HOCHTIEF Annual report 2008 - Management Report > Measuring return on capital: Return on net assets

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Divisions	Return	Net Assets	RONA	WACC	Value created	Value created	Value created
	2007 EUR million	2007 EUR million	2007 %	2007 %	2007 %	2007 EUR million	2006 EUR million
HOCHTIEF Airport*	186.9	846.8	22.1	10.2	11.9	100.8	(2.7)
HOCHTIEF Development	117.3	844.4	13.9	9.6	4.3	36.3	(0.7)
HOCHTIEF Construction Services Americas	78.6	361.0	21.8	14.1	7.7	27.8	22.9
HOCHTIEF Construction Services Asia Pacific	456.3	1,417.7	32.2	11.6	20.6	292.1	174.1
HOCHTIEF Construction Services Europe	(112.3)	530.8	-21.2	11.3	-32.5	(172.5)	(25.1)

Group	611.7	4,107.2	14.9	10.0	4.9	201.3	69.9

*HOCHTIEF Airport adjusted

As a result of the healthy performance, the division generated RONA of 22.1 percent, compared with 9.8 percent in 2006. Value created exceeded EUR 100 million.

Divisional operating earnings include the Group's share of net income from equity-accounted airport holdings, which is stated after tax paid by the holdings themselves. The tax is added back into net income when determining RONA for the HOCHTIEF Airport division. Amounts credited to equity for changes in the fair value of the shares in Sydney Airport are also eliminated in net assets for the purpose of determining RONA. These adjustments ensure that all divisions are measured using comparable earnings and net asset figures.

HOCHTIEF Development increased RONA to 13.9 percent, up from 9.5 percent in 2006. This healthy performance is mainly accounted for by sales of projects by HOCHTIEF Projektentwicklung and sales of stakes by PPP Solutions. The Facility Management business also contributed positively to divisional performance with a more than 20 percent rise in earnings.

The HOCHTIEF Americas division again substantially exceeded its cost of capital, with RONA at 21.8 percent (compared with 23.6 percent in 2006). Net assets increased in 2007 compared with the prior year as a result of the acquisition of Flatiron. Americas division value created rose compared with 2006 due to the larger asset base.

HOCHTIEF Asia Pacific exceeded its cost of capital by a wide margin, with RONA at 32.2 percent, compared with 29.8 percent in the prior year. Value created showed a further year-on-year increase and came to nearly EUR 300 million. The excellent performance is largely due to positive earnings contributions from major infrastructure and contracting mining projects.

HOCHTIEF Europe recorded RONA of minus 21.2 percent (versus plus 5.9 percent in 2006), below the cost of capital determined for the division. The main negative factors impacting on returns were the losses at HOCHTIEF Construction and restructuring expenditure. We expect that the division will return to making a positive contribution to earnings in the medium term.

Outlook

The outstanding business performance in 2007 confirms our strategy geared to sustained growth. With the exception of HOCHTIEF Construction Europe, all divisions exceeded their prior-year figures for value created. HOCHTIEF will continue expanding in high-growth, highprofitability segments. We expect to achieve further growth in value in the 2008 fiscal year.