financial report 2001 results provide a solid foundation for future prospects holcim

2001 results provide a solid foundation for future prospects Financial Report 2001 MD & A 50 Consolidated Financial Statements Statement of Income 56 Balance Sheet 57 Statement of Changes in Equity 58 Cash Flow Statement 59 Accounting Policies 60 Financial Risk Management 65 Notes to the Financial Statements 68 Auditors’ Report 91 Principal Companies 92 Company Data 95 Holding Company Results Statement of Income 102 Balance Sheet 103 Notes to the Financial Statements 104 Appropriation of Net Earnings 107 Auditors’ Report 109 Capital Market Information 110 5-Year-Review 115 Boosting performance and cash flow is the key objective the Group’s performance, where especially the markets in Venezuela and Ecuador returned significant improvements In 2001, the geographic diversification was further strengthened and served to balance the Group’s portfolio Developing markets continue to increase their share of Group net sales at the expense of the more mature markets Europe, although still the largest region in the Group, decreased its share to 32.3% The following discussion and analysis of the Group’s (2000: 33.3%) of the Group’s net sales The Group financial condition and results of operations should be regions in the emerging markets of Africa Middle East read in conjunction with the Group’s financial state- and Asia Pacific increased during the year and ments and notes to the financial statements, which are accounted for 8.7% (2000: 8.2%) and 9.4% (2000: presented on pages 56 to 89 of this annual report 8.4%) of net sales respectively Net sales in Latin America stabilized and represent 27.2% (2000: 27.2%), Overview while sales in North America declined and represent Holcim again achieved good financial results in 2001 22.4% (2000: 22.9%) of the Group total given the economic slowdown in several markets and the strong CHF The Group’s well-balanced and wide Net Sales 2001 spread geographical positions contributed largely to the maintenance of operating results, with regard to which weakened during the last quarter of 2001 The internal growth in net sales, which excludes the impact of changes in foreign currencies and the con- Asia Pacific ous years did not enjoy the benefits of a strong USD, 9.4% Latin America 27.2% tions to the consolidation structure, but unlike previ- 8.7% Africa Middle East North America (2000: 13,531) The Group benefited from new addi- 22.4% 1,823), or 0.8% (2000: 15.6%), to CHF 13,644 million Europe Group net sales increased by CHF 113 million (2000: 32.3% the prior year, in the face of difficult conditions Per Group region solidation structure, amounted to CHF 166 million (2000: 523) or 1.2% (2000: 4.5%) The global economic Effect of currencies and inflation on operations growth, which has been evident over the past few The Group operates in more than 70 countries, there- years, did not continue in 2001 This was particularly fore most of the Group’s operations are accounted for evident in the second half of the year where the US in currencies other than the CHF Income statements economy lost some momentum This also had a ripple in foreign currencies are translated into CHF at the effect in other regions, where especially the Mexican average exchange rate of the year, whereas balance as well as some Western European markets declined sheets in foreign currencies are consolidated at year- In addition, the delayed commissioning of the Port- end exchange rates land plant and the write-off of Fort Collins production facility in the USA negatively impacted the operating results by CHF 112 million On the positive side, against most of the major currencies in which the there were improved economic environments in most Group operates Group results are sensitive to move- of the emerging markets of Africa Middle East, Asia ments affecting the EUR, which was 3.2% weaker Pacific and Eastern Europe in which the Group oper- than the CHF and the USD, which was similar to the ates Latin America continues to contribute greatly to 50 During 2001, the CHF strengthened in average CHF as a result of movements in the fourth quarter Management’s Discussion and Analysis of Financial Condition and Results of Operations 2001 In addition, most currencies in emerging markets minority interests were acquired at Beloizvorski weakened during the year As a consequence, Cement JSCo (Bulgaria), Apasco S.A de C.V (Mexico), exchange rate movements had a negative impact on Minetti S.A (Argentina), Holcim (Brasil) S.A (Brazil) the consolidated income statement and the results of and St Lawrence Cement Inc (Canada) the Group Due to the translation into CHF, net sales decreased by CHF 412 million (2000: +779) and oper- In addition, new or further investments have been ating profit by CHF 57 million (2000: +133) made in non-consolidated companies including CHF 50 million in Swiss International Air Lines Ltd The impact on the Group balance sheet was more (Switzerland) mixed The EUR lost 2.6% compared to the previous year closing This was offset by a strengthening of Divestments mainly include operations falling out- the USD that gained 2.4% year-on-year This led to a side of Group core activities and markets focusing on CHF 70 million (2000: 116) decrease in shareholders’ the development of products and expertise in the equity due to currency translation adjustments field of clinker and cement The most significant of these divestments occurred in Alsen AG (Germany) The impact of inflation and devaluation in some and Holcim (Belgique) S.A emerging market countries is minimized by functional currency accounting – usually in USD or EUR The change in Group structure increased net sales by CHF 359 million (2000: 521) and operating profit The Group experienced a smooth introduction of the by CHF 65 million (2000: 65) EUR on January 1, 2002, and will continue to benefit from reduced currency exchange risks and new Results of operations opportunities in the European financial markets During 2001, cement capacity grew by 7.1% (2000: 21.2%) to 121.2 million tonnes (2000: 113.2) This Change in Group structure reflects the investment activity during the year as Net financial investments amount to CHF 1,949 mil- well as some internal adjustments necessary to lion (2000: 1,929) The most significant investments ensure that the capacity is measured identically in all were in PT Semen Cibinong Tbk (Indonesia), which operations The increase would have been higher will be consolidated as of January 1, 2002, and except for the difficulties encountered regarding a Corporación Incem S.A (Panama), which was propor- commissioning of new production facilities in the tionately consolidated for the first time this year USA The new capacity should commence operations St Lawrence Cement Inc (Canada) invested in aggre- in the first half 2002 and is expected to reduce pro- gate operations which were immediately included in duction costs in the USA its consolidated results In addition, the Group provided financing to the Spanish investor, Cartera Lusita- The percentage of the Group’s net sales represented nia, who acquired a participation in Cimpor – Cimen- by income statement items is set out in the table tos de Portugal, SA (Portugal) below During the past two years a Group-wide standardized management accounting system was imple- Holcim (Bangladesh) Ltd, Caricement Antilles N.V mented The new management information system (Curaỗao) and Nicacem S.A (Nicaragua) were fully and related initiatives will facilitate international, consolidated and Union Cement Corporation (Philip- Group-wide benchmarking, enable Group companies pines) was proportionately consolidated for the first to share services and further strengthen the efficien- time Egyptian Cement Company S.A.E (Egypt) was cy and effectiveness of administration Since the now proportionately consolidated for a full year after beginning of 2001, Group companies report in a uni- only months in 2000 form manner As a consequence, certain comparative information has been restated This mainly included The Group continued to strengthen its participation the restatement of revenue where only the margin in subsidiaries The most significant additional earned from trading activities forms part of net sales, Management’s Discussion and Analysis of Financial Condition and Results of Operations 2001 51 the transfer of ready-mix concrete transportation helped lower production costs The comparison of the costs from production costs to distribution costs and gross profit margin with previous years is limited the separation of administration overheads from pro- Certain Group companies recorded some distribution duction costs activities, mainly those involving the bagging and shipping of cement, as part of production costs in previous years This has now been standardized for all Income Statement Items in % of Net Sales 1999 Group companies resulting in a decrease in produc- Net sales 100.0 100.0 100.0 tion costs and an increase in distribution costs The Production cost of goods sold (52.4) (55.1) (54.6) prior year income statement was not restated for this 2001 Gross profit 47.6 2000 44.9 45.4 effect Distribution and selling expenses (22.1) (20.1) (20.8) Distribution and selling expenses amounted to 22.1% (9.3) (8.2) (8.1) (2000: 20.1%) of net sales amortization (1.9) (1.8) (1.9) Administration expenses amounted to 9.3% (2000: Operating profit 14.3 14.8 14.6 8.2%) of net sales Administration costs are high due 1.6 1.2 1.7 Administration expenses Other depreciation and Additional ordinary income to the launch of the global Holcim brand, the intro- EBIT 15.9 16.0 16.3 duction of a procurement initiative as well as the Financial expenses (5.1) (5.0) (4.4) release of a standardized chart of accounts These ini- Group net income before taxes 10.8 11.0 11.9 tiatives will increase operating results and competi- Income taxes (3.2) (3.4) (3.5) tiveness in the future In addition, various initiatives, including efforts to optimize the Group structure Group net income before minority interests 7.6 7.6 8.4 continue to be launched to streamline administration and reduce costs Net sales The increase of net sales by CHF 113 million (2000: Other depreciation and amortization amounted to 1,823) to CHF 13,644 million (2000: 13,531) was 1.9% (2000: 1.8%) of net sales The slight increase in achieved through growth in the areas of the business this item, which contains amortization and deprecia- that the Group considers part of its core competen- tion on intangible and other operating assets, was cies Net sales in the segment cementitious materials primarily due to the amortization of goodwill arising increased by CHF 450 million (2000: 1,272) and now from recent investment activities account for CHF 9,994 million (2000: 9,544) or 68.4% (2000: 64.4%) of total Group turnover In the seg- Operating profit decreased to 14.3% (2000: 14.8%) of ment aggregates and concrete, net sales increased by net sales The decrease in operating profit of CHF 56 CHF 137 million (2000: 540) to CHF 3,588 million million (2000: +295) or 2.8% (2000: +17.3%) was due (2000: 3,451), representing a share of 24.5% (2000: partly to negative effects from exchange rate move- 23.3%) of total net sales Due to continued divest- ments of CHF 57 million (2000: +133) Ignoring the ments of activities in the segment other products impact of currency and changes in the consolidation and services, net sales decreased by CHF 786 million structure of CHF 65 million (2000: 65) operating (2000: +136) to CHF 1,043 million (2000: 1,829), profit decreased by CHF 64 million (2000: +97) This accounting now for 7.1% (2000: 12.3%) of total decrease was impacted by the restructuring costs of turnover CHF 131 million Operating profit in North America decreased significantly by 27.7% (2000: 0.2%) The Operating profit difficulties commissioning a new production facility 44.9%) The Group continues to focus on methods to as well as the write-off of the Fort Collins plant and increase its use of alternative fuels and optimize the the related closure costs (CHF 48.5 million) Operating use of mineral components These initiatives have 52 lower economic growth levels were compounded by The gross profit margin amounts to 47.6% (2000: profit in Europe decreased by 5.0% (2000: +0.2%) Management’s Discussion and Analysis of Financial Condition and Results of Operations 2001 reflecting the weakening EUR and challenging condi- Financial expenses tions in Western Europe where the restructuring Net financial expenses amounted to 5.1% (2000: costs in Alsen AG (Germany) and Holcim (France 5.0%) of net sales The small increase resulted from Benelux) S.A lowered operating profits This was part- the higher levels of net financial debt arising from ly offset by encouraging results in Eastern Europe the investment activity in the last years The average where especially Holcim in Hungary returned good interest rate on the financial liabilities on hand at results Although operating profit in Latin America December 31 amounts to 5.2% (2000: 6.4%) decreased by 1.8% (2000: +43.2%) the area accounts for 41.1% (2000: 40.8%) of Group operating profit Income taxes making it the largest contributor to the Group’s oper- The expected income tax rate for the Group remains ating results Most companies in this area returned at 33.0% During the year the effective tax rate was improved results – especially Cementos Caribe C.A 29.6% (2000: 30.2%) and was lower than the expect- (Venezuela), La Cemento Nacional C.A (Ecuador) and ed rate, primarily due to tax incentives received in Minetti S.A (Argentina) Only Apasco S.A de C.V recently acquired companies and the future tax rate (Mexico) and Holcim in Brazil, both on the back of reductions announced in Mexico excellent 2000 results, returned lower operating profits The areas of Africa Middle East and Asia Pacific Net income increased their operating profit by 31.6% (2000: Net income after minority interests decreased by 67.0%) and 60.8% (2000: 40.6%) respectively In the 8.4% (2000: +11.4%) As a result, earnings per area of Africa Middle East Egyptian Cement Company dividend-bearing bearer share (EPS) decreased by S.A.E (Egypt) was proportionately consolidated 12.1% (2000: +9.6%) to CHF 21.20 (2000: 24.12) and contributed its first full year results after only months in 2000 This, together with good market Cash flow conditions in Holcim (Maroc) S.A means that this Cash generated from operating activities amounted area now accounts for 10.0% (2000: 7.4%) of Group to CHF 2,402 million (2000: 2,557) a decrease of 6.1% operating profit Asia Pacific accounts for 7.8% (2000: +34.4%) during the year which reflects the (2000: 4.7%) of Group operating profit due mainly communicated one-time effects in 2000 This reduc- to the first time proportionate consolidation of Union tion is higher than the decrease in EBITDA and arises Cement Corporation (Philippines) and improved mainly from higher working capital requirements results in Siam City Cement (Public) Company Limited Inventory and trade receivables both increased while (Thailand) and most other companies in this region operating liabilities remained largely unchanged The strong and resistant operating results are a confirmation of the successful Group strategy of The emerging markets of Africa Middle East and geographical diversification Asia Pacific returned the largest increases in cash flow of 38.0% (2000: 55.8%) and 51.8% (2000: 31.7%) Operating Profit 2001 respectively The strong cash flows in Latin America increased further by 1.0% (2000: 64.4%) These Per Group region requirements in Europe and North America decreasing cash flow in these regions by 6.6% (2000: +4.3%) and 18.9% (2000: +30.9%) respectively 7.8% Asia Pacific 10.0% Africa Middle East Latin America 41.1% North America 15.4% 25.7% Europe increases were offset by increased working capital Balance sheet Consolidated shareholders’ equity grew by CHF 542 million (2000: 670) to CHF 7,642 million (2000: 7,100), mainly due to the enhancement of equity through net income by CHF 812 million (2000: 886) and the CHF 650 million capital increase This was offset by Management’s Discussion and Analysis of Financial Condition and Results of Operations 2001 53 profit distribution of CHF -188 million (2000: -162), environmental and economic benefit to the Group increase in treasury shares of CHF -372 million (2000: but also to contribute to societies’ future Invest- +238), effects of adopting IAS 39 on financial instru- ments in environmental protection are clearly a prior- ments of CHF -269 million and currency translation ity in acquired companies in developing countries adjustments of CHF -70 million (2000: -116) CHF 81 million (2000: 129) was invested to further In July 2001, the Group increased its equity by CHF improve the environmental sustainability of the pro- 650 million through the issue of subscription rights duction facilities for existing shareholders This was used to underlay approximately half of the CHF 1,300 million share- Group companies provide for their environmental lia- holdings acquired in new markets over the preceding bilities based on constructive as well as legal and two years with equity contractual obligations CHF 279 million (2000: 273) has been set-aside as a provision for recultivation and Interests of minority shareholders increased by CHF other environmental liabilities The Group does not 841 million (2000: 98) to CHF 2,741 million (2000: anticipate any material adverse effect of environmen- 1,900) due mainly to the issue of preference shares tal liabilities on future results of operations with a total subscription value of USD 450 million The Group does not guarantee these preference The section headed “Sustainable Development” on shares for redemption and dividend payments page contains details of activities and efforts in the Further increases arise from minority interests in the areas of corporate social responsibility and environ- new consolidations, partially offset by the buy-outs of mental protection minority interests in already consolidated companies New management structure and The Group’s net financial debt amounts to CHF 9,768 corporate governance million (2000: 9,060) an increase of 7.8% (2000: As a consequence of the strong growth witnessed by 18.7%) largely due to cash requirements for expansion the Group and to satisfy the capital markets new cor- through property, plant and equipment and financial porate governance requirements for publicly listed investment Standard & Poor’s, London awarded the companies, Holcim has decided to spread manage- Group a credit rating of “BBB+” (long-term; outlook ment responsibilities more broadly The functions of stable) and “A-2” (short-term) In August 2001, the Chairman of the Board of Directors and Chief Execu- Group issued unsecured notes through a private tive Officer were split effective January 1, 2002 placement in the US of USD 825 million Gearing (net Markus Akermann has assumed overall executive financial debt divided by shareholders’ equity includ- responsibility as the new Holcim CEO Chairman ing minority interests) benefited from the higher Dr h.c Thomas Schmidheiny will focus more on equity levels and decreased to 94.1% from 100.7% strategic tasks He remains the Group’s largest shareholder The Board of Directors has named Urs Bieri Although net financial debt increased, the portion Deputy CEO Newly appointed to the Executive Com- relating to cash and marketable securities remained mittee, Paul Hugentobler is now responsible for the high and amounted to CHF 2,242 million (2000: Northern ASEAN and South Asia regions 2,288) In order to bring the company’s organizational Sustainable development regulations into line with the changed circumstances, The Group is a founding member of the World Business an Audit Committee and a Nomination & Compen- Council for Sustainable Development (WBCSD), rein- sation Committee are to be established at Board forcing its commitment to the environment in a larger level sense The use of alternative fuels and raw materials as well as the production of blended cements is being 54 The business risk management concept has now systematically pursued in all regions to bring both an been fully implemented Group-wide Management’s Discussion and Analysis of Financial Condition and Results of Operations 2001 The internal audit function has been redefined It is Group interests in that area Accordingly the carrying to establish guidelines for internal audits at operative value of the assets and liabilities remain unchanged company level At the Group/finance company level, at their December 31, 2001 values the function of internal auditor has been transferred to an independent firm of auditors These measures On February 25, 2002 Siam City Cement (Public) Com- create a basis for professional and efficient internal pany Limited (Thailand), jointly controlled by Holcim auditing throughout the Group Ltd and the Ratanarak family, signed a subscription agreement with TPI Polene Public Co Ltd to acquire a Accounting policies controlling participation through an investment in IAS 39 on financial instruments and IAS 40 on invest- new equity of USD 375 million The proposed transac- ment properties were implemented in 2001 Whereas tion is subject to the approval of the Scheme Credi- investment properties had no impact on the Group, tors as the company is currently under rehabilitation IAS 39 had a substantial financial and administrative in accordance to the Bankruptcy Law of Thailand impact The complexities and demanding disclosure requirement of the standard resulted in considerable Outlook training and system development In addition, the Management feels confident about the financial per- Group took the opportunity to formalize the Group formance 2002 thanks to the wide spread presence treasury policy over the period and to the restructuring in several key markets For further details please refer to the “Shareholders’ As a consequence of IAS 39 shareholders’ equity was Letter” on page reduced by CHF 192 million as of January 1, 2001 The standard does not require restatement of comparative information There are no International Accounting Standards that affect the Group scheduled for implementation during 2002, however management continues to monitor developments and contribute towards future standards Events after the balance sheet date During 2001, the Group increased the shareholding in PT Semen Cibinong Tbk (Indonesia) to approximately 77% after successful negotiations to restructure the company’s debt The company will be consolidated from January 1, 2002 the date that management control became effective On December 28, 2001 the Serbian government accepted Holcim’s bid that amounts to about CHF 85 million for 70% of the voting shares of Novi Popovac The final contract is scheduled to be signed in the first half of 2002 During January 2002, the economic crisis in Argentina resulted in the devaluation of the local currency and in the default of its foreign debt It is too early to estimate the effect of the crisis on the economy and Management’s Discussion and Analysis of Financial Condition and Results of Operations 2001 55 Consolidated Statement of Income of Group Holcim Million CHF Notes 2001 2000 Net sales 13,644 13,531 Production cost of goods sold (7,154) (7,457) 6,490 6,074 (3,017) (2,728) (1,274) (1,104) (254) (241) 1,945 2,001 Gross profit Distribution and selling expenses Administration expenses Other depreciation and amortization Operating profit Additional ordinary income 10 212 165 2,157 2,166 (693) (683) 1,464 1,483 (433) (448) Group net income before minority interests 1,031 1,035 Minority interests (219) (149) 812 886 EBIT Financial expenses 11 Group net income before taxes Income taxes 12 Group net income after minority interests CHF Earnings per dividend-bearing bearer share 14 21.20 24.12 Fully diluted earnings per bearer share 14 20.85 23.60 56 Consolidated Statement of Income Consolidated Balance Sheet of Group Holcim Million CHF Cash and cash equivalents Notes 31.12.2001 31.12.2000 15 2,137 1,536 Marketable securities 15 105 752 Accounts receivable 16 2,456 2,486 Inventories 17 1,416 1,423 Prepaid expenses and other current assets 253 204 6,367 Total current assets 6,401 Financial investments 18 3,312 2,386 Property, plant and equipment 19 14,235 13,266 Intangible and other assets 20 3,130 2,936 Total long-term assets 20,677 18,588 Total assets 27,044 24,989 1,114 Trade accounts payable 21 1,187 Current financing liabilities 22 2,729 3,295 Other current liabilities 23 1,342 1,381 5,258 5,790 Total short-term liabilities Long-term financing liabilities 24 9,281 8,053 Deferred taxes 25 1,213 1,201 Long-term provisions 26 909 945 Total long-term liabilities 11,403 10,199 Total liabilities 16,661 15,989 2,741 1,900 402 377 Reserves 7,240 6,723 Total shareholders’ equity 7,642 7,100 27,044 24,989 Interests of minority shareholders 28 Authorized capital Total liabilities and shareholders’ equity Consolidated Balance Sheet 57 Information on Main Activities of Board of Directors Board of Directors Main activities Position Dr h.c Thomas Schmidheiny, Schweizerische Cement-Industrie-Gesellschaft, Glaris Chairman Chairman Think Tools AG, Zurich Director Thermalbäder und Grand Hotels, Bad Ragaz Director Schweizerische Cement-Industrie-Gesellschaft, Glaris Director Dr Anton E Schrafl, Deputy Chairman Franke Holding AG, Aarburg Director Schweizerische Cement-Industrie-Gesellschaft, Glaris Director F Hoffmann-La Roche Ltd, Basel CFO Unaxis Holding AG, Zurich Chairman and CEO Forbo Holding SA, Eglisau Deputy Chairman Esec Holding AG, Cham Chairman SIG Holding AG, Neuhausen am Rheinfall Dr Willy Kissling, Director Director Apogee Technology Inc., Norwood (USA) Dr Erich Hunziker, Director Director Organogenesis Inc., Canton (USA) Director Dr Peter Kurer, Director UBS AG, Zurich Group General Counsel Prof Dr Angelo Pozzi, Director Pozzi & Partner AG, Baden Chairman Prof Dr Gilbert Probst, Director University of Geneva Professor HEC Kuoni Travel Holding Ltd., Zurich Director Dr h.c Wolfgang Schürer, Director MS Management Service AG, St Gallen Chairman and Managing Director Danzas Holding Ltd., Basel Director Dr Rolf Soiron, Director Jungbunzlauer AG, Basel Director, CEO University of Basel President University Council Bellevue Holding AG, Zurich Director Metalor Technologies International S.A., Neuchâtel Peter G Wodtke, Director Director Synthes-Stratec Inc., Paoli (USA) Director Schweizerische Cement-Industrie-Gesellschaft, Glaris Director Aquila International Fund, Tortola (British Virgin Islands) Director C.A.T Holding, Luxemburg (Luxemburg) Director Wingate Partners, Dallas (USA) Advisory Director Eurorient China Infrastructure Fund Limited, Cayman Director The information disclosed complies with all Swiss legal requirements 106 Notes to the Financial Statements Holcim Ltd Dividend-bearing share capital Shares 2001 2000 Number Million CHF Number Million CHF Bearer shares of CHF 10 par value 29,032,699 290.3 27,218,155 272.2 Registered shares of CHF par value 56,021,334 112.1 52,520,000 Total 105.0 402.4 377.2 6,438,804 4,365,967 Appropriation of retained earnings CHF Retained earnings brought forward Net income of the year 203,929,620 189,696,987 Retained earnings 210,368,424 194,062,954 (195,161,829) (187,624,150) 15,206,595 6,438,804 Gross Net2 Bearer share CHF 5.00 CHF 3.25 Registered share CHF 1.00 CHF 0.65 The Board of Directors proposes to the Annual General Meeting of Shareholders of May 24, 2002 in Zurich the following appropriation: Gross dividend1 Balance to be carried forward This results in the following dividend per share: Dividend As from May 29, 2002, the dividend will be paid by any of the banks designated by the company (UBS AG, Credit Suisse First Boston, Bank Leu) upon presentation of Coupon No from Holcim bearer shares The dividend on registered shares will be paid in accordance with shareholders’ instructions No dividend is paid on treasury shares held by Holcim On January 1, 2002, treasury holdings amounted to 1,204,600 bearer shares After deduction of 35% withholding tax Appropriation of Net Earnings Holcim Ltd 107 Report of the statutory auditors to the General Meeting of Holcim Ltd, Jona As statutory auditors, we have audited the accounting records and the financial statements (statement of income, balance sheet and notes on pages 102 to 107) of Holcim Ltd for the year ended December 31, 2001 These financial statements are the responsibility of the Board of Directors Our responsibility is to express an opinion on these financial statements based on our audit We confirm that we meet the legal requirements concerning professional qualification and independence Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation We believe that our audit provides a reasonable basis for our opinion In our opinion, the accounting records and financial statements and the proposed appropriation of the retained earnings comply with Swiss law and the company’s articles of incorporation We recommend that the financial statements submitted to you be approved Arthur Andersen AG Thomas Stenz Markus Schweizer Zurich, March 22, 2002 Auditors’ Report Holding Company 109 Holcim stock an attractive blue chip investment Credit rating increases international appeal and In 2001, Holcim completed the biggest ever private reduces capital costs placement (USD 825 million) made by a foreign issuer Further enhancing the attractiveness of Holcim stock in the US Around 26 institutional investors from on the international financial markets and widening America provided funding with maturities running the Group’s base of non-Swiss investors, Standard & between and 30 years The mean maturity is Poor’s, London has given Holcim a credit rating The approximately years, and the average rate of inter- present long-term credit rating is “BBB+” (outlook est 6.8 percent stable), and the short-term rating was put at “A-2” Dividend on high level Shareholders Our shareholders also profited from the Group’s con- As at December 31, 2001, Dr h.c Thomas Schmidheiny, tinuous growth and the ensuing increase in profit Chairman of the Board of Directors of Holcim Ltd, Holcim is aiming for a distribution rate of approxi- directly and indirectly held 27.3 percent of share mately 25 percent On the basis of retained earnings capital, or 57.4 percent of total voting rights Capital of CHF 210.4 million (2000: 194.1) reported by the Group Companies Inc held 8.9 percent of share capi- holding company, the Board of Directors proposes to tal, or 5.9 percent of total voting rights, as at Decem- the General Meeting that an unchanged gross divi- ber 31, 2001 dend of CHF 5.00 per bearer share and CHF 1.00 per registered share be paid As a consequence of the Share split and successful capital increase capital increase, the total dividend amount has risen The 5-for-1 split tabled by the Board of Directors to CHF 195.2 million (2000: 187.6) was designed to increase the appeal and liquidity of Holcim bearer and registered shares The authorized share capital created at the same time by the General Meeting of Shareholders of May 18, 2001 was used to increase the company’s capital stock The capital increase with subscription rights for existing shareholders was carried out as follows: in the period from June 13 to 22, 2001, 15 old bearer shares entitled holders to subscribe one new bearer share with a par value of CHF 10 at an issue price of CHF 270 and 15 old registered shares entitled holders to subscribe one new registered share with a par value of CHF at an issue price of CHF 54 Through the issue of 1,814,544 new bearer and 3,501,334 new registered shares, some CHF 650 million in new equity accrued to the company from the capital increase The inflow of new capital was used to underpin with equity approximately half of the CHF 1,300 million shareholdings acquired in the emerging markets over the past two years 110 Capital Market Information Widely represented in share indices The Holcim bearer share is represented in 18 share indices, including the SMI, the virt-x Composite and the Dow Jones Building Materials Index Weighting of Holcim Bearer Share in Selected Share Indices Index Weighting in % SMI 1.245 SPI 1.128 BEBULDM, BE500 Building Materials Index 10.673 SXOP, Dow Jones STOXX 600 Construction 7.857 VIRTX, virt-x Composite 0.126 Source: Bloomberg End-December 2001 The Holcim registered share is represented in share indices, including the SPI and the Bloomberg Building Index Weighting of Holcim Registered Share in Selected Share Indices Index Weighting in % SPI 0.384 BEBULDM, BE500 Building Materials Index 4.256 Source: Bloomberg End-December 2001 Additional Data Bearer Share Registered Share Security code no 1221406 1221405 Telekurs code HOL HOLN Reuters code HOLZ HOLZn Bloomberg code HOL VX HOLN SW The shares are listed on SWX Swiss Exchange and Every share, regardless of whether bearer or regis- virt-x in London They are also traded on the Frank- tered, carries one voting right The market capitaliza- furt Stock Exchange and in the form of ADRs tion of Holcim Ltd amounted to CHF 14,461 million (HCMLY) in the USA (2000: 16,182) at December 31, 2001 Financial Reporting Calendar Annual report 2001 available in German and English May 17, 2002 First quarter 2002 results May 23, 2002 General Meeting of Shareholders May 24, 2002 Dividend payment May 29, 2002 First half 2002 results August 29, 2002 Third quarter 2002 results conference for press and analysts November 11, 2002 2002 annual results conference for press and analysts March 19, 2003 Capital Market Information 111 Performance of Holcim Bearer Share vs Swiss Market Index (SMI) 210 200 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 1996 1997 1998 1999 2000 2001 2000 2001 Performance of Holcim Registered Share vs Swiss Performance Index (SPI) 210 200 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 1996 1997 1998 1999 SMI / SPI 112 Capital Market Information Key Data Bearer Share Par value CHF 10 2001 2000 1999 1998 1997 Number of shares issued 29,032,699 21,633,155 21,633,155 26,131,300 26,131,300 Number of dividend-bearing shares 29,032,699 21,633,155 21,633,155 26,131,300 25,645,730 1,801,5751 1,801,575 1,801,575 801,575 826,575 234,155 843,125 903,575 366,800 403 455 439 430 294 265 326 281 221 191 Number of shares conditional capital Number of treasury shares 1,204,600 Stock market prices in CHF, adjusted High Low Consolidated earnings per dividend-bearing share in CHF 21.20 24.12 22.01 19.22 17.48 195.80 189.44 174.36 141.17 143.80 5.004 Consolidated shareholders’ equity per share in CHF3 5.00 4.40 4.00 4.00 Gross dividend per share in CHF Key Data Registered Share Par value CHF 2001 2000 1999 1998 1997 Number of shares issued 56,021,334 52,520,000 52,520,000 50,500,000 50,500,000 Number of dividend-bearing shares 56,021,334 52,520,000 52,520,000 50,500,000 50,500,000 0 210 0 High 109 120 114 87 59 Low 61 87 60 45 39 4.24 4.82 4.40 3.84 3.50 39.16 37.89 34.87 28.23 28.76 1.004 1.00 0.88 0.80 0.80 Number of treasury shares Stock market prices in CHF, adjusted Consolidated earnings per dividend-bearing share in CHF Consolidated shareholders’ equity per share in CHF 3 Gross dividend per share in CHF 801,575 shares reserved for the 1% convertible bond issued in 1998 Of which, 1,121,610 shares reserved for zero coupon and 1% convertible bond and options After interests of minority shareholders; adjusted Proposal of the Board of Directors Capital Market Information 113 Group 2001 Net sales Gross profit 2000 1999 1998 1997 Million CHF 13,644 13,531 11,708 10,921 10,980 Million CHF 6,490 6,074 5,318 4,788 4,521 Operating profit Million CHF 1,945 2,001 1,706 1,567 1,435 Depreciation and amortization Million CHF 1,417 1,429 1,201 1,124 1,143 Income taxes Million CHF 433 448 415 366 301 Group net income before minority interests Million CHF 1,031 1,035 978 837 755 Group net income after minority interests Million CHF 812 886 795 682 618 Cash flow from operating activities Million CHF 2,402 2,557 1,902 1,887 1,630 Investments in property, plant and equipment net Million CHF 1,730 1,640 1,111 967 1,400 Financial investments net Million CHF 1,949 1,929 710 1,751 441 Current assets Million CHF 6,367 6,401 5,501 4,140 4,187 Long-term assets Million CHF 20,677 18,588 16,201 13,969 13,150 Short-term liabilities Million CHF 5,258 5,790 4,167 3,337 3,873 Long-term liabilities Million CHF 11,403 10,199 9,303 8,356 6,500 Shareholders' equity2 Million CHF 10,383 9,000 8,232 6,416 6,964 Shareholders' equity as % of total assets2 % 38.4 36.0 37.9 35.4 40.2 Interests of minority shareholders Million CHF 2,741 1,900 1,802 1,423 1,877 Total assets Million CHF 27,044 24,989 21,702 18,109 17,337 Production capacity cement Million t 121.2 113.2 93.4 86.6 80.8 Sales of cement and clinker3 Million t 84.3 80.6 74.6 68.4 64.3 Sales of aggregates Million t 89.5 86.6 84.9 83.9 81.1 Personnel 25.5 24.9 21.8 20.8 19.4 Number 47,362 44,316 39,327 40,520 40,779 2001 Sales of ready-mix concrete 2000 1999 1998 1997 Million m Holding Company Net income Million CHF 203.9 189.7 160.6 141.9 143.2 Total assets Million CHF 6,629 6,460 5,411 4,663 3,782 Share capital Million CHF 402 377 377 363 363 187.6 161.9 141.7 141.0 Gross dividend Million CHF 195.2 1997 to 2000 restated figures Includes interests of minority shareholders 2000 restated figure Proposed by the Board of Directors 5-Year Review 115 Group Personnel per Region 2001 Europe North America Latin America Africa Middle East Asia Pacific Total Group Group Personnel per Product 2000 1999 1998 1997 15,719 16,190 14,249 14,229 14,793 5,494 5,348 5,271 2001 Cement/Clinker 2000 1999 1998 1997 29,100 24,278 21,846 22,089 20,373 5,114 5,228 Aggregates/Concrete 14,172 12,198 11,203 11,684 10,472 12,266 10,499 10,676 11,098 9,972 Others Total Group 5,224 4,779 4,999 5,967 6,831 8,659 7,500 4,132 4,112 3,955 47,362 44,316 39,327 40,520 40,779 4,090 7,840 6,278 6,747 9,934 47,362 44,316 39,327 40,520 40,779 Average Personnel per Function and Region 2001 Production and distribution Sales Administration and others Total 12,386 1,294 2,275 15,955 North America 4,441 341 639 5,421 Latin America 8,896 1,118 1,369 11,383 Africa Middle East 3,918 415 668 5,001 Asia Pacific 6,758 508 813 8,079 Total Group 36,399 3,676 5,764 45,839 Europe Personnel Expenses per Function and Region 2001 In million CHF Production and distribution Sales Administration and others Total Europe 589 117 291 997 North America 389 57 96 542 Latin America 335 84 143 562 95 16 49 160 111 13 34 158 1,519 287 613 2,419 Africa Middle East Asia Pacific Total Group © 2002 Holcim Ltd Concept: Kirchhoff (Schweiz) AG, Lucerne Helmut W Rodenhausen, Lucerne Design: Ernst Schadegg, Zurich-Gockhausen Photos: Andreas Schwaiger, Zurich Thomas Cugini, Zurich (pages 3, 4, left) Alf Dietrich, Zurich (page right) Printed by: Stäubli Ltd, Zurich Holcim Board of Directors Markus Akermann CEO Office and Secretary of EXCO CEO Markus Akermann Bent-H Koch Dr Hansueli H (ad interim) Urs Bieri Paul Hugentobler Theophil H Schlatter Deputy CEO Latin America North America Western Europe Mediterranean International Trade Central and Eastern Europe Southern ASEAN East Asia and Pacific South and East Africa Dr Thomas Knöpfel Martin F Altorfer Jean Guillot Urs Böhlen Jerry C.R Maycock Area Management Area Management Area Management CFO Area Management Corporate Strategy and Business Development Corporate Legal and Internal Audit Corporate Human Resources Management Corporate Communications Investor Relations Manufacturing Services Commercial Services Industrial Ecology Training and Learning Information Technology Special Projects Administration Group Support South Asia Northern ASEAN Finance and Controlling Holcim Commerce Ltd Corporate Controlling Corporate Financing and Treasury Financial Holdings Executive Committee (EXCO) í Situation as of April 1, 2002 Management Structure Holcim Ltd Zürcherstrasse 156 CH-8645 Jona Phone +41 58 858 86 00 Fax +41 58 858 86 09 info@holcim.com www.holcim.com Corporate Communications Roland Walker Phone +41 58 858 87 10 Fax +41 58 858 87 19 communications@holcim.com Investor Relations Bernhard A Fuchs Phone +41 58 858 87 20 Fax +41 58 858 86 69 investor.relations@holcim.com The Katse dam in Lesotho brings drinking water to South Africa By delivering cement, aggregates, concrete and know-how, Holcim creates value which transcends borders and brings regions together With Strength Performance Passion ... Increase in cash and cash equivalents (A+ B+C) Cash and cash equivalents as at January Cash and cash equivalents as at December 31 as reported Adjustment for change in basis Cash and cash equivalents... net change in the fair value of financial assets classified as available -for- sale The movement in the available -for- sale equity reserve was as follows: Transition adjustment as at January 1, 2001. .. Inc October 1, 2001 Nicaragua: Nicacem S .A January 1, 2001 Panama: Corporación Incem S .A (proportionate consolidation) January 1, 2001 Curaỗao: Caricement Antilles N.V January 1, 2001 Philippines: