23 May 2006

Annual General Meeting of Shareholders

on Tuesday, 23 May 2006, in the Portland Forum at Herrenberg in Leimen

Review of the 2005 financial year

In his speech in front of around 340 shareholders, the Chairman of the Managing Board Dr. Bernd Scheifele outlined the major events of the 2005 financial year, emphasising that it had been an “exciting and dynamic year for the company”. HeidelbergCement significantly increased its turnover by 12.6% to EUR 7.8 billion and achieved growth in sales volumes in nearly all markets. The improvement in profit for the financial year, which amounted to EUR 471 million (2004: EUR -333 million), is attributable to growth and strict cost management. The shareholders’ equity base was strengthened by just under EUR 0.6 billion as a result of two capital increases. The change in the shareholder structure was of central importance in 2005. After the successful takeover bid, Spohn Cement GmbH, including persons acting in concert with it and its subsidiaries, now holds just under 78% of the shares in HeidelbergCement.

New management focus

“In 2005, a lot of things were tackled and successfully implemented”, stressed Dr. Scheifele. In spring 2005, HeidelbergCement started the three-year “win” project in order to neutralise cost disadvantages compared with its competitors. As part of the restructuring measures, the extremely decentralised Group organisation was replaced by an integrated management approach with a uniform organisation and flat hierarchies. Of far greater importance for the future development of HeidelbergCement is the introduction of a new management focus. “In order to achieve the strategic goal of long-term, earnings-oriented growth, we are concentrating on increasing efficiency and attaining cost leadership. Consistent benchmarking and the focus on customers and operating activities are a vital part of this.” The new uniform management culture has been documented in leadership principles, which are being implemented across the Group.

In his speech, Dr. Scheifele also talked about the geographical expansion of the Group. “We have developed our business portfolio further by means of targeted acquisitions.” Besides investments in the US, Denmark and Ukraine, HeidelbergCement expanded its geographical presence particularly in China and through market entries in Kazakhstan, India and recently in Georgia.

2006 financial year

He described the prospects for 2006 as follows: “We have seen a dynamic start to the year. All key figures are moving in a positive direction.” Group turnover rose by 29% in the first quarter to EUR 1.7 billion. The strong improvements in results and efficiency are also due to the savings produced by the “win” project. “The first quarter of 2006 confirms our estimate of double-digit growth in turnover and results for the whole year. With the improved market conditions, we must make intensive use of our opportunities to increase efficiency and reduce costs. We want to strengthen our profitability further, as it forms the basis for future growth. HeidelbergCement still has a lot more potential.”

Resolutions of the Annual General Meeting

The motions for resolutions presented to the shareholders include several capital measures, such as capital increases in return for cash contributions and against contributions in kind. These measures are necessary so that the Group can respond flexibly to any opportunities that arise for further strategic growth. “We are anticipating these opportunities and have decided to exploit them if they promise long-term returns”, explains Dr. Scheifele.

Other resolutions concerned the Supervisory Board. Resolutions were passed to further decrease the Supervisory Board remuneration and also to reduce the size of the Supervisory Board from 16 to 12 members from the beginning of the next period of office – i.e. as of the end of the 2009 Annual General Meeting. In this way, the Supervisory Board is making its contribution to sustainable cost savings.

The shareholders also passed a resolution to refrain from individualised declaration of the remuneration of the individual members of the Managing Board in the annual accounts of the parent company and the Group.

Other decisions were made in connection with the amendments to the German stock corporation law i.e. the Act on Corporate Integrity and the Modernisation of the Right to Appeal (UMAG). One of the aims of UMAG is to ensure that Annual General Meetings are held within a reasonable timeframe, with all shareholders given equal consideration. “At HeidelbergCement, we have never had to impose restrictions on the right to speak or ask questions. This resolution is purely a precautionary measure”, explained the Chairman of the Managing Board in relation to the relevant agenda item.

84 % of the company’s share capital, amounting to EUR 296 million, was represented.

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Andreas Schaller

Group Spokesman, Director Group Communication & Investor Relations
+49 6221 481 13249
+49 6221 481 13217
HeidelbergCement AG
Berliner Straße 6
69120 Heidelberg