a present value below the carrying amount. Furthermore, IFRS 3 states that negative goodwill from business combinations must not be recognised in the balance sheet.

The Group Annual Accounts comprise the subsidiaries in which HeidelbergCement is able to govern the financial and operating policies. Normally, this is the case when more than 50 % of the shares are owned. If company law stipulates that a company can be controlled despite a shareholding of less than 50%, this company is included in the Group Annual Accounts as a subsidiary. If a company cannot be controlled with a shareholding of more than 50% as a result of contractual regulations, this company is not included in the Group Annual Accounts as a subsidiary.

The minority interests' share of the shareholders' equity and of the profit or loss for the financial year are shown separately. Minority interests in the shareholders' equity, for which put options or forward contracts exist, interestbearing or non-interest-bearing, and minority interests in German partnerships are shown as a financial liability, at the present value of the repayment sum. The excess of the present value of the liability over the carrying amount of the minority interests is recognised as goodwill. The minority's share of profit for the period is shown in financial results.

Significant joint ventures of the HeidelbergCement Group are included in the Group Annual Accounts as proportionately consolidated companies (IAS 31 Interests in Joint Ventures). Using this method, the Group accounts for its share of the assets, liabilities, income, expenses and cash flows in the corresponding lines of the Group Annual Accounts.

Investments in associates, in cases where HeidelbergCement exerts significant influence on the operating and financial policies of the participation through a shareholding of between 20% and 50% are accounted for in accordance with the equity method (IAS 28 Investments in Associates) in the Group Annual Accounts. Initially, the acquired investments are recognised at cost, with the Group's share of profit or loss being recognised as an increase or decrease to the carrying value of the investment (IAS 28 Investments in Associates). In order to present the results from participations in a more meaningful way, the Group's share of income from associates is shown before taxes on income. The proportionate income tax expense is shown under taxes on income. The net profit from associated companies is shown separately below the profit and loss accounts.

Income and expenses as well as receivables and payables between consolidated companies are eliminated according to IAS 27 (Consolidated and Separate Financial Statements). Profits and losses from intra-Group sales of assets are eliminated, where they have a significant impact. Intra-Group transactions are settled on the basis of market prices and transfer prices that correspond in principle to the prices that would apply to third parties ("arm's length principle"). The consequences of consolidation on income tax are taken into account by recognising deferred taxes.

Application of new accounting standards

The new and revised standards and interpretations of the International Accounting Standards Board (IASB) explained below were applicable for the first time to the financial year ending on 31 December 2007.

• IFRS 7 (Financial Instruments: Disclosures) requires disclosures that allow the users of the Annual Accounts to evaluate the significance of the financial instruments for the financial position and profitability of the Group and the nature and extent of risks arising from these financial instruments. The new disclosures have been reflected throughout the existing Notes to the Accounts. Comparative information is shown accordingly.
• The amendments to IAS 1 (Presentation of Financial Statements) have resulted in additional disclosures regarding the Group's goals, methods and processes for capital management, which are explained on page 131.
• IFRIC 7 (Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflation Economies) governs how comparative information should be restated under IFRS where a country, whose currency is the functional currency of the accounts, becomes a hyperinflationary.
• IFRIC 8 (Scope of IFRS 2) clarifies that IFRS 2 (Share-Based Payment) applies to arrangements where an entity makes share-based payments for apparently nil or inadequate consideration.
• IFRIC 9 (Reassessment of Embedded Derivatives) clarifies that the assessment of whether an embedded derivative is required to be separated from the host contract and accounted for separately may, in principle, only take place at the time the contract is concluded.
• IFRIC 10 (Interim Financial Reporting and Impairment) states that impairment losses recognised in an interim period and for which reversal is prohibited in accordance with IAS 36 or IAS 39 must not be reversed in subsequent interim periods or Annual Accounts.

The first-time application of the above regulations had no impact on the financial position and performance of the Group. The IASB and IFRIC also adopted the standards and interpretations listed below, whose application was not yet

mandatory for the 2007 financial year.

• IFRS 8 Operating Segments (applicable for financial years beginning on or after 1 January 2009);
• IAS 1 Presentation of Financial Statements Revised (applicable for financial years beginning on or after 1 January 2009; not yet adopted into EU law);
• IAS 23 Borrowing Costs Revised (applicable for financial years beginning on or after 1 January 2009; not yet adopted into EU law);
• IFRIC 11 IFRS 2 Group and Treasury Share Transactions (applicable for financial years beginning on or after 1 March 2007);
• IFRIC 12 Service Concession Arrangements (applicable for financial years beginning on or after 1 January 2008; not yet adopted into EU law);
• IFRIC 13 Customer Loyalty Programmes (applicable for financial years beginning on or after 1 July 2008; not yet adopted into EU law);
• IFRIC 14 IAS 19 The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (applicable for financial years beginning on or after 1 January 2008; not yet adopted into EU law).

HeidelbergCement has not opted for early application of these standards and interpretations. Our current assessment is that the first-time application will not have a significant impact on the financial position and performance of the Group.

Finally, in January and February 2008, the following standards were published by the IASB:

• Change to IFRS 2 Share-based Payment
• (applicable for financial years beginning after 1 January 2009; not yet adopted into EU law);
• IFRS 3 Business Combinations (revised 2008)
• (applicable for financial years beginning after 1 July 2009; not yet adopted into EU law);
• IAS 27 Consolidated and Separate Financial Statements (revised 2008) (applicable for financial years beginning after 1 July 2009; not yet adopted into EU law);
• Change to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements (applicable for financial years beginning after 1 January 2009; not yet adopted into EU law).

Recognition and measurement principles

The Group Annual Accounts are generally prepared using the historical cost principle. Exceptions to this are derivative financial instruments and available-for-sale investments, which are measured at fair value. The carrying amounts of hedged assets and liabilities recognised in the balance sheet and hedged by fair value hedge relationships, are adjusted for changes in the fair value attributable to the risk being hedged. These assets and liabilities would otherwise be accounted for at cost. The fundamental recognition and measurement principles are outlined below.

According to IAS 38 (Intangible Assets), an intangible asset is an identifiable non-monetary asset without physical substance. The definition requires an intangible asset to be identifiable in order to distinguish it from goodwill. An asset meets the identifiability criterion if it is separable or arises from contractual or other legal rights. Intangible assets are initially measured at cost. In subsequent periods, intangible assets with a finite useful life are measured at cost less accumulated amortisation and impairment, and intangible assets with an indefinite useful life are measured at cost less impairment. Intangible assets with a finite useful life are amortised using the unit of production or the straight line method.

In Germany, emission rights trading is governed by the Greenhouse Gases Emissions Trading Act (TEHG), 8 July 2004. The provisions of the IFRS require these rights to be accounted for as intangible assets (IAS 38). Emission rights granted free of charge are initially measured at a nominal value of zero. The Group currently believes that sufficient emission rights are available to ensure that no provisions need be recognised for the purchase of additional emission rights. Emission rights acquired for consideration must be accounted for at cost and are subject to write-down in the event of impairment.

In accordance with IFRS 3 (Business Combinations), goodwill arising from business combinations is not amortised. Instead, an impairment test according to IAS 36 (Impairment of Assets) is carried out. In this impairment test, the carrying amount of a group of cash-generating units (CGUs) to which goodwill is allocated is compared to its recoverable amount of this group of CGUs. On the basis of the sales and management structure, a group of cash-generating units is defined generally as a country or region.

As soon as the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in profit or loss to reduce the asset to its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. The fair value less costs to sell is the amount obtainable from the sale of an asset or cash-generating unit in an arm's length transaction less costs of disposal. The value in use is calculated by discounting estimated future cash flows after taxes with a risk-adjusted discount rate (WACC). A cash flow-based method in accordance with IAS 36 was used to determine the impairment. The impairment is determined on the basis of the cash flow estimates for the groups of CGUs. Operational forecasting usually projects a three year period.

Assumptions made in the calculation of impairment of goodwill Cash-generating unit	Carrying amount of goodwill EURm	Weighted average cost of capital after taxes
Europe-Central Asia	4,993.2	7.5%
North America	4,089.3	6.0%
Asia-Australia-Africa-Mediterranean	1,648.2	8.0% - 14.0%
Group Services	33.0	7.5%
Total	10,763.7

In order to calculate the values in use, growth rates between 1.0% and 2.5% were applied into perpetuity.

Tangible fixed assets are accounted for according to IAS 16 (Property, Plant and Equipment) at cost less accumulated depreciation and impairment. The costs of conversion include all costs that can be attributed to the manufacturing process and appropriate amounts of production overheads. Costs for repair and maintenance of tangible fixed assets are expensed as incurred. Capitalisation takes place in exceptional cases, if the measures lead to an extension or significant improvement of the asset. Tangible fixed assets are generally depreciated on a straight-line basis unless, in an individual case, there is another depreciation method more appropriate for the pattern of use. Borrowing costs that can be allocated directly to the construction of large facilities are capitalised as part of the cost.

Stock is valued in accordance with IAS 2 (Inventories) at the lower of cost and net realisable value, using the weighted average cost method. Adequate provisions are made for risks relating to quality and quantity. Besides direct expenses, the costs for finished goods and work in progress include proportional amounts of indirect materials and indirect labour costs, as well as production-related depreciation. Spare parts for equipment are reported under stock or fixed assets.

Long-term service and construction contracts spanning a longer period of time are accounted according to the extent of completion (Percentage of Completion Method).

Provisions for pensions and similar liabilities are determined in accordance with IAS 19 (Employee Benefits) using the Projected Unit Credit Method. Actuarial gains and losses are recognised directly in shareholders' equity in the period in which they arise, taking deferred taxes into account. Detailed explanations concerning the accounting of provision for pensions are provided in Note 38.

Other provisions are recognised in accordance with IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) if, as a result of past events, there are legal or constructive obligations towards third parties that are likely to lead to outflows of assets that can be reliably determined. The provisions are calculated on the basis of the best estimate, taking into account all identifiable risks.

Deferred tax assets and liabilities are recognised in accordance with the liability method (IAS 12 Income Taxes). This means that, with the exception of goodwill arising on consolidation, deferred taxes are recognised for all temporary differences between the IFRS accounts and the tax accounts regardless of the period of time within which these differences are likely to reverse. Furthermore, deferred tax assets are recognised on unused tax losses carried forward, to the extent that the probability of their recovery in subsequent years is sufficiently high. Deferred tax liabilities are considered in connection with undistributed profits from subsidiaries, joint ventures and associates, unless HeidelbergCement is able to control the dividend policy of the companies and no dividend distribution or disposal is anticipated in the foreseeable future. The deferred taxes are measured using the rates of taxation that, as of the balance sheet date, are applicable or have been announced as applicable in the individual countries for the period when the deferred taxes are realised. Deferred tax assets and liabilities are offset if there is an enforceable right to set off current tax assets and liabilities and if they relate to taxes on income levied by the same taxing authority and the Group intends to settle its current tax assets and liabilities on a net basis.

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The financial instruments include non-derivative and derivative financial instruments.

Non-derivative financial instruments are, in principle, measured at fair value when first recognised. These include non-current and current investments, loans and receivables granted and financial liabilities.

Non-current and current investments that are categorised as available for sale in accordance with IAS 39 are regularly measured at fair value if it can be reliably ascertained. This class of instrument is referred to, in the following, as investments available for sale at fair value. The unrealised gains and losses resulting from the subsequent measurement are recognised directly in shareholders' equity. The stock market price at the balance sheet date forms the basis of the fair value. Investments in equity instruments, for which no listed price on an active market exists and whose fair values cannot be reliably determined with justifiable expense, are measured at cost. This class of instrument is referred to in the following as investments available for sale at cost. In the HeidelbergCement Group, this concerns shares in nonconsolidated companies and in other participations that are not listed on the stock exchange. If the fair values of available-for-sale investments fall below the cost and there is objective evidence of a significant or permanent impairment, the accumulated gains and losses previously recognised in the shareholders' equity are recognised directly in profit or loss. The recognition of reversals of impairment in profit or loss for equity instruments held is not permitted.

Loans and receivables are measured at amortised cost, using the effective interest method if applicable, provided that they are not linked with hedging instruments. This concerns long-term loans, interest-bearing receivables, trade receivables and other short-term operating receivables. In principle, the amortised cost in the case of short-term receivables corresponds to the nominal value or the repayment sum. If there is objective evidence of impairment of the loans and receivables, impairment losses are recognised in profit or loss. For trade receivables, the impairment losses are recognised through the use of a provision for doubtful debts account. Reversals are carried out if the reasons for the impairment losses no longer apply. In the past financial year, there were no financial assets (as in the previous year) whose terms have been changed which would otherwise have been overdue or impaired.

Non-derivative financial liabilities are recognised for the first time at the fair value of the consideration received or at the value of the cash received less transaction costs incurred, if applicable. These instruments are subsequently measured at amortised cost using the effective interest method. This includes trade payables, other short-term operating liabilities and short- and long-term financial debts. Long-term financial liabilities are discounted. In principle, the amortised cost in the case of short-term financial liabilities corresponds to the nominal value or the repayment sum.

The Group has not yet made use of the possibility of designating non-derivative financial instruments, when first recognised, as financial instruments at fair value through profit or loss. All non-derivative financial assets are accounted for at the settlement date.

A derivative financial instrument is a contract whose value is dependent on a variable, which usually requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors, and which is settled at a later date. All derivative financial instruments are measured at fair value on the trade date when first recognised. The fair values are also relevant for the subsequent measurement. The fair value of traded derivative financial instruments corresponds to the market value. This value can be positive or negative. For derivative financial instruments, the fair value corresponds to the amount that HeidelbergCement would either receive or have to pay at the reporting date in the case of early termination of this financial instrument. This is calculated on the basis of the relevant exchange and interest rates on the reporting date. Average rates are used for the calculation.

In the HeidelbergCement Group, derivative financial instruments such as currency forwards, currency option contracts, interest rate swaps or interest rate options are, in principle, used to minimise financial risks. The focus is on hedging interest, currency and other market price risks. The market valuations are monitored regularly by the Group Treasury department. No derivative financial instruments are contracted or held for speculative purposes.

Hedge accounting denotes a specific accounting method that modifies the hedged item and hedge of a hedging relationship so that the results of measuring the hedged item or hedge are recognised in the period incurred directly in the shareholders' equity or in profit or loss. Accordingly, hedge accounting is based on matching the offsetting values of the hedge and the hedged item.

For accounting purposes, three types of hedge exist in accordance with IAS 39, provided that the stringent conditions for hedge accounting are fulfilled in each individual case:

– Cash flow hedges

HeidelbergCement hedges the risk of fluctuation in future cash flows. The risk of interest rate fluctuations in the case of variable interest is hedged by means of swaps that convert variable interest payments into fixed interest payments. This method is also used for hedging currency risks of transactions to be executed in foreign currency in the future. The market value of the derivatives used for hedging is shown in the balance sheet. As an offsetting item, the profit and loss reserve is adjusted directly in shareholders' equity to the amount of the effective portion, taking deferred taxes into account. They are only recognised in profit or loss when the future cash flows are realised. The ineffective portion is recognised directly in the profit or loss for the period.

– Fair value hedges

The Group hedges against fluctuations in the fair value of assets or liabilities. In particular, the foreign exchange risk that arises when financial instruments are accounted for in a currency other than the functional currency is hedged. In addition, selectively the fair value of fixed interest-bearing liabilities by means of conversion to variable interest is hedged. In the case of hedging against fluctuations in the fair value of certain balance sheet items (fair value hedges), both the hedge and the hedged share of the risk of the underlying transaction are recognised at fair value. Changes in fair value are recognised in profit or loss.

– Hedging a net investment in a foreign operation

When acquiring foreign companies, in some cases the investment is financed with loans in the functional currency of the foreign company, the settlement of which is neither planned nor likely to occur in the foreseeable future. In these cases, the risk arising on the subsidiary's equity through fluctuations in exchange rates (transaction risk) is designated as a hedge. The loans are converted using the exchange rate applicable at the balance sheet date. As an offsetting item, the foreign currency translation reserves in shareholders' equity are adjusted. Consequently, translation differences are recognised directly in equity until the net investment is sold and are recognised in profit or loss on its disposal.

Derivative financial instruments for which no hedge accounting is used nevertheless represent an effective hedge in an economic sense within the context of the Group strategy. In accordance with IAS 39, these instruments are classified for accounting purposes as held for trading. The changes in the market values of these derivative financial instruments recognised in profit or loss are almost offset by changes in the market values of the hedged items.

Assets held for sale and discontinued operations are shown separately in the balance sheet if they can be sold in their present condition and the sale is probable. Assets classified as held for sale are recognised at the lower of their carrying amount and fair value less costs to sell. According to their classification, provisions and liabilities directly connected with these assets are shown separately on the liability side.

For discontinued operations, the profit after tax is shown in a separate line in the profit and loss accounts. In the cash flow statement, the cash flows are broken down into continuing and discontinued operations. Likewise, the discontinued operations are shown separately in the segment reporting. For discontinued operations, the previous year's values in the profit and loss accounts, the cash flow statement and the segment reporting are restated. The notes include additional details on the assets held for sale and discontinued operations.

Contingent liabilities and assets are current or possible obligations or assets arising from past events and whose existence is due to the occurrence or non-occurrence of one or more uncertain future events that are not within the Group's control. Contingent liabilities are recognised in the balance sheet at their fair value if they have been taken on as a result of a business combination. Contingent assets are only recognised in the balance sheet if they are virtually certain. In so far as an outflow or inflow of economic benefits is possible, details of contingent liabilities and assets are provided in the notes.

Income is recognised if it is sufficiently probable that the Group will receive future economic benefits that can be reliably determined. It is measured at the fair value of the consideration received; sales tax and other duties are not taken into account. Turnover is recognised as soon as the goods have been delivered and the opportunities and risks have passed to the purchaser. Interest income is recognised pro rata temporis using the effective interest method. Dividend income is realised when the legal entitlement to payment arises.

Foreign currency translation

The Annual Accounts of the Group's foreign subsidiaries are translated into Euros according to IAS 21 (The Effects of Changes in Foreign Exchange Rates) using the concept of functional currency. In general, for operating companies, the functional currency is that of the country in which the subsidiary is based, since all foreign subsidiaries are financially, economically and organisationally independent in the conduct of their business. Assets and liabilities are converted using the average exchange rates at the balance sheet date, with shareholders' equity, in contrast, using the historical exchange rates. The translation differences resulting from this are recognised directly in shareholders' equity in the profit and loss reserve until the subsidiary is disposed of. The share of shareholders' equity of the foreign associates is translated using the same method. Income and expenses are translated using average annual exchange rates.

Foreign currency transactions in the companies' individual accounts are accounted for using historical exchange rates. Exchange gains or losses from the measurement of monetary items in foreign currency at the balance sheet date are recognised in profit or loss. Exceptions to the described translation method are exchange differences arising from foreign currency borrowings, to the extent that they are part of a net investment in a foreign operation. In these cases, settlement is neither planned nor likely to occur in the foreseeable future. Translation differences are recognised directly in shareholders' equity until the net investment is sold and are not recognised in profit or loss until its disposal.

The following key exchange rates were used in the translation of the companies' individual accounts into Euros:

Exchange rates		Exchange rates at reporting date		Average annual exchange rates
		31 Dec. 2006	31 Dec. 2007	2006	2007
	Country	EUR	EUR	EUR	EUR
USD	US	1.3196	1.4589	1.2565	1.3707
CAD	Canada	1.5373	1.4536	1.4247	1.4719
CNY	China	10.3015	10.6552	10.0156	10.4252
GBP	Great Britain	0.6737	0.7351	0.6816	0.6848
GEL	Georgia	2.2544	2.3182	2.2232	2.2811
HRK	Croatia	7.3502	7.3310	7.3267	7.3444
IDR	Indonesia	11,902.79	13,741.38	11,485.67	12,560.94
INR	India	58.2076	57.4515	56.7675	56.4360
KZT	Kazakhstan	167.46	176.06	158.28	167.95
NOK	Norway	8.2248	7.9287	8.0507	8.0273
PLN	Poland	3.8279	3.5976	3.8955	3.7881
RON	Romania	3.3808	3.6063	3.5245	3.3363
SEK	Sweden	9.0331	9.4277	9.2579	9.2567
SKK	Slovak Republik	34.4442	33.5707	37.2161	33.8021
CZK	Czech Republic	27.4741	26.5053	28.3324	27.7863
HUF	Hungary	251.0803	252.1417	263.9377	251.3956
TRY	Turkey	1.8672	1.7003	1.8040	1.7875

Consolidation scope

In addition to HeidelbergCement AG, the Group Annual Accounts include 1,189 subsidiaries that have been fully or proportionately consolidated, of which 82 are German and 1,107 are foreign. The newly acquired subgroup of Hanson Limited accounts for a substantial proportion of these, with 724 companies. Proportionately consolidated joint ventures according to IAS 31 accounted for 1.6% of the revenues and 5.5% of the expenses; they contributed 2.4% and 5.8%, respectively, to the consolidated long-term and short-term assets. Furthermore, they account for 1.6% of the liabilities. In comparison with 31 December 2006, the consolidation scope changed as follows:

Companies consolidated at equity

The participation in Vicat S.A., which was included in the Group Annual Accounts as an associate, was sold on 18 June 2007 for a price of EUR 1.4 billion.

Fully consolidated companies

The coming into effect of the scheme of arrangement (share cancellation process) on 23 August 2007 completed the acquisition of 100% of the shares in the British building materials manufacturer Hanson. The cost for the outstanding shares and the existing stock option programmes amounted to EUR 11,696.7 million. This includes transaction costs, particularly for legal and economic advisory services, of EUR 19.9 million. The purchase price was settled with cash and in exchange for the issue of loan notes amounting to EUR 178.1 million.

As a result of the size and complexity of the transaction, the purchase price allocation as at 31 December 2007 is only provisional, as important analysis steps are yet to be completed. The provisional goodwill from the acquisition amounts to EUR 8,940.8 million and is essentially attributable to expected synergies in the areas of administration, purchasing and sales within the context of vertical integration with the existing HeidelbergCement activities as well as the strategically important locations. In the period from 17 May to 23 August 2007, Hanson was included in the Group Annual Accounts according to the equity method with a percentage of 27.6%.

Other additions to the consolidation scope in comparison with 31 December 2006 primarily occurred in the Europe-Central Asia Group area. The following table summarises the changes.

Further additions of fully consolidated companies in 2007			Acquisition
Country / Company	Domicile	%	costs EURm	Goodwill EURm	Included since
Belgium
Beton de Liège SA	Liège	100.0	0.5	0.3	1 Jan.
Germany
TBH Transportbeton Hamburg GmbH & Co. KG	Hamburg	85.0	0.4	0.2	1 Jan.
Heidelberger Beton Frankfurt/ Main GmbH & Co. KG	Frankfurt	100.0	3.7	0.7	1 Jan.
KG Andresen Grundstücksverwaltungs GmbH & Co. KG	Damsdorf	100.0	0.9		1 July
Kieswerke Andresen GmbH	Damsdorf	100.0	3.5	1.2	1 July
Georgia
Limited Liability Company RustavCementi	Rustavi	75.0	3.4	2.6	1 Feb.
Limited Liability Company SaqCementi	Manglis	75.0	68.2	55.8	1 Feb.
Indonesia
PT Gunung Tua Mandiri	Kabupalen Bogor	51.0	3.5		31 July
Latvia
Baltik Saule	Riga	71.4	3.2	1.8	1 Aug.
Lithuania
UAB Gerdukas	Kaunas	70.0	2.4	1.6	1 Oct.
Poland
Bialostockie Kopalnie Surowców Mineralnych Sp. z o.o.	Bialostockie	99.2	2.6	1.6	1 Jan.
Russia
Open Joint Stock Company Gurovo-Beton	Novogurovsky	80.1	7.4	4.6	1 Jan.
Ukraine
Limited Liability Company "Rybalski Quarry"	Dnipropetrovsk	100.0	5.3	1.5	1 Jan.
United States
Aggresource, Ltd	Cleveland	100.0	3.0	1.0	31 Dec.

The provisional goodwill of the other companies consolidated for the first time comprises market shares purchased that cannot be assigned to any other identifiable and separable intangible asset.

The assets and liabilities at the acquisition date and the subsequently earned turnover and profits of companies acquired and included for the first time in the Group Annual Accounts are as follows, in accordance with IFRS 3.67 ff:

Assets contributed by companies consolidated for the first time at acquisition date	Hanson Group		Other companies
EUR '000s	Carrying value	Fair value	Carrying value	Fair value
Long-term assets
Intangible assets	85,648	77,472	464	12,945
Tangible fixed assets	4,559,212	5,572,084	16,967	37,471
Financial fixed assets	396,565	493,761	1,289	1,289
Fixed assets	5,041,425	6,143,317	18,720	51,705
Deferred taxes	-13	-13	228	213
Other long-term receivables	392,047	392,047	130	130
	5,433,459	6,535,351	19,078	52,048
Short-term assets
Stock	726,589	828,294	7,230	7,130
Receivables and other assets	1,500,254	1,499,281	13,960	13,923
Cash at bank and in hand	462,004	462,004	1,694	1,694
	2,688,847	2,789,579	22,884	22,747
Total Assets	8,122,306	9,324,930	41,962	74,795

Liabilities contributed by companies consolidated for the first time at acquisition date	Hanson Group Other companies
EUR '000s	Carrying value	Fair value	Carrying value	Fair value
Long-term provisions and liabilities
Provisions	638,898	863,009	5,987	10,197
Liabilities	1,911,897	2,067,793	7,766	7,852
	2,550,795	2,930,802	13,753	18,049
Short-term provisions and liabilities
Provisions	744,163	1,040,540	938	938
Liabilities	2,557,516	2,557,516	17,071	17,130
	3,301,679	3,598,056	18,009	18,068
Total Liabilities	5,852,474	6,528,858	31,762	36,117

Turnover and profit contributed by companies consolidated for the first time since acquisition date
EUR '000s	Hanson Group	Other	Total
Turnover	2,139,455	117,785	2,257,240
Profit for the financial year	21,843	23,183	45,026
Minority interests	-543	-4,108	-4,651
Group share in profit	21,300	19,075	40,375

For reasons of materiality, we refrained from individual disclosures for the other companies (IFRS 3.68).

Assuming that the companies had been consolidated for the first time on 1 January 2007, the Group turnover would have been EUR 4,192.8 million higher and the profit for the financial year EUR 176.6 million higher.

The net assets of the companies included for the first time in the Group Annual Accounts for the financial year 2006 amounted to EUR 129.4 million. Final adjustments to the business combinations, provisionally accounted in 2006 in accordance with IFRS 3.61 ff. within the 12-month period, of the Indian companies Mysore Cements Ltd., Ammasandra; Indorama Cement Ltd, Navi Mumbai; and Cochin Cements Ltd., Kerala led to an adjustment of EUR 10.1 million in assets and an adjustment of EUR 2.3 million in liabilities. This led to a decrease of EUR 7.8 million in the goodwill recognised in 2006.

Discontinued operations and disposal groups

On 7 August 2007, HeidelbergCement signed an agreement for the sale of maxit Group with the French building materials manufacturer Saint Gobain. The sales price is EUR 2,125 million. The transaction was completed on 13 March 2008, after approval by the competition authorities. By selling maxit, HeidelbergCement is consistently pursuing its strategy of focusing on the refinement of raw materials for its core products cement and aggregates and for downstream concrete activities. The sales proceeds are being used to finance the acquisition of the British building materials manufacturer Hanson. maxit Group, which until now has formed an independent segment, is summarised separately in the profit and loss accounts, in the cash flow statement, in the Group balance sheet and in the segment reporting as a discontinued operation in accordance with IFRS 5.

In addition, HeidelbergCement has signed an agreement for the sale of the participations in the African companies Cement Company of Northern Nigeria in Nigeria and Société Nigérienne de Cimenterie in Niger with the private Nigerian company Damnaz Cement Company Limited. The transaction is expected to be completed in March 2008. By selling these activities, HeidelbergCement is focusing its financial resources on markets in which it can achieve a leading market position and which have an appropriate opportunity/risk ratio.

On 26 January 2008, HeidelbergCement sold its shares in the joint venture United Marine Holdings Limited to the joint venture partner Tarmac Limited, a subsidiary of Anglo American PLC. Following the takeover of Hanson PLC, the former parent company of United Marine Holdings, by HeidelbergCement, the sale had become necessary on the basis of the joint venture agreement. The assets and liabilities of these companies are shown in the balance sheet as disposal groups in accordance with IFRS 5.

The profit after tax of discontinued operations can be broken down as follows:

Profit after tax of discontinued operations
EUR '000s	2006	2007
Revenue	1,249,558	1,372,194
Expenses	-1,116,691	-1,210,443
	132,867	161,751
Income tax expense	-22,862	-17,347
Profit after tax	110,005	144,404

The following overview shows the main groups of assets and liabilities classified as held for sale.

Non-current assets and liabilities held for sale	Discontinued	Disposal
EUR '000s	operations	groups
Intangible assets	403,585	12,333
Tangible fixed assets	492,333	73,539
Other long-term assets	25,899
Inventories	142,246	22,896
Cash and cash equivalents	14,151	12,266
Other short-term assets	197,759	9,293
Non-current assets held for sale	1,275,973	130,327
Provisions for pensions	31,213
Other long-term provisions	80,830	7,092
Long-term liabilities	10,982	268
Short-term provisions	2,372	481
Short-term liabilities	192,100	33,305
Liabilities held for sale	317,497	41,146
Cumulative income/expense recognised directly in equity	5,066	-628

Principal shareholdings – continuing operations

Affiliated companies	since	Equity EURm	Holding in % 1)	Parent company
Europe-Central Asia
Cement
Amvrosiyivske Open Joint Stock Company "Doncement",
Novoamvrosiyivske village/Ukraine	2006	48	98.7	CBRPO
Bukhtarminskaya Cement Company, Zyryanovskiy/Kazakhstan	2005	34	100.0	HCCEE
Carpatcement Holding S.A. (CAR), Bucharest/Romania	1998	275	99.0	HCCEE
Castle Cement Ltd, Birmingham/UK	1999	142	100.0	HCUK
CBR Baltic B.V. (CBRB), 's-Hertogenbosch/Netherlands	1993	350	100.0	HCCEE
CBR International Services S.A., Brussels/Belgium	1993	1,111	99.4	CBR
CBR Portland B.V. (CBRPO), 's-Hertogenbosch/Netherlands	2004	74	100.0	HCCEE
Cementa AB, Danderyd/Sweden	1999	42	100.0	HCSWE
Ceskomoravsk ´y Cement, a.s. (CMC), Beroun/Czech Republic	1991	116	100.0	HCCEE
Civil and Marine Slag Cement Ltd , London/UK2)	2007	104	100.0	CIVHO
Duna-Dráva Cement Kft (DDC), Vác/Hungary	1989	186	50.0	HCCEE
Ekocem Sp. z o.o., Katowice/Poland	2003	110	100.0	GOR
ENCI Holding N.V. (ENCI), 's-Hertogenbosch/Netherlands	1993	356	100.0	HCNETH
Górazdze Cement S.A. (GOR), Chorula/Poland	1993	206	100.0	CBRB
Hanson Ltd. (HANSON), London/UK	2007	13,534	100.0	HCUKEU
HC CAUCAS Holding (HCCAUS), 's-Hertogenbosch/Netherlands	2007	95	75.00	HCCEE
HeidelbergCement Central Europe East Holding B.V. (HCCEE),
's-Hertogenbosch/Netherlands	1993	883	100.0	HC
HeidelbergCement Denmark A/S (HCDEN), Ringsted/Denmark	2005	18	100.0	HCNE
HeidelbergCement International Holding GmbH (HCIH), Heidelberg	1993	700	100.0	HC
HeidelbergCement Netherlands Holding B.V. (HCNETH), 's-Hertogenbosch/Netherlands	2006	659	100.0	HC/CBR
HeidelbergCement Northern Europe AB (HCNE), Malmö/Sweden	1999	355	100.0	HC
HeidelbergCement Norway AS (HCN), Oslo/Norway	1999	146	100.0	HCNE
HeidelbergCement Sweden AB (HCSWE), Limhamn/Sweden	2006	677	100.0	HCNE
HeidelbergCement UK Holding II Limited (HCUKUS), Birmingham/UK	2007	9,848	100.0	HANSON
HeidelbergCement UK Holding Ltd. (HCUKEU), Birmingham/UK	2007	6,400	100.0	HCHLUX
HeidelbergCement UK Ltd. (HCUK), Birmingham/UK	1999	101	100.0	HC
Hüttenzement GmbH, Königs Wusterhausen	2003	15	100.0	HC
Kunda Nordic Cement Corp., Kunda/Estonia	1999	104	75.0	HCSWE
Limited Liability Company SaqCementi, Manglisi village/Georgia	2007	28	75.0	HCCAUS
Norcem AS, Oslo/Norway	1999	121	100.0	HCN
OAO Cesla, Slancy/Russia	2001	26	96.7	HCSWE
Open Joint Stock Company "Kryvyi Rih Cement", Kryvyi Rih/Ukraine	2001	58	99.9	CBRPO
S.A. Cimenteries CBR (CBR), Brussels/Belgium	1993	919	100.0	HCHLUX
Teutonia Zementwerk AG, Hanover	2005	81	94.5	HC
Tvornica Cementa Kakanj d.d., Kakanj/Bosnia-Herzegovina	2000	108	45.6	DDC

Affiliated companies	since	Equity EURm	Holding in % 1)	Parent company
Europe-Central Asia (cont.) Aggregates and concrete
Abetong AB, Växjö/Sweden	1999	13	100.0	EB
Betongindustri AB, Stockholm/Sweden	1999	18	100.0	HCSWE
BLG Betonlieferungsgesellschaft mbH, Munich	1959	7	100.0	HB
BT Poznan sp. z o.o., Janikowo/Poland	1996	2	75.0	GOR
BT Topbeton Sp. z.o.o., Gorzow Wielkopolski/Poland	2002	12	50.0	GOR
Carpat Agregate SA, Bucharest/Romania	2002	13	98.5	CAR
Carpat Beton S.R.L., Bucharest/Romania	2002	29	99.0	CAR
Ceskomoravsk ´y Beton, a.s., Beroun/Czech Republic	2000	34	100.0	CMC
Ceskomoravsk ´y Sterk, a.s. (CST), Brno/Czech Republic	1993	93	100.0	CMC
Euroc Beton AB (EB), Växjö/Sweden	1999	73	100.0	HCSWE
Górazdze Beton sp. z o.o., Chorula/Poland	2003	37	100.0	GOR
Hanson (Israel) Ltd, Ramat Gan/Israel 2)	2007	38	100.0	PIBV
Hanson Aggregates Belgium NV, Zeebrugge/Belgium2)	2007	17	100.0	HOUS
Hanson Aggregates Nederland BV, Maarssen/Netherlands2)	2007	4	100.0	HAHN
Hanson Aggregates Verwaltungs GmbH, Gospiteroda2)	2007	*	100.0	STLUK
Hanson Beton Nederland BV, Maarssen/Netherlands2)	2007	12	100.0	PIBV
Hanson CR, a.s., Veseli nad Luznici/Czech Republic2)	2007	*	100.0	PIBV
Hanson Finance PLC, London/UK2)	2007	1,381	100.0	HHOL
Hanson Germany GmbH & Co. KG, Gospiteroda2)	2007	1	100.0	STLUK
Hanson Hispania, S.A. (HAHIS), Madrid/Spain2)	2007	100	100.0	HPES
Hanson Holdings Ltd (HHOL), London/UK2)	2007	2,993	100.0	HANSON
Hanson Pioneer España, S.L., Madrid/Spain2)	2007	95	100.0	STNIC
Hanson Quarry Products Europe Ltd (HQPE), Bristol/UK2)	2007	53,770	100.0	UDSX
HeidelbergCement Beton A/S, Ringsted/Denmark	2005	12	100.0	HCDEN
Heidelberger Beton GmbH & Co. Bremen KG, Bremen	2005	3	100.0	HB
Heidelberger Beton GmbH (HB), Heidelberg	1959	34	100.0	HC
Heidelberger Beton Rhein-Haardt GmbH & Co. KG, Speyer	1969	2	100.0	HB
Heidelberger Sand und Kies GmbH (HSK), Heidelberg	1960	88	100.0	HC
Houserate Ltd (HOUS), London/UK2)	2007	968	100.0	HANSON
Inter-Beton S.A., Brussels/Belgium	1993	*	99.9	CBR
Limited Liability Company Rybalsky Quarry, Ukraine	2007	4	100.0	CBRPO
MEBIN B.V., 's-Hertogenbosch/Netherlands	1993	48	100.0	ENCI
Norbetong AS, Oslo/Norway	1999	71	100.0	HCN
Opolskie Kopalnie Surowców Mineralnych S.A. (OKSM), Opole/Poland	1998	18	100.0	GOR
Quarzsande GmbH, Eferding/Austria2)	2007	2	100.0	HHGMB
Sand & Grus AB Jehander, Stockholm/Sweden	1999	13	100.0	HCSWE
Sandwerke Biesern GmbH, Penig	1992	12	100.0	HSK
TBG Hungaria-Beton Befektetö, Gyarto es Forgalmazo Kft, Budapest/Hungary	2002	26	50.0	DDC

Affiliated companies	since	Equity EURm	Holding in % 1)	Parent company
Europe-Central Asia (cont.)
Aggregates and concrete
TBG Transportbeton Berlin-Brandenburg GmbH & Co. KG, Hoppegarten	1994	13	100.0	HB
TBG Transportbeton Kurpfalz GmbH & Co. KG, Eppelheim	1970	8	51.1	HB
TBH Transportbeton Hamburg GmbH & Co. KG, Hamburg	2003	*	85.0	HB
Wetterauer Lieferbeton GmbH & Co. KG, Bad Nauheim	2004	1	57.5	HB
Zielonogórskie Kopalnie Surowców Mineralnych S.A., Zielona Góra/Poland	1996	9	100.0	OKSM
Building products
Baustoffwerke Dresden GmbH & Co. KG, Dresden	1991	6	51.0	HKGB
Hanson Building Products Ltd, Stewartby/UK2)	2007	248	100.0	HERX
HeidelbergCement Baustoffe für Geotechnik GmbH & Co. KG, Ennigerloh	1996	6	100.0	HC
Heidelberger Betonelemente GmbH & Co. KG, Chemnitz	1995	9	100.0	HB
Heidelberger Kalksandstein GmbH, Durmersheim	2003	68	100.0	HC
Heidelberger Kalksandstein Grundstücks- u. Beteiligungs GmbH & Co. KG (HKGB), Durmersheim	2003	43	100.0	HSK
HKS Hunziker Kalksandstein AG, Brugg/Switzerland	1992	13	66.7	HKGB
Walhalla Kalk GmbH & Co. KG, Regensburg	1970	9	79.9	HC
Cement Civil and Marine Inc. (CIVMI), Cape Canaveral/US2)	2007	**	100.0	CIVMH
Heidelberg Cement, Inc. (HCI), Wilmington/US	1977	795	100.0	LBV
Lehigh B.V. (LBV), 's-Hertogenbosch/Netherlands	1993	2,174	100.0	HCUKUS
Lehigh Cement Company (LEH), Allentown/US	1977	787	100.0	HCI
Lehigh Cement Limited (LCL), Calgary/Canada	1993	420	100.0	LBV
Lehigh Southwest Cement Company, Concord/US	1993	295	100.0	LEH
Permanente Cement Company, Pleasanton/US2)	2007	**	100.0	HPMC
Aggregates and concrete
Campbell Concrete & Materials, L.P., Cleveland/US	1998	80	100.0	LEH
Continental Florida Materials Inc., Fort Lauderdale/US	1999	109	100.0	LEH
HBMA Holdings, Inc., Irving/US2)	2007	2,371	100.0	HNA
Material Service Corporation, Chicago/US2)	2007	**	100.0	HAH
Mission Valley Rock Co., Sunol/US2)	2007	**	100.0	HAMP
Sherman Industries, Inc., Birmingham/US	1994	81	100.0	LEH
Sinclair General Corporation, Panama/Panama2)	2007	9,109	100.0	HOUS
Building products
Hanson Pipe & Precast, Inc., Irving/US2)	2007	**	100.0	HAC
PaverModule, Inc., Irving/US2)	2007	**	100.0	HAC

Affiliated companies		Equity	Holding 1)	Parent
	since	EURm	in %	company
Asia-Australia-Africa-Mediterranean Cement
Butra HeidelbergCement Sdn. Bhd., Muara/Brunei	2000	5	100.0	ENCI
Cimbenin S.A., Cotonou/Benin	1999	1	55.9	SI
Ciments du Togo S.A., Lomé/Togo	1999	1	99.6	SI
Cochin Cements Ltd., Kottayan Dristrict, Kerala/India	2006	*	98.7	ENCI
Edocement Ltd., Okpella/Nigeria	2002	*	87.0	SI
Ghacem Ltd., Accra/Ghana	1999	35	93.1	SI
HeidelbergCement Bangladesh Ltd., Chittagong/Bangladesh	2000	20	60.7	HC
Indorama Cement Limited, Navi Mumbai/India3)	2006	20	50.0	HCCEE
Liberia Cement Corporation Ltd., Monrovia/Liberia	1999	*	77.1	SI
Mysore Cements Limited, Ammasandra/India	2006	71	54.9	ENCI
PT Indocement Tunggal Prakarsa Tbk., Jakarta/Indonesia	2001	531	65.1	HC
Scancem International ANS (SI), Oslo/Norway	1999	178	100.0	HCNE
Sierra Leone Cement Corp. Ltd., Freetown/Sierra Leone	1999	6	50.0	SI
Société des Ciments du Gabon, Libreville/Gabon	2000	2	75.0	SI
Tanzania Portland Cement Company Ltd., Dar Es Salaam/Tanzania	1999	47	69.3	SI
Aggregates and concrete
Hanson Australia (Holdings) Pty Ltd, Sydney/Australia2)	2007	1,242	100.0	SINC
Hanson Australia Funding Ltd, Sydney/Australia2)	2007	****	100.0	HHOL
Hanson Building Materials (S) Pte Ltd, Singapore2)	2007	1	100.0	HNOH
Hanson Building Materials Malaysia Sdn Bhd, Kuala Lumpur/Malaysia2)	2007	36	100.0	PIHL
Hanson Construction Materials Pty Ltd, Sydney/Australia2)	2007	***	100.0	HAPL
Hanson Finance Australia Ltd, Sydney/Australia2)	2007	***	100.0	HAPL
Hanson Quarry Products (Holdings) Sdn Bhd, Kuala Lumpur/Malaysia2)	2007	87	100.0	PIHL
Pioneer Concrete (Hong Kong) Ltd, Hong Kong/China2)	2007	31	100.0	PICO
Pioneer Concrete Services (Malaysia) Sdn Bhd, Kuala Lumpur/Malaysia2)	2007	*	100.0	PIHL
Pioneer International (Labuan) Sdn Bhd , Kuala Lumpur/Malaysia2)	2007	10	100.0	HOUS
Group Services
HC Trading B.V., 's-Hertogenbosch/Netherlands	1996	15	100.0	CBR

Proportionately consolidated companies	Equity since EURm		Holding in % 1)	Parent company
Europe-Central Asia
Aggregates and concrete
Gralex S.A., Brussels/Belgium	1993	60	50.0	CBR
Heidelberger Beton Rhein-Ruhr GmbH & Co. KG, Recklinghausen4)	2005	*	51.0	HB
Lithonplus GmbH & Co. KG, Lingenfeld4)	2004	20	60.0	HB
Mibau Holding GmbH, Cadenberge	1993	16	50.0	HSK
TBG Transportbeton Franken GmbH & Co. KG, Fürth4)	2004	2	51.0	HB
Trapobet Transportbeton GmbH Kaiserslautern KG, Kaiserslautern	2003	3	50.0	HB
United Marine Holdings Ltd, Chichester/UK2)	2007	44	50.0	HQPE
Building products
Heidelberger Betonelemente GmbH & Co. KG, Baden-Baden4)	2005	3	85.0	HB
North America
Cement
Texas-Lehigh Cement Company, Buda/US	1986	53	50.0	LEH
Asia-Australia-Africa-Mediterranean
Cement
Akçansa Çimento Sanayi ve Ticaret A.S. (AC), Istanbul/Turkey	1996	501	39.7	CBR
China Century Cement Limited, Hong Kong/China	1995	54	50.0	CBR
Jidong Heidelberg (Fufeng) Cement Company Limited, Fufeng/China	2005	38	47.0	CBR
Jidong Heidelberg (Jingyang) Cement Company Limited, Jingyang/China	2006	24	50.0	CBR

Associated companies	since	Equity EURm	Holding in % 1)	Parent company
Europe-Central Asia
Cement
Südbayerisches Portland-Zementwerk Gebr. Wiesböck & Co. GmbH, Rohrdorf	1968	238	32.3	HC
Aggregates and concrete
Kronimus AG, Iffezheim	1991	20	24.9	HC
Midland Quarry Products Ltd, Whitwick/UK2)	2007	81	50.0	HQPE

Associated companies	since	Equity EURm	Holding in % 1)	Parent company
Asia-Australia-Africa-Mediterranean
Cement
Cement Australia Holdings Pty Ltd, North Sydney/Australia2)	2007	251	25.0	HANPL
Aggregates and concrete
Alliance Construction Materials Ltd, Hong Kong/China2)	2007	19	50.0	PICO
Metromix Pty Ltd, Paramatta/Australia2)	2007	17	50.0	HANPL
Pioneer Road Services Pty Ltd, Melbourne/Australia2)	2007	48	50.0	HANPL

1) Ultimate shareholding

2) The consolidated accounts of the subgoup Hanson are based on a management structure which differs from the legal company structure. Therefore stated amounts are based on statutory (partly consolidated) accounts of 2006

3) Due to legal regulations the company is included as a fully consolidated company in the consolidated financial statements even though it is a 50%shareholding 4) Due to legal regulations the company is included as a proportionately consolidated company in the consolidated financial statements even though the shareholding exceeds 50% * Equity below EUR 0.5 million

** Equity of the parent company HBMA Holdings Inc. is reported

*** Equity of the parent company Hanson Australia (Holdings) Pty Ltd is reported

**** Equity of the parent company Hanson Holdings Ltd is reported

The complete list of our shareholdings, accompanied by all legally required information, will be published in the Electronic Federal Gazette. The list of shareholdings also includes a concluding list of all subsidiaries that make use of the exemption from disclosure obligations in accordance with § 264b of the German Commercial Code.

Notes to the segment reporting

Certain key figures are represented by Group areas and business lines in accordance with IAS 14 (Segment Reporting). The segments disclosed correspond to the Group's internal management reporting.

The segmental integration of our new acquisition, Hanson, follows the existing Group areas. The North American Hanson divisions are shown in the Group area "North America". Hanson activities in Austria, Belgium, Czech Republic, Germany, Israel, Netherlands, Spain and UK are reported in the Group area "Europe-Central Asia" whereas the remaining parts of the Hanson Group's activities in Australia, Hong Kong, Malaysia and Singapore are shown in the Group area "Asia-Australia-Africa-Mediterranean".

In accordance with IFRS 5 (Discontinued Operations), maxit Group is no longer included in the 2006/2007 figures of continuing operations.

In the business lines, we combine operating lines that are active in related markets. The "aggregates and concrete" business line is composed of the operating lines aggregates, ready-mixed concrete, concrete products and asphalt. The "building products" business line contains the operating lines bricks, aircrete blocks and pipes. Group Services includes the Group's distribution activities.

Turnover with Group areas or business lines represents the turnover between segments. Transfer prices were determined in accordance with the market prices.

In the "Additional ordinary result" line, impairment losses and reversals of impairment losses have been broken down by segment in accordance with IAS 36.139, in contrast with the previous year's presentation.

Notes to the profit and loss accounts

1 Turnover

Turnover development by Group areas and business lines

EURm	Cement		Aggregates and concrete		Building products		Intra-Group eliminations			Total
	2006	2007	2006	2007	2006	2007	2006	2007	2006	2007
Europe-Central Asia	2,708	3,254	1,662	2,377	139	414	-279	-313	4,230	5,732
North America	1,413	1,318	1,227	1,688		399	-193	-200	2,447	3,205
Asia-Africa-Australia-Mediterranean	1,249	1,479	84	433		31	-31	-34	1,302	1,909
Total	5,370	6,051	2,972	4,498	139	844	-504	-547	7,978	10,846
Group Services									642	680
Inter-Group area turnover									-623	-664
Continuing operations									7,997	10,862

2 Other operating income

Other operating income
EURm	2006	2007
Income from sale of non-core products	71.1	56.8
Rental and leasing income	19.3	23.7
Income from reduction of bad debt provision	4.8	6.2
Gains from sale of assets	19.0	21.0
Write back of provisions	11.8	8.8
Other income	72.9	88.5
	198.9	205.0

Significant non-recurring transactions occurring in the course of ordinary business activity are shown in the line additional ordinary income.

3 Material costs

Material costs
EURm	2006	2007
Raw materials	1,072.8	1,555.3
Supplies, repair materials and packaging	450.5	665.0
Costs of energy	885.2	1,125.6
Goods purchased for resale	627.2	662.2
Miscellaneous	55.6	106.1
	3,091.3	4,114.2

In 2007, material costs increased by EUR 1,022.9 million to EUR 4,114.2 million. Hanson's impact amounted to EUR 848.9 million. Material costs amounted to 37.9%of turnover (previous year: 38.7%)

4 Employees and personnel costs

Personnel costs
EURm	2006	2007
Wages, salaries, social security costs	1,166.7	1,543.8
Costs of retirement benefits	82.8	111.2
Other personnel cost	21.5	39.3
	1,271.0	1,694.3

Personnel costs equalled 15.6%of turnover (previous year: 15.9%). The increase in personnel costs in comparison with the previous year is essentially attributable to the inclusion of Hanson for the first time. The development of expenses for retirement benefits is explained in Note 38 Provisions for pensions.

Annual average number of employees
Categories of employees	2006	2007
Blue-collar employees	31,190	37,946
White-collar employees	14,364	17,221
Apprentices	404	399
	45,958	55,566

During the reporting period, the average number of employees rose by 9,608 compared with the previous year to 55,566 (previous year: 45,958). This includes an average increase of 11,494 employees as a result of new consolidations, with Hanson accounting for 9,191. This is counterbalanced by a decrease of 2,103 in the number of employees as a result of disposals of businesses and capacity adjustment measures. The number of employees of proportionately consolidated companies amounts to 2,555. The number of employees at the end of the year amounts to 73,133. In contrast with the personnel costs, the average 5,196 employees of maxit Group are included in the employee figures.

5 Other operating expenses

Other operating expenses
EURm	2006	2007
Selling and administrative expenses	590.0	771.7
Freight	779.9	1,106.6
Expenses for third party repairs and services	512.0	724.2
Rental and leasing expenses	94.3	134.5
Other expenses	48.6	41.0
Other taxes	39.3	46.0
	2,064.1	2,824.0

The increase in other operating expenses in comparison with the previous year is essentially attributable to the inclusion of Hanson for the first time, which accounted for EUR 524.3 million.

Expenses of EUR 23.2 million (previous year: 15.4) for research and development are not capitalised according to the conditions stated in IAS 38 (Intangible Assets). This amount does not include personnel costs, in contrast with the expenses reported in the Group management report.

Significant non-recurring transactions occurring in the course of ordinary business activities are shown in the additional ordinary expenses.

6 Amortisation and depreciation of intangible assets and tangible fixed assets

Scheduled amortisation and depreciation of intangible assets and tangible fixed assets is determined on the basis of the following Group-wide useful lives:

Useful lives

	Years
Standard software	3
SAP applications	3 to 5
Buildings	20 to 40
Technical equipment and machinery	10 to 20
Plant and office equipment	5 to 10
IT hardware	4 to 5

The following table shows the scheduled amortisation and depreciation of intangible assets with a finite useful life and tangible fixed assets:

Amortisation and depreciation
EURm	2006	2007
Intangible assets	9.4	14.4
Tangible fixed assets	451.6	558.5
	461.0	572.9

Impairment losses are shown in the line additional ordinary income.

7 Additional ordinary result

The additional ordinary result includes transactions which, although occurring in the course of ordinary business activities, are not shown in operating income because they are non-recurring.

Additional ordinary result
EURm	2006	2007
Additional ordinary income
Non-recurring income	200.4	1,052.0
Reversal of impairment losses	9.2	9.8
	209.6	1,061.8
Additional ordinary expenses
Non-recurring expenses	-153.3	-189.7
Impairment losses	-32.9	-28.4
	-186.2	-218.1
	23.4	843.7

The non-recurring income primarily includes profits from fixed asset disposals. Significant items in the 2007 financial year were the profits from the sale of Vicat (EUR 804.8 million) and Florida Rock Industries (EUR 81.9 million).

Reversals of impairment losses were recognised for tangible fixed assets impaired in previous years. One significant item was the reversal of EUR 8.2 million on technical equipment and machinery of Butra HeidelbergCement Sdn. Bhd., Brunei, to the value in use.

The non-recurring expenses include losses from the sale of fixed assets and additions to provisions for restructuring and other risks. The expenses for restructuring and reorganisation amounted to EUR 53.7 million and were incurred particularly in connection with the acquisition of the Hanson Group. Significant items in the previous year were losses from the sale of fixed assets and non-recurring expenses from the measurement of spare parts, which amounted to EUR 53.5 million.

Following the goodwill impairment test, impairment losses to the value in use amounting to EUR 16.2 million (previous year: 13.1) were recognised in the reporting year. The goodwill of Cimbenin S.A., Cotonou/Benin, accounts for EUR 5.0 million of this total and Kerpen & Kerpen GmbH & Co. KG, Ochtendung/Germany for EUR 9.7 million. In connection with the sensitivity analysis, a change of 0.5 percentage points in the average cost of capital would not result in any additional need for goodwill impairment.

Impairment losses to the value in use amounting to EUR 11.4 million (previous year: 19.8) were recognised on tangible fixed assets. Significant items were technical equipment and machinery of Cimgabon S.A, Libreville/Gabon, accounting for EUR 5.5 million, and of S.A. Cimenteries CBR, Brussels/Belgium, accounting for EUR 3.6 million.

8 Results from participations

Results from participations
EURm	2006	2007
Results from associated companies	185.1	170.7
Income from financial investments	12.0	10.7
Impairment of other particpations	-17.9	-9.1
Impairment of loans	-0.9	-5.7
	178.3	166.6

The results from associated companies are measured using the gross amounts, i.e. they are shown before taxes on income. The Group's share of their tax expense is reported under taxes on income.

The results from associated companies are composed particularly of the pro rata profit for the financial year achieved by Vicat S.A. until its sale in June 2007, the equity period's profit of Hanson from 17 May to 23 August 2007 and the results from associated companies of Hanson from 24 August 2007.

The income from financial investments essentially includes profit distributions from corporations and partnerships. To give a detailed overview of impairment losses on financial investments, impairment losses on participations and loans are shown separately. Impairments were recognised as necessary.

9 Taxes on income

Taxes on income of continuing operations
EURm	2006	2007
Current taxes	-361.3	-433.2
Deferred taxes	-28.3	64.1
	-389.6	-369.1

The increase of EUR 71.9 million in current taxes is essentially attributable to the first-time consolidation of Hanson. Adjusted for tax refunds and additional tax payments for previous years, which amounted to EUR 4.2 million (previous year: 3.2), the current taxes increased by EUR 73.0 million. The share of associates' tax expense accounted for under the equity method and amounting to EUR 44.6 million (previous year: 33.1) is included in the current taxes. EUR 0.9 million (previous year: 1.6) of deferred tax assets created in previous years for losses carried forward were released during the reporting year. The reduction in the tax expense for deferred taxes as a result of tax losses not recognised in previous years amounted to EUR 34.8 million (previous year: 4.2) in the financial year.

Tax losses carried forward and tax credits for which no deferred tax is recognised amount to EUR 1,906.0 million (previous year: 602.4). Hanson made a significant contribution to the increase with EUR 1,299.7 million, as it is probable that these losses carried forward (of which a considerable amount has not yet been ascertained) cannot be used in the foreseeable future. Unrecognised deferred tax assets amounted to EUR 431.6 million (previous year: 226.2) in the reporting year.

In 2007, EUR 18.6 million (previous year: 7.4) of deferred taxes, resulting primarily from the recognition of actuarial gains and losses in accordance with IAS 19 and from subsequent purchase price allocations in accordance with IFRS 3.62, were charged directly to shareholders' equity. The provision for deferred taxes increased by EUR 698.7 million (previous year: 30.7) as a result of changes in the scope of consolidation, particularly the consolidation of Hanson for the first time; the increase was recognised directly in shareholder's equity.

In accordance with IAS 12, deferred taxes must be recognised on the difference between the share of shareholders' equity of a subsidiary recognised in the Group balance sheet and the carrying amount for this subsidiary in the parent company's tax accounts, if realisation is more likely than not (Outside Basis Differences). On the basis of the regulations for the application of IAS 12.39, deferred taxes of EUR 1.2 million (previous year: 12.5) were recognised on planned future dividends. No deferred tax liabilities were recognised for outside basis differences from the undistributed profits of the subsidiaries of HeidelbergCement AG amounting to EUR 1.4 billion (previous year: 1.3), as no further dividend payments are planned.

To measure deferred taxes, an average income tax rate of 28.78%is applied for the domestic companies in accordance with the 2008 German Business Tax Reform Act (Unternehmensteuerreformgesetz).

Tax reconciliation of continuing operations
EURm	2006	2007
Profit before tax	1,305.9	2,343.4
Impairment of goodwill	-13.1	-16.2
Profit before tax and impairment of goodwill	1,319.0	2,359.6
Theoretical tax expense at 30.7%(2006: 30.0%) 1)	-395.3	-724.9
Changes to the theoretical tax expense due to:
Tax-free earnings (+) and non deductible expenses (-) 2)	-5.6	340.2
Tax increase (-), reduction (+) for prior years	3.2	4.2
Changes in tax rate	8.1	11.4
Taxes on income	-389.6	-369.1

1) Weighted average tax rate

2) Including writedown of deferred tax assets set up in prior years and not recognised deferred tax assets for the current year

Deferred tax by type of temporary difference
EURm	2007
Deferred tax assets
Fixed assets	20.3
Other assets	35.6
Provisions and liabilities	626.3
Carryforward of unused tax losses and tax credits	127.8
Gross amount	810.0
Netting	-652.6
	157.4
Deferred tax liabilities
Fixed assets	1,599.1
Other assets	98.1
Provisions and liabilities	59.3
Gross amount	1,756.5
Netting	-652.6
	1,103.9

In 2006, the Group balance sheet showed deferred tax assets of EUR 132.8 million and deferred tax liabilities of EUR 506.6 million. The distribution of the balance sheet items is essentially unchanged in comparison with the previous year.

10 Earnings per share (Basic Earnings per Share IAS 33.10)

Earnings per share
EURm	2006	2007
Profit for the financial year	1,026.3	2,118.8
Minority interests	75.6	97.0
Group share	950.7	2,021.8
Number of shares in '000s (weighted average)	115,602	118,177
Earnings per share in EUR attributable to the parent entity	8.22	17.11
Net income from continuing operations attributable to the parent entity	843.7	1,880.7
Earnings per share in EUR – continuing operations	7.29	15.92
Net income from discontinued operations attributable to the parent entity	107.0	141.1
Earnings per share in EUR – discontinued operations	0.93	1.19

The basic earnings per share are calculated in accordance with IAS 33 (Earnings per Share), by dividing the Group share in profit for the financial year by the weighted average of the number of issued shares.

The diluted earnings per share indicator takes into account not only currently issued shares but also shares potentially available through option rights. The earnings per share were not diluted in the reporting period in accordance with IAS 33.24.

Notes to the cash flow statement

The cash flow statement shows how the Group's cash changed through inflows and outflows during the reporting year. Cash flows in this statement are categorised according to operating, investing and financing activities (IAS 7 Cash Flow Statements). Since the 2007 Annual Accounts, the cash flow statement has been based on the profit after tax from continuing operations. The previous year's values have been restated.

The net cash from operating activities is calculated as profit after tax from continuing operations adjusted for taxes on income, net interest and non-cash items and including cash flows from dividends received, interest and taxes paid, and changes in operating assets and liabilities.

Net cash used in investing activities includes cash outflow for capital expenditures, cash inflow from disposals and changes in the consolidation scope.

Net cash used in financing activities mainly results from changes in capital, dividend payments as well as proceeds from and repayments of bonds and loans. The following notes are provided:

11 Dividends received

The receipt of dividends from non-consolidated companies is shown here.

12 Interest paid

In accordance with IAS 7 (Cash Flow Statements), the interest paid must be shown separately. These amounts are calculated by adjusting the interest expenses for accruals and deferrals recognised in the balance sheet.

13 Elimination of non-cash items

The non-cash items mainly include depreciation and amortisation as well as changes in long-term provisions. In addition, the non-cash portion of the deconsolidation gain from the sale of Vicat S.A. was taken into account in the reporting year. Furthermore, the profits were adjusted for the profits and losses from fixed asset disposals. The total amount earned from these disposals is shown under proceeds from fixed asset disposals in investing activities.

14 Changes in operating assets

Operating assets consist of stock, trade receivables and other assets used in operating activities.

15 Changes in operating liabilities

Operating liabilities include short-term provisions, trade payables and other liabilities from operating activities. Changes in operating liabilities are attributable to the decrease in trade payables as well as other operating liabilities.

16 Investments (cash outflow)

The investments relate to cash outflows for intangible assets and tangible and financial fixed assets. They differ from additions in the fixed-asset movement schedule, which shows non-cash items as additions, for example. Furthermore, purchases of shares of consolidated companies are shown in the cash flow statement under investments in financial fixed assets while such acquisitions do not appear as additions in the fixed-asset movement schedule. Below is a list of the significant cash payments in connection with consolidated companies.

• 100%share of Hanson Limited, London/United Kingdom, for EUR 11,696.7 million (of which EUR 11,518.6 million affects cash flow);
• 75%share of CaucasusCement Holding B.V., 's-Hertogenbosch/Netherlands, for EUR 71.6 million;
• 4.3%share of Mysore Cements Ltd., Ammasandra/India, for EUR 15.6 million;
• 14.9%share of HC Central Asia B.V., 's-Hertogenbosch/Netherlands, for EUR 12.2 million;
• 6.5%share of Amvrosiyivske Open Joint Stock Company "Doncement", Novoamrvosiyivske/Ukraine, for EUR 5.3 million;
• 29.1%share of Open Joint Stock Company Gurovo-Beton, Tula Oblast/Russia, for EUR 3.8 million;
• 100%share of Kieswerke Andresen GmbH, Damsdorf/Germany, for EUR 3.5 million;
• 51.0%share of PT Gunung Tua Mandiri, Kabupalen Bogor/Indonesia, for EUR 3.4 million;
• 71.4%share of SIA Baltik Saule, Riga/Latvia, for EUR 3.2 million;
• 70%share of UAB Gerdukas, Kaunas/Lithuania, for EUR 2.4 million;
• 0.43%share of CBR International Services, Brussels/Belgium for EUR 2.3 million;
• 100%share of Aggresource Limited, Cleveland/US, for EUR 2.0 million (a deposit of EUR 1.0 million was already paid in 2006).

The additions of investments in associates and other long-term investments are explained in Notes 27 and 28.

17 Proceeds from fixed asset disposals

Cash flows from the sale of tangible and financial fixed assets and the repayment of loans are shown here. The following list shows the significant cash sales of financial fixed assets in the reporting year:

• Vicat S.A., France for EUR 1,394.9 million;
• Florida Rock Industries, Inc., US for EUR 87.8 million;
• Reci Industry Aktiebolag, Sweden for EUR 24.9 million;
• Enerjisa Enerji Üretim A.S., Turkey for EUR 6.4 million;
• Fehrbellin GmbH & Co. KG, Germany for EUR 5.2 million;
• Kies- und Sandwerk Börner GmbH & Co. KG, Germany for EUR 2.4 million;
• Donau Kies GmbH, Germany for EUR 2.0 million (repayment of capital).

18 Cash from changes in consolidation scope

This line shows the inflow or outflow of cash arising from changes in the consolidation scope. The regulations of IAS 7 require these cash flows to be disclosed separately from gross investments or proceeds from fixed asset disposals.

19 Dividend payments HeidelbergCement AG

In 2007, HeidelbergCement AG paid dividends of EUR 144.5 million (previous year: 132.9).

20 Dividend payments to minority shareholders

The item "Dividend payments to minority shareholders" shows dividends paid during the financial year for minority interests.

21 Proceeds from bond issuance and loans

Besides the long-term Euro Medium Term Notes of SEK 290 million and EUR 50 million newly issued during 2007, this item primarily includes the drawings under the GBP 8.75 billion and EUR 3.4 billion syndicated acquisition facility to pay the purchase price of the Hanson shares and refinance existing debt of Hanson PLC and HeidelbergCement Finance B.V. This loan was partially refinanced in 2007 by the issue of a ten-year bond of EUR 480 million and two bonded loans of EUR 300 million. As a result of the inflow from the sale of Vicat S.A., the volume of the acquisition facility was reduced to GBP 7.72 billion and EUR 3.4 billion in July 2007.

22 Repayment of bonds and loans

This item includes the balance from repayments of ordinary financial liabilities and net cash from taking out or issuing short-term financial debts or obligations. The scheduled repayment of the EUR 1 billion HeidelbergCement Finance BV 6.375%bond 2000/2007 and the early repayment of the outstanding volume of the HeidelbergCement Finance B.V. 7.375%high-yield bond of EUR 455 million are included in addition to scheduled repayments of Euro Medium Term Notes and private placement debt amounting to EUR 30 million. In addition, bank liabilities of Hanson Limited and its subsidiaries amounting to approx. EUR 500 million were also refinanced by HeidelbergCement in the course of the Hanson takeover. In addition, EUR 1.7 billion of the syndicated acquisition facility were repaid.

23 Cash and cash equivalents

Cash and cash equivalents include securities with a remaining term of less than three months and liquid funds.

Notes to the balance sheet – Assets

24 Intangible assets

Intangible assets EURm	Goodwill	Other intangible assets	Total
Cost
1 January 2006	2,783.1	196.1	2,979.2
Previous year adjustment	52.2	10.1	62.3
Additions	320.3	4.1	324.4
Disposals	-25.9	-20.0	-45.9
Reclassifications 31 December 2006	-14.9 3,114.8	22.4 212.7	7.5 3,327.5
Amortisation and impairment
1 January 2006	379.5	145.0	524.5
Previous year adjustment	12.9	-8.7	4.2
Additions		10.6	10.6
Impairment	13.1		13.1
Disposals	-9.3	-18.5	-27.8
Reclassifications		0.4	0.4
31 December 2006	396.2	128.8	525.0
Net book value at 31 December 2006	2,718.6	83.9	2,802.5
Cost
1 January 2007	3,114.8	212.7	3,327.5
Previous year adjustment	-577.5	93.9	-483.6
Additions	9,071.1	15.7	9,086.8
Disposals	-36.1	-4.3	-40.4
Reclassifications		9.6	9.6
Reclassifications to current assets	-409.0	-18.5	-427.5
31 December 2007	11,163.3	309.1	11,472.4
Amortisation and impairment
1 January 2007	396.2	128.8	525.0
Previous year adjustment	-11.7	-4.3	-16.0
Additions		14.4	14.4
Impairment	16.2	0.8	17.0
Disposals	-0.5	-1.9	-2.4
Reclassifications		4.0	4.0
Reclassification to current assets	-0.5	-12.4	-12.9
31 December 2007	399.7	129.4	529.1
Net book value at 31 December 2007	10,763.6	179.7	10,943.3

Goodwill, concessions and software are shown under intangible assets. As at the balance sheet date, there were no acquired and capitalised emission rights. The expenses incurred in connection with development activities do not fulfil the recognition criteria of IAS 38 (Intangible Assets) and were consequently recognised fully in the profit and loss accounts.

Intangible assets with finite useful lives amounted to EUR 162.8 million and those with indefinite useful lives to EUR 16.9 million. The goodwill comprises acquired market shares that cannot be assigned to any other determinable and separable intangible assets.

In 2007, goodwill of EUR 9,071.1 million was capitalised. Significant additions were the goodwill from the acquisition of the Hanson Group amounting to EUR 8,940.8 million, the acquisition of SaqCementi LLC/Georgia, amounting to EUR 55.8 million, and the acquisition of Open Joint Stock Company Gurovo-Beton/Russia, amounting to EUR 4.6 million. The acquisition of a further 4.3%share of Mysore Cement Ltd./India, led to an increase of EUR 8.7 million in goodwill. The acquisition of assets of the cement plant in Ladik/Turkey resulted in goodwill of EUR 28.4 million. The valuation of put options held by minorities led to a decrease of EUR 20.4 million in goodwill. Existing larger individual items of goodwill are connected with the acquisition of S.A. Cimenteries CBR, Brussels/Belgium, HeidelbergCement, Inc., Wilmington/US, Akçansa Cimento Sanayi ve Ticaret A.S., Istanbul/Turkey, HeidelbergCement Bangladesh Ltd., Chittagong/ Bangladesh, and ENCI N.V., 's-Hertogenbosch/Netherlands.

The line "Previous year adjustment" comprises the acquired intangible assets of the Hanson Group, amounting to EUR 77.5 million. Reclassifications to current assets include the goodwill from the acquisitions of maxit Group, Cement Company of Northern Nigeria and Société Nigérienne de Cimentérie, which are transferred to assets held for sale and discontinued operations.

Goodwill impairment tests are carried out annually in accordance with IAS 36 (Impairment of Assets). Impairment losses on goodwill of EUR 16.2 million were recognised in the reporting year. This impairment is taken into account in the additional ordinary expenses and explained in more detail in Note 7. The remaining negative goodwill arising from business combinations amounted to EUR 0.1 million (previous year: 0.2) and was recognised in the additional ordinary result.

Adjustments of EUR -565.5 million (previous year: 4.3) were made as a result of the effects of changes in currency exchange rates.

25 Tangible fixed assets

The tangible fixed assets of the acquired Hanson Group are included in the line "Previous year adjustment" with an amount of EUR 5,572.1 million. The tangible fixed assets of maxit Group, Cement Company of Northern Nigeria, Société Nigérienne de Cimenterie and United Marine Holdings Limited were reclassified to current assets and shown under assets held for sale and discontinued operations.

In the reporting year, impairment losses of EUR 11.4 million and reversals of EUR 9.8 million were recognised; these are explained in Note 7 "Additional ordinary result". Tangible fixed assets also include EUR 30.7 million (previous year: 10.5) of capitalised leased assets. Liens amounting to EUR 30.7 million (previous year: 86.0) were granted as security. Adjustments made during the reporting year for the effects of changes in exchange rates totalled EUR -533.9 million (previous year -150.6).

Tangible fixed assets EURm	Land and buildings	Plant and machinery	Fixtures, tools and equipment	Payments on account and assets under construction	Total
Cost
1 January 2006	3,790.1	7,696.5	913.0	283.1	12,682.7
Previous year adjustment	13.2	-27.6	-28.8	-12.4	-55.6
Additions	43.6	125.5	44.4	344.1	557.6
Disposals	-76.6	-147.2	-62.0	-1.0	-286.8
Reclassifications	92.0	119.6	14.9	-234.0	-7.5
31 December 2006	3,862.3	7,766.8	881.5	379.8	12,890.4
Depreciation and impairment
1 January 2006	1,750.6	4,714.5	722.9		7,188.0
Previous year adjustment	-19.3	-85.4	-25.6		-130.3
Additions	100.7	349.6	53.4		503.7
Impairment	18.1	1.6	0.1		19.8
Reversal of impairment		-9.2			-9.2
Disposals	-43.1	-122.1	-57.3		-222.5
Reclassifications	7.2	1.5	-9.1		-0.4
31 December 2006	1,814.2	4,850.5	684.4		7,349.1
Net book value at 31 December 2006	2,048.1	2,916.3	197.1	379.8	5,541.3
Cost
1 January 2007	3,862.3	7,766.8	881.5	379.8	12,890.4
Previous year adjustment	3,055.8	1,534.2	13.3	331.3	4,934.6
Additions	87.9	264.7	54.4	585.5	992.5
Disposals	-85.5	-144.8	-43.4	-1.2	-274.9
Reclassifications	132.1	341.3	23.6	-506.6	-9.6
Reclassifications to current assets	-371.8	-787.8	-202.1	-17.0	-1,378.7
31 December 2007	6,680.8	8,974.4	727.3	771.8	17,154.3
Depreciation and impairment
1 January 2007	1,814.2	4,850.5	684.4		7,349.1
Previous year adjustment	-21.0	-118.8	-10.1		-149.9
Additions	118.1	392.3	48.1		558.5
Impairment	0.5	10.2	0.7		11.4
Reversal of impairment	-0.3	-9.4	-0.1		-9.8
Disposals	-32.7	-126.2	-36.1		-195.0
Reclassifications	21.1	-21.2	-3.9		-4.0
Reclassification to current assets	-181.8	-484.0	-174.9		-840.7
31 December 2007	1,718.1	4,493.4	508.1		6,719.6
Net book value at 31 December 2007	4,962.7	4,481.0	219.2	771.8	10,434.7

26 Financial fixed assets

Participations	Investments	Financial	Total
EURm	in associates	investments
Cost
1 January 2006	821.2	349.2	1,170.4
Previous year adjustment	-61.2	-98.7	-159.9
Additions	179.1	22.2	201.3
Disposals	-44.2	-14.5	-58.7
Reclassifications	-0.8	0.8	0.0
31 December 2006	894.1	259.0	1,153.1
Impairment
1 January 2006	61.2	14.7	75.9
Previous year adjustment	-26.0	1.2	-24.8
Impairment	11.8	8.9	20.7
Reversal of impairment	-2.0	-0.3	-2.3
Disposals	-1.1	-0.4	-1.5
Reclassifications	-0.4	0.4	0.0
31 December 2006	43.5	24.5	68.0
Net book value at 31 December 2006	850.6	234.5	1,085.1
Cost
1 January 2007	894.1	259.0	1,153.1
Previous year adjustment	-162.3	-73.8	-236.1
Additions	136.3	59.9	196.2
Disposals	-68.1	-78.1	-146.2
Reclassifications	-0.2	0.2	0.0
Reclassifications to current assets	-4.7	-7.5	-12.2
31 December 2007	795.1	159.7	954.8
Impairment
1 January 2007	43.5	24.5	68.0
Previous year adjustment	-12.5	-7.0	-19.5
Impairment	11.0	1.1	12.1
Reversal of impairment	-2.6	-0.4	-3.0
Disposals	-6.2	-4.9	-11.1
Reclassification to current assets		-6.2	-6.2
31 December 2007	33.2	7.1	40.3
Net book value at 31 December 2007	761.9	152.6	914.5

The line "Previous year adjustment" in 2007 includes the participations of the acquired Hanson Group, which account for EUR 457.5 million. The participations of maxit Group were reclassified to current assets and shown under discontinued operations. Changes in exchange rates had an effect of EUR - 4.1 million (previous year: -31.6) on the investments in associates and of EUR 0.7 million (previous year: -14.5) on financial investments.

27 Investments in associates

The following table contains the summarised financial information concerning the investments in associates of the HeidelbergCement Group.

Investments in associates
EURm	2006	2007
Investments in associates – balance sheet
Assets	1,569.4	1,259.5
Liabilities	-691.7	-480.6
	877.7	778.9
Impairment	-43.6	-33.3
Net assets	834.1	745.6
Investments in associates – profit and loss accounts
Turnover	1,500.2	1,087.8
Profit	159.6	122.7
Unrecognised share of losses for the period	-1.0	-4.1
Unrecognised share of losses cumulated	-16.4	-16.3
Carrying amount of associates	850.6	761.9

Significant changes resulted from the sale of Vicat S.A. in June 2007. This was counteracted by the inclusion of the associated companies of the Hanson Group with net assets of EUR 442.8 million.

28 Financial investments

This item includes investments in equity securities acquired on the basis of long-term investment planning. As at the reporting date, the fair value of investments categorised as "Available for sale at fair value" amounts to EUR 27.4 million (previous year: 94.0). In the period, changes in the fair value of EUR 3.6 million were recognised directly in equity and EUR -58.2 million released to profit or loss. The release relates primarily to the sale of shares in Florida Rock Industries, Inc., US. The carrying amount of the investments classified as "Available for sale at cost" amounts to EUR 125.2 million (previous year: 140.4). The decline in comparison with the previous year is based essentially on the fact that Kopalnia Wapienia Podgrozie, Poland, is now accounted for "at equity".

29 Long-term receivables and derivative financial instruments

The following table shows the composition of the long-term receivables and derivative financial instruments.

Long-term receivables and derivative financial instruments
EURm	2006	2007
Loans to participations	32.0	79.8
Other loans	41.7	24.0
Derivative financial instruments	3.8	2.0
Other long-term operating receivables	69.5	230.6
Other long-term non-financial receivables	6.4	123.4
	153.4	459.8

The long-term derivative financial instruments with positive market values of EUR 2.0 million (previous year: 3.8) include currency forwards of EUR 2.0 million (previous year: 1.2) and interest rate swaps of EUR 0.0 million (previous year: 2.6). At the balance sheet date, these instruments are not accounted for as hedges in accordance with IAS 39. The change in fair value amounted to EUR -1.8 million and was recognised in profit or loss. Additional statements on the derivative financial instruments are provided on pages 126 ff. Other long-term operating receivables particularly include claims for reimbursement against insurance companies for environmental and third-party liability damages. The increase is essentially attributable to the first-time consolidation of Hanson.

The other long-term non-financial receivables primarily include overfunding of pension schemes as well as prepaid expenses and accrued income. The increase in comparison with the previous year mainly relates to the increase in the overfunding of pension schemes and the increase in prepaid expenses and accrued income, which were shown under other operating receivables in the previous year.

The following table shows the due term structure of the long-term financial receivables.

Due terms of long-term financial receivables EURm	Loans to participations		Other loans		operating receivables	Other long-term	Total
	2006	2007	2006	2007	2006	2007	2006	2007
not impaired not overdue	31.4	78.1	40.6	23.4	60.4	223.0	132.4	324.5
not impaired overdue, 1 - 60 days					0.1		0.1
not impaired overdue, 61 - 360 days				0.4	0.5	1.3	0.5	1.7
not impaired overdue, > 360 days	0.6	0.1	1.1	0.2	8.5	5.7	10.2	6.0
impaired		1.6				0.6		2.2
	32.0	79.8	41.7	24.0	69.5	230.6	143.2	334.4

As at the reporting date, there are no indications that the debtors of the receivables shown as "not impaired" will not meet their payment obligations.

Stock, measured at fair value less cost to sell, and resulting impairment are insignificant.

31 Receivables and other assets

The following overview shows the composition of the receivables and other assets.

Receivables and other assets
EURm	2006	2007
Other short-term financial receivables	89.1	182.1
Trade receivables	1,024.3	1,746.7
Other short-term operating receivables	265.2	326.4
Non-financial other assets	38.0	109.7
Current income tax assets	56.5	138.3
	1,473.1	2,503.2

The increase in other short-term financial receivables and trade receivables is essentially attributable to the first-time consolidation of Hanson.

The other short-term operating receivables include, in particular, claims for damages as well as claims for reimbursement against insurance companies for environmental and third-party liability damages. The increase is due to the firsttime consolidation of Hanson in particular.

Non-financial other assets, which do not fall within the scope of IAS 39, essentially include interest paid in advance and other prepayments.

The following table shows the due term structure of the short-term financial receivables.

Due of terms of short-term financial receivables EURm	Other short-term financial receivables		Trade receivables		Other short-term operating receivables		Total
	2006	2007	2006	2007	2006	2007	2006	2007
not impaired not overdue	86.7	173.5	623.7	1,002.0	234.6	301.4	945.0	1,476.9
not impaired overdue, 1 - 60 days	0.6	0.2	302.3	478.4	14.7	10.7	317.6	489.3
not impaired overdue, 61 - 360 days	1.5		34.2	108.3	2.0	10.1	37.7	118.4
not impaired overdue, > 360 days	0.3	4.4	8.7	13.9	1.1	4.1	10.1	22.4
impaired		4.0	55.4	144.1	12.8	0.1	68.2	148.2
	89.1	182.1	1,024.3	1,746.7	265.2	326.4	1,378.6	2,255.2

As at the reporting date, there are no indications that the debtors of the receivables shown as "not impaired overdue" and "not overdue" will not meet their payment obligations.

The valuation allowances on trade receivables have developed as follows:

2006	2007
75.1	70.4
6.4	22.7
-4.8	-5.5
-6.3	-24.5
70.4	63.1

The valuation allowances are essentially based on historical default probabilities and due terms. The valuation allowances are primarily valuation allowances for collective impairments. The other movements result mainly from the reclassification of maxit Group to discontinued operations, which accounts for EUR -20.2 million.

32 Financial investments, derivative financial instruments and cash

The short-term investments in the category "available for sale" are measured at fair value directly in equity ("Available for sale at fair value"). The short-term investments increased to EUR 2.7 million (previous year: 0.1). EUR 4.2 million was recognised directly in equity and EUR -1.5 million released to profit or loss. The release relates to the sale of shares in PT Buket Sentul Tbk (BKSL), Indonesia.

The short-term derivatives with positive market values of EUR 38.3 million (previous year: 15.2) include currency swaps of EUR 21.1 million (previous year: 9.3), currency forwards of EUR 1.4 million (previous year: 0.6) and commodities of EUR 15.8 million (previous year: 5.3). The effective portion of the change in the fair values of derivative financial instruments, accounted for as hedging instruments of cash flow hedges, amounts to EUR 9.1 million and is recognised directly in equity. The changes in the fair values of the derivatives accounted for as "held for trading" amount to EUR 14.0 million and were recognised in profit or loss. Additional statements on the derivative financial instruments are provided on pages 126 ff.

Cash and cash equivalents include cash balances and deposits at banks with a first-class credit rating. EUR 3.4 million of the cash is not available for the use by HeidelbergCement.

Notes to the balance sheet – Equity and liabilities

33 Subscribed share capital

31 December 2007	360,000	120,000
Cash capital increase	13,181	4,394
Capital decrease through withdrawal of treasury shares	-155	-52
1 January 2007	346,974	115,658
Subscribed share capital	Subscribed share capital EUR '000s	Number in '000s

As at the balance sheet date, the subscribed share capital amounts to EUR 360,000,000 and is divided into 120,000,000 shares; the shares are no-par value bearer shares. The nominal value is 3 Euro per share.

Authorised capital

The Annual General Meeting held on 23 May 2006 authorised the Managing Board, with the consent of the Supervisory Board, to increase the Company's subscribed share capital by a total amount of up to EUR 74,000,000 by issuing new no-par value bearer shares in return for cash contributions on one or more occasions until 22 May 2011 (Authorised Capital I). The shareholders must be granted subscription rights. However, the Managing Board is authorised to exclude the subscription rights of shareholders with respect to fractional amounts and to exclude the subscription right completely or partially for an amount of up to EUR 29,600,000 or, if this value is lower, of 10%of the available subscribed share capital at the time of exercise of the authorisation, in order to issue new shares at an issue price that is not substantially lower than the stock market price of the old shares; the limit for the amount should take into account those shares otherwise issued or sold during the term of this authorisation in application of § 186, section 3, clause 4 of the German Stock Company Act. With the consent of the Supervisory Board, the Managing Board will decide on the further nature of the share rights and the terms of the share issue.

By resolution of the Managing Board and Supervisory Board of 13 May 2007, the 51,738 treasury shares held by the Company were cancelled. This reduced the subscribed share capital to EUR 346,818,753 and the number of shares to 115,606,251. By resolution of the Managing Board and Supervisory Board of the same date, the subscribed share capital was then increased by EUR 13,181,247 to EUR 360,000,000 through the issue of 4,393,749 new shares, utilising part of the Authorised Capital I; the total number of shares rose to 120,000,000. This reduced the Authorised Capital I to EUR 60,818,753. Only VEM Vermögensverwaltung GmbH, Dresden, was permitted to subscribe to the new shares; the subscription right of the remaining shareholders was excluded by exercising the authorisation mentioned above.

The Annual General Meeting held on 23 May 2006 also authorised the Managing Board, with the consent of the Supervisory Board, to increase the Company's subscribed share capital by a total amount of up to EUR 74,000,000 by issuing new no-par value bearer shares in return for contributions in kind on one or more occasions until 22 May 2011 (Authorised Capital II). The Managing Board is authorised, with the consent of the Supervisory Board, to exclude the subscription rights of shareholders and determine the further details of the capital increase and the terms of the share issue.

As at the balance sheet date, the Company has no treasury shares.

On the basis of the authorisation contained in the Articles of Association (Authorised Capital I), the subscribed share capital was increased by EUR 15,000,000 to EUR 375,000,000 by resolutions of the Managing Board of 15 January 2008 and 14 February 2008 and with the consent of the Supervisory Board of 14 February 2008. The capital increase has been carried out. The new shares are entitled to participate in dividends from 1 January 2007. Following this capital increase, the Authorised Capital I amounts to EUR 45,818,753.

34 Share premium

The share premium was essentially created from the premium from capital increases. The development of share premium is shown in the following table.

Share premium
EUR '000s	2006	2007
1 January	2,512,679	2,462,144
Withdrawal of treasury shares		-2,779
Conversion into subscribed share capital	-50,889
Exercise of stock options	354
Cash capital increase		514,027
31 December	2,462,144	2,973,392

The capital increase for cash takes into account net transaction costs of EUR 41,000.

35 Profit and loss reserve

The profit and loss reserve includes profits earned in previous years by HeidelbergCement AG and its subsidiaries which have not yet been distributed, as well as changes recognised directly in equity. The statement of recognised income and expense is presented separately in accordance with IAS 1.96 ff. (Presentation of Financial Statements). Explanations of the changes recognised directly in equity as shown in the reconciliation of changes in total equity:

• Consolidation adjustments: In particular, this relates to changes recognised directly in equity of associates accounted for at equity.
• IAS 19 Employee Benefits: The application of IAS 19 (Employee Benefits) led to an adjustment of EUR 68.8 million (previous year: 5.1) in revenue reserves.
• IAS 39 Financial Instruments: Recognition and Measurement: The financial instruments comprise the "available-for-sale financial assets" of EUR -34.4 million (previous year: -7.0) and the derivative financial instruments of EUR 6.4 million (previous year: 11.8).
• Exchange rate: The net assets denominated in foreign currency changed primarily as a result of the disproportionate fall in the GBP and USD prices since the acquisition of the Hanson Group.

36 Minority interests

The increase in minority interests in connection with the consolidation adjustments is attributable in particular to the first-time consolidation of the Georgian companies and the inclusion of Hanson.

37 Provisions

The following overview shows the development of the provisions. The "Adjustments to 2006" line includes changes in the consolidation scope and foreign exchange differences. The "Reclassification to current liabilities" line shows the reclassification of the provisions of maxit Group to the liabilities from discontinued operations and of Cement Company of Northern Nigeria, Société Nigérienne de Ciment and United Marine Holdings Ltd. to the liabilities from disposal groups.

Provisions	Pensions and	Deferred taxes	Other	Total
EURm	similar liabilities
1 January 2007	750.9	506.6	531.3	1,788.8
Adjustments to 2006	134.8	654.6	956.6	1,746.0
Reclassification to current liabilities	-35.9	-37.9	-43.0	-116.8
Utilisation	-122.2		-116.0	-238.2
Release	-145.5	-65.0	-61.4	-271.9
Addition	145.8	45.6	132.6	324.0
31 December 2007	727.9	1,103.9	1,400.1	3,231.9

We have set up appropriate provisions in the balance sheet to ensure adequate provision for risks and uncertainties. Detailed explanations of the provisions can be found in Notes 38 and 39.

38 Provisions for pensions

For numerous employees, the Group makes provision for retirement benefits either directly or indirectly through contributions to pension funds. Various retirement benefit systems are in place, depending on the legal, economic and tax framework in each country. These are generally based on employees' years of service and remuneration. The provisions for pensions include those from current pensions and from entitlements from pensions to be paid in the future. At HeidelbergCement, the company pension schemes include both defined contribution plans and defined benefit plans. In defined contribution plans, the Group pays contributions into earmarked funds. After paying the contributions, the Group has no further benefit obligations. The sum of all pension expenses in connection with defined contribution plans amounted to EUR 31.4 million (previous year: 28.2). In 2007, the contributions to the statutory pension insurance fund amounted to EUR 20.5 million (previous year: 20.6).

In defined benefit plans, the Group's obligation is to provide the agreed benefits to current and former employees. A distinction is made between benefit systems financed by provisions and those financed by funds. The most significant retirement benefit plans financed by funds exist in Belgium, the Netherlands, the United Kingdom, the US, Canada, Norway, India and Indonesia. The retirement benefit system in Indonesia consists of a statutory defined benefit plan and a company-based defined contribution plan financed by funds, the benefits from which may be set off against the statutory benefits. In Germany and Sweden, the retirement benefit plans are financed by means of provisions. HeidelbergCement also has a retirement benefit system financed by provisions to cover the medical care costs of pension

recipients in Belgium, Indonesia and the US, and for early retirement commitments in Belgium. The Dutch system to cover medical care costs was closed in 2006; the outstanding obligations relate purely to the settlement of ongoing cases of illness.

The effect of the acquisition of the Hanson Group in 2007 was shown in the business acquisitions. The pension expenses were shown in the personnel costs from continuing operations. The assets and liabilities and the income and expenses from the pension obligations of maxit Group were reclassified to discontinued operations.

Calculation of pension obligations

The pension obligations and the available plan assets are valued annually by independent experts for all major Group companies. The pension obligations and the expenses required to cover this obligation are measured in accordance with the internationally accepted projected unit credit method (IAS 19 Employee Benefits).

The actuarial assumptions on which the calculations are based are summarised in the following table (weighted presentation):

Actuarial assumptions
	2006	2007
Discount rate	4.87%	5.72%
Expected return on plan assets	6.41%	6.13%
Future salary increases	3.36%	4.03%
Expected increase in health care cost	4.93%	6.45%

The actuarial assumptions are dependent on the economic situation in each individual country and reflect realistic expectations. The interest rate is based on the interest rate level obtained on the measurement date for high-quality fixed interest-bearing securities/corporate bonds with a duration corresponding to the pension plans concerned in the relevant country. The expected income from the pension funds is determined using a uniform method based on longterm actual historical yields, the portfolio structure and the future yields expected in the long term.

Actuarial gains and losses may result from increases or decreases in the present value of the defined benefit obligations or the fair value of the plan assets. These may be caused by, for example, changes in the calculation parameters, changes in estimates of the risk experience of the pension obligations or differences between the actual and expected return on plan assets. In accordance with the third option "Statement of recognised income and expense (SORIE)" of IAS 19, these actuarial gains and losses are recognised directly in equity.

Overview of types of retirement benefit plans

In accordance with IAS 19 (Employee Benefits), detailed information concerning pension plans and benefit plans for medical care costs amounting to EUR 645.9 million (previous year: 744.5) is provided below, showing the funding of the plans and how they are accounted for in the balance sheet and profit and loss accounts.

Types of retirement benefit plans
EUR '000s	2006	2007
Defined benefit pension plans	619,639	433,375
Plans for health care costs	124,826	212,485
	744,465	645,860

Presentation in the balance sheet
EUR '000s	2006	2007
Long-term pension provisions	678,906	648,360
Short-term pension provisions	71,956	79,498
Overfunding in pension schemes	-6,397	-81,998
	744,465	645,860

Pension obligations and pension funds

In 2007, pension obligations amounting to EUR 3,627.5 million (previous year: 1,055.3) existed in the Group, which were covered by outside pension funds. In addition there were direct agreements of EUR 471.0 million (previous year: 537.0). Obligations in the US, Indonesia, Belgium, Canada and the Netherlands for medical care costs for pension recipients amounted to EUR 212.6 million (previous year: 124.9). The following table shows the financing status of these plans and their presentation in the balance sheet.

Pension obligations and pension funds: Continuing operations EUR '000s		Pension plans		Plans for health care cost		Total
	2006	2007	2006	2007	2006	2007
Present value of funded obligations	1,055,336	3,627,538			1,055,336	3,627,538
Fair value of plan assets	-976,217	-3,697,610			-976,217	-3,697,610
Recognised limitation acc. to IAS 19.58 B		29,008				29,008
Fair value of plan assets after limitation acc. to IAS 19.58 B	-976,217	-3,668,602			-976,217	-3,668,602
Deficit (+) / surplus (-)	79,119	-41,064			79,119	-41,064
Present value of unfunded obligations	536,975	470,996	124,936	212,633	661,911	683,629
Total liability	616,094	429,932	124,936	212,633	741,030	642,565
Obligation in the balance sheet	619,639	433,375	124,826	212,485	744,465	645,860
Unrecognised past service cost	-3,545	-3,443	110	148	-3,435	-3,295

The pension plans and the plans for medical care costs include actuarial losses totalling EUR 144.0 million (previous year: 263.1), which have been recognised directly in shareholders' equity. The decrease of EUR 113.5 million (previous year: 20.0) in actuarial losses results primarily from the positive development of the funds' assets, the foreign currency translation and the rise in the interest rate on which the actuarial calculation is based. This rise amounted to 0.85 percentage points (previous year: 0.10). The following table shows the development of the actuarial gains and losses.

Actuarial losses / gains recognised in the statement of recognised income and expense
EUR '000s	2006	2007
1 January	283,132	263,139
Change during year	-8,617	-104,635
Allocation to discontinued operations		-5,576
Exchange rate changes	-11,376	-8,898
31 December	263,139	144,030

In 2007, as a result of changes in fund balances (i.e. not as a result of the change in the actuarial assumptions on which the measurement is based), profits of EUR 47.2 million (previous year: 11.7) accrued on the funds' assets and losses of EUR 7.6 million (previous year: 29.8) accrued on the obligations.

Development in the profit and loss accounts

The expenses for retirement benefits for the significant pension plans, included in the personnel costs, amounted to EUR 77.0 million (previous year: 59.1) and can be summarised as follows:

Development in the profit and loss accounts EUR '000s	Pension plans		Plans for health care cost		Total
	2006	2007	2006	2007	2006	2007
Current service cost	39,020	52,460	3,147	3,301	42,167	55,761
Interest cost	68,237	126,992	6,395	9,062	74,632	136,054
Expected return on plan assets	-52,587	-112,249			-52,587	-112,249
Expected return on reimbursement rights acc. to IAS 19.104A		-183				-183
Acturial losses/(gains) recognised	1,909	1,863			1,909	1,863
Past service cost recognised	-97	-172	66	-85	-31	-257
Curtailment or settlement losses/(gains) recognised	1,709	-2,360	-9,097	-1,598	-7,388	-3,958
Transition amount (from local GAAP to IAS)	410				410
Expense from continuing operations recognised in profit
and loss accounts	58,601	66,351	511	10,680	59,112	77,031
Expense from discontinued operations recognised in profit
and loss accounts	5,009	4,625	-1,040		3,969	4,625
Total expense recognised in profit and loss accounts	63,610	70,976	-529	10,680	63,081	81,656

The actual return on the funds' assets amounted to EUR 173.5 million (previous year: 80.2), exceeding the expected return on plan assets by EUR 61.3 million (previous year: 24.9).

Sensitivity analysis of the expected health care cost

Developments in the cost of health care affect the profit and loss accounts and the pension obligations. The following table shows the effects of a one-percent increase or decrease in the expected cost of health care:

Sensitivity analysis of the expected health care cost		changes in health care cost by
EUR '000s	+1%	-1%
Effect on the service cost and interest cost	1,089	-1,399
Effect on defined benefit obligation	17,736	-12,266

Development of the pension obligations and the funds' assets

The following table shows the development of pension obligations of EUR 4,311.2 million (previous year: 1,717.2) and the funds' assets of EUR 3,697.6 million (previous year: 976.2):

Development of pension obligations and plan assets: Continuing operations EUR '000s	Pension plans		Plans for health care cost		Total
	2006	2007	2006	2007	2006	2007
Defined benefit obligation at 1 January	1,597,995	1,592,311	133,138	124,936	1,731,133	1,717,247
Change in scope of consolidation	3,696	-4,744			3,696	-4,744
Current service cost	42,174	52,311	3,147	3,301	45,321	55,612
Interest cost	71,849	126,992	6,395	9,062	78,244	136,054
Employee contributions	5,452	7,946	473		5,925	7,946
Actuarial losses/(gains)	-7,981	-72,657	11,666	-3,981	3,685	-76,638
Benefits paid by company	-34,943	-51,934	-7,850	-11,077	-42,793	-63,011
Benefits paid by fund	-57,326	-101,539			-57,326	-101,539
Expenses, taxes and premiums paid	-468	-579		-241	-468	-820
Past service cost	7,171	289	621		7,792	289
Business combinations	2,589	2,913,905	27	110,245	2,616	3,024,150
Plan curtailments	1,709	-2,360		-1,598	1,709	-3,958
Plan settlements	-7,200	-5,892	-10,137		-17,337	-5,892
Reclassifications to current assets/
liabilities from discontinued operations		-97,910		-36		-97,946
Exchange rate changes	-32,406	-257,605	-12,544	-17,978	-44,950	-275,583
Defined benefit obligation at 31 December	1,592,311	4,098,534	124,936	212,633	1,717,247	4,311,167
Funded obligation	1,055,336	3,627,538			1,055,336	3,627,538
Unfunded obligation	536,975	470,996	124,936	212,633	661,911	683,629
Fair value of plan assets at 1 January	946,865	976,217			946,865	976,217
Change in scope of consolidation	3,649				3,649
Expected return on plan assets	55,279	112,249			55,279	112,249
Actuarial gains/(losses)	13,205	61,508			13,205	61,508
Employer contributions	43,604	58,040			43,604	58,040
Employee contributions	5,452	7,946			5,452	7,946
Benefits, expenses, taxes and premiums paid	-59,213	-103,083			-59,213	-103,083
Business combinations	296	2,910,395			296	2,910,395
Plan settlements	-7,200	-5,892			-7,200	-5,892
Reclassifications to current assets/
liabilities from discontinued operations		-67,155				-67,155
Exchange rate changes	-25,720	-252,615			-25,720	-252,615
Fair value of plan assets at 31 December	976,217	3,697,610			976,217	3,697,610

HeidelbergCement paid EUR 63.0 million (previous year: 42.8) directly to the pension recipients and EUR 58.0 million (previous year: 43.6) as employer contributions to the funds. In 2008, we expect to pay EUR 129.3 million (previous year: 81.5).

Breakdown of the funds' assets

The funds' assets originate primarily from North America, with 27% (previous year: 25%), the United Kingdom, with 61% (previous year: 25%) and the Netherlands, with 9%(previous year: 33%). The assets in the funds can be divided into the following categories on a percentage basis:

Breakdown of the funds' assets
	2006	2007
Equities North America	13%	10%
Equities Western Europe	16%	13%
Equities other regions	15%	7%
Bonds North America	6%	19%
Bonds Western Europe	30%	40%
Bonds other regions	7%	1%
Others	13%	10%

Five-year comparison

The development of the pension obligations and the funds' assets is shown in the following table:

Five-year comparison: Continuing operations
EUR '000s	2003	2004	2005	2006	2007
Pension Plans
Present value of funded obligations for pension plans	798,962	827,172	1,050,514	1,055,336	3,627,538
Present value of unfunded obligations for pension plans	441,416	450,240	547,479	536,975	470,996
Present value of unfunded obligations for health care plans	101,647	105,368	133,138	124,936	212,633
Total present value of obligations	1,342,025	1,382,780	1,731,131	1,717,247	4,311,167
Fair value of plan assets after limitation acc. to IAS 19.58 B	-722,545	-784,811	-946,865	-976,217	-3,668,602
Deficit (+) / Surplus (-)	619,480	597,969	784,266	741,030	642,565
Experience (gains)/losses on obligations		-12,556	66,728	29,773	-7,617
Experience gains/(losses) on assets		-9,406	-46,528	-11,716	-47,160
Expected development of obligations		55,572	33,059	30,873	85,888
Expected development of assets		-45,645	-47,110	42,940	120,143

HeidelbergCement also participates in "Multi-Employer Pension Plans" (MEP), predominantly in the US, which award some unionised employees fixed benefits after their retirement. Multi-Employer Pension Plans are accounted for as defined contribution plans, as it is not possible to isolate the individual components of these plans. The contributions are determined on the basis of collective bargaining. The undercoverage and overcoverage of these plans have no significant impact on the Group Annual Accounts. Contributions of EUR 2.8 million were paid in 2007.

39 Other provisions

Other provisions comprise all identifiable risks from uncertain liabilities and anticipated losses from pending transactions. Recultivation obligations are recognised in profit or loss in accordance with the progress of extraction from quarries. In 2007, provisions for recultivation amounted to EUR 187.3 million (previous year: 147.5). Obligations from restructuring measures are included, as are obligations from guarantee commitments. Other provisions also include adequate risk provision for legal disputes including risks from pending cartel proceedings, environmental obligations, product liability or long-service awards.

With the exception of provisions for restructuring measures of EUR 53.3 million, for which a cash outflow is expected in the next two years, the dates of the cash outflows for the other provisions are uncertain as they are dependent on various external factors outside HeidelbergCement's control.

The increase of EUR 868.8 million in other provisions is essentially attributable to the obligations assumed as a result of the acquisition of the Hanson Group. As at the balance sheet date, these relate primarily to liability for damages amounting to EUR 301.5 million and environmental obligations of EUR 291.8 million, as well as restoration and recultivation obligations of EUR 77.1 million and EUR 62.0 million respectively.

The liability for damages relates mainly to US subsidiaries of Hanson. These subsidiaries are facing claims for damages in connection with the manufacture of products containing asbestos in the period from 1973 to 1984. Furthermore, a substantial increase in environmental and product liability claims in connection with toxic substances against former and existing participations, which are not linked to the current business activity, is being recorded in the US Adequate provisions have been formed on the basis of an extrapolation of the claims and reliable estimates of the development of costs. The corresponding claims for reimbursement against the environmental and third-party liability insurers amount to EUR 173.0 million and are shown under other operating receivables.

The interest rate effect of other provisions amounted to EUR 0.9 million. Changes in the discount rate led to a decrease of EUR 0.2 million in provisions.

40 Liabilities

The following table splits up the liabilities into financial and operating liabilities.

Liabilities
EURm	2006	2007
Financial liabilities
Debenture loans	1,420.6	2,342.3
Bank loans	1,132.0	11,913.6
Other financial liabilities	846.2	1,279.4
Liabilities from finance lease		20.9
Derivative financial instruments	22.0	10.4
	3,420.8	15,566.6
Operating liabilities
Trade payables	657.4	1,010.7
Current income taxes payables	72.6	476.1
Liabilities relating to personnel	156.6	233.6
Other operating liabilities	388.3	850.9
Deferred income and non-financial liabilities	6.0	35.1
	1,280.9	2,606.4
	4,701.7	18,173.0

Of the financial liabilities, EUR 10.5 million (previous year: 28.3) is secured by mortgages to banks. The increase in liabilities to banks results from the syndicated acquisition facility to pay the purchase price of the Hanson shares and refinance existing debt of Hanson and HeidelbergCement Finance B.V. In the previous year, finance lease liabilities were included in the other financial liabilities. The other financial liabilities primarily include European Medium Term Note programmes and loan notes. The increase is primarily due to the first-time consolidation of Hanson.

The derivative financial instruments with negative market values of EUR 10.4 million (previous year: 22.0) include interest rate swaps of EUR 0.0 million (previous year: 9.8), currency forwards of EUR 1.2 million (previous year: 2.1) and currency swaps of EUR 9.2 million (previous year: 10.1). The change in the market values of derivative financial instruments, accounted for as hedging instruments of cash flow hedges, amounts to EUR -5.2 million and was recognised directly in shareholders' equity. The changes in the market values of the derivatives included in the fair value hedge amount to EUR -3.6 million and the derivatives accounted for as "held for trading" amount to EUR -2.8 million. These changes were recognised in profit or loss. Additional statements on the derivative financial instruments are provided on pages 126 ff.

In connection with liabilities relating to personnel, provisions of EUR 120,000 (previous year: 120,000) were set up for outstanding virtual stock option plans. For the virtual stock option plan 2003/2009, the stock options were recognised at their fair value. At the end of the year, the total number of outstanding stock options still amounted to 3,000 (previous year: 3,000).

The following tables give an overview of the maturities of the financial liabilities.

Maturities of financial liabilities
EURm	<= 1 year	1-5 years	> 5 years	Total
31 December 2007
Debenture loans	30.2	845.7	1,466.4	2,342.3
Bank liabilities	1,365.9	10,096.4	451.3	11,913.6
Other financial liabilities	903.4	261.5	114.5	1,279.4
Liablities from finance lease	7.6	11.4	1.9	20.9
Derivative financial instruments	10.4			10.4
	2,317.5	11,215.0	2,034.1	15,566.6
31 December 2006
Debenture loans	672.4	748.2		1,420.6
Bank liabilities	437.9	691.3	2.8	1,132.0
Other financial liabilities	377.2	343.2	125.8	846.2
Liablities from finance lease
Derivative financial instruments	15.8	6.2		22.0
	1,503.3	1,788.9	128.6	3,420.8

The following table contains further details of the finance lease liabilities. It shows the reconciliation of the total future minimum lease payments at the balance sheet date to their present value.

Minimum lease payments of finance leases
EURm	<= 1 year	1-5 years	> 5 years	Total
Present value of future minimum lease payments	7.6	11.4	1.9	20.9
Interest of future minimum lease payments	0.7	0.8	0.5	2.0
Future minimum lease payments	8.3	12.2	2.4	22.9

Additional statements on financial instruments

The following table assigns the individual balance sheet items for the financial instruments to classes and categories. In addition, the aggregate carrying amounts for each measurement category and the fair values for each class are shown.

		31 December2007
Carrying value	Fair value	Carrying value	Fair value
140.4		125.2
94.1	94.1	30.1	30.1
162.8	163.8	285.9	300.1
1,359.0	1,357.3	2,303.7	2,305.5
214.9	214.9	831.6	831.6
9.7	9.7	14.4	14.4
9.3	9.3	25.9	25.9
3,398.8	3,408.7	15,535.3	15,590.7
1,199.0	1,199.0	2,095.2	2,131.5
		20.9	20.9
10.5	10.5	1.7	1.7
11.5	11.5	8.7	8.7
		31 December2006

Investments "Available for sale at cost" are equity securities measured at cost, for which no listed price on an active market exists and whose fair values cannot be reliably determined. Therefore, no fair value is indicated for these instruments. "Available for sale at fair value" investments are measured at fair value on the basis of the stock market prices on the reporting date. Derivative financial instruments, both those using hedge accounting and those held for trading, are also measured at fair value. In these items, the fair value always corresponds to the carrying amount.

The fair values of the long-term loans, other long-term operating receivables, bank loans, finance lease liabilities, and other long-term financial and operating liabilities correspond to the present values of the future payments, taking into account the interest parameters at the time of payment.

The fair values of the listed bonds correspond to the nominal values multiplied by the price quotations on the reporting date. For the financial instruments with short-term maturities, the carrying amounts on the reporting date represent reasonable estimates of the fair values.

The following overview shows the carrying amounts of the financial instruments aggregated by the categories given in IAS 39.

Financial instruments according		31 December 2006			31 December2007
to categories of IAS 39	Fair value	Fair value	Cost/	Fair value	Fair value	Cost/
	with	without	amortised	with	without	amortised
EURm	P/L effect	P/L effect	cost	P/L effect	P/L effect	cost
Loans and receivables			1,736.7			3,421.2
Assets available for sale		94.1	140.4		30.1	125.2
Assets held for trading	-2.2			17.2
Financial liabilities			-4,597.9			-17,651.4
	-2.2	94.1	-2,720.8	17.2	30.1	-14,105.0

The following table shows the net gains or losses from the financial instruments by category.

Net gains or losses
EURm	2006	2007
Loans and receivables	23.2	23.8
Financial assets available for sale	-40.1	28.1
Financial assets held for trading	-7.2	24.4
Financial liabilities	-15.9	-66.7
	-40.0	9.6

The net gains from loans and receivables include impairments of EUR -31.9 million (previous year: 15.5) and exchange rate effects of EUR 55.7 million (previous year: 38.7).

In the recognition of the available for sale financial assets directly in shareholders' equity, a gain of EUR 7.8 million (previous year: -16.7) was recognised in shareholders' equity and EUR -59.7 million (previous year: 0.0) released from equity. The release relates to the sale of shares in Florida Rock Industries, Inc., US and of shares in PT Buket Sentul Tbk (BKSL), Indonesia. Furthermore, these sales produced a gain of EUR 81.9 million. A net loss of EUR -1.1 million (previous year: -8.9) is attributable to valuation allowances. In addition, foreign exchange losses of EUR -0.8 million (previous year: -14.5) were incurred. The net gains from the subsequent measurement of the financial assets held for trading includes foreign exchange and interest rate effects. In financial liabilities, the net profit includes effects from foreign currency translation of EUR -15.9 million (previous year: -66.7). The following table shows the total interest income and expenses for the financial instruments not measured at fair value through profit or loss.

Total interest income and expense
EURm	2006	2007
Total interest income	10.7	39.8
Total interest expense	-182.6	-510.2
	-171.9	-470.4

The impairment of financial assets by class is shown in the following table:

Impairment
EURm	2006	2007
Financial assets available for sale at cost	-8.9	-1.0
Financial assets available for sale at fair value		-0.1
Loans and other financial receivables	-3.5	-5.8
Trade receivables and other operating receivables	-12.0	-26.1
	-24.4	-33.0

Financial assets of EUR 22.3 million were pledged as collateral for liabilities and contingent liabilities.

Derivative financial instruments

The following table shows the nominal values and market values of the derivative financial instruments and the commodities, which fall within the scope of IAS 39.

Derivative financial instruments	31 December2006		31 December2007
EURm	Nominal value	Market value	Nominal value	Market value
Assets
Cash flow hedges
Interest rate swaps	3.8	0.0
Commodities		5.3		14.4
Fair value hedges
Currency forwards	40.9	1.8
Interest rate swaps	50.0	2.6
Derivatives held for trading
Currency forwards			36.1	3.4
Currency swaps	327.4	9.3	1,296.7	21.1
Interest rate swaps			3.8	0.0
Commodities				1.4
	422.1	19.0	1,336.6	40.3
Liabilities
Cash flow hedges
Interest rate swaps	30.7	0.5
Currency swaps	113.7	6.4	102.8	1.7
Fair value hedges
Interest rate swaps	455.0	3.6	271.8	0.0
Derivatives held for trading
Currency forwards	45.6	2.1	97.2	1.2
Currency swaps	460.3	3.5	951.4	7.5
Interest rate swaps	217.3	5.9
	1,322.6	22.0	1,423.2	10.4

Cash flow hedges

The currency risk of a business acquisition was hedged using currency forwards. The valuation effects of EUR -1.28 million, recognised directly in equity, were charged to goodwill at the time of acquisition. The currency interest rate swap hedges the future currency and interest rate risks of a variable interest-bearing loan. This swap with a market value of EUR -1.7 million matures in March 2009. During the reporting period, EUR 4.2 million was recognised directly in equity and EUR 4.8 million released to profit or loss as a foreign exchange gain in financial results. The hedged cash flows from currency arise at every reporting date and the hedged cash flows from interest arise quarterly.

The commodities hedge future electricity prices. In 2008, around half of the outstanding market value (EUR 14.4 million) matures. The remaining amount is distributed across the next three years. In the reporting year, EUR 9.1 million was recognised directly in equity. Half of the hedged cash flows arise in 2008. The remaining cash flows are distributed across the next three years. There was no appreciable ineffectiveness in the cash flow hedges.

Fair value hedge

In order to hedge the risk of a change in the market interest rate of a fixed interest-bearing loan, an interest rate swap was designated as a hedging instrument in a fair value hedge. As at the reporting date, the market value is EUR 0.03 million. The interest swap matures in January 2008. The valuation effects of the interest rate swap, amounting to EUR 1.2 million, and the valuation effects of the loan, amounting to EUR -1.5 million, were recognised in profit or loss.

The currency forwards used to hedge the foreign-currency risks of a loan in a fair value hedge were dedesignated at the beginning of the year and accounted for as derivatives held for trading. The adjustment of the loan to its fair value until dedesignation is amortised over the term of the loan.

Derivatives not accounted for as hedges ("held for trading")

Of the market values of the held for trading derivatives, EUR 1.1 million of the currency forwards mature in the middle of 2009 and EUR 0.9 million mature in the middle of 2010. All other derivatives mature within one year.

Risks from financial instruments

As regards its assets, liabilities, firm commitments and planned transactions, HeidelbergCement is particularly exposed to risks arising from changes in foreign exchange rates, interest rates, and market and stock market prices. These market price risks may have a negative impact on the Group's financial position and performance. The Group manages these risks primarily as part of its ongoing business and financing activities and, when required, by using derivative financial instruments. The main aspects of the financial policy are determined by the Managing Board. The Group Treasury department is responsible for implementation of the financial policy and ongoing risk management.

The Group Treasury department acts on the basis of existing binding guidelines, which determine the decision criteria, competences, responsibilities and processes for managing the financial risks. Certain transactions also require the prior approval of the Managing Board. The Group Treasury department informs the Managing Board on an ongoing basis about the amount and scope of the current risk exposure and the current market development on the global financial markets. The Group Internal Audit department monitors the observance of the guidelines mentioned above and the corresponding legal framework by means of targeted auditing.

Credit risk

HeidelbergCement is exposed to credit risks through its operating activities and certain financial transactions. The credit risk is the risk that a contracting party unexpectedly does not fulfil, or only partially fulfils, the obligations agreed when signing a financial instruments contract. The Group limits its credit risk by only concluding contracts for financial investments and derivative financial instruments with partners with a first-class credit rating.

Credit rating

The rating agencies Standard & Poor's, Moody's Investor Service and Fitch Ratings assess the creditworthiness of HeidelbergCement as BBB-/A3, Baa3/P3 and BBB-/F3 respectively. The downgrading of the ratings awarded by the rating agencies could have a negative impact on HeidelbergCement's cost of capital and refinancing possibilities.

Cash and cash equivalents

This item essentially comprises cash. The Group is exposed to losses arising from credit risks in connection with the investment of cash and cash equivalents if contracting parties do not fulfil their obligations. HeidelbergCement manages the resulting risk position by diversification of contracting parties. Cash and cash equivalents are invested in carefully selected financial institutions with external ratings. At present, no cash or cash equivalents are overdue or impaired as a result of failures. The maximum credit risk of the cash and cash equivalents corresponds to the carrying amount.

Trade receivables

Trade receivables result mainly from the sale of cement, concrete and aggregates. In operating activities, the outstanding debts are monitored on an ongoing basis. Credit risks are taken into account by means of individual valuation allowances and lump-sum individual valuation allowances. The maximum risk position from the trade receivables corresponds to the carrying amount.

Other receivables and assets

The credit risk position from other receivables and assets corresponds to the carrying amount of these instruments. HeidelbergCement regards this credit risk as insignificant.

Derivative financial instruments

Derivative financial instruments are generally used to reduce risks. In the course of its business activity, HeidelbergCement is exposed to interest rate, currency and energy price risks. For accounting purposes, a significant portion of the derivatives are not accounted for as hedges in accordance with IAS 39, but as instruments in the category "held for trading". However, from a commercial perspective, the changes in the market value of these instruments represent an economically effective hedge within the context of the Group strategy. The maximum credit risk of this item corresponds to the market value of the derivative financial instruments that have a positive market value and are shown as financial assets at the balance sheet date. In order to reduce the credit risk, the hedging transactions are, in principle, only concluded with leading financial institutions with a first-class credit rating. The contracting parties have very good credit ratings, awarded by external rating agencies, such as Moody's Investor Service, Standard & Poor's or Fitch Ratings. There are currently no past-due derivative financial instruments in the portfolio.

Liquidity risk

The liquidity risk describes the risk that a company cannot fulfil its financial obligations to a sufficient degree. To manage HeidelbergCement's liquidity, the Group maintains sufficient cash and extensive credit lines with banks, besides the cash inflow from operating activities. The operating liquidity management includes a daily reconciliation of cash and cash equivalents; the Group Treasury department, based in Heidelberg, acts as an in-house bank. This allows liquidity surpluses and requirements to be managed in accordance with the needs of the entire Group and of individual Group companies. In addition to a revolving credit facility of EUR 1 billion with a term ending in May 2012, HeidelbergCement has other unused bilateral credit lines of a significant amount available in order to secure liquidity.

The following maturity overview shows how the cash flows of the liabilities as at 31 December 2007 affect the Group's liquidity position. The overview describes the progress of

• undiscounted repayments and interest payments for bonds
• undiscounted bank loans and interest payments to banks
• undiscounted other liabilities and
• undiscounted contractually agreed payments for derivative financial instruments, as a total for the year.

The trade payables are assigned to short-term maturities (within a year). For variable interest payments, the current interest rate is taken as a basis. Payments in foreign currency are translated using the exchange rate at year end.

Cash flows of financial liabilities
and derivative financial instruments	Book value	Cash flows	Cash flows	Cash flows	Cash flows	Cash flows
EURm	31.12.2007	2008	2009	2010	2011	2012-2016
Debenture loans	2,342.3	113.3	509.4	703.8	149.2	1,958.8
Bank loans	11,913.6	5,860.8	5,966.4	146.1	157.2	213.0
Other financial liabilities	1,300.2	974.6	55.2	23.6	122.8	443.5
Derivatives with positive market values
Cash flow hedges	14.4	7.2	3.9	2.7	0.6
Fair value hedges
Derivatives held for trading	25.9	1,313.0	9.9	9.3
Derivatives with negative market values
Cash flow hedges	1.7		102.2
Fair value hedges		0.2
Derivatives held for trading	8.7	1,048.5

Cash flows of financial liabilities and derivative financial instruments EURm	Book value 31.12.2006	Cash flows 2007	Cash flows 2008	Cash flows 2009	Cash flows 2010	Cash flows 2011-2016
Debenture loans	1,420.6	763.2	47.9	347.8	473.0
Bank loans	1,132.0	492.5	177.0	77.8	125.0	263.8
Other financial liabilities	846.2	426.8	222.2	42.7	9.8	183.1
Derivatives with positive market values
Cash flow hedges	5.3			3.8
Fair value hedges	4.3	11.2	10.5	9.9	59.3
Derivatives held for trading	9.3	327.4
Derivatives with negative market values
Cash flow hedges	6.9	10.2	20.5	113.7
Fair value hedges	3.6	455.0
Derivatives held for trading	15.3	553.7	63.9	153.4

Interest rate risk

Interest rate risks exist as a result of potential changes in the market interest rate and may lead to a change in fair value in the case of fixed interest-bearing financial instruments and to fluctuations in interest payments in the case of variable interest-bearing financial instruments. The Managing Board and Supervisory Board of HeidelbergCement AG have decided against hedging the variable interest-bearing financial instruments. This strategy is based on the historically strong correlation between increasing profits and rising interest rates. For financial instruments with fixed interest that are measured at amortised cost, interest rate risks have no impact on the earnings and shareholders' equity.

The average share of variable interest-bearing financial instruments is 84% (previous year: 80%). If the market interest rate level had been 100 basis points higher (lower) on 31 December 2007, HeidelbergCement's interest cost would have risen (fallen) by EUR 73 million (previous year: 28).

Currency risk

HeidelbergCement AG's currency risks result from its investing, financing and operating activities. Risks from foreign currencies are primarily hedged in so far as they affect the Group's cash flows. In contrast, foreign currency risks that do not affect the Group's cash flows (i.e. the risks resulting from the translation of the assets and liabilities of foreign subsidiaries into the Group reporting currency) generally remain unhedged. However, if necessary, HeidelbergCement AG can also hedge this foreign currency risk. Currency forwards, currency swaps and, in isolated cases, currency options are used in the elimination of existing currency risks.

Through the in-house banking activities of HeidelbergCement AG, the borrowing and investment of liquidity of the subsidiaries leads to currency positions that are hedged by means of external currency swap transactions which are appropriate in terms of maturities and amounts. Consequently, currency fluctuations in connection with the in-house banking activities would have no impact on profit or shareholders' equity.

The hypothetical profit implications, considering the external financial instruments (primarily currency swap transactions) in isolation, in the event of a 10% increase (decrease) in the value of the Euro against all other currencies on 31 December 2007 would be as follows:

EUR/USD: EUR +9.5 million, EUR/AUD: EUR -15.5 million, EUR/SEK: EUR -63.3 million, EUR/GBP: EUR -48.4 million, EUR/NOK: EUR -66.2 million, EUR/CAD: EUR -6.0 million, EUR/DKK: EUR -4.5 million, EUR/CZK: EUR -4.2 million, EUR/RUB: EUR -1.1 million, EUR/CHF: EUR +1.6 million, EUR/EEK: EUR +4.7 million, EUR/ILS: EUR +1.2 million, EUR/PLN: EUR +1.4 million, EUR/RON: EUR +4.2 million, EUR/HKD: EUR +2.9 million, IDR/USD: EUR +11.2 million

(At 31 December 2006 EUR/USD: EUR -9.7 million, EUR/SEK: EUR -26.0 million, EUR/GBP: EUR -5.5 million, EUR/NOK: EUR -13.8 million, EUR/CZK: EUR -5.5 million, EUR/DKK: EUR -5.4 million, EUR/PLN: EUR -1.9 million, EUR/HKD: EUR -1.6 million, EUR/EEK: EUR +1.3 million, EUR/RON: EUR +1.5 million, IDR/USD: EUR +14.5 million)

Capital management

To ensure the sustainability of the Group's financial position and performance, the management primarily employs three instruments.

The investments are aligned with HeidelbergCement's strategic and operational planning. For all investments, with the exception of replacement investments, the long-term contribution to profits for the Group is measured and subjected to a 'contribution to profits' test. Significant strategic investments with a volume exceeding EUR 5 million are subject to central testing and are presented individually to the Managing Board. The test centres on the impact of investments on the balance sheet and the profit and loss accounts of the HeidelbergCement Group. HeidelbergCement also uses country-specific weighted average cost of capital after tax, which was between 7.5% and 14% for 2007.

HeidelbergCement has a worldwide, results-related remuneration system for management (see management report page 41 f.). Clear goal agreements ensure a results-focused management approach. For all countries in the Group, the Managing Board defines the target profit required in order to obtain bonus payments.

Through regular quarterly meetings with all country managers, the Managing Board of HeidelbergCement discusses and follows up agreed goals and countries' profits, as well as the strategic orientation. An extensive discussion on operational planning at national level is held in the fourth quarter. In personal talks with the national management, the Managing Board establishes profit goals, activities and the important investments.

Guarantees and other financial commitments

Guarantees are potential future obligations to third parties, the existence of which depends on the occurrence of at least one uncertain future event outside HeidelbergCement's control.

At the reporting date, there are contractually provided guarantees of EUR 136.5 million (previous year: 129.5). These include obligations of EUR 119.3 million (previous year: 96.5) for which the probability of outflow is remote (IAS 37.28).

Other financial commitments
EURm	2006	2007
Rental and leasing contracts
Total of all leasing payments mature within 1 year	38.1	75.3
Total of all leasing payments mature within 1 to 5 years	107.2	194.5
Total of all leasing payments mature after more than 5 years	77.6	242.0
	222.9	511.8
Other off-balance-sheet financial commitments for planned tangible
and financial fixed asset investments	210.2	232.8

Other financial commitments are listed with their nominal values. The future rental and leasing obligations refer primarily to property and other assets used by HeidelbergCement.

Related parties disclosures

IAS 24 requires a statement concerning the most important relationships with related companies and persons that may exert a significant influence on HeidelbergCement AG. This applies to companies accounted for as joint ventures or associates and key management personnel.

Spohn Cement GmbH, Norderfriedrichskoog, holds a 60.59% share in HeidelbergCement AG. Spohn Cement GmbH is included in the Group Annual Accounts of Kötitzer Ledertuch- und Wachstuch Werke AG, Norderfriedrichskoog. The companies belong to the Merckle Group.

HeidelbergCement has purchased a total of 2.6 million shares in Hanson PLC at a price of EUR 33.5 million from MeTo Beteiligungen GmbH, Ulm, Pan GmbH, Norderfriedrichskoog and HWO GmbH, Norderfriedrichskoog. The companies belong to the Merckle Group and sold the shares to HeidelbergCement at their acquisition prices. In addition, HeidelbergCement provided services to the value of EUR 101,000 (previous year: 43,000) to Spohn Cement GmbH, Norderfriedrichskoog.

Business transactions with associates include turnover and other sales, primarily to ready-mixed concrete companies accounted for at equity, amounting to EUR 87.9 million (previous year: 116.4), the procurement of goods and services amounting to EUR 101.3 million (previous year: 105.2), and services provided amounting to EUR 1.4 million (previous year: 3.0). In addition, guarantees of EUR 2.8 million (previous year: EUR 1.8) were granted to associated companies. In 2007, no loans were provided to associated companies (previous year: EUR 15.4 million).

Intra-group turnover and other sales with joint ventures amounted to EUR 110.2 million (previous year: 66.9). Raw materials, goods and other services amounting to EUR 149.6 million (previous year: 48.1) were procured from these joint ventures. EUR 9.6 million (previous year: 10.0) was generated in financial and other services. Receivables amounting to EUR 74.8 million (previous year: 82.8) and liabilities of EUR 19.4 million (previous year: 9.3) exist in connection with these activities and financial transactions. Guarantees of EUR 68.3 million (previous year: 51.8) were granted.

All transactions were conducted at standard market terms and conditions. In addition, companies of the Heidelberg-Cement Group have not carried out reportable transactions of any kind with members of the Supervisory Board of Managing Board as persons in key positions or with companies in whose executive or governing bodies these persons are represented.

Statement of compliance with the German Corporate Governance Code

The statement of compliance with the German Corporate Governance Code required by § 161 of the German Stock Company Act (Aktiengesetz) was submitted by the Managing Board and the Supervisory Board of HeidelbergCement AG on 21 March 2007. The statement for 2008 will be published on 17 March 2008.

Fees of the independent auditors

In 2007, the independent auditors Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft received fees amounting to EUR 7,273,900.

Fees of the independent auditors
EUR '000s	2007
Approval of the Group Annual Accounts	2,574.3
Other charges for confirmation and valuation services	1,409.0
Tax advisory service	2,842.8
Other services	447.8
	7,273.9

Supervisory Board and Managing Board

We refer to the details given in the in the Corporate Governance chapter of the management report (pages 33 f.).

The total remuneration of the Managing Board in 2007 amounted to EUR 25.0 million (previous year: 20.1). EUR 4.0 million (previous year: 3.3) of this was paid in fixed remuneration, EUR 20.2 million (previous year: 16.7) in variable remuneration and EUR 0.8 million (previous year: 0.1) as part of other remuneration elements. The other remuneration elements consist of payments for committee activities at subsidiaries of HeidelbergCement AG and non-cash benefits arising from the provision of company cars. Allocations to provisions for pensions (current service cost) for current members of the Managing Board amounted to EUR 1.7 million (previous year: 1.4). EUR 5.2 million was charged to expense for redundancy payments in connection with the Hanson acquisition. Payments to former members of the Managing Board and their surviving dependants amounted to EUR 2.9 million (previous year: 3.8) in the reporting year. Provisions for pension obligations for former members of the Managing Board amounted to EUR 25.8 million (previous year: 28.1).

The total Supervisory Board remuneration in 2007 amounted to EUR 608,113 (previous year: 1,366,077).

Mandates of members of the Supervisory Board and Managing Board

The members of the Supervisory Board and Managing Board hold the following mandates:

• a) Membership in other legally required supervisory boards of German companies
• b) Membership in comparable German and foreign supervisory committees of commercial enterprises. Group mandates are marked with 1).

Supervisory Board*

Fritz-Jürgen Heckmann

Chairman

Chairman of the Arbitration Committee and member of the Personnel Committee and the Audit Committee Business lawyer

• a) All for One Systemhaus AG Drews Holding AG INFORMATIK CONSULTING SYSTEMS AG Paul Hartmann AG (Chairman)
• b) HERMA Holding GmbH + Co. KG (Deputy Chairman) Hübner GmbH (Chairman) Neue Pressegesellschaft (Südwestpresse) mbH & Co. KG Südwestdeutsche Medien Holding GmbH URACA GmbH & Co. KG (Deputy Chairman)

Heinz Schirmer

Deputy Chairman Member of the Audit, the Personnel and the Arbitration Committee Mechanic and locksmith foreman; Chairman of the Council of Employees at the Schelklingen plant of HeidelbergCement AG

Theo Beermann

Member of the Personnel Committee Production controller; Deputy Chairman of the Council of Employees at the Ennigerloh plant, Heidelberg-Cement AG

Heinz-Josef Eichhorn

until 29 September 2007 Department Head of the Executive Committee Section IV – Building Materials Industry, IG Bauen-Agrar-Umwelt

Josef Heumann

Member of the Arbitration Committee Kiln supervisor; Chairman of the Council of Employees at the Burglengenfeld plant, HeidelbergCement AG

Gerhard Hirth

Managing Director of the SCHWENK group of companies

• a) Köster AG
• b) Duna-Dráva Cement Kft Tvornica Cementa Kakanj d.d.

Rolf Hülstrunk

until 31 December 2007 Former Chairman of the Managing Board, Heidelberg-Cement AG

Heinz Kimmel

until 13 March 2008 Sales employee; Chairman of the Council of Employees at the Sulzheim plant, Südharzer Gipswerk GmbH

Max Dietrich Kley

• Attorney a) BASF AG Infineon Technologies AG (Chairman) Schott AG SGL Carbon AG (Chairman)
• b) UniCredito Italiano S.p.A. (member of the Board of Directors)

Hans Georg Kraut

Member of the Personnel Committee Director of the Schelklingen plant of HeidelbergCement AG

* All indications refer to 31 December 2007 or, if the person in question left the Supervisory Board of HeidelbergCement AG prior to that date, the date on which they stepped down

Senator h.c. Dr. med. h.c. Adolf Merckle

Chairman of the Audit Committee Attorney

a) Hanfwerke Oberachern AG (Chairman) Kässbohrer Geländefahrzeug AG Pommersche Provinzial-Zuckersiederei AG (Chairman) F. Reichelt AG (Chairman)

Ludwig Merckle

Chairman of the Personnel Committee Managing Director, VEM Vermögensverwaltung GmbH

a) Kässbohrer Geländefahrzeug AG (Chairman) Phoenix Aktiengesellschaft (Deputy Chairman) Württembergische Leinenindustrie AG (Chairman)

Tobias Merckle

Managing Director of the association prisma – Initiative für Jugendhilfe und Kriminalprävention e.V., Leonberg

Eduard Schleicher

Member of the Audit, the Personnel and the Arbitration Committee Partner with unlimited liability, SCHWENK group of companies

a) Wieland-Werke AG Wohnungsverein Ulm AG

b) Duna-Dráva Cement Kft Nederlandse Cement Handelmaatschappij B.V.

Heinz Schmitt

Member of the Audit Committee Controller; Chairman of the Council of Employees at the headquarters of HeidelbergCement AG

Karl Heinz Strobl

Member of the Audit Committee until 22 April 2007 Member of the Federal Executive Committee, IG Bauen-Agrar-Umwelt

Managing Board*

Dr. Bernd Scheifele

Chairman

• a) PHOENIX Pharmahandel AG & Co KG (Chairman) Verlagsgruppe Georg von Holtzbrink GmbH (Deputy Chairman) Landesbank Hessen-Thüringen Girozentrale (member of the Board of Directors)
• b) TAMRO Oyj (Chairman of the Board of Directors) Hanson Limited1) PT Indocement Tunggal Prakarsa Tbk.1) Mysore Cements Limited1)

Dr. Dominik von Achten

since 1 October 2007

Helmut S. Erhard

until 31 December 2007 b) Lehigh Cement Company 1) (Chairman) Lehigh Cement Limited1) (Chairman)

Daniel Gauthier

b) S.A. Cimenteries CBR1) (Chairman) ENCI Holding N.V. 1) (Chairman) PT Indocement Tunggal Prakarsa Tbk.1) (Chairman) Mysore Cements Limited1) (Chairman) Indorama Cement Limited1) (Chairman) Scancem International AS 1) (Chairman) Akçansa Çimento Sanayi ve Ticaret A.S. (Deputy Chairman) China Century Cement Limited (Deputy Chairman) Tanzania Portland Cement Company Ltd. Górazdze Cement S.A.1) Duna-Dráva Cement Kft1) Ceskomoravsk ´y Cement, a.s.1) Carmeuse Holding S.A.

Andreas Kern

• a) Basalt-Actien-Gesellschaft Kronimus AG
• b) Bukhtarminskaya Cement Company 1) (Chairman) Carpatcement Holding S.A.1) Castle Cement Ltd1) (Chairman)

Ceskomoravsk ´y Cement, a.s.1) (Chairman) Duna-Dráva Cement Kft 1) (Chairman) Górazdze Cement S.A.1) (Chairman) HeidelbergCement Northern Europe AB1) (Chairman) Limited Liability Company SaqCementi 1) Nederlandse Cement Handelmaatschappij B.V. (Deputy Chairman) Open Joint Stock Company "Kryvyi Rih Cement" 1) Südbayer. Portland-Zementwerk Gebr. Wiesböck & Co. GmbH Tvornica Cementa Kakanj d.d.1)

Alan Murray

since 1 October 2007 b) Hanson Limited1) Hanson Pension Trustees Limited International Power plc

Dr. Lorenz Näger

• a) PHOENIX Pharmahandel AG & Co KG
• b) S.A. Cimenteries CBR1) Hanson Limited1) HeidelbergCement Finance B.V.1) HeidelbergCement Netherlands Holding B.V.1) HeidelbergCement Northern Europe AB1) Lehigh Cement Company 1) Lehigh Cement Limited1) Mysore Cements Limited1) PT Indocement Tunggal Prakarsa Tbk.1) RECEM S.A.1) TAMRO Oyj

Dr. Albert Scheuer

since 6 August 2007

b) Heidelberg Cement, Inc.1) HeidelbergCement UK Holding II Limited1) Lehigh Cement Company 1) Lehigh Cement Limited1)

* All indications refer to 31 December 2007

Events after the Balance Sheet date

On 17 January 2008 (settlement on 25 January 2008), a four-year Euro Bond with a volume of EUR 1 billion was issued via our EUR 10 billion European Medium Term Note (EMTN) programme.

On 14 February 2008, the Managing Board of HeidelbergCement AG decided on the conditions for carrying out the cash capital increase from authorised capital, with the consent of the Supervisory Board, following its resolution of 15 January 2008. VEM Vermögensverwaltung GmbH, Dresden, which belongs to the Merckle Group, has subscribed for 5 million new shares at the near-market subscription price of EUR 102.50 per share. The Group received EUR 512.5 million on 19 February from the capital increase.

On 7 August 2007, HeidelbergCement had reached an agreement with the French building materials manufacturer Saint Gobain regarding the sale of maxit Group. The transaction, with a value of EUR 2,125 million was completed on 13 March 2008 with the approval of the European Commission.

The proceeds from all three measures were used to repay the syndicated loan taken out in connection with the Hanson acquisition.

There were no other reportable events in accordance with IAS 10 (Events after the Balance Sheet Date) after 31 December 2007.

41 Proposed dividend

The Managing Board and Supervisory Board propose the following dividend: EUR 1.30 dividend per share. Based on 125,000,000 no-par value shares, entitled to participate in dividends for the 2007 financial year, the amount for dividend payment is EUR 162,500,000.

42 Approval of the Group Annual Accounts

The Group Annual Accounts were prepared by the Managing Board and adopted on 14 March 2008. They were then submitted to the Supervisory Board for approval.

Heidelberg, 14 March 2008

HeidelbergCement AG

The Managing Board

Audit Opinion

We issued the following audit opinion on the Group annual accounts and the management report of HeidelbergCement Group and HeidelbergCement AG:

"We have audited the consolidated financial statements prepared by the HeidelbergCement AG, Heidelberg, comprising the balance sheet, the income statement, statement of changes in equity, statement of recognized income and expense, cash flow statement and the notes to the consolidated financial statements, together with the combined management report of HeidelbergCement Group and HeidelbergCement AG for the business year from 1 January to 31 December 2007. The preparation of the consolidated financial statements and the group management report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to § 315a (1) HGB are the responsibility of the parent company's management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs as adopted by the EU, the additional requirements of German commercial law pursuant to § 315a (1) HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development."

Stuttgart, 14 March 2008 Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft

Elkart Somes Wirtschaftsprüfer Wirtschaftsprüferin

(German Public Auditor) (German Public Auditor)

HeidelbergCement annual accounts

Responsibility statement

To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group management report, which has been combined with the management report of the company, includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.

Heidelberg, 14 March 2008

HeidelbergCement AG

The Managing Board

Dr. Bernd Scheifele Alan Murray

Dr. Dominik von Achten Dr. Lorenz Näger

Andreas Kern

Daniel Gauthier Dr. Albert Scheuer

Additional information

Group functions and Country Managers

Group functions

Böttcher, Henner	Director Group Treasury
Fickel, Dr. Brigitte	Director Group Communication & Investor Relations
Fischer, Helmut	Director Group Reporting, Controlling & Consolidation
Glitz, Dr. Albrecht	Director Group Compliance
Huhn, Claus	Director Group Purchasing
Kern, Thomas	Director Group Strategy & Development
Kozelka, Rolf	Director Group Tax
Schaffernak, Dr. Ingo	Director Group Legal
Schnurr, Andreas	Director Group Human Resources
Schwind, Klaus	Director Group Shared Service Centers
Standhaft, Dr. Wolfgang	Director Group Information Technology
Vandenberghe, Marc	Director Group Insurance & Corporate Risk Management
Weingardt, Stefan	Director Group Internal Audit

Heidelberg Technology Center (HTC)

Breyer, Robert	Senior Vice President Manufacturing & Engineering,
	President – HTC North America
Jelito, Ernest	Director Manufacturing & Engineering TEAM and
	Head of HTC TEAM.
Nobis, Rainer	Director Manufacturing & Engineering Europe-Central Asia and
	Head of HTC Europe-Central Asia

Country Managers

Europe-Central Asia
Baltics/Denmark/Noway/Sweden
Syvertsen, Gunnar	General Manager Northern Europe
Belgium/Netherlands
Jacquemart, André	General Manager Benelux
Bosnia & Herzegovina
Muidza, Branimir	Country Manager Bosnia & Herzegovina
Czech Republic
Hrozek, Jan	General Manager Czech Republic
Georgia
Thrul, Meinhard	General Manager Georgia
Germany
Seitz, Gerhard	General Manager Germany
Hungary
Szarkándi, János	General Manager Hungary

Additional information

Country Managers (cont.)

Israel
Priel, Eliezer	Country Manager Israel
Kazakhstan
Seher, Hans-Jürgen	General Manager Kazakhstan
Poland
Balcerek, Andrzej	General Manager Poland
Romania
Rohan, Mihai	General Manager Romania
Russia
Knell, Christian	General Manager Russia
Spain
Ortiz, Jesus	Country Manager Spain
Ukraine
Lysenko, Stanislav	General Manager Ukraine
United Kingdom
O'Shea, Patrick	Chief Executive Officer Hanson UK

North America

Kitzmiller, James Chief Executive Officer Lehigh Hanson Harrington, Dan Chief Operating Officer, Regional President South, White Cement Purcell, Jim Regional President North Hummel, David Regional President West Derkatch, Jim Regional President Canada Manning, Richard President Building Products

Asia-Australia-Africa-Mediterranean

China
Bogdan, Ludek	Chief Operating Officer China
India
Guha, Ashish	Chief Operating Officer India
Indonesia/Bangladesh/Brunei
Lavallé, Daniel	Chief Operating Officer South East Asia
Malaysia
Jeffery, Simon	Country Manager Malaysia
Australia
Cadzow, Leslie	Chief Executive Officer Australia
Africa
Junon, Jean-Marc	Chief Operating Officer Africa
Mediterranean/HC Trading
Adigüzel, Emir	Chief Operating Officer Mediterranean Basin & Middle East and HC Trading

Intermediate product in the cement production process that is made by heating a finely-ground raw material mixture to around 1,450° C in the cement kiln. For the manufacture of cement, the greyish-black clinker nodules are extremely finely ground. Clinker is the main ingredient in most cement types.

Commercial Paper p.26 f., 48

Bearer notes issued by companies within the framework of a Commercial Paper Programme (CP Programme) to meet short-term financing needs.

Concrete

Building material that is manufactured by mixing cement, aggregates (gravel, sand or chippings as a rule) and water.

* The index indicates the main references

142

Glossary/index*

Aggregates

Aggregates in the form of sand, gravel and crushed rock are used principally for concrete manufacturing or for road construction and maintenance.

Alternative raw materials and fuels p. 5, 20, 28, 39, 43, 48, 53, 56, 59

By-products or waste from other industries, whose chemical components make them suitable substitutes for natural resources (raw materials, fuels).

Asphalt is manufactured from a mixture of graded aggregates, sand, filler and bitumen. It is used primarily for road construction and maintenance.

Biodiversity or biological diversity is the genetic diversity within species, diversity between species and diversity of ecosystems.

Blast furnace slag p. 43, 47

Finely ground, glassy by-product from steel production. Additive for cement.

Cement

Cement is a hydraulic binder, i.e. a finely ground inorganic material that sets and hardens by chemical interaction with water and that is capable of doing so also under water. Cement is mainly used to produce concrete. It binds the sand and gravel into a solid mass.

Clinker (cement clinker) p. 47

Asphalt p. 54, 56

Biodiversity p. 5, 44, 49

Additional information

Euro Medium Term Note (EMTN) programme p. 26, 32, 48, 103, 122, 137

An EMTN programme represents a framework agreement made between the company and the banks appointed to be dealers. HeidelbergCement AG has the option of issuing debenture bonds up to a total volume of EUR 10 billion under its EMTN programme.

Fly ash		p.47
	Solid, particulate combustion residue from coal-fired power plants. Additive for cement.
	Net financial liabilities	p. 26, 38
	The sum of all long-term and short-term financial liabilities minus cash at bank and in hand, short-term investments and short-term derivatives. Synonyms: net indebtedness, net liabilities, net debt.
	Price-earnings ratio (PER)	p. 26
	Share price divided by earnings per share.

Rating (credit rating) p. 27, 128

Classification of the credit standing of debt instruments and their issuers. Specialised agencies such as Standard & Poor's, Fitch Ratings and Moody's produce such ratings. Ratings range from AAA or Aaa as the highest credit standing to C or D as the lowest.

Ready-mixed concrete

Concrete that is manufactured in a ready-mixed concrete facility and transported to the building site using ready-mix trucks.

SNCR installation p. 44

An installation to reduce nitrogen oxide emissions by the SNCR process (selective non-catalytic reduction).

Sustainable development p. 5, 43 ff., 49

Sustainable development signifies a development that fulfils the economic, ecological and social needs of people alive today without endangering the ability of future generations to fulfil their own needs.

Syndicated loan p. 25 ff., 31 f., 38, 48, 103, 122, 137

Large-sized loan which is distributed ("syndicated") among several lenders for the purpose of risk spreading.

Review of 2007 events

January/February Investment in Tanzania

In order to cover the growing cement demand in Tanzania, we are investing around USD 100 million by 2009 in the modernisation of our Tanzania Portland Cement Company cement plant and in expanding the production capacity to 1.2 million tonnes of cement.

March/April

Akçansa acquires Ladik cement plant

The purchase of the Ladik cement plant extends the market region of our joint venture Akçansa to the Central Black Sea region in Turkey. The plant, constructed in 1983, has a cement capacity of 1.2 million tonnes and has large raw material deposits at its disposal.

Takeover bid for Hanson

HeidelbergCement submits a takeover bid to the shareholders of Hanson PLC for the acquisition of their shares. The price per share is 1,100 pence, the total purchase price approximately GBP 8 billion. Hanson's Board of Directors recommends that its shareholders accept the takeover bid.

Sale of Vicat

As part of the strategic reorientation, HeidelbergCement sells its 35% stake in the French company Vicat. The proceeds of around EUR 1.4 billion are used specifically to expand the aggregates activities in mature markets.

July/August

New cement plant in China

In the Chinese province of Shaanxi, HeidelbergCement commissions the newly constructed Jingyang cement plant. The state-of-the-art plant has a cement capacity of 2.3 million tonnes and has large raw material deposits at its disposal. It is operated as a joint venture with Jidong Cement.

Acceptance and authorisation of the Hanson takeover

A few days after the acceptance of the takeover bid by the Hanson shareholders, with more than 99% of the votes at an Extraordinary General Meeting, the US competition authorities FTC and the European Commission approve the purchase.

Additional information

Sale of maxit Group to Saint-Gobain

As part of the strategic reorientation, HeidelbergCement sells the subsidiary maxit Group to the French building materials manufacturer Saint-Gobain for EUR 2,125 million. The transaction was completed on 13 March 2008.

Purchase of Hanson completed

With the approval from the competent courts on 23 August, the purchase of Hanson is completed. The company, now owned 100% by HeidelbergCement, is delisted from the stock exchange and renamed Hanson Limited.

September/October

Integration of Hanson

Start of a tight integration programme, which should be completed by mid-2008. By the end of 2007, numerous locations are visited, data collected, areas of synergy and best practices determined, and important decisions concerning the Group organisation made.

Disinvestments in Niger and Nigeria

As it is not possible to establish leading market positions in Nigeria and Niger, HeidelbergCement sells its participations in the Cement Company of Northern Nigeria in Nigeria and Société Nigérienne de Cimenterie in Niger.

Modernisation of the cement plant in Mitchell, Indiana

By 2012, the Mitchell cement plant in the US state of Indiana will be modernised and its capacity expanded. One important goal is to considerably reduce the electricity and fuel consumption as well as emissions.

November/December

Integration significantly ahead of schedule

Just 100 days after the completion of the takeover of Hanson, the fundamental cornerstones of the reorganisation in the two important markets, North America and the United Kingdom, are established. The new organisation takes effect from 1 January 2008.

Imprint

Copyright © 2008

HeidelbergCement AG Berliner Strasse 6 69120 Heidelberg, Germany

Concept and realisation

Group Communication & Investor Relations HeidelbergCement Hans-Joachim Dietz, Kelkheim, Germany ServiceDesign Werbeagentur GmbH, Heidelberg, Germany Target Languages GbR, Gaiberg, Germany DG Medien GmbH, Heidelberg, Germany abcdruck GmbH, Heidelberg, Germany

Photographs

HeidelbergCement photo archives Angelo Caggiano, Allentown/US – pages 62-63 Steffen Fuchs, Heidelberg – pages 11 and 16-17 Lloyd Lutz, Evansville/US – pages 72-73

Translation of the Annual Report 2007. The German version is binding.

Copies of the 2007 accounts of HeidelbergCement AG and further information are available on request from Group Communication & Investor Relations. Kindly find this annual report and further information about HeidelbergCement on the Internet: www.heidelbergcement.com

Contact:

Group Communication

Phone: +49 6221/4 81-227 Fax: +49 6221/4 81-217 E-Mail: info@heidelbergcement.com

Investor Relations

Phone: +49 6221/4 81-696 Fax: +49 6221/4 81-217 E-Mail: IR-info@heidelbergcement.com

Printed on environmentally friendly PEFC certified paper. Promotion of sustainable forest management – more information under www.pefc.org Group areas

Financial calendar 2008
-------------------------	--	--

Interim Report January to March 2008	8 May 2008
Annual General Meeting	8 May 2008
Interim Report January to June 2008	5 August 2008
Interim Report January to September 2008	5 November 2008

Group areas

North America

Canada US

Europe-Central Asia

Austria Belgium Bosnia-Herzegovina Croatia Czech Republic Denmark Estonia Georgia Germany Hungary Israel Kazakhstan Latvia

Lithuania Netherlands Norway Poland Romania Russia Slovak Republic Spain Sweden Switzerland Ukraine United Kingdom

Asia-Australia-Africa-Mediterranean

Benin Gabon Ghana Liberia Sierra Leone Tanzania

Bangladesh Brunei China India Indonesia Malaysia Singapore

Australia

Togo Turkey United Arab Emirates

Group Services

Heidelberg Cement is member:

HeidelbergCement AG Berliner Strasse 6 69120 Heidelberg, Germany www.heidelbergcement.com