37 Contingencies, guarantees and commitments

Contingencies

In the ordinary course of 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. The effects of such risks which arise in the normal course of business are not foreseeable and are therefore not included in the accompanying consolidated financial statements.

At December 31, 2014, the Group’s contingencies amounted to CHF 1,037 million (2013: 779), which included contingencies of CHF 362 million (2013: 333) from ACC Limited and Ambuja Cements Ltd. and of CHF 190 million from Holcim Brazil. It is possible, but not probable, that the respective legal cases will result in future liabilities.

The Competition Commission of India issued an order dated June 20, 2012, imposing a penalty of CHF 362 million (INR 23,119 million) on ACC Limited and Ambuja Cements Ltd. concerning an alleged breach of competition law by certain cement manufacturers in India. The two Indian Holcim Group companies contest the allegation and have filed an appeal against the order before the appropriate authority, which is pending a decision. As per the order, a total deposit of 10% of the penalty amounts has been placed with a financial institution by both Holcim Group companies with a lien in favor of the Competition Appellate Tribunal. Based on the advice of external legal counsel, Holcim believes that it has good grounds for appeal. Accordingly, no provision has been recognized in the statement of financial position.

On May 28, 2014, the Administrative Council for Economic Defense (CADE) has ruled an order including fines against several Brazilian cement companies. This also applies to Holcim Brazil, which has been fined CHF 190 million (BRL 508 million). The order relates to the competition law proceedings started in 2006 which aimed at investigating the conduct of several of the leading cement producers in Brazil. In the context of the proceeding, Holcim Brazil has always supplied all information requested. The company reinforces that it acts lawfully and in accordance with fair competition rules and practices. Holcim Brazil will pursue all available legal steps to defend its position. Accordingly, no provision has been recognized in the statement of financial position.

There are no further single matters pending that the Group expects to be material in relation to the Group’s business, financial position or results of operations.

Guarantees

At December 31, 2014, guarantees issued in the ordinary course of business amounted to CHF 386 million (2013: 411).

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, 2014, the Group’s commitments amounted to CHF 1,351 million (2013: 1,284), of which CHF 543 million (2013: 759) related to the purchase of property, plant and equipment.

On November 7, 2014, Group Holcim signed a Share and Loan Purchase Agreement where it agreed to purchase an additional 15% interest in United Cement Company of Nigeria Ltd (“Unicem”) and also agreed to purchase shareholder loans to Unicem in 2015. The total estimate of the financial commitment relating to these transactions amounts to CHF 146 million (USD 148 million).