Base Prospectus

ITALCEMENTI S.p.A.
(incorporated with limited liability in the Republic of Italy)
and
ITALCEMENTI FINANCE S.A.
(incorporated with limited liability in the French Republic)
€2,000,000,000 Euro Medium Term Note Programme
unconditionally and irrevocably guaranteed in respect of Notes issued by Italcementi Finance S.A. by
ITALCEMENTI S.p.A.
(incorporated with limited liability in the Republic of Italy)
Under this €2,000,000,000 Euro Medium Term Note Programme (the "Programme"), Italcementi S.p.A. and Italcementi Finance S.A. (the "Issuers", and each an "Issuer")
may from time to time issue notes (the "Notes") denominated in any currency agreed between the relevant Issuer and the relevant Dealer (as defined below).
References in this Base Prospectus to the "relevant Issuer" shall, in relation to any Tranche of Notes, be construed as references to the Issuer which is, or is intended to be, the
Issuer of such Notes as indicated in the applicable Final Terms.
The payments of all amounts due in respect of the Notes issued by Italcementi Finance S.A. will be unconditionally and irrevocably guaranteed by Italcementi S.p.A. in its
capacity as guarantor (the "Guarantor").
The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed €2,000,000,000 (or its equivalent in other currencies
calculated as described in the Programme Agreement described herein), subject to increase by way of a supplement prepared in accordance with Article 16 of the Prospectus
Directive and as described herein.
The Notes may be issued on a continuing basis to one or more of the Dealers specified under "Overview of the Programme" and any additional Dealer appointed under the
Programme from time to time by the Issuers (each a "Dealer" and together the "Dealers"), which appointment may be for a specific issue or on an ongoing basis. References in
this Base Prospectus to the "relevant Dealer" shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to
subscribe such Notes.
An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks see "Risk Factors".
Application has been made to the Commission de Surveillance du Secteur Financier (the "CSSF") in its capacity as competent authority under the Luxembourg Act dated 10
July 2005 on prospectuses for securities as amended (the "Prospectus Act 2005") to approve this document as a base prospectus. The CSSF assumes no responsibility for the
economic and financial soundness of the transactions contemplated by this Base Prospectus or the quality or solvency of the Issuer in accordance with Article 7(7) of the
Prospectus Act 2005. Application has also been made to the Luxembourg Stock Exchange for Notes issued under the Programme to be admitted to trading on the Luxembourg
Stock Exchange's regulated market and to be listed on the Official List of the Luxembourg Stock Exchange.
References in this Base Prospectus to Notes being listed (and all related references) shall mean that such Notes have been admitted to trading on the Luxembourg Stock
Exchange's regulated market and have been admitted to the Official List of the Luxembourg Stock Exchange. The Luxembourg Stock Exchange's regulated market is a
regulated market for the purposes of the Markets in Financial Instruments Directive (Directive 2004/39/EC).
Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and certain other information which is applicable to each
Tranche (as defined under "Terms and Conditions of the Notes") of Notes will be set out in a final terms document (the "Final Terms") which will be filed with the CSSF.
Copies of Final Terms in relation to Notes to be listed on the Luxembourg Stock Exchange will also be published on the website of the Luxembourg Stock Exchange
(www.bourse.lu).
The Programme provides that Notes may be listed or admitted to trading, as the case may be, on such other or further stock exchanges or markets as may be agreed between the
relevant Issuer, the Guarantor (in the case of notes issued by Italcementi Finance S.A.) and the relevant Dealer. The relevant Issuer may also issue unlisted Notes and/or Notes
not admitted to trading on any market.
The relevant Issuer and the Guarantor (in the case of Notes issued by Italcementi Finance S.A.) may agree with any Dealer that Notes may be issued in a form not contemplated
by the Terms and Conditions of the Notes herein, in which event a new Base Prospectus or a drawdown prospectus in the case of listed Notes only, if appropriate, will be made
available which will describe the effect of the agreement reached in relation to such Notes.
Italcementi S.p.A. has been rated "Ba3" by Moody's Deutschland GmbH ("Moody's") and "BB+" by Standard & Poor's Rating Services ("Standard & Poor's"). The
Programme has been rated "(P)Ba3" (senior unsecured) and "(P)NP" (short term) by Moody's and "BB+" (long term) and "B" (short term) by Standard & Poor's. Each of
Standard & Poor's and Moody's is established in the European Union and is registered under the Regulation (EC) No. 1060/2009 (as amended) (the "CRA Regulation"). As
such each of Standard & Poor's Rating Services and Moody's is included in the list of credit rating agencies published by the European Securities and Markets Authority on its
website (at http://www.esma.europa.eu/page/List-registered-and-certified-CRAs) in accordance with the CRA Regulation. Notes issued under the Programme may be rated or
unrated by any one or more of the rating agencies referred to above. Where a Tranche of Notes is rated, such rating will be disclosed in the Final Terms and will not necessarily
be the same as the rating assigned to the Programme by Standard & Poor's and Moody's. A security rating is not a recommendation to buy, sell or hold securities and may be
subject to suspension, reduction or withdrawal at any time by the assigning rating agency.
ARRANGERS
Banca IMI
BNP PARIBAS
DEALERS
Banca IMI
BofA Merrill Lynch
CM-CIC
ING
Mediobanca S.p.A.
NATIXIS
Société Générale
Corporate & Investment Banking
BNP PARIBAS
Crédit Agricole CIB
HSBC
J.P. Morgan
MUFG
The Royal Bank of Scotland
UniCredit Bank
The date of this Base Prospectus is 24 September 2014.
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This Base Prospectus comprises a base prospectus in relation to each Issuer for the purposes of
Article 5.4 of Directive 2003/71/EC as amended (which includes the amendments made by Directive
2010/73/EU to the extent that such amendments have been implemented in a Member State of the
European Economic Area) (the "Prospectus Directive").
The Issuers and the Guarantor (the "Responsible Persons") accept responsibility for the
information contained in this Base Prospectus (including all translations of their financial
statements listed under "Documents Incorporated by Reference" below) and the Final Terms for
each Tranche of Notes issued under the Programme. To the best of the knowledge of the Issuers
and the Guarantor (each having taken all reasonable care to ensure that such is the case) the
information contained in this Base Prospectus is in accordance with the facts and does not omit
anything likely to affect the import of such information.
This Base Prospectus is to be read in conjunction with all documents which are deemed to be
incorporated herein by reference (see "Documents Incorporated by Reference"). This Base
Prospectus shall be read and construed on the basis that such documents are incorporated and
form part of this Base Prospectus.
No representation, warranty or undertaking, express or implied, is made and no responsibility or
liability is accepted by the Dealers as to the accuracy or completeness of the information contained
or incorporated in this Base Prospectus or any other information provided by the Issuers or the
Guarantor in connection with the Programme. No Dealer accepts any liability in relation to the
information contained or incorporated by reference in this Base Prospectus or any other
information provided by the Issuers or the Guarantor in connection with the Programme.
No person is or has been authorised by any of the Issuers or the Guarantor to give any information
or to make any representation not contained in or not consistent with this Base Prospectus or any
other information supplied in connection with the Programme or the Notes and, if given or made,
such information or representation must not be relied upon as having been authorised by any of the
Issuers, the Guarantor or any of the Dealers.
Neither this Base Prospectus nor any other information supplied in connection with the
Programme or any Notes (a) is intended to provide the basis of any credit or other evaluation or (b)
should be considered as a recommendation by any of the Issuers, the Guarantor or any of the
Dealers that any recipient of this Base Prospectus or any other information supplied in connection
with the Programme or any Notes should purchase any Notes. Each investor contemplating
purchasing any Notes should make its own independent investigation of the financial condition and
affairs, and its own appraisal of the creditworthiness, of the relevant Issuer and the Guarantor (in
the case of Notes issued by Italcementi Finance S.A.). Neither this Base Prospectus nor any other
information supplied in connection with the Programme or the issue of any Notes constitutes an
offer or invitation by or on behalf of any of the Issuers or the Guarantor or any of the Dealers to
any person to subscribe for or to purchase any Notes.
Neither the delivery of this Base Prospectus nor the offering, sale or delivery of any Notes shall in
any circumstances imply that the information contained herein concerning any of the Issuers
and/or the Guarantor is correct at any time subsequent to the date hereof or that any other
information supplied in connection with the Programme is correct as of any time subsequent to the
date indicated in the document containing the same. The Dealers expressly do not undertake to
review the financial condition or affairs of any of the Issuers or the Guarantor during the life of the
Programme or to advise any investor in the Notes of any information coming to their attention.
The Notes have not been and will not be registered under the United States Securities Act of 1933,
as amended (the "Securities Act") and are subject to U.S. tax law requirements. Subject to certain
exceptions, Notes may not be offered, sold or delivered within the United States or to, or for the
account or benefit of, U.S. persons (see "Subscription and Sale").
This Base Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any
Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in
such jurisdiction. The distribution of this Base Prospectus and the offer or sale of Notes may be
restricted by law in certain jurisdictions. None of the Issuers, the Guarantor and the Dealers
represent that this Base Prospectus may be lawfully distributed, or that any Notes may be lawfully
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offered, in compliance with any applicable registration or other requirements in any such
jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for
facilitating any such distribution or offering. In particular, no action has been taken by the Issuers,
the Guarantor or the Dealers which is intended to permit a public offering of any Notes or
distribution of this Base Prospectus in any jurisdiction where action for that purpose is required.
Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Base
Prospectus nor any advertisement or other offering material may be distributed or published in
any jurisdiction, except under circumstances that will result in compliance with any applicable laws
and regulations. Persons into whose possession this Base Prospectus or any Notes may come must
inform themselves about, and observe, any such restrictions on the distribution of this Base
Prospectus and the offering and sale of Notes. In particular, there are restrictions on the
distribution of this Base Prospectus and the offer or sale of Notes in the United States, the
European Economic Area (including the United Kingdom, the Republic of Italy and France) and
Japan, see "Subscription and Sale".
This Base Prospectus has been prepared on the basis that any offer of Notes in any Member State of the
European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member
State") will be made pursuant to an exemption under the Prospectus Directive, as implemented in that
Relevant Member State, from the requirement to publish a prospectus for offers of Notes. Accordingly
any person making or intending to make an offer in that Relevant Member State of Notes which are the
subject of an offering contemplated in this Base Prospectus as completed by final terms in relation to the
offer of those Notes may only do so in circumstances in which no obligation arises for the Issuers or any
Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a
prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer.
Neither Issuer nor any Dealer have authorised, nor do they authorise, the making of any offer of Notes in
circumstances in which an obligation arises for any Issuer or any Dealer to publish or supplement a
prospectus for such offer.
All references in this document to "Euro" and "€" refer to the currency introduced at the start of
the third stage of European economic and monetary union pursuant to the Treaty on the
functioning of the European Union, as amended.
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CONTENTS
Page
RISK FACTORS .......................................................................................................................................... 2
OVERVIEW OF THE PROGRAMME ..................................................................................................... 17
DOCUMENTS INCORPORATED BY REFERENCE ............................................................................. 21
FORM OF THE NOTES ............................................................................................................................ 24
APPLICABLE FINAL TERMS ................................................................................................................. 26
TERMS AND CONDITIONS OF THE NOTES ....................................................................................... 35
USE OF PROCEEDS ................................................................................................................................. 61
DESCRIPTION OF ITALCEMENTI S.p.A. ............................................................................................. 62
PROGRAMME FOR SUSTAINABLE DEVELOPMENT ....................................................................... 82
RISK MANAGEMENT ............................................................................................................................. 85
CORPORATE STRUCTURE .................................................................................................................... 86
CORPORATE GOVERNANCE ................................................................................................................ 89
LEGAL PROCEEDINGS .......................................................................................................................... 97
DESCRIPTION OF ITALCEMENTI FINANCE S.A. ............................................................................ 102
TAXATION ............................................................................................................................................. 106
SUBSCRIPTION AND SALE ................................................................................................................. 118
GENERAL INFORMATION .................................................................................................................. 122
INDEX OF DEFINED TERMS ............................................................................................................... 125
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the
Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable
Final Terms may over-allot Notes or effect transactions with a view to supporting the market price
of the Notes at a level higher than that which might otherwise prevail. However, there is no
assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager)
will undertake stabilisation action. Any stabilisation action may begin on or after the date on which
adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if
begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue
date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant
Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant
Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in accordance
with all applicable laws and rules.
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RISK FACTORS
In purchasing Notes, investors assume the risk that the Issuers and the Guarantor may become insolvent
or otherwise be unable to make all payments due in respect of the Notes. There is a wide range of factors
which individually or together could result in the Issuers and the Guarantor becoming unable to make all
payments due in respect of the Notes. It is not possible to identify all such factors or to determine which
factors are most likely to occur, as the Issuers and the Guarantor may not be aware of all relevant factors
and certain factors which they currently deem not to be material may become material as a result of the
occurrence of events outside the Issuers' and the Guarantor's control. The Issuers and the Guarantor
have identified in this Base Prospectus a number of factors which could materially adversely affect their
businesses and ability to make payments due under the Notes. In addition, factors which are material for
the purpose of assessing the market risks associated with Notes issued under the Programme are also
described below.
Prospective investors should also read the detailed information set out elsewhere in this Base Prospectus
and reach their own views prior to making any investment decision.
Factors that may affect the Issuers’ and the Guarantor’s ability to fulfil their obligations
under the Notes issued under the Programme or the Guarantee
1) Operational Risks
The Group’s international operations subject the Group to risks associated with conditions specific to
the countries or regions in which it operates
In the construction material business, as of the date hereof, the Group conducts operations in 22 countries
worldwide.
In 2013, 85.73 per cent. of the Group’s consolidated revenues were generated from international (i.e. nonItalian) operations and 34.08 per cent. of the Group’s consolidated revenues were generated from
operations in emerging markets.
In particular, with respect to its operations in emerging markets, the Group operates in the Middle East,
North Africa and Eastern Europe (including Egypt, Kuwait, Morocco, Saudi Arabia and Bulgaria) and
Asia (Kazakhstan, India and Thailand), which can experience political and economic instability, civil
unrest or violence and corruption, and which in some cases have legal systems in which the protection of
rights and the enforceability of contractual claims are not guaranteed. In these regions, the Group is also
exposed to higher risks of inflation and exchange rate fluctuations as well as changes in tax law or
changes in the interpretation thereof by the relevant authority. Finally, in some of the emerging markets in
which the Group operates, there are limitations on international monetary transactions, import or export
restrictions and, occasionally, potential risks of expropriation. Developments relating to any of the above
risks in an emerging market in which the Group has a significant presence could result in lower profits or
a loss in the value of the Group’s assets in that country. The realisation or worsening of one or several of
the above mentioned risks in any one significant country or in several emerging countries may have
material adverse effects on the Group’s business, financial condition, results of operations and prospects.
In 2013, these risks have become particularly relevant with regards to the Group’s operations in Egypt. In
2013, 11.45 per cent. of the Group’s consolidated revenues have been generated in Egypt. In 2013, Egypt
was characterised by political instability and uncertainty, which led to the impeachment of the President,
transfer of political power to the Constitutional Court and the civil unrest in August and October 2013.
The political climate in Egypt has led to legal and regulatory instability, including laws and regulation
applicable to the Group’s activity, and judicial uncertainty, including the length of legal proceedings and
predictability of the outcome of the same. During the course of 2013, the Group experienced frequent
work stoppages caused by interruptions in energy supply (gas and heavy fuel oil) which caused a decrease
in production and sales volume of cement and clinker on the domestic Egyptian market equal to 8.6 per
cent. compared to 2012. A general increase of production costs and, particularly, costs of energy was
offset by the increase of domestic prices of cement and clinker increased by 20.3 per cent. compared to
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2012, but such price increase may not be sustainable in the future. If these conditions persist or worsen,
this may have a material adverse effect on the Group’s business, financial condition, results of operations
and prospects.
Adverse macroeconomic and business conditions may significantly and negatively affect the Group’s
business, financial condition, results of operations and prospects
Since the second half of 2007, disruption in the global financial markets has created increasingly difficult
conditions, including decreased liquidity and availability of credit and greater market volatility, and
continues to affect the functioning of financial markets and to impact the global economy.
In Europe, measures have been taken by governments, international and supranational organisations, and
monetary authorities to provide financial assistance to Eurozone countries in economic difficulty and to
mitigate the possibility of default by certain European countries on their sovereign debt obligations.
However, in spite of such assistance concerns persist regarding the debt and/or deficit burden of certain
Eurozone countries, including the Republic of Italy, and their ability to meet future financial obligations.
Moreover, restrictions to credit availability and fiscal austerity programmes are affecting demand levels
in affected economies. It remains difficult to predict the effect of the above measures on the economy and
on the financial system, how long the crisis will persist and to what extent the Group’s business, financial
condition, results of operations, and prospects may continue to be adversely affected.
As a result, in spite of risk mitigation actions, the Group’s ability to access the capital and financial
markets and to refinance its debt to meet the financial requirements of the Group may be adversely
impacted and costs of financing may significantly increase. This could in turn materially and adversely
affect the business, financial condition, results of operations and prospect of the Issuer, with a consequent
negative effect on the market value of the Notes and the Issuers’ ability to meet their obligations under
the Notes.
The Group operates in a highly competitive environment and competitive pressures could lead to a
decrease in our market share
The building materials and construction industries are characterised by intense competition. The
competitive dynamics and profitability levels of these markets are affected by the balance between
production capacity and long-term demand. Within a regional market, a cyclical downturn in the
construction industry, a significant decrease in demand or the addition of new and more efficient capacity
by established players or new entrants might lead to overcapacity and trigger more aggressive pricing
policies, resulting in a reduction in the utilisation of the Group’s plants in such markets. As a result,
reduced sales volumes and/or a decrease in prices may occur which could have an impact on the overall
operating profitability of the Group.
In addition, global consolidation in the building materials industry may put the Group at a competitive
disadvantage as strong local players, especially in emerging markets, consolidate through acquisitions,
their domestic networks and diversify their global presence entering markets where they were previously
absent. The Group’s competitors have in the past sought, and may continue to seek, to take advantage of
lower cost structures, economies of scale, strong cash flow generation and other synergies. Such actions
may increase the production capacity in the industry and result in the Group’s competitors gaining market
share, leading to increased competitive and pricing pressures.
If one or more of the above-mentioned events materialises, this could have a material adverse effect on
the Group’s business, financial condition, results of operations and prospects.
The Group's competitive environment may change
On 7 April 2014 the Group’s two principal global competitors in the building materials sector, Holcim
Ltd (“Holcim”) and Lafarge S.A. (“Lafarge”) announced that they are to merge, thereby becoming the
largest cement producer worldwide. In connection with the merger project, in order to comply with
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requests put forward by the competent antitrust authorities, the resulting entity will be required to divest
certain of their assets. A number of these divestitures will occur on markets on which the Group operates,
i.e. France, Morocco and North America. Given the lack of information at the date hereof, it is difficult to
establish the conditions at which the divestitures will be carried out, their effect on the competitive
dynamics in the various local markets, the reaction of the Group’s other competitors, the effects on the
level of profitability in these markets and whether the Group will actively participate in the divestiture
process as a buyer. If the Group does not participate at all or only to a limited extent in these transaction,
this could have a negative effect on its competitiveness and thus a material adverse effect on the Group’s
business, financial condition, results of operations and prospects.
The Group’s operations are subject to cyclicality and seasonality
The building materials industry in any regional market is dependent on the level of activity in the
construction sector in that specific market. The construction industry tends to be cyclical and closely
linked to the general economic situation, particularly the residential and commercial construction markets,
and to the level of public spending on infrastructure projects. Negative global trends in the construction
industry or in key regional markets in which the Group operates (such as for example, in the United States,
Spain, Italy and Greece) could have a material adverse impact on the Group’s liquidity, financial
condition, results of operations and prospects.
Moreover, the construction industry is seasonal in nature and is affected by weather conditions. During
the winter season, when adverse weather conditions make large-scale construction projects difficult, there
is typically lower activity levels, resulting in a lower demand for building materials. In addition, plant
maintenance activities and related costs are typically carried out in the winter season. This leads to high
volatility in the quarterly financial figures of the Group. The results in a particular financial quarter might
therefore not be representative of the expected full financial year results. Furthermore, if adverse climatic
conditions are unusually intense, occur unexpectedly or last longer than usual in major geographical
markets, especially during seasonal peak construction periods, this could have a material adverse effect
on the Group’s business, financial condition, results of operations and prospects.
Material disruptions at our facilities could have a negative impact on the Group
The Group’s industrial facilities are located in 22 countries in four different continents and comprised an
industrial network of 46 cement plants, 112 aggregate quarries, 12 grinding centers, 6 terminals and 420
concrete batching units. These facilities are subject to operational risks, including manufacturing, trade
and labour risks, such as breakdowns of equipment, failure to comply with applicable regulations,
revocation of permits and licenses, lack of manpower or work interruptions, natural disasters, sabotage,
attacks or significant interruptions of supplies of raw materials or components. Any interruption of the
activity at the Group’s sites, due either to the events described above or to other events, could have a
material adverse effect on its business, financial condition, results of operations and prospects.
As a consequence of the capital intensive nature of the cement industry, interruptions in production
capabilities at any plant may result in a significant decline in the Group’s results of operations during the
affected period. The manufacturing processes of cement depend on critical pieces of equipment such as
crushers for raw materials, kilns to produce clinker and grinding mills. This equipment may, on occasion,
be out of service as a result of strikes, failures, accidents or force majeure events. In addition, there is a
risk that equipment or production facilities may be damaged or destroyed by such events.
Although Italcementi believes that it has satisfactory relations with its workers’ councils and unions,
failure to reach new collective bargaining agreements with satisfactory terms when existing collective
bargaining agreements expire or to reach such agreements without work stoppages, strikes or similar
industrial actions may result in labor unrest which may obstruct the Group’s manufacturing operations for
an extended period of time and thus have a material adverse effect on its business, financial condition,
results of operations and prospects.
In addition, the Group’s operations in certain locations are exposed to the risk of earthquakes and/or other
natural disasters. For these risks, the Group has not acquired insurance coverage for the total amount of
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the insured assets, but within the limit of the “Expected Maximum Loss”, i.e. what risk management
established to be the maximum possible damage caused by the insured event. If damage is greater than
the “Expected Maximum Loss”, this could have a material adverse effect on the Group’s business,
financial condition, results of operations and prospects. In this respect, in 2013 the Group experienced a
material event in its facility in Martinsburg (United States) due to a machinery failure which resulted in a
total quantifiable damage of approximately Euro 5 million, net of insurance compensation.
An increase in transportation costs may have a negative impact on the Group
The Group relies also upon third party service providers to distribute its products to customers. Due to the
heavy weight of its products, the Group incurs substantial transportation costs which accounted for 11%
of the Group’s consolidated revenues in 2013. The Group’s ability to service customers at a competitive
cost depends, in many cases, upon its ability to negotiate competitive terms with suppliers including
railroad, trucking and shipment companies. To the extent that the Group’s third party suppliers increase
their rates, the Group may be forced to pay such increases sooner than it is able to pass on such increases
to customers, if at all. Failure to negotiate competitive terms, higher transportation costs or an increase in
sales price due to higher transportation costs (which may lead to a competitive disadvantage) may have a
material adverse effect on the Group’s business, financial condition, results of operations and prospects.
Higher energy and fuel costs may have a material adverse effect on the Group’s business, financial
condition, results of operations and prospects
The activity carried out by the Group requires large volumes of energy and fuel, which for the periods
ended 31 December 2013 represented 18.9 per cent. of the Group’s consolidated revenues. Energy and
fuel typically experience significant price fluctuations in many countries in which the Group operates.
The price of energy has varied significantly in the past and it may vary significantly also in the future as a
result of market conditions and other factors beyond the Group’s control, including high volatility of the
price of oil, changes in government subsidies on electricity and other fuel prices, and geo-political
developments.
The costs of energy and fuel have significantly affected, and may continue to affect, the Group’s results
of operations and its profitability.
We depend on adequate supplies of raw materials for our operations
The Group generally sources its raw materials from quarries of limestone, clay, schist, gypsum, aggregate
and other materials which it uses for the production of cement and concrete. The Group also uses growing
amounts of other materials, purchased from third parties, derived from industrial activities that generate
wastes suitable for the cement production process, such as fly ash, blast furnace slag, and chemical
gypsums. The Group owns most of the quarries from which it sources the main raw materials used in
production, and generally enters into long-term renewable supply contracts and framework agreements
with outside suppliers of raw materials and materials from other industrial activities, in order to ensure
more efficient management of procurement. However, the Group has to resort to short-term supply
contracts in some countries. If the current suppliers, especially of secondary materials, ceased their
activity or substantially reduced the production of these by-products, the Group could be exposed to
significantly higher procurement costs unless alternatives were found for such materials.
The availability of raw materials needed for the production of cement is a strategic factor for the Group
both in deciding investments on existing or new plants and for new acquisitions. The Group manages the
quarries in which it operates or plans to operate so as to ensure efficient procurement over the long term.
In most of the countries in which it operates, the Group owns the excavation rights for the quarries of raw
materials essential for its business, in both the areas of cement and crushed stone, and carefully manages
the complex process of obtaining and renewing the excavation rights and the various authorisations
required to operate the quarries. Failure to obtain or renew excavation rights or expropriation measures
could result in higher costs for raw materials which have to be procured from a different source that may
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not necessarily be passed on to customers, which could have a significant adverse effect on the
development of the Group’s business, financial position, results of operations and prospects.
If the Group’s customers fail to meet their payment obligations, the Group may experience losses
The Group is exposed to potential losses resulting from the failure by the Group’s customers to perform
their respective obligations. As of 31 December 2013 the Group’s total trade receivables amounted to
Euro 752 million. As of 31 December 2013 the Group’s provisions for overdue trade receivables
amounted to Euro 92 million. The Group determines on a case-by-case basis whether trade receivables
subject to legal proceedings should be written off and for which amount. Due in part to current market
conditions, some of the Group’s customers might fail to perform their payment obligations in accordance
with their respective agreements with the Group or the Group may not receive payment of all or a portion
of the Group’s overdue trade receivables from counterparties that are subject to bankruptcy, insolvency or
other similar proceedings or have disputed such trade receivables. The Group’s customers’ failure to pay
all or a portion of the Group’s trade receivables could have a material adverse effect on the Group’s
business, financial condition, results of operations and prospects.
Asset impairments may have negative effects on the Group’s results of operations and financial
condition
As in the majority of capital intensive industries, fixed assets in the cement industry and, to a lesser extent,
in the concrete and the aggregates industries normally have a rather long technical life. However, the
economic life of these assets and their recoverable amounts depend on many factors beyond the Group’s
control, such as local environment, market growth, changing degree of competition, import or export
facilities and regulation, environmental regulations, availability and continuity of licences, and
availability of raw materials, as discussed above. In certain circumstances, the economic life or the
recoverable value of these assets could be abruptly reduced, which could lead to a discontinuity in the
Group’s operations.
The technical life of the Group’s fixed assets is periodically revised to allow for adequate depreciation.
The net book value of the Group’s assets (attributed or belonging to the Cash Generating Units),
including goodwill, must be submitted to annual impairment tests in order to accurately represent the
lower of the asset’s carrying amount and its recoverable amount. Impairment losses are recognised in the
income statement and may therefore have a material adverse effect on the Group’s income and equity,
both at individual and consolidated level.
The Group depends on key personnel whom we may not be able to retain
The development of the Group’s business, and in particular its technological evolution and geographic
diversification, is dependent on attracting and retaining qualified and motivated personnel. Competition
for such personnel has increased in recent years, creating difficulties in recruiting or retaining such
personnel. In particular, the Group’s business depends in part on the continued services of key members
of management. If The Group were to lose their services, it may be unable to find and integrate
replacement personnel in a timely manner and such loss could significantly impair the Group’s ability to
develop and implement its business strategies. There can be no assurance that the Group will be able to
successfully attract and/or retain sufficiently qualified personnel. Loss of employees or failure to retain or
attract professional personnel, particularly individuals in key positions or at the level of the managing
board, or personnel shortages could negatively impact the Group’s ability to maintain the necessary level
of know-how and its future development which could have a material adverse effect on the Group’s
business, financial condition, results of operations and prospects.
The Group's operations depend on authorisations, concessions and licences from public authorities
which are subject to expirations, limitation on renewal, changes in the relevant laws and regulations
The Group’s business is subject to laws and regulations, including regulations regarding concessions of
quarries, operating licences, environmental regulations, restoration of industrial sites, controlled prices,
bans on exports and licence rights to be paid to allow the construction of new plants. The Group believes
-6-
that it is in possession of, and/or has submitted fully compliant requests to obtain all material permits and
licences required to conduct its present industrial sites. These permits and licences are subject to the
Group’s compliance with conditions imposed and regulations promulgated by the relevant governmental
authorities. If new conditions are imposed or if the Group violates these conditions and/or is not in
compliance with current or future regulations, the Group may be subjected to substantial fines or criminal
sanctions or such licenses, permits and concessions may be revoked which could have a material adverse
effect on the Group’s business, financial condition or results of operations.
We are subject to environmental and health and safety laws, regulations and standards
The Group is subject to a broad and increasingly stringent range of environmental and health and safety
laws, regulations, and standards in each of the jurisdictions in which it operates. This results in significant
compliance costs and could expose the Group to legal liability or place limitations on the development of
the Group’s operations. Laws, regulations and standards relate to, among other things, air (including
greenhouse gases) and noise emissions, wastewater discharges, avoidance of soil and groundwater
contamination, the use and handling of hazardous materials and waste disposal practices.
Environmental and health and safety laws, regulations and standards may also expose the Group to the
risk of incurring substantial costs and liabilities, including liabilities associated with assets that have been
sold and activities that have been discontinued. In addition, many of the Group’s manufacturing sites have
a history of industrial use and some soil and groundwater contamination has occurred in the past at a
limited number of sites, although to date the remediation costs have not been material to the Group. Such
contamination might occur or be discovered at other sites in the future. Furthermore, certain materials
employed, added to or resulting from the production process could be classified as hazardous materials or
waste according to different local or international regulations, which may vary from time to time or from
region to region. The Group complies with all applicable environmental laws, however, it may face
remediation liabilities and legal proceedings concerning environmental matters. Based on information
currently available, the Group has budgeted capital and revenue expenditures for environmental
improvement projects and has established reserves for known environmental remediation liabilities that
are probable and reasonably estimable. However, the Group cannot predict environmental matters with
certainty and its budgeted capital expenditures and established reserves may not be adequate for all
purposes. In addition, the development or discovery of new facts, events, circumstances or conditions,
including future decisions to close plants which may trigger remediation liabilities, and other
developments such as changes in law or increasingly strict enforcement by governmental authorities,
could result in increased costs and liabilities or prevent or restrict some of the Group’s operations and
thus have a material adverse effect on the Group’s business, financial condition, results of operations and
prospects.
The Group is involved in pending legal proceedings, antitrust proceedings, administrative proceedings
and tax proceedings
At the date of this Base Prospectus, a number of legal proceedings are pending that involve companies of
the Italcementi Group. The characteristics of the principal cases are described under “Description of
Italcementi S.p.A. – Legal Proceedings”, below.
As of 31 December 2013 the Group had accrued a provision of Euro 66.8 million (Euro 25.8 million for
tax proceedings and Euro 6 million for antitrust proceedings) to cover these potential liabilities. In
addition, with respect to antitrust proceedings in relation to competition matters pending before the
European Commission and the Italian Antitrust Authority which are in a preliminary phase, no provisions
have been accrued given the preliminary phase they are in and the related uncertainty as to which
measures the authorities will take.
The Group and, in particular, the Company and its subsidiary Calcestruzzi S.p.A., is party to an unfair
competition proceeding initiated by the European Commission and the Autorità Garante della
Concorrenza e del Mercato (the “Italian Antitrust Authority”). As some of these proceedings are still at a
preliminary stage, it is currently not possible to predict the outcome. However, if the Company or other
-7-
Group companies were to succumb, there would be a risk that the authorities would impose monetary
sanctions. In relation to the abovementioned proceedings, according to applicable law, in case of a
negative outcome, each company subject to the proceeding could face monetary sanctions up to 10 per
cent. of total revenues generated by such company during the last fiscal period completed prior to such
judgment.
However, such proceedings may have an unfavorable outcome and any amount the Group sets aside may
not be sufficient to cover losses that could result from a unfavorable outcome or if the outcome is worse
than expected. Any such unfavorable outcome or any other legal proceeding or investigation in the future
may have a material adverse effect on the Group’s business, financial condition, results of operations and
prospects.
If the Group cannot continue to enforce and protect our intellectual property rights, the Group’s
business could be adversely affected
The Group relies on proprietary rights and information in the development of its products. There can be
no assurance that any patent or trademark which the Group owns or is able to obtain will adequately
protect the covered products and technologies. Nor can there be any assurance that the confidentiality
agreements and other measures taken by the Group will adequately protect its trade secrets, know-how or
other proprietary information not covered by patents, or that others will not obtain this information
through independent development, indiscretion of employees, industrial espionage or other means. Such
use by competitors could have a material adverse effect on the Group’s business, financial condition or
results of operations. In the future, competitors may obtain patents for technologies which the Group does
not possess, or its proprietary rights and information may become obsolete. Furthermore, there can be no
assurance that the Group’s activities will not infringe on the proprietary rights of others or that it will be
able to obtain licenses, on reasonable terms or otherwise, referred to the required technology. If the Group
fails to obtain the necessary intellectual property rights to protect its proprietary information, or if it
encounters difficulties in enforcing intellectual property rights in certain foreign countries, or if it
infringes upon the proprietary rights of others, this could have a material adverse effect on the Group’s
business, financial condition, results of operations and prospects.
The Group is exposed to tax risks
The Group could be adversely affected by changes in tax laws in the countries in which it operates or
changes in the interpretation of tax laws by any fiscal authority, which are outside of its control.
Significant changes in tax legislation or difficulty in the interpretation of the tax legislation could have an
adverse effect on the Group’s business, financial condition, and results of operations.
The Group is exposed to risks arising from its information and communication technology
infrastructure
The efficiency and uninterrupted operations of the Group’s computers, telecommunications and data
processing systems are essential for the continued operation of its production facilities, sales activities and
all general services, including payroll, accounting, planning and financial. To the extent that these
systems are affected by disturbances, damage, electricity failures, computer viruses, fire and similar
events, there may be a resulting material adverse effect on the Group’s operations and financial situation.
2) Financial Risks
If the Group defaults under any of its debt arrangements, it may have to repay its debt immediately
The Group’s ability to borrow from banks or in the capital markets to meet its current and future financial
requirements is dependent on favourable market conditions, which are subject to macroeconomic and
regulatory factors outside of its control.
-8-
If the Group is unable to obtain financing or financing at competitive terms to meet its financial
requirements, this could put the Group at a disadvantage and could prejudice growth which could
materially and adversely affect its business, financial condition, results of operations and prospects.
In addition, the terms and condition of a number of the Group’s financing arrangements require the Group
to comply with certain financial covenants and contain mandatory prepayment events, events of default,
including cross-default provisions. Upon an event of default, creditors may seek repayment, in whole or
in part, of the relevant financing including interest and accrued amounts payable, which could have a
material adverse effect on the Group’s business, financial condition, results of operations and prospects.
The Group's ability to raise funding depends on the Group’s credit rating
The Group’s ability to compete successfully in the marketplace for funding depends on various factors,
including credit ratings assigned to it by recognised rating agencies. Credit ratings may change depending
on changes in the operating results, financial condition, credit structure and liquidity profile of the
Company. As a result, a downgrade in credit ratings may impact the Group’s ability to raise funding
and/or the cost of such funding, and this could in turn adversely affect its business, financial condition,
results of operations and prospects.
Fluctuations in currency exchange rates could adversely affect the Group's business and results of
operations
The Group is present in a number of different countries, including emerging market countries. The Group
is mainly exposed to the US dollar, Thai baht, Moroccan dirham, Egyptian pound, Indian rupee and
Kazakh tenge. The Group companies (with the exception of the trading terminals) operate largely within
their respective local markets or within the euro zone. However, certain activities (such as the purchase of
fuels, spare parts and investments for construction of new plants) may be conducted by the Group
companies pursuant to contracts denominated in currencies other than the company’s main functional
currency. As a consequence, the Group faces moderate transaction foreign exchange risks in connection
with various currencies, and fluctuations in exchange rates may have a significant effect on such activities
which are reflected in the Group’s consolidated income statement. In addition, dividend payments by the
Group companies (whether direct or indirect) to the Company are subject to currency exchange risks
which may have a material adverse effect on the Group’s financial condition and results of operations.
The translation of local financial statements into the Group’s reporting currency, the euro, leads to
currency translation effects which the Group normally does not actively hedge, affecting its reported
consolidated results and debt levels, and certain relevant financial ratios.
In addition, shareholders’ equity expressed in foreign currencies are only partially matched by debt in
foreign currencies and therefore a significant decrease in the aggregate value of such local currencies
against the euro may have a material effect on the Group’s shareholders’ equity.
Fluctuations in interest rates could adversely affect our business and results of operations
The Group is exposed to fluctuations in interest rates. As of December 31, 2013, 80 per cent. of the
Group’s gross financial debt and 102 per cent. of the Group’s net financial debt (not taking into account
the fair value of derivative instruments) is fixed rate debt or covered by swap agreements. If interest rates
rise, to the degree that swap agreements currently in place are not sufficiently covering the Group’s
exposure to such increase, this could have a material adverse effect on its business, financial condition,
results of operations and prospects.
The Group’s insurance coverage may be insufficient to cover certain of the losses to which we may be
exposed
Insurance contracts with major insurance companies are regularly established and maintained for the
Group, in order to cover the risks related to property and employees, as well as the risks stemming from
-9-
third-party liability. All the contracts are negotiated within a standard framework agreement in order to
ensure congruence between the likelihood of occurrence of the risk and the damages caused by its
occurrence for each subsidiary of the Group. Such insurance coverage, however, may not fully cover the
risks to which the Group is exposed. This can be the case with respect to insurance covering legal and
administrative claims, as well as with respect to insurance covering other risks, such as business
interruption. For certain risks, such as war and war-like events, acts of terrorism, and certain natural
hazards adequate insurance cover may not be available on the market or may not be available at
reasonable conditions. Consequently, any harm resulting from the materialisation of these risks could
result in significant capital expenditures and other expenses as well as liabilities, thereby having a
material adverse effect on the Group’s business, financial condition and operating results. Furthermore,
for risks currently covered, adequate insurance cover may not be available in the future at all or may not
be available on reasonable terms or may only be available at significantly higher premiums.
This Base Prospectus contains certain unaudited market share data that has not been verified by
independent third parties
This Base Prospectus contains statements regarding the Group’s market share and competitive position
that have been derived from management’s own experience and internal estimates based on data from
various market sources or Company estimates. Although management believes these statements and the
underlying data upon which they are based are accurate, they have not been verified by an independent
third-party source and the Company cannot guarantee their accuracy or completeness or that they will not
change in the future. Investors should not rely on this data when making an investment decision.
The Group is subject to risks related to the Company’s status as a holding company
Italcementi, in its capacity as holding company of the Group, conducts a significant part of its operations
(and all of its foreign operations) through its subsidiaries, and depends on the earnings and cash flows of,
and the distribution of funds from, these subsidiaries also in order to meet its debt obligations, including
its obligations with respect to the Notes and/or the Guarantee. Generally, creditors of a subsidiary,
including trade creditors, secured creditors and creditors holding debt and guarantees issued by the
subsidiary, and preferred shareholders, if any, of the subsidiary, will be entitled to the assets of that
subsidiary before any of those assets can be distributed to shareholders upon liquidation or winding up.
As a result, Italcementi’s obligations in respect of the Notes and/or the Guarantee will actually be
subordinated to the prior payment of all the above debts. If the Company does not receive any dividends
from its subsidiaries, this may affect its financial condition and it may not be able to service its debt
obligations.
Certain of Italcementi’s obligations may have priority over the Notes
Italcementi, by virtue of its Italian cement operations (which include several cement plants and grinding
centres), is the leading cement manufacturer in the Italian market and is directly exposed to
manufacturing, trade and labour liabilities. Some of Italcementi’s obligations, notably vis-à-vis the Italian
State, tax authorities and its own employees, have, by law, priority vis-à-vis other Company’s
indebtedness. As a result, Italcementi’s obligations in respect of the Notes and/or the Guarantee are
subordinated to such obligations.
Italcementi is subject to restrictions due to minority interests in certain of its subsidiaries
Minority shareholders hold significant interests in certain Group subsidiaries in Morocco, Egypt,
Thailand and Middle East. The presence of minority shareholders, whose interests may not always align
with those of Italcementi, may, among other things, affect Italcementi’s ability to implement
organisational efficiencies and transfer cash and assets from one subsidiary to another in order to allocate
assets more effectively.
- 10 -
Italcementi Finance S.A. is not an operating company and relies upon other companies of the
Italcementi Group for its revenues and cash flows
Italcementi Finance S.A.'s revenues and cash flow depend upon the receipt of funds contractually due by
Italcementi and other companies of the Italcementi Group (including Ciments Francais S.A.) under the
loan agreements with Italcementi Finance S.A., as well as under certain contracts for services provided to
Italcementi S.p.A. and Ciments Français S.A. As a consequence, Italcementi Finance S.A.'s operations
depend on the ability of Italcementi and other members of the Italcementi Group to meet their payment
obligations under such loans and contracts.
All debt securities of Italcementi Finance S.A. under the Programme are wholly and unconditionally
guaranteed by Italcementi in respect of both principal and interest payments. This guarantee is
enforceable under the laws of England.
Factors which are material for the purpose of assessing the market risks associated with the Notes
issued under the Programme
The Notes may not be a suitable investment for all investors
Each potential investor in the Notes must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor may wish to consider, either on its own or with the
help of its financial and other professional advisers, whether it:
(i)
has sufficient knowledge and experience to make a meaningful evaluation of the Notes, the
merits and risks of investing in the Notes and the information contained or incorporated by
reference in this Base Prospectus or any applicable supplement;
(ii)
has access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the Notes and the impact the Notes will have on its
overall investment portfolio;
(iii)
has sufficient financial resources and liquidity to bear all of the risks of an investment in the
Notes, including Notes where the currency for principal or interest payments is different from the
potential investor's currency;
(iv)
understands thoroughly the terms of the Notes and is familiar with the behaviour of financial
markets; and
(v)
is able to evaluate possible scenarios for economic, interest rate and other factors that may affect
its investment and its ability to bear the applicable risks.
Risks related to the structure of a particular issue of Notes
A range of Notes may be issued under the Programme. A number of these Notes may have features which
contain particular risks for potential investors. Set out below is a description of the most common such
features:
If the Issuer has the right to redeem any Notes at its option, this may limit the market value of the Notes
concerned and an investor may not be able to reinvest the redemption proceeds in a manner which
achieves a similar effective return
An optional redemption feature of Notes is likely to limit their market value. During any period when the
relevant Issuer may elect to redeem Notes, the market value of those Notes generally will not rise
substantially above the price at which they can be redeemed. This also may be true prior to any
redemption period.
The relevant Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest
rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption
proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may
only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in
light of other investments available at that time.
- 11 -
If the Issuer has the right to convert the interest rate on any Notes from a fixed rate to a floating rate, or
vice versa, this may affect the secondary market and the market value of the Notes concerned
Fixed/Floating Rate Notes are Notes which may bear interest at a rate that converts from a fixed rate to a
floating rate, or from a floating rate to a fixed rate. Where the relevant Issuer has the right to effect such a
conversion, this will affect the secondary market and the market value of the Notes since the relevant
Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing.
If the relevant Issuer converts from a fixed rate to a floating rate in such circumstances, the spread on the
Fixed/Floating Rate Notes may be less favourable than then prevailing spreads on comparable Floating
Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower
than the rates on other Notes. If the relevant Issuer converts from a floating rate to a fixed rate in such
circumstances, the fixed rate may be lower than then prevailing market rates.
Notes which are issued at a substantial discount or premium may experience price volatility in response
to changes in market interest rates
The market values of securities issued at a substantial discount (such as Zero Coupon Notes) or premium
to their principal amount tend to fluctuate more in relation to general changes in interest rates than do
prices for more conventional interest-bearing securities. Generally, the longer the remaining term of such
securities, the greater the price volatility as compared to more conventional interest-bearing securities
with comparable maturities.
Risks related to Notes generally
Set out below is a description of material risks relating to the Notes generally:
The conditions of the Notes contain provisions which may permit their modification without the consent
of all investors
The conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters
affecting their interests generally. These provisions permit defined majorities to bind all Noteholders
including Noteholders who did not attend or were not represented at the relevant meeting and Noteholders
who voted in a manner contrary to the majority.
The Guarantee may be limited by applicable laws or subject to certain defences that may limit its validity
and enforceability
The Guarantee given by the Guarantor provides Noteholders with a direct claim against the Guarantor in
respect of the Issuer's obligations under the Notes. Enforcement of the Guarantee would be subject to
certain generally available defences. Local laws and defences may vary, and may include those that relate
to corporate benefit, fraudulent conveyance or transfer, voidable preference, financial assistance,
corporate purpose, and capital maintenance or similar laws. They may also include regulations or
defences which affect the rights of creditors generally. If a court were to find the Guarantee given by the
Guarantor void or unenforceable as a result of such local laws or defences, then Noteholders would cease
to have any claim in respect of the Guarantor and would be creditors solely of the Issuer. Enforcement of
the Guarantee is subject to the detailed provisions contained therein which include certain limitations
reflecting mandatory provisions of the laws of the Guarantor's jurisdiction.
For the purpose of (inter alia) article 1938 of the Italian Civil Code the obligations of the Guarantor under
the Guarantee shall at no time require the Guarantor to pay any amount which exceeds the outstanding
principal amount plus interest of each series of Notes issued under the Programme, provided that the
Guarantor shall only be liable up to an amount which is 120 per cent. of the aggregate principal amount of
each series of Notes issued under the Programme (as specified in the applicable Final Terms) and it being
further understood that in no event shall the aggregate amount of the payment obligations of the
Guarantor under the Guarantee exceed €2,400,000,000.
The Notes may be subject to withholding taxes in circumstances where the Issuer is not obliged to make
gross up payments and this would result in holders receiving less interest than expected and could
significantly adversely affect their return on the Notes.
Withholding under the EU Savings Tax Directive
- 12 -
Under EC Council Directive 2003/48/EC on the taxation of savings income (the "Directive"), each
Member State is required to provide to the tax authorities of another Member State details of payments of
interest or other similar income paid by a person within its jurisdiction to, or collected by such a person
for, an individual resident or certain limited types of entity established in that other Member State;
however, for a transitional period, Austria and Luxembourg may instead apply a withholding system in
relation to such payments, deducting tax at a rate of 35 per cent. The transitional period is to terminate at
the end of the first full fiscal year following agreement by certain non-EU countries to the exchange of
information relating to such payments. Luxembourg has announced that it will no longer apply the
withholding tax system as from 1 January 2015 and will provide details of payments of interest (or similar
income) as from this date.
A number of non-EU countries, including Switzerland, and certain dependent or associated territories of
certain Member States, have adopted similar measures (either provision of information or transitional
withholding) in relation to payments made by a person within its jurisdiction to, or collected by such a
person for, an individual resident or certain limited types of entity established in a Member State. In
addition, the Member States have entered into provision of information or transitional withholding
arrangements with certain of those dependent or associated territories in relation to payments made by a
person in a Member State to, or collected by such a person for, an individual resident or certain limited
types of entity established in one of those territories.
The Council of the European Union formally adopted a Council Directive amending the Directive on 24
March 2014 (the "Amending Directive"). The Amending Directive broadens the scope of the
requirements described above. Member States have until 1 January 2016 to implement national legislation
giving effect to these additional requirements and the national legislation must apply from 1 January
2017. The changes made under the Amending Directive include extending the scope of the Directive to
payments made to, or collected for, certain other entities and legal arrangements. They also broaden the
definition of "interest payment" to cover income that is equivalent to interest.
Investors who are in any doubt as to their position should consult their professional advisers.
Payments on certain Notes may be subject to U.S. withholding tax under FATCA
The United States has enacted rules, commonly referred to as "FATCA", that generally impose a new
reporting and withholding regime with respect to certain U.S. source payments (including dividends and
interest), gross proceeds from the disposition of property that can produce U.S. source interest and
dividends and certain payments made by entities that are classified as financial institutions under FATCA.
The United States has entered into intergovernmental agreements regarding the implementation of
FATCA with Italy and France (the "IGAs"). Under the IGAs, as currently drafted, the Issuer does not
expect payments made to them, or on or with respect to the Notes to be subject to withholding under
FATCA. However, significant aspects of when and how FATCA will apply remain unclear, and no
assurance can be given that withholding under FATCA will not become relevant with respect to payments
made on or with respect to the Notes in the future. If any withholding under FATCA or the IGAs is
required in the future, neither the Issuer, any paying agent, nor any other person shall be required to pay
any additional amounts with respect to such withholding or deduction. Prospective investors should
consult their own tax advisors regarding the potential impact of FATCA.
The value of the Notes could be adversely affected by a change in English law or administrative practice
The conditions of the Notes are based on English law in effect as at the date of this Base Prospectus. No
assurance can be given as to the impact of any possible judicial decision or change to English law or
administrative practice after the date of this Base Prospectus and any such change could materially
adversely impact the value of any Notes affected by it.
Because the Global Notes are held by or on behalf of Euroclear and Clearstream, Luxembourg, investors
will have to rely on their procedures for transfer, payment and communication with the relevant Issuer
Notes issued under the Programme may be represented by one or more Global Notes. Such Global Notes
will be deposited with a common depositary or common safekeeper for Euroclear and Clearstream,
Luxembourg. Except in the circumstances described in the relevant Global Note, investors will not be
entitled to receive definitive Notes. Euroclear and Clearstream, Luxembourg will maintain records of the
beneficial interests in the Global Notes. While the Notes are represented by one or more Global Notes,
- 13 -
investors will be able to trade their beneficial interests only through Euroclear and Clearstream,
Luxembourg.
While the Notes are represented by one or more Global Notes the relevant Issuer will discharge its
payment obligations under the Notes by making payments to or to the order of the common depositary or
common safekeeper for Euroclear and Clearstream, Luxembourg for distribution to their account holders.
A holder of a beneficial interest in a Global Note must rely on the procedures of Euroclear and
Clearstream, Luxembourg to receive payments under the relevant Notes. The relevant Issuer has no
responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in
the Global Notes.
Holders of beneficial interests in the Global Notes will not have a direct right to vote in respect of the
relevant Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by
Euroclear and Clearstream, Luxembourg to appoint appropriate proxies. Similarly, holders of beneficial
interests in the Global Notes will not have a direct right under the Global Notes to take enforcement
action against the relevant Issuer in the event of a default under the relevant Notes but will have to rely
upon their rights under the Deed of Covenant.
Investors who purchase Notes in denominations that are not an integral multiple of the Specified
Denomination may be adversely affected if definitive Notes are subsequently required to be issued
In relation to any issue of Notes which have denominations consisting of a minimum Specified
Denomination plus one or more higher integral multiples of another smaller amount, it is possible that
such Notes may be traded in amounts that are not integral multiples of such minimum Specified
Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount which is
less than the minimum Specified Denomination in his account with the relevant clearing system at the
relevant time may not receive a definitive Note in respect of such holding (should definitive Notes be
printed) and would need to purchase a principal amount of Notes such that its holding amounts to a
Specified Denomination.
If such Notes in definitive form are issued, holders should be aware that definitive Notes which have a
denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and
difficult to trade.
French Insolvency Law
Under French insolvency law, holders of debt securities are automatically grouped into a single assembly
of holders (the "Assembly") in case of the opening in France of an accelerated financial preservation
(procedure de sauvegarde financière accélérée) or a preservation (procédure de sauvegarde) or an
accelerated preservation (procedure de sauvegarde accélérée) or a judicial reorganisation procedure
(procédure de redressement judiciaire) of Italcementi Finance S.A., in order to defend their common
interests.
The Assembly comprises holders of all debt securities issued by Italcementi Finance S.A. (including the
Notes), whether or not under a debt issuance programme (such as a Euro Medium Term Notes
programme) and regardless of their governing law.
The Assembly deliberates on the draft safeguard (projet de plan de sauvegarde), accelerated financial
safeguard plan (projet de plan de sauvegarde financière-accélérée) or judicial reorganisation plan (projet
de plan de redressement) applicable to Italcementi Finance S.A. and may further agree to:

increase the liabilities (charges) of holders of debt securities (including the Noteholders) by
rescheduling and/or writing-off debts;

establish an unequal treatment between holders of debt securities (including the Noteholders) as
appropriate under the circumstances; and/or

decide to convert debt securities (including the Notes) into shares or securities that give or may
give right to the share capital.
- 14 -
Decisions of the Assembly will be taken by a two-third (2/3) majority (calculated as a proportion of the
debt securities held by the holders attending such Assembly or represented thereat). No quorum is
required on the convening of the Assembly.
For the avoidance of doubt, the provisions relating to the Representation of the Noteholders described in
the Terms and Conditions of the Notes set out in this Base Prospectus and, if applicable, the applicable
Final Terms will not be applicable in these circumstances.
Risks related to the market generally
Set out below is a description of material market risks, including liquidity risk, exchange rate risk, interest
rate risk and credit risk:
An active secondary market in respect of the Notes may never be established or may be illiquid and this
would adversely affect the value at which an investor could sell his Notes
Notes may have no established trading market when issued, and one may never develop. If a market does
develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at
prices that will provide them with a yield comparable to similar investments that have a developed
secondary market. This is particularly the case for Notes that are especially sensitive to interest rate,
currency or market risks, are designed for specific investment objectives or strategies or have been
structured to meet the investment requirements of limited categories of investors. These types of Notes
generally would have a more limited secondary market and more price volatility than conventional debt
securities.
If an investor holds Notes which are not denominated in the investor's home currency, he will be exposed
to movements in exchange rates adversely affecting the value of his holding. In addition, the imposition of
exchange controls in relation to any Notes could result in an investor not receiving payments on those
Notes
The relevant Issuer will pay principal and interest on the Notes and (in the case of Notes issued by
Italcementi Finance S.A.) the Guarantor will make any payments under the Guarantee in the Specified
Currency. This presents certain risks relating to currency conversions if an investor's financial activities
are denominated principally in a currency or currency unit (the "Investor's Currency") other than the
Specified Currency. These include the risk that exchange rates may significantly change (including
changes due to devaluation of the Specified Currency or revaluation of the Investor's Currency) and the
risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange
controls. An appreciation in the value of the Investor's Currency relative to the Specified Currency would
decrease (1) the Investor's Currency-equivalent yield on the Notes, (2) the Investor's Currency-equivalent
value of the principal payable on the Notes and (3) the Investor's Currency-equivalent market value of the
Notes.
Government and monetary authorities may impose (as some have done in the past) exchange controls that
could adversely affect an applicable exchange rate or the ability of the Issuers or the Guarantor to make
payments in respect of the Notes. As a result, investors may receive less interest or principal than
expected, or no interest or principal.
The value of Fixed Rate Notes may be adversely affected by movements in market interest rates
Investment in Fixed Rate Notes involves the risk that, if market interest rates subsequently increase above
the rate paid on the Fixed Rate Notes, this will adversely affect the value of the Fixed Rate Notes.
Credit ratings assigned to the Issuers, the Guarantor, the Programme or any Notes may not reflect all
risks
One or more independent credit rating agencies may assign credit ratings to the Issuers, the Guarantor, the
Programme or the Notes. The ratings may not reflect the potential impact of all risks related to structure,
market, additional factors discussed above, and other factors that may affect the value of the Notes. A
credit rating is not a recommendation to buy, sell or hold securities and may be revised, suspended or
withdrawn by the rating agency at any time.
- 15 -
In general, European regulated investors are restricted under Regulation (EC) No. 1060/2009 (as
amended) (the "CRA Regulation") from using credit ratings for regulatory purposes, unless such ratings
are issued by a credit rating agency established in the EU and registered under the CRA Regulation (and
such registration has not been withdrawn or suspended), subject to transitional provisions that apply in
certain circumstances whilst the registration application is pending. Such general restriction will also
apply in the case of credit ratings issued by non-EU credit rating agencies, unless the relevant credit
ratings are endorsed by an EU- registered credit rating agency or the relevant non-EU rating agency is
certified in accordance with the CRA Regulation (and such endorsement action or certification, as the
case may be, has not been withdrawn or suspended). The list of registered and certified rating agencies
published by the European Securities and Markets Authority ("ESMA") on its website in accordance with
the CRA Regulation is not conclusive evidence of the status of the relevant rating agency included in such
list, as there may be delays between certain supervisory measures being taken against a relevant rating
agency and the publication of the updated ESMA list. Certain information with respect to the credit rating
agencies and ratings is set out on the cover of this Base Prospectus.
Legal investment considerations may restrict certain investments
The investment activities of certain investors are subject to legal investment laws and regulations, or
review or regulation by certain authorities. Each potential investor should consult its legal advisers to
determine whether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as
collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any
Notes. Financial institutions should consult their legal advisors or the appropriate regulators to determine
the appropriate treatment of Notes under any applicable risk-based capital or similar rules.
- 16 -
OVERVIEW OF THE PROGRAMME
The following overview does not purport to be complete and is taken from, and is qualified in its
entirety by, the remainder of this Base Prospectus and, in relation to the terms and conditions of
any particular Tranche of Notes, the applicable Final Terms. The relevant Issuer and any relevant
Dealer may agree that Notes shall be issued in a form other than that contemplated in the Terms
and Conditions, in which event, in the case of listed Notes only and if appropriate, a new Base
Prospectus or a drawdown prospectus will be published.
This Overview constitutes a general description of the Programme for the purposes of Article 22.5(3) of
Commission Regulation (EC) No 809/2004 implementing the Prospectus Directive (the "Prospectus
Regulation").
Words and expressions defined in "Form of the Notes" and "Terms and Conditions of the Notes" shall
have the same meanings in this Overview.
Issuers:
Italcementi S.p.A.
Italcementi Finance S.A.
Guarantor:
Italcementi S.p.A. in respect of Notes issued by Italcementi Finance
S.A.
Description:
Euro Medium Term Note Programme
Arrangers:
Banca IMI S.p.A
BNP Paribas
Dealers:
Banca IMI S.p.A.
BNP Paribas
Crédit Agricole Corporate & Investment Bank
CM-CIC Securities
HSBC Bank plc
ING Bank N.V.
J.P. Morgan Securities plc
Mediobanca – Banca di Credito Finanziario S.p.A.
Merrill Lynch International
Mitsubishi UFJ Securities International plc
NATIXIS
Société Générale
The Royal Bank of Scotland plc
UniCredit Bank AG
and any other Dealers appointed in accordance with the Programme
Agreement.
Certain Restrictions:
Each issue of Notes denominated in a currency in respect of which
particular laws, guidelines, regulations, restrictions or reporting
requirements apply will only be issued in circumstances which
comply with such laws, guidelines, regulations, restrictions or
reporting requirements from time to time (see "Subscription and
Sale") including the following restrictions applicable at the date of
this Base Prospectus.
Notes having a maturity of less than one year
Notes having a maturity of less than one year will, if the proceeds
of the issue are accepted in the United Kingdom, constitute deposits
for the purposes of the prohibition on accepting deposits contained
in section 19 of the Financial Services and Markets Act 2000 unless
they are issued to a limited class of professional investors and have
a denomination of at least £100,000 or its equivalent, see
- 17 -
"Subscription and Sale".
Under the Luxembourg Act dated 10 July 2005 on prospectuses for
securities, which implements the Prospectus Directive, prospectuses
for the listing of money market instruments having a maturity at
issue of less than 12 months and complying also with the definition
of securities are not subject to the approval provisions of such Act
and do not need to be approved by the CSSF.
Issuing and Principal Paying
Agent:
BNP Paribas Securities Services, Luxembourg Branch
Programme Size:
Up to €2,000,000,000 (or its equivalent in other currencies
calculated as described in the Programme Agreement) outstanding
at any time. The Issuers and the Guarantor may increase the amount
of the Programme in accordance with the terms of the Programme
Agreement.
Distribution:
Notes may be distributed by way of private or public placement and
in each case on a syndicated or non-syndicated basis.
Currencies:
Notes may be denominated in, subject to any applicable legal or
regulatory restrictions, any currency agreed between the relevant
Issuer and the relevant Dealer.
Maturities:
The Notes will have such maturities as may be agreed between the
relevant Issuer and the relevant Dealer, subject to such minimum or
maximum maturities as may be allowed or required from time to
time by the relevant central bank (or equivalent body) or any laws
or regulations applicable to the relevant Issuer or the relevant
Specified Currency.
Issue Price:
Notes may be issued on a fully-paid basis and at an issue price
which is at par or at a discount to, or premium over, par. Special tax
rules may apply to Notes which are issued at a discount to par, see
"Taxation".
Form of Notes:
The Notes will be issued in bearer form as described in "Form of
the Notes".
Fixed Rate Notes:
Fixed interest will be payable on such date or dates as may be
agreed between the relevant Issuer and the relevant Dealer and on
redemption and will be calculated on the basis of such Day Count
Fraction as may be agreed between the relevant Issuer and the
relevant Dealer.
Floating Rate Notes:
Floating Rate Notes will bear interest at a rate determined:
(a)
on the same basis as the floating rate under a notional
interest rate swap transaction in the relevant Specified
Currency governed by an agreement incorporating the
2006 ISDA Definitions (as published by the International
Swaps and Derivatives Association, Inc., and as amended
and updated as at the Issue Date of the first Tranche of the
Notes of the relevant Series); or
(b)
on the basis of the reference rate set out in the applicable
Final Terms.
The margin (if any) relating to such floating rate will be agreed
between the relevant Issuer and the relevant Dealer for each Series
- 18 -
of Floating Rate Notes.
Floating Rate Notes may also have a maximum interest rate, a
minimum interest rate or both.
Interest on Floating Rate Notes in respect of each Interest Period, as
agreed prior to issue by the relevant Issuer and the relevant Dealer,
will be payable on such Interest Payment Dates, and will be
calculated on the basis of such Day Count Fraction, as may be
agreed between the relevant Issuer and the relevant Dealer.
Zero Coupon Notes:
Zero Coupon Notes will be offered and sold at a discount to their
nominal amount and will not bear interest.
Redemption:
The applicable Final Terms will indicate either that the relevant
Notes cannot be redeemed prior to their stated maturity (other than
for taxation reasons or following an Event of Default or a Change
of Control Put Event) or that such Notes will be redeemable at the
option of the relevant Issuer and/or the Noteholders upon giving
notice to the Noteholders or the relevant Issuer, as the case may be,
on a date or dates specified prior to such stated maturity and at a
price or prices and on such other terms as may be agreed between
the relevant Issuer and the relevant Dealer.
Notes having a maturity of less than one year may be subject to
restrictions on their denomination and distribution, see "Certain
Restrictions - Notes having a maturity of less than one year" above.
Denomination of Notes:
The Notes will be issued in such denominations as may be agreed
between the relevant Issuer and the relevant Dealer save that the
minimum denomination of each Note will be such amount as may
be allowed or required from time to time by the relevant central
bank (or equivalent body) or any laws or regulations applicable to
the relevant Specified Currency, see "Certain Restrictions - Notes
having a maturity of less than one year" above, and save that the
minimum denomination of each Note will be €100,000 (or, if the
Notes are denominated in a currency other than euro, the equivalent
amount in such currency).
Taxation:
All payments in respect of the Notes will be made without
deduction for or on account of withholding taxes imposed by any
Tax Jurisdiction as provided in Condition 7. In the event that any
such deduction is made, the relevant Issuer or, as the case may be,
the Guarantor (in the case of Notes issued by Italcementi Finance
S.A.) will, save in certain limited circumstances provided in
Condition 7, be required to pay additional amounts to cover the
amounts so deducted.
Negative Pledge:
The terms of the Notes will contain a negative pledge provision as
further described in Condition 3.
Cross Default:
The terms of the Notes will contain a cross default provision as
further described in Condition 9.
Status of the Notes:
The Notes will constitute direct, unconditional, unsubordinated and
(subject to the provisions of Condition 3) unsecured obligations of
the relevant Issuer and will rank pari passu among themselves and
(save for certain obligations required to be preferred by law)
equally with all other unsecured obligations (other than
subordinated obligations, if any) of the relevant Issuer, from time to
time outstanding.
- 19 -
Guarantee:
The Notes issued by Italcementi Finance S.A. will be
unconditionally and irrevocably guaranteed by the Guarantor. The
obligations of the Guarantor under its guarantee will be direct,
unconditional, unsubordinated and (subject to the provisions of
Condition 3) unsecured obligations of the Guarantor and will rank
pari passu and (save for certain obligations required to be preferred
by law) equally with all other unsecured obligations (other than
subordinated obligations, if any) of the Guarantor from time to time
outstanding.
Rating:
The Programme has been rated "BB+" (long term) and "B" (short
term) by Standard & Poor's and "(P)Ba3" (senior unsecured) and
"(P)NP" (short term) by Moody's. Series of Notes issued under the
Programme may be rated or unrated. Where a Series of Notes is
rated, such rating will be disclosed in the applicable Final Terms
and will not necessarily be the same as the ratings assigned to the
Programme. A security rating is not a recommendation to buy, sell
or hold securities and may be subject to suspension, reduction or
withdrawal at any time by the assigning rating agency.
Listing Approval and Admission
to Trading:
Application has been made to the CSSF to approve this document
as a base prospectus. Application has also been made for Notes
issued under the Programme to be listed on the Official List of the
Luxembourg Stock Exchange and admitted to trading on the
Luxembourg Stock Exchange's regulated market.
Notes may be listed or admitted to trading, as the case may be, on
other or further stock exchanges or markets agreed between the
relevant Issuer and the relevant Dealer in relation to the Series.
Notes which are neither listed nor admitted to trading on any
market may also be issued.
The applicable Final Terms will state whether or not the relevant
Notes are to be listed and/or admitted to trading and, if so, on which
stock exchanges and/or markets.
Governing Law:
The Notes and any non-contractual obligations arising out of or in
connection with the Notes will be governed by, and shall be
construed in accordance with, English law.
Selling Restrictions:
There are restrictions on the offer, sale and transfer of the Notes in
the United States, the European Economic Area (including the
United Kingdom, the Republic of Italy, the Netherlands and
France) and Japan and such other restrictions as may be required in
connection with the offering and sale of a particular Tranche of
Notes, see "Subscription and Sale".
- 20 -
DOCUMENTS INCORPORATED BY REFERENCE
The following documents which have previously been published and have been filed with the CSSF or
are published and filed with the CSSF simultaneously with this Base Prospectus shall be incorporated in,
and form part of, this Base Prospectus:
(a)
the English version of the auditors' report and audited consolidated annual financial statements of
Italcementi S.p.A. as of 31 December 2013 and 31 December 2012 and for the financial years
then ended, as included in the annual report of Italcementi S.p.A. for 2013 (the "2013 Annual
Report") and the annual report of Italcementi S.p.A. for 2012 (the "2012 Annual Report")
respectively;
(b)
the English versions of the half-year consolidated financial statements of Italcementi S.p.A. as of
30 June 2014 and 30 June 2013 and for the six months then ended, together with the auditors'
limited review report prepared in connection therewith, as included in the report of Italcementi
S.p.A. for the first six months of 2014 (the "Half-Year 2014 Report") and the report of
Italcementi S.p.A. for the first six months of 2013 (the "Half-Year 2013 Report") respectively;
(c)
the English versions of the auditors' report and audited annual financial statements of Italcementi
Finance S.A. as of 31 December 2013 and 31 December 2012 and for the financial years then
ended, as included in the annual report of Italcementi Finance S.A. for 2013 (the "Italcementi
Finance S.A. 2013 Annual Report") and the annual report of Italcementi Finance S.A. for 2012
(the "Italcementi Finance S.A. 2012 Annual Report") respectively; and
(d)
the Terms and Conditions of the Notes contained in previous Base Prospectuses dated 9 March
2010, pages 43 to 72 (inclusive), 29 June 2012, pages 47 to 76 (inclusive) and 26 September
2013, pages 40 to 67 (inclusive), in each case prepared by the Issuer in connection with the
Programme.
The English versions of the documents listed in items (a) and (b) above and incorporated by reference in
this Base Prospectus are unsworn translations from the respective Italian originals.
The English versions of the documents listed in item (c) above and incorporated by reference in this Base
Prospectus are unsworn translations from the respective French originals.
Following the publication of this Base Prospectus a supplement may be prepared by the relevant Issuer
and approved by the CSSF in accordance with Article 16 of the Prospectus Directive. Statements
contained in any such supplement (or contained in any document incorporated by reference therein) shall,
to the extent applicable, be deemed to modify or supersede statements contained in this Base Prospectus
or in a document which is incorporated by reference in this Base Prospectus. Any statement so modified
or superseded shall not, except as so modified or superseded, constitute a part of this Base Prospectus.
Copies of documents incorporated by reference in this Base Prospectus can be obtained from the
registered office of the relevant Issuer and from the specified offices of the Paying Agents for the time
being in Luxembourg.
Any non-incorporated parts of a document referred to herein are either deemed not relevant for an
investor or are otherwise covered elsewhere in this Base Prospectus.
The Issuers and (in the case of notes issued by Italcementi Finance S.A.) the Guarantor will, in the event
of any significant new factor, material mistake or inaccuracy relating to information included in this Base
Prospectus which is capable of affecting the assessment of any Notes, prepare a supplement to this Base
Prospectus or publish a new Base Prospectus for use in connection with any subsequent issue of Notes.
The following information from Italcementi S.p.A. and Italcementi Finance S.A. annual reports is
incorporated by reference, and the following cross-references lists are provided to enable investors to
identify specific items of information so incorporated.
- 21 -
Document
Information
incorporated
Italcementi S.p.A. audited consolidated
annual financial statements for the financial
year ended 31 December 2013
Balance Sheet
Cashflow Statement
Income Statement
Accounting Principles and
Notes
Audit Report
Italcementi S.p.A. audited consolidated
annual financial statements for the financial
year ended 31 December 2012
Balance Sheet
Cashflow Statement
Income Statement
Accounting Principles and
Notes
Audit Report
Italcementi S.p.A. half-year consolidated
financial statements for the six months ended
30 June 2014
Balance Sheet
Cashflow Statement
Income Statement
Accounting Principles and
Notes
Audit Report
Italcementi S.p.A. half-year consolidated
financial statements for the six months ended
30 June 2013
Balance Sheet
Cashflow Statement
Income Statement
Accounting Principles and
Notes
Audit Report
Italcementi Finance S.A. audited annual
financial statements for the financial year
ended 31 December 2013
Balance Sheet
Income Statement
Notes to the financial
statements
Audit Report
Italcementi Finance S.A. audited annual
financial statements for the financial year
ended 31 December 2012
Balance Sheet
Income Statement
Notes to the financial
statements
Audit Report
- 22 -
Page number
2013 Annual Report
64
68
65
69 - 144
153 - 154
2012 Annual Report
64
68
65
71 - 134
143 - 144
Half-Year 2014 Report
38
42
39
43-73
75-76
Half-Year 2013 Report
38
42
39
44 - 69
71 -72
Italcementi Finance S.A.
2013 Annual Report
12 - 13
11
14 - 28
30 - 31
Italcementi Finance S.A.
2012 Annual Report
11 - 12
10
13 - 28
29 - 30
Any other information incorporated by reference that is not included in the cross-reference list above is
considered to be additional information to be disclosed to investors rather than information required by
the relevant Annexes of the Prospectus Regulation.
- 23 -
FORM OF THE NOTES
Each Tranche of Notes will be in bearer form and will be initially issued in the form of a temporary
global note (a "Temporary Global Note") or, if so specified in the applicable Final Terms, a permanent
global note (a "Permanent Global Note") which, in either case, will:
(i)
if the Global Notes are intended to be issued in new global note ("NGN") form, as stated in the
applicable Final Terms, be delivered on or prior to the original issue date of the Tranche to a
common safekeeper (the "Common Safekeeper") for Euroclear Bank SA/NV ("Euroclear") and
Clearstream Banking, société anonyme ("Clearstream, Luxembourg"); and
(ii)
if the Global Notes are not intended to be issued in NGN Form, be delivered on or prior to the
original issue date of the Tranche to a common depositary (the "Common Depositary") for
Euroclear and Clearstream, Luxembourg.
Where the Global Notes issued in respect of any Tranche are in NGN form, the applicable Final Terms
will also indicate whether such Global Notes are intended to be held in a manner which would allow
Eurosystem eligibility. Any indication that the Global Notes are to be so held does not necessarily mean
that the Notes of the relevant Tranche will be recognised as eligible collateral for Eurosystem monetary
policy and intra-day credit operations by the Eurosystem either upon issue or at any times during their life
as such recognition depends upon satisfaction of the Eurosystem eligibility criteria. The Common
Safekeeper for NGNs will either be Euroclear or Clearstream, Luxembourg or another entity approved by
Euroclear and Clearstream, Luxembourg, as indicated in the applicable Final Terms.
Whilst any Note is represented by a Temporary Global Note, payments of principal, interest (if any) and
any other amount payable in respect of the Notes due prior to the Exchange Date (as defined below) will
be made (against presentation of the Temporary Global Note if the Temporary Global Note is not
intended to be issued in NGN form) only to the extent that certification (in a form to be provided) to the
effect that the beneficial owners of interests in such Note are not U.S. persons or persons who have
purchased for resale to any U.S. person, as required by U.S. Treasury regulations, has been received by
Euroclear and/or Clearstream, Luxembourg and Euroclear and/or Clearstream, Luxembourg, as
applicable, has given a like certification (based on the certifications it has received) to the Agent.
On and after the date (the "Exchange Date") which is 40 days after a Temporary Global Note is issued,
interests in such Temporary Global Note will be exchangeable (free of charge) upon a request as
described therein either for (a) interests in a Permanent Global Note of the same Series or (b) for
definitive Notes of the same Series with, where applicable, interest coupons and talons attached (as
indicated in the applicable Final Terms and subject, in the case of definitive Notes, to such notice period
as is specified in the applicable Final Terms), in each case against certification of beneficial ownership as
described above unless such certification has already been given. The holder of a Temporary Global Note
will not be entitled to collect any payment of interest, principal or other amount due on or after the
Exchange Date unless, upon due certification, exchange of the Temporary Global Note for an interest in a
Permanent Global Note or for definitive Notes is improperly withheld or refused.
Payments of principal, interest (if any) or any other amounts on a Permanent Global Note will be made
through Euroclear and/or Clearstream, Luxembourg (against presentation or surrender (as the case may
be) of the Permanent Global Note if the Permanent Global Note is not intended to be issued in NGN
form) without any requirement for certification.
The applicable Final Terms will specify that a Permanent Global Note will be exchangeable (free of
charge), in whole but not in part, for definitive Notes with, where applicable, interest coupons and talons
attached upon either (a) not less than 60 days' written notice from Euroclear and/or Clearstream,
Luxembourg (acting on the instructions of any holder of an interest in such Permanent Global Note) to the
Agent as described therein or (b) only upon the occurrence of an Exchange Event. For these purposes,
"Exchange Event" means that (i) an Event of Default (as defined in Condition 9) has occurred and is
continuing, or (ii) the relevant Issuer has been notified that both Euroclear and Clearstream, Luxembourg
have been closed for business for a continuous period of 14 days (other than by reason of holiday,
statutory or otherwise) or have announced an intention permanently to cease business or have in fact done
so and no successor clearing system is available or (iii) the relevant Issuer has or will become subject to
adverse tax consequences which would not be suffered were the Notes represented by the Permanent
Global Note in definitive form. The relevant Issuer will promptly give notice to Noteholders in
- 24 -
accordance with Condition 13 if an Exchange Event occurs. In the event of the occurrence of an
Exchange Event, Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of
an interest in such Permanent Global Note) may give notice to the Agent requesting exchange and, in the
event of the occurrence of an Exchange Event as described in (iii) above, the relevant Issuer may also
give notice to the Agent requesting exchange. Any such exchange shall occur not later than 45 days after
the date of receipt of the first relevant notice by the Agent.
The following legend will appear on all Notes which have an original maturity of more than one year and
on all interest coupons relating to such Notes:
"ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(J) AND 1287(A) OF THE INTERNAL REVENUE
CODE."
The sections referred to provide that United States holders, with certain exceptions, will not be entitled to
deduct any loss on Notes or interest coupons and will not be entitled to capital gains treatment in respect
of any gain on any sale, disposition, redemption or payment of principal in respect of such Notes, or
interest coupons.
Notes which are represented by a Global Note will only be transferable in accordance with the rules and
procedures for the time being of Euroclear or Clearstream, Luxembourg, as the case may be.
Pursuant to the Agency Agreement (as defined under "Terms and Conditions of the Notes"), the Agent
shall arrange that, where a further Tranche of Notes is issued which is intended to form a single Series
with an existing Tranche of Notes at a point after the Issue Date of the further Tranche, the Notes of such
further Tranche shall be assigned a common code and ISIN which are different from the common code
and ISIN assigned to Notes of any other Tranche of the same Series until such time as the Tranches are
consolidated and form a single series, which shall not be prior to the expiry of the distribution compliance
period (as defined in Regulation S under the Securities Act) applicable to the Notes of such Tranche.
Any reference herein to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so
permits, be deemed to include a reference to any additional or alternative clearing system specified in the
applicable Final Terms.
A Note may be accelerated by the holder thereof in certain circumstances described in Condition 9. In
such circumstances, where any Note is still represented by a Global Note and the Global Note (or any part
thereof) has become due and repayable in accordance with the Terms and Conditions of such Notes and
payment in full of the amount due has not been made in accordance with the provisions of the Global
Note then the Global Note will become void at 8.00 p.m. (London time) on such day. At the same time,
holders of interests in such Global Note credited to their accounts with Euroclear and/or Clearstream,
Luxembourg, as the case may be, will become entitled to proceed directly against the relevant Issuer on
the basis of statements of account provided by Euroclear and/or Clearstream, Luxembourg on and subject
to the terms of a deed of covenant (the "Deed of Covenant") dated 24 September 2014 and executed by
the Issuers.
- 25 -
APPLICABLE FINAL TERMS
Set out below is the Form of Final Terms which will be completed for each Tranche of Notes issued under
the Programme.
[DATE]
[Italcementi S.p.A.
(incorporated with limited liability in the Republic of Italy)]/
[Italcementi Finance S.A.
(incorporated with limited liability in the French Republic)]
Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]
[Guaranteed by Italcementi S.p.A.]
under the €2,000,000,000
Euro Medium Term Note Programme
PART A – CONTRACTUAL TERMS
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in
the Base Prospectus dated [date] [and the supplement[s] to it dated [date] [and [date]]] which [together]
constitute[s] a base prospectus for the purposes of the Prospectus Directive (the "Base Prospectus"). This
document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the
Prospectus Directive and must be read in conjunction with the Base Prospectus. Full information on the
Issuer[, the Guarantor] and the offer of the Notes is only available on the basis of the combination of
these Final Terms and the Base Prospectus. The Base Prospectus has been published on
www.italcementigroup.com and on www.italcementifinance.com and on the website of the Luxembourg
Stock Exchange (www.bourse.lu).
[The following alternative language applies if the first tranche of an issue which is being increased was
issued under a Base Prospectus with an earlier date.
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the
"Conditions") set forth in the Base Prospectus dated [original date] which are incorporated by reference
in the Base Prospectus dated [current date]. This document constitutes the Final Terms of the Notes
described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in
conjunction with the Base Prospectus dated [current date] [and the supplement[s] to it dated [date] [and
[date]]] which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive (the
"Base Prospectus"), including the Conditions incorporated by reference in the Base Prospectus. Full
information on the Issuer[, the Guarantor] and the offer of the Notes is only available on the basis of the
combination of these Final Terms and the Base Prospectus. The Base Prospectus has been published on
www.italcementigroup.com and on www.italcementifinance.com and on the website of the Luxembourg
Stock Exchange (www.bourse.lu). [Include whichever of the following apply or specify as "Not
Applicable" (N/A). Note that the numbering should remain as set out below, even if "Not Applicable" is
indicated for individual paragraphs or subparagraphs. Italics denote directions for completing the Final
Terms.]
The expression "Prospective Directive" means Directive 2003/71/EC (and amendments thereto, including
the 2010 PD Amendment Directive, to the extent implemented in the relevant Member State) and includes
any relevant implementing measures in the Relevant Member State and the expression "2010 PD
Amending Directive" means Directive 2010/73/EU.
If the Notes have a maturity of less than one year from the date of their issue, the minimum denomination
may need to be £100,000 or its equivalent in any other currency.]
1.
(a)
Series Number:
[
]
(b)
Tranche Number:
[
]
- 26 -
(c)
Date on which the Notes will be
consolidated and form a single
Series:
2.
Specified Currency or Currencies:
3.
Aggregate Nominal Amount:
The Notes will be consolidated and form a single
Series with [identify earlier Tranches] on [the
Issue Date/exchange of the Temporary Global
Note for interests in the Permanent Global Note,
as referred to in paragraph 22 below, which is
expected to occur on or about [date]][Not
Applicable]
[
]
(a)
Series:
[
]
(b)
Tranche:
[
]
4.
Issue Price:
[ ] per cent. of the Aggregate Nominal Amount
[plus accrued interest from [insert date] (if
applicable)]
5.
(a)
[
Specified Denominations:
]
(N.B. Notes must have a minimum denomination
of EUR 100,000 (or equivalent))
(Note – where multiple denominations above
[€100,000] or equivalent are being used the
following sample wording should be followed:
"[€100,000] and integral multiples of [€1,000] in
excess thereof up to and including [€199,000]. No
Notes in definitive form will be issued with a
denomination above [€199,000].")
(b)
Calculation Amount:
[
]
(If only one Specified Denomination, insert the
Specified Denomination.
If more than one Specified Denomination, insert
the highest common factor. Note: There must be a
common factor in the case of two or more
Specified Denominations.)
6.
(a)
Issue Date:
[
]
(b)
Interest Commencement Date:
[specify/Issue Date/Not Applicable]
(N.B. An Interest Commencement Date will not be
relevant for certain Notes, for example Zero
Coupon Notes.)
7.
Maturity Date:
[Fixed rate - specify date/
Floating rate - Interest Payment Date falling in or
nearest to [specify month and year]]
8.
Interest Basis:
[[
] per cent. Fixed Rate]
[[ ] month [LIBOR/EURIBOR] +/- [
cent. Floating Rate]
- 27 -
] per
[Zero Coupon]
(further particulars specified below)
9.
Redemption/Payment Basis:
10.
Change
of
Interest
Redemption/Payment Basis:
11.
Put/Call Options:
Subject to any purchase and cancellation or early
redemption, the Notes will be redeemed on the
Maturity Date at 100 / [ ] per cent. of their
nominal amount.
Basis
or
[Specify the date when any fixed to floating rate
change occurs or cross refer to paragraphs 14
and 15 below and identify there] [Not Applicable]
[Investor Put (Change of Control Put Option)]
[Issuer Call]
[(further particulars specified below)]
12.
[Date Board approval for issuance of Notes
[and Guarantee] obtained:
[
] [and [
], respectively]]
(N.B. Only relevant where Board (or similar)
authorisation is required for the particular
tranche of Notes or Guarantee)
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
13.
Fixed Rate Note Provisions
[Applicable/Not Applicable]
(If not applicable, delete the
subparagraphs of this paragraph)
remaining
(a)
Rate(s) of Interest:
[ ] per cent. per annum payable in arrear on
each Interest Payment Date
(b)
Interest Payment Date(s):
[ ] in each year up to and including the
Maturity Date
(N.B. Amend appropriately in the case of
irregular coupons)
(c)
Fixed Coupon Amount(s):
[
] per Calculation Amount
(Applicable to Notes in definitive
form.)
(d)
Broken Amount(s):
(Applicable to Notes in definitive
form.)
[[ ] per Calculation Amount, payable on the
Interest Payment Date falling [in/on] [ ]][Not
Applicable]
(e)
Day Count Fraction:
[30/360] [Actual/Actual (ICMA)]
(f)
[Determination Date(s):
[[
] in each year][Not Applicable]
(Only relevant where Day Count Fraction is
Actual/Actual (ICMA). In such a case, insert
regular interest payment dates, ignoring issue
date or maturity date in the case of a long or
short first or last coupon)
- 28 -
14.
Floating Rate Note Provisions
[Applicable/Not Applicable]
(If not applicable, delete the
subparagraphs of this paragraph)
remaining
(a)
Specified Period(s)/Specified
Interest Payment Dates:
[
(b)
Business Day Convention:
[Floating Rate Convention/Following Business
Day Convention/Modified Following Business
Day Convention/ Preceding Business Day
Convention]
(c)
Additional Business Centre(s):
[
(d)
Manner in which the Rate of
Interest and Interest Amount is to be
determined:
[Screen Rate Determination/ISDA Determination
(e)
Party responsible for calculating the
Rate of Interest and Interest Amount
(if not the Agent
[
(f)
Screen Rate Determination:
]
]
]
(i)
Reference Rate:
Reference Rate: [
(ii)
Interest
Date(s):
[
Determination
] month [LIBOR/EURIBOR]
]
(Second London business day prior to the start of
each Interest Period if LIBOR (other than Sterling
or euro LIBOR), first day of each Interest Period
if Sterling LIBOR and the second day on which
the TARGET2 System is open prior to the start of
each Interest Period if EURIBOR or euro LIBOR)
(iii)
Relevant Screen Page:
[
]
(In the case of EURIBOR, if not Reuters
EURIBOR01 ensure it is a page which shows a
composite rate or amend the fallback provisions
appropriately)
(g)
ISDA Determination:
(i)
Floating Rate Option:
[
]
(ii)
Designated Maturity:
[
]
(iii)
Reset Date:
[
]
(the first day of the Interest Period)
(h)
Linear interpolation:
Not Applicable/Applicable – the Rate of Interest
for the [long/short] [first/last] Interest Period shall
be calculated using Linear Interpolation (specify
for each short or long interest period)]
(i)
Margin(s):
[+/-][
(j)
Minimum Rate of Interest:
[
- 29 -
] per cent. per annum
] per cent. per annum
(k)
Maximum Rate of Interest:
[
] per cent. per annum
(l)
Day Count Fraction:
[Actual/Actual (ISDA)
Actual/365 (Fixed)
Actual/365 (Sterling)
Actual/360
[30/360][360/360][Bond Basis]
[30E/360][Eurobond Basis]
30E/360 (ISDA)
Other]
(See Condition 4 for alternatives)
15.
Zero Coupon Note Provisions
[Applicable/Not Applicable]
(If not applicable, delete the
subparagraphs of this paragraph)
(a)
Accrual Yield:
[
] per cent. per annum
(b)
Reference Price:
[
]
(c)
Day Count Fraction in relation to
Early Redemption Amounts:
[30/360]
remaining
[Actual/360]
[Actual/365]
PROVISIONS RELATING TO REDEMPTION
16.
17.
Notice
periods
for
Condition
6.2
(Redemption and Purchase – Redemption for
taxation reasons):
Minimum period: [
] days
Maximum period: [
] days
Issuer Call:
[Applicable/Not Applicable]
(If not applicable, delete the
subparagraphs of this paragraph)
(a)
Optional Redemption Date(s):
[
(b)
Optional Redemption Amount:
[[
(c)
If redeemable in part:
(d)
]
] per Calculation Amount]
(i)
Minimum
Amount:
Redemption
[
]
(ii)
Maximum
Amount:
Redemption
[
]
Notice periods:
Minimum period: [
] days
Maximum period: [
] days
- 30 -
remaining
(N.B. If setting notice periods which are different
to those provided in the Conditions, the Issuer is
advised to consider the practicalities of
distribution
of
information
through
intermediaries, for example, clearing systems
(which require a minimum of 5 business days'
notice for a call) and custodians, as well as any
other notice requirements which may apply, for
example, as between the Issuer and the Agent)
18.
Investor Put (Change of Control Put
Option):
[Applicable/Not Applicable]
(a)
Optional Redemption Amount:
[[
(b)
Notice period (if other than as set
out in the Conditions):
Minimum period: [
] days
Maximum period: [
] days
(If not applicable, delete the
subparagraphs of this paragraph)
remaining
] per Calculation Amount]
(N.B. When setting notice periods, the Issuer is
advised to consider the practicalities of
distribution
of
information
through
intermediaries, for example, clearing systems
(which require a minimum of 15 business days'
notice for a put) and custodians, as well as any
other notice requirements which may apply, for
example, as between the Issuer and the Agent)
19.
Final Redemption Amount:
[[
] per Calculation Amount]
20.
Early Redemption Amount payable on
redemption for taxation reasons or on event
of default:
[[
] per Calculation Amount]
GENERAL PROVISIONS APPLICABLE TO THE NOTES
21.
Form of Notes:
(a)
Form:
[Temporary Global Note exchangeable for a
Permanent Global Note which is exchangeable for
Definitive Notes [on 60 days' notice given at any
time/only upon an Exchange Event]]
[Temporary Global Note exchangeable for
Definitive Notes on and after the Exchange Date]
[Permanent Global Note exchangeable for
Definitive Notes [on 60 days' notice given at any
time/only upon an Exchange Event/at any time at
the request of the Issuer]]
(Ensure that this is consistent with the wording in
the "Form of the Notes" section in the Base
Prospectus and the Notes themselves.
N.B. The exchange upon notice/at any time
options should not be expressed to be applicable
if the Specified Denomination of the Notes in
paragraph 5 includes language substantially to
the following effect: "[€100,000] and integral
- 31 -
multiples of [€1,000] in excess thereof up to and
including [€199,000]." Furthermore, such
Specified Denomination construction is not
permitted in relation to any issue of Notes which
is to be represented on issue by a Temporary
Global Note exchangeable for Definitive Notes.)
(b)
22.
New Global Note:
[Yes][No]
Additional Financial Centre(s):
[Not Applicable/give details]
(Note that this paragraph relates to the place of
payment and not Interest Period end dates to
which sub-paragraphs 14(c) relates)
23.
Talons for future Coupons to be attached to
Definitive Notes:
[Yes, as the Notes have more than 27 coupon
payments, Talons may be required if, on exchange
into definitive form, more than 27 coupon
payments are still to be made/No]
[[Relevant third party information] has been extracted from [specify source]. The Issuer [and the
Guarantor] confirm[s] that such information has been accurately reproduced and that, so far as it is aware
and is able to ascertain from information published by [specify source], no facts have been omitted which
would render the reproduced information inaccurate or misleading.
Signed on behalf of the Issuer:
[Signed on behalf of the Guarantor:
By: ...........................................................................
Duly authorised
By: ...........................................................................
Duly authorised]
- 32 -
PART B – OTHER INFORMATION
1.
2.
LISTING AND ADMISSION TO TRADING
(i)
Listing and Admission to trading:
[Application has been made by the Issuer (or on
its behalf) for the Notes to be admitted to trading
on the Luxembourg Stock Exchange's regulated
market, and listed on the Official List of the
Luxembourg Stock Exchange with effect from
[ ].] [Application is expected to be made by the
Issuer (or on its behalf) for the Notes to be
admitted to trading on the Luxembourg Stock
Exchange's regulated market, and on the Official
List of the Luxembourg Stock Exchange with
effect from [ ].]/[Not Applicable]
(ii)
Estimate of total expenses related to
admission to trading:
[
]
RATINGS
[The Notes to be issued [[have been]/[are
expected to be]] rated]/[The following
ratings reflect ratings assigned to Notes of
this type issued under the Programme
generally]:
[insert details]] by [insert the legal name of
the relevant credit rating agency entity(ies)
and associated defined terms].
[Need to include a brief explanation of the
meaning of the ratings if this has previously
been published by the rating provider.]
(The above disclosure should reflect the
rating allocated to Notes of the type being
issued under the Programme generally or,
where the issue has been specifically rated,
that rating.)
3.
INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE
[Save for any fees payable to the [Managers/Dealers], so far as the Issuer is aware, no person
involved in the issue of the Notes has an interest material to the offer. The [Managers/Dealers]
and their affiliates have engaged, and may in the future engage, in investment banking and/or
commercial banking transactions with, and may perform other services for, the Issuer [and the
Guarantor] and [its/their] affiliates in the ordinary course of business - Amend as appropriate if
there are other interests]]
[(When adding any other description, consideration should be given as to whether such matters
described constitute "significant new factors" and consequently trigger the need for a supplement
to the Base Prospectus under Article 16 of the Prospectus Directive.)]
4.
YIELD (FIXED RATE NOTES ONLY)
Indication of yield:
5.
[
]
[
]
OPERATIONAL INFORMATION
(i)
ISIN Code:
- 33 -
(ii)
Common Code:
[
]
(iii)
Any clearing system(s) other than
Euroclear Bank SA/NV and
Clearstream Banking, société
anonyme and the relevant
identification number(s):
[Not Applicable/give name(s) and number(s)]
(iv)
Delivery:
Delivery [against/free of] payment
(v)
Names and addresses of additional
Paying Agent(s) (if any):
[
(vi)
Deemed delivery of clearing system
notices for the purposes of
Condition 13 (Notices):
Any notice delivered to Noteholders through the
clearing systems will be deemed to have been
given on the [second] [business] day after the day
on which it was given to Euroclear and
Clearstream, Luxembourg.
[(vii)
Intended to be held in a manner
which would allow Eurosystem
eligibility:
[Yes] [No]
]
[Note that the designation "yes" simply means
that the Notes are intended upon issue to be
deposited with one of the ICSDs as common
safekeeper and does not necessarily mean that the
Notes will be recognised as eligible collateral for
Eurosystem monetary policy and intra-day credit
operations by the Eurosystem either upon issue or
at any or all times during their life. Such
recognition will depend upon satisfaction of the
Eurosystem eligibility criteria.]
No. Whilst the designation is specified as "no" at
the date of these Final Terms, should the
Eurosystem eligibility criteria be amended in the
future such that the Notes are capable of meeting
them the Notes may then be deposited with one of
the ICSDs as common safekeeper. Note that this
does not necessarily mean that the Notes will then
be recognised as eligible collateral for
Eurosystem monetary policy and intra day credit
operations by the Eurosystem at any time during
their life. Such recognition will depend upon the
ECB being satisfied that Eurosystem eligibility
criteria have been met.]]
6.
DISTRIBUTION
(i)
Method of distribution:
[Syndicated/Non-syndicated]
(ii)
If syndicated, namesof Managers:
[Not Applicable/give names]
(iii)
Stabilising Manager(s) (if any):
[Not Applicable/give name]
(iv)
If non-syndicated, name of relevant
Dealer:
[Not Applicable/give name]
(v)
U.S. Selling Restrictions:
Reg. S Compliance Category [2]; [TEFRA
D/TEFRA C/TEFRA not applicable]
- 34 -
TERMS AND CONDITIONS OF THE NOTES
The following are the Terms and Conditions of the Notes which will be incorporated by reference into
each Global Note (as defined below) and each definitive Note, in the latter case only if permitted by the
relevant stock exchange or other relevant authority (if any) and agreed by the relevant Issuer and the
relevant Dealer at the time of issue but, if not so permitted and agreed, such definitive Note will have
endorsed thereon or attached thereto such Terms and Conditions. The applicable Final Terms (or the
relevant provisions thereof) will be endorsed upon, or attached to, each Global Note and definitive Note.
Reference should be made to "Applicable Final Terms" for a description of the content of Final Terms
which will specify which of such terms are to apply in relation to the relevant Notes.
This Note is one of a Series (as defined below) of Notes issued by Italcementi S.p.A. or Italcementi
Finance S.A., as specified in the applicable Final Terms (as defined below), and references to the
"Issuer" shall be construed accordingly. This Note is issued pursuant to the Agency Agreement (as
defined below).
References herein to the "Notes" shall be references to the Notes of this Series and shall mean:
(a)
in relation to any Notes represented by a global Note (a "Global Note"), units of each Specified
Denomination in the Specified Currency;
(b)
any Global Note; and
(c)
any definitive Notes issued in exchange for a Global Note.
The Notes and the Coupons (as defined below) have the benefit of an Agency Agreement (such Agency
Agreement as amended and/or supplemented and/or restated from time to time, the "Agency
Agreement") dated 24 September 2014 and made between Italcementi S.p.A. in its capacity both as an
Issuer and as guarantor (the "Guarantor"), Italcementi Finance S.A., BNP Paribas Securities Services,
Luxembourg Branch as issuing and principal paying agent and agent bank (the "Agent", which
expression shall include any successor agent) and the other paying agents named therein (together with
the Agent, the "Paying Agents", which expression shall include any additional or successor paying
agents).
Interest bearing definitive Notes have interest coupons ("Coupons") and, if indicated in the applicable
Final Terms, talons for further Coupons ("Talons") attached on issue. Any reference herein to Coupons or
coupons shall, unless the context otherwise requires, be deemed to include a reference to Talons or talons.
Global Notes do not have Coupons or Talons attached on issue.
The final terms for this Note (or the relevant provisions thereof) are set out in Part A of the Final Terms
attached to or endorsed on this Note which supplement these Terms and Conditions (the "Conditions").
References to the "applicable Final Terms" are, unless otherwise stated, to Part A of the Final Terms (or
the relevant provisions thereof) attached to or endorsed on this Note.
The payment of all amounts in respect of Notes issued by Italcementi Finance S.A. have been guaranteed
by the Guarantor pursuant to a guarantee (the "Guarantee") dated 24 September 2014 and executed by
the Guarantor. The original of the Guarantee is held by the Agent on behalf of the Noteholders and the
Couponholders at its specified office.
Any reference to "Noteholders" or "holders" in relation to any Notes shall mean the holders of the Notes
and shall, in relation to any Notes represented by a Global Note, be construed as provided below. Any
reference herein to "Couponholders" shall mean the holders of the Coupons and shall, unless the context
otherwise requires, include the holders of the Talons.
As used herein, "Tranche" means Notes which are identical in all respects (including as to listing and
admission to trading) and "Series" means a Tranche of Notes together with any further Tranche or
Tranches of Notes which are (a) expressed to be consolidated and form a single series and (b) identical in
all respects (including as to listing and admission to trading) except for their respective Issue Dates,
Interest Commencement Dates and/or Issue Prices.
The Noteholders and the Couponholders are entitled to the benefit of the Deed of Covenant (the "Deed of
Covenant") dated 24 September 2014 and made by the Issuers. The original of the Deed of Covenant is
- 35 -
held by the common depositary for Euroclear (as defined below) and Clearstream, Luxembourg (as
defined below).
Copies of the Agency Agreement, the Guarantee and the Deed of Covenant are available for inspection
during normal business hours at the specified office of each of the Paying Agents. The Base Prospectus
and, in the case of Notes admitted to trading on the regulated market of the Luxembourg Stock Exchange,
the applicable Final Terms will be published on the website of the Luxembourg Stock Exchange
(www.bourse.lu).
The Noteholders and the Couponholders are deemed to have notice of, and are entitled to the benefit of,
all the provisions of the Agency Agreement, the Guarantee (in the case of Notes issued by Italcementi
Finance S.A.), the Deed of Covenant and the applicable Final Terms which are applicable to them. The
statements in the Conditions include summaries of, and are subject to, the detailed provisions of the
Agency Agreement.
Words and expressions defined in the Agency Agreement or used in the applicable Final Terms shall have
the same meanings where used in the Conditions unless the context otherwise requires or unless otherwise
stated and provided that, in the event of inconsistency between the Agency Agreement and the
applicable Final Terms, the applicable Final Terms will prevail.
1.
FORM, DENOMINATION AND TITLE
The Notes are in bearer form and, in the case of definitive Notes, serially numbered, in the
currency (the "Specified Currency") and the denominations (the "Specified Denomination(s) ")
specified in the applicable Final Terms. Notes of one Specified Denomination may not be
exchanged for Notes of another Specified Denomination.
This Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note or a
combination of any of the foregoing, depending upon the Interest Basis shown in the applicable
Final Terms.
Definitive Notes are issued with Coupons attached, unless they are Zero Coupon Notes in which
case references to Coupons and Couponholders in the Conditions are not applicable.
Subject as set out below, title to the Notes, and Coupons will pass by delivery. The Issuer, the
Guarantor (in the case of Notes issued by Italcementi Finance S.A.) and the Paying Agents will
(except as otherwise required by law) deem and treat the bearer of any Note or Coupon as the
absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or
writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of
any Global Note, without prejudice to the provisions set out in the next succeeding paragraph.
For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear Bank
SA/NV ("Euroclear") and/or Clearstream Banking, société anonyme ("Clearstream,
Luxembourg"), each person (other than Euroclear or Clearstream, Luxembourg) who is for the
time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a
particular nominal amount of such Notes (in which regard any certificate or other document
issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of such Notes
standing to the account of any person shall be conclusive and binding for all purposes save in the
case of manifest error) shall be treated by the Issuer, the Guarantor (in the case of Notes issued
by Italcementi Finance S.A.) and the Paying Agents as the holder of such nominal amount of
such Notes for all purposes other than with respect to the payment of principal or interest on such
nominal amount of such Notes, for which purpose the bearer of the relevant Global Note shall be
treated by the Issuer, the Guarantor (in the case of Notes issued by Italcementi Finance S.A.) and
any Paying Agent as the holder of such nominal amount of such Notes in accordance with and
subject to the terms of the relevant Global Note and the expressions "Noteholder" and "holder
of Notes" and related expressions shall be construed accordingly.
Notes which are represented by a Global Note will be transferable only in accordance with the
rules and procedures for the time being of Euroclear and Clearstream, Luxembourg, as the case
may be. References to Euroclear and/or Clearstream, Luxembourg shall, whenever the context so
- 36 -
permits, be deemed to include a reference to any additional or alternative clearing system
specified in Part B of the applicable Final Terms.
2.
STATUS OF THE NOTES AND THE GUARANTEE
2.1
Status of the Notes
The Notes and any relative Coupons are direct, unconditional, unsubordinated and (subject to the
provisions of Condition 3) unsecured obligations of the Issuer and rank pari passu among
themselves and (save for certain obligations required to be preferred by law) equally with all
other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time
to time outstanding.
2.2
Status of the Guarantee
Applicable in the case of Notes issued by Italcementi Finance S.A.
The Guarantor has in the Guarantee unconditionally and irrevocably guaranteed the payment of
all principal and interest and other sums from time to time payable in respect of Notes issued by
Italcementi Finance S.A. and any relevant Coupons. The obligations of the Guarantor under the
Guarantee are direct, unconditional, unsubordinated and (subject to the provisions of Condition
3) unsecured obligations of the Guarantor and (save for certain obligations required to be
preferred by law) rank equally with all other unsecured obligations (other than subordinated
obligations, if any) of the Guarantor, from time to time outstanding.
3.
NEGATIVE PLEDGE
3.1
So long as any of the Notes or, if applicable, any Coupons relating to them, remain outstanding,
the Issuer and (in the case of Notes issued by Italcementi Finance S.A.) the Guarantor will not,
and the Issuer (in the case of Notes issued by Italcementi S.p.A.) or the Guarantor (in the case of
Notes issued by Italcementi Finance S.A.) will ensure that no Principal Subsidiary will, create or
permit to subsist any mortgage, charge, pledge, lien or other security interest (each a "Security
Interest"), other than a Permitted Security, upon any of its or their respective assets or revenues,
present or future, to secure any Relevant Indebtedness or any guarantee or indemnity in respect
of any Relevant Indebtedness (whether before or after the issue of Notes) unless:
3.2
(a)
the Issuer's obligations under the Notes, and Coupons and (in the case of Notes issued by
Italcementi Finance S.A.) the Guarantor's obligations under the Guarantee are equally
and rateably secured so as to rank pari passu with such Relevant Indebtedness or such
guarantee or indemnity in respect thereof; or
(b)
such other security interest or other arrangement is provided as may be approved by an
Extraordinary Resolution (as defined in the Agency Agreement) of the Noteholders.
Definitions
In these Conditions:
"Permitted Security" means any Security Interest:
(i)
arising by operation of law; or
(ii)
existing on the date on which agreement is reached to issue the first Tranche of the Notes;
or
(iii)
created by any entity upon the whole or any part of its undertaking or assets and
subsisting at the time such entity (A) merges or consolidates with or is demerged,
contributed or merged into or transferred to the Issuer, the Guarantor or a Principal
Subsidiary, (B) becomes a Principal Subsidiary or (C) sells, contributes or transfers all or
substantially all of its assets to the Issuer, the Guarantor or a Principal Subsidiary,
provided, in each case, that such Security Interest was not created in connection with, or
in contemplation of, such merger, consolidation, demerger, contribution, transfer or sale
- 37 -
or such entity becoming a Principal Subsidiary and provided further that the amount of
Relevant Indebtedness secured by such Security Interest is not subsequently increased;
or
(iv)
created over (A) the receivables of a Securitisation Entity (and any bank account to
which such proceeds are deposited) which are subject to a Non-recourse Securitisation as
security for Non-recourse Securitisation Debt raised by such Securitisation Entity in
respect of such receivables; and/or (B) the shares or other interests owned by any
member of the Italcementi Group in any Securitisation Entity as security for Nonrecourse Securitisation Debt raised by such Securitisation Entity, provided, in each case,
that the receivables or revenues which are the subject of the relevant Non-recourse
Securitisation comprise all or substantially all of the business of such Securitisation
Entity, or any Security Interest created in order to extend, renew or replace, in whole or
in part, any Security Interest referred to in this paragraph (or any successive extensions,
renewals or replacements thereof) or extend, renew or refinance any Relevant
Indebtedness secured by any Security Interest permitted by this paragraph;
"Relevant Indebtedness" means any present or future indebtedness for borrowed money
represented by notes or other securities which are for the time being, or are capable of being,
quoted, listed or ordinarily dealt in on any stock exchange, over-the-counter- or other securities
market;
"Person" means any individual, company, corporation, firm, partnership, joint venture,
association, organisation, state or agency of a state or other entity, whether or not having separate
legal personality;
"Principal Subsidiary" means at any relevant time a Subsidiary of Italcementi S.p.A.:
(i)
whose accounts are consolidated with those of Italcementi S.p.A. and whose net
revenues or whose net total assets, represent not less than 10 per cent. of the
consolidated net revenues or, as the case may be, consolidated net total assets of
Italcementi S.p.A., all as calculated by reference to the then latest audited accounts of
such Subsidiary and the then latest audited consolidated accounts of Italcementi S.p.A.;
or
(ii)
which is required to publish consolidated accounts under the applicable local laws and
regulations and whose consolidated net revenues or consolidated net total assets,
represent not less than 10 per cent. of the consolidated net revenues or, as the case may
be, consolidated net total assets of Italcementi S.p.A., all as calculated by reference to
the then latest audited consolidated accounts of such Subsidiary and the then latest
audited consolidated accounts of Italcementi S.p.A.; or
(iii)
to which is transferred the whole or substantially the whole of the undertaking of a
Subsidiary of Italcementi S.p.A. which immediately before the transfer was a Principal
Subsidiary under either paragraph (i) or (ii) above;
provided that, for the purposes of Condition 9(g) only and, for the avoidance of doubt, not in
connection with any other of the Conditions, "Principal Subsidiary" will not include any
Subsidiary of Italcementi S.p.A. that is not located or domiciled in an OECD Member Country;
"OECD Member Country" means a country that is a member of the Organisation for Economic
Cooperation and Development or any successor organisation thereof (or, to the extent that the
Organisation for Economic Cooperation and Development or a successor organisation no longer
exists, was a member thereof at the time the relevant organisation ceased to exist);
A report by the auditors of Italcementi S.p.A. that in their opinion a Subsidiary of Italcementi
S.p.A. is or is not or was or was not at any particular time or throughout any Specified Period a
Principal Subsidiary will, in the absence of manifest error, be conclusive and binding on all
parties;
- 38 -
"Optional Redemption Amount" means, in respect of any Note, its principal amount or such
other amount as may be specified in, or determined in accordance with, the relevant Final Terms,
which shall be at least equal to the Aggregate Nominal Amount of the relevant Series;
"Aggregate Nominal Amount" has the meaning given in the relevant Final Terms;
"Subsidiary" means, in relation to any Person (the first Person) at any particular time, any other
Person (the second Person):
(i)
whose affairs and policies the first Person directly or indirectly controls or has the power
to control, whether by ownership of share capital or contract, the power to appoint or
remove members of the governing body of the second Person or otherwise; or
(ii)
whose financial statements are, in accordance with applicable law and generally
accepted accounting principles, consolidated with those of the first Person;
"Italcementi Group" means Italcementi S.p.A. and its Subsidiaries;
"Securitisation Entity" means any special purpose vehicle created for the sole purpose of
carrying out, or otherwise used solely for the purpose of carrying out a Non-recourse
Securitisation or any other Subsidiary of Italcementi S.p.A. which is effecting Non-recourse
Securitisations;
"Non-recourse Securitisation" means any securitisation, asset backed financing or transaction
having similar effect under which an entity (or entities in related transactions) on commercially
reasonable terms:
(i)
acquires receivables for principally cash consideration or uses existing receivables; and
(ii)
issues any notes, bonds, commercial paper, loans or other securities (whether or not
listed on a recognised stock exchange) to fund the purchase of or otherwise backed by
those receivables and/or any shares or other interests falling under the scope of item
(v)(B) of the Permitted Security definition and the payment obligations in respect of
such notes, bonds, commercial paper, loans or other securities:
(A)
are secured on those receivables, provided that if the relevant Securitisation
Entity is a Principal Subsidiary of Italcementi S.p.A., the aggregate book value
of the assets over which such Security Interest is created does not exceed, at any
time, 10 per cent. of the consolidated net assets of Italcementi S.p.A. and its
Subsidiaries taken as a whole; and
(B)
are not guaranteed by any member of the Italcementi Group (other than as a
result of any Security Interest which is granted by any member of the
Italcementi Group in accordance with item (v)(B) of the Permitted Security
definition or as to the extent of any Standard Securitisation Undertakings);
"Non-recourse Securitisation Debt" means any Relevant Indebtedness incurred by a
Securitisation Entity pursuant to a securitisation of receivables where the recourse in respect of
that Relevant Indebtedness to the Issuer or the Guarantor or a Principal Subsidiary is limited to:
(i)
those receivables and/or related insurance and/or any Standard Securitisation
Undertakings; and
(ii)
if those receivables comprise all or substantially all of the business or assets of such
Securitisation Entity, the shares or other interests of any member of the Italcementi
Group in such Securitisation Entity; and
"Standard Securitisation Undertakings" means representations, warranties, covenants and
indemnities entered into by any member of the Italcementi Group from time to time which are
customary in relation to Non-recourse Securitisations, including any performance undertakings
with respect to servicing obligations or undertakings with respect to breaches of representations
or warranties.
- 39 -
4.
INTEREST
4.1
Interest on Fixed Rate Notes
Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the
rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest
Payment Date(s) in each year up to (and including) the Maturity Date.
If the Notes are in definitive form, except as provided in the applicable Final Terms, the amount
of interest payable on each Interest Payment Date in respect of the Fixed Interest Period ending
on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on
any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the
Broken Amount so specified.
As used in the Conditions, "Fixed Interest Period" means the period from (and including) an
Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first)
Interest Payment Date.
Except in the case of Notes in definitive form where an applicable Fixed Coupon Amount or
Broken Amount is specified in the applicable Final Terms, interest shall be calculated in respect
of any period by applying the Rate of Interest to:
(A)
in the case of Fixed Rate Notes which are represented by a Global Note, the aggregate
outstanding nominal amount of the Fixed Rate Notes represented by such Global Note
(or, if they are Partly Paid Notes, the aggregate amount paid up); or
(B)
in the case of Fixed Rate Notes in definitive form, the Calculation Amount;
and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the
resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such subunit being rounded upwards or otherwise in accordance with applicable market convention.
Where the Specified Denomination of a Fixed Rate Note in definitive form is a multiple of the
Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be
the product of the amount (determined in the manner provided above) for the Calculation
Amount and the amount by which the Calculation Amount is multiplied to reach the Specified
Denomination, without any further rounding.
"Day Count Fraction" means, in respect of the calculation of an amount of interest in
accordance with this Condition 4.1:
(a)
if "Actual/Actual (ICMA)" is specified in the applicable Final Terms:
(i)
in the case of Notes where the number of days in the relevant period from (and
including) the most recent Interest Payment Date (or, if none, the Interest
Commencement Date) to (but excluding) the relevant payment date (the
"Accrual Period") is equal to or shorter than the Determination Period during
which the Accrual Period ends, the number of days in such Accrual Period
divided by the product of (I) the number of days in such Determination Period
and (II) the number of Determination Dates (as specified in the applicable Final
Terms) that would occur in one calendar year; or
(ii)
in the case of Notes where the Accrual Period is longer than the Determination
Period during which the Accrual Period ends, the sum of:
(A)
the number of days in such Accrual Period falling in the Determination
Period in which the Accrual Period begins divided by the product of (x)
the number of days in such Determination Period and (y) the number of
Determination Dates that would occur in one calendar year; and
(B)
the number of days in such Accrual Period falling in the next
Determination Period divided by the product of (x) the number of days
- 40 -
in such Determination Period and (y) the number of Determination
Dates that would occur in one calendar year; and
(b)
if "30/360" is specified in the applicable Final Terms, the number of days in the period
from (and including) the most recent Interest Payment Date (or, if none, the Interest
Commencement Date) to (but excluding) the relevant payment date (such number of
days being calculated on the basis of a year of 360 days with 12 30-day months) divided
by 360.
In the Conditions:
"Calculation Amount" has the meaning given in the relevant Final Terms;
"Determination Period" means each period from (and including) a Determination Date to (but
excluding) the next Determination Date (including, where either the Interest Commencement
Date or the final Interest Payment Date is not a Determination Date, the period commencing on
the first Determination Date prior to, and ending on the first Determination Date falling after,
such date);
"Fixed Coupon Amount" has the meaning given in the relevant Final Terms;
"Rate of Interest" means the rate or rates (expressed as a percentage per annum) of interest
payable in respect of the Notes specified in the relevant Final Terms or calculated or determined
in accordance with the provisions of these Conditions and/or the relevant Final Terms; and
"sub-unit" means, with respect to any currency other than euro, the lowest amount of such
currency that is available as legal tender in the country of such currency and, with respect to
euro, one cent.
4.2
Interest on Floating Rate Notes
(a)
Interest Payment Dates
Each Floating Rate Note bears interest from (and including) the Interest Commencement
Date and such interest will be payable in arrear on either:
(i)
the Specified Interest Payment Date(s) in each year specified in the applicable
Final Terms; or
(ii)
if no Specified Interest Payment Date(s) is/are specified in the applicable Final
Terms, each date (each such date, together with each Specified Interest Payment
Date, an "Interest Payment Date") which falls the number of months or other
period specified as the Specified Period in the applicable Final Terms after the
preceding Interest Payment Date or, in the case of the first Interest Payment
Date, after the Interest Commencement Date.
Such interest will be payable in respect of each Interest Period. In the Conditions,
"Interest Period" means the period from (and including) an Interest Payment Date (or
the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment
Date).
If a Business Day Convention is specified in the applicable Final Terms and (x) if there
is no numerically corresponding day in the calendar month in which an Interest Payment
Date should occur or (y) if any Interest Payment Date would otherwise fall on a day
which is not a Business Day, then, if the Business Day Convention specified is:
(A)
in any case where Specified Periods are specified in accordance with Condition
4.2(a)(i) above, the Floating Rate Convention, such Interest Payment Date (a) in
the case of (x) above, shall be the last day that is a Business Day in the relevant
month and the provisions of (ii) below shall apply mutatis mutandis or (b) in the
case of (y) above, shall be postponed to the next day which is a Business Day
unless it would thereby fall into the next calendar month, in which event (i) such
- 41 -
Interest Payment Date shall be brought forward to the immediately preceding
Business Day and (ii) each subsequent Interest Payment Date shall be the last
Business Day in the month which falls the Specified Period after the preceding
applicable Interest Payment Date occurred; or
(B)
the Following Business Day Convention, such Interest Payment Date shall be
postponed to the next day which is a Business Day; or
(C)
the Modified Following Business Day Convention, such Interest Payment Date
shall be postponed to the next day which is a Business Day unless it would
thereby fall into the next calendar month, in which event such Interest Payment
Date shall be brought forward to the immediately preceding Business Day; or
(D)
the Preceding Business Day Convention, such Interest Payment Date shall be
brought forward to the immediately preceding Business Day.
In the Conditions, "Business Day" means a day which is both:
(b)
(a)
a day on which commercial banks and foreign exchange markets settle
payments and are open for general business (including dealing in
foreign exchange and foreign currency deposits) in each Additional
Business Centre specified in the applicable Final Terms; and
(b)
either (i) in relation to any sum payable in a Specified Currency other
than euro, a day on which commercial banks and foreign exchange
markets settle payments and are open for general business (including
dealing in foreign exchange and foreign currency deposits) in the
principal financial centre of the country of the relevant Specified
Currency (if other than any Additional Business Centre and which if the
Specified Currency is Australian dollars or New Zealand dollars shall
be Sydney and Auckland, respectively) or (ii) in relation to any sum
payable in euro, a day on which the Trans-European Automated RealTime Gross Settlement Express Transfer (TARGET2) System (the
"TARGET2 System") is open.
Rate of Interest
The Rate of Interest payable from time to time in respect of Floating Rate Notes will be
determined in the manner specified in the applicable Final Terms.
(i)
ISDA Determination for Floating Rate Notes
Where ISDA Determination is specified in the applicable Final Terms as the
manner in which the Rate of Interest is to be determined, the Rate of Interest for
each Interest Period will be the relevant ISDA Rate plus or minus (as indicated
in the applicable Final Terms) the Margin (if any). For the purposes of this
subparagraph (i), "ISDA Rate" for an Interest Period means a rate equal to the
Floating Rate that would be determined by the Agent under an interest rate swap
transaction if the Agent were acting as Calculation Agent for that swap
transaction under the terms of an agreement incorporating the 2006 ISDA
Definitions, as published by the International Swaps and Derivatives
Association, Inc. and as amended and updated as at the Issue Date of the first
Tranche of the Notes (the "ISDA Definitions") and under which:
(A)
the Floating Rate Option is as specified in the applicable Final Terms;
(B)
the Designated Maturity is a period specified in the applicable Final
Terms; and
(C)
the relevant Reset Date is the day specified in the applicable Final
Terms.
- 42 -
If Linear Interpolation is specified as applicable in respect of an Interest Period
in the applicable Final Terms, the Rate of Interest for such Interest Period shall
be calculated by the Calculation Agent by straight-line linear interpolation by
reference to two rates based on the relevant Floating Rate Option, where:
(A)
one rate shall be determined as if the Designated Maturity were the
period of time for which rates are available next shorter than the length
of the relevant Interest Period; and
(B)
the other rate shall be determined as if the Designated Maturity were
the period of time for which rates are available next longer than the
length of the relevant Interest Period
provided, however, that if there is no rate available for a period of time next
shorter than the length of the relevant Interest Period or, as the case may be,
next longer than the length of the relevant Interest Period, then the Calculation
Agent shall determine such rate at such time and by reference to such sources as
it determines appropriate.
For the purposes of this subparagraph (i), "Floating Rate", "Calculation
Agent", "Floating Rate Option", "Designated Maturity" and "Reset Date"
have the meanings given to those terms in the ISDA Definitions.
Unless otherwise stated in the applicable Final Terms the Minimum Rate of
Interest shall be deemed to be zero.
(ii)
Screen Rate Determination for Floating Rate Notes
Where Screen Rate Determination is specified in the applicable Final Terms as
the manner in which the Rate of Interest is to be determined, the Rate of Interest
for each Interest Period will, subject as provided below, be either:
(A)
the offered quotation; or
(B)
the arithmetic mean (rounded if necessary to the fifth decimal place,
with 0.000005 being rounded upwards) of the offered quotations,
(expressed as a percentage rate per annum) for the Reference Rate (being either
London Interbank Offered Rate ("LIBOR") or Euro Interbank Offered Rate
("EURIBOR"), as specified
in the applicable Final Terms) which appears or appear, as the case may be, on
the Relevant Screen Page as at 11.00 a.m. (London time, in the case of LIBOR,
or Brussels time, in the case of EURIBOR) (the "Relevant Time") on the
Interest Determination Date in question plus or minus (as indicated in the
applicable Final Terms) the Margin (if any), all as determined by the Agent. If
five or more of such offered quotations are available on the Relevant Screen
Page, the highest (or, if there is more than one such highest quotation, one only
of such quotations) and the lowest (or, if there is more than one such lowest
quotation, one only of such quotations) shall be disregarded by the Agent for the
purpose of determining the arithmetic mean (rounded as provided above) of
such offered quotations.
If Linear Interpolation is specified as applicable in respect of an Interest Period
in the applicable Final Terms, the Rate of Interest for such Interest Period shall
be calculated by the Calculation Agent by straight-line linear interpolation by
reference to two rates which appear on the Relevant Screen Page as of the
Relevant Time on the relevant Interest Determination Date, where:
(A)
one rate shall be determined as if the relevant Interest Period were the
period of time for which rates are available next shorter than the length
of the relevant Interest Period; and
- 43 -
(B)
the other rate shall be determined as if the relevant Interest Period were
the period of time for which rates are available next longer than the
length of the relevant Interest Period;
provided, however, that if no rate is available for a period of time next shorter
or, as the case may be, next longer than the length of the relevant Interest
Period, then the Calculation Agent shall determine such rate at such time and by
reference to such sources as it determines appropriate.
The Agency Agreement contains provisions for determining the Rate of Interest
in the event that the Relevant Screen Page is not available or if, in the case of
(A) above, no such offered quotation appears or, in the case of (B) above, fewer
than three such offered quotations appear, in each case as at the time specified in
the preceding paragraph.
(c)
Minimum Rate of Interest and/or Maximum Rate of Interest
If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest
Period, then, in the event that the Rate of Interest in respect of such Interest Period
determined in accordance with the provisions of paragraph (b) above is less than such
Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such
Minimum Rate of Interest.
If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest
Period, then, in the event that the Rate of Interest in respect of such Interest Period
determined in accordance with the provisions of paragraph (b) above is greater than such
Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such
Maximum Rate of Interest.
(d)
Determination of Rate of Interest and calculation of Interest Amounts
The Agent will at or as soon as practicable after each time at which the Rate of Interest is
to be determined, determine the Rate of Interest for the relevant Interest Period.
The Agent will calculate the amount of interest (the "Interest Amount") payable on the
Floating Rate Notes for the relevant Interest Period by applying the Rate of Interest to:
(A)
in the case of Floating Rate Notes which are represented by a Global Note, the
aggregate outstanding nominal amount of the Notes represented by such Global
Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or
(B)
in the case of Floating Rate Notes in definitive form, the Calculation Amount;
and, in each case, multiplying such sum by the applicable Day Count Fraction, and
rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency,
half of any such sub-unit being rounded upwards or otherwise in accordance with
applicable market convention. Where the Specified Denomination of a Floating Rate
Note in definitive form is a multiple of the Calculation Amount, the Interest Amount
payable in respect of such Note shall be the product of the amount (determined in the
manner provided above) for the Calculation Amount and the amount by which the
Calculation Amount is multiplied to reach the Specified Denomination, without any
further rounding.
"Day Count Fraction" means, in respect of the calculation of an amount of interest in
accordance with this Condition 4.2:
(i)
if "Actual/Actual (ISDA)" or "Actual/Actual" is specified in the applicable Final
Terms, the actual number of days in the Interest Period divided by 365 (or, if any portion
of that Interest Period falls in a leap year, the sum of (I) the actual number of days in that
portion of the Interest Period falling in a leap year divided by 366 and (II) the actual
number of days in that portion of the Interest Period falling in a non-leap year divided by
365);
- 44 -
(ii)
if "Actual/365 (Fixed)" is specified in the applicable Final Terms, the actual number of
days in the Interest Period divided by 365;
(iii)
if "Actual/365 (Sterling)" is specified in the applicable Final Terms, the actual number
of days in the Interest Period divided by 365 or, in the case of an Interest Payment Date
falling in a leap year, 366;
(iv)
if "Actual/360" is specified in the applicable Final Terms, the actual number of days in
the Interest Period divided by 360;
(v)
if "30/360", "360/360" or "Bond Basis" is specified in the applicable Final Terms, the
number of days in the Interest Period divided by 360, calculated on a formula basis as
follows:
Day Count Fraction =
[360  (Y2  Y1 )]  [30  ( M 2  M 1 )]  ( D2  D1 )
360
where:
"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last
day of the Interest Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Interest
Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately
following the last day of the Interest Period falls;
"D1" is the first calendar day, expressed as a number, of the Interest Period, unless such
number is 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day
included in the Interest Period, unless such number would be 31 and D1 is greater than
29, in which case D2 will be 30;
(vi)
if "30E/360" or "Eurobond Basis" is specified in the applicable Final Terms, the
number of days in the Interest Period divided by 360, calculated on a formula basis as
follows:
Day Count Fraction =
[360  (Y2  Y1 )]  [30  ( M 2  M 1 )]  ( D2  D1 )
360
where:
"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last
day of the Interest Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Interest
Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately
following the last day of the Interest Period falls;
"D1" is the first calendar day, expressed as a number, of the Interest Period, unless such
number would be 31, in which case D1 will be 30; and
- 45 -
"D2" is the calendar day, expressed as a number, immediately following the last day
included in the Interest Period, unless such number would be 31, in which case D 2 will
be 30;
(vii)
if "30E/360 (ISDA)" is specified in the applicable Final Terms, the number of days in
the Interest Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction =
[360  (Y2  Y1 )]  [30  ( M 2  M 1 )]  ( D2  D1 )
360
where:
"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last
day of the Interest Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Interest
Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately
following the last day of the Interest Period falls;
"D1" is the first calendar day, expressed as a number, of the Interest Period, unless (i)
that day is the last day of February or (ii) such number would be 31, in which case D 1
will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day
included in the Interest Period, unless (i) that day is the last day of February but not the
Maturity Date or (ii) such number would be 31, in which case D 2 will be 30.
(e)
Notification of Rate of Interest and Interest Amounts
The Agent will cause the Rate of Interest and each Interest Amount for each Interest
Period and the relevant Interest Payment Date to be notified to the Issuer and any stock
exchange on which the relevant Floating Rate Notes are for the time being listed (by no
later than the first day of each Interest Period) and notice thereof to be published in
accordance with Condition 13 as soon as possible after their determination but in no
event later than the fourth London Business Day thereafter. Each Interest Amount and
Interest Payment Date so notified may subsequently be amended (or appropriate
alternative arrangements made by way of adjustment) without prior notice in the event of
an extension or shortening of the Interest Period. Any such amendment will be promptly
notified to each stock exchange on which the relevant Floating Rate Notes are for the
time being listed and to the Noteholders in accordance with Condition 13. For the
purposes of this paragraph, the expression "London Business Day" means a day (other
than a Saturday or a Sunday) on which banks and foreign exchange markets are open for
general business in London.
(f)
Certificates to be final
All certificates, communications, opinions, determinations, calculations, quotations and
decisions given, expressed, made or obtained for the purposes of the provisions of this
Condition 4.2, whether by the Agent or, if applicable, the Calculation Agent, shall (in the
absence of wilful default, bad faith, manifest error or proven error) be binding on the
Issuer, the Guarantor (in the case of Notes issued by Italcementi Finance S.A.), the
Agent, the Calculation Agent (if applicable), the other Paying Agents and all
Noteholders and Couponholders and (in the absence of wilful default or bad faith) no
liability to the Issuer, the Guarantor (in the case of Notes issued by Italcementi Finance
S.A.), the Noteholders or the Couponholders shall attach to the Agent or, if applicable,
the Calculation Agent in connection with the exercise or non-exercise by it of its powers,
duties and discretions pursuant to such provisions.
- 46 -
4.3
Accrual of interest
Each Note (or in the case of the redemption of part only of a Note, that part only of such Note)
will cease to bear interest (if any) from the date for its redemption unless, upon due presentation
thereof, payment of principal is improperly withheld or refused. In such event, interest will
continue to accrue until whichever is the earlier of:
(a)
the date on which all amounts due in respect of such Note have been paid; and
(b)
five days after the date on which the full amount of the moneys payable in respect of
such Note has been received by the Agent and notice to that effect has been given to the
Noteholders in accordance with Condition 13.
5.
PAYMENTS
5.1
Method of payment
Subject as provided below:
5.2
(a)
payments in a Specified Currency other than euro will be made by credit or transfer to an
account in the relevant Specified Currency maintained by the payee; and
(b)
payments in euro will be made by credit or transfer to a euro account (or any other
account to which euro may be credited or transferred) specified by the payee.
Payments subject to fiscal and other laws
Payments will be subject in all cases to any (i) fiscal or other laws and regulations applicable
thereto in the place of payment, but without prejudice to the provisions of Condition 7 and (ii)
any withholding or deduction required pursuant to an agreement described in Section 1471(b) of
the U.S. Internal Revenue Code of 1986 (the "Code") or otherwise imposed pursuant to Sections
1471 through 1474 of the Code, any regulations or agreements thereunder, any official
interpretations thereof, or (without prejudice to the provisions of Condition 7) any law
implementing an intergovernmental approach thereto.
5.3
Presentation of definitive Notes and Coupons
Payments of principal in respect of definitive Notes will (subject as provided below) be made in
the manner provided in Condition 5.1 above only against presentation and surrender (or, in the
case of part payment of any sum due, endorsement) of definitive Notes, and payments of interest
in respect of definitive Notes will (subject as provided below) be made as aforesaid only against
presentation and surrender (or, in the case of part payment of any sum due, endorsement) of
Coupons, in each case at the specified office of any Paying Agent outside the United States
(which expression, as used herein, means the United States of America (including the States and
the District of Columbia, its territories, its possessions and other areas subject to its jurisdiction)).
Fixed Rate Notes in definitive form (other than Long Maturity Notes (as defined below)) should
be presented for payment together with all unmatured Coupons appertaining thereto (which
expression shall for this purpose include Coupons falling to be issued on exchange of matured
Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment
not being made in full, the same proportion of the amount of such missing unmatured Coupon as
the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each
amount of principal so deducted will be paid in the manner mentioned above against surrender of
the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as
defined in Condition 7) in respect of such principal (whether or not such Coupon would
otherwise have become void under Condition 8) or, if later, five years from the date on which
such Coupon would otherwise have become due, but in no event thereafter.
Upon any Fixed Rate Note in definitive form becoming due and repayable prior to its Maturity
Date, all unmatured Talons (if any) appertaining thereto will become void and no further
Coupons will be issued in respect thereof.
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Upon the date on which any Floating Rate Note or Long Maturity Note in definitive form
becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or
not attached) shall become void and no payment or, as the case may be, exchange for further
Coupons shall be made in respect thereof. A "Long Maturity Note" is a Fixed Rate Note (other
than a Fixed Rate Note which on issue had a Talon attached) whose nominal amount on issue is
less than the aggregate interest payable thereon provided that such Note shall cease to be a Long
Maturity Note on the Interest Payment Date on which the aggregate amount of interest remaining
to be paid after that date is less than the nominal amount of such Note.
If the due date for redemption of any definitive Note is not an Interest Payment Date, interest (if
any) accrued in respect of such Note from (and including) the preceding Interest Payment Date
or, as the case may be, the Interest Commencement Date shall be payable only against surrender
of the relevant definitive Note.
5.4
Payments in respect of Global Notes
Payments of principal and interest (if any) in respect of Notes represented by any Global Note
will (subject as provided below) be made in the manner specified above in relation to definitive
Notes and otherwise in the manner specified in the relevant Global Note against presentation or
surrender, as the case may be, of such Global Note at the specified office of any Paying Agent
outside the United States. A record of each payment made against presentation or surrender of
any Global Note, distinguishing between any payment of principal and any payment of interest,
will be made on such Global Note by the Paying Agent to which it was presented and such record
shall be prima facie evidence that the payment in question has been made.
5.5
General provisions applicable to payments
The holder of a Global Note shall be the only person entitled to receive payments in respect of
Notes represented by such Global Note and the Issuer or the Guarantor (in the case of Notes
issued by Italcementi Finance S.A.) will be discharged by payment to, or to the order of, the
holder of such Global Note in respect of each amount so paid. Each of the persons shown in the
records of Euroclear or Clearstream, Luxembourg as the beneficial holder of a particular nominal
amount of Notes represented by such Global Note must look solely to Euroclear or Clearstream,
Luxembourg, as the case may be, for his share of each payment so made by the Issuer or the
Guarantor (in the case of Notes issued by Italcementi Finance S.A.) to, or to the order of, the
holder of such Global Note.
Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or
interest in respect of Notes is payable in U.S. dollars, such U.S. dollar payments of principal
and/or interest in respect of such Notes will be made at the specified office of a Paying Agent in
the United States if:
5.6
(a)
the Issuer has appointed Paying Agents with specified offices outside the United States
with the reasonable expectation that such Paying Agents would be able to make payment
in U.S. dollars at such specified offices outside the United States of the full amount of
principal and interest on the Notes in the manner provided above when due;
(b)
payment of the full amount of such principal and interest at all such specified offices
outside the United States is illegal or effectively precluded by exchange controls or other
similar restrictions on the full payment or receipt of principal and interest in U.S. dollars;
and
(c)
such payment is then permitted under United States law without involving, in the
opinion of the Issuer and the Guarantor (in the case of Notes issued by Italcementi
Finance S.A.), adverse tax consequences to the Issuer or the Guarantor (in the case of
Notes issued by Italcementi Finance S.A.), as the case may be.
Payment Day
If the date for payment of any amount in respect of any Note or Coupon is not a Payment Day,
the holder thereof shall not be entitled to payment until the next following Payment Day in the
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relevant place and shall not be entitled to further interest or other payment in respect of such
delay. For these purposes, "Payment Day" means any day which (subject to Condition 8) is:
(a)
(b)
5.7
a day on which commercial banks and foreign exchange markets settle payments and are
open for general business (including dealing in foreign exchange and foreign currency
deposits) in:
(i)
the relevant place of presentation;
(ii)
each Additional Financial Centre specified in the applicable Final Terms; and
either (A) in relation to any sum payable in a Specified Currency other than euro, a day
on which commercial banks and foreign exchange markets settle payments and are open
for general business (including dealing in foreign exchange and foreign currency
deposits) in the principal financial centre of the country of the relevant Specified
Currency (if other than the place of presentation, London and any Additional Financial
Centre and which if the Specified Currency is Australian dollars or New Zealand dollars
shall be Sydney and Auckland, respectively) or (B) in relation to any sum payable in
euro, a day on which the TARGET2 System is open.
Interpretation of principal and interest
Any reference in the Conditions to principal in respect of the Notes shall be deemed to include,
as applicable:
(a)
any additional amounts which may be payable with respect to principal under Condition
7;
(b)
the Final Redemption Amount of the Notes;
(c)
the Early Redemption Amount of the Notes;
(d)
the Optional Redemption Amount(s) (if any) of the Notes;
(e)
in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition
6.5); and
(f)
any premium and any other amounts (other than interest) which may be payable by the
Issuer under or in respect of the Notes.
Any reference in the Conditions to interest in respect of the Notes shall be deemed to include, as
applicable, any additional amounts which may be payable with respect to interest under
Condition 7.
6.
REDEMPTION AND PURCHASE
6.1
Redemption at maturity
Unless previously redeemed or purchased and cancelled as specified below, each Note will be
redeemed by the Issuer at its Final Redemption Amount specified in the applicable Final Terms
in the relevant Specified Currency on the Maturity Date specified in the applicable Final Terms.
6.2
Redemption for tax reasons
Subject to Condition 6.5, Notes may be redeemed at the option of the Issuer in whole, but not in
part, at any time (if this Note is not a Floating Rate Note) or on any Interest Payment Date (if this
Note is a Floating Rate Note), on giving not less than the minimum period and not more than the
maximum period of notice specified in the applicable Final Terms to the Agent and, in
accordance with Condition 13, the Noteholders (which notice shall be irrevocable), if:
(a)
on the occasion of the next payment due under the Notes, the Issuer has or will become
obliged to pay additional amounts as provided or referred to in Condition 7 or (in the
case of Notes issued by Italcementi Finance S.A.) the Guarantor would be unable for
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reasons outside its control to procure payment by the Issuer and in making payment itself
would be required to pay such additional amounts, in each case as a result of any change
in, or amendment to, the laws or regulations of a Tax Jurisdiction (as defined in
Condition 7) or any change in the application or official interpretation of such laws or
regulations, which change or amendment becomes effective on or after the date on which
agreement is reached to issue the first Tranche of the Notes; and
(b)
such obligation cannot be avoided by the Issuer or, as the case may be, the Guarantor (in
the case of Notes issued by Italcementi Finance S.A.) taking reasonable measures
available to it, provided that no such notice of redemption shall be given earlier than 90
days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor
(in the case of Notes issued by Italcementi Finance S.A.) would be obliged to pay such
additional amounts were a payment in respect of the Notes then due.
Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall
deliver to the Agent to make available at its specified office to the Noteholders (i) a certificate
signed by two Directors of the Issuer or, as the case may be, two Directors of the Guarantor (in
the case of Notes issued by Italcementi Finance S.A.) stating that the Issuer is entitled to effect
such redemption and setting forth a statement of facts showing that the conditions precedent to
the right of the Issuer so to redeem have occurred, and (ii) an opinion of independent legal
advisers of recognised standing to the effect that the Issuer or, as the case may be, the Guarantor
(in the case of Notes issued by Italcementi Finance S.A.) has or will become obliged to pay such
additional amounts as a result of such change or amendment.
Notes redeemed pursuant to this Condition 6.2 will be redeemed at their Early Redemption
Amount referred to in Condition 6.5 below together (if appropriate) with interest accrued to (but
excluding) the date of redemption.
6.3
Redemption at the option of the Issuer (Issuer Call)
If Issuer Call is specified as being applicable in the applicable Final Terms, the Issuer may,
having given not less than the minimum period nor more than the maximum period of notice
specified in applicable Final Terms to the Noteholders in accordance with Condition 13 (which
notice shall be irrevocable and shall specify the date fixed for redemption), redeem all or some
only of the Notes then outstanding on any Optional Redemption Date and at the Optional
Redemption Amount(s) specified in the applicable Final Terms together, if appropriate, with
interest accrued to (but excluding) the relevant Optional Redemption Date. Any such redemption
must be of a nominal amount not less than the Minimum Redemption Amount and not more than
the Maximum Redemption Amount, in each case as may be specified in the applicable Final
Terms.
In the case of a partial redemption of Notes, the Notes to be redeemed (Redeemed Notes) will (i)
in the case of Redeemed Notes represented by definitive Notes, be selected individually by lot,
not more than 30 days prior to the date fixed for redemption and (ii) in the case of Redeemed
Notes represented by a Global Note, be selected in accordance with the rules of Euroclear and/or
Clearstream, Luxembourg, (to be reflected in the records of Euroclear and Clearstream,
Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion). In the
case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such
Redeemed Notes will be published in accordance with Condition 13 not less than 15 days prior to
the date fixed for redemption.
6.4
Redemption at the Option of the Noteholders (Change of Control Put Option)
If Investor Put is specified as being applicable in the applicable Final Terms, upon the occurrence
of a Change of Control Put Event (as defined below), the holder of any Note may give to the
Issuer in accordance with Condition 13 not less than the minimum nor more than the maximum
period of notice specified in the applicable Final Terms, the Issuer will, upon the expiry of such
notice, redeem such Note on the date specified for such redemption in the notice, being a date not
earlier than 7 days nor later than 14 days after the expiry of the aforementioned notice period at
the Optional Redemption Amount specified in the applicable Final Terms together with interest
accrued to (but excluding) the date of redemption.
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To exercise the right to require redemption of this Note the holder of this Note must, if this Note
is in definitive form and held outside Euroclear and Clearstream, Luxembourg, deliver, at the
specified office of any Paying Agent at any time during normal business hours of such Paying
Agent falling within the notice period, a duly completed and signed notice of exercise in the form
(for the time being current) obtainable from any specified office of any Paying Agent (a "Put
Notice") and in which the holder must specify a bank account (or, if payment is required to be
made by cheque, an address) to which payment is to be made under this Condition accompanied
by this Note or evidence satisfactory to the Paying Agent concerned that this Note will, following
delivery of the Put Notice, be held to its order or under its control. If this Note is represented by a
Global Note or is in definitive form and held through Euroclear or Clearstream, Luxembourg, to
exercise the right to require redemption of this Note the holder of this Note must, within the
notice period, give notice to the Agent of such exercise in accordance with the standard
procedures of Euroclear and Clearstream, Luxembourg (which may include notice being given
on his instruction by Euroclear or Clearstream, Luxembourg or any common depositary or
common safekeeper, as the case may be, for them to the Agent by electronic means) in a form
acceptable to Euroclear and Clearstream, Luxembourg from time to time and, if this Note is
represented by a Global Note, at the same time present or procure the presentation of the relevant
Global Note to the Agent for notation accordingly.
Any Put Notice or other notice given in accordance with the standard procedures of Euroclear
and Clearstream, Luxembourg given by a holder of any Note pursuant to this Condition 6.4 shall
be irrevocable except where, prior to the due date of redemption, an Event of Default has
occurred and is continuing, in which event such holder, at its option, may elect by notice to the
Issuer to withdraw the notice given pursuant to this Condition 6.4 and instead to declare such
Note forthwith due and payable pursuant to Condition 9.
A "Change of Control Put Event" shall be deemed to occur if:
(a)
a Change of Control occurs; and
(b)
at the time of the occurrence of the Change of Control, the Notes carry from any Rating
Agency either:
(c)
(i)
an investment grade credit rating (BBB-/Baa3/BBB-, or equivalent, or better),
and such rating from any Rating Agency is within 120 days of the occurrence of
the Change of Control either downgraded to a non-investment grade credit
rating (BB+/Ba1/BB+, or equivalent, or worse) or withdrawn and is not within
such 120- day period subsequently (in the case of a downgrade) upgraded to an
investment grade credit rating by such Rating Agency or (in the case of a
withdrawal) replaced by an investment grade credit rating from any other Rating
Agency; or
(ii)
a non-investment grade credit rating (BB+/Ba1/BB+, or equivalent, or worse),
and such rating from any Rating Agency is within 120 days of the occurrence of
the Change of Control downgraded by one or more notches (for illustration, Ba1
to Ba2 being one notch) and is not within such 120-day period subsequently
upgraded to its earlier credit rating or better by such Rating Agency; or
(iii)
no credit rating, and no Rating Agency assigns within 90 days of the occurrence
of the Change of Control an investment grade credit rating to the Notes, and
in making the relevant decision(s) referred to above, the relevant Rating Agency
announces publicly or confirms in writing to the Issuer and the Agent that such
decision(s) resulted, in whole or in part, from the occurrence of the Change of Control.
A "Change of Control" shall be deemed to occur if control of Italcementi S.p.A. is acquired by
any one Person or group of Persons Acting in Concert, other than one or more of the Related
Parties;
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"Rating Agency" means any of Standard & Poor's Ratings Services, a division of The McGrawHill Companies, Inc., or Moody's Investors Service Inc. or Fitch Ratings Ltd, or any of their
successors;
"Related Parties" shall mean Italmobiliare S.p.A., Efiparind B.V. – Amsterdam and any Person
directly or indirectly controlled by Italmobiliare S.p.A. or Efiparind B.V. – Amsterdam;
"Persons Acting in Concert" shall have the meaning set forth by Article 101-bis, paragraphs 4
and 4- bis, of Italian Legislative Decree No. 58/1998; and
For the purposes of this Condition, the term "control" shall have the meaning set forth by Article
93 of the Italian Legislative Decree no. 58/1998.
6.5
Early Redemption Amounts
For the purpose of Condition 6.2 above and Condition 9, each Note will be redeemed at its Early
Redemption Amount calculated as follows:
(a)
in the case of a Note with a Final Redemption Amount equal to the Issue Price, at the
Final Redemption Amount thereof; or
(b)
in the case of a Zero Coupon Note, at an amount (the "Amortised Face Amount")
calculated in accordance with the following formula:
Early Redemption Amount
 RP  (1  AY ) y
where:
"RP" means the Reference Price;
"AY" means the Accrual Yield expressed as a decimal; and
"y"
is the Day Count Fraction specified in the applicable Final Terms which will be either (i)
30/360 (in which case the numerator will be equal to the number of days (calculated on the basis
of a 360-day year consisting of 12 months of 30 days each) from (and including) the Issue Date
of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case
may be) the date upon which such Note becomes due and repayable and the denominator will be
360) or (ii) Actual/360 (in which case the numerator will be equal to the actual number of days
from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date
fixed for redemption or (as the case may be) the date upon which such Note becomes due and
repayable and the denominator will be 360) or (iii) Actual/365 (in which case the numerator will
be equal to the actual number of days from (and including) the Issue Date of the first Tranche of
the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon
which such Note becomes due and repayable and the denominator will be 365) or on such other
calculation basis as may be specified in the applicable Final Terms.
6.6
Purchases
The Issuer, the Guarantor (in the case of Notes issued by Italcementi Finance S.A.) or any
Subsidiary of the Issuer or (in the case of Notes issued by Italcementi Finance S.A.) any
Subsidiary of the Guarantor may at any time purchase Notes (provided that, in the case of
definitive Notes, all unmatured Coupons and Talons appertaining thereto are purchased
therewith) at any price in the open market or otherwise. Such Notes may be held, reissued, resold
or, at the option of the Issuer or (in the case of Notes issued by Italcementi Finance S.A.) the
Guarantor, surrendered to any Paying Agent for cancellation.
6.7
Cancellation
All Notes which are redeemed will forthwith be cancelled (together with all unmatured Coupons
and Talons attached thereto or surrendered therewith at the time of redemption). All Notes so
cancelled and any Notes purchased and cancelled pursuant to Condition 6.6 above (together with
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all unmatured Coupons and Talons cancelled therewith) shall be forwarded to the Agent and
cannot be reissued or resold.
6.8
Late payment on Zero Coupon Notes
If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero
Coupon Note pursuant to Condition 6.1, 6.2, 6.3 or 6.4 above or upon its becoming due and
repayable as provided in Condition 9 is improperly withheld or refused, the amount due and
repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in
Condition 6.5(b) above as though the references therein to the date fixed for the redemption or
the date upon which such Zero Coupon Note becomes due and payable were replaced by
references to the date which is the earlier of:
7.
(a)
the date on which all amounts due in respect of such Zero Coupon Note have been paid;
and
(b)
five days after the date on which the full amount of the moneys payable in respect of
such Zero Coupon Notes has been received by the Agent and notice to that effect has
been given to the Noteholders in accordance with Condition 13.
TAXATION
All payments of principal and interest in respect of the Notes and Coupons by the Issuer or (in
the case of Notes issued by Italcementi Finance S.A.) the Guarantor will be made without
withholding or deduction for or on account of any present or future taxes or duties of whatever
nature imposed or levied by or on behalf of any Tax Jurisdiction unless such withholding or
deduction is required by law. In such event, the Issuer or, as the case may be, the Guarantor (in
the case of Notes issued by Italcementi Finance S.A.) will pay such additional amounts as shall
be necessary in order that the net amounts received by the holders of the Notes or Coupons after
such withholding or deduction shall equal the respective amounts of principal and interest which
would otherwise have been receivable in respect of the Notes or Coupons, as the case may be, in
the absence of such withholding or deduction; except as follows:
(a)
Where the Issuer is Italcementi S.p.A., or in the event of payment by Italcementi S.p.A.
as Guarantor, no such additional amounts shall be payable with respect to any Note or
Coupon:
(i)
presented for payment in Italy; or
(ii)
presented for payment by or on behalf of a holder who is liable for such taxes or
duties in respect of such Note or Coupon by reason of his having some
connection with the Tax Jurisdiction other than the mere holding of such Note
or Coupon; or
(iii)
presented for payment more than 30 days after the Relevant Date (as defined
below) except to the extent that the holder thereof would have been entitled to
an additional amount on presenting the same for payment on such thirtieth day
assuming that day to have been a Payment Day (as defined in Condition 5.6); or
(iv)
where such withholding or deduction is required to be made pursuant to
European Council Directive 2003/48/EC on the taxation of savings income or
any law implementing or complying with, or introduced in order to conform to,
such Directive; or
(v)
presented for payment by or on behalf of a holder who would have been able to
avoid such withholding or deduction by presenting the relevant Note or Coupon
to another Paying Agent in a Member State of the European Union; or
(vi)
presented for payments by, or on behalf of, a holder who is entitled to avoid
such withholding or deduction in respect of such Note or Coupon by making a
declaration or any other statement to the relevant tax authority, including, but
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not limited to, a declaration of residence or non-residence or other similar claim
for exemption.
(b)
Where the Issuer is Italcementi Finance S.A., no such additional amounts shall be
payable with respect to any Note or Coupon:
(i)
presented for payment by or on behalf of a holder who is liable for such taxes or
duties in respect of such Note or Coupon by reason of his having some
connection with a Tax Jurisdiction other than the mere holding of such Note or
Coupon; or
(ii)
presented for payment more than 30 days after the Relevant Date (as defined
below) except to the extent that the holder thereof would have been entitled to
an additional amount on presenting the same for payment on such thirtieth day
assuming that day to have been a Payment Day (as defined in Condition 5.6); or
(iii)
where such withholding or deduction is required to be made pursuant to
European Council Directive 2003/48/EC on the taxation of savings income or
any law implementing or complying with, or introduced in order to conform to,
such Directive; or
(iv)
presented for payment by or on behalf of a holder who would have been able to
avoid such withholding or deduction by presenting the relevant Note or Coupon
to another Paying Agent in a Member State of the European Union; or
(v)
presented for payments by, or on behalf of, a holder who is entitled to avoid
such withholding or deduction in respect of such Note or Coupon by making a
declaration or any other statement to the relevant tax authority, including, but
not limited to, a declaration of residence or non-residence or other similar claim
for exemption.
Notwithstanding anything to the contrary in this section, none of the Issuer, any paying agent or
any other person shall be required to pay any additional amounts with respect to any withholding
or deduction imposed on or in respect of any Note pursuant to Section 1471 to 1474 of the U.S.
Internal Revenue Code of 1986 ("FATCA"), any treaty, law, regulation or other official guidance
implementing FATCA, or any agreement between the Issuer, a paying agent or any other person
and the United States, any other jurisdiction, or any authority of any of the foregoing
implementing FATCA.
As used herein:
8.
(A)
"Tax Jurisdiction" means France or any political subdivision or any authority thereof
or therein having power to tax (in the case of payments by Italcementi Finance S.A.) or
Italy or any political subdivision or any authority thereof or therein having power to tax
(in the case of payments by Italcementi S.p.A.); and
(B)
the "Relevant Date" means the date on which such payment first becomes due, except
that, if the full amount of the moneys payable has not been duly received by the Agent
on or prior to such due date, it means the date on which, the full amount of such moneys
having been so received, notice to that effect is duly given to the Noteholders in
accordance with Condition 13.
PRESCRIPTION
The Notes and Coupons will become void unless presented for payment within a period of 10
years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as
defined in Condition 7) therefor.
There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the
claim for payment in respect of which would be void pursuant to this Condition or Condition 5.3
or any Talon which would be void pursuant to Condition 5.3.
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9.
EVENTS OF DEFAULT
If any one or more of the following events (each an "Event of Default") shall occur and be
continuing:
(a)
if default is made in the payment of any principal or interest due in respect of the Notes
or any of them and the default continues for a period of 14 days; or
(b)
if the Issuer or (in the case of Notes issued by Italcementi Finance S.A.) the Guarantor
fails to perform or observe any of its other obligations under the Conditions or (in the
case of Notes issued by Italcementi Finance S.A.) the Guarantee and (except in any case
where the failure is incapable of remedy when no such continuation or notice as is
hereinafter mentioned will be required) the failure continues for the period of 30 days
next following the service by a Noteholder on the Issuer or (in the case of Notes issued
by Italcementi Finance S.A.) the Guarantor (as the case may be) of notice requiring the
same to be remedied; or
(c)
in relation to: (A) any other present or future indebtedness of the Issuer or (in the case of
Notes issued by Italcementi Finance S.A.) the Guarantor or any Principal Subsidiary for
borrowed money in excess of, individually or in the aggregate, €30,000,000 (or its
equivalent in any other currency) or (B) any guarantee or indemnity by the Issuer or (in
the case of Notes issued by Italcementi Finance S.A.) the Guarantor or any Principal
Subsidiary of any such indebtedness, whether individually or in the aggregate:
(i)
in the case of (A), such indebtedness shall become due and repayable
prematurely by reason of an event of default (however described) or shall not be
paid in full on the due date thereof (as extended by any originally applicable
grace period); or
(ii)
in the case of (B), default shall be made in making any payment due under such
guarantee or indemnity for any amount in excess of, individually or in the
aggregate, €30,000,000 (or its equivalent in any other currency),
provided that no such event shall constitute an Event of Default so long as and to the
extent that the Issuer, Guarantor or any Principal Subsidiary, as the case may be, is
contesting in good faith and by all appropriate means, including where applicable, before
a court or arbitration panel, that such payment is not due and/or such default has not
occurred, as appropriate; or
(d)
if any order is made by any competent court or resolution passed for the winding up or
dissolution of the Issuer or (in the case of Notes issued by Italcementi Finance S.A.) the
Guarantor or any Principal Subsidiary, save for the purposes of (A) a Permitted
Reorganisation or (B) a reorganisation on terms previously approved by an
Extraordinary Resolution; or
(e)
if the Issuer, (in the case of Notes issued by Italcementi Finance S.A.) the Guarantor or
any Principal Subsidiary ceases or threatens to cease to carry on the whole or a
substantial part of its business, save for the purposes of (A) a Permitted Reorganisation
or (B) a reorganisation on terms previously approved by an Extraordinary Resolution
(for the purposes of this paragraph (e), a "substantial part of its business" means a part
of the relevant entity's business which accounts for 33 per cent. or more of the Group's
assets and/or revenues); or
(f)
if the Issuer, the Guarantor (in the case of Notes issued by Italcementi Finance S.A.) or
any Principal Subsidiary stops or threatens to stop payment generally of, or is unable to,
or admits inability to, generally pay, its debts (or any class of its debts) as they fall due,
or is deemed unable to pay its debts pursuant to or for the purposes of any applicable law,
or is adjudicated or found bankrupt or insolvent; or
(g)
if, under any applicable civil liquidation, insolvency, composition, reorganisation or
other similar civil laws, (A) proceedings are initiated against the Issuer, (in the case of
Notes issued by Italcementi Finance S.A.) the Guarantor or any Principal Subsidiary; or
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(B) an application is made (or documents filed with a court) for the appointment of an
administrative or other receiver, manager, administrator or other similar official, or an
administrative or other receiver, manager, administrator or other similar official is
appointed, in relation to the Issuer, (in the case of Notes issued by Italcementi Finance
S.A.) the Guarantor or any Principal Subsidiary or, as the case may be, in relation to the
whole or substantially the whole of the undertaking or assets of any of them, provided
that, in relation to an application for the appointment of an administrative or other
receiver, manager, administrator or other similar official only, an Event of Default shall
not be deemed to have occurred under this item (B) so long as and to the extent that (i)
any such application has not been made by the Issuer, the Guarantor or any Principal
Subsidiary and (ii) the Issuer, Guarantor or Principal Subsidiary, as the case may be, is
contesting in good faith and by all appropriate means that any such application is
frivolous or vexatious; or (C) an encumbrancer takes possession of the whole or
substantially the whole of the undertaking or assets of any of the Issuer, (in the case of
Notes issued by Italcementi Finance S.A.) the Guarantor or any Principal Subsidiary; or
(D) a distress, execution, attachment, sequestration or other process is levied, enforced
upon, sued out or put in force against the whole or substantially the whole of the
undertaking or assets of any of the Issuer, (in the case of Notes issued by Italcementi
Finance S.A.) the Guarantor or any Principal Subsidiary; and (E) in any case (other than
the appointment of an administrator) is not discharged within 60 days, save for the
purposes of a reorganisation on terms previously approved by an Extraordinary
Resolution; or
(h)
if the Issuer, (in the case of Notes issued by Italcementi Finance S.A.) the Guarantor or
any Principal Subsidiary initiates or consents to judicial proceedings relating to itself
under any applicable liquidation, insolvency, composition, reorganisation or other
similar laws (including the obtaining of a moratorium) or makes a conveyance or
assignment for the benefit of, or enters into any composition or other arrangement with,
its creditors generally (or any class of its creditors) or any meeting is convened to
consider a proposal for an arrangement or composition with its creditors generally (or
any class of its creditors), save for the purposes of a reorganisation on terms previously
approved by an Extraordinary Resolution; or
(i)
in the case of Notes issued by Italcementi Finance S.A., if the Issuer ceases to be a
Subsidiary of the Guarantor; or
(j)
in the case of Notes issued by Italcementi Finance S.A., if the Guarantee ceases to be, or
is claimed by the Issuer or the Guarantor not to be, in full force and effect,
then any holder of a Note may, by written notice to the Issuer at the specified office of the Agent,
effective upon the date of receipt thereof by the Agent, declare any Note held by it to be
forthwith due and payable whereupon the same shall become forthwith due and payable at its
Early Redemption Amount, together with accrued interest (if any) to the date of repayment,
without presentment, demand, protest or other notice of any kind.
For the purposes of this Condition 9:
"Principal Subsidiary" has the meaning set forth in Condition 3;
"Permitted Reorganisation" means:
(a)
in the case of the Issuer or (in the case of Notes issued by Italcementi Finance S.A.) the
Guarantor, (A) an amalgamation, reorganisation, merger, demerger, consolidation or
restructuring whilst solvent whereby the assets and undertaking of the Issuer or, if
relevant, the Guarantor (or, in the case of a demerger, all or substantially all of such
assets and undertaking) are vested in a Person (including but not limited to a Subsidiary
of the Issuer or (in the case of Notes issued by Italcementi Finance S.A.) the Guarantor)
in good standing and such Person (1) assumes or maintains (as the case may be) liability
as principal debtor in respect of the Notes or the Guarantee, as the case may be; and (2)
continues to carry on substantially the same business of the Issuer or the Guarantor, as
the case may be; or (B) a sale, demerger or other disposal of assets to the Issuer, the
- 56 -
Guarantor or another Subsidiary of Italcementi S.p.A. (including a Principal Subsidiary),
provided that the transaction is carried out on commercial arm's length terms, as
ascertained by an independent expert appointed by Italcementi S.p.A. or as appropriate,
Italcementi Finance S.A.; and
(b)
10.
in the case of a Principal Subsidiary, (A) an amalgamation, reorganisation, merger,
demerger, consolidation or restructuring whilst solvent whereby the assets and
undertaking of such Principal Subsidiary are transferred to (or otherwise vested in) the
Issuer, (in the case of Notes issued by Italcementi Finance S.A.) the Guarantor or
another Subsidiary of Italcementi S.p.A. (including a Principal Subsidiary) or any other
Person, provided that such other Person continues to carry on substantially the same
business of the Principal Subsidiary and the transaction is carried out on commercial
arm's length terms, as ascertained by an independent expert appointed by Italcementi
S.p.A.; or (B) a sale, demerger or other disposal of assets to the Issuer, (in the case of
Notes issued by Italcementi Finance S.A.) the Guarantor or another Subsidiary of
Italcementi S.p.A. (including a Principal Subsidiary) or any other Person provided that
the transaction is carried out on commercial arm's length terms, as ascertained by an
independent expert appointed by the Principal Subsidiary.
REPLACEMENT OF NOTES, COUPONS AND TALONS
Should any Note, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be
replaced at the specified office of the Agent upon payment by the claimant of such costs and
expenses as may be incurred in connection therewith and on such terms as to evidence and
indemnity as the Issuer may reasonably require. Mutilated or defaced Notes, Coupons or Talons
must be surrendered before replacements will be issued.
11.
PAYING AGENTS
The names of the initial Paying Agents and their initial specified offices are set out below. If any
additional Paying Agents are appointed in connection with any Series, the names of such Paying
Agents will be specified in Part B of the applicable Final Terms.
The Issuer and the Guarantor (in the case of Notes issued by Italcementi Finance S.A.) are
entitled to vary or terminate the appointment of any Paying Agent and/or appoint additional or
other Paying Agents and/or approve any change in the specified office through which any Paying
Agent acts, provided that:
(a)
there will at all times be an Agent;
(b)
so long as the Notes are listed on any stock exchange or admitted to listing by any other
relevant authority, there will at all times be a Paying Agent with a specified office in
such place as may be required by the rules and regulations of the relevant stock
exchange or other relevant authority;
(c)
there will at all times be a Paying Agent in a Member State of the European Union that
will not be obliged to withhold or deduct tax pursuant to European Council Directive
2003/48/EC or any law implementing or complying with, or introduced in order to
conform to, such Directive; and
(d)
there will at all times be a Paying Agent in a jurisdiction within continental Europe,
other than the jurisdiction in which the Issuer or the Guarantor is incorporated.
In addition, the Issuer and the Guarantor (in the case of Notes issued by Italcementi Finance
S.A.) shall forthwith appoint a Paying Agent having a specified office in New York City in the
circumstances described in Condition 5.5. Notice of any variation, termination, appointment or
change in Paying Agents will be given to the Noteholders promptly by the Issuer in accordance
with Condition 13.
In acting under the Agency Agreement, the Paying Agents act solely as agents of the Issuer and
the Guarantor (in the case of Notes issued by Italcementi Finance S.A.) and do not assume any
obligation to, or relationship of agency or trust with, any Noteholders or Couponholders. The
- 57 -
Agency Agreement contains provisions permitting any entity into which any Paying Agent is
merged or converted or with which it is consolidated or to which it transfers all or substantially
all of its assets to become the successor paying agent.
12.
EXCHANGE OF TALONS
On and after the Interest Payment Date on which the final Coupon comprised in any Coupon
sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the
specified office of the Agent or any other Paying Agent in exchange for a further Coupon sheet
including (if such further Coupon sheet does not include Coupons to (and including) the final
date for the payment of interest due in respect of the Note to which it appertains) a further Talon,
subject to the provisions of Condition 8.
13.
NOTICES
Without prejudice to any further formalities and other requirements set out under any applicable
Italian laws and regulations (including Article 125-bis of Legislative Decree No. 58 of 24
February 1998 as amended), all notices regarding the Notes will be deemed to be validly given if
published (a) in a leading English language daily newspaper of general circulation in London,
and (b) if and for so long as the Notes are admitted to trading on the regulated market of, or listed
on the Official List of the Luxembourg Stock Exchange, a daily newspaper of general circulation
in Luxembourg and/or the Luxembourg Stock Exchange's website, www.bourse.lu. It is expected
that any such publication in a newspaper will be made in the Financial Times in London and the
Luxemburger Wort or the Tageblatt in Luxembourg. The Issuer and the Guarantor (in the case of
Notes issued by Italcementi Finance S.A.) shall also ensure that notices are duly published in a
manner which complies with the rules of any stock exchange or other relevant authority on which
the Notes are for the time being listed or by which they have been admitted to trading. Any such
notice will be deemed to have been given on the date of the first publication or, where required to
be published in more than one newspaper, on the date of the first publication in all required
newspapers.
Until such time as any definitive Notes are issued, there may, so long as any Global Notes
representing the Notes are held in their entirety on behalf of Euroclear and/or Clearstream,
Luxembourg, be substituted for such publication in such newspaper(s) the delivery of the
relevant notice to Euroclear and/or Clearstream, Luxembourg for communication by them to the
holders of the Notes and, in addition, for so long as any Notes are listed on a stock exchange or
are admitted to trading by another relevant authority and the rules of that stock exchange or
relevant authority so require, such notice will be published in a daily newspaper of general
circulation in the place or places required by those rules. Any such notice shall be deemed to
have been given to the holders of the Notes such day as is specified in the applicable Final Terms
after the day on which the said notice was given to Euroclear and/or Clearstream, Luxembourg.
Notices to be given by any Noteholder shall be in writing and given by lodging the same,
together (in the case of any Note in definitive form) with the relative Note or Notes, with the
Agent. Whilst any of the Notes are represented by a Global Note, such notice may be given by
any holder of a Note to the Agent through Euroclear and/or Clearstream, Luxembourg, as the
case may be, in such manner as the Agent and Euroclear and/or Clearstream, Luxembourg, as the
case may be, may approve for this purpose.
14.
MEETINGS OF NOTEHOLDERS AND MODIFICATION
14.1
In the case of Notes issued by Italcementi S.p.A.
In accordance with the rules of the Italian Civil Code, the Agency Agreement contains provisions
for convening meetings of the Noteholders to consider any matter affecting their interests,
including the sanctioning by Extraordinary Resolution (a resolution adopted by the favourable
vote of one or more persons present holding or representing Notes representing in the aggregate
not less than one half of the principal amount of the Notes outstanding at the time such resolution
is adopted) of a modification of these Conditions. The constitution of meetings and the validity of
resolutions thereof shall be governed pursuant to the relevant provisions of the Italian Civil Code
(and, namely, by those provided for by Article 2415) and, as long as the Issuer has its shares
- 58 -
listed on a regulated market in Italy or another EU member country, pursuant to Legislative
Decree no. 58 of 24 February 1998 (as amended from time to time). Any resolution (including an
Extraordinary Resolution) passed at any meeting of the Noteholders shall be binding on all the
Noteholders, whether or not they are present at the meeting, and on all Couponholders and unless
the Principal Paying Agent agrees otherwise, any modification shall be notified to the
Noteholders in accordance with Condition 14 as soon as practicable thereafter.
In accordance with the Italian Civil Code, a "rappresentante comune", being a joint
representative of Noteholders may be appointed in order to represent the Noteholders' interest
hereunder and to give execution to the resolutions of the Noteholders' meeting. The
"rappresentante comune" is appointed by resolution passed at the Noteholders' meeting. In the
event the Noteholders' meeting fails to appoint the "rappresentante comune", the appointment is
made by the President of the Court of First Instance of the venue where the registered office of
the Issuer is located at the request of any Noteholder or the Board of Directors of the Issuer.
14.2
In the case of Notes issued by Italcementi Finance S.A.
The Agency Agreement contains provisions for convening meetings of the Noteholders to
consider any matter affecting their interests, including the sanctioning by Extraordinary
Resolution of a modification of the Notes, the Coupons or any of the provisions of the Agency
Agreement. Such a meeting may be convened by the Issuer and shall be convened by the Issuer if
required in writing by Noteholders holding not less than one-twentieth in nominal amount of the
Notes for the time being remaining outstanding. The quorum at any such meeting for passing an
Extraordinary Resolution is one or more persons holding or representing not less than one half in
nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or
more persons being or representing Noteholders whatever the nominal amount of the Notes so
held or represented, except that at any meeting the business of which includes the modification of
certain provisions of the Notes or the Coupons (including modifying the date of maturity of the
Notes or any date for payment of interest thereon, reducing or cancelling the amount of principal
or the rate of interest payable in respect of the Notes or altering the currency of payment of the
Notes or the Coupons), the quorum shall be one or more persons holding or representing not less
than two-thirds in nominal amount of the Notes for the time being outstanding, or at any
adjourned such meeting one or more persons holding or representing not less than one-third in
nominal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed
at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are
present at the meeting, and on all Couponholders.
14.3
Modification
The Agent, the Issuer and the Guarantor (in the case of Notes issued by Italcementi Finance S.A.)
may agree, without the consent of the Noteholders or Couponholders, to:
(a)
any modification (except such modifications in respect of which an increased quorum is
required as mentioned above) of the Notes, the Coupons or the Agency Agreement
which is not prejudicial to the interests of the Noteholders; or
(b)
any modification of the Notes, the Coupons or the Agency Agreement which is of a
formal, minor or technical nature or is made to correct a manifest or proven error or to
comply with mandatory provisions of the law.
Any such modification shall be binding on the Noteholders and the Couponholders and any such
modification shall be notified to the Noteholders in accordance with Condition 13 as soon as
practicable thereafter.
15.
FURTHER ISSUES
The Issuer shall be at liberty from time to time without the consent of the Noteholders or the
Couponholders to create and issue further notes having terms and conditions the same as the
Notes or the same in all respects save for the amount and date of the first payment of interest
thereon and so that the same shall be consolidated and form a single Series with the outstanding
Notes.
- 59 -
16.
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
No person shall have any right to enforce any term or condition of this Note under the Contracts
(Rights of Third Parties) Act 1999, but this does not affect any right or remedy of any person
which exists or is available apart from that Act.
17.
GOVERNING LAW AND SUBMISSION TO JURISDICTION
17.1
Governing law
The Agency Agreement, the Guarantee, the Deed of Covenant, the Notes, the Coupons and any
non- contractual obligations arising out of or in connection with the Agency Agreement, the
Guarantee, the Deed of Covenant, the Notes, the Coupons are governed by, and shall be
construed in accordance with, English law. Condition 14.1 and the provisions of the Agency
Agreement concerning any meetings of the Noteholders and the "rappresentante comune" are
subject to compliance with Italian law.
17.2
Submission to jurisdiction
Each of the Issuer and the Guarantor (in the case of Notes issued by Italcementi Finance S.A.)
irrevocably agrees, for the benefit of the Noteholders and the Couponholders, that the courts of
England are to have exclusive jurisdiction to settle any disputes which may arise out of or in
connection with the Notes and/or the Coupons (including a dispute relating to any noncontractual obligations arising out of or in connection with the Notes and/or the Coupons) and
accordingly submits to the exclusive jurisdiction of the English courts.
Each of the Issuer and the Guarantor (in the case of Notes issued by Italcementi Finance S.A.)
waives any objection to the courts of England on the grounds that they are an inconvenient or
inappropriate forum. The Noteholders and the Couponholders may take any suit, action or
proceedings (together referred to as "Proceedings") arising out of or in connection with the
Notes and the Coupons (including any Proceedings relating to any non-contractual obligations
arising out of or in connection with the Notes and the Coupons) against the Issuer or the
Guarantor (in the case of Notes issued by Italcementi Finance S.A.) in any other court of
competent jurisdiction and concurrent Proceedings in any number of jurisdictions.
17.3
Appointment of Process Agent
Each of the Issuer and the Guarantor (in the case of Notes issued by Italcementi Finance S.A.)
appoints UK Process Services Limited at its registered office at 12 Gough Square, London EC4A
3DW, United Kingdom as its agent for service of process, and undertakes that, in the event of
UK Process Services Limited ceasing so to act or ceasing to be registered in England, it will
appoint another person as its agent for service of process in England in respect of any
Proceedings. Nothing herein shall affect the right to serve proceedings in any other manner
permitted by law.
17.4
Other documents
The Issuer and, where applicable, the Guarantor have in the Agency Agreement, the Guarantee
and the Deed of Covenant submitted to the jurisdiction of the English courts and appointed an
agent for service of process in terms substantially similar to those set out above.
- 60 -
USE OF PROCEEDS
The net proceeds from each issue of Notes will be applied by the relevant Issuer for its general corporate
purposes. If, in respect of an issue of Notes, there is a particular identified use of proceeds, this will be
stated in the applicable Final Term.
- 61 -
DESCRIPTION OF ITALCEMENTI S.P.A.
GENERAL OVERVIEW
Italcementi S.p.A. ("Italcementi" or the "Company") is incorporated as a joint stock company (società
per azioni) under the laws of Italy and is registered in the Companies’ Register of the City of Bergamo
under number 00637110164. Its registered office and principal place of business is at Via Gabriele
Camozzi 124, Bergamo, Italy and its telephone number is +39 035 396 111. The Company was founded
in 1864 and its duration is until 31 December 2050. The Company’s shares are listed on the Mercato
Telematico Azionario. Italcementi is the leading cement manufacturer in Italy as well as one of Italy’s ten
largest industrial companies and is the parent company of the Italcementi Group (the "Italcementi
Group" or the "Group"). With an annual global production capacity of approximately 60 million tonnes
of cement per year, as at 31 December 2013, the Group is the world’s fifth largest international cement
producer1.
In the construction materials business, as at 31 December 2013, the Italcementi Group had operations in
22 countries in four different continents and comprised an industrial network of 46 cement plants, 12
grinding centres, 6 terminals, 112 aggregates quarries and 420 concrete batching units. In 2013, Group
sales amounted to Euro 4,235 million (compared to Euro 4,479 million in 2012), loss amounted to Euro
88 million (compared to a loss of Euro 362 million in 2012) and sales volumes amounted to 43.1 million
tonnes with regard to cement and clinker, 32.5 million tonnes with regard to aggregates and 12.3 million
cubic metres with regard to ready-mixed concrete.
HISTORY AND DEVELOPMENT
The Company was founded in 1864 under the name Società Bergamasca per la Fabbricazione del
Cemento e della Calce Idraulica. The Pesenti brothers acquired this company in the beginning of the
twentieth century and merged it with their company, Fabbrica Cementi e Calci Idrauliche Fratelli
Pesenti fu Antonio.
The Company was listed on the Milan Stock Exchange in 1925 and was renamed Italcementi S.p.A. in
1927.
In 1984, the Group's leadership was taken over by the Chairman, Mr. Giampiero Pesenti, who was the
Company's Chief Operating Officer at the time.
In the late 1980s Italcementi began expanding outside Italy, and in April 1992 it became the majority
shareholder of the French group Ciments Français. Through this acquisition the Group achieved
significant presence in the international markets.
After a phase of reorganisation and integration of the acquired companies, in 1997 the Company
completed the acquisition of the Italian company Calcestruzzi S.p.A. ("Calcestruzzi"), a ready-mixed
concrete producer, and began an expansion strategy in emerging markets, in order to diversify its business
in geographic areas with higher growth potential.
The Group's geographic diversification process has taken shape through a series of acquisitions in
emerging markets such as Bulgaria, Egypt, Morocco, Kazakhstan, Thailand and India.
In 2004, Mr. Giampiero Pesenti became the Company's Chairman and his son, Mr. Carlo Pesenti became
Chief Executive Officer.
In December 2012, the Group announced "Project 2015", with the aim of implementing it in the two years
between 2013-2014, for the re-organisation and strengthening of Group operations in Italy. The aim is to
rationalise industrial and distribution activities as well as corporate structures and the sales network.
In the first half of 2014, the Company approved the terms of a plan to simplify its organizational structure
and to strengthen the Group (the “i.150 Project”). In summary, the plan provided for:
(i) the mandatory conversion of the Company's savings shares into ordinary shares, based on a conversion
ratio of no. 0.65 ordinary shares for each savings share, which was approved by the special savings
1
Source: Company elaborations based on Jefferies' estimates.
- 62 -
shareholders' meeting and the extraordinary general shareholders" meeting of Italcementi, respectively,
on 7 April 2014 and 8 April 2014 and became effective as of 2 June 2014;
(ii) a share capital increase of Euro 499,979,628.82 (including share premium) made available to the
Company's shareholders at the subscription price equal to Euro 4.825 for each newly issued Italcementi
share, aimed mainly at financing the Tender Offer (as defined below), resolved by the Board of Directors
of Italcementi of 6 March 2014, 19 May 2014 and 5 June 2014 by virtue of the delegation granted by the
shareholders meeting of the Company on 17 April 2013 pursuant to Article 2443 of the Italian Civil Code
(the “Share Capital Increase”). The offering period of the Share Capital Increase took place from 9 June
2014 to 27 June 2014 and all the option rights not exercised during the offering period had been placed on
2 July 2014 (the first session of the offering on the Stock Exchange pursuant to art. 2441, par. 3 of the
Italian Civil Code) and had been fully exercised by 7 July 2014. Therefore, the Share Capital Increase
concluded with the full subscription of the 103,622,721 offered shares; and
(iii) the voluntary tender offer launched by the Company, in the form of offre publique d"achat simplifiée
under the laws of France, for all of the shares of its subsidiary Ciments Français S.A. ("Ciments
Français") not held by the Company (equal to approximately 16.17 per cent. of the share capital) at the
price per share of Euro 79.5 and aimed at delisting Ciments Français shares from the Paris Stock
Exchange (NYSE-Euronext Paris) (the “Tender Offer”). All of the above mentioned steps were
successfully concluded.
In March 2014, after Italcementi's announcement regarding the i.150 Project, the rating agency Moody's
placed on review for upgrade the Italcementi rating (Ba3 - outlook stable). At the same time Moody's
placed under review, for direction uncertain, the Ciments Français rating.
RECENT DEVELOPMENTS
Consolidated results as at 30 June 2014
The Italcementi Board of Directors examined and approved the half-year financial report as at and for the
year to 30 June 2014. After a second quarter that proved slower than the first three months, the first half
of 2014 reported cement sales substantially in line with the first half of 2013, while volumes of ready
mixed concrete and aggregates – mostly on the mature markets – were down against a background of
persistent stagnation in the construction industry. Despite this dynamic, thanks in part to the positive
results from efficiency measures, which generated savings of Euro 20 million, the Italcementi Group
reported an improvement in the first-half EBITDA margin to 14.8 per cent. (13.6 per cent. in the yearearlier period).
Considering performance in sales and sales prices – which had a positive overall effect, largely thanks to
Egypt (which reported sharp increases in energy costs) and Thailand – first-half revenue totalled Euro
2,048.4 million (-5.0 per cent.). Net of the exchange-rate effect and on a like-for-like basis, the reduction
was down to 1.8 per cent.. Operating results to the end of June reflected an improvement from the first
half of 2013, while second-quarter operating results were substantially in line with the year-earlier period.
Recurring EBITDA for the first half of 2014 was Euro 304.8 million, an improvement of 2.2 per cent.
(+1.9 per cent. at constant exchange rates and excluding CO2 emission rights), with the most significant
progress reported in Italy and Thailand, while France, Belgium, North America and India showed the
largest decreases. After a long negative period, Spain and Greece reported a turnaround with positive
results. After a reduction in non-recurring expense and lower amortization and depreciation compared
with the year-earlier period, EBIT was Euro 99.8 million, an increase of 27.7 per cent.. The loss for the
period of Euro 79.6 million (a loss of Euro 43.1 million for the first half of 2013) reflected a sharp
increase (Euro 48 million) in finance costs and impairment losses on financial assets.
Cash flows in the first half showed an increase of 4 per cent. in cash flow from operating activities to
Euro 179 million, and were significantly influenced by the extraordinary transactions launched in the first
half (share capital increase), which were completed only in July with the close of the public tender offer
for Ciments Français shares. The carrying amount for net debt at 30 June 2014 was Euro 1,851.7 million
(down Euro 82.3 million from the end of December 2013). Taking account of commitments to complete
the Group’s strategic investments and accounting for the entire i.150 operation in the first half, proforma
debt would show an increase of approximately Euro 138 million from the end of 2013.
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In the first six months of 2014, consolidated cement and clinker sales were substantially steady at 21.7
million metric tons, despite a slowdown in the second quarter. Central Western Europe reported a small
increase in sales, thanks to performance improvements in Spain and Greece offsetting the downturns in
France-Belgium and Italy, while the North American market continued to reflect the impact of the severe
weather conditions of the early part of the year. Among the emerging countries, Egypt, India and
Thailand reported sales growth of between 4 and 5 per cent.. In aggregates, sales totaled 15.4 million
metric tons (-6.3 per cent.), with a general slowdown in all countries, with the exception of Italy and
Greece. In ready mixed concrete, the decrease in sales volumes (-8.1 per cent. to 5.7 million cubic meters)
was generated largely by reductions in Central Western Europe and Morocco.
Sales volumes and
internal transfers
Cement and clinker
Aggregates
Ready mixed concrete
(millions of metric tons)
(millions of metric tons)
(millions of m3)
H1
2014
% change vs.
H12013
H1
2014
% change vs.
H12013
A
B
H1
2014
% change vs.
H12013
A
B
Central Western Europe
North America
Emerging Europe North
Africa and Middle East
Asia
Trading
Eliminations
7.3
1.9
1.1
(4.8)
1.1
(4.8)
14.2
0.5
(2.9)
(28.7)
(2.9)
(28.7)
3.6
0.3
(11.7)
(2.6)
A
(11.7)
(2.6)
B
6.9
5.5
1.9
(1.8)
(0.5)
2.6
12.2
n.s.
(0.5)
2.6
12.2
n.s.
0.7
n.s.
-
(36.3)
n.s
(36.3)
n.s
1.3
0.5
n.s
-
(3.7)
7.5
n.s
-
(6.3)
7.5
n.s
-
Total
21.7
(0.5)
(0.5)
15.4
(6.3)
(6.3)
5.7
(8.1)
(8.7)
For the purposes of this Base Prospectus, "Central Western Europe" includes Italy, France, Belgium, Spain and Greece;
"North America" includes the U.S.A. and Canada; "Emerging Europe, North Africa and Middle East" includes Egypt,
Morocco, Bulgaria, Kuwait, Saudi Arabia; and "Asia" includes Thailand, India and Kazakhstan.
Revenue, at Euro 2,048.4 million, was down 5.0 per cent. on the first half of 2013, due to slower business
performance (-1.8 per cent.) and a negative exchange-rate effect (-3.3 per cent.), with a marginally
positive consolidation effect (+0.1 per cent.). Revenue reflected the fall in sales volumes, whose impact
was nonetheless mitigated by a positive dynamic in sales prices, mainly in Egypt (where the sharp
increases in energy costs had an impact on sales prices) and Thailand.
Recurring EBITDA was Euro 304.8 million, an improvement of 2.2 per cent. benefitting from the sales
price factor and income from CO2 emission rights, which counterbalanced the unfavorable exchange-rate
effect. After net non-recurring expense of Euro 1.9 million, EBITDA was Euro 302.9 million (+3.3 per
cent.). EBIT was Euro 99.8 million, an improvement of 27.7 per cent. on the year-earlier period. Despite
the impact of the trend in sales volumes and the exchange-rate effect (Euro 11 million), operating results
improved thanks to the sales price effect, the significant containment of operating expense (for Euro 20
million overall) and income from CO2 emission rights transactions. Even excluding the CO2 factor and
the exchange-rate effect, recurring EBITDA showed an improvement of about 1.9 per cent., with the most
important progress in Italy and Thailand, and the largest reductions in France, Belgium, North America
and India.
Increases were posted in net finance costs (Euro 75.1 million from Euro 45.1 million in the first half of
2013, largely as a result of higher costs due to the negative base effect from exchange rates and CO 2) and
in impairment on financial assets, which reflected losses of Euro 26.8 million (losses of Euro 8.9 million
in the year-earlier period) arising on the impairment of the equity investment in the West China Cement
company.
The share of profit (loss) of equity-accounted investees was positive at Euro 3.1 million (a loss of Euro
2.3 million in the first half of 2013). Despite the progress in operating results, the increase in nonrecurring finance costs (owing to the exchange-rate effect and impairment losses on equity investments,
which had an overall negative impact of Euro 48 million) and the rise in income tax expense (from Euro
64.9 million to Euro 80.6 million) led to a loss for the first half of 2014 of Euro 79.6 million (a loss of
Euro 43.1 million in the year-earlier period). The loss attributable to owners of the parent was Euro 113.3
million (a loss of Euro 85.1 million) and profit attributable to non-controlling interests was Euro 33.7
million (profit of Euro 42.0 million).
- 64 -
In the first half of 2014, capital expenditure amounted to Euro 277.0 million (Euro 140.9 million in the
year-earlier period). The significant increase related to work on the strategic revamping projects in
Rezzato (Italy) and Devnya (Bulgaria); the plants will be completed by the end of the year and will
generate positive effects as from 2015. The rise in capital expenditure was also due to investment for the
new grinding center in India.
Considering the high level of capital expenditure, the small increase in cash flow from operating activities
and the share capital increase completed in the first half and used only in part to fund acquisition of the
Ciments Français shares tendered by 30 June 2014, net debt at the end of the first half of 2014 stood at
Euro 1,851.7 million, a decrease of Euro 82.3 million from 31 December 2013 (Euro 1,934.0 million).
Total equity at the end of the first half of 2014 was Euro 3,854.2 million (Euro 3,783.0 million at 31
December 2013), an increase arising largely from the extraordinary transactions of the i.150 plan.
Tender Offer and subsequent squeeze-out of Ciments Français shares
On 19 May 2014, the Board of Directors of the Company approved the final terms of the Tender Offer in
the form of offre publique d"achat simplifiée under the laws of France for all of the shares of its
subsidiary Ciments Français, as part of the i.150 Project. After the approval by the Autorité des Marchés
Financiers (“AMF”), the Tender Offer on the Ciments Français shares took place from 13 June 2014 to 3
July 2014.
Further to the success of the Tender Offer, Italcementi owned 97.73 per cent. of the share capital and
98.65 per cent. of the voting rights of Ciments Français and less than 5 per cent. of the share capital and
of the voting rights of Ciments Français were held by minority shareholders. Therefore, Italcementi
requested the AMF implement the squeeze-out procedure (retrait obligatoire), in accordance with its
intentions to delist Ciments Français shares from the Paris Stock Exchange. The squeeze-out aimed the
shares not tendered to the Tender Offer, i.e. a maximum of 808,794 outstanding securities, representing
2.27 per cent. of the capital and 1.35 per cent. of the voting rights of Ciments Français.
On 7 July 2014, the AMF announced the date for the squeeze-out of Ciments Français shares, which was
set for 15 July 2014. The squeeze-out procedure has been implemented at the same price as the one paid
during the Tender Offer (Euro 79.50 per share) and the shares of Ciments Français have been delisted
from the Paris Stock Exchange (NYSE-Euronext Paris).
The implementation of the squeeze-out procedure corresponds to the final step of the integration of
Ciments Français within the Italcementi Group.
Recent rating actions
After the positive conclusion of the i.150 Project, Moody's ratings agency, after its March announcement
that it would review the rating, confirmed the "Ba3" corporate family rating, while the outlook is changed
to "positive" from "stable". The same rating is affirmed for the EMTN programme and for the subsidiary
Italcementi Finance.
Following the recent transaction which led Italcementi to control the total share capital of Ciments
Français and the related delisting of the company, Moody’s announced the withdrawal of the corporate
family rating on the company and confirmed the Ba2 rating on Ciments Français notes due in 2017.
Presentation of financial information
Due to the adoption of the new standards IFRS 10 – “Consolidated financial statements” and IFRS 11 –
“Joint arrangements”, the Group restated some of the comparative figures included in Italcementi's halfyear consolidated financial statements for the six months ended 30 June 2014. See "Documents
incorporated by reference" for more information.
STRATEGY
The Group pursues a series of medium/long-term objectives in order to continue to successfully compete
and grow within the global building materials industry and on the international markets in which it
operates and to create value for all of its stakeholders through innovative, sustainable use of natural
resources for the benefit of the customers and local communities the Group works with.
- 65 -
These strategic objectives can be summarised as follows:
Dimensional growth in the cement production activity, especially in the emerging markets
In a rapidly consolidating sector, as demonstrated in the recent merger project between Holcim and
Lafarge, the Group has set dimensional growth objectives in order to reinforce its presence in the mature
markets where it is already active, but especially to expand its presence in the emerging markets, which
are considered by the Company the drivers of future demand for cement and therefore represent strategic
markets for operators in the sector.
Such growth has been and will be pursued, depending on the specific industry structure and market
conditions, through organic actions aimed at increasing the Group's production capacity via greenfield
sites (i.e. new sites) and brownfield sites (i.e. expansion of capacity at an already operative site)
investments and, in the medium-long term when opportunities arise, potentially through external
acquisitions and other business combinations, currently not yet identified. The Group is currently
investigating the possibility of growth in its clinker and cement production business in India and Morocco
through the development of greenfield sites.
In line with its financial policy goals, the Group may from time to time review its existing
assets/businesses and decide to divest non-core activities to generate financial resources necessary to fund
strategic growth initiatives.
Selective increase of its presence in the concrete and aggregates sectors
Ready-mix concrete is delivered to end users directly at construction sites. Therefore ready-mix concrete
is a channel to reach end users, namely construction companies, directly. Aggregates, in turn, represent a
strategic resource at the local level (given the high cost involved in transporting them compared to their
value) for operating in the concrete business 2. Therefore the Group continues to monitor its degree of
vertical integration along the building products industry value chain, and selectively bolstering its
presence in the Ready-mix concrete and aggregates businesses, especially in those markets in which the
share of cement sold through the concrete channel is high or rapidly rising.
Improvement in operational efficiency on variable costs and fixed costs
The Group constantly strives to improve efficiency on both fixed costs and variable costs. For this
purpose, the Group recently started an initiative aimed at disseminating the best operating practices within
the Group and at identifying new opportunities for operational efficiency, pursuing an optimisation of all
the principal elements of its industrial costs: fuel consumption, electricity consumption, costs of raw
materials, reliability of machinery, efficiency of maintenance resources (internal and external).
These opportunities can be pursued either by improving technical and other efficiency parameters within
the existing production footprint and organisational structure, or through capital expenditure aimed at
replacing older, less efficient assets with state of the art equipment.
Strengthening and development of innovation and the brand
In light of the rising costs of raw materials and fuels on the international markets, product and process
innovation represents an increasingly important factor in order to compete on the international cement
market. The Group pursues a specific strategy aimed at strengthening the corporate brand, in particular in
the emerging markets and/or those markets of recent expansion. In some of these countries (in India, for
instance) the brand represents an important purchase factor for the customer, who associates it with the
quality of the product. The Group's strategy calls for a large degree of commitment to research activity
2
The Group's presence in the concrete (and aggregates) business enables it to be in direct contact with the construction companies
and planners who express the new demands of the end market, particularly with regard to new needs in terms of performance,
product innovation and sustainable construction. The end market requires concrete with better mechanical, structural, durability,
thermal and acoustic insulation, fire resistance and seismic properties, but also a lower use of energy and resources. These needs
can be met using an "integrated" approach to the components of concrete (cement, binders, aggregates, additives). Management
believes that the Group's presence in the concrete sector thus makes it possible to anticipate new needs and to respond promptly
and competently to the demands for innovation of the end market, building customer loyalty. Innovation of concrete products,
which requires a constant research commitment on single components, the formula and its application, also makes it possible, in
the belief of the Company, to stimulate the adoption of higher quality construction techniques by the end customer.
- 66 -
around product innovation (for example, products with high environmental value like photocatalytic
cements, or products that offer significant advantages to the construction industry, like self-levelling
concretes) and innovation of process technology (such as cement production processes with lower use of
energy and non-renewable resources). The innovation effort has been highlighted by significant
initiatives, including the creation of a flagship research and development center (i.lab) near Bergamo,
Italy, and most recently the launch of a new and industry-unique product branding strategy (project i.nova
– See "- New Products – i.nova") designed to facilitate the conveyance to the final customer of the unique
selling proposition offered by the Group, focused on solutions rather than simple products.
Development of resources and systems in order to further improve the Group's capabilities in the
fields of IT, corporate governance, and human resources management
To cope with the increasing complexity of the competitive context and the degree of internationalisation,
a key element of the Group's strategy is further improvement of its mechanisms of governance and
management of human resources and information systems. As regards human resources, the Group
proposes to further develop the principal technical and managerial skills, as well as to ensure an
increasing availability of resources capable of managing multicultural contexts in the various geographic
areas in which it is present. In terms of corporate governance, the Group's priority objective is to
complete the adoption of governance and control systems in line with the international best practices. As
concerns information systems, the Group intends to gradually implement a global IT model enabling
operations efficiency and best-practice dissemination.
Sustainable development
Sustainability constitutes the cornerstone of the Group's strategy and its work culture. In 2000, the
Company formalised its commitment to the protection of the environment and social responsibility by
joining the World Business Council for Sustainable Development (WBCSD) and the Cement
Sustainability Initiative (CSI), which provides participating companies with a platform for the exchange
of knowledge, experiences and best practices as well as for support of their positions on these issues
through forums and by working with governments, non-governmental and intergovernmental
associations. In 2010 the Group adhered to the United Nations Global Compact (UNGC), completing the
Group's long-standing participation in the WBCSD. The UNGC brings together organisations to protect
and promote human rights, employment, the environment and the fight against corruption. Further details
are described under "Programme for sustainable development below.
Financial policy
The Company's financial policy aims to support the Group's industrial long term strategy by optimising
its cost of capital and maintaining a strong financial and liquidity structure. The Group has a prudent
financial policy organised around five key principles, targeted to be consistent with a solid investment
grade rating: (i) prudent level of leverage, taking into account the cash flow generated by the Group
during the business cycle, as supplemented as appropriate by disposals of assets; (ii) safe debt maturity
profile ensuring that debt repayments are appropriately distributed over time, to reduce refinancing risk;
(iii) availability of unutilised medium and long term committed credit lines, providing the Group with the
option of refinancing its short term debt at any time, guaranteeing the Group's liquidity. To ensure ample
liquidity reserves, the Company maintains long term and close relationships with leading domestic and
international banks; (iv) access to diversified financial sources to limit the concentration or the
dependence on a specific market, and risk linked to counterparties; and (v) an appropriate balance
between debt at variable rates and debt at fixed rates, in accordance with its objectives of performance
and risk exposure limitation. The Company believes that further financial efficiencies are achievable by
the Group through a stronger coordination of its treasury operations and a more centralised approach to its
funding transactions, providing greater liquidity to its debt instruments.
BUSINESS OVERVIEW
Main activities
With an annual production capacity of approximately 60 million tonnes of cement per year, as at 31
December 2013, the Group believes it was the world's fifth largest international cement producer.
- 67 -
In the construction materials business, as at 31 December 2013, the Group had operations in 22 countries
in four different continents and comprised an industrial network of 46 cement plants, 112 aggregate
quarries, 12 grinding centers, 6 terminals and 420 concrete batching units.
The chart below illustrates the industrial network of the Group as at 31 December 2013.
The Group operates mainly in the production and sale of cement, aggregate and concrete. The Group is
also engaged in the sale of admixtures and in the manufacturing and sale of limes, cement mortars and
premixes, the production and sale of electric energy and e-business services.
The following table sets out the breakdown of the consolidated revenues of the Group by sector for the
years ended 31 December 2012 and 20133.
Year ended 31 December
2012
2013
(audited)
(€ millions)
Sector
(€ millions)
%
%
Cement and clinker ...........................................................................
Ready mixed concrete/Aggregates ....................................................
Other activities ..................................................................................
2,904
1,280
295
64.8
28.6
6.6
2,717
1,249
270
64.1
29.5
6.4
Total Revenues ................................................................................
4,479
100.0
4,235
100.0
Financial Highlights
The following table sets out certain measures of financial performance of the Group for the years ended
31 December 2012 and 20134.
Year Ended 31 December
3
4
Due to the adoption of the revised IAS 19 – "Employee benefits" and the
certificates", the Group restated some of the corresponding figures included in
and statement of financial position as at 1 January 2012.
Due to the adoption of the revised IAS 19 – "Employee benefits" and the
certificates", the Group restated some of the corresponding figures included in
and statement of financial position as at 1 January 2012.
- 68 -
change in the accounting treatment of "green
the prior year consolidated financial statements
change in the accounting treatment of "green
the prior year consolidated financial statements
2012
2013
(audited)
(€ millions)
Revenues ..............................................................................................................................................
Recurring EBITDA .............................................................................................................................
EBITDA ...............................................................................................................................................
EBIT .....................................................................................................................................................
Net profit (loss) for the period ............................................................................................................
Group net profit (loss) for the period.................................................................................................
Investments in fixed assets(*) .............................................................................................................
Total shareholders' equity ..................................................................................................................
Group shareholders' equity ................................................................................................................
Net debt (financial position) ...............................................................................................................
Number of employees at period end...................................................................................................
4,479
643
625
(140)
(362)
(395)
370
4,165
2,903
1,998
18,886
4,235
631
618
159
(88)
(165)
339
3,776
2,604
1,939
18,434
_______________
(*) Gross of cash of acquired and consolidated companies.
OPERATIONS
Products
The Group offers a diversified range of products to meet the specific local needs of construction
companies in the various countries it operates in, although it may not be present in all countries with the
entire range of products.
Generally, the products offered can be grouped as follows:

cement, clinker and hydraulic binders, which are accounted for under the item "Cement and
clinker" in Italcementi's consolidated financial statements;

ready-mix concrete and aggregates, which are accounted for under the item "Concrete and
aggregates" in Italcementi's consolidated financial statements; and

cement mortars and premixes, which are accounted for under the item "Other activities" in
Italcementi's consolidated financial statements.
The range of cements and hydraulic binders is well developed and responds to the standards and
construction techniques relevant to each geographic area, also supporting sustainable construction. For
example, with regard to Europe and North America, the reference standards for cements and binders are
the European Norms ("EN") and the American Society for Testing and Materials ("ASTM"),
respectively. These standards apply to aggregates and concrete additives, as well. The reference standards
for concrete are analogous to those of cements (EN and ASTM being the main ones).
The following table sets out the breakdown of sales volumes of the Group by sector for the years ended
31 December 2012 and 2013.
Year ended 31 December
2012
Sector
2013
(audited)
Cement and clinker (million metric tonnes) .............................................
Aggregates (million metric tonnes) ..........................................................
Ready-mix concrete (million cubic meters)..............................................
45.9
34.01
12.9
43.1
32.5
12.3
Cement and clinker
Cement and clinker production constitutes the Company's main business, accounting for 64.1 per cent. of
its total consolidated revenues for the year ended 31 December 2013.
As at 31 December 2013, the Group operated 46 cement plants in 13 countries, 12 grinding centers in 6
countries and 6 trading terminals in 4 countries. In 2013, sales of cement and clinker amounted to Euro
2,716.8 million (compared to Euro 2,903.5 million in 2012) and 43.1 million tonnes.
- 69 -
Cement is manufactured from raw materials mainly of natural origin that are crushed to form a compound
comprised of limestone, clay, other natural raw materials and alternative raw materials that is ground to
obtain a powder known as "raw meal". Raw meal is subjected to a temperature of close to 1,450°C in
rotary kilns, where it undergoes chemical reactions that transform it into clinker. Cement is obtained from
clinker by grinding it into a fine powder and adding gypsum, and possibly secondary constituents that
determine the qualities of the final product. Clinker is an important intermediate product which is itself
actively traded between cement manufacturers.
The Group's cement plants have quarries with sizeable reserves that enable them to meet their needs for a
long period of time. Most of the quarries have an estimated period of exploitable reserves of over 50
years5. All of the quarries in which the Group operates are owned by the Group except for the quarries in
Egypt, Kazakhstan, Morocco (the Marrakech and Ait Baha quarries), Thailand (the limestone quarry in
Pukrang, Takli and Cha-am) whose land is owned by the state and the Group operates on such quarries on
the basis of leasing contracts and mining concessions.
Ready mix concrete and aggregates
Ready mix concrete and aggregates production accounted for 29.5 per cent. of the Company's total
consolidated revenues for the year ended 31 December 2013.
As at 31 December 2013, the Group operated 112 aggregate quarries in 8 countries and 420 concrete
batching units in 14 countries. In 2013, sales of concrete and aggregate amounted to Euro 1,248.7 million
(compared to Euro 1,280.3 in 2012), 32.5 million tonnes, with regard to aggregates and 12.3 million cubic
meters with regard to ready mixed concrete.
Concrete is obtained from cement, aggregate, water and additives and its composition must comply with
very rigorous technical and strength requirements. Concrete additives are products, generally liquid, that
are added to the material being produced in order for it to have certain desired characteristics, or to
attenuate critical behaviours of the material.
Concrete is classified according to its characteristics. The main characteristic of concrete is its
compressive strength, but just as important is its effectiveness in the fresh state and its aging behaviour.
Aggregates are made up of sand and natural gravels that are extracted from alluvial quarries or massive
rocks and then crushed and screened. Around 40 per cent. of aggregates are used for the production of
concrete, of which they constitute the main component, while the rest is used, in its natural state, for road
work and other miscellaneous uses. Raw materials are supplied in conditions similar to those for cement,
and dynamic management of the quarries to ensure renewal of the reserves. An aggregate quarry has an
exploitation period that is generally shorter than that of a cement quarry.
New products
The Group is engaged in marketing and developing new products, services and applications in different
areas, such as: thermal insulation, acoustic insulation, heat-conducting products, new developments in the
semiconductor industry, "i.light" products, specialized applications for high-resistance mortar,
architectural products and sulfoaluminate cement-based products.
Furthermore, following the sale of its cement and concrete admixture and additive business, which was
operated by the Group under the brand Axim, to Sika AG (a Switzerland-based company with a global
presence in the chemicals sector) in December 2011, the Group entered into a strategic partnership
agreement with Sika AG for a duration of five years with the intention of developing joint research and
development programmes and a long-term supply agreement with the Group for the supply of additives
for cement and admixtures for concrete to the Group. There are a number of operative synergies being
developed between Sika AG and the Group in India, Morocco and the United States and there are also
plans to develop the production of admixtures in Thailand.
5
Source: Company data.
- 70 -
i.nova
During the second half of 2013, the Group launched the "i.nova branding system" initiative ("i.nova").
i.nova's objective is to maximise the value of products produced by the Group and bring them to market
by way of a new system of product branding on a global scale.
The Group has adopted this new strategy of branding which involves the reorganisation of its products on
the basis of "performance families". The introduction of such "families" (11 in total), which are grouped
together on the basis of products that can be categorised as having the same performance, serves both a
strategic and a practical purpose. By grouping such categories together, the Company's management is of
the view that the market will have a clearer view of the Company's product range, allowing the members
of the building community to find the most appropriate solution in terms of performance for all their
needs.
The Group has therefore chosen a system of categorisation characterised by a system of codes/parameters
which can be easily understood by the market. The Company's management believes that this new
initiative will allow the value of the Group brand to grow.
Other activities
The Group is also engaged in the sale of admixtures and in the manufacturing and sale of limes, mortars
and premixes for cement and concretes, the production and sale of electric energy and e-business services.
These activities accounted for 6.4 per cent. of the Company's total consolidated revenues for the year
ended 31 December 2013.
Admixtures
Premixed products are made up of a wide range of materials comprising joiners, aggregates and additives
that fulfill the specific requirements of their users. Such products are sold together in lots or transported
loose and unloaded in dedicated silos at construction sites.
Electric energy
In the electric energy business, the Company operates through its subsidiary Italgen S.p.A. (Italgen),
which was founded in 2001 following a spin-off of the hydro and thermal power plants operated by the
Company since the 1920s. The activity has been historically oriented towards the production of energy
for the Group's needs while today the majority of the production is sold to third parties. Italgen's main
assets in Italy are 14 hydroelectric power plants located in the Italian regions of Lombardy, Piedmont and
Veneto for a total installed capacity of approximately 56 Megawatts, as well as approximately 400
kilometres of transmission lines.
In 2013, Italgen had revenues of €73.1 million (i.e. 1.7 per cent. of Italcementi's consolidated revenues),
earnings before interest tax depreciation and amortisation (recurring EBITDA) of €17.7 million (2.8 per
cent. of Italcementi's consolidated recurring EBITDA) and a net profit of €5.8 million, down 9.9 per cent.
from 2012.
As at the date of this Base Prospectus, Italgen operates through the following plants:

14 hydroelectric plants – 56 MW;

400 kilometers of long-distance power lines;

1 solar panelling plant in Guiglia (Italy) – 6 MW;

2 wind farms in Kavarna (Bulgaria) – 18 MW; and

1 wind farm in Morocco – 5 MW.
The photovoltaic plant in Guiglia (Modena, Italy), completed at the end of June 2011 (in respect to which
a convention was signed with the Italian Electric System Authority, which assigned the 20-year
- 71 -
government incentives as from 27 June 2011) and owned by i.Fotoguiglia (with Italgen holding a 30 per
cent share) reported total production for the year of 8.0 GWh, with a 99.5 per cent. availability rate.
In 2013, civil and mechanical construction work continued on the solar concentrator plant in Ait Baha,
whose project received in 2012 a contribution from the Institut de Recherche en Energie Solaire et
Énergies Nouvelles "IRESEN" for its innovative content.
Regarding the wind farm project (10 MW) in Safi, Morocco, following the positive outcome of the
feasibility study, development activities were completed and the procedure to obtain the necessary
permits for this type of activity moved toward a conclusion. During the year under review, the Laayoune
wind farm (5 MW) produced 15.4 GWh, with an average plant availability of around 99 per cent..
During 2013, the Laayoune wind farm (5 MW) produced 15.4 GWh, with a 99.0 per cent. availability rate,
covered 62 per cent. of the energy requirement of the Laayoune grinding centre in Western Sahara / South
Morocco.
During 2013, the Kavarna I and Kavarna II wind farms in Bulgaria (18 MW) produced 43.4 GWh with
97.3 per cent. availability rate. In 2013, after the ruling of the Community bodies, the additional
contribution of 10 per cent. of turnover for access rights to the network was abolished. On the other hand,
with effect from 1 January 2014, the state budget approved at the end of December re-introduced taxation
on renewable energy sources, this time at 20 per cent. The Bulgarian wind energy association is drawing
up an appeal to the constitutional court alleging the manifest illegitimacy of the tax, whose application is
nonetheless mandatory pending an eventual ruling to the contrary by the court..
The Gulf El Zeit wind farm project in Egypt has been subdivided into two phases (phase 1 and phases 2),
each of which provides for construction of a 120 MW wind farm with an independent corporate status.
Development work has been completed on phase 1, and is underway on phase 2.In 2013, the Mandra
wind farm project in Greece is in the analysis and pre-development stage. The site is near Athens
(Greece), where Halyps owns a quarry and some adjoining land.
E-Business Services
In the e-business sector, Italcementi operates through its subsidiary BravoSolution S.p.A.
(BravoSolution), which has developed a technological platform and related organizational processes and
skills, through which corporate customers can manage their supply and procurement activities.
BravoSolution is recognised as an international market leader 6 for web-based supply management
solutions by industry analysts. BravoSolution is pursuing an international expansion strategy: at the
beginning of 2008 it acquired the US Verticalnet group and subsequently it formed new subsidiaries in
Mexico, Netherlands, Germany and United Arab Emirates.
In 2013, BravoSolution had consolidated revenues of Euro 65.7 million (i.e. 1.6 per cent. of Italcementi's
consolidated revenues), an EBITDA of Euro 8.5 million (1.3 per cent. of Italcementi's consolidated
recurring EBITDA) and a net profit of Euro 2.4 million.
GEOGRAPHICAL PRESENCE
In the business of construction materials, the Company operates in 22 countries in Europe, North
America, North Africa, the Middle East and Asia. The operations in each country are led by a Country
Manager reporting to one of the five Zone Managers who ensure the coordination and implementation of
the industrial policies and actions set by the Chief Operating Officer. As of the date of this Base
Prospectus, the five Zones comprise: Italy, Greece, Bulgaria (Zone 1); France, Belgium, Spain and
Morocco (Zone 2); Egypt, United Arab Emirates, Saudi Arabia and Kuwait (Zone 3); India, Sri Lanka,
Thailand, Kazakhstan and China (Zone 4); and North America (Zone 5). For accounting purposes, Group
results are disclosed on a more conventional basis also in accordance with IFRS 8 and divided between:
Central Western Europe; North America; Emerging Europe, North Africa and Middle East; Asia; Cement
and Clinker Trading; and finally, Other Operations.
6
Source: Gartner, Inc., Magic Quadrant for Strategic Sourcing Application Suites, Deborah R. Wilson, et al., July 1, 2013.
- 72 -
The following table shows the breakdown of the consolidated revenues of the Italcementi Group by
geographic area for the years ended 31 December 2012 and 20137.
Year ended 31 December
2012
2013
(audited)
Revenues by
region
Revenues
Intragroup
sales
Contributive
Revenues
(c.r.)
per
cent.
of c.r.
Revenues
Intragroup
Sales
Contributive
Revenues
(c.r.)
per
cent.
of c.r.
(€ thousands)
Italy
France
Belgium
Spain
Others
C.W.E.(1)
Eliminations
Central
Western
Europe
(C.W.E.)
North
America
Egypt
Morocco
Others
EE.NA.ME.(2)
Eliminations
Emerging
Europe,
North Africa
and Middle
East
(EE.NA.ME.)
Thailand
India
Others Asia(3)
Eliminations
Asia
Cement and
clinker
trading(4)
Other
operations(5)
Unallocated
postings
Eliminations
Total
798,656
(60,726)
737,930
16.5
654,966
(50,694)
604,272
14.3
1,501,706
111,301
(7,942)
(32,319)
1,493,764
78,982
33.3
1.8
1,473,437
99,435
(6,923)
(34,689)
1,466,514
64,746
34.6
1.5
28,355
(23,386)
(7,891)
23,386
20,464
0.4
24,189
(17,204)
(3,817)
17,204
20,372
0.5
2,416,632
(85,492)
2,331,140
52.0
2,234,823
(78,919)
2,155,904
50.9
439,544
563,857
325,362
(456)
(46,956)
(2,386)
439,088
516,901
322,976
9.8
11.5
7.2
428,691
498,912
325,038
(354)
(14,129)
(4,774)
428,337
484,783
320,264
10.1
11.4
7.6
119,475
(8,708)
110,767
2.5
120,017
(11)
(12,560)
11
107,457
2.5
1,008,694
227,937
248,565
(58,050)
(653)
950,644
227,284
248,565
21.2
5.1
5.5
943,956
269,151
213,509
(31,452)
(57)
(1,017)
912,504
269,094
212,492
21.5
6.3
5.0
44,433
1.0
49,431
(1)
49,430
1.2
44,433
520,935
(653)
520,282
11.6
532,091
(1,075)
531,016
12.5
212,957
(48,492)
164,465
3.7
176,128
(43,953)
132,175
3.2
342,210
(269,033)
73,177
1.7
308,478
(232,981)
75,497
1.8
(462,176)
4,478,796
462,176
100.0
(388,734)
4,235,433
388,734
4,478,796
4,235,433
100,0
_______________
(1)
(2)
(3)
(4)
(5)
7
Greece.
Bulgaria, Kuwait and Saudi Arabia.
Kazakhstan.
"Cement and clinker trading" includes cement and clinker marketing activities in countries where Group terminals are located:
Gambia, Mauritania, Sri Lanka and Albania, as well as direct exports to markets not covered by Group subsidiaries.
"Other operations" comprises the operations of the Ciments Français sub-holding, consisting essentially of provisions of
services to subsidiaries. It also includes liquid and solid fuel procurement operations for Group companies, the BravoSolution
group in the field of e-business, Italcementi Finance, other international holdings and other minor operations in Italy.
Due to the adoption of the revised IAS 19 – "Employee benefits" and the change in the accounting treatment of "green
certificates", the Group restated some of the corresponding figures included in the prior year consolidated financial statements
and statement of financial position as at 1 January 2012.
- 73 -
PRODUCTION
The industrial operations aimed at production include the various phases from excavation of the raw
materials to delivery of the end product, with a set of tasks that differ from phase to phase and from plant
to plant at local level.
The most important raw materials, limestone, clay and aggregates, are mainly extracted from quarries,
either owned or leased, for which the Group's operating companies hold the excavation licenses, while the
other raw materials, including chemical gypsum, fly ash and blast furnace slag, are primarily purchased
from third parties.
Set out below is a summary of the key phases in the production of cement and clinker:

cement is obtained from raw materials of natural origin including limestone and clay which are
extracted from quarries usually located near the cement plants. Limestone and clay undergo local
primary crushing to have their size reduced and to make material haulage to the manufacturing
plants easier; the first processing step is grinding followed by drying. The raw materials,
adequately proportioned and possibly incorporating additives, are ground into a very fine powder,
called raw meal, which is then conveyed to blending silos and then sent to storage;

the raw meal is fed to the rotary kilns and is heated up to 1,450°C to obtain clinker. It is the
clinker components that impart hydraulic properties to cement. The clinker exiting the kiln is
rapidly cooled and then stored;

the final step of the cement manufacturing process consists in grinding clinker blended with
gypsum and other secondary constituents, if any. In this way cements for the most varied final
uses are obtained. The various types of cement are then stored in suitably devised silos; and

after the final grinding process, the cement is stored in silos, and ready to be dispatched to
customers (either end customers or distributors) in bulk or bags of 25kg and is ready for use.
At the local level, extraction activities can either be performed directly by the Group or can be
subcontracted to third parties, depending on efficiency. The Group usually retains ownership of the area
and title to the concession of the area.
As at 31 December 2013, the Group operated 46 integrated cement plants with the related quarries, 12
grinding centers, 420 concrete batching units, 112 aggregate plants and 6 terminals).
The production process is mainly managed by the personnel of the operating companies, who to differing
degrees avail themselves of third-party services for industrial cleaning operations, maintenance, and
ancillary and general services.
The plants' technical and economic performances are continuously monitored by the Group, which
pursues the optimisation of results through benchmarking comparison and experience sharing, if
necessary providing technical assistance through CTG specialists.
The product loading installations are an integral part of the production plants or distribution terminals fed
by the production plants or the trading companies. The transport of the cement products to destination,
either in bags or in bulk, as well as of the aggregates, is mainly performed directly by the customers or
accomplished through third parties, with the notable exception of France where the Group operates its
own in-house transportation company, Tratel.
ENVIRONMENT
CO2 emissons
The cement sector is characterised by high consumption of primary energy and the use of non-renewal
resources. Therefore, environmental issues have fundamental importance for successfully carrying out the
production activity. Lowering the production cost of the product cannot disregard respect for the
environment and for the community in which the Group operates. The development of techniques aimed
at reducing carbon dioxide (CO2) and other emissions generated by the production cycle, and the
adoption of responsible management systems aimed at limiting any environmental impact of the
- 74 -
installations have therefore become a competitive factor for companies in the sector, which operate while
respecting the traditions and needs of local communities.
In particular, control of CO2 emissions represents an important competitive factor, especially in Europe.
The Emission Trading Scheme Directive in fact imposes on cement manufacturers a maximum limit on
CO2 emissions per production site; beyond this limit the plant owner must purchase emission certificates
on the CO2 trading market, impacting the cost structure and consequently the enterprise's ability to
compete effectively in the market. To the extent that applicable limitations on CO2 emissions are
complied with, emission certificates may be sold on the CO2 trading market. Other regional markets are
developing similar approaches. As at 31 December 2013, the Group had not made any sales of purchases
of CO2 emission certificates.
The Group adopts environmental management systems as tools for risk prevention and continuous
improvement of its environmental performances in relation in particular to the responsible use of
resources, the control of gaseous emissions and the management of the quarries of raw materials. In
addition, the Group is constantly engaged in the control of major environmental aspects, with defined
reduction goals periodically updated.
Emission certificates
In relation to the activities that the Group carries out, the European companies within the Group are
exposed to market fluctuations in the price of emission certificates for CO2, as a result of the system
established in 2005 for the exchange of emission certificates, known as the EU Emissions Trading System
("EU ETS"). The EU ETS operates to monitor the surplus or deficits of companies in relation to the
emission certificates assigned to them by their relevant governments. The EU system of emission
certificate exchanges is the result of the implementation of the Kyoto Protocol for the reduction of gas
emissions and the greenhouse effect in industrial sectors which are responsible for the greatest impact on
climate change. Such system was implemented by Directive 2003/87/CE, as amended (the "Emission
Trading Scheme Directive"), which has introduced in Europe the so-called "cap&trade" system,
introduced by the Kyoto Protocol at an international level.
In light of the changing regulatory framework and in accordance with production plans for any given
period, the Group constantly monitors the balance between emission certificates and its medium-term
emission projections. Between 2010-2012, as a result of the decline in production levels of the Group in
EU countries, the Group was in a position to sell some of its emission certificates to the market in respect
of future emissions. Such quotas were not sold in 2013 as a result of market trends in the emission
certificate market. In 2014 the Group managed to generate an additional volume of emission rights taking
profit from a regulatory arbitrage that allows EU company to use cheaper international credits
(CER/ERU) instead of the European Union Allowance (EUA). The additional volume generated was sold
in the second quarter of 2014. As at the date of this Base Prospectus, the Group maintains a balance
between emission certificate allocation and use of such certificates for the period ending in 2020, and
maintains a reserve of emission certificates in order to safeguard it against adverse regulatory changes.
Concessions and authorisations
The Group's activities are dependent upon the requisite authorisations and concessions for the
exploitation of quarries and upon environmental authorisations for the running of its plants. The duration
of these authorisations and concessions differs in each country in which the Group operates. The
management of such authorisations and concessions, along with their maintenance and renewal process, is
carried out by the operating companies of the Group who may also consult with local advisors. The
average duration of the authorisations of the Group as at the date of this Base Prospectus is 10-15 years,
on a renewable basis, whilst most of the Group's concessions have a 30 year duration. In some cases,
usually in the ready-mix concrete sector, excavation activity is carried out on the basis of contracts with
independent parties who are granted excavation rights. Such contracts usually have a five year term.
The Group's projects for the modernisation and construction of new plants are also subject to
authorisations and concessions. The average timeframe for an application for planning permission is
approximately one year.
- 75 -
Planning and scheduling of production
The Group's activities have prevalently a local nature and therefore the planning and scheduling of
production are managed by the operating companies, as a matter of priority on the basis of the indications
of their respective commercial functions and in addition, as regards clinker and cement, of the requests
for the trading activities managed at Group level.
The Group level trading activities are directed both at supplementing the product availability of the
operating companies whose production capacity is lower than the demand in their markets and at
maintaining or acquiring market shares in countries where the Group is not present with production
facilities, as well as to satisfy specific requests from third parties. In this way maximisation of the degree
of plant utilisation is pursued and consequently the unit cost of production is reduced.
The Company, however, maintains a stringent production and inventories monitoring system, managed by
CTG, which is aimed at reinforcing operational controls and ensuring consistency of local activities with
Group-wide goals, notably in terms of working capital management.
Quality control
The Company constantly seeks to improve the quality of the products and services it supplies. To this end
it has adopted a quality management system that is aimed in particular at ensuring constant quality of its
products over time and in keeping with the specified requirements.
The entire cement production cycle is monitored and subject to continuous control by the technical
personnel. Automatic control combined with computerised techniques enables uniform interpretation of
the results as well as the definition of preventive measures to maintain consistent product quality.
The reference standards for product quality are those adopted in the product destination countries and, for
specific applications, the technical specifications of the clients and the performances guaranteed by the
manufacturer. To ensure product quality, in addition to the quality controls on production, which regard
all the phases of the process, full efficiency of all the production facilities, especially of dosing systems, is
a major focus. Each plant is equipped with a lab and dedicated staff for this activity who cover the entire
operating period.
In particular the controls regard:

sampling and controlling of raw materials (also those from the Company's own quarries),
additives and fuels entering the plant;

analysing semi-finished materials through automatic online systems or through samples taken at
preset intervals; and

finished products sent to the stockyard (for controls also through automatic online systems) and
finished products sent to shipping.
For the plants that produce the hydraulic binders, the reliability of the controls is ensured by adopting a
quality manual with procedures, technical instructions, forms and registrations followed up by periodic
checks.
To verify the reliability of its laboratories, the Company also has recourse to the use of standard cements
and to interventions by the Calibration Center of the Laboratory Quality Assurance Service of Bergamo
and Guerville.
All the production plants are ISO 9001 certified with limited exceptions in India and North America,
where other standards are applied. All the operating companies have a system for managing the data
resulting from the quality controls that is identical for the entire Group, through which CTG monitors the
quality performances in the different phases of the process and develops a benchmarking comparison.
Reliance on suppliers and customers
The production of clinker is a process which requires a continual preparation process at high temperatures
in rotary kilns. Any interruption to such process would cause disruption to its production. As such, the
- 76 -
consistent supply of solid fuels, liquids or gases is an essential element in order to ensure the continuity
and effectiveness of the product, and upon which it is dependent. The maintenance of such continuity is
managed by the Group through the control of suppliers and reserve materials.
The supply of electricity also plays a key role in the continuity of the Group's production process,
particularly during the phase in which the raw materials are ground together with other materials to obtain
raw meal. Where possible, the Group has put into place agreements for the continued supply of
electricity. Such agreements provide that Group companies will be compensated for any unscheduled
outages to their electricity supply. Such power outages are generally limited to several seconds or
minutes, and, in addition to being covered by compensation, they do not usually result in damage to plant,
people or machinery.
With regards to customer relationships, given the widespread client base which is characteristic of the
cement industry, the Group is not dependent on any specific type of contract with its clients. The Group's
top three clients for 2013 amount to 6.48 per cent of its total client base, whilst the top 10 clients made up
10.97 per cent.
SALES, TRADING AND MARKETING ACTIVITIES
Sales
Given the "local" nature of the cement business, the sales activities are consistently developed according
to the structure of the construction market and the specific operating methods of the customers and there
is a substantial difference in the commercial approach between mature markets and emerging markets.
As a result of i.nova, commercial sales are developed in line with trends in the local construction market
and client needs.
In mature markets, characterised by a high incidence of sales of bulk cement, due to the high penetration
of ready-mix concrete and precasting, the supplier/client relationship requires an orientation towards
satisfying the explicit and latent needs of the customer, so that each commercial opportunity necessarily
requires the development of competitive solutions for the customer.
A commercial and marketing organization with qualified personnel constantly updated as regards
customers' requests is therefore needed, able to offer information on the product range and the related
applications, support in the various phases of product use, technical consulting on the integrated use of
cement and additives and on the optimization/development of mix designs, and information on technical
standards and their possible evolutions.
Technical assistance constitutes an important customer loyalty building tool and is able to provide all
operators with technical support in their various application needs, also through the aid of mobile
laboratories that carry out the activity directly at the customer's work site.
In emerging markets, which are characterised by a high incidence of bagged cement consumption, sales
are aimed mainly at the channel of indirect distribution (distributors and retailers) who provide
widespread distribution to the end users. In this case, the direct interaction between producer and end user
is mediated by the distributor, with whom Italcementi enters into short or medium-term contracts. The
commercial organisation of such relationships must maintain the correct level of marketing of the
product, for which price control, geographical coverage and coverage of logistics' services are key to
competition.
Italcementi has adopted a structured methodology for the evaluation of customer satisfaction which is
easily adaptable to address different local expectations and market segmentations. Product, service,
logistics and the overall perception of the Group are the four key elements in the survey.
At the end of 2013, the Group launched an innovative initiative onto the market based on the performance
of its products, known as the i.nova initiative. The main objective of the i.nova initiative is to provide
each client with the most appropriate solutions on the basis of the services requested, in accordance with
their specific needs and circumstances. The implementation of this new marketing and sales initiative is
based on a clear segmentation of the market and on the possibility of spreading innovation pursuant to
product performance. Italcementi's management maintains that one of the key objectives of this initiative
is to engender client loyalty, with a view to increasing commercial margins.
- 77 -
Trading
The Group's companies sell their products mainly in their respective local markets and export the
products that have not been sold in such local markets. However, the Group's subsidiaries in Bulgaria,
Egypt Thailand and more recently Spain and Greece have historically been the most active in
international trade and export, selling cement and clinker to countries in which the Group has no
production facilities. The shipping trading sector is managed by Interbulk S.A. (Interbulk), the Group's
international trading company, which is active in direct trading with countries in which the Group is not
present and also coordinates the activities of the Group's terminals located in Gambia and Albania and of
the Group's grinding centre located in Mauritania. The terminal facilities in Kuwait and Sri Lanka are
managed as part of the Middle East operations. Interbulk is active both in the trading of clinker and
cement and works with different branches of the Group as well as with third parties (producers,
distributors and end clients). Interbulk also provides shipping services for materials through brokers and
independent vessel owners and has a network of specialists in the shipping industry.
Marketing
As regards marketing activities, the goal is differentiation vis-à-vis the Group's main competitors, through
brand enhancement, promotion of the use of innovative products, and partnerships with primary
customers to develop new product applications. The initiatives adopted by the Group include, among
others:

advertising in the media and specialised trade journals, used to strengthen the brand and to
provide information on new products, especially in the launch phase of special products (for
example TX Active photocatalytic cement, natural limes and sulfoaluminate cements);

product promotion of customers' and end users' facilities (for example construction site
demonstrations and merchandising);

participation at specialised trade fairs and seminars/conferences aimed at contractors and
operators in the sector; and

sponsorship for the realisation of works of particular architectural merit that can constitute a
point of reference for the market (for example the Dives in Misericordia Church).
Principal markets and competitive position
The worldwide demand for cement is closely linked to the growth rate of the construction sector
(residential, non residential building and infrastructure). According to Company data, worldwide cement
consumption has increased in the period between 2007 and 2013. This growth was due predominantly to
the performance of emerging markets (mainly China, India and the Middle East), which, for such period,
recorded an overall growth in the demand for cement. On the contrary, as a consequence of the world
financial crisis, the mature markets registered a decline, which in some countries (such as the United
States and Japan) started in 2006, whilst in others began only in 2010.
On account of this market trend, the worldwide demand for cement is now concentrated in the emerging
markets, which in 2013 represented over 90 per cent. of the total demand worldwide.
The orientation of the leading cement manufacturers towards a global presence has become more marked
in recent years also as a result of the strong expansion of the emerging markets, and operators have
focused their growth initiatives towards these markets to benefit from the notable growth in demand.
The Group has developed this strategy, diversifying beyond its main markets (Italy and France), into the
rest of the European Union, North America, and the Mediterranean Rim (Egypt and Morocco).
Since 1998, the Group has continued its policy of external growth in order to maintain and extend its
geographical positions in markets with a strong potential, and create a new balance between market share
in mature markets and emerging markets. In this way, the Group has reinforced its position in Morocco
and extended its presence in Asia (Thailand, India and Kazakhstan), Bulgaria and Egypt. In line with its
financial policy goals, the Group may from time to time review its existing investments and decide to
divest non-core activities to generate financial resources necessary to fund strategic growth initiatives.
- 78 -
Management of the Company believes that, as at the date of this Base Prospectus, the Group's main
competitors at a global level are the following groups: Lafarge, Holcim, Cemex and HeidelbergCement.
On 7 April 2014 Holcim and Lafarge announced a plan for the merger of their respective groups.
For information only, ranks and market shares for Italcementi’s cement business may be estimated as
follows:
Country
Rank
Market share
Italy
1
24%
France
2
32%
Belgium
3
15%
Spain
7
6%
Greece
3
7%
Canada
5
Egypt
1 (2)
16%
Morocco
2
26%
Bulgaria
1
30%
Thailand
4
15%
India
7
3%
Kazakhstan
5
14%
USA
8
Source: Jefferies estimates, company data.
(1) Shares of Canadian capacity. Part of production exported to US.
(2) Combined market share of Suez, Helwan and Tourah.
(3) Based on domestic capacities.
- 79 -
(1)
(3)
4%
4%
SEASONALITY
The financial performance of the Group fluctuates throughout the year on the basis of seasonal trends.
The Group's revenues tend to increase in the second, third and fourth quarters of each calendar years, with
yearly-lows in the first quarter. The table below sets out the Group's quarterly performance for 2013.
(Euro millions)
Revenues
Change % vs. 2012
4th quarter
2013
2013
3rd quarter
2013
2nd quarter
2013
1st quarter
2013
4,235.4
(5.4)
1,017.9
(6.0)
1,060.9
(3.2)
1,191.8
(3.6)
964.8
(9.3)
631.0
157.9
174.5
210.1
88.5
(1.9)
14.9
17.4
15.5
16.5
3.7
17.6
(32.7)
9.2
618.0
157.9
166.5
204.9
88.7
(1.2)
14.6
56.8
15.5
(5.1)
15.7
(2.0)
17.2
(36.8)
9.2
159.3
51.2
30.7
93.9
(16.5)
n.s.
3,8
n.s.
5,0
(50,3)
2,9
19,1
7,9
n.s.
(1,7)
Results from continuing operations
(88.4)
(8.3)
(36.9)
15.2
(58.5)
Net profit (loss) for the period
(88.4)
(8.3)
(36.9)
15.2
(58.5)
(2.1)
(0.8)
(3.5)
1.3
(6.1)
Recurring EBITDA (1)
Change % vs. 2012
% of revenues
EBITDA (2)
Change % vs. 2012
% of revenues
EBIT (3)
Change % vs. 2012
% of revenues
% of revenues
Group net profit (loss) for the period
(165.0)
(29.8)
(50.1)
(6.9)
(78.2)
Total net debt (at end of period)
1,939.0
1,939.0
2,031.1
2,000.7
2,105.9
_______________
(1)
(2)
(3)
Recurring EBITDA is calculated as EBIT before non-recurring income / expense, amortization, depreciation and impairment
losses on non-current assets.
EBITDA is calculated as EBIT before amortization, depreciation and impairment losses on non-current assets.
EBIT is calculated as profit before taxes, finance income and costs, exchange-rate differences and derivatives, impairment on
financial assets and share of profit (loss) of equity-accounted investees.
The building materials industry in which the Group operates is characterized by seasonality and the
cyclical nature of business throughout the year, which may have an adverse impact on the profitability of
the companies which operate in such industry.
During the winter season, when adverse weather conditions make large-scale construction projects
difficult, there is typically lower activity levels, resulting in a lower demand for building materials. In
addition, plant maintenance activities and related costs are typically carried out in the winter season. This
leads to high volatility in the quarterly financial figures of the Group. The results in a particular financial
quarter might therefore not be representative of the expected full financial year results.
RESEARCH AND DEVELOPMENT
The research activity of the Group is carried out by CTG in which Italcementi has concentrated the
Group's research, development, engineering and technical assistance activities. Since 1994 CTG
combines the skills and specific knowledge of two previously separate technical centers respectively of
Italcementi and Ciments Français, improving the quality of the services offered both to the companies of
the Group and to third parties around the world. CTG has its headquarters in Bergamo and a branch in
Guerville, France, and has a staff of approximately 343 employees as at 31 December 2013. With the
inauguration of i.lab in Bergamo, the Group decided in 2013 to relocate the research activity of CTG in
i.lab.

CTG's principal activities are:

planning and supervision of the realisation of industrial plants and machinery;

modernisation and optimisation of production processes;

monitoring of technical and economic performances for plants;

research and development on materials, products and processes; and
- 80 -

specialised technical assistance.
In addition to the research carried out in Bergamo and Guerville, research is also performed through a
network of scientific collaborations at international level that includes research centers, universities and
companies in the materials and construction sector. The network is comprised of 16 internationally
recognized independent research centers, 25 companies and 25 among Italian, European and nonEuropean universities.
With these resources, the laboratories of the CTG have attained national and international recognition
from ACCREDIA (the "Ente unico nazionale di accreditamento") in Italy and from COFRAC (the
"Comité Français d'Accréditation") in France linked to the strong commitment in the field of research
and development, and the reliability of the tests carried out. These honors have also enabled CTG to
obtain European and national funding for specific research projects.
In April 2012, Italcementi inaugurated i.lab, the new research and innovation center, designed by the US
architect Richard Meier. Located in the Kilometro Rosso Science Park (Bergamo), the research and
innovation center has an overall surface area of 23,000 square meters and hosts engineers, technicians and
researchers from the research and development and laboratories departments of CTG and from
Italcementi's innovation department, all engaged in investigating and developing innovative
technological, functional and aesthetic solutions for new construction materials.
At the date of this Base Prospectus the Group is involved in numerous research projects regarding:

use of alternative fuels in cement production;

new systems for clinker grinding;

new clinker with reduced CO2 impact;

additions for mix cements;

special cements with advanced strength and workability characteristics;

high-performance concrete;

recycling of cement materials;

photocatalytic cements;

permeable concrete;

special concretes for thermal and acoustic insulation; and

architectonic concrete.
INTELLECTUAL PROPERTY
The Group's activity is not substantially dependent on trademarks, patents or licenses, as the development
of the technology occurs proprietarily through its own organization and/or through consulting contracts
with related parties.
The Group protects the results of its research and development programmes through industrial patents
aimed at protecting its technical inventions both at the national and international level. Italcementi does
not hold licenses in respect of other trademarks, patents or third party licenses, nor does it have similar
obligations which may interfere with the industrial activities of the Group.
The Group pursues an active policy to protect its intellectual property assets, including through a
monitoring system, in order to prevent imitations and abuses of those assets and to contest them when
they occur through a system which monitors counterfeiting and breaches of its own patents.
Following the launch of the i.nova initiative, Italcementi launched a strategy to categorize and maximize
the value of its brand. See "– New Products – i.nova" for further information.
- 81 -
PROGRAMME FOR SUSTAINABLE DEVELOPMENT
Among the long-term strategic objectives of the Group, sustainability constitutes the foundation of the
Italcementi Group's strategy and of its work culture.
In 2000, Italcementi formalised its commitment to the protection of the environment and social
responsibility by joining the World Business Council for Sustainable Development (WBCSD) and the
Cement Sustainability Initiative (CSI), which provide participating companies a platform for the
exchange of knowledge, experiences and best practices as well as for support of their positions on these
issues through forums and by working with governments and non-governmental and intergovernmental
associations. As a member of the WBCSD, Italcementi signed the Cement Sustainability Initiative's
Agenda for Action, which is the first formal commitment that binds a number of world cement industry
leaders to an action plan that aims at satisfying present-day needs at the same time as safeguarding the
requirements of future generations.
In 2010, the commitment was confirmed and further expanded with the adhesion to the Global Compact
of the United Nations, adding to well established objectives in terms of environmental protection, health
and safety and wider commitments on human and labour rights and on anti-corruption.
The complete series of "Sustainability Policies", issued in 2010 and circulated for gradual implementation
in 2011 reflects and details these formal commitments. Operative, quantified improvement targets are
established and the full disclosure on progress is to be done on a yearly basis through dedicated reporting
and integration into the financial elements of the Annual Report.
The intervention areas in which Italcementi is engaged in sustainable development can be grouped into
the following categories:

Vision, management approach and corporate governance system: to ensure the efficacy of its
operational activities and its decision-making process, the Group has adopted specific corporate
governance standards and has undertaken actions aimed at improving the efficiency and the
transparency of its management and control systems. This has required careful definition of its
decision-making structure and the adoption of a series of policies, rules and principles that guide
and control the actions and conduct of all employees which the Group has codified in a set of
voluntary codes. Specific short-term targets and long-term ambitions have been adopted and
publicly disclosed.

Economic development: the principal economic objectives of the Italcementi Group are longterm growth and profitability. These goals are pursued through acquisitions, industrial
investments and product innovation, with a portfolio balanced between mature markets and
emerging markets. This produces economic benefits not only for the Group and its investors but
also for the countries in which the Group operates and invests. Cement factories are important
catalysts for the development of local economies; they support infrastructure development and
generate work opportunities, making an important contribution to government revenue. The
multiplier effect exerted by these benefits in the value chain is very positive, especially in the
emerging economies.

Integrity: high ethical standards are part of Italcementi Group's beliefs and conducts. Reputation
of the Group is built on the individual action of each employee, director, officer and
representative, who remains committed to obeying the applicable laws and regulations, deterring
fraud or wrongdoings and avoiding any conflicts of interest between personal and Italcementi's
interests. Through the senior management's leadership, the Group promotes an organisational
culture of compliance with its ethics values, with the laws governing the company's business
operations, with the corporate criminal liabilities laws and with the laws protecting other public
interests.

Valuing people: diversity is perceived as one of the core values of the Italcementi Group.

Employment and development and human resource promotion programmes are carried out
without discrimination, acting on extensive training and skill building to ensure talent retention
and full support to future challenges.
- 82 -

Health and safety: the health and safety of employees, as well as of the surrounding environment,
are fundamental for the Group. In addition, the Group has adopted a health and safety policies
that involve all of its production and work sites, with the objective of eliminating occupational
illnesses and injuries. This goal is pursued by applying the highest safety standards, encouraging
a culture of risk prevention and promoting the adoption of responsible conduct on the part of all
the employees and those who work or have relations with the Group.

Social initiatives: the Group aims at building relationships with its stakeholders based on mutual
commitment, active partnership, trust, openness and long-term cooperation. Building relations
with communities means understanding their needs, supporting local projects without creating
dependency, and fostering stakeholder consultation when opening new facilities, running
existing ones and closing plants at the end of their productive lives.

Protection of the environment: the Italcementi Group's proactive approach is centred on the
prevention and mitigation of every potential environmental impact and on the conservation of
natural resources in the development and operation of its production plants:

climate and energy, through adequate control and careful management of CO2
emissions, energy efficiency, use of alternative fuels and development of low-energy
products;

environmental management, through the adoption of internationally recognised
environmental management schemes, verified by third parties;

control and reduction of atmospheric emissions, ensuring careful monitoring of all kilns
and the adoption of the Group standards;

assessment of the sustainable use of water resources; and

responsible use of natural resources and raw materials, including quarry rehabilitation
and preservation of biodiversity.

Supply chain management: stakeholder dialogue is a key success factor in creating value and
customer relationship. A fundamental pillar to implement such culture and monitor the relation
with clients is represented by the Customer Survey Process. Through this process, the Group
aims at developing and improving a customer-centric culture, based on the comprehension of
market real needs in order to best answer to clients product /service expectations, and more over
to implement a truly pro-active Sales Policy. Moreover, the Group is fully, and constantly,
committed to evaluate, prevent and mitigate the risks associated with dealing with suppliers and
contractors. Adopting a worldwide unique approach, in 2012 a multi-functional team, defined a
standard setting minimum requirements for contractors and suppliers to establish commercial
relationships with the Group. The standard is based on the respect of human rights, labor,
environmental and anti-corruption best-available practices, in line with the Ten Principles of the
UN Global Compact. Furthermore, a new set of clauses including previous minimum
requirements, has been defined in the standard general contract conditions and are now available
for any future purchase order in the Group.

Quality: The Group is committed to guarantee and continuously improve the quality of its
products, processes and services. Implementing a systematic approach is the key issue to manage
the Group processes aiming at satisfying quality requirements, creating value along the life-cycle
of products and enhancing relationships with customers and suppliers. The group Quality Policy
consolidates this approach. All the Group sites adopt quality management systems, subjected to
regular audits and periodic updates.

Research, innovation and support to sustainable construction: Italcementi Group commitment to
research and innovation is of strategic importance as a guarantee of growth, global
competitiveness. In line with its Sustainability Policies, the Group prioritises the design and
promotion of a "sustainable portfolio" as part of the answer to growing market requests and to
regulatory drive for construction product labeling. The Group, therefore, strives to provide
solutions addressing integrated design, allowing applications of our products to satisfy
requirements of holistic and internationally recognised rating systems.
- 83 -
The Group's sustainability management is entrusted to the Sustainable Development Steering Committee
("SDSC"). The SDSC, chaired by the Group's Chief Executive Officer and coordinated by the Director
for Sustainable Development, is made up of all members of the Italcementi Steering Committee plus the
directors of the Communication & Image and Research & Innovation.
In 2013, the Group maintained and strengthened its commitment to sustainable development in all
countries and lines of business, with initiatives coordinated by the Group's "Sustainable Development
Steering Committee". Details on objectives, initiatives and results are provided in the 2013 Sustainability
Disclosure, now an integrated section within the Annual Report.
- 84 -
RISK MANAGEMENT
The Management of Risks (internal, external, political, social and financial) is part of the management
and decision making process. It represents a key aspect in the governance system.
The objective of risk management is to support the continuous improvement of results through the
safeguarding of assets and reputation of the company, decision support and mobilisation of the managers.
Risk management is also used to reduce risk exposure and capitalise opportunities for which those
managers are responsible.
In 2008 the Group launched the "Risk and Compliance" Programme and in May 2010 Italcementi formed
an Enterprise Risk Management Department, reporting to the Italcementi S.p.A. Chief Executive Officer,
to improve its ability to create value for stakeholders by optimising through the support of the business
units in order to meet their strategic and operational objectives. The mission of the function is to
guarantee a structured approach to risk management, integrated with the Group growth strategy, and to
support the improvement of Group performance by identifying, measuring, managing and controlling key
risks.
The risk management process includes:
1.
identification of the main areas of risk for Group strategic goals and development of methods and
tools to analyse and assess the correlated risk events;
2.
assessment, at country level and at aggregate level, of identified risk events in terms of impact,
probability and timeframe, in order to acquire an overall vision of the Group risk portfolio;
3.
selection of priority risks and definition of response strategies, Group governance rules and
actions to integrate and improve risk management systems;
4.
implementation of mitigation strategies and action and development of the Enterprise Risk
Management process;
5.
reporting to Top Management and the governance bodies on the main risks, and their
management and evolution; in this phase quantification of risks and opportunities is integrated
with the enterprise management process, for example in the budget, in results forecasting reviews
and in assessment of strategic projects.
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CORPORATE STRUCTURE
Italcementi is the parent company of Italcementi Group, which, as at 31 December 2013, was comprised
of 195 companies, of which:

147 are directly or indirectly controlled by Italcementi and therefore consolidated on a line-byline basis;

27 are jointly controlled and therefore consolidated on a proportionate basis; and

21 are affiliated and therefore consolidated with the equity method.
Italcementi directly operates its cement business in Italy and also controls the Group's main operational
subsidiaries in Italy and, through Italgen S.p.A. and BravoSolution, the foreign operational subsidiaries of
the Group in the electricity and e-business services businesses.
Italcementi owns practically all of the non-Italian operational subsidiaries indirectly through its French
subsidiary, Ciments Français, in which Italcementi acquired a controlling stake in 1992.
The main subsidiaries with a significant presence of minority shareholders are located in Thailand (Asia
Cement Company and Jalaprathan Cement Public Company), Morocco (Ciments du Maroc), Egypt (Suez
Cement Company, which also owns 99.54 per cent. of Helwan Cement Company, 66.1 per cent. of
Tourah Portland Cement, 52 per cent. of Ready Mix Concrete Alalamia SAE and 51 per cent. of Hilal
Cement Company - Kuwait) and France (Ciments Français).
The table below provides an overview of the structure of the Group as at 31 December 2013, with the
exception of Ciments Français (as of 15 July 2014, after the completion of Italcementi tender offer).
Italcementi S.p.A.
Group financing
100%
Italcementi Finance S.A.
100%
Société Internationale
Italcementi
(Luxembourg) S.A.
Holding company also operating
Italian cement activities
Captive reinsurance
100%
100%
Italgen S.p.A.
100%
Affiliates
Ciments Français S.A.
E-business initiatives
BravoSolution S.p.A.
R&D, engineering and technical support
CTG S.p.A.
50%
Interbulk Trading S.A.
85%
50%
Shipping
Medcem S.r.l.
75%
50%
Trading Co
15%
Support activities
Power production
Ready-Mix and Aggregates in Italy
Calcestruzzi S.p.A.
Diversified activities
France
Bulgaria
Belgium
Egypt (*)
Spain
Morocco (*)
Greece
India
U.S.
Thailand (*)
Canada
Kazakhstan
Affiliates
Others (**)
International cement, ready-mix and
aggregates activities
-
_____________
All figures as of 3st December 2013, with the exception of Ciments Français (as of 15 July 2014, after the completion of Italcementi
tender offer)
(*)
Controlling presence with significant minority interests.
(**)
Italcementi is also present in Kuwait (terminals and Ready-Mix) and Mauritania (grinding centre and Ready-Mix); Albania,
Gambia, Sri Lanka (terminals); Saudi Arabia (Ready-Mix); China, Syria and Cyprus (minority stakes).
- 86 -
Below is a table representing the leading operating companies headed by the Italcementi Group as at 31
December 2012, broken down by country and area of activity.
Country
Italy
Cement
Italcementi
Aggregates and readymixed concrete
Calcestruzzi
Other
Italgen
BravoSolution
France
Ciments Calcia
GSM
Socli
Unibeton
Tratel
Trabel
Belgium
Compagnie des Ciments
Belges
Aggregates and readymixed concrete
subsidiaries
Spain
Financiera y Minera
Aggregates and readymixed concrete
subsidiaries
Greece
Halyps Building
Materials
Aggregates and readymixed concrete
subsidiaries
Cyprus
Vassiliko(1)(2)
United States of
America and Porto
Rico
Essroc Corp.
Canada
Essroc Canada
Aggregates and readymixed concrete
subsidiaries
Ciment Quebec(2)
Thailand
Asia Cement Public
Company
Aggregates and readymixed concrete
subsidiaries
Jalaprathan Cement
Public Company
India
Zuari Cement Ltd.
Kazakhstan
Shymkent Cement
Saudi Arabia
Egypt
Sitapuram Power Ltd.
BetonAta
International City for
Ready Mix(3)
Suez Cement Company
RMC Alalamia
Italgen Misr
Other aggregates and
ready- mixed concrete
subsidiaries
Suez Bags(1)
Aggregates and readymixed concrete
subsidiaries
Italgen Maroc
(1)
Tourah(1)
Helwan Cement Co.
Morocco
Ciments du Maroc(1)
Asment(2)
Bulgaria
Devnya Cement AD
Vulkan AD
- 87 -
Country
Cement
(1)
Kuwait
Hilal Cement
Albania
Eurotech Cement(4)
Sri Lanka
Singha Cement (PTE)
Limited(4)
Gambia
Gacem(4)
Mauritania
Mafci(4)
Switzerland
_______________
Interbulk Trading
(1)
(2)
(3)
(4)
Aggregates and readymixed concrete
Other
Aggregates and readymixed concrete
subsidiaries
1.
Mauritanienne
des Batiments et
Routes S.A.
Listed company
Companies valued with the equity method
As at 31 December 2013, International City for Ready Mix was accounted for as Joint venture. During 2014, Suez Cement
Company SAE acquired the residual 50 per cent. of the capital of International City for Ready Mix (in which Italcementi
already held 50 per cent. of the capital) and therefore the company has been consolidated; in 2013, it was accounted for with the
proportionate consolidation method.
Terminals
- 88 -
CORPORATE GOVERNANCE
Overview
Corporate governance rules for Italian companies whose shares are listed on the Italian Stock Exchange
are set forth in the Italian Civil Code, the Legislative Decree no. 58 of 24 February 1998 (Testo Unico
della Finanza, the Italian Financial Services and Markets Act, hereinafter the "TUF") and CONSOB rules
implementing the TUF. The Company corporate governance system deduces from the following codes
and/or regulations, as well as the By-laws:

corporate governance code for listed companies promoted by the Committee for Corporate
Governance, which the Company adhered to (the "Corporate Governance Code" or the
"Code");

the Group code of ethics (the "Code of Ethics");

treatment of confidential information;

internal dealing corporate governance code;

procedure for transactions with related parties ("Transactions with Related Parties");

"Insider register" procedure;

regulation for manager in charge of preparing the company's financial reports; and

the organisational, management and control model (the "Organisational, Management and
Control Model").
The above documents are all available on the corporate website www.italcementigroup.com except for
the Corporate Governance Code (available on the Italian Stock Exchange website www.borsaitaliana.it),
the Regulation for the manager in charge of preparing the company's financial reports, available to all
Group companies on the company intranet and in respect of the special part of the Organizational,
Management and Control Model, also made available to all employees on the Company intranet.
Italcementi is organised according to the so-called "traditional" administration and control system
(sistema tradizionale) provided for by Articles 2380-bis et seq. of the Italian Civil Code, where (i) the
Board of Directors (Consiglio di amministrazione), appointed by the ordinary shareholders' meeting, is
responsible for the Company's management; and (ii) the Board of Statutory Auditors (Collegio Sindacale)
also appointed by the ordinary shareholders' meeting is responsible for control over the Company's
administration.
According to Article 2409-bis of the Italian Civil Code, and Legislative Decree no. 39/2010,
implementing Directive 2006/43/EC on statutory audits of annual and consolidated accounts, listed
companies organised under the laws of Italy shall appoint – by resolution of the ordinary shareholders'
meeting - an auditing firm or auditor to audit their financial statements and carry out the accounting
control.
Board of Directors
The By-laws provide that the Company shall be managed by a Board of Directors, whose number shall be
comprised between eleven and twenty one members appointed on the basis of lists of candidates that
ensure for minority shareholders the minimum number of directors provided for by the law. Directors are
appointed by the ordinary Shareholders' meeting, they remain in office for the period set at the time of
appointment, but in no event for more than three fiscal years and they may be reappointed after the
expiration of their term of office.
The Board of Directors is responsible for defining the Company's and the Group's overall strategy and is
in charge of the Company's operations. To this end, according to the By-laws, it is vested with the
broadest powers of ordinary and extraordinary administration of the Company. It may thus carry out any
and all acts, including disposal transactions, which it deems appropriate to achieve the corporate purpose,
with the sole exception of those expressly reserved to the Shareholders' meeting by operation of law.
- 89 -
In addition to the powers granted to the Board of Directors by virtue of applicable laws and the By-laws
regarding the issue of shares and bonds, the resolutions concerning the following matters are also
entrusted to the Board – without prejudice to the extraordinary shareholders' meeting authority, existing
by operation of law in compliance with Art. 2436 of the Italian Civil Code:

incorporation of wholly owned companies or 90 per cent. owned companies;

transfer of the registered office, provided that it remains in Italy;

establishment or removal of secondary offices, both in Italy or abroad;

reduction in share capital in the event of shareholder's withdrawal; and

amendments to the By-laws to comply with mandatory legal requirements.
Furthermore, the Board of Directors, in accordance with the Code, has the task of examining and
approving in advance:

the transactions undertaken by the Company and by its subsidiaries when such transactions are
of strategic or financial importance for Italcementi; and

the transactions with related parties when expressly required by the specific Company procedure
and in compliance with the methods therein.
The Board of Directors, in compliance with the By-laws, meets at least once every calendar quarter. At
such meeting delegated bodies report to the Board of Directors and to the Board of Statutory Auditors on
significant transactions put in place in the exercise of delegated powers.
Lastly, the Board of Directors must review, at least once a year, the size, composition and functioning of
the Board itself and of its Committees, in compliance with the corporate governance rules set forth by the
Code.
The Board of Directors has delegated all of its powers, except for those which the Italian Civil Code and
the Company's By-laws do not allow to be delegated, to an Executive Committee, composed of six
members, including the Chairman, the Executive Deputy Chairman, the Deputy Chairman and the Chief
Executive Officer. As specified at the time of its appointment, the resolutions of the Executive Committee
must be reported to the next Board of Directors' meeting. Among the 6 members of the Executive
Committee, three are executive directors; the remaining, two of whom independent, are considered nonexecutive directors, as the Company's Executive Committee meets without any regularity and, in fact,
exclusively to address the timely examination of certain transactions and for the adoption of the relevant
resolutions. The Code also shares this interpretation provided that, as in this case, the director, a member
of the Executive Board, is not given individual executive powers.
In accordance with the Code, the Board of Directors has set up, internally, a Remuneration Committee
and a Control and Risks Committee, whose resolutions are of advisory nature without being binding on
the Board.
The Remuneration Committee, under the Corporate Governance Code, is responsible for (i) periodically
assessing the adequacy, overall consistency and actual implementation of the policy for the remuneration
of directors and managers with strategic responsibilities, submitting proposals to the Board of Directors,
and (ii) submitting proposals or expressing opinions to the Board of Directors on the remuneration of
executive directors and of other directors who hold particular offices, as well as on the setting of
performance targets related to the variable portion of such remuneration. The Remuneration Committee is
also required to monitor the implementation of the resolutions adopted by the Board, in particular, by
verifying the actual achievement of performance targets. The Remuneration Committee also performs
additional advisory functions on remuneration and related matters that the Board of Directors may request
from time to time.
In compliance with the provisions of the Corporate Governance, the Control and Risk Committee has the
task of supporting, through adequate preparatory work, the assessments and decisions of the Board of
Directors relating to the Internal Control and Risk Management System, as well as those regarding the
approval of interim financial statements. The Control and Risks Committee has, among others, the
- 90 -
following purposes: to evaluate, together with the manager in charge of preparing the Company's
financial reports and the external auditors, the correct application of accounting policies and their
consistency for the purpose of preparing the consolidated financial statements; to express opinions on
specific issues regarding the identification measurement, management and monitoring of the Company's
main risks and the definition of the nature and level of risk deemed compatible with the strategic
objectives; to review the activities programme and periodic reports of the internal audit function
concerning the assessment of the internal control and risk management system, as well as the other
reports of the Internal Audit function that are particularly significant; to monitor the independence,
adequacy, efficiency and effectiveness of the Internal Audit Function. In addition, the Control and Risks
Committee performs further duties assigned by the Board of Directors and reports, at least, on a halfyearly basis, at the time of the approval of the annual and the half-year reports, on the activities
performed as well as on the adequacy and effectiveness of the Internal Control and Risk Management
System.
Finally, the Board of Directors, in compliance with the CONSOB regulation no. 17221 of 12 March 2010
envisaged for transactions with related parties, set up from among its own members, during the adoption
of the related procedure, a committee for Transactions with Related Parties (the "Committee for
Transactions with Related Parties"), which consists of only independent directors and is composed of
the same members as the Control and Risks Committee.
The Committee for Transactions with Related Parties has the task of assessing the formal and substantial
accuracy of the transactions undertaken directly by the Company, or through its subsidiaries, with other
related parties. Specifically, the Committee for Transactions with Related Parties has: (i) the duty to give
and explain its opinion on both minor (non-binding opinion) and significant (binding opinion)
transactions; (ii) the right, for significant transactions, to take part in the negotiations and in the
preliminary investigation stage through a complete and prompt flow of information, and the right to ask
for information and to submit its remarks to the delegated bodies and to those in charge of the
negotiations or the preliminary investigation; (iii) the right to seek the assistance, at the Company's
expense, of independent experts of its choosing. In the case of minor transactions, the Procedure for
Transactions with Related Parties envisages the right, in any case, to execute the transaction even if the
Committee for Transactions with Related Parties expresses a negative opinion, provided that this is
disclosed to the market through a specific document setting out the reasons for this divergence. For
significant transactions, on the other hand, should the Committee for Transactions with Related Parties
express a negative opinion, the Board of Directors may approve the transaction only with the prior
authorisation of the Shareholders' Meeting. In this case, the Shareholders' Meeting will give its approval
on the basis of an enhanced quorum (the majority of shareholders who are not related parties must not
vote against the transaction) and a vote against will be valid only if the unrelated shareholders present at
the meeting represent at least 10 per cent. of the share capital, with voting rights (the so-called
"whitewash").
Board of Statutory Auditors
The Company's By-laws provide that the Board of Statutory Auditors consists of three Acting Auditors
and three Substitute Auditors, appointed on the basis of lists of candidates that ensure for minority
shareholders one Acting Auditor and one Substitute Auditor. They hold office for three years and their
terms expire on the date of the shareholders' meeting called to approve the financial statements regarding
their third year in office. They can be re-elected.
In accordance with art. 149 of the TUF the Board of Statutory Auditors monitors: (i) compliance with the
law and the By-laws; (ii) respect of the principles of proper administration and adequacy of the
Company's organisational structure in respect of competency of the internal control systems and of the
administrative and accounting systems, as well as of the reliability of the latter in correctly representing
the business operations; (iii) the procedures for the realistic implementation of the corporate governance
rules provided for by the codes of conduct drawn up by regulated-market management companies or trade
associations, to which the Company, by informing the public, declares that it abides to; and (iv) adequacy
of the instructions given by the Company to its subsidiaries.
In addition the Board of Statutory Auditors reports on the oversight activity carried out and on eventual
omissions and reprehensible actions to the Shareholders' meeting called to approve the financial
statements.
- 91 -
Moreover, in accordance with art. 151 of the TUF, the auditors individually and at any time can carry out
inspections and controls, as well as request information from the directors, also in relation to the
subsidiaries, regarding company operations or specific businesses, or make the same requests for
information directly to the management and control bodies of the subsidiaries. The Board of Statutory
Auditors can exchange information with the corresponding bodies of the subsidiaries in relation to the
administration and control systems and to the general trend of the their business. It can also, after having
so communicated to the Chairman of the Board of Directors, call meetings of shareholders, the Board of
Directors or the Executive Committee, and avail itself of the Company's employees in carrying out its
functions. Its powers of convocation and request for collaboration can also be exercised individually by
each member of the Board, with the exception of the power to call a Shareholders' meeting, for which at
least two members are necessary.
In addition to the above mentioned duties, Leg. Dec. 39/2010 by which VIII EU directive on statutory
audits has been acknowledged in Italy, the Board of Statutory Auditors is also required to: (i) oversee the
independence of the external auditors by verifying both compliance with relevant laws and the nature and
extent of services other than account auditing provided to the Company and its subsidiaries by the
external auditors and companies belonging to their group; (ii) evaluate the proposals made by external
auditors for their appointment to this position, as well as the audit plan and the results set out in their
report and any letter of recommendations; (iii) oversee the effectiveness of the audit process and risk
management; and (iv) monitor the financial disclosure process.
The Corporate Governance Code provides that a statutory auditor who has, directly or through third
parties, any interest in a specific Company transaction, shall inform the other statutory auditors and the
Chairman of the Board of Directors about nature, terms, cause and value of his/her interest in a timely and
exhaustive manner.
Management and Supervisory Bodies
Board of Directors
The Board of Directors currently in office, renewed in 2013, is made up of fifteen members. The newly
appointed Board, in accordance with best practice requirements and the recommendations of the former
directors which emerged in the self-assessment questionnaire for 2012, has been reduced from twenty to
fifteen members, a third of which reserved to the less represented gender in accordance with the
provisions of law regulating gender quotas.
Twelve out of fifteen elected members are non-executive and, among these, eight are independent, in
accordance with the TUF and the Corporate Governance Code. This therefore guarantees compliance
with the provisions of art. 37 paragraph 1, letter d) of the CONSOB Market Regulation, that require that
the Board of Directors of subsidiaries subject to management and coordination of a joint-stock company
listed on regulated markets consist of a majority of independent directors. Among the fifteen Board
members, Mr. Giulio Antonello represent the minority shareholder First Eagle Investment Management
LLC.
The current Board of Directors will remain in office until the approval of the financial statements for the
year ending 31 December 2015. Outgoing directors may be re-elected.
The current members of the Board of Directors are set out below, together with an indication of their
principal activities outside the Company as at the date of this Base Prospectus.
Name
Giampiero Pesenti
Position
Chairman(1)
Principal activities outside the
Company
Chairman of Italmobiliare S.p.A.,
Deputy Chairman of Finter Bank
Zürich, Director of Ciments Français
S.A. (in representation of Italcementi
S.p.A.), Compagnie Monegasque de
Banque and Credit Mobilier de
Monaco.
- 92 -
Name
Position
Principal activities outside the
Company
Pierfranco Barabani
Executive Deputy Chairman(1)
Director of SACBO S.p.A.
Lorenzo Renato Guerini
Deputy Chairman(1)(4)(5)(6)(7)
Chairman of 035 Investimenti
S.p.A., Supervisory Director of UBI
Banca S.c.p.a.
Carlo Pesenti
Chief Executive Officer(1)(2)
Chief Executive Officer and Chief
Operating Officer of Italmobiliare
S.p.A., Deputy Chairman of Ciments
Français
S.A.,
Director
of
Mediobanca S.p.A. and Finter Bank
Zurich
Giulio Antonello
Director(3)(4)(7)
Chief Executive Officer of Alerion
Clean Power S.p.A., Director of
Reno de Medici S.p.A.
Giorgio Bonomi
Director
Director of Italmobiliare S.p.A. and
IGP – Decaux S.p.A.
Fritz Burkard
Director(7)
Chairman of Terra Piedi AG and
Icerunner ltd, Director of Schenker
Winkler Holding AG.
Victoire de Margerie
Director (4)(7)
Chairman Rondol Industrie SAS,
Director of Morgan Advanced
Materials Co. plc, Eurazeo S.A.,
Norsk Hydro and Arkema S.A.
Federico Falck
Director(1)(5)(6)(7)
Chairman of Falck Renewables
S.p.A., Director of Falck S.p.A.,
Banca Popolare di Sondrio S.c.p.a.,
Avvenire Nuova Editoriale Italiana
S.p.A.
Italo Lucchini
Director
Deputy Chairman of Italmobiliare
S.p.A., Member of the Management
Board of Unione di Banche Italiane
S.c.p.a., Chairman of the Board of
Statutory Auditors of BMW Italia
S.p.A., Fedrigoni S.p.A., San
Colombano S.p.A. and Alphabet
Italia Fleet Management S.p.A.
Emma Marcegaglia
Director(4)(7)
Deputy Chairman and Chief
Executive Officer of Marcegaglia
S.p.A.,
Chairman
and
Chief
Executive Officer of Marfin S.r.l.,
Director of Bracco S.p.A. and
Gabetti Property Solutions S.p.A.
Sebastiano Mazzoleni
Director
Director of Italmobiliare S.p.A. and
Ciments
Français
S.A.
(in
representation
of
Italcementi
Ingegneria S.r.l.)
Jean Paul Méric
Director(1)
Chairman of Ciments Français S.A.
- 93 -
Name
Position
Principal activities outside the
Company
Carlo Secchi
Director(5)(6)(7)
Chairman of Mediolanum S.p.A.,
Director of Mediaset S.p.A.
Elena Zambon
Director(7)
Chairman of Secofind S.I.M.,
Deputy Chairman Fondo Strategico
Italiano S.p.A.
_______________
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Member of the Executive Committee.
Director in charge of the internal control and risk management system.
Lead Independent Director.
Member of the Remuneration Committee.
Member of the Control and Risks Committee.
Member of the Committee for Transactions with Related Parties
Independent Director (in accordance with the Code of Conduct and the TUF).
The business address of each of the members of the Board of Directors is at the registered office of
Italcementi, Via Gabriele Camozzi 124, Bergamo, Italy.
Executive Committee
The Executive Committee consists of six members (the Chairman, the Executive Deputy Chairman, the
Deputy Chairman, the Chief Executive Officer and two directors of the Company). At the date of this
Base Prospectus, its members are Mr. Giampiero Pesenti (Chairman), Mr. Pierfranco Barabani (Executive
Deputy Chairman), Mr. Carlo Pesenti (Chief Executive Officer), Mr. Lorenzo Renato Guerini (Deputy
Chairman), Mr. Federico Falck and Mr. Jean Paul Méric.
Remuneration Committee
The Remuneration Committee consists of four members, all non-executive and independent directors. At
the date of this Base Prospectus, its members are Mr. Lorenzo Renato Guerini (Chairman), Mr. Giulio
Antonello, Mrs. Emma Marcegaglia and Mrs. Victoire de Margerie. All of its members are in possession
of adequate experience in accounting and finance, as required by the Code for at least one of them.
Control and Risks Committee
The Control and Risks Committee consists of three members, all non-executive and independent
directors. At the date of this Base Prospectus, its members are Mr. Carlo Secchi (Chairman), Mr. Lorenzo
Renato Guerini and Mr. Federico Falck. All of its members are in possession of adequate experience in
accounting and finance, as required by the Code for at least one of them.
Committee for Transactions with Related Parties
The Committee for Transactions with Related Parties is composed of three members, all non-executive
and independent directors. At the date of this Base Prospectus, its members are Mr. Carlo Secchi
(Chairman), Mr. Federico Falck and Mr. Lorenzo Renato Guerini.
Board of Statutory Auditors
The current members of the Board of Statutory Auditors will remain in office until the annual general
Shareholders' meeting called to approve the financial statements for the financial year ending on 31
December 2014. On renewal of the Board of Statutory Auditors at the shareholders' meeting, the majority
shareholder presented its own list of candidates. The minority shareholders did not present a list.
Therefore, none of the auditors currently in office represents the minority shareholders. Outgoing auditors
may be re-elected.
- 94 -
The current members of the Board of Statutory Auditors are set out below:
Name
Office
Maria Martellini
Chairwoman
Mario Comana
Acting Auditor
Luciana Gattinoni
Acting Auditor
Fabio Bombardieri
Substitute Auditor
Luciana Ravicini
Substitute Auditor
Carlo Luigi Rossi
Substitute Auditor
Auditing firm
The Italcementi Shareholders' Meeting held on 19 April 2011 appointed KPMG for the external audit of
the financial statements of the Company and the limited review of the half-yearly report as at June 30
each year for the nine year period 2011-2019, in compliance with current laws and regulations and with
the indications of the relevant authorities.
Managers
Below is the list of the top managers of Italcementi and of the positions they hold within the Company on
the date of this Base Prospectus.
Name
Position
Giovanni Ferrario
Chief Operating Officer
Fabrizio Pedetta
Deputy Chief Operating Officer
Silvestro Capitanio
Director of Human Resources, Organization and IT
Department
Andrea Pifferi
Deputy
Director
of
Human
Organization and IT Department
Carlo Giuseppe Bianchini
Administration and Control Director and Manager
in charge of preparing the Company's financial
reports
Giovanni Maggiora
Finance Director
Graziano Molinari
Corporate Affairs Director
Agostino Nuzzolo
Legal and Tax Affairs Director
Sergio Crippa
Communication and Image Director
Michele Pennazio
Director of Strategic Planning
Mauro Maestrini
Head of Internal Audit
Frederic Groussaud
Chief Risk Officer
Stefano Gardi
Director for sustainable development
Giancarlo Berera
Head of Investor Relations
Federico Vitaletti
CTG Chief Executive Officer – Zone 5 manager
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Resources,
Name
Position
Andrea Dentone
Global Procurement Director
The business address of each of the top managers listed above is the registered office of Italcementi, Via
Gabriele Camozzi 124, Bergamo, Italy.
Conflicts of interest
To the best of the Company's knowledge, no member of the Board of Directors or Board of Statutory
Auditors has interests that conflict with the duties arising from the position held within the Company,
except those that may concern transactions put before the relevant bodies of the Company, in full
compliance with existing regulations.
Employees
The following table shows the overall number of employees on the payroll of the companies of the
Italcementi Group as at 31 December 2012 and 2013, broken down into the main categories and
subdivided between Italy and abroad:
As at 31 December 2012(1)
Employees
Italy
Others
(2)
Total
As at 31 December 2013
Italy
Others(2)
Total
Executives....................................................
Middle management & white collar .............
Blue collar....................................................
208
1,357
1,629
921
6,397
8,392
1,129
7,736
10,021
181208
1,417
1,368
952
6,362
8,154
1,133
7,779
9,522
Total ............................................................
3,194
15,692
18,886
2,966
15,468
18,434
_______________
(1)
"Others" also includes the employees of Bravo Solution Italia S.p.A., CTG Italia S.p.A. and Ing. Sala S.p.A. (1) ata at total level
are the same shown in 2012 consolidated financial statement.
Major shareholders
The entity which controls the Company as defined by Article 93 of the TUF and Article 2359 of the
Italian Civil Code is Efiparind B.V., indirectly through Italmobiliare S.p.A.
The following table shows the persons and entities who, at the date of this Base Prospectus and according
to the Company's Shareholders' book, the official communications received and other information
available, hold more than 2 per cent. of the Company's voting share capital and the amount of treasury
shares held by Italcementi.
Shareholder
Ordinary shares
EFIPARIND BV - AMSTERDAM ..................................................................................
FIRST EAGLE INVESTMENT MANAGEMENT LLC (as saving manager) .................
TREASURY SHARES .....................................................................................................
% of ordinary
share capital
155,530,682
24,108,504 (*)
3,861,604
(*) As at 4 June 2014, before the commencement of the Share Capital Increase
As far as the Company is aware, no voting trusts exist among the shareholders of Italcementi.
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44.53
9.81 (*)
1.11
LEGAL PROCEEDINGS
The main cases that involve the Group at the date of this Base Prospectus are illustrated below.
Criminal proceedings
There are no pending criminal proceedings in respect of Italcementi or its Italian subsidiaries pursuant to
Legislative Decree 231/2001, nor are there any corporate criminal liability proceedings in respect of other
Group companies. In Italy and in certain other countries, employees of the Group are involved in judicial
proceedings for the violation of environmental laws for which sanctions may include the payment of a
fine or other administrative sanctions as a substitute for criminal charges.
Civil and administrative proceedings
Egypt
Lawsuits were brought locally by individuals to annul the privatizations of Helwan and Tourah, which
took place before the control of these companies was acquired by Suez Cement Company (of which the
Group acquired control in 2005). Suez Cement is not involved in the lawsuit for the annulment of the
Helwan privatization, since to date only the parties that actually took part in the privatization are involved;
they do not include Suez Cement, which acquired Helwan, from other private parties, after its
privatization. Suez Cement is a party to the Tourah proceedings although, at the time of its privatization,
Tourah was controlled and managed by the State of Egypt. Each of these proceedings are still at a stage of
first instance judgment, and, as such, a hypotheses regarding the possible outcome of each of the
proceedings, or on the impact such outcome may have on the Group and how the Group may safeguard
against such outcome, cannot be made at this time.
Sibcem
The non-performance of the agreement (the "SPA") signed between Ciments Français and OJSC Holding
Company Sibirskiy Cement ("Sibcem") in 2008 regarding the disposal of the Turkish assets held by
Ciments Français has resulted in an international arbitration in Turkey as well as legal proceedings in
numerous countries.
Russia
Limited Liability Company Financial-Industrial Union Sibconcord ("Sibconcord", Sibcem's majority
shareholder) instituted legal proceedings in Russia to obtain cancellation of the SPA. The regional Court
of Cassation upheld the decisions of the first two judicial degrees (first instance and appeal), which
annulled the SPA. Final recourse has been filed by Ciments Français with the Supreme Commercial Court
of Russia. The Supreme Commercial Court of Russia overturned the decisions of the lower courts on 5
June 2012. Accordingly, the Kemerovo judgment invalidating the SPA no longer exists.
The Supreme Commercial Court of Russia did not dismiss Sibconcord's claim but decided to remand the
case back to the Kemerovo court for new consideration.
On 10 July 2013, the Russian Kemerovo Court released a decision denying the claim of Sibconcord and
stating that Sibcem lost Euro 50,000,000 only because of its failure to perform under the SPA (and not
due to any other reasons). Ibcem, a Sibconcord group company, and Sibconcord appealed this decision
which was upheld by the Russian Court of Appeal in March 2014. Sibconcord initiated an appeal to the
Regional Court of Cassation against the decision of the Russian Court of Appeal; the Regional Court of
Cassation cancelled the decisions of the first two judicial degrees (first instance and appeal) and referred
to the case to the Kemerovo Court for new consideration. In addition, Sibconcord submitted to the
Regional Court of Cassation a request such that the case be reheard by judges of the Kemorovo Court
different from the ones having issued the previous Kemerovo judgment.
Turkey
Pursuant to the terms of the SPA, Ciments Français submitted the dispute to ICC arbitration seated in
Turkey and a partial arbitral award (the "Partial Award") in favor of Ciments Français was issued by the
arbitral tribunal on 7 December 2010. The arbitral tribunal held, amongst other things, that: (i) Ciments
Français had duly and validly exercised its right to terminate the SPA, following Sibcem's failure to close
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the deal and (ii) as a consequence of Ciments Français' valid termination of the SPA, Ciments Français
was entitled to keep the Euro 50 million paid by Sibcem as the initial payment amount. A final award (the
"Final Award") was then issued on 3 December 2012 rejecting Ciments Français' request for an antienforcement order preventing Sibcem from attempting to enforce any Russian judgment that might be
issued in contradiction with the Partial Award and the arbitration agreement contained in the SPA. With
respect to costs and fees, the result of the arbitral tribunal's findings is that Sibcem should reimburse
Ciments Français a total of Euro1,232,520.69 and USD 255,000.
Enforcement
As at the date of this Base Prospectus, Ciments Français has initiated recognition and enforcement
proceedings in respect of the Partial Award in various countries. Enforcement proceedings in respect of
the Final Award have not yet been initiated in respect of payments due by Sibcem, except in the United
States which is the last enforcement proceedings that has been started.
In Turkey, Sibcem obtained a judgment to set aside the Partial Award. Then, once the Turkish Court of
Appeals quashed the Istanbul first Court of instance's judgment annulling the Partial Award; in March
2014, the Court of Istanbul confirmed the validity of the Partial Award in favor of Ciments Français. An
appeal is pending against the Court of Istanbul's judgment.
Recognition and enforcement have been granted in Belgium, France and Kazakhstan whilst the procedure
for recognition is still underway in Italy, Bulgaria, Egypt, Russia and the United States.
Spain
On 14 May 2014, further to a lawsuit initiated by a local association, the Court of Malaga issued a
decision declaring null and void the Integrated Environmental Permit ("IEP") released in 2007 to
Sociedad Financiera Y Minera S.A. ("Financiera Y Minera") to revamp the Malaga plant on the ground
that the competent Regional Administration Body wrongly issued the IEP without requiring a prior
Environmental Impact Assessment ("EIA").
Financiera Y Minera intends challenging the decision before the Court of Appeal and, in parallel, it is
evaluating whether to apply for a new permit through the performance of an EIA. Financiera Y Minera is
also evaluating, with the assistance of its legal counsels, the potential consequences that can arise from
the ruling, including those on business operations.
Antitrust proceedings
EU
In November 2008, the European Commission started an investigation that was aimed at verifying alleged
infringements to the European antitrust rules by several group of cement producers, among which
Italcementi and its foreign subsidiaries Ciments Français, Ciments Calcia SAS and Compagnie des
Ciments Belges SA. In December 2010, the European Commission notified to Italmobiliare (and,
indirectly, to the aforesaid companies and the Spanish affiliated company Financiera Y Minera), a
decision to open formally the proceedings. In April 2011, the Commission notified Italmobiliare of a
further decision requesting extensive additional economic, financial and commercial information.
Italmobiliare provided the information within the required term and, simultaneously, challenged the
decision of the European Commission before the EU General Court. On March 17, 2014, the European
General Court rejected Italmobiliare's appeal. The rejection of such appeal will not result in any actual or
potential financial losses. The subject of the case brought before the EU General Court relates only to the
legitimacy of the request for information by the European Commission and its outcome only affects the
terms of use of the collected information. Italmobiliare has lodged an appeal against the Court's decision
before the EU Court of Justice.
Italy
In 2004, the companies Calcestruzzi and Cemencal were ordered in a ruling by the Italian Antitrust
Authority to pay a total of Euro 11,850,000 for alleged anti-competitive activities in the Milan Province.
In a 2005 decision the Regional Administrative Court (the "TAR") of Lazio partially amended the 2004
ruling. The companies nevertheless appealed the TAR of Lazio's decision to the Consiglio di Stato, Italy's
supreme judicial/administrative review body, which on 7 July 2009 issued a decision entirely discharging
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Cemencal and thus abolishing the fine imposed on it, as well as reducing the gravity and period of time of
the participation of Calcestruzzi in the infringement. The companies had not paid the aforesaid fine.
In June 2013, the Italian Antitrust Authority notified Calcestruzzi of a decision to re-open the proceeding
to re-calculate the amount of the fine (of Euro 10.2 million) imposed in 2004 and partially waived by the
decision of the TAR of Lazio and the Consiglio di Stato. On 13 January 2014, the Italian Antitrust
Authority issued a fine of Euro 8,125,509 to Calcestruzzi in relation to the previous fine, in addition to a
request for the payment of interest pursuant to Article 27, paragraph 6 of Legislative Decree 689/81,
amounting to a total of Euro 7 million. Calcestruzzi lodged an appeal against such decision as it believes
the same illegitimate on several levels, in addition to contradicting the administrative judgments received.
Calcestruzzi was granted an interim order by the TAR on 13 February 2014 suspending the efficacy of the
Italian Antitrust Authority's decision; hearing on the merit of the appeal has been scheduled for
November 2014 before the TAR of Lazio. In the meantime, the Italian Antitrust Authority challenged the
TAR of Lazio's interim order before the Consiglio di Stato. The hearing is scheduled for 5 June 2015.
In January 2014, the Italian Antitrust Authority initiated proceedings in relation to alleged anticompetitive practices by Calcestruzzi and other ready mix concrete companies operating in the region of
Friuli. A final judgment is expected on 30 January 2015.
Belgium
In July 2009, the Belgian Directorate General for Competition started an investigation against the cement
producers (including Compagnie des Ciments Belges ("CCB") and the Belgian Association of Producers
of Materials for Constructions for alleged anticompetitive practices. In August 2013, the Belgian
Competition Council decided that cement producers and other bodies conspired to delay the adoption of
industry standards to protect their interests. CCB was fined Euro 1.8 million lodged an appeal before the
Court of Appeal: proceedings are pending.
Tax proceedings
India
As at the date of this Base Prospectus a tax proceeding relating to financial year 2007-2008 (tax year
2008-2009) is still officially pending against Zuari Cement Limited. The dispute is the result of a tax
audit and involves transfer pricing adjustments and corporate tax disallowances. The Indian tax
authorities claim a higher taxable base of Euro 7.6 million (639.9 million INR) and additional tax, interest
and penalties of approximately Euro 3.3 million (274.1 million INR). The case was initially ruled in favor
of Zuari Cement Limited by the High Court of Judicature of Andhra Pradesh in its judgment of 21
February 2013 and then rejected by the Supreme Court in its judgment of 27 September 2013. The Indian
tax authorities have the right to reopen the tax audit process until 31 March 2015.
In February 2014 the Indian tax authorities served Zuari Cement Limited with a final assessment order for
financial year 2008-2009 (tax year 2009-2010), involving transfer pricing adjustments and corporate tax
disallowances. The company appealed against this final assessment order, which claims a higher taxable
base of approximately Euro 11.3 million (954.8 million INR) and additional tax, interest and penalties of
approximately Euro 6.3 million (527.8 million INR), before the Deputy Commissioner of Income-Tax in
March 2014 and, at a later date, before the Income Tax Appellate Tribunal, where the proceeding is
pending as at the date of this Base Prospectus.
In January 2014 the Indian tax authorities served Zuari Cement Limited with a draft assessment order for
financial year 2009-2010 (tax year 2010-2011), involving transfer pricing adjustments and corporate tax
disallowances. In May 2014, the company argued against this draft assessment order, which claims a
higher taxable base of approximately Euro 19.3 million (1.626.9 million INR), before the Dispute
Resolution Panel, where the proceeding is pending as at the date of this Base Prospectus.
Egypt
The Egyptian tax authorities have recently finalized corporate income tax audits regarding years 2008 and
2009 for the following companies:

Suez Co.
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


Year 2008 – tax audit reassessment is Euro 791 thousand (7.7 million EGP) in taxes,
provision in books for the year is Euro 532 thousand (5.2 million EGP), expected
reassessment: Euro 403 thousand (3.9 million EGP) after internal committee.

Year 2009 – tax audit reassessment is Euro 2.7 million (26.8 million EGP) in taxes,
provision in books for the year is Euro 696 thousand (6.8 million EGP), expected
reassessment: Euro 1.7 million (16.7 million EGP) after internal committee.
Tourah Co.

Year 2008 – tax audit reassessment is Euro 618 thousand (6 million EGP) in taxes,
provision in books for the year is Euro 205 thousand (2 million EGP), expected
reassessment: Euro 318 thousand (3.1 million EGP) after internal committee.

Year 2009 – tax audit reassessment is Euro 714 thousand (7 million EGP) in taxes,
provision in books for the year is Euro 511 thousand (5 million EGP), expected
reassessment: Euro 388 thousand (3.8 million EGP) after internal committee.
Helwan Co.

Year 2008 — tax audit reassessment is Euro 1.4 million (14.1 million EGP) in taxes,
provision in books for the year is Euro 297 thousand (2.9 million EGP), expected
reassessment: Euro 417 thousand (4.1 million EGP) after internal committee.

Year 2009 — tax audit reassessment is Euro 2.1 million (20.8 million EGP) in taxes,
provision in books for the year is Euro 430 thousand (4.2 million EGP), expected
reassessment: Euro 447 thousand (4.4 million EGP) after internal committee.
Furthermore, the final reassessments will be subject to late interest amounting to 12% yearly.
For all those reassessments, appeals have been filed. The tax internal committees are the next steps of the
proceedings.
REGULATORY FRAMEWORK
The activities and the plants of the Italcementi Group are subject to regulations that vary greatly from
country to country. The principal applicable regulations relate to the environment and occupational safety.
Among other things these regulations govern:

the excavation of the natural raw materials from the quarries under the Group's operational
control;

the procurement methods and the permissible characteristics of the fossil fuels used;

the procurement methods and the permissible characteristics of alternative fuels and raw
materials;

the release of pollutants into the air;

the assigned quotas of greenhouse gas emissions;

water intake and waste water discharge arrangements;

the management of any wastes generated;

the use, storage and disposal of hazardous substances and waste;

the rehabilitation of contaminated zones;

the decommissioning of sites that are no longer operational;

noise in indoor and outdoor industrial environments;
- 100 -

the safety characteristics of the machinery used;

the safety conditions to be ensured in the workplace;

industrial hygiene; and

the safety of the commercialised products.
The Group operates in accordance with precautionary procedures and operating methods aimed at
ensuring over time, in accordance with the methods required in the various territorial contexts,
compliance with the environmental and safety standards and maintenance of the validity of the necessary
authorisations for engaging in the various activities.
INDEBTEDNESS
The tables below set out the Group's consolidated net debt as at 31 December 2012 and 20138.
Consolidated Annual Net Debt
Financial asset and liability
category
Statement of financial
position caption
As at 31 December 2012
As at 31 December 2013
(audited)
(Euro thousands)
Current financial assets
(624,765)
(546,479)
Cash and cash equivalents
Cash and cash equivalents
(578,388)
(484,386)
Current loan assets
financial assets
(22,738)
(46,402)
Other current financial assets
Other current assets
(5,121)
(3,971)
Derivatives
Other current assets
(18,518)
(11,720)
Current financial liabilities
Bank overdrafts and shortterm borrowings
Loans and short-term
borrowings
727,634
Loans and borrowings
429,479
228,791
Financial liabilities
296,376
188,269
Derivatives
Other current liabilities
1,779
4,402
Non-current financial assets
421,462
(154,639)
(94,061)
Securities and bonds
Other non-current assets
(27,850)
(6,249)
Derivatives
Non-current financial
liabilities
Loans and long-term
borrowings
Other non-current assets
(126,789)
(87,812)
Derivatives
Other non-current liabilities
2,050,026
Financial liabilities
Net debt
8
1,998,256
2,158,090
2,016,946
2,135,003
33,080
23,087
1,939,012
Due to the adoption of the revised IAS 19 – "Employee benefits" and the change in the accounting treatment of "green
certificates", the Group restated some of the corresponding figures included in the prior year consolidated financial statements
and statement of financial position as at 1 January 2012.
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DESCRIPTION OF ITALCEMENTI FINANCE S.A.
Overview
Italcementi Finance S.A. (Italcementi Finance) is organised as a société anonyme under the laws of
France, registered in the Trade and Companies Register of Nanterre (France) under number 440413730,
with registered office at Tour Ariane, 5 Place de la Pyramide, 92800-Puteaux (France), telephone number:
+33 1 42917500.
Italcementi Finance was incorporated on 24 December 2001 as a société par actions simplifiée under the
laws of France. The company’s original name “Unibeton Med” was changed into “Holfipar” as of 9
October 2007. On 22 December 2009 Holfipar, which until then was a wholly owned subsidiary of
Ciments Français S.A., was purchased by Italcementi. On 29 January 2010, the company’s share capital
was increased to Euro 20 million, the company was transformed in a société anonyme and its name was
changed to Italcementi Finance. The duration of the company is until 23 December 2100.
Italcementi Finance is a wholly owned subsidiary of Italcementi (including a 0.0003 per cent. stake
indirectly owned) and, as at the date of this Base Prospectus, has no subsidiaries.
Business of Italcementi Finance
Italcementi Finance is the funding vehicle of the Italcementi Group, incurring external debt, including the
issuance of Notes under the Programme, on-lending proceeds to Italcementi and its subsidiaries at arm’s
length basis and carrying out other financial and treasury services for Italcementi and its subsidiaries.
Notes issuance
In March 2010, Italcementi Finance proceeded to its inaugural issue under the Programme, with the
issuance of Euro 750 million Fixed Rate Notes due 19 March 2020, listed on the Official List of the
Luxembourg Stock Exchange. The original coupon of 5.375 per cent was raised to 6.625 per cent after the
downgrade of Moody’s rating of the Notes to Ba1 in December 2012 in line with the downgrade of
Italcementi’s corporate rating.
During the first half of 2013, respectively on 21 February and 21 May, Italcementi Finance issued in two
tranches an aggregate nominal amount of Euro 500 million, 6.125 per cent. five year Fixed Rate Notes
due 21 February 2018.
Bonds issued by the Company under the EMTN program are unconditionally guaranteed by Italcementi.
Proceeds from the Notes issuance have been loaned to Italcementi and Ciments Français, currently in the
aggregate amount of Euro 710 million and Euro 540 million, respectively.
Commercial paper issuance
At the end of October of 2011, Italcementi Finance launched its first Commercial Paper Programme (the
“CP Programme”) for a maximum amount of Euro 800 million, reduced to Euro 200 million on 3 June
2013. On 28 July 2014, the Board of Directors of Italcementi Finance authorised a new expansion of the
CP Programme to a maximum of Euro 400 million, for which it is seeking approval by the Banque de
France.
Such expansion follows increasing issuance volumes, with outstanding amounts on 30 June 2014 totalling
Euro 150 million compared to a total of Euro 38.4 million of commercial paper notes outstanding as of
31 December 2013.
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Proceeds from Commercial Paper issuance are loaned to Italcementi and Ciments Français according to
their respective short term borrowing requirements under the wrap of intercompany uncommitted credit
lines.
The programme is guaranteed by Italcementi and complies with the STEP label (Short-Term European
Paper).
Committed credit facilities
In addition to bond and commercial paper issuance, Italcementi Finance also enters, from time to time,
into bilateral or syndicated revolving credit facility agreements with the purpose of securing incremental
funding and liquidity back-up sources for the Group’s companies as well as for its own liquidity back-up
needs. Such facilities enjoy the guarantee of Italcementi.
In particular, on 22 September 2010 the company entered into a five year syndicated revolving credit
facility for up to Euro 920 million with a group of 16 international lenders. This facility, which was never
utilised and constituted the Group’s principal liquidity back-up facility, has been cancelled on 19 June
2014 at the time of the signing of a new, five year syndicated facility for up to Euro 450 million, maturing
19 June 2019. The total amount of the facility has been reduced from the prior one thanks to the improved
liquidity profile of the Group after the 2013 bond issues.
In addition, Italcementi Finance has entered into a number of bilateral medium term revolving credit
facilities. It is the sole borrower under a Euro 50 million five year facility entered into in April 2011, and
a Euro 100 million 3½ year facility entered into in September 2012. Proceeds of drawdowns under these
facilities have to date been primarily allocated to the borrowing requirements of Italcementi under
dedicated intercompany facilities.
Italcementi Finance is also an alternate borrower to Italcementi under a bilateral Euro 200 million, five
year revolving credit facility entered into in May 2012 and a Euro 225 million, 3½- and 4½-year facility
entered into in September 2013. These transactions refinanced previously existing bilateral revolving
credit facilities available to Italcementi exclusively, with a view to broaden availability of such financing
to other Group entities via the centralization role of Italcementi Finance.
During 2013, Italcementi Finance renewed three bilateral 364-days committed revolving credit facilities
with international banks for a total amount of Euro 150 million (first set up in 2011). Two additional short
term lines (for Euro 50 and Euro 30 million, respectively) were set up during the second half of the year.
These facilities are primarily dedicated to back-stopping commercial paper issuance and satisfying short
term borrowing requirements at Italcementi and Ciments Français.
Liquidity management
In 2012, Italcementi Finance also started centralising the Group's liquidity, managing excess cash
available at other Group legal entities, As of 31 December 2013 the outstanding amount of Italcementi
Finance’s intercompany financial payables was equal to Euro 40 million.
Financial risk management
Beyond the pursuit of its main mission as Group financing company, realised through external funding
with proceeds loaned back to Italcementi S.p.A. and its subsidiaries at arm's length conditions, in 2012
Italcementi Finance initiated centralised financial risk management transactions for Italcementi S.p.A.
and its subsidiaries, acting as the main Group counterpart vis-à-vis primary bank counterparts for interestrate and exchange-rate derivatives, the positions taken with external counterparts being symmetrical to
those taken with Italcementi S.p.A. and its subsidiaries.
- 103 -
Board of Directors
The Directors of Italcementi Finance and their functions and principal activities outside the company as at
the date of this Base Prospectus are as follows:
Principal activities outside the
Company
Name
Office
Giovanni Maggiora
Chairman
Officer
Philippe Raymond Missika
Director
Partner of DMMS & Associés Law
Firm, Paris
Carlo Giuseppe Bianchini
Director
Administration and Control Director
of Italcementi S.p.A. and Ciments
Français S.A., and Manager in
charge of preparing the financial
reports of Italcementi S.p.A.,
Director of other Group Italian
companies.
Giancarlo Berera
Director
Head of Investor Relations of
Italcementi S.p.A. and Director of
Previp – fondo pensione as
representative of Italcementi S.p.A.
Agostino Nuzzolo
Director
Legal and Tax Affairs Director of
Italcementi S.p.A. and Ciments
Français S.A., Director of Interbulk
Trading (Switzerland) and person
responsible for the permanent
establishment of Italcementi S.p.A.
in France.
and
Chief
Executive
Chief
Financial
Officer
of
Italcementi S.p.A. and Ciments
Français S.A., Chief Executive
Officer
of
several
French
subsidiaries of Italcementi S.p.A.
and director of other Group
companies.
The business address of Mr. Giovanni Maggiora, Mr. Carlo Giuseppe Bianchini, Mr. Giancarlo Berera
and Mr. Agostino Nuzzolo is at the offices of Italcementi in Via Gabriele Camozzi 124, Bergamo Italy.
The business address of Philippe Raymond Missika is at 36 rue de Lisbonne, Paris, France.
There are no potential conflicts of interests between the duties to Italcementi Finance of any of the
Directors listed above and their private interests and/or duties.
Litigation
Italcementi Finance is not nor has been involved in any governmental, legal or arbitration proceedings,
during the 12 months prior to the date hereof, which may have, or have had in the recent past a significant
effect on the financial position or profitability of Italcementi Finance.
Share Capital
The authorised share capital of Italcementi Finance is equal to Euro 20,000,000 divided into 2,000,000
ordinary shares with a par value of Euro 10 each.
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The following table shows the shareholders of Italcementi Finance at the date of this Base Prospectus.
Shareholder
Share capital
Shares
Number
Euro
%
Italcementi S.p.A. - Permanent establishment ...............................................
92800 Puteaux (Paris), 5 place de la Pyramide, Quartier Villon
Calcestruzzi S.p.A. ...........................................................................................
24121 Bergamo, via G.Camozzi 124
Gruppo Italsfusi S.r.l. ......................................................................................
24121 Bergamo, via G.Camozzi 124
SAMA S.r.l. ......................................................................................................
24121 Bergamo, via G.Camozzi 124
Italcementi Ingegneria S.r.l. ............................................................................
24121 Bergamo, via G.Camozzi 124
Italgen S.p.A. ....................................................................................................
24121 Bergamo, via G.Camozzi 124
Société Internationale Italcementi (Luxembourg) SA ...................................
2220 Luxembourg, 534 rue de Neudorf
1,999,994
99.9997
19,999,940
1
0.00005
10
1
0.00005
10
1
0.00005
10
1
0.00005
10
1
0.00005
10
1
0.00005
10
Total ..................................................................................................................
2,000,000
100
20,000,000
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TAXATION
ITALIAN TAXATION
The statements herein regarding taxation are based on the laws in force in Italy as of the date of this Base
Prospectus and are subject to any changes in law occurring after such date, which changes could be
made on a retroactive basis. The following summary does not purport to be a comprehensive description
of all the tax considerations which may be relevant to a decision to subscribe for, purchase, own or
dispose of the Notes and does not purport to deal with the tax consequences applicable to all categories
of investors, some of which (such as dealers in securities or commodities) may be subject to special rules.
Prospective purchasers of the Notes are advised to consult their own tax advisers concerning the overall
tax consequences of their ownership of the Notes.
Law Decree No. 66 of 24 April 2014, as converted into law with amendments by Law No. 89 of 23 June
2014 published in the Official Gazette No. 143 of 23 June 2014, ("Decree No. 66"), has introduced new
tax provisions amending certain aspects of the tax regime of the Notes as summarised below. In
particular the Decree No. 66 has increased from 20 per cent. to 26 per cent. the rate of withholding and
substitute taxes of interest accrued, and capital gains realised, as of 1 July 2014 on financial instruments
(including the Notes) other than government bonds.
This summary does not describe the tax consequences for an investor with respect to Notes that provide
payout linked to the profits of the Issuer, profits of other company of the group or profits of the business
in relation to which they are issued.
Tax Treatment of Notes issued by Italcementi S.p.A.
Legislative Decree No. 239 of 1 April 1996, as subsequently amended (Decree 239), provides for the
applicable regime with respect to the tax treatment of interest, premium and other income (including the
difference between the redemption amount and the issue price) (hereinafter collectively referred to as
"Interest") from Notes falling within the category of bonds (obbligazioni) or debentures similar to bonds
(titoli similari alle obbligazioni) issued, inter alia, by Italian resident companies with shares listed on a
EU regulated market or a regulated market of the European Economic Area.
For these purposes, debentures similar to bonds are defined as securities that incorporate an unconditional
obligation to pay, at redemption, an amount not less than their nominal value and that do not give any
right to directly or indirectly participate in the management of the issuer or of the business in relation to
which they are issued nor any type of control on the management.
Italian Resident Noteholders
Where an Italian resident Noteholder is (i) an individual not engaged in an entrepreneurial activity to
which the Notes are connected (unless he has opted for the application of the "risparmio gestito" regime –
see "Capital Gains Tax" below), (ii) a non-commercial partnership pursuant to article 5 of the Italian
Income Consolidated Code (TUIR) (with the exception of general partnership, limited partnership and
similar entities), (iii) a non-commercial private or public institution, or (iv) an investor exempt from
Italian corporate income taxation, Interest relating to the Notes are subject to a substitute tax, referred to
as "imposta sostitutiva", levied at the rate of 26 per cent.. If the Noteholders described under (i) and (iii)
above are engaged in an entrepreneurial activity to which the Notes are connected, the imposta sostitutiva
applies as a provisional tax.
Where an Italian resident Noteholder is a company or similar commercial entity or a permanent
establishment in Italy of a foreign company to which the Notes are effectively connected and the Notes
are deposited with an authorised intermediary, Interest from the Notes will not be subject to imposta
sostitutiva, but must be included in the relevant Noteholder’s annual income tax return and are therefore
subject to general Italian corporate taxation (and, in certain circumstances, depending on the "status" of
the Noteholder, also to the regional tax on productive activities (IRAP)). To ensure payment of Interest in
respect of the Notes without the application of 26 per cent imposta sostitutiva, the Noteholders indicated
above under (i) to (iv) must: (a) be the beneficial owners of payments of Interest on the Notes and (b)
deposit the Notes in due time, together with the coupons relating to such Notes, directly or indirectly with
an Italian authorised intermediary (or a permanent establishment in Italy of a foreign intermediary).
Where the Notes and the relevant coupons are not deposited with an Italian authorised intermediary (or a
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permanent establishment in Italy of a foreign intermediary), the imposta sostitutiva is applied and
withheld by any Italian intermediary paying Interest to the holders of the Notes or, absent that, by the
Issuer.
Interest accrued on the Notes and received by Italian real estate funds (complying with the definition as
amended pursuant to Law Decree n. 78 of 31 may 2010, converted into Law n. 122 of 30 July 2010) or
SICAFs (Società di investimento a capitale fisso), to which the provisions of Law Decree No. 351 of 25
September 2001, as subsequently amended, apply, is subject neither to substitute tax nor to any other
income tax in the hands of the real estate funds or SICAFs. The income of the real estate funds or SICAFs
is subject to tax, in the hands of the unitholder, depending on the status and percentage of participation,
or, when earned by the fund, through distribution and/or upon redemption or disposal of the units.
If the investor is resident in Italy and is an open-ended or a closed-ended investment fund or a SICAV
(Società di Investimento a Capitale Variabile) established in Italy and either (i) the fund or SICAV or (ii)
their manager is subject to the supervision of a regulatory authority (the Fund) and the Notes are
deposited with an authorised intermediary, Interest accrued during the holding period on the Notes will
not be subject to imposta sostitutiva, but must be included in the management results of the Fund accrued
at the end of each tax period. The Fund will not be subject to taxation on such result, but a substitutive tax
of 26 per cent. may apply to distributions made in favour of unitholders or shareholders and/or
redemption or disposal of the units and shares (the withholding tax was 20 per cent. with reference to any
proceeds accrued by 30 June 2014).
Where an Italian resident Noteholder is a pension fund (subject to the regime provided for by Article 17
of the Legislative Decree No. 252 of 5 December 2005) and the Notes are deposited with an authorised
intermediary, Interest relating to the Notes and accrued during the holding period will not be subject to
imposta sostitutiva, but must be included in the result of the relevant portfolio accrued at the end of the
tax period, to be subject to an 11 per cent. substitute tax (increased to 11.50 per cent. for fiscal year 2014,
pursuant to Decree No. 66).
Pursuant to Decree 239, imposta sostitutiva is applied by banks, SIMs, fiduciary companies, SGRs,
stockbrokers and other entities identified by a decree of the Ministry of Economy and Finance (each an
Intermediary).
An Intermediary must (i) be (a) resident in Italy or (b) a permanent establishment in Italy of a non-Italian
resident financial intermediary or (c) an entity or a company not resident in Italy, acting through a system
of centralised administration of notes and directly connected with the Italian Ministry of Economy and
Finance having appointed an Italian representative for the purposes of Decree No. 239; and (ii) intervene,
in any way, in the collection of interest or in the transfer of the Notes. For the purpose of the application
of the imposta sostitutiva, a transfer of Notes includes any assignment or other act, either with or without
consideration, which results in a change of the ownership of the relevant Notes or in a change of the
Intermediary with which the Notes are deposited.
Where the Notes are not deposited with an Intermediary, the imposta sostitutiva is applied and withheld
by any entity paying interest to a Noteholder.
Non-Italian Resident Noteholders
Where the Noteholder is a non-Italian resident without a permanent establishment in Italy to which the
Notes are connected, an exemption from the imposta sostitutiva applies provided that the non-Italian
resident beneficial owner is either (i) resident, for tax purposes, in a country which allows for a
satisfactory exchange of information with Italy; or (ii) an international body or entity set up in accordance
with international agreements which have entered into force in Italy; or (iii) a Central Bank or an entity
which manages, inter alia, the official reserves of a foreign State; or (iv) an institutional investor which is
resident in a country which allows for a satisfactory exchange of information with Italy, even if it does
not possess the status of a taxpayer in its own country of residence.
The imposta sostitutiva will be applicable at the rate of 26 per cent., or at the reduced rate provided for by
the applicable double tax treaty, if any, to Interest paid to Noteholders who are resident, for tax purposes,
in countries which do not allow for a satisfactory exchange of information with Italy.
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Note that, according to the Law No. 244 of 24 December 2007 (Budget Law 2008), a Decree still to be
issued will introduce a new "white list" replacing the current "black list" system, so as to identified those
countries which allow for a satisfactory exchange of information.
In order to ensure gross payment, non-Italian resident Noteholders must (i) be the beneficial owners of the
payments of Interest, (ii) deposit, directly or indirectly, the Notes with a resident bank or SIM or a
permanent establishment in Italy of a non-Italian resident bank or SIM or with a non-Italian resident
entity or company participating in a centralised securities management system which is in contact, via
computer, with the Ministry of Economy and Finance and (iii) file with the relevant depository, prior to or
concurrently with the deposit of the Notes, a statement of the relevant Noteholder, which remains valid
until withdrawn or revoked, in which the Noteholder declares to be eligible to benefit from the applicable
exemption from imposta sostitutiva. Such statement, which is not requested for international bodies or
entities set up in accordance with international agreements which have entered into force in Italy nor in
the case of foreign Central Banks or entities which manage, inter alia, the official reserves of a foreign
State, must comply with the requirements set forth by Ministerial Decree of 12 December 2001. The
statement is not required for non-Italian resident investors that are international entities and organisations
established in accordance with international agreements ratified in Italy and Central Banks or entities
which manage, inter alia, the official reserves of a foreign State.
Failure of a non-Italian resident Noteholder to comply in due time with the procedures set forth in Decree
No. 239 and in the relevant implementation rules will result in the application of imposta sostitutiva on
Interest payments to a non-resident Noteholder.
Non-Italian resident Noteholders who are subject to imposta sostitutiva might, nevertheless, be eligible
for a total or partial relief under an applicable tax treaty between the Republic of Italy and the country of
residence of the relevant Noteholders.
Fungible issues
Pursuant to Article 11, paragraph 2 of Decree No. 239, where the Issuer issues a new Tranche forming
part of a single series with a previous Tranche, for the purposes of calculating the amount of Interest
subject to imposta sostitutiva (if any), the issue price of the new Tranche will be deemed to be the same as
the issue price of the original Tranche. This rule applies where (a) the new Tranche is issued within 12
months from the issue date of the previous Tranche and (b) the difference between the issue price of the
new Tranche and that of the original Tranche does not exceed 1 per cent. of the nominal value of the
Notes multiplied by the number of years of the duration of the Notes.
Atypical securities
Interest payments relating to Notes that are not deemed to fall within the category of bonds (obbligazioni)
or debentures similar to bonds (titoli similari alle obbligazioni) may be subject to a withholding tax,
levied at the rate of 26 per cent.. For this purpose, securities similar to bonds are securities that
incorporate an unconditional obligation to pay, at maturity, an amount not lower than their nominal value.
Where the Noteholder is (i) an Italian individual engaged in an entrepreneurial activity to which the Notes
are connected, (ii) an Italian company or a similar Italian commercial entity, (iii) a permanent
establishment in Italy of a foreign entity to which the Notes are connected, (iv) an Italian commercial
partnership or (v) an Italian commercial private or public institution, such withholding tax is a provisional
withholding tax. In all other cases, the withholding tax is a final withholding tax.
Tax Treatment of the Notes issued by Italcementi Finance S.A.
Decree No. 239 also provides for the applicable regime with respect to the tax treatment of Interest
(including the difference between the redemption amount and the issue price) from Notes falling within
the category of bonds (obbligazioni) or debentures similar to bonds (titoli similari alle obbligazioni)
issued, inter alia, by non-Italian resident issuers and traded on a EU regulated market or a regulated
market of the European Economic Area.
For these purposes, debentures similar to bonds are defined as securities that incorporate an unconditional
obligation to pay, at redemption, an amount not less than their nominal value and that do not give any
right to directly or indirectly participate in the management of the issuer or of the business in relation to
which they are issued nor any type of control on the management.
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Italian Resident Noteholders
Where the Italian resident Noteholder, which is the beneficial owner of the Notes, is (i) an individual not
engaged in an entrepreneurial activity to which the Notes are connected (unless he has opted for the
application of the risparmio gestito regime – see "Capital Gains Tax" below), (ii) a non-commercial
partnership pursuant to article 5 of the TUIR (with the exception of general partnership, limited
partnership and similar entities), (iii) a non-commercial private or public institution, or (iv) an investor
exempt from Italian corporate income taxation, Interest relating to the Notes, accrued during the relevant
holding period, are subject to a withholding tax, referred to as "imposta sostitutiva", levied at the rate of
26 per cent.. In the event that the Noteholders described under (i) and (iii) above are engaged in an
entrepreneurial activity to which the Notes are connected, the imposta sostitutiva applies as a provisional
income tax. Interest will be included in the relevant beneficial owner's Italian income tax return and will
be subject to Italian ordinary income taxation and the imposta sostitutiva may be recovered as a deduction
from Italian income tax due.
Where an Italian resident Noteholder, which is the beneficial owner of the Notes is (i) a company or
similar commercial entity or a permanent establishment in Italy of a foreign company to which the Notes
are effectively connected; (ii) a partnership carrying out commercial activities ('società in nome collettivo'
or 'società in accomandita semplice'); or (iii) an individual holding the Notes not in connection with
entrepreneurial activity who has entrusted the management of its financial assets, including the Notes, to
an authorised financial intermediary and has opted for the risparmio gestito regime, Interest from the
Notes will not be subject to imposta sostitutiva. To ensure payment of Interest in respect of the Notes
without the application of the 26 per cent. imposta sostitutiva, the Noteholders indicated above under (i)
to (iii) must (a) be the beneficial owners of payments of Interest on the Notes and (b) deposit the Notes in
due time together with the coupons relating to such Notes directly or indirectly with an Italian
Intermediary (or permanent establishment in Italy of foreign Intermediary). Where the Notes and the
relevant coupons are not deposited with an Italian authorised Intermediary (or permanent establishment in
Italy of foreign Intermediary), the imposta sostitutiva is applied and withheld by any Italian Intermediary
paying Interest to the Noteholder and Noteholders that are Italian resident corporations or permanent
establishments in Italy of foreign corporations to which the Notes are effectively connected are entitled to
deduct imposta sostitutiva suffered from income taxes due.
Interest accrued on the Notes would be included in the corporate taxable income (and in certain
circumstances, depending on the "status" of the Noteholder, also in the net value of production for IRAP
purposes) of beneficial owners who are Italian resident corporations or permanent establishments in Italy
of foreign corporations to which the Notes are effectively connected, subject to tax in Italy in accordance
with ordinary tax rules, and such beneficial owners should be generally entitled to a tax credit for any
withholding taxes applied outside Italy on Interest on Notes issued by non Italian resident Issuer.
Interest accrued on the Notes and received by Italian real estate funds (complying with the definition as
amended pursuant to Law Decree n. 78 of 31 may 2010, converted into Law n. 122 of 30 July 2010) or
SICAFs (Società di investimento a capitale fisso), to which the provisions of Law Decree No. 351 of 25
September 2001, as subsequently amended, apply, is subject neither to substitute tax nor to any other
income tax in the hands of the real estate funds or SICAFs. The income of the real estate funds or SICAFs
is subject to tax, in the hands of the unitholder, depending on the status and percentage of participation,
or, when earned by the fund, through distribution and/or upon redemption or disposal of the units.
If the investor is resident in Italy and is a Fund or a SICAV, and the Notes are held by an Intermediary,
Interest accrued during the holding period on the Notes will not be subject to imposta sostitutiva, but must
be included in the management results of the Fund or accrued at the end of each tax period. The Fund or
SICAV will not be subject to taxation on such result, but a substitutive tax of 26 per cent. may apply, to
distributions made in favour of unitholders or shareholders and/or redemption or disposal of the units and
shares (the withholding tax was 20 per cent. with reference to any proceeds accrued by 30 June 2014).
Where an Italian resident Noteholder is a pension fund (subject to the regime provided for by article 17 of
the Legislative Decree No. 252 of 5 December 2005) and the Notes are deposited with an Intermediary,
Interest relating to the Notes and accrued during the holding period will not be subject to imposta
sostitutiva, but must be included in the result of the relevant portfolio accrued at the end of the tax period,
to be subject to a 11 per cent. substitute tax (increased to 11.50 per cent. for fiscal year 2014, pursuant to
Decree No. 66).
- 109 -
Where the Notes are not deposited with an Intermediary, the imposta sostitutiva is applied and withheld
by any entity paying interest to a Noteholder.
Non-Italian Resident Noteholders
Interest payments relating to Notes issued by non-Italian resident issuers and received by non-Italian
resident beneficial owners are not subject to taxation in Italy.
If Notes issued by non-Italian resident issuers and beneficially owned by non-Italian residents are
deposited with an Italian bank or other resident intermediary (or permanent establishment in Italy of
foreign Intermediary) or are sold through an Italian Intermediary (or permanent establishment in Italy of
foreign Intermediary) or in any case an Italian resident Intermediary (or permanent establishment in Italy
of foreign Intermediary) intervenes in the payment of Interest on such Notes, to ensure payment of
Interest without application of Italian taxation a non-Italian resident Noteholder may be required to
produce to the Italian bank or other intermediary a statement stating that he or she is not resident in Italy
for tax purposes.
Payments made by an Italian resident guarantor
With respect to payments on the Notes made to certain Italian resident Noteholders by an Italian resident
guarantor, in accordance with one interpretation of Italian tax law, any payment of liabilities equal to
interest and other proceeds from the Notes may be subject to a provisional withholding tax at a rate of 26
per cent. pursuant to Presidential Decree No. 600 of 29 September 1973, as subsequently amended. In
case of payments to non-Italian resident Noteholders, the withholding tax may be applied at a rate of 26
per cent. Double taxation treaties entered into by Italy may apply allowing for a lower (on, in certain
cases, nil) rate of withholding tax. In accordance with another interpretation, any such payment made by
the Italian resident guarantor will be treated, in certain circumstances, as a payment by the Issuer and will
thus be subject to the tax regime described in the previous paragraphs of this section.
Fungible issues
Pursuant to Article 11, paragraph 2 of Decree No. 239, where the Issuer issues a new Tranche forming
part of a single series with a previous Tranche, for the purposes of calculating the amount of Interest
subject to imposta sostitutiva (if any), the issue price of the new Tranche will be deemed to be the same as
the issue price of the original Tranche. This rule applies where (a) the new Tranche is issued within 12
months from the issue date of the previous Tranche and (b) the difference between the issue price of the
new Tranche and that of the original Tranche does not exceed 1 per cent. of the nominal value of the
Notes multiplied by the number of years of the duration of the Notes.
Atypical securities
Interest payments relating to Notes that are not deemed to fall within the category of bonds (obbligazioni)
or debentures similar to bonds (titoli similari alle obbligazioni) may be subject to a withholding tax,
levied at 26 per cent.. For this purpose, debentures similar to bonds are securities that incorporate an
unconditional obligation to pay an amount not lower than their nominal value.
If the Notes are issued by a non-Italian resident Issuer, the withholding tax mentioned above does not
apply to interest payments made to a non-Italian resident Noteholder and to an Italian resident Noteholder
which is: (i) a company or similar commercial entity (including the Italian permanent establishment of
foreign entities), (ii) a commercial partnership, or (iii) a commercial private or public institution.
Capital Gains Tax
Any gain obtained from the sale or redemption of the Notes would be treated as part of the taxable
income (and, in certain circumstances, depending on the "status" of the Noteholder, also as part of the net
value of the production for IRAP purposes) if realised by an Italian company or a similar commercial
entity (including the Italian permanent establishment of foreign entities to which the Notes are connected)
or Italian resident individuals engaged in an entrepreneurial activity to which the Notes are connected.
Where an Italian resident Noteholder is an individual not holding the Notes in connection with an
entrepreneurial activity and certain other persons, any capital gain realised by such Noteholder from the
- 110 -
sale or redemption of the Notes would be subject to an imposta sostitutiva, levied at the current rate of 26
per cent.. Noteholders may set off losses with gains.
In respect of the application of the imposta sostitutiva, taxpayers may opt for one of these three regimes
described below.
Under the tax declaration regime (regime della dichiarazione), which is the default regime for Italian
resident individuals not engaged in an entrepreneurial activity to which the Notes are connected, the
imposta sostitutiva on capital gains will be chargeable, on a cumulative basis, on all capital gains, net of
any incurred capital loss, realised by the Italian resident individual Noteholder holding the Notes not in
connection with an entrepreneurial activity pursuant to all sales or redemptions of the Notes carried out
during any given tax year. Italian resident individuals holding the Notes not in connection with an
entrepreneurial activity must indicate the overall capital gains realised in any tax year, net of any relevant
incurred capital loss, in the annual tax return and pay imposta sostitutiva on such gains together with any
balance income tax due for such year. Capital losses in excess of capital gains may be carried forward
against capital gains realised in any of the four succeeding tax years. Pursuant to Decree No. 66, capital
losses may be carried forward to be offset against capital gains of the same nature realised after 30 June
2014 for an overall amount of: (i) 48.08 per cent. of the relevant capital losses realised before 1 January
2012; (ii) 76.92 per cent. of the capital losses realised from 1 January 2012 to 30 June 2014.
As an alternative to the tax declaration regime, Italian resident individual Noteholders holding the Notes
not in connection with an entrepreneurial activity may elect to pay the imposta sostitutiva separately on
capital gains realised on each sale or redemption of the Notes (the "risparmio amministrato" regime).
Such separate taxation of capital gains is allowed subject to (i) the Notes being deposited with Italian
banks, SIMs or certain Intermediaries and (ii) an express election for the risparmio amministrato regime
being timely made in writing by the relevant Noteholder. The depository is responsible for accounting for
imposta sostitutiva in respect of capital gains realised on each sale or redemption of the Notes (as well as
in respect of capital gains realised upon the revocation of its mandate), net of any incurred capital loss,
and is required to pay the relevant amount to the Italian tax authorities on behalf of the taxpayer,
deducting a corresponding amount from the proceeds to be credited to the Noteholder or using funds
provided by the Noteholder for this purpose. Under the risparmio amministrato regime, where a sale or
redemption of the Notes results in a capital loss, such loss may be deducted from capital gains
subsequently realised, within the same securities management, in the same tax year or in the following tax
years up to the fourth. Pursuant to Decree No. 66, capital losses may be carried forward to be offset
against capital gains of the same nature realised after 30 June 2014 for an overall amount of: (i) 48.08 per
cent. of the relevant capital losses realised before 1 January 2012; (ii) 76.92 per cent. of the capital losses
realised from 1 January 2012 to 30 June 2014.Under the risparmio amministrato regime, the Noteholder
is not required to declare the capital gains in the annual tax return.
Any capital gains realised by Italian resident individuals holding the Notes not in connection with
entrepreneurial activity who have entrusted the management of their financial assets, including the Notes,
to an Intermediary and have opted for the so-called risparmio gestito regime will be included in the
computation of the annual increase in value of the managed assets accrued, even if not realised, at year
end, subject to a 26 per cent. substitute tax, to be paid by the managing Intermediary. Under this
risparmio gestito regime, any depreciation of the managed assets accrued at year end may be carried
forward against increase in value of the managed assets accrued in any of the four succeeding tax years.
Pursuant to Decree No. 66, depreciations of the managed assets may be carried forward to be offset
against any subsequent increase in value accrued as of 1 July 2014 for an overall amount of: (i) 48.08 per
cent. of the relevant depreciations in value registered before 1 January 2012; (ii) 76.92 per cent. of the
depreciations in value registered from 1 January 2012 to 30 June 2014. Under the risparmio gestito
regime, the Noteholder is not required to declare the capital gains realised in the annual tax return.
Any capital gains realised by a Noteholder who is a Fund or a SICAV will be included in the result of the
relevant portfolio accrued at the end of the tax period. The Fund will not be subject to taxation on such
result, but a 26 per cent. withholding tax may apply to distributions made in favour of unitholders or
shareholders and/or redemption or disposal of the units and shares (the withholding tax was 20 per cent.
with reference to any proceeds accrued by 30 June 2014).
Any capital gains realised by a Noteholder who is an Italian pension fund (subject to the regime provided
for by Article 17 of the Legislative Decree No. 252 of 5 December 2005) will be included in the result of
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the relevant portfolio accrued at the end of the tax period, to be subject to the 11 per cent substitute tax
(increased to 11.5 per cent. with reference to fiscal year 2014, pursuant to Decree No. 66).
Capital gains realised by Italian real estate funds (complying with the definition as amended pursuant to
Law Decree n. 78 of 31 may 2010, converted into Law n. 122 of 30 July 2010) or SICAFs, to which the
provisions of Law Decree No. 351 of 25 September 2001, as subsequently amended, apply, are subject
neither to substitute tax nor to any other income tax in the hands of a real estate investment fund or
SICAF. The income of the real estate fund or SICAF is subject to tax, in the hands of the unitholder,
depending on the status and percentage of participation, or, when earned by the fund, through distribution
and/or upon redemption or disposal of the units.
Capital gains realised by non-Italian-resident Noteholders, not having a permanent establishment in Italy
to which the Notes are connected, from the sale or redemption of Notes issued by an Italian resident
issuer and traded on regulated markets may in certain circumstances be subject to the 26 per cent.
substitute tax, if the Notes are held in Italy. However, pursuant to Article 23 of Decree No. 917, any
capital gains realised by non-Italian residents without a permanent establishment in Italy to which the
Notes are effectively connected through the sale for consideration or redemption of the Notes are exempt
from taxation in Italy to the extent that the Notes are listed on a regulated market in Italy or abroad, and in
certain cases subject to timely filing of required documentation (in the form of a declaration
(autocertificazione) of non-residence in Italy) with Italian qualified intermediaries (or permanent
establishments in Italy of foreign intermediaries) with which the Notes are deposited, even if the Notes
are held in Italy and regardless of the provisions set forth by any applicable double tax treaty.
Capital gains realised by non-Italian resident Noteholders, not having a permanent establishment in Italy
to which the Notes are connected, from the sale or redemption of Notes issued by an Italian issuer and not
traded on regulated markets are not subject to the imposta sostitutiva, provided that the actual beneficiary:
(i) is resident for income tax purposes in a country which allows for a satisfactory exchange of
information with Italy; or (ii) is an international entity or body set up in accordance with international
agreements which have entered into force in Italy; or (iii) is a Central Bank or an entity which manages,
inter alia, the official reserves of a foreign State; or (iv) is an institutional investor which is resident in a
country which allows for a satisfactory exchange of information with Italy, even if it does not possess the
status of a taxpayer in its own country of residence. Under these circumstances, if non-Italian
Noteholders, not having a permanent establishment in Italy to which the Notes are connected, are subject
to the risparmio amministrato regime or elect for the risparmio gestito regime, exemption from Italian
capital gains tax will apply upon condition that they file in time with the authorised financial intermediary
an appropriate declaration (autocertificazione) stating that they meet the requirement indicated above.
If none of the conditions above are met, capital gains realised by non-Italian resident Noteholders from
the sale or redemption of Notes issued by an Italian resident issuer not traded on regulated markets are
subject to the imposta sostitutiva at the current rate of 26 per cent.
In any event, non-Italian resident individuals or entities without a permanent establishment in Italy to
which the Notes are connected, that may benefit from a double taxation treaty with Italy providing that
capital gains realised upon the sale or redemption of Notes are to be taxed only in the country of tax
residence of the recipient, will not be subject to imposta sostitutiva in Italy on any capital gains realised
upon the sale or redemption of Notes.
Capital gains realised by non-Italian resident Noteholders from the sale or redemption of Notes issued by
a non-Italian resident issuer are not subject to Italian taxation, provided that the Notes are traded on a
regulated market or held outside Italy.
Inheritance and gift taxes
Pursuant to Law Decree No. 262 of 3 October 2006 (Decree No. 262), converted into Law No. 286 of 24
November 2006, as subsequently amended, the transfers of any valuable asset (including shares, bonds or
other securities) as a result of death or donation are taxed as follows:
(i)
transfers in favour of spouses and direct descendants or direct ancestors are subject to an
inheritance and gift tax applied at a rate of 4 per cent. on the value of the inheritance or the gift
exceeding, for each beneficiary, Euro 1,000,000;
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(ii)
transfers in favour of relatives to the fourth degree or relatives-in-law to the third degree are
subject to an inheritance and gift tax at a rate of 6 per cent. on the entire value of the inheritance
or the gift. Transfers in favour of brothers/sisters are subject to the 6 per cent. inheritance and gift
tax on the value of the inheritance or the gift exceeding Euro 100.000; and
(iii)
any other transfer is, in principle, subject to an inheritance and gift tax applied at a rate of 8 per
cent. on the entire value of the inheritance or the gift.
If the transfer is made in favour of persons with severe disabilities, the tax is levied at the rate mentioned
above in (i), (ii) and (iii) on the value exceeding, for each beneficiary, Euro 1,500,000.
Transfer Tax
Contracts relating to the transfer of securities are subject to the registration tax as follows: (i) public deeds
and notarised deeds are subject to fixed registration tax at rate of Euro 200; (ii) private deeds are subject
to registration tax only in case of use or voluntary registration.
Stamp duty
Pursuant to Article 13 par. 2/ter of the tariff Part I attached to Presidential Decree No. 642 of 26 October
1972, as amended by Article 1 par. 581 of Law No. 147 of 27 December 2013, a proportional stamp duty
applies on a yearly basis to the periodic reporting communications sent by financial intermediaries to their
clients in respect of any financial product and instrument, which may be deposited with such financial
intermediary in Italy. The stamp duty applies at the rate of 0.20 per cent and it cannot exceed Euro 14,000
for taxpayers which are not individuals. This stamp duty is determined on the market value or – in the
absence of a market value – on the nominal value or the redemption amount of any financial product or
financial instruments (including the Notes). Stamp duty applies both to Italian resident Noteholders and to
non-Italian resident Noteholders, to the extent that the Notes are held with an Italian-based financial
intermediary.
The statement is deemed to be sent at least once a year, even for instruments for which is not mandatory
nor the deposit nor the release or the drafting of the statement. In case of reporting periods of less than 12
months, the stamp duty is payable pro-rata.
Based on the wording of the law and the implementing decree issued by the Italian Ministry of Economy
on 24 May 2012, the stamp duty applies to any investor who is a client (as defined in the regulations
issued by the Bank of Italy on 9 February 2011) of an entity that exercises in any form a banking,
financial or insurance activity within the Italian territory.
Wealth Tax on securities deposited abroad
According to Article 19 of Decree No. 201/2011, as amended by Article 1 par. 582 of Law No. 147 of 27
December 2013, Italian resident individuals holding financial assets – including the Notes – outside of the
Italian territory are required to pay in its own annual tax declaration a wealth tax at the rate of 0.2 per
cent. The tax applies on the market value of the securities at the end of the relevant year or – if no market
value figure is available – the nominal value or the redemption value of such financial assets held outside
the Italian territory. Taxpayers are entitled to an Italian tax credit equivalent to the amount of wealth taxes
paid in the State where the financial assets are held (up to an amount equal to the Italian wealth tax due).
Implementation in Italy of the EU Savings Directive
According to Article 19 of Decree No. 201/2011, as amended by Article 1 par. 582 of Law No. 147 of 27
December 2013, Italian resident individuals holding financial assets – including the Notes – outside of the
Italian territory are required to pay in its own annual tax declaration a wealth tax at the rate of 0.2 per
cent. The tax applies on the market value of the securities at the end of the relevant year or – if no market
value figure is available – the nominal value or the redemption value of such financial assets held outside
the Italian territory. Taxpayers are entitled to an Italian tax credit equivalent to the amount of wealth taxes
paid in the State where the financial assets are held (up to an amount equal to the Italian wealth tax due).
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FRENCH TAXATION
The following is an overview of certain withholding tax considerations that may be relevant to holders of
the Notes who do not currently hold shares of Italcementi Finance SA. The statements herein regarding
taxation are based on the laws in force in France as of the date of this Base Prospectus and are subject to
any changes in law occurring after such date, which changes could be made on a retroactive basis. The
statements are of a general nature and do not constitute legal or tax advice and should not be understood
as such. Prospective investors in the Notes are therefore advised to consult their own qualified advisors
so as to determine, in the light of their individual situation, the tax consequences of the purchase,
holding, redemption or sale of the Notes.
Payments of interest and other revenues with respect to Notes issued by Italcementi Finance S.A. will not
be subject to the withholding tax set out under Article 125 A III of the French Code général des impôts
unless such payments are made outside France in a non-cooperative State or territory (Etat ou territoire
non coopératif) within the meaning of Article 238-0 A of the French Code général des impôts (a "NonCooperative State"). If such payments under the Notes are made in a Non-Cooperative State, a 75 per
cent. withholding tax will be applicable (subject to certain exceptions and to the more favourable
provisions of an applicable double tax treaty) by virtue of Article 125 A III of the French Code général
des impôts.
Furthermore, according to Article 238 A of the French Code général des impôts, interest and other
revenues on such Notes will no longer be deductible from the Issuer's taxable income if they are paid or
accrued to persons established in a Non-Cooperative State or paid in such a Non-Cooperative State (the
"Deductibility Exclusion"). Under certain conditions, any such non-deductible interest and other
revenues may be recharacterised as constructive dividends pursuant to Article 109 of the French Code
général des impôts, in which case such non-deductible interest and other revenues may be subject to the
withholding tax set out under Article 119 bis of the French Code général des impôts, at a rate of 30 per
cent. or 75 per cent, subject to the more favourable provisions of an applicable double tax treaty, if any.
Notwithstanding the foregoing, neither the 75 per cent. withholding tax set out under Article 125 A III of
the French Code général des impôts nor the Deductibility Exclusion will apply if the Issuer can prove that
the principal purpose and effect of a particular issue of Notes was not that of allowing the payments of
interest or other revenues to be made in a Non-Cooperative State (the "Exception"). Pursuant to the
Bulletins Officiels des Finances Publiques - Impôts BOI –INT-DG-20-50-20140211 (n°990) and BOIANNX-000364-20120912, an issue of Notes will benefit from the Exception without the Issuer having to
provide any proof of the purpose and effect of such issue of Notes, if such Notes are:
(i)
offered by means of a public offer within the meaning of Article L.411.1 of the French Code
monétaire et financier or pursuant to an equivalent offer in a State which is not a NonCooperative State. For this purpose, an "equivalent offer" means any offer requiring the
registration or submission of an offer document by or with a foreign securities market authority;
or
(ii)
admitted to trading on a regulated market or on a French or foreign multilateral securities trading
system provided that such market or system is not located in a Non-Cooperative State, and the
operation of such market is carried out by a market operator or an investment services provider,
or by such other similar foreign entity, provided further that such market operator, investment
services provider or entity is not located in a Non-Cooperative State; or
(iii)
admitted, at the time of their issue, to the clearing operations of a central depositary or of a
securities clearing and delivery and payments systems operator within the meaning of Article
L.561-2 of the French Code monétaire et financier, or of one or more similar foreign depositaries
or operators provided that such depositary or operator is not located in a Non-Cooperative State.
Pursuant to Article 125 A and 125 D of the French Code général des impôts subject to certain limited
exceptions, interest and other similar revenues received from 1 January 2013 by individuals who are
fiscally domiciled in France are subject to a 24 per cent. withholding tax, which is deductible from their
personal income tax liability in respect of the year in which the payment has been made. Social
contributions (CSG, CRDS and other related contributions) are also levied by way of withholding tax at
an aggregate rate of 15.5 per cent. on interest and other similar revenues paid to individuals who are
fiscally domiciled in France.
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Implementation in France of the EU Savings Directive
The EU Savings Directive has been implemented into French law under article 242 ter of the French Code
général des impôts. Article 242 ter of the French Code général des impôts, imposes on paying agents
based in France an obligation to report to the French tax authorities certain information with respect to
interest payments made to beneficial owners domiciled in another Member State, including, among other
things, the identity and address of the beneficial owner and a detailed list of the different categories of
interest paid to that beneficial owner.
LUXEMBOURG TAXATION
The following summary is of a general nature and is based on the laws presently in force in Luxembourg,
though it is not intended to be, nor should it be construed to be, legal or tax advice. The information
contained within this section is limited to Luxembourg withholding tax issues and prospective investors
in the Notes should therefore consult their own professional advisers as to the effects of state, local or
foreign laws, including Luxembourg tax law, to which they may be subject.
Please be aware that the residence concept used under the respective headings below applies for
Luxembourg income tax assessment purposes only. Any reference in the present section to a withholding
tax or a tax of a similar nature refers to Luxembourg tax law and/or concepts only.
A holder of the Notes may not become resident, or deemed to be resident, in Luxembourg by reason only
of the holding of the Notes, or the execution, performance, delivery and/or enforcement of the Notes.
Withholding Tax
(i)
Non-resident holders of Notes
Under Luxembourg general tax laws currently in force and subject to the laws of 21 June 2005 as
amended (the "Laws") mentioned below, there is no withholding tax on payments of principal,
premium or interest made to non-resident holders of Notes, nor on accrued but unpaid interest in
respect of the Notes, nor is any Luxembourg withholding tax payable upon redemption or
repurchase of the Notes held by non-resident holders of Notes.
Under the Laws implementing the EC Council Directive 2003/48/EC of 3 June 2003 on taxation
of savings income in the form of interest payments and ratifying the treaties entered into by
Luxembourg and certain dependent and associated territories of EU Member States (the
"Territories"), payments of interest or similar income made or ascribed by a paying agent
established in Luxembourg to or for the immediate benefit of an individual beneficial owner or a
residual entity, as defined by Article 4.2 of the Laws, which is a resident of, or established in, an
EU Member State (other than Luxembourg) or one of the Territories will be subject to a
withholding tax unless the relevant recipient has adequately instructed the relevant paying agent
to provide details of the relevant payments of interest or similar income to the competent fiscal
authority of Luxembourg, or, in the case of an individual beneficial owner, has provided a tax
certificate issued by the fiscal authorities of his/her country of residence in the required format to
the relevant paying agent. Responsibility for the withholding of the tax will be assumed by the
Luxembourg paying agent. Payments of interest under the Notes coming within the scope of the
Laws would at present be subject to withholding tax of 35 per cent.
On 18 March 2014, the Luxembourg government has submitted to the Luxembourg Parliament
the draft Bill N° 6668 on taxation of savings income putting an end to the current withholding tax
regime as from 1 January 2015 and implementing the automatic exchange of information as from
that date. This draft Bill is in line with the announcement of the Luxembourg government dated
10 April 2013.
Responsibility for the withholding of the tax will be assumed by the Luxembourg paying agent.
(ii)
Resident holders of Notes
Under Luxembourg general tax laws currently in force and subject to the law of 23 December
2005 as amended (the "Law") mentioned below, there is no withholding tax on payments of
principal, premium or interest made to Luxembourg resident holders of Notes, nor on accrued but
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unpaid interest in respect of Notes, nor is any Luxembourg withholding tax payable upon
redemption or repurchase of Notes held by Luxembourg resident holders of Notes.
Under the Law payments of interest or similar income made or ascribed by a paying agent
established in Luxembourg to or for the benefit of an individual beneficial owner who is a
resident of Luxembourg will be subject to a withholding tax of 10 per cent. Such withholding tax
will be in full discharge of income tax if the beneficial owner is an individual acting in the course
of the management of his/her private wealth. Responsibility for the withholding of the tax will be
assumed by the Luxembourg paying agent. Payments of interest under the Notes falling within
the scope of the Law would be subject to withholding tax of 10 per cent.
Furthermore, Luxembourg resident individuals acting in the course of the management of their
private wealth, who are the beneficial owners of interest or similar income made or ascribed by a
paying agent established outside Luxembourg in a Member State of the European Union or the
European Economic Area or in a jurisdiction having concluded an agreement with Luxembourg
in connection with the EU Savings Directive may also opt for a final 10 per cent. levy, providing
full discharge of Luxembourg income tax. In such case, the 10 per cent. levy is calculated on the
same amounts as the 10 per cent. withholding tax for payments made by Luxembourg resident
paying agents. The option for the 10 per cent. final levy must cover all interest payments made
by the paying agents to the Luxembourg resident beneficial owner during the entire civil year.
Responsibility for the declaration and the payment of the 10 per cent. final levy is assumed by the
individual resident beneficial owner of the interest or similar income.
OTHER TAXES
EU Savings Directive
Under EC Council Directive 2003/48/EC on the taxation of savings income in the form of interest
payments (the "Directive"), each Member State is required to provide to the tax authorities of another
Member State details of payments of interest or other similar income paid by a person within its
jurisdiction to, or collected by such a person for, an individual resident or certain limited types of entity
(within the meaning of Article 4.2 of Directive) established in that other Member State; however, for a
transitional period, Austria and Luxembourg may instead apply a withholding system in relation to such
payments, deducting tax at a rate of 35 per cent. The transitional period is to terminate at the end of the
first full fiscal year following agreement by certain non-EU countries to the exchange of information
relating to such payments. Luxembourg has announced that it will no longer apply the withholding tax
system as from 1 January 2015 and will provide details of payments of interest (or similar income) as
from this date.
On 18 March 2014, the Luxembourg government has submitted to the Luxembourg Parliament the draft
Bill N° 6668 on taxation of savings income putting an end to the current withholding tax regime as from
1 January 2015 and implementing the automatic exchange of information as from that date. This draft Bill
is in line with the announcement of the Luxembourg government dated 10 April 2013.
A number of non-EU countries, and certain dependent or associated territories of certain Member States,
have adopted similar measures (either provision of information or transitional withholding) in relation to
payments made by a person within its jurisdiction to, or collected by such a person for, an individual
resident or certain Residual Entities established in a Member State. In addition, the Member States have
entered into provision of information or transitional withholding arrangements with certain of those
dependent or associated territories in relation to payments made by a person in a Member State to, or
collected by such a person for, an individual resident or certain limited types of entity established in one
of those territories.
The European Council formally adopted a Council Directive amending the EU Savings Directive on 24
March 2014 (the "Amending Directive"). The Amending Directive broadens the scope of the
requirements described above. Member States have until 1 January 2016 to adopt the national legislation
necessary to comply with the Amending Directive. The changes made under the Amending Directive
include extending the scope of the EU Savings Directive to payments made to, or secured for, certain
other entities and legal arrangements. They also broaden the definition of "interest payment" to cover
income that is equivalent to interest.
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Proposed Financial Transactions Tax ("FTT")
On 14 February 2013, the European Commission has published a proposal (the "Commission's
Proposal") for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France,
Italy, Austria, Portugal, Slovenia and Slovakia (the "participating Member States").
The Commission's Proposal has very broad scope. If introduced, it could apply to certain dealings in
Notes (including secondary market transactions) in certain circumstances. The issuance and subscription
of Notes should, however, be exempt.
Under the Commission's Proposal, the FTT could apply in certain circumstances to persons both within
and outside of the participating Member States. Generally, it would apply to certain dealings in Notes
where at least one party is a financial institution, and at least one party is established in a participating
Member State. A financial institution may be, or be deemed to be, "established" in a participating
Member State in a broad range of circumstances, including (a) by transacting with a person established in
a participating Member State or (b) where the financial instrument which is subject to the dealings is
issued in a participating Member State.
A joint statement issued in May 2014 by ten of the eleven participating Member States indicated an
intention to implement the FTT progressively, such that it would initially apply to shares and certain
derivatives, with this initial implementation occurring by 1 January 2016. The FTT, as initially
implemented on this basis, may not apply to dealings in Notes.
The FTT proposal remains subject to negotiation between the participating Member States. Additional
EU Member States may decide to participate it may therefore be altered prior to any implementation.
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SUBSCRIPTION AND SALE
The Dealers have, in a Programme Agreement (such Programme Agreement as modified and/or
supplemented and/or restated from time to time, the "Programme Agreement") dated 24 September
2014, agreed with the Issuers and the Guarantor the basis upon which they or any of them may from time
to time agree to purchase Notes. Any such agreement will extend to those matters stated under "Form of
the Notes" and "Terms and Conditions of the Notes". In the Programme Agreement, the Issuers and the
Guarantor have agreed to reimburse the Dealers for certain of their expenses in connection with the
establishment and any future update of the Programme and the issue of Notes under the Programme and
to indemnify the Dealers against certain liabilities incurred by them in connection therewith.
United States
The Notes have not been and will not be registered under the Securities Act and may not be offered or
sold within the United States or to, or for the account or benefit of, U.S. persons except in certain
transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph
have the meanings given to them by Regulation S under the Securities Act.
The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the
United States or its possessions or to a United States person, except in certain transactions permitted by
U.S. Treasury regulations. Terms used in this paragraph have the meanings given to them by the U.S.
Internal Revenue Code of 1986 and Treasury regulations promulgated thereunder.
The applicable Final Terms will identify whether TEFRA C rules or TEFRA D rules apply or whether
TEFRA is not applicable.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be
required to represent and agree, that it will not offer, sell or deliver Notes (a) as part of their distribution
at any time or (b) otherwise until 40 days after the completion of the distribution, as determined and
certified by the relevant Dealer or, in the case of an issue of Notes on a syndicated basis, the relevant lead
manager, of all Notes of the Tranche of which such Notes are a part, within the United States or to, or for
the account or benefit of, U.S. persons. Each Dealer has further agreed, and each further Dealer appointed
under the Programme will be required to agree, that it will send to each Dealer to which it sells any Notes
during the distribution compliance period a confirmation or other notice setting forth the restrictions on
offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons.
Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.
Until 40 days after the commencement of the offering of any Series of Notes, an offer or sale of such
Notes within the United States by any dealer (whether or not participating in the offering) may violate the
registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance
with an available exemption from registration under the Securities Act.
Each issuance of Index Linked Notes or Dual Currency Notes shall be subject to such additional U.S.
selling restrictions as the relevant Issuer and the relevant Dealer may agree as a term of the issuance and
purchase of such Notes, which additional selling restrictions shall be set out in the applicable Final
Terms.
Public Offer Selling Restriction under the Prospectus Directive
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a "Relevant Member State"), each Dealer has represented and agreed, and each further
Dealer appointed under the Programme will be required to represent and agree, that with effect from and
including the date on which the Prospectus Directive is implemented in that Relevant Member State (the
"Relevant Implementation Date") it has not made and will not make an offer of Notes which are the
subject of the offering contemplated by this Base Prospectus as completed by the final terms in relation
thereto to the public in that Relevant Member State except that it may, with effect from and including the
Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State:
(a)
at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(b)
at any time to fewer than 100 or, if the Relevant Member State has implemented the relevant
provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified
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investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the
relevant Dealer or Dealers nominated by the relevant Issuer for any such offer; or
(c)
at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Notes referred to in (a) to (c) above shall require any Issuer or any Dealer
to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus
pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision:

the expression an "offer of Notes to the public" in relation to any Notes in any Relevant
Member State means the communication in any form and by any means of sufficient information
on the terms of the offer and the Notes to be offered so as to enable an investor to decide to
purchase or subscribe the Notes, as the same may be varied in that Member State by any
measure implementing the Prospectus Directive in that Member State;

and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments
thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant
Member State) and includes any relevant implementing measure in each Relevant Member State;
and

the expression "2010 PD Amending Directive" means Directive 2010/73/EU.
United Kingdom
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be
required to represent and agree, that:
(a)
in relation to any Notes which have a maturity of less than one year, (i) it is a person whose
ordinary activities involve it in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not
offer or sell any Notes other than to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or as agent) for the purposes of their
businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments
(as principal or agent) for the purposes of their businesses where the issue of the Notes would
otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act
2000 (FSMA) by the relevant Issuer;
(b)
it has only communicated or caused to be communicated and will only communicate or cause to
be communicated an invitation or inducement to engage in investment activity (within the
meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any
Notes in circumstances in which Section 21(1) of the FSMA does not apply to the relevant Issuer
or the Guarantor; and
(c)
it has complied and will comply with all applicable provisions of the FSMA with respect to
anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.
Japan
The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of
Japan (Act No.25 of 1948, as amended; the "FIEA") and each Dealer has represented and agreed, and
each further Dealer appointed under the Programme will be required to represent and agree, that it will
not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan
(as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign Trade Control Act
(Act No. 228 of 1949, as amended)), or to others for re-offering or resale, directly or indirectly, in Japan
or to, or for the benefit of, a resident of Japan, except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the FIEA and any other applicable laws, regulations
and ministerial guidelines of Japan.
France
Each of the Dealers and the Issuer has represented and agreed that it has not offered or sold and will not
offer or sell, directly or indirectly, Notes to the public in France, and has not distributed or caused to be
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distributed and will not distribute or cause to be distributed to the public in France, this Base Prospectus,
the relevant Final Terms or any other offering material relating to the Notes, and that such offers, sales
and distributions have been and will be made in France only to (a) persons providing investment services
relating to portfolio management for the account of third parties (personnes fournissant le service
d'investissement de gestion de portefeuille pour compte de tiers), and/or (b) qualified investors
(investisseurs qualifiés), other than individuals, all as defined in, and in accordance with, Articles L.4111, L.411-2, and D.411-1 of the French Code monétaire et financier.
The Netherlands
Zero Coupon Notes in definitive bearer form and other Notes in definitive bearer form on which interest
does not become due and payable during their term but only at maturity (savings certificates or
spaarbewijzen as defined in The Netherlands Savings Certificates Act or Wet inzake spaarbewijzen, the
"SCA") may only be transferred and accepted, directly or indirectly, within, from or into The Netherlands
through the mediation of either the Issuer or a member of Euronext Amsterdam N.V. with due observance
of the provisions of the SCA and its implementing regulations (which include registration requirements).
No such mediation is required, however, in respect of (i) the initial issue of such Notes to the first holders
thereof, (ii) the transfer and acceptance by individuals who do not act in the conduct of a profession or
business and (iii) the issue and trading of such Notes if they are physically issued outside The Netherlands
and are not immediately thereafter distributed in The Netherlands.
Republic of Italy
The offering of the Notes has not been registered pursuant to Italian securities legislation and, accordingly,
no Notes may be offered, sold or delivered, nor may copies of the Base Prospectus or of any other
document relating to the Notes be distributed in the Republic of Italy, except:
(i)
to qualified investors (investitori qualificati), as defined pursuant to Article 100 of Legislative
Decree No. 58 of 24 February 1998, as amended (the "Financial Services Act") and Article 34ter, first paragraph, letter b) of CONSOB Regulation No. 11971 of 14 May 1999, as amended
from time to time ("Regulation No. 11971"); or
(ii)
in other circumstances which are exempted from the rules on public offerings pursuant to Article
100 of the Financial Services Act and Article 34-ter of Regulation No. 11971.
Any offer, sale or delivery of the Notes or distribution of copies of the Base Prospectus or any other
document relating to the Notes in the Republic of Italy under (i) or (ii) above must be:
(a)
made by an investment firm, bank or financial intermediary permitted to conduct such activities
in the Republic of Italy in accordance with the Financial Services Act, CONSOB Regulation No.
16190 of 29 October 2007 (as amended from time to time) and Legislative Decree No. 385 of 1
September 1993, as amended, and any other applicable law and regulations; and
(b)
in compliance with any other applicable laws and regulations or requirement imposed by
CONSOB or other Italian authority.
Provisions relating to the secondary market in the Republic of Italy
Please note that in accordance with Article 100-bis of the Financial Services Act, where no exemption
from the rules on public offerings applies, Notes which are initially offered and placed in Italy or abroad
to qualified investors only but in the 12 months following such placing are regularly ("sistematicamente")
distributed on the secondary market in Italy to non qualified investors become subject to the public offer
and the prospectus requirement rules provided under the Financial Services Act and Regulation No.
11971. Failure to comply with such rules may in certain circumstances result in the sale of such Notes
being declared null and void and in the liability of the intermediary transferring the Notes for any
damages suffered by such non qualified investors.
General
Each Dealer has agreed and each further Dealer appointed under the Programme will be required to agree
that it will (to the best of its knowledge and belief) comply with all applicable securities laws and
regulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or
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distributes this Base Prospectus and will obtain any consent, approval or permission required by it for the
purchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction
to which it is subject or in which it makes such purchases, offers, sales or deliveries and none of the
Issuers, the Guarantor nor any of the other Dealers shall have any responsibility therefor.
None of the Issuers, the Guarantor nor the Dealers represents that Notes may at any time lawfully be sold
in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to
any exemption available thereunder, or assumes any responsibility for facilitating such sale.
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GENERAL INFORMATION
Authorisation
The update of the Programme and the giving of the Guarantee in respect of Notes issued by Italcementi
Finance S.A. have been duly authorised by a resolution of the Board of Directors of Italcementi S.p.A.
dated 8 May 2014.
The update of the Programme has been duly authorised by a resolution of the Board of Directors of
Italcementi Finance S.A. dated 29 April 2014.
Listing, approval and admission to trading of Notes
Application has been made to the CSSF to approve this document as a base prospectus. Application has
also been made to the Luxembourg Stock Exchange for Notes issued under the Programme to be admitted
to trading on the Luxembourg Stock Exchange's regulated market and to be listed on the Official List of
the Luxembourg Stock Exchange. The Luxembourg Stock Exchange's regulated market is a regulated
market for the purposes of the Markets in Financial Instruments Directive (Directive 2004/39/EC).
Documents Available
For the period of 12 months following the date of this Base Prospectus, copies of the following
documents will, when published, be available for inspection from the registered office of the relevant
Issuer and from the specified offices of the Paying Agents for the time being in Luxembourg:
(a)
the constitutional documents of each of Italcementi S.p.A. (with an unsworn English translation
thereof) and Italcementi Finance S.A.;
(b)
the audited consolidated financial statements of Italcementi S.p.A. in respect of the financial
years ended 31 December 2013 and 2012 (with an unsworn English translation thereof) and the
audited financial statements of Italcementi Finance S.A. in respect of the financial years ended 31
December 2013 and 2012, in each case together with the audit reports prepared in connection
therewith. Each of Italcementi S.p.A. and Italcementi Finance S.A. is required to publish audited
accounts on an annual basis;
(c)
the interim consolidated financial statements of Italcementi S.p.A. in respect of the six months
ended 30 June 2014 and 30 June 2013, with limited review report prepared in connection
therewith. Italcementi S.p.A. is required to publish interim accounts subject to limited review by
the auditors on a half-yearly basis and unaudited interim accounts on a quarterly basis;
(d)
the Agency Agreement/the Guarantee, the Deed of Covenant and the forms of the Global Notes,
the Notes in definitive form, the Coupons and the Talons;
(e)
a copy of this Base Prospectus; and
(f)
any future base prospectuses, prospectuses, information memoranda, supplements to this Base
Prospectus and Final Terms (save that a Final Terms relating to a Note which is neither admitted
to trading on a regulated market in the European Economic Area nor offered in the European
Economic Area in circumstances where a prospectus is required to be published under the
Prospectus Directive will only be available for inspection by a holder of such Note and such
holder must produce evidence satisfactory to the relevant Issuer and the Paying Agent as to its
holding of Notes and identity) and any other documents incorporated herein or therein by
reference;
In addition, copies of this Base Prospectus, each Final Terms relating to Notes which are admitted to
trading on the Luxembourg Stock Exchange's regulated market and each document incorporated by
reference are available on the Luxembourg Stock Exchange's website at www.bourse.lu.
Clearing Systems
The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg (which are
the entities in charge of keeping the records). The appropriate Common Code and ISIN for each Tranche
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of Notes allocated by Euroclear and Clearstream, Luxembourg will be specified in the applicable Final
Terms. If the Notes are to clear through an additional or alternative clearing system the appropriate
information will be specified in the applicable Final Terms.
The address of Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels and
the address of Clearstream, Luxembourg is Clearstream Banking, 42 Avenue JF Kennedy, L-1855
Luxembourg.
Conditions for determining price
The price and amount of Notes to be issued under the Programme will be determined by the relevant
Issuer and each relevant Dealer at the time of issue in accordance with prevailing market conditions.
Yield
In relation to any Tranche of Fixed Rate Notes, an indication of the yield in respect of such Notes will be
specified in the applicable Final Terms. The yield is calculated at the Issue Date of the Notes on the basis
of the relevant Issue Price. The yield indicated will be calculated as the yield to maturity as at the Issue
Date of the Notes and will not be an indication of future yield.
Significant or Material Change
There has been no significant change in the financial position of Italcementi S.p.A. or the Group since 30
June 2014 and there has been no material adverse change in the financial position or prospects of
Italcementi S.p.A. or the Group since 31 December 2013.
There has been no significant change in the financial position of Italcementi Finance S.A. since 31
December 2013 and there has been no material adverse change in the financial position or prospects of
Italcementi Finance S.A. since 31 December 2013.
Litigation
Save as disclosed in this Base Prospectus under "Description of Italcementi S.p.A. – Legal Proceedings"
from page 96 to page 99 and "Description of Italcementi Finance S.A. – Litigation" on page 103, above,
there are no governmental, legal or arbitration proceedings (including any such proceedings which are
pending or threatened of which Italcementi S.p.A. or Italcementi Finance S.A. are aware) in the 12
months preceding the date of this Base Prospectus which may have or have in such period had a
significant effect on the financial position or profitability of Italcementi S.p.A., Italcementi Finance S.A.
or the Group.
Auditors
KPMG S.p.A. has audited, without qualification, Italcementi S.p.A.'s accounts for the financial years
ended on 31 December 2013 and 31 December 2012, respectively, in each case prepared in accordance
with International Financial Reporting Standards ("IFRS"). KPMG S.p.A. does not have a material
interest in Italcementi S.p.A.
The ordinary shareholders' meeting of Italcementi S.p.A. appointed KPMG S.p.A. as auditing firm for the
legal audit of the annual financial statements and the consolidated financial statements for the years 20112019 and for the limited review of the half year reports at 30 June 2011-2019.
KPMG S.p.A. is registered under No. 13 in the Special Register (Albo Speciale) maintained by CONSOB
and set out at Article 161 of the TUF and under No. 70623 in the Register of Accountancy Auditors
(Registro dei Revisori Contabili), in compliance with the provisions of the Legislative Decree 27 January
1992, No. 88. KPMG S.p.A.'s address is Via Vittor Pisani 25 20124 Milan, Italy.
The auditors of Italcementi Finance S.A. are KPMG Audit, a Department of KPMG S.A., and Ernst &
Young et Autres, both members of the Compagnie Nationale des Commissaires aux Comptes. KPMG
Audit, a Department of KPMG S.A., and Ernst & Young et Autres have audited, without qualification,
the accounts of Italcementi Finance S.A. prepared in accordance with accounting principles generally
accepted in France as of and for the financial year ended on 31 December 2013. KPMG Audit, a
Department of KPMG S.A., and Ernst & Young et Autres have audited, without qualification, the
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accounts of Italcementi Finance S.A. prepared in accordance with accounting principles generally
accepted in France as of and for the financial year ended on 31 December 2012 as stated in their report
incorporated by reference in this Base Prospectus. The auditors of Italcementi Finance S.A. have no
material interest in Italcementi Finance S.A. KPMG Audit, a Department of KPMG S.A.'s address is 1,
cours Valmy, 92923 Paris La Défense Cedex and Ernst & Young et Autres' address is 1/2 Place des
Saisons, 92400 Courbevoie-Paris-La Défense, France.
Unsworn English translations of the reports of the auditors of Italcementi S.p.A. and Italcementi Finance
S.A. on the annual financial statements for the financial years ended 31 December 2013 and 31 December
2012 are incorporated by reference in this Base Prospectus.
Dealers transacting with Italcementi S.p.A. and Italcementi Finance S.A.
Certain of the Dealers and their affiliates, including parent companies, have engaged, and may in the
future engage, in investment banking and/or commercial banking transactions with, and may perform
services to the Issuers, the Guarantor and their affiliates in the ordinary course of business. In addition, in
the ordinary course of their business activities, the Dealers and their affiliates may make or hold a broad
array of investments and actively trade debt and equity securities (or related derivative securities) and
financial instruments (including bank loans) for their own account and for the accounts of their
customers. Such investments and securities activities may involve securities and/or instruments of the
Issuers or the Guarantor, or the Issuers' or the Guarantor's affiliates. Certain of the Dealers or their
affiliates that have a lending relationship with the Issuers or the Guarantor routinely hedge their credit
exposure to the Issuers or the Guarantor consistently with their customary risk management policies.
Typically, such Dealers and their affiliates would hedge such exposure by entering into transactions
which consist of either the purchase of credit default swaps or the creation of short positions in securities,
including potentially the Notes issued under the Programme. Any such short positions could adversely
affect future trading prices of Notes issued under the Programme. The Dealers and their affiliates may
also make investment recommendations and/or publish or express independent research views in respect
of such securities or financial instruments and may hold, or recommend to clients that they acquire, long
and/or short positions in such securities and instruments. For the purpose of this paragraph the term
"affiliates" includes also parent companies.
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INDEX OF DEFINED TERMS
€ ....................................................................... iii
2010 OD Amending Directive ........................ 26
2010 PD Amending Directive ...................... 119
2011 Annual Report ....................................... 21
2012 Annual Report ....................................... 21
30/360 ....................................................... 41, 45
30E/360 .......................................................... 45
30E/360 (ISDA) ............................................. 46
360/360 ........................................................... 45
Accrual Period ................................................ 40
Actual/360 ...................................................... 45
Actual/365 (Fixed) ......................................... 45
Actual/365 (Sterling) ...................................... 45
Actual/Actual.................................................. 44
Actual/Actual (ICMA).................................... 40
Actual/Actual (ISDA) ..................................... 44
Agency Agreement ......................................... 35
Agent .............................................................. 35
Amending Directive ............................... 13, 116
Amortised Face Amount................................. 52
applicable Final Terms ................................... 35
Assembly ........................................................ 14
ASTM ............................................................. 69
AY .................................................................. 52
Base Prospectus .............................................. 26
Bond Basis...................................................... 45
Business Day .................................................. 42
Calcestruzzi .................................................... 62
Calculation Agent ........................................... 43
Change of Control .......................................... 51
Change of Control Put Event .......................... 51
Ciments Français ............................................ 63
Clearstream, Luxembourg ........................ 24, 36
Code ............................................................... 47
Code of Ethics ................................................ 89
Comité Français d'Accréditation .................... 81
Committee for Transactions with Related
Parties ................................................................ 91
Common Depositary....................................... 24
Common Safekeeper ...................................... 24
Company ........................................................ 62
Conditions ................................................ 26, 35
control............................................................. 52
Corporate Governance Code" or the "Code .... 89
Couponholders................................................ 35
Coupons .......................................................... 35
CRA Regulation ......................................... 1, 16
CSSF ................................................................ 1
Day Count Fraction .................................. 40, 44
Dealer ............................................................... 1
Dealers .............................................................. 1
Decree No. 66 ............................................... 106
Deductibility Exclusion ................................ 114
Deed of Covenant ..................................... 25, 35
Designated Maturity ....................................... 43
Determination Period ..................................... 41
Directive ................................................. 13, 116
Documents incorporated by reference .............. ii
EIA .................................................................. 98
EN ................................................................... 69
ESMA ............................................................. 16
EU ETS ........................................................... 75
EURIBOR ....................................................... 43
Euro .................................................................iii
Eurobond Basis ............................................... 45
Euroclear ................................................... 24, 36
Event of Default .............................................. 55
Exception ...................................................... 114
Exchange Date ................................................ 24
Exchange Event .............................................. 24
FATCA ..................................................... 13, 54
FIEA ............................................................. 119
Final Terms ....................................................... 1
Financial Services Act .................................. 120
Financiera Y Minera ....................................... 98
Fixed Interest Period ....................................... 40
Floating Rate ................................................... 43
Floating Rate Option ....................................... 43
FTT ............................................................... 117
Global Note ..................................................... 35
Group .............................................................. 62
Guarantee ........................................................ 35
Guarantor .................................................... 1, 35
Half-Year 2012 Report ................................... 21
Half-Year 2013 Report ................................... 21
holder of Notes ................................................ 36
holders............................................................. 35
i.nova .............................................................. 71
IEP .................................................................. 98
IFRS .............................................................. 123
IGAs ................................................................ 13
Interest .......................................................... 106
Interest Amount .............................................. 44
Interest Payment Date ..................................... 41
Interest Period ................................................. 41
Investor's Currency ......................................... 15
ISDA Definitions ............................................ 42
ISDA Rate ....................................................... 42
Issuer ........................................................... 1, 35
Issuers ............................................................... 1
Italcementi ...................................................... 62
Italcementi Finance S.A. 2011 Annual Report 21
Italcementi Finance S.A. 2012 Annual Report 21
Italcementi Group ..................................... 39, 62
Law ............................................................... 115
Laws .............................................................. 115
LIBOR ............................................................ 43
London Business Day ..................................... 46
Long Maturity Note ........................................ 48
Moody's............................................................. 1
NGN ................................................................ 24
Non- Cooperative State ................................. 114
Non-recourse Securitisation ............................ 39
Non-recourse Securitisation Debt ................... 39
Noteholder ...................................................... 36
Noteholders ..................................................... 35
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Notes........................................................... 1, 35
OECD Member Country................................. 38
offer of Notes to the public ........................... 119
Organisational, Management and Control
Model ................................................................ 89
Partial Award .................................................. 97
participating Member States ......................... 117
Paying Agents................................................. 35
Payment Day .................................................. 49
Permanent Global Note .................................. 24
Permitted Reorganisation ............................... 56
Permitted Security .......................................... 37
Person ............................................................. 38
Persons Acting in Concert .............................. 52
Principal Subsidiary ................................. 38, 56
Proceedings .................................................... 60
Programme ....................................................... 1
Programme Agreement ................................. 118
Prospective Directive ..................................... 26
Prospectus Act 2005 ......................................... 1
Prospectus Directive ............................... ii, 119
Prospectus Regulation .................................... 17
Put Notice ....................................................... 51
Rate of Interest ............................................... 41
Rating Agency ................................................ 52
Regulation No. 11971................................... 120
Related Parties ................................................ 52
Relevant Date ................................................. 54
relevant Dealer ................................................. 1
Relevant Implementation Date ..................... 118
Relevant Indebtedness .................................... 38
relevant Issuer ................................................... 1
Relevant Member State ............................iii, 118
Relevant Time ................................................. 43
Reset Date ....................................................... 43
Responsible Persons..........................................ii
RP ................................................................... 52
SDSC .............................................................. 84
Securities Act .................................................... ii
Securitisation Entity ........................................ 39
Security Interest .............................................. 37
Series............................................................... 35
Sibcem ............................................................ 97
Sibconcord ...................................................... 97
SPA ................................................................. 97
Specified Currency.......................................... 36
Specified Denomination(s) ............................. 36
Standard & Poor's ............................................. 1
Standard Securitisation Undertakings ............. 39
Subsidiary ....................................................... 39
substantial part of its business ......................... 55
sub-unit ........................................................... 41
Talons ............................................................. 35
TAR ................................................................ 98
TARGET2 System .......................................... 42
Tax Jurisdiction............................................... 54
Temporary Global Note .................................. 24
Territories...................................................... 115
Tranche ........................................................... 35
Transactions with Related Parties ................... 89
TUF ................................................................. 89
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ISSUERS
Italcementi S.p.A
Via G. Camozzi 124
24121 Bergamo
Italy
Italcementi Finance S.A.
Tour Ariane
5 Place de la Pyramide
92800 Puteaux
France
GUARANTOR
Italcementi S.p.A.
Via G. Camozzi 124
24121 Bergamo
Italy
ISSUING AND PRINCIPAL PAYING AGENT
BNP Paribas Securities Services, Luxembourg Branch
33, rue de Gasperich
Howald – Hesperange
L – 2085 Luxembourg
LEGAL ADVISERS
To Italcementi S.p.A. as to Italian law
d'Urso Gatti e Bianchi Studio Legale Associato
Piazza Borromeo, 8
20123 Milan
Italy
To the Dealers as to English, French and Italian law
Studio Legale Associato in associazione con Clifford Chance
Piazzetta M. Bossi, 3
20121 Milan
Italy
Clifford Chance Europe LLP
9, place Vendôme CS 50018
75038 Paris Cedex 01
France
AUDITORS
To Italcementi S.p.A.
To Italcementi Finance S.A.
KPMG S.p.A.
Via Vittor Pisani 25
20124 Milan
Italy
KPMG Audit
Département de KPMG S.A.
1, cours Valmy
92923 Paris La Défense Cedex
Ernst & Young et Autres
1/2 Place des Saisons
92400 Courbevoie-Paris-La Défense France
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ARRANGERS
Banca IMI S.p.A.
Largo Mattioli, 3
20121 Milan
Italy
BNP Paribas
10 Harewood Avenue
London NW1 6AA
United Kingdom
DEALERS
Banca IMI S.p.A.
Largo Mattioli, 3
20121 Milan Italy
BNP Paribas
10 Harewood Avenue
London NW1 6AA
United Kingdom
Crédit Agricole Corporate & Investment Bank
9 quai du Président Paul Doumer
92920 Paris La Défense Cédex
France
CM-CIC Securities
6, avenue de Provence
75441 Paris Cedex 9
France
HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom
ING Bank N.V.
Foppingadreef 7
1102 BD Amsterdam
The Netherlands
J.P. Morgan Securities plc
25 Bank Street
London E14 5JP
United Kingdom
Mediobanca–Banca di Credito Finanziario
S.p.A.
1 Piazzetta Cuccia
20121 Milan
Italy
Merrill Lynch International
2 King Edward Street
London EC1A 1HQ
United Kingdom
Mitsubishi UFJ Securities International plc
Ropemaker Place
25 Ropemaker Street
London EC2Y 9AJ
United Kingdom
Natixis
30 avenue Pierre Mendès France
75013 Paris
France
Société Générale
29 boulevard Haussmann
75009 Paris
France
The Royal Bank of Scotland plc
135 Bishopsgate
London EC2M 3UR
United Kingdom
UniCredit Bank AG
Arabellastrasse 12
81925 Munich
Germany
LISTING AGENT
BNP Paribas Securities Services, Luxembourg Branch
33, rue de Gasperich
Howald – Hesperange
L–2085 Luxembourg
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