We draw attention to the fact that the English translation of this auditor's report according to section 274 UGB (Austrian Company Code) is presented for the convenience of the reader only and that the German wording is the only legally binding version.

Auditor’s report

Report on the consolidated financial statements

Audit opinion

We have audited the consolidated financial statements of STRABAG SE, Villach, and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2024, the consolidated income statement, the statement of comprehensive income, the consolidated cash flow statement and the statement of changes in equity for the financial year then ended, and the notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements comply with legal requirements and give a true and fair view of the financial position of the Group as at 31 December 2023, and of its financial performance and cash flows for the financial year then ended in accordance with International Financial Reporting Standards as adopted by the EU (IFRSs) and the additional regulations of section 245a Austrian Company Code.

Basis for opinion

We conducted our audit in accordance with Regulation (EU) No. 537/2014 (hereinafter EU Regulation) and Austrian Generally Accepted Standards on Auditing. Those standards require the application of the International Standards on Auditing (ISAs). Our responsibilities under those provisions and standards are further described in the “Auditor’s responsibilities for the audit of the consolidated financial statements” section of our report. We are independent of the Group in accordance with Austrian Generally Accepted Accounting Principles and professional requirements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained until the date of the auditor’s report is sufficient and appropriate to provide a basis for our opinion by this date.

Other matter

The financial statements of STRABAG SE, Villach, for the financial year ended 31 December 2023 were audited by another auditor who issued an auditor's report containing an unqualified audit opinion dated 4 April 2024 on these consolidated financial statements.

Our audit opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the financial year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have structured key audit matters as follows:

  • Description
  • Audit approach and key observations
  • Reference to related disclosures

Revenue and earnings recognition from construction contracts and measurement of construction contracts

Description

In the financial year 2024, revenues in the amount of EUR 17.4 billion are shown in the consolidated income statement of the consolidated financial statements of STRABAG SE, Villach. Revenue mainly consists of the execution of construction contracts. Furthermore, profits and losses from construction contracts that were concluded with other partners in the form of joint ventures are shown in the item “share of profit or loss of equity-accounted investments” in the amount of EUR 111.6 million in the consolidated income statement of the financial year 2024. The accurate measurement of construction contracts and the proper recognition of the resulting revenue and earnings are crucial for the presentation of the financial position and profitability of the Group.

Revenue is recognized in accordance with IFRS 15, based on the progress of performance, which is determined over time using the output-oriented revenue recognition method. The assessment of the period during which performance obligations are fulfilled, therefore, has a significant impact on revenue recognition and the deferral of revenue and earnings. Revenue and earnings are recognised based on the stage of completion of the contract that has already been executed. This method requires significant estimates and assumptions by management, particularly regarding the fulfilment of performance obligations, project progress, and expected total revenues, including additions to projects. Such estimates are inherently subject to uncertainties and require professional judgment, especially in long-term and complex construction projects and changes during the project lifecycle. These changes can lead to deviations from the initial estimates and assumptions made by management concerning the agreed-upon revenues, the expected future revenues, and the anticipated results. Furthermore, there is a risk that receivables from construction contracts and joint ventures may not be collectible.

Against this backdrop and given the complexity of the measurement and the underlying estimates and assumptions, we considered this matter to be a key audit matter in the course of our audit.

Audit approach and key observations

Our audit approach included procedures aimed at assessing the accuracy of the recognition of revenues and earnings from construction contracts as well as evaluating the measurement of these contracts:

  1. Understanding of the systems, processes and internal controls: We developed an understanding of the systems, internal processes, and controls related to the recognition of revenues and earnings from, as well as the measurement of, construction contracts. Our focus was on understanding the design and implementation of the relevant IT systems, processes, policies, and methods, especially regarding approval before contract acceptance, correct contract setup, allocation of material and personnel costs as well as proceeds to projects, estimation of progress, and examining how IT systems and internal controls support the requirements of IFRS 15.
  2. Test of operating effectiveness of internal controls: We conducted an audit to assess the effectiveness of selected internal controls related to the recognition of revenues and earnings from, and the measurement of, construction contracts. In doing so, we specifically reviewed the approval processes prior to contract acceptance, the correct setup of contracts, and the accurate allocation of material and personnel costs to the respective projects.
  3. Audit of selected projects: We selected a sample of construction projects and projects from joint ventures, both risk-based and randomly, which we subjected to individual audit procedures. In the risk-based selection, we considered projects with a high degree of complexity and significant estimates to understand how revenues and earnings were recognized and how the construction contracts were measured. Furthermore, we also reviewed the consideration of contractual terms, such as delay and penalty clauses, as well as the recognition of additions. We held discussions with project managers and management and reviewed ongoing project reports to validate the underlying assumptions. In doing so, we critically assessed the judgments and discretionary decisions made by management regarding revenue and earnings recognition and the measurement of construction contracts.
  4. Subsequent events: To assess the appropriateness of the estimates and recognised revenues and earnings, we analysed subsequent events. This analysis helped us validate the assumptions made by management or identify adjustments that needed to be included in the consolidated financial statements.
  5. Notes: We examined whether the disclosures required by IFRS 15 in the notes to the consolidated financial statements contain all necessary explanations related to revenues, earnings from, and the measurement of construction contracts, as well as adequately describe the significant estimation uncertainties.

The processes, estimates, and assumptions applied by management in relation to the recognition of revenues and earnings from, as well as the measurement of construction contracts, align with our expectations and are in accordance with the applicable accounting standards.

Reference to related disclosures

The disclosures regarding revenues and earnings from, as well as the measurement of construction contracts, can be found in the explanations of Accounting policies in the chapter “Revenue recognition”, as well as in the explanations of the items in the consolidated income statement in the chapters “1. Revenue” and “6. Shares of profit or loss of equity-accounted investments”.

Other information

Management is responsible for the other information. The other information comprises the information included in the Annual and Sustainability Report 2024, but does not include the consolidated financial statements, the management report for the Group and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and the Audit Committee for the consolidated financial statements

Management is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU (IFRSs) and the additional regulations of section 245a Austrian Company Code, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Audit Committee is responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the EU Regulation and with Austrian Generally Accepted Standards on Auditing, which require the application of ISAs, will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the EU Regulation and with Austrian Generally Accepted Standards on Auditing, which require the application of ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

  • identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risks of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
  • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
  • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
  • conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
  • evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
  • plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with all relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, on measures taken to eliminate identified threats or on applied safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

Comments on the management report for the Group

Pursuant to Austrian Generally Accepted Accounting Principles, the management report for the Group is to be audited as to whether it is consistent with the consolidated financial statements and as to whether the management report for the Group was prepared in accordance with the applicable legal regulations. Regarding the consolidated non-financial statement contained in the management report for the Group, it is our responsibility to examine whether it has been prepared, to read it and to consider whether it is, based on our knowledge obtained in the audit, materially inconsistent with the consolidated financial statements or otherwise appears to be materially misstated.

Management is responsible for the preparation of the management report for the Group in accordance with Austrian Generally Accepted Accounting Principles.

We conducted our audit in accordance with Austrian standards on auditing for the audit of the management report for the Group.

Opinion

In our opinion, the management report for the Group was prepared in accordance with the applicable legal regulations, comprising the details in accordance with section 243a UGB, and is consistent with the consolidated financial statements.

Statement

Based on the findings during the audit of the consolidated financial statements and due to the obtained understanding concerning the Group and its circumstances no material misstatements in the management report for the Group came to our attention.

Additional information in accordance with Article 10 of the EU Regulation

We were elected as statutory auditor at the ordinary general meeting dated 14 June 2024. We were appointed by the Supervisory Board on 23 July 2024. We have audited the company for an uninterrupted period since 31 December 2024.

We confirm that the audit opinion in the “Report on the consolidated financial statements” section is consistent with the additional report to the Audit Committee referred to in Article 11 of the EU Regulation.

We declare that no prohibited non-audit services (Article 5 para. 1 of the EU Regulation) were provided by us and that we remained independent of the audited company in conducting the audit.

Responsible engagement partner

Responsible for the proper performance of the engagement is Gabor Krüpl, Austrian Certified Public Accountant.

Vienna

4 April 2025

PwC Wirtschaftsprüfung GmbH
qualified electronically signed:
Gabor Krüpl
Austrian Certified Public Accountant

This document has been qualified electronically signed and is only valid in this version. This report is a translation of the original report in German, which is solely valid. Publication and sharing with third parties of the consolidated financial statements together with our auditor’s report is only allowed if the consolidated financial statements and the management report for the Group are identical with the German audited version. This auditor’s report is only applicable to the German and complete consolidated financial statements with the management report for the Group. For deviating versions, the provisions of section 281 para. 2 UGB apply.