Report 2010 - Italcementi Group

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Significant events for the year Significant events in the first nine months of the year, previously illustrated in the halfyear financial report and the quarterly reports at the end of March and September, are described below. In March, Italcementi Finance S.A. issued debentures on the European market maturing on March 19, 2020, for an aggregate nominal amount of 750 million euro. The proceeds were used to provide financing for Italcementi S.p.A. (210 million euro) and Ciments Français S.A. (540 million euro). April saw the close of the Ciments Français offer on the “US Private Placement Notes” with the repurchase of all the “Notes” issued in 2006 (300 million euro) and of 183.5 million of the total 200 million US dollars issued in 2002. Ciments Français simultaneously agreed a “clarifying amendment” expressly permitting Ciments Français to borrow funds from Italcementi or from subsidiaries. On April 27, 2010, with regard to the assets that make up the Calcestruzzi business concern, the Caltanissetta preliminary investigating magistrate issued an “order for the return of the corporate assets under seizure with prescriptions”. Also in April, Italcementi S.p.A. joined the United Nations’ “Global Compact”, the leading international forum set up to discuss the most critical aspects of globalization. In September, at the Investor Event organized in Agadir, Morocco, the Group illustrated its development guidelines for the medium/long-term. An agreement was reached by Italcementi Finance with a pool of 16 international banks for a 5-year revolving line of credit for 920 million euro. Significant events in the fourth quarter of 2010 are described below. On November 4, 2010, the Board of Directors of Ciments Français S.A. approved plans for the merger by and into Ciments Français of Société Internationale Italcementi France (SIIF), as part of a program to simplify the Group shareholding structure. On December 23, the Ciments Français and SIIF Shareholders' Meetings approved the merger; Italcementi S.p.A. received the same number of shares and voting rights as those previously held by SIIF prior to the merger, and thus became a direct shareholder in Ciments Français S.A.. At December 31, 2010, the Italcementi S.p.A. shareholding in Ciments Français S.A. was 81.82% with 89.0% of voting rights. At the end of November, Moody’s Investor Services amended its rating for Italcementi (and for the subsidiaries Ciments Français and Italcementi Finance) from Baa2 to Baa3. The outlook was upgraded to stable from negative. At the end of the financial year, subject to approval by the Board of Directors, Italcementi S.p.A. sold to the parent company Italmobiliare S.p.A. 12,099,146 Mediobanca shares representing 1.405% of share capital and 17,084,738 RCS MediaGroup S.p.A. shares representing 2.332% of share capital. The transactions generated an aggregate consolidated capital gain of 17.1 million euro. They are intended to help Italcementi focus its financial resources on its core business and further strengthen its financial structure by freeing up resources for possible growth opportunities in the future. The transactions are illustrated in detail in the section on dealings with related parties. 30
2010 Annual Report Presentation 6 Consolidated Annual Report Directors’ report 28 Corporate Governance Consolidated financial statements 68 Italcementi S.p.A. financial statements 158 The international economy and industry trends After the economic collapse of 2009, the world economy saw a strong recovery in production and trade. The central driver of the growth process was Asia, specifically China and India, but generally speaking all the emerging areas reported very substantial progress. By contrast, in the more industrialized areas the recovery proceeded at a moderate overall pace, with far greater performance differences, with North America, Japan and Germany reporting far stronger upturns than the euro zone as a whole. A feature common to the advanced nations was the weak situation in employment, where the response to the rise in production and demand was very limited. While the real economy improved, the financial sector continued to display a high level of volatility, largely due to the emergence of potential crisis situations in the sovereign debt of some countries in the euro zone. In part in response to these difficulties in public finances, restrictive fiscal policies were introduced almost everywhere to correct the stimulus measures adopted previously to combat the 2008-2009 recession. Monetary policies in the most industrialized countries continued to take a permissive approach, with domestic price trends staying easily under control despite widespread increases in prices for raw materials, notably energy. The instability of the financial situation was reflected on the foreign exchange market: the euro lost almost 20% against the dollar in the first half of the year, recovering much of the lost ground in the second half; meanwhile a situation of ample international liquidity fostered a strong outflow of funds toward the faster growing emerging countries, exerting upward pressure on a number of currencies in that area. In the construction sector, the recessionary wave that hit the Group’s industrialized countries eased only slightly in 2010 after the heavy slowdowns reported in 2009. Specifically the business downturn continued for the fifth consecutive year in the USA, where the residential sector – whose decline is close to 60% of the previous peak – struggled to pick up in a situation of unabsorbed surplus supply on the market. In the Group’s main euro zone countries the contraction in the construction sector continued for the third consecutive year, affecting all segments. Moreover, in Spain and Greece, the difficulties in the real estate sector combined with the general domestic recessionary conditions kept performance in the construction industry at very modest levels. More generally, although the fiscal stimulus measures – based in part on investment in infrastructure – helped mitigate the severity of the recession in the construction industry in 2009, in 2010 the budget policies of the mature area took a restrictive stance almost everywhere, thus accentuating the weakness of market factors in construction demand. Meanwhile, the picture remained very favorable in the Group’s emerging countries. A strong macroeconomic trend and expansionary monetary and fiscal policy helped generate important growth in construction, with significant recoveries also reported in countries like Turkey and Thailand that had suffered a recent slowdown. 31 www.italcementigroup.com
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Page 5 and 6: In the past three financial years w
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1.5. Translation of foreign currenc
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1.10. Intangible assets Intangible
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deferred tax assets are reviewed at
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Pending publication of a standard/i
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2. Exchange rates used to translate
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4. Operating segment disclosure The
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Operating segments The table below
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The table below sets out other segm
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Assets 5 Property, plant and equipm
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6.2 Goodwill testing Goodwill acqui
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“Concessions” are amortized ove
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9. Other equity investments This no
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12. Trade receivables (in thousands
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17. Dividends paid Dividends declar
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The movements in defined benefit li
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20. Provisions Non-current and curr
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22.1 Loans and borrowings Loans and
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) in the third quarter of 2010, Ita
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v) in the third quarter of 2010, Ci
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Fair value - hierarchy In determini
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In 2009 and 2010, in view of the su
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22.4 Interest-rate risk Notional va
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22.6 Exposure to exchange-rate risk
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22.8 Hedge Accounting The effects a
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At December 31, 2010, the average m
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25. Goods and utilities expenses Go
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The following table sets out the de
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The reconciliation between the theo
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34. Transactions with related parti
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36. Cash flow statement 36.1. Cash
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38. Considerations to the Independe
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Annex 1 The following table has bee
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Company Registered office Share cap
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Representation form pursuant to art
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Financial statements Balance sheet
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Statement of comprehensive income (
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Cash flow statement 2010 2009 (euro
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Transactions with related parties o
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Summary of resolutions The Annual G
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Extraordinary session: 1) to amend
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Report on Corporate Governance and
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c) Significant shareholders as disc
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In the event of presentation of mor
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By resolution of June 20 th , 2007,
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d) Analysis of controls at process
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8) the various company functions, w
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knowledge of the company and its dy
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Emilio Zanetti * Unione di Banche I
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at their request, the Chief Executi
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The lists must be presented at the
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- for the simultaneous replacement
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Within the Board of Directors, the
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their level of agreement has been m
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The Board of Directors, with the as
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TABLE 2 BOARD OF STATUTORY AUDITORS
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Code of ethics The Code, approved f
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only if the unrelated shareholders
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EQUITY INVESTMENTS OF DIRECTORS, ST
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parent company, on a regular basis,
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Stock option plan for directors - 2
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Based on the opinion of the Committ
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g) Share capital increase; disposal
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Italcementi S.p.A. will have a pre-
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iii) approving for each assignee th
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Annex 1 Highlights from the most re
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(in thousands of euro) Full name Po
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STOCK OPTIONS GRANTED TO DIRECTORS
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CIMENTS FRANÇAIS S.A. Options held
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Corporate bodies resulting from the
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italcementi S.p.A. Via G. Camozzi,
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Report 2010 - Italcementi Group

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