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Financial Reports 2006

4

Implenia Ltd Industriestrasse 24 CH-8305 Dietlikon Tel. +41 44 805 45 55 Fax +41 44 805 45 56 www.implenia.com


Consolidated Financial Statements of the Implenia Group

Statutory Financial Statements of Implenia Ltd

04 Consolidated Income Statement 05 Consolidated Balance Sheet 06 Consolidated Statement of Cash Flows 07 Consolidated Statement of Changes in Equity 10 Notes to the Consolidated Financial Statements 47 Report of the Group Auditors on the Consolidated Accounts

50 Income Statement 51 Balance Sheet 52 Notes to the Statutory Financial Statements 55 Report of the Statutory Auditors

1

Unofficial translation for information only. Approved and published version is available in German.

2


General Information To facilitate reading of the 2006 Consolidated Accounts, the following table provides an overview of the changes introduced as a result of consolidation.

Implenia Consolidated Income Statement

Implenia Consolidated Balance Sheet

Implenia Consolidated Cash Flow Statement

Consolidated Statement of Changes in Equity Share of Minority Shareholders

2006 Figures As of 1.1.2006: ex Zschokke Group Reuss Group As of 3.3.2006: ex Batigroup Group Gravière de la Claie-aux-Moines SA Rocmouve SA SISAG ex Zschokke Group Reuss Group ex Batigroup Group Gravière de la Claie-aux-Moines SA Rocmouve SA SISAG Excluding Stamm Bau AG As of 1.1.2006: ex Zschokke Group Reuss Group As of 3.3.2006: ex Batigroup Group Gravière de la Claie-aux-Moines SA Rocmouve SA SISAG

2005 Figures

Zschokke Group

Zschokke Group

Zschokke Group

Implenia Group

Zschokke Group

SAPA: 25% AG für Manuelle Dienstleistungen: 46.7% Gravière de la Claie-aux-Moines SA: 33.33% Rocmouve SA: 33.33%

SAPA: 25% AG für Manuelle Dienstleistungen: 46.7%


1

Consolidated Financial Statements of the Implenia Group


4

Consolidated Income Statement (in 1000 CHF)

Group turnover Materials and sub-contractors Personnel Other operating expenses Depreciation Income from associated companies Income from other investments Operating result (EBIT)

Restated Figures

Notes

2006

2005

2

2 338 142 (1 439 239) (686 704) (158 836) (37 326) 3 294 483 19 814

1 362 089 (855 648) (384 642) (69 748) (18 144) (412) – 33 495

3 4 16, 19 17 1

Financial charges Financial income Profit before tax

5 5

(11 112) 5 337 14 039

(4 011) 4 851 34 335

Income tax expense Group result

6

(7 897) 6 142

(9 110) 25 225

5 277 865 6 142

25 190 35 25 225

CHF 0.31 CHF 0.31

CHF 2.14 CHF 2.14

Attributable to: Shareholders of Implenia Ltd (2005 Zschokke Holding AG) Minority interests Group result Earnings per share (undiluted) Earnings per share (diluted)

7 7

The notes on pages 10 to 46 are an integral part of these consolidated financial statements.

Consolidated Income Statement


Consolidated Financial Statements of the Implenia Group Consolidated Income Statement l Consolidated Balance Sheet

Consolidated Balance Sheet (in 1000 CHF) ASSETS Cash and cash equivalents Securities Trade debtors Work in progress Work partnerships Other debtors Inventories Real estate operations Prepayments and accrued income Current assets Tangible fixed assets Investments in associated companies Other financial investments Benefit plan surplus Intangible assets Deferred tax assets Non-current assets TOTAL EQUITY AND LIABILITIES Current portion of long-term borrowings, banks Trade payables Work in progress Work partnerships Other payables Current tax liabilities Accruals and deferred income Current liabilities Long-term borrowings Provision for deferred tax liabilities Provisions Non-current liabilities Share capital Reserves Retained earnings Treasury shares Result attributable to shareholders of Implenia

Restated Figures

Notes

31.12.2006

31.12.2005

8 9 10 11 12 13 14 15

107 346 686 313 670 172 168 72 615 29 984 18 310 165 077 22 994 902 850

99 437 5 430 177 867 82 895 44 877 9 142 4 517 112 141 6 564 542 870

16 17 18 24 19, 20 25

212 812 22 354 40 823 8 258 93 416 4 953 382 616 1 285 466

101 244 6 902 21 305 11 700 5 529 4 627 151 307 694 177

22, 23

81 096 134 030 511 434 9 103 36 885 4 883 89 408 866 839

44 39 210 325 565 8 275 34 312 4 880 49 156 461 442

22, 23 25 26

15 718 11 691 21 699 49 108

1 491 23 195 1 491 26 177

27

89 589 123 315 154 465 (7 319) 5 277 365 327

25 500 19 638 136 867 (1 923) 25 190 205 272

4 192 369 519 1 285 466

1 286 206 558 694 177

11 12 21 21

Minority interests Equity TOTAL The notes on pages 10 to 46 are an integral part of these consolidated financial statements.

Consolidated Balance Sheet

5


6

Consolidated Cash Flow Statement (in 1000 CHF)

Restated Figures

2006

2005

a)

14 039 37 326 8 230 2 348 256 175 (3 238) (62 558) 18 482 25 978 (48 648) (42 835) 76 949 14 294 220 – (3 451) 37 567

34 335 18 144 6 361 (18 323) (799) 500 (1 694) (2 228) (46 793) 50 097 (8 654) (48 596) 69 419 (3 979) (961) 955 (974) 46 810

16 16 32 17, 18 17, 18 19 b)

(28 832) 5 517 19 392 (22 968) 13 588 (444) (13 747)

(15 699) 1 424 – (977) 3 119 (582) (12 715)

22 22

306 887 (315 221) (104) (6 827) – (1 220) 729 (15 756)

145 000 (144 994) (123) (4 128) (2 653) (152) 1 421 (5 629)

8 064 (155) 7 909 99 437 107 346

28 466 – 28 466 70 971 99 437

Notes Operating activities Net profit before taxes Depreciation Changes in provisions Changes in value adjustment of real estate operations Profit on sale of fixed assets Changes in benefit plan adjustments Other adjustments not effecting cash and cash equivalents Changes in trade and other debtors Changes in trade and other payables Changes in work in progress/inventories Changes in work partnerships Investments in real estate operations Disposals of real estate operations Other short-term assets and liabilities Interest paid Interest received Taxes paid Net cash from operating activities Investment activities Investments in tangible fixed assets Disposals of tangible fixed assets Purchase/sale of subsidiaries Other investments in financial assets Other disposals of financial assets Investments in intangible assets Net cash from investment activities Financing activities Increase in borrowings Repayment of borrowings Minority interests (dividends paid) Dividends paid Nominal value refund Purchase of treasury shares Sale of treasury shares Net cash from financing activities

16, 19 15

15 15

c)

Net increase / (decrease) in cash and cash equivalents (a+b+c) Foreign currency translation Increase / (decrease) in cash and cash equivalents Cash and equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year

Significant non-cash transactions: Acquisition of equipment in leasing for CHF 3.8 million (2005: CHF 0 million). The notes on pages 10 to 46 are an integral part of these consolidated financial statements.

Consolidated Cash Flow Statement


Consolidated Financial Statements of the Implenia Group Consolidated Cash Flow Statement l Consolidated Statement of Changes in Equity 7

Consolidated Statement of Changes in Equity (in 1000 CHF)

Share Capital

Zschokke Holding SA / Implenia Ltd Shareholders ConsoliForeign Treasury dated Revaluation Currency Retained Shares Reserves Reserves Translation Earnings

28 200 – – – (2 700) – – 25 500

(2 470) – – 1 269 47 – – (1 154)

18 383 – – – – – – 18 383

– – – – – – – –

322 – – – – 164 – 486

(769)

769

25 500 Balance as at 1.1.2006 – Transfer of 2005 profit – Dividends paid Capital increase as at 6.03.06 64 089 (and share exchange) – Transaction costs Reverse 2005 capital gain – on Batigroup shares Value adjustment – of newly consolidated companies – Change in treasury shares – Foreign currency translation – Profit for the period 89 589 Balance as at 31.12.2006

(1 923) – –

19 152 – –

(4 905) –

Balance as at 1.1.2005 Transfer of 2004 profit Dividends paid Change in treasury shares Nominal value refund Foreign currency translation Profit for the period Balance as at 31.12.2005 Transfer

Result

Subtotal

Minority Interests

Total Equity

119 952 21 043 (4 128) – – – – 136 867

21 043 (21 043) – – – – 25 190 25 190

185 430 – (4 128) 1 269 (2 653) 164 25 190 205 272

1 374 – (123) – – – 35 1 286

186 804 – (4 251) 1 269 (2 653) 164 25 225 206 558

– – –

486 – –

136 867 25 190 (6 827)

25 190 (25 190) –

205 272 – (6 827)

1 286 – (104)

206 558 – (6 931)

100 390 (1 214)

– –

– –

– –

– –

159 574 (1 214)

6 –

159 580 (1 214)

(765)

(765)

(765)

– (491) – – (7 319)

– 1 721 – – 120 049

2 906 – – – 2 906

– – (126) – 360

– – – 154 465

– – – 5 277 5 277

2 906 1 230 (126) 5 277 365 327

2 139 – – 865 4 192

5 045 1 230 (126) 6 142 369 519

Consolidated Statement of Changes in Equity


8

Change in Treasury Shares Average Unit Price (in CHF)

Total

5 110

337 784 591 9 226

2 470 152 (1 421) (47) 1 154

5 110

150

769

5 110 (1 937)

376 376

1 923 (729)

3 173

376

1 194

Exchanged for Implenia shares

126 920

9

1 194

Implenia shares held by Zschokke Holding SA1 Implenia Ltd shares Implenia shares held by Batigroup Holding SA2 Purchases Balance as at 31.12.2006

259 681 20 700 6 573 51 200 465 074

18 5 21 24 16

4 665 100 140 1 220 7 319

Number Balance as at 1.1.2005 Purchases Disposals (profit-sharing plan) Nominal value refund Balance as at 31.12.2005 Transfer* Balance as at 1.1.2006 Disposals (profit-sharing plan) Balance as at 2.03.2006

1Implenia/Zschokke

exchange ratio = 40:1 2Implenia/Batigroup

exchange ratio = 1:1

7 319 194 (2 403)

*As of 1 January 2006, accumulated changes in fair value previously recorded in the carrying value of treasury shares was reclassified to equity so that the treasury shares are now measured at acquisition cost.

Change in Treasury Shares


Consolidated Financial Statements of the Implenia Group Change in Treasury Shares

9


10

General Presentation of the consolidated financial statements The consolidated financial statements of the Implenia Group are prepared as being those of the former Zschokke Group which, in compliance with IFRS standards, acquired Batigroup. For more information on the acquisition, please refer to note 1 Consolidation scope. The consolidated financial statements of the Implenia Group are prepared in accordance with IFRS (International Financial Reporting Standards) as defined by the International Accounting Standard Board (IASB). Changes in accounting principles The following new standards, amendments to standards and IFRS interpretations have been considered for the preparation of the 2006 Financial Report: – Amendments to IAS 19 – Employee benefits: actuarial gains and losses, group plans and disclosures – Amendment to IAS 39 – Option to designate a financial instrument at fair value – Amendment to IAS 39 – Cash flow hedge accounting of forecasted intragroup transactions – Amendment to IAS 39 and IFRS 4 – Financial guarantee contracts – Amendment to IAS 21 – Net investments in foreign operations – IFRS 6 – Exploration for and evaluation of mineral assets – IFRIC 4 Interpretation – Determining whether an arrangement contains a lease agreement – IFRIC 5 Interpretation – Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds. – IFRIC 6 Interpretation – Liabilities arising from participating in a specific market, waste electrical and electronic equipment. The impact is not significant for the consolidated accounts and/or is limited to additional disclosure. The content of other accounting principles has not been changed. However, the form of some principles has been adapted and, if appropriate, additional disclosure has been added to facilitate understanding.

Accounting Principles

Standards, interpretations and amendments to published (but not yet mandatory) standards: The following standards, amendments and interpretations have already been adopted by IASB, although their application will become mandatory only for the years starting after 1 January 2006. (Implenia decided not to early adopt those requirements). – IFRS 7 Financial instruments: Disclosures (for years starting from 1 January 2007). The new disclosure requirements have been considerably extended. They include, among other things, disclosures on financial instruments that may have an impact on the financial situation and results of the enterprise, as well as on the objectives, principles and processes of risk management in relation to financial instruments. Quantified disclosures on the risks to which the enterprise is exposed are provided on the basis of the information used by the operating management. The application of IFRS7 will have no impact on the consolidated result. – IFRS 8 Operating Segments: (for years starting from 1 January 2009). IFRS 8 replaces IAS 14 Segment Reporting. The definitions of operating segments and the reporting are based on the information used by the operating management. The application of IFRS 8 will influence the reporting by segments, but will have no impact on the consolidated result. – IFRIC 7, Applying the Restatement Approach under IAS 29 standard – Financial Reporting in Hyperinflationary Economies. (for years starting from 1 March 2006). – IFRIC 8, Scope of IFRS 2 (for years starting from 1 May 2006). – IFRIC 9, Reassessment of Embedded Derivatives (for years starting from 1 June 2006). – IFRIC 10, Interim Financial Reporting and Impairment (for years starting from 1 November 2006). – IFRIC 11, Group and Treasury Share Transactions according to IFRS 2 (for years starting from 1 March 2007). – IFRIC 12, Service Concession Arrangements (for years starting from 1 January 2008). The management has examined these new standards and interpretations and has reached the conclusion that they will have no significant impact on the presentation of the accounts of Implenia.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 11

Transactions with minority interest holders Transactions with minority interest holders are treated similarly to transactions with third parties. Sales of minority shares generate a profit or a loss in the consolidated accounts. Purchases of minority shares generate goodwill amounting to the difference between the purchase price and the corresponding net assets value of the affiliated company. Basis of consolidation The parent company of the group (Holding) is Implenia Ltd, with registered office in Dietlikon, Switzerland. The consolidated accounts are presented in thousands of Swiss francs, unless indicated otherwise. In principle, it owns directly the main subsidiaries of the Group that come within the consolidation. The details of the shareholdings held directly or indirectly by Implenia Ltd are given on pages 44 and 45 of the present annex. Valuation is based on historical cost, with the exception of certain items for which the valuation methods are described below. Subsidiaries Subsidiaries are companies in which Implenia exercises control over the financial and commercial policies. This is generally the case if Implenia holds, directly or indirectly, more than 50% of the capital or the majority of the voting rights. To determine whether control exists, the existence and impact of potential existing or convertible voting rights is considered. The accounts of these companies are prepared using consistent accounting policies as those of the group and in conformity with IFRS. The reporting year of subsidiaries is similar to the one of the parent company. All assets and liabilities as well as expenses and revenues are fully consolidated. All intra-group balances, transactions, income and expenses and profits and losses resulting from intragroup transactions that are recognised in assets and that have not yet been realised in relation to third parties (for example: inventory movements), are eliminated in full. Intra-group transactions are done at market prices. New subsidiaries are consolidated from the date of their acquisition, which corresponds to the date of taking control, using the Purchase Method of accounting, as defined by the standard IFRS 3. A company is excluded from the consolidation on the date when control ceases.

Associated Companies Associated companies are companies in which Implenia exercises a considerable influence, but not control. In principle, they are companies in which the Group holds between 20 and 50% of the capital. These entities are accounted for using the Equity Method. In the balance sheet, they are separately disclosed. The reference date for the Equity Method calculation is, in principle, the same as the year end date of the parent company. However, if some of the accounts are not available at this time, the valuation is performed on the basis of the last available financial statements, taking into consideration any changes noted since then. Associated companies are included in the consolidation using accounting and valuation principles similar to those of the group. The share of the Group in the result of associated companies is accounted for separately in the consolidated income statement. The share in losses is limited to the value of the shareholding, in so far as the Group is not committed to any liability beyond that value. Work partnerships (consortia) These are activities carried on jointly by two or more partners and are performed, in general, in the legal form of a partnership. The partners share control and share the running, resources and know-how with the aim of performing a given activity in the context of one or more contracts. The partners must make available human and material resources that are invoiced directly to the work partnership. The results achieved for works executed jointly are distributed on the basis of contractual agreements and are recorded in the context of these activities. Certain work partnerships have their own assets, acquired or contributed for the execution of the planned activity. The share of the Group in these net assets is presented as credits and debits in relation to the work partnership. The composition of the net assets of the work partnerships is presented in the notes.


12

Minority holdings The minority holdings in which Implenia does not exercise predominant control, in general shareholdings not exceeding 20%, are classified as “available for sale” and are reported in the balance sheet at their fair value, in accordance with IAS 39. Changes in the fair value are recorded in equity. These unrealised profits and losses reorded in equity are transferred to the income statement on sale of the shareholdings. The losses previously recorded in equity are also transferred to the income statement whenever a significant and lasting impairment in the value of the shareholdings is noted. Estimates and assumptions The preparation of the Group financial statements according to IFRS standards requires that a number of assumptions be formulated concerning the future, which entails a certain number of judgements and estimates that directly impact the values disclosed in the balance sheet and the income statement. These assumptions, judgements and estimates are based on experience and on factors considered relevant in the given conditions. Assumptions are subject to permanent review. Changes made in the estimates used are accounted for directly in the year when the estimate was reviewed. The categories that are especially based on assumptions and estimates and for which such estimates may generate significant adjustments to the book values during the following year are detailed below. Turnover, Works in progress and Work partnerships: the valuation of works in progress and work partnerships, and therefore also the determination of their turnover, which is done according to the “Percentageof-Completion” (PoC) Method, is based on estimates and assumptions on the income, costs and final margins of the projects in progress, as well as the income, costs and margins already realised on the balance sheet date. Goodwill: this asset is subject to an annual impairment test. Such a test requires the estimation of future cash flows, as well as the discount rate. Tangible fixed assets: depreciation is based on estimates of the useful life of the tangible fixed assets. Deferred tax assets: the valuation is based on estimates of future profits.

Judgements in the application of accounting and valuation methods Some judgements are required notably in the following cases: – Securities can be classified in various categories – In the context of the valuation of provisions for benefit plan commitments, actuarial gains and losses can be accounted for differently. – Assets that the Group considers selling must be examined to ascertain whether realisation is possible and highly probable. If these conditions are met, these assets must be reported as “held for sale” and valued accordingly. The decisions taken by Implenia in the cases that actually arose are disclosed in the comments on the accounting and valuation principles. Foreign currency translation The consolidated financial statements are presented in Swiss francs, the local and operating currency of Implenia Ltd and of most of the affiliated companies. Transactions and balances in foreign currencies Transactions in foreign currencies are converted into the operating currency at the exchange rate prevailing on the day of the transaction. Financial assets and liabilities in foreign currencies are converted at the exchange rate prevailing on the balance sheet date. The exchange rate differences resulting from the settlement of such transactions and from the translation of balance sheet items are recognised in the income statement.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 13

Translation of the accounts of subsidiaries whose accounting records are maintained in foreign currencies The assets and liabilities of balance sheets prepared in foreign currencies are converted at the rate prevailing on the balance sheet date of the parent company. The income statement is translated at the average exchange rate. The resulting exchange rate differences on the balance sheet and income statement items are posted directly to equity. The exchange rate differences related to the conversion of group loans, being in the nature of a shareholding, are also posted directly to equity. On the sale of these shareholdings, the exchange rate differences that were posted to equity are transferred to the income statement. Reporting by segments The operational organisation of the Group is based on the following main segments of activities: General contracting The activities carried on by this division include general project planning, work as general contractor and total contractor in the construction sector. Construction Works The Construction works division includes both the Industrial Works and the Infrastructure Works units. These works include road construction, special construction works, civil engineering infrastructures, tunnels, and building construction and renovation. Services Services are provided by the Group’s Real Estate division. They include studies, management and running of buildings, coordination, engineering, and project planning, as well as Facility Management. Real estate Real estate activities are integrated into the Group’s Real Estate division. They include real estate promotion activities and the implementation of projects in the real estate field.

Head office overheads and sundry expenses This category includes the costs of the parent company that cannot be assigned to a segment and the inactive affiliated companies. At the segment reporting level, this category includes the Group’s financial commitments (consortium loan) in particular. The list of affiliated companies on pages 44 and 45 shows how each company is assigned to the various segments. Because the Implenia group presently operates essentially in Switzerland, no secondary geographical segment was presented. Consolidated income statement Turnover Turnover contains all the income from the different activities of the group. Within General Enterprise and Construction divisions orders are recorded according to the Percentage of Completion Method. The income and results are recognised as a proportion of the work done in relation to the total contract value. Expected losses on the order book are included in relation to the valuation of works in progress and are recognised as a reduction in turnover. Conversely, price uplifts, supplements and bonuses are included if they have already been accepted by the customer. For work partnerships only the work done for the work partnerships and the share in the results of these work partnerships are included in the turnover. The turnover of Services is calculated on the basis of the service actually performed for the customer on the balance sheet date. For the Real estate segment, the turnover includes the result on sale of real estate operations and the income from temporary leases (pending sale). The sales are recognised when the risk is actually transferred, which, generally speaking, is at the time when ownership is transferred, with registration in the Land Register. Reductions of income such as losses on debtors, changes in provisions for unsecured debts, rebates or discounts directly related to the invoiced services are accounted for as a reduction of turnover.


14

Materials and subcontractors Materials and subcontractors include all items of cost that are directly allocated to projects and are taken into account in the calculation of the project margin. Personnel Personnel costs consists of gross salaries, social security contributions charged to the employer, as well as any other employee benefits that must be accounted for in the period concerned. Other operating expenses These are the other operating expenses that are not directly allocated to projects. Financial charges and income Financial expenses consist of the interest charged on financial commitments, foreign currency exchange losses, losses on financial instruments and losses on the revaluation or sale of financial investments. Borrowing costs directly related to a real estate operation are accounted for as part of the cost of the operation. Financial income consists of the interest income on loans granted, dividends, foreign currency exchange gains, gains on financial instruments and profits on the revaluation or sale of financial investments. Income taxes Taxes reported in the income statement consist of current taxes on profits and deferred taxes. Taxes on amounts recognised directly in equity are also posted to equity. Current taxes are estimated on the basis of the taxable result. They are calculated at the tax rates currently in force. Any differences on the tax accounts for previous years are also included in current taxes. Deferred taxes are determined on the basis of the timing differences arising between the tax bases of assets and liabilities and their carrying values (Balance Sheet Liability Method). Deferred taxes are determined based on the fiscal legislation and the tax rates in force at the balance sheet date or announced and expected to apply at the time of the realisation of the asset, or when the deferred tax liability is settled.

Deferred tax assets are recognised on the balance sheet to the extent that it is probable that future taxable profits will be available to offset the taxable losses carried forward. Deferred tax liabilities are provided on timing differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the timing difference is controlled by the Group and it is probable that the timing difference will not reverse in the foreseeable future. Earning per share Earning per share is calculated by dividing the Group result attributable to the shareholders of Implenia Ltd by the average weighted number of shares in circulation during the period concerned. To date, there are no factors that would require the calculation of a diluted result per share. Consolidated balance sheet Cash and cash equivalents Cash and cash equivalents include cash, assets held in current accounts (with the post office and banks), and deposits with a term of less than 90 days. Trade debtors The carrying value represents the amounts invoiced after deducting allowance for doubtful debts. The allowance is recognised in the income statement. Work in progress Expenses related to orders are recorded at the time they occur. If the result of an order cannot be estimated reliably, income is recorded only up to the amount of the recoverable estimated expenses. If the result of an order can be estimated reliably and if the final estimated result is a profit, the order is valued at the net selling price, according to the Percentage of Completion Method. When it appears probable that the total costs of an order will exceed the expected income, the total amount of expected loss is recognised immediately in the income statement. The percentage of completion is expressed as a percentage of the costs incurred up to the balance sheet date in relation to the total expected costs to completion of the project.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 15

Each order is valued individually, and the valuation is based on the estimated result at completion. Work in progress consists of work not yet invoiced to customers and services and work not yet invoiced by suppliers and subcontractors, as well as provisions for losses on the order book, if any (negative margins and provision for any overheads not recoverable). The valuation adjustments are determined individually project by project. The net balance, by project, of these adjustments is disclosed as an asset if it is positive, or a liability if it is negative. Work partnerships This balance sheet item includes debtors and creditors in relation to work partnerships (advances made and received, debtors and creditors on current account, share in the result not distributed). A single asset or liability is reported on the balance sheet in relation to each work partnership. Work partnerships are valued in a similar way as work in progress. Inventories Inventories are valued at the lower of cost and net realisable value at the balance sheet date (including the purchase costs but not taking into account selling costs). Inventory costs are taken to the income statement at their weighted average cost. Real estate operations The real estates classified under this heading consist of properties held for sale in the ordinary course of business and valued like “Inventories” according to IAS 2. Completed operations not yet sold, may temporarily generate rental income. They continue to be classified under this heading as they are intended to be sold. Some real estate operations are conducted jointly with one or more partners. The operations that are carried on under joint control and ownership are reported as Real estate operations in the balance sheet for the share pertaining to Implenia, but as a maximum at the value of the funds invested.

Each transaction is measured individually. The valuation is stated at the lower of the construction cost of the property and its market value estimated by the Group’s real estate specialists. The construction cost includes the borrowing costs paid to third parties until the property is ready for use or sale. Impairment resulting of the above valuation principles are deducted from the carrying value as a valuation adjustment. Net result from the sale of real estate operations and changes in the relevant valuation adjustments are included in turnover. Tangible fixed assets Tangible fixed assets are stated at their acquisition or production cost, after deducting depreciation and any impairment. Borrowing costs are capitalized only if financing has been specifically obtained for the asset. Improvement investments are capitalized only if they increase the value or if they replace a complete part of the asset and if the replaced part is derecognized from the inventory. Other expenses related to tangible fixed assets are recognised directly in the income statement. Depreciation is charged using the estimated useful life of the fixed asset. Fixed assets that are important in value are divided into significant components with different useful lives. Depreciation is recorded separately for each component according to its useful life. The main depreciation periods are as follows: – Business premises 25-50 years – Investment properties 25-50 years – Production units 15-20 years – Machinery and vehicles 06-15 years – Furniture 05-10 years – IT equipment 03-50 years The residual values and useful lives are checked every year. If the current estimate changes from previous assessment, the resulting value adjustments are recognised in the income statement in the period when the change occurs in accordance with IAS 8. Gains and losses on disposal represent the difference between the book value and the sales proceeds, if any. Tangible fixed assets are derecognised at the time of sale or when it is determined that the asset no longer represents a future economic value.


16

Leasing Lease agreements that substantially transfer to Implenia all the risks and rewards incidental to ownership are classified as finance lease. All other lease agreements are classified as operating lease. The decision as to whether a lease agreement is an operating or finance lease is made on an individual basis, according to the principles of IAS 17. Properties under finance leases are recognised on the balance sheet at the discounted value of the minimum leasing payments or if lower at market value. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Fixed assets acquired through finance leases are depreciated over their estimated useful life or over the duration of the lease agreement, if it is shorter. The charges for operating lease agreements are included in the income statement at the time of payment. Long-term investments The valuation of minority shareholdings is presented under the heading “Basis of Consolidation; Minority shareholdings”. Long-term loans and receivables are recorded initially at their fair value and subsequently measured at amortised cost, less any allowance for unrecoverable amounts. The allowance is recorded in the income statement. Intangible assets a) Licenses and software Software is recorded at purchase cost after deducting the accumulated depreciation and any impairment. Depreciation is calculated using the straight line method based on the estimated useful life, not exceeding 5 years.

b) IT Projects The costs incurred for IT projects are included on the balance sheet as intangible assets only if it is considered probable that they can be exploited commercially and are technically feasible, and the costs can be determined reliably. Other development expenses that do not satisfy these conditions are recognised in the income statement as they occur. As a maximum, the costs are capitalised for an amount corresponding to the discounted income from their future use. The development costs recognised are depreciated on a straight line basis over an estimated useful life between 3 and 6 years. Development expenses once recorded as expenses cannot be included as an asset in subsequent years. c) Goodwill In a business combination, goodwill represents the difference between the cost of acquisition and the fair value of the share in the net assets of the acquired company at the time of the acquisition. In the case of negative goodwill (if the value of the net assets exceeds the acquisition price), the amount is recognised directly in the income statement. Goodwill resulting from the acquisition of an associated company is included in the book value and is disclosed under “Investment in associated companies”. Goodwill recognised on the balance sheet is subject to impairment tests conducted annually and whenever there are indications of a potential impairment. Goodwill is stated at the acquisition cost less accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to cash generating units or groups of units that are expected to benefit from the advantages that gave rise to the goodwill. d) Trademarks Acquired trademarks are stated at their acquisition cost less accumulated depreciation. Depreciation is calculated on a straight line basis, over the estimated useful life of 1 to 5 years.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 17

e) Customer lists and order books Acquired customer lists and order books are stated at their acquisition cost less accumulated depreciation. Depreciation is calculated on a straight line basis, over the estimated useful life of 1 to 5 years. Impairment of tangible and intangible fixed assets Fixed assets are examined annually to detect any indications of a permanent reduction of value. If such indications do exist, the recoverable amount of the fixed asset is determined on the basis of an impairment test. Intangible assets with indefinite useful life (such as goodwill, for example) are systematically subject to annual impairment tests. The recoverable amount is the higher of the fair value less cost to sell, and the value in use. An impairment is charged to the income statement if the carrying value of the fixed asset or the cash generating unit exceeds the recoverable amount. With the exception of Goodwill, non monetary fixed assets whose value has been impaired previously are reviewed at each balance sheet date to determine any potential reversal of impairment. Financial liabilities Financial liabilities are initially recognised at the actual cost less transaction costs and subsequently measured by using the effective interest rate method. The difference between the amount borrowed and the amount to be repaid is recognised in the income statement over the period of the borrowing. Provisions Provisions are recognised when at the date of the financial statements: – The Group has a present legal or constructive obligation resulting from a past event; – it is probable that a transfer of economic resources will be necessary to settle the obligation; – a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, the amount of the provision is appropriately discounted.

Pension plans The employees of Group companies are affiliated to autonomous and independent pension plans. These plans are financed by regulatory contributions paid by both employers and employees. The assets of the pension plans are managed independently and are completely separated from the Group. The benefit obligations are calculated every year by an independent actuary. In relation to the application of the international accounting standard IAS 19, the Group's pension plans are considered to be defined benefit pension plans, although, according to the interpretation given in Switzerland, they are considered as mixed plans. The balance-sheet provision corresponds to the discounted value of any future defined benefit obligation (DBO) as at the balance-sheet date, after deducting the fair value of long-term assets, adjusted for the accumulated actuarial differences which fall outside of the corridor, to be depreciated over the remaining number of years of service. The liabilities are calculated periodically using the projected unit credit method by an independent actuary. The value of the liabilities is determined by discounting the expected future cash flows. The discount rate used is the market rate for top quality industrial debtors. Actuarial gains and losses due to experience adjustments and changes made in the actuarial assumptions are recognised over the expected average remaining working lives of the employees to the extent that they fall outside of the corridor at the end of the previous period. The cost of past services is recorded on a straight line basis over the average remaining working lives until the benefits corresponding to the adopted or modified scheme become due to the employees.


18

Other employee benefits Group executives benefit from a profit-sharing plan in shares. It may be considered as supplementary remuneration linked to the result of the year concerned and takes the form of a free distribution of shares or shares offered at a preferential purchase price. These benefits (the difference between the stock market value of the shares distributed and the amounts received for the shares) are reported as personnel charges. The charges related to shares that are distributed only during the following year are provided for and recognised at 100% in the year concerned, as this remuneration is not related to the future performance of the executives. The details are defined from year to year by the Board of Directors. All the employees of the Group enjoy the benefit of a profit-sharing plan in shares managed according to the regulations of the Motivation Foundation. Under the framework of this plan, the employees can acquire, once a year, a fixed number of Implenia Ltd shares at a preferential price. The difference between the stock market value of the shares distributed and the amounts received for the shares is charged to the Group units concerned and reported in the consolidated accounts as personnel expenses in the year when the shares are allocated. Equity The share capital consists of all issued registered shares. Dividends are recognised when the entitlement to their payment arises. External transaction costs related directly to the issue of share capital are deducted directly from the capital reserves. The acquisition by Implenia Ltd of treasury shares or those of the affiliated companies is recognised as a reduction of equity at the purchase cost, including transaction expenses. The income from the resale of these treasury shares is also recognised in equity.

Management of financial risks Credit risk Credit risk essentially result of the credit worthiness of the main financial assets (cash and cash equivalents, trade debtors, short and long-term financial debtors). Cash and cash equivalents consist essentially of assets in current accounts and short-term deposits with banks. Trade debtors and short and long-term financial debtors are checked regularly with regard to their credit worthiness. If necessary, impairment adjustments are recorded. Market risk Implenia is subject, like all other market companies, to the effects of general economic conditions as well as to the specific factors affecting the Swiss construction industry. These include notably the dependence on the business trend, the cyclic nature of the construction industry in general and particularly in Switzerland, the strong competition by Swiss and foreign contractors, and the risks related to private and public tenders. Foreign currency risk The Implenia Group is not exposed to a significant foreign currency exchange risk, as both purchases and sales are invoiced in the supplier's national currency. Similarly, financial loans and debts are granted or contracted in the local currency. Interest rate risk The Implenia Group is only exposed to a limited interest rate risk, as long-term financial assets and liabilities are generally subject to fixed interest rates and repricing terms are fixed only for a small part of them. No long-term financial liabilities exist at variable interest rates. Actual interest rates usually correspond to the standard rates. Price Risk The carrying amounts relating to cash and cash equivalents, financial assets, trade debtors and other debtors, as well as those related to financial liabilities correspond essentially to market values.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 19


20

1. Consolidation Scope 1.1. Acquisition of Batigroup On 2 March 2006, the group acquired 100% of Batigroup, a Swiss group active in the construction sector. From a legal standpoint, Zschokke and Batigroup were merged to form Implenia Ltd. According to IFRS 3, the Zschokke Group was designated as the acquiring company. The acquired company has contributed CHF 759 million to turnover and CHF 15.8 million to the annual result of the Group. If the combination had taken place at the beginning of the year, the company would have contributed to the Group turnover for CHF 851 million and to the operating result for CHF 17.7 million; these figures were calculated on the basis of the methods used to value and draw up the Group accounts. Where necessary, the results have been adjusted to take account of the depreciation of fixed and intangible assets, as well as the relevant tax effects, as though the takeover had been made on 1st January 2006. As the Zschokke Group was designated as the acquiring company, all the comparative figures contained in this report are from the 2005 report issued by the Zschokke Group. The values calculated below may differ from the provisional values presented in our report as at 30 June 2006. Additional adjustments have been made in the accounts on the basis of the analyses of the final figures. The acquisition cost and the corresponding goodwill can be broken down as follows: Value of Implenia shares issued Purchase price of the 4.03% of Batigroup shares purchased by Zschokke in 2005 Transaction costs Total acquisition costs Fair value of the net assets acquired (details below) Goodwill

(in million CHF) 159.6 4.7 3.9 168.2 104.8 63.4

For the purpose of the acquisition, a total of 6 185 046 Implenia shares with a market value of CHF 25.80 each were distributed in exchange of the existing 6 185 046 Batigroup Holding Ltd share. Goodwill was apportioned among the following Cash Generating Units: Implenia Bau AG – Construction Implenia GU AG – General Contractor Stamm Bau AG – Construction (see note below) Total Goodwill

Goodwill represents the value of the staff of Batigroup as well as the synergies expected from the group merger.

Notes to the Consolidated Financial Statements

(in million CHF) 30.3 32.1 1 63.4


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 21

(in 1000 CHF) The values of the assets and liabilities of Batigroup acquired are as follows:

Fair value 37 780 Cash and cash equivalents 87 797 Trade debtors 8 320 Other debtors 32 830 Work in progress 9 627 Inventories 93 930 Real estate operations 6 014 Prepayments and accrued income 110 229 Tangible assets 33 180 Financial investments 12 164 Intangible assets1 Short-term borrowings / current portion of long-term borrowings (97 233) (71 145) Trade creditors (17 165) Other creditors (21 138) Work partnerships (103 825) Work in progress (11 713) Accruals and deferred income (8 414) Long-term borrowings (4 214) Benefit plan liabilities (10 677) Other provisions 18 391 Net deferred taxes 53 Minority interests 104 791 Total Net Assets

Fair value adjustment – (2 030) – – (473) (7 274) – (4 276) 779 12 070 – – – (3 000) (28 384) – – (561) (750) 15 175 – (18 724)

1Includes

the following intangible assets: IT development Trademark Customers list Order book

3 812 1 883 1 529 4 846 12 070

Carrying value before acquisition 37 780 89 827 8 320 32 830 10 100 101 204 6 014 114 505 32 401 94 (97 233) (71 145) (17 165) (18 138) (75 441) (11 713) (8 414) (3 653) (9 927) 3 216 53 123 515


22

Newly consolidated companies Zschokke held, before the acquisition of Batigroup, 33.33% of the following companies: Gravière de la Claie-aux-Moines SA, Rocmouve SA and SISAG. It also held 50% of Implenia Ltd. With the acquisition of Batigroup, the group now controls these companies. This means that these companies are now fully consolidated, with the following impact on the group balance sheet: Assets Cash and cash equivalents Debtors Inventories Tangible assets Other assets

2 434 6 529 6 279 12 210 1 678

Liabilities Trade creditors Long-term borrowings Provisions Others

(5 005) (3 303) (1 301) (4 562)

This step acquisition required an adjustment amounting to CHF 2.9 million of the current value of the shares previously held by Zschokke. This amount was accounted for directly in the equity revaluation reserve. An amount of CHF 2.1 million corresponding to the 33.33% of minority interests in these companies was also accounted for.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 23

1.2. Acquisition of the Reuss Group The contract for the acquisition of the Reuss Group was signed on 29 November 2005 with an effective start date of 1 January 2006. Effective control also commenced on 1 January 2006. The Reuss Group is active in construction engineering and facility management. The Group consists of a holding company – Reuss Group Holding AG – and 6 subsidiaries. Implenia Ltd (Zschokke Holding SA) has purchased all the shares of the Reuss Group Holding SA, which, in turn, holds all the shares of its subsidiaries. The contribution of the Reuss Group to the Group turnover is 22.6 million, and to the Group result 1.8 million. (in million CHF) 19.2 0.8 0.1 20.1

The acquisition cost can be broken down as follows: Cash payment Balance due to the seller1 Transaction costs Total acquisition cost

9.8 10.3

Fair value of the net assets acquired (see details below) Goodwill

The Goodwill represents the value of the staff of the Reuss Group as well as the expected synergies. The values of the assets and liabilities of the Reuss Group acquired are as follows: (in 1000 CHF) Fair value Fair value adjustment 131 – Cash and cash equivalents 5 010 198 Trade debtors 71 – Other debtors 1 911 – Work in progress 413 – Inventories 80 – Prepayments and accrued income 1 236 (250) Tangible fixed assets 28 – Financial assets 8 619 7 938 Intangible assets2 (400) – Bank debts / current portion of long-term borrowings (1 898) – Trade payables (472) – Other payables (1 798) – Work in progress (211) – Current tax liabilities (650) – Accruals and deferred income (2 222) (1 971) Net deferred taxes 9 848 5 915 Reuss Group net purchase value (100%)

Carrying value before acquisition 131 4 812 71 1 911 413 80 1 486 28 681 (400) (1 898) (472) (1 798) (211) (650) (251) 3 933

2Includes

the following intangible assets: Trademark Customer list Order book

Purchase price Reuss Group Balance due for the purchase of Reuss Group Cash and cash equivalents taken over from Reuss Group Cash outflow for the purchase

1 001 5 148 1 789 7 938 20 143 (800) (131) 19 212

1The

outstanding balance due to the seller is subject to the objectives defined in the contract being reached and is payable at the latest on 31 December 2010.


24

1.3. Disposal of Stamm Bau AG Stamm Bau AG was a wholly-owned subsidiary of Implenia Immobilien AG (ex Batigroup AG). An agreement was reached between the Management of Stamm Bau AG and Implenia Ltd regarding the sale of this company. The contract was signed on 14 June 2006. The contract became effective from 22 June 2006. In accordance with IFRS, the profit and loss account of Stamm Bau AG is consolidated for the period from 3 March 2006 to 22 June 2006. After that date, the balance sheet is no longer consolidated. The share of the Goodwill attributed to Stamm Bau from the acquisition of Batigroup is added to the net assets of Stamm Bau AG for the disposal calculation. 1.4. Impact on Cash and equivalents / Other debtors / Other financial assets (in 1000 CHF) Cash received Short-term loans to purchasers Long-term loans to purchasers Long-term loans to purchasers Disposal proceeds

5 110 1 000 Rate 5%, Due date: 30.06.08 1 000 Rate 5%, Due date: 30.06.09 2 000 9 110 Rate 5%, Due date: 30.06.07

1.5. Net assets of Stamm Bau at date of disposal (in 1000 CHF) Cash and cash equivalents Trade debtors Work partnerships Other debtors Work in progress Prepayments and accrued income Tangible fixed assets Other financial assets Goodwill Short-term borrowings Trade payables Other payables Current tax liabilities Accruals and deferred income Long-term borrowings Provisions for deferred tax liabilities Net assets of Stamm Bau AG

3 421 17 692 601 44 1 653 541 12 248 12 953 (514) (15 246) (1 528) (10) (2 065) (9 000) (175) 8 627

Disposal proceeds Net assets of Stamm Bau AG Profit on sale

9 110 (8 627) 483

Cash received Cash paid out Cash surplus

5 110 (3 421) 1 689

For the period from 3 March to 22 June 2006, the contribution of Stamm Bau AG to the Group turnover is 27.2 million and to the Group result 0.2 million. Included in tangible fixed assets is a building with a value of CHF 10 million that was recorded by Implenia under real estate operations.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 25

2. Segment Information The new operational organisation of the Group is based on the following primary business segments: – general contractor (general planning, general and total contractor); – construction works (buildings, civil engineering, special construction); – services (building management, engineering and facility management); – real estate (promotion, project development). Considering the fact that Implenia is essentially implemented on the Swiss market, no secondary geographical segments was prepared. Inter-segment transactions are carried out at market conditions. (in 1000 CHF)

2006 Turnover including inter-segment sales ./. Inter-segment sales Group Turnover Profit from associated companies Operating profit/EBIT Financial profit Income tax Group Profit Depreciation Other non monetary items Investments Segment assets Segment liabilities

General Construction contracting works 1 112 158 1 207 582 (65 240) (84 986) 1 046 918 1 122 596

Services 106 620 (13 692) 92 928

Head office overheads and Real estate Miscellaneous 88 565 34 032 (12 551) (34 346) 76 014 (314)

Group Total 2 548 957 (210 815) 2 338 142

– 3 709

3 294 25 298

– (2 873)

– 696

– (7 016)

3 294 19 814 (5 775) (7 897) 6 142

760 (324) 272 236 696 382 815

29 348 2 295 30 349 661 641 361 905

1 652 207 1 334 36 907 16 714

2 712 845 359 255 111 65 541

2 854 (1 287) 740 95 111 88 972

37 326 1 736 33 054 1 285 466 915 947

Head office overheads and Real estate Miscellaneous 15 381 16 799 (2 796) (16 446) 12 585 353

Group Total 1 469 488 (107 399) 1 362 089

(in 1000 CHF)

2005 (restated figures) Turnover including inter-segment sales ./. Inter-segment sales Group Turnover Profit from associated companies Operating profit/EBIT Financial profit Income tax Group Profit Depreciation Other non monetary items Investments Segment assets Segment liabilities

General Construction contracting works 826 837 531 812 (3 057) (81 191) 823 780 450 621

Services 78 659 (3 909) 74 750

– 9 280

598 14 670

– 1 636

(1 010) 9 912

– (2 003)

(412) 33 495 (840) (9 110) 25 225

513 4 870 475 63 253 250 591

11 635 1 352 13 240 227 663 177 508

3 697 240 1 399 21 495 10 711

2 223 (18 242) 1 060 243 778 7 951

76 359 107 137 988 40 858

18 144 (11 421) 16 281 694 177 487 619


26

3. Personnel (in 1000 CHF) Restated Figures

Salaries and fees Social security contributions Benefit plan expenses FAR Foundation expenses Other personnel expenses (including third-party personnel) Total

2006 530 188 66 270 33 900 11 222 45 124 686 704

2005 265 354 38 386 22 834 5 331 52 737 384 642

4. Other operating expenses (in 1000 CHF) Restated Figures

*This position essentially includes the expenses related to the merger (integration, rebranding, etc.).

Rent Maintenance and repairs Insurance Office and administration costs and consultants Other operating costs* Total

2006 42 037 30 268 9 410 25 016 52 105 158 836

2005 20 022 16 800 2 593 28 598 1 735 69 748

5. Financial charges and income (in 1000 CHF) Restated Figures

*The Group does not hold any financial derivatives and hence there is no impact on the financial statements.

2006

2005

Financial charges Interest Other financial charges* Foreign exchange losses Total

4 921 5 390 801 11 112

963 2 744 304 4 011

Financial income Interest Income from securities Other financial income Foreign exchange gains Total

2 186 1 195 – 1 956 5 337

1 262 894 2 460 235 4 851

*Other financial charges for 2006 comprise: Bank charges Commissions on finance guarantees Other interest expenses

930 1 283 3 177 5 390


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 27

6. Income taxes (in 1000 CHF) Current taxes Deferred taxes Income taxes Breakdown of tax charges: Pre-tax income Tax calculated at a rate of 25.74% (2005: 25%) Effect of tax rate differences in certain cantons due to taxation of real estate gains Effect of non-capitalised tax losses carried forward Effect of non taxable or non deductible items Effect of non-capitalised tax losses created during the year Other taxes Income taxes

2006 3 961 3 936 7 897

2005 3 152 5 958 9 110

14 039 3 614

34 335 8 584

(1 738) (77) 1 692 4 225 181 7 897

(501) (566) 297 1 471 (175) 9 110

The average tax rate is based on the weighted average of tax rates in effect by group companies.

7. Earnings per share (in 1000 CHF) Restated Figures

Net earnings Weighted average number of shares in circulation Earnings per share1 Number of shares in circulation as at 31.122

2006 5 277 17 010 510 CHF 0.31 18 006 926

2005 25 190 11 778 240 CHF 2.14 11 795 600

8. Cash and cash equivalents (in 1000 CHF) Restated Figures

Cash Bank and Post Office accounts Other cash equivalents Total

2006 355 92 156 14 835 107 346

2005 266 99 171 – 99 437

The bank current account figures include an amount of 14.7 million, representing assets held on a fiduciary basis for general contractor projects.

1There

is no dilution.

2Implenia/Zschokke

exchange ratio = 40:1.


28

9. Securities (in 1000 CHF) Listed shares Bills receivable Total

2006 – 686 686

2005 5 430 – 5 430

In 2005, the value of CHF 5.4 million of the Batigroup Holding SA shares, reported in the balance sheet, corresponded to the stock exchange value as at 31 December 2005. In compliance with IFRS 3, only the purchase value (4.7 million see consolidation scope) of these shares was included in the purchase price calculated for the merger with Batigroup. The capital gain of 0.7 million reported in 2005 was adjusted through equity (see Consolidated Statement of Changes in Equity).

10. Trade debtors (in 1000 CHF) Customers ./. Value adjustment Total

2006 327 200 (13 530) 313 670

2005 187 917 (10 050) 177 867

These figures refer to invoices issued to customers for works completed and to interim statements for work in progress.

11. Work in progress Work in progress includes invoicing instalments for works and expenses, provisions for works completion, provisions for losses on the order book, provisions for unrecoverable overheads, advances to suppliers, customer advances and stocks of materials on construction sites. (in 1000 CHF)

Balance sheet presentation: Work in progress – Assets Work in progress – Liabilities

Information on construction contracts: Contract revenue recognised in the period Costs incurred since the start of construction work and relating to current contracts, as at 31.12 Advances received on construction contracts, as at 31.12 Amount of retentions, as at 31.12

31.12.2006

31.12.2005

172 168 (511 434) (339 266)

82 895 (325 565) (242 670)

2006 1 883 588 4 198 818 94 331 14 506

2005 1 248 916 2 582 122 41 282 9 527


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 29

12. Work partnerships The assets and liabilities on the consolidated balance sheet include current debtor and creditor balances, advances made and received and the share in income not yet distributed. Partnerships are valued on an individual basis. The amounts included under this section as either liabilities or assets represent the whole debts owed to or by each partnership. The Group’s share in the partnership assets, liabilities and sales includes: (in 1000 CHF) Statistical information

Current assets Fixed assets Short-term liabilities Long-term liabilities Turnover Expenses

2006 416 406 185 136 357 130 26 401 597 530 583 865

2005 239 965 54 154 228 561 36 566 421 562 411 590

This information does not include the value adjustments calculated according to the Group’s accounting principles, nor the proportion of the Group’s overheads. Work partnerships are jointly liable for any debts of the partnership, unless otherwise agreed. Joint liabilities toward joint venture partners Main partnerships: Consorzio TAT Tunnel Alp Transit Ticinio TU ABL Bahntechnik Lötschberg TRANSCO-Sedrun ARGE Uetliberg-Tunnel AG

228 564

154 817

Shareholding 25% 50% 40% 25%

13. Other debtors (in 1000 CHF) Receivable withholding tax Other taxes and duties receivables Operating receivables Total

2006 891 9 897 19 196 29 984

2005 565 1 191 7 386 9 142

2006 18 310 18 310

2005 4 517 4 517

14. Inventories (in 1000 CHF) Raw materials and ancillary products Total There are no pledged inventories.


30

15. Investments in real estate operations (in 1000 CHF)

2006 Acquisition value As at 1.1. Investments Disposals Transfers/ Reclassifications Change in consolidation scope As at 31.12 Valuation adjustment As at 1.1. Increase As at 31.12. Net book value of which pledged Distribution of real-estate portfolio: Available land Property being developed or in construction Buildings completed and ready for sale Net total

Operations Operations Operations in own by by real estate name partnerships companies

Total

129 845 39 449 (75 491) 6 102 83 296 183 201

17 036 3 106 (26) – – 20 116

6 827 280 (1 432) – – 5 675

153 708 42 835 (76 949) 6 102 83 296 208 992

(32 769) (5 105) (37 874) 145 327

(5 620) 1 036 (4 584) 15 532

(3 178) 1 721 (1 457) 4 218

(41 567) (2 348) (43 915) 165 077 –

67 650 60 610 36 817 165 077


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 31

(in 1000 CHF)

2005 (restated figures) Acquisition value As at 1.1 Foreign currency translation difference Investments Disposals As at 31.12 Valuation adjustment As at 1.1 Increase Decrease As at 31.12 Net book value of which pledged Distribution of real-estate portfolio: Available land Property being developed or in construction Buildings completed and ready for sale Net book value Valuation adjustment decreases only affect property sold during the period. No interest was capitalised in 2006 and 2005.

Operations Operations Operations in own by by real estate name partnerships companies 154 170 (171) 44 461 (68 615) 129 845

(50 628) (3 264) 21 123 (32 769) 97 076

13 306 – 3 730

Total

17 036

7 246 (20) 405 (804) 6 827

174 722 (191) 48 596 (69 419) 153 708

(5 620) – – (5 620) 11 416

(3 642) 464 – (3 178) 3 649

(59 890) (2 800) 21 123 (41 567) 112 141 –

44 459 57 446 10 236 112 141


32

16. Tangible fixed assets (in 1000 CHF) Restated Figures

Acquisition value as at 1.1.2005 Investments Disposals Acquisition value as at 31.12.2005/1.1.2006 Change in consolidation scope Investments Transfers Disposals Currency translation differences As at 31.12.2006 Accumulated depreciation as at 1.1.2005 Disposal Depreciation for the year Accumulated depreciation as at 31.12.2005/1.1.2006 Transfers Disposal Depreciation for the year Accumulated depreciation as at 31.12.2006 Net Book value as at 31.12.2006 Net Book value as at 31.12.2005 of which finance leases at 31.12.2006 of which finance leases at 31.12.2005 Fire insurance values: – as at 31.12.2006 – as at 31.12.2005 Surface area of land in hectares: – as at 31.12.2006 – as at 31.12.2005

Office buildings 92 084 1 060 (133) 93 011

Production units 13 990 633 (336) 14 287

Machines, Equipment, Furniture 140 737 14 006 (800) 153 943

49 474 1 132 (18 008) (535) 45 125 119

8 814 177 – (541) – 22 737

63 772 31 301 – (20 342) (10) 228 664

122 060 32 610 (18 008) (21 418) 35 376 520

47 990 (52) 2 700 50 638

7 695 (215) 1 103 8 583

87 241 (377) 13 912 100 776

142 926 (644) 17 715 159 997

(11 906) – 3 763 42 495

– (22) 1 339 9 900

– (15 623) 26 160 111 313

(11 906) (15 645) 31 262 163 708

82 624 42 373

12 837 5 704

117 351 53 167

212 812 101 244

– –

– –

22 380 –

22 380 –

495 000 87 677

– –

400 000 14 000

895 000 101 677

Total 246 811 15 699 (1 269) 261 241

81.5 87.7

Other notes (in 1000 CHF) Mortgage certificates Buildings in construction Current contractual liabilities Valuation adjustments Capitalised interest

2006 92 274 – – – –

2005 47 615 – – – –


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 33

17. Investments in associated companies (in 1000 CHF)

Restated Figures

2006 6 902 2 21 854 (1 743) 708 (3 630) – 3 294 (5 033) 22 354

2005 2 878 – – 4 525 50 – 289 (412) (428) 6 902

Balance sheets of associated companies Assets Liabilities Net assets

137 177 (90 258) 46 919

58 760 (46 632) 12 128

Income Charges

106 371 95 642

44 805 42 158

As at 1.1 Foreign currency translation difference Change in consolidation scope Transfer Acquisitions Disposals Increase /(Decrease) of loans / advances Share in earnings of associated companies Dividends received As at 31.12 of which the following are pledged

To date, there are no restrictions on the transfer of profits of the associated companies.

18. Other financial investments (in 1000 CHF) As at 1.1 Conversion difference Change in consolidation scope Transfer Acquisitions Disposals Valuation adjustments As at 31.12 Weighted actual interest rate Distribution: Shareholdings in unlisted companies Loans* Other financial investments As at 31.12 of which pledged *The carrying value approximates the fair value.

Restated figures

2006 21 305 22 6 689 712 22 260 (9 291) (874) 40 823

2005 27 145 – – (4 525) 688 (3 095) 1 092 21 305

8 075 31 469 1 279 40 823

10 711 9 664 930 21 305


34

19. Intangible assets (in 1000 CHF)

Trademarks – 2 884 – (1 883) 1 001

Customer List and order Book – 13 230 – (2 329) 10 901

Goodwill 4 834 72 723 – – 77 557

Group Total 5 529 93 506 444 (6 063) 93 416

– – – –

542 582 (429) 695

– – – –

– – – –

4 834 – – 4 834

5 376 582 (429) 5 529

IT Project – 3 812 150 (1 059) 2 903

Licences and Software 695 857 294 (792) 1 054

of which pledged

2005 As at 1.1, after depreciation Net investments Depreciation As at 31.12, after depreciation of which pledged

2006 As at 1.1, after depreciation Change in consolidation scope Net investments Depreciation As at 31.12, after depreciation

20. Goodwill valuation and distribution In accordance with IFRS 3, the net book value of Goodwill represents the excess of the cost of acquisition over the fair value of the acquired identifiable assets, liabilities and contingent liabilities, under deduction of accumulated impairment losses. Goodwill is allocated to the respective cash generating units (CGU). The goodwill resulting from the acquisition of Batigroup is allocated over the new legal entities resulting from the internal reorganisation. The net residual value of a CGU is determined based on a value in use calculation of discounted cash flows, taking into account the business plan 2007 to 2009 adopted by the management. Subsequent years cash flows are estimated based on growth rates as disclosed below.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 35

The Goodwill is distributed between the CGUs as follows: (in 1000 CHF)

Cash Generating Units: Implenia Construction Ltd Implenia General Contractor Ltd* Stamm Bau AG Reuss Group Privera AG AG für manuelle Dienstleistungen

Assumptions for the computation of the recoverable amount: Gross margin Pre-tax discount rate Post-business plan growth rate

Implenia Construction 9.40% 8.50% 1.00%

2006

2005

30 347 34 160 – 10 295 2 690 65 77 557

– 2 079 – – 2 690 65 4 834

Implenia General Contractor 4.90% 10.50% 1.00%

Reuss Group 31.80% 10.50% 0.50%

Management defines the budgeted gross margin based on historical trends and expectations of future market development. The average growth rate are in line with construction industry in Switzerland. Discount rates are pre-tax and reflect the specific risks related to the corresponding segments. Based on current computation, no impairment was identified. *Including goodwill Göhner Merkur (CHF 2.079 million).

21. Other creditors (in 1000 CHF) Tax authorities (withholding tax, VAT, taxes paid in advance) Social security institutions, insurance providers Payables to employees Benefit plan institutions Others Total

2006 29 338 1 320 926 3 621 1 680 36 885

2005 11 078 5 761 12 662 1 828 2 983 34 312

Accrued liabilities and deferred income Vacation and overtime entitlement of employees Other payables Total

46 338 43 070 89 408

19 776 29 380 49 156


36

22. Borrowings (in 1000 CHF) 2006 1 535 99 836 310 664 (315 221) 96 814

As at 1.1 Change in consolidation scope Increase in borrowings Repayments As at 31.12

2005 3 338 – 145 000 (146 803) 1 1 535

1Including

CHF 1.8 million of debt foregiveness by a creditor. No impact on cash flows.

Due dates: Within 12 months Between 1 and 5 years As at 31.12

81 096 15 718 96 814

44 1 491 1 535

of which finance leases

13 289

The main source of financing is the consortium credit that the Group obtained from a consortium of banks on 16 August 2006. The total credit limit amounts to CHF 500 million and will be valid until the end of 2009. The limit is split up between a cash limit of CHF 200 million and a limit for the issue of guarantees of CHF 300 million. To secure the consortium credit, the Implenia Group issued the following securities in favour of the bank consortium: – Pledging of mortgage certificates on the Group real estate for a market value of CHF 40 million. – Guarantees given by the most important companies of the Group to cover the obligations of Implenia Ltd towards the bank consortium. The continuance of the credit relationships is dependant on various conditions (Covenants), which had been fully complied with by Implenia Ltd at 31 December 2006.

23. Liabilities arising from finance leases (in 1000 CHF) As at 31.12

Within 12 months Between 1 and 5 years Total

Total of minimum leasing payments 2006 2005 8 035 – 5 829 – 13 864 –

Total interest 2006 294 281 575

2005 – – –

Present value of minimum leasing 2006 2005 7 741 – 5 548 – 13 289 –


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 37

24. Employee benefit plans Implenia benefit plans essentially comprise the former plans of Zschokke and Batigroup. They consist of plans ruled by Swiss pensions law and are regarded as defined benefit plans for IAS 19 purpose. The defined benefit obligation of active staff is determined using the projected unit credit actuarial valuation method, considering future salary and benefits increase and staff turnover expectations. The defined benefit obligation of pensioners correspond to the fair value of present benefits, considering future increases. Actuarial reports are prepared at balance sheet date. (in million CHF) 2006

2005

(1 221.9) 1 193.9 (28.0)

(563.1) 555.7 (7.4)

36.3 8.3

19.1 11.7

Reconciliation of the amount recognized in the balance sheet Asset recognized as per 1.1 Effects from business combinations Expense recognized in profit or loss Contributions by the employer Asset recongnized as per 31.12

11.7 (3.3) (33.9) 33.8 8.3

12.2 – (22.7) 22.2 11.7

Pension expenses recognized in profit or loss Current service cost Interest cost Expected return on plan assets Expense recognized in profit (+) / loss (–)

(36.2) (40.7) 43.0 (33.9)

(24.9) (21.2) 23.4 (22.7)

65.4

27.1

3.2% 3.5% 1.0% 0.0% 21.6 21.2

4.0% 4.2% 2.0% 0.0% 21.6 21.2

Amount recognized in the balance sheet as per year-end Present value of funded defined benefit obligation Fair value of plan assets Overfunding (+) / underfunding (–) Unrecognized actuarial gains (–) / losses (+) Asset (+) / Liability (–) recognized in balance sheet

The expected employer’s contributions for 2007 amounts approximately to CHF 34.3 million. Actual return on plan assets (in million CHF) Principal actuarial assumptions at 31.12 Discount rate Expected rate of return on plan assets Future salary increases Future pension increases Expected average remaining working lives in years Life expectancy at retirement age (male/female) in years

The expected rate of return on plan assets is based on expected performance of each investment category as per present investment policy. The long term returns by category is 7.0% on Swiss shares, 8.0% on foreign shares, 2.5% on Swiss bonds, 3.5% on foreign bonds, 4.5% on real estate investments and 1% on cash deposits.


38

(in million CHF) Reconcilation of defined benefit obligation Defined benefit obligation at 1.1 Effects from business combinations Interest cost Current service cost (employer) Contributions by plan participants Past service cost Actuarial gain (+) / loss (–) on defined benefit obligation Defined benefit obligation at 31.12 Reconcilation of the fair value of plan assets Fair value of plan assets at 1.1 Effects from business combinations Expected return on plan assets Contributions by the employer Contributions by plan participants Benefits paid/deposited Actuarial gain (+) / loss (–) on plan assets Fair value of plan assets at 31.12 Major categories of plan assets Properties Equity instruments Switzerland Equity instruments foreign countries Debt instruments Switzerland Debt instruments foreign countries Cash

2006

2005

(563.1) (707.3) (40.7) (36.2) (30.2) 195.0 (39.5) (1 221.9)

(553.2) – (21.2) (24.9) (17.1) 47.3 6.0 (563.1)

555.7 704.0 43.0 33.8 30.2 (195.0) 22.4 1 193.9

535.7 – 23.4 22.1 17.1 (47.3) 4.7 555.7

14.9% 15.7% 15.9% 27.5% 19.5% 6.5%

16.4% 16.3% 14.6% 33.5% 9.3% 9.9%

Plan assets include shares of Implenia Ltd for a total fair value of CHF 1.6 million (2005: shares of Zschokke Holding Ltd for a value of CHF 3.1 million) and properties occupied by Implenia for a value of CHF 1.5 million (2005: nil). Information over several years Present value of funded defined benefit obligation Fair value of plan assets Underfunding Experience adjustments on defined benefit obligation Experience adjustments on plan assets

(1 221.9) 1 193.9 (28.0)

(563.1) 555.7 (7.4)

42.2 22.4

6.0 4.7

Fundation for flexible retirement (FAR) Since June 2003, employees (works) are entitled to an optional early retirement as of their 62 anniversary. A Fundation (FAR) was jointly constituted for that purpose by unions GBI and SYNA, and the Swiss Construction Companies Association. The financing of FAR is granted by contribution of both employers and employees. Based on the information presently available, the commitments of FAR are fully funded. The contributions paid by the Group in 2006 amount to CHF 11.2 million (2005: CHF 5.3 million).


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 39

25. Deferred taxes (in 1000 CHF) Deferred tax liabilities As at 1.1 Changes Change in consolidation scope As at 31.12 The main deferred tax assets refer to the following items: Difference between taxable base and carrying value of provisions Difference between taxable base and carrying value of tangible fixed assets Difference between taxable base and carrying value of work in progress (assets/liabilities) and work partnerships (debtors/creditors) Other net differences

Deferred tax assets As at 1.1 Changes Change in consolidation scope As at 31.12

2006

2005

23 195 (11 151) (353) 11 691

17 407 5 788 – 23 195

2 348 6 403

5 815 5 958

435 2 505 11 691

8 314 3 108 23 195

4 627 (15 087) 15 413 4 953

4 797 (170) – 4 627

Recognised deferred taxes are calculated on the basis of a loss carry forward of 27.8 million (2005: 21.4 million). The amount of tax losses taken into account is based on profit projections prepared by the management. Unrecognised tax losses to be carried forward Expiry date 1 year from 2 to 5 years After 5 years no expiry

31 518 8 338 17 913 98 766 156 535

– 112 212 69 206 69 530

The amount of unrecognised fiscal losses in 2005 mainly concerns the foreign companies, which no longer have any operational activities.


40

26. Provisions (in 1000 CHF)

2006 As at 1.1 Change in consolidation scope Allocation Utilised Released As at 31.12 2005 As at 1.1 Allocation Utilised As at 31.12

Warranty provisions – 4 696 – – (377) 4 319

Onerous contracts – 2 692 1 270 – – 3 962

Integration costs – – 7 766 (6 000) – 1 766

Others 1 491 4 590 5 581 (10) – 11 652

Group Total 1 491 11 978 14 617 (6 010) (377) 21 699

– – – –

– – – –

– – – –

917 961 (387) 1 491

917 961 (387) 1 491

Provision for warranty relate to the residual risk on completed projects which according to contract can be claimed within a period of usuall 2 to 3 years, possibly 5 years at the most. Onerous contracts are related to renting agreements. They usually expire within 2 to 3 years. The remaining balance of the provision for integration costs relate essentially to rebranding and other costs that did not yet fall due. Other provisions cover risks related to foreign activities, ongoing litigation, ongoing claims for damages and site restoration.

27. Share capital (in 1000 CHF) Restated Figures

2006

20051

10.9% 5.2%

< 5% –

Number of registered shares: Nominal value per share in CHF Total nominal value in CHF, as at 31.12

18 472 000 4.85 89 589 200

300 000 85.00 25 500 000

Number of shares in circulation, as at 31.12

18 006 926

294 890

CH002 386 8554 (IMPN)

Known shareholders holding more than 5% of shares as at 31 December: Parmino Holding AG 3V Asset Management AG

1Zschokke

shares.

Holding AG

ISIN Code

The annual general meeting on 2 March 2006 decided on a conditional capital increase of up to a total of CHF 44 794 600 (9 236 000 shares with a nominal value of CHF 4.85 each) for the purpose of covering the potential conversion of future converting bonds or similar finance instrument. As of 31 December 2006, no such financing instrument was issued.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 41

28. Leasing contracts (in 1000 CHF) 2006 42 037 21 704 56 496 11 331

Rents expensed in the financial year Amount of leasing liabilities for 2007 / (2006) Amount of leasing liabilities for 2008 to 2011 / (2007-2010) Amount of leasing liabilities from 2012 / (ab 2011)

2005 20 022 13 562 46 295 21 321

There are no existing leases or sub-leasing agreements that are not rescindable.

29. Profit-sharing scheme (in 1000 CHF) Restated Figures

2006

2005

a) Scheme available to all employees The profit-sharing scheme for the benefit of employees is determined by the Motivation Foundation of Implenia Group (2005: Zschokke). Under this scheme, employees can subscribe to shares of Implenia Ltd (2005 and 2006 Zschokke Holding SA) at a preferential price. The difference between the average market price of CHF 562.99 per share (2005: CHF 551.21 per share) and the preferential price of CHF 400 per share (2005: CHF 300 per share) is recorded as an expense of the period. Share subscription (converted into shares Implenia) Amount expensed in the financial year

Number KCHF

73 120 765

56 360 379

The shares are blocked and cannot be traded for a period of 5 years. The employees are entitled to dividends and may exercise their voting rights. Upon expiry of the blocking period, the shares may be freely traded by the employees. b) Executive scheme The Groupâ&#x20AC;&#x2122;s executives benefit from a profit-sharing scheme based on shares of Implenia Ltd (2005: Zschokke Holding SA). Depending on goal achievement, the Board of Directors may decide to grant shares free of charge or on a preferential basis. Under a written agreement, this share grant is considered to be a supplementary annual remuneration that is not related to the future performance of the executives. The amount is therefore expensed entirely in the current financial year. The amount charged to the Group is calculated on the basis of the stock market value of the share at the time of the grant, which, in principle, is made at the beginning of the following year. The Group may either buy shares on the market or it may draw them from its own portfolio of treasury shares. In 2006, shares reserved to executives have been attributed at a price of CHF 25.45 per share (2005: CHF 818.50 per share). The listed price at the time of grant amounted to CHF 25.45 per share (2005: CHF 835.20 per share). Share grant Amount expensed for the financial year

Number KCHF

64 140 1 632

The number of shares for the comparative year 2005 has been adjusted using the exchange ratio used for the conversion of Zschokke shares into Implenia Ltd shares (40:1).

77 000 1 965


42

30. Related party disclosures (in 1000 CHF) 2006

2005

Information on related party transactions Sales to related parties: – associated companies – companies related to a key management executive – work partnerships – others

1 758 – 262 168 191

147 35 135 608 11 168

Purchases from related parties: – associated companies – companies related to a key management executive – others

23 141 544 2 078

1 302 2 426 –

Credit claims on related parties (as at 31.12): – associated companies – companies related to a key management executive – work partnerships – others

1 599 – 61 153 903

23 22 21 873 –

Debts to related parties (as at 31.12): – associated companies – companies related to a key management executive – work partnerships

926 – 3 274

128 22 –

Short-term employee benefits Other post-employment benefits Long-term benefits Termination benefits Share-based payments Total remuneration of key management executives

4 910 182 410 – 1 774 7 276

4 195 – 316 – 798 5 309

Balance in favour of key management executives as at 31.12

1 632

200

2006 228.6

2005 173.9

Transactions with related parties are dealt with at arm’s length. The term “key management executives” includes the members of the Board of Directors and the members of the Group Management.

31. Contingent liabilities (in million CHF) Third party guarantees The balance of outstanding guarantees relates essentially to ongoing projects carried for own account (submission, warranty and prestation guarantee) as well as for projects in work partnerships.


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 43

32. Acquisition / disposal of subsidiaries – Cash flow impact (in 1000 CHF) Reuss Group Acquisition price of Reuss Group Balance payable on purchase of Reuss Group Cash and cash equivalents taken over from Reuss Group Batigroup Acquisition of Batigroup (purchase cost paid in 2006) Cash and cash equivalents taken over from Batigroup (including newly consolidated entities) Stamm Bau Disposal price of Stamm Bau Loan to purchasers Cash and cash equivalents transferred out of Stamm Bau

2006

2005

(20 143) 800 131

– – –

(3 299) 40 214

– –

9 110 (4 000) (3 421) 19 392

– – – –

33. Post-balance sheet events The Board of Directors of Implenia Ltd, in its meeting held on 15 March 2007, approved the consolidated accounts for the year 2006 for presentation to the ordinary general meeting of shareholders on 24 April 2007. The general meeting is deciding on the final approval of the financial statements. Up to the time of the approval of this report, there were no known events that might require an adjustment to the accounting values of the Groups assets and liabilities. Subsequent to the date of the balance sheet, the following significant change has occured in the operating structure of the Group. The “General Contractor” segment was integrated into “Real Estate”, headed by Hans-Peter Domanig. This decision was taken to better address the potential of the market and concentrate all the services surrounding the value chain of a real estate. The concept of a “Corporate Center” is currently under preparation. The details about its future structure will be communicated in the course of the second half of 2007.


44

34. Subsidiaries Registered Company name Share holding office AG für manuelle Dienstleistungen 53.33% Neuenhof B + B Engineering AG 100% Inwil Balduin Weisser AG 100% Basel Implenia (Ticino) SA 100% Lugano Batilabor AG 100% Wallisellen Implenia Holding GmbH 100% Rümmingen (D) Implenia Bau GmbH 100% Rümmingen (D) Batirhin Sàrl 100% Mulhouse (F) Développements transfrontaliers SA 100% Lyon (F) Gebr. Ulmer GmbH 100% Bruchsal (D) Gravière de La Claie-aux-Moines SA 66.66% Savigny Gust. Stumpf GmbH 100% Bruchsal (D) Gust. Stumpf Verwaltungs GmbH & Co KG 100% Bruchsal (D) Implenia Bau AG 100% Genève Implenia Entreprise Générale SA 100% Basel Implenia Immobilien AG 100% Wallisellen Implenia Management AG 100% Genève Implenia Real Estate AG 100% Wallisellen M.F. Wachter Bauunternehmung GmbH 100% Stuttgart (D) Privera AG 100% Berne Privera Services AG 100% Berne Reprojet AG 100% Zürich Reuss FM AG 100% Inwil Reuss Management AG 100% Inwil Reuss Group Holding AG 100% Wallisellen Reuss Group International AG 100% Inwil

Currency CHF CHF CHF CHF CHF EUR EUR EUR EUR EUR CHF EUR EUR CHF CHF CHF CHF CHF EUR CHF CHF CHF CHF CHF CHF CHF

Share capital Segment 150 000 Services 100 000 Services 1 750 000 Overheads Holding and Miscellaneous 1 000 000 Construction 100 000 Construction 3 067 751 Overheads Holding and Miscellaneous 2 556 459 Construction 195 000 Services 14 663 800 Real Estate 25 565 Overheads Holding and Miscellaneous 1 500 000 Construction 1 533 876 Construction 511 292 40 000 000 20 000 000 30 600 000 500 000 30 000 000

Active/ Inactive Active Active Inactive Active Active Active Active Inactive Active Inactive

Held by Implenia AG Reuss Group Holding AG Implenia Immobilien AG Implenia AG Implenia AG Implenia Immobilien AG Implenia Immobilien AG Implenia AG Implenia Real Estate AG Implenia AG

Active Implenia AG Inactive Implenia Holding GmbH

Overheads Holding and Miscellaneous Construction General Contractor Real Estate Overheads Holding and Miscellaneous Real Estate

Inactive Active Active Active Active Active

Implenia Holding GmbH Implenia AG Implenia AG Implenia AG Implenia AG Implenia AG

1 000 000 Overheads Holding and Miscellaneous 4 000 000 Services 1 000 000 Services 100 000 Travaux 100 000 Services 100 000 Services 800 000 Services 100 000 Services

Inactive Active Active Active Active Active Active Active

Implenia AG Implenia AG Implenia AG Implenia AG Reuss Group Holding AG Implenia AG Implenia AG Reuss Group Holding AG


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements 45

Company name Share holding Robert Aerni Ingenieur AG 100% Rocmouve SA 66.66% S + P Haustechnik AG 100% SAPA, Société Anonyme de Produits Asphaltiques 75% SISAG 100% Socarco 100% Sonnrain Wohnbau GmbH 100% Stamm Bau AG* 0% Strassen und Tiefbau AG 100% Stuag Bauunternehmung GmbH 100% Swiss Overseas Engineering Company 100% Tetrag AG 100% Trachsel AG 100% Zschokke Bratislava s.r.o. 100% Zschokke Construction Sàrl 100% Zschokke Développement SA 100% Zschokke France SA 100% Zschokke GmbH Leipzig 100%

Registered office Dietlikon Echallens Inwil

Currency CHF CHF CHF

Satigny Abidjan (CI) Bamako (Mali) Rümmingen (D) Binningen Vaduz (FL) Rümmingen (D)

CHF XOF XOF EUR CHF CHF EUR

500 000 492 000 000 100 000 000 255 646

Genève Gisikon Heimberg Bratislava (SLK) Lyon (F) Lyon (F) Lyon (F) Leipzig (D)

CHF CHF CHF SKK EUR EUR EUR EUR

200 000 100 000 100 000 2 225 000 76 225 457 347 914 694 1 022 584

Zschokke Holding Deutschland GmbH100% Berlin (D) Zschokke Österreich GmbH 100% Wien (O) Zschokke Procédés Spéciaux Sàrl 100% Lyon (F)

EUR EUR EUR

Share capital Segment 500 000 Services 120 000 Construction 100 000 Services Construction Construction Construction Overheads Holding and Miscellaneous Construction 50 000 Overheads Holding and Miscellaneous 306 775 Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Services Overheads Holding and Miscellaneous Entreprise Générale Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous

Held by Implenia AG Implenia AG Reuss Group Holding AG

Active Active Active Inactive Active Inactive Inactive

Implenia AG Implenia AG SISAG Implenia Holding GmbH Implenia Immobilien AG Implenia Immobilien AG Implenia Holding GmbH

Implenia AG Reuss Group Holding AG Implenia AG Implenia AG Zschokke France SA Zschokke France SA Implenia AG Zschokke Holding Deutschland GmbH 3 067 751 Overheads Holding and Miscellaneous Inaktiv Implenia AG 35 000 Construction Active Implenia AG 457 347 Overheads Holding and Miscellaneous Inactive Zschokke France SA

*Stamm Bau AG has been solid on 30 June 2006 (see comments in Consolidation scope). All subsidiaries of the Group are fully consolidated.

Active/ Inactive Active Active Active

Inactive Active Active Inactive Inactive Inactive Inactive Inactive


46

35. Associated Companies Company name

Share holding Registered office

Apec SA Arge Mischgutanlage Aktiengesellschaft Niederbipp Argo Mineral AG Argobit AG Asfatop AG Bawag, Belagsaufbereitungsanlage Wimmis AG Belagswerk Rinau AG Bépo-Bétonpompé SA Catram AG Garage-Parc Montreux Gare SA GU Kies AG Holcim Bétondrance S.A. Kies und Beton Schluein AG* Léchire S.A. Mifag Mischgutwerk Frauenfeld AG MOAG Baustoffe Holding AG Parking de la Place de la Navigation S.A. Remora AG Reproad AG SFR société Fribourgeoise de Recyclage SA Socarco Bénin Sàrl Socarco Burkina Sàrl Société d’exploitation du Mégastore d’Archamps - SEMA Wohnpark an der Kander GmbH *Kies und Beton AG has been sold in December 2006. The associated companies are consolidated to the equity method.

20.0% 27.5% 50.0% 40.0% 50.0% 24.0% 30.0% 39.0% 24.0% 26.0% 33.3% 46.0% 19.6% 33.3% 10.0% 13.7% 24.4% 20.0% 33.3% 20.8% 40.0% 40.0% 30.0% 40.0%

Posieux Niederbipp Aarau Schafisheim Unterengstringen Wimmis Kaiseraugst Lausanne Chur Montreux Schaffhausen Martigny Schluein Fribourg Frauenfeld Mörschwil Lausanne St. Gallen Dietlikon Hauterive Cotonou Burkina Archamps Rümmingen-D

Currency CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF CHF XOF XOF EUR EUR

Share capital 300 000 1 000 000 300 000 1 200 000 1 000 000 100 000 1 000 000 120 000 1 000 000 2 050 000 450 000 300 000 50 000 100 000 600 000 3 000 000 6 986 000 300 000 1 500 000 1 200 000 1 000 000 10 000 000 37 000 204 517


Consolidated Financial Statements of the Implenia Group Notes to the Consolidated Financial Statements l Report of the Group Auditors on the Consolidated Accounts 47

Report of the Group Auditors to the General Meeting of Implenia AG, Dietlikon As auditors of the group, we have audited the consolidated financial statements (consolidated income statement, consolidated balance sheet, consolidated statement of cash flows, consolidated statement of changes in equity and notes to the consolidated financial statements â&#x20AC;&#x201C; pages 4 to 46) of Implenia AG for the year ended December 31, 2006. The financial statements of the Company as of December 31, 2005 were audited by another auditor whose report dated January 16, 2006 expressed an unqualified opinion on those statements. These consolidated financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with Swiss Auditing Standards and with the International Standards on Auditing, which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law. We recommend that the consolidated financial statements submitted to you be approved. PricewaterhouseCoopers AG

W. Wenger Auditor in charge

G. Siegrist

ZĂźrich, March 20, 2007

Report of the Group Auditors on the Consolidated Accounts


2

Statutory Financial Statements of Implenia Ltd


50

Income Statement (in 1000 CHF) 2006

2005

REVENUE Revenue from investments Finance revenue TOTAL

12 944 6 454 19 398

– – –

EXPENSES Finance costs Amortisation on investments Administration costs Capital tax and stamp duty Income tax Changes in provisions Profit/(loss) for the year TOTAL

5 691 3 006 8 253 56 (88) 6 2 474 19 398

– – – 11 – – – (11) –

Income Statement


Statutory Financial Statements of Implenia Ltd Income Statement l Balance Sheet 51

Balance Sheet (in 1000 CHF) 31.12.2006

31.12.2005

31 815 7 319 4 688 341 162 1 499 386 483

100 – – – – 100

2

274 522 1 217 275 739 662 222

– – – 100

6

70 000 135 374 464 1 345 445 944

– 2 – 9 11

800 800

– –

89 589 54 559 7 319 18 773

100 – – – – – (11) 89 100

Notes ASSETS Cash and cash equivalents Securities Receivables Group companies Prepayments and accrued income Current assets Investments Receivables Non-current assets TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY Bank borrowings Creditors Group companies Accrued liabilities and deferred income Current liabilities

1

Uncalled capital on holdings Non-current liabilities Share capital: – 18 472 000 (2005: 20 700) Registered shares of CHF 4.85 General reserve Reserve for treasury shares Voluntary reserve Profit and loss account: – profit carried forward – profit for the year Shareholders’ equity TOTAL

Balance Sheet

3

42 764 2 474 215 478 662 222


52

1. Securities (in 1000 CHF) 2006

2005

– 6 098 1 221 – 7 319

– – – – –

2006 273 058 1 464 274 522

2005 – – –

Implenia Ltd shares Balance as at 1.1 Buyback after merger with Zschokke and Batigroup Purchases Sales Balance as at 31.12

Number – 413 874 51 200 – 465 074

2. Investments (in 1000 CHF) Group companies (affiliated companies, pages 44 and 45) Minority shareholdings

3. Share capital At the general meeting of shareholders held on 2 March 2006 it was decided to increase the share capital by 18 451 300 registered shares to be given in exchange to the former shareholders of Zschokke Holding SA and Batigroup Holding SA, respectively 12 000 000 and 6 451 300 shares, in the context of the merger of Implenia Ltd with Zschokke Holding SA and Batigroup SA. The general meeting of shareholders held on 2 March 2006 further decided to authorise a conditional share capital amounting to a maximum of CHF 44 794 600 represented by 9 236 000 fully paid-up shares with a nominal value of CHF 4.85 each. To date, this conditional capital has not been used by the Board of Directors. Known shareholders holding more than 5% of shares as at 31 December: Parmino Holding AG 3V Asset Management AG

10.9% 5.2%

4. Hidden reserves (in 1000 CHF) Net dissolution as per Art. 663b CO

Notes to the Statutory Financial Statements

2006 –

2005 –


Statutory Financial Statements of Implenia Ltd Notes to the Statutory Financial Statements 53

5. Contingent liabilities (in 1000 CHF) Guarantees granted and used Security for joint liability regarding the levying of VAT for the Group

2006 61 808 18 700

2005 – –

6. Consortium credit A new consortium credit was signed on 16 August 2006 with a consortium of banks. The total credit limit amounts to CHF 500 million and will be valid until the end of 2009. The limit is split up between a cash limit of CHF 200 million and a limit for the issue of guarantees of CHF 300 million. To secure the consortium credit, the Implenia Group issued the following securities in favour of the bank consortium: – Pledging of mortgage certificates on the Group real estate for a market value of CHF 40 million. – Guarantees given by the most important companies of the group to cover the obligations of Implenia Ltd towards the bank consortium. The continuance of the credit relationships is dependant on various conditions (Covenants), which had been fully complied with by Implenia Ltd at 31 December 2006. (in 1000 CHF) Situation as at 31.12.2006

Authorised limits Limits used

Cashlimit 200 000 70 000

Guaranteeslimit 300 000 166 386


54

Proposal of the Board of Directors regarding to the appropriation of available earnings (in 1000 CHF) Balance carried forward Balance carried forward by Zschokke Holding and Batigroup Holding Profit for the year Balance To be carried forward

2006 (11) 42 775 2 474 45 238 45 238

The Board of Directors propose a reimbursement of CHF 0.35 on the nominal value of each share. The share capital will be reduced by CHF 6.465 million down to CHF 83.124 million. Companyâ&#x20AC;&#x2122;s Articles will be adjusted accordingly. The reimbursement will occur on 10 July 2007 for shareholders recorded on the share register as of 5 July 2007. This reimbursement is not subject to witholding tax and not to the income tax for individuals being Swiss tax residents.

(in CHF) Evolution of the share price (as quoted on the Swiss stock exchange) Share high/low: Price as at 31st December:

Proposal of the Boards of Directors

2006 30.50/20.63 25.45

2005 â&#x20AC;&#x201C; (11) (11) (11)


Statutory Financial Statements of Implenia Ltd Proposal of the Boards of Directors l Report of the Statutory Auditors 55

Report of the Statutory Auditors to the General Meeting of Implenia AG, Dietlikon As statutory auditors, we have audited the accounting records and the financial statements (balance sheet, income statement and notes â&#x20AC;&#x201C; pages 50 to 54) of Implenia AG for the year ended December 31, 2006. The financial statements of the Company as of December 31, 2005 were audited by another auditor whose report dated January 19, 2006 expressed an unqualified opinion on those statements. These financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with Swiss Auditing Standards, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the accounting records and financial statements and the proposed appropriation of available earnings comply with Swiss law and the company's articles of incorporation. We recommend that the financial statements submitted to you be approved.

PricewaterhouseCoopers AG

W. Wenger Auditor in charge

ZĂźrich, March 20, 2007

Report of the Statutory Auditors

L. Schulthess


Financial Reports 2006

4

Implenia Ltd Industriestrasse 24 CH-8305 Dietlikon Tel. +41 44 805 45 55 Fax +41 44 805 45 56 www.implenia.com


2006-Implenia-Finanzielle-Berichterstattung-e