Italcementi. Italcementi Group. Consolidated quarterly report as of 31 March 2003

Transcription

1 Italcementi Italcementi Group Consolidated quarterly report as of 31 March 2003

2 Contents Comments on performance and significant events during the period 3 Consolidated financial statements 13 Notes to the consolidated financial statements 15

3 Consolidated quarterly report at 31 March 2003 May 7, 2003 Italcementi Italcementi Group Italcementi S.p.A. Registered office in Bergamo, Italy Via G. Camozzi 124 Capitale sociale Bergamo Company Register

4 Antonio Catani Honorary Chairman Board of Directors (Term ends on approval of financial statements at ) Giovanni Giavazzi 1 Chairman Pierfranco Barabani 1 Deputy Chairman Giampiero Pesenti 1 Chief Executive Officer - CEO Mario Arcelli 3-4 Alberto Falck Danilo Gambirasi Bruno Isabella Karl Janjöri 2-4 Italo Lucchini 2 Yves René Nanot 1 Massimo Pellegrini 4 Carlo Pesenti 1 Marco Piccinini Ettore Rossi 3-4 Attilio Rota 3-4 Emilio Zanetti 2-4 Paolo Santinoli 5 Secretary to the Board Board of Statutory Auditors (Term ends on approval of financial statements at ) Acting Auditors Substitute Auditors Luigi Guatri Claudio De Re Claudio Cavalli Eugenio Mercorio Dino Fumagalli Paolo Marchi Chairman Rodolfo Danielli Chief Operating Officer - COO Reconta Ernst & Young S.p.A. Independent Auditors 2 1 Member of the Executive Committee 2 Member of the Remuneration Committee 3 Member of the Internal Control Committee 4 Indipendent Director 5 Secretary to the Executive Committee

5 Comments on performance and significant events during the period As noted in earlier interim reports, group performance is heavily influenced by seasonal trends, with the first quarter typically showing low business levels and high maintenance costs, which tend to be concentrated in this part of the year. Therefore, results for the period under review are not significant indicators of full-year performance. Financial highlights (in millions of euro) 1 st Quarter 1 st Quarter Change Full year % 2002 Net sales ,261.7 Gross operating profit ,8 % return on net sales Depreciation, amortisation and other writedowns (95.0) (92.7) 2.5 (397.7) Operating income % return on net sales Financial income and charges, net (31.5) (28.5) 10.4 (127.6) Adjustments to financial asset values and non-recurring items, net (5.3) 5.5 n.s (52.5) Income before taxes (14.6) % return on net sales Taxes (29,9) (32,9) (9,1) (174,1) Income before minority interests (21.0) % return on net sales Minority interests (6.4) (4.1) 56.0 (82.9) Group net income (34.1) % sui ricavi milioni di euromiliard Employees at period-end (heads) 17,608 17, , March 31 December 31 March Net debt (2,057.0) (2,086.0) (1,917.5) n.s. = not significant 3

6 Expectations of the start of the war in Iraq had a strong impact on international economic conditions in the early months of 2003 and heightened uncertainty over short-term prospects. This uncertainty was also reflected in the construction business, whose performance varied from one market to another, with negative trends in some countries emphasized by extremely unfavourable weather conditions. Despite this difficult scenario, the Italcementi group improved its net sales and operating results thanks to positive overall performance in EU countries and on emerging markets as a whole, and despite the sharp business slowdown in North America. Although net financial charges benefited from a reduction in interest rates, they were adversely affected by the increase in debt compared with first quarter 2002, translation losses and the decrease in income from equity investments. Total net income and Group net income were also affected by the negative balance on results of companies valued with the equity method (mainly Suez), compared with a gain in first quarter 2002, and by a modest net charge for non-recurring items, compared with net non-recurring income in the year-earlier first quarter. The parent company Italcementi S.p.A. reported net sales of million euro for the first quarter of 2003, an improvement of 7.5% from first quarter 2002, gross operating profit of 56.3 million euro (+6.4%) and net income of 21.1 million euro compared with 20.5 million euro in first quarter 2002 (+2.7%). Significant events during the first quarter During the period under review, Italcementi S.p.A. increased the equity investment held through subsidiaries in Ciments Français by a total of 1,055,074 shares, for an investment of 49.9 million euro. At 31 March 2003, Italcementi S.p.A. s total indirect shareholding in Ciments Français S.A. stood at 74.6% compared with 71.8% at 31 December During first quarter 2003, as for shareholders meeting resolution, Italcementi S.p.A. bought 635,138 own ordinary shares for a total outlay of 5.4 million euro. At 31 March 2003 Italcementi S.p.A. held 2,872,338 own ordinary shares, representing 1.62% of ordinary capital stock, to be used to service stock option plans for Directors and Managers. At the same date, the company held 105,500 own savings shares (0.1% of savings capital stock). 4

7 Comments on performance Sales volumes and internal transfers 1 st Quarter (miliardi di lire) Cemento and clinker Aggregates * Ready mixed concrete (millions of metric tons) (millions of metric tons) (millions of m 3 ) 2003 % change on % change on % change on 2002 Published At constant Published At constant Published At constant size size size European Union (1.6) (2.6) North America 1.0 (8.7) (17.1) Asia 1.5 (0.4) (0.4) Other emerging countries Trading Eliminations (0.7) n.s. n.s Total (0.2) (1.9) * excluding outgoes on work-in-progress account n.s. = not significant First-quarter 2003 aggregate sales volumes for cement and ready mixed concrete, reported on an historic basis and at constant size, improved compared with the year-earlier first quarter, although performance varied from one market to another writhin the same individual geographical area. Inside the European Union, Italy, Greece and Spain turned in positive performances, which more than offset the slowdown on the French market and the Belgian cement market. In North America, the contribution of Riverton Investment Corporation, which has been consolidated since the end of May 2002, mitigated only in part the sharp decrease in sales volumes. On the other hand, growth remained strong in the emerging countries, where only India reported a sales slowdown compared with the year-earlier first quarter. The modest downturn in the aggregates business was largely due to the French market. 5

8 Net sales and operating results The 1.1% increase in net sales compared with first quarter 2002 arose as follows: 3% from higher business volumes; 1.4% from changes in the consolidation area; -3.3% from the negative exchange rate effect. The main contribution to the net sales increase came from Italy, Thailand and Morocco, while the largest downturns were reported in North America, France and Turkey. As mentioned earlier, the changes in the consolidation area referred mainly to North America, as a result of the consolidation of Riverton Investment Corporation on a line-by-line basis. The negative exchange rate effect was largely due to the depreciation of the US dollar and other currencies against the euro. First-quarter 2003 gross operating profit and operating income improved by 4.0% and 5.7% respectively compared with the year-earlier first quarter. The return on net sales rose from 18.8% to 19.4% for gross operating profit and from 9.0% to 9.4% for operating income. The main contributions to these improvements came from Thailand, Morocco and Greece, whose performance more than offset the marked decline in results in North America, where particularly adverse weather conditions in the areas in which the group operates intensified the downward sales trend. At gross operating profit level, the appreciation of the euro against the other currencies produced a translation loss of 5.6 million euro on results denominated in foreign currency. 6

9 Performance by geographical region (area sub-consolidations) (in millions of euro) Net sales Gross operating profit Capital expenditure 1 st quarter % change vs 1 st quarter % change vs 1 st quarter 1 st quarter st quarter st quarter European Union North America 86.0 (21.2) 3.3 (68.6) Asia Other emerging countries Trading > Inter-area eliminations (43.3) n.s Total n.s. = not significant European Union First-quarter 2003 cement consumption in Italy confirmed the marked differences in regional trends that emerged in 2002: strong growth in the North, with excellent weather conditions and work going ahead on the High-Speed Train construction sites; stable trends in central Italy; a slowdown in the South and the Islands, due to adverse weather conditions. Aggregate sales grew, although they were affected by the increase in imports and by the unfavourable location of the group s production units compared to the distribution of demand. Supported by strong net sales, operating results went up compared with first quarter 2002, despite the rise in operating costs (purchases of clinker, raw materials, transport and energy costs) and the higher concentration of maintenance work during the period under review. In February four other cement plants obtained ISO environmental certification; certification is pending for the group s other plants. Overall consumption of ready mixed concrete also rose during the first quarter, reflecting growth in the North and a decline in the South and Islands, largely as a result of the territorial distribution of the High-Speed Train construction sites (Milan- Bologna and Milan-Turin sections) and the varying effect of weather conditions in different regions of the country. Calcestruzzi S.p.A. and its Italian subsidiaries reported an increase in sales, but results reflected the narrowing in unit margins due to the different mix in work sites served and the difficulty of transferring significant increases in raw materials prices to sales prices. These factors pushed down operating results compared with the first quarter of 2002, despite containment of fixed costs. 7

10 On 3 April 2003, the Italian Antitrust Authority opened a preliminary investigation into ten companies on the ready mixed concrete market and one company on the cement market, regarding supplies of ready mixed concrete in Lombardy. Within the Group, Calcestruzzi S.p.A. and Cemencal S.p.A. are involved in this investigation. The Authority must complete this preliminary stage by 30 July In France group cement sales on the domestic market decreased. At the same time, production levels at Ciments Calcia rose sharply compared to first quarter 2002, which was adversely affected by a long series of strikes. Operating results improved despite the slowdown in net sales, benefiting from a strong sales price trend and the reduction in variable production costs, largely as a result of cost containment, an improved fuel mix and lower product purchases compared with the previous year to replenish the production shortfalls caused by the above mentioned strikes. In the ready mixed concrete and aggregates businesses, the slowdown in consumption arising largely in public works brought a significant reduction in sales. The group s operating results in these two sectors reflected the impact of lower sales volumes and higher production costs, offset only in part by the recovery achieved on sales prices. In Belgium, cement sales by Compagnie des Ciments Belges (CCB) were affected by negative conditions on the domestic market and the decrease in sales to France and exports to other countries. Group operations in aggregates and ready mixed concrete reflected the positive impact of supplies to major work sites, and reported significant improvements. Total net sales decreased as a result of the downturn in cement volumes. Operating results were also adversely affected by the decrease in net sales and by the rise in operating costs (electricity, fuel and maintenance), due mainly to work on plants, and decreased compared with first quarter At the same time, the year-earlier first quarter reflected strong sales to France as a result of the strikes in the cement plants of Ciments Calcia S.A. In Spain, market demand remained strong in the period under review, especially in Andalusia and Vizcaya, with a positive impact on the Group s cement sales. The favourable economic climate in the southern regions also assisted an increase in ready mixed concrete sales, while aggregates sales were affected by the delay in the start-up of a number of important construction sites. Good sales price trends in all business areas helped to boost net sales, thus offsetting the rise in operating costs. Operating results were largely unchanged from first quarter 2002, and reflected higher personnel expenses and maintenance costs, compensated only in part by greater use of alternative fuels and lower product purchases. 8

11 In Greece, cement consumption was affected by adverse weather conditions during the early months of the year. Nevertheless, Halyps reported a further significant increase in sales volumes, helped in part by a long period of strikes at a major local competitor. Performance was also positive in aggregates and ready mixed concrete, supported by the works for the Olympic Games. Thanks to higher sales volumes and the positive sales price trend in all sectors, operating results made a strong improvement in the first quarter. North America In a highly uncertain economic climate, which was also affected by the war in Iraq, the downturn in the construction sector that had already emerged in the final period of 2002 continued. This slowdown was amplified, especially in the geographical regions in which the group operates, by extremely poor weather conditions for most of the first quarter. Total first-quarter cement sales, which also include sales by Riverton Investment Corporation, reflected a marked decrease compared with first quarter 2002, despite a turnaround in March. Average sales prices remained steady; with regard to operating costs, the containment of fixed costs more than made up for the increase in some variable costs, most notably electricity. Nevertheless, the slowdown in sales volumes had a significant impact on net sales and operating results, which were sharply down on first quarter 2002 levels; this was also due to the negative exchange rate effect (translation losses of 16.8 million euro on net sales and 1.1 million euro on gross operating profit, at constant size). Asia In Thailand, where cement consumption rose sharply during 2002, group cement sales on the domestic market turned in a satisfactory improvement in the first quarter of 2003; sales also rose in the ready mixed concrete business, due in particular to demand for major public works (Bangkok airport). The less aggressive market environment compared with 2002 allowed the Group to make a strong recovery in sales prices; this had a very positive impact on net sales and operating results, which improved significantly compared with the modest results reported in first quarter 2002, also thanks to efficient control of fixed costs. 9

12 In India, where the market continued to grow, the group s cement sales slowed slightly in first quarter 2003, due to the decision to terminate an unprofitable marketing operation. Net sales were sharply down, once again due to the negative impact of excess production capacity, which heightened pressures on sales prices, and to the depreciation of the Rupee. Operating results consequently decreased compared to first quarter Other emerging countries IIn Bulgaria, group sales on the domestic market decreased, although the slowdown was slighter than the general market. This was due to the fact that operations by Devnya, which focuses on the market area around the Black Sea, benefited from an up-swing in demand. Strong clinker exports enabled the group to report an increase in aggregate cement and clinker sales compared with first quarter Net sales were slightly down, due to an unfavourable sales mix geared to exports, where the depreciation of the dollar was a negative factor. Operating results remained steady compared with those of the year-earlier first quarter, thanks to containment of operating costs. In Morocco, market conditions were particularly favourable, with excellent prospects in the agricultural sector and new public works programmes. Against this background, the Group reported very high sales on the domestic market and lower export volumes. A strong increase in sales was also achieved in aggregates and ready mixed concrete, the latter reflecting strong market trends in the Casablanca area. Operating results benefited from the expansion of operations and good price trends, and made a marked improvement. In Turkey, the strong growth in cement sales in fourth quarter 2002 continued into January 2003 and then slowed as a result of the war in Iraq, poor weather conditions and long religious festivities, which brought the country s main construction sites to a standstill. Compared with first quarter 2002, the group s overall cement and clinker sales rose slightly, but were affected by a significant reduction in prices in euro, caused mainly by the strong devaluation of the Turkish Lira. Major residential projects in the Ankara and Istanbul areas assisted group sales of aggregates and ready mixed concrete, although these too were affected by the sales price problems caused by devaluation. The fall in prices caused an overall sharp downturn in first-quarter net sales, which was reflected in operating results, despite containment of operating costs. 10

13 In Egypt, the general economic climate was affected by the devaluation of the Egyptian Pound, while performance on the cement market slowed due to excess production capacity. Suez Cement Company (Suez) boosted cement sales volumes on the domestic market and reduced clinker exports, to report a modest improvement in overall sales volumes. Net sales and operating results nevertheless fell heavily, largely as a result of the strong reduction in sales prices. Suez, in which the Group holds an equity investment of approximately 34%, was consolidated with the equity method. Trading Aggregate trading volumes with third parties and among group entities increased by approximately 44% compared with first quarter 2002, thanks to the strong rise in sales to third parties. Sales volumes from terminals rose by approximately 37%. e-business For first quarter 2003, BravoSolution S.p.A. and its subsidiaries in France and Spain reported overall net sales of approximately 2.5 million euro, up by almost 90% from the year-earlier first quarter (1.3 million euro). For the full year, strong net sales growth is forecast on all product lines and in all geographical areas as a result of the group s vigorous growth programs; the full year will show a loss, but this will be significantly smaller than that posted in Net debt Net debt at 31 March 2003 totalled 2,057 million euro, a decrease of approximately 29 million euro compared with 31 December The improvement arose a result of strong cash flows from operations and a lower working capital requirement, despite capital expenditure and financial investments totalling approximately 148 million euro. The exchange rate effect generated a gain of 1.4 million euro. 11

14 The ratio of net debt plus net floating rate subordinated securities to net equity was 77.9% at 31 March 2003, compared with 76.2% at 31 December The ratio at 31 March 2003 reflected a reduction of approximately 106 million euro in total shareholders equity due to exchange rate fluctuations, which generated a loss of approximately 83 million euro posted under the reserve for translation differences, and to the purchase of additional shares of Ciments Français, which reduced minority interests. The ratio of net debt as defined before to gross operating profit decreased from 1.95 at the end of December 2002 to 1.91 at the end of first quarter Dealings with related parties The Italcementi group s dealings with related parties did not include transactions of an untypical or unusual nature. The nature of current dealings has not changed in respect of the dealings described in the 2002 Annual Report. Italcementi S.p.A. provides services for its controlling company Italmobiliare S.p.A. and its subsidiaries and receives and provides services to optimise use of resources and skills in the interest of the Group. Dealings with subsidiaries that are not consolidated with the line-by-line method and with the associated companies of Italcementi S.p.A. are of a commercial nature (exchange of goods/services) and a financial nature. All dealings, of either a commercial or financial nature, are conducted at normal market conditions. Outlook The global macroeconomic and geopolitical scenario remains uncertain, making it difficult to formulate reliable projections for full year results. Although, as pointed out, the foregoing quarterly results are not greatly representative of annual performance in our industry, they appear to confirm the comments in the annual report concerning a market weakening in a number of mature countries - North America, France, Belgium - and positive progress in many emerging countries. Against this background, the Group will continue its policy to improve operating efficiency - with a view to consolidating operating results - and reduce debt. 12

15 Consolidated financial statements

16 Consolidated financial statements (in thousands of euro) 1 st quarter % 1 st quarter % Change % Full year % Net sales 947, , , ,261, Change in inventories, work in progress, semi-finished and finished goods 6, (282) 0.0 6,855 n.s 16, Increase in internal work capitalized under fixed assets 4, , , Other operating income 7, , (1,262) , Net sales and other operating income 966, , , ,331, Raw, ancillary and consumable materials and supplies (249,601) (241,673) (7,928) 3.3 (1,053,747) Services (323,799) (327,238) , (1,341,534) Other operating costs (25,797) -2.7 (29,220) , ( ) -2.5 Added value 367, , , ,830, Personnel expenses (178,569) (169,319) (9,250) 5.5 (694,417) Provisions and writedowns (4,849) -0.5 (6,415) , (27,340) -0.6 Gross operating profit 183, , , ,108, Depreciation and amortization (95,025) (92,708) -9.9 (2,317) 2.5 (397,656) -9.3 Operating income 88, , , , Financial income and charges, net (31,475) -3.3 (28,511) -3.0 (2,964) 10.4 (127,615) -3.0 Adjustments to financial asset values, net (4,371) (5,053) n.s. (10,357) -0.2 Non-recurring income and charges, net (904) , (5,688) (42,161) -1.0 Income before taxes 52, , (8,893) , Income taxes (29,903) -3.2 (32,910) , (174,143) -4.1 Income before minority interest 22, , (5,886) , Minority interest (6,401) -0.7 (4,103) -0.4 (2,298) 56.0 (82,857) -1.9 Group net income 15, , (8,184) , Cash flow (income + depreciation and amortization) 117, , (3,569) , Investments in fixed assets 147, ,826 (33,021) 812,247 n.s. = not significant (migliaia di euro) Net debt 31 March 31 December Change % Cash, cash equivalents and current financial assets (146,266) (189,216) 42, Short-term financing 423, ,878 (17,026) -3.9 Medium/long-term financial assets (363) (652) Medium/long-term financing 1,779,771 1,835,022 (55,251) -3.0 Net debt 2,056,994 2,086,032 (29,038) -1.4 Floating rate subordinated securities, net 70,658 77,010 (6,352) -8.2 Net debt + floating rate subordinated securities, net 2,127,652 2,163,042 (35,390) -1.6 Total shareholders equity 2,730,923 2,837,110 (106,187)

17 Notes to the consolidated financial statements Foreword The consolidated financial statements as of 31 March 2003 have been drawn up pursuant to article 82 of the regulation approved by Consob (National Commission for Listed Companies) with resolution n of 14 May The financial statements, the tables and explanatory notes to the statements are expressed in thousands of euro, unless otherwise indicated. Basis of presentation The consolidated financial statements have been draw up on the basis of the accounts at 31 March 2003 provided by the consolidated companies, adjusted, where necessary, to ensure alignment with the Group s classification criteria and accounting policies by applyng the valuation criteria and consolidation principles used during the preparation of the consolidated financial statements for the 2002 accounting period. 15

18 Consolidation area The changes in the consolidation area compared to 31 March 2002 are as follows: Changes Company Entered the consolidation area On a line-by-line basis E.S.A. Monviso S.p.A. (Italy) Riverton Investment Corporation (USA) Berkeley Resource Recovery Ltd. (USA) Capitol Cement Corporation (USA) Consumer Materials Inc. (USA) Riverton Corporation (USA) Riverton Lime&Stone Co. Inc. (USA) On a proportional basis Société Calcaires Lorrains (France) (at 50%) Société Carrières du Tournaisis (Belgium) (at 65%) Left the consolidation area Cave Comand S.r.l. (Italy) Betonsud S.r.l. in liquidation (Italy) Merged companies Incorporating company Merged company Companie General de Canteras S.A. (Spain) Maquinaria y Proyectos Immobiliarios S.L. (Spain) Essroc Cement Corp. (USA) Essroc Puerto Rico Holdings (USA) Unibeton S.A. (France) Unibeton Sud-Ouest S.a.s. (France) Unibeton S.A. (France) Unibeton Mediterranee S.a.s. (France) Unibeton S.A. (France) Unibeton Ouest Pays de Loire S.a.s. (France) Unibeton S.A. (France) Unibeton Saba S.A. (France) The only change with respect to 31 December 2002 concerned the Belgian company Société Carrières du Tournaisis, which was established to use the Milieu and Barry quarries in Belgium jointly with Holcim. 16

19 Exchange rates used to translate the accounts of foreign companies The result of operations of foreign subsidiaries consolidates on a line-by-line or proportional basis and those of foreign associated companies valued with the equity method, have been translated into accounting currency using the exchange rate ruling at 31 March 2003 for balance sheet items and the average rate fot the first three mounths of 2003 for the income statement. The following exchange rates were used: (in euro) Average rate Period-end rate 1 st Quarter Full year 1 st Quarter 31 March 31 December 31 March Currency US Dollar Canadian Dollar Pound Sterling Cypriot Pound Moroccan Dirham Turkish Lira 1,765, ,429, ,189, ,833, ,703, ,161,142.0 Swiss Franc Thai Baht Indian Rupee Mauritanian Ouguiya Albanian Lek Sri Lanka Rupee Egyptian Pound

20 Net Sales Net sales totalled 947,867 thousand euro, as follows: (in thousands of euro) 1 st Quarter 1 st Quarter Change % change Product sales 921, ,253 7, Services 24,213 22,046 2, Other 1,779 1, Total 947, ,694 10, The breakdown of consolidated net sales by business and by geographical area was as follows: by business 1 st Quarter % 1 st Quarter % % change Cement 568, , Ready mixed concrete and aggregates 332, , Other 46, , Total 947, , by geographical area 1 st Quarter % 1 st Quarter % % change European Union 723, , North America 85, , Asia 46, , Other emerging countries 70, , Trading 21, , Total 947, ,

21 Raw, ancillary, consumable materials and supplies These costs totalled 249,601 thousand euro, as follows: (in thousands of euro) 1 st Quarter 1 st Quarter Change % change Raw materials and semi-finished goods 113,111 94,896 18, Fuel 54,550 54, Packaging, materials and machinery 63,202 58,934 4, Finished goods 21,774 30,114 (8,340) Change in inventories of raw materials, consumables materials and supplies (3,036) 3,572 (6,608) n.s. Total 249, ,673 7, Services were 323,799 thousand euro, as follows: Services 1 st Quarter 1 st Quarter Change % change Electricity, water and gas 64,870 64, External services and maintenance 93,642 94,160 ( 518) -0.6 Transport 91,547 92,945 (1,398) -1.5 Legal fees and consultancy 12,648 15,182 (2,534) Rents 19,662 19, Insurance 8,846 7,116 1, Other 32,584 33,761 (1,177) -3.5 Total 323, ,238 (3,439)

22 Other operating costs Other operating costs totalled 25,797 thousand euro, as follows: (in thousands of euro) 1 st Quarter 1 st Quarter Change % change Subscriptions 2,405 2,734 ( 329) Other taxes 14,448 15,464 (1,016) -6.6 Other costs 8,944 11,022 (2,078) Total 25,797 29,220 (3,423) Personnel expenses Personnel expenses were 178,569 thousand euro, as follows: 1 st Quarter 1 st Quarter Change % change Wages and salaries 123, ,049 4, Social security contributions 48,102 43,070 5, Employees leaving entitlements 4,678 4, Pensions and similar obligations 2,226 3,189 ( 963) Totale 178, ,319 9, The number of employees at the end of the period, and the average number of heads for the period, were as follows: (units) 1 st Quarter 1 st Quarter Full year Employees at the end of the period 17,608 17,550 17,838 Employees average number 17,690 17,773 17,904 20

23 Provisions and writedowns The overall total of 4,849 thousand euro (6,415 thousand euro at 31 March 2002) reflects writedowns on receivables of 3,063 thousand euro (4,914 thousand euro at ) and other provisions totalling 1,786 thousand euro (1,501 thousand euro at ), which were mainly provisions for the restoration of quarries. Depreciation and amortization The overall total of 95,025 thousand euro (92,708 thousand euro at 31 March 2002) reflects amortization of intangible assets for 22,436 thousand euro (22,751 thousand euro at 31 March 2002) and depreciation of tangible assets for 72,589 thousand euro (69,957 thousand euro at 31 March 2002). Financial income and charges Financial charges net of income totalled 31,475 thousand euro, arising as follows: (in thousands of euro) 1 st Quarter 1 st Quarter Change % change Income and capital gains from equity investment 85 2,025 (1,940) Interest income and financial income 8,516 10,370 (1,854) Interest expense and other financial charges (38,380) (42,210) 3, Net translation differences (1,696) 1,304 (3,000) Total (31,475) (28,511) (2,964)

24 Adjustments to financial asset values The net negative balance of 4,371 thousand euro at 31 March 2003 (+682 thousand euro at 31 March 2002) arose from the net result of -2.8 million euro for companies valued with the equity method (+2.7 million euro at 31 March 2002), of which the Suez Cement group (Egypt) accounted for -2.4 million euro, and net writedowns of 1.6 million euro on financial assets (2.0 million euro at 31 March 2002). Income taxes The tax charge of 29,903 thousand euro in the income statement arose as follows: (in millions of euro) 1 st Quarter 1 st Quarter Change % change Current taxes 26,200 34,516 (8,316) Deferred taxes 3,703 (1,606) 5,309 n.s. Total 29,903 32,910 (3,007) -9.1 n.s. = not significant Investments in fixed assets Investments in fixed assets at 31 March 2003 totalled million euro, as follows: (in millions of euro) 1 st Quarter 1 st Quarter Change Intangible fixed assets (0.8) Tangible fixed assets (12.5) Financial fixed assets (47.6) Change in payables on acquisition held as fixed asset Total (33.0) Investments in financial fixed assets totalled 58.9 million euro and related in the main to an additional purchase of shares of Ciments Français S.A. stock for 49.9 million euro and the purchase of the Parent Company s own ordinary share for 5.4 million euro. 22

25 Net debt Net debt at 31 March 2003 totalled 2,056,994 thousand euro. The decrease against 31 December 2002 was 29,038 thousand euro, broken down as follows: (in thousands of euro) Change vs. 31 December 2002 Cash, cash equivalents and current financial assets 42,950 Short-term financing (17,026) Change in short-term net debt 25,924 Medium/long-term financial assets 289 Medium/long-term financing (55,251) Change in medium/long-term net debt (54,962) Change in total net debt (29,038) The 29 million euro decrease in the net financial requirement arose as follows: financial flows from operations, including the change in the working capital requirement, for million euro; less total investments in fixed assets of million euro; plus divestments for 2.8 million euro; plus other net movements for 7.6 million euro. 23

26 Italcementi S.p.A. Via G. Camozzi Bergamo - Italy Tel: Fax: Telex: ITALC I