CONFIDENTIAL Offering Memorandum 182,000,000 Preferred Shares Including Preferred Shares in the Form of American Depositary Shares

Cementos Argos S.A. (incorporated under the laws of Colombia)

Including in the form of American Depositary Shares This is the initial public offering of preferred shares of Cementos Argos S.A. (the ‘‘Preferred Shares’’). We are offering 182,000,000 Preferred Shares in a global offering, which consists of an international offering in the United States and other countries outside Colombia and a concurrent Colombian offering. These Preferred Shares are being offered directly or in the form of American depositary shares (the ‘‘ADSs’’ and together with the Preferred Shares, the ‘‘Offered Securities’’). Each ADS represents five Preferred Shares. The ADSs will be evidenced by American Depositary Receipts, or ADRs. The offering of the ADSs is being underwritten by the initial purchasers named in this offering memorandum. Existing shareholders who submit orders to buy Preferred Shares in the Colombian offering at the price to the public or above shall be allocated Preferred Shares on a priority basis in an amount up to their percentage ownership of ordinary shares of the Company as of the date of closing. The number of Preferred Shares available for sale to other investors in the international offering will be reduced to the extent that our existing shareholders subscribe on a priority basis for Preferred Shares in the Colombian offering and to the extent that Prefered Shares are allocated to other investors in the Colombian offering.The Preferred Shares purchased by investors outside Colombia will be settled in Colombia, paid for in Colombian pesos, and placed by the Colombian placement agents named elsewhere in this offering memorandum. Prior to this offering, there has been no public market for the Offered Securities. The initial public offering price is U.S.$21.03 per ADS and Ps.7,700 per Preferred Share. We have listed our Preferred Shares on the Colombian Stock Exchange (Bolsa de Valores de Colombia) under the symbol ‘‘PFCEMARGOS’’. Trading of our Preferred Shares in Colombia on the Colombian Stock Exchange will be conducted in Colombian pesos, in accordance with applicable Colombian regulations. Our ordinary shares are listed on the Colombian Stock Exchange under the symbol ‘‘CEMARGOS.’’ We have granted the initial purchasers an option for a period of 30 days to purchase from us up to 5,460,000 additional ADSs, representing 27,300,000 Preferred Shares, to cover over-allotments, if any. The Offered Securities have not and will not be registered under the U.S. Securities Act of 1933, as amended, which we refer to as the Securities Act, or under any U.S. state securities laws. Accordingly, the Offered Securities are being offered only to qualified institutional buyers pursuant to exemptions from registration under Rule 144A under the Securities Act, which we refer to as Rule 144A, and outside the United States in accordance with Regulation S under the Securities Act, which we refer to as Regulation S. Each purchaser of the Offered Securities is hereby notified that the sellers of the Offered Securities, as applicable, may be relying on the exemptions from the provisions of Section 5 of the Securities Act provided by Rule 144A. For a description of the restrictions on offers and sales of the Offered Securities and distribution of this offering memorandum, see ‘‘Plan of Distribution’’ and ‘‘Transfer Restrictions.’’ Investing in the Offered Securities involves a high degree of risk. See ‘‘Risk Factors’’ beginning on page 18. The Offered Securities may not be offered or sold, directly or indirectly, in Colombia or any other jurisdiction or to any resident of Colombia or any such jurisdiction, except as permitted by applicable Colombian law or the laws of any such jurisdiction. The Preferred Shares have been registered with The Colombian National Registry of Securities and Issuers (Registro Nacional de Valores y Emisores). Neither the registration nor the approval of the public offer issued by the Colombian Superintendency of Finance (Superintendencia Financiera de Colombia), which we refer to as Superintendency of Finance, nor the registration of the Preferred Shares in the Colombian Stock Exchange, should be understood as a rating or assumption of liability by the Superintendency of Finance with respect to the issuer, price, quality or tradeability of the securities or of the issuance, or of our solvency. The registration of the Preferred Shares on the Colombian Stock Exchange should not be understood as a rating or assumption of liability by the Colombian Stock Exchange with respect to the issuer, price, quality or tradeability of the securities or of the issuance, or of our solvency. Delivery of the Preferred Shares in book-entry form is expected to be made on or about May 16, 2013 through the book-entry system of the Colombian Central Securities Depositary (Depósito Centralizado de Valores de Colombia—Deceval S.A., ‘‘Deceval’’) in Bogotá, Colombia. Delivery of the ADSs will be made through the book-entry facilities of The Depositary Trust Company on or about May 16, 2013. Global Coordinators and Joint bookrunners J.P. Morgan HSBC Joint Lead Managers (for the offering under Regulation S of the Securities Act only) Banca de Inversión Bancolombia Valores Bancolombia Joint bookrunners BofA Merrill Lynch Credit Suisse Itaú BBA The date of this offering memorandum is May 9, 2013. Geographic coverage You must read the following disclaimer before continuing. The following disclaimer applies to the attached offering memorandum accessed from this page or otherwise received as a result of such access, and you are therefore advised to read this disclaimer page carefully before reading, accessing or making any other use of the attached offering memorandum. In accessing the attached offering memorandum, you agree to be bound by the following terms and conditions, including any modifications to them from time to time, each time you receive any information from us as a result of such access.

THE FOLLOWING DOCUMENT MAY NOT BE FORWARDED OR DISTRIBUTED OTHER THAN AS PROVIDED BELOW AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. THIS DOCUMENT MAY ONLY BE DISTRIBUTED IN “OFFSHORE TRANSACTIONS” AS DEFINED IN, AND AS PERMITTED BY, REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITHIN THE UNITED STATES TO QIBs (AS DEFINED BELOW) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”). ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND, SUBJECT TO CERTAIN EXCEPTIONS, THE SECURITIES MAY NOT BE OFFERED OR SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”), OR (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.

CONFIRMATION OF YOUR REPRESENTATION: In order to be eligible to view this document or make an investment decision with respect to the securities, you must be either: (a) a QIB that is acquiring the securities for its own account or for the account of another QIB or (b) not a U.S. Person within the meaning of Regulation S under the Securities Act or have not received delivery of this electronic mail in the United States of America, its territories and possessions, any state of the United States and the District of Columbia; and “possessions” include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. By accepting the email and accessing this document, you shall be deemed to have represented to us that you are outside the United States or that you are a QIB and that you consent to delivery of such document by electronic transmission. You are reminded that this document has been delivered to you on the basis that you are a person into whose possession this document may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorized to, deliver this document to any other person. The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the initial purchasers, as named in this document, or any affiliate of the initial purchasers is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the initial purchasers or such affiliate on behalf of Cementos Argos S.A. in such jurisdiction. Under no circumstances shall this document constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. Recipients of this document who intend to subscribe for or purchase the securities are reminded that any subscription or purchase may only be made on the basis of the information contained in the offering memorandum.

This offering memorandum has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of transmission, and consequently, none of the initial purchasers nor any person who controls any initial purchaser or any of their directors, officers, employees or agents, or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the offering memorandum distributed to you in electronic format and the hard copy version available to you on request from the initial purchasers.

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Notice to investors ...... iii Available information ...... iv Incorporation of documents by reference...... v Service of process and enforcement of civil liabilities ...... v Cautionary statement regarding forward-looking statements ...... vii Presentation of financial information ...... ix Market information and other statistical information ...... x Summary ...... 1 Summary of the global offering ...... 10 Risk factors ...... 18 Use of proceeds...... 31 Dividends ...... 32 Exchange rates and regulation of foreign investment ...... 34 Capitalization ...... 39 Selected financial and operating data ...... 40 Management’s discussion and analysis of financial condition and results of operations ...... 43 Industry and regulatory matters ...... 74 Business ...... 89 Management ...... 127 Principal shareholders ...... 134 Related party transactions ...... 135 Description of our share capital ...... 137 Description of our Preferred Shares ...... 142 Description of the American Depositary Shares ...... 144 Regulation of the Colombian securities market ...... 155 Taxation ...... 159 Plan of distribution ...... 169 Transfer restrictions ...... 175 Legal matters ...... 179 Independent auditors ...... 179 ______You should only rely on the information contained in this offering memorandum. Neither we nor the initial purchasers have authorized anyone to provide you with information that is different or additional from that contained in this offering memorandum. If anyone provides you with different or additional information, you should not rely on it. You should assume that the information in this offering memorandum is accurate only as of the date on the front cover of this offering memorandum, regardless of time of delivery of this offering memorandum or any sale of the Offered Securities. Our business, financial condition, results of operations and prospects may change after the date on the front cover of this offering memorandum. Neither we nor the initial purchasers are making an offer to sell the Offered Securities in any jurisdiction where the offer or sale is not permitted. ______

i Unless otherwise indicated or the context otherwise requires, all references in this offering memorandum to “Cementos Argos,” the “Company,” “we,” “us” and “our” refer to Cementos Argos S.A. and its consolidated subsidiaries taken as a whole. All references in this offering memorandum to: (i) “Cemento Panamá” refer to Cemento Panamá S.A., (ii) “Cina” refer to Cimenterie Nationale S.E.M, (iii) “Cementos Colón” refer to Cementos Colón S.A., (iv) “Vensur” refer to Vensur N.V., (v) “Grupo Argos” refer to Grupo Argos S.A., (vi) “Grupo Sura” refer to Grupo Suramericana de Inversiones S.A., (vii) “Bancolombia” refer to Bancolombia S.A. and (viii) “Nutresa” refer to Nutresa S.A.

Unless otherwise indicated, all references in this offering memorandum to (i) the southeastern United States are to Alabama, Georgia, Florida, Mississippi, North Carolina, South Carolina and Virginia, and (ii) the south central United States are to Texas and Arkansas. In addition, all references to the Caribbean exclude Cuba.

ii NOTICE TO INVESTORS

In connection with the Global Offering, we are relying on certain exemptions from registration under the Securities Act. By purchasing Offered Securities in the Global Offering, you will be deemed to have made the acknowledgements, representations, warranties and agreements described under the heading “Transfer Restrictions” in this offering memorandum. The Offered Securities issued in the Global Offering are subject to restrictions on transferability and resale. You may not transfer or resell the Offered Securities issued in the Global Offering except as permitted under the Securities Act and applicable state securities laws, pursuant to registration or in transactions exempt from, or not subject to, the registration requirements of the Securities Act. Trading of the Preferred Shares shall be effected through the Colombian Stock Exchange in accordance with applicable Colombian regulations. You should understand that you will be required to bear the financial risks of your investment for an indefinite period of time.

We have submitted this offering memorandum solely to a limited number of institutional investors in the United States and certain investors outside the United States and Colombia so that they can consider a purchase of the Offered Securities. Offers to investors in Colombia are being made pursuant to a separate prospectus filed with the Colombian Superintendency of Finance in accordance with applicable Colombian regulations. We have not authorized the use of this offering memorandum for any other purpose. This offering memorandum may not be copied or produced in whole or in part. By accepting delivery of this offering memorandum, you agree to these restrictions. See “Transfer Restrictions.”

This offering memorandum is based on information provided by us and by other sources that we believe reliable. We and the initial purchasers cannot assure you that this information is accurate or complete. This offering memorandum summarizes certain documents and other information and we refer you to those sources for a more complete understanding of what we discuss in this offering memorandum. Copies of documents referred to herein will be made available to prospective investors upon request to us. Questions regarding information contained in this offering memorandum may be addressed to Mr. Gustavo Uribe, Investors Relations Manager, at Calle 7D #43A 99, Piso 10, Torre Almagrán, Medellin, Colombia. You hereby acknowledge that you have been afforded an opportunity to request from us, and have received, all information considered by you to be necessary to verify the accuracy of, or to supplement, the information contained herein, and you have had the opportunity to review all the documents described herein. Nothing contained in this offering memorandum is, or shall be relied upon as, a promise or representation by us or the initial purchasers, whether as to the past or to the future. In making an investment decision, you must rely on your own examination of us and the terms of the Global Offering, including the merits and risks involved. You should not consider any information in this offering memorandum to be legal, business or tax advice.

Neither we nor the initial purchasers are making any representation to any purchaser of the Offered Securities regarding the legality of an investment in the Offered Securities by such purchaser under any legal investment or similar laws or regulations. You should consult with your own business, legal, accounting, regulatory, foreign exchange and tax advisors to determine the appropriateness and consequences of an investment in the Offered Securities in your specific circumstances and arrive at an independent evaluation of the investment based upon, among other things, your own views as to the risks associated with the Offered Securities or us.

There is currently no market for the Offered Securities being offered hereby and there can be no assurance that one will develop or, if one develops, that it will continue.

NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED STATES

To purchase the Offered Securities, you must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell any of the Offered Securities or possess or distribute this offering memorandum. You must also obtain all consents, approvals or permissions required by such jurisdiction for you to purchase, offer or sell any of the Offered Securities under the laws and regulations in force in any jurisdiction to which you are subject or in which you make such purchase, offer or sale. We and the initial purchasers will not have any responsibility therefor. If your investment authority is subject to legal restrictions, you should consult your legal advisors to determine whether and to what extent the Offered Securities constitute legal investments for you. We

iii and the initial purchasers make no representation to any purchaser of the Offered Securities regarding the legality of an investment in the Offered Securities by such purchaser under any legal investment or similar laws or regulations.

THE OFFERED SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THEREFORE, THE OFFERED SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, UNLESS THE OFFER OR SALE WOULD QUALIFY FOR A REGISTRATION EXEMPTION FROM THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. WE HAVE PREPARED THIS OFFERING MEMORANDUM FOR USE IN CONNECTION WITH THE OFFER AND SALE OF THE OFFERED SECURITIES OUTSIDE THE UNITED STATES TO NON-U.S. PERSONS IN RELIANCE ON REGULATION S AND WITHIN THE UNITED STATES TO QIBs IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT, OR RULE 144A. PROSPECTIVE PURCHASERS ARE HEREBY NOTIFIED THAT SELLERS OF THE OFFERED SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A. FOR A DESCRIPTION OF THESE AND CERTAIN FURTHER RESTRICTIONS ON OFFERS AND SALES OF THE OFFERED SECURITIES AND DISTRIBUTION OF THIS OFFERING MEMORANDUM, SEE “TRANSFER RESTRICTIONS.”

NOTICE TO NEW HAMPSHIRE RESIDENTS

Neither the fact that a registration statement or an application for a license has been filed under RSA 421-B with the State of New Hampshire, nor the fact that a security is effectively registered or a person is licensed in the State of New Hampshire, constitutes a finding by the Secretary of State of the State of New Hampshire that any document filed under RSA 421-B is true, complete and not misleading. Neither any such fact nor the fact that an exemption or exception is available for a security or a transaction means that the Secretary of State of the State of New Hampshire has passed in any way upon the merits or qualifications of, or recommended or given approval to, any person, security or transaction. It is unlawful to make, or cause to be made, to any prospective purchaser, customer or client any representation inconsistent with the provisions of this paragraph.

NOTICE TO INVESTORS IN CERTAIN COUNTRIES

For information for investors in certain countries, see “Plan of Distribution” and “Transfer Restrictions.”

AVAILABLE INFORMATION

To permit compliance with Rule 144A in connection with resales of the Offered Securities, we will furnish upon request of a holder of the Rule 144A Offered Securities or, during the restricted period, the Regulation S Offered Securities, or of a prospective purchaser designated by such holder, the information required to be delivered by Rule 144A(d)(4) under the Securities Act unless, at the time of such request, we either are a reporting company under Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), or are furnishing information pursuant to the requirements of Rule 12g3-2(b) thereunder. We are currently not a reporting company under the Exchange Act and are exempt from the registration requirements of Section 12(g) of the Exchange Act under Rule 12g3-2(b) thereunder. Any such request may be made to us in writing at our registered address located Calle 7D #43A 99, Piso 10, Torre Almagrán, Medellin, Colombia, Attn: Mr. Gustavo Uribe, Investors Relation Manager. We will also be required periodically to furnish certain information, including quarterly and annual reports and other periodic reports with material information, to the Colombian Stock Exchange and the Colombian Superintendency of Finance, which will be available in Spanish for review through the Colombian Superintendency of Finance’s website at www.superfinanciera.gov.co and, in certain cases, at our website at www.argos.com.co. Unless specifically identified as information incorporated by reference into this offering memorandum as set forth below, information accessible through our website is not part of this offering memorandum.

iv INCORPORATION OF DOCUMENTS BY REFERENCE

We may incorporate by reference into this offering memorandum certain information that we upload to our website www.argos.com.co and we specifically identify as being incorporated by reference into this offering memorandum. This means that we can disclose important information to you by referring to another document uploaded to our website. Any future information uploaded to our website after the date of this offering memorandum and until the closing of the Global Offering and specifically identified as incorporated by reference into this offering memorandum shall be considered to be incorporated into this offering memorandum by reference and shall be considered a part of this offering memorandum from the date such information is uploaded to our website.

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

We are a Colombian company and a substantial portion of our assets is located in Colombia. In addition, a majority of our directors and executive officers reside or are located outside the United States. As a result, investors may not be able to effect service of process outside these countries upon us or these persons or to enforce judgments obtained against us or these persons in foreign courts predicated solely upon the civil liability provisions of U.S. securities laws.

We have been advised by Brigard & Urrutia S.A., our Colombian counsel, that the Supreme Court of Justice of Colombia (Corte Supreme de Justicia de Colombia) determines whether to enforce a U.S. judgment predicated on the U.S. securities laws through a procedural system known under Colombian law as exequatur. The Supreme Court of Justice of Colombia will enforce a foreign judgment, without reconsideration of the merits, only if the judgment satisfies the requirements of Articles 693 and 694 of Colombia’s Code of Civil Procedure (Código de Procedimiento Civil), which provide that a foreign judgment will only be enforced in Colombia if:

a treaty exists between Colombia and the country where the judgment was granted or there is reciprocity in the recognition of foreign judgments between the courts of the relevant jurisdiction and the courts of Colombia;

the foreign judgment does not relate to in rem rights vested in assets that were located in Colombia at the time the suit was filed and does not contravene or conflict with Colombian laws relating to public order other than those governing judicial procedures;

the foreign judgment, in accordance with the laws of the country where it was rendered, is final and is not subject to appeal and a duly certified and authenticated copy of the judgment has been presented to a competent court in Colombia;

the foreign judgment does not refer to any matter upon which Colombian courts have exclusive jurisdiction;

no proceeding is pending in Colombia with respect to the same cause of action, and no final judgment has been awarded in any proceeding in Colombia on the same subject matter and between the same parties; and

in the proceeding commenced in the foreign court that issued the judgment, the defendant was served in accordance with the law of such jurisdiction and in a manner reasonably designated to give the defendant an opportunity to defend against the action.

The Supreme Court of Justice of Colombia has generally accepted that reciprocity exists when it has been proven that either a U.S. court has enforced a Colombian judgment or that a U.S. court would enforce a foreign judgment, including a judgment issued by a Colombian court. In accordance with previous rulings of the Supreme Court of Justice of Colombia, reciprocity may also be granted by a treaty or by law. Such enforceability decisions are considered by the Supreme Court of Justice of Colombia on a case-by-case basis.

The United States and Colombia do not have a bilateral treaty providing for automatic reciprocal recognition and enforcement of judgments in civil and commercial matters. However, Colombia is party to international treaties such

v as the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), the 1975 Inter-American Convention on International Commercial Arbitration, and the 1965 Washington Convention for the Settlement of Disputes between States and Nationals of Other States.

As of the enactment of Law 1563 of 2012, in force as of October 13, 2012, international arbitration awards issued in Colombia are not subject to exequatur or recognition proceedings.

Recognition of international arbitration awards may only be denied pursuant to the cases described in article 112 of Law 1563 of 2012:

When it is proved by the party against which recognition is sought that:

the party to the agreement was, under the law applicable to it, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, if failing indication thereon, under the law of the country where the award was issued; or

the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the initiation of the arbitration proceeding or was otherwise unable to present its rights in the case; or

the award deals with a difference not contemplated within the terms of the submission to arbitration or it contains decisions on matters beyond the scope of the submission to arbitration (if the decisions on matters submitted to arbitration can be separated from those not submitted, the first may be recognized and enforced); or

the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

the award has not become binding for the parties or was annulled or suspended by an authority of the country in which the award was issued; or when the competent judicial authority proves that:

in accordance with Colombian law, the matter subject to arbitration is not capable of arbitration; or

the recognition or enforcement of the award would be contrary to Colombian public policy.

If an application for the annulment or suspension of the award has been made to an authority of the seat of the arbitration, the Colombian judicial authority, if it considers it proper, may adjourn the decision on the enforcement of the award and may also, by petition of the party claiming enforcement of the award, order the other party to give suitable security.

The above events are similar to the ones regulated in articles V and VI of the New York Convention.

vi CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This offering memorandum contains forward-looking statements within the meaning of the U.S. securities laws. Forward-looking statements include statements that are preceded or followed by, or include, expressions such as “believes,” “expects,” “intends,” “plans,” “projects,” “estimates” or “anticipates” and similar expressions. Such statements appear in, among others, the sections of this offering memorandum entitled “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Industry and Regulatory Matters” and “Business.” Although we believe that these forward-looking statements are based upon reasonable assumptions, these statements are subject to several risks and uncertainties and are made in light of information currently available to us. Forward-looking statements include, among others, statements regarding our intent, belief or current expectations, as well as those of our directors or executive officers, with respect to, but not limited to:

our corporate strategy, plans, objectives or goals;

our ability to realize the benefits of our acquisitions and capital expenditures;

our products and process developments;

projections of operating income, net income (loss), basic earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items or ratios;

projections of growth and development of the cement and ready-mix concrete industries in the countries where we operate or market our products;

demand for our products, especially in the countries where we operate or market our products;

our future economic performance or that of Colombia, Panama and the Caribbean, the United States, and other countries or regions where we operate or market our products;

assumptions underlying such statements; and

other matters that are not historical facts.

Any or all of our forward-looking statements in this offering memorandum may turn out to be inaccurate. Our actual results could differ materially from those contained in forward-looking statements due to a number of factors, including:

the general economic, business, political and social conditions in the markets where we operate or market our products, including Colombia, Panama and the Caribbean and the United States, as well as the effect of world events and natural disasters in those markets;

the exchange rates between the peso and foreign currencies;

the cyclical activity and growth of the construction industry in Colombia, Panama and the Caribbean, the United States and other countries or regions where we operate or market our products;

the availability and prices of energy sources and fuels and our ability to manage rising energy costs;

trends affecting our financial condition or results of operations;

weather conditions affecting construction activity in the countries where we operate or market our products;

vii our ability to identify and consummate acquisitions, joint ventures or strategic alliances and to realize the benefits of those acquisitions, joint ventures or strategic alliances;

our ability to identify opportunities to divest non-strategic or non-core assets;

our ability to construct new production plants or make capital investments and realize the benefits from those new production plants or capital investments;

the declaration and payment of dividends from our subsidiaries;

the results of the litigation proceedings in which we are currently involved or in which we may be involved in the future;

our ability to generate cash and the cost and availability of the financing required to fund our operations and capital expenditures;

the business abilities and judgment of our personnel;

the enactment of new and stricter environmental regulations in the markets where we operate or market our products;

the future impact of competition and regulations;

business interruptions or impairment of our assets;

future policies and resolutions adopted by our shareholders; and

other factors discussed under the heading “Risk Factors.”

Such forward-looking statements include expectations with respect to our business following the completion of the offering and contain projections only as of the date of this offering memorandum.

Neither we nor the initial purchasers can assure prospective purchasers of the Offered Securities that these forward- looking statements, estimates, assumptions or intentions will prove to be correct or that the information, interpretations and understandings on which they are based will prove to be valid. The actual results of our forward- looking statements, estimates, assumptions or intentions may depend on factors beyond our control.

Neither we nor the initial purchasers undertake any obligation to publicly release any revisions to such forward- looking statements after completion of this offering to reflect later events or circumstances or to reflect the occurrence of unanticipated events even if new information, future events or other circumstances have made them incorrect or misleading. In light of the risks and uncertainties underlying the forward-looking statements, there can be no assurance that the events described or implied in the forward-looking statements contained in this offering memorandum will in fact transpire. Accordingly, readers are cautioned not to place undue reliance on the forward- looking statements, which contain projections only as of the date they were made. Our independent auditors have not examined or compiled the forward-looking statements and, accordingly, do not provide assurance with respect to such statements. These cautionary statements also should be considered in connection with any written or oral forward-looking statements that we or our underwriters may issue in the future.

viii PRESENTATION OF FINANCIAL INFORMATION

Our consolidated financial statements included in this offering memorandum have been prepared in pesos and in accordance with generally accepted accounting principles (“GAAP”), as in effect from time to time, in Colombia (“Colombian GAAP”) and audited in accordance with generally accepted auditing standards, as in effect from time to time, in Colombia.

In accordance with Colombian law, we will be required to present our financial statements under International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standard Board (“IASB”), beginning with our financial statements for the year ending December 31, 2015 and with a transition date of January 1, 2014.

Colombian GAAP differs in material respects from IFRS. See Annex A to this offering memorandum for a discussion of the principal differences between Colombian GAAP and IFRS.

In this offering memorandum, we present operating revenues plus depreciation, operational amortization and asset impairment (“Operating EBITDA”), a non-GAAP financial measure. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. We present Operating EBITDA because we believe that it provides investors with a supplemental measure of the financial performance of our core operations that facilitates period-to-period comparisons on a consistent basis. Our management also uses Operating EBITDA from time to time for internal planning and performance measurement purposes, among other measures. Operating EBITDA is not, and should not be, construed as an alternative to income or operating income, as an indicator of operating performance, as an alternative to cash flow provided by operating activities or as a measure of liquidity (in each case, as determined in accordance with Colombian GAAP). Operating EBITDA, as calculated by us, may not be comparable to similarly titled financial measures reported by other companies, including those in the cement industry. For a calculation of Operating EBITDA, see “Selected Financial and Operating Data.”

In this offering memorandum, we define net debt as long-term and current financial obligations, securities and bonds payable (“Net Debt”). Likewise, we define capital expenditures as funds and resources used to acquire new fix assets and to improve, change or replace current assets owned by us (“capital expenditures”).

Unless otherwise specified, all references in this offering memorandum to “pesos” or “Ps.” are to Colombian pesos, the legal currency of Colombia, and references to “U.S. dollars” or “U.S.$” are to United States dollars, the legal currency of the United States of America. Also, as used herein, the term “billion” means one thousand million, or 1,000,000,000 and the term “trillion” means one million million, or 1,000,000,000,000.

This offering memorandum converts certain peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. The Federal Reserve Bank of New York does not report a rate for pesos. Unless otherwise indicated, all peso amounts in this offering memorandum have been converted at the rate of Ps.1,768.23 per U.S.$1.00, which was the representative market rate reported by the Colombian Superintendency of Finance for December 31, 2012. The representative market rate is computed and certified by the Colombian Superintendency of Finance on a daily basis and represents the weighted average of the buy/sell foreign exchange rates negotiated on the previous day by certain financial institutions authorized to engage in foreign exchange transactions. The Colombian Superintendency of Finance also calculates and certifies the average representative market rate for each month for purposes of preparing financial statements, and converting amounts in foreign currency to pesos. You should not construe these convenience conversions as a representation that the peso amounts correspond to, or have been or could be converted into, U.S. dollars at the representative market rate or any other rate. Furthermore, fluctuations in exchange rates significantly affect the comparability of the financial figures presented in U.S. dollars throughout this offering memorandum. See “Exchange Rates and Regulation of Foreign Investment” for information regarding historical exchange rates of pesos to U.S. dollars.

Certain figures included in this offering memorandum have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures that precede them.

ix MARKET INFORMATION AND OTHER STATISTICAL INFORMATION

The information in this offering memorandum also includes statistical data regarding the production, distribution, marketing and sale of cement, ready-mix concrete and aggregates. We generated some of this data internally and we obtained some data from independent industry publications and reports that we believe to be reliable sources, including, among others identified herein, the Colombian National Administrative Department of Statistics (Departamento Administrativo Nacional de Estadística, “DANE”), the Colombian Chamber of Construction (Cámara Colombiana de la Construcción, “CAMACOL”), the Colombian Institute of Cement Producers (Instituto Colombiano de Productores de Cemento) and the Portland Cement Association (“PCA”), as well as from general publications. We have not independently verified the data obtained from external sources nor sought the consent of any organizations to refer to their reports in this offering memorandum. We have not participated in the preparation or compilation of any of such information and accept no responsibility therefor, except that we confirm that this information has been accurately reproduced and, as far as we are aware and are able to ascertain from the published information, no facts have been omitted which would render the reproduced information inaccurate or misleading.

x SUMMARY

This summary highlights selected information contained in this offering memorandum and may not include all of the information that is important to you. For a more complete understanding of our company, our business and this offering, you should read this entire offering memorandum, including “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and our financial statements included in this offering memorandum.

Overview

We are the leading cement and ready-mix concrete producer in Colombia in terms of sales volume for 2012, one of Latin America’s fastest-growing economies, and also have strategic operations in contiguous countries and regions including Panama and the Caribbean and nine states throughout the south central and southeastern regions of the United States. According to our calculations derived from information collected by the DANE, we have a 49% market share in the Colombian market for cement, and, according to our internal estimates, approximately a 50% market share for ready-mix concrete, in each case based on volumes sold in 2012. Based on our internal estimates, we are one of two leading cement producers in Panama and the Caribbean, in terms of volumes sold in 2012. Based on PCA data on installed cement manufacturing capacity and our own internal estimates of ready-mix concrete sales volumes, we believe we are the second largest cement producer in the southeastern region of the United States and the third largest ready-mix concrete producer in the United States.

During our 68-year history, we have created a vertically integrated cement and ready-mix concrete business in our contiguous markets of Colombia, Panama, the Caribbean and the United States. Our vertically integrated operations are complemented by access to key raw materials, such as limestone, ownership of generation facilities for a significant portion of our power needs in Colombia, and land and sea transportation capabilities. We also operate port facilities to meet our exporting and importing needs. We believe that our extensive footprint and strong distribution and logistics infrastructure allow us to provide consumers with high-quality and value-added cement products in a cost-effective manner. We believe we have developed strong brand recognition in our markets, particularly in Colombia.

We operate 17 cement production facilities, including 11 cement plants and six grinding stations, with total installed annual production capacity of 15.6 million metric tons. Our 307 ready-mix concrete plants, including 273 permanent plants and 34 mobile plants, have a combined installed annual production capacity of 14.1 million cubic meters of ready-mix concrete, which is delivered by our fleet of 2,137 mixer trucks. Our experienced senior management team, with an average of 17 years of experience in the cement and ready-mix concrete industries, manages a workforce of 7,537 employees as of December 31, 2012.

We provide a broad range of products that allow us to serve our customers’ needs. We seek to offer specialized and differentiated products and services and innovative commercial offerings to enable us to create value for our customers and grow profitability. Our cement plants produce a broad range of products, including clinker, general use cement, structural cement, Portland cement, cement types I, II, I/II and III, white cement, masonry cement and oil well cement. For the Panama Canal expansion project, our subsidiary Cemento Panamá provides specialized cement and puzzolana designed to comply with the project’s sulfate resistance, low heat of hydration and durability specifications. Our portfolio of ready-mix concrete products includes ready-mix concrete for use in infrastructure projects, architectural projects, ornamental projects and public spaces, among other uses.

For the fiscal years ended December 31, 2010, 2011 and 2012, we had:

Consolidated operating revenues of Ps.3,023,069 million (U.S.$1,709.66 million), Ps.3,668,610 million (U.S.$2,074.74 million) and Ps.4,380,393 million (U.S.$2,477.2 million), respectively;

Consolidated operating EBITDA of Ps.539,182 million (U.S.$304.93 million), Ps.681,544 million (U.S.$385.44 million) and Ps.791,190 million (U.S.$447.4 million), respectively; and Consolidated net income of Ps.288,878 million (U.S.$163.337 million), Ps.369,974 million (U.S.$209.23 million) and Ps.387,619 million (U.S.$219.21 million), resppectively.

We manage our business in three geographic business segments: Colombia, Panama and the Caribbean, and the United States.

The following chart indicates the geographic breakdown of our consolidated revenues for the year ended December 31, 2012:

The following chart indicates the product breakdown of our consolidated revenues for the year ended December 31, 2012:

2 The following table sets forth certain of our operating and financial data, on a consolidated basis, for the periods indicated:

Year ended December 31, 2010 2011 2012 Operating data: Capacity at period end (thousands of metric tons per year): Installed cement capacity 9.7 11.8 15.6 Installed clinker capacity 5.6 6.6 8.9 Production: Cement production (thousands of metric tons)(1) 6,532 7,846 9,276 Ready-mix concrete production (thousands of cubic meters) 5,915 7,038 8,542 Average cement capacity utilization rate 67.5% 66.4% 59.4% Selected financial data (amounts in millions of Ps.): Operating revenues 3,023,069 3,668,610 4,380,393 Growth in revenues (versus prior period) (12.4)% 21.4% 19.4% Gross income 599,636 764,245 911,936 Gross income margin 19.8% 20.8% 20.8% Operating income after asset impairment 130,257 272,833 414,567 Operating income margin after asset impairment 4.3% 7.4% 9.5% Operating EBITDA(2) 539,182 681,544 791,190 Operating EBITDA margin(3) 17.8% 18.6% 18.1%

(1) Includes cement produced in all regions. (2) Operating EBITDA is defined as operating revenues plus depreciation, operational amortization and asset impairment. (3) Operating EBITDA margin is defined as Operating EBITDA divided by operating revenues.

Our competitive strengths

Our principal competitive strengths include the following:

Leadership in attractive markets

In less than 20 years, we have evolved from being primarily a Colombian cement producer to an international cement and ready-mix concrete company offering a diversified product portfolio in the contiguous and attractive markets of Colombia, Panama and the Caribbean, and nine states in the south central and southeastern regions of the United States.

According to the DANE, in the five years ended December 31, 2011, Colombia’s GDP grew at a CAGR of 3.0% while, according to the International Monetary Fund (“IMF”), Panama’s GDP grew at a CAGR of 8.2%. GDP growth tends to fuel construction spending and increase demand for cement and other building materials for residential and commercial buildings, and infrastructure projects. We expect that continuation of these favorable macroeconomic conditions will drive demand for our products and provide us with opportunities for growth. We believe that we have the ability to address the expected increased demand in the countries where we operate through projects and initiatives that will allow us to enhance our efficiency and expand our plants with modest additional investments and capital expenditures. Macroeconomic and monetary policies in Colombia and Panama have generally resulted in reasonably stable macroeconomic indicators over the past several years, encouraging foreign direct investment in these countries. For instance, in 2011, foreign direct investments in Colombia and Panama increased 98.5% and 18.7%, respectively, in each case, compared to 2010.

According to our calculations derived from information collected by the DANE, we have a 49% market share in the Colombian market for cement, and, according to our internal estimates, approximately 50% for ready-mix concrete, in each case based on volumes sold in 2012. We believe that our extensive distribution network and the strategic location of our cement and ready-mix concrete plants in Colombia position us to take advantage of the opportunities that Colombia’s economic growth presents, in particular with respect to infrastructure and other construction spending forecasted for the next three years.

Based on our internal estimates, we are one of two leading producers of cement and ready-mix concrete in Panama and the Caribbean. We operate cement grinding stations and ready-mix concrete plants in Panama, Haiti, the 3 Dominican Republic and Suriname. Cement from our grinding stations in the region, together with cement produced and exported from our Cartagena plant is also used to supply cement to our customers throughout the Caribbean, Central America and beyond. We believe that Panama and the Caribbean are markets with potential for growth in view of existing projects relating to infrastructure, housing, tourism and other construction spending.

Based on PCA data on installed cement manufacturing capacity and our own internal estimates of ready-mix concrete sales volumes, we believe that we are the second-largest cement producer in the southeastern regions of the United States and the third-largest ready-mix concrete producer in the United States. We have taken strategic advantages into consideration when choosing the location of our cement and ready-mix concrete operations in the United States, focusing on nine states in the south central and southeastern regions of the United States. We believe that our geographic footprint positions us to take advantage of the expected economic recovery in the United States. We believe that the states in which we operate have the potential to exhibit economic growth and population increases that are higher than national averages over the coming years. Three of the states in our core geographic market, Georgia, North Carolina and Texas, are in the top growth markets for the United States, based on PCA forecasts.

Vertically integrated operations

Our operations are vertically integrated, allowing us to capture a greater portion of the cement value chain. We source our own limestone and other raw materials, own our cement and ready-mix concrete plants, supply a significant portion of our energy needs, and operate an extensive logistics and distribution network that includes ports, ocean-going vessels, and ready-mix concrete trucks.

We have access to raw materials required for the production of both cement and ready-mix concrete, including approximately 421 million metric tons of proven and probable reserves of limestone in Colombia (representing approximately 40 years of production, based on production levels as of December 31, 2012) and 238 million metric tons of proven and probable reserves of limestone in the United States (representing approximately 75 years of production based on production levels as of December 31, 2012). Our access to limestone allows us to produce clinker in Colombia and the United States that is used to supply our operations in those countries without incurring significant transportation costs. Clinker produced in Colombia, particularly in our Cartagena plant, is also used to supply our cement operations in Panama and the Caribbean.

Our network of ready-mix concrete plants in the countries and regions where we operate establishes a distribution channel for our cement production. For the year ended December 31 2012, our cement operations supplied all of the cement requirements of our ready-mix concrete operations in Colombia, Panama and the Caribbean, and 32.0% of the cement requirements of our ready-mix concrete operations in the United States.

In addition, for the year ended December 31, 2012, we generated approximately 75% of the power required for our operations in Colombia through our own power generation plants, lowering our exposure to fluctuations in the price of energy available in the local market. We are able to keep our distribution costs low through the use of our fleet of ocean-going vessels, which we use to transport cement and clinker into and around the Caribbean, including to our network of four ports and five terminals in the region.

Our operations are concentrated in a contiguous geographic area

We operate in Colombia, Panama, the Caribbean and nine states in the south central and southeastern United States. By focusing our operations in these contiguous markets, we are better able to leverage our installed production capacity and distribution network in order to efficiently allocate our products and raw materials. We optimize our operations in a cost-effective manner by shifting our cement products among markets with excess capacity to international and local markets with a shortage of capacity. For example, our Cartagena plant’s location allows us to supply cement to the Colombian market and to export cement and clinker to Panama and the Caribbean and, if desirable, to the markets that we serve in the United States. In light of these advantages and in contrast to some of our major competitors, we do not focus on global expansion and, instead, seek to grow in our existing and contiguous markets.

4 Strong brand recognition in Colombia and established distribution network

We have provided consumers with high-quality and value-added products since 1944. Throughout the years, we believe that we have developed strong brand recognition and a reputation in our principal market for producing reliable and high-quality cement and ready-mix concrete. According to an Invamer Gallup study in 2011, the Argos brand was the No. 1 Top of Mind brand in the cement industry in Colombia. Our brand recognition also contributes to our price premium in Colombia. We are seeking to capitalize on and consolidate our brand recognition beyond Colombia through the transition to the Argos brand in Panama and the Caribbean. We expect this transition to be completed by 2014. In the United States, we plan to continue using our heritage brands alongside the Argos brand.

We have also created a distribution network focused on reaching our end-users. The strategic locations of our cement production plants which are close to our customers, and offer reliable access to land transportation capabilities, our ports and our terminals in the regions and countries where we operate, allow us to effectively distribute our cement products in a cost-effective manner. Our distribution network enables us to promptly meet customer demands, adjust output to each consumption center and keep distribution costs low. Our mobile ready-mix concrete plants also enable us to service infrastructure projects located far from production facilities on a cost- effective basis.

As a result of our long-term investment in our distribution network, we currently serve approximately 70% of the local retailers of bagged cement in Colombia. This is particularly meaningful in a market where retail consumption still dominates.

Financial flexibility to grow organically and to selectively pursue strategic acquisitions

Historically, we have generated strong cash flows mainly due to our leadership position in the countries and regions where we operate, our extensive distribution network and our operational flexibility and focus on innovation.

For the year ended December 31, 2011, we generated cash flow from operating activities of Ps.409,724 million and Operating EBITDA of Ps.681,544 million and our Operating EBITDA margin was 18.6%. During the year ended December 31, 2012, we generated cash flow from operating activities of Ps.328,783 million and Operating EBITDA of Ps.791,190 million, and our Operating EBITDA margin was 18.1%.

We also have an established record of successful offerings in the Colombian capital markets. Since our inaugural bond offering in 2005, we have issued debt securities with an aggregate principal amount of approximately Ps.4.1 trillion. In addition, we have successfully completed international syndicated loans and export credit agency financings. As of December 31, 2012, our Net Debt was Ps.3,030,813 million, of which 66% was in the form of bonds.

Our current investment portfolio, comprised primarily of equity securities of listed companies in Colombia, provides us additional resources and financial flexibility to meet operating needs and enable further focused expansion. As of December 31, 2012, the market value of our investment portfolio totaled Ps.1,780,462 million of which Ps.1,684,079 million represented our interests in Grupo Sura and Bancolombia.

We have used the proceeds from our capital market transactions and divestitures of our investment portfolio to fund expansion projects and selective strategic acquisitions in the countries and regions where we operate. Following this Global Offering, we expect to have greater access to international funding sources, which will further increase our ability to undertake expansion project, pursue strategic acquisitions and strengthen our capital structure.

Management with strong track record

Our senior management team, with an average tenure at Cementos Argos and our affiliates of over 17 years, has significant operating experience and industry knowledge, a proven track record of solid operating performances and the ability to successfully acquire and integrate businesses while focusing on our core products.

5 The leadership provided by our management team has created a strong reputation in our markets and with our customers. The 2012 Merco corporate reputation report ranked us among the top 10 companies with the best reputations in Colombia.

Additionally, our senior management team is committed to the sustainable development of our business and the quality of life of the communities in the regions where we operate. We believe that our corporate sustainability policy aims to provide long-term value to our shareholders, while also taking into account the economic, social and environmental dimensions of our business.

Our business strategies

Our objective is to maximize shareholder value, while maintaining our commitment to sustainable development. We will seek to achieve our objectives through the following principal strategies:

Provide our customers with the best value proposition

We seek to be the supplier of choice for our customers and provide them with the most efficient and effective building material. We believe that by further integrating and strengthening our business along the cement value chain, we can continue to enhance the value proposition that we provide to our customers and our shareholders.

We also strive to offer integrated solutions that provide more reliable and higher-quality products and services, depending on the type of customer we serve. In the case of our commercial clients, who buy our products to resell them to the market, we provide distinct services such as personalized delivery and a network of advisors that supports our client’s commercial activities. In the case of industrial clients, who use our products to produce other goods, we have technical advisors who provide advice on the purchase and application of our products. We also provide our clients with customer service through a hotline that allows us to build collaborative relationships with our customers.

An important result of this strategy is that our on-site presence has allowed us to develop closer relationships with our customers positioning us as providers of first-hand technical assistance on a real-time basis. For example, by participating in infrastructure projects and managing the supply of ready-mix concrete through our mobile ready- mix concrete plants, we are consolidating our leadership position in the infrastructure segment in Colombia.

Continue to focus on our core business and consolidate our market leadership in our existing and contiguous markets

Following the recent spin-off of certain of our non-cement related assets, we intend to maintain our focus on our core cement and ready-mix concrete businesses, while leveraging our international presence and operations in Colombia, Panama and the Caribbean, and the United States.

In Colombia we will focus our efforts on the expansion of our production capacity in the interior region and our distribution capability from our Cartagena plant. In the Caribbean, we have commenced ready-mix concrete operations in the Dominican Republic and Suriname in order to enhance our vertical integration in the region. In the United States, we are adding an additional mill to our South Carolina plant, which will increase our ability to respond to growing demand for cement as the economy improves. We also are modifying our terminal in North Carolina to accept delivery of cement by rail from our South Carolina and Alabama plants in the United States, further expanding our ability to supply cement to the North Carolina market.

We intend to continue managing our costs and making investments in promising and structurally attractive markets where we can benefit from our competitive advantages.

Improve operating efficiencies and reduce production costs

6 amount of clinker used to produce a given quantity of cement. We anticipate that this will allow us to produce blended cements with less capital expenditure and achieve a higher product yield in a more environmentally responsible manner. To reduce our clinker to cement ratio, we use substitute materials, such as slag or fly ash. In addition, we continue to focus on lowering our energy costs through the use of alternative fuels or a more efficient blend of fuels as well as by transitioning our cement production from the wet process to the dry process.

In addition, with the purpose of consolidating our market position and increasing our production capacity, our expansion efforts are also focused on increasing efficiency in the following ways:

We are currently building a dispatch facility at our Cartagena plant, expected to be completed in the first quarter of 2014, that will increase our annual dispatch capacity from the plant by 360% to 1.3 million tons of bagged cement and one million tons of bulk cement. The increase in dispatch capacity also is expected to increase the utilization rate of the Cartagena plant, making it more cost-efficient to operate.

We are currently expanding the installed annual production capacity at our Rioclaro, Cairo and Nare cement plants in the interior of Colombia. Following the expansion, the facilities will use the more efficient, dry process.

The additional mill we are adding into our South Carolina plant will not only increase our grinding capacity but also replace older, less efficient mill capacity at the plant.

The modification of our terminal in North Carolina will allow us to use more cost-efficient plants in Alabama and South Carolina to supply the North Carolina cement market, including our ready-mix concrete operations by rail from our more cost-efficient plants in Alabama and South Carolina.

Continue enhancing distribution and logistics network

We expect to continue to use our distribution and logistics network to strengthen our relationships with end-users of our products. In Colombia, we intend to increase the proportion of bagged cement we sell directly to retailers. We expect to continue to invest in new mixer trucks to distribute ready-mix concrete to major cities and rural areas and also expect to continue to invest in mobile ready-mix concrete plants that enable us to service infrastructure projects, such as roads and hydroelectric dams, in remote locations. We believe that the dispatch facility we are building at our Cartagena plant will further reduce the freight costs of our deliveries to ready-mix concrete companies and the bulk market. By continuing to improve our distribution and logistics network, we believe we can improve service and prompt delivery to our customers.

Further emphasis on innovation and sustainable development

We will continue to invest in innovation and sustainable development in order to strengthen our competitive advantage in the markets where we operate and enhance our ability to comply with environmental regulations in the future.

We recently created a corporate division headed by a vice-president focused on innovation, research and development of new businesses, alternative fuels and new products. As part of our innovation efforts, we have decided to build a portfolio of “green cements” in order to be well-positioned to respond to future demand and changes in the market and applicable legislation. For example, our investment in Ceratech, Inc. has given us access to a cementing technology with an almost carbon neutral footprint. In the United States, we own 66 of the 288 National Ready-Mixed Concrete Association (“NRMCA”) Green-Star certified ready-mix concrete plants in North America, including the first such plant in the United States to have achieved this certification. The Green-Star certification is awarded to plants that have achieved or are actively working towards excellence in environmental efforts and a demonstrable reduction in environmental impacts.

7 University, which will serve as our flagship research and innovation facility. The Innovation Center will operate under an “open innovation” scheme in collaboration with 16 leading education centers, including MIT, the University of Michigan, Universidad de Antioquia, EAFIT University, Universidad Nacional de Colombia, Universidad del Valle and Instituto Eduardo Torroja.

We are also committed to the sustainable development of our business and the quality of life of the communities that live in the areas where we operate.

Selectively pursue attractive acquisition opportunities

We will continue to evaluate and may selectively pursue strategic acquisitions of cement and cement-related businesses primarily to enter new contiguous markets and to complement our existing footprint in the markets where we operate. Our management team has a proven track record of acquiring and successfully integrating companies and assets into our regional platform. During the last seven years, we have made acquisitions for an aggregate amount of approximately U.S.$2 billion that have significantly increased the size and geographic footprint of our operations.

Corporate information

We are a stock corporation (sociedad anónima) organized in 1944 under the laws of Colombia. Since 1981, we have maintained a listing on the Colombian Stock Exchange and our ordinary shares trade under the symbol “CEMARGOS” (formerly “CEMCARIBE”). As of December 31, 2012, our market capitalization was approximately Ps.11,632 billion.

On May 30, 2012, we completed a spin-off of certain non-core assets to our majority shareholder, Grupo Argos, in exchange for which our shareholders received preferred shares in Grupo Argos. As a result of the spin-off, we have emerged as a cement and ready-mix concrete business focused on our core operations in the markets where we operate.

Our principal office is located at Calle 7D #43A 99, Piso 10, Torre Almagrán, Medellin, Colombia and our main telephone number is +57 4 319 8700. Our website address is www.argos.com.co. Information contained on, or accessible through, our website is not incorporated in this offering memorandum and you should not consider any such information to be part of this offering memorandum.

Recent Developments

Preliminary Operating Results for the Three Months ended March 31, 2013

Cementos Argos S.A. today announced preliminary information regarding its operating results for the three-month period ended March 31, 2013. Consolidated operating revenues for the three-month period are expected to be Ps.1,094,711 million, which would represent a 3.7% increase over the consolidated revenues of Ps. 1,055,188 million recorded for the corresponding period in 2012.

In Colombia, during the first quarter of 2013, the Company experienced an approximately 8% decline in combined cement volumes and an approximately 5% increase in ready-mix concrete volumes, compared with results for the first quarter of 2012. The volume performance was affected in part by the impact of five fewer business days in Colombia in the first quarter of 2013 due to the Easter holidays; on a per-business day basis, combined cement volumes decreased by approximately 3% and ready-mix concrete volumes increased by approximately 10%. Average realized selling prices increased for both cement and ready-mix concrete in Colombia during the first quarter of 2013. Prices for gray cement, the Company’s principal cement product, increased by 10%, while ready- mix concrete prices increased by 7%.

In Panama and the Caribbean, combined cement volumes increased by approximately 10% in the first quarter of 2013, led by a 23% increase in Panama (6% increase in gray cement, excluding the Panama Canal Project). Cement volumes delivered for the Panama Canal expansion increased over 80% during the first quarter of 2013, compared

8 with the first quarter of 2012, and deliveries of pozzolan to the Panama Canal expansion project increased by over 95% during the first quarter of 2013, as that project ramped up to its maximum expected run rate in terms of cement consumption. Ready-mix concrete volumes produced and sold in the region increased by over 6% during the first quarter of 2013. A very slight decline (less than 1%) in ready-mix concrete volumes in Panama was more than offset by the contributions from our ready-mix concrete operations in the Dominican Republic and Suriname, each of which commenced operations in the fourth quarter of 2012, and stronger demand for ready-mix concrete in Haiti. Cement prices in the region were up very slightly (less than 1%) during the first quarter of 2013. Average selling prices for cement in Panama decreased slightly due to increased shipments to the Panama Canal zone, which have a substantially lower price. This increase in shipments to the Panama Canal zone more than offset cement price increases of over 5% elsewhere in Panama. In contrast, ready-mix concrete prices in Panama rose by more than 11% during the first quarter of 2013.

In the United States, cement volumes increased slightly (less than 1%) during the first quarter of 2013, while ready- mix concrete volumes increased almost 4%. Average selling prices for both cement and ready-mix concrete reflected increases in the 5% range over the first quarter of 2012. Our sales volumes for cement compared favorably with PCA estimates of a 4% decline nationwide for the first quarter of 2013. Sales volumes were adversely affected by cold temperatures and heavy rainfall in parts of the region, particularly in Georgia, which depressed construction activity somewhat, whereas the first quarter of 2012 was characterized by more favorable weather conditions.

As a result of the revenue increases, the Company also expects to report increased operating income for the first quarter of 2013 compared with the first quarter of 2012. Increases in direct costs were in line with increased production, but our gross margin is expected to improve as a result of fixed costs being spread over a larger sales volume. Administrative and selling costs are expected to be broadly in line with the levels reported for the first quarter of 2012, which would help improve the Company’s operating margin. As in the first quarter of 2012, no asset impairments are expected to be recorded for the first quarter of 2013. The improvement in operating income is expected to be driven largely by results in Colombia, the Company’s most significant market. Although operating results in the United States segment are expected to improve, the Company still expects a small loss in the operating income of its U.S. region. We believe the underlying conditions in Panama and the Caribbean are favorable, although the operating results in that segment are also expected to reflect a greater contribution from less-profitable sales of cement to the Panama Canal expansion project.

Operating results are expected to show improvement, although reported net income for the first quarter of 2013 will be well below the figure for the first quarter of 2012, when the Company recorded net income of Ps.255,496 million, which included non-operating income of almost Ps.193,000 million from the sale of securities in its investment portfolio.

Our actual consolidated results for the first quarter of 2013 may differ from the management estimates and trends set forth above due to the completion of our financial closing procedures, final adjustments and other developments that may arise between now and the time the financial results as of and for the three-month period ended March 31, 2013 are finalized. We can give you no assurance as to consolidated results until such information is released.

9 SUMMARY OF THE GLOBAL OFFERING

The following is a brief summary of the terms of this offering and should be read together with the more detailed information and financial data and statements contained elsewhere in this offering memorandum. For a more complete description of the Offered Securities, see “Description of our Preferred Shares,” “Description of the American Depositary Shares” and “Description of Our Share Capital” in this offering memorandum.

Issuer ...... Cementos Argos S.A.

Global offering ...... We are offering 182,000,000 of our Preferred Shares in a Global Offering, which consists of an international offering in the United States and other countries outside Colombia and a concurrent Colombian offering.

International offering ...... We are offering Preferred Shares in the international offering directly or in the form of ADSs, through the initial purchasers and the Colombian Lead Placement Agent (see Plan of Distribution). These Preferred Shares, including in the form of ADSs, are being offered:

to qualified institutional buyers in the United States pursuant to exemptions from registration under Rule 144A; and

to institutions and investors outside the United States in accordance with Regulation S.

The ADSs purchased by investors will be settled in accordance with customary market practices. The Preferred Shares purchased by investors outside Colombia will be settled in Colombia, paid for in Colombian pesos and placed by the Colombian Lead Placement Agent (see Plan of Distribution).

Investors residing outside Colombia may only purchase Preferred Shares in this offering by submitting an order to the Colombian Lead Placement Agent and must comply with the applicable Colombian foreign exchange registration requirements. For a description of these registration requirements, see “Exchange Rates and Regulations of Foreign Investment—Regulation of foreign investment in Colombia.”

Colombian offering ...... We are concurrently offering Preferred Shares in Colombia.

Pro rata priority allocation to existing shareholders ...... Existing shareholders who submit orders to buy Preferred Shares in the Colombian offering at the price to the public or above shall be allocated Preferred Shares on a priority basis in an amount up to their percentage ownership of ordinary shares of our company. The number of Preferred Shares available for sale to other investors in the Global Offering will be reduced to the extent that our existing shareholders subscribe on a priority basis for Preferred Shares in the Colombian offering.

ADSs ...... Each ADS represents five Preferred Shares held by Fiduciaria Bancolombia S.A., as custodian of The Bank of New York Mellon, the depositary (the “Depositary”). The ADSs will be evidenced by American depositary receipts, or ADRs, issued under deposit agreements among us, the Depositary and all owners and holders from time to time of the ADSs

10 issued thereunder.

Offering price ...... The initial public offering price is U.S.$21.03 per ADS and Ps.7,700 per Preferred Share.

Over-allotment option ...... We are granting the initial purchasers an option, exercisable within 30 days from the date in which the Offered Securities are allocated in the Global Offering, to purchase up to an aggregate additional 5,460,000 ADSs, representing 27,300,000 Preferred Shares, solely for the purpose of covering over-allotments, if any.

Use of proceeds ...... We estimate that the net proceeds from this offering, based on the offering price of U.S.$21.03 per ADS and Ps.7,700 Preferred Share and after deducting estimated initial purchaser discount and commissions and expenses, will be approximately U.S.$729 million (using the representative market rate as of May 9, 2013, which was Ps.1,830.7 per U.S.$1.00). If the initial purchasers exercise their over-allotment option in full, we estimate that our net proceeds will be up to approximately U.S.$843 million (using the representative market rate as of May 9, 2013, which was Ps. 1,830.7 per U.S.$1.00), after deducting the estimated initial purchaser discount and commissions and expenses incurred in connection with this offering.

We intend to use up to 20% of the net proceeds from this offering to prepay existing indebtedness and the remaining proceeds for general corporate purposes to grow our core cement business internally and through acquisitions. See “Use of Proceeds”.

Shares outstanding immediately following this offering ...... Our share capital is divided into ordinary and Preferred Shares. Each share of our share capital represents the same economic interest, except that the Preferred Shares are entitled to the preferences described under “Description of our Preferred Shares” and “Dividends Dividend policy— Preferred shares.”

Our outstanding share capital immediately after completion of this offering (assuming no exercise of the initial purchasers’ overallotment option) will consist of 1,333,672,310 shares, as follows:

1,151,672,310 ordinary shares; and

182,000,000 Preferred Shares (including Preferred Shares in the form of ADSs).

Voting rights ...... Holders of our Preferred Shares will not be entitled to voting rights, except in very limited circumstances. Holders of any ordinary shares are entitled to one vote per share. See “Description of Share Capital—Voting rights and dividends.”

Holders of ADSs will have limited voting rights but may direct the voting of the Preferred Shares underlying their ADSs under the circumstances described in the deposit agreements. See “Description of the American Depositary Shares—Voting of Deposited Securities.”

Liquidation preference ...... Upon liquidation, each holder of Preferred Shares, and consequently ADSs, will be entitled to a preferential reimbursement of its contribution 11 (aporte) to Cementos Argos out of the surplus assets available for distribution to shareholders. This reimbursement, if any, is payable in Colombian pesos before any distribution or payment may be made to holders of ordinary shares. Amounts in Colombian pesos will be converted by the depositary into U.S. dollars and paid to the holders of ADSs, net of fees, expenses and any taxes. If, upon any liquidation, assets that are available for distribution among the holders of Preferred Shares and ADSs (in liquidation) are insufficient to pay in full their respective liquidation preferences, such assets will be distributed among those holders pro rata. See “Description of our share capital— Liquidation rights.”

Dividends ...... Holders of ADSs will be entitled to receive dividends, if any, paid on the Preferred Shares represented by the ADSs. Cash dividends on our Preferred Shares will be paid in Colombian pesos and will be converted by the depositary into U.S. dollars and paid to the holders of ADSs, net of fees, expenses and any taxes.

Under our dividend policy, the board of directors must consider the following factors prior to recommending a dividend to the shareholders for approval at the annual general shareholders’ meeting: our financial and economic condition, including committed and budgeted expenses and obligations and previously approved investments. In addition, as required by the Colombian Commercial Code (Código de Comercio), our by-laws and resolutions of the general shareholders’ meeting, among other relevant provisions, our dividend policy states that (i) dividends will be determined only after deduction of the amount to be set aside for the legal, statutory and occasional reserves; (ii) the distribution of any amount of dividends equivalent to an amount smaller than 50% of our distributable profits in a year, must be approved by shareholders representing at least 78% of the shares present at the meeting, or, if that supermajority is not reached, at least 50% of the profits must be distributed; and (iii) the shareholders may decide on the payment of dividends in kind by a majority of 80% of the shares represented at the meeting.

Holders of Preferred Shares (and ADSs to the extent set forth above) will be entitled to receive a minimum dividend to be paid preferentially over holders of ordinary shares, so long as dividends have been declared by the shareholders’ meeting of our company and paid by the company. If no dividends are declared, none of the holders of our share capital will be entitled to dividends. The minimum dividend to be paid to holders of Preferred Shares will be calculated as follows:

(i) Starting on the first quarterly dividend payment date, which is immediately following the settlement of the first round of the offering, and for the next twelve (12) quarterly payment dates (including the first dividend payment date) the minimum annual dividend will be a fixed amount equal to 3% of the offering price, rounded to the nearest whole number, as long as we have achieved sufficient profits.

(ii) Starting on the thirteenth (13th) quarterly dividend payment date after settlement of the first round of the offering, the minimum dividend will be equal to Ps.10 per Preferred Share, payable in quarterly installments. As of that date, the 12 minimum dividend will be adjusted in accordance with the Colombian consumer price index, or Colombian CPI and the resulting amount will be rounded to the nearest whole number.

If the profits achieved by our company are sufficient to pay the minimum dividend to both the Preferred Shares and ordinary shares, then the holders of Preferred and ordinary shares shall be entitled to receive the same dividend. If after performing such payment there are remaining distributable profits, such profits will be distributed in such a way that each share will have the right to receive the same dividend, regardless of the class to which it belongs. If on the contrary the profits achieved by our company are not sufficient to pay the minimum dividend to both classes of shares, but the profits achieved are sufficient to pay the minimum dividend to each holder of the Preferred Shares, then each holder of Preferred Shares shall be entitled to receive the minimum dividend. The remaining profits, if any, shall be allocated pro rata among the ordinary shares.

In the event the profits achieved by our company are not sufficient to pay the minimum dividend to each holder of Preferred Shares, then the profits shall be allocated entirely pro rata among the holders of Preferred Shares. In no event may the holders of ordinary shares be entitled to a dividend that is higher than that declared to the holders of Preferred Shares.

Any in kind payment of the minimum dividend will be made in accordance with the decision adopted by the general meeting of shareholders, the Company´s bylaws and applicable law.

With respect to the distributable net profit for the fiscal year 2012, the ADSs, including the ADSs settled in the second round, shall be entitled to receive dividend payments according to the rules set forth above, but only for those periods between the settlement of the first round of the Offering and the subsequent interest payment date. If the settlement date for the second round occurs after the dates described above, the payment of the overdue dividend will occur on the next interest payment date for the ordinary shares.

In order for the ADS to be entitled to receive dividend payments with respect to the distributable net profit for the fiscal year 2012, the general meeting of shareholders held in 2013 has set aside an occasional reserve.

In the case of holders of ADSs, the payment of dividends is subject to deduction of the fees of the depositary and the costs of foreign exchange conversion. See “Dividends—Dividend policy” and “Description of our share capital.”

The declaration, amount and payment of dividends are based on the distributable profits of Cementos Argos and must be approved at the ordinary annual shareholders’ meeting. For additional information regarding our dividend policy see “Dividends—Dividend policy” and “Description of the American Depositary Shares—Dividends, Other Distributions and Rights.”

13 Lock-up ...... In connection with this offering, we, Grupo Argos and our directors and executive officers will enter into lock-up agreements with the initial purchasers of this offering under which neither we nor they may, subject to certain exceptions, for a period of 180 days after the date of this offering memorandum, directly or indirectly sell, dispose of or hedge, or file or cause to be filed a registration statement with the SEC under the Securities Act or similar document with the Superintendency of Finance, relating to, any of our Preferred Shares or other share capital, including in the form of ADSs, or any securities convertible into or exercisable or exchangeable for any of our Preferred Shares or other share capital, including in the form of ADSs, without the prior written consent of the representatives of the initial purchasers. The representatives of the initial purchasers has advised us that they have no present intention or arrangement to release any of the securities subject to a lock-up agreement and any future request for such a release will be considered in light of the particular circumstances surrounding the request. See “Plan of Distribution.”

Listing ...... We have listed our Preferred Shares on the Colombian Stock Exchange (Bolsa de Valores de Colombia) under the symbol “PFCEMARGOS”. Our ordinary shares are listed on the Colombian Stock Exchange under the symbol “CEMARGOS.”

Transfer restrictions ...... Our Offered Securities have not been registered with the SEC and are subject to restrictions on transfer and resale, as described in “Transfer Restrictions.”

Certain fees and expenses ...... The depositary will charge any party depositing or withdrawing Preferred Shares or any party surrendering ADSs or to whom ADSs are issued a fee of U.S.$5.00 or less per each 100 ADSs (or portion thereof) issued or surrendered, as well as certain fees, expenses and charges, such as expenses incurred by the depositary in the conversion of foreign currency pursuant to the deposit agreement. See “Description of the American Depositary Shares—Charges of the Depositary.”

Risk factors ...... See ‘‘Risk Factors’’ beginning on page 18 and the other information included in this offering memorandum for a discussion of factors you should consider before deciding to invest in the Offered Securities.

Unless otherwise indicated, all information contained in this offering memorandum assumes:

no exercise of the initial purchasers’ option to purchase up to 5,460,000 additional ADSs to cover over- allotments of ADSs, if any; and

the Preferred Shares and ADSs to be sold in this offering will be sold at the price set forth on the cover page of this offering memorandum.

14 Summary financial and operating data

The following selected consolidated financial data should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and the related notes included in this offering memorandum. The audited consolidated annual financial statements included in this offering memorandum have been prepared in accordance with Colombian GAAP, which differ in certain important respects from IFRS as issued by the IASB. See Annex A to this offering memorandum for a qualitative discussion of certain of these differences.

Consolidated Income Statement:

Year ended December 31, 2010 2011 2012 (in millions of Ps.) Operating revenues 3,023,069 3,668,610 4,380,393 Cost of goods sold 2,423,433 2,904,365 3,468,457 Gross income 599,636 764,245 911,936

Operating expenses: Administration expenses 253,709 282,230 327,095 Selling expenses 127,327 134,722 170,274 Total operating expenses 381,036 416,952 497,369 Operating income before asset impairment 218,600 347,293 414,567 Asset impairment 88,343 74,460 - Operating income after asset impairment 130,257 272,833 414,567

Other non-operating income (expenses): Financial revenues 12,981 18,785 12,498 Dividends and shares received 81,374 72,283 35,512 Financial expenses (192,208) (195,963) (223,942) Foreign exchange difference 758 (15,848) (1,160) Other revenues 592,268 746,023 362,262 Other expenses (295,491) (493,335) (182,947) Income before tax provision 329,939 404,778 416,790

Income tax provision 31,947 25,024 17,083 Income before minority interests 297,992 379,754 399,707

Net income sharing in subordinate companies (9,114) (9,780) (12,088) Consolidated net income 288,878 369,974 387,619 Net income per share 250.8 321.2 336.6

15 Consolidated Balance Sheet:

Year ended December 31, 2010 2011 2012 Assets (in millions of Ps.) Current Assets: Cash 241,058 262,952 155,106 Negotiable investments 235,072 27,983 1,759 Receivables, net 687,873 837,267 796,519 Inventories, net 289,475 376,626 355,379 Prepaid expenses 23,617 29,530 24,910 Total Current Assets 1,477,095 1,534,358 1,333,673

Non-Current Assets: Long-term debtors 38,230 53,815 39,718 Inventories 39,412 38,237 - Long-term investments 340,108 299,457 145,094 Property, plant and equipment, net 2,870,683 4,177,137 3,779,319 Deferred charges and intangible assets 1,634,481 1,466,387 1,375,489 Other assets 44,319 26,933 19,438 Asset appraisals 9,036,539 9,184,742 3,573,985 Total Non-Current Assets 14,003,772 15,246,708 8,933,043

Total Assets 15,480,867 16,781,066 10,266,716

Liabilities Liabilities And Shareholders’ Equity: Current Liabilities Financial obligations 682,182 1,269,423 653,308 Bonds payable - 224,002 77,200 Securities 250,000 199,030 - Suppliers and accounts payable 500,749 618,347 560,779 Taxes, levies and contributions 46,445 121,499 124,320 Labor obligations 36,419 38,470 51,106 Other liabilities 249,145 322,083 302,963 Total Current Liabilities: 1,764,940 2,792,854 1,769,676

Long-Term Liabilities Financial obligations 700,167 719,717 369,717 Taxes, levies and contributions - 63,481 30,745 Labor obligations 224,990 253,366 255,627 Deferred charges 160,869 135,676 38,166 Accounts payable 136,850 111,122 75,857 Bonds payable 1,228,506 1,006,146 1,930,588 Total Non-Current Liabilities 2,451,382 2,289,508 2,700,700

Total Liabilities 4,216,322 5,082,362 4,470,376 Minority interest 88,468 81,305 82,855 Shareholders’ Equity 11,176,077 11,617,399 5,713,485 Total Liabilities And Shareholders’ Equity 15,480,867 16,781,066 10,266,716

Operating EBITDA to Net Income reconciliation

We define Operating EBITDA as operating income plus operational depreciation and amortization and asset impairment. We present Operating EBITDA because we believe it provides investors with a supplemental measure of the financial performance of our core operations that facilitates period-to-period comparisons on a consistent basis. Our management uses Operating EBITDA from time to time, among other measures, for internal planning and performance measurement purposes.

Operating EBITDA should not be construed as an alternative to income or operating income, as an indicator of operating performance, as an alternative to cash flow provided by operating activities or as a measure of liquidity (in each case, as determined in accordance with Colombian GAAP). Operating EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies, including those in the cement industry. 16 The following table sets forth the reconciliation of our net income to Operating EBITDA:

Year ended December 31, 2010 2011 2012 (in millions of Ps.) Consolidated net income 288,878 369,974 387,619 Minus Net income sharing in subordinate companies (9,114) (9,780) (12,088) Income tax provision………………………………. (31,947) (25,024) (17,083) Financial revenues…………………………………. 12,981 18,785 12,498 Dividends and shares received…………………….. 81,374 72,283 35,512 Financial expenses………………………………… (192,208) (195,963) (223,942) Foreign exchange difference……………………… 758 (15,848) (1,160) Other revenues……………………………………… 592,268 746,023 362,262 Other expenses…………………………………….. (295,491) (493,335) (182,947) Operating income after asset impairment 130,257 272,833 414,567 Plus Asset impairment………………………………….. 88,343 74,460 - Operating income before asset impairment 218,600 347,293 414,567 Depreciation included in cost of goods sold 235,094 255,741 297,601 Depreciation included in selling and administration expenses 14,377 14,072 14,803 Amortization included in cost of goods sold 22,660 24,808 25,958 Amortization included in selling and administration expenses 136,793 114,090 38,261 Minus Asset impairment………………………………….. (88,343) (74,460) - Operating EBITDA 539,181 681,544 791,190

17 RISK FACTORS

In addition to the other information in this offering memorandum, you should carefully consider the risks described below before purchasing the Offered Securities. The following risk factors are not the only risks we face and if any of the following risks actually occurs, our business, results of operations or financial condition will likely suffer. As a result, the trading price of the Offered Securities may decline, and you may lose part or all of your investment. The importance given to the following risk factors may change in the future, and other factors not disclosed below may have an important impact on us in the future.

Risks relating to Colombia and the other jurisdictions where we operate

The economies of the countries where we operate remain vulnerable to external shocks, including to the recent global economic crisis and to possible future significant economic difficulties of its major regional trading partners.

Securities issued by Colombian companies may be affected by economic and market conditions in other countries, including the United States and other Latin American and emerging market countries. Securities issued by Colombian issuers are also likely to be affected by economic and political conditions in countries neighboring Colombia: Venezuela, Ecuador, Peru, Brazil and Panama. Although economic conditions in such Latin American and other emerging market countries may differ significantly from economic conditions in Colombia, investors’ reactions to developments in these other countries may have an adverse effect on the market value of securities of Colombian issuers, including the Offered Securities.

In recent years, the markets where we operate experienced slower growth and other adverse economic and financial effects as a result of the recent global financial and economic crisis. We cannot assure you that any other financial or political crisis or similar events will not negatively affect investor confidence in emerging markets or the economies of the markets where we operate. In addition, we cannot assure you that these events will not adversely affect our company, its consolidated subsidiaries’ and related companies’ financial condition, results of operations and the price for the Offered Securities.

A substantial portion of our assets is located, and a substantial portion of our income is earned, in Colombia and, thus, we are highly dependent on economic and political conditions in Colombia.

We are a stock corporation (sociedad anónima) organized under the laws of Colombia. Although we have operations in countries other than Colombia, a substantial portion of our assets, operations and customers is located in Colombia and a substantial portion of our income is earned in Colombia and denominated in Colombian pesos. As a result, our assets and income are subject to political, economic and other uncertainties and factors in Colombia, including expropriation, nationalization, renegotiation or nullification of existing contracts, currency exchange restrictions and international monetary fluctuations. Accordingly, our financial condition and results of operations depend significantly on macroeconomic and political conditions prevailing in Colombia.

Our business and results of operations or financial condition may be adversely affected by changes in monetary, fiscal and regulatory policies, future judicial interpretation of policies and other political, diplomatic, social and economic developments that may affect Colombia or the international markets. Possible developments include fluctuations in exchange rates, inflation, instability of prices, changes in interest rates or currency depreciation, liquidity of domestic capital and debt markets, exchange controls, deposit requirements on foreign borrowings, controls on capital flows, and limits on foreign trade. The Colombian government and the Central Bank of Colombia have considerable power to determine governmental policies and actions relating to the economy and may adopt policies that negatively affect us.

Colombia has experienced several periods of violence and instability and such instability could affect the economy and our operations.

Colombia has experienced several periods of criminal violence over the past four decades, primarily due to the activities of guerillas, paramilitary groups and drug cartels. In response, the Colombian government has

18 implemented various security measures and has strengthened its military and police forces by creating specialized units. Despite these efforts, drug-related crime and guerrilla and paramilitary activities continue to exist in Colombia. Any possible escalation in the violence associated with these activities may have a negative impact on the Colombian economy in the future.

Natural disasters in Colombia, Panama, the Caribbean, the United States and the other countries and regions where we operate could disrupt our business and adversely affect our results of operations and financial condition.

We are exposed to natural disasters in Colombia, Panama, the Caribbean, the United States and the other countries and regions where we operate, such as earthquakes, volcanic eruptions, tornados, tropical storms and hurricanes. For example, in recent years, heavy rains in Colombia, attributable in part to the La Niña weather pattern, have resulted in severe flooding and mudslides. La Niña is a recurring weather phenomenon and it may contribute to flooding, mudslides or other natural disasters on an equal or greater scale in the future. Natural disasters in the Caribbean and the United States, such as hurricanes and earthquakes, also could disrupt our business and affect our results of operations and financial condition.

In the event of a natural disaster, our disaster recovery plans may prove to be ineffective, which could have a material adverse effect on our ability to carry out our businesses as currently conducted, particularly if such an occurrence affects computer-based data processing, transmission, storage and retrieval systems or destroys customer or other data. In addition, if a significant number of our employees and senior managers or service providers were unavailable because of a natural disaster, our ability to conduct our businesses could be compromised. Natural disasters or similar events could also result in substantial volatility in our results of operations for any fiscal quarter or year.

Changes in tax regulations or the interpretation of existing regulations in Colombia, Panama, the Caribbean, the United States and other countries and regions where we operate could adversely affect our results of operations and financial condition.

New tax laws and regulations and uncertainties with respect to future tax policies in the countries where we operate may materially affect us. Changes in tax-related laws and regulations or in the interpretation of existing regulations may affect tax burdens by increasing tax rates and fees, creating new taxes, limiting tax deductions and eliminating tax-based incentives and non-taxable income rules. In addition, the interpretation of tax regulations of tax authorities and courts may differ from ours, which could result in tax litigation and associated costs and penalties.

Governments of the countries where we have assets may expropriate those assets under certain circumstances.

We have assets located in Colombia, Panama, the Caribbean and the United States. Changes in policies, laws and regulations or in their interpretation or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business. For example, the Colombian constitution permits the government of Colombia to exercise eminent domain powers in respect of our Colombian assets if any such action is deemed necessary to protect public interests. As a general rule, compensation must be paid before the asset is effectively expropriated. However, the compensation may be lower than the price for which the expropriated asset could be sold in a free-market sale or the value of the asset as part of an ongoing business.

In 2006, the government of Venezuela initiated expropriation proceedings against a cement production plant and related port facilities in Venezuela owned by one of our subsidiaries. Although the expropriation proceedings have not been completed, we no longer control or administer the plant as the Venezuelan government has taken over its administration.

There can be no assurance that other countries where we operate, currently or in the future, will not initiate expropriation proceedings against us. If our assets were to be expropriated in any of the countries in which they are located, there is no guarantee that we will receive adequate compensation. No assurance can be given as to the effects that an expropriation may have on our business and results of operations.

19 It may be difficult or impossible to enforce judgments of courts of the United States and other jurisdictions against us or any of our directors, officers and controlling persons.

We are a corporation organized under the laws of Colombia and most of our directors, officers and assets reside or are located outside the United States. Although we have appointed Argos USA Corporation as our agent for service of process in the State of New York, it may be difficult or impossible for you to effect service of process on, or to enforce judgments of U.S. courts against us or our directors and officers, based on the civil liability provisions of the U.S. federal securities laws. We have been advised by our Colombian counsel that Colombian courts will enforce a U.S. judgment predicated on the U.S. securities laws through a procedural system known under Colombian law as exequatur. See “Service of Process and Enforcement of Civil Liabilities” for a discussion of the requirements for a foreign judgment to be enforced in Colombia

Risks relating to our business and industry

We operate in several countries and we are subject to risks that are specific to those countries. A slowdown in economic growth in Colombia, Panama, the Caribbean or the United States could materially impact their respective cement and ready-mix concrete industries and therefore our business and results of operations.

We have operations in Colombia, Panama, the Caribbean and the United States. We sell our products in other countries in the Caribbean and Central America. The performance of our business is heavily dependent on the performance of the construction industry in each of the countries where we operate or sell our products. The construction industry is, in turn, dependent on the growth and overall performance of the economies in those countries. Any economic slowdown in such countries may negatively impact residential, commercial and infrastructure construction activity, as well as spending levels, which may affect our business. In particular, an economic slowdown in Colombia may adversely affect the Colombian government’s plan to spend U.S.$56.2 billion) in infrastructure investments through 2021, equal to 17% of Colombia’s 2011 GDP. Moreover, the construction industry is cyclical and significantly sensitive to factors beyond our control, including the political, legal and social stability environment of the countries where we operate.

The cement industry in Colombia is highly dependent on construction activity in the country, which, in turn, depends on the purchasing power of consumers and commercial and infrastructure investment. Adverse economic conditions could adversely affect the construction industry and activity overall and result in a decrease in demand for cement products.

We have a large exposure to the U.S. market. For the year ended December 31, 2012, our operating revenues in the United States were Ps.1,201,388 million, which represented 27.4% of our consolidated operating revenues. The economic slowdown in the United States associated with the sub-prime mortgage crisis and other financial and related difficulties in the United States, including potential government spending restrictions at the end of calendar year 2012 (commonly referred to as the fiscal cliff), poses a risk to our earnings as home building, consumer spending and construction activity generally could continue to be negatively affected. The timing of a housing recovery remains uncertain given the current market environment, tight credit conditions and housing oversupply. As part of the announced government fiscal stimulus package, the U.S. Congress passed the American Recovery and Reinvestment Act of 2009, which provided for approximately U.S.$85 billion for infrastructure spending. However, spending under this program has not been effective to offset the decline in cement and ready-mix concrete demand as a result of current economic conditions. If the current economic slowdown in the United States worsens, we may experience a significant decline in the demand for our products, which may, in turn, result in lower sales, lower prices and a reduction in our revenues and income.

The cement and ready-mix concrete industries are highly competitive.

The markets for cement and ready-mix concrete are highly competitive. Competition is based largely on price and, to a lesser extent, quality and service.

We compete in the cement and ready-mix concrete businesses with other suppliers and importers of these products in some of our markets. As a result, we are subject to significant price competition. Our profitability is contingent

20 upon the level of demand for building materials and on our ability to control operating costs. As a result, we may experience price, volume or margin declines in the future, which may result in an adverse effect on our business, results of operations and financial condition.

In the United States, our competitors’ current excess production capacity may affect price recovery and result in highly competitive dynamics.

Our competitiveness and our long-term profitability depend on our ability to reduce costs and maintain efficient operations.

Our competitiveness and long-term profitability are dependent upon our ability to reduce costs and maintain integrated and efficient operations. Such efforts include changing from the wet process at our cement production plants to the more cost-efficient dry process, as well as minimizing the costs of the limestone, sand, gravels, coal, power, labor and transportation we use. Our production costs also are affected by production volumes and, therefore, our ability to maintain production levels and maximize capacity utilization is a key factor in determining our overall cost competitiveness.

Moreover, costs associated with the inland distribution of cement are high in relation to the value of cement, especially in markets like Colombia where retail demand is significant and where the railway infrastructure is underdeveloped (distribution by railway being more cost-effective than distribution by truck). Hence, cement is traditionally sold from local and regional sources to diminish inland transportation costs, while cement plants are usually located close to the regional markets they target. Consequently, shifts in local markets and/or product ranges might lead to impairment of the assets associated with the supply of a displaced market.

We are subject to exchange rate fluctuations, which may be harmful to our business and reported results.

As of December 31, 2012, 47.8% of our sales were made outside of Colombia in terms of consolidated operating revenues. The impact of fluctuations in exchange rates, especially the peso/U.S. dollar rate on our operations has been and may continue to be material.

Colombia has adopted a floating exchange rate system. The Central Bank of Colombia maintains the power to intervene in the exchange market in order to consolidate or dispose of international reserves, and to control any volatility in the exchange rate. From time to time, there have been significant fluctuations in the exchange rate between the Colombian peso and the U.S. dollar. Unforeseen events in the international markets, fluctuations in interest rates or changes in capital flows may cause exchange rate instability that could generate sharp movements in the value of the peso. Given that a portion of our assets and liabilities is denominated in, or indexed to, foreign currencies, especially the U.S. dollar, sharp movements in exchange rates may negatively impact our results. In addition, exchange rate fluctuations may adversely impact the value of dividends paid to holders of our ADSs as well as the market price and liquidity of ADSs. Furthermore, there can be no assurance that the Colombian peso will not depreciate or appreciate relative to other currencies in the future.

Increases in energy costs may have a material adverse effect on our operating costs.

Companies in the cement industry consume significant amounts of energy, the cost of which has significantly increased worldwide in recent years. In an attempt to reduce our exposure to fluctuating energy costs, we have implemented the use of alternative fuels in our operations in the United States and are currently examining the possibility of using alternative fuels in our operations in Colombia. We also rely on our auto-generation power facilities to supply a substantial portion of our electricity needs in Colombia.

Despite these measures, we cannot assure you that our operations would not be materially and adversely affected in the future if energy costs increase. If we are unable to continue satisfying most of our needs for energy for our cement operations or if our need for these products exceeds our capacity to produce them internally, we would be required to obtain energy from third parties at much higher prices. This may expose us to the risks associated with the volatility of energy prices and cause us to experience significant increases in our production costs, which, in turn, may affect our ability to compete.

21 A reduction in private or public construction projects may have a material adverse effect on our business, financial condition and results of operations.

Significant interruptions or delays in, or the termination of, private or public construction projects may adversely affect our business, financial condition and results of operations. Private and public construction levels in the markets where we operate depend on investments in the region which, in turn, are affected by economic conditions. The level of public infrastructure construction also depends, to a great extent, on the priorities and financial resources of the national, regional and local governmental authorities.

The Colombian government, for example, has recently promoted significant public spending in infrastructure projects in response to an infrastructure shortage. Colombian governmental authorities may decide to limit the scope of infrastructure projects if they face budget constraints. In addition, the rate of awards of infrastructure projects in Colombia has been and continues to be slower than we anticipated. These and other delays can also result from new administrations at the national, regional or local level reviewing the terms of project contracts previously granted or pursuing different priorities than prior administrations.

We cannot assure you that the Colombian government will continue to promote recent levels of public infrastructure spending in our market. A reduction in public infrastructure spending in Colombia would adversely affect our business, financial condition and results of operations.

The introduction to the market of cement and ready-mix concrete substitutes or the development of new construction techniques could have a material adverse effect on our business, financial condition and results of operations.

Materials such as plastic, aluminum, ceramics, glass, wood and steel can be used in construction as a substitute for cement and ready-mix concrete. In addition, research aimed at developing new construction techniques and materials may introduce new products in the future. The use of substitutes for cement or ready-mix concrete could cause a significant reduction in the demand and prices for our cement products. Furthermore, technology, knowledge and innovation are essential to our business. If we do not develop the right technology or do not obtain the expertise to operate new technology or to improve our processes, do not have access to, or deploy the knowledge necessary to apply and improve such technology effectively, our profitability and our earnings may be adversely affected.

The construction industry is sensitive to weather conditions. Adverse weather conditions may lead to a decrease or delay in construction activity and therefore to a decrease in the demand for our products.

Construction activity, and thus demand for our products, decreases substantially during cold or rainy seasons. Consequently, demand for our products may be significantly lower during periods of low construction and infrastructure activity due to the winter season in temperate countries (e.g., extreme cold in the United States) or the rainy season in tropical countries. In the United States, one of our principal markets, cold weather causes a reduction in our first quarter sales and, to a lesser extent, our fourth quarter sales. Our operations in these and similar markets are seasonal, with sales generally increasing during the second and third quarters due to improved weather conditions. Furthermore, high levels of rainfall, such as the ones experienced under La Niña during 2010 in Colombia, can adversely impact our operations during these periods as well. Such adverse weather conditions can materially and adversely affect our results of operations and profitability if they occur with unusual frequency or intensity, during abnormal periods, or last longer than usual in our major markets, especially during peak construction periods.

We may not be able to make capital investments, obtain financing to make those capital investments or realize the benefits of our capital investments.

Our business is capital intensive. The development of new production facilities, the maintenance of machinery and equipment for both our cement and ready-mix concrete operations and compliance with applicable laws and regulations requires substantial capital expenditures. There can be no assurance that our new projects will be completed on time or at the estimated cost. Factors that could result in the delay or cancellation of planned capacity

22 increases include construction difficulties and the failure to obtain all requisite permits and other consents. Especially in developed countries, it is becoming increasingly difficult to obtain permits for new installations and quarries or extensions of existing permits. Difficulties in obtaining permits could result in significant delays of future investments and growth or even in the suspension of particular projects.

We may also need additional capital in the future to finance these capital investments. Additional financing may not be available on favorable terms when needed, if at all. If we are unable to obtain adequate financing on acceptable terms, we may be unable to develop or enhance our products, take advantage of future business opportunities or respond to competitive pressures, any of which could adversely affect our business, results of operations and financial condition.

There can be no assurance that we will be able to maintain or increase our production levels or generate sufficient cash flow, or that we will have access to sufficient investments, financing or other alternatives to continue our expansion and production program.

We may not be able to maintain our growth strategy through acquisitions or realize the expected benefits of our past and future acquisitions.

We have made several acquisitions in the past decade and we intend to continue making acquisitions in order to strengthen, develop and grow our existing operations. Any acquisitions we have completed or may complete in the future are subject to integration and development risks. The success of our acquisition strategy depends upon our ability to manage disparate operations and integrate distinct corporate cultures, identify targets with growth potential, manage our objectives as a corporate group, make reasonable projections of future cash flows, integrate them into our operations, complete acquisitions at an appropriate cost and achieve an acceptable rate of return from our acquisitions, including past acquisitions.

We may face difficulties or experience delays while integrating our business with the businesses we have acquired or intend to acquire. In addition, we may not be able to fully realize the expected benefits or synergies from past or future acquisitions or any such benefits may be slow to be realized compared with our expectations. Integration of new acquisitions may require substantial time from management. These risks include potential disruptions of our businesses and the assumption of unexpected or greater than expected liabilities.

We may become liable for unexpected liabilities arising from acquired assets or businesses, including environmental liabilities. Indemnification agreements with the sellers of such assets may be non-existent, unenforceable or insufficient to cover all potential liabilities and unforeseen costs. We also may be subject to regulatory interference, the imposition and maintenance of regulatory controls, procedures and policies and the impairment of relationships with employees and counterparties should difficulties arise in integration. Moreover, the value of any business that we acquire or in which we invest may be less than the amount that we paid or may not yield the expected results.

Restrictions in our debt agreements may limit our ability to operate our business and incur additional indebtedness.

The agreements governing indebtedness impose restrictions on our operations and activities, as well as on our ability to incur additional indebtedness or grant guarantees. The most significant restrictions in our debt agreements relate to our ability to, among other things, incur or guarantee additional indebtedness, pay dividends or make distributions, make restricted payments, including investments, create liens, sell or otherwise dispose of assets, amend material contracts or invest in companies, prevent certain balance sheet items or ratios from falling below an agreed level, and enter into mergers or consolidations.

These restrictions and covenants may limit our ability to operate our businesses and may prohibit or limit our ability to enhance our operations or take advantage of potential business opportunities as they arise. Our breach of any of these covenants or our failure to meet any of these conditions could result in a default under any or all of such indebtedness. Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions. In addition, if we are unable to generate sufficient cash flow from operations, we may be required to refinance outstanding debt or to obtain additional financing. There can be no

23 assurance that a refinancing would be possible or that any additional financing would be obtainable on acceptable terms.

We obtain a significant amount of raw materials from sources that we operate and/or exploit pursuant to governmental concessions. If we are unable to obtain, maintain or renew such governmental concessions, we may have to obtain raw materials from third parties, which may lead to increased production costs.

Our production process involves the use of raw materials such as limestone, slag, fly ash and gypsum and also requires coal and water. In some of the countries where we operate, we obtain such materials from our own quarries pursuant to mining concessions that require us to comply with certain terms in order to obtain, maintain or renew such concessions.

In Colombia, we obtain a substantial portion of the limestone required for our production process from quarries that we operate and exploit under mining concessions. The governmental agencies that have granted us such concessions (e.g., the Ministry of Mines and Energy (Ministerio de Minas y Energía)) may terminate any of our mining concessions if we materially violate the terms of our concession agreements. A material violation of the terms of the concession contracts would occur, for example, if we fail to make required payments of royalties or other amounts due to the government.

If any authority terminates our concessions, permits or licenses, we may be unable to satisfy our needs for certain raw materials or may be required to acquire certain raw materials from third parties, which may result in a decrease in our production, an increase in our production costs and a decrease in our income, which may, in turn, result in an adverse effect on our business, results of operations and financial condition.

Some of our ports located in the jurisdictions where we operate are subject to governmental concessions that may be terminated under certain circumstances. Other port facilities, especially in the United States, operate pursuant to lease agreements that may be terminated under certain circumstances.

We operate ports in Colombia and the United States from which we ship and receive raw materials, and export and import cement and clinker. The operation of ports in Colombia is subject to certain requirements and regulations, including the need to obtain governmental concessions. The governmental authorities that grant concessions may terminate them under certain circumstances, including as a result of a material default by us on any obligation under the port concessions, including defaults on fee payments, failure to maintain continued operations and non- compliance with obligations regarding capital investments. If port concessions were terminated, our ability to export or import our products and raw materials at competitive prices may be significantly reduced, which may adversely affect our cement related business, results of operations and financial condition.

Our seaport operations in the United States are subject to certain requirements and regulations. Except for our Houston port, which we own, we operate our U.S. ports under lease agreements. If our landlords fail to comply with their obligations under port concessions or permits, or if the leases under which we operate ports in the United States are not renewed or terminated, we may not be able to continue operating such ports. If port leases were terminated, our ability to export or import our products and raw materials at competitive prices may be significantly reduced, which may, in turn, result in an adverse effect on our business, results of operations and financial condition.

Our income may be severely affected by business interruptions, reductions in our levels of production and loss of assets.

Cement and ready-mix concrete production employs heavy machinery that is not easily replaceable and has elevated fixed costs. Any interruption, slow down, or loss in the production cycle at any facility may cause our productivity and results of operations to decrease significantly during the affected period. Our cement and ready-mix concrete production relies on critical pieces of equipment such as cement kilns, crushers and grinders. Work stoppages, operational failures, maintenance failures, accidents or natural disasters may totally or partially interrupt or impair the service of such equipment. A reduction or an interruption of our production may result in an adverse effect on our business, results of operations and financial condition.

24 Our business is subject to certain operational risk and performance by third parties.

Our operations are subject to industry-specific risks that are, to a large extent, beyond our control. Such factors include the availability of raw materials, coal and other fuels, water and power. In addition, our business is subject to operational risks such as interruption of power supplies, industrial action or disputes, strikes by employees, transportation strikes, environmental hazards, technical failure, fire, explosions or other accidents at a quarry, plant, port or related facilities. These risks and hazards could result in damage to, or destruction of, properties or production facilities, or may reduce or cause production to cease at those properties or production facilities. These risks may also result in personal injury, environmental damage, business interruption and possible legal liability or may result in actual production falling short of our production estimates. There can be no assurance that our operating risks and the costs associated with them will not adversely affect our results of operations and financial condition.

We are also dependent on critical third-party suppliers, including providers of data services, and service providers and we are exposed to the risk that they do not perform their obligations in a timely and proper manner. These suppliers and service providers include minerals, fuels and electricity providers, transportation service providers, mine exploration and exploitation services, and equipment repair and maintenance providers. A failure or delay in the rendering or delivery of these services may affect our results of operations and financial condition.

A dispute with the labor unions that represent our employees could have an adverse effect on our business, financial condition and results of operations.

As of December 31, 2012, approximately 31% of our employees were members of employee unions. Our practice is to extend some of the benefits we offer our unionized employees to non-unionized employees. Although we consider our relations with our employees to be positive, we cannot assure you that we will not experience work slowdowns, work stoppages, strikes or other labor disputes in the future, which could adversely affect our business, financial condition and results of operations.

Our operations are subject to social risks.

Our cement and ready-mix concrete operations and our quarry operations are subject to social risks, including protests by communities surrounding our operations and project sites. While we are committed to operating in a socially responsible manner, we may face opposition from local communities with respect to our current and future development and exploration projects, which could adversely affect our business, results of operations and financial condition.

In particular, new projects in Colombia may require the prior approval of local indigenous communities and Afro- Colombians, pursuant to Law 70 of 1993 and article 330 of the Colombian Constitution, which establish a prior consultation procedure (procedimiento de consulta previa) that private entities must carry out with local indigenous communities and Afro-Colombians when projects, such as mining concessions or any other type of project involving the exploitation of those natural resources, directly affect the natural resources located in the areas in which such persons live. Local indigenous communities and Afro-Colombians do not have a veto right. The prior consultation procedure is intended to allow parties to reach an agreement about the characteristics of the project in order to manage its impact on the area. We cannot assure you that this procedure will not adversely affect our new projects in Colombia and have an adverse effect on our business, financial condition and results of operations.

Our success depends on key members of our management.

Our success depends largely on the efforts and strategic vision of our executive management team and board of directors. The loss of some or all of our executive management and members of our board of directors could have a material adverse effect on our ability to conduct our business, results of operations and financial condition.

The execution of our business plan also depends on our ongoing ability to attract and retain qualified employees capable of operating our facilities. If we are unable to hire, train and retain qualified employees at a reasonable cost,

25 we may be unable to successfully operate our business or reach planned production levels in a timely manner and, as a result, our business, financial condition and results of operations could be adversely affected.

The cement and ready-mix concrete industries in the countries where we operate are subject to significant environmental laws and regulations.

Our operations are subject to laws and regulations relating to the protection of the environment in the various countries where we operate. These laws and regulations provide, among other things, for certain permitted levels of discharge or emission of chemicals, dust or other pollutants into the air, soil or water. To comply with these laws and regulations, we may be required to make significant investments or incur costs in order to address such discharges or emissions. In the event we inadvertently exceed permitted levels of discharge or emission, we could face significant liabilities to government entities and third parties.

Due to increased public concern regarding emissions of greenhouse gases and the protection of the environment, and taking into account that carbon dioxide emission levels in the cement and ready-mix concrete industries are particularly high as a result of the chemical and combustion processes that take place in order to produce cement and other products, the cement and ready-mix concrete industries may in the future be subject to stricter laws and regulations. Moreover, the operations of cement and ready-mix concrete producers might be subject to numerous other national and supranational environmental, health and safety laws, regulations, treaties and conventions.

Although we monitor international efforts to regulate greenhouse gas emissions, it is often difficult to estimate the potential impact of any international agreements under the United Nations Framework Convention on Climate Change or through other international or multilateral instruments. A Conference of Parties was held in November- December 2011 in Durban, South Africa, extending the Kyoto Protocol for five more years (until 2017). The Durban package states that a new international agreement with legal force that would include emission reduction targets for developing countries must be agreed by 2015 and implemented by 2020.

Given the uncertain nature of the actual or potential statutory and regulatory requirements for greenhouse gas emissions at the national and international levels, we cannot predict the impact on our operations or financial condition or make a reliable estimate of the potential costs to us that may result from such requirements. However, the impact of any such requirements, whether individually or in the aggregate, could have a material economic impact on our operations in the countries where we operate.

For example, in our operation we use a significant amount of coal to fuel our kilns in our cement plants and as fuel in our power plants. If regulations focusing on carbon dioxide emission levels were to be enacted by Colombia, compliance with these regulations may increase the cost of using coal as our primary source of fuel.

See “Industry and Regulatory Matters—Regulatory Matters—Environmental laws” for an additional discussion of the environmental regulations to which we are subject.

There can be no assurance that stricter environmental laws and regulations will not (i) increase our exposure to liabilities to governments or third parties, (ii) result in a decrease of our production levels or in work stoppages or in a material increase in the cost of production or (iii) require us to make significant investments in the future. All of these factors may result in an adverse effect on our business, results of operations and financial condition.

We may not be able to fully detect illegal or improper activities on a timely basis, which could expose us to sanctions or liability.

Our port facilities, ships, trucks and our distribution network at large may be used for transporting or smuggling narcotics, illegal substances or contraband. Our policies and procedures aimed at detecting and preventing the use of our distribution and transportation network for illegal activities may not completely eliminate instances where such network may be used by other parties or our agents and employees to engage in illegal or improper activities. To the extent we fail to detect illegal activities and fully comply with relevant laws and regulations, governmental agencies in the countries or regions where we operate may impose fines and other penalties. In addition, our business and reputation could suffer if someone uses our distribution and transportation network for illegal or improper purposes.

26 We are subject to risks related to litigation and administrative proceedings that could adversely affect our business and financial performance in the event of an unfavorable ruling.

The nature of our business exposes us to litigation relating to product liability claims, labor, health and safety matters, environmental matters, regulatory, tax and administrative proceedings, governmental investigations, tort claims and contract disputes, among other matters. In the past, we have been subject to antitrust, tax and other proceedings or investigations. While we contest these matters vigorously and make insurance claims when appropriate, litigation is inherently costly and unpredictable, making it difficult to accurately estimate the outcome of actual or potential litigation. Although we establish provisions as we deem necessary, the amounts that we reserve could vary significantly from any amounts we actually pay. We cannot assure you that these or other legal proceedings will not materially affect our ability to conduct our business, results of operations and financial condition in the event of an unfavorable ruling. These or other legal proceedings may demand that our management devote substantial amounts of time to litigation matters.

Insurance, guaranty and warranty coverage may not be adequate.

We believe that we currently maintain customary and adequate insurance of the types and amounts that are generally consistent with industry practice in each country where we operate, including product liability insurance and consumer-related liability insurance. However, there can be no assurance that such insurance coverage will continue to be available on commercially reasonable terms or that the amounts for which we are insured, or the proceeds of such insurance, will compensate us fully for our losses. In the event there is a total or partial loss of our facilities, any insurance proceeds that we may receive may not be sufficient in any particular situation to effect a restoration of our facilities to the condition that existed prior to such loss, which may affect our cash flows, financial condition and results of operations.

In the event of a total or partial loss of our facilities, certain items of equipment may not be easily replaced, or replaced in a timely manner, since they may be so expensive or system-specific that they are not readily available. Accordingly, although we may have insurance, guaranty or warranty coverage over such equipment, the location of our facilities or limitations on our ability to procure replacement equipment may give rise to significant delays in replacement and thereby cause losses of our sales. This could have a materially adverse effect on our cash flows, results of operations and financial condition.

We have entered into transactions with related parties, which may result in conflicts of interest.

We have entered into certain transactions with related parties. Many of these transactions occur in the ordinary course of our business. Such transactions may create potential conflicts of interest that could adversely affect our interests. See “Related Party Transactions.” While we believe such transactions have been and will be negotiated on an arm’s-length basis in accordance with our internal policies and corporate governance practices, there can be no assurance that we are obtaining the most favorable terms possible or that such transactions would not give rise to conflicts of interest that could have an impact on our prospects, results of operations and financial condition.

Our controlling shareholder’s interests may be different than yours.

Grupo Argos is our largest shareholder, controlling 60.68% of our outstanding voting stock as of the date of this offering memorandum. Our controlling shareholder has the ability to elect a majority of the members of our board of directors and control substantially all matters that are decided by a shareholders’ vote, including fundamental corporate transactions such as mergers, divestitures and other material transactions or the payment of dividends. Our controlling shareholder’s rights may limit our ability to respond rapidly to market developments, engage in certain transactions or to otherwise make changes to our business and operations. Our controlling shareholder may have interests that differ from those of our Offered Securities holders.

27 Risks relating to the offering

The market price of the Offered Securities may fluctuate significantly, and you could lose all or part of your investment.

Volatility in the market price of the Offered Securities may prevent you from being able to sell your Offered Securities at or above the price you paid for them. The market price and liquidity of the market for the Offered Securities may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, among others:

actual or anticipated changes in our results of operations, or failure to meet expectations of financial market analysts and investors;

investor perceptions of our prospects or our industry;

operating performance of companies comparable to us and increased competition in our industry;

new laws or regulations or new interpretations of laws and regulations applicable to our business;

general economic trends in the countries where we operate, especially in Colombia;

catastrophic events, such as earthquakes and hurricanes or other natural disasters; and

developments and perceptions of risks in Colombia and in other countries where we operate.

You may not be able to sell your Offered Securities at the time or at the price you desire because an active or liquid market for these securities may not develop.

Prior to this offering, there has not been a public market for the Offered Securities. We cannot predict whether an active liquid public trading market for the Offered Securities will develop or be sustained. Active, liquid trading markets generally result in lower price volatility and respond more efficiently to orders from investors to purchase or sell securities. Liquidity of a securities’ market is often a function of the volume of the underlying Offered Securities that are held publicly by unrelated parties. As a consequence, the absence of a liquid market can cause the price and financial flexibility of the Offered Securities to decrease substantially.

We have applied to list our Preferred Shares on the Colombian Stock Exchange. The Colombian Stock Exchange is generally a less liquid and a more volatile trading market than the New York Stock Exchange. For example, the Colombian Stock Exchange had a market capitalization of approximately Ps.462.7 trillion (U.S.$260.9 billion) and an average daily trading value of approximately Ps.142 billion (U.S.$78 million), in each case as of December 31, 2012. In contrast, the New York Stock Exchange had a market capitalization of approximately U.S.$16.8 trillion and an average daily trading value of approximately U.S.$54 billion, in each case as of December 31, 2012. Concentration is also significantly higher in the Colombian securities market than in the major securities markets in the United States.

Substantial sales of the Offered Securities after this offering could cause the price of the Offered Securities to decrease.

Our controlling shareholder will continue to hold a large number of our ordinary shares after this offering. We and our controlling shareholder, among others, will agree with the Initial Purchasers not to offer, sell, contract to sell or otherwise dispose of or hedge any Offered Securities or ordinary shares, without the prior written consent of the Initial Purchasers, during the 180-calendar day period following the date of the offering memorandum, subject to certain exceptions. After this 180-day period expires, these securities will be eligible for sale. The market price of the Offered Securities could decline significantly if we or our controlling shareholder sell securities in our company or the market perceives that we or our controlling shareholder intend to do so.

28 The ability of ADS holders to receive cash dividends may be limited.

The ability of ADS holders to receive cash dividends may be limited by the ability of the depositary to convert cash dividends paid in Colombian pesos into U.S. dollars. Under the terms of our deposit agreements with the depositary for the ADSs, the depositary will convert any cash dividend or other cash distribution we pay on the Preferred Shares underlying the ADSs into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If this conversion is not possible or if any government approval is needed and cannot be obtained, the deposit agreements allow the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. If the exchange rate fluctuates significantly during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the dividend distribution.

Preemptive rights may not be available to ADSs holders.

We may choose to offer the holders of the same class of shares (including Preferred Shares underlying ADSs) the right to purchase a number of shares of such class sufficient to maintain their existing percentage ownership of our Preferred Shares. These rights are called preemptive rights. Holders of ADSs may not be able to exercise their preemptive rights through the depositary unless a registration statement under the Securities Act is effective with respect to such rights and the class of shares being offered or an exemption from the registration requirement thereunder is available. Although we are not obligated to, we intend to consider at the time of any rights offering the costs and potential liabilities associated with any such registration statement, the benefits to us from enabling the holders of the ADSs to exercise those rights and any other factors deemed appropriate at the time, and will then make a decision as to whether to file a registration statement. Accordingly, we might decide not to file a registration statement in some cases.

To the extent holders of ADSs are unable to exercise these rights because a registration statement has not been filed and no exemption from the registration requirement under the Securities Act is available, the depositary may attempt to sell the holders’ preemptive rights and distribute the net proceeds from that sale, if any, to such holders. The depositary, after consulting with us, will have discretion as to the procedure for making preemptive rights available to the holders of ADSs, disposing of such rights and making any proceeds available to such holders. If by the terms of any rights offering or for any other reason the depositary is unable or chooses not to make those rights available to any holder of ADSs, and if it is unable or for any reason chooses not to sell those rights, the depositary may allow the rights to lapse. Whenever the rights are sold or lapse, the equity interests of the holders of ADSs will be proportionately diluted.

Our Preferred Shares have limited voting rights.

Our corporate affairs are governed by our by-laws and Colombian law. Under our by-laws and Colombian law, our preferred stockholders may have fewer rights than stockholders of a corporation incorporated in a U.S. jurisdiction. Holders of our Preferred Shares are not entitled to vote for the election of directors or to influence our management policies. Under our by-laws and Colombian corporate law, holders of Preferred Shares have no voting rights in respect of Preferred Shares, other than in limited circumstances as described in “Description of our Preferred Shares” and “Description of our Share Capital.”

ADSs holders may encounter difficulties in exercising their limited voting rights with respect to the shares underlying ADSs. Also, under some circumstances, ADS holders may not be able to vote by giving instructions to the depositary in those limited instances in which the Preferred Shares represented by the ADSs have the power to vote.

We are entitled to amend the deposit agreements and to change the rights of ADS holders under the terms of such agreements, without the prior consent of the ADS holders.

We and the depositary are entitled to amend the deposit agreements and to change the rights of the ADS holders under the terms of such agreements, without the prior consent of the ADS holders. Any amendment related to an increase in fees or charges or that might hinder the rights of the ADS holders will not become effective until 30 days

29 after the ADS holders have received notice of such amendment and such holders will have no right to any compensation whatsoever.

ADSs do not have the same tax benefits as other equity investments in Colombia.

Although ADSs represent our Preferred Shares, they are held through a fund of foreign capital in Colombia which is subject to a specific tax regulatory regime. Accordingly, the tax benefits applicable in Colombia to equity investments, in particular those relating to dividends and profits from sale, are not applicable to ADSs, including the ADSs.

Exchange rate fluctuations may adversely affect the foreign currency value of the Shares and any dividend or other distributions.

Our Preferred Shares underlying the ADSs will be quoted in Colombian pesos on the Colombian Stock Exchange. Dividends and other distributions, if any, in respect of the Preferred Shares will be declared in Colombian pesos for payment to shareholders by Deceval, acting on our behalf. Fluctuations in the exchange rate between Colombian pesos and U.S. dollars will affect, among other things, the foreign currency value of the proceeds which a shareholder would receive upon sale in Colombia of the Preferred Share, the value of dividend and other distributions and proceeds which a shareholder would receive upon sale in Colombia of the Preferred Shares.

We follow certain Colombian standards of corporate governance, which may differ from the requirements in other jurisdictions.

We currently follow certain Colombian practices concerning corporate governance and intend to continue doing so. Accordingly, holders of our Preferred Shares will not have the same protections afforded to shareholders of companies that are subject to the corporate governance requirements of other jurisdictions, including New York Stock Exchange rules.

For example, the New York Stock Exchange listing standards provide that the board of directors of a U.S.-listed company must have a majority of independent directors at the time the company ceases to be a “controlled company.” Under Colombian law, a listed Colombian company is required to have, at all times, at least 25% of independent directors.

The New York Stock Exchange listing standards also require that U.S.-listed companies, at the time they cease to be “controlled companies,” have a nominating/corporate governance committee and a compensation committee. Each of these committees must consist solely of independent directors and must have a written charter that addresses certain matters specified in the listing standards. Colombian regulations recommend listed companies to have a nominating committee and a corporate governance committee on a “comply or explain” basis.

Furthermore, under New York Stock Exchange rules, the audit committee of a U.S.-listed company must have a minimum of three members and all the audit committee members must be independent. Under Colombian law, the audit committee of a Colombian issuer is required to include, at a minimum, all independent members.

In addition, New York Stock Exchange rules require that the directors of U.S.-listed companies that are not executive officers meet on a regular basis without management participation. There is no similar requirement under Colombian law even though our Corporate Governance Code does allow directors to meet without management participation.

30 USE OF PROCEEDS

We estimate that the net proceeds from this offering, based on the offering price of U.S.$21.03 per ADS and Ps.7,700 Preferred Share and after deducting estimated initial purchaser discount and commissions and expenses, will be approximately U.S.$729 million (using the representative market rate as of May 9, 2013, which was Ps.1,830.7 per U.S.$1.00).

We currently intend to use up to 20% of the net proceeds from this offering to prepay indebtedness and the rest of the net proceeds for general corporate purposes, which may include additions to working capital, capital expenditures and acquisitions. We routinely evaluate acquisitions and investments that are aligned with our strategic goals. As a result we may also acquire, or invest in, businesses that are complementary to our core business.

Temporarily, and only in limited cases, we could invest the net proceeds of this offering according to applicable laws and regulations, while the final investment of the net proceeds is defined.

31 DIVIDENDS

Dividend policy

Under our dividend policy, the board of directors must consider the following factors prior to recommending a dividend to the shareholders for approval at the annual general shareholders’ meeting: our financial and economic condition, including committed and budgeted expenses and obligations and previously approved investments. In addition, as required by the Colombian Commercial Code (Código de Comercio), our by-laws and resolutions of the annual general shareholders’ meeting, among other relevant provisions, our dividend policy states that (i) dividends will be determined only after deduction of the amount to be set aside for the legal, statutory and occasional reserves; (ii) the distribution of any amount of dividends equivalent to an amount smaller than 50% of the distributable profits of Cementos Argos S.A. in a year (determined on an unconsolidated basis) must be approved by shareholders representing at least 78% of the shares present at the meeting, or, if that supermajority is not reached, at least 50% of such profits must be distributed; and (iii) the shareholders may decide on the payment of dividends in kind by a majority of 80% of the shares represented at the meeting.

Ordinary shares

Our ability to pay dividends is subject to our results of operations, net income and financial condition for each year. Holders of our ordinary shares are entitled to receive dividends on a pro rata basis in accordance with their respective number of shares held.

Preferred Shares

Holders of Preferred Shares (and ADSs to the extent set forth above) will be entitled to receive a minimum dividend to be paid preferentially over holders of ordinary shares, so long as dividends have been declared by the shareholders’ meeting of our company and paid by the Company. If no dividends are declared, none of the holders of our share capital will be entitled to dividends. The minimum dividend to be paid to holders of Preferred Shares will be calculated as follows:

(i) Starting on the first quarterly dividend payment date immediately following the settlement of the first round of the offering, and for the next twelve (12) quarterly payment dates (including the first dividend payment date) the minimum annual dividend will be a fixed amount equal to 3% of the offering price, rounded to the nearest whole number, as long as we have achieved sufficient profits.

(ii) Starting on the thirteenth (13th) quarterly dividend payment date after settlement of the first round of the offering, the minimum dividend will be equal to Ps.10 per Preferred Share, payable in quarterly installments. As of that date, the minimum dividend will be adjusted in accordance with the Colombian consumer price index, or Colombian CPI and the resulting amount will be rounded to the nearest whole number.

Payment of dividends

Dividends are paid to holders of our ordinary and Preferred Shares as of a record date determined by us. In order to allow for the settlement of securities, under article 3.1.1.12 of the General Rules of the Colombian Stock Exchange (Reglamento General de la Bolsa de Valores de Colombia), investors who purchase shares of a publicly-held company such as us within four business days prior to a dividend payment date do not have the right to receive such dividend payment. Dividends on issued and outstanding ordinary shares are distributed pro rata.

If the profits achieved by our company are sufficient to pay the minimum dividend to both the Preferred Shares and ordinary shares, then the holders of Preferred and ordinary shares shall be entitled to receive the same dividend. If after performing such payment there are remaining distributable profits, such profits will be distributed in such a way that each share will have the right to receive the same dividend, regardless of the class to which it belongs. If, on the contrary, the profits achieved by our company are not sufficient to pay the minimum dividend to both classes of shares, but the profits achieved are sufficient to pay the minimum dividend to each holder of the Preferred Shares,

32 then each holder of Preferred Shares shall be entitled to receive the minimum dividend. The remaining profits, if any, shall be allocated pro rata among the ordinary shares.

Any in kind payment of the minimum dividend will be made in accordance with the decision adopted by the general meeting of shareholders, the Company´s bylaws and applicable law.

The declaration, amount and payment of dividends are based on the distributable profits of Cementos Argos and must be approved at the ordinary annual shareholders’ meeting.

Previous dividend payments

The following table sets forth the amounts of cash dividends declared and paid on our ordinary shares from 2010 through the date hereof:

Year in which dividends Dividends paid Per share were declared (Ps.) (Ps.)

2010 145,110,711,060.00 126 2011 152,020,744,920.00 132 2012 161,234,123,400.00 140 2013 177,357,535,740.00 154

33 EXCHANGE RATES AND REGULATION OF FOREIGN INVESTMENT

Recent exchange rates of peso per U.S. dollar

The Federal Reserve Bank of New York does not report a noon-buying rate for Colombian pesos. The Colombian Superintendency of Finance calculates the representative market rate based on the weighted average of the buy/sell foreign exchange rates quoted daily by certain foreign exchange rate market intermediaries, including financial institutions, for the purchase and sale of U.S. dollars. On December 31, 2012, the representative market rate was Ps.1,768.23 per U.S.$1.00.

The following table sets forth the low and high peso/U.S. dollar representative market rates, the peso/U.S. dollar representative market rate on the last day of the month and the average representative market rate, for each of the last six months:

Month Low High Period End Period Average February 2013 1,775.7 1,818.5 1816.4 1,790.5 January 2013 1,758.5 1,779.8 1,773.2 1,769.7 December 2012 1,768.2 1,813.7 1,768.2 1,792.5 November 2012 1,814.2 1,831.3 1,817.9 1,821.0 October 2012 1,795.4 1,830.5 1,829.9 1,804.4 September 2012 1,789.5 1,825.2 1,800.5 1,802.7

The following table sets forth the low and high peso/U.S. dollar representative market rates, the peso/U.S. dollar representative market rate on the last day of the year and the average peso/U.S. dollar representative market rate, for each of the five most recent financial years:

Year Low High Period End Period Average(1) (Appreciation) Depreciation (2) 2012 1,754.9 1,942.7 1,768.2 1,797.8 (8.98%) 2011 1,748.4 1,972.8 1,942.7 1,847.0 1.5% 2010 1,786.2 2,044.2 1,914.0 1,898.7 (6.4%) 2009 1,825.7 2,596.4 2,044.2 2,153.3 (8.9%) 2008 1,652.4 2,392.3 2,243.6 1,967.1 11.4% (1) The average market exchange rate is calculated using the average of the representative market rates of each business day of the year in Colombia. (2) Calculated based on the variation of period-end exchange rates.

Regulation of foreign investment in Colombia

The following is a brief summary of certain regulations applicable to foreign investment in Colombia and does not purport to be complete. You should consult with your financial and legal advisors regarding the specific restrictions on foreign investment in Colombia.

Exchange market

In 1990, the Colombian government initiated a policy of gradual currency liberalization.

The general legal principles of Colombia’s foreign exchange controls and international investments regulations were established by Law 9 of 1991. According to this law, the Ministry of Finance and Public Credit is in charge of regulating foreign investment while the board of directors of the Central Bank of Colombia is in charge of regulating most of the transactions pertaining to the formal exchange market (including foreign investment). Pursuant to these powers, the Central Bank of Colombia enacted Regulation 8 of 2000 and Regulation DCIN-83 and the Ministry of Finance and Public Credit enacted Decree 2080 of 2000, as amended from time to time, (together with Regulation 8 of 2000, the “Foreign Investment Statute”).

34 The Foreign Investment Statute establishes two types of markets for foreign currency exchange:

the controlled foreign exchange market (the “FX Market”), which consists of all foreign exchange transactions which must be mandatorily conducted through foreign exchange intermediaries (i.e., commercial and mortgage banks, financial corporations, commercial finance companies, Financiera Energética Nacional, Banco de Comercio Exterior, financial cooperatives and local stock broker dealers) or compensation accounts (i.e., offshore bank accounts registered with the Central Bank of Colombia and subject to periodic reports before the Colombian authorities). Payments between Colombian residents and foreign residents in respect of foreign investments, imports, exports, foreign indebtedness, derivative transactions and guarantees in foreign currency, among others, must be conducted through the FX market.

the free market, which consists of all other transactions that are not mandatorily traded on the FX market.

Colombian law allows the Central Bank of Colombia to intervene in the foreign exchange market if the value of the Colombian peso is subject to significant volatility. The government and the Central Bank of Colombia may also limit the remittance of dividends and the product of the liquidation of foreign investments on a temporary basis whenever the international reserves are below an amount equal to three months of imports.

In addition to its interventions in the foreign exchange market, the regulations of the Central Bank of Colombia also established a deposit requirement on all foreign loans granted to Colombian residents, as an instrument to control the fluctuation of the peso against the U.S. dollar. To this end, the Central Bank of Colombia has on some occasions required that a certain percentage of the debt incurred (depending on the maturity of the debt) be deposited in Colombian pesos or foreign currency with the Central Bank of Colombia in a non-interest-bearing account for a fixed period of time (depósito por operaciones de endeudamiento externo). A debtor can prepay foreign loans or redeem the certificate given by the Central Bank of Colombia evidencing the deposit, but said prepayment or redemption will imply a discount. The discount is reduced as the term for maturity is reduced. Currently, the deposit requirement is equal to zero (0%) of the disbursements made under the loan, so in practice, there is currently no deposit that has to be posted with the Central Bank of Colombia by the debtor of loans in foreign currency.

Investment by non-Colombian investors

According to the Foreign Investment Statute, the acquisition of stock in Colombian companies can be made as one of two kinds of foreign investment regimes: foreign portfolio investments or foreign direct investments.

Foreign Portfolio Investment

Pursuant to the Foreign Investment Statute, the acquisition of Preferred Shares on the Colombian Stock Exchange by foreign residents is considered to be a foreign portfolio investment in Colombia, and as such, it can only be made through a local “administrator” (i.e., Colombian broker-dealers, trust companies or investment management companies supervised by the Colombian Financial Superintendency).

Furthermore, foreign portfolio investments in Colombia are subject to registration with the Central Bank of Colombia. Such registration must be completed by the local administrator, by means of filing an Exchange Declaration Form No. 4 with the local bank through which payment of the shares was made.

Foreign investors who have duly registered their portfolio investments have the right to (i) transfer abroad dividends resulting from the investment; (ii) reinvest dividends and income derived from the sale or liquidation of the investment; and (iii) transfer abroad any income derived from the sale of the investment within the country, the liquidation (winding-up) of the company or portfolio.

Repatriation of funds must be made through the local administrator by (i) converting the relevant amounts paid by us in Colombian pesos into foreign currency, and (ii) filing an Exchange Declaration Form No. 4 as support for the transaction.

35 Failure to timely report or register foreign investment operations with the Central Bank of Colombia may prevent a foreign investor from having remittance rights. In addition, such failure could result in a violation of the foreign exchange regime and/or in fines of up to 200% of the amount invested.

Investment repatriation conditions are those in force on the date on which investments are registered and may not be modified in any way that may be detrimental to the investor, except on a temporary basis when Colombia’s international reserves fall below the equivalent of three months’ worth of imports. However, such situation has not arisen during the past 30 years, except for a brief restriction by the national government in 2004.

Foreign direct investment

Although the acquisition of Preferred Shares by foreign residents is defined as a foreign portfolio investment in Colombia, foreign investors may alternatively register their investment as foreign direct investment, to the extent the investment is for the purpose of creating a lasting interest in or effective management control over the relevant company issuing the shares.

The appropriate registration of foreign direct investment will permit foreign residents to remit rights as foreign portfolio investment registration. Similarly, failure to timely register foreign direct investment operations will entail equivalent consequences. However, unlike foreign portfolio investment, foreign direct investors (and not local the administrator) will be responsible for the correct registration of their investment with the Central Bank of Colombia by means of filing the corresponding Exchange Declaration Form No. 4. In addition, the transfer of the shares by any foreign direct investor to another foreign investor will require the filing of a substitution of foreign investor request with the Central Bank of Colombia, as well as the filing of supporting documentation, within 12 months as from the date of the corresponding substitution.

Foreign portfolio investment operations that are inaccurately registered as foreign direct investments may be deemed as a misrepresentation which could entail a violation to the International Investment Statute, and may be penalized by the competent authority with fines of up to 200% of the amount invested.

Investors intending to register the purchase of Preferred Shares as foreign direct investment (i) should appoint a local agent for purposes thereof and (ii) will be solely responsible for compliance with the abovementioned legal requirements, including without limitation, the provisions on foreign investment registration, as set forth in the International Investment Statute.

Colombian requirements for the purchase of Preferred Shares

In order to purchase Preferred Shares as a foreign portfolio investment, an investor residing outside Colombia must:

appoint a local “administrator” with powers to take actions relating to the portfolio investment and to comply with applicable foreign investment registration and reporting requirements; and

enter into a custody agreement with the local administrator. Foreign ADSs, Global Depositary Notes (“GDNs”) and Global Depositary Receipts (“GDRs”) Programs

Pursuant to the Foreign Investment Statute, equity instruments such as shares and convertible bonds may serve as underlying instruments for the issuance of securities abroad, which represent a specific number of local-currency denominated shares or convertible bonds. The issue and negotiation of these securities abroad can be achieved by means of ADS, GDN and GDR programs, which are subject to foreign exchange regulations and securities laws.

As per the Foreign Investment Statute, the scope of the certificates’ underlying instruments is no longer limited to equity securities, since the same currently provides for all types of “securities.” Moreover, Regulation DCIN-83 specifically included investments in GDNs as a type of portfolio investment.

36 Furthermore, the Central Bank of Colombia has established specific procedures and mechanisms that allow (i) the registration of ADS, GDN and GDR programs as a form of foreign portfolio investment. Such registration is required for the acquisition of local shares and convertible bonds by any foreign resident, which allow the issuing of securities abroad; (ii) the acquisition of ADSs, GDNs and GDRs by Colombian residents and the required registrations thereof, which is understood as a foreign investment allowed for Colombian residents; (iii) the negotiability of ADSs and GDRs between Colombian residents, which is permitted to be settled in dollars of the United States of America, subject to the filing of an Exchange Declaration Form No. 4 and a foreign investment substitution report that is required to be filed before the Central Bank of Colombia pursuant to applicable regulations; (iv) the possibility for foreign holders of ADSs, GDNs and GDRs to surrender their securities in exchange for local shares and convertible bonds. This process is permitted and does not require registration considering that, notwithstanding the exchange of securities for local shares and convertible bonds, the foreign holder will be deemed to be a portfolio investor; and (v) the possibility for Colombian residents to surrender their shares and convertible bonds in exchange for ADSs, GDNs or GDRs, which is not subject to registration from a foreign exchange perspective.

Measures adopted by the Colombian Government to minimize fluctuations of the peso against the U.S. dollar

During 2007 and 2008, both the Ministry of Finance and Public Credit and the Central Bank of Colombia adopted several measures aimed at controlling the fluctuation of the Colombian peso against the U.S. dollar. These measures included, among others: a 50% non-interest-bearing deposit requirement at the Central Bank of Colombia, applicable to short-term portfolio investments in assets other than shares or convertible bonds or collective investment funds that only invest in shares or convertible bonds, for a period of six months. This restriction was eliminated in 2008;

a six-month 40% non-interest-bearing deposit at the Central Bank of Colombia applicable in connection with foreign loans, established by Resolution No. 2 of May 6, 2007;

a six-month 40% non-interest-bearing deposit at the Central Bank of Colombia applicable to corporate reorganization transactions, including mergers, acquisitions and spin-offs, if the successor thereof is a Colombian resident required to repay foreign indebtedness which would have otherwise been subject to the deposit requirement of Resolution No. 2 of May 6, 2007;

exemptions to the 40% non-interest-bearing deposit requirement applicable to foreign investment in local private equity funds and American Depositary Receipt and Global Depositary Receipt programs of Colombian issuers;

restrictions on the repatriation of foreign direct investments;

increases to the reference rate; and

non-interest-bearing deposits with the Central Bank of Colombia applicable to the proceeds resulting from imports financings.

On October 8, 2008 and October 9, 2008, through Decree 3913 and Resolution 10, issued by the government of Colombia and the Central Bank of Colombia, respectively, the deposit requirement established by Resolution No. 2 of May 6, 2007 was set at 0% in connection with foreign portfolio investment and foreign indebtedness operations, including foreign loans, import financing and export financing. Additionally, on September 1, 2008 by means of Decree 3264, the government of Colombia eliminated restrictions on the repatriation of foreign direct investments.

On March 3, 2010, the Central Bank of Colombia resumed intervention in the foreign exchange market, accumulating international reserves through daily purchases of U.S.$20.0 million in competitive auctions in response to indications of an exchange rate misalignment. Recently, the Central Bank of Colombia made public its decision to extend its intervention in the Colombian foreign exchange market.

37 The government of Colombia and the Central Bank of Colombia have considerable power to determine governmental policies and actions that relate to the Colombian economy and, consequently, to affect the operations and financial performance of businesses. The government of Colombia and the Central Bank of Colombia may seek to implement additional measures aimed at controlling further fluctuation of the Colombian peso against other currencies and fostering domestic price stability.

38 CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2012:

on an actual basis; and

as adjusted to give effect to the gross proceeds from the issuance of an aggregate of Ps.1,401,400,000,000 of our Preferred Shares at a price of Ps.7,700 per Preferred Share and U.S.$21.03 per ADS in the offering.

The table below should be read in conjunction with our consolidated financial statements and related notes included in this offering memorandum:

As of December 31, 2012 Actual As adjusted (millions of (millions of (millions of Ps.) U.S.$)(1) (millions of Ps.) U.S.$)(1) Indebtedness: Current interest-bearing loans and 730,508 413.1 730,508 413.1 borrowings Non-current interest-bearing loans and 2,300,305 1,300.9 2,300,305 1,300.9 borrowings Total interest-bearing loans and 3,030,813 1,714.0 3,030,813 1,714.0 borrowings

Equity: Capital Ordinary Shares 7,291 4.1 7,291 4.1 Preferred Shares - - 1,092 0.6 Premium on placement of shares 175,674 99.4 1,575,982 891.3 Total reserves 912,885 516.3 912,885 516.3 Revaluation of shareholders’ equity 756,753 428.0 756,753 428.0 Period profits 387,619 219.2 387,619 219.2 Asset appraisal surplus 3,473,263 1,964.3 3,473,263 1,964.3 Total equity 5,713,485 3,231.2 7,114,885 4,023.7

Total capitalization (total equity plus interest 8,744,298 4,945.2 10,145,698 5,737.8 bearing loans and borrowings) (1) Calculated based on an exchange rate of Ps.1,768.23 to U.S.$1.00, the representative market rate reported by the Colombian Superintendency of Finance for December 31, 2012.

39 SELECTED FINANCIAL AND OPERATING DATA

Consolidated Income Statement:

Year ended December 31, 2010 2011 2012 (in millions of Ps.) Operating revenues 3,023,069 3,668,610 4,380,393 Cost of goods sold 2,423,433 2,904,365 3,468,457 Gross income 599,636 764,245 911,936

Income tax provision 31,947 25,024 17,083 Income before minority interests 297,992 379,754 399,707

Net income sharing in subordinate companies (9,114) (9,780) (12,088) Consolidated net income 288,878 369,974 387,619 Net income per share 250.8 321.2 336.6

40 Consolidated Balance Sheet:

Non-Current Assets: Long term debtors 38,230 53,815 39,718 Inventories 39,412 38,237 - Long term investments 340,108 299,457 145,094 Property, plant and equipment, net 2,870,683 4,177,137 3,779,319 Deferred charges and intangible assets 1,634,481 1,466,387 1,375,489 Other assets 44,319 26,933 19,438 Asset appraisals 9,036,539 9,184,742 3,573,985 Total Non-Current Assets 14,003,772 15,246,708 8,933,043

Total Assets 15,480,867 16,781,066 10,266,716

Operating EBITDA to Net Income reconciliation

41 The following table sets forth the reconciliation of our net income to Operating EBITDA:

Year ended December 31, 2010 2011 2012 (in millions of Ps.) Consolidated net income 288,878 369,974 387,619 minus Net income sharing in subordinate companies (9,114) (9,780) (12,088) Income tax provision………………………………. (31,947) (25,024) (17,083) Financial revenues…………………………………. 12,981 18,785 12,498 Dividends and shares received…………………….. 81,374 72,283 35,512 Financial expenses………………………………… (192,208) (195,963) (223,942) Foreign exchange difference……………………… 758 (15,848) (1,160) Other revenues……………………………………… 592,268 746,023 362,262 Other expenses…………………………………….. (295,491) (493,335) (182,947) Operating income after asset impairment 130,257 272,833 414,567 plus Asset impairment………………………………….. 88,343 74,460 - Operating income before asset impairment 218,600 347,293 414,567 plus Depreciation included in cost of goods sold 235,094 255,741 297,601 Depreciation included in selling and administration expenses 14,377 14,072 14,803 Amortization included in cost of goods sold 22,660 24,808 25,958 Amortization included in selling and administration expenses 136,793 114,090 38,261 minus Asset impairment………………………………….. (88,343) (74,460) - Operating EBITDA 539,181 681,544 791,190

42 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations are based on, and should be read in conjunction with, our audited consolidated financial statements as of and for the years ended December 31, 2010, 2011 and 2012 and the related notes thereto included elsewhere in this offering memorandum. This discussion and analysis presents our financial condition and results of operations on a consolidated basis.

Basis of preparation of financial statements

Our audited consolidated financial statements for the years ended December 31, 2010, 2011 and 2012 have been prepared in accordance with Colombian GAAP and audited in accordance with generally accepted auditing standards in Colombia. In accordance with Colombian law, we will be required to present our financial statements under IFRS beginning with our financial statements for the year ending December 31, 2015 and with a transition date of January 1, 2014.

Colombian GAAP differ in material respects from IFRS. See Annex A to this offering memorandum for a discussion of the principal differences between Colombian GAAP and IFRS.

Certain information contained in this discussion and analysis and presented elsewhere in this offering memorandum, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Regarding Forward-Looking Statements.” In evaluating this discussion and analysis, you should specifically consider the various risk factors identified in “Risk Factors”, other risk factors identified elsewhere in this offering memorandum and other factors that could cause results to differ materially from those expressed in such forward-looking statements.

For the purpose of this discussion, volume data presented by geographic segment in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and elsewhere in this offering memorandum are presented before the elimination of intercompany transactions, other than sale of cement products from one company in the consolidated group to another group company for resale to third parties.

In this offering memorandum, for the three year period ended December 31, 2012, sales of cement from our Cartagena plant to clients in Colombia are treated as sales in the Colombia geographic segment; sales to clients in the United States are treated as sales in the United States geographic segment; and sales to clients located outside of the United States and Colombia are treated as sales in the Panama and the Caribbean geographic segment. For certain other purposes, however, including our earnings reports to investors, we include sales from our Cartagena plant in the Colombia geographic segment as from the fourth quarter of 2012 and in the Panama and the Caribbean segment for prior periods. Also, for such purposes we classify sales from the Cartagena plant to clients outside Colombia as export sales that are part of our “other business” segment. Accordingly, the information presented in this offering memorandum is not directly comparable to such other information.

A. Overview

We are the leading cement and ready-mix concrete producer in Colombia, one of Latin America’s fastest-growing economies. We also have operations in countries and regions that are contiguous, including Panama, the Caribbean and states in the southeast and south central region of the United States. Almost all of our cement and ready-mix concrete products are used in the construction sector, including infrastructure projects. We currently operate 10 cement facilities, including nine cement plants and one grinding station, and 54 ready-mix concrete plants in Colombia, four grinding stations and 14 ready-mix concrete plants in Panama and the Caribbean and three cement facilities, including two cement plants and one grinding station, and 239 ready-mix concrete plants in the United States.

43 significant portion of our power needs in Colombia, and land and sea transportation capabilities. We also operate port facilities to meet our exporting and importing needs. We believe that our extensive footprint and strong distribution and logistics infrastructure allow us to provide consumers with high-quality and value-added cement products in a cost-effective manner. We believe we have developed strong brand recognition in our markets, particularly in Colombia.

In recent years, we have undertaken important steps to strengthen our presence and operations in Colombia and in our geographically contiguous markets:

In July 2010, we commenced operation at our Cartagena plant of our dry process kiln with an installed annual production capacity of 2.31 million metric tons of cement. The total cost of the expansion of the Cartagena plant was approximately Ps.1,006,730 million;

In 2010, we purchased eight ready-mix concrete plants and 115 additional mixer trucks in Colombia at a total cost of Ps.84,750 million in response to increased demand from infrastructure projects;

Between 2009 and 2011, we installed a new vertical mill in our grinding station in Panama for a cost of Ps.113,824 million;

In July 2010, we acquired an aggregate mine in Saldaña, Colombia that serves as a strategic source of raw materials for our operations near Bogota for a cost of Ps.24,858 million;

In October 2011, we completed our acquisition from the Lafarge Group of cement and concrete assets in the United States for Ps.1,354,284 million (U.S.$760 million) in cash. As a result of this acquisition, we became a vertically integrated cement and ready-mix concrete producer in the southeastern United States;

We are currently expanding the installed annual production capacity at our Rioclaro, Cairo and Nare cement plants in the interior of Colombia at an estimated cost of Ps.167,000 million; and

We are adding an additional mill to our South Carolina plant that was acquired as part of the purchase of the Lafarge businesses in 2011. The new mill will increase grinding capacity and replace older, less efficient mill capacity at the plant. The estimated cost of this addition is Ps.84,875 million.

Our operating revenue, operating income after asset impairment and consolidated net income in 2012 was (i) Ps.4,380,393 million, 19.4% higher than in 2011, (ii) Ps.414,567 million, 51.9% higher than in 2011 and (iii) Ps.387,619 million, 4.8% higher than in 2011, respectively.

B. Factors affecting comparability of historical financial information

Our consolidated financial position and, to a significantly lesser extent, our results of operation were affected by the spin-off on May 30, 2012 of certain non-core assets and operations in real estate, coal mining and commercial ports, along with a substantial majority of the value of our investment portfolio, to Grupo Argos, a listed company on the Colombia Stock Exchange and our controlling shareholder. In exchange for these assets, our other shareholders received preferred shares in Grupo Argos. The spin-off was undertaken in keeping with our strategy to focus operations on our core business. As a result of the spin-off, the carrying value of assets and our shareholders’ equity each decreased by Ps.6,105,046 million and Ps.5,933,858 million, respectively.

For the periods ending prior to June 2012, the results of operations of the Ancillary Business segment include results of our coal, real estate and commercial port businesses that were spun-off. See “Business—Our history.”

44 C. Principal factors affecting our results of operations

Operating segments

We organize and manage our business along geographic regions and divide our business activities into three operating segments as follows:

the Cement segment, which comprises activities relating to the production, marketing, transportation and distribution of cement in all forms and grades, raw materials and semi-finished cement products. This segment also includes our clinker trading operations;

the Ready-Mix Concrete segment, which comprises activities relating to the production and marketing of ready-mix concrete in all forms and grades; and

the Ancillary Business segment, which includes operations in Colombia comprised of livestock, forestry and quicklime and, prior to the spin-off, coal, real estate and port services to third parties.

We operate in three principal geographic segments: Colombia, Panama and the Caribbean and the United States. Each geographic segment includes our cement and ready-mix concrete operating segments. We have a fourth geographic segment that we refer to as Other that includes the results of our Ancillary Business segment, as well as our corporate overhead expenses that are not allocated to a particular operating segment.

Revenue drivers

Activity levels in the construction sector

Our cement and ready-mix concrete sales are heavily dependent on the performance of the construction industry, including residential, commercial and infrastructure projects, in each of the countries in which we operate or sell our products. Fluctuations in the performance of the construction industry significantly affects the volume of cement and ready-mix concrete that we are able to sell as well as the sale prices we are able to realize for our products. The construction industry is, in turn, dependent on the growth and overall performance of the economies in those countries, including the availability of financing, prevailing investment levels in the region and the priorities and financial resources of national, regional and local governments. General economic downturns or localized downturns in the regions where we have operations generally have a material adverse effect on our business, financial condition and results of operations. Moreover, the construction industry is cyclical and significantly sensitive to factors beyond our control, including the political, economic, legal and social stability environment of the countries in which we operate or sell our products. The levels of activity in residential, commercial and infrastructure projects have their own cycles that may be correlated with one another to different degrees over time.

The table below shows information about our principal distribution channels for our cement products, by geographic area for the periods indicated, in each case on a combined basis before eliminations.

45 Year ended December 31, 2010 2011 2012 (percentage of operating revenues) Colombia Retailers 21.5% 23.0% 20.4% Wholesalers 25.9% 24.8% 21.8% Construction companies 22.2% 19.8% 25.1% Ready-mix companies 16.1% 17.0% 18.6% Pre-cast companies 7.3% 6.6% 6.6% Other intercompany(1) 1.7% 5.6% 5.0% Logistics(2) 1.2% 1.3% 1.1% Others 4.1% 1.9% 1.4% Colombia Total 100.0% 100.0% 100%

Panama and the Caribbean Panama Retailers and distributors 41.3% 40.5% 35.4% Construction companies 19.3% 22.6% 34.7% Ready-mix companies 34.8% 31.6% 24.5% Pre-cast companies 4.6% 5.3% 5.4% Panama Total 100.0% 100.0% 100% Haiti Distributors 59.9% 70.2% 69.0% Retailers 12.4% 14.2% 15.0% Construction companies 5.8% 9.6% 9.0% Ready-mix companies 20.6% 2.3% 2.5% Others 1.3% 3.7% 4.5% Haiti Total 100.0% 100.0% 100% Dominican Republic Retailers 55.9% 51.3% 43.3% Wholesalers 26.8% 13.6% 19.0% Construction companies 2.5% 3.5% 11.3% Ready-mix companies 5.4% 16.2% 19.2% Others 9.4% 15.4% 7.2% Dominican Republic Total 100.0% 100.0% 100.0%

United States Ready-mix companies 47.8% 52.6% 48.9% Pre-cast companies - 4.7% 8.7% Retailers and distributors 6.5% 9.8% 15.9% Construction companies - 4.6% 4.5% Others 45.7% 28.3% 22.0% United States Total 100.0% 100.0% 100% (1) Includes sales of raw materials from Cementos Argos to our subsidiary Zona Franca Argos and sales of clinker from Zona Franca Argos to Cementos Argos. (2) Includes sales from our subsidiary Logitrans, which provides transportation services for our products. (3) Includes sales from our operations in Suriname, St. Maarten, Antigua, Dominica, St. Thomas and Curaçao, as well as sales from trading operations and exports from our operations in Panama and the Caribbean.

46 The table below shows the breakdown for each geographic segment of cement production that was sold to third- party ready-mix companies and to our own ready-mix concrete operations:

Year ended December 31, 2010 2011 2012 (percentage of metric tons) Colombia Our ready-mix companies 80.4% 81.1% 78.6% Third-party ready-mix companies 19.6% 18.9% 21.4% Colombia Total 100.0% 100.0% 100%

Panama Our ready-mix companies 49.8% 61.4% 55.3% Third-party ready-mix companies 50.2% 38.6% 44.7% Panama Total 100.0% 100.0% 100%

United States Our ready-mix companies 28.4% 23.2% 37.7% Third-party ready-mix companies 71.6% 76.8% 72.3% United States Total 100.0% 100.0% 100%

The table below shows information about the end use of our ready-mix concrete products, by geographic area for the periods indicated:

Year ended December 31, 2010 2011 2012 (percentages of operating revenues) Colombia Residential Construction 28.7% 32.2% 39.9% Commercial Construction 26.8% 24.5% 27.1% Infrastructure 38.2% 38.0% 29.9% Other 6.3% 5.3% 3.1% Colombia Total 100.0% 100.0% 100%

Panama and the Caribbean(1) Residential Construction 41.2% 31.5% 20.6% Commercial Construction 23.9 % 28.2% 44.3% Infrastructure 32.6% 36.5% 19.0% Other 2.3% 3.8% 16.1% Panama and the Caribbean Total 100.0% 100.0% 100%

United States Residential Construction 28.2% 28.9% 28.8% Commercial Construction 47.2% 45.2% 47.9% Infrastructure 22.1% 22.7% 19.8% Other 2.5% 3.2% 3.5% United States Total 100.0% 100.0% 100% (1) Figures for 2010 and 2011 for Panama and the Caribbean include only ready-mix concrete sales in Panama, as ready-mix concrete production commenced in Haiti in October 2011, in the Dominican Republic in October 2012 and in Suriname in December 2012. Figures for 2012 include ready-mix concrete sales in Panama and Haiti and exclude the Dominican Republic and Suriname as these operations were in the process of ramping up.

For 2012, cement sales accounted for 56.5% of our consolidated operating revenues and ready-mix concrete accounted for 42.6% of our consolidated operating revenues. Our ready-mix concrete operations are major customers for our cement output. Sales of our products between geographic or operating segments are made on arm’s length terms comparable to those extended to our best third-party customers.

47 Acquisitions of other companies and capital investments

Our strategy over the last decade has been to expand our international operations through the acquisition of cement and ready-mix concrete companies and production assets, principally in the United States. We also have made significant capital investments in the past and expect to continue such strategy. Our acquisitions and capital investments have resulted in a significant increase in our operating revenues. Likewise, they have resulted in a significant increase in our long-term assets, including goodwill and other intangible assets. Our strategic acquisitions and capital expenditures in the years ended December 31, 2010 and 2011 have permitted us to vertically integrate our operations in the United States and to increase the degree of integration in Panama and the Caribbean. We believe that our vertically integrated business model has allowed us to generate higher margins by maintaining lower cement production costs.

Price competition

Pricing strategy is the main factor affecting the competitiveness of cement producers due to the fact that cement and related products are commodities and the production of cement involves the use of significant fixed assets and fixed costs. As a result, any decrease or increase in the price we charge for our products may significantly affect our financial results. In general, we seek to reflect increases in the prices of raw materials and other direct costs in the prices for our products.

Foreign exchange

We prepare our audited consolidated financial statements in Colombian pesos and are exposed to risk based on foreign exchange rate movements. Our operations in Panama and the United States are U.S. dollar functional currency businesses while our operations in the Caribbean use local currency but set prices based on U.S. dollar equivalents. Our earnings, assets and liabilities from these geographic areas are translated to Colombian pesos for inclusion in our consolidated financial statements. As a result, currency exchange rate fluctuations could increase or decrease the amount of our revenues or costs expressed in pesos and affect our results of operations and financial position. Sales in the Panama and the Caribbean and the United States are made in U.S. dollars.

Accordingly, our reported revenues for those geographic segments were adversely affected by the appreciation of the Colombian peso against the U.S. dollar during 2012, while our reported cost of goods sold in those segments were positively affected by the appreciation of the Colombian peso.

Following the recent acquisition of certain Lafarge assets in October 2011, movements in the Colombian peso against the U.S. dollar more significantly affect the financial performance of our business expressed in Colombian pesos, thus increasing our currency translation risk. See “—Derivative Financial Instruments.”

U.S. dollar amounts are translated into peso amounts based on the representative market rate calculated by the Superintendency of Finance and included in our consolidated financial statements. The Superintendency of Finance calculates the representative market exchange rate based on the weighted average of the buy/sell foreign exchange rates quoted daily by certain foreign exchange rate market intermediaries, including financial institutions, for the purchase and sale of U.S. dollars. The closing representative market exchange rates and the approximate average annual market exchange rates used in preparing our financial statements as of and for the years ended December 31, 2010, 2011 and 2012, were as follows:

Year ended December 31, 2010 2011 2012 Closing Average(1) Closing Average(1) Closing Average(1) U.S. dollars 1,913.98 1,898.68 1,942.70 1,846.97 1,768.23 1,797.79 (1) The average market exchange rate is calculated using the average of the representative market rates of each business day of the year in Colombia. The average annual market exchange rate does not necessarily reflect the rate at which any particular purchase of U.S. dollars or Colombian pesos could actually be executed on such dates.

48 Cost drivers

The chart below shows our principal costs of goods sold for our cement and ready-mix concrete products, expressed as a percentage of our total direct costs (which represent our total cost of goods sold other than indirect costs):

Year ended December 31, 2010 2011 2012 Raw materials 53.4% 54.7% 55.3% Transportation and other direct costs 20.7% 20.7% 19.0% Energy(1) 15.1% 15.1% 14.9% Labor costs 10.8% 10.8% 10.9% (1) Includes electricity and fuel costs.

Our principal raw materials for the production of cement are limestone and clay for plants where we produce our own clinker, and clinker for our grinding facilities, as well as other minerals and admixtures. Our principal raw materials for the production of ready-mix concrete are cement and aggregates. In Colombia, we supply all of the limestone we need from our own sources. We supply all of the cement and a majority of the aggregates used by our ready-mix concrete plants in Colombia. In 2012, we imported a portion of the cement used in our ready-mix operations from third parties. In Panama, we supply a portion of the clinker used in our cement operations and purchase the balance under a long-term contract. In the rest of the Caribbean, we supply clinker from our own plants, from our trading operations or from third parties. In the United States, we supply all the limestone required to make clinker in our cement plants and substantially all of the cement to our ready-mix operations in the Southeastern United States.

Energy costs, including electricity costs and the cost of fuels to power our kilns and vehicles, are important components of our cost structure. In Colombia for 2012, we obtained approximately 75% of the electric power we require for our operations from our seven power generation plants (using hydroelectric, coal and gas-fired facilities), which reduces our energy costs and limits our exposure to fluctuating electricity prices and energy shortages. We source the remainder of our electric power under power supply agreements with various power generators. In Panama, we source power from the national grid under a ten-year fixed rate agreement expiring in 2018. In Haiti, we source electricity from our own power generation facilities given the lack of national infrastructure. In the Dominican Republic, we expect to enter into a two-year (renewable for a third year), variable rate agreement for the supply of electricity from the national grid in the first half of 2013, which we expect will replace our electricity supplied from our power generation facilities and which is expected to reduce our cost for electricity in that country by 25.0%. In Suriname, we source our electricity from a local provider at a competitive, fixed rate. See “Business— Our operations” for a discussion of our power purchase agreements.

Coal and gas are the principal sources of fuel for our kilns. In Colombia, we source coal on the spot market mainly from third-party suppliers, including a subsidiary of Grupo Argos and to a minor extent from mines that exploit coal concessions that we hold. In the United States, we purchase coal from third-party suppliers at local spot market prices and contract for the supply of natural gas. In addition, fuel oil, which we use for most of our vehicles, is also an important component of our cost structure, particularly in the United States.

Portfolio investments

We own non-controlling interests in companies that are not related to our core business, including Grupo Sura and Bancolombia, among others. As of December 31, 2012, the value of our investment portfolio, defined as Permanent Investments in our consolidated financial statements, totaled Ps.1,780,462 million of which Ps.1,684,079 million represented our interests in Grupo Sura and Bancolombia. We can provide no assurance that we would be able to sell our portfolio investments for an aggregate amount equal to or greater than the market value as of December 31, 2012.

We account for these investments as permanent investments within the long-term investments in our balance sheet. We record realized profits or losses from those investments as non-operating “other income” or “other expenses”, as the case may be in our income statement. Unrealized profits or losses on shares or equity stakes are credited or debited in the asset appraisal account and in the appraisal surplus account under shareholders’ equity, without 49 recognition in the income statement. See Note 8 to our financial statements for each of the years ended December 31, 2010, 2011 and 2012.

We believe our investment portfolio serves as a source of liquidity that gives us flexibility to pursue attractive opportunities. In the past, we have sold investment securities in order to finance acquisitions and capital expenditures. In 2010, 2011 and 2012, we sold investment securities for total proceeds of Ps.547,856 million, Ps.715,280 million and Ps.257,303 million, respectively. Net profits from the sale of investment securities of Ps.509,220 million, Ps.641,155 million and Ps.231,369 million in 2010, 2011 and 2012, respectively, made a significant positive contribution to our net income for each of those years.

As part of the spin-off on May 30, 2012, we transferred a 14.7% interest in Grupo Sura, a 5.4% interest in Nutresa and a 2.0% interest in Bancolombia to Grupo Argos. The aggregate value of those shares based on their respective closing prices on the date of the spin-off was Ps.2,925,672 million. As of December 31, 2012, we owned 28,183,262 ordinary shares of Grupo Sura and 20,437,148 ordinary shares of Bancolombia. Our investors received preferred shares of Grupo Argos in consideration for the transfer of assets to Grupo Argos.

Critical accounting policies and estimates

The following discussion sets forth our critical accounting policies used in the preparation of our audited consolidated financial statements. Critical accounting policies require management to make judgments, estimates and assumptions that affect our financial condition and results of operation. Management bases its estimates and assumptions on the historical experience of the Company and on other factors that it believes to be relevant and reasonable under the circumstances. The estimates and underlying assumptions are reviewed on an ongoing basis. Actual results may differ from estimates made using different assumptions or under different conditions.

Property, Plant and Equipment. Property, plant and equipment are carried at cost, which includes financing expenses and exchange differences on foreign currency liabilities, incurred for their acquisition until they are brought to operating conditions. Sales and dispositions of such assets are charged at the relevant net adjusted cost, and the difference between the sales price and the net adjusted cost is charged to income. Depreciation is calculated by applying the straight-line method on the cost adjusted for inflation based on the estimated useful life of the asset as follows: (i) between 20 and 40 years for constructions and buildings, plants and networks; (ii) between three and 10 years for machinery, industrial equipment and office equipment; (iii) between five and 10 years for vehicles and transportation equipment, computers and communications equipment; and (iv) between six and eight years for ships. Repairs and maintenance of assets are charged to income, while improvements and additions are added to the cost thereof.

In the companies located in Panama and the Caribbean, the life span defined for buildings and installations is between 4 and 40 years, for machinery and equipment between 3 and 35 years, and for furniture, vehicles and tools between 3 and 30 years.

In the United States, the life span for buildings and installations is between 20 and 40 years, for transportation equipment between 5 and 10 years, for machinery and equipment between 2 and 20 years, and for furniture and other elements between 3 and 5 years.

In Panama and the Caribbean and in the United States, the company evaluates assets that generate earnings when there are changes or other circumstances that might cause a loss or deterioration of the future cash flow of such assets. This revision is carried out every year before closing the accounting period.

Intangible Assets. Intangible assets are carried at acquisition cost and represent the value of certain rights, such as trademarks, goodwill, exploitation rights (concessions and franchises), among others. They are amortized using the straight-line method. The amortization period for trademarks in Colombia is 20 years, while in the United States the period is between 4 to 20 years; for exploitation rights, the period is the lesser of the validity of the license and the term during which the reserves are expected to be exploited, which is estimated between three and 30 years.

50 Colombian companies are required to record as goodwill the excess paid for the shares, quotas or equity stakes in ongoing business over their book value (as certified by the respective company) when such transaction involves a change of control, as determined in accordance with the Colombian Code of Commerce, as amended. Based on rules issued by the Colombian Superintendency of Finance, the Company amortizes goodwill from mergers and acquisitions using the straight-line method of accounting based on the estimated useful life, which in no event shall exceed 20 years.

At the closing of each accounting period or the closing of the month being used as the base to prepare interim financial statements, the Company assesses goodwill obtained from each investment and records a provision if it considers that the value of the assets, whose acquisition originated such goodwill, has decreased. In other countries in which the Company’s subsidiaries operate, goodwill is calculated according to the accounting rules and regulations applicable in those countries, subject to a higher standard (e.g., U.S. GAAP or IFRS) pursuant to Colombian GAAP and the rules issued by the Colombian Superintendency of Finance. Goodwill is then recognized and amortized in accordance with Colombian GAAP at the parent company level.

Just as for plant and equipment, in the United States and in Panama and the Caribbean, intangible assets that generate earnings are evaluated when there are changes or other circumstances that might cause a loss or impairment of the future cash flow. This revision is carried out every year before closing the accounting period. Impairment is defined as the excess of book value compared to the reasonable or recoverable value of assets that are considered earning-generating units. Losses due to deterioration are registered with a charge to the results and are not amortized.

Asset Appraisal. Asset appraisal relates to: (a) excess commercial or intrinsic value of an investment in shares and quotas of interest at the end of the period over its net cost; and (b) excess technical appraisals of property, plant and equipment over the respective net costs adjusted for inflation. Such appraisals were carried out in 2011 by individuals related and non-related to the companies under labor agreements based on replacement values and depreciation. These appraisals are to be updated at least every three years.

Labor Obligations and Retirement Pensions. Labor liabilities are adjusted at the closing of each period pursuant to outstanding legal regulations and legal agreements. The liability for retirement pensions represents the present value of all future expenditures that the Company shall have to pay to its retired personnel or to their beneficiaries, which mainly relates to senior employees.

The relevant charges to annual results are made based on actuarial studies in compliance with legal regulations prepared under methods such as the actual equivalence system for revenues in arrears, immediately due fractioned annuities and prospective revenues. On December 7, 2010, the Colombian Ministry of Finance and Public Credit issued Decree 4565, which amended section 77 of Decree 2649 of 1993, and provides guidelines on how Colombian companies should estimate and disclose the retirement pension liabilities. In preparing the actuarial calculations as of December 31, 2010, such entities must use the Life Tables for Male and Female Annuitants as updated by the SFC on July 30, 2010. The percentage of amortization established as compared with that reached at December 2009 and the amount pending provision shall be amortized as of December 31, 2010 until 2029 on a straight-line basis without affecting the possibility of completing such amortization earlier than 2029.

The payment of retirement pensions during the period is directly charged to period results. For employees under the new social security regime pursuant to Law 100 of 1993, we must contribute payments to the Institute for Social Security and/or to the retirement pension private funds according to the terms and conditions set forth by Law 100 of 1993. For consolidation purposes, we carry the estimated labor liabilities for each country pursuant to the applicable accounting policies and with the subsidiaries’ legal obligations. We record the consolidated social benefits and other benefits due to employees on the basis in force in the country where the relevant liabilities arose. We do not deem it necessary to prepare again the accounting estimates on a different basis.

In Panama, the Company must make a contribution to the social insurance fund for the payment of future retirement pensions of all employees. Additionally, we make contributions to an independent administration fund as a benefit to employees that meet the following requirements: (i) have worked at the company for a minimum of 15 years; (ii) have reached the retirement age established by the social insurance fund; and (iii) have been retired by the social insurance fund. 51 The contributions made to the independent administration fund are recognized and charged to the period results.

Derivatives. We are exposed to different risks in the financial market as part of its normal course of business, such as loans incurred to finance different businesses, shares in companies and other financial instruments relating to the foregoing. The main market risks that we face include those relating to the market risk presented by changes in the Colombian peso/U.S. Dollar exchange rate and changes in interest rates. We hedge these risks by using primarily natural hedging and also by executing swaps, forwards and options.

Swap arrangements are financial transactions wherein we, by means of an agreement with a bank, exchange money flows in order to decrease illiquidity, exchange rate, term or issuer risks, as well as rebalance the net exposure of our assets and liabilities.

In the case of cross-currency swaps, we account separately for the interest rate swap and the currency swap. In the case of interest rate swaps, no principal is exchanged and the accounting for the hedged liability is not affected by the existence of the swap. For purposes of recording the swap, only the net payments of interest between the parties to the swap agreement are recorded. Therefore, our recognition of the swap transaction is limited to the positive or negative difference between the flows of interest that the parties agree to exchange. The resulting profits or losses are not recognized as assets or liabilities, but are directly recognized in the statement of income.

In the case of currency swaps, capital may be exchanged at the inception and termination or expiration of the swap. As with the interest rate swaps, the existence of the swap agreement does not affect the accounting for the related hedge item. During the term of each currency swap, the parties make net payments of amounts arising from the difference between exchange rates. Amounts are recorded in the statement of income as a gain or a loss on exchange differences.

Foreign currency forwards are used to cover the exchange rate risk in debt and investment transactions in foreign currencies, as well as to cover future cash flows with a high probability of occurrence, such as the our monthly exports. At the end of each period, these arrangements are valued discounting the forward future rate at the market devaluation rate, comparing such present value to the market representative exchange rate at the closing of the relevant period and recording the positive or negative difference as exchange differences in the income accounts.

Option arrangements are used to cover the exchange rate risk, mainly arising from monthly exports and the future flows resulting from exports. They are carried out through structured hedges, such as export collars. Option arrangements are valued by applying the Black-Scholes model.

Contingencies. Certain contingencies may exist on the date on which the financial statements are issued, which may result in losses at a future date when one or more events occur. Such loss contingencies are estimated by management in consultation with its legal advisors. Estimated loss contingencies necessarily involve the exercise of judgment and, therefore, are a matter of opinion. In estimating loss contingencies relating to legal proceedings against us, legal advisors assess the merits of the claims, the jurisprudence of the courts on the subject matter and the current status of the legal proceedings. Should the contingency assessment indicate the probability of a material loss and the liability can be estimated, the liability is recorded in the financial statements. Should the assessment indicate that a potential loss is not probable, or that a potential loss is probable to occur but the result is uncertain or the amount of the loss cannot be estimated, the nature of the contingency is disclosed in a note to the financial statements. Loss contingencies estimated as remote generally are not disclosed.

52 D. Results of Operations

The following table sets forth selected financial data derived from our consolidated statement of income for the years ended December 31, 2010, 2011 and 2012:

Year ended December 31, 2010-2011 2011-2012 2010 2011 2012 variation variation (millions of Ps. and percentages) Operating revenues 3,023,069 3,668,610 4,380,393 21.4% 19.4% Cost of goods sold 2,423,433 2,904,365 3,468,457 19.8% 19.4% Gross income 599,636 764,245 911,936 27.5% 19.3%

Operating expenses Administration expenses 253,709 282,230 327,095 11.2% 15.9% Selling expenses 127,327 134,722 170,274 5.8% 26.4% Total operating expenses 381,036 416,952 497,369 9.4% 19.3% Operating income before asset impairment 218,600 347,293 414,567 58.9% 19.4% Asset impairment 88,343 74,460 - (15.7%) - Operating income after asset impairment 130,257 272,833 414,567 109.5% 51.9%

Other non-operating income (expenses) Financial revenues 12,981 18,785 12,498 44.7% (33.5%) Dividends and shares received 81,374 72,283 35,512 (11.2%) (50.9%) Financial expenses (192,208) (195,963) (223,942) 2.0% 14.3% Foreign exchange difference 758 (15,848) (1,160) (2,190.8%) (92.7%) Other income 592,268 746,023 362,262 26.0% (51.4%) Other expenses (295,491) (493,335) (182,947) 67.0% (62.9%) Income before tax provision 329,939 404,778 416,790 22.7% 3.0%

Income tax provision 31,947 25,024 17,083 (21.7%) (31.7%) Income before minority interest 297,992 379,754 399,707 27.4% 5.3%

Net profit sharing in subordinate companies (9,114) (9,780) (12,088) 7.3% 23.6% Consolidated net income 288,878 369,974 387,619 28.1% 4.8% Net income per share 250.8 321.2 336.6 28.1% 4.8%

Operating revenues

Summarized in the tables below are the percentage increases and decreases for 2011 compared to 2010 and for 2012 compared to 2011, in our cement and ready-mix concrete sales volumes and our average realized prices for Portland cement and ready-mix concrete.

Sales volumes Geographic area Cement Ready-mix concrete 2010/2011 2011/2012 2010/2011 2011/2012 Colombia(1) +18.4% +1.7% +35.3% +14.6% Panama and the Caribbean(2) +11.9% +22.7% +26.4 % -1.4% United States(3) +79.9% +173.7% +9.7% +28.4% (1) Excludes changes in sales volume for white cement and clinker. (2) Percentage changes for our ready-mix concrete sales volumes for 2011 compared to 2010 reflect only our ready-mix concrete business in Panama, as ready-mix concrete production commenced in Haiti in October 2011, in the Dominican Republic in October 2012 and Suriname in December 2012. (3) Changes in sales volumes are not comparable due to the effects of the sales volumes attributable to the Lafarge assets acquired in the fourth quarter of 2011.

53 Average prices in local currency(1) Geographic area Portland cement Ready-mix concrete 2010/2011 2011/2012 2010/2011 2011/2012 Colombia +1.2% +16.7% +5.3% +12.5% Panama and the Caribbean(2) +2.1% +2.4% +2.8% +9.5% United States -1.2% -1.3% -0.1% +5.8% (1) Represents the average realized sales prices in cement and ready-mix concrete in local currency terms for 2011 compared to 2010 and 2012 compared to 2011. Sales outside of Colombia are denominated in U.S. dollars. (2) Percentage changes for our ready-mix concrete prices for 2011 compared to 2010 reflect only our ready-mix concrete business in Panama, as ready-mix concrete production commenced in Haiti in October 2011, in the Dominican Republic in October 2012 and Suriname in December 2012.

Our operating revenues, which are determined on the basis of the Colombian peso, reflect the appreciation or depreciation of the U.S. dollar vis-à-vis the Colombian peso; therefore, such variations may differ materially from those based solely on the countries’ local currencies.

The following table sets forth a breakdown of our operating revenues and the percentage variation of our operating revenues for the years ended December 31, 2010, 2011 and 2012, in each case by operating segment and geographic area and on a consolidated basis:

Year ended December 31, 2010-2011 2011-2012 2010 2011 2012 variation variation (millions of Ps. and percentages) Colombia Cement 1,057,157 1,302,453 1,501,505 23.2% 15.3% Ready-mix concrete 433,311 620,486 786,458 43.2% 26.7% Total Revenue 1,490,468 1,922,939 2,287,963 29.0% 19.0%

Panama and the Caribbean Cement 561,279 660,725 733,446 17.7% 11.0% Ready-mix concrete 87,461 111,377 115,480 27.3% 3.7% Total Revenue 648,740 772,102 848,926 19.0% 10.0%

United States Cement 87,357 108,730 239,147 24.5% 119.9% Ready-mix concrete 684,328 730,948 962,241 6.8% 31.6% Total Revenue 771,685 839,678 1,201,388 8.8% 43.1%

Other Ancillary business 112,176 133,891 42,116 19.4% -68.5% Total Revenue 112,176 133,891 42,116 19.4% -68.5% Total Revenue 3,023,069 3,668,610 4,380,393 21.4% 19.4%

Our consolidated operating revenue in 2012 was Ps.4,380,393 million, 19.4% higher than in 2011. This increase was due principally to higher sales volumes and prices in our main markets. The increases reflected 12 months of operations of the assets acquired from Lafarge compared with only three months in 2011 as well as generally improved economic conditions in each of our main markets and, in particular, in the construction industry in those markets.

Our consolidated operating revenue in 2011 was Ps.3,668,610 million, 21.4% higher than in 2010. This increase was due principally to higher sales volumes in our main markets and, to a lesser extent, by higher prices.

The following table shows the operating revenue of our geographic operating segments for the years ended December 31, 2010, 2011 and 2012, expressed as a percentage of our consolidated operating revenue:

54 Year ended December 31, 2010 2011 2012 Colombia Cement 35.0% 35.5% 34.2% Ready-mix concrete 14.3% 16.9% 18.0% Total Revenue 49.3% 52.4% 52.2%

Panama and the Caribbean Cement 18.6% 18.0% 16.7% Ready-mix concrete 2.9% 3.0% 2.6% Total Revenue 21.5% 21.0% 19.3%

United States Cement 2.9% 3.0% 5.5% Ready-mix concrete 22.6% 19.9% 22.0% Total Revenue 25.5% 22.9% 27.5%

Other Ancillary business 3.7% 3.7% 1.0% Total Revenue 3.7% 3.7% 1.0% Total Revenue 100.0% 100.0% 100.0%

Colombia

2012 versus 2011

Our total operating revenue in Colombia in 2012 was Ps.2,287,963 million, 19.0% higher than in 2011.

Our total operating revenue for the Cement segment in 2012 was Ps.1,501,505 million, 15.3% higher than in 2011. This increase was primarily due to a 16.7% increase in the average sales price of cement.

Our total operating revenue for the Ready-mix concrete segment in 2012 was Ps.786,458 million, 26.7% higher than in 2011. This increase was primarily due to an increase in ready-mix concrete sales volumes, which increased 14.6% on a combined basis compared to 2011, as well as a 12.5% increase in average sales prices. These increases were due to the increased use of ready-mix concrete in construction projects even though the level of construction on a national level activity remained stable compared with 2011.

2011 versus 2010

Our total operating revenue in Colombia in 2011 was Ps.1,922,939 million, 29.0% higher than in 2010.

Our total operating revenue for the Cement segment in 2011 was Ps.1,302,453 million, 23.2% higher than in 2010. This increase was primarily due to an increase in cement sales volumes, which increased 18.4% on a combined basis compared to 2010, and a 1.2% increase in average sales price. This increase was due to the positive effects of an increase in construction spending in Colombia in 2011. The increase in construction activity for 2011 was driven principally by increased spending for infrastructure projects and residential construction, particularly middle- and high-income housing development, which benefited from stable interest rates, controlled inflation, low unemployment and favorable macroeconomic conditions. More favorable weather conditions in 2011 as compared to the effects of La Niña in 2010, which caused considerable damage, also contributed to increased construction activity and resulted in higher demand for our products.

Our total operating revenue for the Ready-mix concrete segment in 2011 was Ps.620,486 million, 43.2% higher than in 2010. This increase was primarily due to an increase in ready-mix concrete sales volumes, which increased 35.3% on a combined basis compared to 2010, as well as a 5.3% increase in the average sales price. Our increased sales volume in the ready-mix concrete segment reflected the same general improvement in market conditions as those experienced by the Cement segment, including an increase in infrastructure spending. In response to this increase in demand, we expanded our capacity through the acquisition of eight ready-mix concrete plants and 115 additional mixer trucks at a total cost of Ps.84,750 million.

55 Panama and the Caribbean

2012 versus 2011

Our total operating revenue in Panama and the Caribbean in 2012 was Ps.848,926 million, 10.0% higher than in 2011.

Our total operating revenue for the Cement segment in 2012 was Ps.733,446 million, 11.0% higher than in 2011. This increase was primarily due to an increase in cement sales volumes, which increased 22.7% on a combined basis compared to 2011. The increase in cement sales volumes in Panama and the Caribbean was driven primarily by growth in sales in Panama, which increased 29.3% on a combined basis, resulting from higher demand from infrastructure projects, including the Panama Canal expansion project. We have a contract to supply 50% of the cement required for this project. Our operating revenues were adversely affected by a 4.1% decrease in average sales prices in Panama. However, average sales prices for Panama and the Caribbean increased 2.4% due primarily to a 6.2% increase in average sales prices in Panama to customers other than the Panama Canal expansion project. Finally, our sales volumes of puzzolana in Panama increased 326.6% compared to 2011 driven principally by the sales made to the Panama Canal expansion project, which also positively affected our operating revenues in the Cement segment.

Our total operating revenue for the Ready-mix concrete segment in 2012 was Ps.115,480 million, 3.7% higher than in 2011. This increase was primarily due to a 9.5% increase in average sales prices compared to 2011, which was the result of increased demand in Panama during 2012. Ready-mix concrete sales volumes decreased 1.4% in 2012, primarily due to a lower volume of cement available from our production facilities following an increase in demand from the Panama Canal expansion project and the decision to sell a greater portion of our remaining cement production to customers (other than our ready-mix concrete plants) in order to take advantage of higher average cement prices and margins.

Our ready-mix concrete operations commenced in the Dominican Republic in October 2012 and Suriname in December 2012. As a result, our revenues from ready-mix concrete operations in other countries in the Caribbean were not meaningful for 2012.

2011 versus 2010

Our total operating revenue in Panama and the Caribbean in 2011 was Ps.772,102 million, 19.0% higher than in 2010.

Our total operating revenue for the Cement segment in 2011 was Ps.660,725 million, 17.7% higher than in 2010. This increase was primarily due to an increase in cement sales volume, which increased 11.9% on a combined basis compared to 2010. The increase in cement volumes was driven by growth in sales in Panama resulting from higher demand from infrastructure projects, including the Panama Canal expansion project, which began to ramp up in terms of its demand for cement in 2011. Higher average sales prices in Panama, where prices increased 3.2% (or 5.8% excluding sales to the Panama Canal expansion project), also contributed to increased operating revenues. Prices for cement elsewhere in the region were relatively stable.

Our total operating revenue for the Ready-mix concrete segment in 2011 was Ps.111,377 million, 27.3% higher than in 2010. This increase was primarily due to an increase in ready-mix concrete sales volumes in Panama, which increased 26.4% on a combined basis compared to 2010. Our average sales price for ready-mix concrete increased 2.8% in 2011 compared to 2010, due to increased demand in Panama as well as inflation during 2011. Our revenues from ready-mix concrete operations in other countries in the Caribbean were not meaningful for 2011.

United States

2012 versus 2011

Our total operating revenue in the United States in 2012 was Ps.1,201,388 million, 43.1% higher than in 2011.

56 Our total operating revenue for the Cement segment was Ps.239,147 million, 119.9% higher than in 2011. This increase was due primarily to the inclusion of the Lafarge businesses in our consolidated results and increases in our cement sales volumes, which increased 173.7% on a combined basis compared to 2011. Prior to the acquisition of the Lafarge businesses, we exported cement from the Cartagena plant to the United States to supply our ready-mix concrete operations in the United States and also for sale to third-party clients. Following the acquisition, cement exports from Cartagena to the United States were gradually replaced by cement produced at the acquired plants. We ceased all cement exports from our Cartagena plant to the United States in the first quarter of 2012. Our average sales price for cement decreased 5.0% in 2012 compared to 2011, due to increased transportation costs (which we subtract from the contractual price paid by customers for purposes of determining our realized selling price) resulting from shipments to customers located farther away from our production facilities. For 2012, the business acquired from Lafarge contributed U.S.$171.8 million of combined revenues and 1.6 million metric tons in the Cement segment.

Our total operating revenue for the Ready-mix concrete segment was Ps.962,241 million, 31.6% higher than in 2011. This increase was primarily due to an increase in sales volumes, which increased 28.4% on a combined basis compared to 2011, particularly in the southeast region of the United States where the ready-mix operations acquired from Lafarge are located. Our average sales price for ready-mix concrete increased 5.8% in 2012 compared to 2011, due to a rise in the price of raw materials. For 2012, the business acquired from Lafarge contributed U.S.$121.2 million of combined revenues and 1.1 million cubic meters in the Ready-mix concrete segment.

2011 versus 2010

Our total operating revenue in the United States in 2011 was Ps.839,678 million, 8.8% higher than in 2010. This increase was primarily due to the inclusion in our consolidated results of the Lafarge businesses beginning in the fourth quarter of 2011. For 2011, the business acquired from Lafarge contributed U.S.$37.3 million of combined revenues and 356,000 metric tons in the Cement segment and U.S.$26.2 million of combined revenues and 230,921 cubic meters in the ready-mix concrete segment, all of which occurred in the fourth quarter.

Our total operating revenue for the Cement segment was Ps.108,730 million, 24.5% higher than in 2010. This increase was primarily due to an increase in our cement sales volumes, which increased 79.5% on a combined basis compared to 2010, almost entirely due to our acquisition of the Lafarge businesses in the fourth quarter of 2011.

Our total operating revenue for the Ready-mix concrete segment was Ps.730,948 million, 6.8% higher than in 2010. This increase was primarily due to an increase in our ready-mix concrete sales volumes, which increased 9.7% on a combined basis compared to 2010, particularly in the southeast region of the United States where the ready-mix operations acquired from Lafarge are located.

Other

Our total operating revenue for the Ancillary Business segment in 2012 was Ps.42,116 million, 68.5% lower than in 2011, primarily due to the spin-off of certain non-core assets on May 30, 2012 and the subsequent exclusion of the corresponding financial results. Our total operating revenue for the Ancillary Business segment in 2011 was Ps.133,891 million, 19.4% higher than in 2010.

57 Costs of Goods Sold and Gross Income

The following tables set forth a breakdown of our costs of goods sold, our gross income and our gross income margin, in each case by operating segment and geographic area for the years ended December 31, 2010, 2011 and 2012.

Cost of Goods Sold Year ended December 31, 2010 2011 2012 2010-2011 variation 2011-2012 variation (millions of Ps. and percentages) Colombia Cement 621,847 751,230 808,044 20.8% 7.6% Ready-mix concrete 443,043 601,763 722,024 35.8% 20.0% Total 1,064,890 1,352,993 1,530,068 27.1% 13.1%

Panama and the Caribbean Cement 441,132 509,924 586,457 15.6% 15.0% Ready-mix concrete 83,373 101,186 103,128 21.4% 1.9% Total 524,505 611,110 689,585 16.5% 12.8%

United States Cement 86,686 113,774 232,573 31.2% 104.4% Ready-mix concrete 686,043 752,584 975,817 9.7% 29.7% Total 772,729 866,358 1,208,390 12.1% 39.5%

Other Ancillary business 61,309 73,904 40,414 20.5% (45.3)% Total 61,309 73,904 40,414 20.5% (45.3)% Total Cost of Goods Sold 2,423,433 2,904,365 3,468,457 19.8% 19.4%

Gross Income Year ended December 31, 2010 2011 2012 Gross income Gross income Gross income 2010 2011 2012 margin margin margin (millions of Ps. and percentages) Colombia Cement 435,310 551,223 693,461 41.2% 42.3% 46.2% Ready-mix concrete (9,732) 18,723 64,434 (2.2)% 3.0% 8.2% Total 425,578 569,946 757,895 28.6% 29.6% 33.1%

Panama and the Caribbean Cement 120,147 150,801 146,989 21.4% 22.8% 20.0% Ready-mix concrete 4,088 10,191 12,352 4.7% 9.1% 10.7% Total 124,235 160,992 159,341 19.2% 20.9% 18.8%

United States Cement 671 (5,044) 6,574 0.8% (4.6)% 2.7% Ready-mix concrete (1,715) (21,636) (13,576) (0.3)% (3.0)% (1.4)% Total (1,044) (26,680) (7,002) (0.1)% (3.2)% (0.6)%

Other Ancillary business 50,867 59,987 1,702 45.3% 44.8% 4.0% Total 50,867 59,987 1,702 45.3% 44.8% 4.0% Consolidated Gross Income 599,636 764,245 911,936 19.8% 20.8% 20.8%

Our total cost of goods sold in 2012 was Ps.3,468,457 million, 19.4% higher than in 2011. This increase was equal to the increase in our operating revenues in 2012. As a result, our consolidated gross income margin (gross income divided by operating revenues) in 2012 was 20.8%, the same as 2011.

Our total cost of goods sold in 2011 was Ps.2,904,365 million, 19.8% higher than in 2010. This increase was less than the 21.4% increase in our operating revenues. As a result, our consolidated gross income margin (gross income divided by operating revenues) increased from 19.8% to 20.8%.

58 Colombia

2012 versus 2011

Our total cost of goods sold in Colombia in 2012 was Ps.1,530,068 million, 13.1% higher than in 2011. This increase was primarily due to an increase in direct costs required to support increased sales volumes in ready-mix concrete. Our gross income margin for the region increased from 29.6% to 33.1%.

Our total cost of goods sold for the Cement segment was Ps.808,044 million, 7.6% higher than in 2011. This increase was due mainly to an increase in the price of raw materials, fuel costs, transportation and other direct costs, as well as to an increase in indirect costs. The increase in direct and indirect costs was due, in part, to the increased demand for clinker from our cement plants in the interior of Colombia, which in some cases required delivery from other plants in the region and our Cartagena plant. Revenues for this segment increased by 15.3% and gross income increased 25.8%, resulting in an increase in the gross income margin for the segment from 42.3% to 46.2%.

Our total cost of goods sold for the Ready-mix concrete segment was Ps.722,024 million, 20.0% higher than in 2011. This increase was due principally to a 14.6% increase in sales volume, with increases above that rate for raw materials (including cement) and fuels, offset by slower increases in labor costs. The increase in costs of goods sold was higher than the 14.6% increase in sales volume, but gross income for this segment was favorably affected by the 12.5% increase in average ready-mix concrete sale prices. As a result, gross income margin for the segment increased from 3.0% to 8.2% .

2011 versus 2010

Our total cost of goods sold in Colombia in 2011 was Ps.1,352,993 million, 27.1% higher than in 2010. This increase was primarily due to an increase in direct costs required to support increased sales volumes. Our gross income margin for the region increased from 28.6% to 29.6%.

Our total cost of goods sold for the Cement segment was Ps.751,230 million, 20.8% higher than in 2010. This increase was due mainly to increases in direct costs related to increased sales volumes, an increase in the prices of raw materials and price increases for coal and gas, and increased costs for the maintenance of equipment. This increase was offset by increased productivity of labor, and increased efficiencies in production equipment. Revenues for this segment increased by 23.2% and gross income increased 26.6%, resulting in an increase in the gross income margin for the segment increased from 41.2% to 42.3%.

Our total cost of goods sold for the Ready-Mix concrete segment was Ps.601,763 million, 35.8% higher than in 2010. This increase was due principally to a 35.3% increase in sales volume, with increases at or below that rate for raw materials (including cement) and fuels, offset by slower increases in labor costs and other indirect costs. While the increase in costs of goods sold was in line with the 35.3% increase in sales volume, gross income for this segment was favorably affected by the increase in average ready-mix concrete selling prices of 5.3%. As a result, gross income margin for the segment increased from a loss of 2.2% to a gain of 3.0%.

Panama and the Caribbean

2012 versus 2011

Our total cost of goods sold in Panama and the Caribbean in 2012 was Ps.689,585 million, 12.8% higher than in 2011. This increase was primarily due to an increase in direct costs relating to increased cement sales volumes compared to 2011. Segment gross income was adversely affected by the foreign currency translation effect of the appreciation of the Colombian peso against the U.S. dollar in 2012, although to a lesser extent than in 2011, and by a decrease in sales volumes in the ready-mix concrete segment compared to 2011. Our gross income margin for the region decreased from 20.9% to 18.8%.

Our total cost of goods sold for the Cement segment was Ps.586,457 million, 15.0% higher than in 2011. This increase was due principally to an increase in direct costs relating to increased cement sales volumes compared to

59 2011, particularly to the Panama Canal expansion project. The impact of the increase in costs of goods sold was offset by the 11.0% increase in cement operating revenues, reflecting an average price increase of 2.4% (or 6.2% excluding sales to the Panama Canal expansion project). Gross income margin for the segment decreased from 22.8% to 20.0%.

Our total cost of goods sold for the Ready-mix concrete segment was Ps.103,128 million, 1.9% higher than in 2011. The impact of the increase in cost of goods sold was offset by the 3.7% increase in ready-mix concrete operating revenues, stable raw material prices resulting from the increased use of fly ash in the production of ready-mix concrete and stable distribution costs. Gross income margin for the segment increased from 9.1% to 10.7%.

2011 versus 2010

Our total cost of goods sold in Panama and the Caribbean in 2011 was Ps.611,110 million, 16.5% higher than in 2010. This increase was primarily due to an increase in direct costs relating to increased cement and ready-mix concrete sales volumes compared to 2010. Labor and other indirect costs increased more slowly than the rate of overall increase in costs of goods sold. Segment gross income was adversely affected by the foreign currency translation effect of the appreciation related to the Colombian peso against the U.S. dollar in 2011. Our gross income margin for the region increased from 19.2% to 20.9%.

Our total cost of goods sold for the Cement segment was Ps.509,924 million, 15.6% higher than in 2010. This increase was due principally to increased costs incurred in Panama, where direct costs of production, primarily costs for raw materials, rose due to an increase in the amount of clinker used in our cement production process. The impact of the increase in costs of goods sold was more than offset by the 17.7% increase in cement revenues in this region, reflecting an average price increase of 3.2% in Panama (or 5.8% excluding sales to the Panama Canal expansion project). Gross income margin for the segment increased from 21.4% to 22.8%.

Our total cost of goods sold for the Ready-mix concrete segment was Ps.101,186 million, 21.4% higher than in 2010. This increase was significantly lower than the 27.1% increase in sales volumes. Gross income for the Ready- mix concrete segment also benefited from a 2.8% increase in average selling prices in dollar terms, offset by the translation effect of the appreciation of the Colombian peso against the U.S. dollar during 2011. Gross income margin for the segment increased from 4.7% to 9.1%.

United States

2012 versus 2011

Our total cost of goods sold in the United States in 2012 was Ps.1,208,390 million, 39.5% higher than in 2011. This increase was primarily due to full-year effects of the costs associated with the businesses acquired from Lafarge. Segment revenues increased by 43.1% in the United States, the segment posted a loss of Ps.7,002 million at the gross income level for 2012, compared with a loss of Ps.26,680 million for 2011.

Our total cost of goods sold for the Cement segment was Ps.232,573 million, 104.4% higher than in 2011. This increase was due principally to increased costs of goods sold of U.S.$124.2 million relating to the business acquired from Lafarge, including related depreciation and amortization. However, segment revenues for cement increased by 119.9%, as a result of which the segment gross income increased. Gross income margin for the segment increased from a loss of 4.6% to 2.7%.

Our total cost of goods sold for the Ready-mix concrete segment was Ps.975,817 million, 29.7% higher than in 2011. This increase was due principally to the increased costs incurred as a result of the Lafarge acquisition and an increase in prices for raw materials, fuel and labor costs. However, segment revenues increased 31.6%, as a result of which our loss at the gross income level decreased.

60 2011 versus 2010

Our total cost of goods sold in the United States in 2011 was Ps.866,358 million, 12.1% higher than in 2010. This increase was primarily due to an increase in costs relating to the businesses acquired from Lafarge in October 2011. Because operating revenues in the United States increased by only 8.8%, segment cost of goods sold exceeded segment operating revenues.

Our total cost of goods sold for the Cement segment was Ps.113,774 million, 31.2% higher than in 2010. This increase was due principally to increased costs of goods sold of U.S.$33.1 million relating to the business acquired from Lafarge. Segment revenues for cement increased by only 24.5%, however, as a result of which the segment gross income declined. Gross income margin for the segment decreased from 0.8% to a loss of 4.6%.

Our total cost of goods sold for the Ready-mix concrete segment was Ps.752,584 million, 9.7% higher than in 2010. This increase was due principally to the increased costs incurred as a result of the Lafarge acquisition and an increase in prices for fuels and raw materials. Segment revenues increased only 6.8%, however, as a result of which segment gross income decreased.

Other

2012 versus 2011

Our total costs of goods sold for the Ancillary Business segment in 2012 was Ps.40,414 million, 45.3% lower than in 2011 as a result of the decrease in costs following the transfer of certain non-core assets to Grupo Argos as part of the spin-off completed on May 30, 2012. Our total costs of goods sold for the Ancillary Business segment in 2011 was Ps.73,904 million, 20.5% higher than in 2010.

Operating expenses and segment operating income

The following table sets forth a breakdown of our operating expenses, which comprise a portion of depreciation and amortization expenses, selling expenses and general and administrative expenses, and our operating income, by operating segment and geographic area for the years ended December 31, 2010, 2011 and 2012.

61 Year ended December 31,

2010 2011 2012

(in millions of Ps.) Ready- Ready- Ready- mix Ancillary mix Ancillary mix Ancillary Cement Concrete business Cement Concrete business Cement Concrete business Colombia Other depreciation and amortization 29,097 692 - 21,888 404 - 19,626 372 - Selling expenses 47,838 5,978 - 51,114 7,250 - 65,892 7,646 - General and administrative 38,530 3,781 - 40,194 4,022 - 54,124 5,012 - Total operating expenses 115,465 10,451 - 113,196 11,676 - 139,642 13,030 - Operating income after asset impairment(1) 319,845 (20,183) - 438,027 7,047 - 553,819 51,404 - Operating margin 30.3% (4.7%) - 33.6% 1.1% - 36.9% 6.5% -

Panama and the Caribbean Other depreciation and amortization 1,637 - - 2,221 - - 2,618 - - Selling expenses 14,489 1,057 - 13,402 1,209 - 17,910 1,980 - General and administrative 27,565 1,798 - 31,413 2,643 - 35,141 3,282 - Total operating expenses 43,691 2,855 - 47,036 3,852 - 55,669 5,262 - Operating income after asset impairment(1) 67,405 1,233 - 103,765 6,339 - 91,320 7,090 - Operating margin 12.0% 1.4% - 15.7% 5.7% - 12.5% 6.1% -

United States Other depreciation and amortization 3,640 19,786 - 1,819 20,153 - 1,694 19,565 - Selling expenses 7,932 15,179 - 6,427 17,328 - 16,236 23,362 - General and administrative 9,011 34,573 - 34,016 32,387 - 35,580 43,763 - Total Segment Operating Expenses 20,583 69,538 - 42,262 69,868 - 53,510 86,690 - Operating income after asset impairment(1) (19,912) (150,545) - (47,306) (165,964) - (46,936) (100,266) - Operating margin (22.8%) (22.0%) - (43.5%) (22.7%) - (19.6%) (10.4%) -

Other Other depreciation and amortization - - 7,975 - - 7,217 - - 9,188 Selling expenses - - 6,081 - - 7,059 - - 7,765 General and administrative - - 104,397 - - 114,786 - - 126,613 Total Operating Expenses - - 118,453 - - 129,062 - - 143,566 Operating income after asset impairment(1) - - (67,586) - - (69,075) - - (141,864) Operating margin - - (60.2%) - - (51.6%) - - (336.8%) (1) In computing our segment operating income we deduct from gross income (revenues minus cost of goods sold) other segment depreciation and amortization as well as segment selling, general and administrative expenses. Corporate overhead expenses are included as part of the “other” segment.

Our consolidated operating expenses for 2012 were Ps.497,369 million, 19.3% higher than in 2011, and our consolidated operating income after asset impairment for 2012 was Ps.414,567 million, 19.4% higher than in 2011.

Our consolidated operating expenses in 2011 were Ps.416,952 million, 9.4% higher than in 2010, and our consolidated operating income after asset impairment in 2011 was Ps.272,833 million, 109.5% higher than in 2010.

Colombia

2012 versus 2011

Our operating expenses in Colombia in 2012 were Ps.152,672 million, 22.3% higher than in 2011. This increase resulted primarily from increased selling expenses and general and administrative expenses. The increase in selling 62 expenses was principally due to an increase in employee salaries, an increase in taxes in the Cement and Ready-mix concrete segment resulting from increased revenues and an increase in marketing costs for our cement products in connections with a new campaign. The increase in general and administrative expenses was due to payments made in April and December of 2012 under our variable compensation program corresponding to compensation for 2011 and 2012, respectively.

As a result of these trends and higher gross income in 2012, the segment operating income after asset impairment was Ps.605,223 million, 36.0% higher than in 2011.

2011 versus 2010

Our operating expenses in Colombia in 2011 were Ps.124,872 million, 0.8% lower than in 2010. This decrease resulted primarily from lower depreciation and amortization expense following our write-off in 2010 of certain trademarks that were no longer used, which offset increased selling expenses, while segment general and administrative expenses did not change significantly between the periods. The increased selling expenses were principally due to an increase in employee salaries and an increase in taxes in the Cement and Ready-mix concrete segment resulting from increased revenues. The 6.8% increase in selling expenses in cement and 21.3% increase in selling expenses in ready-mix concrete supported higher levels of operating revenues of 23.2% and 43.2%, respectively, resulting in favorable operating leverage.

As a result of these favorable trends and higher gross income in 2011, the segment operating income after asset impairment was Ps.445,074 million, 48.5% higher than in 2010.

Panama and the Caribbean

2012 versus 2011

Our operating expenses in Panama and the Caribbean in 2012 were Ps.60,931 million, 19.7% higher than in 2011. Segment selling expenses and general and administrative expenses increased in both the Cement and Ready-mix concrete segments, while depreciation and amortization increased. The increase in segment selling expenses and general and administrative expenses was primarily due to an increase in marketing expenses in all of our markets in the region and administrative expenses in Haiti related to our new office in Port-au-Prince.

Our operating income after asset impairment for this segment was Ps.98,410 million, 10.6% lower than in 2011.

2011 versus 2010

Our operating expenses in Panama and the Caribbean in 2011 were Ps. 50,887 million, 9.3% higher than in 2010. Increases in segment general and administrative expenses were partially offset by a small reduction in selling expense, while depreciation and amortization increased only slightly. The increase in segment general and administrative expenses was primarily due to an increase in marketing expenses, mainly in the Cement segment, as well as the recognition of a deferred cost for SAP software in Panama. Our results in 2011 also benefited from the absence of any asset impairment, compared with an impairment of Ps.9,051 million in 2010 relating to our subsidiary in the Netherlands Antilles.

As a result of these favorable trends and higher gross income in 2011, our operating income after asset impairment for this segment was Ps.110,105 million, 60.4% higher than in 2010.

United States

2012 versus 2011

Our operating expenses in the United States in 2012 were Ps.140,200 million, 25.0% higher than in 2011. General and administrative expenses increased as a result of the Lafarge acquisition, while selling expenses also increased as

63 a result of increased marketing activities relating to the cement assets acquired in connection with the Lafarge acquisition.

2011 versus 2010

Our total segment operating expenses in the United States in 2011 were Ps.112,130 million, 24.4% higher than in 2010. The principal cause of the increase was higher general and administrative expenses as a result of acquisition- related expenses, including U.S.$10.7 million in transaction-related expenses, incurred in connection with the Lafarge acquisition. Depreciation and amortization decreased slightly in the Cement segment but increased slightly in the Ready-mix concrete segment. Segment selling expenses decreased in Cement as a result of a net effect, generated between a reduction of U.S.$2.2 million due to a reclassification of expenses of South Central Terminal which are considered as Other Business since 2011 and on the other hand, an increase of U.S.$1.5 million due to the Lafarge acquisition because of an increase in the Cement sales force. The United States segment results were adversely affected by asset impairments in the Ready-mix concrete segment both in 2010 (Ps.79,292 million) and in 2011 (Ps.74,460 million).

Other non-operating income (expenses)

The following table sets forth a breakdown of our other non-operating income and expense items for the years ended December 31, 2010, 2011 and 2012.

Year ended December 31, 2010 2011 2012 (millions of Ps.)

Other non-operating income (expenses)

Financial income 12,981 18,785 12,498 Dividends received 81,374 72,283 35,512 Interest expense (192,208) (195,963) (223,942) Foreign exchange difference 758 (15,848) (1,160) Other income 592,268 746,023 362,262 Other expenses (295,491) (493,335) (182,947) Total other non-operating income 199,682 131,945 2,223

2012 versus 2011

Other income in 2012 was Ps.362,262 million, 51.4% lower than in 2011. This decrease in other income resulted from lower sales from our investment portfolio following the acquisition of the Lafarge businesses. See Note 25 to our consolidated financial statements included in this offering memorandum for more detailed information.

Other expenses decreased by 62.9% from 2011 to 2012. This decrease resulted principally from reduced provisions and write offs compared to 2011, a year in which we wrote off trademarks (Fortaleza and Uno A) valued at Ps.96,799 million, had a goodwill write down of Ps. 84,302 million and a pension provision of Ps.32,880 million.

Interest expense increased 14.3% for 2012, principally due to an increase in our average cost of funding following an extension of the average maturity of our interest-bearing debt, which we did to take advantage of attractive market conditions. In 2012, we issued bonds in a principal amount equal to Ps.1,000,000 million with a maturity of up to 15 years, repaid 100% of outstanding commercial paper and decreased our short term financial obligations from Ps.1,269,423 million in 2011 to Ps.653,308 million.

As a result of the foregoing, our other non-operating income in 2012 was Ps.2,223 million, 98.3% lower than in 2011.

2011 versus 2010

Other income increased by 26.0% from 2010 to 2011. The increase in other income resulted almost entirely from an increase in gains from the sale of permanent investments. In both periods, the Company sold shares from our 64 investment portfolio, mainly shares in Grupo Sura, for cash. Sales of shares in 2010 resulted in net profits of Ps.509,220 million (including Ps.488,108 million from net profits on sales of shares in Grupo Sura), whereas sales of shares in 2011 resulted in net profits of Ps.641,155 million (including Ps.607,290 million from net profits on sales of shares in Grupo Sura). See Note 25 to our consolidated financial statements included in this offering memorandum for more detailed information.

Other expenses increased by 67.0% from 2010 to 2011. This increase resulted principally from the write-off of Ps.96,799 million of trademarks relating to the Colombian cement business and a write-down of Ps.84,302 million in goodwill in our subsidiaries Caricement and Domar. See Note 26 to our consolidated financial statements included in this offering memorandum for more detailed information.

Interest expense increased only slightly in 2011, notwithstanding a significant increase in the average level of indebtedness following the acquisition of the Lafarge businesses. This was due to a refinancing operation that resulted in lower interest costs achieved through the non-speculative use of derivatives and foreign currency- denominated loans. The loss from foreign exchange differences in 2011 resulted principally from the effect of exchange rate movements on the value of forward contracts entered into by the Company to hedge the Colombian peso value of purchase price of the Lafarge business.

As a result, our other non-operating income in 2011 was Ps.131,945 million, 33.9% lower than in 2010.

Provision for income taxes

2012 versus 2011

The provision for income taxes in 2012 was Ps.17,083 million, 31.7% lower than in 2011. The decrease is due primarily to the net effect of the recording of deferred tax assets arising from the recognition of exchange differences on financial obligations and foreign currency bonds.

2011 versus 2010

The provision for income taxes in 2011 was Ps.25,024 million, 21.7% lower than in 2010, notwithstanding an increase in income before tax provision of 22.7%, from Ps.329,939 million to Ps.404,778 million. The decrease in taxes as a percentage of income before taxes, resulted from an increase in gains from the sale of permanent investments which were not subject to income tax, and from an increase in dividends paid to Cementos Argos from foreign subsidiaries that gave rise to equivalent tax credits.

Liquidity and capital resources

Overview of sources and uses of cash

Our main cash requirements includes our operating expenses, working capital requirements, capital expenditures relating to the maintenance and expansion of our facilities, the servicing of our debt, the payment of dividends and payment of taxes. Our primary sources of cash have been cash flows from operating activities, dividends and sales of shares from our investment portfolio, loans and other financings. In 2010, 2011 and 2012, we sold investment securities for total proceeds of Ps.547,586 million, Ps.715,280 million and Ps.257,303 million, respectively. Profits from the sale of investment securities of Ps.509,220 million, Ps.641,155 million and Ps.231,369 million in 2010, 2011 and 2012, respectively, made a significant positive contribution to our net income for each of those years. The investment portfolio, as of December 31, 2012, included shares of Grupo Sura and Bancolombia with market values of Ps.1,070,964 million and Ps.613,115 million, respectively, based on the closing prices for such shares on the Colombia Stock Exchange on that date. Financial obligations outstanding at December 31, 2012 were Ps.1,023,025 million, principally loans and credit lines with commercial banks. We also had outstanding on December 31, 2012 floating rate bonds of Ps.2,015,998 million principal amount, with remaining maturities between 10 months and 14 years.

65 The table below sets forth our net cash flows primary sources and uses of cash for the years ended December 31, 2010, 2011 and 2012.

Year ended December 31, 2010 2011 2012 (in millions of Ps.)

Net cash provided by operating activities 183,400 409,724 328,783 Net cash provided by (used in) investment activities 89,914 (1,041,370) 94,258 Net cash provided by (used in) financing activities (442,291) 453,614 (487,569) Cash and cash equivalents at the end of the year 476,130 290,935 156,865

Net cash provided by operating activities

2012 versus 2011

Our net cash provided by operating activities was Ps.409,724 million in 2011 compared to Ps.328,783 million in 2012. This decrease was due to higher working capital requirements related to growth in the cement and ready-mix concrete businesses. This decrease was offset by an increase in Operating EBITDA of Ps. 109,646 million. The main uses of our cash from operating activities were increases in inventory, receivables and deferred liabilities.

As part of its working capital strategy, management attempts to minimize the difference between (i) the sum of the number of days of sales represented by its accounts receivable plus the number of days of its inventories minus (ii) the number of days of total costs of goods sold represented by its accounts payable. This measure increased slightly for 2012 from 50 days at December 31, 2011 to 51 days at December 31, 2012 mainly due to higher turnover in days of inventories and accounts payable following the integration of the assets acquired from Lafarge assets in 2012.

Our accounts receivable at December 31, 2012 represented 34 days of revenues based on average daily revenues for the last two months of 2012, compared with 34 days of average daily revenues (calculated on a comparable basis) at December 31, 2011. Our inventories at December 31, 2012 represented 39 days of cost of goods sold based on average daily cost of goods sold for 2012, compared with 46 days of cost of goods sold based on average daily cost of goods sold (calculated on a comparable basis) at December 31, 2011. Our accounts payable at December 31, 2012 represented 22 days of average daily costs of goods plus sales, general and administrative expenses for 2012, compared with 31 days of average daily costs of goods sold (calculated on a comparable basis) at December 31, 2011.

2011 versus 2010

Our net cash provided by operating activities was Ps.183,400 million in 2010 compared to Ps.409,724 million in 2011. This increase was due principally to (i) an increase in net income of Ps.81,096 million, (ii) an increase of Ps.84,770 million in amortization of deferred charges, (iii) write-offs of intangible assets of Ps.96,799 million and (iv) an increase of Ps.51,004 million in long-term financial liabilities and accounts payable exchange difference. In addition to these non-cash items, there were other sources of cash such as higher proceeds from the sale of shares from our investment portfolio (an increase of Ps.131,935 million from 2010 to 2011), and lower losses from the disposal of property, plant and equipment (a decrease of Ps.60,434 million from 2010 to 2011).

Our accounts receivable at December 31, 2011 represented 34 days of revenues based on average daily revenues for the last two months of 2011, compared with 37 days of average daily revenues (calculated on a comparable basis) at December 31, 2010. Our inventories at December 31, 2011 represented 46 days of cost of goods sold based on average daily cost of goods sold for 2011, compared with 55 days of cost of goods sold revenues based on average daily cost of goods sold (calculated on a comparable basis) at December 31, 2010. Our accounts payable at December 31, 2011 represented 31 days of average daily costs of goods sold plus sales, general and administrative expenses for 2011, compared with 31 days of average daily costs of goods sold plus sales, general and administrative expenses (calculated on a comparable basis) at December 31, 2010. The difference between the measure for (i) accounts receivable plus inventories minus (ii) accounts payable decreased from 61 days at December 31, 2010 to 50 days at December 31, 2011.

66 Net cash provided by (used in) investment activities

Our net cash used in investment activities was Ps.1,041,370 million in 2011 compared to our net cash provided by investment activities of Ps.94,258 million in 2012. This change was due primarily to the fact that we made no significant acquisitions in 2012 compared to the acquisition of the Lafarge assets in 2011. During 2012, we also sold shares of Bancolombia from our investment portfolio for total proceeds of Ps.257,303 million, which we use used to reduce our financial liabilities. We made Ps.167,346 million of capital expenditures in 2012.

Our net cash provided by investment activities was Ps.89,914 million in 2010 compared to net cash used in investment activities of Ps.1,041,370 million for 2011. This change was due to the acquisition of the Lafarge assets in October 2011 for Ps.1,349,042 million and other capital expenditures for Ps.253,530 million, compared with acquisitions of Ps.491,977 million for 2010.

Net cash provided by (used in) financing activities

Our net cash provided in financing activities was Ps.453,614 million for 2011 compared to net cash used by financing activities of Ps.487,569 million for 2012. The main source of cash was the issuance of Ps.1,000,000 million in principal amount of bonds in 2012, which was offset by cash used to (i) repay short-term indebtedness and commercial paper in amount of Ps.423,032 million in 2012 compared to repayments of Ps.50,970 million in 2011 and (ii) reduce financial liabilities in an amount of Ps.868,038 million in 2012 compared with an increase in financial liabilities of Ps.553,148 million in 2011.

Our net cash used in financing activities was Ps.442,291 million for 2010 compared to our net cash provided by financing activities of Ps.453,614 million for 2011. This change was due primarily to our borrowing of funds to finance a portion of the purchase price for the Lafarge acquisition (total increase in financial liabilities of Ps.553,148 million compared with the reduction in financial liabilities of Ps.331,866 million in 2010).

Cash and cash equivalents

Our cash and cash equivalents decreased from Ps.290,935 million for 2011 to Ps.156,865 million for year ended December 31, 2012. For purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash on hand and short-term deposits.

Indebtedness

The below tables set forth the financial obligations and outstanding bonds and securities for the periods indicated.

Year ended December 31, Financial Obligations 2010 2011 2012 (in millions of Ps.)

Loans from domestic banks and financing entities 867,532 1,122,833 659,875 Loans from foreign banks and other entities 426,908 807,620 298,118 Letters of credit and loans from trade financing companies 251 125 24,269 Other loans from third parties 28,899 23,204 14,158 Other domestic liabilities 58,759 35,358 26,604 Total 1,382,349 1,989,140 1,023,025 Non-current portion (700,167) (719,717) (369,717) Current portion of financial obligations 682,182 1,269,423 653,308

67 Year ended December 31, 2010 2011 2012 Commercial Paper, Bonds and Securities (in millions of Ps.)

Commercial Paper 250,000 199,030 - Short-term - 224,002 77,200 Long-term 1,228,506 1,006,146 1,930,588 Total Commercial Paper, Bonds and Securities 1,478,506 1,429,178 2,007,788 (1) Includes loans denominated in Colombian pesos and U.S. dollars.

As of December 31, 2012 and after giving effect to our cross-currency swaps and forwards, 25% of our total debt was denominated in U.S. dollars and 75% was denominated in Colombian pesos.

Most of our indebtedness has been incurred to finance acquisitions, capital expenditures and working capital needs. Historically, we have addressed our liquidity needs (including funds required to make scheduled principal and interest payments, refinance debt, and fund working capital and planned capital expenditures) with operating cash flows, borrowings, proceeds from debt issuances and proceeds from asset sales and sales from our investment portfolio.

See Note 11 of our audited consolidated financial statements for a table of our loans from domestic banks and financial corporations and loans from foreign banks and other entities as of December 31, 2012. See Note 12 of our audited consolidated financial statements for additional information regarding the terms of our outstanding bonds.

Our loan agreements contain representation and warranties, financial covenants, undertakings and other terms and conditions customarily found in financing agreements of this kind. These loans do not have any restrictions on the use of amounts drawn and currently outstanding. The seasonality of our borrowings for working capital depends on the seasonality of our business. In Colombia and Panama and the Caribbean, where the working capital is steady throughout the year, there is no seasonality of borrowings. In the United States, where the seasons affect the sales of cement and ready-mix concrete, the borrowings vary depending on the working capital

The following is a summary of our material loans from domestic banks and financial corporations and foreign banks and other entities:

Bancolombia S.A. Unsecured Loan

In September 2010, we entered into an unsecured loan with Bancolombia in an amount of Ps.300,000 million accruing interest at a variable rate equivalent to 12 month CPI plus 580 basis points on a yearly basis. This loan matures on September 2020. On September 10, 2012, the loan agreement pertaining to this loan was amended, pursuant to which Grupo Argos agreed to pay Ps.200,000 million plus accrued interest, with the remaining Ps.100,000 million, plus accrued interest, to be paid by us at the original interest rate. This loan was granted with the purpose of paying pre-existing debt and for working capital. This loan contains representations and warranties, undertakings and other terms and conditions customarily found in financing agreements of this kind. As of December 31, 2012, we are in compliance with the terms and conditions of this loan.

Eksport Kredit Fonden and Citibank International Unsecured Loan

In December 2007, we entered into an unsecured loan with Eksport Kredit Fonden and Citibank International PLC in an amount of U.S.$159 million, accruing interest at a variable rate per annum equal to the LIBOR rate plus 0.1%. The maturity date for this loan is June 27, 2019. This loan was granted with the purpose of financing costs related to the expansion of the Cartagena plant. The loan contains the following financial covenants:

a ratio of Consolidated Total Senior Net Debt to EBITDA Ratio (as defined in the loan) plus 12- month dividends no greater than 4.0x; and

a Debt Service Coverage Ratio (as defined in the loan) of no less than 1.5x.

68 See Note 11 to our audited consolidated financial statements. The Net Debt to EBITDA Ratio has an impact on our ability to undertake additional debt, so long as such additional debt does not represent a significant increase in the EBITDA. As of December 31, 2012, we are in compliance with the terms and conditions of this loan.

Bonds Payable

As of December 31, 2012, we had Ps.2,015,998 million aggregate amount of outstanding bonds. Of these outstanding bonds, Ps.77,200 million represent current liabilities and Ps.1,938,798 million are non-current liabilities.

November 2005 Bonds

On November 23, 2005, we issued Ps.600,000 million aggregate principal amount of floating rate local bonds, Ps.80,000 million of which matured in November 2012. These bonds were issued at face values between 88% and 100%, have effective interest rates between CPI+2.40% and CPI+5.25%, and mature between November 2012 and November 2017. As of December 31, 2012, the following bonds issued under this offering were still outstanding:

Term Amounts Issued Effective Int. Rate Interest Payment Terms (in millions of Ps.) 10 years 80,000 CPI+2.88% Half-yearly in arrears 12 years(1) 290,000 CPI+3.17% Half-yearly in arrears 12 years(1) 150,000 CPI+5.25% Half-yearly in arrears Total 520,000 (1) The 12-year notes, issued in two tranches amounting to Ps.440,000 million, were converted to U.S. Dollars (equivalent to U.S.$240 million) through a currency swap at an average rate of Libor +1.78% half yearly in arrears.

April 2009 Bonds

On April 28, 2009, we issued Ps.640,000 million aggregate principal amount of floating rate notes, of which Ps.144,002 million matured in April 2012. The tranches were issued at face values of 100%, bear floating interest rates between CPI+6.00% and CPI+7.19% and a fixed rate between 9.0% and 9.7%. These bonds mature between April 2012 and April 2024. As of December 31, 2012, the following bonds issued under this offering were still outstanding:

Term Amounts Issued Effective Int. Rate Interest Payment Terms (in millions of Ps.) 5 years 81,175 9.70% AE Annually in arrears 7 years 114,943 CPI+6.00% Quarterly in arrears 10 years 70,350 CPI+6.30% Quarterly in arrears 15 years 229,530 CPI+7.19% Quarterly in arrears Total 495,998

April 2012 Bonds

On April 11, 2012, we issued Ps.300,000 million aggregate principal amount of floating rate notes in three tranches. The tranches were issued at face values of 100%, bear floating interest rates as set forth below, and mature between October 2013 and April 2015. As of December 31, 2012, the following bonds issued under this offering were still outstanding:

Term Amounts Issued Effective Int. Rate Interest Payment Terms (in millions of Ps.) 18 months 77,200 IBR(1) +1.45% Monthly in arrears 2 years 111,400 DTF(2)+1.34% Quarterly in arrears 3 years 111,400 DTF+1.45% Quarterly in arrears Total 300,000 (1) IBR means Indicador Bancario de Referencia. It is a short-term interest reference rate for the private sector calculated using the average interest rates that banks are willing to offer in order to obtain resources from the market. (2) DTF means Depósito a Término Fijo. It is the average short-term composite reference rate, a type of interest rate calculated using short-term interest rates on deposits as a reference.

69 May 2012 Bonds

On May 16, 2012, we issued Ps.700,000 million aggregate principal amount of floating rate notes in three tranches. The tranches were issued at face values of 100%, bear floating interest between CPI+3.80% and CPI+4.50%, and mature between May 2018 and May 2027. As of December 31, 2012, the following bonds issued under this offering were still outstanding:

Term Amounts Issued Effective Int. Rate Interest Payment Terms (in millions of Ps.) 6 years 97,022 CPI+3.80 Quarterly in arrears 10 years 299,896 CPI+4.24 Quarterly in arrears 15 years 303,082 CPI+4.50 Quarterly in arrears Total 700,000

Securities

In 2010, our Board of Directors approved a commercial paper program for up to Ps.300,000 million, of which Ps.199,030 million in commercial paper has been issued. See Note 12 of our audited consolidated financial statements.

No commercial paper was outstanding as of December 31, 2012.

Derivative financial instruments

We currently hedge against fluctuations in interest rates and foreign currency exchange rates. Our financial risks are measured, analyzed and hedged by the corporate treasury group. Due to the nature of our business and our international footprint, our financial risks include currency risk, interest rate risk and equity price risks arising from equity investments. Guidelines for the use of derivative financial instruments for hedging purposes have been established by our Board of Directors, at the recommendation of our CFO, which has adopted a derivative policy that includes limits per instrument and counterparty. Hedging activities are evaluated regularly to align with currency exchange and interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. We do not enter into or trade financial instruments, including derivatives, for speculative purposes.

We enter into a variety of derivative financial instruments to manage our exposure to interest rate and foreign exchange rate risks, including currency swap arrangements, forward and option arrangements contracts and interest rate swaps.

See Notes 3, 6 and 13 to our audited consolidated financial statements concerning our swap arrangements.

Currency swap, forward-buying and option arrangements

We enter into currency swaps, forward-buying and currency-option arrangements in order to mitigate the risk presented by fluctuations in the Colombian peso/U.S. dollar exchange rate arising from our liabilities and temporary investments that are denominated in U.S. dollars, and from our export/import transactions. We carry our forwards and option arrangements at fair value, taking into consideration current market curves on the valuation date.

Cross-currency swaps

We enter into cross-currency swap agreements for the purpose of hedging risk of exchange rate and interest rate fluctuations. See “—Principal Factors Affecting our Results of Operations—Critical Accounting Policies and Estimates” for a description of the accounting for our cross-currency swaps.

70 Capital expenditures

Our current capital budget includes approved capital expenditures of Ps.504,936 million, of which Ps.419,319 million is expected to be incurred during 2013. As a matter of management policy, we prepare our capital budget in U.S. dollars, although a portion of the approved amounts ultimately will be made in Colombian pesos.

The approved items include expenditures in the following categories for the amounts shown in Colombian pesos:

Investment type (in millions of Ps.) Environmental 32,116 Enhancement 354,637 Mobile equipment 70,692 Technology 47,491 Total 504,936

Our capital expenditures incurred for the years ended December 31, 2010, 2011 and 2012 were as follows:

Year ended December 31,

Investment type 2010 2011 2012 (in millions of Ps.) Enhancement 413,208 173,378 64,699 Environmental 2,913 4,420 26,218 Mobile equipment 33,310 7,597 6,798 Maintenance capital expenditures 27,502 31,849 65,972 Technology 15,044 36,286 3,659 Total 491,977 253,530 167,346

Off-balance sheet arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a material effect on our financial condition, operating results, liquidity or capital resources.

71 Contractual obligations and commercial commitments

The following table sets forth the maturity profile of our long-term debt and more significant lease obligations as of December 31, 2012:

Total < 1 Year 1-3 Years 3-5 Years > 5 Years (in millions of Ps.) Long-term debt obligations Loans from domestic banks and financial 659,876 509,875 - - 150,000 entities ...... Loans from foreign banks and other entities ...... 298,118 116,733.86 82,837 56,313 42,235 Letters of credit and loans from trade 24,269 3,264 8,052 7,978 4,975 financing companies ...... Other domestic liabilities ...... 26,604 7,115 18,667 822 - Other loans from third parties 14,158 14,158 - - - Bonds ...... 2,015,998 77,200 383,975 554,943 999,880 Total Debt Obligations ...... 3,039,023 728,346 493,530 620,056 1,197,089

Other Contractual Obligations Operating Lease Obligations ...... 171,163 1,894 19,441 38,098 111,729 Total Other Contractual Obligations ...... 171,163 1,894 19,441 38,098 111,729 Total ...... 3,210,186 730,240 512,972 658,155 1,308,818

Qualitative and quantitative market disclosure

Our management has overall responsibility for establishing and monitoring the conceptual framework of our risks, as well as developing and monitoring of risk management policies. Our risk management policies are established to identify and analyze the risks we faced, set limits and appropriate risk controls and to monitor the risks and compliance with the limits. Policies and risk management systems are regularly reviewed to reflect changes in market conditions and in our activities. Through our management rules and procedures, we aim to develop a disciplined and constructive environment so that all our employees understand their roles and obligations.

Foreign currency exchange risk

Our net exchange difference was Ps.(15,848) million for 2011, compared to Ps.758 million for 2010, as a result of increased exchange losses resulting from the temporary imbalance in our exchange exposure structure while hedges were obtained to cover the cost of the Lafarge acquisition and the revaluation at market prices of a forward currency purchase portfolio in the amount of approximately U.S.$512 million. See Note 24 of our audited consolidated financial statements. Our net exchange difference was Ps.(1,160) million for 2012, compared to Ps.(15,848) million for 2011.

In order to minimize the impact of foreign exchange rate fluctuations, we balance our net currency exposure through derivative instruments. We have a “net exposure” policy which accounts for a maximum balance sheet exposure of +/- U.S.$30 million. A sensitivity analysis is carried out to evaluate the currency risk based on the net balance exposure at the end of each year. As of December 31, 2010, 2011 and 2012, the net balance exposure was U.S.$10.2 million short, U.S.$7.4 million short and U.S.14.2 million long, respectively.

In addition, substantially all our borrowings are in the form of loans denominated in U.S. dollars. We enter into a variety of derivative financial instruments to manage our exposure to foreign exchange rate risks, including foreign exchange forward contracts.

Credit risk

Credit risk is the risk of financial loss we face if a customer or counterpart of a financial instrument does not meet its contractual obligations and comes mainly from our accounts receivable from customers. Our management has developed policies for the granting of credit and our exposure to credit risk is monitored constantly. Credit is assigned on a customer-by-customer basis and is subject to assessments, which consider the capacity of payment, the history and particulars of the customer and, in certain cases when deemed necessary, management may require real guarantees with regard to financial assets. 72 As of December 31, 2012, our maximum exposure to credit risk is represented by the balance of receivables and other financial assets.

Our management has established a policy of low risk, under which we analyze the creditworthiness of each new client individually before offering general payment conditions. The review includes external ratings, when references are available, and in some cases, bank references. Thresholds of purchases are established for each client, which require different levels of approval depending on the amount of the purchase. Customers who do not meet the solvency requirements that we impose can only carry out cash payment transactions.

When monitoring credit risk, clients are grouped according to certain credit features, including the separation of individuals and legal entities, industry sector to which they belong and profile of performance in terms of payment.

We provide an estimate for doubtful accounts, which represents our best estimate of loss and is established based on an analysis of age and management of recovery efforts. Our accounts receivable grouped by number of days past due as of each of the dates in the table below were as follows:

Year ended December 31,

Cash Receivables by Age 2010 2011 2012 (millions of Ps. and percentages) Current ...... 246,518 64.5% 344,254 65.3% 280,182 54.3% 1-30 days ...... 17,359 4.5% 25,456 4.8% 76,377 14.8% 31-90 days ...... 70,478 18.4% 93,746 17.8% 83,248 16.1% 91-180 days ...... 27,684 7.2% 42,458 8.0% 34,526 6.7% 181-360 days ...... 807 0.2% 2,902 0.6% 20,461 4.0% Over 360 days ...... 19,976 5.2% 18,366 3.5% 21,182 4.1% Total ...... 382,822 526,982 515,976

The reserve for doubtful accounts amounted to Ps.27,505 million, Ps.28,501 million and Ps.35,926 million as of December 31, 2010, 2011 and 2012, respectively.

73 INDUSTRY AND REGULATORY MATTERS

General

Cement is a construction material made from calcined limestone that is ground, blended and mixed with different materials to obtain certain desired levels of adhesive and cohesive properties when mixed with water in a process known as hydration. The most commonly used cement blend is “Portland cement.” Also, white cement is a premium-priced type of cement that is used in prestige construction projects and for ornamental purposes.

Ready-mix concrete is a construction material composed of cement (usually Portland cement) and other cementitious materials such as fly ash, aggregates (generally a coarse aggregate mixed with a fine aggregate and water) and chemical admixtures used to give it certain special characteristics. Ready mix concrete is used to make pavement, architectural structures, motorways and roads, bridges and overpasses, parking structures, walls and footings for gates, fences and poles, among other things. Concrete is the most commonly used construction material in the world.

Aggregates used to create concrete include coarse aggregates such as gravel or crushed stone such as granite, sandstone and occasionally limestone, and fine aggregates such as sand. Aggregates are obtained from sand and gravel pits, rock quarries or dredged marine deposits. Aggregates are used to produce ready-mix concrete, ready-mix concrete products and mortar for the construction industry.

Cement production

The production of Portland cement is a chemical process that begins with the mining and crushing of limestone, which is then mixed with clay and, in some instances, other raw materials. There are two primary processes used to produce cement, the wet process and the dry process.

In the wet process, raw materials are homogenized in basins (large tanks) and then mixed with water. The mixture, which is known as slurry, is fed into a kiln. The following diagram illustrates the wet process of Portland cement production:

74 In the dry process, raw materials are first blended in a homogenizing silo and then processed through a pre-heater tower to pre-heat the dry raw mix. This pre-heater tower uses exhaust heat generated by the kiln as its power source. In some dry processes, pre-calciners are used to make the pre-heating process even more thermaally efficient. The resulting pre-heated mix is then deposited into the kiln to produce clinker. The folllowing diagram illustrates the dry process of Portland cement production:

Once in the kiln, the mixture (either slurry, in the case of the wet process, or preheated mix, in the case of the dry process) goes through a process referred to as calcination at temperatures of 800°C (1,470°F), and then through a process known as clinkerization at temperatures of 1,500°C (2,700°F). The result of this process is cement clinker, lumps or nodules usually 25 to 50 millimeters in diameter. The cemment clinker is thhen crushed by a grinding mill into a very fine powder, often with other cementitious materials such as fly ash, which is used to produce finished cement.

The dry process is more efficient than the wet process because the water added in the wet process to form the slurry must be evaporated in the kiln, increasing fuel consumption. The wet process also produces more greenhouse gases and environmental pollutants than the dry process and, as a result, requires more filters to mitigate environmental damage.

Ready-mix concrete production

Ready-mix concrete is a combination of cement, fine and coarse aggregates and admixtures. The admixtures control the concrete’s properties, including resistance to chemical corrosion, plasticity, pumpability, freeze/thaw resistance, strength and setting time.

75 Key characteristics of the cement and ready-mix concrete industries in the countries where we operate

Although characteristics of the cement and ready-mix concrete industries can vary somewhat across geographic markets, the markets where we operate share certain important features. Some of the important industry dynamics that affect our business are described below:

Barriers to entry. The main barriers to entry for the cement and ready-mix concrete industries are:

o the capital-intensive nature of the cement industry. New cement plants are expensive and take up to three years to build; o access to raw materials and the difficulty in obtaining new mining concessions; o transportation costs, which are particularly significant in Colombia because of an inadequate railway infrastructure and mountainous topography. Land transportation costs for cement are usually high in relation to the value of cement. In order to make land transportation of ready-mix concrete cost- effective, the distribution radius of ready-mix must be in proximity to the concrete plant. In addition, delivery of ready-mix concrete requires mixer trucks that further increase land transportation costs; o the difficulty in obtaining environmental permits and approvals necessary for the construction and operation of new plants; and o the high costs associated with environmental compliance. Cyclical business. Due to the cyclical nature of the construction industry, the cement and ready-mix concrete business tends to be cyclical as well because the construction industry accounts for a substantial majority of the demand for cement and ready-mix concrete in the markets where we operate. Cyclicality corresponds to the contraction and expansion of economies over time and to changes in economic and social policies in response to such contractions and expansions.

Seasonality. In markets where seasons are very pronounced, demand for cement and ready-mix concrete can be driven by seasonal effects. In the United States, for example, demand for cement and ready-mix concrete generally is tied not only to economic conditions and trends but also to seasonality. According to the PCA, nearly two-thirds of U.S. cement consumption occurs between May and October.

High energy consumption. A large amount of energy obtained from the burning of coal, gas, petcoke or alternative fuels is needed in order to heat the kilns used to produce clinker. Similarly, large amounts of electric power are required to operate the kilns and power the grinding stations used to produce cement.

The cement and ready-mix concrete industry in Colombia

Macroeconomic overview

The following is a summary of key economic indicators for Colombia:

From 2007 to the third quarter of 2012, Colombia enjoyed real GDP growth every period. Real GDP grew by 6.9% in 2007, 3.5% in 2008, 1.7% in 2009, 4.0% in 2010, 5.9% in 2011 and 3.9% during the first nine months of 2012 when compared to the first nine months of 2011, mainly driven by growth in the construction sector as described below.

The construction sector experienced real annual growth rates of 8.3% in 2007, 8.8% in 2008 and 5.3% in 2009. The sector contracted by 1.7% in 2010, and grew by 5.5% in 2011. The higher rate of growth experienced in 2011 was primarily due to an increase of 6.2% in civil works. For the first nine months of 2012, the construction sector grew 0.6% compared to the same period in 2011 while residential construction grew 2.5%.

76 Inflation, as measured by the change in the consumer price index, was 5.7% in 2007, 7.7% in 2008, 2.0% in 2009, 3.2% in 2010, 3.7% in 2011 and 2.4% in 2012 . The rate of inflation in 2012 was lower than in 2011 mainly due to a moderate increase in prices for education services, health services, housing, food, communication, and transportation with 4.6%, 4.3%, 3.3%, 2.5%, 1.6%, and 1.5%, respectively. The producer price index increased by 1.3% in 2007, 9.0% in 2008, 2.2% in 2009, 4.4% in 2010 and 5.5% in 2011.

The Central Bank of Colombia’s interest rate (tasa de intervención del Banco de la República) for the end of the year was fixed at 9.5% in 2007, 9.5% in 2008, 3.5% in 2009, 3.0% in 2010, 4.75% in 2011 and 4.25% in 2012.

Colombia received an investment grade rating in 2011 and is currently rated investment grade by Moody’s (Baa3 with a stable outlook), S&P (BBB- with a positive outlook) and Fitch (BBB- with a stable outlook). Credit ratings are not a recommendation to buy, sell or hold securities and may be subject to downward revision, suspension or withdrawal at any time by the relevant rating agencies. Each rating should be evaluated independently of any other rating.

According to macroeconomic estimates of the DANE and the IMF Colombia will have a population of approximately 51 million in 2020, with an estimated 1.2% population growth between 2011 and 2017, among the highest of any Latin American country.

The following table sets forth information regarding additional economic indicators for Colombia:

For the year ended December 31,

2007 2008 2009 2010 2011 2012(1) Population (millions) 43.9 44.5 45.0 45.5 46.0 46.8 Annual GDP at constant prices (billions of Ps.) 387,983 401,744 408,379 424,719 449,837 347,826 Annual real GDP growth 6.9% 3.6% 1.7% 4.0% 5.9% 3.9% Inflation 5.7% 7.7% 2.0% 3.2% 3.7% 2.4% Unemployment 9.9% 10.6% 11.3% 11.1% 9.8% 9.9% Total debt/GDP 35.9% 35.6% 36.7% 37.3% 35.8% 32.9% External debt (millions of U.S.$) 23,659 24,351 29,035 30,987 32,934 33,445 % domestic debt 66.4% 65.8% 66.4% 68.8% 69.2% 71.8% Net international reserves (millions of U.S.$) 20,948 24,030 25,336 28,452 32,300 35,829.5 International Reserves/External Debt 88.5% 98.7% 87.3% 91.8% 98.1% 107.1% External Debt/GDP 12.3% 13.6% 14.5% 14.05 14.2% 17.3% Construction real GDP growth 8.3% 8.8% 5.3% (1.7)% 5.5% 0.6% Real construction GDP growth/Real GDP Growth 1.2x 2.5x 3.1x (0.4x) 0.9x 0.3x Central Bank of Colombia’s interest rate (tasa de intervención del Banco de la República) 9.5% 9.5% 3.5% 3.0% 4.75% 4.25% (1) September 30, 2012 figures Sources: DANE, Central Bank of Colombia.

We believe that Colombia’s economic characteristics, combined with its record as a stable democracy, account for its relative strength during the recent global economic and financial crisis. According to the IMF, between 2002 and 2011, Colombia outperformed the average GDP growth rate in Latin America by 0.7%.

Colombia is also recognized for its investor-friendly legal regime. A study published in 2012 by the World Bank and the International Finance Corporation gave Colombia the highest ranking in Latin America and the Caribbean and sixth-highest in the world in terms of investor protections.

Industry overview

According to the 2011 Global Cement Report and the Iberoamerican Federation of Ready Mixed Concrete (Federación Iberoamericana de Hormigón Premezclado), Colombia was Latin America’s fourth-leading consumer of Portland cement and fifth-leading producer of ready-mix concrete. As illustrated in the following graph, cement

77 sales volumes in Colombia have grown at a CAGR of 6.71% from 2001 to 2012. Cement consumption showed a similar trend, reaching a high of 224 Kg per person in 2012. The yeaar-on-year deccreases in 2008 and 2009 were due primarily to a decrease in construction activity in response to the global economic and financial crises.

Source: DANE

According to the DANE, in 2012 10.9 million metric tons of Portland cement were produced in Colombia, of which 10.5 million metric tons were consumed domestically, an increase of 1.4% from 2011, and 0.4 million metric tons were exported.

Trends and prospects

As of December 31, 2012, our cement and ready-mix concrete saless to construction companies in Colombia were driven by three sectors of the construction industry: residential, commercial and infrastructure. In terms of revenues, 47% of cement sales were made to residential construction, 34% to infrastructure construction and 19% to commercial construction. In terms of revenues, 41% of ready-mix concrete sales were made to residential construction, 31% to infrastructure construction and 28% to commeercial construction.

Growth in these sectors is, in turn, driven by several factors, includinng (i) government subsidies and policies aimed at promoting residential development, (ii) increased government spending on infrastructure projects, (iii) the need for new, privately funded infrastructure following the growth in mining and oil exploration and production and (iv) record levels of foreign direct investment in Colombia.

Residential

According to the DANE, Colombia has a significant quantitative annd qualitative housing deficit, created by a backlog in housing construction in the last 20 to 30 years. Between 22006 and 2011, household demand units grew by 285,000 per year, but only approximately 145,000 houses were built each year, coovered only about 51% of the demand for new houses. As a result, as of the 2005 national census, the quantitative deficit of new houses is estimated at 1.3 million units, while the qualitative deficit is estimated at 2.5 million housing units.

To address the persistent housing deficit (quantitative and qualitative), Colombia’s current administration announced a plan to build one million housing units during 2010-2014. The plan includes both low-income housing (vivienda de interés social) and middle-income housing and involves an investment of Ps.78.3 trillion.

While these efforts target low-income and middle-income housing needs specifically, residential construction generally has started to recover following the global financial crisis. According to the DANE, the surface area

78 covered by residential building permits in 88 major municipal districcts grew at a CAGR of 8% between 2001 and 2012, with the largest yeara -over-year increase of 42.0% recorded between 2010 and 2011. However, the surface area covered by residential building permits for the year ended December 31, 2012 was down by 16.1% compared to 2011, largely due to a significant decrease (24.95%) in residential building permit approvals granted in Bogota.

Source: DANE

Infrastructure

Colombia has a significant infrastructure deficit and was ranked 126 out of 142 countries in terms of road quality, according to a survey published by the World Economic Forum in 2012. In addition, demand for investments in infrastructure needed to transport goods and products to the market is expected to increase, as natural resource exploration and production in Colombia is expanding, according to tthe Colombian National Agency of Hydrocarbons (Agencia Nacional de Hidrocarburos) and the Ministry of Mines and Energy. In 2011, as part of the 2010-2014 National Development Plan (Plan Nacional de Desarrollo), the Colombian government created a National Infrastructure Agency (Agencia Nacional de Infraestructura) and passed a ten-year infrastructure development plan that provides for investments of U.S.$56.2 billion through 2021, which will increase infrastructure GDP to 3% by 2014. This initiative includes U.S.$43.5 billion in spending on road and railway construction, according to the Colombian National Planning Department (Departamento Nacional de Planeación).

We currently supply cement and ready-mix concrete to 36 infrastructure projects in Colombia. These projects are expected to consume 1.5 million metric tons of cement and four milllion cubic meters of ready-mix concrete in the aggregate from 2012 to 2015.

Commercial

Commercial construction currently is recovering, after contracting in 2008 and 2009 primarily as a result of the global economic and financial crisis. According to DANE, the surface area covered by non-residential building permits in 88 major municipal districts grew at a CAGR of 7.8% between 2001 and 2012.

Sales and distribution channels

Our network of 10 cement production facilities and 54 ready-mix concrete plants allows us to service the market in all of Colombia, including large metropolitan areas, including Bogoota, Medellin, Barranquilla, Cali and Cartagena and mid-size cities such as Santa Marta, Manizales, Bucaramanga, Armenia, Pereira, Monteria, Villavicencio and Ibague. These major metropolitan areas and mid-size cities represent approximately 45% of the total population of Colombia. Sales made in these areas represent more than 40% of our total cement sales and 70% of our total ready- mix concrete sales in Colombia.

As of December 31, 2012, Portland cement in Colombia was sold primarily to the following customers:

79 Source: DANE

According to the DANE, as of December 31, 2012, retail sales of bagged cement represent 69.5% of the total cement consumption in Colombia. Cement producers in Colombia consequently benefit from having a well- established distribution network and strong brand name recognition.

Competition

Our principal competitors in Colombia are Cemex and Holcim. Based on sales figures reported to the DANE as of November 2012, we are the leading cement company in Colombia with a 48.9% market share in terms of volumes sold. The cement industry in Colombia is highly consolidated, with Cemex, Holcim and Cementos Argos comprising nearly the entire cement market.

The market for ready-mix concrete is not as concentrated as the cement market. According to our internal estimates, we have approximately a 50% market share for ready-mix concrete based on volumes sold in 2012 followed by Cemex and Holcim in terms of volumes sold nationally and installed production capacity in 2011.

The cement and ready-mix concrete industry in Panama and the Caribbean

Macroeconomic overview

Our three largest markets in the region are Panama, Haiti and the Dominican Republic.

Panama’s GDP in 2011 was U.S.$30.6 billion. According to the IMF, Panama is one of the fastest growing economies in the region and the world, with real GDP growth for the third quarter of 2012 of 10.7%, and has one of the lowest unemployment rates in Latin America at 4.0% as of August 2012. Panama is rated investment grade by Moody’s (Baa3), S&P (BBB) and Fitch (BBB).

According to the IMF, Haiti’s GDP in 2011 was U.S.$7.4 billion. After a 5.4% decrease in 2010, in the aftermath of the earthquake on January 12, 2010, real GDP grew by 5.6% in 2011 and is expected to grow at a CAGR of 5.7% between 2012 and 2017 according the IMF. Haiti is not rated by Moody’s, S&P and Fitch.

The Dominican Republic is the largest economy in the Caribbean with a GDP of U.S.$55.8 billion in 2011, according to the IMF. The Dominican Republic is rated B1 by Moody’s, B+ by S&P, and B by Fitch.

80 Industry overview

According to INDESA, in 2011 total sales of cement in Panama reached approximately 1.8 million metric tons, of which our sales accounted for 0.9 million metric tons, while sales of ready-mix concrete reached 1.5 million cubic meters, of which our sales accounted for 0.46 million cubic meters. Our installed annual production capacity of 1.26 million metric tons accounts for 38% of the total cement installed production capacity for the country.

According to the Dominican Association of Portland Cement Producers (Asociación Dominicana de Productores de Cementos Portland), installed annual production capacity for cement in the Dominican Republic was 6.3 million metric tons in 2011, of which our installed annual production capacity accounted for 0.51 million metric tons.In 2011, total sales of cement in the Dominican Republic reached 2.8 million metric tons, of which our sales accounted for 0.29 million metric tons.

In both Haiti and Suriname, we are the only cement producer in the country, with an installed annual production capacity of 0.57 million metric tons and 0.13 million metric tons, respectively.

Trends and prospects

Regional cement demand is expected to be driven by infrastructure projects, commercial construction related to tourism and residential construction.

The Panamanian cement market grew at an annual rate (“CAGR”) of 9.2% from 2007 to 2012. This growth was driven primarily by the Panama Canal expansion, which is expected to be completed by the end of 2014, major mass-transit and highway project developments, and construction of new hydroelectric plants. In addition to the U.S.$5.2 billion expansion of the Panama Canal, the Panamanian government adopted a U.S.$13.6 billion investment plan for the 2010-2014 period, which includes the construction of the first underground transportation system in Central America, and additional highways. We believe that the implementation of this infrastructure program initiative should continue to bolster growth in demand for cement.

Residential construction is also expected to increase in Panama, as the country takes advantage of its economic growth to close the residential deficit in the country, which in 2012 rose to 125,000 houses, as annual housing construction covers only about 59% of the housing demand per year. To close the housing deficit, the Panamanian government has adopted a series of measures, including a lowering of the value threshold for government mortgage subsidies and a temporary waiver of the property tax.

Cement demand in Haiti is expected to continue to be driven by ongoing reconstruction efforts following the earthquake of 2010, aimed at restoring the housing stock, hospitals and commercial buildings, including projects funded by the U.S.$278 million reconstruction fund set up by the Haitian government, the United Nations and the international community.

In the Dominican Republic, cement demand is expected to be driven by growth in low-income housing and infrastructure projects, including the expansion of Santo Domingo’s underground subway system, the expansion of the Bavaro-Miches road and the development of a highway in Santiago and San Juan de la Maguana.

In Suriname, ongoing investments in housing ventures and investments from foreign companies, particularly in the mining sector, are expected to drive future demand for cement.

We supply cement products to other markets throughout the Caribbean, including Aruba, the Bahamas, Barbados, Curaçao, Guadeloupe, the British Virgin Islands, the U.S. Virgin Islands, Jamaica, Martinique, Puerto Rico, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, St. Maarten, Trinidad and Tobago, and the Turks and Caicos islands. We expect cement demand in these countries to grow as tourism and related infrastructure investments continue to rebound following the global economic crisis.

81 Competition

In Panama, where our installed annual production capacity of 1.32 million metric tons accounts for 38% of the total cement installed production capacity, we and Cemex are the leading cement and ready-mix concrete producers. We are the only cement producer in Haiti and our principal competitors, each of which imports cement into the country, are Cemex, Domicem and Cementos Cibao, and Botonex, GDG, Cemex, HT 360 and Constructores Dominicanos in the ready-mix concrete industry. In the Dominican Republic, we represent 8% of the country’s total installed production capacity for cement and our principal competitors are Cemex, Cementos Cibao, Cementos Santo Domingo and Domicem. We are the only cement producer in Suriname and have a 53% market share based on volumes sold, followed by Rudisa and Vabi, each of which import cement.

The cement and ready-mix concrete industry in the United States

Macroeconomic overview

According to data published by the Bureau of Economic Analysis of the Department of Commerce, real GDP in the United States grew by 1.9% in 2007, decreased 0.3% in 2008, and by 3.1% in 2009, then grew by 2.4% in 2010, 1.8% in 2011 and 2.2% in 2012. The growth in GDP was mainly due to an increase in the consumption of durable goods and services and gross private domestic investment.

According to data published by the U.S. Bureau of Labor Statistics, the end-of-year unemployment rate was 5.0% in 2007, 7.3% in 2008, 9.9% in 2009, 9.3% in 2010, 8.5% in 2011 and 7.8% in 2012. The decrease in unemployment in 2011 and 2012 reflects the ongoing recovery after the financial crisis.

The recent growth in the number of permits for the construction of new residential units also evidences the ongoing recovery after the financial crisis. According to the U.S. Census Bureau, the number of permits for the construction of new residential units increased from 605,000 in 2010 to 624,000 units in 2011, representing a 3% increase. For the year ended December 31, 2012, 815,512 units were authorized, representing a 30.7% increase over the level recorded in 2011.

According to data published by the U.S. Census Bureau, the vacancy rate for rental housing was 8.7% in 2012, compared to 9.4% for 2011 and the vacancy rate for homeowner housing was 1.9% in 2012 compared to 2.3% in 2011.

In the United States, the recent recession was longer and deeper than the previous two recessions during the 1990s and early 2000s. According to the IMF, after a 3.1% decrease in 2009, real GDP grew by 2.4% in 2010 and 1.8% in 2011. According to the IMF, growth is expected to stabilize at 2.2% in 2012 and expected to grow at a CAGR of 3% over the next five years. The United States is rated AAA by Moody’s, AA+ by S&P and AAA by Fitch.

Industry overview

According to the USGS, in 2011, the United States was the third-largest producer of cement in the world after China and India. As of January 2012, there were 103 cement plants in 35 states across the United States. Over 95% of the cement produced in the United States is Portland cement.

Total U.S. cement consumption reached 72 million tons in 2011, a 2.5% growth compared to 2010. About 71% of the U.S. cement demand came from ready-mix concrete producers, 12% from ready-mix concrete product manufacturers, 10% from contractors, 3% from building materials dealers, and 4% from other users. According to the USGS, total U.S. cement consumption is up 9.53% in 2012 compared to 2011.

According to the U.S. Census Bureau, construction activity improved in the United States in 2012, with construction spending increasing 9.9% compared to 2011.

We operate in nine states in the south central and southeastern United States. According to the USGS, total Portland cement consumption in these states (excluding Florida, where we do not supply cement) was over 18 million metric

82 tons (over 26% of the total national cement consumption) in 2011 and 21 million metric tons (30.4% of total national cement consumption) during 2012, a 15.3% increase compared to 2011. Total installed annual cement production capacity in the states where we operate (excluding Florida) is 11.4 million metric tons per year, of which we account for 3.2 million metric tons per year. According to the PCA, in these states, cement consumption is expected to grow cumulatively by 45% from 2012 to 2017, in the aggregate.

The following table shows total growth in cement consumption in the states where we operate, based on data published in the PCA Monitor Reports:

Growth in cement consumption(1) Alabama 2.6% Arkansas 6.5% Georgia 5.4% Mississippi (2.2)% North Carolina 7.9% South Carolina 11.1% Texas 22.0% Virginia 11.5% (1) Represents growth for 2012 compared to 2011.

According to the NRMCA, volumes of ready-mix concrete sold in the United States reached 203 million cubic meters in 2011, representing approximately U.S.$30 billion in sales. Our ready-mix concrete production in the United States reached approximately 4 million cubic meters in 2011.

Trends and prospects

Demand for cement and ready-mix concrete in the United States is driven by construction output. According to the PCA, the key drivers for future growth in the construction industry will be additional demand for housing, commercial building, public building and infrastructure, all of which depend to some extent on macroeconomic factors such as economic growth, unemployment, inflation, consumer confidence and interest rates.

The construction industry in the United States is divided into three main sectors: residential, infrastructure and commercial. In the United States, total construction expenditures reached U.S.$502.9 billion in the first half of 2012, up 4.2% from the same period in 2011. After a 73% decline in housing starting in 2005 up to 2009, the housing sector stabilized in the second half of 2009 and has increased moderately since. The commercial sector stabilized during 2011 from a year-over-year spending decline of 12% during the first half of the year to an increase of 5% in the third quarter and 12% in the fourth quarter. Commercial contract awards, which drive future spending for the sector, increased by 8% in real terms in 2011 compared to the prior year. Nominal construction spending for the infrastructure sector remained more resilient during the recession, increasing 9% in 2008 followed by flat spending in 2009 and declines of 7% in 2010 and 2% in 2011.

The chart below illustrates Portland cement consumption and expected total cement consumption in the United States, which, according to the PCA, is expected to grow at a CAGR of 6.8% during the period between 2012 and 2017:

83 Source: PCA

Competition

The cement industry in the United States, where we compete with national and regional cement producers, is highly competitive. In the states where we operate, our main competitors are Holcim, National Cement of Alabama, Cemex, Giant Cement and Lehigh Cement. As of December 31, 2012, our market share in cement in the southeastern United States (excluding Florida) is 23% in terms of sales volume.

The independent U.S. ready-mix concrete industry is highly fragmented. According to the NRMCA, there are about 6,000 ready-mix concrete plants in the United States and about 70,0000 ready-mix cconcrete mixer trucks. The ready- mix concrete industry historically consumes approximately 75% of all the cement produced annually in the U.S.; consequently, many cement companies choose to develop ready-mix concrete plant capabilities.

Regulatoryr matters

Our business activities in all of the regions where we operate are subject to governmental regulations, including regulations relating to mining, environmental protection, labor, consumer protection (product liability and safeety), exportation tariffs, antitrust and competition laws, taxation and foreign exchange controls.

Mining regulations

Our production and distribution processes involve the operation and exploitation of quarries in order to obtain certain raw materials (such as limestone) required for cement and ready-mix production. These activities are subject to regulation, licensing requirements and governmental supervision, including:

in Colombia, by the Ministry of Mines and Energy, the National Mining Agency (Agencia Nacional Minera), the Ministry of Environment and Sustainable Development (Ministerio de Ambiente y Desarrollo Sostenible), the National Authority of Environmental Licenses (Autoridad Nacional de Licencias Ambientales), the General Superintendency of Ports and Transportation (SSuperintendencia General de Puertos y Transpporte), the General Maritime Direction (Dirección General Marítima) and the Regional Autonomous Corporations (Corporaciones Autónomas Regionales);

in Panama, by the National Authority for Environment (Auutoridad Nacionnal del Ambiente);

84 in the Dominican Republic, by the General Direction of Mining (Dirección General de Minería) and the Ministry of Environment and Natural Resources (Ministerio de Medio Ambiente y Recursos Naturales);

in Haiti, by the Bureau of Mines and Energy (Bureau des Mines et de l’Énergie); and

in the United States, by the U.S. Mine Safety and Health Administration.

Environmental laws

Our operations are subject to local, regional and national environmental laws and regulations in Colombia, the United States and other countries where we operate concerning the emissions of pollutants into the atmosphere; the use, release, discharge, disposal, transportation and cleanup of hazardous and non-hazardous substances and wastes; the transportation and consumption of fuels; the use, consumption and discharge of water, especially to and from sensitive ecological sources; and the overall environmental impact of our operations. These activities are subject to regulation, licensing requirements and governmental supervision, including:

in Colombia, by the Ministry of Environment and Sustainable Development (Ministerio de Ambiente y Desarrollo Sostenible) the National Authority of Environmental Licenses (Autoridad Nacional de Licencias Ambientales); and the Regional Autonomous Corporations (Corporaciones Autónomas Regionales);

in Panama, by the National Environment Authority (Autoridad Nacional del Ambiente);

in the Dominican Republic, by the Ministry of Environment and Natural Resources (Ministerio de Medio Ambiente y Recursos Naturales);

in Haiti, by the Ministry of Environment (Ministère de l’Environnement);

in Suriname, by the National Institute for Environment and Development in Suriname (Nationaal Institut voor Milieu en Ontwikkeling in Suriname); and

in the United States, by the Environmental Protection Agency.

Such laws and regulations impose environmental protection standards on our operations and expose us to potential increases in costs and liabilities. Furthermore, we are required to obtain certain environmental licenses, authorizations or permits to begin, expand or continue our operations. These licenses or authorizations are granted by entities of national or regional authorities in the countries where we operate.

We place a high priority on mitigating environmental damage caused by our operations. In an effort to effectively control the environmental impact of our operations, we operate our business based on five organizational pillars:

1. Strengthening our environmental compliance;

2. Addressing issues related to climate change by reducing greenhouse gas emissions, implementing Clean Development Mechanism projects and using alternative fuels and raw materials;

3. Maintaining eco-efficiency through initiatives aimed at reducing air emissions generally and water use, and optimizing use of raw materials, fuels, and energy;

4. Addressing biodiversity through the implementation of rehabilitation plans at our quarries and conservation of ecologically important areas; and

5. Promoting sustainable construction by developing products with lower environmental impact and best practices for sustainable use of concrete and cementitious materials.

85 Our existing plants are compliant with the current environmental regulations applicable to them.

In December 2012, the U.S. Environmental Protection Agency approved revised NESHAP regulations regarding Portland cement maximum achievable technology (“PC MACT”) along with revised regulations for commercial and industrial solid waste incineration (“CISWI”) units. Compliance with the revised PC MACT is required within three years and compliance with the revised CISWI regulations is required within five years. The PCA estimates that the revised PC MACT regulations could result in the closure of 18 cement plants in the United States. If this occurs, we believe that the combination of rising demand and capacity reduction could lead to a dramatic increase in utilization rates at those plants that continue to operate in the United States. If demand continues to rise beyond 2013, as expected, we estimate that domestically produced cement in the United States could be in short supply if full implementation of the revised PC MACT regulations causes a reduction in installed cement production capacity in the United States.

In order to comply with the revised PC MACT and CISWI regulations, we will need to make material modifications and improvements to our plants in the United States but we do not expect our plants to be subject to closure.

Consumer protection laws

We sell cement and ready-mix concrete for construction and other uses, which involves risks such as product spoilage or tampering and other issues that may cause product defects. There are consumer protection laws, product regulations, technical and industry standards in the countries where we operate, as well as international quality standards set by industry regulators or industry associations. These standards and regulations impose requirements on the chemical composition, product performance and labeling of our products.

Under consumer protection laws, we may be subject to product liability if any defect in our product causes injury, illness, or death.

Antitrust regulations and price controls

We are subject to antitrust regulations in the various countries where we operate. Antitrust regulations generally prohibit practices designed to limit the production, supply, distribution and consumption of raw materials, products, merchandise, national or foreign services, or any kind of practices, proceedings or systems that inhibits free competition and unfair pricing.

Dominant positions in the markets where we operate are not prohibited per se, but the abuse of such dominant positions is restricted. Prohibited practices include agreements to fix prices or allocate market shares, predatory and discriminatory pricing, exclusive distributions agreements and resale price maintenance practices.

Antitrust regulations in the countries where we operate also impose restrictions on mergers, acquisitions and consolidations, and a governmental review process that may result in the prohibition or conditioning of the transaction.

Antitrust regulations are supervised by governmental agencies and authorities, including:

in Colombia, by the Superintendency of Industry and Commerce (Superintendencia de Industria y Comercio);

in Panama, by the Competition Defense Authority (Autoridad de Protección al Consumidor y Defensa de la Competencia);

in the Dominican Republic, by the National Commission for the Defense of Competition (Comisión Nacional de Defensa de la Competencia);

in Haiti, by the Ministry of Commerce and Industry (Ministère du Commerce et de l’Industrie); and

86 in the United States, by the Federal Trade Commission and the Consumer Protection branch of the Department of Justice.

Tariffs and trade restrictions

We are subject to tariffs and certain trade restrictions for the importation of raw materials or cement. In recent years, the Colombian government has substantially reduced cement import tariffs, which currently range from 0% to 5% with an average weighted tariff for the Colombian cement industry of approximately 4%.

Colombia also has trade arrangements in place through a number of agreements and bilateral treaties, including the Andean Community agreement, Caricom (the Caribbean trade community), the Mercosur agreement and bilateral agreements with the United States, South Korea and Canada.

The United States imposes tariffs that vary by product on imported goods. Cement imported from Colombia to the United States was not subject to a tariff as of December 31, 2011. In 2006, Colombia and the United States signed the Free Trade Agreement, which became effective on May 15, 2012. The tariffs on imports into the United States from Colombia and into Colombia from the United States may decrease for certain products. We do not expect the Free Trade Agreement to have a significant effect on the tariffs we pay, as cement and clinker are already imported to the United States without being subject to any tariffs on imports.

The United States does not currently apply trade restrictions (other than tariff restrictions) to cement imports from Colombia. Certain critical U.S. government requirements are related only to product quality and consistency standards, such compliance with the standards of the American Society for Testing and Materials (“ASTM”) and approval by the Department of Transportation to use our cement products in public projects.

Workplace health and safety regulations

Colombia

We are subject to laws and regulations relating to health and safety in Colombia, such as Decree 1295 dated June 22, 1994, as amended by Law 1562 of 2012, which determines the organization and administration of the Labor Risk Insurance System and Resolution 2400, dated May 22, 1979, which sets forth certain provisions about housing, health and safety at work establishments. Occupational health and safety is a key focus of our management. We have formulated management policies and adopted rules in accordance with applicable laws and regulations such as our production safety measures, the handling of hazardous materials and guidelines on high risk operations. We have procedures in place to ensure that our health and safety rules and requirements are adhered to. We also encourage our management to promote awareness of the importance of health and safety in the workplace. In addition, in Colombia, employers are required to make monthly contributions to Labor Risk Managers (Administradoras de Riesgos Laborales), Pension Fund Managers (Administradoras de Fondos de Pensiones) and Health Insurers (Entidades Promotoras de Salud).

Notwithstanding these procedures, employees have sustained injuries arising from their work as a result of operating our production and packing equipment and from handling various chemicals, raw materials and other items utilized or generated in our business. In the years ended December 31, 2010, 2011 and 2012, compensation for injuries suffered by our employees was fully covered by insurance or state-administered social security schemes to which we are required to make monthly contributions.

Panama

Our operations in Panama are subject to laws and regulations relating to health and safety, such as the Resolution No. 41,039-2009-JD, published in the digital gazette on March 31, 2009, which regulates the prevention of health and safety risks, and Resolution No. 45,588–2011-JD, which approves and institutes the General Regulation of Professional Risks Prevention and Safety and Health in the Workplace (Reglamento General de Prevención de Riesgos Profesionales y de Seguridad e Higiene en el Trabajo).

87 Haiti

Our operations in Haiti are subject to health and safety laws and regulations, such as Chapter V of the Labor Code (Code du Travail), which contains provisions relating to work equipment safety and professional risks, among others.

The Dominican Republic

Our operations in the Dominican Republic are subject to laws and regulations relating to health and safety, including the Regulation of Safety and Health in the Workplace (Reglamento de Seguridad y Salud en el Trabajo, Decree 522- 06 of October 17, 2006), which defines the responsibilities of employers and employees with regard to health and safety in the workplace and provides guidelines for companies.

United States

Our operations in the United States are subject to laws and regulations relating to health and safety, including the Occupational Safety and Health Act of 1970 and regulations of the Department of Labor. The Occupational Safety and Health Act ensures safe and healthy working conditions for employees by setting and enforcing standards and by providing training, outreach, education and assistance.

Other material laws and regulations governing the industry

We operate ports in Colombia, Panama, Haiti, Suriname and the United States to export and import products and raw materials. The operation of these port facilities is subject to regulation, licensing requirements and governmental supervision, including, in Colombia, the General Superintendency of Ports and Transportation (Superintendencia General de Puertos y Transporte), the General Maritime Direction (Dirección General Marítima) and, in the United States, by the U.S. Coast Guard and other federal, state and local agencies.

The operation of ports in the United States is subject to certain additional requirements. Except for our Houston port, we do not own the ports that we operate in the United States. Our landlords obtain the required licenses and are responsible for complying with those regulations. Nevertheless, we are subject to the risk of non-compliance by our landlords or the licensees and, generally, to the sanctions resulting from the infringement of the applicable requirements and regulations.

88 BUSINESS

Overview of our business

We are the leading cement and ready-mix concrete producer in Colombia in terms of sales volume for 2012, one of Latin America’s fastest-growing economies, and also have strategic operations in contiguous countries and regions including Panama and the Caribbean and nine states throughout the south central and southeastern regions of the United States. According to our calculations derived from information collected by the DANE, we have a 49% market share in the Colombian market for cement, and, according to our internal estimates, approximately a 50% market share for ready-mix concrete, in each case based on volumes sold in 2012. Based on our internal estimates, we are one of two leading cement producers in Panama and the Caribbean, in terms of volumes sold in 2012. Based on PCA data on installed cement manufacturing capacity and our own internal estimates of ready-mix concrete sales volumes, we believe that we are the second largest cement producer in the southeastern region of the United States and the third largest ready-mix concrete producer in the United States.

The following map illustrates the geographic footprint of our operations:

89 We provide a broad range of products that allow us to serve our customers’ needs. We seek to offer specialized and differentiated products and services and innovative commercial offerings to enable us to create value for our customers and grow profitability. Our cement plants produce a broaad range of products, including clinker, general use cement, structural cement, Portland cement, cement types I, II, I/II and III, white cement, masonry cement and oil well cement. For the Panama Canal expansion project, our subsidiary Cemento Panamá provides specialized cement and puzzolana designed to compm ly with the project’s sulfatee resistance, low heat of hydration and durability specifications. Our portfolio of ready-mix concrete products includees ready-mix concrete for use in infrastructure projects, architectural projects, ornamental projects and public spaces, among other uses.

For the fiscal years ended December 31, 2010, 2011 and 2012, we had:

Consolidated operating revenues of Ps.3,023,069 million (U.S.$1,709.66 million), Ps.3,668,610 million (U.S.$2,074.74 million) and Ps.4,380,393 million (U.S.$2,477.2 million), respectively;

Consolidated operating EBITDA of Ps.539,182 million (U..S.$304.93 million), Ps.681,544 million (U.S.$385.44 million) and Ps.791,190 million (U.S.$447.4 million), respectively; and

Consolidated net income of Ps.288,878 million (U.S.$163.337 million), Ps.369,974 million (U.S.$209.23 million) and Ps.387,619 million (U.S.$219.21 million), resppectively.

We manage our business in three geographic business segments: Colombia, Panama and the Caribbean, and the United States.

The following chart indicates the geographic breakdown of our consolidated revenues for the year ended December 31, 2012:

90 The following chart indicates the product breakdown of our consolidated revenues for the year ended December 31, 2012:

For the years ended December 31, 2010, 2011 and 2012, we had combined sales volume of 7.8 million, 9.3 milllion and 10.8 million metric tons of cement and 5.9 million, 7.0 million and 8.5 million cubic meters of ready-mix concrete, respectively.

The following table sets forth certain of our operating and financial data, on a conssolidated basis, for the periods indicated:

Year ended December 31, 2010 2011 2012 Operating data: Capacity at period end (thousands of metric tons per year): Installed cement capacity 9.7 11.8 15.6 Installed clinker capacity 5.6 6.6 8.9 Production: Cement production (thousands of metric tons)(1) 6,532 7,846 9,276 Ready-mix concrete production (thousands of cubic meters) ...... 5,915 7,038 8,542 Average cement capacity utilization rate: 67.5% 66.4% 59.4% Selected financial data (amounts in millions of Ps.): Operating revenues 3,023,0669 3,668,610 4,380,393 Growth in revenues (versus prior period) (12.4)% 21.4% 19.4% Gross income 599,6336 764,245 911,936 Gross income margin 19.8% 20.8% 20.8% Operating income after asset impairment 130,2557 272,833 414,567 Operating income margin after asset impairment 4.3% 7.4% 9.5% Operating EBITDA(2) 539,1882 681,544 791,190 Operating EBITDA margin(3) 17.8% 18.6% 18.1%

Our competitive strengtths

Our principal competitive strengths include the following:

Leadership in contiguous and attractive markets

In less than 20 years, we have evolved from being primarily a Colombian cement pproducer to an international cement and ready-mix concrete company offering a diversified product portfolio in the contiguous and attractive

91 markets of Colombia, Panama and the Caribbean and nine states in the south central and southeastern regions of the United States.

Based on our internal estimates, we are one of two leading producers of cement and ready-mix concrete in Panama and the Caribbean. We operate cement grinding stations and ready-mix concrete plants in Panama, Haiti, the Dominican Republic and Suriname. Cement from our grinding stations in the region, together with cement produced and exported from our Cartagena plant is also used to supply cement to our customers throughout the Caribbean, Central America and beyond. We believe that Panama and the Caribbean are markets with potential for growth in view of existing projects relating to infrastructure, housing, tourism and other construction spending.

Vertically integrated operations

We have access to raw materials required for the production of both cement and ready-mix concrete, including 421 million metric tons of proven and probable reserves of limestone in Colombia (representing 40 years of production, based on production levels as of December 31, 2012) and 238 million metric tons of proven and probable reserves of limestone in the United States (representing approximately 75 years of production based on production levels as of December 31, 2012). Our access to limestone allows us to produce clinker in Colombia and the United States that is used to supply our operations in those countries without incurring significant transportation costs. Clinker produced in Colombia, particularly in our Cartagena plant, is also used to supply our cement operations in Panama and the Caribbean.

92 Our network of ready-mix concrete plants in the countries and regions where we operate establishes a distribution channel for our cement production. For the year ended December 31, 2012, our cement operations supplied all of the cement requirements of our ready-mix concrete operations in Colombia, Panama and the Caribbean, and 32.0% of the cement requirements of our ready-mix concrete operations in the United States.

Our operations are concentrated in a contiguous geographic area

Strong brand recognition in Colombia and established distribution network

We have also created a distribution network focused on reaching our end-users. The strategic locations of our cement production plants which are close to our customers, and offer reliable access to land transportation capabilities, our ports and our terminals in the regions and countries where we operate allow us to effectively distribute our cement products in a cost-effective manner. Our distribution network enables us to promptly meet customer demands, adjust output to each consumption center and keep distribution costs low. Our mobile ready-mix concrete plants also enable us to service infrastructure projects located far from production facilities on a cost- effective basis.

Financial flexibility to grow organically and to selectively pursue strategic acquisitions

93 We also have an established record of successful offerings in the Colombian capital markets. Since our inaugural bond offering in 2005, we have issued debt securities with an aggregate principal amount of approximately Ps.4.1 trillion. In addition, we have successfully completed international syndicated loans and export credit agency financings. As of December 31, 2012, our Net Debt was Ps.3,030,813 million, of which 66% was in the form of bonds.

We have used the proceeds from our capital market transactions and divestitures of our investment portfolio to fund expansion projects and selective strategic acquisitions in the countries and regions where we operate. Following Global Offering, we expect to have greater access to international funding sources, which will further increase our ability to undertake expansion project, pursue strategic acquisitions and strengthen our capital structure.

Management with strong track record

The leadership provided by our management team has created a strong reputation in our markets and with our customers. The 2012 Merco corporate reputation report ranked us among the top 10 companies with the best reputations in Colombia.

Our business strategies

Our objective is to maximize shareholder value, while maintaining our commitment to sustainable development. We will seek to achieve our objectives through the following principal strategies:

Provide our customers with the best value proposition

We also strive to offer integrated solutions that provide more reliable and higher quality products and services, depending on the type of customer we serve. In the case of our commercial clients, who buy our products to resell them to the market, we provide distinct services such as personalized delivery and a network of advisors that supports our client’s commercial activities. In the case of industrial clients, who use our products to produce other goods, we have technical advisors who provide advice on the purchase and application of our products. We also provide our clients with customer service through a hotline that allows us to build collaborative relationships with our customers.

An important result of this strategy is that our on-site presence has allowed us to develop closer relationships with our customers positioning us as providers of first-hand technical assistance on a real time basis. For example, by participating in infrastructure projects and managing the supply of ready-mix concrete through our mobile ready- mix concrete plants, we are consolidating our leadership position in the infrastructure segment in Colombia.

94 Continue to focus on our core business and consolidate our market leadership in our existing and contiguous markets

In Colombia we will focus our efforts on the expansion of our installed production capacity in the interior region and our distribution capability from our Cartagena plant. In the Caribbean, we have commenced ready-mix concrete operations in the Dominican Republic and Suriname in order to enhance our vertical integration in the region. In the United States, we are adding an additional mill to our South Carolina plant, which will increase our ability to respond to growing demand for cement as the economy improves. We also are modifying our terminal in North Carolina to accept delivery of cement by rail from our South Carolina and Alabama plants in the United States, further expanding our ability to supply cement to the North Carolina market.

We intend to continue managing our costs and making investments in promising and structurally attractive markets where we can benefit from our competitive advantages.

Improve operating efficiencies and reduce production costs

We strive to increase our margins by reducing our overall cement and ready-mix concrete production-related costs. We have undertaken a number of projects aimed at continuing to reduce our clinker to cement ratio, which is the amount of clinker used to produce a given quantity of cement. We anticipate that this will allow us to produce blended cements with less capital expenditure and achieve a higher product yield in a more environmentally responsible manner. To reduce our clinker to cement ratio, we use substitute materials, such as slag or fly ash. In addition, we continue to focus on lowering our energy costs through the use of alternative fuels or a more efficient blend of fuels as well as by transitioning our cement production from the wet process to the dry process.

In addition, with the purpose of consolidating our market position and increasing our production capacity, our expansion efforts are also focused on increasing efficiency in the following ways:

The additional mill we are adding into our South Carolina plant will not only increase our grinding capacity but also replace older, less efficient mill capacity at the plant.

Continue enhancing distribution and logistics network

95 bulk market. By continuing to improve our distribution and logistics network, we believe we can improve service and prompt delivery to our customers.

Further emphasis on innovation and sustainable development

Our research and development strategy is also designed to leverage our industry knowledge to achieve desired levels of long-term sustainability. As part of this strategy, we have access to a centralized laboratory at EAFIT University in Medellin, Colombia. In addition, we are in the process of developing an Innovation Center, also at EAFIT University, which will serve as our flagship research and innovation facility. The Innovation Center will operate under an “open innovation” scheme in collaboration with 16 leading education centers, including MIT, the University of Michigan, Universidad de Antioquia, EAFIT University, Universidad Nacional de Colombia, Universidad del Valle and Instituto Eduardo Torroja.

We are also committed to the sustainable development of our business and the quality of life of the communities that live in the areas where we operate.

Selectively pursue attractive acquisition opportunities

Our history

We were established in Barranquilla, Colombia on August 14, 1944, and began operations as Cementos del Caribe S.A. Since our inception, our core business has included cement production. Several other cement companies were also incorporated in the 1940s, including Colclinker, Cementos del Valle, Cementos el Cairo, Cementos Rioclaro, Cementos Paz del Rio, Tolcemento and Cementos del Nare. Over time, our majority shareholder Grupo Argos (then known as Compañía de Cemento Argos S.A.) acquired a majority interest in these cement companies, although each cement company was separately managed and continued to operate independently.

We began to export our products in 1950. Since then, in addition to growing our business in Colombia, we have focused on international expansion, by increasing our exports from Colombia and by establishing production facilities outside Colombia through strategic acquisitions. We have operations in 11 countries and export our products to more than 40 countries in the Caribbean, Central America and West Africa.

During the late 1990s and early 2000s, we began to expand our production through joint ventures in Panama and the Caribbean. Our initial expansion efforts focused on emerging markets with cultural and geographic proximity to

96 Colombia, specifically Panama, the Dominican Republic, Haiti and other Caribbean nations, through the formation of a joint venture with Holcim.

In 1998, we acquired Corporación de Cemento Andino in Venezuela, which was expropriated in 2007. See “Business—Legal proceedings.”

In 2005, seeking synergies and larger and more diversified operations, we undertook a corporate reorganization in which (i) the seven other cement companies that were majority owned by our majority shareholder merged with and into us, (ii) we changed our name to Cementos Argos S.A. (and our majority shareholder, Grupo Argos, changed its name at the time from Compañía de Cemento Argos S.A. to Inversiones Argos S.A.) and (iii) the ready-mix concrete subsidiaries owned by the merged cement companies were merged with and into our ready-mix concrete subsidiary, Concretos Argos S.A.

Also in 2005, we began focusing on establishing and expanding operations in the United States in order to further diversify our sources of income. We expanded our presence in the United States through acquisitions, resulting in operations in Arkansas, Georgia, South Carolina and Texas. We further expanded to North Carolina and Virginia through our acquisition of Southern Equipment Company Inc. (doing business as RMCC) in 2006.

In 2006, we acquired 100% of the shares of Cemento Andino S.A. for U.S.$254 million.

In 2009, we continued our expansion in the Caribbean by purchasing from Holcim its interest in our Caribbean joint venture and 100% of the shares in Caricement Antilles N.V., a company holding interests in port terminals throughout the Caribbean.

In 2010, we expanded our operations to Suriname through the acquisition of 50% of C. Kersten en Co. N.V.’s participation in a company that owns 84.24% of Vensur.

In the fourth quarter of 2011, we completed our acquisition of certain of Lafarge’s cement and ready-mix concrete assets in the United States, including cement plants in Alabama and South Carolina, a grinding station in Georgia, five rail terminals in Georgia, Mississippi and North Carolina, 79 ready-mix concrete plants in Georgia, South Carolina, Alabama and Florida and a port terminal in Alabama. As a result of this acquisition, we became a vertically integrated cement and ready-mix concrete producer in the southeastern United States.

The following table summarizes our acquisitions since 2005:

Country/Region Year Aggregate consideration Description of transactions Colombia 2006 U.S.$264,000,000 Acquisition of 100% of the outstanding shares of Cemento Andino 2010 U.S.$13,572,895 Acquisition of Saldaña aggregate mine Panama and the 2009 U.S.$136,350,000 Acquisition of Holcim’s interest in Panama Cement Holding, S.A., Caribbean Domar Ltd., and Haiti Cement Holding, S.A.; Acquisition of 100% of the shares of Caricement Antilles N.V. 2010 U.S.$3,196,315 Acquisition of 50% of the participation of Kersten En Co. N.V. in Surcol Cement Company (Surcol Cement Company owned 84.24% of Vensur N.V.) United States 2005 U.S.$245,000,000 Acquisition of Southern Star Concrete, Inc. (approximately 50 plants in Texas and Arkansas) 2005 U.S.$12,500,000 Acquisition of Concrete Express (approximately six plants in Georgia and South Carolina) 2006 U.S.$435,000,000 Acquisition of Southern Equipment Company Inc. (doing business as RMCC) (approximately 80 plants in North Carolina, South Carolina and Virginia) 2006 U.S.$800,000 Acquisition of Cabot (one plant in Arkansas) 2007 U.S.$12,000,000 Acquisition of Central Aggregates LLC (sand reserves in Texas) 2007 U.S.$43,500,000 Acquisition of HRM (four plants in Texas) 2007 U.S.$6,300,000 Acquisition of Chalico (one plant in Texas) 2008 U.S.$7,000,000 Acquisition of Santee Redi-Mix (one plant in South Carolina) 2011 U.S.$760,000,000 Acquisition from Lafarge of certain cement and ready-mix concrete assets in the United States, including 2 cement plants, one grinding station, 79 ready-mix concrete plants, 347 mixer trucks, five terminals and one port.

97 In order to focus on our core cement and ready-mix concrete business as well as fund our acquisitions, we have sold a number of our non-core assets since 2005, including our La Jagua coal mine to Glencore International AG for U.S.$110 million, our El Hatillo and Cerro Largo coal concessions to Vale for U.S.$326 million and certain interests in Bancolombia, Tablemac and other portfolio investments.

In November 2011, our shareholders and the shareholders of Grupo Argos approved a spin-off of non-cement assets from us to Grupo Argos. The spin-off to our majority shareholder, completed on May 30, 2012, was aimed at consolidating our operations to focus on our core cement and concrete business. The non-core assets we spun off included certain real estate assets, coal assets, port assets and a majority of our investment portfolio. As part of the spin-off transaction, our shareholders (other than Grupo Argos) received Preferred Shares in Grupo Argos. As of May 30, 2012, the aggregate value of the spun-off assets was Ps.3.4 trillion, according to valuations of the spun-off assets conducted independently by BNP Paribas and Credit Suisse.

The following chart illustrates our corporate structure before and after the spin-off:

Our corporate structure

The following chart shows our major cement and ready-mix concrete subsidiaries, excluding intermediary holding companies, non-consolidated subsidiaries (except certain significant operational investments) and non-operating subsidiaries, as December 31, 2012.

98 Our products

Our cement production plants produce a broad range of products, primarily clinker and Portland cement, including general use cement, structural cement, cement type I/II, white cement and oil well cement. Production levels of each of our products depend on our customers’ needs and demands.

Our portfolio of ready-mix concrete products includes construction materials for use in infrastructure projects, architectural projects, ornamental purposes, and public spaces. In the United States, we recently developed a line of value-added/specialty ready-mix concrete products (“VASP”), including sustainable LEED-compliant (Leadership in Energy and Environmental Design-compliant) concrete for residential and commercial applications, pervious concretes with water and storm water detention properties, high-early strength concretes for pavement repairs and decorative, colored concretes for interior and exterior architectural designs.

Description of our raw material reserves

Limestone and clay

Our cement production process begins with the mining and crushing of limestone and clay, the main raw materials in the cement production process, and, in some instances, other raw materials. We have access to limestone and clay quarries near most of our cement plants.

The types of mines mostly used to extract raw materials for aggregates and cement production, are open pit or open cut, which relate to deposits of economically useful minerals or rocks that are found near the land surface. Open-pit mines that produce raw material for our industry are commonly referred to as quarries. Open-pit mines are typically enlarged until either the mineral resource is exhausted, or an increasing ratio of overburden to exploitable material makes further mining uneconomic.

99 Limestone, aggregates and other raw materials for our own production processes are obtained mainly from our own sources. However, we may cover our aggregates and raw material needs through third-party suppliers. For the year ended December 31, 2012, approximately 45% of our total raw material needs were fulfilled by third-party suppliers. For the year ended December 31, 2012, we obtained all our limestone needs from our own sources.

As of December 31, 2012, we had 185 mining concessions, of which (i) 85 were to be used for the extraction of limestone, (ii) 43 were to be used for the extraction of other raw materials, including clay, kaolin, gypsum, (iii) 48 were to be used for aggregates and (iv) nine were to be used for the extraction of coal.

Most of the limestone concessions for our quarries in Colombia provide for 25- to 30-year terms, provided that we pay the corresponding economic considerations to the concessions and, in the case of concessions that are in the exploitation stage, a penalty fee if we fail to meet required minimum annual production levels. As of the date of this offering memorandum, we have fully paid all applicable concession fees and have not been required to pay any penalty fees. According to Colombia’s mining regulations and pursuant to the terms of our concessions, we believe we can renew the term of each of our concessions subject to the satisfaction of certain conditions. We have not had difficulty renewing our concessions in the past, and we believe we will continue to renew our concessions in the future.

Amendments to Colombia’s Mining Code are being considered by the Colombian Congress. We do not expect our concessions or our operations to be affected adversely by the proposed reforms.

As of December 31, 2012, the total surface area covered by our mining concessions in Colombia, including mining concessions for aggregates and raw materials, was approximately 16,377 hectares. We exploit those mining concessions directly and through third parties. In Panama and the Caribbean, the total surface area covered by our mining concessions, including mining concessions for aggregates and raw materials, was approximately 5,513 hectares. We directly exploit all of our mining concessions in this region. In the United States, the total surface area covered by our mining concessions, including mining concessions for aggregates and raw materials, was approximately 1,362 hectares. We directly exploit all of our mining concessions in this region.

We own two quarries in the United States from which we extract the limestone. We also obtain limestone from a quarry owned by Vulcan Construction Materials, LP (“Vulcan”) that is adjacent to our plant in Alabama. Under the terms of a reserve exchange agreement with Vulcan, we have the right to extract limestone from the Vulcan quarry and, in return, we supply Vulcan with aggregate-grade stone that is unsuitable for cement manufacturing. The reserve exchange agreement gives us the right to mine limestone on Vulcan’s property and effectively increases our available reserves. The agreement with Vulcan expires on December 31, 2035, with an option to extend it until December, 2045.

The table set forth below presents our total permitted proven and probable limestone reserves and resources by country or region as of December 31, 2012:

Reserves Resources Proven and Number of Property probable Millions of metric Location mining Surface Years to depletion Years to depletion (millions of tons concessions (hectares) metric tons) Colombia 80 10,225 421 40 3,632 346 Panama and the 3 4,593 134 570 10 43 Caribbean United States 2 1,149 238 76 - -

Reserves are considered as proven when all legal and environmental conditions have been met and permits have been granted. Proven reserves are those for which (i) the quantity is computed from dimensions revealed by drill data, together with other direct and measurable observations such as outcrops, trenches and quarry faces and (ii) the grade and/or quality are computed from the results of detailed sampling; and the sampling and measurement data are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. Probable reserves are those for which quantity and grade and/or quality are computed from information similar to that used from proven reserves, but the sites for inspection, sampling and measurement

100 are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

Our reserve estimates are prepared by our engineers and geologists using geological studies and mining plans prepared by nationally and internationally renowned consultants. Our consultants use widely accepted methodologies and protocols for measuring reserves.

Reserves determination incorporates only materials meeting specific quality requirements. For aggregates used in ready-mix concrete such requirements are based on hardness, shape and size; for cement raw materials (mainly limestone and clay), such requirements are based on a chemical composition that matches the quality demanded by the production process. In the case of cement raw materials, since chemical composition varies from production- sites and even in the same site, we conduct geostatistical chemical tests and determine the best blending proportions to meet production quality criteria and to try to maintain an extraction ratio close to 100% of the reported reserves for such materials.

Aggregates

In Colombia, we have eight aggregates plants from which we obtained 49% of our supplies of aggregates in 2011. In Panama, 35% of the aggregates used by our facilities were supplied by our own operations. We purchase the remaining portion of our aggregates requirements in Colombia and Panama from third parties. In Haiti, the Dominican Republic and Suriname, we currently obtain all our aggregates requirements from third parties. However, starting in January 2013, we plan to supply 20% of our aggregates needs in Suriname from our own operations. In the United States, we obtain all of our aggregates requirements for our U.S. ready-mix concrete operations from third parties. We are not substantially dependent on any single supplier of aggregates for our ready- mix concrete operations (other than our own cement production plants) and believe that we could access adequate alternatives to our existing suppliers without suffering any material disruption to our business or incurring additional material costs.

Other raw materials and admixtures

Other raw materials used to produce our cement and clinker are silica, clay, bauxite, iron-ore and gypsum. We extract clay from our quarries and purchase raw materials from third-party suppliers. We also use admixtures such as slag, fly ash and pozzolana as a substitute for clinker in the cement production process. We obtain fly ash from coal-fired electricity generating power plants and slag from third-party steel producers. We have entered into supply agreements with third-party suppliers to purchase slag. If we are unable to acquire raw materials or admixtures from current suppliers, we believe that we could access adequate alternatives without suffering any material disruption to our business or incurring additional material costs.

Cement production under the wet process requires large amounts of water. In some cases, we use underground river water for which we have obtained water concessions from the appropriate regional Colombian environmental authorities. Some of our cement plants also are connected to the national water pipelines.

Clinker

The primary input to our cement production process. We produce substantially all of the clinker used in our cement operations in Colombia and the United States. Our Panamanian operations purchased 42% of their clinker requirements for 2012 from our Cartagena plant. The remainder was purchased from a third-party supplier pursuant to a long-term supply agreement. In the event our long-term contract were to be terminated, an event that we do not believe is reasonably likely to occur, we believe that we could access adequate alternatives to our existing clinker suppliers without suffering any material disruption to our business or incurring additional material costs. We also could supply clinker from our Cartagena plant.

Our other operations in the Caribbean purchase their clinker requirement from our Cartagena plant, on the open market or through our trading operations in the Caribbean.

101 Our operations

Our operations in Colombia

Overview

Our corporate headquarters are located in Colombia, which is our principal market. We are the leading cement and ready-mix concrete producer in Colombia in terms of sales volume for 2012, and believe that we are well-positioned to take advantage of the opportunities presented by Colombia’s economic growth prospects and infrastructure initiatives.

For the years ended December 31, 2010, 2011 and 2012, we had operating revenues in Colombia of Ps.1,490,468 million, Ps.1,922,939 million and Ps.2,287,963 million, respectively. Our operations in Colombia represented 49.3%, 52.4% and 52.2% of our consolidated operating revenues for the years ended December 31, 2010, 2011 and 2012, respectively.

We operate our cement business in Colombia directly or through Zona Franca Argos S.A.S., our wholly owned subsidiary that owns our Cartagena plant. We operate our ready-mix concrete business in Colombia through Concretos Argos S.A.

We own 10 cement production facilities in Colombia, including nine integrated cement plants and one grinding station, 54 ready-mix concrete plants and one port. Our cement production facilities and ready-mix concrete plants in Colombia have an aggregate installed annual production capacity of 9.88 million metric tons of cement and 3.5 million cubic meters of ready-mix concrete.

The following map shows the geographic locations of our cement and our ready-mix concrete plants as of December 31, 2012 (our mobile ready-mix concrete plants are not included):

102 Production facilities and equipment

Cement

We own 10 cement production facilities in Colombia, including nine integrated cement plants and one grinding station. The table below shows the key characteristics of our cement production facilities:

As of December 31, 2012 Cement Clinker Total installed Total installed Start of annual production annual production Number Plant Commercial Process capacity Utilization rate(1) capacity Utilization rate (1) of Kilns Operation (million metric tons (million metric tons per year) per year) Coastal Locations

1977 Wet 3 1.14 12.4% 1.09 70.7% Cartagena 2010 Dry 1 2.32 22.8% 1.72 77.2% Barranquilla(2) 1955 - 0 1.29 53.0% - - Toluviejo 1967 Dry 2 0.91 60.1% 0.45 96.1% Sabanagrande 2005 Dry 1 0.40 63.1% 0.25 70.6% Sub-total 7 6.06 35.5%(3) 3.51 77.1(4) Internal Locations

Rioclaro 1984 Dry 2 1.33 98.4% 1.15 80.1% Yumbo 1979 Wet 3 1.06 89.5% 0.9 84.0% Sogamoso 1986 Dry 1 0.88 90.0% 0.54 90.8% Cairo 1960 Wet 2 0.27 98.7% 0.22 97.6% Nare 1943 Wet 1 0.25 51.6% 0.2 49.1% San Gil 2006 Dry 1 0.03 68.2% 0.05 78.4% Sub-total 10 3.82 90.7% 3.07 82.1% Total 17 9.88 56.9% (3) 6.58 79.4% (4) (1) Utilization rate is calculated by dividing production for the specified period by installed production capacity. (2) As of December 31, 2012, the Barranquilla cement plant was operating only as a grinding station. (3) Represents the average utilization rate weighted on the basis of total installed production capacity of cement. (4) Represents the average utilization rate weighted on the basis of total installed production capacity of clinker.

Cartagena is our largest cement plant and one of the most modern cement production facilities of its kind in Colombia, with four production lines, the technology for both the wet and dry processes, and a conveyor belt that supplies limestone from our adjacent quarry. This plant is the only cement facility in Colombia with direct access to a dedicated port. The Cartagena plant and port operate in a duty free zone, which allows us to take advantage of certain favorable tax rates and tariffs exemptions, which we have secured until 2028 by means of a contractual arrangement with the Colombian government. The plant has an installed annual production capacity of approximately 3.5 million metric tons of cement. Moreover, as a result of their strategic location on Colombia’s coast, we are able to use the Cartagena plant and port to supply clinker to our cement operations in the Caribbean and to export cement products, such as clinker, on a cost-effective basis to Panama and the Caribbean and other foreign markets. We are currently building a dispatch facility, expected to be completed in the first quarter of 2014, that will increase our annual dispatch capacity from the Cartagena plant by 360% to 1.3 million tons of bagged cement and one million tons of bulk cement. The increase in dispatch capacity also is expected to increase the utilization rate of the Cartagena plant, making it more cost-efficient to operate.

In addition to the Cartagena plant, we have one grinding station and two cement plants near Colombia’s Atlantic coast and six other cement plants in the interior of Colombia, all of which are strategically located near large

103 metropolitan areas where demand and potential growth is higher, allowing us to reduce associated transportation costs.

Our Nare plant has an installed annual production capacity of white cement of 230,000 metric tons. We are the only producer of white cement in Colombia, a distinction we believe gives us a competitive advantagee. White cement is used in prestige construction projects and for ornamental purposes. White cement production requires limestone and other minerals that comply with certain specifications that are only available at certain quarries (in the case of our quarries, only in the quarry near the Nare plant).

Our San Gil plant is located near the oil producing region of Colombia and, therefore focuses on producing specialty cement used in oil wells. The San Gil plant is one of only two facilities producing oil well cement in Colombia. The demand for oil well cement is expected to increase steadily in the future, as the Colombian oil sector continues to grow.

Our cement production levels for the past decade are shown in the following table:

We are currently expanding the installed annual production capacity at our Rioclaro, Cairo and Nare cement plants in the interior of Colombia to meet increased demand for cement products in the areas serviced by those plants, in particular Colombia’s three most populated cities (Bogota, Medellin and Cali) and the coffee-growing region in the provinces of Caldas, Risaralda and Quindio. The expansion of these plants, expected to be completed in the firrst quarter of 2014 at a cost of approximately U.S.$93 million, will boost our aggregate installed annual production capacity of cement by 900,000 metric tons, 9% of our total installed annual production capacity in Colombia.

We also own a number of concessions to exploit quarries with reserves of limestone and other raw materials located near our facilities in Colombia. We estimate that our existing quarriees in Colombia have sufficient proven and probable reserves to supply limestone for 40 years based on production levels as of December 31, 2012.

Ready-mix concrete

We own and operate 54 ready-mix concrete plants in Colombia, inclluding 32 permanent ready-mix plants and 22 ready-mix concrete mobile plants located near infrastructure projects currently under construction. We expect to continue investing in mobile ready-mix concrete plants, which will enable us to service infrastructure projects. We own 540 mixer trucks to distribute ready-mix concrete throughout the country, as wwell as 71 ready-mix concrete pumps that are used in locations that mixer trucks cannot reach, such as high-rise buildings or large slabs.

104 The table below shows the key operating characteristics of our ready-mix concrete plants (on an aggregate basis):

Total installed annual production Utilization rate for the year ended Type of plant Number capacity (million cubic meters) December 31, 2012(1) Permanent 32 2.6 85% Mobile 22 0.9 86% Total 54 3.5 85%(2) (1) Utilization rate is calculated by dividing production for the specified period by installed production capacity. (2) Represents the average utilization rate weighted on the basis of total installed production capacity of ready-mix concrete.

Our ready-mix concrete production levels for period indicated are shown in the table below:

In 2012, our ready-mix concrete plants in Colombia obtained all of their cement requirements from our own cement plants.

Energy sources

Given the high kiln temperatures required to produce clinker and quicklime, our production processes consume large amounts of electric power and fuels, such as coal and natural gas. In addition, milling operations, homogenization and transportation of raw materials consume significant amounts of electricity and fuel.

Electricity

Expenses for electric power represented 6.2% of our total direct costs in Colombia as of December 31, 2012. We produced approximately 75% of the electric power we required for our operations in Colombia in 2012. For these purposes, we operate seven power generation plants in Colombia. Selected information as of December 31, 2012 about these power plants is contained in the table below:

Capacity Plant Method (MW) Cartagena Natural gas turbines 42 Toluviejo Natural gas turbines 11 Nare Hydroelectric 9 Cairo Hydroelectric 9 Yumbo Coal fired thermoelectric 17 Rioclaro Coal fired thermoelectric 17 Sogamoso Coal fired thermoelectric 15 Total 120

We have entered into power supply agreements with various power generators to supply the balance of our electric power needs. We believe that we could access adequate alternatives to our existing electric power suppliers without suffering any material disruption to our business or incurring additional material costs.

105 We purchase electricity from local utility companies for our ready-mix concrete plants in Colombia. In some cases, particularly with respect to our mobile plants, our ready-mix concrete customers provide the required electric power.

Fuels

Expenses for fuels used in our production processes (other than the fuels used to provide electric power) represented 11.0% of our total direct costs in Colombia as of December 31, 2012.

Coal

Following our spin-off, we have nine remaining coal concessions, which are currently operated by Carbones del Caribe S.A.S. on our behalf. We obtain a portion of the coal used by our Colombian cement plants from our coal concessions, but we do not rely on our coal concessions for a material amount of our coal needs. Instead, we rely on third-party suppliers for the majority of our coal needs. We believe that we could access adequate alternatives to our existing coal suppliers, since coal is a readily available resource in Colombia, without suffering any material disruption to our business or incurring additional material costs.

Natural gas

We purchase the natural gas we require for our operations from unaffiliated third parties. We have entered into short-term natural gas supply agreements with various suppliers. We believe that we could access adequate alternatives to our existing natural gas suppliers without suffering any material disruption to our business or incurring additional material costs.

Diesel

We also use limited amounts of diesel fuel to pre-heat the kilns in our facilities and to operate our machinery. We purchase all diesel fuel from a third-party supplier under a supply agreement that provides minimum purchase amounts. This contract will expire on June 15, 2013. In the event of termination or non-renewal of this agreement, we believe that we could access adequate alternatives to our existing diesel fuel suppliers without suffering any material disruption to our business or incurring additional material costs.

Alternative fuels

We currently are developing an energy and fuel strategy, which we will use to optimize the management, sourcing and supply of electric energy and fuels throughout the regions where we operate. As part of this strategy, we are reviewing alternative fuel projects in Colombia similar to those we have implemented at our plants in the United States, where more than 20% of our fuel requirements are met with alternative fuels.

Sales and distribution

Cement

Our cement operations represented 65.6% of our operating revenue in Colombia for the year ended December 31, 2012. We sold 5.14 million metric tons of cement during this period, which represented a 1.7% increase compared to 2011 as a result of an increase in residential and commercial projects.

106 The following chart sets forth the composition of our customer base in Colombia for the periods indicated:

For the year ended December 31, 2008 2009 2010 2011 2012 (percentage of volumes sold) Retail 25.0% 23.5% 22.6% 23.6% 20.5% Wholesalers 26.1% 29.4% 29.7% 27.9% 23.6% Construction companies 24.7% 24.6% 22.3% 20.7% 26.3% Our ready-mix concrete companies 12.1% 11.3% 14.1% 16.3% 17.6% Other ready-mix concrete companies 4.1% 3.8% 3.4% 3.8% 4.8% Pre-cast companies 6.7% 6.4% 6.9% 6.3% 6.5% Others 1.2% 1.0% 1.0% 1.3% 0.8% Total 100% 100% 100% 100% 100% For the year ended December 31, 2012, approximately 67% of our total cement shipments were in the form of bagged cement, which was primarily sold through retailers or directly to wholesalers. The remaining 33% of our cement was sold in bulk or in shipments directly to large construction companies, or ready-mix concrete operators. Our own ready-mix concrete operations accounted for 55% of our bulk shipments for 2012. For 2012, none of our customers represented more than 10% of our consolidated revenue and the top 10 cement customers represented approximately 10% of cement sales.

We distribute cement through our subsidiary Logitrans S.A. and through a third-party. Our cement plants are strategically located near metropolitan areas, thus keeping our transportation costs low. Expenses for transportation represented 28.7% of our total direct costs in Colombia for 2012.

We have nine cement dispatch facilities and 17 warehouses in Colombia with an aggregate annual distribution capacity of 142,000 metric tons of cement. We currently are building a dispatch facility at our Cartagena plant that will increase our annual dispatch capacity from that plant by 360%, to 1.3 million tons of bagged cement and one million tons of bulk cement. The facility is expected to be completed in the first quarter of 2014.

Moreover, as a result of its strategic location on the Atlantic coast of Colombia, we also sell cement and clinker from the Cartagena plant to customers in other parts of the Caribbean, West Africa and the United States. We also sell clinker to counterparties in Caribbean countries through our clinker trading operations. Our port in Cartagena has the capacity to dispatch 2.2 million metric tons of cargo per year.

Ready-mix concrete

Our ready-mix concrete operations represented 34.2% of our operating revenues for our operations in Colombia for 2012. We sold 3.0 million cubic meters of concrete during 2012, which represented a 14.6% increase compared to 2011, as a result of growth of Colombian demand for concrete, resulting from an increase in the development of infrastructure projects in Colombia.

The following table sets forth the distribution of our ready-mix concrete sales by customer base for the periods indicated:

For the year ended December 31, 2008 2009 2010 2011 2012 Commercial construction 36.5% 34.8% 27.9% 24.8% 26.6% Housing construction 19.8% 31.0% 39.9% 39.1% 31.1% Infrastructure 42.3% 33.3% 30.9% 35.0% 41.4% Other customers 1.4% 0.9% 1.4% 1.2% 1.0% Total(1) 100.0% 100.0% 100.0% 100.0% 100.0% (1) Sales of ready-mix concrete to construction companies during 2008, 2009, 2010, 2011 and 2012 account for 98.6%, 99.1%, 98.6%, 98.8% and 99%, respectively, of our total ready-mix concrete sales. Sales of ready-mix concrete that can be allocated to commercial construction, housing construction and infrastructure are made to construction companies. Sales made to other customers cannot be allocated to these segments.

107 We supply all of the cement requirements of our ready-mix concrete operations in Colombia. Ready-mix concrete is sold through our own internal sales force and facilities network. We also own 22 mobile ready-mix concrete plants, which we use to distribute ready-mix concrete to large infrastructure projects that are too far from our permanent ready-mix concrete plants.

For the year ended December 31, 2012, none of our customers represents more than 10% of our consolidated revenue and the top 10 ready-mix concrete customers represented approximately 24% of ready-mix concrete sales.

Price and production costs

Cement

The aggregate production cost of cement is determined by fixed and variable costs. Our most significant fixed costs for cement production in Colombia have historically included wages and employee salaries, services and maintenance. Our most significant variable costs in Colombia have historically included fuel, raw materials and electricity consumption. The average price of Portland cement increased by 1.2% from 2010 to 2011 and by 16.7% from 2011 to 2012.

Ready-mix concrete

The aggregate production cost of ready-mix concrete is determined by fixed and variable costs. Our most significant fixed costs for ready-mix concrete in Colombia have historically included wages and salary, services and labor. Our most significant variable costs in Colombia have historically included cement, sand, gravel and maintenance. The average price of ready-mix concrete increased 5.3% from 2010 to 2011 and by 12.5% from 2011 to 2012.

Capital Expenditures

We made capital expenditures in Colombia of Ps.348,168 million, Ps.193,552 million and Ps.100,641 million in 2010, 2011 and 2012, respectively.

Our operations in Panama and the Caribbean

Overview

Based on our internal estimates, we are one of two leading producers of cement and ready-mix concrete in Panama and the Caribbean. We have four cement grinding stations and 14 ready-mix concrete plants in Panama, Haiti, the Dominican Republic and Suriname. We also operate four portsBahia Las Minas (Panama), Haina (Dominican Republic), the port operated by Cina (Haiti) and the port operated by Vensur (Suriname)and five terminals located in St. Maarten, Antigua and Barbuda, Dominica, St. Thomas and Curaçao. Our grinding stations in Panama, Haiti, the Dominican Republic and Suriname have an aggregate installed annual production capacity of cement of 2.53 million metric tons. We do not produce clinker in Panama and the Caribbean, and instead source clinker from our Cartagena plant or acquire it under competitive supply agreements or in the open market. Our ready-mix concrete plants located in Panama, Haiti, the Dominican Republic and Suriname are well positioned in the market and have an aggregate installed annual production capacity of 0.76 million cubic meters. Our grinding stations, together with exports produced in our Cartagena plant, are also used to supply cement to our customers in other markets in the Caribbean and Central America. We also are an important player in cement and clinker trading in the Caribbean through our subsidiary C.I. del Mar Caribe BVI. Based on public information from maritime and customs agencies, we estimate that we control 47% of the seaborne trade market for cement and clinker in the Caribbean.

For the years ended December 31, 2010, 2011 and 2012, we had operating revenues in Panama and the Caribbean of Ps.648,740 million, Ps.772,102 million and Ps.848,926 million, respectively. Our operations in Panama and the Caribbean represented 21.5%, 21.0% and 19.4% of our consolidated operating revenues for the years ended December 31, 2010, 2011 and 2012, respectively.

108 We operate our business in this geographic segment through several subsidiaries and affiliated companies. In Panama, we own 98.4% of the outstanding stock of Cemento Panamá S.A.; in Haiti, we own 65% of the outstanding stock of Cimenterie Nationale S.E.M. (“Cina”) (the remainder of which is owned by the government of Haiti); in the Dominican Republic, we own 80% of the outstanding stock of Cementos Colón S.A. (the remainder of which is held by a group of interrelated parties); and in Suriname we indirectly own 42.12% of the outstanding stock of Vensur. See “Business—Joint ventures.”

The following map shows the geographic locations of our cement and ready-mix concrete production facilities in Panama and the Caribbean as of December 31, 2012:

Production facilities and equipment

Cement

The table below shows some key operating characteristics of our four grinding stations as of December 31, 2012:

Start of Number of Total installed annual production Name Country commercial grinding capacity of cement Utilization rate(2) operation stations(1) (million metric tons) Cemento Panamá Panama 1943(3) 3 1.26 88.9% Cina Haiti 2000(3) 2 0.63 82.4% Cementos Colón Dominican Republic 1940(3) 1 0.51 51.8% Vensur Suriname 1965(4) 1 0.13 87.7% Total 7 2.53 79.7%(5) (1) Cement grinding stations do not have cement kilns and, as a result, must purchase clinker to produce cement. (2) Utilization rate is calculated by dividing production for the specified period by installed production capacity. (3) We acquired the remaining shares owned by Holcim of Cemento Panamá, Cina and Cementos Colón in 2009. Prior to 2009, our interests in the Caribbean were held through a joint venture with Holcim. See “Business—Our history.” (4) We acquired our interest in Vensur in February 2010. (5) Represents the average utilization rate weighted on the basis of total installed production capacity of cement.

109 The following table shows our production of cement in Panama, the Dominican Republic, Haiti and Suriname for the periods indicated by production volume:

For the year ended December 31, 2008 2009 2010 2011 2012 (thousands of metric tons) Cemento Panamá . 706 702 711 862 1,120 Cina ...... 409 436 436 477 519 Cemento Colón .... 409 321 327 305 264 Vensur ...... - - 45 74 114 Total ...... 1,524 1,459 1,519 1,718 2,017

As of December 31, 2012, we operated 43 bulk trailers in Panama, of which we owned 23 and rented 20, and owned and operated eight bulk trailers in the Dominican Republic, four bulk trailers in Haiti and three bulk trailers in Suriname. The trucks used to transport the bulk carriers are leased through agreements with third parties, and we believe that we could have access to other adequate transport providers without suffering material interruptions in our commercial activities and without incurring in additional significant costs.

Ready-mix concrete

In Panama, we own 10 ready-mix concrete plants, two of which are mobile plants. These plants have an aggregate installed annual production capacity of 600,000 cubic meters of ready-mix concrete. We also own 116 mixer trucks and 11 ready-mix concrete pumps to distribute ready-mix concrete throughout the country.

In Haiti, we own one ready-mix concrete plant with an installed annual production capacity of 30,000 cubic meters. We also own eight mixer trucks, one quick mix truck (a type of truck used to transport raw materials used to produce ready-mix concrete) and one ready-mix concrete pump.

For the year ended December 31, 2012, our ready-mix concrete plants in Panama and Haiti had a utilization rate of 73.2% and 19.2%, respectively.

We commenced ready-mix concrete operations in the Dominican Republic on October 1, 2012. We own two ready- mix concrete plants with an installed annual production capacity of 110,000 cubic meters. We also own 16 mixer trucks and three ready-mix concrete pumps.

We commenced ready-mix concrete operations in Suriname on December 1, 2012. We own one ready-mix concrete plant with an installed annual production capacity of 20,000 cubic meters. We also own three ready-mix concrete trucks and one ready-mix concrete pump.

The following table shows our production of ready-mix concrete in Panama, Haiti, the Dominican Republic and Suriname for the periods indicated, by production volume:

For the year ended December 31, 2008 2009 2010 2011 2012 (thousands of cubic meters) Cemento Panamá .... 425 428 362 459 439 Cina ...... - - - 1 6 Cementos Colón ..... - - - - 7 Vensur ...... - - - - 0.2 Total ...... 425 428 362 460 452.2

Energy sources

Our operations in Panama and the Caribbean are grinding stations that do not use coal, natural gas or coke.

110 Electricity

For the year ended December 31, 2012, electric power represented approximately 6%, 11%, 14% and 2% of the cost of goods sold for our cement production in Panama, Haiti, the Dominican Republic and Suriname, respectively.

In Panama, we purchase electricity from the national grid to operate our grinding stations. We have a 10-year power supply agreement on a fixed-rate basis. In case of an emergency, we may obtain electric power from our back-up diesel fuel generators.

Because of limited access to and availability of public utilities, our operations in Haiti rely almost exclusively on electric power generated by our three diesel fuel or fuel oil generators with an aggregate capacity of 7.65MW.

We expect to connect our plant in the Dominican Republic to the national grid during the first quarter of 2013. We have negotiated a 10-year variable rate power supply contract with a local power supplier, which we expect will reduce our electricity costs by 25%. In case of an emergency, we may obtain electric power from our four diesel fuel- or fuel oil-powered generators with an aggregate capacity of 7.8MW.

Fuel

In Panama, we use diesel fuel to operate our ready-mix concrete plants and emergency generators, and fuel oil to operate our cement plant. We purchase our fuel requirements from third-party suppliers.

In Haiti, we purchase diesel fuel and fuel oil to operate our cement plant from third-party suppliers.

We believe that we could access adequate alternatives to our existing fuel suppliers without suffering any material disruption to our business or incurring additional material costs.

Sales and distribution

Cement

In Panama and the Caribbean, we sold 2.84 million metric tons of cement during 2012, which represented a 7% increase compared to 2011, mainly as a result of an increase in cement demand in Panama and Suriname. All the cement production in Panama, Haiti and Suriname is sold in their respective domestic markets.

111 The following chart sets forth the composition of our customer base in Panama, Haiti, the Dominican Republic and Suriname for the periods indicated:

For the year ended December 31,(1) 2008 2009 2010 2011 2012 (percentage of volume sold) Panama(2) Distributors 42.5% 41.6% 42.4% 29.3% 33.4% Construction companies 19.0% 18.0% 15.9% 44.9% 39.3% Ready-mix companies 35.6% 37.3% 37.9% 22.1% 22.4% Pre-cast companies 2.5% 2.7% 3.3% 3.4% 4.6% Others(2) 0.4% 0.4% 0.4% 0.3% 0.3% Total 100.0% 100.0% 100.0% 100.0% 100.0% Haiti(3) Distributors - - 77.0% 71.4% 69.2% Retailers - - 14.5% 13.5% 15.4% Construction companies - - 7.0% 9.3% 9.4% Ready-mix companies - - 0.0% 2.3% 2.0% Others(2) - - 1.6% 3.5% 4.0% Total - - 100.0% 100.0% 100.0% Dominican Republic(3) Distributors - - 28.5% 14.9% 18.8% Wholesalers - - 59.4% 58.2% 49.1% Construction companies - - 2.8% 4.0% 8.9% Ready-mix companies - - 5.9% 18.2% 16.6% Others(2) - - 3.4% 4.7% 0.9% Total 100.0% 100.0% 100.0% Suriname(4) Distributors - - - 34.1% 33.0% Construction companies - - - 10.0% 35.0% Ready-mix companies - - - 50.4% 28.0% Others(2) - - - 5.5% 4.0% Total - - - 100.0% 100.0% (1) Includes sales of white cement, as the case may be. (2) Sales to construction companies in Panama increased in 2011 and 2012 as a consequence of the sales of cement to the Canal Expansion Project. (3) Sales information for Haiti and the Dominican Republic was not divided on a customer basis before 2010. (4) Sales information for Suriname was not divided on a customer basis before 2011.

The following chart sets forth the our total sales in Panama, Haiti, the Dominican Republic, Suriname and the islands in the Caribbean where we have trading operations (Saint Maarten, Saint Thomas, Antigua and Dominica), including exports made in this region, for the periods indicated:

For the year ended December 31, 2008 2009 2010 2011 2012 Panama and the Caribbean Panama 40.4% 45.0% 34.8% 37.9% 39.9% Haiti 22.5% 25.0% 22.3% 24.0% 19.9% Dominican Republic 21.3% 15.9% 15.1% 12.6% 8.8% Suriname 2.4% 2.6% 2.1% 3.8% 4.4% Caribbean Islands where we operate 13.4% 11.5% 5.2% 5.3% 5.4% Trading operations(1) 0.0% 0.0% 20.4% 16.4% 21.6% Total 100.0% 100.0% 100.0% 100.0% 100.0% (1) Trading operations include the sale of white cement, Portland cement and clinker to third parties.

For the year ended December 31, 2012, approximately 54% of our total cement shipments in Panama were in the form of bagged cement. In Haiti, the Dominican Republic and Suriname approximately 98%, 78% and 66% of our total cement shipments, respectively, were in the form of bagged cement.

We have nine dispatch facilities and eight warehouses in Panama and the Caribbean with an aggregate distribution capacity of 4 million metric tons of cement per year.

To distribute our bulk cement production, we operate a fleet of owned or leased bulk trailers, and have agreements with third parties for the transportation of the bulk trailers. All of our bagged cement is shipped through third parties.

112 We also use a fleet of vessels owned and operated by our joint venture with Shipmanagement & Transport STM to ship our products throughout the Caribbean and other markets, including through our ports and terminals in the region.

The following chart shows the cargo movement in the ports located in Panama and the Caribbean for the year ended December 31, 2012:

Location Cargo movement (thousands of metric tons of cargo per year) Bahia Las Minas (Panama) 881 Haina (Dominican Republic) 0 Cina (Haiti) 475 Vensur (Suriname) 117

Ready-mix concrete

We sold 452,299 cubic meters of ready-mix concrete in Panama and the Caribbean during 2012, a 1.4% decrease compared to 2011. In addition, in October 2012, Cemento Panamá implemented a 10% price increase in order to improve profitability. Our ready-mix concrete operations in Haiti commenced in September 2011. Our ready-mix concrete operations commenced on October 1, 2012 in the Dominican Republic and on December 1, 2012 in Suriname. Consequently, no relevant data was yet available as of the date of this offering memorandum.

The following table sets forth the distribution of our ready-mix concrete sales in Panama by customer base for the periods indicated:

For the year ended December 31,

2008 2009 2010 2011 2012 Commercial construction 16% 17% 25% 29% 18% Residential construction 61% 43% 42% 39% 44% Infrastructure 23% 40% 33% 32% 38% Total 100% 100% 100% 100% 100%

Our ready-mix concrete operations in Panama, Haiti and the Dominican Republic obtained all of their cement requirements from our own production facilities. For 2012, none of our customers represents more than 10% of our consolidated revenue and the top 10 ready-mix concrete customers represented approximately 57% of ready-mix concrete sales. Ready-mix concrete is sold through our own internal sales force and facilities network.

Price and production costs

Cement

The aggregate production cost of cement is determined by fixed and variable costs. Our most significant fixed costs for cement production in Panama and the Caribbean have historically included wages and employee salaries, services and maintenance. Our most significant variable costs in Panama and the Caribbean have historically included raw materials and electricity consumption. The average domestic price of Portland cement increased by 2.1% from 2010 to 2011 and by 2.4% from 2011 to 2012.

Ready-mix concrete

The aggregate production cost of ready-mix concrete is determined by fixed and variable costs. Our most significant fixed costs for ready-mix concrete in Panama and the Caribbean have historically included wages and salary, services and labor. Our most significant variable costs in Panama and the Caribbean have historically included cement, sand and gravel. The average price of ready-mix concrete increased 2.8% from 2010 to 2011 and by 9.5% from 2011 to 2012.

113 Capital Expenditures

We made capital expenditures in Panama and the Caribbean of Ps.129,749 million, Ps.44,759 million and Ps.16,951 million for the years ended December 31, 2010, 2011 and 2012, respectively.

Our operations in the United States

Overview

We produce and sell cement and ready-mix concrete in nine States in the south central and southeastern regions of the United States. We commenced cement production operations in the United States as a result of our acquisition of certain Lafarge assets in October 2011. Before the Lafarge acquisition, we imported cement into the United States from our plant in Cartagena through our ports located in Texas, Georgia and North Carolina. Our ready-mix concrete business in the United States commenced through acquisitions in 2005 and 2006 in Arkansas, Georgia, North Carolina, South Carolina, Texas and Virginia.

For the years ended December 31, 2010, 2011 and 2012, we had operating revenues in the United States of Ps.771,685 million, Ps.839,678 million and Ps.1,201,388 million, respectively. Our operations in the United States represented 25.5%, 22.9% and 27.4% of our consolidated operating revenues for the years ended December 31, 2010, 2011 and 2012, respectively.

We serve cement markets in the southeastern United States through our wholly owned subsidiary, Argos Cement LLC, and serve ready-mix concrete markets in the southeastern and south central United States through our wholly- owned subsidiaries Argos Ready Mix LLC, Southern Equipment Company Inc. (doing business as RMCC) and Southern Star Concrete Inc.

We are the second largest cement producer in the Southeast (excluding Florida) and believe that we are the third largest ready-mix concrete producer in the United States, based on data from the PCA data on installed cement production capacity and our own internal estimates of ready-mix concrete sales volumes. Our cement plants in the United States are located in South Carolina and Alabama and we operate a grinding station in Georgia. We operate five distribution terminals in Georgia, Mississippi and North Carolina, and four ports in Texas, Alabama, Georgia and North Carolina. Our ready-mix concrete plants are located in Texas, Arkansas, Alabama, Florida, Georgia, South Carolina, North Carolina and Virginia.

Our cement plants, which have a combined installed annual production capacity of 3.2 million metric tons of cement per year, are strategically located in close proximity to both our own ready-mix concrete plants in the southeastern United States and major metropolitan areas in the region. Our cement plants are integrated into a regional network of distribution terminals that provides us a competitive advantage in terms of transportation and distribution costs. This network of plants and terminals allows us to both vertically integrate our own ready-mix concrete operations in the southeastern United States and effectively supply cement to third parties throughout the region.

We believe that our geographic footprint positions us to take advantage of the expected economic recovery in the United States. We believe that the states in which we operate have a potential for economic growth and population increases that are higher than national averages. We expect that this will cause those states to recover from the current economic crises faster than other regions in the United States and result in increased construction spending across residential, commercial and infrastructure sectors. Three of the states in our core geographic market, Georgia, North Carolina and Texas, are in the top growth markets for the United States, based on PCA forecasts.

114 The following map shows the geographic locations of our cement and ready-mix concrete production plants as of December 31, 2012:

Virginia

Richmond

Durham

North Raleigh Carolina Arkansas South Columbia Ball Carolina Wilmington Ground Alabama Augusta Harleyville Little Rock Mississippi Atlanta Newman

Roberta Dallas Savannah Fort Worth Meridian Cordele

Georgia Texas Mobile

Pensacola Houston

Terminals Florida Cement plant Ready-mix plant Grinding mill Port

Production facilities and equipment

Cement

We own two cement production plants located in Alabama and South Carolina and one grinding station in Georgia, with an aggregate installed annual production capacity of 3.2 million metric tons (assuming type I/II or equivalent production):

As of December 31, 2012 Cement Clinker Total installed Total installed Start of annual production annual production Utilization Plant State commercial Process Number of kilns capacity capacity Utilization rate(1) Rate operation (millions of metric (millions of metric tons per year) tons per year) Roberta Alabama 1943 Dry 1 1.6 55.9% 0.99 83.4% Harleyville South Carolina 1974 Dry 1 1.1 60.7% 1.36 44.9% Atlanta Georgia 1968 - - 0.5 15.4% - - Total……… - - - 2 3.2 51.2% 2.35 61.1%(2) (1) Represents the average utilization rate on the basis of total installed production capacity of cement. (2) Utilization rate is calculated by dividing production for the specified period by installed production capacity.

We produced 1.6 million metric tons of cement in the year ending December 31, 2012, which represents 57.2% of our installed annual production capacity of cement. A new mill being installed at our plant in South Carolina will increase our installed cement production capacity at the plant by 31% to 1.45 million metric tons per year to respond to a growing demand for cement as the economy improves. This expansion project is expected to be completed by August 2014 at a cost of approximately U.S.$48 million.

We also operate four quarries near our cement production plants from which we extract limestone and other raw materials. We estimate that our existing quarries in the United States have sufficient reserves to fulfill our limestone needs for approximately 75 years, based on production levels as of December 31, 2012.

115 Ready-mix concrete

As of December 31, 2012, our 239 ready-mix concrete plants, located in Alabama, Arkansas, Georgia, Florida, North Carolina, South Carolina, Texas and Virginia, had an aggregate installed annual ready-mix concrete installed annual production capacity of 9.8 million cubic meters. The following chart shows the location of our ready-mix concrete plants:

State Number of plants(1) Alabama 13 Arkansas 7 Florida 3 Georgia 60 North Carolina 72 South Carolina 19 Texas 59 Virginia 6 Total 239 (1) Includes 10 mobile plants that may be relocated from state to state.

Our ready-mix concrete production levels for period indicated are shown in the table below:

For the year ended December 31, Region 2008 2009 2010 2011 2012 (thousands of cubic meters) Southeast 1,315 961 978 1,258(1) 2,975 South Central 3,933 2,529 2,662 2,735 2,150 Total 5,248 3,490 3,640 3,993 5,125 (1) Includes 230,920 cubic meters attributable to plants acquired from Lafarge in October 2011.

For the year ended December 31, 2012, our ready-mix concrete plants in the United States had a utilization rate of 52.3% weighted on the basis of installed annual production capacity and actual production for the period.

Energy sources

Our cement and ready-mix concrete operations consume significant amounts of electricity, and our cement plants in Alabama and South Carolina require large amounts of fuel to heat their kilns.

Electricity

We have entered into supply agreements with public utilities to supply electricity to each of our cement plants. Our ready-mix concrete plants in the Southeast (Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia) and Arkansas purchase electricity from local utilities or power co-operatives. Our ready-mix concrete plants in Texas purchase electricity through brokers who source electricity for delivery through a utility in the local market.

Coal and alternative solid fuels

We use coal and alternative solid fuels (“ASF”) as the primary fuel sources for our cement plants in Alabama and South Carolina. We purchase coal for our plant in Alabama on the local spot market from sources in close geographic proximity to our plant. We purchase coal for our plant in South Carolina through a broker who sources materials from Kentucky, Virginia and West Virginia. We purchase ASF for our plants under an alternative fuel supply agreement with Systech Environmental Corporation. Our agreement grants Systech the exclusive right to source ASF on our behalf and expires on October 3, 2014.

116 Fuel oil

We purchase our natural gas, diesel fuel and other fuel oils needs in the United States from third-party suppliers. We believe that we could access alternatives to our existing fuel suppliers without suffering any material disruption to our business or incurring material additional costs.

Sales and distribution

Cement

We sold 1.58 million metric tons of cement in 2012. In most cases, we document sales through individual purchase orders, and occasionally we enter into supply or take-or-pay agreements.

The following chart sets forth the composition of our customer base in the United States for the periods indicated:

For the year ended December 31,(1) 2008 2009 2010 2011 2012 (percentage of volumes sold) Distributors 38.4% 22.3% 0.0% 7.1% 11.3% Our ready-mix concrete 9.3% 29.7% 28.4% 18.1% companies 26.3% Other ready-mix concrete 52.3% 47.9% 71.6% 60.0% companies 43.4% Pre-cast companies 0.0% 0.0% 0.0% 7.2% 12.3% Construction companies 0.0% 0.0% 0.0% 7.6% 6.7% Total 100% 100% 100% 100% 100% (1) Prior to our acquisition of Lafarge assets in 2011, all our cement sales in the United States were imported from other regions. For the year ended December 31, 2012, 10% of our total cement shipments were in the form of bagged cement. The remaining 90% of our cement was sold in bulk. We sold 26.3% of our total cement shipments to our own ready-mix operations. For the year ended December 31, 2012 and excluding our ready-mix operations, none of our customers represents more than 10% of our consolidated revenue and the top 10 cement customers represented approximately 40% of cement sales.

We supply 80% of the cement we require for our ready-mix concrete operations in the southeastern United States from our own cement production plants. We obtain all of the cement requirements for our Texas and Arkansas operations from third parties.

We transport our products in the markets where we operate by rail or third-party common carrier. We operate a fleet of 485 railcars, approximately 17% of which are owned and 83% leased. We also operate five inland cement terminals in Georgia, Mississippi and North Carolina. We deliver cement to these terminals by rail for storage and delivery to our customers in the Southeast. We lease one of the terminals in Georgia from a third-party.

We have 12 dispatch facilities in the United States. All these facilities include warehouses, five of which have covered storage for packaged goods, while the remaining seven have bulk storage, such as silos and flat storage. These dispatch facilities have an aggregate annual distribution capacity of 5.75 million metric tons of cement.

We operate four ports in Texas, Alabama, Georgia and North Carolina. We can use the ports to resume imports of cement into the United States once market conditions improve. We lease these ports from different landlords, who are licensed to operate the wharfs and docks (except for our port in Texas, which we own). Under the terms of those leases, we pay a fixed amount of rent as well as wharfage, dockage, and other fees upon the amount of cement and materials we handle through the ports. Certain of the leases also provide for minimum throughput (annual tonnage of bulk cement imported through the terminal) to guarantee minimum payments to the landlords. We currently are not meeting the minimum throughput capacity for our ports in Alabama, Georgia and North Carolina and consequently paid U.S.$145,000, U.S.$197,000 and U.S.$949,000 guaranteed minimums to the respective landlords in 2011 and U.S.$149,000, U.S.$379,000 and U.S.$1,251,000 in 2012.

117 The following chart shows the cargo handling capacity per year of our ports:

Location Annual cargo handling capacity (million metric tons) Houston, Texas 0.8 Mobile, Alabama 0.8 Savannah, Georgia 0.4 Wilmington, North Carolina 0.3

We are currently modifying our port in Wilmington, North Carolina, to accept delivery by rail of the cement produced by our Roberta and Harleyville plants. We expect to complete this project in the first semester of 2013 at an estimated cost of U.S.$1.6 million. Our terminal in Wilmington currently can only accept delivery from vessels and we have historically supplied this facility with imports from Colombia. The modifications will allow us to supply this terminal from our plants in the United States and provide us with a greater flexibility in how we source the surrounding market.

Ready-mix concrete

We sold 5.13 million cubic meters of concrete during the year ended December 31, 2012, which represented a 28.4% increase as compared to 2011. None of our customers represents more than 10% of our U.S. ready-mix concrete segment revenue.

The following table sets forth the distribution of our ready-mix concrete sales by customer base for the periods indicated:

For the year ended December 31, 2008 2009 2010 2011 2012 Commercial construction 57.0% 52.8% 48.3% 47.3% 49.3% Housing construction 23.7% 24.2% 29.2% 29.2% 29.7% Infrastructure 18.5% 22.4% 22.3% 23.3% 20.9% Other 0.8% 0.6% 0.2% 0.2% 0.1% Total 100% 100% 100% 100% 100%

We own 1,454 mixer trucks in the United States. The following chart shows the distribution of our mixer trucks by state:

State Mixer trucks Alabama 22 Arkansas 73 Florida 19 Georgia 293 North Carolina 374 South Carolina 105 Texas 532 Virginia 36 Total 1,454

Price and production costs

Cement

The aggregate production cost of cement is determined by fixed and variable costs. Our most significant fixed costs for cement production in the United States have historically included wages and employee salaries, services and maintenance. Our most significant variable costs in the United States have historically included fuel, raw materials and electricity consumption.

118 Ready-mix concrete

The aggregate production cost of ready-mix concrete is determined by fixed and variable costs. Our most significant fixed costs for ready-mix concrete in the United States have historically included wages and salary, services and labor. Our most significant variable costs in the United States have historically included fuels, maintenance, cement, sand and gravel.

Capital expenditures

We made capital expenditures in the United States of Ps.14,060 million, Ps.15,219 million and Ps.49,754 million for the years ended December 31, 2010, 2011 and 2012, respectively.

Property

As of December 31, 2012, the net book value of our property, plants and equipment amounted to Ps.3,779,319 million, representing approximately 36.8% of our consolidated assets.

Marketing and brand awareness

We believe that our distribution network has enabled us to build strong brand recognition among retailers and end consumers. The Cementos Argos brand is the most recognized brand in the cement industry in Colombia and among the 10 most recognized brands overall, according to a Top of Mind survey conducted by Invamer-Gallup in 2011. In February 2011, we launched the Cementos Argos brand in the United States. The transition to the Cementos Argos brand in the United States will allow us to streamline our brand development and marketing efforts. We intend to continue using our heritage brands until completion of our rebranding efforts.

Our marketing expenses in 2012 were U.S.$9.8 million. Our advertising campaigns seek to develop brand loyalty that we believe will drive growth in our cement sales. We also seek to develop consumer loyalty by providing high- quality products and customer service, including direct technical assistance in the use and application of our products. As a result of the foregoing, we believe we are able to charge premium prices for our products in Colombia.

To maintain and improve our relationship with the end consumers of our products, we use our customer relationship management system to track customer information and feedback. This feedback in turn allows us to provide a tailored level of service in the markets where we operate.

Innovation

We emphasize innovation in order to achieve desired levels of long-term sustainability. Our research and development is focused on two areas: (i) energy efficiency and reduction of carbon emissions and (ii) new product development and new or improved applications for our existing products. We expect that by 2015, 10% of our revenues will come from products developed through our innovation and sustainable development programs. We also promote innovation within our organization through our “Ideaxion” program that allows our employees to participate in and help identify new areas and opportunities for innovative growth.

We undertake our innovation, research and development projects through a centralized laboratory at EAFIT University in Medellin, Colombia. In addition, we are in the process of developing an Innovation Center, also at EAFIT University, which will serve as our flagship research and innovation facility. The Innovation Center will operate under an “open innovation” scheme in collaboration with 16 leading education centers, including the MIT, the University of Michigan, Universidad de Antioquia, EAFIT University, Universidad Nacional de Colombia, Universidad del Valle and Instituto Eduardo Torroja.

We believe that we have a highly qualified research and development team, including 25 full-time professionals of whom four have advanced doctorate degrees in relevant fields. Our laboratory is also equipped with more than 70 state-of-the-art chemical and physical research equipment that allow us to undertake research using various

119 advanced techniques, including but not limited to field emission scanning electronic microscopy (FESEM), x-ray fluorescence (FRX) and diffraction (DRX), laser particle size distribution, optic microscopy, rheometry, calorimetry and Fourier transform infrared spectroscopy (FTIR).

As part of our innovation efforts, we have decided to build a portfolio of “green cements” in order to be well- positioned to respond to future demand and changes in the market. For example, our investment in Ceratech, Inc. has given us access to a cementing technology with an almost carbon neutral footprint. In the United States, we own 66 of the 288 NRMCA Green-Star certified ready-mix concrete plants in North America, including the first such plant in the United States to have achieved this certification, which rewards plants that have achieved or are actively working towards environmental excellence and a demonstrable reduction of environmental impacts.

We spent U.S.$4.9 million on research and development in 2012.

Intellectual property

Our intellectual property rights portfolio includes trademarks, patents, know-how, research documents and trade secrets which are used as strategic tools in the generation of new ways to produce and optimize our process and to protect our business activities. We aim to protect the value of our intellectual property by establishing our ownership rights through trademarks, copyright, patents and other relevant conventions and agreements and by using legal and regulatory recourse in the event of infringement by a third-party.

Legal proceedings

As of the date of this offering memorandum, we are involved in various legal proceedings that have arisen in the ordinary course of business. We believe that we have made adequate reserves to cover both current and contemplated general and specific litigation risks as have deemed necessary, and we believe that these matters will be resolved without any significant effect on our operations, financial position or results of operations. In most cases we are able to make and disclose reasonable estimates of the expected losses or the expected range of losses, as well as to disclose any expenditure made for such losses. However, in connection with a limited number of outstanding legal proceedings, it is not possible to make such estimations or, where possible, such disclosure could have a significant negative effect on our arguments under such proceedings or settlement negotiations thereunder. Consequently, in these cases, we have disclosed qualitative information regarding the nature and characteristics of the contingency but not an expected range of potential losses.

A description of material regulatory and legal matters affecting us is provided below:

Litigation related to Transmilenio

Transportes del Nuevo Milenio, Transmilenio S.A., is a state-owned company responsible for developing, planning and controlling the mass transit system in Bogota, Colombia. The Transmilenio mass transit system is a system of roads designated exclusively for mass transit, as well as an extended network of feeder routes that reach all major points in Bogota. This transportation system has been developed in several phases involving the construction and development of roads for exclusive use by buses in different sectors of Bogota. One of the phases is the construction and development of exclusive mass transportation lanes throughout the North Highway Project (Autopista Norte). Our subsidiary Concretos Argos S.A. was one of the suppliers of ready-mix concrete used in the North Highway Project.

As a result of material structural defects found in the North Highway Project shortly after its completion, class actions have been initiated by several individuals against the Office of the City Mayor (Alcaldía Mayor de Bogota), the Urban Development Institute (Instituto de Desarrollo Urbano) and certain public officials. Most of the class actions claimed that the defendants were liable for the structural defects of the North Highway Project as there was, according to the plaintiffs, evidence of planning, designing and engineering failures. Concretos Argos S.A. is a codefendant as it was one of the suppliers of the materials used in the North Highway Project. Pursuant to the applicable administrative laws, all of those class actions were consolidated into a single class action. In turn, the Office of the City Mayor of Bogota and the Urban Development Institute initiated a separate class action against

120 certain suppliers, including Concretos Argos S.A., of certain construction materials used in the North Highway Project. The plaintiffs in this action claim that Concretos Argos S.A., along with other suppliers, supplied construction materials that did not meet the technical specifications required for the project and that the suppliers’ failure to comply with those specifications resulted in the structural defects in the North Highway Project. Both class actions are still in discovery stages.

Based on the advice of outside counsel, we believe that Concretos Argos S.A. has meritorious arguments and should prevail, although there can be no guarantee of a positive outcome.

If these proceedings were decided against Concretos Argos S.A., we may be required, along with other defendants found liable, to pay for all repairs required to correct any structural defects found in the North Highway Project. According to recent media reports, the value of the civil works required to repair the North Highway Project is estimated to be U.S.$13.5 million. This estimate may no longer be accurate as the North Highway Project continues to deteriorate.

Expropriation proceedings in respect of a cement production plant and related assets in Venezuela

In 1994, a company owned by a Venezuelan citizen defaulted on the payment of a U.S.$250 million debt to the government of Venezuela. As a consequence of such default, the owner was judicially required to transferthe property of a cement production plant it owned to the government of Venezuela, as payment in-kind for that debt.

In 1997, we participated in an international auction conducted by the Venezuelan government and were awarded the option to acquire this property. We purchased, paid and operated the cement plant and some other associated assets, through our wholly owned subsidiary, Corporación de Cemento Andino C.A.

On March 13, 2006, the initial owner of the plant initiated an action claiming the restitution of the plant. On August 7, 2007, while we were litigating with the previous owner, the Venezuelan Congress (Asamblea Nacional de Venezuela) declared that the cement industry was of public interest and began expropriation proceedings of all cement plants in the country, including Corporación de Cemento Andino C.A. Although the expropriation proceedings have not been resolved yet, we no longer have control over the plant, which is currently controlled by the Venezuelan government.

In 2010, the initial owner filed several appeals that have delayed final legal judgment. As of the date of this offering memorandum, the expropriation proceedings continue. It is uncertain who will be entitled to the compensation, if any, that the government of Venezuela decides to pay in connection with the expropriation of the plant. We believe that we have meritorious arguments to claim the ownership of the plant over the initial owner and are entitled to compensation from the Venezuelan government.

Due to the political nature of the expropriation proceeding initiated by the Venezuelan Congress, it is difficult to estimate its outcome or the amount, if any, of the compensation to which we may be entitled in case the plant is finally expropriated and we–rather than the initial owner–are declared as the owner entitled to compensation. In light of these circumstances, we have written-down to zero our investment in the plant.

Litigation related to Puerto Colombia

An individual plaintiff has filed a class action lawsuit claiming that we have violated the collective rights of the municipality of Puerto Colombia, in the Colombian province of Atlántico. Specifically, the plaintiff has alleged that we have failed to pay the appropriate royalties due to the municipality in connection with our exploitation of certain mining concessions. The plaintiff also alleges that our trucks have accessed prohibited areas without the appropriate permission. The plaintiff is seeking compensation on behalf of the municipality of Puerto Colombia for an aggregate amount of Ps.44,000 million. Currently, this proceeding is in the discovery stage and we have not recorded any accounting reserves as we believe that we have meritorious arguments, but an adverse resolution in the proceeding could have a material negative effect on our results of operations.

121 Litigation related to Sindicaribe

In accordance with the Collective Bargaining Agreement entered into between Sindicaribe, a workers’ union, and Cementos del Caribe (now Cementos Argos) in 1962 (the “Sindicaribe CBA”), we created the Sindicaribe Social Benefit Fund (the “Benefit Fund”) with the purpose of funding future benefits for Sindicaribe’s members. The Benefit Fund was administered jointly by our chief executive officer at the time and the president of Sindicaribe and used funds contributed by Cementos del Caribe to purchase shares of Cementos del Caribe. In 2005, the Sindicaribe CBA was amended to allow for the fund to be liquidated. As part of the liquidation, Cementos del Caribe provided compensation to unionized employees and the Benefit Fund contributed the shares it held to Fundación Argos. Eight months later the Sindicaribe CBA expired and our unionized workers joined the new collective bargaining agreement entered into with Cementos Argos, following the reorganization in 2005. Three lawsuits have been filed in July 2012 by former union employees against us, Bancolombia and Sindicaribe arguing that the shares purchased by the Benefit Fund were property of the unionized employees and not of the Benefit Fund. The plaintiffs are requesting compensation of Ps.150,000 million in each lawsuit for an aggregate amount of Ps.450,000 million. We have not recorded any accounting provisions as we believe that we have meritorious arguments, but an adverse resolution in the proceeding could have a material negative effect on our results of operations.

Gross revenue tax matters in the province of Atlántico

The local tax authorities of the Colombian province of Atlántico created a local tax in 2006 calculated on the basis of a taxpayer’s gross revenues in the jurisdiction. In previous instances, attempts by this same local authority to create such taxes have been declared illegal by applicable judicial authorities. Based on these rulings and the advice of outside counsel, we abstained from filing and paying the most recent incarnation of this tax with the authorities of the province of Atlántico. On November 13, 2009, the local tax authority issued a resolution requesting payment by us of Ps.14,912 million for failing to file the necessary tax returns reflecting this tax. On October 18, 2011, a new resolution was issued by the local tax authority requesting payment of an additional Ps.15,942 million for failing to file the necessary tax returns for the relevant periods. We have not recorded any accounting provisions as we believe we have meritorious arguments, but an adverse resolution in the proceeding could have a material negative effect on our results of operations.

Sustainability and social responsibility projects

We are committed to the sustainable development of our business and the quality of life of the communities that live in the areas where we operate. Our corporate sustainability policy aims to provide long-term value to our shareholders while also taking into account the economic, social and environmental dimensions of our business.

Our annual sustainability report is prepared in accordance with the G3 Guidelines of the Global Reporting Initiative and the reporting requirements of the United Nations Global Compact. We are committed to the United Nations Global Compact initiative and we also participate actively in international meetings of the World Business Council for Sustainable Development (WBCSD) and its Cement Sustainability Initiative (CSI), in which we are the only Colombian participant. Furthermore, in 2012 and for the sixth consecutive year we were selected to be part of the annual Dow Jones Sustainability Index survey (DJSI) in which we ranked well above the industry average for cement companies.

We believe that we have developed a good relationship with the local communities surrounding our plant facilities. In order to further develop and maintain these relationships, we have a number of social responsibility programs aimed at improving the health and education of the people living in the areas where we operate. We have been working to improve quality of life in 672 communities influenced by our operations in Colombia, Haiti, the Dominican Republic and Panama. The Argos Foundation in Colombia and the Cina Foundation in Haiti have been working for six years and two years, respectively, to support educational and other initiatives. In other countries where we operate, social programs are sponsored by the local subsidiary in accordance with our corporate guidelines.

In 2012, we invested U.S.$9.7 million in education, housing and community infrastructure projects, including, among other projects, the reconstruction of several schools affected by floods in Colombia, and the construction of schools in Panama, Haiti and the Dominican Republic.

122 Quality control

Pursuant to our general sales terms in Colombia, we guarantee the quality of the cement we sell for a period of six months. We specifically guarantee that our Portland cement meets certain technical specifications (NTC 121 and NTC 321) and that our white cement meets the same technical specifications as well as NTC 1362. We also guarantee the quality of the ready-mix concrete we sell for a period of six months. We specifically guarantee that ready-mix concrete meets certain technical specifications as well as NTC 3318, NSR-10 and Law 400 of 1997.

All of our cement plants in Colombia have been certified in accordance with the ISO 9001 standards. Additionally, our Rioclaro and Sogamoso plants in Colombia have received ISO 14000 certifications. Our plants in Panama and the Dominican Republic also have received ISO 9001, ISO 14001 and OHSAS 18001 certifications.

Pursuant to our general sales terms in the United States, we guarantee that our cement when shipped meets the Standard Specifications for cement as adopted by the ASTM. Our U.S. subsidiaries guarantee that our ready-mix concrete delivered in the United States complies with the ASTM C94 standard (also known as the Standard Specification for Ready-Mixed Concrete) and other applicable standards of the American Concrete Institute.

We monitor compliance with these technical specifications and other technical standards through our internal quality assurance laboratories and personnel, in conjunction with an external laboratory in each of the markets where we operate.

Joint ventures

Trans Atlantic Shipmanagement Ltd.

In June 2004, our subsidiary Transatlantic Cement Carriers, Inc. (“TACC”) and Blue Sea International S.A. (“Blue Sea”) incorporated Trans Atlantic Shipmanagement Ltd. (“TAS”) as a joint venture. Each party owns a 50% interest in TAS.

TAS charters the vessels Winterset and Somerset to TACC, under a Time Charter agreement. In turn, TAS charters the vessels from the owner, Labbeholmen Shipping AS, an unrelated third-party, under a Bareboat Charter Party. We guarantee to TAS the payment and performance by TACC of its obligations under the Time Charter Agreement. TAS assigned our guaranty to Labbeholmen Shipping AS, as the owner of these vessels. TAS has an option to purchase the Winterset and Somerset from the owner.

Pursuant to the shareholders’ agreement between TACC and Blue Sea, TAS employs the Winterset and Somerset vessels for trade by TACC in the Americas. The shareholders’ agreement also sets forth a mutual right of first offer with respect to the other party’s interest in the joint venture that is also applicable upon a change of control.

The Time Charter agreements between TACC and TAS had a limited term of eight years, beginning on October 12, 2006, in the case of Somerset and on February 5, 2008, in the case of Winterset. In the case of Somerset¸ the Time Charter agreement was executed by Somerset Shipping Co. Ltd. During the term of these contracts TACC has the responsibility to employ the annual shipping capacity of each vessel.

The shareholders’ agreement had an expiration date of June 10, 2009, but has been extended for an additional period of eight years. Upon its expiration, if one of the parties does not agree to wind up TAS, the party unwilling to wind up may be required to sell its interest in TAS to the other party.

Vensur N.V.

On February 16, 2010, we acquired an indirect interest in Vensur N.V. through the acquisition of a 50% interest in a joint venture with C. Kersten en Co. N.V., Suriname’s largest economic group. Our indirect 42.12% economic interest in Vensur gives us access to a port, which we used to import clinker from our Cartagena plant for use at Vensur’s grinding stations.

123 Insurance

We believe that we currently maintain customary insurance of the types and amounts that are generally consistent with industry practice. We maintain insurance policies covering risks related to damage to property, equipment breakdown, loss profits (lucro cesante), business interruption, third-party liability (including coverage for product liability), automobile liability, director and officer liability, workers’ compensation, fidelity and natural disasters, among others.

We have implemented an enterprise risk management system pursuant to which we identify, evaluate, control and transfer the risks that affect people, assets and income related with our business. We implement a risk focus method to evaluate potential risks. Once a risk is identified and measured in terms of frequency and severity, we decide whether the risk should be transferred (either to an insurance company or to another party) or whether we should assume the risk in light of preventive measures available to us.

Our policy is to use insurance and re-insurance providers of the highest national and international standards.

Employees

Overview

As of December 31, 2012, we had 7,537 employees, of whom 4,403 were employees in Colombia, 845 were employees in Panama and the Caribbean and 2,289 were employees in the United States. We also have 5,079 contractors, of whom 4,483 were employed in Colombia, and 596 were employed in Panama and the Caribbean.

Employees in Colombia

Of our employees in Colombia, 36% have been employed by us for five years or less, 29% for between 5 and 10 years, 18% for between 10 and 20 years and 17% for more than 20 years.

As of December 31, 2012, 1,899 of our employees in Colombia were members of one of the following unions: (i) Construction Materials Industry Workers Union (Sindicato Unitario de Trabajadores de la Industria de Materiales para la Construccion, SUTIMAC); (ii) National Cementos Argos Workers Union (Sindicato nacional de trabajadores de la empresa Cementos Argos, SINTRAARGOS); (iii) Cementos Argos Workers Union (Sindicato de trabajadores de Cementos Argos, SINTRAACEARGOS); and (iv) National Concretos Argos Workers Union (Sindicato nacional de trabajadores de Concretos Argos, SINALTRACONCREARGOS).

In November 2006, as a consequence of our corporate reorganization in 2005, we entered into a new collective bargaining agreement with the Construction Materials Industry Workers Union (Sindicato Unitario de Trabajadores de la Industria de Materiales para la Construcción), the National Cementos Argos Workers Union (Sindicato Nacional de Trabajadores de la Empresa Cementos Argos), and the Cementos Argos Workers Union (Sindicato de Trabajadores de Cementos Argos), covering all of our cement operations in Colombia. This collective bargaining agreement has been renewed on two occasions. The current agreement has a term through August 31, 2015.

On June 11, 2011, we entered into a collective bargaining agreement with the Construction Materials Industry Workers Union (Sindicato Unitario de Trabajadores de la Industria de Materiales para la Construccion, SUTIMAC) covering all of Colombian our ready-mix concrete operations. This collective bargaining agreement covers and extends benefits to 257 unionized employees and is scheduled to expire on December 31, 2014. In addition, we have a benefits plan in place that covers 978 non-unionized employees of our Colombian ready-mix concrete operations.

Pursuant to the collective bargaining agreements and each of our benefit plans, our employees receive voluntary fringe benefits in addition to mandatory fringe benefits, including, among others, life and health insurance, contribution to savings plans, semi-annual and year-end bonuses, vacation bonuses, retirement bonuses, disability payments.

124 Any employee not covered by the collective bargaining agreements receives benefits provided under the applicable subsidiary’s benefits plan.

Since our reorganization in 2005 and the execution of the new collective bargaining agreement in 2006, we have not had any strikes or labor disruptions in Colombia.

Employees in the Caribbean

In Panama, 56% of our employees are unionized. Cemento Panamá and Concreto Panamá entered into collective bargaining agreements on July 1, 2012 and October 16, 2010, respectively, each of which is scheduled to last for four years.

In Panama, we sponsor the following benefits: health insurance, disability coverage, tuition contribution, life insurance, and retirement plan contribution.

Our employees in Haiti and the Dominican Republic are not unionized. In each of those countries, our employees receive the following benefits: health insurance, disability coverage, calamity disbursement, tuition contribution, life insurance, contribution to savings plan, and retirement plan contribution.

Employees in the United States

In the United States, 5% of our employees are covered by a collective bargaining agreement. At the Roberta plant in Calera, Alabama, 113 of our employees are represented by the United Steelworkers International Union # 9-537 and the corresponding collective bargaining agreement was signed on May 20, 2010 and will expire on May 20, 2015. Also we have a new collective bargaining agreement with the United Steelworkers, covering 58 employees at the South Carolina cement plant. This agreement was approved by the union but its execution by both parties is still pending. Once it is executed, we expect the agreement to be effective retroactively from December 1, 2012 through November 30, 2017.

For all of our employees in the United States, we sponsor a 401(k) retirement saving plan, health insurance plans, life insurance plans, and disability coverage.

The unionized employees of the Alabama plant are covered by a defined benefit pension plan, known as the DB Pension Plan.

Variable compensation programs

In 2006, we implemented corporate short- and long-term variable compensation programs.

For 2013, the long-term program, which is available only to our senior executives and officers, is based on four factors related to our results: consolidated Operating EBITDA, consolidated net income, Dow Jones Sustainability Index score and a financial factor based on accounts receivable, accounts payable and inventory. Payments under the long-term component are made into a stock fund, with rights vesting three years thereafter. The aggregate payments made under the long-term variable compensation program cannot exceed an amount equal to 5% of our consolidated net income.

For 2013, the short-term program, which is open to senior executives and officers, as well as top and middle management (approximately 300 employees in total), is based on financial and individual factors. The financial factor is based on our consolidated, regional, and country Operating EBITDA, depending on the title held by the employee. The individual component is based on individual performance indicators. Payments under the short-term component are made to employees in cash.

Payments under the variable compensation programs do not qualify as salaries according to the rules of our variable compensation system. Conversion into wages of the monies paid under the programs is expressly prohibited by an addendum to the program rules. We comply with all applicable tax provisions in the other jurisdictions where we

125 make payments under the programs. In particular, payments made in Colombia are subject to income tax withholding.

In 2010, we paid out Ps.3,862 million under our short-term compensation program and deposited Ps.2,642 million in the stock fund under the long-term compensation program. In 2011, we paid out Ps.5,851 million under the short- term compensation program and did not make any payments under the long-term compensation program. In 2012, we paid out Ps.24,608 million under the short-term compensation program and deposited Ps.6,458 million in the stock fund under the long-term compensation program.

Pension liabilities

According to the actuarial calculations conducted January 4, 2013, the net present value of our individual pension liabilities amounted to Ps.255,627 million as of December 31, 2012. As of December 31, 2012, the pension liabilities we carried on our balance sheet represented 100% of our total estimated pension liabilities according to such actuarial calculations. Pension liability amortizations amounted to 3.6%, 9.8% and 0% of our operating revenue after asset impairment for 2010, 2011, and 2012, respectively.

126 MANAGEMENT

General

Our business and affairs are managed by our board of directors, in accordance with our by-laws. Our by-laws provide for a board of directors (junta directiva) comprised of seven directors and no alternates. As of December 31, 2012, two of our directors, Leon E. Teicher Grauman and Claudia Beatriz Betancourt Azcarate, were independent, according to Colombian standards. None of our directors holds more than 6% of our capital stock.

Pursuant to Colombian law, at least 25% of the members of the board of directors must be independent directors. As of the date of this offering memorandum, two out of the seven members (28.6%) of the board of directors are declared as independent.

Our board of directors meets at least once every two months and whenever either the chairman, the chief executive officer, the statutory auditor or any three directors calls a meeting. The quorum required for board meetings is four directors and decisions are adopted by the vote of at least four directors.

The members of our board of directors are elected at the general shareholders’ meeting for a two-year term. The directors may be re-elected for unlimited additional terms. The compensation of the members of the board of directors is determined at the general shareholders’ meeting.

Duties and responsibilities of directors

The duties and responsibilities of our directors are determined both by Colombian Law and by our by-laws and regulations.

Duty of Loyalty: In exercising their responsibilities, our directors must comply with the Company’s by-laws and all applicable regulations. The duty of loyalty requires that our directors place the Company’s interests before their own and demands that they disclose any conflict of interest that may exist when performing their duties. Our directors are also required to comply with our Corporate Governance Code. Our directors are prohibited from taking advantage of a business opportunity, either for the director’s own benefit or for the benefit of related persons, unless the business opportunity has previously been offered to us and we have chosen not to take advantage of it by a vote of the Board (excluding the director in question).

Duty of Care: Directors also must manage the Company with the diligence of orderly businessmen. According to our by-laws and applicable regulation, the duty of care requires, among other things, to appoint and remove the Company’s CEO and other legal representatives; to convene the general assembly for extraordinary sessions whenever it deems advisable; to give advice to our CEO when he or she requests it; to present to the General Assembly a reasoned annual management report with a faithful presentation of the business, legal, economic and administrative position of the Company; to prepare and attend the meetings of the board of directors; to actively participate in the deliberations of the board of directors; to act professionally and in accordance with principles and standards of good faith; and to give notice to the board of directors of any irregularities detected in the management of the Company and to monitor Company risks.

Board of directors

The following table sets forth our directors and their respective positions as of the date of this offering memorandum. All directors were elected at our annual shareholders’ meeting held on March 23, 2012, and their appointments expire on March 23, 2014, the second anniversary of their election.

127 Director Age Position Jose Alberto Vélez Cadavid 62 Chairman Leon E. Teicher Grauman 59 Director Esteban Piedrahita Uribe 41 Director Cecilia Rodríguez González Rubio 51 Director Carlos Gustavo Arrieta Padilla 62 Director Claudia Beatriz Betancourt Azcarate 47 Director Camilo José Abello Vives 42 Director

The following sets forth selected biographical information for each of the members or our board of directors. The business address of each of our current directors is Calle 7D #43A 99, Piso 10, Torre Almagrán, Medellin, Colombia.

Jose Alberto Vélez Cadavid. Mr. Velez serves as chief executive officer of Grupo Argos. Before that, he was president of Inversura. Mr. Velez holds a Master of Science degree in Engineering from the University of California (UCLA) in Los Angeles, California, USA and a degree in Administrative Engineering from Universidad Nacional de Colombia in Medellin, Colombia. He also serves as a board member of Grupo de Inversiones Suramericana, Grupo Nutresa and Bancolombia. Mr. Velez served as chief executive officer of Cementos Argos S.A. from August 11, 2003 to May 31, 2012.

Leon E. Teicher Grauman. Mr. Teicher served as the president of Cerrejón in Bogota and president of Unisys de Colombia. Mr. Teicher holds a Master of Business Administration from Stanford University in Palo Alto, California, United States and a degree in economics from Universidad de los Andes in Bogota, Colombia.

Esteban Piedrahita Uribe. Mr. Piedrahita serves as an advisor to the mayor of Cali, Colombia. Before that, he was general director of the Colombian National Planning Department. Mr. Piedrahita holds a Master of Science in Philosophy and History of Science from the London School of Economics in London, England, and a degree in economics from Harvard University in Cambridge, Massachusetts, United States. He also serves as a board member of Banco Agrario.

Cecilia Rodríguez González Rubio. Ms. Rodríguez serves as president of Corporación Bioparque. Before that, she served as Minister of Environment, Housing and Territorial Development (Ministra del Ambiente, Vivienda y Desarrollo Territorial) for the Colombian Government. Ms. Rodríguez holds a degree in administration from Universidad de los Andes in Bogota, Colombia. She also serves as a board member of Corporación Bioparque, Bioparque Proyectos S.A.S. and Fundación Botánica y Zoológica de Barranquilla.

Carlos Gustavo Arrieta Padilla. Mr. Arrieta is a partner at Arrieta, Mantilla & Asociados, a law firm in Bogota. He served as the Attorney General of Colombia and the Colombian Ambassador to the Netherlands. He was also Dean of the Universidad de los Andes Law School. Mr. Arrieta holds a Master’s degree in law from Harvard University in Cambridge, Massachusetts, USA, and a degree in law from Universidad de los Andes in Bogota, Colombia. He also serves as a board member of Fiducor S.A. and Mapfre.

Claudia Beatriz Betancourt Azcarate. Ms. Betancourt serves as manager of Amalfi S.A. Before that, she was vice- president of Risk Management of Corporación Financiera del Valle Corficolombiana. Ms. Betancourt holds a degree in economics from Colegio Mayor de Nuestra Señora del Rosario University in Bogota, Colombia. She also serves as a board member of Promigas and Proenergía.

Camilo José Abello Vives. Mr. Abello is vice-president of Corporate Affairs of Grupo Argos, our controlling shareholder. Before that, he was our vice-president of corporate affairs. Mr. Abello holds a specialization degree in commercial law from Universidad de los Andes, in Bogota, Colombia, a specialization degree in international 128 business from Universidad del Norte, in Barranquilla, Colombia and a degree in law from Pontificia Universidad Javeriana in Bogota, Colombia. He also serves as a board member of the Fútbol con Corazón foundation.

Board committees

We have three board committees comprised of members of our board of directors.

Audit and finance committee

Our audit and finance committee is composed currently of three directors. The current members are Claudia Betancourt, who is the Chairman of the audit and finance committee, Leon Teicher and Esteban Piedrahita. Pursuant to Colombian law, the audit committee must meet at least quarterly.

The audit committee is responsible for:

reviewing our financial statements;

evaluating our internal controls and procedures, and identifying deficiencies;

the appointment, compensation, retention and oversight of our external auditors;

resolving any disagreements between management and our external auditors;

informing our board of directors regarding any issues that arise with respect to the quality or integrity of our financial statements, our compliance with legal or regulatory requirements, the performance and independence of the external auditors, or the performance of the internal audit function; and

overseeing measures adopted as a result of any observations made by our shareholders, directors, executive officers, employees or any third parties with respect to accounting, internal controls and internal and external audit, as well as any complaints regarding management irregularities, including anonymous and confidential methods for addressing concerns raised by employees.

Pursuant to regulations of the Colombian Superintendency of Finance, the audit committee has a charter approved by the board of directors, which sets forth the main aspects related to the operation of such committee, including, among others, its composition and duties.

Compensation and nomination committee

Our compensation and nomination committee is composed currently of two directors. The current members are Jose Alberto Vélez and Carlos Gustavo Arrieta.

The compensation and nomination committee is responsible for: (i) evaluating the hiring, termination and compensation of our chief executive officer, (ii) evaluating the hiring, termination and compensation of our executive officers, (iii) evaluating the performance of our executive officers and (iv) recommending performance- based compensation packages to be approved by our board of directors.

Corporate governance committee

Our corporate governance committee is composed currently of two directors. The current members are Camilo José Abello and Cecilia Rodríguez.

The corporate governance committee is responsible for: (i) developing and evaluating the qualifications of our directors, (ii) scheduling meetings of and setting the agenda for our board of directors, (iii) establishing our shareholder communication policy, (iv) ensuring compliance with our corporate governance code, (v) evaluating the

129 performance of our board of directors and (vi) monitoring the purchase and sale of our shares by our directors and affiliates.

Executive officers

Our executive officers oversee our business and are responsible for the execution of the decisions of the board of directors. The following table presents information concerning the current officers of the company and their respective positions:

Date of Joined the Officer Age Position appointment Company Jorge Mario Velásquez Jaramillo 52 Chief Executive Officer May 2, 2012 1983 Juan Luis Múnera Gómez 40 Vice-President of Legal Affairs and Sustainability May 22, 2012 2005 Carlos Horacio Yusty 44 Vice-President of Finance May 22, 2012 1996 Tomás Restrepo Pérez 35 Regional Vice-President for Colombia May 22, 2012 2007 Mauricio Ossa Echeverri 41 Regional Vice-President for the Caribbean May 22, 2012 1996 Eric Flesch 55 Regional Vice-President for the United States Jan. 16, 2006 1979 Camilo Restrepo Restrepo 35 Vice-President of Innovation May 22, 2012 2005 Victor Lizarralde Aristizábal 53 Vice-President of Technical Affairs Nov. 26, 2003 1982 Jorge Ignacio Acevedo Zuluaga 48 Vice-President of Human Resources June 1, 2005 2005

The following sets forth selected biographical information for each of our executive officers:

Jorge Mario Velásquez Jaramillo serves as chief executive officer. Mr. Velásquez previously served as regional vice-president for the Caribbean region, as well as vice-president of Logistics. Prior to these positions he served as the president of Cementos Paz del Río S.A., chief executive officer of Cementos del Nare S.A. and in numerous positions within our ready-mix concrete and cement operations over 29 years. Mr. Velásquez holds a civil engineering degree from Escuela de Ingeniería de Antioquia in Medellin, Colombia and a specialization degree in industrial operations focused on the cement industry. He also completed an executive management program at The Kellogg School of Management at Northwestern University in Evanston, Illinois, United States, a course on logistics operations at Universidad de los Andes in Bogota, Colombia, and a course on supply chain strategies at Stanford University, in Palo Alto, California. He serves as a board member of Grupo de Inversiones Suramericana and Argos USA Corp. and has been a member of the national board of directors of ANDI and the board of directors of Camacol, among others.

Juan Luis Múnera Gómez serves as vice-president of Legal Affairs and Sustainability. Mr. Múnera previously served as our legal manager for Colombia and legal manager for International Affairs. Mr. Múnera has a law degree and a master’s degree in commercial law from Universidad Pontificia Bolivariana in Medellin, Colombia and a master’s degree in comparative law (LL.M) from San Diego University in San Diego, California, United States. He also serves as a board member Argos USA Corp., Cemento Panamá, Cina, Cementos Colón and the Colombo- American Chamber of Commerce of Medellin.

Carlos Horacio Yusty Calero serves as vice-president of Finance. Mr. Yusty previously served as our corporate finance manager. Mr. Yusty has an industrial engineering degree from Universidad Javeriana in Cali, Colombia, and a specialization degree in managerial systems engineering. He also has completed a joint top executive program from Universidad de San Buenaventura joint-program and Universidad de los Andes, both in Bogota, Colombia. He also serves as a board member of Omya Andina S.A., Argos USA Corp., Cemento Panamá and Cementos Colón.

Tomás Restrepo Pérez serves as regional vice-president for Colombia. Mr. Restrepo previously served as our vice- president of Innovation. Mr. Restrepo has a PhD degree in industrial engineering from École Nationale Supérieure d’Arts et Métiers (ENSAM) in Paris, France, a master’s degree in product design and innovation and a Bachelor of Science in Mechanical Engineering from EAFIT University in Medellin, Colombia. He also holds a specialization degree from the Institute for Management Development (IMD) in Lausanne, Switzerland and the Massachusetts Institute of Technology (MIT) in Cambridge, Massachusetts, United States. He also serves as a board member of Omya Andina S.A., Promotora de Proyectos and Contreebute.

130 Mauricio Ossa Echeverri serves as vice-president for the Caribbean. Mr. Ossa previously served as our industrial business manager. Mr. Ossa holds a bachelor’s degree in business administration from EAFIT University in Medellin, Colombia, a specialization degree in international marketing from EAFIT University in Medellin, Colombia and a diploma of chief executive officer from The Kellogg School of Management at Northwestern University in Evanston, Illinois, United States. He also completed various marketing strategy programs at Universidad de los Andes in Bogota, Colombia, Universidad del Rosario in Bogota, Colombia, Universidad Pontificia Boliviariana in Medellin, Colombia and Universidad Javeriana in Bogota, Colombia. He also serves as a board member of Cemento Panamá, Cina and Cementos Colón.

Eric Flesch serves as regional vice-president for the United States. Mr. Flesch previously held several positions in the cement and concrete businesses within the Company, such as international vice-president of Inversiones Argos S.A., now Grupo Argos, president of Cementos del Caribe S.A, president of Cementos Paz del Rio S.A., and general manager of Cementos del Nare S.A. Mr. Flesch holds a bachelor’s degree in civil engineering from Universidad del Norte in Barranquilla Colombia and a master of science in management from West Coast University in Los Angeles, California, United States. He also completed a mergers and acquisitions program in Stanford University in Palo Alto, California, United States and a competitive strategies program at Kellogg School of Management in Evanston, Illinois, United States. Currently, he serves on the boards of directors of NRMCA and the PCA.

Camilo Restrepo Restrepo serves as vice-president of innovation. Mr. Restrepo previously served as our research and development manager. Mr. Restrepo has a Master of Science in Civil and Environmental Engineering from the University of Maryland in College Park, Maryland, United States and a Bachelor of Science in Environmental Engineering from Escuela de Ingeniería de Antioquia in Medellin, Colombia. He also completed an executive seminar on managing innovation strategies at Babson College in Wellesley, Massachusetts, United States. He also serves as a board member of Ceratech Inc. and as an advisor of the Sede de Investigaciones Universitaria (SIU) of Universidad de Antioquia.

Víctor Lizarralde Aristizabal serves as vice-president of Technical Affairs. Mr. Lizarralde previously served as general manager of Corporación de Cemento Andino C.A. in Venezuela and as president of Cementos del Valle. Mr. Lizarralde has a degree in mechanical engineering from Villanova University in Villanova, Pennsylvania, United States. He also has a diploma of senior management from Universidad ICESI in Cali, Colombia. Mr. Lizarralde completed an executive management program at The Kellogg School of Management at Northwestern University in Evanston, Illinois, United States. He also serves as a board member of Zona Franca Argos S.A.

Jorge Ignacio Acevedo Zuluaga serves as vice-president of Human Resources. Mr. Acevedo previously served as project manager of Inversura S.A. Mr. Acevedo obtained an Executive Master of Business Administration from the Instituto de Empresa in Madrid, Spain and a business administration degree from EAFIT University in Medellin, Colombia. He has also completed a specialization degree in quality management from EAFIT University in Medellin, Colombia. He is a member of the board of directors of Suramericana de Seguros S.A., Suramericana de Seguros de Vida S.A., Trideaz S.A. and the management council (consejo directivo) of Comfama.

Compensation of directors and executive officers

In 2012, total compensation paid to members of our board of directors and executive officers amounted to Ps.14,348,147,005. For executive officers, this compensation included mandatory and additional benefits granted by the company to all of its employees.

Director compensation must be approved by a majority of shareholders at our annual shareholders’ meeting.

Executive compensation plan

Our business operates in a competitive environment where highly trained professionals and executives are in demand. The recent growth in the majority of the regions where we operate has created new opportunities resulting in additional competition for local talent. As a result, we have designed a compensation plan to retain our key executives and attract new executives with the skills and experience required to achieve our strategic objectives and

131 create long-term value for our shareholders. We believe that executive compensation should reward individual performance and the achievement of our strategic objectives.

Our executive compensation plan has been designed to achieve the following primary objectives:

recruit, retain and incentivize highly talented and dedicated executives with the skills and experience required to manage and operate our business and create long-term value for our shareholders;

provide our executive officers with compensation opportunities that are fair, reasonable and competitive in the market;

compensate based on our performance and individual performance;

promote transparency by using clear and straightforward compensation metrics; and

align the interests of our executive officers with the interests of our shareholders, both in the short-term and long-term.

Our executive compensation plan is in addition to the other benefits given to our employees.

Following this offering, we expect that these objectives will continue to be our primary executive compensation goals. Our compensation plan has been designed to compensate our executives with a base salary, a bonus incentive and other benefits that we believe are fair and equitable to us and our shareholders and competitive in the market. We believe that the combination of salary, bonus incentive and other mandatory and additional benefits serve as an important retention tool as we compete for talent. We also believe that it will provide an appropriate compensation structure to retain our executives, reward them for individual performance, and induce them to contribute to the creation of long-term value.

Components of executive compensation plan

Our executive compensation plan includes base salary, mandatory and other benefits and the Corporate Variable Compensation Program. The Corporate Variable Compensation Program applies to all executive officers in Colombia, Panama, the Dominican Republic, Haiti, Suriname and the United States.

Base salary

We provide our executive officers and other employees with a base salary for services rendered on a day-to-day basis during the fiscal year. Base salaries provide stable compensation to executives, allow us to recruit and retain highly talented and dedicated executives and, through periodic merit increases, provide a basis upon which executives may be rewarded for individual performance.

Mandatory and other benefits

We comply with all mandatory benefits imposed by the jurisdictions where we operate, such as the service premium (prima de prestación de servicios) in Colombia. Additionally, we currently provide our employees, including our executive officers, annual additional benefits such as life insurance, health insurance and savings plans depending on the labor market needs of each country.

Corporate Variable Compensation Program

The Corporate Variable Compensation Program is intended to create incentives tied directly to the company’s financial performance and the accomplishment of certain corporate and individual objectives. The Corporate Variable Compensation Program is divided in two categories: the long-term program with 99 participants and the short-term program with 275 participants.

132 All of our senior executive officers are part of the long-term program of the Corporate Variable Compensation Program. Also, all of our senior executive officers and members of mid-level management are part of the short-term program of the Corporate Variable Compensation Program.

Share ownership

As of December 31, 2012, persons who were members of our board of directors held as a group 1,150 of our ordinary shares and our executive officers held 400 of our ordinary shares in the aggregate. This amount represented 0.000135% percent of our outstanding share capital as of December 31, 2012.

Corporate governance

We have a Corporate Governance Code that seeks to create value for our shareholders through the establishment of what we believe are transparent and efficient management structures. We believe that our Corporate Governance Code contains high standards and principles of corporate governance and responds reasonably to the demands of our investors and the market in general.

Statutory auditor

Deloitte & Touche Ltda. was our statutory auditor for the years ended December 31, 2012, 2011 and 2010 and will continue as our statutory auditor through 2013. Our shareholders appoint the statutory auditor and set its compensation at the general shareholders’ meeting.

133 PRINCIPAL SHAREHOLDERS

As of the date of this offering memorandum, our issued and outstanding share capital was composed of 1,151,672,310 ordinary shares.

Grupo Argos is our controlling shareholder and is the beneficial owner of 60.68% of our issued and outstanding share capital, retaining 60.68% of our voting power. Beneficial ownership generally includes voting or investment power over securities. As an ordinary shareholder, Grupo Argos does not have any different or special voting rights in comparison to any other ordinary shareholder.

Grupo Argos is a Colombian-based infrastructure holding company with investments in the cement, energy, coal, real estate and ports sectors; and with holdings in Nutresa (food sector), Grupo Sura (insurance and private pension sector) and Bancolombia (financial services sector).

The following table sets forth information regarding the beneficial ownership of our equity securities immediately as of December 31, 2012:

Number of ordinary Beneficial Owner Percentage shares Grupo Argos S.A. 698,806,652 60.68% Fondo de Pensiones Obligatorias Protección 91,882,149 7.98% Amalfi S.A. 62,593,875 5.44% Fondo de Pensiones Obligatorias Horizonte 35,811,873 3.11% Fondo de Pensiones Obligatorias Colfondos 24,469,524 2.12% Fondo de Pensiones Obligatorias Porvenir 23,837,788 2.07% Other shareholders 214,270,449 18.60% Total 1,151,672,310 100%

134 RELATED PARTY TRANSACTIONS

Colombian law sets forth certain restrictions and limitations on transactions carried out with related parties including principal shareholders, subsidiaries and management. In particular:

Subsidiaries must carry out their activities independently and with administrative autonomy, so that they have enough decision-making capacity to carry out the transactions related to their business purpose.

Transactions between the parent company and its subsidiaries must be of a real nature and cannot diverge materially from standard market conditions, nor may they be detrimental to shareholders or third parties.

Subsidiaries may not acquire any shares issued by their parent company.

We believe that we are in material compliance with these rules.

As a general governance policy, we do not enter into transactions with related parties, board members and officers on terms more favorable than what we would offer third parties. Our corporate governance code expressly prohibits our senior executives from purchasing, directly or indirectly, shares or any other security of the Company, Grupo Argos or any of its subsidiaries that are traded on the Colombian Stock Exchange. Additionally, our board members may only purchase or sell such securities in the conditions and pursuing the authorizations set forth in the applicable laws.

The following transactions have been entered into by us with our subsidiaries or among our subsidiaries:

Sale and purchase of clinker between Cementos Argos S.A. and our subsidiaries and among our subsidiaries, independently from the region where they are located: These transactions are based on the sale of clinker by those clinker producing companies to cement producing companies, which, in turn, use the clinker as a raw material for the production of cement.

Sale and purchase of cement between Cementos Argos S.A. and our subsidiaries and among our subsidiaries, independently from the region where they are located: These transactions are based on the sale of cement by the cement producing companies to ready-mix producing companies, which, in turn, use the cement as a raw material for the production of ready-mix concrete. In the case of the sale and purchase of cement between cement producing companies, the cement is sold for so it can be resold to third parties for a profit.

Sale and purchase of aggregates between Cementos Argos S.A. and our subsidiaries and among our subsidiaries, independently from the region where they are located: These transactions are based on the sale of aggregates by those aggregate producing companies to cement and ready-mix producing companies, which, in turn, use the aggregates as a raw material for the production of those products.

Transportation services provided by Logitrans S.A. to Cementos Argos S.A. and by Logitrans S.A. to Concretos Argos S.A.: Logitrans S.A. serves as a freight intermediary, commissioning third parties to provide the transport of raw materials used and products manufactured by Cementos Argos S.A. and Concretos Argos S.A.

Back-office services provided by Cementos Argos S.A. to Zona Franca Argos S.A.S: Cementos Argos S.A. provides administrative support to Zona Franca S.A.S., including financial and technology services. In turn, Zona Franca Argos S.A.S. pays a service fee for the services received.

The following transactions have been entered into by us or our subsidiaries with Grupo Argos and its subsidiaries:

Back-office services provided by Cementos Argos S.A. to Grupo Argos S.A: Cementos Argos S.A. provides back-office support to Grupo Argos S.A., including administrative, financial and technology services,

135 including with respect to assets transferred to Grupo Argos S.A. in relation to the Spin-off. In turn, Grupo Argos S.A. pays a service fee for the services received.

Rental of real estate between Grupo Argos S.A. and its subsidiaries and Cementos Argos S.A. and its subsidiaries: Grupo Argos S.A. and certain of its subsidiaries rent of office space, warehouses and other real estate to Cementos Argos S.A. and certain of its subsidiaries for use in their business operations.

Sale and purchase of coal between Carbones del Caribe S.A.S. and Cementos Argos S.A: Carbones del Caribe S.A., supplies coal to Cementos Argos S.A., which uses the coal for the production of clinker.

Mine operating services provided by Carbones del Caribe S.A.S. to Cementos Argos S.A.: Carbones del Caribe S.A.S. operates certain coal concessions which belong to Cementos Argos S.A. In exchange, Cementos Argos S.A. pays a service fee for the mine operating services that it receives.

Port services provided by Compas S.A., to Cementos Argos S.A.: Compas S.A., a subsidiary of Grupo Argos S.A., provides port services to Cementos Argos with the purpose of facilitating the export and import of goods manufactured or purchased by Cementos Argos.

Transportation services provided by Logitrans S.A. to Carbones del Caribe S.A.S.: Logitrans S.A. serves as a freight intermediary, commissioning third parties to provide the transport of the products and raw materials of Carbones del Caribe S.A.S.

Sale and Purchase of cement and ready-mix concrete between Urvisa S.A.S., Cementos Argos S.A., Zona Franca Argos S.A.S. and Concretos Argos S.A.: Urvisa S.A.S., a subsidiary of Grupo Argos S.A., purchases cement and ready-mix concrete from Cementos Argos S.A., Zona Franca Argos S.A.S. and Concretos Argos S.A. with the purpose of carrying out its urban construction activities.

We believe that the prices, interest rates and the terms and conditions set forth in the agreements described above are comparable to those that would be obtained at arm’s-length negotiations with unrelated parties.

See Note 27 of the financial statements attached hereto for a list of all related party transactions with accounts payable or receivable as of December 31, 2012.

During the last three fiscal years and through the date of this offering memorandum, we have not been involved in, and we do not currently anticipate becoming involved in, any transactions that are unusual in their nature or conditions and that are significant to our business.

136 DESCRIPTION OF OUR SHARE CAPITAL

Set forth below is certain information relating to our share capital, including brief summaries of the material provisions of our by-laws, Colombian corporate law and certain related laws and regulations of Colombia, all as in effect as of the date hereof. Although we believe that this summary contains all the information about our by-laws important to your decision to purchase the Offered Securities, the following summary does not include all of the provisions that you may consider important. Our by-laws and the general shareholders’ meeting regulations, and not this summary, will define the rights of holders of the Offered Securities. Our by-laws and rules that govern our shareholders’ and board of directors’ meetings are available at www.argos.co.

General

We are a stock corporation organized under the laws of Colombia and registered with the Chamber of Commerce of Barranquilla.

Our by-laws provide that our principal corporate purpose is the production and commercialization of concrete and other materials and articles based on cement, quicklime and clay, as well as the purchase and sale of minerals and mineral deposits related to the industry of cement and similar materials.

Ordinary shares

Ordinary shares represent 100% of our voting shares. As of December 31, 2012, our share capital was Ps.7,291 million, represented by 1,151,672,310 outstanding ordinary shares. Our ordinary shares have been fully subscribed and are fully paid. Our ordinary shares are registered on the Colombian National Registry of Securities and Issuers and are listed on the Colombian Stock Exchange. As of December 31, 2012, there were 6,044 owners of record of our ordinary shares.

Preferred Shares

Our by-laws provide for the possibility of issuing Preferred Shares. The holders of Preferred Shares will have the following rights: (i) to receive a minimum dividend established in the placement rules of the issuance (such dividend to be paid preferentially over the dividend of the ordinary shares) and (ii) to receive preferential reimbursement of capital contributions upon the Company’s liquidation, and provided that the Company’s external liabilities have been paid.

The holders of Preferred Shares are not entitled to receive notice of, attend, or vote at any general shareholders’ meeting of holders of ordinary shares, except as described below.

The holders of Preferred Shares will be entitled to vote on the basis of one vote per share at any general shareholders’ meeting at which such shareholder is entitled to vote. Under Colombian law, preferred shareholders are entitled to vote on the following matters:

Any amendments to our by-laws that may impair or negatively affect the conditions or rights assigned to Preferred Shares (such amendments require a supermajority of 70% of the shares);

Conversion of Preferred Shares into ordinary shares (such resolution requires approval by shareholders representing 70% of the shares);

Dissolution, merger, transformation or amendment of our main corporate purpose;

If we do not generate profits to be distributed to pay the minimum dividend or if the Colombian Superintendency of Finance, ex officio or at the request of holders of Preferred Shares representing at least 10% of the Preferred Shares, considers that benefits have been concealed or diverted in order to reduce the amount of profits disclosed. The Colombian Superintendency of Finance may permit holders of Preferred

137 Shares to vote at shareholders’ meetings until it has determined that benefits have not been concealed or diverted.

Ordinary and extraordinary shareholders’ meetings

Our by-laws provide that ordinary shareholders’ meetings must be held within the first three months of each calendar year. Extraordinary meetings are held whenever it is deemed necessary by the board of directors, the president of the company or the statutory auditor, or pursuant to an official requirement issued by a public authority.

Notice of meetings

The shareholders must be notified of meetings either by publication of a notice in a widely-circulated newspaper of our main domicile (Barranquilla) or through a written communication to the shareholders. While the Company remains listed as a securities issuer in Colombia, notices of meetings will also be disclosed to the market as relevant information (información relevante) in Colombia. In the case of extraordinary meetings, the notice must include the agenda of the meeting.

For purposes of the meetings in which the shareholders will approve the Company’s individual or consolidated financial statements, or when the law specifically provides, the shareholders must receive notice 15 business days prior to the date on which the meeting is held. In the case of extraordinary meetings, notice must be given at least five business days prior to the meeting.

In addition, in the case of a merger, spin-off, transformation or cancellation of registration with the Colombian Stock Exchange and the National Registry of Securities and Issuers, the notice of the meeting must be communicated to shareholders at least 15 business days prior to the meeting, which notice must include mention of such matters along with the shareholders’ right of withdrawal. In the case of cancellation of the registration with the Colombian Stock Exchange and the National Registry of Securities and Issuers, the notice of the meeting must also set forth that the shareholders approving the cancellation will be required to launch a tender offer for shares held by absent or disapproving shareholders.

Quorum and voting requirements

Our by-laws provide for both ordinary and extraordinary shareholders’ meetings a deliberating quorum equivalent to a plural number of shareholders representing at least 50% plus one of the subscribed shares. If there is no quorum for purposes of undertaking the meeting, the shareholders will be referred to another meeting in which deliberation and decisions will be validly taken with one or more shareholders, regardless of the number of represented shares. The new meeting must be undertaken no earlier than 10 business days or later than 30 business days following the date of the first meeting.

Pursuant to article 155 of the Colombian Commercial Code, the distribution of profits must be approved by no less than 78% of the shares represented at the meeting. Furthermore, for purposes of approving the issuance of shares not subject to preemptive rights, article 420 of the Colombian Commercial Code requires a majority of 70% of the shares present at the meeting. Additionally, in accordance with article 455 of the Colombian Commercial Code, the distribution of dividends under the form of shares must be approved by no less than 80% of the represented shares. However, when a corporation is under control by a shareholder in the terms provided by the Colombian law, dividends can only be paid under the form of shares to those shareholders who have given their explicit consent to accept such payment.

The shares which have been repurchased by the company are not counted for purposes of calculating quorum.

Voting rights and dividends

Shareholders are entitled to one vote per share. Shareholders have the right to receive a part of the dividends established in our financial statements as of December 31 of the year duly approved by the general shareholders’

138 meeting, in a proportion equivalent to their participation in the Company on the date on which such dividend declaration and distribution is approved.

Shareholders’ liability

Under Colombian corporate law, shareholders’ liability in stock corporations is limited to their share capital in the Company, except with respect to tax obligations and labor obligations for which each shareholder is jointly and severally liable.

Redemption and rights of withdrawal

Pursuant to Colombian law, absent or dissident shareholders have the right to withdraw when the general shareholders’ meeting approves a merger, spin-off, transformation or cancellation of the registration with the Colombian Stock Exchange and the National Registry of Securities and Issuers.

Withdrawal rights may also be exercised in connection with the cancellation of the registration of the shares of the company with the National Registry of Securities and Issuers.

Preemptive and accretion rights

Our by-laws provide that shareholders that have ordinary shares have preemptive rights to subscribe any newly issued ordinary shares, in a proportion equivalent to the amount of ordinary shares that they own at the date on which the placement rules of the issuance are approved by the competent corporate body.

Preemptive rights for our ordinary shares are negotiable from the date of the offering notice. The application of preemptive rights in the issuance of shares other than ordinary shares will be determined on a case-by-case basis in the placement rules of such issuance.

Liquidation rights

If we are liquidated, our shareholders will have the right to receive the proceeds from the sale of the net assets resulting from the liquidation after we comply with our obligation to pay all our creditors and after discounting any existing dividend liabilities.

Limitations on the rights of nonresidents or foreign shareholders

There are no limitations under our by-laws or Colombian corporate law on the rights of non-residents or foreign shareholders to own securities or exercise voting rights with respect to our securities.

Disclosure of shareholdings and tender offer regulations

Disclosure of shareholdings

Pursuant to Colombian regulations, an issuer registered on the National Registry of Securities and Issuers must publicly disclose changes in control, changes in ownership of any shareholders in an amount equal to or greater than 5% of the outstanding shares, acquisitions and disposals of securities by directors, and shareholders’ agreements, among others.

Tender offer regulations

Colombian securities regulations include mandatory provisions regarding the acquisition of control of a listed company.

Pursuant to Colombian securities regulations, any person or group of persons: (i) willing to acquire or become the beneficial owner(s) of 25% or more of the voting shares of a listed company, or (ii) being already the beneficial

139 owner(s) of 25% or more of the voting shares of a listed company, intending to increase said participation by more than 5%, must launch a public tender offer (oferta pública de adquisición). Any public tender offer in the Colombian market must be addressed to all the shareholders of the relevant company and constitute an offer to acquire at least 5% of the total outstanding shares of the company. Whenever a beneficial owner of 25% or more of the voting shares of a listed company has privately acquired less than 5% of the total shares outstanding, such person or group of persons must launch a public tender offer at the moment that such private transactions in the aggregate reach the 5% threshold.

Changes in capital

Our by-laws do not establish special conditions to increase or reduce our share capital beyond what is required under Colombian corporate law.

Anti-takeover provisions

Our by-laws do not contain any provision that would have the effect of delaying, deferring or preventing a change of control. However, acquisitions of shares of our capital stock that involve a change of control may be subject to Colombian securities regulations applicable to tender offers, including the obligation to launch a tender offer.

Form and transfer

Pursuant to our by-laws, any sale, assignment, transfer, pledge, or other disposition of any of the Company’s ordinary shares must be recorded in the shareholders’ book. In addition, any disposition of any dematerialized shares must be registered as well in the shareholders’ book. We may delegate the custody of the shareholders’ book to a third-party. Dematerialized shares are book-entry securities; therefore, shareholders must prove their status with a certificate issued by Deceval.

While our shares (ordinary or preferred) remain listed on the Colombian Stock Exchange, any trading (purchase or sale) of our shares must be performed through the stock exchange, subject to certain limited exceptions.

Market price of our shares

Our Preferred Shares

Prior to this offering, there has been no public market for our Preferred Shares. We have listed our Preferred Shares listed on the Colombian Stock Exchange. We cannot assure you that an active trading market will develop for our Preferred Shares or that our Preferred Shares will trade in the public market subsequent to the offering at or above the initial public offering price.

Our ordinary shares

Our ordinary shares are registered on the National Registry of Securities and Issuers held by the Colombian Superintendency of Finance and are listed on the Colombian Stock Exchange. As of December 31, 2012, the closing price on the Colombian Stock Exchange was Ps.10,100 per ordinary share. The prices of our ordinary shares on the Colombian Stock Exchange may not necessarily be indicative of the price of the Preferred Shares in this offering.

140 The following table sets forth the high and low closing prices in Colombian pesos of our ordinary shares on the Colombian Stock Exchange as reported by the Colombian Stock Exchange for the five most recent full years:

Ordinary shares Year ended December 31, High Low Ps. 2007 9,555 7,719 2008 8,991 5,020 2009 11,500 6,389 2010 13,400 10,820 2011 11,760 9,700

The following table sets forth the high and low closing prices in Colombian pesos of our ordinary shares and the Colombian Stock Exchange as reported by the Colombian Stock Exchange for each quarter for the years indicated:

Ordinary shares Year High Low Ps. 2010: First quarter 11,980 10,820 Second quarter 12,340 10,900 Third quarter 12,800 11,320 Fourth quarter 13,400 11,280 2011: First quarter 11,760 10,020 Second quarter 11,700 10,240 Third quarter 11,520 10,200 Fourth quarter 11,100 9,700 2012: First quarter 11,180 10,740 Second quarter (1) 12,300 6,050 Third quarter 7,960 6,670 Fourth quarter 10,700 7,780 (1) During the second quarter of 2012, the stock price decreased from Ps.11,200 per share to Ps.6,050 per share as a consequence of the asset spin-off to Grupo Argos.

The following table sets forth the high and low closing prices in Colombian pesos of our ordinary shares on the Colombian Stock Exchange as reported by the Colombian Stock Exchange for the last six months:

Ordinary Shares Year High Low Ps. 2012: September 7,960 7,090 October 9,600 7,780 November 9,120 8,550 December 10,700 8,550 2013: January 11,260 10,160 February 11,120 9,230

Share prices on or prior to May 30, 2012 do not reflect the spin-off of certain of our non-core assets to Grupo Argos.

141 DESCRIPTION OF OUR PREFERRED SHARES

Below is a summary of the Preferred Shares to be offered in this offering. For more information about our share capital, by-laws and rules that govern our shareholders’ rights, please read “Description of our share capital”.

Form and transfer of the Preferred Shares

The Preferred Shares are represented by a global registered certificate which will be deposited with Deceval prior to the closing of the Global Offering. The Preferred Shares sold in the Global Offering are represented in book-entry form in the book-entry system of Deceval, as a requisite for their listing on the Colombian Stock Exchange.

Preferred Shares will be book-entry securities in registered form held in a centralized securities depositary managed by Deceval pursuant to Law 964 of 2005, Decree 2555 of 2010, Law 27 of 1990 and the Operative Regulations of Deceval. Prior to the closing of the Global Offering, investors must enter into a contract of agency with an authorized entity as depositary agent, so that they can purchase the Preferred Shares in the Global Offering and instruct Deceval to execute the transaction in its book-entry system. The appointed depasitory agent cannot be removed or replaced until the Preferred Shares have been paid in full. Additionally, the Preferred Shares cannot be issued in physical form in the future. Therefore, by accepting the Preferred Shares in the Global Offering, purchasers of Preferred Shares in the Global Offering renounce any right to request the “materialization” of the Preferred Shares in the future. Our Preferred Shares will be held by Deceval for and on behalf of persons who maintain, through depasitory agents (depositantes directos), securities accounts or sub-accounts with Deceval. Transactions in our Preferred Shares may occur only after the Preferred Shares have been paid in full, and will be reflected by the seller's securities account being debited with the number of Preferred Shares sold and the buyer's securities account being credited with the number of Preferred Shares acquired. Shareholders may request certificates of ownership in the Preferred Shares from Deceval, which may be used to exercise any rights under the Preferred Shares.

Upon closing of the Global Offering, trading of the Preferred Shares shall occur on the Colombian Stock Exchange through an authorized trader and shall be conducted in accordance with applicable Colombian regulations and the rules of the Colombian Stock Exchange and Deceval. A list of authorized traders is available at www.bvc.com.co. We assume no responsibility whatsoever by reason of facts or circumstances that may affect the validity of the transfer of Preferred Shares.

Procedures for investing in our Preferred Shares

Delisting from the Colombian Stock Exchange

We may delist from the Colombian Stock Exchange at any time as provided for under the applicable regulations and according to the provisions set forth in Decree 2555 of 2010, so long as the delisting is (i) previously approved at our general shareholders' meeting, except in the case of delisting from the Colombian Stock Exchange due to violations of applicable listing rules and (ii) followed by a tender offer launched by any of the approving shareholders for the benefit of absent and dissenting shareholders, within three months after the date of approval of delisting and at a price determined pursuant to an independent valuation process previously approved by the Colombian Superintendency of Finance.

142 Delisting of our shares from the Colombian Stock Exchange shall not exempt us, our managers, controlling shareholder and other shareholders from complying with obligations and meeting the requirements prescribed in the Colombian Stock Exchange rules and Colombian law with regard to facts and events preceding the delisting date.

Foreign exchange regime applicable to the purchase of Preferred Shares

Non-residents of Colombia can invest in our Preferred Shares and trade them in the secondary market in Colombia, through the trading systems of the Colombian Stock Exchange. See “Exchange Rates and Regulation of Foreign Investment.”

Trading of the Preferred Shares outside the Colombian Stock Exchange

Registration in the book-entry system of Deceval of such transactions require that the parties involved in such a transaction show sufficient evidence of the validity and effectiveness of the transaction under applicable law to their direct depository, Cementos Argos or a third-party acting on behalf of Cementos Argos, as the case may be, and that such direct depository, Cementos Argos or third-party in turn instructs registration of the transaction in the book- entry system of Deceval in accordance with the “Operational Rules” of Deceval (Reglamento de Operaciones de Deceval) Any new shareholder of Cementos Argos will need to comply with applicable Colombian rules and regulations, including rules and regulations issued by the Central Bank of Colombia, and will also need to fulfill certain other local requirements, including qualifying as a direct depositary with Deceval or being represented by a direct depository.

Colombian Offering

Concurrently with the International offering, we are offering 182,000,000 Preferred Shares in Colombia to the public in Colombia, pursuant to a separate Spanish-language prospectus prepared in accordance with Colombian law requirements and authorized by the Colombian Superintendency of Finance.

The Colombian Superintendency of Finance authorized the registration of our Preferred Shares in the National Registry of Securities and Issuers pursuant to Resolution No. 0693 dated April 9, 2013.

The Colombian offering will be placed by the Colombian Placement Agents under the terms of the Colombian Placement Agreements, as more fully described in a Colombian prospectus to be published as part of the Colombian offering and as set forth by Colombian securities regulations. In accordance with the Colombian Placement Agreements, Colombian Placement Agents will receive an economic benefit for participating in the Colombian offering contingent on the results of the Colombian offering. Secondary trading in our Preferred Shares in Colombia will occur on the Colombian Stock Exchange in compliance with applicable Colombian regulations.

Holders of ordinary shares as of April 17, 2013, the date of publication in Colombia of the public offering notice for the Colombian offering, will have priority for purposes of allocation of the Preferred Shares of the Global Offering, subject to the requirements set forth in the prospectus of the Colombian offering.

143 DESCRIPTION OF THE AMERICAN DEPOSITARY SHARES

American Depositary Receipts and American Depositary Shares

The Bank of New York Mellon, also referred to as the depositary, will execute and deliver Rule 144A American Depositary Receipts, also referred to as Rule 144A ADRs under a Rule 144A deposit agreement among us, the depositary, and all registered holders of ADRs and persons a holding security entitlement or other interest in a Rule 144A ADR that is not the registered holder of the Rule 144A ADR. Each Rule 144A ADR is a certificate evidencing a specified number of Rule 144A American Depositary Shares, also referred to as Rule 144A ADSs.

The depositary will execute and deliver Regulation S American Depositary Receipts, also referred to as Regulation S ADRs under an Regulation S deposit agreement among us, the depositary, and all registered holders of Regulation S ADRs and persons holding a security entitlement or other interest in a Regulation S ADR that is not the registered holder of the Regulation S ADR. Each Regulation S ADR is a certificate evidencing a specified number of Regulation S American Depositary Shares, also referred to as Regulation S ADSs.

Rule 144A ADRs and Regulation S ADRs are sometimes referred to together as ADRs. Rule 144A ADSs and Regulation S ADSs are sometimes referred to together as ADSs. The Rule 144A Deposit Agreement and the Regulation S Deposit Agreement are each sometimes referred to as a deposit agreement, and, together, they are sometimes referred to as the deposit agreements.

The depositary’s office at which the ADRs will be administered is located at 101 Barclay Street, New York, New York 10286. Copies of the deposit agreements will be available for inspection at the depositary’s office.

Each ADS will represent five Preferred Shares deposited with the principal Bogota office of Fiduciaria Bancolombia S.A., as custodian for the depositary in Colombia. Each ADS will also represent any other securities, cash or other property the depositary receives in respect of the deposited shares and holds under the deposit agreements referred to below. The Preferred Shares the depositary holds, together with any other securities, cash or other property held under the applicable deposit agreement are referred to together as the deposited securities.

The terms ADR and ADS, when used in this section, do not refer to the American Depositary Shares representing our ordinary shares (“ordinary share ADSs”) or the American Depositary Receipts evidencing ordinary share ADSs that are outstanding under a separate depositary receipt facility. The ADSs offered hereby are separate from and will not be fungible with the ordinary share ADSs.

Registered holders and book-entry system

The rights of ADS holders under the deposit agreements described in this section belong to the registered holders of ADSs. All the Rule 144A ADSs will be registered in the name of Cede & Co, a nominee of The Depository Trust Company, also referred to as DTC. All persons other than Cede & Co. that hold interests in Rule 144A ADSs will hold security entitlements in ADSs directly or indirectly through securities intermediaries that are participants in DTC. All the Regulation S ADSs will be registered in the name of a nominee of DTC. All persons other than the nominee of DTC that hold interests in Regulation S ADSs will hold security entitlements in Regulation S ADSs directly or indirectly through securities intermediaries that are participants in DTC, Euroclear or Clearstream, Luxembourg. You will not be entitled to have ADSs registered in your name or receive an ADR except under special circumstances that are set out in the applicable deposit agreement. Therefore, you must rely on the procedures of DTC, Euroclear or Clearstream, Luxembourg, as applicable, and any other securities intermediary through which you hold your interests in ADSs to assert the rights of ADS holders described in this section. You should consult with that securities intermediary to find out what those procedures are.

As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Colombian law governs shareholder rights. The depositary will be the holder of the Preferred Shares represented by your ADSs. As a holder of ADSs, you will have ADS holder rights as set forth in the applicable deposit agreement. Each deposit agreement also sets forth our rights and obligations and the rights and obligations of the depositary. New York law governs the deposit agreements and the ADSs.

144 In this section: (a) the terms “deliver” and “delivery,” when used with respect to Preferred Shares means either (i) one or more book-entry transfers of Preferred Shares to an account or accounts designated by the transferee maintained with institutions authorized under applicable law to effect book-entry transfers of shares or (ii) physical delivery of certificates evidencing Preferred Shares that are registered in the name of the transferee or duly endorsed for transfer or accompanied by any proper instrument of transfer that is duly executed. In this section, the terms “deliver” and “delivery,” when used with respect to Rule 144A ADSs, mean (i) one or more book-entry transfers of those ADSs to an account or accounts at DTC designated by the person entitled to that delivery or (ii) if book-entry settlement is no longer available for the Rule 144A ADSs under the circumstances provided in the deposit agreements, to execution and delivery at the depositary’s office to or to the order of that person of one or more Rule 144A ADRs evidencing those ADSs, registered in the name or names requested by that person. In this section, the terms “deliver” and “delivery,” when used with respect to Regulation S ADSs, mean (i) one or more book-entry transfers of those ADSs to an account or accounts at DTC, Euroclear or Clearstream, Luxembourg designated by the person entitled to that delivery or (ii) if book-entry settlement is no longer available for the Regulation S ADSs under the circumstances provided in the deposit agreements, to execution and delivery at the depositary’s office to or to the order of that person of one or more Regulation S ADRs evidencing those ADSs, registered in the name or names requested by that person. In this section, the term “surrender,” when used with respect to Rule 144A ADSs, means (i) a book-entry transfer or transfers of Rule 144A ADSs to the DTC account of the depositary or (ii) surrender to the depositary at its office of one or more Rule 144A ADRs evidencing those ADSs, duly endorsed in blank or accompanied by proper instruments of transfer duly executed in blank. In this section, the term “surrender,” when used with respect to Regulation S ADSs, means (i) a book-entry transfer or transfers of Regulation S ADSs to the DTC account of the depositary or (ii) surrender to the depositary at its office of one or more Regulation S ADRs evidencing those ADSs, duly endorsed in blank or accompanied by proper instruments of transfer duly executed in blank.

The following is a summary of the material provisions of the deposit agreements. Because it is a summary, it does not contain all the information that may be important to you. For more complete information, you should read the entire deposit agreement applicable to you, including the applicable form of ADR.

Available information

We expect to be exempted from the registration requirements of Section 12(g) of the Securities Exchange Act of 1934 under Rule 12g3-2(b) under that Act. We will agree in the deposit agreements that if, at any time prior to the termination of the Rule 144A deposit agreement (in the case of the Rule 144A ADSs) or during the period of 40 days following the date of the commencement of the offering of Regulation S ADSs and the last related closing, also referred to as the restricted period (in the case of the Regulation S ADSs), we are neither a reporting company under Section 13 or 15(d) of the Securities Exchange Act of 1934 nor exempt from reporting pursuant to Rule 12g3-2(b) under that Act, we will provide to any holder or beneficial owner of ADSs or any holder of Preferred Shares, and to any prospective purchaser of ADSs or Preferred Shares designated by that holder or beneficial owner, upon request of that holder, beneficial owner or prospective purchaser, the information required by Rule 144A(d)(4)(i) under the Securities Act and otherwise comply with Rule 144A(d)(4).

Transfer restrictions

The ADSs and the Preferred Shares represented by the ADSs will be subject to restrictions on transfer that are described under “Transfer Restrictions”.

Deposit and withdrawal

Rule 144A ADSs

The depositary will deliver Rule 144A ADSs if you or your broker deposits Preferred Shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the appropriate number of Rule 144A ADSs as you request.

145 Any deposit of Preferred Shares for Rule 144A ADSs must be accompanied by a written acknowledgement, certification and agreement by or on behalf of the person who will be the beneficial owner of the Rule 144A ADSs:

acknowledging that the Rule 144A ADSs and the Preferred Shares represented thereby have not been and will not be registered under the Securities Act;

certifying that it is a qualified institutional buyer (as defined in Rule 144A under the Securities Act) also referred to as a QIB, acquiring such beneficial ownership for its own account or it is a broker-dealer acting for the account of one or more QIBs;

agreeing that it will comply with the restrictions on transfer set forth under “Transfer Restrictions— Limitations on Ownership—Rule 144A ADSs” on transfers of the Rule 144A ADSs and the underlying Preferred Shares.

The depositary may refuse to accept Preferred Shares for deposit if it believes Rule 144A ADSs representing those Preferred Shares would not be eligible for resale pursuant to Rule 144A under the Securities Act.

You may at any time surrender your Rule 144A ADSs to the depositary for withdrawal of the deposited securities. Upon payment of any required fees and expenses and of any taxes or charges, such as stamp taxes or share transfer taxes or fees, and subject to the terms and conditions of the Rule 144A deposit agreement, the depositary will deliver the amount of deposited securities represented by those Rule 144A ADSs to you or as you direct. Any physical delivery of deposited securities other than at the custodian’s office will be made only at your request, risk and expense.

Notwithstanding the foregoing, no deposited securities may be withdrawn upon surrender of Rule 144A ADSs unless the depositary has received a written certificate and agreement by or on behalf of the person surrendering the Rule 144A ADSs who after withdrawal will be the beneficial owner of the deposited securities withdrawn:

acknowledging that the deposited securities have not been and will not be registered under the Securities Act;

certifying that that person either:

o is a QIB and:

has sold or otherwise transferred, or agreed to sell or otherwise transfer and at or prior to the time of withdrawal will have sold or otherwise transferred, the Rule 144A ADSs or the Preferred Shares in accordance with Regulation S under the Securities Act and it is , or prior to that sale or transfer it was, the beneficial owner of the Rule 144A ADSs;

has sold or otherwise transferred, or agreed to sell or otherwise transfer and at or prior to the time of withdrawal will have sold or otherwise transferred, the Rule 144A ADSs or the Preferred Shares to another qualified institutional buyer in accordance with Rule 144A under the Securities Act and it is, or prior to that sale it was, the beneficial owner of the Rule 144A ADSs; or

will be the beneficial owner of the Preferred Shares upon withdrawal and, accordingly, agrees to comply with the restrictions on transfer of Preferred Shares described under “Transfer Restrictions—Limitations on Ownership—Rule 144A ADSs”; or

o is located outside the United States and acquired, or has agreed to acquire and at or prior to the time of withdrawal will have acquired, the Rule 144A ADSs or the Preferred Shares outside the United States (within the meaning of Regulation S under the Securities Act) and it is, or upon acquisition will be, the beneficial owner of the Rule 144A ADSs or the Preferred Shares.

146 The depositary will not accept Preferred Shares it believes were withdrawn from deposit under the Rule 144A deposit agreement for deposit under the Regulation S deposit agreement so long as those Preferred Shares are or may be restricted securities within the meaning of Rule 144(a)(3) under the Securities Act, and the depositary may require certification from the person depositing those Preferred Shares to the effect that the Preferred Shares are not restricted securities.

Regulation S ADSs

The depositary will deliver Regulation S ADSs if you or your broker deposits Preferred Shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the appropriate number of Regulation S ADSs as you request.

Although we do not currently intend to do so, following completion of the offering, we may file with the Securities and Exchange Commission a registration statement on Form F-6 under the Securities Act relating to Regulation S ADSs issued pursuant to the Regulation S deposit agreement subsequent to the effectiveness of that registration statement. There can be no assurance that a registration statement under the Securities Act relating to the Regulation S ADSs will be filed or, if filed, will be declared effective under the Securities Act by the Commission. The time that a registration statement for Regulation S ADSs, if any, becomes effective is referred to as the effective time.

Prior to the effective time, each deposit of Preferred Shares for Regulation S ADSs must be accompanied by a written acknowledgement, certification and agreement by or on behalf of the person who will be the beneficial owner of the Regulation S ADSs:

acknowledging that the Regulation S ADSs and the Preferred Shares represented thereby have not been and will not be registered under the Securities Act;

certifying that it is not a U.S. person (within the meaning of Regulation S) under the Securities Act and is located outside the United States (within the meaning of Regulation S) and acquired, or has agreed to acquire and will acquire, the Preferred Shares to be deposited outside the United States;

certifying that it is not an affiliate of us or a person acting on behalf of one of our affiliates;

certifying that it is not in the business of buying and selling securities or, if it is in that business, it did not acquire the Preferred Shares to be deposited from us or any of our affiliates in the offering;

agreeing that, during the restricted period, it will comply with the restrictions on transfer set forth under “Transfer Restrictions—Limitations on Ownership—Regulation S ADSs” on transfers of the Regulation S ADSs and the underlying Preferred Shares; and

agreeing that if it sells or otherwise transfers the Regulation S ADSs during the restricted period to a person it reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A it will cause the Preferred Shares represented by those Regulation S ADSs to be withdrawn in accordance with the Regulation S deposit agreement and deposited under the Rule 144A deposit agreement for issuance of Rule 144A ADSs in accordance with the Rule 144A deposit agreement.

The depositary will not accept Preferred Shares it believes were withdrawn from deposit under the Rule 144A deposit agreement for deposit under the Regulation S deposit agreement so long as those Preferred Shares are or may be restricted securities within the meaning of Rule 144(a)(3) under the Securities Act, and the depositary may require certification from the person depositing those Preferred Shares to the effect that the Preferred Shares are not restricted securities.

You may at any time surrender your Regulation S ADSs to the depositary for withdrawal of the deposited securities. Upon payment of any required fees and expenses and of any taxes or charges, such as stamp taxes or share transfer taxes or fees, and subject to the provisions of the Regulation S deposit agreement, the depositary will deliver the amount of deposited securities represented by those Regulation S ADSs to you or as you direct. Any physical 147 delivery of deposited securities other than at the custodian’s office will be made only at your request, risk and expense.

Notwithstanding the foregoing, during the restricted period, no deposited securities may be withdrawn upon surrender of Regulation S ADSs unless the depositary has received a written certificate and agreement by or on behalf of the person surrendering those Regulation S ADSs who after withdrawal will be the beneficial owner of the deposited securities withdrawn:

acknowledging that the Regulation S ADSs and the Preferred Shares they represent have not been registered and will not be registered under the Securities Act;

certifying that that person either:

o is located outside the United State and either:

has sold or otherwise transferred, or agreed to sell or otherwise transfer and at or prior to the time of withdrawal will have sold or otherwise transferred the Regulation S ADS or Preferred Shares in accordance with Regulation S under the Securities Act and is, or prior to that sale or other transfer was, the beneficial owner of the Regulation S ADSs;

has sold or otherwise transferred, or agreed to sell or otherwise transfer and at or prior to the time of withdrawal will have sold or otherwise transferred the Regulation S ADSs or the Preferred Shares to a qualified institutional buyer (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A and, accordingly, is giving instructions to withdraw the Preferred Shares from deposit under the Regulation S deposit agreement and deposit those Preferred Shares under the Rule 144A deposit agreement for issuance of Rule 144A ADSs to that qualified institutional buyer in accordance with the Rule 144A deposit agreement, and is, or prior to that sale or other transfer was, the beneficial owner of the Regulation S ADSs; or

will be the beneficial owner of the Preferred Shares upon withdrawal and, during the restricted period, will comply with the restrictions on transfer of those Preferred Shares as described under “Transfer Restrictions – Limitations on Ownership – Regulation S ADSs”; or

o is a QIB, agreed to acquire the Regulation S ADSs or the Preferred Shares in a transaction made in reliance on Rule 144A and, accordingly, is giving instructions to withdraw the Preferred Shares from deposit under the Regulation S deposit agreement and deposit those Preferred Shares under the Rule 144A deposit agreement for issuance of Rule 144A ADSs to that QIB in accordance with the Rule 144A deposit agreement, and is, or prior to that sale or other transfer was, the beneficial owner of the Regulation S ADSs.

Pre-release

Unless requested in writing by us to cease doing so, the depositary may deliver ADSs before deposit of the underlying Preferred Shares. This is called a pre-release of ADSs. The depositary may also deliver Preferred Shares upon cancellation of pre-released ADSs, even if the ADSs are canceled before the pre-release transaction has been closed out. A pre-release is closed out as soon as the underlying Preferred Shares are delivered to the depositary. The depositary may receive ADSs instead of Preferred Shares to close out a pre-release. The depositary may pre-release ADSs only under the following conditions:

before or at the time of the pre-release, the person to whom the pre-release is being made must represent to the depositary in writing that the person or its customer (i) owns the Preferred Shares or ADSs to be remitted, as the case may be, (ii) assigns all beneficial right, title and interest in such Preferred Shares or ADSs, as the case may be, to the depositary in its capacity as such and for the benefit of the holders of

148 ADSs, and (iii) will not take any action with respect to such Preferred Shares or ADSs, as the case may be, that is inconsistent with the transfer of beneficial ownership (including, without the consent of the depositary, disposing of Preferred Shares or ADSs, as the case may be, other than in satisfaction of such pre-release);

the pre-release must be fully collateralized with cash or other collateral that the depositary considers appropriate;

the depositary must be able to close out the pre-release on not more than five business days’ notice; and

compliance with indemnities and credit regulations as the depositary deems appropriate.

In addition, the depositary will limit the number of ADSs that may be outstanding at any time as a result of pre- release, although the depositary may disregard the limit from time to time, if it thinks it is appropriate to do so. Each person to whom a pre-release is to be made under the Rule 144A deposit agreement or, prior to the effective time, the Regulation S deposit agreement, must deliver to the depositary a written deposit certification and agreement as described under “Deposit and Withdrawal—Rule 144A ADSs” in the case of a pre-release of Rule 144A ADSs or “—Regulation S ADSs” in the case of a pre-release of Regulation S ADSs.

Dividends, other distributions and rights

The depositary has agreed to pay you the cash dividends or other distributions it or the custodian receives on Preferred Shares or other deposited securities, subject to restrictions imposed by applicable law and after deducting its fees and expenses. You will receive these distributions in proportion to the number of Preferred Shares your ADSs represent.

Cash distributions

The depositary will convert any cash dividend or other cash distribution we pay on the Preferred Shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If that is not possible or if any approval from the Colombian government is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It may, at its discretion, hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency, and it will not be liable for the interest. If the depositary can only convert a portion of the cash dividend into U.S. dollars, it can either distribute the unconverted portion in the foreign currency or hold the foreign currency on the account of the ADS holders. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution.

Before making a distribution, any withholding taxes that must be paid under any applicable law will be deducted. The depositary will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent.

Share distributions

The depositary may distribute new ADSs representing any Preferred Shares we may distribute as a share dividend or free distribution. The depositary will only distribute whole ADSs. It will try to sell Preferred Shares that would require it to deliver fractions of ADSs and will distribute the net proceeds in the same way as it does with cash. If the depositary does not distribute additional ADSs or sell Preferred Shares, the outstanding ADSs will also represent the new Preferred Shares. The depositary may sell a portion of the distributed shares that is sufficient to pay its fees and expenses in connection with the distribution.

Each beneficial owner of Rule 144A ADSs and, prior to the effective time, each beneficial owner of Regulation S ADSs, will be deemed to have acknowledged that the new ADSs and the Preferred Shares they represent have not

149 been registered under the Securities Act and to have agreed to comply with the restrictions on transfer set forth under “Transfer Restrictions—Rule 144A ADSs” or “—Regulation S ADSs,” as applicable.

Rights to receive additional preferred shares

If we offer holders of our Preferred Shares any rights to subscribe for additional Preferred Shares or any other rights, the depositary may make these rights available to you. We must first instruct the depositary to do so, and furnish it with satisfactory evidence that it is legal to do so. If we do not furnish this evidence and give these directions, and the depositary decides it is practical to sell the rights, the depositary may sell the rights and distribute the proceeds in the same way as it does with cash. The depositary may allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them.

If the depositary makes rights to purchase Preferred Shares available to you, upon instruction from you, it will exercise the rights and purchase the Preferred Shares on your behalf. The depositary will then deposit the Preferred Shares and deliver ADSs to you. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay. The depositary will not be responsible for any failure to determine that it may be lawful or feasible to make rights available to you.

United States securities laws may restrict the sale, deposit, cancellation and transfer of the ADSs issued after exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.

Other distributions

The depositary will send to you anything else we distribute on deposited securities by any means it thinks is equitable and practical. The depositary may withhold any distribution of securities if it has not received satisfactory assurances from us that the distribution does not require registration under the Securities Act. If it cannot make the distribution to you, the depositary may decide to sell what we distributed and distribute the net proceeds in the same way as it does with cash or it may decide to hold what we distributed, in which case the outstanding ADSs will also represent the newly distributed property. The depositary may withhold any fees and expenses, taxes or other governmental charges it thinks are applicable in this process. The depositary may sell a portion of the distributed securities or other property that is sufficient to pay its fees and expenses in connection with the distribution.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, Preferred Shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, Preferred Shares, rights or anything else to ADS holders. This means that you may not receive the distribution we make on our Preferred Shares or any value for them if it is illegal or impractical for us to make them available to you.

150 Changes affecting deposited Preferred Shares

If we do any of the following, then all of the following will apply: Change the nominal or par value of our Preferred Any securities received by the depositary will become deposited Shares securities. Reclassify, split up or consolidate any of the Each ADS will automatically represent its equal share of the new deposited securities deposited securities, unless additional ADSs are issued. Recapitalize, reorganize, merge, consolidate, sell all The depositary may execute and deliver new ADRs or call the or substantially all of our assets or take any similar outstanding ADRs for exchange into new ADRs describing the new action deposited securities.

Voting of deposited securities

Holders of Preferred Shares have very limited voting rights and, consequently, holders of ADSs have very limited voting rights.

In the event holders of Preferred Shares are entitled to vote, subject to applicable Colombian law, you may instruct the depositary to vote the number of Preferred Shares your ADSs represent. The depositary will notify you of shareholders’ meetings and arrange to deliver our voting materials to you if we ask it to. Those materials will describe the matters to be voted on and explain how you may instruct the depositary how to vote. For instructions to be valid, they much reach the depositary by a date set by the depositary.

The depositary will try, as far as practical, subject to Colombian law and the provisions of our by-laws or similar documents, to vote the number of Preferred Shares or other deposited securities represented by your ADSs as you instruct. The depositary will only vote or attempt to vote as you instruct.

We cannot ensure that you will receive voting materials or otherwise learn of an upcoming shareholders’ meeting in time to ensure that you can instruct the depositary to vote your Preferred Shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to vote and there may be nothing you can do if your Preferred Shares are not voted as you requested.

Reports and other communications

The depositary will make available to you for inspection any reports and communications from us or made available by us at its corporate trust office. The depositary will also, upon our written request, send to the registered holders of ADSs copies of such reports and communications furnished by us under the deposit agreement.

Any such reports and communications furnished to the depositary by us will be furnished in English when so required under any U.S. securities laws.

Amendment and termination of the deposit agreements

We may agree with the depositary to amend the deposit agreements and the ADRs without your consent for any reason. If the amendment adds or increases fees or charges, except for taxes and other governmental charges or registration fees, cable, telex or fax transmission costs, delivery costs or other similar expenses, or prejudices an important right of ADS holders, it will only become effective 30 days after the depositary notifies you in writing of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.

The depositary will terminate the deposit agreements if we ask it to do so, by mailing notice of termination to you at least 30 days before termination. The depositary may also terminate the deposit agreements if the depositary has told us that it would like to resign and we have not appointed a new depositary bank within 60 days.

151 After termination, each deposit agreement requires the depositary and its agents to do only the following under such deposit agreement:

collect dividends and other distributions on the deposited securities;

sell rights and other property; and

deliver Preferred Shares and other deposited securities upon surrender of ADSs.

Four months or more after the date of termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the net proceeds of the sale, as well as any other cash it is holding under the applicable deposit agreement for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the net proceeds of the sale and other cash and will have no liability for interest. The depositary’s only obligations will be to account for the proceeds of the sale and other cash. After termination of the deposit agreements our only obligations will be with respect to indemnification and to pay certain amounts to the depositary.

Charges of the depositary

ADS holders must pay: for: U.S.$5.00 (or less) per 100 ADSs or portion thereof: Each issuance of ADSs, including as a result of a distribution of Preferred Shares or rights or other property. Each surrender of ADSs for the purpose of withdrawal, including if the applicable deposit agreement terminates. U.S.$0.02 (or less) per ADS or portion thereof Any cash distribution. Registration or transfer fees Transfer and registration of Preferred Shares on our share register or the share register of the foreign registrar from your name to the name of the depositary or its agent when you deposit or withdraw Preferred Shares.

A distribution fee equivalent to the fee that would be Distribution of securities to holders of deposited securities payable if securities distributed to you had been Preferred which are distributed by the depositary to ADS holders. Shares and the Preferred Shares had been deposited for Conversion of foreign currency to U.S. dollars. issuance of ADSs Expenses of the depositary Conversion of foreign currency to U.S. dollars. Cable, telex and facsimile transmission expenses. Servicing of shares or deposited securities. Taxes and other government charges the depositary or the As necessary custodian have to pay on any ADS or Preferred Share underlying a ADS, for example, stock transfer taxes, stamp duty or withholding taxes U.S.$0.02 (or less) per ADS per calendar year Depositary services

The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid. The depositary may collect any of its fees by deduction from any cash distribution payable to ADS holders that are obligated to pay those fees.

From time to time, the depositary may make payments to us to reimburse and / or share revenue from the fees collected from ADS holders, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the ADS program. In performing its duties under the 152 deposit agreements, the depositary may use brokers, dealers or other service providers that are affiliates of the depositary and that may earn or share fees or commissions.

Liability of owner for taxes

You will be responsible for any taxes or other governmental charges or other liabilities payable on your ADSs or on the deposited securities underlying your ADSs. The depositary may refuse to register a transfer of your ADRs or allow you to withdraw the deposited securities underlying your ADSs until these taxes or other charges or liabilities are paid. It may apply payments owed to you or sell deposited securities underlying your ADSs to pay any taxes or other liabilities you owe and you will remain liable for any deficiency. If it sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any proceeds, or send to you any property, remaining after it has paid the taxes or other liability.

Limitations on obligations and liability to holders of ADSs

The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:

are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;

are not liable if either of us is prevented or delayed by law or circumstances beyond our control from performing our obligations under the deposit agreement;

are not liable if either of us exercises discretion permitted under the deposit agreement;

are not liable for the inability of any ADS holder to benefit from any distribution that, under the terms of the deposit agreement, is not made available to ADS holders or for any special, consequential or punitive damages for any breach of the deposit agreement;

have no obligation to become involved in a lawsuit or other proceeding related to the ADRs or the deposit agreement on your behalf or on behalf of any other person; and

may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party.

The depositary will not be liable for the acts or omissions of any securities depository, clearing agency or settlement system.

In the deposit agreements, we agree to indemnify the depositary for acting as depositary, except for losses resulting from the depositary’s negligence or bad faith, and the depositary agrees to indemnify us for losses resulting from its negligence or bad faith.

Maintenance of books and records by the depositary

The depositary will keep a register of ADSs at its office open for inspection by you at all reasonable times. You agree not to inspect that register for any purpose other than communication with other registered holders in relation to our business, the deposit agreements or the ADRs.

Requirements for depositary actions

Before the depositary will deliver ADSs or register a transfer of an ADR, make a distribution on ADSs or permit withdrawal of deposited securities, the depositary may require:

153 payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third-parties for the transfer of any Preferred Shares or other deposited securities;

production of satisfactory proof of citizenship or residence, exchange control approval or other information it deems necessary or proper; and

compliance with regulations it may establish, from time to time, consistent with the deposit agreements, including presentation of transfer documents.

The depositary may refuse to deliver ADSs or register transfers of ADRs generally or in particular cases when the depositary has closed its books or at any time if the depositary thinks it advisable to do so.

Your right to receive the Preferred Shares underlying your Regulation S ADSs

At and after the effective time, if any, you will have the right to surrender your Regulation S ADSs and withdraw the underlying Preferred Shares at any time except:

When temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of Preferred Shares is blocked to permit voting at a shareholders' meeting; or (iii) we are paying a dividend on our Preferred Shares.

When you or other Regulation S ADS holders seeking to withdraw Preferred Shares owe money to pay fees, taxes and similar charges.

When it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of Preferred Shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the Regulation S deposit agreement.

Ownership restrictions

Each holder of ADSs agrees to be bound by any restrictions on ownership or transferability of Preferred Shares or requirement to disclose beneficial ownership of Preferred Shares under our by-laws or Colombian law and consents to any blocking of its voting and transfer rights that is imposed by the depositary to enforce such restrictions or requirements.

154 REGULATION OF THE COLOMBIAN SECURITIES MARKET

The Colombian Stock Exchange

Prior to 2001, there were three stock exchanges in Colombia: the Stock Exchange of Bogota created in 1928, the Stock Exchange of Medellin (1950) and the Stock Exchange of Occidente (1970).

Despite the limited economic growth during the 1980s, the economic expansion of the 1990s resulted in the Colombian capital markets growing at unprecedented rates, as indicated or measured by listed company’s market capitalization, the total value traded in the stock markets and the total amount of outstanding domestic public and private bonds.

Such rapid growth has resulted in the increased regulation of the Colombian capital markets. In addition, such growth precipitated the merger of the Stock Exchanges of Bogota, Medellin and Occidente into the Colombian Stock Exchange in July 2001.

On November 22, 2010, the Colombian Stock Exchange completed the first phase of its equity markets integration process of the Latin American Integrated Market (Mercado Integrado Latinoamericano), with the equity stock markets of Chile and Peru, which allows integrated trading and settlement. The Latin American Integrated Market is the leading market in terms of number of issuers (approximately 561), the second in terms of market capitalization and the third in terms of volume in Latin America. As of October 31, 2012, securities for U.S.$77,147 million were traded on the Latin American Integrated Market.

Currently, the Colombian Stock Exchange manages stock, foreign exchange, derivatives fixed income markets, and encompasses all brokerage firms registered with the former stock exchanges.

As of December 31, 2012, there were 85 companies listed on the Colombian Stock Exchange. As of December 31, 2012, the Colombian Stock Exchange, which includes all the companies listed in the Colombian Stock Exchange, had market capitalization of Ps.483,295 billion.

Substantially all of the transactions on the Colombian Stock Exchange are traded on the electronic system. Transactions during the electronic sessions are executed through brokerage firms and stock brokers on behalf of their clients. Brokers submit orders in the order in which they are received. The orders must specify the type of security as well as the amount and price of the proposed sale or purchase.

Certain information regarding trading on the Colombian Stock Exchange is set forth in the table below:

2007 2008 2009 2010 2011 2012 Market capitalization 197,748,478 175,754,131 265,588,271 395,401,603 376,317,898 483,295,737 (in millions of pesos)(1) Volume (in millions of 34,792,693 40,234,834 40,552,769 53,506,156 68,285,900 70,956,495 pesos) Average daily trading 142,593 163,556 167,573 218,392 278,718 188,212 volume (in millions of pesos) (1) End-of-period figures for trading on the Colombian Stock Exchange.

The stock market capitalization of companies listed on the Colombian Stock Exchange increased, in U.S. dollar terms, 24.07% in 2006, and 91.57% in 2007, in each case compared to the prior year. It decreased by 20.68% in 2008 as a result of the global economic crisis and recuperated in 2009. In 2010 it grew by 61.58%, in 2011 it decreased by 7.40% and grew 41.10% in 2012.

The total value of securities traded on the Colombian Stock Exchange during 2011 was Ps.1,664 trillion, representing a nominal decrease of 25.14% from the value of securities traded in 2010. Both debt and equity securities are traded on the Colombian Stock Exchange, including stocks and bonds of private sector corporations, although the vast majority of securities traded are fixed income government debt securities.

155 According to calculations based on information available at www.bcv.com.co, equity trading during 2011 amounted to Ps.68 billion or 4.2% of total securities traded on the Colombian Stock Exchange. This represented a nominal increase of 25.93% relative to 2010, when equity trading amounted to 2.41% of total securities traded in the markets.

The share price index of equity traded on the Colombian Stock Exchange is the General Index of the Colombian Stock Exchange (Índice General de la Bolsa de Valores de Colombia, “IGBC”), which is a volume-weighted index of the liquid and highest capitalized stocks traded on the Colombian Stock Exchange. In 2007 the IGBC decreased 4.18% in Ps. terms (increased 6.83% in U.S. dollar terms), it decreased 29.3% in Ps. terms, (36.81% in U.S. dollar terms in 2008), but increased 53.45% in Ps. terms (68.85% in U.S. dollar terms) in 2009, 33.57% in Ps. terms (43.14% in U.S. dollar terms) in 2010, decreased 18.27% in Ps. terms (19.64% in U.S. dollar terms) in 2011, and increased 16.99% in Ps. terms (28.32% in U.S. dollar terms) in 2012 reaching 14,817.55 points as of December 31, 2012.

Regulation of the Colombian securities market

Regulatory authorities

The Colombian stock market is regulated by the Colombian Congress and by the Colombian government through the Ministry of Finance and Public Credit and the Colombian Superintendency of Finance. The Colombian Government is responsible for the overall economic policy making in Colombia. Pursuant to Article 150(19)(d) of the Colombian Constitution, the Colombian Congress must determine the principles, criteria and objectives that the National Government of Colombia must observe when regulating all financial activities. Also, under Article 189(24) of the Colombian Constitution, the national government of Colombia must regulate, supervise and control institutions in the financial, insurance and securities industry.

The responsibilities of the Colombian government include the adoption of rules and regulations pertaining to, among other things, the public offering of securities; the operation and administration of the Integral Information System of the Securities Market, and the procedures for registration of securities, the establishment, operation and dissolution of infrastructure providers (such as central securities depositories and stock exchanges, among others), the disclosure obligations of periodic and relevant issuers of securities that are registered in the National Register of Securities and Issuers, regulation of market intermediaries, and establishing transparent criteria and best practices of negotiation.

On July 8, 2005, the Colombian Congress enacted the Colombian Securities Market Law (Ley del Mercado de Valores, Law 964 of 2005). Pursuant to Law 964 and Decree 663 of 1993, the Ministry of Finance and Public Credit is the governmental agency in charge of regulating the financial, insurance and securities markets. Direct supervisory authority of the financial, insurance and securities markets has been entrusted to the Colombian Superintendency of Finance.

The Colombian Superintendency of Finance was created in 2005 by Decree 4327 issued by the President of the Republic of Colombia when the Superintendency of Securities, originally created in 1979, merged with the Superintendency of Banking. The Colombian Superintendency of Finance is a technical entity linked to the Ministry of Finance and Public Credit that acts as the inspection, supervision and control authority of the financial, insurance and securities markets and any other activities related to the investment or management of the public’s savings. The Colombian Superintendency of Finance has been entrusted with the objective of supervising the Colombian financial system, with the purpose of preserving its stability and trustworthiness, as well as promoting, organizing and developing the Colombian securities market and protecting the users of financial and insurance services and investors.

Regulatory framework

Law 964 provides the principal legal framework that governs the Colombian securities market. The primary scope of Law 964 is to promote the efficiency, transparency and integrity and the development of the Colombian securities market. Law 964 also sets forth certain corporate governance standards for listed companies and issuers, such as the requirement that at least 25% of the board members be “independent” directors (as defined in Law 964), that the 156 company maintain an audit committee with at least three board members, including all independent members, and that the company’s legal representatives adopt and implement internal control procedures and adequate mechanisms for disclosure of information and certify the truthfulness of the financial and other relevant information disclosed to the market.

Issuers of securities registered with the Colombian Superintendency of Finance are required to disclose to the market material information (información relevante) relating to the issuer and its securities. Pursuant to Decree 2555 of 2010, all material information in connection with the issuer of registered securities (such as our ordinary shares), its activities or securities issued or secured by such issuer which may influence the liquidity or market price of such securities must be disclosed as relevant information. Accordingly, issuers must file with the Colombian Superintendency of Finance mainly two types of information: (a) financial information, including interim unaudited financial statements on a quarterly basis, and annual audited consolidated financial statements on an annual basis, and (b) material information relating to the issuer and its activities that may significantly affect the price, offering or negotiation of the issued securities, and in general, all the information that may be relevant for investors in making investment decisions.

In order to comply with the foregoing disclosure obligations, issuers must disclose relevant information through the Colombian Superintendency of Finance’s website as soon as the event to be disclosed has occurred or as soon as the issuer knows of its occurrence.

Pursuant to Decree 2555, any person, entity or group which intends to become a beneficial owner of 25% or more of one class of a Colombian Stock Exchange listed company's issued and outstanding voting stock, or a person, entity or group that already is deemed to be a beneficial owner of 25% or more of the outstanding voting stock of such a company and intends to increase its participation by more than 5%, is required to make a public tender offer to purchase such voting stock from all of such company's shareholders, except in the case where such purchase is effected through a stock exchange auction, as a consequence of a privatization process or subject to other exceptions as provided in Decree 2555. Voting stock includes issued and outstanding voting shares, convertible stock, subscription rights or similar securities. According to Colombian regulations, a beneficial owner is any person or group of persons that, directly or indirectly, have the power (by contract, understanding, arrangement, relationship or otherwise) to vote and transfer (or to direct the voting or decide on the transfer of) the shares of a listed company. Neither we nor Deceval will be liable for any failure by a beneficial owner to comply with the ownership limitations or failure to respond to any request for information to determine compliance with the ownership limitations.

In addition, Decree 2555 establishes that any public tender offer to purchase a company's shares must be for at least 5% of all outstanding shares of such company. The Colombian Superintendency of Finance will inform the Colombian Stock Exchange of any authorization granted to launch a mandatory tender offer in order to suspend negotiations until the day following the publication of the relevant offering notice of public acquisition.

As a general rule, pursuant to Decree 2555, as amended, any transaction involving the sale of publicly traded stock in an amount of Colombian pesos equivalent or superior to 66,000 Units of Real Value (Unidades de Valor Real), an index calculated by the Central Bank of Colombia on a daily basis based on the monthly fluctuation of the consumer price index (índice de precios al consumidor) (equivalent to Ps.13,474,434.6 as of January 31, 2013), must be effected through transaction modules subject to the inspection and supervision of the Colombian Superintendency of Finance. Trading transactions of securities of non-Colombian companies outside Colombia are generally exempt from this requirement. Stock transfers originated in operations different from buying or selling or conducted between two parties who are acting for the same beneficial owner are exempt as well, but must be informed to the Colombian Superintendency of Finance five days prior to the transaction. Decree 2555 expressly prohibits any issuer from registering such transactions which do not comply with these requirements in its share registry.

Securities market self-regulatory organization

Self-regulation in the capital markets was formally introduced in Colombia by Law 964, and in this way, the Securities Market Self-Regulatory Organization (Autoregulador del Mercado de Valores) was created in June 2006.

The Securities Market Self Regulator of Colombia is a private entity that oversees functions, and disciplinary regulations regarding the securities market intermediaries and those entities that voluntarily undergo auto regulation 157 criteria of the Market Exchange of Colombia. Within its regulatory functions, the Securities Market of Colombia has enacted various rules regarding conflicts of interest, transparency, efficiency, integrity and market access.

To better achieve their objectives and avoid duplicative efforts, the Securities Market Self-Regulatory Entity of Colombia and the Colombian Superintendency of Finance have issued a joint memorandum of understanding.

Regulation of the Colombian Stock Exchange

Trading on the Colombian Stock Exchange is subject to specific private regulations issued by the Colombian Stock Exchange, particularly the General Rules of the Colombian Stock Exchange, as amended from time to time, the Regulation Letter (Circular Única de la Bolsa de Valores de Colombia), as amended from time to time, and Decree 2555 of 2010. These rules mainly govern listing and trading activities in the Colombian Stock Exchange. In particular, they include (i) listing requirements, (ii) suspension and/or cancellation of the securities listed with the Colombian Stock Exchange, and (iii) admission requirements for broker-dealers.

Pursuant to Decree 2555 of 2010, the Colombian Stock Exchange has the prerogative to order the suspension of trading in a particular security of a particular company as a means of controlling excessive price volatility or as a protective measure for the investors and the market. The Colombian Stock Exchange may also suspend all trading in securities listed on such exchange in response to the issuers’ non-compliance with market or securities regulations. Colombian securities regulations define “insider trading” as the use to one’s own benefit in a securities transaction on a stock exchange of privileged information. For these purposes, privileged information is market-moving information which has not been made public. While sanctions imposed for insider trading have been few, individuals who use privileged information and those who through their employees, including brokers, have access to such information and disclose it to a third-party with no right to such information, or who recommend a market transaction based on such information, may be fined in each instance depending, among other criteria, upon the seriousness of the infraction and the monetary benefit obtained. In addition, article 258 of the Colombian Criminal Code (Código Penal) penalizes the improper use of privileged information with one to three years’ imprisonment and monetary fines.

Prior to 1992, settlement procedures for trades on the Colombian Stock Exchange occurred through physical delivery of the securities and were regulated by the Colombian Stock Exchange. Deceval was established in 1992 as a centralized securities depositary and clearing facility for securities of private issuers in charge of administering the transfer and registry of securities and facilitating the exercise of economic and political rights of securities holders. Deceval formally began operations in 1994 and its activities are regulated by Law 964 and Decree 2555, as amended. Settlement procedures could then be made either through physical delivery or in book-entry form.

Except for some specific public auction procedures, since 2001 the settlement of securities transactions on the Colombian Stock Exchange is customarily made at T+3 through Deceval's book-entry system. There also exists in Colombia a limited clearing facility through the Central Bank of Colombia for government-issued or government guaranteed securities. In addition, by means of Resolution No. 0093 of 1995, in 1996 the Colombian Stock Exchange implemented an electronic system in order to access the information related to both the stocks and their issuers and the quantities and prices of each offering, demand and transactions traded on the exchanges (Sistema Electrónico Transaccional).

Pursuant to Law 964 and Decree 2555, each local broker-dealer must be a member of a self-regulatory body as a requirement for the performance of activities on the Colombian Stock Exchange. Self-regulatory bodies have supervisory, regulatory and disciplinary powers over their broker-dealer members with the purposes of maintaining the transparency and integrity of the securities market and protect investors. Self-regulatory bodies are subject to the supervision of the Colombian Superintendency of Finance and the rules and regulations they issue must be approved by the Colombian Superintendency of Finance.

158 TAXATION

Colombian tax considerations

The following summary contains a description of the principal Colombian income tax considerations in connection with the purchase, ownership and sale of our Offered Securities, but does not purport to be a comprehensive description of all Colombian tax considerations that may be relevant to a decision to purchase our Offered Securities. This summary does not describe any tax consequences arising under the laws of any state, locality or taxing jurisdiction other than those of Colombia.

This summary is based on the tax laws of Colombia as in effect as of the date of this offering memorandum, as well as regulations, rulings and decisions in Colombia available on or before such date and now in effect. All of the foregoing is subject to change, such change could apply retroactively and could affect the continued validity of this summary.

Prospective purchasers of our Offered Securities should consult their own tax advisors as to Colombian tax consequences of the purchase, ownership and sale of our Offered Securities, including, in particular, the application of the tax considerations discussed below to their particular situations, as well as the application of state, local, foreign or other tax laws.

General rules

Entities and individuals that are residents in Colombia are subject to Colombian income tax on their worldwide income. Non-resident entities and non-resident individuals are subject to income tax in Colombia solely on their Colombian-source income which, as a general rule, originates in the sale of assets located in the country at the time of the sale, in the exploitation of tangible and intangible assets in Colombia, and in the provision of services within the Colombian territory. Double taxation treaties signed by Colombia, if applicable, provide for special rules regarding income tax.

For purposes of Colombian taxation, an individual is a resident of Colombia if he or she meets any of the following criteria:

i. stays in Colombia for more than 183 calendar days within any given 365-consecutive-day term.

ii. is a member of the Colombian Government foreign service or is related to a member of the Colombian Government foreign service in a foreign state in which that person is exempt from taxes during the time of service by virtue of any provisions of the Vienna Conventions on diplomatic relations.

iii. is a Colombian national and:

- has a spouse or permanent companion, or dependent children, who are residents of Colombia, or

- 50% or more of his or her total income is sourced in Colombia, or

- 50% or more of his or her assets are managed in Colombia, or

- 50% or more of his or her assets are deemed to be located in Colombia, or

- has failed to provide proof of residency in another country (different than Colombia) upon previous official request by the Colombian tax office, or

- is a resident of a country deemed a tax haven under Colombian law.

For purposes of Colombian taxation, an entity is deemed to be domestic and resident in Colombia if it meets any of the following criteria:

i. It has had its effective place of management in Colombia during the corresponding calendar year.

159 ii. It has as its principal domicile the Colombian territory.

iii. It has been incorporated according to the Colombian law.

Colombian Tax Law includes a definition of a permanent establishment in Colombia. A foreign entity or individual performing activities in Colombia through (i) a fixed place of business (i.e., branches, factories or offices among others), or (ii) a dependent agent empowered to conclude agreements on behalf of the foreign entity or individual, will be considered to have a permanent establishment in Colombia that will be considered as a Colombian taxpayer in connection with the income and taxable gains attributable to said permanent establishment. A foreign entity or individual will not be deemed to have a permanent establishment in Colombia solely by the fact that it acts through a broker or any other independent agent.

As stated above, the fact of purchasing the Offered Securities, receiving dividends and selling the Offered Securities does not itself constitute a permanent establishment in Colombia for a non-resident entity and a non- resident individual. For purposes of this offering memorandum we are assuming that the investor that is a non- resident entity or a non-resident individual does not have a permanent establishment in Colombia arising from other business activities that it may conduct in Colombia.

Taxation of dividends

In general, dividends distributed by Colombian companies to non-resident entities and non-resident individuals who are investing directly or through a foreign fund administration account (“FFAA”) are treated as Colombian- source income and are, as such, subject to Colombian income tax.

To avoid double taxation, dividends are not subject to tax at the shareholder level when they are paid out of corporate profits that have been previously taxed at the corporate level. If the accounting/commercial profits of a Colombian company exceed the tax profits subject to income tax, such that dividend distributions are made out of profits not taxed at the Colombian company’s level, then the excess is subject to income tax at the shareholder level. Under the last scenario, shareholders will be taxed as follows:

i. If the shareholder is a non-resident entity or a non-resident individual investing directly in an investment which is not considered a portfolio investment, the applicable withholding tax rate is 33% and it is applied on the basis of the total amounts distributed or accrued as demandable by the shareholder.

ii. If the shareholder is a non-resident entity or a non-resident individual investing through a FFAA in an investment which is considered a portfolio investment, the applicable withholding tax rate is 25% and it is applied on the basis of the total amounts distributed or accrued as demandable by the shareholder.

Foreign shareholders subject to said withholding taxes are not obligated to file a tax return in Colombia.

If the shareholder is a Colombian individual who is a resident in the country or a resident entity, the applicable income tax withholding rate is 20%. Such income tax withholding can be credited against the shareholder’s income tax liability as liquidated in its Colombian income tax return. If the shareholder is a Colombian individual who is not obliged to file a Colombian income tax return, the applicable income tax withholding rate is 33%.

Therefore, dividend distributions to holders of our Offered Securities will be treated as non-taxable income for income tax purposes in Colombia if they are paid out of corporate profits that were taxed at the level of our Company. Dividend distributions to non-resident entities and non-resident individuals investing directly who are holders of our Offered Securities that are paid out of earnings that were not taxed at the corporate level will be subject to income tax in Colombia at a 33% rate via withholding tax. Dividend distributions to non-resident entities and non-resident individuals investing through a FFAA who are holders of our Offered Securities that are paid out of earnings that were not taxed at the corporate level will be subject to income tax in Colombia at a 25% rate via withholding tax. Generally, this withholding tax becomes the non-resident entity and non-resident individual’s final tax liability in Colombia and, therefore, none of them has to file an income tax return in Colombia.

160 Dividend distributions to Colombian individuals who are residents in Colombia and resident entities, are subject to income tax withholding at a 20% rate, unless the Colombian individual is not required to file an income tax return in Colombia in which case the applicable rate is 33%.

Notwithstanding the above, dividends paid in shares by a listed company, including us, will be distributed as non- taxable income.

Taxation of capital gains

Capital gains on the sale of ADSs

Capital gains obtained from the sale of ADSs by non-resident entities, Colombian individuals who are not residents in Colombia or foreign non-resident individuals, are not subject to income tax in Colombia as such sale does not result in Colombian-source income to the extent that the ADSs are not deemed to be possessed in Colombia.

If the holder of the ADSs is a resident entity, a Colombian individual who is resident in Colombia or a foreign individual who is a resident, the capital gain generated from the sale of such ADSs will be taxed in Colombia, according to general tax rules. The investor will be entitled to credit a foreign income tax accrued on the sale of the ADSs (if applicable) against the Colombian income tax accrued on that same sale (subject to the limitations set forth under Colombian law).

If the holder of the ADSs who is a non-resident entity, a Colombian individual who is not a resident in Colombia or a foreign non-resident individual, decides to surrender ADSs and withdraws the underlying Preferred Shares, it is arguable that such holder will not realize a capital gain subject to income tax in Colombia. Different interpretations may be adopted by the Colombian Tax Authorities on this matter.

If the holder sells the underlying Preferred Shares, any capital gain shall be treated as explained in the following section.

Capital gains on the sale of our Preferred Shares

The tax treatment applicable to investors selling shares of companies listed on the Colombian Stock Exchange, including our Preferred Shares, is explained as follows.

As a general rule, capital gains generated from the sale of shares of Colombian companies by resident and non- resident entities, or resident and non-resident individuals, are subject to income tax in Colombia as such gains are considered Colombian source income to the extent that the shares are located in Colombia. However, according to section 36-1 of Decree 624 of 1989 (the “Colombian Tax Code”), capital gains obtained in the sale of shares listed on the Colombian Stock Exchange and owned by the same beneficial owner are treated as non-taxable income, provided that the shares sold during the taxable year do not represent more than 10% of the outstanding shares of the listed company.

Consequently, if the abovementioned requirements are not met, the capital gain obtained in the sale of shares of a listed company is subject to income tax or capital gains tax, under the following rules:

The gain or loss arising therefrom will be equivalent to the difference between the sale price and the tax basis of the shares. As a general rule, the tax basis of shares is equal to the price paid for such shares (i.e., cost of acquisition); however, such cost of acquisition may be adjusted based on adjustment indexes provided for under Colombian law. The loss derived from the sale of shares is not deductible for income tax purposes.

In the case of individuals, the shares’ cost of acquisition may be adjusted based on (i) the percentage of increase of the Consumer Price as of January 1 of the year during which the shares were acquired and until January 1 of the year during which the shares are sold if the individual has included the adjustment in his or her income tax returns (according to Section 73 of the Colombian Tax Code), or (ii) the index of adjustment of the tax value unit (unidad de valor tributario) according to Sections 70 and 868 of the Colombian Tax Code (assuming the individual

161 resident in Colombia has not kept accounting books). In the case of entities, both resident entities and non-resident entities are entitled to the adjustment set forth in Section 70 of the Colombian Tax Code.

Furthermore, the capital gains arising from the sale of shares can be decreased by an amount equal to the seller’s pro rata share of the profits retained by the company that have been taxed at the corporate level and have accrued between the date of the shares’ acquisition and the date on which the shares are sold.

If the buyer of the shares is a Colombian resident who qualifies as a withholding agent, payment for the shares is subject to income tax withholding at a rate of 14% if the payment is made to a non-resident entity or a non- Colombian individual who is not a resident in Colombia and is investing directly in an investment that does not qualify as a portfolio investment. The non-resident entity or the non-Colombian individual who is not a resident in Colombia will have to file directly an income tax return liquidating the income tax liability arising from the sale which will be taxed at a 33% rate (unless the shares have been held for more than two years in which case the applicable rate is 10%). The 14%-income-tax-withholding can be credited against the Colombian income tax liability as liquidated in the corresponding Colombian income tax return.

If the buyer of the shares is a Colombian resident who qualifies as a withholding agent, payment for the shares is not subject to an income tax withholding by the buyer if the payment is made to a non-resident entity or a non-resident individual investing through a FFAA in an investment that qualifies as a portfolio investment. However, the custodian or entity managing the FFAA must apply an income tax withholding at a 14% rate, unless the investor is located in a tax haven in which case the applicable rate is 25%. The non-resident entity or the non-resident individual will have to file through the custodian or entity managing the FFAA an income tax return liquidating the income tax liability arising from the sale which will be taxed at a 33% rate (unless the shares have been held for more than two years in which case the applicable rate is 10%). The 14%-income-tax- withholding (or the 25%-income-tax-withholding if applicable) can be credited against the investor’s Colombian income tax liability as liquidated in the corresponding Colombian income tax return.

If the buyer of the shares is a Colombian resident who qualifies as a withholding agent, payment for the shares is not subject to income tax withholding if the payment is made to a resident entity or a resident individual. The resident entity or resident individual will have to liquidate the corresponding income tax liability in its income tax return applying the corresponding income tax rate depending on the nature of the taxpayer and whether the shares have been hold for more than two years or not.

Income tax treaty; inheritance and gift taxes

As of the date of this offering memorandum, there is no income tax treaty and no inheritance or gift tax treaty in effect between Colombia and the United States.

Entities that are resident in Colombia, non-resident entities, resident individuals and non-resident individuals are subject to capital gains tax on gains arising from inheritance or gifts regarded as Colombian-source income. The applicable income tax rate is 10%.

The value of assets that are transferred by gift cannot be deducted by the transferor in its income tax return in Colombia unless certain specific requirements are met.

U.S. federal income tax considerations

United States Treasury Department Circular 230 Notice: To ensure compliance with Treasury Department Circular 230, prospective investors are hereby notified that: (a) any discussion of U.S. federal tax issues contained or referred to in this offering memorandum or any document referred to herein is not intended or written to be used, and cannot be used by prospective investors for the purpose of avoiding penalties that may be imposed on them under the United States Internal Revenue Code, (b) such discussion is written for use in connection with the promotion or marketing of the transactions or matters addressed herein and (c) prospective investors should seek advice based on their particular circumstances from an independent tax advisor.

162 This section describes the material U.S. federal income tax consequences of owning our Offered Securities. It applies to you only if you acquire your Offered Securities in this offering and you hold your Offered Securities as capital assets for tax purposes.

This section does not apply to you if you are a member of a special class of holders subject to special rules, including:

a dealer in securities,

a trader in securities that elects to use a mark-to-market method of accounting for securities holdings,

a financial institution,

a tax-exempt organization,

a life insurance company,

a person liable for alternative minimum tax,

a person that actually or constructively owns 10% or more of our voting stock,

a person that holds Offered Securities as part of a straddle or a hedging or conversion transaction,

a person that purchases or sells Offered Securities as part of a wash sale for tax purposes, or

a U.S. Holder (as defined below) whose functional currency is not the U.S. dollar.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, all as currently in effect. These authorities are subject to change, possibly on a retroactive basis. There is currently no comprehensive income tax treaty between the United States and Colombia. In addition, this section is based in part upon the representations of the depository and the assumption that each obligation in the Deposit Agreements and any related agreement will be performed in accordance with its terms.

If a partnership holds Offered Securities, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding Offered Securities should consult its tax advisor with regard to the U.S. federal income tax treatment of an investment in the Offered Securities.

You are a U.S. Holder if you are a beneficial owner of Offered Securities and you are:

an individual citizen or resident of the United States,

a domestic corporation,

an estate whose income is subject to U.S. federal income tax regardless of its source, or

a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust or (ii) the trust has a valid election in effect to be treated as a U.S. person.

A “Non-U.S. Holder” is a beneficial owner of Offered Securities that is not a U.S. person for U.S. federal income tax purposes.

163 You should consult your own tax advisor regarding the U.S. federal, state and local tax consequences and other tax consequences of owning and disposing of Offered Securities in your particular circumstances.

This discussion addresses only U.S. federal income taxation.

In general, and taking into account the earlier assumptions, for U.S. federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the Preferred Shares represented by those ADRs. Exchanges of Preferred Shares for ADRs, and ADRs for Preferred Shares, generally will not be subject to U.S. federal income tax.

Taxation of dividends

U.S. Holders

Under the U.S. federal income tax laws, and subject to the passive foreign investment company (“PFIC”) rules discussed below, if you are a U.S. Holder, the gross amount of any distribution we pay out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) is generally subject to U.S. federal income taxation as a dividend taxed at ordinary income rates. If you are a non-corporate U.S. Holder, dividends paid to you that constitute qualified dividend income will instead be taxable to you at the preferential rates applicable to long-term capital gains, provided that you meet certain holding period and other requirements. However, we currently do not believe that any dividends we pay to you will constitute qualified dividend income eligible for the preferential tax rates. You should consult your own tax advisor in this regard.

You must include any Colombian tax withheld from the dividend payment in income even though you do not in fact receive it. The dividend is taxable to you when you, in the case of Preferred Shares, or the Depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend will not be eligible for dividends-received deduction generally allowed to United States corporations in respect of dividends received from other U.S. corporations. The amount of the dividend distribution that you must include in your income as a U.S. Holder will be the U.S. dollar value of the peso payments made, determined at the spot peso/ U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the shares and thereafter as capital gain. However, we do not expect to calculate earnings and profits in accordance with U.S. federal income tax principles. Accordingly, you should expect to generally treat distributions we make as dividends.

Subject to certain limitations, any Colombian tax withheld and paid over to Colombia may be creditable or deductible against your U.S. federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates. To the extent a refund of the tax withheld is available to you under Colombian law, the amount of tax withheld that is refundable will not be eligible for credit against your U.S. federal income tax liability.

Dividends will be income from sources outside the United States and will, depending on your circumstances, be either “passive” or “general” income for purposes of computing the foreign tax credit allowable to you.

Distributions of additional Offered Securities to you that are made as part of a pro rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax.

Non-U.S. Holders

If you are a Non-U.S. Holder, dividends paid to you in respect of Offered Securities will not be subject to U.S. federal income tax unless the dividends are “effectively connected” with your conduct of a trade or business within

164 the United States, and the dividends are attributable to a permanent establishment that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis. In such cases you generally will be taxed in the same manner as a U.S. Holder. If you are a corporate Non-U.S. Holder, “effectively connected” dividends may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

Taxation of capital gains

U.S. Holders

Subject to the PFIC rules discussed below, if you are a U.S. Holder and you sell or otherwise dispose of your Offered Securities, you will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your Offered Securities. Capital gain of a non-corporate U.S. Holder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

Non-U.S. Holders

If you are a Non-U.S. Holder, you will not be subject to U.S. federal income tax on gains realized from the sale or other disposition of your Offered Securities unless:

the gain is “effectively connected” with your conduct of a trade or business in the United States, and the gain is attributable to a permanent establishment that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis, or

you are an individual, you are present in the United States for 183 or more days in the taxable year of the sale and certain other conditions exist.

You will generally be taxed in the same manner as our U.S. Holders on any “effectively connected” gains. If you are a corporate non-U.S. Holder, “effectively connected” gains that you recognize may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

PFIC rules

We believe that our Offered Securities should not be treated as stock of a PFIC for U.S. federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change.

In general, if you are a U.S. Holder, we will be a PFIC with respect to you if for any taxable year in which you held our Offered Securities:

at least 75% of our gross income for the taxable year is passive income or

at least 50% of the value, determined on the basis of a quarterly average, of our assets is attributable to assets that produce or are held for the production of passive income.

Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation’s income.

165 If we are treated as a PFIC, and you are a U.S. Holder that did not make a mark-to-market election, as described below, you will be subject to special rules with respect to:

any gain you realize on the sale or other disposition of your Offered Securities and

any excess distribution that we make to you (generally, any distributions to you during a single taxable year that are greater than 125% of the average annual distributions received by you in respect of the Offered Securities during the three preceding taxable years or, if shorter, your holding period for the Offered Securities).

Under these rules:

the gain or excess distribution will be allocated ratably over your holding period for the Offered Securities,

the amount allocated to the taxable year in which you realized the gain or excess distribution, and any taxable year prior to the first taxable year in which we were a PFIC, will be taxed as ordinary income,

the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year, and

the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.

If you own shares in a PFIC that are treated as marketable stock, you may make a mark-to-market election. Our Preferred Shares or ADSs will be treated as marketable stock for this purpose if they are “regularly traded” on a “qualified exchange or other market.” It is intended that our Preferred Shares will be listed on the Colombian Stock Exchange, which must meet certain trading, listing, financial disclosure and other requirements to be treated as a qualified exchange under applicable U.S. Treasury regulations for purposes of the mark-to-market election, and no assurance can be given that the Preferred Shares will be regularly traded for purposes of the mark-to-market election. We do not expect that the ADSs will be listed on a qualified exchange or other market and, thus, we do not expect holders of ADSs to be eligible to make a mark-to-market election. If you make a valid mark-to-market election with respect to the Preferred Shares, you will not be subject to the PFIC rules described above. Instead, in general, you will include as ordinary income each year the excess, if any, of the fair market value of your Preferred Shares at the end of the taxable year over your adjusted basis in your Preferred Shares. You will also be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of your Preferred Shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). Your basis in the Preferred Shares will be adjusted to reflect any such income or loss amounts. If you make an effective mark-to-market election, in each year that we are a PFIC any gain that you recognize upon the sale or other disposition of your Preferred Shares will be treated as ordinary income and any loss will be treated as ordinary loss (but only to the extent of the net amount of previously included income as a result of the mark-to-market election).

Your Offered Securities will be treated as stock in a PFIC if we were a PFIC at any time during your holding period in your Offered Securities, even if we are not currently a PFIC. For purposes of this rule, if you make a mark-to- market election with respect to your Preferred Shares, you will be treated as having a new holding period in your Preferred Shares beginning on the first day of the first taxable year beginning after the last taxable year for which the mark-to-market election applies.

If you own Offered Securities during any year that we are a PFIC with respect to you, you generally will be required to file Internal Revenue Service Form 8621.

Medicare tax

For taxable years beginning after December 31, 2012, a U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax on the lesser of 166 (1) the U.S. Holder’s “net investment income” (or undistributed “net investment income” in the case of an estate or trust) for the relevant taxable year and (2) the excess of the U.S. Holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between U.S.$125,000 and U.S.$250,000, depending on the individual’s circumstances). A holder’s net investment income will generally include its dividend income and its net gains from the disposition of Offered Securities, unless such dividend income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If you are a U.S. Holder that is an individual, estate or trust, you are urged to consult your tax advisors regarding the applicability of the Medicare tax to your income and gains in respect of your investment in the Offered Securities.

Information with respect to foreign financial assets

Owners of “specified foreign financial assets” with an aggregate value in excess of U.S.$50,000 (and in some circumstances, a higher threshold) may be required to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” may include financial accounts maintained by foreign financial institutions, as well as the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties, and (iii) interests in foreign entities. Holders are urged to consult their tax advisors regarding the application of this legislation to their ownership of the Offered Securities.

Backup withholding and information reporting

If you are a non-corporate U.S. Holder, information reporting requirements, on Internal Revenue Service Form 1099, generally will apply to:

dividend payments or other taxable distributions made to you within the United States; and

the payment of proceeds to you from the sale of Offered Securities effected at a U.S. office of a broker.

Additionally, backup withholding may apply to such payments if you are a non-corporate U.S. Holder that:

fails to provide an accurate taxpayer identification number;

is notified by the Internal Revenue Service that you have failed to report all interest and dividends required to be shown on your federal income tax returns; or

in certain circumstances, fails to comply with applicable certification requirements.

If you are a Non-U.S. Holder, you are generally exempt from backup withholding and information reporting requirements with respect to:

dividend payments made to you outside the United States by us or another non-U.S. payer; and

other dividend payments and the payment of the proceeds from the sale of Offered Securities effected at a U.S. office of a broker, as long as the income associated with such payments is otherwise exempt from U.S. federal income tax, and:

o the payor or broker does not have actual knowledge or reason to know that you are a U.S. person and you have furnished the payor or broker:

an Internal Revenue Service Form W-8BEN or an acceptable substitute form upon which you certify, under penalties of perjury, that you are a non-U.S. person, or

other documentation upon which it may rely to treat the payments as made to a non-U.S. person in accordance with U.S. Treasury regulations; or 167 o you otherwise establish an exemption.

Payment of the proceeds from the sale of Offered Securities effected at a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, a sale of Offered Securities that is effected at a foreign office of a broker will be subject to information reporting and backup withholding if:

the proceeds are transferred to an account maintained by you in the United States;

the payment of proceeds or the confirmation of the sale is mailed to you at a U.S. address; or

the sale has some other specified connection with the United States as provided in U.S. Treasury regulations; unless the broker does not have actual knowledge or reason to know that you are a U.S. person and the documentation requirements described above are met or you otherwise establish an exemption.

In addition, a sale of Offered Securities effected at a foreign office of a broker will be subject to information reporting if the broker is:

a U.S. person;

a controlled foreign corporation for U.S. tax purposes;

a foreign person 50% or more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period; or

a foreign partnership, if at any time during its tax year:

one or more of its partners are “U.S. persons”, as defined in U.S. Treasury regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership, or

such foreign partnership is engaged in the conduct of a United States trade or business; unless the broker does not have actual knowledge or reason to know that you are a U.S. person and the documentation requirements described above are met or you otherwise establish an exemption. Backup withholding will apply if the sale is subject to information reporting and the broker has actual knowledge that you are a U.S. person.

You generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed your income tax liability by filing a refund claim with the Internal Revenue Service.

168 PLAN OF DISTRIBUTION

We are offering the Offered Securities described in this offering memorandum through the initial purchasers named below in the United States and other countries other than Colombia. The Preferred Shares are being offered directly or in the form of ADSs. The offering of the ADSs is being underwritten by the initial purchasers named below. The Preferred Shares purchased by investors outside Colombia will be settled in Colombia, paid for in Colombian pesos, and placed by the Colombian Lead Placement Agent named below.

Subject to the terms and conditions of the purchase agreement entered into with the initial purchasers, we have agreed to sell to the initial purchasers, and each initial purchaser has agreed severally to purchase, the number of ADSs opposite its name in the following table.

Name Number of ADSs J.P. Morgan Securities LLC ...... 225,603 HSBC Securities (USA) Inc...... 154,758 Merrill Lynch, Pierce, Fenner & Smith Incorporated ...... 50,379 Credit Suisse Securities (USA) LLC ...... 50,379 Itaú BBA USA Securities, Inc...... 50,379 Total ...... 531,498

J.P. Morgan Securities LLC and HSBC Securities (USA) Inc. are acting as representatives of the initial purchasers in the international offering.

The obligations of the initial purchasers under the purchase agreement, including their agreement to purchase ADSs from us, are several and not joint. The initial purchasers are committed to purchase all the ADSs offered by us if they purchase any ADSs (other than those ADSs covered by their option to purchase additional shares as described below). The purchase agreement provides that, if an initial purchaser defaults, the purchase commitments of non- defaulting initial purchasers may also be increased or the offering may be terminated. The purchase agreement also provides that the obligations of the initial purchasers are subject to certain conditions precedent, including the absence of any material adverse change in our business and the receipt of customary certificates, opinions and letters from us, our counsel and our independent registered public accounting firm.

We have also entered into a placement agency agreement with Valores Bancolombia S.A. Sociedad Comisionista de Bolsa (the “Colombian Lead Placement Agent”) and certain other Colombian broker dealers (the Colombian Lead Placement Agent, and together with the Colombian broker dealers, the “Colombian Placement Agents”) providing for the concurrent offering of Preferred Shares in Colombia.

These limitations do not apply to stabilization transactions of ADSs by the initial purchasers, who have agreed that they may sell ADSs between their respective syndicates.

Existing shareholders who submit orders to buy Preferred Shares in the Colombian offering at the price to the public in the Global Offering or higher shall be allocated Preferred Shares on a priority basis in an amount up to their percentage ownership of ordinary shares of our company as of the first day of the subscription period. The number of Preferred Shares available for sale to other investors in the international offering will be reduced to the extent that our existing shareholders subscribe on a priority basis for Preferred Shares in the Colombian offering and to the extent that Preferred Shares are allocated to other investors in the Colombian offering.

The initial purchasers initially propose to offer the Offered Securities directly to investors at the initial offering price set forth on the cover page of this offering memorandum. After the initial public offering, the initial purchasers may change the offering price and other selling terms. Sales of ADSs made outside of the United States may be made by affiliates of the initial purchasers.

The initial purchasers will offer the Offered Securities within the United States to “qualified institutional buyers” (as defined in Rule 144A) in reliance on Rule 144A and outside the United States to certain non-U.S. persons in reliance on Regulation S. See “Transfer restrictions.”

169 The Offered Securities have not been registered under the Securities Act. The Offered Securities may not be offered or sold within the United States or to U.S. persons except pursuant to an exemption from the registration requirements of the Securities Act or in transactions not subject to those registration requirements.

In addition, until 40 days following the commencement of this offering, an offer or sale of the Offered Securities within the United States by a dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act unless the dealer makes the offer or sale in compliance with Rule 144A or another exemption from registration under the Securities Act.

The initial purchasers have an option to buy up to 5,460,000 additional ADSs from us to cover over-allotments, if any. The initial purchasers have 30 days from the date of this offering memorandum to exercise this over-allotment option.

The initial purchaser discount is equal to the public offering price per ADS less the amount paid by the initial purchasers to us per ADS. The initial purchaser discount in connection with the offering is U.S.$0.71 per ADS.

We estimate that the total expenses of the Global Offering, including local registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the initial purchaser discounts and commissions, will be approximately U.S.$13 million.

The offering of the ADSs is made for delivery when and if accepted by the initial purchasers and subject to prior sale and to withdrawal, cancellation or modification of this offering without notice. The initial purchasers reserve the right to reject an order for the purchase of ADSs in whole or part.

An offering memorandum in electronic format may be made available on the websites maintained by one or more initial purchasers. The information on any such website is not part of this offering memorandum.

We, Grupo Argos, and our directors and executive officers have agreed with the initial purchasers, prior to the commencement of this offering, that we and each of these persons or entities, with limited exceptions, for a period of 180 days after the date of this offering memorandum, may not, without the prior written consent of the representatives, among other things:

(1) offer, pledge, announce the intention to sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or cause to be filed with the SEC a registration statement under the Securities Act or similar document with the Superintendency of Finance relating to, any of our Preferred Shares or ordinary shares, including in the form of ADSs, or any securities convertible into or exercisable or exchangeable for any of our Preferred Shares or ordinary shares, including in the form of ADSs (including without limitation, such other securities which may be deemed to be beneficially owned by our controlling shareholder and such directors and executive officers in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a stock option or warrant), or publicly disclose the intention to make any offer, sale, pledge, disposition, or filing; or

(2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any of our Preferred Shares or ordinary shares, including in the form of ADSs, or any securities convertible into or exercisable or exchangeable for any of our Preferred Shares or ordinary shares, including in the form of ADSs, whether any such transaction described in paragraph (1) or (2) above is to be settled by delivery of any of our Preferred Shares or ordinary shares, including in the form of ADSs, or any securities convertible into or exercisable or exchangeable for any of our Preferred Shares or ordinary shares, including in the form of ADSs, or such other securities, in cash or otherwise.

The representatives have no current intent or arrangement to release any of the share capital subject to the lock-up agreements prior to the expiration of the 180-day lock-up period. There is no contractually specified condition for the waiver of lock-up restrictions, and any waiver is at the discretion of the representatives.

170 There are no specific criteria for the waiver of lock-up restrictions, and the representatives may not in advance determine the circumstances under which a waiver might be granted. Any waiver will depend on the relevant facts and circumstances existing at the time. Among the factors that the representatives may consider in deciding whether to release shares are the length of time before the lock-up period expires, the number of shares involved, the reason for the requested release, market conditions, the trading prices of our Preferred Shares, ordinary shares and the ADSs, historical trading volumes of our Preferred Shares, ordinary shares and the ADSs, and whether the person seeking the release is a director, officer or affiliate of our company. The representatives will not consider their own positions in our shares, if any, in determining whether or not to consent to a waiver of a lock-up agreement.

We have agreed to indemnify the initial purchasers against certain liabilities, including liabilities under the Securities Act.

We have listed our Preferred Shares on the Colombian Stock Exchange (Bolsa de Valores de Colombia) under the symbol “PFCEMARGOS ”. Our ordinary shares are listed on the Colombian Stock Exchange under the symbols “CEMARGOS.”

In connection with the offering, the initial purchasers may engage in stabilizing transactions, which involve making bids for, purchasing and selling ADSs in the open market for the purpose of preventing or retarding a decline in the market price of the Preferred Shares while the offering is in progress. These stabilizing transactions may include making short sales of ADSs, which involve the sale by the initial purchasers of a greater number of such securities than they are required to purchase in the offering, and purchasing them on the open market to cover positions created by short sales. Short sales may be “covered” shorts, which are short positions in an amount not greater than the initial purchasers’ over-allotment option referred to above, or may be “naked” shorts, which are short positions in excess of that amount. The initial purchasers may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing ADSs in the open market. In making this determination, the initial purchasers will consider, among other things, the price of the Offered Securities available for purchase in the open market compared to the price at which the initial purchasers may purchase ADSs through the over- allotment option. A naked short position is more likely to be created if the initial purchasers are concerned that there may be downward pressure on the price of the Offered Securities in the open market that could adversely affect investors who purchase in the offering. To the extent that the initial purchasers create a naked short position, they will purchase ADSs in the open market to cover the position.

These activities may have the effect of raising or maintaining the market price of the Offered Securities or preventing or retarding a decline in the market price of the Offered Securities, and, as a result, the price of the Offered Securities may be higher than the price that otherwise might exist in the open market. If the initial purchasers commence these activities, they may discontinue them at any time. The initial purchasers may carry out these transactions on the over-the-counter market or otherwise.

Prior to the offering, there has been no public market for the Offered Securities. The initial public offering price will be determined by negotiations between us, Banca de Inversión Bancolombia S.A., Corporación Financiera and the initial purchasers based on investors’ interest in the Offered Securities. The estimated public offering price range set forth on the cover page of this preliminary offering memorandum may be subject to change as a result of market conditions and other factors.

Neither we nor the initial purchasers can assure investors that an active trading market will develop for the Offered Securities, or that the Offered Securities will trade in the public market at or above the initial public offering price.

No action has been or will be taken in the United States, the United Kingdom or any country or jurisdiction by us or the initial purchasers that would permit a public offering of the Offered Securities, or possession or distribution of any offering material in relation thereto, in any country or jurisdiction where action for that purpose is required. Accordingly, the Offered Securities may not be offered or sold, directly or indirectly, and neither this offering memorandum nor any other offering material or advertisements in connection with the Offered Securities may be distributed, published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction. This offering memorandum does not constitute an offer to sell or a solicitation of an offer to purchase in any jurisdiction where such offer or solicitation would be unlawful. Persons into whose possession this offering memorandum comes are advised to inform themselves about and to observe any

171 restrictions relating to the offering of the Offered Securities, the distribution of this offering memorandum and resale of the Offered Securities. See “Transfer restrictions.”

In relation to each member state of the European Economic Area (each, a “Member State”) which has implemented the Prospectus Directive (each, a “Relevant Member State”), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”), no offer of the Offered Securities to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Offered Securities which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of notes to the public in that Relevant Member State at any time:

to any legal entity which is a “qualified investor” as defined in the Prospectus Directive;

to fewer than 150 natural or legal persons per Relevant Member State (other than “qualified investors” as defined in the Prospectus Directive); or

in any other circumstances falling within Article 3(2) of the Prospectus Directive.

Each person in a Relevant Member State who initially acquires any notes as a “financial intermediary,” as that term is used in Article 3(2) of the Prospectus Directive, will be deemed to have represented, acknowledged and agreed that (x) the ADSs acquired by it in this offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, or in circumstances in which the prior consent of the subscribers has been given to the offer or resale, or (y) where ADSs have been acquired by it on behalf of persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, the offer of those ADSs to it is not treated under the Prospectus Directive as having been made to such persons.

For the purposes of the foregoing, “offer of the Offered Securities to the public,” in relation to any Offered Securities in any Relevant Member State, means the communication in any form and by any means of sufficient information on the terms of the offer and the Offered Securities to be offered so as to enable an investor to decide to purchase or subscribe the notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State; “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive), and includes any relevant implementing measure in the Relevant Member State; and “2010 PD Amending Directive” means Directive 2010/73/EC.

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling with Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

The initial purchasers have represented and agreed that:

(a) they have only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (‘‘FSMA’’)) received by it in connection with the issue or sale of the Offered Securities in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and

(b) they have complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the ADSs in, from or otherwise involving the United Kingdom.

172 The Offered Securities may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to ‘‘professional investors’’ within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a ‘‘prospectus’’ within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the Offered Securities may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to the Offered Securities which are or are intended to be disposed of only to persons outside Hong Kong or only to ‘‘professional investors’’ within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

The Offered Securities offered in this offering memorandum have not been registered under the Securities and Exchange Law of Japan. The Offered Securities have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an exemption from the registration requirements of the Securities and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.

This offering memorandum has not been registered as an offering memorandum with the Monetary Authority of Singapore. Accordingly, this offering memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Offered Securities may not be circulated or distributed, nor may the Offered Securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the ‘‘SFA’’), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

The offer of the Offered Securities described in this offering memorandum will not be carried out by any means that would constitute a public offering in Brazil under Law No. 6,385, of December 7, 1976, as amended, and under CVM Rule No. 400, of December 29, 2003, as amended. The offer and sale of the Offered Securities have not been and will not be registered with the Comissão de Valores Mobiliários in Brazil. The Offered Securities have not been offered or sold, and will not be offered or sold in Brazil, except in circumstances that do not constitute a public offering or distribution under Brazilian laws and regulations.

The Offered Securities will not be registered under Law 18,045, as amended, of Chile with the Superintendencia de Valores y Seguros (Chilean Securities Commission), and accordingly, they may not be offered to persons in Chile, except in circumstances that do not constitute a public offering under Chilean law.

The ADSs will not be registered with the Colombian Registry of Securities and Issuers (Registro Nacional de Valores y Emisores) or listed on the Colombian Stock Exchange (Bolsa de Valores de Colombia), and, accordingly, shall not be offered or sold in Colombia to non-identified persons or to no more than 99 identified persons and shall not be offered or sold in Colombia by means of a general solicitation.

The Offered Securities and the information contained in this offering memorandum have not been and will not be registered with or approved by the Peruvian Securities Commission or the Lima Stock Exchange. Accordingly, the Offered Securities cannot be offered or sold in Peru, except if such offering is considered a private offering under the securities laws and regulations of Peru.

Relationships with the initial purchasers

The initial purchasers and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions.

173 The initial purchasers may enter into derivative transactions in connection with the Offered Securities, acting at the order and for the account of their clients. The initial purchasers may also purchase some of the Offered Securities offered hereby to hedge their risk exposure in connection with these transactions. Such transactions may have an effect on demand, price or offer terms of the international offering without, however, creating an artificial demand during the international offering.

In addition, in the ordinary course of their business activities, the initial purchasers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their clients. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The initial purchasers and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Colombian requirements for the purchase of Preferred Shares in the Colombian offering

In order to purchase Preferred Shares in the Colombian offering, an investor residing outside Colombia must:

appoint a local “administrator” (i.e., Colombian broker-dealers, trust companies or investment management companies supervised by the Colombian Financial Superintendency) with powers to take actions relating to the portfolio investment and to comply with applicable foreign investment registration and reporting requirements;

enter into a custody agreement with the local administrator; and

make payment for the Preferred Shares to us in Colombian pesos through the local administrator no later than May 16, 2013.

Pursuant to the International Investment Statute, the acquisition of Preferred Shares on the Colombian Stock Exchange by foreign residents is considered to be a foreign portfolio investment in Colombia, and as such is subject to registration with the Colombian Central Bank. Such registration must be completed by the local administrator, by means of filing an Exchange Declaration Form No. 4 with the local bank through which payment of the shares was made. Local administrators are also required to file monthly update reports with the Colombian Central Bank regarding foreign portfolio investments.

174 TRANSFER RESTRICTIONS

As a result of the following restrictions, investors are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of the Offered Securities offered hereby.

The Global Offering may be made in accordance with Rule 144A and Regulation S under the Securities Act. The Preferred Shares, the Rule 144A ADSs and the Regulation S ADSs, and the Rule 144A ADRs and the Regulation S ADRs, evidencing the Rule 144A ADSs and the Regulation S ADSs, respectively, have not been registered under the Securities Act or with a securities regulatory authority of any state or other jurisdiction outside Colombia and, accordingly, may not be offered, sold, pledged or otherwise transferred or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except to qualified institutional buyers as defined in Rule 144A and to persons outside the United States in accordance with Regulation S.

Investors are advised that affiliates of the Company will not be prohibited from purchasing and reselling Offered Securities (except for Regulation S ADSs), and that certain affiliates of the Company may be purchasing Offered Securities (except for Regulation S ADSs) in the International Offering. As a result, no representation can be made as to the availability of the safe harbor provided by Rule 144A under the Securities Act for the resale of Offered Securities.

Terms used in these “Transfer Restrictions” that are defined in Rule 144A or Regulation S under the Securities Act are used herein as defined therein.

Limitations on ownership

The Company may restrict transfers of the Preferred Shares where such transfer might result in ownership of Preferred Shares exceeding the prescribed limits under applicable law or the Company’s by-laws. The Company may also restrict, in such manner as it deems reasonably appropriate, transfer of ADSs where such transfer may result in the total number of Preferred Shares beneficially owned by any person exceed the prescribed limits under any applicable law or the Company’s by-laws.

Rule 144A ADSs

Each purchaser of Rule 144A ADSs will be deemed to have represented and agreed as follows:

1. The purchaser (A) is a qualified institutional buyer, (B) is aware that the sale of the Rule 144A ADSs to it may be made in reliance on Rule 144A and (C) is acquiring such Rule 144A ADSs for its own account or for the account of a qualified institutional buyer, as the case may be.

2. The purchaser understands that the Rule 144A ADRs, the Rule 144A ADSs evidenced thereby and the Preferred Shares represented thereby have not been registered under the Securities Act and may not be reoffered, resold, pledged or otherwise transferred except (A) (i) to a person whom the purchaser and any person acting on its behalf reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act purchasing for its own account or for the account of a qualified institutional buyer in a transaction meeting the requirements of Rule 144A, (ii) in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S or (iii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) and (B) in accordance with all applicable securities laws of the states of the United States.

3. The purchaser understands that the Rule 144A ADRs evidencing the Rule 144A ADSs will bear a legend substantially to the following effect, unless the Company and the depositary determine otherwise in compliance with applicable law:

THE RULE 144A AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY AND THE PREFERRED SHARES OF CEMENTOS ARGOS S.A. (“SHARES”) REPRESENTED THEREBY HAVE NOT BEEN REGISTERED

175 UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND THOSE SECURITIES MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S. PERSON (AS THOSE TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) TO A PERSON WHOM THE BENEFICIAL OWNER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.

THE BENEFICIAL OWNER OF SHARES RECEIVED UPON CANCELLATION OF ANY RULE 144A AMERICAN DEPOSITARY RECEIPT MAY NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH SHARES INTO ANY DEPOSITARY RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK, OTHER THAN A RULE 144A RESTRICTED DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH SHARES ARE “RESTRICTED SECURITIES” WITHIN THE MEANING OF RULE 144(a) (3) UNDER THE SECURITIES ACT.

NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR THE RESALE OF THE SHARES OR THE RULE 144A AMERICAN DEPOSITARY SHARES.

EACH OWNER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THIS RULE 144A AMERICAN DEPOSITARY RECEIPT OR A BENEFICIAL INTEREST IN THE RULE 144A AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY, AS THE CASE MAY BE, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.

4. The purchaser understands that the Rule 144A ADSs offered within the United States will initially be represented by a global Rule 144A ADR and before any beneficial interest in the Regulation S ADSs evidenced by the global Regulation S ADR may be sold or otherwise transferred to a person who takes delivery in the form of a beneficial interest in the Rule 144A ADSs evidenced by the global Rule 144A ADR, the transferor will be required to provide a written certification, in the form provided in the Rule 144A deposit agreement, which shall include representations that (A) it understands that the Preferred Shares and the Rule 144A ADSs have not been and will not be registered under the Securities Act, (B) it is a qualified institutional buyer and (C) it agrees to comply with the transfer restrictions referred to in (2) above, and the transferee will be required to provide a written certification in the form provided in the Regulation S deposit agreement.

176 Regulation S ADSs

Each purchaser of Regulation S ADSs will be deemed to have represented and agreed as follows:

1. The purchaser is a non-U.S. person (within the meaning of Regulation S) who is acquiring such Regulation S ADSs in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S.

2. The purchaser understands that the Regulation S ADRs, the Regulation S ADSs evidenced thereby and the Preferred Shares represented thereby have not been registered under the Securities Act and that they may be offered, sold, pledged or otherwise transferred only in accordance with a legend substantially to the following effect which during the Restricted Period (as defined below) will appear on the Regulation S ADRs (including the Global Regulation S ADR) unless otherwise agreed by the Company and the Depositary:

NEITHER THE REGULATION S AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY, NOR THE PREFERRED SHARES OF CEMENTOS ARGOS S.A. (THE “SHARES”) REPRESENTED THEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION AND THOSE SECURITIES MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD (DEFINED AS 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING OF THE REGULATION S AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY, AND THE SHARES REPRESENTED THEREBY, AND THE LAST RELATED CLOSING) EXCEPT (1) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT OR (2) TO A PERSON WHOM THE BENEFICIAL OWNER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, PROVIDED THAT IN CONNECTION WITH ANY TRANSFER UNDER (2) ABOVE, THE TRANSFEROR SHALL, PRIOR TO THE SETTLEMENT OF SUCH SALE, WITHDRAW THE SHARES IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE REGULATION S DEPOSIT AGREEMENT AND INSTRUCT THAT SUCH SHARES BE DELIVERED TO THE CUSTODIAN UNDER THE RULE 144A DEPOSIT AGREEMENT FOR ISSUANCE, IN ACCORDANCE WITH THE TERMS AND CONDITIONS THEREOF, OF A RULE 144A AMERICAN DEPOSITARY SHARES TO OR FOR THE ACCOUNT OF SUCH QUALIFIED INSTITUTIONAL BUYER.

UPON THE EXPIRATION OF THE RESTRICTED PERIOD (DEFINED ABOVE), THE REGULATION S AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY AND THE DEPOSITED SECURITIES REPRESENTED THEREBY SHALL NO LONGER BE SUBJECT TO THE RESTRICTIONS ON TRANSFER PROVIDED IN THIS LEGEND, PROVIDED THAT AT THE TIME OF SUCH EXPIRATION THE OFFER AND SALE OF THE REGULATION S AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY AND THE DEPOSITED SECURITIES 177 REPRESENTED THEREBY BY THE HOLDER THEREOF IN THE UNITED STATES WOULD NOT BE RESTRICTED UNDER THE SECURITIES LAWS OF THE UNITED STATES OR ANY STATE OF THE UNITED STATES.

3. The purchaser understands that until a registration statement on Form F-6 under the Securities Act relating to the Regulation S ADSs issued pursuant to the Regulation S Deposit Agreement is filed with and declared effective by the U.S. Securities and Exchange Commission, any deposit of Preferred Shares for Regulation S ADSs must be accompanied by a written certificate and agreement that (A) the Regulation S ADRs, the Regulation S ADSs evidenced thereby, and the Preferred Shares represented thereby have not been registered under the Securities Act, (B) it is not a U.S. person and is located outside the United States and acquired, or has agreed to acquire and will acquire, the Preferred Shares to be deposited outside the United States, (C) it is not an affiliate of the Company or a person acting on behalf of such an affiliate and (D) it is not in the business of buying and selling securities or, if it is in such business, it did not acquire the Preferred Shares to be deposited from the Company or any affiliate thereof in the Global Offering. In addition, the purchaser will agree that during the Restricted Period any transfer of the Regulation S ADRs, the Regulation S ADSs evidenced thereby and the Preferred Shares represented thereby will comply with the transfer restrictions referred to in (2) above.

178 LEGAL MATTERS

The validity of the ADSs and other matters of U.S. federal and New York state law, will be passed upon for us by Sullivan & Cromwell LLP, New York, New York and for the underwriters by Simpson Thacher & Bartlett LLP, New York, New York. The validity of the Preferred Shares and other matters of Colombian law will be passed upon for us by Brigard & Urrutia Abogados S.A. and for the underwriters by prietocarrizosa.

INDEPENDENT AUDITORS

Our consolidated financial statements for the years ended December 31, 2010, 2011 and 2012, have been audited by Deloitte & Touche Ltda., independent auditors, as stated in their report included elsewhere in this offering memorandum.

179 [Thispageintentionallyleftblank.] CEMENTOS ARGOS S.A.

CONSOLIDATED FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

F-1 [Thispageintentionallyleftblank.]

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CEMENTOS ARGOS S.A. CONSOLIDATED BALANCE SHEET At December 31st (Millions of Colombian pesos)

ASSETS Notes 2012 2011 2010

CURRENT ASSETS Cash 155,106 262,952 241,058 Negotiable investments 5 1,759 27,983 235,072 Receivables, net 6 796,519 837,267 687,873 Inventories, net 7 355,379 376,626 289,475 Prepaid expenses 24,910 29,530 23,617

TOTAL CURRENT ASSETS 1,333,673 1,534,358 1,477,095

NON-CURRENT ASSETS Long term debtors 6 39,718 53,815 38,230 Inventories 7 - 38,237 39,412 Long term investments 8 145,095 299,457 340,108 Property, plant and equipment, net 9 3,779,319 4,177,137 2,870,683 Deferred charges and intangible assets 10 1,375,489 1,466,387 1,634,481 Other assets 19,437 26,933 44,319 Asset appraisal 19 3,573,985 9,184,742 9,036,539

TOTAL NON-CURRENT ASSETS 8,933,043 15,246,708 14,003,772

TOTAL ASSETS 10,266,716 16,781,066 15,480,867

LIABILITIES AND SHAREHOLDER'S EQUITY

CURRENT LIABILITIES Financial obligations 11 653,308 1,269,423 682,182 Bonds payable 12 77,200 224,002 - Securities 12 - 199,030 250,000 Suppliers and accounts payable 13 560,779 618,347 500,749 Taxes, levies and contributions 14 124,320 121,499 46,445 Labor obligations 16 51,106 38,470 36,419 Other liabilities 17 302,963 322,083 249,145

TOTAL CURRENT LIABILITIES 1,769,676 2,792,854 1,764,940

LONG TERM LIABILITIES Financial obligations 11 369,717 719,717 700,167 Taxes, levies and contributions 14 30,745 63,481 - Labor obligations 16 255,627 253,366 224,990 Deferred charges 15 38,166 135,676 160,869 Accounts payable 13 75,857 111,122 136,850 Bonds payable 12 1,930,588 1,006,146 1,228,506

TOTAL NON-CURRENT LIABILITIES 2,700,700 2,289,508 2,451,382

TOTAL LIABILITIES 4,470,376 5,082,362 4,216,322

Minority interest 82,855 81,305 88,468

SHAREHOLDER'S EQUITY, see attached statement 18 5,713,485 11,617,399 11,176,077

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY 10,266,716 16,781,066 15,480,867

Memorandum accounts 20 2,233,588 3,517,113 3,358,117

The accompanying notes are an integral part of the financial statements

/s/ Jorge Mario Velásquez /s/ Oscar Rodrigo Rubio C. Legal Representative Corportate Accounting Manager Lic. 47208 -T

F-4

CEMENTOS ARGOS S.A. CONSOLIDATED INCOME STATEMENT

Years ended December 31st (Millions of Colombian pesos, except net profit per share)

Notes 2012 2011 2010

Operating revenues 4,380,393 3,668,610 3,023,069 Costs of goods sold 3,468,457 2,904,365 2,423,433

GROSS INCOME 911,936 764,245 599,636

Operating expenses

Administration expenses 21 327,095 282,230 253,709 Selling expenses 22 170,274 134,722 127,327

Total operating expenses 497,369 416,952 381,036

OPERATING INCOME BEFORE ASSET IMPAIRMENT 414,567 347,293 218,600

Asset impairment 10 - 74,460 88,343

OPERATING INCOME AFTER ASSET IMPAIRMENT 414,567 272,833 130,257

Non-operating income (expenses) Financial revenues 12,498 18,785 12,981 Dividends 23 35,512 72,283 81,374 Financial expenses (223,942) (195,963) (192,208) Foreing exchange difference, net 24 (1,160) (15,848) 758 Other revenues 25 362,262 746,023 592,268 Other expenses 26 (182,947) (493,335) (295,491)

Income before income tax provision 416,790 404,778 329,939

Income tax provision 14 17,083 25,024 31,947

INCOME BEFORE MINORITY INTEREST 399,707 379,754 297,992

Net income sharing in subordinate companies (12,088) (9,780) (9,114)

CONSOLIDATED NET INCOME 387,619 369,974 288,878

Net income per share 336.6 321.2 250.8

The accompanying notes are an integral part of the financial statements.

/s/ Jorge Mario Velásquez /s/ Oscar Rodrigo Rubio C. Legal Representative Corportate Accounting Manager Lic. 47208 -T

F-5

CEMENTOS ARGOS S.A. STATEMENTS OF CHANGE IN CONSOLIDATED SHAREHOLDER'S EQUITY

Years ended December 31 (Mililons of Colombian pesos) Premium Reserve for Revaluation Income Income Asset Total Capital of issued Legal Future expansions Other Total of shareholders' from previous of the appraisal shareholders' shares reserve and investments reserves reserves equity periods period surplus equity

BALANCES AT DECEMBER 31, 2009 7,291 210,819 23,163 585,331 12,469 620,963 1,001,609 - 209,827 7,689,871 9,740,380

Transfer to income from previous periods ------209,827 (209,827) - - Release of untaxed reserves for future expansions - - - (1,328) - (1,328) - 1,328 - - - Dividends issued in cash at $126 per year per share payable in four installments as of from April 2010 ------(145,111) - - (145,111) Other movements in reserves 11 11 (6) 5 Income obtained during the year 6 6 - - - 6 Appropriation of the reserve for future expansions - - - 62,630 - 62,630 - (62,630) - - - Appropriation of the reserve for tax requirements - - - - 3,408 3,408 - (3,408) - - - Tax on equity ------(19,870) - - - (19,870) Appraisal surplus ------1,311,789 1,311,789 Income for the period ------288,878 - 288,878 BALANCES AT DECEMBER 31, 2010 7,291 210,819 23,163 646,633 15,894 685,690 981,739 - 288,878 9,001,660 11,176,077

Transfer to income from previous periods ------288,878 (288,878) - - Release of untaxed reserves for future expansions - - - (6,135) - (6,135) - 6,135 - - - Dividends issued in cash at $126 per year per share payable in four installments as of April 2011 ------(152,021) - - (152,021) Other reserve movements 17,479 17,479 - - 17,479 Movements due to the conversion of the income statements ------37,396 - - - 37,396 Income obtained during the year ------Apropriation of the reserve for future expansions - - - 142,992 - 142,992 - (142,992) - - 0 Appropriation of the reserve for tax requirements ------Tax on equity ------(126,961) - - - (126,961) Appraisal surplus ------295,455 295,455 Income for the period ------369,974 - 369,974 BALANCES AT DECEMBER 31, 2011 7,291 210,819 23,163 783,490 33,373 840,026 892,174 - 369,974 9,297,115 11,617,399 Transfer to income from previous periods ------369,974 (369,974) - Release of untaxed reserves for future expansions - - - (51,234) - (51,234) - 51,234 - - - Dividends issued in cash at $140 per year per share payable in four installments as of April 2011 ------(161,234) - - (161,234) Spin-off (1,175) (33,970) (9,318) (163,428) (427) (173,173) (145,358) - - (5,545,613) (5,899,289) Transfer to capital premium of issued shares 1,175 (1,175) - Other reserve movements ------Movements due to the conversion of the income statements ------0 Income obtained during the year - - - 54,788 (17,496) 37,292 9,937 - - - 47,229 Apropriation of the reserve for future expansions - - - 259,974 - 259,974 - (259,974) - - - Appropriation of the reserve for tax requirements ------Tax on equity ------Appraisal surplus ------(278,239) (278,239) Income of the period ------387,619 - 387,619 BALANCES AT DECEMBER 31, 2012 7,291 175,674 13,845 883,590 15,450 912,885 756,753 0 387,619 3,473,263 5,713,485

/s/ Jorge Mario Velásquez /s/ Oscar Rodrigo Rubio C. Legal Representative Corportate Accounting Manager Lic. 47208 -T

F-6 CEMENTOS ARGOS S.A. STATEMENTS OF CONSOLIDATED CHANGES IN FINANCIAL POSITION

Years ended December 31st (Millions of Colombian pesos)

2012 2011 2010

FINANCIAL RESOURCES WERE PROVIDED BY: Net income 387,619 369,974 288,878 Plus (less) - debit (credit) to income statements that does not affect working capital: Depreciation and amortization of property, plant and equipment 312,404 269,813 249,471 Amortization of deferred charges and others 64,219 138,898 71,111 Other amortizations 1,642 18,625 1,642 Writte off intangible - 96,799 - Provision recovery on property, plant and equipment, net - 2,620 Long term liability (financial obligations and accounts payable) exchange difference (75,787) 53,325 2,321 Provision recovery on investments (2,463) - - Provision for the protection of investments, net - - 6,295 Profit from the sale of property, plant and equipment (4,017) (8,554) (1,885) Loss from the sale of property, plant and equipment 546 - - Loss from the disposable of property, plant and equipment 3,182 - 74,237 Loss from the disposable of other assets 996 13,803 - Profit from the sales of permanent investments (231,369) (641,155) (509,220) Amortization of retirement pensions - 26,795 4,697 Minority interests 12,088 9,780 9,114 Asset impairment - 74,460 88,343 WORKING CAPITAL PROVIDED BY YEAR'S OPERATIONS 469,060 422,563 287,624 FINANCIAL RESOURCES GENERATED BY OTHER SOURCES Proceeds form the sale of property, plant and equipment 6,180 21,056 176,872 Proceeds form the sale of long term investments 257,303 715,280 547,856 Decrease in long term inventories 38,237 1,175 - Decrease in deferred charges and intangible assests 3,505 - 114,946 Decrease in other non-current assets - 17,386 32,676 Increase in long term labor obligations 2,261 1,581 - Increase in long term outstanding bonds 922,800 - - Increase in the equity due to other equity variations - 192,733 - Increase in long term taxes - 63,481 - Increase in deffered charges and other long term liabilities - - 29,246 Decrease in long term receivables - - 19,292 (Decrease) increase in minority interests - - 1,344 TOTAL FINANCIAL RESOURCES PROVIDED 1,699,346 1,435,255 1,209,856

FINANCIAL RESOURCES WERE USED FOR: Increase in long term inventories - - 39,412 Increase in long term receivables 15,295 15,585 - Acquisition of property, plant and equipment 167,346 253,530 491,977 Acquisition in long term investments 746 - 3,333 Increase in deferred charges and intangible assests 4,638 159,046 - Increase in permanent investments due to realized profits - 33,474 - Net increase in property, plant and equipment due to the incorporation of companie - 1,349,042 - Dividends declared 161,234 152,021 145,111 Decrease in long term financial obligations 274,213 34,093 255,949 Decrease in long term creditors 35,265 25,410 44,410 Decrease in long term taxes 32,736 - - Decrease in deffered long term charges 89,880 25,193 - Net effect due to the spin-off 25,958 - Tranfer of the outstanding bonds to short term - 224,002 - Decrease in minoritary interests 69,542 7,163 - Decrease in labor obligations - - 2,533 Decrease of the shareholder's equity due to other variations in the equity - - 92,475 Payments of tax on equity - 127,347 19,870 Transfer of the long term controlled investments to non-controlled - - 47,029 TOTAL FINANCIAL RESOURCES USED 876,853 - 2,405,906 1,142,099

INCREASE ( DECREASE) IN WORKING CAPITAL 822,493 (970,651) 67,757

CHANGES IN THE COMPONENTS OF WORKING CAPITAL: Cash and negotiable investments (134,070) (185,195) (168,977) Debtors, net (40,748) 149,394 (64,476) Inventories, net (21,247) 87,151 (71,660) Prepaid expenses (4,620) 5,913 (15,933) Financial liabilities 616,115 (587,241) 75,917 Bonds payable 146,802 (224,002) - Securities 199,030 50,970 50,000 Suppliers and accounts payable 57,568 (117,598) 105,514 Taxes, contributions and levies (2,821) (75,054) 147,780 Labor obligations (12,636) (2,051) (7,899) Other liabilities 19,120 (72,938) 17,491 INCREASE ( DECREASE) IN WORKING CAPITAL 822,493 (970,651) 67,757

The accompanying notes are an integral part of the Financial Statements.

/s/ Jorge Mario Velásquez /s/ Oscar Rodrigo Rubio C. Legal Representative Corportate Accounting Manager Lic. 47208 -T

F-7 CEMENTOS ARGOS S.A. STATEMENTS OF CONSOLIDATED CASH FLOWS

Years ended December 31st (Millions of Colombian pesos)

2012 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income 387,619 369,974 288,878 Ajustment to reconcile net income for the year to net cash provided by operating activities: Depreciation and amortization of property, plant and equipment 312,404 269,813 249,471 Amortization of deferred charges and intangible assets 64,219 138,898 71,111 Other amortizations 1,642 18,625 1,642 Writte off intangibles - 96,799 - Recovery of the investment provisions (2,463) - - Recovery of the property, plant and equipment - - 2,620 Gain from the sale of property, plant and equipment, net (4,017) (8,554) (1,885) Loss from the sale of property, plant and equipment 546 - - Loss from sale or disposal of assets 3,182 - 74,237 Loss form the disposable of property, plant and equipment 996 13,803 - Gain from the sale of long term investments (231,369) (641,155) (509,220) Amortization of retirement pensions - 26,795 4,697 Income receivable (5,822) (15,851) (8,532) Provision for debtors 8,497 5,243 4,165 Provision for the protection of investments - - 6,295 Provision for inventories 1,768 2,138 7,798 Long term permanent investments and accounts payables exchange difference (75,787) 53,325 2,321 Minority interests 12,088 9,780 9,114 Asset impairment - 74,460 88,343 SUBTOTAL OPERATING CASH FLOWS 473,503 414,093 291,055

CHANGES IN OPERATING ASSETS AND LIABILITIES: Debtors (34,886) (154,371) 88,135 Inventories (74,136) (88,114) 24,450 Prepaid expenses 4,620 (5,913) 15,933 Suppliers and accounts payable 11,757 117,598 (105,514) Labor obligations 16,907 3,632 5,366 Taxes, contributions and levies (26,088) 75,054 (147,780) Other liabilities 46,986 72,938 11,755 Accrued liabilities (89,880) (25,193) - NET CASH PROVIDED BY OPERATING ACTIVITIES 328,783 409,724 183,400

CASH FLOWS FROM INVESTMENT ACTIVITIES: Proceeds from the sale of property, plant and equipment 6,180 21,056 176,872 Proceeds from the sale of long term investments 257,303 715,280 547,856 Acquisition of property, plant and equipment (167,346) (253,530) (491,977) Acquisition of long term investments (746) - (3,333) Net increase of property, plant and equipment due to the incorporation of companies - (1,349,042) - Decrease (increase) in deferred charges and intangible assets 3,505 (159,046) - Increase in long term investments due to generation of profits - (33,474) - Transfer of the long term controlled investments to non-controlled - - (47,029) (Decrease) increase in shareholders’ equity from other equity variations (92,475) Increase (decrease) in other assets (4,638) 17,386 - NET CASH PROVIDED (USED) BY INVESTMENT ACTIVITIES 94,258 (1,041,370) 89,914

CASH FLOWS FROM FINANCING ACTIVITIES: Declared dividends (161,234) (152,021) (145,111) Payment of outstanding bonds and comercial papers (423,032) (50,970) (50,000) Bonds issue 1,000,000 - - (Decrease) increase in labor obligations (868,038) 553,148 (331,866) Decrease in long term taxes - 63,481 - Decrease in long term accounts payable (35,265) (25,410) (44,410) Decrease in long term deferred charges and intangible assets - - 114,946 Decrease in other long term assets - - 32,676 Tax on equity - (127,347) (19,870) (Decrease) increase in shareholders’ equity from other equity variations - 192,733 NET CASH (USED) PROVIDED IN FINANCING ACTIVITIES (487,569) 453,614 (443,635)

Net (decrease) increase in cash and cash equivalents (64,528) (178,032) (170,321)

Other items that do not affect the cash: Decrease in minority interests (69,542) (7,163) 1,344

Cash and cash equivalents at beginning of year 290,935 476,130 645,107 CASH AND CASH EQUIVALENT AT YEAR’S END 156,865 290,935 476,130

CASH EQUIVALENTS Cash available 155,106 262,952 241,058 Negotiable investments 1,759 27,983 235,072 CASH AND CASH EQUIVALENT 156,865 290,935 476,130

The accompanying notes are an integral part of the Financial Statements.

/s/ Jorge Mario Velásquez /s/ Oscar Rodrigo Rubio C. Legal Representative Corportate Accounting Manager Lic. 47208 -T F-8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CEMENTOS ARGOS S.A.

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010 (In millions of Colombian pesos, unless otherwise indicated)

NOTE 1 – REPORTING ENTITY

Cementos Argos S.A. (hereinafter, the “Company”) is a commercial company that was incorporated under Colombian law on August 14, 1944. Its corporate purpose is the exploitation of the cement industry, the production of concrete mixtures and any other products or articles made of cement, lime or clay, the acquisition and disposal of minerals or mineral deposits usable in the cement industry and the like, and the acquisition of rights to explore and exploit the mentioned minerals, either by concession, privilege, leasing or otherwise. The Company is registered in the city of Barranquilla, Colombia, with duration until August 14, 2060.

Through Public Deed no. 2503, which was registered at the Chamber of Commerce of Barranquilla on May 30, 2012, through a spin-off and acquisition operation, the company became exclusively focused on the cement, concrete, and aggregates business after approval of the Financial Superintendence, given in Resolution 616 of April 26, 2012.

The shareholders’ equity thus transferred to Grupo Argos S.A. (previously known as Inversiones Argos S.A.) is represented in:

Payables 87,056 Inventory – urban development projects 131,852 Investment in shares and valuation 3,114,731 Properties and equipment, net and valuation 2,736,322 Other assets 35,085 Liabilities 171,188 Shareholders’ equity (net assets) 5,933,858

Cementos Argos S.A. has 59 subsidiaries in Colombia, Surinam, the US, the British Virgin Islands, Curacao, Panama, the Dominican Republic and Venezuela. The following companies are included in the consolidated financial statements of Cementos Argos S.A.:

ALIANZA PROGENÉTICA S.A.S.

This company was incorporated under Colombian law on July 8, 2004. It is registered in Medellín with indefinite duration. Its corporate purpose is the rendering of any type of veterinarian service, the production, import, export and distribution of in vitro embryos - be it of purebred or mixed breed animals - as well as their freezing through different

F-9 techniques (ethylene glycol, glycerol or vitrification), and the sexing of fetuses and of in vitro produced embryos through ultrasound.

AMERICAN CEMENT TERMINALS LLC

This company was incorporated under the laws of the State of Delaware, United States, on September 20, 2007. Its main corporate purpose is to invest and its duration was established as indefinite.

ARGOS U.S.A. CORP.

This company was incorporated under the laws of the State of Delaware, United States, on December 19, 2006. It is registered in the city of Houston, Texas, United States, with perpetual duration. Its corporate purpose is the development of lawful activities involving investments in the cement, concrete and related products sectors. This company is consolidated with Southern Star Concrete Inc., Southern Star Leasing LLC, Piazza Acquisition Corp., RMCC Group Inc., Southern Equipment Company Inc., Gulf Coast Cement LLC, Savannah Cement Company LLC, South Central Cement Ltd., Central Aggregates LLC, Consort Livestock Inc., Argos Cement LLC, Argos Ready Mix LLC, Piazza Properties LLC, Palmetto Leasing Company, and Metro Products and Construction Inc.

CARBONES DEL CARIBE S.A.S.

This company was incorporated under Colombian law on October 28, 1981. It was first registered in the city of Barranquilla with indefinite duration. Its corporate purpose is the prospecting, exploration, exploitation, production, processing, transformation, acquisition, selling, marketing and transportation of coal and any other coal-related minerals, and the import, export, marketing and supply of raw materials, supplies, equipment and machinery needed for mining coal and other minerals. In 2010, through a merger, the company took over the company Carbones Nechí S.A.S. Also in 2010, the organization moved its legal seat from Barranquilla to Medellín. In 2011, it changed its name to Carbones del Caribe S.A.S. This company is only consolidated up to 2011, since it was absorbed by Grupo Argos S.A.

C.I. DEL MAR CARIBE BVI INC.

This company was incorporated under the laws of the British Virgin Islands on June 2, 2004 and is registered in Tortola with an indefinite duration, in accordance with the laws of that country. Its corporate purpose is the commercialization of cement, clinker and lime.

CANTERAS DE COLOMBIA S.A.S.

This company was incorporated under Colombian law on November 9, 1979. It is registered in the city of Medellín with indefinite duration. Its corporate purpose is the exploration, exploitation, transformation, benefit, integral use, marketing and sale of stony minerals such as sand, gravel and any other typical, incidental, or supplementary materials and elements used in the construction industry, and in general, carrying out all

F-10 activities related to the mining, marketing and selling of renewable and nonrenewable natural resources, as well as any lawful economic activity, both in Colombia and abroad.

CARICEMENT ANTILLES, N.V.

This is a limited liability partnership that was incorporated under the laws of the Netherlands Antilles on December 10, 1999. It is registered in Curacao with indefinite duration. Its main corporate purpose is investments. This company is consolidated with Caricement USVI Corp., Caribbean Construction and Development Ltd., Caricement Antigua Limited, and Caricement Saint Maarten N.V.

CEMENT AND MINING ENGINEERING INC.

This company was incorporated under Panama law on February 4, 1997. It is registered in Panama City with indefinite duration. Its main corporate purpose is the construction, technical assistance, installation and setup of equipment, the purchase, sales, and administration of real estate and chattels, investments, the funding of and participation in companies, the purchase or acquisition of patents, brands, copyrights, licenses and formulas, and the carrying out of operations with banks or other financial institutions, but also the purchase and sale of shares, securities or bonds, the funding of and participation in companies, mining businesses, and shipping, and any other lawful business permitted by the laws of the Republic of Panama.

CEMENTO PANAMÁ S.A.

This is a stock corporation that was incorporated under Panama law on June 25, 1943. It is registered in Panama City, Republic of Panama, with perpetual duration. Its corporate purpose is the manufacturing, sale, import and export of cement and its derivatives, as well as the import of all types of raw materials, machinery, equipment and spare parts for the manufacturing and sale of cement. This company is consolidated with Grava S.A., Concreto S.A., Terminal Granelera Bahía Las Minas S.A., Cementos Panamá Comercializadora S.A., Extracción Arci-Cal S.A., Inversiones e Inmobiliaria Tocumen S.A., Arenas del Golfo S.A., Canteras Nacionales Centrales S.A., Canteras Nacionales Chiriquí S.A., and Agropecuaria Panamá Este S.A.

CEMENTOS COLÓN S.A.

This stock company was incorporated under the laws of the Dominican Republic on February 12, 1996. It is registered in the city of Santo Domingo, Dominican Republic, with indefinite duration. Its main corporate purpose is the manufacturing, marketing, import, and export of clinker and cement and the exploitation and marketing of minerals used in and related to the cement industry. In 2012, the company was consolidated with Concretos Argos Dominicanos S.R.L. and merged with Compañía de Electricidad de Najayo S.A. COLCARIBE HOLDINGS S.A.

This company was incorporated under Panama law on June 25, 1996. It is registered in Panama City with perpetual duration. Its corporate purpose is to negotiate the disposal and/or acquisition of securities, bonds, participations in other companies, and rights of

F-11 all kinds, either on its own or on behalf of third parties, as well as to open, operate, and close accounts and deposits with financial institutions, lend or borrow money, and offer guarantees in favor of third parties in any currency in the world.

COMERCIAL ARVENCO C.A.

This company was incorporated in Caracas, Venezuela on November 2, 2006 with duration of 50 years, starting from that date. It is registered in the city of Barquisimeto, state of Lara, Venezuela. Its corporate purpose is the exploitation of businesses and activities related to the import, export, transportation, purchase and sale of all kinds of goods and products, metallic minerals, cement, clinker, coal, equipment, artifacts, vehicles, machinery, tools, spare parts, and accessories, as well as carrying out any act of lawful trade.

CONCRETOS ARGOS S.A.

This is a stock corporation that was incorporated under Colombian law on April 22, 1985. It is registered in Bogotá, Colombia with duration until September 8, 2093. Its main corporate purpose is the exploration, exploitation, transportation, benefit, integral use, marketing and sales of stony minerals such as sand, gravel, pre-mixed concrete and pre-fabricated concrete elements, concrete blocks and any typical, accessory, or complementary materials and elements used in the construction industry.

CORPORACIONES E INVERSIONES DEL MAR CARIBE S.A.S.

This is a company that was incorporated under Colombian law on December 14, 1982. It is registered in Medellín, with indefinite duration. The corporate purpose of the company is to carry out any lawful economic activity, both in Colombia and abroad. In 2010, the registration of the Company as a foreign company was authorized in the Republic of Panama and it merged with Colcaribe Holdings Dos S.A. Currently, it is dedicated to investing in stock or interest shares.

GANADERÍA RÍO GRANDE S.A.S.

This company was incorporated under Colombian law on September 8, 2006. It is registered in Medellín with indefinite duration. Its main corporate purpose is the exploitation of the agricultural and livestock industries. In addition, the company may carry out any other lawful economic activity, both in Colombia and abroad.

HAITI CEMENT HOLDING S.A.

This company was incorporated and registered in Panama City on October 7, 1997, with perpetual duration. Its main corporate purpose is the acquisition, purchase of, and investment in securities, bonds, shares, and participations in other companies, as well as any other business considered lawful by the Republic of Panama. This company is consolidated with Cimenterie Nationale S.E.M. (CINA).

F-12

INTERNATIONAL CEMENT COMPANY S.A.

This company was incorporated under Panama law on November 24, 1997. It is registered in Panama City with perpetual duration, according to the laws of that country. Its corporate purpose is to acquire, possess, manage, impose liens, lease, transfer and dispose of all kinds of goods, on its own behalf or on behalf of third parties.

LOGÍSTICA DE TRANSPORTE S.A.

This corporation was incorporated under Colombian law on April 16, 1996. It is registered in the city of Medellín with duration until April 16, 2026. Its corporate purpose is the ground, air, fluvial or maritime transportation of persons and all types of cargo inside and outside the country, using vehicles, ships or aircrafts of its own or of third related parties.

MARÍTIMA DE GRANELES S.A.

This corporation was incorporated under Panama law on December 29, 1978, being registered in Panamá City with indefinite duration. Its main corporate purpose is maritime transportation, especially of cement and clinker, and the purchase and sale of these same products, the charter of vessels and particularly their provisioning.

POINT CORP.

This company was incorporated under the laws of the British Virgin Islands on February 20, 2001. It is registered in the city of Town Road in Tortola with indefinite duration, and its corporate purpose is the sale, purchase and assignment of shares, the purchase, entering into loan and rental agreements for real estate purposes and carrying out of all activities that it is allowed to do and that lead to the achievement of the goals of the company. This company was absorbed by Valle Cement Investment Ltd. in January, 2012.

PORT ROYAL CEMENT COMPANY, LLC

This company was incorporated under the laws of the State of Delaware, United States, on March 10, 1998 and later acquired by American Cement Terminals LLC on December 3, 2001. Its corporate purpose is the commercialization of cement and related products. Its duration is indefinite.

REFORESTADORA DEL CARIBE S.A.S.

This is a company that was incorporated under Colombian law on February 14, 1983. In 2010, the company changed its registration from Cartagena to Medellín where it is currently registered with indefinite duration. Its corporate purpose is to carry out any lawful economic activity, both in Colombia and abroad.

SOCIEDAD PORTUARIA DE CEMENTERAS ASOCIADAS S.A. – CEMAS S.A.

F-13 This is a company that was incorporated under Colombian law on August 6, 1993. It is registered in the city of Buenaventura with duration until August 6, 2043. Its main corporate purpose is the construction, operation, management and maintenance of ports and port terminals, the carrying out of landfills, dredging, civil and ocean engineering projects, and in general, all works carried out in ports, port terminals, and on piers, and constructions on beaches and adjunct land. This company was only consolidated up to 2011 since it was absorbed to Grupo Argos S.A.

SOCIEDAD PORTUARIA GOLFO DE MORROSQUILLO S.A.

This company was incorporated under Colombian law on October 31, 1995. It is registered in the city of Sincelejo with duration until October 31, 2045. Its main corporate purpose is the investment in construction and management of ports and maritime and fluvial piers. This company was only consolidated up to 2011 since it was absorbed to Grupo Argos S.A.

SOCIEDAD PORTUARIA LA INMACULADA S.A.

This company was incorporated under Colombian law on October 10, 2000. It is registered in Barranquilla with duration until October 10, 2050. Its corporate purpose is the investment in construction and management of ports and maritime and fluvial piers. This company was only consolidated up to 2011 since it was absorbed to Grupo Argos S.A.

SOCIEDAD PORTUARIA LAS FLORES S.A.

This is a company that was incorporated under Colombian law on May 22, 2002. It is registered in the city of Barranquilla with duration until May 22, 2052. Its corporate purpose is the investment in construction and management of ports and maritime and fluvial piers. This company was only consolidated up to 2011 since it was absorbed to Grupo Argos S.A.

SURCOL HOUDSTERMAATSCHAPPIJ N.V. (ANTES ALEXIOS N.V.)

This company was incorporated under the laws of Surinam on March 1, 2006, its duration is indefinite and is domiciled in Paramaribo, Surinam. Its main corporate purpose is the undertaking of investments. ALEXIOS N.V. changed its name to SURCOL HOUDSTERMAATSCHAPPIJ N.V. in July 2012 and its shares became registered. This company is consolidated with Vensur N.V.

TRANSATLANTIC CEMENT CARRIERS INC.

This company was incorporated under Panama law on July 26, 1974 and registered in Panama City with indefinite duration. Its corporate purpose is international maritime transportation, particularly of cement and clinker, and the purchase and sale of the same products.

TRANSATLANTIC SHIPMANAGEMENT LTD.

F-14 This company was incorporated on the British Virgin Islands on June 3, 2004 and registered in Road Town, Tortola. Its main activity is the international maritime transportation and to this end, it may, among other things, lease, charter or own ships and transport third parties’ cargo aboard ships belonging to others as well as carry out any lawful activity under the laws of the British Virgin Islands. This company is consolidated with Somerset Shipping Co. Ltd., Winterset Shipping Co. Ltd., and Dorset Shipping Co. Ltd.

URBANIZADORA VILLA SANTOS S.A.S.

This is a company that was incorporated under Colombian law on June 18, 1974 and registered in Barranquilla. Its duration is indefinite. Its corporate purpose is to carry out any economic lawful activity both in Colombia as well as abroad. This company was only consolidated up to 2011 since it was absorbed to Grupo Argos S.A.

VALLE CEMENT INVESTMENTS LTD.

This company was registered in and incorporated under the laws of the British Virgin Islands on November 18, 1998. Its corporate purpose is investments of any kind. The duration of the company is indefinite. In 2012, it absorbed Point Corp.

VENEZUELA PORTS COMPANY S.A.

This company was incorporated in Panama City, Republic of Panama on February 26, 2002 and registered in the same city with perpetual duration. Its main purpose is the investment in concerns or projects and the negotiation, exploitation or participation in industrial, mining, marketing, commercial, real estate, maritime transportation or any other type of companies, as well as any lawful business permitted under the laws of the Republic of Panama.

ZONA FRANCA ARGOS S.A.S.

This company was incorporated under Colombian law on July 5, 2007 and registered in Cartagena. Its duration is indefinite. Its corporate purpose is the exploitation of the cement industry, the production of concrete mixes and any other materials or articles based on cement, lime or clay, the acquisition and transfer of minerals or mineral deposits to be used in the cement industry or similar industries, the acquisition of rights to explore and exploit the above-mentioned minerals, whether by concession, privilege, lease or by any other means, the direction, management, supervision, promotion and development of a customs free zone, the undertaking of all activities that in its condition as sole user of the customs free zone are convenient, pertinent or necessary, and the undertaking of the following activities as port operator: loading and unloading, storage in ports, imports and exports of goods and services, freight management in general, and management of container freight. In addition, the company may carry out any lawful economic activity either in Colombia or abroad. In 2007, it was declared permanent special customs free zone.

F-15 NOTE 2 – BASIS FOR THE PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATION

In compliance with the regulations of the Financial Superintendence, all consolidated financial statements include the accounts of companies to which any of the following conditions apply:

a) If more than 50% of the capital belongs to the Company, either directly or through or with the help of its subsidiaries or the subsidiaries of the latter. Shares with preferred dividend and without voting right are not taken into account for such purpose.

b) If the Company and its subsidiaries hold, either jointly or separately, enough votes to get the minimum deciding majority in the Board of Directors or in the General Assembly, or have the number of votes required to elect a majority of members of the Board, if it exists.

c) If the Company, either directly or through or with the help of its subsidiaries, exerts dominant influence on the decision of the company’s administration bodies by virtue of an act or contract that was entered into with the controlled company or its shareholders.

Consolidated financial statements are prepared in accordance with accounting principles that are generally accepted in Colombia. The Company’s management must make estimations and assumptions that affect the reported figures of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements, and the reported figures of revenues and expenses during the period being reported. Actual results might defer from such estimations.

The consolidation method used to prepare the financial statements is that of global integration, in which the parent or controlling company’s financial statements are completed with the total assets, liabilities, shareholders’ equity, and results of the subsidiaries, after the Company’s investment in the capital of the subsidiaries and mutual existing transactions and balances on the date of the consolidated financial statements have been eliminated from the statements of the parent or controlling company.

The elimination of balances and transactions between the parent company and the subsidiaries, as well as among the latter, and the estimation of the minority interest, proportionate equity value and amortization of the excess and/or shortage of the cost of the investment over book value, were carried out following the guidelines of the Financial Superintendence contained in Circular No. 002 of 1998, which was amended by Circular No. 11 of 1998.

The financial information concerning the subsidiaries consolidated by Cementos Argos S.A. is prepared, as far as possible, based on the same criteria and accounting methods. This information is taken at the cut-off date at of December 31, which is the

F-16 date established by the parent company to close its operations and submit its financial statements according to its own by-laws and as stipulated in section 9 of Decree 2649 of 1993.

Taking into consideration that foreign related companies prepare their financial statements using the International Financial Reporting Standards (IFRS) and accounting principles generally accepted in the United States of America, using a consistent set of top-quality accounting standards, and given that said structure of principles is deemed appropriate as a source of accounting technical reference in Colombia, these subsidiaries do not substantially adjust their financial statements to make accounting policies equivalent, except for differences that go against the substance over form principle.

Below is a detail of the assets, liabilities, shareholders’ equity and period results for each of the companies included in the consolidation:

2012

Companies Participation Assets Liabilities Shareholders’ Period % equity results

Alianza Progenética S.A.S. 60.00 1,189 352 837 (1,439) American Cement Terminals LLC 100.00 8,717 - 8,717 (1,484)

Argos Cement LLC 98.63 1,291,159 173,422 1,117,737 (22,765)

Argos Ready Mix LLC 98.63 241,131 61,309 179,822 (16,641)

Argos USA Corp. 98.63 2,240,457 772,598 1,467,859 (151,492)

C.I. del Mar Caribe (BVI) Inc. 99.97 46,373 29,919 16,454 8,706

Canteras de Colombia S.A.S. 99.48 107,120 8,813 98,307 (325)

Caribbean Construction and Development Ltd. 100.00 6,602 1,291 5,311 297

Caricement Antigua Limited 100.00 5,824 1,393 4,431 (207)

Caricement Antilles NV 100.00 24,120 3,122 20,998 494

Caricement Saint Maarten NV 100.00 12,897 8,392 4,505 296

Caricement USVI Corp. 100.00 2,440 8,643 (6,203) (892)

Cement and Mining Engineering Inc. 100.00 9,922 26,483 (16,561) (3,504)

Cemento Panamá S.A. 98.40 426,121 170,625 255,496 76,645

Cementos Argos S.A. 9,437,661 3,722,370 5,715,291 387,619

Cementos Colón S.A. 79.18 57,676 11,755 45,921 12,963

Central Aggregates LLC 98.63 22,674 3,042 19,632 (57)

Cimenterie Nationale S.E.M. (CINA) 65.00 61,652 20,205 41,447 8,990

Colcaribe Holdings S.A. 100.00 176,663 36,608 140,055 (2,524 )

Comercial Arvenco C.A. 100.00 2,530 2,447 83 -

Concretos Argos S.A. 99.44 657,165 299,946 357,219 22,750

Consort Livestock Inc. 98.63 - - - -

F-17 Companies Participation Assets Liabilities Shareholders’ Period % equity results

Corporaciones e Inversiones del Mar Caribe S.A.S. 100.00 96,438 50,048 46,390 6,729

Dorset Shipping Co. Ltd. 50.00 1,141 1 1,140 (1)

Ganadería Río Grande S.A.S. 100.00 14,369 15,509 (1,140) (7,191)

Gulf Coast Cement LLC 98.63 - - - -

Haiti Cement Holding S.A. 100.00 32,251 - 32,251 5,159

International Cement Company S.A. 100.00 18,961 - 18,961 (652)

Logística de Transporte S.A. 99.65 49,150 13,282 35,868 5,618

Marítima de Graneles S.A. 100.00 37,217 7,322 29,895 (1,375)

Piazza Acquisition Corp. 98.63 298,752 29,129 269,623 (43,488)

Port Royal Cement Company LLC 100.00 15,351 6,634 8,717 (1,484)

Reforestadora del Caribe S.A.S. 100.00 46,597 8,756 37,841 1,580

RMCC Group Inc. 98.63 94,449 - 94,449 (32,747)

Savannah Cement Company LLC 98.63 6,886 2,444 4,442 (2,874)

Somerset Shipping Co. Ltd. 50.00 16,106 8,942 7,164 1,965

South Central Cement Ltd. 98.63 68,967 22,401 46,566 2,559

Southern Equipment Company Inc. 98.63 631,550 537,101 94,449 (32,747)

Southern Star Concrete Inc. 98.63 565,305 266,872 298,433 (33,847)

Southern Star Leasing, LLC 98.63 - - - -

Surcol NV 50.00 15,713 2,793 12,920 997

Trans Atlantic Shipmanagement Ltd. 50.00 28,714 1,173 27,541 3,311

Transatlantic Cement Carriers Inc. 100.00 60,908 10,082 50,826 (3,802)

Valle Cement Investments Limited 91.81 531,428 159,440 371,988 26,024

Venezuela Ports Company S.A. 100.00 3,118 8 3,110 1

Vensur N.V. 42.12 24,644 12,145 12,499 1,040

Winterset Shipping Co. Ltd. 50.00 17,416 12,647 4,769 630

Zona Franca Argos S.A.S. 100.00 1,385,076 69,624 1,315,452 20,829 18,900,600 6,599,088 12,301,512

2011

Companies Participation Assets Liabilities Shareholders’ Period % equity results Alexios N.V. (Surcol N.V.) 50.00 11,423 951 10,472 1,155 American Cement Terminals LLC 100.00 11,189 - 11,189 (1,150) Argos Cement LLC 100.00 1,374,877 122,336 1,252,541 (8,473) Argos Ready Mix LLC 100.00 251,068 35,337 215,731 (3,951) Argos USA Corp. 100.00 2,621,242 864,767 1,756,475 (176,463) Carbones del Caribe S.A.S. 100.00 99,220 60,151 39,069 (44,013)

F-18 Companies Participation Assets Liabilities Shareholders’ Period % equity results C.I. del Mar Caribe BVI Inc. 100.00 27,684 19,021 8,663 1,518 Canteras de Colombia S.A.S. 100.00 108,775 10,143 98,632 3,249 Caribbean Construction and Development Ltd. 100.00 7,700 1,701 5,999 202 Caricement Antigua Limited 100.00 6,841 2,125 4,716 (68) Caricement Antilles NV 100.00 25,699 4,163 21,536 (612) Caricement Saint Maarten NV 100.00 11,993 8,020 3,973 (285) Caricement USVI Corp. 100.00 2,658 8,689 (6,031) (1,097) Cement and Mining Engineering Inc. 100.00 10,901 25,356 (14,455) (437) Cemento Panamá S.A. 98.40 443,307 175,757 267,550 62,581 Cementos Argos S.A. 15,760,939 4,094,504 11,666,435 369,974 Cementos Colón S.A. 80.00 51,387 6,739 44,648 16,383 Central Aggregates LLC 100.00 24,911 3,281 21,630 (85) Cimenterie Nationale S.E.M. 65.00 61,359 17,589 43,770 6,166 Colcaribe Holdings S.A. 100.00 198,745 41,106 157,639 (1,241) Comercial Arvenco C.A. 100.00 2,027 1,937 90 - Concretos Argos S.A. 100.00 734,344 293,104 441,240 (11,578) Consort Livestock Inc. 100.00 - - - - Corporaciones e Inversiones del Mar Caribe S.A.S. 100.00 161,502 78,211 83,291 (82,979) Dorset Shipping Co. Ltd. 50.00 1,262 9 1,253 17 Ganadería Río Grande S.A.S. 100.00 12,997 10,447 2,550 (571) Gulf Coast Cement LLC 100.00 - - - - Haití Cement Holding S.A. 100.00 30,296 - 30,296 407 International Cement Company S.A. 100.00 6,562 170 6,392 (3,694) Logística de Transporte S.A. 100.00 49,505 19,090 30,415 12,752 Marítima de Graneles S.A. 100.00 39,513 7,123 32,390 (331) Piazza Acquisition Corp. 100.00 364,443 21,705 342,738 (91,049) Point Corp. 80.85 180,692 14,667 166,025 943 Port Royal Cement Company LLC 100.00 13,326 2,137 11,189 (1,150) Reforestadora del Caribe S.A.S. 100.00 44,555 8,309 36,246 3,775 RMCC Group Inc. 100.00 139,022 - 139,022 (57,173) Savannah Cement Company LLC 100.00 11,970 3,982 7,988 (2,435) Sociedad Portuaria de Cementeras Asociadas S.A. 100.00 16,471 11,673 4,798 1,043 Sociedad Portuaria Golfo de Morrosquillo S.A. 100.00 21,672 9,282 12,390 854 Sociedad Portuaria La Inmaculada S.A. 100.00 49 6 43 - Sociedad Portuaria Las Flores S.A. 100.00 53 3 50 - Somerset Shipping Co. Ltd. 50.00 20,200 14,442 5,758 2,296 South Central Cement Ltd. 100.00 76,510 28,200 48,310 (1,351) Southern Equipment Company Inc. 100.00 719,429 580,407 139,022 (57,173) Southern Star Concrete Inc. 100.00 642,413 278,149 364,264 (84,424) Southern Star Leasing, LLC 100.00 - - - - Trans Atlantic Shipmanagement Ltd. 50.00 29,904 1,387 28,517 4,845 Transatlantic Cement Carriers Inc. 100.00 59,556 9,309 50,247 (686) Urbanizadora Villa Santos S.A.S. 100.00 61,816 48,228 13,588 6,024 Valle Cement Investments Ltd. 100.00 500,710 284,836 215,874 4,965 Venezuela Ports Company S.A. 100.00 3,425 9 3,416 (1,358)

F-19 Companies Participation Assets Liabilities Shareholders’ Period % equity results Vensur N.V. 42.12 18,759 9,315 9,444 1,049 Winterset Shipping Co. Ltd. 50.00 21,909 17,265 4,644 1,479 Zona Franca Argos S.A.S. 100.00 1,393,966 99,787 1,294,179 7,882 26,490,776 7,354,925 19,135,851

2010

Companies Participation Assets Liabilities Shareholders’ Period % equity results Alexios N.V. (Surcol N.V.) 50.00 10,659 1,641 9,018 (60) American Cement Terminals LLC 100.00 12,185 - 12,185 22 Argos USA Corp. 100.00 1,280,992 835,740 445,252 (145,968) Belsford Ltd. 100.00 55,254 96 55,158 (276) C.I. Carbones del Caribe S.A.S. 100.00 189,717 79,595 110,122 (24,963) C.I. del Mar Caribe BVI Inc. 100.00 14,991 7,998 6,993 (602) Canteras de Colombia S.A.S. 100.00 83,529 14,081 69,448 (2,336) Caribbean Construction and Development Ltd. 100.00 7,183 1,493 5,690 (256) Caricement Antigua Limited 100.00 6,528 2,400 4,128 (881) Caricement Antilles NV 100.00 18,622 3,925 14,697 (10,717) Caricement Saint Maarten NV 100.00 11,263 9,752 1,511 (126) Caricement USVI Corp. 100.00 2,131 10,298 (8,167) (1,715) Cement and Mining Engineering Inc. 100.00 10,740 24,503 (13,763) (2,310) Cemento Panamá S.A. 98.40 423,954 184,442 239,512 43,683 Cementos Argos S.A. 14,732,805 3,475,900 11,256,905 288,878 Cementos Colón, S.A. 70.00 78,197 7,907 70,290 17,986 Central Aggregates LLC 100.00 24,543 3,146 21,397 (97) Cimenterie Nationale S.E.M. 65.00 56,194 13,734 42,460 5,601 Climsford Investments Ltd. 100.00 65,880 10,720 55,160 (276) Colcaribe Holdings S.A. 100.00 181,296 27,315 153,981 3,000 Comercial Arvenco C.A. 100.00 1,412 1,323 89 - Concretos Argos S.A. 100.00 658,915 284,425 374,490 (28,144) Consort Livestock Inc. 100.00 - - - - Corporaciones e Inversiones del Mar Caribe 100.00 210,962 66,116 144,846 (6,690) S.A.S. Dorset Shipping Co. Ltd. 100.00 1,259 36 1,223 (22) Fortecol Investments Ltd. 100.00 24,820 4 24,816 (1,865) Ganadería Río Grande S.A.S. 100.00 6,474 3,430 3,044 (1,421) Godiva Investments Ltd. 100.00 24,864 - 24,864 (2,098) Gulf Coast Cement LLC 100.00 - - - - Haití Cement Holding S.A. 100.00 29,420 - 29,420 860 International Cement Company S.A. 100.00 437 - 437 (1) Logística de Transporte S.A. 100.00 42,401 22,504 19,897 545 Marítima de Graneles S.A. 100.00 20,900 7,411 13,489 (855) Piazza Acquisition Corp. 100.00 445,065 14,673 430,392 (68,990) Point Corp. 80.85 177,057 14,450 162,607 610 Port Royal Cement Company LLC 100.00 13,561 1,376 12,185 22 Reforestadora del Caribe S.A.S. 100.00 29,389 10,057 19,332 2,779 RMCC Group Inc. 100.00 197,331 - 197,331 (73,142) Savannah Cement Company LLC 100.00 16,340 5,976 10,364 (383) Sociedad Portuaria de Cementeras Asociadas 100.00 15,804 13,398 2,406 565 S.A. Sociedad Portuaria Golfo de Morrosquillo S.A. 100.00 16,911 8,498 8,413 (2,541) Somerset Shipping Co. Ltd. 100.00 20,446 17,299 3,147 2,124 South Caribbean Trading & Shipping S.A. 100.00 189,301 42,577 146,724 5,245 South Central Cement Ltd. 100.00 61,418 12,669 48,749 (2,697) Southern Equipment Company Inc. 100.00 803,138 605,807 197,331 (73,142) Southern Star Concrete Inc. 100.00 684,922 239,878 445,044 (63,335) Southern Star Leasing, LLC 100.00 - - - - Trans Atlantic Shipmanagement Ltd. 50.00 23,485 493 22,992 1,832

F-20 Companies Participation Assets Liabilities Shareholders’ Period % equity results Transatlantic Cement Carriers Inc. 100.00 39,785 8,282 31,503 (37) Urbanizadora Villa Santos S.A.S. 100.00 57,685 55,615 2,070 381 Valle Cement Investments Ltd. 100.00 470,649 270,883 199,766 (91,884) Venezuela Ports Company S.A. 100.00 3,361 9 3,352 - Vensur N.V. 84.40 15,984 6,049 9,935 (66) Winterset Shipping Co. Ltd. 100.00 22,143 19,048 3,095 (752) Zona Franca Argos S.A.S. 100.00 1,050,714 252,657 798,057 (36,689) 22,643,016 6,699,629 15,943,387

In 2012, the following changes occurred in the company’s subsidiaries:

These companies were left out of the consolidation due to their spin-off (and acquisition by their new parent company Grupo Argos S.A.): Carbones del Caribe S.A.S., Sociedad Portuaria de Cementeras Asociadas S.A., Sociedad Portuaria Golfo de Morrosquillo S.A., Sociedad Portuaria La Inmaculada S.A., Sociedad Portuaria Las Flores S.A., and Urbanizadora Villa Santos S.A.S. Also Tubos Tocumen S.A. was eliminated, as it was sold by Cemento Panamá S.A.

The following companies were capitalized as indicated: Argos USA Corp. USD 10,522,878 Transatlantic Cement Carriers Inc. USD 5,000,000 International Cement Company S.A. USD 7,500,000 Ganadería Rio Grande S.A.S. COP 3,500

Concretos Argos S.A. was spun-off in order to create Inversiones Fortcorp S.A.S., it was 100% property of Cementos Argos S.A. Afterwards, it was absorbed by Grupo Argos S.A.

Corporaciones e Inversiones del Mar Caribe S.A. was spun-off in order to create Inversiones Round Corp S.A.S., it was 100% property of Cementos Argos S.A.; afterwards, it was absorbed by Grupo Argos S.A.

Alianza Progenética S.A. and Concretos Argos Dominicana S.R.L. were included in the consolidation, the second company through Cementos Colón S.A.

Point Corp. and Valle Cement Investment Ltd. were merged, as well as Cementos Colón S.A. and Compañía de Electricidad de Najayo S.A.

The participation of Cementos Argos S.A. in some companies changed as follows:

o For Argos USA Corp., it rose from 83.04% to 83.21%, due to capitalization. o For Valle Cement Investment Ltd., it fell from 100% to 91.81%, with the difference going to Grupo Argos S.A. o For Concretos Argos S.A., it fell from 100% to 99.44%, with the difference going to Grupo Argos S.A.

The following companies are currently in the process of being dissolved: Profesionales a su Servicio Ltda., Asesorías y Servicios Ltda., Agente Marítimos

F-21 del Caribe Ltda., Carbones del Caribe Ltda., Transportes Elman Ltda., and Distribuidora de Cementos Ltda.

In 2011, the following changes occurred in the company’s subsidiaries:

These companies were included in the consolidation: Argos Cement LLC, Argos Ready Mix LLC, Sociedad Portuaria La Inmaculada S.A., and Sociedad Portuaria Las Flores S.A.

South Caribbean Trading & Shipping S.A. merged with Colcaribe Holdings S.A. These companies were dissolved: Belsford Ltd., Climsford Investments Ltd., Godiva Investments Ltd., Fortecol Investments Ltd., and Emcarbon S.A.

The following companies were capitalized as indicated: Zona Franca Argos S.A.S. COP 167,000 Transatlantic Cement Carriers Inc. COP 18,534 - (USD 9,800,000) International Cement Company S.A. COP 9,027 - (USD 5,000,000) Logística de transportes S.A. COP 5,599 Urbanizadora Villa Santos S.A.S. COP 5,500 Reforestadora del Caribe S.A.S. COP 5,150 Sociedad Portuaria Golfo de Morrosquillo S.A. COP 3,816 Sociedad Portuaria de Cementeras Asociadas S.A. COP 535

In 2010, the following changes occurred in the company’s subsidiaries:

Alexios N.V. and Vensur N.V. were included in the consolidation.

Carbones Nechí S.A.S. and C.I. Carbones del Caribe S.A.S. were merged, as were Dominicana Cement Holdings S.A. and Domar Ltd.; Colcaribe Holdings S.A. was spun-off, creating Colcaribe Holdings Dos S.A. Then, Domar Ltd. and Colcaribe Holdings Dos S.A. were merged, as were Colcaribe Holdings Dos S.A. and Corporaciones e Inversiones del Mar Caribe S.A.S.

Flota Fluvial Carbonera S.A.S. was sold.

The following companies were excluded from the consolidation in the periods due to the lack of control: Corporación de Cemento Andino C.A. and its subsidiaries Andino Trading Corporation, Comercializadora Dicemento C.A., and Depoan S.A. as well as Intership Agency Venezuela C.A. and Surandina de Puertos C.A.

The effect of consolidating the financial statements of the Company and its subsidiaries is shown in this table:

2012 Balance before Consolidated eliminations Eliminations balance

Assets 18,900,600 (8,633,884) 10,266,716 Liabilities and minority interests 6,599,088 (2,045,857) 4,553,231 Shareholders’ equity 12,301,512 (6,588,027) 5,713,485

F-22

2011

Assets 26,490,776 (9,709,710) 16,781,066 Liabilities and minority interests 7,354,925 (2,191,258) 5,163,667 Shareholders’ equity 19,135,851 (7,518,452) 11,617,399

2010

Assets 22,643,016 (7,162,149) 15,480,867 Liabilities and minority interests 6,699,629 (2,394,839) 4,304,790 Shareholders’ equity 15,943,387 (4,767,310) 11,176,077

The profit of Cementos Argos S.A. and the consolidated profit for 2012, 2011, and 2010 didn’t change.

2012 2011 2010

Consolidated profit 387,619 369,974 288,878

The consolidation of Cementos Argos S.A.’s shareholders’ equity and the consolidated shareholders’ equity is as shown in this table:

2012 2011 2010

Individual shareholders’ equity 5,715,291 11,666,435 11,256,905 Non-realized gains from the sale of properties, plants, and (1,806) (1,807) (1,807) equipment Non-realized gains from sale of investments (15,147) (48,621) - Non-realized gains from sale of land (32,082) (30,400)

Consolidated shareholders’ equity 5,713,485 11,617,399 11,176,077

NOTE 3 – MAIN ACCOUNTING POLICIES AND PRACTICES

To prepare its consolidated financial statements, the Parent Company, by legal mandate, must follow accounting principles generally accepted in Colombia, the standards of the Financial Superintendence, and other legal regulations. The main accounting policies and practices implemented by the Company in accordance with the above are described below.

SUBSTANCE ABOVE LEGAL FORM

F-23 The consolidated companies recognize and disclose the economic resources and facts according to their substance or economic reality and not only on the grounds of their legal forms. For this reason, they apply accounting principles that allow for the proper recognition of the economic facts in each of the countries where the operations are carried out.

CONVERSION OF FINANCIAL STATEMENTS

Colombian standards do not provide a technical framework that establishes accepted conversion methods, but they do stipulate that facing the absence of such, it is suitable to refer to a higher application standard. Consequently, the guidelines of the IFRS (International Financial Reporting Standards), particularly the International Accounting Standard (IAS) 21 “Effects of Changes in Foreign Exchange Rates” were applied to the conversion process.

In that perspective, the financial statements of foreign companies whose currency is not the Dollar of the United States of America or any other currency that is at par with it, are converted from the currency of the country of origin into US dollars according to the IAS 21 methodology, as follows:

Assets and liabilities are converted at the exchange rate in effect on the closing date.

The equity accounts are converted at the exchange rates in effect on each of the dates on which the transactions occurred. For companies for which no historical information is available, equities were converted at the closing exchange rate of December 2005.

Income accounts are converted at the exchange rates in effect on each of the dates on which the transactions occurred; should this prove impossible, the average exchange rate for each of the months shall be used.

Conversion differences are taken into account in shareholders’ equity through the accumulated conversion adjustments account, which represents the differences stemming from the conversion of items in the income statement at average exchange rates and the conversion of balance sheet items at closing rates.

In turn, the amounts in US Dollars are converted into Colombian pesos at the market representative exchange rate as certified by the Central Bank.

INFLATION ADJUSTMENTS

Decree 1536 of May 7, 2007 amended Decrees 2649 and 2650, deleting the application of comprehensive inflation adjustments. The rule states that inflation adjustments recorded from January 1, 1992 until December 31, 2006 shall become part of the balance of the respective accounts.

The balance in the Equity Revaluation account may not be distributed until the Company is liquidated or capitalized. Should it be capitalized, it may be used to offset losses if the Company would fall into grounds for dissolution; in no event may it be used to reimburse

F-24 invested capital. Should it show a debit balance, it may be decreased against the current period results or the results from prior periods, respecting the rules regarding income in compliance with the Code of Commerce. Law 1111 of 2006 allowed offsetting the equity tax against this account without affecting the results. This option was chosen by the companies of Grupo Cementos Argos S.A. with enough balance under this item.

MATERIALITY IN THE PREPARATION OF FINANCIAL STATEMENTS

Preparing the financial statements in compliance with accounting principles generally accepted in Colombia requires the Management to make estimates and assumptions that have an impact on the amounts of assets and liabilities reported on the closing date of financial statements and the amounts of revenues and expenses reported during the relevant period. Generally, the recognition and presentation of economic events occur in accordance with their relative importance or materiality. For the financial statements of 2012, the materiality that was applied was determined taking 5% of the consolidated EBITDA as basis.

CASH AND CASH EQUIVALENTS

Cash available on hand and in banks, savings deposits, and all high-liquidity investments are deemed cash and cash equivalents.

CONVERSION OF FOREIGN CURRENCY TRANSACTIONS AND BALANCES

Transactions in foreign currency are carried out at the applicable exchange rates in effect on the respective dates. At the closing of each period, the balances receivable or payable and investments in foreign currency are adjusted to the market representative exchange rate certified by the Central Bank. When it comes to accounts receivable or payable in foreign currency, exchange differences are recorded against income provided the exchange differences don’t stem from the cost of acquisition of assets. Exchange differences arising while assets are in progress of construction or installation and until they are ready for use can be attributed to the cost of acquisition of assets.

As of 2007, in compliance with Decree 4918 of the same year, the exchange difference of variable income investments in foreign subordinated companies is carried as a higher or lower value of equity in the equity method surplus.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to various financial market risks arising from its ordinary businesses, which are managed by means of derivative financial instruments. These risks may be summarized as follows:

Strategic risk: a deviation between the benefits expected from a strategy and the results.

F-25 Liquidity risk: losses arising from the failure to comply with payments due to the difficulty of obtaining liquidity or the impossibility of taking or undoing a derivative position due to the lack of a market. Credit risk: a loss that may become real due to the non-compliance of another party.

Operations risk: a loss to which the Company is exposed due to mistakes in the record and/or valuation systems or due to the faulty design of a proper limit system, an inappropriate review of contracts, or an inadequate management information system.

Market risk: a situation to which the Company is exposed because of changes in interest rates or exchange rates (peso-dollar), which can significantly affect the financial statements of the Company as well as alter its cash flow.

In the case of market risk, the Company tries to protect itself through the use of natural hedging as a first measure, and derivative instruments as a last resource. The Company uses neither derivative instruments nor any other financial instruments for speculative purposes.

Furthermore, the Company does periodical appraisals of its derivatives, at market prices, for administrative control purposes.

Said derivatives are listed below:

SWAP ARRANGEMENTS

They relate to financial transactions wherein the Company, by means of an agreement with a bank, exchanges money flows in order to decrease liquidity, exchange rate, term or issuer risks, as well as to reorganize assets and liabilities.

In the case of interest rate swaps there is no exchange of capitals; the Company is liable for its credits with defined amounts and terms, and its accounting recording is independent from the swap arrangement. As for the recording of swaps, only payments net of interests between the parties thereto are recorded and consequently, the record shall be limited to the recognition of the positive or negative difference between the interest flows that the parties agree on exchanging. Profits or losses arising from the arrangements are recognized directly in the period income/(loss)..

In the case of currency swaps, the existence of this arrangement does not have an impact on the valuation of the underlying debt (face value). During the term of the agreement, the parties pay a differential for the interests and the exchange difference which are directly included in the period income/(loss).

FORWARD ARRANGEMENTS

They are used to cover the exchange rate risk in debt and investment transactions in foreign currency, as well as to cover future cash flows, with high probability of occurrence, such as the monthly exports of the Company. At the end of each period, they are valued discounting the forward future rate at the market devaluation rate, comparing such present value to the market representative exchange rate at the closing

F-26 of the assessed period and recording the positive or negative difference in the statement of income.

OPTION ARRANGEMENTS

They are used to cover the exchange rate risk mainly arising from monthly exports and the future flows resulting from the later. They are carried out through structured hedges, such as export collars that allow having a market monetization range and protecting from extreme exchange rate changes. They are valued by applying the Black-Scholes model.

NEGOTIABLE AND PERMANENT INVESTMENTS

Regulations of the Finance Superintendence require that investments be classified and accounted for as follows: a) Investments for which the Parent Company has the serious purpose of held them until their maturity or redemption, or for a period of minimum three years if their duration is more than three years or indefinite, are classified as permanent investments. These investments are accounted for and valued prospectively as follows:

Debt investments or investments embodying fixed-rate or variable-rate debt rights (non-participative securities) are originally registered at their acquisition cost and valued monthly on the basis of each security’s return on investment rate, estimated at the time of purchase; the resulting adjustment is taken to the period’s income accounts. Variable-rate investments in stock or equity in non-controlled entities are carried at the cost adjusted for inflation and adjusted monthly to their realization value. The resulting adjustment, either positive or negative, is taken to the revaluation account with debit or credit to the revaluation surplus in shareholders’ equity, as the case may be. The realization value of securities classified as high or medium marketability by the Finance Superintendence is determined on the grounds of average Stock Market value during the last 10 to 90 days pursuant to certain parameters set by that Entity. The realization value of securities classified as low or minimum marketability or which are not listed is established by its intrinsic value calculated on the basis of the latest financial statements disclosed by the securities’ issuer. b) Investments represented in easily marketable securities, of which the Company has the serious purpose of realizing them in a term not to exceed three years, are classified as negotiable investments. These investments are originally carried at cost and adjusted monthly to their realization value with debit or credit to income, as the case may be. The realization value is determined as mentioned under the preceding subparagraph a) for each type of investment.

PROVISION FOR DEBTORS OF DOUBTFUL ACCOUNTS

F-27 The provision for debtors of doubtful accounts is reviewed and brought up-to-date at the end of each period on the grounds of the analysis of the age of balances and the assessment of collectability of individual accounts performed by the Management. Amounts that are considered uncollectable are charged to the provision periodically.

INVENTORIES

Inventories are recorded at cost and at the closing of the period they are reduced to their market value, should this be lower. Cost is determined based on the average cost method. The obsolescence analysis for the inventories of materials and spare parts is reviewed and brought up to date at the closing of each period, and the provision is recognized in the financial statements. As of 2009, inventories include urban development projects and lands to be developed. All costs and taxes stemming from the readying of lands up to the point where they are in adequate conditions to be sold are recorded.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost, which may include financing expenses and exchange differences on foreign currency liabilities used for their acquisition, until they are brought to operating conditions.

Sales of and withdrawal from such assets are discharged at the relevant net adjusted cost, and the differences between the sales price and the net adjusted cost are taken to income.

Depreciation is calculated by applying the straight line method, based on the probable useful life of assets, as follows: between 20 and 40 years for constructions and buildings, plants and networks; between 3 and 10 years for machinery, industrial equipment and office equipment; between 5 and 10 years for vehicles and transportation equipment, computers and communications equipment; and between 6 and 8 years for ships.

In the companies of the Caribbean Regional Division, the useful life defined for buildings and installations is between 4 and 40 years, for machinery and equipment between 3 and 35 years, and for furniture, vehicles and tools between 3 and 30 years.

In the United States, the useful life for buildings and installations is between 20 and 40 years, for transportation equipment between 5 and 10 years, for machinery and equipment between 2 and 20 years, for furniture and other elements between 3 and 5 years.

Repairs and maintenance of assets are recorded in the income/(loss) for the year as far as the improvements and additions are added to their cost.

In the Caribbean and United States Regional Divisions, the company evaluates assets that generate earnings when there are changes or other circumstances that might cause loss or deterioration (impairment) of the future cash flow of such assets. This revision is carried out every year before closing the accounting period.

F-28

Impairment is defined as the excess of book value compared to the reasonable or recoverable value of assets that are considered earning-generating units. Impairment is registered with a charge to the income/(loss).

DEFERRED CHARGES This account includes prepaid expenses and deferred charges. Prepaid expenses mainly include insurance premiums, which are amortized using the straight line method over a 12-month period.

Deferred charges mainly include computer software, deferred income tax, improvements to third party property, and automation projects, which are amortized using the straight line method over a period between 3 and 5 years.

INTANGIBLE ASSETS

Intangible assets are registered at acquisition cost and represent the value of certain rights such as trademarks, goodwill, and exploitation rights (concessions and franchises), among others. They are amortized using the straight line method.

In Colombia, the amortization period for trademarks is 20 years, while in the United States it is 4 to 20 years. For exploitation rights it is the lower of the expiration period of the license or the period during which the reserves are expected to be exploited. This period is estimated between 3 and 30 years.

The accounting policy to account for and amortize the goodwill is detailed below:

ACQUIRED GOODWILL

In Colombia, the additional amount paid over the intrinsic value certified by the relevant company upon the purchase of sales, quotas or shares of social interest in an active economic entity is recorded under acquired goodwill when one has or acquires control over it, as set forth by sections 260 and 261 of the Code of Commerce, amended by sections 26 and 27 of Law 222 of 1995 and other regulations that modify, add to or supersede it.

Following the regulations of circular letters 007 of 1997 and 011 of 2005 issued by the Colombian Finance Superintendence, the amortization of goodwill arising from the merger of businesses is estimated using the straight line method based on the exploitation time estimated for the intangible asset, which in no event shall be more than 20 years.

At the closing of each accounting period or the closing of the month that is being taken as the basis to prepare the extraordinary financial statements, Colombian companies assesses the goodwill originated from each investment, in order to verify its adequacy as part of the balance sheet.

In other countries where the Company has operations, goodwill is estimated based on the accounting regulations applicable where the subordinated company operates, in the

F-29 frame of a higher standard that respects accounting principles generally accepted in Colombia and the guidelines of the Colombian Financial Superintendence, and in accordance with the contents of section 11 of Decree 2649 of 1996 regarding substance above legal forms.

Just as for the items plant and equipment, in the United States and the Caribbean Regional Division, intangible assets that generate earnings are evaluated when there are changes or other circumstances that might cause loss or deterioration (impairment) of the future cash flow. This revision is carried out every year before closing the accounting period. Impairment is defined as the excess of book value compared to the reasonable or recoverable value of assets that are considered earning-generating units. Impairment is registered with a charge to the income/(loss) and are not amortized.

ASSET APPRAISAL

In Colombia, this refers to: a) Excess commercial or intrinsic value of the investment in shares and quotas of interest at the end of the period over its net cost. b) Excess technical appraisals of property, plant and equipment over the respective net costs adjusted over inflation. Such appraisals were carried out in 2011 by related and independent experts based on replacement values and depreciation. These appraisals are to be updated every three years.

Valuations are recognized as a higher value of shareholders’ equity.

LABOR LIABILITIES AND RETIREMENT PENSIONS

For the consolidation process, the Company maintains labor obligations stipulated in the countries according to the accounting technique and the legal obligations implicitly acquired by its subsidiaries. In the light of this, the Company does not deem it necessary to prepare the accounting estimates resulting from recording the consolidated social benefits and other benefits due to employees again, on a basis other than those in force in the countries where the relevant liabilities arose.

Labor liabilities are adjusted at the closing of each period in compliance with the outstanding legal regulations and labor agreements in force.

The liability for retirement pensions represents the present value of all future expenditures that the Company shall have to pay to its retired personnel or to their beneficiaries, which mainly relates to senior employees. The relevant charges to annual results are made based on actuarial studies bound to legal regulations in force, and prepared using methods such as the actual equivalence system for revenues in arrears, immediate due fractioned annuities, and prospective revenues.

The payment of retirement pensions during the period is directly charged to period income/(loss).

F-30 For employees that fall under the new social security regime (Law 100 of 1993), the Company complies with its obligation by contributing payments to the Institute for Social Security (ISS) and/or to the private retirement pension funds in the terms and conditions set forth by the above-mentioned law.

In Panama, the Company must make a contribution to the Social Insurance Fund for the payment of future retirement pensions of all employees. Additionally, the Company makes contributions to an Independent Administration Fund, as a benefit for the employees that meet the following requirements:

Having worked in the company for a minimum of 15 years; Having reached the retirement age established by the Social Insurance Fund; Being retired by the Social Insurance Fund.

The contributions made to the Fund are recognized and charged to the income/(loss).

TAXES, CONTRIBUTIONS AND LEVIES

They represent the value of general mandatory taxes payable to the Government by the Company, estimated on the basis of private assessments prepared during the relevant taxable period. They include, among others, the income and supplementary tax, the tax on equity, and the industry and trade tax.

Income and supplementary tax

The Company determines the income tax provision either on the grounds of taxable income estimated at the rates provided for in the tax law or on the grounds of the presumptive income system. The tax effects of revenues, costs and expenses corresponding to the temporary differences between accounting and the figures for tax purposes are carried as deferred taxes. However, in the case of debit deferred taxes they are only carried as revenues when related to temporary differences that entail payment of a higher tax during the current year, provided there is a reasonable expectation of generating enough taxable income in the periods during which the tax benefit is to be obtained.

Equity tax

In accordance with Decree 514 of 2010, in 2011, Cementos Argos and its subordinated companies adopted as accounting practice for the recognition of the tax on equity the recording of total taxes payable against the shareholders’ equity revaluation account. When the revaluation account becomes exhausted and there is no balance in it to cover the tax, the relevant amount payable is taken to the statement of income.

Sales tax – VAT

Companies that sell goods and render taxed services or that obtain revenues through export fall under the common regulations for this tax.

F-31 In Colombia, the general rate is 16%, but there are special rates depending on the good or service being sold, which range from 1.6% to 10%, and for sumptuary consumption, the differential rates range from 20% to 35%.

Also in Colombia, for the generation of excluded revenues, the VAT paid on purchases is part of an increased value of cost. Furthermore, when taxed revenues are generated, this means when taxed goods or services are sold, the VAT paid on the purchase or acquisition of supplies for these sales, will be deductible from the amount to be paid in tax. When the company generates revenues that are excluded from VAT, but at the same time generates revenues that are exempt and/or taxed, the proportions of VAT paid will have to be analyzed to determine the VAT to be discounted.

MEMORANDUM ACCOUNTS

Commitments pending formalization and contingent rights and obligations, such as the value of assets and securities delivered as collateral, endorsements granted, unused letters of credit, assets and securities received in custody or as collateral, fully depreciated assets and the difference between tax and accounting equity values, are taken to memorandum accounts.

RECOGNITION OF REVENUES, COSTS AND EXPENSES

Revenues from sales are recognized upon dispatch of the product or upon granting the public deed regarding the land or development works. Those arising from rental agreements are recognized during the month they accrue and those arising from services, upon their rendering. Revenues from dividends are recognized when the issuer declares such dividends.

All revenues, costs and expenses are recorded under an accrual basis.

ASSET IMPAIRMENT

It relates to the expense arising from the appraisal of the long-term asset impairment carried out by experts, recognized by the operation of Argos USA Corp. in accordance with accounting principles generally accepted in the United States of America (USGAAP) and Caricement Antilles NV who applies International Financial Reporting Standards (IFRS). This expense arises from events not related with the Company’s core business.

STATEMENT OF CASH FLOWS

The accompanying statement of cash flows is prepared using the indirect method, which includes a conciliation of the net income for the year to the net cash provided by operating activities.

NET INCOME PER SHARE

F-32 The net income per share is estimated on the annual weighted average of subscribed and outstanding shares during each year. Re-acquired own shares are excluded for the effects of this calculation.

CONTINGENCIES

There may be certain contingent conditions on the date of issuance of the financial statements, which may result in a loss for the Company but shall only evolve in the future upon the occurrence or potential occurrence of one or more events. Such loss contingencies are estimated by the Management and its legal counsels. The estimation of loss contingencies necessarily implies a judgment and is a matter of opinion. In estimating the loss contingencies in legal proceedings against the Company, the legal counsels assess, among others, the merits of the claims, the jurisprudence of the courts on the subject matter, and the current status of the legal proceedings.

Should the contingency assessment indicate the probability of a material loss and the liability can be estimated, it is recorded in the financial statements. Should the assessment indicate that a potential loss is not probable or is probable to occur but the result is uncertain or the amount of the loss cannot be estimated, the nature of the contingency is disclosed in a note to the financial statements. Loss contingencies estimated as remote are generally not disclosed.

CONVERGENCE TO INTERNATIONAL STANDARDS OF FINANCIAL INFORMATION

In compliance with what is stipulated in Law 1314 of 2009 and the regulating decrees 2706 and 2784 of 2012, the company is obliged to start the convergence process from accounting principles generally accepted in Colombia to the International Financial Reporting Standards (IFRS). For this reason, the Technical Council of the Body for Public Accounting published Strategic Guidelines that classify companies in three groups. According to these regulations, the mandatory transition period starts on January 1, 2014 for groups 1 and 3 and January 1, 2015 for group 2, and the emission of the first financial statements under IFRS will be on December 31, 2015 for groups 1 and 3 and December 31, 2016 for group 2.

Cementos Argos S.A. is classified in group 1 because it is a share-emitting company. Therefore, it is obliged to present an IFRS implementation plan to the Financial Superintendence before February 28, 2013. Since the company has the information and processes for the conversion to IFRS for itself and its subsidiaries when necessary, it is currently internally evaluating what would be the most appropriate date to officially publish the opening balance sheet, which would be agreed on with the monitoring and control agencies, along with its subsequent disclosure process in the stock market. Nevertheless, in all cases, the schedule authorized by the National Government will be respected.

RECLASSIFICATIONS IN THE FINANCIAL STATEMENTS

Certain figures shown in the financial statements of December 31, 2011 and 2010 were reclassified for presentation purposes.

F-33

NOTE 4 - TRANSACTIONS IN FOREIGN CURRENCY

Standards in force in Colombia allow the free negotiation of foreign currencies through banks and other financial institutions at free exchange rates.

Nevertheless, most foreign currency transactions still require that certain legal requirements be met.

Transactions and balances in foreign currency are converted at the market representative exchange rate certified by the Central Bank, which was used to prepare the financial statements of December 31, 2012, 2011 and 2010. Market representative exchange rate of December 31, 2012 in Colombian pesos was COP $1,768.23 (2011 - $1,942.70 and 2010 $1,913.98) to US$1.

On December 31, the Company had the following assets and liabilities in foreign currency, mainly in dollars, recorded at their equivalent in millions of Colombian pesos.

2012 2011 2010 Millions of Millions of Millions of Dollars Dollars Dollars pesos pesos pesos

616,304,317 1,089,768 1,017,384,070 1,976,472 540,475,248 1,034,459 Current assets Non-current assets 2,078,441,255 3,675,162 1,075,792,825 2,089,943 1,227,887,588 2,350,152

2,694,745,572 4,764,930 2,093,176,895 4,066,415 1,768,362,836 3,384,611

Current liabilities (704,455,982) (1,245,640) (922,317,986) (1,791,787) (494,393,829) (946,260) Non-current liabilities (814,254,897) (1,439,790) (835,376,734) (1,622,886) (849,518,434) (1,625,961)

(1,518,710,879) (2,685,430) (1,757,694,720) (3,414,673) (1,343,912,263) (2,572,221)

Net asset position 1,176,034,693 2,079,500 335,482,175 651,742 424,450,573 812,390

To mitigate the risk of transactions in foreign currency, Cementos Argos S.A. undertakes hedging operations that are detailed in notes 6 and 13.

NOTE 5 – NEGOTIABLE INVESTMENTS

Negotiable investments as of December 31st were comprised of:

Average annual 2012 2011 2010 rate in 2012 Time deposit certificates (1) 0.00003% 1,149 15,155 216,912 Savings deposit certificates - 9,801 - Land rights 4.24% 602 1,935 17,980 Securities and bank acceptances - 1,083 180

F-34 Bonds and others 8 9 248 1,759 27,983 235,320 Less - Provisions - - (248) 1,759 27,983 235,072

(1) In 2012, this corresponds mainly to overnight operations for US$650,000. In 2011, to term deposit certificates for US$ 5,092,867 (effective annual rate of 5.7%) and overnight operations for US$1,350,000. In 2010, to term deposit certificates for US$ 110,000,000 (effective annual rate of 4.0%).

The decrease from 2010 to 2011 can be explained mainly by the use of capitalization resources of the subsidiary Argos USA Corp. for the purchase of cement and concrete assets of Lafarge. In 2012, the main reason was the change from short-term investments to long-term and the use of resources to pay debt and raise working capital.

None of these investments have restrictions that limit their use.

NOTE 6 – ACCOUNTS RECEIVABLE

On December 31, the receivables account was comprised of:

2012 2011 2010 Domestic customers (1) 502,902 527,166 383,492 Foreign customers 13,023 9,627 10,208 Related companies (see note 27) 19,342 25,294 33,501 Advance payments to contractors and others (2) 25,964 31,165 25,750 Deposits (3) 14,891 12,368 - Promises to enter into purchase-sale agreements (4) 2,716 1,679 48,711 Loans to third parties 765 675 420 Various debtors (5) 53,986 113,384 40,034 Accounts receivable from employees (6) 26,004 35,597 32,678 Revenues receivable (7) 30,788 37,141 33,306 Tax advance payments (8) 178,437 121,687 138,501 Common trade accounts 496 229 442 Others 2,849 3,571 6,565 872,163 919,583 753,608 Less - Provision for doubtful accounts (35,926) (28,501) (27,505) Long term (39,718) (53,815) (38,230) 796,519 837,267 687,873

F-35 (1) The balance corresponds mainly to the portfolio of credit sales to customers of Cementos Argos S.A. for $262,049 (2011 - $265,034 and 2010 - $238,151), Southern Star Concrete Inc. for $75,892 (2011 - $71,589 and 2010 - $64,541), Argos Cement LLC for $48,833 (2011 - $61,699), Argos Ready Mix LLC for $35,894 (2011 - $37,546), Southern Equipment Company Inc. for $34,331 (2011 - $34,819 and 2010 - $31,181), and Cemento Panamá S.A. for $21,929 (2011 - $18.546 y 2010 - $18.656).

The increase of 2011 can be explained mainly by the portfolio of credit sales to customers of Cementos Argos S.A. and the appearance of the new companies Argos Cement LLC and Argos Ready Mix LLC.

(2) In 2012, the decrease can be explained mainly by advance payments of Carbones del Caribe S.A.S. for $ 4,120. This company was spun-off to Grupos Argos S.A.

(3) In 2011, the increase was mainly due to deposits for import by Cementos Colón S.A.

(4) In 2011, the decrease was due to the legalization of advance payments for the purchase of land for the forest project in Carmen de Bolívar, the terrain of Hacienda El Centenario, and the purchase of offices for administrative staff located in Ciudad Empresarial Sarmiento Angulo in Bogotá.

(5) The account balance mainly corresponds to accounts receivable from operations with derivatives. For 2012, these showed a decrease because of the unfavorable variation in the agreed exchange and interest rates, compared to those of the year- end closing. In 2011, there was an increase because of a variation of those same factors.

Transactions with financial derivatives that gave rise to a Company’s positive valuation at the year-end closing were as follows:

6ZDSDUUDQJHPHQWV Underlying amount Underlying Swap amount Swap Type Underlying COP$ or US$ rate COP$ o US$ rate Maturity Currency swap Bonds 2017 $ 343,520 CPI + 3.17% US$190,000,000 Libor + 1.75% 23-Nov-17 Currency swap Bonds 2017 $ 89,800 CPI + 3.17% US$ 50,000,000 Libor + 1.92% 23-Nov-17

6ZDSDUUDQJHPHQWV Underlying amount Underlying Swap amount Swap Type Underlying COP$ or US$ rate COP$ o US$ rate Maturity Currency swap Account payable US$ 71,500,000 4.90% PV 136,558 CIP + 5.35% 08-Ago-16 Currency swap Bonds 2017 $ 343,520 CPI + 3.17% US$190,000,000 Libor + 1.75% 23-Nov-17 Currency Bonds 2017 $ 89,800 CPI + 3.17% US$ 50,000,000 Libor + 1.92% 23-Nov-17

F-36 swap

)RUZDUGDUUDQJHPHQWV Type Underlying Underlying Forward amount Forward Maturity amount (US$) rate Financial liability principal Fwd buying and interest US$ 40,000,000 US$ 40,582,446 $ 1,781.98 27-Apr-12 Fwd buying Financial liability principal US$ 40,000,000 US$ 40,000,000 $ 1,789.88 18-Apr-12 Fwd buying Financial liability principal US$ 30,000,000 US$ 30,000,000 $ 1,787.93 18-Apr-12 Fwd buying Financial liability interest US$ 459,422 US$ 459,422 $ 1,785.97 06-Feb-12 Fwd buying Financial liability interest US$ 369,535 US$ 369,535 $ 1,789.94 19-Apr-12 Financial liability principal Fwd buying and interest US$ 10,000,000 US$ 10,065,261 $ 1,805.30 02-Feb-12 Financial liability principal Fwd buying and interest US$ 19,000,000 US$ 10,061,380 $ 1,815.28 02-Feb-12 Financial liability principal Fwd buying and interest US$ 29,000,000 US$ 20,035,473 $ 1,817.49 07-Mar-12 Fwd buying Financial liability interest US$ 135,981 US$ 135,981 $ 1,816.13 10-Feb-12 Financial liability principal Fwd buying and interest US$ 25,000,000 US$ 25,242,917 $ 1,829.32 07-Mar-12 Financial liability principal Fwd buying and interest US$ 47,000,000 US$ 47,500,924 $ 1,805.10 07-Jun-12 Fwd buying Financial liability interest US$ 121,581 US$ 121,581 $ 1,773.19 20-Jan-12 Fwd buying Financial liability interest US$ 120,259 US$ 120,259 $ 1,780.96 20-Apr-12 Financial liability principal Fwd buying and interest US$ 25,000,000 US$ 25,108,365 $ 1,787.17 12-Jul-12 Fwd buying Financial liability interest US$ 97,424 US$ 97,424 $ 1,780.22 26-Jan-12 Fwd buying Financial liability interest US$ 96,365 US$ 96,365 $ 1,788.59 26-Apr-12 Financial liability principal Fwd buying and interest US$ 21,000,000 US$ 21,087,893 $ 1,795.75 18-Jul-12 Fwd buying Financial liability principal US$ 20,000,000 US$ 20,000,000 $ 1,794.94 27-Jan-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,832.55 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,833.40 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,827.32 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,829.86 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,829.36 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,824.64 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,826.35 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,822.96 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,824.32 27-Jul-12 Fwd buying Financial liability principal US$ 10,000,000 US$ 10,000,000 $ 1,816.55 27-Jul-12 Fwd buying Financial liability principal US$ 10,000,000 US$ 10,000,000 $ 1,807.50 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,808.48 27-Jul-12 Fwd buying Financial liability principal US$ 1,500,000 US$ 1,500,000 $ 1,808.30 27-Jul-12 Fwd buying Financial liability principal US$ 3,500,000 US$ 3,500,000 $ 1,808.42 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,798.02 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,783.32 27-Jan-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,783.81 27-Jan-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,783.50 27-Jan-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,812.56 27-Jul-12

F-37 )RUZDUGDUUDQJHPHQWV Type Underlying Underlying Forward amount Forward Maturity amount (US$) rate Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,811.25 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,820.46 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,818.13 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,795.85 27-Jan-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,796.28 27-Jan-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,815.18 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,814.47 27-Jul-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,793.50 27-Jan-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,792.90 27-Jan-12 Fwd buying Financial liability principal US$ 5,000,000 US$ 5,000,000 $ 1,792.50 27-Jan-12 Financial liability principal Fwd buying and interest US$ 16,000,000 US$ 16,265,782 $ 1,842.87 12-Mar-12 Financial liability principal Fwd buying and interest US$ 13,000,000 US$ 13,124,573 $ 1,906.91 22-Mar-12 Financial liability principal Fwd buying and interest US$ 17,000,000 US$ 17,155,354 $ 1,907.39 26-Mar-12 Fwd buying Financial liability interest US$ 186,155 US$ 186,155 $ 1,788.95 29-Mar-12 Financial liability principal Fwd buying and interest US$ 25,184,109 US$ 25,184,109 $ 1,798.74 27-Jun-12 Financial liability principal Fwd buying and interest US$ 3,860,037 US$ 3,860,037 $ 1,785.73 13-Feb-12 Fwd buying Financial liability interest US$ 36,725 US$ 36,725 $ 1,794.41 17-Feb-12 Fwd buying Financial liability interest US$ 35,927 US$ 35,927 $ 1,804.28 17-May-12 Financial liability principal Fwd buying and interest US$ 3,533,532 US$ 3,533,532 $ 1,813.54 09-Aug-12 Financial liability principal Fwd buying and interest US$ 4,976,684 US$ 4,976,684 $ 1,814.40 21-Feb-12 Fwd buying Financial liability interest US$ 65,225 US$ 65,225 $ 1,908.25 11-Jan-12 Fwd buying Financial liability interest US$ 62,462 US$ 62,462 $ 1,919.57 11-Apr-12 Fwd buying Financial liability interest US$ 62,462 US$ 62,462 $ 1,930.95 11-Jul-12 Financial liability principal Fwd buying and interest US$ 4,039,628 US$ 4,039,628 $ 1,875.58 23-Apr-12 Financial liability principal Fwd buying and interest US$ 10,095,173 US$ 10,095,173 $ 1,938.67 10-Jan-12 Financial liability principal Fwd buying and interest US$ 3,815,028 US$ 3,815,028 $ 1,938.67 10-Jan-12

2SWLRQDUUDQJHPHQWV Type Underlying Underlying amount US$ collar Strike put Strike call Maturity US$ amount Export collar Future cash flow US$ 500,000 US$ 500,000 $ 1,900.00 $ 2,020.00 20-Jan-12 Export collar Future cash flow US$ 500,000 US$ 500,000 $ 1,900.00 $ 2,020.00 21-Feb-12

6ZDSDUUDQJHPHQWV Underlying amount Underlying Swap amount Swap Type Underlying COP$ or US$ rate COP$ o US$ rate Maturity Currency Account payable US$85,800,000 4.90% PV $ 163,869 CPI + 5.354% 08-Aug-16 swap

F-38 Currency Bonds 2017 $432, 922 CPI + 3.17% US$240,000,000 Libor + 1.78% 23-Nov-17 swap

)RUZDUGDUUDQJHPHQWV Type Underlying Underlying Forward amount Forward Maturity Amount (US$) rate Fwd buying Financial liability US$30,000,000 US$30,278,812 $ 1,792.74 05-Apr-11 Fwd buying Financial liability US$20,000,000 US$20,198,130 $ 1,835.64 13-Apr-11 Fwd buying Financial liability US$39,000,000 US$39,418,945 $ 1,836.99 27-Apr-11 Fwd buying Financial liability US$20,000,000 US$20,095,327 $ 1,854.57 08-Feb-11 Fwd sale TDC dollars US$12,500,000 US$12,500,000 $ 1,910.52 24-Jan-11 Fwd buying Financial liability US$25,500,000 US$25,737,666 $ 1,809.69 13-Apr-11 Fwd buying Financial liability US$16,800,000 US$16,857,747 $ 1,788.08 12-Jan-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,926.28 25- Jan -11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,926.48 25-Feb-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,907.12 25-Feb-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,930.35 25-Mar-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,913.99 25-Mar-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,932.81 25-Apr-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,921.62 25-Apr-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,935.14 25-May-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,927.58 25-May-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,937.17 25-Jun-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,932.68 25-Jun-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,939.15 25-Jul-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,934.06 25-Jul-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,941.23 25-Aug-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,934.64 25-Aug-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,942.81 25-Sep-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,935.23 25-Sep-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,944.03 25-Oct-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,935.47 25-Oct-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,945.42 25-Nov-11 Fwd buying Future cash flow US$500,000 US$500,000 $ 1,939.39 25-Nov-11

Currency swap arrangements are made to balance the exchange exposure of the Company, taking advantage of what the Administration considers favorable market conditions.

Forward and option arrangements are made to cover the risk of fluctuation in exchange rates applicable to liabilities in dollars, temporary investments and export/import transactions. These instruments are valued reasonably, taking into consideration market curves on the valuation date (see policy on derivative financial instruments).

F-39 (6) In 2012, the decrease is mainly due to the transfer of employee loans of staff that was moved to Grupo Argos S.A. after the spin-off and the strengthening of the company.

(7) The most significant variation can be seen in 2012 and it is the result of inferior dividends to be paid, due to the spin-off through which 100% of the investment Cementos Argos S.A. had in Nutresa S.A. was transferred to Grupo Argos S.A., as well as 2% of its participation in Bancolombia S.A. and 14.71% of its participation in Grupo de Inversiones Suramericana S.A.

(8) The account includes:

2012 2011 2010 Advance payment of income tax 29,145 723 1,815 Advance payment of industry and trade tax 1,826 1,554 1,405 Retention tax 3,628 11,372 2,987 Withheld sales tax 28 0 53 Industry and trade tax 9,705 9,537 6,593 Excess in private liquidation 125,338 89,143 115,844 Contributions 11 1111 Deductible taxes 8,424 9,090 9,494 Others 332 257 299

The variation in 2012 in mainly due to the increase of excess of private liquidation in Cementos Argos S.A. for $26,994, Concretos Argos S.A. for $11,726, Zona Franca Argos S.A.S. for $3,533 and to advance tax payments in Cementos Panamá S.A. for $27,564. Other factors were decreases in Corporaciones e Inversiones del Mar Caribe S.A.S. of $6,315 for advance tax payments and the effect of the spin-off to Grupo Argos S.A. of Carbones del Caribe S.A.S.

The provision for the protection of receivables changed as follows:

2012 2011 2010 Opening balance 28,501 27,505 52,573 Provision for the year 8,497 5,243 4,165 Penalties (1,072) (4,247) (29,233) Closing balance 35,926 28,501 27,505

On December 31, 2011 Southern Star Concrete’s accounts receivable and inventories were granted as collateral to Wells Fargo Facility to guarantee each of the Company’s revolving credit lines. The credit lines were approved for US$30,000,000, of which US$65,327 had been disbursed up until December 2011 and US$76,343 up until December 2010. For 2012, Southern Star Concrete cancelled the revolving credit lines with Wells Fargo Facility. Therefore, its accounts receivable and inventories are no longer pledged as collateral.

Long term debtor maturities on December 31 are as follows:

F-40

2012 2011 2010 2012 - 6,903 2013 - 10,150 14,582 2014 8,650 21,441 1,812 2015 5,735 2,664 1,097 2016 6,587 1,613 13,836 2017 4,027 17,947 2018 and after 14,719 39,718 53,815 38,230

Interest rates applicable on long term accounts receivable are: for employee loans, between 0% and 14.41% A.E. in 2012, between 0% and 20% A.E. in 2011, between 1.98% and 14.41% A.E. in 2010, and for loans to related parties, 4.98% A.E. (3.47% and 4.11% A.E. for 2011 and 2010 respectively).

Overdue accounts receivable from customers on December 31 amounted to $60,115 in 2012, $169,090 in 2011, and $115,336 in 2010. Uncollectible accounts overdue more than one year amounted to $743 in 2012, $874 in 2011, and $627 in 2010.

NOTE 7 – INVENTORIES, NET

Inventories at December 31st were comprised of:

2012 2011 2010 Finished products 76,709 61,705 56,418 Products in progress (1) 64,397 33,405 21,801 Raw and direct materials (2) 83,931 143,617 78,835 Materials, spare parts, and accessories 101,754 94,552 97,930 Inventories in transit 11,842 11,596 9,462 Goods for sale - 11,042 13,482 Lands - 9,681 9,594 Finished products not manufactured by 11,399 10,924 the company 13,017 Urban planning projects (3) - 30,472 20,466 Others 18,719 14,893 14,735 368,751 421,887 335,740 Less – provision for the protection of inventories (13,372) (7,024) (6,853) Long-term portion (4) - (38,237) (39,412) 355,379 376,626 289,475

F-41 (1) Mainly corresponds to Cementos Argos S.A. for $13,098 (2011 - $13,897), Cementos Panamá S.A. for $20,985 (2011 - $17,860) and Argos Cement LLC for $28,114. In 2011, the increase is mainly due to the new companies, Argos Cement LLC and Argos Ready Mix, in the US.

(2) The variations correspond to the process of valuation of the assets acquired from Lafarge.

(3) In 2011, the account mainly corresponds to the projects Portal de Genovés for $8,747, Miramar stage IV for $9,484, C.I.C. for $6,601 and Clúster Institucional for $5,841, among others. For 2012, the variation stems from the spin-off of the inventories of urban planning projects, real estate for sale, and plots for residential purposes, subsequently absorbed by Grupo Argos S.A.

(4) Correspond to plots for residential purposes.

The following changes occurred in the provision for the protection of inventories:

2012 2011 2010

Opening balance 7,024 6,853 5,574

Provision for the year 1,768 2,138 7,798 Charge off balance 8,369 - - Penalties (3,789) (1,967) (6,519) Closing balance 13,372 7,024 6,853

NOTE 8 – PERMANENT INVESTMENTS, NET

Permanent investments at December 31 included:

F-42 CEMENTOS ARGOS S.A. - CONSOLIDATED PERMANENT INVESTMENT NOTE

Main place Economic Outstanding No. of Interest Share Adjusted Commercial Valuation 2012 of Business Activity Valuation Shares Shares held Class Costs Value Provision (loss of value)

A. SHARES

Bancolombia S.A. Medellín Financial intermediation B 509.704.584 20.437.148 4,01% O 61.414 613.115 - 551.701 Cartón de Colombia S.A. Cali Cardboard manufacturing B 107.716.050 2.308.930 2,14% O 5.089 13.617 - 8.528 Carvajal Pulpa y Papel S.A. Cali Paper manufacturing I 596.630.268 116.767 0,02% O 3 584 - 581 Cementos de Caldas S.A. Manizales Cement manufacturing I 50.666.501 20.179.195 39,83% O 3.027 3.158 - 131 Cera Tech Inc EE.UU. Ecological cement manufacturing I 1.069.519 100.000 9,35% O 272 242 30 - Cera Tech USA EE.UU. Ecological cement manufacturing I 27.500.000 7.500.000 27,27% O 40 568 - 528 Compañía Colombiana de Empaques Bates S.A. Palmira Packaging manufacturing I 54.607 3.503 6,41% O 49 7.390 - 7.341 Concesiones Urbanas S.A. Bogotá Civil works I 24.554.726 8.186.537 33,34% O 6.362 9.636 - 3.274 Corporación de Cemento Andino C.A. Venezuela Cement manufacturing I 37.697.288 37.580.426 99,69% O 38.687 - 38.687 - Fundiciones Colombia S.A. Medellín Forge manufacturing I 2.496.845.128 38.543.456 1,54% O 278 11 267 - Grupo de Inversiones Suramericana S.A. Medellín Investments B 469.037.260 28.183.262 6,01% O 39.384 1.070.964 - 1.031.580 Hipódromo Los Comuneros S.A. Guarne Horse racing I 3.199.388 16.870 0,53% O 12 - 12 - Industrial Hullera S.A. Medellín Coal explotation I 6.474.711 2.426.054 37,47% O 154 (1) 155 - Intership Agency Venezuela Venezuela Maritime representation I - - 100,00% O 18 - 18 - Occidental de Empaques S.A. Medellín Packaging manufacturing I 2.160.000 4.500 0,21% O 10 91 - 81 Omya Colombia S.A. Guarne Manufacturing of non-metalic minerals I 12.690.910 6.345.455 50,00% O 11.554 39.438 - 27.884 Papeles y Cartones S.A. Barbosa Paper manufacturing I 11.424.044.960 1.112.158 0,01% O 1 15 - 14 Sociedad de Transporte Férreo del Occidente S.A. Cali Railway services I 2.450.625 72.294 2,95% O 331 - 331 - Surandina de Puertos C.A. Venezuela Port services I 515 500 97,09% O 4.494 3.254 1.241 - Triple A S.A. E.S.P. Barranquilla Public utilities services I 73.485.384 13.700 0,02% O 62 30 - -32 Other 4.422 (943) 5.753 388

B. CAPITAL QUOTAS Distribuidora Colombiana de Cementos Ltda. (1) Barranquilla Marketing I 200.000 200.000 100,00% O 3.674 4.820 - 1.146 Servigranel Barranquilla Marketing I - - 0,00% O 37 - 37 - Transmarítima del Caribe Ltda. (1) Barranquilla Shipping I 50 34 68,00% O 53 - 53 - Transportes Elman Ltda. (1) Barranquilla Land, river and sea transport I 800.000 389.437 48,68% O 1.595 3.457 20 1.882 Other 34 4 30 -

TOTAL SHARES AND QUOTAS 181.056 1.769.449 46.634 1.635.027

C. BONDS AND SECURITIES 587 587

D. OTHER INVESTMENTS 10.103 10.426 17 340 Less - Provision for protection of investments (46.651) 145.095 1.780.462 46.651 1.635.367

F-43 Main place Economic Outstanding No. of Interest Share Adjusted Commercial Valuation 2011 of Business Activity Valuation Shares Shares held Class Costs Value Provision (loss of value)

A. SHARES

Aeropuerto de Barranquilla S.A. Barranquilla Air transportation I 338.000.000 16.000.000 4,73% O 40 177 - 137 Bancolombia S.A. Medellín Financial intermediation B 509.704.584 39.916.932 7,83% O 119.950 1.136.834 - 1.016.884 Cartón de Colombia S.A. Cali Cardboard manufacturing B 107.716.050 2.308.930 2,14% O 5.088 28.960 - 23.872 Cementos de Caldas S.A. Manizales Cement manufacturing I 50.666.501 20.179.195 39,83% O 3.027 3.180 - 153 Cera Tech Inc EE.UU. Ecological cement manufacturing I 1.069.519 100.000 9,35% O 299 - 299 - Compañía Colombiana de Empaques Bates S.A. Palmira Packaging manufacturing I 54.607 3.503 6,41% O 49 7.203 - 7.154 Concesiones Urbanas S.A. Bogotá Civil works I 1.554.726 518.346 33,34% O 6.362 9.516 - 3.154 Corporación de Cemento Andino C.A. Venezuela Cement manufacturing I 37.697.288 37.580.426 99,69% O 39.191 - 39.191 - Fondo Regional Garantias del Caribe Colombiano S.A. Barranquilla Financial intermediation I 68.359 2.730 3,99% O 40 207 - 167 Fundiciones Colombia S.A. Medellín Forge manufacturing I 2.496.845.128 38.543.456 1,54% O 278 11 267 - Grupo de Inversiones Suramericana S.A. Medellín Investments B 469.037.260 97.183.662 20,72% O 120.659 3.007.265 - 2.886.606 Grupo Nutresa S.A. Medellín Candy manufacturing B 460.123.458 24.940.650 5,42% O 15.444 543.706 - 528.262 Hipódromo Los Comuneros S.A. Guarne Horse racing I 3.199.388 16.870 0,53% O 12 - 12 - Industrial Hullera S.A. Medellín Coal explotation I 6.474.711 2.426.054 37,47% O 155 - 155 - Inmobiliaria Incem Panamá Real state I 2.195.056 281.143 12,81% O 194 194 - - Intership Agency Venezuela Venezuela Maritime representation I - - 100,00% O 19 - 19 - Occidental de Empaques S.A. Medellín Packaging manufacturing I 2.160.000 4.500 0,21% O 10 85 - 75 Omya Colombia S.A. Guarne Manufacturing of non-metalic minerals I 12.690.910 6.345.455 50,00% O 11.554 32.391 - 20.837 Papeles y Cartones S.A. Barbosa Paper manufacturing I 11.426.975.914 1.112.158 0,01% O 1 13 - 12 Propal S.A. Cali Paper manufacturing I 596.630.268 116.767 0,02% O 2 165 - 163 Propuerto S.A. Barranquilla Port services I 1.144.907 128.965 11,26% O 1.150 1.339 4 193 Sociedad Administradora Portuaria Puerto Berrio S.A. Barranquilla Port services I 16.760 2.625 15,66% O 70 - 70 - Sociedad de Transporte Férreo del Occidente S.A. Cali Railway services I 2.450.625 72.294 2,95% O 331 - 331 - Sociedad Portuaria Bocas de Ceniza S.A. Barranquilla Port services I 18.075.480 403.130 2,23% O 484 406 78 - Sociedad Portuaria de Barrancabermeja S.A. Barranquilla Port services I 52.714 1.000 1,90% O 17 23 - 6 Sociedad Portuaria de Tamalameque S.A. Barranquilla Port services I 50 3 6,00% O 4 - 4 - Sociedad Portuaria Regional de Barranquilla S.A Barranquilla Port services I 2.799.646 12.771 0,46% O 31 147 - 116 Sociedad Portuaria Río Grande S.A. Barranquilla Port services I 2.799.646 12.771 0,46% O 31 266 - 235 Sociedad Promotora Puerto Industrial Aguadulce S.A. Buenaventura Port services I 8.742.710 4.390 0,05% O 103 40 63 - Surandina de Puertos C.A. Venezuela Port services I 515 500 97,09% O 4.938 3.574 1.364 - Triple A S.A. E.S.P. Barranquilla Public utilities services I 73.445.177 82.214 0,11% O 350 221 129 - Other 4.256 (2.685) 6.975 34

B. CAPITAL QUOTAS Distribuidora Colombiana de Cementos Ltda. (1) Barranquilla Marketing I 200.000 200.000 100,00% O 3.674 4.249 - 575 Servigranel Barranquilla Marketing I - - - O 37 - 37 - Transmarítima del Caribe Ltda. (1) Barranquilla Shipping I 50 34 68,00% O 53 - 53 - Transportes Elman Ltda. (1) Barranquilla Land, river and sea transport I 800.000 389.437 48,68% O 1.594 3.472 - 1.878 Other 35 35 -

TOTAL SHARES AND QUOTAS 339.532 4.780.994 49.051 4.490.513

C. BONDS AND SECURITIES 667 667

D. OTHER INVESTMENTS 8.372 8.595 63 286 Less - Provision for protection of investments (49.114) 299.457 4.790.256 49.114 4.490.799

F-44

Main place Economic Outstanding No. of Interest Share Adjusted Commercial Valuation 2010 of Business Activity Valuation Shares Shares held Class Costs Value Provision (loss of value)

A. SHARES

Aeropuerto de Barranquilla S.A. Barranquilla Air transportation I 338.000.000 16.000.000 4,73% O 40 203 - 163 Bancolombia S.A. Medellín Financial intermediation B 509.704.584 37.979.964 7,45% O 114.340 1.120.409 - 1.006.069 Cartón de Colombia S.A. Cali Cardboard manufacturing B 107.716.050 3.117.675 2,89% O 6.871 42.048 - 35.177 Cementos de Caldas S.A. Manizales Cement manufacturing I 50.666.501 20.179.195 39,83% O 3.027 3.289 - 262 Companie de Distribution de Ciment S.A. Haití freight transport I 200 200 100,00% O 181 181 - - Compañía Colombiana de Empaques Bates S.A. Palmira Packaging manufacturing I 54.607 3.503 6,41% O 49 8.952 - 8.903 Concesiones Urbanas S.A. Bogotá Civil works I 1.554.726 518.345 33,34% O 6.361 8.840 - 2.479 Corporación de Cemento Andino C.A. Venezuela Cement manufacturing I 37.697.288 37.580.426 99,69% O 39.108 - 39.108 - Emcarbón S.A. Medellín Coal explotation I 65.322 65.196 99,81% O 70.350 44.339 25.926 (85) Fondo Regional de Garantías de la Costa Atlántica Barranquilla Financial intermediation I 68.359 2.730 3,99% O 40 178 - 138 Fundiciones Colombia S.A. Medellín Forge manufacturing I 2.496.845.128 38.543.456 1,54% O 278 21 257 - Grupo de Inversiones Suramericana S.A. Medellín Investments B 469.037.260 114.590.115 24,43% O 111.511 4.246.219 - 4.134.708 Grupo Nacional de Chocolates S.A. Medellín Candy manufacturing B 435.123.458 24.940.650 5,73% O 15.444 675.892 - 660.448 Hipódromo Los Comuneros S.A. Guarne Horse racing I 3.199.388 16.870 0,53% O 12 - - (12) Industrial Hullera S.A. Medellín Coal explotation I 6.474.711 2.426.054 37,47% O 155 - 155 - Inmobiliaria Incem Panamá Real state I 2.196.430 281.143 12,80% O 191 191 - - Intership Agency Venezuela Venezuela Maritime representation I - - 100,00% O 19 - 19 - Occidental de Empaques S.A. Medellín Packaging manufacturing I 2.160.000 4.500 0,21% O 10 83 - 73 Omya Andina S.A. Guarne Manufacturing of non-metalic minerals I 12.690.910 6.345.455 50,00% O 11.554 32.214 - 20.660 Papeles y Cartones S.A. Barbosa Paper manufacturing I 11.426.975.951 1.112.158 0,01% O 1 13 - 12 Propal S.A. Cali Paper manufacturing I 150.826.378 116.767 0,08% O 2 144 - 142 Propuerto S.A. Barranquilla Port services I 1.145.337 128.965 11,26% O 1.151 - 1.147 (4) Sociedad Administradora Portuaria Puerto Berrio S.A. Barranquilla Port services I 16.667 2.625 15,75% O 70 - - (70) Sociedad Portuaria de Barrancabermeja S.A. Barranquilla Port services I 52.714 1.000 1,90% O 15 11 - (4) Sociedad Portuaria Bocas de Ceniza S.A. Barranquilla Port services I 16.198.079 403.130 2,49% O 484 403 - (81) Sociedad Portuaria La Inmaculada S.A. (2) Barranquilla Port services I 40.000 40.000 100,00% O 56 38 2 (16) Sociedad Portuaria Las Flores S.A. (2) Barranquilla Port services I 50.000 50.000 100,00% O 61 48 1 (11) Sociedad Portuaria Regional de Barranquilla S.A Barranquilla Port services I 2.799.646 12.771 0,46% O 63 370 - 307 Sociedad Portuaria de Tamalameque S.A. Barranquilla Port services I 50 3 6,00% O 4 - 4 - Sociedad Promotora Puerto Industrial Aguadulce S.A. Buenaventura Port services I 8.742.710 4.390 0,05% O 103 47 - (56) Surandina de Puertos C.A. Venezuela Port services I 250.000 250.000 100,00% O 4.865 3.509 - (1.356) Sociedad de Transporte Férreo del Occidente S.A. Cali Railway services I 2.450.625 72.294 2,95% O 331 - 331 - Triple A S.A. E.S.P. Barranquilla Public utilities services I 73.445.177 82.214 0,11% O 350 213 - (137) Other 4.134 - 4.144 10

B. CAPITAL QUOTAS Compañía de Navegación del Mar Caribe Ltda. (1) Barranquilla Maritime freigth transport I 61.169 50.334 82,29% O 10 - 10 - Distribuidora Colombiana de Cementos Ltda. (1) Barranquilla Marketing I 200.000 200.000 100,00% O 3.674 4.861 - 1.187 Distribuidora de Cementos Ltda. (1) Medellín Marketing I 50.000 50.000 100,00% O 1.914 1.196 764 46 Servigranel Barranquilla Marketing I - - - O 37 - 37 - Transportadora Sucre Ltda. (1) Barranquilla Freight transport I 100 40 40,00% O 75 75 - - Transportes Elman Ltda. (1) Barranquilla Land, river and sea transport I 800.000 389.148 48,64% O 1.592 3.899 - 2.306 Transmarítima del Caribe Ltda. (1) Barranquilla Maritime freigth transport I 50 34 68,00% O 53 - 53 - Other 34 34 - -

TOTAL SHARES AND QUOTAS 398.620 6.197.920 71.958 5.871.258

C. BONDS AND SECURITIES 1.974 1.974

D. OTHER INVESTMENTS 13.502 88.031 2.030 76.559 Less - Provision for protection of investments (73.988) 340.108 6.287.925 73.988 5.947.817

Valuation I: Intrínsic B: Listed value

Class of shares O: Ordinary P: Preferred

(1) Companies under liquidation (2) Companies in preoperating stage

F-45 The following investments are pledged as collateral for credit lines:

In 2012, to Bancolombia:

Company No. of shares Bank Amount

Grupo de Inversiones Suramericana S.A. 5,200,000 Bancolombia 197,600 197.600

In 2011, to Bancolombia and HSBC New York:

Company No. of shares Bank Amount

Carbones del Caribe S.A.S. 50,000 Bancolombia 324 Grupo Nutresa S.A. 10,824,072 Bancolombia 235,964 Grupo de Inversiones Suramericana S.A. 16,800,000 HSBC New York 516,260 Grupo de Inversiones Suramericana S.A. 5,000,000 Bancolombia 161,720 914,268 In 2010, to Bancolombia:

Company No. of shares Bank Amount

Carbones del Caribe S.A.S. 661,000 Bancolombia 11,182 Grupo de Inversiones Suramericana S.A. 5,200,000 Bancolombia 194,896 Grupo Nutresa S.A. 2,706,018 Bancolombia 73,333 279,411

NOTE 9 – PROPERTY, PLANT, AND EQUIPMENT

The balance of property, plant, and equipment at December 31 includes:

ADJUSTED ACCUMULATED NET REVALUATION 2012 COST DEPRECIATION COST APPRAISAL REVALUATION METHOD

Land 371,223 - 371,223 1,051,318 680,095 Comparative Constructions in progress 111,326 - 111,326 111,326 - Cost Constructions and buildings 771,842 264,837 507,005 676,626 169,621 Comparative/cost Machinery and production equipment 3,647,643 1,785,417 1,862,226 2,722,567 860,341 Revenue capitalization Office furniture and equipment, computing and communication equipment 72,848 47,829 25,019 32,515 7,496 Cost Mines, quarries, and mineral deposits 517,873 103,817 414,056 606,235 192,179 Rental Ground transportation equipment 463,331 279,720 183,611 207,177 23,566 Revenue capitalization River fleet 73,620 33,068 40,552 41,388 836 Revenue capitalization Communication channels 177,490 16,568 160,922 163,635 2,713 Comparative/cost Agricultural plantations 12,890 1,564 11,326 12,183 857 Machinery and equipment being assembled 97,880 - 97,880 97,880 - Revenue capitalization Property, plant, and equipment in transit 3,232 - 3,232 3,232 - Cost Other assets 11,106 2,584 8,522 9,436 914 Cost Subtotal 6,332,304 2,535,404 3,796,900 5,735,518 1,938,618 Less provision for protection against impairment - - (17,581) - - TOTAL 6,332,304 2,535,404 3,779,319 5,735,518 1,938,618

ADJUSTED ACCUMULATED NET REVALUATION 2011 COST DEPRECIATION COST APPRAISAL REVALUATION METHOD

F-46 Land 906,183 - 906,183 4,265,633 3,359,450 Comparative Construction in progress 108,717 - 108,717 108,717 - Cost Construction and buildings 766,518 240,598 525,920 701,390 175,470 Comparative/cost Machinery and production equipment 3,858,139 1,651,574 2,206,565 3,082,376 875,811 Revenue capitalization Office furniture and equipment, computing and communication equipment 57,294 42,399 14,895 22,872 7,977 Cost Mines, quarries, and mineral deposits 122,026 101,081 20,945 263,617 242,672 Rental Ground transportation equipment 417,729 245,341 172,388 197,194 24,806 Revenue capitalization River fleet 81,324 29,830 51,494 52,576 1,082 Revenue capitalization Communication channels 155,201 14,545 140,656 143,894 3,238 Comparative/cost Agricultural plantations 10,394 1,516 8,878 9,735 857 Machinery and equipment being assembled 34,589 - 34,589 34,589 - Revenue capitalization Property, plant, and equipment in transit 5,529 - 5,529 5,529 - Cost Other assets 6,202 1,123 5,079 7,659 2,580 Cost Subtotal 6,529,845 2,328,007 4,201,838 8,895,781 4,693,943 Less provision for protection against impairment - - (24,701) - - TOTAL 6,529,845 2,328,007 4,177,137 8,895,781 4,693,943

ADJUSTED ACCUMULATED NET REVALUATION 2010 COST DEPRECIATION COST APPRAISAL REVALUATION METHOD

Land 399,730 - 399,730 1,660,875 1,261,145 Comparative Construction in progress 28,890 - 28,890 28,890 - Cost Construction and buildings 531,219 214,247 316,972 508,792 191,820 Comparative/cost Machinery and production equipment 3,137,066 1,588,818 1,548,248 2,402,211 853,963 Revenue capitalization Office furniture and equipment, computing and communication equipment 51,582 35,215 16,367 19,292 2,925 Cost Mines, quarries, and mineral deposits 135,106 104,552 30,554 772,606 742,052 Rental Ground transportation equipment 441,933 213,218 228,715 256,993 28,278 Revenue capitalization River fleet 79,955 23,465 56,490 57,705 1,215 Revenue capitalization Communication channels 141,720 12,562 129,158 133,910 4,752 Comparative/cost Agricultural plantations 8,390 1,324 7,066 7,868 802 Machinery and equipment being assembled 120,983 - 120,983 120,983 - Revenue capitalization Property, plant, and equipment in transit 3,170 - 3,170 3,170 - Cost Other assets 3,223 1,500 1,723 3,493 1,770 Cost Subtotal 5,082,967 2,194,901 2,888,066 5,976,788 3,088,722 Less provision for protection against impairment - - (17,383) - - TOTAL 5,082,967 2,194,901 2,870,683 5,976,788 3,088,722

The decrease in properties, plant, and equipment in 2012 is mainly due to:

The assets spun-off by Cementos Argos S.A. for $40,006 and lands spun-off by Concretos Argos S.A. for $ 4,241 and by Corporaciones e Inversiones del Mar Caribe S.A.S. for $3,639. For this reason, the companies Inversiones Fortcorp S.A.S. and Inversiones Roundcorp S.A.S. were created respectively. These assets were absorbed by Grupo Argos S.A.

Asset retirements of the companies Carbones del Caribe S.A.S., Urbanizadora Villa Santos S.A.S., Sociedad Portuaria Golfo de Morrosquillo S.A., and Sociedad Portuaria Cementeras Asociadas S.A., as a result of the spin-off, that amounted to $47,222.

The finalization of the purchase price allocation for the acquisition of assets from Lafarge in September 2012.

The increase in property, plant and equipment mainly relates to subordinated Argos Cement LLC’s and Argos Ready Mix LLC’s assets in amount of $1,349,042, as part of the acquisition process from Lafarge.

F-47 The Company carried out technical appraisals of property, plant and equipment in 2011. Appraisal methods applied are explained in note 19.

Depreciation taken to income in 2012 was $312,404 (2011 - $269,813 and 2010 - $249,471).

Since 1994, the cement plant in Sogamoso, along with its lands, was given as collateral to guarantee financial liabilities of Acerías Paz del Río S.A., which on December 31, 2010 were comprised of first-ranking mortgages for US$8,365,573, a second-ranking mortgage for $659, and a second-ranking pledge for US$21,337,187. The Company is in the process of cancelling such liens given that the liabilities guaranteed thereunder have been fully paid.

NOTE 10 – DEFERRED CHARGES AND INTANGIBLE ASSETS

Deferred charges and intangible assets at December 31 were comprised of:

2012 2011 2010 Goodwill (1) 896,547 948,021 993,294 Trademarks (2) 139,866 166,038 265,775 Rights (3) 171,383 134,297 111,368 Concessions, franchises, and licenses (4) 279,849 288,263 262,008 Deferred assets, net (5) 154,397 170,999 160,229 Provisions (2,107) (2,107) (2,108) Accumulated amortization (264,446) (239,124) (156,085)

1,375,489 1,466,387 1,634,481

(1) Goodwill mainly arising from the acquisition of the US concrete companies Southern Star and Ready Mixed Concrete Co. in 2005 and 2006, respectively. In 2011, goodwill was generated in amount of $33,548 from the acquisition of Argos Ready Mix LLC’s assets from Lafarge. Purchased goodwill corresponding to the difference between the value paid and the fair value of the American companies acquired was recorded. Such recognition was made in accordance with accounting principles generally accepted in the United States of America, which are considered of higher hierarchy compared to the Colombian conceptual framework, since they relate to accounting principles applicable by developed economies. In compliance with these principles, the goodwill is not subject to amortization, but to impairment valuation, should signs of it exist. At the closing of 2012 and 2011 accounting periods, the goodwill was appraised by experts and impairment for 2011 set at $74,460 (2010 - $88,343)

The goodwill also relates to the higher amounts paid over the book value of the stock of:

Cemento Panamá S.A. in amount of $22,688; the intrinsic value in pesos was $218,190 per share to be amortized over 5 years using the straight line method.

F-48 Alexios N.V. in amount of $1,802; the intrinsic value in pesos was $88,198,366 per share at the time of acquisition. It is amortized over 4 years using the straight line method. The investment was acquired on February 16, 2010. The goodwill arising from the acquisition of interests in Carbones del Caribe S.A.S., Caricement Antilles NV, and Domar Ltd. in amount of $ 84,302 was fully amortized during 2011. Haití Cement Holding S.A. in amount of $975; the intrinsic value in pesos was $195,340 per share to be amortized over 12 months using the straight line method. The investment was acquired on August 13, 2009 and was fully amortized by September 2010.

Accounting standards generally accepted in the United States of America (USGAAP) and International Financial Reporting Standards (IFRS) include the concept of impairment which calls for the value of assets not to exceed the recovery value thereof. In other words, wherever situations that generate book value arise, whether due to adverse situations, changes in the operating environment, changes in the anticipated use of the assets, or a decrease in the operating results in the estimation of future discounted flows generated by a productive unit, and they exceed the fair value at which they might be recovered, either through use or sale, the assets are considered impaired, and such loss must be recognized in the Company’s financial statements. Colombian accounting standards, as set forth in Decree 2649 of 1993, do not contain specific regulations to estimate the impairment of assets. The effect of asset impairment is shown in the consolidated statement of income as “Asset Impairment” under the “Operating Income before Asset Impairment” and results from unusual or non-recurring events not related with the main business purpose of Argos USA Corp. and Caricement Antilles NV. The most significant item included in this entry relates to the goodwill and acquired customer databases, resulting in an accumulated impairment for these assets of $319,280 in 2011, which did not change in 2012. In 2011, it amounted to $74,460 for Argos USA Corp., whereas in 2010, it amounted to $79,292 for the latter and to $9,051 for Caricement Antilles NV.

(2) It relates to the valuation of acquired trademarks. The methodology applied for the valuation was based on the Discounted Cash Flow analysis: the Company value is the result of the operating cash that the company is capable of generating in a given period of time, discounted at a rate reflecting the risk arising from such flows. This methodology is supported on the return on the ownership of the trademark regarding these flows (contribution of the trademark to the business, both current and future):

Argos Trademark purchased from Grupo Argos S.A. (previously known as Inversiones Argos S.A.); the trademark valuation was carried out by Corporación Financiera Colcorp. The trademark was acquired in December 2005 and is amortized over 20 years. Its acquisition cost was $115,389 and it was adjusted for inflation by $5,274. In 2012, the trademark was not subject to change.

In 2012, the decrease corresponds to the process of revaluation of the assets acquired from Lafarge.

F-49

In 2011, as part of the periodical review of assets, a decision was made during the period not to continue using the UNO A and La Fortaleza trademarks, being 100% amortized for $ 96,799. These trademarks were acquired after they were assigned to Cementos Argos S.A. as part of the remaining assets of the liquidation of Cementos Apolo S.A. ad Cementos la Unión S.A.

(3) It includes the contributions made by the Company to Real Estate Trust Agreement 732-1359 managed by Fiduciaria Fiducorp S.A. for the forest reestablishment project in Carmen de Bolívar, for $29,699 (2011 - $26,130 and 2010 - $8,895). Also, contributions made during 2012 that amounted to $3,569 (2011 - $17,235 and 2010 - $5,608). Additionally, it includes an availability right acquired from Acerías Paz del Río in December 2008 for US$21,500,000 ($39,828), for at least 150,000 tons per year of slag produced by them, for a period of 15 years, which is renewable for an equal period. The net balance is $28,627 (2011 - $31,282 and 2010 - $33,934). And finally, contributions made to Fideicomiso Mercantil de Administración in Fiduciaria Corficolombiana S.A. for $42,761 since 2009.

It also includes the following assets acquired through financial leasing agreements under a monthly payment model:

2012

Agreement Original Balance Term Remaining Termination Asset number amount Dec 2012 (months) installments 124900 2,783 2,504 18-02-19 84 73 Bello Plant 143367 1,787 1,430 18-10-19 84 80 Rigid truck 143546 1,769 1,415 18-10-19 84 80 Rigid truck 141252 1,746 1,396 18-07-19 84 77 Truck 773G 136006 1,630 1,304 18-02-19 84 72 CAT 988H 133409 1,488 1,190 18-01-19 84 71 CAT D9T 128053 1,511 1,186 18-10-18 84 68 CAT 773 128226 1,471 1,143 18-09-18 84 67 CAT 773 Articulated 144532 1,416 1,133 18-11-19 84 81 truck 124854 1,308 1,002 18-08-18 84 66 CAT 730

2011

Agreement Original Balance Term Remaining Termination Asset number amount Dec 2011 (months) installments 109521 79 3 16-04-2012 24 4 Vehicles 124541 36 16 16-05-2012 12 5 Vehicles 120828 28 17 16-11-2012 21 11 Vehicles

F-50 134692 42 42 16-02-2013 14 14 Vehicles

2010

Agreement Original Balance Term Remaining Termination Asset number amount Dec 2010 (months) installments 85689 91 50 16-12-12 60 24 Vehicles 117984 32 32 16-03-12 15 15 Vehicles 106219 46 15 16-04-11 15 4 Vehicles 104892 61 30 16-12-11 25 12 Vehicles 109521 79 41 16-12-11 20 12 Vehicles

During 2012, in the Colombian companies, leasing arrangements recognized as operational leases were reviewed based on the concept established by the company in the previous years. As a result of this review, it was decided to adopt a conservative position, taking into account the essence of the operation, and to proceed to their registry as financial leases.

(4) In 2012, this mainly includes the partial concession of mining license 11378 for the extraction of lime, acquired in 2008 for US$41,256,757 ($95,524) from Acerías Paz del Río, whose balance is $73,047 (2011 - $78,667). In 2011, it includes port concession agreement No. 40 made by Cormagdalena and Cementos Argos S.A. for the amount of $6,311, which includes shores, lands, the main dock and the infrastructure detailed in the agreement, located in Barranquilla, Atlántico, Colombia, transferred to Sociedad Portuaria Golfo de Morrosquilllo S.A. (a company absorbed by Grupo Argos S.A.).

Furthermore, it includes mining concessions, among which are the mining licenses acquired from Villasanta S.A. for the amount of $1.500.

The main mining concessions are:

Contract Term Type of title Main mineral Municipality Department Value Status Start date numbers (years) Mining Barranquilla concession Limestone Extension 2952 and Puerto Atlántico Indefinite 07/03/1980 30 Decree Law and sand procedure Colombia 1275

Mining Limestone 3632 concession Toluviejo Sucre Indefinite Exploitation 06/10/1992 30 and clay law 2655 Mining Barranquilla 9334 concession Calcareous and Puerto Atlántico Indefinite Exploitation 04/02/1993 30 law 2655 Colombia Mining 18610 concession Limestone Turbaco Bolívar Indefinite Exploitation 04/02/1997 30 law 2655

F-51 Contract Term Type of title Main mineral Municipality Department Value Status Start date numbers (years) Mining 7609 concession Limestone Curití Santander Indefinite Exploitation 23/08/2004 30 law 2655 Mining Construction FD2 154 concession Saldaña Tolima Exploitation 02/12/2004 28 materials 5,356 Law 685 Mining IKS- Construction concession Saldaña Tolima Exploration 30/12/2009 29 11581 materials 10,000 Law 685

Exploitation 14672 Limestone San Luis Antioquia Indefinite Exploitation 24/07/2007 10 license 2655

Mining Extension 441xRío concession Limestone Sonsón Antioquia Indefinite and 22/11/1983 30 Claro decree 1275 conversion Mining 8648 concession Limestone Abejorral Antioquia Indefinite Exploitation 25/04/1990 30 Cairo Law 685 911-15 Contribution Monjas contract Limestone Firavitoba Boyacá Indefinite Exploitation 16/11/1994 20 Decree 2655 GSA- Contract 112 Quarried Province of District of EXTR 95- December Indefinite Exploitation 24/12/2006 10 stone Panamá Panamá 105 11, 1996 Concesió District of Contract 241 Caliche and Province of n Minera San Indefinite Exploitation 09/07/1996 75 July 9, 1996 pozzolane San Cristóbal "Najayo" Cristóbal

(5) Deferred charges at December 31 were mainly comprised of:

2012 2011 2010 Technology projects and other deferred charges (a) 93.518 67.922 57.298 Debit deferred income tax (b) 35.313 87.325 45.490 Software 18.514 9.68116.941 Improvements to third party’s properties 6.347 3.864 1.013 Research surveys 610 236 294 Organization and pre-operating expenses - 1.867 2.693 Licenses 17 2645 Mining development - - 18.455 Projects - -1.621

a) In 2012, this mainly includes the costs associated with the issuance of bonds for $11,616, technology projects in progress for $53,191, and the software licenses for $3,632. In software projects, the Synergy Project (software and adaptation)

F-52 and the Tulane project are included. The increase is mainly due to the costs for these: $47,670 for Synergy (2011 - $18,716) and $170 for Tulane (2011 - $556).

In 2011, this includes the costs associated with the issuance of 2007 and 2009 bonds for $13,826 and ongoing technology projects amounting to $23,487. In 2010, projects such as the transformation of the plant Cartagena TPC and the development of SAP for Cementos Panamá S.A, closed in stage I and II in 2011, stand out.

b) In 2012, this includes deferred taxes of Cementos Argos S.A. for $10,653 (2011 - $29,015). The variation corresponds mainly to the decrease in the following companies: Argos USA Corp. for $40,768, Corporaciones e Inversiones del Mar Caribe S.A.S. for $18,498, Cementos Argos S.A. for $18,361; and the increase in Argos Cement LLC for $12,966, Argos Ready Mix LLC for $9,405, Cementos Colón S.A. for $1,844, and Port Royal Cement Company LLC for $1,625. This originated mainly from derivative operations, estimated contingency liabilities, and deferred impairment. Furthermore, in the previously indicated figures of the operation in the United States, the effect of compliance with norm ASC (Accounting Standard Codification) 740 is recognized. This norm is related with tax provisions formally known as FAS (Financial Accounting Standard) 109, emitted by the US Financial Accounting Standard Board (FASB), where it states it is mandatory to recognize a provision for deferred tax valuation, known as Valuation Allowance, indicating that the devaluation of the active deferred tax over possible estimated fiscal losses that could not be compensated must be registered, based on a high probability of recovering the latter. In this case, it amounted to US$22.6 million. Even though this provision was applied using the conservatism principle as required by United States regulations, which demand a high safety level of recoverability, Cementos Argos S.A. feels that in the future, enough taxable revenues will be generated, which will allow the company to obtain the benefits of deferred tax associated with fiscal losses, which are allowed a period of 20 year to be compensated.

In 2011, there was an increase due to goodwill of Caricement y Cementos Colón.

NOTE 11 – FINANCIAL OBLIGATIONS

Financial liabilities at December 31 were comprised of:

2012 2011 2010 Bank overdraft 2,341 3,078 - Loans from domestic banks (1) 659,876 1,122,833 867,532 Loans from foreign banks (2) 298,118 807,620 426,908 Loans with financial corporations 5,636 7,091 - Letters of credit and loans from trade financing 24,269 125 251 companies (3) Other loans from third parties (4) 14,158 23,204 28,899 Other liabilities 18,627 25,189 58,759 1,023,025 1,989,140 1,382,349

F-53 Less non-current portion (369,717) (719,717) (700,167) 653,308 1,269,423 682,182

(1) The decrease corresponds mainly to the cancellation of obligations by Cementos Argos S.A., which were partly replaced by the placement of debt bonds.

Liabilities to domestic banks:

Original Company Concept 2012 2011 2010 currency Maturity

a) Long-term loans Bancolombia Long term loan 500 500 500 Pesos 19-Feb-13 Banco AV Villas Long term loan 25,000 25,000 - Pesos 10-Oct-13 Banco de Bogotá Long term loan 35,365 - - Dollars 31-Jan-13 Bancolombia Long term loan 50,000 50,000 50,000 Pesos 27-Dec-20 Banco Popular Long term loan 60,000 60,000 60,000 Pesos 14-May-13 Bancolombia Long term loan 100,000 300,000 300,000 Pesos 16-Sep-20 Davivienda Long term loan - 7,000 60,000 Pesos 18-Dec-12

b) Working capital loans Davivienda Working capital loan 4,421 - Dollars 04-Jan-13 Bancolombia Working capital loan 9,725 - - Dollars 02-Aug-13 Bancolombia Working capital loan 19,451 - - Dollars 03-May-13 BBVA Working capital loan 26,523 - - Dollars 29-Apr-13 Bancolombia Working capital loan 28,292 - - Dollars 30-Apr-13 Bancolombia Working capital loan 31,828 - - Dollars 25-Apr-13 Davivienda Working capital loan 44,206 - - Dollars 26-Jun-13 Bancolombia Working capital loan 54,815 - - Dollars 26-Apr-13 BBVA Working capital loan 61,888 - - Dollars 29-Apr-13 Banco de Bogotá Working capital loan 107,862 - - Dollars 30-Jan-13 Bancolombia Working capital loan - 6,799 - Dollars 10-Aug-12 BBVA Working capital loan - 7,382 - Dollars 13-Feb-12 Davivienda Working capital loan - 9,519 - Dollars 22-Feb-12 Banco de Bogotá Working capital loan - 19,427 - Dollars 03-Feb-12 Banco de Bogotá Working capital loan - 19,427 - Dollars 03-Feb-12 Bancolombia Working capital loan - 25,255 - Dollars 25-Mar-12 BBVA Working capital loan - 31,083 - Dollars 13-Mar-12 Banco de Bogotá Working capital loan - 33,026 - Dollars 27-Mar-12 Davivienda Working capital loan - 38,853 - Dollars 21-Mar-12 Banco de Bogotá Working capital loan - 38,854 - Dollars 08-Mar-12 Banco de Bogotá Working capital loan - 48,568 - Dollars 28-Jun-12 Davivienda Working capital loan - 48,568 - Dollars 08-Mar-12 Bancolombia Working capital loan - 48,568 - Dollars 13-Jul-12 Davivienda Working capital loan - 77,708 - Dollars 27-Apr-12 BBVA Working capital loan - 91,307 - Dollars 08-Jun-12

F-54 Original Company Concept 2012 2011 2010 currency Maturity Bancolombia Working capital loan - 135,989 - Dollars 19-Apr-12 Davivienda Working capital loan - - 28,709 Dollars 05-Apr-11 Banco de Bogotá Working capital loan - - 38,279 Dollars 13-Apr-11 Davivienda Working capital loan - - 74,646 Dollars 27-Apr-11 Bancolombia Working capital loan - - 38,280 Dollars 09-Feb-11 BBVA Working capital loan - - 95,699 Dollars 04-Feb-11 Santander Working capital loan - - 57,420 Dollars 19-Jan-11 Bancolombia Working capital loan - - 32,155 Dollars 12-Jan-11 Other Working capital loan - - 31,844 Pesos Total 659,876 1,122,833 867,532

(2) Liabilities to foreign banks:

Original Company Concept 2012 2011 2010 currency Maturity

a) Long-term loans UBS Long-term loan 7,9468,730 8,601 Dollars 05-Mar-13 Various Syndicated loan 44,20667,995 86,129 Dollars 18-May-15 Citibank PLC London ECA credit 183,017 232,010 258,662 Dollars 26-Jun-19 Citibank NA Long-term loan - 25,255 - Dollars 06-Nov-12

b) Working capital loan Mercantil Commercebank Working capital loan 1,768 - - Dollars 08-May-13 Mercantil Commercebank Working capital loan 3,360 - - Dollars 05-Jun-13 Mercantil Commercebank Working capital loan 3,536 - - Dollars 05-Mar-13 BCI Miami Branch Working capital loan 4,774 - - Dollars 15-Apr-13 BCI Miami Branch Working capital loan 5,305 - - Dollars 24-Feb-13 Mercantil Commercebank Working capital loan 5,305 - - Dollars 02-Apr-13 BCI Miami Branch Working capital loan 6,012 - - Dollars 29-Jan-13 Mercantil Commercebank Working capital loan 8,841 - - Dollars 21-Jan-13 BCI Miami Branch Working capital loan 24,048 - - Dollars 05-Mar-13 Helm Bank Panamá Working capital loan - 7,771 - Dollars 27-Feb-12 Citibank NA Working capital loan - 7,771 - Dollars 24-Apr-12 Citibank NA Working capital loan - 7,382 - Dollars 11-Jan-12 Citibank NA Working capital loan - 19,427 - Dollars 11-Jan-12 Citibank NA Working capital loan - 40,797 - Dollars 19-Jul-12 HSBC USA NA Working capital loan - 361,342 - Dollars 30-Jul-12 Banco General Working capital loan - 29,140 - Dollars 19-Apr-12 Bancafé Panamá Working capital loan - - 28,710 Dollars 05-Apr-11 Citibank NA Working capital loan - - 44,806 Dollars 13-Apr-11 Total 298,118 807,620 426,908

F-55 The long-term loan with Citibank PLC, which is endorsed by EKF (ECA from Denmark), with an original value of US$159,235,669, and whose debtors are Cementos Argos S.A., Zona Franca Argos S.A.S., and Argos USA Corp., is subject to the following financial covenants, in effect on December 31, 2012: a) Net Debt / EBITDA ratio + 12-month dividends less than 4 times b) EBITDA / Financial expense ratio higher than 1.5 times.

The loan endorsed by EKF has a term of 11.5 years, with biannual payments to principal as from December 2009 and maturity in June 2019.

The syndicated loan with Citibank Panama branch as administrative agent stipulates, among others, the following covenants regarding the financial statements of Cemento Panamá S.A and its subsidiaries:

A net debt / EBITDA ratio of less than 2.5 is to be maintained Coverage of debt service not less than 4.0 Total debt / shareholders’ equity ratio less than 1.3 The interest rate of Cemento Panamá’s syndicated loan is Libor + 1.5%. It expires in May 2015.

(3) The increase corresponds mainly to the reclassification of operational leases to financial leases in accordance with sentence C015 of 2013 of the Colombian Constitutional Court.

(4) This corresponds to liabilities stemming from the rent agreements for vessels, which under International Financial Reporting Standards (IFRS) are accountable as financial leases. If these operations had been undertaken within the country, they would have had to be recognized as rent, without presenting any liability.

At the closing of 2012, currency forward buying transactions were in place to convert dollar liabilities into pesos in a synthetic manner. The detail of these transactions is given in note 13.

On financial liabilities, bonds, securities and accounts payable, interests were accrued for the amount of $208,340 in 2012, $184,914 in 2011, and $177,917 in 2010.

In 2012, the credit line with Bancolombia S.A. was backed by permanent investments worth $197,600 (2011 - $914,268 and 2010 - $279,411), as mentioned in note 8. Long term financial liabilities outstanding at December 31, 2011 mature as follows:

Amount at maturity Year 2012 2011 2010 2012 26,091 2013 - 137,043 121,039 2014 67,190 76,218 48,821 2015 41,024 48,185 97,503 2016 and following 32,181 30,935 406,713 2017 and following 32,109 427,336

F-56 2018 and following 197,213 TOTAL 369,717 719,717 700,167

NOTE 12 - OUTSTANDING BONDS AND SECURITIES

Outstanding bonds issued on November 23, 2005 were comprised of the following on December 31 of each year:

2012

Term Amounts issued Effective rate Interest payment terms 10 years 80,000 CPI + 2.88% Half-yearly in arrears 12 years 290,000 CPI + 3.17% Half-yearly in arrears 12 years 150,000 CPI + 5.25% Half-yearly in arrears $520,000

2011

Term Amounts issued Effective rate Interest payment terms 7 years 80,000 CPI + 2.40% Half-yearly in arrears 10 years 80,000 CPI + 2.88% Half-yearly in arrears 12 years 290,000 CPI + 3.17% Half-yearly in arrears 12 years 150,000 CPI+5.25% Half-yearly in arrears $600,000

2010

Outstanding bonds issued on April 28, 2009 were comprised of the following on December 31 of each year:

2012

Term Amounts issued Effective rate Interest payment terms 5 years 81,175 9.70% A.E. Annually in arrears 7 years 114,943 CPI + 6.00% Quarterly in arrears 10 years 70,350 CPI + 6.30% Quarterly in arrears 15 years 229,530 CPI + 7.19% Quarterly in arrears $495,998

F-57

2011

Term Amounts issued Effective rate Interest payment terms 3 years 144,002 9.00% A.E. Quarterly in arrears 5 years 81,175 9.70% A.E. Annually in arrears 7 years 114,943 CPI + 6.00% Quarterly in arrears 10 years 70,350 CPI + 6.30% Quarterly in arrears 15 years 229,530 CPI + 7.19% Quarterly in arrears $640,000

2010

Outstanding bonds issued on April 11, 2012 were comprised of the following on December 31, 2012:

Term Amounts issued Effective rate Interest payment terms 1 ½ years 77,200 IBR* + 1.45% Monthly in arrears 2 years 111,400 DTF** + 1.34% Quarterly in arrears 2 years 111,400 DTF** + 1.45% Quarterly in arrears $300,000 * IBR (IndicadorBancariodeReferencia) is a Colombian short-term bank index reference ** DTF (DepósitoaTerminoFijo) is a base rate for fixed rate deposits over three months

Outstanding bonds issued on May 16, 2012 were comprised of the following on December 31, 2012:

Term Amounts issued Effective rate Interest payment terms 6 years 97,022 CPI + 3.80% Quarterly in arrears 10 years 299,896 CPI + 4.24% Quarterly in arrears 15 years 303,082 CPI + 4.50% Quarterly in arrears $700,000

F-58 All issuances have been rated AA+ by Fitch Ratings Colombia S.A. for 3 consecutive years (2010, 2011, and 2012) and are securities that are negotiable in the secondary market. Out of the total issue maturing in 2017 of securities (12-year term 2005 Argos bonds) amounting to $440,000, an amount of $433,320 was converted to US dollars (equivalent to US$240,000,000) through a currency swap at an average rate of Libor + 1.78% half- yearly in arrears (see notes 6 and 13).

The February 23, 2007 bond issued for the amount of $132,211 gave rise to a placement discount of $17,788 which is amortized over 12 years using the straight line method. On December 31, it showed the following balances:

2012 2011 2010 Total outstanding bonds 2,015,998 1,240,000 1,240,000 Less placement premium bonds (8,210) (9,852) (11,494) 2,007,788 1,230,148 1,228,506 Short-term ( 77,200) (224,002) - Long-term 1,930,588 1,006,146 1,228,506

At the year-end closing of December 2012, there were no security placements in effect. An Argos 2010 securities program was approved for up to $300,000, of which $199,030 was placed in 2011 and $250,000 in 2010. They are payable-to-order securities, negotiable in the secondary market, and comprised of the following trenches on December 31 of each year:

2011

Term Amounts issued Interest rate Interest payment terms 360 days 53,660 4.88% Period in arrears 337 days 145,370 IBR + 0.96% Month in arrears $199,030

2010

Term Amounts issued Interest rate Interest payment terms 363 days 150,000 4.61% PV* Period in arrears 363 days 100,000 4.80% PV* Period in arrears $250,000 *PV (PeriodoVencido) refers to the effective rate for the complete term of the agreement

F-59 The resources obtained from placement of issues were devoted 100% to finance working capital. For 2011 and 2010, the issues obtained the top short-term rating F1+ from the risk rating firm Fitch Ratings Colombia S.A.

Interests in amount of $141,213 were accrued on securities and ordinary bonds during 2012 (2011 - $105,005 and 2010 - $102,177).

The total cost of financial liabilities, including Argos’ bonds, securities, financial derivatives and loans during the three years was as follows: Average cost of financial liabilities in Colombian pesos: 7.74% A.E. in 2012, 6.68% A.E. in 2011, and 6.60% A.E. in 2010 Average cost of financial liabilities in US dollars: 2.28% A.E. in 2012, 1.99% A.E. in 2011, and 1.90% in 2010.

NOTE 13 – SUPPLIERS AND ACCOUNTS PAYABLE

Suppliers and accounts payable on December 31 for each year were comprised of:

2012 2011 2010 Costs and expenses payable 169,781 167,443 137,799 Domestic suppliers 136,815 172,731 108,103 Foreign suppliers 15,444 18,963 10,904 Dividends payable 49,317 46,321 47,778 Current commercial accounts (See note 27) 16,602 14,877 70,009 Accounts payable to contractors 5,542 5,136 6,468 Sundry accounts payable (1) 194,175 247,098 224,951 Tax withholdings payable 30,146 25,520 22,627 Installments payable 1,215 1,370 4,728 Other accounts payable (2) 17,599 30,010 4,232 636,636 729,469 637,599 Less – sundry long term accounts payable (75,857) (111,122) (136,850) 560,779 618,347 500,749

(1) It mainly reflects the valuation of the derivative operations for $20,277 (2011 - $33,902) and the balance payable of $101,143 arising from the acquisition of Cementos La Unión S.A. and Cementos Apolo S.A. under the following conditions:

Balance on December 31, 2012: US$57,200,000 (2011 - US$71,500,000 and 2010 - US$85,800,000).

Maturity: August 2016 Interest rate: 5% A.E. to be paid quarterly in arrears Amortization: 10 annual installments

F-60 Interests amounting to US$3,169,447 were accrued during 2012 (2011 - US$3,932,917 and 2010 - US$4,636,914). In 2012, 2011, and 2010, US$14,300,000 was repaid as principal. A currency swap was arranged on this account payable.

At the year closing, currency forward buying transactions were in place to convert dollar liabilities into pesos in a synthetic manner.

Below, operations with financial derivatives that generated a positive valuation on behalf of the counterpart (bank) at the year-end closing of each year are shown:

2012

Swap amount Underlying Underlying amount Underlying rate Swap rate Maturity COP$ Account US$ 57,200,000 4.90% PV $109,246 CPI + 5.35% 08-Aug-16 payable

a) Financial liabilities principal and interest

)RUZDUGDUUDQJHPHQWV Underlying Type Underlying Forward amount Forward rate Maturity amount Financial liability Fwd buying US$20,164,501 US$20,164,501 $ 1,832.79 30-Jan-13 principal and interest Financial liability Fwd buying US$20,096,950 US$20,096,950 $ 1,835.66 29-Jan-13 principal and interest Financial liability Fwd buying US$20,000,000 US$20,000,000 $ 1,834.03 29-Jan-13 principal and interest Financial liability Fwd buying US$21,000,000 US$21,000,000 $ 1,837.50 29-Jan-13 principal and interest Financial liability Fwd buying US$18,008,574 US$18,008,574 $ 1,850.71 24-Apr-13 principal and interest Financial liability Fwd buying US$31,054,764 US$31,054,764 $ 1,849.49 24-Apr-13 principal and interest Financial liability Fwd buying US$16,030,196 US$16,030,196 $ 1,854.17 26-Apr-13 principal and interest Financial liability Fwd buying US$35,221,021 US$35,221,021 $ 1,851.24 26-Apr-13 principal and interest Financial liability Fwd buying US$2,510,956 US$2,510,956 $ 1,830.75 03-Jan-13 principal and interest Financial liability Fwd buying US$25,147,537 US$25,147,537 $ 1,880.47 25-Jun-13 principal and interest Financial liability Fwd buying US$5,500,000 US$5,500,000 $ 1,865.20 01-Aug-13 principal and interest Financial liability Fwd buying US$11,012,779 US$11,012,779 $ 1,847.81 02-May-13 principal and interest

b) Financial liabilities interest

)RUZDUGDUUDQJHPHQWV Underlying Type Underlying Forward amount Forward rate Maturity amount Fwd buying Financial liability US$22,149 US$22,149 $ 1,831.83 11-Jan-13

F-61 )RUZDUGDUUDQJHPHQWV Underlying Type Underlying Forward amount Forward rate Maturity amount interest Financial liability Fwd buying US$22,149 US$22,149 $ 1,838.50 12-Feb-13 interest Financial liability Fwd buying US$20,006 US$20,006 $ 1,844.57 12-Mar-13 interest Financial liability Fwd buying US$22,149 US$22,149 $ 1,850.82 12-Apr-13 interest Financial liability Fwd buying US$77,688 US$77,688 $ 1,830.17 10-Jan-13 interest Financial liability Fwd buying US$75,141 US$75,141 $ 1,841.96 12-Mar-13 interest Financial liability Fwd buying US$40,043 US$40,043 $ 1,833.57 11-Jan-13 interest Financial liability Fwd buying US$38,730 US$38,730 $ 1,846.26 13-Mar-13 interest Financial liability Fwd buying US$147,537 US$147,537 $ 1,873.91 27-Mar-13 interest Financial liability Fwd buying US$12,028 US$12,028 $ 1,833.85 09-Jan-13 interest Financial liability Fwd buying US$12,028 US$12,028 $ 1,840.05 08-Feb-13 interest Financial liability Fwd buying US$10,864 US$10,864 $ 1,846.04 08-Mar-13 interest Financial liability Fwd buying US$12,028 US$12,028 $ 1,853.25 09-Apr-13 interest Financial liability Fwd buying US$11,640 US$11,640 $ 1,858.35 09-May-13 interest Financial liability Fwd buying US$12,028 US$12,028 $ 1,864.11 07-Jun-13 interest Financial liability Fwd buying US$11,640 US$11,640 $ 1,870.31 09-Jul-13 interest Financial liability Fwd buying US$8,924 US$8,924 $ 1,866.24 01-Aug-13 interest Financial liability Fwd buying US$14,199 US$14,199 $ 1,828.76 04-Jan-13 interest Financial liability Fwd buying US$14,199 US$14,199 $ 1,836.16 04-Feb-13 interest Financial liability Fwd buying US$14,199 US$14,199 $ 1,839.27 06-Mar-13 interest Financial liability Fwd buying US$14,199 US$14,199 $ 1,845.44 05-Apr-13 interest

2011

&XUUHQF\VZDSDUUDQJHPHQWV Underlying amount Swap amount Underlying Underlying rate Swap rate Maturity US$ COP$ or US$ Account US$ 71,500,000 4,90% PV $ 136,558 CPI + 5.35% 08-Aug-16 payable

Below, operations with financial derivatives that generated a positive valuation on behalf of the counterpart (bank) at the year closing of 2011:

Underlying amount Swap amount Underlying Underlying rate Swap rate Maturity US$ COP$ or US$

F-62 Account US$ 71,500,000 4,90% PV $ 136,558 CPI + 5.35% 08-Aug-16 payable Bonds 2017 $ 343,520 CPI + 3.17% US$ 190,000,000 Libor + 1.75% 23-Nove-17 Bonds 2017 $ 89,800 CPI + 3.17% US$ 50,000,000 Libor + 1.92% 23-Nove-17

2010

Below, operations with financial derivatives that generated a positive valuation on behalf of the counterpart (bank) at the year closing of 2010:

)RUZDUGDUUDQJHPHQWV Underlying Type Underlying Forward amount Forward rate Maturity amount Fwd sale Future cash flow US$500.000 US$500.000 $ 1,887.47 25-Jan-11 6ZDSDUUDQJHPHQWV Underlying Underlying Forward amount Forward rate Maturity amount Financial liability principal and US$ 20,000,000 US$ 20,428,956 $ 1,928.71 20-Mar-12 interest Financial liability principal and US$ 4,000,000 US$ 4,028,846 $ 1,929.44 02-Feb-12 interest Financial liability principal and US$ 63,149 US$ 63,149 $ 1,942.53 11-Oct-12 interest Financial liability principal and US$ 13,017,846 US$ 13,017,846 $ 1,946.83 06-Nov-12 interest

Option arrangements Underlying Type Underlying amount Collar amount Strike Put Strike Call Maturity Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 25-Jan-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 25-Jan-11 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 25-Feb-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 25-Feb-11 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 25-Mar-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 25-Mar-11 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 25-Apr-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 25-Apr-11 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 25-May-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 25-May-11 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 24-Jun-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 24-Jun-11 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 25-Jul-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 25-Jul-11 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 25-Aug-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 25-Aug-11 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 26-Sep-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 26-Sep-11

F-63 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 25-Oct-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 25-Oct-11 Export collar Future cash flow US$500,000 US$500,000 $1,850.00 $ 1,943.00 25-Nov-11 Export collar Future cash flow US$500,000 US$500,000 $1,900.00 $ 1,950.00 25-Nov-11

In 2010, US$14,300,000 was paid towards the principal. On this credit, as underlying, a currency swap arrangement was made with the following conditions:

Underlying Swap Type Underlying amount Underlying rate amount Swap rate Maturity Currency swap Account payable US$85,800,000 4.90% PV $ 163,869 CPI + 5.354% 08-Aug-16

Currency swaps are arranged with the purpose of balancing the Company’s exchange exposure, taking advantage of what the Administration considers favorable market conditions.

Forward and option arrangements are carried out to cover the risk of fluctuation in exchange rates applicable to liabilities in dollars, temporary investments and export/import transactions. These instruments are valued at their fair value, taking into consideration current market curves on the valuation date (see policy on derivative financial instruments).

2) In 2012, the decrease relates mainly to the payment of the annual installment of $2,529 of the port concession of Zona Franca S.A., as well as the spin-off to Grupos Argos S.A. of Sociedad Portuaria Golfo de Morrosquillo S.A. and Sociedad Portuaria Cementeras Asociadas S.A., which own port concessions No. 040 for $5,592 and 024 for $1,741 respectively. In 2011, the increase is mainly due to the compensation for paying the State for the port concession on goods of public use, as agreed in contract 003 of March 8, 2010, entered into by the National Institute of Concessions and Zona Franca Argos S.A for a period of 20 years at a value of US$10,504,700.

NOTE 14 – TAXES, CONTRIBUTIONS, AND LEVIES

The balance of taxes, contributions and levies at December 31 was comprised of:

2012 2011 2010 Income tax 34,120 43,771 12,307 Sales tax 43,015 42,029 30,905 Industry and commerce tax 14,900 2,700 1,123 Other (equity tax) 63,030 96,480 2,110 155,065 184,980 46,445 Less – Long-term portion (1) (30,745) (63,481) - 124,320 121,499 46,445

(1) In 2012 and 2011, this relates to equity tax payments due in 2013 and 2014.

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The tax provisions applicable to the Company and its subsidiaries for 2012 state that: a) Taxable income is taxed at a rate of 33%. As of 2007, with Law 1111 of 2006, the occasional gains system is restated for those who were under the obligation to adjust for inflation, particularly regarding the sale of investments and fixed assets held in possession for more than 2 years. b) The base to determine the income tax cannot be less than 3% of net equity on the last day of the immediately preceding taxable period. c) As of 2010, the taxpayers who are users of the free trade industrial zone and contribute income tax at 15% will not be entitled to apply the special deduction upon acquisition of productive fixed assets set forth by section158-3 of the Tax Code. d) Fiscally adjusted tax losses may be offset against the ordinary net income obtained during the subsequent taxable periods, with no time limitations as regards the values to be offset, without affecting the period’s presumptive income.

Tax losses arising from the special deduction for investment in productive fixed assets also may be offset against the taxpayer’s net income.

Tax losses incurred as of taxable year 2007 may be offset against the ordinary net income obtained by the Company without time or percentile limits, without affecting the period’s presumptive income. Up to 2006, losses for tax purposes were adjusted to inflation, but as of 2007 they are adjusted under tax standards.

The tax losses of Cementos Argos S.A. and its subsidiaries at December 31, 2012 amounted to $246,271 (2011 - $397,127 and 2010 - $416,996). e) Excess presumptive income over ordinary income generated as of 2003 may only be offset against ordinary net income during the five subsequent years.

In all cases the excess presumptive income over ordinary income was adjusted to inflation until 2006. As of 2007, excess presumptive income over ordinary income is adjusted under tax standards.

On December 31, 2012, excess presumptive income of Cementos Argos S.A. and its subsidiaries for taxable years 2006, 2010, and 2011, amounted to $44,047 (2011 - $152,667 and 2010 - $143,546) f) For tax and supplementary purposes, as of 2004, income taxpayers who carry out transactions with foreign related parties must calculate their ordinary and extraordinary revenues, costs and deductions, assets and liabilities, applying the prices and profit margins they would have applied in transactions with non-related parties or transactions comparable with the latter. The Company conducted a technical survey on transactions carried out during 2011 and concluded that there is no need to adjust the income tax return for that taxable period.

The following is the detail of the estimation of the income tax for the years ended December 31st:

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2012 2011 2010 Taxable income of domestic companies (rate of 15%) 28,813 63,227 - 15% 15% - Current income tax at the rate of 15% (1) 4,322 9,484 - Taxable income of domestic companies (rate of 33%) 103,270 112,124 117,915 33% 33% 33% Current income tax at the rate of 33% (2) 34,079 37,001 38,912 Credit deferred income tax (3) (15,366) 10,492 1,783 Domestic companies’ income tax provision 23,035 56,977 40,695 Foreign companies’ income tax (5,952) (31,953) (8,748) Total income tax provision charged to income 17,083 25,024 31,947

(1) Zona Franca Argos S.A.S. pays income taxes at the rate of 15%, based on presumptive income for 2012 and 2011.

(2) Among the Colombian companies paying income tax at the rate of 33%, some are based on presumptive income and others on taxable income.

(3) In Colombia the deferred tax is negative, mainly as a result of the fiscal recognition of the Exchange differences of liabilities in dollars, among which we can count the borrower’s notes of Concrecem.

Cementos Argos S.A. and its subsidiaries’ income tax returns for taxable year 2010 and 2011 are subject to the review and acceptance of tax authorities.

The Company Management and its tax advisors are of the opinion that the amount carried as liability for taxes payable is enough to cover any liability that may be assessed concerning such years.

TAX ON EQUITY

The tax on equity recorded during 2010 amounted to $19,870 of which $9,935 was paid on May 25, 2010 and $9,935 on September 21, 2010. These amounts were accrued against the equity revaluation account.

For 2011, important changes to the tax on equity and the income tax were introduced by Law 1370 of 2009, which was complemented by Decree 4825 and Law 1430 of December 29, 2010.

In 2012, the Company assessed the tax at $175,323 on the basis of the net shareholders’ equity on January 1, 2011 at rates of between 1.40% and 4.8% plus a surtax of between 0% and 25%. The tax return was filed in May 2011 and payment thereof shall be made in eight equal installments in the months of May and September of 2011, 2012, 2013, and 2014. For 2011, the Company accrued and charged the tax on equity and the surtax to the equity revaluation account in amount of $126,961 and to income in amount of $12,090.

F-66 For 2012, with the spin-off, the tax on equity paid was reduced by $3,982.

In 2012, the tax on equity against liabilities paid was $31,238 (2011 - $31,740), with a charge to income of $12,090 (2011 - $12,090).

The amount declared for 2010 was $19,870. Of this amount, $9,935 was paid on May 25, 2010 and another $9,935 on September 21, 2010, charged to the equity revaluation account, in compliance with the law.

TAX REFORMS

Below is a summary of some changes to the Colombian tax regime that take effect from 2013 onwards. These changes were introduced by Law 1607 of December 26, 2012.

For the income and supplementary tax, the rate on taxable income for legal persons is changed to 25% as of January 1, 2013.

A new tax called “Impuesto sobre la renta para la equidad”, abbreviated CREE in Colombia, was created. This is an income tax that will be used to fund governmental social welfare bodies. It will take effect on January 1, 2013 and is calculated based on gross revenues after deduction of non-taxable revenues, costs, deductions, tax-exempt income and occasional profits, at a rate of 8%. For 2013, 2014, and 2015, the rate will be 9%.

Within the purging of the previously mentioned base, the compensation of income tax of the taxed period with fiscal losses or presumptive tax excesses of previous periods is not allowed.

In terms of exoneration of contributions, legal persons who are subject to the income and supplementary tax are exonerated of the parafiscal contributions to the National Learning Service (Servicio Nacional del Aprendizaje, or SENA) and the Colombian Institute for Family Wellbeing (Instituto Colombiano de Bienestar Familiar, or ICBF) that are normally imposed on employees individually making up to ten (10) current legal minimum salaries. This exoneration will take effect as soon as the system of withholding at the source for the collection of the previously mentioned CREE is implemented, but in any case before July 1, 2013.

Regarding accounting regulations, it is established that only for tax purposes, the referrals to accounting regulations contained in the tax regulations will remain in effect for the 4 years following the implementation of the International Financial Reporting Standards (IFRS). As a result, during the aforementioned period, the tax bases of the items included in tax returns will remain unaltered. Furthermore, the requirements regarding accounting treatments for the recognition of special tax situations will not remain in effect as of the date when the new accounting regulation framework is implemented.

Regarding the obligation for Business Groups to publish consolidated financial statements, it is established that at the latest on June 30 of each year, these duly registered groups must file their consolidated financial statements digitally, along with

F-67 their respective appendices.

NOTE 15 – DEFERRED LIABILITIES

2012 2011 2010 Deferred taxes (1) 38,166 128,036 153,201

Deferred monetary correction (2) - 7,640 7,668 38,166 135,676 160,869

(1) In 2012, the decrease refers mainly to Zona Franca Argos S.A.S. for $5,859 for the unification of life spans, to Cementos Argos S.A. for $18,543 for transactions in financial derivatives, to Argos USA Corp. for $13,000, to Southern Equipment Company Inc. for $24,374, and to Southern Star Concrete Inc. for $22,525.

(2) For 2011, Sociedad Portuaria Cementeras Asociadas S.A. represented $258 and Urbanizadora Villa Santos S.A. $7,382. In 2012, these companies were spun-off to Grupo Argos S.A.

NOTE 16 – LABOR OBLIGATIONS

2012 2011 2010 Retirement pensions payable 256,274 253,759 225,371 Consolidated severance pay (fund) 7,800 7,919 7,941 Consolidated vacation 13,089 12,176 11,894 Non-mandatory benefits (1) 20,884 16,816 14,294 Salaries payable 314 230 969 Other 8,372 936 940 306,733 291,836 261,409 Less – long-term portion (255,627) (253,366) (224,990) 51,106 38,470 36,419

1) Mainly corresponds to an increase in Argos Ready Mix LLC for $3,758.

The estimation of the actuarial reserve was made on the following technical basis:

1. Mortality table: Colombian annuitants life table RV08 both for men and women (Financial Superintendence’s Resolution 1555 of 2010). 2. Pension and salary adjustments: the formula applied explicitly incorporates future salary and pension adjustments at a growth rate of 3.26% for 2012 and 3.53% for 2011 (Decree 2783 of December 20, 2001). 3. Technical interest rate: 4.8% actual p.a. for 2012 and 2011. 4. Reserves: Reserves are estimated using the fractional annuities in arrears model (Article 112 of the Tax Code).

F-68

The actuarial method used to estimate the liability is that set forth by Decree 2783 of 2001 issued by the National Government.

The main factors used in the actuarial estimations for each year closing on December 31 were:

2012 2011 2010

Headcount 1,650 1,607 1,648 Interest rate 4.80% 4.80% ϰ͘ϴϬй Future pension increase 3.26% 3.53% 4.51%

Charges to income on account of retirement pensions were:

2012 2011 2010 Retirement pensions 28,651 58,890 29,985

Pension titles and bonds have been fully amortized.

The increase in liabilities is due to the update of the actuarial calculations up to December 2012, mainly because of the inclusion of some pensioners of Industrial Hullera S.A. in Liquidation, as a result of the normalization process of retirement pension liabilities, in which Cementos Argos S.A. definitely assumes its corresponding proportion of the obligation, as stipulated by the official letter of October 9, 2012 from the Ministry of Labor.

The retirement pension liabilities were as follows:

2012 2011 2010 Actuarial calculation 222,539 216,005 222,090 Balance to be amortized - - (32,880) Add: Pension certificated 29,484 33,985 32,663 Pension bonds 3,604 3,376 3,117 255,627 253,366 224,990

The following table contains information about the Company’s and its subsidiaries’ employees, more specifically management and other employees’ numbers and expenses, for 2012:

OTHER MANAGEMENT MANAGEMENT OTHER COMPANY EMPLOYEES’ HEADCOUNT EXPENSES EMPLOYEES EXPENSES Alianza Progenética S.A.S. - - - - American Cement Terminals LLC - - - - Argos Cement LLC 46 17,050 340 30,698 Argos Ready Mix LLC 13 4,901 415 33,883

F-69 OTHER MANAGEMENT MANAGEMENT OTHER COMPANY EMPLOYEES’ HEADCOUNT EXPENSES EMPLOYEES EXPENSES Argos USA Corp. - - - - C.I. del Mar Caribe BVI Inc. - - - - Canteras de Colombia S.A.S. - - - - Caribbean Construction and Development Ltd. 1 67 8 154 Caricement Antigua Limited - - 6 548 Caricement Antilles NV - - - - Caricement Saint Maarten NV - - 8 638 Caricement USVI Corp 2 271 4 180 Cement and Mining Engineering Inc. - - - - Cemento Panamá S.A. 16 4,151 423 25,867 Cementos Argos S.A. 176 62,444 2,571 149,373 Cementos Colón S.A. 5 537 91 3,158 Central Aggregates LLC - - - - Cimenterie Nationale S.E.M. 5 1,227 212 5,913 Colcaribe Holdings S.A. - - - - Comercial Arvenco C.A. - - - - Concretos Argos S.A. 12 3,055 1,233 48,926 Consort Livestock Inc. - - - - Corporaciones e Inversiones del Mar Caribe - - - - S.A.S. Dorset Shipping Co. Ltd. - - - - Ganadería Río Grande S.A.S. 1 182 103 1,139 Gulf Coast Cement LLC - - - - Haití Cement Holding S.A. - - - - International Cement Company S.A. - - - - Logística de Transporte S.A. 3 1,019 82 4,253 Marítima de Graneles S.A. - - - - Piazza Acquisition Corp. 10 3,492 5 1,272 Port Royal Cement Company LLC - - - - Reforestadora del Caribe S.A.S. 1 95 449 2,513 RMCC Group Inc. - - - - Savannah Cement Company LLC 1 614 - - Somerset Shipping Co. Ltd. - - - - South Central Cement Ltd. 1 289 1 193 Southern Equipment Company Inc. 8 3,060 673 59,781 Southern Star Concrete Inc. 24 10,070 752 71,666 Southern Star Leasing, LLC - - - - Surcol N.V. - - - - Trans Atlantic Shipmanagement Ltd. - - - - Transatlantic Cement Carriers Inc. - - - - Valle Cement Investments Ltd. - - - - Venezuela Ports Company S.A. - - - -

F-70 OTHER MANAGEMENT MANAGEMENT OTHER COMPANY EMPLOYEES’ HEADCOUNT EXPENSES EMPLOYEES EXPENSES Vensur N.V. ϰ ϵϴϭ ϲϬ ϭ͕ϲϭϮ Winterset Shipping Co. Ltd. - - - - Zona Franca Argos S.A.S. ϵ Ϯ͕Ϯϳϭ ϯϭϰ ϭϲ͕ϴϮϳ

The following table contains information about the Company’s and its subsidiaries’ employees, more specifically management and other employees’ numbers and expenses, for 2011:

OTHER MANAGEMENT MANAGEMENT OTHER COMPANY EMPLOYEES’ HEADCOUNT EXPENSES EMPLOYEES EXPENSES Alexios N.V. ---- American Cement Terminals LLC ---- Argos Cement LLC 41 2,228 357 10,142 Argos Ready Mix LLC 65 2,258 335 5,903 Argos USA Corp. ---- C.I. del Mar Caribe BVI Inc. ---- Canteras de Colombia S.A.S. - - 16 520 Carbones del Caribe S.A.S. 1 136 696 18,616 Caribbean Construction and Development Ltd. 1 27 8 48 Caricement Antigua Limited 1 108 7 118 Caricement Antilles NV ---- Caricement Saint Maarten NV - - 9 667 Caricement USVI Corp 1 137 7 589 Cement and Mining Engineering Inc. ---- Cemento Panamá S.A. 19 4,535 471 15,513 Cementos Argos S.A. 200 50,650 2,529 137,672 Cementos Colón, S.A. 6 872 91 2,034 Central Aggregates LLC ---- Cimenterie Nationale S.E.M. 5 876 213 3,444 Colcaribe Holdings S.A. ---- Comercial Arvenco C.A. ---- Concretos Argos S.A. 12 2,279 1,071 42,615 Consort Livestock Inc. ---- Corporaciones e Inversiones del Mar Caribe S.A.S. ---- Dorset Shipping Co. Ltd. ---- Ganadería Río Grande S.A.S. 1 98 94 1,265 Gulf Coast Cement LLC ---- Haití Cement Holding S.A. ---- International Cement Company S.A. ---- Logística de Transporte S.A. 2 479 109 3,844 Marítima de Graneles S.A. ---- Piazza Acquisition Corp. 16 6,531 - -

F-71 OTHER MANAGEMENT MANAGEMENT OTHER COMPANY EMPLOYEES’ HEADCOUNT EXPENSES EMPLOYEES EXPENSES Point Corp. ---- Port Royal Cement Company LLC ---- Reforestadora del Caribe S.A.S. 2 315 13 618 RMCC Group Inc. ---- Savannah Cement Company LLC - - 6 813 Sociedad Portuaria de Cementeras Asociadas S.A. 1 111 2 141 Sociedad Portuaria Golfo de Morrosquillo S.A. 1 122 19 1,195 Somerset Shipping Co. Ltd. ---- South Central Cement Ltd. - - 3 550 Southern Equipment Company Inc. 6 1,605 691 57,775 Southern Star Concrete Inc. 42 19,622 700 80,117 Southern Star Leasing, LLC ---- Trans Atlantic Shipmanagement Ltd. ---- Transatlantic Cement Carriers Inc. ---- Urbanizadora Villa Santos S.A.S. 2 149 23 981 Valle Cement Investments Ltd. ---- Venezuela Ports Company S.A. ---- Vensur N.V. ---- Winterset Shipping Co. Ltd. ---- Zona Franca Argos S.A.S. 8 1,802 333 16,404

The following table contains information about the Company’s and its subsidiaries’ employees, more specifically management and other employees’ numbers and expenses, for 2010:

OTHER MANAGEMENT MANAGEMENT OTHER COMPANY EMPLOYEES’ HEADCOUNT EXPENSES EMPLOYEES EXPENSES Alexios N.V. ---- American Cement Terminals LLC ---- Argos USA Corp. ---- Belsford Ltd. ---- C.I. Carbones del Caribe S.A.S. 1 121 697 18,363 C.I. del Mar Caribe BVI Inc. ---- Corporaciones e Inversiones del Mar Caribe S.A.S. ---- Canteras de Colombia S.A.S. - - 14 360 Caricement Antilles NV ---- Caricement USVI Corp. 2 637 6 733 Caribbean Construction and Development Ltd. 1 158 8 307 Caricement Antigua Limited - - 7 487 Caricement Saint Maarten NV - - 9 667

F-72 OTHER MANAGEMENT MANAGEMENT OTHER COMPANY EMPLOYEES’ HEADCOUNT EXPENSES EMPLOYEES EXPENSES Cement and Mining Engineering Inc. ---- Cemento Panamá S.A. 17 2,752 452 9,099 Cementos Argos S.A. 204 50,681 2,604 130,072 Cementos Colón S.A. 5 1,837 83 4,266 Central Aggregates LLC ---- Cimenterie Nationale S.E.M. 5 810 56 3,322 Climsford Investments Ltd. ---- Colcaribe Holdings S.A. ---- Concretos Argos S.A. 13 2,256 994 33,877 Consort Livestock Inc. ---- Comercial Arvenco C.A. ---- Dorset Shipping Co. Ltd. ---- Fortecol Investments Ltd. ---- Ganadería Río Grande S.A.S. 1 85 64 630 Godiva Investments Ltd. ---- Gulf Coast Cement LLC ---- Haití Cement Holding S.A. ---- International Cement Company S.A. ---- Logística de Transporte S.A. 3 563 113 4,765 Marítima de Graneles S.A. ---- Piazza Acquisition Corp. 11 4,764 4 808 Point Corp. ---- Port Royal Cement Company LLC ---- Reforestadora del Caribe S.A.S. - - 11 894 RMCC Group Inc. ---- Savannah Cement Company LLC 1 284 5 518 Sociedad Portuaria de Cementeras Asociadas S.A. 1 151 2 80 Sociedad Portuaria Golfo de Morrosquillo S.A. 1 162 43 1,258 Somerset Shipping Co. Ltd. ---- South Caribbean Trading & Shipping S.A. ---- South Central Cement Ltd. 1 252 3 648 Southern Equipment Company Inc. 6 2,070 710 74,325 Southern Star Concrete Inc. 6 2,857 705 92,638 Southern Star Leasing, LLC ---- Transatlantic Cement Carriers Inc. ---- Trans Atlantic Shipmanagement Ltd. ---- Urbanizadora Villa Santos S.A.S. 1 106 24 1,427 Valle Cement Investments Ltd. ---- Venezuela Ports Company S.A. ---- Vensur N.V. ---- Winterset Shipping Co. Ltd. ----

F-73 OTHER MANAGEMENT MANAGEMENT OTHER COMPANY EMPLOYEES’ HEADCOUNT EXPENSES EMPLOYEES EXPENSES Zona Franca Argos S.A.S. 10 2,001 325 16,931

NOTE 17 – OTHER LIABILITIES

At December 31, other liabilities were comprised of:

2012 2011 2010 Accrued liabilities and provisions Costs and expenses (1) 139,113 125,631 62,937 Labor liabilities 8,667 5,403 3,749 Tax liabilities 18,145 39,954 41,092 Maintenance and repairs 1,285 1,330 1,028 Contingencies (2) 42,814 30,835 33,542 Sundries provisions 30,370 44,897 29,721

Deferred liabilities Revenues received in advance 5,023 6,188 1,789

Other liabilities Advance payments received (3) 56,680 66,757 74,013 Revenues received for third parties 107 177 266 Withholdings on third parties’ contracts - 485 585 For surety liabilities 759 426 423 302,963 322,083 249,145

(1) It mainly relates to provisions on account of goods and/or services received by Cementos Argos S.A. and not billed by suppliers in amount of $21,966 (2011 - $25,217 and 2010 - $19,818), and to other liabilities for costs and expenses of Southern Equipment for $18,153 (2011 -$12,057), Southern Star Concrete Inc. for $13,647 (2011 -$11,809), Argos Cement LLC for $35,850 (2011 - $35,983), and Argos Ready Mix LLC for $11,494 (2011 - $7,407).

(2) Mainly comprised of provisions for contingencies, as follows: labor contingencies in amount of $22,845 (2011 - $16,846 and 2010 - $18,552), administrative contingencies in amount of $4,423 (2011 - $4,601 and 2010 - $3,626) and other contingencies in amount of $8,533 (2011 - $1,742 and 2010 $1,770), and in Argos Cement LLC for $6,824.

(3) Mainly advances received from customers in 2012, amounting to $55,855 (2011 - $55,887 and 2010 - $56,607) and advance payments on contracts for $764 (2011 - $10,128 and 2010 -$16,959).

The cost method was applied to assess accrued liabilities on costs and expenses, labor liabilities, tax liabilities, contingencies and sundries provisions.

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NOTE 18 – SHAREHOLDERS’ EQUITY

CORPORATE CAPITAL

The authorized capital is made up of 1,500,000,000 shares with par value of COP$6 each, and subscribed and paid-in capital is made up of 1,215,247,885 shares. Re- acquired own shares are 63,575,575 and, consequently, the outstanding shares on December 31, 2012, 2011, and 2010 amounted to 1,151,672,310.

2012 2011 2010 Authorized capital – 1,500,000,000 ordinary shares with par value of COP$6 9,000 9,000 9,000 Subscribed and paid-in capital – 1,215,247,885 ordinary 7,291 7,291 7,291 shares

LEGAL RESERVE

Domestic companies are required to appropriate to a legal reserve at least 10% of their net annual profits, until the balance of this reserve is equivalent to 50% of subscribed capital. Currently said reserve is above legal requirements by $10,201. The legal reserve is not distributable prior to the Company’s liquidation, but it has to be used to absorb or reduce annual net losses. Appropriations in excess of the mentioned 50% are freely available to the General Shareholders’ Assembly.

On December 31, 2012, the legal reserve held $13,845 (2011 and 2010 $23,163); the decrease is due to the spin-off to Grupo Argos S.A.

RESERVE FOR REACQUISITION OF SHARES In compliance with the Code of Commerce this reserve on reacquired own shares is only distributable to shareholders upon re-sale of the shares. As long as the shares are owned by the Company the rights attached to them remain suspended.

2012 2011 2010 Reserve for reacquisition of shares 113,797 113,797 113,797 Less – reacquired own shares (113,797) (113,797) (113,797)

OTHER RESERVES

On March 23, 2012 the General Shareholders’ Assembly authorized the release of $51,234 from the non-taxable reserve for future expansion. It also decided to appropriate $259,974 to the reserve for future expansion and investments. All other reserves are freely available to the shareholders.

SHAREHOLDERS’ EQUITY REVALUATION

F-75 In compliance with legal regulations in effect until 2006, equity revaluation reflects the effect that the loss of purchasing power has on equity.

With the elimination of inflation adjustments provided for in Decree 1536 of 2007, the balance in the shareholders’ equity revaluation account may only be distributed upon the Company’s liquidation or capitalization; nevertheless, once capitalized, it may be used to absorb losses wherever the Company falls under grounds for dissolution and it shall not be used to reimburse the contributions of shareholders. Should the balance in this account be of a debit nature, such balance may be reduced with the period or prior period results provided that regulations set forth in the Code of Commerce as regards income have been complied with.

Law 1370 of December 30, 2009 maintains the option of charging the tax on equity against the shareholders’ equity revaluation account without affecting period results. In compliance with this regulation, the Company recorded the tax on equity for the periods 2011 to 2014 in amount of $126,961.

F-76 NOTE 19 – APPRAISAL AND ASSET APPRAISAL SURPLUS

Appraisal and asset appraisal surplus at December 31 were comprised of:

2012 2011 2010 Permanent investments (1) (note 8) 1,635,367 4,490,799 5,947,817 Property, plant and equipment and other assets (2) (note 9) 1,938,618 4,693,943 3,088,722 Appraisal 3,573,985 9,184,742 9,036,539 Transfer minority interest (100,723) 112,373 (34,879) Appraisal surplus 3,473,262 9,297,115 9,001,660

(1) The decrease was mainly due to the sale of shares of Bancolombia S.A. and the spin- off of shares of Grupo Nutresa S.A., Bancolombia S.A., and Grupo de Inversiones Suramericana S.A. to Grupo Argos S.A.

(2) The decrease was due to the spin-off of fixed assets to Grupo Argos S.A.

During 2011 the firm Activos e Inventarios y Cia Ltda. conducted an inventory of the fixed assets of the companies associated with Grupo Cementos Argos S.A. in the various industrial, commercial and administrative units located all over the national territory. Activos e Inventarios y Cia Ltda. applied a methodology based on the criteria to appraise an ongoing concern using the comparative method, the revenue capitalization method and/or the cost method, as was the case. In summary, their appraisal was based on the application of the fair value principle when comparing against international figures of operating productive units, elements used and in operation, installed and productive capacities valued in US dollars and measured by the production capacity in operations of exploitation, crushing, calcination, grinding and packing for cement manufacturing.

This methodology further requires that the value of equipment include civil works for assembly, engineering thereof, electric, mechanical and electronic connections, preoperating testing and start up in accordance with section 64 of Decree 2649 of 1993 supplemented with internationally accepted accounting standards (IFRS USGAAP).

NOTE 20 – MEMORANDUM ACCOUNTS

Memorandum accounts at December 31 were comprised of:

2012 2011 2010 Assets and securities given as collateral (1) 607,351 1,585,988 925,904

F-77 2012 2011 2010 Fully depreciated assets (2) 845,033 781,425 1,005,019 Shareholders’ equity revaluation capitalization 55,391 55,391 55,391 Tax debit accounts (3) 10,240,923 10,704,952 9,302,736 Lawsuits and/or legal claims 8,595 8,915 72,514 Unused credits receivable (4) 9,864 11,715 11,127 Other debit control accounts 52,006 47,003 51,258 Other (5) 171,701 210,368 209,169 11,990,864 13,405,757 11,633,118 Contingent liabilities Assets and securities received (42,949) (40,710) (40,355) Other contingent liabilities (6) (40,250) (86,060) (50,948) Other (7) (26,702) (33,560) (93,097) (109,901) (160,330) (184,400) Credit memorandum accounts Tax credit accounts (9,647,374) (9,727,654) (8,063,951) Credit control accounts (1) (660) (26,650) (9,647,375) (9,728,314) (8,090,601) 2,233,588 3,517,113 3,358,117

(1) It mainly relates to 5,200,000 shares of Grupo de Inversiones Suramericana S.A. delivered as collateral for financial liabilities to Bancolombia S.A. The decrease compared to 2011 is mainly due to the payment of the loan of HSBC New York, which included shares pledged as collateral. It also reflects the cement plant of Sogamoso, including its lands, given as collateral to back financial liabilities of Acerías Paz del Rio S.A. for $72,844.

(2) The increase is mainly due to the updating of the Company’s assets’ commercial value and decreases to selling or withdrawal of assets.

(3) It relates to the difference of assets, liabilities and revenues for tax and accounting purposes in Cementos Argos S.A., the most important difference being that of shareholders’ equity in amount of $8,965,160 in 2012 and 2011 (2010- $7,410,324).

(4) This corresponds to credit lines available with Citibank; the decrease occurred because of the termination of the contract with Chevron Petroleum Company, which led to the cancellation of the standby type credit letter of Cementos Argos S.A. and Zona Franca S.A. to Citibank N.A.

(5) This mainly contains assets currently being rented out; the decrease is mainly due to the spin-off of Sociedad Portuaria Cementeras Asociadas S.A. to Grupo Argos S.A., which in 2011 contributed $31,018 to this category.

(6) The drop is mainly due to the effect of the difference in mining rights, which represent a future delivery commitment in 2012 for $36,525 (2011 - $40,117 and 2010 - $39,524), and to the spin-off to Grupo Argos S.A. of the memorandum

F-78 accounts of Carbones del Caribe S.A.S. (2011 - $40,788) and of Sociedad Portuaria de Cementeras Asociadas S.A. (2011 - $1,406).

(7) The decrease is mainly due to the updating of labor and administrative lawsuits against Cementos Argos S.A. and to the spin-off to Grupo Argos S.A. of Carbones del Caribe S.A.S., Urbanizadora Villa Santos S.A.S., and Sociedad Portuaria Golfo de Morrosquillo S.A., which contributed $42,202 to the consolidation in contingencies in 2011.

(8) It mainly relates to the difference of the revaluations for tax and accounting purposes, which in Cementos Argos S.A. amounted to $8,744,320.

NOTE 21 – ADMINISTRATION EXPENSES

At December 31 administration expenses were comprised of:

2012 2011 2010 Personnel expenses 150,920 116,246 104,906 Services 46,835 40,629 30,074 Fees (1) 45,984 24,029 25,954 Maintenance and repairs 13,660 9,485 8,898 Amortization of deferred charges 13,289 13,979 24,725 Travel expenses 10,867 8,283 7,650 Depreciation of property, plant and equipment 10,291 8,790 9,329 Insurance 10,153 8,626 10,477 Rental expenses 7,547 7,695 10,895 Contributions and affiliations 3,558 4,325 3,317 Legal expenses 3,028 4,249 1,712 Taxes 1,690 2,124 2,762 Employees’ restaurant 1,679 1,463 1,268 Entertainment and public relation expenses 1,423 936 733 Stationery 836 512 597 Adaptation and assembly 614 327 129 Ground transportation 545 499 342 Provisions 290 440 3,075 Other(2) 3,886 29,593 6,866 327,095 282,230 253,709

(1) Corresponds to technical and financial advisory services amounting to $16,674 (2011 - $9,799) and $15,500 (2011 - $1,034), respectively.

(2) In 2011, this includes expenses stemming from the acquisition of companies in the United State, by Argos USA Corp. for $20,346 and from the project to change to ERP of Cementos Panamá S.A. for $7,551.

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NOTE 22 – SALES EXPENSES

At December 31, sales expenses were comprised of:

2012 2011 2010 Personnel expenses 59,674 40,646 37,720 Services 30,495 19,38022,526 Amortization of deferred charges 24,972 25,651 23,725 Taxes 21,810 19,337 15,141 Provisions 6,413 4,814 7,190 Depreciation of property, plant and equipment 4,511 5,282 5,048 Fees 3,843 3,2522,876 Travel expenses 3,700 2,674 2,336 Rental expenses 3,407 3,080 3,698 Contributions and affiliations 3,087 793 744 Maintenance and repairs 2,019 1,872 1,946 Insurance 1,738 2,2911,882 Fuels and lubricants 1,028 57 212 Public relations 527 365 304 Stationery 257 8483 Commissions 202 412329 Packaging - - 56 Legal expenses 47 103 67 Adaptations and assembly 38 3 1 Other 2,506 4,6261,443 170,274 134,722 127,327

NOTE 23 –DIVIDENDS AND PARTICIPATIONS RECEIVED

2012 2011 2010 Dividends and participations received 35.512 72.283 81.374 35.512 72.283 81.374

In 2012, this corresponds mainly to dividends received for the investment in Bancolombia S.A. for $18,808 (2011 - $27,316), Grupo de Inversiones Suramericana S.A. for $13,993 (2011 - $33,231), and Grupo Nutresa S.A. for $1,496 (2011 - $8,531). The decrease stems from the transfer of shares to Grupo Argos S.A. as a result of the spin-off.

NOTE 24 – EXCHANGE DIFFERENCE

F-80 2012 2011 2010 Exchange gain 62,154 1,199 3,703 Exchange loss (63,314) (17,047) (2,945) Net exchange difference (1,160) (15,848) 758

In 2012, the average net position of dollar assets to liabilities was US$2,314,072 (long); exchange exposure was mainly managed with a balancing natural position and the remaining gap with financial derivative transactions.

In 2011, in Cementos Argos the average net position of dollar assets to liabilities was US$25,624,447 (short).This was the result of the financing model used in the acquisition of assets from Lafarge through subsidiary Argos USA Corp., which gave rise to a temporary unbalance in the exchange exposure structure while hedges were obtained to cover the transaction. This situation, along with the revaluation at market prices of a forward portfolio in amount of US$512,088,738 with a strong revaluation trend of the peso against the US dollar, particularly during the second half of the year, resulted in the change in the exchange difference account. Such revaluation situation should be reverted as forward operations mature. The Exchange exposure is mainly managed with a balancing natural position and the remaining gap with financial derivative transactions.

NOTE 25 – OTHER REVENUES

At December 31, other expenses were comprised of:

2012 2011 2010 Profits from sale of permanent investments (1) 231,369 641,370 510,618 Recoveries (2) 52,071 29,892 54,438 Services 9,398 2,485 2,014 Other sales 5,764 6,727 5,021 Indemnifications 5,190 5,142 2,964 Profits from the sale of property, plant and equipment 4,017 13,490 2,277 Fees 2,641 4,809 14 Rentals 1,967 3,301 3,814 Exploitation 1,714 2,499 4,206 Profits from sale of other assets 822 856 681 Revenues from prior periods 558 605 610 Grants 311 75 28 Other (3) 46,440 34,772 5,583 362,262 746,023 592,268

(1) In 2012, this corresponds to the profits from the sale of shares of Bancolombia S.A., in 2011, from the sale of shares of Cartón de Colombia S.A. for $3,961, of Grupo de Inversiones Suramericana S.A. for $607,290 and of Bancolombia S.A. for $23,752 and in 2010, from the sale of shares of Inversiones Suramericana for $488,108, of Bancolombia S.A. for $1,140, of Tablemac for $8,480, of Flota

F-81 Fluvial Carbonera S.A.S for $4,943, of Inversiones el Duero S.A.S for $2,420, and of Cartón de Colombia for $410. (2) This mainly includes the recovery of investment provisions for $40,683 (2011 - $11,780 and 2010 - $26,549) and the recovery of costs and expenses for $11,355 (2011 - $11,780 and 2010 - $18,010).

(3) In 2012, this mainly relates to the additional payment received for Valle Cement Investments Ltd. for $45,925 for Vale Do Río Doce for the revaluation of the coal reserves of Las Cuevas mine. In 2011, it relates to profits generated by the liquidation of Fortecol Investments Limited, Godiva Investments Ltd., Climsford Investments Limited, and Belsford Ltd.

NOTE 25 – OTHER EXPENSES

At December 31, other expenses were comprised of:

2012 2011 2010 Taxes (1) 35,386 28,895 7,578 Retirement pensions and pension certificates (2) 28,181 52,890 29,985 Costs and expenses from prior periods 26,814 9,943 34,557 Donations and contributions 15,464 10,210 12,331 Provision for investment impairment (3) 15,407 59,446 34,915 Labor lawsuits 14,013 9,758 11,224 Other amortization (4) 4,538 195,995 12,731 Cost of sale of materials and spare parts 4,532 4,743 5,159 Cost of other sales 3,378 7,304 3,461 Loss from sale and withdrawal of other assets 3,182 2,581 13,536 Litigation costs 3,179 653 148 Indemnifications 2,408 5,873 4,747 Related parties’ expenses 2,400 249 1,376 Fines, penalties, legal claims and lawsuits (5) 1,786 12,303 8,130 Withdrawal of property, plant and equipment (6) 996 13,321 73,833 Loss from the sale and withdrawal of property, plant and 546 2,067 404 equipment Loss from accidents 237 555 338 Amortization of deferred charges 79 484 497 Loss from sale of investments 215 1,398 Other (7) 20,421 75,850 39,143 182,947 493,335 295,491

(1) It relates to the tax on equity of Zona Franca Argos S.A.S. for $12,080, the tax on financial transactions in Cementos Argos S.A. for $13,313, in Logística de Transporte S.A. for $1,580 and in Valle Cement Investments Ltd. for $1,844 as a result of the retentions withheld on interests of loans with related parties, and to the dividends paid by Cementos Colón S.A.

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(2) It corresponds mainly to the payment and amortization of retirement pensions. In 2011, it increased because of the 100% amortization of the balance of pending retirement pension liabilities of 2010 with a change of mortality tables for $32,880.

(3) The decrease is mainly due to the fact that in 2011, the provision for the protection of investments of Cementos Argos S.A. in Argos U.S.A. Corp. was $38,757 but that for 2012, this provision was inexistent. In 2010, there were provisions of Cemento Panamá for $16,478, of Point Corp for $7,490 and of Haiti Cement Holding.

(4) In 2012, this reflects that amortization of goodwill of Cementos Panamá for $4,538. In 2011, it refers to the total amortizations of the Fortaleza and Uno A trademarks for $96,799 and a consequence of the revision of the evaluation of the use and amortization of goodwill by Caricement and Domar for $84,302, by Cementos Panamá S.A. for $2,270 and by Carbones del Caribe S.A.S. for $2,656.

(5) The decrease is due to the provision created in 2011 in Carbones del Caribe S.A.S for $8,280 for contingencies related with the payment of stamp taxes “Pro Hospital Universitario” for two-month periods III and IV.

(6) In 2010, it corresponds mainly to the withdrawal of assets of the Betania plant for $59,267, of the Barranquilla plant for $7,779, and of the Nare plant for $1,117. In 2011, to the withdrawal of assets of the Betania plant for $9,012, of trucks for $976 and of scrapped assets for $430.

(7) Colcaribe Holdings S.A. contributes $6,575 (2011 - $6,413) as a result of the dividends of Cementos Panamá S.A. that it transferred to Cementos Argos S.A., Cementos Argos S.A. $6,448 for non-operational asset costs (costs for farms and all assets that are not used for the production of cement), Cementos Argos S.A. $4,092 for agreements with Fundación Argos (Argos Foundation) to mitigate the impact on communities, and finally $2,401 for the accepted responsibility for expenses of Industrial Hullera S.A., which is in the process of liquidation.

NOTE 27 – TRANSACTIONS WITH RELATED PARTIES

The following is a summary of assets and liabilities at December 31, 2012 and 2011, and of the revenues and expenses of the Parent company arising from transactions carried out during the years then ended with shareholders holding more than 10% of the Parent capital, with directors and with Company legal representatives and managers.

2012 Legal representatives Shareholders Directors and managers At the year-end closing

F-83 Assets

Account receivable 2,603 - - Total assets 2,603 - -

Revenues Salaries - - - Fees 2,260 - -

Rent 72 - - Interests - - - 2,332 - -

Expenditure Salaries - - 5,311 Fees - - -

Rent 261 - - Interests - - - 261 - 5,311

Accounts with legal representatives and managers are related with labor policies approved by the Board of Directors and with policies equally granted to all employees not entitled to the benefits of the collective agreements in force; they are represented in housing loans, house remodeling loans, loans for the purchase of vehicles and loans to attend household calamities, in each case under duly implemented policies and with the required guarantees.

At December 31, 2012 , transactions with related parties were:

COMPANIES ACCOUNT DETAIL ACCOUNTS DETAIL RECEIVABLE PAYABLE Grupo Argos S.A. 2,603 Balance of loans to 4,722 Rent of lands employees transferred to Grupo Argos S.A. as a result of the spin-off 788 Services Asesorías y Servicios Ltda. in 208 Capitalization - liquidation Carbones del Caribe Ltda. in 8 Loan interests liquidation Carbones del Caribe S.A.S. 1,906 Remains of liquidation of 2,549 Purchase of coal the company Emcarbón. 1,466 Balance of loans to 168 Transfer of account payable to employees transferred as Emcarbón, loan, and other a result of the spin-off, sale of wood and others Cementos de Caldas S.A. - 6,145 Purchase of 326,876 shares of Metroconcreto S.A., 1.066.625 shares of Logitrans S.A., 5.800 shares of Aridos de Antioquia, 3.700 shares of Canteras de Colombia, rent of offices and warehouses, and loan interests Celsia S.A. E.S.P 19 Loans to staff transferred 41 Energy supply in 2011

F-84 COMPANIES ACCOUNT DETAIL ACCOUNTS DETAIL RECEIVABLE PAYABLE Compañía de Puertos 6 Sale of 20,000 shares of 60 Services of wharfage and docking Asociados S.A. Sociedad Portuaria Golfo fees de Morrosquillo, 4.000 shares of Sociedad portuaria Las Flores, 4.000 shares of Sociedad Portuaria La Inmaculada (these were absorbed by COMPAS S.A.) Concesiones Urbanas S.A. 41 Loan interests

Corporación de Cemento 11,579 Technical consultancies 887 Loan Andino C.A. and loans Distribuidora Colombiana - 425 Purchase of 247,745 shares of Flota Cementos Ltda. in liquidation Fluvial Carbonera S.A.S., 25,000 shares of C.I Carbones del Caribe, and 10,000 shares of Sociedad Portuaria Golfo de Morrosquillo S.A.S. Fundiciones Colombia S.A. 3 Loan for tax payments - Proservi Ltda. in liquidation 21 Capitalization and loan for 8 Liquidation of Vigilancia Privada del payment to Litoral Ltda. Superintendence

Surandina de Puertos C.A. - 145 Loan

Transmarítima del Caribe Ltda. 284 Loan (liquidation ) and - in liquidation interests Transportadora Alfa Ltda. in 91 Loan - liquidation 'Transporte Elman Ltda. in - 515 Sale of “Títulos de devolución de liquidation impuestos” (tax refund certificates) Urbanizadora Villa Santos 1,146 Loans to staff transferred 30 Cancellation of loans to employees S.A.S as a result of the spin-off transferred as a result of the spin-off Other 10 70

Total 19,342 16,602

2011 Legal representatives Shareholders Directors and managers At year-end closing Assets

Accounts receivable 8,640 - 9,480 Total assets 8,640 - 9,480

Revenues Interests 67 - - 67 - -

Expenditure Salaries - - 5,896 Fees 4,652 - -

F-85 Insurance 141 - - Interests 21 - - 4,814 - 5,896

At December 31, 2011, transactions with related parties were:

ACCOUNTS ACCOUNTS COMPANIES DETAIL DETAIL RECEIVABLE PAYABLE Grupo Argos S.A. 8,640 Services 125 Services Andino Trading Corporation - 974 Loan Asesorías y Servicios Ltda. in 208 Capitalization - liquidation Carbones del Caribe Ltda. in - 8 Loan interests liquidation Cementos de Caldas S.A. - 5,891 Purchase of 326,876 shares of Metroconcreto S.A., 1.066.625 shares of Logitrans S.A., rent of offices and warehouses, and loan interests

Compañía Colombiana de 19 - Inversiones S.A. E.S.P. Concesiones Urbanas S.A. 41 Loan interests Corporación de Cemento Andino C.A. 12,721 Technical 2,275 Sale of materials consultancies and loans Distribuidora de Cementos Ltda. in 19 Payment of income 445 Automatic debit refund liquidation tax, paid by reimbursement, corresponding to Cementos Argos telephone lines of Dicementos S.A., S.A. purchase of 3,600 shares of Sociedad Portuaria La Inmaculada S.A., 4,000 shares of Sociedad Portuaria Las Flores S.A., and 50,000 shares of Sociedad Portuaria Río Córdoba S.A. Fundiciones Colombia S.A. 3 - Fundación para el Beneficio Social de 21 Loan - Energy bills stemming from donation los Empleados de Carbones del that FBSECC makes to the national Caribe army, and that the energy company bills to Carbones del Caribe S.A.S. Flota Fluvial Carbonera S.A.S - 4 Rent of tugboat Promosur S.A. in liquidation - 1 Proservi Ltda. in liquidation 20 Capitalization 8 Liquidation of Vigilancia Privada del Litoral Ltda. Reforestadora El Guásimo S.A. 23 Charge of - participation in insurance against service and civil liabilities Surandina de Puertos C.A. - 159 Loan Transmarítima del Caribe Ltda. in 284 Loan (pay-off) and - liquidation interest Transportadora Alfa Ltda. in 1 Loans to pay - liquidation income tax of 2009 Other 3,335 62 Total 25,294 9,993

2010

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Legal Representatives Shareholders Directors and managers

At the year-end closing Assets Accounts receivable 3,079 - 9,443 Total assets 3,079 - 9,443

Expenditure Salaries - - 6,942 Insurance 136 - - Interests 71 - - Total expenditure 207 - 6,942

At December 31, 2010, transactions with related parties were:

ACCOUNTS ACCOUNTS COMPANIES DETAIL DETAIL RECEIVABLE PAYABLE Grupo Argos S.A. 3,079 Services - Andino Trading - 960 Loan Asesorías y Servicios Ltda. in liquidation 208 Capitalization - Cartec Inc. 11,664 Loan 1,768 Loan Purchase of 326,876 shares Cementos de Caldas S.A. of Metroconcreto, 1,066,625 shares of Logitrans, rent of - 6,175 offices and warehouses Cía. de Navegación del Mar Caribe 174 Loan (pay-off) - Corporación de Cemento Andino C.A. Technical consultancies and 12,533 loans 1,904 Sale of materials Automatic debit refund reimbursement, corresponding to telephone lines of Dicementos S.A., Distribuidora de Cementos Ltda. in purchase of 3,600 shares of liquidation Sociedad Portuaria La Inmaculada S.A., 4,000 shares of Sociedad Portuaria Las Flores S.A., and 50,000 Payment of income tax, paid shares of Sociedad Portuaria 23 by Cementos Argos S.A. 60 Río Córdoba S.A. Purchase of 225,000 shares of Corporaciones e Inversiones del Mar Caribe Distribuidora Colombiana de Cementos S.A.S., 247,745 shares of Ltda. in liquidation Flota Fluvial Carbonera S.A.S., and 10.000 shares of Payment of income tax, paid Sociedad Portuaria Golfo de 4 by Cementos Argos S.A. 1,196 Morrosquillo S.A.

Emcarbon S.A. Inter-company loans for 4,154 Loan 51,965 operation Diamante. Loan for payment of Flota Fluvial Carbonera S.A.S liabilities when this company 213 was sold to Mercuria S.A. - Account receivable for Promosur S.A. in liquidation liquidation of Dicente, 470 according to Act No 90. -

F-87 ACCOUNTS ACCOUNTS COMPANIES DETAIL DETAIL RECEIVABLE PAYABLE

Proservi Ltda. in liquidation Liquidation of Vigilancia 20 Capitalization 9 Privada del Litoral Ltda.

Charge of participation in Reforestadora El Guásimo S.A. insurance against service 53 and civil liabilities -

Payment of the contribution Sociedad Portuaria La Inmaculada S.A. to the associates of Sociedad Portuaria la Inmaculada S.A., allocated -4 to Cementos Argos S.A.

Payment of the contribution Sociedad Portuaria Las Flores S.A. to the associates of Sociedad Portuaria Las Flores S.A., allocated to -8 Cementos Argos S.A.

Surandina de Puertos C.A. - 157 Loan Transfer of payroll of employees, purchase of Tempo Ltda. fixed assets (data - 61 processing equipment) Transmarítima del Caribe Ltda. in liquidation 284 Loan (pay-off ) and interests - Transportadora Alfa Ltda. in liquidation Loans to pay income tax of 1 2009 - Sale of shares of Transportadora Sucre Ltda. in liquidation 79 Asoservicios Other 621 593 Total 33,501 64,939

The abovementioned transactions were carried out at usual market rates.

During 2012, 2011 and 2010, no transactions with shareholders, directors and legal representatives were carried out that met any of the following conditions: a) Free or compensated services. b) Loans imposing an obligation on borrower that is not coherent with the essence or nature of the loan agreement. c) Loans at interest rates other than those which are normally paid or charged to third parties under similar conditions of term, risk, etc.

NOTE 28 – CONTINGENCIES AND SUBSEQUENT EVENTS

CEMENTOS ARGOS S.A. AND SUBSIDIARY COMPANIES

During 2012, there were no:

1. Inspection visits by controlling agencies that resulted in warnings or sanction.

F-88 2. Administrative, contentious or civil final and binding sanctions imposed by the relevant national, departmental or municipal authorities.

3. Judgments against Company officers for events occurred in the performance of their duties in office under criminal prosecution proceedings.

F-89 FINANCIAL RATIOS

2012 2011 2010 Current ratio - times (current assets / current liabilities) 0.75 0.54 0.84 Total indebtedness (total liabilities / total assets) 43.54% 30.29% 27.24% Asset turnover - times (operating revenues / total assets) 0.43 0.22 0.20

Profitability: Net margin (net income / operating revenues) 8.85% 10.08% 9.56% Return on shareholders’ equity (net income / shareholders’ equity) 6.78% 3.18% 2.58% Return on total assets (net income / total assets) 3.78% 2.20% 1.87% Operating EBITDA 791,190 681,544 539,182 Operating EBITDA margin 18.06% 18.58% 17.84% Operating EBITDA on total shareholders’ equity 13.85% 5.87% 4.82%

BRIEF

RATIO Formula Description Liquidity Current ratio (times) Current assets / Measures the Company’s ability to Current liabilities meet short-term debt obligations, involving its current assets. Indebtedness Total indebtedness Total liabilities / Total Shows leverage assets * 100 relevant to the participation of creditors in Company assets.

Profitability Asset turnover Operating income / The amount in pesos (times) generated by every Total assets peso of assets; it measures how efficiently the assets have been used to generate operating revenues. Net profit margin Net income / Out of every peso of Operating income * revenues, how many 100 pesos of income are generated regardless if

F-90 RATIO Formula Description they are related or not with the Company’s corporate purpose. Return on Net income / Percentage of net shareholders’ equity Shareholders’ equity * income on 100 shareholders’ equity. Shows the profitability of shareholders’ investment. Total return on Net income / Total Net income generated Assets assets by each peso invested * 100 in total assets, regardless of how it was financed. Operating EBITDA Operating income + Cash flows generated depreciation + by the amortization Company’s operation. Operating EBITDA margin Operating Ebitda / The amount that Operating revenues becomes cash out of * 100 each peso of revenue in order to pay taxes, support investments, repay debt and distribute profits. Operating EBITDA on Total Shareholders’ Operating Ebitda / The amount that Shareholders’ equity * becomes cash out of equity 100 each peso in shareholders’ equity in order to pay taxes, support investments, repay debt and distribute profits.

F-91 [Thispageintentionallyleftblank.] 1. Fixed Assets

Topic Colombian Regulations IFRS In accordance with article 64 of Decree 2649 of 1993, fixed Under IAS 16, an asset may be recognized as a fixed asset only assets represent the tangible assets (a) that are acquired, built, or if: being built, with the intention to use them permanently: (1) in Initial Recognition the production or supply of goods and services; (2) for lease; or it is probable that future economic benefits associated (3) in the administration of the economic entity, (b) are not with the asset will flow to the company; and intended for sale in the normal course of business; and (c) the cost of the asset can be measured reliably. whose useful life exceeds one year.

Under article 64 of Decree 2649 of 1993, fixed assets are Under IAS 16, assets are initially measured at cost, which initially measured at their historical value, which includes all comprises: expenditures and necessary charges to place them in a condition to be used. the asset’s purchase price, any costs attributable to bringing the asset to the The historical value of PP&E acquired through exchange, swap, conditions necessary to enable it to operate;, donation, among others, is determined by agreement of the the initial estimate of the costs of dismantling the and parties (approved by the authorities as the case may be), or rehabilitation of the site where it is located. when their price has not been determined through an appraisal. The cost of an asset built by the entity is determined using the Initial Measurement The historical value is increased by additions, improvements same principles as if it were an element of fixed assets acquired. and repairs that increase the quantity or quality of production or the asset’s useful life. In the event an asset is acquired through a swap, the cost of the asset should be measured at fair value if the swap is of a commercial nature, i.e., (a) the cash flows of the asset received differ from those of the asset transferred; or (b) the value of the activities associated with the asset changes as a result of the exchange; and the difference identified in clause (a) or (b) is material when compared to the fair value of the assets exchanged.

If the cost of an asset may not be determined by the fair value, it will be measured by its book cost.

Costs of borrowing for the acquisition of an asset are to be

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Topic Colombian Regulations IFRS capitalized at the cost of the asset, provided that they represent future economic benefits for the entity and may be identified reliably.

Under article 64 of Decree 2649 of 1993, in accordance with the Under IAS 16, after recognition, fixed assets must be measured accounting policy, the subsequent measurement continues to be using: the historical value of the asset, taking into account, however, depreciation , as determined in accordance with the asset’s the cost model: cost less any accumulated depreciation useful life. and losses for impairment value. the revaluation model: fair value at the date of The realization value, current or present, of fixed assets should revaluation less any accumulated depreciation and be determined at the close of the period during which they were impairment losses. acquired or built and at least every three years, by means of appraisals made by individuals with demonstrated professional Revaluation should be carried out regularly, depending on the suitability, trustworthiness, experience and independence. changes of the fair value, to ensure that the carrying amount Subsequent does not differ from the fair value of the asset at the balance Measurement If the commercial value exceeds the book cost, the difference is sheet date. Revaluations will depend on the changes in fair recorded as a surplus on account of the appreciation of fixed value. However, a revaluation every 3 to 5 years will be

assets. sufficient if no significant changes occur in the market value of the assets. If the commercial value is lower than the cost, without affecting it, the appreciation recorded should be reversed up to When the revaluation method is used, increases in fair value concurrence. should generally be credited against other comprehensive income and accumulated under the heading “revaluation If there is any difference below the cost, in accordance with the surplus”, unless it reverses a revaluation decrease of the same rule of prudence, a provision will be set up for each real asset, in which case it should be recognized in profit or loss.” property asset that will affect the statement of income for the Decreases will be recognized in profit or loss, or in the respective period, with a credit to the provision for PP&E revaluation surplus account of each asset, to the extent of any amount previously credited to such account.

Useful life is the period for which a PP&E asset is expected to Under IAS 16, the useful life of an asset will be defined in contribute to generating revenues. terms of the asset’s expected utility to the entity. The estimation Useful Life of the useful life of the asset may be based on the experience of Under article 2 of Decree 3019 of 1989, useful lives may be: the entity with similar assets.

20 years for real property, buildings and constructions. The linear method, the declining balance method and the units-

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Topic Colombian Regulations IFRS 10 years for personal property and fixtures 10 years of-production method may be used. 5 years for computers and vehicles.

Article 64 of Decree 2649 states that depreciation should be Under IAS16, the depreciable amount of an asset will be determined on a systematic basis (in compliance with the allocated on a systematic basis over the asset’s useful life. association rule) by means of methods of recognized technical value, such as straight-line, sum of the years’ digits, units of Depreciation begins when in the asset is in the condition production or work hours. The method to be used is that which necessary to operate as intended by management and continues will better satisfy the basic rule of association. until the asset is derecognized (e.g. when the as classified as held for the purposes of sale). Depreciation of real property should be calculated excluding the cost of the related land. Depreciation will not cease when the asset is not being used or when it has been retired from active use, unless it has been fully depreciated. Depreciation The policy adopted should be consistent during the entire accounting process.

The residual value and the useful life of an asset should be reviewed at least at the end of each financial year and, if expectations differ from previous estimates, changes will be recorded as a change in accounting estimate.

Each component of the asset that has a significant cost in relation to the total cost of the item should be depreciated separately.

No regulation exists regarding derecognition of fixed assets. Pursuant to IAS 16, an asset should be removed from the However, as an accounting process, it should be taken into balance sheet: account if any provision or valuation as a result of a technical appraisal was recorded in relation to the asset. Memorandum on disposal; or Derecognition accounts where entries related with the asset that is then sold when no future economic benefits are expected from and/or retired could have been previously recorded should be its use or disposal. reviewed, in order to remove such accounts from the financial statement. The result (loss or profit) arising from derecognition of an asset

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Topic Colombian Regulations IFRS will be included in the income statement. Gains will not be classified as revenues in the ordinary course.

An asset’s accumulated surplus will be transferred to results of the period at the time it is written-off.

In accordance with article 116 of Decree 2649, the notes Under IAS 16, the entity must disclose: accompanying the financial statements must disclosure whether the assets are recorded at their acquisition cost, the depreciation the bases for measuring carrying amount; method, if expenses for repairs and maintenance are recognized the depreciation methods used and its criterion; in the results to the extent that they are incurred. useful lives or depreciation rates; the gross carrying amount and accumulated The appreciations and provisions in relation to fixed assets depreciation, including accumulated impairment losses conform with the provisions of article 64 of Decree 2649 of at the beginning and end of each period. 1993 when the entity recognizes appreciations and provisions reconciliations of the carrying amount at the beginning that result from comparing the technical appraisals with the and the end of the period, showing: assets’ net book value. additions disposals acquisitions through business combinations Disclosure revaluation increases or decreases impairment losses reversals of impairment losses depreciation net foreign exchange differences on translation other movements

existence and materiality of restrictions on title; assets used as collateral expenditures to construct property, plant, and equipment during the period contractual commitments to acquire property, plant, and equipment if not separately disclosed in the comprehensive statement of income, compensation from third parties

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Topic Colombian Regulations IFRS for items of property, plant, and equipment that were impaired, lost or given up.

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2. Investment Properties

Topic Colombian Regulations IFRS No guideline exists on investment properties. However, initial Under IAS 40, investment property is property held to earn recognition of invest properties could be treated in accordance rentals and/or for capital appreciation. Investment property will with certain guidelines of Decree 2649 of 1993. be recognized as an asset only when it is probable that future economic benefits that are associated with such investment will Article 64 of Decree 2649 of 1993 points that the entity should flow towards the entity and the cost of investment property can Initial Recognition recognize tangible assets (a) that are acquired, built, or being be measured reliably. built, with the intention to use them permanently: (1) in the production or supply of goods and services; (2) for lease; or (3) In case part of the property is used for administration of the in the administration of the economic entity, (b) are not company and the other is used to obtain economic benefits, each intended for sale in the normal course of business; and (c) part must be identifiable and separable. whose useful life exceeds one year.

Pursuant to article 64 of Decree 2649 of 1993, such assets are Under IAS 40, investment properties will be measured initially initially measured at their historical value, which includes all at cost. expenditures and necessary charges to place them in a condition to be used. Costs associated with the transaction will be included in the measurement. The historical value of assets acquired through exchange, swap, donation, among others, is determined by agreement of the The acquisition cost of an investment property includes: Initial Measurement parties (approved by the authorities as the case may be), or when their price has not been determined through an appraisal. its purchase price any expenditure directly attributable to the asset, The historical value is increased by additions, improvements the estimate of dismantling costs and repairs that increase the quantity or quality of production or the asset’s useful life. In case an asset is received through exchange, the same procedure as applicable to PP&E assets should be used.

Under article 64 of Decree 2649 of 1993, in accordance with the IAS 40, permits entity to choose between. accounting policy, the subsequent measurement continues to be Subsequent the historical value of the asset, taking into account, however, a cost model: After the initial recognition, the entity Measurement depreciation , as determined in accordance with the asset’s that selects the cost model will account for its useful life. investment properties as set out in IAS 16. a fair value model: Fair value is the amount for which

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Topic Colombian Regulations IFRS The historical value should be increased by the additions, the property could be exchanged between improvements and repairs the significantly increase the quantity knowledgeable, willing parties in an arm’s-length or quality of the asset’s useful life. transaction, reflecting the actual market conditions and circumstances as of the measuring date. The fair value The realization value, current or present, of fixed assets should may be given by the rent that could be obtained from a be determined at the close of the period during which they were lease of similar property under similar circumstances. acquired or built and at least every three years, by means of appraisals made by individuals with demonstrated professional One model must be adopted for all investment property. suitability, trustworthiness, experience and independence.

If the commercial value exceeds the book cost, the difference is recorded as a surplus on account of the appreciation of fixed assets.

If the commercial value is lower than the cost, without affecting it, the appreciation recorded should be reversed up to concurrence.

If there is any difference below the cost, in accordance with the rule of prudence, a provision will be set up for each real property asset that will affect the statement of income for the respective period, with a credit to the provision for PP&E.

Article 64 of Decree 2649 states that depreciation should be Under IAS 40 the depreciable amount of an asset will be determined on a systematic basis (in compliance with the allocated on a systematic basis over the asset’s useful life. association rule) by means of methods of recognized technical value, such as straight-line, sum of the years’ digits, units of Depreciation begins when in the asset is in the condition production or work hours. The method to be used is that which necessary to operate as intended by management and continues will better satisfy the basic rule of association. until the asset is derecognized (e.g. classified as maintained for Depreciation the purposes of sale). Depreciation of real property should be calculated excluding the cost of the related land. Depreciation will not cease when the asset is not being used or when it has been retired from active use, unless it has been fully depreciated.

The policy adopted should be consistent during the entire

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Topic Colombian Regulations IFRS accounting process.

Each component of the asset that has a significant cost in relation to the total cost of the item should be depreciated separately.

No guidelines exist regarding the transfer of assets to or from Transfers to, or from, investment property should only be made investment property. when there is a change in use evidenced by: occupation by the Transfers owner, development with a view to sell the property, end of the occupation by the owner, commencement of an operating lease to a third party, or end of construction or development.

No regulation exists regarding derecognition of investment Under IAS 40, an investment property should be derecognized property. However, as an accounting process, it should be taken on disposal or when the investment property is permanently into account if any provision or valuation as a result of a withdrawn from use and no future economic benefits are technical appraisal was recorded in relation to the asset. expected from its disposal.

Memorandum accounts where entries related with the asset that Disposal may result from sale or incorporation into a financial is then sold and/or retired could have been previously recorded lease. should be reviewed, in order to remove such accounts from the financial statement. If the company includes the substitution cost of one portion of Derecognition the asset in its book value, it will have to write off the substituted element in the book value.

If the investment property is accounted for using the cost model, the entity should states whether the substituted portion has been amortized independently. If it is not possible to determine its book value, the substitution cost may be used as an indicator of the cost of this element at the time it was acquired or built.

Under the fair value model, the cost of the element may reflect

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Topic Colombian Regulations IFRS the decrease in value of the element that will be substituted.

In cases where it is difficult to determine the fair value of the element that will be substituted, the entity may use the substitution cost in the book value of the asset, and then a subsequent valuation at fair value would have to be carried out.

Gains or losses arising from the retirement or disposal of investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or loss in the period of the retirement or disposal.

If payment for the sale is postponed, interests resulting from the delay will be recognized in accordance with the provisions of IAS 18.

The entity will apply IAS 37, or other Standards it considers appropriate, to any liability remaining after the disposal of an investment property.

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3. Leases

Topic Colombian Regulations IFRS Article 88 of Law 223 of 1995 added to the Tax Code article Under IAS 17, the classification of leases adopted by the 127-1 relating to lease contracts, establishing rules for Standard is based on the extent to which risks and rewards accounting and tax purposes to record financial lease contracts incident to ownership of a leased asset lie with the lessor or the with a purchase option. Financial leases of real property, with a lessee. Risks include the likelihood of losses due to idle term no less than 60 months, leases of machinery, equipment, capacity or technological obsolescence, as well as variations in Initial Recognition personal property and fixtures with a term no less than 36 the performance due to changes in economic conditions. months; leases of vehicles used for production and computer Rewards may be represented by the expectation of a profitable equipment with a term no less than 24 months will be operation during the economic life of the asset, as well as by a considered operating leases. revaluation gain or a realization of the residual value.

A lease will be classified as a finance lease when it transfers substantially all the risks and rewards incident to ownership. All other leases are classified as operating leases.

Under the same regulation, at commencement of the lease, the Under IAS 17, at commencement of the lease term, a finance lessee should record an asset and a liability for the total value of lease should be recorded in the lessee’s statement of financial the property that is the subject matter of the lease. This means position as an asset and a liability at the lower of the fair value that the lessee should record an asset for an amount equal to the of the leased asset and the present value of the minimum lease current value of the rents and purchase options agreed to, payments, determined at commencement of the lease. The calculated as of the date of commencement of the contract and present value of the minimum lease payments will be at the rate agreed therein. The amount recorded as liability by discounted at the interest rate implicit in the lease, if the lessee should agree with that recorded by the lessor as practicable, or, if not, at the entity’s incremental borrowing rate. Initial Measurement monetary asset, in the account of assets given on lease. Any initial direct costs of the lessee will be added to the amount In the operating lease, these expenditures should be reported as recognized as asset. a deferred charge in the “others” sub-account, calculating the amortization over the time of useful life of the asset and, once Lessors will record finance leases in their statement of financial the purchase option is exercised, the balance pending position as a receivable, at an amount equal to the net amortization will become a part of the cost of the asset, making investment in the lease. the amortization and/or remaining depreciation using this value as reference; in the event the purchase option is not exercised, the total value should be charged to results as of the date of termination of the contract.

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Topic Colombian Regulations IFRS For operating leases, the subsequent measurement takes into Each one of the leasing installments will be divided in two parts account that rents paid are recognized as an expense. which represent, respectively, the financial charges and the reduction of the outstanding debt. The total financial burden Subsequent For financial leases, the installments paid will be reflected as a will be allocated among the periods constituting the lease term, Measurement reduction of the financial obligations and interest is recognized so that a constant interest rate is obtained in each period over as a financial expense. the debt, pending amortization. Contingent payments will be charged as expenses in the periods in which they are incurred.

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4. Intangible Assets

Topic Colombian Regulations IFRS Article 66 of Decree 2649 of 1993 defines intangible assets as Under IAS 38, an intangible asset will be recognized if and only resources obtained by an economic entity that, are without if it is probable that future economic benefits that are physical substance and involve rights or privileges against third attributable to the asset will flow to the entity and the cost of the parties, other than derivative of other assets, from which asset can be measured reliably. The probability of future economic benefits may be obtained over several determinable economic benefits must be based on reasonable and supportable periods when exercised or exploited. assumptions about conditions that will exist over the useful life of the asset. They include: The probability criterion is always considered to be satisfied for patents intangible assets that are acquired separately (the acquiring trademarks entity expects economic benefits, even if there is uncertainty author’s rights regarding the date or amount thereof) or in a business goodwill combination. franchises rights deriving from assets given in commercial trust Acquisition by means of a government grant: When an Recognition (“fiducia mercantil”) intangible asset is acquired without any charge, or for a symbolic compensation, by means of a government grant, the entity may opt for recognizing, at the initial

time, both the intangible asset and the grant, at their fair values. If the entity decides not to recognize initially the asset at its fair value, it will recognize it initially at a nominal value, plus any expenditure directly attributable to bringing the asset to the conditions necessary to the used intended by management. Swaps of assets: If the entity is able to determine reliably the fair values of the asset received or of the asset delivered, the fair value of the asset delivered will be used to measure the cost of the asset received. The fair value of an intangible asset for which no comparable transactions exist in the market may be measured reliably if (a) the variability in the range of estimates of fair value is not significant, or (b) the probabilities of the various estimates within this range may be valued reasonably and used in the estimate of

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Topic Colombian Regulations IFRS the fair value.

Under article 66 of Decree 2649 of 1993, the historical value of Under IAS 38, an intangible asset will be measured initially at intangible assets should correspond to the amount of cost. Initial Measurement expenditures clearly identifiable and that have effectively been incurred or should be incurred to acquire, make, or use such

assets, which as the case may be, should be re-expressed and as a result of inflation.

To recognize the contribution of intangible assets to the Under IAS 38, an entity must choose either the cost model or generation of revenues, these assets should be amortized on a the revaluation model for each class of intangible asset: systematic basis over their useful life. This amortization should be calculated by using the shorter of the estimated duration of cost model: after initial recognition, an intangible asset exploitation and the duration of its legal or contractual will be carried at cost less any accumulated Subsequent protection. Admissible methods include straight-line, units of amortization and impairment losses. Measurement production and other methods of recognized technical value that revaluation model: after initial recognition, an

are appropriate given the nature of the asset. The method that intangible asset may be carried at a revalued amount, better meets the basic rule of association should be selected. based on fair value at the time of revaluation, less any accumulated amortization impairment losses. Fair At the close of the reporting period, loss contingencies should value will be determined by reference to an active be recognized by adjusting and accelerating their amortization. market.

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5. Impairment of Assets

Topic Colombian Regulations IFRS Under Colombian regulations, there are no guidelines on asset Under IAS 36, an asset may be impaired if its carrying amount impairment. exceeds the amount to be recovered through use or sale of the asset.

An entity should assess, at each balance sheet date, whether there is any indication that an asset may be impaired. If such indication exists, the entity should estimate the recoverable amount of the asset.

For certain assets it is necessary to make annual evaluations of the recoverable value, irrespective of whether that are indication of impairment:

goodwill intangible assets with an indefinite useful life intangible assets not yet available for use (in formation Recognition process)

If there is an indication that an asset has been impaired, it may be necessary to review and adjust:

the useful life of the asset the residual value the amortization method

There are two sources of indications of impairment:

External sources:

The asset’s market value has decreased significantly more than expected as time goes by or its normal use. Significant changes in the legal, economic,

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Topic Colombian Regulations IFRS technological or market environment the entity operates in, or in the market the asset is intended for. Increases in market interest rates. The book value of net assets of the entity is higher than its market capitalization.

Internal sources:

There is evidence on obsolescence or physical impairment of an asset. Significant changes occur in the scope or form in which the asset is used or is expected to be used or when such changes are expected to take place, which will unfavorably affect the entity. There is applicable evidence of internal reports indicating that the economic performance of the asset is or will be worse than expected.

Under Colombian regulations, there are no guidelines on asset Under IAS 36, the recoverable amount of an asset or of a cash impairment. generating unit is the higher of its fair value less costs of sale and its value in use.

Value in use

The following elements should be reflected in the calculation of Measurement the value in use of an asset:

an estimate of the future cash flows the entity expects to derive from the asset; expectations about possible variations in the amount or timing of such future cash flows; the time value of money, represented by the current market risk-free rate of interest;

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Topic Colombian Regulations IFRS the price for bearing the uncertainty inherent in the asset; and other factors, such as illiquidity that market participants would reflect in pricing the future cash flows the entity expects to derive from the asset.

To estimate the value of use, the entity must:

estimate the inflows and outflows of cash deriving both from the continued use of the asset and of its final disposition; and apply the appropriate discount rate to these future cash flows.

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6. Financial Instruments

Topic Colombian Regulations IFRS Under the provisions of the Basic Accounting and Financial Under IAS 39, a financial asset is initially recognized when the Circular 100 of 1995 of the Colombian Superintendency of entity becomes a party to the contractual provisions of the Finance (“SFC”), supervised entities are required to value and instrument. record investments in debt securities, equity securities, investments in securities and other rights of economic content that make up Recognition their portfolios at their fair exchange value.

Accounts receivable from financing bonuses and credits to employees for housing and non-mandatory repairs are treated by the SFC as consumption and housing credits.

According to Chapter I “Classification, Valuation and Accounting The classification of financial instruments mentioned in IAS 39 of Investments” of the Basic Accounting and Financial Circular CE is: 100 of 1995 of the SFC, the classification of permanent investments and financial instruments is as follows: financial assets at fair value through profit or loss; Classification investments held through maturity; negotiable investments; loans and accounts receivable; investments to be held through maturity; financial assets available for sale. investments available for sale.

Numeral 2.1. of the Basic Accounting and Financial Circular CE Under IAS 39, all financial instruments are initially measured at 100 of 1995 of the SFC, specifies the methods for determining the fair value plus or minus, in the case of a financial asset or fair exchange value of a financial asset: financial liability not at fair value through profit or loss, transaction costs directly attributable to the purchase. 1. The fair exchange value may be determined on a Initial case-by-case basis based on operations representative Per IFRS 13, the fair value hierarchy is as follows: measurement of the market (Central Bank or by entities supervised by the SFC) or in the over the counter market (OTC). 1. Level 1 inputs are quoted prices in active markets 2. The fair exchange value may be determined by means for identical assets or liabilities that the entity can of the use of reference rates and margins calculated access at the measurement date. based on operations representative of the market 2. Level 2 inputs are quoted prices in active markets aggregated by categories, as well as on operations for identical assets or liabilities that the entity can

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Topic Colombian Regulations IFRS carried out in the over the counter market (OTC) and access at the measurement date. recorded in systems of registration of operations on 3. Level 3 inputs are quoted prices in active markets values authorized by the SFC. for identical assets or liabilities that the entity can 3. The fair exchange value may be determined by means access at the measurement date.- Unobservable of other methods, if a fair exchange value or price inputs are used to measure fair value to the extent may not be established through any of the above that relevant observable inputs are not available. provisions.

The SFC in Circular CE 100 of 1995 states that measurement Under IAS 39, financial assets at fair value through profit of should be at fair exchange value. In case there is no fair exchange loss include: Subsequent value, it should be estimated or approximated by calculating the Measurement sum of the present value of future flows from yields and capital. assets acquired or held mainly for trading in the short term; Negotiable assets that in their initial recognition are part of a Investments portfolio of identified financial instruments that are managed jointly and for there is evidence of a recent pattern of short-term profit-taking; derivatives.

Subsequent The CE 100 of 1993 classifies as investments to maintain through Investments held through maturity are instruments with fixed or Measurement maturity, securities and, in general, any type of investment in determinable payments, a fixed maturity date, that the entity has respect of which the investor has the serious intent and the legal, the actual intention and capacity to hold through maturity. They Investments held contractual, financial and operating capacity of maintaining it are measured at cost amortized by the effective interest rate. through maturity through the expiration of its maturity or redemption.

The CE 100 of 1995 provides that investments available for sale Per IAS 39, investments that are specifically designated as Subsequent are investment securities and, in general, any type of investment available for sale or that have not been designated as assets at Measurement which is not classified as a negotiable investment or held-through- fair value through profit or loss, held-to-maturity investments or maturity investment, and in respect of which the investor has the loans and receivables. The subsequent measurement is made at Investments serious intent and the legal, contractual, financial and operating fair value. Available for Sale capacity of maintaining them for at least one (1) year from the day they were classified under this category.

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Topic Colombian Regulations IFRS The Colombian regulation applies directly only to clients’ accounts An entity may derecognize a financial asset or liability when, receivable. Chapter V of CE 100 of 1995 states that derecognition and only when: should be approved by the board of directors. the financial asset has been transferred, both in regards Derecognition The derecognition should be recorded in accordance with the to contractual rights to receive cash flows and in risks. stipulations of the SFC, after creation or revision of the respective the financial liability is extinguished, that is, the provisions. obligation specified in the contract is either discharged or cancelled or expires.

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7. Income Tax

Topic Colombian Regulations IFRS Under the Colombian Tax Code, the tax base corresponds to all Under IAS 12, the tax base is generally the deductible or taxable revenues received by a taxpayer in the year, that are liable to value for tax purposes. The way management intends to calculate Tax Base generate net increase in equity at the time of perception, provided or recover the book value affects the determination of the tax that they have not been expressly exempted, and after deducting base. the costs and expenses incurred.

Article 5 of the Tax Code provides that income and ancillary Under IAS 12, current tax for current and prior periods will be taxes is considered as a single tax and extended to taxpayers other recognized as a liability, to the extent unpaid. than individuals, such as illiquid successions, among others, that compute taxes based on income, capital gains and foreign Tax losses that could be used to recover taxes paid in prior years transfers of income and capital gains, as well as on commercial should be recognized as an asset in the same period it is profits in the case of branches of foreign companies. generated, as it will bring economic benefits to the company and is measurable reliably, at the amount expected to be recovered To determine the tax, the taxpayer must ascertain the net income, from the taxation authorities. through calculating the gross income and applying to it the deductions related with income generation activities, less exempt Recognition of deferred taxes: income (if any). Taxable temporary differences: When the carrying Initial Recognition However, the tax should be realized in accordance with the amount of the asset or liability exceeds its tax base, it higher value of presumptive income and net income. Presumptive will result in a deferred tax liability, unless the income assumes what the company should have received in difference arises from the initial recognition of goodwill, revenues and profits during the year and corresponds to 6% of or the initial recognition of an asset/liability other than gross equity of the prior year. in a business combination which, at the time of the transaction, does not affect either the accounting or the taxable profit; Deductible temporary differences: When the carrying amount of an asset or liability is lower than its tax base, it will give rise to deferred tax asset, unless the difference arise from the initial recognition of an asset or liability other than in a business combination which, at the time of the transaction, does not affect the accounting or the taxable profit. Deferred tax assets should be reviewed at each balance sheet date and eliminated to the extent that it is no longer probable that

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Topic Colombian Regulations IFRS they will still be used. Any elimination should be subsequently reversed to the extent that it becomes probable that sufficient taxable profit will be available to use the deferred tax assets.

A deferred tax asset should be recognized for an unused tax loss carryforward or unused tax credit if, and only if, it is considered probable that there will be sufficient future taxable profit against which the loss or credit carryforwards can be utilized.

Taking into account the bases mentioned above, pursuant to Under IAS12, deferred tax assets and liabilities should be article 240 of the Colombian Tax Code, the tax rate for this tax measured (reflecting expectations as to temporary differences) at will be of 33% for stock companies (sociedades anónimas), the tax rates that are expected to apply to the period when the Measurement limited liability companies (sociedades de responsabilidad asset is realized or the liability is settled (liability method), based limitada) and other foreign entities, which will be applied at the on tax rates/laws as of the balance sheet date. above mentioned bases, in accordance with official calculations approved by local tax laws.

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8. Employee Benefits

Topic Colombian Regulations IFRS Title V and Title VIII of Chapter 2 of the Colombian Labor IAS 19 defines short-term benefits as those payable within twelve Code, describe the recognition of short-term benefits as: months after the closing period during which the corresponding service is rendered. They include: salaries social security salaries, wages and contributions to the social security. leaves, compensated absences. participation in profits and incentive plans. non-monetary benefits such as medical care, housing, vehicles and delivery of free or subsidized goods and services (during employment).

When the employee has rendered his services during the accounting period, the company should recognize them:

as a liability (earned expense), after deducting any amount Initial Recognition already paid. If the amount paid is higher than the unpaid amount of the benefit, the difference is recognized as an Short-Term Benefits asset (advance payment of an expense). as an expense, unless another Standard requires the

inclusion of the stated benefits in the cost of an asset (see, for example IAS 2 Inventories, and IAS 16 Property, Plant and Equipment).

For these benefits, it is not necessary to set out any actuarial hypothesis to measure the corresponding obligations or costs.

Compensated absence:

Taking into account the above considerations, absences will be recognized when:

an absence is compensated where the right accrued as the service is rendered. These are measured at the expected cost of those absences, at the end of the period reported, based on the values of the rights accrued until such date.

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Topic Colombian Regulations IFRS non-cumulative compensated absences: No liabilities or expenses are recognized in these situations, until such time as the absence occurs, since services rendered by employees do not increase the amount of the benefits the employee is entitled to.

Participation in profits:

The company will recognize the expected cost of the participation in profits or in the incentive plans by employees when, and only when:

it has a present obligation, legal or constructive, to make such payments as a result of past events; and, a reliable estimate of the expected cost can be made.

Articles 260 to 276 of chapter 2 of title IX of the Under IAS 19 Post-Employment Benefits include: Colombian Labor Code, describes the recognition of Retirement Pension payments. retirement benefits, such as pension plans. Initial Recognition other post-employment benefits, such as life insurance or post-employment medical care. Post-Employment Benefits Post-employment benefits are classified in:

defined contribution plans defined benefit plans

Not contemplated in Colombian regulations. Under these plans, the entity makes predetermined contributions to a separate entity (a fund) but has no legal or constructive obligation to Defined Contribution make additional contributions in the event that the fund does not Plans have sufficient assets to pay all of the employees’ benefits related to services rendered in the current and the previous periods.

The actuarial risk (which occurs when the benefits are lower than those expected) and the investment risks (which occur when the assets invested are insufficient to cover the expected benefits) are

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Topic Colombian Regulations IFRS assumed by the employee.

These plans are classified under:

multi-employers’ plans: contributions are gathered by various entities which are not under common control and used to provide benefits to employees of more than one entity. defined benefit plans where risks are shared among the various entities under joint control (a controlling entity and its subsidiaries). government plans: these plans are established by the legislation to cover all entities specified therein and are managed by national and local authorities or by any other body that is not subject to the control or influence of the entities of which employees are the beneficiaries.

When the employee has rendered his services during the accounting period, the company must recognize the contribution payable to the defined contributions plan:

as a liability (earned expense), after deducting any amount already paid. If the amount paid is higher than the unpaid amount of the benefit, the difference is recognized as an asset (prepayment of an expense). as an expense, unless another Standard requires the inclusion of the stated benefits in the cost of an asset (for example, see IAS 2 Inventories, and IAS 16 PP&E).

Not contemplated in Colombian regulations. Defined benefit plans are plans other than defined contribution plans, i.e. where the entity’s obligation consists in providing agreed benefits to current and former employees. Defined Benefit Plans Therefore, the actuarial risk (which occurs when t the benefits have a higher than expected cost) and the investment risk are assumed, essentially, by the entity itself. If actuarial differences or the

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Topic Colombian Regulations IFRS investment yield are lower than expected, the entity’s obligations may increase.

These benefits may be financed through other means than a fund, or, fully or partially, by means of contributions made by the company and possibly by the employees to a fund that is in charge of paying the benefits to the employees. The payment of the benefits through a fund does not only depend on the financial situation and the yield of the investments held, but also on the capacity and will of the entity to cover any insufficiency of the fund’s assets.

Under Decree 4565 of 2010, entities supervised by the SFC The accounting treatment of defined benefit plans requires the may, as of the financial statements of December 31, 2010, company to take the following steps: allocate or distribute the percentage pending amortization of its actuarial calculation until 2029 in a linear way. Use actuarial techniques to make a reliable estimation of the value of the benefits the employees have accumulated. The formulation of the calculations will be made in This calculation requires computing the benefits for the accordance with the provisions and legal rules issued to current period and previous periods, making estimate of date, which are Decree 2498 of 1988, Law 100 of 1993 and demographic variables (such as employees’ turnover and the External Circular of the Superintendency of mortality) and financial variables (such as future salary Corporations 07 of 1998. increases and medical assistance costs) that have an Measurement influence on the cost of the benefits to be provided. Find the present value of the obligations that make up the benefits and the cost of the services for the current period, Defined Benefits Plan using the projected-unit-of-credit method, which consists in taking each year of service as an additional unit of the entitlement to benefits, measuring each unit separately to arrive at the final obligation. Determine the fair value of any of the plan assets, using market prices or, if not available, the discount rate of future cash flows, discounting from the calculation any unpaid contributions. Determine actual profits or losses, and the gains or losses to be recognized. If the plan has been reinstated or if the conditions have changed, determine the cost in respect of past services as

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Topic Colombian Regulations IFRS well as any increase or decrease in the actual value of obligations in respect of pensions attributable to services rendered by employees during the previous periods, as a result of changes in the obligations. If the plan has been curtailed or settled, determine the corresponding loss or profit. If the company maintains more than one defined benefit plan, apply the above procedures to each plan that is significantly distinct. In some cases, use estimates, averages or simplified methods of calculation to provide a reliable approximation of the procedures above described.

Accounting for constructive obligations

The entity will record not only its legal, formal obligations in respect of a defined benefit plan, but also informal practices, called constructive obligations.

The company may withdraw from the defined benefit plan without fulfilling its promised obligations, however, it cannot retain its employees. Nevertheless, in accounting for post-employment benefits, the entity must assume that it is actually promising the benefits and will continue to maintain them over the rest of its employees’ employment.

Statement of financial position

The entity will record in its statement of financial position the sum of the following amounts:

current value of the obligation at the closing date; deferred actuarial gains or losses; cost of the revocable deferred past services; effect of any curtailment or settlement of the plan.

The sum of the above amounts may be negative (asset) or positive

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Topic Colombian Regulations IFRS (liability). The asset amount to be recorded will be the lower of the following amounts: the result of the above calculation or the total value of actuarial losses and the cost of unrecognized past services, and the current value of any amount that may be refunded to the entity or reduction in future contributions to be made by the entity.

The standard establishes certain limits for the asset amount to be recognized.

The company will measure the economic benefit available as a refund as the amount of surpluses as of the balance sheet date (which is the fair value of plan assets less the actual value of the obligation in respect of defined benefits), less associated costs.

Calculation of results

The loss to be recorded will be the net amount of the following components:

the cost of services for the current period; the cost of interests; the expected return on any plan assets or any right to refund; recognized actuarial gains or losses; the cost of recognized past services; effect of any curtailment or settlement.

Actuarial gains or losses are defined as the effect of changes in actuarial hypotheses (financial and demographical).

Return on plan assets are recognized in the statement of income. The difference between the projected return on plan assets and the actual return is an actuarial gain or loss and is included in the calculation.

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Topic Colombian Regulations IFRS Not contemplated in Colombian regulations. These benefits are of the following types:

compensated long term leaves, such as sabbatical or sick Recognition leave. permanent disability benefits. Other Long-term seniority bonuses. benefits participation in benefits, deferred compensation and bonuses paid at least one year after the period when they were earned.

Not contemplated in Colombian regulations These are treated the same way as defined benefits, except for the following, which should be recognized immediately:

Measurement and actuarial gains and losses, without the possibility of Disclosure applying the fluctuation range, any cost for past services. Other Long-Term Benefits Taking into account these exceptions, accounting requirements are the same as for long-term benefits.

No specific disclosure requirements exist.

As described in article 64 of the Colombian Labor Code, They correspond to the amounts employees are entitled to as a result every labor agreement implicitly contains the obligation to of: indemnify the losses attributable to the party responsible for to the breach of the agreement, which in all cases is the the employer’s decision to terminate the contract before the Recognition employer. normal retirement date, or a decision of the employee to voluntarily accept the Benefits due to Article 66 of the Colombian Labor Code states that the dismissal in exchange for an indemnity. contract termination employee should be informed the reason for the dismissal at the time it occurs, which could be: Indemnities for termination should be recorded as a liability and an

expense when, and only when, the entity is demonstrably required Article 62: Termination of the contract for just to: cause. Article 63: Termination with previous notice. terminate the contract with an employee or group of Article 64: Unilateral termination of the contract

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Topic Colombian Regulations IFRS without just cause. employees before the normal retirement date, or pay indemnities for dismissal as a result of an offer made in order to encourage voluntary dismissals.

“Demonstrably required” means that:

the entity has a formal detailed plan for rescissions which it cannot cancel; the detailed plan should include at least:

the location, function and approximate number of employees whose services will be suspended; indemnities due to cessation for each type of work or function; the time when the plan is to be implemented; and

the implementation should start as soon as possible and be completed rapidly enough so that material changes in the plan be unlikely.

Article 64 of the Colombian Labor Code states that in case When benefits are paid more than 12 months after the end of the of unilateral termination by the employer of the reported period, their amount will be discounted at the discount rate Measurement employment agreement without a proven just cause or if specified by actuarial assumptions. the employer gives rise to the unilateral termination by the Benefits Upon employee due to any of the just causes contemplated in the In the event there is an offer of the entity to encourage the voluntary Contract Termination law, the former will owe an indemnity to the latter in termination of the agreement, the measurement will be based on the accordance to the law. number of employees expected to accept the offer.

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9. Provisions and Contingencies

Topic Colombian Regulations IFRS Article 52 of Decree 2649 of 1993 provides that a Under IAS 37, an entity must recognize a provision if and only if the contingency is a condition, situation or set of existing following conditions are met: circumstances that involve uncertainty in respect to a possible profit or loss by an economic entity, uncertainty A present obligation has arisen as a result of a past event: that will eventually be resolved when one or more future Considering all the evidence available at the end of the events occur or cease to occur. reported period, it may be considered that a probability exists that there is an obligation as a consequence of a past Contingencies may be probable, possible or remote. event. The past event could result from a legal obligation, or a constructive obligation arising from a valid expectation Probable contingencies are those in respect of among the parties involved. Initial Recognition which the information available, considered as a It is probable that the entity will need to pay such whole, indicates that the occurrence of future obligation by spending resources that incorporate economic events is possible. benefits. Probable means that the possibility of occurrence Possible contingencies are those in respect of of an event is higher than the probability of non- which the information available, considered as a occurrence. When the obligation is not probable, a whole, does not allow to predict if future events contingent liability should be disclosed, unless it is will occur or will cease to occur. considered remote. Remote contingencies are those in respect of The amount of the obligation can be estimated reliably: A which the information available, considered as a set of possible results of the situation should be determined whole, indicates that the occurrence of future in a manner sufficiently reliable to be used in the events is remotely possible. recognition of the provision.

No Colombian regulation exists regarding the measurement Under IAS 37, to provide the best possible measurement of the of provisions. provision, the following should be taken into account:

Best estimate: the amount that an entity would rationally pay to settle the obligation at the balance sheet date or to Measurement transfer it to a third party at that date.. Risks and uncertainties: To make the best estimate, all possible outcomes should be taken into account in order not to overstate or understate the assets or revenues or the liabilities or expenses. Present value: In case the financial impact of the provision is significant, it should reflect the present value of the

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Topic Colombian Regulations IFRS expenditure expected to be made to pay the obligation, valued at market rates reflecting the time value of money. Future events: Events occurring in the future that could affect the amount necessary to pay the obligation must be valued and taken into account in the estimate. Provisions expected from assets: Expected gains upon the disposal of assets should not be taken into account to evaluate the provision amount, even if this provision is tied up with the event motivating it.

No Colombian regulation exists regarding the recognition Under IAS 37, if some or all of the expenditure required to settle a of reimbursement obligations. provision is expected to be reimbursed by a third party, the reimbursement should be recognized when, and only when, it is Reimbursements virtually certain that it will be received if the entity settles the obligation that is the object of the provision. In such case, this reimbursement should be treated as a separate asset and the amount recognized should not exceed the amount of the provision.

Article 52 of Decree 2649 of 1993 contemplates the Under IAS 37, at the end of each period, the estimate should be qualification and quantification of contingencies. reviewed for evaluation and adjustment, in order to provide at all Contingencies should be adjusted at least at the close of times the best estimate possible. each period, if necessary based on the advice of experts. If it is no longer probable that an outflow of resources incorporating Changes in value economic benefits for the entity will be required to settle the obligation, the provision should be settled or reversed.

In case a discount rate is used to reflect the increase in the value of the provision over time, such increase will be reflected as a borrowing cost.

Article 52 of Decree 2649 of 1993 establishes that Under IAS 37, the provision should be used only to resolve the Application provisions should be recorded to cover estimated liabilities, obligation for which it was created. contingencies of probable losses as well as to decrease the

re-expressed value, in the case of assets, when necessary, in Using a provision for purposes other than those for which it was accordance with technical practices. Provisions should be created produces the effect of hiding the impact of two different

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Topic Colombian Regulations IFRS justified, quantifiable and reliable. events.

Under Resolution 2300 of 1990 (Single Plan of Accounts Future losses deriving from the operation: The company may not of the Insurance Sector) provisions are contemplated within recognize within its provisions forecast or expected losses as a result the plan of accounts for: of the ordinary course of business.

labor obligations Onerous contracts: Onerous contracts are contracts in which the taxes unavoidable costs of fulfilling the obligations exceed economic contributions and affiliations benefits expected from it. The entity must recognize the current fines and penalties of SFC utility it derives from these contracts, which obligations should be fines, penalties, litigation, indemnities and recognized and measured with provisions. lawsuits obligations in favor of intermediaries Restructuring: Restructuring is the sale or termination of an miscellaneous operation line, closure of a location of the company, the country or minority interest region where it is located, changes (elimination) in the management structure, significant reorganizations of the company.

Under this perspective, the company that recognizes a provision should:

have a detailed plan to carry out the restructuring that identifies the areas involved, the locations affected, the data of employees who will receive indemnity (location, function and number), probable expenditures, implementation date of the plan. create a real expectation of the restructuring among the affected parties upon commencement of the development of the plan or upon creating the uncertainty.

Restructuring provisions should include only those expenditures arising from the restructuring that are necessary for such purpose, not costs associated with ongoing activities of the entity.

These costs should not be included:

formation or relocation of personnel who remain with the entity;

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Topic Colombian Regulations IFRS marketing or publicity; or investment in new systems and distribution networks.

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10. Investments in Associates

Topic Colombian Regulations IFRS Under article 61 of Decree 2649 of 1993, investments in Under IAS 28, significant influence arises where the company associates, in which the entity has the right to profits or surpluses, holds, directly or indirectly, 20% or more of the voting power of should be recognized under the equity method. However, if these the associate, unless it is possible to clearly demonstrate that such investments are held for disposal, they should be recorded at cost. influence does not exist.

Significant influence also exists among entities if one or several of the following conditions are met:

Recognition representation of one entity in the administrative council or equivalent body of the other; participation of one entity in policy-making processes of the other, among them, decisions to distribute dividends or other distributions; material transactions between the entity and the associate; exchange of executive personnel among entities; provision essential technical information among entities.

The acquisition cost is recognized at the moment of the The initial measurement of investments in associates is made acquisition. using the equity method, whereby the investment is recorded at cost and is subsequently adjusted to reflect changes subsequent to Initial the acquisition in the investor’s share of the net assets of the Measurement associate. The investor’s financial statement includes its participation in the associate’s financial statement and the other comprehensive income of the investor includes its share in the other comprehensive income of the associate.

As stated above, the entity should evaluate the investments in An investment will be recorded using the equity method as of the associates and if it intends to dispose of them, it should leave date it becomes an associate or joint business. At the time of the Subsequent them at the acquisition cost. investment acquisition, any difference between the investment Measurement cost and the share of the entity in the net fair value of identifiable assets and liabilities of the associate will be recorded as follows:

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Topic Colombian Regulations IFRS The surplus related to an associate or joint business will be included in the book value of the investment. The amortization of such surplus will not be permitted. If the entity’s share in the net fair value of identifiable assets and liabilities of the associate is higher the cost of the investment, the difference will be included as revenue for the determination of the share of the entity in the associate or joint business’s financial statements for the period in which the investment is acquired.

The appropriate adjustments will be made in the entity’s share in the associate or joint business’s financial statements after the acquisition to reflect differences in accounting.

It is also necessary to make appropriate adjustments in the share of the entity in the associate or joint business’s financial statement after the acquisition to reflect losses due to impairment in value such as goodwill or property, plant and equipment.

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11. Joint Arrangements

Topic Colombian Regulations IFRS Decree 2649 does not contain directives for the accounting of IFRS 11 provides that a joint business has the following joint businesses. The Plan Único de Cuentas (“PUC”), the tax characteristics: regulations or in certain doctrines, resolutions or circulars refer to these types of arrangements, among other: Accounts in The parties are under a contractual arrangement; participation, consortia, Temporary Unions, joint operation The contractual arrangement gives two or more of those accounts, stand-alone trusts. parties joint control of the arrangement.

Contributions into accounts in participation are recorded in the A joint arrangement may be either: category of investments and the business must keep separate records in memorandum accounts. Contributions into partnership a joint operation, which is a joint agreement whereby the Joint contracts are recorded as advances or in other debtors. parties that have joint control of the arrangement have Arrangements rights to the assets and obligations for the liabilities Recognition Assets, liabilities, revenues and expenses deriving from joint related with the agreement. Those parties are called joint operation contracts are recorded in the accounting of the operators. participants, using in certain cases criteria similar to those for a joint business, which is a joint agreement whereby the investments in order to adjust the amount of investments made in parties that have joint control of the agreement have this type of businesses. rights to the net assets of the arrangement. Those parties are called joint venturers. External Circular 6 of 2009 on cooperation contracts established certain directives for the accounting of this type of business, permitting the use of the proportional consolidation method for the incorporation into the financial statements of the participants of their participation in the joint businesses.

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12. Consolidation

Topic Colombian Regulations IFRS The SFC regulates consolidation in Chapter X, Consolidated IRFS 10 Consolidated Financial Statements establishes the Financial Statements, of the Basic Accounting and Financial principles for the presentation and preparation of consolidated Legislation Circular (External Circular 100 of 1995). financial statements when the entity controls one or more different entities.

Under Chapter X of the EC 100 of 1995 of the SFC, supervised Under IFRS 10, an investor controls the associate when it is entities will consolidate when: exposed or has the right to receive variable returns from its investment in the associate and has the capacity of affecting these they own, directly or indirectly, fifty per cent (50%) or returns through its power over the associate. more of the social rights or outstanding contributions. when it is presumed that the investor entity exercises This standard: dominant influence over the subordinated entity. combined financial statements should be prepared; the requires that an entity (the controlling entity) that Recognition combination will be presented on the same basis as the controls one or more different entities (subsidiaries) consolidation of financial statements. present consolidated financial statements; unit of purpose and management exists between the defines the control principle, and establishes the control supervised entities. as the basis for consolidation; sets out how the control principle is applied to identify whether an investor controls an associate entity and therefore should consolidate such entity; sets out the accounting requirements for the preparation of the consolidated financial statements.

With respect to regulation of a minority interest, chapter X of the Under IFRS 10, a controlling entity will present the non- EC 100 of 1995 establishes that when combined financial controlling participations in its consolidated statement of Minority interest statements should be prepared, the combination will be presented financial position, within equity, separately from the equity of the or Non- on the same basis as the consolidation of financial statements for controlling entity’s owners. Controlling controlled entities, adding the figures of the financial entities to Participation be combined and making the appropriate adjustments and eliminations. In these cases, the participation that does not correspond to the economic group of the combined entities is

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Topic Colombian Regulations IFRS recognized as a minority interest.

Chapter X of the EC 100 of 1995 provides the following Under IFRS 10, consolidated financial statements: regarding subsidiary entities: combine similar items of assets, liabilities, equity, Reconciliations of reciprocal operations that involve a income, expenses and cash flows of the parent with difference or that have not been recorded by any of the those of its subsidiaries. entities, in order to determine the figure that should be offset (eliminate) the carrying amount of the parent’s eliminated during consolidation. investment in each subsidiary and the parent’s portion of Eliminate the reciprocal operations and balances equity of each subsidiary (IFRS 3 explains how to reflected in the financial statements of each one of the account for any related goodwill). entities to be consolidated as: fully eliminate intercompany assets and liabilities, equity, income, expenses and cash flows related with Investments in rights or fixed yield securities, transactions between entities of the group. deposits in checking or savings accounts, including accrued returns. An entity will include the income and expenses of a subsidiary in

Consolidation Sales and purchases of realizable goods or the consolidated financial statements from the date it gains inventories, with their respective effect on the control until the date such control ceases. Measurement value of inventories, on the cost of sales and on unrealized profits. The parent will derecognize the assets and liabilities of the Assets received in lieu of payment of debts former subsidiary from the consolidated statement of financial between the group entities. position. Sales and purchases of any class of assets (intangibles, depreciable, depletable or amortizable). Balances receivable and payable, including returns accrued thereon. Revenues and expenses recorded during the accounting period, so that they correspond to realized operations that do not reflect a balance in the balance sheet. All eliminations in respect of the operations that affect the results of prior years will be recorded against the account of the same name.

The proportional equity value is the result of the multiplication of

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Topic Colombian Regulations IFRS the subordinate’s equity, as of the investment date, by the participation percentage acquired by the investor entity on that date. Its purpose is to determine whether the investment cost is higher or lower than the carrying amount of the issuer, and to establish the amounts that should be eliminated from each of the accounts of the subordinate’s equity against the acquisition cost of the investment recorded by the investor entity.

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13. Presentation of Financial Statements

Topic Colombian Regulations IFRS According to decree 2649, the elements of the financial The elements of the financial statements, according to IAS 1, are: statements are: assets Elements of assets liabilities Financial liabilities equity Statements equity income and expenses income, costs and expenses contributions by and distributions to owners price-level adjustments cash flows memorandum accounts

According to decree 2649, the financial statements are composed Under IAS 1, a complete set of financial statements includes: of: statement of financial position balance sheet statement of comprehensive income Basic Financial income statement statement of changes in equity Statements statement of changes in equity cash flow statement statement of changes in financial position notes cash flow statement notes

The Basic Accounting and Financial Circular (CE 100 of 1995) Under IAS 1, the statement of financial position must detail the states that the balance sheet is a static financial statement, following items: fixed assets, property investments, provisions, through which cumulative figures are reported at a given date, financial liabilities, intangible assets, financial assets, equity- Balance sheet - which is the financial position at that date. value investments, assets classified according to IFRS 5, stock, Statement of clients and other accounts receivables, suppliers and other financial position Consequently the user of the information should be able to accounts payable, cash and cash equivalents, assets and liabilities determine what important variations have occurred between one for current and deferred tax, liabilities classified according to date and another, which is what should be disclosed on the IFRS 5, non-controlling interests, issued capital and reserves published balance sheet. attributable to shareholders of the parent.

Following the disclosure rule under decree 2649, the assets and IAS 1 states that the statement of financial situation must present Current and Non- liabilities should be classified depending on their intended use or

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Topic Colombian Regulations IFRS Current degree of realization, enforceability or liquidation, in terms of the current and non-current assets and liabilities separately. time and value.

For this purpose, current assets or liabilities are defined as those amounts that will be realizable or enforceable, respectively, within a period not exceeding one year, as well as those that will be realizable or enforceable within one operating cycle when the normal cycle exceeds one year.

Income statement The Basic Accounting and Financial Circular (CE 100 of 1995) Under IAS 1, the statement of comprehensive income includes all – Statement of states that the income statement, in contrast with the balance items of income and expenses recognized in that period along comprehensive sheet, is characterized by being dynamic. It presents the income, with the other items recognized as profit or losses not realized in income costs and expenses of the company. other comprehensive incomes.

Decree 2649 specifies that the statement of changes in equity Under IAS 1, the statement of changes in equity includes only the must contain: distributions of profits declared during the period, the details of the transactions with owners, while the other movement of the profits not appropriated, movement of each of transactions non related to the owners that affect the equity will Statement of the reserves or other accounts included into de profit not be included in one single line (other comprehensive income), the Changes in Equity appropriated accounts, movement of the paid-in shares and detail of which will be included in a separate financial statement. valuations, movement of the equity revaluation and the movement of other accounts that are part of the equity.

Decree 2649 establishes that the statement of changes in financial This is not contemplated under international standards. position must include the following information:

the accumulated amount of all the resources provided during the period and their utilization, regardless of Statement of whether cash and other components of the working Change in capital are directly affected; Financial Position the working capital provided or used in the operations of the period; the effect in the working capital of the extraordinary items; expenditures for purchasing consolidated subsidiaries, gathered by categories of acquired assets and debts

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Topic Colombian Regulations IFRS contracted; acquisitions of non-current assets; product of the sale of non-current liabilities; conversion of long-term liabilities into contributions the incurrence, redemption or payment of long-term debts; the issuance, redemption or purchase of contributions; declaration of dividends, contributions, shares or capital surplus; changes in every item of working capital.

Under Decree 2649, the statement of cash flows must show the IAS 1 specifies that the information that the cash flows provide to detail of cash received or paid during the period, classified by users of financial statement is a basis to evaluate the entity’s activities of: ability to generate cash and cash equivalents and the entity’s need to use those cash flows. IAS 7 establishes the requirements for Cash Flow operation, that is, those that affect the income statement; presentation and disclosure of the information that must be Statement investment of resources, that is, the changes in assets included in the cash flows that differ from current assets; funding of resources, that is, the changes in liabilities and equity that differ from current items.

Under decree 2649, the notes, as presentation of the accounting Under IAS 1, notes must: practices and disclosure of the entity, are an integral part of the financial statements. present information about the bases of preparation of the financial statements and the accounting policies applied; Each note must be identified by a number or letter and duly disclose any information required by IFRS that is not entitled, in order to facilitate its reading and cross-reference to the presented elsewhere in the financial statements. Notes respective financial statements. give additional information that is relevant to its understanding and is not presented elsewhere in the The initial notes must identify the economic entity, summarize its financial statements. accounting policies and practices and material matters.

The notes must be presented in a logical sequence, following, to the extent possible, the same order as the financial statements items.

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