B U I L DI N G F O R
G RO W T H
2 0 17 A N N UA L R E P O R T
LAFA RGEHOLCIM
L AFARGEHOLCIM IS
THE LEADING GLOBAL
CONSTRUC T ION MATER I ALS
AND SOLUT IONS COMPANY.
FROM SMALL LOCAL PROJECTS TO
THE BIGGEST, MOST TECHNICALLY
CHALLENGING INFRASTRUCTURE
ENDEAVORS, WE SUPPORT BUILDERS
AROUND THE WORLD.
TOWA RD INTEG RATED REPORTING
SUSTAINABILITY REPORT
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integrated annual report. By applying the principles of
integrated reporting, we aim to present a more holistic
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(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:86)(cid:17)(cid:3)(cid:50)(cid:89)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:90)(cid:72)(cid:3)(cid:75)(cid:82)(cid:83)(cid:72)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)
report will be an increasingly effective tool for all
stakeholders to understand how LafargeHolcim
contributes to our world.
FIND OUT MORE ABOUT
WHAT WE DO ONLINE
www.lafargeholcim.com
The Sustainability Report complements this report.
It presents more detail on our sustainability achievements
as well as progress against our sustainability strategy,
The 2030 Plan. It will be published in April 2018.
K E Y GROUP F IGUR E S
FIN A NCI AL HIGHLIGHTS
SALES
CONTENTS
6.1
4.7
RECURRING EBITDA GROWTH
%
2016: 8.7
NET SALES GROWTH
%
2016: –1.7
5,9 9 0
RECURRING EBITDA
CHF M
2016: 5,950
209. 5
SALES OF CEMENT
MILLION TONNES
2016: 233.2
1,6 85
FREE CASH FLOW
CHF M
2016: 1,660
278.7
SALES OF AGGREGATES
MILLION TONNES
2016: 282.7
5.8
50.6
RETURN ON INVESTED CAPITAL
%
2016: 5.2
SALES OF READY-MIX CONCRETE
MILLION M3
2016: 55.0
Notes:
Recurring EBITDA replaces the former Operating EBITDA Adjusted. Recurring EBITDA excludes
restructuring, litigation, implementation and other non-recurring costs. Free cash flow is
defined as cash flow from operating activities less net maintenance and expansion Capex.
Recurring EBITDA growth and Net Sales growth are both presented on a like-for-like basis.
Return On Invested Capital is defined as Net Operating Profit After Tax (NOPAT) divided by the
average Invested Capital. The average is calculated by adding the Invested Capital at the
beginning of the period to that at the end of the period and dividing the sum by 2 (based on a
rolling 12 month calculation).
The non-GAAP measures used in this report are defined on page 251.
1
2
4
6
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
42
44
46
50
54
84
Group at a glance
Chairman’s statement
Chief Executive’s statement
Our Leadership
Around our business
Tailored solutions
Customer focus
Recycled materials
Unlocking value
Marketplace
Strategy 2022
By the numbers
Business review:
> Asia Pacific
> Europe
> Latin America
> Middle East Africa
> North America
Innovation
Our people
Health & Safety
Risk management
Capital market information
Corporate governance
Compensation report
Management discussion & analysis
Financial information
108
121
LAFARGEHOLCIM ANNUAL REPORT 2017 2
L A F A R G E H O L C I M
GROUP AT A GL ANCE
GROUP AT A GL A NCE
As the leading global construction materials and solutions company,
LafargeHolcim can help address challenges such as urbanization and climate
change. We offer a strong asset base in around 80 countries, the most
innovative cement, concrete, and aggregates solutions to meet our customers’
needs, and a commitment to health, safety, and sustainability.
OUR GLOBAL PRESENCE
81,000
EMPLOYEES WORLDWIDE
2,300
OPERATING SITES
Top 3
POSITION IN 80%
OF OUR MARKETS
NO RT H
A MERI CA
NET SALES [CHFm]
5,664
READ MORE
P36 — 37
L AT IN
A MERI CA
NET SALES [CHFm]
2,944
READ MORE
P32 — 33
OUR BUSINESSES
CEMENT
AGGR EGATES
From classic masonry cements to high-
performance products tailored for specialized
settings, we offer an extensive line of cements
and hydraulic binders. Customers range from
individuals buying bag cement to businesses
undertaking major construction projects.
Our aggregates serve as raw materials for
concrete, masonry and asphalt as well
as base materials for buildings, roads and
landfills. Our recycled aggregates use
crushed concrete and asphalt from
deconstruction.
209.5
SALES MILLION TONNES
2016: 233.2
278.7
SALES MILLION TONNES
2016: 282.7
3
EUROPE
NET SALES [CHFm]
7,167
READ MORE
P30 — 31
MIDDLE
EAST AFRICA
NET SALES [CHFm]
3,374
READ MORE
P34 — 35
A SI A
PAC IF I C
NET SALES [CHFm]
7,441
READ MORE
P28 — 29
REA DY-MIX
SOLUTIONS & PRODUCTS
READ MORE
Concrete is the world’s second most
consumed substance by volume after water.
In this highly competitive and decentralized
market, we stand apart through the quality
and consistency of our products, the breadth
of our portfolio and our innovative solutions.
Supported by technical expertise and
generations of experience, we create
innovative solutions that meet our customers’
specific needs and requirements.
CHIEF EXECUTIVE’S STATEMENT
P6 — 9
STRATEGY
P24 — 25
50.6
SALES MILLION M3
2016: 55.0
2.1
NET SALES
2017: CHF bn
LAFARGEHOLCIM ANNUAL REPORT 2017 4
L A F A R G E H O L C I M
CHA IRMAN ’ S S TATEMENT
CH A I R M A N ’ S S TATE ME NT
Dear shareholders,
2017 was a year of progress for
LafargeHolcim.
In performance terms we delivered
continued growth in net sales and margins
leading to an increase in Recurring EBITDA
and cash flow. This solid operational result
once again highlights the underlying
strength of our asset base combined with
our ability to deliver in all types of market
conditions.
But, like you, we have high expectations and
believe that LafargeHolcim has the potential
to achieve even more. I’m excited, therefore,
that Jan Jenisch joined us as Chief Executive
Officer in September last year. The speed
with which he has identified the
opportunities to grow our company is
impressive. The Board and I have full faith
in Jan’s approach to leading LafargeHolcim,
which you can read in his own words on
page 6. Guided by our Strategy 2022 we are
confident we can deliver long-term year-on-
year success.
LafargeHolcim is the global leader in
building materials and solutions. We employ
the most talented people in the industry and
apply the right technology and solutions to
help our customers achieve their goals,
thereby helping to meet global challenges
such as urbanization and climate change.
The future of LafargeHolcim looks bright.
We hope you will see evidence of this
strength and differentiation as you look
through this report. In keeping with our
commitment to integrated reporting, our
aim with this 2017 edition is to demonstrate
to all our stakeholders how LafargeHolcim
creates value in both financial and non-
financial terms. In the coming editions we
hope to do this more and more as we seek to
find the right way to improve our disclosures
and track our progress.
I hope I have managed to convey some of
my excitement for the years ahead. Please
read Jan’s letter to learn about the course
that will guide us.
I would like to take this opportunity to
express my gratitude to my fellow Board
members for their commitment and wise
counsel and to the members of the Executive
Committee under whose leadership we
made real progress in 2017.
I also extend my sincere thanks and
admiration to our employees around the
world who make a difference every day and
who will take us to the next level of
performance in the coming years.
Most of all, I thank you for your continued
confidence in this great company.
Beat Hess
Chairman
A time for reflection
Any review of 2017 must also address the
events that took place in our operations in
Syria in 2014 and that have been reported by
various news outlets during the year. The
Board and I condemn the mistakes that were
made in no uncertain terms. They are
unacceptable and we have taken decisive
steps to prevent this happening again. Such
events impact our reputation.
They also affect our people. That’s why our
focus has been squarely on our employees.
Speaking on behalf of the Board, we are
determined to ensure that our employees
continue to take pride in the work we do and
the way we do it.
To underline the importance of these aims
we took a number of actions in 2017. Among
the most notable was the establishment of a
Health, Safety and Sustainability Committee
of the Board (see page 63) and an Ethics,
Integrity and Risk Committee at operational
level (see page 46). In keeping with our
commitment to good corporate citizenship,
the Board has also endorsed a strategy for
dealing with our carbon emissions.
These actions reinforce the underlying truth:
LafargeHolcim is a first-class company that
holds itself to the highest standards
wherever it operates. We work every day to
create a safe, healthy and ethical workplace
for the people who truly create value for all
our stakeholders, including you, our
shareholders.
Today’s LafargeHolcim is a global company.
We draw from a long history of operations
around the world, using our diversity as a
strength and driver of differentiation from
our peers. At the same time we are a local
company, close to our customers and vital
contributors to the communities in which we
live and work.
5
We are confident we can
deliver long-term year-on-year
success. LafargeHolcim is the
global leader in building
materials and solutions. We
employ the most talented
people in the industry and
apply the right technology
and solutions to help our
customers achieve their
goals, thereby helping to
meet global challenges such
as urbanization and climate
change. The future of
LafargeHolcim looks bright.
CORPORATE GOVERNANCE
Our approach to assuring the
long-term value of the Group
Find out more
P54
THE 2030 PLAN
For complete results of our
progress against The 2030
Plan, see our 2017 Sustainability
Report, to be published in
April 2018.
LAFARGEHOLCIM ANNUAL REPORT 2017 6
L A F A R G E H O L C I M
CHIEF E XECUT I VE ’ S S TATEMENT
CHI E F E X ECU T I V E ’ S S TATE ME NT
My review of the business underlined the
opportunities and made our priorities as a
company clear. While we delivered strong
annual results in 2017, they do not reflect
the full potential of this business. As the
market leader, we will hold ourselves to
a higher standard than anyone else in
our industry.
The building materials sector is highly
attractive with growth driven by the rapid
rise in the global population, the continuing
shift towards urban living and the increasing
need for infrastructure development.
Demand for better living standards and
more efficient infrastructure, digitalization
of the construction value chain and the
requirement to develop sustainable
construction solutions are also fueling
innovation and spending.
Our traditional business segments of
Cement, Aggregates and Ready-mix
Concrete are at the center of these global
megatrends. Our international scale and
excellent positioning in local markets will
enable us to take full advantage of them.
Dear shareholders,
In 2017 we made good progress across all
key metrics. The growth in sales and the
over-proportional increase in EBITDA
represent a good performance and gives us
a very good basis to build on. The fact that
four of our five regions reported growing
EBITDA is further testimony to the global
strength of LafargeHolcim.
Recurring EBITDA reached CHF 5,990 million
for the full year. This figure includes the
reclassification of the Group’s profit share in
the Chinese joint venture Huaxin — CHF 126
million for 2017 — pursuant to our IFRS 11
assessment, following the ongoing
streamlining of our Chinese operations.
Like-for-like Recurring EBITDA, which is not
impacted by the reclassification of Huaxin
profits, grew by 6.1 percent over the full
year, in line with guidance from last October.
Since joining the company in September
2017 I have visited many of our operations
around the world to see at first-hand the
scale and strengths of the business. I have
been very impressed by the experience
and enthusiasm of our people, whose
commitment and hard work are the
foundation for our success. LafargeHolcim
is a first-class company with the best assets
in a growing building materials market and
there are clear opportunities to enhance
the business and target growth and
outperformance.
7
LafargeHolcim is a first-class
company with the best
assets in a growing building
materials market and there
are clear opportunities
to enhance the business
and target growth and
outperformance.
LAFARGEHOLCIM ANNUAL REPORT 2017 8
L A F A R G E H O L C I M
CHIEF E XECUT I VE ’ S S TATEMENT
Strategy 2022
LafargeHolcim has launched its new Strategy
2022 – ‘Building for Growth’, that aims to
drive profitable growth and simplify the
business to deliver resilient returns and
attractive value to stakeholders. The new
strategy will shift gears towards growth of
the top and bottom line over the next five
years. Over this period, the Group commits
to the following targets 1:
– Annual Net Sales growth of 3 to 5 percent
– Annual Recurring EBITDA growth of at least
5 percent
– Improvement in Free Cash Flow to over
40 percent of Recurring EBITDA
– Improvement in ROIC to more than
8 percent
The strategy is based on the four value
drivers of Growth, Simplification &
Performance, Financial Strength and
Vision & People.
Growth
The Group will focus on capitalizing on this
underlying growth, seeking to deliver above-
market performance. LafargeHolcim will
utilize its strong asset base to invest in
markets where greater opportunities exist
while being more selective in other markets.
The Group will execute more aggressive
strategies for Aggregates and Ready-mix
Concrete alongside its existing strong
Cement business. The Group will build a
fourth business segment, Solutions &
Products, to take advantage of products and
applications that are closer to the customer.
This segment, which currently includes
precast, concrete products, asphalt, mortars
and contracting and services, already
generates annual Net Sales of CHF 2.1
billion. The agile, country-based growth
strategies will target value-enhancing
bolt-on acquisitions to leverage scale
and margins.
Simplification & Performance
The value driver Simplification &
Performance, will create a cost disciplined
operating model and a corporate-light
structure. There will be a greater focus on
countries, with local markets empowered
and fully profit and loss accountable. The 35
biggest markets will report directly to Group
management and local profit & loss leaders
will be assigned for all four business
segments. The two Corporate business
functions have been merged and the Group
management is reduced to nine members.
Simplification will allow LafargeHolcim to
1 All figures at constant exchange rates
9
improve its cost efficiency considerably. This
is expected to create an Sales, General &
Administration (SG&A) cost saving of CHF
400 million per annum with the related
program expected to be completed by Q1
2019. As part of this program, the Corporate
offices in Singapore and Miami will be closed
by mid-year. A strong performance culture
will be created with simplified KPIs and new
incentives that are fully aligned to the
Group’s goals. Profit and loss responsibility
and accountability is implemented for
countries and all four business segments. In
Aggregates and Ready-mix Concrete we
intend to close the performance gap to best
in class.
Financial Strength
Financial Strength will ensure disciplined
value creation through maintaining an
investment grade credit rating. Growth will
be funded through divestment of selected
assets during the course of 2019 worth at
least CHF 2 billion. Capex investment will be
kept below CHF 2 billion per annum and
excess free cash flow will be used to pay an
attractive dividend.
Vision & People
Vision & People further develops our values
of trust and integrity, our commitment to
Health & Safety and our desire to be at the
forefront of sustainable construction
solutions and innovation. We want to foster
an entrepreneurial leadership style and we
are focused on the long-term success of
LafargeHolcim.
My team and I are now working to
implement this strategy across the Group.
We will provide regular updates as we focus
on achieving our targets and on producing
an even stronger result in 2018. On behalf of
all of LafargeHolcim’s employees I thank you
for your continued trust and support.
Jan Jenisch
Chief Executive Officer
OUR STRATEGY
Learn more about our plan to
realize our full potential
P24 — 25
BY THE NUMBERS
A summary of 2017 performance
P26 — 27
LAFARGEHOLCIM ANNUAL REPORT 2017 10
L A F A R G E H O L C I M
OUR LE ADER SHIP
OUR LE A DE R S HI P
Meet the LafargeHolcim Executive Committee.
Collectively, they are responsible for the day-to-day
management of our Group.
Oliver Osswald
Géraldine Picaud
Marcel Cobuz
Caroline Luscombe
René Thibault
11
ABOUT OUR DIRECTORS
Learn about our Board of Directors
in Corporate Governance
Find out more
P72 — 77
Saâd Sebbar
Jan Jenisch
Martin Kriegner
Urs Bleisch
LAFARGEHOLCIM ANNUAL REPORT 2017 12
L A F A R G E H O L C I M
AROUND OUR BUS INESS
A ROUND OUR BUS I NE S S
Our materials and solutions help customers meet their
objectives. This also helps to solve global challenges.
Together with our customers we are helping
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versatile, more affordable and more
sustainable solutions. Through the
LafargeHolcim Foundation for Sustainable
Construction we raise awareness of the role
that architecture, engineering, urban
planning, and the building industry have in
achieving a more sustainable future —
especially through the LafargeHolcim
Awards (see inset).
Today we are becoming a lean, agile
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our customers’ needs, while at the same
time we look at our business from many
points of view — i.e., an ‘integrated
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In the following pages we highlight a few
examples of how we’ve added value in 2017.
As the population grows, so does the need
for building. New homes, new workplaces,
new infrastructure — all required on an
unprecedented scale. Faced with the
challenge of rapid urbanization, diminishing
resources and climate change, it’s not
enough to simply meet demand.
Building must be safer and more affordable.
The structures we leave behind must be
more durable and more sustainable.
Materials and techniques must be more
friendly to the environment than they have
been in the past. Solutions should be
developed that will allow builders to gain
time and maximize space. Transport links
should connect communities and businesses
more effectively. Affordable homes that are
built today should be passed proudly to the
next generation.
As the world’s leading provider of building
materials and solutions, LafargeHolcim is
well-placed to make a difference. We can
leverage our global strength and
generations of know-how to offer the best
and most innovative materials and solutions
to our customers.
The building materials sector is
highly attractive with growth
driven by the rapid rise in
the global population, the
continuing shift towards urban
living and the increasing need
for infrastructure development.
CHIEF EXECUTIVE’S STATEMENT
P6 — 9
HOW WE PERFORMED
IN OUR REGIONS
P28 — 37
AS A GROUP
P108 — 113
13
The LafargeHolcim Foundation conducts the most significant global competition
for sustainable design — the LafargeHolcim Awards. The 5th Awards in 2017
attracted more than 5,000 projects and visions in sustainable construction to be
implemented across 131 countries. Half of all entries were submitted by
participants younger than 30 years of age.
The LafargeHolcim Awards Silver winner of 2017 in Asia Pacific by SHAU is shown
above. The Fibonacci-inspired park pavilion in Bandung, Indonesia is as
minimalistic as it is well conceived — providing not only a public library, but also
storage, public toilets and a prayer room.
MATERIALS AND TECHNIQUES
THAT ARE MORE FRIENDLY
TO THE ENVIRONMENT
SOLUTIONS THAT ALLOW
BUILDERS TO GAIN TIME
AND MAXIMIZE SPACE
TRANSPORT LINKS THAT
CONNECT COMMUNITIES
AND BUSINESSES MORE
EFFECTIVELY
AFFORDABLE HOUSING THAT
CAN BE PASSED PROUDLY
FROM ONE GENERATION TO
THE NEXT
LAFARGEHOLCIM ANNUAL REPORT 2017 14
WOR K ING FOR TA RGE T
INFR A S TRUC TUR E M A R K E T S
Mexico City’s new international airport will be the most
sustainable in the world — and we are proud to support it.
Our teams designed special concretes able to withstand
aggressive sulfate and chloride conditions for 75 years, with
a minimal environmental footprint. This project adds to the
list of major airports we helped build, a list which already
includes Jeddah International and Kuala Lumpur
International.
We also have expertise in mining. In Canada’s Timmins
mining camp, we are on-site at one of the world’s deepest
underground mines where we’ve developed and continue to
supply specialty backfill products to help increase mine
output. LafargeHolcim has deployed such mine-specific
solutions in more than 40 mines across North America,
Africa, Europe and Asia Pacific.
In Algeria LafargeHolcim worked with contractors and local
authorities to develop a range of solutions for road
foundations and pavement. As a result we helped lower the
cost and construction time of road projects and at the same
time made them far more durable (enabling a typical
lifespan of 15 – 20 years, as compared to 2 – 5 years for
conventional road projects). These specific road solutions
are now available in more than 20 countries.
Every infrastructure sector has its own specific
challenges when it comes to construction and
operations. LafargeHolcim’s expert
infrastructure teams work from the design
stage to deliver sector-specific solutions
so that infrastructure projects are
more efficient and sustainable,
anywhere in the world.
A
B
B
15
TAI LO RED
SOLUT IONS
Want to comment? Tweet @LafargeHolcim using
#INFRASTRUCTURE
16
A
A
CU S TOM ER
FO C US
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#RETAIL
17
CLOS E TO OUR
M A R K E T S
In 2005 we established a retail
construction franchise network, called
Disensa, in Ecuador. The network laid the
foundation for a worldwide expansion
that now accounts for 1,000 Disensa
stores across Latin America (including
Mexico) and more than 600 similar stores
in the Middle East and Africa, where
they’re called Binastore.
Our vision for retail is to offer
self-builders and smaller contractors a
one-stop shop. Within our stores these
customers enjoy easy access to
LafargeHolcim’s own building solutions
as well as a wide range of other
construction materials and services.
The stores support customers with
microcredit and technical help as well as
complete kits for different phases of
home building. They also offer solutions
to facilitate construction including
financing plans, access to architects and
standard building designs.
To strengthen the foundation we give
our franchisees the tools to succeed, for
example with training on products, store
management, marketing and finance.
With individual customers accounting for
around 60 percent of Group net sales,
having direct access to the retail market
is a strategic priority. In 2018 we aim to
continue broadening our reach, focusing
particularly on India and Southeast Asia.
This global initiative demonstrates how
we are bringing our commitment to
commercial excellence to life for our
retail customers while developing a
strong network of trained franchisees.
18
CLOS I NG T HE C I RCLE
In December 2016, Bouygues Construction began
renovating two heritage buildings in the heart of Paris.
Rather than producing new concrete for the reconstruction
project, they partnered with LafargeHolcim’s business in
France to turn the sites’ rubble — the waste left behind after
construction and demolition — into ready-to-use concrete.
Using our aggneo® solutions, our teams in France were
able to make use of all inert material, turning 12.5 percent
into new concrete products and 87.5 percent into new road
gravels.
Transporting, sorting and recycling 4,000 tonnes of
demolition materials meant that we preserved that same
amount of natural resources from quarry extraction. More
than 500 tonnes of this waste was then recycled to make
new concrete, contributing to a reduction in CO2 emissions
of up to 8 percent for 1 tonne of recycled aggregates.
The two renovated buildings now comply with France’s
green building standards (“Haute Qualité Environnementale”
or HQE) as well as Europe’s targets for the recycling of
construction and demolition waste. This circular economy
project is also an illustration of how the solutions driven by
our sustainability strategy (The 2030 Plan) can be used to
overcome the real-life building challenges faced by our
customers and partners.
B
19
A
A
REC YCL ED
M ATER IA LS
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20
A
A
U N LO CK ING
VA LUE
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#WASTEMANAGEMENT
21
GEOC YCLE I N I NDI A
In India about 80 percent of municipal waste is uncontrolled,
dumped and openly burned. The problem is felt acutely in
Goa, where the economy thrives on tourism. Local authorities
are tackling the problem head-on, showcasing new methods
to create a clean and green Goa.
In 2017 Geocycle India met with public and private sector
players working on landfill remediation. To demonstrate how
they could help, Geocycle co-processed approximately 5,000
tonnes of refuse-derived fuel, winning the trust of authorities.
The pilot provided a sustainable model for cleaning up landfills
without any future liability for the state government. The Goa
site is now being visited by city officials from all over India as a
showcase of successful partnership between Geocycle and
municipalities. Municipalities of Bangalore, Chennai, Mumbai
and others are now looking at similar projects.
B
S OLV I NG A MOUN T I NG CH A LLE NGE
Fifty million people move to cities each year to find better opportunities
for themselves and their children. One consequence is a lot more waste.
Between 2012 and 2025, the amount of municipal solid waste generated
each year will increase from 1.3 billion tonnes to 2.2 billion tonnes,
according to World Bank estimates.
The extremely high temperatures required for cement production offer
a unique and safe solution to dispose of waste for which no other
solution exists. Geocycle thus opens a channel for a ‘circular economy’:
it takes waste that cannot be reused or recycled, treats it and then
converts it into a resource.
Our Geocycle business offers a unique and sustainable solution to this
growing challenge. Today Geocycle treats around 10 million tonnes of
waste annually, serving more than 10,000 customers in over 50
countries. Our aim is to reach 22 million tonnes by 2025.
Using state-of-the art technology, tailored processes and in-depth
expertise, Geocycle converts industrial, municipal and agricultural waste
into a suitable material from which mineral and/or combustible
components can be recovered in our cement kilns.
Geocycle contributes to lower CO2 emissions from cement production by
reducing use of natural resources such as fossil fuels and virgin raw
materials. Simultaneously it conserves land which would otherwise be
used for landfill and reduces air and water pollution as compared to
either landfill or incineration. This also significantly reduces the burden
on municipalities that need solutions to this ever-growing problem.
22
L A F A R G E H O L C I M
MARKE TPL ACE
M A R K E T PL ACE
The world needs to build — now more than ever before.
At LafargeHolcim we offer materials and solutions that
meet the needs of customers around the world. This is
our marketplace.
LONG-TER M TRENDS AFFE CTI NG O UR BUSI NESS
UR BANIZATIO N
CHA NGING STA KEHOLDER EXP ECTATIONS
The number of people living in cities increases by 50 million
every year, and the figure is growing. In the next fifteen years
the number of cities whose population exceeds 15 million will
rise from 13 to 20, with all seven new ‘megacities’ appearing
in emerging markets. By 2050 an estimated six billion people
— or two-thirds of the world’s population — will live in cities.
This growth will require durable, affordable workplaces and
homes. Resilient and sustainable buildings must be constructed
in congested urban areas, and the non-recyclable
construction waste must be disposed of sustainably.
GLO BAL IZATION AND THE CONTINUED RISE
OF E MERGI NG MARKE TS
National boundaries and geographical distance are less
important than in the past. Ideas, goods and services now
travel more freely, helping to diffuse the locations of
innovation and economic growth. This will be a key driver
of the increasing share of wealth creation that will occur
in emerging Asia, Africa and Latin America.
The proliferation of mobile devices and social media enables
political and social activity just as much as economic activity.
Interest groups can advance their agendas quickly and draw
membership from a wider geographic area. Ordinary citizens
can thus wield greater influence over commercial and non-
commercial institutions than in the past.
CLIMATE CHANGE AND SUSTA INABL E
RESOURCE MANAGEMENT
The earth’s climate is changing. The 2015 UNFCCC COP21
conference in Paris marked a turning point in the global
consensus, achieving broad agreement that society must
reduce its carbon emissions to help limit warming to
a tolerable level (the ‘2 degree scenario’). This deliberate
reduction will have significant consequences for building
and infrastructure designers, developers and owners,
the construction industry and the construction materials
industry. Most notably, sustainability criteria are becoming
an increasingly critical decision factor when choosing
building materials.
23
50m
Increase in the number
of people living in cities
every year
TH E SHORT-ME DIUM
TERM ENVIR ONMENT
OUR RESPO NSE
OVE R CAPAC ITY
From a global perspective, cement plants
are being utilized below capacity. However,
the market-level picture varies. While some
markets indeed face structural over-supply
issues, others remain under-supplied.
DIGI TA LI ZATI ON
Whether it’s homebuilders buying materials
online or developers conceptualizing projects
over a virtual workspace, digital technologies
are reshaping the practice of building.
E N VIR ONMENTAL RE GULATION A ND
QUAS I- REGU LATI ON
Regulators aren’t the only ones enforcing
environmental standards. Investors, NGOs,
employees and communities expect companies
to be transparent about their activities and
mindful of the potential impact.
The markets for building materials are
fundamentally local — so location and
diversification are key.
LafargeHolcim operates in a roughly even balance
between mature and emerging markets. Urban
markets are a strength. We are among the top three
in 80 percent of our markets, and no single market
contributes more than 15 percent of our revenue.
Global strength allows us to disseminate best practices
and innovative products. Through our research and
development we develop new products and solutions that
deliver more for our customers and meet their specific
needs, for example in Building Information Modelling. Often
our research leads to products with enhanced sustainability
characteristics, providing benefits to society overall.
We are focused on creating value for all stakeholders over
the long term. This is one of the main reasons we developed
The 2030 Plan, which reflects our view of sustainability
as both responsibility and business opportunity. (Our full
performance against this plan is reported in the 2017
Sustainability Report, to be published April 2018.) And as
demonstrated by our active engagement in the Carbon
Pricing Leadership Coalition and the Carbon Disclosure
Project, we support carbon pricing mechanisms
as essential to developing competitive low-carbon
solutions as well as transparency in disclosing
carbon-related performance.
The strategy that follows has been developed in
full view of the trends in our marketplace and our
unique strengths as a company. It will guide us
for the next five years.
LAFARGEHOLCIM ANNUAL REPORT 2017
24
L A F A R G E H O L C I M
S TR ATEGY 202 2
S T R ATEG Y 2 02 2 :
BUI LDI NG FOR GROW TH
STRATEGY WIL L D EL IVER AT TRACTIVE RETURNS
LafargeHolcim’s new Strategy 2022, “Building for Growth”, aims to drive profitable growth
and simplify the business to deliver resilient returns and attractive value to stakeholders.
The new strategy will shift gears towards growth of the top and bottom line over the next
five years. Over this period, the Group commits to the following targets1:
NET S ALES
GROW TH
RECURR ING
EBI TDA GROWTH
FREE CA SH FLOW
TO RECURRING
EBITDA
RETURN ON
INVESTED
CAP ITAL
3-5 %
ANNUALLY
OF AT LEAST
5 %
ANNUALLY
>40 %
>8 %
The strategy is based on the four value drivers of Growth,
Simplification & Performance, Financial Strength and
Vision & People.
The building materials market is a CHF 2,500 billion fragmented
global market which is forecast to grow 2 to 3 percent per annum,
faster than GDP. Through the value driver Growth, the Group will
aim to capitalize on this underlying growth, seeking to deliver
above-market performance. LafargeHolcim will utilize its strong
asset base to invest in markets where greater opportunities exist
while being more selective in other markets. The Group will execute
more aggressive strategies for Aggregates and Ready-mix Concrete
alongside its existing strong Cement business. The Group will build
a fourth business segment, Solutions & Products, to take advantage
of products and applications that are closer to the customer.
This segment, which currently includes precast, concrete products,
asphalt, mortars and contracting and services, already generates
annual Net Sales of CHF 2.1 billion. The agile, country-based
growth strategies will target value-enhancing bolt-on acquisitions
to leverage scale and margins.
1 All figures at constant exchange rates
CHIEF EXECUTIVE’S STATEMENT
Find out more
P6 — 9
BY THE NUMBERS
Find out more
P26 — 27
25
Our strategy will enable us
to realize the full potential
of LafargeHolcim.
GR OWTH
SI MPLI FI CATION &
PERFORMANCE
FINA NCI AL
STRENGTH
VISI ON
& PEOP LE
Financial Strength will ensure disciplined value creation through
maintaining an investment grade credit rating. Growth will be
funded through divestment of selected assets during the course
of 2019 worth at least CHF 2 billion. Capex investment will be kept
below CHF 2 billion per annum and excess free cash flow will be
used to pay an attractive dividend.
The value driver Vision & People further develops the values of
trust and integrity, the commitment to Health & Safety and the
desire to be at the forefront of sustainable construction solutions
and innovation. We want to foster an entrepreneurial leadership
style and a focus on the long-term success of LafargeHolcim.
The value driver Simplification & Performance will create a cost
disciplined operating model and a corporate-light structure. There
will be a greater focus on countries, with local markets empowered
and fully profit and loss accountable. The 35 biggest markets will
report directly to Group management and local profit and loss
leaders will be assigned for all four business segments. The two
Corporate business functions Performance & Cost and Growth
& Innovation have been merged and the Group management
is reduced to nine members. The simplification will allow
LafargeHolcim to improve its cost efficiency considerably.
This is expected to create a Sales, General & Administration
(SG&A) cost saving of CHF 400 million per annum with the related
program expected to be completed by Q1 2019.
A strong performance culture will be created with simplified KPIs
and new incentives that are fully aligned to the Group’s goals.
Profit and loss responsibility and accountability is implemented
for countries and all four business segments. In Aggregates and
Ready-mix Concrete, the Group intends to close the performance
gap to the best-in-class performers.
LAFARGEHOLCIM ANNUAL REPORT 2017 26
L A F A R G E H O L C I M
BY THE NUMBER S
BY T HE NUMBE R S
FINA NCI AL
RECURRING EBITDA 1
MILLION CHF
A key measure of earnings and
operating profitability.
SALES OF CEMENT
MILLION TONNES
A critical input to housing, non-
CO2 EMISSIONS
housing and infrastructure
% INTENSITY REDUCTION
17
16
5,990
5,950
2017 in brief
Solid performance led by good
growth in India and operational
excellence in the US.
209.5
233.2
construction.
2017 in brief
Turnaround in second half of
2017 drives performance.
FREE CASH FLOW 2
MILLION CHF
A measure of how much cash
our business generates.
SALES OF AGGREGATES
MILLION TONNES
A key material for roads, landfills
HEALTH & SAFETY
FATALITIES
17
16
1,685
1,660
2017 in brief
A benefit of prudent capital
allocation focusing on key
markets.
RETURN ON INVESTED CAPITAL 3
%
17
16
5.8
5.2
A measure of how well we
deploy capital to generate
returns.
2017 in brief
A strong foundation for
future performance.
1 Excluding restructuring, litigation, implementation and other non-recurring costs.
2 Cash flow from operating activities less net maintenance and expansion Capex.
3 Return On Invested Capital is defined as Net Operating Profit After Tax (NOPAT)
divided by the average Invested Capital. The average is calculated by adding the
Invested Capital at the beginning of the period to that at the end of the period and
dividing the sum by 2 (based on a rolling 12 month calculation).
BUSINESS REVIEW
P28 — 37
MD&A
P108 — 118
17
16
17
16
and buildings.
2017 in brief
278.7
282.7
Stable performance despite
difficult weather.
24
24
Reduction of net CO2 emissions
per tonne of cement 1 compared
to 1990 (the industry baseline).
2017 in brief
Stable performance of net CO2
emissions per tonne of cement
We want to achieve a zero
fatality target by 2030.
2017 in brief
31
47
The number of employees who
lost their lives increased from
three to ten. Thirty-four third-
party individuals died, compared
to 39 in 2016.
SALES OF READY-MIX CONCRETE
Used by construction and public
GENDER DIVERSITY
We track gender diversity at
MILLION M3
works contractors worldwide.
% MINIMUM OF EACH GENDER
management level.
50.6
55.0
2017 in brief
Challenging conditions in key
17
16
markets.
2017 in brief
18
15
The figure at left combines top
and senior management levels.
17
16
17
16
17
16
OPERATIONAL
NO N-FINA NCIA L
RECURRING EBITDA 1
MILLION CHF
A key measure of earnings and
operating profitability.
5,990
5,950
2017 in brief
Solid performance led by good
growth in India and operational
excellence in the US.
SALES OF CEMENT
MILLION TONNES
17
16
209.5
233.2
A critical input to housing, non-
housing and infrastructure
construction.
2017 in brief
Turnaround in second half of
2017 drives performance.
CO2 EMISSIONS
% INTENSITY REDUCTION
17
16
FREE CASH FLOW 2
MILLION CHF
A measure of how much cash
our business generates.
SALES OF AGGREGATES
MILLION TONNES
A key material for roads, landfills
and buildings.
HEALTH & SAFETY
FATALITIES
1,685
1,660
2017 in brief
A benefit of prudent capital
allocation focusing on key
markets.
17
16
278.7
282.7
2017 in brief
Stable performance despite
difficult weather.
17
16
27
24
24
31
47
Reduction of net CO2 emissions
per tonne of cement 1 compared
to 1990 (the industry baseline).
2017 in brief
Stable performance of net CO2
emissions per tonne of cement
We want to achieve a zero
fatality target by 2030.
2017 in brief
The number of employees who
lost their lives increased from
three to ten. Thirty-four third-
party individuals died, compared
to 39 in 2016.
RETURN ON INVESTED CAPITAL 3
A measure of how well we
deploy capital to generate
5.8
5.2
returns.
2017 in brief
A strong foundation for
future performance.
1 Excluding restructuring, litigation, implementation and other non-recurring costs.
2 Cash flow from operating activities less net maintenance and expansion Capex.
3 Return On Invested Capital is defined as Net Operating Profit After Tax (NOPAT)
divided by the average Invested Capital. The average is calculated by adding the
Invested Capital at the beginning of the period to that at the end of the period and
dividing the sum by 2 (based on a rolling 12 month calculation).
SALES OF READY-MIX CONCRETE
MILLION M3
Used by construction and public
works contractors worldwide.
GENDER DIVERSITY
% MINIMUM OF EACH GENDER
We track gender diversity at
management level.
17
16
50.6
55.0
2017 in brief
Challenging conditions in key
markets.
17
16
18
15
2017 in brief
The figure at left combines top
and senior management levels.
1 This refers to cementitious materials as per WBCSD-CSI Cement CO2
and Energy Protocol
17
16
17
16
%
17
16
LAFARGEHOLCIM ANNUAL REPORT 2017 28
L A F A R G E H O L C I M
BUS INESS RE V IE W
BUS I NE S S R E V I E W :
A S I A PAC I F IC
In 2017 volumes were stronger in India,
though challenges remain in Southeast Asia.
Market overview
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(cid:75)(cid:82)(cid:79)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:69)(cid:88)(cid:79)(cid:78)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:3)(cid:68)(cid:86)(cid:3)
(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:15)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:86)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)
(cid:83)(cid:85)(cid:72)(cid:71)(cid:82)(cid:80)(cid:76)(cid:81)(cid:68)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:17)
2017 in review
(cid:57)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:44)(cid:81)(cid:71)(cid:76)(cid:68)(cid:3)(cid:86)(cid:87)(cid:85)(cid:82)(cid:81)(cid:74)(cid:79)(cid:92)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
(cid:73)(cid:88)(cid:79)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:68)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:73)(cid:68)(cid:89)(cid:82)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)
(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:83)(cid:82)(cid:86)(cid:87)(cid:16)(cid:71)(cid:72)(cid:80)(cid:82)(cid:81)(cid:72)(cid:87)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:88)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:88)(cid:83)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:72)(cid:80)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)
(cid:70)(cid:68)(cid:83)(cid:68)(cid:70)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:38)(cid:75)(cid:76)(cid:81)(cid:68)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:83)(cid:82)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:3)
(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:17)(cid:3)(cid:51)(cid:85)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
(cid:89)(cid:82)(cid:79)(cid:88)(cid:80)(cid:72)(cid:86)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:564)(cid:87)(cid:72)(cid:71)(cid:15)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:70)(cid:88)(cid:79)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:68)(cid:87)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:72)(cid:81)(cid:71)(cid:15)(cid:3)
(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)
(cid:82)(cid:81)(cid:3)(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:83)(cid:85)(cid:82)(cid:87)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:42)(cid:82)(cid:82)(cid:71)(cid:3)(cid:87)(cid:82)(cid:83)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)
(cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:36)(cid:88)(cid:86)(cid:87)(cid:85)(cid:68)(cid:79)(cid:76)(cid:68)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:71)(cid:85)(cid:76)(cid:89)(cid:72)(cid:81)(cid:3)(cid:69)(cid:92)(cid:3)
(cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:71)(cid:72)(cid:80)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:70)(cid:88)(cid:79)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:76)(cid:81)(cid:3)(cid:49)(cid:72)(cid:90)(cid:3)(cid:54)(cid:82)(cid:88)(cid:87)(cid:75)(cid:3)
(cid:58)(cid:68)(cid:79)(cid:72)(cid:86)(cid:17)
Our presence*
117
CEMENT & GRIND IN G P LANT S
6 8
AGGREGATES PLANTS
35 4
READY-MIX CONCRETE PLANTS
(cid:13)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:77)(cid:82)(cid:76)(cid:81)(cid:87)(cid:3)(cid:89)(cid:72)(cid:81)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)
29
Circular economy
In 2017 the Chinese government
enforced a number of plant shutdowns
in the steel and cement industry as a
means of mitigating their environmental
impact. However, the ruling did not
affect the facilities of Huaxin Cement (a
joint venture company), due to its
far-sighted commitment to alternative
fuels.
For years Huaxin has adhered to a
harmonious integration of business
activities and environmental protection.
Based on the pressing need to safely
dispose of solid waste in China, Huaxin
has developed innovative technologies
for co-processing domestic waste,
floating waste, municipal sludge and
hazardous waste in cement kilns. It has
received 94 patents and 1 software
copyright for its innovations in co-
processing solid waste in Huaxin kilns.
WHERE WE OPERATE
Cement plant
Grinding plant
1,418
RECURRING EBITDA
CHF MILLION
2016: 1,594
These solid regional performances were
offset by challenging market conditions in a
cost inflationary environment in Southeast
Asia. Strong competition and soft demand
in Malaysia affected price levels compared
to the prior year. In the Philippines, delays
in infrastructure projects and an influx of
imports affected revenues. In Indonesia,
continuous volume growth was muted
by pressure on price resulting from new
capacity in the market.
CONSOLIDATED CEMENT GRINDING
CAPACITY MILLION TONNES PER YEAR
67.8
INDIA
10.9
CHINA
9.1
PHILIPPINES
117.4
ASIA PACIFIC
14.8
INDONESIA
10.9
MALAYSIA
3.9
BANGLADESH
LAFARGEHOLCIM ANNUAL REPORT 2017 30
L A F A R G E H O L C I M
BUS INESS RE V IE W
BUS I NE S S R E V I E W :
EUROPE
Market recovery in the region and continued
focus on costs support further margin expansion.
Our presence
56
CEMENT & GRIND IN G P LANT S
267
AGGREGATES PLANTS
569
READY-MIX CONCRETE PLANTS
Market overview
Our Europe region can be roughly divided
into Eastern and Western Europe, with
Eastern Europe performing strongly in
recent quarters due to positive growth and
infrastructure investment. Our largest
Western European markets have grown
more slowly, though macroeconomic
indicators have been improving recently.
There has been notable growth in the
countries bordering the Mediterranean,
albeit from a low base. Across Western
Europe there are extensive long-term
infrastructure plans already in place (e.g., in
France and the UK) which we expect to see
developing in the coming years. We see
positive implications in rising employment
levels and demand for housing.
2017 in review
In 2017 the region ended the year up 2
percent in Net Sales on a like-for-like basis
compared to the prior year. Recurring
EBITDA was up 3.7 percent.
Strong performances in Eastern Europe
continued in 2017. Western Europe was
faced with a number of unrelated
operational challenges, with France and
Belgium impacted in the beginning of the
year and Germany at the end. These
temporary disruptions have all since been
resolved and do not undermine the
fundamentally positive market developments
we see accelerating in Western Europe. In
Switzerland a number of important
infrastructure projects came to an end in
2016, leading to a drop in contributions.
1,385
RECURRING EBITDA
CHF MILLION
2016: 1,334
31
Innovative solutions
At our Retznei plant in Austria we are
participating in a pilot project that
may help solve carbon emissions. The
project aims to demonstrate how carbon
emissions from cement production
can be safely captured and stored, with
a special focus on efficient methods to
retrofit the necessary equipment onto
existing plants.
Carbon capture and storage (CCS) is
one of many tools that can help reduce
greenhouse gas emissions of cement
manufacturing. Energy efficiency
measures and renewable fuels can also
play a big part (see page 20). CCS is
an attractive counterpart, as it can help
address emissions due to the calcination
of limestone, which accounts for a large
portion of emissions.
WHERE WE OPERATE
Cement plant
Grinding plant
CON SO LI DATED CEMENT GRI NDING CAPACITY
[ MIL L ION TON NES PER YEAR]
73.4
EUROPE
7.6
SPAIN
5.7
ROMANIA
2.4
ITALY
1.9
9.7
FRANCE
7.3
GERMANY
4.8
GREECE
2.1
AUSTRIA
1.9
9.6
RUSSIA
7.0
POLAND
3.3
SWITZERLAND
2.1
BELGIUM
1.8
AZERBAIJAN
UNITED KINGDOM
HUNGARY
1.5
BULGARIA
1.2
CZECH REPUBLIC
1.4
SERBIA
0.9
CROATIA
1.3
MOLDOVA
LAFARGEHOLCIM ANNUAL REPORT 2017 32
L A F A R G E H O L C I M
BUS INESS RE V IE W
BUS I NE S S R E V I E W :
L AT I N A ME R IC A
Another year of strong performance in Latin America —
and a milestone for retail.
Our presence
30
CEMENT & GRIND IN G P LANT S
11
AGGREGATES PLANTS
98
READY-MIX CONCRETE PLANTS
Market overview
The Latin America region contains a number
of attractive markets with strong underlying
demographics and expanding middle classes
driving demand for building materials. A
large share of that demand is attributable to
small and self-builders, making it a natural
home for retail.
2017 in review
(cid:44)(cid:81)(cid:3)(cid:47)(cid:68)(cid:87)(cid:76)(cid:81)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:3)(cid:90)(cid:72)(cid:3)(cid:564)(cid:81)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:88)(cid:83)(cid:3)
(cid:20)(cid:20)(cid:98)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)(cid:54)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:16)(cid:73)(cid:82)(cid:85)(cid:16)(cid:79)(cid:76)(cid:78)(cid:72)(cid:3)
basis compared to 2016 and 22.9 percent
higher in terms of Recurring EBITDA.
Mexico and Argentina were the two standout
performers in 2017. Major infrastructure
projects drove demand in Mexico (see page
15), while there was a general pickup in
Argentina, notably in housing, due to broad
economic and political improvements. We
also celebrated the opening of the 1,000th
Disensa store this year, highlighting the
successful roll-out of our retail strategy in its
home region. Teams in Brazil continue to
focus on managing costs while the economic
slowdown continues.
33
WHERE WE OPERATE
Cement plant
Grinding plant
1,055
RECURRING EBITDA
CHF MILLION
2016: 885
CONSOLIDATE D CEM ENT GR INDING
CAPACITY MILLION TONNE S PER YEAR
39.3
12.2
LATIN AMERICA
MEXICO
10.8
BRAZIL
4.7
ARGENTINA
1.7
5.5
ECUADOR
2.1
COLOMBIA
1.1
EL SALVADOR
COSTA RICA
0.7
0.4
WEST INDIES
NICARAGUA
Empowered to succeed
The Brazilian economy has been in
recession since 2014, with predictable
impact on our business.
But rather than making cost reduction a
task for management alone, we invited
the entire organization to contribute.
It’s the employees, after all, who know
the plants and work processes best.
More than 350 initiatives have been
launched and implemented at the
plants and offices in Brazil thanks to
our employees’ suggestions through
the “Crie Na Crise” (‘create in the
crisis’) program.
The program has delivered a sizeable
portion of savings over 2017. We have
focused on sharing, replicating,
rewarding and recognizing the
hundreds of initiatives generated by
our employees in the program. It’s a
consequence of empowering people
to take control of their environment
and their futures.
LAFARGEHOLCIM ANNUAL REPORT 2017 34
L A F A R G E H O L C I M
BUS INESS RE V IE W
BUS I NE S S R E V I E W :
M I DDLE E A S T A FR IC A
A challenging year in the region.
Our presence*
4 4
CEMENT & GRIND IN G P LANT S
30
AGGREGATES PLANTS
212
READY-MIX CONCRETE PLANTS
(cid:13)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:77)(cid:82)(cid:76)(cid:81)(cid:87)(cid:3)(cid:89)(cid:72)(cid:81)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)
Market overview
The Middle East Africa region has the
(cid:86)(cid:87)(cid:85)(cid:82)(cid:81)(cid:74)(cid:72)(cid:86)(cid:87)(cid:3)(cid:71)(cid:72)(cid:80)(cid:82)(cid:74)(cid:85)(cid:68)(cid:83)(cid:75)(cid:76)(cid:70)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)
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middle classes and a strong, long-term trend
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(cid:43)(cid:82)(cid:90)(cid:72)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:86)(cid:88)(cid:73)(cid:73)(cid:72)(cid:85)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)
(cid:74)(cid:85)(cid:72)(cid:68)(cid:87)(cid:72)(cid:85)(cid:3)(cid:89)(cid:82)(cid:79)(cid:68)(cid:87)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:92)(cid:83)(cid:76)(cid:70)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:76)(cid:81)(cid:74)(cid:3)
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(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:16)
(cid:87)(cid:72)(cid:85)(cid:80)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:17)
2017 in review
(cid:44)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:48)(cid:76)(cid:71)(cid:71)(cid:79)(cid:72)(cid:3)(cid:40)(cid:68)(cid:86)(cid:87)(cid:3)(cid:36)(cid:73)(cid:85)(cid:76)(cid:70)(cid:68)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:72)(cid:3)(cid:564)(cid:81)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)
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(cid:43)(cid:82)(cid:90)(cid:72)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3)(cid:80)(cid:68)(cid:87)(cid:70)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:82)(cid:85)(cid:16)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)
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(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:20)(cid:21)(cid:3)(cid:80)(cid:82)(cid:81)(cid:87)(cid:75)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:16)(cid:73)(cid:82)(cid:85)(cid:16)(cid:79)(cid:76)(cid:78)(cid:72)(cid:3)(cid:49)(cid:72)(cid:87)(cid:3)
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(cid:71)(cid:76)(cid:80)(cid:76)(cid:81)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:70)(cid:82)(cid:81)(cid:71)(cid:3)(cid:75)(cid:68)(cid:79)(cid:73)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:15)(cid:3)(cid:82)(cid:81)(cid:3)
(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:68)(cid:70)(cid:78)(cid:3)(cid:82)(cid:73)(cid:3)(cid:90)(cid:72)(cid:68)(cid:78)(cid:72)(cid:85)(cid:3)(cid:70)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:71)(cid:72)(cid:80)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:3)
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(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:17)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:3)(cid:40)(cid:74)(cid:92)(cid:83)(cid:87)(cid:3)
(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:86)(cid:76)(cid:564)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:3)(cid:80)(cid:68)(cid:70)(cid:85)(cid:82)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)
(cid:86)(cid:87)(cid:76)(cid:79)(cid:79)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:71)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
(cid:75)(cid:76)(cid:74)(cid:75)(cid:3)(cid:76)(cid:81)(cid:565)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:49)(cid:76)(cid:74)(cid:72)(cid:85)(cid:76)(cid:68)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:86)(cid:88)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)
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(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:86)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:49)(cid:76)(cid:74)(cid:72)(cid:85)(cid:76)(cid:68)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:74)(cid:92)(cid:83)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)
(cid:87)(cid:72)(cid:68)(cid:80)(cid:86)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:85)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:79)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:73)(cid:88)(cid:72)(cid:79)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
(cid:82)(cid:83)(cid:87)(cid:76)(cid:80)(cid:76)(cid:93)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:82)(cid:74)(cid:76)(cid:86)(cid:87)(cid:76)(cid:70)(cid:86)(cid:17)(cid:3)(cid:54)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
region are also looking to export as a means
(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:86)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:79)(cid:3)(cid:71)(cid:72)(cid:80)(cid:68)(cid:81)(cid:71)(cid:17)(cid:3)
1,085
RECURRING EBITDA
(cid:38)(cid:43)(cid:41)(cid:3)(cid:48)(cid:44)(cid:47)(cid:47)(cid:44)(cid:50)(cid:49)
(cid:21)(cid:19)(cid:20)(cid:25)(cid:29)(cid:3)(cid:20)(cid:15)(cid:21)(cid:23)(cid:26)
35
From a global view
As the world’s leading building
materials group, we have a worldwide
view of the seaborne cementitious trade
market as well as a wide network of
customers. LafargeHolcim Trading is
there to help take advantage of this
scale, capturing additional opportunities
to generate additional profits outside of
local markets.
This global strength helped support
the Middle East Africa region in 2017.
Following the steep decline in the
Egyptian market, 1 million tonnes of
cement and clinker were exported
through Trading in 2017. We were able
to conclude the first cement exports
out of Algeria.
Every year LafargeHolcim trades
approximately 35 million tonnes of
cementitious materials, gypsum,
slag, and other dry bulk goods around
the world.
WHERE WE OPERATE
Cement plant
Grinding plant
CON SO LI DATED CEMENT GRI NDING CAPACITY
MIL L ION TONNES PER YEAR
55.3
12.6
MIDDLE EAST AFRICA
ALGERIA
10.5
NIGERIA
8.9
EGYPT
3.2
SOUTH AFRICA
1.4
ZAMBIA
0.6
QATAR
0.3
MALAWI
5.7
IRAQ
2.5
LEBANON
1.2
UGANDA
0.5
REUNION
0.2
MADAGASCAR
3.9
JORDAN
2.3
KENYA
1.1
TANZANIA
0.4
ZIMBABWE
LAFARGEHOLCIM ANNUAL REPORT 2017 36
L A F A R G E H O L C I M
BUS INESS RE V IE W
BUS I NE S S R E V I E W :
NOR T H A ME R IC A
Continued strong performance in our largest
region in terms of earnings.
Our presence
2 4
CEMENT & GRINDING P LANT S
253
AGGREGATES PLANTS
2 4 6
READY-MIX CONCRETE PLANTS
2017 in review
(cid:44)(cid:81)(cid:3)(cid:49)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:3)(cid:90)(cid:72)(cid:3)(cid:564)(cid:81)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)
down 0.4 percent in Net Sales on a like-
for-like basis compared to 2016, and 10.5
percent like-for-like increase in terms of
Recurring EBITDA.
The North America region posted another
(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:87)(cid:85)(cid:82)(cid:81)(cid:74)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:76)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:78)(cid:86)(cid:3)
to the Ste Genevieve (MO) ramp-up after
enhancements and improvements at our
plant in Ravena (NY). The contribution from
Canada was also strong as the oil sector
continued its recovery.
Market overview
(cid:55)(cid:75)(cid:72)(cid:3)(cid:49)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:15)(cid:3)(cid:72)(cid:602)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)
and highly industrialized.
Demand for infrastructure investment is
expected to rise in the coming years in both
the US and Canada after a disappointing
2017, creating positive prospects for the
building materials industry.
Of all cement companies operating in the
US, we have the broadest coverage as well
(cid:68)(cid:86)(cid:3)(cid:86)(cid:82)(cid:80)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:72)(cid:90)(cid:72)(cid:86)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:72)(cid:602)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3)
plants. In Canada we enjoy a strong
market position, especially in the western
half of the country.
Strong economic indicators suggest that
demand in the US will be supported by rising
employment and housing construction, while
(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:68)(cid:81)(cid:68)(cid:71)(cid:76)(cid:68)(cid:81)(cid:3)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:92)(cid:3)(cid:76)(cid:86)(cid:3)(cid:83)(cid:82)(cid:76)(cid:86)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:564)(cid:87)(cid:3)
from rising commodity prices.
WHERE WE OPERATE
Cement plant
Grinding plant
1,483
RECURRING EBITDA
CHF MILLION
2016: 1,335
CONSOLIDATE D CEM ENT GR INDING
CAPACITY MILLION TONNES P ER YEAR
33.0
24.7
NORTH AMERICA
UNITED STATES
8.3
CANADA
37
Digital learning
In North America we already operate
some of the most advanced and
efficient plants in our industry. We
aim to train our teams with the same
cutting-edge approach.
By using digital e-learning platforms
we have found a more efficient and
effective way to promote employee
understanding of critical topics such as
health and safety. We use those same
platforms to deliver targeted training
for specific groups, such as commercial
teams who need to understand and sell
new products.
Compared to conventional methods,
the digital approach offers more
consistent content and quality. Training
can be delivered nearly wherever and
whenever it suits the trainee. The
platforms also deliver feedback on
trainee competence that can be
aggregated to give us a picture of the
overall state of skills and knowledge
across our organization.
LAFARGEHOLCIM ANNUAL REPORT 2017 38
I NNOVAT ION
We seek to understand our customers’ challenges
with one goal in mind: creating new ways to operate
and better serve their needs.
Like many countries, Malaysia struggles to
meet a growing need for affordable housing.
In 2017 the government tested four different
approaches to tackling the problem, judging
each for efficiency, quality and cost.
Following its impressive debut, the
FASTBUILD™ solution was quickly selected
for another 3,500 homes across Malaysia,
and it is currently being deployed in Nigeria
and Iraq.
Lafarge Malaysia innovated to win with an
approach called FASTBUILD™. Developed in
partnership with MFE Aluminum Formwork,
FASTBUILD™ capitalizes on Agilia® — our
highly fluid, self-placing and self-leveling
concrete. Agilia® flows through the
FASTBUILD™ formwork, leaving no space
unfilled and producing flawless finishing.
The approach delivers ultra-rapid
construction of affordable, quality homes.
It’s also cost-effective, as the formwork
can be used up to 100 times without
sacrificing quality.
Focused on customer needs
At LafargeHolcim, innovation is for our
customers. We constantly seek to
understand their challenges with one goal
in mind: creating new ways to operate and
better serve their needs.
For construction companies, for example,
we know that building faster and more
efficiently means increased productivity and
additional business. So we have developed
specialty concretes, such as our rapid-
strength Chronolia® and Speedcrete, as well
as self-placing and self-leveling concretes
(Agilia®, Easycrete, or Cemflow) that lead to
quicker construction. We develop ultra-high
performance concretes such as Ductal®,
which support beautiful, efficient and
high-strength building systems and
construction elements.
Demand for better living
standards and more efficient
infrastructure, digitalization of
the construction value chain
and the requirement to develop
sustainable construction
solutions are fueling
innovation and spending.
CHIEF EXECUTIVE’S STATEMENT
P6 — 9
LAFARGEHOLCIMINNOVATION
39
After innovating at the product stage we
then invest to make sure we’re actually
reaching the market by creating networks
of professionally-trained partners who can
apply the technology.
We’re also bringing targeted innovations
to the infrastructure sector. Roads, mines,
ports, dams, data centers, stadiums, wind
farms, and electric power plants are often
complex projects. All these sectors have
specific ecosystems with international
players acting globally and expecting specific
construction solutions from us. Our offer
includes an international key account
management team, which supports major
infrastructure players from the project
design phase forward, bringing dedicated
sectoral expertise and world-class
construction material solutions to these
critical projects (see page 14).
We’re taking advantage of opportunities
arising from the ongoing digitization of the
construction value chain, such as Building
Information Modelling (BIM). By employing
3D models at all stages of construction, BIM
promotes collaboration and can significantly
increase the effectiveness and efficiency of
construction. We aim to ensure that all our
countries are BIM-ready.
In many of our markets, the emergence of
climate change challenges has started to
change the game for our clients. Developers
and project owners have to comply with
sustainable construction requirements such
as energy efficiency, water management or
recycling. We have a range of solutions to
help our clients achieve high environmental
standards, including our mineral insulating
foam Airium or energy efficient insulating
concrete Thermedia. We extend the lifecycle
of building materials, as with our recycled
aggregates (like aggneo®, see page 18).
We innovate for customers working at every
level. Masons and individual homebuilders,
for example, need materials and solutions
close to where they live and work. Therefore,
we have developed local retail networks in
emerging markets, such as Disensa in Latin
America and Binastore in Middle East Africa
(see page 17). In regions where people lack
access to decent housing we’ve implemented
a range of solutions, from microfinance
schemes to earth-cement building solutions
such as our low-carbon Durabric.
Yesterday’s innovations are showing up
in our bottom line today. In waste
management, for example, we have decades
of experience to developing innovative and
tailored approaches for a variety of
customers. Today the heritage continues
under the Geocycle brand, which maintains
a network of more than 50 operations that
together comprise one of the world’s leading
providers of waste management services
(see page 21).
LAFARGEHOLCIM ANNUAL REPORT 2017 40
The innovation pipeline
The cornerstone of our global R&D
activities is the LafargeHolcim Research
Center in Lyon, France. It is the first and
largest research center in the global
construction industry.
Of course our business is highly local so we
operate a network of local laboratories. In
2017 we opened our eighth Construction
Development Lab (CDL) in Morocco. The
Casablanca CDL will house 50 engineers,
architects and technicians specialized
in Moroccan and African construction
markets. Like its counterparts in Algeria,
Argentina, China, France, India, Malaysia and
Mexico, the Casablanca facility will develop
partnerships with startups, universities and
other institutions. It will test new ideas and
organize training to promote innovative
solutions in the target markets.
LAFARGEHOLCIMINNOVATION 41
This approach has led to many successes.
Our India CDL helped the inhabitants of
Dharavi, a slum in the heart of Mumbai,
to build solid and watertight houses. The
Algerian CDL developed a specific product
for soil stabilization in road construction. In
China, the CDL team developed Thermedia®
Screed 0.3, which is four times more
insulating than traditional floor screeds. And
on a global level, our portfolio includes more
than 1,500 patents.
At LafargeHolcim,
innovation is for our
customers. We constantly
seek to understand their
challenges with one goal in
mind: creating new ways to
operate and better serve
their needs.
LAFARGEHOLCIM ANNUAL REPORT 2017 42
OUR PEOPLE
Our people strategy focuses on developing a stronger
performance culture and investing in developing current
and future leaders.
Leadership development
In 2017 LafargeHolcim invested in
developing new programs and approaches
to leadership development building on
previous best practices. We have a broad
range of programs for developing
all levels of leadership including newly
appointed managers and supervisors. We
offer a wide range of training programs to
our employees to build skills in many areas
including business, financial, Health & Safety,
operations and compliance topics.
Performance and talent management
We have a well-established global
performance management system where
employees agree objectives at the beginning
of the year and line managers are
encouraged to regularly review performance
and set development objectives with
individuals and teams. Strengthening
our feedback is an important part of
improving our performance culture —
a priority for 2018.
LAFARGEHOLCIMOUR PEOPLE 43
In 2017 we launched a new global Talent
Review & Succession Planning process
to enable better succession planning and
career and development decisions and
identify where we need to improve our talent
pipeline to ensure we have the right people
for our current and future business.
Employee engagement
In 2017, we again ran a global employee
survey and followed up with focus groups
in countries to address areas for
improvement as well as sharing best
practices across the Group.
Diversity and inclusion
LafargeHolcim values diversity and promotes
a workplace that is inclusive and fair and
which fosters respect for all employees. In
2017, we:
– Set 2020 targets and action plans at
country and regional levels covering
gender balance and inclusion
– Developed an Inclusion Index to
measure the extent to which our
employees feel they are valued by the
company and are committed
GRO UP EMP LOYEES
BY REGIO N
Asia Pacific
Europe
2017
2016
24,153
31,274
21,317
21,829
Latin America
9,305
10,536
Middle East Africa
12,901
13,191
North America
12,697
12,257
Service and trading
companies
1,588
1,816
– Created a global and multi-functional task
Total Group
81,960
90,903
force to contribute to our Diversity &
Inclusion programs
– Started to roll-out Inclusiveness programs
to raise awareness of unconscious bias
starting at the top of the company
COMPOSITION OF MANAGEM ENT
Top management level
Senior management level
Total
MALE
127
1,175
1,302
FEMALE
PERCENTAGE
OF WOMEN
11
271
282
8%
19%
18%
GRO UP EMP LOYEES
BY SEGMENT
Cement1
Aggregates
Other construction
materials and
services
2017
2016
47,531
56,133
10,777
11,816
22,182
21,257
Diverse
1,470
1,697
Total Group
81,960
90,903
1 Including all other cementitious materials.
LAFARGEHOLCIM ANNUAL REPORT 2017 44
HE A LT H & S A FE T Y
Health & Safety
Health & Safety (H&S) is a core value of the
LafargeHolcim Group, which has established
targets of a zero harm culture and zero
fatalities by 2030. In 2017, the H&S strategy
(Ambition “0”) was revised in collaboration
with over 60 country CEOs and more than
200 executives throughout the Group.
Ambition “0” focuses on six areas: onsite
Fatality Elimination, Zero Harm Culture,
Systems & Processes, Road Safety, Control
of Health Risks and Contractor Partnerships.
With the new strategy in place standardized
global programs are being developed to
drive a consistent approach and zero harm
culture in every country where we operate.
H&S is promoted through engagement and
communication campaigns. Our Global H&S
Days, introduced in 2016, were continued in
2017, using the theme “Stop Unsafe Work”.
We also introduced a new Key Lessons
format, sharing all incidents in a simple
and effective way to reach all members
of the workforce.
HEALT H & SA FETY
Fatalities
Fatalities by
personnel category
Fatalities by location
Lost time injury (LTI) 1
Employees
Contractors
Onsite
Offsite
Employees
Contractors onsite
Lost time injury frequency rate (LTIFR) 2
Employees
Contractors
Employee and contractors onsite
2017
2016
31
10
21
17
14
173
169
0.93
0.89
0.91
47
3
44
18
29
231
233
1.08
0.99
1.03
1 Lost Time Injury: Work-related injury, after which the affected person cannot work for at least one full shift or
full working day any time after the shift or day on which the incident causing the work-related injury occurred,
regardless of whether such person is scheduled to work.
2 Lost time injury frequency rate: number of lost time injuries per million hours worked
LAFARGEHOLCIMHEALTH & SAFETY 45
Auditing our H&S performance
2017 marked the first full year of the Group
H&S audit program. The program
measures the capacity and capability to
implement the Group H&S Standards and
ensures effective H&S Management Systems
(HSMS) at Unit level across the Group. The
audit program provides an independent
governance process that aligns with Group
Internal Audit.
Sixty-eight audits were conducted in 2017
across 34 countries. Over 500 employees
participated as auditors further contributing
to knowledge-sharing across facilities,
product lines, and borders.
Ninety audits are scheduled for 2018.
Despite these efforts, and most regrettably,
31 employees and contractors lost their lives
in 2017 compared to 47 in 2016. While the
number of contractors who died dropped
significantly, the number of employees who
lost their lives increased from 3 to 10 due to
the nature of the onsite incidents that
occurred in 2017. Thirty-four third-party
individuals died, compared to 39 in 2016.
These deaths are unacceptable. The Board
and management are committed to ensuring
that the strategy and underpinning programs
are fully embedded in the organization.
Road safety program
Based on the fact that less than 5 percent
of driving incidents are due to vehicle
condition, the 2017 road safety efforts
focused on monitoring and improving driver
skills and behavior. The training program
has been fully revisited so that going
forward, training has to happen in-cab and
must include a robust pass/fail assessment.
Recognized experts in driver training have
been identified at Group level to ensure
high-quality training is implemented in all
countries with qualified trainers. We have
started to use in-vehicle monitoring systems
(iVMS) to evaluate both driver behavior
(speed and hours of work) and skills (harsh
braking and harsh acceleration). Training
and/or consequence management is applied
accordingly. In India we’ve launched a
Central Transport Control Tower pilot project
as part of our effort to improve road safety.
Monitoring our worksites
Through the continued application of our
Design Safety and Construction Quality
Program (DSCQP), we mitigate risks linked
to design safety and construction quality
of structures (steel, concrete, etc.) and
quarries (and slopes), in order to prevent
catastrophic failures and incidents. In 2017
we invested CHF 79 million based on DSCQP
recommendations. Such vigilance helped
support a target outcome on our own capital
expenditure projects — i.e., zero fatalities —
in 2017.
Supporting the health of our workforce
The implementation of the renewed health
program began in January 2017. A global
reporting module for occupational illness
cases was included in our H&S incident
reporting system.
Every global Unit management team (560)
completed a baseline assessment to rate the
level of maturity of 17 key health program
elements. Based on these findings, each
country selected actions to address the
highest-priority health risk as part of their
2017 H&S Improvement Plan. The country
data was analyzed to identify the ten lowest-
maturity countries, which then received
additional support from Group occupational
medicine and hygiene specialists.
In 2017 the two highest global health
priorities were medical emergency response
planning and workplace occupational
hygiene programs. A three-year occupational
hygiene improvement plan was agreed on
a global basis. Regional training workshops
are scheduled during 2018.
LAFARGEHOLCIM ANNUAL REPORT 2017 46
L A F A R G E H O L C I M
R I SK MANAGEMENT
R I S K M A N AGE ME NT
Understanding risks is key to strategic
decision-making. Through the annual
Group risk report processes, we aim to
assess and prioritize risks according to their
significance and likelihood. Our goal is to
analyze our risks more deeply regarding
their causes, and to define risk mitigating
actions when necessary.
Our analyses consider market and
operational risks, financial and legal
risks, compliance and reputational risks as
well as external risk factors in our business
environment.
We attempt to consider a risk horizon that
includes long-term strategic risks, short- to
medium-term risks as well as single events.
We collect risks from the individual countries
through a bottom-up risk assessment, while
our Board and Executive Committee
members contribute a top-down view. To
those two assessments we add a topical
risk assessment, generated through
interviews with our function heads.
One of the outputs of this process is a
forward-looking Group risk report.
This consolidated Group risk report is
presented to the Executive Committee
and the conclusions are reported to
the Board of Directors and the Finance &
Audit Committee.
We view the risks on the opposite page as
material and fundamental to our strategy for
value creation over 2018–2020. This list is not
exhaustive. Further information is provided
in the Corporate Governance section
(pages 54–83), Management Discussion
& Analysis (pages 108–118) and Note 3
of the Consolidated Financial Statements
(“Risk management,” pages 145–154).
Ethics, Integrity & Risk
Committee
In the course of 2016 a number of
publications reported allegations that
company personnel of a Lafarge plant in
Syria had engaged in dealings with armed
groups and sanctioned parties during 2013
until the plant closed in September 2014.
The Board of Directors commissioned law
firms with substantial experience in
complex cross-border investigations. The
process of the investigation adhered to
well-accepted standard including as to the
rigor and independence. Its integrity was
closely protected from external influences.
In March 2017 the Board of Directors
shared its initial findings from its
independent internal investigation into
those allegations. The findings confirmed
that violations of Lafarge’s established
standards of business conduct had
taken place.
In response the Board mandated remedial
measures including the adoption of a more
rigorous risk assessment process focusing
on high-risk third parties; introduction of a
restricted party screening program and a
new sanctions and export control program.
The Ethics, Integrity & Risk Committee is
responsible for overseeing the rigorous
implementation which will strengthen and
enhance Group-wide compliance. The
committee is co-chaired by the Executive
Committee member responsible for Human
Resources and the Chief Legal and
Compliance Officer. It reports to the
Finance and Audit Committee of the Board
of Directors.
47
K E Y R I S K S *
RISK
P OT E NTIA L IMPAC T
OU R RESPON SE
Market demand
The risk that economic
development in a given country will
significantly change and have an
influence on demand for
construction and building materials
Legal and compliance risk
The risk that the company is found
to have violated laws covering
business conduct such as those
that combat bribery, corruption,
terrorism and unfair competition
Demand for construction materials is
fundamentally driven by economic growth (or
contraction) in a given territory. These changes
in underlying demand may then lead to
changes in pricing and/or industry structure.
Investigation costs, financial penalties,
debarment, profit disgorgement and
reputational damage. The impact is
compounded by the fact that local violations
can have an effect on the entire group.
Energy prices (including
alternative fuels)
The risk that prices for fuels,
electricity or planned savings from
alternative fuels will change
significantly
Raw materials (including mineral
components)
The risk that raw materials cannot
be supplied at economical cost or
suitable quality
Changes in energy prices are a supply chain
risk that could significantly alter our
production costs.
Much of our business depends on the reliable
supply of mineral resources,
e.g. sand and limestone.
Sustainability risk
The risk that the Group is not
effectively managing its
commitments to sustainability and
corporate social responsibility
The cement industry is associated with
significant negative externalities, notably high
CO2 emissions, thus reducing our
attractiveness to some stakeholders.
LafargeHolcim maintains a globally diversified portfolio, with
a good balance between mature and developing markets. We
have a top-three position in 80 percent of our markets, with
none exceeding 15 percent of total revenues. We also trade in
clinker, cement and other products to take advantage of
shifting demand between countries.
LafargeHolcim maintains a comprehensive risk-based
compliance program with dedicated resources at local,
regional and Group level. Comprehensive training is provided
and our Code of Business Conduct sets out our practices to
be adhered to across the Group. A dedicated alert hotline is
available. The program is embedded in the three lines of
defense model and maintains state-of-the-art policies,
processes and compliance solutions. Periodic and ad hoc
reporting to the Ethics, Integrity & Risk Committee and
ultimately to the Finance & Audit Committee ensure effective
program oversight.
Optimizing fuel mix and energy efficiency, as well as the use
of alternative fuels, is a key area of focus at all our plants. At
Group level, we use derivative instruments to hedge part of
our exposure to these risks.
In countries where the supply of raw materials is at risk, we
apply a range of tactics including strategic sourcing, changing
input mixtures and maintaining minimum long-term reserve
levels. At Group level our research and development is
devoted to finding ways to mitigate this risk while at the
same time lowering our environmental footprint, e.g. by
using waste-derived materials.
The 2030 Plan, which includes commitments to reducing net
CO2/tonne of cement by 40 percent compared to 1990, is one
reason we are considered a sustainability leader in our
sector. Increasingly our business is aimed toward sustainable
products and solutions. We actively promote industry and
regulatory measures that can mitigate environmental harm,
including advocating a carbon price, as well as those that
promote sustainable construction and infrastructure
development.
* The risks listed in the table are not exhaustive, and additional risks and uncertainties not presently known to LafargeHolcim or that it currently deems immaterial may also have
or develop a material adverse effect on its business, operations, financial condition or performance, or other interests. Similarly, the mitigating actions mentioned are not
exhaustive, may be ineffective and may be adjusted from time to time, and their inclusion in this section does not create any legal obligation for the company. The sequence in
which these risks and mitigating actions are presented in no way reflects any order of importance, chance or materiality.
LAFARGEHOLCIM ANNUAL REPORT 2017 48
L A F A R G E H O L C I M
R I SK MANAGEMENT
RISK
P OT E NTIA L IMPAC T
OU R RESPON SE
Political risk
The risk that political instability,
changes of government or political
pressure lead to national and/or
international conflict.
Political instability, changes of government or
increased political pressure can impact our
business. That impact may be direct, as with
infrastructure spending, or indirect, as with
economic uncertainty.
As with market demand, the best defense is diversification.
LafargeHolcim has leading positions in nearly every market
where we are active. LafargeHolcim is politically neutral.
Talent risk
The risk that the company does not
have a sufficiently robust talent
pipeline given its growth ambition.
Cyber risk
The risk that an information/
cybersecurity event affects the
privacy, confidentiality, availability
or integrity of data.
Joint Ventures and Associates
The Group does not have a
controlling interest in certain of its
business entities (i.e. joint ventures
and associates) in which it has
invested. The absence of a
controlling interest increases the
governance complexity. This may
restrict the Group’s ability to
generate adequate returns and to
implement the LafargeHolcim
control framework and compliance
program.
Goodwill and asset impairment
Significant under-performance in
any of the Group’s major cash-
generating units or the divestment
of businesses in the future may
give rise to a material write-down
of goodwill or assets.
Without the right people, LafargeHolcim will
be unable to deliver on its growth ambition.
We have a global talent review and succession planning
process to evaluate current and future talent. We invest
significantly in developing both functional and management
skills (see ‘Our People’, page 42).
An information or cybersecurity event could
lead to financial loss, reputational damage,
safety or environmental impact.
In 2017 we established a Group cybersecurity roadmap to
protect critical assets from cyberattacks and improve our
cyber resilience.
These limitations could impair the Group’s
ability to manage joint ventures and associates
effectively and/or realize the strategic goals for
these businesses. In addition this might,
impede the ability of LafargeHolcim to
implement organization efficiencies and its
controls framework, including its full
compliance program. It can also impede the
ability to transfer cash and assets between
subsidiaries in order to allocate assets in the
most effective way.
A write-down of goodwill or assets could have
a substantial impact on the Group’s net income
and equity.
In subsidiaries where we have joint control we seek to govern
our relationships with formal agreements to effect
LafargeHolcim controls and programs. In these joint venture
arrangements, LafargeHolcim has traditionally appointed
LafargeHolcim personnel to facilitate integration, best
practice transfer and drive performance.
Indicators of goodwill or asset impairment are monitored
closely through our reporting process to ensure that
potential impairment issues are addressed on a timely basis.
Detailed impairment testing for each cash-generating unit
within the Group is performed prior to year-end or at an
earlier stage when a triggering event materializes. The
Finance and Audit Committee regularly reviews the goodwill
impairment process.
49
RISK
P OT E NTIA L IMPAC T
OU R RESPON SE
Risk of downgrade of the Group’s credit rating
may affect the availability and costs of future
funding.
LafargeHolcim’s overall risk management focuses on the
unpredictability of financial markets and seeks to minimize
potential adverse effects on financial performance. The
Group has established policies for financial risk management
which set out the principles to manage liquidity, interest rate,
foreign exchange and credit risks. Please see note 3 to the
consolidated financial statements for further detail.
The Group could be impacted by losses where
recovery from insurance is either not available
or non-reflective of the incurred loss.
We place insurance with international insurers of high repute,
together with our internal captive insurance companies. We
continuously monitor our risk environment to determine
whether additional insurances will need to be obtained.
Cash contributions may be required to fund
unrecoverable deficits.
Where possible, defined benefit pension schemes have
been closed. Active management is in place to
mitigate the volatility and match investment returns with
benefit obligations.
Financial risks
The risk on the unpredictability of
financial markets could cause
potential adverse effects on the
financial performance of the Group.
The main financial risks of the
Group include liquidity, interest
rate, foreign exchange and credit
risk.
Insurance
Our sector is subject to a wide
range of risks, not all of which can
be adequately insured. The Group
obtains coverage as far as possible,
commensurate with the relevant
risks.
Defined benefit pension schemes
The Group operates a number of
defined benefit pension schemes
and schemes with related
obligations (for example jubilee/
long-term service benefits) in
several of its countries. The assets
and liabilities of defined benefit
pension schemes may exhibit
significant volatility.
LAFARGEHOLCIM ANNUAL REPORT 2017 50
L A F A R G E H O L C I M
C API TAL MARKE T INFORMAT ION
C A P I TA L M A R K E T I NFOR M AT ION
2017 was a fairly strong year for equity
markets which benefited from a resurgence
of global economic growth, a rally in
emerging markets, increased inflation, the
weakening of the US dollar and the
continued expansionary monetary policy of
the US Federal Reserve. In Switzerland, the
franc weakened, markedly against the euro,
which also supported dividend stocks. In
Europe, Brexit talks as well as political events
in Germany and Spain failed to dampen
investor confidence. LafargeHolcim’s share
price closed at CHF 55.0, an increase of 2.4
percent from 2016 year-end closing price on
the Swiss market. The share price contracted
by 5.8 percent on the Paris stock exchange,
mostly impacted by the devaluation of the
Swiss Franc against the euro. In comparison,
the SMI increased by 14.1 percent while the
CAC 40 progressed by 9.3 percent.
PERFORMANCE OF LAFARGEHOLCIM SH ARES VER SU S
SWISS MAR KET INDEX (SMI) AND THE CAC 40 OVER 5 YEARS 1
80
60
40
20
2013
2014
2015
2016
2017
LafargeHolcim SW in CHF
Swiss Market Index (SMI) in CHF
LafargeHolcim FP in EUR
French Stock Market Index (CAC 40) in EUR
1 SMI rebased to LafargeHolcim SW share price at January 2, 2013; CAC40 and LafargeHolcim FP rebased
to LafargeHolcim SW share price at July 9, 2015.
51
The average trading volume in 2017
amounted to approximately 2.0 million
shares per day on the SIX Swiss Exchange
and 0.3 million shares per day on the
Euronext Paris.
Listings
LafargeHolcim is listed on the SIX Swiss
Exchange and on Euronext Paris. The Group
is a member of the main large indices on
both the SIX Swiss Exchange and Euronext
Paris (SMI and CAC 40). Each share carries
one voting right. At year-end 2017, the
company’s market capitalization stood at
CHF 33.3 billion.
ADDITIONAL DATA
ISIN
CH0012214059
Security code
number
Telekurs code
Bloomberg code
Thomson Reuters
code
1221405
LHN
LHN:SW
LHN.SW
W EIG HTI NG O F THE LAFARGEHOLCIM REGISTERED SHA RE
IN SELECTED SHARE INDICES
Weighting in %
2.71
1.85
1.95
4.47
9.04
0.35
0.27
0.07
0.15
0.34
Index
SMI, Swiss Market Index
CAC 40, Euronext Paris
SPI, Swiss Performance Index
SLI, Swiss Leader Index
STOXX Europe 600 Construction
STOXX Europe Large 200
STOXX Europe 600
STOXX Global 1800
DJSI World Enlarged Index
FTSE4Good Europe Index
Sources: Bloomberg, FTSE Index Company, as of year-end 2017
Distribution of LafargeHolcim shares
and breakdown of shareholders
The majority of shares held outside
Switzerland and France are owned by
shareholders in the United Kingdom
and the United States.
LAFARGEHOLCIM ANNUAL REPORT 2017 52
L A F A R G E H O L C I M
C API TAL MARKE T INFORMAT ION
Free float
Free float as defined by the SIX Swiss
Exchange and the Euronext stands at
79 percent.
Dividend policy
Dividends are distributed annually.
LafargeHolcim is committed to an attractive
dividend policy. For the 2017 financial year,
the Board is proposing a payout from the
capital contribution reserves in the amount
of CHF 2.00 per registered share. The payout
is scheduled for May 16, 2018.
Significant shareholders
Information on significant shareholders can
be found on page 242 of this report.
Disclosure of shareholdings
Under the Federal Act on Financial Market
Infrastructures and Market Conduct in
Securities and Derivatives Trading (Financial
Market Infrastructure Act, FMIA), whosoever,
directly, indirectly, or in concert with third
parties, acquires or disposes of shares, for
his own account, in a company incorporated
in Switzerland whose equity securities are
listed, in whole or in part, in Switzerland and
thereby attains, falls below, or exceeds the
threshold of 3, 5, 10, 15, 20, 25, 33⅓, 50, or
66⅔ percent of the voting rights, whether or
not such rights may be exercised, shall notify
the company and the stock exchanges on
which the equity securities in question are
listed. Significant shareholders are disclosed
on page 242.
K E Y DATA LA FARGEHOLCIM REGISTERED SHARES
Par value CHF 2.00
Number of shares issued
2017
2016
2015
20141
2013
606,909,080
606,909,080
606,909,080
327,086,376
327,086,376
Number of dividend-bearing shares
598,067,626
606,909,080
606,909,080
327,086,376
327,086,376
Number of shares conditional capital 2
Number of treasury shares
1,422,350
9,698,149
1,422,350
1,422,350
1,422,350
1,422,350
1,152,327
1,338,494
1,219,339
1,522,510
Stock market prices in CHF
High
Low
Average
Market capitalization (billion CHF)
Trading volumes (million shares)
Earnings per share (EPS) in CHF
EPS before impairment and divestments in CHF
Cash earnings per share in CHF 4
Consolidated shareholders’ equity per share in CHF 5
Dividend per share in CHF
2017
60
51
56
33.3
574.6
(2.78)
2.35
5.04
51.87
2.00 6
2016
57
34
47
32.6
615.0
2.96
2.10
5.44
50.88
2.00
2015
73
48
63
30.5
449.1
(3.11)
–
5.22
51.79
1.50
2014
83
62
73
23.3
266.8
3.63 3
–
7.01
53.49
1.30
2013
79
63
69
21.8
215
3.91
–
8.56
49.77
1.30
1 Restated due to changes in accounting policies.
2 Shares reserved for convertible bonds.
3 EPS for 2014 was restated due to the distribution of a scrip dividend.
4 Cash EPS calculated based on cash flow from operating activities divided by the weighted-average number of shares outstanding.
5 Based on shareholders’ equity — attributable to shareholders of LafargeHolcim Ltd — and the number of dividend-bearing shares (less treasury shares) as per December 31.
6 Proposed by the Board of Directors for a payout from capital contribution reserves.
53
CURRENT R ATING (MARCH 2, 2018)
FINANCIA L REPORTING CA LEN DAR
Date
May 8, 2018
May 8, 2018
May 11, 2018
May 16, 2018
Rating Agency
Long-term rating
Short-term rating
BBB, outlook
negative
Baa2, outlook
negative
A-2
P-2
Results for the first
quarter 2018
Annual General
Meeting of
shareholders
Information on LafargeHolcim
registered shares
Further information on LafargeHolcim
registered shares can be found at:
www.lafargeholcim.com/investor-relations
Ex date
Payout
Standard & Poor’s Ratings Services
Moody’s Investors Service
Registration in the share register and
restrictions on voting rights
On request, purchasers of registered shares
are entered in the share register as voting
shareholders provided that they expressly
declare that they acquired the shares in their
own name and for their own account. The
Board of Directors will enter individuals
whose requests for registration do not
include an express declaration that they hold
the shares for their own account (nominees)
in the share register as shareholders with
voting rights, provided that such nominees
have concluded an agreement with the
company concerning their status and are
subject to recognized banking or financial
market supervision. The Board of Directors
has issued the applicable Registration
Regulations which can be found on the
LafargeHolcim website.
LAFARGEHOLCIM ANNUAL REPORT 2017 54
COR P OR AT E GOV E R N A NCE
LafargeHolcim applies high standards to corporate governance.
The goal is to assure the long-term value and success of the
company in the interests of various stakeholder groups:
customers, shareholders, employees, creditors, suppliers,
and the communities where LafargeHolcim operates.
TO PI C
Business review in the individual
Group regions
Segment information
Principal companies
Information about
LafargeHolcim Ltd & listed
Group companies
28–37
160
217
220
Group structure and shareholders
The holding company LafargeHolcim Ltd
operates under the laws of Switzerland for
an indefinite period. Its registered office
is in Rapperswil-Jona (Canton of St. Gallen,
Switzerland). It has direct and indirect
interests in all companies listed on pages
217 to 221 of this Annual Report.
The Group is organized by geographical
regions. The management structure as
per December 31, 2017, and changes
which occurred in 2017, are described in
this chapter.
LafargeHolcim has no mutual cross-holdings
with any other company. There are neither
shareholders’ agreements nor other
agreements regarding voting or the holding
of LafargeHolcim shares.
More detailed information on the business
review, Group structure, and shareholders
can be found on the following pages of the
Annual Report:
Acting responsibly
The ultimate goal of effective corporate
governance is long-term value creation and
strengthening of the Group’s reputation. This
includes continuous improvement to
decision-making processes and management
systems through legal, organization, and
ethical directives and terms of reference, as
well as measures to enhance transparency.
Compliance with internal and external
directives, early recognition of business
risks, social responsibility for stakeholder
groups, and open communication on all
relevant issues are among the principles of
LafargeHolcim. The Code of Business
Conduct, binding for the entire Group, is part
of our internal regulation.
LafargeHolcim aims to achieve a balanced
relationship between management and
control by keeping the functions of Chairman
of the Board of Directors and CEO separate.
All directors are independent according to
the definition of the Swiss Code of Best
Practice for Corporate Governance. The
principle of “one share, one vote” applies.
The information published in this chapter
conforms to the Corporate Governance
Directive of the SIX Swiss Exchange (SIX) and
the disclosure rules of the Swiss Code of
Obligations. In the interest of clarity,
reference is made to other parts of the
Annual Report or, for example, to the
Group’s website (www.lafargeholcim.com).
Pages 60 to 63 of this report describe the
duties of the Finance & Audit Committee, the
Nomination, Compensation & Governance
Committee, the Strategy Committee (former:
Strategy & Sustainable Development
Committee), the newly established Health,
Safety & Sustainability Committee as well as
the Organizational Rules.
Except where otherwise indicated, this
Annual Report reflects the legal situation as
of December 31, 2017.
LAFARGEHOLCIMCORPORATE GOVERNANCE 55
Authorized share capital/Certificates
of participation
As per December 31, 2017, neither
authorized share capital nor certificates
of parti cipation were outstanding.
FURTHER INFORMATION
CAN BE FOUND UNDER
www.lafargeholcim.com/investor-relations
TOP IC
Articles of Incorporation of
LafargeHolcim Ltd
www.lafargeholcim.com/articles-association
Code of Business Conduct
www.lafargeholcim.com/corporate-governance
Changes in equity of
LafargeHolcim Ltd Information
for the year 2015 is included in the
Annual Report 2016
176–177, 126–127
Detailed information
on conditional capital
www.lafargeholcim.com/articles-association
Articles of Incorporation
Art. 3bis
Key data per share
50–53, 208, 243
Rights pertaining to the shares
www.lafargeholcim.com/articles-association
Articles of Incorporation
Art. 6, 9, 10
Regulations on transferability
of shares and nominee registration
www.lafargeholcim.com/articles-association
Articles of Incorporation
Art. 4, 5
Warrants/Options
203–207
Capital structure
LafargeHolcim has one uniform type of
registered share in order to comply with
inter national capital market requirements in
terms of an open, transparent, and
modern capital structure and to enhance
attractiveness, particularly for
institutional investors.
Share capital
The share capital is divided into
606,909,080 registered shares of CHF 2.00
nominal value each. As of December 31,
2017, the nominal, fully paid-in share capital
of LafargeHolcim Ltd amounted to
CHF 1,213,818,160.
Conditional share capital
The share capital may be raised by a nominal
amount of CHF 2,844,700 through the
issuance of a maximum of 1,422,350 fully
paid-in registered shares, each with a par
value of CHF 2.00 (as per December 31,
2017). The conditional capital may be used
for exercising convertible and/or option
rights relating to bonds or similar debt
instruments of the company or one of its
Group companies. The subscription rights
of the shareholders will be excluded. The
current owners of conversion rights and/or
warrants will be entitled to subscribe for the
new shares. The acquisition of shares
through the exercise of conversion rights
and/or warrants and each subsequent
transfer of the shares will be subject to the
restrictions set out in the Articles of
Incorporation. As per December 31, 2017,
no bonds or similar debt instruments of the
company or one of its Group companies
were outstanding that would give rise to
conversion rights related to the conditional
capital; therefore, in the year under review,
no conversion rights have been exercised.
Further information on conversion rights
and/or warrants and applicable conditions
may be found in the Articles of Incorporation
of LafargeHolcim Ltd at:
www.lafargeholcim.com/articles-association
LAFARGEHOLCIM ANNUAL REPORT 2017 56
New members of the Board of Directors are
introduced in detail to the company’s
areas of business. The Board of Directors
meets as often as business requires, but at
least four times a year. In 2017, six regular
meetings and eight additional meetings
were held. Two meetings focused on
strategy topics. As a rule, the members of
the Executive Committee attended those
parts of the regular meetings of the Board of
Directors which dealt with operational issues
of areas of their responsibility. The average
duration of the regular meetings was
five hours.
Board of Directors
The Board of Directors consists of 12
members, all of whom are independent
according to the definition of the Swiss Code
of Best Practice for Corporate Governance.
Please see pages 74 to 77 for the
biographical information of the Board
members as per December 31, 2017.
Mr. Bruno Lafont, Mr. Alexander Gut, and
Mr. Philippe Dauman retired from the Board
of Directors at the Annual General Meeting
of May 3, 2017.
In 2017, the shareholders elected Mr. Patrick
Kron as new member and re-elected 11
members of the Board of Directors. Dr. Beat
Hess was re-elected as Chairman of the
Board of Directors. Furthermore, the
shareholders re-elected the five members of
the Nomination, Compensation &
Governance Committee.
The shareholders also elected the auditors
and re-elected the independent proxy.
LAFARGEHOLCIMCORPORATE GOVERNANCE 57
BOAR D AND COMMIT T EE AT T E NDA NC E AT SC H ED UL ED O RD I N ARY ME ETI NGS
NAME
Beat Hess
Oscar Fanjul
Bertrand Collomb
Paul Desmarais, Jr.
Patrick Kron 1
Gérard Lamarche
Adrian Loader
Jürg Oleas
Nassef Sawiris
POSITION
Chairman
Vice-Chairman
Member
Member
Member
Member
Member
Member
Member
Thomas Schmidheiny
Member
Hanne B. Sørensen
Dieter Spälti
Member
Member
1 Elected to the Board at the AGM 2017
2 Member of the FAC as of May 3, 2017
BOARD
MEETINGS
ATTENDED
FINANCE &
AUDIT
COMMITTEE
NOMINATION,
COMPENSATION &
GOVERNANCE
COMMITTEE
STRATEGY
COMMITTEE
HEALTH, SAFETY &
SUSTAINABILITY
COMMITTEE
6/6
6/6
6/6
4/6
4/4
5/6
6/6
6/6
6/6
6/6
6/6
6/6
–
–
5/5
–
–
5/5
–
3/3 2
–
–
–
4/5
–
2/3
–
2/3
–
–
3/3
–
3/3
–
3/3
–
–
5/5
–
–
2/2
4/5
–
–
–
–
–
5/5
–
–
–
–
3/3
–
3/3
–
–
3/3
3/3
–
LAFARGEHOLCIM ANNUAL REPORT 2017 58
L A F A R G E H O L C I M
CORPOR ATE GOVERNANCE
OTHE R MA JO R SW ISS AN D FOR EI GN M A NDATES O F THE BOA RD O F DI REC TORS
(cid:50) (cid:56) (cid:55)(cid:54)(cid:44)(cid:39)(cid:40)(cid:3)(cid:55)(cid:43)(cid:40) (cid:3)(cid:47)(cid:36)(cid:41)(cid:36)(cid:53)(cid:42)(cid:40)(cid:43)(cid:50)(cid:47)(cid:38)(cid:44) (cid:48) (cid:3) (cid:42)(cid:53) (cid:50)(cid:56)(cid:51) (cid:3)(cid:36)(cid:54)(cid:3)(cid:36)(cid:55)(cid:3)(cid:39)(cid:40)(cid:38)(cid:40)(cid:48) (cid:37)(cid:40)(cid:53)(cid:2013) (cid:22)(cid:20)(cid:15)(cid:3)(cid:21) (cid:19)(cid:20)(cid:26)
BOARD OF DIRECTORS
MANDATE
POSITION
Beat Hess
Nestlé S.A.
Vevey (Switzerland)*
Sonova Holding AG,
Stäfa (Switzerland)*
Member of the Board, Member of the Chairman’s and
Corporate Governance Committee, Chairman of the
Compensation Committee
Vice Chairman of the Board, Member of the Nomination
and Compensation Committee
Oscar Fanjul
(cid:48)(cid:68)(cid:85)(cid:86)(cid:75)(cid:3)(cid:9)(cid:3)(cid:48)(cid:70)(cid:47)(cid:72)(cid:81)(cid:81)(cid:68)(cid:81)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:49)(cid:72)(cid:90)(cid:3)(cid:60)(cid:82)(cid:85)(cid:78)(cid:3)(cid:49)(cid:60)(cid:3)(cid:11)(cid:56)(cid:54)(cid:36)(cid:12)(cid:585)(cid:13)
Member of the Board
Omega Capital, Madrid (Spain)
Ferrovial S.A., Madrid (Spain)*
Bertrand Collomb
Académie des sciences morales et politiques, Paris
(France); Global Advisory Board; The University of Tokyo,
Tokyo (Japan)
Vice Chairman
Member of the Board
Member
Paul Desmarais, Jr.
(cid:51)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:68)(cid:81)(cid:68)(cid:71)(cid:68)(cid:15)(cid:3)(cid:48)(cid:82)(cid:81)(cid:87)(cid:85)(cid:171)(cid:68)(cid:79)(cid:3)(cid:11)(cid:38)(cid:68)(cid:81)(cid:68)(cid:71)(cid:68)(cid:12)(cid:585)(cid:13)
Member of the Board
(cid:42)(cid:85)(cid:72)(cid:68)(cid:87)(cid:16)(cid:58)(cid:72)(cid:86)(cid:87)(cid:3)(cid:47)(cid:76)(cid:73)(cid:72)(cid:70)(cid:82)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:15)(cid:3)(cid:58)(cid:76)(cid:81)(cid:81)(cid:76)(cid:83)(cid:72)(cid:74)(cid:3)(cid:11)(cid:38)(cid:68)(cid:81)(cid:68)(cid:71)(cid:68)(cid:12)(cid:585)(cid:13)(cid:3)
Member of the Board
(cid:44)(cid:42)(cid:48)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:15)(cid:3)(cid:3)(cid:58)(cid:76)(cid:81)(cid:81)(cid:76)(cid:83)(cid:72)(cid:74)(cid:3)(cid:11)(cid:38)(cid:68)(cid:81)(cid:68)(cid:71)(cid:68)(cid:12)(cid:585)(cid:13)
Pargesa Holding SA,
Geneva (Switzerland)
Member of the Board
Member of the Board
(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:72)(cid:3)(cid:37)(cid:85)(cid:88)(cid:91)(cid:72)(cid:79)(cid:79)(cid:72)(cid:86)(cid:3)(cid:47)(cid:68)(cid:80)(cid:69)(cid:72)(cid:85)(cid:87)(cid:15)(cid:3)(cid:37)(cid:85)(cid:88)(cid:86)(cid:86)(cid:72)(cid:79)(cid:86)(cid:3)(cid:11)(cid:37)(cid:72)(cid:79)(cid:74)(cid:76)(cid:88)(cid:80)(cid:12)(cid:585)(cid:13)
Member of the Board
Patrick Kron
(cid:55)(cid:85)(cid:88)(cid:603)(cid:72)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:15)(cid:3)(cid:51)(cid:68)(cid:85)(cid:76)(cid:86)(cid:3)(cid:11)(cid:41)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:12)
(cid:54)(cid:42)(cid:54)(cid:3)(cid:54)(cid:36)(cid:15)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:89)(cid:68)(cid:3)(cid:11)(cid:54)(cid:90)(cid:76)(cid:87)(cid:93)(cid:72)(cid:85)(cid:79)(cid:68)(cid:81)(cid:71)(cid:12)(cid:585)(cid:13)(cid:3)
(cid:54)(cid:68)(cid:81)(cid:82)(cid:564)(cid:3)(cid:54)(cid:17)(cid:36)(cid:17)(cid:15)(cid:3)(cid:42)(cid:72)(cid:81)(cid:87)(cid:76)(cid:79)(cid:79)(cid:92)(cid:3)(cid:11)(cid:41)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:12)(cid:13)
Bouygues, Paris (France)*
Member of the Board
Chairman
Member of the Board
Member of the Board
Gérard Lamarche
Groupe Bruxelles Lambert, Brussels (Belgium)*
Co-CEO
Halcor Metal Works S.A., Athens (Greece)*
Member of the Board
Total SA, Paris (France)*
Member of the Board, Chairman of the Remuneration
Committee and Member of the Audit Committee
SGS, Geneva (Switzerland)*
Member of the Board and of the Audit Committee
Umicore, Brussels (Belgium)*
Member of the Board
Adrian Loader
Alderon Iron Ore Corp. Montreal (Canada)*
Member of the Board
Jürg Oleas
GEA Group Aktiengesellschaft, Düsseldorf (Germany)*
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:602)(cid:70)(cid:72)(cid:85)
Sherrit International Corporation, Toronto (Canada)*
Member of the Board
LL Plant Engineering AG, Ratingen (Germany)
Chairman of the Board
RUAG Holding AG, Bern (Switzerland)
Member of the Board and Chairman of the Strategy
Committee
59
BOARD OF DIRECTORS
MANDATE
POSITION
Nassef Sawiris
OCI N.V., Amsterdam (The Netherlands)*
Executive Director and Chief Executive Officer
Adidas AG, Herzogenaurach (Germany)*
Member of the Board
OCI Partners LP, Delaware (USA)
Thomas Schmidheiny
Schweizerische Cement-Industrie-Aktiengesellschaft,
Rapperswil-Jona (Switzerland)
Spectrum Value Management Ltd., Rapperswil-Jona
(Switzerland)
Member of the Board
Chairman of the Board
Chairman of the Board
Abraaj Holdings, Dubai (United Arab Emirates)
Member of the Board
Hanne B. Sørensen
Ferrovial S.A., Madrid (Spain)*
Member of the Board
Koninklijke Vopak N.V., Rotterdam (The Netherlands)*
Member of the Board
Delhivery Pvt. Ltd., Gurgaon (India)
Schweizerische Cement-Industrie-Aktiengesellschaft,
Rapperswil-Jona (Switzerland)
Spectrum Value Management Ltd., Rapperswil-Jona
(Switzerland)
Member of the Board
Member of the Board
Member of the Board
Dieter Spälti
* Listed company
LAFARGEHOLCIM ANNUAL REPORT 2017 60
ELECTIONS AND TERMS OF OFFICE
The following expert committees exist:
CO MPOSITION OF T HE FINANCE
AND AUDIT COMMIT TEE
FINANCE & AU DI T COMM I T T EE
NAME
POSITION
Gérard Lamarche
Chairman
Betrand Collomb
Member
Jürg Oleas
Member
Dieter Spälti
Member
The Finance & Audit Committee assists and
advises the Board of Directors in conducting
its supervisory duties with respect to the
internal control systems. It examines the
reporting for the attention of the Board of
Directors and evaluates the Group’s external
and internal audit procedures, reviews the
risk management systems of the Group, and
assesses financing issues.
All members are independent according to
the definition of the Swiss Code of Best
Practice for Corporate Governance, in order
to ensure the necessary degree of objectivity
required for a Finance & Audit Committee.
In 2017, five regular meetings and four
additional meetings of the Finance & Audit
Committee were held. The auditors, the
Head of Group Internal Audit and the Chief
Legal & Compliance Officer were present at
all meetings for certain agenda topics.
Furthermore, the Chairman of the Board, the
CEO and the CFO attended the meetings of
the Finance & Audit Committee as guests.
The average duration of the regular
meetings was four hours.
In 2017, the committee reviewed in
particular the financial reporting of the
Group, the releases of the quarterly results
and the findings of the external auditors. The
committee took note of the status of the ICS
(Internal Control System), discussed the
findings of the Group Internal Audit, dealt
with compliance and internal directives, and
evaluated financing issues. The committee
also evaluated the performance of the
external auditors and their fees. The Finance
& Audit Committee performed significant
work in preparing and following up the
committee’s meetings, including oversight of
the internal investigation on Syria operations
and the review of the current compliance
program (policies, protocols, and related
financial controls) to ensure that misconduct
identified can be better detected and/or
prevented altogether.
The charter of the Finance & Audit
Committee is available at:
www.lafargeholcim.com/articles-association
LAFARGEHOLCIMCORPORATE GOVERNANCE 61
CO MPOSITI ON OF T HE
NOMIN ATION, COMPE NSATI ON
& GOVERNANCE COMMIT TEE
NOMI NATI ON , COM PE N SAT I O N &
GOVERN AN CE COMM I T T EE
NAME
POSITION
Nassef Sawiris
Chairman
Paul Desmarais, Jr.
Member
Oscar Fanjul
Member
Adrian Loader
Member
Hanne B. Sørensen
Member
The charter of the Nomination,
Compensation & Governance Committee
is available at:
www.lafargeholcim.com/articles-association
More details on the activities of the
Nomination, Compensation & Governance
Committee, in particular with regard to the
process of determination of compensation,
can be found in the Compensation Report,
starting on page 84.
The Nomination, Compensation &
Governance Committee supports the Board
of Directors in planning and preparing
succession at the Board of Directors and
senior management level. It monitors
developments with regard to corporate
governance and compensation for the Board
of Directors and Executive Committee, and
briefs the Board of Directors accordingly.
The committee advises the Board of
Directors on the compensation policy for the
Board of Directors and for the Executive
Committee and on the motion by the Board
of Directors to the Annual General Meeting
of shareholders for the total compensation
of the Board of Directors and of the
Executive Committee.
In 2017, the Nomination, Compensation &
Governance Committee held three regular
meetings and seven additional meetings.
The meetings were also attended by the
Chairman of the Board and the CEO as a
guest, insofar as they were not themselves
affected by the items on the agenda. The
average duration of the regular meetings
was two hours.
LAFARGEHOLCIM ANNUAL REPORT 2017 62
CO MPOSITION OF T HE
STR ATEGY COMMIT TEE
STRATEG Y COM M IT TE E
NAME
POSITION
Dieter Spälti
Chairman
Oscar Fanjul
Member
Patrick Kron
Member
Gérard Lamarche
Member
The Strategy Committee supports the Board
of Directors in all matters relating to the
strategic priorities of the company. The
committee deals with any matters within
the Board of Director’s authority, which are
urgent and may arise between scheduled
ordinary Board of Directors meetings,
including the authorization to take
preliminary action on behalf of the Board,
followed by adequate information of the
Board of Directors.
In 2017, the Strategy Committee held five
regular meetings and two additional
meetings. The Chairman of the Board, the
CEO and the CFO attended the meetings
of the Strategy Committee as guests. The
average duration of the regular meetings
was three hours.
The charter of the Strategy Committee
is available at:
www.lafargeholcim.com/articles-association
LAFARGEHOLCIMCORPORATE GOVERNANCE 63
CO MPOSITI ON OF T HE HE ALT H,
SA FETY AND SUSTAINABILITY
CO MMIT TEE
HEALTH, S AFE T Y AN D
SUSTAI NABI LI TY CO MM I T TE E
NAME
POSITION
Adrian Loader
Chairman
Patrick Kron
Member
Thomas
Schmidheiny
Member
Hanne B. Sørensen
Member
The newly established Health, Safety and
Sustainability Committee supports and
advises the Board of Directors on the
development and promotion of a healthy
and safe environment for employees and
contractors as well as on sustainable
development and social responsibility. Since
its establishment in May 2017 the Health,
Safety and Sustainability Committee held
three regular meetings. The Head of Health
and Safety and the Head of Sustainable
Development were present at all meetings.
The Chairman of the Board and the CEO
attended the meetings of the Health, Safety
and Sustainability Committee as guests.
The average duration of the meetings was
two hours.
The charter of the Health, Safety &
Sustainability Committee is available at:
www.lafargeholcim.com/articles-association
LAFARGEHOLCIM ANNUAL REPORT 2017 64
Areas of responsibility
The division of responsibilities between
the Board of Directors, the CEO, and the
Executive Committee is set out in detail
in the company’s Organizational Rules.
The Organizational Rules may be found at:
www.lafargeholcim.com/articles-association
Organizational Rules
The Organizational Rules entered into force
on May 24, 2002, and according to the
Organizational Rules they shall be reviewed
at least every two years and amended as
required. They were last reviewed and
amended in September 2017.
The Organizational Rules are issued by the
Board of Directors of LafargeHolcim Ltd in
accordance with the terms of Art. 716b of the
Swiss Code of Obligations and Art. 18 of the
company’s Articles of Incorporation. They
stipulate the organizational structure of the
Board of Directors and the Executive
Committee and govern the tasks and powers
conferred on the company’s executive
bodies. They regulate the convocation,
execution, and number of meetings to be
held by the Board of Directors and the
Executive Committee as well as the tasks and
competences of the company’s bodies. The
Organizational Rules set out the tasks and
responsibilities of the Chairman of the Board
of Directors and the CEO. In the event that
the Chairman of the Board of Directors is not
independent, the Organizational Rules
provide for the election of an Independent
Lead Director.
The Board of Directors also has the power to
establish expert committees and, if required,
ad-hoc committees for special tasks. The
Board of Directors can delegate special tasks
or tasks related to specific functions to a
Vice-Chairman on a temporary or permanent
basis.
As part of its non-transferable statutory
responsibilities, the Board of Directors
defines the corporate strategy, approves the
consolidated Group mid-term plan, including
the budget, and the Annual Report for
submission to the Annual General Meeting.
The CEO is responsible for operational
management, preparing a large part of the
business of the Board of Directors —
including corporate strategy proposals — and
executing the latter’s resolutions. The CEO
issues directives and recommendations with
Group-wide significance in his own authority
and is also responsible for electing and
dismissing Area Managers, Function Heads
and CEOs of Group companies, as well as for
the nomination of the members of the Board
of Directors and supervisory bodies of the
Group companies.
Within the framework of mid-term plan
approval, the Board of Directors defines
limits for investments and financing. Within
these limits, the Executive Committee
decides on financing transactions and on
one-off investments and divestments for
amounts up to CHF 400 million. Amounts
exceeding this are subject to approval by
the Board of Directors. The Board of
Directors is regularly informed about
important transactions under the authority
of the Executive Committee.
The members of the Executive Committee
may delegate their tasks in relation to their
geographical areas of responsibility to Area
Managers.
The Board of Directors determines the CEO’s
objectives upon motion by the Chairman
of the Board and the Executive Committee
members’ Group objectives upon motion
by the Nomination, Compensation &
Governance Committee, both after advice
and assessment with the CEO.
LAFARGEHOLCIMCORPORATE GOVERNANCE 65
The CEO assesses the performance of the
members of the Executive Committee and,
after advice and assessment by the
Nomination, Compensation & Governance
Committee, determines their respective
individual objectives.
The Executive Committee oversees risk
management following appraisal by the
Finance & Audit Committee. The Board
of Directors is informed annually about the
risk situation.
In case of a direct conflict of interest, the
Organizational Rules require each member
of the corporate body concerned to stand
aside voluntarily prior to any discussion of
the matter in question. Members of the
corporate bodies are required to treat all
information and documentation which they
may obtain or view in the context of their
activities in these bodies as confidential
and not to make such information available
to third parties.
All individuals vested with the powers to
represent the company have only joint
signatory power at two.
Information and control instruments
of the Board of Directors
The Board of Directors determines the
manner in which it is to be informed about
the course of business. Any member of the
Board of Directors may demand information
on all issues relating to the Group and the
company. All members of the Board of
Directors may request information from the
CEO after informing the Chairman of the
Board of Directors. At meetings of the Board
of Directors, any attending member of the
Executive Committee has a duty to provide
information. All members of the Board of
Directors have a right to inspect books and
files to the extent necessary for the
performance of their tasks.
Financial reporting
The Board of Directors is informed on a
monthly basis about the current course of
business, adopts the quarterly reports, and
releases them for publication. The Board of
Directors discusses the Annual Report, takes
note of the Auditors’ Reports, and submits
the Annual Report to the Annual General
Meeting for approval.
With regard to Group strategy development,
a stra tegy plan, a mid-term plan covering
three years and including the budget are
submitted to the Board of Directors.
Risk Management
LafargeHolcim benefits from many years of
experience with risk management. The risk
assessment process was concluded in 2017
across the Countries.
Responsibilities concerning risks are clearly
defined at Country and corporate level. The
underlying principle is that risk management
is a line management responsibility. Line
managers are supported by Group Risk
Management (GRM) that forms part of the
second line of defense. Internal Audit
represents the third line of defense.
GRM analyzes the Group’s overall risk
exposure and supports the strategic
decision-making process. The full risk
spectrum from market, operations, finance
and legal, to external risk factors of the
business environment is reviewed, including
compliance and reputational risks. The risk
assessment is not limited to the risks, but
also identifies potential opportunities.
The Group’s risk map is established by
strategic, operational and topical risk
assessments which are combined into a
Group risk report. GRM involves the Board of
Directors, the Executive Committee,
corporate Function Heads and the Countries
in the risk assessment.
The risk assessment process consists of
several steps. First, risks are assessed and
prioritized according to significance and
likelihood. Top risks are analyzed more
deeply regarding their causes, and risk
mitigating actions are defined. The
consolidated Group risk report is presented
to the Executive Committee and the
conclusions reported to the Finance & Audit
Committee and to the Board of Directors.
Internal Control
LafargeHolcim aims to have an effective
Internal Control System and a culture of
robust internal control, supported by the
commitment of the Board of Directors and
Senior Management. Group Internal Control
(GIC) aims at providing the Board of
Directors and Senior Management
reasonable assurance concerning the
reliability of the financial reporting and
statements, the compliance with laws and
regulations, the protection of assets and
fraud prevention, and the effectiveness and
efficiency of processes.
Internal control is monitored at all levels so
that risks are identified and action plans are
followed up on a continuous basis. GIC gives
an assessment to the Executive Committee
and the Finance & Audit Committee on the
existence, the design and the operating
effectiveness of the Internal Control System
in the Countries/Entities. In order to fulfill
this responsibility, GIC calls the Group
Internal Control Committee for an annual
update on the work performed on internal
control.
GIC designs and coordinates the annual
certification process to review the main
action plans in progress and to confirm
management responsibility at each relevant
level of the Group organization on the
quality of both internal control and financial
reporting. This process also supports the
identification of business risks.
LAFARGEHOLCIM ANNUAL REPORT 2017 66
Effective September 1, 2017, Jan Jenisch has
been appointed Chief Executive Officer of the
Group succeeding Eric Olsen, who has
resigned effective July 15, 2017. Beat Hess,
Chairman of the Board, has overseen
the transition period as interim Chief
Executive Officer.
Ron Wirahadiraksa, Chief Financial Officer
of the Group, has decided to pursue new
opportunities outside the Group and
has been succeeded by Géraldine Picaud
as of January 3, 2018.
Effective January 1, 2018 Pascal Casanova,
Region Head North America and Mexico, and
Gérard Kuperfarb, responsible for Growth
and Innovation, have decided to pursue a
career outside the Group.
Roland Köhler, Region Head Europe,
Australia/New Zealand, and Trading, has
decided to retire at the beginning of 2018.
Effective January 1, 2018, Marcel Cobuz,
previously Country CEO Morocco, has been
appointed member of the Executive
Committee as Head Region Europe.
Also effective January 1, 2018, René Thibault,
previously CEO of Western Canada, has been
appointed member of the Executive
Committee as Head Region North America.
During the year under review, the Executive
Committee of LafargeHolcim was comprised
of the following ten members:
The outcome is presented to the Executive
Committee and the Finance & Audit
Committee.
Internal Audit
Internal Audit assures the existence and
pertinence of process controls and the
integrity of information. Internal Audit
reports to the CEO with an additional
reporting line to the Chairman of the Finance
& Audit Committee and periodically informs
the Finance & Audit Committee. The
members of the Board of Directors have
access to Internal Audit at all times. Each
year, the Finance & Audit Committee defines
the audit focal areas to be addressed by
Internal Audit, and the Head of Internal
Audit periodically updates the Finance &
Audit Committee on the activities of
Internal Audit.
Executive Committee
Members of the Executive Committee
(including the CEO) are appointed by the
Board of Directors and are responsible for
the management of the Group. They may be
assisted by Area Managers in their area of
responsibility. Area Managers are appointed
upon motion by the respective Executive
Committee member by the CEO after advice
and assessment by the Executive Committee.
The tasks of the Executive Committee are
divided into different areas of responsibility
in terms of country and function, each of
these areas being ultimately supervised
and managed by a member of the
Executive Committee.
Further to the situation effective January 1,
2017 reported in the Annual Report 2016 on
pages 110 – 111, the following changes
within the Executive Committee during the
year under review have occurred:
LAFARGEHOLCIMCORPORATE GOVERNANCE 67
COMP OSITIO N OF THE EXECUTIVE COM M IT TEE
EXECUTIVE COMMITTEE
POSITION
RESPONSIBILITY
Jan Jenisch (as of September 1, 2017)
Ron Wirahadiraksa
(Géraldine Picaud as of January 3, 2018)
CEO
CFO
Urs Bleisch
Pascal Casanova
Roland Köhler
Martin Kriegner
Gérard Kuperfarb
Caroline Luscombe
Oliver Osswald
Saâd Sebbar
Member
Cost & Performance
Member
Member
Member
Regional Head
North America and Mexico
Region Head Europe,
Australia/New Zealand, and Trading
Region Head
India and South East Asia
Member
Growth and Innovation
Member
Human Resources
Member
Member
Regional Head
Central and South America
Region Head
Middle East Africa
Compensation, shareholdings and loans
Details of Board and management
compensation, shareholdings, and loans are
contained in the Compensation Report
(starting at page 84) and in the Holding
company results (page 240, note 14).
Please refer to pages 80–83 for biographical
information on the members of the
Executive Committee. None of the members
of the Executive Committee has important
functions outside the LafargeHolcim Group
or any other significant commitments of
interest, with the exception of Jan Jenisch
who is a non-executive Director of the stock-
listed Schweiter Technologies AG and of the
privately held Glas Troesch.
Management agreements
LafargeHolcim has no management
agreements in place with companies or
private individuals outside the Group.
LAFARGEHOLCIM ANNUAL REPORT 2017 68
Shareholders’ participation
Voting rights and representation restrictions
All holders of registered shares who are
registered as shareholders with voting rights
in the share register on the closing date for
the share registry (approximately one week
prior to the Annual General Meeting; the
closing date is communicated with the
invitation to the Annual General Meeting) are
entitled to participate in, and vote at, Annual
General Meetings. Shares held by trusts and
shares for which no declaration has been
made that the holder requesting registration
is holding the shares in his own name and
for his own account are entered in the share
register as having no voting rights.
Shareholders not participating in person in
the Annual General Meeting may be
represented by another shareholder or by
the independent voting proxy. In line with
the requirements of the Ordinance against
Excessive Compensation in public
corporations, an electronic voting option is
provided for. Voting rights are not subject
to any restrictions. Each share carries one
vote.
Statutory quorums
The Annual General Meeting of shareholders
constitutes a quorum, regardless of the
number of shares represented or
shareholders present; resolutions are passed
by an absolute majority of the votes
allocated to the shares represented, unless
Art. 704 para. 1 of the Swiss Code of
Obligations or the Merger Act provides
otherwise. In such cases, resolutions may
only be passed with the respective qualified
majority of the votes represented.
According to Art. 10 para. 2 of the Articles of
Incorporation and in addition to Art. 704
para. 1 of the Swiss Code of Obligations, the
approval of at least two-thirds of the votes
represented and the absolute majority of the
par value of shares represented shall
be required for resolutions of the Annual
General Meeting of shareholders with
respect to the removal of restrictions set
forth in Art. 5 of the Articles of Incorporation
(entries in the share register), the removal of
the mandatory bid rule (Art. 22 para. 3 of the
Stock Exchange Act), and the removal or
amendment of para. 2 of Art. 10 of the
Articles of Incorporation.
The chair of the meeting may also have votes
and elections conducted electronically.
Electronic votes and elections are deemed
equivalent to secret votes and elections.
Convocation of the Annual General Meeting
and agenda rules
The ordinary Annual General Meeting of
shareholders takes place each year, at the
latest six months following the conclusion of
the financial year. It is convened by the
Board of Directors, whereby invitations are
published at least twenty days prior to the
meeting and in which details are given of the
agenda and items submitted. Shareholders
representing shares with a par value of at
least one million Swiss Francs may request
the addition of a particular item for
discussion and resolution. A corresponding
application must be submitted in writing to
the Board of Directors at least forty days
prior to the Annual General Meeting. Such
application should indicate the items to be
submitted. The invitations as well as the
minutes of the Annual General Meetings
shall be published on:
www.lafargeholcim.com
Entries in the share register
The company maintains a share register for
registered shares in which the names and
addresses of owners and beneficiaries are
entered. According to the applicable rules
and regulations, only those included in the
share register are deemed shareholders or
beneficial owners of the registered shares of
the company. Upon request, purchasers of
LAFARGEHOLCIMCORPORATE GOVERNANCE 69
registered shares shall be included in the
share register as shareholders with voting
rights if they expressly declare that they
have acquired the shares in their own name
and for their own account. Exceptions to this
rule apply for nominees who have signed a
nominee agreement with the company
regarding this position and are subject to a
recognized banking or financial markets
supervisory authority.
The share register is closed approximately
one week prior to the date of the Annual
General Meeting (the exact date is
communicated in the invitation to the Annual
General Meeting). Shareholders’
participation and rights of protection are
furthermore governed by the Swiss Code of
Obligations.
Auditors
As part of their auditing activity, the auditors
inform the Finance & Audit Committee and
the Executive Committee regularly about
their findings and make suggestions
for improvement. Taking into account the
reporting and assessments by the Group
companies, the Finance & Audit Committee
evaluates the performance of the auditors
and their remuneration in line with market
conditions. The Finance & Audit Committee
approves the audit focus area, provides
recommendations to the auditors and makes
suggestions for improvement. In 2017, the
auditors participated in all five regular
meetings of the Finance & Audit Committee
to discuss individual agenda items.
Deloitte AG, Zurich, was appointed at the
Annual General Meeting 2017 as the auditors
of LafargeHolcim Ltd. David Quinlin has
been responsible for managing the audit
mandate, supported by Frédéric Gourd. The
rotation of the lead auditor will be carried
out in accordance with Art. 730a of the Swiss
Code of Obligations. The auditors are elected
for a one-year term by the Annual General
Meeting.
The fees shown below were charged for
professional services rendered to the Group
(excluding JVs) by the auditors (Ernst &
Young Ltd until AGM 2017 and Deloitte AG
as of AGM 2017) in 2017 and 2016:
This information comprises excerpts from or
references to the content of the Articles of
Incorporation of LafargeHolcim Ltd. The full
version of the Articles of Incorporation in
force as at the date of publication of this
Annual Report can be accessed at:
www.lafargeholcim.com/articles-association
Million CHF
Audit services 1
Audit-related services 2
Tax services
Other services 3
Total
2017
14.5
0.2
0.1
0.0
14.8
2016
17.0
1.9
2.2
0.8
21.8
1 This amount includes the fees for the individual audits of Group companies carried out by Deloitte as well as their
fees for auditing the Group financial statements.
2 Audit-related services comprise, among other things, amounts for comfort letters, accounting advice, information
systems reviews and reviews on internal controls.
3 Other services include, among other things, amounts for due diligences and translation services.
Changes of control and defense measures
The Articles of Incorporation contain no
waiver of the duty to make a public offer
under the terms of Art. 32 and 52 of the
Stock Exchange Act (“opting out”). The result
is that a shareholder who directly, indirectly,
or in concert with third parties acquires
shares in the company and, together with
the shares he already possesses, thereby
exceeds the 33⅓ percent threshold of voting
rights in the company must make an offer
for all listed shares of the company.
There are no clauses relating to changes
of control.
LAFARGEHOLCIM ANNUAL REPORT 2017 70
Current information relating to sustainable
development is available at:
www.lafargeholcim.com
A full sustainability report is published
every year.
The financial reporting calendar is shown on
pages 53 and 250 of this Annual Report.
Should there be any specific queries
regarding LafargeHolcim, please contact:
Corporate Communications
Phone: +41 58 858 87 10
Fax: +41 58 858 87 19
E-Mail: communications@lafargeholcim.com
Investor Relations
Phone: +41 58 858 87 87
Fax: +41 58 858 80 09
E-Mail: investor.relations@lafargeholcim.com
Information policy
LafargeHolcim Ltd reports to shareholders,
the capital market, employees, and the
public at large in a transparent and timely
manner concerning its corporate
performance, including achievement of
its sustainability targets. Open dialog is
nurtured with the most important
stakeholders, based on mutual respect and
trust. This promotes knowledge of the
company and understanding of objectives,
strategy, and business activities of the
company.
As a listed company, LafargeHolcim Ltd is
under an obligation to disclose facts that
may materially affect the share price (ad-hoc
disclosure, Art. 53 and 54 of the SIX listing
rules and Art 223-2 of the AMF General
Regulations). LafargeHolcim Ltd is subject
to the SIX and AMF rules on the disclosure
of management trans actions made by the
members of the Board of Directors and
senior management. These can be accessed
on the SIX and AMF websites:
https://www.six-exchange-regulation.com/en/
home/issuer/obligations/management-
transactions.html and
http://www.amf-france.org/en_US/Acteurs-et-
produits/Societes- cotees-et-operations-
financieres/Information-financiere-et-
comptable/Obligations-d- information.
html?#title_ paragraph_1
The most important information tools are
the annual and half-year reports, the website
(www.lafargeholcim.com), media releases,
press conferences, meetings for financial
analysts and investors, and the Annual
General Meeting.
LAFARGEHOLCIMCORPORATE GOVERNANCE 71
LAFARGEHOLCIM ANNUAL REPORT 2017 72
BOA R D OF DI R EC TOR S
BEAT HESS
Chairman
Date appointed: 2010
Nationality: Swiss
Born: 1949
Biography
P74
OSCAR FANJUL
Vice-Chairman
Date appointed: 2015
Nationality: Spanish and Chilean
Born: 1949
Biography
P74
BERTRAND COLLOMB
Member
Date appointed: 2015
Nationality: French
Born: 1942
Biography
P74
PAUL DESMARAIS, JR.
Member
Date appointed: 2015
Nationality: Canadian
Born: 1954
Biography
P75
PATRICK KRON
Member
Date appointed: 2017
Nationality: French
Born: 1953
Biography
P75
GÉRARD LAMARCHE
Member
Date appointed: 2015
Nationality: Belgian
Born: 1961
Biography
P75
LAFARGEHOLCIMCORPORATE GOVERNANCE 73
ADRIAN LOADER
Member
Date appointed: 2006
Nationality: British
Born: 1948
Biography
P76
JÜRG OLEAS
Member
Date appointed: 2014 / 2016
Nationality: Swiss
Born: 1957
Biography
P76
NASSEF SAWIRIS
Member
Date appointed: 2015
Nationality: Egyptian
Born: 1961
Biography
P77
THOMAS SCHMIDHEINY
Member
Date appointed: 1978
Nationality: Swiss
Born: 1945
Biography
P77
HANNE BIRGITTE BREINBJERG
SØRENSEN
Member
Date appointed: 2013
Nationality: Danish
Born: 1965
Biography
P77
DIETER SPÄLTI
Member
Date appointed: 2003
Nationality: Swiss
Born: 1961
Biography
P77
LAFARGEHOLCIM ANNUAL REPORT 2017 74
BEAT HESS
Chairman
Beat Hess is Chairman of the Board of
Directors of LafargeHolcim Ltd. He was
elected to the Board of Directors of
LafargeHolcim Ltd (then “Holcim Ltd”) in
2010. He holds a doctorate in law and is
admitted to the bar in Switzerland. From
1977 to 2003, he was initially Legal Counsel
and subsequently General Counsel for the
ABB Group. From 2004 until the end of 2010,
he was Legal Director and a Member of the
Executive Committee of the Royal Dutch
Shell Group, London and The Hague. His
other mandates include that he is a Member
of the Board of Directors, a Member of the
Chairman’s and Corporate Governance
Committee, and Chairman of the
Compensation Committee of Nestlé S.A.,
Vevey, Switzerland, as well as Vice-Chairman
and Member of the Nomination and
Compensation Committee of the Board
of Directors of Sonova Holding AG,
Stäfa, Switzerland.
OSCAR FANJUL
Vice-Chairman
Oscar Fanjul is Vice-Chairman of the Board
of Directors and a Member of the Strategy
and of the Nomination, Compensation and
Governance Committees of
LafargeHolcim Ltd. He was elected to the
Board of Directors of LafargeHolcim Ltd in
2015. Oscar Fanjul holds a PhD in Economics.
He was Vice-Chairman of the Board of
Directors of Lafarge S.A. He began his career
working for the industrial holding INI,
Madrid, Spain. He was Chairman founder
and CEO of Repsol. He has also been
Chairman of Hidroeléctrica del Cantábrico,
Oviedo, Spain and of Deoleo S.A., Madrid,
Spain. Oscar Fanjul is Vice-Chairman of
Omega Capital, Madrid, Spain and his other
mandates include that he is a Member of the
Boards of Marsh & McLennan Companies,
New York NY, USA and Ferrovial S.A., Madrid,
Spain. He has also been a Board Member of
the London Stock Exchange, Unilever,
London/Rotterdam, UK/Netherlands, Areva,
France, and BBVA, Spain.
BERTRAND COLLOMB
Member
Bertrand Collomb is a Member of the Board
of Directors and a Member of the Finance &
Audit Committee of LafargeHolcim Ltd. He
was elected to the Board of Directors of
LafargeHolcim Ltd in 2015. A graduate of the
École Polytechnique and the École des Mines
in Paris, France, he also holds a French law
degree and a PhD in Management from the
University of Texas, USA. Bertrand Collomb is
Honorary Chairman of Lafarge S.A., served
as Chairman and Chief Executive Officer of
Lafarge S.A. from 1989 to 2003, as Chairman
from 2003 to 2007, and as Director until
2012. He joined Lafarge in 1975 and held
various positions, including Chief Executive
Officer of Lafarge in North America from
1985 to 1988. He founded the Center for
Management Research at the École
Polytechnique in Paris, France. He is also a
founding member of the World Business
Council for Sustainable Development
(WBCSD), of which he was Chairman
from 2004 to 2005. He was a Member of the
Board of Directors of Total S.A., Courbevoie,
France, of DuPont, Wilmington, Delaware,
USA and of ATCO Group, Calgary, Canada
until May 2015. His other mandates include
that he is Member of the “Institut de France”
and was Chairman of the “Académie des
sciences morales et politiques” in 2013.
LAFARGEHOLCIMCORPORATE GOVERNANCE 75
PAUL DESMARAIS, JR.
Member
Paul Desmarais, Jr. is a Member of the Board
of Directors and a Member of the
Nomination, Compensation & Governance
Committee of LafargeHolcim Ltd. He was
elected to the Board of Directors of
LafargeHolcim Ltd in 2015. He holds
a Bachelor of Commerce from McGill
University, Montréal, Canada, and an MBA
from the European Institute of Business
Administration (INSEAD), Paris, France. He
was a Member of the Board of Directors of
Lafarge S.A. from 2008 to 2015 and was also
a Member of its Strategy, Investment and
Sustainable Development Committee until
2015. Paul Desmarais, Jr. is Chairman and
Co-Chief Executive Officer of Power
Corporation of Canada and Executive Co-
Chairman of Power Financial Corporation,
both located in Montréal, Canada. He joined
Power Corporation in 1981 and assumed the
position of Vice-President the following year.
In 1984, he led the creation of Power
Financial to consolidate Power Corporation’s
major financial holdings, as well as Pargesa
Holding SA, Geneva, Switzerland, under a
single corporate entity. Paul Desmarais, Jr.
served as Vice-President of Power Financial
from 1984 to 1986, as President and Chief
Operating Officer from 1986 to 1989, as
Executive Vice-Chairman from 1989 to 1990,
as Executive Chairman from 1990 to 2005, as
Chairman of the Executive Committee from
2006 to 2008 and as Executive Co-Chairman
from 2008 until today. He also served as
Vice- Chairman of Power Corporation from
1991 to 1996. He was named Chairman and
Co-CEO of Power Corporation in 1996. From
1982 to 1990, he was a member of the
Management Committee of Pargesa
Holding SA and in 1991, Executive Vice
Chairman and then Executive Chairman of
the Management Committee. In 2003, he
was appointed Co-Chief Executive Officer
and in 2013 named Chairman of the Board.
His other mandates include sitting on the
Board of Directors of several Power group
companies, including Power Corporation of
Canada, Power Financial Corporation, Great-
West Lifeco Inc., Winnipeg, Canada, and its
major subsidiaries, IGM Financial Inc.,
Winnipeg, Canada, and its major
subsidiaries, and several companies within
the Pargesa Group, including Pargesa
Holding SA, Geneva, Switzerland, Groupe
Bruxelles Lambert, Brussels, Belgium, and
SGS SA, Geneva, Switzerland.
Chairman of the executive board of Imerys.
A director of Alstom since July 2001, he was
appointed CEO of Alstom in January 2003,
and then Chairman and CEO in March 2003,
a position he held until January 2016, when
he created PKC&I (Patrick Kron - Conseils &
Investissements). In November 2016, he was
appointed Chairman of Truffle Capital, Paris,
France. His other mandates include that he is
a Member of the Board of Directors of Sanofi
S.A., Paris, France, of Halcor Metal Works
S.A., Athens, Greece, and of Bouygues,
Paris, France.
PATRICK KRON
Member
GÉRARD LAMARCHE
Member
Patrick Kron is a Member of the Board of
Directors and a Member of the Strategy and
of the Health, Safety & Sustainability
Committees of LafargeHolcim Ltd. He was
elected to the Board of Directors of
LafargeHolcim Ltd in 2017. Patrick Kron is a
graduate of the École Polytechnique and the
Paris École des Mines, France. He began his
career at the French Industry Ministry in
1979 before joining the Pechiney group in
1984, where he held senior operational
responsibilities in one of the group’s largest
factories in Greece before becoming
manager of Pechiney’s Greek subsidiary in
1988. Between 1988 and 1993, Patrick Kron
held various operational and financial
positions, first managing a group of activities
in aluminum processing, before being
appointed Chairman and CEO of Pechiney
Électrométallurgie. In 1993, he became
member of the executive committee of the
Pechiney group and was Chairman and CEO
of Carbone Lorraine from 1993 to 1997.
From 1995 to 1997, he ran Pechiney’s Food
and Health Care Packaging Sector and held
the position of COO of the American National
Can Company in Chicago (United States).
From 1998 to 2002, Patrick Kron was
Gérard Lamarche is a Member of the Board
of Directors, the Chairman of the Finance &
Audit Committee and Member of the
Strategy Committee of LafargeHolcim Ltd. He
was elected to the Board of Directors of
LafargeHolcim Ltd in 2015. He is a graduate
in Economics Sciences from the University of
Louvain-la-Neuve, Belgium, and the INSEAD
Business School, Fontaine bleau, France
(Advanced Management Program for Suez
Group Executives). He also trained at
Wharton International Forum in 1998-1999
(Global Leadership Series). He was a Member
of the Board of Directors of Lafarge S.A.
between 2012 and 2016 and also a Member
of the Audit Committee and a Member of the
Strategy, Investment and Sustainable
Development Committee. Gérard Lamarche
is Co-CEO of Groupe Bruxelles Lambert,
Brussels, Belgium. He began his career with
Deloitte Haskins & Sells, Brussels, Belgium,
in 1983 and was appointed as an M&A
consultant in the Netherlands in 1987. In
1988, he joined Société Générale de
Belgique, Brussels, Belgium as Investment
Manager. He was promoted to Controller
in 1989 before becoming Advisor to the
Strategy and Planning Department from
LAFARGEHOLCIM ANNUAL REPORT 2017 76
1992 to 1995. He joined Compagnie
Financière de Suez as Special Advisor to the
Chairman and Secretary to the Suez
Executive Committee, Paris, France, and was
later appointed Senior Vice President in
charge of Planning, Control and Accounting.
In 2000, he joined NALCO (the US subsidiary
of the Suez Group based in Naperville Il,
USA) as General Managing Director. He was
appointed CFO of the Suez Group in 2003.
Gérard Lamarche is Director of Total SA,
Paris, France, of SGS, Geneva, Switzerland,
and of Umicore, Brussels, Belgium.
the year. In January 2008, he joined the
Board of Directors of Candax Energy Inc.,
Toronto, Canada and was Chairman until
June 2010. He then served as Chairman of
Compton Petroleum, Calgary, Canada until
August 2012, and as Chairman of the Board
of Directors of Oracle Coalfields PLC, London,
United Kingdom until April 2016. His other
mandates include serving as a Member of
the Board of Directors of Sherritt
International Corporation, Toronto, Canada,
and as a Member of the Board of Alderon
Iron Ore, Montreal, Canada.
ADRIAN LOADER
Member
JÜRG OLEAS
Member
Adrian Loader is a Member of the Board of
Directors, Chairman of the Health, Safety &
Sustainability Committee and a Member of
the Nomination, Compensation &
Governance Committee of
LafargeHolcim Ltd. He was elected to the
Board of Directors of LafargeHolcim Ltd
(then “Holcim Ltd”) in 2006. Adrian Loader
holds an Honours Degree in History from
Cambridge University and is a fellow of the
Chartered Institute of Personnel and
Development. He was Chairman of the
Nomination & Compensation Committee of
Holcim Ltd from 2014 to 2015. He began his
professional career at Bowater in 1969 and
joined Shell the following year. Until 1998, he
held various management positions in Africa,
Latin America, Asia, and Europe and at the
corporate level. In 1998, he was appointed
President of Shell Europe Oil Products and in
2004 became Director for strategy, planning,
sustainable development, and external
affairs for the Shell Group. In 2005 he
became Director of the Strategy and
Business Development Directorate of Royal
Dutch Shell, Den Haag, Netherlands, he
became President and CEO of Shell Canada
in 2007 and retired from Shell at the end of
Jürg Oleas is a Member of the Board of
Directors and a Member of the Finance &
Audit Committee of LafargeHolcim Ltd. He
was elected to the Board of Directors of
LafargeHolcim Ltd (then “Holcim Ltd”) in
2014, retired from the Holcim Ltd Board in
the context of the LafargeHolcim Ltd merger
closing effective 10 July 2015 and was re-
elected at the AGM 2016. He holds an MSc
from the mechanical engineering from the
Swiss Federal Institute of Technology (ETH) in
Zurich, Switzerland. He is CEO of GEA Group
Aktiengesellschaft, a Düsseldorf-based
mechanical engineering company listed on
Germany’s MDAX stock index. Jürg Oleas has
been a member of the GEA Group Executive
Board since joining the company in
May 2001. Initially responsible for the
Group’s chemical activities, he was appointed
CEO of GEA Group on November 1, 2004.
Before joining the GEA Group, he spent
nearly 20 years with ABB and the Alstom
Group, where he held several management
positions. He is Chairman of the Board of LL
Plant Engineering AG, Ratingen, Germany,
and a Member of the Board and Chairman of
the Strategy Committee of RUAG Holding AG,
Bern, Switzerland.
LAFARGEHOLCIMCORPORATE GOVERNANCE 77
NASSEF SAWIRIS
Member
Nassef Sawiris is a Member of the Board of
Directors and Chairman of the Nomination,
Compensation & Governance Committee of
LafargeHolcim Ltd. He was elected to the
Board of Directors of LafargeHolcim Ltd in
2015. He holds a Bachelor of Economics from
the University of Chicago. Nassef Sawiris was
a Member of the Board of Directors of
Lafarge S.A. from 2008 to 2015 and was a
Member of equivalent Committees. Nassef
Sawiris is the Chief Executive Officer of OCI
N.V. a role previously held at Orascom
Construction Industries (OCI S.A.E.) where he
was additionally appointed Chairman in
2009. Orascom Construction Industries SA,
which he joined in 1982, was the predecessor
company to OCI N.V. He also serves on the
Board of OCI Partners LP. His other
appointments include that he is a Member of
the Cleveland Clinic’s International
Leadership Board Executive Committee since
2011, a Member of the University of
Chicago’s Board of Trustees since 2013, a
Member of the International Advisory Board
of JP Morgan since 2017, and a Member of
the Board of Adidas AG since 2016.
THOMAS SCHMIDHEINY
Member
Thomas Schmidheiny is a Member of the
Board of Directors and a Member of the
Health, Safety & Sustainability Committee of
LafargeHolcim Ltd. He was elected to the
Board of Directors of LafargeHolcim Ltd
(then “Holderbank Financière Glaris Ltd”,
later “Holcim Ltd”) in 1978. He studied
mecha nical engineering at the ETH Zurich
and complemented his studies with an MBA
from the IMD Lausanne in 1972. In 1999, he
was awarded an honorary doctorate for his
services in the field of sustainable
development from Tufts University,
Massachusetts. He began his career in 1970
as Technical Director with Cementos Apasco
and in 1976 was appointed to the Executive
Committee of Holcim Ltd, where he held the
office of Chairman from 1978 until 2001. He
was Chairman of the Board of Directors of
Holcim Ltd from 1984 until 2003 and a
Member of the Nomination & Compensation
Committee of Holcim Ltd until 2015. His
other mandates include that he is the
Chairman of the Board of Directors of
Spectrum Value Management Ltd and of
Schweizerische Cement-Industrie-
Aktiengesellschaft, both in Rapperswil-Jona,
Switzerland and a Member of the Board of
Abraaj Holdings, Dubai, United Arab
Emirates. He also serves as a Member of the
Board of Trustees of the Fletcher School of
Law and Diplomacy, Cambridge,
Massachusetts, USA.
HANNE BIRGITTE
BREINBJERG SØRENSEN
Member
Hanne Birgitte Breinbjerg Sørensen is a
Member of the Board of Directors and a
Member of the Health, Safety &
Sustainability and of the Nomination,
Compensation & Governance Committees of
LafargeHolcim Ltd. She was elected to the
Board of Directors of LafargeHolcim Ltd
(then “Holcim Ltd”) in 2013. Hanne Birgitte
Breinbjerg Sørensen holds an MSc in
Economics and Management from the
University of Aarhus. She was a Member of
the Nomination & Compensation Committee
of Holcim Ltd from 2014 to 2015 and has
been re-elected in 2016. Until the end of
2013 she was the Chief Executive Officer of
Maersk Tankers, Copenhagen and has been
Chief Executive Officer of Damco, The Hague,
Netherlands, another company of the A.P.
Møller-Maersk Group, Copenhagen,
Denmark, from 2014 until December 31,
2016. Her other mandates include that she is
a Member of the Board of Ferrovial S.A.,
Madrid, Spain, of Delhivery Pvt. Ltd.,
Gurgaon, India, and of Tata Motors Ltd,
Mumbai, India. She was a Member of the
Board of Koninklijke Vopak N.V., Rotterdam,
The Netherlands, until February 16, 2018.
DIETER SPÄLTI
Member
Dieter Spälti is a Member of the Board of
Directors, the Chairman of the Strategy
Committee and Member of the Finance &
Audit Committee of LafargeHolcim Ltd. He
was elected to the Board of Directors of
LafargeHolcim Ltd (then “Holcim Ltd”) in
2003. He studied law at the University of
Zurich, Switzerland, where he obtained a
doctorate in 1989. He was a Member of the
Audit Committee from 2010 to 2015 and of
the Governance & Strategy Committee of
Holcim Ltd from 2013 to 2015. Dieter Spälti
began his professional career as a Credit
Officer with Bank of New York in New York
NY, USA, before taking up an appointment as
Chief Financial Officer of Tyrolit (Swarovski
Group), based in Innsbruck, Austria and
Zurich, Switzerland in 1991. From 1993 until
2001, he was with McKinsey & Company,
ultimately as a partner, and was involved in
numerous projects with industrial, financial,
and technology firms in Europe, the USA,
and Southeast Asia. In October 2002, he
joined Rapperswil-Jona, Switzerland-based
Spectrum Value Management Ltd as a
partner; the firm administers the industrial
and private investments of the family of
Thomas Schmidheiny. Since 2006, he has
been Chief Executive Officer and Member
of the Board of Directors of Spectrum Value
Management Ltd. His other mandates
include a membership in the Board
of Directors of Schweizerische Cement-
Industrie-Aktiengesellschaft,
Rapperswil-Jona, Switzerland.
LAFARGEHOLCIM ANNUAL REPORT 2017 78
E X ECU T I V E COMM I T T E E 1
JAN JENISCH
CEO
Date appointed: 2017
Nationality: German
Born: 1966
Biography
P80
URS BLEISCH
Member
Date appointed: 2014
Nationality: Swiss
Born: 1960
Biography
P81
MARCEL COBUZ
Member
Date appointed: 2018
Nationality: Romanian
Born: 1971
Biography
P83
MARTIN KRIEGNER
Member
Date appointed: 2016
Nationality: Austrian
Born: 1961
Biography
P80
1 As of March 2, 2018
LAFARGEHOLCIMCORPORATE GOVERNANCE 79
CAROLINE LUSCOMBE
Member
Date appointed: 2016
Nationality: British
Born: 1960
Biography
P81
OLIVER OSSWALD
Member
Date appointed: 2016
Nationality: Swiss
Born: 1971
Biography
P81
GÉRALDINE PICAUD
Member
Date appointed: 2018
Nationality: French
Born: 1970
Biography
P83
SAÂD SEBBAR
Member
Date appointed: 2015
Nationality: Moroccan and French
Born: 1965
Biography
P82
RENÉ THIBAULT
Member
Date appointed: 2018
Nationality: Canadian
Born: 1966
Biography
P83
LAFARGEHOLCIM ANNUAL REPORT 2017 80
JAN JENISCH
CEO
MARTIN KRIEGNER
Member
Jan jenisch has been CEO of LafargeHolcim
since September 1, 2017. He has studied in
Switzerland and the US and is a graduate of
the University Fribourg, Switzerland with an
MBA (lic. rer. pol.). From 2012 Jan Jenisch
served as Chief Executive Officer of Sika AG
which develops and manufactures systems
and products for the building materials and
automotive sector. Under his leadership,
Sika expanded into new markets and set new
standards of performance in sales and
profitability. Jan Jenisch joined Sika in 1996
and went on to work in various management
functions and countries. He was appointed
to the Management Board in 2004 as Head
of the Industry Division and he served as
President Asia Pacific from 2007 to 2012. He
is a non-executive Director of the stock-listed
Schweiter Technologies AG and of the
privately held Glas Troesch.
Martin Kriegner has been a Member of the
Executive Committee of LafargeHolcim Ltd
since August 2016 and is Region Head for
Asia. He is a graduate from the Vienna
University with a Doctorate in Law and he
obtained an MBA at the University of
Economics in Vienna. Martin Kriegner joined
the Group in 1990 and became the CEO of
Lafarge Perlmooser AG, Austria in 1998. He
moved to India as CEO of the Lafarge
operations in 2002 and later served as
Regional President Cement for Asia, based in
Kuala Lumpur. In 2012, he was appointed
CEO of Lafarge India for the Cement, RMX
and Aggregates. In July 2015 he became Area
Manager Central Europe for LafargeHolcim
operations and was appointed Head of India
in 2016. Effective January 2018, Martin
Kriegner is Region Head Asia, including
Australia and New Zealand.
RON WIRAHADIRAKSA
CFO
GÉRARD KUPERFARB
Member
Ron Wirahadiraksa has been CFO of
LafargeHolcim Ltd since December 1, 2015.
He graduated with a Doctoral in Business
Economics from the Free University of
Amsterdam, the Netherlands. He also
graduated as a Certified Registered Controller
from the Free University of Amsterdam. Ron
Wirahadiraksa joined the Philips group in
1987. He became Chief Financial Officer at
LG. Philips LCD in South Korea in 1999,
during which time he shared operating
leadership with the Korean CEO. He also led
the 2004 initial public offering of LG. Philips
LCD on the Korean and New York Stock
Exchanges and supported the significant
growth and market leadership of the
company. He became Chief Financial Officer
at Philips Healthcare in 2008 and in 2011 he
took over as CFO for the Philips Group.
Gérard Kuperfarb has been a Member of the
Executive Committee of LafargeHolcim Ltd
since July 10, 2015 and is responsible for
Growth and Innovation. He graduated from
the École des mines de Nancy (France). He
also holds a Master’s degree in Materials
Science from the École des mines de Paris
and an MBA from the École des Hautes
Etudes Commerciales (HEC). Gérard
Kuperfarb began his career in 1983 as an
Engineer at the Centre de Mise en Forme des
Matériaux (CEMEF) of the École des mines de
Paris, before joining the Composite Materials
Division at Ciba group in 1986, where he held
sales and marketing positions. In 1989, he
joined a strategy consulting firm in Brussels
and Paris. He joined Lafarge in 1992 as
Marketing Director for the Refractories
business and then became Vice-President for
LAFARGEHOLCIMCORPORATE GOVERNANCE 81
Strategy at Lafarge Specialty Materials. In
1996, he became Vice-President of Ready-
Mix Concrete Strategy in Paris. In 1998, he
was appointed Vice-President/General
Manager for the Aggregates & Concrete
Business in southwest Ontario (Canada)
before heading the Performance group at
Lafarge Construction Materials in North
America in 2001. He joined the Aggregates &
Concrete Division in Paris as Senior Vice-
President of Performance in 2002. From 2005
to August 2007, he was President of the
Aggregates & Concrete Business for eastern
Canada. On September 1, 2007, he became
Executive Vice- President, Co-President of
the Aggregates & Concrete Business, and a
member of the Executive Committee of the
Lafarge Group and since January 1, 2012
executive Vice- President Innovation of
Lafarge.
URS BLEISCH
Member
Urs Bleisch has been a Member of the
Executive Committee of LafargeHolcim Ltd
(then “Holcim Ltd”) since September 30, 2014
and is responsible for Growth &
Performance. He holds a Master’s in
Business and Economics from the University
of Basel. Urs Bleisch joined Holcim in 1994 as
Head IT of Holcim Switzerland. From 2000
onward, he assumed Group-wide
responsibility for Information Technology
and was instrumental in the development
and implementation of the global IT strategy
of the Holcim Group. Since 2011, he has
managed the Information and Knowledge
Management function at Holcim Group
Support Ltd. In 2012 he was appointed CEO
of Holcim Group Services Ltd and of Holcim
Technology Ltd. Since July 2015, Urs Bleisch
has led the global functions of Cement
Industrial Performance, Project Management
& Engineering, Logistics, Procurement,
Waste Management / Geocycle, Aggregates
and Performance Navigation. In January
2018 he took on additional responsibility for
the commercial area, development of
innovative products and services as well as
the capabilities to bring these solutions to
customers around the world.
PASCAL CASANOVA
Member
Pascal Casanova has been a Member of the
Executive Committee of LafargeHolcim Ltd
since July 10, 2015 and is responsible for
North America and Mexico. He is a graduate
of the École Polythechnique and holds a PhD
in Materials and Structures from the École
Nationale des Ponts et Chassées. Pascal
Casanova was hired in 1999 as Technical
Director for Lafarge and was subsequently
appointed Head of R&D and Industrial
Performance of the Roofing activity based in
the UK. In 2005, he directed the international
activity of Roofing Components
headquartered in Oberursel, Germany,
ensuring the development of production and
international sales, particularly in Malaysia,
USA, South Africa, Brazil, and Western/
Eastern Europe. In 2008, he was appointed
Head of R&D of the Lafarge Group. In 2012
he was appointed Chief Executive Officer of
Lafarge France.
ROLAND KÖHLER
Member
1988 as Head of Finance and Administration
and transferred to Holcim Group Support Ltd
as a Management Consultant in 1994. From
1995 to 1998, he was Head of Corporate
Controlling and, from 1999 to end 2001,
Head of Business Risk Manage ment. Since
2002, he has headed Corporate Strategy &
Risk Management. Effective January 1, 2005,
Roland Köhler was promoted to Corporate
Functional Manager responsible for
Corporate Strategy & Risk Management. On
March 15, 2010, he was appointed Member
of the Executive Committee and CEO of
Holcim Group Support Ltd. Since
September 1, 2012 Roland Köhler has been
responsible for the Group region Europe.
CAROLINE LUSCOMBE
Member
Caroline Luscombe has been a Member of
the Executive Committee of LafargeHolcim
Ltd since July 2016 and is responsible for
human resources. She holds a Bachelor’s
degree in German from the University
College, London. Caroline Luscombe joined
LafargeHolcim from Syngenta where she was
Head of Human Resources since January
2010 and a member of the Executive
Committee. Prior to joining Syngenta,
Caroline held senior HR roles in the financial
and healthcare businesses of the GE Group,
and in the specialty chemical company,
Laporte plc.
Roland Köhler has been a Member of the
Executive Committee of LafargeHolcim Ltd
(then “Holcim Ltd”) since March 15, 2010 and
is responsible for Europe, Australia/New
Zealand and Trading. He is a graduate in
business administration from the University
of Zurich. Roland Köhler joined the building
materials group Hunziker, Switzerland, in
OLIVER OSSWALD
Member
Oliver Osswald has been a Member of the
Executive Committee of LafargeHolcim Ltd
since August 2016 and is responsible for
Central and South America. He is a graduate
from the Technische Hochschule in Ulm and
holds an Executive Education Degree from
LAFARGEHOLCIM ANNUAL REPORT 2017 82
the Harvard Business School. Oliver Osswald
joined Holcim Apasco in Mexico in 1995. He
has been responsible for a number of plants
in Switzerland and in Germany between
1999 and 2005. From 2005 to 2010, he held
management and marketing positions
in Holcim Switzerland. He was appointed
Commercial Director for Holcim Apasco in
Mexico in 2012 before being appointed
Country Head for Argentina in 2014.
SAÂD SEBBAR
Member
Saâd Sebbar has been a Member of
the Executive Committee of
LafargeHolcim Ltd since July 10, 2015 and is
responsible for Middle East Africa. He is an
aeronautics engineer and graduated from
the ESSEC Business School in Paris. Before
joining Lafarge, Saâd Sebbar worked as an
Investment Advisor and then as a
Management and Organization Consultant.
He joined Lafarge in 1997 as a Plant
Manager and subsequently held several
other positions in operations. In 2002, he
was appointed Managing Director of
Lafarge-Titan Egypt. From 2004 to 2008, he
held the position of Managing Director of
Herakles General Company in Greece, and
then became East Asia Regional President
with responsibility for South Korea, Japan,
Vietnam, and the Philippines. In 2012, he
was appointed Country Chief Executive
Officer for Lafarge Morocco.
LAFARGEHOLCIMCORPORATE GOVERNANCE 83
THE FOL LOWING EXECUTI VE COM MI T TEE MEMBERS
JOIN ED AFTER TH E END OF 2017
MARCEL COBUZ
Region Europe
Romanian and French national born in
1971, Marcel Cobuz became a member of
the Executive Committee in January 2018
and is responsible for the Europe region.
He studied Law and Global Economics
at University of Bucharest and has
completed Executive Education programs
at IMD and INSEAD.
Marcel Cobuz joined the company in 2000.
At LafargeHolcim, he has held various
operational roles in six different countries
during which time he established a
successful P&L track record. He has been
country CEO of Indonesia, Iraq and Morocco.
In his various country roles, Marcel has
delivered results notably by investing in
new offers in building and infrastructure,
constructing and operating new plants and
managing joint ventures and partnerships
in listed companies. In Group roles between
2012 and 2015, he was instrumental in
leading organisational change in marketing
across Lafarge before heading up the Global
Pre-Merger Integration Project between
Lafarge and Holcim.
GÉRALDINE PICAUD
Chief Financial Officer
French national born in 1970, Géraldine
Picaud became Chief Financial Officer for
LafargeHolcim in January 2018. She holds
a Master Degree in Business Administration
from Reims Business School.
Géraldine Picaud joined the Group from CAC
40-listed ophthalmic optics company Essilor
International, where she was Group CFO.
Prior to that she was CFO of Volcafe
Holdings, the Switzerland-based coffee
business of ED&F Man. Géraldine initially
joined ED&F Man in London in 2007 as Head
of Corporate Finance in charge of M&A. This
followed 13 years as CFO at international
specialty chemicals group, Safic Alcan as
Head of Business Analysis and then as CFO.
Géraldine Picaud started her career with
audit firm Arthur Andersen.
RENÉ THIBAULT
Region North America
Canadian national born in 1966,
René Thibault became a member of the
Executive Committee in January 2018 and is
responsible for the North America region.
He is a graduate of Queen’s University in
civil engineering and has completed the
Advanced Management Program at Harvard
Business School.
René Thibault joined the company in 1989
and has built a strong commercial track
record, with a particular expertise in
downstream offerings to customers.
After progressing through leadership roles
in Canada, in 2007 René served as Vice
President, Strategy for Europe, Middle East
and Africa based in France.
Returning to Canada in 2009, he led the
Western Canada, aggregates and concrete
businesses. In 2012, adding the cement
business to his control, he was appointed
CEO Western Canada.
LAFARGEHOLCIM ANNUAL REPORT 2017 84
COMPE N S AT ION R E P OR T
Director and executive compensation is designed to reinforce
the LafargeHolcim strategy by helping the company attract,
motivate and retain talent, while aligning their interests
with those of shareholders.
TOP IC
Letter from the
Compensation Committee
Chairman to shareholders
Compensation system
of the Board of Directors and
the Executive Committee
Compensation for 2017 awarded
to the Board of Directors and
the Executive Committee
Shareholdings of
the Board of Directors and
the Executive Committee
Compensation governance
Outlook for 2018
85
87
93
97
101
104
The executive compensation structure
provides balance by rewarding short-term
and long-term performance, by combining
absolute and relative as well as financial
and non-financial metrics in measuring
performance, and by delivering
compensation through a mix of cash and
equity. Executives are expected to build their
LafargeHolcim share ownership over time, to
provide further alignment with shareholders.
The compensation report provides detailed
information on the compensation programs
at LafargeHolcim, on the governance
framework around compensation and on the
compensation awarded to the members of
the Board of Directors and the Executive
Committee in 2017. It is written in
accordance with the Ordinance against
Excessive Compensation in Listed Stock
Corporations, the standard relating to
information on Corporate Governance of the
SIX Swiss Exchange and the principles of the
Swiss Code of Best Practice for Corporate
Governance of economiesuisse.
LAFARGEHOLCIMCOMPENSATION REPORT Nassef Sawiris
Dear shareholders,
I am pleased to share with you
LafargeHolcim’s Compensation Report for
the financial year 2017, which has been
prepared in accordance with applicable laws,
rules and regulations.
As the leading global construction
materials and solutions company,
LafargeHolcim aims to be an employer of
choice for our employees. This is supported
by our compensation framework which is
designed to attract, motivate and
retain the qualified talent needed to
succeed globally while providing excellent
returns to our shareholders.
2017 has been a year with solid like-for-like
results and positive contributions from most
regions. Jan Jenisch was appointed as the
new CEO as of 1 September 2017. He
succeeds Eric Olsen who left in July 2017,
with Beat Hess carrying out the duties of
interim CEO and Chairman during the
transition period.
In 2017, the Nomination, Compensation and
Governance Committee (“NCGC”) conducted
a thorough review of the compensation
programs to ensure their alignment to the
new business strategy and decided to
implement the following changes in the
incentive programs in 2018:
– To further focus Executive Committee
members on the delivery of financial
performance objectives, the proportion
of the annual incentive that relates to
financial performance will be increased
to 85 percent of the total incentive
opportunity. A new relative performance
measure which compares the annual
financial performance of LafargeHolcim
to a sector peer group will be introduced
with a weighting of 30 percent of the total
incentive opportunity. The remaining
55 percent will continue to be absolute
financial objectives.
– 15 percent of the annual incentive will be
linked to a Health & Safety score. This score
will reflect improvements in the lost-time
injury frequency rate
– The 2018 grant under the long-term
incentive program will consist of
performance share awards conditional
upon earnings per share (EPS) before
impairment and divestments and return on
invested capital (ROIC) of the Group
– In addition to this, due to the exceptional
changes to the Executive team, and to
support the launch of the new growth
strategy, a performance share option grant
will be made to the Executive Committee
members in 2018.
You will find further details about these
changes as well as information on the NCGC
activities and on our remuneration systems
in this Compensation Report. The report will
be submitted to a consultative shareholder
vote at the Annual General Meeting 2018.
Looking ahead, we will continue to regularly
assess our remuneration plans to ensure
that they are fulfilling their purpose. We trust
that you will find this report informative.
Yours sincerely,
Nassef Sawiris
Chairman of the Nomination,
Compensation and Governance Committee
LAFARGEHOLCIM ANNUAL REPORT 201785 86
COMPE N S AT ION PR I NC I PLE S
20 17 COMPE N SAT ION OVERV I EW
B OARD OF DI RECTORS
ELEMENT
P UR P OSE
ST RU CTU RE
DRIVERS
PERFORMA NCE
MEA SU RES
Annual retainer
Pay for the function on
the Board of Directors
Committee fees
Pay for additional
contribution and time
commitment
Expense allowance
Cover Board members’
expenses incurred
EXECUTIVE CO MMIT TEE
– Annual retainer in cash
and 5-year blocked
shares
– Differentiation between
membership and
chairmanship
– Paid in cash
– Paid in cash
– Role
– Responsibilities
– Time commitment
– Experience required
– Role
– Responsibilities
– Time commitment
– Experience required
- Buisness expenses
incured
None
None
None
ELEMENT
P UR P OSE
ST RU CTU RE
DRIVERS
PERFORMA NCE
MEA SU RES
Base salary
Attract and retain
Fixed amount paid
monthly in cash
Pensions
Attract and retain
Pension and insurances
Benefits
Attract and retain, protect
against risks
– Perquisites
– Car or allowance
– Relocation benefits
– Role
– Responsibilities
– Experience
– Market value
– Market practice
– Role
– Market practice
– Role
Annual Incentive
Reward for short-term
performance
Variable amount paid half
in cash and half in shares
deferred for 3 years
– Annual financial and
non-financial
performance
– Recurring EBITDA
– Free Cash Flow
– Individual performance
Long-Term Incentive
(LTI)
Reward long-term
performance
Align with shareholders
Retain
Performance shares
delivered after 3 year
vesting period
– Long-term financial
business performance
over 3 years
– Earnings per share (EPS)
before impairment and
divestments
– Return on invested
capital (ROIC)
– Relative Total
Shareholder Return (TSR)
LAFARGEHOLCIMCOMPENSATION REPORT COMPENSATION SYSTEM
Board of Directors
To guarantee their independence in exercising their supervisory duties, the members of the
Board of Directors receive fixed compensation only. Part of the compensation is paid in
shares in order to strengthen alignment with shareholders’ interests.
The Board compensation consists of an annual retainer as Chairman, Vice-Chairman or
member of the Board of Directors and additional fees for assignments to committees of the
Board either as chair or member. The annual retainer is paid partially in cash and partially in
shares, which are blocked from sale and pledging for a period of five years. The committee
fees are paid in cash. Additionally, a lump sum expense allowance is paid in cash. The
Chairman of the Board of Directors is also entitled to a secretarial allowance. The members of
the Board of Directors receive no additional reimbursements of business expenses beyond
travel costs from abroad. The members of the Board do not participate in LafargeHolcim’s
employee benefit plans.
In exceptional circumstances, additional fees are payable to a Board member or Chairman
when an exceptional workload beyond the regular function on the Board has been required.
Cash compensation is paid quarterly for the Board members and monthly for the Chairman.
The shares are transferred in March of the term (year) of office.
COM P ENSATIO N MODE L OF THE BOARD OF DIR ECTOR S
ANNUAL RETAIN ER (GROS S P. A .)
Chairman of the Board of Directors 1
Vice-Chairman of the Board of Directors
Members of the Board of Directors
CA SH
COM PENSATIO N
IN CHF
SHARE-BASED
CO MPENSATIO N 2
IN CHF
EXPEN SE
AL LOWA NC E
IN CHF
SECRETARIAL
ALLOWANCE
IN C HF
725,000
200,000
100,000
725,000
200,000
100,000
10,000
10,000
10,000
60,000
COMMIT TEE FEES (GROSS P. A.)
Committee chair
Committee member
CA SH
COM PENSATIO N
IN CHF
125,000
40,000
1 The Chairman of the Board of Directors is not eligible for committee fees.
2 Converted into shares based on the average share price between 1 January 2018 and 15 February 2018.
LAFARGEHOLCIM ANNUAL REPORT 201787 88
Executive Committee
Executive Committee compensation is designed to reinforce the LafargeHolcim strategy, by
helping the company attract, motivate and retain talent, while aligning their interests with
those of shareholders.
The executive compensation structure balances short-term and long-term performance,
combines absolute and relative performance, and financial and non-financial metrics in
measuring performance, and delivers compensation through a mix of cash and company
shares. Executives are expected to build their LafargeHolcim share ownership over time, to
provide further alignment with shareholders.
The compensation for members of the Executive Committee includes the following elements:
– Fixed base salary
– Pensions and benefits
– Variable compensation: annual and long-term incentives
Base salaries
Base salaries of Executive Committee members are reviewed annually, with the objective to
provide total compensation packages which are broadly competitive against companies of
the Swiss Market Index (SMI).
Salaries for Executive Committee members are set taking into account market practice for
the relevant role, and internal consistency. In 2017, a number of new executives joined
the Executive Committee, and the same principles were applied in setting their salary levels.
LAFARGEHOLCIMCOMPENSATION REPORT Pension
Members of the Executive Committee participate in the benefits plans available in the country
of their employment contract. Benefits consist mainly of retirement, insurance and
healthcare plans that are designed to provide a reasonable level of protection for the
employees and their dependents in respect to the risk of retirement, disability, death and
health. The members of the Executive Committee with a Swiss employment contract
participate in LafargeHolcim’s defined benefit pension scheme applicable to Swiss-based
senior management, which is set up to achieve, at age 62 and assuming 10 years of service in
senior management and 20 years of service with the Group, an amount of 40 percent of the
average of the last 3 years’ base salaries, inclusive of all other pension incomes participants
may benefit from. Early or deferred retirement pensions are adjusted based on actuarial
calculations. LafargeHolcim’s pension funds exceed the legal requirements of the Swiss
Federal Law on occupational Retirement, Survivors and Disability Pension Plans (BVG).
Members of the Executive Committee under foreign employment contracts are insured
commensurately with market conditions and with their position. Each plan varies in line with
the local competitive and legal environment and is, as a minimum, in accordance with the
legal requirements of the respective country.
Benefits and perquisites
Members of the Executive Committee may receive certain executive perquisites such as a
company car or transport allowances and other benefits in kind, in line with competitive
market practice in their country of contract. Executives who are relocating may also be
provided with housing, schooling and travel benefits, in line with the LafargeHolcim
International Mobility policy. The monetary value of these other elements of compensation
is evaluated at fair value and is included in the disclosure in the compensation tables.
LAFARGEHOLCIM ANNUAL REPORT 201789 90
Annual incentives
The annual incentive, which is paid half in cash and half in shares deferred for three years,
rewards financial achievements at Group level (and at regional level for Executive Committee
members as appropriate), as well as individual performance over a time horizon of one year.
The annual incentive design applicable to the Executive Committee is summarized below:
ROLE
CE O
OTHER EX EC UT IVE COMM IT T EE M EM BERS
Maximum opportunity
250% of salary
125% of salary
METRICS
Purpose
Definition
Weighting
Payout formula
RE C URRING E BIT DA
FREE CA SH FLOW
IN DIVIDUAL PERFORMANCE
Measures Group or Regional
operational profitability
Measures the company’s ability
to generate cash
Captures each Executive Committee
member’s individual performance
Cash Flow from operating activities,
adjusted for net maintenance and
expansion Capex
Operating profit before
depreciation, amortization and
impairment of operating assets
and before restructuring,
litigation, implementation and
other non recurring costs, at
budget FX rate, adjusted for
changes in scope
30%
100%
60%
25%
0%
40%
100%
60%
25%
0%
90% of
Target
Target
110% of
Target
90% of
Target
Target
110% of
Target
Assessment of how each executive
has met a number of strategic,
operational or project-based
objectives (including health &
safety) and demonstrated behaviors
in line with company values
30%
NCGC and Chairman assessment
Long-term incentives
The performance share plan (PSP) is designed to retain talent and to provide forward-looking
incentives for sustained Group performance. Under the current plan rules, conditional share
awards and/or share options may be awarded, and vest after a three-year period.
LAFARGEHOLCIMCOMPENSATION REPORT It is the NCGC’s intention to normally grant conditional share awards annually, whilst share
options may be granted in exceptional circumstances. No option grant was awarded in 2017.
The long-term incentive design applicable to the Executive Committee is summarized below:
20 17 PERFO RMANCE SHARE AWARD
ROLE
CE O
OTHER EX EC UT IVE COMM IT T EE M EM BERS
Maximum opportunity
250% of salary
140% of salary
METRICS
Purpose
E ARN IN GS PE R SH ARE
BE F OR E IMPAIRME N T
AND DIVE ST ME N TS
ROIC
REL ATIVE TSR
Measures LafargeHolcim’s
profitability to investors
Measures the company’s ability
to use invested capital efficiently
Weighting
Performance period
30%
2019
40%
2019
Definition
Underlying, fully-diluted earnings
per share adjusted for after tax
gains and losses on disposals of
Group companies and
impairments of goodwill and
assets
Return on Invested Capital at year
end 2019, adjusted for changes in
scope between 2017 and 2019
Measures LafargeHolcim’s ability
to provide investors with better
returns compared to alternative
investments
30%
July 25, 2017 to July 24, 2020
Percentile-ranking of
LafargeHolcim’s 3-month average
TSR vs 17 sector peers: ACS,
Bouygues, Buzzi Unicem, Cemex,
CRH, HeidelbergCement, James
Hardie Industries, Kingspan, Martin
Marietta Materials, Mitsubishi
Materials, NCC, Saint-Gobain, Sika,
Skanska, Vicat, Vinci and Vulcan
Materials
Performance vesting
100%
75%
50%
25%
0%
100%
75%
50%
25%
0%
100%
75%
50%
25%
0%
Target
–4.6%
Target
Target
+15.7%
Target
–100bps
Target
Target
+100bps
Median
60th
percentile
75th
percentile
Absolute targets are not disclosed as they could give an unfair
competitive advantage to our competitors, but are in line with the
guidance given to investors and will be disclosed at vesting
LAFARGEHOLCIM ANNUAL REPORT 201791 92
The unvested performance share awards forfeit upon termination of employment, except
in the case of retirement, ill-health, disability, termination due to a change of control, or
at the discretion of the Nomination, Compensation and Governance Committee. In such
circumstances, unvested performance share awards are subject to a pro-rata vesting (for the
number of full months between grant date and termination date) at regular vesting date.
In the event of death, vesting is immediate and performance conditions are considered met.
For the avoidance of doubt, performance shares always lapse when termination is due to
resignation or gross misconduct.
Executive Share Ownership guidelines
To reflect the importance the NCGC places on aligning their interests with shareholders,
executives are required to hold LafargeHolcim shares, with a value of 300 percent of salary
for the CEO and 150 percent of salary for other Executive Committee members. Executives
are expected to retain at least 50 percent of vested shares (after statutory deductions) until
the required holding is met.
Employment contracts for the Executive Committee
The contracts of employment of the Executive Committee are concluded for an indefinite
period of time and may be terminated with one year’s notice. Contracts of employment
do not include severance compensation or change of control clauses except the vesting
provisions of long-term incentive (LTI) awards as described above.
In the case of one former Lafarge Executive Committee member, a contractual commitment
is payable in the event of termination by the company before December 31st 2017.
Retention awards
No payments were made in 2017 under a retention scheme (2016: CHF 2.0 million, merger
related). No further retention payments are due to any member of the Executive Committee.
LAFARGEHOLCIMCOMPENSATION REPORT COMPENSATION FOR FINANCIA L YEA R 2017
The tables in this section were audited according to Article 17 of the Ordinance against
Excessive Compensation in Listed Stock Corporations.
BOAR D OF DIRECTORS
SHARE-BASED
COMPENSATION
NAME
POSITIONS
AS PER 31
DECEMBER
CASH
COMPEN-
SATION CHF
NUMBER
VALUE CHF
OTHER
CHF
SUBTOTAL
CHF
SOCIAL
SECURITY
CHF
2017
TOTAL CHF
2016
TOTAL CHF
Beat Hess, Chairman
1,075,000 1
12,690
725,000
70,000
1,870,000
82,275
1,952,275
1,145,492
Oscar Fanjul 2
2
3
Bertrand Collomb
Philippe Dauman 3
Paul Desmarais, Jr.
Alexander Gut 3
Patrick Kron 4
Bruno Lafont 3
Gérard Lamarche
Adrian Loader
Jürg Oleas
Nassef Sawiris
Thomas Schmidheiny
Hanne B. Sørensen
1
1
1
1
2
2
2
2
3
4
3
4
4
4
Dieter Spälti
1
3
238,334
140,000
41,667
140,000
58,334
105,000
41,667
265,000
212,917
123,333
241,667
123,333
163,333
265,000
2,917
1,750
729
166,667
100,000
41,667
10,000
10,000
4,167
415,001
250,000
87,501
0
415,001
290,000
10,144
260,144
258,122
5,835
93,336
216,933
1,750
100,000
10,000
250,000
0
250,000
285,417
729
1,021
729
1,750
1,750
1,750
1,750
1,750
1,750
1,750
41,667
58,333
41’667
100,000
100,000
100,000
100,000
100,000
100,000
100,000
4,167
5,833
4,167
10,000
10,000
10,000
10,000
10,000
10,000
10,000
104,168
169,166
87,501
375,000
322,917
233,333
351,667
233,333
273,333
375,000
7,929
6,425
112,097
300,377
175,591
0
0
0
0
0
0
87,501
216,540
375,000
339,583
322,917
250,000
233,333
124,166
351,667
322,917
9,290
242,623
218,094
0
273,333
250,000
19,999
394,999
394,999
Total
3,234,585
34,565
1,975,001
188,334
5,397,920
141,897
5,539,817
4,612,640
Chairman of Committee 1 FAC: Finance & Audit Committee 2 NCGC: Nomination, Compensation and Governance Committee 3 SC: Strategy Committee
4 HSSC: Health, Safety & Sustainability Committee since May 3, 2017
1 Includes additional fee of CHF 350,000 for the additional time commitment to organize the CEO’s succession.
2 Vice-Chairman since May 3, 2017
3 Board-Member until May 3, 2017
4 Board-Member since May 3, 2017
LAFARGEHOLCIM ANNUAL REPORT 201793
94
Compensation for financial year 2017
In 2017, fifteen non-executive members of the Board of Directors received in total a
remuneration of CHF 5.5 million including mandatory Social Security payments (2016:
CHF 5.4 million when including CHF 0.8 million paid to one former Board Member having
left during 2016) of which CHF 3.2 million (2016: CHF 3.1 million) was paid in cash,
CHF 0.1 million (2016: CHF 0.1 million) in the form of social security contributions, and
CHF 2.0 million (2016: CHF 1.9 million) in shares. Other compensation paid totaled
CHF 0.2 million (2016: CHF 0.2 million). These amounts include an additional fee of
CHF 350,000 paid to the Chairman for the additional time commitment involved in organizing
the CEO succession.
At the Annual General Meeting 2016, shareholders approved a maximum aggregate amount
of compensation of CHF 5,400,000 for the Board of Directors for the term until the Annual
General Meeting 2017. The remuneration paid to the Board for this term was CHF 4,868,336
(excluding mandatory Social Security payments) and is therefore within the approved limits.
At the AGM 2017, shareholders approved an unchanged maximum aggregate amount of
compensation of CHF 5,400,000 for the Board of Directors for the term until the Annual
General Meeting 2018. The remuneration paid to the Board of Directors for this term is
anticipated to be approx. CHF 5.4 million. The final amount will be disclosed in the 2018
compensation report.
LAFARGEHOLCIMCOMPENSATION REPORT EXE CUTIVE COMMIT TE E
PERFORMANCE SHARES 4 OTHER SHARE AWARDS 5
EXECUTIVE
BASE
SALARY
CHF
OTHER
FIXED PAY
CHF 1
ANNUAL
BONUS CHF
NUMBER OF
SHARES
FAIR VALUE
AT GRANT
CHF
NUMBER OF
SHARES
FAIR VALUE
AT GRANT
CHF
PENSION
CONTRI-
BUTIONS
CHF
TOTAL
2017
CHF
TOTAL
2016 6
CHF
Eric Olsen
1,500,000
323,871 1,800,000 2
0
0
0
0
501,692
4,125,563
7,207,062
01.01.2017 to
15.07.2017
Jan Jenisch
01.09.2017 to
31.12.2017
Other Exco
01.01.2017 to
31.12.2017
533,332
8,667 1,120,000 3
70,422
1,971,112
89,784
4,861,804
278,062
8,772,977
0
7,312,047
1,590,048
1,646,258
173,171
4,847,056
0
0
3,971,649 19,367,058 29,732,002
Total
9,345,379
1,922,586
4,566,258
243,593
6,818,168
89,784
4,861,804
4,751,403 32,265,598 36,939,064
1 Includes the value of benefits in kind: car allowance and benefits for internationally mobile members (expatriates) such as housing, schooling and tax consulting
2 Amount paid on-target as per policy and according to contractual agreement in line with Swiss regulations
3 Bonus agreed at hire, paid on-target for the period September to December 2017 for the financial portion (70% of bonus opportunity) and based on effective performance for
the individual portion (30% of bonus opportunity). Also includes amount paid in respect of forfeited 2017 bonus from previous employer.
4 Performance shares granted under the long-term incentive plan, subject to a three-year performance-based vesting period
5 Other share awards are restricted share awards granted to Jan Jenisch at hire, compensating for share awards forfeited from his previous employer, on a strict like-for-like
basis. Vesting of these restricted shares is in December 2017, December 2018 and December 2019, reflecting the vesting dates of forfeited awards
6 2016 figures also reflect the fair value at grant of the performance share awards under the LTI. (Performance shares were previously disclosed at face value, which corresponds
to the maximum payout opportunity. Stock options were disclosed at fair value.)
Compensation for financial year 2017
Total compensation for Executive Committee members in 2017 is as follows: The total annual
compensation for the members of the Executive Committee amounted to CHF 32.3 million
(2016: CHF 36.9 million). This amount comprises base salaries and variable compensation of
CHF 15.8 million (2016: CHF 21.3 million), share-based compensation of CHF 11.7 million
(2016: CHF 10.3 million), employer contributions to pension plans of CHF 4.8 million (2016:
CHF 5.3 million).
LAFARGEHOLCIM ANNUAL REPORT 201795 96
Explanatory comments to the compensation table:
The compensation changes in 2017 compared to 2016 are mainly caused by the following
factors:
– The former CEO (Eric Olsen) left the company July 15th 2017, and contractually due
payments for 2017 are included in the total Executive Committee compensation in the table
above. The contractual terms are as follows: 12-month notice period, 12-month non-
competition period and partial forfeiture of LTI awards as per LTI plan rules.
– The new CEO (Jan Jenisch) started on September 1st 2017 and received a combined base
salary plus variable compensation of CHF 1.7 million, share-based compensation of CHF 6.8
million, employer contributions to pension benefits of CHF 0.3 million. As a result, the new
CEO’s total compensation amounted to CHF 8.8 million. He received a replacement award of
89,784 shares for long-term incentive awards forfeited at his previous employer due to
joining LafargeHolcim. This replacement award will vest in three tranches each in December
2017, 2018 and 2019 and is included in the compensation table above (value at grant). It
was also agreed that, with regard to 2017, he would receive CHF 240,000 in compensation
for his forfeited bonus from his previous employer, and a LafargeHolcim annual incentive
payment for 2017 reflecting on-target achievement for the financial portion (70% of the
bonus opportunity) and based on effective performance for the individual portion (30% of
the bonus opportunity).
– The need for interim coverage as Group CEO by Beat Hess, Chairman, included in the
section “other EXCO”, was compensated with 0.2 million fixed pay. No incentives were paid
for the interim period.
– The performance achievement under the annual bonus was lower in 2017 than in 2016.
Further details are provided below.
– As a result of the 2017 compensation review, it was decided not to increase Executive
Committee and CEO base salaries, but to increase their long-term incentive opportunity.
CEO normal award was increased from 225 percent to 250 percent of salary and Executive
Committee normal award was increased from 125 percent to 140 percent of salary.
The compensation awarded to the Executive Committee members for 2017 (including the
compensation for the interim CEO and the supplement for the interim COO) is within the total
maximal amount of compensation for the Executive Committee for the financial year 2017
of CHF 40,500,000 approved at the Annual General Meeting 2016.
Annual incentive
2017 annual incentives for members of the Executive Committee (excluding Jan Jenisch
and Eric Olsen) were on average, 24 percent of maximum, with an average payout on
financial objectives of 4 percent of maximum and of 69 percent for the achievement of
personal objectives.
Long-term incentive plan vesting in 2017
The first LafargeHolcim long-term incentive plan vesting will take place in December 2018
and will be disclosed in the 2018 Compensation Report.
Loans granted to members of governing bodies
As at December 31, 2017, there were no loans outstanding to members of the Executive
Committee. There were no loans to members of the Board of Directors or to parties closely
related to members of governing bodies.
Other transactions
As part of the employee share purchase plan, LafargeHolcim manages employees’ shares.
It sells and purchases LafargeHolcim Ltd shares to and from employees and in the open
market. No shares were purchased from members of the Executive Committee in 2016 and
2017.
Compensation for former members of governing bodies
During 2017, payments in the total amount of CHF 7.8 million were made to four former
members of the Executive Committee.
LAFARGEHOLCIMCOMPENSATION REPORT SHARE OWNER SHIP INFORMATION
Ownership of shares: Board of Directors
On December 31, 2017, non-executive members of the Board of Directors held a total of
94,528,975 registered shares in LafargeHolcim Ltd. This number comprises privately acquired
shares and those allotted under participation and compensation schemes. As of the end of
2017 one non-executive member of the Board of Directors held privately acquired
LafargeHolcim share purchase (call) options.
Until the announcement of market-relevant information or projects, the Board of Directors,
the Executive Committee and any employees involved are prohibited from effecting
transactions with equity securities or other financial instruments of LafargeHolcim Ltd,
exchange-listed Group companies or potential target companies (trade restriction period).
SH ARES AND O PT IONS HELD BY THE BOARD OF DIR ECTORS
SHARES HELD
AS OF
DECEMBER 31, 2017
OPTIONS HELD
AS OF
DECEMBER 31, 2017
SHARES HELD
AS OF
DECEMBER 31, 2016
OPTIONS HELD
AS OF
DECEMBER 31, 2016
NAME
Beat Hess
POSITION
Chairman
Oscar Fanjul
Vice-Chairman
Bertrand Collomb
Paul Desmarais Jr
Member
Member
Patrick Kron
Member (from May 3, 2017)
Gérard Lamarche
Adrian Loader
Jürg Oleas
Nassef Sawiris
Member
Member
Member
Member
Thomas Schmidheiny
Member
Hanne B. Sørensen
Member
Dieter Spälti
Member
Philippe Dauman
Member (until May 3, 2017)
Alexander Gut
Member (until May 3, 2017)
Bruno Lafont
Co-chairman (until May 3, 2017)
17,419
7,758
116,065
38,943
0
4,066
16,739
3,397
25,180,203
69,072,527
6,776
65,082
n/a
n/a
n/a
10,000,000 1
8,792
5,901
121,673
37,086
0
2,209
14,882
2,314
28,938,346
69,070,670
4,920
62,751
1,129
8,161
44,939
Total
94,528,975
10,000,000
98,323,773
1 5,000,000 Call-Options/Exercise Price = CHF 59,096/expiry date July 3, 2018, and 5,000,000 Call-Options/Exercise Price = CHF 59,096/expiry date July 4, 2018,
both European Style.
2 From former equity based compensation (Lafarge S.A.).
443,068 2
443,068
LAFARGEHOLCIM ANNUAL REPORT 201797 98
Ownership of shares and options: Executive Committee
As of December 31, 2017, members of the Executive Committee held a total of 209,225
registered shares in LafargeHolcim Ltd. This figure includes both privately acquired shares
and those allocated under the Group’s compensation schemes.
Furthermore, at the end of 2017, the Executive Committee held a total of 919,834 stock
options and 605,372 performance shares; these arose as a result of the participation and
compensation schemes of various years.
Options are issued solely on registered shares in LafargeHolcim Ltd. One option entitles the
holder to buy to one registered share in LafargeHolcim Ltd.
N UM BER OF SHARES AND OPTIONS HELD BY EXECUTIVE COMMIT TEE MEMBERS AS OF DECEMBER 31, 201 7
NAME
POSITION
Jan Jenisch
CEO
Ron Wirahadiraksa
Member
Urs Bleisch
Member
Pascal Casanova
Member
Roland Köhler
Member
Martin Kriegner
Member
Gérard Kuperfarb
Member
Caroline Luscombe
Member
Oliver Osswald
Member
Saâd Sebbar
Member
Total
TOTAL NUMBER
OF SHARES
TOTAL NUMBER
OF OPTIONS
120,000
5,649
13,116
8,057
39,288
4,094
11,240
1,474
1,784
4,523
80,0001
113,217
122,115
86,574
195,927
52,353
140,614
36,410
27,308
65,316
TOTAL NUMBER
OF PERFORMANCE
SHARES
126,868
77,655
49,416
56,351
67,655
38,026
76,760
40,009
27,231
45,401
209,225
919,834
605,372
1 80,000 call options (HOLN C56 JUN18), strike price: CHF 56, expiry date 15 June 2018, privately acquired
N UM BER OF SHARES AND OPTIONS HELD BY EXECUTIVE COMMIT TEE MEMBERS AS OF DECEMBER 31, 201 6
NAME
POSITION
Eric Olsen
CEO
Ron Wirahadiraksa
Member
Urs Bleisch
Member
Pascal Casanova
Member
Roland Köhler
Member
Martin Kriegner
Member
Gérard Kuperfarb
Member
Caroline Luscombe
Member
Oliver Osswald
Member
Saâd Sebbar
Member
Total
TOTAL NUMBER
OF SHARES
TOTAL NUMBER
OF OPTIONS
TOTAL NUMBER
OF PERFORMANCE
SHARES
117,924
50,543
32,163
31,632
40,543
20,354
34,460
22,756
14,291
29,159
262,054
113,217
122,115
70,857
198,208
45,410
77,193
36,410
27,308
65,316
1,018,088
393,825
23,499
2,101
10,399
4,857
34,581
3,100
8,222
–
887
5,072
92,718
LAFARGEHOLCIMCOMPENSATION REPORT During 2017, Jan Jenisch purchased 77’086 LafargeHolcim shares, for a total value as at 31st
December of CHF 4.2 million, or 263 percent of his base salary, thereby (together with
granted registered shares) meeting the CEO Share Ownership Guideline of 300 percent of
salary.
Liquidity mechanism for remaining rights under the Lafarge long term incentive plans
Following the success of the public exchange offer on Lafarge S.A. and the completion of the
subsequent squeeze-out of Lafarge shares, LafargeHolcim has proposed a liquidity
mechanism for (i) Lafarge shares that may be issued following the exercise on or after
October 23, 2015 of stock options that have been allocated pursuant to the Lafarge stock
option plans; or (ii) Lafarge shares that may be definitively allotted on or after October 23,
2015 in accordance with the Lafarge performance shares plans.
Five members of the LafargeHolcim Executive Committee, including the former Chief
Executive Officer, have accepted this mechanism which will translate into an exchange or a
purchase (according to their country of residence) of their Lafarge shares for LafargeHolcim
shares. The exchange or purchase will take place at the end of the holding period (i.e. up to
March 2019) for performance shares or following the exercise of stock options (all non-
exercised options will lapse at the end of 2020 at the latest), applying the relevant exchange
ratio to maintain the initial parity of the public exchange offer (at the end of December 2017,
the exchange ratio is 0.945 LafargeHolcim share for 1 Lafarge share).
The following table presents the rights of the Executive Committee members that are still
under vesting period or holding period under the Lafarge performance shares plans and the
non-exercised Lafarge stock options as of December 31, 2017.
Beneficiaries
Eric Olsen
Pascal Casanova
Martin Kriegner
Gérard Kuperfarb
Saâd Sebbar
All these rights were granted before the merger.
Lafarge
(Performance
shares)
Lafarge
(Stock options)
11,578
5,617
4,038
11,578
3,423
63,421
15,717
6,943
63,421
7,569
LAFARGEHOLCIM ANNUAL REPORT 201799 100
The share options outstanding held by the Executive Committee (including former members)
at year-end 2017 have the following expiry dates and exercise prices:
Issuing Company
Expiry date
Exercise price 1
2017
2016
Number 1
Number 1
Option
grant date
2008
2009
2010
2010
2011
2012
2013
2014
2014
Holcim
Holcim
Holcim
Holcim
Holcim
Holcim
Holcim
Holcim
Holcim
2015 (2007 2)
Lafarge
2015 (2008 2)
Lafarge
2015 (2009 2)
Lafarge
2015 (2010 2)
Lafarge
2015 (2011 2)
Lafarge
2015 (2012 2)
Lafarge
2015
2015
2015
2016
Total
Holcim
Holcim
LafargeHolcim
LafargeHolcim
2020
2017
2018
2022
2019
2020
2021
2022
2026
2017
2018
2019
2020
2020
2020
2023
2023
2025
2026
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
62.95
35.47
67.66
70.30
63.40
54.85
67.40
64.40
64.40
129.46
112.41
35.93
59.96
52.01
42.07
66.85
63.55
50.19
53.83
33,550
0
95,557
33,550
33,550
38,760
95,557
33,550
113,957
113,957
165,538
165,538
122,770
122,770
99,532
99,532
33,550
33,550
0
18,836
60,745
25,166
22,125
60,745
28,106
22,125
24,675
24,645
24,360
21,420
144,970
144,970
47,333
47,333
417,360
437,348
503,120
503,120
1,967,858
2,045,412
1 Adjusted to reflect former share splits and/or capital increases and/or scrip dividend.
2 These options were granted through the Lafarge Stock-Options plans. The figures presented in this table
are based on the application of the actual exchange ratio of 0.945. The year specified between brackets is the
original option grant date and the exercise price is converted from EUR to CHF at the closing rate of 1.17.
LAFARGEHOLCIMCOMPENSATION REPORT COMPENSATION GOVERNANCE
Rules relating to Compensation in the LafargeHolcim Articles of Incorporation
The Articles of Incorporation contain provisions regarding the approval of compensation of
the Board of Directors and the Executive Management (Art. 23), the supplementary amount
for new members of the Executive Committee (Art. 24), the general compensation principles
(Art. 25) as well as provisions regarding the agreements with members of the Board of
Directors and the Executive Committee (Art. 26). Moreover, the Articles of Incorporation
contain provisions regarding the roles of the Board of Directors and the Nomination,
Compensation & Governance Committee (Art. 17 and Art. 5). The Articles of Incorporation are
approved by the shareholders and available at www.lafargeholcim.com/articles-association
Board of Directors
The Board of Directors has according to Article 17 of the Articles of Incorporation the
responsibility for preparing the compensation report.
Nomination, Compensation & Governance Committee
In accordance with Article 21 of the Articles of Incorporation, the NCGC supports the Board
of Directors in establishing and reviewing LafargeHolcim’s nomination, compensation and
governance strategy and guidelines as well as in preparing the motions to the Annual
General Meeting regarding the nomination and compensation of the members of the Board
of Directors and of the Executive Committee.
The NCGC proposes to the Board of Directors the compensation of the Board of Directors.
It decides upon the applicable performance criteria, targets and compensation levels for the
Executive Committee and informs the Board of Directors accordingly.
The NCGC is composed of five members of the Board of Directors that are elected individually
by the Annual General Meeting for a period of one year. Since the Annual General Meeting
2017, Mr. Nassef Sawiris (Chair), Mrs. Hanne Birgitte Breinbjerg Sørensen, Mr. Oscar Fanjul,
Mr. Paul Desmarais, Jr and Mr. Adrian Loader are re-elected members of the NCGC.
The NCGC holds ordinary meetings at least three times a year: at the beginning of the year,
in the middle of the year, and in December. In 2017, the NCGC held three meetings and the
attendance rate was 94 percent.
The NCGC Chair may invite members of the Executive Committee, other officers of the Group
or third parties to attend the meetings. They will however not be present if their own
performance or compensation is discussed or determined. After each NCGC meeting, the
Board of Directors is informed of the topics discussed, decisions taken and recommendations
made.
In 2017, the NCGC retained Mercer Ltd as its independent compensation advisor. The NCGC
is satisfied with their performance and the independence of their advice since its
appointment. It will reassess regularly the quality of the consulting service and the
opportunity of rotating advisors.
LAFARGEHOLCIM ANNUAL REPORT 2017101 102
Annual General Meeting – Shareholder involvement
According to Art. 23 of the Articles of Incorporation, the Annual General Meeting approves
annually the compensation of the Board of Directors for the period from the Annual General
Meeting to the next Annual General Meeting as well as the compensation of the Executive
Committee for the following financial year. Art. 24 of the Articles of Incorporation provides
for a supplementary amount for Executive Committee members who become members of,
or who are promoted to the Executive Committee during a compensation period for which
the Annual General Meeting has already approved the compensation of the Executive
Committee if the compensation already approved is not sufficient to cover this compensation.
The supplementary amount per compensation period shall not exceed 40 percent of the
aggregate amount of compensation last approved by the Annual General Meeting in total.
In addition to this prospective compensation approval process, the Compensation Report is
submitted to the Annual General Meeting for an advisory vote on a yearly basis.
The table below summarizes the roles of the NCGC, the Board of Directors, and the Annual
General Meeting:
N OMIN ATION ,
CO MPENSATIO N
& GOVERNA NCE
CO MMIT TEE
BOA RD OF
DIRECTORS
AN N UAL
GEN ERAL
MEETING (AGM)
Compensation Report
Proposes
Approves
Advisory vote
Maximum compensation
amount for the Board of
Directors from AGM to
AGM
Maximum compensation
for the Executive
Management for the next
financial year
Proposes
Reviews and
proposes to AGM
Binding vote
Proposes
Reviews and
proposes to AGM
Binding vote
Individual compensation of
members of the Board of
Directors
Proposes
Approves
(within the budget
approved by the
AGM)
Individual compensation of
members of the Executive
Management
Approves
(within the
budget approved
by the AGM)
LAFARGEHOLCIMCOMPENSATION REPORT Method for determining compensation: Periodic benchmarking
The compensation of the Board of Directors is regularly reviewed against prevalent market
practice of other multinational industrial companies of the SMI. This provides for a peer
group which is well-balanced in terms of market capitalization, revenue size and headcount.
The compensation model of the Board of Directors has not had any significant change since
the creation of LafargeHolcim in 2015.
Regarding the compensation of the Executive Committee, a benchmarking analysis is
conducted regularly with the support of independent data sources (Willis Towers Watson,
Aon Hewitt). The same peer group of companies has been chosen as for the review of
compensation of the Board of Directors. Mercer gathers the relevant benchmarking data and
summarizes them in a report that serves as basis for the NCGC to analyze the compensation
of the CEO and the Executive Committee and to set their target compensation levels. The
policy of LafargeHolcim is to target market median compensation for on-target performance,
with significant upside for above target performance.
Such compensation benchmarking analysis was undertaken in 2017 and served as basis for
the NCGC to analyze the compensation of the CEO and the Executive Committee and to set
their target compensation levels for the business year 2018.
LAFARGEHOLCIM ANNUAL REPORT 2017103 104
OUTLOOK 2018
Composition of the Executive Committee
As announced on 15 December 2017, the Board of Directors of LafargeHolcim has decided to
establish a more market-focused and agile management organization. As a result, the
Executive Committee will be reduced to nine members. Géraldine Picaud started as the new
Chief Finance Officer on 3 January 2018, replacing Ron Wirahadiraksa. Their respective hiring
and exit terms are in full compliance with Swiss regulations, and will be included in the 2018
Compensation Report.
The positions of Head of Performance & Cost and Head of Growth & Innovation have been
combined into one role, held by Urs Bleisch. Marcel Cobuz has been nominated Head of
Europe, replacing Roland Köhler, and René Thibault has been nominated Head of North
America, replacing Pascal Casanova.
2018 Compensation System
In light of the new Strategy 2022, the NCGC has decided to make several changes to the
compensation system of the Executive Committee for 2018. Those changes will be described
in detail in the 2018 Compensation Report and are summarized below:
Annual base salary:
Except for promotions to — or within — the Executive Committee, annual base salaries are
not expected to change substantially in the future.
Annual incentive:
– To further focus Executive Committee members on the delivery of pre-determined targets,
the proportion the annual incentive that relates to financial performance objectives will
increase to 85 percent of the total incentive opportunity. An annual relative performance
measure which compares the annual financial performance of LafargeHolcim to a sector
peer group (see details page 91) will be introduced. The relative performance measure will
have a weighting of 30 percent of the total incentive opportunity and will combine relative
Group revenue growth and relative Group recurring EBITDA growth. LafargeHolcim’s
relative performance will be independently calibrated by a specialist financial information
company. The other 55 percent will continue to be absolute financial objectives that are set
either at Group level (for corporate roles) or at Regional level (for regional roles).
– 15 percent of the annual bonus opportunity will be linked to a Health & Safety score, at
Group or Regional level depending on the Executive Committee member’s role. This score
will reflect improvements in the lost-time injury frequency rate (LTIFR). The Compensation
Committee will also consider the overall Health & Safety-related outcomes during the year
when determining the achievement level of the Health & Safety objective.
LAFARGEHOLCIMCOMPENSATION REPORT The exhibit below illustrates the 2018 structure of the annual bonus:
Financial
performance (85%)
Relative Group
performance
Recurring EBITDA
Free Cash Flow
Non-financial
performance (15%)
Health & Safety
objectives (15%)
CO RPORATE
EXEC UTIVE
CO MMIT TEE
ROL ES
REG IONAL
EXECU TIVE
CO MMIT TEE
ROL ES
30%
30%
30%
(Group level)
25%
(Group level)
15%
(Group level)
30%
(regional level)
25%
(regional level)
15%
(regional level)
Long-term incentive:
In order to support the new business strategy, the grant that will be awarded in 2018 under
the long-term incentive will consist of both performance shares and stock options.
– Performance share awards will be subject to a three-year vesting period based on Group
earnings per share (EPS) before impairment and divestments and Group return on invested
capital (ROIC). These performance metrics have been chosen as they reflect the strategic
priorities of the Group to increase profitability through strong operating leverage (EPS
before impairment and divestments) and to improve how the company generates cash
relative to the capital it has invested in its business (ROIC). For both metrics, the NCGC
determines a Threshold performance level (below which there is no vesting), a Target level
(vesting of 50 percent) and a ‘Stretch’ performance level (vesting in full). Between these
levels, vesting is calculated on a straight-line basis, as for previous performance share
awards.
– Stock options will be subject to a five year vesting period based on LafargeHolcim’s
3-month average Total Shareholder Return (TSR) and will have a maturity of ten years.
Threshold vesting (25 percent of maximum) will be achieved for a TSR of 35 percent, Target
vesting (50 percent of maximum) will be achieved for a TSR of 40 percent and full vesting
will be achieved for a Stretch TSR of 50 percent at the end of the five-year period. The
vesting level between Threshold, Target and Stretch TSR will be calculated on a straight-line
basis. Should the 50 percent TSR target be achieved before the end of the five-year period,
the options will vest at that moment but no earlier than three years from the grant date.
LAFARGEHOLCIM ANNUAL REPORT 2017105 106
The decision to replace the former relative TSR performance share awards by stock options
was driven by the intention to further strengthen the link between the compensation of the
Executive Committee and the shareholders’ interests in the context of the new, growth-
orientated business strategy.
The changes to the incentive programs for 2018 ensure a balanced measurement of
performance between financial and non-financial achievements, relative and absolute
performance, as well as short-term and long-term results. The incentive programs reward the
long-term performance and the sustainable success of LafargeHolcim and are strongly
aligned to the interests of the shareholders.
LAFARGEHOLCIMCOMPENSATION REPORT TO THE GENER AL MEETING OF LAFARGEHOLCIM LTD,
R APPERSWIL-JONA
Zurich, March 1, 2018
REPORT OF THE STATUTORY AU DITOR ON TH E COM PENSATION R EP OR T
We have audited the compensation report of LafargeHolcim Ltd for the year ended
December 31, 2017. The audit was limited to the information according to articles 14 – 16 of
the Ordinance against Excessive Compensation in Listed Stock Corporations (Ordinance)
contained on pages 93 to 96 of the compensation report.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the
compensation report in accordance with Swiss law and the Ordinance. The Board of Directors
is also responsible for designing the compensation system and defining individual
compensation packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying compensation report. We
conducted our audit in accordance with Swiss Auditing Standards. These standards require
that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the compensation report complies with Swiss law and
articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in
the compensation report with regard to compensation, loans and credits in accordance with
articles 14 – 16 of the Ordinance. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatements in the compensation report,
whether due to fraud or error. This audit also includes evaluating the reasonableness of the
methods applied to value components of compensation, as well as assessing the overall
presentation of the compensation report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Opinion
In our opinion, the compensation report for the year ended December 31, 2017 of
LafargeHolcim Ltd complies with Swiss law and articles 14 – 16 of the Ordinance.
Deloitte AG
David Quinlin
Licensed Audit Expert
Auditor in charge
Frédéric Gourd
LAFARGEHOLCIM ANNUAL REPORT 2017107
108
M A N AGE ME NT DI S CUS S ION
& A N A LYS I S 2 017
This management discussion and analysis should be read in conjunction with the shareholders’
letter and the individual reports for the Group regions.
GROUP
Sales of cement
Sales of aggregates
million t
million t
Sales of ready-mix concrete million m3
2017
209.5
278.7
50.6
2016 1
233.2
282.7
55.0
Net sales
million CHF
26,129
26,904
Recurring EBITDA 2
million CHF
Operating (loss) profit
million CHF
5,990
(478)
Net (loss) income
million CHF
(1,716)
5,950
2,963
2,090
±%
(10.2)
(1.4)
(7.9)
(2.9)
0.7
±%
like-for-like
3.3
0.3
(2.8)
4.7
6.1
Earnings per share before
impairment and
divestments
Cash flow from operating
activities
CHF
2.35
2.10
11.9
million CHF
3,040
3,295
Capex
million CHF
(1,355)
(1,635)
Free Cash Flow
million CHF
1,685
1,660
Net financial debt
million CHF
14,346
14,724
(7.8)
17.2
1.5
(2.6)
1 Restated due to change in presentation.
2 Excluding restructuring, litigation, implementation and other non-recurring costs, but including contribution from
joint ventures, previously named "Operating EBITDA adjusted".
Volume, income statement and cash flow statement
In 2017, LafargeHolcim continued to show improvements in the key measures relating to Net
sales and recurring EBITDA driven by cost discipline and commercial initiatives. The strong
performance was most visible in the Americas, while most remaining regions continued to show
growth as net sales and recurring EBITDA were higher than prior year on a like-for-like basis.
Continuing the trend seen over 2016 and highlighting the balanced nature of the portfolio,
positive contributions were made by both mature and developing markets. Notably, Latin
America performed well with growth stemming from retail and infrastructure projects as well
as cost management and pricing growth. Recurring EBITDA, in particular, India, Mexico,
Argentina and Nigeria were markets which showed significant growth in top-line which also
translated into strong profit growth. Challenges in some markets, although isolated, impacted
the growth of regions in 2017. The performance in Malaysia was impacted by weak market
demand which drove prices down whilst in Switzerland; the decline in performance was the
result of infrastructure projects finishing without follow-up projects to bridge the gap.
LAFARGEHOLCIMMANAGEMENT DISCUSSION & ANALYSIS 2017 cement volumes sold were like-for-like above prior year by 3.3 percent or 6.7 million tonnes,
aggregates volumes were up by 0.3 percent or 0.7 million tonnes and ready-mix concrete
shipments declined by 2.8 percent or 1.4 million cubic meters versus prior year. The Group
achieved net sales of CHF 26,129 million, improving by 4.7 percent or CHF 1,194 million on a
like-for-like basis. Unfavorable currency translation effects impacted the Group’s net sales by
1.1 percent or CHF 285 million, led by Egypt and Nigeria. On a like-for-like basis, adjusted for
restructuring, litigation, implementation and other non-recurring costs, the Group generated
a recurring EBITDA of CHF 5,990 million including the reclassification of the Group’s share of
Huaxin profits, (CHF 126 million) which did not impact the higher 6.1 percent like-for-like growth
above the prior year. The Group’s recurring EBITDA margin increased by 0.8 percentage points
to 22.9 percent. Restructuring costs were the main driver for the one-offs during 2017 with
further implementation of business service centers in the regions also accounting for some
additional non-recurring expenditure.
Following the weaker than anticipated outlook for the macro-economic environment, especially
in terms of expected growth rates and pricing developments of countries such as Algeria,
Malaysia and Spain, management performed an impairment test on the goodwill during the
fourth quarter 2017 as well as a detailed review of the fair value of its assets. Subsequent to the
completion of the impairment test performed, management recognized a total impairment loss
of CHF 3.8 billion. Further information on the impairments recognized has been detailed in the
notes 10, 25 and 26. This impairment loss resulted in an operating loss of CHF 478 million. The
items below operating profit were broadly in line with prior year. The lower gains on divestments
were due to the fewer entities divested in comparison to prior year. Taxes for the current year
were also lower due to lower taxable income, resulting in a net loss of CHF 1,716 million.
Earnings per share (EPS) before impairment and divestments increased by 12 percent to
CHF 2.35. The increase in return attributable to LafargeHolcim Ltd. shareholders is driven by
marginally higher recurring EBITDA, a reduction in other non-operating costs and lower tax
expenses. These all contributed to the increase in EPS before impairment and divestments,
whilst the share buyback performed during the year also assisted with the improvement.
The group’s Free Cash Flow improved by 1.5 percent to CHF 1,685 million. The improvement
was driven by the strong performance in the Americas. Working capital variation deteriorated
as a result of a low 2016 ending position and in some countries, changes in customer payment
terms during 2017 saw delays in receipts. Capex was well controlled across the Group and lower
than prior year in all regions, except Europe.
LAFARGEHOLCIM ANNUAL REPORT 2017109 110
Financing activity
LafargeHolcim’s investments were funded from the cash flow from operating activities. New
debt capital issuances were mainly conducted for refinancing and general corporate purposes.
In the year under review, capital market issuances of CHF 1.5 billion were undertaken, enabling
the Group to lock in historically low interest rates. The main capital market transactions were
the following:
GBP 300 million
AUD 300 million
EUR 750 million
LafargeHolcim Sterling Finance (Netherlands) B.V.
with a coupon of 3.00 %, term 2017–2032
Holcim Finance (Australia) Pty Ltd
with a coupon of 3.50 %, term 2017–2022
Holcim Finance (Luxembourg) S.A.
with a coupon of 1.75 %, term 2017–2029
Net financial debt
The Group’s year-end net financial debt stood at CHF 14,346 million, an improvement of CHF
378 million over prior year, driven by divestments and improved cash flows.
Capital market financing of the Group as per December 31, 2017 (CHF 15,258 million)
Others (GBP and MXN bonds, USD and EUR Private
Placements, NGN bonds and commercial paper)
CHF 1,377 m
AUD Bonds
CHF 569 m
CHF Bonds
CHF 1,974 m
USD Bonds
CHF 4,262 m
4% 9%
13%
28%
EUR Bonds
CHF 7,076 m
46%
Financing profile
LafargeHolcim has a strong financial profile. 82 percent of financial liabilities are financed
through various capital markets and 18 percent through banks and other lenders. There are no
major positions with individual lenders. The average maturity of financial liabilities increased
from 5.9 years at December 31, 2016, to 6.3 years at December 31, 2017, due to several capital
market transactions during 2017. The Group’s maturity profile is well balanced with a large share
of mid-to long-term financing.
Maintaining a favorable credit rating is one of the Group’s objectives and LafargeHolcim
therefore gives priority to achieving its financial targets and retaining its solid investment-grade
rating (current rating information is displayed on page 53). The average nominal interest rate
on LafargeHolcim’s financial liabilities as at December 31, 2017, was 4.5 percent, and the
proportion of financial liabilities at fixed rates was at 69 percent. Detailed information on financial
liabilities can be found in the respective Note 28.
LAFARGEHOLCIMMANAGEMENT DISCUSSION & ANALYSIS Maturity profile
Million CHF
6,000
5,000
4,000
3,000
2,000
1,000
0
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
7
2
0
2
>
n Bonds, private placements and commercial paper notes
n Loans from financial institutions and other financial liabilities
Liquidity
To secure liquidity, the Group held cash and cash equivalents of CHF 4,217 million at December 31,
2017. This cash is mainly invested in term deposits held with a large number of banks on a
broadly diversified basis. The counterparty risk is constantly monitored on the basis of clearly
defined principles as part of the risk management process. As of December 31, 2017,
LafargeHolcim had unused committed credit lines of CHF 6,794 million (see also note 28).
Current financial liabilities as at December 31, 2017, of CHF 3,843 million are comfortably covered
by existing cash, cash equivalents and unused committed credit lines. LafargeHolcim has USD,
EUR and NGN commercial paper programs. The aim of these programs is to fund short-term
liquidity needs at attractive terms. As per December 31, 2017, commercial paper of NGN 26
billion (CHF 82 million) were outstanding.
Foreign exchange sensitivity
The Group has a global footprint, generating the majority of its results in currencies other than
the Swiss Franc. Only about 2 percent of net sales are generated in Swiss Francs.
Foreign currency volatility has little effect on the Group’s operating profitability. As the Group
produces a very high proportion of its products locally, most sales and costs are incurred in the
respective local currencies. The effects of foreign exchange movements are therefore largely
restricted to the translation of local financial statements for the consolidated statement of
income. As a large part of the foreign capital is financed with matching transactions in local
currency, the effects of the foreign currency translation on local balance sheets for the
consolidated statement of financial position have not, in general, resulted in significant
distortions in the consolidated statement of financial position.
LAFARGEHOLCIM ANNUAL REPORT 2017111 112
The following sensitivity analysis presents the effect of the main currencies on selected key
figures of the consolidated financial statements. The sensitivity analysis only factors in effects
that result from the conversion of local financial statements into Swiss Francs (translation effect).
Currency effects from transactions conducted locally in foreign currencies are not included in
the analysis.
The following table shows the effects of a hypothetical 5 percent depreciation of the respective
foreign currencies against the Swiss Franc.
Sensitivity analysis
Million CHF
2017
EUR
GBP
USD
CAD
Latin
American
basket
(MXN, BRL,
ARS, COP)
Asian
basket
(AUD, CNY,
IDR, PHP)
Middle East
African
basket
(NGN, DZD,
EGP)
INR
Net sales
Recurring EBITDA
Cash flow from operating activities
Net financial debt
Actual
figures
26,129
5,990
3,040
14,346
Assuming a 5% strengthening of the Swiss franc the impact would be as follows:
(178)
(31)
(14)
(346)
(86)
(17)
(12)
(13)
(220)
(77)
(40)
(244)
(98)
(22)
(14)
50
(99)
(31)
(11)
(29)
(177)
(152)
(32)
(27)
38
(29)
(14)
(68)
(86)
(35)
(14)
(11)
LAFARGEHOLCIMMANAGEMENT DISCUSSION & ANALYSIS Reconciliation of non-GAAP measures
Reconciling measures of profit and loss to the consolidated statement of income of
LafargeHolcim
Million CHF
Operating (loss) profit
Depreciation and amortization
Impairment of operating assets
Restructuring, litigation, implementation and other
non-recurring costs
Recurring EBITDA
Million CHF
Net (loss) income
Impairments
Profit on disposals of Group companies
Net income before impairment and divestments
2017
(478)
(2,300)
(3,707)
(461)
5,990
2017
(1,716)
(3,501)
226
1,560
2016
2,963
(2,343)
(62)
(582)
5,950
2016
2,090
(62)
583
1,570
of which net income before impairment and divestments –
shareholders of LafargeHolcim Ltd
1,417
1,273
Adjustments disclosed net of taxation.
Reconciling measures of Free Cash Flow to the consolidated statement of cash flows of
LafargeHolcim
Million CHF
Cash flow from operating activities
Purchase of property, plant and equipment
Disposal of property, plant and equipment
Free cash flow
2017
3,040
(1,522)
167
1,685
2016
3,295
(1,773)
137
1,660
LAFARGEHOLCIM ANNUAL REPORT 2017113 114
ASIA PACIFIC
Sales of cement
Sales of aggregates
million t
million t
Sales of ready-mix concrete million m3
Net sales
Recurring EBITDA 2
million CHF
million CHF
2017
91.7
31.8
12.8
7,441
1,418
2016 1
113.7
32.2
15.4
8,226
1,594
±%
(19.3)
(1.4)
(16.7)
(9.5)
(11.1)
±%
like-for-like
5.5
9.7
0.7
6.7
(6.9)
1 Restated due to change in presentation.
2 Excluding restructuring, litigation, implementation and other non-recurring costs, but including contribution from
joint ventures, previously named "Operating EBITDA adjusted".
The markets in Asia Pacific showed heterogeneous performance. South East Asia countries were
impacted by change in demand supply while India, China and Australia posted solid growth.
Overall, Cement volumes sold increased by 5.5 percent on a like-for-like basis to 91.7 million
tonnes. This was mainly driven by higher demand and additional capacities in India. In Indonesia,
infrastructure and retail supported the demand.
Aggregates volumes sold stood at 31.8 million tonnes for 2017, an improvement of 9.7 percent
on a like-for-like basis. Infrastructure growth in Australia was particularly strong with significant
projects on the east coast. Ready-mix concrete volumes sold stood at 12.8 million cubic meters
which translated to a growth of 0.7 percent on a like-for-like basis. The growth for the region
was driven by Australia and India, both of which benefited from residential building and
capitalization of local footprint. The challenges in the Singapore market weighed heavily on the
regional ready-mix volume performance resulting in only marginal growth.
Net sales for the year stood at CHF 7,441 million, a like-for-like growth of 6.7 percent, which
translated to a recurring EBITDA of CHF 1,418 million. Top line was improved driven by volumes
growth in India and Indonesia and despite price pressure in South East Asian countries. In
Philippines, influx of importers changed the market dynamics. In Malaysia, soft demand and
new capacities also lead to change in market behavior. The cost inflation particularly visible in
energy (solid fuels mainly) and raw materials impacted the financial performance. It was partly
offset by strong fixed costs actions, first results of change in regional structure with higher
leverage of shared service center and focus on operational improvements.
The share of profit of Huaxin joint venture was recognized within recurring EBITDA during 2017,
contributed CHF 126 million to the region and did not impact the like-for-like growth. Due to
the continuing concerns on market perspectives in Malaysia, an impairment loss of CHF 448
million was recognized.
LAFARGEHOLCIMMANAGEMENT DISCUSSION & ANALYSIS
EUROPE
Sales of cement
Sales of aggregates
million t
million t
Sales of ready-mix concrete million m3
Net sales
Recurring EBITDA 2
million CHF
million CHF
2017
42.8
125.2
18.2
7,167
1,385
2016 1
41.6
124.2
18.4
7,023
1,334
±%
2.9
0.8
(0.9)
2.1
3.8
±%
like-for-like
3.0
1.2
(0.5)
2.0
3.7
1 Restated due to change in presentation.
2 Excluding restructuring, litigation, implementation and other non-recurring costs, but including contribution from
joint ventures, previously named "Operating EBITDA adjusted".
The markets in Europe overall showed solid economic growth, although uncertainties relating
to Brexit negatively impacted the market in the United Kingdom. Countries within continental
Europe showed clear signs of recovery. Western Europe saw growth in construction specifically
in France with recovery driven mainly by the residential sector. In the eastern countries,
construction activity was strong, particularly in Poland and Romania which benefitted from
increased residential demand. Cement volumes sold reached 42.8 million tonnes improving by
3.0 percent on a like-for-like basis. This resulted from improved demand for residential projects
with growth in infrastructure across the region. There was partial offset coming from Greece,
Switzerland and the United Kingdom. Aggregates volumes sold stood at 125.2 million tonnes
for 2017 and grew slightly by 1.2 percent on a like-for-like basis with strong levels in the majority
of the countries in continental Europe. Ready-mix concrete volumes sold were 18.2 million cubic
meters which translated to a deterioration of 0.5 percent on a like-for-like basis, notably coming
from lower sales in Switzerland due to the end of large infrastructure projects.
Net sales for the year ended at CHF 7,167 million, growing by 2.0 percent on a like-for-like basis.
This translated into a recurring EBITDA of CHF 1,385 million, registering a growth of 3.7 percent
on a like-for-like basis. The increase in results was supported by good cost discipline across the
region to improve recurring EBITDA. France, United Kingdom and Central Europe were overall
stable throughout the year, while we suffered a deterioration in Switzerland due to the conclusion
of infrastructure projects and a softer demand. Russia has strongly benefited of our good
positioning in the Moscow market, while a weaker environment in the Volga region has led to
an impairment loss of CHF 152 million. In a similar way, the continuing concerns on market
perspectives in Spain have resulted in an impairment loss of CHF 221 million.
LAFARGEHOLCIM ANNUAL REPORT 2017115
116
LATIN AMERICA
Sales of cement
Sales of aggregates
million t
million t
Sales of ready-mix concrete million m3
Net sales
Recurring EBITDA 2
million CHF
million CHF
2017
24.9
4.2
5.8
2,944
1,055
2016 1
24.1
6.0
6.5
2,773
885
±%
3.4
(29.4)
(11.4)
6.1
19.3
±%
like-for-like
5.6
(18.8)
(2.6)
11.0
22.9
1 Restated due to change in presentation.
2 Excluding restructuring, litigation, implementation and other non-recurring costs, but including contribution from
joint ventures, previously named "Operating EBITDA adjusted".
The market in Latin America had a strong year. This was driven particularly by the significant
performance improvement of Mexico and Argentina due to increased private and public
spending. Other areas of Latin America were stable during the year. Cement volumes sold was
24.9 million tonnes improving by 5.6 percent on a like-for-like basis, due to large infrastructure
projects in Mexico, in particular the New Mexico City International Airport. In Argentina, strong
cement demand and recovery of the construction activity fueled by improvement in the overall
political and economic environment, contributed to the region. Market remained challenging
in Brazil where cement demand continued contracting in year 2017 after the slump in post-
Olympic games projects. The negative impacts from the market have been off-set by positive
results achieved in the implementation of Brazil Turn-Around Plan which provided for material
improvement versus prior year both in recurring EBITDA and Cash Flow. Aggregates volumes
sold stood at 4.2 million tonnes for 2017, a weakening of 18.8 percent on a like-for-like basis.
Key reason for this movement in volumes sold is Brazil due to market contraction although
offset by increased market share. Ready-mix concrete volumes sold ended the year at 5.8 million
cubic meters, a deterioration of 2.6 percent on a like-for-like basis, mainly due to the soft demand
in Chile in the first half of the year.
Net sales for the year stood at CHF 2,944 million, which translated to a recurring EBITDA of CHF
1,055 million, an improvement of 22.9 percent on a like-for-like basis. This is due to a strong top
line growth, both volume and price driven particularly in Argentina and Mexico, value proposition
offerings while building on the well-established retail business, continuous focus on cost
optimization and discipline. In Brazil, the still contracting market demand impacted prices which
have been offset by a strong focus on cost leadership.
LAFARGEHOLCIMMANAGEMENT DISCUSSION & ANALYSIS
MIDDLE EA ST AFR ICA
Sales of cement
Sales of aggregates
million t
million t
Sales of ready-mix concrete million m3
Net sales
Recurring EBITDA 2
million CHF
million CHF
2017
35.7
10.4
4.7
3,374
1,085
2016 1
40.3
12.2
6.0
3,900
1,247
±%
(11.4)
(15.0)
(21.4)
(13.5)
(13.0)
±%
like-for-like
(4.2)
(13.0)
(19.5)
5.4
3.5
1 Restated due to change in presentation.
2 Excluding restructuring, litigation, implementation and other non-recurring costs, but including contribution from
joint ventures, previously named "Operating EBITDA adjusted".
The market in Middle East Africa continued to be affected by macroeconomic structural
adjustments which started to impact Egypt and Nigeria in 2016 and impacting Algeria in 2017.
Changes in the competitive profile and shifts of supply and demand balance in some countries
of the African continent impacted results. Still, Middle East Africa remains an attractive market
with significant growth potential which saw signs of turnaround late in 2017. Cement volumes
sold was 35.7 million tonnes declining by 4.2 percent on a like-for-like basis. This was mainly
due to Algeria switching to an oversupplied market during the second half of 2017 due to new
capacities coming on stream in the market and liquidity issues affecting public spending. Lower
growth rates in Egypt and Nigeria were driven by macroeconomic imbalances as the currency
liberalization in 2016 continued to affect the economy. Aggregates volumes sold stood at 10.4
million tonnes for 2017, a weakening of 13.0 percent on a like-for-like basis. Delays in
infrastructure projects and a significant geographical shift in demand on the African continent
drove the decline of volumes in the region. Although not cancelled, significant projects were
delayed in Egypt, while South Africa struggled with the demand. Ready-mix concrete volumes
sold 4.7 million cubic meters which translated into a deterioration of 19.5 percent on a like-for-
like basis driven mainly by the northern countries of Africa as the macroeconomic conditions
impacted all segments. The Middle East remained stable throughout 2017.
Net sales for the year stood at CHF 3,374 million growing by 5.4 percent on a like-for-like basis
translating to a recurring EBITDA of CHF 1,085 million, following the cement volume evolution
in our major markets and price recovery in Egypt and Nigeria. Although, operational results
were stable, an impairment loss of CHF 1,008 million was recognized in Algeria due to changes
in the market perspective and decline of profitability evidenced by the end of the year.
LAFARGEHOLCIM ANNUAL REPORT 2017117
118
NORTH AMERICA
Sales of cement
Sales of aggregates
million t
million t
Sales of ready-mix concrete million m3
Net sales
Recurring EBITDA 2
million CHF
million CHF
2017
19.2
2016 1
19.5
107.1
108.2
9.1
5,664
1,483
8.7
5,584
1,335
±%
(1.7)
(1.0)
4.9
1.4
11.1
±%
like-for-like
(1.7)
(1.0)
(1.5)
(0.4)
10.5
1 Restated due to change in presentation.
2 Excluding restructuring, litigation, implementation and other non-recurring costs, but including contribution from
joint ventures, previously named "Operating EBITDA adjusted".
The US economy recorded increasing GDP growth over the quarters, reaching the highest growth
in 3 years. Canada experienced some recovery in the west of the country as oil prices recovered
from its lows of prior year. Eastern Canada continued to grow, supported by increased exports
to US, benefiting from favorable exchange rates and the strengthening US market.
Cement volumes sold reached 19.2 million tonnes, declining by 1.7 percent on like-for-like basis.
Volume growth did not materialize as initially anticipated although trends improved in the last
quarter of the year. This decline was mainly caused by lower deliveries in the US market, which
were below prior year by 3.9 percent. Above average precipitation until October, including
hurricanes Irma and Harvey, hindered business activity and cement shipments. Canada reported
a volume increase by 4.7 percent on a like-for-like basis, mainly benefiting from the economic
recovery in the west. Aggregates volumes sold stood at 107.1 million tonnes for 2017, lower
compared to prior year on like-for-like basis by 1.0 percent. This reduction was mainly driven
by the impacts of the challenging weather conditions on the US construction activity. Canada’s
volumes improved, partially offsetting the US shortfall. Ready-mix concrete volumes sold were
9.1 million cubic meters, which translated to a reduction of 1.5 percent on like-for-like basis,
reflecting lower sales in US, which were partially compensated by more volumes in Canada.
Net sales for the year stood at CHF 5,664 million and recurring EBITDA of CHF 1,483 million, an
improvement of 10.5 percent over prior year on like-for-like basis. This improvement reflects
mainly higher sales prices and cost focus throughout the region. An impairment loss on the US
Aggregates business was recognized during the year amounting to CHF 371 million which
resulted from a review of geographical markets.
LAFARGEHOLCIMMANAGEMENT DISCUSSION & ANALYSIS
RESPONSIBILITY STATEMENT
We certify that, to the best of our knowledge and having made reasonable inquiries to that
end, the financial statements have been prepared in accordance with applicable accounting
standards and give a true and fair view of the assets and liabilities, and of the financial
position and results of the Company and of its consolidated subsidiaries, and that this annual
report provides a true and fair view of the evolution of the business, results and financial
condition of the Company and of its consolidated subsidiaries, and a description of the main
risks and uncertainties the Company and its consolidated subsidiaries are subject to.
Zürich, March 1, 2018
Jan Jenisch
Chief Executive Officer
Géraldine Picaud
Chief Financial Officer
LAFARGEHOLCIM ANNUAL REPORT 2017119
120
LAFARGEHOLCIMMANAGEMENT DISCUSSION & ANALYSIS F I N A NC I A L I NFOR M AT ION
CONTENTS
Key Figures
Consolidated Statement
of Income
Consolidated Statement
of Comprehensive Earnings
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Notes to the
Consolidated Financial Statements
1. Significant events of the period
2. Accounting policies
3. Risk management
4. Changes in the scope
of consolidation
5. Principal exchange rates
122
123
124
125
126
21. Prepaid expenses and
other current assets
22. Assets and related liabilities
classified as held for sale
23. Long-term financial investments and
other long-term assets
24. Investments in associates and
joint ventures
25. Property, plant and equipment
26. Goodwill and intangible assets
27. Trade accounts payable
128
28. Financial liabilities
29. Leases
129
129
145
155
159
30. Derivative financial instruments
31. Taxes
32. Provisions
33. Employee benefits
34. Share compensation plans
35. Information on share capital
36. Non-controlling interest
170
170
171
172
177
179
184
184
188
189
190
193
195
203
208
209
37. Contingencies, guarantees,
commitments and contingent assets 210
38. Additional cash flow information
213
39. Transactions and relations with
members of the Board of Directors
and Executive Committee
40. Events after the reporting period
41. Authorization of the financial
statements for issuance
42. Principal companies of the Group
Auditors Report
Holding Company Results
5-Year-Review
LafargeHolcim Group
Definitions of non-GAAP measures
215
216
216
217
222
231
248
251
6. Information by reportable segment 160
7. Information by product line
8. Information by country
9. Production cost of goods sold
162
164
164
10. Summary of depreciation,
amortization and impairment
165
11. Profit on disposals and other non-
operating income
12. Loss on disposals and other non-
operating expenses
13. Financial income
14. Financial expenses
15. Research and development
16. Earnings per share
17. Cash and cash equivalents
18. Trade Accounts receivable
19. Current financial receivables
20. Inventories
165
166
166
166
167
167
168
168
169
169
LAFARGEHOLCIM ANNUAL REPORT 2017121 122
K E Y FI GU RES LAFARGEHOLCIM GROUP
Annual cement production capacity
Sales of cement
Sales of aggregates
Sales of ready-mix concrete
Net sales
Recurring EBITDA 2
Recurring EBITDA margin 3
Net income (loss)
Net income (loss) – shareholders of LafargeHolcim Ltd
Net income before impairment and divestments –
shareholders of LafargeHolcim Ltd
Cash flow from operating activities
Net financial debt
Total shareholders’ equity
Personnel
Earnings per share
Earnings per share before impairment and divestments
Payout
Payout per share
million t
million t
million t
million m3
million CHF
million CHF
million CHF
million CHF
million CHF
million CHF
million CHF
million CHF
million CHF
CHF
CHF
million CHF
CHF
2017
318.4
209.5
278.7
50.6
26,129
5,990
22.9
(1,716)
(1,675)
1,417
3,040
14,346
30,975
81,960
(2.78)
2.35
1,196 4
2
2016
Restated 1
353.3
233.2
282.7
55.0
26,904
5,950
22.1
2,090
1,791
1,273
3,295
14,724
34,747
90,903
2.96
2.10
1,212
2
±%
–9.9%
–10.2%
–1.4%
–7.9%
–2.9%
+0.7%
–182.1%
–193.5%
+11.3%
–7.8%
–2.6%
–10.9%
–9.8%
–193.9%
+11.9%
–1.3%
+0.0%
1 Restated due to change in presentation, see note 2.
2 Excluding restructuring, litigation, implementation and other non-recurring costs, but including contribution from joint ventures, previously named
“Operating EBITDA adjusted”, refer to the definitions of non-GAAP measures, table in page 251.
3 Previously named “Operating EBITDA adjusted margin”, refer to the definitions of non-GAAP measures, table in page 251.
4 Proposed by the Board of Directors for a maximum payout of CHF 1,196 million from capital contribution reserves. There is no payout on treasury shares held
by LafargeHolcim.
The non-GAAP measures used in this report are defined on page 251.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS CON SO LI DATED STATEME NT OF INCOME OF LAFA R GEH OLCIM
Million CHF
Net sales
Production cost of goods sold
Gross profit
Distribution and selling expenses
Administration expenses
Share of profit of joint ventures
Operating (loss) profit
Profit on disposals and other non-operating income 2
Loss on disposals and other non-operating expenses 3
Share of profit of associates
Financial income
Financial expenses
Net (loss) income before taxes
Income taxes
Net (loss) income from continuing operations
Net income from discontinued operations
Net (loss) income
Net (loss) income attributable to:
Shareholders of LafargeHolcim Ltd
Non-controlling interest
Net income from discontinued operations attributable to:
Shareholders of LafargeHolcim Ltd
Non-controlling interest
Earnings per share in CHF
Earnings per share
Fully diluted earnings per share
Earnings per share from continuing operations in CHF
Earnings per share
Fully diluted earnings per share
Earnings per share from discontinued operations in CHF
Earnings per share
Fully diluted earnings per share
1 Restated due to change in presentation, see note 2.
2 Previously named “Other income”.
3 Previously named “Other expenses”.
Notes
8
9
24
11
12
24
13
14
31
16
16
16
16
16
16
2017
26,129
(18,348)
7,781
(6,608)
(1,938)
286
(478)
447
(242)
51
153
(1,111)
(1,180)
(536)
(1,716)
0
(1,716)
(1,675)
(41)
0
0
(2.78)
(2.78)
(2.78)
(2.78)
0.00
0.00
2016
Restated 1
26,904
(15,632)
11,272
(6,394)
(2,041)
125
2,963
824
(68)
81
187
(1,104)
2,882
(835)
2,047
43
2,090
1,791
299
43
0
2.96
2.96
2.89
2.89
0.07
0.07
LAFARGEHOLCIM ANNUAL REPORT 2017123
124
CON SO LI DATED STATEME NT OF COMPREHENSIVE EARNINGS OF LAFARGEHOLCIM
Million CHF
Net (loss) income
Other comprehensive earnings
Items that will be reclassified to the statement of income in future periods
Currency translation effects
– Exchange differences on translation
– Realized through statement of income
– Tax effect
Available-for-sale financial assets
– Change in fair value
– Realized through statement of income
– Tax effect
Cash flow hedges
– Change in fair value
– Realized through statement of income
– Tax effect
Net investment hedges in subsidiaries
– Change in fair value
– Realized through statement of income
– Tax effect
Subtotal
Items that will not be reclassified to the statement of income in future periods
Defined benefit plans
– Remeasurements
– Tax effect
Subtotal
Total other comprehensive earnings
Notes
2017
(1,716)
2016
2,090
5
(302)
(1,097)
95
0
(2)
10
1
(8)
5
0
30
0
0
3
1
1
0
0
34
6
(8)
(3)
0
(3)
(172)
(1,065)
33
216
(70)
146
(142)
32
(111)
(26)
(1,176)
Total comprehensive earnings
(1,742)
914
Total comprehensive earnings attributable to:
Shareholders of LafargeHolcim Ltd
Non-controlling interest
(1,704)
(39)
464
450
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS CON S OL IDATED STATEMENT OF FINANCIAL POSITION OF LAFARGEHOLCIM
Million CHF
Cash and cash equivalents
Short-term derivative assets
Current financial receivables
Trade accounts receivable
Inventories
Prepaid expenses and other current assets
Assets classified as held for sale
Total current assets
Long-term financial investments and other long-term assets
Investments in associates and joint ventures
Property, plant and equipment
Goodwill
Intangible assets
Deferred tax assets
Pension assets
Long-term derivative assets
Total non-current assets
Total assets
Trade accounts payable
Current financial liabilities
Current income tax liabilities
Other current liabilities
Short-term provisions
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Long-term financial liabilities
Defined benefit obligations
Long-term income tax liabilites
Deferred tax liabilities
Long-term provisions
Total non-current liabilities
Total liabilities
Share capital
Capital surplus
Treasury shares
Reserves
Total equity attributable to shareholders of LafargeHolcim Ltd
Non-controlling interest
Total shareholder’s equity
Total liabilities and shareholder’s equity
Notes
31.12.2017
31.12.2016 1
17
30
19
18
20
21
22
23
24
25
26
26
31
33
30
27
28
32
22
28
33
31
31
32
35
35
36
4,217
44
262
3,340
2,870
1,335
550
12,618
1,114
3,120
30,152
14,569
1,026
758
308
14
51,061
63,679
3,715
3,843
765
2,444
592
160
11,519
14,779
1,861
398
2,345
1,801
21,185
32,703
1,214
24,340
(554)
2,787
27,787
3,188
30,975
63,679
4,923
68
207
2,826
2,645
1,720
2,046
14,435
1,287
3,241
32,052
16,247
1,017
1,060
271
6
55,182
69,617
3,307
4,976
641
2,299
575
711
12,509
14,744
2,079
146
3,387
2,005
22,361
34,870
1,214
25,536
(72)
4,144
30,822
3,925
34,747
69,617
1 Some line items have been reclassified or disaggregated, such as Accounts receivables, Long-term financial assets and Other long-term assets and the comparative figures
have been adjusted accordingly.
LAFARGEHOLCIM ANNUAL REPORT 2017125 126
CON SO LI DATED STATEME NT OF CHANGES IN EQUITY OF LAFARGEHOLCIM
Million CHF
Equity as at January 1, 2017
Net loss
Other comprehensive earnings
Total comprehensive earnings
Payout
Change in treasury shares
Share-based remuneration
Capital paid-in by non-controlling interests
(Disposal) Acquisition of participation in Group companies
Change in participation in existing Group companies
Share
capital
1,214
Capital
surplus
25,536
Treasury
shares
(72)
Retained
earnings
Available-for-sale
reserve
Total equity
attributable to
shareholders
Total
of LafargeHolcim
Non-controlling
shareholders’
(1,212)
16
(482)1
Equity as at December 31, 2017
1,214
24,340
(554)
Equity as at January 1, 2016
Net income
Other comprehensive earnings
Total comprehensive earnings
Payout
Change in treasury shares
Share-based remuneration
Capital repaid to non-controlling interest
Disposal of participation in Group companies
Change in participation in existing Group companies
Equity as at December 31, 2016
1 The amount of CHF –482 million includes the impact of the share buyback program of CHF –500 million, see note 35.
1,214
26,430
(86)
4,357
35,722
(909)
15
14
1,214
25,536
(72)
(13)
23
(12,412)
(117)
4,144
(117)
30,822
Cash flow
hedging
reserve
Currency
translation
adjustments
23
(12,412)
(4)
(4)
(184)
(184)
19
(10)
32
32
(11)
(12,606)
(11,158)
(1,254)
(1,254)
(13)
10
10
(4)
(13)
1
1
reserves
4,144
(1,675)
(29)
(1,704)
(7)
354
2,787
3,807
1,791
(1,327)
464
(10)
Ltd
30,822
(1,675)
(29)
(1,704)
(1,212)
(489)
16
354
27,787
31,365
1,791
(1,327)
464
(909)
5
15
interest
3,925
(41)
2
(39)
(247)
55
(118)
(388)
3,188
299
151
450
(248)
(2)
(165)
(467)
3,925
Total
equity
34,747
(1,716)
(26)
(1,742)
(1,459)
(489)
16
55
(118)
(34)
30,975
2,090
(1,176)
914
(1,157)
5
15
(2)
(165)
(584)
34,747
16,546
(1,675)
149
(1,526)
(7)
365
15,378
14,988
1,791
(106)
1,685
(10)
(117)
16,546
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS CONSOL IDATED STATEMENT OF CHANG ES IN EQUITY OF LAFARGE HOLCI M
Retained
earnings
Available-for-sale
reserve
Total equity
attributable to
shareholders
of LafargeHolcim
Ltd
Non-controlling
interest
Total
shareholders’
equity
(13)
10
10
(4)
(13)
1
1
Cash flow
hedging
reserve
Currency
translation
adjustments
23
(12,412)
(4)
(4)
(184)
(184)
19
(10)
32
32
(11)
(12,606)
(11,158)
(1,254)
(1,254)
Total
reserves
4,144
(1,675)
(29)
(1,704)
(7)
354
2,787
3,807
1,791
(1,327)
464
(10)
30,822
(1,675)
(29)
(1,704)
(1,212)
(489)
16
354
27,787
31,365
1,791
(1,327)
464
(909)
5
15
(13)
23
(12,412)
(117)
4,144
(117)
30,822
3,925
(41)
2
(39)
(247)
55
(118)
(388)
3,188
34,747
(1,716)
(26)
(1,742)
(1,459)
(489)
16
55
(118)
(34)
30,975
4,357
35,722
299
151
450
(248)
(2)
(165)
(467)
3,925
2,090
(1,176)
914
(1,157)
5
15
(2)
(165)
(584)
34,747
16,546
(1,675)
149
(1,526)
(7)
365
15,378
14,988
1,791
(106)
1,685
(10)
(117)
16,546
Equity as at December 31, 2017
1,214
24,340
(554)
Equity as at January 1, 2017
Million CHF
Net loss
Other comprehensive earnings
Total comprehensive earnings
Payout
Change in treasury shares
Share-based remuneration
Capital paid-in by non-controlling interests
(Disposal) Acquisition of participation in Group companies
Change in participation in existing Group companies
Equity as at January 1, 2016
Net income
Other comprehensive earnings
Total comprehensive earnings
Payout
Change in treasury shares
Share-based remuneration
Capital repaid to non-controlling interest
Disposal of participation in Group companies
Change in participation in existing Group companies
Equity as at December 31, 2016
Share
capital
1,214
Capital
surplus
25,536
Treasury
shares
(72)
(1,212)
16
(482)1
1,214
26,430
(86)
(909)
15
14
1 The amount of CHF –482 million includes the impact of the share buyback program of CHF –500 million, see note 35.
1,214
25,536
(72)
LAFARGEHOLCIM ANNUAL REPORT 2017127 128
CON SO LI DATED STATEME NT OF CASH FLOWS OF L A FA RGEHOLCIM
Million CHF
Net (loss) income
Income taxes
Profit on disposals and other non-operating income 1
Loss on disposals and other non-operating expenses 2
Share of profit of associates and joint ventures
Financial expenses net
Depreciation, amortization and impairment of operating assets
Other non-cash items
Change in net working capital
Cash generated from operations
Dividends received
Interest received
Interest paid
Income taxes paid
Other expenses
Cash flow from operating activities (A)
Purchase of property, plant and equipment
Disposal of property, plant and equipment
Acquisition of participation in Group companies
Disposal of participation in Group companies
Purchase of financial assets, intangible and other assets
Disposal of financial assets, intangible and other assets
Cash flow from investing activities (B)
Payout on ordinary shares
Dividends paid to non-controlling interest
Capital paid-in by (repaid to) non-controlling interest
Movements of treasury shares
Net movement in current financial liabilities
Proceeds from long-term financial liabilities
Repayment of long-term financial liabilities
Increase in participation in existing Group companies
Cash flow from financing activities (C)
(Decrease) Increase in cash and cash equivalents (A + B + C)
Cash and cash equivalents as at the beginning of the period (net)
(Decrease) Increase in cash and cash equivalents
Currency translation effects
Cash and cash equivalents as at the end of the period (net)
1 Previously named “Other income”.
2 Previously named “Other expenses”.
Notes
31
11
12
24
13,14
10
38
31
38
16
3
3
3
17
17
2017
(1,716)
536
(447)
242
(337)
958
6,007
237
(925)
4,555
303
146
(917)
(871)
(176)
3,040
(1,522)
167
55
858
(347)
113
(675)
(1,212)
(237)
63
(489)
(163)
2,047
(3,079)
(13)
(3,083)
2016
2,090
835
(824)
68
(205)
917
2,405
470
(694)
5,063
160
169
(1,187)
(860)
(49)
3,295
(1,773)
137
(4)
2,245
(402)
503
706
(909)
(249)
(20)
5
(946)
6,216
(6,600)
(375)
(2,879)
(718)
1,122
4,795
(718)
(122)
3,954
3,771
1,122
(99)
4,795
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As used herein, the terms “LafargeHolcim” or “Group” refer to
LafargeHolcim Ltd together with the companies included in the scope
of consolidation.
1.
SIGNIFICANT EVENTS OF THE PER IOD
The financial position and performance of the Group were particularly impacted by the following
events and transactions during the reporting period:
– The disposals of entities in Vietnam and Chile and the restructuring of operations in China
(see note 4);
– The extensive portfolio review and asset impairment indicators assessment in several countries
resulting in a total impairment charge of CHF 3.8 billion related mainly to property, plant and
equipment and goodwill (see notes 10, 25 and 26);
– The initiation of a share buyback program of up to CHF 1 billion over the period 2017 and 2018
(see note 35).
2.
ACCOUNTING POL ICIES
Basis of preparation
The consolidated financial statements have been prepared in accordance with Inter national
Financial Reporting Standards (IFRS).
Due to rounding, numbers presented throughout this report may not add up precisely to the
totals provided. All ratios and variances are calculated using the underlying amount rather than
the presented rounded amount.
Adoption of revised and new International Financial Reporting Standards and
interpretations
In 2017, LafargeHolcim adopted the following amended standards relevant to the Group:
Amendments to IAS 12
Amendment to IAS 7
Improvements to IFRSs
Income Taxes
Disclosure Initiative
Clarifications of existing IFRSs (issued in
December 2016)
The amendments to IAS 12 Income Taxes clarify the requirements for recognizing deferred tax
assets on unrealized losses. The amendments also clarify the accounting for deferred tax where
an asset is measured at fair value and that fair value is below the asset’s tax base. The adoption
of these amendments did not materially impact the Group’s financial statements.
The amendment to IAS 7 Statement of Cash Flows introduces the disclosure of the reconciliation
of liabilities arising from financing activities. The adoption of this amendment is disclosure
related only, and therefore did not materially impact the Group’s financial statements.
The adoption of the improvements to IFRSs did not materially impact the Group’s financial
statements.
LAFARGEHOLCIM ANNUAL REPORT 2017129 130
In 2018, LafargeHolcim will adopt the following new standards, interpretation and amended
standards relevant to the Group:
IFRS 15
IFRS 9
Amendments to IFRS 2
IFRIC 22
Revenue from Contracts with Customers
Financial Instruments
Classification and measurement of share-
based payment transactions
Foreign Currency Transactions and Advance
Consideration (Clarifications to IAS 21)
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, which replaces IAS
11 Construction Contracts, IAS 18 Revenue and related Interpretations. Except for the disclosure
requirements, the new standard will not materially impact the Group financial statements, as
over 90 percent of Group net sales relate to the delivery at a point in time of cement, aggregates
and ready-mix concrete.
In July 2014, the IASB issued IFRS 9 Financial Instruments, which replaces IAS 39 Financial
Instruments: Recognition and Measurement, which will change the classification and measurement
requirements of financial assets, financial liabilities and the general hedge accounting rules.
Except for the disclosure requirements, the new standard will not materially impact the Group
financial statements, considering that sales are made with credit terms largely ranging between
30 days and 60 days and the Group generally applies hedge accounting using standard derivative
contracts.
The amendments to IFRS 2 Share-based Payment provide additional guidance on the accounting
for cash-settled share-based payments and add a narrow scope exception that requires equity-
settled accounting where settlement of share-based payment awards are split between the
equity instruments issued to the employee and the cash payment made to the tax authorities
on the employee’s behalf. Since LafargeHolcim does not have any cash-settled share based
payment transactions and settles equity-settled payment transactions on a gross basis, the
adoption of these amendments will not impact the Group financial statements.
In December 2016, the IASB issued IFRIC 22 Foreign Currency Transactions and Advance
Consideration which provides guidance on how to account for an advance consideration when
it is paid or received in a foreign currency. The adoption of this interpretation will not materially
impact the Group’s financial statements.
In 2019, LafargeHolcim will adopt the following new standards, interpretation and amended
standards relevant to the Group:
IFRS 16
IFRIC 23
Amendments to IAS 28
Improvements to IFRS
Leases
Uncertainty over Income Tax Treatments
Long-term Interests in Associates and Joint
Ventures
Clarifications of existing IFRSs (issued in
December 2017)
In January 2016, the IASB issued IFRS 16 Leases, which replaces IAS 17 Leases and related
interpretations. The new standard will require lessees to recognize a lease liability re flecting
future lease payments and a right-of-use asset for virtually all lease contracts. The Group is in
the process of evaluating the impact this new standard may have on its consolidated financial
statements.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS In June 2017, the IASB issued IFRIC 23 Uncertainty over Income Tax Treatments which clarifies
that an entity will be required to reflect the effect of uncertainty in determining its taxable profit
(and potentially the related tax base) by applying either the “most likely amount” method or the
“expected value” method whichever amount better predicts the resolution of the uncertainty.
Such guidance would be applied in situations where an entity concluded that it was not probable
that the taxation authority would accept a particular tax treatment, such as, the deductibility of
a certain expense. The Group is in the process of evaluating the impact IFRIC 23 may have on
its consolidated financial statements.
In October 2017, the IASB issued amendments to IAS 28 Long-term Interests in Associates and
Joint Ventures, which clarifies that an entity first applies IFRS 9 Financial Instruments to other
financial instruments, such as long-term interests to which the equity method is not applied,
before the entity takes account of its share of profit or loss of an associate or joint venture by
applying the equity method under IAS 28. Consequently, in applying IFRS 9, an entity does not
take account of any adjustments to the carrying amount of long-term interests that arise from
applying IAS 28. The Group is in the process of evaluating the impact the amendments to IAS
28 may have on its consolidated financial statements.
The adoption of the improvements to IFRSs will not materially impact the Group financial
statements.
Change in presentation
As from January 1, 2017, management decided to reclassify the Group’s share of profit of joint
ventures within operating profit due to the fact that such a presentation provides more relevant
information regarding the Group’s financial performance, considering that the underlying
operational activities of joint ventures are jointly controlled and reflect the core business
activities of LafargeHolcim. Based on 2016 figures, this change in presentation increased
operating profit by CHF 125 million.
Use of estimates
The preparation of financial statements in conformity with IFRS requires management to make
estimates and assumptions that affect the reported amounts of revenues, expenses, assets,
liabilities and related disclosures at the date of the financial statements. These estimates are
based on management’s best knowledge of current events and actions that the Group may
undertake in the future. However, actual results could differ from those estimates. Management
also uses judgment in applying the Group’s accounting policies.
Critical estimates and assumptions
Estimates and judgments are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under
the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results.
The following details the judgments, apart from those involving estimations, that management
has made in the process of applying the Group’s accounting policies and that have the most
significant effect on the amounts recognized in the financial statements:
– The classification of a subsidiary or a disposal group as held for sale especially as to whether
the sale is expected to be completed within one year from the date of classification as held
for sale, and whether the proceeds expected to be received will exceed the carrying amount
(note 22).
LAFARGEHOLCIM ANNUAL REPORT 2017131 132
The following details the assumptions the Group makes about the future, and other major
sources of estimation uncertainty at year end, that could have a significant risk of resulting in
a material adjustment to the carrying amounts of assets and liabilities within the next financial
year:
– The determination of the useful lives of fixed assets which impacts the depreciation charge
recognized in profit or loss (note 10);
– Assumptions underlying the estimation of value in use in respect of cash-generating units for
impairment testing purposes require the use of estimates such as long-term discount rates
and growth rates (note 26);
– Liabilities and costs for defined benefit pension plans and other post-employment benefits
are determined using actuarial valuations. The actuarial valuations involve making assumptions
about discount rates, expected future salary increases and mortality rates which are subject
to significant uncertainty due to the long-term nature of such plans (note 33);
– The measurement of site restoration and other environmental provisions require long-term
assumptions regarding the completion of raw material extraction and the phasing of the
restoration work to be carried out and the appropriate discount rate to use (note 32);
– The recognition and measurement of provisions requires an estimate of the expenditure and
timing of the settlement. The litigations and claims to which the Group is exposed are assessed
by management with the assistance of the legal department and in certain cases with the
support of external specialized lawyers (note 32). Disclosures related to such provisions, as
well as contingent liabilities, also require significant judgment (note 37);
– The recognition of deferred tax assets requires assessment of whether it is probable that
sufficient future taxable profit will be available against which the unused tax losses can be
utilized (note 31).
Scope of consolidation
The consolidated financial statements comprise those of LafargeHolcim Ltd and of its subsidiaries.
The list of principal companies is presented in the note 42.
Principles of consolidation
The Group consolidates a subsidiary if it has an interest of more than one half of the voting
rights or otherwise is able to exercise control over the operations. The Group controls an entity
when it is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity. Business combinations
are accounted for using the acquisition method. The cost of an acquisition is measured at the
fair value of the consideration given at the date of exchange. For each business combination,
the Group measures the non-controlling interest in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are
expensed in the statement of income. Identifiable assets acquired and liabilities assumed in a
business combination are measured initially at fair value at the date of acquisition.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as of the acquisition date.
If the business combination is achieved in stages, the carrying amount of the Group’s previously
held equity interest in the acquiree is remeasured to fair value as at the acquisition date with
any resulting gain or loss recognized in the statement of income.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Any contingent consideration to be transferred by the Group is recognized at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration are
recognized in the statement of income.
Contingent liabilities assumed in a business combination are recognized at fair value and
subsequently measured at the higher of the amount that would be recognized as a provision
and the amount initially recognized.
Subsidiaries are consolidated from the date on which control is transferred to the Group and
are no longer consolidated from the date that control ceases.
All intercompany transactions and balances between Group companies are eliminated in full.
Changes in the ownership interest of a subsidiary that does not result in loss of control
are accounted for as an equity transaction. Consequently, if LafargeHolcim acquires or partially
disposes of a non-controlling interest in a subsidiary, without losing control, any difference
between the amount by which the non-controlling interest is adjusted and the fair value of the
consideration paid or received is recognized directly in retained earnings.
It is common practice for the Group to write put options and acquire call options in connection
with the remaining shares held by the non-controlling shareholders, mainly as part of a business
combination. If the Group has acquired a present ownership interest as part of a business
combination, the present value of the redemption amount of the put option is recognized as a
financial liability with any excess over the carrying amount of the non-controlling interest
recognized as goodwill. In such a case, the non-controlling interest is deemed to have been
acquired at the acquisition date and therefore any excess arising should follow the accounting
treatment as in a business combination. All subsequent fair value changes of the financial liability
are recognized in the statement of income and no earnings are attributed to the non-controlling
interest. However, where the Group has not acquired a present ownership interest as part of a
business combination, the non-controlling interest continues to receive an allocation of profit
or loss and is reclassified as a financial liability at each reporting date as if the acquisition took
place at that date. Any excess over the reclassified carrying amount of the non-controlling
interest and all subsequent fair value changes of the financial liability are recognized directly
in retained earnings.
Interests in joint arrangements are interests over which the Group exercises joint control and
are classified as either joint operations or joint ventures depending on the contractual rights
and obligations arising from the agreement rather than the legal structure of the joint
arrangement. If the interest is classified as a joint operation, the Group recognizes its share of
the assets, liabilities, revenues and expenses in the joint operation in accordance with the
relevant IFRSs.
Associates are companies in which the Group generally holds between 20 and 50 percent of the
voting rights and over which the Group has significant influence but does not exercise control.
Associates and joint ventures are accounted for using the equity method of accounting.
Goodwill arising from an acquisition is included in the carrying amount of the investment in
associated companies and joint ventures. Equity accounting is discontinued when the carrying
amount of the investment together with any long-term interest in an associated company or
joint venture reaches zero, unless the Group has also either incurred or guaranteed additional
obligations in respect of the associated company or joint venture.
LAFARGEHOLCIM ANNUAL REPORT 2017133 134
Foreign currency translation
The assets and liabilities of each of the Group’s companies are measured using the currency of
the primary economic environment in which the entity operates (“the functional currency”).
Statements of income of foreign entities are translated into the Group’s reporting currency at
average exchange rates for the year and statements of financial position are translated at the
exchange rates prevailing on December 31.
Goodwill arising from the acquisition of a foreign operation is expressed in the functional
currency of the foreign operation and is translated at the closing rate of the reporting period.
Foreign currency transactions translated into the functional currency are accounted for at the
exchange rates prevailing at the date of the transactions; gains and losses resulting from the
settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies are recognized in the statement of income, except when
deferred outside the statement of income as qualifying cash flow hedges or net investment
hedges.
Exchange differences arising on monetary items that form part of a company’s net investment
in a foreign operation are recognized in other comprehensive earnings (currency translation
adjustment) and are fully reclassified to the statement of income should the Group lose control
of a subsidiary, lose joint control over an interest in a joint arrangement or lose significant
influence in an associate. When a foreign operation is partially disposed of or sold, exchange
differences that were recorded in equity are recognized in the statement of income as part of
the net gain or loss on sale, except for a partial disposal of a subsidiary without loss of control,
where a proportionate share of the cumulative currency translation adjustments are re-attributed
to non-controlling interest and not recognized in the statement of income.
Operating profit
Operating profit excludes items that are not directly related to the Group’s normal operating
activities. These primarily relate to gains or losses on the disposal of property, plant and
equipment, gains or losses on the sale of Group companies, associates and joint ventures,
revaluation gains or losses on previously held equity interests, disputes with minority
shareholders, other major lawsuits, share of profit or loss of associates and financial income
and expenses.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Segment information
The Group is organized by countries. Countries or regional clusters are the Group’s operating
segments. For purposes of presentation to the Chief Operating Decision Maker (i.e. the Group
CEO), five regions corresponding to the aggregation of countries or regional clusters are
reported:
– Asia Pacific
– Europe
– Latin America
– Middle East Africa
– North America
While each operating segment is reviewed separately by the Chief Operating Decision Maker
(i.e. the Group CEO), the countries have been aggregated into five reportable segments as they
have similar long-term average gross margins and are similar in respect of products, production
processes, distribution methods and types of customers.
Each of the above reportable segments derives its revenues from the sale of cement, aggregates
and other construction materials and services.
The Group has three product lines:
– Cement, which comprises clinker, cement and other cementitious materials
– Aggregates
– Other construction materials and services, which comprises ready-mix concrete, concrete
products, asphalt, construction and paving, trading and other products and services
Group financing (including financing costs and financing income) and income taxes are managed
on a Group basis and are not allocated to any reportable segments.
Transfer prices between segments are set on at arm’s-length basis in a manner similar to
transactions with third parties. Segment revenues and segment results include transfers
between segments. Those transfers are eliminated on consolidation.
Cash and cash equivalents
Cash and cash equivalents are financial assets. Cash equivalents are readily convertible into a
known amount of cash with original maturities of three months or less. For the purpose of the
statement of cash flows, cash and cash equivalents comprise cash at banks and in hand, deposits
held on call with banks and other short-term, highly liquid investments, such as monetary mutual
funds, net of bank overdrafts.
LAFARGEHOLCIM ANNUAL REPORT 2017135 136
Accounts receivable
Accounts receivable consist of (a) current financial receivables, (b) prepaid expenses and other
current assets, and (c) trade accounts receivable. Trade accounts receivable are carried at the
original invoice amount less an estimate made for doubtful debts based on a review of all
outstanding amounts of the financial asset at year end.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined by using
the weighted average cost method. The cost of finished goods and work in progress comprises
raw materials and additives, direct labor, other direct costs and related production overheads.
Cost of inventories includes transfers from equity of gains or losses on qualifying cash flow
hedges relating to inventory purchases.
Long-term financial investments and other long-term assets
Long-term financial assets consist of (a) financial investments – third parties, (b) long-term
receivables – associates and joint ventures and (c) long-term receivables – third parties. Financial
investments in third parties are classified as available- for-sale and long-term receivables from
associates, joint ventures and third parties are classified as loans and receivables.
All purchases and sales of long-term financial assets are recognized on trade date, which is the
date that the Group commits to purchase or sell the asset. The purchase cost includes transaction
costs. Loans and receivables are measured at amortized cost using the effective interest method.
Available-for-sale investments are carried at fair value. Gains and losses arising from changes
in the fair value of available-for-sale investments are included in other comprehensive earnings
until the financial asset is either impaired or disposed of, at which time the cumulative gain or
loss previously recognized in other comprehensive earnings is reclassified from equity to the
statement of income.
Property, plant and equipment
Property, plant and equipment is valued at acquisition or construction cost less depreciation
and impairment losses. Cost includes transfers from equity of any gains or losses on qualifying
cash flow hedges. Depreciation is charged to write off the cost of property, plant and equipment
over their estimated useful lives, using the straight-line method, on the following bases:
Land and mineral reserves
No depreciation except on land with
raw material reserves
Buildings and installations
Machinery and equipment
20 to 40 years
3 to 30 years
Costs are only included in the asset’s carrying amount when it is probable that economic benefits
associated with the item will flow to the Group in future periods and the cost of the item can
be measured reliably. Costs include the initial estimate of the costs for dismantling and removing
the item and for restoring the site on which it is located. All other repairs and maintenance
expenses are charged to the statement of income during the period in which they are incurred.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Mineral reserves are valued at cost and are depreciated based on the unit-of-production method
over their estimated commercial lives.
Costs incurred to gain access to mineral reserves (typically stripping costs) are capitalized and
depreciated over the life of the quarry, which is based on the estimated tonnes of raw material
to be extracted from the reserves.
Interest costs on borrowings to finance construction projects, which necessarily take a substantial
period of time to get ready for their intended use, are capitalized during the period of time that
is required to complete and prepare the asset for its intended use. All other borrowing costs
are expensed in the period in which they are incurred.
Government grants received are deducted from property, plant and equipment and reduce the
depreciation charge accordingly.
Leases of property, plant and equipment where the Group has substantially all the risks and
rewards of ownership are classified as finance leases. Property, plant and equipment acquired
through a finance lease are capitalized at the date of the commencement of the lease term at
the present value of the minimum future lease payments or, if lower, at an amount equal to the
fair value of the leased asset as determined at the inception of the lease. The corresponding
lease obligations, excluding finance charges, are included in either current or long-term financial
liabilities.
For sale-and-lease-back transactions, the book value of the related property, plant or equipment
remains unchanged. Proceeds from a sale are included as a financing liability and the financing
costs are allocated over the term of the lease in such a manner that the costs are reported over
the relevant periods.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts,
and are recognized in the statement of income in “Profit (Loss) on disposals and other non-
operating income (expenses)”.
Non-current assets (or disposal groups) classified as held for sale
and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale and stated at the lower
of carrying amount and fair value less costs to sell if their carrying amount is to be recovered
principally through a sale transaction rather than through continuing use.
Non-current assets (including those that are part of a disposal group) are not depreciated or
amortized while they are classified as held for sale.
Gains and losses on disposals of non-current assets (or disposal groups) are determined by
comparing proceeds with carrying amounts, and are recognized in the statement of income in
“Profit (Loss) on disposals and other non-operating income (expenses)”.
A discontinued operation is a component of an entity that either has been disposed of or is
classified as held for sale, and represents a separate major line of business or geographical area
of operations, and is part of a single coordinated plan to dispose a separate major line of
business or geographical area of operations or is a subsidiary acquired exclusively with a view
to resale.
LAFARGEHOLCIM ANNUAL REPORT 2017137 138
Goodwill
Goodwill represents the excess of the aggregate of the consideration transferred and the amount
recognized for the non-controlling interest over the fair value of the net identi fiable assets
acquired and liabilities assumed. Such goodwill is tested annually for impairment or whenever
there are impairment indicators, and is carried at cost less accumulated impairment losses.
Goodwill on acquisitions of associates and joint ventures is included in the carrying amount of
the respective investments. If the consideration transferred is less than the fair value of the net
identifiable assets of the subsidiary acquired, the difference is recognized directly in the
statement of income.
On disposal of a subsidiary or joint operation, the related goodwill is included in the determination
of profit or loss on disposal.
For the purpose of impairment testing, goodwill arising from acquisitions of subsidiaries is
allocated to cash generating units expected to benefit from the synergies of the business
combination. Impairment losses relating to goodwill cannot be reversed in future periods.
For further information, refer to the note 26.
Intangible assets
Expenditure on acquired trademarks, mining rights, software, patented and unpatented
technology and other intangible assets are capitalized and amortized using the straight-line
method over their estimated useful lives, but not exceeding 20 years, except for mining rights
which are depleted on a volume basis.
Impairment of non-financial assets
At each reporting date, the Group assesses whether there is any indication that a non-financial
asset may be impaired. If any such indication exists, the recoverable amount of the non-financial
asset is estimated in order to determine the extent of the impairment loss, if any. Where it is
not possible to estimate the recoverable amount of an individual non-financial asset, the Group
estimates the recoverable amount of the smallest cash generating unit to which the non- financial
asset belongs. The recoverable amount is the higher of an asset’s or cash generating unit’s fair
value less costs of disposal and its value in use. If the recoverable amount of a non- financial
asset or cash generating unit is estimated to be less than its carrying amount, the carrying
amount of the non-financial asset or cash generating unit is reduced to its recoverable amount.
Impairment losses are recognized immediately in the statement of income.
Where an impairment loss subsequently reverses, the carrying amount of the non- financial
asset or cash generating unit is increased to the revised estimate of its recoverable amount.
However, this increased amount cannot exceed the carrying amount that would have been
determined if no impairment loss had been recognized for that non-financial asset or cash
generating unit in prior periods. A reversal of an impairment loss is recognized immediately in
the statement of income.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Impairment of financial assets
At each reporting date, the Group assesses whether there is any indication that a financial asset
may be impaired. An impairment loss in respect of a financial asset measured at amortized cost
is calculated as the difference between its carrying amount and the present value of the future
estimated cash flows discounted at the original effective interest rate. The carrying amount of
the asset is reduced through the use of an allowance account. The amount of the loss is
recognized in the statement of income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed, to the extent that the carrying value of the asset does
not exceed its amortized cost at the reversal date. Any reversal of an impairment loss is
recognized in the statement of income.
An impairment loss in respect of an available-for-sale financial asset is recognized in the statement
of income and is calculated by reference to its fair value. Individually significant financial assets
are tested for impairment on an individual basis. Reversals of impairment losses on equity
instruments classified as available-for-sale are recognized in other comprehensive earnings,
while reversals of impairment losses on debt instruments are recognized in the statement of
income if the increase in fair value of the instrument can be objectively related to an event
occurring after the impairment loss was recognized in the statement of income. Impairment
losses of financial assets carried at cost cannot be reversed.
Objective evidence that an available-for-sale financial asset is impaired includes observable data
about the following loss events:
– the occurrence of significant financial difficulties of the issuer or obligor;
– adverse changes in national or local economic conditions have occurred;
– adverse changes that have taken place in the technological, economic or legal environment;
and
– the existence of a significant or prolonged decline in the fair value of an investment in an
equity instrument below its cost.
In relation to accounts receivable, a provision for doubtful debts is made when there is objective
evidence (such as the probability of insolvency or significant financial diffi culties of the debtor)
that the Group will not be able to collect all of the amounts due under the original terms of the
invoice. The carrying amount of accounts receivable is reduced through use of an allowance
account. Impaired accounts receivable are derecognized when they are assessed as uncollectable.
LAFARGEHOLCIM ANNUAL REPORT 2017139 140
Derivative instruments
The Group mainly uses derivative financial instruments in order to reduce its exposure to
changes in interest rates, foreign currency exchange rates and commodity prices. The Group
enters into foreign exchange contracts and interest rate swaps to hedge certain exposures
relating to debt, foreign exchange contracts to hedge firm commitments for the acquisition of
certain property, plant and equipment and into swaps and options in order to manage its
exposure to commodity risks.
Derivatives are regarded as held for hedging unless they do not meet the strict hedging criteria
stipulated under IAS 39 Financial Instruments: Recognition and Measurement, in which case they
will be classified as held for trading. Financial derivatives expected to be settled within 12 months
after the end of the reporting period are classified as current liabilities or current assets.
Movements in the cash flow hedging reserve are shown in the consolidated statement of changes
in equity.
Derivatives are initially recognized at fair value on the date a derivative contract is entered into
and are subsequently remeasured at their fair value. The method of recognizing the resulting
gain or loss is dependent on the nature of the item being hedged. On the date a derivative
contract is entered into, the Group designates certain derivatives as either (a) a hedge of the
fair value of a recognized asset or liability (fair value hedge) or (b) a hedge of a particular risk
associated with a recognized asset or liability, such as future interest payments on floating rate
debt (cash flow hedge) or (c) a hedge of a foreign currency risk of a firm commitment (cash flow
hedge) or (d) a hedge of a net investment in a foreign entity (accounted for similarly to a cash
flow hedge).
Changes in the fair value of derivatives that are designated and qualify as fair value hedges and
that are highly effective are recorded in the statement of income, along with any changes in
the fair value of the hedged asset or liability that is attributable to the hedged risk.
Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and
that are highly effective are recognized outside the statement of income and accumulated in
the cash flow hedging reserve. Where the firm commitment results in the recognition of an
asset, for example, property, plant and equipment, or a liability, the gains or losses previously
deferred in the cash flow hedging reserve are transferred from equity and included in the initial
measurement of the non-financial asset or liability. Otherwise, amounts deferred in equity are
transferred to the statement of income and classified as income or expense in the same periods
during which the cash flows, such as hedged firm commitments or interest payments, affect
the statement of income.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Long-term financial liabilities
Bank loans acquired and bonds issued are recognized initially at the proceeds received, net of
transaction costs incurred. Subsequently, bank loans and bonds are stated at amortized cost,
using the effective interest method, with any difference between proceeds (net of transaction
costs) and the redemption value being recognized in the statement of income over the term of
the borrowings.
Financial liabilities that are due within 12 months after the end of the reporting period are
classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability until more than 12 months after the reporting period. The repayment of the
current portion of such liabilities is shown in the statement of cash flows in the line “Repayment
of long-term financial liabilities”.
Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required
in determining the provision and liability for income taxes. There are many transactions and
calculations where the ultimate tax determination is uncertain during the ordinary course of
business. The Group recognizes liabilities for tax issues based on estimates of whether additional
taxes will be due, based on its best interpretation of the relevant tax laws and rules. Where the
final tax outcome of these matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax provisions in the period in which
such determination is made.
Deferred taxes
Deferred tax is provided, using the balance sheet liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Tax rates enacted or substantively enacted by the end of the reporting period are
used to determine the deferred tax expense.
Deferred tax assets are recognized to the extent that it is probable that future taxable profit
will be available against which deductible temporary differences or unused tax losses can be
utilized. Deferred tax liabilities are recognized for taxable temporary differences arising from
investments in subsidiaries, associates and interests in joint arrangements except where the
Group is able to control the distribution of earnings from these respective entities and where
dividend payments are not expected to occur in the foreseeable future.
Deferred tax is charged or credited in the statement of income, except when it relates to items
credited or charged outside the statement of income, in which case the deferred tax is treated
accordingly.
Long-term income tax liabilities
In the event the Group expects to settle income taxes payable beyond the next 12 months, they
are classified as long-term income taxes payable and are recognized at the discounted amount.
LAFARGEHOLCIM ANNUAL REPORT 2017141 142
Site restoration and other environmental provisions
The Group provides for the costs of restoring a site where a legal or constructive obligation
exists. The estimated future costs for known restoration requirements are determined on a
site-by-site basis and are calculated based on the present value of estimated future costs. The
cost of raising a provision before exploitation of the raw materials has commenced is included
in property, plant and equipment and depreciated over the life of the site. The effect of any
adjustments to the provision due to further environmental damage as a result of exploitation
activities is recorded through operating costs over the life of the site, in order to reflect the best
estimate of the expenditure required to settle the obligation at the end of the reporting period.
Changes in the measurement of a provision that result from changes in the estimated timing
or amount of cash outflows, or a change in the discount rate, are added to or deducted from
the cost of the related asset to the extent that they relate to the asset’s installation, construction
or acquisition. All provisions are discounted to their present value.
Restructuring provisions
A provision for restructuring costs is recognized when the restructuring plans have been
approved by the management, a detailed formal plan exists and when the Group has raised a
valid expectation in those affected that it will carry out the restructuring plan either by
announcing its main features to those affected by it or starts to implement that plan and
recognize the associated restructuring costs. The provision for restructuring only includes direct
expenditures arising from the restructuring, notably severance payments, early retirement
costs, costs for notice periods not worked and other costs directly linked largely with the closure
of the facilities.
Other provisions
A provision is recognized when a legal or constructive obligation arising from past events exists,
it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of this amount.
Emission rights
The initial allocation of emission rights granted is recognized at nominal amount (nil value).
Where a Group company has emissions in excess of the emission rights granted, it will recognize
a provision for the shortfall based on the market price at that date. The emission rights are held
for compliance purposes only and therefore the Group does not intend to speculate with these
in the open market.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Employee benefits – Defined benefit plans
Some Group companies provide defined benefit pension plans for employees. Pro fessionally
qualified independent actuaries value the defined benefit obligations on a regular basis. The
obligation and costs of pension benefits are determined using the projected unit credit method.
The projected unit credit method considers each period of service as giving rise to an additional
unit of benefit entitlement and measures each unit separately to build up the final obligation.
Past service costs, which comprise plan amendments and curtailments, as well as gains or losses
on the settlement of pension benefits are recognized immediately in the statement of income
when they occur.
Remeasurements, which comprise actuarial gains and losses on the pension obligation, the
return on plan assets and changes in the effect of the asset ceiling excluding amounts in net
interest, are recognized directly in other comprehensive earnings and are not reclassified to
the statement of income in a subsequent period. The pension obligation is measured at the
present value of estimated future cash flows using a discount rate that is determined by
reference to the interest rate on high quality corporate bonds where the currency and terms of
the corporate bonds are consistent with the currency and estimated terms of the defined benefit
obligation.
A net pension asset is recorded only to the extent that it does not exceed the present value of
any economic benefits available in the form of refunds from the plan or reductions in future
contributions to the plan.
The cost for defined benefit plans charged to the statement of income consists of service cost
(current service cost, past service cost and curtailments as well as gains or losses on settlements)
and the net interest expense. The service costs are recorded in “Cost of goods sold”, “Distribution
and selling expenses” or “Administrative expenses” based on the beneficiaries of the plan and
the net interest expense is recorded in “Financial expenses”.
LAFARGEHOLCIM ANNUAL REPORT 2017143 144
Employee benefits – Defined contribution plans
In addition to the defined benefit plans described above, some Group companies sponsor
defined contribution plans based on local practices and regulations. The Group’s contributions
to defined contribution plans are charged to the statement of income in the period to which
the contributions relate.
Employee benefits – Other long-term employment benefits
Other long-term employment benefits include long-service leave or sabbatical leave, medical
aid, jubilee or other long-service benefits, long-term disability benefits and, if they are not
expected to be settled wholly within twelve months after the year end, profit sharing, variable
and deferred compensation.
The measurement of these obligations differs from defined benefit plans in that all
remeasurements are recognized immediately in the statement of income and not in other
comprehensive earnings.
Employee benefits – Equity compensation plans
The Group operates various equity-settled share-based compensation plans. The fair value of
the employee services received in exchange for the grant of the options or shares is recognized
as an expense. The total amount to be expensed is determined by reference to the fair value of
the equity instruments granted. The amounts are charged to the statement of income over the
relevant vesting periods and adjusted to reflect actual and expected levels of vesting.
Equity
Incremental costs directly attributable to the issuance of ordinary shares and share options are
recognized as a deduction from equity, net of any tax effects.
Treasury shares (own equity instruments held by the Group) are accounted for as a reduction
of equity at acquisition cost and are not subsequently remeasured. When shares are sold out
of treasury shares, the resulting profit or loss is recognized in equity, net of tax.
Revenue recognition
Revenue is recognized when it is probable that the economic benefits associated with the
transaction will flow to the entity and the amount of the revenue can be measured reliably.
Revenue is measured at the fair value of the consideration received net of sales taxes and
discounts. Revenue from the sale of goods is recognized when delivery has taken place and the
transfer of risks and rewards of ownership has been completed. The significant risks and rewards
of products sold are transferred according to the specific delivery terms that have been formally
agreed with the customer, generally upon delivery when the bill of lading is signed by the
customer as evidence that they have accepted the product delivered to them.
Interest is recognized on a time proportion basis that reflects the effective yield on the asset.
Dividends are recognized when the shareholder’s right to receive payment is established.
Contingent liabilities
Contingent liabilities arise from past events whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of LafargeHolcim. They are accordingly disclosed in the notes to the financial statements.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 3.
RISK MANAGEMENT
Group Risk Management
Group Risk Management supports the Board of Directors, the Executive Committee and the
management teams of the countries in analyzing the overall risk exposure. Group Risk
Management aims to systematically identify, monitor and manage major risks the Group
encounters. All types of risks from industry, operations, finance and legal, up to the external
business environment are considered including compliance, sustainable development and
reputational aspects. Risks are understood as the effect of uncertainty on business objectives
which can be an opportunity or a threat. The risk horizon includes long-term strategic risks but
also short- to medium-term business risks. Potential risks are identified and evaluated at an
early stage and monitored. Mitigating actions are proposed and implemented at the appropriate
level so that risk management remains a key responsibility of the line management. Risk transfer
through insurance solutions forms an integral part of risk management.
The Group’s risk map is established by strategic, operational and topical risk assessments which
are combined into a Group risk report. Besides the Countries, the Board of Directors, the
Executive Committee and Corporate Function Heads are involved in the risk assessment during
the Group’s management cycle. The results of the annual Group risk process are presented to
the Executive Committee and the conclusions reported to the Board of Directors and the Finance
& Audit Committee.
Country risk
LafargeHolcim’s major presence in developing markets exposes the Group to risks such as
political, financial and social uncertainties and turmoil, terrorism, civil war and unrest.
The impact of United Kingdom’s withdrawal from the European Union (“Brexit”) has been
assessed and preventive measures have been taken. Relevant currency exposures and
counterparty risks were reduced before the BREXIT vote.
Financial Risk Management
The Group’s activities expose it to a variety of financial risks, including liquidity, interest rate,
foreign exchange, commodity and credit risk. The Group’s overall risk management focuses on
the unpredictability of financial markets and seeks to minimize potential adverse effects on the
financial performance of the Group. The Group uses derivative financial instruments such as
foreign exchange contracts, commodity and interest rate swaps to hedge certain exposures.
The Group does not enter into derivative or other financial transactions which are unrelated to
its business needs.
Financial risk management within the Group is governed by policies approved by key management
personnel. It provides principles for overall risk management as well as policies covering specific
areas such as interest rate risk, foreign exchange risk, credit risk, use of derivative financial
instruments and investing of cash.
Liquidity risk
Group companies need liquidity to meet their obligations. Individual companies are responsible
for their own cash balances and the raising of internal and external credit lines to cover the
liquidity needs, subject to guidance by the Group.
The Group monitors its liquidity risk by using a recurring liquidity planning tool and maintains
cash, readily realizable marketable securities and unused committed credit lines to meet its
liquidity requirements. In addition, the strong creditworthiness of the Group allows it to access
international financial markets for financing purposes.
LAFARGEHOLCIM ANNUAL REPORT 2017145 146
Contractual maturity analysis
Million CHF
2017
Payables 1
Loans from financial institutions
Bonds, private placements and
commercial paper notes
Interest payments
Finance leases
Derivative financial instruments net 2
Financial guarantees
Total
2016
Payables 1
Loans from financial institutions
Bonds, private placements and
commercial paper notes
Interest payments
Finance leases
Derivative financial instruments net 2
Financial guarantees
Total
Within
1 year
Within
2 years
Within
3 years
Within
4 years
Within
5 years
Thereafter
Total
Carrying
amount
Contractual undiscounted cash flows
3,743
1,887
478
497
189
98
37
3,743
3,186
3,743
3,177
1,822
1,703
1,222
1,666
676
502
14
(56)
0
12
15
0
379
7
108
0
316
6
0
0
929
270
4
0
0
7,662
15,003
15,258
2,519
4,662
340
41
0
11
84
67
11
64
64
8,086
2,710
2,213
2,177
1,301
10,270
26,757
3,345
2,617
514
316
220
110
18
3,345
3,794
3,345
3,770
2,325
1,677
1,680
1,204
1,608
6,969
15,463
15,773
730
557
435
16
(34)
0
11
0
48
9
3
59
320
5
109
0
267
2,571
4,880
333
4
0
0
44
0
11
90
79
118
67
35
8,999
2,807
2,502
1,859
1,989
9,612
27,770
1 Payables include trade account payables and payables related to the purchase of property, plant and equipment included in other current liabilities.
2 The contractual cash flows include both cash in- and outflows. Additional information is disclosed in note 30.
The maturity profile is based on contractual undiscounted amounts including both interest and
principal cash flows and is based on the earliest date on which LafargeHolcim can be required
to pay.
Contractual interest cash flows relating to a variable interest rate are calculated based on the
rates prevailing as of December 31.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS
Interest rate risk
Interest rate risk arises from movements in interest rates which could affect the Group’s financial
result and market values of its financial instruments. The Group is primarily exposed to
fluctuations in interest rates on its financial liabilities at floating rates which may cause variations
in the Group’s financial result. The exposure is mainly addressed through the management of
the fixed/floating ratio of financial liabilities. To manage this mix, the Group may enter into
interest rate swap agreements, in which it exchanges periodic payments based on notional
amounts and agreed-upon fixed and floating interest rates. The Group is also exposed to the
evolution of interest rates and credit markets for its future refinancing, which may result in a
lower or higher cost of financing. The Group constantly monitors credit markets and the aim of
its financing strategy is to achieve a well-balanced maturity profile to reduce both the risk of
refinancing and large fluctuations of its financing cost.
Interest rate sensitivity
The Group’s sensitivity analysis has been determined based on the interest rate exposure relating
to the Group’s financial liabilities at a variable rate on a post hedge basis as at December 31.
A 1 percentage point change is used when the interest rate risk is reported internally to key
management personnel and represents management’s assessment of a reasonably possible
change in interest rates.
At December 31, 2017, a 1 percentage point shift in interest rates, with all other assumptions
held constant, would result in approximately CHF 34 million (2016: CHF 49 million) of annual
additional/lower financial expenses before tax on a post hedge basis.
The Group’s sensitivity to interest rates is lower than last year mainly due to the decrease of
current financial liabilities as well as the decrease of the ratio of financial liabilities at variable
rates to total financial liabilities from 39 percent to 31 percent.
Foreign exchange risk
The Group’s global footprint exposes it to foreign exchange risks.
The translation of foreign operations into the Group reporting currency leads to currency
translation effects. The Group may hedge certain net investments in foreign entities with foreign
currency borrowings or other instruments. To the extent that the net investment hedge is
effective, all foreign exchange gains or losses are recognized in equity and included in currency
translation adjustments.
Due to the local nature of the construction materials business, foreign exchange risk is limited.
However, for many Group companies, income will be primarily in local currency, whereas debt
servicing and a significant amount of capital expenditures may be in foreign currencies. As a
consequence thereof, the Group may enter into derivative contracts which are designated as
either cash flow hedges or fair value hedges, as appropriate and also include the hedging of
forecasted transactions.
LAFARGEHOLCIM ANNUAL REPORT 2017147 148
Foreign exchange sensitivity
The Group’s sensitivity analysis has been determined based on the Group’s net transaction
exposure that arises on monetary financial assets and liabilities at December 31 that are
denominated in a foreign currency other than the functional currency in which they are
measured. The Group’s net foreign currency transaction risk mainly arises from CHF, USD and
EUR against the respective currencies the Group operates in.
A 5 percent change is used when the net foreign currency transaction risk is reported internally
to key management personnel and represents management’s assessment of a reasonably
possible change in foreign exchange rates.
A 5 percent change in CHF, USD and EUR against the respective currencies the Group operates
in would have an immaterial impact on foreign exchange (loss) gains net on a post hedge basis
in both the current and prior year.
Impacts on equity due to derivative instruments are considered as not material based on the
shareholders’ equity of the Group.
Commodity risk
The Group is subject to commodity risk with respect to price changes mainly in the electricity,
natural gas, petcoke, coal, oil refined products and sea freight markets. The Group uses derivative
instruments to hedge part of its exposure to these risks. Derivative instruments are generally
limited to swaps and standard options.
Credit risk
Credit risks arise, among others, from the possibility that customers may not be able to settle
their obligations as agreed. To manage this risk, the Group periodically assesses the financial
reliability of customers.
Credit risks, or the risk of counterparties defaulting, are constantly monitored. Counterparties
to financial instruments consist of a large number of established financial institutions. The Group
does not expect any counterparty to be unable to fulfill its obligations under its respective
financing agreements. At year end, LafargeHolcim has no significant concentration of credit
risk with any single counterparty or group of counterparties.
The maximum exposure to credit risk is represented by the carrying amount of each financial
asset, including derivative financial instruments, in the consolidated statement of financial
position.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Tax risk
The Group’s tax filings for various periods will be subject to audit by tax authorities in most
jurisdictions in which the Group operates. In particular, such jurisdictions may have extended
focus on issues related to the taxation of multinational corporations.
These audits may result in assessments of additional taxes, as well as interest and/or penalties,
and could affect the Group’ s financial results. Due to the uncertainty associated with tax matters,
it is possible that at some future date, liabilities resulting from audits or litigations could vary
significantly from the Group’s provisions.
Changes in tax laws, regulations, court rulings, related interpretations, and tax accounting
standards in countries in which the Group operates may adversely affect its financial results.
Legal risk
In the ordinary course of its business, the Group is involved in lawsuits, claims of various natures,
investigations and proceedings, including product liability, commercial, environmental, health
and safety matters, etc. The Group operates in countries where political, economic, social and
legal developments could have an impact on the Group’s operations.
In connection with disposals made in the past years, the Group provided customary warranties
notably related to accounting, tax, employees, product quality, litigation, competition, and
environmental matters. LafargeHolcim and its subsidiaries received or may receive in the future
notice of claims arising from said warranties.
Capital structure
The Group’s objectives when managing capital are to secure the Group’s financial needs as a
going concern as well as to cater for its growth targets, in order to provide returns to shareholders
and benefits for other stakeholders and to maintain a solid investment grade rating.
The Group manages the capital structure and makes adjustments to it in light of changes in
economic conditions, business activities, investment and expansion programs and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares, increase debt or sell assets to reduce debt.
The Group monitors capital, among others, on the basis of the ratio of net financial debt to
recurring EBITDA.
LAFARGEHOLCIM ANNUAL REPORT 2017149 150
Million CHF
31.12.2016
Cash flows Non cash flows
31.12.2017
Current financial liabilities 1
Long-term financial liabilities
Gross financial debt
Derivative assets
Cash and cash equivalents
Net financial debt
4,976
14,744
19,720
(74)
(4,923)
14,724
(115)
(1,032)
(1,147)
0
670
(477)
(1,019)
1,067
48
16
35
99
3,843
14,779
18,621
(58)
(4,217)
14,346
1 Including bank overdraft cash movement for CHF 48 million.
Million CHF
2017
2016
Net financial debt as at beginning of the period
Cash flow from operating activities
Cash flow from investing activities
Payout on ordinary shares
Dividends paid to non-controlling interests
Capital (paid-in by) repaid to non-controlling interest
Movements of treasury shares
Increase in participation in existing Group companies
Total cash effective movements
as per statement of cash flows
Cash proceeds reflected in the financing flows 1
Total cash effective movements as per Net financial debt
Change in scope
Change in fair values
Currency translation effects
Others 2
Total non – cash effective movements
14,724
(3,040)
675
1,212
237
(63)
489
13
(477)
(181)
(658)
106
(83)
378
(119)
281
17,266
(3,295)
(706)
909
249
20
( 5)
375
(2,453)
(200)
(2,653)
(221)
(170)
84
417
111
Net financial debt as at closing of the period
14,346
14,724
1 From the disposal of 73.5 percent listed shares in Sichuan Shuangma Cement Co. Ltd, these amounts are
presented in the cash flow from financing activities in the line Net movement in current financial liabilities.
2 Out of which, in 2016, the liability for the put option related to China transactions amounted to CHF 389 million
which was presented in the statement of financial position as current financial liability.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS The net financial debt to recurring EBITDA ratio is used as an indicator of financial risk and
shows how many years it would take the Group to pay back its debt.
Million CHF
Net financial debt
Recurring EBITDA 2
Net financial debt/recurring EBITDA
2017
14,346
5,990
2.4
2016
Restated 1
14,724
5,950
2.5
1 Restated due to change in presentation, see note 2.
2 Excluding restructuring, litigation, implementation and other non-recurring costs, but including contribution from
joint ventures, previously named “Operating EBITDA adjusted”.
Fair value estimation
The fair value of publicly traded financial instruments is generally based on quoted market
prices at the end of the reporting period.
For non-publicly traded financial instruments, the fair value is determined by using a variety of
methods, such as the discounted cash flow method and option pricing models. The valuation
methods seek to maximize the use of observable market data existing at the end of the reporting
period.
LAFARGEHOLCIM ANNUAL REPORT 2017151 152
The fair value of current financial assets and liabilities at amortized cost are assumed to
approximate their carrying amounts due to the short-term nature of these financial instruments.
Carrying amount (by measurement basis)
Amortized
cost
Fair value
level 1
Fair value
level 2
Total
Comparison
Fair value
Fair values as of December 31, 2017
Million CHF
IAS 39 Category
Current financial assets
Cash and cash equivalents
Financial assets
Trade accounts receivable
Financial receivables
Derivative assets
Derivative assets
Long-term financial assets
Financial receivables
Loans and receivables at
amortized cost
Loans and receivables at
amortized cost
Held for hedging at fair value
Held for trading at fair value
Loans and receivables at
amortized cost
Financial investments third parties
Financial investments at cost
Derivative assets
Held for hedging at fair value
4,217
3,340
262
432
85
Current financial liabilities
Payables 2
Financial liabilities
Derivative liabilities
Derivative liabilities
Long-term financial liabilities
Financial liabilities at amortized cost
Financial liabilities at amortized cost
3,743
3,734
Held for hedging at fair value
Held for trading at fair value
4,217
3,340
262
42
2
432
85
14
3,743
3,734
22
86
42
2
14
22
86
432 1
Financial liabilities
Financial liabilities at amortized cost
14,766
14,766
15,655 3
Derivative liabilities
Held for hedging at fair value
13
13
1 The comparison fair value for long-term receivables consists of CHF 12 million level 1 and CHF 420 million level 2 fair value measurements.
2 Payables include trade account payables and payables related to the purchase of property, plant and equipment included in other current liabilities.
3 The comparison fair value for long-term financial liabilities consists of CHF 12,760 million level 1 and CHF 2,895 million level 2 fair value measurements.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Carrying amount (by measurement basis)
Amortized
cost
Fair value
level 1
Fair value
level 2
Total
Comparison
Fair value
Fair values as of December 31, 2016
Million CHF
IAS 39 Category
Current financial assets
Cash and cash equivalents
Financial assets
Trade accounts receivable
Financial receivables
Derivative assets
Derivative assets
Long-term financial assets
Financial receivables
Loans and receivables at amortized
cost
Loans and receivables at amortized
cost
Held for hedging at fair value
Held for trading at fair value
Loans and receivables at amortized
cost
Financial investments third parties
Financial investments at cost
4,923
2,826
207
638
92
Financial investments third parties
Available-for-sale financial assets
5
Derivative assets
Derivative assets
Held for hedging at fair value
Held for trading at fair value
Current financial liabilities
Payables 2
Financial liabilities
Derivative liabilities
Derivative liabilities
Long-term financial liabilities
Financial liabilities at amortized cost
Financial liabilities at amortized cost
3,345
4,946
Held for hedging at fair value
Held for trading at fair value
4,923
2,826
207
60
8
638
636 1
92
75
6
1
3,345
4,946
9
21
60
8
70
6
1
9
21
Financial liabilities
Financial liabilities at amortized cost
14,666
14,666
15,386 3
Derivative liabilities
Held for hedging at fair value
79
79
1 The comparison fair value for long-term receivables consists of CHF 6 million level 1 and CHF 630 million level 2 fair value measurements.
2 Payables include trade account payables and payables related to the purchase of property, plant and equipment included in other current liabilities.
3 The comparison fair value for long-term financial liabilities consists of CHF 13,049 million level 1 and CHF 2,337 million level 2 fair value measurements.
The table above shows the carrying amounts and fair values of financial assets and liabilities.
LAFARGEHOLCIM ANNUAL REPORT 2017153
154
The levels of fair value hierarchy used are defined as follows:
– Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities. The types of assets carried at level 1 fair value are
equity and debt securities listed in active markets;
– Level 2 fair value measurements are those derived from valuation techniques using inputs for
the asset or liability that are observable market data, either directly or indirectly. Such valuation
techniques include the discounted cash flow method and option pricing models. For example,
the fair value of interest rate and currency swaps is determined by discounting estimated
future cash flows, and the fair value of forward foreign exchange contracts is determined
using the forward exchange market at the end of the reporting period; and
– Level 3 fair value measurements are those derived from valuation techniques using inputs for
the asset or liability that are not based on observable market data. In 2017 and 2016, there
were no financial assets and liabilities allocated to level 3.
There have been no transfers between the different hierarchy levels in 2017 and 2016.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 4.
CHANGES IN THE SCOPE OF CONSOLIDATION
4.1 Divestments during the current reporting period
China
The streamlining of the Group’s operations in China, which started in 2016, continued in 2017.
The impact in the 2016 financial statements is explained in 4.2 below. The transactions entered
included:
– the disposal of the non-listed cement assets in China to the Group’s joint venture Huaxin; and
– the disposal of 73.5 percent of the listed shares in Sichuan Shuangma together with a put and
call option agreement to repurchase the underlying Shuangma cement companies.
The disposal of the non-listed cement assets was finalised in the first quarter 2017, operations
and assets were disposed from Lafarge China Cement Ltd to the Group’s joint venture Huaxin
for a total consideration of CHF 257 million. The assets and the related liabilities were classified
as held for sale on December 31, 2016.
From the disposal of 73.5 percent of the listed shares in Sichuan Shuangma Cement Co. Ltd. in
2016, CHF 352 million was received on an escrow account in December 2016 and was released
in 2017. Since the Group did not dispose of the underlying cement assets, the cash received up
to the amount of the initial put option liability is presented as financing cash flow, resulting in
2017 in CHF 181 million presented in the cash flow from financing activities in the line Net
movement in current financial liabilities and the remainder in the cash flow from investing
activities in the line Disposal of participation in Group companies. An additional amount of CHF
114 million is only due in 2018 and is presented in the current financial receivables.
The put and call option agreement entered into in 2016 resulted in LafargeHolcim retaining
control over four Shuangma cement companies. The put and call option agreement expired in
December 2017 and two cement companies were deconsolidated with a loss of CHF 40 million
recognized. As LafargeHolcim signed a Share Purchase Agreement for the remaining two cement
companies, the Group continued to maintain control with a corresponding net liability of CHF
215 million presented in the statement of financial position as current financial liability. The
assets and associated liabilities for these two cement companies are classified as held for sale
and a write-down of CHF 58 million was recorded.
Vietnam
On February 28, 2017, the Group disposed of its 65 percent shareholding in LafargeHolcim
Vietnam for a total consideration of CHF 546 million before taxes which resulted in a net gain
before taxes of CHF 339 million. The assets and the related liabilities were classified as held for
sale on December 31, 2016.
Chile
On August 14, 2017, the Group disposed of its 54 percent shareholding in Cemento Polpaico
S.A. (Chile) for a total consideration of CHF 114 million before taxes which resulted in a net loss
before taxes of CHF 40 million. The assets and the related liabilities were classified as held for
sale on December 31, 2016.
LAFARGEHOLCIM ANNUAL REPORT 2017155
156
4.2 Divestments during the previous comparative reporting period
South Korea
On April 29, 2016, the Group disposed of Lafarge Halla Cement Corporation in South Korea for
a total consideration of CHF 522 million which resulted in no gain or loss before taxes.
Morocco and Sub-Saharan African countries
On July 4, 2016, the shareholders of Lafarge Ciments and Holcim (Maroc) S.A. agreed to merge
the two companies by an exchange of shares, the new merged company being renamed as
LafargeHolcim Maroc. As a result, the Group deconsolidated Holcim (Maroc) S.A. and recorded
a net gain before tax of CHF 236 million for a total consideration of CHF 498 million, of which
CHF 233 million were received in cash.
In conjunction with the transaction above, the Group further reinforced its partnership with SNI
by creating a joint venture for Francophone Sub-Saharan Africa, named LafargeHolcim Maroc
Afrique. Four African companies were sold to this joint venture during the second semester
2016:
– On July 4, 2016, the Group company LafargeHolcim Côte d’Ivoire, previously named Société
de Ciments et Matériaux (SOCIMAT), was sold for a total consideration of CHF 73 million
resulting in a net gain before taxes of CHF 9 million;
– On October 10, 2016, the Group company Cimenteries du Cameroun was sold for a total
consideration of CHF 54 million resulting in a net gain before taxes of CHF 15 million;
– On October 10, 2016, the joint venture Groupement SCB Lafarge in Benin was sold for a total
consideration of CHF 60 million resulting in a net gain before taxes of CHF 26 million; and
– On December 20, 2016, the Group company LafargeHolcim Guinée, previously named Ciment
de Guinée S.A., was sold for a total consideration of CHF 5 million resulting in a net loss before
taxes of CHF 2 million.
Sri Lanka
On August 10, 2016, the Group disposed of its entire interest in Holcim (Lanka) Ltd for a total
consideration of CHF 365 million which resulted in a net gain before taxes of CHF 225 million.
Saudi Arabia
On August 17, 2016, the Group disposed of its 25 percent interest in the associated company
Al Safwa Cement Company in Saudi Arabia for a total consideration of CHF 123 million which
resulted in a net loss before taxes of CHF 9 million.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS India
On October 4, 2016, the Group disposed of Lafarge India Pvt. Limited for a total con sideration
of CHF 1,168 million resulting in a net gain before taxes of CHF 35 million.
Turkey
On November 29, 2016, the Group disposed of its 50 percent interest in the joint venture Dalsan
Alci Sanayi Ve Ticaret AS for a total consideration of CHF 36 million resulting in no gain or loss
before taxes.
China
The Group streamlined its operations in China, which resulted in a net gain before taxes of
CHF 192 million. The transactions were entered into at the same time and in contemplation of
each other and consisted of the following:
– the disposal of 73.5 percent of the listed shares in Sichuan Shuangma Cement Co. Ltd. for a
total consideration of CHF 658 million resulting in a gain before taxes of CHF 370 million. At
the same time, the parties entered into a put and call option agreement resulting in
LafargeHolcim retaining control over Shuangma’s cement assets. As of December 31, 2016,
the liability for this put option amounted to CHF 389 million and was presented in the statement
of financial position as current financial liability. Of the total consideration, CHF 200 million
was received in cash in the fourth quarter 2016, CHF 352 million was received on an escrow
account and presented as prepaid expenses and other current assets and the remaining
amount of CHF 105 million due in 2018 recorded as a long-term financial receivable. Since the
Group did not dispose of the underlying cement assets, the cash received up to the amount
of the put option liability was presented as financing cash flow. Accordingly, CHF 200 million
was reflected in the line Net movement in current financial liabilities of the cash flow statement;
and
– the disposal of non-listed cement assets in China to Huaxin Cement Co. Ltd. for a consideration
of CHF 257 million. These assets and associated liabilities were classified as held for sale in
the fourth quarter 2016 which resulted in a loss of CHF 178 million. The transaction was closed
in the first quarter 2017.
4.3 Finalization of the merger between Holcim and Lafarge
The merger between Holcim and Lafarge announced publicly on April 7, 2014 became effective
on July 10, 2015 after completion of the public exchange offer filed by Holcim Ltd for all the
outstanding shares of Lafarge S.A.
As at July 9, 2016, the purchase price allocation (PPA) was completed and therefore the fair
values assigned to the identifiable assets acquired and liabilities assumed became final. The
main changes in the purchase price allocation in 2016 related to property, plant and equipment,
intangible assets and contingent liabilities and resulted in an increase in the goodwill of
CHF 522 million. The final fair values of the net assets acquired are as follows:
LAFARGEHOLCIM ANNUAL REPORT 2017157 158
Million CHF
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses and other current assets
Assets classified as held for sale
Total currrent assets
Long-term financial assets
Investments in associates and joint ventures
Property, plant and equipment
Intangible assets
Deferred tax assets
Other long-term assets
Total non-current assets
Trade accounts payable
Current financial liabilities
Current income tax liabilities
Other current liabilities
Short-term provisions
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Long-term financial liabilities
Defined benefit obligations
Deferred tax liabilities
Long-term provisions
Total non-current liabilities
Fair value of net assets acquired
Non-controlling interest
Fair value of net assets acquired attributable to shareholders of Lafargeholcim Ltd
Consideration for the business combination
Fair value of net assets acquired attributable to shareholders of LafargeHolcim Ltd
Goodwill
Fair Values dis-
closed in Q4 2015
PPA refinements
in 2016
Final Fair Values
1,704
2,544
1,706
571
4,874
11,399
657
1,644
20,177
1,030
99
56
23,663
2,074
2,272
81
1,646
106
367
6,546
13,320
1,194
2,732
992
18,237
10,279
2,407
7,872
19,483
7,872
11,611
(8)
(33)
(41)
(21)
(5)
(216)
(123)
2
(363)
(10)
9
(1)
(85)
271
186
(589)
(67)
(522)
(522)
522
1,704
2,536
1,673
571
4,874
11,358
636
1,639
19,961
907
101
56
23,300
2,064
2,272
81
1,655
106
367
6,545
13,320
1,194
2,647
1,263
18,423
9,690
2,340
7,350
19,483
7,350
12,133
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 5.
PRINCIPAL EXCHA NGE RATES
The following table summarizes the principal exchange rates that have been used for translation
purposes.
Statement of income
Average exchange rates
in CHF
Statement of financial position
Closing exchange rates
in CHF
EUR
USD
GBP
AUD
BRL
CAD
CNY
DZD
EGP
IDR
INR
MXN
NGN
PHP
2017
1.11
0.98
1.27
0.75
0.31
0.76
0.15
0.89
0.06
0.07
1.51
5.22
0.32
1.95
2016
1.09
0.98
1.33
0.73
0.28
0.74
0.15
0.90
0.10
0.07
1.47
5.28
0.40
2.07
31.12.2017
31.12.2016
1.17
0.98
1.32
0.76
0.29
0.78
0.15
0.85
0.05
0.07
1.53
4.96
0.32
1.96
1.07
1.02
1.26
0.74
0.31
0.76
0.15
0.92
0.06
0.08
1.50
4.93
0.32
2.06
1 Euro
1 US Dollar
1 British Pound
1 Australian Dollar
1 Brazilian Real
1 Canadian Dollar
1 Chinese Renminbi
100 Algerian Dinar
1 Egyptian Pound
1,000 Indonesian Rupiah
100 Indian Rupee
100 Mexican Peso
100 Nigerian Naira
100 Philippine Peso
LAFARGEHOLCIM ANNUAL REPORT 2017159 160
6.
IN FO RMATI ON BY REPORTABLE SEGMENT
Capacity and sales (unaudited)
Annual cement production capacity (Million t)
Sales of cement (Million t)
Sales of aggregates (Million t)
Sales of ready-mix concrete (Million m3)
Statement of income (Million CHF)
Net sales to external customers
Net sales to other segments
Total net sales
Recurring EBITDA 2
Recurring EBITDA margin in %
Operating profit (loss)
Operating profit (loss) margin in %
Statement of financial position (Million CHF)
Invested capital 3
Investments in associates and joint ventures
Total assets
Total liabilities
Statement of cash flows (Million CHF)
Cash flow from operating activities
Capex 4
Personnel (unaudited)
Number of personnel
Reconciliation of measures of profit and loss to the consolidated statement of income
Recurring EBITDA 2
Restructuring, litigation, implementation and other non-recurring costs
Depreciation, amortization and impairment of operating assets
of which impairment charge relating to property, plant and equipment and assets
classified as held for sale
of which impairment charge relating to goodwill
of which impairment charge relating to intangible assets
of which impairment charge relating to investments in joint ventures
Operating profit (loss)
Profit on disposals and other non-operating income 5
Loss on disposals and other non-operating expenses 6
Share of profit of associates
Financial income
Financial expense
Net (loss) incomme before taxes
Asia Pacific
2017
2016 1
2017
117.4
91.7
31.8
12.8
7,357
84
7,441
1,418
19.1
7
0.1
9,297
1,185
14,438
6,031
150.5
113.7
32.2
15.4
8,100
125
8,226
1,594
19.4
916
11.1
10,520
1,148
16,901
6,587
Europe
2016 1
76.4
41.6
124.2
18.4
6,575
448
7,023
1,334
19.0
637
9.1
73.4
42.8
125.2
18.2
6,838
330
7,167
1,385
19.3
260
3.6
11,738
11,263
350
17,608
7,921
340
17,547
8,676
Latin America
Middle East Africa
North America
Corporate/Eliminations
Total Group
2017
2016 1
2017
2016 1
2017
2016 1
2017
2016 1
2017
2016 1
2,941
2,773
5,664
5,584
26,129
26,904
55.3
35.7
10.4
4.7
3,329
45
3,374
1,085
32.2
(1,215)
(36.0)
7,265
1,421
8,720
3,889
55.3
40.3
12.2
6.0
3,871
29
3,900
1,247
32.0
815
20.9
9,187
1,618
10,554
3,570
33.0
19.2
107.1
9.1
5,664
1,483
26.2
552
9.7
29.2
19.5
108.2
8.7
5,584
1,335
23.9
764
13.7
(4.8)
(6.0)
318.4
209.5
278.7
50.6
353.3
233.2
282.7
55.0
(462)
(462)
(436)
(602)
(602)
(445)
(649)
(788)
26,129
26,904
5,990
22.9
(478)
(1.8)
5,950
22.1
2,963
11.0
11,054
11,505
1,009
43,556
46,641
56
15,311
5,878
53
16,894
7,295
1,605
105
3,075
6,105
78
2,562
5,666
3,120
63,679
32,703
3,241
69,617
34,870
41.9
24.1
6.0
6.5
2,773
885
31.9
619
22.3
3,158
3
5,159
3,076
885
(50)
(216)
39.3
24.9
4.2
5.8
3
2,944
1,055
35.9
568
19.3
2,598
4
4,527
2,879
1,055
(58)
(429)
(213)
(11)
704
328
1,054
364
819
313
966
270
483
80
358
99
420
254
837
375
851
370
718
518
(238)
10
(638)
10
3,040
1,355
3,295
1,635
24,153
31,274
21,317
21,829
9,305
10,536
12,901
13,191
12,697
12,257
1,588
1,816
81,960
90,903
1,418
(70)
(1,341)
(320)
(545)
(4)
1,594
(86)
(593)
(4)
(40)
1,385
(111)
(1,013)
(368)
(40)
(5)
(4)
1,334
(112)
(585)
(5)
1,085
(162)
(2,138)
(474)
(1,237)
(14)
(103)
1,247
(69)
(363)
(7)
(1)
1,483
38
(969)
1,335
(36)
(534)
(371)
(9)
(436)
(98)
(116)
(1)
7
916
260
637
568
619
(1,215)
815
552
764
(649)
(788)
(445)
(229)
(114)
5,990
(461)
5,950
(582)
(6,007)
(2,405)
(1,745)
(1,821)
(35)
(107)
(478)
447
(242)
51
153
(1,111)
(1,180)
(25)
(40)
(1)
2,963
824
(68)
81
187
(1,104)
2,882
1 Restated due to change in presentation, see note 2.
2 Previously named “Operating EBITDA Adjusted”. Comparative figures have been adjusted accordingly.
3 The definition of invested capital as presented in the Annual Report last year has been changed to provide more relevant information regarding the Group’s financial
performance (see new definition on page 251). The new definition includes net deferred tax liabilities that are mainly linked to the property, plants and equipment and excludes
the financial investments third party and financial receivables which are not part of the core operations. Comparative figures have been adjusted accordingly.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 6.
I NFOR MATION BY REPORTABLE SEG MENT
Capacity and sales (unaudited)
Annual cement production capacity (Million t)
Sales of cement (Million t)
Sales of aggregates (Million t)
Sales of ready-mix concrete (Million m3)
Statement of income (Million CHF)
Net sales to external customers
Net sales to other segments
Total net sales
Recurring EBITDA 2
Recurring EBITDA margin in %
Operating profit (loss)
Operating profit (loss) margin in %
Statement of financial position (Million CHF)
Investments in associates and joint ventures
Invested capital 3
Total assets
Total liabilities
Statement of cash flows (Million CHF)
Cash flow from operating activities
Capex 4
Personnel (unaudited)
Number of personnel
Recurring EBITDA 2
Operating profit (loss)
Profit on disposals and other non-operating income 5
Loss on disposals and other non-operating expenses 6
Share of profit of associates
Financial income
Financial expense
Net (loss) incomme before taxes
Europe
2016 1
76.4
41.6
124.2
18.4
6,575
448
7,023
1,334
19.0
637
9.1
73.4
42.8
125.2
18.2
6,838
330
7,167
1,385
19.3
260
3.6
11,738
11,263
350
17,608
7,921
340
17,547
8,676
117.4
91.7
31.8
12.8
7,357
84
7,441
1,418
19.1
7
0.1
9,297
1,185
14,438
6,031
150.5
113.7
32.2
15.4
8,100
125
8,226
1,594
19.4
916
11.1
10,520
1,148
16,901
6,587
Asia Pacific
Latin America
Middle East Africa
North America
Corporate/Eliminations
Total Group
2017
2016 1
2017
2017
2016 1
2017
2016 1
2017
2016 1
2017
2016 1
2017
2016 1
39.3
24.9
4.2
5.8
41.9
24.1
6.0
6.5
2,941
2,773
3
2,944
1,055
35.9
568
19.3
2,598
4
4,527
2,879
2,773
885
31.9
619
22.3
3,158
3
5,159
3,076
55.3
35.7
10.4
4.7
3,329
45
3,374
1,085
32.2
(1,215)
(36.0)
7,265
1,421
8,720
3,889
55.3
40.3
12.2
6.0
3,871
29
3,900
1,247
32.0
815
20.9
33.0
19.2
107.1
9.1
29.2
19.5
108.2
8.7
(4.8)
(6.0)
318.4
209.5
278.7
50.6
353.3
233.2
282.7
55.0
5,664
5,584
26,129
26,904
5,664
1,483
26.2
552
9.7
5,584
1,335
23.9
764
13.7
(462)
(462)
(436)
(602)
(602)
(445)
(649)
(788)
26,129
26,904
5,990
22.9
(478)
(1.8)
5,950
22.1
2,963
11.0
9,187
1,618
10,554
3,570
11,054
11,505
56
15,311
5,878
53
16,894
7,295
1,605
105
3,075
6,105
1,009
43,556
46,641
78
2,562
5,666
3,120
63,679
32,703
3,241
69,617
34,870
704
328
1,054
364
819
313
966
270
483
80
358
99
420
254
837
375
851
370
718
518
(238)
10
(638)
10
3,040
1,355
3,295
1,635
24,153
31,274
21,317
21,829
9,305
10,536
12,901
13,191
12,697
12,257
1,588
1,816
81,960
90,903
Reconciliation of measures of profit and loss to the consolidated statement of income
Restructuring, litigation, implementation and other non-recurring costs
Depreciation, amortization and impairment of operating assets
of which impairment charge relating to property, plant and equipment and assets
classified as held for sale
of which impairment charge relating to goodwill
of which impairment charge relating to intangible assets
of which impairment charge relating to investments in joint ventures
1,418
(70)
(1,341)
(320)
(545)
(4)
1,594
(86)
(593)
(4)
(40)
1,385
(111)
(1,013)
(368)
(40)
(5)
(4)
1,334
(112)
(585)
(5)
1,055
(58)
(429)
(213)
(11)
885
(50)
(216)
1,085
(162)
(2,138)
(474)
(1,237)
(14)
(103)
1,247
(69)
(363)
(7)
(1)
1,483
38
(969)
1,335
(36)
(534)
(371)
(9)
(436)
(98)
(116)
(1)
7
916
260
637
568
619
(1,215)
815
552
764
(649)
(788)
1 Restated due to change in presentation, see note 2.
2 Previously named “Operating EBITDA Adjusted”. Comparative figures have been adjusted accordingly.
3 The definition of invested capital as presented in the Annual Report last year has been changed to provide more relevant information regarding the Group’s financial
performance (see new definition on page 251). The new definition includes net deferred tax liabilities that are mainly linked to the property, plants and equipment and excludes
the financial investments third party and financial receivables which are not part of the core operations. Comparative figures have been adjusted accordingly.
4 The capex consists of the purchase and disposal of property, plant and equipment.
5 Previously named “Other income”.
6 Previously named “Other expenses”.
(445)
(229)
(114)
5,990
(461)
5,950
(582)
(6,007)
(2,405)
(1,745)
(1,821)
(35)
(107)
(478)
447
(242)
51
153
(1,111)
(1,180)
(25)
(40)
(1)
2,963
824
(68)
81
187
(1,104)
2,882
LAFARGEHOLCIM ANNUAL REPORT 2017161 162
7.
IN FO RMATI ON BY PRODUCT LINE
Million CHF
Statement of income and statement
of cash flows
Net sales to external customers
Net sales to other segments
Total net sales
– of which Asia Pacific
– of which Europe
– of which Latin America
– of which Middle East Africa
– of which North America
– of which Corporate/Eliminations
Recurring EBITDA 3
– of which Asia Pacific
– of which Europe
– of which Latin America
– of which Middle East Africa
– of which North America
– of which Corporate
Recurring EBITDA margin in %
Capex
Personnel (unaudited)
Number of personnel
1 Cement, clinker and other cementitious materials.
2 Restated due to change in presentation, see note 2.
3 Previously named “Operating EBITDA Adjusted”.
2017
16,012
1,168
17,181
5,656
3,370
2,572
2,973
2,796
(186)
4,768
1,143
886
1,031
1,051
1,012
(355)
27.8
1,134
Cement 1
2016 2
16,747
1,206
17,952
6,488
3,161
2,376
3,426
2,747
(246)
4,858
1,442
835
849
1,175
888
(330)
27.1
1,414
2017
2,759
1,157
3,916
574
1,819
36
112
1,374
1
759
156
317
(2)
12
344
(67)
19.4
167
Aggregates
2016 2
Other construction materials and services
Corporate/Eliminations
2017
2016 2
2017
2016 2
2017
Total Group
2016 2
2,756
1,177
3,933
527
1,822
44
118
1,422
684
97
327
(3)
22
313
(72)
17.4
146
7,357
348
7,705
1,624
2,971
528
429
2,088
66
462
119
182
27
22
127
(15)
6.0
86
7,402
473
7,875
1,611
3,047
554
550
2,033
79
408
56
173
39
50
134
(44)
5.2
81
(2,673)
(2,673)
(413)
(992)
(192)
(140)
(594)
(343)
(2,855)
(2,855)
(400)
(1,008)
(201)
(194)
(618)
(435)
(32)
(5)
26,129
26,904
26,129
26,904
7,441
7,167
2,944
3,374
5,664
(462)
5,990
1,418
1,385
1,055
1,085
1,483
(436)
22.9
1,355
8,226
7,023
2,773
3,900
5,584
(602)
5,950
1,594
1,334
885
1,247
1,335
(445)
22.1
1,635
47,531
56,133
10,777
11,816
22,182
21,257
1,470
1,697
81,960
90,903
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 7.
I NFOR MATION BY PRODUCT L INE
Million CHF
of cash flows
Statement of income and statement
Net sales to external customers
Net sales to other segments
Total net sales
– of which Asia Pacific
– of which Europe
– of which Latin America
– of which Middle East Africa
– of which North America
– of which Corporate/Eliminations
Recurring EBITDA 3
– of which Asia Pacific
– of which Europe
– of which Latin America
– of which Middle East Africa
– of which North America
– of which Corporate
Recurring EBITDA margin in %
Capex
Personnel (unaudited)
Number of personnel
1 Cement, clinker and other cementitious materials.
2 Restated due to change in presentation, see note 2.
3 Previously named “Operating EBITDA Adjusted”.
2017
16,012
1,168
17,181
5,656
3,370
2,572
2,973
2,796
(186)
4,768
1,143
886
1,031
1,051
1,012
(355)
27.8
1,134
Cement 1
2016 2
16,747
1,206
17,952
6,488
3,161
2,376
3,426
2,747
(246)
4,858
1,442
835
849
1,175
888
(330)
27.1
1,414
2017
2,759
1,157
3,916
574
1,819
36
112
1,374
1
759
156
317
(2)
12
344
(67)
19.4
167
2,756
1,177
3,933
527
1,822
44
118
1,422
684
97
327
(3)
22
313
(72)
17.4
146
Aggregates
2016 2
Other construction materials and services
Corporate/Eliminations
2017
2016 2
2017
2016 2
2017
Total Group
2016 2
7,357
348
7,705
1,624
2,971
528
429
2,088
66
462
119
182
27
22
127
(15)
6.0
86
7,402
473
7,875
1,611
3,047
554
550
2,033
79
408
56
173
39
50
134
(44)
5.2
81
(2,673)
(2,673)
(413)
(992)
(192)
(140)
(594)
(343)
(2,855)
(2,855)
(400)
(1,008)
(201)
(194)
(618)
(435)
(32)
(5)
26,129
26,904
26,129
26,904
7,441
7,167
2,944
3,374
5,664
(462)
5,990
1,418
1,385
1,055
1,085
1,483
(436)
22.9
1,355
8,226
7,023
2,773
3,900
5,584
(602)
5,950
1,594
1,334
885
1,247
1,335
(445)
22.1
1,635
47,531
56,133
10,777
11,816
22,182
21,257
1,470
1,697
81,960
90,903
LAFARGEHOLCIM ANNUAL REPORT 2017163 164
8.
INFORMATION BY COUNTRY
Million CHF
Switzerland
USA
India
Canada
United Kingdom
France
Australia
Algeria
Nigeria
Other countries
Total
Net sales
to external customers
Non-current assets
2017
673
3,769
3,535
1,950
1,713
1,771
1,242
766
660
2016
620
3,732
3,234
1,874
1,856
1,620
1,133
793
609
2017
1,096
7,987
4,598
4,638
2,139
4,226
1,429
2,156
2,077
2016
1,064
8,846
4,566
4,574
2,055
3,944
1,421
3,424
2,183
10,049
26,129
11,433
26,904
15,400
45,747
17,240
49,316
Net sales to external customers are based primarily on the location of assets (origin of sales).
Non-current assets consist of property, plant and equipment, goodwill and intangible assets.
There is no single external customer where net sales amount to 15 percent or more of the Group
net sales.
9.
PRODUCTION COST OF GOODS SOLD
Million CHF
Material expenses
Fuel expenses
Electricity expenses
Personnel expenses
Maintenance expenses
Depreciation, amortization and impairment
Other production expenses
Changes in inventory
Total
2017
(4,208)
(1,616)
(1,311)
(2,288)
(1,581)
(5,632)
(1,662)
(49)
2016
(4,397)
(1,550)
(1,470)
(2,382)
(1,722)
(2,267)
(1,797)
(47)
(18,348)
(15,632)
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 10.
SUMMARY OF DEPRECIATION, AM OR TIZATION AND IM PAIRMENT
Million CHF
Production facilities
Distribution and sales facilities
Administration facilities
2017
2016
(5,632)
(2,267)
(250)
(126)
(32)
(106)
Total depreciation, amortization and impairment of operating
assets (a)
(6,007)
(2,405)
of which impairment charge relating to property, plant and
equipment and assets classified as held for sale (note 25)
of which impairment charge relating to goodwill (note 26)
of which impairment charge relating to intangible assets
(note 26)
of which impairment charge relating to investments
in joint ventures (note 24)
Impairment of long-term financial assets (note 14)
Impairment of investments in associates (note 24)
Ordinary depreciation of non-operating assets
Unusual write-offs
Total depreciation, amortization and impairment of
non-operating assets (b)
Total depreciation, amortization and impairment (a + b)
Of which depreciation of property, plant and equipment (note 25)
(1,745)
(1,821)
(35)
(107)
(119)
(4)
(5)
(1)
(128)
(6,135)
(2,112)
11.
PROFIT ON DISPOSALS AND OTHER NON-OPER ATING INCOM E
Million CHF
Dividends earned
Net gain on disposal before taxes
Other
Total
2017
6
441
0
447
(25)
(40)
(1)
0
0
(5)
(8)
(4)
(17)
(2,422)
(2,161)
2016
6
756
63
824
In 2017, the position “Net gain on disposal before taxes” mainly includes a gain on the disposal
of LafargeHolcim Vietnam of CHF 339 million and gains on property, plant and equipment of
CHF 82 million.
In 2016, the position “Net gain on disposal before taxes” mainly included:
– a gain on the disposal of Holcim (Maroc) S.A. of CHF 236 million;
– a gain on the disposal of Holcim (Lanka) Ltd of CHF 225 million;
– a gain from the transactions entered in China of CHF 192 million; and
– gains on disposal of property, plant and equipment of CHF 46 million.
Further information is disclosed in the note 4.
LAFARGEHOLCIM ANNUAL REPORT 2017165 166
12.
LOSS ON DISPOSALS AND OTHER NON-OPER ATING EXPENSES
Million CHF
2017
2016
Depreciation, amortization and impairment of non-operating
assets
Net loss on disposal before taxes
Other
Total
(10)
(108)
(124)
(242)
(17)
0
(51)
(68)
In 2017, the position “Net loss on disposal before taxes” relates mainly to the loss of CHF 40
million on the disposal of Cemento Polpaico S.A. (Chile) and CHF 40 million from the transactions
entered in China (see note 4).
In 2017, the position “Other” includes expenses in relation to ongoing legal cases (see note 37
for further information on legal cases) and expenses incurred in connection with assets, that
are not operating anymore, abandoned or not part of the operating business cycle.
13.
FINANCIA L INCOME
Million CHF
Interest earned on cash and cash equivalents
Other financial income
Total
2017
92
60
153
2016
132
55
187
The position “Other financial income” relates primarily to interest income from loans and
receivables.
14.
FINANCIA L EXPENSES
Million CHF
Interest expenses
Fair value changes on financial instruments
Unwinding of discount on provisions
Net interest expense on retirement benefit plans
Impairment of long-term financial assets
Other financial expenses
Foreign exchange gain/ (loss) net
Financial expenses capitalized
Total
2017
(760)
0
(27)
(52)
(119)
(200)
26
21
2016
(896)
2
(32)
(56)
4
(91)
(68)
34
(1,111)
(1,104)
The position “Interest expenses” relates primarily to financial liabilities measured at amortized
cost and includes amortization on bonds and private placements of CHF 99 million (2016:
CHF 393 million). The decrease of this position in 2017 is the result of lower financial liabilities
and a decrease in average interest rates (see note 28). In 2016, it also included bonds early
repayment premiums of CHF 90 million (2017: CHF 0 million).
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS The position “Impairment of long-term financial assets” includes write-offs of third parties
financial investments and long-term financial receivables (see note 23).
The position “other financial expenses” includes accruals for interest related to ongoing legal
cases (see note 37 for further information on legal cases), impacts of reevaluation of put options
liabilities and bank charge fees.
The position “Financial expenses capitalized” comprises interest expenditures on large-scale
projects during the reporting period.
15.
RESEARCH AND DEVELOPMENT
Research and development projects are carried out with a view to generate added value for
customers through end user oriented products and services. Additionally, process innovation
aims at environmental protection and production system improvements. Research and
development costs of CHF 96 million (2016: CHF 141 million) were charged directly to the
consolidated statement of income.
16.
EARNINGS PER SHARE
Earnings per share in CHF
From continuing operations
From discontinued operations
Net (loss) income – shareholders of LafargeHolcim Ltd –
as per statement of income (in million CHF)
From continuing operations
From discontinued operations
2017
(2.78)
(2.78)
0.00
(1,675)
(1,675)
0
2016
2.96
2.89
0.07
1,791
1,749
43
Weighted average number of shares outstanding
603,235,216 605,680,320
Fully diluted earnings per share in CHF
From continuing operations
From discontinued operations
Net (loss) income used to determine diluted earnings per share
(in million CHF)
From continuing operations
From discontinued operations
(2.78)
(2.78)
0.00
(1,675)
(1,675)
0
2.96
2.89
0.07
1,791
1,749
43
Weighted average number of shares outstanding
603,235,216 605,680,320
Adjustment for assumed exercise of share options and
performance shares
Weighted average number of shares for diluted earnings
per share
0
358,140
603,235,216 606,038,460
In conformity with the decision taken at the annual general meeting on May 3, 2017, a payout
related to 2016 of CHF 2.00 per registered share was paid out of capital con tribution reserves.
This resulted in a total payment of CHF 1,212 million.
LAFARGEHOLCIM ANNUAL REPORT 2017167 168
A cash payment out of the capital contribution reserves in respect of the financial year 2017 of
CHF 2.00 per registered share, amounting to a maximum payment of CHF 1,196 million, is to be
proposed at the annual general meeting of shareholders on May 8, 2018. These consolidated
financial statements do not reflect this cash payment, since it will only be effective in 2018.
296,752 stock options, which would have an anti-dilutive impact on the calculation of the diluted
earnings per share, are excluded from the calculation for the year 2017.
17.
CASH AND CASH EQUIVA LENTS
Million CHF
Cash at banks and on hand
Short-term deposits
Total
Bank overdrafts
Cash and cash equivalents classified as held for sale
2017
2,449
1,768
4,217
(275)
11
2016
3,175
1,747
4,923
(263)
135
Cash and cash equivalents for the purpose of the consolidated
statement of cash flows
3,954
4,795
Cash and cash equivalents comprise cash at banks and on hand, deposits held on call with banks,
monetary mutual funds and other short-term highly liquid investments that are readily
convertible to a known amount of cash with a maturity of three months or less from the date
of acquisition.
Investments in monetary mutual funds amounting CHF 377 million (2016: CHF 275 million) are
considered cash equivalents since they are readily convertible to known amounts of cash and
are subject to an insignificant risk of changes in value.
Bank overdrafts are included in current financial liabilities.
18 .
TRADE ACCOUNTS R ECEIVABL E
Million CHF
Trade accounts receivable – associates and joint ventures
Trade accounts receivable – third parties
Total
Overdue accounts receivable
Million CHF
Not overdue
Overdue 1 to 89 days
Overdue 90 to 180 days
Overdue more than 180 days
Allowances for doubtful accounts
Total
2017
119
3,221
3,340
2017
1,877
1,249
189
217
(192)
2016
109
2,717
2,826
2016
1,961
670
118
260
(183)
3,340
2,826
Due to the local nature of the business, specific terms and conditions for trade accounts
receivable exist for local Group companies.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS
Allowance for doubtful accounts
Million CHF
January 1
Disposal of Group companies
Allowance recognized
Amounts used
Unused amounts reversed
Currency translation effects
December 31
19.
CURRENT FINANCIAL RECEIVA B LES
Million CHF
Marketable securities
Current financial receivables – associates and joint ventures
Current financial receivables – third parties
Total
of which pledged/ restricted
2017
(183)
0
(81)
6
68
(2)
2016
(189)
11
(52)
4
44
(1)
(192)
(183)
2017
1
25
236
262
45
2016
0
105
102
207
42
The current financial receivables third parties increased mainly in connection with the transaction
entered in China for which an amount of CHF 114 million is due in 2018 (see note 4).
20.
INVENTORIES
Million CHF
Raw materials and additives
Semi-finished and finished products
Fuels
Parts and supplies
Total
2017
420
1,444
312
693
2,870
2016
429
1,332
235
649
2,645
In 2017, the Group recognized inventory write-downs to net realizable value of CHF 9 million
(2016: CHF 4 million) relating mainly to semi-finished and finished products.
LAFARGEHOLCIM ANNUAL REPORT 2017169 170
21.
PREPAID EXPENSES AND OTHER CUR RENT A SSETS
Million CHF
Prepaid expenses and accruals
Other current assets
Other receivables – associates and joint ventures
Other receivables – third parties
Receivable on escrow account in connection with the transaction
in China (note 4)
Total
2017
211
406
20
697
0
1,335
2016
255
216
171
726
352
1,720
As indicated in note 4, the receivable of CHF 352 million in connection with the disposal of 73,5
percent listed shares in Sichuan Shuangma Cement Co in 2016 was released in 2017.
22.
ASSE TS AND RELATED LIA BIL ITIES CLA SSIFIED A S HEL D FOR SALE
The net assets classified as held for sale as of December 31, 2017 amount to CHF 390 million
and mainly relate to two cement companies in China, as explained below.
China
As disclosed in note 4, LafargeHolcim signed a Share Purchase Agreement for two Shuangma
cement companies in 2017, which resulted in the Group continuing to exercise control over
them.
As the Group believes it is highly probable that the two cement companies will be sold by the
end of 2018, they remained classified as held for sale at December 31, 2017. This resulted in
the assets being written down by CHF 58 million to its fair value less costs to sell. The two cement
companies are disclosed in the reportable segment Asia Pacific. The assets include two cement
plants with a combined annual cement capacity of 7.7m tons.
The disposal of non-listed cement assets in China to the Group’s joint venture Huaxin Cement
Co. Ltd. was closed in the first quarter 2017 for a consideration of CHF 257 million. The assets
and associated liabilities were classified as held for sale in the fourth quarter 2016, and were
disclosed in the reportable segment Asia Pacific. Upon classifi cation as held for sale, the assets
were written down by CHF 178 million to its fair value less costs to sell in 2016.
Further information is disclosed in note 4.
Vietnam
On August 4, 2016, the Group announced it had signed an agreement with Siam City Cement
Public Company Limited (“SCCC”) for the divestment of its entire 65 percent shareholding in
LafargeHolcim Vietnam for an enterprise value of CHF 867 million (on a 100 percent basis).
LafargeHolcim Vietnam operated one integrated plant and four grinding plants with an annual
cement grinding capacity of 6.3 million tons and was a leading ready-mix concrete producer. The
shareholders of SCCC approved the acquisition in the fourth quarter 2016 and consequently
LafargeHolcim Vietnam was classified as held for sale on December 31, 2016 and was disclosed
in the reportable segment Asia Pacific.
On February 28, 2017, the Group disposed of its 65 percent shareholding in LafargeHolcim
Vietnam.
Further information is disclosed in note 4.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Chile
On October 7, 2016, the Group signed an agreement with Inversiones Caburga Limitada, a
company of the Hurtado Vicuña Group, for the divestment of its 54.3 percent interest in Cemento
Polpaico in Chile for an enterprise value of approximately CHF 220 million (on a 100 percent
basis). Cemento Polpaico operated one integrated plant and two grinding plants with an annual
cement capacity of 2.3 million tons and was a leading ready-mix and aggregates producer in
Chile. Cemento Polpaico was classified as held for sale on December 2016 and was disclosed in
the reportable segment Latin America.
On August 14, 2017, the Group disposed of its 54.3 percent shareholding in Cemento Polpaico
S.A. (Chile). Further information is disclosed in note 4.
The assets and related liabilities classified as held for sale are disclosed by major classes of
assets and liabilities in the table below.
Million CHF
Cash and cash equivalents
Inventories
Other current assets
Property, plant and equipment
Goodwill and intangible assets
Other long term assets
Assets classified as held for sale
Current liabilities
Long-term liabilities
Liabilities directly associated with assets classified
as held for sale
Net assets classified as held for sale
2017
11
14
78
382
39
26
550
149
11
160
390
2016
135
123
240
1,294
227
27
2,046
567
144
711
1,335
23 .
LONG-TERM FINANCIAL INV ESTM ENTS A ND OTHER LONG-TE RM AS SE T S
Million CHF
Financial investments – third parties
Long-term receivables – associates and joint ventures
Long-term receivables – third parties
Long-term receivables in connection with the transaction
in China (note 4)
Deferred charges
Other long-term assets
Total
Of which pledged/restricted
2017
85
192
240
0
101
496
1,114
13
2016
168
295
237
105
50
432
1,287
12
Long-term receivables are primarily denominated in USD, AUD and BRL. The repayment dates
vary between one and 22 years (2016: one and 23 years).
As indicated in note 4, a receivable of CHF 114 million (2016: CHF 105 million) in connection with
the transaction in China entered in 2016 is due in 2018 and has been accordingly reclassified
to current financial receivables (see note 19).
LAFARGEHOLCIM ANNUAL REPORT 2017171 172
As indicated in note 14, impairment of financial investments – third parties and write-offs of
long-term financial receivables were recorded in 2017.
Other long-term assets include notably various deposits in connection with ongoing legal cases
(see note 37).
24.
I N V E S TMENTS IN ASSOCIATES AND JOINT VENTUR ES
Million CHF
Investments in associates
Investments in joint ventures
Total
2017
426
2,693
3,120
2016
1,309
1,932
3,241
In 2017, as a result of the streamlining of the Chinese operations (see note 4), the Group has
joint control in Huaxin Cement Co. Ltd. which was reclassified from an investment in an associate
to an investment in a joint venture. In 2016, the share of profit of Huaxin Cement Co. Ltd.
amounted to CHF 42 million and was reflected in the line share of profit of associates in the
consolidated statement of income.
24.1 Investment in associates
Movement in investments in associates
Million CHF
January 1
Share of profit of associates
Dividends earned
PPA refinement (note 4)
Net acquisitions (disposals)
Reclassifications
Impairments
Currency translation effects
December 31
Investments in associates
Million CHF
Huaxin Cement Co. Ltd.
Other associates
Total
2017
1,309
51
(16)
0
1
(924)
(4)
9
426
2016
1,433
81
(16)
(5)
(125)
(23)
(5)
(32)
1,309
31.12.2017
31.12.2016
0
426
426
848
462
1,309
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2017, the Group has no interests in associates that are considered as indi-
vidually material. The following table summarizes, in aggregate, the financial information of all
individually immaterial associates that are accounted for using the equity method:
Aggregated financial information of LafargeHolcim’s share in other associates
Million CHF
Carrying amount of investments in other associates
Net income
Total comprehensive earnings
31.12.2017
31.12.2016
426
51
51
462
39
39
There are no unrecognized share of losses relating to the above associates.
24.2 Investments in joint ventures
Movement in investments in joint ventures
Million CHF
January 1
Share of profit of joint ventures
Dividends earned
Net additions
Reclassifications
Impairments
Currency translation effects
December 31
2017
1,932
286
(263)
17
847
(107)
(19)
2016
1,739
125
(161)
223
23
0
(18)
2,693
1,932
In 2017, the position impairment mainly relates to the impairment of the Group’s interest in
certain joint ventures in Middle East and Africa.
In 2016, the position “Net additions (disposals)” mainly related to the increase in value of
LafargeHolcim Maroc following the merger between Lafarge Ciments and Holcim (Maroc) S.A.
on July 4. Further information is disclosed in the note 4.
The Group has two material investments in joint ventures:
– the 50 percent interest in Lafarge Maroc in Morocco, the parent company of LafargeHolcim
Maroc and LafargeHolcim Maroc Afrique, and
– the 41.8 percent interest in Huaxin Cement Co. Ltd. in China
Since LafargeHolcim Maroc is a publicly listed company in Morocco and has not yet published
its financial statements for the year 2017, the disclosed amounts for the investment in the joint
venture Lafarge Maroc are as of June 30, 2017.
Likewise, since Huaxin Cement Co. Ltd. is a publicly listed company in China and has not yet
published its financial statements for the year 2017, the disclosed amounts for the investments
in the joint venture Huaxin Cement Co. Ltd. are as of September 30, 2017.
LAFARGEHOLCIM ANNUAL REPORT 2017173 174
Lafarge Maroc
As of December 31, 2017, the Group holds 50 percent (2016: 50 percent) of the voting rights in
the joint venture company Lafarge Maroc.
Set out below is the summarized financial information for the material joint venture Lafarge
Maroc, which is accounted for using the equity method. The summarized financial informa tion
presented below are the amounts included in the IFRS financial statements of Lafarge Maroc
as at June 30, 2017 and as at December 31, 2016. As of June 30, 2017, dividends of CHF 25 million
(December 31, 2016: CHF 49 million) were received from Lafarge Maroc.
Lafarge Maroc - Statement of financial position
Million CHF
Current assets
Long-term assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities
Net assets
Shareholders’ equity (excluding non-controlling interest)
30.6.2017
31.12.2016
374
2,249
2,623
465
673
1,138
1,485
1,026
358
2,311
2,669
400
688
1,089
1,581
1,091
The net financial debt of Lafarge Maroc amounted to CHF 628 million as of June 30, 2017, and
to CHF 495 million as of December 31, 2016.
Lafarge Maroc – Statement of comprehensive earnings
Million CHF
Net sales
Recurring EBITDA1
Depreciation and amortization
Operating profit
Loss on disposals and other non-operating expenses 2
Financial expenses
Income taxes
Net income
Net income (excluding non-controlling interest)
Other comprehensive earnings
Total comprehensive earnings (excluding non-controlling
interest)
1 Previously named “Operating EBITDA adjusted”.
2 Previously named “Other expenses”.
Jan-June
2017
Jan-Dec
2016
505
213
(46)
168
(13)
(12)
(46)
97
65
2
67
751
357
(73)
284
(28)
(6)
(83)
166
114
(1)
113
A reconciliation of the summarized financial information to the carrying amount of the
investment in Lafarge Maroc is as follows:
Lafarge Maroc
Million CHF
Group share of 50% (2016: 50%)
of shareholders’ equity (excluding non-controlling interest)
Goodwill
Total
30.6.2017
31.12.2016
513
786
1,299
545
802
1,347
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Huaxin Cement Co. Ltd.
As of December 31, 2017, the Group holds 41.8 percent (2016: 41.8 percent) of the voting rights
in the joint venture company Huaxin Cement Co. Ltd.
The fair value of the investment in Huaxin Cement Co. Ltd. based on a quoted market price on
December 31, 2017 amounted to CHF 1,123 million (2016: CHF 624 million).
Set out below is the summarized financial information for the material joint venture company
Huaxin Cement Co. Ltd., which is accounted for using the equity method. The summarized
financial information presented below are the amounts included in the IFRS financial statements
of Huaxin Cement Co. Ltd. as at September 30, 2017 and as at December 31, 2016. As of
September 30, 2017, dividends of CHF 4 million (December 31, 2016: CHF 5 million) were received
from Huaxin Cement Co. Ltd.
Huaxin Cement Co. Ltd. – Statement of financial position
Million CHF
Current assets
Long-term assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities
Net assets
Shareholders’ equity (excluding non-controlling interest)
30.9.2017
31.12.2016
1,150
3,343
4,493
1,268
1,231
2,499
1,994
1,804
1,107
3,149
4,256
1,159
1,210
2,370
1,887
1,675
The net financial debt of Huaxin Cement Co. Ltd. amounted to CHF 1,113 million as of September
30, 2017 and to CHF 1,061 million as of December 31, 2016.
Huaxin Cement Co. Ltd. – Statement of comprehensive earnings
Million CHF
Net sales
Recurring EBITDA1
Depreciation and amortization
Operating profit
Profit (Loss) on disposals and other non-operating
income/expenses 2
Financial income
Financial expenses
Income taxes
Net income
Net income (excluding non-controlling interest)
Other comprehensive earnings
Total comprehensive earnings
(excluding non-controlling interest)
1 Previously named “Operating EBITDA adjusted”.
2 Previously named “Other income (expenses)”.
Jan-Sep
2017
2,069
469
(177)
292
7
5
(81)
(38)
185
169
(3)
166
Jan-Dec
2016
1,998
439
(192)
247
(4)
3
(90)
(27)
129
100
2
102
LAFARGEHOLCIM ANNUAL REPORT 2017175 176
A reconciliation of the summarized financial information to the carrying amount of the
investment in Huaxin Cement Co. Ltd. is as follows:
Huaxin Cement Co. Ltd.
Million CHF
Group share of 41.8% (2016: 41.8%)
of shareholders’ equity (excluding non-controlling interest)
Goodwill
Total
30.9.2017
31.12.2016
755
145
901
701
146
848
The following table summarizes, in aggregate, the financial information of all individually
immaterial joint ventures that are accounted for using the equity method:
Aggregated financial information of LafargeHolcim’s share in joint ventures
Million CHF
Carrying amount of investments in joint ventures
Net income
Total comprehensive earnings
31.12.2017
31.12.2016
377
95
95
498
69
69
There are no unrecognized share of losses relating to the above joint ventures.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 25 .
PRO PERTY, PL ANT AND EQUI PME NT
Million CHF
2017
At cost of acquisition
Accumulated depreciation/impairment
Net book value as at January 1
Acquisition
Divestments
Additions
Disposals
Reclassifications
Depreciation
Impairment loss (charged to statement of income)
Currency translation effects
Net Book Value as at December 31
At cost of acquisition
Accumulated depreciation/impairment
Net Book Value as at December 31
2016
At cost of acquisition
Accumulated depreciation/impairment
Net book value as at January 1
PPA refinement (note 4)
Divestments
Reclassifications to assets classified as held for sale
Additions
Disposals
Reclassifications
Depreciation
Impairment loss (charged to statement of income)
Currency translation effects
Net Book Value as at December 31
At cost of acquisition
Accumulated depreciation/impairment
Net Book Value as at December 31
Land and
mineral reserves
Buildings and
installations
Machinery and
equipment
Construction
in progress
7,576
(1,621)
5,956
63
(12)
10
(41)
100
(191)
(491)
95
5,489
7,654
(2,164)
5,489
7,989
(1,594)
6,394
(314)
(180)
(30)
11
(33)
281
(191)
(8)
26
5,956
7,576
(1,621)
5,956
10,726
(4,130)
6,596
12
(14)
2
(16)
375
(362)
(290)
14
6,317
11,064
(4,748)
6,317
10,567
(3,739)
6,828
(73)
(367)
(661)
5
(22)
1,254
(381)
(1)
14
6,596
10,726
(4,130)
6,596
30,741
(13,001)
17,740
152
(2)
13
(32)
1,424
(1,559)
(794)
65
17,007
32,003
(14,996)
17,007
31,526
(11,368)
20,158
236
(1,057)
(704)
51
(52)
1,511
(1,589)
(14)
(799)
17,740
30,741
(13,001)
17,740
1,794
(33)
1,761
126
0
1,492
(1)
(1,900)
0
(115)
(24)
1,339
1,490
(152)
1,339
3,517
(150)
3,367
(64)
(51)
(41)
1,669
(1)
(3,045)
0
(2)
(71)
1,761
1,794
(33)
1,761
Total
50,837
(18,784)
32,052
352
(28)
1,517
(90)
0
(2,112)
(1,690)
151
30,152
52,211
(22,060)
30,152
53,598
(16,850)
36,747
(216)
(1,654)
(1,437)
1,736
(108)
0
(2,161)
(25)
(830)
32,052
50,837
(18,784)
32,052
LAFARGEHOLCIM ANNUAL REPORT 2017177 178
The net book value of leased property, plant and equipment amounts to CHF 61 million (2016:
CHF 60 million) and mainly relates to buildings, machinery and equipment.
CHF 209 million of the total net book value of property, plant and equipment are pledged or
restricted (2016: CHF 638 million).
Net gains on sale of property, plant and equipment amounted to CHF 82 million (2016:
CHF 46 million) reported in the line “Profit on disposals and other non-operating income” in the
consolidated statement of income (see note 11).
In 2017, LafargeHolcim carried out an extensive portfolio review and assessed asset impairment
indicators which resulted in an aggregate impairment charge relating to property, plant and
equipment of CHF 1,690 million, of which CHF 904 million was impaired as insufficient goodwill
was available to absorb the full impairment charge (see note 26).
The remaining impairment charge of CHF 786 million mainly consisted of CHF 371 million relating
to specific aggregates sites in North America.
Apart from the assets mentioned above, no asset impairment was deemed to be individually
material in the other reportable segments but pertained mostly to assets in Europe and Middle
East and Africa.
The total impairment charge of CHF 1,745 million resulted primarily from the weaker than
anticipated outlook for the macro-economic environment, especially in terms of expected growth
rates, cement demand and export opportunities for countries such as Malaysia, Spain and Egypt
(see note 26).
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 26.
GOODWIL L AND INTA NGIBLE ASSETS
Million CHF
2017
At cost of acquisition
Accumulated amortization/impairment
Net book value as at January 1
Divestments
Reclassification
Additions
Disposals
Amortization
Impairment loss (charged to statement of income)
Currency translation effects
Net book value as at December 31
At cost of acquisition
Accumulated amortization/impairment
Net book value as at December 31
2016
At cost of acquisition
Accumulated amortization/impairment
Net book value as at January 1
PPA refinement (note 4)
Divestments
Reclassification from assets classified as held for sale
Additions
Disposals
Amortization
Impairment loss (charged to statement of income)
Currency translation effects
Net book value as at December 31
At cost of acquisition
Accumulated amortization/impairment
Net book value as at December 31
Goodwill
Intangible
assets
17,514
(1,267)
16,247
(3)
0
27
0
0
(1,821)
119
14,569
17,603
(3,034)
14,569
17,698
(1,209)
16,490
522
(266)
(85)
0
0
0
(40)
(374)
16,247
17,514
(1,267)
16,247
2,325
(1,309)
1,017
(2)
62
135
(4)
(190)
(35)
44
1,026
2,612
(1,586)
1,026
2,584
(1,168)
1,416
(123)
(28)
(138)
96
(8)
(188)
(1)
(9)
1,017
2,325
(1,309)
1,017
LAFARGEHOLCIM ANNUAL REPORT 2017179 180
Intangible assets
Intangible assets have finite useful lives, over which the assets are amortized. The corresponding
amortization expense is recognized mainly in administration expenses.
Intangible assets mainly consist of mining rights, trademarks and brands.
During the fourth quarter 2017, the Group carried out an extensive portfolio review and
identified a number of brands being in local decline therefore resulting in an aggregate
impairment charge of CHF 35 million. No asset impairment was deemed to be individually
material.
Goodwill
As explained in note 4, in 2016, the finalization of the purchase price allocation led to an increase
in the goodwill of CHF 522 million.
Impairment test of goodwill
For the purpose of impairment testing, goodwill is allocated to a cash-generating unit or to a
group of cash-generating units that are expected to benefit, among others, from the synergies
of the business combination. The Group’s cash-generating units are defined on the basis of the
geographical market, normally country- or region-related. The carrying amount of goodwill
allocated to the countries or regions stated below, is significant in comparison with the total
carrying amount of goodwill, while the carrying amount of goodwill allocated to the other cash-
generating units is individually not significant.
For the impairment test, the recoverable amount of a cash-generating unit, which has been
determined based on its value in use or its fair value less costs to sell, is compared to its carrying
amount. An impairment loss is recognized if the carrying amount of the cash-generating unit
exceeds its recoverable amount. The value in use is determined based on future discounted
cash flows using the weighted average cost of capital (WACC).
The WACC used for the impairment test is a post-tax discount rate and is applied to post-tax
cash flows. There is no material difference in the outcome of the impairment test using the
discount rate applied when compared to using a pre-tax discount rate for pre-tax cash flows.
The cash flow projections are based on a three-year financial planning period using business
plans approved by management. Cash flows beyond the three-year budget period are
extrapolated based on increasing sustainable cash flows. In any event, the growth rate used to
extrapolate cash flow projections beyond the three-year budget period does not exceed the
long-term average growth rate for the relevant market in which the cash-generating unit
operates.
In respect of the goodwill allocated to “Others”, the same impairment model and parameters
are used, as is the case with individually significant goodwill positions, except that different key
assumptions are used depending on the risks associated with the respective cash-generating
units.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Key assumptions used for value-in-use calculations in respect of goodwill 2017
Cash-generating unit (Million CHF)
North America
India
France
United Kingdom
Algeria
Central Europe West
Nigeria
Poland
Philippines
Mexico
Others 1
Total
Carrying amount
of goodwill
4,750
1,705
1,521
929
709
682
639
550
484
400
2,199
14,569
Currency
USD/CAD
INR
EUR
GBP
DZD
CHF/EUR
NGN
PLN
PHP
MXN
Post-tax
discount rate
Long-term
growth rate
+6.9%
+10.7%
+6.5%
+6.6%
+11.7%
+6.1%
+22.7%
+8.2%
+8.7%
+8.7%
+2.2%
+5.0%
+1.8%
+2.0%
+4.0%
+1.4%
+14.5%
+2.5%
+3.0%
+3.0%
Various
5.6%–17.7%
1.0%–9.1%
Key assumptions used for value-in-use calculations in respect of goodwill 2016
Cash-generating unit (Million CHF)
North America
Algeria
India
France
United Kingdom
Central Europe West
Nigeria
Poland
Philippines
Mexico
Others 1
Total
1 Individually not significant.
2 Figures adjusted from pre-tax to post-tax.
Carrying amount
of goodwill
4,808
1,812
1,678
1,398
884
656
648
478
470
398
3 017
16,247
Currency
USD/CAD
DZD
INR
EUR
GBP
CHF/EUR
NGN
PLN
PHP
MXN
Post-tax
discount rate2
Long-term
growth rate
+6.8%
+9.7%
+10.7%
+6.7%
+6.6%
+5.9%
+14.9%
+8.2%
+9.2%
+8.7%
+2.1%
+4.0%
+4.9%
+2.1%
+2.0%
+1.3%
+8.0%
+2.5%
+3.5%
+3.0%
Various
4.6%–13.9%
0.4%–7.0%
In 2017, management recognized a total impairment charge of CHF 3,566 million relating to
certain cash-generating units (country- or region-related), of which CHF 1,821 million has been
allocated to goodwill. The total impairment charge resulted primarily from:
– higher WACC to consider risks and uncertainties that may materialize in the coming years and
attributable to change in markets, national economic circumstances, political complex
situations and governments’ ability to fund infrastructure projects for countries such as Algeria,
Brazil, Indonesia, Zambia and Iraq.
– the weaker than anticipated outlook for the macro-economic environment, especially in terms
of expected growth rates, cement demand and export opportunities for countries such as
Malaysia, Spain and Egypt.
LAFARGEHOLCIM ANNUAL REPORT 2017181 182
A goodwill impairment charge relating to Algeria of CHF 1,008 million was recognized. A post-
tax discount rate of 11.7 percent was used to calculate the recoverable amount, which was
measured based on value in use. The reportable segment for Algeria is Middle East and Africa;
The cash-generating units included in “Others” comprised the following impairment charges:
– a total impairment charge relating to Malaysia of CHF 448 million, of which CHF 277 million
has been allocated to goodwill. Since there was insufficient goodwill available to absorb the
full impairment amount, an additional impairment charge of CHF 171 million was recognized
for property, plant and equipment. A post-tax discount rate of 9.7 percent was used to calculate
the recoverable amount, which was measured based on value in use. The reportable segment
for Malaysia is Asia Pacific;
– a total impairment charge relating to Brazil of CHF 226 million. Since there was no goodwill
available to absorb the full impairment amount, the impairment charge was fully allocated to
property, plant and equipment. A post-tax discount rate of 12.3 percent was used to calculate
the recoverable amount, which was measured based on value in use. The reportable segment
for Brazil is Latin America;
– a total impairment charge relating to Spain of CHF 221million, of which CHF 40 million has
been allocated to goodwill. Since there was insufficient goodwill available to absorb the full
impairment amount, an additional impairment charge of CHF 181 million was recognized for
property, plant and equipment. A post-tax discount rate of 7.5 percent was used to calculate
the recoverable amount, which was measured based on value in use. The reportable segment
for Spain is Europe;
– a total impairment charge relating to Iraq of CHF 216 million, of which CHF 38 million has been
allocated to goodwill. Since there was insufficient goodwill available to absorb the full
impairment amount, an additional impairment charge of CHF 178 million was recognized for
property, plant and equipment. A post-tax discount rate of 15.7 percent was used to calculate
the recoverable amount, which was measured based on value in use. The reportable segment
for Iraq is Middle East and Africa;
– a goodwill impairment charge relating to Indonesia of CHF 205 million. A post-tax discount
rate of 10.7 percent was used to calculate the recoverable amount, which was measured based
on value in use. The reportable segment for Indonesia is Asia Pacific;
– a total impairment charge relating to Egypt of CHF 197 million, of which CHF 49 million has
been allocated to goodwill. Since there was insufficient goodwill available to absorb the full
impairment amount, an additional impairment charge of CHF 148 million was recognized for
property, plant and equipment. A post-tax discount rate of 14.8 percent was used to calculate
the recoverable amount, which was measured based on value in use. The reportable segment
for Egypt is Middle East and Africa;
– a goodwill impairment charge relating to Zambia of CHF 141 million. A post-tax discount rate
of 14.8 percent was used to calculate the recoverable amount, which was measured based on
value in use. The reportable segment for Zambia is Middle East and Africa;
– management recognized also an aggregated goodwill impairment charge of CHF 63 million
related to cash-generating units within the reported segments Others.
The total recoverable amount of countries that were impaired amounted to CHF 5.8 billion.
In 2016, management recognized a goodwill impairment charge of CHF 40 million relating to
cash-generating units “Others” within the reportable segment Asia Pacific.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Sensitivity to changes in assumptions
With regard to the assessment of value in use of a cash-generating unit or a group of cash-
generating units, management believes that except for the countries listed below, a possible
change in the post-tax discount rate of 0.5 percentage point, and a 0.25 percentage point change
in long-term growth rate, would not cause the carrying amount of a cash-generating unit or a
group of cash-generating units to materially exceed its recoverable amount. For the countries
listed below, a change in the post-tax discount rate and long-term growth rate would have the
following impacts:
Used post-tax
discount rate
Used long-term
growth rate
+10.7%
+11.7%
+4.0%
+4.0%
Excess of
recoverable
amount over
carrying amount
(Million CHF)
Break-even
post-tax
discount rate
using the used
long-term
growth rate
Break-even
long-term
growth rate
using the used
post-tax
discount rate
0
0
+10.7%
+11.7%
+4.0%
+4.0%
Used post-tax
discount rate1
Used long-term
growth rate
+6.9%
+8.7%
+8.2%
+7.2%
+2.2%
+3.0%
+2.5%
+3.2%
Excess of
recoverable
amount over
carrying amount
(Million CHF)
Break-even
post-tax
discount rate
using the used
long-term
growth rate1
Break-even
long-term
growth rate
using the used
post-tax
discount rate1
33
97
62
27
+7.0%
+9.1%
+8.5%
+7.6%
+2.1%
+2.5%
+2.1%
+2.8%
Sensitivity to changes in assumptions 2017
Cash-generating unit
Indonesia
Algeria
Sensitivity to changes in assumptions 2016
Cash-generating unit
Australia/New Zealand
Malaysia
Poland
Spain
1 Figures adjusted from pre-tax to post-tax.
LAFARGEHOLCIM ANNUAL REPORT 2017183 184
27.
TRADE ACCOUNTS PAYABLE
Million CHF
Trade accounts payable – associates and joint ventures
Trade accounts payable – third parties
Advance payments from customers – third parties 1
Total
2017
126
3,307
282
3,715
2016
85
2,963
259
3,307
1 Advance payments from customers – third parties are now shown separately, comparative figures have been
adjusted accordingly.
28.
FINANCIA L LIAB ILITIES
Million CHF
Current financial liabilities – associates and joint ventures
Current financial liabilities – third parties
Current portion of long-term financial liabilities
Derivative liabilities (note 30)
Total current financial liabilities
Long-term financial liabilities – associates and joint ventures
2017
24
1,306
2,403
109
3,843
39
2016
52
2,014
2,881
30
4,976
0
Long-term financial liabilities – third parties
14,727
14,666
Derivative liabilities (note 30)
Total long-term financial liabilities
Total
Of which secured
Details of total financial liabilities
Million CHF
Loans from financial institutions
Bonds and private placements
Commercial paper notes
Total loans and bonds
Obligations under finance leases (note 29)
Derivative liabilities (note 30)
Total
13
14,779
18,621
83
79
14,744
19,720
87
2017
3,177
2016
3,770
15,177
15,578
82
195
18,435
19,544
64
122
67
109
18,621
19,720
“Loans from financial institutions” include amounts due to banks and other financial institutions.
Repayment dates vary between one and 11 years (2016: one and 12 years). CHF 1,876 million
(2016: CHF 2,570 million) is due within one year.
As per the loans agreements, the Group is required to comply with certain provisions or
covenants. The Group complied with its debt covenants in all material respect.
Unused committed credit lines totaled CHF 6,794 million at year-end 2017 (2016: CHF 6,256
million).
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Financial liabilities by currency
Currency
Million CHF
EUR
USD
CHF
AUD
GBP
NGN
IDR
BRL
Others
Total
7,528
5,229
2,009
738
396
393
391
355
1,582
18,621
2017
Interest
rate 1
Million CHF
2.8
5.1
2.7
3.8
3.0
15.8
7.7
10.3
5.8
4.5
7,581
5,286
2,425
693
601
314
365
425
2,030
19,720
In %
40.4
28.1
10.8
4.0
2.1
2.1
2.1
1.9
8.5
100.0
2016
Interest
rate1
3.2
5.0
2.1
4.2
8.0
14.4
9.0
7.2
7.4
4.8
In %
38.4
26.8
12.3
3.5
3.0
1.6
1.9
2.2
10.3
100.0
1 Weighted average nominal interest rate on financial liabilities at December 31.
Interest rate structure of total financial liabilities
Million CHF
Financial liabilities at fixed rates
Financial liabilities at floating rates
Total
2017
12,910
5,711
18,621
2016
12,060
7,660
19,720
Financial liabilities that are hedged to a fixed or floating rate are disclosed on a post hedge
basis.
Information on the maturity of financial instruments is disclosed in the note 3.
LAFARGEHOLCIM ANNUAL REPORT 2017185 186
Bonds and private placements as at December 31
Nominal
interest
rate
Effective
interest
rate
Term
Description
Nominal
value
Million CHF
LafargeHolcim Ltd
CHF
CHF
CHF
CHF
CHF
CHF
400
450
450
250
250
150
3.13%
4.00%
3.00%
2.00%
0.38%
1.00%
Holcim Overseas Finance Ltd.
2007–2017
Bonds swapped into floating interest rates at inception
4.19%
2.97%
2.03%
0.41%
1.03%
2009–2018
Bonds with fixed interest rate
2012–2022
Bonds with fixed interest rate
2013–2022
Bonds with fixed interest rate
2015–2021
Bonds with fixed interest rate
2015–2025
Bonds with fixed interest rate
Net
book
value
in CHF 1
Net
book
value
in CHF1
2017
2016
0
449
451
250
250
150
413
449
451
250
250
150
CHF
425
3.38%
3.42%
2011–2021
Bonds guaranteed by LafargeHolcim Ltd
424
424
Lafarge S.A.
EUR
EUR
EUR
EUR
EUR
EUR
EUR
GBP
USD
GBP
EUR
250
150
50
175
357
247
371
56
600
80
289
7.25%
6.85%
5.25%
5.00%
5.50%
5.00%
4.75%
6.63%
7.13%
8.75%
5.38%
2009–2017
Private placement with fixed interest rate
2009–2017
Private placement with fixed interest rate
2012–2017
Private placement with fixed interest rate
4.68%
2012–2018
Private placement with fixed interest rate
4.74%
5.19%
4.19%
2009–2019
Bonds with fixed interest rate (partially repaid 2016)
2010–2018
Bonds with fixed interest rate (partially repaid 2016)
2005–2020
Bonds with fixed interest rate (partially repaid 2016)
2002–2017
Bonds with fixed interest rate
5.90%
2006–2036
Bonds with fixed interest rate
2009–2017
Bonds with fixed interest rate
2007–2017
Bonds with fixed interest rate
0
0
0
205
450
292
464
0
691
0
0
277
169
54
194
429
278
439
74
728
104
316
EUR
430
5.38%
4.98%
2010–2018
EUR
198
5.88%
4.29%
2012–2019
Holcim GB Finance Ltd.
Bonds, partly swapped into floating interest rates
(partially repaid 2016)
Bonds, partly swapped into floating interest rates
(partially repaid 2016)
522
503
247
237
GBP
300
8.75%
2009–2017
Bonds guaranteed by LafargeHolcim Ltd
0
377
Holcim Capital Corporation Ltd.
USD
USD
USD
50
250
250
7.65%
6.88%
6.50%
7.65%
7.28%
6.85%
Holcim Capital México, S.A. de C.V.
2001–2031
Private placement guaranteed by LafargeHolcim Ltd
2009–2039
Bonds guaranteed by LafargeHolcim Ltd
2013–2043
Bonds guaranteed by LafargeHolcim Ltd
MXN
1,700
7.00%
7.23%
2012–2019
Bonds guaranteed by LafargeHolcim Ltd
MXN
2,000
7.78%
5.53%
2014–2018
MXN
1,700
8.01%
6.78%
2015–2020
Subtotal
1 Includes adjustments for fair value hedge accounting, where applicable.
Bonds guaranteed by LafargeHolcim Ltd,
with floating interest rates
Bonds guaranteed by LafargeHolcim Ltd,
with floating interest rates
49
237
237
84
99
84
51
247
248
84
99
84
5,636
7,377
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Net
book
value
in CHF 1
2017
5,636
0
581
38
177
Net
book
value
in CHF1
2016
7,377
215
533
35
163
Nominal
interest
rate
Effective
interest
rate
Term
Description
Nominal
value
Million CHF
Subtotal
Holcim Finance (Luxembourg) S.A.
EUR
EUR
EUR
EUR
EUR
200
500
33
152
1,150
6.35%
3.00%
2.00%
1.46%
1.38%
3.11%
2.03%
1.51%
1.43%
2009–2017
Bonds guaranteed by LafargeHolcim Ltd
2014–2024
Bonds guaranteed by LafargeHolcim Ltd
2016–2026
Schuldschein loan guaranteed by LafargeHolcim Ltd
2016–2023
Schuldschein loan guaranteed by LafargeHolcim Ltd
2016–2023
Bonds guaranteed by LafargeHolcim Ltd
1,340
1,231
EUR
209
0.72%
0.85%
2016–2021
Schuldschein loan guaranteed by LafargeHolcim Ltd,
with floating interest rates
EUR
EUR
EUR
EUR
25
413
1,150
750
0.99%
1.04%
2.25%
1.75%
Holcim Finance (Australia) Pty Ltd
AUD
AUD
AUD
AUD
250
200
250
300
6.00%
5.25%
3.75%
3.50%
1.04%
1.10%
2.23%
1.90%
5.52%
3.90%
3.73%
Holcim US Finance S. à r.l. & Cie S.C.S.
USD
USD
EUR
USD
USD
200
750
500
500
50
6.21%
6.00%
2.63%
5.15%
4.20%
6.24%
6.25%
3.59%
5.30%
4.20%
LafargeHolcim International Finance Ltd
2016–2023
Schuldschein loan guaranteed by LafargeHolcim Ltd,
with floating interest rates
2016–2021
Schuldschein loan guaranteed by LafargeHolcim Ltd
2016–2028
Bonds guaranteed by LafargeHolcim Ltd
2017-2029
Bonds guaranteed by LafargeHolcim Ltd
2012–2017
Bonds guaranteed by LafargeHolcim Ltd
2012–2019
Bonds guaranteed by LafargeHolcim Ltd
2015–2020
Bonds guaranteed by LafargeHolcim Ltd
2017-2022
Bonds guaranteed by LafargeHolcim Ltd
2006–2018
Private placement guaranteed by LafargeHolcim Ltd
2009–2019
Bonds guaranteed by LafargeHolcim Ltd
2012–2020
Bonds guaranteed by LafargeHolcim Ltd,
swapped into USD and floating interest rates at inception
2013–2023
Bonds guaranteed by LafargeHolcim Ltd
2013–2033
Bonds guaranteed by LafargeHolcim Ltd
244
224
29
482
27
442
1,347
1,238
863
0
0
152
190
227
195
729
597
485
49
184
147
184
0
204
761
558
507
51
USD
40
2.80%
2.88%
2016–2021
Schuldschein loan guaranteed by LafargeHolcim Ltd
39
41
USD
USD
121
15
3.01%
3.20%
3.03%
3.27%
2016–2021
Schuldschein loan guaranteed by LafargeHolcim Ltd,
with floating interest rates
2016–2023
Schuldschein loan guaranteed by LafargeHolcim Ltd
USD
25
3.21%
3.23%
2016–2023
Schuldschein loan guaranteed by LafargeHolcim Ltd,
with floating interest rates
118
15
123
15
24
25
LafargeHolcim Finance US LLC
USD
USD
400
600
3.50%
4.75%
3.59%
5.00%
2016–2026
Bonds guaranteed by LafargeHolcim Ltd
2016–2046
Bonds guaranteed by LafargeHolcim Ltd
LafargeHolcim Sterling Finance (Netherlands) B.V.
GBP
300
3.00%
3.16%
2017–2032
Bonds guaranteed by LafargeHolcim Ltd
Holcim (Costa Rica) S.A.
CRC
5,000
6.95%
2016–2018
Bonds with fixed interest rate (early repaid in 2017)
Holcim (US) Inc.
USD
USD
USD
33
25
27
Lafarge Africa PLC
0.94%
0.98%
0.91%
0.94%
0.98%
0.91%
1999–2032
Industrial revenue bonds – Mobile Dock & Wharf
2003–2033
Industrial revenue bonds – Holly Hill
2009–2034
Industrial revenue bonds – Midlothian
NGN
NGN
Total
26,386
14.25%
16.08%
2016–2019
Bonds with fixed interest rate
33,614
14.75%
16.39%
2016–2021
Bonds with fixed interest rate
1 Includes adjustments for fair value hedge accounting, where applicable.
389
569
388
0
33
24
26
407
595
0
9
34
26
27
84
107
86
109
15,177
15,578
LAFARGEHOLCIM ANNUAL REPORT 2017187 188
29 .
LE ASES
Future minimum lease payments
Million CHF
Within 1 year
Between 1 and 5 years
Thereafter
Total
Interest
Total finance leases
Operating leases
Finance leases
Operating leases
Finance leases
2017
340
753
521
1,614
2016
252
567
446
1,264
2017
14
29
41
84
(20)
64
2016
16
29
44
90
(23)
67
The total expense for operating leases recognized in the consolidated statement of income in
2017 was CHF 352 million (2016: CHF 257 million). There are no individually significant operating
lease agreements.
The liabilities from finance leases due within one year are included in current financial liabilities
and liabilities due thereafter are included in long-term financial liabilities (note 28). There are
no individually significant finance lease agreements.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Derivative assets and liabilities
Million CHF
Fair value hedges
Interest rate
Currency
Cross-currency
Total fair value hedges
Cash flow hedges
Currency
Commodity
Total cash flow hedges
Net investment hedges
Currency
Total net investment hedges
Held for trading
Currency
Cross-currency
Commodity
Total held for trading
Total
30.
DERIVATIVE FINANCIAL INSTRUM ENTS
Derivative liabilities are included in financial liabilities (note 28) and derivative assets are
separately disclosed in the consolidated statement of financial position.
Fair value
assets
Fair value
liabilities
2017
2017
Nominal
amount
2017
Fair value
assets
Fair value
liabilities
2016
2016
Nominal
amount
2016
0
0
0
0
18
33
50
6
6
2
0
0
2
58
0
0
10
10
14
6
19
6
6
86
0
0
87
122
0
0
613
613
1,690
229
1,919
1,333
1,333
687
30
0
717
4,583
18
15
4
36
7
22
29
0
0
7
0
1
8
74
0
0
78
78
2
4
6
5
5
20
0
0
20
109
1,007
26
653
1,685
74
123
197
467
467
1,702
0
1
1,703
4,053
LAFARGEHOLCIM ANNUAL REPORT 2017189 190
31.
TAXES
Million CHF
Current taxes
Deferred taxes and non-current taxes
Total
2017
(1,042)
507
(536)
2016
(943)
109
(835)
In 2017, CHF 131 million (2016: CHF 177 million) related to the divestment of Group companies
are included in the current taxes position in the consolidated statement of income.
Reconciliation of tax rate
Net (loss) income before taxes
Group’s expected weighted
average tax income (charge)
Effect of non-deductible items
Effect of non-taxable items
Effect of non-recoverable
withholding tax
Effect from unrecognized tax losses
and deferred tax asset write-offs
Effect from non tax deductible
goodwill impairments
Other effects
Group’s effective income tax
(charge)/rate
2017
(1,180)
2016
2,882
142
(134)
70
(128)
(53)
(403)
(30)
(870)
(143)
166
(153)
17
0
148
(536)
–45%
(835)
+29%
The Group’s expected tax expense at weighted average applicable tax rate is the result from
applying the domestic statutory tax rates to net (loss) income before taxes of each entity in the
country it operates.
In 2017, the difference between expected and effective tax rate related mainly to impairments
of assets without recognition of deferred taxes, non tax- deductible goodwill impairments,
impacts of the US tax reform measures, reassessment of tax risks and changes in unrecognized
tax losses carryforward.
Other effects of CHF (30) million mainly include provisions for tax risks and the impact of the
US tax reform as disclosed in the page 192.
Excluding impairment and divestments, the Group’s expected weighted average tax
rate amounts to 28.3 percent (2016: 29.5 percent) and the Group’s effective tax rate amounts
to 30.5 percent (2016: 29.6 percent).
In 2017, total income taxes paid amounts to CHF 1,043 million (2016: CHF 1,000 million), of which
CHF 163 million (2016: CHF 140 million) related to the divestment of Group companies and are
included in position “Disposal of participation in Group companies” in the consolidated statement
of cash flows and 9 million included in position “Dividends paid to non-controlling interest”.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Deferred tax in the consolidated statement of financial position as follows:
Million CHF
Deferred tax assets
Deferred tax liabilities
Deferred tax liabilities net
2017
(758)
2,345
1,587
2016
(1,060)
3,387
2,327
The Group’s deferred tax asset position is primarily the result of uncertainties regarding the
future realization of recorded tax benefits on temporary differences and tax loss carryforwards
from operations in various jurisdictions.
Change in deferred tax asset and liabilities
Million CHF
2017
2017 Deferred tax liabilities net as
at January 1, 2017
Charged (credited)
– to the statement of income
– to other comprehensive income
Divestments
Reclassifications
Currency translation effects
Deferred tax liabilities net as at
December 31, 2017
2016
2016 Deferred tax liabilities net as
at January 1, 2016
Charged (credited)
– to the statement of income
– to other comprehensive income
PPA refinement (note 4)
Divestments
Reclassification to liabilities directly
associated with assets classified as
held for sale
Currency translation effects
Deferred tax liabilities net as at
December 31, 2016
Property, plant
and equipment
Intangible and
other long-term
assets
Provisions
Other
Tax losses carry-
forward
Total
4,035
(566)
0
(72)
63
37
3,497
21
(4)
0
7
16
9
48
(732)
68
(1,064)
2,327
116
70
10
(80)
(1)
(155)
0
(3)
(120)
(54)
(157)
0
58
121
(36)
(766)
70
0
0
(43)
(616)
(264)
(1,078)
1,587
4,946
124
(866)
(229)
(898)
3,077
(358)
0
(111)
(307)
(14)
(120)
(110)
3
0
0
0
3
229
(32)
(68)
11
1
(7)
4,035
21
(732)
141
7
295
(188)
3
39
68
(11)
0
(202)
35
0
11
(109)
(22)
(86)
(449)
(10)
(74)
(1,064)
2,327
The Group has not recognized deferred tax liabilities in respect of unremitted earnings that are
considered indefinitely reinvested in foreign subsidiaries.
LAFARGEHOLCIM ANNUAL REPORT 2017191 192
Tax losses carryforward
Million CHF
Total tax losses carryforward
Of which reflected in deferred taxes
Total tax losses carryforward not recognized
Expiring as follows:
Within 1 year
Between 2 and 5 years
Thereafter
Losses
carry-forward
Tax effect
Losses
carry-forward
Tax effect
2017
10,836
(4,141)
6,695
138
550
6,006
2017
2,725
(1,078)
1,647
33
128
1,487
2016
10,843
(3,760)
7,083
97
243
6,742
2016
2,910
(1,064)
1,846
18
55
1,773
In 2017, CHF 1,647 million (2016: CHF 1,846 million) of deferred tax assets on tax losses were
not recognized as the Group considers it will not generate sufficient taxable income within the
carryforward period to realize these deferred tax benefits in all juridictions where the Group
operates.
In 2017, net deferred tax assets recognized on prior year losses amounted to CHF 227 million.
Long-term income tax liabilities
The long-term income tax liabilities include provisions for risks related to income tax liabilities
amounting to CHF 268 million (2016: CHF 146 million) for which the Group does not expect the
resolution within 12 months and the effect of the one-time repatriation tax arising from the US
tax reform legislation payable over 8 years amounting to CHF 130 million.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 32 .
PROVI SI O NS
Million CHF
January 1
PPA refinement (note 4)
Change in structure
Reclassification to liabilities directly
associated with assets held for sale
Provisions recognized
Provisions used during the year
Provisions reversed during the year
Unwinding of discount and discount
rate changes
Reclassifications
Currency translation effects
December 31
Of which short-term provisions
Of which long-term provisions
Site restoration
and other environ-
mental provisions
912
0
(9)
0
69
(58)
(35)
31
0
6
916
87
829
Specific
business
risks
812
0
1
0
173
(98)
(246)
2
(6)
(5)
633
139
494
Restructuring
provisions
Other
provisions
Total 2017
Total 2016 1
365
492
2,580
0
0
0
118
(143)
(52)
0
(26)
18
279
171
109
0
2
0
286
(189)
(60)
3
32
(1)
564
195
369
0
(6)
0
647
(488)
(392)
36
0
18
2,393
592
1,801
2,463
271
(55)
(19)
572
(484)
(198)
12
(38)
57
2,580
575
2,005
1 The year 2016 has been adjusted for the provisions for income tax risks which are now presented separately in the line long-term income tax liabilities.
LAFARGEHOLCIM ANNUAL REPORT 2017193
194
Site restoration and other environmental provisions
Site restoration and other environmental provisions represent the Group’s legal or constructive
obligations of restoring a site. The timing of cash outflows of these provisions is dependent on
the completion of raw material extraction and the commencement of site restoration.
Specific business risks
The total provision for specific business risks amounted to CHF 633 million as of December 31,
2017 (2016: CHF 812 million). Specific business risks comprise litigation provisions and provisions
for contractual risks recorded in connection with purchase price allocations. Provisions for
litigations mainly relate to antitrust and commercial disputes, environmental claims and product
liabilities and are set up to cover legal and administrative proceedings.
Provisions for contingent liabilities arising from business combinations amounted
to CHF 192 million (2016: CHF 426 million). The timing of cash outflows of provisions for litigations
is uncertain since it will largely depend upon the outcome of administrative and legal proceedings.
The sensitivity associated with certain provisions led management to limit the extent of the
disclosure discussed above as it believes it could seriously prejudice the position of the Group.
Restructuring provisions
Provisions for restructuring costs relate to various restructuring programs and amounted to
CHF 279 million (2016: CHF 365 million) on December 31, 2017.
These provisions are expected to result in future cash outflows mainly within the next one to
three years.
Other provisions
Other provisions relate mainly to provisions that have been set up to cover other contractual
liabilities and amounted to CHF 564 million (2016: CHF 492 million). The composition of these
items is manifold and comprised, as of December 31, 2017, among other things: provisions for
performance related compensation and various severance payments to employees of CHF 138
million (2016: CHF 130 million), provisions for health insurance and pension schemes, which do
not qualify as benefit obligations, of CHF 17 million (2016: CHF 21 million) and provisions related
to sales and other taxes of CHF 77 million (2016: CHF 17 million). The expected timing of the
future cash outflows is uncertain.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 33.
EMPLOYEE BENEFITS
Personnel expenses and number of personnel
The Group’s total personnel expenses, including social charges, are recognized in the relevant
expenditure line by function in the consolidated statement of income and amounted to
CHF 4,932 million (2016: CHF 5,100 million). As of December 31, 2017, the Group employed 81,960
people (2016: 90,903 people).
Defined benefit pension plans
The Group is managing the pension plans through the Group Pension Fund Committee. The
Committee is co-chaired by Finance and Organization & Human Resources and includes as well
legal and treasury specialists.
The Group’s main defined benefit pension plans are located in the United Kingdom, North
America and Switzerland. They respectively represent 52 percent (2016: 51 percent), 22 percent
(2016: 23 percent) and 16 percent (2016: 17 percent) of the Group’s total defined benefit
obligation on pensions. These main plans are funded through legally separate trustee
administered funds. The cash funding of these plans, which may from time to time involve
special payments, is designed to ensure that present and future contri butions should be
sufficient to meet future liabilities.
Unfunded pension plans are mainly retirement indemnity schemes or end of service benefits
where benefits are vested only if the employee is still employed by the Group company at the
retirement date. They also include certain benefits in addition to the general and mandatory
pension plans where limitations may apply. The unfunded pension plans are located largely in
the United States, Canada and France.
United Kingdom (UK)
The companies operate three defined benefit pension plans in the UK: the Lafarge UK pension
plan, the Aggregate Industries pension plan and the Ronez 2000 pension plan. Pensions payable
to employees depend on average final salary and length of service within the Group. These
plans are registered schemes under UK tax law and managed by independent Boards of Trustees.
They are closed to new entrants and vested rights of the Lafarge UK pension Plan were frozen
in 2011. The vested rights of the Ronez 2000 pension plan were frozen in 2016.
These plans are funded by employer contributions, which are negotiated every three years
based on plan valuations carried out by independent actuaries, so that the long-term financing
services are ensured.
– The last funding valuation of the Lafarge UK Pension plan was carried out based on the June 30,
2015 fund situation. On September 30, 2016, the Board of Trustees agreed with the company
that no further contribution from the Group was needed based on the low level of deficit,
calculated in line with local legislation, at the valuation date. The next funding valuation will
be conducted in the year 2018. No contributions were paid in 2017 and 2016.
– The last funding valuation for the Aggregate Industries Pension Plan was conducted as at 5
April 2015. A revised schedule of contributions setting out the deficit repayment contributions
payable by the Employer was put in place with the aim of removing the funding deficit in the
Plan by 5 April 2027. The next funding valuation will be conducted as at 5 April 2018.
LAFARGEHOLCIM ANNUAL REPORT 2017195 196
– Under the Ronez 2000 Pension Plan, there are currently no contributions being paid by the
Employer following the closure of the Plan to future accrual. The Trustee is currently carrying
out the actuarial valuation as at December 31, 2015.
In relation to risk management and asset allocation, the Board of Trustees aims to ensure that
it can meet its obligations to the beneficiaries of the plan both in the short and long term. Subject
to this primary objective, the Board of Trustees targets to maximize the long-term investment
return whilst minimizing the risk of non-compliance with any statutory funding requirements.
The Board of Trustees is responsible for the plan’s long-term investment strategy but usually
delegates strategy design and monitoring to an Investment Committee.
For the Lafarge UK pension plan, the Board of Trustees employs a fiduciary manager to implement
the strategy and manage the plan’s investments. The fiduciary manager is responsible for the
selection and deselection of underlying investment managers and funds as well as managing
the asset allocation of the plan within agreed guidelines.
The fair value of investment funds is based on a mixture of market values and estimates. Cash
and cash equivalents are invested with financial institutions that have at least a “A/ BBB” rating.
Strategies have been designed to target an asset value equal to 100 percent of the liability value.
This objective has been translated into two main asset categories:
– a portfolio of return-seeking assets, which includes shares, real estate and alternative assets
classes;
– a portfolio of instruments that provides a reasonable match to changes in liability values,
which includes government bonds, corporate bonds and derivatives.
Share instruments represent investments in equity funds and direct investments which have
quoted market prices in an active market. Alternative asset classes are used for both risk
management and return generation purposes, and its fair value is based on market values. Real
estate comprises investments in listed real estate funds or direct investments. Real estates that
are held directly are valued annually by an independent expert.
Bonds generally have a credit rating that is not lower than “A/BBB” and have quoted market
prices in an active market. Liability Driven Investment (LDI) portfolio is mainly composed of
government bonds and swaps. This strategy mainly involves hedging the fund’s exposure to
changes in interest rates and inflation.
No material plan amendment or curtailment occurred during the year.
The companies operate also defined contribution plans which include active members from
frozen defined benefit plans and employees who are not members of a defined benefit plan.
North America (United States and Canada)
The companies operate defined contribution plans and a number of defined benefit pension
plans. The majority of the defined benefit pension plans are closed to new entrants and some
plans are frozen to future accruals. Pensions payable to employees depend on average final
salary and length of service within the Group.
In 2017, for the largest US plans, annuities contracts were purchased in September for certain
retirees and a lump sum window was offered in October to certain terminated vested participants
leading to a net settlement gain of CHF 10 million.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS The Group companies must contribute a minimum amount to the defined benefit pension plans
annually which is determined actuarially and is comprised of service costs as well as payments
toward any existing deficits. For plans that are currently closed and frozen, there will generally
be no service component in the future.
In the United States, the companies intend to pay the minimum required contributions as
prescribed under Internal Revenue Service (IRS) regulations in addition to voluntary amounts
in order to achieve and maintain an IRS funded status of at least 80 percent. In Canada, the
Group companies intend to pay at least the minimum required contributions under the applicable
pension legislation for each plan.
The companies delegate various responsibilities to Pension Committees. These committees
define and manage long-term investment strategies for reducing risks as and when appropriate
including interest rate risks and longevity risks. The assets in the United States and Canada
include a certain proportion which hedge the liability swings against interest rate movements,
with those assets primarily invested in fixed income investments, particularly intermediate and
longer term instruments.
In 2017, a pension plan freeze was announced for all Canadian salaried employees participating
in the defined benefit plan. From January 1, 2020, active members will no longer acquire further
rights in this defined benefit plan. Active members will then participate in a defined contribution
plan.
Switzerland
The Swiss pension plans of Swiss companies contain a cash balance benefit formula, accounted
for as a defined benefit plan. Employer and employee contributions are defined in the pension
fund rules in terms of an age related sliding scale of percentages of salary. Under Swiss law,
the pension fund guarantees the vested benefit amount as confirmed annually to members.
Interest above legal requirements may be added to member balances at the discretion of the
Board of Trustees. At retirement date, members have the right to take their retirement benefit
as a lump sum, an annuity or part as a lump sum with the balance converted to a fixed annuity
at the rates defined in the fund rules. The Board of Trustees, composed of half employer and
half employees’ representatives, may increase the annuity at their discretion subject to the plan’s
funded status including sufficient free funds as determined according to Swiss statutory
valuation rules. The Swiss pension plans fulfill the requirements of the regulatory framework
which requires a minimum level of benefits.
The Board of Trustees invests in a diversified range of assets in accordance with the local legal
requirements. The investment strategy takes into account the pension fund’s tolerance to risk
as well as the funding needs (minimum investment return necessary to stabilize the coverage
ratio in the long run).
In 2017, a plan amendment occurred and led to a minor gain. A settlement occurred in 2016
due to a restructuring of the corporate functions in Switzerland and the settlement gain
amounted to CHF 17 million.
LAFARGEHOLCIM ANNUAL REPORT 2017197 198
Other post-employment benefit plans
The Group operates a number of other post-employment benefit plans which are covered by
provisions in the statement of financial position of the respective companies. In 2017, a plan
amendment occurred in Canada for the post-retirement benefits offered to salaried employees
first eligible to retire on or after January 1, 2020. The benefits will be changed from traditional
insurance to fixed dollar amounts coverage and, also for these employees, life insurance
coverage will be eliminated.
Status of the Group’s defined benefit plans
The status of the Group’s defined benefit plans using actuarial assumptions determined
in accordance with IAS 19 Employee Benefits is summarized below. The tables provide
reconciliations of defined benefit obligations, plan assets and the funded status for the defined
benefit pension plans to the amounts recognized in the statement of financial position.
Reconciliation of retirement benefit plans to the statement of financial position
Million CHF
Net liability arising from defined benefit pension plans
Net liability arising from other post-employment benefit plans
Net liability
Reflected in the statement of financial position as follows:
Pension assets
Defined benefit obligations
Net liability
2017
1,265
288
1,553
(308)
1,861
1,553
2016
1,499
308
1,807
(271)
2,079
1,807
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Retirement benefit plans
Million CHF
Present value of funded obligations
Fair value of plan assets
Plan deficit of funded obligations
Present value of unfunded obligations
Effect of asset ceiling
Net liability from funded and unfunded plans
Of which:
United Kingdom
North America (United States and Canada)
Switzerland
Rest of world
Costs recognized in the statement of income are as follows:
Current service costs
Past service costs (including curtailments)
Gains on settlements 1
Net interest expense
Special termination benefits
Total recorded in the statement of income
Of which:
United Kingdom
North America (United States and Canada)
Switzerland
Rest of world
Amounts recognized in other comprehensive earnings:
Actuarial gains (losses) arising from changes in demographic
assumptions
Actuarial gains (losses) arising from changes in financial assumptions
Actuarial gains (losses) arising from experience adjustments
Return on plan assets excluding interest income
Change in effect of asset ceiling excluding interest (income) expense
Total recorded in other comprehensive earnings
Of which:
United Kingdom
North America (United States and Canada)
Switzerland
Rest of world
Defined benefit pension plans
Other post-employment benefit plans
2017
9,142
(8,596)
546
714
5
1,265
(96)
581
66
714
123
(21)
(11)
41
10
142
1
42
40
59
71
(274)
8
410
(4)
211
46
1
181
(17)
2016
8,940
(8,162)
778
720
1
1,499
(30)
598
252
679
125
(16)
(19)
44
12
146
9
52
29
56
11
(1,078)
90
834
0
(142)
(58)
7
(21)
(70)
2017
2016
0
0
0
288
0
288
0
226
0
61
2
(5)
0
11
0
9
0
6
0
3
1
(16)
21
0
0
5
0
7
0
(2)
0
0
0
308
0
308
0
244
0
64
3
0
0
12
0
16
0
12
0
4
5
(8)
3
0
0
(1)
0
5
0
(6)
1 Gains on settlements in 2017 included a settlement gain of CHF 10 million in the United States relating to annuities purchases and a lump sum window for certain beneficiaries.
In 2016, it included a settlement gain of CHF 17 million resulting from a restructuring in Switzerland.
LAFARGEHOLCIM ANNUAL REPORT 2017199 200
Retirement benefit plans
Million CHF
Present value of funded and unfunded obligations
Defined benefit pension plans
Other post-employment benefit plans
2017
2016
2017
2016
Opening balance as per January 1
9,660
9,546
308
304
Divestments
Reclassifications and other change in structure
Current service costs
Interest expense
Contribution by the employees
Actuarial (gains) losses
Benefits paid
Past service costs (including curtailments)
Settlements
Special termination benefits
Currency translation effects
Closing balance as per December 31
Of which:
United Kingdom
North America (United States and Canada)
Switzerland
Rest of world
Fair value of plan assets
Opening balance as per January 1
Divestments
Other change in structure
Interest income
Return on plan assets excluding interest income
Contribution by the employer
Contribution by the employees
Benefits paid
Settlements
Currency translation effects
Closing balance as per December 31
Of which:
United Kingdom
North America (United States and Canada)
Switzerland
Rest of world
0
16
123
258
20
196
(551)
(21)
(111)
10
257
9,857
5,172
2,161
1,600
924
(51)
38
125
300
21
977
(538)
(16)
(75)
12
(680)
9,660
4,956
2,196
1,628
879
8,162
8,122
0
6
217
410
198
20
(551)
(101)
234
(9)
0
256
834
229
21
(537)
(55)
(698)
8,596
8,162
5,272
1,580
1,534
210
4,987
1,598
1,376
201
0
(2)
2
11
0
(5)
(18)
(5)
0
0
(4)
288
0
226
0
61
0
0
0
0
0
18
0
(18)
0
0
0
0
0
0
0
(5)
0
3
12
0
1
(20)
0
0
0
13
308
0
244
0
64
0
0
0
0
0
20
0
(20)
0
0
0
0
0
0
0
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Retirement benefit plans
Million CHF
Plan assets based on quoted market prices:
Cash and cash equivalents
Equity instruments 1
Debt instruments 2
Liability-driven investments 3
Alternative investments 4
Investment in real estate occupied or used by third parties
Investment funds
Derivatives
Plan assets based on non-quoted prices:
Equity instruments
Structured debt
Investment funds
Land and buildings occupied or used
Debt instruments 2
Insurance policies
Others
Defined benefit pension plans
2017
2016
199
2,019
1,287
1,934
995
449
99
16
48
195
280
53
23
703
297
275
1,837
1,463
1,505
1,162
374
91
(15)
38
194
274
112
32
688
130
Total plan assets at fair value
8,596
8,162
1 Equity instruments include CHF 3 million (2016: CHF 3 million) quoted equity instruments of LafargeHolcim Ltd or
subsidiaries.
2 Debt instruments include CHF 4 million (2016: CHF 5 million) quoted and CHF 0 million (2016: CHF 4 million)
non-quoted debt instruments of LafargeHolcim Ltd or subsidiaries.
3 Liability-driven investment (LDI) is an investment strategy that is defined considering the risk profiles of the liability
of the plan. The LDI investment strategy mainly consists of index-linked government bonds and swaps and involves
hedging the plan against liquidity risk and change in interest rates or inflation yields.
4 Alternative investments include among others hedge-funds, multi-asset values and reinsurance investments.
LAFARGEHOLCIM ANNUAL REPORT 2017201 202
Principal actuarial assumptions (weighted average) used at the end of the reporting period for defined benefit pension plans
Discount rate in %
Expected salary increases in %
Life expectancy in years
after the age of 65
Total Group
United Kingdom
North America
Switzerland
2017
+2.5%
+2.4%
2016
+2.8%
+2.3%
2017
+2.6%
+3.2%
2016
+2.8%
+3.3%
2017
2016
2017
2016
+3.5%
+2.9%
+4.0%
+2.9%
+0.6%
+0.8%
+0.7%
+0.8%
22.3
22.7
23.8
23.0
22.8
22.4
22.5
23.3
Weighted average duration of defined benefit pension plans
Weighted average duration in years
Total Group
United Kingdom
North America
Switzerland
2017
15.3
2016
15.6
2017
17.4
2016
17.6
2017
13.3
2016
14.3
2017
13.7
2016
14.2
Sensitivity analysis as per December 31, 2017 on defined benefit pension plans
Impact on the defined benefit obligation
Total Group
United Kingdom
North America
Switzerland
Million CHF
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
Discount rate (±1% change in assumption)
(1,359)
1,665
(813)
1,009
(266)
314
(197)
243
Expected salary increases
(±1% change in assumption)
Life expectancy in years after the age of 65
(±1 year change in assumption)
120
(105)
20
(18)
378
(365)
258
(244)
17
52
(17)
(50)
19
52
(19)
(60)
Sensitivity analysis as per December 31, 2016 on defined benefit pension plans
Impact on the defined benefit obligation
Total Group
United Kingdom
North America
Switzerland
Million CHF
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
Discount rate (±1% change in assumption)
(1,334)
1,633
(772)
957
(266)
316
(207)
258
Expected salary increases
(±1% change in assumption)
Life expectancy in years after the age of 65
(±1 year change in assumption)
124
(108)
24
(21)
362
(358)
245
(236)
14
50
(13)
(49)
20
54
(19)
(61)
The sensitivity analysis above may not be representative of the actual change in the defined
benefit pension plans as it is unlikely that the change in assumptions would occur in isolation
of one another as some of the assumptions may be correlated.
Expected contributions by the employer to be paid to the post-employment benefit plans during
the annual period beginning after the end of the reporting period are CHF 108 million, of which
CHF 36 million related to North America, CHF 33 million related to Switzerland and CHF 18 million
related to United Kingdom.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 34.
SHARE COMPENSATION PLANS
The total personnel expense arising from the LafargeHolcim share compensation plans
amounted to CHF 20.5 million in 2017 (2016: CHF 16.6 million) as presented in the following
table:
Million CHF
Employee share purchase plan
LafargeHolcim Performance Share Plan
LafargeHolcim Senior Management Plan
Share option plan
Liquidity mechanism for remaining Lafarge rights
Total
Personnel
expenses
2017
Personnel
expenses
2016
0.5
15.5
2.9
0.2
1.3
20.5
0.9
5.8
1.1
0.2
8.6
16.6
All shares granted under these plans are either purchased from the market or derived from
treasury shares.
34.1 Description of plans
Employee share purchase plan
LafargeHolcim offers an employee share-ownership plan for all employees of Swiss subsidiaries
and some executives from Group companies. This plan entitles employees to acquire a limited
amount of discounted LafargeHolcim Ltd shares generally at 70 percent of the market value
based on the prior-month average share price. The shares cannot be sold for a period of two
years from the date of purchase.
LafargeHolcim Performance Share Plan
LafargeHolcim set up a performance share plan in 2015. Performance shares and/or options
are granted to executives, senior management and other employees for their contribution to
the continuing success of the business. These shares and options will be delivered after a three-
year vesting period following the grant date and are subject to performance conditions (shares
are subject to both internal and external conditions, options are subject to internal conditions).
Information related to awards granted through the LafargeHolcim Performance Share Plan is
presented below:
January 1
Granted
Forfeited
2017
2016
Shares
Options
Shares
Options
1,364,703
1,559,468
610,167
747,136
926,203
0
780,003
832,320
(58,716)
(169,723)
(25,467)
(19,988)
December 31
2,232,190
1,389,745
1,364,703
1,559,468
LAFARGEHOLCIM ANNUAL REPORT 2017203 204
The fair value of the plan was calculated by an independent consultant as follows:
– 926,203 performance shares were granted in 2017 under the Performance Share Plan (2016:
780,003). These shares are subject to a three-year vesting period. 648,342 shares (2016:
546,002) are subject to internal performance conditions and the fair value per share is
CHF 57.45 (2016: CHF 52.80). 277,861 shares (2016: 234,001) are subject to an external
performance condition, based on the Total Shareholder Return. This external condition was
included in the fair value per share of CHF 26.27 (2016: CHF 21.40) using a Monte Carlo
simulation;
– no share options were granted in 2017 under the Performance Share Plan (2016: 832,320).
These share options are subject to a three-year vesting period and internal performance
conditions. In 2016, the fair value per share option had been determined using the Black-
Scholes model and amounted to CHF 9.03.
Underlying assumptions for the fair value of the share options granted in 2016 are presented
below (no grants in 2017):
Grant date
Share price at grant date
Exercise price
Assumed/expected dividend yield 1
Expected volatility of stock 2
Risk-free interest rate
Expected life of the options
1 Based on data market provider estimates.
2 Based on a 2 year at-the-money implied volatility.
December 14, 2016
CHF 52.80
CHF 53.83
3.3%
28.5%
0.04%
8 years
LafargeHolcim Senior Management Plan
Part of the variable, performance-related compensation for Senior Management is paid in
LafargeHolcim Ltd shares, which are granted based on the market price of the share in the
following year. The shares cannot be sold by the employee for the next three years.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Share option plans
Two types of share options were granted to senior management of the Group: the ones, which
were granted as part of the annual variable compensation and those, that were allotted to the
Executive Committee upon appointment. In both cases, each option represented the right to
acquire one registered share of LafargeHolcim Ltd at the market price of the shares at the date
of grant. These plans are closed. The last share options under this plan were granted in 2015.
The contractual term of the first type of option plan is eight years, with immediate vesting but
exercise restrictions for a period of three years following the grant date. The contractual term
of the second type of option plan is twelve years and the options have a vesting period (service-
related only) of nine years from the date of grant, with sale and pledge restrictions. The Group
has no legal or constructive obligation to repurchase or settle the options in cash.
Liquidity mechanism for remaining rights under the Lafarge long-term incentive plans
The Lafarge long-term incentive plans consisted of stock options (granted up to 2012) and
performance share (granted up to 2014) plans, all subject to performance conditions.
All Lafarge stock options are vested, while some performance shares granted in 2014 are still
under vesting period (vesting period was 4 years).
Performance conditions include internal conditions and a market condition related to Total
Shareholder Return. The market condition is included in the fair value of each granted instrument.
Following the success of its public exchange offer on Lafarge S.A. and the completion of the
subsequent squeeze-out of Lafarge S.A. shares on October 23, 2015, LafargeHolcim proposed
a liquidity mechanism for:
– Lafarge S.A. shares that may be issued following the exercise on or after the date of the
squeeze-out of stock options that have been allocated pursuant to the Lafarge stock option
plans; or
– Lafarge S.A. shares that may be definitively allotted on or after the squeeze-out in accordance
with the Lafarge performance share plans.
In 2017, the liquidity mechanism has been applied as follows:
– 84,993 Lafarge S.A. shares have been purchased;
– 81,833 Lafarge S.A. shares have been exchanged for 76,425 LafargeHolcim shares; and
– 60,490 Lafarge S.A. options have been exercised in 2017. One Lafarge S.A. stock options plan
ended in June 2017 and 442,448 unexercised Lafarge S.A. options have been lapsed.
LAFARGEHOLCIM ANNUAL REPORT 2017205
206
34.2 Outstanding Share Options
Movements in the number of share options outstanding and their related weighted average
exercise prices are as follows:
January 1
Granted and under vesting period 2
Forfeited
Exercised
Lapsed
December 31
Number 1
Number1
Weighted average
exercise price1
2017
2016
CHF
CHF
CHF
CHF
CHF
CHF
66.90
4,127,010
4,098,017
0.00
52.24
39.36
0
832,320
169,723
95,923
67,427
31,742
129.46
418,113
704,158
64.29
3,443,251
4,127,010
Of which exercisable at the end of
the year
1,794,103
2,175,057
1 Adjusted to reflect former share splits and/or capital increases and/or scrip dividend.
2 These options will not be delivered before the end of the 3-year vesting period and are subject to the level of
achievement of performance conditions.
The weighted average share price for the options exercised in 2017 was CHF 54.08 (2016:
CHF 51.40)
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Share options outstanding at the end of the year have the following expiry dates and give the
right to acquire one registered share of LafargeHolcim Ltd at the exercise prices as listed below:
Option grant date
Expiry date
Exercise price1
Number 1
Number1
2008
2009
2010
2010
2011
2012
2013
2014
2014
2015 (2007 2)
2015 (2008 2)
2015 (2009 2)
2015 (2010 2)
2015 (2011 2)
2015 (2012 2)
2015
2015
2015
2016
Total
2020
2017
2018
2022
2019
2020
2021
2022
2026
2017
2018
2019
2020
2020
2020
2023
2023
2025
2026
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
62.95
35.47
67.66
70.30
63.40
54.85
67.40
64.40
64.40
2017
2016
33,550
33,550
0
38,760
95,557
33,550
95,557
33,550
113,957
113,957
165,538
165,538
122,770
122,770
99,532
33,550
99,532
33,550
129.46
0
418,113
112.41
551,892
551,892
35.93
59.96
52.01
42.07
66.85
63.55
50.19
53.83
85,677
103,545
197,212
197,212
139,000
149,617
189,418
218,096
144,970
144,970
47,333
47,333
652,939
727,148
736,806
832,320
3,443,251
4,127,010
1 Adjusted to reflect former share splits and/or capital increases and/or scrip dividend.
2 These options were granted through the Lafarge Stock-Options plans. The figures presented in this table are based
on the application of the actual exchange ratio of 0.945. The year specified between brackets is the original option
grant date and the exercise price is converted from EUR to CHF at the closing rate of 1.17.
LAFARGEHOLCIM ANNUAL REPORT 2017207 208
35.
INFORMATION ON SHAR E CAPITA L
Number of registered shares December 31
Total oustanding shares
Treasury shares
Share buyback program
Reserved for share compensation plans
Total treasury shares
Total issued shares
Shares out of conditional share capital
Reserved for convertible bonds
Total shares out of conditional share capital
Total shares
2017
2016
597,210,931
605,756,753
8,841,454
0
856,695
1,152,327
9,698,149
1,152,327
606,909,080
606,909,080
1,422,350
1,422,350
1,422,350
1,422,350
608,331,430
608,331,430
The par value per share is CHF 2.00. The share capital amounts to nominal CHF 1,214 million
(2016: CHF 1,214 million) and the treasury shares amount to CHF 554 million (2016: CHF 72 million).
In 2017, the Group initiated a share buyback program of up to a CHF 1 billion over the period
2017 and 2018. The program started on June 1, 2017 and 8,841,454 shares were purchased in
2017 for an average price of CHF 56.56.
At the end of the buyback program, the Board of Directors will put a proposal to the LafargeHolcim
Annual General Meeting to approve the cancellation of the repurchased shares and to reduce
LafargeHolcim’s share capital accordingly.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 36.
NON-CONTROL LING INTER EST
LafargeHolcim has two Group companies with material non-controlling interests. Information
regarding these subsidiaries is as follows:
Material non-controlling interest
Company
Million CHF
ACC Limited
Ambuja Cements Ltd.
Principal
place
of business
Non-controlling interest1
Net income2
Total equity 2
2017
2016
2017
2016
India
India
63.9%
36.9%
63.9%
36.9%
87
56
57
48
2017
622
958
2016
561
915
Dividends paid to
non-controlling interest
2017
2016
35
27
23
29
1 The non-controlling interest of these companies represents the percentage interest (direct and indirect).
2 Attributable to non-controlling interest.
Set out below is the summarized financial information relating to ACC Limited and Ambuja
Cements Ltd. before intercompany eliminations.
ACC Limited
Ambuja Cements Ltd.
Statement of financial position
Million CHF
Current assets
Long-term assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities
Net assets
Statement of income
Million CHF
Net sales
Net income
Statement of cash flows
Million CHF
Cash flow from operating activities
Increase (decrease) in cash and cash equivalents
2017
860
1,738
2,598
660
289
948
1,650
2017
1,977
136
2017
257
115
2016
605
1,721
2,326
508
273
782
1,545
2016
1,593
90
2016
201
63
2017
832
2,251
3,082
617
206
823
2,259
2017
1,560
176
2017
301
138
2016
609
2,228
2,837
491
209
700
2,137
2016
1,336
135
2016
252
(393)
LAFARGEHOLCIM ANNUAL REPORT 2017209 210
37.
CONTINGENCIES, GUARANTEES, COMM ITMENTS AND
CONTINGENT ASSETS
Contingencies
In the ordinary course of its business, the Group is involved in lawsuits, claims of various natures,
investigations and proceedings, including product liability, commercial, environmental, health
and safety matters, etc. The Group operates in countries where political, economic, social and
legal developments could have an impact on the Group’s operations.
In connection with disposals made in the past years, the Group provided customary warranties
notably related to accounting, tax, employees, product quality, litigation, competition, and
environmental matters. LafargeHolcim and its subsidiaries received or may receive in the future
notice of claims arising from said warranties.
The Group is exposed to varying degrees of uncertainty related to tax planning and regulatory
reviews and audits. The Group accounts for its income taxes on the basis of its own internal
analyses, supported by external advice. The Group continually monitors its global tax position,
and whenever uncertainties arise, The Group assesses the potential consequences and either
accrues the liability or discloses a contingent liability in its financial statements, depending on
the strength of the Group’s position and the resulting risk of loss.
As of December 31, 2017, the Group’s contingencies amounted to CHF 1,354 million (2016:
CHF 1,155 million). The increase is mainly related to tax contingencies in various countries.
Except for what has been provided for as disclosed in note 32, the company has concluded that
due to the uncertainty with some of the matters mentioned below, the potential losses for some
of these cases cannot be reliably estimated. There are no further single matters pending that
the Group expects to be material in relation to the Group’s business, financial result or results
of operations.
The following is a description of the material legal and tax matters currently ongoing.
Legal and tax matters with new developments since last reporting period
The Competition Commission of India (“CCI”) issued in June 2012 an order imposing a penalty
on Ambuja Cements Ltd. (“ACL”) and ACC Limited (“ACC”). The order found those companies
together with other cement producers in India to have engaged in price coordination.
Following a successful appeal by the companies before the Competition Appellate Tribunal
(“Compat”), which set aside the order on December 11, 2015, a new order was issued on
August 31, 2016 confirming its initial order and imposing the same penalties on the cement
companies and their trade association amounting to an aggregate of CHF 353 million (INR
23,106 million) for ACC and ACL. The total amount of penalties (including interests) for ACC and
ACL is CHF 414 million (INR 27,057 million) as of December 31, 2017. ACC and ACL appealed this
new order before the Compat and continue to vigorously defend themselves. As per the interim
order passed by the Compat, a deposit of 10 percent of the penalty amounts has been placed
in 2016 with a financial institution by both LafargeHolcim Group companies with a lien in favor
of the Compat. In May 2017, all matters pending before COMPAT were transferred to the National
Company Law Appellate Tribunal (NCLAT). Hearings before the NCLAT have been completed in
October 2017 and the case is reserved for judgment. It can be appealed before the Supreme
Court.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS On December 31, 2010, in an extraordinary general meeting, the merger of Lafarge Brasil S.A.
into LACIM was approved by the majority of shareholders of Lafarge Brasil S.A. Two minority
shareholders (Maringa and Ponte Alta) holding a combined ownership of 8.93 per cent, dissented
from the merger decision and subsequently exercised their right to withdraw as provided for
by the Brazilian Corporation law. In application of such law, an amount of CHF 22 million
(BRL 76 million) was paid by Lafarge Brasil S.A. to the two dissenting shareholders. In March 2013,
the two shareholders obtained a ruling from the Court of first instance ordering Lafarge Brasil
S.A. to pay Maringa and Ponte Alta the difference between the amount paid for their shares at
the time of the exercise of the withdrawal rights by the plaintiffs (based on book value) and the
price per share calculated according to a fair market value, this value approximates CHF 108
million (BRL 366 million) as at the date of the order. Following a first unsuccessful appeal by
Lafarge Brasil S.A., in September 2017, the Superior Court of Justice denied a further appeal
filed by Lafarge Brasil S.A. (now merged into LafargeHolcim (Brasil) S.A.). An extraordinary appeal
filed with the Supreme Court is still pending. Following the Superior Court of Justice decision,
the plaintiffs are entitled to request the provisional enforcement of the Court of First Instance
decision, as amended by the first appeal decision and duly updated. Following these latest
developments, management has made an appropriate adjustment to its provision for this
matter.
In September 2011, the Parish of Saint Bernard (Louisiana) filed suit against Lafarge North
America Inc. (“LNA”), alleging that a barge under contract to LNA breached the Inner Harbor
Navigational Canal levee, flooding the Parish and damaging Parish-owned property. On 12
June 2017, LNA and the Parish entered into an agreement to settle the case the terms of which
are confidential. Whilst LNA denies all claims against it of liability, wrongdoing or damages (as
is it also stated in the settlement agreement), LNA sought to settle the case solely to avoid the
uncertainties, expense, and delay inherent in continued litigation. This settlement resolves the
last remaining Katrina-related litigation against LNA.
The criminal proceedings in France related to the alleged dealings of Lafarge Cement Syria with
terrorist organizations in the years 2013 and 2014 are currently pending with the investigating
judges in Paris. Criminal investigations in France are conducted under a rule of secrecy and
neither Lafarge SA nor any of its affiliates have been made a party to these proceedings as per
31 December 2017. Although there have been preliminary inquiries by authorities outside of
France, including from the Swiss and US authorities, the Group is not aware of any other active
government investigation at this time. The Group has completed its internal independent
investigation into the alleged underlying facts under the supervision of the Board of Directors.
On April 24, 2017, the Group reported on the main findings of the investigation and the
remediation measures decided on by the Board of Directors. Based on the information available
as of this date, there is no indication that the reported allegations are likely to result in penalties
that will have an adverse financial impact that is material to the Group.
There has been litigation in Hungary for a number of years related to the ownership of assets
and damage compensation in the context of the privatization of one of the former Holcim cement
plants in Hungary. This plant was closed a number of years ago and remains inactive. This
litigation is ongoing on first instance court level and there is currently no decision on the merits.
Following a procedural hearing on February 6, 2018 in one of the main cases, the evidence
taking process, including hearing of experts, is currently expected to complete in the first half
of 2018.
LAFARGEHOLCIM ANNUAL REPORT 2017211 212
Previously disclosed legal matters with no developments since last reporting period
On May 28, 2014, the Administrative Council for Economic Defense (“CADE”) ruled that Holcim
Brazil along with other cement producers had engaged in price collusion and other anti-
competitive behavior. The ruling includes behavioral remedies prohibiting certain greenfield
projects, divestment of a ready-mix plant, and M&A activities and fines against the defendants.
This order became enforceable on September 21, 2015 and applies to Holcim Brazil, which has
been fined CHF 150 million (BRL 508 million) as at the date of the order. As of December 31,
2017, the total amount including interests and monetary adjustment was CHF 211 million
(BRL 717 million). In September 2015, Holcim Brazil filed an appeal against the order, offering
a cement plant as guarantee to support its appeal. The fine and the behavioral remedies imposed
by CADE were suspended by two decisions of the court of first instance on September 29, 2016
and October 21, 2016. Unless successfully appealed by CADE, the suspension will remain in
effect until the completion of the substantive proceedings against the CADE ruling.
In July 2016, Lafarge Brasil S.A. received an assessment from the Brazilian Internal Revenue
Service, claiming the reversal of a deducted Goodwill for the years 2011 and 2012. The amount
in dispute is CHF 93 million (BRL 315 million) and includes any penalty and interest. The company
is contesting this assessment.
In November and December 2016, the Indonesian tax authorities issued the final objection letter
in respect of the 2010 PT Lafarge Cement Indonesia payment of Corporate Income and
Withholding Tax including associated penalties of a total amount of CHF 36 million (IDR
500 billion) related to refinancing transactions. PT Lafarge Cement Indonesia appealed against
this decision at the tax court to defend its initial statement. In case of a negative outcome for
PT Lafarge Cement Indonesia, the total claim amounts to CHF 72 million (IDR 1 trillion) due to
additional penalties charged for the appeal.
Guarantees
At December 31, 2017, the Group’s guarantees issued in the ordinary course of business
amounted to CHF 873 million (2016: CHF 809 million).
Commitments
In the ordinary course of business, the Group enters into purchase commitments for goods and
services, buys and sells investments, associated companies and Group companies or portions
thereof. It is common practice for the Group to make offers or receive call or put options in
connection with such acquisitions and divestitures.
At December 31, 2017, the Group’s commitments amounted to CHF 1,577 million (2016: CHF
1,707 million) and included CHF 1,303 million (2016: CHF 1,448 million) related to the purchase
of various products, inventories and services and CHF 274 million (2016: CHF 259 million) related
to the purchase of property, plant and equipment.
Contingent assets
A contingent asset is a possible asset that arises from past events, which existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Group. At December 31, 2017, the total contingent assets
for various claims in favor of the Group amounted to CHF 126 million (2016: CHF 2 million) and
are valued at the maximum potential recoverable amount.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 38 .
ADD ITIO NAL CASH FLOW INFORMATION
Cash flow from operating activities - analysis of change in net working capital items
Million CHF
(Increase) in inventories
(Increase)/Decrease in trade accounts receivable
(Increase) in other receivables excluding financial and income tax receivables
Increase in trade accounts payables
(Decrease) in liabilities excluding financial and income tax liabilities
Change in net working capital
Cash flow information related to investing activities
Million CHF
Purchase of property, plant and equipment net
Replacements
Proceeds from sale of property, plant and equipment
Capital expenditures on property, plant and equipment to maintain productive capacity and to secure
competitiveness
Expansion investments
Total purchase of property, plant and equipment net (a)
Acquisition of participation in group companies (net of cash and cash equivalents acquired)
Disposal of participation in group companies (net of cash and equivalents disposed of)
Purchase of financial assets, intangible and other assets
Increase in financial investments including associates and joint ventures
Increase in other financial assets, intangible and other assets
Total purchase of financial assets, intangible and other assets
Disposal of financial assets, intangible and other assets
Decrease in financial investments including associates and joint ventures
Decrease in other financial assets, intangible and other assets
Total disposal of financial assets, intangible and other assets
Total disposal of financial assets, intangible and other assets and businesses net (b)
Total cash flow from investing activities (a + b)
1 As reported in 2016, not restated due to change in presentation.
2017
(272)
(379)
(88)
360
(546)
(925)
2016 1
(19)
1
(22)
99
(752)
(694)
2017
2016 1
(1,048)
167
(881)
(474)
(1,355)
55
858
(5)
(341)
(347)
22
91
113
679
(675)
(1,134)
137
(997)
(638)
(1,635)
(4)
2,245
(7)
(395)
(402)
283
220
503
2,342
706
LAFARGEHOLCIM ANNUAL REPORT 2017213 214
Cash flow from acquisitions and disposals of Group companies
Acquisitions
Disposals
Million CHF
Cash and cash equivalents
Assets classified as held for sale
Other current assets
Property, plant and equipment
Other assets
Bank overdrafts
Other current liabilities
Long-term provisions
Other long-term liabilities
Net assets
Non-controlling interest
Net assets (acquired) disposed
Goodwill (acquired) disposed
Fair value of previously held equity interest
Net gain on disposals
2016
Total
2017
Total
(59)
(73)
(353)
(28)
253
10
256
7
(3)
4
(27)
20
Total (purchase) disposal consideration
(3)
Purchase consideration in the form of shares
Acquired (disposed) cash and cash equivalents
59
Tax and disposal costs paid
Deferred consideration
Net cash flow
55
(4)
(4)
2017 1
Total
86
355
868
161
(457)
(40)
(297)
676
(115)
561
88
285
934
(86)
(174)
185
858
2016
Total
153
746
497
1,654
108
(160)
(453)
(102)
(383)
2,061
(165)
1,896
266
511
2,673
(265)
6
(140)
(28)
2,245
1 Include among others the disposals of operations in China, Vietnam and Chile classified as held for sale at the end
of 2016, see note 4. For the purpose of this table, the assets and related liabilities classified as held for sale are
presented in their respective balance sheet positions.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 39.
TRANSACTIONS AND R ELATIONS WITH MEMB ER S OF THE BOARD OF
DIRE CTOR S AND EXECUTIVE COMM IT TEE
Key management compensation
Board of Directors
In 2017, fifteen non-executive members of the Board of Directors received in total a remuneration
of CHF 5.5 million including mandatory Social Security payments (2016: CHF 5.4 million when
including CHF 0.8 million paid to one former Board Member having left during 2016) of which
CHF 3.2 million (2016: CHF 3.1 million) was paid in cash, CHF 0.1 million (2016: CHF 0.1 million)
in the form of social security contributions, and CHF 2.0 million (2016: CHF 1.9 million) in shares.
Other compensation paid totaled CHF 0.2 million (2016: CHF 0.2 million). These amounts include
an additional fee of CHF 350,000 for the Chairman for the additional time commitment involved
in organizing the CEO succession.
Executive Committee
Compensation for the members of the Executive Committee amounted to CHF 32.3 million (2016:
CHF 36.9 million). This amount comprises base salaries and variable compensation of CHF 15.8
million (2016: CHF 21.3 million), share-based compensation of CHF 11.7 million (2016: CHF 10.3
million), employer contributions to pension plans of CHF 4.8 million (2016: CHF 5.3 million).
Compensation for former members of governing bodies
During 2017, compensation in the amount of CHF 7.8 million was paid to four former members
of the Executive Committee.
Loans granted to members of governing bodies
As at December 31, 2017, there were no loans outstanding to members of the Executive
Committee. There were no loans to members of the Board of Directors or to parties closely
related to members of governing bodies.
Other transactions
As part of the employee share purchase plan, LafargeHolcim manages employees’ shares. It
sells and purchases LafargeHolcim Ltd shares to and from employees and in the open market.
In 2016 and 2017, the company did not purchase any LafargeHolcim Ltd share from members
of the Executive Committee.
As a result of the merger, LafargeHolcim has identified the following transactions with other
parties or companies related to the Group:
Lafarge S.A. has received indemnifications guarantees from (in relation to an acquisition in 2008)
and entered into a cooperation agreement with Orascom Construction Industries S.A.E (OCI).
Mr. Nassef Sawiris is Chief Executive Officer and Director of Orascom Construction Industries
N.V., parent company of OCI, former director of Lafarge S.A. and current director of LafargeHolcim.
LafargeHolcim has two indemnification claims contingent on the approval of OCI under the
indemnification guarantees. The cooperation agreement dated December 9, 2007 aims to allow
OCI to participate in tenders in respect of the construction of new plants in countries where OCI
has the capability to meet certain of LafargeHolcim’s construction needs. There are no
outstanding balances under this agreement as at December 31, 2017.
LAFARGEHOLCIM ANNUAL REPORT 2017215 216
40.
EVENTS AFTER THE REPOR TING P ER IOD
In connection with the streamlining of its operations in China, as explained in detail in note 4,
the Group reacquired the shares of the two consolidated cement companies Dujiangyan Cement
Co., Ltd and of Jiangyou LafargeHolcim Shuangma Cement Co., Ltd on February 9, 2018 and
extinguished the remaining liability.
A settlement agreement related to the minority shareholders case in Brazil as described in note
37 was signed on February 28, 2018 between the parties. This settlement resolves the litigation
and is adequately provisioned with no further material impact expected.
The share buyback program is discontinued with CHF 581 million completed.
41.
AUTHORIZATION OF THE FINA NCIA L STATEM ENTS FOR ISSUANCE
The consolidated financial statements were authorized for issuance by the Board of Directors
of LafargeHolcim Ltd on March 1, 2018 and are subject to shareholder approval at the annual
general meeting of shareholders scheduled for May 8, 2018.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS 42 .
PRI NCIPA L CO MPAN IES OF THE GROUP
Principal operating Group companies
Region
Company
Asia Pacific
Holcim (Australia) Holdings Pty Ltd
Holcim Cement Bangladesh Ltd
LafargeHolcim Bangladesh Limited
Lafarge Shui On Cement Limited
Lafarge Dujiangyan Cement Co., Ltd.
ACC Limited
Ambuja Cements Ltd.
PT Holcim Indonesia Tbk.
PT Lafarge Cement Indonesia
Holcim (Malaysia) Sdn Bhd
Lafarge Malaysia Berhad
Holcim (New Zealand) Ltd
Holcim Philippines Inc.
Holcim (Singapore) Ltd
Lafarge Cement Singapore Pte Ltd
Latin America
Holcim (Argentina) S.A.
LafargeHolcim (Brasil) S.A.
Holcim (Colombia) S.A.
Holcim (Costa Rica) S.A.
Holcim (Ecuador) S.A.
Holcim El Salvador S.A. de C.V.
Place
Australia
Bangladesh
Bangladesh
China
China
India
India
Indonesia
Indonesia
Malaysia
Malaysia
New Zealand
Philippines
Singapore
Singapore
Argentina
Brazil
Colombia
Costa Rica
Ecuador
El Salvador
Société des Ciments Antillais
French Antilles
Holcim Mexico S.A. de C.V.
Holcim (Nicaragua) S.A.
Mexico
Nicaragua
Other
construc-
tion mate-
rials and
services
Effective
partici-
pation
(percent-
age of
interest)
Listed
company
Cement
Aggre-
gate
u
l
100.0%
100.0%
29.4%
u
l
100.0%
75.0%
36.1%
63.1%
80.6%
80.6%
51.0%
51.0%
100.0%
75.3%
90.8%
51.0%
79.6%
99.9%
99.8%
65.6%
92.2%
95.4%
69.7%
100.0%
52.5%
l
l
l
l
l
l
l
l
l
l
l
l
l
l
u
u
u
u
u
u
u
u
u
u
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
X
X
X
X
X
X
X
X
X
LAFARGEHOLCIM ANNUAL REPORT 2017217 218
Region
Europe
Company
Lafarge Zementwerke GmbH
Holcim (Azerbaijan) O.J.S.C.
Holcim (Belgique) S.A.
Holcim (Bulgaria) AD
Holcim (Hrvatska) d.o.o.
Lafarge Cement a.s.
Lafarge Bétons France
Lafarge Ciments
Lafarge Ciments Distribution
Lafarge Granulats France
Holcim (Deutschland) GmbH
Holcim (Süddeutschland) GmbH
Heracles General Cement Company S.A.
Lafarge Cement Hungary Ltd
Holcim Gruppo (Italia) S.p.A.
Lafarge Ciment (Moldova) S.A.
Lafarge Cement S.A.
Lafarge Kruszywa i Beton
Holcim (Romania) S.A.
LLC Holcim (Rus) CM
JSC Lafarge Cement
Lafarge Beocinska Fabrika Cementa
Lafarge Cement d.o.o
Holcim (España) S.A.
Holcim Trading S.A.
Lafarge Aridos y Hormigones, S.A.U.
Lafarge Cementos, S.A.U.
Holcim (Schweiz) AG
LH Trading Ltd
Place
Austria
Azerbaijan
Belgium
Bulgaria
Croatia
Czech Republic
France
France
France
France
Germany
Germany
Greece
Hungary
Italy
Moldova
Poland
Poland
Romania
Russia
Russia
Serbia
Slovenia
Spain
Spain
Spain
Spain
Switzerland
Switzerland
Klesivskiy Karier Nerudnykh Kopalyn “Technobud”
Ukraine
Aggregate Industries Ltd.
Lafarge Cauldon Limited
United Kingdom
United Kingdom
Cement
Aggre-
gate
Other
construc-
tion mate-
rials and
services
Listed
company
Effective
partici-
pation
(percent-
age of
interest)
70.0%
90.2%
100.0%
100.0%
99.9%
68.0%
l
l
l
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
u
u
u
u
u
u
u
u
u
u
u
u
u
u
l
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
70.0%
l
l
l
100.0%
l
l
l
95.3%
100.0%
100.0%
99.7%
100.0%
90.5%
l
100.0%
l
l
l
l
l
70.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
65.0%
l
100.0%
100.0%
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Region
Company
North America
Lafarge Canada Inc.
Holcim (US) Inc.
Aggregate Industries Management Inc.
Lafarge North America Inc.
Middle East Africa Lafarge Ciment de M’sila “LCM”
Lafarge Béton Algérie “LBA”
Lafarge Ciment Oggaz “LCO”
Lafarge Logistique Algérie “LLA”
Cilas Spa
Lafarge Cement Egypt S.A.E.
Lafarge Ready Mix S.A.E.
Bazian Cement Company Limited
Karbala Cement Manufacturing Ltd
United Cement Company Limited
Jordan Cement Factories Company P.S.C.
Bamburi Cement Limited
Holcim (Liban) S.A.L.
Holcim (Outre-Mer) Trading S.A.S.
Lafarge Cement Malawi Ltd
Lafarge (Mauritius) Cement Ltd
Ashakacem Plc.
Lafarge Africa Plc.
Lafarge Industries South Africa (Pty) Ltd
Lafarge Mining South Africa (Pty) Ltd
Mbeya Cement Company Limited
Hima Cement Ltd.
Lafarge Cement Zambia Plc
Lafarge Cement Zimbabwe Limited
Other
construc-
tion mate-
rials and
services
Effective
partici-
pation
(percent-
age of
interest)
l
100.0%
Listed
company
l
l
l
100.0%
100.0%
100.0%
100.0%
99.5%
100.0%
99.5%
49.0%
97.4%
l
100.0%
l
l
l
l
l
l
70.0%
51.0%
60.0%
50.3%
58.6%
52.1%
100.0%
100.0%
58.4%
76.3%
76.3%
76.3%
76.3%
61.5%
71.0%
75.0%
76.5%
X
X
X
X
X
X
Cement
Aggre-
gate
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
u
u
u
u
u
u
u
u
u
Place
Canada
USA
USA
USA
Algeria
Algeria
Algeria
Algeria
Algeria
Egypt
Egypt
Iraq
Iraq
Iraq
Jordan
Kenya
Lebanon
La Réunion
Malawi
Mauritius
Nigeria
Nigeria
South Africa
South Africa
Tanzania
Uganda
Zambia
Zimbabwe
LAFARGEHOLCIM ANNUAL REPORT 2017219 220
Listed Group companies
Region
Company
Domicile
Place of listing
Market capitalization at December 31,
2017 in local currency
Security
code number
Asia Pacific
LafargeHolcim Bangladesh
Limited
Bangladesh
ACC Limited
Ambuja Cements Ltd.
India
India
Chittagong/
Dhaka
Mumbai
Mumbai
BDT
INR
81,180 million
BD0643LSCL09
330,205 million
INE012A01025
INR
540,195 million
INE079A01024
PT Holcim Indonesia Tbk.
Indonesia
Jakarta
IDR
6,398,522 million
ID1000072309
Lafarge Malaysia Berhad
Malaysia
Kuala Lumpur
Holcim Philippines Inc.
Philippines
Manila
Latin America
Holcim (Argentina) S.A.
Argentina
Buenos Aires
Holcim (Costa Rica) S.A.
Costa Rica
San José
Middle East Africa
Holcim (Ecuador) S.A.
Ecuador
Jordan Cement Factories
Company P.S.C.
Bamburi Cement Limited
Holcim (Liban) S.A.L.
Lafarge Africa Plc.
Jordan
Kenya
Lebanon
Nigeria
Lafarge Cement Zambia Plc
Zambia
Quito,
Guayaquil
Amman
Nairobi
Beirut
Lagos
Lusaka
MYR
PHP
ARS
CRC
5,268 million
MYL3794OO004
69,554 million
PHY3232G1014
27,038 million
ARP6806N1051
145,815 million
CRINC00A0010
USD
1,372 million
ECP516721068
JOD
KES
USD
NGN
ZMW
73 million
JO4104211019
65,333 million
KE0000000059
282 million
LB0000012833
250,297 million
NGWAPCO00002
1,250 million
ZM0000000011
Lafarge Cement Zimbabwe
Limited
Zimbabwe
Harare
USD
112 million
ZW0009012056
Principal joint ventures and associated companies
Region
Asia Pacific
Middle East Africa
Company
Cement Australia Holdings Pty Ltd
Huaxin Cement Co. Ltd.
Lafarge Maroc SA
Readymix Qatar W.L.L.
Lafarge Emirates Cement LLC
Country of
incorporation
or residence
Australia
China
Morocco
Qatar
United Arab
Emirates
Effective
participation
(percentage of
interest)
50.0%
41.8%
50.0%
49.0%
50.0%
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Principal finance and holding companies
Company
Holcim Finance (Australia) Pty Ltd
Vennor Investments Pty Ltd
Holcibel S.A.
Holcim Finance (Belgium) S.A.
Holcim Capital Corporation Ltd.
Holcim GB Finance Ltd.
Holcim Overseas Finance Ltd.
Holcim Investments (France) S.A.S.
Lafarge S.A.
Financière Lafarge S.A.S.
Société financière immobilière et mobilière “SOFIMO” S.A.S.
Holcim Auslandbeteiligungs GmbH (Deutschland)
Holcim Beteiligungs GmbH (Deutschland)
Holcim Finance (Luxembourg) S.A.
Holcim US Finance S. à r.l. & Cie S.C.S.
Holderind Investments Ltd.
Holcim Capital México, S.A. de C.V.
LafargeHolcim Sterling Finance B.V.
Holchin B.V.
Holderfin B.V.
Holcim Investments (Spain), S.L.
LafargeHolcim Ltd 1
LafargeHolcim Albion Finance Ltd
LafargeHolcim Continental Finance Ltd
LafargeHolcim Helvetia Finance Ltd
LafargeHolcim International Finance Ltd
Holcim Group Services Ltd
Holcim Technology Ltd
Aggregate Industries Holdings Limited
Holcim Participations (UK) Limited
Lafarge International Holdings Limited
Lafarge Building Materials Limited
Lafarge Minerals Limited
LafargeHolcim Finance US LLC
Holcim Participations (US) Inc.
1 LafargeHolcim Ltd, Zürcherstrasse 156, CH-8645 Rapperswil Jona.
Place
Australia
Australia
Belgium
Belgium
Bermuda
Bermuda
Bermuda
France
France
France
France
Germany
Germany
Luxembourg
Luxembourg
Mauritius
Mexico
Netherlands
Netherlands
Netherlands
Spain
Switzerland
Switzerland
Switzerland
Switzerland
Switzerland
Switzerland
Switzerland
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
USA
USA
Effective
participation
(percentage of
interest)
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
LAFARGEHOLCIM ANNUAL REPORT 2017221 222
TO THE GENER AL MEETING OF
LAFARGEHOLCIM LTD,
R APPERSWIL-JONA
Zurich, March 1, 2018
REPORT ON THE AUDIT OF THE CONSOLIDATED FINA NC IAL STATE ME NT S
Opinion
We have audited the consolidated financial statements of LafargeHolcim Ltd and its subsidiaries
(the Group), which comprise the consolidated statement of financial position as at 31 December
2017 and the consolidated statement of income, consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies.
In our opinion the consolidated financial statements (pages 121 to 221) give a true and fair view
of the consolidated financial position of the Group as at 31 December 2017, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance
with International Financial Reporting Standards (IFRS) and comply with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs)
and Swiss Auditing Standards. Our responsibilities under those provisions and standards are
further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in accordance with the
provisions of Swiss law and the requirements of the Swiss audit profession, as well as the IESBA
Code of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
A summary of our Audit Approach
Audit scope
– We scoped our audit of component operations based on the significance of
account balances and significant risks.
– We gained sufficient and appropriate coverage of the Group.
Group
materiality
Key audit
matters
– Coverage details are provided on page 228.
– CHF 114.6 million
– 5% of normalised 2-year average profit before tax
– Goodwill
– Property, plant and equipment
– Taxation
– Litigation
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most sig-
nificance in our audit of the consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the consolidated financial statements as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Goodwill
Key audit
matter
The Group’s balance sheet includes CHF 14,569 million of goodwill,
representing 22.9% of total Group assets. In accordance with IFRS, these
balances are allocated to Cash Generating Units (CGUs) which are tested
annually for impairment using discounted cash flow models to determine the
recoverable values of the CGUs, which is compared to the carry value of the
net assets of the CGUs, including goodwill. A deficit in recoverable value
compared with the carrying amount would result in an impairment.
The annual impairment testing of goodwill for impairment is considered a
key audit matter because the assumptions on which the tests are based are
highly judgemental and affected by future market conditions, which are
inherently uncertain, and because of the materiality of the balances taken as
a whole. Refer to Note 26 for key assumptions used in goodwill impairment
testing.
In assessing the recoverable value of goodwill, management is required to
estimate future cash flows. In determining future cash flows management is
required to make assumptions relating to future profitability, including
revenue growth and operating margins, and the determination of an
appropriate discount rate. The outcome of the impairment assessments could
vary significant if different judgements are applied. Refer to Note 26 for
Impairment test of goodwill.
In total, impairments amounting to CHF 1,821 million were recognised against
goodwill – refer to Note 26.
LAFARGEHOLCIM ANNUAL REPORT 2017223 224
How the scope
of our audit
responded to
the key audit
matter
We considered the controls implemented by management in testing for
impairment and the judgements in determining the CGUs to which goodwill
is allocated.
We focused our audit effort based on assessing the risk of goodwill being
impaired, which was based on the level of headroom of the recoverable value
over carrying value of the CGUs.
We utilised Deloitte valuation specialists to develop independent discount
rates and compared these from external market data and compared this to
management estimates for the discount rate and country risk premium.
For all CGUs selected for detailed testing, we benchmarked key operating
assumptions in the models to historical performance and benchmarked
demand growth assumptions to external growth forecasts and supply growth
to industry reports and recent historical trends, particularly with respect to
export/import volumes and met with Senior Management at the CGU level.
We checked the mechanical accuracy of the discounted cash flow models and
the extraction of inputs from source documents.
We challenged management’s sensitivity analyses and performed our own
sensitivity calculations, where the headroom was limited, to assess the level
of excess of recoverable value against the carrying amount of the CGU.
We considered the adequacy of management’s disclosures in respect to
impairment testing and whether the disclosures appropriately disclose the
underlying sensitivities.
Our procedures found the discounted cash flow models of the CGUs to be
supported by appropriate inputs and assumptions. We concluded that
discount rate assumptions were in line with third party evidence and our
expert’s acceptable ranges. We reviewed management’s disclosures on key
assumptions and sensitivities and found them to be appropriate.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Property, plant and equipment
Key audit
matter
How the scope
of our audit
responded to
the key audit
matter
Significant judgement is involved in assessing property, plant & equipment
for impairment. Property plant and equipment is tested at a CGU level. The
CGUs are tested when a trigger for impairment is identified. Impairment
testing is undertaken using discounted cash flow models to determine the
recoverable values of the CGUs, which is compared to the carry value of the
non-current assets of the CGUs. A deficit in recoverable value compared with
the carrying amount would result in an impairment.
Due to the size of the impairment amounting to CHF 1,690 million (refer to
Note 25) as well as the nature of key assumptions and the fact that the
outcome of the impairment assessment could vary significantly were different
assumptions applied – (refer to note 26 for the key assumptions) the
impairment of property, plant and equipment is a key audit matter.
The key judgements are assumptions made by management in developing
the discounted cash flows is similar to that noted above for goodwill
impairment testing.
We considered the controls implemented by management in testing for
impairment and the judgements in determining the CGUs to which property,
plant and equipment is tested for impairment.
We tested the key assumptions and inputs in the discounted cash flow models
similar to that applied above for goodwill impairment testing.
Our procedures found the discounted cash flow models of the CGUs supported
by appropriate inputs and assumptions. We concluded that discount rate
assumptions were in line with third party evidence and our expert’s acceptable
ranges. We reviewed management’s disclosures on key assumptions and
sensitivities and found them to be appropriate.
LAFARGEHOLCIM ANNUAL REPORT 2017225 226
Taxation
Key audit
matter
How the scope
of our audit
responded to
the key audit
matter
There is significant judgement in accounting for income taxes, particularly
given the large number of jurisdictions in which the Group operates and
exposures to numerous different tax laws around the world. This gives rise
to complexity and uncertainty in respect of the calculation of income taxes,
deferred tax positions, as well as the assessment of provisions for uncertain
tax positions, including estimates of interest and penalties where appropriate.
As at 31 December 2017, the Group has recorded a tax expense of CHF 536
million, CHF 1,587 million Deferred tax liabilities net (refer to Note 31) , CHF
765 million Current income tax liabilities and CHF 398 million Long-term
income tax liabilities.
Due to their significance to the financial statements as a whole, combined
with the judgment and estimation required to determine their values, the
evaluation of current and deferred tax balances is considered to be a key audit
matter.
We discussed with management the adequate implementation of Group
policies and controls regarding current and deferred tax, as well as the
reporting of uncertain tax positions.
We evaluated the design and implementation of controls in respect of
provisions for current tax and the recognition and recoverability of deferred
tax assets. We examined the procedures in place for the current and deferred
tax calculations for completeness and valuation and audited the related tax
computations and estimates in the light of our knowledge of the tax
circumstances. Our work was conducted with the support of our tax specialists.
We performed an assessment of the material components impacting the
Group’s tax expense, balances and exposures, including the impact of the
United States of America tax reform. We reviewed and challenged the infor-
mation reported by components with the support of our own local tax
specialists, where appropriate. With the support of our tax specialists at group
level, we verified the consolidation and analysis of tax balances.
We considered management’s assessment of the validity and adequacy of
provisions for uncertain tax positions, evaluating the basis of assessment and
reviewing relevant correspondence and legal advice where available including
any information regarding similar cases with the relevant tax authorities. In
respect of deferred tax assets and liabilities, we assessed the appropriateness
of management’s assumptions and estimates, including the likelihood of
generating sufficient future taxable income to support deferred tax assets
for tax losses carried forward as disclosed in Note 31 of CHF 1,078 million.
We validated the appropriateness and completeness of the related disclosures
in Note 31 to the consolidated financial statements. Based on the procedures
performed above, we obtained sufficient audit evidence to corroborate
management’s estimates regarding current and deferred tax balances and
provisions for uncertain tax positions.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Litigation
Key audit
matter
How the scope
of our audit
responded to
the key audit
matter
The Group operates in multiple jurisdictions, exposing it to a variety of
different laws, regulations and interpretations thereof. In this environment,
there is an inherent litigation risk. In the normal course of business, provisions
and contingent liabilities may arise from legal proceedings, including anti-
trust, regulatory and other governmental proceedings, as well as investigations
by authorities and commercial claims.
At 31 December 2017, the Group held legal provisions of CHF 633 million.
Given the highly complex nature of regulatory and legal cases, management
applies significant judgement when considering whether, and how much, to
provide for the potential exposure of each matter. These estimates could
change substantially over time as new facts emerge and each legal case
progresses.
Given the complexity and magnitude of potential exposures across the Group,
and the judgement necessary to determine required disclosures this is a key
audit matter.
We discussed the status of significant known actual and potential litigation
with the Head of Legal and Compliance, other management and directors
who have knowledge of these matters. We challenged the decisions and
rationale for provisions held or for decisions not to record provisions or make
disclosures. For the most significant of the matters, we assessed relevant
historical and recent judgments passed by the court authorities and consid-
ered legal opinion obtained by management from external lawyers to
challenge the basis used for the provisions recorded and the disclosures made
by the Group.
We reviewed internal reports and met with Internal Audit to identify actual
and potential noncompliance with laws and regulations, both those specific
to the Group’s business and those relating to the conduct of business
generally.
For those matters where management concluded that no provisions should
be recorded, we also considered the adequacy and completeness of the
Group’s disclosures made in relation to contingent liabilities.
Based on the procedures performed above, we obtained sufficient audit
evidence to corroborate management’s estimates for legal provisions and
disclosures in Note 37 relating to contingencies.
LAFARGEHOLCIM ANNUAL REPORT 2017227 228
Other matters
The consolidated financial statements of the Group for the year ended 31 December 2016 were
audited by another auditor whose report, dated 1 March 2017, expressed an unqualified opinion
on those financial statements.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes
it probable that the economic decisions of a reasonably knowledgeable person would be
changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement we determined materiality for the Group as a whole to
be CHF 114.6 million, based on a calculation of 5% of normalised 2-year average profit before
tax for 2016 and 2017.
The materiality applied by the component auditors ranged from CHF 3.4 million to CHF 65.3
million depending on the scale of the component’s operations, the component’s contribution
to Group profit before tax and our assessment of risks specific to each location.
We agreed with the Finance & Audit Committee that we would report to the committee all audit
differences in excess of CHF 5.7 million, as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also report to the Finance & Audit
Committee on disclosure matters that we identified when assessing the overall presentation of
the financial statements.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including groupwide controls, and assessing the risks of material misstatement at the Group
level. Based on our continuing assessment, we focused our Group audit scope primarily on the
audit work at 26 components, representing the Group’s most material country operations, and
utilised 26 component audit teams in 24 countries. All 26 components were subject to full scope
audits, where the extent of our testing was based on our assessment of the risks of material
misstatement and of the materiality of the Group’s operations at those locations.
These 26 components represent the principal business units and account for 72% of the Group’s
net assets, 85% of the Group’s net sales and 89% of the Group’s EBITDA.
At the parent entity level we also tested the consolidation process and carried out analytical
procedures to confirm our conclusion that there were no significant risks of material mis-
statement of the aggregated financial information of the remaining components not subject to
audit or audit of specified account balances.
The Group audit team continued to follow a programme of planned visits that has been de-
signed so that a senior member of the Group audit team visits each of the locations where the
Group audit scope was focused. Where we have not visited a significant component we included
the component audit team in our team briefing, discussed their risk assessment, and reviewed
documentation of the findings from their work.
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS Net sales
EBITDA
Net assets
15%
11%
28%
85%
89%
72%
n Full audit scope
n Review at group level
Other Information in the Annual Report
The Board of Directors is responsible for the other information in the Annual Report. The other
information comprises all information included in the Annual Report, but does not include the
consolidated financial statements, the standalone financial statements of the Company upon
which we issue a separate Statutory Auditor’s report, the Compensation Report from pages 84
to 106 and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in
the Annual Report and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to
read the other information in the Annual Report and, in doing so, consider whether the other
information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on
the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
LAFARGEHOLCIM ANNUAL REPORT 2017229 230
Responsibility of the Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in ac-
cordance with the provisions of Swiss law and the company’s articles of incorporation, and for
such internal control as the Board of Directors determines is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the
entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Board of Directors either
intends to liquidate the entity or to cease operations, or has no realistic alternative but to
do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs
and Swiss Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements
is located at the website of EXPERTsuisse: http://expertsuisse.ch/en/audit-report-for-public-
companies. This description forms part of our auditor’s report.
Report on Other Legal and Regulatory Requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we
confirm that an internal control system exists, which has been designed for the preparation of
consolidated financial statements according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
Deloitte AG
David Quinlin
Licensed Audit Expert
Auditor in charge
Frédéric Gourd
LAFARGEHOLCIMCONSOLIDATED FINANCIAL STATEMENTS
HOLDING
COMPANY RESULTS
LAFARGEHOLCIM ANNUAL REPORT 2017231 232
Statement of income LafargeHolcim Ltd
Million CHF
Dividend income – Group companies
Financial income – Group companies
Other operational income
Total income
Financial expenses – Group companies
Financial expenses – Third parties
Other operational expenses
Impairment of financial investments – Group companies
Direct taxes
Total expenses
Net income
Notes
3
4
5
6
2017
5,736
197
258
6,191
(16)
(51)
(649)
(5,030)
(17)
(5,763)
428
2016
5,910
214
11
6,135
(32)
(50)
(729)
(5,203)
0
(6,014)
120
LAFARGEHOLCIMHOLDING COMPANY RESULTS Statement of financial position LafargeHolcim Ltd
Million CHF
Cash and cash equivalents
Trade receivables – Group companies
Short-term financial receivables - Group companies
Other current receivables – Group companies
Other current receivables – Third parties
Accrued income and prepaid expenses – Third parties
Current assets
Long-term financial receivables – Group companies
Financial investments – Group companies
Other financial assets
Long-term assets
Total assets
Interest bearing short-term financial liabilities – Group companies
Interest bearing short-term financial liabilities – Third parties
Other current liabilities – Group companies
Other current liabilities – Third parties
Current liabilities
Interest bearing long-term financial liabilities – Group companies
Interest bearing long-term financial liabilities – Third parties
Long-term liabilities
Total liabilities
Share capital
Statutory capital reserves
Statutory retained earnings
– Statutory retained earnings
– Reserves for treasury shares held by subsidiaries
Voluntary retained earnings
– Retained earnings prior year
– Annual profit
Treasury shares
Shareholders’ equity
Total liabilities and shareholders’ equity
Notes
31.12.2017
31.12.2016
175
0
234
32
1
1
443
2,732
36,875
3
39,610
40,053
1,380
450
598
31
2,459
1,246
1,100
2,346
4,805
1,214
334
2
91
45
0
2
474
4,246
36,428
4
40,678
41,152
173
400
565
60
1,198
1,888
1,550
3,438
4,636
1,214
20,412
21,624
2,531
0
2,531
0
11,222
11,102
428
(559)
35,248
40,053
120
(75)
36,516
41,152
7
8
9
10
11
16
12
LAFARGEHOLCIM ANNUAL REPORT 2017233 234
NOTES TO THE FINANCIAL STATEMENTS OF LAFARGEHOLCIM LTD
LafargeHolcim Ltd, with registered office in Rapperswil-Jona, is the ultimate
holding company of the LafargeHolcim Group which comprises subsidiaries,
associated companies and joint ventures around the world. During the reporting
period, LafargeHolcim Ltd employed fewer than ten employees (previous year:
fewer than ten employees).
1.
ACCOUNTING POL ICIES
Due to rounding, numbers presented throughout this report may not add up precisely to the
totals provided. All ratios and variances are calculated using the underlying amount rather than
the presented rounded amount.
Accounting principles applied
Share based payments expense is recorded on an accrual basis over the course of the years.
The shares are granted at their fair value.
Treasury shares are recognized at acquisition cost and deducted from equity. Gains and losses
on the sale are recognized in the statement of income.
2.
PRINCIPAL EXCHA NGE RATES
1 Euro
1 US Dollar
1 British Pound
1 Australian Dollar
1 Canadian Dollar
100 Mexican Peso
1 Brazilian Real
1 New Zealand Dollar
1 Polish Zloty
EUR
USD
GBP
AUD
CAD
MXN
BRL
NZD
PLN
Statement of income
Average
exchange rates in CHF
Statement of financial
position Closing
exchange rates in CHF
2017
1.11
0.98
1.27
0.75
0.76
5.22
0.31
0.70
0.26
2016
31.12.2017
31.12.2016
1.09
0.98
1.33
0.73
0.74
5.28
0.28
0.69
0.25
1.17
0.98
1.32
0.76
0.78
4.96
0.29
0.69
0.28
1.07
1.02
1.26
0.74
0.76
4.93
0.31
0.71
0.24
LAFARGEHOLCIMHOLDING COMPANY RESULTS 3.
DIVIDEN D INCOME – GR OUP COMPA NIES
Million CHF
LafargeHolcim Continental Finance Ltd
LafargeHolcim International Finance Ltd
Holdertrade Ltd
Holchile S.A.
Holcim Participations (US) Inc.
Aggregate Industries Europe
Holcim Finance (Canada) Inc.
Holderfin B.V.
Lafarge S.A.
Cesi S.A.
Holcim Group Services Ltd
Total
4.
OTHER OPERATIONAL INCOM E
Million CHF
Branding and trademark fees
Foreign exchange gains
Total
5.
OTHER OPERATIONAL EXPENSES
Million CHF
Board of Director fees
Stewardship, branding and project expenses
Administrative expenses
Foreign exchange losses
Total
2017
1,044
1,509
65
13
893
0
1
147
2,064
0
0
5,736
2017
0
258
258
2017
(6)
(369)
(12)
(262)
(649)
2016
5,708
0
0
0
0
20
0
0
0
168
14
5,910
2016
1
10
11
2016
(6)
(612)
(20)
(91)
(729)
LAFARGEHOLCIM ANNUAL REPORT 2017235 236
6.
IMPAIRMENT OF FINANCIA L INVESTM ENTS – GR OUP COMPANIES
Million CHF
Lafarge S.A.
LafargeHolcim Continental Finance Ltd
LafargeHolcim International Finance Ltd
Cemasco B.V.
Holchil Limited
Total
2017
(3,218)
(952)
(840)
(19)
(1)
2016
0
(5,203)
0
0
0
(5,030)
(5,203)
7.
LONG-TE RM FINANCIAL RECEIVAB L ES – G ROU P COM PANIES
Million CHF
Fernhoff Ltd.
Cemasco B.V.
Heracles General Cement Company S.A.
Lafarge Cement Polska S.A.
Holcim (US) Inc.
Holcim Participations (US) Inc.
Holcim (Schweiz) AG
LafargeHolcim International Finance Ltd
LafargeHolcim Albion Finance Ltd
Holdertrade Ltd
Total
31.12.2017
31.12.2016
62
10
62
255
117
132
855
1,143
0
96
63
0
0
0
0
322
885
2,932
13
31
2,732
4,246
8.
FINANCIAL INVESTMENTS – G ROUP COMPA NIES
The principal direct and indirect subsidiaries and other holdings of LafargeHolcim Ltd are shown
in note 42 to the Group’s consolidated financial statements.
9.
INTEREST BEARING SHORT-TERM FINANCIAL LIABILITIES – THIRD PARTIES
Million CHF
4.00% fixed, Bond, 2009–2018
–0.53% floating, Bond swapped into floating interest
rates at inception, 2007–2017
Total
31.12.2017
31.12.2016
450
0
450
0
400
400
LAFARGEHOLCIMHOLDING COMPANY RESULTS 10.
INTEREST BEA RING LONG-TERM FINANCIAL LIA BIL ITIES –
GROUP COMPANIES
Million CHF
LafargeHolcim International Finance Ltd
LafargeHolcim Helvetia Finance Ltd
LafargeHolcim Continental Finance Ltd
Total
31.12.2017
31.12.2016
10
581
655
1,454
434
0
1,246
1,888
11.
INTEREST BEA RING LONG-TERM FINANCIAL LIA BIL ITIES –
THIRD PARTIES
Million CHF
4.00% fixed, Bond, 2009–2018
3.00% fixed, Bond, 2012–2022
2.00% fixed, Bond, 2013–2022
1.00% fixed, Bond, 2015–2025
0.38% fixed, Bond, 2015–2021
Total
31.12.2017
31.12.2016
0
450
250
150
250
450
450
250
150
250
1,100
1,550
12 .
M OV EMENT I N TREAS URY S HARES
Number held by
LafargeHolcim Ltd
Million CHF
Price per
share
in CHF
Number
held by
subsidiaries
Reserve for
treasury
shares
held by
subsidiaries
in Million
CHF
Price per share
in CHF
01.01.2017
Opening
1,152,327
75
64.7
2017
2017
2017
31.12.2017
01.01.2016
2016
2016
31.12.2016
Purchases share buyback
program
Other purchases
Sales
Closing
Opening
Purchases
Sales
Closing
8,841,454
11
(295,643)
9,698,149
1,119,339
289,544
(256,556)
1,152,327
500
0
(16)
559
73
12
(10)
75
56.6
55.3
53.5
57.6
65.3
40.3
40.0
64.7
0
0
0
0
0
219,155
150,000
(369,155)
0
0
0
0
0
0
13
7
(20)
0
0.0
0.0
0.0
0.0
0.0
58.1
46.2
53.2
0.0
In 2017, the Group initiated a share buyback program for a total up to a maximum amount of
CHF 1 billion over the period 2017 and 2018. The program started on June 1, 2017 and 8,841,454
shares were purchased in 2017 for an average price of CHF 56.56.
LAFARGEHOLCIM ANNUAL REPORT 2017237 238
13 .
CON TINGENT LIAB ILITIE S
Million CHF
Holcim Capital Corporation Ltd. – Guarantees in respect of holders of
7.65% USD 50 million private placement due in 2031
6.88% USD 250 million bonds due in 2039
6.50% USD 250 million bonds due in 2043
Holcim Capital México, S.A. de C.V. – Guarantees in respect of holders of
7.78% MXN 2,000 million bonds due in 2018
7.00% MXN 1,700 million bonds due in 2019
8.01% MXN 1,700 million bonds due in 2020
Holcim Finance (Australia) Pty Ltd – Guarantees in respect of holders of
6.00% AUD 250 million bonds due in 2017
5.25% AUD 200 million bonds due in 2019
3.75% AUD 250 million bonds due in 2020
3.50% AUD 300 million bonds due in 2022
Holcim Finance (Belgium) S.A.
Commercial Paper Program, guarantee based on utilization, EUR 3,500 million maximum
Holcim Finance (Luxembourg) S.A. – Guarantees in respect of holders of
6.35% EUR 200 million bonds due in 2017
0.72% EUR 209 million Schuldschein loans due in 2021
1.04% EUR 413 million Schuldschein loans due in 2021
0.92% EUR 25 million Schuldschein loans due in 2023
1.38% EUR 1,150 million bonds due in 2023
1.46% EUR 152 million Schuldschein loans due in 2023
3.00% EUR 500 million bonds due in 2024
2.00% EUR 33 million Schuldschein loans due in 2026
2.25% EUR 1,150 million bonds due in 2028
1.75% EUR 750 million bonds due in 2029
31.12.2017
31.12.2016
77
269
269
109
93
93
0
168
210
252
0
0
269
531
32
1,478
195
643
42
1,478
964
81
281
281
109
92
92
203
162
203
0
215
236
247
488
30
1,359
180
591
39
1,359
0
LAFARGEHOLCIMHOLDING COMPANY RESULTS Million CHF
31.12.2017
31.12.2016
Holcim GB Finance Ltd. – Guarantees in respect of holders of
8.75% GBP 300 million bonds due in 2017
Holcim Overseas Finance Ltd. – Guarantees in respect of holders of
3.38% CHF 425 million bonds due in 2021
Holcim US Finance S.à r.l. & Cie S.C.S. – Guarantees in respect of holders of
6.21% USD 200 million private placement due in 2018
6.00% USD 750 million bonds due in 2019
2.63% EUR 500 million bonds due in 2020
4.20% USD 50 million bonds due in 2033
5.15% USD 500 million bonds due in 2023
LafargeHolcim International Finance Ltd – Guarantees in respect of holders of
3.01% USD 121 million Schuldschein loans due in 2021
2.80% USD 40 million Schuldschein loans due in 2021
3.21% USD 25 million Schuldschein loans due in 2023
3.20% USD 15 million Schuldschein loans due in 2023
LafargeHolcim Finance US LLC – Guarantees in respect of holders of
3.50% USD 400 million bonds due in 2026
4.75% USD 600 million bonds due in 2046
LafargeHolcim Sterling Finance (Netherlands) B.V.
3.00% GBP 300 million bonds due in 2032
Guarantees for committed credit lines, utilization CHF 0 million (2016: CHF 0 million)
Other guarantees
0
468
195
806
643
54
537
130
43
27
16
430
645
435
6,229
0
414
468
204
843
591
56
562
136
45
28
17
450
674
0
5,619
14
LafargeHolcim Ltd is part of a value added tax group and therefore jointly liable to the Swiss
Federal Tax Administration for the value added tax liabilities of the other members.
LafargeHolcim Ltd guarantees Holcim Finance (Luxembourg) S.A. any amount needed to fulfill
its obligations from financing agreements.
LAFARGEHOLCIM ANNUAL REPORT 2017239 240
14.
SHARE INTERESTS OF BOARD OF DIRECTOR S A ND SENIOR MANAG EM EN T
Shares and options owned by Board of Directors
As of December 31, 2017, the members of the Board of Directors of LafargeHolcim Ltd held
directly and indirectly in the aggregate 94,528,975 registered shares (2016: 98,323,773 registered
shares) and no rights to acquire further registered shares and 10,000,000 call options on
registered shares (2016: 443,086 call options on registered shares).
Number of shares and options held by the Board of Directors as of December 31, 2017 1
Name
Beat Hess
Position
Chairman
Oscar Fanjul
Vice-Chairman
Bertrand Collomb
Paul Desmarais, Jr.
Patrick Kron
Gérard Lamarche
Adrian Loader
Jürg Oleas
Nassef Sawiris
Thomas Schmidheiny
Hanne Sørensen
Dieter Spälti
Total Board of Directors
Member
Member
Member
Member
Member
Member
Member
Member
Member
Member
Number of shares and options held by the Board of Directors as of December 31, 2016 1
Name
Beat Hess
Position
Chairman
Bruno Lafont
Co-Chairman
Bertrand Collomb
Philippe Dauman
Paul Desmarais, Jr.
Oscar Fanjul
Alexander Gut
Member
Member
Member
Member
Member
Gérard Lamarche
Member, Finance and Audit Committee Chairman
Adrian Loader
Jürg Oleas
Member
Member
Total number
of shares 2017
Total number
of call options 2017
17,419
7,758
116,065
38,943
0
4,066
16,739
3,397
25,180,203
10,000,000
69,072,527
6,776
65,082
94,528,975
10,000,000
Total number
of shares 2016
Total number
of call options 2016
443,086
8,792
44,939
121,673
1,129
37,086
5,901
8,161
2,209
14,882
2,314
Nassef Sawiris
Member, Nomination, Compensation & Governance Committee Chairman
28,938,346
Thomas Schmidheiny
Hanne Sørensen
Member
Member
Dieter Spälti
Member, Strategy and Sustainable Development Committee Chairman
69,070,670
4,920
62,751
Total Board of Directors
98,323,773
443,086
1 From allocation, shares are subject to a five-year sale and pledge restriction period.
LAFARGEHOLCIMHOLDING COMPANY RESULTS Shares and options owned by Senior Management
As of December 31, 2017, members of Senior Management held a total of 209,225 registered
shares (2016: 92,718 registered shares) in LafargeHolcim Ltd. This figure includes both privately
acquired shares and those allocated under the Group’s participation and compensation schemes.
Furthermore, at the end of 2017, Senior Management held a total of 919,834 share options
(2016: 1,018,088 share options) and 605,372 performance shares (2016: 393,825 performance
shares); both of these arose as a result of the participation and compensation schemes of various
years. Options are issued solely on registered shares in LafargeHolcim Ltd. One option entitles
the holder to subscribe to one registered share in LafargeHolcim Ltd.
Number of shares and options held by the senior management as of December 31, 2017
Name
Jan Jenisch
Position
CEO
Ron Wirahadiraksa
Member of the Executive Committee, CFO
Urs Bleisch
Pascal Casanova
Roland Köhler
Martin Kriegner
Gérard Kuperfarb
Caroline Luscombe
Oliver Osswald
Saâd Sebbar
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Total number
of shares 2017
120,000
5,649
13,116
8,057
39,288
4,094
11,240
1,474
1,784
4,523
Total number
of call options
2017
80,000
113,217
122,115
86,574
195,927
52,353
140,614
36,410
27,308
65,316
Total number of
performance
shares
2017
126,868
77,655
49,416
56,351
67,655
38,026
76,760
40,009
27,231
45,401
Total Senior Management
209,225
919,834
605,372
Number of shares and options held by the senior management as of December 31, 2016
Name
Eric Olsen
Position
CEO
Ron Wirahadiraksa
Member of the Executive Committee, CFO
Urs Bleisch
Pascal Casanova
Roland Köhler
Martin Kriegner
Gérard Kuperfarb
Caroline Luscombe
Oliver Osswald
Saâd Sebbar
Total Senior Management
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Member of the Executive Committee
Total number
of shares 2016
Total number
of call options
2016
Total number of
performance
shares
2016
23,499
2,101
10,399
4,857
34,581
3,100
8,222
0
887
5,072
92,718
262,054
113,217
122,115
70,857
198,208
45,410
77,193
36,410
27,308
65,316
117,924
50,543
32,163
31,632
40,543
20,354
34,460
22,756
14,291
29,159
1,018,088
393,825
LAFARGEHOLCIM ANNUAL REPORT 2017241 242
15.
SIGNIFICANT SHAR EHOL DERS
According to the share register and disclosed through notifications filed with LafargeHolcim Ltd
and the SIX Swiss Exchange shareholders, owning 3 percent or more are as follows:
– Thomas Schmidheiny directly and indirectly holds 69,072,527 shares or 11.4 percent as per
December 31, 2017 (2016: 69,070,670 shares or 11.4 percent)¹;
– Groupe Bruxelles Lambert holds 57,238,551 shares or 9.4 percent as per December 31, 2017
(2016: 57,238,551 shares or 9.4 percent);
– NNS Jersey Trust holds 25,180,203 shares or 4.1 percent and additionally 10,000,000 options
or 1.7 percent, total of 5.8 percent as per December 31, 2017 (2016: 28,938,346 shares or
4.8 percent)²;
– Harris Associates L.P. declared holdings of 30,446,532 shares or 5.0 percent on October 25,
2017 (August 15, 2016: 30,285,539 shares or 5.0 percent). Harris Associates Investment Trust
declared holdings of 18,332,272 shares or 3.0 percent on October 6, 2017;
– BlackRock Inc. declared holdings of 18,725,934 shares or 3.1 percent on May 12, 2017 (January 6,
2017: 18,343,270 shares or 3.0 percent).
1 Included in share interest of Board of Directors.
2 Included in share interest of Board of Directors, ultimate beneficial owner Nassef Sawiris.
LAFARGEHOLCIMHOLDING COMPANY RESULTS 16.
SHARE CAPITAL
Shares
Number
Million CHF
Number
Million CHF
2017
2016
Registered shares of CHF 2.00 par
value
606,909,080
1,214
606,909,080
Total
606,909,080
1,214
606,909,080
Appropriation of retained earnings
Retained earnings brought forward
Net income of the year
Retained earnings available for
annual general meeting of
shareholders
The Board of Directors proposes to
the annual general meeting of
shareholders to carry the balance
forward to the new accounts
11,222
428
11,650
1,214
1,214
11,102
120
11,222
Balance to be carried forward
11,650
11,222
Payout from capital contribution reserves
The Board of Directors proposes to the annual general meeting of shareholders an appropriation
from statutory capital reserves to voluntary retained earnings and payout of CHF 2.00 per
registered share up to an amount of CHF 1,196 million¹.
Payout per share, gross
Less withholding tax
Payout per share, net
2017
2016
Cash payout
CHF
Cash payout
CHF
2.00
0
2.00
2.00
0
2.00
1 There is no payout on treasury shares held by LafargeHolcim. On January 1, 2018 treasury holdings amounted to
9,698,149 registered shares of which 8,841,454 shares have been acquired within the share buyback program.
LAFARGEHOLCIM ANNUAL REPORT 2017243 244
TO THE GENER AL MEETING OF LAFARGEHOLCIM LTD,
R APPERSWIL-JONA
Zurich, March 1, 2018
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of LafargeHolcim Ltd, which comprise the balance
sheet as at as at 31 December 2017 and the income statement and notes for the year then
ended, including a summary of significant accounting policies.
In our opinion the financial statements as at 31 December 2017, presented on pages 231 to 243
comply with Swiss law and the company’s articles of incorporation.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our
responsibilities under those provisions and standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are inde-
pendent of the entity in accordance with the provisions of Swiss law and the requirements of
the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Report on Key audit matters based on the circular 1/2015
of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most sig-
nificance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
LAFARGEHOLCIMHOLDING COMPANY RESULTS Financial investments – Group companies
Key audit
matter
As described in Note 8 to the financial statements, the Group holds investments
in LafargeHolcim Group companies with a carrying value of CHF 36,875 million
as of 31 December 2017, representing 92.1% of total assets.
How the scope
of our audit
responded to
the key audit
matter
In accordance with Article 960 CO, each investment held is usually valued
individually and reviewed annually for impairment indicators. Each investment
showing impairment indicators must be tested for impairment and an
impairment would need to be recorded if the recoverable amount is lower
than the carrying amount.
The impairment test performed by management is subject to judgement
around the valuation method and key valuation assumptions.
Accordingly, for the purposes of our audit, we identified the impairment
assessment and judgement applied by management on the valuation of these
investments as representing a key audit matter.
We discussed with management the adequate implementation of accounting
policies and controls regarding the valuation of investments in group
companies.
We tested the design and implementation of controls around the valuation
of investments to determine whether appropriate controls are in place.
We challenged the assessment of impairment indicators by the Company.
We tested the valuations by critically assessing the methodology applied and
the reasonableness of the underlying assumptions and judgements. We
assessed the impairment testing models and calculations by:
– Checking the mechanical accuracy of the impairment models and the
extraction of inputs from source documents; and
– Challenging the significant inputs and assumptions used in impairment for
investments in LafargeHolcim Group companies.
We validated the appropriateness and completeness of the related disclosures
in Notes 6 and 8 to the financial statements.
LAFARGEHOLCIM ANNUAL REPORT 2017245 246
Other matters
The financial statements of the company for the year ended 31 December 2016 were audited
by another auditor whose report, dated 1 March 2017, expressed an unqualified opinion on
those financial statements.
Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in ac-
cordance with the provisions of Swiss law and the company’s articles of incorporation, and for
such internal control as the Board of Directors determines is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the
entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Board of Directors either
intends to liquidate the entity or to cease operations, or has no realistic alternative but to
do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
LAFARGEHOLCIMHOLDING COMPANY RESULTS A further description of our responsibilities for the audit of the consolidated financial statements
is located at the website of EXPERTsuisse:
http://expertsuisse.ch/en/audit-report-for-public-companies.
This description forms part of our auditor’s report.
Report on Other Legal and Regulatory Requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we
confirm that an internal control system exists, which has been designed for the preparation of
financial statements according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss
law and the company’s articles of incorporation. We recommend that the financial statements
submitted to you be approved.
Deloitte AG
David Quinlin
Licensed Audit Expert
Auditor in charge
Frédéric Gourd
LAFARGEHOLCIM ANNUAL REPORT 2017247
248
5-YEAR-REVIEW
LAFARGEHOLCIM GROUP
LAFARGEHOLCIMHOLDING COMPANY RESULTS 5- Y EAR -REVIEW LAFARGEHOLCIM GROUP
Statement of income
Net sales
Gross profit
Recurring EBITDA
Recurring EBITDA margin
Operating (loss) profit
Operating (loss) profit margin
Depreciation, amortization and
impairment of operating assets
Income taxes
Tax rate
Net (loss) income
Net (loss) income – shareholders of
LafargeHolcim Ltd
Statement of cash flows
2017
2016 1
2015
2014 1
2013 2
million CHF
million CHF
million CHF
%
million CHF
%
million CHF
million CHF
%
million CHF
26,129
7,781
5,990
22.9
(478)
(1.8)
6,007
536
(45)
(1,716)
26,904
11,272
5,950
22.1
2,963
11.0
2,405
835
29
2,090
23,584
7,093
n/a
n/a
(739)
(3.1)
4,421
781
(114)
(1,361)
18,825
8,365
n/a
n/a
2,244
11.9
1,402
581
26
1,619
19,719
8,632
n/a
n/a
2,357
12.0
1,538
533
25
1,596
million CHF
(1,675)
1,791
(1,469)
1,287
1,272
Cash flow from operating activities
million CHF
3,040
3,295
2,465
2,484
2,787
Investments in property, plant and
equipment for maintenance net
Investments in property, plant and
equipment for expansion
Disposal of financial assets,
intangible and other assets and
businesses net
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total shareholders’ equity
Shareholders’ equity
as % of total assets
Non-controlling interest
Net financial debt
Capacity, sales and personnel
Annual production capacity cement
Sales of cement
Sales of aggregates
Sales of ready-mix concrete
Personnel
million CHF
million CHF
(881)
(474)
(997)
(638)
(981)
(732)
(719)
(1,007)
(1,005)
(1,282)
million CHF
680
2,342
7,222
35
336
million CHF
million CHF
million CHF
million CHF
million CHF
million CHF
%
million CHF
million CHF
million t
million t
million t
million m3
12,618
51,061
63,679
11,519
21,185
30,975
48.6
3,188
14,346
318.4
209.5
278.7
50.6
81,960
14,435
55,182
69,617
12,509
22,361
34,747
49.9
3,925
14,724
353.3
233.2
282.7
55.0
13,331
59,967
73,298
14,832
22,744
35,722
48.7
4,357
17,266
374.0
193.1
231.5
47.6
90,903
100,956
7,231
32,259
39,490
6,847
12,531
20,112
50.9
2,682
9,520
208.8
138.2
153.1
37.0
67,137
7,590
30,355
37,944
7,461
11,807
18,677
49.2
2,471
9,461
206.2
138.9
154.5
39.5
70,857
1 Restated due to changes in presentation or in accounting policies.
2 As reported in the respective years, not restated due to changes in accounting policies.
LAFARGEHOLCIM ANNUAL REPORT 2017249 250
L A F A R G E H O L C I M
Cautionary statement regarding forward-looking statements
This document may contain certain forward-looking statements relating to the Group’s future
business, development and economic performance. Such statements may be subject to a
number of risks, uncertainties and other important factors, such as but not limited to (1)
competitive pressures; (2) legislative and regulatory developments; (3) global, macroeconomic
and political trends; (4) fluctuations in currency exchange rates and general financial market
conditions; (5) delay or inability in obtaining ap provals from authorities; (6) technical
developments; (7) litigation; (8) adverse publicity and news coverage, which could cause actual
development and results to differ materially from the statements made in this document.
LafargeHolcim assumes no obligation to update or alter forward-looking statements whether
as a result of new information, future events or otherwise.
Disclaimer
LafargeHolcim Ltd publishes Annual Reports in English, German, and French. The English version
is legally binding.
Financial reporting calendar
Results for the first quarter 2018
Annual General Meeting of shareholders
Ex date
Payout
Date
May 8, 2018
May 8, 2018
May 11, 2018
May 16, 2018
Definition of Non-GAAP Measures used in this report
Like-for-like
Restructuring,
litigation,
implementation
and other non
recurring costs
Like-for-like information is information factoring out changes in the scope of
consolidation (such as divestments and acquisitions occurring in 2017 and 2016) and
currency translation effects (2017 figures are converted with 2016 exchange rates in
order to calculate the currency effects).
Restructuring, litigation, implementation and other non recurring costs comprise
significant items that, because of their exceptional nature, cannot be viewed as inherent
to the Group’s ongoing performance, such as strategic restructuring, major items
relating to antitrust fines and other business related litigation cases. In 2017 and 2016,
they also included costs directly related to the merger such as legal, banking fees and
advisory costs, employee costs related to redundancy plans and IT implementation
costs.
Profit/Loss on
disposals and other
non-operating
items
Profit/Loss on disposals and non-operating items comprise capital gains or losses on
the sale of Group companies and of property, plant and equipment and other non-
operating items that are not directly related to the Group’s normal operating activities
such as revaluation gains or losses on previously held equity interests, disputes with
non-controlling interests and other major lawsuits.
Recurring EBITDA
(previously named
“Operating EBITDA
adjusted”)
Recurring EBITDA
margin
(previously named
“Operating EBITDA
margin adjusted”)
Net income before
impairment and
divestments
The recurring EBITDA is an indicator to measure the performance of the Group
excluding the impacts of non recurring items. It is defined as:
+/– Operating profit;
– depreciation, amortization and impairment of operating assets; and
– restructuring, litigation, implementation and other non recurring costs.
The recurring EBITDA margin is an indicator to measure the profitability of the Group
excluding the impacts of non recurring items. It is defined as the recurrring EBITDA
divided by the net sales.
Net income before impairment and divestments excludes impairment charges and
capital gains and losses arising on disposals of investments which, because of their
exceptional nature, cannot be viewed as inherent to the Group’s ongoing activities. It
is defined as:
+/– Net income (loss)
– gains/ losses on disposals of Group companies; and
– impairments of goodwill and assets.
Earnings Per Share
(EPS) before
impairment and
divestments
The Earnings Per Share (EPS) before impairment and divestments is a indicator that
measures the theoretical profitability per share of stock outstanding based on a net
income before impairment and divestments. It is defined as:
– net income before impairment and divestments attributable to the shareholders of
LafargeHolcim Ltd divided by the weighted average number of shares outstanding.
Net Maintenance
and Expansion
Capex (“Capex”
or “Capex Net”)
Free Cash Flow
(previously named
“Operating Free
Cash Flow”)
Net financial debt
(“Net debt”)
The Net Maintenance and Expansion Capex (“Capex” or “Capex Net”) is an indicator to
measure the cash spent to maintain or expand its asset base. It is defined as:
+ Expenditure to increase existing or create additional capacity to produce, distribute
or provide services for existing products (expansion) or to diversify into new products
or markets (diversification);
+ Expenditure to sustain the functional capacity of a particular component, assembly,
equipment, production line or the whole plant, which may or may not generate a
change of the resulting cash flow; and
– Proceeds from sale of property, plant and equipment.
The Free Cash Flow is an indicator to measure the level of cash generated by the Group
after spending cash to maintain or expand its asset base. It is defined as:
+/– Cash flow from operating activities; and
– Net Maintenance and expansion Capex
The Net financial debt (“Net debt”) is an indicator to measure the financial debt of the
Group after deduction of the cash. It is defined as:
+ Financial liabilities (long-term & short-term) including derivative liabilities;
– Cash and cash equivalents; and
– Derivative assets.
LAFARGEHOLCIM ANNUAL REPORT 2017251 252
L A F A R G E H O L C I M
Net working
capital
Invested Capital
Net Operating
Profit After Tax
(“NOPAT”)
Return On Invested
Capital (“ROIC”)
The net working capital is an indicator that indicates whether the Group has enough
short-term assets to cover its short-term liabilities. It is defined as:
+ Trade accounts receivable;
+ Inventories;
+ Prepaid expenses and other current assets;
– Trade accounts payable;
– Current income tax liabilities;
– Long-term income tax liabilities; and
– Other current liabilities.
The Invested Capital is an indicator that measures total funds invested by shareholders,
lenders and any other financing sources. It is defined as:
+ Net working capital;
+ Investments in associates and joint ventures;
+ Property, plant and equipment;
+ Goodwill;
+ Intangible assets;
+ Deferred tax assets;
+ Pension assets;
– Short-term provisions;
– Defined benefit obligations;
– Deferred tax liabilities; and
– Long-term provisions.
The Net Operating Profit After Tax (“NOPAT”) is an indicator that measures the Group’s
potential earnings if it had no debt. It is defined as:
+/– Net Operating Profit (being the recurring EBITDA, adjusted for depreciation and
amortization of operating assets but excluding impairment of operating assets);
and
– Standard Taxes (being the taxes applying the Group’s tax rate to the Net Operating
Profit as defined above).
The ROIC (Return On Invested Capital) measures the Group’s ability to efficiently use
invested capital. It is defined as Net Operating Profit After Tax (NOPAT) divided by the
average Invested Capital. The average is calculated by adding the Invested Capital at
the beginning of the period to that at the end of the period and dividing the sum by 2
(based on a rolling 12 month calculation).
Cash conversion
The cash conversion is an indicator that measures the Group’s ability to convert profits
into available cash. It is defined as Free Cash Flow divided by recurring EBITDA.
This set of definitions can be found on our website:
www.lafargeholcim.com/non-gaap-measures
Cover photograph: Two employees at our Királyegyháza
cement plant in Hungary, which received the World Prix
d’Excellence 2017 from the International Real Estate
Federation (FIABCI). The plant was awarded the World
Gold Winner prize in the industrial buildings category for
its outstanding environmental performance and the high
architectural quality of the plant buildings.
LafargeHolcim Ltd
Zurcherstrasse 156
CH-8645 Jona/Switzerland
Phone +41 58 858 86 00
communications@lafargeholcim.com
www.lafargeholcim.com
Concept and design:
Salterbaxter MSL Group
© 2018 LafargeHolcim Ltd