Annual Report

2006

2

REFERENCE TO THE HEIJMANS WEBSITE

This is the Heijmans N.V. 2006 Annual Report. This

Annual Report is published solely in electronic form.

To improve readability, an HTML document has been

placed alongside the PDF version of the full document.

A 2006 Annual Review is available in printed form.

An electronic version of this document is also available on

the Heijmans website. You can also order the printed

version of the 2006 Annual Overview via the Internet if

you are not yet included on our mailing list. The Annual

Overview thematically and graphically depicts the most

important Heijmans developments and includes the

summarized balance sheet, income statement and cash

flow statements. References to more detailed information

on the Heijmans website are included below. Where more

comprehensive information is available on the website,

it is indicated in the text of the Annual Review.

1. Analysts who track Heijmans’ activities, their reports

and recommendations: www.heijmans.nl/Investor_

Relations/aanbevelingenanalisten

2. Management roadshows and presentations:

www.heijmans.nl/Investor_Relations/roadshows

3. Heijmans share trends, including peer group

comparisons: www.heijmans.nl/Investor_Relations/

Actuelekoers

4. Archive of press releases: www.heijmans.nl/Pers/

perskamer/main_archief

5. Code of Conduct and whistle-blowing regulations:

www.heijmans.nl/Corporate_governance/gedragscode

6. Insider trading policy: www.heijmans.nl/Corporate_

governance/reglementvoorwetenschap

7. Heijmans vision on principles and best practice

provisions of the Corporate Governance Code:

www.heijmans.nl/Corporate_governance/

corporategovernancecode

8. 2006 Annual Review: www.heijmans.nl/jaaroverzicht

9. Heijmans and Corporate Social Responsibility (as of

May 2007): www.heijmans.nl/

maatschappelijkondernemen

Publication date: 15 March 2007

This Annual Report is also published in Dutch. In case of textual

contradictions between the Dutch and the English version, the first shall

prevail.

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TABLE OF CONTENTSCHAIRMAN’S MESSAGE 4

HEIJMANS PROFILE AND OBJECTIVES 7Profile and positioning 7

Core values 8

2006 Milestones 8

HEIJMANS’ TEN YEAR RECORD IN KEY FIGURES 9

THE EXECUTIVE BOARD, THE SUPERVISORY BOARD AND OVERVIEW OF MANAGEMENT BOARDS 11

REPORT OF THE SUPERVISORY BOARD 14

REPORT OF THE EXECUTIVE BOARD FOR THE 2006 FINANCIAL YEAR 16Strategy 16 Trends 16 The Heijmans strategy 16 Objectives 17 Competition 192006 financial performance 20 Income statement 20 Balance sheet 25 Cash flow 27Market information 28 Markets in countries in which Heijmans is active 28 Heijmans 2006 operations 31 The Netherlands 31 Heijmans Property Development 31 Heijmans Building 35 Heijmans Infrastructure 36 Belgium 39 United Kingdom 39 Germany 40Expectations for 2007 41 Management information 41 Innovation, modernization 42 Corporate Governance, Code of Conduct 44 Reporting, audit, communications and accountability 46 Heijmans shares and ratios 47 Clients 49 Employees, suppliers, subcontractors 50 The environment 55 Risk management 56

2006 FINANCIAL STATEMENTS 61

OTHER FACTS 136Statutory provisions concerning profit appropriation 137Auditor’s report 138

OTHER INFORMATION 140Declaration of Independence of the Heijmans Preference Shares Trust 141Heijmans Share Administration Trust report 143Glossary 146

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CHAIRMAN’S MESSAGE

Dear Heijmans Shareholder and other interested parties,

Prior to its start, the year 2006 was characterized by many as

a year of transition. After a few difficult years, the Dutch

government offered its citizens the prospect of a better future.

For the building sector, it primarily provided a stimulus for

residential development and new large infrastructure projects.

An important part of our activities already performed better in

2006 than in the year before. This mainly concerned property

operations in the Netherlands and all of our operations in the

United Kingdom, Belgium and Germany. The prospects for the

future also look good. For the Netherlands in terms of its

economy and for the construction industry as an industrial

sector.

Market trends and results: strong residential market and increasing Building and Infrastructure volumes. Positive developments in almost all divisions.

Looking back on 2006, a few clear trends related to the Dutch

markets in which Heijmans operates can be discerned:

• The market for privately owned homes, the key market for

the Heijmans Property Development Division, remained

consistently strong. Demand was high and while production

was higher than in previous years, it nevertheless lagged

behind government targets. 2006 was a year of rising prices

and a year during which the division achieved excellent

results. There was greater demand in the commercial

property market, particularly for office space. In 2006

Heijmans succeeded in reducing its vacancy rate significantly.

• The results achieved by the Building Division were

disappointing. In addition to executing projects accepted

under less favourable market conditions and a significant

rise in purchase prices, there were shortcomings in the

management of several projects. This provided the impetus

for making several organizational adjustments and placing

greater emphasis on risk and contract management.

• The Infrastructure Division’s activities in the Netherlands

yielded better results, particularly for smaller projects.

Nevertheless, entirely according to expectations, the results

for the Infrastructure Division are lower than in 2005 when

large projects such as the HSL and the Betuwelijn still had a

considerable impact on operating results. Starting in 2007,

new large projects will be initiated.

• The countries outside the Netherlands in which Heijmans

operates exhibited more or less significant growth in

construction volumes. However, Heijmans’ results improved

in all countries.

After Building and Infrastructure volumes in the Netherlands

had expanded in early 2006, the second half of the year also

saw an improvement in prices. This did not immediately yield

margin improvements, since price increases often had to be

passed on to suppliers and subcontractors. This is a normal

pattern for this phase of the cycle. As builders’ manpower

capacity is used up and clients are forced to cut their own

manpower capacity, they are likely to opt more frequently for

variations of building team agreements that include

opportunities for design, financing, operations or

maintenance, or a combination thereof. This will also lead to

improved margins. Over the long term, these forms of

contracting produce the best possible results for all parties

involved, in a technical as well as economic sense. They offer

opportunities for defining performance commitments by the

executing party and for approaching the project on the basis

of overall lifecycle costs. This furthermore promotes emphasis

on constructive quality, which limits the probability of the

occurrence of problems such as those we recently experienced

in relation to several projects in the Netherlands. Our strategy

to evolve into a full service construction and property

development company should make us less vulnerable to this

cycle, for example in relation to project development.

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We acquired companies in countries and segments in which

we wanted to gain strength and disposed of companies that

we no longer considered part of our core activities. This way,

we succeeded in creating a proper balance between our

operations and the geographical regions in which we are

active: property development, Building and Infrastructure in

the Netherlands, Belgium, the United Kingdom and Germany.

Our vulnerability to individual cycles has been reduced and

we are closer to achieving a number of objectives formulated

for 2008.

The profit after taxes for 2006 is € 82.5 million. A nonrecurring

profit reducing impact was caused by a penalty imposed by

the European Commission that exceeded the provisions set

aside in prior years. The operating result, excluding

nonrecurring costs, increased from € 118 million to

€ 121 million. The disappointing results of the Building

Division prevented a larger increase in relation to the previous

year. The operating results in the Property Development

Division and in all foreign operations were good to excellent.

Strategy: significant steps forward in achieving objectives

Translated freely, the strategy must ensure that Heijmans is

involved earlier, longer and more frequently in the design and

maintenance of construction projects. The ultimate goal here is

to improve margins. In the search for improved margins,

opportunities will also be created for further growth. To achieve

this goal, Heijmans underwent significant renewal in several

areas in 2006:

• The recognition by Infrastructure that regular infrastructure

projects clearly require a different approach than projects that

are becoming increasingly larger and that more often involve

design, financing and maintenance has resulted in

organizational adjustments and changes in management.

Large, integral projects are dealt with centrally. This involves

key aspects such as risk and contract management. Regular

projects that are on average much smaller in size and that are

often limited to execution are dealt with on a decentralized

basis. Key aspects here include efficiency, logistics and costs.

• Trends in the markets in which Heijmans operates demand

new business units with different management criteria and

market focus. In 2006 the following business units were set

up and/or further evolved: Heijmans Rail, Technical Facility

Management (TFM), Inframanagement and Heijmans @

ventures for PPP/PFI (Public Private Partnerships and

Private Finance Initiatives).

• To be able to offer integral projects, Heijmans was still

missing the installation engineering component. This

component was also required to be able to offer Technical

Facility Management services. The larger installation

companies in the Netherlands that are qualified to carry out

large, complicated projects that include design, financing

and/or maintenance usually belong to competitors.

Heijmans has a need for the structural availability of this

discipline and filled this void with the acquisition, which

was completed in 2007, of Burgers Ergon.

• Abroad, Heijmans wants to be active in areas with the

potential for providing added value. This is already the case

with Leadbitter in the UK. Leadbitter is a company that

specializes in subsidized housing, healthcare and education.

To achieve better geographical coverage, Heijmans

reinforced its position with the acquisition of Denne

Construction.

• Added value can be provided in Germany through road and

railway construction activities, a market which after years of

recession appears to be the first to be recovering. The

acquisition of Heitkamp and the Oevermann acquisition

completed at the beginning of 2007 strengthen Heijmans’

position in this market.

• Involvement in the design and initiation of projects is also

being realized through the ownership of development

lands. This is why Heijmans announced the purchase of the

assets of Bouwfonds Langewold: approximately 59 hectares

of development land that can accommodate over 1,000

homes.

• The serial production of building elements is not one of

Heijmans’ core activities. This is a result of the policy that

was instituted a few years ago and is the reason why Vebo

6

Holding was sold to BTE Nederland in June 2006.

Expectations are that Vebo will come into its own within the

BTE production culture and that this will ensure the

continued viability of this company.

• Participating in and coordinating all phases of the

construction value chain requires the chain to be

orchestrated. It also requires Heijmans to have continued

assurance that it will have access to strategic raw materials

such as sand and gravel. For that reason, in 2006 Heijmans

acquired a right, which will remain effective for 80 years,

to extract gravel from a quarry in Norway.

• People within the organization itself also took important

steps. Initiatives within the organization are funnelled into

the so-called V3 Programme (“Accelerated”, “Innovative”,

“In front”, which all begin with the letter V in Dutch) created

by Heijmans. This platform for innovation gives ideas for

innovation full rein and several ideas have indeed resulted

in concepts and products that are being marketed, such as

Tailor housing (Living as you Wish), Waterwonen (Living on

Water), Adaptis, and starter homes.

• Heijmans endorses the importance of Corporate Social

Responsibility and sustainable development in its broadest

sense. Care for our environment leads to a better

understanding of our processes and services and, over the

long term, to innovation as well. This will have

repercussions on the achievements of the company.

We want to make this more explicit. Performance indicators

have been determined for this purpose, baseline

measurements will be carried out and objectives will be

formulated that we intend to use as a management tool.

You will find more information on this topic in the Report of

the Executive Board in this Annual Report. After 2007 the

formulation of yearly objectives must become a regular

component of our improvement cycle. Heijmans endorses

the importance of including sustainability factors as part of

the criteria that serve as a basis for selecting construction

partners. This is expected to lead to long-lasting quality

improvement in the development of our built environment.

Innovation in our day-to-day operations

Modernization is high on Heijmans’ agenda, which is why the

spotlight is focused on innovation within the organization.

Innovation is a topic of daily consideration as part of our

projects and often spontaneously results from the

involvement of our people in these projects. Examples of such

projects can be found on our website: www.heijmans.nl.

Involvement is crucial to the realization of our full-service

strategy and must lead to the “sweet taste” of improved

margins. And for that involvement we thank you, our

shareholder, but first and foremost we thank our now well

over 12,000 employees.

Rosmalen, 21 February 2007

Guus Hoefsloot

Chairman of the Executive Board

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Profile and positioning

Heijmans is a listed Property Development, Building and

Infrastructure company. Outside the Netherlands, Heijmans

operates in the United Kingdom, Belgium and Germany.

At the end of 2006 our 9,189 employees together achieved

revenues of almost € 3 billion and a profit after tax of

€ 82.5 million. Our strength lies in the combination of

Property Development, Building and Infrastructure. We are a

major leading company in this sector, combining professional

and conceptual skills.

We offer our clients full-service solutions from concept and

design through to maintenance and management. Our aim is

to stand out as a reliable and service-oriented partner.

FIGURE 1: Revenues and operating profit in 2006

Breakdown of revenues by activity and country

Breakdown of operating profit by activity and country

FIGURE 2: Full-service

Ope

ratin

g m

argi

n (%

)

Consulting/design

(Risk-bearing)development

Execution Maintenance Operation/management1 2 3 4 5

Engineering servicesProperty DevelopmentBuildingInfrastructureService and maintenance

FIGURE 3: Heijmans Organization Chart

HEIJMANSINTERNATIONAL

HeijmansProperty Development

HeijmansBuilding

HeijmansInfrastructure

Burgers Ergon

HeijmansBelgium

HeijmansUK

HeijmansGermany

HEIJMANSNETHERLANDS

HEIJMANS N.V.

In the Netherlands and Belgium, most companies operate under

the name of Heijmans. The names of divisions and operating

companies can be recognized by the name Heijmans with the

additional specification of the activity they carry out. A few

companies operate under a different name: In the Netherlands,

this includes Proper-Stok (Property Development), Van Kleef,

Tecona (Infrastructure), Burgers Ergon (Installation Engineering)

and Bestcon, and in Belgium Himmos (Property Development)

and Van den Berg (Infrastructure). In Germany and the United

Kingdom, Heijmans generally operates under the name of

individually acquired companies. In Germany these are Franki

Grundbau, Heitkamp Rail and Oevermann (Infrastructure),

HEIJMANS PROFILE AND OBJECTIVES

Property DevelopmentInfrastructureBuilding

64%25%11%

NetherlandsBelgiumUK

83%8%6%

Germany 3%

NetherlandsBelgiumUK

77%10%9%

Germany 4%

BuildingInfrastructureProperty Development

38%33%29%

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and in the United Kingdom Leadbitter and Denne Construction

(Building). The summary of important group entities in this

Annual Report provides more information in this regard.

Core values

Heijmans stands for:

Innovative Entrepreneurship

We are modern and progressive, ambitious, proactive and

actively looking for opportunities.

Committed Partner

Heijmans operates as a service provider and involves the client

in developing solutions. We are big enough to take on any

challenging project, but we are also pleased to provide rapid,

high quality service to local clients with smaller projects.

Heijmans is a committed partner that is, moreover, aware of its

social responsibilities.

Agreeable Professionals

Heijmans combines the personal approach, collegiality and the

long-term outlook of the original family business (since 1923)

with the professionalism, result-orientation, discipline and cost-

awareness of a listed company (which it has been since 1993).

Reliable and Transparent

Heijmans is fair and transparent in the conduct of all its

business and approaches all its stakeholders with an open mind.

Investors know us as transparent, approachable and predictable.

2006 Milestones

• Stronger presence at front end of value chain

Heijmans’ strategy is focused on increasing its involvement

during the initiation phase of a construction project.

The announced takeover of Bouwfonds Langewold allows

Heijmans to expand its potential residential building

programme by over 1,000 homes on 59 hectares. In addition,

Heijmans won a number of competitions via Proper-Stok

which also increase development capacity.

• Stronger presence at back end of value chain

Heijmans’ strategy is also focused on extending its

involvement in building projects by providing

maintenance and management services. With the announced

takeover of Burgers Ergon (2006 revenues of € 210 million),

completed in 2007, Heijmans has expanded its maintenance

activities and is now in a position to offer not only

construction services, but installation engineering services as

well.

• Foreign operations strengthened, while maintaining a strong

position in the domestic market

Heijmans’ strategy is focused on involvement in operations

outside the Netherlands with the potential of providing added

value to the corporation. By maintaining foreign operations at

20-25% of total revenues, Heijmans is able to secure a strong

position in the domestic market. In Germany, Heitkamp Rail

(€ 78 million in revenues) and (in January 2007) Oevermann

(€ 230 million in revenues) were acquired, both of which are

active in various markets such as the infrastructure market.

Denne Construction (2006 revenues of € 75 million), active

in the subsidized housing market segment and in the

education and healthcare markets, was acquired in the United

Kingdom. The share of foreign operations as a percentage of

Heijmans’ 2006 revenues was approximately 23%.

• Alignment with new market dynamics

The (planned) organizational adjustments of the Building

and Infrastructure divisions align the organization with the

market trends that make a clearer distinction between large,

integrated projects with a focus on contract, risk and

procurement management and regular projects with an

emphasis on efficiency and costs.

• Improvement in results

Improvement in the results obtained by the Heijmans

Property Development Division, as well as in the United

Kingdom, Belgium and Germany to a large extent

compensated for the disappointing results of the Building

Division.

• Innovation in products and processes

Through means of Waterwonen (Living on Water), Starter

Homes and the continued development of Tailor housing

(Living as you Wish), as well as Adaptis, Shuttle Buggy,

Technical Facility Management and Public Private

Partnerships (Heijmans@ventures).

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HEIJMANS’ TEN-YEAR RECORD IN KEY FIGURES

Key figures 2006 2005 2004IFRS

2004NL GAAP

2003 2002 2001 2000 1999 1998 1997

Results x € millions

Revenues 2,942 2,835 2,672 2,594 2,604 2,415 2,288 1,564 1,243 1,078 899

Operating profit1 117.2 128.8 80.6 85.4 97.4 134.0 112.2 68.8 51.4 44.5 34.9

Profit after tax 82.5 87.1 40.1 44.9 60.0 87.6 70.2 48.1 34.3 27.3 22.9

Capital x € millions

Assets 2,130 1,906 2,011 1,585 1,518 1,373 1,090 628 473 391 312Average capital invested 952 892 995 883 899 747 480 269 213 189 144

Equity 442 389 284 457 446 427 284 176 147 153 94

Net debt 497 403 515 197 344 301 216 91 15 33 21

Cash flow x € millions

Operating –34 109 245 219 59 –30 –10 –3 68 3 26

Investing –36 –13 –15 –38 –64 –101 –107 –66 –47 –57 –31

Financing 78 –85 –167 –75 –5 150 123 52 –3 50 7

Net cash flow 8 11 63 106 –10 19 6 –17 18 –4 2

Ratios (%)

Return on average

capital invested2 12.3 14.5 11.1 13.1 12.5 17.9 23.4 25.6 24.2 23.5 24.2

Profit after tax:

– as a % of equity 18.7 22.4 14.0 10.0 13.7 24.7 30.5 29.8 22.9 22.1 26.1

– as a % of revenues 2.8 3.1 1.5 1.7 2.3 3.6 3.1 3.1 2.8 2.5 2.5

Number of shares x 1,000

At year-end 24,073 24,073 22,438 22,438 22,438 22,438 21,468 18,859 18,127 17,778 17,361

Average 24,073 23,696 22,438 22,438 22,438 22,433 20,697 18,552 17,982 17,631 17,161

Information per share� x € 1,00

Equity 18.35 16.42 12.66 20.37 19.88 19.03 13.72 9.49 8.17 8.68 5.48

Operating profit 4.87 5.43 3.59 3.81 4.34 5.97 5.42 3.71 2.86 2.52 2.03

Profit after tax 3.43 3.67 1.79 1.70 2.37 3.70 3.28 2.47 1.78 1.52 1.33

Dividend 1.45 1.45 1.22 1.22 1.22 1.48 1.31 1.00 0.72 0.61 0.53

Share price x € 1,00

At year-end 41.66 36.49 24.10 24.10 19.10 16.70 20.77 19.25 15.65 17.61 21.33

Highest 43.75 40.80 24.34 24.34 19.81 28.25 26.60 19.50 19.60 32.22 22.46

Lowest 35.49 24.44 17.64 17.64 13.20 14.51 18.05 14.35 12.80 12.52 12.71

Other information

Order book x € millions 3,196 2,559 2,362 2,350 2,341 2,317 2,013 1,666 1,203 818 790

Economic Value Added

x € millions 37 15 33 20 –3 –9 64 51 10 13 14

Weighted average cost

of capital % 6.6 6.3 6.5 6.5 6.2 7.4 8.1 8.1 8.8 7.9 9.3

Employees (average) 9,162 9,336 9,839 9,839 10,011 9,544 9,549 7,083 6,296 5,517 4,761

1 The amounts for 2004 and prior years on the basis of NL GAAP represent EBIT.2 The amounts for 2004 and prior years on the basis of NL GAAP are calculated with reference to EBIT. For 2004 and later years, IFRS operating profit is used. 3 The information per share is based on the weighted average number of shares. Dividend per share is based on the total outstanding number of shares at year-end.

1010

0

1.000

750

500

250

’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06

INVESTED CAPITAL (IN € MILLION)

0

3,000

REVENUES (IN € MILLION)

2,000

2,500

1,500

1,000

500

’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06

0

150

100

125

75

50

25

’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06

OPERATING PROFIT (IN € MILLION)

0

6

5

4

3

2

1

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OPERATING MARGIN (IN %)

0

225

150

75

300

450

375

525

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EQUITY (IN € MILLION)

0

1.0

0.5

2.0

1.5

3.0

2.5

3.5

4.0

’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06

PROFIT AFTER TAX AS % OF REVENUES

0

10,500

9,000

7,500

6,000

4,500

3,000

1,500

’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06

EMPLOYEES (AVERAGE)

0

30

25

20

15

10

5

’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06

RETURN ON INVESTED CAPITAL (IN %)

0

100

80

60

40

20

’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06

PROFIT AFTER TAX (IN € MILLION)

0

3,000

2,500

3,500

2,000

1,500

1,000

500

’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06

ORDERBOOK (IN € MILLION)

IFRSNL GAAP

1111

EXECUTIVE BOARD

G.H. (Guus) Hoefsloot (1��0), Chairman

Dutch nationality; appointed to the Heijmans

Executive Board in November 2002 and appointed

chairman in May 2003. Formerly worked for ABN

AMRO Bank N.V., Barclays Bank Plc and was also a

member of the Executive Board of Hollandsche

Beton Groep N.V. Guus Hoefsloot is also chairman

of the supervisory board of the college for

intermediate professional education, MBO Sint

Lucas, a member of the Advisory Council of

Euronext Amsterdam, and member of the board of

governors for the MBA programme for the

construction industry at the TSM Business School

(the international business school of Twente

University).

J.A.J.M. (Jacques) van den Hoven (1��2)

Dutch nationality; appointed to the Heijmans

Executive Board in May 1999. Jacques van den

Hoven is also chairman of the Stichting

Wetenschappelijk Onderwijs en Onderzoek in de

Vastgoedkunde (SWOOV), a member of the Bureau

(general board) of the International Federation for

Housing and Planning (IFHP), treasurer for

Habiforum and chairman of the supervisory board

of Van Raak Staal Holding B.V.

D.A.M. (Dick) van der Kroft (1��6)

Dutch nationality; appointed to the Heijmans

Executive Board in December 2000. Formerly

worked for KPMG Accountants N.V., Asea Brown

Boveri B.V. and as finance and administration

director at Volker Wessels N.V. Dick van der Kroft is

also a member of the board of governors of the

postdoctoral Register Controller programme at the

Tias Business School in Tilburg and a member of

the supervisory board of the Rotterdam

Philharmonic Orchestra.

1212

J.L. (Joep) Brentjens (1��0), Chairman.

Dutch nationality; former chairman of the

executive board of VNU N.V.; appointed to the

Supervisory Board of Heijmans N.V. in May 1994,

most recently reappointed in May 2005. Due to

stand down in 2009. Most important other

positions held: vice-chairman of the Van Leer

Group Foundation, Trustee of the Bernhard van

Leer Foundation, chairman of the Océ N.V.

supervisory board, member of the supervisory

boards of Fortis OBAM N.V., Crecor B.V. and Holding

Mij. P. Bakker Hillegom B.V. and chairman and

member of the boards of a number of foundations.

J.L.M. (Hans) Bartelds, RA (1��6), Chairman of the

Audit Committee.

Dutch nationality; former chairman of the executive

board of Fortis; appointed to the Supervisory Board

of Heijmans N.V. in May 1994, most recently

reappointed in May 2006. Due to stand down in

2010. Most important other positions held: chairman

of the supervisory board of Hogeschool Utrecht,

member of the board of Nationaal Restauratie Fonds

and member of the board of VSB Fonds.

J.C. (Hans) Blankert (1��0), Chairman of the

Remuneration Committee and the Selection and

Appointment Committee.

Dutch nationality; former chairman of the Dutch

Olympic Committee/Dutch Sports Federation,

former chairman of VNO NCW. Appointed member

of the Supervisory Board of Heijmans N.V. in

September 1999, most recently reappointed in

May 2003. Due to stand down in 2007 (not

eligible for reappointment).

SUPERVISORY BOARD

Most important other positions held: chairman of

the supervisory board of ING Dutch Residential

Fund N.V./Dutch Office Fund N.V./Dutch Retail

Fund N.V. and member of the supervisory boards

of Siemens N.V. and Q-Park N.V., member of the

supervisory board of Stichting Antonius

Ziekenhuis Nieuwegein and chairman of the

supervisory board of Stichting De Open Ankh and

chairman of Regieraad Bouw.

Professor N.H. (Nico) Douben (1���)

Dutch nationality; Emeritus Professor of technical

economics at Eindhoven University of Technology;

appointed to the Supervisory Board of Heijmans N.

V. in May 1996, most recently reappointed in May

2005. Due to stand down in 2009.

Most important other positions held: member of

the supervisory board of Smals Beheer B.V. and

Vitalis Zorggroep, chairman of European Logistic

Centre Limburg and lecturer in network and chain

studies at HAS Den Bosch.

Professor T.J. (Theo) Peeters (1���)

Belgian nationality; former chairman of the

executive board of BBL N.V., former member of the

executive board of KBC Bankverzekeringsholding

N.V. and KBC Verzekeringen N.V.; appointed to the

Supervisory Board of Heijmans N.V. in May 2002,

most recently reappointed in May 2006. Due to

stand down in 2007 (not eligible for reappointment).

Most important other positions held: chairman of

the supervisory board of Uitgeverij Lannoo N.V.,

member of the supervisory board of F. van

Lanschot Bankiers N.V., Brantano N.V., De Eik N.V.,

SN Airholding N.V. and Partena.

1�1�

MANAGEMENT BOARDS OF DIVISIONS, CORPORATE SERVICES AND

OF ASSOCIATES OUTSIDE THE NETHERLANDS

Divisions

Heijmans Property Development

A.G.J. Hillen (1961), Chairman

W. de Jager (1957)

Heijmans Building

J.H.A. Vaags (1962), Chairman

R.A.M.M. Gradus (1963)

J.A. Poldervaart (1956)

Heijmans Structure

P.J. Overakker (1953), Chairman

M.J.J. Heijmans (1955)

P.G.F. Staps (1966)

Burgers Ergon

L.J.T. van der Els (1954), Chairman

G.P. Schoonderbeek (1961)

Heijmans Belgium

J. Godemont (1951), Chairman

L.F.M. Kwaks (1952)

Heijmans UK

Leadbitter

R.J. Rendell, M.I.C.E. (1952), Chairman

P. Abson, M.R.I.C.S. (1966)

S.M. Burgess (1952)

Corporate Services

Communication

F.E.A. Janssen (1964)

Facilities Management

E. van Hutten MBI (1951)

Control & Accounting

J.G. Telling MBA (1960)

Investor Relations

A.H.M. van Lith (1959)

Information Technology

J.A.C. van Geel RE (1969)

Legal Affairs

Z.G.J. Wijnands (1968)

Central Works Council

S. von Stetten, Chairman

H. Evers

F. van Gennip

R. Hermus

A. Jansen

S. Kitselaar

T. Koks

S. de Koning

A. Posthuma

D. van Schijndel

Heijmans Germany

Franki Grundbau

O. Neubauer (1956)

H. Steltner (1958)

Heitkamp Rail

W. Bremerich (1956)

M. Wacker (1955)

Oevermann

M. Gutsche (1970)

C. Gutsche (1967)

J. Segeth (1959)

H. Wegner (1954)

Personnel & Training

G.F.M.B. Raessens MBA (1958)

Secretary of the Executive Board

H.S.M. van Oostrom (1950)

Strategy and Planning

H.G. van der Zouwen MFE (1960)

A. Turenhout

Y. Valk

M. Vink

T. Vos

Technical Facility Management Business Unit

E.A. Grüter (1959)

Public Private Partnership Business Unit

M. van der Zwan (1964)

1�

MESSAGE OF THE SUPERVISORY BOARD

The Supervisory Board has the pleasure to present to

you the Annual Report for 2006, including the financial

statements. The Supervisory Board has read the

Executive Board’s 2006 report and has approved the

financial statements for 2006. The financial statements

have been audited by KPMG Accountants N.V., which

issued an unqualified opinion on them. The Supervisory

Board recommends that the shareholders adopt the

financial statements and accept the Executive Board’s

proposal for profit appropriation that the Supervisory

Board has approved, this being a dividend of € 1.45 in

cash (2005: € 1.45) per ordinary share with a face value

of € 0.03. The Supervisory Board also recommends that

the shareholders approve the proposed discharge from

liability to be presented to the Annual General Meeting

of Shareholders.

The Supervisory Board has traditionally exercised critical and

constructive oversight over the management of the company.

The state of affairs and the movements in results were

discussed at length during each meeting, as were the

company’s strategy, the 2006 and 2007 budgets and the

2006-2010 multi-year plan. The basic assumptions included in

these documents constitute important criteria for assessing the

implementation of plans and performance. Furthermore,

important matters for approval included acquisitions and

divestments based on planned policy directions. Partly as a

result of this, sound financing of the company’s operations was

a returning agenda item. The quality of a company’s

management is a primary responsibility of the Supervisory

Board. In view of this, the management development

programme was a topic that dominated our agenda. Risk

management and control mechanisms are items that are

always high on the agenda of a supervisory board. Particular

attention was devoted to these items due to the disappointing

results of the Heijmans Building Division. The Executive Board

immediately took drastic and proper measures in the area of

management and control systems in this regard.

Agenda

The Supervisory Board met eight times in 2006. Each of these

meetings was attended by all members of the Supervisory

Board and all members of the Executive Board. One of the

meetings was partially attended by all division directors and

some corporate directors to exchange ideas about current

issues. One meeting was combined with a project visit.

The company accountant was present at two meetings.

The Supervisory Board discussed its own performance and that

of the (members of the) Executive Board without the members

of the Executive Board being present.

Audit Committee

The Audit Committee consists of Messrs J.L.M. Bartelds

(Chairman) and T.J. Peeters. They met with the Executive Board

and the company accountant three times in 2006. They

consulted the accountant once without the Executive Board

being present. The main points of discussion concerned risk

management and control systems, the financing of the

company, the company’s fiscal position and the quality of

financial reporting.

Selection and Appointment Committee, Remuneration Committee

Both committees comprise Messrs J.C. Blankert (Chairman) and

J.L. Brentjens. They met two times in 2006. The remuneration of

Heijmans Executive Board members is in line with the

remuneration policy approved by shareholders during the

Annual General Meeting of Shareholders in May 2004.

The remuneration policy for members of the Executive Board is

available on the Heijmans website at www.heijmans.nl.

The amount of the bonus for 2006 is based on the Executive

Board’s performance over the past year, as well as the Board’s

performance measured over the past 3 years. The key

performance criteria for the past year were the budgeted net

profit after taxes, several personal objectives and objectives

concerning the net debt position of the company. The 3-year

performance criteria consisted of the trend in the net profit after

taxes over the past 3 years, as well as the company’s share price

trend during this period.

The personal objectives as well as the objectives concerning the

net profit after taxes were practically all achieved across the board.

1�

Composition of the Supervisory Board

In accordance with the articles of association and the

established practice of retirement by rotation, Mr. J.C Blankert

(by rotation) and Professor T.J. Peeters (statutory age limit) will

stand down in 2007. Heijmans is highly indebted to both

persons for their efforts and significant contributions to the

meetings and the development of the company. Heijmans has

greatly profited from their broad business and community

experience in this respect. In connection with their departure,

two vacancies will need to be filled on 18 April 2007.

The Annual General Meeting of Shareholders has a right to

recommend potential candidates for the board and the Central

Works Council has a right to submit candidates. A proposal will

be submitted to the Annual General Meeting of Shareholders of

18 April 2007 concerning possible successors. No supervisory

directors are scheduled to stand down in 2008. The present

composition of the Supervisory Board, together with personal

information and main and other positions held, is presented on

page 12 of this Annual Report, as well as on the Heijmans

website at www.heijmans.nl. All members of the Supervisory

Board are considered to be independent as defined in Article

II.1.2 of the Corporate Governance Code. None of the supervisory

directors had a conflict of interest with respect to the exercise of

their duties in 2006.

Departure of Ton Stuifzand

On 16 January 2007, Heijmans N.V. announced that Ton

Stuifzand had decided to leave the company. The Supervisory

Board and the Executive Board respect this decision and are

very grateful for his contribution to the development of the

company in various director positions and as a member of the

Executive Board.

In conclusion

Following several recessionary years, the construction market

is once again clearly expanding. All current indications are that

this expansion is taking place on a broad front and is expected

to last for several years. This is consistent with the projections

of the Economic Institute for the Building Industry (EIB).

The challenge for the coming years is the modernization of the

construction market, particularly in terms of how the players in

this market will relate to one another. A greater focus on the

chains and the costs of lifecycles will also make the market

more attractive to employees. This will create room for

creativity and for cooperation based on mutual trust.

The Supervisory Board would like to express its appreciation to

all Heijmans employees who are continuously focused on

quality improvement and who are actively contributing to this

indispensable process of modernization.

’s-Hertogenbosch, 21 February 2007

J.L. Brentjens, Chairman

J.L.M. Bartelds, Registered Accountant

J.C. Blankert

Professor N.H. Douben

Professor T.J. Peeters

16

REPORT OF THE EXECUTIVE BOARD FOR THE 2006 FINANCIAL YEAR

• A new market dynamic that demands more flexibility which

reinforces the outsourcing trend. This increases the

complexity of the construction process and there is a

greater need for sound management.

• New contract types (PPP/PFI) combined with improved

economic conditions that will attract foreign competition.

The Heijmans strategy

Heijmans has made a number of choices and formulated a

strategy based on these trends. The fundamental principle is

growth; organic growth, but also growth through

acquisitions. A net margin averaging 3% through the

eceonomic cycle is the basic precondition in this respect.

Margin remains an important objective, on the one hand due

to the risk profile of the construction industry, but also

because margin can only be realized on the basis of the

capacity to differentiate oneself. This makes the capacity to

differentiate oneself

a source of growth. Growth that can be realized by becoming

involved earlier, for longer and more often with our

client’s projects.

• Heijmans must realize a larger share of its growth at the

front end of the value chain by consistently involving itself

at the design stage of projects (project development,

engineering, PPP, construction teams). Heijmans intends to

carry out approximately 35% of its activities this way in 2008.

Ope

ratin

g m

argi

n (%

)

Consulting/design

(Risk-bearing)development

Execution Maintenance Operation/management1 2 3 4 5

Engineering servicesProperty DevelopmentBuildingInfrastructureService and maintenance

Strategy

Demand-side trends

A number of trends have been developing within the sector for

years and were reinforced in 2006. These trends are creating a

construction industry which is more knowledge and capital

intensive, in which international barriers are lowered or

eliminated and which is becoming increasingly competitive.

The most important trends are as follows:

• A shortage of homes and a persistent scarcity of lands for

residential development in the Netherlands. At the same

time, demand is becoming increasingly differentiated:

seniors, starters, families looking for improved living

quality, custom-developed homes and living near water.

• Reduction in government involvement which increases the

involvement of market players in a larger number of project

phases (integral property development, PPP (although slow

to take off), maintenance contracts, new contract types,

lifecycle approaches). Examples of sectors in which

government is reducing its involvement include the

healthcare sector, where new forms of financing will require

new work methods that will in turn affect healthcare

formulas and property development. New contract types

are also being used in the infrastructure sector which give

the builder greater responsibility for design and, for

example, maintenance.

• Increased tendency to outsource, with respect to which

criteria other than just the lowest price play an important

role. However, a large portion of the market remains

traditional, particularly in Belgium and Germany in

comparison to the Netherlands and the United Kingdom.

Supply-side trends

• The demand-side trends create differentiation on the supply

side: larger construction companies keep knowledge-

intensive, capital intensive and strategic activities in-house

and focus on integral projects and process management.

Smaller builders specialize in specific activities or

concentrate their activities in specific geographical areas.

• Developers, builders, building management companies,

engineers and installers which compete for the principal

contractor role.

1�

• Heijmans intends to realize a larger share of its activities at

the back end of the value chain (maintenance,

management, technical facility management). The objective

for 2008 is 20%. To achieve this, acquisitions are essential.

• Heijmans intends to offer its clients comprehensive

solutions and better value for money using an integral

approach involving a variety of Heijmans disciplines.

This will allow the operational synergy between different

Heijmans activities to be leveraged. In addition, activities

complement each other financially, given that property

development is capital intensive and construction

generates cash.

• Heijmans wants to create vertical integration across a

number of business activities, such as road construction,

where the control over raw materials is of strategic

significance for the production of asphalt.

• Heijmans intends to offer its clients excellent process and

product quality. This is only feasible by adopting a

systematic way of working to improve risk management,

project management and product quality management

and how projects are delivered.

• The Netherlands is the most important country of focus for

Heijmans. A strong domestic market is the best platform for

internationalization. Growth is realized organicly, but also

through acquisitions. This does not preclude larger

initiatives.

• The share of foreign revenues is approximately 23%.

Heijmans operates in those countries that have the

potential for realizing the above-mentioned strategic

options, or where it is possible to achieve synergy with

activities in the Netherlands.

Objectives

Due to the fact that certain activities are managed in terms of

capital requirement and return, while others are managed in

terms of margin and cash flow, a combination of both

approaches has been selected in formulating objectives. The

target for profit after taxes in relation to revenues is 3% in

2008, in respect of which the target for the return on average

capital invested is 14%. This target for return on capital

invested is based on the IFRS and corresponds to the earlier

formulated target of 18%, which was based on NL GAAP.

2006 Target 2008

Profit after tax as a % of revenues

2.8% 3%

Operating profit as a % of average capital invested

12.3% 14%

Number of homes sold in the Netherlands

3,600 4,500

Share of revenues from foreign operations

23% 20%

Revenues generated through Heijmans’ involvement in design or initiation phase

35% 35%

Revenues from management or maintenance activities

10% 20%

Heijmans’ financial objectives are increasingly supplemented

with non financial objectives. The emphasis in 2006 was on the

search for the right indicators in non financial areas, particularly

the social and environmental policy areas. The year 2007 will

be characterized by the formalization of concrete objectives and

transparent reporting in relation to these objectives. The

optimization of the value of the company is increasingly

becoming jointly dependent on the ability to respond to

expectations, requirements and demands in a changing social

context.

Objectives by division

Net margin is a key objective for every division. Heijmans wants

to limit revenues growth to only those activities that generate

acceptable profit margins. Heijmans Property Development will

also be managed in terms of the (return on) capital requirement.

The largest portion of the Heijmans capital invested is in this

division. From a continuity perspective it is important to keep

the inventory of homes up to par by reinvesting in lands, but

also to win competitive tenders. Heijmans intends to sell 4,500

1�

homes in 2008. A portion of these homes must consist of new

products such as Tailor housing, Starter Homes, etc.

Approximately 30% of Heijmans Building’s production is

produced for Heijmans Property Development. The division

must earn the remaining 70% from market transactions,

for the most part preferably on the basis of building team

agreements. Internal processes remain an area of attention:

purchasing, risk management and the management of large

projects. The division is managed in terms of operating margin

and cash flow.

Heijmans Infrastructure is shifting from an executing party of

mostly small, regular infrastructure projects to a full-service

provider for both large integral projects and regular

infrastructure projects. The growth in revenues and margin must

be realized through larger, integral projects. This also implies a

change in the division’s need for working capital. Risk

management and efficiency are continuing areas of attention.

Objectives related to international activities consist of growth in

owner occupied homes and cabling and pipes in Belgium,

growth in subsidized housing in the United Kingdom through

the geographical expansion of activities, and growth in the

margin of infrastructure activities in Germany.

The Burgers Ergon installation engineering business acquired in

2007 must primarily grow in terms of service and maintenance.

At new developments margin improvement is a more important

objective than revenue growth.

Heijmans is aiming for growth. The construction markets in the

countries in which Heijmans operates are exhibiting limited

growth. The average real growth of the construction market in

the Netherlands, for example, was 1% per year over the past

10 years (after inflation). A portion of Heijmans’ increase in size

must therefore be realized through acquisitions. Over the past

10 years, Heijmans achieved an average growth rate of over 15%

per year. Heijmans achieved this growth rate through a

combination of organic growth and acquisitions.

In 2006 and during the first weeks of 2007, 6 acquisitions and 2

divestments were announced.

Acquisitions

Divestments

Heijmans expects that the trends outlined will form the basis

for consolidation in the construction sector. Heijmans wants

to play a leading role in this process. What are the

opportunities and threats for Heijmans, and what are the

strengths and weaknesses of the company?

Strength Weakness Opportunity Threat

Shortage of employees

Track record Market power, size

Consolidation Influx of school graduates

Land bank Stock exchange listing

Inhibiting lead

Abolition of building cartels

Asphalt holdings Shift of risks

Distribution of risks Regulations

Country Activity Name

Estimated

Revenues

Acquisition

Cost

Germany RailwayConstruction

Heitkamp € 65 mln € 19 mln

United Kingdom

Building Denne € 75 mln € 17.3 mln € 26.2 mln

Netherlands Foundations Herrewijnen € 6 mln € 3.8 mln

Netherlands Installations Burgers Ergon

€ 210 mln € 70 mln

Germany Road construction

Oevermann € 230 mln € 14.5 mln

Netherlands Property development

Langewold € 17.6 mln

Country Activity Name Revenues Selling price

Netherlands Production Vebo € 37 mln € 12 mln

Netherlands Production BouwToe € 2 mln € 0.1 mln

1�

Competition

What is the competition like in the countries in which

Heijmans operates?

The 17 largest Dutch companies (business revenues of € 500

million and over) have a combined total revenues of

approximately € 31 billion. The group with revenues between

€ 100 and € 500 million (approx. 40 companies) have a

combined total revenues of approximately € 6.5 billion.

Because these revenues are also earned abroad, it is not

possible to make comparisons with the total Dutch

construction production. The market leader in the Netherlands

generates under 7% of the construction production and the 5

largest companies together generate about 23%. The larger

companies, almost without exception, are multi-disciplinary.

The smaller and medium-sized companies generally focus on

a single (niche) market and are occasionally involved in one

or several non-core activities. These figures indicate that the

supply side of the market is highly fragmented. There are over

6,500 principal contracting companies, of which

approximately 90% are active in the residential and non-

residential building segment. The remaining 10% are active in

the infrastructure segment. Of the infrastructure builders,

only 3% have more than 100 employees. Approximately

12,300 companies are active in the installation engineering

market (total of approximately € 10 billion).

The picture is not much different in other European countries,

although large companies in countries with large national

construction markets, such as the United Kingdom and

Germany, sometimes also focus on a single discipline or

market. In view of the changing market dynamics in many of

these countries, there is a reason for increase in size: the

industry is becoming more capital intensive (see the following

section for the key trends in this respect).

Property Development and Building 200� Revenues (€ billions)

BAM 1.8

Heijmans 1.8

Bouwfonds Property Development 1.3

Volker Wessels 1.2

Ballast Nedam 0.7

Rabo Vastgoed 0.6

Van Wijnen 0.5

Heijmans reports property development and building results

separately. Most Dutch companies that carry out both

activities report on total building and property development.

The competition summary is therefore based on combined

building and property development results (source: Annual

Reports).

Infrastructure 200� Revenues (€ millions)

Volker Wessels 1,430

BAM 1,422

Heijmans 776

Strukton 700

Ballast Nedam 541

Dura Vermeer 407

Installation Engineering 200� Revenues (€ millions)

GTI 1,062

Imtech 619

TBI 553

Stork 377

Unica 191

Burgers Ergon 187

20

Heijmans’ operations in Belgium reflect the situation in the

Netherlands. In addition to executing activities, Heijmans also

carries out property related activities in the Building and

Infrastructure markets. The supply side here is even more

highly fragmented than in the Netherlands. The top 5

companies were as follows in 2006.

Property Development and Construction 200� Revenues (€ millions)

CFE 533

Eiffage 497

BAM 469

Besix 353

Heijmans 265

Heijmans’ operations in the United Kingdom are primarily

focused on the residential building market. In addition,

Heijmans carries out projects for public clients in the

healthcare, education and recreation sectors. Although the

size of the British market allows for a greater focus on market

segments, the supply side is often still multi-disciplinary and

rather fragmented. To display the top 10 British construction

companies is meaningless in terms of providing a comparison

with Heijmans’ activities. This is because the results produced

in market segments can barely be derived from the figures.

Heijmans’ operations in Germany are primarily focused on

the infrastructure market. The same comments made above

for the British market apply here.

2006 financial performance

Heijmans closed the year 2006 with a profit after tax

amounting to € 82.5 million. This is after an incidental charge

of € 9 million arising from the investigation into the

construction industry. This concerns the € 17.1 million

penalty imposed in 2006 by the European Commission

concerning bitumen.

Income statement

2006 summary income statement

in € millions 2006 2005 Variance

Revenues 2,942 2,835 4%

Operating margin 4.0% 4.5%

Operating profit 117 129 –9%

Financial income and expenses –6 –7

Share of profits of associates 1 1

Profit before tax 112 123

Income tax expense –29 –36

Profit after tax �� 87 –5%

Profit margin 2.8% 3.1%

Revenues

Revenues rose by almost 4% to over € 2.9 billion. A significant

portion of this increase is due to the consolidation of the

acquisitions of Heitkamp Rail (Germany) and Denne

Construction (UK) as of 1 February 2006 and 1 October 2006,

respectively. The composition of revenues by organic and non

organic is as follows (after elimination of intercompany

revenues):

Revenues in € millions 2006 2005 Variance

Organic 2,827 2,792 1%

Acquisitions 95 –

Divestments 20 43

Total revenues 2,��2 2,835 4%

21

The divestments represent the former production companies

in the Netherlands, namely Vebo (de-consolidated as of

30 June 2006), Bouwtoe (de-consolidated as of 1 January

2006) and Opstalan (de-consolidated as of 31 March 2006).

The geographic distribution of revenues (after eliminating

intercompany revenues) was as follows:

Revenues in € millionsPercentage

distribution 2006 2005 Variance

Netherlands 77% 2,255 2,290 –2%

Belgium 10% 288 265 9%

United Kingdom 9% 264 227 16%

Germany 4% 135 53 155%

Total revenues 100% 2,��2 2,835 4%

Core activities in the Netherlands reveal a slight net decrease

in revenues. The limited increase in revenues experienced by

the Infrastructure Division (+2%) was negated by decreases in

the Property Development Division (-3%) and the Building

Division (-5%). The reduction experienced by the Property

Development Division was in part due to the decision to

pursue margin instead of volume as well as delays in

acquiring permits.

The decrease experienced by the Building Division was due to

the stagnated progress of several large projects.

The Infrastructure Division increased its volume of work which

largely compensated for the reduction in revenues resulting

from the completion of HSL projects in 2005. The increase in

revenues in Belgium was achieved entirely organicly and was

largely due to infrastructure activities. Both cable and pipe

installation, as well as road building activities benefited from

greater demand in this market segment compared to last

year. Of the continuous growth in revenues in the United

Kingdom, approximately 8% was due to the acquisition of

Denne Construction. The continuing organic growth in the

United Kingdom reflects the consistently favourable market

conditions in relation to our core construction activities.

The increase in revenues in Germany was largely due to

the acquisition of Heitkamp Rail.

The share of Heijmans’ foreign operations as a percentage of

total revenues increased to over 23% (2005: 19%). Belgium

(10%) and the United Kingdom (9%) were the largest

contributors in this respect.

The distribution of revenues by business segment (after

eliminating intercompany revenues) is as follows:

Revenues in € millions 2006 2005 Variance

Property Development 911 941 –3%

Building 1,210 1,213 0%

Infrastructure 1,068 945 13%

3,189 3,099 3%

Other 36 70 –49%

Intercompany eliminations –283 –334

Total revenues 2,��2 2,835 4%

95% of the revenues in the Property Development business

segment was earned in the Netherlands and 5% in Belgium.

The decrease in 2006 was largely due to delays in

development projects in progress, which in turn impacted the

sale of homes. In total, 3,765 homes were sold in the

Netherlands and Belgium (2005: 3,968 homes). Activities in

the Property Development business segment for the most

part involve the development and sale of homes.

Revenues in the Building business segment was generated in

the Netherlands (70%), Belgium (8%) and the United Kingdom

(22%). Net revenues remained constant in relation to the

previous year. The Netherlands experienced a drop, partly due

to lagging production on a few larger projects.

The reduction in the Netherlands was offset by a significant

increase in the United Kingdom, in part due to the acquisition

22

of Denne Construction, and a limited increase in Belgium.

Building activities include residential as well as non-

residential building.

The revenues in the infrastructure business segment were

earned in the Netherlands (74%), Belgium (13%) and Germany

(13%). All these countries experienced growth in volume.

The organic growth in this segment was approximately 5%.

Due to the acquisition of Heitkamp Rail (Germany), the overall

increase amounts to 13%. Infrastructure activities primarily

involve road construction and related (niche) activities.

In addition, (larger) concrete and hydraulic engineering

projects and cable and pipe installation activities constitute

an important component of the overall infrastructure

activities.

Revenues from other activities were primarily derived from

production companies in the Netherlands. Divestments took

place in both 2005 (Opstalan) and in 2006 (Bouwtoe and

Vebo). This explains the 49% reduction.

Operating profit

The operating profit, excluding the exceptional charge related

to the bitumen affair, is € 126 million compared to

€ 129 million in 2005. This lagging operating profit is largely

part due to the disappointing developments within the

Building Division in the Netherlands. Compared to 2005,

the operating profit of the Building Division decreased by

almost € 24 million, from € 30 million in 2005 to € 6 million

in 2006. To a large extent, this is due to results on contracts

acquired in 2005 in a highly competitive pricing environment.

Furthermore, a few large projects generated seriously

disappointing results due to inadequate project and risk

management.

The operating profit in 2006, as well as in 2005, was also

affected by nonrecurring revenues. In 2006, this consisted

of a realized book profit and a release from the pension

provision on to the sale of the Vebo production company,

together amounting to € 5 million. The 2005 operating

profit included a realized book profit of over € 5 million

related to the sale of the Opstalan production company

and nonrecurring revenues of € 6 million on the release

on a provision following settlement of the management

participation plan terminated early 2003. Adjusted for these

items, the 2006 operating profit increase by € 3 million

(approx. 3%), from € 118 million to € 121 million.

The reconciliation to the operating profit disclosed in the

2006 financial statements is as follows:

Operating profit in € millions 2006 2005 Variance

Excluding nonrecurring items 121 118 3

Book profit on divestments 5 5 –

Management participation plan – 6 –6

release from provision

Including nonrecurring income 126 129 –3

Incidental charge relating to

construction industry investigation

–9 – –9

Financial statements 11� 129 –12

The operating profit breakdown by geographic segment is as

follows:

Operating profit in € millions 2006 2005 Variance

The Netherlands 97 116 –19

Belgium 10 8 2

United Kingdom 7 5 2

Germany 3 0 3

Total operating profit 11� 129 –12

The operating profit in the Netherlands was primarily impacted

by the disappointing state of affairs in the Building Division.

The decline in this sector, amounting to almost € 24 million,

was in part offset by the excellent performance of the Property

Development Division.

The operating profit of this division rose by € 14 million,

2�

or 21%, to € 80 million, partly due to continuing positive

developments in the owner occupied housing market. Higher

sales prices in part resulted in further operating margin

improvements: 9.2% in 2006 compared to 7.4% in 2005 and

5.7% in 2004. The operating profit of the Infrastructure

Division was lower than in previous years, in line with

expectations announced earlier. It was not possible to

sufficiently compensate for the significant decrease in the

margin contribution by large projects through the

contribution to margins by regular projects and more recently

acquired (medium-)large projects. The decrease amounts to

€ 9 million, from € 34 million in 2005 to € 25 million in

2006. The corresponding operating margin is 3.2% (2005:

4.4%). Although still not sufficient, a slight improvement in

pricing levels is noticeable compared to 2005. The volume of

work is also steadily increasing. Other activities (excluding the

exceptional charge relating to the construction investigation

industry) in the Netherlands, experienced a improvement on

balance by € 9 million. Facility management, as well as the

Bestcon production business made an important contribution

to these results. Although Bestcon still showed a loss in 2006,

there were significant improvements in comparison to the

previous year. Other activities also include nonrecurring

revenues related to book profits on divestments and the

release from the provision for the management participation

plan (in 2005).

The operating profit in foreign countries increased by 50%

from € 13 million to € 20 million. The contribution made

by the acquisition of Heitkamp Rail (Germany) and Denne

Construction (UK) amounts to over € 3 million, or 25%,

in this respect. Organic growth is therefore 25% too.

The breakdown of the operating profit by business segment is

as follows:

Operating profit in € millions 2006 2005 Variance

Property Development 85 71 14

Building 13 36 –23

Infrastructure 34 36 –2

132 143 –11

Other/unallocated –15 –14 –1

Total operating profit 11� 129 –12

The operating profit in the Property Development business

segment realized in the Netherlands was € 80 million,

or almost 94% and over 6% in Belgium. The increase in the

operating profit is entirely due to activities in the Netherlands.

The profit realized from these activities in Belgium remained

at almost the same level as last year, namely € 5 million.

The € 23 million decrease in the operating profit in the

building business segment is largely from the account of the

Building Division in the Netherlands. The operating profit of

this division is € 6 million. The operating margin in Belgium

remains limited at 0.5% and its contribution is therefore

almost nil. The operating profit in the United Kingdom

increased by € 2 million to € 7 million. Of this increase

€ 1 million is due to the acquisition of Denne Construction.

The operating profit in the infrastructure business segment

had showed a limited decrease of € 2 million to € 34 million.

In line with expectations, this decrease was the result of the

substantially lower contribution to the margin made by the

Infrastructure Division in the Netherlands as a result of the

near-completion of large infrastructure projects in 2005.

This caused the operating profit of that division to drop by

€ 9 million to € 25 million. This decrease was, in large part,

offset by infrastructure activities in Belgium (increase of

€ 3 million to € 5 million) and Germany (increase of

2�

2005 is more or less offset by decreased interest expenses

resulting from improved cash and treasury management,

as well as the favourable interest rate obtained for the

committed 5-year € 400 million financing facility negotiated

in April 2006. The interest capitalized on land and

development portofolio largely involves the Property

Development business segment (€ 14 million, of which

€ 12 million for the Property Development Division in the

Netherlands).

Income taxes

Income taxes in 2006 decreased by € 7 million to

€ 29 million (€ 36 million in 2005). As in 2005, there is a

tax gain from reductions in the rate of Dutch corporation tax.

The positive effect amounted to € 7 million in 2006 compared

to € 2 million in 2005.

2006 Total recognized revenues and expense

The total recognized revenues and expense break down is as

follows:

Total recognized revenues and expense in € millions 2006 2005 Variance

Profit after tax 83 87 –4

Profit taken directly to shareholders’ equity 5 1 4

Total recognized revenues and expense �� 88 0

The profit after tax that is directly taken to shareholders’

equity is the effective share of changes in the fair value of cash

flow hedges in the positive amount of € 4.4 million (2005:

positive € 0.5 million) and the currency translation differences

in the positive amount of € 0.6 million (2005: positive

€ 0.4 million).

The cash flow hedges are largely related to fixing the interest

rate for € 175 million of the 5-year financing facility for a

period of 5 years.

€ 3.5 million to almost € 3.5 million). The Heitkamp Rail

acquisition contributed over € 2 million in this regard.

The item other/unallocated is primarily related to the

Netherlands. This includes the additional charge related to

the bitumen affair and the incidental income from the book

profit on divestments and the release from the provision for

the management participation plan (total 2006 revenues:

€ 5 million; total 2005 revenues: € 11 million).

The charge related to the bitumen affair is largely

compensated by the sound results achieved by facilities

management and, although it still shows a loss, the

significant improvement in the results achieved by Bestcon.

Financial income and expense

The financial income and expense breakdown is as follows:

Financial income and expense in € millions 2006 2005 Variance

Interest received 8 8 0

Interest paid –29 –29 0

Net financing costs –21 –21 0

Capitalized interest 15 14 1

Financial income and expense –6 –7 1

The interest charges include the dividend on cumulative

preference shares. The amount for 2006 is € 4.5 million in

compared to almost € 6 million in 2005. The decrease is due

to the withdrawal in mid-2005 of all cumulative preference

A shares issued in 1998. The dividend issued in 2006 only

involves the cumulative B shares in the amount of € 66 million

with a 6.81% interest rate. The interest rate review date is

1 January 2009.

Interest revenues and expenses remained virtually unchanged

from the previous year. The increase in interest expenses

resulting from the growth in financing the increased working

capital requirements in the second half of 2006 relative to

2�

Order book

The order book rose by € 637 million, or 25%, to € 3,196

million by the end of 2006 (year end 2005: € 2,559 million).

This includes the contract awarded in September 2006 for the

construction of the A2 ring road in Eindhoven in the amount

of € 294 million (infrastructure business segment) and

€ 165 million from the acquisition of Heitkamp Rail and

Denne Construction.

The breakdown of the order book at the end of 2006 by

business segment and the corresponding revenues projections

for 2007 and beyond is as follows:

Order book in € millions

2006 2007 Projected revenues

Projected revenues after

2007

Property Development 951 723 228

Building 1,501 1,118 383

Infrastructure 1,160 631 529

3,612 2,472 1,140

Other 9 9 0

Intercompany elimination –425 –318 –107

Total order book �,1�6 2,163 1,033

Balance sheet

Capital and financing

The summarized balance sheet based on the capital invested

is shown below:

Summary balance sheet in € millions 31-12-2006 31-12-2005 Variance

Fixed assets 447 418 29

Working capital 579 461 118

Invested capital 1,026 879 147

Shareholders’ equity 442 389 53

Provisions 87 87 0

Net interest-bearing debt 497 403 94

Financing 1,026 879 147

The capital invested in 2006 rose by € 147 million, or 17%.

This increase for the most part relates to working capital,

particularly for the Infrastructure Division and (to a lesser

extent) for operations in Belgium. The infrastructure market

in particular shows a clear trend towards contract types that

require little or no prefinancing (anymore) on the part of the

client. This results in a significantly higher working capital.

Of the € 118 million increase in working capital (excluding

cash and cash equivalents), € 71 million is related to an

increase in work in progress. In addition, there is a

€ 27 million increase in Inventories to € 640 million.

This is primarily related to the Property Development

business segment and involves (strategic) land portfolios,

development projects and unsold commercial property.

The Strategic Land portfolio increased by € 19 million in

2006. Unsold commercial property consisted of 43,971 m2

of leasable office space at year-end 2006. 33,300 m2, or 76%,

of this had been rented. The cost of unsold commercial

property at year-end of 2006 was € 138 million.

26

Working capital increased in part as a result of the penalties

paid in relation to the construction industry investigation.

In 2006, € 30 million was paid to the Netherlands

Competition Authority (NMa) and the European Commission.

At the end of 2006, a non interest bearing debt of € 2.7 million

(year end 2005: € 25 million), which is part of the working

capital, remained outstanding within this context.

The fixed assets at year-end 2006 included an amount of

€ 177 million for intangible assets (year end 2005:

€ 153 million). The € 24 million increase is primarily related

to the acquisition of Denne Construction (UK). The intangible

assets primarily reflect capitalized goodwill. Impairment tests

were performed, using a weighted average cost of capital

(WACC) of 6.2% (2005: 6.3%). These impairment tests were to

assess whether the future cash-generating capacity of past

acquisitions is sufficient to justify the book value of the

goodwill relating to these acquisitions. As in 2005, only very

limited impairment adjustments were found to be necessary.

The shareholders’ equity increased by € 53 million to

€ 442 million in 2006. The increase represents the total

recognized income and expence for 2006 in the amount of

€ 88 million minus the dividend paid for the 2005 financial

year in the amount of € 35 million.

The non-current provisions at the end of 2006 amount to

€ 87 million (year-end 2005: € 87 million).

The breakdown is as follows:

Provisions in € millions 2006 2005 Variance

Deferred taxation 50 45 5

Staff remuneration 21 27 –6

Other 16 15 1

Non-current provisions �� 87 0

The net interest-bearing debt (interest-bearing debt minus

cash and cash equivalents) increased by € 94 million to

€ 497 million at the end of 2006. The significant increase in

working capital resulted in a need for increased financing.

Net interest-bearing debt at year-end 2006 breaks down as

follows:

Interest-bearing debt in € millions 2006 2005 Variance

Non-current 429 368 61

Current 261 208 53

Gross debt 6�0 576 114

Cash and cash equivalents –193 –173 –20

Net debt ��� 403 94

Financing ratios

A € 400 million committed financing facility with a 5-year

term was negotiated with eight banks in April 2006.

The primary objective of this financing facility was to redeem

uncommitted current account facilities and the redemption of

recourse loans over time. An important function of this facility

is to finance (fluctuations in) working capital. In this context,

the following financial ratios apply.

• NET DEBT/EBITDA: relationship between net debt

(excluding preference shares and non recourse loans) and

profit before tax, interest and depreciation of tangible and

intangible assets.

• Interest coverage: relationship between EBITDA and the net

interest paid.

Heijmans more than adequately complied with these

requirements at the end of 2006.

2�

Return

The return on the average invested capital decreased from

14.5% to 12.3% in 2006. This decrease is primarily due to the

increase in working capital and the impact of the exceptional

charge in relation to the construction industry investigation.

The breakdown is as follows:

Return in € millions 2006 2005 Variance

Average capital invested 952 892 60

Operating profit 117 129 –12

Return 12.�% 14.5%

The return based on the economic added value realized in

2006, expressed in terms of the Heijmans Economic Added

Value key figure (EVA), is positive € 37 million (2005:

€ 15 million). The EVA is the difference between the cash flow

(based on the operating profit, adjusted for works in progress,

etc.) and the return on capital invested in operations, required

by capital providers.

Cash flow

The summary statement of cash flow is based on the indirect

method and is as follows:

Cash flow in € millions 2006 2005 Variance

Operating –34 109 –143

Investing –36 –13 –23

Financing 78 –85 163

Cash flow � 11 –3

The negative operating cash flow in 2006 is almost entirely

due to the increase in working capital. This explains for the

better part the € 143 million decrease in the operating cash

flow in comparison with 2005. The operating cash flow also

includes the penalties paid in relation to the construction

industry investigation. This amounted to € 30 million in

2006, compared to € 9 million in 2005.

The investment cash flow includes revenues from the sale of

the Vebo participation in the amount of € 13 million (2005:

€ 23 million in revenues from the sale of the Opstalan

participation). € 36 million was paid for the acquisition of

Heitkamp Rail (Germany) and Denne Construction (UK) in

2006. No acquisitions were made in 2005. The net

investments (investments minus divestments) amounted to

€ 24 million in 2006 (2005: € 23 million).

These investments were, for the most part, made in support of

the infrastructure business segment and, in addition to

investments in regular lifecycle replacements, also include

expansion investments, such as the purchase of a quarry in

Norway and the construction of new asphalt plants.

The depreciation on property, plant and equipment in 2006

was € 28 million compared to € 29 million in 2005.

The increased need for financing is reflected in a positive

financing cash flow. The net financing facilities used in 2006

(excluding acquisitions/divestments shares) were

€ 113 million. The financing cash flow also includes the

payment of dividend on ordinary (depositary receipts for)

shares in the amount of € 35 million (2005: € 29 million).

There is an increase of € 163 million in the financing cash

flow relative to 2005. This largely consists of the net use of

bank financing facilities and other interest-bearing debts

minus the net revenue of € 47 million from the issue of shares

in March 2005 to finance the redemption of cumulative

financing preference shares A in July 2005, that were part

of the 2005 financing cash flow.

2�

Market information

Markets in countries in which Heijmans is active1

Heijmans is active in the property development, Building and

Infrastructure sectors. This market is generally characterized

as late-cyclical. This statement may be somewhat qualified

for the subsectors in which Heijmans is active, but it has an

impact on a broad front, particularly for purchasing and

recruiting efforts. This cyclical character translates into price

fluctuations that must be hedged in ascending cycles and

which can result in additional yield in declining cycles in

respect of the purchase of equipment and services (in total

approximately 70% of revenues).

• The Netherlands (Housing, Non-Residential Building,

Infrastructure): production in 2006 grew by approximately

5% to over € 51.3 billion. The expectation is that the

building production losses accumulated during the

recession years will be recovered in 2007. The growth rate

is with 6% primarily driven by new housing building

activities and larger infrastructure projects. The role of the

national government as a client in this latter sector is

exhibiting strong growth in relation to previous years.

The strongest growth rate at approximately 7.5% is, however,

expected to occur in the new development of non-residential

buildings. The EIB expects a growth rate of around 4.5% for

the sector as a whole in 2007. Starting in 2008, the EIB

expects the growth rate to slow somewhat: the projected

growth rate for 2008 is 3%, while the annual growth rate for

2009-2012 is expected to be around 2%, primarily due to

deferred maintenance.

New housing development grew significantly in 2006.

A total of approximately 72,000 homes was produced

(including 55,000 owner-occupied homes), which represents

an increase of over 5% relative to 2005 (67,500). This growth

is expected to be maintained over the coming years.

About 90,000 building permits were granted in 2006.

Of these, approximately 60% were issued to project developers

and 22% to corporations. The remaining permits were issued

to private developers. According to the EIB, the average time

between the issue of a permit and delivery is 18 months.

The Dutch National Spatial Strategy (Nota Ruimte) defines

spatial planning policy through to 2020, with a long-term

view to 2030. In this connection, the focus of activity will shift

from large-scale VINEX (sites designated by the government

for future urban development) extension locations to

concentrated building in existing urban areas.

The government intends to accelerate housing construction

between now and 2010. The target in this respect is 420,000

new homes. The goal is to reduce housing shortages to 1.5%.

This is based on the assumption that 80,000 houses will be

demolished.

The commercial property market appears to have bottomed

out. The take-up of office and shopping space increased and

activity in the healthcare and education sectors remained at

high levels.

FIGURE 4: Market for industrial property

Public Sector 37%Commercial services 19%Trade 16%Industry 13%Agriculture 10%Transportation 5%

The infrastructure market exhibited clear growth in volume.

According to the EIB, growth in 2006 amounted to 3.5%.

The Dutch Mobility Policy Document of September 2005

defines the policy for traffic and transportation in the

1 Building markets trends and figures are published annually by national research institutions which, under the Euroconstruct banner, use unambiguous standards and reporting methods. For the countries in which Heijmans operates, this includes the Economic Institute for the Building Industry (EIB) in the Netherlands, Experian Business Strategies in the United Kingdom, Aquiec-VKEBI in Belgium and the Institute for Economic Research (IFO) in Germany. The figures below are based on the 1 December 2006 Euroconstruct Conference held in Munich and the January 2007 EIB Conference in Amsterdam. In this regard, particular attention was paid to the (sub)markets relevant to Heijmans.

2�

Netherlands over the long term. The basic premise is that

mobility is an essential condition for economic and social

development. This requires investment in key infrastructure of

the Netherlands as well as the carrying out of overdue

maintenance work. The majority of large projects is expected

to be initiated in 2007 and 2008. Government is focusing on

increased private-sector participation in this regard (public-

private partnerships, toll roads, performance specifications,

concession areas and competitive public transportation

pricing policies). The objective is to expand the main road

network by 10% in 10 years. Combined with an alternative

method for paying for road use, these initiatives are expected

to be able to absorb the approximately 50% increase in the

number of vehicle kilometres travelled on the main road

network relative to the year 2000. The national government is

therefore expected to exhibit the highest level of growth over

the next two years with an annual growth rate of 10%.

The volume of smaller (maintenance) projects was high in

2006 and is expected to remain high in 2007 and 2008.

These projects are often commissioned by lower levels of

government, which jointly commission about 40% of these

projects.

There is much debate about the involvement of the private

sector in construction projects (non-residential as well as

infrastructure). Government has formulated policies which

specify minimum requirements for government buildings or

roads. Although the Public-Private Partnership (PPP) approach

has long since proven its viability in relation to large-scale

housing development projects (VINEX locations – sites

designated by the government for future urban development

– are almost without exception realized on the basis of the PPP

approach) and successful infrastructure pilot projects have

been completed or are underway (Heijmans is involved in the

Harnaschpolder PPP), the number of projects based on this

form of contracting is extremely limited in the Netherlands.

A number of projects are highly suited to this approach,

however, and some are already on the drawing board.

Examples in this regard are the A2 Passage Maastricht (the

conversion of a national trunk road into a motorway and the

associated construction of a road connection with another

motorway), the A4 Delft-Schiedam motorway section, the

A15 Maasvlakte-Vaanplein motorway section, tax offices in

Groningen and Doetinchem, and the Kromhout Kazerne

(barracks) in Utrecht (total estimated value of over € 4 billion).

Heijmans is a supporter of this form of partnership and has

therefore created and staffed a PPP unit at the corporate level.

Market Opportunities Threats

Housing market Shortage of housing;Favourable economic developments (interest rate, employment opportunities, consumer confidence);Government priority.

Fine particulate matter regulations;Insufficient capacity to deal with all requests;Shift to complex inner city locations;Scarcity of personnel.

Non-residential construction market

Requirements of the Dutch Buildings Decree 2003;Economic development;Need for optimizing the use of space based on healthcare financing policy.

Cyclical sensitivity;(European) Tendering Policy;Scarcity of personnel and materials.

Infrastructure market Size of the infrastructure fund;Importance to competitive position of the Netherlands (Mobility Policy Document);Maintenance backlog;Decrease in government involvement (concessions, toll roads, PPP).

Market fragmentation;Competitors’ focus on capacity;Scarcity of personnel and materials.

• United Kingdom (Housing, Non-Residential Construction):

the growth in building production bottomed out in 2006.

Slightly declining infrastructure activities were offset by

slightly increasing non-residential construction activities.

2007 will also exhibit only marginal growth or none at all.

Significant growth in subsidized housing is expected over the

next three years, in particular to meet the heavy demand for

affordable housing in the south. The number of subsidized

housing units produced makes up about 15% of the total

annual housing production. Growth is also expected in the

private sector, although at a lower level than in the public

sector. A 3% annual growth rate to 2009 inclusive is

considered realistic. The decreasing production with respect

to public non-residential construction is primarily related to

a shift to the private sector as a result of the increased

implementation of healthcare and education projects on the

basis of PPP and PFI formats. 199,000 housing units were

delivered in 2006 (195,000 in 2005). The average price for a

home was approximately € 242,000 in 2006.

�0

• Belgium (Housing, Non-Residential Building and

Infrastructure): production growth in 2006 was primarily

driven by the demand for housing. This demand will be

maintained in 2007 and should compensate for the

expected regression as a result of cutbacks in government

expenditure (2007 follows a year in which local elections

took place). The growth in housing production in 2006 and

2007 is expected to be approximately 7% and 4.5%

respectively, after which it should stabilize at a growth rate

of 1%-1.5%. Over 60,000 residential building permits were

issued in 2006 and 54,500 homes were delivered (46,000

in 2005). Following strong growth in 2006, 2007 is

expected to be a year of stabilized non-residential building

production, primarily due to a strong demand for

commercial property. The growth rate is subsequently

expected to stabilize at 2.5% per year. The 2006 election

year resulted in a traditional peak in expenditures on

infrastructure and production increased by about 9%.

This growth is expected to be largely wiped out in 2007 and

2008 is also expected to show a slight reduction.

• Germany (Infrastructure): after many years of decreased

building production, the German market is on the threshold

of recovery. 2006’s 1.7% growth rate put an end to many

years of recession. Further recovery resulting in moderate

growth in total building production in 2008 and beyond is

expected in particular for the infrastructure and non-

residential construction sectors. Infrastructure growth is

tempered by restrictions on government expenditures,

particularly at lower levels of government. Significant

investments are planned, however, by Deutsche Bahn, the

German railway enterprise. On balance, the 2007 and 2008

growth rate is expected to be about 2% per year. About

235,000 building permits were granted in 2006. 227,500

houses were delivered in 2006 (225,000 in 2005).

The Netherlands United Kingdom Belgium Germany

2006 2007 2006 2007 2006 2007 2006 2007

Economic growth +3.1% +3.0% +2.6% +2.4% + 2.7% +2.2% +2.3% +1.4%

Gross Domestic Product x € billion 521 1,838 306 2,293

Inflation +1.3% +1.5% +2.2% +2.1% +1.9% +1.9% +1.7% +2.3%

Population +0.2% +0.2% +0.6% +0.4% +0.2% +0.2% –0.1% –0.1%

Population x 1,000 16,361 60,254 10,479 82,350

Households x 1,000 7,196 25,046 4,414 38,750

Housing inventory x 1,000 6,972 25,688 4,880 38,220

Owner-occupied homes 55.6% 70.7% 66.1% 44.8%

Unemployment –17.1% –13.8% +11.8% +3.2% –2.3% –3.7% –7% –4.8%

Non-residential development x € billion 20 21.1 76.6 78.9 12.1 12.6 115.8 116.7

Housing development +7.1% +5.1% –0.3% +3.0% +7.3% +4.5% +1.8% +0.8%

Non-residential development x € billion 18.4 19.2 91.4 93.3 10 10.1 51.4 52.3

Non-residential development +3.4% +4.6% +2.2% +2.1% +5.7% +0.9% +2.0% +1.8%

Infrastructural development x € billion 10.9 11.3 24.2 24.9 5.1 4.7 31.4 32

Infrastructural development +3.8% +4.2% –2.1% +3.1% +8.8% –8.4% +0.4% +2.0%

Total building production +5% +4.5% +0.6% +2.6% +7.0% +0.8% +1.7% +1.2%

Total building production x € billion (incl. external subcontractors) 51.3 53.6 192.1 197 27.2 27.4 198.4 200.8

Source: Euroconstruct December 2006/ for the Netherlands EIB January 2007

�1

Heijmans 2006 operations

The Netherlands

Heijmans Property Development

The Property Development Division is primarily focused on

the initiation, development and sale of houses, and to a lesser

extent of shops, offices, business premises, schools and

healthcare establishments. The division derives approximately

95% of its revenues from the housing segment and about 5%

from the development of commercial property.

In € millions 2006 2005 Variance

Revenues 866 889 –3%

Operating profit 80 66 21%

Operating margin 9.2% 7.4%

Profit after tax 51 37 38%

Profit margin 5.8% 4.1%

Order book 915 798 15%

The main trends perceived by Heijmans in relation to the

housing market and business accommodations are as follows:

• the repositioning of corporations. They are expected to play

an increasingly dominant role, in part due to their

increased size. This makes them competitors in the housing

market on the one hand and potential partners and clients

on the other;

• the increasingly important role played by area

development on the basis of competitive tendering.

The government’s tendency to reduce its involvement will

require greater knowledge and conceptual skills from

private sector parties;

• focus on core activities and, as a result, the outsourcing of

management activities by users of buildings (hospitals,

offices): opportunity for PPP and PFI approach;

• greater focus on specific target groups such as starter

homes and homes for senior citizens;

• greater demand for sustainable solutions with respect to

material selection, energy use and use of space.

The Netherlands has a structural shortage of homes

At the end of 2006, the Netherlands had approximately

16.4 million inhabitants constituting about 7.2 million

households. Over 7 million homes are available to

accommodate these households. The population is projected

to grow to 17 million inhabitants by the year 2025 and,

following a period of stabilization, the number of inhabitants

is expected to decrease as from 2040. As a result of, among

other things, the greying population, divorce and an increase

in average life expectancy, the number of single individuals is

expected to increase and the average number of persons per

household is expected to decrease.

FIGURE 5: Households (Source: Statistics Netherlands (CBS))

’97 ’06

Number of persons per household (right axis)Total number of households (x 1,000) (left axis)

2.15

2.45

2.40

2.35

2.30

2.25

2.20

5,400

5,600

5,800

6,000

6,200

6,400

6,600

6,800

7,000

7,200

The government estimates that there is a shortage of

approximately 170,000 quality housing units and has set a

goal of reducing this number over a 5-year period by setting

the average annual production targets at 90,000 housing

units. The average annual production over the past 5 years

was about 70,000. Approximately 25% of these were destined

for the rental market. Approximately 72,000 new homes were

�2

built in the Netherlands in 2006, which represents a 5%

increase relative to 2005. The EIB expects an increase of about

9% to 77,500 homes for 2007. Due to the demolition of

approximately 15,000 housing units every year, the net

increase in the housing inventory is lower.

FIGURE 6: Number of homes built (Source: EIB)

’00

Number x 1,000

’01 ’02 ’03 ’04 ’05 ’06 ’07 e

6872

70

65

60

6771

77.5

Over 55% of existing homes are owner-occupied and almost

45% are rented units. The majority of rented units are owned

by one of the over 500 housing corporations.

The factors that determine the demand for housing are

positive

As a result of the sustained shortage of housing, the housing

market is limited cyclical. The quantitative demand is stable, in

part due to the fact that the demand for housing as a private

investment opportunity is limited in the Netherlands: houses

are generally purchased for private use. Houses are, though,

held as investments by corporations and institutional

investors. This represents a stable group of investors, that

scarcely generates volatility during changing economic times.

The demand for increased quality occurs during periods of

growing economic confidence (often accompanied by other

factors, such as decreasing unemployment) and increased

purchasing power. Furthermore, (net) interest charges

constitute a determining factor in the demand for housing

units. Graphs 7 to 9 on the right illustrate the way in which

these housing-market drivers developed.

FIGURE 7: Mortgage interest rates (Source: DNB)

4%3.8%

4.4% 4.4%4.3% 4.4%

ave. ’03-’04

’05 Q1 ’06 Q2 ’06 Q3 ’06 Q4 ’06

FIGURE 8: Inflation (Source: Statistics Netherlands)

’04 ’05

1%

1.7%

1.2%

0.1%

0.9%1%

Q1 ’06 Q2 ’06 Q3 ’06 Q4 ’06

FIGURE 9: Consumer confidence (Source: DNB)

–30

ave.’03-’04 ’05 Q1 ’06 Q2 ’06

Q3 ’06 Q4 ’06

–13

–22

–2

5 7

Price increases are acceptable in spite of the supply shortage

The long-term scarcity on the supply side has resulted in an

increase in prices. According to the Netherlands Association of

Real Estate Brokers and Immovable Property Experts (NVM),

prices rose by approximately 4% in 2006. The average price of

the 210,000 homes that exchanged hands in 2006 was about

€ 240,000. The Heijmans average sales price was € 245,000,

��

excluding VAT, approximately equal to the previous year’s

price. The NVM expects a 5% price increase for 2007. The limit

that the NVM considers affordable for a housing unit is

€ 185,000 for modal revenuess.

FIGURE 10: Cost of housing and price increases (Source: NVM)

0

50

100

150

200

250

300

0 %

8 %

4 %

‘01 ‘02 ’03 ’04 ’05 ’06 ’07

Price increase in % (right axis)Housing unit cost (x € 1,000) (left axis)

The distribution of homes sold by Heijmans broken down by

price segment in 2006 was as follows:

2006 2005 2004 2003 2002

< 175.000 13% 10% 14% 18% 8%

175,000 - 240,000 43% 45% 42% 45% 51%

> 240,000 44% 45% 44% 37% 41%

When the cost of a private home is related to revenues, the

pricing trend is acceptable. The conclusions reached by the

University of Amsterdam (UvA) and the Netherlands

Association of Real Estate Brokers and Immovable Property

Experts (NVM) is that accommodation costs in relation to

revenues are not higher than they were at the beginning of

1975: the average mortgage rate has been cut by more than

half since 1975.

FIGURE 11: Average living expenses (Source: UvA, NVM)

’75 ’07

Average living expenses of home owners in relation to income based on 1975 = 100 (left axis) x € 1,0005-year mortgage interest (right axis) in %

0

12

14

10

8

6

4

2

0

20

40

60

80

100

120

140

160

The reason why starter home buyers nevertheless have

difficulty accessing the home ownership market is due to the

restrictions on the amount of money they can borrow. In

contrast to homeowners, they are therefore affected by high

house prices, particularly in the western part of the country.

Heijmans develops affordable housing for every home

consumer. This is one of the reasons why Startlab was created

within the organization to allow employees to contribute

ideas for the development of starter housing units.

An independent jury has in the meantime awarded a prize to

one of the seventeen submissions. A number of submissions

will in fact be brought to market.

Heijmans can profit from favourable housing market

conditions thanks to its development potential and

market orientation

An important source for future growth is the development

potential of 45,000 homes which Heijmans has at its disposal.

For 30,000 of these homes, this is based on its land bank,

options and claims. The lands in question are largely situated

in an area designated as residential according to a regional

plan drawn up by the provincial authorities but often still

��

require zoning approval by local authorities. The zoning

procedure takes a nominal period of approximately 45 months

but is almost always delayed by consultation and objection

procedures. Moreover, based on competitive tenders and the

like awarded to Heijmans, the company is in a position to

develop about 15,000 housing units over the coming years.

Due to the fact that the company once again won a number of

attractive competitive tenders in 2006, the potential has been

maintained.

To optimize the efficient use of this development potential

requires two crucial skill sets: management and deployment of

the land bank, and the customer-oriented development of

products. The land bank was therefore centralized in 2005 and

has since been deployed in an optimal fashion in recognition

of the fact that it is a scarce commodity. The acquisition of new

sites, with an eye on maintaining development potential, has

also been centralized. In 2006, for example, lands were

acquired through the purchase of the Reesink property in

Zutphen. In relation to product development, the company

achieved success in 2006 with its “living on water” and starter

housing units and with the continued development of its Tailor

housing concept, which allows buyers to specify the layout of

their homes. The Tailor housing concept also allows Heijmans

to meet the wish expressed by municipalities for the awarding

of contracts by private parties. In total, over 2,400 housing

units have since been sold or are under development on the

basis of this concept. The variety of available housing units has

increased even further. Tailor housing homes are also for sale

in the higher-end segment (Hoog Dalem Gorinchem) and the

concept is being applied to flats (Kop van Oost Groningen). In

2006 Heijmans sold 3,600 housing units (3,786 in 2005), of

which 1,143, or 32%, were sold to end investors and

corporations (2005: 17%). 2,331 housing units, or about 65%,

came from Heijmans’ own land portfolio (2005: 60%) and 1,269

housing units, or 35%, from competitive tenders won by

Heijmans (2005: 40%). The decrease in relation to 2005 is due

to the decision to maintain margin above volume.

The improvement achieved in margin is due to favourable

market conditions, new products such as Tailor housing that

yield higher margins and the more efficient operation of the

land bank. The major portion of housing units are built by the

Heijmans Building Division, which in 2006 delivered 1,779

homes to Heijmans Property Development.

Integral area development is playing an increasingly

significant role in the development and construction of

homes. This usually occurs in close cooperation with

primarily local authorities and also includes public bodies

such as healthcare, sports and education services in the

development process (Meerstad Groningen and

Zuidplaspolder Gouda). It also often involves cooperation with

housing corporations with the objective of developing

solutions to inner-city housing issues.

The objective for 2008 is the sale of 4,500 homes on the basis

of internal development. Approximately half would come

from the Heijmans land portfolio and the other half from

conceptual development (competitive tenders, usually for

integral area development). The balance between

development based on the land portfolio and competitive

tenders, linked to market-oriented product development,

should ensure Heijmans’ healthy economic growth in the

housing market.

Land Bank Competitive Tenders

Yield ++ +

Continuity + + –

Recession-proof ++ + –

Duration – +

Capital Requirement – – ++

There is a clear split between qualitatively sound and old

offices in the office market. An ever increasing share of the

inventory can be characterized as unmarketable. Vacant office

space decreased in 2006 by about 500,000m2 to 5.5 million m2.

As a result, 12.5% of office inventories was not in use at the

end of 2006. The increased demand for office space also put

pressure on yields (the initial yields demanded by investors).

The Amsterdamse Zuidas (a large urban project in the

southern part of Amsterdam) is experiencing the lowest yields;

yields which, according to Property.NL/Cushman & Wakefield,

were at their lowest level, at around 5.5%, during the last

quarter of 2006 since 1995. Heijmans’ activities in the

shopping and (modern) business accommodation markets

(primarily logistics) are limited, and here too yields are

��

decreasing (yields quoted for top shop locations were

approximately 4.75% in the last quarter of 2006 and top

industrial estate locations approximately 7%). In 2006,

Heijmans sold 36,812 m2 of commercial property and leased

48,471 m2. In accordance with Heijmans’ risk management

policy, project development is only initiated once 100% has

been presold or preleased.

With an improving office market, Heijmans’ inventory of

unsold, unleased office space also decreased in 2006. Lessees

were found for such properties as INIT in Amsterdam and

properties in Almere and Breda were sold to an end investor.

At the end of 2006, 43,971 m2 (2005: 51,358 m2) remained

unsold, of which 33,301 m2 (2005: 14,965 m2) was leased.

On balance there is therefore an outstanding risk on a total of

10,671 m2 (2005: 36,393 m2), a decrease of 70% relative to the

end of 2005. The unsold property represented an investment of

€ 138 million at 31 December 2006. The land bank at the

disposal of Heijmans provides opportunities for the

development of about 675,000 m2 of commercial property.

With the improving market, new developments were initiated.

For example, work was started in 2006 on the construction of

32,000 m2 of office accommodation for Statistics Netherlands

and 17,000 m2 for Stater, a Bouwfonds member. Work was also

started in 2006 on the De Admirant in Eindhoven, Turfschip

Breda, the Haarlemmerplein in Amsterdam and others.

Heijmans Building

Heijmans Building focuses on building housing

accommodation, including maintenance and service, in all

segments of the market. The activities comprise new building

activities, renovation and redevelopment, and maintenance of

residential properties, shops, offices, schools, care

establishments and airports.

In € millions 2006 2005 Variance

Revenues 845 889 –5%

Operating profit 6 30 –80%

Operating margin 0.7% 3.3%

Profit after tax 8 23 –65%

Profit margin 0.9% 2.6%

Order book 1,000 1,031 –3%

Heijmans Property Development and corporations are

major customers for Heijmans Construction

42% of the division’s revenues are derived from housing

development. In 2006, 3,518 homes were delivered, of which

1,739 to third parties, often housing corporations or project

developers. In addition to being partners in development

projects, corporations are important customers for Heijmans’

residential building activities. The Building Division prefers to

work with them as part of a building team. On the basis of

concepts such as Adaptis and Woonvitaal, Heijmans provides

added value to housing corporations. Adaptis enables these

corporations to effectively match residential development

needs and requirements in a district by creating a structured

inventory of housing needs. By applying industrial building

methods, housing units can be built more quickly and

adapted to changing needs if necessary.

Shift from tendering process to building team is noticeable

Heijmans Building earned 46% of its revenues from non-

residential development. In 2006, over 40% of the revenues in

the non-residential building sector was earned from multiple

tenders and 60% from building team agreements or internal

development. At the end of 2006, building team agreements

made up 56% of the order book, while tenders made up 44%.

The impact of some of the above-mentioned trends is

experienced as follows:

• during times of recession, clients tend to view competitive

tenders as an instrument for competing on price due to

scarcity of work in the marketplace;

• large-scale projects in particular are tendered differently

and require more attention to be paid to risk and contract

management by parties such as Heijmans;

• the demand for integrated proposals requires the chain to

be properly coordinated, in respect of which the installation

engineering component in particular takes on increasing

importance in terms of its design and execution, as well as

its maintenance and management;

• the demand for flexibility remains real and will require

prefab solutions, particularly in relation to projects in inner-

city areas.

�6

Large and/or complex projects require a different focus and

set of skills

Large and/or complex projects require a centralized approach

in which contract and risk management, as well as

coordination with respect to the setup of the overall project,

play a key role. This resulted in the creation of a Tender Board

in early January 2006 that Heijmans uses for the centralized

assessment of tenders for large-scale and complex projects.

This is a result of the tendering policy which stipulates that

no proposals will be submitted for projects that simply serve

to use up capacity. In addition, this approach provides a built-

in control over the risk analysis included as part of the

proposal. Inadequate buffers in the 2005 order book against

sharp increases in the cost of goods and inadequate project

management of several large projects resulted in

disappointments, particularly in relation to non-residential

works. Measures have been taken or formulated in the

meantime to prevent the reoccurrence of these problems in

the future. In addition to the Tender Board, the division’s

management team was strengthened. The organization has

now been structured so that large and/or complex projects are

handled centrally by a specialized group with greater

knowledge of and experience with risk management and the

management of such projects. The 2007 results will still be

affected by these projects, which will be delivered in 2007 and

which are currently recognized as work in progress with

neutral results. These projects are estimated to represent 20%

of 2007 revenues. In addition, a number of large projects will

be initiated in 2007, such as the new RABO head office in

Utrecht.

Burgers Ergon acquisition creates additional PPP/PFI project

and maintenance contracting opportunities for Heijmans

The acquisition of Burgers Ergon in January 2007 provides

Heijmans with an in-house installation engineering

capability. This enables Heijmans to provide integral

solutions to non-residential construction projects, including

installation maintenance. The importance of the installation

component in buildings continues to increase and sometimes

contributes up to 50% of the building’s new-construction

value. This has caused installation engineering companies to

act increasingly as secondary contractors and even as main

contractors. The acquisition of Burgers Ergon has propelled

Heijmans into the top 5 of Dutch installation engineering

companies and, as such, has made it a key player in the design,

execution and maintenance of large non-residential works such

as schools and hospitals. Heijmans was already working in

cooperation with Burgers Ergon on various contracts acquired

in 2006 for the construction of hospitals, for example.

Burgers Ergon places Heijmans in an even better position to

respond to the government’s policy of involving the private

sector in financing. Burgers Ergon is one of the members in the

Ministry of Finance project consortium; one of the first

buildings in the Netherlands to be realized on the basis of the

PFI approach. Burgers Ergon will be incorporated into the

Heijmans organization structure as a separate division. In 2006,

Burgers Ergon achieved € 210 million in revenues with a

normalized operating result of approximately 3%.

building services activities will receive a boost from the

combination with Burgers Ergon

From its network of regional companies, Heijmans offers

services and maintenance to regional as well as national

customers such as the Ministry of Transport, Public Works and

Water Management and the Schiphol Group. The Building

Division earned € 98 million from this activity in 2006,

representing 12% of its revenues. The goal is to expand this

activity to include the full technical management of larger

properties: Technical Facility Management (TFM). The acquisition

of Burgers Ergon is of strategic importance in this respect as

well. In 2006, Burgers Ergon realized approximately 35% of its

revenues from maintenance and management activities. The

emphasis of maintenance activities is far more on the

building’s installation component that on its architectural

aspects. This allows Heijmans to respond to the trend among

building users to tender increasingly larger amounts of work

to fewer suppliers. For the time being, Heijmans’ TFM function

is solely focused on the “hard side” of facility management; on

structural and technical plant maintenance and management.

This focus provides Heijmans with access to a market worth

approximately € 2.6 billion a year with an estimated annual

growth rate of approximately 5%.

Heijmans Infrastructure

Heijmans Infrastructure’s activities focus on design,

consultation, execution and maintenance activities with

��

respect to groundwork, road building, concrete construction

and hydraulic engineering, the environment, demolition and

recycling, technical and traffic infrastructure (cables, pipes,

traffic systems), sports and green facilities and industrial

services. The division adheres to a two-pronged policy focused

on complex integrated projects on the one hand and standard

works on the other.

In € millions 2006 2005 Variance

Revenues 791 776 2%

Operating profit 25 34 –26%

Operating margin 3.2% 4.4%

Profit after tax 19 24 –21%

Profit margin 2.4% 3.1%

Order book 977 588 66%

Heijmans is increasingly involved in the design phase

Production in 2006 clearly improved, resulting in a 3.5%

increase relative to 2005 according to the EIB. The EIB expects

a similar growth in volume for 2007. Contract award on the

basis of lowest price and the resulting stiff price competition

continued to dominate market behaviour for regular work.

In relation to large-scale, integral projects there was a clear

progressive change in the approach taken by clients and, in

addition to price, other differentiating criteria were also used

as part of the assessment; for example, duration of execution,

limitation to disruption to traffic and organization of the work.

One example in this respect is the A2 Eindhoven project

(€ 294 million) which was acquired by Heijmans in 2006 and

in which the project’s duration and organization were decisive

contract-award factors. Other examples include the

Ontsluiting N37-Vierslagen (improving accessibility with

respect to the N37-Vierslagen highway section), the A1

Naarden-Muiderdorp motorway section, the N201 Rondweg

Aalsmeer (N201 Aalsmeer Ring Road), maintenance of the

Schiphol Zwanenburgbaan (one of Schiphol Airport’s

runways) and long-term maintenance of Schiphol access

roads. As an expert executing agency and as a market leader,

Heijmans feels responsible for promoting smooth traffic

circulation. As demonstrated above, this responsibility often

finds expression in project-related solutions. Furthermore, at

Heijmans’ initiative, a think tank has been created that allows

road users to participate in conceptual discussions concerning

improvements in traffic circulation. Participants include

representatives of Simon Loos (transport), the Dutch

Association of Transport Users and Transport on Own Account

EVO, the Royal Dutch Touring Club ANWB, the Dutch

Transport Operators Association TLN, the Confederation of

Netherlands Industry and Employers VNO-NCW, the Province

of North Brabant, the Dutch Traffic Safety Association VVN,

Connect, and the association of Building and Infrastructure

companies Bouwend Nederland.

Heijmans adapted its organization structure to the

marketplace

Of the projects acquired in 2006, approximately 80% were

acquired through competitive tenders (2005: 75%) and 20%

through negotiated contracts (2005: 25%). Extensive

discussions took place concerning the financing of

infrastructure by the private sector and, in spite of large-scale

successes abroad and smaller scale successes in the

Netherlands (Harnaschpolder), this potential market has not

yet really gotten off the ground. Heijmans has aligned its

organization structure with these trends by transforming it

from a (specialist) discipline-driven structure to a more

market-driven organization. Integrated knowledge-intensive

projects are proposed by a central business unit. This always

includes design and execution and may also include financing

and/or maintenance and management. This centralized

organization unit worked on a number of large tenders in

2006 and at the beginning of 2007, of which the following

have since been awarded to Heijmans:

Project SizeContract awarded

to Heijmans Execution

N201 Aalsmeer highway section € 84 million 2005 2007 - 2011

A2 Eindhoven motorway section € 294 million 2006 2007 - 2010

A2 Culemborg-Deil motorway section € 85 million 2007 2007 - 2009

��

In addition, a significant number of projects are currently in

the estimating phase. These are expected to be tendered in

2007, after which they will be initiated.

Project Tender

Tunnel Delft (Delft tunnel) Q1 2007

Zwolle 2nd Railway Bridge Q1 2007

A12 Gouda-Woerden motorway section Q2 2007

N35 Nijverdal highway section Q2 2007

A57 Veersedam motorway section Q2 2007

A12 Zoetermeer-Gouda motorway section Q3 2007

A12 Utrecht-Maarsbergen motorway section Q4 2007

N34 Ommen highway section Q4 2007

A2 Zaltbommel-Empel motorway section Q4 2007

A4 Steenbergen motorway section Q4 2007

N348 Dieren highway section Q4 2007

On the other hand, the more regular infrastructure work is

handled by decentralized organizational units (small-scale

asphalt and road construction projects). Cost management,

efficiency and strategic raw materials and production sites

(sand, gravel, asphalt) are the most important success factors in

this regard. In this connection, an interest in a concession for

extracting gravel from the Florö quarry in Norway was acquired

in 2006. Asphalt production is managed centrally in the new

organization structure. This will ensure that production in the 6

plants owned by Heijmans in the Netherlands will occur more

efficiently and at lower costs. Traffic movements will be reduced

in terms of kilometres travelled, natural gas consumption peaks

will be more closely monitored and less natural gas will be

used. Furthermore, there is an opportunity to apply “best in

class” principles to all plants. This not only applies to efficiency,

but to emissions (of odour, particulates and noise) and energy

consumption as well. The cancellation of the Environmental

Management Act permit for the Meppel Asphalt Plant by the

Dutch Council of State is disappointing. The division is

currently discussing this issue with the Municipality of Meppel

and the Province of Drenthe.

Following these organizational changes, Heijmans is capable

of executing integral projects of any size, at any location in the

Netherlands and, in addition, is thereby responding to current

trends relating to the government’s reduced involvement,

outsourcing by companies and client demands for transparent

and efficient building processes. In addition to requiring a

different organization structure and direction, this policy also

requires different financing. The need for working capital is

increasing as a result of new forms of contracting and

changing payment conditions. With an eye on the above-

mentioned developments, a number of new activities were

initiated or given additional structure in 2006. For example,

the Infrastructure Management business unit was created to

handle management and maintenance (for example of

industrial estates and municipal public spaces), including the

possible operation of infrastructure. In 2007 Heijmans intends

to acquire the necessary endorsement from ProRail for railway

construction activities via Heijmans Rail. Heitkamp Rail’s

knowledge and experience will be deployed for this purpose.

Finally, initiatives that are increasing in scope include the

Heijmans event service which was responsible for safely

channelling traffic and the public at events such as the

Zomercarnaval (Summer Carnival), the Bavaria City Race and

the Dance Parade in Rotterdam, and work by the Integral

Excavation Department, which was responsible for preparing

the excavations needed for the Haarlemmerplein in Amsterdam,

the RABO head office in Utrecht and the Neherpark

Leidschendam. In addition, renewed cooperation with Desso in

the area of artificial turf for hockey fields yielded good results

and the Sports and Green Department appeared at two symposia

as a partner for operators of athletic tracks and artificial turf

fields. The service activities of the division are increasing in

importance, partly due to increased cooperation with entities

such as Van Gansewinkel for the maintenance of paved asphalt

surfaces and for the maintenance of business properties.

Bestcon

Bestcon is the last remaining company of the former

Production Division

Bestcon is a supplier of customized prefab concrete

components, particularly floor plates and partition walls.

The organization is primarily focused on non-residential

buildings, such as offices, parking garages, schools and

hospitals. The presence of Bestcon offers Heijmans flexibility

��

when it is needed. The company went through a difficult year

in 2005 when it attempted to focus on the residential market

without much success. The reason for this attempt was the

poorly performing office market. A reorganization has since

been completed and the negative results of 2005 have

significantly improved.

Belgium

In € millions 2006 2005 Variance

Revenues 288 265 9%

Operating profit 10.0 8.4 19%

Operating margin 3.5% 3.2%

Profit after tax 5.3 3.9 36%

Profit margin 1.8% 1.5%

Order book 304 256 19%

The supply side of the Belgian housing market is not at all

like the Dutch market. There is little or no centralized control

over housing production and much is left to the discretion of

the consumer. This has resulted in characteristic ribbon

development in Belgium versus core development in the

Netherlands. The large-scale suburban housing sites that are

typical of the Netherlands are therefore a rare sight in

Belgium. There are, however, inner-city redevelopment sites in

Belgium and the government promotes owner-occupied

housing. This typically involves the construction of flats that

make up approximately half of the total housing production.

This is the market on which Heijmans is focused in Belgium,

with projects such as Hertogendal Leuven, the Bavière Luik

hospital site and several developments in the centre of

Antwerp. Key drivers for this trend are shrinking family size

due to divorce, a greying population and migration to urban

centres motivated by higher availability of facilities (public

transportation and so on). The appeal of the subsidized

housing market is clearly discernable and a programme

involving 3,600 housing units has been created in the

Walloon Provinces. In 2006, Heijmans sold 165 housing units

(211 in 2005). The cost of homes rose by 9% (flats) to over 11%

in 2006. The average cost of a home in Belgium varies from

€ 112,000 (Walloon Provinces) to € 189,000 (Flemish Brabant).

In relation to non-residential construction, the focus for the

coming years is on new sports infrastructure and school

buildings. € 1 billion has been provided for the latter sector to

address the existing backlog. Public-private partnerships are

being created for this purpose. However, these are typically

between governments and financial institutions. This involves

a multitude of smaller projects (up to a maximum of € 25

million).

Following the municipal elections of 2006, a decrease in

infrastructure investments is expected in line with previous

cycles. This decrease is expected to be approximately 8.5%.

Approximately 70% of Heijmans’ infrastructure revenues are

earned from public clients. Starting in 2008, work on large

infrastructural projects, such as the Oosterweelverbinding,

Diabolo and the Antwerp Master Plan is expected to begin. In

addition, there is a projected demand for the construction and

operation of sewage treatment plants. It is expected that PPP

constructs, primarily involving financial parties, will be

created for this purpose here as well.

United Kingdom

In € millions 2006 2005 Variance

Revenues 264 227 16%

Operating profit 6.9 5.2 33%

Operating margin 2.6% 2.3%

Profit after tax 5.4 4.0 35%

Profit margin 2.1% 1.8%

Order book 351 164 114%

Heijmans’ operations in the United Kingdom are primarily

focused on clients in the public sector: subsidized social

housing and affordable owner occupied homes, education,

�0

healthcare and recreation. In spite of rising house prices and

an increase in the number of mortgages issued at the

beginning of 2006, the housing market remained flat.

The subsidized housing market experienced strong growth,

however. Heijmans realized organic growth in 2006, in part

due to the opening of a business location in Plymouth,

as well as through the acquisition of Denne Construction,

which was included in the consolidated accounts as of

1 October 2006. These initiatives provided good coverage of

the region to the south and west of London. New framework

contracts were concluded with Cardiff Partnership, Oxford

Rural Housing Partnership and English Partnerships National

Brownfield Strategy, as well as others. Company projects

involving approximately 75 homes were developed and sold

in areas such as Cardiff. In addition, around 200 homes are

under development.

The (pro forma 2006) revenues of the Leadbitter/Denne

combination are distributed as follows:

FIGURE 12

Homes 60%Education 16%Healthcare 13%Recreation 7%Commercial 4%

The goal is to achieve a combination of improvements in

margin and growth; improvements in margin on the basis of

an increase in the number of framework contracts, by acting

more frequently as a developer of less expensive homes and

growth by providing support to local levels of government in

relation to complex redevelopment projects as a means of

becoming involved in projects at an earlier stage.

Further growth must primarily be generated by geographical

expansion through the opening of additional business

locations as well as through the acquisition of regional

companies that are active in the same market segment.

There was a growing demand for commercial property during

the first half of 2006, particularly in London. This is of

marginal importance in relation to Heijmans’ operations in

the United Kingdom, which is in contrast to developments in

the healthcare sector. This sector experienced strong growth

relative to 2005, primarily due to the construction of several

new hospitals. A shift is occurring in the healthcare and

education markets from traditionally financed projects to

private-sector financing. Heijmans is assessing how best to

respond to this trend and, via Denne Construction, has

reached the prequalification stage as a builder for the

realization of two PFI projects in Kent.

Germany

In € millions 2006 2005

Revenues 135 53

Operating profit 3.5 –0.1

Operating margin 2.6% –0.2%

Profit after tax 2.2 –0.6

Profit margin 1.6% –1.1%

Order book 65 13

Three Heijmans companies were active in the infrastructure

market in Germany. All companies are active in niche markets

in this sector: dike reinforcements (Heijmans Bau),

foundations (Franki Grundbau) and railway construction

(Heitkamp Rail). The acquisition of Münster-based Oevermann,

completed at the beginning of 2007, supplements these

activities with general groundwork, road building and hydraulic

engineering operations. The geographic focus of these activities

�1

is located in the North Rhine-Westphalia region and in the area

of Hamburg. As a subcontractor, Franki Grundbau in particular

observed signs of recovery in the market and achieved good

results. Franki Grundbau ranks among the top 5 in the German

foundations market. Franki Grundbau expects to capitalize on

growth opportunities through activities such as the provision of

integral excavations and bored pile operations. The demand for

railway construction activities only exhibited clear growth

during the second half of 2006. A moderate budget increase is

expected for 2007 and thereafter. There is growth potential in

the Netherlands, Eastern Europe (Heitkamp is a partner in a

German consortium of railway companies) and China, where

Heitkamp provides project management services for railway

construction projects. With € 78 million in revenues in 2006,

Heitkamp ranks among the top 10 players in its field of

activities in Germany. To be able to profit from improving

markets, Heijmans has decided to invest in railway construction

equipment. In addition to its existing companies, Heijmans

expects that Oevermann will also be able to profit from the

improving German infrastructure market. Mutual reinforcement

and margin improvement are priorities for 2007.

Expectations for 200�

At € 3.2 billion at the end of 2006, the order book is 25%

higher than at the end of 2005. Heijmans is projecting profits

after tax of € 90 million in 2007, not including unforeseen

circumstances. This represents an increase in the profits per

share up to approximately € 3.75. The basic assumption in

this respect is that the Property Development Division will

achieve the same high results as it did in 2006 and that the

steps taken in relation to the Building Division will result in

improved returns. A portion of the revenues from projects

currently under development by the Building Division will,

however, be realized at zero profit. The contribution of new

large projects undertaken by the Infrastructure Division are

not expected to be at the level needed to increase operating

results in 2007. Further improvements in results are projected

for all foreign operations.

This forecast includes a provision for higher financing charges,

a higher effective income tax rate and higher write-offs in

relation to the capitalized intangible assets of acquisitions

that are not part of goodwill.

Management information

Heijmans develops and builds the environment in which we

live, work and play. This means that, to an extent, Heijmans

has for some time determined the image of the Netherlands

and other countries in which we operate. We want to meet the

acute needs of today without damaging the opportunities of

future generations to meet their own needs. Because of this,

we have to consider matters such as how we introduce

products into the landscape in an aesthetically pleasing way,

how we organize processes to reduce nuisance, and how we

guarantee the safety and well-being of our employees.

This demands, firstly, constant innovation and risk

management and, secondly, dialogue with others towards

whom or which Heijmans is very aware of its responsibilities:

clients, shareholders, employees and the built and natural

environments. We aim to translate the real needs of clients

and end users into products and services. To do this we bring

our competences in the areas of property development,

Building and Infrastructure into action in an integrated and

sustainable way. The value and reputation of a company is

primarily determined by its performance. However, this

requires transparent and active communication, as that

encourages confidence in the company. Heijmans’ full-service

strategy was the starting point in this regard: internally by

making the concept tangible and explaining how strategic

objectives affect the work, externally by presenting Heijmans

as a full service company and living up to that image in

practice. Heijmans engages in dialogue with the following

external parties:

• Clients

Through client evaluations and customer satisfaction

surveys, but also with users’ representatives, to identify

trends allowing us to respond to them or anticipate them.

In 2006, for example, we discussed mobility with various

organizations and road users, we consulted senior citizens

and their representatives about housing for the elderly and

we consulted various partners concerning the global

warming issue in relation to Waterwonen, our “living on

water” housing product. The basic idea: to deliver excellent

products and services in a pleasant and professional

manner.

�2

• Providers of capital

Through regular personal contacts (roadshows to financial

centres and one-to-one meetings with institutional investors,

project visits, attending trade fairs and holding information

meetings for private shareholders), the General Meeting of

Shareholders, the Shareholders’ Communication Channel and

with representatives of investors, including the Association of

Investors for Sustainable Development (VBDO). The basic idea:

to become the most popular share in the construction and

property development sectors.

• Employees

Through the employee participation structure at Heijmans

and through the FNV and CNV trade unions in semi-annual

consultation meetings. The basic idea: to offer continuity in a

pleasant and challenging working environment.

Above all, however, it is the Heijmans culture that guides how we

act. This culture is based on a number of core values that should

offer greater certainty with respect to the sustainability of

Heijmans’ activities.

Heijmans stands for:

• Innovative enterprise: Heijmans is modern and progressive,

ambitious, proactive and actively looking for opportunities.

This means blazing new trails, bringing new concepts onto the

market and taking quality of life, safety or mobility as our

point of departure rather than the delivery of asphalt or stone,

and coming up with solutions for problems facing the

government and society.

• Committed partner: Heijmans operates as a service provider

and involves the client in developing solutions. We are big

enough to take on any challenging project, but we are also

pleased to provide rapid, high-quality service to local clients

with smaller projects. Heijmans is a committed partner that is,

moreover, aware of its social responsibilities. We show our

commitment through the Heijmans Foundation, for example.

• Agreeable professionals: Heijmans combines the personal

approach, collegiality and long-term outlook of the original

family business (since 1923) with the professionalism, result-

orientation, discipline and cost-awareness of a listed company

(which it has been since 1993). This combination makes us

agreeable professionals.

• Reliable and transparent: Heijmans is fair and transparent in

the conduct of all its business and approaches all its

stakeholders with an open mind. Investors know us as

transparent, approachable and predictable. Clients also

appreciate that: say what you do and do what you say.

Heijmans always starts from the premise that its policy and

promises are measurable. To measure our performance on

sustainability, we have established how we want to and can do

this for the subjects “employees” and “environment”.

These indicators are not restrictive and can be added to later.

We have already done that for the “return” factor. In 2006 we

undertook efforts to set out the concrete, practical aspects of

areas of concern, objectives, measurements and priorities.

Indicators were established and baseline measurements are

being taken. In addition to issues that relate to our own

employees, there are subjects that have to do with the outside

world, for example: integrity, innovation and customer

satisfaction. As far as our environment is concerned, we

distinguish between environmental issues of relevance to today’s

society, environmental issues based on our primary processes

(for example, use of scarce raw materials, use of space, dust, light

and noise emissions, production of waste and use of energy), and

environmental issues related to the running of the company.

Heijmans has chosen to integrate these issues with existing

responsibilities, which has led to a logical division in the

Executive Board: Mr Van den Hoven focuses on the

environmental dimension, while Mr Hoefsloot focuses on the

social and ethical aspects, and Mr Van der Kroft focuses on

financial aspects.

Innovation, modernization

The building industry used to be known as a capacity-driven

sector, and that is still the case for many projects. For a number

of reasons, there is now an opportunity to change this, to take on

the competition not only on capacity and efficiency but also on

modernization of processes and products. Heijmans is making

use of this opportunity. Versneld Vernieuwend Voorop

(“Accelerated, Innovative, In front”) is the name of a project started

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in the company to promote innovation. It functions as a platform

for modernization outside day-to-day concerns. In 2006, this

programme saw 17 initiatives to modernize processes and

products, some of which can be said to be very promising.

Heijmans modernizes processes by moving up in the

construction value chain and getting more involved in design

and development, as well as in maintenance and management.

In this way, Heijmans aims to fulfil a directing role in the

construction process.

• First, by managing the chain from raw material to end

product. To do this, it is sometimes necessary for Heijmans to

have strategic raw materials, production facilities or activities

at its own disposal. Heijmans considers sand and gravel to be

strategic raw materials, which is why we invested in a pit with

extraction rights in Norway in 2006. This has guaranteed our

supply of high-grade aggregate, a raw material for the

production of asphalt, for 80 years. Heijmans also has sand

extraction sites in various places in the Netherlands. The

production of asphalt is also a strategic activity for Heijmans,

and it supplies the market from eight plants in the

Netherlands, Belgium and Germany.

• Second, by exercising influence on the client or end product.

If the client omits to specify sustainability aspects or leaves no

room for them to be included in the offer, there is no latitude

for the party executing the work. This is a dilemma for

sustainable development right across our industry.

An alternative, in addition to exercising influence on standards

and other specifications, tendering regulations or licensing

criteria, is to be involved in design or development.

The Heijmans land bank offers opportunities in this regard.

However, from this perspective too, Heijmans prefers to work

with modern forms of contract such as PPP, D&C and PFI.

Finally, Heijmans offers the client tools like Adaptis and Tailor

housing as a way to offer the desired flexibility.

• Modernization, of both process and product, usually took place

within concrete projects. An example of the modernization of a

process in a concrete project is the way in which the N201

project (construction of a provincial road from Aalsmeer to

Hoofddorp) was converted into an alliance model in 2006. An

example of an innovative product is the Shuttle Buggy, which

can be used for large-scale asphalt projects which have to be

completed in a short period. Heijmans has always invested a

lot in modernization. Examples from the past include:

Modernization Situation

Asphalt under water (floating plant) Coastal defences completed, ship scrapped

Sewer renovation (various licences and patents)

Market for sewer restoration hardly opened up

Soil decontamination procedure Various projects successfully completed; environment has not been on political agenda for some time

Rubber bitumen Rejected by the Directorate-General of Public Works and Water Management

Asphalt on steel bridges Not used because of lack of competition

Removal of tar from asphalt Not used in anticipation of competition

Dynamic road marking Guidelines set aside by clients in order to generate more competition

Innovation in the construction industry only has a chance

of success if clients are willing to award projects on criteria

other than the lowest bid. These other criteria could be: total

cost over useful life, social burden (traffic congestion, noise

and so on), use of sustainable materials and so on.

At Heijmans we have demonstrated our willingness to be

noted for innovativeness in the past year.

2006 Modernization Sector Description

Tailor housing Housing development and construction

Offers home buyers freedom of design, even in lower price brackets

Adaptis Site development Gives clients an instrument for optimal design of residential areas

Shuttle Buggy Road building Guarantees continuous process and quality of asphalt processing

Waterwonen Housing development and construction

Use of space for more than one purpose: water storage and housing

Startlab Housing development and construction

Affordable homes for first-time buyers

Modieslab Road building Prefab road surface

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Providers of capital: corporate governance

Corporate governance is the structure and system of rules and

procedures on which the management and control of a

company is based.

Corporate governance structure

Heijmans is a public limited company which is subjected by

law to the dual-board structure. Among other things, this

implies that the Executive Board manages the company and

supervision of the management of the company is carried out

by the Board of Supervisory Directors; the Supervisory Board

also appoints and dismisses the members of the Executive

Board. The interests of the company and its business are the

main concern of both boards, which therefore endeavour to

create long-term shareholder value. On the occasion of its

stock-exchange introduction in 1993, Heijmans opted for two

anti-takeover measures. One of them was the issue of

depositary receipts for shares which transferred the voting

rights on the shares to the Heijmans Share Administration

Trust. The articles of association of Heijmans N.V. were

amended in 2006. As a result, the 1% rule, which restricted the

transfer of ordinary shares, ceased to have effect. This also

abolished the restrictions on the exercising of voting rights, so

the issue of depositary receipts for shares no longer serves as

a defensive measure. The issue of depositary receipts will still

be continued for the time being to combat absenteeism from

the Annual General Meeting of Shareholders. At the same

time, the option of the Heijmans Preference Share Trust to

acquire preference shares in Heijmans’ capital has been

extended from 50% to 100% of the par value of the capital

issued. The rationale for the extension of this call option was

explained during the Annual General Meeting of Shareholders

held on 26 April 2006. In addition, a put option is included in

the agreement with the Trust (the initiative to put the option

into effect lies with the Heijmans Executive Board) alongside

the call option that is already in force (the initiative lies with

the Trust). The Trust will acquire preference shares on the

basis of this put option as soon as the company issues such

shares. A maximum of 100% of the par value of the capital

issued also applies in this case. Heijmans has therefore

abolished a structural anti-takeover instrument and

strengthened an ad hoc anti-takeover instrument.

The purpose of this is to give us the opportunity and the time

to satisfy ourselves of the strategic fit with an acquiring party

or ascertain the intentions of a party which on the basis of the

gradual purchase of (depositary receipts for) shares on the

stock market wants to exercise control over the company.

Compliance with the Corporate Governance Code

In the Annual Reports for 2004 and 2005, Heijmans reported

on its governance structure and the extent to which this was

in line with the provisions of the Corporate Governance Code.

Heijmans adheres to practically all principles and best

practices of the Code. There is a list of the provisions which

Heijmans currently still departs from on the website (see

www.heijmans.nl/Corporate_ governance/

corporategovernancecode.asp). These are:

Appointment and remuneration of directors (provisions

II.1.1, II.2.7, II.2.11)

• II.1.1: A director is appointed for a period of a maximum of

four years. Reappointments can be made each time for a

maximum of four years.

• II.2.7: The maximum remuneration in case of involuntary

dismissal is one time the annual salary (the “fixed” portion of

the salary). If the maximum of one time the annual salary for

a director who is dismissed during his first term is clearly

unreasonable, the director in that case qualifies for a dismissal

allowance of a maximum of two times the annual salary.

• II.2.11: The key elements of a director’s contract with the

company is immediately made public as soon as the

contract is signed. This at a minimum includes the fixed

salary amount, the structure and the amount of the variable

remuneration portion, the dismissal pay, the applicable

pension arrangements and the performance criteria.

Heijmans endorses the principles but respects the agreements

with the directors with regard to their terms of office,

remuneration and publication of terms of employment which

were already in place when the Corporate Governance Code

was published. For directors appointed in the future, the

recommendations of the Code on these points will be

followed.

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Terms of office of members of the Supervisory Board and

the board of the Heijmans Share Administration Trust

(provisions III.3.5 and IV.2.3)

• III.3.5: A director of the Supervisory Board can be appointed

as a member of the Supervisory Board for a maximum of

three times, each time for a period of four years.

• IV.2.3: A director of the Share Administration Trust can be

appointed as a member of the board of the Heijmans Share

Administration Trust for a maximum of three times, each time

for a period of four years.

Heijmans also endorses these principles but needs time to

implement them; in the interests of continuity in supervision

and management it is necessary to temporarily depart from

the principles set out in the Code. The proposed stepping

down of supervisory directors and appointment of new ones

will once again bring Heijmans a step closer to compliance

with the provisions of the Code in this area.

Adoption of the minutes of the Annual General Meeting of

Shareholders (AGM) (provision IV.3.8)

• IV.3.8: The minutes of the AGM are made available to

shareholders upon request at most three months after the

meeting of shareholders, after which shareholders are given

the next three months to provide feedback. The minutes are

subsequently adopted according to the procedure specified in

the articles of association.

The adoption of the minutes of the Annual General Meeting of

Shareholders is regulated in Heijmans’ articles of association

(Articles 33.4 and 33.5) and, for reasons of efficiency, departs

slightly from the principle in the Corporate Governance Code

(IV.3.8). Instead of a three-month comments procedure,

Heijmans invites one of the shareholders present at the

meeting to co-sign for the adoption of the minutes.

As part of its system of values (transparent and reliable),

Heijmans also operates a disclosure policy. Heijmans ensures

that information about the company that is for publication

and which could influence price formation is made available

immediately and is disclosed to everyone at the same time.

The disclosure policy can also be found on the Heijmans

website www.heijmans.nl/corporate_governance/

disclosurebeleid. It is possible to follow the analysts’ meetings

and press conferences live via webcasts. These broadcasts are

subsequently available on the Heijmans website in on-

demand versions. Heijmans keeps shareholders and

prospective shareholders in and outside the Netherlands

informed about its strategy and performance face-to-face (at

roadshows and one-to-one meetings). Roadshows are

announced on the website www.heijmans.nl/Investor_

Relations/Roadshows.asp. Presentations used and

documentation are also available via the Heijmans website.

Code of Conduct: good examples are followed

Heijmans introduced a written code of conduct for its own

employees in 2003. The introduction was accompanied by an

extensive round of communications to ensure that all

employees were made familiar with its content and to get an

idea of how clear the provisions of the code were. The code was

revised in 2005 and values expressed in relatively abstract

terms were further normalized. This mainly affected the rules

on giving and receiving promotional gifts and use of company

property. The revised code was accompanied by another

extensive round of communications. All new employees know

of and are familiar with the code through their employment

contracts. A confidential adviser has been appointed in each

division in case any aspects of the code are unclear or require

interpretation. This person can also provide advice with

respect to any dilemmas employees may be faced with in

their daily work.

In certain areas the standards have been assigned to values.

This is the case, for example, with respect to the “insider

knowledge rules”: management that participates in the capital

of Heijmans N.V. is subject to these rules, which are based on

the model of the Association of Securities-Issuing Companies

(VEUO) and which comply with the provisions of the Market

Abuse Act (Wet Marktmisbruik). The insider knowledge rules

can be consulted on the Heijmans website www.heijmans.nl/

Corporate_governance/reglementvoorwetenschap.asp. The

“Private investment rules of the Executive Board and the

Supervisory Board of Heijmans N.V.” are also on the website.

The chairman of the Executive Board acts as compliance

officer for share transactions.

�6

The chairman of the Supervisory Board acts as compliance

officer for the chairman of the Executive Board. Another aspect

of the code has been worked out in more detail in the

statement that Heijmans requires with each quotation we

submit. This states that no anti-competitive practices have

been involved in the production of the quotation. Heijmans

has instructed KPMG to check that the required statements are

present in the quotation files. This check forms part of the

annual audit of the financial statements performed by KPMG

Accountants. The audit also includes interviews with the

management of the Heijmans business units about

compliance with the code of conduct and about how this

aspect is kept a hot topic within the organization. KPMG also

reports on these matters to the Heijmans Integrity Committee,

which advises the Executive Board on Heijmans’ integrity

policy. Members of the Integrity Committee include the

chairman of the Central Works Council, chairmen of the

Executive Board and the divisions, and the Heijmans

compliance officer. Professor Eduard Kimman also sits on the

committee as an independent expert.

The basic assumption is that issues should be resolved in the

day-to-day workplace through contact with the appropriate

manager, if necessary with the support of the confidential

adviser. For those situations where this is difficult or

impossible, Heijmans has introduced a whistle-blowing

scheme. This can be found on Heijmans’ website,

www.heijmans.nl. The associated companies of Heijmans are

included in the register of the Foundation for Evaluating the

Integrity of the Building Industry (SBIB). Every two years,

breaches of the code of conduct, together with an account of

how they were dealt with, are reported to the SBIB.

Heijmans informed its suppliers and subcontractors in 2006

that they would be required to endorse the Heijmans code or

that of Bouwend Nederland, or their own (industry sector)

code.

Reporting, audit, communications and accountability

Each year, Heijmans publishes an Annual Report and a Semi-

Annual Report. In addition, the company has decided to

publish two so-called trading updates every year instead of

quarterly figures. Heijmans is of the opinion that the

quarterly figures do not provide greater insight into its

operations and lead to an unnecessary administrative burden,

not only for the company but also for those who track the

company on a professional basis. The Annual Report is

audited by an auditor and is accompanied by a certified audit

opinion. A so-called audit review statement is issued by an

auditor for the Semi-Annual Report.

The following publication dates and other relevant dates have

been scheduled for 2007 and 2008:

Date Event Time (C.E.T.)

18 April 2007 Annual General Meeting of Shareholders

10.30 hrs

20 April 2007 Ex-dividend listing 9.00 hrs

27 April 2007 Release of dividend for payment

16 May 2007 Trading update Before trading

23 August 2007 Publication of Semi-Annual Report Before trading

Press conference 10.00 hrs

Analysts’ meeting 13.00 hrs

14 November 2007 Trading update Before trading

21 February 2008 Publication of Annual Report Before trading

Press conference 10.00 hrs

Analysts’ meeting 13.00 hrs

9 April 2008 Annual General Meeting of Shareholders

10.30 hrs

11 April 2008 Ex-dividend listing 9.00 hrs

18 April 2008 Release of dividend for payment

15 May 2008 Trading update Before trading

21 August 2008 Publication of Semi-Annual Report Before trading

Press conference 10.00 hrs

Analysts’ meeting 13.00 hrs

13 November 2008 Trading update Before trading

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Heijmans shares and ratios

Heijmans share capital at 31 December 2006 consists of two

types of shares: 6,610,000 unlisted cumulative preference

shares with a nominal value of € 0.03 per share and a fixed

dividend of 6.81% on the issue price of € 10.00 per share.

The voting right on one cumulative preference share is 0.426.

The review date is 1 January 2009. In addition, 24,072,584

ordinary shares were issued with a nominal value of € 0.03

per share and a yearly dividend to be determined on the basis

of profits earned. Depositary receipts for ordinary shares are

listed on Euronext Amsterdam, AMX (midcap). Holders of

depositary receipts have the option to convert these shares

under certain conditions, whereby the voting rights revert to

the shareholder. This option was exercised for 420 depositary

receipts. Holders of depositary receipts who would like to

exercise their voting rights during the Annual Meeting are

granted unconditional authority to do so by the Share

Administration Trust that issued the depositary receipts on

the ordinary shares. Each share entitles its holder to cast one

vote. A total of 26,888,444 votes can be cast at the Annual

General Meeting of Shareholders. The price movements in

2006 in depositary receipts for Heijmans shares are shown

below.

FIGURE 13

The current situation with regard to the number of shares

issued, the price and daily revenues volume of the Heijmans

share, analysts’ forecasts, press releases and the Annual

Report can be accessed at www.heijmans.nl.

FIGURE 14 : Movements in the number of listed shares and depositary

receipts and key figures per share/depositary receipt

Number x 1,000 2006 2005 2004 2003* 2002*

Issued 1 January 24,073 22,438 22,438 22,438 21,468

Issue 0 1,635 0 0 0

Stock dividend 0 0 0 0 938

Options exercised 0 0 0 0 32

Issued 31 December 24,073 24,073 22,438 22,438 22,438

Average issued 24,073 23,696 22,438 22,438 22,433

Face value x € 1,000 722 722 673 673 673

Market value x € 1,000** 1,077,250 982,160 546,140 444,489 633,861

Closing price x € 1 41.66 36.49 24.10 19.10 16.70

Average daily revenues 71,597 100,564 50,073 48,288 47,822

Earnings per share x € 1 3.43 3.67 1.79 2.37 3.70

Dividend per share x € 1 1.45 1.45 1.22 1.22 1.48

Pay out ratio % 42.3 39.5 68.2 51.4 40.0

* 2002 and 2003 figures are based on NL GAAP and on IFRS from 2004 onwards.

** Based on highest stock price in the financial year in question.

Market capitalization

Heijmans’ 2006 market capitalization fluctuated between the

minimum of € 854 million on 13 June 2006 and the

maximum of € 1,053 million on 11 May 2006. An average of

71,597 shares were traded each day in 2006. This allowed

Heijmans to maintain its AMX (midcap) listing for at least one

more year.

Earnings per share and dividend

Reports on earnings per ordinary share are based on the

weighted average number of shares in circulation in the

financial year in question. There were 24,072,584 shares in

02-01-2006 29-12-2006

HeijmansAMX

90

100

110

120

130

140

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circulation in 2006 versus 23,695,626 shares in 2005.

Heijmans’ dividend policy aims to pay out approximately 40%

of the profit after tax. Earnings per share in 2006 were € 3.43.

It is proposed to pay a cash dividend which, at € 1.45 per

share, is, in absolute terms, at least at the same level as the

dividend paid in the 2005 financial year. This is due to the

incidental character of the additional € 9 million provision

related to the penalty imposed by the European Commission.

Table: Heijmans dividend yield in comparison to peer group

Yield based on year-end closing price 200� 200� 200� 2002 2001

Heijmans 4% 5.1% 6.4% 8.9% 6.3%

BAM 2.8% 4.2% 7.2% 11.2% 7.3%

Ballast Nedam 3.1% 0 0 0 7.1%

Arcadis 2.5% 3.5% 5.1% 6.0% 4.7%

Imtech 3.9% 4.1% 5.2% 9.9% 5.9%

Boskalis 1.3% 4.2% 6.0% 6.2% 3.5%

Share distribution

Communication with shareholders is hampered due to the

fact that it is not easy to trace them. There is no mandatory

registration requirement and there are no registers to record

this information. Heijmans performed an analysis of share

ownership at the end of 2006 by requesting a distribution

summary from the largest banks and custodians of securities

in the Netherlands. In addition, an analysis was performed of

institutional share ownership on the basis of public registers,

information obtained from custodians and surveys among

large institutions. Distribution summaries were obtained from

7 Dutch banking institutions and also from the Stichting

Gemeenschappelijk Bezit Heijmans (Heijmans Joint

Ownership Trust). This located 17,972,842 shares, or 75% of

the total, and produced the following overview (based on the

number of shares traced).

Institutional 2006 2005 2004

The Netherlands 33% 16% 17%

United Kingdom 13% 20% 16%

United States 12% 16% 22%

Other 12% 9% 10%

Total �0% 61% 65%

Private 2006 2005 2004

The Netherlands 29% 37% 33%

United Kingdom 0% 1% 1%

United States 0% 0% 0%

Other 1% 1% 1%

Total �0% 39% 35%

Total 2006 2005 2004

The Netherlands 62% 53% 50%

United Kingdom 13% 21% 17%

United States 12% 16% 22%

Other 13% 10% 11%

Total 100% 100% 100%

Assuming that the untraced shares are held outside the

Netherlands and are related to the total number of

outstanding shares, the total number of shares held in the

Netherlands is 46% instead of 62%, of which 21% is held by

private investors and 25% by institutional investors.

An analysis of institutional investors commissioned by

Heijmans shows that, of the total Heijmans shares held (total

of 10,789,211 ordinary shares identified, or around 45%), 10%

is held by Dutch, 13.3% by American, 9.6% by British and 5.8%

by German institutions. The remaining 6.3% is held by

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institutions in other European countries, mostly in

Scandinavia.

The register of the Disclosure of Major Holdings in Listed

Companies Act (Wet melding zeggenschap in ter beurze

genoteerde vennootschappen, Wmz) maintained by the

Netherlands Authority for the Financial Markets (AFM)

identifies the following interests in Heijmans at year-end

2006.

Clients

Several parties have an influence on Heijmans’ end products.

In the traditional model the end user is not Heijmans’ direct

client. Think, for example, of a corporation as the client and a

tenant as the end user, or of the Directorate-General of Public

Works and Water Management as the client and the car driver

as the end user. We distinguish between direct and indirect

clients. The current trend is increasingly to try to

communicate with the end user and, also in this case,

government authorities are stepping back or assuming a more

facilitative role as clients.

• Heijmans develops and builds homes. On average, 80% of

the customers for the residential properties that Heijmans

develops itself are end users, the homeowners. In this case,

the indirect client with which Heijmans has to deal is the

local authority, which has far-reaching decision-making

powers when it comes to the number and type of homes to

be built. As soon as the outline of a plan is settled, the user

comes into the picture. His freedom of choice is limited by

the conditions laid down by the local authority as well as

by legal provisions. The remaining 20% or so of homes are

purchased by institutional investors or housing

corporations. In that case, the end user, the tenant, is an

indirect client who has little influence on the end result.

Houses built for third parties (housing corporations,

investors or developers) fall into this category.

Through concepts like Tailor housing and Seniorenstad

(“Seniors’ City”), for example, end users are being offered

more opportunities to see their own wishes translated into

their home or the environment around their home.

The corporation as the direct client is given help by

Heijmans with planning the housing in the areas it is

developing. Heijmans developed the digital planning tool

Adaptis for this purpose.

• On the commercial property market (offices, shops) the

client is either an investor (pension fund, insurance

company) or a tenant. The investor determines what the

property should look like. The tenant is an indirect client

and has limited influence in this regard. When we are

building for the public sector, the client is usually a

government department such as the Government Buildings

Agency or a semi-government body (educational or care

(Depositary receipts for)

ordinary shares

Capital as % (of total

share capital issued)

Capital as % (of total number of

ordinary shares issued)

Votes as % (of total share capital issued)

Direct Potential

Van Herk Groep BV 12.1 15.4 13.8

Fidelity Low Priced Fund 6.4 8.1 7.3

Aviva 2.8 3.6 3.2

Heijmans Share Administration Trust 78.5 100 89.5

Options on ordinary shares

Heijmans Preference Shares Trust 87.63 87.63 87.63 100

Cumulative Preference Shares

Capital as % (of total

share capital issued)

Votes as % (of total

share capital issued)

F. van Lanschot Trust Company 9.3 4.5

Ducatus 6.5 3.2

Aviva 5.7 2.8

21.5 10.5

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establishment), or a private client (private educational or

care establishment). Here too, a clear trend can be seen

towards tenants as end users having more influence. New

developers like Proper-Stok guide property seekers to their

new accommodation rather than promote existing sites.

• Heijmans deals with three types of client on the

infrastructure market: national government (Directorate-

General of Public Works and Water Management), local

authorities (province, water board, municipality) and private

clients/companies. Indirect clients are then the road users,

computer users and telephone users, although they are at a

much greater “distance” from the developer than, for

instance, the tenant as indirect client for a house.

• Customer satisfaction. Heijmans Property Development

targets the end user, home buyers and tenants with its

customer satisfaction surveys. Heijmans Construction

surveys professional clients. Customer satisfaction surveys

are still in the preparation stage in the Heijmans

Infrastructure Division. The industrial services business unit

in this division started a Customer Focus Project in 2006 to

optimize relationships with various client groups.

Employees, suppliers, subcontractors

The history of Heijmans is one of a company with close ties to

the local and national economies, and that still applies to its

day-to-day activities today. Many facets of the organizational

structure of the company take this into account.

Many employees come from the region and many of our

processed products and services provided are purchased

locally or nationally. One important advantage of this

practice is that issues such as human rights are largely

guaranteed by our current laws and regulations. Of the 6,557

employees working in the Netherlands, 33 live in Belgium or

Germany. We have 604 employees living in the northern

provinces of the Netherlands, 3,031 in the southern provinces

and 2,889 in the middle of the country.

Heijmans is, however, aware that an increasing proportion of

the labour, products and services we use come from countries

other than the countries in which Heijmans operates.

This means that we need to pay more explicit attention to

guaranteeing human rights (discrimination, freedom of

association, child labour, safety policy). More work will be

done in 2007 to increase awareness of Heijmans’

responsibilities in these areas and of the influence we can

exercise.

Employee participation

The arrangements for employee participation are laid down in

the Works Councils Act (Wet op de Ondernemingsraden, WOR).

Heijmans has implemented the provisions of this Act by

establishing a European Works Council, works councils in

Belgium and Germany, and a Central Works Council in the

Netherlands with four works councils at divisional level.

Committees have also been established for each region or

operating company in the Netherlands. These councils and

committees represent the employees, and it is through these

bodies that elected representatives of the employees are

involved in consultations with the management of the

company. In the Netherlands, over 200 employees participate

in this way.

The 7-member European Works Council met four times in

2006, twice to consult the chairman of the Executive Board.

Among other topics, their discussions covered

internationalization, Corporate Social Responsibility and

harmonization of working conditions policy across national

boundaries.

The Central Works Council met twelve times in 2006, on six

occasions in order to consult the chairman of the Executive

Board. A member of the Board of Supervisory Directors was

also present at almost all of these six consultative meetings.

Topics of discussion included strategy, investments, annual or

semi-annual figures, changes to legislation, including social

legislation, and pay. The Central Works Council and the

chairman of the board jointly determined the basic principles

with respect to obtaining consent or advice and also for

reporting on pay (Harrewijn Act). The Central Works Council

advised the chairman of the board in 2006 on the disposal of

Vebo Holding and on the acquisitions of Denne Construction,

Herrewijnen, Bouwfonds Langewold, Oevermann and Burgers

Ergon. It also issued an opinion on the refinancing of the

company’s credit and on outsourcing IT services. The Central

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Works Council gave its consent in 2006 to a new Arbo Unie

(occupational health and safety) service, the appointment of

risk-prevention officers, the new salary system and the

working hours reduction scheme. A certificate of no objection

was issued regarding the reappointment to the Supervisory

Board of T.J. Peeters and J.L.M. Bartelds.

Radical structural and organizational changes took place

within Heijmans in 2006. The need for this in the changing

market conditions was understood and was therefore

supported by the Central Works Council. By adopting an open

attitude, the Central Works Council hoped to make a

constructive contribution to the necessary changes.

The fundamental assumption of the Central Works Council

that every employee should be given a real chance to adapt to

the new situation increased the willingness of employees to

change considerably, and helped lead to the success of the

operation. In this dialogue model, the Central Works Council

also got issues that have traditionally been difficult for the

construction industry, such as strategic personnel policy

(part-time working, flexible working hours, working from

home) and social innovation, on the agenda for consultation

with the chairman of the board.

Constructive consultations are also held with trade unions.

Meetings between trade union delegates and the Executive

Board of the company are held at least twice a year.

In addition, meetings are held on an ad hoc basis on current

issues such as acquisitions (in accordance with the Rules

relating to mergers of the Social and Economic Council),

reorganizations (in accordance with regulations on collective

redundancy) and matters such as working hours. In this

connection, the year model for the Infrastructure Division that

Heijmans – the first one in the sector to do so – agreed upon

with the trade unions is a mark of the good relationships the

company has with the unions. The basic premise here is that

both employer and employee make an effort to mitigate the

risk of winter unemployment. During the period between 15

November and 15 April, employees build up savings hours.

Heijmans pays an allowance on these hours. The savings

hours, increased by the allowance, can then be used to take

paid leave during the winter period and thus avoid

interruption of work.

Quality of management

Heijmans has a national structure within which divisions

operate. The basis of this structure is a three-member group

board whose members represent operational and financial

disciplines and have extensive experience in the sector.

The divisions are generally run by a three-member board with

extensive experience in the sector. For these and other

management positions, the shortage of qualified people is a

cause for concern. Their average age is relatively high, a factor

that applies to the whole sector. There are also few new

entrants. For these reasons, Heijmans considers it a primary

task to develop management within the company itself.

Heijmans provides higher management in the 35-45 age

group with the opportunity of attending a general

management training programme provided by CEDEP (Centre

Européen d’Education Permanente) in collaboration with

INSEAD in Fontainebleau. For middle management in the 30-

40 year age group with potential for advancement, Heijmans

has created a two-year Heijmans Management Programme in

collaboration with Nijenrode. The programme comprises 24

participants each year.

Employees

At year-end 2006, Heijmans had 9,189 employees (2005:

9,135). The distribution of employees over the countries in

which Heijmans operates is shown in the table below.

Country 2006 % total 2005 % total

The Netherlands 6,557 72% 7,023 77%

Belgium 1,504 16% 1,496 16%

United Kingdom 564 6% 391 4%

Germany 564 6% 225 3%

Total �,1�� 100% 9,135 100%

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The distribution of the 6,557 employees in the Netherlands

over the divisions is shown in the chart below.

FIGURE 15

Property Development 9.4%Building 31.4%Infrastructure 51.8%

Production 1.7%Corporate services 5.7%

Almost all Heijmans Nederland employees are subject to a

collective labour agreement (CAO).

CAO Bouwnijverheid 83%

CAO Metaal & Techniek 9%

CAO Metalektro 2%

CAO Hoveniersbedrijf 2%

CAO Betonproductenindustrie 1.4%

CAO Beroepsgoederenvervoer 0.6%

Other 2%

91% of the employees in the Netherlands are male and 9% are

female, 93% work full-time and 7% work on a part-time basis,

and 49% are employed in production and 51% in an

implementing, administrative or management job. Almost 92%

of employees have indeterminate employment contracts,

while 8% work on a temporary employment contract basis.

Absenteeism due to illness

The average age of workers in the construction industry in the

Netherlands is about 40 years. The inflow of young people

into the labour market is stabilizing, and fewer and fewer of

them are choosing to go into the construction industry.

In addition to this, the number of older workers leaving the

industry is increasing. Ensuring sufficient numbers of skilled

workers is a cause for concern for the future. Heijmans intends

to counter this problem, firstly by minimizing loss of staff

through, for instance, pursuing an age-aware personnel

policy, facilitating opportunities to combine work with a

caring role and encouraging women to choose Heijmans, but

also by treating the health and safety of employees as a

matter of paramount importance by investing in reducing

absenteeism due to illness and preventing occupational

disability. Preventive care and working to achieve accident-free

workplaces are increasingly important aspects in this regard.

The pilot project started in the West region with Working

Conditions Service Centre ACS in 2005 resulted in 155

preventive treatments on 1,010 participating employees.

The role of ACS is to advise, support and guide the managers

of operating companies and their employees on all aspects of

managing and preventing absenteeism. The starting point is

to look at what an employee can do, regardless of his

complaint, and to find work for him on that basis. Heijmans

also works very closely with the health insurance company

on preventive and curative interventions and on waiting time

management. Participation in the collective contract that

Heijmans negotiated with health insurance companies

provides basic health insurance supplemented by services

such as physiotherapy, ergonomy, psychology and preventive

medical examinations. Every employee who participates in

this collective contract receives a gross allowance to offset the

cost of the supplementary insurance. This allowance

currently consist of three times the amount provided under

the CAO Bouwnijverheid. We have established a medical

centre at our head office in Rosmalen where a company

doctor holds consulting hours and where employees can have

physiotherapy under expert guidance and work on their

health and fitness in the company fitness centre. All these

measures contributed to a further decrease in illness-related

absence from work in 2006 to an average of 4.8% for Heijmans

in the Netherlands. The average number of absences due to

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illness (the average number of times that an employee takes

leave due to illness each year) was 0.88 and 25 employees

entered schemes under the Work and Income (Ability to Work)

Act (WIA) due to their reduced ability to perform work.

Absenteeism due to illness since 2000

Indirect personnel Direct personnel Total

2000 3.33% 7.9% 6%

2001 3.62% 8.49% 6.31%

2002 3.14% 7.88% 5.82%

2003 3.04% 7.24% 5.36%

2004 3.14% 6.45% 4.97%

2005 2.97% 7.07% 5.21%

2006 2.42% 6.36% 4.5%

Employees’ years of service

Number of years of service Total

< 1 year 1,076

1 year 758

2 year 389

3 year 440

4 year 388

5 - 9 year 2,029

10 - 14 year 1,312

15 - 19 year 1,016

20 - 24 year 744

25 and > 1,037

Grand total 9,189

Commitment

Heijmans aims to equip its employees with the necessary

skills for a dynamic and constantly changing future.

Heijmans therefore invests in staff education and training so

that organizational objectives can be realized. Training and

development programmes are accessible to all employees.

Of the average of 9,162 employees, over 6,400 (70%) took part

in some form of education or training in 2006 (2005: 49%).

Fixed arrangements were made with a number of training

centres. The training of skilled workers largely consists of on-

the-job training. In 2006, Heijmans employed 153 apprentices

in a vocational training programme and 202 Heijmans

employees in the Netherlands were qualified at the “Master”

level.

The Heijmans Academy set up in December 2005 takes as its

basic principle that employees are responsible for their own

actions and learning achievements. Competence-based

courses are offered in an intranet environment. Given the

changing demands upon employees, rigorous but attainable

educational programmes are set up mainly in the fields of

project management, financial management, customer focus

and personal skills. The courses are organized on an

intercompany basis, which has the additional benefit of

encouraging cooperation across divisions and disciplines.

In 2006, Heijmans invested € 5 million in out-of-expenses in

training. Furthermore, € 3.7 million was paid in premiums to

training and development funds. This represents

approximately 3% of gross salaries and an average of € 1,325

per employee.

Heijmans intends to tackle the concerns about the shortage of

suitable employees by presenting itself as a good employer

to work for. To be sure of an increase in graduates from

universities and institutes of higher professional education,

Heijmans recruits a number of trainees every year. Heijmans

in the Netherlands provided 304 work placement and final

study positions during 2006. Participants in the trainee

programme are guided and supervised in a variety of jobs in

the company for two years. Younger employees have banded

together to create a platform called “Young Heijmans”. They

also serve as a source of new ideas for the Executive Board.

The chart below shows the breakdown of Heijmans’

employees by age group.

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FIGURE 16

Between 25 and 40 years 36.5%Between 40 and 55 years 42.1%

Above 55 years 15.7%Below 25 years 5.7%

In 2006, 1,693 employees, or over 18%, left the company (15%

in 2005). Of these, 560 were involved in Heijmans’ activities

outside the Netherlands. 274 employees were working for

companies sold by Heijmans. In 144 cases the employment

relationship was terminated by the employer; 476 employees

left of their own accord. 1,292 new employees, or 14%, joined

the company (11% in 2005), of whom 625 were involved in

Heijmans’ activities outside the Netherlands.

Safety and working conditions

To encourage awareness of safety issues, Heijmans started the

“Veiligheid gewoon goed!” (“Safety simply right!”) action plan

in 2005. As part of this initiative, senior management has the

task of carrying out demonstrable inspections of workplaces

to promote safety awareness. Poster and toolbox campaigns

support this safety policy. Working with VCA-certified

subcontractors is also part of this policy (VCA being the safety

checklist for contractors). This implies that all workers on

construction sites have done the basic safety course, have the

necessary personal protective equipment and only work with

approved equipment and resources. The construction industry

in the Netherlands has, on average, 35 accidents necessitating

time off work per million hours worked. Heijmans also records

its own company-wide accident figures. The trends in accident

index figures for the Dutch activities are shown in the

following table.

2006 2005 2004 2003 2002

IF (accident frequency) 10.3 13.3 11.0 10.9 11.4

ID (average duration of absence) 197 194 173 146 155

IP ( absenteeism due to accidents) 0.20 0.21 0.17 0.16 0.18

IF: number of accidents involving absenteeism of at least one

day per million hours worked

ID: average duration of absence expressed in lost working

hours per accident

IP: number of accidents involving at least one day’s lost work

expressed as a percentage of total working hours

The index figures are based on the number of accidents

necessitating time off work among the company’s own

personnel related to the number of hours worked. There were

116 accidents necessitating time off work among the

company’s own personnel in 2006. That is 30% less than in

2005. However, the IP figure remained almost the same. This

is because the average duration of time off work as a result of

accidents increased. Heijmans’ long-term target is to get the IP

index below 0.10. Heijmans deeply regrets the fact that,

despite these efforts, a fatal accident occurred in 2006.

The total number of accidents to our own and subcontractors’

personnel resulting in injury was 224 in 2006, a 25%

decrease relative to 2005.

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Type of injury 2006 2005 2004 2003 2002

Limbs 129 206 191 159 172

Head 49 38 32 35 31

Eyes 15 19 20 23 20

Torso 23 30 29 16 32

Internal 7 5 4 5 1

Fatal 1 0 1 0 0

Total injuries 22� 298 280 238 256

Heijmans Foundation

The Heijmans Foundation was established in 2005.

The purpose of the Foundation is to give expression to

Heijmans’ social commitment and translate this commitment

into practice. The mission of the Foundation is to initiate,

develop and realize construction and civil projects in Kenya with

effort and commitment from our own staff. To do this we are

seeking to cooperate with SOS Kinderdorpen (SOS Children’s

Villages), Stichting Exchange (Exchange Foundation) and the

Westerveld Conservation Trust. The Heijmans Foundation is

supporting these projects with funding and by sending

Heijmans personnel to transfer professional know-how. In 2006

the Foundation sent 9 employees to Kenya and 6 others made

a contribution from the Netherlands. The employees concerned

gave up leave days to help with these projects. The Foundation

plans to support projects in the Netherlands as well in 2007,

so that it will also be making a worthwhile contribution to

society at home. The Heijmans Foundation is also contributing

to the development of our own personnel through these

projects. In addition to these projects, financial support is being

given at local and national levels to various good causes,

ranging from cancer research by Professor Pinedo at VU

University Amsterdam to the work carried out by Stichting

Workmate (Workmate Foundation). Heijmans furthermore

sponsors various local cultural and sports activities.

The environment

Heijmans’ activities have a major impact on our surrounding

environment in terms of both the products to be constructed

(a road, a house or other building) and the way in which they

are realized (materials to be used, interference in nature and

the environment). When a building is constructed it should be

remembered that it will have to be removed again at some

point without this causing too much nuisance. As a society we

are regularly confronted with things from the past which do

create nuisance of this kind (cost and sometimes also physical

injury). Consider, for example, the need to remove asbestos

sheets which were very widely used in the past, or the

completion of projects in areas at risk of flooding. From the

great variety of indicators which could be used for

environmental management, Heijmans has selected the most

important ones to spearhead future policy and has put them

into three main groups.

Environmental issues of relevance to today’s society

Some examples of the market concepts developed at Heijmans

presented by environmental issue:

• Air quality and fine particles. Tests have been carried out to

reduce fine particles using water screens and vacuum cleaner

systems.

• Improving mobility. A so-called Shuttle Buggy is being used

to keep porous asphalt concrete processable for longer.

Modieslab is being used to reduce disruption to traffic when

maintenance work is being done.

• Noise reduction. Cleaning procedure for cleaner, quieter and

more homogeneous asphalt. A ground absorber to reduce

ground noise.

• Quality of life in residential areas. Adaptis is an aid to

facilitate future-proof housing development. The Woonvitaal

(“vital living”) concept is a response to the demand for

affordable, social rented housing for senior citizens and

people with special care needs.

• Water problems. Heijmans organized a symposium in

Rotterdam on this subject. The event produced some insights

into how water-related issues can be included in integral area

development. In addition, four living concepts have been

developed in relation to the Waterwonen (“living on water”)

product.

Environmental issues arising from the primary process

In 2005 each division took stock of how and to what extent they

were responding to the most challenging environmental

problems for the period up to 2030, as set out in the National

Environmental Policy Plan (NPM4). For the primary processes

choices were made on “energy and climate change”, “responsible

materials”, “air quality”, “biodiversity”, “water” and “waste”.

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In the homes and work segment, there are instruments

available to perform life-cycle analyses with a view to making

an environmental assessment. The best known are “Greencalc+”

for non-residential construction and “GPR-gebouw” for house

construction. Heijmans has some experience with using these

instruments, mainly GPR-gebouw, on projects, for example in

Waalwijk (De Laan and Het Venster projects) and in Pijnacker

(Keijzershof project). Heijmans hopes to gain more experience

with these in 2007 and, if our evaluation of the instruments

proves to be positive, to apply these methods to all our own

housing developments. With projects for third parties, Heijmans

is also dependent on the role and choices of the client. Heijmans

plans to draw up a list of environmental alternatives for these

projects which can be presented to the client. Clients are open to

this kind of initiative, especially if they are also end users.

This was recently made manifest in the new-build plans for the

new RABO head office in Utrecht. RABO hopes that this will give

them one of the most sustainable large office buildings in the

Netherlands. Greencalc+ was used for this project. As the party

carrying out the work, Heijmans appreciates such lofty

ambition and supports it by, for instance, in this case

suggesting a different construction method with a view to

reducing local noise nuisance while the work is being done.

For construction site activities, Heijmans has a national contract

with a waste disposal company with a view to achieving the

best possible management of waste. The percentage (in

volumes) of waste separated on the construction site (at the

source therefore) increased from 22.4% in 2005 to 30.9% in

2006. As a result, the cost of waste per ton fell in 2006 by

1.5% relative to 2005.

In the traffic and transport segment, Heijmans has chosen to

monitor energy consumption in asphalt production.

Heijmans records energy consumption and CO2 emissions from

its plants. Measures are being taken to achieve energy savings

by, for instance, reducing the number of starts and stops.

Heijmans is also doing tests with asphalt as solar collectors and

with asphalt production at low temperatures. The high

proportion of re-used asphalt (now 60%) contributes to our

target to reduce the use of primary raw materials, as does

Heijmans’ rock and rubble crushing activities. The Infrastructure

Division has been awarded a Forest Stewardship Council (FSC)

certificate, so that projects can now be reported as being carried

out under FSC certification. Use of this on all projects is partly

dependent on the willingness of clients to exclude sustainably

produced timber from competition on price.

Environmental issues arising from the running of the

company

Heijmans’ Facilities Management Department plays a leading

role in this regard. Various initiatives were taken in 2006, such

as: investments in a spray booth, a washing place and facilities

for the collection of separated waste, the demolition of buildings

that were wasting a lot of energy, the provision of energy-saving

advice for production plants and housing sites, the digitization

and electronic archiving of documents, and the development of

policy on the purchase of energy-efficient cars. The latter

implies fitting particulate filters on all new passenger cars to be

purchased and giving them energy labels on the options list.

Risk management

Heijmans defines risk management as the structured

identification and monitoring of risks in the company. The aim

is to deal with uncertainties more effectively, minimize threats

and make optimum use of opportunities. The need for risk

management has been spurred on by Heijmans’ rapid growth,

the internationalization of activities, changing contract types

and responsibilities, and the competitive market conditions.

The strategic risk analysis (SRA) carried out at the end of 2004

formed the basis for Heijmans’ integrated risk management

approach. Partly in response to the findings of this analysis, the

first foundations were laid in 2005 for a Heijmans-wide risk

management framework that was further elaborated in 2006.

The objective is an ongoing analysis and assessment of risk

management activities whereby risks are classified along the

lines of the COSO Enterprise Risk Management framework.

Heijmans distinguishes between the following risks:

• strategic risks

• operational risks

• risks arising from internal and external reporting

• risks due to failure to comply with relevant laws and

regulations

• financial risks

The Heijmans-wide risk management framework concerns

both specific and general measures and covers risks that have

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to be controlled at holding, divisional and company levels.

A Risk Management Committee conducts a half yearly

assessment of the progress made with implementing the

framework, potential new risks and the adequacy and

efficiency of the risk management measures. The Risk

Management Committee is made up of representatives of the

Executive Board, the management boards of the Heijmans

divisions and heads of some corporate departments.

The Executive Board discusses the risk management system

with the Audit Committee and the Supervisory Board at

regular intervals.

In addition to ensuring the quality of management, the

instruments used to manage risk are the Corporate

Governance policy, the code of conduct and the Heijmans

management information system. The Heijmans Corporate

Governance model is explained on page 44 of this report.

The Heijmans code of conduct serves as a guide to the

company and individual employees when they are acting on

behalf of the company. Its purpose is to guarantee compliance

with the law and regulations and to act in accordance with

Heijmans’ system of values. More information about the code

of conduct, the whistle-blowing scheme and monitoring of

compliance can be found on page 45 of this report.

Strategic risks

The most serious business risks in the context of the

formulated strategic objectives are:

• employee competences

• failure costs

• efficiency

• project management

• capital locked up in land portfolios

• management style

• liabilities

• outsourcing and subcontracting

• economic climate

Heijmans is highly dependent on the economic climate in the

Netherlands, as over 75% of its revenues is earned in this

domestic market. The full-service strategy should make the

company less sensitive to economic upturns and downturns.

As well as being dependent on general economic trends in the

Netherlands, Heijmans is specifically sensitive to

developments in the housing market. The government

estimates that the country has a shortage of more than

170,000 homes at the present time. To reduce this shortfall, it

has set a target to increase the number of homes built to

around 90,000 per annum for the next 5 years. This target is

probably over-ambitious, in view of the lengthy public

consultation procedures for new housing development

projects. However, as the Dutch population is still growing, the

country will continue to need new homes for some time yet.

The susceptibility of the housing market to the possibility of

worsening economic conditions has its origins in the

associated reduction in the borrowing capacity of the average

home buyer. This is expressed not so much in a fall in

demand, as in a shift from more to less expensive houses.

A particular characteristic of the Dutch housing market is that

there are few houses to let by private landlords. This reduces

the volatility of the average house price compared with

countries which have large numbers of private lettings and

where private owners resort more quickly to selling their

properties in response to fluctuations in the market and in

interest rates. Furthermore, the effect of potential increases in

interest rates is mitigated by mortgage interest tax relief.

These factors limit the impact of cyclical economic trends on

the housing market.

The promotion of home ownership has been a spearhead of

government policy for many years and one measure designed

to do this has been mortgage interest tax relief. There has

been a lot of debate in recent years about this tax facility and

whether it should be abolished. Such a drastic intervention by

the government would certainly affect the housing market,

but it is to be expected that such a measure would only be

introduced gradually and would be accompanied by some

form of compensatory measure.

Heijmans’ land bank has offered growth opportunities in

recent years (in both absolute and relative terms). As well as

the opportunities offered by land ownership, the land bank is,

of course, susceptible to the risk of falling prices.

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Heijmans mitigates that risk, that is relatively small given the

situation in the Dutch housing market already outlined, by the

fact that a relatively larger portion of project development

contracts are being won through successful competitive tenders.

Furthermore, land is carried at historical cost on the Heijmans

balance sheet. Development costs and interest charges are

only capitalized when the land use has been authorized and

the plan to realize the project has been finalized (when the

land is “under construction”), so that any forced sale of the

land portfolio can be expected to yield at least the value on

the balance sheet at current price levels.

Measures to mitigate strategic risks arising from the quality of

management and the competences of employees are

embedded in continuous and proactive human resources

management. Improved management appraisal systems were

rolled out in 2005, programmes to identify management

potential were started, the internal and external training

programmes were updated, and new management personnel

recruited.

Like other companies in the Netherlands, Heijmans is

increasingly affected by European legislation. The fine particle

debate during the past year is an example of this. In our

densely populated country, these European regulations have

led to the postponement of construction projects while

awaiting further policy from national government. This led to

delays in several infrastructure and construction projects for

Heijmans.

Operational risks

Heijmans’ operational risks relate to project development on

one hand and individual building projects on the other hand.

The most risky components of the primary process are the

tendering standards, the preliminary costing, the proposal

process and project management.

For housing development, Heijmans in the Netherlands has a

policy which stipulates that at least 70% of the properties

must be sold before construction on a project starts. If sales on

a project are disappointing, close cooperation with the

relevant local authorities can usually result quickly in the

necessary adjustment of the housing programme.

For the development of non-residential property, the policy is

not to start construction until the building has been sold with

time-limited rental guarantees or the greater part of the

building has been leased. To limit the risk of taking on loss-

making building projects or projects involving irresponsible

risks, a selective tendering policy is applied and the practice of

working in so-called construction teams is adopted whenever

possible. Under these arrangements Heijmans is involved in

designing the work from an early stage. Good and open

communication with the client makes the various operational

risks clearer at an earlier stage, allowing appropriate

measures to be taken.

A large proportion of projects are, however, won through

tendering. This means that for the larger and/ or more

complex projects, the risks are mapped out systematically in

the calculation phase and a risk margin determined for the

tender. Historical figures and management estimates are also

used in determining the margin. Depending on the scale and

complexity of the work, a tender committee involving several

disciplines is used to evaluate the tender.

As soon as work starts on a project, it is carefully monitored so

that variance from the budget is spotted quickly. The operating

companies have project control procedures, involving

obligatory monthly analysis and reporting on the progress of

projects in terms of costs, purchasing discrepancies, physical

progress, contract variations and expected revenues. Any

developments relating to risk, threats and opportunities are

explicitly included in these analyses.

During the third quarter of 2006, it became apparent,

however, that the above-mentioned procedures and measures

were not followed properly or to an insufficient degree by the

Building Division for a number of larger projects. Heijmans

consequently took immediate measures to prevent similar

risks from arising in the future. These measures consisted of

the changes implemented at the end of 2006 to strengthen

line and financial management and the preliminary work

required to adapt the organization to the trend towards larger

and more complex projects.

Attention to quality, working conditions, safety and

environment are integrated into the primary process.

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QSE staff who are responsible for maintaining and monitoring

compliance with QSE guidelines are appointed in all parts of

the company. Where possible, responsibility for checking

compliance is handed over to external certification bodies.

Some of the risks that cannot be eliminated or avoided are put

into the hands of underwriters. Heijmans’ Insurance

Department ensures that as many operational risks as

possible are covered by company policies. As it has increased

its own design input in projects, Heijmans recently took out

professional indemnity insurance with sufficient cover to

match the benchmark for similar enterprises.

Risks arising from internal and external reporting

This risk category includes internal as well as external

reporting. Reports are produced following set guidelines.

Heijmans’ accounting manual prescribes how the financial

reports should be set out and what procedures must be

followed.

Risks arising from failure to comply with laws and regulations

The government is an important client for the entire

construction sector and that of course includes Heijmans.

Investigations into breaches of competition regulations in the

construction sector since 2001 have exposed compliance risks,

necessitating the management of reputation. There is a need

to restore the confidence of clients, shareholders, employees,

suppliers and financiers. It is also necessary to avoid repeating

such mistakes in the future, which Heijmans is aspiring to do

by operating a strict policy on integrity. For more on this,

please visit the www.heijmans.nl website and look under

“Code of Conduct”.

The QSE activities described earlier ensure that the health and

safety and environmental protection laws are properly met.

Financial risks

By financial risks, Heijmans means the risk that the company

would cease to be able to achieve its operational and strategic

objectives due to its inability to attract any funding. This risk

is limited and the long-term availability of financial resources

is guaranteed by making the financing structure more

transparent and through the committed 5-year financing

facilities negotiated with eight banks in 2006.

Heijmans does not have substantial credit risks, as the

contracts usually include payments in advance that

correspond to progress made with production activities.

Exchange rate risks are limited at Heijmans, as approximately

90% of revenues is in euros, with the remainder being invoiced

in pound sterling (GBP). The costs incurred in connection with

that part of the revenues are also in pounds sterling.

Translation exposure is limited and is not hedged.

Heijmans is exposed to various forms of interest rate risk.

The points made earlier about the effects of a change in

mortgage interest rates on the housing market are relevant.

In addition, a rise in interest rates leads to higher capital costs.

A portion of long-term loans (and future long-term loans) are

at fixed rates. Two forward starting interest rate swap of

€ 175 million with a 5-year term were negotiated.

PPP contracts for project financing also have long terms.

Related interest charges for these constructs are always fixed.

Project financing for property development is usually for

shorter terms, and fixing of interest charges related to these

projects depends on the amount and term of the financing.

Implementation activities often operate with a working capital

deficit as payments are received in advance from clients.

A cash risk can arise if fewer advance payments are received

because of project delays, fewer projects taken on, or because

of different payment structures for new projects.

To control this risk, Heijmans operating companies draw up a

cash flow forecast at regular intervals. In addition to this, an

in-house bank was set up in 2005 to allow cash developments

in the companies to be closely monitored and managed.

Heijmans also controls this risk by maintaining sufficient

scope in its credit facilities.

60

Statement by the Executive Board

On the basis of the measures outlined in this section with

regard to the risks inherent in financial reporting, the

Executive Board states that the risk management and control

procedures provide a reasonable degree of certainty that the

financial reporting is free of material misstatement.

The Executive Board also notes that the system of risk

management measures aims to identify, track (monitor and

test) and improve management of significant risks in a

structured and integrated way. Monitoring and testing

requires greater depth and a more systematic approach,

however. This area will be given the attention it requires in

2007. The aim of the system of risk management measures is

to deal with uncertainties more effectively, so that threats can

be mitigated and optimum use made of opportunities.

This should contribute to the achievement of a lower risk

profile in respect of Heijmans’ stated strategic objectives.

Such a system cannot, however, guarantee with absolute

certainty that the objectives will be achieved. Nor can the risk

management measures provide absolute certainty that there

will be no material errors, fraud or breaches of legal

regulations.

Conclusion

It is part of the Heijmans culture to formulate objectives which

can be used to determine whether our basic principles are

being translated into action. In 2007, within that context,

objectives will also be formulated for our Dutch activities with

a view to encouraging sustainable and Corporate Social

Responsibility. These objectives are based on the classification

recommended by the guidelines of the Global Reporting

Initiative (GRI), and stakeholders should increasingly perceive

Heijmans to be an integrated and transparent organization

that is aware of its responsibilities to investors, employees

and the built and natural environments.

Rosmalen, 21 February 2007

G.H. Hoefsloot, Chairman

J.A.J.M. van den Hoven

D.A.M. van der Kroft

Financial Statements

2006

62

These financial statements are also published in the Dutch Language. In case of textual contradictions between the Dutch and English version, the first shall prevail.

6�

FINANCIAL STATEMENTS 2006

Contents 1. Consolidated income statement 64

2. Consolidated statement of recognized income

and expense 65

3. Consolidated balance sheet 66

4. Consolidated cash flow statement - indirect method 68

5. Accounting principles 69

6. Notes to the consolidated financial statements 78

6.1 Segment reporting 78

6.2 Acquisition of subsidiaries 82

6.3 Non-current assets held for sale and

discontinued operations 86

6.4 Other operating income 87

6.5 Employee expenses and depreciation 88

6.6 Other operating expenses 88

6.7 Net financing costs 89

6.8 Income tax expense 90

6.9 Income tax receivable 91

6.10 Property, plant and equipment 92

6.11 Intangible assets 94

6.12 Real estate investments 97

6.13 Investments in associates 98

6.14 Other investments 99

6.15 Deferred tax assets and liabilities 100

6.16 Inventories 103

6.17 Construction work in progress 104

6.18 Trade and other receivables 105

6.19 Cash and cash equivalents 105

6.20 Equity 106

6.21 Profit per share 108

6.22 Interest-bearing loans and other non-current

financing liabilities 109

6.23 Employee benefits 111

6.24 Other provisions 115

6.25 Trade, income tax and other payables 116

6.26 Financial instruments 117

6.27 Contingent liabilities 120

6.28 Rental and operating lease agreements 121

6.29 Capital commitments 122

6.30 Related parties 122

6.31 Subsequent events 125

6.32 Accounting estimates and judgements 126

7. Group entities 127

8. Company financial statements 130

6�

1. CONSOLIDATED INCOME STATEMENT

x € 1,000

2006 2005

Revenues 2,942,078 2,835,317

Cost of sales –2,702,673 –2,596,165

Gross profit 2��,�0� 239,152

6.4 Other operating income 10,576 5,3876.3 Gain on sale of assets classified as held for sale 5,169 5,432

Distribution expenses –30,123 –24,781

Administrative expenses –107,281 –95,8746.6 Other operating expenses –519 –550

Operating profit 11�,22� 128,766

6.7 Financial income 8,301 8,5396.7 Financial expenses –14,076 –15,2776.13 Share of profit of associates 545 648

Profit before tax 111,��� 122,676

6.8 Income tax expense –29,457 –35,613

Profit after tax �2,��0 87,063

The profit after tax is entirely allocated to shareholders

Earnings per share (in €s)6.21 Basic earnings per share 3.43 3.676.21 Diluted earnings per share 3.43 3.67

6�

2006 2005

Foreign exchange translation differences 642 354

Effective portion of changes in fair value

due to cash flow hedges 4,414 522

Net income and expense recognized directly in equity �,0�6 876

Profit after tax 82,540 87,063

Total recognized income and expense ��,��6 87,939

Total recognized income and expense attributable to:

Equity holders 87,596 87,939

Minority interest 0 0

Total recognized income and expense ��,��6 87,939

2. CONSOLIDATED STATEMENT OF RECOGNIZED INCOME

AND EXPENSE

x € 1,000

66

Assets 31 December 2006 31 December 2005

Non-current assets6.10 Property, plant and equipment 177,537 164,6666.11 Intangible assets 177,110 152,6396.12 Real estate investments 10,307 8,3586.13 Investments in associates 2,192 2,3166.14 Other investments 74,111 86,0726.15 Deferred tax assets 5,672 4,336

��6,�2� 418,387

Current assets6.16 Inventories 639,809 612,8766.17 Construction work in progress 150,345 107,5236.9 Income tax receivables 34,083 32,6876.18 Trade and other receivables 665,748 539,9576.19 Cash and cash equivalents 192,930 173,1786.3 Assets classified as held for sale 33 21,598

1,6�2,��� 1,487,819

Total assets 2,12�,��� 1,906,206

3. CONSOLIDATED BALANCE SHEET

x € 1,000

6�

Equity and Liabilities 31 December 2006 31 December 2005

Equity6.20 Issued capital 722 7226.20 Share premium 122,331 122,3316.20 Reserves 3,916 –4636.20 Retained earnings of previous years 232,334 179,4996.20 Profit after tax for the year 82,540 87,063

��1,��� 389,152

Non-current liabilities6.22 Interest-bearing loans and other non-current financing 428,933 367,5366.23 Employee benefits 20,739 27,5986.24 Other provisions 15,465 15,0316.15 Deferred tax liabilities 50,241 44,777

�1�,��� 454,942

Current liabilities6.22 Interest-bearing loans and other current financing 261,404 208,4296.25 Trade and other payables 722,376 625,1236.17 Construction work in progress 135,242 163,5626.25 Income tax payables 24,401 30,5966.23 Employee benefits 14,546 12,7606.24 Other provisions 14,612 12,0446.3 Liabilities classified as held for sale 75 9,598

1,1�2,6�6 1,062,112

Total equity and liabilities 2,12�,��� 1,906,206

6�

4. CONSOLIDATED CASH FLOW STATEMENT – INDIRECT METHOD

x € 1,000

2006 2005

Operating profit 11�,22� 128,766

6.13 Share of profit of associates 545 648 Adjustments for:

6.3 Gain on sale of non-current assets –14,162 –9,3416.5 Depreciation on property, plant and equipment 27,928 29,1506.5 Depreciation on real estate investments 380 3156.5 Amortization of intangible assets 285 06.5 Impairment losses on goodwill 234 550

Operating profit before changes in working capital and provisions 1�2,��� 150,088

6.15 Changes in deferred tax assets –1,336 2,561 Changes in working capital –126,775 14,286

6.15, 6.23 & 6.24 Changes in non-current provisions –2,633 –15,464

Changes in working capital and provisions –1�0,��� 1,383

6.7 Financial income 8,301 8,5396.7 Financial expenses –14,076 –15,2776.8 Income tax expense –29,457 –35,613

–��,2�2 –42,351

Cash flow from operating activities –��,��� 109,120

6.10 Acquisition of property, plant and equipment –42,509 –43,5776.3 Proceeds from sale of subsidiaries 13,163 23,0016.2 Acquisition of subsidiaries –40,077 06.11 Subsequent payments and receipts on prior years’ acquisitions 3,798 –1,2956.10 Proceeds from sale of property, plant and equipment 18,289 20,466

Granted/redeemed loans to joint ventures 11,961 –11,198 Reclassification, foreign exchange differences and other changes

in non-current assets –887 –476

Net cash flow from investing activities –�6,262 –13,079

6.20 Issue of share capital 0 47,824 Transaction costs of issuing shares 0 –919 Borrowed interest-bearing loans 220,433 33,684 Repayment of interest-bearing loans –108,309 –136,9976.20 Dividends paid –34,905 –29,3686.20 Hedge transactions, foreign exchange differences and purchase

of minority interest 642 346

Net cash flow from financing activities ��,�61 –85,430

Net cash flow in the period �,060 10,611

6.19 Cash and cash equivalents at 1 January 173,178 165,3906.2 Cash and cash equivalents of acquired subsidiaries 11,694 06.3 Changes in cash related to assets and liabilities classified

as held for sale –2 –2,823

6.19 Cash and cash equivalents at �1 December 1�2,��0 173,178

6�

5. ACCOUNTING PRINCIPLES

Significant accounting policies

Heijmans N.V. (the Company) is domiciled in the Netherlands.

The Company’s consolidated financial statements for the

2006 financial year comprise the Company and its

subsidiaries (together referred to as the “Group”), and the

Group’s interest in associates and jointly controlled entities.

With respect to the Heijmans N.V. company income

statement, election has been made for the facilities under

Article 402 of Book 2 of the Dutch Civil Code.

The consolidated financial statements were authorized for

issue on 21 February 2007.

1. Statement of compliance

The 2006 consolidated financial statements have been drawn

up in accordance with International Financial Reporting

Standards as adopted by the European Union (EU-IFRS).

Standards that are not considered mandatory for 2006 (IFRS

7, the changes to IAS 1 and IFRIC 7, 8 and 9) have not been

applied. If applied, the impact of these standards, which are

not mandatory for 2006, on the financial results is expected

to be nil according to our current understanding.

2. Policies applied with respect to financial reporting

The financial statements are presented in thousands of euro.

The financial statements are based on historical costs unless

otherwise indicated. Fixed assets classified as held for sale are

stated at the lower of their book value and the fair value

minus selling costs.

The preparation of the financial statements in accordance

with the EU-IFRS requires management to make judgements,

estimates and assumptions that affect the reported value of

assets and liabilities and the reported value of revenue and

expenses. The estimates and their underlying assumptions are

based on experience and other factors which are considered

reasonable. The estimates form the basis for calculating the

book value of the assets and liabilities, which cannot easily

be derived from other sources. The actual results may vary

from these estimates.

The estimates and underlying assumptions are subject to

continuous reassessment. Revised estimates are included in

the period during which the estimate was revised, provided

that the revision only affects that period. Revisions are made

to the reporting period and future periods if the revision also

affects future periods.

The accounting policies described below have been

consistently applied to all periods presented in these annual

consolidated financial statements and to all entities

belonging to the Group.

�. Basis for consolidation

a. Subsidiaries (full consolidation)

Subsidiaries are entities controlled by the Company.

Control exists when the Company has the power to directly

or indirectly govern the financial and operating policies of an

entity. The potential voting rights are taken into account in

assessing whether control exists. The financial statements of

subsidiaries are included in the consolidated financial

statements from the date that control commences until the

date that control ceases.

b. Associates (equity method)

Associated participating interests are those entities in which

the Group, together with third parties, has significant influence

but not control over the financial and operating policies.

c. Joint ventures (proportionate consolidation)

Joint ventures are entities over whose activities the Group has

joint control with third parties. This control is established by

contractual agreement. The consolidated financial statements

include the proportionate share of the Group in the assets,

liabilities, revenues and costs of the entity. The items are

consolidated line by line with items of a similar nature from

the date joint control commences until the date joint control

ceases.

d. Transactions eliminated on consolidation

Intragroup balances and any unrealized income and expenses

arising from intragroup transactions are eliminated in

preparing the consolidated financial statements.

�0

Unrealized gains and losses from transactions with

participating interests and entities subject to joint control are

eliminated in proportion to the Group’s interest in that entity.

�. Foreign currency

a. Foreign currency transactions

Transactions in foreign currencies are converted to euros at

the exchange rates in effect at the dates of the transactions.

Foreign currencies held, as well as assets and liabilities received

or paid in foreign currencies are converted at the exchange rates

in effect at the reporting date. Foreign currency differences

resulting from conversion are recognized in profit or loss.

b. Financial statements of foreign operations expressed in

foreign currencies

The assets and liabilities of foreign operations are converted

into euro at exchange rates at the reporting date. The revenues

and expenses of foreign operations are translated into euros at

exchange rates at the transaction dates.

Foreign currency exchange rate differences arising from the

conversion of a net investment in foreign operations and the

associated hedging transactions are recognized directly in

equity. When the hedged investment is disposed of, the

amount transferred to equity is recognized in profit or loss.

Any foreign currency differences arising from foreign

operations are presented as a separate equity component.

�. Financial instruments

a. Derivative financial instruments

The Group uses interest rate swaps to hedge its interest rate

risk exposure arising from corporate and project financing

activities. In accordance with its treasury policy, the Group does

not hold derivatives for commercial purposes. Interest rate

swaps are stated on the basis of market prices. This value is

equal to the discounted cash value of the expected cash flows.

b. Non-derivative financial instruments

Non-derivative financial instruments are recognized initially

at fair value plus, for instruments not at fair value through

profit or loss, any directly attributable transaction costs,

except as described below.

A financial instrument is recognized if the Group becomes

a party to the contractual provisions of the instrument.

Financial assets are derecognized if the Group’s contractual

rights to the cash flows from the financial assets expire or

if the Group transfers the financial asset to another party

without retaining control or substantially all risks and

rewards of the asset. Regular way purchases and sales of

financial assets are accounted for at trade date, i.e. the date

that the Group commits itself to purchase or sell the asset.

Financial liabilities are derecognized if the Group’s obligations

specified in the contract expire or are discharged or cancelled.

6. Hedging

Hedge accounting is, in principle, applied to derivative financial

instruments and the cash flow hedging guidelines apply.

Changes in the fair value of interest rate swaps that serve to

hedge interest rate risks arising from future interest payments

are directly recognized in equity to the extent that the hedge

is effective. To the extent that the hedge is ineffective, changes

in fair value are recognized in profit or loss.

When the interest rate swap is sold or expires or when the

transaction no longer meets the effectiveness criterion,

the cumulative gains or losses previously recognized in equity

remain there. This amount is amortized over the original term

unless there no longer is an expectation that the hedged

future interest payments will take place. In that case the

above-mentioned cumulative gains and losses will be

immediately recognized in profit or loss.

Hedge accounting does not apply to non-derivative financial

instruments. Changes in fair value are recognized in profit or

loss.

�. Revenues

a. Goods sold and services rendered

Revenue from the sale of goods is recognized in profit or loss

when the significant risks and rewards of ownership have

been transferred to the buyer. For residential construction

projects, whereby the transfer of risks and rewards takes place

when the purchase/acceptance contract is signed and where

significant work remains to be done, the revenues and results

are recognized when the work is performed. Revenues from

�1

services rendered is recognized in profit or loss in proportion

to the stage of completion of the transaction at the reporting

date. The stage of completion is assessed by reference to

surveys of work performed. No revenues are recognized in

instances where there is significant uncertainty concerning

the recovery of the compensation, associated costs or the

potential return of goods.

b. Contruction work in progress

The agreed upon revenues and costs related to construction

work in progress is recognized in profit or loss in proportion to

the stage of completion of the project. The stage of completion

is assessed by reference to the proportion of costs booked in

relation to the total expected costs.

Expected project losses are immediately recognized in profit

or loss.

c. Rental income

Rental income from real estate investments is recognized in

profit or loss in proportion to the term of the lease.

�. Other operating income

Government grants

Grants that compensate the Group for expenses incurred are

recognized in profit or loss on a systematic basis in the same

periods in which the expenses are recognized. Grants to

compensate the Group for the cost of an asset are recognized in

profit or loss on a systematic basis over the useful life of the asset.

�. Expenses

a. Selling expenses

Selling expenses consist of the costs of selling that are not

charged to projects.

b. Administrative expenses

Administrative expenses consist of general expenses that are

not selling expenses and that are not charged to projects.

c. Lease payments made under operating leases

Lease payments made under operating leases are recognized

in profit or loss. These payments are recognized in proportion

to the term of the lease.

d. Lease payments made under financial leases

Lease payments made under financial leases are apportioned

between the finance expense and the reduction of the

outstanding liability. The finance expense is allocated to each

period during the total lease term so as to produce a constant

periodic rate of interest over the remaining term of the

liability.

e. Net financing costs

Net financing costs comprise interest payable on borrowings

and financial lease obligations, dividends on preferred shares,

interest receivable on funds invested, dividend income, foreign

currency exchange gains and losses, as well as gains and

losses on hedging instruments that are recognized in profit

or loss (see accounting policy 6).

The balance of finance income and expenses includes the

interest income capitalized during the financial year on

property development projects and land holdings under

development.

The interest component of financial lease payments is

recognized in profit or loss and is calculated using the

effective interest rate method.

10. Income tax expense

Income tax expense recognized in profit or loss during the

financial year comprises the income tax owed or refundable

over the reporting period and the deferred income tax.

The income tax is recognized in profit or loss, except to the

extent that it relates to items recognized directly in equity.

In that case the income tax is recognized in equity.

The income tax owed or refundable over the financial year is

the expected tax payable on the taxable income for the

financial year, using tax rates enacted or substantively

enacted on the reporting date and any adjustments to tax

payable in respect of previous years.

The provision for deferred tax is determined using the balance

sheet liability method whereby a provision is formed for

temporary differences between the carrying amounts of assets

and liabilities for financial reporting purposes and the

amounts used for taxation purposes. No provision is made for

the following temporary differences: non-deductible goodwill,

the initial recognition of assets or liabilities that do not affect

accounting or taxable profit and differences relating to

�2

investments in subsidiaries to the extent that they will

probably not reverse in the foreseeable future. The amount of

the provision for deferred income tax liabilities is based on the

manner in which the expected asset and liability carrying

value will be realized or settled, based on the income tax rates

that have been enacted or substantively enacted on the

reporting date.

A deferred tax asset is recognized only to the extent that it is

probable that future taxable profits will be available and can

be utilized towards realizing the deferred asset. The deferred

tax is reduced to the extent that it is no longer probable that

the related tax benefit shall be realized.

Additional income taxes that arise from the distribution of

dividends are recognized at the same time as the liability to

pay the related dividend is recognized.

11. Property, plant and equipment

a. Owned assets

Items of property, plant and equipment are measured at cost or

estimated cost less accumulated depreciation (see below) and

impairment losses (see accounting policy 19). The cost of self-

constructed assets and acquired assets includes (i) the estimate

at the time of installation of the dismantling and removal of the

assets and restoring the site on which the assets are located

and (ii) changes in the measurement of existing liabilities

recognized in relation to the costs identified in (i) above.

Property that is being constructed for future use as an real

estate investment is accounted for as property, plant and

equipment and measured at cost until construction or

development is complete, at which time it is reclassified as

real estate investment.

When parts of an item of property, plant and equipment have

different useful lives, they are accounted for using the

component method.

b. Leased assets

Leases for which the Group assumes substantially all the risks

and rewards of ownership are classified as finance leases.

The leased asset is stated at an amount equal to the lower

of its fair value and the present value of the minimum lease

payments at the inception of the lease, less cumulative

depreciation (see below) and impairment losses (see

accounting policy 19).

c. Subsequent costs

The cost of replacing part of an item of property, plant or

equipment is recognized in the carrying amount of the asset

by the Group when these costs are incurred if it is probable

that the future economic benefits embodied within the asset

will flow to the Group and its costs can be measured reliably.

All other costs will be recognized as costs in profit or loss as

they are incurred.

d. Depreciation of property, plant and equipment

Depreciation is recognized in profit or loss using the straight-

line method over the estimated useful life of each part of an

item of property, plant or equipment. The residual values are

reassessed on an annual basis. Land is not depreciated.

The estimated useful lives are as follows:

• Buildings: main building structures and roofs: 30 years

• Buildings: technical equipment: 15 years

• Buildings: inner walls: 10 years

• Office equipment: 3 - 10 years

• Machines: 5 - 10 years

• Equipment: 5 - 10 years

• Large equipment and other capital assets: 3 - 10 years

12. Intangible assets

a. Goodwill

All business combinations are presented in the accounts using

the purchase method. Goodwill represents the amount arising

from the acquisition of subsidiaries, associated companies

and joint ventures. Goodwill represents the excess of the cost

of the acquisition over the net fair value of the identifiable

assets and liabilities at the time of acquisition. An impairment

test is carried out every year (see accounting policy 19).

Goodwill related to acquisitions that occurred prior to

1 January 2004 is subject to annual write-offs. The classifi-

cation and accounting framework applied to acquisitions that

occurred prior to 1 January 2004 have not been restated in

terms of the IFRS 1 January 2004 opening balance.

Negative goodwill arising on an acquisition is immediately

recognized in profit or loss.

��

b. Other intangible assets

The intangible assets acquired by the Group, wich have finite

useful lives, are measured at cost less acccumulated

depreciation and accumulated impairment losses.

c. Amortization

In relation to goodwill, an impairment test is systematically

performed at each balance sheet date to determine whether

there are any impairments. The other intangible assets are

amortized in profit or loss on a straight-line basis over the

estimated useful lives of the intangible assets and are subjected

to a periodic impairment test (see accounting policy 19).

The estimated useful life of the intangible asset categories is

as follows:

• Brand name: 20-25 years

• Customer relationships: 5-20 years

d. Expenditures after initial recognition

Expenditures on intangible assets that are not goodwill are

capitalized after initial recognition only if they are expected

to increase future economic benefits. These benefits are

embodied in the specific asset to which the expenditures

relate. All other expenditures are recognized as costs in profit

or loss as they are incurred.

1�. Investments

a. Real estate investments

Real estate Investments are properties which are held to earn

rental income and/or for capital appreciation. Real estate

investments are measured at cost less accumulated

depreciation and impairment losses. Rental income from real

estate investments is accounted for as described in accounting

policy 7.

When an real estate investment is owner-occupied, it is

reclassified as property, plant and equipment.

The fair value of a real estate investment is based on market

value, being the estimated amount for which a investment

could be exchanged on the date of the valuation between

a willing buyer and a willing seller in an arms length

transaction, while acting knowledgeably, prudently and

without compulsion.

b. Depreciation of real estate investments

Depreciation of real estate investments is recognized in profit

or loss using the straight-line depreciation method over the

estimated useful life of each part of the real estate investement.

The depreciation percentage is similar to the percentages used

for the property, plant and equipment categories.

c. Other investments

These are measured at amortized cost.

1�. Inventories

a. Strategic land portfolio

The strategic land portfolio represents the reported land

holdings that are managed centrally by the so-called

Land Bank. These holdings are acquired and held for future

property development. The interest and development costs

for land portfolios that are under development are capitalized.

b. Other inventories

The inventories are measured at the lower of cost and net

realizable value. The net realizable value is the estimated

selling price in the ordinary course of business, less the

estimated costs of completion and selling expenses.

The cost of inventories is based on the first-in first-out (FIFO)

principle and includes expenditures incurred in acquiring the

inventories and bringing them to their existing location and

condition. The cost of inventories includes an appropriate

share of production overheads based on normal operating

capacity.

Development and construction rights are also classified

as inventories.

Residential construction projects in respect of which the

transfer of risks and rewards takes place when the purchase/

acceptance contract is signed and where significant work still

remains to be done are recognized as part of inventories.

This portion of the inventories is valuated in the same way

as “Construction work in progress” (see accounting policy 15).

Lands and premises up for sale are also recognized as part of

inventories. These are lands and premises that have been

technically delivered as developed, but which on the balance

sheet date were not sold to third parties. The inventory of lands

and premises for sale are valuated at cost (including interest

��

and allocated overhead costs) less any write-offs related to a

lower net realizeable value as a consequence of the risk of

inability to sell or rent.

1�. Contruction work in progress

Construction work in progress are projects by order of third

parties. These are measured at cost plus profit recognized to

date (also see accounting policy 7) in proportion to the

progress of the project, less expected losses and progress

billings. Total expected project losses, if any, are directly

recognized as expenses in the relevant period. The cost

includes all expenditures related directly to projects and

an allocation of overheads incurred in the Group’s contract

activities based on normal operating capacity.

Interest and development costs for construction work in

progress are only capitalized if the asset is “under construction”.

If no construction activities are carried out over an extended

period of time, the interest and development costs are no

longer capitalized.

The preliminary costs and the design and development costs

of major projects (tender costs) are capitalized as work in

progress if the following conditions are met:

• the costs can be separately identified;

• the costs can be determined in a reliable manner;

• it is probable that the project will be awarded; and

• there is no longer any competition with respect to the

award of the project.

If each of these requirements is not fulfilled, the tender costs

are recognized in the income statement as an expense in the

period in which they are incurred. Tender costs once expensed

in the income statement are not subsequently capitalized if

the if the project is acquired.

The profit capitalized on works in progress is based on the

estimated final result, taking into account the progress on the

work in question. The progress percentage is determined as

the ratio between the costs incurred to date and the total

expected costs on a project-by-project basis.

16. Trade and other receivables

Trade and other receivables are estimated at the amortized

cost minus impairment losses (see accounting policy 19).

1�. Cash and cash equivalents

The cash and cash equivalents comprise cash and bank

balances and other call deposits with an original term of a

maximum of three months. Current account overdrafts that

are repayable on demand and form an integral part of the

Group’s cash management are included as a component of

cash and cash equivalents for the purpose of the statement

of cash flows.

1�. Assets held for sale and discontinued operations

Immediately before classification as held for sale, the assets

(and all assets and liabilities of a disposal group) are

remeasured in accordance with the applicable IFRS

accounting policies. Thereafter the non-current assets and

disposal group are measured at the lower of their carrying

amount and the fair value minus the selling costs on initial

classification as held for sale.

Impairment losses at initial classification as held for sale are

recognized in profit or loss, even in case of revaluation.

The same applies to gains and losses related to subsequent

revaluations.

Classification as a discontinued operation occurs upon

disposal or when the operation meets the criteria as held for

sale if earlier. A group of assets held for disposal that is to be

abandoned may also meet these criteria.

1�. Impairment

The carrying amount of the Group’s assets excluding

construction work in progress (see accounting policy 15),

inventories (see accounting policy 14) and deferred tax assets

(see accounting policy 10) are reviewed at the reporting date

to determine whether there is any indication of impairment.

If such indication exists, then the asset’s fair value is estimated.

For goodwill, assets of an indefinite useful life and intangible

��

assets that are not yet ready for use, the fair value is

estimated at the reporting date.

An impairment loss is recognized whenever the carrying

amount of the asset or its cash-generating unit exceeds its fair

value. All impairment losses are recognized in profit or loss.

Impairment losses recognized in respect of cash-generating

units are allocated first to reduce the carrying amount of any

goodwill allocated to the units and then to reduce the

carrying amount of the other assets in the unit (group of

units) on a pro rata basis.

Goodwill and intangible assets with an indeterminate useful life

were tested on 1 January 2004, the EU-IFRS conversion date, for

impairment. This impairment test did not result in impairment.

If a decrease in the fair value of an available-for-sale financial

asset was previously recognized directly in equity and there

are objective indications that the asset was subject to an

impairment, the cumulative losses that were previously

directly recognized in equity are recognized in profit or loss in

spite of the fact that the asset has not been derecognized.

The cumulative loss recognized in profit or loss is the

difference between the acquisition cost and the current fair

value less any impairment losses in respect of that financial

asset, which were recognized in profit or loss in prior periods.

a. Determination of recoverable amount

The recoverable amount of assets is equal to the higher of

the net selling price or the value in use. To determine the

value in use, the discounted cash value of the estimated future

cash flows is determined on the basis of a discount factor that

reflects current market rates as well as the specific risks

associated with the asset. For an asset that does not generate

cash flows and which is highly dependent on other assets,

the recoverable amount is determined on the basis of its cash-

generating unit.

b. Impairment reversal

An impairment loss related to securities held to maturity or

assets measured at amortized cost is reversed if the increase,

following the recognition of this loss, of the fair value can

objectively be related to an event that occurred after the

impairment loss was recognized.

An impairment loss in respect of goodwill is not reversed.

In respect of other assets, impairment losses recognized in

other periods are reversed if there is an indication that the

impairment loss no longer exists or has decreased and if there

has been a change in the estimates used to determine the

recoverable amount.

An impairment loss is reversed only to the extent that the

asset’s carrying amount does not exceed the carrying amount

that would have been determined, net of depreciation or

amortization, if no impairment loss had been recognized.

20. Share capital

a. Repurchase of share capita

When share capital recognized as equity is repurchased,

the amount of the consideration paid, including directly

attributable costs, is recognized as a deduction from total

equity. Repurchased shares are classified as treasury shares

and are presented as a deduction from total equity.

b. Dividend

Dividends are recognized as a liability in the period in which

they are declared.

21. Interest-bearing loans

a. Financing of preference share capital

Preference share capital is classified as a liability because

the dividend payments are not discretionary. Dividends on

preference share capital are recognized as interest expense

in profit or loss.

b. Loans

Interest-bearing loans are initially recognized at cost less

attributable transaction costs. Thereafter interest-bearing

loans are measured at an amortized cost basis, whereby a

difference between the amortized cost and the redemption

amount calculated on the basis of the effective interest

method is recognized in profit or loss over the term of

the loans.

�6

22. Employee benefits

a. Defined contribution plans

Obligations for contributions to defined contribution pension

plans are recognized as an expense in profit or loss as

incurred.

b. Defined benefit plans

The Group’s net obligation in respect of defined benefit pension

plans is calculated separately for each plan by estimating the

amount of future pension benefit that employees have earned

in return for their service in the reporting period and in

previous periods. The discounted present value of the pension

benefits is determined and is reduced by the fair value of the

fund’s assets. The discount rate is the yield at the reporting

date on high-quality company bonds that have maturity

dates approximating the terms of the Group’s obligations.

The calculation is performed by a qualified actuary using the

projected unit credit method. This method takes future salary

increases resulting from employee career opportunities and

general salary increases, including adjustments for inflation,

into account.

When the benefits of a plan are improved, the portion of the

increased benefits relating to past service by employees is

recognized as an expense in profit or loss on a straight-line

basis over the average period until the benefits become vested.

To the extent that benefits vest immediately, the expense is

recognized immediately in profit or loss.

All actuarial gains and losses as of 1 January 2004, the IFRS

conversion date, are recognized. Actuarial gains and losses

incurred after 1 January 2004 are recognized by the Group

on the basis of the corridor method. According to the corridor

method, unrecognized cumulative gains or losses are

recognized in profit or loss over the average remaining

working lives of employees in the plan, provided they fall

outside a bandwidth of 10% of the present value of the gross

obligations related to the defined (pension) benefits or the

fair value of the fund’s assets if this is higher. Otherwise,

the actuarial gains or losses are not recognized.

When the fund’s assets exceed the Group’s obligations,

the recognized asset is limited to an amount that is equal to

a maximum of the total of any unrecognized actuarial losses

and pension costs related to past service and the present

value of any future refunds from the plan or that of lower

future contributions to the plan.

c. Long-term employee benefits

The Group’s net obligation in respect of long-term employee

benefits other than pension plans, is the amount of future

benefits that employees have built up in return for their

service in the reporting period and in previous periods, such

as anniversary payments, bonuses and incentives.

This obligation is calculated on the basis of the projected unit

credit method and is discounted to determine its present

value. The discount rate is the yield at the reporting date on

high-quality company bonds that have maturity dates

approximating the terms of the Group’s obligations.

d. Share-based payment transactions

The management participation plan implemented in 1999

was terminated at the beginning of 2003. This plan was

completely dissolved in 2005 and all remaining shares were

sold. The independent foundation responsible for managing

the shares was liquidated at the beginning of 2006.

2�. Provisions

A provision is recognized in the balance sheet if the Group has

a present legal or actual obligation that is the result from a

past event and it is probable that its settlement will require an

outflow of economic benefits. Provisions are determined by

discounting the expected future cash flows at a pre-tax

discount rate that reflects current market assessments of the

time value of money and, where necessary, the risks specific

to the liability.

a. Warranties

A provision for warranty is recognized after the underlying

products or services have been sold and delivered.

The provision is made for costs that must be incurred to

correct deficiencies which appear after delivery but during the

warranty period. The provision is based on specific claims and

a weighting of all possible outcomes against their probability

of occurrence.

��

b. Restructuring

A provision for restructuring is recognized (i) when the Group

has approved a detailed and formal restructuring plan and

the restructuring has either commenced or has been publicly

announced.

c. Environment

A provision for site restoration in respect of contaminated land

is made in accordance with the Group’s applicable

environment policy and applicable legal requirements.

2�. Trade debts, income tax owed and other payable items

Trade debts and other payable items are recognized at

amortized cost.

2�. Segment reporting

A segment is a distinguishable activity of the Group that is

engaged either in providing goods or services (business

segments Property Development, Building, Infrastructure) or

in providing goods or services in a particular geographic area

(geographical segments: the Netherlands, Belgium, Germany,

United Kingdom). A segment is characterized by risks and

rewards that are different from those of other segments.

��

6. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

x € 1,000

6.1 Segment reporting

Due to the sale of almost all of the former Production Division’s remaining business units in 2006, the segmentation summary

has been modified, effective 2006. Three primary segments are recognized. Property Development, Building and Infrastructure.

The financial information related to the remaining component of the former Production Division has been included under

“Other”. The comparative figures for 2005 have been restated accordingly.

Summary income statement by business segment

Business segments Property Development Building Infrastructure Other/Elimination Total

2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Revenues

Third parties 909,427 940,315 977,978 939,845 1,029,812 906,740 24,861 48,417 2,942,078 2,835,317

Intercompany 1,738 759 232,048 273,617 38,158 37,868 –271,944 –312,244 0 0

Total revenues �11,16� 941,074 1,210,026 1,213,462 1,06�,��0 944,608 –2��,0�� –263,827 2,��2,0�� 2,835,317

Operating profit ��,�06 71,090 1�,��� 35,817 ��,�2� 36,261 –1�,�00 –14,402 11�,22� 128,766

Financial income 8,301 8,539

Financial expenses –14,076 –15,277

Share of profit of associates 195 350 648 545 648

Profit before tax 111,��� 122,676

Income tax –29,457 –35,613

Profit after tax ��,�2� 39,544 1�,��� 27,390 2�,��6 24,289 –10,11� –4,160 �2,��0 87,063

��

Business segments Property Development Building Infrastructure Other/Elimination Total

2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Assets 1,023,830 998,149 439,134 427,740 609,083 553,082 7,527 –121,390 2,079,574 1,857,581

Not allocated 50,303 48,625

Total assets 1,02�,��0 998,149 ���,1�� 427,740 60�,0�� 553,082 �,�2� –121,390 2,12�,��� 1,906,206

Liabilities 176,315 157,031 368,806 337,985 319,492 297,978 30,499 47,690 895,112 840,684

Not allocated 792,922 676,370

Total liabilities 1�6,�1� 157,031 �6�,�06 337,985 �1�,��2 297,978 �0,��� 47,690 1,6��,0�� 1,517,054

Shareholders’ equity ��1,��� 389,152

Total equity and liabilities 2,12�,��� 1,906,206

Property, plant and equipment

Depreciation 612 805 2,014 2,412 13,170 12,053 12,132 13,880 27,928 29,150

Capital expenditure 726 761 2,036 1,390 23,340 16,406 16,407 25,020 42,509 43,577

Intangible assets

Depreciation 0 0 147 0 138 0 0 0 285 0

Capital expenditure 0 0 23,996 –83 4,370 921 0 457 28,366 1,295

Associates

Carrying amounts 64 55 0 0 2,056 2,190 72 71 2,192 2,316

Summary balance sheet and balance sheet analysis by business segment

�0

Revenues and assets by geographical segment

Geographical segments The Netherlands Belgium United Kingdom Germany Total

2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Revenues 2,2��,�1� 2,289,985 2��,�12 264,975 26�,0�� 227,484 1��,1�� 52,873 2,��2,0�� 2,835,317

Assets 1,60�,��� 1,526,499 266,��1 236,369 10�,0�1 64,102 ��,1�� 30,611 2,0��,��� 1,857,581

Not allocated 50,303 48,625

Total assets 2,12�,��� 1,906,206

Property, plant and equipment

Depreciation 19,454 22,381 4,110 4,367 456 411 3,908 1,991 27,928 29,150

Capital expenditure 35,408 35,589 3,986 3,946 717 509 2,398 3,533 42,509 43,577

Intangible assets

Depreciation 0 0 0 0 147 0 138 0 285 0

Capital expenditure 0 1,295 0 0 23,996 0 4,370 0 28,366 1,295

�1

Revenues Geographical Segments

The Netherlands Belgium United Kingdom Germany Total

Business segments 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Property Development 865,658 888,515 45,507 52,559 0 0 0 0 911,165 941,074

Building 845,366 888,756 100,563 97,222 264,097 227,484 0 0 1,210,026 1,213,462

Infrastructure 790,627 776,386 142,170 114,824 0 0 135,173 53,398 1,067,970 944,608

Other/elimination –247,237 –263,672 172 370 0 0 –18 –525 –247,083 –263,827

Consolidated 2,2��,�1� 2,289,985 2��,�12 264,975 26�,0�� 227,484 1��,1�� 52,873 2,��2,0�� 2,835,317

Operating profit Geographical Segments

The Netherlands Belgium United Kingdom Germany Total

Business segments 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Property Development 79,985 65,892 4,921 5,198 0 0 0 0 84,906 71,090

Building 5,994 29,765 550 855 6,853 5,197 0 0 13,397 35,817

Infrastructure 25,296 34,179 4,965 2,148 0 0 3,463 –66 33,724 36,261

Other/elimination –14,330 –14,593 –470 191 0 0 0 0 –14,800 –14,402

Consolidated �6,��� 115,243 �,�66 8,392 6,��� 5,197 �,�6� –66 11�,22� 128,766

Profit after tax Geographical Segments

The Netherlands Belgium United Kingdom Germany Total

Business segments 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Property Development 50,507 36,801 3,416 2,743 0 0 0 0 53,923 39,544

Building 7,731 22,969 1,240 378 5,423 4,043 0 0 14,394 27,390

Infrastructure 18,977 24,150 3,147 728 0 0 2,212 –589 24,336 24,289

Other/elimination –7,640 –4,224 –2,473 64 0 0 0 0 –10,113 –4,160

Consolidated 6�,��� 79,696 �,��0 3,913 �,�2� 4,043 2,212 –589 �2,��0 87,063

Revenues, operating profit and profit after tax by geographical and business segment

�2

6.2 Acquisition of subsidiaries

1. 2006 Acquisitions

Heitkamp Rail GmbH

On 31 January, Heijmans acquired the name and the operations of the German company Heitkamp Rail GmbH on the basis of

an assets/liabilities transaction. The purchase price was € 19 million and was paid in cash. Heitkamp Rail is active in the railway

construction sector. As of the takeover date, Heitkamp realized income after taxes in the amount of € 1.4 million. Including its

share in joint ventures, revenues in the period since the takeover amounted to € 78 million.

The fair value adjustment of Heitkamp Rail’s property, plant and equipment concerns the revaluation of its equipment.

The change in the value of the construction work in progress is due to the application of the percentage-of-completion method.

The value assigned to the identifiable intangible assets is € 3 million and is related to the Heitkamp brand name and the

company’s client file. The difference between the value of the assets after adjustments and the acquisition cost is classified as

goodwill and amounts to € 1.4 million.

Denne Construction Ltd.

On 19 September Leadbitter, part of Heijmans, purchased 100% of the shares of the British company Denne Construction Ltd.

Denne Construction is primarily active in the residential development sector and operates in southeast Britain. As of the

takeover date, Denne Construction realized income after taxes in the amount of € 0.8 million. Revenues in this period amounted

to € 18 million.

The adjustment in fair value for Denne Construction is related to the value assigned to identifiable intangible assets.

This amounts to € 12.7 million and is related to the Denne Construction brand name and the company’s customer relationships

related to housing cooperatives and private project developers. The difference between the value of the assets after adjustments

and the acquisition cost is classified as goodwill and amounts to € 11.3 million.

Herrewijnen

On 7 December, Heijmans acquired the operations of Herrewijnen Heiwerken Spijkenisse B.V., J.W. Herrewijnen Holding B.V.,

as well as 100% of the shares of Silent Piling Nederland B.V. on the basis of an assets/liabilities transaction. The purchase price

was € 3.8 million and was paid in cash. Herrewijnen is active in the foundation engineering sector. In view of the takeover date,

Heijmans did not report any income for the acquired party in 2006. The goodwill is nil.

��

Heitkamp Rail GmbH

Book Value

before Takeover

Fair Value

Adjustments

Recognized

Value

at Takeover

Property, plant and equipment 4,532 2,075 6,607

Intangible assets 3,000 3,000

Inventories 333 333

Construction work in progress 10,956 1,285 12,241

Trade and other receivables 21,982 240 22,222

Cash and cash equivalents 2,938 2,938

Interest-bearing loans and other financial liabilities –2,252 –2,252

Trade and other payables –27,509 –27,509

Balance of identifiable assets and liabilities 10,980 6,600 17,580

Acquisition goodwill 1,370

Purchase price paid in cash 18,950

Acquired cash assets –2,938

Net cash outflow 16,012

2. Impact of acquisitions on the assets and liabilities of the Group as of the acquisition date:

��

Denne Construction Ltd.

Book Value

before Takeover

Fair Value

Adjustments

Recognized

Value

at Takeover

Property, plant and equipment 480 480

Intangible assets 0 12,732 12,732

Construction work in progress 619 619

Trade and other receivables 6,475 6,475

Cash and cash equivalents 8,065 8,065

Trade and other payables –13,410 –13,410

Balance of identifiable assets and liabilities 2,229 12,732 14,961

Acquisition goodwill 11,264

Purchase price 26,225

Purchase price to be paid in case of earn-out –8,903

Purchase price paid in cash 17,322

Acquired cash assets –8,065

Net cash outflow 9,257

��

Herrewijnen

Book Value

before Takeover

Fair Value

Adjustments

Recognized

Value

at Takeover

Property, plant and equipment 1,481 750 2,231

Inventories 269 269

Trade and other receivables 1,250 1,250

Cash and cash equivalents 691 691

Trade and other payables –586 –50 –636

Balance of identifiable assets and liabilities 3,105 700 3,805

Acquisition goodwill 0

Purchase price paid in cash 3,805

Acquired cash assets –691

Net cash outflow 3,114

�6

6.� Non-current assets held for sale and discontinued operations

1. Business operations sold

On 18 January 2006, BouwToe was sold to the management of this business unit on the basis of a Management Buy-out.

BouwToe is a producer of (kitchen) cabinets and had nil operating results over 2006 up to the date of takeover. The net inflow

of cash, after subtracting BouwToe’s cash resources, amounted to € 0.7 million.

On 30 June 2006, Heijmans sold all of its shares in Vebo Holding B.V. to BTE Nederland B.V. The purchase price was paid in cash.

Up to the takeover date, income of € 1.8 million after taxes was realized over the 2006 financial year and the outflow of cash

resources from business operations amounted to € 0.6 million. The sale resulted in a reduction of Heijmans’ net assets of

€ 13.0 million. The net inflow of cash resources, after subtracting Vebo’s cash resources, amounted to € 19.2 million.

Impact of the disposals on individual assets and liabilities 2006

Property, plant and equipment 7,286

Intangible assets 0

Inventories 4,368

Current tax assets 40

Trade and other receivables 6,275

Cash and cash equivalents 2,727

Non-current liabilities –2,473

Interest-bearing current liabilities –100

Non-interest-bearing current liabilities –6,455

Net assets and liabilities as at 31 December 2005 11,668

2006 operating results 1,790

Net assets and liabilities as at date of sale 13,458

Consideration received, settled in cash 22,663

Cash disposed –2,727

Net cash inflow 1�,��6

��

Other operating income 2006 2005

Gain on sale of property, plant and equipment 8,993 3,909

Other 1,583 1,478

10,��6 5,387

2. Assets and liabilities classified as held for sale

Assets held for sale 31 December 2006

Property, plant and equipment 0

Inventories 0

Trade and other receivables 31

Cash and cash equivalents 2

��

Liabilities held for sale

Non-current liabilities 0

Non-interest-bearing current liabilities 75

��

6.� Other operating income

The assets and liabilities held for sale are related to the company’s share in Recycling Oost Brabant B.V.

��

The depreciation and amortization processed in the income statement can be stated as follows:

Depreciation and amortization 2006 2005

Depreciation on property, plant and equipment 27,928 29,150

Depreciation on real estate investments 380 315

Amortization of intangible assets 285 0

Impairment losses related to goodwill 234 550

2�,�2� 30,015

The depreciation of property, plant and equipment and real estate investments are included in the cost of sales and management

costs.

The amortization of intangible assets and impairment losses are classified under other operating expenses.

6.6 Other operating expenses

The other operating expenses can be specified as follows:

Other operating expenses 2006 2005

Impairment losses –234 –550

Amortization of intangible assets –285 0

–�1� –550

6.� Employee expenses and depreciation

The employee expenses processed in the income statement can be specified as follows:

Employee expenses 2006 2005

Wages and salaries 415,363 394,759

Compulsory social security contributions 76,296 66,558

Defined contribution plans 25,194 29,017

Defined benefit pension plans and anniversary payments 8,594 12,306

�2�,��� 502,640

��

The capitalized interest expenses are primarily related to the land portfolios and development projects under development.

In determining the amount of financing costs that can be considered for capitalization use is made of a classification system for

lands and development projects owned. Capitalization of financing costs related to the strategic land portfolio only takes place

in the event that the completion of the related project falls within the applicable zoning plan and is expected within five years.

The interest rate applied for the determination of financing costs to be capitalized was 3.9% in 2006 (2005: 4.5%).

6.� Net financing costs

The net financing costs can be specified as follows:

Financial income and expense 2006 2005

Interest income 8,305 8,169

Exchange differences –4 370

Financial income �,�01 8,539

Interest expense –28,820 –29,405

Interest expense capitalized 14,731 14,194

Loss on financial instruments 13 –66

Financial expense –1�,0�6 –15,277

–�,��� –6,738

�0

6.� Income tax expense

Recognized in the income statement 2006 2005

Current tax charges/credits

Current financial year 27,682 53,970

Amount of the positive impact of the losses not recognized in

the past, receivables or temporary differences applied to reduce

the current tax charge –250 –386

Amount of the positive impact of the losses not recognized in

the past, receivables or temporary differences applied to reduce

the deferred tax charge – –363

Adjustment for prior years 39 –411

2�,��1 52,810

Deferred tax charges/credits

Deferred tax charges/credits concerning temporary differences 8,059 –15,932

Deferred tax charges/credits in connection with revised tax rates

or the levy of new income taxes –7,209 –1,872

Deferred tax charges (in connection with the write-off of a

deferred tax asset) or tax credits (in connection with the reversal

of a write-off) 1,256 546

Taxes relating to adjustments for prior years –120 61

1,��6 –17,197

Total income tax expense in income statement 2�,��� 35,613

In addition to the recognition of a tax burden of € 29.5 million in the income statement, an income tax expense of

€ 1.3 million was directly charged to equity.

�1

Reconciliation of effective tax rate 2006 2006 2005 2005

% € % €

Profit before tax 111,997 122,676

Income tax expense on basis of local tax rate 29.6% 33,153 31.5% 38,643

Effect of tax rates in foreign jurisdictions 0.3% 351 –0.1% –165

Non-deductible expenses 3.7% 4,211 1.9% 2,324

Effect of exceptional tax rates 0.0% 0 –0.0% –27

Effect of tax rate reductions –6.4% –7,209 –1.5% –1,872

Non-taxable revenues –1.8% –2,044 –2.8% –3,380

Tax incentives not recognized in the income statement 0.2% 195 0.5% 643

Effect of compensable losses utilized –0.2% –250 –0.3% –386

Effect of losses, receivables or temporary differences not

recognized in the past –0.1% –125 –0.3% –364

Effect of write-off or reversal of write-offs of deferred tax assets 1.1% 1,256 0.4% 546

Under/over provision in prior years –0.1% –81 –0.3% –349

Total effective tax rate and charge 26.�% 2�,��� 29.0% 35,613

The effective tax rate for the year 2006 amounts to 26.3% (2005: 29%). The variance in 2006 compared to the current tax rate of

29.6% in the Netherlands can be explained by:

1. Effect of the 2007 rate adjustment on deferred tax assets and liabilities: - 6.4%

2. Non-deductible provision related to the EC Bitumen Affair fine: +1.9%

3. Non-deductible interest expense on cumulative preference shares: +1.2%

4. Write-down of the compensation for losses: +1.0%

5. Untaxed result from the sale of companies: -0.7%

6. Limitation on deduction of costs: +0.5

7. Effect of foreign rates and facilities: -0.4%

8. Other: -0.4%

6.� Income tax receivable

The total tax receivable relates to the tax recoverable in connection with the excess advance payments of tax in the reporting

period and prior periods.

�2

6.10 Property, plant and equipment

Land

and

Buildings

Machines,

Plant

and

Equipment

Other

Fixed

Assets

Assets

under

Construction Total

Cost

Balance as at 1 January 2005 156,126 144,530 149,997 2,401 453,054

Transferred to non-current assets held for sale –13,469 –9,380 –994 0 –23,843

Transferred to inventories –10,272 0 0 0 –10,272

Acquisitions 14,535 9,788 14,212 5,042 43,577

Disposals –19,965 –17,981 –18,207 0 –56,153

Deconsolidated –1,018 –4,177 –1,083 0 –6,278

Reclassifications –3,545 5,138 –3,895 1,959 –343

Foreign exchange translation differences 0 2 72 0 74

Balance at 31 December 2005 122,392 127,920 140,102 9,402 399,816

Balance at 1 January 2006 122,392 127,920 140,102 9,402 399,816

Transferred to non-current assets held for sale –2,038 0 –111 0 –2,149

Transferred to/from inventories –952 100 0 0 –852

Acquisitions 18,369 7,913 12,862 3,365 42,509

Disposals –6,198 –15,020 –19,368 0 –40,586

Acquisitions included in the consolidation 750 5,668 2,768 133 9,319

Reclassifications –4 3,426 2,031 –5,453 0

Foreign exchange translation differences –1 3 54 0 56

Balance at �1 December 2006 1�2,�1� 1�0,010 1��,��� �,��� �0�,11�

��

Land

and

Buildings

Machines,

Plant

and

Equipment

Other

Fixed

Assets

Assets

under

Construction Total

Depreciation and impairment losses

Balance at 1 January 2005 57,212 104,328 109,539 9 271,088

Depreciation 6,303 10,506 12,341 0 29,150

Transferred to non-current assets held for sale –6,879 –8,066 –968 0 –15,913

Transferred to inventories –4,706 0 0 0 –4,706

Deconsolidated –236 –3,182 –752 0 –4,170

Disposals –9,086 –17,152 –13,358 0 –39,596

Reclassifications 482 3,434 –4,650 –9 –743

Foreign exchange translation differences 0 2 38 0 40

Balance at 31 December 2005 43,090 89,870 102,190 0 235,150

Balance at 1 January 2006 43,090 89,870 102,190 0 235,150

Depreciation 5,268 10,781 11,879 0 27,928

Transferred to non-current assets held for sale –1,168 0 –79 0 –1,247

Disposals –2,538 –13,043 –15,709 0 –31,290

Reclassifications 0 –1,234 1,234 0 0

Foreign exchange translation differences 0 0 35 0 35

Balance at �1 December 2006 ��,6�2 �6,��� ��,��0 0 2�0,��6

��

6.11 Intangible assets

The intangible assets comprise goodwill and other intangible assets

Property, plant and equipment amounting to € 5.6 million (2005: € 3.9 million) has been pledged as security for providers of

loans. In addition, € 8.7 million (2005: € 7.7 million) has been leased under financial lease agreements. Of this amount,

€ 4.8 million relates to company buildings and grounds and € 3.9 million relates to machinery, installations and large

equipment. These leased assets serve as security for the lease obligations.

The carrying amount for assets under construction includes an expenditure of € 3.4 million recognized during the year.

These expenditures are primarily related to the construction of asphalt plants.

Land

and

Buildings

Machines,

Plant

and

Equipment

Other

Fixed

Assets

Assets

under

Construction Total

Carrying amounts

At 1 January 2005 98,914 40,202 40,458 2,392 181,966

At 31 December 2005 79,302 38,050 37,912 9,402 164,666

At 1 January 2006 79,302 38,050 37,912 9,402 164,666

At �1 December 2006 ��,666 ��,6�6 ��,��� �,��� 1��,���

Goodwill

Other Intangible

Assets Total

Cost

Balance at 1 January 2005 152,794 0 152,794

Aquisitions 0 0 0

Subsequent payments and receipts related to prior years’

acquisitions 1,295 0 1,295

Balance at 31 December 2005 154,089 0 154,089

Balance at 1 January 2006 154,089 0 154,089

Aquisitions 12,634 15,732 28,366

Adjustments to prior years’ acquisitions –3,798 0 –3,798

Foreign exchange translation differences 423 0 423

Balance at �1 December 2006 16�,��� 1�,��2 1��,0�0

��

Balance at 1 January 2006 1,450 0 1,450

Impairment losses 234 0 234

Amortization 0 285 285

Foreign exchange translation differences 0 1 1

Balance at �1 December 2006 1,6�� 2�6 1,��0

Carrying amounts

At 1 January 2005 151,894 0 151,894

At 31 December 2005 152,639 0 152,639

At 1 January 2006 152,639 0 152,639

At �1 December 2006 161,66� 1�,��6 1��,110

Goodwill

Other intangible

assets Total

Impairment losses and amortization

Balance at 1 January 2005 900 0 900

Impairment losses 550 0 550

Balance at 31 December 2005 1,��0 0 1,��0

�6

An adjustment to goodwill was made in 2006 arising from an agreement with the Dutch Tax Authorities concerning the

finalization of the company tax returns for Koninklijke IBC B.V. for the years 1995-2000 inclusive.

This resulted in an income tax refund of approximately € 4.4 million. Due to the fact that this refund is related to the period

prior to the takeover of IBC by Heijmans, the goodwill was adjusted in the amount of the income tax refund.

In addition, an adjustment to the cumulative write-off of goodwill was also made for the years 2001-2003 inclusive.

This adjustment amounts to approximately € 0.7 million and is recorded against the operating results.

According to IFRS 3, the downward revaluation of goodwill (€ 3.7 million) must be charged to the operating profit and the

income tax refund (€ 4.4 million) must be recorded against the income tax expense in the income statement.

Heijmans is of the opinion that this approach, particularly in view of the size of the amounts involved, does not provide proper

insight into the build up of the operating profit and the tax burden and therefore decided to adopt the presentation approach

described above. The foregoing does not affect the profit after tax.

Goodwill is annually tested for impairment based on the relevant cash-generating unit. For an explanation of the calculation

of the fair value, reference is made to the accounting policies for financial reporting.

The impairment tests are based on the Adjusted Present Value (APV) method. This method calculates the value of the relevant

cash-generating unit based on 100% equity capital financing. The cash value of the tax advantages related to an ideal financing

structure for the relevant cash-generating unit is added to this. The relevant discount factor is the (unleveraged) cost of equity

capital. The rate used for 2006 is 7.11% (2005: 8.69%).

The value of cash-generating units is based on the expected future cash flows. The period adopted to determine the present value

of cash flows is indefinite. In the determination of future cash flows, use is made of the medium term planning of the cash-

generating unit concerned. The assumptions underlying the medium term planning are jointly based on historical experience

and external information sources. The medium term planning generally covers a period of five years. Cash flows after 5 years

are extrapolated using growth rates ranging from 0% to 2%.

The fair value calculated by the impairment test is dependent on the growth rate used and the period over which the cash flows

are realized.

Impairment losses related to goodwill are classified in the income statement under the item other operating expenses.

Goodwill

The key components of the carrying amount of goodwill and other intangible assets are related to:

Acquisition Goodwill Other intangible assets

IBC (NL-2001) 47,707 –

Proper-Stok (NL-2002) 49,799 –

Leadbitter (UK - 2003) 19,476 –

Denne (UK - 2006) 11,264 12,584

Heitkamp (DE-2006) 1,370 2,862

Other acquisitions 32,048 0

161,664 15,446

��

2006 2005

Balance at 1 January 8,358 8,637

Acquisitions 2,329 36

Depreciation –380 –315

Balance at �1 December 10,�0� 8,358

If the real estate investments were to be stated at fair value, their value would be approx. € 14 million. The fair value has been

determined on appraisals and insured values.

The following amounts related to real estate investment have been processed in the income statement.

2006 2005

Rental income 1,379 798

Direct operating costs that:

• generated rental income –661 –742

• generated no rental income –150 –223

6.12 Real estate investments

��

6.1� Investments in associates

The most significant associated companies are the Nederlandse Frees Maatschappij B.V, Latexfalt B.V. and Delfluent B.V.

The relevant financial information for these three associated companies is shown below. Furthermore, there is a relatively small

number of associated companies that are not of significance. The figures reflect the Heijmans share in the book value of the

associated companies.

The table below presents the summary financial data of the significant associated companies.

2006

Assets

at Year-end

Liabilities

at Year-end

Equity

at Year-end Revenues

Operating

Results

Heijmans’

Share

Nederlandse Frees Maatschappij B.V. 2,482 1,430 1,052 4,376 368 16.67%

Latexfalt B.V. 2,422 1,632 790 4,924 21 20.00%

Delfluent B.V. 13,990 13,777 213 1,203 –39 5.00%

Total 18,894 16,839 2,055 10,503 350

The Delfluent consortium has been involved in the design, construction, financing and management of waste water purification

plants in the region of The Hague over a period of 30 years. Delfluent’s income is linked to the quality and quantity of purified

water delivered during the management period. At the end of the agreed upon period – 2033 – the plants will be handed over

to the client. Heijmans is entitled, together with Strukton, to appoint a member to Delfluent’s Board of Supervisory Directors.

This allows Heijmans to exercise significant influence on Delfluent’s policies, in spite of the fact that Heijmans’ share is limited

to 5%.

��

6.1� Other investments

2006 2005

Non-current receivables 71,833 83,792

Other non-current receivables 2,278 2,280

Balance at �1 December ��,111 86,072

Approximately € 55 million of the non-current receivables concerns the Heijmans share of loans provided to minority interests

via joint ventures. The remaining non-current receivables, amounting to approximately € 17 million, consist of the loans

provided by the Group to joint ventures in which the company participates. Against this is an identical amount in debts to other

participants in these joint ventures (included in the “Non-current liabilities” item, see 6.22).

Set-off of these receivables with these debts is not permitted due to the pro-rata application of the joint and several liability with

respect to these joint ventures.

100

6.1� Deferred tax assets and liabilities

The balance of the deferred tax assets and liabilities relating to temporary differences between the value for fiscal and financial

reporting purposes of balance sheet items as well as the valuation of the tax loss carry-forwards is as follows:

Assets

31 December

Liabilities

31 December

Balance

31 December

2006 2005 2006 2005 2006 2005

Property, plant and equipment 0 0 11,466 8,981 –11,466 –8,981

Lands/strategic land portfolio 0 0 9,476 9,356 –9,476 –9,356

Property intended for sale 0 174 97 3,472 –97 –3,298

Other inventories 266 0 0 0 266 0

Construction work in progress 11,405 12,165 56,000 60,607 –44,595 –48,442

Interest-bearing loans and other non-current

borrowings 0 0 1,282 278 –1,282 –278

Employee benefits 7,924 10,005 0 0 7,924 10,005

Deferred government grants 0 0 0 12 0 –12

Provisions 0 0 467 472 –467 –472

Other items 0 625 1,466 1,484 –1,466 –859

Tax value of tax loss carry-forwards recognized 16,090 21,252 0 0 16,090 21,252

Tax assets and liabilities 35,685 44,221 80,254 84,662 –44,569 –40,441

Set-off of tax assets and liabilities –30,013 –39,885 –30,013 –39,885 0 0

Net tax assets and liabilities �,6�2 4,336 �0,2�1 44,777 –��,�6� –40,441

101

Balance at

31 December

2005

Recognized in

Tax Expense

2006

Recognized

in Equity

2006

Recognized as

a result of

Business

Combinations

in 2006

Balance at

�1 December

2006

Property, plant and equipment –8,981 –1,669 – –816 –11,466

Lands/strategic land portfolio –9,356 –120 – – –9,476

Property intended for sale –3,298 3,201 – – –97

Other inventories 0 266 – – 266

Construction work in progress –48,442 3,847 – – –44,595

Interest-bearing loans and other non-current

borrowings –278 322 –1,326 –1,282

Employee benefits 10,005 –2,081 – – 7,924

Deferred government grants –12 12 – – 0

Provisions –472 5 – – –467

Other items –859 –607 – – –1,466

Tax value of loss carry-forwards recognized 21,252 –5,162 – – 16,090

Total –40,441 –1,��6 –1,�26 –�16 –��,�6�

The balance of tax assets and liabilities during 2006 is as follows:

102

Balance at

31 December

2004

Recognized in

Tax Expense

2005

Recognized

in Equity

2005

Recognized as

a result of

Business

Combinations

in 2005

Balance at

31 December

2005

Property, plant and equipment –11,210 2,229 – – –8,981

Lands/strategic land portfolio –6,585 –2,771 – – –9,356

Property intended for sale –987 –2,311 – – –3,298

Other inventories 54 –54 – – 0

Construction work in progress –73,653 25,211 – – –48,442

Interest-bearing loans and other non-current

borrowings 0 –278 – – –278

Employee benefits 13,212 –3,207 – – 10,005

Deferred government grants 0 –12 – – –12

Provisions –2,631 2,159 – – –472

Other items –917 58 – – –859

Tax value of loss carry-forwards recognized 25,079 –3,827 – – 21,252

Total –57,638 17,197 – – –40,441

The balance of tax assets and liabilities during 2005 is as follows:

Valuation of deferred tax assets

At year-end 2006, the tax loss carry-forwards recognized amount to € 16.1 million. Of this amount € 12.4 million relates to the

loss carry-forwards of the Dutch fiscal unit. In 2005 agreement was reached with the tax authorities about how the losses within

the fiscal unit will be compensated. In view of the limitation of the available loss carry-forwards options to 9 years

(whereby the losses of 2002 to 2011 inclusive can be compensated) introduced in 2007, the loss carry-forwards have been

adjusted downwards by € 1.1 million. The Dutch fiscal unit’s loss carry-forwards have been offset by the deferred tax liabilities.

The other deferred tax assets, that do not qualify for set-off, amount to € 5.7 milion and are related to the recognized losses of

a number of subsidiaries in Belgium and to the temporary valuation differences for subsidiaries in Belgium and Germany.

The losses in Belgium and Germany are in principle fully compensable in the future.

The fiscal accounting policies related to work in progress have been changed effective 2007. As a result, a significant portion

of the deferred tax liabilities recognized in the 31 December 2006 balance sheet will become due in 2007. This effect is

provisionally estimated at approximately € 40 million.

10�

Tax losses not recognized on the balance sheet

At the end of 2006, tax losses that are not recognized on the balance sheet amount to € 14.6 million (2005: 5.3 million).

The increase in unrecognized tax losses is primarily due to the fact that a portion of the Dutch fiscal unit’s tax loss carry-forwards

have been adjusted downwards as a result of the new loss compensation rules effective 2007.

The other unrecognized losses are related to a number of subsidiaries in Belgium and Germany.

6.16 Inventories

Inventories 31 December 2006 31 December 2005

Strategic land portfolio 297,095 277,617

Stocks of raw and auxiliary materials 15,162 13,751

Work in progress 174,534 175,278

Inventory of finished products 153,018 146,230

Total 6��,�0� 612,876

Carrying amounts of inventories that are offered as security

for liabilities 129,146 166,159

Inventory value recorded as expense in the period 848,861 826,138

Inventory recognized at net realizable value 140,914 144,225

The inventory of unsold property is in part recognized at net realizable value less write-downs (2006: € 13.5 million;

2005: € 18.0 million).

10�

6.1� Construction work in progress

31 December 2006 31 December 2005

Cost less provisions for losses and risks plus profit recognized based

on percentage of completion 2,125,139 1,753,266

Less: Progress billings –2,110,036 –1,809,305

Balance of construction work in progress 1�,10� –56,039

Positive balance on construction work in progress 1�0,��� 107,523

(recognized under current assets)

Negative balance on construction work in progress –1��,2�2 –163,562

(recognized under current liabilities)

Balance of construction work in progress 1�,10� –56,039

The positive balance on construction work in progress represents all projects in progress where the incurred costs plus

the capitalized profit less the recognized losses are in excess of the progress billing.

The negative balance on construction work in progress represents all projects in progress where the incurred costs plus

the capitalized profit less the recognized losses are less than the progress billing.

10�

6.1� Trade and other receivables

31 December 2006 31 December 2005

Trade receivables 501,577 375,311

Amounts to be invoiced 57,415 46,151

Receivables on proportionally consolidated participations 36,360 52,563

Other current receivables 70,396 65,932

Total trade and other receivables 66�,��� 539,957

As at 31 December 2006 the receivables include in total € 29.2 million that will only be settled in the event that certain

conditions concerning contracts relating to projects in progress have been met.

Trade receivables are presented after impairment losses. The write-down for expected doubtful collectability is recognized in the

income statement under administrative expenses. At year-end 2006 a provision of € 6.5 million for bad debt (2005: € 8 million)

is included in trade receivables.

6.1� Cash and cash equivalents

31 December 2006 31 December 2005

Bank balances 190,705 169,469

Cash in hand 27 22

Funds in blocked accounts 2,198 3,687

Total cash and cash equivalents 1�2,��0 173,178

Of the total cash and cash equivalents, an amount of € 63.5 million (2005: € 76.4 million) is with joint ventures.

The funds in blocked accounts amount to € 2.2 million (2005: € 3.7 million) and represent particularly the prescribed obligatory

G-accounts (guarantee accounts).

106

6.20 Equity

Changes in equity

(before profit appropriation)

200�

Paid & Called

Share Capital

Share

Premium

Reserve

Translation

Reserve

Hedging

Reserve

Retained

Earnings

Profit after Tax

for the Year

Total

Equity

Balance at 31 December 2004 673 75,475 –806 0 168,777 40,090 284,209

Impact of first application of IAS 32/39

on 1 January 2005 0 0 0 –533 0 0 –533

Proceeds of issue of ordinary shares 49 46,856 0 0 0 0 46,905

Appropriation of 2004 profit 0 0 0 0 40,090 –40,090 0

Dividend paid on ordinary shares 0 0 0 0 –29,368 0 –29,368

Total recognized income and expense 0 0 354 522 0 87,063 87,939

Balance at 31 December 2005 722 122,331 –452 –11 179,499 87,063 389,152

2006

Paid & Called

Share Capital

Share

Premium

Reserve

Translation

Reserve

Hedging

Reserve

Retained

Earnings

Profit after Tax

for the Year

Total

Equity

Balance at 31 December 2005 722 122,331 –452 –11 179,499 87,063 389,152

Appropriation of 2005 profit 0 0 0 0 87,063 –87,063 0

Dividend paid on ordinary shares 0 0 0 0 –34,905 0 –34,905

Reclassification 0 0 0 –677 677 0 0

Total recognized income and expense 0 0 642 4,414 0 82,540 87,596

Balance at �1 December 2006 �22 122,��1 1�0 �,�26 2�2,��� �2,��0 ��1,���

10�

Translation reserve

The translation reserve comprises all foreign exchange rate differences originating from the translation of the Heijmans

net investment in foreign subsidiaries.

Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedging

instruments related to hedged transactions that have not yet occurred.

Profit appropriation

Refer to the company financial statements (page 134) for the proposal for the appropriation of profits.

Paid and called capital

In thousands of ordinary shares 2006 2005

Outstanding at 1 January 24,073 22,438

Issued for payment in cash 0 1,635

Outstanding at 31 December 2�,0�� 24,073

Please refer to the company financial statements for notes on the company share capital.

10�

Diluted profit per ordinary share

The diluted profit per share over 2006 is equal to the basic profit per share over 2006.

6.21 Profit per share

Basic profit per ordinary share

The basic profit per share for the year 2006 amounts to € 3.43 (2005: € 3.67). The calculation is based on the profit after tax

attributable to the holders of (depositary receipts for) ordinary shares and a weighted average number of ordinary shares that

were outstanding during 2006.

Profit attributable to ordinary shareholders 2006 2005

Profit after tax attributable to ordinary shareholders 82,540 87,063

Weighted average number of ordinary shares

In thousands of shares 2006 2005

Issued ordinary shares at 1 January 24,073 22,438

Impact of shares issued in 2005 0 1,258

Weighted number of ordinary shares at 31 December 24,073 23,696

10�

6.22 Interest-bearing loans and other non-current financing liabilities

This note presents information on the contractual terms of the interest-bearing loans and the other liabilities of Heijmans:

Preference shares

At year-end 2006, 6,610,000 cumulative preference shares B are outstanding at € 10 per share. The payment on these shares

amounts to 6.81% and is payable yearly 14 days after the Annual General Meeting of Shareholders. The dividend shall first be

revised on 1 January 2009 and every 7 years thereafter. The company has the right to sell or withdraw these preference shares

(in the interim).

�1 December 2006 Non-current Current Total

Redeemable preference shares 66,100 0 66,100

Syndicated bank financing 175,000 75,000 250,000

Other bank financing 7,765 6,390 14,155

Project financing 135,565 82,770 218,335

Financial lease liabilities 8,362 1,814 10,176

Other non-current liabilities 36,141 1,061 37,202

Bank overdrafts 0 94,369 94,369

Total liabilities �2�,��� 261,�0� 6�0,���

31 December 2005 Non-current Current Total

Redeemable preference shares 66,100 0 66,100

Bank financing 67,955 51,940 119,895

Project financing 187,725 34,323 222,048

Financial lease obligations 7,105 1,443 8,548

Other non-current liabilities 38,651 0 38,651

Bank overdrafts 0 120,723 120,723

Total liabilities 367,536 208,429 575,965

110

Syndicated bank facility

The syndicated bank facility consists of a committed standby facility for a total amount of € 400 million with a term of 5 years

and two one year optional extensions. This facility was concluded at the end of March 2006 and involves eight banks. Based on

this financing facility, outstanding current accounts and various financing agreements with banking institutions were redeemed

in 2006. No secured collateral is provided in relation to the bank financing facility. The following financial covenants apply in

this context:

• leverage ratio < 3.5

• interest cover ratio > 3.5

The leverage ratio is calculated as the net debt divided by EBITDA (profit before tax, interest, depreciation and amortization),

based on the net debt and EBITDA definitions mutually agreed upon with the group of banks. The interest cover ratio is

calculated as the EBITDA divided by the interest paid. These covenants were more than adequately met during the reporting

year.

At the end of 2006, € 250 million of the bank facility is drawn down. This includes an amount of € 175 million which is

considered non-current. To fix the related interest charges, interest rate swaps were negotiated for the face value of the

non-current portion over the committed period of this facility. The average interest rate for 2006 was approximately 3.76%.

The facility’s current end date is April 2011. Heijmans intends to extend the facility by one year to April 2012. It is expected

that the banks involved will agree to this request.

Other bank financing

The other bank financing item consists of loans with straight line redemption terms. The amount to be redeemed in 2007 is

€ 6.4 million, € 5.6 million in 2008 and € 2.2 million in 2009. The average interest rate was approximately 3.66%.

Project financing

Project financing was negotiated for specific projects, generally in joint ventures. The redemption schedule for project financing

is usually related to the project’s progress. The term of project financing extends at the most to the delivery and/or sale of

the projects.

The value of the related projects, including the future positive cash flow from these projects, serves as security for the project

financing in the amount of € 218 million (2005: € 222 million).

Heijmans N.V. has stood as guarantor for the repayment of the principal and/or interest expense for € 134 million

(2005: € 137 million) of the total project financing. The balance of € 84 million (2005: € 85 million) was therefore financed on

a non-recourse basis with no guarantee from Heijmans N.V.

The average interest rate on the project financing amounts to 4.04% (2005: 3.68%).

111

�1 December 2006 < 1 year 1-5 years > 5 years Total

Lease payments 2,305 5,590 4,566 12,461

Less: interest portion 491 1,174 620 2,285

Lease liabilities 1,�1� �,�16 �,��6 10,1�6

Financial lease liabilities

The financial lease liabilities are primarily related to equipment in Belgium and Germany. The lease liability is equal to the face

value of the debt. The lease payments are due as follows:

There were no charges in the financial year for contingent lease payments.

Other non-current liabilities

At the end of 2006, the other non-current liabilities amount to € 37 million (year-end 2005: € 39 million). Of this amount,

around € 20 million constitutes the Heijmans share in loans from third parties to joint ventures. The remaining balance of

around € 17 million concerns debts to other participants of joint ventures that, due to the pro-rata application according to the

calculated share of the joint and several liability in these joint ventures, may not be eliminated with the identical amount of

loans granted by the Group to these joint ventures (included in the “Other investments” item, see 6.14).

31 December 2005 < 1 year 1-5 years > 5 years Total

Lease payments 1,818 4,388 4,577 10,783

Less: interest portion 375 957 903 2,235

Lease liabilities 1,443 3,431 3,674 8,548

6.2� Employee benefits

The personnel-related liabities are for defined benefit plans and anniversary payments and are as follows:

31 December 2006 31 December 2005

Non-current 20,739 27,598

Current 14,546 12,760

��,2�� 40,358

Of the total personnel-related liabilities, € 19.8 million (year-end 2005: € 20.4 million) is for unfinanced plans.

112

Liability for defined benefit plans and anniversary payments

2006 2005

Liability for defined benefit plans and anniversary payments

at 1 January 294,812 274,589

Service costs 8,377 8,127

Interest expenses 12,201 12,941

Employee contributions 2,127 1,808

Settlements and curtailments 2,398 –10,756

Actuarial gains and losses –3,548 16,452

Pension and anniversary payments –8,528 –8,349

Acquisitions 1,544

Liability for defined benefit plans and anniversary payments

at �1 December (A) �0�,��� 294,812

Fair value of plan assets at 1 January 242,468 229,072

Return on plan assets 19,124 18,313

Employer contribution 12,605 9,535

Employee contribution 2,127 1,808

Pension payments from financed plans –7,308 –6,916

Settlements and curtailments 163 –9,344

Acquisitions 10

Fair value of plan assets at �1 December (B) 26�,1�� 242,468

Benefit obligation in excess of plan assets (A-B) �0,1�� 52,344

Unrecognized pension costs related to past service –1,874 0

Unrecognized actuarial losses –3,035 –11,986

Total defined benefit plan obligations and anniversary payments ��,2�� 40,358

11�

Liability for defined benefit plans in the Netherlands

The liability for defined benefit plans concerns the liabilities from three plans that have been insured with company pension

funds and approximately 20 schemes that have been insured with insurance companies:

The majority of participants are covered by the three company pension funds.

• Stichting Pensioenfonds Heijmans N.V. (number of active members at end 2006: 1,044). The pension base is the salary

(final pay), that exceeds the maximum pension base of industry pension plans. No indexation.

• Stichting Pensioenfonds IBC (number of active members at year-end 2006: 392). Average wage plan with indexation

depending on available resources.

Stichting Pensioenfonds for the Heijmans N.V. Executive Board (number of active members at end 2006: 3). The pension base is

the salary (final pay) that exceeds the maximum pensionable earnings of the industry pension plan for the Bouwnijverheid.

In addition, the pension is also calculated on the basis of the bonus plan (average wage plan).

Furthermore, most Dutch employees participate in pension plans that are in fact defined benefit plans. These are treated as

defined contribution plans, since the records of the industry pension funds are not designed to deliver the required information.

Under these plans Heijmans is committed to paying the determined premiums. The Group cannot be obliged to supplement

any shortages other than by means of future pension revisions. Heijmans cannot in turn make any claims on any excess

pension funds. The relevant industry sector pension funds are the pension funds for the Bouwnijverheid, Metaal en Techniek,

Landbouw, Beroepsvervoer over de Weg, Metalelektro and Betonproductenindustrie.

Liability for defined benefit plans - Germany

A number of pension plans apply to German workers for which a liability has been recorded on the balance sheet. These plans

have not been placed with outside insurance companies or funds. The pension entitlements primarily consist of income-

independent, monthly payments.

Anniversary payments

The anniversary payments in the Netherlands and Belgium consist of a (portion of the) monthly salary on employment periods

of 12.5, 25 and 40 years. The anniversary is celebrated by a party funded by Heijmans. In Germany, the anniversary payment

consists of a fixed sum on a period of service of 10 years and a (portion of the) monthly salary on periods of service of 25 and

40 years.

Management compensation

In the management remuneration system, a portion of the variable remuneration consists of a long-term bonus. The three-year

bonus is dependent on operating and financial goals and partially on relative performance in comparison with other building

companies, and share price trends. It is therefore not possible to make a reasonable estimate of the possible obligation that

might result from the long-term bonus. No liability has therefore been recorded here.

Composition of plan assets as a % of total 31 December 2006 31 December 2005

Shares 10% 11%

Fixed-interest securities 50% 50%

Cash 5% 4%

Other/Insured plans 35% 35%

11�

Principal actuarial assumptions at the balance sheet date were:

31 December 2006 31 December 2005

Discount rate 4.5% 4.0%

Expected return on plan assets 4.5% 4.0%-4.75%

Future salary indexation 2.25% 2.25%

Future salary increases 0-1.5% 0-1.5%

Future pension increases 0% 0%

Personnel movements 6.0%-15.0% 4.3%-13.3%

Mortality table Pension Table 2006 0/0 CRC 03 0/0

2006 2005

Service costs 8,377 8,576

Interest expenses 12,201 13,306

Return on plan assetst –11,546 –11,965

�,0�2 9,917

Amortization of pension costs related to past service 129 0

Recognized actuarial gains and losses –1,819 737

Administration and other expenses 1,377 1,467

Settlements and curtailments –125 185

Total expense for defined benefit plans and anniversary payments �,��� 12,306

Charges recognized in relation to defined benefit plans and anniversary payments

The decrease in expenses in relation to 2005 is in part due to the termination of a number of insured plans. The pensions of the

affected employees were transferred to the industrial sector pension plan within the context of the harmonization of pension

plans. No liabilities are recognized on the Heijmans balance sheet for the pension plans transferred.

The change in the above assumptions at year-end 2006 relative to year-end 2005 resulted in decreased commitments

amounting to approximately € 5.4 million: the increased discount rate resulted in a decrease of approximately € 9.5 million,

the revised mortality table to an increase of approximately € 8.1 million, and the adjustment in the movement of personnel

resulted in a decrease of approximately € 4.0 million.

11�

Term of the provisions: 31 December 2006 31 December 2005

Non-current portion 15,465 15,031

Current portion 14,612 12,044

�0,0�� 27,075

Provision for warranty obligations

The provisions relate to complaints and deficiencies that have become apparent after the delivery of projects and that fall within

the warranty period. The magnitude of the costs provided for is dependent on the estimated division of the claim over the related

building partners. It is expected that a majority of the obligations will materialize in the next two years.

These impacts have been incorporated into the actuarial calculations taking the corridor of IAS 19 into account.

An exception to this is the impact on obligations that are related to anniversary payments. These are directly recognized in the

operating results, since the corridor does not apply in this instance.

The impact of changes based on historical data (realized return on investment higher than previously expected return) resulted

in an increase of approximately € 7.6 million in the plan’s assets.

The premium contribution due in 2007 is estimated at approximately € 15 million..

6.2� Other provisions

General

Provisions including those for warranty obligations, restructuring costs and environmental risks are recognized in the event that

Heijmans has an existing obligation and it is probable that an outflow of economic benefits will take place and the amount of

the provisions can be reasonably estimated. The provisions are stated at face value unless the time value of money is material.

31 December

2005

Reversal of

unused

amounts

Provisions

made in

the Year

Provisions

used in

the Year

�1 December

2006

Warranty obligations 7,769 –1,499 10,111 –4,652 11,�2�

Restructuring costs 3,572 –995 0 –1,146 1,��1

Environmental risks 6,193 –300 6 –181 �,�1�

Other provisions 9,541 –542 5,157 –2,957 11,1��

Total 27,075 –3,336 15,274 –8,936 �0,0��

116

6.2� Trade, income tax and other payables

Trade and other payables 31 December 2006 31 December 2005

Suppliers and subcontractors 492,429 369,902

Pension obligations 3,663 3,039

Invoices to be received on projects 58,561 66,833

Liabilities regarding investigation building industry, etc. 2,651 25,623

Employee costs 39,076 38,760

Turnover tax payable 27,931 24,408

Wage tax and social security contributions 17,523 18,163

Other taxes payable 12 628

Other payables 80,530 77,767

Total trade and other payables �22,��6 625,123

Income tax payables

Income tax liability 24,401 30,596

The income tax liability relates to outstanding income tax payments for financial years that have not yet been closed and is in

addition to income tax assessments already paid.

Provision for restructuring costs

The provision for restructuring costs are related to the Hijbeek (Property Development) business unit. The Hijbeek business unit

will be integrated into other Heijmans companies in the region for efficiency reasons.

Provision for environmental risks

This provision represents possible site restoration costs. On the basis of government regulations concerning the manner of soil

restoration and investigation, the costs of restoration have been estimated on a per site basis. The periods within which

restoration needs to take place varies by site. The largest portion of the provision is for a site for which a restoration obligation

exists for the year 2015. In the event that the restoration only has to take place after a few years, there is an obligation to

monitor the pollution. The expected monitoring costs have also been included in the provision.

Other provisions

The other provisions relate, among other things, to amounts to be paid to tax authorities (€ 3.7 million) in connection with

VAT/BUA and the costs incurred for redundancy schemes (€ 2.8 million). Furthermore, the provision includes an amount

(€ 1.3 million) for legal disputes. The balance primarily consists of expenses incurred in relation to disability.

11�

6.26 Financial instruments

Heijmans is exposed to various financial risks, including credit, currency and interest rate risks, in the normal course of business.

Credit risks

Credit policies are applied on a divisional basis within Heijmans. Credit risk related to property development is extremely

limited, since the potential residents can only take possession of their new home in the event that all commitments have been

fulfilled. In transactions involving development of commercial property the creditworthiness is, if applicable, assessed and

additional securities could be required.

An assessment of the creditworthiness of the counterparty is a standard procedure within the Construction, Infrastructure and

International divisions. The credit risk is limited by prefinancing and advance payment schemes. In the event considered

necessary, risks are insured. The cover of such credit insurance policies is 90%.

The Group’s cash and cash equivalents are deposited with various banks, all with a more than sufficient credit rating.

In view of the large number of clients and the significant proportion of private individuals herein, there is no question of a

concentration of credit risks.

Exchange risks

The exchange risks on sales, purchases and loans taken is extremely limited for Heijmans, since by far the greatest part of the

cash flows within the enterprise are in euros.

Heijmans has interests in countries that do not form part of the Eurozone. The interest in the British subsidiary Leadbitter is the

most significant of these. The foreign exchange translation risk is limited, however, since the revenues and layouts are in the

same currency (GBP). The related translation risk is not hedged.

Interest risk

The interest policy at Heijmans N.V. is directed towards limiting the impact of changes in interest rates on the results of the

company. To that effect the future interest payments on the existing group financing have been fixed by interest rate swaps for

the full period of the related financing. A very small portion of the future interest payments on project financing has also been

fixed by interest rate swaps. The decision to enter into interest rate swaps is dependent on the duration and magnitude of the

related project.

Other financial risks

In 2006, Heijmans concluded a bitumen swap for one of its road construction projects to cover the risk of rising oil prices.

11�

Analysis of repricing dates

The table below identifies the period in which interest-bearing financial assets and financial liabilities are repriced:

�1 December 2006

Total

0-6

Months

6-12

Months 1-2 Years 2-5 Years > 5 Years

6.19 Cash and cash equivalents 192,930 192,930 0 0 0 0 6.22 Preference shares –66,100 0 0 0 –66,100 0 6.22 Bank loans –189,155 –10,735 –1,160 –960 –176,300 0

Effect of interest rate swaps

on bank loans 0 175,000 0 0 –175,000 0 6.22 Project financing –218,335 –131,519 –8,871 –18,037 –24,052 –35,856

Effect of interest rate swaps

on project financing 0 0 0 0 0 0 6.22 Other non-current liabilities –37,202 –37,202 0 0 0 0 6.22 Financial lease liabilities –10,176 –675 –661 –1,026 –2,067 –5,747 6.22 Bank overdrafts –169,369 –169,369 0 0 0 0

31 December 2005

Total

0-6

Months

6-12

Months 1-2 Years 2-5 Years > 5 Years

6.19 Cash and cash equivalents 173,178 173,178 0 0 0 0 6.22 Preference shares –66,100 0 0 0 –66,100 0 6.22 Bank loans –119,895 –102,570 –3,370 –6,130 –7,825 0

Effect of interest rate swaps

on bank loans 0 77,750 –23,750 –27,000 –27,000 0 6.22 Project financing –222,048 –118,942 –12,124 –17,332 –35,209 –38,441

Effect of interest rate swaps

on project financing 0 6,250 0 –6,250 0 0 6.22 Other non-current liabilities –38,651 –38,651 0 0 0 0 6.22 Financial lease liabilities –8,548 –1,165 –618 –996 –1,987 –3,782 6.22 Bank overdrafts –120,723 –120,723 0 0 0 0

11�

Fair value

The table below shows the fair values of the interest rate swaps and the other financial instruments to the extent that they differ

from the carrying amounts.

Carrying

Amount 2006

Fair Value

2006

Carrying

Amount 2005

Fair Value

2005

Interest rate swaps:

Assets 4,928 4,928 1,208 1,208

Liabilities 0 0 –1,393 –1,393

Bitumen swap –183 –183 – –

Preference shares –66,100 –67,972 –66,100 –67,899

Bank loans –189,155 –189,090 –119,895 –119,869

Project financing –218,335 –214,782 –222,048 –223,350

Other non-current liabilities –37,202 –37,201 –38,651 –39,132

Financial lease liabilities –10,176 –9,967 –8,548 –8,646

–�16,22� –�1�,26� –455,427 –459,081

Unrecognized gain(-)/loss(+) –1,956 3,654

Estimation of fair values

The following summarizes the key methods and assumptions used on estimating the fair value of financial instruments

reflected in the table:

Interest rate swaps

The value of interest rate swaps is based on valuation models that assume discounted cash flows. The discount rate adopted is

based on the interest rate swap curve at 31 December 2006.

On application of present value techniques, the discount rate adopted represents the market rate at the balance sheet date.

The cash flows related to the interest rate swaps are expected to be generated in the period 2007-2011.

Other forms of financing

The fair value of preference shares, bank loans, project financing, other non-current liabilities and financial lease liabilities is

estimated as the present value of future cash flows, discounted using the interest rate swap curve at 31 December 2006 plus a

constant assumed interest spread.

120

6.2� Contingent liabilities

Contingent liabilities are possible liabilities resulting from events prior to balance sheet date. These concern possible liabilities

because the outflow of economic benefits is dependent on the occurrence of an uncertain event in the future.

The bank guarantees have been provided to clients in connection with the execution of projects. Group guarantees have been

provided to clients in connection with the execution of projects as well as in favour of credit institutions in connection with the

guarantees for credit facilities provided to joint ventures by Heijmans N.V.

31 December 2006 31 December 2005

Contingent liabilities

Bank guarantees 304,390 319,539

Group guarantees to clients 265,048 183,919

Group guarantees to credit institutions 49,692 67,098

Total 61�,1�0 570,556

Other contingent liabilities at year-end 2006 (€ 327 million) primarily relate to commitments to acquire land when the

building permit is received and/or a predetermined sales percentage has been achieved. As security for these commitments,

group guarantees have been issued valued at € 9 million (included in the € 265 million).

Bitumen swap

The market value of the bitumen swap at the end of 2006 is based on the quotes provided by the financial institution.

Changes in market value are directly recognized in the operating results.

The bitumen swap was acquired to avoid the negative impact of bitumen (a key raw material in the production of asphalt) price

increases on the A2 Eindhoven Ring Road project results. There is no public futures market to hedge the price of bitumen.

The hedging transaction estimates the market price of bitumen by valuating its composite elements, i.e. heavy fuel oil and

diesel. If the price of these elements goes up, the value of this derivative will increase.

121

6.2� Rental and operating lease agreements

31 December 2006 31 December 2005

Rental agreements

Instalments due within 1 year 12,240 10,315

Instalments due within 1 to 5 years 42,437 31,399

Instalments due after 5 years 30,822 33,222

Total ��,��� 74,936

Operating lease agreements

Instalments due within 1 year 25,109 25,314

Instalments due within 1 to 5 years 45,372 40,887

Instalments due after 5 years 641 2,531

Total �1,122 68,732

An amount of € 26 million (2005: € 22 million) has been recognized as a charge in the income statement in 2006.

The lease commitments primarily relate to future instalments on leases for vehicles, equipment and computers.

The rental commitments are for the rental of company buildings.

The Dutch divisions lease approximately 3,100 rental cars (163 trucks and 2,900 passenger cars and minivans) on the basis of

an operating contract. The framework agreement with the leasing company includes an exclusivity clause. The term of the

agreement is 5 years and ends on November 14, 2007. The separate agreements signed under the framework agreement have

terms that vary from 24 months to 96 months. These agreements can only be dissolved by compensating the lease company’s

carrying amount and loss of profit. The agreements can be extended at the end of the original term in consultation with the

leasing company.

In 2006, Heijmans concluded a contract with Atos Origin for its operational IT services in the Netherlands and Belgium.

This includes network and system management activities, data centre services and the provision of hardware to more than

4,000 computer users. The contract runs from 1 April 2006 to 31 March 2011, i.e. for a total of five years. The amounts of the

contract (related to hardware) are recorded above under operating lease agreements. Heijmans can only terminate the contract

earlier by making a lump sum payment.

122

6.2� Capital commitments

Capital commitments 31 December 2006 31 December 2005

Contractual commitments for:

• the acquisition of property, plant and equipment 5,897 5,417

• the acquisition of land 111,104 170,182

11�,001 175,599

Group guarantees to an amount of € 34 million have been provided as security for the capital commitments. Of the capital

commitments, € 67 million relates to capital commitments undertaken by joint ventures in which Heijmans participates.

The amount indicated is Heijmans share of the commitments undertaken by the joint ventures. The 2005 capital commitments

concerning the acquisition of land have been restated for purposes of comparison.

6.�0 Related parties

The related parties of Heijmans can be grouped as: the subsidiaries, the associated companies, the joint ventures, the company

pension funds, the members of the Board of Supervisory Directors and the members of the Executive Board.

Transactions with subsidiaries, associated companies and joint ventures

Heijmans undertakes a few operating activities together with related parties through joint ventures. Significant transactions in

this context are the contribution of land positions in joint ventures and/or the financing thereof. In addition, large and complex

projects are carried out in cooperation with other companies. These transactions are conducted at arms length on conditions

that are comparable to transactions with third parties.

Company pension funds

Heijmans is associated with three company pension funds and their management. The three funds are Stichting Pensioenfonds

Heijmans N.V., Stichting Pensioenfonds IBC and the Stichting Pensioenfonds for the Heijmans N.V. Executive Board. The key

function of these company pension funds is to execute the pension schemes for Heijmans’ (former) employees and retired

personnel.

In 2006, approximately € 14 million in pension premiums have been paid by Heijmans to the company pension funds specified

above.

Management remuneration

Remuneration of the members of the Board of Supervisory Directors

None of the members of the Board of Supervisory Directors holds Heijmans N.V. depositary receipts for shares. Neither have any

options or depositary receipts for shares been allocated to them. All Supervisory Directors receive a fixed annual fee that is not

dependent on the results in any one year. They also receive a fixed expense allowance. None of the Supervisory Directors has

any other business links to Heijmans from which he could derive personal benefit. Heijmans discourages share ownership by

the members of its Board of Supervisory Directors in order to guarantee optimal independent performance.

12�

In 2006 and 2005 respectively, the members of the Board of Supervisory Directors received the following fees:

in € 2006 2005

J.L. Brentjens - Chairman 52,723 52,723

J.L.M. Bartelds, Registered Accountant (RA) 37,723 37,723

J.C. Blankert 37,723 37,723

Prof. N.H. Douben 32,723 32,723

Prof. T.J. Peeters 37,723 37,723

Remuneration of the members of the Executive Board

In 2006, € 2,626,927 (2005: € 2,571,959) was charged to the income statement in respect of the current members of the

Executive Board for:

• gross fixed remuneration;

• gross variable remuneration awarded over the financial year; and

• pension benefits.

The composition per member and per remuneration component is as follows:

in €

Gross Fixed

Remuneration

Gross Variable

Remuneration Pension Burden

2006 2005 2006 2005 2006 2005

G.H. Hoefsloot - Chairman 424,984 410,065 403,735 369,059 207,354 237,661

J.A.J.M. van den Hoven 354,145 340,682 336,438 306,614 100,273 115,326

D.A.M. van der Kroft 354,145 340,682 336,438 306,614 109,415 145,256

Total 1,133,274 1,091,429 1,076,611 982,287 417,042 498,243

12�

The gross fixed remuneration was increased by 4% on 1 January 2006. This increase means that the gross fixed remuneration

for 2006 and 2007 has been established. In addition, the “at target” variable remuneration level for 2006 and 2007 has been

increased by 7%. These revisions are the result of the biennial review of the assumptions underlying the established

remuneration policy.

A new remuneration policy came into force in 2004. This policy was explained in detail in the 2003 Annual Report and

approved by the Annual General Meeting of Shareholders on 5 May 2004. In the new remuneration structure, Heijmans has

chosen to include a fixed income component and a variable remuneration component that is dependent on the short-term

targets (annual bonus) and long-term targets (three-year bonus). If the short-term and long-term targets are met, the variable

remuneration amounts to 107% of the fixed remuneration. However, if performance significantly exceeds or falls well below the

agreed upon targets, the variable remuneration could amount to a maximum of 167% of the fixed remuneration or be reduced to

zero. If the targets are met, 67% of the total variable remuneration will comprise the annual bonus and 40% will make up the

recurring three-year bonus. The new remuneration package takes into account the termination of the management share

participation plan in 2003.

The awarding of bonuses is linked to clearly measurable criteria. 70% of the annual bonus depends on the annual profit and

return targets. The remaining 30% is also subject to clearly measurable targets. 50% of the three-year bonus is dependent on

operating and financial targets and 50% is dependent on performance relative to other building companies and the performance

of share price.

The 2006 budgeted profit after tax was € 85 million. By applying the criteria associated with the achievement of the long and

short-term objectives, a total of 95% of the fixed remuneration was paid out as one-year and three-year bonuses.

Until 2005 inclusive, the pension scheme included an early retirement option from the age of 62 to 65 and a pension from the

age of 65. The early retirement option is based on the gross fixed remuneration, including the gross variable remuneration.

The pension from the age of 65 is based on the gross fixed remuneration, for the most part based on the final salary system for

the build up of entitlements, as well as a supplementary pension build-up scheme of which the gross variable remuneration

forms a part and in which entitlements are built up over actual years of service spent as a member of the Executive Board (no

back-service commitments).

The pension regulations were adjusted in 2006 to adhere to the Dutch Early Retirement (Adjustment of Tax Treatment) and

Life-Course Savings Scheme Act (Wet VPL) provisions concerning early retirement and self-funded leave. As a result of these

provisions, early retirement pension schemes are no longer tax-deductible. The changed provisions relate to the build-up of early

retirement pensions for the ages of 62 to 65 starting in 2006. This is offset by a higher build-up of pension benefits for pensions

taken from age 65 onwards.

This change is actuarially neutral, which means that there are practically no financial advantages or disadvantages arising

from these changes for the company or the members of the Executive Board.

The pension charge is calculated on the basis of accounting policy 22.

12�

Remuneration of previous members of the Executive Board

A termination compensation was awarded to Mr A.H.J.M. Stuifzand in the amount of € 2,021,481, which will be paid in 2007.

This compensation is a result of the arrangements made during his term as a member of the Executive Board. The above-

mentioned allowance is recognized as a charge against the 2006 operating profit.

A fixed gross remuneration in the amount of € 301,740 was paid to Mr H.A.J. Bemelmans, Chairman of the Executive Board up

to 8 May 2003, in 2005. Furthermore, an additional pension charge in the amount of € 670,927 is recognized.

The gross fixed remuneration for Mr Bemelmans includes payments related to the early pension plan up to age 62.

These payments were terminated on 1 January 2006 in view of Mr Bemelmans’ retirement.

Number of shares held at 31 December 2006 2005

G.H. Hoefsloot 7,000 7,000

J.A.J.M. van den Hoven 0 0

D.A.M. van der Kroft 0 0

Total 7,000 7,000

Property, plant and equipment 2 million

Financial fixed assets 1 million

Inventories (including construction work in progress) and trade receivables 44 million

Cash and cash equivalents 30 million

Non-current liabilities 6 million

Current liabilities (including construction work in progress) 56 million

6.�1 Subsequent events

Burgers Ergon

Final agreement was reached between Burgers Ergon and Heijmans on 10 January 2007 concerning the acquisition of their

technical contractor operations. The acquisition price is € 70 million. The acquisition expenses amount to approximately

€ 0.2 million.

The significant categories of assets and liabilities on the takeover date are provisionally stated as follows in accordance with the

IFRS (in millions):

The following individual categories of intangible fixed assets have been defined provisionally: brand name, order book and

customer relationships.

The current members of the Executive Board held a total of 7,000 depositary receipts for Heijmans shares at the end of 2006

(2005: 7,000). These depositary receipts are personally owned by the members. The ownership of depositary receipts for

Heijmans shares held by individual members at the end of 2006 and 2005, respectively, was as follows:

126

6.�2 Management accounting estimates and judgements

Supplementary to the estimates already explained in the accounting policies, the key sources of estimation uncertainty are

explained below.

Provisions for losses on projects

Provisions for losses on projects are formed at the point in time when it is apparent that the project costs shall exceed the

revenues. Periodic assessments are made of each project by the project manager and the management of the respective unit.

This assessment takes place on the basis of the information in the project files, the project accounting records and the

knowledge and experience of the persons involved. It is inherent to such a process that estimations have to be made that

subsequently may appear to be at variance with the actuals. This is particularly true in the case of long-term projects which

include a high proportion of customization. Experience furthermore shows that estimates made in the past have in general been

sufficiently reliable.

Claims for projects

Claims submitted to clients are recognized if negotiations on the claims with the client have reached such a stage that it is

probable that the client will accept the claim for payment and that the amount which is considered probable for acceptance by

the client can be reasonably estimated. For claims made and penalties imposed by contractors against Heijmans, for example as

a result of exceeding construction schedules, similar considerations apply.

Bonuses from projects

Bonuses are recognized as revenues from projects in progress in the event that the project is far enough advanced and that it

is probable that the performance indicators specified will be met or exceeded, and that the bonus amount can be reasonably

estimated.

Pensions

The key actuarial assumptions for the calculation of the pension obligations are outlined in 6.23.

Property investments

Refer to 6.12 for the key assumptions in the determination of the fair value of property investments.

Oevermann

On 15 January 2007 Oevermann GmbH & Co. KG and Heijmans reached agreement concerning a transfer of assets and

liabilities. This acquisition relates to the assets and liabilities of Oevermann Verkehrswegebau GmbH, Oevermann Hochbau

West GmbH & Co. KG and Oevermann GmbH & Co. KG. In addition, 100% of the CMG GmbH & Co. KG shares were acquired.

The cost of the business units to be taken over is € 14.5 million.

In relation to the takeover of Oevermann’s operations, it is currently not possible to determine to what extent intangible assets

exist. This assessment will take place during 2007 in relation to the conversion to the IFRS accounting principles and the

recalculation of fair market value.

12�

Important group entities

The entities listed below (proportionate to the Heijmans share) are involved in the 2006 consolidation. For practical reasons,

insignificant subsidiaries are not shown in this list. A summary of all participations that are part of the consolidation is recorded

in the Trade Register at the office of the Chamber of Commerce in Eindhoven.

7. GROUP ENTITIES

Heijmans Nederland B.V., Rosmalen �1 December 2006

Heijmans Vastgoed B.V., Rosmalen

Heijmans Vastgoed Participaties B.V., Rosmalen 100%

Heijmans Vastgoed Realisatie B.V., Rosmalen 100%

Hijbeek B.V., Zwijndrecht 100%

IJsselbouw B.V., Capelle aan den IJssel 100%

Walcherse Bouwunie B.V., Grijpskerke 100%

Vos & Teeuwissen B.V., Huizen 100%

Proper-Stok Groep B.V., Rotterdam 100%

Rond De Admirant C.V., Best 50%

KBC C.V., Eindhoven 50%

Heijmans Trebbe Vastgoedontwikkeling V.O.F., Capelle aan de IJssel 50%

Grondbank Meerstad Groningen C.V., Groningen 25%

Zuidplaspolder C.V., Utrecht 20%

Ontwikkel Bedrijf Vathorst C.V., Amersfoort 17%

GEM Waalsprong C.V., Nijmegen 8%

Heijmans Bouw B.V., Rosmalen

Heijmans Bouw Almere B.V., Almere 100%

Heijmans Bouw Amersfoort B.V., Amersfoort 100%

Heijmans Bouw Amsterdam B.V., Schiphol 100%

Heijmans Bouw Arnhem B.V., Arnhem 100%

Heijmans Bouw Assen B.V., Assen 100%

Heijmans Bouw Best B.V., Best 100%

Heijmans Bouw Breda B.V., Breda 100%

Heijmans Bouw Drachten B.V., Drachten 100%

Heijmans Bouw Leiderdorp B.V., Leiderdorp 100%

Heijmans Bouw Rotterdam B.V., Rotterdam 100%

Heijmans Bouw Utrecht B.V., Nieuwegein 100%

BBF Bouwbedrijf Friesland B.V., Leeuwarden 100%

H.W. Reukers Beheer B.V., Groenlo 100%

Witbrant V.O.F., Breda 50%

De Hofdame V.O.F., Zoetermeer 50%

12�

Heijmans Nederland B.V., Rosmalen �1 December 2006

Heijmans Infrastructuur B.V., Rosmalen

Heijmans Infra Advies en Ontwikkeling B.V., Rosmalen 100%

Heijmans Industrieservice B.V., Rosmalen 100%

Heijmans Infra Techniek B.V., Rosmalen 100%

Heijmans Speciale Technieken B.V., Opijnen 100%

Heijmans Technische Infra B.V., ’s-Hertogenbosch 100%

Heijmans Techniek en Mobiliteit B.V., ’s-Hertogenbosch 100%

Wegenbouwmaatschappij J. Heijmans B.V., Rosmalen 100%

Heijmans Beton- en Waterbouw B.V., Zaltbommel 100%

Heijmans Sport en Groen B.V., Arnhem 100%

Borchwerf II C.V., Oud Gastel 50%

Combinatie Harnaschpolder V.O.F., Zaltbommel 50%

Combinatie HSL 5 KW V.O.F., Prinsenbeek 50%

Combinatie HSL 5 V.O.F., Prinsenbeek 41%

Combinatie HSL Brabant-Zuid wegenbouw V.O.F., Prinsenbeek 33%

Combinatie HSL 3 ZH Midden V.O.F., Rotterdam 21%

Heijmans Facilitair Bedrijf B.V., Rosmalen 100%

Heijmans Materieel Beheer B.V., Rosmalen 100%

Heijmans Vastgoedexploitatie B.V., Rosmalen 100%

Other

Heijmans Bestcon B.V., Best 100%

Heijmans @ventures B.V., Rosmalen 100%

Heijmans International B.V., Rosmalen

Heijmans België B.V., Rosmalen 100%

Heijmans (B) N.V., Zaventem 100%

Heijmans Infra N.V., Schelle 100%

De Coene Construct N.V., Kortrijk 100%

Van den Berg N.V., Wijnegem 100%

Heijmans Vastgoed N.V., Zaventem 100%

Himmos N.V., Antwerpen 100%

Heijmans Bouw N.V., Beringen 100%

Heijmans UK Ltd., Londen 100%

J.B. Leadbitter & Co Ltd., Abingdon 100%

Denne Construction Ltd., Canterbury 100%

12�

Heijmans International B.V., Rosmalen �1 December 2006

Heijmans Deutschland B.V., Rosmalen 100%

Heijmans Bau GmbH., Goch 100%

Franki Grundbau GmbH & Co. KG., Seevetal 100%

Heitkamp Rail GmbH, Herne 100%

1�0

�.1 General

The Company financial statements are part of the 2006 financial statements of Heijmans N.V.

With regard to the separate income statement of Heijmans N.V., use has been made of the exemption pursuant to Article 402 of

Book 2 of the Dutch Civil Code.

�.2 Accounting principles for the valuation of assets and liabilities and the determination of results

For setting the principles for the recognition and measurement of assets and liabilities and the determination of the result for its

separate financial statements, Heijmans N.V. makes use of the option provided in Article 362, paragraph 8, of Book 2 of the

Dutch Civil Code. This means that the principles applied for the recognition and measurement of assets and liabilities and the

determination of the result (accounting policies) of the Company financial statements of Heijmans N.V. are the same as the

accounting policies applied for the consolidated EU-IFRS financial statements. Participating interests over which significant

control is exercised are stated on the basis of the equity method.

The share in the result of participating interests consists of the share of Heijmans N.V. in the result of these participating

interests. Results on transactions where the transfer of assets and liabilities between Heijmans N.V. and its participating

interests, and mutually between participating interests themselves, are not included insofar as they can be deemed to be

unrealized.

8. COMPANY FINANCIAL STATEMENTS

x € 1,000

�.� Company income statement for the year 2006

2006 2005

Share in results of participations 79,766 93,886

Other income and expenses after tax 2,774 –6,823

Profit after tax �2,��0 87,063

1�1

Liabilities 31 December 2006 31 December 2005

Equity

Issued capital 722 722

Share premium reserve 122,331 122,331

Revaluation reserve 0 780

Translation reserve 190 –452

Hedging reserve 3,726 –11

Other reserves 232,334 178,719

Result for the current financial year 82,540 87,063

��1,��� 389,152

Non-current liabilities 248,361 130,871

Current liabilities 435,209 512,420

1,12�,�1� 1,032,443

�.� Company balance sheet at �1 December 2006 (before profit appropriation proposal)

Assets 31 December 2006 31 December 2005

Non-current assets

Intangible assets 47,707 51,433

Financial fixed assets 219,942 142,358

26�,6�� 193,791

Current assets

Receivables 856,081 787,058

Cash and cash equivalents 1,683 51,594

���,�6� 838,652

1,12�,�1� 1,032,443

1�2

�.� Notes to the Company financial statements

Intangible assets 2006 2005

Balance at 1 January 51,433 57,133

Adjustments to prior year acquisitions –3,726 0

Sale of participation 0 –5,700

Balance at �1 December ��,�0� 51,433

Financial fixed assets 2006 2005

Participation in group companies

Balance at 1 January 133,889 39,550

Share in profit after tax of participations 79,766 93,886

Other movements 1,287 453

Balance at 31 December 21�,��2 133,889

Long-term receivables from group companies

Balance at 1 January 8,469 30,038

Loans granted 0 970

Redemptions –3,469 –22,539

Balance at 31 December �,000 8,469

Total financial fixed assets 21�,��2 142,358

Participations in group companies are direct or indirect interests in group companies. The most important group companies

are listed on page 131.

Receivables 31 December 2006 31 December 2005

Group companies 820,040 757,120

Taxes and social security 29,382 27,255

Other receivables 6,659 2,683

��6,0�1 787,058

The receivables fall due within one year.

1��

Equity

200�

Issued and

called

capital

Share

premium

reserve

Revaluation

reserve

Translation

reserve

Hedging

reserve

Retained

earnings

Profit after tax

for the Year Total equity

Balance at 1 January 673 75,475 0 –806 0 168,777 40,090 284,209

Impact of first application

of IAS 32/39

at 1 Jan 2005 0 0 0 0 –533 0 0 –533

Proceeds of issue of

ordinary shares 49 46,856 0 0 0 0 0 46,905

Appropriation

of 2004 profit 0 0 0 0 0 40,090 –40,090 0

Dividend paid

on ordinary shares 0 0 0 0 0 –29,368 0 –29,368

Total recognized income

and expense 0 0 780 354 522 –780 87,063 87,939

Balance at 31 December 722 122,331 780 –452 –11 178,719 87,063 389,152

2006

Issued and

called

capital

Share

premium

reserve

Revaluation

reserve

Translation

reserve

Hedging

reserve

Retained

earnings

Profit after tax

for the Year Total equity

Balance at 1 January 722 122,331 780 –452 –11 178,719 87,063 389,152

Reclassification 0 0 –780 0 –677 1,457 0 0

Appropriation of 2005

profit 0 0 0 0 0 87,063 –87,063 0

Dividend paid on

ordinary shares 0 0 0 0 0 –34,905 0 –34,905

Total recognized income

and expense 0 0 0 642 4,414 0 82,540 87,596

Balance at �1 December �22 122,��1 0 1�0 �,�26 2�2,��� �2,��0 ��1,���

1��

The company is required to form from its retained earnings a legal reserve with respect to the profits and/or reserves of

participating interests for which Heijmans N.V. cannot effect payment, for example because it does not exercise control (in case

of minority participating interests and joint ventures). Payment of the company’s profits and/or reserves may also be limited,

for example due to local laws and regulations. Part 9, Chapter 6, Article 389, paragraph 6 of Book 2 of the Dutch Civil Code

stipulates that in such situations a legal reserve for participating interests must be recorded. The information required to

determine this legal reserve is currently unavailable.

Authorized share capital

The authorized share capital breaks down as follows:

in € 31 December 2006

40,000,000 ordinary shares each with a face value of € 0,03 1,200,000

10,000,000 cumulative preference B shares each with a face value of € 0.03 300,000

1,000,000 preference shares each with a face value of € 1.50 1,500,000

�,000,000

At 31 December 2006, the number of issued ordinary shares was 24,072,584. Ordinary shares have been certified.

Holders of depositary receipts have the option to decertify these shares under certain conditions. This option was exercised for

420 depositary receipts. The holders of (depository receipts for) ordinary shares are entitled to dividends and have the right to

exercise one vote per share at the meeting of the company’s shareholders.

Proposed appropriation of profit

With the approval of the Board of Supervisory Directors, it is proposed that € 82.5 of the profit for the year 2006 of € 47.6 million

be transferred to reserves in accordance with Article 39, paragraph 6 of the Articles of Association. The balance of the profit

amounting to approx. € 34.9 million is, in accordance with Article 39 paragraph 6, at the disposal of the General Meeting of

Shareholders. It is proposed that a cash dividend of € 1.45 per (depositary receipt for) ordinary Heijmans share be distributed for

the year 2006 (2005: € 1.45).

Proposal for appropriation of profits (€ millions) 2006 2005

Dividend on (depositary receipt for) ordinary shares 34.9 34.9

Transfer to reserves 47.6 52.2

Profit after taxes �2.� 87.1

1��

Liabilities 31 December 2006 31 December 2005

Non-current liabilities

Redeemable preference shares 66,100 66,100

Non-current loans from credit institutions 180,565 64,305

Deferred tax liabilities 1,696 466

2��,�61 130,871

Current liabilities

Current portion of non-current liabilities 4,740 50,490

Credit institutions 110,183 94,741

Group entities 311,376 357,119

Dividends payable on preference shares 4,503 4,503

Trade payables 0 1,106

Other payables 4,407 4,461

���,20� 512,420

�.6 Commitments not shown on the balance sheet

Contingent liabilities 31 December 2006 31 December 2005

Parent company guarantees to clients 265,048 183,919

Parent company guarantees to credit institutions 145,097 71,443

�10,1�� 2��,�62

At year-end 2006, the guarantees provided on behalf of consolidated entities amounted to approx. € 410.1 million (at year-end

2005: approx. € 255.4 million). No guarantees have been provided on behalf of non-consolidated participations.

Joint and several liability and guarantees

With the exception of Heijmans Deutschland B.V. and Oosterveem Beheer B.V., a statement of joint and several liability as

referred to under Article 403, paragraph 1, subparagraph f, of Book 2 of the Dutch Civil Code has been filed in the commercial

registers of the Chambers of Commerce concerned for all Dutch group companies listed under Section 7 Group entities.

Tax entity

Heijmans N.V. is the fiscal parent of the Dutch tax entities formed for the purposes of corporate income taxes and turnover tax

and is therefore jointly and severally liable for the tax liabilities of these tax entities.

1�6

Other facts

2006

1��

PROVISIONS IN THE ARTICLES OF ASSOCIATION CONCERNING

PROFIT APPROPRIATION

According to Article 39 of the articles of association, the profit

must be appropriated as follows:

1. Subject to the approval of the Supervisory Board, the

Executive Board allocates as much of the profit to the

reserves as it deems necessary.

2. To the extent that the profit is not allocated to the reserves,

it is at the disposal of the General Meeting of Shareholders,

either for allocation in full or in part to the reserves or for

distribution in full or in part to the holders of ordinary

shares in proportion to the amount of ordinary shares each

holds.

1��

To: The Annual General Meeting of Shareholders of Heijmans N.V.

AUDITOR’S REPORT

Report on the financial statements

We have audited the financial statements for the year ended

31 December 2006, as taken up on pages 64 to 135 of

Heijmans N.V., ’s-Hertogenbosch. The financial statements

consist of the consolidated financial statements and the

company financial statements. The consolidated financial

statements comprise the consolidated balance sheet as at

31 December 2006, profit and loss account, statement of

recognized income and expense and cash flow statement for

the year then ended, and a summary of significant accounting

policies and other explanatory notes. The company financial

statements comprise the company balance sheet as at

31 December 2006, the company profit and loss account for

the year then ended and the notes.

Management’s responsibility

Management is responsible for the preparation and fair

presentation of the financial statements in accordance with

International Financial Reporting Standards as adopted by

the European Union and with Part 9 of Book 2 of the

Netherlands Civil Code, and for the preparation of the

Directors’ report in accordance with Part 9 of Book 2 of the

Netherlands Civil Code. This responsibility includes:

designing, implementing and maintaining internal control

relevant to the preparation and fair presentation of the

financial statements that are free from material misstatement,

whether due to fraud or error; selecting and applying

appropriate accounting policies; and making accounting

estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial

statements based on our audit. We conducted our audit in

accordance with Dutch law. This law requires that we comply

with ethical requirements and plan and perform the audit to

obtain reasonable assurance whether the financial statements

are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material

misstatement of the financial statements, whether due to

fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation

and fair presentation of the financial statements in order to

design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of

accounting estimates made by management, as well as

evaluating the overall presentation of the financial

statements.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit

opinion

Opinion with respect to the consolidated financial

statements

In our opinion, the consolidated financial statements give a

true and fair view of the financial position of Heijmans N.V.

as at 31 December 2006, and of its result and its cash flow for

the year then ended in accordance with International

Financial Reporting Standards as adopted by the European

Union and with Part 9 of Book 2 of the Netherlands Civil Code.

1��

Opinion with respect to the company financial statements

In our opinion, the company financial statements give a true

and fair view of the financial position of Heijmans N.V. as at

31 December 2006, and of its result for the year then ended

in accordance with Part 9 of Book 2 of the Netherlands Civil

Code.

Report on other legal and regulatory requirements

Pursuant to the legal requirement under 2:393 sub 5 part e of

the Netherlands Civil Code, we report, to the extent of our

competence, that the management board report is consistent

with the financial statements as required by 2:391 sub 4 of

the Netherlands Civil Code.

’s-Hertogenbosch, 21 February 2007

KPMG ACCOUNTANTS N.V.

D. Luthra R.A.

1�0

Other Information

2006

1�1

Declaration of Independence

Heijmans Preference Share Trust

In 2006 the right (call option) of the Heijmans Preference Share Trust to acquire preference shares in the capital of Heijmans N.V.

was extended up to a maximum of (almost) 100% of the face value of the capital then issued in ordinary and financial preference

B shares (was 50%). This extension was made possible by the proposal of the Executive Board to abolish the so-called 1% rule in

the articles of association of Heijmans N.V. and thereby end the anti-takeover mechanism provided by the issue of depositary

receipts.

Furthermore, Heijmans Preference Share Trust entered into a put option contract with Heijmans N.V. which stipulates that

Heijmans Preference Share Trust will acquire preference shares as soon as Heijmans N.V. issues them. Here too a maximum of

almost 100% of the face value of the then issued capital in ordinary and financial preference B shares applies. This put option

makes the issue of preference shares even more effective as a temporary anti-takeover measure.

These matters were explained to shareholders during the Heijmans N.V. Annual General Meeting of Shareholders on 26 April

2006. The shareholders approved the proposals.

As an extension to this, the articles of association of the Trust were also amended in 2006.

The board of the Heijmans Preference Share Trust met three times in 2006. Representatives of the Executive Board and the

Supervisory Board were also present at these meetings at the invitation of the Trust’s board.

These board meetings addressed Heijmans N.V. corporate governance (including extensive discussion of the extension of the

call option and the proposed put option contract (see above)), amendments to the articles of association, the composition of

the management team and the state of affairs at Heijmans N.V.

During the board meeting of 6 April 2006, Mr. E.J. Rongen was reappointed as a board member of the Heijmans Preference

Share Trust for a period of time ending on 31 December 2007 (due to the fact that he will reach the age of 70 in 2007).

In September 2006, Prof. H.P.J. Ophof, Chairman of the board of the Trust stood down from the Board. Mr. Ophof served as a

member of the board for more than six years, during which he was Chairman from 2003 onwards. The Executive Board and

the Trust’s board are grateful to Mr. Ophof for his contribution to and the management of the board meetings of the Trust.

Prof. M.W. den Boogert took over the chairmanship of the board of the Trust from Mr. Ophof.

During the board meeting of March 2007, Mr. R. Icke RA (1957), currently CEO of the Executive Board of USG People N.V.,

will be proposed for appointment to the board of the Trust.

1�2

The Executive Board of Heijmans N.V. and the board of Heijmans Preference Share Trust hereby state that, in their joint opinion,

the independence requirements applicable to the members of the board of Heijmans Preference Share Trust, as referred to in the

General Rules for the Euronext Amsterdam Stock Market, have been complied with.

’s-Hertogenbosch, February 2007

Heijmans N.V. Heijmans Preference Share Trust

Executive Board Board of Management

The board of Heijmans Preference Share Trust consists of Messrs:

Prof. M.W. den Boogert (Chairman)

H.H. Meijer

E.J. Rongen

1��

Heijmans Share Administration Trust

Report over the book year 2006

To fulfil the requirements in article 18, paragraph 2 of the

trust conditions for the ordinary registered shares of Heijmans

N.V., dated 9 June 2006, we report below to the holders of

depositary receipts for shares.

The board of the Trust met three times during the year under

review. To emphasize the independence of the Trust, the board

of the Trust first meets in advance without the members of the

company’s Executive Board being present. The board of the

Trust subsequently meets with the Executive Board and the

Chairman of the Supervisory Board.

On 24 February 2006, the board met to discuss an amendment

to the Trust’s articles of association and the administrative

conditions that apply to the issue of depositary receipts for

Heijmans N.V. shares. At this meeting the board decided to

harmonize the issue of receipts for depositary shares with

Principle IV.2 of the Dutch Corporate Governance Code,

under the suspensive condition that the Annual General

Meeting of Shareholders (AGM) of Heijmans N.V. on 26 April

2006, would agree to the proposal put forward by the

Heijmans N.V. Executive Board to abolish the 1% rule in the

articles of association – which limits the transfer of ordinary

shares and consequently limits voting rights – and to extend

the possibility, without the prior approval to be provided by

the AGM for the specific case in question, of issuing protective

preference shares up to 100% of the then placed capital.

Following an extensive presentation on the subject at the

Annual General Meeting of Shareholders of Heijmans N.V.,

the AGM agreed to the proposals put forward by the Heijmans

N.V. Executive Board to abolish the 1% rule and to extend the

possibility, without the prior approval to be provided by the

AGM for the specific case in question, of issuing protection

preference shares up to 100% of the then placed capital.

In this context, the articles of association of Heijmans N.V.

were amended on 9 June 2006. In addition, the articles of

association and the administrative conditions of the Heijmans

Share Administration Trust were amended by Mr. G.W.Ch.

Visser, a notary with Allen & Overy in Amsterdam, in order to

bring them in line with Principle IV.2 of the Dutch Corporate

Governance Code.

The issue of depositary receipts for Heijmans N.V. shares now

solely serves as a means to prevent that, due to absenteeism,

an (accidental) minority of shareholders at an AGM or Special

AGM can bend the decision-making process to its will.

On 12 April 2006, the board of the Trust received an explanation

of the 2005 Annual Report from the management of the

company and the agenda items for the Annual General

Meeting of Shareholders held on 26 April 2006 were discussed.

Corporate governance at Heijmans N.V. and whether or not to

hold a meeting of depositary receipt holders were among the

other topics discussed at this meeting. It was concluded that,

should a clear need for such a meeting be expressed at the

AGM and should people register for such a meeting in the

near future – and depending on the subjects raised or

submitted – the Trust’s board will then deliberate on this

subject. During this board meeting, the board bid farewell to

Mr. A.G. Jacobs who had been a member of the board since

1998. The board has had the benefit of his wealth of

experience in Corporate Netherlands for many years and

thanks him for his valuable contribution during this period.

The board was present at the above-mentioned meeting of

shareholders and voted on all agenda items that were put to

a vote, including the agenda item concerning the amendment

of the Heijmans N.V. articles of association. The chairman of

the board also responded to any questions/comments put

forward by holders of depositary receipts for shares. In this

respect, the Trust’s board reiterated its view that if there is

sufficient support from holders of depositary receipts for a

meeting of such holders to take place, the board would grant

this request.

1��

The Trust authorized depositary receipt holders who attended

the shareholders’ meeting in person to cast their vote

independently.

Of the 24,072,164 depositary receipts (for shares) issued by

the Heijmans Share Administration Trust, 6,474,379

depositary receipts (for shares) reported for the meeting/were

present with voting rights (approx. 27%).

In addition, approximately 280 holders of depositary receipts,

representing 897,892 depositary receipts (approximately 4%)

had provided voting instructions to the N.V. Algemeen

Nederlands Trustkantoor ANT.

This is due to the fact that, for the first time, Heijmans had

offered holders of depositary receipts, who were unable to

attend the shareholders meeting, the possibility (via the

Shareholders Communications channel and otherwise) to

authorize the N.V. Algemeen Nederlands Trustkantoor ANT

as a proxy and provide it with voting instructions. This trust

was appointed by Heijmans to vote in accordance with the

voting instructions received. Consequently, 69% of votes cast

on ordinary shares were represented by the Administration

Trust.

On 5 September 2006, the board met to discuss the company’s

half yearly figures. Furthermore, the board noted that, in spite

of its readiness to call a meeting of holders of depositary

receipts should there be sufficient support for this – more

than 4 months after the 26 April 2006 AGM and more than

1.5 months after the minutes of the AGM were placed on the

Heijmans website – not one holder of depositary receipts has

made a request for such a meeting and it is therefore clear

that holders of depositary receipts do not consider such a

meeting to be of value. The board therefore decided not to

issue a call for a meeting of holders of depositary receipts.

Following the close of the financial year and at the initiative

of the Trust’s board, an additional meeting took place on

9 January 2006, during which the Heijmans Executive Board

provided information about the news coverage concerning

the Heijmans trading update dated 23 November 2006.

During this meeting the Executive Board in particular

discussed the decrease in the results of the Construction

Division in the Netherlands during the third quarter of 2006.

The Executive Board also addressed the recently published

organizational changes at Heijmans.

In addition, the Trust performed tasks connected with the

administration of ordinary registered shares for which bearer

depositary receipts have been issued.

At 31 December 2006, the Trust took ordinary shares with

a face value of €722,164.92 into administration, for which

24,072,164 bearer depositary receipts at €0.03 face value

were issued. There were no movements compared to the

previous reporting year.

The work related to the administration of the shares is in the

hands of the administrator of: the office of Algemeen

Administratie- en Trustkantoor B.V., Amsterdam.

The Heijmans N.V. Annual Report 2006 no longer includes a

declaration of independence due to the fact that following the

amendment of the Heijmans N.V. articles of association the

(depositary receipts for) shares can be converted without

limitation.

1��

The board of the Trust consists of Messrs:

C.J. de Swart (Chairman)

W.M. van den Goorbergh

P.J.J.M. Swinkels

R.P. Voogd

The remuneration of the board amounts to €6,000 for each

member.

At the meeting of 12 April 2006, Mr. P.J.J.M. Swinkels was

reappointed as a member of the board for a period of

four years.

Mr. A.G. Jacobs stood down as a member of the board effective

26 April 2006, upon reaching the age limit laid down in the

articles of association. The board has decided not to fill this

vacancy for the time being.

According to the current appointment schedule, no members

are due to stand down from the board in 2007.

’s-Hertogenbosch, February 2007

The Board

Contact details for the Trust:

Heijmans N.V.

Attn: Mr. H.S.M. van Oostrom

Graafsebaan 65

5248 JT Rosmalen

1�6

Glossary

EVA

Economic Value Added

The value created by the company during a certain period based on the extent to which realized

return exceeds the required return

EIB Economic Institute for the Building Industry

Net debt Interest-bearing debts after deducting cash and cash equivalents

Netto schuld Rentedragende schulden na aftrek van de liquide middelen

NEN-EN-ISO 9001/2 Dutch environmental management standard

NEN-ISO 14001 The Netherlands Competition Authority

NMa The Netherlands Competition Authority

The NMa upholds the ban on cartels or misuse of a position of economic power and assesses

mergers and takeovers

PFI Private Financing Initiatives

PPS Public Private Partnership

VCA Safety Checklist for Contractors

WACC Weighted Average Cost of Capital

The weighted average of the required return on the shareholders’ equity (risk-free interest rate

+ market mark-up x Beta Heijmans) and borrowed capital (risk-free interest rate + risk supplement

on borrowed capital – marginal tax rate)

Invested capital Fixed assets + working capital

Working capital Current assets excluding cash and cash equivalents less non-interest-bearing liabilities

Solvency Equity expressed as a percentage of total assets

ROI

Return on average invested capital, i.e. the operating profit expressed as a percentage

of the average invested capital

WMZ Disclosure of Major Holdings in Listed Companies Act