Group presentation and management report Ciments Français SAS annual financial statements

Transcription

1 2014 ANNUAL REPORT

2 Table of contents Group presentation and management report... 3 Consolidated financial statements Ciments Français SAS annual financial statements Corporate governance General Meeting and additional information

3 2014 ANNUAL REPORT The photos in the report are part of Faces & Places - The Grey Matters, the book published to celebrate the 150 th anniversary of Italcementi

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5 1 Group presentation 1.1 Business segments of the Group Overall Group structure Risk factors Human ressources Management report

6 Business segments of the Group Cement, aggregates and ready mix concrete are the three core products of Ciments Français. They are used in housing, building and infrastructure construction and renovation. Cement After crushing, raw materials form a mixture composed of 80% limestone and 20% clay which is then ground further to produce the raw feed. Heated to a temperature of around 1,500 C in rotating kilns, the raw feed is transformed into clinker by complex chemical reactions. In the last processing stage, cement is produced by finely grinding the clinker together with various additives which determine the quality of the final product. The Group s cement plants have quarries available with substantial reserves, which allow them to face their long-term operating needs. The average life of a quarry is around 100 years. In most of the countries where the Group operates, clinker production capacity is used at a high level. Aggregates Aggregates are sand and natural gravel which are extracted from the alluvial or solid rocks that can be found in quarries and then crushed and strained. Approximately 40% of aggregates are used to produce concrete, the remainder being used in the construction of roads. The supply needs are fulfilled under conditions similar to those of cement as a result of land management which is well adapted and extremely dynamic to ensure the replacement of reserves. The average life of aggregates quarries is generally shorter than that of cement quarries. Ready mix concrete Concrete is a mix of cement, aggregates, water and admixtures which must be combined in accordance with formulae based on strict technical requirements. Ready mix concrete offers a logistic solution complying with the site requirements in terms of quality, quantity and delivery. The cement producer harnesses an existing knowledge of the chemistry of the materials to bring an additional service to the user. 1.2 Overall Group structure Ciments Français is segmented by geographical areas, themselves structured in business segments. As of 31 December 2014 the Group comprised 150 companies (including Ciments Français) with operations in 20 different countries. The Group is the majority shareholder of 110 companies; 32 companies are held at equity and 8 are held under joint control. Some subsidiaries controlled by the Group are also held by minority shareholders, namely in Thailand (Asia Cement Company and Jalaprathan Cement Public Company), Morocco (Ciments du Maroc) and Egypt (Suez Cement Company and its subsidiaries) who may be industrial or financial partners, State-controlled companies (following privatizations), or companies held by the public (listed companies). The most significant companies held in joint ventures are the Société des Carrières du Tournaisis in Belgium together with several companies in the French construction materials sector. The most significant affiliates are Vassiliko in Cyprus, Ciment Québec in Canada and Asment Temara in Morocco. 4

7 Group presentation and management report Business segments of the Group 4 Consolidated financial statements Overall Group structure 4 Ciments Français SAS annual financial statements Risk factors 5 Corporate governance Human ressources 10 General Meeting Management report 11 Simplified organization chart as of 31 December 2014 Western Europe France/Belgium Spain Other country Greece North America Morocco Emerging Europe, North Africa & Middle East Egypt Others countries Kuwait Saudi Arabia Bulgaria Thailand Asia India Other country Kazakhstan Materials subsidiaries LTD Materials subsidiaries Cement subsidiares Materials subsidiaries Materials subsidiaries Materials subsidiaries Materials subsidiaries Materials subsidiaries TERMINALS (1) Listed company. (2) Investment held at equity. Cement Materials subsidiaries Cement & construcion materials Sales are mainly achieved on local markets. Some subsidiaries (Spain, Morocco and Greece) export to other countries through trading activities (cement/clinker trading segment) which supply the terminals in Gambia, Mauritania and Albania. Trading is also responsible for the purchase of fuels for the subsidiaries of both the Group and Italcementi. Cement and aggregates activities sell part of their production to the ready mix concrete activity. The industrial setup of Ciments Français includes 35 cement plants, 6 grinding centers, 81 quarries, 313 batching units and 6 terminals. 1.3 Risk factors Like any company, the Group is exposed to risks which could have a negative impact on its business activities, financial situation and assets. The management of risks (internal, external, industrial, political, social and financial) is included in management and decision-making processes. It is a major component of the governance system. The objective of risk management is to support sustainable and improved performance through asset preservation. A risk can be defined as an event which may threaten the achievement of the company s or of the Group s short- or medium-term operational objectives or its long-term strategic goals. An opportunity can be described as the possibility to obtain results beyond assigned objectives. The Group operates within an industry that exposes it to risks and uncertainties of a varied nature (operational, financial, conformity risks or dependent on external events, etc.). The Risk & Compliance Program ensures a structured approach to risk management which is integrated in the Group development strategy and contributes to improve performance. 5

8 1 The risk management setup includes: An organizational framework encompassing methodology together with the definition of the roles and responsibilities of the stakeholders (Primary Risk Owner). A process of identification, analysis and treatment of risks in accordance with the strategies clearly defined in the Risk Management Guidelines. A continuous monitoring designed to keep risk mapping permanently up to date and manage action plans developped to reduce exposure to risk. The measurement of risks and opportunities is present in most enterprise management processes such as budget year, revised forecast of results or analysis of major investment projects. The Monte Carlo method is used to obtain maximum exposure to risk factors, as well as estimate the likelihood of achieving the objectives set. The Group through its Sustainable Development Department monitors the programs dedicated to the enforcement of safety prevention policies by plants workers; those programs are supplemented by an integrated financial risk and insurance management policy. Protection of assets and individuals Insurance The Group has subscribed insurance contracts with leading insurance companies, for all the subsidiaries of the Group, to cover the risks associated with its assets and its employees, as well as risks of civil liability with third parties. Major risks insured are as follows: Protection of property and compensation for operating losses resulting from any accidental interruption of activity; Civil liability, pollution or damages towards third parties and employees caused by defects in products or in the industrial process; Physical protection of employees. As part of its risk coverage policy, the Group aims to optimize its risk management costs with a selective allocation between direct coverage and transfer to the market. All contracts are negotiated within a standard agreement framework in order to ensure perfect adequacy between the probability of the risk occurring and the damages resulting therefrom for each subsidiary of the Group. In this framework, which may change depending on prevention policies, claims statistics and market environment, the Group is insured with a global limit of 150 million euros for direct damages and operating losses and 150 million euros for civil liability and products. Prevention of industrial risks The Group pursues its policy of identification, prevention and control of the risks related to the protection of its assets, in order to limit material damages and the resulting operating losses. The Property Preservation Program includes a series of motivational actions designed to make everyone aware of the Group s exposure to risks and thus contribute to improve the maintenance of plants and equipments. Goals related to the realization of key performance indicators based on the program s activities are defined for managers. All the Group s industrial plants actively participate in this program with the support of independent auditors. The objective is to establish a classification of risks and implement appropriate prevention and protection policies resulting in fewer accidents. The Environment Protection Program has been associated with the Property Preservation Program since

9 Group presentation and management report Business segments of the Group 4 Consolidated financial statements Overall Group structure 4 Ciments Français SAS annual financial statements Risk factors 5 Corporate governance Human ressources 10 General Meeting Management report 11 Political risks Ciments Français maintains insurance contracts designed to limit the financial consequences of any possible event potentially preventing normal activity in some of its subsidiaries located in emerging countries. Market, credit and liquidity risks The Group limits its market operations to the management of positions arising from its industrial and commercial activities, excluding any speculative transaction. Management is made on a central basis through the Group s Finance Department exclusively on regulated or over-the-counter markets. The major market, credit and liquidity risks to which the Group is exposed as well as the management policies implemented to reduce them are described in note 19 of the Notes to the consolidated financial statements. Interest-rate risk Interest-rate risk management is aimed at minimizing the Group s net borrowing costs and reducing exposure to that type of risk. Two kinds of risks are hedged: The fair value risk with respect to fixed-rate financial assets and liabilities. The Group is exposed to an opportunity cost risk in the event of a fall in interest rates in case of fixed-rate liabilities. A change in interest rates will impact the fair value of the fixedrate assets and liabilities and will affect the consolidated income statement in case of settlement or early repayment of such derivatives; The cash flow risk with respect to floating-rate assets and liabilities. Changes in interest rates will have little impact on fair value, but will affect finance costs and consequently the future results of the company. The Group, in accordance with its general policy, its objectives of performance and of risk exposure limitation, monitors these two risks by favoring future short and medium-term cash flow hedges and long-term fair value hedges, within defined limits. Hedging transactions consist primarily of interest-rate exchange contracts (swaps), forward-rate agreements (FRA) and interest-rate options traded on over-the-counter market with first-ranking banks. No derivative exposure can exceed the underlying exposure. Foreign-exchange risk Group companies are exposed to exchange-rate risk with respect to their operating cash flows and financing when these are not denominated in local currency. Group companies primarily operate in their local markets. Hence, invoicing and operating costs are denominated in the same currency and exposure to exchange-rate risk on operating cash flows is not very significant except for fuels, spare parts and investments relating to the construction of new plants. Group policy requires that subsidiaries borrow and invest money in their own local currency, except in case of cash flow hedges in foreign currency. The Group may however adapt this general policy in very special cases where a country s specific situation so requires (hyperinflation, high interest rates, translation, liquidity ). As part of financing activities for its subsidiaries, Ciments Français can also enter into financing agreements denominated in a currency different than the currency of the loan to its subsidiary. 7

10 1 Group policy is to hedge such exposures whenever the market makes it possible. Net exposure of each entity is determined on the basis of forecast net operating cash flows within one or two years and financing or investments denominated in currencies other than the local currency. In order to hedge the exchange-rate risk, the Group uses primarily forward contracts, currency exchange contracts or optionbased hedging. These hedging instruments are traded with top-ranking banks. Equity market risk The Group is not significantly exposed to equity market risk. All available-for-sale investments, with the exception of West China Cement, are not listed and Ciments Français treasury shares stated at acquisition cost are deducted from consolidated net equity. Commodity and energy market risk Raw materials used in the manufacturing of cement and aggregates are quarried out. The Group has sufficient reserves to cover its medium and long-term needs. The Group is exposed to a risk of volatility in the prices of some of its energy supplies, i.e. coke, petcoke, gas and electricity. The Group strives to limit this risk by developing, whenever possible, the use of alternative fuels and improving the thermic efficiency of its plants. CO 2 emission trading risk Group companies located in Europe are exposed to changes in the CO 2 emission trading market on the difference between effective emissions and allocated allowances. Group policies consistent with sustainable development practices encourage the reduction of specific CO 2 emissions through the optimization of industrial processes and the use of non-fossil fuels. Over the period, the Group hedged part of its exposure with the use of forward sales of firm or option-based European Union Allowances (EUAs) and forward purchases of Certified Emission Reductions (CERs) with the aim to diversify and optimize its CO 2 emissions rights portfolio. Credit, counterparty and liquidity risk The Group is exposed to credit risk in case of default of a customer or counterparty. Customers who wish to trade on credit terms are subject to preliminary credit verification procedures. In addition, outstanding receivables are monitored on an ongoing basis following Group specific procedures. Concentrations of credit risks with respect to trade receivables are limited due to the Group s customer base being large and unrelated. Exchange-rate and interest-rate derivatives are exclusively traded with highly rated counterparties, selected according to various criteria: ratings assigned by credit rating agencies, assets, equity, nature and maturity of the instrument while respecting risk diversification rules by counterparty, avoiding concentrations. The Group generally trades with leading international banks. None of our counterparties is located in geographic areas with high political or financial risk. All are located either in Western Europe or North America. Cash and cash equivalents are mainly made of very liquid short-term investments with an insignificant risk of changes in value (short-term deposits, certificates of deposit, money market mutual funds). 8

11 Group presentation and management report Business segments of the Group 4 Consolidated financial statements Overall Group structure 4 Ciments Français SAS annual financial statements Risk factors 5 Corporate governance Human ressources 10 General Meeting Management report 11 According to the centralized financial policy available committed credit lines must be sufficient at any time to cover the maturities of the debt over a 2-year period. Some financing agreements signed in 2014 for foreign subsidiaries (India and Kazakhstan) contain acceleration clauses or cancellation clauses in case of non-compliance with the financial ratios (cf. section Covenants of the Notes to the consolidated financial statements). At of 31 December 2014 Ciments Français complied with all of its covenants. Legal risks The Legal Department monitors all Group litigation, providing assistance and control, if necessary with the assistance of the Group s legal advisors. In the normal course of activities of the Group and its subsidiaries, disputes may arise with third parties and proceedings may be brought. Provisions are recognized when the cost of settlement can be reasonably estimated. Disputes and pending proceedings for which no provision was made are detailed in section 2 in the Notes to the consolidated financial statements (note 21). To the company s knowledge, there are no other governmental, legal or arbitration proceedings, or any fact of an exceptional nature, which may have or have had in the past 12 months, any significant impact on the financial position, results, business or assets of the company or of the Group. Compliance risks The Group is subject to special regulations regarding the quality of the products it markets. A specific monitoring guarantees compliance with the local standards of each country. In all the countries where the Group operates, the Risk and Compliance program has contributed to develop targeted training actions and improve the spreading of procedures and recommendations. This program is designed to ensure the implementation by all collaborators and employees of all the tax, social, administrative and environmental laws to which the Group is subjected. It is updated on a yearly basis according to regulatory changes. 9

12 1 1.4 Human resources As of 31 December 2014, the Group had 14,442 employees (14,563 as of 31 December 2013). Headcount by geographical area at 31 December (1) France 3,472 3,550 Belgium Spain Greece North America 1,396 1,381 Egypt 4,420 4,502 Morocco Bulgaria Kuwait Saudi Arabia 59 Thailand India Kazakhstan Trading Others (2) TOTAL 14,442 14,563 (1) By legal entity. (2) Includes head office employees. Headcount by business segment at 31 December Cement and clinker 8,526 8,590 Construction materials 3,802 3,806 Others* 2,114 2,167 TOTAL 14,442 14,563 * Including headquarters and employees working in several business segments. 10

13 Group presentation and management report Business segments of the Group 4 Consolidated financial statements Overall Group structure 4 Ciments Français SAS annual financial statements Risk factors 5 Corporate governance Human ressources 10 General Meeting Management report Management report Significant events Further to the successful simplified tender offer launched by the parent company Italcementi S.p.A., Ciments Français was delisted on 15 July Furthermore, it was transformed into a simplified joint stock company (SAS) by decision of the General Meeting of 4 November Review of business activity and consolidated results The consolidated financial statements of Ciments Français SAS have been prepared in accordance with IFRS (International Financial Reporting Standards). The financial statements for 2014 have been prepared in accordance with the standards and interpretations adopted by the European Union as of 31 December Changes in reporting standards versus 2013 are detailed in the Notes to the consolidated financial statements (section note 1). Data for 2013 has been restated pursuant to IFRS 10 and 11 applicable as from 1 January 2014 with retrospective effect to 1 January The first application of IFRS 10 and 11 has mainly resulted in the consolidation using the equity method of joint ventures previously consolidated using the proportionate consolidation method. This change in method, with no impact on shareholders equity or Group net profit & loss, affects the presentation of assets, liabilities, income statement and cash flow statement. For the Group, impacts are limited. Revenues and results Consolidated revenues for 2014 were stable compared to the previous year at 3,584.5 million euros. Recurring EBITDA amounted to million euros, down 3.9%. EBITDA decreased by 3.5% at million euros. EBIT amounted to million euros (288.7 million euros in 2013) after recognition of 7.6 million euros in non-recurring expense (20.0 million euros in 2013), million euros in amortization and depreciation (331.1 million euros in 2013) and 4.1 million euros in net reversal of asset impairment (against a net impairment of 12.4 million euros in 2013). Net profit amounted to million euros (114.9 million euros in 2013). As of 31 December 2014, net financial debt increased at million euros (750.4 million euros at the end of 2013). 11

14 1 Consolidated key figures (in millions of euros) % change 2014/2013 Revenues 3, , % Recurring EBITDA % EBITDA % EBIT % Net consolidated Group profit (loss) % Attributable to: Owners of the parent Non-controlling interests (in millions of euros) At 31 December 2014 At 31 December 2013 Equity 3, ,515.4 Attributable to: Owners of the parent 2, ,780.4 Non-controlling interests Net financial debt Investments (385.0) (276.6) Quarterly results (in millions of euros) Q1 Q2 Q3 Q4 TOTAL Revenues , , ,587.4 Recurring EBITDA EBITDA EBIT Net consolidated Group profit (loss) (13.5) Attributable to: Owners of the parent (31.0) (22.8) (10.3) Non-controlling interests Net financial debt - end of quarter

15 Group presentation and management report Business segments of the Group 4 Consolidated financial statements Overall Group structure 4 Ciments Français SAS annual financial statements Risk factors 5 Corporate governance Human ressources 10 General Meeting Management report 11 Key figures by geographical segment (in millions of euros) Revenues Recurring EBITDA EBITDA EBIT Western Europe 1, , North America (16.1) (3.7) Emerging Europe, North Africa & Middle East 1, Asia Cement/clinker trading Others* (19.5) (25.6) (20.0) (29.2) (21.0) (30.5) Eliminations (324.1) (274.0) TOTAL 3, , * Headquarters, holding companies and fuel trading. Sales volumes by geographical and business segment Volumes shown here relate to the volumes sold by the fully integrated companies and the companies consolidated on a proportionate basis, pro rata Group share. Cement & clinker millions of tonnes /2013 % Aggregates millions of tonnes /2013 % Ready mix concrete millions of cubic meters /2013 % (1) (2) (1) (2) (1) (2) Western Europe North America Emerging Europe, North Africa & Middle East Asia ns Trading ns ns Eliminations (3.5) (2.4) Total (1) On a comparable basis with (2) On a historical basis. Cement and clinker Overall cement & clinker sales volumes for 2014 were slightly up on Improved sales in Spain and Greece have contributed to limit the decline in Western Europe despite the downturn in France/Belgium. All the other business segments reported progress with the largest contributions from Egypt, North America, Thailand and Trading. Aggregates Aggregates sales volumes were down in all the countries with the sole exception of Greece. 13

16 1 Ready mix concrete The fall in ready mix concrete sales volumes was largely caused by the contraction in Western Europe, where the Group has a larger presence, and in Morocco. The reduction was offset in part by the healthy performance in Egypt, Kuwait, Thailand and North America. Contribution to consolidated revenues Revenues for 2014 have remained stable at 3,584.5 million euros compared with 2013 (+1.1% at comparable consolidation scope and exchange rates). Revenues by business segment (in millions of euros) /2013 % change Amount % Amount % Apparent At comparable consolidation scope and exchange rates Cement & clinker 2, , Construction materials 1, , Others Total 3, , Revenues by geographical segment (in millions of euros) /2013 % change Amount % Amount % Apparent At comparable consolidation scope and exchange rates Western Europe 1, , North America Emerging Europe, North Africa & Middle East Asia Cement/clinker trading Others* Total 3, , * Including fuel trading, headquarters and holding companies. Operating results Recurring EBITDA was down 3.9% on 2013 at million euros. After a net non-recurring expense of 5.9 million euros (as against a net non-recurring expense of 8.9 million euros in 2013), EBITDA was million euros, down 3.5% from EBIT remained steady compared with 2013 at million euros, after recognition of amortization and depreciation for million euros (331.1 million euros in 2013) and 4.1 million euros in net reversal of asset impairment (as against 12.4 million euros in net asset impairment in 2013). 14

17 Group presentation and management report Business segments of the Group 4 Consolidated financial statements Overall Group structure 4 Ciments Français SAS annual financial statements Risk factors 5 Corporate governance Human ressources 10 General Meeting Management report 11 Finance costs, net Net interest expense on net debt amounted to 44.3 million euros (46.0 million euros in 2013). Total finance costs, net of finance income, amounted to 93.8 million euros as against 75.3 million euros in 2013 essentially because of impairment on equity investments for 28.3 million euros. Net profit The share of profit of associates amounted to 12.2 million euros as against 7.5 million euros at the end of 2013 (cf. note 8 of the Notes to the consolidated financial statements). After recognition of 98.5 million euros in income tax expense (106.1 million euros in 2013), net profit was million euros (as against million euros in 2013). The share attributable to the owners of the parent was down at 43.8 million euros (as against 48.1 million euros in 2013). The share of profit attributable to non-controlling interests amounted to 64.6 million euros (66.8 million euros in 2013). Other comprehensive income The impact from other comprehensive income was a profit of million euros (compared with a loss of million euros in 2013) primarily related to the increase of million euros in the translation reserve due to the depreciation of the Egyptian pound, the Thai baht and the Indian rupee against the euro. Equity After distribution of million euros in dividends, total equity was up million euros at 3,700.1 million euros. This increase resulted primarily from the exchange effect ( million euros). The share of equity attributable to the owners of the parent was up million euros at 2,883.6 million euros. The share attributable to non-controlling interests was up 81.5 million euros at million euros. Net profit for the year amounted to million euros (of which 43.8 million euros attributable to the owners of the parent). Debt to equity ratio and debt coverage ratio Debt to equity ratio or gearing ratio (net financial debt/total equity) was 22.3% (21.3% as of 31 December 2013). Net debt coverage ratio (net financial debt/recurring EBITDA over the 12-month period) was 1.34 (1.17 as of 31 December 2013). Investments Total investments in 2014 amounted to million euros as against million euros in Capital expenditure (Property, plant & equipment and intangible assets) before changes in fixed assets payables amounted to million euros (327.8 million euros in 2013). PPE and investment property mainly related to France/Belgium (81.1 million euros), Egypt (65.1 million euros), India (59.1 million euros), Bulgaria (57.3 million euros), North America (37.7 million euros) and Kazakhstan (24.1 million euros). 15

18 1 Key data by country Western Europe Cement plants Grinding center Quarries Batching units France/Belgium Spain Greece TOTAL (in millions of euros) Revenues Recurring EBITDA EBITDA EBIT Capital expenditure France/Belgium 1, , Spain (2.6) 9.3 (13.9) (4.0) (44.8) Greece (3.8) (1.1) (3.8) Eliminations (14.4) (11.4) TOTAL 1, , North America Cement plants Quarries Batching units North America (in millions of euros) Revenues* Recurring EBITDA EBITDA EBIT Capital expenditure TOTAL (16.1) (3.7) * Before intra-group eliminations. Emerging Europe, North Africa & Middle East Cement plants Grinding centers Quarries Batching units Terminals Egypt 5 20 Morocco Other countries * TOTAL * Bulgaria, Kuwait & Saudi Arabia. 16

19 Group presentation and management report Business segments of the Group 4 Consolidated financial statements Overall Group structure 4 Ciments Français SAS annual financial statements Risk factors 5 Corporate governance Human ressources 10 General Meeting Management report 11 (in millions of euros) Revenues Recurring EBITDA EBITDA EBIT Capital expenditure Egypt Morocco Other countries* (3.0) TOTAL 1, * Bulgaria, Kuwait & Saudi Arabia. Asia Cement plants Grinding center Batching units Thailand 3 33 India 2 1 Kazakhstan 1 3 TOTAL (in millions of euros) Revenues Recurring EBITDA EBITDA EBIT Capital expenditure Thailand India Kazakhstan (2.7) (7.0) TOTAL Cement/clinker trading Grinding center Batching units Terminals Trading (in millions of euros) Revenues* Recurring EBITDA EBITDA EBIT Capital expenditure TOTAL * Before intra-group elimination. 17

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21 2 Consolidated financial statements 2.1 Statement of financial position Income statement Statement of comprehensive income (expense) Statement of changes in equity Cash flow statement Notes to the consolidated financial statements Statutory auditors report on the consolidated financial statements

22 2 2.1 Statement of financial position Assets (in millions of euros) Notes 31 December December 2013* 1 January 2013* Property, plant & equipment 5 3, , ,336.3 Investment property Goodwill 6 1, , ,195.1 Intangible assets Investments in associates Other equity investments Deferred tax assets Other non-current assets Total non-current assets 4, , ,957.4 Inventories Trade receivables Other current assets Tax assets Equity investments, bonds and financial assets Cash and cash equivalents Total current assets 1, , ,740.2 Total assets 6, , ,697.5 * Figures for 2013 have been adjusted in accordance with IFRS 10 & 11 which have been applied by the Group since 1 January 2014 with retrospective effect to 1 January

23 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Equity and liabilities (in millions of euros) Notes 31 December December 2013* 1 January 2013* Share capital Share premium Reserves (134.6) 33.1 Treasury shares 16 (16.5) (17.1) Retained earnings 1, , ,890.6 Equity attributable to owners of the parent 2, , ,996.8 Non-controlling interests Total equity 3, , ,789.1 Financial liabilities 19 1, , ,267.3 Employee benefits Provisions Deferred tax liabilities Other non-current liabilities Total non-current liabilities 1, , ,810.1 Loans and borrowings Financial liabilities Trade payables Provisions Tax liabilities Other current liabilities Total current liabilities 1, , ,098.3 Total equity and liabilities 6, , ,697.5 See notes to the consolidated financial statements. * Figures related to 2013 have been adjusted in accordance with IFRS 10 & 11 which have been applied by the Group since 1 January 2014 with retrospective effect to 1 January

24 2 2.2 Income statement (in millions of euros) Notes Change 2014/2013 Amounts % Amounts* % % Revenues 4 3, % 3, % 0.1% Other revenues Change in inventories Internal work capitalized Raw materials and utilities 25 (1,452.9) (1,411.3) Service expense 26 (955.0) (927.6) Personnel expense 27 (592.3) (593.3) Other operating expense 28 (40.6) (54.6) Recurring EBITDA % % 3.9% Net capital gains from sale of fixed assets Other non-recurring expense 29 (7.9) (20.0) EBITDA % % 3.5% Amortization and depreciation 5 (325.6) (331.1) Impairment 5, 6 & (12.4) EBIT % % 0.1% Finance income Finance costs 30 (81.8) (83.4) Fair value gains on derivatives and exchange rates Impairment on financial assets 30 (28.3) (17.0) Finance costs, net 30 (93.8) (75.3) Share of profit of associates Profit before tax % % 6.4% Income tax expense 31 (98.5) (106.1) Net profit % % 5.7% Of which share attributable to: Owners of the parent Non-controlling interests Earnings per share (in euros) 33 Basic earnings Diluted earnings See notes to the consolidated financial statements. * Figures related to 2013 have been adjusted in accordance with IFRS 10 & 11 which have been applied by the Group since 1 January 2014 with retrospective effect to 1 January

25 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Statement of comprehensive income (expense) (Note 32) (in millions of euros) * Profit for the period Actuarial gains (losses) on employee benefits (47.3) 23.1 Income tax on items with no possible reclassification to the income statement 8.7 (3.7) Total items with no possible reclassification to the income statement (38.7) 19.4 Translation differences on foreign operations (237.2) Fair value gains (losses) on cash flow hedging (2.1) 1.6 Fair value gains (losses) on available-for-sale financial assets 19.5 (4.5) Income tax (expense) on items with possible reclassification to the income statement 0.7 (0.7) Total items with possible reclassification to the income statement (240.8) Total other comprehensive income (expense) net of tax effect (221.3) Total comprehensive income (expense) (106.5) Attributable to: Owners of the parent (100.5) Non-controlling interests (6.0) See notes to the consolidated financial statements. * Figures related to 2013 have been adjusted in accordance with IFRS 10 & 11 which have been applied by the Group since 1 January 2014 with retrospective effect to 1 January

26 2 2.4 Statement of changes in equity (in millions of euros) RESERVES Share capital Share premium Available for sale reserve Hedging reserve Other reserves Translation reserve Treasury shares Retained earnings Equity attributable to owners of parent Noncontrolling Total equity interests Balance at 1 January 2013* (9.4) (2.6) (58.9) (17.1) 1, , ,789.1 Net profit for the period Other comprehensive income (expense) (4.5) 0.9 (164.1) 19.2 (148.5) (72.8) (221.3) 2013 comprehensive income (expense)* (4.5) 0.9 (164.1) 67.3 (100.5) (6.0) (106.5) Dividends (106.6) (106.6) (49.9) (156.5) Sale of treasury shares Changes in consolidation scope and others (9.9) (9.9) (1.4) (11.3) Balance at 31 December 2013* (14.0) (1.7) (223.0) (16.5) 1, , ,515.4 Net profit for the period Other comprehensive income (expense) 19.6 (1.5) (37.7) comprehensive income (expense) 19.6 (1.5) Dividends (106.7) (106.7) (55.4) (162.0) Share capital increase Cancellation of treasury shares (1.4) 16.5 (15.1) Changes in consolidation scope and others Balance at 31 December (3.2) (60.0) 1, , ,700.1 See notes to the consolidated financial statements. * Figures related to 2013 have been adjusted in accordance with IFRS 10 & 11 which have been applied by the Group since 1 January 2014 with retrospective effect to 1 January

27 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Cash flow statement (Note 35) (in millions of euros) (2) Cash flow from operating activities Profit before tax Adjustments for: Amortization, depreciation and impairment Reversal of the share of profit (loss) of associates 6.2 (1.1) Net capital (gains) losses on sale of fixed assets (1.5) (12.9) Change in employee benefit and other provisions (16.8) 7.7 Finance costs, net Cash flow before tax, interest expense and change in working capital (WCR) Change in working capital requirement (1) Cash flow from operating activities Net interest expense paid (61.3) (53.8) Dividends received Tax paid (101.0) (86.5) TOTAL NET CASH PROVIDED BY OPERATING ACTIVITIES Cash flow from investing activities Intangible assets (2.2) (20.6) Property, plant and equipment and investment property (379.6) (274.7) Financial assets (equity, investments), net of cash acquisitions (0.5) (1.4) Proceeds from the sale of fixed assets Change in other long-term financial assets and liabilities (12.1) 0.3 TOTAL NET CASH USED IN INVESTING ACTIVITIES (385.0) (276.6) Cash flow from financing activities Increase in non-current financial liabilities Repayment of non-current financial assets and liabilities (23.9) (172.1) Change in current financial assets (54.1) 38.2 Capital increase 10.7 Sale of treasury shares 0.6 Dividends paid (110.1) (156.5) Other sources and applications 4.3 (3.3) TOTAL NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (67.6) (289.7) Translation differences and other changes 40.9 (39.7) (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 49.7 (89.3) See notes to the consolidated financial statements. (1) Of which improvement (deterioration) related to transferred receivables (cf. note 12). (3.2) 19.7 (2) Figures related to 2013 have been adjusted in accordance with IFRS 10 & 11 which have been applied by the Group since 1 January 2014 with retrospective effect to 1 January

28 2 2.6 Notes to the consolidated financial statements Note 1 Main rules and accounting policies Note 2 Euro conversion rates Note 3 Changes in the scope of consolidation Note 4 Segment information Note 5 Property, plant and equipment, net Note 6 Goodwill Note 7 Intangible assets Note 8 Investments in associates Note 9 Other equity investments Note 10 Other non-current assets Note 11 Inventories Note 12 Trade receivables Note 13 Other current assets Note 14 Share capital Note 15 Reserves (share attributable to the owners of the parent) Note 16 Treasury shares Note 17 Dividends Note 18 Non-controlling interests Note 19 Net financial position Note 20 Employee benefits Note 21 Provisions and contingent liabilities Note 22 Income tax Note 23 Other current liabilities Note 24 Off balance-sheet commitments Note 25 Raw materials and utilities expense Note 26 Service expense Note 27 Personnel expense Note 28 Other operating income (expense) Note 29 Non-recurring income (expense) Note 30 Finance income (costs) Note 31 Tax expense Note 32 Recyclable components of comprehensive income (expense) Note 33 Earnings per share Note 34 Related party transactions Note 35 Cash flow statement Note 36 Significant events after the reporting period Note 37 Application of IFRS 10 & 11 as of 1 January 2014 Note 38 Consolidation scope 26

29 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Ciments Français consolidated financial statements as of 31 December 2014 were examined on 27 February 2015 by the Chief Executive Officer, who authorized their publication on 25 March Further to the simplified tender offer launched by Italcementi S.p.A. and the subsequent squezze-out procedure, Ciments Français is 100% owned by Italcementi S.p.A. Ciments Français was delisted from Euronext Paris on 15 July Ciments Français was transformed into a French simplified joint stock company (SAS) by decision of the General Meeting of 4 November Note 1 Main rules and accounting policies 1.1 Statement of compliance Ciments Français consolidated financial statements reflect the accounting position of Ciments Français and its subsidiaries (hereafter referred to as the Group ), as well as the interest in associates and jointly owned companies. They are prepared in conformity with International Financial Reporting Standards (IFRS) as adopted by the European Union at closing date. International Financial Reporting Standards are available on the European Union website at They do not integrate the standards and interpretations published by the IASB as of 31 December 2014 but not yet adopted by the European Union at that date. The Group has not anticipated any standard, amendment or interpretation adopted by the EU but with no mandatory application in The provisions with mandatory application for the Group on or after 1 January 2014 are as follows: Amendments to IAS 32 Financial Instruments - Presentation about offsetting financial assets and liabilities, adopted by the European Union in December IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities and consequential amendments to IAS 27 and IAS 28, adopted by the EU in December The main effect of those provisions is the consolidation using the equity method of certain joint ventures previously consolidated using the proportionate consolidation method. The impacts on the 2014 accounts are detailed in note 37. Amendments to IFRS 10, 11 and 12 about transition guidance, adopted by the EU in April Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets, adopted by the EU in December Amendments to IAS 19 Novation of Derivatives and Continuation of Hedge Accounting adopted by the EU in December First-time application of these standards did not have any material impact on 2014 accounts. The new provisions adopted by the EU and applicable for the Group to annual periods beginning on or after 1 January 2015 are as follows: IFRIC 21 Levies on when to recognize a liability to pay a levy (other than income tax) to a government, if that liability is within the scope of IAS 37. It was adopted by the EU in June Annual improvements, cycle, adopted by the EU in December The Group is completing its review regarding the implementation of those provisions, which are not expected to have any material impact on 2015 financial statements. 27

30 2 The new provisions adopted by the EU and applicable for the Group to annual periods beginning on or after 1 January 2016 are as follows: Amendments to IAS 19 revised on employee contributions, adopted by the EU in December Annual improvements, cycle, adopted by the EU in December The standards, amendments and interpretations published by the IASB with mandatory application after 1 January 2016 provided that they are adopted by the EU can be listed as follows: Amendments to IAS 16 - Property, Plant and Equipment and IAS 38 - Intangible Assets Clarification of Acceptable Methods of Depreciation and Amortization. Amendments to IAS 27 Equity Method in Separate Financial Statements on the consolidation using the equity method of investments in subsidiaries, joint ventures and associates, so far recognized at cost or according to IFRS 9. Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture. Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations. Amendments to various IFRSs (standards annual improvement process, ). The standards, amendments and interpretations published by the IASB with mandatory application at a later date provided that they are adopted by the EU can be listed as follows: IFRS 15 Revenue from Contracts with Customers will be applicable to annual periods beginning on or after 1 January IFRS 9 Financial Instruments will be applicable to annual periods beginning on or after 1 January Basis of preparation of the financial statements The Group s consolidated financial statements have been prepared on a historical cost basis, with the exception of the following assets and liabilities that have been measured at fair value: derivatives, held-for-trading investments and available-for-sale financial assets. The carrying value of recognized assets and liabilities that are hedged is adjusted to record changes in the fair value attributable to the risks that are being hedged. The consolidated financial statements are presented in euros rounded off to the nearest tenth of a million. The statement of financial position is presented using the following classification: current and non-current assets, current and noncurrent liabilities. Assets expected to be realized, or intended for sale or consumption during the Group s normal operating cycle, together with cash and cash equivalents, represent the Group s current assets. The other assets are non-current assets. Liabilities due during the Group s normal operating cycle or within the twelve months after the statement of financial position date are current liabilities. The other liabilities are non-current liabilities. The income statement is presented by nature. The cash flow statement is presented using the indirect method. The preparation of the consolidated financial statements, in conformity with IFRS, requires the Group s management to take into account a certain number of estimates and assumptions that have an impact on assets and liabilities and on the income and expense of the income statement, as well as on contingent assets and liabilities referred to in the notes. These estimates are determined on an ongoing concern basis using data available at the time of their preparation. They serve as basis for the exercise of judgment in the appreciation of the book values of some assets and liabilities. Estimates and assumptions are reviewed at each closing. Actual results may turn out to be different primarily because of the difficulty of apprehending economic prospects. Estimates and 28

31 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 assumptions can be particularly sensitive in terms of impairment tests on intangible assets widely based upon future cash flows forecasts and estimates of discount and growth rates (see note 6.2), litigation provisions (see note 21), employee benefits (see note 20), provisions for site restructuring, valuation of available-for-sale investments (see note 9), derivatives (see note 19) and recognition of deferred tax assets (see note 31). Some of the countries where the Group operates via subsidiaries or financial investments, in particular Egypt and Syria, experience political developments resulting in tensions and uncertainties in the economic environment with an increase in costs (salary, energy and fuels, preservation of assets and people), as well as sometimes production interruptions. However, medium-term cement needs remain high in those countries. 1.3 Basis of consolidation The full consolidation method is used to consolidate the financial statements of entities controlled by the Group. The Group has control over an entity when it benefits from variable returns because of its implication in that entity and has the capacity to influence these returns due to its power on the entity. The financial statements of these entities are consolidated line by line in the consolidated financial statements from the date on which control is effectively transfered to the date on which control ceases to exist. The equity method of accounting is used to recognize investments in associates in the consolidated balance sheet. An associate is an entity in which the Group has a significant influence on the financial and operating policies, but that it does not control. Significant influence is usually presumed when the Group holds 20% or more of the voting rights of the associate. According to this method, the share in an associate is initially recognized at cost. The cumulative post-acquisition movements in the Group s share of net asset of the associate are adjusted against the carrying amount of the investment, together with any impairment in value. The Group s share of the profit or loss of the associate is carried in the income statement on a specific line from the date on which the Group has a significant influence up to the date on which it ceases. The equity method of accounting is also used to recognize investments in entities of which the Group is a venturer. Those joint ventures are jointly controlled entities in which the Group has rights over the net assets. Joint ventures are jointly controlled companies for which the parties have rights on assets and obligations on liabilities. The assets, liabilities, income and expense related to the interests of the Group as joint participant in these undertakings are recognized on a line-by-line basis in the consolidated balance sheet. Intra-Group balances and transactions, including internal profits and losses resulting from intra-group transactions are eliminated in full. Intra-Group losses are eliminated unless the transaction provides evidence of impairment. Unrealized gains on transactions between the Group and its associates are eliminated against investment. 1.4 Business combinations Business combinations on or after 1 January 2010 Business combinations are accounted for using the purchase method. When the Group acquires control over an entity, during the first consolidation of said entity, the acquired identifiable assets and liabilities incurred or assumed are recognized at their fair value at acquisition date. Non-controlling interests (minority interests) are recognized either at their fair value or proportionally to the fair value of the net identified assets of the acquired entity, with the possibility to choose on a case-by-case basis for each acquisition. Acquisition costs are treated as expenses. 29

32 2 When a business combination is achieved by stages, the share held prior to the date of acquisition is adjusted to its fair value in the income statement. Goodwill is determined as the positive difference between the fair value of the consideration transferred, adjusted as the case may be to the fair value of the share previously held and the amount of non-controlling interests, and the net acquired identifiable assets and liabilities. Should this difference be negative it is recognized directly in the income statement. Goodwill is then kept at its initial cost, less any recognition of impairment losses. After a period of one year, any contingent adjustment to the values allocated to identifiable acquired assets and liabilities are recognized in the income statement; the same accounting treatment is applied to adjustments in acquisition costs when they relate to financial liabilities. In case of an additional purchase of shares in an already controlled entity, the difference between the purchase price and the carrying value of non-controlling interests is recognized as changes in equity attributable to the owner of the parent company. The consolidated value of the assets, liabilities and goodwill of the entity remains unchanged. Likewise, in case of a partial sale of an entity s shares without loss of control, the difference between the sale price and the share of equity of the controlled entity is recognized as change in equity attributable to the owner of the parent company. Buyback commitments of non-controlling interests in controlled companies are recognized as liabilities for the discounted amount of the sale option exercise price against equity attributable to the owners of the parent company; subsequent changes in the debt are treated in the same manner. Business combinations prior to 1 January 2010 The accounting methods applied to business combinations prior to 1 January 2010 differed from the above-mentioned policies. The main differences are as follows: Expenses directly attributable to business combinations came in addition to acquisition cost. However, acquisition costs incurred in 2009 for later business combinations were recognized as expenses over 2009; Non-controlling interests were recognized proportionally to the fair value of net acquired assets; In case of a business combination achieved by stages, each major transaction was treated separately to determine the fair value of acquired identifiable assets and liabilities and the resulting goodwill. Whenever an additional purchase enabled acquisition of control, the share of interest previously held was restated to the fair value of identifiable assets and liabilities determined for this additional investment. The revaluation balancing entry was recognized in equity. Business combinations prior to 1 January 2004 have not been retreated retrospectively. Additionally, buyback commitments on interests held by minorities in controlled companies have been recognized as loan for the present value of the sale option exercise price. The corresponding minority interests have been cancelled. The difference as well as future changes in the debt have been recognized as goodwill. 30

33 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Foreign currency translation The functional currency of Ciments Français SAS and its operations located in the euro zone is the euro. The functional currency of the operations located outside the euro zone is usually the local currency. The presentation currency of Ciments Français Group consolidated financial statements is the euro. Transactions in currencies other than the functional currency Foreign currency transactions are initially translated into the functional currency using the exchange rate ruling at the date of transaction. At balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate ruling at closing date. The resulting foreign exchange differences are recognized in the income statement. Non-monetary items denominated in foreign currency, when measured at cost, are translated using the exchange rate at the date of the initial transaction. Non-monetary items measured at fair value are translated using the exchange rate at the date on which the fair value was determined. Translation of the financial statements of foreign operations At balance sheet date, the assets and liabilities of subsidiaries, associates and joint ventures, with a functional currency other than the euro are translated into the presentation currency using the exchange rate ruling at balance sheet date. Income and expense are translated at the average exchange rate for the year. From 1 January 2004, date of the transition to IFRS, the resulting exchange differences are recognized as a separate component of equity. On subsequent disposal of net investments denominated in foreign currency, the cumulative deferred exchange differences included in the separate component of equity relating to that foreign operation is recognized in the income statement. Pursuant to an exemption offered by IFRS 1, the amount of cumulative translation adjustments resulting from exchange differences in the accounts of subsidiaries in currencies other than the euro, prior to 1 January 2004, has been reclassified as retained earnings at that date and will not be recognized as profit or loss on subsequent disposal of net investments denominated in foreign currency. 1.6 Property, plant & equipment (net) Elements of costs Property, plant and equipment (PPE) is carried at cost less any accumulated depreciation and impairment losses. Cost includes the purchase price or production cost and directly attributable costs of bringing the asset to the location and conditions necessary for its operation. Production cost includes the cost of used equipments and direct labor. Borrowing costs incurred by the Group to finance capital expenditure during the pre-operation period are capitalized as part of the costs of the asset. When an item of property, plant and equipment includes significant components with different useful lives, they are recognized separately. 31

34 2 Subsequent costs Maintenance costs are expensed when incurred. The replacement cost or the renewal of a component of property, plant and equipment is recognized as a separable asset and the replaced asset is written off. Depreciation Depreciation is recognized as expense using the straight-line method over the estimated useful life of the item of property, plant and equipment. Land is not depreciated, with the exception of land used for quarrying operations. Quarries Stripping costs enabling quarrying operations are considered as quarry s components and depreciated over the expected period which will benefit from such costs. Quarry land is depreciated using the depletion method based on the tonnes excavated in the year compared to the total estimated tonnes to be excavated over its useful life. When there is a legal or contractual obligation to reorganize sites, a provision for site reorganization is recognized (see note 21). Since the financial resources required to settle such obligations are directly related to the degree of use, the provision is defined from earnings as the site is redeveloped. 1.7 Finance leases Lease contracts of property, plant and equipment whereby the Group substantially holds all risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease inception at the lower of the leased asset fair value or the present value of the minimum lease payments. Lease payments are apportioned between finance costs and reductions against the residual liability so as to obtain a constant rate of interest on the outstanding liability. Depreciation and subsequent asset measurement policies are consistent with those of similar property, plant and equipment. Lease contracts for which a significant part of the risks and rewards incidental to ownership are kept by the lessor are classified as operating leases. Leasing expenses are recognized in the income statement and spread over the lease term on a straight-line basis. 1.8 Investment properties Properties are classified as investment properties when they are held to earn rentals or for capital appreciation rather than being used for production purposes. Investment properties are initially measured at acquisition or production cost. Transaction costs are included in the initial measurement. They are subsequently measured at amortized cost. 32

35 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Goodwill As from 1 January 2004 goodwill recognized in business combinations (see note 1.4) is no longer amortized. From acquisition date, goodwill is allocated to cash-generating units expected to benefit from the combination s synergies in view of future assessment. Goodwill is systematically tested for impairment annually or when there is any indication that the goodwill may be impaired according to the assets impairment method described in note Where goodwill has been allocated to a cash-generating unit and the Group disposes of assets within that unit, the goodwill associated with the sold assets is included in their carrying amount and measured on the basis of the relative values of the sold assets and the portion of the cash-generating unit retained Intangible assets Intangible assets acquired separately are capitalized at cost; those acquired in a business combination are recognized at fair value determined at acquisition date. Amortization is recognized over the asset s estimated useful life. The Group has not identified any intangible assets with an indefinite useful life other than goodwill Impairment of non-current assets Assets with an indefinite useful life (goodwill) which are not subject to amortization are systematically tested annually for impairment and every time there is an indication that their recoverable amount may be lower than their carrying amount. The impairment test is performed systematically once a year for the annual closing on every cash-generating unit to which goodwill had been allocated. Assets that are subject to depreciation are tested for impairment as soon as there is an indication that their recoverable amount may be lower than their carrying amount. The amount of impairment recognized is equivalent to the excess of the carrying amount over the recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use. The value in use is determined using the estimated future discounted cash flows method over periods covering up to 9 years to take into account the characteristics of the Group s activities and the specificities of the cycles of the various markets involved. Final values are determined according to reference cash flows reflecting the standard profitability of the markets. Assets are tested at the level of cash-generating units based on an operational breakdown. The discount rate used is calculated for each group of tested assets using the weighted average cost of capital (WACC) method. Impairment losses recognized on goodwill shall never be reversed. For other assets, whenever there is an indication that an impairment loss recognized in prior periods may no longer exist, the impairment loss is reversed up to the lowest amount between the new value and the net carrying value of the asset should it not have been impaired Equity investments and other financial assets All investments and financial receivables are initially recognized at fair value increased with acquisition costs associated with the investment. The future evaluation of financial assets depends on the category in which they have been classified: financial assets recognized at fair value in the income statement, held-to-maturity investments or available-for-sale assets. Balancing entries of financial assets carried at fair value against income are classified as investments and financial receivables and are measured at fair value; gains or losses resulting from the changes in the fair value are recognized as finance income (costs). 33

36 2 Held-to-maturity investments are classified as investments and financial receivables if their maturity is less than one year and in other investments if their maturity exceeds one year. They are recognized at amortized cost, being determined based on the effective interest rate at acquisition date, less any impairment losses. Other investments are classified as available-for-sale and measured at their fair value. Gains or losses resulting from this measurement are recognized as reserve in equity until investments are discontinued except in case of significant or prolonged impairment loss. In such a case, the net cumulative loss in equity is recognized in the income statement Inventories Inventories are stated at the lower of purchase or production cost (using the weighted average cost method) and net realizable value. For finished and semi-finished goods, the net realizable value is the estimated selling price in the ordinary course of business, less estimated completion costs and estimated selling expenses. When a decline in the price of raw materials indicates that the cost of the finished products exceeds the net realizable value, the raw materials are written down to net realizable value, being the replacement cost. The net realizable value includes any impairment losses related to the obsolescence and slow moving of inventories. Raw materials, supplies and spare parts are valued at cost using the weighted average cost method. Cost includes expenses incurred in purchasing and bringing the inventories to their present location. The production costs of finished and semi-finished goods comprise raw materials, direct labor costs and an allocation of production overheads, based on normal capacity, and excluding borrowing costs Trade receivables and other receivables Trade receivables and other receivables are recognized and carried at fair value plus transaction costs, less an allowance for any uncollectible amounts. Derecognition of investments and financial receivables: The Group derecognizes all or part of a financial asset when: The contractual entitlements that constitute the asset expire. The Group substantially transfers almost all the risks and rewards attaching to the ownership of the asset or has neither transferred nor kept almost all the risks and rewards attaching to the ownership of the financial asset, but has transferred control of the financial asset. When the entitlement to receive cash flows from financial assets has been transferred but the Group has neither transferred nor kept almost all the risks and rewards, nor has transferred control of the financial asset, it continues to recognize the financial asset transferred in proportion to its continuing contribution to assets. 34

37 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, short-term deposits and other investments with original maturities of three months or less at the original transaction date. Within the Group, bank overdrafts are not considered as a component of cash and equivalents but as a source of financing. Investment supports denominated in euros are mutual funds (OPCVM) classified as Euro Monetary investments by the Autorité des marchés financiers (AMF) in France, or by the relevant regulatory authorities in other countries. Cash investments in euros or in other currencies that do not fall in the Euro Monetary category are mutual funds (OPCVM) that comply with the definition of cash equivalents given by IAS 7: i.e. a reference benchmark to the monetary market index of the corresponding money market; investment maturities generally three months or less; settlement value calculated daily or weekly; investments easily convertible into known cash amounts given low volatility and sensitivity levels; easily predictable disposal value; performance determined mainly by trends in the monetary market Income tax Current income tax is recognized in conformity with the regulations in force in each of the countries. Deferred tax is recognized, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amount. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, unused tax losses carry-forward and unused tax credits, to the extent that it is probable that future taxable profit will be available against which these items can be utilized. Only taxable or deductible temporary differences arising in the following cases do not imply the recognition of deferred tax liabilities or assets: Taxable temporary differences related to goodwill Taxable or deductible temporary differences resulting from the initial recognition of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit/loss nor taxable profit/loss Temporary differences related to investments in subsidiaries, associates and interests in joint ventures: on taxable temporary differences when the company has control over the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future; on deductible temporary differences if it is not probable that they will reverse in the foreseeable future and that they could be utilized against a taxable profit. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to enable this deferred tax asset to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted at balance sheet date. Income tax relating to items recognized in equity is carried directly in equity. 35

38 Employee benefits Main plans and accounting treatment Defined contribution plans Defined contribution plans involve post-employment benefit plans under which the Group pays defined contributions to an insurance company or to a pension fund and will have no legal or constructive obligation to pay further contributions should the fund not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. These contributions, paid in return for employee service, are recognized as expense as incurred. Defined benefit plans Defined benefit plans involve post-employment benefit plans that guarantee employees future benefits representing a liability for the Group. The actuarial risk and investment risks thus fall on the company. The calculation of the liability is determined on the basis of an actuarial calculation using the projected unit credit method in order to determine the present value of the obligation and the current service cost. This actuarial calculation requires the use of actuarial assumptions with regard to variables of a demographic (mortality, employee turnover) and financial (future increases in salaries and medical costs, discount rate, expected return on financial investments) nature. Where defined benefit plans are wholly or partly funded by contributions paid to a separate fund or to an insurance company, the assets of such entities are measured at their fair value. The obligation is then recorded in the balance sheet, less the value of the plan assets covering this obligation. Actuarial gains and losses Actuarial gains and losses result from changes in actuarial assumptions from one period to another, as well as any gain or loss recorded on the obligation or on the value of the funds compared with the expected trend at the beginning of the period. These actuarial gains or losses are recognized in Other comprehensive income (expense), with no possible reclassification in income statement. Actuarial gains or losses on other long-term (jubilee awards) and termination benefits (early retirement plans) are recognized immediately in profit or loss. Past service cost Impacts relating to a plan amendment are immediately recognized in profit or loss. Curtailment and settlement When a curtailment or a settlement occurs, gains and losses are recognized in profit or loss. Gains or losses on a curtailment or settlement shall comprise any change in the present value of the defined benefit obligation or in the fair value of the plan assets. The obligation and the related plan assets are measured using actuarial assumptions at curtailment or settlement date. Net interests on obligation Interests on net liabilities related to defined benefits are recognized in Finance costs. 36

39 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Other provisions A provision is recognized when a legal or constructive obligation exists at balance sheet date and it is probable that an outflow of resources to the benefit of third parties will be required to settle the obligation. Provisions are recognized at the value representing the best estimate of the amount to be paid to settle the obligation. Where the effect of the time value of money is material, future cash outflows are discounted. The discount rate reflects market assessments of the time value of money and the risks specific to the liability that have not been adjusted in the estimate of future outflows. The changes in discounted provisions resulting from the passage of time and changes in discount rates are recognized as finance income (costs). When an obligation to restore operating quarry sites exists, a provision for site restoration is recognized. The outflow of resources required to settle the obligation being directly related to the stage of the site operation, the liability is provided for based on the progress of the operation. A provision for dismantling costs is recognized based on the initial cost of the quarry. As for the recognition of greenhouse gas emission allowances, the Group applies the following treatment: A provision is recognized in case of probable allowances deficit vs. granted allowances. Bonus emission allowances received as part of national allocation plans are not recognized in the balance sheet (zero cost). A provision for restructuring costs is recognized when the Group has endorsed a detailed formal restructuring plan and when restructuring has been implemented or when the plan s details have been released to the public Interest-bearing loans and borrowings All loans and borrowings are recognized initially at fair value, adjusted for transaction costs directly related to the issue of the financial asset or liability. Loans and borrowings are subsequently measured at amortized cost using the effective interest method. At every closing the recoverable aspect of loans and borrowings is estimated and amortization is recognized whenever there is an asset impairment risk Trade payables and other payables Commercial and other debts are initially recognized at fair value. After the initial recognition, commercial and other debts are valued at the amortized cost Derivative financial instruments The Group uses derivatives such as foreign currency contracts and interest-rate swaps and options to hedge its risks associated with interest rate, greenhouse gas emission allowances and foreign currency fluctuations. Derivatives are recognized and measured at fair value. They are recognized as assets when their fair value is positive and as liabilities when their fair value is negative. The fair value of forward-exchange contracts is calculated by reference to current exchange rates for contracts with similar maturity profiles. The fair value of interest rate swap contracts is determined by discounting future cash flows using the zero curve. 37

40 2 Hedge accounting When derivatives qualify for hedge accounting and pass hedging efficiency tests, derivatives are designated as fair value hedges when they cover the exposure to changes in the fair value of a recognized asset or liability, or cash flow hedges when they hedge exposure to variability in cash flows that are either attributable to a particular risk associated with a recognized asset or liability, a forecast transaction, or a firm commitment. The changes in the fair value of foreign currency or interest rate derivatives designated as fair value hedges are recognized in finance income (costs). The carrying amount of hedged financial assets and liabilities is adjusted by the gain or loss attributable to the hedged risk, the adjustment being also recognized in finance income (costs). The fair value of financial assets and liabilities denominated in foreign currencies is measured using the exchange rate at the balance sheet date. The fair value of fixed rate financial assets and liabilities is measured using a fixed rate excluding credit margin. For relationships designated as cash flow hedges (foreign currency contracts, fixed-rate interest swaps), changes in the spot price or in the intrinsic value (rate, exchange option) are recognized in a special reserve of equity. Changes in interest or in the time value (rate, exchange option) and the non-effective hedge portion are recognized in finance income (costs). When the future hedged transaction results in the recognition of a non-financial asset or liability, at the time the asset or liability is recognized, the associated gains or losses previously recognized in equity are included in the initial measurement of the acquisition cost. For all other cash flow hedge relationships, the gains or losses that are recognized in equity are transferred to the income statement for the period during which the hedged firm commitment (or future transaction) affects the net profit or loss. When the derivative instrument no longer qualifies for hedge accounting, any cumulative gain or loss in equity at that date is kept in equity until the hedged commitment is realized. When derivatives do not qualify for hedge accounting, they are classified as non-designated derivatives and fair value changes are recognized in finance income (costs) Revenues, interests and dividends Revenues are recognized to the extent that it is probable that the economic benefits associated to the sale of goods and services will benefit to the Group and revenues can be reliably measured. Revenues Revenues are measured at the fair value of the consideration received or receivable taking into account potential rebates or discounts. Sales of goods are recognized when the risks and rewards of ownership of the goods have been passed to the buyer. Rental income Rental income received from investment properties is recognized as other income. Interest income Interest income is recognized as finance income on an accrual basis using the effective interest rate method. Dividends Dividends are recognized as finance income when the shareholders rights to receive dividends are established in conformity with local legislations in force. 38

41 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Government grants Government grants are recognized at their fair value when there is a reasonable assurance that the grant will be received and that all attached conditions will be fulfilled. Investment grants are recognized as deferred income in the balance sheet liabilities and depreciated on a linear basis over the useful life of the underlying asset Capital management The Group monitors its capital using the gearing ratio: net financial debt/equity. Net financial debt consists of financial debt (as described in note 19.1) less cash and cash equivalents and current and other non-current financial assets as presented in the Group statement of financial position. Total equity includes all the components of equity presented in the balance sheet; it includes the owners of the parent company (shareholders of Ciments Français) and the owners of non-controlling interests (minority shareholders of subsidiaries). When needed, treasury shares are recognized at their acquisition cost and deducted from equity; their potential sale has no effect on profit or loss, the resulting net income being recognized as increase in equity. Group strategy is to maintain this ratio to such a level as to allow the smooth running of business operations, the funding of its investments in the best of conditions and the creation of maximum value for its shareholder. Within this framework, the Group may decide to vary the amount of dividends paid, redeem capital, issue new shares, increase or reduce its shareholding in subsidiaries, as well as purchase or sell interests. 39

42 2 Note 2 Euro conversion rates Average rates Closing rates 2014 financial year 2013 financial year At 31 December 2014 At 31 December 2013 US dollar Canadian dollar Moroccan dirham Swiss franc Thai baht Indian rupee Mauritanian ouguiya Albanian lek Sri Lanka rupee Egyptian lira Kazakh tenge Kuwait dinar Saudi riyal New Mozambican metical Note 3 Consolidation scope There were no significant changes in the scope of consolidation in 2014 and The full list of the companies included in the scope of consolidation is presented by country in note 38 with Group percentages of control and interest. The subsidiaries in which non-controlling interests are significant are those located in Egypt, Morocco and Thailand. Financial information related to Suez Cement Company, Ciments du Maroc and Asia Cement Public Co sub-groups operating in the aforementioned countries are detailed in note 4. 40

43 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Note 4 Segment information The geographical segments of the Group which constitute the internal reporting segments used by the operating management are as follows: France/Belgium, Spain, Greece, North America, Egypt, Morocco, Bulgaria, Kuwait, Saudi Arabia,Thailand, India, Kazakhstan and cement/clinker trading. Greece, Bulgaria, Kazakhstan, Saudi Arabia and Kuwait are presented in the Other countries sections as they do not meet the criteria required for a separate presentation. The business segments of the Group, which constitute the secondary internal reporting segment used by the operational management, consist of the following segments: cement and clinker, construction materials (aggregates and concrete) and other activities (transportation, bags ). Operating activities are organized and managed by country and by business. Senior management assesses the performance of the business units based on revenues, recurring EBITDA, EBITDA, EBIT and invested capital. The Group s geographical segments are determined according to the location of the Group s assets. Units mainly sell in their local market. Those exporting sell to other units of the Group or outside the Group s scope, usually via the trading subsidiary (international segment). The international reporting segment comprises the cement and clinker business carried out via terminals located in Gambia, Mauritania and Albania, together with sales realized by the trading subsidiary towards countries where the Group does not operate. The trading activity is also responsible for the purchase of fuels to supply subsidiaries. Revenues after intra-group eliminations therefore mainly consist of sales made on the geographical segments where the assets are located. A part of the cement and aggregates business output is sold to the ready mix concrete segment. Transfer prices between geographical or business segments correspond to prices set at arm s length conditions. 41

44 2 The following table summarizes revenues derived from the various segments: Cement & clinker Construction materials Aggregates Ready mix concrete Western Europe France/Belgium Spain Other country (1) North America Emerging Europe, North Africa & Middle East Egypt Morocco Other countries (2) Asia Thailand India Other country (3) Cement/clinker trading Others (4) (1) Greece. (2) Bulgaria, Kuwait & Saudi Arabia. (3) Kazakhstan. (4) Fuel trading, headquarters & holding companies. Other activities Transport Bags Fuels Holding companies Segment information reflects the Group organizational and management structure. No customer represents more than 10% of consolidated revenues. 42

45 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Revenues and results by country as of 31 December 2014 were as follows: (in millions of euros) Revenues Intra- Group sales Revenues after elimination Recurring EBITDA EBITDA EBIT Finance costs Share Profit of profit before tax (loss) of associates Income tax Net profit France/Belgium 1,362.5 (4.5) 1, Spain (46.2) (4.0) Other country (1) 29.3 (3.5) (1.1) 9.3 Intra-zone eliminations (14.4) 14.4 Western Europe 1,485.0 (39.8) 1, North America (0.3) (16.1) 4.3 Egypt (2) (20.7) Morocco (2) (7.8) Other countries (3) (6.9) (3.0) Emerging Europe, North Africa & Middle East 1,021.6 (35.4) Thailand (2) (6.3) India (2.8) Other country (4) (2.7) Asia (9.2) Cement/clinker trading (69.4) (0.4) Unallocated (5) (169.9) 36.9 (19.5) (20.0) (21.0) Inter-zone eliminations (324.1) Postings unallocated to countries (93.8) GROUP TOTAL 3, , (93.8) (98.5) (1) Greece. (2) Segments in which non-controlling interests are not significant. (3) Bulgaria, Kuwait & Saudi Arabia. (4) Kazakhstan. (5) Fuel trading, headquarters & holding companies. 43

46 2 Revenues and results by country as of 31 December 2013 (1) were as follows: (in millions of euros) Revenues Intra- Group sales Revenues after elimination Recurring EBITDA EBITDA EBIT Finance costs France/Belgium 1,474.0 (5.9) 1, (0.2) Spain 99.4 (34.4) 65.0 (2.6) (13.9) (44.8) Other country (2) 24.2 (3.7) 20.5 (3.8) (3.8) 7.0 (5.9) Intra-zone eliminations (11.4) 11.4 Western Europe 1,586.2 (32.6) 1, (6.1) North America (0.4) (3.7) 5.0 Egypt (3) (14.1) Morocco (3) (4.8) Other countries (4) (12.5) Emerging Europe, North Africa & Middle East (31.3) Thailand (3) (0.1) India (1.0) Other country (5) (7.0) Asia (1.1) Cement/clinker trading (51.7) (1.3) Unallocated (6) (157.0) 34.7 (25.6) (29.2) (30.5) Inter-zone eliminations (274.0) Postings unallocated to countries (75.3) Share Profit of profit before tax (loss) of associates Income tax Net profit GROUP TOTAL 3, , (75.3) (106.1) (1) For comparative purposes, figures related to 2013 have been adjusted in accordance with IFRS 10 & 11 which have been applied by the Group since 1 January 2014 with retrospective effect to 1 January (2) Greece. (3) Segments in which non-controlling interests are not significant. (4) Bulgaria & Kuwait. (5) Kazakhstan. (6) Fuel trading, headquarters & holding companies. 44

47 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Other segment information as of 31 December 2014 was as follows: (in millions of euros) Non-current operating assets At 31 December Current operating assets Operating liabilities Invested capital PPE and intangible investments PPE & intangible depreciation & amortization Impairment of assets France/Belgium 1, , (92.2) (0.2) Spain (13.3) Other country (1) (4.6) 15.0 Western Europe 1, , (110.1) 14.7 North America (67.5) Egypt (2) (50.0) Morocco (2) (39.9) Other countries (3) (11.2) (7.1) Emerging Europe, North Africa & Middle East 1, , (101.1) (7.1) Thailand (2) (20.4) 0.1 India (17.3) Other country (4) (5.6) Asia (43.4) 0.1 Cement/clinker trading (2.6) (3.7) Others (5) (59.2) 0.3 (0.9) GROUP TOTAL 4, , , , (325.6) 4.1 (1) Greece. (2) Segments in which non-controlling interests are not significant. (3) Bulgaria, Kuwait & Saudi Arabia. (4) Kazakhstan. (5) Fuel trading, headquarters & holding companies. 45

48 2 Other segment information as of 31 December 2013 (1) was as follows: (in millions of euros) Non-current operating assets At 31 December Current operating assets Operating liabilities (5) Invested capital PPE and intangible investments PPE & intangible depreciation & amortization Impairment of assets France/Belgium 1, , (91.8) (1.4) Spain (14.8) (16.1) Other country (2) (4.3) 15.1 Western Europe 1, , (110.9) (2.4) North America (64.9) Egypt (3) (54.1) Morocco (3) (40.1) Other countries (4) (6.6) (5.8) Emerging Europe, North Africa & Middle East 1, , (100.8) (5.8) Thailand (3) (24.1) India (19.1) Other country (5) (7.0) Asia (50.2) Cement/clinker trading (3.1) (4.2) Others (6) (0.4) 0.7 (1.3) GROUP TOTAL 4, , , , (331.1) (12.4) (1) For comparative purposes, figures related to 2013 have been adjusted in accordance with IFRS 10 & 11 which have been applied by the Group since 1 January 2014 with retrospective effect to 1 January (2) Greece. (3) Segments in which non-controlling interests are not significant. (4) Bulgaria & Kuwait. (5) Kazakhstan. (6) Fuel trading, headquarters & holding companies. Non-current operating assets comprise net property, plant & equipment (PPE), net goodwill, net intangible assets and prepaid extraction rights. Current operating assets comprise inventories, trade receivables and current assets other than tax assets and financial assets. Operating liabilities comprise trade payables and provisions as well as liabilities other than tax provisions and liabilities, and financial liabilities. Invested capital corresponds to operating assets less operating liabilities and excluding provisions. PPE and intangible investments are presented before changes in PPE and intangible assets payables. 46

49 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Other countries revenues and recurring EBITDA are detailed below: (in millions of euros) Revenues Recurring EBITDA Greece (3.8) Western Europe (3.8) Bulgaria Kuwait Saudi Arabia Emerging, North Africa & Middle East Kazakhstan Asia The major subsidiaries in which non-controlling interests are not significant are located in Egypt, Morocco and Thailand. They are listed in note 38 Consolidation scope under the corresponding country headings. The financial data by geographic area (assets, liabilities) in this note are provided before intra-group eliminations. The table below gives the amounts attributable to noncontrolling interests in the results, equity and dividends paid of those three countries. (in millions of euros) Egypt Morocco Thailand Net profit Of which share attributable to noncontrolling interests Total comprehensive income (expense) (78.7) (15.5) Of which share attributable to noncontrolling interests 59.2 (32.9) (2.6) Equity Of which share attributable to noncontrolling interests Paid dividends Of which payment to non-controlling interests

50 2 Note 5 Property, plant & equipment, net (in millions of euros) Land and buildings Quarries Plant and equipment Other PPE & construction in progress TOTAL At 1 January 2013 Cost 1, , ,863.9 Accumulated depreciation and impairment (727.3) (169.4) (3,343.3) (287.6) (4,527.5) Net carrying amount at 1 January , ,336.3 Additions Changes in consolidation scope (0.5) (0.1) Disposals (1.4) (2.3) 3.1 (0.7) Depreciation and impairment losses (35.0) (12.4) (256.9) (21.7) (325.9) Currency translation differences (43.9) (4.1) (88.3) (31.4) (167.6) Reclassifications and others 30.1 (0.2) (161.1) (8.8) At 31 December 2013 Cost 1, , ,737.4 Accumulated depreciation and impairment (736.8) (179.5) (3,402.4) (277.5) (4,596.4) Net carrying amount at 31 December , ,141.0 Additions Changes in consolidation scope Disposals (3.1) (2.3) (1.4) (6.9) Depreciation and impairment losses (29.0) (11.3) (246.6) (26.3) (313.2) Currency translation differences Reclassifications and others (200.4) 0.1 At 31 December 2014 Cost 1, , ,522.2 Accumulated depreciation and impairment (802.6) (193.6) (3,804.0) (315.5) (5,115.7) Net carrying amount at 31 December , ,406.5 Other information In 2014, investments in property, plant & equipment related primarily to France/Belgium, Egypt, India, Bulgaria, North America and Kazakhstan. In 2013, investments in property, plant & equipment related primarily to France/Belgium, Bulgaria, Egypt, North America and India. In 2014, the Depreciation and impairment losses line included a net reversal of asset impairment of 4.1 million euros, of which 15.0 million euros in impairment reversals in Greece and 7.7 million euros in impairment losses in Bulgaria. In 2013, the Depreciation and impairment losses line included 27.7 million euros in impairment losses, of which 16.1 million euros in Spain and 5.8 million euros in Bulgaria, and 15.3 million euros in impairment reversals of which 15.1 million euros in Greece. In 2014, capitalized production costs included in property, plant & equipment amounted to 25.2 million euros (19.4 million euros in 2013). 48

51 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Borrowing costs capitalized in 2014 amounted to 1.1 million euros (0.3 million euros in 2013). Fixed assets (PPE) held under finance leases were carried at a net amount of 7.6 million euros as of 31 December 2014 (7.4 million euros in 2013). Estimated useful lives by category are as follows: Useful life in years Buildings Plant and machinery 5-30 Other property, plant and equipment 3-10 Note 6 Goodwill 6.1 Changes in goodwill Goodwill recognized on acquisition dates involves in particular the synergy expected from the integration of the acquired companies into the Group. The change in goodwill was as follows: (in millions of euros) At 1 January 2013, net 1,195.1 Acquisitions Disposals (0.3) Impairment losses (4.7) Currency translation differences and others (88.0) At 31 December 2013, net 1,102.1 Acquisitions 1.6 Disposals Impairment losses Currency translation differences and others 71.1 At 31 December 2014, net 1,

52 2 6.2 Goodwill testing Goodwill is systematically tested for impairment losses every year in accordance with the method described in note Future cash flows used for such testing have been determined according to the 2015 budget and based on the latest forecasts approved by the management for the following years. A nine-year forecast period has been retained for countries in the European Union and North America in order to take into account the long-term trends in cement consumption. Forecasts have been limited to a period of five years for emerging countries with cement consumption widely dependent on exogenous factors related to one-time macroeconomic events. The terminal value has been estimated based on mid cycle activity while considering the market risks and predictable orientation for each country. The projections accepted represent the best estimates of the future developments and economic conditions of the countries where the Group operates. In 2014 the recoverable value corresponded to the value in use for all relevant cash-generating units. Discount rates are determined for each country. They correspond to the weighted average cost of capital (WACC) to which an estimated long-term inflation rate and a country risk premium, if any, are applied. WACCs are computed based on equity market cost (according to the 10-year government bonds rate and a market risk premium to which a European cement sector beta sensitivity coefficient is applied) and the cost of the financial debt (based on the average 7-year borrowing rate), weighted by the average sector coefficient based on the financial debt/stock market capitalization ratio computed from a panel of major European cement groups. The main assumptions used for the computation were as follows: (in %) Discount rate before tax Long-term growth rate including inflation Cash-generating units France/Belgium Spain Greece North America Egypt Morocco Bulgaria Kuwait Thailand India Long-term growth rate is equal to long-term inflation alone, the actual growth rate used being zero. Inflation rates are determined using the Global Insight database. 50

53 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Analyses performed at the end of 2014 have not resulted in any recognition of goodwill impairment. At the end of 2014, the net carrying amounts of goodwill allocated to the main cash-generating units (CGUs) were as follows: (in millions of euros) Goodwill Cash-generating units 31 December December 2013 France/Belgium Spain North America Egypt Morocco Bulgaria Kuwait Thailand India Others TOTAL 1, ,102.1 Additionally, in order to take into account costs unallocated to specific CGUs, the Group has carried out a test on global recoverable value which did not require any additional impairment. Sensitivity analysis: An analysis of the sensitivity of recoverable values to the main economic assumptions was carried out as of 31 December The discount rate before tax which would make the recoverable value equal to the carrying value is 11.8% in Greece, 9.8% in North America, 20.8% in Egypt, 9.2% in Kuwait and 16.3% in India. A deterioration of 5% in demand over the forecast period without any change in the terminal flow or a reduction of 5% in future cash flows would not result in the recognition of a decrease in the carrying value of the cash-generating units. 6.3 Quoted value of listed subsidiaries and associates As of 31 December 2014 the quoted values of some of the listed subsidiaries (namely Suez Cement Company and Ciments du Maroc) and of Vassiliko Cement Works differed significantly from the corresponding assets value in the Group s accounts. The Group considers that quoted values at year-end are not necessarily representative of asset fair value, given the lack of depth of markets and price volatility. 51

54 2 Note 7 Intangible assets The table set out below details other intangible assets, by nature: (in millions of euros) 31 December December 2013 Concessions and others Patents and IT developments TOTAL Note 8 Investments in associates and joint ventures This category consists of the Group s shares in the equity of the main equity affiliates including goodwill for 25.8 million euros in 2014 and 24.8 million euros in (in millions of euros - net carrying value) Value of investments Share of profit (loss) 31 December December Associates: Ciment Québec (Canada) Vassiliko Cement Works* (Cyprus) (5.9) Asment Temara (Morocco) Other associates Sub-total Joint ventures (1.0) TOTAL * Listed company. 52

55 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Key financial information on associates are detailed below: (in millions of euros) Ciment Québec Vassiliko Cement Works Asment Temara * Revenues Net profit (loss) for the period (11.0) Other comprehensive expense (1.7) Comprehensive income (expense) (12.7) Total non-current assets Total current assets Total non-current liabilities Total current liabilities Equity Percentage of interest 50.0% 50.0% 24.7% 24.7% 37.0% 37.0% Equity attributable to owner of the parent Goodwill Homogenisation adjusments (0,9) (0,8) (15.0) (14.0) (1.1) (1.1) Investments in associates Dividends received for the period Stock-market value * Data at 30 September

56 2 Note 9 Other equity investments This non-current asset caption reflects equity investments classified as available-for-sale investments as required by IAS 39. (in millions of euros) At 1 January Changes in consolidation scope (5.1) Acquisitions 1.3 Disposals Impairment variation recognized in profit or loss (17.0) Change in value recognized in equity (4.6) Currency translation differences (0.2) At 31 December Changes in consolidation scope Acquisitions 1.0 Disposals Impairment variation recognized in profit or loss (28.3) Change in value recognized in equity 19.5 Currency translation differences 0.2 At 31 December Impairment losses of 28.3 million euros recognized in 2014 in income statement related to West China Cement shares for 24.7 million euros. They included the decrease of 13.4 million euros in value recognized against equity at the end of 2013 and taken to income statement at the end of The value of West China Cement stake was 24.8 million euros as of 31 December 2014 (30.6 million euros at the end of 2013). Impairment losses of 17.0 million euros recognized in 2013 in income statement included Al Badia Cement shares (Syria) for 16.0 million euros. Note 10 Other non-current assets (in millions of euros - net carrying value) 31 December December 2013 Derivatives* Prepaid extraction rights Non-current loans Personnel expense Deposits and others TOTAL * See note

57 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Note 11 Inventories (in millions of euros - net carrying value) 31 December December 2013 Raw materials and consumables Work in progress and semi-finished goods Finished goods Spare parts Down payments TOTAL As of 31 December 2014 inventory write-downs amounted to 73.0 million euros as against 77.0 million euros as of 31 December Note 12 Trade receivables (in millions of euros) 31 December December 2013 Gross amount Provisions (48.0) (48.6) Net amounts On 20 December 2012, Ciments Français French and Belgian operating subsidiaries agreed on a 5-year international program of transfer of trade receivables. The aim of the program was to transfer eligible receivables to a financial institution. The initial amount devoted to the program was 70 million euros; it was increased to 160 million euros as from mid-march 2013, 210 million euros at the end of June 2013 and finally decreased to 170 million euros in July As of 31 December 2014 receivables transferred under this program amounted to million euros (167.3 million euros at the end of December 2013). The Group extended this program to its American subsidiary through an agreement signed on 25 June 2013 for an amount not to exceed 35 million US dollars. It is valid for 4 years and 7 months and expires at the same time as the one signed on 20 December American trade receivables transferred under this program amounted to 30.4 million US dollars as of 31 December 2014 (26.8 million US dollars as of 31 December 2013). As part of those two programs and under the respective Receivables Transfer Servicing Agreement (RTSA), sellers remain responsible for recovering receivables on behalf of the financial institution. Under that transaction, receivables were transferred as collateral and kept on balance sheet for a total amount of 33.3 million euros as of 31 December 2014; however, this collateral assignment does not cover the credit risk on the assigned trade receivables. According to the criteria defined by IAS 39, 100% of the associated risks and rewards can be considered as transferred. The financial expense corresponding to trade receivables assigned in 2014 amounted to 4.6 million euros. Provisions The recognition of a provision for bad debts results from detailed analyses conducted by each subsidiary based on aging payables on a customer-by-customer basis taking into consideration bank guarantees and security interests. The amount of risk-associated outstanding payables for which no provision was recognized is immaterial. 55

58 2 Note 13 Other current assets (in millions of euros) 31 December December 2013 Receivables from tax and social security authorities Receivables from the sale of fixed assets Extraction rights Derivatives Others Prepaid expense TOTAL Note 14 Share capital During 2014 and 2013, the movements in treasury shares were as follows: Number of shares 31 December December 2013 Beginning of period 35,798,136 35,798,136 Exercise of share subscription options 150,400 Cancellation of treasury shares (350,187) End of period 35,598,349 35,798,136 As of 31 December 2014 Ciments Français SAS share capital amounted to 143,393,396 euros (4 euros per share). Note 15 Reserves (share attributable to the owners of the parent) Currency translation reserve Currency translation adjustments (in millions of euros) 31 December December 2013 Change 2014/2013 North America (US and Canadian dollars) 41.7 (6.3) 48.0 Egypt (pound) (105.1) (152.3) 47.1 Morocco (dirham) 7.5 (4.9) 12.3 Thailand (baht) India (rupee) (62.3) (88.7) 26.4 Others TOTAL (60.0) (223.0)

59 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Other reserves (in millions of euros) Cash flow hedging reserve* Available-for-sale reserve Others At 31 December 2012 (2.6) (9.4) Gains (losses) taken directly to reserves (12.2) Gains (losses) transferred to profit (loss) Deferred tax taken directly to reserves (0.7) At 31 December 2013 (1.7) (14.0) Gains (losses) taken directly to reserves 5.6 Gains (losses) transferred to profit (loss) (2.1) 14.0 Deferred tax taken directly to reserves 0.7 At 31 December 2014 (3.2) * See note Note 16 Treasury shares As of 31 December 2014, Ciments Français did no longer hold any treasury shares: the 350,187 treasury shares owned by Ciments Français at the end of December 2013 were cancelled by decision of the Board of Directors on 19 May Note 17 Dividends Dividends paid by Ciments Français SA since 2011 were as follows: Date of payment Amount per share Nature Total (in millions of euros) 5 May euro 2013 balance August euro 2013 interim dividend May euro 2012 balance August euro 2012 interim dividend May euro 2011 balance August euro 2011 interim dividend May euro 2010 balance Furthermore, by decision of 19 December 2014, an interim dividend of 1.50 euro per share, i.e million euros, was paid on 19 January It is recognized in Other current liabilities (cf. note 23). 57

60 2 Note 18 Non-controlling interests Non-controlling interests amounted to million euros in 2014 as against million euros in Profit for 2014 decreased from 2013 at 64.6 million euros (66.8 million euros in 2013). The change in foreign exchange rates against euro resulted in an increase of 64.3 million euros in non-controlling interests. Note 19 Net financial position 19.1 Net financial debt Assets and liabilities included in net financial debt were as follows: (in millions of euros) Category of financial assets and liabilities Balance sheet caption 31 December December 2013 Fair value of derivatives assets Other non-current assets Other non-current financial assets Other non-current assets Non-current financial assets Cash and cash equivalents Cash and cash equivalents Fair value of non-current derivatives assets Other current assets Other current financial investments Equity investments, bonds and financial receivables Cash and cash equivalents and current financial assets Financial assets Interest-bearing loans Financial liabilities 1, ,125.7 Fair value of derivatives liabilities Payables and other non-current liabilities Non-current loans and borrowings 1, ,126.4 Bank overdrafts and short-term borrowings Loans and borrowings Interest-bearing loans and short-term borrowings Financial liabilities Fair value of derivatives liabilities Other current liabilities Current loans and borrowings ,8 TOTAL LOANS AND BORROWINGS 1, ,254.2 NET FINANCIAL DEBT

61 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Loans and borrowings Breakdown of gross loans and borrowings, by category (in millions of euros) Effective interest rate Maturity 31 December December 2013 Debenture loans MEUR 500 EMTN debenture loan 4.75% 4.84% Bank loans and credit lines Subsidiaries (0.99% %) Finance lease obligation Other interest-bearing loans Others (0% %) Loan from Italcementi Finance SA 3.74% Loan from Italcementi Finance SA - MUSD % NON-CURRENT INTEREST-BEARING LOANS 1, ,125.7 Fair value of derivatives NON-CURRENT LOANS AND BORROWINGS (A) 1, ,126.4 Bank loans and credit lines Subsidiaries (1.0% %) Finance lease obligation Short-term borrowings Loan from Italcementi Finance SA 6.5 Bank overdrafts Accrued interests CURRENT INTEREST-BEARING LOANS Fair value of derivatives CURRENT LOANS AND BORROWINGS (B) TOTAL LOANS AND BORROWINGS (A + B) 1, ,254.2 Breakdown of non-current loans and borrowings by currency Non-current interest-bearing loans and borrowings (in millions of euros) 31 December December 2013 Euro 1, ,064.5 US and Canadian dollars Egyptian pound 0.5 Indian rupee Other currencies TOTAL 1, ,

62 2 Breakdown of non-current loans and borrowings by year of maturity Non-current interest-bearing loans and borrowings (in millions of euros) 31 December December Beyond TOTAL 1, ,125.7 Other information Major debenture loans Ciments Français covers its long-term financial requirements largely through Italcementi Finance, which is responsible for the coordination and direct implementation of the financing programs for all the companies of Italcementi Group. Its 1,500 millioneuro medium and long-term debt negotiable security program (EMTN) has not been updated since 17 July Debentures issued and still valid under this program amounted to 500 million euros as of 31 December They were issued on 21 March 2007 at a fixed interest rate of 4.75% and a maturity of ten years. Main bank loans and lines of credit India On 30 November 2010, Zuari Cement Ltd arranged 5-year redeemable bilateral lines of credit for a total amount of 5.1 billion rupees with several international banks and on 9 May 2012 it arranged an additional line for 600 million rupees. The company also has a 5-year redeemable line of credit for 20 million US dollars. At the end of December 2014, those long-term lines of credit were drawn for 1,890 billion rupees, equivalent to 29.5 million euros. On 25 October 2013, Zuari Cement arranged a new short-term bilateral line of credit of 5 billion rupees with an international bank. On 23 July 2014, it was converted into a term loan for the same amount maturing in January This loan was used for its maximum amount, i.e. for an equivalent of 65.2 million euros, at the end of December On 24 November 2014, Zuari Cement took out a 2-year loan for one billion rupees (equivalent to 13.0 million euros) which was fully drawn at the end of December Kazakhstan Shymkent Cement took out a 6-year term loan for 5 billion tenge with an international financial institution on 3 December This loan maturing in June 2021 was not used at the end of December Its purpose is to finance the new dry production line currently under way at Shymkent. 60

63 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Major loans and intercompany credit lines During the first half of 2010, Ciments Français contracted a long-term intercompany loan of 540 million euros arranged with Italcementi Finance with a 10-year maturity carrying a variable rate of interest. This loan is directly secured by the 750-million euro debenture loan issued by Italcementi Finance in On 15 December 2011 Moody s downgraded Italcementi Finance debenture loan from Baa3 to Ba1, and therefore triggered the step-up clause of the loan, with an increase of 125 basis points in the coupon, applicable as from the annual coupon payment date of 19 March Pursuant to the loan agreement signed with Italcementi Finance, the applicable rate shall be readjusted accordingly. Since the third quarter of 2014, Ciments Français holds a 5-year 450-million euro credit line arranged with Italcementi Finance, replacing the 700-millon euro credit line not used as of 31 December All the loans and lines of credit arranged between Ciments Français and Italcementi Finance are concluded at arm s length conditions Liquidity, credit and counterparty risks Liquidity risk Cash and cash equivalents are mainly made of very liquid short-term investments with an insignificant risk of change in value. They are located in part in countries not allowing the immediate availability of funds at the level of Ciments Français holding (see note 35.1). None of the counterparties represent more than 20% of total liquidity as of 31 December The objective of the centralized financial policy is that at any time available committed credit lines must be sufficient to cover the maturities of the debt over a 2-year period. The 450-million euro committed credit line from Italcementi Finance, fully available as of 31 December 2014, is backed by credit lines for the same duration arranged by Italcementi Finance; those lines are subject to covenants (currently respected) related to Italcementi Group debt ratios. The table below compares net debt by maturity with available credit lines at the end of each period. Maturity of loans and credit lines as of 31 December 2014 (in millions of euros) Less than 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years More than 5 years Non-current interest-bearing loans ,227.3 Interest-bearing loans (current) and other short-term borrowings Bank overdrafts Cash and cash equivalents (496.3) (496.3) Net debt (maturities) (381.0) Total End 2014 End 2015 End 2016 End 2017 End 2018 Committed credit lines available at the end of each period

64 2 Maturity of loans and credit lines as of 31 December 2013 (in millions of euros) Less than 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years More than 5 years Non-current interest-bearing loans ,125.7 Interest-bearing loans (current) and other shortterm borrowings Total Bank overdrafts Cash and cash equivalents (446.6) (446.6) Net debt (maturities) (322.1) End 2013 End 2014 End 2015 End 2016 End 2017 Committed credit lines available at the end of each period As of 31 December 2014 the average maturity of Group gross debt (derivatives excluded) was 3 years and 7 months (4 years and 3 months as of 31 December 2013); As of 31 December 2014 the average maturity of confirmed undrawn credit lines was 4 years and 4 months (1 year and 9 months as of 31 December 2013). Covenants Some financing agreements signed in 2014 for foreign subsidiaries (India and Kazakhstan) include acceleration clauses or cancellation clauses in the event of non-compliance with financial ratios. As of 31 December 2014, loans subject to covenants totaled 78.2 million euros while confirmed and available credit lines subject to covenants amounted to million euros. Ciments Français complied with all its covenants as of 31 December Credit risk Customers who wish to trade on credit terms are subject to preliminary credit verification procedures. In addition, receivable balances are monitored on an ongoing basis following Group procedures. Concentration of credit risks with respect to trade receivables is limited due to the Group s customer base being large and unrelated. Counterparty risk on derivatives Interest-rate and exchange-rate derivatives are exclusively traded with highly rated counterparties, selected according to various criteria: ratings assigned by credit rating agencies, assets, equity, and nature and maturity of the instrument, while respecting risk diversification rules by counterparties avoiding concentration. The Group generally trades with leading international banks. All our counterparties are located either in Western Europe or in the United Sates of America. The adoption of IFRS 13 resulted in the valuation of credit risk, particularly on derivatives (see note 19.4). 62

65 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Financial instruments Set out below is a comparison by category of carrying amounts and fair values of all of the Group s financial assets and liabilities as defined in IAS 39 as of 31 December 2014 and As of 31 December 2014 (in millions of euros) Financial instruments at fair value through profit or loss Derivatives qualified as hedges Financial assets at fair value Availablefor-sale financial assets Loans & receivables Financial liabilities at amortized cost Carrying value Level 1: quoted prices and availabilities Level 2: internal model with observable parameters Level 3: internal model with non observable parameters Fair value Financial assets Equity investments Non-current loans & financial receivables Derivatives (assets) Receivables Other current assets Other current financial assets Cash and cash equivalents Total assets , ,022.2 Financial liabilities Floating-rate loans & borrowings Fixed-rate loans & borrowings Finance lease payables Derivatives (liabilities) Payables Other current liabilities Bank overdrafts Short-term borrowings Total liabilities , , , ,

66 2 As of 31 December 2013 (in millions of euros) Financial instruments at fair value through profit or loss Derivatives qualified as hedges Financial assets at fair value Availablefor-sale financial assets Loans & receivables Financial liabilities at amortized cost Carrying value Level 1: quoted prices and availabilities Level 2: internal model with observable parameters Level 3: internal model with non observable parameters Fair value Financial assets Equity investments Non-current loans & financial receivables Derivatives (assets) Receivables Other current assets Other current financial assets Cash and cash equivalents Total assets Financial liabilities Floating-rate loans & borrowings Fixed-rate loans & borrowings Finance lease payables Derivatives (liabilities) Payables Other current liabilities Bank overdrafts Short-term borrowings Total liabilities , , , ,974.7 Trade receivables and payables are current assets and liabilities and their carrying amount is a reasonable approximation of fair value. Derivatives are measured and recognized at fair value. The fair value of interest-rate contracts is based on the present value of cash flows using the zero coupon curve. The fair value of forward exchange contracts is calculated by reference to the current exchange rates of contracts with similar maturity profiles. The fair value of payables and receivables denominated in foreign currencies is measured using year-end exchange rates. The fair value of fixed-rate payables and receivables is based on a fixed rate with no credit margin, net of transaction costs directly attributable to the financial asset or liability. 64

67 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Market value of currency and interest rate derivatives (in millions of euros) 31 December December 2013 Assets Liabilities Assets Liabilities Derivatives - Interest rates Cash flow hedges Fair value hedges 16.0 (1) 0.1 (2) 19.1 (1) 0.3 (2) Non-designated derivatives Derivatives - Exchange rates Cash flow hedges Fair value hedges Non-designated derivatives 6.3 Non-current Derivatives - Interest rates Cash flow hedges Fair value hedges Non-designated derivatives Derivatives - Exchange rates Cash flow hedges Fair value hedges Non-designated derivatives Current TOTAL (1) Of which a receive fixed-rate to Euribor-indexed pay floating-rate interest-rate swap hedging part of the 500-million euro fixed-rate debenture under the EMTN program, rate impact: 16.2 million euros as of 31 December 2014 (19.1 million euros as of 31 December 2013). (2) Of which credit risk impact on the interest-rate derivative portfolio of 0.1 million euros as of 31 December 2014 (no material impact on the exchange-rate derivative portfolio). The valuation of derivatives as of 31 December 2014 was performed considering the credit valuation adjustment (CVA) and the debit valuation adjustment (DVA) as per IFRS 13. The methodology used to determine the credit risk impact on valuations (exposure at default) at closing date, as recognized in the IFRS balance sheet, relies on the application of a credit default probability on each flow of a valuation at valuation date, in order to assess the value adjustment linked to the inclusion of the counterpart risk as compared with a credit risk-free valuation. Whenever the valuation is positive for Ciments Français, the credit value adjustement is based on the credit default probability of the bank counterparty and corresponds to a discount on the derivative valuation experienced by Ciments Français because of the counterparty risk. Symmetrically, whenever the valuation is negative, the debit value adjustment is mainly based on Ciments Français probability of default and corresponds to a premium on the derivative valuation recognized by Ciments Français because of the credit risk it causes to the counterparty. Probabilities of default are computed based on secondary market data and calculation of implied credit default swaps (CDSs). 65

68 2 The loss percentage in case of loss given default (LGD) is 60% according to market standard. The impacts as of 31 December 2014 and 2013 of netting agreements related to derivatives held as assets and derivatives held as liabilities as defined by the amendment to IFRS 7 are detailed in the two tables below. Derivatives are stated below at their fair value, including the impact of IFRS 13 related to credit risk for Netting of financial assets and liabilities as of 31 December 2014 (in millions of euros) Gross amounts Amounts offset in balance sheet Net amounts in balance sheet Amounts not offset in balance sheet Derivatives Collateral cash Net amounts per IFRS 7 Derivative assets Derivative liabilities Netting of financial assets and liabilities as of 31 December 2013 (in millions of euros) Gross amounts Amounts offset in balance sheet Net amounts in balance sheet Amounts not offset in balance sheet Derivatives Collateral cash Net amounts per IFRS 7 Derivative assets Derivative liabilities Financial risk management policy The Group uses derivative financial instruments to hedge the risk of fluctuation in interest rates and exchange rates in relation to the nature of the debt and international operations. Interest-rate risk The management of interest-rate risk aims at minimizing the cost of Group net indebtedness and reducing exposure to that risk. Two different types of exposure are hedged: The market value risk with respect to fixed-rate financial assets and liabilities. The Group is exposed to an opportunity cost risk in the event of a fall in interest rates. A change in interest rates will impact the market value of the fixed rate assets and liabilities and the consolidated income statement in case of settlement or early repayment of the derivatives; The cash flow risk with respect to floating-rate assets and liabilities. Change in interest rates will have little impact on market value but will affect the trend in interest expense and consequently the future results of the company. The Group, in accordance with its general policy, its objectives of performance and risk exposure limitation monitors these two risks by favoring future short and medium-term cash flow hedges and long-term market value hedges, within defined limits. Hedging transactions consist primarily of interest-rate exchange contracts (swaps), forward-rate agreements (FRA) and interest-rate options traded on the OTC market with first-ranking banks. No derivative exposure can exceed the underlying exposure. 66

69 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Interest-rate derivatives by maturity date The following tables set out the carrying amount, by maturity, of interest rate hedges: (Nominal amount in millions of euros) MATURITY TOTAL Less than 1 year 1 to 2 years 2 to 5 years More than 5 years Fair value hedges Swaps receive Fixed / pay Floating M % / 3-month Euribor % Total fair value hedges Cash flow hedges Swaps receive Floating / pay Fixed M 100 three-month Euribor / 0.86% M 150 three-month Euribor / % M 4.3 three-month Euribor / 1.164% Total cash flow hedges Non-designated derivatives Swaps pay Floating / receive Floating M$ 150 pay 3-month Libor against 3-month Euribor Swaps pay Floating / receive Fixed M$ 175 three-month Libor / 0.78% M$ 75 three-month Libor / 0.59% M$ 265 three-month Libor / 1.16% Total non-designated derivatives TOTAL All derivatives are given in the nominal amounts of the hedging contract. Instruments deactivated at year-end, if any, are excluded. Exposure to interest-rate risk The following table sets out the carrying value, by maturity, of the Group s financial instruments that are exposed to interest-rate risk. 67

70 2 Net debt after hedging (in millions of euros) TOTAL Less than 1 year 1 to 2 years 2 to 5 years More than 5 years Fixed-rate Fixed-rate financial liabilities* Fixed-rate financial assets Net fixed-rate debt before hedging Fixed-rate to floating-rate hedges (165.0) (165.0) Floating-rate to fixed-rate hedges Net fixed-rate debt after hedging 1, Floating-rate Floating-rate financial liabilities* Floating-rate financial assets (521.4) (520.4) (1.0) Net floating-rate debt before hedging (405.2) Fixed-rate to floating-rate hedges Floating-rate to fixed-rate hedges (678.4) (61.8) (144.1) (468.3) (4.3) Net floating-rate debt after hedging (227.1) (467.0) (116.1) (184.3) * Excluding derivatives. In case of a translation of +0.5% in the interest rate curve, the revalorization of the interest-rate derivative portfolio would have an impact before tax of 4.4 million euros on equity and 2.6 million euros on profit or loss before tax as of 31 December The positive effect on profit or loss primarily relates to derivatives not qualifying for hedge accounting hedging the interest-rate risk on the intra-group loans of the US subsidiary. The revaluation of the fixed-rate debt hedged at a fair value would have an impact before tax of 2.0 million euros on profit or loss. Conversely, in case of a translation of 0.5% in the interest rate curve, the revalorization of the interest-rate derivative portfolio would have an impact before tax of 4.5 million euros on equity and 3.4 million euros on profit or loss before tax. The revaluation of the fixed-rate debt hedged at a fair value would have an impact before tax of 2.0 million euros on profit or loss. Exchange-rate risk Group companies are exposed to exchange-rate risk with respect to their operating cash flows and financing, when these are not denominated in local currency. Group companies primarily operate in their local markets. Hence, invoicing and operating costs are denominated in the same currency and exposure to exchange-rate risk on operating cash flows is not very significant except for fuels, spare parts and investments relating to the construction of new plants. Group policy requires that subsidiaries borrow and invest money in their own local currency, except in case of cash flow hedges in foreign currency. The Group may however adapt this general policy in very special cases where a country s specific situation so requires (hyperinflation, high interest rates, translation, liquidity ). As part of its activities of financing of the subsidiaries, Ciments Français can also enter into financing agreements denominated in a different currency than the one used for the loan to its subsidiary. 68

71 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Group policy is to hedge such exposures whenever the market makes it possible. Net exposure of each entity is determined on the basis of forecast net operating cash flows within one or two years and financing or investments denominated in currencies other than the local currency. In order to hedge the exchange-rate risk, the Group uses primarily forward contracts, currency exchange contracts or option-based hedging. These hedging instruments are traded with top-ranking banks. The table below details the amount of financial assets and liabilities incurred in a currency other than the company s local currency as of 31 December Net exposure mainly results from investing the cash balances of the Egyptian subsidiaries in US dollars as a protection against the effects of fluctuations in the local currency. (in millions of euros equivalent) Euro USD Others Financial assets (1) Financial liabilities (1) (24.4) (39.1) (50.7) Derivatives (2) (398.3) 41.1 Net exposure by currency (24.1) (1) Excluding trade receivables and payables. (2) Nominal value. Equity s exposure to foreign exchange risk referred mainly to the US dollar, Thai baht, Moroccan dirham, Egyptian pound and Indian rupee. Net investments in these currencies are unhedged. As of 31 December 2014, a 1% change in the exchange rate with the euro would have an impact of 33.2 million euros on equity, of which 7.9 million euros on non-controlling interests. A 10% increase in exchange rates on the exchange-rate derivatives in portfolio as of 31 December 2014 would have an impact of 3.0 million euros on equity and of 29.3 million euros on profit or loss before tax. A 10% decrease in exchange rates would have an impact of 3.0 million euros on equity and of 29.4 million euros on profit or loss before tax. 69

72 2 Exchange-rate derivatives by maturity Foreign exchange contracts are expressed in face value and translated into euro at closing exchange rate. Their maturity is less than two years. (Nominal amounts in millions of euros) 31 December December 2013 Forward purchases Cash flow hedging US dollar Others Fair value hedging US dollar Swiss franc Others Total forward purchases Forward sale contracts Cash flow hedging US dollar 5.77 Fair value hedging US dollar Others Non-designated derivatives US dollar Total forward sales Options Cash flow hedging US dollar Total options Cross currency swaps* Fair value hedges US dollar Total cross-currency swaps * The cross currency swaps hedge loans denominated in US dollars with a maturity exceeding one year (2015). Commodity derivative risk Ciments Français does not hold any commodity financial instruments and is therefore not exposed to commodity market risk. 70

73 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 CO 2 emission trading risk The European companies of the Group are exposed to fluctuation in the CO 2 emission rights market. In 2013, they renewed Italcementi S.p.A. mandate to buy and sell CO 2 European Unit Allowances (EUA) and Certified Emission Reduction (CER) until The Group continued to optimize its emission rights portfolio during the first half of 2014 with spot purchases of CERs and spot sales of EUAs generating an economic impact of 5.1 million euros (immaterial in 2013) without modifying the CO 2 emission rights balance expressed in tonnes. No emission trading derivatives were carried on the balance sheet as of 31 December Equity market risk Ciments Français is not significantly exposed to equity market risk. All available-for-sale investments, with the exception of West China Cement, are not listed Hedge accounting Hedging impacts during the period can be summarized as follows: The equity reserve reflects fair value gains or losses on the effective components of cash flow hedges. New derivatives recognized in equity totaled 0.3 million euros as of 31 December 2014 ( 1.6 million euros as of 31 December 2013). The portion of the reserve eliminated from equity and relating to derivatives that expired in 2014 amounted to 2.1 million euros as of 31 December 2014 (1.2 million euros as of 31 December 2013). The changes in equity relating to derivatives negotiated during previous tax years and still in portfolio as of 31 December 2014 was 3.6 million euros (2.0 million euros as of 31 December 2013). The non-effective component of cash flow hedges in portfolio recognized in profit or loss was immaterial for both 2014 and Fair value hedges in portfolio at the end of 2014 taken to profit or loss amounted to 0.6 million euros for 2014 (34.4 million euros for 2013). Recognized amounts attributable to underlying risk hedged during the period totaled 0.3 million euros as of 31 December 2014 ( 34.6 million euros as of 31 December 2013). These amounts are taken to profit or loss as gains and losses on interest-rate and exchange-rate derivatives (note 30). Note 20 Employee benefits 20.1 Defined benefit plans As of 31 December 2014 post-employment benefit plans provisions, net of related assets, amounted to million euros as against million euros as of 31 December Those provisions corresponded to medical cost coverage for million euros (90.3 million euros in 2013) and other commitments, mainly retirement, early retirement, termination benefits and jubilee awards, for million euros (79.5 million euros in 2013). 71

74 2 Medical cost liabilities mainly concerned France (for 60.2 million euros), the United States (41.4 million euros) and Morocco (7.1 million euros). In France, the employer pays a portion of the contribution to the mutual insurance company providing for the reimbursement of part of the medical costs incurred after retirement. Liabilitlies related to active employees for 37% and former retired employees for 63%. In the United States, plans generally cover a certain percentage of the net costs incurred above and beyond social welfare. Liabilities related to active employees for 57% and retired employees for 43%. Other post-employment benefit liabilities amounted to million euros. The most substantial ones were in the United States (139.4 million euros) and France (38.3 million euros). They are either partly or fully financed via independent pension funds or insurance contracts (93.6 million euros in the United States and 6.4 million euros in France). In the United States, 23% of such liabilities related to active employees, 10% to former employees eligible to deferred pension and 67% to former employees who have retired. Post-employment benefits - Pension plans and equivalent The movements in obligation can be analyzed as follows: (in millions of euros) Pension plans and other long-term benefits Post-employment medical plans TOTAL Opening value of obligation Current service cost Past service cost (Gains) losses on plan settlements (1.2) (1.2) Net interest expense Benefits paid by the funds (8.0) (10.5) (0.2) (8.0) (10.7) Benefits paid by employer (3.7) (4.9) (3.7) (4.1) (7.3) (9.0) Funds paiements for plan settlements (2.8) (2.8) Employee contributions Changes in scope Actuarial gains & losses recognized in other comprehensive income (expense): - Impact of changes in demographic assumptions (1.6) Impact of changes in financial assumptions 20.4 (14.1) 17.1 (6.4) 37.4 (20.6) - Experience gains & losses (2.5) 0.1 Exchange-rate differences 17.6 (6.2) 5.0 (1.6) 22.6 (7.8) Closing value of obligation

75 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 The movements in pension plans hedging assets fair value can be analyzed as follows: (in millions of euros) Pension plans and other long-term benefits Opening fair value of hedging assets Interest income Employer contributions Employee contributions Benefits paid by the funds (8.0) (10.5) Funds payments for plan settlements (2.8) Administration fees (0.5) (0.4) Difference on return on hedging assets recognized in other comprehensive income (expense) Exchange-rate differences 11.3 (3.9) Closing fair value of hedging assets Net amounts recognized as of 31 December are as follows: (in millions of euros) Pension plans and other long-term benefits Post-employment medical plans TOTAL Discounted value of obligation Fair value of plan assets (104.5) (91.5) (104.5) (91.5) Net value of obligation

76 2 Costs are detailed below: (in millions of euros) Pension plans and other long-term benefits Post-employment medical plans TOTAL Expense in income statement: Current service cost (3.6) (3.8) (1.8) (2.2) (5.4) (6.1) Past service cost (1.6) (2.0) (1.6) (2.0) (Gains) losses on plan settlements Cost of discounting actuarial liabilities (7.2) (6.5) (3.3) (3.0) (10.5) (9.5) Interest income on plan assets Actuarial gains & losses on other long-term benefits Administration fees (0.5) (0.4) (0.5) (0.4) TOTAL recognized in income statement (7.6) (9.7) (5.0) (5.2) (12.7) (14.9) Actuarial gains & losses recognized in income statement: Impact of changes in demographic assumptions (7.5) (3.5) (3.8) 1.6 (11.4) (1.9) Impact of changes in financial assumptions (19.9) 14.0 (17.1) 6.4 (36.9) 20.5 Experience gains & losses (3.1) 2.5 (0.6) Difference on return on hedging assets TOTAL recognized in statement of comprehensive income (expense) (26.9) 15.4 (18.4) 8.0 (45.3) 23.4 The movements in net liabilities can be analyzed as follows: (in millions of euros) Pension plans and other long-term benefits Post-employment medical plans TOTAL Opening net liability Net expense in income statement Actuarial gains & (losses) recognized in statement of comprehensive income (expense) 26.9 (15.4) 18.4 (8.0) 45.3 (23.4) Changes in scope Contributions paid by employer (5.4) (4.8) (5.4) (4.8) Benefits paid by employer (3.7) (4.9) (3.7) (4.1) (7.3) (9.0) Exchange-rate differences 6.3 (2.4) 5.0 (1.6) 11.3 (4.0) Closing net liability

77 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Contribution apportioning according to the status of beneficiaries is as follows: (in millions of euros) Pension plans and other long-term benefits Post-employment medical plans TOTAL Active employees Former employees entitled to deferred pension Former retired employees Closing value of obligation Investments intented to cover pension obligations can be apportioned as follows: (in millions of euros) Monetary investments Equities Debentures Insurances Others TOTAL The Group is expecting to pay the following amounts in employer contributions in 2015: (in millions of euros) Pension liabilities Health care and other social benefits Total Benefits to be paid under defined benefit plans in the ten years to come can be estimated as follows: (in millions of euros) Pension liabilities Health care and other social benefits Total 75

78 2 The key actuarial assumptions used to estimate Group liabilities are as follows: (in %) Western Europe North America Other countries Inflation rate n/a n/a Salary increase rate n/a n/a (in %) 2014 Discount rates Europe 2013 Discount rates Belgium Spain France Greece Bulgaria North America United States Canada Other countries Egypt Morocco Kuwait Thailand India Kazakhstan Discount rates have been determined in a harmonized way to reflect the specific maturity of each commitment, using Iboxx Corporate AA as reference index for countries in the euro zone and the Citigroup Pension Discount Curve for the United States. For other countries, several 10+ year reference indexes have been used. A change of or / 0.25 percentage point in the main actuarial assumptions would affect obligations as follows: (in millions of euros) Pension plans and other long-term benefits Post-employment medical plans 0.25% +0.25% 0.25% +0.25% Discount rate Inflation rate Salary growth rate Medical cost trend rate

79 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Defined contribution plans Within the Group, defined contribution plans are generally used for pension plans, medical care and providence schemes. During the year, 40.3 million euros were recognized as expense for defined contribution plans (as against 37.7 million euros in 2013) Termination benefits As of 31 December 2014 provisions for termination benefits amounted to 4.1 million euros (as against 5.0 million euros in 2013). Note 21 Provisions and contingent liabilities 21.1 Provisions Provisions for site restoration, litigation or procedures are recognized in accordance with the policies described in note Changes in provisions can be summarized as follows: (in millions of euros) 31 December 2013 Addition Reversal (used provision) Reversal (unused provision) Change in consolidation scope Currency translation differences Reclassification 31 December 2014 Site restoration & environment (6.3) (6.1) 1.8 (0.2) 52.1 Disputes* (6.6) (2.1) 3.4 (0.3) 47.8 Other provisions * (5.5) (4.5) TOTAL (18.4) (12.7) 7.6 (0.3) Non-current portion (17.5) (12.7) 7.7 (0.5) Current portion (1.0) (0.1) * Provisions for litigation and others are used to cover risks such as legal disputes with third parties and administrative bodies like tax authorities. Reversal of provision (unused provision) essentially reflected over-estimated costs or extinguished risk on tax provision. In 2014, the net impact of changes in provisions in the income statement can be detailed as follows: (in millions of euros) Additions Reversal (unused provision) EBIT 15.2 (12.3) 2.8 Tax expense 4.2 (0.4) 3.7 TOTAL 19.3 (12.7) 6.6 TOTAL (net) 77

80 Contingent liabilities The main disputes and pending proceedings as of 31 December 2014 for which no provision was made are detailed below. To the Group s knowledge, there is no other litigation, arbitration or contingency liable to have a significant impact on the financial position, results, business or assets of the Group. Western Europe In November 2008, the European Commission commenced an investigation into alleged unfair trading practices/cartel agreements by several cement producers among which Italcementi S.p.A. and its subsidiaries (namely Ciments Français, Ciments Calcia and Compagnie des Ciments Belges). In December 2010, the European Union notified the formal opening of the proceeding to Italmobiliare S.p.A. (company controlling Italcementi S.p.A.) and expanded it to the Spanish subsidiary Financiera y Minera (FyM). In April 2011, the EU served formal notice on Italmobiliare S.p.A. of its decision to request extensive additional economic, financial and commercial information. Italmobiliare S.p.A. provided the information within the required term and, simultaneously, lodged an appeal with the EU General Court against the decision. On 17 March 2014 the EU General Court rejected the appeal presented by Italmobiliare, which will have no financial impact. Italmobiliare has filed an appeal with the European Court of Justice. Decision is still pending. In July 2009, the Belgian antitrust authorities requested information from various cement producers among which the Compagnie des Ciments Belges (CCB). In August 2013, the authorities decided that cement producers had conspired to delay the adoption of industrial standards to protect their interests. CCB was fined 1.8 million euros but lodged an appeal before the Court. Spain On 14 May 2014, after a petition was filed by a local association, the Court of Malaga annulled the integrated environmental permit released in 2007 to FyM to revamp the Malaga plant based on the grounds of the absence of a prior environmental impact assessment. Financiera y Minera has lodged an appeal against the decision and also contemplates the possibility to apply for a new permit once an environmental impact assessment has been conducted. Turkey/Russia Following the non-closure of the 2008 agreement for the transfer of the Turkish operations (Set Group) to Sibcem (subsidiary of Sibconcord), the various lawsuits filed by Sibconcord moved ahead in accordance with the procedural regulations of the countries in question. On 10 July 2013, the Court of Kemerovo (Russia) issued a ruling in favor of Ciments Français rejecting Sibconcord requests. In March 2014, the Court of Appeal dismissed Sibconcord s action for annulment of the agreement and upheld the ruling in favor of Ciments Français. Sibconcord consequently filed an appeal with the regional Court of Cassation. The Supreme Court overturned the ruling of first instance and referred the case back to the Court of Kemerovo. Next hearing is scheduled for March Regarding ICC arbitration, the Tribunal of Commerce of Istanbul confirmed on 26 January 2015 that the final arbitration ruling in favor of Ciments Français was enforceable. Ciments Français also pursues proceedings for the recognition of the arbitral decision in various countries, including Russia. The decision has already become enforceable in Belgium, France, the United States and Kazakhstan. Egypt Private individuals have initiated proceedings intended to question the privatizations of Helwan Cement Company (Helwan) and Tourah Portland Cement Company (TPCC) - today subsidiaries of Suez Cement Company - which took place prior to any acquisition of a direct or indirect stake by Ciments Français. Suez Cement is currently a party only to the proceedings relating to TPCC. These proceedings are still at too early a stage to draw any conclusion. 78

81 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 India Zuari Cement Limited is facing several tax reassessments relating to the following financial years: , for an amount of about 3.6 million euros (included interests and penalties). The Court of Andhra Pradesh ruled in favor of Zuari Cement on 21 February 2013 but the Supreme Court rejected the decision on 27 September The Indian tax authorities have the right to reopen the process until 31 March , for an amount of about 6.9 million euros. The matter is still pending before the Court of Appeal , for an undetermined amount. In May 2014, Zuari approached the competent administrative court and challenged the assessment but the decision is still pending. Note 22 Income tax Deferred tax (in millions of euros) 31 December 2013 Profit (loss) Other movements * 31 December 2014 Tax loss carryforward (2.0) 42.7 PPE and intangible assets (287.4) 7.0 (24.4) (304.8) Provisions 89.5 (0.9) Others (30.6) (15.3) Deferred tax liability, net (185.6) (167.2) Of which Deferred tax assets Deferred tax liabilities (196.7) 16.9 (0.1) (179.9) * Other movements include deferred tax related to items charged or credited to equity and the impact of the changes in consolidation scope and exchange adjustments. Deferred tax assets not capitalized amounted to million euros as of 31 December million euros related to tax loss carryforward primarily located in Spain (11.1 million euros), Greece (6.3 million euros), Thailand (2.2 million euros) and North America (106.8 million euros). 79

82 2 Note 23 Other current liabilities (in millions of euros) 31 December December 2013 Tax and social security liabilities PPE and intangible assets payables Buyback commitments on non-controlling interests Advance payments received Derivatives Dividends to be paid Other liabilities Accrued income TOTAL Buyback commitments on non-controlling interests related to Ready Mix Concrete Alalamia in Egypt and Hilal Cement in Kuwait. There is no other unconditional buyback commitment of shares held by non-controlling interests. Note 24 Off balance-sheet commitments 24.1 Commitments related to Group financing (in millions of euros) 31 December December 2013 Secured debt guaranteed by mortgages Deposits, guarantees and others TOTAL Commitments related to Group financing as of 31 December 2014 by maturity date: (in millions of euros) Total Less than 1 year 1 to 5 years More than 5 years Undetermined Debt (balance sheet item) 1, of which secured debt guaranteed by mortgages* Deposits, guarantees and others * As of 31 December 2014, secured debt consisted mainly of bank loans in India. The net carrying value of assets guaranteed by mortgages amounted to million euros as the end of

83 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Commitments related to Group operations As of 31 December 2014, commitments relating to non-cancelable leases or contracts requiring payment of a penalty in case of cancellation amounted to 80.6 million euros (81.4 million euros in 2013). Contractual obligations relating to extracting rights and purchase of raw materials and fuels totaled million euros as of 31 December 2014 (151.5 million euros in 2013). Non-cancelable orders for capital expenditure amounted to million euros as of 31 December 2013 (175.0 million euros in 2013). Commitments related to Group operations as of 31 December 2014 by maturity date: (in millions of euros) Total Less than 1 year 1 to 5 years More than 5 years Leases Extracting rights and purchase of raw materials and fuels Investments Note 25 Raw materials and utilities expense (in millions of euros) Raw materials and semi-finished goods (416.0) (379.9) Fuels (427.4) (401.5) Packaging, materials and spare parts (205.5) (200.4) Finished goods (150.1) (134.8) Electricity, water (249.0) (251.3) Change in inventories of raw materials, consumables and others (4.9) (43.4) TOTAL (1,452.9) (1,411.3) Note 26 Service expense (in millions of euros) Subcontracts (275.0) (270.9) Transport on sales (425.0) (410.1) Legal fees and consultancy (25.1) (22.9) Leases (60.6) (59.8) Insurances (31.0) (32.2) Other external services (138.2) (131.8) TOTAL (955.0) (927.6) 81

84 2 Note 27 Personnel expense (in millions of euros) * Salaries, profit-sharing (416.4) (416.4) Social security contributions (112.1) (111.7) Defined benefit plans expense (4.8) (5.3) Other personnel expense (59.1) (59.9) TOTAL (592.3) (593.3) * For comparative purposes, figures for 2013 have been adjusted in accordance with IFRS 10 & 11 which have been applied by the Group since 1 January 2014 with retrospective effect to 1 January Group total headcount was 14,442 as of 31 December 2014 (14,563 as of 31 December 2013). Stock options Information related to the movements in the ongoing option plans in 2014 and 2013 was as follows: Number of options 31 December December 2013 Average exercise price (in euros) Number of options Average exercise price (in euros) Unexercised subscription and purchase options at 1 January 585, , Options exercised during year (150,400) (13,175) Options cancelled during year (435,300) (41,525) Options granted during year Unexercised subscription options at end of year 585, All share option schemes were settled in July 2014 as part of the simplified public offer launched by Italcementi S.p.A., which is now the sole shareholder of Ciments Français SAS. Note 28 Other operating income (expense) (in millions of euros) Other taxes (66.3) (65.4) Write-down of receivables, net (1.7) (4.4) Provision for site restoration, net 0.7 (5.2) Other operating expense (16.9) (17.7) Total other operating expense (84.0) (92.7) Other operating income Total other operating expense, net (40.6) (54.6) 82

85 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Note 29 Non-recurring income (expense) Non-recurring income (expense) primarily includes restructuring costs and capital gains or losses on assets disposals. (in millions of euros) Net capital gains (losses) on disposals (1) Restructuring costs (2) (6.4) (18.2) Other non-recurring costs (3) (1.5) (1.8) TOTAL (6.2) (8.9) (1) Of which in 2013, 4.7 million euros for the United States and 3.8 million euros for Morocco. (2) Of which in 2014, 3.5 million euros for Morocco and 1.2 million euros for Greece and in 2013, 11.7 million euros for Spain and 5.3 million euros for France. (3) Of which costs for defined benefit plans: 1.6 million euros. Note 30 Finance income (costs) (in millions of euros) Costs Income Costs Income Interest income Interest expense (58.2) (58.1) Net interest expense on net interest-bearing financial debt (44.3) (46.0) Dividends, net Other finance income Other finance costs* (23.6) (25.4) Sub-totals (a) (81.8) 16.1 (83.4) 23.8 Impairment on financial assets (b) (28.3) (17.0) Sub-total, net (a) + (b) (94.1) (76.6) Fair value of interest-rate derivatives (0.2) 2.4 Exchange-rate gains (losses) Fair value of exchange-rate derivatives (33.2) (3.5) Sub-totals (33.5) 33.7 (3.5) 4.8 Sub-total, net (c) Total finance income (costs) (a) + (b) + (c) (93.8) (75.3) * Net of capitalized borrowing costs in conformity with IAS 23 (1.1 million euros in 2014 and 0.3 million euros in 2013). 83

86 2 Note 31 Income tax expense (in millions of euros) Current tax (113.3) (96.6) Adjustment of current tax related to prior years (2.5) (2.5) Deferred tax 21.6 (5.4) Tax resulting from change in tax rates (4.3) (1.5) TOTAL (98.5) (106.1) Reconciliation of effective tax rate In 2014 as in 2013, an exceptional contribution of 10.7% brought the theoretical tax rate in France to 38%. (in millions of euros) Amounts % Amounts % Profit (loss) before tax and share of profit of associates Theoretical tax charge at tax rate applicable in France Difference with foreign tax rates (1) (18.9) (18.9) Effect of change in tax rates (2) Unrecognized tax asset (on current year losses) (3) Adjustment of estimate for previously recognized/unrecognized deferred tax (2.4) (0.4) Non-deductible impairment losses on goodwill and equity investments Permanent differences and others Prior-year tax Effective Group tax expense (1) In 2014 and 2013, foreign jurisdictions for which effects of tax rate difference compared to tax rate applicable in France were the most significant were Egypt, Morocco and Thailand. (2) In 2014, there was a change in tax rate in Egypt. (3) Unrecognized tax benefits resulted primarily from losses generated in the United States in 2014 and in the United States and Spain in Note 32 Recyclable components of comprehensive income (expense) (in millions of euros) Amounts before tax Tax Amounts after tax Recyclable components of comprehensive income (expense) at 31 December 2013 (351.9) 1.0 (351.0) Currency translation differences on foreign activities Change in value of cash flow hedging derivatives (2.1) 0.7 (1.4) Change in value of available-for-sale financial assets Recyclable components of comprehensive income (expense) at 31 December 2014 (107.3) 1.6 (105.7) 84

87 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Note 33 Earnings per share Basic and diluted earnings per share Basic earnings per share are calculated by dividing the profit or loss attributable to the owners of the parent by the weighted average number of outstanding shares for the period, after deduction of the weighted average number of treasury shares. Diluted earnings per share include the dilutive effect of stock options. Basic and diluted earnings per share are presented below: (in thousands of shares) Number of shares at 1 January 35,798 35,798 Treasury shares held at 1 January (350) (363) Weighted average number of treasury shares acquired during the period Weighted allocation of treasury shares during the period 11 Weighted average number of shares issued during the period 80 Weighted average number of shares at 31 December 35,528 35,446 Dilutive effect of share subscription and purchase options Weighted average number of shares (diluted earnings) at 31 December 35,528 35,446 Net profit attributable to owners of parent (in millions of euros) Basic earnings per share (in euros) Diluted earnings per share (in euros) Note 34 Related party transactions Terms and conditions Ciments Français Group buys and sales goods and services to Italcementi S.p.A., its subsidiaries and associates. Ciments Français carries out all the fuels and part of the semi-finished and finished goods purchases made by Italcementi S.p.A. and its subsidiaries. CTG S.p.A, subsidiary of both Ciments Français SAS and Italcementi S.p.A., invoices its services of technical assistance and technological development to the Ciments Français. Personnel reinvoicing also exists between Italcementi S.p.A. and Ciments Français or its subsidiaries, as well as reinvoicing of expenses incurred by Italcementi S.p.A. for the development of organization, marketing, insurance and IT projects. Common costs between Italcementi S.p.A. and Ciments Français are mutually invoiced. They relate to Italcementi Group functions to either of the two companies or to the Group, as well as to the breakdown of expenses for acquisition or international development projects. Those transactions are realized at arms length conditions. No guarantee has been given or received for related party transactions. The Group did not recognize any provision for bad debt in conjunction with receivables from related parties in 2014 and Besides, Ciments Français funding requirements are mainly provided for by Italcementi Finance. Ciments Français also gave Italcementi S.p.A. mandate to manage its emission rights (cf. note 19). 85

88 2 The transactions of Ciments Français with related parties were as follows: (in millions of euros) Italcementi S.p.A. Companies controlled by Italcementi S.p.A. Joint ventures Associates Sales of goods Purchases of goods (10.2) (4.6) (8.1) (8.4) (3.0) Sales of services Purchases of services (56.8) (44.5) (33.2) (32.4) (2.0) (2.6) Other income Other expense (0.2) Interest income Interest expense (0.6) (0.3) (28.0) (25.0) Trade and other receivables Trade and other payables (79.5) (24.5) (12.9) (18.3) (1.3) (1.7) Finance receivables Finance payables (12.8) (0.9) (597.8) (538.7) (0.2) (1.6) As of 31 December 2014 Ciments Français hedged its interest-rate risks with Italcementi Finance for an amount of million euros and its exchange-rate risks for an amount of 42.1 million euros. Additionnally, the purchase of fixed assets totaled 9.5 million euros in 2014 (25.8 million euros in 2013). Ultimate parent company Italcementi S.p.A. is an Italian company listed on the regulated market managed by Borsa Italiana S.p.A. Its majority shareholder is Italmobiliare S.p.A. There was no transaction between Italmobiliare S.p.A. and Ciments Français. Associates The most significant associated companies with which the Group trades or provides/purchases services are Ciment Québec and Innocon in North America and Vassiliko in Cyprus. Companies controlled by Italcementi S.p.A. Transactions re-invoiced to Ciments Français or its subsidiaries mainly relate to a portion of research and development costs and services rendered by CTG S.p.A., equally owned by Italcementi and Ciments Français. 86

89 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Key management personnel The Chairman, the Chief Executive Officer and the Chief Operating Officer are considered key management personnel under IAS 24. The effects of the transactions with key management personnel on Ciments Français accounts can be detailed as follows: Transactions with key management personnel (in millions of euros) Expense for 2014 Balance at 31 December 2014 Expense for 2013 Balance at 31 December 2013 Short-term benefits excluding director s fees (2.2) (0.7) (3.8) (1.5) Director s fees (0.6) (0.6) Subtotal short-term benefits (2.8) (0.7) (4.4) (1.5) Post-employment benefits TOTAL (2.8) (0.7) (4.4) (1.5) Short-term benefits excluding director s fees include compensation (excluding employers contributions) paid by Ciments Français (base salaries, bonuses and benefits in kind) to the Chairman, the Chief Executive Officer and the Chief Operating Officer, excluding multiannual variable compensation to be paid in The multiannual variable compensation paid in 2014 amounted to 0.9 million euros. Directors fees are paid by Ciments Français and its subsidiaries (either fully consolidated or consolidated using the proportionate method). Note 35 Cash flow statement 35.1 Cash and cash equivalents (in millions of euros) 31 December December 2013 Western North Other Total Western North Other Total Europe America countries Europe America countries Cash at bank and in hand Mutual funds (OPCVM) and short-term deposits (< 3 months) TOTAL Mutual funds qualify for recognition as cash and cash equivalents as detailed in note Existing regulations and the presence of non-controlling interests, if any, limit the immediate availability of funds at the level of Ciments Français holding in most of the Other countries, mainly Egypt (174.0 million euros), Morocco (105.0 million euros), Thailand (113.6 million euros) and India (22.8 million euros). 87

90 Working capital requirement (WCR) (in millions of euros) Change in inventories (78.5) 17.1 Change in trade receivables 36.5 (4.6) Change in trade payables 36.4 (15.6) Change in operating WCR (5.6) (3.1) Change in other assets and operating liabilities Total change in working capital requirement Note 36 Significant events after the reporting period The company is not aware of any event after the reporting period that could have a significant impact on the Group s business, financial and equity position as of 31 December Note 37 Application of IFRS 10 & 11 as of 1 January 2014 As specified in note 1 on accounting principles, the Group has been applying IFRS 10 & 11 revised since 1 January 2014 (date of mandatory application), with retrospective effect to 1 January The Group has reviewed the nature of its ties with the entities in which it has invested according to the criteria of IFRS 10. Due to contractual obligations and despite a holding of voting rights limited to 50%, the Group controls 3 companies initially consolidated with the proportionate consolidation method. They are now fully consolidated. Conversely, a company held at more than 50%, previously accounted for using the global integration method, is now classified as joint venture and consolidated using the equity method. Furthermore, pursuant to IFRS 11, jointly-controlled entities include 13 joint ventures now consolidated using the equity method and 8 joint operations for which the Group recognizes its share of the assets and liabilities jointly held. The effects on equity at 1 January 2013 and on the financial statements for the year 2013 are not significant; they are detailed below. Restatement of equity as of 1 January 2013 (in millions of euros) Published balance at 1 January 2013 Share capital Share premium Available for sale reserve Reserves Hedging reserve Other reserves Translation reserve Treasury shares Retained earnings Equity attributable to owners of parent Noncontrolling interests Total equity (9.4) (2.6) (58.9) (17.1) 1, , ,782.9 IFRS 10 & 11 adjustment Restated balance at 1 January (9.4) (2.6) (58.9) (17.1) 1, , ,

91 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Restatement of income statement (in millions of euros) Year 2013 Published IFRS 10 & 11 adjustments Restated Revenues 3,591.5 (4.1) 3,587.4 Other revenues 19.3 (0.3) 19.0 Change in inventories Internal work capitalized Raw materials and utilities (1,407.0) (4.3) (1,411.3) Service expense (934.0) 6.4 (927.6) Personnel expense (593.5) 0.2 (593.3) Other operating income (expense) (54.5) (0.1) (54.6) Recurring EBITDA (1.6) Net capital gains on sale of fixed assets Other non-recurring income (expense) (20.0) (20.0) EBITDA (1.6) Amortization and depreciation (332.8) 1.6 (331.1) Impairment (12.9) 0.5 (12.4) EBIT Finance income Finance costs (84.1) 0.7 (83.4) Fair value gains (losses) on derivatives and exchange rates Impairment on financial assets (17.0) (17.0) Finance income (costs), net (76.1) 0.8 (75.3) Share of profit (loss) of associates 8.5 (1.1) 7.5 Profit before tax Tax expense (106.0) (0.1) (106.1) Net profit Of which share attributable to: Owners of the parent Non-controlling interests Basic earnings per share (in euros) Basic earnings Diluted earnings

92 2 Restatement of statement of comprehensive income (in millions of euros) Year 2013 Published IFRS 10 & 11 adjustments Restated Profit for the period Actuarial gains on employee benefits Income tax on items with no possible reclassification in profit or loss (3.7) (3.7) Total items with possible reclassification in profit or loss Translation differences on foreign operations (237.2) (237.2) Fair value gains on cash flow hedging Changes in available-for-sale financial assets (4.5) (4.5) Income tax on items with possible reclassification in profit or loss (0.7) (0.7) Total items with possible reclassification in profit or loss (240.8) (240.8) Total other comprehensive expense net of tax effect (221.3) (221.3) Total comprehensive income (expense) (106.7) 0.2 (106.5) Attributable to: Owners of the parent (100.5) (100.5) Non-controlling interests (6.2) 0.2 (6.0) Restatement of statement of financial position Assets 31 December December January 2013 (in millions of euros) Published IFRS 10 & 11 adjustments Restated Published IFRS 10 & 11 adjustments Restated Property, plant & equipment 3,158.8 (17.8) 3, ,356.6 (20.2) 3,336.3 Investment property Goodwill 1,102.9 (0.8) 1, ,196.0 (0.8) 1,195.1 Intangible assets Investments in associates Other equity investments Deferred tax assets Other non-current assets (0.1) 73.1 Total non-current assets 4,637.5 (0.2) 4, ,958.2 (0.8) 4,957.4 Inventories (1.0) (1.4) Trade receivables (1.1) (0.8) Other current assets (1.4) (1.8) Tax assets Equity investments, bonds and financial receivables Cash and cash equivalents (3.9) (3.2) Total current assets 1,557.1 (4.8) 1, ,744.2 (4.1) 1,740.2 Total assets 6,194.6 (4.9) 6, ,702.4 (4.9) 6,

93 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Equity and liabilities 31 December December January 2013 (in millions of euros) Published IFRS 10 & 11 adjustments Restated Published IFRS 10 & 11 adjustments Restated Share capital Share premium Reserves (134.6) (134.6) Treasury shares (16.5) (16.5) (17.1) (17.1) Retained earnings 1, , , ,890.6 Equity attributable to owners of the parent 2, , , ,996.8 Non-controlling interests Total equity 3, , , ,789.1 Financial liabilities 1,128.7 (3.1) 1, ,270.3 (3.0) 1,267.3 Employee benefits Provisions (1.5) (1.4) Deferred tax liabilities (0.2) (0.4) Other non-current liabilities Total non-current liabilities 1,651.3 (4.8) 1, ,814.9 (4.8) 1,810.1 Loans and borrowings 57.6 (0.1) (0.6) 54.3 Financial liabilities 70.6 (3.4) (4.1) Trade payables (1.4) (0.7) Provisions Tax liabilities (0.1) 30.8 Other current liabilities (1.6) (0.8) Total current liabilities 1,034.4 (6.6) 1, ,104.6 (6.3) 1,098.3 Total equity and liabilities 6,194.6 (4.9) 6, ,702.4 (4.9) 6,

94 2 Restatement of cash flow statement (in millions of euros) Year 2013 Published IFRS 10 & 11 adjustments Restated Cash flow from operating activities Profit before tax Adjustments for: Amortization, depreciation and impairment losses (2.1) Reversal of the share of profit (loss) of associates (2.7) 1.6 (1.1) Net capital (gains) losses on sale of fixed assets (12.9) (12.9) Change in employee benefits and other provisions 7.8 (0.1) 7.7 Stock options Finance costs, net 57.9 (0.7) 57.2 Cash flow before tax, interest expense and change in working capital (1.0) Change in working capital requirement (WCR) 20.3 (1.1) 19.2 Cash flow from operating activities (2.1) Net interest expense paid (54.5) 0.7 (53.8) Dividends received Tax paid (86.8) 0.3 (86.5) Total net cash provided by operating activities (1.1) Cash flow from investing activities Intangible assets (20.6) (20.6) Property, plant and equipment and investment property (274.6) (0.1) (274.7) Financial assets (equity, investments), net of cash acquisitions (1.4) (1.4) Proceeds from the sale of fixed assets Change in other long-term financial assets and liabilities Total net cash used in investing activities (276.5) (0.1) (276.6) Cash flow from financing activities Increase in non-current financial liabilities Repayment of non-current long-term financial assets and liabilities (172.3) 0.2 (172.1) Change in current financial assets Capital increase Purchase of treasury shares Dividends paid (156.3) (0.2) (156.5) Other sources and applications (3.6) 0.3 (3.3) Total net cash provided by (used in) financing activities (290.2) 0.5 (289.7) Translation differences and other changes (39.7) (39.7) (Decrease) increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period (3.2) Cash and cash equivalents at the end of the period (3.9) (Decrease) increase in cash and cash equivalents (88.6) (0.7) (89.3) 92

95 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 Note 38 Consolidation scope ENTITIES REGISTERED OFFICE % control at 31 Dec FRANCE CEMENT SCE La Grange d Etaule SOCLI IMMOBILIÈRE DES TECHNODES CIMALIT SRT Société Rouennaise de Transformation CIMENTS CALCIA SZG Transport (Tratel) TRATEL AFFRETEMENT LARRICQ JOHAR TRAGOR TRABEL TRANSPORTS DECOUX BONAFINI TRABEL AFFRETEMENT TRATEL (ex XINPRO) % control at 31 Dec % interests at 31 Dec % interests at 31 Dec Consolidation method at 31 Dec Beaujeu St Vallier Gray GLOB 2 Quartier Castans - Izaourt Loures Barousse GLOB Rue des Technodes Guerville GLOB Zone portuaire - Hangar 42, quai François Bassens GLOB Chez Ciments Calcia, Boulevard Maritime Grand Couronne GLOB Rue des Technodes Guerville GLOB AM Zementwerk Saarbrucken Gudingen (Allemagne) GLOB Les Technodes Guerville GLOB Z.I - 28 rue de l Aumônerie Airvault GLOB Voie Saint Nicolas Luxemont-Villotte GLOB 162 av du Haut Lévêque Pessac GLOB Grand Route Gaurain Ramecroix (Belgium) GLOB Route de Saint Gilles Beaucaire GLOB Z.I. de la Gare - Moult Argences GLOB Grand Route Gaurain Ramecroix (Belgium) GLOB Les Technodes Guerville GLOB CONSTRUCTION MATERIALS FRANCE B.C. DE L ADOUR Lieu-dit Castera - Rue du Moulin de Castera Bayonne GLOB DTM Dragages, 30 & 36 bis rue Saint Claude, Transports & Travaux 29 rue du Duc, Port de la Pallice Maritimes La Rochelle GLOB SABLIMARIS* Z.I. Portuaire du Rohu Lanester GLOB 93

96 2 ENTITIES REGISTERED OFFICE % control at 31 Dec % control at 31 Dec % interests at 31 Dec % interests at 31 Dec Consolidation method at 31 Dec UNIWERBETON Z.I. des Érables, BP Heillecourt GLOB LES GRAVES DE L ESTUAIRE LES SABLIERS DE L ODET * CALCAIRES DE SOUPPES SUR LOING CARRIERES BRESSE BOURGOGNE * DIJON BETON DRAGAGES ET CARRIERES Route du Port Pétrolier, Terre-plein Sud Le Havre EQUI Port de Corniguel Quimper GLOB Lieu-dit Le Coudray Souppes-sur-Loing EQUI Port fluvial Sud de Chalon Epervans EQUI Route de Gray St Apollinaire EQUI Port fluvial Sud de Chalon Epervans EQUI B.C. DES ABERS 11 rue de la roche - BP Lannilis EQUI B.C. DU PAYS BASQUE Lieu-dit Castera Rue du Moulin de Castera Bayonne GLOB GSM Les Technodes Guerville GLOB UNIBETON Les Technodes Guerville GLOB STÉ PARISIENNE DE SABLIERES EURARCO FRANCE FRAIMBOIS GRANULATS UNIBETON-VAR sas des grésillons STINKAL LES CALCAIRES GIRONDINS FONCIERE PETITE SEINE sci du colombier Le Catelier - Martot Pont de l Arche EQUI Chemin de Barre Mer - St Firmin les Crotoy Le Crotoy GLOB Pont de Fraimbois Moncel les Luneville EQUI Z.A. du Berthoire Lambesc GLOB 2 avenue du Général de Gaule Clamart PROP Hameau Beaulieu Ferques EQUI 18/20 avenue René Cassagne Cenon EQUI Route de Donnermarie en Montois Saint-Sauveur les Bray PROP SILIC, 2 rue du Verseau Rungis PROP les sables de mézières La Ballastière St-Pierre des Corps PROP GRANULATS DE LA DROME CALCAIRES LORRAINS Parc St Jean - ZAC du Mas de Grille St Jean de Vedas GLOB ZI. avenue des Érables Heillecourt EQUI 94

97 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 ENTITIES REGISTERED OFFICE % control at 31 Dec % control at 31 Dec % interests at 31 Dec % interests at 31 Dec Consolidation method at 31 Dec SCI Balloy 49 bis avenue F. Roosevelt Avon GLOB VALOISE 13 route de Conflans Pierrelaye EQUI SEAPM 49 bis avenue F. Roosevelt Avon PROP GRANULATS OUEST 3 rue du Charron Saint Herblain GLOB les quatre termes Chemin St Jean Salon de Provence PROP SODRAMARIS 30 & 36 bis rue Saint Claude, 29 rue du Duc, Port de la Pallice La Rochelle EQUI Belgium CCB Grand Route Tournai GLOB DE PAEPE BETON Kennedylaan - Afrit Moervaart Noord 9042 Gent GLOB SOCIETE DES CARRIERES DU TOURNAISIS SPAIN Grand-Route Tournai (Gaurain Ramecroix) PROP C. G. CANTERAS Carretera de Almeria - Km 8, apdo 189 Malaga GLOB FINANCIERA y MINERA Carretera de Almeria - Km 8, apdo Malaga GLOB HORMIGONES Y MINAS Carretera de Almeria - Km 8, apdo Malaga GLOB ATLANTICA DE Sestao-Galindo, Via Galindo - Vizcaya GRANELES PROP VENTORE Carretera de Almeria - Km 8, apdo 189 Malaga GLOB C.A.S. MALAGA Carretera de Almeria - Km 8, apdo 189 Malaga GLOB conglomerantes hidraulicos especiales GREECE - CYPRUS HALYPS BUILDING MATERIALS VASSILIKO CEMENT WORKS Ltd ITALMED CEMENT COMPANY NORTH AMERICA ESSROC CANADA Inc. (Canada) Carretera de Almeria - Km 8, apdo 189 Malaga GLOB Km 17 National Rd Athens-Korinth Aspropyrgos - Attika GLOB 1A Kyriakos Matsis Avenue Nicosia Chypre EQUI 284 Arch Makarios C ave Fortuna Blg Block B, 3105 Limassol Chypre GLOB 2000 Argentia Rd-Plaza 3-Suite 270 L5N 1P7 Mississauga (Ontario) Canada GLOB 95

98 2 ENTITIES REGISTERED OFFICE % control at 31 Dec % control at 31 Dec % interests at 31 Dec % interests at 31 Dec Consolidation method at 31 Dec ESSROC SAN JUAN Inc. Road No. 2 km 26.7 Bo. Espinosa Dorado - Puerto Rico GLOB GREYROCK Inc Bath Pike - Nazareth, PA (USA) GLOB TOMAHAWK Inc. c/o Delaware Corporate Management Inc N. Market St - Suite Wilmington DL (USA) GLOB GROUPE CIMENT QUEBEC Inc. CIMENT QUEBEC Inc.* 145 bd du Centenaire - GOA 3GO St Basile de Portneuf (Québec) Canada EQUI 145 bd du Centenaire - GOA 3GO St Basile de Portneuf (Québec) Canada EQUI QUEBEC * 145 bd du Centenaire - GOA 3GO St Basile de Portneuf (Québec) Canada EQUI ST-BASILE TRANSPORT * 184 bd du Centenaire - GOA 3GO St Basile de Portneuf (Québec) Canada EQUI INNOCON Inc. 50 Newkirk Road - L4C 3G3 Richmond Hill (Ontario) Canada EQUI ESSROC CEMENT Corp Bath Pike - Nazareth PA (USA) GLOB ESSROC Corp Bath Pike - Nazareth PA (USA) GLOB INNOCON PARTNERSHIP 50 Newkirk Road - L4C 3G3 Richmond Hill (Ontario) Canada EQUI Essroc Ready Mix 3251 Bath Pike - Nazareth PA (USA) Corp GLOB cambridge aggregates Inc. NATIONAL EAST READY MIX Corp. * BOLTON READY MIX * TESKEY CONCRETE COMPANY * 1182 Alps road RR#2 - N1R 5S5 Cambridge (Ontario) Canada GLOB th avenue - L3R 0H9 Markham (Ontario) Canada EQUI 10 Cadetta road, L6P 0X4 Brampton (Ontario) Canada EQUI 20 Murray road - M3K 1T2 Toronto (Ontario) Canada EQUI ONTARIO Inc. 21 Murray road - Toronto (Ontario) M3K 1T2 Canada EQUI EGYPT SUEZ CEMENT COMPANY TOURAH PORTLAND CEMENT SUEZ BAG company Nile City Towers, South Tower, Corniche El Nil - Cairo GLOB Nile Korniche, Helwan Road - Tourah PO Box Cairo GLOB Quattamia, Ein Sokhna Rd (km 30), PO Box 1022 Maadi - Cairo GLOB HELWAN CEMENT CO Kafr El Elw, Helwan GLOB Tecno Gravel Egypt 39 Kasr El Nile Street - Cairo EQUI Decom Abour City - II Saber Amin St.-Cairo, I Ibn Afan Sq. Dokki - Cairo, West of Suez Golf GLOB axim for industrials 35 Ramses st., Marouf, Office n 10, Cairo GLOB 96

99 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 ENTITIES REGISTERED OFFICE % control at 31 Dec % control at 31 Dec % interests at 31 Dec % interests at 31 Dec Consolidation method at 31 Dec development for 35 Ramses st., Marouf, Office n 6, Cairo industries GLOB suez lime Nile Office Building Southern, Cairo EQUI suez for Nile Office Building Southern, Cairo transportation GLOB suez for import & 35 Ramsis str. Kaser El Nile, Cairo export GLOB READY MIX CONCRETE ALALAMIA SAE MOROCCO 108, Anabib El-Petrol Street, End of Gesr El-Suez, The industrial Area, Cairo GLOB PROCIMAR 621 boulevard Panoramique, Casablanca GLOB BETOMAR 621 boulevard Panoramique, Casablanca GLOB asment temara Ain Attig, Route de Casablanca, Temara EQUI CIMENTS DU MAROC 621 boulevard Panoramique, Casablanca GLOB INDUSAHA SA Immeuble Chiâa, route de Mekka km 18 route de la ville du port - Laayoune GLOB BULGARIA DEVNYA CEMENT AD Varna District Devnya GLOB LYULYAKA 1 Suvorovsko Shose Devnya GLOB VULKAN AD Vulkan Quarter - Dimitrovgrad GLOB DEVNYA FINANCE Varna District Devnya EQUI DEVNYA BUSINESS Suvorovsko Shose N Devnya CENTER GLOB KUWAIT Hilal Cement PO Box 20732, Safat, Kuwait GLOB kugemix 1 bd Al-Tayeba, Industrial Area, Kuwait GLOB al mahaliya Po Box 5146, Safat, Kuwait GLOB gulf ready mix concrete Al Mirqab Plot 1, building 1, Office 5, floor 6, Kuwait GLOB tameer beton Po Box Doha, Qatar EQUI LibyA itc for cement MANUFACTURING SAUDI ARABIA INTERNATIONAL CITY FOR CONCRETE THAILAND JALAPRATHAN CEMENT PUBLIC Bashir El Ibrahim Street, Al Dhara Tripoli, Libya EQUI King Road, PO Box 11282, Jeddah, Saudi Arabia GLOB 23/ Soi Soonvijai, Rama 9 Rd Kwaeng Bangkapi Khet Huay Kwang Bangkok GLOB 97

100 2 ENTITIES REGISTERED OFFICE % control at 31 Dec JALAPRATHAN CONCRETE ASIA CEMENT (ACC) ASIA CEMENT PRODUCTS NAGA PROPERTY asia cement energy conservation % control at 31 Dec % interests at 31 Dec % interests at 31 Dec Consolidation method at 31 Dec / Soi Soonvijai, Rama 9 Rd Kwaeng Bangkapi Khet Huay Kwang Bangkok GLOB 23/ Soi Soonvijai, Rama 9 Rd Kwaeng Bangkapi Khet Huay Kwang Bangkok GLOB 23/ Soi Soonvijai, Rama 9 Rd Kwaeng Bangkapi Khet Huay Kwang Bangkok GLOB 23/ Soi Soonvijai, Rama 9 Rd Kwaeng Bangkapi Khet Huay Kwang Bangkok GLOB 23/ Soi Soonvijai, Rama 9 Rd Kwaeng Bangkapi Khet Huay Kwang Bangkok GLOB INDIA ZUARI CEMENT LTD Krishna Nagar - Yerraguntla , Kadapa district, Andra Pradesh GLOB singha cement (private) 44/1 New Nuge road, Colombo 03, Sri Lanka GLOB SITAPURAM POWER Ltd 431/A Road n 22, Jubilee Hills Hyderabad GLOB GULBARGA CEMENT Ltd Adventz Centre 2nd & 3rd floors n 28, Cubbon Road, Bangalore GLOB KAZAKHSTAN SHYMKENT CEMENT 22 Koikeldy batyr street Shymkent GLOB BETON ATA LLP 264 Kazybaev Street, Zhetysuskyi region Almaty GLOB TRADING intercom 124, via G. Camozzi Bergame, Italy GLOB GACEM Kanifing Industrial Estate, PO Box 2973, Serrekunda, Gambia GLOB INTERBULK TRADING Via Bagutti 5, CH-6904 Lugano, Switzerland GLOB MAFCI BP n 5291, Nouakchott, Mauritania GLOB EUROTECH cement Rruga Unazes Shkozet, Durres, Albania GLOB medcem 39 via Santa Brigida Naples, Italy EQUI MARITIME TRADE & BROKERAGE Interbulk Egypt mauritanienne des bâtiments et routes Via Paolo Imperiale, Edifico Caffa int. 8 e 9 Genova, Italy EQUI 35 St. Ramsis, United Bank Building 6th floor Cairo - Egypt GLOB BP 40254, Nouakchott, Mauritania GLOB 98

101 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements 100 ENTITIES REGISTERED OFFICE % control at 31 Dec % control at 31 Dec % interests at 31 Dec % interests at 31 Dec Consolidation method at 31 Dec intercom Libya F.Z.C. Free Trade Zone de Misurata, Libya GLOB TERRA CIMENTOS LDA 466, rua Damiao de Gois, Sommershield Block, Maputo, Mozambique GLOB HEADQUARTERS & HOLDINGS SAX Les Technodes - Rue du Château Guerville GLOB TECHNODES SA Rue du Château Guerville GLOB TERCIM Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB CIMENTS FRANÇAIS Tour Ariane - 5 pl. de la Pyramide Puteaux mère COFIPAR Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB INVESTCIM Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB VESPRAPAT HOLDING CO LTD VANIYUTH CO LTD COCIMAR CIMFRA China ESSROC INTERNATIONAL PARCIB AL MANAR CEMENT MENAF SUEZ BOSPHORUS CIFI CODESIB N 540 Mercury Tower 22nd fl. Ploenchit Road Lumpiee Subdistrict - Bangkok, Thailand GLOB Sukhumvit Rd, Klongtoey subdistrict, Wattana district, Bangkok Metropolis, Thailand GLOB Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB Kordon Yolu Sokak n 6 Daire 1, Kalamis Istanbul - Turkey GLOB Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB Tour Ariane - 5 pl. de la Pyramide Puteaux GLOB CIMINTER SA 1 rue Joseph Hackin Luxembourg GLOB SEAS Co Ltd 23/ Soi Soonvijai, Rama 9 Rd Huay Kwang Bangkok - Thailand GLOB * Subsidiaries of companies consolidated using proportionate or equity method. 99

102 2 2.7 Statutory auditors report on the consolidated financial statements Year ended 31 December 2014 This is a free translation into English of the statutory auditors report on the consolidated financial statements issued in French and it is provided solely for the convenience of English-speaking users. The statutory auditors report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the audit opinion on the consolidated financial statements and includes an explanatory paragraph discussing the auditors assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account balances, transactions, or disclosures. This report also includes information relating to the specific verification of information given in the group s management report. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. KPMG Audit 1, cours Valmy Paris-La Défense Cedex Ernst & Young Audit 1/2, place des Saisons Courbevoie - Paris-La Défense 1 To the Sole Shareholder, In compliance with the assignment entrusted to us by your annual general meetings, we hereby report to you, for the year ended 31 December 2014, on: the audit of the accompanying consolidated financial statements of Ciments Français S.A.S.; the justification of our assessments; the specific verification required by law. These consolidated financial statements have been approved by the board of directors. Our role is to express an opinion on these financial statements based on our audit. 1. Opinion on the consolidated financial statements We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities, of the financial position of the Group as at December 31, 2014 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union. Without qualifying our opinion, we draw your attention to the matter set out in notes 1, 4 and 37 to the consolidated financial statements regarding the effect of the first application of IFRS 10, 11 and

103 Group presentation and management report Statement of financial position 20 Consolidated financial statements Income statement 22 Ciments Français SAS annual financial statements Statement of comprehensive income (expense) 23 Corporate governance Statement of changes in equity 24 General Meeting Cash flow statement 25 Notes to the consolidated financial statements 26 Statutory auditors report on the consolidated financial statements Justification of our assessments Accounting estimates used in the preparation of the consolidated financial statements as at 31 December 2014 have been made in a context where the economic outlook is difficult to assess. These conditions are described in note 1.2 to the consolidated financial statements. Such is the context of uncertainty in which we made our own assessments that we bring to your attention in accordance with the requirements of article L of the French Commercial Law ( Code de Commerce ). Accounting estimates Non-current assets Your Group systematically performs at each annual closing an impairment test for goodwill and assets with an indefinite useful life and takes into consideration indicators of any potential loss in value of other long-term assets, as described in notes 1-11 and 6 to the consolidated financial statements. We have examined the method applied for performing this impairment test as well as the estimates and assumptions used and checked that the notes 1-11, 5, 6 and 8 give appropriate information. Post-employment benefits Notes 1-17 and 20 provide details about the valuation methods of the obligations for post-employment benefits and similar commitments. These obligations have been valued by an actuary. Our audit procedures consisted in examining the methods used and assessing the data and assumptions applied and checking that the notes 1-17 and 20 to the consolidated financial statements give appropriate information. Provisions The Company records provisions to cover its obligations related in particular to litigation in progress, as described in notes 1-19 and 21 to the consolidated financial statements. We have examined the procedures implemented by the Group to identify and account for these obligations as well as the assumptions applied to estimate them. Application of IAS 10, 11 and 12 As mentioned in the first part of this report, notes 1, 4 and 37 of the consolidated accounts disclose the change in accounting principles applied during the year following the first application of IFRS 10, 11 and 12. In the context of our assessment of the accounting principles applied by your croup, we have examined the effects of the application of IFRS 10, 11 and 12 and ensured that notes 4 and 37 to the consolidated accounts gives appropriate information. These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report. 3. Specific verification As required by law we have also verified, in accordance with professional standards applicable in France, the information presented in the Group s management report. We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements. Paris-La Défense, 19 March 2015 The statutory auditors French original signed by KPMG Audit Départment of KPMG S.A. Ernst & Young Audit Michel Piette Laurent des Places Pierre Henri Pagnon 101

104

105 3 Ciments Français SAS Annual Financial Statements 3.1 Results, financial situation and other legal information relating to Ciments Français SAS (parent company) Income statement Balance sheet Notes to the financial statements Five-year financial summary Subsidiaries and affiliates over the last 2 years Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements

106 3 3.1 Results, financial situation and other legal information relating to Ciments Français SAS (parent company) Results Ciments Français SAS net profit amounted to 65.6 million euros in 2014 (47.4 million euros in 2013). Dividend payment Dividend, subject to approval by the General Meeting of 10 April 2015 has been set at 3 euros. Given that an interim dividend of 1.50 euro was paid on 19 January 2015, the dividend balance to be paid for 2014, i.e euro per share, will be payable in cash as from 5 May Share capital As of 31 December 2013 the share capital amounted to 143,192,544 euros, consisting of 35,798,136 shares with a par value of 4 euros. During 2014, the number of shares changed as follows: Exercise of stock subscription options: 150,400 Cancellation of shares: 350,187 As of 31 December 2014 the share capital amounted to 142,393,396 euros, consisting of 35,598,349 shares with a par value of 4 euros. At year-end, Italcementi S.p.A. held 100% of the shares and 100% of the voting rights. There were no share subscription options as of 31 December Special report on treasury shares (Article L , 2 of the French code of commercial law) As of 1 January 2014, the company held 350,187 treasury shares which have been cancelled by decision of the Board of Directors of 19 May During 2014 the company did not purchase any shares under the share buyback program authorized by the General Meeting of 11 April Balance at 1 January ,187 shares Cancellation 350,187 shares Balance at 31 December 2014 nil There were no more shares registered under the company s name at year-end. 104

107 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements 129 Option plans 150,400 share subscription options were exercised in ,500 share subscription options were individually surrendered against compensation and 8,800 were cancelled. There was no share subscription option left as of 31 December Legal and arbitration proceedings Ciments Français SAS is not aware of any legal or arbitration procedure or non-recurring event against it, which could have a significant impact on its financial position or profitability other than those described in section 3.4 «Non-recurring events and disputes». Social information Social information relating to Ciments Français SAS can be summarized as follows: As of 31 December 2014 the company employed 74 people, all under open-term contracts. In the course of the year and apart from intra-group mobility, one new employee was hired, five employees were made redundant and there was no contractual termination of employment contract. Average headcount for 2014 was 78.5 employees. Overtime and the use of temporary workers are not significant. In terms of working time, the company abides by the French employment law on the organization and reduction of working hours under an agreement signed in 1999 and two employees work under a part-time contract (one at 80% and one at 90%). During the year, absenteeism rate was 1.38%. In 2014, payroll amounted to 16,072 thousand euros. Ciments Français employees are entitled to employee benefits such as subscription to medical insurance, provident fund, additional pension schemes, contribution to food expenses and various bonuses granted for family events. They also benefit from a company savings plan (Plan Épargne Entreprise) and an intercompany retirement plan (Plan Épargne pour la Retraite Collectif Interentreprises). Both plans are fed with money from the profit-sharing scheme or from free deposits in corporate mutual funds (Fonds communs de placement d entreprise). Ciments Français works council (comité d entreprise) is composed of five permanent members. During 2014, it met 11 times in ordinary meetings and 5 times in extraordinary meetings. The comité d entreprise total expense amounted to 157,544 euros. In terms of training, 77 sessions were carried out in 2014 corresponding to 1,195 training hours. During 2014, the health and safety committee (CHSCT) met 4 times in ordinary meetings; there were no extraordinary meetings. 105

108 3 3.2 Income statement (in thousands of euros) Notes Year 2014 Year 2013 REVENUES A1 14,618 11,438 Goods and utilities expense A2 (81,689) (83,409) ADDED VALUE (67,071) (71,971) Taxes (other than income tax) A3 (7,033) (4,721) Employee expense A4 (22,201) (20,013) RECURRING EBITDA (96,305) (96,705) Other income A5 73,911 58,120 Other expense A6 (14,502) (482) Depreciation (413) (665) Provisions (58) 0 EBIT (37,367) (39,732) Dividends 129, ,839 Interest expense, net (52,055) (12,252) Provision release (addition) 2,884 (56,514) FINANCE INCOME A7 80,129 75,073 RECURRING PROFIT 42,762 35,341 Other non-recurring income ,655 Other non-recurring expense (691) (35,690) Depreciation 0 0 Provisions 2,133 2,166 OTHER NON-RECURRING INCOME (EXPENSE) A8 1,547 (18,869) PROFIT BEFORE TAX 44,309 16,472 Income tax A11 21,241 30,953 NET PROFIT 65,550 47,

109 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements Balance sheet ASSETS (in thousands of euros) Notes Gross amount 31 December 2014 Depreciation & provision (to be deducted) Net amount 31 December 2013 INTANGIBLE ASSETS B1 8,079 7, PROPERTY, PLANT & EQUIPMENT B1 Plant & equipment 1,891 1, Other assets 2,657 2, FINANCIAL ASSETS (1) B2 4,548 4, Investments in subsidiaries and associates 3,997, ,215 3,778,716 3,676,413 Loans to affiliates 394, , ,655 Deposits and available-for-sale investments ,510 Loans Other financial investments ,392, ,239 4,173,727 4,182,388 NON-CURRENT ASSETS 4,405, ,431 4,174,162 4,183,216 OTHER CURRENT ASSETS Trade receivables B3 29, ,487 20,252 Other operating assets 1,062-1, Accrued expense B4 8,883-8,883 11,538 Other current assets (2) B4 163,587 1, ,161 97,987 Translation adjustments (2) 11,051-11,051 12,290 Securities ,002 Cash and cash equivalents 5,447-5,447 4, ,509 2, , ,173 TOTAL ASSETS 4,625, ,849 4,391,253 4,348,389 (1) Of which current 9 20 (2) Of which non-current

110 3 EQUITY AND LIABILITIES (in thousands of euros) Notes 31 December December 2013 EQUITY Share capital 142, ,193 Paid-in capital 1,004, ,590 Revaluation reserve B6 4,802 4,802 Legal reserve 15,394 15,394 Other reserves 76,011 76,011 Retained earnings 1,133,135 1,207,479 Net profit for the period 65,550 47,425 SHAREHOLDERS' EQUITY B5 2,441,934 2,488,894 PROVISIONS (1) B7 49,074 46,285 FINANCIAL DEBT (1) B8 Debenture loans 500, ,000 Bank interest-bearing loans (2) 1 38 Other borrowings and financial liabilities 1,237,161 1,265,739 1,737,162 1,765,777 OTHER LIABILITIES (1) Trade payables 33,189 25,412 Tax liabilities 11,386 9,322 Fixed assets payables - - Accrued income , Other liabilities 53, Translation adjustments 64,830 12, ,083 47,433 TOTAL LIABILITIES 4,391,253 4,348,389 (1) Of which current 1,091,935 1,131,568 Of which non-current 857, ,927 (2) Of which bank overdrafts

111 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements Notes to the financial statements (All amounts are in thousands of euros unless otherwise stated) Significant events for 2014 Simplified public offer and squeeze-out procedure Italcementi S.p.A., Ciments Français reference shareholder, launched a simplified public offer on Ciments Français shares at euros per share. Following the approval by the Autorité des marchés financiers (AMF) on 10 June 2014, the offer opened on 13 June On 3 July 2014, at the end of the offer period, Italcementi S.p.A. held 97.73% of the share capital and 98.65% of the voting rights of Ciments Français. A squeeze-out procedure of Ciments Français shares not yet held by Italcementi S.p.A. was initiated on 15 July 2014 against payment of euros. Ciments Français was delisted from Euronext Paris on 15 July 2014 on which date Italcementi S.p.A. became the sole owner of Ciments Français shares. Change of legal form from limited liability (SA) company to simplified joint stock company (SAS) On 4 November 2014 the extraordinary Meeting approved the transformation of Ciments Français into a simplified joint stock company (SAS). Financial rating On 31 July 2014 Moody s rating agency withdrew the company s rating. General principles The annual financial statements (balance sheet and income statement) as of 31 December 2014 and 31 December 2013 have been prepared in accordance with the principles and methods laid down in the Accounting Act and its implementing provisions, pursuant to CRC regulation no The general accounting conventions will be applied in accordance with the principle of prudence, in conformity with the following basic assumptions: fair view comparability business continuity regularity sincerity consistency of methods. They will also be applied according to the accepted general accounting rules governing the preparation and presentation of annual accounts. The basic method used when stating the value of items in the financial statements is the historical cost method. 109

112 3 Valuation methods Property, plant & equipment and intangible assets Property, plant and equipment and intangible assets are recognized at the initial purchase price, excluding financing and other costs. Depreciation Assets are depreciated as follows over their estimated useful life: Fittings and installations are depreciated on a straight-line basis over ten years. Technical installations, equipment and tools are usually depreciated on a straight-line basis over eight years. Vehicles are depreciated on a straight-line basis over four years. Office furniture is depreciated on a straight-line basis over eight years. Machines, office equipment and large computers are depreciated on a straight-line basis over five years. Software is depreciated on a straight-line basis over three or five years. Depreciation is recognized in operating expense and deducted from fixed assets. Provisions When an asset s estimated market value falls below net book value, an impairment provision is recognized. Investments Financial fixed assets are carried at cost or at fair value in case of asset transfers. Portfolio investments were revalued on 31 December 1976 as required by French law. Provisions for impairment of financial fixed assets An impairment provision is recognized whenever the value in use of an equity investment falls below book value. The value in use of an equity investment is generally computed on the basis of the share of equity held. It may be increased when necessary in case of intangible items with the company s market value estimated according to the discounted cash flow method, or in case of listed shares based on market price at year-end. Foreign currency receivables and liabilities Receivables and liabilities in non-euro zone currencies are converted using the exchange rate at the closing date. All differences with the rate at the date of purchase or sale are credited or debited to «Other current assets» or «Other liabilities». Unrealized losses are usually provided for in the income statement with the exception of hedging products. 110

113 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements 129 Provisions A provision is recognized where there is a legal or constructive obligation at the close of the financial year that is likely or certain to lead to an outflow of resources to third-party beneficiaries. With regard to pension and post-retirement liabilities, the main defined benefit plans are retirement indemnities and medical cost coverage. Pension-related liabilities are funded by insurance companies. The liability recorded in the balance sheet is net of the fair value of plan assets. Pensions and post-retirement liabilities are measured and recognized pursuant to ANC recommendation no The provision for termination benefits was up 173 thousand euros in 2014 (up 183 thousand euros in 2013). The provision for other employment benefits was up 264 thousand euros in 2014 (up 101 thousand euros in 2013). The impacts of bill no of 9 November 2010 were recognized in actuarial gains and losses. The rights to termination benefits are determined by the collective agreement of the Industrie de la Fabrication des Ciments. In addition, jubilee award plans paid during the working life are also in place for which Ciments Français applies CRC regulation no Such plans have been subject to an actuarial valuation. Actuarial gains and losses result from changes in actuarial assumptions from one period to another, as well as any gains or losses recorded on the obligation or on the value of the funds vis-à-vis the actuarial assumptions used at the beginning of the period. They are amortized per plan in accordance with the corridor method (gains or losses exceeding 10% of the market value of the plan assets or of the present value of the obligation), over the average remaining working lives of the employees benefiting from the plan. Changes in liabilities following a plan amendment are recognized immediately in the income statement when the rights have vested or over the vesting period. Discount rate is 1.50% for retirement indemnities and health benefits, and 0.90% for jubilee awards. Inflation rate is 2.00%. Liabilities have been estimated using the TH-TF mortality table. For termination benefits, the salary increase rate is 2.00% and the expected return on assets is 1.50%. Income tax Group tax consolidation is automatically renewed every five years for a five-year period. Ciments Français SAS is the parent company of the tax integrated group. As of 31 December 2014 the tax integrated consolidation scope was as follows: Al Manar Codesib Menaf Technodes Cifi Cofipar Parcib Tercim Cimalit Essroc International Sax Tratel Ciments Calcia Granulats Ouest SCI de Balloy Tratel Affrètement Ciments Français GSM Socli Unibéton Cimfra Immobilière des Technodes SRT Société Rouennaise Unibéton Var Cocimar Investcim de Transformation 111

114 3 The rules for the distribution of the Group s tax expense between the various companies are contractually agreed according to the following guiding principles: For subsidiaries, neutral tax treatment; For Ciments Français, recognition: In the income statement of any restatements as income or expense associated with the Group tax regime, As income of any tax savings generated by loss-making companies, Of a provision in the event the loss-making companies return to profit and use their tax loss carryforwards. Financial instruments The company uses certain financial instruments to reduce the foreign-exchange and interest-rate risks inherent in its international operations and in the nature of its borrowings. Financial instruments are traded in regulated markets and over the counter as part of a policy of partial hedging of covered transactions and never involve speculative positions. Gains and losses from hedging are symmetrically recognized in the same manner as gains and losses on the underlying hedged transactions. Currency-hedging instruments The company uses in particular forward purchases and sales together with currency swaps to hedge fluctuations in currency exchange rates. Subsequent gains and losses from currency-hedging derivatives applied to hedge balance sheet items are recognized as corrections resulting from the items hedged. Interest-rate hedging instruments The company uses interest-rate swaps, forward-rate agreements (FRA) and collars to hedge interest rate changes. Interest rate differential received or paid out are recorded as interest expense. Loan issuance costs Since 1997, loan issuance costs, previously shown as prepaid expense in the balance sheet, are recorded on a straight-line basis as external expense over the period of the corresponding loans. Non-recurring events and disputes In the normal course of Ciments Français activities, disputes may occur with third parties and proceedings may be initiated. Provisions are recorded on a case by case basis, according to the risks attached to each case, whenever the cost can be estimated. The main disputes as of 31 December 2014 and for which no provision was established were as follows: 1) In November 2008, the European Commission commenced an investigation into alleged unfair trading practices/cartel agreements by several cement producers among which Italcementi S.p.A. and its subsidiaries (namely Ciments Français, Ciments Calcia and Compagnie des Ciments Belges). In December 2010, the European Union notified the formal opening of the proceeding to Italmobiliare S.p.A. (company controlling Italcementi S.p.A.) and expanded it to the Spanish subsidiary Financiera y Minera (FyM). In April 2011, the EU served formal notice on Italmobiliare S.p.A. of its decision to request extensive additional economic, financial and commercial information. Italmobiliare provided the information within the required term and, simultaneously, lodged an appeal with the EU General Court against the decision. On 17 March 2014 the EU General Court rejected the appeal presented by Italmobiliare, which will have no financial impact. Italmobiliare has filed an appeal with the European Court of Justice. Decision is still pending. 112

115 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements 129 2) In July 2009, the Belgian antitrust authorities requested information from various cement producers among which Compagnie des Ciments Belges (CCB). In 2010, they disclosed their findings to the parties involved. In August 2013, the authorities decided that cement producers had conspired to delay the adoption of industrial standards to protect their interests. CCB was fined 1.8 million euros but lodged an appeal before the Court. 3) Following the non-closure of the 2008 agreement for the transfer of the Turkish operations (Set Group) to Sibcem (subsidiary of Sibconcord), the various lawsuits filed by Sibconcord moved ahead in accordance with the procedural regulations of the countries in question. On 10 July 2013, the Court of Kemerovo (Russia) issued a ruling in favor of Ciments Français rejecting Sibconcord requests. In March 2014, the Court of Appeal dismissed Sibconcord s action for annulment of the agreement and upheld the ruling in favor of Ciments Français. Sibconcord consequently filed an appeal with the regional Court of Cassation. The Supreme Court overturned the ruling of first instance and referred the case back to the Court of Kemerovo. Next hearing is scheduled for March Regarding ICC arbitration, the Tribunal of Commerce of Istanbul confirmed on 26 Janaury 2015 that the final arbitration ruling in favor of Ciments Français was enforceable. Ciments Français also pursues proceedings for the recognition of the arbitral decision in various countries, including Russia. The decision has already become enforceable in Belgium, France, Kazakhstan and the United States. 4) Private individuals have initiated proceedings intended to question the privatizations of Helwan Cement Company (Helwan) and Tourah Portland Cement Company (TPCC) - today subsidiaries of Suez Cement Company - which took place prior to any acquisition of a direct or indirect stake by Ciments Français. Suez Cement is currently a party only to the proceedings relating to TPCC. These proceedings are at too early a stage to draw any conclusion. To the company s knowledge, there is no other litigation, arbitration or non-recurring event liable to have a significant impact on the financial position, results, business or assets of the company. Consolidation The company s financial statements are included in the financial statements of Italcementi S.p.A. - Via Camozzi Bergamo (Italy) according to the global consolidation method. Management estimates The preparation of the parent company financial statements, in accordance with generally accepted accounting principles in France (French GAAP), requires Group management to use estimates and assumptions that affect assets and liabilities in the balance sheet as well as expense and income in the income statement. This applies to amortization, depreciation and provisions, as well as to the assets and liabilities that are discussed in the notes to the financial statements. These estimates are based on the assumption of ongoing operations and take into account the data available at the time. They also reflect the current environment which makes it difficult to determine the future economic outlook and actual results may turn out to be different from estimates and assumptions. 113

116 3 Notes to the financial statements A. Income statement All amounts are in thousands of euros unless otherwise stated. A1 Revenues Services 14,618 11,438 of which exports 7,665 9,336 A2 Goods and utilities Rents, utilities and maintenance (2,396) (2,749) Fees (2,844) (3,224) Other supplies (111) (124) Contribution to Centre Technique Groupe (16,265) (17,842) External services (60,073) (59,470) TOTAL (81,689) (83,409) A3 Taxes Social security and solidarity contribution (137) (130) Taxes levied abroad (5,015) (3,341) Others (299) (205) Payroll tax (1,582) (1,045) TOTAL (7,033) (4,721) A4 Employee expense Compensation and benefits (15,039) (13,484) Social contributions (5,668) (5,318) Post-employment benefits (437) (283) Other employee expense (1,057) (928) TOTAL (22,201) (20,013) A5 Other income Technology transfers and assistance to subsidiaries (1) 59,601 57,766 Licensing of i.nova brands and/or visual identity to subsidiaries (2) 13,977 Others TOTAL 73,911 58,120 (1) Ciments Français provides its subsidiaries with technical and administrative support remunerated according to each subsidiary s revenues. (2) Ciments Français licenses out i.nova brands and/or visual identity to most of its subsidiaries against a compensation determined according to the revenues of the subsidiary. 114

117 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements A6 Other expense Licensing out of i.nova brands and/or visual identity by Italcementi S.p.A. (3) (13,977) Others (525) (482) TOTAL (14,502) (482) A7 Finance income (costs) Dividends 129, ,839 Other finance income 14,804 12,581 Finance costs from bank overdrafts and short-term borrowings (44,038) (49,533) Foreign-currency differences, net (22,395) 23,927 Provisions on capital assets 2,458 (55,741) TOTAL 80,129 75,073 A8 Other non-recurring income (expense) Capital gains (losses) on asset disposals 9 (15,954) Provision for social contributions 3,151 (3,045) Provision for tax audit 0 (54) Others (1,613) 184 TOTAL 1,547 (18,869) A9 Income and expense relating to the Group Revenues 14,618 11,438 Other income 73,836 57,877 Dividends 129, ,839 Interest income 14,719 12,361 Provision on investments in and loans to subsidiaries 2,458 (55,741) Other external expense (58,069) (60,634) Other expense (13,977) Finance income (costs) (26,344) (28,162) Non-recurring income (expense) (1,017) (17,269) TOTAL 135,524 63,709 A10 Compensation for corporate officers Directors' fees Compensation 3,246 3,163 TOTAL 3,738 3,645 (3) Italcementi S.p.A. licenses out i.nova brand system and/or visual identity to Ciments Français. 115

118 3 A11 Taxable income - Breakdown of tax charge under consolidation regime Designation: Income tax (expense) Effect of tax consolidation regime Taxes received from individual subsidiaries - Normal and reduced rate (including non-recurring contributions) 45,598 59,221 Group's accrued income tax for the period - Normal rate (15,836) (17,758) - Reduced rate (565) (751) - Non-recurring contributions (2,271) (2,566) Provision for future use by subsidiaries of tax loss carryforwards* (5,057) (6,605) Adjustment (204) (40) Foreign tax credit, patronage and learning 2,776 2,642 Taxation of dividends (3,200) (3,190) TOTAL 21,241 30,953 * See the note related to the valuation methods of income tax. Ciments Français SAS as a single entity would have shown a tax loss for the last two years. For each of the two years, income tax at reduced rate related to royalties. A12 Changes in deductions and reinstatements of taxation 31 December 2014 Movements 31 December 2013 Assets Liabilities Assets Liabilities Assets Liabilities Temporarily non-deductible expense To be deducted the following year Bonus 2, ,605 Social security and solidarity contribution Construction subsidy Provision for labor costs 3,151 (3,151) 0 To be deducted later Provision on liabilities Provision for liabilities on participating interest 2,793 1,018 3,811 Retirement indemnity 1, ,842 Health insurance 1, ,822 Long-term incentive (3-year bonus) 2,100 (1,353) 747 Deducted expense and taxed income not yet recognized Translation adjustment on assets 12,290 (1,239) 11,051 Translation adjustment on liabilities 12,321 52,509 64,830 Provision on foreign-exchange risk 11,873 (426) 11,447 Income on subsidiaries tax integration 24,521 5,057 29,578 TOTAL 12,290 63,279 (1,239) 54,077 11, ,

119 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements 129 B. Balance sheet B1 PPE and intangible assets At 31 December At 1 January 828 1,214 Net change (393) (386) Change in gross amount (a) Capital expenditure Property, plant and equipment disposed of or decommissioned (6,898) (53) TOTAL (6,878) 243 Change in depreciation (b) Annual depreciation Depreciation of property, plant and equipment disposed of or decommissioned (6,898) (36) TOTAL (6,485) 629 Change in net amount (a) (b) (393) (386) B2 Financial assets At 31 December 4,173,727 4,182,388 At 1 January 4,182,388 4,383,255 Net change (8,661) (200,867) Analysis of changes Investments (disposals) of equity interests (1) 99,845 (61,635) (Provisions) reversals for amortization of equity interests (2) 2,458 (55,741) Net increase (decrease) in loans to subsidiaries (3) (93,843) (82,873) Increase (decrease) in other loans (598) (15) Treasury shares (4) (16,510) (618) Other changes (13) 15 TOTAL (8,661) (200,867) (1) In 2014, the net change of 99,845 thousand euros related to the following movements: Capital increase: - Essroc International +99,962 Capital reduction: - Parcib -80 Disposals: - Xinpro -37 In 2013, the net change of -61,635 thousand euros related to the following movements: Capital reduction: - Parcib -33,910 Disposals: - Jalaprathan Cement -28,355 - Asment de Temara -528 Constitution of capital: - CTG +1,162 Liquidation - Inversiones e Iniciativas -3 - Soficem

120 3 (2) In 2014, the net change of 2,458 thousand euros related to allowances to Cimfra (6,777 thousand euros), Menaf (2,157 thousand euros), Al Manar (294 thousand euros), Parcib (30 thousand euros) and Sax (22 thousand euros) and to reversals of provision on Halyps (8,833 thousand euros), Codesib (2,034 thousand euros) and CTG (871 thousand euros). In 2013, the net change of -55,741 thousand euros mainly related to allowances to Menaf (21,100 thousand euros), Tercim (12,718 thousand euros), Cimfra (11,656 thousand euros), Suez Cement Company (9,286 thousand euros), Sax (4,133 thousand euros), CTG (910 thousand euros) and Al Manar (27 thousand euros) and to reversals of provision on Halyps (2,994 thousand euros) and Codesib (1,095 thousand euros). (3) In 2014, the net change of -93,843 thousand euros primarily related to the decrease for 106,478 thousand euros in loans to Essroc, to a new loan to Essroc International for 9,447 thousand euros and to the increase in the Halyps loan for 2,300 thousand euros and Intercom Libya for 2,818 thousand euros. In 2013, the net change of -82,873 thousand euros primarily related to the decrease for 46,600 thousand euros in loans to Essroc, to the transfert from current liabilities to non-current liabilities of the GSM loan for 30,000 thousand euros, to the decrease in the Jalaprathan loan for 723 thousand euros and to the transfert of 11,650 thousand euros from current liabilities to non-current liabilities, to the end of the loan to Inversiones e Iniciativas for 3,400 thousand euros related to the liquidation of the company and finally to the loans to Halyps for 6,700 thousand euros and Intercom Libya for 2,818 thousand euros. (4) In 2014, all the treasury shares existing at 1 January 2014, i.e. 350,187 shares for an amount of 16,510 thousand euros, were cancelled by the Board of Directors of 19 May 2014 and the company did not purchase any share as part of the buyback program. At year-end, there were no more treasury shares registered in the company s name. In 2013, the company did not buy any share as part of the buyback program and no share was cancelled. During the year, 13,175 shares were allocated as part of the exercise of purchase share options. At year-end Ciments Français held 350,187 shares for an amount of 16,510 thousand euros. B3 Accounts receivables At the end of 2014, accounts receivables related mainly to: invoices to Group subsidiaries for technology transfers and support as well as licensing agreements for i.nova brands and/or visual identity, receivables with Italcementi S.p.A., its parent company, as part of the structural cost distribution contract between the two companies. B4 Prepaid expense and other receivables Subsidiaries short-term overdrafts 154,584 86,356 Income tax 7,577 11,327 Other receivables 304 Prepaid expense * 8,883 11,538 TOTAL 171, ,525 * Includes costs relating to bond issues and loans with credit institutions, spread out over the duration of the loan, for an outstanding amount of 2,579 thousand euros as of 31 December B5 Shareholders equity At 31 December 2,441,934 2,488,894 At 1 January 2,488,894 2,547,812 Net changes (46,960) (58,918) 118

121 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements 129 The net changes in shareholders equity reflected the following movements: Breakdown of changes Net profit (loss) 65,550 47,425 Dividend paid during the period (53,262) (53,172) Interim dividend (53,398) (53,171) Exercise of share subscription options (1) 10,660 0 Cancellation of treasury shares (2) (16,510) 0 TOTAL (46,960) (58,918) (1) 2014 : 150,400 share subscription options with a par value of 4 euros were exercised at a price of euros : No share subscription option exercised. (2) 2014 : Cancellation of 350,187 treasury shares with a par value of 4 euros, i.e. 1,401 thousand euros. The difference between the acquisition price of the shares and their par value was recognized as retained earnings for 15,109 thousand euros : No cancellation of shares. There were no more share subscription options as of 31 December B6 Revaluation reserve Investments (at fair value in 1976): 4,802 thousand euros. B7 Provisions Total at 1 January 2014 Additions Reversals used Reversals unused Total at 31 December 2014 Foreign exchange loss 11,873 11,447 11,873 11,447* Provision for consolidated tax regime 24,521 5,057 29,578 Pensions and other post-retirement benefits 3, ,765 Labor costs 3,151 3,151 Other provisions 3,267 1,017 4,284 TOTAL 46,285 17,813 3,151 11,873 49,074 * Of which Interbulk en CHF for 10,914 thousand euros. Impact of net costs related to provisions Additions Reversals used Reversals unused Net total Employee expense Finance income(costs) 11,447 11,873 (426) Other income (expense) 1,017 3,151 (2,134) Income tax 5,057 5,057 TOTAL 17,813 3,151 11,873 2,

122 3 Post-employment benefits Pension commitments and similar benefits 31 December December 2013 Present value of funded obligation 7,454 5,711 Fair value of plan assets 1,070 1,484 Present value of unfunded obligation 6,384 4,227 Unrecognized actuarial gains (losses) (2,619) (899) Net liability at year-end 3,765 3,328 Assets 145 Liabilities 3,765 3,473 Net liability 3,765 3,328 Changes in net liability can be analyzed as follows: Pension commitments and similar benefits 31 December December 2013 Opening net liability 3,328 3,044 Net expense (income) in income statement Net closing liability 3,765 3,328 Details of the changes in net liability were as follows: Pension commitments and similar benefits 31 December December 2013 Service cost Interest cost Expected return on plan assets (39) (111) (Gains) losses on curtailments and settlements Contribution paid, payment and transfer (120) (124) Total employee expense (income) Total changes in net liability Effective return on plan assets (412) 327 B8 Financial debt Total at 1 January 2014 Movements Total at 31 December 2014 Debenture loans 500, ,000 Bank loans and credit lines 38 (37) 1 Debt of Group subsidiaries* 1,253,301 (28,514) 1,224,787 Other debt 12,438 (64) 12,374 TOTAL 1,765,777 (28,615) 1,737,162 * Italcementi S.p.A. and its subsidiaries. 120

123 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements 129 Analysis of financial debt according to interest rates* Fixed interest, below 6% 499, ,925 Floating interest, below 6% 1,237,902 1,266,852 TOTAL 1,737,162 1,765,777 * Before hedging transactions. B9 Financial commitments outstanding at year-end Securities and guarantees 212, ,128 Reciprocal commitments: Interest-rate swaps (nominal amounts) 538, ,766 Foreign exchange hedging transactions (nominal amounts) 343, ,402 Unused credit lines 500, ,000 TOTAL 1,593,657 1,943,296 Failure to comply with a covenant included in the financing contracts signed respectively in 2010 and 2012 by Zuari Cement (an Indian subsidiary of Ciments Français) has implied the payment by Zuari Cement of a guarantee issued by Ciments Français in favor of the financings counterparties, at their request, during the first half of The outstanding amount of the debt on these various financings at the end of December 2014 is estimated at about 29.5 million euros at exchange rates on 31 December B10 Fair value of derivatives At 31 December 2014 At 31 December 2013 Assets Liabilities Assets Liabilities Interest-rate derivatives Future cash flow hedges 119 6, Fair value hedges 15, ,127 Foreign-currency derivatives Fair value hedges 14 6,282 Non-current 16,114 7,102 25, Interest-rate derivatives Future cash flow hedges 844 Trading Foreign-currency derivatives Fair value hedges 16,402 9, Trading Current 71 17,125 9,481 1,569 TOTAL 16,185 24,227 34,890 1,970 The fair values above do not include accrued interests. 121

124 3 B11 Future liabilities Accounts payables 24,039 16,388 Financial debt (loans and debts) 13,106 13,212 Other debt 11,450 9,389 TOTAL 48,595 38,989 B12 Assets and liabilities by maturity At 31 December 2014 Total Under one year One to five years Over five years Operating receivables 29,549 29,549 Prepaid expenses 8,883 6,989 1, Other receivables 162, ,161 Translation differences 11,051 11,051 Marketable securities and available cash and cash equivalents 5,447 5,447 TOTAL 217, ,197 1, Financial liabilities 1,737, ,855 1,054,307 Other liabilities 98,253 98,253 Translation differences 64,830 64,830 TOTAL 1,900, ,938 1,054,307 Trade payables Maturity between 0 and 30 days after closing 2,942 3,169 Maturity between 31 and 60 days after closing 6,208 5,855 Maturity between 61 and 90 days after closing 0 0 TOTAL 9,150 9,

125 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements 129 B13 Assets and liabilities relating to the Group Assets (net amounts) Investments 3,778,716 3,676,413 Loans to subsidiaries 394, ,655 Trade receivables 28,487 20,235 Other receivables 154,584 86,357 TOTAL ASSETS 4,356,599 4,271,660 Liabilities Provisions 3,811 2,793 Financial debt 1,224,935 1,253,301 Operating debt 79,648 24,069 TOTAL LIABILITIES 1,308,394 1,280,163 B14 Translation differences Assets (net amounts) Interbulk loan (CHF) 10,914 9,892 Others 137 2,398 Total assets 11,051 12,290 Liabilities Essroc loan (USD) 62,397 12,315 Others 2,433 6 Total liabilities 64,830 12,321 B15 Employee distribution Engineers and managers Non-management and supervisory staff TOTAL B16 Individual training rights Training rights accrued amounted to 7,353 hours. B17 Significant events after the reporting period The company is not aware of any event after the reporting period that could have a significant impact on the Group s business, financial and equity position as of 31 December

126 3 3.5 Five-year financial summary (in thousands of euros) Closing financial position Share capital 142, , , , ,528 Number of shares issued 35,598,349 35,798,136 35,798,136 35,778,576 36,381,872 Results Revenues 14,618 11,438 12,418 18,291 15,053 Profit before tax, depreciation and provisions 39,763 71,485 79, ,747 90,942 Income tax (1) 21,241 30,953 32,274 36,618 42,781 Profit after tax, depreciation and provisions 65,550 47,425 50, , ,743 Dividend distribution (2) 106, , , , ,725 Earnings per share (in euros) Net profit after tax, but before depreciation and provisions Profit after income tax, depreciation and provisions Dividend paid Personnel Number of employees Total annual payroll 15,039 13,484 11,927 17,359 17,658 Employee benefits 6,380 6,006 5,440 7,326 7,689 (1) Tax savings. (2) Provisional for shares; will be adjusted according to the shares existing on 10 April 2015, date of the General Meeting, after deduction of treasury shares and subject to the approval by said Meeting. 124

127 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements Subsidiaries and affiliates over the last 2 years (in millions of euros) Revenues Net profit (loss) % of share capital held Net carrying value INVESTMENTS IN FRENCH COMPANIES CIMENTS CALCIA INVESTCIM 5.9 (6.9) AL MANAR (0.3) TECHNODES CIFI (0.1) CIMFRA (6.8) (11.7) COCIMAR CODESIB (0.1) COFIPAR 0.2 (2.4) GSM IMMOBILIÈRE DES TECHNODES SAX (3.4) ESSROC INTERNATIONAL MENAF 10.5 (18.6) TERCIM 2.7 (1.7) UNIBETON (22.1) (12.4) PARCIB Others 0.1 Sub-total 2, ,198.4 INVESTMENTS IN FOREIGN COMPANIES COMPAGNIE DES CIMENTS BELGES (Belgium) HALYPS (Greece) PROCIMAR (Morocco) ASMENT DE TEMARA (Morocco) ASIA CEMENT PUBLIC (Thailand) VULKAN (Bulgaria) (1.3) (0.3) ZUARI CEMENT LIMITED (India) (8.3) (3.0) SUEZ CEMENT COMPANY (Egypt) SINGHA CEMENT (Sri Lanka) (0.7) (1.8) CARRIÈRES DU TOURNAISIS (Belgium) SOCIÉTÉ MAURITANO-FRANÇAISE DES CIMENTS (Mauritania) CIMINTER (Luxembourg) (1.2) FINANCIERA Y MINERA (Spain) (0.3) (25.1) SEAS (Thailand) Others Sub-total 1, ,478.0 TOTAL 3, ,676.4 N.B.: Many holding companies among the above-listed subsidiaries do not, by definition, have revenues. 125

128 3 3.7 Subsidiaries and affiliates as of 31 December 2014 A/ DETAILED INFORMATION FOR INVESTMENTS WITH GROSS RECOVERABLE VALUE EXCEEDING 1% OF CIMENTS FRANCAIS SHARE CAPITAL (in thousands of currencies) Capital Shareholders % of share equity before capital held earnings appropriation Investments carrying value Gross Net Outstanding loans & advances granted by parent company Guarantees given Revenues before taxes (1) Net profit (loss) Dividends received during the year 1 - SUBSIDIARIES (AT LEAST 50% OWNED) CIMENTS CALCIA (2) Rue des Technodes CS Guerville Cedex 593, , , ,097 40, ,214 37,908 60,357 GSM Rue des Technodes CS Guerville Cedex 18,676 80, ,850 65,850 70,004 7, ,430 12,406 12,451 CIMFRA Tour Ariane 5 place de la Pyramide Puteaux 31,100 31, ,116 24,526 (6,776) COFIPAR Tour Ariane 5 place de la Pyramide Puteaux 18,000 18, ,337 36, TERCIM Tour Ariane 5 place de la Pyramide Puteaux 47,037 52, ,524 53,652 2,661 SAX Rue des Technodes CS Guerville Cedex 483 2, ,821 2,666 1,296 (21) INVESTCIM Tour Ariane 5 place de la Pyramide Puteaux 104, , , ,985 5,870 AL MANAR Tour Ariane 5 place de la Pyramide Puteaux 3, , (293) COCIMAR Tour Ariane 5 place de la Pyramide Puteaux 72, , , ,536 28,297 24,319 CODESIB Tour Ariane 5 place de la Pyramide Puteaux 55,037 54, ,037 55,037 32,597 (93) CIMINTER 1 rue Joseph Hackin 1746 Luxembourg - Luxembourg 53,800 52, ,800 53,800 5,615 (1,240) UNIBETON Rue des Technodes CS Guerville Cedex 27,160 77, , ,950 18, ,805 (22,120) 126

129 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements 129 (in thousands of currencies) Capital Shareholders % of share equity before capital held earnings appropriation Investments carrying value Gross Net Outstanding loans & advances granted by parent company Guarantees given Revenues before taxes (1) Net profit (loss) Dividends received during the year HALYPS 17th Km National Road Aspropyrgos Athènes - Grèce 48,821 66, ,678 50,044 9, ,295 7,285 IMMOBILIÈRE DES TECHNODES Rue des Technodes CS Guerville Cedex 8,024 8, ,869 5, ESSROC INTERNATIONAL Tour Ariane 5 place de la Pyramide Puteaux 344, , , ,360 9,481 (30) MENAF Tour Ariane 5 place de la Pyramide Puteaux 291, , , ,819 10,542 CIFI Tour Ariane 5 place de la Pyramide Puteaux 7,350 7, ,350 7,350 29,935 (51) TECHNODES Rue du Château CS Guerville Cedex 3,200 3, ,049 3, SINGHA CEMENT (3) 44/1 New Nuge Road - Peliyagoda - Colombo 03 Sri Lanka 397,396 LKR (628,465) LKR , ,421 (744) SOCIETE MAURITANO-FRANCAISE DES CIMENTS (4) BP Nouakchott - Mauritania PROCIMAR (5) 621 boulevard Panoramique - Casablanca - Morocco VULKAN (6) Vulkan Quarter - Dimitrovgrad - Bulgaria 1,111,310 MRO 37,500 MAD 453 BGL 3,751,156 MRO ,788 2,788 17, ,701 MAD ,071 7,071 8,480 18,446 86,301 BGL ,619 17,619 11,452 (1,265) ZUARI CEMENT LIMITED (7) Krishna Nagar - Yerraguntla Kadapa District Andhra Pradesh - India 2,749,614 INR 13,406,128 INR , , , ,922 (8,287) COMPAGNIE DES CIMENTS BELGES Grand Route Tournai - Belgium 295, , , ,634 5, ,946 6,168 FYM Carretera de Almeria Km Malaga - Spain 39, , , , ,136 (257) 127

130 3 (in thousands of currencies) Capital Shareholders % of share equity before capital held earnings appropriation Investments carrying value Gross Net Outstanding loans & advances granted by parent company Guarantees given Revenues before taxes (1) Net profit (loss) Dividends received during the year 2 - INVESTMENTS (10 TO 15% OWNED) CARRIÈRES DU TOURNAISIS Grand route Tournai - Belgium 12,297 22, ,538 11,538 26, ASIA CEMENT PUBLIC (8) 23/ Soi Soonvijai Rama 9 Road - Khet Huaykwang, Bangkok Thailand 4,670,523 THB 10,169,518 THB , , ,894 24,485 2,405 ASMENT DE TEMARA (5) Ain Attig - Route de Casablanca Temara - Morocco SUEZ CEMENT COMPANY (9) Nile Office Building Southern Cairo - Egypt 495,000 MAD 909,283 EGP 662,700 MAD ,676 5,676 23,949 3,683 5,480,004 EGP , , ,658 44,380 6,336 B/ SUMMARY INFORMATION ON OTHER SUBSIDIARIES AND AFFILIATES (in thousands of currencies) Capital Shareholders % of share equity before capital held earnings appropriation Investments carrying value Gross Net Outstanding loans & advances granted by parent company Guarantees given Revenues before taxes (1) Net profit (loss) Dividends received during the year 1 - SUBSIDIARIES NOT INCLUDED IN A) French subsidiaries (all) Foreign subsidiaries (all) 1,668 1, INVESTMENTS NOT INCLUDED IN A) French companies (all) Foreign companies (all) 2 2 TOTAL 3,997,931 3,778, , , ,300 (1) Revenues included for consolidated accounts (2) Of which 4,802 of revaluation adjustment (3) 1 euro = LKR (4) 1 euro = MRO (5) 1 euro = MAD (6) 1 euro = BGL (7) 1 euro = INR (8) 1 euro = THB (9) 1 euro = EGP

131 Group presentation and management report Results, financial situation and other legal information Consolidated financial statements relating to Ciments Français SAS (parent company) 104 Ciments Français SAS annual financial statements Income statement 106 Corporate governance Balance sheet 107 General Meeting Notes to the financial statements 109 Five-year financial summary 124 Subsidiaries and affiliates over the last 2 years 125 Subsidiaries and affiliates at 31 December Statutory auditors report on the financial statements Statutory auditors report on the financial statements Year ended 31 December 2014 This is a free translation into English of the statutory auditors report on the financial statements issued in French and it is provided solely for the convenience of English-speaking users. The statutory auditors report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the audit opinion on the financial statements and includes an explanatory paragraph discussing the auditors assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account balances, transactions or disclosures. This report also includes information relating to the specific verification of information given in the management report and in the documents addressed to the sole shareholder. This report should be read in conjunction with and construed in accordance with French law and professional auditing standards applicable in France. KPMG Audit 1, cours Valmy Paris - La Défense Cedex ERNST & YOUNG Audit 1/2 place des Saisons, Courbevoie - Paris - La Défense 1 To the Sole Shareholder, In compliance with the assignment entrusted to us by your annual general meetings, we hereby report to you, for the year ended December 31, 2014, on: the audit of the accompanying financial statements of Ciments Français S.A.S.; the justification of our assessments; the specific verifications and information required by law. These financial statements have been approved by the board of directors. Our role is to express an opinion on these financial statements based on our audit. 1. Opinion on the financial statements We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31, 2014 and of the results of its operations for the year then ended in accordance with French accounting principles. 129

132 3 2. Justification of our assessments Accounting estimates used in the preparation of the financial statements as at 31 December 2014 were made in a context where the economic outlook is difficult to assess. These conditions are described in note Management estimates to the financial statements. Such is the context of uncertainty in which we made our own assessments that we bring to your attention in accordance with the requirements of article L of the French Commercial Law ( Code de Commerce ). Accounting estimates Depreciation of investments in subsidiaries Your Company determines allowances for depreciation of investments in subsidiaries in accordance with the accounting method described in notes Valuation methods and B.2 Financial Investments to the annual financial statements. We assessed the methods used by management to determine these depreciations on the basis of information available at the date of our report, and verified, on a test basis, the application of such methods. Provisions The Company records provisions to cover its obligations related in particular to litigations in progress, as described in note Valuation methods to the annual financial statements. We have examined procedures implemented by the Company to identify and account for these obligations as well as the assumptions applied to estimate them. These assessments were made as part of our audit of the financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report. 3. Specific verifications and information We have also performed, in accordance with professional standards applicable in France, the specific verifications required by French law. We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report the board of directors and in the documents addressed to the sole shareholder with respect to the financial position and the financial statements. Paris - La Défense, 19 March 2015 The statutory auditors French original signed by KPMG Audit Ernst & Young Audit Département de KPMG S.A. Michel Piette Laurent des Places Pierre-Henri Pagnon 130

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135 4 Corporate Government 4.1 Management, administration and control Principles for determining the compensation and benefits of corporate officers and senior managers Report on internal control and risk management

136 4 4.1 Management, officers and auditors Composition of the General Management at the General Meeting of 10 April 2015, after Ciments Français was transformed into a simplified joint-stock company (SAS) General Management Chairman Jean-Paul MÉRIC Chief Executive Officer Giovanni FERRARIO Chief Operating Officer Fabrizio DONEGÀ Reminder: Composition of the Board of Directors prior to 4 November 2014 Board of Directors Jean-Paul Méric, chairman Carlo Pesenti, deputy chairman Yves René Nanot, honorary chairman and director Giovanni Ferrario, permanent representantive of Italcementi Finance SA Giampiero Pesenti, permanent representantive of Italcementi S.p.A. Martina Barcaroli Élisabeth Lulin Marc Viénot Amaury d Humières, director representing employees Dario Massi Sebastiano Mazzoleni, permanent representantive of Italcementi Ingegneria Srl Graziano Molinari: Board secretary (not a director) Statutory Auditors Ernst & Young Audit KPMG Audit, Department of KPMG SA Deputy Auditors Auditex KPMG Audit IS SAS 134

137 Group presentation and management report Management, administration and control) 134 Consolidated financial statements Principles for determining the compensation and benefits Ciments Français SAS annual financial statements of corporate officers and senior managers 141 Corporate governance Report on internal control and risk management 141 General Meeting Main activity and other responsibilities of the corporate officers in the last 5 years Year 2014 Year 2013 Year 2012 Year 2011 Year 2010 C : listed company G : Italcementi Group company Jean-Paul Méric Born: 21 May 1943; French citizen Business address: Ciments Français - Tour Ariane - 5 place de la Pyramide Puteaux Position at Ciments Français: Chairman of the Board (until 4 November 2014) then Chairman Year of first term: 2014 End of term Meeting: 2015 Other responsibilities: Deputy chairman of Ciments du Maroc L/G (Morocco) Director of: Italcementi S.p.A. L/G (Italy) since 18 April 2013, Financiera y Minera G (Spain), Italmed G (Cyprus) and CTG G (Italy) Chairman of Ciments Calcia G (France) until 11 April 2013, GSM G (France) until 13 May 2013 and Unibéton G (France) until 13 May 2013 Other responsibilities: Chairman of the Board of Financiera y Minera G (Spain) until 24 July 2013 then director Chairman and director of: Compagnie des Ciments Belges G (Belgium) until 7 May 2013 Deputy chairman of Ciments du Maroc L/G (Morocco) COO of Ciments du Maroc L/G (Morocco) until 24 July 2013 Director of: Italcementi S.p.A. L/G (Italy) since 18 April 2013, Financiera y Minera G (Spain), Italmed G (Cyprus) and CTG G (Italy) Chairman of: Ciments Calcia G (France), GSM G (France) and Unibéton G (France) Other responsibilities: Chairman of the Board of Financiera y Minera G (Spain) Chairman and director of: Compagnie des Ciments Belges G (Belgium) Deputy chairman and COO of Ciments du Maroc L/G (Morocco) Director of: Marvex G (Bulgaria) until April 24, 2012, Italmed G (Cyprus), CTG G (Italy) Member of the Supervisory Board of Devnya Cement AD G (Bulgaria) until April 12, 2012 Chairman of: Ciments Calcia G (France), GSM G (France) and Unibéton G (France) Other responsibilities: Chairman of the Board of Financiera y Minera G (Spain) Chairman and director of: Compagnie des Ciments Belges G (Belgium) Deputy chairman and COO of Ciments du Maroc L/G (Morocco) Director of: Marvex G (Bulgaria), Italmed G (Cyprus), CTG G (Italy) Chairman of the Management Board of C.F.E. N.V. G (Netherlands) Member of the Supervisory Board of Devnya Cement AD G (Bulgaria) Chairman of: Ciments Calcia G (France), GSM G (France) and Unibéton G (France) Chairman & Chief Executive Officer of Essroc Corp. G (United States) Chief Executive Officer & director of Essroc Cement Corp. G (United States) Chief Executive Officer of Essroc Canada Inc. (Canada) Other responsibilities: Chairman of the Board of Financiera y Minera G (Spain) Chairman and director of: Compagnie des Ciments Belges G (Belgium), Cifrinter G (Luxembourg) Deputy chairman and COO of Ciments du Maroc L/G (Morocco) Director of: Marvex G (Bulgaria), Ciment Québec G (Canada), Groupe Ciment Québec G (Canada), Italmed G (Cyprus), CTG G (Italy) Chairman of the Management Board of C.F.E. N.V. G (Netherlands) Member of the Supervisory Board of Devnya Cement AD G (Bulgaria) 135

138 4 Giovanni FERRARIO Born: 3 November 1948; Italian citizen Business address: Italcementi S.p.A. - via Camozzi, Bergamo (Italy) Position at Ciments Français: Chief Executive Officer and permanent representative of Italcementi Finance SA, director since 2010 and until 4 November 2014 End of term Meeting: 2015 Year 2014 Year 2013 Year 2012 Year 2011 Year 2010 Other responsibilities: Chief Operating Officer of Italcementi S.p.A. L/G (Italy) Director of:, Zuari Cement G (India); Asia Cement G (Thailand); Suez Cement Company L/G (Egypt); Essroc Corp. G (USA) and BravoSolution S.p.A. G (Italy) Chairman of the Board of: Centro Tecnico di Gruppo G (Italy) since 4 April 2013) and Italgen S.p.A. G (Italy) Permanent representative of Ciments Français G (France) at Ciments du Maroc L/G (Morocco) Other responsibilities: Chief Operating Officer of Italcementi S.p.A. L/G (Italy) Director of:, Zuari Cement G (India); Asia Cement G (Thailand); Suez Cement Company L/G (Egypt); Essroc Corp. G (USA) and BravoSolution S.p.A. G (Italy) Chairman of the Board of: Centro Tecnico di Gruppo G (Italy) since 4 April 2013) and Italgen S.p.A. G (Italy) Permanent representative of Ciments Français G (France) at Ciments du Maroc L/G (Morocco) Other responsibilities: Chief Operating Officer of Italcementi S.p.A. L/G (Italy) Director of: Centro Tecnico di Gruppo G (Italy), Zuari Cement G (India); Asia Cement G (Thailand); Suez Cement Company L/G (Egypt); Essroc Corp. G (USA) and BravoSolution S.p.A. G (Italy) Chairman of the Board of: Italgen S.p.A. G (Italy) Permanent representative of Sodecim G at Ciments du Maroc L/G (Morocco) Other responsibilities: Chief Operating Officer of Italcementi S.p.A. L/G (Italy) Director of: Centro Tecnico di Gruppo G (Italy), Zuari Cement G (India); Asia Cement G (Thailand); Suez Cement Company L/G (Egypt); Essroc Corp. G (USA) and BravoSolution S.p.A. G (Italy) Chairman of the Board of: Italgen S.p.A. G (Italy) Permanent representative of Sodecim G at Ciments du Maroc L/G (Morocco) Other responsibilities: Chief Operating Officer of Italcementi S.p.A. L/G (Italy) Director of: Centro Tecnico di Gruppo G (Italy), Zuari Cement G (India); Asia Cement G (Thailand); Suez Cement Company L/G (Egypt); Essroc Corp. G (USA) and BravoSolution S.p.A. G (Italy) Chairman of the Board of: Italgen S.p.A. G (Italy) Permanent representative of Sodecim G at Ciments du Maroc L/G (Morocco) C : listed company G : Italcementi Group company 136

139 Group presentation and management report Management, administration and control) 134 Consolidated financial statements Principles for determining the compensation and benefits Ciments Français SAS annual financial statements of corporate officers and senior managers 141 Corporate governance Report on internal control and risk management 141 General Meeting Fabrizio Donegà Born on 26 August 1963; Italian citizen Business address: Ciments Français - Tour Ariane - 5 place de la Pyramide Puteaux Position at Ciments Français: Chief Operating Officer since 12 April 2013 Year of first term: 2013 End of term Meeting: 2015 Year 2014 Year 2013 Other responsibilities: Chairman of the Board of Directors of Compagnie des Ciments Belges G (Belgium) Chairman of Ciments Calcia G (France) Chairman and director of Financiera y Minera G (Spain) Chief Operating Officer of Ciments du Maroc L/G (Morocco) Director of: Italcementi for Cement Manufacturing Libya JS Co G (Lybia) Director of the following Egyptian companies until 31 March 2014: Suez Cement Company L/G, Tourah Portland Cement Company G and Helwan Cement Company G Other responsibilities: Chairman of the Board of Directors of Compagnie des Ciments Belges G (Belgium) since 7 May 2013 Chairman of Ciments Calcia G (France) since 11 April 2013 Chairman and director of Financiera y Minera G (Spain) since 24 July 2013 Chief Operating Officer of Ciments du Maroc L/G (Morocco) since 24 July 2013 Director of: Suez Cement Company L/G (Egypt), Tourah Portland Cement Company G (Egypt), Helwan Cement Company G (Egypt), Italcementi for Cement Manufacturing Libya JS Co G (Lybia) C : listed company G : Italcementi Group company 137

140 4 General management as of 31 December 2014 Chairman Jean-Paul MÉRIC Chief Executive Officer Giovanni FERRARIO Chief Operating Officer Fabrizio DONEGÀ Vice-president Administration & Control Carlo BIANCHINI Chief Financial Officer Giovanni MAGGIORA Vice-president Human Resources Silvestro CAPITANIO Jean-Paul MERIC - Chairman of the Board (born on 21 May years old) A former student at École Polytechnique and École Supérieure d Electricité, Jean-Paul Méric began his career with EDF (Électricité de France) before moving into the cement industry, first with CERILH (Centre d Études et de Recherches de l Industrie des Liants Hydrauliques) then Ciments Français since He was appointed successively Research and Development Manager and Manager of the Cement Division for France. Executive vice-president of Ciments Français from 1991 to 2010, he was first responsible for the Group s activities in France/Belgium, then the international business, i.e. the United States, Canada, Morocco, Turkey, Greece, Bulgaria and Kazakhstan. He was also responsible for the trading segment. From July 2006, Jean-Paul Méric was responsible for all the Group s activities in France, Belgium, Spain, Morocco, United States and Canada. Jean-Paul Méric was Chief Operating Officer of Ciments Français SA between 1 January 2010 and 11 April 2013, on which date he was appointed chairman of the Board of Directors of Ciments Français SA. He was appointed chairman of Ciments Français SAS by the General Extraordinary Meeting of 4 November

141 Group presentation and management report Management, administration and control) 134 Consolidated financial statements Principles for determining the compensation and benefits Ciments Français SAS annual financial statements of corporate officers and senior managers 141 Corporate governance Report on internal control and risk management 141 General Meeting Giovanni FERRARIO - Chief Executive Officer (born on 3 November years old) Giovanni Ferrario, who holds a degree in Economics & Commerce from the Bocconi University (Milan), was appointed Chief Operating Officer of Italcementi S.p.A. and Ciments Français SA in June His professional career started in 1973 in the Pirelli Group where he took on international responsibilities in Europe, USA and Brazil. From 1998 to 2001, as Chief Operating Officer of Pirelli Pneumatici, he was heading domestic and international operations in the tire sector and establishing Pirellli as one of the world s top five producers. In 2001, he was appointed Chairman and Chief Executive Officer of Pirelli & C. In February 2005 he was appointed Chairman and Chief Executive Officer of Olivetti Tecnost until his new assignment in Italcementi Group. Giovanni Ferrario also served as Senior Advisor at Morgan Stanley for industry and as advisor to a number of important private equity funds. Giovanni Ferrario became Chief Executive Officer of Ciments Français SA on 1 January He was appointed Chief Executive Officer of Ciments Français SAS by the General Extraordinary Meeting of 4 November Fabrizio DONEGÀ - Chief Operating Officer (born on 26 August years old) A graduate in Mechanical Engineering from Genoa University and post-graduate in Corporate Finance from Bocconi University (Milan) and Management Development from Harvard Business School (USA), Fabrizio Donegà began his career with Italcementi, first as Technical Assistance Manager in 1990 then as Plant Manager. From 1995 until 1998, he served as Diagnostic & Performance Supervisor at the Italcementi headquarters. In 1999, he was appointed manager in charge of Greece and Bulgaria, with his responsibilities subsequently enlarged to Cyprus, Kazakhstan and Egypt until From 2004 to 2007, he was Deputy General Manager of Italcementi S.p.A. responsible for the Industrial Operations of Italcementi Group in Italy. Between October 2007 and April 2013, he was Executive vice-president of Ciments Français, responsible for Group operations in Bulgaria, Greece, Cyprus, Kazakhstan, Turkey, Egypt and Kuwait. He is Chief Operating Officer responsible for operations in France, Belgium, Spain and Morocco. He was appointed Chief Operating Officer of Ciments Français SAS by the General Extraordinary Meeting of 4 November Silvestro CAPITANIO - Vice-president, Human Resources (born on 20 July years old) A graduate in Philosophy and in Social Sciences, Silvestro Capitanio began his career at Italimpianti in the Finsider Group where he was in charge of Organization and Human Resources Management. He joined Italcementi in 1971 and was in charge of industrial relations before becoming Human Resources Manager for Italy. In July 1994 he was appointed Central Manager of Personnel and Organizational Development for Italcementi S.p.A. He subsequently served as Director of Human Resources for the Group in December 1995, before joining Ciments Français SA in 2001, as vicepresident, Human Resources. 139

142 4 Carlo BIANCHINI - Vice-president, Administration & Control (born on 20 December years old) Carlo Bianchini graduated in Economics and Business Sciences and in Strategic Analysis from Bocconi University in Milan, where he was assistant professor from 1979 to He started his career with Pirelli in 1980 in the Strategy Department first, and then held several positions in the International Treasury and Finance departments in Italy and abroad. In 1998, he joined Italtel S.p.A. as Chief Operating Officer, then Siemens ICN S.p.A. as vice-president, Administration and Finance. He joined Italcementi S.p.A. in 2000 as Finance, Administration and Control manager for the Italy zone. In 2008, he was appointed vice-president, Administration and Control of Italcementi Group and vice-president, Administration and Control of Ciments Français SA. Giovanni MAGGIORA - Chief Financial Officer (born on 18 November years old) Giovanni Maggiora, who holds a degree in Business & Economics from the University of Torino and an MBA from Bocconi University in Milan, joined the FIAT group in 1987, where he held various positions in Treasury Management, Investor Relations and Mergers & Acquisitions in Italy, France, the UK and the USA. He joined Italcementi in 2007 and worked in international development with a particular focus on Group projects in the Mediterranean rim and the Middle East. He was appointed Chief Financial Officer of both Italcementi S.p.A. and Ciments Français SA in July In 2010 he was appointed Chairman & Chief Executive Officer of Italcementi Finance SA, created by Italcementi S.p.A. to centralize Italcementi Group refinancing projects on international bond and banking markets. 140

143 Group presentation and management report Management, administration and control) 134 Consolidated financial statements Principles for determining the compensation and benefits Ciments Français SAS annual financial statements of corporate officers and senior managers 141 Corporate governance Report on internal control and risk management 141 General Meeting 4.2 Principles for determining the compensation and benefits of corporate officers and senior management The remuneration of the Chairman is a fixed annual amount. The remuneration of the Chief Executive Officer and of the Chief Operating Officer includes: An annual fixed compensation; An annual variable compensation (Management by Objectives) subject to economic performance and achievement of personal objectives. It is paid in the following year, when all the components for its calculation are known ; A multiannual variable compensation (Long-Term Incentive) computed over the period, to be paid in It is also calculated according to economic performance and achievement of personal objectives, and based on the value of the Italcementi S.p.A. share. Directors fees paid by Ciments Français SA to directors include a fixed amount and a variable amount taking into account the actual attendance of the directors at Board meetings and Board committee meetings (the fees of a committee s chairman being higher than those of a simple member). 4.3 Report on internal control and risk management The following text has been prepared based on surveys carried out by the various functions (particularly risk management and internal audit); it is updated every year. Definition of internal control The internal control systems implemented by the Group s senior management are intended to ensure: Compliance with current laws and regulations Application of instructions and directions set by senior management Proper running of the company s internal processes, in particular those contributing to the protection of its assets Accuracy of financial information Internal control generally contributes to monitoring activity, ensuring operational effectiveness and guaranteeing efficient resource utilization. By helping to prevent and monitor the risk of failing to achieve the objectives set by the company and the Group, the internal control system plays a vital role in the implementation and management of their various activities. Internal control objectives The company s internal control procedures are intended to prevent and monitor risks resulting from its operations as well as risks of error or fraud, particularly in accounting and finance. 141

144 4 Risk analysis approach and objectives The function of Group Chief Risk Officer was created in May 2010 in order to ensure a perennial Enterprise Risk Management process. The mission of risk management is to support the continuity and improvement of medium-term results, safeguard the Group s assets and its reputation, support decision-making as well as the definition of objectives, and mobilizes those concerned in management to reduce the risks under their control. The approach which is based on COSO (Committeee of Sponsoring Organizations of the Treadway Commission) and AMF recommendations is organized around five phases: Identification of the most important areas of risk in conformity with Group strategic objectives, development of methodologies and instruments of analysis, and assessment of risk factors. Appraisal, either at country or world level, of risks factors measured according to impact, probability or time horizon and control level in order to acquire a global view on the Group risk portfolio. Prioritization of risks, definition of strategies and Group governance rules. Many operational risks are monitored at subsidiary level, whereas some others requiring specific skills or depending on a cross-functional responsibility are managed by central functions. Implementation of mitigating strategies and measures, and development of the corporate risk management process. Information of the company s management and its supervisory bodies on the main risks and their management and trends. Organization and structure - the internal control players In order to implement its risk management policies, the company uses a general organization and governance guidelines. Senior management defines the strategic orientations of internal control, which is the managers responsibility within each subsidiary or Group functional entity. The mission of the Internal Audit is to give senior management objective assurance as to the level of control of its operations by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. The Group internal audit function is centralized and carried out by a team of 20 auditors. The Internal Audit Department draws up its audit plan over a three-year period. This plan consisting in about 50 audit missions per year can be amended depending on priorities. Risk analysis is an ongoing process as the development of each annual audit plan includes the Group s newly acquired units and possibly new risks identified through the Enterprise Risk Management process. It also benefits from contributions from Group and subsidiaries management. Within the Finance Department, the Risk Management Department is responsible for defining the Group s asset insurance policy, for drafting Group procedures on asset and employee insurance and for hedging operating losses and risks relating to civil liability. It is also in charge of monitoring and controlling the enforcement of procedures in subsidiaries, as well as the implementation of the prevention plan for industrial risks.the responsibility of the Finance Department is to control market and liquidity risks, monitor financial commitments and implement and follow up on procedures for headquarters and Group subsidiaries alike. The Legal Affairs Department handles all claims brought against the Group. 142

145 Group presentation and management report Management, administration and control) 134 Consolidated financial statements Principles for determining the compensation and benefits Ciments Français SAS annual financial statements of corporate officers and senior managers 141 Corporate governance Report on internal control and risk management 141 General Meeting The Tax Department keeps informed on tax-related regulations, ensures that Group subsidiaries comply with local regulations and assesses the tax consequences of any transaction contemplated by the Group. Within the Administration and Control Department, the Budget and Control Department is responsible for preparing and controlling budgets, consolidating monthly management reports and monitoring investments in cooperation with Group financial and operational management and subsidiaries management. The role of the Consolidation Department is to prepare consolidated Group financial statements, Group accounting procedures manuals and ensure that the financial statements and notes thereto comply with current accounting standards and policies. The Enterprise Risk Management s primary mission is to monitor Group risks by identifying, measuring and treating them. Existing procedures Existing procedures are updated at Group level by the relevant departments. Risk mapping has been precisely defined with the identification of 41 priority risks covering the following areas: Covering operating risks Protection of assets and coverage of industrial risks Environmental risks and compliance with regulations Liquidity and market risks subject to management policies and prudential rules Legal and tax risks Commitment risks Risks related to IT systems Risks of price volatility of certain raw materials, fuel and electricity Risks associated with new products: Image risks Procedures related to the preparation and processing of accounting and financial information In addition to operating controls, the internal audit organization, ensuring the accuracy of published financial statements, draws on four main axes: A common computerized management reporting and consolidation system for all Group subsidiaries, to prepare the Group s financial statements. A process defined by standardized procedures for the preparation and collection of all the information published in the financial statements. Key controls performed by the Administration and Control Department (budget and control, consolidation, procedures) and the Finance Department, as described hereafter. Missions carried out by the Internal Audit Department. 143

146 4 The Group Administration and Control Department prepares and controls financial, accounting and management disclosures. Planning, budget process, monthly reporting and preparation of quarterly consolidated financial statements, together with controls and reconciliations at every level, all contribute to the accuracy of the accounting and financial information. The five-year strategic plan is periodically drawn up by the subsidiaries. The plan structure has been adapted to facilitate the impairment testing procedures required by IAS 36. Every year, Group subsidiaries prepare their monthly budget forecasts according to Group policies. These budget forecasts are updated twice during the year. Results are analyzed and controlled by the Budget and Control Department based on monthly reporting of management performance, investments and technical data. Reporting procedures, definitions and accounting policies applied are formalized in the Group s procedures manual which has been updated further to the implementation of IFRS. The Group s consolidated accounts are prepared every quarter by using a shared consolidation software system. The chart of accounts, the consolidation documents as well as the applicable accounting policies are formalized in the Group s procedures manual. For interim and annual closings, a specific instruction note is sent to the subsidiaries summarizing key items in the closing process. For the preparation of annual financial statements, a pre-closing procedure is implemented. This procedure also enables the Group to ensure that its standards are correctly understood by subsidiaries, hence contributing through direct contact to the accuracy of the information. At each quarterly closing, potential discrepancies resulting from the reconciliation of consolidated accounts with management results are analyzed. Statutory annual accounts and Group consolidated financial statements are examined by the statutory auditors who perform a limited review of interim accounts and a full audit of annual accounts. New features for 2014 and outlook The new risk assessment methodology was consolidated in The risk index is determined on the basis of 3 criteria: the probability of occurrence, the qualitative or quantitative impact and the level of control. This methodology has been used to assess legal risks in all Group litigation. In 2015, for the purpose of continuous improvement, the measurement of risks and opportunities during budget estimates or the analysis of major investment projects will take into account any potential link between various risk scenarios. Reminder on the functioning of the Board of Directors until 4 November 2014 Composition Until 4 November date on which the company was transformed from a limited liability company into a simplified joint-stock company - the Board of Directors was composed of eleven members (two women for nine men). Functioning An Internal Charter on the functioning of the Board of Directors was adopted on 3 April The appropriate adjustments necessary to respond to legal developments and market recommendations were regularly examined and adopted by the Board of Directors. The Board was vested with the powers defined by the texts in force. The Board held preliminary deliberations on significant operations, and particularly on: The Group s strategic orientations Strategic alliance and industrial cooperation agreements Major investments and the public offers initiated by Italcementi S.p.A. The projects to change the corporate form of Ciments Français. 144

147 Group presentation and management report Management, administration and control) 134 Consolidated financial statements Principles for determining the compensation and benefits Ciments Français SAS annual financial statements of corporate officers and senior managers 141 Corporate governance Report on internal control and risk management 141 General Meeting During 2014, the Board met 10 times; the attendance rate was 87%. The statutory auditors have attended all the meetings of the Board. Committees According to the Board s Internal Charter, some of the Board s deliberations must be preceded by meetings of specialized committees composed of members appointed from among the directors of the Board. Appointment and compensation committee The appointment and compensation committee consisted of three directors (Giampiero Pesenti as chairman, Martina Barcaroli and Marc Viénot) and was responsible for the preparation of the Board s decisions by making recommendations regarding appointments and compensation. During 2014, the appointments and compensation committee met once and the attendance rate was 100%. Audit committee The audit committee was made up of four members (Marc Viénot as chairman, Elisabeth Lulin, Dario Massi and Martina Barcaroli). In conformity with Article L of the Code of commercial law, the audit committee s mission was to review the: Financial information elaboration process Effectiveness of the internal control and risk management systems Legal auditing by the statutory auditors of the annual accounts and of the consolidated financial statements. Independence of the statutory auditors. During 2014, it met four times with an attendance rate of 94%. Other committee Following Italcementi S.p.A. public offer on the company s share, a specific committee composed of independent directors (Elisabeth Lulin, Marc Viénot and Martina Barcaroli) was created to analyze the conditions of the offer and to prepare a report for the Board of Directors. This committee met seven times in the presence of all its members. 145

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