Asset management

Asset management means all activities involved in managing buildings and properties. This includes rent accounting, tenant administration, utility billing and support, systems maintenance, energy management, coordinating repairs and refurbishing, as well as short-to-medium-run planning of all cash flows relating to the property.

BOOT concession

Under a build-own-operate-transfer (BOOT) concession, the company builds then owns and operates a project for a contractually agreed period before transferring it back to the customer.

Captive insurance arrangements

Business-related insurance risks are covered by the Group itself up to a predefined maximum that depends on financial resources and risk philosophy. The most frequently encountered methods are to build in a substantial deductible (per claim or per year, for example) before an insurance policy provides coverage or to have Group-owned (re)insurance companies, known as captives.

Cash flow

One of the key figures used to assess a company's financial position. Represents the net inflow of funds from sales and other operating activities.

CIP team

The Continuous Improvement Process team.

Code of Conduct

Binding code of conduct for HOCHTIEF employees, summarizing ethical principles at HOCHTIEF.

Compliance

Compliance with prevailing law and HOCHTIEF's internal directives and standards.

Construction management at fee

An approach to project management where the construction manager advises the client and, during the design and build phases, provides services for a fee such as administration, construction planning and progress monitoring. The construction manager has little or no financial involvement in the project.

Contractual trust arrangement (CTA)

A contractual trust arrangement is essentially a form of company pension fund where the fund's assets have been transferred to a legal entity separate from the company. The company is free to decide the timing and size of asset transfers to the CTA. The terms of contract stipulate that transferred assets are exclusively and irrevocably dedicated to meeting and funding the company's pension obligations. A CTA is thus a way of meeting pension liabilities through a trust fund.

EU 27

The 27 member states of the European Union.

Hedge accounting

Hedge accounting denotes the accounting treatment of two or more transactions that are in a designated hedging relationship. The transactions are such that each wholly or partly offsets the risk inherent in the other. One of the two transactions is generally referred to as the hedged item (the transaction giving rise to the risk) and the other as the hedging instrument (the transaction hedging the risk). The two transactions must be viewed jointly when determining whether they qualify for hedge accounting. According to International Financial Reporting Standards, the hedge accounting treatment can only be applied if the hedged item and hedging instrument qualify for hedge accounting, the hedging relationship is documented at the inception of the hedge, the hedge is expected to be highly effective and its effectiveness can be reliably measured and demonstrated at the inception of the hedge and in subsequent periods.

Long-term incentive plan (LTIP)

A long-term incentive plan is an incentives system or pay component offered to selected managerial staff so that they participate in the company's long-term success, thus securing their loyalty to the company.

Net present value (NPV)

Value of an investment, obtained by applying a discount factor to expected future cash flows. The NPV represents the present value of future cash inflows and outflows, which need not be constant over the lifetime of the investment.

Percentage of completion (POC) method

Method of accounting for long-term contracts that computes the applicable costs and revenues generated by the project up to the reporting date. Revenues, expense and earnings are thus reported in line with the progress of a project to date. This method supersedes the "realization principle" stipulated by the German Commercial Code, which does not allow profits from construction contracts to be recognized until the fiscal year in which a project is formally accepted by the client.

Procurement Visibility (ProVis)

System providing transparency about all procurement activities across the Group. This ensures, for example, that procurement needs can be combined for award to reliable subcontractors. The system is supported by a software tool for collection and analysis of procurement data from throughout the Group. Units thus have access to Groupwide procurement information.

Public-private partnership

Cooperation between the public sector and usually wellcapitalized private-sector firms to realize a major investment project. A characteristic feature of such cooperation is that the parties pursue common objectives and interests as regards the project itself even though they differ in terms of their broader functions.

United States Green Building Council

The United States Green Building Council operates under the umbrella of the World Green Building Council, which promotes sustainable construction and resource-friendly buildings worldwide. The Green Building Council also awards Leadership in Energy and Environmental Design (LEED) certification, setting precise standards for sustainable buildings. The LEED rating system is organized into five categories: Sustainable Sites, Water Efficiency, Energy and Atmosphere, Materials and Resources, and Indoor Environmental Quality.

Glossary