IMPORTANT NOTICE

You must read the following disclaimer before continuing. The following disclaimer applies to the attached offering memorandum (the “offering memorandum”). You are therefore advised to read this disclaimer page carefully before reading, accessing or making any other use of the attached offering memorandum.

THE FOLLOWING OFFERING MEMORANDUM MAY NOT BE FORWARDED OR DISTRIBUTED OTHER THAN AS PROVIDED BELOW AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. THIS OFFERING MEMORANDUM 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 OFFERING MEMORANDUM 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 OF AMERICA OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THE ATTACHED OFFERING MEMORANDUM MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS OFFERING MEMORANDUM IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

CONFIRMATION OF YOUR REPRESENTATION: In order to be eligible to view the attached offering memorandum or make an investment decision with respect to the securities, investors must be either (i) a “qualified institutional buyer,” within the meaning of and in reliance on Rule 144A or (ii) a non “U.S. person” (as defined in Rule 902 under the Securities Act) in an offshore transaction in accordance with Regulation S under the Securities Act (together, “Eligible Investors”). By opening the e-mail or accessing the offering memorandum, you shall be deemed to have represented to Grupo Cementos de Chihuahua, S.A.B. de C.V. (the “Company”), Citigroup Global Markets Inc., BBVA Securities Inc. and Scotia Capital (USA) Inc. (the “initial purchasers”), that (1) you and any customers you represent are Eligible Investors; (2) you consent to delivery of the offering memorandum by electronic transmission; and (3) you are a “relevant person” (as defined below) if in the United Kingdom or you are outside the European Economic Area or the United Kingdom (and the electronic mail address that you gave us and to which this e-mail has been delivered are not located in such jurisdictions).

This offering memorandum is for distribution only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion Order"), (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). This offering memorandum is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this offering memorandum relates is available only to relevant persons and will be engaged in only with relevant persons.

You are reminded that the attached offering memorandum has been delivered to you on the basis that you are a person into whose possession the offering memorandum 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 offering memorandum to any other person. You will not transmit the attached offering memorandum (or any copy of it or part thereof) or disclose, whether orally or in writing, any of its contents to any other person except with the consent of the initial purchasers.

Under no circumstances shall the offering memorandum 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.

The 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 electronic transmission and consequently none of the Company, the initial purchasers or any of their respective affiliates, or any directors, officers, employees or agents of any of the Company or the initial purchasers 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 any of the initial purchasers.

OFFERING MEMORANDUM STRICTLY CONFIDENTIAL

U.S.$260,000,000

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. de C.V. 5.250% Senior Notes due 2024

Unconditionally guaranteed by GCC Cemento, S.A. de C.V., Cementos de Chihuahua, S.A. de C.V. and GCC of America, Inc.

_____________________ Grupo Cementos de Chihuahua, S.A.B. de C.V. (the “Company”) is offering U.S.$ 260,000,000 aggregate principal amount of senior notes due 2024

(the “notes”). The notes will mature on June 23, 2024. Interest on the notes is payable on June 23 and December 23 of each year, beginning on December 23, 2017. We may redeem some or all of the notes on or after June 23, 2021 at the prices and as described under “Description of Notes—Optional Redemption.” Prior to June 23, 2021, we may redeem the notes in whole or in part, at a redemption price based on a “make-whole” premium as described under “Description of Notes—Optional Redemption.” In addition, as described under “Description of Notes—Optional Redemption,” prior to June 23, 2020, we may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings. We may also redeem the notes, in whole but not in part, at a price equal to 100% of their outstanding principal amount, plus accrued and unpaid interest, and any additional interest due thereon if certain changes in applicable tax laws occur as described under “Description of Notes—Optional Redemption.” If a change of control event described under “Description of Notes—Change of Control” occurs, we may be required to offer to purchase the notes from the holders.

The notes will be senior obligations of the Company and will rank equally in right of payment with all other existing and future senior indebtedness of the Company subject to certain statutory preferences under Mexican law, including tax, social security and labor obligations. The notes will be guaranteed by GCC Cemento, S.A. de C.V. (“GCC Cemento”), Cementos de Chihuahua, S.A. de C.V. (“Cementos de Chihuahua”) and GCC of America, Inc. (“GCC of America”). See “Description of Notes—Note Guarantees.”

Prior to this offering, there has been no market for the notes. Application has been made to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for the listing and quotation of the notes on the Official List of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained herein. Approval in-principle from, and admission of the notes to the Official List of the SGX-ST and quotation of any notes on the SGX-ST are not to be taken as an indication of the merits of the offering, the Company, the Guarantors, their respective subsidiaries (if any), their respective associated companies (if any), their respective joint venture companies (if any) or such notes. If the application to the SGX-ST to list the notes is approved, for so long as such notes are listed on the SGX-ST and the rules of the SGX-ST so require, such notes will be traded on the SGX-ST in a minimum board lot size of at least U.S.$200,000.

Investing in the notes involves risks. See “Risk Factors” beginning on page 21. _____________________

Issue price for notes: 100.000% plus accrued interest, if any, from June 23, 2017. _____________________

The notes and the guarantees have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Prospective purchasers that are “qualified institutional buyers” (“QIBs”) within the meaning of Rule 144A under the Securities Act (“Rule 144A”) are hereby notified that the sellers of the notes may be relying on an exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. Outside the United States, the offering is being made in reliance on Regulation S under the Securities Act (“Regulation S”). This offering memorandum has not been approved by a competent authority within the meaning of the Prospectus Directive. See “Transfer Restrictions; Notice to Investors” for additional information about eligible offerees and transfer restrictions.

THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE NATIONAL SECURITIES REGISTRY (REGISTRO NACIONAL DE VALORES) MAINTAINED BY THE MEXICAN NATIONAL BANKING AND SECURITIES COMMISSION (COMISION NACIONAL BANCARIA Y DE VALORES (“CNBV”)), AND MAY NOT BE OFFERED OR SOLD PUBLICLY IN MEXICO. WE WILL NOTIFY THE CNBV OF THE TERMS AND CONDITIONS OF THIS OFFERING AS REQUIRED UNDER APPLICABLE LAW AND FOR INFORMATIONAL PURPOSES ONLY. DELIVERY OF SUCH NOTICE TO, AND RECEIPT THEREOF BY, THE CNBV IS NOT A REQUIREMENT FOR THE VALIDITY OF THE NOTES AND DOES NOT CONSTITUTE OR IMPLY A CERTIFICATION AS TO THE INVESTMENT QUALITY OF THE NOTES, OUR SOLVENCY, LIQUIDITY OR CREDIT QUALITY OR THE ACCURACY OR COMPLETENESS OF THE INFORMATION SET FORTH IN THIS OFFERING MEMORANDUM. THIS OFFERING MEMORANDUM IS SOLELY OUR RESPONSIBILITY AND HAS NOT BEEN REVIEWED OR AUTHORIZED BY THE CNBV. THE NOTES MAY BE OFFERED TO INVESTORS DOMICILED IN MEXICO THAT QUALIFY AS INSTITUTIONAL AND QUALIFIED, PURSUANT TO THE PRIVATE PLACEMENT EXEMPTION SET FORTH IN THE LEY DEL MERCADO DE VALORES (THE “MEXICAN SECURITIES MARKET LAW”).

The notes will be ready for delivery in book-entry form only through the facilities of The Depository Trust Company (“DTC”) for the accounts of its participants, including Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”), and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”), on or about June 23, 2017.

_____________________

Joint Book-Running Managers

Citigroup BBVA Scotiabank Offering Memorandum dated June 20, 2017

TABLE OF CONTENTS

Page

i

Introduction ................................................................................................................................................................... ii Enforceability of Civil Liabilities ................................................................................................................................. vi Cautionary Statement Regarding Forward-Looking Statements ................................................................................. vii Presentation of Financial and Other Information .......................................................................................................... x Summary ....................................................................................................................................................................... 1 Risk Factors ................................................................................................................................................................. 21 Exchange Rates ........................................................................................................................................................... 39 Use of Proceeds ........................................................................................................................................................... 40 Capitalization .............................................................................................................................................................. 41 Selected Consolidated Financial Information .............................................................................................................. 42 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...................................... 46 Guarantors ................................................................................................................................................................... 75 Industry Overview ....................................................................................................................................................... 77 Our Business ............................................................................................................................................................... 88 Management .............................................................................................................................................................. 130 Principal Shareholders ............................................................................................................................................... 138 Related Party Transactions ........................................................................................................................................ 139 Description of Notes .................................................................................................................................................. 140 Dividends .................................................................................................................................................................. 191 Book-Entry; Delivery and Form ................................................................................................................................ 192 Transfer Restrictions; Notice to Investors ................................................................................................................. 196 Taxation ..................................................................................................................................................................... 198 Plan of Distribution ................................................................................................................................................... 203 Listing and General Information ............................................................................................................................... 210 Legal Matters............................................................................................................................................................. 213 Independent Auditors ................................................................................................................................................ 213 Index to Consolidated Financial Statements .............................................................................................................. F-1

ii

INTRODUCTION

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. de C.V. is a sociedad anónima bursátil de capital variable (publicly listed variable capital stock corporation) organized under the laws of the United Mexican States (“Mexico”). Except as the context otherwise may require, references in this offering memorandum to “GCC,” the “Company,” “we,” “us” or “our” refer to Grupo Cementos de Chihuahua, S.A.B. de C.V. together with its consolidated subsidiaries.

The Company’s obligations under the notes will be unconditionally guaranteed by GCC Cemento, S.A. de C.V., Cementos de Chihuahua, S.A. de C.V. and GCC of America, Inc. References in this offering memorandum to a “Guarantor” refer to each of GCC Cemento, S.A. de C.V., Cementos de Chihuahua, S.A. de C.V. and GCC of America, Inc., or collectively, the “Guarantors.”

References in this offering memorandum to “initial purchasers” refer to Citigroup Global Markets Inc. (“Citigroup”), BBVA Securities Inc. (“BBVA”) and Scotia Capital (USA) Inc. (“Scotiabank”).

This offering memorandum has been prepared by us solely for use in connection with the proposed offering of the notes described in this offering memorandum. This offering memorandum is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire the notes. You are authorized to use this offering memorandum solely for the purpose of considering the purchase of the notes.

We have prepared the information contained in this offering memorandum. Neither we nor any of the initial purchasers has authorized anyone to provide you with any other information and neither we nor any of the initial purchasers takes any responsibility for other information others may give you.

You should assume that the information appearing in this offering memorandum is accurate as of the date on the front cover of this offering memorandum only. Our business, properties, results of operations or financial condition may have changed since that date. Neither the delivery of this offering memorandum nor any sale of notes hereunder will under any circumstances imply that the information herein is correct as of any date subsequent to the date on the front cover of this offering memorandum.

In making an investment decision, prospective investors must rely on their own examination of the Company and the terms of the offering, including the merits and risks involved. Prospective investors should not construe anything in this offering memorandum as legal, business or tax advice. Each prospective investor should consult its own advisors as needed to make its investment decision and to determine whether it is legally permitted to purchase the securities under applicable securities or similar laws or regulations.

This offering memorandum is based on information provided by us and by other sources we believe to be reliable. We and the initial purchasers cannot assure you that this information is accurate or complete. You acknowledge and agree that the initial purchasers make no representation or warranty, express or implied, as to the accuracy or completeness of such information, and nothing contained in this offering memorandum is, or shall be relied upon as, a promise or representation by the initial purchasers. The initial purchasers accept no responsibility in relation to the information in this offering memorandum or any other information provided by GCC. This offering memorandum contains summaries believed to be accurate with respect to certain documents, but reference is made to the actual documents for complete information. All such summaries are qualified in their entirety by such reference. Copies of documents referred to herein will be made available to prospective investors upon request to us or the initial purchasers.

The distribution of this offering memorandum and the offering and sale of the notes in certain jurisdictions may be restricted by law. We and the initial purchasers require persons into whose possession this offering memorandum comes to inform themselves about and to observe any such restrictions. This offering memorandum does not constitute an offer of, or an invitation to purchase, any of the notes in any jurisdiction in which such offer or sale would be unlawful. This offering memorandum may only be used where it is legal to sell the notes (or beneficial interests therein).

_______________

You must (1) comply with all applicable laws and regulations in force in any jurisdiction in connection with the possession or distribution of this offering memorandum and the purchase, offer or sale of the notes, and (2) obtain any required consent, approval or permission for the purchase, offer or sale by you of the notes under the laws and regulations

iii

applicable to you in force in any jurisdiction to which you are subject or in which you make such purchases, offers or sales, and neither we nor the initial purchasers or their agents have any responsibility therefor. See “Transfer Restrictions; Notice to Investors” for information concerning some of the transfer restrictions applicable to the notes.

You acknowledge that:

• you have been afforded an opportunity to request from GCC, and to review, all additional information considered by you to be necessary to verify the accuracy of, or to supplement, the information contained in this offering memorandum;

• you have not relied on the initial purchasers or their respective agents or any person affiliated with the initial purchasers or their respective agents in connection with your investigation of the accuracy of such information or your investment decision;

• no person has been authorized to give any information or to make any representation concerning GCC or the notes other than those set forth in this offering memorandum. If given or made, any such other information or representation should not be relied upon as having been authorized by GCC, the initial purchasers or their agents; and

• the notes have not been registered under the Securities Act, any U.S. state securities laws or the laws of any other jurisdiction. In making an investment decision, you must rely on your own examination of GCC’s business and the terms of this offering, including the merits and risks involved. The notes have not been recommended by the SEC or any state securities commission or any Mexican or other regulatory authority, including the CNBV. Furthermore, these authorities have not confirmed the accuracy or determined the adequacy of this offering memorandum. Any representation to the contrary is a criminal offense.

In connection with the issue of the notes, the initial purchasers (or persons acting on behalf of the initial purchasers) may over-allot notes or effect transactions with a view to supporting the market price of the notes at a level higher than that which might otherwise prevail. However, there is no assurance that the initial purchasers (or persons acting on behalf of the initial purchasers) will undertake stabilization action. Such stabilizing, if commenced, may be discontinued at any time and, if begun, must be brought to an end after a limited period. Any stabilization action or over-allotment must be conducted by the initial purchasers (or persons acting on behalf of the initial purchasers) in accordance with all applicable laws and rules.

The notes may not be transferred or resold except as permitted under the Securities Act and related regulations and applicable state securities laws. In making your purchase, you will be deemed to have made certain acknowledgements, representations and agreements set forth in this offering memorandum under “Transfer Restrictions; Notice to Investors.” You should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time.

See “Risk Factors” for a description of certain factors relating to an investment in the notes, including information about GCC’s business. None of GCC, the initial purchasers or any of their representatives is making any representation to you regarding the legality of an investment by you under applicable legal investment or similar laws.

_______________

The notes will be available initially only in book-entry form. GCC expects that the notes offered and sold in the United States to QIBs within the meaning of Rule 144A in reliance upon Rule 144A will be represented by beneficial interests in one or more permanent global notes in fully registered form without interest coupons (the “Rule 144A global notes”). GCC expects that the notes offered and sold outside the United States to non-U.S. persons as defined in Regulation S pursuant to Regulation S will be initially represented by beneficial interests in one or more temporary global notes in fully registered form without interest coupons (the “temporary Regulation S global notes”). Interests in the temporary Regulation S global notes will be exchangeable for interests in one or more corresponding permanent Regulation S global note in fully registered form without interest coupons (the “permanent Regulation S global notes” and, together with the temporary Regulation S global notes, the “Regulation S global notes”) not earlier than the later of (i) the “distribution compliance period” as defined in Regulation S under the Securities Act and (ii) the first day on which certification of non-U.S. ownership is provided to the trustee as described under “Book-Entry; Delivery and Form – Certification by Holders of the Temporary Regulation S Global Notes.” The Rule 144A global notes and the Regulation S

iv

global notes (collectively, the “global notes”) will be deposited with DTC. Notes shall be issued in minimum denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. See “Description of Notes” for further discussion of these matters.

v

NOTICE TO RESIDENTS OF THE UNITED KINGDOM

This offering memorandum is for distribution only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations, etc.”) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000, as amended (the “FSMA”) in connection with the issue or sale of the notes may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This offering memorandum is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this offering memorandum relates is available only to relevant persons and will be engaged in only with relevant persons.

Recipients of this offering memorandum are not permitted to transmit it to any other person. The notes are not being offered to the public in the United Kingdom.

NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

This offering memorandum has been prepared on the basis that any offer of Notes in any Member State of the European Economic Area will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of Notes. The expression Prospectus Directive means Directive 2003/71/EC (as amended), and includes any relevant implementing measure in the Member State concerned.

NOTICE TO RESIDENTS OF MEXICO

This offering memorandum may be distributed only to, and may only be directed at, investors domiciled in Mexico that qualify as institutional or qualified investors, under the Mexican Securities Market Law and its regulations, pursuant to the private placement exemption set forth therein. The notes have not been and will not be registered with the Registro Nacional de Valores (National Securities Registry) maintained by the CNBV, and may not be offered or sold publicly in Mexico.

vi

ENFORCEABILITY OF CIVIL LIABILITIES

We are a sociedad anónima bursátil de capital variable (publicly listed variable capital stock corporation) organized and existing under the laws of Mexico having our domicilio social (principal place of business) in Chihuahua, Chihuahua, Mexico. Most of our directors, officers and controlling persons and some of the persons named in this offering memorandum reside in Mexico and all or a significant portion of the assets of those persons may be, and a significant portion of our assets are, located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or us, or to enforce against them or against us in U.S. courts, judgments predicated upon the civil liability provisions of the federal securities laws of the United States. We have appointed CT Corporation System, as an agent to receive service of process with respect to any action brought against us in any federal or state court in the State of New York arising from this offering. There is doubt as to the enforceability, in original actions in Mexican courts or in original actions or actions for enforcement of judgments obtained in courts of jurisdictions outside of Mexico, of civil liabilities under the laws of any jurisdiction outside of Mexico, including any judgment predicated solely upon the federal and state securities laws of the United States. We have been advised by our special Mexican counsel that no treaty is currently in effect between the United States and Mexico that covers the reciprocal enforcement of foreign judgments. In the past, Mexican courts have enforced judgments rendered in the United States by virtue of the legal principles of reciprocity and comity, consisting of the review in Mexico of the United States judgment in order to ascertain, among other matters, whether Mexican legal principles of due process and orden público (public policy) have been complied with, without reviewing the merits of the subject matter of the case. See “Risk Factors—Legal and Regulatory Risks.”

AVAILABLE INFORMATION

For as long as any notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, we will provide to any holder or beneficial owner of such restricted securities or to any prospective purchaser or subscriber of such restricted securities designated by such holder or beneficial owner upon the request of such holder, beneficial owner or prospective purchaser or subscriber, the information required to be delivered to such persons pursuant to Rule 144A(d)(4) (or any successor provision thereto). Any such request may be made to us in writing at our main office located at Avenida Vicente Suárez y Calle Sexta S/N, Colonia Nombre de Dios, C.P. 31110, Chihuahua, Chihuahua, México.

We will make available to the holders of notes, at the specified office of each paying agent, copies of the information specified in the preceding paragraph, including a review of our operations, and annual audited consolidated financial statements prepared in accordance with International Financing Reporting Standards issued by the International Accounting Standards Board (“IASB” and, such reporting standards issued by the IASB, “IFRS”). We will also make available at the specified office of each paying agent our unaudited quarterly consolidated financial statements in English for the first three fiscal quarters in each fiscal year prepared in accordance with IFRS.

We are also required to periodically file certain annual, quarterly and special reports and other information with the Mexican Stock Exchange. You may inspect and copy these reports and other information at: Paseo de la Reforma No. 255, Colonia Cuauhtémoc, Delegación Cuauhtémoc, Ciudad de México, C.P. 06500. Our Mexican Stock Exchange filings are available to you on the Mexican Stock Exchange’s website (www.bmv.com.mx).

The information included (or accessed through) any website included or referred to in this offering memorandum is not incorporated by reference in, and shall not be considered part of, this offering memorandum.

vii

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This offering memorandum contains forward-looking statements. These forward-looking statements include, without limitation, those regarding our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets in which we participate or are seeking to participate or anticipated regulatory changes in the markets in which we operate or intend to operate. In some cases, forward-looking statements can be identified by terminology such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should” or “will” or the negative of such terms or other comparable terminology.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution potential investors that forward-looking statements are not guarantees of future performance and are based on numerous assumptions and that our actual results of operations, including our financial condition and liquidity, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this offering memorandum. In addition, even if our results of operations, including our financial condition and liquidity and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this offering memorandum, those results or developments may not be indicative of results or developments in subsequent periods.

Important factors that could cause these differences include, but are not limited to:

• current global economic conditions and their impact on the U.S. and Mexican economies;

• the cyclical activity of the construction sector;

• violence in Mexico, including violence associated with drug cartels;

• adverse developments in the global economy that restrict credit markets;

• the effects of economic and political developments in the U.S. and in Mexico on U.S. and Mexican economic policy, including the potential renegotiation of the North American Free Trade Agreement and its impact on the economies of Mexico and the U.S.;

• the risks related to conducting business in corrupt environments;

• the risks associated with government contracting;

• the development of compliance and information technology standards that adequately address the needs of its operations in various jurisdictions;

• developments in other countries that may have an adverse effect on the U.S. or the Mexican economy;

• the depreciation or appreciation of the value of the Mexican peso and possible inflationary risks;

• the influence of our controlling shareholder and our significant partners;

• potential conflicts resulting from our transactions with related parties;

• limitations on our subsidiaries’ ability to transfer income and dividends to us and their effects on our ability to repay our debt;

• our ability to attract and retain key executives and technical employees;

• the unauthorized use of our brand names, trademarks and other intellectual property;

• the extent to which our insurance coverage does not cover certain losses;

viii

• failures or interruptions in our information systems, including as a result of cyber-attacks;

• an impairment in the carrying value of goodwill or other intangible assets;

• the need to spend more on capital investments than anticipated;

• the differences between IFRS (as defined herein), which we follow in preparing our financial statements, and U.S. GAAP (as defined herein);

• the inability to realize the expected benefits from expansions and acquisitions and to integrate newly acquired businesses;

• regulatory issues that affect our ability to conduct our business and to acquire other businesses;

• our ability to apply the laws and regulations that affect us as a public company in Mexico, and fully disclose the events that affect us, in a timely manner;

• higher energy and fuel costs;

• an interruption in our supply of raw materials;

• increases in the prices of raw materials;

• inaccuracies in our estimates of our recoverable coal reserves and other raw materials;

• the introduction of cement substitutes;

• a disruption or delay in production at one of our production facilities;

• adverse weather conditions and natural disasters;

• disruptions to our distribution network;

• labor unrest, failure to maintain our relationships with labor unions and unexpected labor-related costs;

• the effects of the loss or consolidation of our top customers and the effects of late payments;

• the highly competitive nature of our industry;

• our ability to keep up with competitive changes affecting our industry;

• product liability claims brought against us;

• any adverse developments in litigation, arbitration and antitrust proceedings;

• our ability to comply with the current and changing regulatory environment, including environmental laws and regulations, and any adverse effects resulting from fines or penalties to which we become subject;

• risks related to our indebtedness and our ability to obtain funding;

• our compliance with restrictions and covenants in our debt instruments and our ability to service our debt;

• the impact of floating interest rates on our indebtedness; and

• other risks and uncertainties described under “Risk Factors” and elsewhere in the offering memorandum.

Potential investors should read the sections of this offering memorandum entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Our Business” for a more complete

ix

discussion of the factors that could affect our future performance and the markets and industry in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking events described in this offering memorandum may not occur. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information or future events or developments.

x

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Financial Information

This offering memorandum includes:

• our annual audited consolidated financial statements and related notes as of and for the years ended December 31, 2016, 2015 and 2014 (the “annual consolidated financial statements”), which have been prepared in accordance with IFRS; and

• our unaudited interim condensed consolidated financial statements and related notes as of March 31, 2017 and December 31, 2016 and for the three months ended March 31, 2017 and 2016 (the “interim condensed consolidated financial statements”), which have been prepared in accordance with IFRS and subject to limited review procedures.

On September 28, 2016, we successfully merged GCC, as the surviving entity, and two of the companies that

directly or indirectly controlled GCC, Control Administrativo Mexicano, S.A. de C.V. (“CAMSA”) and Imin de México, S.A. de C.V. (“Imin”), as the merged entities (the “Merger”). On November 18, 2016, we consummated the acquisition of certain assets from affiliates of Cemex, S.A.B. de C.V. located in Texas and New Mexico (the “2016 Asset Acquisition”). This acquisition has been classified as a business combination pursuant to the requirements of IFRS 3, “Business Combinations.” The effects of both of these transactions are reflected as of the date of the merger and as of the date of the acquisition in our consolidated statement of financial position and statement of profit of our annual audited consolidated financial statements. See notes 1, 4(p) and 13 to our annual audited consolidated financial statements. We have not included pro forma financial information in this offering memorandum.

Our annual consolidated financial statements have been audited by Galaz, Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu Limited, as stated in its report included elsewhere in this offering memorandum. You should read the interim condensed consolidated financial statements in conjunction with our annual consolidated financial statements.

In our opinion, our interim condensed consolidated financial statements include all adjustments necessary to present fairly in all material respects our financial condition and results of operations as of the dates and for the periods presented, in each case in accordance with IFRS. Nonetheless, our results for the three months ended March 31, 2017 and for the year ended December 31, 2016 incorporate the results from the 2016 Asset Acquisition, and as a result, may not be as easily comparable to our results in prior periods. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other period.

Our financial statements and the other financial data included in this offering memorandum differ from U.S. GAAP (as defined below) and the regulations published by the SEC and include the presentation of certain non-GAAP financial measures.

IFRS differs in certain respects from accounting principles generally accepted in the United States, (“U.S. GAAP”). We have not prepared a quantitative reconciliation of our annual consolidated financial statements and interim condensed consolidated financial statements or other financial information to U.S. GAAP. Any such reconciliation could reveal material differences, which may be positive or negative, in our results of operations and financial condition from the annual consolidated financial statements and interim condensed consolidated financial statements and other financial information contained in this offering memorandum. See “Risk Factors—Risks Related to Our Company, Business and Operations—We are subject to different disclosure and accounting standards than companies in other countries.”

In making an investment decision, you must rely upon your own examination of the Company, the terms of the offering and the financial information included herein. We urge you to consult your own advisors regarding the differences between IFRS and U.S. GAAP and how these differences might affect the financial information included in this offering memorandum.

xi

Currency Information

Unless stated otherwise, references herein to “Mexican pesos,” “pesos” or “Ps.” are to Mexican pesos, the legal currency of Mexico and references to “U.S. dollar” or “U.S.$” are to U.S. dollars, the legal currency of the United States.

The U.S. dollar is our functional currency for our operations conducted in the United States and the Mexican peso is our functional currency for our Mexican subsidiaries. Because the Mexican peso is the reporting currency we use to present our financial statements, in accordance with our legal and tax obligations as a Mexican company, the financial statements of our non-Mexican subsidiaries have been translated into Mexican pesos. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting our Results of Operations and Financial Condition—Effects of Foreign Currency Exchange Rate Fluctuations on Results of Operations.”

This offering memorandum contains translations of various peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. You should understand these translations are not representations that the peso amounts actually represent U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated. Unless otherwise indicated, for convenience purposes, we have translated U.S. dollar amounts for the years ended December 31, 2014, 2015 and 2016 and the three months ended March 31, 2016 and 2017 in this offering memorandum at the exchange rate of Ps.14.72 to U.S.$1.00, Ps.17.21 to U.S.$1.00, Ps.20.73 to U.S.$1.00, Ps.17.40 to U.S.$1.00 and Ps.18.81 to U.S.$1.00, respectively, which were the exchange rates published by the Banco de México as the rates for the payment of obligations denominated in non-Mexican currency payable in Mexico, expressed in pesos per U.S. dollar on December 31, 2014, 2015 and 2016 and March 31, 2016 and 2017, respectively. Exchange rates that we use for convenience purposes differ from the exchange rates we use in preparing our financial statements. See note 4(r) to our annual consolidated financial statements and note 4(d) to our interim condensed consolidated financial statements for a description of the calculation of the exchange rate used in preparing our financial statements. Non-GAAP Financial Measures

A body of generally accepted accounting principles is commonly referred to as “GAAP.” A non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable IFRS or U.S. GAAP measure. We present “EBITDA” in this offering memorandum, which is a non-GAAP financial measure. We define EBITDA to mean consolidated net income after adding back or subtracting, as the case may be: (1) depreciation and amortization; (2) result from financing activities (which includes financial expenses, financial income and exchange gain, net); (3) other expenses (which typically consists of non-operating items); (4) income taxes; and (5) share of profit of associates, in each case as determined in accordance with IFRS, as the case may be.

In managing our business, we rely on EBITDA as a means of assessing our operating performance. We believe that EBITDA enhances the understanding of our financial performance and our ability to satisfy principal and interest obligations with respect to our indebtedness as well as to fund capital expenditures and working capital requirements. We also believe EBITDA is a useful basis of comparing our results with those of other companies because it presents results of operations on a basis unaffected by capital structure and taxes. EBITDA, however, is not a measure of financial performance under IFRS or U.S. GAAP and should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of our overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability, such as financial expenses, income taxes, depreciation, amortization and the impact of foreign exchange. Our calculation of EBITDA may not be comparable to other companies’ calculation of similarly titled measures. For a reconciliation of EBITDA to consolidated net income under IFRS, see “Summary Consolidated Financial Information.”

Statistical and Market Data

The information in this offering memorandum also includes statistical data regarding the production, distribution, marketing and sale of cement, ready-mix concrete and other products and services. We generated some of this data internally, and some were obtained from independent industry publications and reports that we believe to be reliable sources. 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 believe that we have accurately reproduced this

xii

data, and as far as we are aware and able to ascertain from such independent industry publications and reports, no facts have been omitted which would render the reproduced information inaccurate or misleading.

Certain information contained herein was extracted from information published by various official sources as identified herein. This information includes several reported rates of inflation, exchange rates and information relating to certain of the countries in which we operate. We have not participated in the preparation or compilation of any of such information. We believe 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. Certain other information contained herein was extracted (i) with permission from the Portland Cement Association (“PCA”) and the Business Monitor International Research Group (“BMI Research”) and (ii) from publicly available information supplied by the United States Geological Survey (“USGS”), which can be found on https://www.usgs.gov/.

Intellectual Property

This offering memorandum includes some of our trademarks and trade names, including our logos. Each trademark and trade name of any other company appearing in this offering memorandum belongs to its respective owner.

Other Information Presented

In some cases, amounts and percentages presented in tables in this offering memorandum may not add up due to rounding adjustments.

All tonnage information in this offering memorandum is expressed in metric tons unless otherwise specified.

Unless otherwise specified, references in this offering memorandum to our net sales and assets, including percentages, are calculated after eliminations resulting from consolidation, and thus do not include intercompany balances between entities, which are eliminated when calculated on a consolidated basis.

1

SUMMARY

This summary highlights information contained elsewhere in this offering memorandum and does not contain all of the information you should consider before investing in the notes. You should read this entire offering memorandum carefully, including the section entitled “Risk Factors” and the financial statements and related notes included elsewhere in this offering memorandum, before you decide to invest in the notes.

Our Company We believe we are one of the leading building materials companies in the corridor that stretches from northern

Mexico to the United States border with Canada, encompassing 14 contiguous states in the United States and the state of Chihuahua in Mexico. We produce, market and distribute cement, ready-mix concrete, aggregates and other cement-related products. We have been in the cement business for 75 years, and we have a proven track record of growing organically and through selective acquisitions in the United States. According to the Portland Cement Association (“PCA”), the United States Geological Survey (“USGS”) and our estimates, we believe we are a leading producer and supplier of cement in the markets in which we operate, and we are one of the largest producers and suppliers of cement in Colorado, South Dakota, New Mexico, west Texas and North Dakota. These states, in descending order, account for 80% of our sales volume in the United States in 2016. The United States market represented approximately 73.6% of our sales in 2016.

The following map shows our operations in the United States and Mexico:

We have vertically integrated operations in Mexico and in several markets in the United States in which we operate, which helps us manage our costs at each stage of the production, distribution and sale of our products. We own several facilities that supply the raw materials necessary for the production of cement, including most of the limestone quarries needed to supply our operations and all of the clay and gypsum quarries needed to supply our Mexico operations. These materials account for 95% of the raw materials necessary for the production of cement. We supply approximately 63% of the cement required in our ready-mix concrete production from our cement plants through our distribution network. This distribution network also enables us to locate cement inventories closer to our customers, which reduces delivery times and allows us to better meet our customers’ needs.

GCC Presence

Cement terminal Cement plant

Coal mine Concrete

2

The following map shows, as of the date of this offering memorandum, the states in which we produce and sell cement:

As of March 31, 2017, we operated seven cement production facilities, with an annual installed capacity of 5.1 million tons of cement, 130 ready-mix concrete plants, 22 cement distribution terminals and two distribution centers. The following tables provide an overview of these facilities:

As of March 31, 2017

Cement Plants Installed Cement

Capacity(1) Colorado, United States ............................................................................ 1 1.1 South Dakota, United States ..................................................................... 1 0.7 Texas, United States .................................................................................. 1 0.5 New Mexico, United States....................................................................... 1 0.4 Chihuahua, Mexico ................................................................................... 3 2.3

Total ............................................................................................. 7 5.1 _______________ (1) Millions of tons per annum.

3

As of March 31, 2017

Ready-Mix Concrete

Plants

Cement Distribution Terminals

Distribution Centers

Chihuahua, Mexico ............................................................ 40 - 2 Colorado, United States. .................................................... - 3 - South Dakota, United States. ............................................. 16 2 - New Mexico, United States ............................................... 1 4 - Iowa, United States ............................................................ 24 1 - Minnesota, United States ................................................... 5 2 - Montana, United States ...................................................... - 1 - Nebraska, United States ..................................................... - 1 - North Dakota, United States .............................................. - 2 - Wyoming, United States .................................................... - 2 - West Texas, United States ................................................. 9 4 - Arkansas, United States ..................................................... 11 - - Missouri, United States ...................................................... - - - Oklahoma, United States.................................................... 24 - -

Total ........................................................................... 130 22 2

We expect to further grow our presence in our core markets in the United States. On November 18, 2016, we consummated the acquisition of certain assets from affiliates of Cemex, S.A.B. de C.V. (“CEMEX”) located in Texas and New Mexico (the “2016 Asset Acquisition”). The 2016 Asset Acquisition has allowed us to extend our presence in west Texas markets and to increase the efficiency of the freight and logistics functions that serve our plants and distribution network. The effect of the 2016 Asset Acquisition is reflected as of the date of the acquisition in our consolidated statement of financial position and statement of profit of our annual audited consolidated financial statements. We have not included pro forma financial information in this offering memorandum. We are also in the process of expanding our cement plant in Rapid City, South Dakota. Together, these initiatives are expected to increase our maximum cement production capacity to approximately 5.5 million tons by the first half of 2018.

For the year ended December 31, 2016, we had net sales of Ps.13,996.8 million (U.S.$675.2 million), of which 73.6% was generated by our U.S. operations and 26.4% by our Mexican operations. Our EBITDA for the same period was Ps.3,525.6 million (U.S.$170.1 million), of which 67.2% was generated by our U.S. operations and 32.8% by our Mexican operations. For the three months ended March 31, 2017, we had net sales of Ps.3,364.5 million (U.S.$178.9 million), of which 71.7% was generated by our U.S. operations and 28.3% was generated by our Mexican operations. Our EBITDA for the same period was Ps.661.3 million (U.S.$35.2 million), of which 48.9% was generated by our U.S. operations and 51.1% by our Mexican operations. For a reconciliation of EBITDA to consolidated net income (loss) under IFRS, see “Summary Consolidated Financial Information.”

For the year ended December 31, 2016 and the three months ended March 31, 2017, we had a sales volume in the United States of approximately 2.3 million and 0.5 million tons of cement, respectively, and approximately 1.6 million and 0.3 million cubic meters of ready-mix concrete, respectively. For the year ended December 31, 2016 and the three months ended March 31, 2017, we had a sales volume in Mexico of approximately 1.2 million and 0.3 million tons of cement and approximately 1.0 million and 0.2 million cubic meters of ready-mix concrete, respectively.

4

The following chart shows our EBITDA breakdown by product (before corporate expenses) as a percentage of EBITDA for the year ended December 31, 2016:

For the year ended December 31, 2016(1)

___________ (1) Others principally includes concrete blocks, prefabricated products, developed land and other materials for construction.

Our Operations

We believe we are one of the leading building materials companies in the corridor that stretches from northern Mexico to the United States border with Canada. The following chart shows our net sales breakdown by country and product for the year ended December 31, 2016:

5

United States

In the United States, we mainly operate in 14 contiguous states, from Texas and New Mexico in the south to Montana, North Dakota and Minnesota in the north. We own four cement plants with an annual production capacity of approximately 2.8 million tons in Pueblo, Colorado, Tijeras, New Mexico, Rapid City, South Dakota and Odessa, Texas. We also have 22 cement distribution terminals and transferring stations in Colorado, South Dakota, New Mexico, Iowa, Minnesota, Montana, Nebraska, North Dakota, Wyoming and west Texas. We have 90 ready-mix concrete plants in the United States, a fleet of 498 ready-mix concrete mixer trucks, 184 haul trucks, six aggregates plants, four asphalt plants and approximately 1,900 railcars, primarily on renewable five-year term leases, for the transportation of cement and coal. We also have an underground coal mine in Durango, Colorado, with an estimated annual production capacity of 866,000 tons, which supplies coal to our plants in Mexico, Tijeras, New Mexico and Pueblo, Colorado. According to the PCA, the USGS and our estimates, we believe we are a leading producer and supplier of cement in many of the markets in which we operate, including: Colorado, New Mexico, North Dakota, South Dakota, west Texas and Wyoming. Additionally, according to the National Ready Mixed Concrete Association (“NRMCA”) and our estimates, we supply a significant percentage of the total consumption of ready-mix concrete in certain regional markets in the states of South Dakota, Arkansas, Oklahoma and Iowa, making us one of the leading producers of ready-mix concrete in the United States. The markets in which we operate in the United States are strategically located away from most of the markets where there is currently excess cement production capacity. Given cement’s low value-to-weight ratio, importing excess cement from such regions to the markets in which we operate results in high transportation costs. We believe that our geographic location in the United States represents a competitive advantage for us because the country’s regions where we participate possess healthy and diversified economies, such as those of Colorado and Texas, and a geographic protection from imports.

According to the PCA’s estimates, cement and mortar consumption in the United States is expected to increase to 95.0 million tons in 2017 from 92.0 million tons in 2016, representing a 3.4% increase. Housing starts, the primary driver of cement demand in the residential sector, and residential construction reached historic lows in 2010 and 2011. Since 2011 and through 2016, according to the PCA, housing starts and residential construction increased at a compound annual growth rate of 14.0% and 8.9%, respectively, and are expected to increase by approximately 6.4% and 3.5% in 2017, respectively. Non-residential construction is expected to grow at a rate of 2.7% in 2017, and public construction spending is expected to increase by 0.9% in 2017 in part due to increased federal funding for the Federal Aid Highway Program that was included in the recently enacted Fixing America’s Surface Transportation Act (“FAST Act”).

For the year ended December 31, 2016 and the three months ended March 31, 2017, we had a sales volume in the United States of approximately 2.3 million and 0.5 million tons of cement, respectively, and approximately 1.6 million and 0.3 million cubic meters of ready-mix concrete, respectively. Our net sales in the United States for the year ended December 31, 2016 and the three months ended March 31, 2017, were Ps.10,307.2 million (U.S.$497.2 million) and Ps.2,411.1 million (U.S.$128.2 million), respectively. Our U.S. operations represented approximately 73.6% and 71.7% of our net sales for the year ended December 31, 2016 and the three months ended March 31, 2017, respectively.

6

Mexico

In Mexico, we operate in the state of Chihuahua, where we own three cement plants with a total annual production capacity of approximately 2.3 million tons in the cities of Chihuahua and Juarez and in the town of Samalayuca. We have two regional bases to cover the entire state of Chihuahua and transport cement, specialty products and gypsum to other regions in Mexico and in the southern United States. Our cement transportation fleet consists of 131 trucks, 36 platforms, 36 dump trucks, 101 bulk trucks and three low-boys. In order to serve our ready-mix customers, we own a ready-mix concrete transportation fleet, which consists of 237 mixer trucks and 46 pumps. Additionally, we own 40 ready-mix concrete plants in Mexico, of which 36 are stationary and four are mobile, which we believe allows us to supply any location within the state of Chihuahua and to provide ready-mix concrete supply to projects with high consumption volumes. We have also established alliances with two local ready-mix concrete producers whereby we provide them with cement and then sell and distribute the ready-mix concrete they produce. We believe that these alliances allow us to increase our geographical presence and reduce production costs by acquiring manufactured ready-mix concrete and distributing it to our customers. We also have six concrete blocks plants, five aggregates plants, one gypsum plant and two prefabricated products plants. In the state of Chihuahua, according to our estimates, we are the leader in each of the markets in which we participate (cement, mortar, ready-mix concrete, aggregates, concrete blocks, prefabricated products and gypsum) in terms of sales volume.

According to our estimates, cement consumption in Chihuahua is expected to increase in 2017, primarily driven by an increase in construction activity in the private sector. Cement sales volume are expected to moderately increase in 2017, primarily due to growth in the residential segment, as well as an increase in commercial, leisure and industrial projects in the non-residential sector. According to the Cámara Mexicana de la Industria de la Construcción (Mexican Chamber of the Construction Industry, or “CMIC”), infrastructure activity is expected to increase by as much as 0.5% in 2017 due to investment in private infrastructure projects, partially offset by an expected 23.1% decrease in government infrastructure spending.

For the year ended December 31, 2016 and the three months ended March 31, 2017, we had a sales volume in Mexico of approximately 1.2 million and 0.3 million tons of cement, respectively, including both cement sold in Mexico and cement sold directly to third parties in the United States, and approximately 1.0 million and 0.2 million cubic meters of ready-mix concrete, respectively. In addition to these sales, approximately 259.7 thousand and 82.5 thousand tons of cement were exported to the United States and sold by our U.S. subsidiaries during the year ended December 31, 2016 and the three months ended March 31, 2017, respectively. During the year ended December 31, 2016 and the three months ended March 31, 2017, 63.4% and 74.2% of the tons of cement exported to the United States, respectively, were sold through our subsidiaries in the United States, with the remainder being sold through third parties. Our net sales in Mexico for the year ended December 31, 2016 and the three months ended March 31, 2017, were Ps.3,689.6 million and Ps.953.4 million, respectively. Our Mexico operations represented approximately 26.4% and 28.3% of our total sales for the year ended December 31, 2016 and the three months ended March 31, 2017, respectively.

Our Competitive Strengths

We believe our main competitive strengths include the following:

Leading Position in Markets with Attractive Fundamentals. We have a contiguous presence in markets that we believe present attractive fundamentals, including favorable growth prospects and high barriers to new entrants. According to information from the PCA, we believe we are the leading supplier of cement in the states of South Dakota and New Mexico, and are the second leading supplier of cement in the states of Colorado, North Dakota and Wyoming. Additionally, according to information from the NRMCA, we supply a significant percentage of the total consumption of ready-mix concrete in certain regional markets in the states of South Dakota, Iowa, Oklahoma and Arkansas. For our Mexican operations, we believe we are one of the leading producers of cement and ready-mix concrete in the state of Chihuahua.

In the United States, we believe we are well positioned to benefit from the ongoing cyclical recovery, as cement consumption in 2016, which totaled 92.0 million tons, remained 20.7% below average annual cement consumption from 2006 to 2007. The PCA expects that overall cement consumption in Colorado, Iowa, Minnesota, New Mexico, North Dakota, South Dakota and Wyoming will increase by over 11.7% by 2020 as compared to 2007. According to the PCA, cement consumption in Colorado, South Dakota, New Mexico, North Dakota, Minnesota, Iowa and Wyoming is expected to reach 9.0 million tons in 2020; the PCA also expects total cement consumption in the United States to reach 106.6

7

million tons in 2020. Compounded annual growth rates for the states of North Dakota, South Dakota, Minnesota and Iowa as estimated by the PCA, are expected to be 7.3%, 1.1%, 1.1% and 1.0%, respectively, for the same period. In Mexico, the state of Chihuahua’s strong economic ties to the United States not only allow it to benefit from the United States’ economic recovery but has also enabled Chihuahua to be a beneficiary of U.S. foreign direct investments. We believe that these favorable macroeconomic conditions will drive demand for our products and provide us with opportunities for growth in these markets.

Contiguous Geographic Presence Supported by Sophisticated Distribution Network. We are the only building materials company with a contiguous geographic presence from the state of Chihuahua in Mexico to Montana, North Dakota and Minnesota in the northern United States, which we believe provides us with operational flexibility and cost efficiency within the markets where we operate. This is also a key region because the states in which we operate have limited prospects for new plants, do not have maritime access and are protected from sea imports. We also emphasize growth in contiguous markets as part of our operations, which we believe allows us to further penetrate markets with which we are familiar. We have developed an extensive and sophisticated distribution network, which we operate using advanced logistics. Our distribution network includes 1,900 railcars (most of them on five-year renewable leases), which transport our products through 22 cement distribution terminals within the corridor established from northern Mexico to the United States border with Canada. A fleet of over 1,000 mixer and haul trucks transports cement and ready-mix concrete to customers in Mexico and the United States. In addition, no other competitor has cement production facilities in the state of Chihuahua, which we believe gives us a significant competitive advantage in terms of freight costs. Our contiguous geographic presence allows us to leverage this distribution network to reduce delivery times and therefore supply our customers on short notice. The ability to efficiently distribute inventory throughout this network minimizes disruptions to our customers in the event of a supply interruption elsewhere in the system. Because products from our U.S. and Mexican plants share the same technical specifications, we are able to readily source demand in a given U.S. market from various manufacturing facilities, including those located in the state of Chihuahua.

Vertically Integrated Operations with State of the Art Production Facilities. We have vertically integrated operations in Mexico and in some of the markets in which we operate in the United States, participating in almost every process of the cement and ready-mix concrete supply chain. We have seven cement production facilities in the United States and Mexico located near our raw materials production facilities, which increases our efficiency and decreases our production costs. Additionally, more than half of our ready-mix concrete operations are supplied by cement produced by us. A key component of our vertical integration is our coal mine in Durango, Colorado, which provides a significant source of fuel needed for our cement plants (except the Rapid City, South Dakota plant, for which we use a coal supplier in Wyoming, and the recently acquired Odessa, Texas plant, which operates with natural gas) and helps lower production costs and manage volatility in the price of our inputs. We also own most of the limestone and all of the clay quarries needed to supply our operations. We use cement produced at our cement plants to supply 63.0% of the cement required by our ready-mix concrete operations. In turn, delivery and shipment of these products benefits from our top of the line distribution terminals and transportation fleet. All of our cement plants use state-of-the-art dry process technology, with the goal of maximizing operating results while complying with applicable environmental regulations. Throughout the years, we have continually invested in the modernization and expansion of our cement plants, a current example of which is the expansion of our Rapid City, South Dakota cement plant, with an expected total investment of U.S.$90.0 million from 2016 through 2018. We believe this will help us to continue the improvement of our world-class facilities and will allow us to increase our installed capacity, which will in turn further support the vertical integration of our supply chain.

Track Record of Growth and Resiliency. Since our formation in 1941, we have expanded broadly through organic growth as well as through targeted acquisitions, such as the acquisitions of the cement plant in Tijeras, New Mexico in 1994, the cement assets and working capital of Dacotah Cement in Rapid City, South Dakota in 2001 and, in November 2016, the 2016 Asset Acquisition, which included assets from affiliates of CEMEX in Odessa, Texas, El Paso, Texas and Las Cruces, New Mexico. We have sought to tailor our growth strategy to market conditions, which we believe has contributed to reaching growth of our revenues and EBITDA at compound annual growth rates of 18.3% and 31.5%, respectively, from 2014 to 2016, and an improvement of our EBITDA margin of 25.2% in 2016 as compared to 20.4% in 2014. This significant growth rate in revenues resulted from increases in price in Mexican peso terms and in volume in both the United States and Mexico during this period, as well as fluctuations in the exchange rate between the Mexican peso and the U.S. dollar. We have also been able to consistently generate positive EBITDA and EBITDA margins, even during periods of economic turmoil, including the recent global financial crisis that affected our operations in the United States and Mexico. We believe that our financial resiliency has been underpinned by a tailored product mix, customer loyalty, an

8

extensive and sophisticated distribution network and our agile decision-making. During 2016, the annual sales volume of our cement sales exceeded our results prior to the 2008 global financial crisis.

Broad Product Portfolio and Tailored Services. We provide a wide array of products to our customers intended to better serve their needs. With 75 years in the industry, we have developed a broad portfolio of 59 brands of cement, ready-mix concrete and other products, including “GCC,” “Cemento Chihuahua,” “Dacotah Cement,” “GCC Dacotah,” “GCC Rio Grande,” “Yeso Chuvíscar,” “Mortero Chuvíscar,” “Megablock” and “Construcentro.” We also sell value-added specialty products to our customers, particularly for the mining industry, including Dinamix, Lanzamix and Fraguamax cement, and for infrastructure projects and to small contractors, including Mortermix, Expan 500, Expancem-K, Microsilex, Versabind and Tecnogrout to meet the construction specifications required by our customers. Through our products, we have built a strong reputation and brand equity with our customers, many of which we believe are loyal to our brand names and quality.

In the United States, we believe we are a first-rate supplier of cement and ready-mix concrete and offer our customers a complete service and delivery package designed to meet their specifications. In Mexico, we offer comprehensive bundles of products and services related to bulk cement and ready-mix concrete, including advanced technical support, installation and specialty products. We also offer comprehensive bundles in Mexico that include technical assistance related to material usage for our ready-mix concrete customers. We believe we provide excellent service, offer advanced technical assistance and have the capacity to meet client demands and offer quality products, which we believe allows us to capture value added in pricing in the markets in which we operate.

Experienced and Dedicated Management Team. Our senior management team has an average of 27 years of experience in the cement industry, as well as extensive technical, operational and financial expertise. We believe this experience and familiarity with our industry and operations are important assets that support us in implementing our business strategy, particularly in counter-cyclical economic environments. In addition, our management has substantial acquisition integration expertise, as demonstrated by the ability to successfully integrate three cement plants, one coal mine and several ready-mix operations and distribution terminals acquired in the United States since 1994.

Our Business Strategy

Our objective is to continue strengthening our leadership in the markets in which we operate by enhancing our value proposition to our customers, growing our business in a sustainable way, investing in our people and ultimately maximizing shareholder value by implementing our business strategy. This strategy is focused on increasing revenue and margins growth by leveraging our existing geographic footprint, vertically integrated operations, customer service, pricing strategy, product offering and the people that make the implementation of this strategy possible. The main components of our business strategy include the following:

Continue to Enhance Profitability through Cost Efficiency and a Pricing Strategy. We intend to maintain and improve our profitability by increasing our cost efficiency and tailoring our pricing strategy to each of the markets in which we operate. Because we are vertically integrated, we are able to obtain the materials needed for our operations, including fuel from our coal mine in Colorado, at competitive costs. Our contiguous network also allows us to efficiently distribute our inventory at lower costs. By continuing to rely on and grow our vertical and contiguous networks, we believe we will be able to maintain and improve our cost efficiency. We also seek to optimize pricing in the markets in which we operate in light of competitive conditions to maximize profitability. Prices in the industries in which we operate vary from region to region, influenced by factors such as supply and demand, economic conditions, transportation costs and availability, among other things. In the United States, we have been able to, and believe that we will continue to, increase the prices for most of our products because of the value our customers place on our product portfolio and distribution network as well as, in many cases, the ability of our customers to pass through price increases. In Mexico, we use a structured pricing strategy for our products based on the customer group, which takes into account the added value we provide to our customers, including comprehensive solutions, high quality products and timely delivery of our products. We also offer customized service packages tailored to our customers that include technical support for contractors, technical and regulatory filing support for government authorities and a distributor retail chain to reach the self-construction market, which provide greater profit margins. By providing integrated and innovative solutions, ensuring timely delivery of our products and building and maintaining strong relationships with our customers, we believe we will be able to achieve optimal pricing for our products that will ultimately drive profitable growth in the markets in which we operate.

9

Continue to Provide Outstanding Logistical and Technical Support Services to our Customers. We aim to continue strengthening the quality of our customer service by offering integrated and innovative solutions, including technical support, product solutions for specific projects and customized products and logistics according to the needs of our clients. We also develop strategic alliances through the “Construred” retailer network that serves customers in the self-construction segment in Mexico. In the United States, we aim to continue to enhance our extensive network of plants and distribution terminals, which allows us to provide continuous product supplies to our customers from geographically close inventories. We offer a full range of products, from cement to specialty and prefabricated products, which allows us to meet all our customers’ construction materials needs and offer sophisticated technical support when needed.

Broaden our Product Offerings Through Innovative Solutions with Higher Margins. We aim to broaden our range of product offerings by focusing on the development of new, value-added products and technologies. We are also focused on increasing our integrated offerings and solutions, developing specialty cement products and increasing our prefabricated products portfolio, which we believe offer opportunities for profitable growth. Specialty products are a strategic part of our product mix because they enhance our role in construction projects, reduce the seasonality associated with our cement business and generally have higher profit margins. We export special cements from Mexico to the United States with required properties for specific applications, such as high early strength cements for short-term loads. By broadening our product offering and by developing specialty products tailored to our customers’ needs, we believe we will be able to foster our profitable growth in the long term.

Foster the Sustainable Development of Our Operations. We are committed to the environmental sustainability of all stages in our operations. In light of increasingly strict environmental regulations in the United States and Mexico, we have and will continue to invest in adapting our state-of-the-art facilities to National Emission Standards for Hazardous Air Pollutants (“NESHAP”) requirements. We have embraced the principles of the World Business Council for Sustainable Development’s “Cement Sustainability Initiative,” of which we have been full members since February 2012. Pursuant to this initiative, we seek to continue to employ an environmental management system to assess and minimize the environmental impact of operations, among other things. We are focused on experimenting with and developing alternative fuel sources to reduce CO2 generation and further reduce our fuel expenses, positively impacting our carbon footprint and margins. For example, during 2016 we implemented an alternative energy plan for our Samalayuca cement plant, which resulted in a substitution of 41% of the plant’s use of fossil fuels in favor of alternative fuels. We also place a high priority on the health and safety of our employees, promoting wellness programs and providing various health benefits to our workers. Likewise, we have launched a Sustainable Construction Initiative, beginning with the state of Chihuahua in Mexico, to combat some of the main challenges connected to sustainable growth, such as: access to water, urban development, housing, transportation, energy and education. We approved six projects in 2016 as part of this initiative, and will continue to work alongside public and private institutions on specific projects to provide economically and environmentally viable solutions.

Continue Strengthening and Expanding our Operational Capacity and Geographic Footprint through Organic Growth and Strategic and Complementary Acquisitions. We intend to continue developing and expanding in the markets where we operate through organic growth and by maintaining our profitable operations. We believe this will allow us to continue positioning ourselves as a leader in the markets where we participate. Additionally, given the difficulty of developing “greenfield” projects, we regularly evaluate the possibility of acquiring existing cement plants. For this purpose we have developed a strategic prioritization process that assists us in evaluating potential targets. As part of this process, we first consider turnkey cement opportunities that are complementary to our current operations, particularly plants in the United States, and that can be easily “plugged in” to our existing distribution network. We also actively seek acquisition opportunities with high probabilities of success and strong business fundamentals, including return on investment, size and affordability. Finally, we consider other targets, including ready-mix concrete opportunities near our cement operations that we could vertically integrate, aggregate opportunities near our ready-mix concrete plants and standalone aggregates opportunities. With all of our acquisitions, we intend to continue to apply our experience in order to successfully integrate acquired businesses and to add beneficial synergies to the Company.

10

Develop our Human Capital and Invest in our Local Community. We strive to be recognized as a great place to work by all of our stakeholders, including employees, customers, suppliers and competitors in order to attract and retain the most qualified human capital available in the market. In this aspect, we try to promote the development of talent through the rotation and mobility of employees across our Company. This provides our employees with a broader view of the Company and enables them to forge professional relationships outside their immediate department. We also invest heavily in formal training through the GCC University online platform, “Harvard Manage Mentor” courses and institutional training programs for all employees and are moving to standardize human resources processes. Our goal is to provide our employees with the best tools available so that they and their teams can deliver superior results. As a result of our efforts, we have been recognized as one of the 100 best companies to work for in Mexico, and were awarded a Great Place to Work certification in 2015 and 2016. We also seek to invest in our local community through specific projects supported by our foundation and through the joint development of sustainable projects.

Recent Developments Tender Offer

The Company, as offeror, expects to commence a cash tender offer (the “Tender Offer”) on June 7, 2017 for any and all of its 8.125% Notes due 2020 (the “Old Notes”). If, following the Tender Offer’s early settlement, any Old Notes remain outstanding, we intend to promptly issue a notice of redemption to redeem such outstanding Old Notes at a redemption price equal to 104.063% in accordance with the terms of the Old Notes. As of the date of this offering memorandum, the aggregate principal amount outstanding of the 8.125% Notes due 2020 was U.S.$260,000,000.

The Tender Offer is conditioned on the satisfaction, or waiver by the Company, of certain conditions, including, but not limited to, the consummation of this offering.

This offering memorandum is not an offer to purchase, or the solicitation of an offer to sell, the Old Notes.

Our Structure The diagram below depicts our organizational structure.

11

Information on Our Stocks Traded on the Mexican Stock Exchange

Our shares are traded on the BMV under the symbol “GCC*”. Company Information

Our principal executive offices are located at Avenida Vicente Suárez y Calle Sexta S/N, Colonia Nombre de Dios, C.P. 31110, Chihuahua, Chihuahua, México, and our telephone number is +52 (614) 442-3100. Our commercial registry number is 10313*13.

12

The Offering

The summary below describes the principal terms of the notes. Certain of the terms and conditions described

below are subject to important limitations and exceptions. See “Description of Notes” in this offering memorandum for a more detailed description of the terms and conditions of the notes. When we refer to the “Company,” “we,” “us” or “our” in this section, we mean Grupo Cementos de Chihuahua, S.A.B. de C.V. and not its subsidiaries.

Issuer ................................................................ Grupo Cementos de Chihuahua, S.A.B. de C.V.

Notes Offered ................................................... U.S.$260,000,000 aggregate principal amount of 5.250% Senior Notes due 2024.

Issue Price ........................................................ 100.000% plus accrued interest, if any, from June 23, 2017.

Maturity Date .................................................. June 23, 2024.

Interest ............................................................. Interest on the notes will accrue at a rate of 5.250% per annum, payable in cash semi-annually in arrears on each June 23 and December 23, beginning on December 23, 2017 through their final maturity. Interest on the notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

Guarantors ....................................................... GCC Cemento, S.A. de C.V., Cementos de Chihuahua, S.A. de C.V., and GCC of America, Inc.

Guarantees ....................................................... The payment of principal, premium, if any, interest, and Additional Interest (as defined under “Description of Notes”) on the notes will be fully and unconditionally guaranteed by the Guarantors. See “Description of Notes—Note Guarantees.”

The Company’s obligations under the notes will be unconditionally guaranteed by GCC Cemento, Cementos de Chihuahua and GCC of America. The Guarantors and their respective direct and indirect subsidiaries, after eliminations from consolidation, accounted for Ps.3,364.5 million (U.S.$165.2 million), or 100%, of our revenues and contributed Ps.744.0 million (U.S.$36.5 million), or 113%, of our EBITDA for the three months ended March 31, 2017, and Ps.34,876.8 million (U.S.$1,854.2 million), or 98%, of our total assets and Ps.4,253.5 million (U.S.$226.1 million), or 22%, of our total liabilities as of March 31, 2017. The Guarantors and their respective direct and indirect subsidiaries, after eliminations from consolidation, accounted for Ps.13,996.8 million (U.S.$749.7 million), or 100%, of our revenues and contributed Ps.3,854.6 million (U.S.$206.5 million), or 109%, of our EBITDA for the year ended December 31, 2016, and Ps.37,870.4 million (U.S.$1,826.8 million), or 98%, of our total assets and Ps.4,317.3 million (U.S.$208.3 million), or 21%, of our total liabilities as of December 31, 2016.

Certain of our non-Guarantor subsidiaries generate expenses but not revenues and offset the EBITDA presented above for the Guarantors. As of March 31, 2017, our non-Guarantor subsidiaries that are not subsidiaries of Guarantors had total assets of Ps.671.1 million (U.S.$35.7 million), or 2% of our total assets. EBITDA for these non-guarantor subsidiaries for the three months ended March 31, 2017 was Ps.(80.8) million (U.S.$(4.0) million), or (12%) of our EBITDA. As of December 31, 2016, our non-Guarantor subsidiaries that are not subsidiaries of Guarantors had total assets of

13

Ps.836.9 million (U.S.$40.4 million), or 2% of our total assets. EBITDA for these non-guarantor subsidiaries for the year ended December 31, 2016, was Ps.(321.0) million (U.S.$(17.2) million), or (9)% of our EBITDA.

Ranking ............................................................ The notes will rank:

• junior to certain obligations preferred by statute, including tax, social security and labor obligations;

• equal in right of payment with all other existing and future Senior Indebtedness (as defined under “Description of Notes”) of the Company; and

• senior in right of payment to all existing and future Subordinated Indebtedness (as defined under “Description of Notes”) of the Company.

The notes will be effectively subordinated to all existing and future indebtedness of the Company and the Guarantors secured by assets of the Company and the Guarantors to the extent of the applicable security interest, and structurally subordinated to all existing and future indebtedness of the Company’s subsidiaries (other than the Guarantors). Furthermore, the notes and the guarantees will be subordinated to certain statutory preferences under Mexican law (including tax, social security and labor obligations). See “Description of Notes—General.” As of March 31, 2017, after giving pro forma effect to the issuance of the notes and the Tender Offer and the application of the proceeds therefrom:

• we would have had U.S.$684.5 million of debt outstanding;

• our Guarantor subsidiaries taken together would have had Ps.47.4 million (U.S.$2.5 million) of consolidated total indebtedness; and

• our non-Guarantor subsidiaries taken together would have had Ps.12,826.9 million (U.S.$682.0 million) of consolidated total indebtedness.

Use of Proceeds ................................................ We estimate that the net proceeds from the offering will be approximately

U.S.$257.1 million, after deducting commissions payable to the initial purchasers and other expenses related to the offering.

We intend to use the net proceeds from this offering (i) to pay the consideration for the Tender Offer, (ii) if, following the Tender Offer’s early settlement, any Old Notes remain outstanding, to promptly redeem such outstanding Old Notes at a redemption price equal to 104.063% in accordance with the terms of the Old Notes, and (iii) the remainder, if any, for general and corporate purposes. See “Use of Proceeds.”

Optional Redemption ...................................... On or after June 23, 2021, we may redeem the notes, in whole or in part, at any time at the redemption prices set forth in “Description of Notes—Optional Redemption.” Prior to June 23, 2021, we may also redeem the notes, in whole or in part, at a redemption price based on a “make-whole” premium. In addition, we may redeem up to 35% of the aggregate principal amount of the notes with the net cash proceeds from certain equity offerings, at any time prior to June 23, 2020, at a redemption price equal to 105.250%

14

of the aggregate principal amount of the notes, plus accrued and unpaid interest, if any, to, but not including the applicable redemption date if at least 65% of the aggregate principal amount of notes issued under the indenture remains outstanding after the redemption and if we make such redemption not more than 90 days after the consummation of such equity offerings. See “Description of Notes—Optional Redemption.”

Tax Redemption .............................................. The notes are redeemable at our option, in whole but not in part, at the principal amount thereof plus accrued and unpaid interest and any Additional Interest (as defined under “Description of Notes”) due thereon if certain changes in applicable tax laws occur that affect the payment of interest and amounts deemed to be interest under the notes. See “Description of Notes—Optional Redemption—Optional Redemption for Changes in Withholding Taxes.”

Additional Interest .......................................... We and the Guarantors generally will pay such additional interest as may be necessary so that the amount received by holders of the notes that are non-residents of Mexico for tax purposes, after withholding or deductions for taxes in relation to under or with respect to the notes, will not be less than the amount that holders of the notes would have received in the absence of such withholding or deductions, subject to certain exceptions as described under “Description of Notes—Additional Interest.”

Certain Covenants ........................................... We will issue the notes under an indenture. The indenture will, among other things, limit our ability and the ability of our restricted subsidiaries, to:

• incur debt;

• pay dividends on our capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness;

• make investments;

• create liens;

• enter into agreements that restrict dividends or other distributions from restricted subsidiaries;

• engage in transactions with affiliates; and

• sell, consolidate, merge or transfer all or substantially all of our assets, including capital stock of our subsidiaries.

These covenants are subject to a number of important limitations and exceptions. See “Description of Notes—Covenants.” In particular, although the indenture governing the notes will contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of important qualifications and exceptions, and the debt incurred in compliance with these restrictions could be substantial.

Change of Control ........................................... Upon a Change of Control, holders of notes will have the right to require us to purchase all or a portion of the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any, through the date of purchase, upon the terms and conditions described under “Description of

15

Notes—Change of Control.”

Events of Default ............................................. For a discussion of events that will permit acceleration of the payment of the principal of and accrued interest on the notes, see “Description of Notes—Events of Default.”

Transfer Restrictions ...................................... The notes and the guarantees have not been and will not be registered under the Securities Act and are subject to restrictions on transfer and may only be offered in transactions exempt from or not subject to the registration requirements of the Securities Act. See “Transfer Restrictions; Notice to Investors.”

Form and Denomination ................................. The notes will be initially issued in the form of (i) one or more Rule 144A global notes, offered and sold to QIBs and (ii) one or more temporary Regulation S global notes, offered and sold to persons other than “U.S. persons” (as defined in Regulation S) in offshore transactions in reliance on Regulation S. Interests in the temporary Regulation S global notes will be exchangeable for interests in one or more corresponding permanent Regulation S global notes not earlier than the later of (i) the “distribution compliance period” as defined in Regulation S under the Securities Act and (ii) the first day on which certification of non-U.S. ownership is provided to the trustee as described under “Book-Entry; Delivery and Form—Certification by Holders of the Temporary Regulation S Global Notes.” Each global note will be deposited upon issuance with the trustee as custodian for DTC, in each case for credit to the account of a direct or indirect participant of DTC. Investors in the global notes that are participants in DTC may hold their interests in the global notes directly through DTC. Investors in the global notes that are not participants in DTC may hold their interests indirectly through organizations that are participants in DTC.

Interests in the global notes will be shown on, and transfers thereof will be effected only through, records maintained by DTC or its nominee (with respect to participants) or by participants and indirect participants (including Euroclear and Clearstream, Luxembourg) and any such interest may not be exchanged for certificated securities, except in limited circumstances. See “Book-Entry; Delivery and Form.” Certificated notes cannot be traded through the facilities of DTC.

The notes will be issued only in denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.

Ratings .............................................................. The notes offered hereby will initially be rated by Standard & Poor’s rating group (“S&P”) and Fitch Ratings.

Listing ............................................................... Application has been made for the listing and quotation of the notes on the SGX-ST. If the application to the SGX-ST to list the notes is approved, for so long as such notes are listed on the SGX-ST and the rules of the SGX-ST so require, such notes will be traded on the SGX-ST in a minimum board lot size of at least U.S.$200,000.

Trustee, Registrar, Principal Paying Agent, and Transfer Agent .........................................

Wells Fargo Bank, National Association.

Listing Agent .................................................... Jones Day.

16

Risk Factors ..................................................... Prospective purchasers of the notes should consider carefully all the information included in this offering memorandum and, in particular, the information set forth under “Risk Factors” before making an investment in the notes.

Security Codes ................................................. The notes will be assigned the following securities codes:

Rule 144A: CUSIP: 40053D AB9 ISIN: US40053DAB91

Regulation S: CUSIP: P4954U AB0

ISIN: USP4954UAB00

17

Summary Consolidated Financial Information

The following tables present our summary consolidated financial information and other data as of the dates and for each of the periods indicated. This information should be read in conjunction with, and is qualified in its entirety by reference to, our audited and unaudited consolidated financial statements, including the notes thereto. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Presentation of Financial and Other Information.”

The summary consolidated financial information as of and for the years ended December 31, 2016, 2015 and 2014 has been derived from our annual consolidated financial statements contained elsewhere in this offering memorandum, which have been audited by Galaz, Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu Limited, which are independent auditors.

The summary consolidated financial information for the three months ended March 31, 2017 and 2016 and the financial position as of March 31, 2017 has been derived from our interim condensed consolidated financial statements, contained elsewhere in this offering memorandum. In our opinion, our interim condensed consolidated financial statements include all adjustments necessary to present fairly in all material respects our financial condition and results of operations as of the dates and for the periods presented, in each case in accordance with IFRS. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other period.

Our annual consolidated financial statements and our interim condensed consolidated financial statements have been prepared in accordance with IFRS and are presented in Mexican pesos. The financial statements of our non-Mexican subsidiaries have been adjusted to conform to IFRS and translated into Mexican pesos. See note 4(r) to our annual consolidated financial statements.

IFRS differs in certain respects from U.S. GAAP. We have not prepared a quantitative reconciliation of our annual consolidated financial statements and interim condensed consolidated financial statements or other financial information to U.S. GAAP. Any such reconciliation could reveal material differences, which may be positive or negative, in our results of operations and financial condition from the annual consolidated financial statements and interim condensed consolidated financial statements and other financial information contained in this offering memorandum. See “Risk Factors—Risks Related to Our Company, Business and Operations—We are subject to different disclosure and accounting standards than companies in other countries.”

For convenience purposes, we have translated U.S. dollar amounts for the year ended December 31, 2016 and the three months ended March 31, 2017 in this offering memorandum at the exchange rate of Ps.20.73 to U.S.$1.00 and Ps.18.81 to U.S.$1.00, respectively, which were the exchange rates published by the Banco de México as the rate for the payment of obligations denominated in non-Mexican currency payable in Mexico, expressed in pesos per U.S. dollar on December 31, 2016 and March 31, 2017, respectively. Exchange rates that we use for convenience purposes differ from the exchange rates we use in preparing our financial statements. See note 4(r) to our annual consolidated financial statements and note 4(d) to our interim condensed consolidated financial statements for a description of the calculation of the exchange rate used in preparing our financial statements.

18

Year Ended December 31,

2016 2016 2015 2014 (in millions)

U.S.$ (Convenience Translation) Ps. Ps. Ps.

Statement of Profit Data: Net sales ............................................................................................. 675.2 13,996.8 11,983.8 10,009.7 Cost of sales ....................................................................................... 493.2 10,223.8 9,074.1 7,682.9

Gross profit .................................................................................. 182.0 3,773.0 2,909.7 2,326.8 General, administrative and selling expenses ..................................... 68.1 1,410.9 1,235.2 1,137.5 Operating income before other expenses ..................................... 113.9 2,362.1 1,674.5 1,189.3 Other expenses ................................................................................... 5.7 118.8 25.3 66.3 Operating income ........................................................................ 108.2 2,243.3 1,649.2 1,123.0 Result from financing activities:

Financial expenses ....................................................................... (35.2) (729.8) (641.3) (564.4) Financial income .......................................................................... 1.7 34.2 27.0 23.1 Exchange gain, net ....................................................................... 1.2 24.6 37.4 9.0

Total ...................................................................................... (32.4) (670.9) (576.9) (532.3) Share of profit of associates ................................................................ 1.0 20.0 12.8 14.3 Income before income taxes ............................................................... 76.8 1,592.4 1,085.1 604.9 Income tax expense ............................................................................ 14.9 308.2 169.7 42.7

Consolidated net income ........................................................... 61.9 1,284.2 915.5 562.2

Consolidated net income attributable to: Owners of the company ............................................................... 61.8 1,280.7 912.7 561.9 Non-controlling interest ............................................................... 0.1 3.5 2.8 0.3 Consolidated net income ............................................................ 61.9 1,284.2 915.5 562.2

As of December 31,

2016 2016 2015 2014 (in millions) U.S.$

(Convenience Translation) Ps. Ps. Ps.

Statement of Financial Position Data: Cash and cash equivalents .................................................................. 163.9 3,396.9 2,522.8 1,786.7 Property, plant and equipment, net ..................................................... 925.1 19,176.9 13,900.9 12,749.1 Total assets ......................................................................................... 1,867.1 38,708.2 26,974.8 24,229.7 Debt and current portion of

long-term financial debt .................................................................

3.9

79.8

115.5

753.3 Long-term financial debt .................................................................... 685.8 14,217.5 7,413.5 6,084.1 Total liabilities.................................................................................... 996.1 20,650.9 12,243.2 10,701.3 Total stockholders’ equity .................................................................. 871.0 18,057.3 14,731.6 13,528.4 Year Ended December 31, 2016 2016 2015 2014 (in millions) U.S.$

(Convenience Translation) Ps. Ps. Ps.

Other Financial Data: EBITDA(1) .......................................................................................... 170.1 3,525.6 2,639.1 2,039.6 Total debt/EBITDA(2) ......................................................................... 4.1 4.1 2.9 3.4 (Footnotes presented below)

19

Three Months Ended March 31, 2017 2017 2016 (unaudited) (in millions)

U.S.$ (Convenience Translation) Ps. Ps.

Statement of Profit Data: . Net sales ................................................................................................................................ 178.9 3,364.5 2,361.5 Cost of sales .......................................................................................................................... 142.5 2,679.7 1,866.4

Gross profit ..................................................................................................................... 36.4 684.8 495.1 General, administrative and selling expenses ........................................................................ 23.5 441.1 318.2 Operating income before other expenses ........................................................................ 12.9 243.7 176.9 Other expenses ...................................................................................................................... – – 30.4 Operating income ........................................................................................................... 12.9 243.7 146.5 Result from financing activities:

Financial expenses .......................................................................................................... (14.4) (270.5) (157.7) Financial income ............................................................................................................ 0.9 16.1 8.4 Exchange loss, net .......................................................................................................... (2.4) (45.2) (5.8)

Total......................................................................................................................... (15.9) (299.6) (155.1) Share of profit of associates .................................................................................................. 0.3 6.4 5.6 Loss before income taxes ...................................................................................................... (2.7) (49.5) (3.0) Income tax benefit ................................................................................................................. (4.3) (81.0) (61.9)

Consolidated net income ............................................................................................... 1.6 31.5 58.9 Consolidated net income attributable to:

Owners of the company ................................................................................................ 1.6 30.8 58.5 Non-controlling interest ................................................................................................ – 0.7 0.4

Consolidated net income ............................................................................................ 1.6 31.5 58.9

As of March 31, 2017 2017 (unaudited) (in millions)

U.S.$ (Convenience Translation) Ps.

Statement of Financial Position Data: Cash and cash equivalents ............................................................................................................... 137.0 2,577.0 Property, plant and equipment, net .................................................................................................. 934.4 17,576.6 Total assets ...................................................................................................................................... 1,890.1 35,548.9 Debt and current portion of

long-term financial debt .............................................................................................................. 5.2 98.7

Long-term financial debt ................................................................................................................. 684.8 12,879.7 Total liabilities ................................................................................................................................ 1,009.6 18,988.3 Total stakeholders’ equity ............................................................................................................... 880.5 16,560.6

20

Three Months Ended March 31, 2017 2017 2016 U.S.$

(Convenience Translation) Ps. Ps.

Other Financial Data: EBITDA(1) .......................................................................................................... 35.2 661.3 439.5

(1) EBITDA consists of consolidated net income after adding back or subtracting, as the case may be: (1) depreciation and amortization; (2) result from financing activities (which includes financial expenses, financial income and exchange gain, net); (3) other expenses (which typically consists of non-operating items); (4) income taxes ; and (5) share of profit of associates. In managing our business, we rely on EBITDA as a means of assessing our operating performance. We believe that EBITDA enhances the understanding of our financial performance and our ability to satisfy principal and interest obligations with respect to our indebtedness as well as to fund capital expenditures and working capital requirements. We also believe EBITDA is a useful basis of comparing our results with those of other companies because it presents results of operations on a basis unaffected by capital structure and taxes. EBITDA, however, is not a measure of financial performance under IFRS or U.S. GAAP and should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of our overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability, such as financial expenses, income taxes, depreciation, amortization and the impact of foreign exchange. Our calculation of EBITDA may not be comparable to other companies’ calculation of similarly titled measures.

(2) Ratio is calculated based on the total debt in pesos and on the definition of EBITDA presented in footnote (1) above.

The following is a reconciliation of EBITDA to consolidated net income for the periods presented:

Year Ended December 31, 2016 2016 2015 2014 (in millions) U.S.$

(Convenience Translation) Ps. Ps. Ps.

EBITDA .................................................................................................................... 170.1 3,525.6 2,639.1 2,039.6 Less:

Depreciation and amortization .......................................................................... 56.1 1,163.5 964.6 850.3 Result from financing activities ........................................................................ 32.4 670.9 576.9 532.3 Other expenses.................................................................................................. 5.7 118.8 25.3 66.3 Income tax expense .......................................................................................... 14.9 308.2 169.7 42.7 Share of profit of associates .............................................................................. (1.0) (20.0) (12.8) (14.3)

Consolidated net income ........................................................................................... 61.9 1,284.2 915.5 562.2

Three Months Ended March 31, 2017 2017 2016 (in millions) U.S.$

(Convenience Translation) Ps. Ps.

EBITDA ....................................................................................................................... 35.2 661.3 439.5 Less:

Depreciation and amortization ............................................................................. 22.2 417.5 262.6 Result from financing activities ........................................................................... 15.9 299.6 155.1 Other expenses ..................................................................................................... - - 30.4 Income tax benefit ............................................................................................... (4.3) (81.0) (61.9) Share of profit of associates ................................................................................. (0.3) (6.4) (5.6)

Consolidated net income .............................................................................................. 1.7 31.5 58.9

21

RISK FACTORS

You should consider carefully the risks and uncertainties described below and all the information set forth in this offering memorandum before investing in the notes. The following risk factors are not the only risks we face and any of the risk factors described below could materially and adversely affect our business, results of operations or financial condition, as well as our ability to satisfy our obligations under the notes or the Guarantors’ ability to satisfy their obligations under the guarantees. The importance given to the following risk factors may change in the future, and other factors not disclosed below may have an impact on us in the future. For purposes of the section “—Risks Related to our Indebtedness, the Notes and the Guarantees.” when we refer to the “Company,” “we,” “us” or “our,” we mean Grupo Cementos de Chihuahua, S.A.B. de C.V. and not its subsidiaries.

Risks Related to Our Company, Business and Operations

Our business, results of operations and financial condition may be materially adversely affected by a devaluation or depreciation in the value of the Mexican peso.

We operate in the United States and Mexico, deriving 71.7% and 28.3% of our net sales from each country, respectively, for the three months ended March 31, 2017, and 73.6% and 26.4% of our net sales from each country, respectively, for the year ended December 31, 2016. Our U.S. operations earn revenue and incur expenses primarily in U.S. dollars, while our Mexican operations earn revenue and incur expenses primarily in Mexican pesos. Our EBITDA for the year ended December 31, 2016 was Ps.3,525.6 million (U.S.$170.1 million), of which 67.2% was generated by our U.S. operations and 32.8% by our Mexican operations, and Ps.661.3 million (U.S.$35.2 million) for the three months ended March 31, 2017, of which 48.9% was generated by our U.S. operations and 51.1% by our Mexican operations. For a reconciliation of EBITDA to consolidated net income (loss) under IFRS, see “Summary Consolidated Financial Information.” Changes in the relative value of the Mexican peso, which fluctuates constantly, to the U.S. dollar have an effect on our results of operations and financial condition reported in Mexican pesos. Our export sales to the United States and coal from our Colorado coal mine for use in our Mexican plants are denominated in U.S. dollars. Similarly, a substantial majority of our costs of sales and other selling and administrative expenses are either denominated in or linked to the value of the U.S. dollar, including our purchases of several raw materials and the costs of our operations in the United States. As a result, when the Mexican peso depreciates against the U.S. dollar, the same level of U.S. dollar net sales or expenses in a prior period will result in higher reported net sales or expenses in Mexican peso terms in the most recent period. Conversely, when the Mexican peso appreciates against the U.S. dollar, the same level of U.S. dollar net sales or expenses in a prior period will result in lower reported net sales or expenses in Mexican peso terms in the most recent period. Any significant devaluation of the Mexican peso also could make it more expensive to convert Mexican pesos into U.S. dollars, which are required to make the payments of interest and principal on our debt, 100% of which is denominated in U.S. dollars as of March 31, 2017. During 2014 and 2015, the Mexican peso depreciated by approximately 12.6% and 16.9%, respectively, against the U.S. dollar. During 2016, the Mexican peso depreciated by approximately 20.5%, while in the first three months ended March 31, 2017, the Mexican peso appreciated approximately 9.3% against the U.S. dollar.

We prepare our annual consolidated financial statements and interim condensed consolidated financial statements

in Mexican pesos. See note 4(r) to our annual consolidated financial statements and note 4(d) to our interim condensed consolidated financial statements for a description of exchange rates used in preparing our financial statements. In the event of a depreciation of the Mexican peso, the carrying amount of our U.S. dollar-denominated debt in our annual consolidated financial statements and interim condensed consolidated financial statements will increase to reflect the additional Mexican pesos required to fund the liabilities. As of the date of this offering memorandum, we do not hedge against fluctuations in foreign exchange rates, and our business, results of operations financial condition could be materially and adversely affected by such fluctuations.

Severe devaluation or depreciation of the Mexican peso may also result in government intervention or disruption of the international foreign exchange markets (including restrictions on currency conversion). While the Mexican government does not currently restrict the ability of Mexican or foreign persons or entities to convert Mexican pesos into U.S. dollars or other specified currencies, or to transfer other currencies outside of Mexico, it has done so in the past, thus we cannot assure you that the Mexican government will not institute a restrictive currency exchange control policy in the future. Any such restrictive foreign currency exchange control policy could prevent or restrict access to U.S. dollars or other specified currencies, and may limit our ability to transfer or convert Mexican pesos into U.S. dollars to service our

22

U.S. dollar-denominated indebtedness. Moreover, the Mexican peso could depreciate against the U.S. dollar, which would have an adverse effect on our business and results of operations.

We have transactions with related parties which may result in resolutions to conflicts of interest and in terms that are less favorable to us than if we are dealing with an unaffiliated party.

We have historically entered into and will continue to enter into a number of transactions with related parties. We engage in substantial repeated transactions with related parties, including with CEMEX, which owns a portion of our controlling shareholder, as well as Abastecedora de Fierro y Acero S.A. de C.V. (“Abastecedora de Fierro y Acero”), Inmobiliaria Ruba, S.A. de C.V. (“Inmobiliaria Ruba”) and Copachisa, S.A. de C.V. (“Copachisa”) each of which is an affiliate of ours due to our significant shareholders also holding significant equity interests in them. See “Principal Shareholders.” Although many of these transactions occur in the ordinary course of business and, if significant, must be submitted to our Audit and Corporate Practices Committee and approved by our Board, these transactions may create the potential for conflicts of interest and we may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable to us than if we were dealing with an unaffiliated party. For more information about our transactions with affiliates see “Related Party Transactions,” note 8 to our annual consolidated financial statements and note 7 to our interim condensed consolidated financial statements.

Our indebtedness could adversely affect our financial condition and our ability to capitalize on business opportunities.

As of March 31, 2017, we have U.S.$700.2 million of debt outstanding, 100% of which is denominated in U.S. dollars. This amount includes U.S.$253.5 million following the financing obtained to consummate the 2016 Asset Acquisition, as well as the refinancing of our existing term loan facility by replacing it with a secured U.S.$184.9 million Term Loan Facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Indebtedness”. Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. The global equity and credit markets in the last few years have experienced significant price volatility, dislocations and liquidity disruptions, which have caused market prices of many stocks to fluctuate substantially and the spreads on prospective and outstanding debt financings to widen considerably. Disruptions in the financial and credit markets may adversely affect our credit rating and the market value of our common stock. In addition, conditions in the capital markets have been such that traditional sources of capital, including equity capital, have not been available to us on reasonable terms or at all. As a result, we cannot guarantee that we would be able to obtain additional financing or equity capital at all or on terms that are favorable to us.

Our ability to service our debt may also be materially and adversely affected by a devaluation or depreciation in the value of the Mexican peso compared to the U.S. dollar. Approximately 71.7% and 73.6% of our net sales were generated in the United States for the three months ended March 31, 2017 and the year ended December 31, 2016, respectively. To the extent the amount of net sales generated in U.S. dollars is not sufficient to cover the cost of our indebtedness, we must use a portion of cash derived from our Mexican peso net sales to cover our financing costs. Any significant devaluation or depreciation of the Mexican peso could limit our ability to convert enough Mexican Pesos into U.S. dollars to make timely principal and interest payments and therefore adversely affect our ability to service our debt. If our U.S. dollar-denominated sales are insufficient to cover any capital amortization and interest payments with respect to our U.S. dollar-denominated debt, we will be adversely affected by any devaluation of the Mexican peso against the U.S. dollar, which could have an adverse effect on our ability to make these payments when due. In addition, a depreciation of the Mexican peso increases the carrying amount of our U.S. dollar-denominated debt in our financial statements to reflect the additional Mexican pesos required to cover such liabilities.

Moreover, the instruments governing our indebtedness contain certain affirmative and negative covenants that impose significant operating and financial restrictions on us. These restrictions limit our ability, among other things, to:

• redeem stock or redeem subordinated debt;

23

• make investments and capital expenditures;

• sell assets, including capital stock of subsidiaries;

• enter into agreements that restrict dividends or other distributions from restricted subsidiaries;

• enter into transactions with affiliates, except for transactions on an arm’s-length basis;

• create or assume liens;

• engage in mergers or consolidations;

• make prepayments and modifications of indebtedness; and

• enter into a sale of all or substantially all of our assets.

Although the covenants under these instruments are subject to certain limitations and exceptions, these restrictions could limit our ability to seize attractive growth opportunities for our businesses, particularly if we are prohibited from obtaining financing, are limited in the amount we can finance or are prohibited from making investments that are necessary to take advantage of such opportunities. These restrictions may also significantly impede our ability, and the ability of our subsidiaries, to develop and implement refinancing plans with respect to our debt or the debt of our subsidiaries.

We cannot guarantee that we will be capable of complying with all the obligations and limitations under the instruments governing our indebtedness. The failure to fulfill any such obligations and limitations could result in an event of default, which could adversely and materially affect our business, results of operations and financial condition.

Our success depends on our ability to retain and attract key executives and technical employees.

Our success depends on our ability to retain certain key executives. In particular, our senior executives have extensive experience in the cement industry and the loss of any of these executives could have an adverse effect on our business, results of operations and financial condition. The maintenance and continuity of our operations is also dependent on maintaining key technical and senior management personnel. If we lose key personnel, or if we are not able to attract and retain skilled employees as needed, our business, results of operations and financial condition could suffer.

Any unauthorized use of our brand names, trademarks and other intellectual property rights may materially adversely affect our business, results of operations and financial condition.

The substantial majority of our net sales are derived from the sales of products that we sell under the various brands that we own, which include “GCC,” “Cemento Chihuahua,” “Dacotah Cement,” “GCC Dacotah,” “GCC Rio Grande,” “Yeso Chuvíscar,” “Mortero Chuvíscar,” “Megablock” and “Construcentro.” Our brand names, to which we believe many of our customers are loyal, are therefore a key asset of our business, and our ability to obtain, maintain and protect our intellectual property rights and proprietary technology is an important component of our ability to effectively compete in our industry. We also hold patents in the United States and Mexico for our process to achieve particular thermal insulation properties and eco-friendly characteristics in certain of our prefabricated products. Any unauthorized use of our brands, trademarks or other intellectual property rights by third parties could adversely affect our business, reputation and market share. If a competitor were to infringe on our trademarks, enforcing our rights would likely be costly and would divert resources that would otherwise be used to operate and develop our business. Although we intend to enforce our intellectual property rights against infringement by third parties, our actions may not be adequate or sufficient to protect our brands, trademarks or other intellectual property rights, which may result in a material adverse effect on our business, results of operations and financial condition.

24

Our insurance coverage may be insufficient to cover certain of our losses, which could have a material adverse effect on our business, results of operations and financial condition.

Our industry generally is subject to a number of risks and hazards, including industrial accidents, labor disputes and changes in regulatory environment. Furthermore, there are types of losses, generally of a catastrophic nature, such as losses due to wars, earthquakes, floods, fires, hurricanes, pollution or environmental matters that are either uninsurable or not economically insurable, or may be insured subject to limitations, such as caps, large deductibles or co-payments. Insurance risks associated with potential terrorist acts and as a result of violence in Mexico could sharply increase the premiums we pay for coverage against property and casualty claims. Although we consider our policies adequate and similar to those of our competitors, our insurance only covers part of the losses that we might incur. The occurrence of losses or other liabilities that are not covered by our insurance, that are widespread or that exceed our insurance limits could result in significant unexpected costs that could adversely affect our business, results of operations and financial condition.

Product liability claims may be brought against us and, whether or not successful, could harm our business, results of operations and financial condition.

We are exposed to risks associated with product liability claims arising from property damage or personal injury caused by the use of our products, which are mainly used as construction materials. While we seek to conform our products to meet a variety of contractual specifications and regulatory requirements, we cannot assure you that product liability claims against us will not arise, whether due to product malfunctions, defects or other causes. We have product liability insurance for all of our subsidiaries. If any such claims against us were ultimately successful, we could be required to pay substantial damages, which could materially and adversely affect our business, results of operations and financial condition.

Failures or interruptions in our information systems could have an adverse effect on our business, results of operations and financial condition.

We depend on our information technology, or IT, which includes systems to conduct our business activities, such as our sales processing, inventory purchasing and management, product distribution and customer service. Although we have security, built-in redundancies and backups for our IT systems, we may, from time to time, experience failures or delays due to a number of factors beyond our control such as hacking, computer viruses and other cyber security attacks and electricity outages, as well as outages due to fire, floods, power loss, telecommunications failures and similar events. Any material failure or disruption of our IT systems could result in a disruption of our operations or the loss or damage of important operating information, which could adversely affect our business, results of operations and financial condition.

A significant portion of our total assets are intangible assets, including goodwill. An impairment in the carrying value of goodwill or other intangible assets could negatively affect our business, results of operations and financial condition.

As of March 31, 2017, goodwill constituted approximately 21.4% of our total assets. Goodwill is deemed to have an indefinite life; therefore, it is not amortizable. However, goodwill and other intangible assets with indefinite life are subject to impairment tests on an annual basis or earlier when there are indicators of impairment, pursuant to which is adjusted, if applicable, the carrying amount thereof for the impairment loss that is determined. To apply impairment tests, goodwill is assigned to cash generating units (“CGU”), which are defined on the basis of geographic markets taking into consideration the synergies in business combinations that have been made. If the recoverable amount of the CGU, which is determined based on value in use, is less than the CGU’s carrying amount, the impairment loss is first assigned to reduce the carrying amount of the goodwill assigned to the CGU, and then to the other CGU’s assets in a proportional manner, taking into account the carrying amount of each asset. The impairment loss of goodwill is recognized in the statement of comprehensive income and is not reversed in subsequent periods. The economic and competition trends in the markets where we operate have a significant impact on the assessment of goodwill impairment and the determination of recovery values of CGUs. Likewise, the discount rates used have a significant effect on impairment evaluations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Sources of Estimation Uncertainty—Impairment of Non-Financial Assets.” In the past, we have readjusted our goodwill downward due to the results of our goodwill impairment tests, and we cannot assure you that possible downturns in the economies where we operate will not necessitate downward readjustments of our goodwill for impairment in the future. If the value of our intangible assets, including goodwill, becomes impaired, our business, results of operations and financial condition may be materially adversely affected.

25

We may be required to spend more on capital investments than we anticipate, which may have a material adverse effect on our business, results of operations and financial condition.

For the years ended December 31, 2014, 2015 and 2016 and for the three months ended March 31, 2017, we recorded Ps.681.5 million, Ps.806.6 million, Ps.1,080.6 million and Ps.272.5 million, respectively, in capital expenditures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Expenditures” and “Our Business—Operations in the United States—Other—Coal—Plants and Equipment.” Our capital expenditures may increase substantially if we are required to undertake additional or unexpected actions to comply with new regulatory requirements or compete with new technologies.

It also may be necessary to expand production capacity at a rate greater than our estimates if demand for our products exceeds our estimates. We may not have the capital to undertake these capital investments. If we are unable to obtain sufficient capital at a reasonable cost or at all, or we are otherwise limited by the capital expenditures cap discussed above, we may not be able to expand production sufficiently to take advantage of changes in the marketplace or to make the relevant regulatory or technological changes required, which may have a material adverse effect on our business, results of operations and financial condition.

We are subject to different disclosure and accounting standards than companies in other countries.

A principal objective of the securities laws of the United States, Mexico, and other countries is to promote full and fair disclosure of all material corporate information, including accounting information. However, there may be less or different publicly available information about foreign issuers of securities than is regularly published by or about U.S. issuers of listed securities. We are subject to reporting obligations in respect of the shares listed on the Mexican Stock Exchange. The disclosure standards imposed by the Mexican Stock Exchange may be different than those imposed by securities exchanges in other countries or regions such as the United States. As a result, the level of information that is available may not correspond to what non-Mexican investors in the notes are accustomed to.

In addition, accounting standards and disclosure requirements in Mexico differ from those of the United States. In particular, our financial statements are prepared in accordance with IFRS as issued by the IASB, which differ from U.S. GAAP in a number of respects. Items on the financial statements of a company prepared in accordance with IFRS as issued by the IASB may not reflect its financial position or results of operations in the way they would be reflected had such financial statements been prepared in accordance with U.S. GAAP.

We may not be able to realize the expected benefits from acquisitions, some of which may have a material adverse effect on our business, results of operations and financial condition.

Our ability to realize the expected benefits from acquisitions depends, in large part, on our ability to integrate acquired operations with our existing operations in a timely and effective manner. These efforts may not be successful. We cannot assure you that we will be successful in identifying or acquiring suitable assets in the future. If we fail to achieve the anticipated cost savings or synergies from any acquisitions, our business, results of operations and financial condition would be materially and adversely affected.

We may also be unable to successfully carry out asset acquisitions for various reasons that may be outside our control. If we cannot successfully carry out asset acquisitions, our business plans may be affected.

Higher energy and fuel costs may have a material adverse effect on our business, results of operations and financial condition.

Our operations require significant amounts of energy, particularly in the cement production process and, to a lesser extent, in connection with our distribution operations, which rely on the use of gasoline and diesel fuel to deliver our products. The availability of energy and related inputs from utilities could be volatile and could be affected by political, economic and regulatory conditions that are outside our control. Even though energy and fuel prices have recently decreased, in the event that the prices of natural gas, coal or electricity rise, suddenly, as has occurred in the past, our profit margins could decrease as we may not be able to pass through energy cost increases to our customers, which could have a material adverse effect on our business and results of operations. To mitigate our exposure to high energy costs and their

26

volatility, we have implemented technical improvements in our cement plants that give us the option to use coal or alternative fuels in our installed capacity for cement production. Our cement plants, except for the recently acquired Odessa, Texas plant, can use natural gas for clinker production if natural gas pricing is more favorable, or if coal supply is interrupted or its quality becomes an issue.

In addition, we have been operating our Colorado coal mine since 2005, which supplies coal to our cement plants (except the Rapid City, South Dakota plant, for which we use a coal supplier in Wyoming and the recently acquired Odessa, Texas plant, which operates with natural gas) and which we estimate has sufficient coal reserves to supply our cement plants and sales to third parties until approximately 2057, based on the existing rate of depletion. However, our operations at the Colorado coal mine are subject to a variety of federal, state and local regulations, including those relating to employee health and safety, which may result in the temporary closure of the mine in the event of certain violations. We therefore cannot guarantee that the coal reserves from our Colorado coal mine will be available in the future or that we will be able to operate the mine in the same manner, which could affect our business, results of operations and financial condition if we cannot obtain alternative energy supply on terms acceptable to us or at all.

Our business, results of operations and financial condition could be materially adversely affected by an interruption of supply of raw materials.

We are dependent on a variety of raw materials that support our manufacturing activities, including limestone, clay, gypsum, silica and iron oxides. Our ability to meet our customers’ needs depends heavily on an uninterrupted supply of these materials, which we source from owned or leased quarries located near our cement plants or which we purchase from suppliers. However, production problems, lack of capacity, high demand periods, changes in our third-party suppliers’ financial or business condition or planned and unplanned shutdowns of their production facilities that affect their ability to supply us raw materials that meet our specifications, or at all, could disrupt our ability to supply products to our customers. We are also susceptible to the breach or termination of lease agreements for the quarries where we have deposits or the breach or termination of contractual obligations by our third-party suppliers. For our Rapid City, South Dakota cement plant, we have a supply agreement with a coal supplier, which was renewed in 2016 and extends the maturity of the agreement to 2019. We can give no assurance that such supplier will not breach or terminate the agreement or renew the agreement upon expiration, although there are a number of suppliers in the region that we believe can supply us with coal for this plant. In addition, interruptions in raw material supply caused by events outside our or our suppliers’ control, such as mine and quarry accidents, inclement weather, labor disputes or transportation disruptions, also could cause us to miss deliveries and breach our contracts, which could damage our relationships with our customers and subject us to claims for damages under our contracts. If any of these events were to occur for more than a temporary period, we may not be able to make arrangements for transition supply, substitute materials or qualified replacement suppliers on terms acceptable to us or at all, which could have a material adverse effect on our business, results of operations and financial condition. See “Our Business—Description of Our Raw Materials Sourcing and Reserves.”

The increase in the prices of raw materials could materially adversely affect our business, results of operations and financial condition.

If the prices we have to pay for raw materials under our existing supply contracts with independent suppliers or under replacement supply contracts increase, we could face significantly higher production costs. Prices of products, such as diesel fuel, tires, steel and explosives, and other raw materials, such as aggregates and sands, have the most significant impact on the prices of our raw materials. Although we believe our independent providers to be a stable, secure and adequate source, increases in raw material prices could adversely affect our ability to renew these contracts on similar terms or at all. Should these suppliers cease operations, eliminate production of these raw materials or substantially increase their prices, our sourcing costs for these materials may increase significantly or we may be required to find alternatives to these materials. Similarly, increases in raw material prices could adversely affect our ability to enter into shorter-term supply agreements at favorable prices. We also may not be able to pass through price increases to our customers, which could have a material adverse effect on our business, results of operations and financial condition. See “Our Business—Description of Our Raw Materials Sourcing and Reserves.”

27

We face numerous uncertainties in estimating our recoverable coal reserves and reserves for other raw materials, and inaccuracies in our estimates could result in higher than expected fuel and raw material costs or decreased profitability if we must obtain a significant portion of our fuel or other raw materials from other suppliers, which could have a material adverse effect on our business, results of operations and financial condition.

We internally source a significant portion of our fuel requirements through our coal mine in Colorado for our cement operations in Mexico, Tijeras, New Mexico and Pueblo, Colorado, and we source a significant portion of our other raw materials mainly used in our cement production from quarries and mines that we either own or lease. Our reserve estimates are prepared by our own engineers and geologists and are subject to annual review by our corporate staff jointly with our regional technical managers. In certain cases, we have used the services of third-party geologists and/or engineers to validate our own estimates. There are numerous uncertainties inherent in estimating quantities, quality and costs to mine recoverable reserves, including many factors beyond our control. Estimates of economically recoverable coal reserves and reserves of certain other raw materials depend upon a number of variable factors and assumptions, such as geological and mining conditions, which may not be fully identified by available exploration data or which may differ from experience in current operations, historical production from the area compared with production from other similar producing areas, the assumed effects of regulation and taxes by governmental agencies and assumptions concerning coal prices, operating costs, mining technology improvements, indemnities and special taxes, development costs and remediation costs, all of which may vary considerably from actual results. Therefore, proven reserve estimates may differ materially from the recoverable quantities of coal and other raw materials. Any inaccuracy in our estimates related to our reserves could result in higher than expected fuels and raw materials costs, decreased profitability if we must source our energy or raw materials from other suppliers or delays in our production if we cannot obtain alternate sources of fuel or raw materials on acceptable terms, any or all of which could have a material adverse effect on our business, results of operations and financial condition. See “Our Business—Description of Our Raw Materials Sourcing and Reserves.”

The introduction of cement substitutes into the market and the development of new construction techniques could have a material adverse effect on our business, results of operations and financial condition.

Materials such as plastic, aluminum, ceramics, glass, wood and steel can be used in construction as a substitute for cement. In addition, other construction techniques, such as the use of plasterboards, could decrease the demand for cement and concrete. Research aimed at developing new construction techniques and modern materials may result in the introduction of new products in the future, reducing the demand for cement and concrete. The use of substitutes for cement could cause a significant reduction in the demand and prices for our products and have a material adverse effect on our business, results of operations and financial condition.

A disruption or delay in production at one of our production facilities could have a material adverse effect on our business, results of operations and financial condition.

If one of our production facilities were to cease production unexpectedly, in whole or in part, our sales and financial results could be materially adversely affected. Such a disruption could be caused by a number of different events, including:

• maintenance outages;

• prolonged power failures;

• equipment failures or malfunctions;

• fires, floods, tornadoes, earthquakes or other catastrophes or effects of extreme weather;

• potential unrest or terrorist activity;

• labor difficulties; or

• other construction, design or operational problems, including those related to the granting, or the timetable for granting, of permits.

28

Based on our production schedule and cycle times, we determine the amount of inventory needed at each of our locations. If there is an unplanned service interruption at any of our plants, inventory levels may drop to a level where servicing the relevant markets may be compromised. Also, if we do not effectively manage our inventory of raw materials to ensure adequate supplies during peak periods and to minimize excessive expenditures during slow periods, our business, results of operations and financial condition could be adversely affected as a result of our inability to meet production orders of cement, ready-mix concrete or other products. Although we attempt to mitigate this risk by keeping inventory at all of our terminals and shipping stations, and in some cases we can ship products from one plant to another for a short period, the inventory may not be sufficient to cover the increased demand from such market. In addition, this strategy would cause us to incur significant additional transportation costs. For example, in 2015, we faced increased freight costs associated with the shipment of cement to our northern markets (North Dakota, Iowa and Minnesota) from our Pueblo, Colorado cement plant to cover sales from our cement plant in Rapid City, South Dakota, which sold cement beyond its capacity. We also must effectively manage our inventories of raw materials to ensure adequate supplies during peak periods and to minimize excessive expenditures during slow periods. For example, although our network of ready-mix concrete plants in certain regions provide back up for any plant that might be affected by a disruption, a prolonged shutdown of any of our production facilities could cause us to miss deliveries and breach our contracts, which could damage our relationships with our customers and subject us to claims for damages under our contracts. Any of these events could have a material adverse effect on our business, results of operations and financial condition.

Our operations could be adversely affected by weather conditions and natural disasters.

Construction activity, and therefore the demand for our products, significantly decreases during periods of cold weather, snow and prolonged or intense rain. Consequently, demand for our products is significantly lower during winter and rainy seasons. Winter weather significantly reduces our sales of cement and concrete during the first quarter and, to a lesser extent, during the fourth quarter. However, in the event the weather remains mild through late October into November, we are able to supply cement and ready-mix concrete to projects until the first hard freeze or snow. Sales in markets with harsh winter weather conditions generally improve during the second and third quarters due to an improvement in such conditions. However, high rain levels or other adverse weather could negatively affect our operations during these periods.

In addition, flooding, severe weather or natural disasters not only delay and lead to the cancellation of projects, but also disrupt transportation logistics, particularly by rail, and could also delay our production. For example, production at our Rapid City, South Dakota plant is subject to much greater variation in winter conditions than in southern regions. Natural disasters, such as tornadoes, could impede operations, damage our infrastructure or adversely affect our production facilities. Any such weather condition or natural disaster in the areas in which we operate could adversely affect our business, results of operations and financial condition, especially in the event that they occur with unusual intensity, during abnormal periods, for periods lasting longer than usual or during peak periods of construction activity.

Disruptions to our distribution network could have a material adverse effect on our business, results of operations and financial condition.

Within Mexico, approximately 33% of the volume of cement that we sell is sold in bags and distributed principally through independent distributors within the state of Chihuahua and our distributor subsidiary, Construcentro. Within the United States, we distribute bulk cement by rail on railcars that we have leased to our cement distribution terminals located throughout the states in which we operate. Damage or disruption to our distribution capability or to that of our third-party distributors due to weather, natural disaster, floods, fire, electricity shortages, terrorism, other service interruptions, pandemics, labor strikes, and disputes with, or the financial and/or instability of key distributors and warehousing, could impair our ability to distribute our products. To the extent that we are unable, or it is financially unfeasible, to mitigate disruptions to our distribution chain, there could be adverse effects on our business, results of operations and financial condition, and substantial additional resources could be required to restore our distribution network. In addition, a shortage of inventory at any of our terminals could cause us to miss deliveries and breach our contracts, thereby damaging the relationships with our customers and exposing us to claims for damages. In Mexico, and to a lesser extent in the United States, we also distribute some of our products by truck, using our own fleet. In addition to all of the risks described above, significant capital outlays may be required to repair or replace aging or damaged vehicles. As our vehicle fleet ages, operation and maintenance costs also increase. For example, insurance rates and the costs of compliance with governmental regulations, safety or other equipment standards increase with time. We cannot assure you that, as our trucks age, market conditions will justify those expenditures or enable us to operate our trucks profitably during the remainder of their useful

29

lives. A shortage of trucks would require us to outsource our distribution operations, resulting in higher costs, which could adversely affect our business, results of operations and financial condition.

Our Tijeras, New Mexico plant is not serviced by rail, and all distribution is made by third-party or customer trucks. If any issues, including labor strikes, disputes or truck breakdowns, arise, we would be dependent on other third-party trucks for delivery. We cannot assure you that third-party trucks will be available for product distribution from our Tijeras, New Mexico plant on terms that are acceptable to us, or that higher costs associated with contracting other third-party distributors will not affect our business and results of operations.

Labor unrest, failure to maintain our relationships with labor unions and labor-related costs may have adverse effects on our business, results of operations and financial condition.

As of March 31, 2017, we had 3,074 employees. Approximately 26.3% of our employees are unionized. In our Mexican operations, all of our unionized employees are members of the Confederación de Trabajadores de México (Confederation of Mexican Workers). Each of our cement plants, ready-mix concrete plants and transportation operations in Mexico has its own collective bargaining agreement in place with its unionized workers. These agreements are reviewed every two years for certain benefits other than wages, and yearly for wages. Some of our workers in our Rapid City, South Dakota plant are affiliated with the United Steelworkers Union. Our collective bargaining agreement with employees in this plant, which is renegotiated every five years and was last renewed in the first half of 2016, has a no strike clause. We believe we maintain a positive and cooperative relationship with our unions and our other employees, and we work towards developing and improving the quality of life of our personnel. Although we believe that our relationship with all the labor organizations that represent our workers is satisfactory, labor-related disputes may arise. Labor-related disputes that result in strikes or other disruptions could cause increases in operating costs, which could damage our relationship with our customers and adversely affect our business, results of operations and financial condition.

In addition, our business, results of operations and financial condition may be materially and adversely impacted as a result of increases in labor costs, including under our pension and benefits plans. Despite measures to mitigate these and other expenses, we may be unable to do so successfully, which could have a material adverse effect on our business, results of operations and financial condition.

The loss or consolidation of any one of our top customers or late payments by these or other customers could reduce our net sales and have an adverse effect on our business, results of operations and financial condition.

For the years ended December 31, 2014, 2015 and 2016, our top ten customers accounted for 16.2%, 12.9% and 14.9% of our net sales, respectively. Our top two customers together accounted for approximately 3.7% of our net sales during 2016. The loss, or consolidation of one or more of these customers or a significant decrease in business from one or more of these customers could harm our business, results of operations and financial condition. We record an allowance for doubtful accounts receivable where collection risks are anticipated, and we request, when applicable, guarantees and collateral. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Sources of Estimation Uncertainty—Allowance for Doubtful Accounts.” We cannot assure you that we will not experience late payments by these or other customers, and any late payments in the future may be material, which could have an adverse effect on our business, results of operations and financial condition.

Our industry is highly competitive, and if we are unable to compete effectively with existing competitors, or with new entrants, our business and financial results could be materially adversely affected.

We compete on a global basis with producers and importers of cement and with local ready-mix concrete producers. Our business faces significant competition from a number of global industry participants and several regional competitors. In the United States, we compete with LafargeHolcim Ltd. (“LafargeHolcim”), CEMEX, Eagle Materials Inc. (“Eagle Materials”), Lehigh Cement Company LLC (“Lehigh Cement Company”) and Ash Grove Cement Co. (“Ash Grove Cement”) all of which have sales and resources exceeding ours, which they may use to develop market share or leverage their distribution networks. In Mexico, we compete with CEMEX, Holcim Mexico, S.A. de C.V. (“Holcim”), Corporación Moctezuma, S.A.B. de C.V. (“Moctezuma”), Cooperativa La Cruz Azul, S.C.L. (“Cooperativa La Cruz Azul”) and Cementos Fortaleza, S.A. de C.V. (“Cementos Fortaleza”) all of which have sufficient sales and resources to develop market share or leverage their distribution networks.

30

In addition, new competitors and alliances may and do emerge from time to time, and may and do take market share away from us, which may adversely affect our profit margins and results of operations in regions in which we have excess capacity. Even where the ready-mix concrete production capacity is in balance, the oversupply of cement creates excessive price pressure on the ready-mix concrete markets and opportunities for new competitors, which in some cases are financed by cement producers. Our competitive position in the markets in which we operate depends upon the relative strength of these competitors in those markets and the resources they devote to competing in those markets, as well as our ability to offer competitive prices, value-added services, specialty products and maintain our relationships with our customers. We also face competition from substitute products, particularly for certain of our prefabricated products. All of these factors could cause us to experience sales and loss of market share, which could have a material adverse effect on our business and financial results. See “Our Business—Business Overview.”

We may not be able to keep up with competitive changes affecting our industry, which could have a material adverse effect on our business, results of operations and financial condition.

The cement market is characterized by evolving industry and end-market standards, changing regulation, frequent enhancements to existing products, services and technologies, introduction of new products and services and changing customer demand, all of which could result in unpredictable product transitions. The success of our new products and services depends on their initial and continued acceptance by our customers. We believe we have a competitive advantage tied to our product innovations. If we are unable to anticipate changes or develop and introduce new and enhanced products, services and innovations that are accepted by our customers on a timely basis, our ability to remain competitive and take advantage of our competitive advantage may be adversely affected. Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

Risks Related to the Countries in which We Operate

Global economic conditions and their impact on the United States and Mexican economies may adversely affect our business, results of operations and financial condition.

Consumption of our main products, cement and ready-mix concrete, as well as other construction materials, is highly dependent on construction expenditures and the construction industry as a whole, which are closely linked to general economic conditions. Our business is closely tied to general economic conditions in the United States and Mexico, with 71.7% and 28.3% of our net sales generated in each country, respectively, for the three months ended March 31, 2017 and 73.6% and 26.4% of our net sales generated in each country, respectively, for the year ended December 31, 2016. Accordingly, an economic downturn in either country could have a material adverse effect on our business, financial condition and results of operations.

According to the most recently available IMF World Economic Outlook from April 2017 (the “IMF World Economic Outlook”), the real gross domestic product (“GDP”) increased 2.4%, 2.6% and 1.6% in the United States and 2.3%, 2.6% and 2.3% in Mexico in 2014, 2015 and 2016, respectively, compared in each case to the prior year. We cannot assure you that a period of economic growth, such as the growth of the U.S. economy in the second half of 2016, will be indicative of sustained or increased economic growth.

In addition, the U.S. Federal Reserve System increased short-term interest rates in December 2016 and March 2017. An increase in interest rates could further strengthen the U.S. dollar against other currencies, which could undermine U.S. exports and economic growth. In turn, a slowdown in economic growth could cause construction spending to fall in the public, residential and non-residential sectors, which would adversely impact consumption of our products.

During 2009, in large part due to the global financial crisis, Mexico suffered one of the sharpest declines in GDP since 1932, declining by 4.7%. Mexican exports fell drastically as a result of a sharp decline in foreign consumer demand and inflation reached 3.6%. Although the Mexican economy has gradually recovered in recent years, it still faces a challenging global environment for emerging markets. For example, recent volatility in global markets has exacerbated the depreciation of the Mexican peso against the U.S. dollar. During 2014, 2015 and 2016, the Mexican peso depreciated by approximately 12.6%, 16.9% and 20.5%, respectively, against the U.S. dollar. During the three months ended March 31, 2017, the Mexican peso appreciated by approximately 9.3% against the U.S. dollar. Exchange rate depreciation and/or volatility in the markets have adversely affected and may continue to affect our results of operations and financial condition. Furthermore, the Mexican government’s fiscal accounts have been negatively affected in recent years due to the

31

sharp decline in crude oil prices. Due to the foregoing, the Mexican government has recently implemented several government spending cuts and may implement further cuts in the future, which may impact economic activity in Mexico. As a result of these factors, a contraction of the Mexican economic activity could negatively affect the construction sector and demand for our products.

Moreover, the Mexican economy is highly correlated to the performance of the U.S. economy. The extent of economic growth in the United States and the participation of Mexico’s industrial sector in such growth may negatively affect economic growth in Mexico. Negative economic conditions in the United States have a greater impact on the state of Chihuahua than other Mexican states and regions due to its proximity to the United States. Therefore, any downturn in the economic outlook in the United States may decrease the consumption of our products in both the United States and Mexico. Moreover, the results of the 2016 presidential elections in the United States has and could continue to produce changes and uncertainty with respect to government policies, including policies related to trade between the United States and Mexico. In the past, certain of our exports from Mexico to the United States were subject to an anti-dumping order imposed by the U.S. Department of Commerce.

More specifically, the correlation between economic conditions in Mexico and the United States has sharpened in recent years because of the North American Free Trade Agreement (“NAFTA”) and increased economic activity between the two countries. While NAFTA has been settled policy between the United States and Mexico for some time, on April 27, 2017 the U.S. administration announced that the United States, Mexico and Canada have agreed to renegotiate the agreement. As a result, the termination or substantial amendment of the NAFTA, an economic downturn in the United States or other related events could have a significant adverse effect on the Mexican economy, which, in turn, could affect our business, results of operations and financial condition.

Our business, results of operations and financial condition can be significantly and adversely affected by the foregoing factors. We cannot assure you that general economic conditions or conditions in the cement and ready-mix concrete markets in the United States or Mexico will improve or will not deteriorate, nor can we give you any assurances regarding the timing of any such changes. A downturn in global economic conditions that results in a decline in construction expenditures could cause demand for cement and ready-mix concrete to decrease in light of decreased consumer demand or the use of lower-cost substitutes by consumers. In addition, a slowdown of U.S. economic growth could adversely affect U.S. demand for products imported from Mexico, in particular the cement that we send from our Mexican operations for our U.S. operations.

See “Industry Overview” for more details concerning our operating environment.

Disruptions in the credit markets may materially and negatively impact our business, results of operations and financial condition, and may affect a portion of our customers.

In the past, constraints in the credit markets have heightened a number of material risks to our business, results of operations and financial condition. For example, the 2008 global financial crisis adversely affected local credit markets, resulting in an increased cost of capital, which had a negative impact on our ability to meet our financial needs. Weakness in, and uncertainty about, global economic conditions, in particular the economic conditions in the United States, could cause businesses to postpone spending or investing in response to tighter credit, negative financial news or declines in income or asset values, which could have a material adverse effect on the demand for goods and international trade which, in turn, could adversely affect the demand for our products.

We further believe that many of our customers are reliant on liquidity from global credit markets and, in some cases, require external financing to fund a portion of their operations. Delays or cancellations to construction projects could occur if our customers are unable to obtain financing for such projects or if consumer confidence is eroded by economic uncertainty, which could adversely affect the demand for our products. Limitations on the ability to access credit could also lead to insolvencies of key customers. Finally, if our customers lack liquidity, they may not be able to pay amounts due to us, which could negatively impact our business, results of operations and financial condition.

32

Economic and political developments in Mexico could affect Mexican economic policy and adversely affect our business, results of operations and financial condition.

We are a publicly listed variable capital stock corporation organized under the laws of Mexico and a large portion of our operations and assets are located in Mexico. As a result, our business, results of operations and financial condition may be affected by the general condition of the Mexican economy, the devaluation or depreciation of the Mexican peso as compared to the U.S. dollar, price instability, inflation, interest rates, regulation, taxation, social instability (including related to public safety) and other political, social and economic developments in or affecting Mexico over which we have no control.

Mexico has, and is expected to continue to have, high real and nominal interest rates. The annualized interest rates on 28-day Certificados de la Tesorería de la Federación (also known as “CETES”), averaged approximately 3.0%, 3.0%, 4.1% and 6.1% for 2014, 2015, 2016 and for the three month period ended March 31, 2017, respectively. Accordingly, if we incur debt denominated in Mexican pesos in the future, it could be at high interest rates. Mexico has also experienced periods of very high levels of inflation. Inflation has led to high interest rates, devaluations of the Mexican peso and, during the 1980s, substantial government controls over exchange rates and prices. A return to higher levels of inflation could adversely affect our business, results of operations and financial condition.

The Mexican government has exercised, and continues to exercise, significant influence over the Mexican economy. Mexican governmental actions concerning the economy and state-owned enterprises could have a significant effect on Mexican private sector entities in general, and on us in particular, as well as on market conditions, prices and returns on Mexican securities, including our securities. The Mexican government could implement significant changes in laws, policies and regulations, which could affect the economic and political situation in Mexico. Moreover, the anticipation and results of the 2018 presidential elections in Mexico could produce changes and uncertainty with respect to government policies.

Our performance historically has been tied to Mexican public-sector spending on infrastructure facilities and Mexican public-sector spending is, in turn, generally dependent on the political climate in Mexico. More specifically, the Mexican government has recently faced pressure to decrease spending in light of the decline in oil prices, given its reliance on oil exports for a significant portion of its revenues. We cannot assure you that changes in Mexican government policies will not adversely affect our business, financial condition and results of operations. In particular, the tax legislation in Mexico is subject to constant change and there can be no assurance as to whether the Mexican government may make changes to it or any of its existing political, social, economic or other policies, whose changes may have a material adverse effect on the Mexican economy and on our business, results of operations, financial condition or prospects or adversely affect the market price of our notes. Furthermore, we cannot provide any assurance that future political developments in Mexico, over which we have no control, will not have an unfavorable impact on our financial position or results of operations and impair our ability to make distributions to holders of our notes. Any of these events, or other unanticipated economic or political developments in Mexico, could have a material adverse effect on our business, results of operations and financial condition.

Finally, demand for our cement products in Mexico depends, in large part, on residential construction in the northern region of Mexico, which consists mostly of families gradually building or improving their own homes. In 2016, residential construction accounted for approximately 34.7% of our cement sales, while public infrastructure and residential housing construction accounted for approximately 8.4% and 9.3%, respectively, of our cement sales. Residential construction is highly correlated to prevailing economic conditions. In particular, in the city of Juarez, the city with the highest population in the state of Chihuahua, according to the Instituto Nacional de Estadística y Geografía (National Institute of Statistics and Geography of Mexico, or “INEGI”), private construction was largely deferred between 2009 and 2011 as a result of criminal violence, primarily due to the activities of drug cartels, which has impacted economic conditions, with public construction partially offsetting these effects. Before the 2008 global economic recession, the residential segment in the state of Chihuahua had one of the highest growth rates in Mexico. In recent years, the state of Chihuahua has experienced a relative decline in violence, which has resulted in improved economic conditions and increased construction, particularly in the residential segment. However, we cannot predict whether this recovery will be sustainable, and a deterioration in economic conditions in the northern region of Mexico would have a material adverse effect on our results of operations and financial condition. See “—Violence in Mexico, including violence associated with Mexican drug cartels, has had and could continue to have an adverse effect on the Mexican economy, which could adversely affect our business, results of operations and financial condition.”

33

Our business, results of operations and financial condition are subject to political and economic risks for conducting business in corrupt environments.

A significant portion of our business is conducted in Mexico, which has elevated levels of corruption compared to, and may present greater political, economic and operational risks than in the United States. We emphasize compliance with the law and, although we have established policies, procedures and employee training programs to promote compliance with global ethics and legal requirements such as the Mexican Ley Federal Anticorrupción en Contrataciones Públicas (Federal Law of Anticorruption in Public Contracting) and the U.S. Foreign Corrupt Practices Act (the “FCPA”), our officers, directors, employees, agents or shareholders acting on our behalf, may not adhere to our code of ethics, other policies or rules and regulations. If we fail to enforce our policies and procedures properly or maintain internal accounting practices to accurately record our transactions, we may be subject to criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. We could incur significant costs, including potential harm to our reputation, for investigation, litigation, civil or criminal penalties, fees, settlements or judgments for potential violations of the Federal Law of Anticorruption in Public Contracting, the FCPA or other laws or regulations, which in turn could have a material adverse effect on our business, results of operations and financial condition.

Our business, results of operations and financial condition may be adversely affected by government contracting risks.

As a result of our supply of cement and ready-mix concrete for use in public infrastructure projects, we are subject to various laws and regulations applicable to parties doing business with the U.S. or the Mexican governments, including the FCPA in the United States, and other such laws and regulations governing performance of U.S. or Mexican government contracts, the use and treatment of U.S. or Mexican government furnished property and the nature of materials used in our products. We may be unilaterally suspended or barred from conducting business with the U.S. or Mexican government, or become subject to fines or other sanctions if we are found to have violated these laws or regulations. As a result of the need to comply with these laws and regulations, we are subject to governmental investigations as well as possible civil fraud actions and fines, among others.

Violence in Mexico, including violence associated with Mexican drug cartels, has had and could continue to have an adverse effect on the Mexican economy, which could adversely affect our business, results of operations and financial condition.

Over the past few years, Mexico has experienced prolonged periods of criminal violence, primarily due to the activities of drug cartels. Although organized criminal activity and related violent incidents has decreased in recent years, they remain prevalent in the northern states of the country that share a border with the United States, including the state of Chihuahua, where we conduct most of our Mexican operations. Despite efforts by the Mexican government to increase its security measures by strengthening its military and police forces, drug-related violence and crime continue to pose a significant threat to the Mexican economy and are a source of economic and political instability and uncertainty. Systemic criminal activity and isolated criminal acts may disrupt operations, impact our ability to earn revenue and dramatically add to our cost of operations. Continued violence could result in the Mexican government taking additional measures, which may include restrictions on cross-border transport and trade. If the levels of violence in Mexico, over which we have no control, remain the same or increase they could have an adverse effect on the Mexican economy and our business, results of operations and financial condition.

Developments in other countries may have an adverse effect on the Mexican economy and on our business, results of operations and financial condition and the market value of the notes.

The Mexican economy and the market value of securities of Mexican companies may be, to a certain degree, affected by economic and market conditions in other countries, including the United States, China and other Latin American emerging market countries. Although economic conditions in other emerging market countries may differ significantly from economic conditions in Mexico, investors’ reactions to developments in any of these other countries may have an adverse effect on the market value of securities of Mexican issuers, including those issued by us. In the past, prices of both Mexican debt and equity securities dropped substantially as a result of developments in Russia, Brazil, Argentina and several Asian countries. In addition, terrorist acts in the United States and elsewhere could depress economic activity in the United States and globally, including in Mexico. This could have a material adverse effect on our business, results of operations and financial condition, which could affect the market value of the notes.

34

Furthermore, Mexico, as an emerging market economy, is more exposed to unfavorable conditions in the international markets that can have a negative impact on the demand for our products. In the past, the development of adverse economic conditions in other emerging market countries resulted, in general, in capital flight and, as a consequence, in a decrease in the value of foreign investments in Mexico. In addition, the high level of indebtedness in U.S. dollars by corporates in emerging markets constitutes an additional source of instability. As a result, any combination of lower consumer confidence, disrupted global capital markets and/or reduced international economic conditions could have a negative impact on the Mexican economy and consequently on our business, results of operations and financial condition.

Legal and Regulatory Risks

We are subject to litigation proceedings, which could increase our expenses and have a material adverse effect on our business, results of operations and financial condition.

From time to time, we may become involved in litigation and other legal proceedings relating to claims arising from our operations in the normal course of business, including antitrust-related proceedings, environmental damage, remediation and other related proceedings, employee-related matters, commercial disputes and insurance coverage. As described in “Our Business—Legal Proceedings,” we are currently subject to legal proceedings, including the dispute related to the sale of our ownership in SOBOCE, which could individually or in the aggregate have a material adverse effect on our business, results of operations and financial condition. See “Our Business—Legal Proceedings—Sale of SOBOCE.”

Litigation and other proceedings are subject to inherent uncertainties and unfavorable rulings may occur. Any claim could be decided against us, or procedural mistakes may be made, which could have a material adverse effect on our business, results of operations and financial condition, including as a result of monetary penalties, the debarment from conducting business with the U.S. or Mexican government or continuing to do business with worse terms for our transactions. Similarly, the costs associated with the outcome of legal proceedings could dramatically increase our expenses, as litigation is often very expensive, divert management’s attention and impact our profitability. If we become involved in significant litigation, we may be forced to direct significant additional resources and our management’s attention to defending or prosecuting the claims, which in turn could have a material adverse effect on our business, results of operations and financial condition. We cannot assure you that these or other legal proceedings will not materially affect our ability to conduct our business in the manner that we expect or otherwise adversely affect us should an unfavorable ruling occur.

Our business, results of operations and financial condition may be materially adversely affected by an unfavorable resolution on our sale of SOBOCE.

On August 18, 2011, we sold our 47.02% interest in the Sociedad Boliviana de Cemento, S.A. (“SOBOCE”), to Consorcio Cementero del Sur (“CCS”), a subsidiary of Grupo Gloria based in Peru. With the sale of SOBOCE, we ceased operations in Bolivia. Compañía de Inversiones Mercantiles, S.A. (“CIMSA”), SOBOCE’s majority shareholder, filed a request for arbitration before the Inter-American Commercial Arbitration Commission (“IACAC”). We were notified of this request on November 16, 2011. The request, which we believe to be unfounded, alleges violations of CIMSA’s right of first refusal with respect to the purchase of SOBOCE’s shares, pursuant to a shareholders’ agreement we entered into with CIMSA.

In September 2013, an arbitral tribunal issued a liability award against us and GCC Latinoamerica, S.A. de C.V. (“GCC Latinoamerica”), finding us and GCC Latinoamerica liable for breaching the aforementioned shareholders’ agreement. In December 2014, CIMSA sold its 51.54% interest in SOBOCE to CCS for approximately U.S.$300 million, thereby making CCS the majority and controlling shareholder of SOBOCE with 98.32% of its shares. In April 2015, as part of the IACAC arbitration initiated by CIMSA against us, the final damages award was issued, requiring that we and GCC Latinoamerica pay CIMSA U.S.$36.1 million for damages and expenses.

Together with GCC Latinoamerica, we sought annulment of both of the awards in Bolivia. As a result, both awards were held to be contrary to Bolivian law and are thus considered null, without effect and unenforceable. As of the date of this offering memorandum, these holdings remain under review in various ongoing proceedings, and are not yet final. During the first quarter of 2016, the three members of the IACAC arbitral tribunal withdrew from their positions, which remain vacant. As a result, the issuance of any new award will require the appointment of a new arbitral tribunal.

35

Additionally, we obtained provisional remedies from a Mexican tribunal ordering CIMSA to refrain from enforcing any award issued in the arbitration process until the pending appeals for annulment have been resolved. We can also exercise our contractual rights to recover, at the time, the damages and expenses that the final judgment of the arbitration process could cause us.

Pursuant to Bolivian law, enforceability of the final damages award is suspended until pending appeals for annulment are resolved. While we believe that this legal proceeding will be resolved in our favor, we cannot assure you that this legal proceeding will not materially and adversely affect our business, results of operations, liquidity and financial condition. See “Our Business—Legal Proceedings—Sale of SOBOCE.”

Compliance with environmental, health and safety laws and regulations could result in significant costs and liabilities, which could have a material adverse effect on our business, results of operations and financial condition.

Our operations are subject to strict laws and regulations governing environmental protection, health and safety in the United States and Mexico. These environmental, health and safety laws and regulations generally require us to obtain and comply with various permits, licenses, registrations and other approvals as well as incur capital expenditures in connection with our compliance efforts. Even though we continuously strive to comply with environmental, health and safety laws and regulations, and related permit and other requirements, there can be no assurance that our operations will at all times be in compliance with them. The enactment of new environmental, health and safety laws and regulations, the more stringent interpretation or enforcement of existing requirements or the imposition of liabilities under such laws and regulations, could force us to incur costs for compliance, capital expenditures or liabilities relating to damage claims or limit our current or planned operations, any of which could have a material adverse effect on our business, results of operations and financial condition.

In recent years, our industry has become subject to a series of new and more stringent environmental requirements in the United States. In particular, the U.S. Environmental Protection Agency (“EPA”) issued the Portland Cement NESHAP in September 2010, the New Source Performance Standard for Portland Cement Plants (“Portland Cement NSPS”) in September 2010, the revised final emissions standards for commercial and industrial solid waste incinerators (“CISWI”) in February 2013 and the final rule regulating Coal Combustion Residuals (“CCRs”) in December 2014. The EPA has also promoted more stringent Clean Air Act permit requirements and efforts to address climate change through federal and state laws and regulations and regional initiatives in the United States, as well as through international agreements and the laws and regulations of other countries, to reduce the emissions of greenhouse gases (“GHGs”). See “Our Business—Environmental, Health and Safety Matters—United States” for a description of these rules. Although all of our facilities are in compliance with the aforementioned environmental regulations as of the date of this offering memorandum, we cannot assure you that we will have the capacity or resources necessary to continue to comply with these regulations going forward. We also cannot predict whether we will be able to comply with new requirements issued in the future. The environmental requirements of the United States and Mexico described above and under “Our Business—Environmental, Health and Safety Matters,” whether already in effect or upon their implementation, individually or in the aggregate, could negatively affect our operations and have a material adverse effect on our business, results of operations and financial condition.

Under certain environmental, health and safety laws and regulations, we also could be held responsible for liabilities and obligations arising out of past or future releases of hazardous materials, exposure to these hazardous materials and other environmental damage, in some cases, without regard to fault. As of the date of this offering memorandum, we are not subject to any legal or administrative proceeding under environmental, health or safety laws or regulations that could have an adverse material effect on our business or financial results. A number of our facilities, however, have been in industrial use for many years, including prior to our ownership. It is possible that some of these facilities may have contamination. As such, obligations to investigate or remediate contamination or related liabilities may be imposed on us in the future, such as in the event of the discovery of contamination at any of our current or former sites or in the event of a change at a facility such as its closure or sale or in the event of an investigation by a regulatory authority. In addition, private parties may have the right to pursue legal action to enforce compliance as well as to seek damages for violations of such laws and regulations or for personal injury or property damage. Our insurance may not cover all environmental, health and safety risks and costs or may not provide complete coverage in the event of an environmental, health or safety claim against us. Any such obligations, liabilities or actions could have a material adverse effect on our business, results of operations and financial condition.

36

In addition to the risks identified above arising from actual or potential statutory and regulatory controls, severe weather, rising seas, higher temperatures and other effects that may be attributable to climate change may impact any manufacturing sector in terms of direct costs (e.g., property damage and disruption to operations) and indirect costs (e.g., disruption to customers and suppliers and higher insurance premiums). To the extent that such conditions negatively affect our operations, they could have a material adverse effect on our business, results of operations and financial condition. See “—Risks Related to Our Company, Business and Operations—Our operations could be adversely affected by weather conditions and natural disasters.”

We may be assessed environmental fines or penalties, which, if substantial, could have a material adverse effect on our business, results of operations and financial condition.

In recent years, by means of a Section 114 information request under the Clean Air Act, the EPA imposed multi-million dollar penalties on several companies operating cement plants in the United States. Most of these penalties were for various violations of Prevention of Significant Deterioration (“PSD”) permitting requirements, focused on emissions of sulfur dioxide and nitrogen oxides.

In addition, the EPA or other environmental regulatory authorities have assessed approximately 25 penalties against us since 2006. These assessed penalties averaged less than U.S.$28,000 each. We cannot predict if we will be subject to additional fines and, if so, whether such fines will be material.

Risks Related to our Indebtedness, the Notes and the Guarantees

Payments on the notes and the guarantees will be effectively junior to any of our and our guarantors’ secured indebtedness, respectively, and structurally junior to debt obligations of our non-guarantor subsidiaries.

The notes and the obligations of any future guarantors will constitute our and our subsidiary guarantors’, and any future note guarantors’, senior unsecured obligations and will rank equal in right of payment with all of our other existing and future senior unsecured indebtedness, other than obligations preferred by statute (such as tax, social security and labor claims). Although the holders of the notes will have a direct, but unsecured, claim on our assets and property, payment on the notes will be subordinated in right of payment to any of our existing or future secured debt, to the extent of the assets securing such debt. Although the indenture governing the notes will contain restrictions on the incurrence of additional secured debt and additional liens, these restrictions are subject to important qualifications and exceptions. Among other exceptions, the indenture will not restrict our ability and the ability of our subsidiaries to incur debt and grant liens pursuant to lease securitization transactions. The amount of secured debt and liens that we may incur in compliance with these restrictions or liens that arise from governmental or creditor action could be substantial. Payment by us in respect of the notes will also be structurally subordinated to the payment of secured and unsecured debt and other creditors of our non-guarantor subsidiaries.

If we or any of the subsidiary guarantors become insolvent or are liquidated, or we or any of the subsidiary guarantors become subject to bankruptcy proceedings (including the subject of concurso mercantil proceedings), or if payment under any secured debt is accelerated, the relevant lenders and security holders would be entitled to exercise the remedies available to a secured lender. Accordingly, any proceeds upon a realization of the collateral would be applied first to amounts due under the secured debt obligations before any proceeds would be available to make payments on the notes. After such application of the proceeds from collateral, it is possible that there would be no assets remaining from which claims of the holders of the notes could be satisfied.

The notes are not guaranteed by all of our existing subsidiaries and may not be guaranteed by certain of our future subsidiaries. However, our financial information is presented on a consolidated basis. Any right that we, the subsidiary guarantors or any future note guarantors will have to receive assets of any of the non-guarantor subsidiaries upon the liquidation or reorganization of those subsidiaries, and the consequent rights of holders of notes to realize proceeds from the sale of any of those subsidiaries’ assets, will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors and holders of debt of that subsidiary.

In addition, under Mexican law, our obligations under the notes and the subsidiary guarantees are subordinated to certain statutory preferences, including claims for salaries, wages, secured obligations (to the extent of the security

37

provided), social security, employee housing fund contributions, taxes and court fees and expenses. In the event of our liquidation, such statutory preferences will have preference over any other claims, including claims by any holder of the notes.

Further, if any assets remain after payment of these lenders, the remaining assets would be available to creditors preferred by statute, such as holders of tax and labor claims, and might be insufficient to satisfy the claims of the holders of the notes and holders of other unsecured debt including trade creditors that rank equal to holders of the notes.

The subsidiary guarantees may not be enforceable.

The notes will be fully and unconditionally guaranteed, jointly and severally, by certain of our subsidiaries. The subsidiary guarantees provide a basis for a direct claim against the subsidiary guarantors; however, it is possible that the subsidiary guarantees may not be enforceable under applicable law.

While Mexican law does not prohibit the giving of subsidiary guarantees and, as a result, does not prevent the subsidiary guarantees of the notes from being valid, binding and enforceable against the subsidiary guarantors, in the event that a subsidiary guarantor becomes subject to a concurso mercantil or to a quiebra, its subsidiary guarantee may be deemed to have been a fraudulent transfer and may be declared void based upon the subsidiary guarantor being deemed not to have received fair consideration in exchange for such subsidiary guarantee. If any such event were to occur, the creditworthiness of the notes and the market value of the notes in the secondary market may be materially and adversely affected.

The notes will be subject to transfer restrictions which could limit your ability to resell your notes.

The notes have not been and will not be registered under the Securities Act or any U.S. state securities laws and may not be altered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Such exemptions include offers and sales that occur outside the United States in compliance with Regulation S and in accordance with any applicable securities laws of any other jurisdiction and sales to qualified institutional buyers as defined under Rule 144A. For a discussion of certain restrictions on resale and transfer, see “Transfer Restrictions.” Consequently, a holder of notes must be able to bear the economic risk of their investment in the notes for the term of the notes.

An active trading market for the notes may not develop.

Currently, there is no market for the notes. Although we have submitted an application for the listing and quotation of the notes on SGX-ST, we cannot guarantee that the notes will remain listed on the Official List of the SGX-ST. A trading market for the notes may not develop, or if a market for the notes were to develop, the notes may trade at a discount from their initial offering price, depending upon many factors, including prevailing interest rates, the market for similar securities, general economic conditions and our financial condition. The initial purchasers are not under any obligation to make a market with respect to the notes, and we cannot assure you that trading markets will develop or be maintained. Accordingly, we cannot assure you as to the development or liquidity of any trading market for the notes. If an active market for the notes does not develop or is interrupted, the market price and liquidity of the notes may be adversely affected.

Payments claimed in Mexico on the notes, pursuant to a judgment or otherwise, would be in pesos.

In the event that proceedings are brought against us in Mexico, either to enforce a judgment or as a result of an original action brought in Mexico, or if payment is otherwise claimed from us in Mexico, we would not be required to discharge those obligations in a currency other than Mexican currency. Under the Ley Monetaria de los Estados Unidos Mexicanos (Monetary Law of the United Mexican States), an obligation, whether resulting from a judgment or by agreement, denominated in a currency other than Mexican currency, which is payable in Mexico, may be satisfied in Mexican currency at the rate of exchange in effect on the date on which payments are made. Such rate is currently determined by Banco de México and published every banking day in the Official Gazette of the Federation. As a result, you

38

may suffer a U.S. dollar shortfall if you obtain a judgment by a Mexican court or a payment is received in Mexico. You should be aware that no separate action exists or is enforceable in Mexico for compensation for any shortfall.

Our subsidiary guarantors’ and any future note guarantors’ obligations under the notes would be converted in the event of bankruptcy.

Under the Mexican Bankruptcy Law, if we or any of the subsidiary guarantors are declared insolvent, bankrupt or became subject to concurso mercantil, our obligations and the obligations of the subsidiary guarantors under the notes (i) would be converted into pesos and then from pesos into unidades de inversion (inflation-adjusted units, known as UDIs), (ii) would be satisfied at the time claims of all our creditors are satisfied, (iii) would be subject to the outcome of, and priorities recognized in, the relevant proceedings, which differ from those in other jurisdictions such as the United States, (iv) would cease to accrue interest from the date the concurso mercantil is declared, (v) would not be adjusted to take into account any depreciation of the peso against the U.S. dollar occurring after such declaration and (vi) would be subject to certain statutory preferences, including tax, social security and labor claims, and claims of secured creditors (up to the value of the collateral provided to such creditors). There is also limited relevant legal related precedent. For such reasons, the ability of the holders of the notes to effectively collect payments due under the notes may be compromised or subject to delay.

In addition, under Mexican law, it is possible that, in the event we are declared insolvent, bankrupt or become subject to concurso mercantil, any amount by which the stated principal amount of the notes exceeds their accreted value may be regarded as not matured and, therefore, claims of holders of the notes may be allowed only to the extent of the accreted value of the notes. At present, there are very few Mexican legal precedents regarding bankruptcy or concurso mercantil in Mexico on this point and, accordingly, uncertainty exists as to how a Mexican court would measure the claims of holders of the notes.

We may be unable to purchase the notes upon a change of control event, which would result in defaults under the indenture governing the notes.

The terms of the notes require us to make an offer to repurchase the notes upon the occurrence of a specified change of control event at a purchase price equal to 101% of the principal amount of the notes, plus accrued interest to the date of the purchase. Any financial arrangements we may enter may require repayment of amounts outstanding upon the occurrence of a change of control event and limit our ability to fund the repurchase of your notes in certain circumstances. It is possible that we will not have sufficient funds at the time of any change of control to make the required repurchase of notes or that restrictions on our other financing arrangement will not allow the repurchase of notes or that restrictions in our other financing arrangements will not allow the repurchases. If we fail to repurchase the notes in such circumstances, we would default under the indenture which may, in turn, trigger cross-default provisions in our other debt instruments. See “Description of the Notes—Events of Default.”

It may be difficult to enforce civil liabilities against us or our directors, executive officers and controlling persons.

All of our directors, executive officers and controlling persons named herein are non-residents of the United States and substantially all of the assets of such non-resident persons and a significant portion of our assets are located in Mexico or elsewhere outside the United States. As a result, it may not be possible for investors to effect service of process within the United States, or in any other jurisdiction outside of Mexico, upon such persons or us or our non-U.S. subsidiary guarantors, or to enforce against them, or us or our non-U.S. subsidiary guarantors in courts of any jurisdiction outside of Mexico, judgments predicated upon the laws of any such jurisdiction, including any judgment predicated upon the civil liability provisions of U.S. federal and state securities laws. In addition, there is doubt as to the enforceability in original actions in Mexican courts of liabilities predicated, in whole or in part, on U.S. federal securities laws and as to the enforceability in Mexican courts of judgments of U.S. courts obtained in actions predicated on the civil liability provisions of U.S. federal securities laws. No treaty exists between the United States and Mexico for the reciprocal enforcement of foreign judgments.

39

EXCHANGE RATES

The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rate published by the Banco de México as the rate for the payment of obligations denominated in non-Mexican currency payable in Mexico, expressed in Mexican pesos per U.S. dollar. The average annual rates presented in the following tables were calculated by using the average of the exchange rates on the last day of each month during the relevant period and the average monthly rates were calculated by using the average of the exchange rates on each day during the relevant period. We make no representation that the peso amounts referred to in this offering memorandum could have been or could be converted into U.S. dollars at any particular rate or at all.

For convenience purposes, we have translated U.S. dollar amounts for the year ended December 31, 2016 and the three months ended March 31, 2017 in this offering memorandum at the exchange rate of Ps.20.73 to U.S.$1.00 and Ps.18.81 to U.S.$1.00, respectively, which were the exchange rates published by the Banco de México as the rates for the payment of obligations denominated in non-Mexican currency payable in Mexico, expressed in pesos per U.S. dollar on December 31, 2016 and March 31, 2017, respectively. Exchange rates that we use for convenience purposes differ from the exchange rates we use in preparing our financial statements. See note 4(r) to our annual consolidated financial statements and note 4(d) to our interim condensed consolidated financial statements for a description of the calculation of the exchange rate used in preparing our financial statements.

Period High Low Average Period End 2011 ................................................................................. 14.2443 11.5023 12.4233 13.9787 2012 ................................................................................. 14.3949 12.6299 13.1695 13.0101 2013 ................................................................................. 13.4394 11.9807 12.7720 13.0765 2014 ................................................................................. 14.7853 12.8462 13.2925 14.7180 2015 ................................................................................. 17.3776 14.5559 15.8483 17.2065 2016 ................................................................................. 21.0511 17.1767 18.6567 20.7314 2017:

January .................................................................... 21.9076 20.6194 21.3955 21.0212 February .................................................................. 20.7908 19.7011 20.3525 19.8335 March ...................................................................... 19.9957 18.8092 19.4165 18.8092 April ........................................................................ 19.1119 18.4863 18.7812 19.0670 May ......................................................................... 19.1364 18.4185 18.7997 18.5121 June (through June 20) ............................................ 18.6909 17.9321 18.2943 17.9321

On June 20, 2017, the exchange rate published by the Banco de México as the rate for the payment of obligations

denominated in non-Mexican currency payable in Mexico was Ps.17.9321 to U.S.$1.00.

40

USE OF PROCEEDS

We estimate that the net proceeds from this offering will be approximately U.S.$257.1 million, after deducting commissions payable to the initial purchasers and other expenses related to the offering. We intend to use the net proceeds from the sale of the notes (i) to pay the consideration for the Tender Offer, (ii) if, following the Tender Offer’s early settlement, any Old Notes remain outstanding, to promptly redeem such outstanding Old Notes at a redemption price equal to 104.063% in accordance with the terms of the Old Notes, and (iii) the remainder, if any, for general corporate purposes.

41

CAPITALIZATION

The following table sets forth our consolidated capitalization and indebtedness as of March 31, 2017, on an actual basis and as adjusted to give effect to the issuance of the notes in this offering and the application of the proceeds therefrom. See “Use of Proceeds.”

U.S. dollar amounts in the table are translated from the Mexican peso amounts at a rate of Ps.18.81 per U.S.$1.00 in accordance with the procedures for the presentation of the Company’s reporting currency in the interim condensed consolidated financial statements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results of Operations and Financial Condition—Effects of Foreign Currency Exchange Rate Fluctuations on Results of Operations” and note 4(d) to the interim condensed consolidated financial statements.

You should read this table in conjunction with “Selected Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and interim condensed consolidated financial statements and the notes thereto.

As of March 31, 2017

Actual As adjusted

(unaudited) (in millions) U.S.$ Ps. U.S.$ Ps. Short-term debt

Secured Term Loan Facility .................................................. — — — —

Unsecured Term Loan Facility ................................................. 4.9 92.2 4.9 92.2 Loans ....................................................................... 0.3 6.5 0.3 6.5

Total short-term debt ...................................................... 5.2 98.7 5.2 98.7 Long-term debt

Secured Term Loan Facility .................................................. 183.5(1) 3,450.7(1) 183.5(2) 3,450.7(2)

Unsecured Term Loan Facility .................................................. 246.0(1) 4,627.8(1) 246.0(2) 4,627.8(2) Current International Bond ...................................... 253.1(1) 4,760.3(1) 123.6(2) 2,324.1(2) Loans ....................................................................... 2.2 40.9 2.2 40.9 Notes offered hereby ............................................... — — 124.0(2) 2,332.1(2)

Total long-term debt ....................................................... 684.8 12,879.7 679.3 12,775.6 Total debt ........................................................................ 690.0 12,978.4 684.5 12,874.3 Stockholders’ equity(3)

Non-controlling interest .......................................... 0.2 4.0 0.2 4.0 Controlling interest .................................................. 880.3 16,556.6 880.3 16,556.6

Consolidated stockholders’ equity .................................. 880.5 16,560.6 880.5 16,560.6 Total capitalization(4) ....................................................... 1,570.5 29,539.0 1,565.0 29,434.9

____________________

(1) Net of issuance costs of U.S.$10.2 million. (2) Net of estimated issuance costs of U.S.$15.7 million. (3) As of March 31, 2017, our capital stock is represented by 337,400,000 ordinary, common, nominative, with no par value shares (including shares held in the treasury). (4) Total capitalization is equal to the sum of total debt and total stockholders’ equity.

42

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following tables present our selected consolidated financial information and other data as of the dates and for each of the periods indicated. This information should be read in conjunction with, and is qualified in its entirety by reference to, our audited and unaudited consolidated financial statements, including the notes thereto. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Presentation of Financial and Other Information.”

The selected consolidated financial information as of and for the years ended December 31, 2016, 2015 and 2014 has been derived from our annual consolidated financial statements contained elsewhere in this offering memorandum, which have been audited by Galaz, Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu Limited, which are independent auditors.

The selected consolidated financial information for the three months ended March 31, 2017 and 2016 and the financial position as of March 31, 2017 has been derived from our interim condensed consolidated financial statements, contained elsewhere in this offering memorandum. In our opinion, our interim condensed consolidated financial statements include all adjustments necessary to present fairly in all material respects our financial condition and results of operations as of the dates and for the periods presented, in each case in accordance with IFRS. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other period.

Our annual consolidated financial statements and our interim condensed consolidated financial statements have been prepared in accordance with IFRS and are presented in Mexican pesos. The financial statements of our non-Mexican subsidiaries have been adjusted to conform to IFRS and translated into Mexican pesos. See note 4(r) to our annual consolidated financial statements.

IFRS differs in certain respects from U.S. GAAP. We have not prepared a quantitative reconciliation of our annual consolidated financial statements and interim condensed consolidated financial statements or other financial information to U.S. GAAP. Any such reconciliation could reveal material differences, which may be positive or negative, in our results of operations and financial condition from the annual consolidated financial statements and interim condensed consolidated financial statements and other financial information contained in this offering memorandum. See “Risk Factors—Risks Related to Our Company, Business and Operations—We are subject to different disclosure and accounting standards than companies in other countries.”

For convenience purposes, we have translated U.S. dollar amounts for the year ended December 31, 2016 and the three months ended March 31, 2017 in this offering memorandum at the exchange rate of Ps.20.73 to U.S.$1.00 and Ps.18.81 to U.S.$1.00, respectively, which were the exchange rates published by the Banco de México as the rate for the payment of obligations denominated in non-Mexican currency payable in Mexico, expressed in pesos per U.S. dollar on December 31, 2016 and March 31, 2017, respectively. Exchange rates that we use for convenience purposes differ from the exchange rates we use in preparing our financial statements. See note 4(r) to our annual consolidated financial statements and note 4(d) to our interim condensed consolidated financial statements for a description of the calculation of the exchange rate used in preparing our financial statements.

43

Year Ended December 31,

2016 2016 2015 2014 (in millions)

U.S.$ (Convenience Translation) Ps. Ps. Ps.

Statement of Profit Data: Net sales ................................................................................................ 675.2 13,996.8 11,983.8 10,009.7 Cost of sales .......................................................................................... 493.2 10,223.8 9,074.1 7,682.9

Gross profit ..................................................................................... 182.0 3,773.0 2,909.7 2,326.8 General, administrative and selling expenses ........................................ 68.1 1,410.9 1,235.2 1,137.5 Operating income before other expenses ........................................ 113.9 2,362.1 1,674.5 1,189.3 Other expenses ...................................................................................... 5.7 118.8 25.3 66.3 Operating income ........................................................................... 108.2 2,243.3 1,649.2 1,123.0 Result from financing activities:

Financial expenses .......................................................................... (35.2) (729.8) (641.3) (564.4) Financial income ............................................................................. 1.7 34.2 27.0 23.1 Exchange gain, net .......................................................................... 1.2 24.6 37.4 9.0

Total ......................................................................................... (32.4) (670.9) (576.9) (532.3) Share of profit of associates ................................................................... 1.0 20.0 12.8 14.3 Income before income taxes .................................................................. 76.8 1,592.4 1,085.1 604.9 Income tax expense ............................................................................... 14.9 308.2 169.7 42.7

Consolidated net income .............................................................. 61.9 1,284.2 915.5 562.2

Consolidated net income attributable to: Owners of the company .................................................................. 61.8 1,280.7 912.7 561.9 Non-controlling interest .................................................................. 0.1 3.5 2.8 0.3 Consolidated net income ............................................................... 61.9 1,284.2 915.5 562.2

As of December 31,

2016 2016 2015 2014 (in millions) U.S.$

(Convenience Translation) Ps. Ps. Ps.

Statement of Financial Position Data: Cash and cash equivalents ..................................................................... 163.9 3,396.9 2,522.8 1,786.7 Property, plant and equipment, net ........................................................ 925.1 19,176.9 13,900.9 12,749.1 Total assets ............................................................................................ 1,867.1 38,708.2 26,974.8 24,229.7 Debt and current portion of

long-term financial debt ....................................................................

3.9

79.8

115.5

753.3 Long-term financial debt ....................................................................... 685.8 14,217.5 7,413.5 6,084.1 Total liabilities....................................................................................... 996.1 20,650.9 12,243.2 10,701.3 Total stockholders’ equity ..................................................................... 871.0 18,057.3 14,731.6 13,528.4 Year Ended December 31, 2016 2016 2015 2014 (in millions) U.S.$

(Convenience Translation) Ps. Ps. Ps.

Other Financial Data: EBITDA(1) ............................................................................................. 170.1 3,525.6 2,639.1 2,039.6 Total debt/EBITDA(2) ............................................................................ 4.1 4.1 2.9 3.4 (Footnotes presented below)

44

Three Months Ended March 31, 2017 2017 2016 (unaudited) (in millions)

U.S.$ (Convenience Translation) Ps. Ps.

Statement of Profit Data: . Net sales ..................................................................................................................................... 178.9 3,364.5 2,361.5 Cost of sales ........................................................................................................................... 142.5 2,679.7 1,866.4

Gross profit ...................................................................................................................... 36.4 684.8 495.1 General, administrative and selling expenses ......................................................................... 23.5 441.1 318.2 Operating income before other expenses ......................................................................... 12.9 243.7 176.9 Other expenses ....................................................................................................................... – – 30.4 Operating income ............................................................................................................ 12.9 243.7 146.5 Result from financing activities:

Financial expenses ............................................................................................................. (14.4) (270.5) (157.7) Financial income ............................................................................................................... 0.9 16.1 8.4 Exchange loss, net ............................................................................................................. (2.4) (45.2) (5.8)

Total............................................................................................................................ (15.9) (299.6) (155.1) Share of profit of associates ..................................................................................................... 0.3 6.4 5.6 Loss before income taxes ......................................................................................................... (2.7) (49.5) (3.0) Income tax benefit .................................................................................................................... (4.3) (81.0) (61.9)

Consolidated net income .................................................................................................. 1.6 31.5 58.9 Consolidated net income attributable to:

Owners of the company ................................................................................................... 1.6 30.8 58.5 Non-controlling interest ................................................................................................... – 0.7 0.4

Consolidated net income ............................................................................................... 1.6 31.5 58.9

As of March 31, 2017 2017 (unaudited) (in millions)

U.S.$ (Convenience Translation) Ps.

Statement of Financial Position Data: Cash and cash equivalents .................................................................................................................... 137.0 2,577.0 Property, plant and equipment, net ....................................................................................................... 934.4 17,576.6 Total assets ........................................................................................................................................... 1,890.1 35,548.9 Debt and current portion of

long-term financial debt ...................................................................................................................

5.2

98.7 Long-term financial debt ...................................................................................................................... 684.8 12,879.7 Total liabilities ..................................................................................................................................... 1,009.6 18,988.3 Total stakeholders’ equity .................................................................................................................... 880.5 16,560.6

45

Three Months Ended March 31, 2017 2017 2016 U.S.$

(Convenience Translation) Ps. Ps.

Other Financial Data: EBITDA(1) ................................................................................................................. 35.2 661.3 439.5

(1) EBITDA consists of consolidated net income after adding back or subtracting, as the case may be: (1) depreciation and amortization; (2) result from financing activities (which includes financial expenses, financial income and exchange gain, net); (3) other expenses (which typically consists of non-operating items); (4) income taxes ; and (5) share of profit of associates. In managing our business, we rely on EBITDA as a means of assessing our operating performance. We believe that EBITDA enhances the understanding of our financial performance and our ability to satisfy principal and interest obligations with respect to our indebtedness as well as to fund capital expenditures and working capital requirements. We also believe EBITDA is a useful basis of comparing our results with those of other companies because it presents results of operations on a basis unaffected by capital structure and taxes. EBITDA, however, is not a measure of financial performance under IFRS or U.S. GAAP and should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of our overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability, such as financial expenses, income taxes, depreciation, amortization and the impact of foreign exchange. Our calculation of EBITDA may not be comparable to other companies’ calculation of similarly titled measures.

(2) Ratio is calculated based on the total debt in pesos and on the definition of EBITDA presented in footnote (1) above.

The following is a reconciliation of EBITDA to consolidated net income for the periods presented:

Year Ended December 31, 2016 2016 2015 2014 (in millions) U.S.$

(Convenience Translation) Ps. Ps. Ps.

EBITDA ........................................................................................................................ 170.1 3,525.6 2,639.1 2,039.6 Less:

Depreciation and amortization .............................................................................. 56.1 1,163.5 964.6 850.3 Result from financing activities ............................................................................ 32.4 670.9 576.9 532.3 Other expenses...................................................................................................... 5.7 118.8 25.3 66.3 Income tax expense .............................................................................................. 14.9 308.2 169.7 42.7 Share of profit of associates .................................................................................. (1.0) (20.0) (12.8) (14.3)

Consolidated net income ............................................................................................... 61.9 1,284.2 915.5 562.2

Three Months Ended March 31, 2017 2017 2016 (in millions) U.S.$

(Convenience Translation) Ps. Ps.

EBITDA ........................................................................................................................ 35.2 661.3 439.5 Less:

Depreciation and amortization .............................................................................. 22.2 417.5 262.6 Result from financing activities ............................................................................ 15.9 299.6 155.1 Other expenses ...................................................................................................... - - 30.4 Income tax benefit ................................................................................................ (4.3) (81.0) (61.9) Share of profit of associates .................................................................................. (0.3) (6.4) (5.6)

Consolidated net income ............................................................................................... 1.7 31.5 58.9

46

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 should be read in conjunction with, and is qualified in its entirety by reference to, our annual consolidated financial statements and interim condensed consolidated financial statements, including the notes thereto, and with the information under “Presentation of Financial and Other Information,” “Summary Consolidated Financial Information” and “Selected Consolidated Financial Information,” as well as other financial information included elsewhere in this offering memorandum. Our annual consolidated financial statements and our interim condensed consolidated financial statements have each been prepared in accordance with IFRS as issued by the IASB.

We present below information that is more detailed than the information included in our annual consolidated financial statements and interim condensed consolidated financial statements. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from those discussed in the forward-looking statements as a result of various factors, including, but not limited to, those set forth in the sections “Cautionary Statement Regarding Forward-looking Statements” and “Risk Factors.”

Our annual consolidated financial statements and interim condensed consolidated financial statements are presented in Mexican pesos. Certain financial information as of and for the years ended December 31, 2014, 2015 and 2016 and for the three months ended March 31, 2016 and 2017 and the financial position as of March 31, 2017, included in this offering memorandum is presented in U.S. dollars for the convenience of the reader, translated at the exchange rate of Ps.14.72 to U.S.$1.00, Ps.17.21 to U.S.$1.00, Ps.20.73 to U.S.$1.00, Ps.17.40 to U.S.$1.00 and Ps.18.81 to U.S.$1.00, respectively, which were the exchange rates published by the Banco de México as the rate for the payment of obligations denominated in non-Mexican currency payable in Mexico, expressed in Mexican pesos per U.S. dollar on December 31, 2014, 2015 and 2016 and March 31, 2016 and 2017, respectively. Exchange rates that we use for convenience purposes differ from the exchange rates we use in preparing our financial statements. See note 4(r) to our annual consolidated financial statements and note 4(d) to our interim condensed consolidated financial statements for a description of the calculation of the exchange rate used in preparing our financial statements. Certain tables may not add due to rounding.

Overview

We believe that we are one of the leading building materials companies in the corridor that stretches from northern Mexico to the United States border with Canada, encompassing 14 contiguous states in the United States and the state of Chihuahua in Mexico. We produce, market and distribute cement, ready-mix concrete, aggregates and other cement-related products. We have been in the cement business for 75 years, and we have a proven track record of growing organically and through selective acquisitions in the United States.

In the United States, we operate principally in a contiguous corridor from Texas and New Mexico in the south to

Montana, North Dakota and Minnesota in the north. We own four cement plants with an annual production capacity of approximately 2.8 million tons in Pueblo, Colorado, Tijeras, New Mexico, Rapid City, South Dakota and Odessa, Texas. We also have 22 cement distribution terminals and transferring stations in Colorado, South Dakota, New Mexico, Iowa, Minnesota, Montana, Nebraska, North Dakota, Wyoming and west Texas. We have 90 ready-mix concrete plants in the United States, a fleet of 498 ready-mix concrete mixer trucks, 184 haul trucks, six aggregates plants, four asphalt plants and approximately 1,900 railcars, primarily on renewable five-year term leases, for the transportation of cement and coal. We also have an underground coal mine in Durango, Colorado, with an estimated annual production capacity of 866,000 tons, which supplies coal to our plants in Mexico, Tijeras, New Mexico and Pueblo, Colorado. According to the PCA, the USGS and our estimates, we believe we are a leading producer and supplier of cement in many of the markets in which we operate, including: Colorado, New Mexico, North Dakota, South Dakota, west Texas and Wyoming. Additionally, according to the NRMCA and our estimates, we supply a significant percentage of the total consumption of ready-mix concrete in certain regional markets in the states of South Dakota, Arkansas, Oklahoma and Iowa, making us one of the leading producers of ready-mix concrete in the United States. The markets in which we operate in the United States are located in areas geographically positioned away from most of the markets where there is excess cement production capacity. We believe that these markets also offer healthy and diversified economies with low unemployment rates, which could present an opportunity for growth in the construction industry. Given cement’s low value-to-weight ratio, importing excess cement from such regions to the markets in which we operate results in high transportation costs. We believe that our geographic positioning in the United States represents a competitive advantage for us because the country’s regions

47

where we participate possess healthy and diversified economies, such as those of Colorado and Texas, and a geographic protection from imports.

In Mexico, we operate in the state of Chihuahua, where we own three cement plants with a total annual production capacity of approximately 2.3 million tons in the cities of Chihuahua and Juarez and in the town of Samalayuca. We have two regional bases to cover the entire state of Chihuahua and transport cement, specialty products and gypsum to other regions in Mexico and in the southern United States. Our cement transportation fleet consists of 131 trucks, 36 platforms, 36 dump trucks, 101 bulk trucks and three low-boys. In order to serve our ready-mix customers, we own a ready-mix concrete transportation fleet, which consists of 237 mixer trucks and 46 pumps. Additionally, we own 40 ready-mix concrete plants in Mexico, of which 36 are stationary and four are mobile, which we believe allows us to supply any location within the state of Chihuahua and to provide ready-mix concrete supply to projects with high consumption volumes. We have also established alliances with two local ready-mix concrete producers whereby we provide them with cement and then sell and distribute the ready-mix concrete they produce. We believe that these alliances allow us to increase our geographical presence and reduce production costs by acquiring manufactured ready-mix concrete and distributing it to our customers. We also have six concrete blocks plants, five aggregates plants, one gypsum plant and two prefabricated products plants. In the state of Chihuahua, according to our estimates, we are the leader in each of the markets in which we participate (cement, mortar, ready-mix concrete, aggregates, concrete blocks, prefabricated products and gypsum) in terms of sales volume.

We sell a substantial majority of our products under the various brands that we own. In the United States, our brands include “GCC,” “Dacotah Cement,” “GCC Dacotah,” and “GCC Rio Grande.” In Mexico, our brands include “GCC,” “Cemento Chihuahua,” “Yeso Chuvíscar,” “Mortero Chuvíscar,” “Megablock” and “Construcentro.” We believe that many of our customers are loyal to our brand names and quality. As of March 31, 2017, we had 3,074 employees, including our executives, sales force, and administrative, technical and operations personnel.

Our operations are divided into geographical segments (United States and Mexico) and by product (cement, ready-mix concrete and others). See notes 4(ab) and 25 to our annual consolidated financial statements and note 14 to our interim condensed consolidated financial statements.

For the year ended December 31, 2016, we had net sales of Ps.13,996.8 million (U.S.$675.2 million), of which 73.6% was generated by our U.S. operations and 26.4% by our Mexican operations. Our EBITDA for the same period was Ps.3,525.6 million (U.S.$170.1 million), of which 67.2% was generated by our U.S. operations and 32.8% by our Mexican operations. During this period, we had sales volumes of 3.5 million tons of cement and 2.5 million cubic meters of ready-mix concrete, resulting in net income attributable to owners of the company of Ps.1,280.7 million (U.S.$61.8 million) and positioning us as the cement and ready-mix concrete producer with the highest level of participation in the local markets.

For the three months ended March 31, 2017, we had net sales of Ps.3,364.5 million (U.S.$178.9 million), of which 71.7% was generated by our U.S. operations and 28.3% was generated by our Mexican operations. Our EBITDA for the same period was Ps.661.3 million (U.S.$35.2 million), of which 48.9% was generated by our U.S. operations and 51.1% by our Mexican operations. During this period, we had sales volumes of 0.7 million tons of cement and 0.5 million cubic meters of ready-mix concrete, resulting in net income attributable to owners of the company of Ps.30.8 million (U.S.$1.6 million). For a reconciliation of EBITDA to consolidated net income (loss) under IFRS, see “Summary Consolidated Financial Information.”

We sell a portion of certain of our products to our subsidiaries in the United States and Mexico, and the remainder to third-parties. The following volume sales numbers have been prepared based on unaudited internal financial models that do not conform to IFRS:

• For the three months ended March 31, 2017 and the year ended December 31, 2016 (in each case, before eliminations from consolidation), we sold 18.7% and 22.0%, respectively, of our total cement and mortar volume produced in Mexico to our subsidiaries in Mexico for the production of ready-mix concrete and 21.2% and 18.4%, respectively, to our subsidiaries in the United States, with the remainder to third-parties.

48

• For the three months ended March 31, 2017 and the year ended December 31, 2016 (in each case, before eliminations from consolidation), we used approximately 37.2% and 40.1%, respectively, of our total volume of aggregates for our own consumption to produce ready-mix concrete or other products and the remainder was sold to third-parties.

• For the three months ended March 31, 2017 and the year ended December 31, 2016 (in each case, before eliminations from consolidation), we sold 5.0% and 8.3%, respectively, of our total cement and mortar volume produced in the United States to our ready-mix concrete subsidiaries in the United States, and the remainder to third-parties.

• For the three months ended March 31, 2017 and the year ended December 31, 2016 (before eliminations from consolidation), we sold 31.8% and 14.7%, respectively, of our sales volume of coal to our Mexican operations and 23.9% and 28.1%, respectively, of our sales volume of coal to our U.S. operations and the remainder to third-parties.

Operating Environment

Our business is closely tied to general economic conditions in the United States and Mexico, with 71.7% and 28.3% of our net sales generated in each country, respectively, for the three months ended March 31, 2017 and 73.6% and 26.4% of our net sales generated in each country, respectively, for the year ended December 31, 2016. Sales of our main products, cement and ready-mix concrete, as well as other construction materials, are closely linked to global economic conditions because they are highly dependent on construction expenditures and the construction industry as a whole, which largely fluctuate according to market cycles.

United States

Supply

The cement industry in the United States has recently been operating at an average of approximately 77% clinker production capacity. Nonetheless, production has been steadily recovering since 2009.

The nine largest cement manufacturers in the United States control close to 75.2% of the total installed capacity in the country. This cement production is distributed among 97 production facilities located across 34 states. Manufacturers in the United States cement market face high barriers to entry, including substantial capital expenditure requirements, the length of time to construct a new plant, high transportation costs, the difficulty of obtaining permits for new plants and strict environmental standards. Some key participants in the U.S. cement market, including us, are vertically integrated, which provides a competitive advantage.

In the United States, we operate principally in 14 contiguous states, from Texas and New Mexico in the south to Montana, North Dakota and Minnesota in the north. We have cement plants in Pueblo, Colorado, Tijeras, New Mexico, Rapid City, South Dakota and Odessa, Texas. We also have cement distribution terminals and transferring stations in Colorado, South Dakota, New Mexico, Iowa, Minnesota, Montana, Nebraska, North Dakota, Wyoming and west Texas. In these markets, we compete primarily with LafargeHolcim, CEMEX, Eagle Materials, Lehigh Cement Company and Ash Grove Cement. There are no dominant participants in the industry that have a significant presence throughout the entire country.

Capacity

According to the USGS, the installed clinker production capacity in 2016 in the United States was 109 million tons and actual clinker production was 77.0 million tons, representing 70.6% of installed capacity. However, some states like Texas are already operating at full capacity, even importing clinker and cement from neighboring states. Because permit requirements often delay plans to increase installed clinker production capacity, usually by five to seven years, increased demand in past years has been met with imports. Drake Cement owns the newest cement plant, which began operations in 2011. There have been no new plant openings since then, though there have been several recent plant upgrade projects to comply with NESHAP regulations or to convert wet kilns to the more energy-efficient dry kilns. In 2014, LafargeHolcim commenced construction of a new plant in Ravena, New York that is expected to be completed in 2018.

49

Demand

According to the PCA, in 2016, total cement consumption was 91.9 million tons, 25% below the peak in consumption reached in 2005 but still the highest level of consumption since 2009. This consumption was driven mainly by higher spending levels for new residential construction and non-residential buildings. Meanwhile, public construction spending remains weak but is poised to benefit from recently enacted infrastructure bills. According to the U.S. Department of Transportation Federal Highway Administration, funding for the public construction of roads is expected to increase following the passing of certain infrastructure bills, such as the FAST Act. Improvement in the housing construction market is expected to continue driving demand for cement. Additionally, an increase in the number of oil and gas rigs in the states in which we operate would likely increase demand for cement in such markets.

Demand for cement in the United States is expected to grow given the current positive outlook with respect to both gross domestic product and job creation, each of which can lead to increased spending in residential, non-residential and public construction projects.

End Markets

The United States residential construction sector represented 38% of total construction spending in the United States for 2016, the largest segment in construction spending and the second largest in cement consumption. According to the PCA, housing starts, the primary driver of cement demand in the residential sector, increased 10.7% as compared to 2015. Growth is expected in upcoming years, mainly driven by moderate loosening of mortgage credit standards, lower inventory levels, increased job creation and favorable affordability ratios.

According to the PCA, cement consumption for residential construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota, and Wyoming represented 14% of total cement consumption in each of 2007 and 2016. Cement consumption for residential construction in the United States represented 28% and 29% of total cement consumption in 2007 and 2016, respectively. The PCA expects 2020 cement consumption for residential construction in Colorado, Iowa , New Mexico, North Dakota, Minnesota, South Dakota and Wyoming to represent 13% of total cement consumption for those states and 32% in the United States.

According to the PCA, non-residential construction represented approximately 30% of total construction spending in 2016. The non-residential sector has been crucial in driving growth for the U.S. construction industry over the previous two years and is expected to continue to do so, mainly driven by private projects in the lodging and office construction segments, partially offset by reduced oil well activity.

According to the PCA, cement consumption for non-residential construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota and Wyoming represented 35% and 34% of total cement consumption in 2007 and 2016, respectively. Cement consumption for non-residential construction in the United States represented 21% and 17% of total cement consumption in 2007 and 2016, respectively. The PCA expects 2020 cement consumption for non-residential construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota and Wyoming to represent 37% of total cement consumption for those states and 18% in the United States.

Also according to the PCA, public construction spending, the most cement-intensive sector represented 32% of total construction spending in 2016. Public construction spending is mainly driven by the construction of highways as well as sewage and water systems. Despite decreases in infrastructure spending in recent years, this spending is expected to increase as a result of works carried out pursuant to the FAST Act, a five-year, U.S.$305 billion highway and transit bill. According to the PCA, infrastructure spending is expected to increase at a rate higher than the growth rate seen in recent years.

According to the PCA, cement consumption for public construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota and Wyoming represented 51% and 53% of total cement consumption in 2007 and 2016, respectively. Cement consumption for public construction in the United States represented 51% and 54% of total cement consumption in 2007 and 2016, respectively. The PCA expects 2020 cement consumption for public construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota and Wyoming to represent 50% of total cement consumption for those states as well as for the United States.

50

Prices

In the United States, cement prices vary within each region due to fluctuations in supply and demand. Prices are also subject to variations resulting from fluctuations in regional economies as well as the country as a whole.

According to the USGS, the average sales price of cement increased 5.8% from 2013 to 2014, 5.0% from 2014 to 2015 and 5.2% from 2015 to 2016. A further increase in prices for this product is expected in most states, as cement demand will most likely surpass supply in the next few years while capacity expansion remains subdued.

Mexico

Supply

The cement industry in Mexico evolved from being regionally spread out in the 1970s to being consolidated into a few companies today. The six companies that compete in the Mexican cement industry are: CEMEX, Holcim, Corporación Moctezuma, Cooperativa La Cruz Azul, Cementos Fortaleza and us. According to the Cámara Nacional del Cemento de México (“CANACEM”), cement production was 40.6 million tons in 2016. Due to the constant modernization of plants, the Mexican cement industry is one of the most competitive in terms of cost. EBITDA margins for cement in Mexico have ranged from 30% to 45% over the last couple of years. In Chihuahua there are two major cement players: Holcim and us. We believe we are one of the leaders in all of the markets where we participate, including cement, mortar, ready-mix concrete, aggregates, concrete-blocks and gypsum.

In Mexico, most cement sales (approximately 80% on a national basis) are to retail customers who use it for housing and other basic construction projects. This in turn requires an efficient network of distributors targeting constructors and self-builders. The remaining amount is sold through ready-mix concrete producers, manufacturers of concrete products and construction contractors. Cement sold through distributors is mixed by the final consumer with aggregates and water on-site to make concrete. Ready-mix concrete producers pre-mix concrete ingredients at their ready-mix concrete plants and deliver it to local construction sites through mixer trucks, which transport and pour the concrete directly at the job site. Unlike more developed economies, where cement sales are concentrated in bulk commercial and industrial orders, bagged sales in Mexico represent a large percentage of demand in the private sector. Retail consumers purchasing bags of cement for their homes and other basic construction jobs represent an important component of the Mexican retail sector.

The ready-mix concrete industry in Mexico is in development. In the state of Chihuahua, 31% of the volume of cement sold in 2016 was sold as ready-mix concrete. During 2016, ready-mix concrete consumption in the state of Chihuahua was approximately 1,131,000 cubic meters, with the highest concentration located in the cities of Chihuahua and Juarez.

Capacity

Mexico’s cement production capacity is currently 61 million tons and its clinker production capacity is 42 million tons with an implied utilization rate of approximately 62%.

We are the only company with an installed cement capacity in the state of Chihuahua, with 2.3 million tons as of March 31, 2017.

Demand

According to the CANACEM, total cement consumption in Mexico in 2016 was 40 million tons, mainly driven by Mexico’s significant housing demand due to a considerable housing deficit, necessary infrastructure improvements and growing population. Residential construction accounts for 28.3% of cement demand, with over 33% of the cement sold in the country being sold in individual bags, whereas the non-residential and public infrastructure construction sectors account for 60.6%,about half of which comes from government infrastructure projects.

51

Prices

The Mexican market has seen steady price improvements since the beginning of 2016, as residential construction improves. According to the INEGI, the average sales price of cement for 2014, 2015 and 2016 increased by 8.6%, 11.4% and 19.0%, respectively. The average sales prices for ready-mix concrete increased 3.2%, 9.1% and 7.0%, respectively. Prices in the industry vary from region to region, influenced by supply and demand, economic situation, the location of plants, access to raw materials and the flexibility that plants have in terms of fuel consumption.

Critical Accounting Policies

We prepared each of our annual consolidated financial statements and our interim condensed consolidated financial statements under IFRS based on certain management estimates and assumptions that affect our reported assets, liabilities, net sales and expenses, and other related amounts during the periods covered by the financial statements.

Management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increases, these judgments become more subjective and complex. We disclose our significant accounting policies in the notes accompanying our interim condensed consolidated financial statements and our annual consolidated financial statements. See note 4 to our interim condensed consolidated financial statements and note 4 to our annual consolidated financial statements. The critical accounting policies used in the preparation of our interim condensed consolidated financial statements and our annual consolidated financial statements are those that are important both to the presentation of results of operations and financial condition and those that require significant judgment with regard to estimates used.

In applying accounting policies, management applies judgments, estimates and assumptions on certain amounts of assets and liabilities in our annual consolidated financial statements and interim condensed consolidated financial statements under IFRS. The associated estimates and assumptions are based on our experience and other factors deemed relevant. Actual results may differ from such estimates. Underlying estimates and assumptions are reviewed by us regularly. Any changes resulting from this review of accounting estimates are recognized in the current period and future periods if the change in estimate affects both the current and subsequent periods.

Critical Judgments in Applying Accounting Policies

The critical judgments, other than those involving estimation, that we have made in the process of applying our accounting policies and have a significant effect on the amounts recognized in the consolidated financial statements are as follows:

Discount Rate Used to Determine the Carrying Amount of the Company´s Defined Benefit Obligations

Our defined benefit obligations are discounted at rates based on the market yields of high quality corporate bonds or, in the absence of a deep market for high quality corporate bonds, at rates based on the market yields of government bonds. We use our professional judgment to establish the criteria used to determine whether a deep market for high quality corporate bonds exists—accordingly, we base our assessment on markets other than those of the Mexico and U.S. divisions.

Lease Classification

We determine the classification of leases using our judgment and considering the requirements of International Accounting Standard (IAS) 17, “Leases.” As of the periods presented in this offering memorandum, all of our leases are classified as operating leases.

Key Sources of Estimation Uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the subsequent fiscal year are as follows:

52

Determination of Fair Value in a Business Acquisition

On November 18, 2016, the Company acquired certain assets of CEMEX located in the United States of America. This acquisition has been classified as a business combination pursuant to the requirements of IFRS 3, “Business Combinations”; therefore, the Company is in the process of applying the acquisition method to measure the fair value of the net assets acquired in the transaction. To determine the fair value of the assets acquired and liabilities assumed at the acquisition date, the Company has made certain market assumptions supported by independent appraisers to reflect the price that (i) would have been received for an asset sold or (ii) would have been paid to transfer a liability, in both cases in an orderly transaction between unrelated market participants.

Useful Life of Property, Plant and Equipment

We review the estimated useful life of our property, plant and equipment at the end of each annual period. The degree of uncertainty related to the estimated useful lives is related to the changes in the market and the use of assets, which varies based on our production volumes, and technological developments.

Impairment of Non-financial Assets

When testing assets for impairment, we estimate the value in use assigned to the property, plant and equipment and CGU. The calculations of value in use require that we determine future cash flows generated by CGUs and an appropriate discount rate to calculate their present value. Our cash inflow projections use estimated market conditions, determination of future prices of products and volumes of production and sale. Similarly, to calculate discount rates and growth to perpetuity, we use market risk premium indicators and long-term growth expectations for markets in which we operate.

Allowance for Doubtful Accounts

We use estimates to determine the allowance for doubtful accounts. The factors that we consider to estimate doubtful accounts are principally the customer’s financial position risk, unsecured accounts and considerable delays in collection according to the credit limits established.

Employee Benefits

Our management uses assumptions to determine the best estimate for employee benefits. Such estimates, like related assumptions, are established in conjunction with our independent actuaries. An actuarial valuation involves several assumptions, which can differ from actual future events. These assumptions include, among others, demographic assumptions, discount rates and expected increases in employee salaries and tenure.

Contingencies

We are subject to contingent transactions or events for which we use professional judgment in the development of estimates of the probability of occurrence. The factors considered in these estimates are the current legal situation as of the date of the estimate and the legal advisors’ opinion.

Deferred Income Taxes

Deferred tax assets are recognized for all tax loss carry forwards to the extent that management believes that recovery is probable through the generation of future taxable income.

Key Factors Affecting our Results of Operations and Financial Condition

Net Sales

Our net sales consist principally of revenue generated from sales of our products and are determined as a function of sales volume, price and product mix. We sell a portion of certain of our products among our subsidiaries in the United

53

States and Mexico, and the remainder to third-parties. See “—Overview.” Net sales to our subsidiaries in the United States and Mexico are eliminated in consolidation.

The principal drivers of sales volume of our products include:

• available production capacity, obtained through the acquisition of new production facilities or the expansion or modernization of existing plants (see “—Effect of Acquisitions, Dispositions and Capacity Expansion”);

• our operating rate and the existence or absence of operational disruptions;

• demand in Mexico and the United States for our products, particularly cement and ready-mix concrete, as well as economic growth or contraction in Mexico and the United States;

• regional market conditions, the regional supply and demand balance for our products and global trends regarding supply and demand for our products; and

• weather conditions in the markets where we operate.

We report sales of mortar together with those of cement. Mortar represents approximately 2% of our total cement sales volume.

The principal factors affecting the price of our products include:

• changes in raw material prices and other price escalators (e.g., energy, inflation, labor and freight costs), which, in accordance with industry pricing practices, are reflected in our prices;

• the proximity of our plants to our raw materials and the proximity of our plants to our customers; and

• regional market conditions, the regional supply and demand balance for our products and global trends regarding supply and demand for our products.

Cost of Sales

Our cost of sales consists primarily of variable costs and fixed production costs. Our primary variable costs include raw materials (particularly limestone, clay and gypsum), fuel and energy (natural gas, diesel, coal and electricity), other catalysts and minor raw materials used in the production processes, labor costs of workers involved in production and transportation costs for raw materials and other inputs to our facilities and of our products to our customers, except as otherwise described under “—Net Sales.” Our fixed production costs include depreciation and amortization of our plant and equipment, most maintenance expenses and labor costs of our unionized workers and certain non-unionized workers. The principal factors that affect our cost of sales include:

• raw material and fuel prices, which, in the case of our fuel costs, are closely related to the price of oil for our transportation needs;

• start-up costs associated with new production facilities, and expansion or modernization of existing plants; and

• our ability to streamline or create efficiencies in production processes.

If natural gas, diesel, coal or electricity costs increase, our margins may be adversely affected because fuel and energy costs are important components of our cost structure. In particular, because coal costs for our Mexican operations are denominated in U.S. dollars, as coal is sourced from our Colorado coal mine, we are subject not only to volatility as a result of price changes, but also to the extent the Mexican peso depreciates against the U.S. dollar.

54

To reduce volatility in our cost of sales, our installed capacity for cement production has the option of using natural gas or coal as fuel. Our Colorado coal mine supplies coal to our cement plants (except the Rapid City, South Dakota plant, for which we have a supplier of coal in Wyoming, and the recently acquired Odessa, Texas plant, which operates with natural gas) and which we estimate has sufficient coal reserves to supply our cement plants and sales to third parties until approximately 2057, based on the existing rate of depletion. See “Our Business—Description of Our Raw Materials Sourcing and Reserves.” We believe this provides us with the flexibility to use the least expensive fuel for our cement operations, which we believe has resulted in significant cost savings since 2005, when we converted our cement plants in Chihuahua and Samalayuca to coal and began sourcing our plants in Mexico, Tijeras, New Mexico and Pueblo, Colorado with coal from our Colorado coal mine.

General, Administrative and Selling Expenses

Our general, administrative and selling expenses include the cost of salaries and related expenses for our employees, including salaries of our executives, sales force and administrative, technical and operations personnel, but not our labor force directly involved in production. The principal factors affecting our general, administrative and selling expenses are labor costs (particularly increasing health insurance costs), professional services, accounting and audit fees, legal expenses, travel and advertising and promotion.

Result from Financing Activities

Financing costs measure the real cost (gain) of an entity’s financing, net of the foreign currency fluctuations. In periods of high inflation or currency depreciation, significant volatility may arise and is reflected under this item. Financing costs include:

• financial or interest expenses on borrowed funds;

• financial income from cash and temporary investments; and

• foreign exchange gains or losses associated with monetary assets and liabilities denominated in foreign currencies.

As of March 31, 2017, 100% of our indebtedness was denominated in U.S. dollars. Foreign currency transactions are recorded at the applicable exchange rate with reference to the rates published by Banco de México in effect at the transaction date. Exchange differences between that date and their collection or payment date, and those arising from the translation of balances in foreign currencies at the exchange rate in effect at the balance sheet date are recorded as a component of financing cost. Exchange rates that we use for convenience purposes in this offering memorandum differ from the exchange rates we use in preparing our financial statements. See note 4(r) to our annual consolidated financial statements and note 4(d) to our interim condensed consolidated financial statements for a description of the calculation of the exchange rate used in preparing our financial statements.

For the three months ended March 31, 2017, approximately 71.7% of our net sales were generated in the United States. To the extent the amount of net sales generated in U.S. dollars is not sufficient to cover the cost of our indebtedness, we must use a portion of our cash-flow derived from our Mexican peso net sales to cover our financing costs. As a result, a significant devaluation or depreciation of the Mexican peso compared to the U.S. dollar could adversely affect our ability to service our debt, as well as adversely affect our results of operations. See note 18 to our annual consolidated financial statements, note 10 to our interim condensed consolidated financial statements, “Risk Factors—Risks Related to Our Company, Business and Operations—Our indebtedness could adversely affect our financial condition and our ability to capitalize on business opportunities” and “—Our Indebtedness,” below.

Owners of the Company and Non-Controlling Interest Net Income (Loss)

Owners of the company net income (loss) represents the difference between our consolidated net income (loss) and non-controlling interest net income (loss), which is the portion of our consolidated net income (loss) attributable to our subsidiaries in which unrelated third parties hold interests, namely GCC Cemento and Cementos de Chihuahua. Changes in non-controlling interest net income (loss) in any period reflect changes in the percentage of the stock of our subsidiaries

55

held by unrelated third parties as of the end of each month during the relevant period and the consolidated net income (loss) attributable to those subsidiaries.

Effect of Acquisitions, Dispositions and Capacity Expansion

Our results of operations for the periods under review were significantly affected by acquisitions, dispositions and capacity expansion and plant modernization. See “Our Business—Business Overview.”

On November 18, 2016, we consummated the acquisition of certain assets from affiliates of Cemex, S.A.B. de C.V. located in Texas and New Mexico. The effect of the 2016 Asset Acquisition is reflected as of the acquisition in our consolidated statement of financial position and statement of profit of our annual audited consolidated financial statements. This acquisition has been classified as a business combination pursuant to the requirements of IFRS 3, “Business Combinations.” The effects of both of these transactions are reflected as of the date of the merger and as of the date of the acquisition in our consolidated statement of financial position and statement of profit of our annual audited consolidated financial statements. See notes 1, 4(p) and 13 to our annual audited consolidated financial statements. We have not included pro forma financial information in this offering memorandum.

Our results for the three months ended March 31, 2017 and for the year ended December 31, 2016 incorporate the results from the 2016 Asset Acquisition, and as a result, may not be as easily comparable to our results in prior periods.

Effects of Foreign Currency Exchange Rate Fluctuations on Results of Operations

Changes in the relative value of the Mexican peso to the U.S. dollar have an effect on our results of operations reported in Mexican pesos. Our export sales to the United States and purchases of coal from our Colorado coal mine for use in our Mexican plants are denominated in U.S. dollars. Similarly, a substantial majority of our costs of sales and other general, administrative and selling expenses are either denominated in or linked to the value of the U.S. dollar, including our purchases of several raw materials and the costs of our operations in the United States. As a result, when the Mexican peso depreciates against the U.S. dollar, the same level of U.S. dollar net sales or expenses in a prior period will result in higher reported net sales or expenses in Mexican peso terms in the most recent period. Conversely, when the Mexican peso appreciates against the U.S. dollar, the same level of U.S. dollar net sales or expenses in a prior period will result in lower reported net sales or expenses in Mexican peso terms in the most recent period.

The U.S. dollar is our functional currency for our operations conducted in the United States and the Mexican peso is our functional currency for our Mexican subsidiaries. Because the Mexican peso is the reporting currency we use to present our financial statements, in accordance with our legal and tax obligations as a Mexican company, the financial statements of our non-Mexican subsidiaries have been translated into Mexican pesos. The translation of the functional currency (the currency in which we operate) into the reporting currency was performed as follows: assets and liabilities are translated at the closing exchange rate on the balance sheet date and items in the statement of comprehensive income are translated at a weighted average exchange rate during the period unless such rates fluctuate significantly during the period, in which case the items are translated at the exchange rate prevailing at the dates of each statement of financial position. See note 4(r) to our annual consolidated financial statements. Because most of our operations are in the United States and thus most of our revenue is earned in U.S. dollars and we report in Mexican pesos, in times of devaluation of the Mexican peso against the U.S. dollar, we will show better results than if we operated and reported in the same currency.

56

For the year ended December 31, 2014, the Mexican peso experienced a weighted average appreciation against the U.S. dollar. For the three months ended March 31, 2017 and 2016 and the years ended December 31, 2016 and 2015, the Mexican peso experienced a weighted average depreciation against the U.S. dollar. The following table sets forth the aforementioned information for the periods indicated:

Three Months Ended March 31,

Year Ended December 31,

2017 2016 2016 2015 2014 Weighted average appreciation

(depreciation) of the Mexican peso against the U.S. dollar ............ (9.1%) (13.7%) (17.7%) (19.2%) 3.4%

Income Taxes

We are currently subject to income tax rates of 38% for our U.S. operations and 30% for our Mexican operations. For the 2016, 2015 and 2014 fiscal years, we recorded income taxes of Ps.308.2 million, Ps.169.7 million, and Ps.42.7 million, respectively.

For additional detail, see note 20 to our annual consolidated financial statements and “Our Business— Legal Proceedings—Tax Matters.”

Deferred tax assets are recognized for tax loss carry forwards to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax benefits can be utilized. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. The criteria for recognizing deferred tax assets arising from unused tax loss carry forwards and tax benefits are the same as the criteria for recognizing deferred tax assets arising from deductible temporary differences. However, the existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, when an entity has a history of recent tax losses, the entity should recognize a deferred tax asset arising from unused tax losses or tax benefits only to the extent that the entity has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses can be utilized by the entity.

As of March 31, 2017, we did not recognize a deferred tax asset of Ps.563.4 million associated with tax losses due to a valuation allowance that had been recorded in previous periods, with the remaining tax loss carry forwards to be recovered through (i) taxable temporary differences, which will result in taxable amounts against which the unused tax losses or unused tax benefits can be utilized before they expire (estimated to be Ps.598.5 million) and (ii) expected taxable profits in the period in which the unused tax losses or unused tax benefits can be utilized (estimated to be Ps.2,628 million).

Seasonality

Construction activity and, consequently, demand for our products, decreases significantly during long periods of cold temperatures, snow or strong or sustained rain. Accordingly, first quarter net sales and, to a lesser extent, fourth quarter net sales typically are lower than during the remainder of the year. Sales typically peak during the third quarter. See “Risk Factors—Risks Related to Our Company, Business and Operations—Our operations could be adversely affected by weather conditions.”

57

Results of Operations

Year Ended December 31, 2016 2016 2015 2014 (in millions)

U.S.$ (Convenience Translation) Ps. Ps. Ps.

Statement of Profit Data: Net sales ....................................................................................................... 675.2 13,996.8 11,983.8 10,009.7 Cost of sales ................................................................................................. 493.2 10,223.8 9,074.1 7,682.9

Gross profit ............................................................................................. 182.0 3,773.0 2,909.7 2,326.8 General, administrative and selling expenses ............................................... 68.1 1,410.9 1,235.2 1,137.5 Operating income before other expenses ............................................... 113.9 2,362.1 1,674.5 1,189.3 Other expenses ............................................................................................. 5.7 118.8 25.3 66.3 Operating income .................................................................................. 108.2 2,243.3 1,649.2 1,123.0 Result from financing activities:

Financial expenses .................................................................................. (35.2) (729.8) (641.3) (564.4) Financial income .................................................................................... 1.7 34.2 27.0 23.1 Exchange gain, net ................................................................................. 1.2 24.6 37.4 9.0

Total ................................................................................................. (32.4) (670.9) (576.9) (532.3) Share of profit of associates ......................................................................... 1.0 20.0 12.8 14.3 Income before income taxes ......................................................................... 76.8 1,592.4 1,085.1 604.9 Income tax expense ...................................................................................... 14.9 308.2 169.7 42.7

Consolidated net income ...................................................................... 61.9 1,284.2 915.5 562.2

Consolidated net income attributable to: Owners of the company .......................................................................... 61.8 1,280.7 912.7 561.9 Non-controlling interest ......................................................................... 0.1 3.5 2.8 0.3 Consolidated net income ....................................................................... 61.9 1,284.2 915.5 562.2

Three Months Ended March 31, 2017 2017 2016 (unaudited) (in millions)

U.S.$ (Convenience Translation) Ps. Ps.

Statement of Profit Data: Net sales................................................................................................................. 178.9 3,364.5 2,361.5 Cost of sales .......................................................................................................... 142.5 2,679.7 1,866.4

Gross profit ..................................................................................................... 36.4 684.8 495.1 General, administrative and selling expenses ....................................................... 23.5 441.1 318.2 Operating income before other expenses ....................................................... 12.9 243.7 176.9 Other expenses ...................................................................................................... - - 30.4 Operating income ........................................................................................... 12.9 243.7 146.5 Result from financing activities:

Financial expenses .......................................................................................... (14.4) (270.5) (157.7) Financial income ........................................................................................ 0.9 16.1 8.4 Exchange loss, net...................................................................................... (2.4) (45.2) (5.8)

Total ..................................................................................................... (15.9) (299.6) (155.1) Share of profit of associates ............................................................................. 0.3 6.4 5.6 Loss before income taxes ................................................................................. (2.7) (49.5) (3.0)

58

Three Months Ended March 31, 2017 2017 2016 (unaudited) (in millions)

U.S.$ (Convenience Translation) Ps. Ps.

Income tax benefit ........................................................................................... (4.3) (81.0) (61.9) Consolidated net income...........................................................................

1.6 31.5 58.9 Consolidated net income attributable to:

Owners of the company ............................................................................ 1.6 30.8 58.5 Non-controlling interest ............................................................................ – 0.7 0.4

Consolidated net income ........................................................................ 1.6 31.5 58.9

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Net Sales

Summarized in the table below are our net sales by product and by country for the three months ended March 31, 2017 and 2016.

Three Months Ended March 31, 2017

(in millions of Mexican pesos)

Geographic Segment Cement Ready-mix Concrete Other(1) Eliminations Consolidated

United States ..................................................... 1,507.3 678.7 382.5 (157.4) 2,411.1 Mexico .............................................................. 692.1 290.1 109.8 (138.6) 953.4 Total .................................................................. 2,199.4 968.8 492.3 (296.0) 3,364.5

Three Months Ended March 31, 2016

(in millions of Mexican pesos)

Geographic Segment Cement Ready-mix Concrete Other(1) Eliminations

Consolidated United States ................................................... 858.3 541.0 268.0 (85.5) 1,581.8 Mexico ............................................................ 535.6 246.6 129.5 (132.0) 779.7 Total ................................................................ 1,393.9 787.6 397.5 (217.5) 2,361.5

(1) Other principally includes aggregates, concrete blocks, prefabricated products, developed land, coal and other materials for construction.

Our net sales increased 42.5% to Ps.3,364.5 million for the three months ended March 31, 2017 from Ps.2,361.5 million for the same period in the prior year. On a consolidated basis before intercompany eliminations, our cement net sales increased 57.8% to Ps.2,199.4 million for the three months ended March 31, 2017 from Ps.1,393.9 million for the same period in the prior year, our ready-mix concrete net sales increased 23.0% to Ps.968.8 million for the three months ended March 31, 2017 from Ps.787.6 million for the same period in the prior year and our other net sales increased 23.8% to Ps.492.3 million for the three months ended March 31, 2017 from Ps.397.5 million for the same period in the prior year. The increase in net sales was primarily attributable to the factors described below. Our results for the three months ended March 31, 2017 may not be as easily comparable to our results for the same period in the prior year due to the 2016 Asset Acquisition.

Set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our net sales on a geographic segment basis. The discussion of volume data below is presented on a consolidated basis. The discussion of net sales information below is presented before intercompany eliminations resulting from consolidation, unless otherwise

59

stated. See note 14 to our interim condensed consolidated financial statements. For a discussion of intercompany sales, see “—Overview.”

United States

In the United States, our net sales increased 52.4% to Ps.2,411.1 million for the three months ended March 31, 2017 from Ps.1,581.8 million for the same period in the prior year. Our U.S. operations represented 71.7% of our net sales for the three months ended March 31, 2017. For the same period, cement represented 58.7%, ready-mix concrete 26.4% and our other businesses 14.9% before intercompany eliminations.

Our U.S. operations’ net sales in Mexican peso terms increased primarily as a result of a 75.6% increase in cement net sales, a 25.5% increase in ready-mix concrete sales and a 42.7% increase in other net sales. The increase in our cement net sales was primarily driven by an increase of 5.8% in the weighted average sales price of cement in U.S. dollars, a 42.5% increase in sales volume in Texas, Colorado, North Dakota, South Dakota and Minnesota and an appreciation of the U.S. dollar against the Mexican peso, which was partially offset by a minor decrease in sales volume in certain other states. The increase in ready-mix concrete net sales was primarily driven by a 21.8% increase in sales volume and the appreciation of the U.S. dollar against the Mexican peso, which was partially offset by a 1.4% decrease in the weighted average price for ready-mix concrete in U.S. dollars. Other net sales increased for the three months ended March 31, 2017, mainly due to the incorporation of a recently acquired aggregates and asphalt business line, which was partially offset by a 24.7% decrease in coal sales volume compared to the same period last year. Net sales from our U.S. operations in U.S. dollar terms increased 35.7% for the three months ended March 31, 2017 compared to the three months ended March 31, 2016 for the reasons described above.

Mexico

In Mexico, our net sales increased 22.3% to Ps.953.4 million for the three months ended March 31, 2017 from Ps.779.7 million for the same period in the prior year. Our Mexican operations represented 28.3% of our net sales for the three months ended March 31, 2017. For the three months ended March 31, 2017, cement represented 63.4%, ready-mix concrete 26.6% and our other businesses approximately 10.1% before intercompany eliminations.

Our Mexican operations’ net sales increased primarily as a result of a 29.2% increase in cement net sales and a 17.6% increase in ready-mix concrete sales, which was partially offset by a 15.2% decrease in other net sales. The increase in net sales in Mexico was primarily due to a 19.3% increase in the weighted average price for cement, an 18.1% increase in the weighted average price for ready-mix concrete and a 6.7% increase in cement sales volume resulting from increased activity in the industrial and self-construction sectors, which was partially offset by a 0.5% decrease in ready-mix concrete sales volume. The decrease in other net sales was primarily due to an 8.8% decrease in sales volume of aggregates and a 14.8% decrease in sales volume of concrete blocks, which was partially offset by an 11.0% and 14.4% increase in the weighted average price for aggregates and concrete blocks, respectively.

Cost of Sales

Our cost of sales increased 43.6% to Ps.2,679.7 million for the three months ended March 31, 2017 from Ps.1,866.4 million for the same period in the prior year, as a result of the factors described below. Our cost of sales for the three months ended March 31, 2017 represented 79.6% of net sales, a 0.6 percentage point increase from the same period in 2016, primarily due to higher fixed production costs, higher depreciation expenses in the United States as a result of the incorporation of certain cement, ready-mix concrete and construction materials business lines and the weighted average depreciation of the Mexican peso against the U.S. dollar.

In the United States, as a percentage of net sales, our variable costs increased 1.2 percentage points in U.S. dollar terms for the three months ended March 31, 2017, compared to the three months ended March 31, 2016, primarily due to the incorporation of the cement plant in Odessa, Texas, which was partially offset by lower power and freight costs associated with our cement operations and lower fuel prices for our ready-mix concrete operations. Our fixed production costs in the United States increased 0.4 percentage points to 48.8% during the three months ended March 31, 2017, primarily due to higher depreciation expenses, mainly as the result of the incorporation of the acquired businesses.

60

In Mexico, as a percentage of net sales, our variable costs decreased 2.3 percentage points for the three months ended March 31, 2017 compared to the three months ended March 31, 2016, primarily due to higher weighted average prices for a variety of our products and a decrease in the cost of energy inputs due to increased use of alternative fuels. Our fixed production costs in Mexico decreased 3.3 percentage points during the same period to reflect 28.6% of sales, primarily due to higher prices for cement and ready-mix concrete in Mexico.

Gross Profit

Gross profit increased 38.3% to Ps.684.8 million for the three months ended March 31, 2017 from Ps.495.1 million for the same period in the prior year for the reasons described above.

General, Administrative and Selling Expenses

Our general, administrative and selling expenses increased 38.6% to Ps.441.1 million for the three months ended March 31, 2017 from Ps.318.2 million for the same period in the prior year. General, administrative and selling expenses increased 45.5% in U.S. dollar terms in the United States and increased 8.8% in Mexico. In the United States, the increase was primarily due to higher depreciation and administrative expenses for our cement and ready-mix operations. In Mexico, the increase was primarily due to an increase in salaries and benefits for our employees and higher maintenance expenses.

Other Expenses

For the three months ended March 31, 2017 we did not incur other expenses, while we incurred Ps.30.4 million in other expenses for the same period in the prior year.

Result from Financing Activities

Our result from financing activities for the three months ended March 31, 2017 and 2016 are as follows:

Three Months Ended March 31, 2017 2017 2016

U.S.$ (Convenience Translation) (in millions of Mexican pesos)

Financial expenses .............................................................................. (14.4) Ps. (270.5) Ps. (157.7) Financial income ................................................................................. 0.9 16.1 8.4 Exchange loss, net ............................................................................... (2.4) (45.2) (5.8) Result from financing activities .......................................................... (15.9) Ps. (299.6) Ps. (155.1)

The result from financing activities increased 93.2% to Ps.299.6 million for the three months ended March 31, 2017 from Ps.155.1 million for the same period in the prior year. The main changes are shown in the table above. Our financial expenses increased 71.5% to Ps.270.5 million for the three months ended March 31, 2017 from Ps.157.7 million for the same period in the prior year, primarily due to a higher level of indebtedness following the 2016 Asset Acquisition and the weighted average depreciation of the Mexican peso against the U.S. dollar. Our financial income increased 91.7% to Ps.16.1 million for the three months ended March 31, 2017 from Ps.8.4 million for the same period in the prior year. Our net foreign exchange result was a loss of Ps.45.2 million for the three months ended March 31, 2017 compared to a loss of Ps.5.8 million for the same period in the prior year due to the weighted average depreciation of the Mexican peso against the U.S. dollar. See note 10 to our interim condensed consolidated financial statements.

Share of Profit of Associates

Our share of profit of associates increased 14.3% to Ps.6.4 million for the three months ended March 31, 2017 from Ps.5.6 million for the same period in the prior year.

61

Loss Before Taxes

Loss before taxes increased to Ps.49.5 million for the three months ended March 31, 2017 from Ps.3.0 million for the same period in the prior year for the reasons described above.

Income Taxes

Our income tax effect was a tax benefit of Ps.81.0 million for the three months ended March 31, 2017 compared to a tax benefit of Ps.61.9 million for the same period in the prior year. See note 11 to our interim condensed consolidated financial statements.

Consolidated Net Income

For the reasons described above, consolidated net income decreased 46.5% to Ps.31.5 million for the three months ended March 31, 2017 from net income of Ps.58.9 million for the same period in the prior year. Consolidated net income represented 0.9% and 2.5% of the net sales for the three months ended March 31, 2017 and 2016, respectively.

62

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

Net Sales

Summarized in the table below are our net sales by product and by country for the years ended December 31, 2016 and 2015.

Year Ended December 31, 2016 (in millions of Mexican pesos)

Geographic Segment Cement Ready-mix Concrete Other(1) Eliminations

Consolidated United States ..................................................... 6,938.0 3,720.0 1,011.5 (1,362.3) 10,307.2 Mexico .............................................................. 2,583.6 1,180.4 586.9 (661.3) 3,689.6 Total .................................................................. 9,521.6 4,900.4 1,598.4 (2,023.6) 13,996.8

Year Ended December 31, 2015 (in millions of Mexican pesos)

Geographic Segment Cement Ready-mix Concrete Other(1) Eliminations Consolidated

United States ..................................................... 5,920.7 2,823.6 1,060.8 (1,256.2) 8,548.9 Mexico .............................................................. 2,130.6 1,174.4 746.9 (617.1) 3,434.9 Total .................................................................. 8,051.3 3,998.0 1,807.7 (1,873.3) 11,983.8

(1) Other principally includes aggregates, concrete blocks, prefabricated products, developed land, coal and other materials for construction.

Our net sales increased 16.8% to Ps.13,996.8 million in 2016 from Ps.11,983.8 million in 2015. On a consolidated basis before intercompany eliminations, our cement net sales increased 18.3% to Ps.9,521.6 million in 2016 from Ps.8,051.3 million in 2015, our ready-mix concrete net sales increased 22.6% to Ps.4,900.4 million in 2016 from Ps.3,998.0 million in 2015 and our other net sales decreased 11.6% to Ps.1,598.5 million in 2016 from Ps.1,807.7 million in 2015.

Set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our net sales on a geographic segment basis. The discussion of volume data below is presented on a consolidated basis. The discussion of net sales information below is presented before intercompany eliminations resulting from consolidation, unless otherwise stated. See note 25 to our annual consolidated financial statements. For a discussion of intercompany sales, see “—Overview.”

United States

In the United States, our net sales increased 20.6% to Ps.10,307.2 million in 2016 from Ps.8,548.9 million in 2015. Our U.S. operations represented 73.6% of our net sales in 2016. For the year ended December 31, 2016, cement represented 59.4%, ready-mix concrete represented 31.9% and our other businesses represented 8.7% of our U.S. operations’ net sales before intercompany eliminations.

Our U.S. operations’ net sales in Mexican peso terms increased primarily as a result of a 17.2% increase in cement net sales and a 31.7% increase in ready-mix concrete net sales, which was partially offset by a 4.6% decrease in other net sales. The increase in our cement net sales was primarily driven by a 4.1% increase in the weighted average cement sales price, as compared to a 6.3% increase in 2015, and a positive effect resulting from the depreciation of the Mexican peso against the U.S. dollar, which was partially offset by a 1.2% decrease in cement sales volume. The increase in our ready-mix concrete net sales was driven by a 2.8% increase in the weighted average ready-mix concrete sales price in U.S. dollar terms, a 9.9% increase in ready-mix concrete sales volumes and the weighted average appreciation of the U.S. dollar against the Mexican peso. The decrease in other net sales was primarily driven by a 28.4% decrease in coal sales volume. Net sales from our U.S. operations in U.S. dollar terms increased 2.8% in 2016 compared to 2015 for the reasons described above.

63

Mexico

In Mexico, our net sales increased by 7.4% to Ps.3,689.6 million in 2016 from Ps.3,434.9 million in 2015. Our Mexican operations represented 26.4% of our net sales in 2016. For the year ended December 31, 2016, cement represented 59.4%, ready-mix concrete represented 27.1% and our other businesses represented 13.5% of our Mexican operations’ net sales before intercompany eliminations.

Our Mexican operations’ net sales increased primarily as a result of an increase of 21.3% in cement net sales and an increase of 0.5% in ready-mix concrete net sales, which was partially offset by a decrease of 21.4% in other net sales. The increase in our cement and ready-mix concrete net sales was primarily due to increased development in the commercial and industrial segments, which was partially offset by a decline in public sector activity due to the completion of two major urban and highway paving projects in 2015, which resulted in an 11.0% contraction in ready-mix concrete sales volume. The increase in our cement net sales was primarily driven by a 16.3% increase in the weighted average cement sales price, as compared to a 6.7% increase in 2015, and a 4.1% increase in cement sales volume. The increase in our ready-mix concrete net sales was primarily driven by a 12.8% increase in the weighted average ready-mix concrete sales price, partially offset by an 11.0% decrease in sales volume. The decrease in our other net sales was primarily due to a 15.6% decrease in sales volume of aggregates and a 6.4% decrease in sales volume of concrete blocks, which was partially offset by a 13.9% increase in the weighted average price for aggregates and a 9.8% increase in the weighted average price for concrete blocks.

Cost of Sales

Our cost of sales increased 12.7% to Ps.10,223.8 million in 2016 from Ps.9,074.1 million in 2015. Our cost of sales in 2016 represented 73.0% of net sales, a 2.7 percentage point decrease as compared to 2015, primarily reflecting decreases in distribution costs as a result of lower fuel costs in the United States, which was partially offset by the effect of the weighted average depreciation of the Mexican peso against the U.S. dollar.

In the United States, as a percentage of net sales, our variable costs decreased 2.3 percentage points in U.S. dollar terms in 2016 as compared to 2015, primarily due to lower freight costs of cement shipments for our cement operations and lower fuel costs for transportation of our ready-mix concrete. Our fixed production costs in the United States, as a percentage of net sales, increased 1.8 percentage points to 31.5% during the same period, primarily due to an increase in asset depreciation and an increase in salaries and benefits for employees in our cement and ready-mix concrete operations.

In Mexico, as a percentage of net sales, our variable costs decreased 5.7 percentage points in 2016 as compared to 2015, primarily due to an increase in weighted average sales prices and lower fuel and electricity costs. Our fixed production costs in Mexico, as a percentage of net sales, decreased 1.0 percentage point during the same period, primarily due to lower depreciation costs.

Gross Profit

Gross profit increased 29.7% to Ps.3,773.0 million in 2016 from Ps.2,909.7 million in 2015 for the reasons described above.

General, Administrative and Selling Expenses

Our general, administrative and selling expenses increased 14.2% to Ps.1,410.9 million in 2016 from Ps.1,235.2 million in 2015. General, administrative and selling expenses decreased 8.5% in U.S. dollar terms in our U.S. operations primarily due to lower administrative expenses in our cement operations. General, administrative and selling expenses increased 1.2% for our Mexican operations, primarily due to an increase in salaries and benefits for our employees.

Other Expenses

Other expenses increased to Ps.118.8 million in 2016 from Ps.25.3 million in 2015 primarily due to one-time expenses incurred in connection with the 2016 Asset Acquisition.

64

Result from Financing Activities

Our result from financing activities for the years ended December 31, 2016 and 2015 are as follows:

Year Ended December 31, 2016 2016 2015

U.S.$ (Convenience Translation)

(in millions of Mexican Pesos)

Financial expenses ..................................................................... (35.2) (729.8) (641.3) Financial income ........................................................................ 1.7 34.2 27.0 Exchange gain, net ..................................................................... 1.2 24.6 37.4

Total ................................................................................ (32.4) (670.9) (576.9)

Our result from financing activities increased 16.3% to an expense of Ps.670.9 million in 2016 from an expense of Ps. 576.9 million in 2015. The changes are shown in the table above. Our financial expenses increased 13.8% to Ps.729.8 million in 2016 from Ps.641.3 million in 2015, primarily due to the adverse effect of the weighted average depreciation of the Mexican peso against the U.S. dollar when converting financial expenses into Mexican pesos, and our higher level of indebtedness, which was partially offset by lower interest rates. Our financial income increased 26.7% to Ps.34.2 million in 2016 from Ps.27.0 million in 2015. Our net foreign exchange result decreased by Ps.12.8 million to a gain of Ps.24.6 million in 2016 from a gain of Ps.37.4 million in 2015, primarily due to the weighted average depreciation of the Mexican peso against the U.S. dollar. See note 24 to our annual consolidated financial statements.

Share of Profit of Associates

Our share of profit of associates increased 56.7% to Ps.20.0 million in 2016 from Ps.12.8 million in 2015.

Income Before Taxes

Income before taxes increased 46.7% to Ps.1,592.4 million in 2016 from Ps.1,085.1 million in 2015 for the reasons described above.

Income Taxes

We had a tax expense of Ps.308.2 million in 2016 compared to a tax expense of Ps.169.7 million in 2015, mainly attributable to an increase in income before taxes. See note 20 to our annual consolidated financial statements and “—Key Factors Affecting Our Results of Operations and Financial Condition—Income Taxes.”

An analysis of income taxes for the years ended December 31, 2016 and 2015 is as follows:

Year Ended December 31, 2016 2016 2015

U.S.$ (Convenience Translation) (in millions of Mexican pesos)

Current year income tax .......................................................................... (7.7) Ps. (160.4) Ps. (146.9) Deferred income tax ................................................................................ (7.1) (147.8) (22.8) Total income taxes ................................................................................ (14.8) Ps. (308.2) Ps. (169.7)

Consolidated Net Income

For the reasons described above, consolidated net income increased 40.3% to Ps.1,284.2 million in 2016 from Ps.915.5 million in 2015. Consolidated net income represented 9.2% and 7.6% of net sales in 2016 and 2015, respectively.

65

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Net Sales

Summarized in the table below are our net sales by product and by country for the years ended December 31, 2015 and 2014.

Year Ended December 31, 2015 (in millions of Mexican pesos)

Geographic Segment Cement Ready-mix Concrete Other(1) Eliminations

Consolidated United States ..................................................... 5,920.7 2,823.6 1,060.8 (1,256.2) 8,548.9 Mexico .............................................................. 2,130.6 1,174.4 746.9 (617.1) 3,434.9 Total .................................................................. 8,051.3 3,998.0 1,807.7 (1,873.3) 11,983.8

Year Ended December 31, 2014 (in millions of Mexican pesos)

Geographic Segment Cement Ready-mix Concrete Other(1) Eliminations Consolidated

United States ..................................................... 4,595.0 2,287.1 1,044.2 (914.3) 7,012.0 Mexico .............................................................. 1,847.9 1,123.9 626.9 (601.0) 2,997.7 Total .................................................................. 6,442.9 3,411.0 1,671.1 (1,515.3) 10,009.7

(1) Other principally includes aggregates, concrete blocks, prefabricated products, developed land, coal and other materials for construction.

Our net sales increased 19.7% to Ps.11,983.8 million in 2015 from Ps.10,009.7 million in 2014. On a consolidated basis before intercompany eliminations, our cement net sales increased 25.0% to Ps.8,051.3 million in 2015 from Ps.6,442.9 million in 2014, our ready-mix concrete net sales increased 17.2% to Ps.3,998.0 million in 2015 from Ps.3,411.0 million in 2014 and our other net sales increased 8.2% to Ps.1,807.7 million in 2015 from Ps.1,671.1 million in 2014.

Set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our net sales on a geographic segment basis. The discussion of volume data below is presented on a consolidated basis. The discussion of net sales information below is presented before intercompany eliminations resulting from consolidation, unless otherwise stated. See note 25 to our annual consolidated financial statements. For a discussion of intercompany sales, see “—Overview.”

United States

In the United States, our net sales increased 21.9% to Ps.8,548.9 million in 2015 from Ps.7,012.0 million in 2014. Our U.S. operations represented 71.3% of our net sales in 2015. For the year ended December 31, 2015, cement represented 60.4%, ready-mix concrete represented 28.8% and our other businesses represented 10.8% of our U.S. operations’ net sales before intercompany eliminations.

Our U.S. operations’ net sales in Mexican peso terms increased primarily as a result of a 28.9% increase in cement net sales, a 23.5% increase in ready-mix concrete net sales and a 1.6% increase in other net sales. The increase in our cement net sales was primarily driven by a 5.8% increase in the weighted average cement sales price and a 1.0% increase in cement sales volume driven by significant increases in Minnesota, Texas, South Dakota, Iowa and Nebraska, partially offset by lower sales volume in New Mexico, Colorado, North Dakota and Wyoming. The increase in our ready-mix concrete net sales was driven by an 8.0% increase in the weighted average ready-mix concrete sales price in U.S. dollar terms and the weighted average depreciation of the Mexican peso against the U.S. dollar, partially offset by a 5.2% reduction in ready-mix concrete sales volume. The increase in other net sales was primarily driven by a positive effect resulting from the depreciation of the Mexican peso against the U.S. dollar, which was partially offset by an 11.5% decrease in coal sales volume. Net sales from our U.S. operations in U.S. dollar terms increased 1.2% in 2015 compared to 2014 for the reasons described above.

66

Mexico

In Mexico, our net sales increased by 14.6% to Ps.3,434.9 million in 2015 from Ps.2,997.7 million in 2014. Our Mexican operations represented 28.7% of our net sales in 2015. For the year ended December 31, 2015, cement represented 52.6%, ready-mix concrete represented 29.0% and our other businesses represented 18.4% of our Mexican operations’ net sales before intercompany eliminations.

Our Mexican operations’ net sales increased primarily as a result of an increase of 15.3% in cement net sales, an increase of 4.5% in ready-mix concrete net sales and an increase of 19.1% in other net sales. The increase in our cement, ready-mix concrete and other net sales primarily resulted from stronger demand in the residential, commercial and industrial segments, which partially mitigated the decline in public sector activity in the second half of the year due to the completion of two major urban and highway paving projects, which resulted in a 0.8% contraction in ready-mix concrete sales volume. The increase in our cement net sales was primarily driven by a 6.7% increase in the weighted average cement sales price and a 6.7% increase in cement sales volume. The increase in our ready-mix concrete net sales was primarily driven by a 5.5% increase in the weighted average ready-mix concrete sales price, partially offset by a 0.8% decrease in sales volume. The increase in our other net sales was driven by higher weighted average prices for our products, an 18.8% increase in concrete block sales volume and a 12.3% increase in aggregates sales volume.

Cost of Sales

Our cost of sales increased 18.1% to Ps.9,074.1 million in 2015 from Ps.7,682.9 million in 2014. Our cost of sales in 2015 represented 75.7% of net sales, a 1.1 percentage point decrease as compared to 2014, reflecting increases in the weighted average prices for our products, lower transport costs in our U.S. operations and lower fuel and electricity costs in our Mexican operations.

In the United States, as a percentage of net sales, our variable costs decreased 2.0 percentage points in U.S. dollar terms in 2015 as compared to 2014, primarily due to lower freight costs of cement shipments for our cement operations and lower fuel costs for transportation of our ready-mix concrete. Our fixed production costs in the United States, as a percentage of net sales, increased 0.7 percentage points to 29.6% during the same period, primarily due to higher operating expenses for our ready-mix concrete operations.

In Mexico, as a percentage of net sales, our variable costs decreased 1.5 percentage points in 2015 as compared to 2014, primarily due to an increase in weighted average sales prices and lower fuel and electricity costs. Our fixed production costs in Mexico, as a percentage of net sales decreased 2.0 percentage points during the same period, primarily due to the increase in weighted average sales prices for our products and decrease in operating expenses for our ready-mix concrete operations.

Gross Profit

Gross profit increased 25.0% to Ps.2,909.7 million in 2015 from Ps.2,326.8 million in 2014 for the reasons described above.

General, Administrative and Selling Expenses

Our general, administrative and selling expenses increased 8.6% to Ps.1,235.2 million in 2015 from Ps.1,137.5 million in 2014. General, administrative and selling expenses increased 3.8% in U.S. dollar terms in our U.S. operations primarily due to an increase in salaries and benefits for our employees and higher depreciation expenses. General, administrative and selling expenses increased 12.4% for our Mexican operations, primarily due to higher depreciation and maintenance expenses.

Other Expenses

Other expenses decreased 61.8% to Ps.25.3 million in 2015 from Ps.66.3 million in 2014 primarily due to an impairment loss recognized in 2014 relating to exploration costs incurred by a project that aimed to identify coal deposits.

67

Result from Financing Activities

Our result from financing activities for the years ended December 31, 2015 and 2014 are as follows:

Year Ended December 31, 2015 2015 2014

U.S.$ (Convenience Translation) (in millions of Mexican pesos)

Financial expenses ..................................................................... (37.3) Ps. (641.3) Ps. (564.4) Financial income ........................................................................ 1.6 27.0 23.1 Exchange gain, net ..................................................................... 2.2 37.4 9.0

Total ................................................................................ (33.5) Ps. (576.9) Ps. (532.3)

Our result from financing activities increased 8.4% to Ps.576.9 million in 2015 from Ps.532.3 million in 2014. The changes are shown in the table above. Our financial expenses increased 13.6% to Ps.641.3 million in 2015 from Ps.564.4 million in 2014, primarily due to the adverse effect of the weighted average depreciation of the Mexican peso against the U.S. dollar when converting financial expenses into Mexican pesos, partially offset by our lower level of indebtedness and decreased interest payments as a result of lower applicable margins. Our financial income increased 16.9% to Ps.27.0 million in 2015 from Ps.23.1 million in 2014. Our net foreign exchange result increased by Ps.28.4 million to a gain of Ps.37.4 million in 2015 from a gain of Ps.9.0 million in 2014, primarily due to the weighted average depreciation of the Mexican peso against the U.S. dollar. See note 24 to our annual consolidated financial statements.

Share of Profit of Associates

Our share of profit of associates decreased 10.5% to Ps.12.8 million in 2015 from Ps.14.3 million in 2014.

Income Before Taxes

Income before taxes increased 79.4% to Ps.1,085.1 million in 2015 from Ps.604.9 million in 2014 for the reasons described above.

Income Taxes

We had a tax expense of Ps.169.7 million in 2015 compared to a tax expense of Ps.42.7 million in 2014, mainly attributable to an increase in income before taxes. See note 20 to our annual consolidated financial statements and “—Key Factors Affecting Our Results of Operations and Financial Condition—Income Taxes.”

An analysis of income taxes for the years ended December 31, 2015 and 2014 is as follows:

Year Ended December 31, 2015 2015 2014

U.S.$ (Convenience Translation) (in millions of Mexican pesos)

Current year income tax .......................................................................... (8.5) Ps. (146.9) Ps. (50.7) Deferred income tax ................................................................................ (1.4) (22.8) 8.0 Total income taxes ................................................................................ (9.9) Ps. (169.7) Ps. (42.7)

Consolidated Net Income

For the reasons described above, consolidated net income increased 62.8% to Ps.915.5 million in 2015 from Ps.562.2 million in 2014. Consolidated net income represented 7.6% and 5.6% of net sales in 2015 and 2014, respectively.

68

Liquidity and Capital Resources

We have satisfied our liquidity needs primarily through the operations of our subsidiaries and expect to continue to do so in both the short- and long-term. Although cash flow from our operations has historically met our overall liquidity needs for operations and funding capital expenditures and acquisitions, our subsidiaries are exposed to risks from changes in foreign currency exchange rates, price and currency controls, interest rates, governmental spending, social instability and other political, economic and/or social developments in the United States and Mexico, any one of which may materially reduce our net income and cash from operations. Consequently, in order to meet our liquidity needs, we also rely on borrowings under credit facilities and, when necessary, proceeds from asset sales. Although no assurances can be made that we will be able to meet our liquidity needs, we believe that our future cash from operations will provide adequate resources to fund operating requirements, capital expenditures and debt servicing obligations for the next twelve months.

Our net cash flows used in operating activities were Ps.107.0 million for the three months ended March 31, 2017 as compared to net cash flows generated by operating activities of Ps.25.1 million for the three months ended March 31, 2016. Our net cash flow requirement for the years ended December 31, 2016, 2015 and 2014 was Ps.3,143.4 million, Ps.2,450.4 million, and Ps.1,521.9 million, respectively. See our consolidated statement of cash flows contained in our interim condensed consolidated financial statements and annual consolidated financial statements.

Our cash requirements relate primarily to servicing of our debt, the purchase of raw materials, the improvement of our production facilities, the acquisition of fixed assets, the expansion of our installed capacity, the modernization of our plants, compliance costs under the Portland Cement NESHAP and other environmental obligations and, when applicable, acquisitions.

As of March 31, 2017, 100% of our indebtedness was denominated in U.S. dollars. As of March 31, 2017, our total indebtedness was U.S.$700.2 million. As of December 31, 2016, our total indebtedness was U.S.$700.5 million. See “—Our Indebtedness.”

As part of our investment policy, we invest in government instruments, certificates of deposit of financial institutions and highly rated commercial paper of large corporations. Our investment policy is designed to limit our exposure to any one financial institution. As of March 31, 2017, 75% and 25% of our investments were denominated in U.S. dollars and Mexican pesos, respectively.

The following table sets out selected cash flow data from our consolidated statements of cash flows for the three months ended March 31, 2017 and 2016 and the years ended December 31, 2016, 2015 and 2014.

Three Months Ended

March 31, Years Ended December 31, 2017 2017 2016 2016 2016 2015 2014 (in millions of Mexican pesos)

U.S.$ (Convenience

Translation) Ps. Ps.

U.S.$ (Convenience Translation) Ps. Ps. Ps.

Net cash generated by operating

activities ...................................... (5.7) (107.0) 25.1 151.6 3,143.4 2,450.4 1,521.9 Net cash used in investing activities .. (18.5) (347.7) (225.6) (336.1) (6,967.0) (815.2) (757.4) Net cash used in financing activities . (20.1) (376.8) (240.3) 209.8 4,349.4 (1,037.8) (875.9) Net increase (decrease) in cash and

cash equivalents ......................... (44.3) (831.5) (440.8) 25.4 525.8 597.4 (111.3) Cash and cash equivalents at beginning

of period ...................................... 180.6 3,396.9 2,522.8 121.7 2,522.8 1,786.7 1,261.6 Adjustment to cash flows for variations

in exchange rates ......................... 0.7 11.6 (38.7) 16.8 348.3 138.8 636.3 Cash and cash equivalents at end of

period........................................... 137.0 2,577.0 2,043.3 163.9 3,396.9 2,522.8 1,786.7

69

Net Cash Flows from Operating Activities

Net cash flow used in operating activities for the three months ended March 31, 2017 was Ps.107.0 million, as compared to net cash flows generated by operating activities of Ps.25.1 million for the three months ended March 31, 2016. This primarily reflects an increase in working capital requirements, which was partially offset by an increase in operating income. Due to the seasonality of our industry, working capital requirements are higher in the first quarter of the year. Cash flows were applied to all the working capital accounts, primarily inventories, accrued provisions and liabilities and trade accounts receivable. These changes were a result of an increase in sales volume and an increase in inventories in order to build our inventories for sales in the upcoming peak months.

For the year ended December 31, 2016, net cash flows generated by operating activities increased by 28.3% to Ps.3,143.4 million from Ps.2,450.4 million in 2015, primarily reflecting an increase in operating income. Our net cash flows applied in working capital were approximately Ps.156.0 million, which were primarily composed of accrued provisions and liabilities, trade accounts receivable, other accounts receivable and inventories, which was partially offset by cash generated by trade accounts payable. These changes were a result of the increase in sales volume.

For the year ended December 31, 2015, net cash flows generated by operating activities increased by 61.0% to Ps.2,450.4 million from Ps.1,521.9 million in 2014, primarily reflecting a decrease in working capital requirements in 2015. Our net cash flows applied in working capital were approximately Ps.166.0 million, which were primarily composed of accounts payable, other accounts receivable and trade accounts receivable for an aggregate amount of approximately Ps.324.7 million, partially offset by accrued provisions and liabilities and inventories for an aggregate amount of approximately Ps.158.5 million. These changes were a result of the increase in sales volume and operational costs.

Net Cash Flows from Investing Activities

For the three months ended March 31, 2017, net cash used in investing activities was Ps.347.7 million compared to net cash used in investing activities of Ps.225.6 million for the same period in the prior year, primarily as a result of the expansion of our Rapid City, South Dakota cement plant.

For the year ended December 31, 2016, net cash used in investing activities was Ps.6,967.0 million, an increase from Ps.815.2 million in 2015, primarily as a result of the 2016 Asset Acquisition.

For the year ended December 31, 2015, net cash used in investing activities increased by 7.6% to Ps.815.2 million from Ps.757.4 million in 2014 primarily as a result of the increased purchases of property, plant and equipment during the second and fourth quarters, principally for new equipment, vehicles and cement plant upgrades required for regulatory compliance.

Net Cash Flows from Financing Activities

For the three months ended March 31, 2017, net cash flows used in financing activities was Ps.376.8 million compared to net cash flows used in financing activities of Ps.240.3 million for the same period in the prior year, primarily as a result of an increase in the amount of interest due to our higher level of indebtedness.

For the year ended December 31, 2016, net cash generated by financing activities was Ps.4,349.4 million, an increase from net cash used in financing activities of Ps.1,037.8 million in 2015, primarily as a result of the financing obtained for the 2016 Asset Acquisition, which was partially offset by an increase in the amount of interest paid due to our higher level of indebtedness.

For the year ended December 31, 2015, net cash flows used in financing activities increased by 18.5% to Ps.1,037.8 million from Ps.875.9 million in 2014, primarily as a result of higher debt repayments, dividends paid and the effect of the weighted average depreciation of the Mexican peso against the U.S. dollar on interest expenses.

70

Capital Expenditures

For the three months ended March 31, 2017 and the years ended December 31, 2016, 2015 and 2014 we recorded Ps.272.5 million (U.S.$14.5 million), Ps.1,080.6 (U.S.$52.1 million), Ps.806.6 million (U.S.$46.8 million) and Ps.681.5 million (U.S.$46.3 million), respectively, in capital expenditures.

Our capital expenditures are intended to ensure that we maintain state-of-the-art facilities and equipment and that all of our plants meet the relevant regulatory standards. The following table summarizes our capital expenditures for the three months ended March 31, 2017 and for the years ended December 31, 2016, 2015 and 2014:

Three Months Ended

March 31,

Year ended December 31, 2017 2016 2015 2014 (in millions of Mexican pesos) Project Improvements to the facilities in our Colorado

coal mine .................................................... 11 93 71 95 Distribution terminals..................................... 1 32 12 11 Technical and regulatory compliance

improvements for our cement facilities ...... 212 508 417 398 Aggregates plant ............................................ - 5 38 36 Transport equipment ...................................... 46 372 216 117 Information systems equipment ..................... 1 54 35 19 Land and buildings ......................................... 2 17 17 6

Total ....................................................... 273 1,081 806 682

The following chart indicates the breakdown of our capital expenditures for the periods indicated in millions of U.S. dollars:

Our Indebtedness

As of March 31, 2017, we had U.S.$700.2 million of debt outstanding, 100% of which was denominated in U.S. dollars. As of March 31, 2017, the average cost of our debt—the weighted average of the interest rates under each of our existing financing agreements—was 6.3%, with 62.5% of our debt bearing interest at a floating rate and 37.5% at a fixed rate. The average life of our debt as of March 31, 2017 was approximately 3.5 years.

In 2013 we issued U.S. dollar-denominated senior secured notes due 2020 with an interest rate of 8.125%, the Old Notes. The principal amount outstanding under the Old Notes is U.S.$260 million, which is payable in a single payment at maturity. Our subsidiaries GCC Cemento, S.A. de C.V., Cementos de Chihuahua, S.A. de C.V. and GCC of America, Inc., are guarantors under the Old Notes and their shares are used as collateral. The collateral will be released if we achieve a leverage ratio of less than 2.75x as of the end of two consecutive quarters, unless the collateral continues to secure the Term Loan Facility. If released, the collateral would be reinstated if our leverage ratio exceeded 2.75x as of the end of any fiscal quarter thereafter. The Old Notes also include both affirmative and negative covenants. The affirmative covenants include

71

requirements to: periodically provide financial information (including audited annual financial statements and unaudited quarterly financial statements). The negative covenants include restrictions on our ability to: (i) incur debt; (ii) pay dividends; (iii) sell certain assets; (iv) merge or consolidate with another entity (unless we are the surviving entity or the surviving entity assumes our obligations, does not fail to fulfill our obligations and meets certain financial ratios set forth in the credit agreement); or (v) conduct certain transactions with our affiliates. As is common for this form of financing, the Old Notes include events of default relating to, among others, failure to pay principal and interest and breach of certain covenants. The Old Notes are subject to the Tender Offer. If, following the Tender Offer’s early settlement date, any Old Notes remain outstanding, we intend to promptly issue a notice of redemption to redeem such Notes at a redemption price equal to 104.063% in accordance with the terms of the Old Notes. See “Summary—Recent Developments—Tender Offer.”

On November 18, 2016, we refinanced certain bank debt, thereby improving the maturity profile of our bank debt and obtaining more favorable contractual terms. The refinancing consisted of replacing our existing term loan facility with a secured U.S.$184.9 million Term Loan Facility. The Term Loan Facility has a variable interest rate. The Term Loan Facility also includes both affirmative and negative covenants. The affirmative covenants include requirements to: (i) periodically provide financial information (including audited annual financial statements and unaudited quarterly financial statements) to our lenders; (ii) allow for inspections by representatives of our lenders; (iii) pay taxes; and (iv) insure our assets. The negative covenants include restrictions on our ability to: (i) exceed certain financial ratios (including net leverage ratios and net interest coverage ratios) and requires that we not decrease our minimum capital levels; (ii) provide collateral (with certain exceptions, including the collateral securing payment of the Term Loan Facility); (iii) pay dividends in the event of noncompliance with certain provisions; and (iv) incur debt in the event of noncompliance with certain provisions. As is common for this form of financing, the Term Loan Facility includes events of default relating to, among others, failure to pay principal and interest, breach of certain covenants, initiation of a bankruptcy proceeding, cross default with respect to other indebtedness and a change of control.

In addition, on November 18, 2016, we entered into an unsecured credit agreement for a loan of U.S.$253.5 million to finance the 2016 Asset Acquisition. The credit agreement has a variable interest rate. The credit agreement also includes both affirmative and negative covenants. The affirmative covenants include requirements to: (i) periodically provide financial information (including audited annual financial statements and unaudited quarterly financial statements) to our lenders; (ii) allow for inspections by representatives of our lenders; (iii) pay taxes; and (iv) insure our assets. The negative covenants include restrictions on our ability to: (i) exceed certain financial ratios (including net leverage ratios and net interest coverage ratios) and requires that we not decrease our minimum capital levels; (ii) provide collateral (with certain exceptions, including the collateral securing payment of the Term Loan Facility); (iii) pay dividends in the event of noncompliance with certain provisions; and (iv) incur debt in the event of noncompliance with certain provisions. As is common for this form of financing, the credit agreement includes events of default relating to, among others, failure to pay principal and interest, breach of certain covenants, initiation of a bankruptcy proceeding, cross default with respect to other indebtedness and a change of control.

The following table summarizes the outstanding principal payments remaining under our total commitments as of March 31, 2017, including the Old Notes:

Year Principal Amount (in millions of

U.S. dollars) 2017 ..................................................... 3.5 2018 ..................................................... 17.2 2019 ..................................................... 48.3 2020 ..................................................... 363.3 2021 ..................................................... 165.2 2022 ..................................................... 82.8 2023 ..................................................... 19.9 2024 ..................................................... - Total .................................................... 700.2

As of the date of this offering memorandum, we are in compliance with all of our payment obligations under the aforementioned Old Notes, Term Loan Facility and credit agreement.

72

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, results of operations, liquidity or capital resources.

Quantitative and Qualitative Disclosures about Market Risk

Our Corporate Treasury provides services to our business, coordinates access to domestic and international financial markets and monitors and manages our operations’ financial risks by preparing internal risk reports that analyze exposures by degree and magnitude of risk. These risks include market risk (including currency risk, interest rate risk and other price risks), credit risk, liquidity risk and the risk of changes to the interest rates applicable our cash flows.

The Board, upon the recommendation from the Audit and Corporate Practices Committee, reviews and approves our risk management policies. For the years ended December 31, 2016, 2015 and 2014 we have not entered into any derivative financial instrument to hedge against market risks.

We are exposed to market risks arising from fluctuations in prices, exchange rates and interest rates. Presented below is a description of our most significant risks.

Exchange Rate Risk

As of March 31, 2017, 100% of our indebtedness was denominated in U.S. dollars. In the event of a depreciation of the Mexican peso, the carrying amount of our U.S. dollar-denominated debt in our annual consolidated financial statements and interim condensed consolidated financial statements will increase to reflect the additional Mexican pesos required to fund the liabilities. A severe depreciation of the Mexican peso may also result in the disruption of the international foreign exchange markets. This may limit our ability to transfer or convert Mexican pesos into U.S. dollars for making timely payments of interest and principal on the U.S. dollar-denominated indebtedness, as we rely in part on a portion of the Mexican pesos from our Mexican operations to service such debt.

In addition, due to our operations in Mexico, we are exposed to foreign exchange rate risk, which could affect our

ability to fulfill our financial obligations resulting from foreign exchange losses on our U.S. dollar-denominated obligations. We derived approximately 28.3% of revenues for the three months ended March 31, 2017 in Mexican pesos. Our results of operations, cash flows and financial position are sensitive to the fluctuation of the Mexican peso relative to the U.S. dollar. Our U.S. operations earn revenue and incur expenses primarily in U.S. dollars, while our Mexican operations earn revenue and incur expenses primarily in Mexican pesos. Changes in the relative value of the Mexican peso to the U.S. dollar, which value fluctuates constantly, have an effect on our results of operations and financial condition reported in Mexican pesos. Our export sales to the United States and coal from our Colorado mine for use in our Mexican plants are denominated in U.S. dollars. Similarly, a substantial majority of our costs of sales and other general, administrative and selling expenses are either denominated in or linked to the value of the U.S. dollar, including our purchases of several raw materials and the costs of our operations in the United States. As a result, when the Mexican peso depreciates against the U.S. dollar, the same level of U.S. dollar net sales or expenses in a prior period will result in higher reported net sales or expenses in Mexican peso terms in the most recent period. Conversely, when the Mexican peso appreciates against the U.S. dollar, the same level of U.S. dollar net sales or expenses in a prior period will result in lower reported net sales or expenses in Mexican peso terms in the most recent period. As of the date of this offering memorandum, we do not use financial derivative instruments to hedge our exposure to the market risk associated with potential fluctuations foreign exchange rates. We designate our net investment in a foreign operation (our U.S. subsidiaries) as a cash flow hedge, whereby the exchange fluctuations arising from our financial debt denominated in U.S. dollars is recognized in other comprehensive income to the extent of the investment in subsidiaries in the United States.

The following table shows a sensitivity analysis of the financial assets and liabilities at a possible fluctuation of the

Mexican peso compared to the U.S. dollar, showing the effects in the consolidated interim statement of comprehensive income and equity as of March 31, 2017 and December 31, 2016:

73

March 31, 2017 December 31, 2016 Results Equity Results Equity Sensitivity analysis: (in millions of Mexican pesos) Mexican peso appreciation 10% ....................... Ps. 109.6 Ps. 1,177.5 Ps. 43.9 Ps. 1,429.7 Mexican peso depreciation 10% ....................... (109.6) (1,177.5) (43.9) (1,429.7)

Interest Rate Risk

We have issued and hold financial instruments that expose us to market risks related to fluctuations in interest rates. We are exposed to interest rate risk with respect to our indebtedness that bears interest at variable rates. As of March 31, 2017, 63% of our total outstanding indebtedness of U.S.$700.2 million bears interest at a variable rate.

The interest rate on our variable rate debt is determined by reference to LIBOR. Increases in the LIBOR rate would impact our result from financing activities, increase financing costs and interest payments, and possibly cause a significant adverse effect on our liquidity position and ability to meet our financial obligations. As of the date of this offering memorandum, we do not use financial derivative instruments to hedge our exposure to the market risk associated with potential fluctuations in interest rates.

We believe that a change of one percentage point in interest rates is a reasonable measure of the possible effect a change in interest rate could have on our results. As of March 31, 2017, a change of ±1 percentage point in interest rates, assuming that all other factors remain constant, would increase or reduce financial expenses before taxes in an amount of approximately Ps.20.7 million.

Credit Risk

We are exposed to the risk of delay or non-payment from our customers on our accounts receivable. Financial instruments which could potentially subject us to significant concentration of credit risk are accounts receivable. We believe the credit risk from trade accounts receivable is diversified due to the wide geographical diversity of our customers.

Our policy for doubtful accounts receivable is to record an allowance where collection problems are anticipated. For this purpose, we conduct a study of the collectability of accounts receivable due from each customer, taking into consideration each customer’s credit history and aging balances, the guarantees granted and the specific situation of each account receivable. We request, when applicable, guarantees and collateral. If we determine that collectability is doubtful, book values related to the non-recoverable assets are adjusted and charged to the statement of operations through an increase in the doubtful accounts receivable reserve. This determination requires substantial management judgment. See “—Key Sources of Estimation Uncertainty—Allowance for Doubtful Accounts.” As a result, final losses from doubtful accounts could differ from our estimated provisions.

In addition, financial instruments which could potentially subject us to a significant concentration of credit risk are cash and cash equivalents. Our cash and cash equivalents are held in different financial institutions located in different geographic areas. As part of our investment policy, we invest in government instruments, certificates of deposit of financial institutions and commercial paper of large corporations. Our investment policy is designed to limit our exposure to any financial institution or instrument.

Price Risk

Our main production materials are limestone, aggregates, sand, fuels and energy. We are exposed to changes in the price of such materials.

We purchase some of the raw materials and energy necessary to produce and distribute our products. The price and other terms of those purchases are subject to change based on factors such as supply and demand. We continuously manage our exposure to increases in the price of our raw materials, energy and transportation costs. To reduce volatility in our cost of sales, our installed capacity for cement production has the option of using natural gas or coal as fuel. Our Colorado coal mine supplies coal to our cement plants (except the Rapid City, South Dakota plant, for which we have a supplier of coal in Wyoming, and the recently acquired Odessa, Texas plant, which operates with natural gas) and which we estimate has

74

sufficient coal reserves to supply our cement plants and sales to third parties until approximately 2057, based on the existing rate of depletion. Moreover, although we have in the past used financial derivative instruments to hedge our exposure to the market risk associated with potential fluctuations in price of energy inputs, such as natural gas, we do not have any such derivatives in place as of the date of this offering memorandum.

75

GUARANTORS

U.S. dollar amounts in the text below are translated from the Mexican peso amounts for the assets and liabilities at the closing exchange rate of Ps.18.81 per U.S.$1.00 and Ps.20.73 per U.S.$1.00 as of March 31, 2017 and December 31, 2016, respectively, and for the items in the consolidated interim statement of comprehensive income at a weighted average exchange rate of Ps.20.37 per U.S.$1.00 and Ps.18.67 per U.S.$1.00 the three months ended March 31, 2017 and for the year ended December 31, 2016, respectively, in accordance with the procedures for the presentation of the Company’s reporting currency in the interim consolidated financial statements and the annual consolidated financial statements.

The Company’s obligations under the notes will be unconditionally guaranteed by GCC Cemento, Cementos de Chihuahua and GCC of America. The Guarantors and their respective direct and indirect subsidiaries, after eliminations from consolidation, accounted for Ps.3,364.5 million (U.S.$165.2 million), or 100%, of our revenues and contributed Ps.744.0 million (U.S.$36.5 million), or 113%, of our EBITDA for the three months ended March 31, 2017, and Ps.34,876.8 million (U.S.$1,854.2 million), or 98%, of our total assets and Ps.4,253.5 million (U.S.$226.1 million), or 22%, of our total liabilities as of March 31, 2017. The Guarantors and their respective direct and indirect subsidiaries, after eliminations from consolidation, accounted for Ps.13,996.8 million (U.S.$749.7 million), or 100%, of our revenues and contributed Ps.3,854.6 million (U.S.$206.5 million), or 109%, of our EBITDA for the year ended December 31, 2016, and Ps.37,870.4 million (U.S.$1,826.8 million), or 98%, of our total assets and Ps.4,317.3 million (U.S.$208.3 million), or 21%, of our total liabilities as of December 31, 2016.

Certain of our non-Guarantor subsidiaries generate expenses but not revenues and offset the EBITDA presented above for the Guarantors. As of March 31, 2017, our non-Guarantor subsidiaries that are not subsidiaries of Guarantors had total assets of Ps.671.1 million (U.S.$35.7 million), or 2% of our total assets. EBITDA for those non-guarantor subsidiaries for the three months ended March 31, 2017 was Ps.(80.8) million (U.S.$(4.0) million), or (12%) of our EBITDA. As of December 31, 2016, our non-Guarantor subsidiaries that are not subsidiaries of Guarantors had total assets of Ps.836.9 million (U.S.$40.4 million), or 2% of our total assets. EBITDA for those non-guarantor subsidiaries for the year ended December 31, 2016, was Ps.(321.0) million (U.S.$(17.2) million), or (9)% of our EBITDA.

As of March 31, 2017, GCC’s (not including its subsidiaries) total assets were Ps.671.2 million (U.S.$35.7 million), or 2% of our total assets, in each case on an unconsolidated basis. EBITDA of GCC (not including its subsidiaries) for the three months ended March 31, 2017 was Ps.(4.6) million (U.S.$(0.2) million), or (1)% of our EBITDA, in each case on an unconsolidated basis. As of December 31, 2016, the total assets of GCC (not including its subsidiaries) were Ps.834.7 million (U.S.$40.3 million), or 2% of our total assets, in each case on an unconsolidated basis. EBITDA of GCC (not including its subsidiaries) for the year ended December 31, 2016 was Ps.(28.1) million (U.S.$(1.5) million), or (1)% of our EBITDA, in each case on an unconsolidated basis.

GCC Cemento, located at Vicente Suárez y Sexta S/N, Col. Nombre de Dios, Chihuahua, Chihuahua, was incorporated on October 2, 1999, registration number 14627 under Mexican law. GCC Cemento’s main activity is the production of cement. Its main facilities are located in the state of Chihuahua, Mexico. As of March 31, 2017, the total assets of GCC Cemento together with its direct and indirect subsidiaries were Ps.2,630.4 million (U.S.$139.8 million), or 7% of our total assets. EBITDA of GCC Cemento together with its direct and indirect subsidiaries for the three months ended March 31, 2017 was Ps.(266.6) million (U.S.$(13.1) million), or (40%) of our EBITDA. As of December 31, 2016, the total assets of GCC Cemento together with its direct and indirect subsidiaries were Ps.3,110.7 million (U.S.$150.1 million), or 8% of our total assets. EBITDA of GCC Cemento together with its direct and indirect subsidiaries for the year ended December 31, 2016 was Ps.(1,098.0) million (U.S.$(58.8) million), or (31)% of our EBITDA. There are no risks specific to GCC Cemento that could materially affect its ability to meet the obligations under its guarantee.

Cementos de Chihuahua, located at Vicente Suárez y Sexta S/N, Col. Nombre de Dios, Chihuahua, Chihuahua, Mexico, was incorporated on September 9, 1941, registration number 1615 under Mexican law. Cementos de Chihuahua’s serves as a holding company for our Mexican operations. Its main facilities are located in the state of Chihuahua, Mexico. As of March 31, 2017, the total assets of Cementos de Chihuahua together with its direct and indirect subsidiaries were Ps.32,246.4 million (U.S.$1,714.3 million), or 91% of our total assets. EBITDA of Cementos de Chihuahua together with its direct and indirect subsidiaries was Ps.1,010.6 million (U.S.$49.6 million), or 153% of our EBITDA for the three months ended March 31, 2017. As of December 31, 2016, the total assets of Cementos de Chihuahua together with its direct and indirect subsidiaries were Ps.34,759.6 million (U.S.$1,676.8 million), or 90% of our total assets. EBITDA of Cementos de Chihuahua together with its direct and indirect subsidiaries was Ps.4,952.5 million (U.S.$265.3 million), or

76

140% of our EBITDA for the year ended December 31, 2016. The figures presented in this paragraph include the results from GCC of America, its subsidiary. There are no risks specific to Cementos de Chihuahua that could materially affect its ability to meet the obligations under its guarantee.

GCC of America, located at 600 S. Cherry Street, Suite 1000, Glendale, Colorado, was incorporated on June 16, 1994, under the laws of Delaware. As of March 31, 2017, the total assets of GCC of America together with its direct and indirect subsidiaries were Ps.26,933.9 million (U.S.$1,431.9 million), or 76% of our total assets. EBITDA of GCC of America together with its direct and indirect subsidiaries was Ps.379.4 million (U.S.$18.6 million), or 57% of our EBITDA for the three months ended March 31, 2017. As of December 31, 2016, the total assets of GCC of America together with its direct and indirect subsidiaries were Ps.29,250.2 million (U.S.$1,411.0 million), or 76% of our total assets. EBITDA of GCC of America together with its direct and indirect subsidiaries was Ps.2,596.6 million (U.S.$139.1 million), or 74% of our EBITDA for the year ended December 31, 2016. There are no risks specific to GCC of America that could materially affect its ability to meet the obligations under its guarantee.

77

INDUSTRY OVERVIEW

Our business is closely tied to general economic conditions in the United States and Mexico, with 71.7% and 28.3% of our net sales generated in each country, respectively, for the three months ended March 31, 2017 and 73.6% and 26.4% of our net sales generated in each country, respectively, for the year ended December 31, 2016. Sales of our main products, cement and ready-mix concrete, as well as other construction materials, are closely linked to global economic conditions because they are highly dependent on construction expenditures and the construction industry as a whole, which largely fluctuate according to market cycles.

Our Products

Our products principally consist of cement and mortar, ready-mix concrete, aggregates and other products and services (including coal, concrete blocks, prefabricated products, transportation and developed land in Mexico).

Cement

Cement, generally known as Portland cement, is produced from clinker, which is created when raw materials such as iron ore, silica, clay and limestone are dried, ground and mixed into a fine powder. This powder is heated in revolving kilns at a temperature of 1,450°C (2,642°F) in order to trigger the chemical reactions that bind cement. There are two primary processes used to manufacture cement: the “dry process” and the “wet process.” These processes differ in the form in which the raw materials are fed into the kiln and the amount of energy consumed. In the dry process, the raw meal is fed into the kiln in the form of a dry powder, whereas in the wet process the raw meal is fed into the kiln in the form of slurry. We manufacture cement using the dry process, which is more fuel-efficient than the wet process because it does not require water and consumes less energy per manufactured ton. According to the PCA, the dry process is the most modern and common way to manufacture cement.

Cement production requires high capital investments. The energy needed to transform raw materials into clinker and cement, consisting of fuel and electricity, is by far the largest component of variable costs for cement production in both the United States and Mexico. Coal, oil, natural gas and electricity are the most commonly used energy sources, although the use of alternative fuels has risen recently as a result of environmental concerns. To mitigate our exposure to high energy and fuel costs and their volatility, we have implemented technical improvements in our cement plants, except for the recently acquired Odessa, Texas plant, that give us the option to use coal in all of our installed capacity for cement production, while retaining the ability to use other energy sources, like natural gas, for operations, such as start-up of a plant following a halt in production or as a back-up power source.

The cement market in the United States is comprised primarily of ready-mix concrete, with the remaining sales related to paving products, concrete blocks and prefabricated materials. In contrast, Mexico’s cement market is comprised primarily of bagged sales. In 2015, approximately 80% of all cement sold in Mexico was sold in bags.

Ready-mix Concrete

According to the PCA, ready-mix concrete refers to concrete that is prepared for delivery from a central plant instead of being mixed on the job site. It is a combination of cement, gravel, sand, water and admixtures, or additives, that control certain properties of the concrete such as plasticity, pumpability, freeze-thaw resistance, strength and setting time. Each batch of ready-mix concrete is tailor-made to fit a client’s specific needs by changing the proportion of water, aggregates and cement in the mix and is typically delivered in cylindrical mixer trucks. Ready-mix concrete is widely considered to be one of the most useful and versatile products in the building materials industry. According to Standard C94 of the American Society for Testing Materials, the discharge of ready-mix concrete must be completed within 90 minutes after preparation or before the drum of the mixer truck has turned 300 revolutions, whichever comes first, to avoid compromising quality. Due to these constraints, the ready-mix concrete market tends to be highly localized.

The ready-mix concrete industry in the United States is highly fragmented, with a number of large, vertically integrated manufacturers of cement, aggregates and ready-mix concrete producers operating over 5,500 plants throughout the United States. In contrast to the cement market, the ready-mix concrete market has minimal barriers to entry due to relatively low start-up costs and the ability to rely on mobile plants, which opens the market to small family-owned

78

companies. As a result, the top five ready-mix concrete manufacturers account for 20% of the U.S. market. According to the NRMCA, approximately 257 million cubic meters of ready-mix concrete were produced in the United States in 2015.

The ready-mix concrete industry in Mexico is dominated by the largest cement companies, in part because these companies enter into the ready-mix concrete market with their own network of plants. However, large cement companies may also sell cement to independent ready-mix concrete companies. Given that ready-mix concrete has a short usable lifetime, it can only be transported relatively short distances, which benefits established cement players that own a production network and distribution facilities that newcomers would find hard to replicate. Factors that favor newcomers to the ready-mix concrete industry include low product differentiation and low inherent switching costs for customers.

Aggregates

Aggregates are inert filler material, typically gravel and sand, that are used with a cement medium to form concrete, mortar or asphalt. Aggregates are indispensable in the production of ready-mix concrete, accounting for between 60% and 75% of ready-mix concrete volume, as well as in the production of asphalt and mortar. Aggregates have various uses in the residential, non-residential and public infrastructure markets. They are extracted both by surface and underground methods, primarily from the deposits of materials such as sand, gravel, rock, granite and limestone.

Depending on the intended end use, aggregates have different characteristics, including chemical composition, calcium carbonate content, grading, graduation of different particle sizes and color. The numerous combinations of these characteristics are very important in the transformation of the raw material into a finished product.

The aggregates market is typically characterized by high profit margins, high barriers to entry and moderate capital expenditures. This has led to notably stable profitability levels through economic cycles, particularly when compared to other construction materials. Access to strategically placed reserves is crucial, given the significant transportation costs and environmental permitting limitations. As in the case of ready-mix concrete, this causes markets to be regional. Vertically-integrated manufacturers of aggregates are often able to leverage their aggregates production for other products such as ready-mix concrete, asphalt paving mix and paving, giving them a competitive advantage over smaller manufacturers.

The aggregates industry is one of the largest segments of the construction materials market in Mexico. CEMEX is the leading producer of aggregates in Mexico, while we are the leading producer of aggregates in the state of Chihuahua. In Mexico, the consumption of aggregates, more so than related products such as cement, largely depends on public spending, including government construction, maintenance and repair projects.

United States

Supply

The cement industry in the United States has recently been operating at an average of approximately 77% clinker production capacity. Nonetheless, production has been steadily recovering since 2009.

The following chart shows United States cement production, in millions of tons, for the years indicated:

96 94 92 85 63 65 67 74 76 81 81 82

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

____________ Source: PCA and USGS.

79

The following chart shows United States cement imports, in millions of tons, for the years indicated:

34 36

23

12 7 7 7 7 7 8 11 14

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

____________ Source: PCA.

The nine largest cement manufacturers in the United States control close to 75.2% of the total installed capacity in the country. This cement production is distributed among 97 production facilities located across 34 states. Manufacturers in the United States cement market face high barriers to entry, including substantial capital expenditure requirements, the length of time to construct a new plant, high transportation costs, the difficulty of obtaining permits for new plants and strict environmental standards. Some key participants in the U.S. cement market, including us, are vertically integrated, which provides a competitive advantage.

In the United States, we operate principally in 14 contiguous states, from Texas and New Mexico in the south to Montana, North Dakota and Minnesota in the north. We have cement plants in Pueblo, Colorado, Tijeras, New Mexico, Rapid City, South Dakota and Odessa, Texas. We also have cement distribution terminals and transferring stations in Colorado, South Dakota, New Mexico, Iowa, Minnesota, Montana, Nebraska, North Dakota, Wyoming and west Texas. In these markets, we compete primarily with LafargeHolcim, CEMEX, Eagle Materials, Lehigh Cement Company and Ash Grove Cement. There are no dominant participants in the industry that have a significant presence throughout the entire country.

Capacity

According to the USGS, the installed clinker production capacity in 2016 in the United States was 109 million tons and actual clinker production was 77.0 million tons, representing 70.6% of installed capacity. However, some states like Texas are already operating at full capacity, even importing clinker and cement from neighboring states. Because permit requirements often delay plans to increase installed clinker production capacity, usually by five to seven years, increased demand in past years has been met with imports. Drake Cement owns the newest cement plant, which began operations in 2011. There have been no new plant openings since then, though there have been several recent plant upgrade projects to comply with NESHAP regulations or to convert wet kilns to the more energy-efficient dry kilns. In 2014, LafargeHolcim commenced construction of a new plant in Ravena, New York that is expected to be completed in 2018.

Demand

According to the PCA, in 2016, total cement consumption was 91.9 million tons, 25% below the peak in consumption reached in 2005 but still the highest level of consumption since 2009. This consumption was driven mainly by higher spending levels for new residential construction and non-residential buildings. Meanwhile, public construction spending remains weak but is poised to benefit from recently enacted infrastructure bills. According to the U.S. Department of Transportation Federal Highway Administration, funding for the public construction of roads is expected to increase following the passing of certain infrastructure bills, such as the FAST Act. Improvement in the housing construction market is expected to continue driving demand for cement. Additionally, an increase in the number of oil and gas rigs in the states in which we operate would likely increase demand for cement in such markets.

80

The following chart shows the number of drilling rigs actively exploring for or developing oil or natural gas in the states in which we operate, for the first and last week of each month indicated:

____________ Source: Baker Hughes North American Rotary Rig Count.

Demand for cement in the United States is expected to grow given the current positive outlook with respect to both gross domestic product and job creation, each of which can lead to increased spending in residential, non-residential and public construction projects.

The following chart shows cement consumption in the United States, in millions of tons, for the years indicated:

128 127 115 97

71 70 72 78 82 89 92 94

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

____________ Source: PCA.

End Markets

The United States residential construction sector represented 38% of total construction spending in the United States for 2016, the largest segment in construction spending and the second largest in cement consumption. According to the PCA, housing starts, the primary driver of cement demand in the residential sector, increased 10.7% as compared to 2015. Growth is expected in upcoming years, mainly driven by moderate loosening of mortgage credit standards, lower inventory levels, increased job creation and favorable affordability ratios.

81

The following chart shows total housing starts in the United States, in thousand units, for the years indicated:

1,001

1,108 1,155

2014 2015 2016

___________ Source: PCA.

The following chart shows residential construction spending in the United States, in billions of U.S. dollars, for the years indicated:

$327

$374 $377

2014 2015 2016

___________ Source: PCA.

According to the PCA, cement consumption for residential construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota, and Wyoming represented 14% of total cement consumption in each of 2007 and 2016. Cement consumption for residential construction in the United States represented 28% and 29% of total cement consumption in 2007 and 2016, respectively. The PCA expects 2020 cement consumption for residential construction in Colorado, Iowa , New Mexico, North Dakota, Minnesota, South Dakota and Wyoming to represent 13% of total cement consumption for those states and 32% in the United States.

The following chart shows cement consumption in residential construction in the United States, in millions of tons, for the years indicated:

23 25 26

2014 2015 2016

___________ Source: PCA.

According to the PCA, non-residential construction represented approximately 30% of total construction spending in 2016. The non-residential sector has been crucial in driving growth for the U.S. construction industry over the previous two years and is expected to continue to do so, mainly driven by private projects in the lodging and office construction segments, partially offset by reduced oil well activity.

82

The following chart shows office vacancy rates in the United States for the years indicated:

13.9% 13.2% 13.0%

2014 2015 2016

___________ Source: PCA.

The following chart shows non-residential construction spending in the United States, in billions of U.S. dollars, for the years indicated:

$253 $286 $305

2014 2015 2016

___________ Source: PCA.

According to the PCA, cement consumption for non-residential construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota and Wyoming represented 35% and 34% of total cement consumption in 2007 and 2016, respectively. Cement consumption for non-residential construction in the United States represented 21% and 17% of total cement consumption in 2007 and 2016, respectively. The PCA expects 2020 cement consumption for non-residential construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota and Wyoming to represent 37% of total cement consumption for those states and 18% in the United States.

The following chart shows cement consumption in non-residential construction in the United States, in millions of tons, for the years indicated:

$22

$21 $21

2014 2015 2016

__________ Source: PCA.

Also according to the PCA, public construction spending, the most cement-intensive sector represented 32% of total construction spending in 2016. Public construction spending is mainly driven by the construction of highways as well as sewage and water systems. Despite decreases in infrastructure spending in recent years, this spending is expected to increase as a result of works carried out pursuant to the FAST Act, a five-year, U.S.$305 billion highway and transit bill. According to the PCA, infrastructure spending is expected to increase at a rate higher than the growth rate seen in recent years.

83

The following chart shows infrastructure spending, as a percentage of GDP, in the United States for the years indicated:

1.0% 1.0% 1.0%

2014 2015 2016

Source: BMI Research.

The following chart shows public construction spending in the United States, in billions of U.S. dollars, for the years indicated:

$320 $315 $317

2014 2015 2016

___________ Source: PCA.

According to the PCA, cement consumption for public construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota and Wyoming represented 51% and 53% of total cement consumption in 2007 and 2016, respectively. Cement consumption for public construction in the United States represented 51% and 54% of total cement consumption in 2007 and 2016, respectively. The PCA expects 2020 cement consumption for public construction in Colorado, Iowa, New Mexico, North Dakota, Minnesota, South Dakota and Wyoming to represent 50% of total cement consumption for those states as well as for the United States.

The following chart shows cement consumption in public construction in the United States, in millions of tons, for the years indicated:

42 44 45

2014 2015 2016

___________ Source: PCA.

84

According to the PCA, public infrastructure spending is expected to be greater than previous growth. The following chart shows such estimated spending, in billions of U.S. dollars, for the years indicated:

____________ Source: PCA. Regulation

In September 2010, the EPA published the Portland Cement NESHAP under the federal Clean Air Act. This regulation requires Portland cement facilities to limit emissions of mercury, hydrocarbons, hydrochloric acid, dioxins-furans and particulate matter. Also in 2010, the EPA published the Portland Cement NSPS, which applies to newly-constructed or modified cement plants, under the federal Clean Air Act. The PCA estimated in August 2011 that the Portland Cement NESHAP could require the closure of 18 cement plants, representing approximately 10% to 15% of U.S. production, and lead to the sourcing of cement from other countries. Seven plants have already been fully or partially closed, and another five are at high risk of closure. In addition to further downsizing manufacturing capacity, the PCA believes that the Portland Cement NESHAP will require approximately U.S.$3.4 billion in capital investment over a three-year period for an industry that currently generates slightly more than U.S.$6.5 billion in annual revenue. Every plant is expected to require some level of capital investment, with an average investment of U.S.$40 per ton of installed clinker capacity. In July 2016, the EPA amended the National Emission Standards for Hazardous Air Pollutants established for the Portland Cement Industry to assure that facilities can show compliance with hydrochloric acid emissions limitations.

In recent years, by means of a Section 114 information request under the Clean Air Act, the EPA imposed multi-million U.S. dollar penalties on several companies operating cement plants in the United States. Most of these penalties were for various violations of PSD permitting requirements, focused on emissions of sulfur dioxide and nitrogen oxides.

Prices

In the United States, cement prices vary within each region due to fluctuations in supply and demand. Prices are also subject to variations resulting from fluctuations in regional economies as well as the country as a whole.

According to the USGS, the average sales price of cement increased 5.8% from 2013 to 2014, 5.8% from 2014 to 2015 and 5.2% from 2015 to 2016. A further increase in prices for this product is expected in most states, as cement demand will most likely surpass supply in the next few years while capacity expansion remains subdued.

Mexico

Supply

The cement industry in Mexico evolved from being regionally spread out in the 1970s to being consolidated into a few companies today. The six companies that compete in the Mexican cement industry are: CEMEX, Holcim, Corporación Moctezuma, Cooperativa La Cruz Azul, Cementos Fortaleza and us. According to the CANACEM, cement production was 40.6 million tons in 2016. Due to the constant modernization of plants, the Mexican cement industry is one of the most competitive in terms of cost. EBITDA margins for cement in Mexico have ranged from 30% to 45% over the last couple of years. In Chihuahua there are two major cement players: Holcim and us. We believe we are one of the leaders in all of the markets where we participate, including cement, mortar, ready-mix concrete, aggregates, concrete-blocks and gypsum.

85

The following chart shows total cement production in Mexico, in millions of tons, for the years indicated:

35.1 34.5 35.4 36.2 34.6 36.6 39.6 40.6

2009 2010 2011 2012 2013 2014 2015 2016

____________________________ Source: CANACEM.

The following chart shows Mexican cement exports, in millions of tons, for the years indicated:

1.0 0.8 1.4

2.1 2.2 1.8

2.2 2.3

2009 2010 2011 2012 2013 2014 2015 2016

__________________ Source: BMI Research.

In Mexico, most cement sales (approximately 80% on a national basis) are to retail customers who use it for housing and other basic construction projects. This in turn requires an efficient network of distributors targeting constructors and self-builders. The remaining amount is sold through ready-mix concrete producers, manufacturers of concrete products and construction contractors. Cement sold through distributors is mixed by the final consumer with aggregates and water on-site to make concrete. Ready-mix concrete producers pre-mix concrete ingredients at their ready-mix concrete plants and deliver it to local construction sites through mixer trucks, which transport and pour the concrete directly at the job site. Unlike more developed economies, where cement sales are concentrated in bulk commercial and industrial orders, bagged sales in Mexico represent a large percentage of demand in the private sector. Retail consumers purchasing bags of cement for their homes and other basic construction jobs represent an important component of the Mexican retail sector.

The ready-mix concrete industry in Mexico is in development. In the state of Chihuahua, 31% of the volume of cement sold in 2016 was sold as ready-mix concrete. During 2016, ready-mix concrete consumption in the state of Chihuahua was approximately 1,131,000 cubic meters, with the highest concentration located in the cities of Chihuahua and Juarez.

Capacity

Mexico’s cement production capacity is currently 61 million tons and its clinker production capacity is 42 million tons with an implied utilization rate of approximately 62%. We are the only company with an installed cement capacity in the state of Chihuahua, with 2.3 million tons as of March 31, 2017.

86

Demand

According to the CANACEM, total cement consumption in Mexico in 2016 was 40 million tons, mainly driven by Mexico’s significant housing demand due to a considerable housing deficit, necessary infrastructure improvements and growing population. Residential construction accounts for 28.3% of cement demand, with over 33% of the cement sold in the country being sold in individual bags, whereas the non-residential and public infrastructure construction sectors account for 60.6%, about half of which comes from government infrastructure projects.

The following chart shows cement consumption in Mexico, in millions of tons, for the years indicated:

34.7 34.1 34.9 35.5 33.7 35.9 39.1 40.1

2009 2010 2011 2012 2013 2014 2015 2016

______ Source: CANACEM.

Regulation

Cement operations in Mexico are subject to federal, state and local environmental authorities, laws, regulations, Normas Oficiales Mexicanas (Mexican Official Standards) and other technical standards, as well as international treaties and conventions on human rights, indigenous people and social impact assessment. The allocation of jurisdiction over environmental matters among governmental authorities at the federal, state and municipal levels is based on a “residual formula” provided in the Mexican Political Constitution which establishes that those matters which are not expressly reserved for the Mexican federal government fall under the jurisdiction of the state governments, and those not expressly reserved for the state government fall under the jurisdiction of the municipalities. Some specific environmental matters such as the handling of non-hazardous waste fall under state or municipal jurisdiction.

The primary federal environmental laws in Mexico applicable to the cement business are the Ley General del Equilibrio Ecológico y la Protección al Ambiente (General Law on Ecological Balance and Environmental Protection), the Ley General para la Prevención y Gestión Integral de los Residuos (General Law for the Prevention and Comprehensive Management of Wastes), the Ley Federal de Responsabilidad Ambiental (Federal Law of Environmental Liability) and the regulations enacted thereunder. Pursuant to these laws, various rules and regulations have been adopted concerning environmental impact and risk matters, noise emissions, emissions into the atmosphere, water extraction and wastewater discharge and waste management, among others.

Under the Ley General de Cambio Climático (General Law on Climate Change), and the regulations thereunder, we are subject to various environmental obligations, which may impact our financial performance. In addition, Mexico recently enacted legislation that allows class action lawsuits related to environmental liabilities. Under such legislation, we may be subject to class action lawsuits that may impact our financial condition, or that may otherwise have a material adverse effect on us or our properties.

On June 7, 2013, the Federal Law of Environmental Liability was passed in Mexico, which went into effect on July 7, 2013. The federal law of environmental liability regulates the environmental liability in connection with actions or omissions that cause or lead to environmental damages, as well as the indemnification and compensation remedies available in Mexican federal courts, the alternative dispute resolution procedures and other administrative procedures in connection with environmental criminal acts. We cannot predict the extent of the impact that the adoption of additional and more stringent environmental laws and regulations could have on our financial performance.

The Programa Gases de Efecto Invernadero (Mexico Greenhouse Gas Program), under the direction of the Secretaría de Medio Ambiente y Recursos Naturales (Mexican Ministry of the Environment and Natural Resources or,

87

“SEMARNAT”), requires cement companies, among other industries, to prepare a greenhouse gas inventory that represents a true and fair account of their emissions, which can be used to build an effective strategy to manage and reduce emissions.

Prices

The Mexican market saw price improvements in the beginning of 2015 as residential construction improved. According to the INEGI, the average sales price of cement for 2014, 2015 and 2016 increased by 8.6%, 11.4% and 19.0% respectively, and the average sales prices for ready-mix concrete increased 3.2%, 9.1% and 7.0%, respectively. Prices in the industry vary from region to region, influenced by supply and demand, economic situation, the location of plants, access to raw materials and the flexibility that plants have in terms of fuel consumption.

88

OUR BUSINESS

Business Overview

We believe we are one of the leading building materials companies in the corridor that stretches from northern Mexico to the United States border with Canada, encompassing 14 contiguous states in the United States and the state of Chihuahua in Mexico. We produce, market and distribute cement, ready-mix concrete, aggregates and other cement-related products. We have been in the cement business for 75 years, and we have a proven track record of growing organically and through selective acquisitions in the United States. According to the PCA, the USGS and our estimates, we believe we are a leading producer and supplier of cement in the markets in which we operate, and we are one of the largest producers and suppliers of cement in Colorado, New Mexico, North Dakota, South Dakota, and west Texas. These states, in descending order, account for 80% of our sales volume in the United States in 2016. The United States market represented approximately 73.6% of our sales in 2016. We are organized under the laws of Mexico as a publicly listed variable capital stock corporation, or sociedad anónima bursátil de capital variable, with our principal executive offices in the city of Chihuahua. Our shares are publicly traded in Mexico and listed on the Mexican Stock Exchange under the ticker symbol “GCC*”.

In the United States, we operate principally in 14 contiguous states, from Texas and New Mexico in the south to Montana, North Dakota and Minnesota in the north. We own four cement plants with an annual production capacity of approximately 2.8 million tons in Pueblo, Colorado, Tijeras, New Mexico, Rapid City, South Dakota and Odessa, Texas. We also have 22 cement distribution terminals and transferring stations in Colorado, South Dakota, New Mexico, Iowa, Minnesota, Montana, Nebraska, North Dakota, Wyoming and west Texas. We have 90 ready-mix concrete plants in the United States, a fleet of 498 ready-mix concrete mixer trucks, 184 haul trucks, six aggregates plants, four asphalt plants and approximately 1,900 railcars, primarily on renewable five-year term leases, for the transportation of cement and coal. We also have an underground coal mine in Durango, Colorado, with an estimated annual production capacity of 866,000 tons, which supplies coal to our plants in Mexico, Tijeras, New Mexico and Pueblo, Colorado. According to the PCA, the USGS and our estimates, we believe we are a leading producer and supplier of cement in many of the markets in which we operate, including: Colorado, New Mexico, North Dakota, South Dakota, west Texas and Wyoming. Additionally, according to the NRMCA and our estimates, we supply a significant percentage of the total consumption of ready-mix concrete in certain regional markets in the states of South Dakota, Arkansas, Oklahoma and Iowa, making us one of the leading producers of ready-mix concrete in the United States. The markets in which we operate in the United States are located in areas geographically positioned away from most of the markets where there is excess cement production capacity. We believe that these markets also offer healthy and diversified economies with low unemployment rates, which could present an opportunity for growth in the construction industry. Given cement’s low value-to-weight ratio, importing excess cement from such regions to the markets in which we operate results in high transportation costs. We believe that our geographic location in the United States represents a competitive advantage for us because the country’s regions where we participate possess healthy and diversified economies, such as those of Colorado and Texas, and a geographic protection from imports.

We expect to further grow our presence in our core markets in the United States through the expansion of our cement plant in Rapid City, South Dakota, as well as through the 2016 Asset Acquisition. Together, these initiatives are expected to increase our maximum cement production capacity to approximately 5.5 million tons by the first half of 2018.

Our top ten customers in the United States represented 19.2% of our net sales in the United States for the year ended December 31, 2016. Our largest customer in the United States accounts for approximately 2.5% of net sales in the United States division for the year ended December 31, 2016. Our main customers in the United States are concrete companies, concrete block producers and construction contractors in the road paving service sector.

89

The following map shows our operations in the United States, including the states in which we operate:

In Mexico, we operate in the state of Chihuahua, where we own three cement plants with a total annual production capacity of approximately 2.3 million tons in the cities of Chihuahua and Juarez and in the town of Samalayuca. We have two regional bases to cover the entire state of Chihuahua and transport cement, specialty products and gypsum to other regions in Mexico and in the southern United States. Our cement transportation fleet consists of 131 trucks, 36 platforms, 36 dump trucks, 101 bulk trucks and three low-boys. In order to serve our ready-mix customers, we own a ready-mix concrete transportation fleet, which consists of 237 mixer trucks and 46 pumps. Additionally, we own 40 ready-mix concrete plants in Mexico, of which 36 are stationary and four are mobile, which we believe allows us to supply any location within the state of Chihuahua and to provide ready-mix concrete supply to projects with high consumption volumes. We have also established alliances with two local ready-mix concrete producers whereby we provide them with cement and then sell and distribute the ready-mix concrete they produce. We believe that these alliances allow us to increase our geographical presence and reduce production costs by acquiring manufactured ready-mix concrete and distributing it to our customers. We also have six concrete blocks plants, five aggregates plants, one gypsum plant and two prefabricated products plants. In the state of Chihuahua, according to our estimates, we are the leader in each of the markets in which we participate (cement, mortar, ready-mix concrete, aggregates, concrete blocks, prefabricated products and gypsum) in terms of sales volume.

Our top ten customers in Mexico represented 24.6% of our net sales in Mexico for the year ended December 31, 2016. Our largest customer in Mexico accounts for approximately 7.0% of net sales in Mexico for the year ended December 31, 2016. Our main customers in Mexico are home improvement stores, construction companies, concrete products producers, the Chihuahua state government and municipalities and mining companies.

90

The following map shows our operations in the state of Chihuahua:

We sell a substantial majority of our products under the various brands that we own. In Mexico, our brands include “GCC,” “Cemento Chihuahua,” “Yeso Chuvíscar,” “Mortero Chuvíscar,” “Megablock” and “Construcentro.” In the United States, our brands include “GCC,” “Dacotah Cement,” “GCC Dacotah,” and “GCC Rio Grande.” We believe that many of our customers are loyal to our brand names and quality.

For the year ended December 31, 2016, we had net sales of Ps.13,996.8 million (U.S.$675.2 million), of which 73.6% was generated by our U.S. operations and 26.4% by our Mexican operations. Our EBITDA for the same period was Ps.3,525.6 million (U.S.$170.1 million), of which 67.2% was generated by our U.S. operations and 32.8% by our Mexican operations. During this period, we had sales volumes of 3.5 million tons of cement and 2.5 million cubic meters of ready-mix concrete, resulting in net income of Ps.1,284.2 million (U.S.$61.9 million) and positioning us as the cement and ready-mix concrete producer with the highest level of participation in the local markets.

For the three months ended March 31, 2017, we had net sales of Ps.3,364.5 million (U.S.$178.9 million), of which 71.7% was generated by our U.S. operations and 28.3% was generated by our Mexican operations. Our EBITDA for the same period was Ps.661.3 million (U.S.$35.2 million), of which 48.9% was generated by our U.S. operations and 51.1% by our Mexican operations. For a reconciliation of EBITDA to consolidated net income (loss) under IFRS, see “Summary Consolidated Financial Information.”

As of March 31, 2017, we had 3,074 employees, including our executives, sales force, and administrative, technical and operations personnel.

91

The following chart indicates the geographic breakdown of our net sales for the periods indicated in millions of U.S. dollars and as a percentage of net sales:

The following chart indicates the geographic breakdown of our EBITDA for the periods indicated in millions of U.S. dollars and as a percentage of total EBITDA:

The following chart shows our net sales breakdown by product in billions of Mexican pesos and as a percentage of net sales for the periods indicated:

92

*Others principally includes aggregates, concrete blocks, prefabricated products, developed land, coal and other materials for construction.

The following chart shows our export sales from Mexico to the United States, in thousands of U.S. dollars, for the years indicated:

Three months Ended March 31, Year Ended December 31,

2017 2016 2015 2014 Export sales ................................................................ 6,792 22,423 25,839 25,562 Percent of total sales .................................................. 4.1% 3.0% 3.4% 3.4%

Our History

We have been in the cement business for 75 years. Our history demonstrates our focus on expansion within Mexico and the United States, as well as on vertical integration and product innovation.

Grupo Cementos de Chihuahua, S.A.B. de C.V. has its origins in 1941 when Cementos de Chihuahua was incorporated. With its plant in the city of Chihuahua, Cementos de Chihuahua had an annual cement production capacity of 60,000 tons. In 1952 and 1967, Cementos de Chihuahua made two expansions to its production capacity.

In 1972, Cementos de Chihuahua began operating a cement plant in the city of Juarez, Chihuahua, which led the company to an annual total production capacity of 420,000 tons.

In 1974, two-stage pre-heating and dust gathering systems for kilns 2 and 3 of the Chihuahua cement plant were installed, increasing our annual production capacity to 560,000 tons.

In 1982, Cementos de Chihuahua added a new cement production line at the Chihuahua cement plant with the most advanced technology available. As a result, annual production capacity increased to 1.1 million tons.

In 1991, we were incorporated as a holding company and, in 1992, we sold 25.9% of our equity publicly and listed on the Mexican Stock Exchange to finance the construction of our cement plant in the town of Samalayuca, Chihuahua, located 35 kilometers south of the city of Juarez.

In 1994, we acquired a cement plant with an annual production capacity of 450,000 tons in Tijeras, New Mexico, located 20 miles east of Albuquerque, New Mexico. Later that year, we acquired two cement distribution terminals, one in Albuquerque, New Mexico and the other in El Paso, Texas.

In 1995, we began operations in the Samalayuca cement plant, which had an annual production capacity of 900,000 tons.

On March 16, 2001, we acquired the cement assets and working capital of Dacotah Cement. This cement plant is located in Rapid City, South Dakota, and had an annual production capacity of approximately 1 million tons. With this acquisition, we increased our installed capacity of cement production, reaching an annual production capacity of 3.3 million tons. In 2004, we increased our capacity in the Rapid City, South Dakota cement plant by approximately 10%, reaching an annual cement production capacity of 3.4 million tons.

In March 2005, we acquired the assets of Gallup Transportation and Transloading Company, LLC and National King Coal, LLC, which included a coal mine located in Durango, Colorado and a loadout facility lease. The coal mine had already been supplying the energy requirements of our cement plants in Tijeras, New Mexico and Mexico. National King Coal, LLC changed its name to GCC Energy, LLC (“GCC Energy”) in October 2007.

In September 2005, we acquired a 47.02% stake in SOBOCE, the largest cement company in Bolivia.

93

In January 2006, we acquired four leading ready-mix concrete companies in eastern South Dakota and western Minnesota. With these acquisitions, we believe we strengthened our leadership position in the ready-mix concrete markets of South Dakota and surrounding regions in terms of total consumption. The acquired companies, Consolidated Ready Mix, Inc., Henrich and Sons, Inc., Huron Steel Structures, Inc., and B&B Concrete, Inc. are now operating as Consolidated Ready Mix, Inc.

In May 2006, we acquired 100% of the stock of The Hardesty Company Inc., the largest producer of ready-mix concrete in northeastern Oklahoma and northwestern Arkansas with a total of 30 ready-mix concrete plants, and Alliance Transportation Inc. (“Alliance Transportation”), which provides aggregates hauling for The Hardesty Company Inc. and other freight services to third parties (together better known as “MidCo”). The MidCo acquisition represented an expansion of our U.S. presence and provided us with a foothold in a market then characterized by strong growth.

In January 2008, we acquired 100% of the assets of Alliance Concrete Inc. (“Alliance Concrete”), which included 23 ready-mix concrete plants. Based in northwest Iowa, Alliance Concrete was the largest producer of ready-mix concrete in that region and provided us with access to an established market in a region close to our plants and distribution terminals, thereby furthering our vertical integration. The acquisition of Alliance Concrete represented an important growth platform in the regions of South Dakota, Minnesota, Iowa and Nebraska.

In January and February of 2008, we acquired four cement distribution terminals in New Mexico, Colorado and North Dakota. In 2008, we also completed the modernization and expansion of our distribution terminals in Denver, Colorado and Brookings, South Dakota to improve our customer service in these markets.

In March 2008, we acquired 100% of the assets of The Bosshart Company, Inc., which included eight ready-mix concrete plants. Bosshart was headquartered in Minnesota and was one of the leading providers of ready-mix concrete in southwest Minnesota and also participated in northwest Iowa along with Alliance Concrete. The acquisition strengthened our leadership position in the markets in which we already participated. We believe the acquisition also furthered our vertical integration, and improved the efficiency of our operations and customer service in these markets.

In April 2008, to meet the growing demand for cement in the state of Colorado and the Rocky Mountain region in the United States, we completed the construction of a new cement plant in Pueblo, Colorado. This cement plant features state-of-the-art cement production technology and had an annual production capacity of 1.1 million tons and a plant permit at that time for 1.0 million tons, which brought our total annual production capacity to 4.4 million tons.

In 2009, we completed the construction of new plants for limestone aggregates, prefabricated concrete panels and dry blends in Samalayuca, Chihuahua. In the same year, we also completed the modernization of our Chihuahua cement plant, strengthening our long-term cement grinding capacity and reducing production costs by increasing operating efficiency.

In the first half of 2009, we began operating a plant in Samalayuca, Chihuahua, where we produce different construction materials featuring cellular concrete technology that provide thermal insulation, used in a broad range of applications, including geotechnical fills, insulated roof deck construction, floor fills and leveling. This new plant enhances our prefabricated products operations, which include the manufacture of beams and slabs for prefabricated ceilings without formwork, alveolar slabs and beams used for bridges and the construction of buildings.

In the first half of 2009, we began operating a dry mix plant located in Samalayuca, Chihuahua. This plant has an annual capacity of 79,000 tons and allows us to meet the demands of customers for sophisticated blends for a variety of applications.

During 2010 and 2011, we expanded our ready-mix concrete production capacity and opened seven new cement distribution terminals in Iowa, Kansas, Minnesota, New Mexico and Oklahoma, which, coupled with our mobile ready-mix concrete plants, allows us to reach customers in neighboring markets.

In August 2011, we sold all of our shares in SOBOCE to CCS. The proceeds from the transaction were mainly used to reduce our outstanding debt, as part of our strategy to improve our financial profile and focus on our core business in Mexico and the United States.

94

In 2012, we installed distribution terminals in Amarillo, Texas and Bismarck, North Dakota. These new distribution terminals and our portable ready-mix concrete plants allow us to reach a larger range of clients and to increase our direct shipments to niche markets, including the oil drilling market in North Dakota and new mining projects in Chihuahua. Also in 2012, we expanded our production of ready-mix concrete and received a modification of the Pueblo, Colorado plant permit, increasing its annual cement production capacity in two phases, with an increase of approximately 1.07 million tons during the first phase and up to 1.18 million tons in the second phase. The first phase of this project was completed in 2012, bringing our annual cement production capacity to 4.5 million tons.

In 2013, we added two new mobile distribution terminals in Fruita, Colorado and Glendive, Montana. We also completed the renovation of our cement distribution terminal in Minot, North Dakota, which increased its distribution capacity.

In 2014, we opened a new portable distribution terminal in Sidney, Nebraska, and converted the distribution terminal in Lakeville, Minnesota from a temporary to a permanent distribution terminal.

In 2015, we began operating a new aggregates plant with a production capacity of 1.8 million tons annually in the city of Chihuahua. Also in 2015, we acquired a concrete plant in Wahpeton, North Dakota, strengthening our presence in the northern central part of the United States.

In 2015, our Board approved the expansion of our Rapid City, South Dakota cement plant, increasing cement production by 440.0 thousand tons per year. This expansion, which is still underway, represents a total investment of U.S.$90.0 million and is expected to be completed in the first quarter of 2018.

On August 23, 2016 we entered into an agreement to acquire certain assets from affiliates of CEMEX in the United States. The consummation of the acquisition pursuant to this agreement was subject to certain conditions, including approval by the U.S. Federal Trade Commission and obtaining the required financing. On September 12, 2016, our shareholders approved the transaction, and on November 18, 2016, following fulfillment of conditions precedent, we consummated the acquisition and published a press release to inform the public. The acquisition, which involved a purchase price of U.S.$306.0 million, included a cement plant, in Odessa, Texas with a capacity of 0.5 million tons per year; two cement distribution terminals in Amarillo and El Paso, Texas; the concrete, aggregates and building materials businesses in El Paso, Texas and Las Cruces, New Mexico (which includes ready-mix concrete plants, aggregates quarries, asphalt plants and centers for construction materials); approximately U.S.$10.0 million in inventories; and distribution terminals in Amarillo, Texas (the BNSF Railway) and El Paso, Texas (the Union Pacific Railroad). The acquisition is intended to strengthen our presence in key regional markets, enhance our ability to serve the industry efficiently, extend our presence in the west Texas markets (including the Permian Basin), help us to become the largest producer in our key markets and support our long-term growth strategy in the United States. We financed the acquisition in part with funds from a new U.S.$253.5 million unsecured credit facility. Simultaneously with the procurement of this acquisition financing, we refinanced our existing term loan facility by replacing it with a U.S.$184.9 million secured term loan facility, which we refer to as the Term Loan Facility. Both the unsecured credit facility and the Term Loan Facility include affirmative and negative covenants and events of default. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Indebtedness.”

On August 27, 2016, we also published a Statement on Corporate Restructuring informing the public of our corporate restructuring, which consists of a merger of GCC, as the surviving entity, and two of the companies that directly or indirectly controlled GCC, CAMSA and Imin, as the merged entities (the “Merger”). On September 12, 2016, our shareholders approved the Merger, and on that date, GCC, as the surviving entity, and CAMSA and Imin, as the merged entities, entered into a merger agreement. On September 28, 2016, the Merger became effective. This restructuring is intended to simplify ownership and control of GCC, making it more transparent to investors. As a result of the Merger, and as of the date of this offering memorandum, CEMEX owns a direct stake in GCC equal to 23.0% of its share capital and a minority stake in CAMCEM, GCC’s controlling shareholder.

We are a company of indefinite duration, and our principal executive offices are located at Avenida Vicente Suárez y Calle Sexta S/N, Colonia Nombre de Dios, C.P. 31110, Chihuahua, Chihuahua, México, and our telephone number is +52 (614) 442-3100. Our commercial registry number is 10313*13.

95

Corporate Structure

The following table shows our subsidiaries and our shareholder interest:

Subsidiaries

Percent Interest Owned by GCC

Percentage Interest Owned by GCC

as of March 31, 2017 and December 31, 2016

as of December 31, 2015 and 2014

Direct equity interest in Mexican subsidiaries:

Cementos de Chihuahua, S.A. de C.V. 99.999 99.999 GCC Ingeniería y Proyectos, S.A. de C.V. 99.999 99.999 GCC Cemento, S.A. de C.V. 99.999 99.999 GCC Corporativo, S.A. de C.V. 99.990 99.990 Indirect equity interest in Mexican subsidiaries: Materiales Industriales de Chihuahua, S.A. de C.V. 99.964 99.964 GCC Concreto, S.A. de C.V. 99.998 99.998 Minera Rarámuri, S.A. 99.990 99.990 Construcentro de Chihuahua, S.A. de C.V. 99.990 99.990 GCC Edificaciones y Servicios, S.A. de C.V. 99.990 99.990 GCC Inversiones y Comercialización, S.A. de C.V. 99.319 99.319 GCC Transporte, S.A. de C.V. 99.950 99.950 GCC Comercial, S.A. de C.V. 99.990 99.990 GCC Proyectos y Administración, S.A. de C.V. - 99.749 Urbanizaciones Contemporáneas, S.A. de C.V. 99.990 99.990 GCC Latinoamérica, S.A. de C.V. 99.990 99.990 Indirect equity interest in non-Mexican subsidiaries (located primarily in the United States):

GCC of America, Inc. 99.999 99.999 GCC Rio Grande, Inc. 99.999 99.999 GCC Dacotah, Inc. 99.999 99.999 GCC Ready Mix, LLC. 99.999 99.999 Mid Continent Concrete Company, Inc. 99.999 99.999 Alliance Transportation, Inc. 99.999 99.999 GCC Holding Company, LLC. 99.999 99.999 American Investments Company, LLC. 99.999 99.999 GCC Energy, LLC. 99.999 99.999 Consolidated Ready Mix, Inc. 99.999 99.999 Materiales (Hungary) Investment Group Financing, Ltd. 99.999 99.999 GCC Alliance Concrete, Inc. 99.999 99.999 Colorado Energy Recyclers, LLC. 99.999 99.999 GCC Technology and Processes, S.A. 99.999 99.999 GCC Investment, Ltd. 99.999 99.999 GCC Premium Transloaders, LLC. 99.999 99.999 GCC Rio Grande Holding, LLC. 99.999 99.999 Cross Border Logistics, LLC. 49.999 49.999 Sunset Properties, LLC. 99.999 99.999 NM Energy, LLC. 99.999 99.999 GCC Permian, LLC. 99.999 - GCC Sun City Materials, LLC. 99.999 -

Except with respect to Cross Border Logistics, LLC, we exercise control over the entities listed in the table above, and together we operate as a business group. As otherwise disclosed in this offering memorandum, we are not part of a business group with any of our shareholders.

96

Our Competitive Strengths

We believe our main competitive strengths include the following:

Leading Position in Markets with Attractive Fundamentals. We have a contiguous presence in markets that we believe present attractive fundamentals, including favorable growth prospects and high barriers to new entrants. According to information from the PCA, we believe we are the leading supplier of cement in the states of South Dakota and New Mexico, and are the second leading supplier of cement in the states of Colorado, North Dakota and Wyoming. Additionally, according to information from the NRMCA, we supply a significant percentage of the total consumption of ready-mix concrete in certain regional markets in the states of South Dakota, Iowa, Oklahoma and Arkansas. For our Mexican operations, we believe we are one of the leading producers of cement and ready-mix concrete in the state of Chihuahua.

In the United States, we believe we are well positioned to benefit from the ongoing cyclical recovery, as cement consumption in 2016, which totaled 92.0 million tons, remained 20.7% below average annual cement consumption from 2006 to 2007. The PCA expects that overall cement consumption in Colorado, Iowa, Minnesota, New Mexico, North Dakota, South Dakota and Wyoming will increase by over 11.7% by 2020 as compared to 2007. According to the PCA, cement consumption in Colorado, South Dakota, New Mexico, North Dakota, Minnesota, Iowa and Wyoming is expected to reach 9.0 million tons in 2020; the PCA also expects total cement consumption in the United States to reach 106.6 million tons in 2020. Compounded annual growth rates for the states of North Dakota, South Dakota, Minnesota and Iowa as estimated by the PCA, are expected to be 7.3%, 1.1%, 1.1% and 1.0%, respectively, for the same period. In Mexico, the state of Chihuahua’s strong economic ties to the United States not only allow it to benefit from the United States’ economic recovery but has also enabled Chihuahua to be a beneficiary of U.S. foreign direct investments. We believe that these favorable macroeconomic conditions will drive demand for our products and provide us with opportunities for growth in these markets.

Contiguous Geographic Presence Supported by Sophisticated Distribution Network. We are the only building materials company with a contiguous geographic presence from the state of Chihuahua in Mexico to Montana, North Dakota and Minnesota in the northern United States, which we believe provides us with operational flexibility and cost efficiency within the markets where we operate. This is also a key region because the states in which we operate have limited prospects for new plants, do not have maritime access and are protected from sea imports. We also emphasize growth in contiguous markets as part of our operations, which we believe allows us to further penetrate markets with which we are familiar. We have developed an extensive and sophisticated distribution network, which we operate using advanced logistics. Our distribution network includes 1,900 railcars (most of them on five-year renewable leases), which transport our products through 22 cement distribution terminals within the corridor established from northern Mexico to the United States border with Canada. A fleet of over 1,000 mixer and haul trucks transports cement and ready-mix concrete to customers in Mexico and the United States. In addition, no other competitor has cement production facilities in the state of Chihuahua, which we believe gives us a significant competitive advantage in terms of freight costs. Our contiguous geographic presence allows us to leverage this distribution network to reduce delivery times and therefore supply our customers on short notice. The ability to efficiently distribute inventory throughout this network minimizes disruptions to our customers in the event of a supply interruption elsewhere in the system. Because products from our U.S. and Mexican plants share the same technical specifications, we are able to readily source demand in a given U.S. market from various manufacturing facilities, including those located in the state of Chihuahua.

Vertically Integrated Operations with State of the Art Production Facilities. We have vertically integrated operations in Mexico and in some of the markets in which we operate in the United States, participating in almost every process of the cement and ready-mix concrete supply chain. We have seven cement production facilities in the United States and Mexico located near our raw materials production facilities, which increases our efficiency and decreases our production costs. Additionally, more than half of our ready-mix concrete operations are supplied by cement produced by us. A key component of our vertical integration is our coal mine in Durango, Colorado, which provides a significant source of fuel needed for our cement plants (except the Rapid City, South Dakota plant, for which we use a coal supplier in Wyoming, and the recently acquired Odessa, Texas plant, which operates with natural gas) and helps lower production costs and manage volatility in the price of our inputs. We also own most of the limestone and all of the clay quarries needed to supply our operations. We use cement produced at our cement plants to supply 63.0% of the cement required by our ready-mix concrete operations. In turn, delivery and shipment of these products benefits from our top of the line distribution terminals and transportation fleet. All of our cement plants use state-of-the-art dry process technology, with the

97

goal of maximizing operating results while complying with applicable environmental regulations. Throughout the years, we have continually invested in the modernization and expansion of our cement plants, a current example of which is the expansion of our Rapid City, South Dakota cement plant, with an expected total investment of U.S.$90.0 million from 2016 through 2018. We believe this will help us to continue the improvement of our world-class facilities and will allow us to increase our installed capacity, which will in turn further support the vertical integration of our supply chain.

Track Record of Growth and Resiliency. Since our formation in 1941, we have expanded broadly through organic growth as well as through targeted acquisitions, such as the acquisitions of the cement plant in Tijeras, New Mexico in 1994, the cement assets and working capital of Dacotah Cement in Rapid City, South Dakota in 2001 and, in November 2016, the 2016 Asset Acquisition, which included assets from affiliates of CEMEX in Odessa, Texas, El Paso, Texas and Las Cruces, New Mexico. We have sought to tailor our growth strategy to market conditions, which we believe has contributed to reaching growth of our revenues and EBITDA at compound annual growth rates of 18.3% and 31.5%, respectively, from 2014 to 2016, and an improvement of our EBITDA margin of 25.2% in 2016 as compared to 20.4% in 2014. This significant growth rate in revenues resulted from increases in price in Mexican peso terms and in volume in both the United States and Mexico during this period, as well as fluctuations in the exchange rate between the Mexican peso and the U.S. dollar. We have also been able to consistently generate positive EBITDA and EBITDA margins, even during periods of economic turmoil, including the recent global financial crisis that affected our operations in the United States and Mexico. We believe that our financial resiliency has been underpinned by a tailored product mix, customer loyalty, an extensive and sophisticated distribution network and our agile decision-making. During 2016, the annual sales volume of our cement sales exceeded our results prior to the 2008 global financial crisis.

Broad Product Portfolio and Tailored Services. We provide a wide array of products to our customers intended to better serve their needs. With 75 years in the industry, we have developed a broad portfolio of 59 brands of cement, ready-mix concrete and other products, including “GCC,” “Cemento Chihuahua,” “Dacotah Cement,” “GCC Dacotah,” “GCC Rio Grande,” “Yeso Chuvíscar,” “Mortero Chuvíscar,” “Megablock” and “Construcentro.” We also sell value-added specialty products to our customers, particularly for the mining industry, including Dinamix, Lanzamix and Fraguamax cement, and for infrastructure projects and to small contractors, including Mortermix, Expan 500, Expancem-K, Microsilex, Versabind and Tecnogrout to meet the construction specifications required by our customers. Through our products, we have built a strong reputation and brand equity with our customers, many of which we believe are loyal to our brand names and quality.

In the United States, we believe we are a first-rate supplier of cement and ready-mix concrete and offer our customers a complete service and delivery package designed to meet their specifications. In Mexico, we offer comprehensive bundles of products and services related to bulk cement and ready-mix concrete, including advanced technical support, installation and specialty products. We also offer comprehensive bundles in Mexico that include technical assistance related to material usage for our ready-mix concrete customers. We believe we provide excellent service, offer advanced technical assistance and have the capacity to meet client demands and offer quality products, which we believe allows us to capture value added in pricing in the markets in which we operate.

Experienced and Dedicated Management Team. Our senior management team has an average of 27 years of experience in the cement industry, as well as extensive technical, operational and financial expertise. We believe this experience and familiarity with our industry and operations are important assets that support us in implementing our business strategy, particularly in counter-cyclical economic environments. In addition, our management has substantial acquisition integration expertise, as demonstrated by the ability to successfully integrate three cement plants, one coal mine and several ready-mix operations and distribution terminals acquired in the United States since 1994.

Our Business Strategy

Our objective is to continue strengthening our leadership in the markets in which we operate by enhancing our value proposition to our customers, growing our business in a sustainable way, investing in our people and ultimately maximizing shareholder value by implementing our business strategy. This strategy is focused on increasing revenue and margins growth by leveraging our existing geographic footprint, vertically integrated operations, customer service, pricing strategy, product offering and the people that make the implementation of this strategy possible. The main components of our business strategy include the following:

98

Continue to Enhance Profitability through Cost Efficiency and a Pricing Strategy. We intend to maintain and improve our profitability by increasing our cost efficiency and tailoring our pricing strategy to each of the markets in which we operate. Because we are vertically integrated, we are able to obtain the materials needed for our operations, including fuel from our coal mine in Colorado, at competitive costs. Our contiguous network also allows us to efficiently distribute our inventory at lower costs. By continuing to rely on and grow our vertical and contiguous networks, we believe we will be able to maintain and improve our cost efficiency. We also seek to optimize pricing in the markets in which we operate in light of competitive conditions to maximize profitability. Prices in the industries in which we operate vary from region to region, influenced by factors such as supply and demand, economic conditions, transportation costs and availability, among other things. In the United States, we have been able to, and believe that we will continue to, increase the prices for most of our products because of the value our customers place on our product portfolio and distribution network as well as, in many cases, the ability of our customers to pass through price increases. In Mexico, we use a structured pricing strategy for our products based on the customer group, which takes into account the added value we provide to our customers, including comprehensive solutions, high quality products and timely delivery of our products. We also offer customized service packages tailored to our customers that include technical support for contractors, technical and regulatory filing support for government authorities and a distributor retail chain to reach the self-construction market, which provide greater profit margins. By providing integrated and innovative solutions, ensuring timely delivery of our products and building and maintaining strong relationships with our customers, we believe we will be able to achieve optimal pricing for our products that will ultimately drive profitable growth in the markets in which we operate.

Continue to Provide Outstanding Logistical and Technical Support Services to our Customers. We aim to continue strengthening the quality of our customer service by offering integrated and innovative solutions, including technical support, product solutions for specific projects and customized products and logistics according to the needs of our clients. We also develop strategic alliances through the “Construred” retailer network that serves customers in the self-construction segment in Mexico. In the United States, we aim to continue to enhance our extensive network of plants and distribution terminals, which allows us to provide continuous product supplies to our customers from geographically close inventories. We offer a full range of products, from cement to specialty and prefabricated products, which allows us to meet all our customers’ construction materials needs and offer sophisticated technical support when needed.

Broaden our Product Offerings Through Innovative Solutions with Higher Margins. We aim to broaden our range of product offerings by focusing on the development of new, value-added products and technologies. We are also focused on increasing our integrated offerings and solutions, developing specialty cement products and increasing our prefabricated products portfolio, which we believe offer opportunities for profitable growth. Specialty products are a strategic part of our product mix because they enhance our role in construction projects, reduce the seasonality associated with our cement business and generally have higher profit margins. We export special cements from Mexico to the United States with required properties for specific applications, such as high early strength cements for short-term loads. By broadening our product offering and by developing specialty products tailored to our customers’ needs, we believe we will be able to foster our profitable growth in the long term.

Foster the Sustainable Development of Our Operations. We are committed to the environmental sustainability of all stages in our operations. In light of increasingly strict environmental regulations in the United States and Mexico, we have and will continue to invest in adapting our state-of-the-art facilities to NESHAP requirements. We have embraced the principles of the World Business Council for Sustainable Development’s “Cement Sustainability Initiative,” of which we have been full members since February 2012. Pursuant to this initiative, we seek to continue to employ an environmental management system to assess and minimize the environmental impact of operations, among other things. We are focused on experimenting with and developing alternative fuel sources to reduce CO2 generation and further reduce our fuel expenses, positively impacting our carbon footprint and margins. For example, during 2016 we implemented an alternative energy plan for our Samalayuca cement plant, which resulted in a substitution of 41% of the plant’s use of fossil fuels in favor of alternative fuels. We also place a high priority on the health and safety of our employees, promoting wellness programs and providing various health benefits to our workers. Likewise, we have launched a Sustainable Construction Initiative, beginning with the state of Chihuahua in Mexico, to combat some of the main challenges connected to sustainable growth, such as: access to water, urban development, housing, transportation, energy and education. We approved six projects in 2016 as part of this initiative, and will continue to work alongside public and private institutions on specific projects to provide economically and environmentally viable solutions.

99

Continue Strengthening and Expanding our Operational Capacity and Geographic Footprint through Organic Growth and Strategic and Complementary Acquisitions. We intend to continue developing and expanding in the markets where we operate through organic growth and by maintaining our profitable operations. We believe this will allow us to continue positioning ourselves as a leader in the markets where we participate. Additionally, given the difficulty of developing “greenfield” projects, we regularly evaluate the possibility of acquiring existing cement plants. For this purpose we have developed a strategic prioritization process that assists us in evaluating potential targets. As part of this process, we first consider turnkey cement opportunities that are complementary to our current operations, particularly plants in the United States, and that can be easily “plugged in” to our existing distribution network. We also actively seek acquisition opportunities with high probabilities of success and strong business fundamentals, including return on investment, size and affordability. Finally, we consider other targets, including ready-mix concrete opportunities near our cement operations that we could vertically integrate, aggregate opportunities near our ready-mix concrete plants and standalone aggregates opportunities. With all of our acquisitions, we intend to continue to apply our experience in order to successfully integrate acquired businesses and to add beneficial synergies to the Company.

Develop our Human Capital and Invest in our Local Community. We strive to be recognized as a great place to work by all of our stakeholders, including employees, customers, suppliers and competitors in order to attract and retain the most qualified human capital available in the market. In this aspect, we try to promote the development of talent through the rotation and mobility of employees across our Company. This provides our employees with a broader view of the Company and enables them to forge professional relationships outside their immediate department. We also invest heavily in formal training through the GCC University online platform, “Harvard Manage Mentor” courses and institutional training programs for all employees and are moving to standardize human resources processes. Our goal is to provide our employees with the best tools available so that they and their teams can deliver superior results. As a result of our efforts, we have been recognized as one of the 100 best companies to work for in Mexico, and were awarded a Great Place to Work certification in 2015 and 2016. We also seek to invest in our local community through specific projects supported by our foundation and through the joint development of sustainable projects.

100

Our Products

Our products consist of cement and mortar, ready-mix concrete, aggregates and other products and services (including coal, concrete blocks, prefabricated products, transportation and developed land in Mexico). The following chart shows our product mix by net sales in billions of Mexican pesos for the periods indicated

*Others principally includes aggregates, concrete blocks, prefabricated products, developed land, coal and other materials for construction.

The following table shows our product mix by net sales for the periods indicated:

As of March 31, 2017

As of December 31, 2016 2015 2014 (in thousands of Mexican pesos) Business Line Sales % Sales % Sales % Sales % Cement and mortar 1,885,842 56% 7,685,320 55% 6,364,571 53% 5,280,561 53% Ready-mix concrete 977,795 29% 4,906,872 35% 4,063,436 34% 3,440,329 34% Concrete blocks 47,420 1% 201,423 1% 194,289 2% 157,535 2% Aggregates 122,155 4% 247,706 2% 207,320 2% 151,673 1% Others 331,307 10% 955,470 7% 1,154,162 9% 979,571 10% Total 3,364,519 100% 13,996,791 100% 11,983,778 100% 10,009,669 100% Cement and Mortar

Cement, generally known as Portland cement, is produced from clinker, which is created when raw materials such as iron ore, silica, clay and limestone are dried, ground and mixed into a fine powder. This powder is heated in revolving kilns at a temperature of 1,450°C (2,642°F) in order to trigger the chemical reactions that bind cement. There are two primary processes used to manufacture cement: the “dry process” and the “wet process.” These processes differ in the form in which the raw materials are fed into the kiln and the amount of energy consumed. In the dry process, the raw meal is fed into the kiln in the form of a dry powder, whereas in the wet process the raw meal is fed into the kiln in the form of slurry. We manufacture cement using the dry process, which is more fuel-efficient than the wet process because it does not require water and consumes less energy per manufactured ton. According to the PCA, the dry process is the most modern and common way to manufacture cement.

The dry process consists of five key steps, which are described below.

1. Extraction and crushing of raw materials. Limestone, clay, gypsum and other raw materials, including silica, magnetite, hematite and ignimbrite, are extracted from natural deposits and crushed to reduce their size. Our cement plants are located next to our deposits of these materials and we own most of the limestone and all of the clay quarries and lease some of the gypsum and shale quarries that supply our

101

operations. We purchase other raw materials from independent suppliers we consider to be reliable, and with some of which we have long-term agreements or are in the process of negotiating such agreements. Most of our suppliers only supply materials to us.

2. Homogenizing raw materials. The raw materials are fed through a mill, which dries and grinds them to the required degree of fineness. The resulting product, referred to as raw mix, is stored in a homogenizing silo in order to ensure the uniformity of the mix components and is available to continuously feed the plant kiln.

3. Calcination. In a process referred to as calcination, the raw mix is then heated in revolving kilns to 1,450°C (2,642°F), which leads to the synthesis of a new material with hydraulic properties known as clinker. On leaving the kiln, the clinker is air cooled rapidly down to 150°C (302°F) to stabilize the mineralogical property necessary for transport.

102

4. Milling. In the cement mills, automatic scales are used to apportion an amount of clinker and gypsum to be added to the clinker, the latter of which regulates the settling time of the cement.

5. Packaging and shipping. The different types of cement are then stored in separate silos to prevent mixing. From the silos, the cement is shipped to the client, either in bulk by truck or railroad or in bags of different capacities. In the United States, we maintain cement inventories at our plants and distribution terminals and tend to produce cement in our lower selling seasons to build our inventories for sales in peak months.

Our operations require significant amounts of energy and fuel, particularly in the cement production process which relies primarily on coal and electricity because our kilns must reach extreme temperatures to produce clinker, and, to a lesser extent, in connection with our distribution operations, which rely on the use of gasoline and diesel fuel to deliver our products. The availability of energy and related inputs from utilities could be volatile and could be affected by political, economic and regulatory conditions that are outside our control. See “Risk Factors—Risks Related to Our Company, Business and Operations—Higher energy and fuel costs may have a material adverse effect on our business, results of operations and financial condition.”

To mitigate our exposure to high energy and fuel costs and their volatility, we have implemented technical improvements in our cement plants, except for the recently acquired Odessa, Texas plan, that give us the option to use coal in all of our installed capacity for cement production, while retaining the ability to use other energy sources, like natural gas, for operations, such as plant start-up following a halt in production or as a back-up power source. Our cement plants can use natural gas for clinker production if natural gas pricing is more favorable, or if our coal supply is interrupted or its quality becomes an operational or environmental issue. We also have long-term relationships with suppliers of natural gas for our cement plants in Mexico and for our cement plants in Tijeras, New Mexico and Rapid City, South Dakota. We have increased the use of alternative fuels in our cement plants in Samalayuca, Juarez and Chihuahua, achieving a substitution rate for alternative fuels of approximately 40.6%, 38.8% and 12.4% in 2016, respectively. We have also used fuel derived from tires at our cement plant in Pueblo, Colorado, achieving a substitution rate of approximately 7% of the plant’s fuel consumption during 2016. In addition, we have been operating our Colorado coal mine since 2005, which supplies coal to our cement plants (except the Rapid City, South Dakota plant, for which we use a coal supplier in Wyoming, and the recently acquired Odessa, Texas plant, which operates with natural gas) and which we estimate has sufficient coal reserves to supply our cement plants and sales to third parties until approximately 2057, based on the existing rate of depletion. Our Tijeras, New Mexico, Pueblo, Colorado and Rapid City, South Dakota plants used an average of 98.0%, 90.8% and 93.2% coal, respectively, for the year ended December 31, 2016. Our Samalayuca, Juarez and Chihuahua plants used an average of 38.3%, 57.3% and 57.6% coal, respectively, for the year ended December 31, 2016. As the price of gas has recently been decreasing, we have begun to use more natural gas. See “Risk Factors—Risks Related to Our Company, Business and Operations—Higher energy and fuel costs may have a material adverse effect on our business, results of operations and financial condition.”

103

The following chart shows certain characteristics, including capacity in millions of tons and utilization as of December 31, 2016, of our seven cement plants:

______ (1) Includes increased capacity in Rapid City, South Dakota cement plant up to 0.4 million tons. (2) Utilization rate based on existing capacity. Ready-mix Concrete

According to the PCA, ready-mix concrete refers to concrete that is prepared for delivery from a central plant instead of being mixed on the job site. It is a combination of cement, fine and coarse aggregates, water and admixtures, or additives that control certain properties of the concrete such as plasticity, pumpability, freeze-thaw resistance, strength and setting time. Each batch of ready-mix concrete is tailor-made to fit a client’s specific needs by changing the proportion of water, aggregates and cement in the mix and is typically delivered in cylindrical mixer trucks. Ready-mix concrete is widely considered to be one of the most useful and versatile products in the building materials industry. According to Standard C94 of the American Society for Testing Materials, the discharge of ready-mix concrete must be completed within 90 minutes after preparation or before the drum of the mixer truck has turned 300 revolutions, whichever comes first, without compromising quality. Due to these constraints, the ready-mix concrete market tends to be highly localized.

Our ready-mix concrete operations have a more diverse customer base than cement, which decreases our exposure to our clients’ credit risk. Due to the weight and perishability of ready-mix concrete, the product must be delivered to the customer from local distribution centers. We deliver the product to our customers through our fleet of mixer trucks and mobile ready-mix concrete plants.

We own a total of 130 ready-mix concrete plants, of which 11 are mobile and 119 are stationary, which we believe allows us to supply different locations within the states of South Dakota, Arkansas, Oklahoma, Iowa, New Mexico, west Texas and the state of Chihuahua and to provide ready-mix concrete supply to projects with high consumption volumes. In the state of Chihuahua, we have also established alliances with two ready-mix concrete local producers whereby we provide them with cement and then sell and distribute ready-mix concrete they produce.

Aggregates

Aggregates are inert filler material, typically gravel and sand that are used with a cement medium to form concrete, mortar or asphalt. Aggregates are indispensable in the production of ready-mix concrete, accounting for between 60% and 75% of ready-mix concrete volume, as well as in the production of asphalt and mortar. Aggregates have various uses in the residential, non-residential and public infrastructure markets. They are extracted both by surface and

104

underground methods, primarily from the deposits of materials such as sand and gravel pits, rock quarries, granite and limestone.

Depending on the intended end use, aggregates have different characteristics, including chemical composition, calcium carbonate content, grading, graduation of different particle sizes and color. The numerous combinations of these characteristics are all very important in the transformation of the raw material into a finished product.

Crushed Stone Production. Rock quarries typically operate for 30 years or more and are developed in distinct benches or steps. A controlled explosion is normally used to release rocks from the working face. The rocks are then transported by truck or conveyor to a crusher to produce a range of sizes to match customer needs.

Sand and Gravel Production. Sand and gravel quarries are much shallower than rock quarries and are typically worked and restored in progressive phases. A conveyor delivers the raw material into the processing plant where it is washed to remove unwanted clay and to separate sand. It is also screened to sort the gravel into different sizes. Sand separated during processing is dried and stored.

Other

We also provide other products such as coal, concrete blocks, prefabricated products, transportation, asphalt and developed land in Mexico.

Coal

Our King II mine is an underground coal mine located 18 miles west of Durango, Colorado. Our Colorado coal mine has an estimated production capacity of 866,000 tons and supplies coal to our plants in Mexico, Tijeras, New Mexico and Pueblo, Colorado. We also sell coal to third parties, primarily in the cement and limestone industries. When compared to other coal sources for the cement and limestone industries, we believe our Colorado coal mine supplies coal with a desirable mix of British Thermal Units per pound with low levels of ash, sulfur and moisture.

Concrete Blocks

Concrete blocks are rectangular prefabricated concrete units with one or more vertical openings that are used in simple stone masonry or structural systems because they can be reinforced on both sides of their surface. We have the technology to produce four types of standard blocks for simple masonry and one type of blocks for structural systems. In addition, our plants manufacture three types of architectural blocks and one type of thermal block, which have different colors and textures and are used for simple or structural masonry.

Prefabricated Products

Prefabricated products feature our proprietary technology for which we have patents in the United States and Mexico to achieve particular thermal insulation properties and eco-friendly characteristics that align with the requirements of INFONAVIT in Mexico and the LEED movement. We produce different construction materials featuring cellular concrete technology used in a broad range of applications, including geotechnical fills, insulated roof deck construction, floor fills and leveling. We also produce other prefabricated structural products, including beams and slabs for prefabricated ceilings, bridges and buildings.

105

Transportation

United States. We have 22 cement distribution terminals and transferring stations and a major component of our distribution network is our ability to travel longer distances at a reasonable cost through our access to a network of railroads. We have a railcar fleet composed of approximately 1,900 railcars (primarily on renewable five-year term leases) for the transportation of cement and coal.

To assist in our distribution, we own 184 haul trucks for the transportation of cement. Our Tijeras, New Mexico plant is not serviced by rail, and all distribution is made by third-party or customer trucks.

Mexico. Our subsidiary, GCC Transporte S.A. de C.V. (“GCC Transporte”), transports cement, aggregates, gypsum and specialty products to customers throughout the state of Chihuahua and certain other locations in Mexico. We have two regional bases to cover the entire state of Chihuahua and transport cement, specialty products and gypsum to other parts of Mexico and in the southern United States. Our distribution centers and cement plants are positioned close to our customers. Our fleet comprises 131 trucks, 36 platforms, 36 dump trucks, 101 bulk trucks and three low-boys. This subsidiary also has an agreement with GCC Concreto, S.A. de C.V to ship bulk cement from our cement plants to the ready-mix concrete plants located within the state of Chihuahua. Our customers may also pick up cement bags directly from any of our cement plants.

The shipment of aggregates to cities, such as Chihuahua and Juarez, depends on third-party transportation companies, with which we have stable long-term relationships. We also use GCC Transporte for shipping aggregates to other locations in Mexico, primarily to the city of Cuauhtemoc, Chihuahua.

In addition, GCC Transporte ships cement to our ready-mix facilities in Mexico and our customers in El Paso, Texas. GCC Transporte may also distribute other goods for third parties and invoices such customers directly when they contract transportation services not related with the sale of cement or aggregates.

As an additional distribution channel, we sell bagged cement through independent hardware stores located throughout the state of Chihuahua under the brands “Cemento Chihuahua,” “Mortero Chuvíscar,” “Dinamix,” “Mortermix,” “Fraguamax” and “Tecnogrout.” Some of these stores are affiliated with our retail program known as Construred, which is managed by our subsidiary Construcentro.

Construcentro also manages two distribution centers located in each of the cities of Chihuahua and Juarez. Within our Mexico division, 40% of the total distribution costs are paid directly to our own transportation company, while the remainder is paid to third parties, primarily other trucking companies.

Asphalt

Asphalt pavement is a combination of approximately 95% stone, sand, or gravel bound together by 5% asphalt cement, a product of crude oil. Asphalt cement is heated and mixed with aggregate at a mixing facility. The resulting asphalt pavement material is loaded into trucks for transport to the paving site. The trucks dump the pavement material into hoppers located at the front of paving machines. The asphalt is placed, then compacted using a pavement roller.

Developed Land

We have a real estate business in Mexico, in which we acquire and develop land for residential or commercial purposes, which we call urbanization. The land is then sold to residential or commercial contractors. Sometimes we sell land without prior urbanization.

Description of Our Raw Materials Sourcing and Reserves

We depend on a variety of raw materials and fuel that support our manufacturing activities, including coal, stone aggregates, cement raw materials (mainly limestone, clay, gypsum, silica and iron oxides).

106

We own or lease several mineral quarries that supply our operations with raw materials. These open-pit quarries consist of economically useful deposits of minerals or rock found near the land surface. Open-pit mines are typically enlarged until either the mineral resource is depleted or an increasing ratio of overburden to exploitable material makes further mining uneconomic, and they are then reclaimed to their natural state.

As of March 31, 2017, we operated six limestone quarries located at or near our cement plants. We own most of our limestone deposits except at the Pueblo, Colorado cement plant, for which we had a preferential renewable ten-year lease agreement with the state of Colorado, which was renewed in May 2016. These quarries provide 100% of the limestone needs for our cement plants and three of them are also used to produce aggregates in Mexico. Limestone represents approximately 84% of the raw materials in cement production. We own all of the limestone, clay and gypsum quarries for our Mexico operations and lease gypsum, iron, silica and shale quarries for our U.S. operations. Limestone, together with clay and gypsum, account for approximately 95% of the raw materials necessary for the production of cement.

We purchase other raw materials (including silica, iron oxides and aluminum) from independent suppliers we consider to be reliable, with some of which we have long-term agreements or are in the process of negotiating such agreements. We have entered into exclusivity contracts with most of our suppliers. For certain raw materials, such as iron oxides, we can use substitute materials sourced from other suppliers.

Our Colorado coal mine comprises two mines: the King I mine and the King II mine. The King I mine reserves were depleted in 2009. At the King II mine, exploration and characterization began in 1998 and production began in 2007. The King II mine reserve base currently contains approximately 27.6 million recoverable and probable tons (using a 70% recoverable factor) of high rank bituminous coal that is currently leased and contains 6.7 million tons of proven reserves and 20.9 million tons of probable reserves). The mine land is leased from the state of Colorado, the U.S. federal government and private owners under long-term leases, such leases being renewable by GCC Energy so long as there are coal reserves at the site.

Our coal mine is an underground mine that uses cameras and a pillars mining system. This mine has a consistent geology, good engineering conditions, no methane and limited water. The coal is mined using the continuous method, in which air ducts and transportation entries are developed underground by machines, leaving “pillars” to support the roof. We use a modified super section production process that is used for development mining while a continuous miner with four mobile roof supports is used to recover the pillars. GCC Energy also has a long-term lease for the supply of water for the mining operations. We estimate we have sufficient coal reserves to supply our cement plants and sales to third parties until approximately 2057, based on the existing rate of depletion.

We believe that our mining facilities are in general good condition, adequate for efficient and safe operations.

Electricity for our quarries and mines is supplied by local electricity providers in the United States and by the Comisión Federal de Electricidad (Federal Electricity Commission, or “CFE”) in Mexico.

The determination of reserves estimates is based only on raw materials meeting specific quality and quantity requirements. For cement raw materials (primarily limestone, clay and gypsum), these requirements are based on the chemical composition demanded by the production process. For materials sourced from third parties (such as bottom ash, iron and pozzolan), since chemical composition varies across production sites, we conduct geostatistical chemical tests to determine optimal blending proportions necessary for meeting production quality criteria and for maintaining a cost-effective extraction ratio of the reported reserves for such materials. For aggregates, quality requirements are based on hardness, shape, density, size and tests for alkali aggregate reaction (known as AAR) and alkali silica reaction (known as ASR). Coal reserve quality is based on ash content, heat value (in British Thermal Units or BTU), sulfur content, moisture, fixed carbon, mercury and chlorine content.

Reserves are considered as proven when all legal and environmental conditions have been met and permits have been granted. Proven reserves are then classified according to: (i) drilling, including whether there is sufficient space between drilled holes to obtain useful quantifying data and samples, and (ii) chemical analysis of drilling samples carried out in an internationally recognized laboratory, which is used to classify blocks according to their geochemical quality. The final result is a classification of reserves using maps and sectioning to determine volume, tonnage and quality of the raw material.

107

Our reserve estimates are prepared by our own engineers and geologists and are subject to annual review by our corporate staff jointly with our regional technical managers. In certain cases, we have also used the services of third-party geologists and/or engineers to validate our own estimates.

We validate our estimates primarily through core drilling or, when core drilling is not feasible, we rely on other methods such as reverse circulation (known as RC) or dust drilling chips. This process is complemented by a computerized survey to map the terrain, which creates digital terrain models that allow us to determine the floor and roof of the minable body by generating computerized design maps in plants and sections to calculate volumes by area. The given density of a raw material will allow us to determine the tonnage.

Our estimates distinguish between owned and leased reserves. For the latter, we enter into a lease contract, which includes only those permitted reserves which are proven or probable.

Our main equipment at our quarries includes wheel loaders, crawler dozers, excavators, crushers, drills, belt conveyers, trucks and other material handling equipment.

The table set forth below presents our total permitted proven and probable cement raw materials reserves and for aggregates (limestone and aggregate sand) by geographic segment and material type extracted or produced in our cement raw materials quarry operations.

Number of Property Surface

(hectares) Reserves (million tons) Years to Location Material quarries Owned Leased Proven Probable Total depletion**

United States Limestone 4 2,966 4,253 225 65 290 269 Silica 1 243 - 7 - 7 233 Gypsum* 1 - 226 1 - 1 50 Shale 1 - 28 3 - 3 14 Mexico Limestone 3 2,184 - 534 300 834 277 Clay 2 994 - 26 - 26 130 Silica 1 500 - 0.5 - 0.5 23 Kaolin 2 600 - 4 - 4 71 Gypsum 2 207 - 24 - 24 169 Iron ore* 1 150 N/D 0.1 - 0.1 6

* No data available for third parties reserves. This table does not show the reserves inventory. ** Calculated with information available.

United States

Cement

We control, either by ownership (41.1%) or long-term leases (58.9%), 100% of the limestone needs for our cement plants. We currently lease the gypsum and shale quarries for our U.S. operations while we purchase from local producers some of the raw materials required in the cement production through long-term supply agreements. Our Rapid City, South Dakota plant uses shale, a clay substitute, from a quarry that we lease. We believe that if we are unable to obtain the raw materials from our current suppliers, there is sufficient supply of raw materials from alternative suppliers. For our coal supply, see “—United States—Coal.”

Ready-Mix Concrete

We supply the cement required for our ready-mix operations in northern markets (South Dakota, Iowa and Minnesota) from our cement plants while the cement required for our ready-mix concrete operations in Southern markets (Oklahoma and Arkansas) is purchased from third parties through long-term contracts. All other required raw materials (aggregates, fly ash and additives) for our ready-mix concrete operations in the United States are supplied by third-party suppliers, with which we have stable long-term relationship or through long-term agreements. We believe that if we are

108

unable to obtain the raw materials from our current suppliers, there is sufficient supply of raw materials from alternative suppliers.

Coal

We source a significant portion of our fuel needs internally through our Colorado coal mine. Our coal mining operations are conducted through our wholly-owned subsidiary GCC Energy, which is located near Durango, Colorado. To mitigate our exposure to high energy and fuel costs and their volatility, we have implemented technical improvements in our cement plants, except the recently acquired Odessa, Texas plant, that give us the option to use coal in all of our installed capacity for cement production while retaining the ability to use other energy sources, like natural gas, for operations, such as plant start-up or as a back-up power source. Our cement plants can use natural gas for clinker production if natural gas pricing is more favorable, or if coal supply is interrupted or its quality becomes an issue. In addition, we have been operating our Colorado coal mine since 2005, which supplies coal to our cement plants (except the Rapid City, South Dakota plant, for which we have a supplier of coal in Wyoming and the recently acquired Odessa, Texas cement plant, which operates with natural gas). Our Tijeras, New Mexico, Pueblo, Colorado and Rapid City, South Dakota plants used an average of 98.0%, 90.8% and 93.2% coal, respectively, for the year ended December 31, 2016. Our Samalayuca, Juarez and Chihuahua plants, which use a combination of coal, natural gas and alternative fuels, used an average of 38.3%, 57.3% and 57.6% coal, respectively, for the year ended December 31, 2016.

Our Colorado coal mine supplies 100% of the coal needs for our Tijeras, New Mexico and Pueblo, Colorado cement plants and 100% of the coal needs for our Mexican plants. We also sell the coal mined from our Colorado coal mine to five other companies in the United States. We purchase our coal needs for our Rapid City, South Dakota cement plant from coal producers in Wyoming, pursuant to a long-term agreement set to expire on December 31, 2019, although there are a number of suppliers in the region that we believe can supply us with coal for this plant. Our cement plants use coal but can switch to other energy sources when they are less expensive. When non-coal sources are more economical, we acquire them from third-party suppliers. We have also implemented sophisticated green technology at many of our facilities and also are pursuing environmentally friendly alternatives, such as the use of green fuels and cement compounds with a lower carbon footprint. For example, we have increased the use of alternative fuels in our cement plants in Samalayuca, Juarez and Chihuahua, decreasing the fuel consumption at those plants by approximately 40.6%, 38.8% and 12.4% in 2016, respectively, and have used alternative fuels at our cement plant in Pueblo, Colorado, achieving a fuel substitution rate of approximately 7.0% during 2016.

See “Risk Factors—Risks Related to Our Company, Business and Operations—Higher energy and fuel costs may have a material adverse effect on our business, results of operations and financial condition.”

Mexico

Cement

We own quarries that provide our limestone, clay and gypsum needs for our cement plants. Some of the raw materials, such as hematite and ignimbrite, required in the cement production are purchased from third-party suppliers. For our coal supply, see “—United States—Coal.”

Ready-mix Concrete

We supply all of the cement required for our ready-mix concrete production in Mexico from our cement plants. We supply most of the aggregates needed for the ready-mix concrete production process from our reserves and the rest is purchased from third parties with which we have stable relationships and in some cases long-term contracts, mainly in rural markets where we have ready-mix concrete operations.

Aggregates

We own our limestone and aggregate sand reserves for our aggregates production. Approximately half of our sales are used for our ready-mix concrete and prefabricated products operations and the remainder is sold to third parties.

109

Sales and Marketing

Our sales and marketing efforts are focused on strengthening our leadership in service and quality by offering integral and innovative solutions to our clients and by creating and developing strategic alliances.

We have a sales and marketing force that is directly employed by us. In addition, we work through indirect sales channels, such as through our distribution network. We have built or acquired a vast network of plants and distribution terminals, which contribute to our objective of offering reliable service, efficiency and costs savings to our clients.

With our knowledge of customers and the market, we believe we are able to identify the expectations and needs of our clients. Our marketing strategy is dedicated to informing clients about technical aspects of their construction projects and the different and competitive materials we can offer to meet their project goals. We continuously evaluate our customers’ satisfaction and stay directly linked to associations and chambers related to the construction industry.

As part of our supply chain optimization analysis, we run monthly models that show consumption trends and forecast the expected volumes for the remainder of the applicable month. In addition, from these monthly models we can derive our production schedule for the plants and the transportation model to supply our distribution network. All of these models consider our production and storage capacity, as well as the cycle times for each location, the expected customer demand in each market and seasonality in order to ensure an adequate supply level while optimizing inventory levels at each location.

In the United States, we have been able to, and believe we will continue to, increase the prices for our products, because of the value our customers place on our product portfolio and distribution network as well as, in many cases, the ability of our customers to pass through price increases. In Mexico, we employ a structured pricing strategy for our products based on the customer group, which takes into account the added value that we provide to our customers, including comprehensive solutions, high quality products and timely delivery of our products. We also strive to provide cement of consistent quality through our extensive logistics system. Most of our customers have cement storage capacity of less than one day, and they are therefore dependent on their supplier to have same-day availability. Due to our geographical positioning in close proximity to the markets we serve, we are able to provide such same-day delivery in those markets. In addition, no other competitor has cement production facilities in the state of Chihuahua, which we believe gives us an important competitive advantage in freight costs.

Operations in the United States

Overview In the United States, we operate principally in 14 contiguous states, from Texas and New Mexico in the south to

Montana, North Dakota and Minnesota in the north. For the three months ended March 31, 2017 and the year ended December 31, 2016, 71.7% and 73.6%, respectively, of our net sales, and 49.2% and 66.5%, respectively, of our EBITDA, were generated in the United States. The following map shows our facilities in the United States and the charts that follow show our cement and ready-mix concrete sales volume in the United States for the periods indicated.

110

Our top ten customers in the United States represented 19.2% of our net sales in the United States for the year

ended December 31, 2016. Our largest customer in the United States accounts for approximately 2.5% of net sales in the United States division for the year ended December 31, 2016. Our main customers in the United States are concrete companies, concrete block producers and construction contractors in the road paving service sector.

111

The following chart reflects total cement consumption, in millions of tons, in the following markets in which we operate — Colorado, South Dakota, New Mexico, North Dakota, Minnesota, Iowa, and Wyoming:

_______________ Source: PCA.

The following chart shows our exposure to various U.S. sectors for the year ended December 31, 2016:

_______________ Source: PCA.

112

The following chart reflects expected cement consumption, in millions of tons, in Colorado, Minnesota, Iowa, North Dakota, New Mexico, South Dakota and Wyoming for the years indicated according to the PCA and USGS:

_______ Source: PCA.

Cement and Mortar

Sales

Sales of cement and mortar represented 56.5% of our net sales from our U.S. operations for the three months ended March 31, 2017. For the year ended December 31, 2016, sales of cement and mortar represented 55.7% of our net sales from our U.S. operations. For the three months ended March 31, 2017 and the year ended December 31, 2016 (in each case, before eliminations from consolidation), we sold 5.0% and 8.3%, respectively, of our total cement volume produced in the United States to our ready-mix concrete subsidiaries in the United States, with the remaining 95.0% and 91.7%, respectively, to third parties.

Plants and Equipment

We own four cement plants with an annual production capacity of 2.8 million tons in Tijeras, New Mexico, Rapid City, South Dakota, Pueblo, Colorado and Odessa, Texas. We are in the process of modernizing our Rapid City cement plant to increase its capacity up to 1,170,000 tons of cement per year, which will bring our total annual production capacity to 3.2 million tons of cement. We have also used fuel derived from tires at our cement plant in Pueblo, Colorado, achieving a substitution rate of approximately 7.0% during 2016.

Competition

According to the PCA, in the United States, approximately 75% of installed clinker manufacturing capacity is concentrated among nine cement groups. According to the USGS, the installed clinker production capacity in 2016 in the United States was 109 million tons and actual clinker production was 77.0 million tons, representing 70.6% of installed capacity.

The cement industry in the United States has recently been operating at only an average of approximately 77% capacity. See “Industry Overview.” Our capacity utilization at our Pueblo, Colorado, Tijeras, New Mexico, Rapid City, South Dakota and Odessa, Texas plants for the year ended December 31, 2016 was approximately 81%, 91%, 94% and 74%, respectively.

In the United States, we compete primarily with LafargeHolcim, CEMEX, Eagle Materials, Lehigh Cement Company and Ash Grove Cement. According to the PCA, the USGS and our estimates, we believe we are a leading producer and supplier of cement in the markets in which we operate, and we are one of the largest producers and suppliers

113

of cement in Colorado, South Dakota, New Mexico, west Texas and North Dakota. These states, in descending order, account for 80% of our sales volume in the United States in 2016.

Potential competitors in the U.S. cement market face high barriers to entry, including substantial capital expenditure requirements, the length of time to construct a new plant, high transportation costs, the difficulty of obtaining permits for new plants and strict environmental standards. Some key players in the cement market, including us, are vertically integrated, giving them and us a competitive advantage.

Customers

Our top ten cement customers in our United States division by sales represented 18.1% of our net sales in the United States for the year ended December 31, 2016. In the United States, bulk cement, which accounts for approximately 99.2% of the total cement we sell, is distributed directly to producers of concrete products, large construction companies and cement wholesale distributors.

Distribution

Bagged cement is sold primarily through independent wholesale distributors. In the United States, bulk cement is distributed directly to producers of concrete products, large construction companies and cement wholesale distributors through our system of 22 distribution terminals in Texas, New Mexico, Colorado, South Dakota, North Dakota, Wyoming, Minnesota, Iowa, Nebraska and Montana, primarily moving from our plants to these terminals by rail. See “—Our Products—Other—Transportation—United States.”

Ready-mix Concrete

Sales

Sales of ready-mix concrete represented 28.1% of our net sales from our U.S. operations for the three months ended March 31, 2017. For the year ended December 31, 2016, net sales of ready-mix concrete represented 36.1% of our net sales from our U.S. operations.

Plants and Equipment

We own 90 ready-mix concrete plants, which we believe allows us to strengthen our leadership position in the ready-mix concrete segment in our U.S. markets. We are a leading producer of ready-mix concrete in the markets where we participate, making us one of the leading producers of ready-mix concrete in the United States.

Competition

The versatility and durability of ready-mix concrete have made this material the most used in the construction industry in the United States. The ready-mix concrete industry in the United States consumes approximately 75% of the cement in the United States. There is a large number of participants in the U.S. ready-mix concrete industry. According to figures from the NRMCA, there are approximately 5,500 concrete plants and 55,000 mixing trucks in the United States.

As in Mexico, barriers to entry are low due to relatively low start-up costs and the ability to rely on mobile plants. Permits also are relatively easy to obtain and large cement producers can leverage their existing operations to easily enter the market.

Customers

Our top ten ready-mix concrete customers in our U.S. division by net sales represented 7.2% of our net sales in the United States for the year ended December 31, 2016. In the United States, we sell our ready-mix concrete primarily to large construction companies.

114

Distribution

In order to serve our U.S. market, we have a fleet of 498 ready-mix concrete mixer trucks. See “—Our Products—Other—Transportation—United States.”

Other

In the United States, we sell coal, aggregates and asphalt. In addition, we provide transportation services through our fleet of haul trucks.

Coal

Sales. Sales of coal represented 3.7% of our net sales from our U.S. operations for the three months ended March 31, 2017, with 31.8% and 23.9% of our sales volume (before eliminations from consolidation) sold to our Mexican and U.S. operations, respectively, and the remainder to third-parties. For the year ended December 31, 2016, sales of coal represented 4.5% of our net sales from our U.S. operations, with 14.7% and 28.1% of our sales volume (before eliminations from consolidation) sold to our Mexican and U.S. operations respectively, and the remainder to third-parties. All coal sales are denominated in U.S. dollars.

For the three months ended March 31, 2017 and the year ended December 31, 2016, we sold 126.5 and 557.8 thousand tons of coal, respectively, to our subsidiaries and third-parties. Sales to third parties are generally made pursuant to long-term supply agreements.

Plants and Equipment. Our King II underground mine is located 18 miles west of Durango, Colorado. With the current underground equipment, our Colorado coal mine has an estimated annual production and load out capacity of 866,000 million tons. Our equipment includes belt conveyors, underground conveyors, continuous miners, shuttle cars, roof bolters, crushers and feeder breakers. See “—Description of Our Raw Materials Sourcing and Reserves.”

Competition. Coal is produced in 25 states across three coal-producing regions, the western region, which covers Alaska, Arizona, Colorado, Montana, New Mexico, North Dakota, Utah and Wyoming; the Interior region, which covers Arkansas, Illinois, Indiana, Kansas, western Kentucky, Louisiana, Mississippi, Missouri, Oklahoma and Texas; and the Appalachian region, which covers Alabama, eastern Kentucky, Maryland, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia. Producers from Utah and Wyoming are our main competitors due to their location and proximity to our market. We also compete with producers of natural gas, which can be used as a substitute fuel.

Customers. The Colorado coal mine has a strong relationship with its third parties that includes primarily customers in the cement and limestone industries. Substantially all of our coal sales to third-parties are pursuant to long-term committed supply agreements, with a contract term that is typically five years. These contracts generally contain annual price escalation clauses based on either fixed percentage changes or on annual changes in U.S. Producer Price Index WPU-051, which refers to coal and is not seasonally adjusted. We rarely offer coal on the spot market.

GCC Energy’s upper management engages in all customer contact, and also focuses on sales strategy, market knowledge and traffic planning. Our marketing efforts focus on coal users with access to the BNSF Railway or the Union Pacific Railroad. We determine an estimate of cost per delivered British thermal unit for competing fuels (such as coal or natural gas) for coal users on the BNSF Railway within a radius to the south of the Colorado coal mine’s rail loading facility. This estimate is used to determine in which destinations GCC could have a competitive advantage.

Our top five third parties for coal in terms of net sales represent 3.9% of our net sales in the United States for the year ended December 31, 2016.

Distribution. GCC Energy maintains a rail loading facility with an approximate live storage capacity and stockpile space of up to 90,700 tons of coal.

115

Transportation

Alliance Transportation is a leading provider of dry bulk transportation services to eastern Oklahoma, western Arkansas and southwest Missouri. Headquartered in Tulsa, Oklahoma, Alliance Transportation is an affiliate of MidCo, the largest ready-mix concrete producer in the region and Alliance Transportation’s largest customer. Alliance Transportation’s operations are divided by geographic region, primarily in Oklahoma and Arkansas, and into three divisions:

• the dumps division provides services for contract hauling of raw materials, primarily crushed stone, sand and gravel;

• the bulks division transports materials such as cement, to third-parties, to MidCo and to Alliance Concrete; and

• the other division provides transportation services related to plant and equipment relocation, waste hauls and other miscellaneous transportation services.

Net sales from our transportation services represented 3.3% and 1.7% of our net sales from our U.S. operations for the three months ended March 31, 2017 and the year ended December 31, 2016, respectively. For the three months ended March 31, 2017 and the year ended December 31, 2016, we sold approximately 30.5% and 43.5% of our transportation services (before eliminations from consolidation) to our subsidiaries, with the remainder to third parties.

See “—Our Products—Other—Transportation—United States.”

Aggregates and Asphalt

Facilities. Our operations include six aggregates plants and four asphalt plants, located in the cities of El Paso and Las Cruces, New Mexico.

Competition. Barriers for new entrants in the aggregates industry are high, as permit requirements and environmental regulation constrain new quarry development. In addition, the aggregates market is restricted by access to strategically placed reserves and transportation costs, which may reduce the competitiveness of prices when competing against local suppliers in markets in distant locations.

Customers. Our main aggregates customers are builders, housing developers and concrete and asphalt producers. Our main asphalt customers are road paving contractors.

Operations in Mexico

Overview

In Mexico, we operate in the state of Chihuahua. For the three months ended March 31, 2017 and the year ended December 31, 2016, 28.3% and 26.4%, respectively, of our net sales, and 51.1% and 32.8%, respectively, of our EBITDA, were generated in Mexico. The following map shows our facilities in Mexico and the charts that follow show our cement and ready-mix concrete sales volume in Mexico for the periods indicated. In the state of Chihuahua, we are the leader in each of the markets in which we participate (cement, mortar, ready-mix concrete, aggregates, concrete blocks, prefabricated products and gypsum) in terms of net sales.

116

Our top ten customers in Mexico represented 24.6% of our net sales in Mexico for the year ended December 31,

2016. Our largest customer in Mexico accounts for approximately 7.0% of our net sales in Mexico for the year ended December 31, 2016. Our main customers in Mexico are home improvement stores, construction companies, concrete products producers, the Chihuahua state government and municipalities and mining companies.

Cement and Mortar

Sales

Sales of cement and mortar represented 55.0% of our net sales from our Mexican operations for the three months ended March 31, 2017. For the year ended December 31, 2016, cement and mortar sales represented 52.8% of the net sales of our Mexican operations. For the three months ended March 31, 2017 (before elimination from consolidation), we sold 18.7% of our total cement and mortar volume produced in Mexico to our subsidiaries in Mexico, 21.2% to our subsidiaries in the United States and 60.1% to third parties for the production of ready-mix concrete. For the year ended December 31, 2016 (before elimination from consolidation), we sold 22.0% of our cement and mortar volume to our subsidiaries in Mexico, 18.4% to our subsidiaries in the United States and 59.6% to third-parties for the production of ready-mix concrete.

117

Plants and Equipment

We own three cement plants with a total annual production capacity of approximately 2.3 million tons, including an annual installed capacity of 1.1 million tons in Chihuahua; 1.1 million tons in Salamayuca; and 0.1 million tons in Juarez. In 2009, we completed the modernization of our Chihuahua plant, strengthening our long-term cement grinding capacity and helping to reduce production costs by increasing efficiency. We also have recently increased the use of alternative fuels in our cement plant in Samalayuca, Juarez and Chihuahua, decreasing the fuel consumption at those plants by approximately 40.6%, 38.8% and 12.4%, respectively in 2016.

Competition

According to the latest information made available by the CANACEM, in 2016 cement production in Mexico was 40.6 million tons, an increase of 2.5% as compared to the 39.6 million tons produced in 2015. In addition, cement consumption reached 40.1 million tons in 2016, an increase of 2.6% as compared to the 39.1 million tons consumed in 2015. Due to the ongoing modernization of plants, the Mexican cement industry is one of the most competitive in terms of cost. See “Industry Overview.” Our capacity utilization at our Chihuahua, Juarez and Samalayuca plants for the year ended December 31, 2016 was 71%, 86% and 56%, respectively.

The six companies that compete in the cement industry in Mexico are: CEMEX, Holcim, Corporación Moctezuma, Cooperativa La Cruz Azul, Cementos Fortaleza and us. In the state of Chihuahua, our main competitor in our cement operations is Holcim, which is also vertically integrated and competes with us in our ready-mix concrete operations, as well, except that, unlike us, Holcim does not have any plants in Chihuahua.

Potential entrants into the Mexican cement market face the following barriers to entry:

• the time-consuming and expensive process of establishing a retail distribution network and developing the brand loyalty necessary to succeed in the retail market, which represents the majority of the domestic market;

• the lack of infrastructure and the high inland transportation costs resulting from the low value-to-weight ratio of cement;

• the distance from ports to major consumption centers and the presence of significant natural barriers, such as mountain ranges, which border Mexico’s east and west coasts;

• the extensive capital expenditure required to begin production and high logistical costs;

• the length of time required for the construction of new plants, which is approximately two years; and

• the difficulty of obtaining permits for new plants and strict environmental standards.

We believe that one of our primary competitive advantages is the loyalty Mexican consumers have to the brand “Cemento Chihuahua” due to the reputation the brand enjoys among retail customers, which represent the majority of cement customers in Mexico. In addition, by using specialized raw materials that contain low levels of alkaline, we believe we are able to deliver higher quality cement that withstands exposure to the climate conditions of Chihuahua.

Customers

In contrast to more developed economies, where purchases of cement are concentrated among the industrial and commercial sectors through bulk sales, in Mexico a large majority of cement sales (approximately 80% on a national basis) are to retail customers who use it for housing and other basic construction projects. However, because the ready-mix concrete industry is more developed in the state of Chihuahua due to growing government expenditure on infrastructure projects, such as highways and airports, we sell most of our cement in bulk to ready-mix concrete producers. For the year ended December 31, 2016, we sold approximately 66.5% of the volume of cement sold in Mexico in bags (primarily 50 kg cement bags) to individuals or small contractors. Bulk cement accounts for the remaining 33.5% of our volume of cement sold and distributed directly to companies producing ready-mix concrete, concrete blocks and other concrete products, and

118

to large scale contractors. Often, we sell bulk cement together with a package of solutions to help our customers on large construction projects.

Our top ten cement customers in our Mexico cement division by net sales represented 21.1% of our net sales in Mexico for the year ended December 31, 2016.

Distribution

We sell bagged cement primarily through our main distribution channel of independent hardware stores, located throughout the state of Chihuahua, some of which are affiliated with our Construred retail program. Construcentro manages two distribution centers located in each of the cities of Chihuahua and Juarez. GCC Transporte transports cement to customers throughout the state of Chihuahua and certain locations in Mexico. GCC Transporte also has an agreement with GCC Concreto to ship bulk cement from our cement plants to the ready-mix concrete plants located within the state of Chihuahua. Our customers may also pick up cement bags directly from any of our cement plants. See “—Our Products—Other—Transportation—Mexico.”

Ready-mix Concrete

Sales

Sales of ready-mix concrete represented 30.4% of our net sales from our Mexican operations for the three months ended March 31, 2017. For the year ended December 31, 2016, sales of ready-mix concrete represented 31.9% of our net sales from our Mexican operations. Our ready-mix concrete operations in Mexico are concentrated in the cities of Juarez and Chihuahua and in rural operations in the rest of the state of Chihuahua.

Plants and Equipment

We own 40 ready-mix concrete plants, of which 36 are stationary and four are mobile, which we believe allows us to supply any location within the state of Chihuahua and to provide ready-mix concrete supply to projects with high consumption volumes.

Competition

The ready-mix concrete industry in Mexico is in development. In the state of Chihuahua, 31% of the volume of cement sold in 2016 was sold as ready-mix concrete. During 2016, ready-mix concrete consumption in the state of Chihuahua was approximately 1,131,000 cubic meters, with the highest concentration located in the cities of Chihuahua and Juarez.

In contrast to the cement market, there are a large number of competitors in the ready-mix concrete market in the state of Chihuahua because of minimal barriers to entry due to relatively low start-up costs and the ability to rely on mobile plants, which opens the market to small family-owned companies. The market for ready-mix concrete in Chihuahua is supplied by GCC and the following competitors: Holcim, Materiales Americas, Agregados y Concretos de Chihuahua, ABYACSA, Rahecsa and Inca. Although Holcim does not have a supply source within the state of Chihuahua, we believe it is our only competitor in the state of Chihuahua with the potential to bid on large infrastructure or industrial projects, particularly due to its vertical integration.

All of our ready-mix processes are certificated under ISO 9001: 2008 and under Organismo Nacional de Normalización y Certificación de la Construcción y Edificación (National Agency for the Normalization and Certification of Construction and Building or, “ONNCCE”), which is a Mexican entity that certifies construction products according to Mexican standards. We believe these certifications give us a competitive advantage in the state of Chihuahua.

119

Customers We have recently been the ready-mix concrete supplier in the following major projects: a housing sector project,

statewide commercial and industrial projects, self-construction projects, mining industry projects and the new Heineken brewery and the glass bottles manufacturing plant, both in Meoqui, Chihuahua.

Our top ten customers in our Mexican ready-mix concrete division by net sales represented 8.6% of our net sales in Mexico for the year ended December 31, 2016.

Distribution

We own a ready-mix concrete distribution fleet, 237 mixer trucks and 46 pumps, which we believe allows us to supply any location within the state of Chihuahua and to ensure ready-mix concrete supply to projects with high consumption volumes. See “—Our Products—Other—Transportation—Mexico.”

120

Aggregates

Sales

Sales of aggregates represented 3.8% of our net sales from our Mexican operations for the three months ended March 31, 2017. For the year ended December 31, 2016, sales of aggregates represented 4.3% of our net sales from our Mexican operations. For the three months ended March 31, 2017 and the year ended December 31, 2016 (in each case, before eliminations from consolidation), our total sales volume was approximately 0.9 and 4.2 million tons, respectively, of which approximately 37.2% and 40.1% was used for our own consumption to produce ready-mix concrete or other products and the remaining 62.8% and 59.9% was sold to third parties, respectively. Our aggregates operations in Mexico are concentrated in the cities of Juarez, Chihuahua, Samalayuca and Cuauhtemoc.

Facilities

Our Mexican operations include five aggregates plants, located in the cities of Chihuahua, Juarez, Cuauhtemoc, and Samalayuca. The location of these plants enhances our ability to supply aggregates throughout the state of Chihuahua.

Competition

The aggregates market is typically characterized by high barriers to entry due to the need to obtain access to strategically placed reserves, which is restricted by permit requirements, high transportation costs and environmental regulation. Competition in the aggregates market is limited because of high freight costs, which may reduce the competitiveness of prices when competing against local suppliers in markets located at greater distances.

Customers

Our main aggregates customers are builders, housing developers and concrete and asphalt producers.

Distribution

The shipment of aggregates to cities, such as Chihuahua and Juarez, depends on third-party transportation companies, with which we have stable long-term relationships. We also use GCC Transporte for shipping aggregates to other locations in Mexico, primarily to the city of Cuauhtemoc. See “—Our Products—Other—Transportation—Mexico.”

Other We provide other products and services, primarily concrete blocks, prefabricated products, transportation services

and developed land.

Concrete Blocks

Sales. Sales of concrete blocks represented 5.0% and 5.5% of our net sales from our Mexican operations for the three months ended March 31, 2017 and for the year ended December 31, 2016, respectively.

Facilities. Our Mexican operations include six concrete block plants, two located in the city of Chihuahua and four in the city of Juarez, which have the technology to produce four types of standard blocks for simple masonry and one type of block for structural systems. In addition, our plants manufacture three types of architectural blocks and one type of thermal block, which have different colors and textures and are used for simple or structural masonry.

Competition. The concrete block market, consistently with the ready-mix concrete market, has a large number of competitors in the state of Chihuahua, mainly family-owned companies, due to low barriers to entry. We believe we differentiate ourselves in this market through our offering of technologically advanced blocks, which meet the new demands of the market, including the requirements of INFONAVIT in Mexico and the LEED movement.

Customers. Our main concrete blocks customers are residential, industrial and commercial building contractors.

121

Prefabricated products, transportation services, developed land and others

Sales. Sales of all other products (not including concrete blocks) represented 5.7% and 5.3% of our net sales from our Mexican operations for the three months ended March 31, 2017 and the year ended December 31, 2016, respectively. These net sales were derived primarily from Construcentro operations (sales of construction materials), which represented 47.1% and 52.1% of our net sales in this segment for the three months ended March 31, 2017 and the year ended December 31, 2016, respectively.

Net sales from our transportation services represented 3.0% of our net sales in this segment for each of the three months ended March 31, 2017 and 3.3% for the year ended December 31, 2016. For the three months ended March 31, 2017 and the year ended December 31, 2016, we sold 97.8% and 97.5%, respectively, of our transportation services (before eliminations from consolidation) to our subsidiaries.

Plants and Equipment. We operate two concrete prefabricated products plants, where we produce different construction materials with advanced technology.

Competition. We do not face significant competition for our other products, including prefabricated products, although for some uses, substitute products are available. See “Risk Factors—Risks related to Our Company, Business and Operations—Our industry is highly competitive, and if we are unable to compete effectively with existing competitors, or with new entrants, our business and financial results could be materially adversely affected.” There are numerous competitors for transportation services and for the sale of developed land.

Customers. Our principal customers of prefabricated products are the government (primarily for the Court House and infrastructure, including bridges, in the city of Chihuahua) and commercial builders. We principally provide transportation services for our subsidiaries.

Distribution. Our subsidiary GCC Transporte owns a transportation fleet for the shipment of our other products. This transportation fleet consists of 131 trucks, 36 platforms, 36 dump trucks, 101 bulk trucks and three low-boys. Our customers are separately invoiced for any shipping services we provide to them. See “—Our Products—Other—Transportation—Mexico.”

Employees

As of March 31, 2017, we had 3,074 employees, including our executives, sales force, and administrative, technical and operations personnel. The following table shows our employees, by location and type:

United States Mexico Total Management........... 123 68 191 Hourly .................... 1,288 660 1,948 Salaried .................. 274 661 935 Total ...................... 1,685 1,389 3,074

Approximately 26.3% of our employees are unionized. Approximately 685 of the employees at our Mexican operations are members of unions affiliated with the Confederation of Mexican Workers. Each of our cement plants, ready-mix concrete facilities and transportation operations in Mexico has its own collective bargaining agreement in place with its unionized workers. These agreements are reviewed every two years for certain benefits other than wages, and yearly for wages. Some of our workers in our Rapid City, South Dakota plant are affiliated with the United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union. Our collective bargaining agreement with employees in this plant, which is renegotiated every five years and was last renewed in the first half of 2016, has a no strike clause. We believe we maintain a positive and cooperative relationship with our unions and our other employees, and we work towards developing and improving the quality of life of our personnel. Although we believe that our relationship with all the labor organizations that represent our workers are satisfactory, labor-related disputes may arise. Labor-related disputes that result in strikes or other disruptions could cause increases in operating costs, which could

122

damage our relationship with our customers and adversely affect our business, results of operations and financial condition. Currently there are no union labor disputes, grievances or strikes at any of our facilities.

Research and Development

Our focus has been to produce innovative products for specific uses. We have been successful in selling value-added and specialty products to the construction and mining industries. We also are focusing on reducing the environmental impact of our products through the usage of fillers and waste fuels and materials (including packaging our products according to our customer’s needs). Our product development efforts combine engineering-driven innovation, as well as customer and market-driven feedback to improve the performance of our products.

In addition, we work with research centers and universities to leverage knowledge and accelerate the development of new products.

Intellectual Property

We hold, directly and through our subsidiary GCC Technology and Processes, S.A., several trademarks over our brand names, including the following trademarks which are set to expire on the corresponding date:

Trademark Expiration Date GCC November 3, 2019 GCC Cemento October 1, 2020 GCC Dacotah July 3, 2022 Dacotah April 26, 2022 GCC Rio Grande July 3, 2022 Yeso Chuvíscar November 26, 2019 Mortero Chuvíscar February 26, 2023 Megablock August 5, 2022 Construred December 19, 2023

Although we continuously renew these trademarks, the majority of these are subject to renewal after 2020.

In addition to our brands, we have registered, directly and through GCC Technology and Processes, S.A., patents in the United States and Mexico for our process to achieve particular thermal insulation properties and eco-friendly characteristics in certain of our prefabricated products. The majority of the patents in use as of the date of this offering memorandum, including those described in the following chart, are set to expire in 2023, 2024 and 2025.

Patent Expiration Date Improved microsilica, its use as a pozzolanic material and production methods January 31, 2025

Improved mortar composition using clinker, ultrafine, fine sand and chemical additives September 9, 2024

Process for micrometric refinement of cementitious particles December 18, 2023 Improved composition of cellular materials containing anhydrite and corresponding preparation methods January 28, 2025

Composition of cementitious products containing anhydrite and corresponding manufacturing processes December 2, 2023

Microsilica materials with improved pozzolanic activity July 6, 2025 We believe that brands and patents are important to our commercial activities and to the recognition of us and our

products in order to attract investments to develop and improve our business. The development of new products is governed by certain guidelines under our Product Development Protocol. These guidelines were prepared by our Research and Development Department and have been approved by our Project Development team, the latter of which is composed of members from various areas of our Company.

We also develop strategic alliances through the “Construred” retailer network that serves customers in the self-construction segment in Mexico. These alliances are established through concession contracts that typically have a three-

123

year duration and grant concessionaires the right to market and distribute our products in authorized outlets. These contracts also allow concessionaires to use our brands, including Cemento Chihuahua, Mortero Chuvíscar, Dinamix, Mortermix, Fraguamax and Tecnogrout.

See “Risk Factors—Risks Related to our Company, Business and Operations—Any unauthorized use of our brand names, trademarks and other intellectual property rights may materially adversely affect our business, results of operations and financial condition.”

Legal Proceedings

As of the date of this offering memorandum, we are not subject to any proceeding set forth in articles 9 or 10 of the Ley de Concursos Mercantiles (Mexican Bankruptcy Law).

Other than the matters described below, we are a party to legal proceedings that we consider routine and incidental to our business. We do not expect the results of any of these routine actions to have a material adverse effect on our business, results of operations or financial condition.

Sale of SOBOCE

In September 2005, we acquired a 47.02% stake in SOBOCE, the largest cement company in Bolivia. On August 18, 2011, we sold our entire interest in SOBOCE to CCS, a subsidiary of Grupo Gloria based in Peru, for U.S.$75.0 million in cash. With the sale of SOBOCE, we ceased operations in Bolivia. On July 11, 2012, CIMSA, SOBOCE’s former majority shareholder, filed a request for arbitration before the IACAC, alleging that GCC Latinoamerica did not honor CIMSA’s right of first refusal with respect to the purchase of SOBOCE’s shares, pursuant to a shareholders’ agreement we entered into with CIMSA. We subsequently filed an answer and counterclaim on September 3, 2012.

The IACAC arbitral tribunal found us and GCC Latinoamerica liable for breaching the aforementioned shareholders’ agreement, ultimately issuing an award on liability on September 13, 2013 and an award on damages in the amount of U.S.$36.1 million on April 28, 2015. Together with GCC Latinoamerica, we sought annulment of both of the awards in Bolivia. As a result, both awards were held to be contrary to Bolivian law and are thus considered null, without effect and unenforceable. As of the date of this offering memorandum, these holdings remain under review in various ongoing proceedings, and are not yet final.

On December 3, 2014 a tribunal in Chihuahua, Mexico provided a provisional remedy ordering CIMSA to refrain from enforcing any award issued in the arbitration proceedings until the pending appeals for annulment have been resolved.

On September 25, 2015, CIMSA filed a petition for an order confirming the damages award against us and GCC Latinoamerica in the United States District Court for the District of Colorado, or the Colorado District Court, as well as an ex parte motion for prejudgment attachment of our assets in Colorado, including any intercompany payables due from our U.S. subsidiary, GCC of America (“GCCA”), to us or GCC Latinoamerica. Neither we nor GCC Latinoamerica have been served with process in this lawsuit, and thus have not yet responded to the petition.

During the first quarter of 2016, the three members of the IACAC arbitral tribunal withdrew from their positions, which remain vacant. As a result, the issuance of any new award will require the appointment of a new arbitral tribunal.

Because litigation and other legal proceedings are inherently unpredictable, we cannot predict the outcome of the arbitration or the final amount of any award, which could be material. As of the date of this offering memorandum, we have not established any reserves in connection with this matter because we do not believe that a loss can be considered probable and estimable in accordance with applicable accounting principles. In addition, if a definitive and enforceable award against us were to exist, we would have the legal right to seek damages from the relevant third party under applicable law. A prolonged arbitration could result in significant legal expenses or a substantial settlement amount, and result in the distraction of management. We cannot assure you that this or other legal proceedings will not materially affect our business, results of operations, liquidity and financial condition. See “Risk Factors—Legal and Regulatory Risks—Our business, results of operations and financial condition may be materially adversely affected by a successful challenge to our sale of SOBOCE.”

124

Tax Matters

For the fiscal years ended December 31, 2016, 2015 and 2014, we recognized a tax expense of Ps.308.2 million (U.S.$14.9 million), Ps.169.7 million (U.S.$9.9 million) and Ps.42.7 million (U.S.$2.9 million), respectively, in each case at a tax rate of 30%.

For additional detail, see note 11 to our interim condensed consolidated financial statements and note 20 to our annual consolidated financial statements and “Our Business— Legal Proceedings—Tax Matters.”

Environmental, Health and Safety Matters

Our operations are subject to strict laws and regulations governing environmental protection, health and safety in the United States and Mexico. These environmental, health and safety laws and regulations generally require us to obtain and comply with various environmental permits, licenses, registrations and other approvals as well as incur capital expenditures in connection with our compliance efforts. Even though we continuously strive to comply with environmental, health and safety laws and regulations, and related permit and other requirements, there can be no assurance that our operations will at all times be in compliance with them. The enactment of new environmental, health and safety laws and regulations, the more stringent interpretation or enforcement of existing requirements or the imposition of liabilities under such laws and regulations, could force us to incur costs for compliance, capital upgrades or liabilities relating to damage claims or limit our current or planned operations, any of which could have a material adverse effect on our business and financial results. See “Risk Factors—Legal and Regulatory Risks—Compliance with environmental, health and safety laws and regulations could result in significant costs and liabilities, which could have a material adverse effect on our business, results of operations and financial condition.”

We believe we have all material environmental permits, licenses, registrations and other approvals for the facilities and projects that we operate, and that we are in substantial compliance with applicable environmental, health and safety laws, regulations, and other requirements. We follow internal policies and procedures to monitor environmental, health and safety compliance. From time to time we update our permits, licenses, registrations and other approvals and make periodic assessments in connection with their validity, including as necessary their amendment, renewal, extension or termination. In the event that as a result of such assessment any action is needed to renew, maintain, transfer or obtain any permit, license, registration or approval, we undertake the necessary actions to maintain its effectiveness.

In recent years, our industry has become subject to a series of new and more stringent environmental requirements in the United States. In particular, the EPA issued the final Portland Cement NESHAP and the final Portland Cement NSPS in September 2010, the revised final emissions standards for CISWI in February 2013 and the final rule regulating CCRs in December 2014. The EPA has also promoted more stringent Clean Air Act permit requirements and efforts to address climate change through federal and state laws and regulations and regional initiatives in the United States, as well as through international agreements and the laws and regulations of other countries, to reduce the emissions of greenhouse gases. Although all of our facilities are in material compliance with the aforementioned environmental regulations as of the date of this offering memorandum, we cannot assure you that we will have the capacity or resources necessary to continue to comply with these regulations going forward. We also cannot predict whether we will be able to comply with any new requirements issued in the future.

Under certain environmental, health and safety laws and regulations, we also could be held responsible for liabilities and obligations arising out of past or future releases of hazardous materials, human exposure to these hazardous materials and other environmental damage, in some cases, without regard to fault. As of the date of this offering memorandum, we are not subject to any legal or administrative proceeding under environmental, health or safety laws or regulations that could have an adverse material effect on our business or financial results. A number of our facilities, however, have been in industrial use for many years, including prior to our ownership. It is possible that some of these facilities may have contamination. As such, obligations to investigate or remediate contamination or related liabilities may be imposed on us in the future, such as in the event of the discovery of contamination at any of our current or former sites or in the event of a change at a facility such as its closure or sale. In addition, private parties may have the right to pursue legal action to enforce compliance as well as to seek damages for violations of such laws and regulations or for personal injury or property damage. See “Risk Factors—Legal and Regulatory Risks—Compliance with environmental, health and safety laws and regulations could result in significant costs and liabilities, which could have a material adverse effect on our business, results of operations and financial condition.”

125

United States

In 2010, the EPA published the Portland Cement NESHAP under the federal Clean Air Act. This regulation requires Portland cement facilities to limit emissions of mercury, hydrocarbons, hydrochloric acid, dioxins-furans and particulate matter. In September 2016, the EPA implemented certain Portland Cement NESHAP standards related to emissions of mercury and hydrochloric acid. All plants are currently and have been continuously in compliance with those standards since that date.

Efforts to address climate change through federal and state laws and regulations and regional initiatives in the United States, as well as through international agreements and the laws and regulations of other countries, to reduce GHG emissions, also create risks and uncertainties for our business. Our cement manufacturing process emits large quantities of carbon dioxide (CO2) from the combustion of fuel and from the calcination of limestone. Impacts of more stringent laws and regulations to address GHG emissions could include costs to purchase allowances or credits to meet GHG emission caps, costs required to reduce emissions to comply with GHG limits or to achieve technological standards, costs or limitations relating to our usage of fuels and other raw materials, or decreased profits or losses arising from decreased demand for our products. Our Pueblo, Colorado plant was one of the first cement plants in the United States to obtain a GHG PSD permit, and we believe it is the first cement plant in the country to operate under such constraints. We do not anticipate material cost impacts from this permit. Any further GHG laws or regulations, which are not anticipated in the short- or medium-term, could negatively affect our operations and have a material adverse effect on our business and financial results, including from competition from imports from countries where such costs are not imposed on manufacturing.

In addition, the EPA or other environmental regulatory authorities have assessed approximately 25 penalties against us since 2006. These assessed penalties averaged less than U.S.$28,000 each. We cannot predict if we will be subject to additional fines and, if so, whether such fines would be material.

Mexico

Our Mexican operations are subject to federal, state and local environmental authorities, laws, regulations, Mexican Official Standards and other technical standards, as well as international treaties and conventions on human rights, indigenous people and social impact assessment. The allocation of jurisdiction over environmental matters among governmental authorities at the federal, state and municipal levels is based on a “residual formula” provided in the Mexican Political Constitution which establishes that those matters which are not expressly reserved for the Mexican federal government fall under the jurisdiction of the state governments, and those not expressly reserved for the state government fall under the jurisdiction of the municipalities. Some specific environmental matters such as the handling of non-hazardous waste fall under state or municipal jurisdiction.

The primary federal environmental laws in Mexico applicable to our business are the General Law on Ecological Balance and Environmental Protection, the General Law for the Prevention and Comprehensive Management of Wastes, the Federal Law of Environmental Liability and the regulations enacted thereunder. Pursuant to these laws, various rules and regulations have been adopted concerning environmental impact and risk matters, noise emissions, emissions to the atmosphere, water extraction and wastewater discharge, waste management, among others, to which our business is subject, and for which we perform annual filings. We are also subject to other laws, regulations and technical requirements such as the Ley de Aguas Nacionales (National Waters Law), Ley General de Salud (General Health Law) and Reglamento Federal de Seguridad, Higiene y Medio Ambiente en el Trabajo (Federal Regulations on Safety, Hygiene and Work Environment).

Under the General Law on Climate Change, and the regulations thereunder, we are subject to various environmental obligations, which may impact our financial performance. In addition, Mexico recently enacted legislation that allows class action lawsuits related to environmental liabilities. Under such legislation, we may be subject to class action lawsuits that may impact our financial condition, or that may otherwise have a material adverse effect on us or our properties.

On June 7, 2013, the Federal Law of Environmental Liability was passed in Mexico, which went into effect on July 7, 2013. The federal law of environmental liability regulates the environmental liability in connection with actions or omissions that cause or lead to environmental damages, as well as the indemnification and compensation remedies available in Mexican federal courts, the alternative dispute resolution procedures and other administrative procedures in connection

126

with environmental criminal acts. We cannot predict the extent of the impact that the adoption of additional and more stringent environmental laws and regulations could have on our financial performance.

Although Mexico is a signatory to the Kyoto Protocol, it has no binding emission reduction obligations since Mexico is classified as a non-Annex 1 Country. However, there is certain political pressure to reduce GHG emissions as Mexico is one of only two Organization for Economic Co-operation and Development countries, along with South Korea, that are classified as “non-Annex 1 Parties” to the Convention. We are monitoring ongoing efforts to address GHG emissions, including the negotiations of the United Nations Framework Convention on Climate Change.

Mexico is also a signatory to the Paris Agreement under the United Nations Framework Convention on Climate Change. The Mexican federal government has submitted its Intended Nationally Determined Contribution, which includes plans to cut black carbon and soot. This Agreement will come into effect in 2020, at which time we may be subject to additional regulations imposed by the Mexican federal government.

In Mexico, the Comisión de Estudios del Sector Privado para el Desarrollo Sustentable (Commission on Studies of the Private Sector for Sustainable Development, or “CESPEDES”) is the organization that represents the World Business Council for Sustainable Development and its goals are to promote efficient environmental regulation and to enforce the promotion of eco-efficient practices among industries. We voluntarily prepare an emissions inventory for the CESPEDES program. Additionally, the Mexico Greenhouse Gas Program, under the direction of the SEMARNAT, requires us to prepare a GHG inventory that represents a true and fair account of our emissions, which can be used to build an effective strategy to manage and reduce emissions.

Under the recently enacted energy reform in Mexico, it is now possible for off-takers consuming more than one megawatt/hour of energy as from 2017 to choose to purchase such energy from the CFE or from private utility companies, or to become an active participant in the wholesale electric market. In the event that, due to market conditions, we choose to become an active participant in the wholesale electric market, we may be required to comply with certain clean energy obligations by purchasing Clean Energy Certificates up until 2018.

Also, due to the 2011 Mexican human rights reform, several international human rights and environmental treaties became enforceable laws under the Mexican legal system. One such treaty is Convention 169 of the International Labor Organization concerning indigenous and tribal people in independent countries, which mandates the Mexican government to carry out a prior consultation procedure with the indigenous people that could be significantly affected by the issuance of an administrative resolution or the enactment of a new law. Consequently, it is possible that in the future we may be required to comply with additional regulatory procedures intended to ensure the protection of the human rights of indigenous people, including as part of a social impact assessment.

Regulatory and Supervising Authorities

SEMARNAT is the primary environmental agency responsible for conducting environmental policies and management and enforces regulation on, among others things, hazardous waste management, environmental impact, use and exploitation of national waters, atmospheric emissions and soil contamination and is empowered, among other things, to grant autorizaciones en materia de impacto y riesgo ambiental (federal environmental impact and risk authorizations) and a licencia ambiental única (unified environmental license) and to participate directly in the issuance of Mexican Official Standards regarding environmental matters.

The Procuraduría Federal de Protección al Ambiente (Mexican Environmental Protection Agency, or “PROFEPA”) is the enforcement branch of SEMARNAT. PROFEPA is responsible for investigating and inspecting facilities (including through the voluntary environmental audit program described below). PROFEPA has the authority to enforce the Mexican Official Standards and any federal environmental regulation. As part of its enforcement authority, PROFEPA can bring civil, administrative and criminal proceedings against companies and individuals that breach environmental laws and has the power to close facilities that are not in compliance with federal environmental laws. As part of its enforcement powers, PROFEPA can issue penalties, including monetary fines, revocation of authorizations, concessions, licenses, permits or registries, administrative arrests and seizure of polluting equipment. Furthermore, in particular situations or certain areas where federal jurisdiction is not applicable or appropriate, the state and municipal authorities can regulate and enforce certain environmental regulations, as long as they are consistent with federal law.

127

The Comisión Nacional del Agua (Mexican National Water Commission) is in charge of the management of national waters, surface and underground, the prevention of pollution to water, as well as the use and protection of certain national assets related to rivers, dams and other bodies of water such as basins and waterbeds. The Mexican National Water Commission has its own enforcement department, independent from PROFEPA. The Mexican National Water Commission grants concessions for the use and exploitation of national waters and permits for wastewater discharges into bodies of water under federal jurisdiction.

Environmental Certifications, Policies and Programs

We participate in voluntary environmental audit programs sponsored by PROFEPA, and have obtained and maintained clean industry certificates since 1999. Our Chihuahua and Samalayuca cement plants also have been certified under ISO 14001 since 2001. We intend to continue participating in these programs.

As part of the PROFEPA-sponsored voluntary environmental audit programs, participating companies agree to conduct environmental audits of their own operations through an authorized third-party consultant. Based on the audit findings, the consultant prepares and proposes to the participating company a corrective and/or improvement action plan and advises the Mexican Environmental Protection Enforcement Agency on the results of the audit and the appropriateness of the resulting action plan. Subject to its review and approval of the audit findings and recommendations, PROFEPA enters into an agreement with the audited company for the implementation of the action plan.

A clean industry certificate is the end product of this voluntary environmental audit program, which generally shows that the company or business has complied with the action plan and is in compliance with applicable federal environmental laws and regulations, and in some cases with international standards and prudent engineering and operational practices for the relevant business. The clean industry certificate is valid for a two-year period and can be continuously renewed for similar periods as long as the company continues to prove that it has maintained or improved the environmental compliance conditions present at the time when the certificate was first awarded.

Other Regulatory Matters

Foreign Corrupt Practices Act and other Legal Requirements

A significant portion of our business is conducted in Mexico, which has elevated levels of corruption compared to, and may present greater political, economic and operational risks than in, the United States. We emphasize compliance with the law and, although we have established policies, procedures and ongoing employee training programs to promote compliance with global ethics and legal requirements such as the Mexican Federal Anticorruption Law, which is still in force, and the FCPA, our officers, directors, employees, agents or shareholders may not adhere to our code of ethics, other policies or rules and regulations. If we fail to enforce our policies and procedures properly or maintain internal accounting practices to accurately record our international transactions, we may be subject to criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. We could incur significant costs, including potential harm to our reputation, for investigation, litigation, civil or criminal penalties, fees, settlements or judgments for potential violations of the Mexican Federal Anticorruption Law, the FCPA or other laws or regulations, which in turn could have a material adverse effect on our business, results of operations and financial condition.

Mexican Federal Anticorruption Law in Public Contracting

On June 12, 2012, the Federal Law of Anticorruption in Public Contracting became effective. The Mexican Federal Anticorruption Law sets forth liabilities and penalties applicable to both Mexican and foreign individuals and legal entities that participate in corrupt practices in federal public contracting, as well as to those Mexican individuals and legal entities that participate in corrupt practices in commercial international contracting with the public sector of a foreign state, or the granting of permits and concessions thereby. We are subject to the Mexican Federal Anticorruption Law with respect to any activities that require the granting of a permit or a concession by a Mexican federal governmental entity, through a public or private bid process, or the contracting with a Mexican federal governmental entity.

128

The Mexican Federal Anticorruption Law states that an individual or legal entity will be liable when, in federal public contracting or the granting of permits or concessions by Mexican federal governmental authorities, it directly or indirectly, promises, offers, or delivers money or any other gift to a public servant or a third-party, in exchange for such public servant performing or abstaining from performing an act related to his/her duties or those of another public servant, with the intent of obtaining or maintaining a benefit or advantage, regardless of whether the money or gift was accepted or received or the result was obtained. The Mexican Federal Anticorruption Law also applies to similar conduct related to international commercial contracting with the public sector of a foreign state. See “Risk Factors—Risks Related to the Countries in which We Operate— Our business, results of operations and financial condition are subject to political and economic risks for conducting business in corrupt environments.”

The Mexican Federal Anticorruption Law provides for the investigation of possible infringers and includes an administrative procedure to address claims. The Secretaría de la Función Pública (Ministry of Public Administration) is the authority in charge of investigating and penalizing infringement of the Anticorruption Law. Other authorities also have authority to penalize for infringement of the Mexican Federal Anticorruption Law within the scope of their duties.

On July 18, 2016, the new Ley General de Responsabilidad Administrativa (Administrative Liability Law) was published in the Official Gazette of the Federation. This law will abolish the Federal Law of Anticorruption in Public Contracting as of July 18, 2017, and is intended to distribute authority among governmental entities and their officers by setting forth the administrative liabilities of public officers, their obligations, applicable sanctions for acts or omissions incurred by such public officers and those pertaining to private persons or entities with respect to serious administrative faults, as well as the procedures for their application.

Mexican Labor Regulation

Our operations in Mexico are subject to the Ley Federal del Trabajo (Federal Labor Law, or “LFT”), the Ley del Seguro Social (Social Security Law) and the general labor regulations issued by the Secretaría del Trabajo y Previsión Social (Mexican Ministry of Labor and Social Prevention) on issues such as employees’ hours and working conditions, health risks, fringe benefits and the dismissal of employees.

Mexican employers are required to pay profit sharing to employees (“PTU”) to their employees in an aggregate amount equal to 10% of the employer’s taxable income (calculated in accordance with the applicable provisions of the Mexican Income Tax Law without reference to dividends, inflation adjustments or tax loss carry forwards, among other items). Employers are liable for PTU regardless of compensation and benefits agreed to with their employees. Some of our employees in Mexico are employed by a services company and we currently pay labor benefits based on the taxable income of the employee’s direct employer (our services company) without considering the taxable income of any other company within the group. Direct employees of the services company could potentially claim the payment of labor benefits, including the payment of PTU, from both the services company and the contracting company and Mexican labor or tax authorities could determine in a future legal proceeding that we are required to pay an increased PTU taking into account the taxable income of a company other than the employees’ direct employer. If as a result of a potential claim, we are required to share profits with the employees of our servicing companies calculated not only from the taxable income of their direct employers, but from our taxable income or that of our other operating Mexican subsidiaries, we could be required to pay additional labor benefits, including PTU, which could be material.

In addition, we must comply with the terms and conditions of any collective bargaining agreements entered into with unions.

Insurance

Although we believe that the insurance coverage we have meets statutory minimums and is adequate for our industry and similar to that of our competitors, our insurance only covers part of the losses that we might incur. In addition to general liability insurance, we have insurance coverage for our property related to our cement and concrete operations, product liability, terrorism, cargo transportation and our rail operations, storage tanks, pollution, directors and officers, worker’s compensation and employer liability. The occurrence of losses or other liabilities that are not covered by insurance or that exceed our insurance limits could result in significant unexpected costs that could adversely affect our business, results of operations and financial condition. As of the date of this offering memorandum, there are no material claims against us under any such policy or instrument as to which any insurance company is denying liability or defending

129

under a reservation of rights clause. See “Risk Factors—Risks Related to our Company, Business and Operations—Our insurance coverage may be insufficient to cover certain of our losses, which could have a material adverse effect on our business, results of operations and financial condition.”

Recent Developments

Tender Offer

The Company, as offeror, expects to commence the Tender Offer on June 7, 2017 for any and all of its Old Notes. If, following the Tender Offer’s early settlement, any Old Notes remain outstanding, we intend to promptly issue a notice of redemption to redeem such outstanding Old Notes at a redemption price equal to 104.063% in accordance with the terms of the Old Notes. As of the date of this offering memorandum, the aggregate principal amount outstanding of the 8.125% Notes due 2020 was U.S.$260,000,000.

The Tender Offer is conditioned on the satisfaction, or waiver by the Company, of certain conditions, including, but not limited to, the consummation of this offering.

This offering memorandum is not an offer to purchase, or the solicitation of an offer to sell, the Old Notes.

130

MANAGEMENT

Directors

Our bylaws and provisions of Mexican law, grant the Board broad authority to manage our company and determine the policies to be followed with respect to our operations. The Board is supported by our Audit and Corporate Practices Committee, which is composed entirely of independent directors. See “—Audit and Corporate Practices Committee.”

The current Board, which is composed of 14 directors, was elected on April 27, 2017 at our ordinary general shareholders’ meeting. Pursuant to Article 24 of our bylaws, the Board may consist of no more than 21 directors, and at least 25% are required to be independent. In accordance with the Mexican Securities Market Law, shareholders are required to make a determination as to the independence of our directors. According to our bylaws, independent directors are those who qualify as independent pursuant to the Mexican Securities Market Law. In addition, pursuant to our bylaws and as permitted under the Mexican Securities Market Law, every director may have an alternate director. Alternate directors are also elected by our shareholders. Under the Mexican Securities Market Law, in certain circumstances, the Board may appoint temporary directors who then may be ratified or substituted at the annual shareholders’ meeting (as an exception to the general rule that states that directors are appointed at an ordinary general shareholders’ meeting).

Our directors exercise their duties in accordance with our bylaws and with the provisions of Mexican law. Under Mexican law, directors are obligated to observe duties of care (consisting principally of attending meetings, being fully informed and requesting opinions when necessary) and loyalty (consisting principally of acting without a conflict of interest, for the benefit of all shareholders and without taking advantage of corporate opportunities).

Our bylaws provide that members of the Board are appointed for a term of one year. Pursuant to the Mexican Securities Market Law, members of the Board may continue in their positions after the expiration of their term for up to an additional 30-day period if new members are not yet appointed.

The business address of the directors and alternate directors is our main office located at Avenida Vicente Suárez y Calle Sexta S/N, Colonia Nombre de Dios, C.P. 31110, Chihuahua, Chihuahua, México, telephone number +52 (614) 442-3100.

The following table sets forth the name, current position and date of first election of the current members of the Board:

Name Position First Elected Federico Terrazas Becerra Chairman of the Board 1991 Federico Terrazas Torres Director 1991 Miguel Márquez Prieto Director 1991 Enrique G. Terrazas Torres Director 1991 Luis Márquez Villalobos Director 1991 Ramiro Gerardo Villarreal Morales Director 1991 Fernando Ángel González Olivieri Director 2010 Martha Márquez de Corral Director 1991 José Antonio González Flores Director 2013 Juan Romero Torres Director 2011 Fernando Ruíz Sahagún Independent Director 2006 Héctor Medina Aguiar Independent Director 1995 Rómulo Jaurrieta Caballero Independent Director 2006 Pedro Miguel Escobedo Cónover Independent Director 2009

The following sets forth biographical information for each of the members of our Board:

Federico Terrazas Becerra has served as a member of the Board since 1991 and as Chairman of the Board since 2013. He is also chairman of the board of directors of CAMCEM, S.A. de C.V. He is also a member of the board of directors of the following companies: Grupo Ruba, S.A. de C.V., Comercial de Fierro y Acero, S.A. de C.V., COPARMEX

131

and Banco BBVA Bancomer, S.A. He has been a partner in Previsión Integral de México, S.A. de C.V. since 1995. Mr. Terrazas holds a Bachelor’s degree in Business Administration and an M.B.A. from the Chihuahua campus of the Instituto Tecnológico de Estudios Superiores de Monterrey (“ITESM”). He has also completed a Harvard Business School Leadership program for executive officers. Mr. Terrazas is the son of Federico Terrazas Torres, nephew of Enrique G. Terrazas Torres, first cousin once removed of Miguel Márquez Prieto and second cousin of Luis Márquez Villalobos and Martha Márquez de Corral, all of whom are members of the Board. Mr. Terrazas is also the cousin of Alberto Terrazas Seyffert and Luis Enrique Terrazas Seyffert and the second cousin of Silvia Márquez Villalobos, Ana Cecilia Márquez Villalobos, and all of whom are alternate members of the Board.

Federico Terrazas Torres has served as a member of the Board since 1991 and served as Chairman of the Board from 1991 to 2013. He is also a member of the board of directors of the following companies: CAMCEM, Inmobiliaria Ruba, S.A. de C.V., Constructora Ruba, S.A. de C.V., Teléfonos de México, S.A. de C.V., Banco de México, S.A., Consejo Cd. Juárez, Universidad TecMilenio, Fundación Pro-Empleo, A.C., Fundación Mexicana para la Salud, A.C., Fundación Empresarios por la Educación Básica, Educación Superior del Norte, A.C. (Tecnológico de Monterrey Campus Chihuahua), Negocios, A.C., Plan Estratégico de Ciudad Juárez, Desarrollo Económico del Estado de Chihuahua, A.C., Promociones Educativas, A.C., Fundación Chihuahua, A.C., Misiones Coloniales de Chihuahua, A.C., Promotora Cultural de Chihuahua, A.C. and Promotora de la Cultura Mexicana, A.C. He previously served as member of the board of directors of Enseñanza e Investigación Superior, A.C., (“EISAC”) from 1985 to 2016, Instituto Tecnológico y de Estudios Superiores de Monterrey (“ITESM”) and Instituto Tecnológico y de Estudios Superiores de Monterrey, A.C. (“ITESMAC”). He is the president of Promotora de Proyectos PROVAL, S.A. de C.V., Cofiasa, S.A. de C.V., Grupo Cofiasa, S.A. de C.V., Promotora de Inversiones Mexicanas, S.A. de C.V., Inmobiliaria Médica de México, S.A. de C.V. and Promotora de Hospitales Mexicanos, S.A. de C.V. Mr. Terrazas also serves as the president of Unión Ganadera Regional de Chihuahua. Mr. Terrazas has previously served as president of Desarrollo Económico del Estado de Chihuahua, A.C., Centro Empresarial de Chihuahua, Casino de Chihuahua, A.C., Casino Chihuahuanse, S.C. and Vice President of the Confederación Patronal de la República Mexicana, S.P. Mr. Terrazas holds a Public Accountant degree from ITESM, and graduated from the Executive Officers Management Program AD-2 at the Institute of Executive Business Management (“IPADE”). Mr. Terrazas is the father of Federico Terrazas Becerra, Chairman of the Board. Mr. Terrazas is the brother of Enrique G. Terrazas Torres, cousin of Miguel Márquez Prieto, and first cousin once removed of Luis Márquez Villalobos and Martha Márquez de Corral, all of whom are members of the Board. Mr. Terrazas is also the uncle of Alberto Terrazas Seyffert, Luis Enrique Terrazas Seyffert and first cousin once removed of Ana Cecilia Márquez Villalobos and Silvia Márquez Villalobos, all of whom are alternate members of the Board.

Miguel Márquez Prieto has served as a member of the Board since 1991. He is also a member of the board of directors of the following companies: CAMCEM, Inmobiliaria Ruba, S.A. de C.V., Acciones y Valores del Norte, S.A. de C.V., Promotora de Infraestructura de México, S.A. de C.V., Grupo Cofiasa, S.A. de C.V. and Promotora de Hospitales Mexicanos, S.A. de C.V. Mr. Márquez holds an M.B.A. from the Babson College of Business. He is the father of Luis Márquez Villalobos and Martha Márquez de Corral, cousin of Federico Terrazas Torres and Enrique G. Terrazas Torres, and first cousin once removed of Federico Terrazas Becerra, all of whom are members of the Board. Mr. Márquez is also the father of Ana Cecilia Márquez Villalobos and Silvia Márquez Villalobos and first cousin once removed of Alberto Terrazas Seyffert and Luis Enrique Terrazas Seyffert, all of whom are alternate members of the Board.

Enrique G. Terrazas Torres has served as a member of the Board since 1991. He is also a member of the board of directors of the following companies: Copachisa, S.A. de C.V., DEMEK, S.A. de C.V., EMYCSA, S.A. de C.V., ESJ, S.A. de C.V., Inmobiliaria Punto Alto, S.A. de C.V., PREMET, S.A. de C.V., Aciarium Estructuras, S.A. de C.V., Abadan, S.A. de C.V., CAMCEM, Promotora de Hospitales Mexicanos, S.A. de C.V., regional board of Banamex, Inmobiliaria Ruba, S.A. de C.V., Educación Superior del Norte, A.C., the state board of Partido Acción Nacional, Colegio de Ingenieros Civiles de Chihuahua, A.C., Centro de Liderazgo y Desarrollo Humano, A.C., Instituto José David, A.C., Vida y Familia, A.C., Asilo de niños y casa Hogar I. de B.P. and the local board of FECHAC, where he serves on different committees. Mr. Terrazas holds a Bachelor’s degree in Civil Engineering from Cornell University. Mr. Terrazas also graduated from the Executive Officers Management Program at IPADE. Mr. Terrazas is the brother of Federico Terrazas Torres, uncle of Federico Terrazas Becerra, cousin of Miguel Márquez Prieto and first cousin once removed of Luis Márquez Villalobos and Martha Márquez de Corral, all of whom are members of the Board. Mr. Terrazas is also the father of Alberto Terrazas Seyffert and Luis Enrique Terrazas Seyffert and first cousin once removed of Ana Cecilia Márquez Villalobos and Silvia Márquez Villalobos, all of whom are alternate members of the Board.

132

Luis Márquez Villalobos has served as a member of the Board since 1991. He currently serves as a staff consultant for the chief executive officer’s office of Grupo Cofiasa, S.A. de C.V. He is the second cousin of Federico Terrazas Becerra, first cousin once removed of Federico Terrazas Torres and Enrique G. Terrazas Torres, brother of Martha Márquez de Corral and son of Miguel Márquez Prieto, all of whom are members of the Board. Mr. Márquez is the brother of Ana Cecilia Márquez Villalobos and Silvia Márquez Villalobos and second cousin of Alberto Terrazas Seyffert and Luis Enrique Terrazas Seyffert, all of whom are alternate members of the Board.

Ramiro Gerardo Villarreal Morales has served as a member of the Board since 1991. He joined CEMEX in 1987 and served as general counsel since then, and also has served as secretary of CEMEX’s board of directors since 1995. Prior to joining CEMEX, Mr. Villarreal served as Deputy Director General of Grupo Financiero Banpaís, having served as deputy general director from 1985 to 1987. Currently, he serves as Executive Vice President of the Legal Department. Mr. Villarreal is a graduate of the Universidad Autónoma de Nuevo León with a degree in law. He also received a Master of Science degree in finance from the University of Wisconsin.

Fernando Ángel González Olivieri has been a member of the Board since 2010. Since 1989, he has held various positions at CEMEX, including Vice President of Strategic Planning, President of CEMEX Venezuela, President of CEMEX Asia, President of CEMEX South America and the Caribbean, President of CEMEX Europe, Middle East, Africa, Asia; Executive Vice President of Planning and Development; and Executive Vice President of Planning and Finances. In February 2010, Mr. González was appointed Executive Vice President of Planning and Finances and in 2011 he was appointed Chief Financial Officer of CEMEX. He currently serves as Chief Executive Officer of CEMEX. Mr. González holds professional and postgraduate degrees in Business Administration from ITESM.

Martha Márquez de Corral has served as a member of the Board since 1991. She holds a Bachelor’s degree in Business Administration from ITESM. Mrs. Márquez is a member of the board of the Consejo de Administración de Inmobiliaria Ruba, S.A. de C. V., Consejo de Promotora de Hospitales Mexicanos, S.A. de C.V. and Grupo Cofiasa, S.A. de C. V., among others. Mrs. Márquez volunteers in the following civil societies: Asociación Nacional Pro-Superación Personal, A.C. (ANSPAC), Casas de Cuidado Diario. A.C. and Fundación Cima, A.C. She has worked in Comerial de Fierro y Acero, S.A. in the accounting department, and in the production department of Agropecuaria La Norteñita. Mrs. Márquez graduated from the Executive Officers Management Program D-1 at IPADE. She is the second cousin of Federico Terrazas Becerra, Chairman of the Board. Mrs. Márquez is the first cousin once removed of Federico Terrazas Torres and Enrique Terrazas Torres, sister of Luis Márquez Villalobos and daughter of Miguel Márquez Prieto, all of whom are members of the Board. She is the sister of Silvia Márquez Villalobos and Ana Cecilia Márquez Villalobos, and cousin of Luis Enrique Terrazas Seyffert and Alberto Terrazas Seyffert, all of whom are alternate members of the board.

José Antonio González Flores has served as a member of the Board since 2013. Mr. González joined CEMEX in 1998 and has held management positions in corporate and operating areas in Finance, Strategic Planning, and Corporate Communications and Public Affairs at CEMEX. He is currently responsible for CEMEX’s Finance, Controllership, Tax and Process Assessment areas. Mr. González holds a Bachelor’s degree in Industrial and Systems Engineering from ITESM and an M.B.A. from Stanford University in California.

Juan Romero Torres has been a member of the Board from 2002 to 2004 and since 2011. He joined CEMEX in 1989. He has held several senior management positions at CEMEX, including President of CEMEX Colombia, President of operations in Mexico, President of the South America and the Caribbean regions and President of CEMEX’s former Europe, Middle East, Africa and Asia regions. He is currently President of CEMEX’s operations in Mexico and is also in charge of the global procurement area. Mr. Romero graduated from Universidad de Comillas in Spain, where he studied law and economic and enterprise sciences.

Fernando Ruíz Sahagún has been an independent director of the Board since 2006. He is a founding member and advisor of Chevez, Ruiz, Zamarripa y Cia, S.C., a tax and financial consulting firm, and was the President of the Fiscal Commission of the Enterprise Coordination Council from 1997 to 2009. He is also a member of the board of directors of the following companies: Kimberly Clark de México, S.A.B. de C.V., Mexichem, S.A.B. de C.V., Rassini, S.A.B. de C.V., Grupo México, S.A.B. de C.V., Grupo Financiero Santander, S.A.B. de C.V., Grupo Pochteca, S.A.B. de C.V., Fresnillo PLC, the Bolsa Mexicana de Valores, S.A.B. de C.V., ArcelorMittal Lázaro Cárdenas, S.A. de C.V. and S.D. Indeval, S.A. de C.V. Mr. Ruíz Sahagún is a graduate of the Universidad Nacional Autónoma de México (UNAM) with a degree in Public Accounting.

133

Héctor Medina Aguiar has been a director of the Board from 1995 to 2009 and independent director of the Board since 2011. He served as a member of the board of directors of Axtel from October 2003 until January 2016. He was Executive Vice President of Finances and Legal at CEMEX until February 2010, when he retired. He served as the chairman of the board of directors of Regiomontana University until April of 2012 and served as a member of the Supervisory Board of ITESM until 2011. He has been a member of the boards of directors of various public and private companies. Mr. Medina Aguiar holds a degree in Chemical Administration from ITESM and a Master’s degree in Management Studies from The Management Centre at the University of Bradford.

Rómulo Jaurrieta Caballero has been an independent director of the Board since 2006. He has been an external auditor, financial consultant and counselor to various companies and organizations dedicated to industrial, commercial, financial, agricultural, educational and charitable activities, among which are Inmobiliaria Ruba, S.A. de C.V., Grupo Copachisa, Grupo Citlali and Grupo Punto Alto. Mr. Jaurrieta Caballero graduated from the Faculty of Accounting and Administration at the Universidad Autónoma de Chihuahua (“UACH”), from which he also holds various postgraduate degrees.

Pedro Miguel Escobedo Cónover has been an independent director of the Board since 2009. From 2008 until now, he has served as General Manager of Axacell, S. de R.L. de C.V., and from 2009 until now as the Managing Director of Comercializadora de Origen Natural, S. de R.L. de C.V. Mr. Escobedo Conover holds a degree in Industrial Engineering from the Instituto Tecnológico Autónomo de México (“ITAM”).

The following table sets forth the name, current position and date of first election of the current alternate members of the Board:

Name Position First Elected Alberto Terrazas Seyffert Alternate Director 1991 Manuel Antonio Milán Reyes Alternate Director 2009 Silvia Márquez Villalobos Alternate Director 2017 Luis Enrique Terrazas Seyffert Alternate Director 1991 Ana Cecilia Márquez Villalobos Alternate Director 2012 Héctor Enrique Escalante Ochoa Alternate Director 2017 Sergio Mauricio Menéndez Medina Alternate Director 2015 Rafael Garza Lozano Alternate Director 2010 Ignacio Alejandro Mijares Elizondo Alternate Director 2013 Luis Guillermo Franco Carrillo Alternate Director 2017 José Alberto Araujo Saavedra Independent Alternate Director 2009 Armando J. García Segovia Independent Alternate Director 1991 Manuel Esparza Zuberza Independent Alternate Director 2014 Gilles Alain Boud’hors Leautaud Independent Alternate Director 2015

Board Practices

Pursuant to the Mexican Securities Market Law and our corporate bylaws, our Board must, among other things:

• determine our general business strategies;

• approve (i) policies and guidelines for the use of our assets by related parties and (ii) any transaction with related parties, subject to certain limited exceptions, in both cases taking into consideration the opinion of the Audit and Corporate Practices Committee;

• approve unusual or non-recurring transactions and any transactions, including the acquisition or sale of assets with a value equal to or in excess of 5% of our consolidated assets, or the provision of collateral or guarantees or the assumption of liabilities equal to or in excess of 5% of our consolidated assets;

• approve the conditions under which a director or officer may take advantage of business opportunities presented to the Company;

134

• approve the appointment, removal and compensation of our chief executive officer, as well as the appointment and compensation of our other officers;

• approve our financial statements, accounting policies and internal control systems and auditing;

• approve the waivers with which a director or officer may take advantage of business opportunities presented to the Company;

• present at our annual shareholders’ meeting (i) a report on the activities of the Audit and Corporate Practices Committee, (ii) a report prepared by our Chief Executive Officer, including its opinion on such report, (iii) a report on the accounting policies used for the preparation of our financial statements and (iv) a report on the transactions and activities carried out by it pursuant to applicable regulation;

• approve the policies for the disclosure of information;

• oversee fulfillment of the resolutions taken by our shareholders;

• determine the appropriate measures to remedy known deficiencies; and

• require that the Chief Executive Officer disclose any material events.

These duties are, principally, to assist in shareholders’ meetings and to ensure that relevant expert opinions are provided, and to act without conflict of interest and without taking advantage of business opportunities for the Company.

Our financial statements as of December 31, 2016, 2015 and 2014 and for the years then ended have been approved by the Board and were approved by our shareholders at the annual shareholders’ meetings held on April 27, 2017, April 28, 2016 and April 30, 2015, respectively.

Audit and Corporate Practices Committee

The Audit and Corporate Practices Committee is comprised of Fernando Ruíz Sahagún, who serves as Chairman of the Committee, Rómulo Jaurrieta Caballero and Hector Medina Aguiar. As required by Mexican Securities Market Law, all members of the Audit and Corporate Practices Committee are independent. The chairman is elected by the shareholders, and the other members are designated by the members of the Board. The Audit and Corporate Practices Committee is responsible for assisting the Board in carrying out its oversight duties and conducting corporate practices in accordance with the Mexican Securities Market Law. In furtherance of this responsibility, and in accordance with the Mexican Securities Market Law, the duties of the Audit and Corporate Practices Committee pursuant to our bylaws include, among other things:

• recommend the appointment of external auditors;

• evaluate the performance of our external auditors and analyze, and express opinions on, the reports and opinions prepared by our external auditors;

• review financial statements and recommend their approval or non-approval to the Board;

• inform the Board about the status of our internal controls, internal audits and any irregularity thereof;

• prepare opinions regarding the report prepared by our Chief Executive Officer;

• monitor compliance with our internal rules and regulations and any applicable law relating to related party transactions and transactions involving assets of a certain value;

135

• request the opinion of independent experts, when deemed appropriate or when required by law, including in connection with related party transactions;

• request that employees of the Company and its subsidiaries prepare any necessary reports;

• investigate and test possible violations of our internal controls and internal policies;

• call shareholders’ meetings and recommend inclusion of matters it deems appropriate on the agenda;

• provide opinions to the Board on certain matters as required by the Mexican Securities Market Law;

• assist the Board in preparing reports as required by the Mexican Securities Market Law;

• supervise and report on the performance of our key officers and recommend their level of compensation;

• render opinions to the Board in connection with the designation, compensation and removal of our Chief Executive Officer and policies for the description and comprehensive remuneration of other executive officers; and

• render its opinion to the Board in connection with transactions with related parties.

Senior Management

The following table sets forth the name, current position and years of service of our senior officers:

Name Position Years of Service Héctor Enrique Escalante Ochoa Chief Executive Officer 17 Ronald S. Henley U.S. Division President 5 Jesús Rogelio González Lechuga Mexico Division President 44 Luis Carlos Arias Laso Chief Financial Officer 20 Daniel E. Helguera Moreno Chief Human Resources Officer 2 Sergio Sáenz Gutiérrez General Counsel 14 The following sets forth selected biographical information for each of our senior officers:

Héctor Enrique Escalante Ochoa joined the Company in 1999 as President of our Mexico Division. He served as President of our U.S. Division from 2000 through the end of 2014, and on January 1, 2015, he was named Chief Executive Officer by the Board. Prior to joining GCC, he spent 15 years in the Mexican lumber industry. From 1979 to 1981 he worked as a Planning Analyst at the steel division of Grupo Alfa. From 1983 to 1985 he was a Financial Analyst with Ponderosa Industrial, S.A. de C.V. From 1986 to 1987, he was the Planning Manager at Ponderosa Industrial, S.A. de C.V. From 1987 to 1990, he was the Sales Manager at Plywood Ponderosa de Mexico, S.A. de C.V., and went on to become Plywood Ponderosa de Mexico, S.A. de C.V.’s President from 1990 to 1996. From 1996 to 1998, he was the President of the Ponderosa Division at Grupo Industrial Durango. From 1998 to 1999, he was President of Tanques Especializados de Chihuahua, S.A. de C.V. He has also been a member of the board of directors of the Centro de Calidad y Productividad of the state of Chihuahua and National Chamber of the Transformation Industry in Chihuahua. He was also the chairman of the National Forestry Industry Chamber and the Association of Forestry Producers of the state of Chihuahua and Vice President of the National Plywood Association. Mr. Escalante Ochoa holds a degree in Industrial and Systems Engineering from ITESM and an M.B.A. from Cornell University. He has also participated in a number of Executive Education programs, including the Management Program at IPADE and the Seminar for Presidents at Harvard University.

Ronald S. Henley joined the Company in 2012 and was named President of the U.S. Division in 2014. With 31 years of experience in the industry, prior to joining the Company, Mr. Henley worked for 15 years at Boral Industries, where he served as President of Boral Construction Materials, Vice President of Growth and Development at Boral Industries, Vice President of Operations and Vice President of Finance at Boral Bricks. Mr. Henley holds a Bachelor’s degree in Finance and Accounting from the University of Missouri and became a Certified Public Accountant in 1983.

136

Jesús Rogelio González Lechuga joined the Company in 1973 as head of the Physics-Chemistry Lab in our Chihuahua plant. Prior to being named President of the Mexico Division in 2001, he served as the Chief of Calcination from 1978 to 1981, as Superintendent of Production from 1981 to 1984, as Manager of Production in the Juarez plant from 1984 to 1992, as Director of Processes in the Samalayuca plant from 1992 to 1995 and as Director of our Samalayuca and Juarez plants in 1995. Mr. González Lechuga holds a degree in Chemical Engineering and a postgraduate degree in Business Administration from the Universidad Autónoma de Chihuahua, and an M.B.A. from ITESM.

Luis Carlos Arias Laso joined the Company in 1996 in our Planning and New Projects division. He served as Director of Corporate Treasury and Investor Relations from 2000 to 2017, and on May 24, 2017 he was named Chief Financial Officer. Mr. Arias holds a degree in financial management from the ITESM and an M.B.A. from the ITESM exchange program with Midwestern State University, and has completed the D-1 business Management Program at IPADE.

Daniel E. Helguera Moreno joined the Company in 2015 and currently serves as the Head of Human Resources. Mr. Helguera has 20 years of experience in human resources and has led human resources for business leaders in the construction, cement, steel, food and technology industries. Mr. Helguera holds a degree in Public Accounting from ITESM, an M.B.A. from ITESM/EGADE Business School and a Master’s degree in Human Resources from IE Business School in Madrid.

Sergio Sáenz Gutiérrez joined the Company in 2003 as Manager of the Legal Department and was named General Counsel in January of 2006. Prior to joining GCC, he spent eight years in private practice and from 2001 to 2002, worked as Director of Legal Planning in the Strategic Planning Office for the Office of the President in Mexico. Mr. Sáenz holds a degree in Law, a Masters in Economics Law from La Sapienza in Rome, Italy; a Masters in Corporate Law from ITESM and an LL.M. in Environmental Law from the University of Denver. He has also participated in a number of Executive Education programs, including the Management Program at IPADE. He was a professor in ITESM School of Law from 1996 to 2010.

Chief Executive Officer

Under our bylaws and Mexican law, the Chief Executive Officer is entrusted with the performance, conduct and execution of our day-to-day business activities. The Chief Executive Officer is responsible for, among other things:

• submit business strategies for the Company to the Board for its approval;

• make public certain relevant information and events concerning the Company that are required to be disclosed;

• exercising a vote on the shares issued by subsidiaries owned by the Company, in compliance with applicable law, unless the Board delegates this authority to special delegates;

• organizing, managing, and directing the staff, property, and business of the Company in accordance with the instructions of the Board; and

• appointing senior officers to assist in the performance and proper discharge of its duties, in accordance with the guidelines set by the Board.

Compensation of Directors and Senior Management

By resolution of the annual shareholders’ meeting held on April 27, 2017, each member of our Board is entitled to receive Ps.70,000 (approximately U.S.$3,700), as compensation for each board meeting attended by such director. The chairman of the Audit and Corporate Practices Committee is entitled to receive Ps.50,000 (approximately U.S.$2,650), and each other member of the Audit and Corporate Practices Committee is entitled to receive Ps.35,000 (approximately U.S.$1,850), as compensation for each audit committee meeting attended by such Audit and Corporate Practices Committee member.

137

The aggregate amount of cash compensation we accrued to our senior management as a group was Ps.55.1 million (approximately U.S.$2.7 million) for the year ended December 31, 2016. We also provide other benefits to our executive officers, including a company vehicle and life and health insurance. As of December 31, 2016, the aggregate amount earmarked for the pension plans of our senior management in our Mexican and United States divisions, as well as for other executives in our United States division, was Ps.31.0 million.

Manuals and Code of Conduct

Our code of ethics contains the guidelines for employee conduct to ensure a healthy work environment and compliance with our ethical values. Among these values are safety, health, attitude of service, integrity, teamwork, innovation and excellence and includes not receiving undue payments in connection with our services.

The members of our Board are given a summary of the main duties and responsibilities they assume upon accepting their positions on the Board, as well as some recommendations for carrying out their responsibilities. The duties and responsibilities indicated in this summary are largely derived from the Mexican Securities Market Law. We also have a guide outlining our policies on the purchase or sale of our securities, which was issued following the approval of the regulations governing these issues and prohibits directors from buying or selling securities in certain cases and during certain periods.

Share Ownership of Directors and Senior Management

As of April 27, 2017, our senior management, as a group, are beneficial owners of less than 0.1% of our capital stock. External Auditors

Our external auditors are Galaz, Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu Limited, independent auditors, with offices at Lázaro Cárdenas 2321 Pte., PB Residencial San Agustín 66260 Garza García, N.L. Our external auditors were selected by our Board based on experience, service standards and quality, and after it had been briefed by our Audit and Corporate Practices Committee.

Galaz, Yamazaki, Ruiz Urquiza, S.C. has served as our external auditors since 2013 and have audited our financial

statements since December 31, 2013. For the years ended December 31, 2016, 2015 and 2014, our external auditors have not issued any exceptions to their opinion or issued a negative opinion, nor have they refrained from issuing opinions on our annual consolidated financial statements included in this offering memorandum.

In addition to auditing our financial statements, Galaz, Yamazaki, Ruiz Urquiza, S.C. audits our social security

contributions and prepares transfer pricing studies.

Internal Controls

We have internal control policies and procedures designed to provide reasonable assurances that our transactions and operations are carried out, registered and recorded according to the guidelines established by our management and based off of, and applied in accordance with the interpretative guidelines of, IFRS. In addition, our processes and operations are subject to periodic internal audits which are reviewed by our Audit and Corporate Practices Committee.

138

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information concerning beneficial ownership of our capital stock estimated as of the date of this offering memorandum:

Shares owned Name of shareholder Number % CAMCEM ................................. 171,658,588 51.6 CEMEX ..................................... 31,483,332 9.5 Treasury shares .......................... 4,864,492* - Other shareholders ..................... 1,858,080 0.6 Public float ................................ 127,535,508 38.4 Total .......................................... 337,400,000 100.0%

* As a result of share repurchase.

Certain members of the Terrazas and Márquez families, which indirectly control CAMCEM, serve as directors or alternate directors of GCC. Specifically, Federico Terrazas Becerra, who is Chairman of the Board, Federico Terrazas Torres, Miguel Márquez Prieto, Enrique G. Terrazas Torres, Martha Márquez de Corral and Luis Márquez Villalobos, who are members of our Board, and Alberto Terrazas Seyffert, Silvia Márquez Villalobos, Luis Enrique Terrazas Seyffert and Ana Cecilia Márquez Villalobos, who are alternate directors, are all related to the Terrazas and Márquez families. Accordingly, CAMCEM, and consequently the Terrazas and Márquez families, through their voting power at shareholders’ meetings, may be able to elect a majority of the members of our Board, exert significant influence over our management and corporate policies and determine the outcome of other actions requiring a vote of our shareholders. In addition, four of the members of our Board and their respective alternates have been appointed by CEMEX.

In addition to the persons mentioned above, no other individual or entity beneficially owns more than 10.0% of our outstanding capital stock, has significant influence, or exercises control or is able to decisively influence our course of business. We are not controlled, directly or indirectly, by any other entity, foreign government or any other person, and we have no knowledge of any agreements that could result in a change of control.

We may repurchase our shares on the Mexican Stock Exchange from time to time up to a specified maximum aggregate value authorized by our shareholders. Our shareholders authorized us at the annual meeting on April 27, 2017 to repurchase shares with an aggregate value of up to Ps.700 million through the next annual shareholders’ meeting. We have not repurchased any of our shares since April 2008.

139

RELATED PARTY TRANSACTIONS

We have historically entered into and will continue to enter into a number of transactions with related parties. We engage in substantial repeated transactions with related parties, including CEMEX, which is and has been a shareholder of our controlling shareholder, as well as Abastecedora de Fierro y Acero, S.A. de C.V. and Inmobiliaria Ruba, S.A. de C.V., each of which is an affiliate of ours due to our significant equityholders also holding significant equity interests in them. Although many of these transactions occur in the ordinary course of business and, if significant, must be submitted to our Audit and Corporate Practices Committee and approved by the Board, these transactions may create the potential for conflicts of interest. We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable to us than if we were dealing with an unaffiliated party.

All transactions with related parties have been made on terms no less favorable to us than would have been obtained in an arm’s-length transaction and comply with the applicable Mexican corporate and tax law.

The following table sets forth the transactions carried out with related parties during the periods specified below:

Three Months Ended

March 31, Year Ended December 31,

Related Party 2017 2016 2015 2014 Nature of

Operations (thousands of Mexican pesos) (unaudited) Sales

Cemex, S.A.B. de C.V. Ps. 4,885 Ps. 53,921 Ps. 87,900 Ps. 242,594 Sales of cement and construction materials

Abastecedora de Fierro y Acero, S.A. de C.V. 8,973 28,574 28,460 20,372 Sales of cement and construction materials

Inmobiliaria Ruba, S.A. de C.V. 13,547 76,259 120,426 89,672 Sales of cement and construction materials

Copachisa, S.A. de C.V. 11,928 55,277 52,717 17,584 Sales of cement and construction materials

Total Sales Ps.39,333 Ps.214,031 Ps.289,503 Ps.370,222 Purchases

Cemex, S.A.B. de C.V Ps. 32,018 Ps. 69,914 Ps. 67,488 Ps. 34,459 Purchase of inventories and other services

Abastecedora de Fierro y Acero, S.A. de C.V. 1,265 4,983 15,511 9,679 Purchase of inventories and other services

Madata It, S.A. de C.V. 13,237 54,625 13,167 - IT services

Total Purchases ............ Ps.46,520 Ps.129,522 Ps.96,166 Ps.44,138

Net sales to related parties for the three months ended March 31, 2017 and for the year ended December 31, 2016, accounted for 1.2% and 1.5% of total net sales, respectively.

See note 7 to the interim condensed consolidated financial statements for the three months ended March 31, 2017 and note 8 to the annual consolidated financial statements for the years ended December 31, 2016, 2015 and 2014.

140

DESCRIPTION OF NOTES

The Company will issue the notes under an indenture to be dated as of the Issue Date (the “Indenture”) among the Company, as issuer, and GCC Cemento, S.A. de C.V. (“GCC Cemento”), Cementos de Chihuahua, S.A. de C.V. (“Cementos de Chihuahua” and together with GCC Cemento, the “Mexican Guarantors”) and GCC of America, Inc. (“GCC of America” and together with the Mexican Guarantors, the “Guarantors”) and Wells Fargo Bank, National Association, as trustee (the “Trustee”) and paying agent (the “Paying Agent”). The notes will be issued in private transactions that are not subject to the registration requirements of the U.S. Securities Act of 1933, as amended (the “Securities Act”). The notes will not have the benefit of any registration rights. The notes are subject to all such terms pursuant to the provisions of the Indenture, and holders of such notes are referred to the Indenture for a statement thereof.

The following is a summary of the material provisions of the Indenture. Because this is a summary, it may not contain all the information that is important to you. You can find the definitions of certain terms used in this description under “—Certain Definitions.” When we refer to the Company in this section, we mean Grupo Cementos de Chihuahua, S.A.B. de C.V. (and its successors and permitted assignees) and not its subsidiaries, and when we refer to the notes in this section, we mean the notes originally issued on the Issue Date and any Additional Notes.

General

The notes will:

• be senior obligations of the Company;

• rank pari passu in right of payment with all other existing and future Senior Indebtedness of the Company;

• rank senior in right of payment to all existing and future Subordinated Indebtedness of the Company, if any;

• be effectively subordinated to all existing and future Indebtedness of the Company and the Guarantors secured by assets of the Company and the Guarantors to the extent of such security interest;

• be structurally subordinated to all existing and future Indebtedness of the Company’s Subsidiaries (other than the Guarantors);

• be subordinated to liabilities preferred by statute (such as tax, social security and labor obligations); and

• be fully and unconditionally guaranteed, on a joint and several basis and on a general senior basis, by each of the Guarantors.

Additional Notes

Subject to the limitations set forth under “Certain Covenants—Limitation on Incurrence of Additional Indebtedness,” and “Certain Covenants—Limitation on Liens,” the Company and its Subsidiaries may Incur additional Indebtedness. At the Company’s option, this additional Indebtedness may consist of additional notes (“Additional Notes”) issued in one or more transactions, which have identical terms (other than the issue date, issue price, the first payment of interest on them and, to the extent necessary, certain temporary securities transfer restrictions) so that the Additional Notes may be consolidated and form a single class with the notes issued on the Issue Date; provided that any Additional Notes shall be issued under a separate CUSIP or ISIN number unless the Additional Notes are issued pursuant to a “qualified reopening” of the original series, are otherwise treated as part of the same “issue” of debt instruments as the original series or are issued with no more than a de minimis amount of original discount, in each case for U.S. federal income tax purposes. Holders of Additional Notes would have the right to vote together with holders of the notes issued on the Issue Date as one class on all matters with respect to the notes issued on the Issue Date.

Principal, Maturity and Interest

The notes will mature on June 23, 2024.

141

The notes will initially be issued in minimum denominations of U.S.$200,000 and in integral multiples of U.S.$1,000 in excess thereof. The notes will not be entitled to the benefit of any mandatory sinking fund. The rights of holders of beneficial interests in the notes to receive the payments on such notes are subject to applicable procedures of Euroclear and Clearstream, Luxembourg or The Depositary Trust Company (“DTC”), as applicable. If the due date for any payment in respect of any notes is not a Business Day at the place at which such payment is due to be paid, the holder thereof will not be entitled to payment of the amount due until the next succeeding Business Day at such place, and will not be entitled to any further interest or other payment as a result of any such delay.

Interest on the notes will accrue at the rate per annum set forth on the cover of this Offering Memorandum and will be payable, in cash, semi-annually in arrears on June 23 and December 23 of each year, commencing on December 23, 2017 and at maturity, to holders of record on the immediately preceding June 23 and December 23. Interest on the notes will accrue from the most recent date on which interest has been paid or should have been paid had the payment been delayed to the next Business Day pursuant to the paragraph above or, if no interest has been paid, from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Each interest period shall end on (but not include) the relevant interest payment date.

Initially, the Trustee will act as Paying Agent and registrar for the notes. The Company may change the Paying Agent and registrar without notice to holders. If a holder of U.S.$10 million or more in aggregate principal amount of notes has given wire transfer instructions to the Paying Agent at least ten Business Days prior to the applicable payment date, the Company will make all principal, premium and interest payments on those notes in accordance with those instructions. All other payments on the notes will be made at the office or agency of the Paying Agent and registrar in New York City unless the Company elects to make interest payments by check mailed to the registered holders at their registered addresses.

Additional Interest

All payments made by or on behalf the Company or the Guarantors under, or with respect to, the notes will be made free and clear of, and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) (collectively, “Taxes”) imposed or levied by or on behalf of the government of México or any other jurisdiction in which the Company is organized or is a resident for tax purposes or within or through which payment is made or any political subdivision or taxing authority or agency thereof or therein (or, in the case of amounts payable by a Guarantor, of the jurisdiction in which such Guarantor is organized or is a resident for tax purposes or any political subdivision or taxing authority or agency thereof or therein) (any of the aforementioned being a “Taxing Jurisdiction”), unless the Company or such Guarantor, as the case may be, is required to withhold or deduct Taxes by law.

If the Company or any Guarantor (or their agents) is so required to withhold or deduct any amount for, or on account of, such Taxes from any payment made under or with respect to the notes, the Company or such Guarantor, as the case may be, will pay such additional interest (“Additional Interest”) as may be necessary so that the net amount received by each holder (including Additional Interest), after such withholding or deduction, will not be less than the amount such holder would have received if such Taxes had not been required to be withheld or deducted; provided, however, that the foregoing obligation to pay Additional Interest does not apply to:

• any Taxes imposed solely because at any time there is or was a connection between the holder or beneficial owner of such note and a Taxing Jurisdiction, including such holder or beneficial owner (i) being or having been a citizen or resident thereof for tax purposes, (ii) maintaining or having maintained an office, permanent establishment or branch, in all cases subject to taxation therein, or (iii) being or having been present or engaged in a trade or business therein (other than the mere purchase of the notes, or receipt of a payment or the ownership or holding of the notes or the exercise or enforcement of rights under or with respect to the notes);

• any estate, inheritance, gift, sales, transfer, personal property or similar Tax imposed with respect to the notes;

• any Taxes imposed solely because the holder or beneficial owner fails to comply with any certification, identification or other reporting requirement concerning the nationality, residence, identity or connection with a Taxing Jurisdiction of the holder or any beneficial owner of the notes if compliance is required by the

142

applicable law of the Taxing Jurisdiction or an income tax treaty to which Mexico or any other Taxing Jurisdiction is a party, as a precondition to exemption from, or reduction in the rate of, the Tax and the Company or the Guarantor, as the case may be, has given the holders at least 30 days’ written notice that holders will be required to provide such information and identification;

• any Taxes payable otherwise than by deduction or withholding from payments on the notes;

• any Taxes with respect to such notes presented for payment more than 30 days after the date on which the payment became due and payable or the date on which payment thereof is duly provided for and notice thereof given to holders, whichever occurs later, except to the extent that the holders of such notes would have been entitled to such Additional Interest on presenting such notes for payment on any date during such 30 day period;

• any Taxes that would not have been imposed but for a failure by the holder or beneficial owner (or any financial institution through which the holder or beneficial owner holds any notes through which payment on such notes are made) to comply with any certification, information, identification, documentation or other reporting requirements (including entering into and complying with an agreement with the Internal Revenue Service) imposed pursuant to Sections 1471 through 1474 of the Internal Revenue Code as in effect on the date of issuance of the notes or any successor or amended version of these provisions;

• any payment on the notes to a holder that is a fiduciary or partnership or a person other than the sole beneficial owner of any such payment, to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such a partnership or the beneficial owner of the payment would not have been entitled to the Additional Interest had the beneficiary, settlor, member or beneficial owner been the holder of the notes; or

• any combination of the above bullet points.

The foregoing provisions will survive any termination or discharge of the Indenture and shall apply mutatis mutandis to any Taxing Jurisdiction with respect to any successor to the Company or any Guarantor, as the case may be. The Company or such Guarantor, as applicable, will (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant Taxing Jurisdiction in accordance with applicable law. The Company or such Guarantor, as applicable, will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each Taxing Jurisdiction imposing such Taxes and will furnish such certified copies to the Trustee within 30 days after the date the payment of any Taxes so deducted or so withheld is due pursuant to applicable law or, if such tax receipts are not reasonably available to the Company or such Guarantor, as applicable, furnish such other documentation that provides reasonable evidence of such payment by the Company or such Guarantor, as applicable.

The limitations on the obligations to pay Additional Interest stated in the third bullet point above will not apply if the provision of information, documentation or other evidence described in the applicable bullet point would be materially more onerous, in form, in procedure or in the substance of information disclosed, to a holder or beneficial owner of a note than comparable information or other reporting requirements imposed under U.S. federal income tax law, regulation and administrative practice.

Applicable Mexican regulations currently allow the Company and the Mexican Guarantors to withhold at a reduced rate; provided that the Company complies with certain information reporting requirements. Accordingly, the limitations on the Company’s obligations to pay Additional Interest stated in the third bullet point above also will not apply and will not entitle the Company to require the information therein specified unless (a) the provision of the information, documentation or other evidence described in the applicable bullet point is expressly required by the applicable Mexican statutes, regulations and administrative practices, and (b) the Company or any Mexican Guarantor would otherwise meet the requirements for application of the reduced Mexican withholding tax rate.

In addition, such third bullet point does not require, and should not be construed as requiring that any Person, including financial institutions (except for non-Mexican pension or retirement funds which may be exempted if registered),

143

register with the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) to establish eligibility for an exemption from, or a reduction of, Mexican withholding tax.

Any reference in this offering memorandum, the Indenture, any supplemental indenture or the notes to principal, premium, interest or any other amount payable in respect of the notes by the Company or the Guarantors will be deemed also to refer to any Additional Interest that may be payable with respect to that amount under the obligations referred to in this subsection.

In the event that Additional Interest actually paid with respect to the notes pursuant to the preceding paragraphs are based on rates of deduction or withholding of withholding taxes in excess of the appropriate rate applicable to the holder of such notes, and as a result thereof such holder is entitled to make a claim for a refund or credit of such excess from the authority imposing such withholding tax, then such holder shall, by accepting such notes, and without any further action, be deemed to have assigned and transferred all right, title and interest to any such claim for a refund or credit of such excess to the Company. However, by making such assignment, the holder makes no representation or warranty that we will be entitled to receive such claim for a refund or credit and incurs no other obligation with respect thereto.

Note Guarantees

Each Guarantor will fully and unconditionally guarantee, on a joint and several basis, the performance of all obligations of the Company under the Indenture and the notes on a senior basis.

The obligations of each Guarantor may be deemed to have been a fraudulent transfer and declared void, or may be effectively subordinated to those obligations that are preferred under applicable laws, in the event any such Guarantor becomes subject to an insolvency proceeding under applicable law. Laws under applicable jurisdictions may, under specific circumstances, allow courts to void the notes or the related Note Guarantees. See “Risk Factors—Risks Related to our Indebtedness, the Notes and the Guarantees—The guarantees of the notes may not be enforceable under Mexican insolvency law and their enforceability may be uncertain under U.S. bankruptcy law.”

Each Guarantor will be released and relieved of its obligations under its Note Guarantee in the event:

(1) there is a Legal Defeasance of the notes as described under “Legal Defeasance and Covenant Defeasance”; or

(2) there is a sale or other disposition of Capital Stock of such Guarantor following which such Guarantor is no longer a direct or indirect Subsidiary of the Company, so long as (a) such Guarantor is simultaneously released from its obligations in respect of any of the Company’s other Indebtedness or any Indebtedness of any Restricted Subsidiary and (b) the proceeds from such sale or disposition of Capital Stock of such Guarantor are used for the purposes permitted under the Indenture.

provided that the transaction is carried out pursuant to and in accordance with all other applicable provisions of the Indenture.

Only three of our Restricted Subsidiaries, GCC Cemento, Cementos de Chihuahua and GCC of America, will guarantee the notes, and our Unrestricted Subsidiaries and certain of our Restricted Subsidiaries will not guarantee the notes. In the event of a bankruptcy, concurso mercantil, liquidation or reorganization of these non-guarantor Subsidiaries of the Company, these non-guarantor Subsidiaries of the Company will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Company. In addition, holders of minority equity interests in the Subsidiaries of the Company may receive distributions prior to or pro rata with the Company and its Subsidiaries depending on the terms of the equity interests. See “Risk Factors—Risks Related to our Indebtedness, the Notes and the Guarantees—The notes will be structurally subordinated to the obligations of our non-guarantor subsidiaries.”

144

Optional Redemption

Except as stated below, the Company may not redeem the notes. The Company may redeem the notes, at its option, in whole at any time or in part from time to time, on and after June 23, 2021, at the following redemption prices, expressed as percentages of the principal amount thereof outstanding at the time of redemption, if redeemed during the 12-month period commencing on June 23 of any year set forth below, plus any accrued and unpaid interest on the principal amount of the notes to the date of redemption:

USD

2021 ....................................................................................................... 102.625% 2022 ....................................................................................................... 101.313% 2023 and thereafter ................................................................................ 100.000%

Prior to June 23, 2021, the Company will have the right, at its option, to redeem any of the notes, in whole or in part, at any time or from time to time prior to their maturity at a redemption price equal to the greater of (1) 100% of the principal amount of such notes and (2) the sum of the present value at such redemption date of (a) the redemption price of the notes at June 23, 2021 (such redemption price being set forth in the table above) plus (b) all required interest payments on the notes through June 23, 2021 (excluding accrued but unpaid interest to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points (the “Make-Whole Amount”), plus in each case any accrued but unpaid interest on the principal amount of the notes to, but excluding, the date of redemption.

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue (as defined below), assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price (as defined below) for such redemption date.

“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker (as defined below) as having an actual or interpolated maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such notes.

“Independent Investment Banker” means one of the Reference Treasury Dealers (as defined below) appointed by the Company.

“Comparable Treasury Price” means, with respect to any redemption date (1) the average of the Reference Treasury Dealer Quotations (as defined below) for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotation or (2) if the Independent Investment Banker or the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

“Reference Treasury Dealer” means either Citigroup Global Markets Inc. or The Bank of Nova Scotia, New York Agency, an affiliate of Scotia Capital (USA) Inc., or their respective affiliates which are primary United States government securities dealers and not less than two other leading primary United States government securities dealers in New York City reasonably designated by the Company; provided, however, that if any of the foregoing shall cease to be a primary United States government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will substitute therefore another Primary Treasury Dealer.

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker or the Company, of the bid and asked price for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker or the Company by such Reference Treasury Dealer at 3:30 p.m. New York time on the third Business Day preceding such redemption date.

145

Optional Redemption upon Equity Offerings. At any time, or from time to time, on or prior to June 23, 2020, the Company may, at its option, use the net cash proceeds of one or more Equity Offerings to redeem in the aggregate up to 35% of the aggregate principal amount of the notes issued pursuant to the Indenture at a redemption price equal to 105.250% of the principal amount thereof plus any accrued and unpaid interest on the principal amount of the notes to the date of redemption; provided, that:

• after giving effect to any such redemption at least 65% of the aggregate principal amount of the notes issued under the Indenture remains outstanding; and

• the Company shall make such redemption not more than 90 days after the consummation of such Equity Offering.

“Equity Offering” means any public or private sale of Qualified Capital Stock after the Issue Date for cash other than issuances to any Subsidiary of the Company.

Optional Redemption for Changes in Withholding Taxes. If, as a result of any amendment to, or change in, the laws (or any rules or regulations thereunder) of a Taxing Jurisdiction affecting taxation, or any amendment to or change in an official interpretation or application of such laws, rules or regulations that has a general effect, which amendment to or change of such laws, rules or regulations, or official interpretation or application, is publicly announced and becomes effective on or after the Issue Date (which, in the case of a merger, consolidation or other transaction permitted and described under “Certain Covenants—Limitation on Merger, Consolidation and Sale of Assets,” shall be treated for this purpose as the date of such transaction) we would be obligated, after taking all reasonable measures to avoid this requirement, to pay Additional Interest in excess of those attributable to a withholding tax rate of 4.9% with respect to the notes (see “Additional Interest”), then, at our option, all, but not less than all, of the notes may be redeemed at any time on giving not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the outstanding principal amount, plus any accrued and unpaid interest on the principal amount of the notes to the date of redemption (including any Additional Interest); provided, however, that (1) no notice of redemption for tax reasons may be given earlier than 60 days prior to the earliest date on which we would be obligated to pay these Additional Interest if a payment on the notes were then due, and (2) at the time such notice of redemption is given such obligation to pay such Additional Interest remains in effect.

Prior to the publication of any notice of redemption pursuant to this provision, we will deliver to the Trustee (1) an Officer’s Certificate stating that we are entitled to effect the redemption and setting forth a statement of facts showing that the conditions precedent to our right to redeem have occurred and (2) an Opinion of Counsel or an opinion of a tax consultant, in either case of recognized standing with respect to tax matters in the Taxing Jurisdiction and reasonably acceptable to the Trustee, stating that the requirement to pay such Additional Interest results from such change or amendment referred to above. The Trustee will accept such Officer’s Certificate and Opinion of Counsel or opinion of a tax consultant as sufficient evidence of the satisfaction of the conditions precedent described above, without further inquiry, in which event it will be conclusive and binding on the holders.

Optional Redemption Procedures. In the event that less than all of the notes are to be redeemed at any time, selection of notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the notes are listed or, if the notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by any other method as the Trustee shall deem fair and appropriate. If a partial redemption is made with the proceeds of an Equity Offering, selection of the notes or portions thereof for redemption will, subject to the preceding sentence, be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to the procedures of DTC, Euroclear and/or Clearstream, as applicable), unless the method is otherwise prohibited. No notes of a principal amount of U.S.$200,000 or less may be redeemed in part and notes of a principal amount in excess of U.S.$200,000 may be redeemed in part in multiples of U.S.$1,000 (provided that the unredeemed portion will be in a denomination of at least U.S.$200,000).

Notice of any redemption will be mailed by first-class mail, postage prepaid, at least 30 but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address. For so long as the notes are listed on the SGX-ST and the rules of the exchange so require, the Company will cause notices of redemption to also be published as described in “—Notices” below. If notes are to be redeemed in part only, the notice of redemption will state

146

the portion of the principal amount thereof to be redeemed. This notice, once delivered by us to the Trustee, will be irrevocable, but may, at the Company’s discretion, be subject to one or more conditions precedent, including the completion of any related Equity Offering, other securities offerings or other financings, transactions or events. If such redemption is subject to the satisfaction of one of more conditions precedent, such notice shall state that, in our discretion, the redemption date may be delayed until such time as any or all such conditions shall be satisfied (or waived by us in our sole discretion), such redemption may not occur and such notice may be rescinded in the event that any or all of such conditions shall not have been satisfied (or waived by us in our sole discretion) by the redemption date, or by the redemption date so delayed. A note in a principal amount equal to the unredeemed portion thereof (if any) will be issued in the name of the holder thereof upon cancellation of the original note (or appropriate adjustments to the amount and beneficial interests in a global note will be made, as appropriate).

The Company will pay the redemption price for any note on the date of redemption. On and after the redemption date, interest will cease to accrue on notes or portions thereof called for redemption as long as the Company has deposited with the Paying Agent funds in satisfaction of the applicable redemption price pursuant to the Indenture. Upon redemption of any notes by the Company, such redeemed notes will be cancelled.

Sinking Fund

The Company is not required to make mandatory redemption payments or sinking fund payments with respect to the notes.

Change of Control

Upon the occurrence of a Change of Control, each holder will have the right to require that the Company purchase all or a portion (in integral multiples of U.S.$1,000; provided that the remaining principal amount of such holder’s note will not be less than U.S.$200,000) of the holder’s notes at a purchase price in cash equal to 101% of the principal amount thereof, plus any accrued and unpaid interest thereon through the purchase date (the “Change of Control Payment”).

Within 30 days following the date upon which the Change of Control occurs, the Company must send, by first class mail, a notice to each holder, with a copy to the Trustee, offering to purchase the notes as described above (a “Change of Control Offer”) and, for so long as the notes are listed on the SGX-ST and the rules of the exchange so require, publish such notice as described in “—Notices” below. The Change of Control Offer shall state, among other things, the circumstances and relevant facts regarding such Change of Control and the purchase date, which must be at least 30 but not more than 60 days from the date the notice is mailed, other than as may be required by law (the “Change of Control Payment Date”). Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

On the Change of Control Payment Date, the Company will, to the extent lawful:

(1) accept for payment all notes or portions thereof properly tendered and not withdrawn pursuant to the Change of Control Offer;

(2) deposit with the Paying Agent funds in an amount equal to the Change of Control Payment in respect of all notes or portions thereof so tendered; and

(3) deliver or cause to be delivered to the Trustee the notes so accepted together with an Officer’s Certificate stating the aggregate principal amount of notes or portions thereof being purchased by the Company.

If only a portion of a note is purchased pursuant to a Change of Control Offer, a new note in a principal amount equal to the portion thereof not purchased will be issued in the name of the holder thereof upon cancellation of the original note (or appropriate adjustments to the amount and beneficial interests in a global note will be made, as appropriate). Notes (or portions thereof) purchased pursuant to a Change of Control Offer will be cancelled and cannot be reissued.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent any such rule, laws and regulations are applicable in connection with the purchase of notes in connection with a Change of Control Offer. To the extent that the provisions of any applicable securities laws or

147

regulations conflict with the Change of Control provisions of the Indenture, the Company will comply with such securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by doing so.

Other existing and future Indebtedness of the Company may contain prohibitions on the occurrence of events that would constitute a Change of Control or require that Indebtedness be purchased upon a Change of Control. Moreover, the exercise by the holders of their right to require the Company to repurchase the notes upon a Change of Control may cause a default under such Indebtedness even if the Change of Control itself does not.

If a Change of Control Offer occurs, the Company may not have available funds sufficient to make the Change of Control Payment for all the notes that might be delivered by holders seeking to accept the Change of Control Offer. In the event the Company is required to purchase outstanding notes pursuant to a Change of Control Offer, the Company expects that it would seek third-party financing to the extent it does not have available funds to meet its purchase obligations and any other obligations it may have. However, there can be no assurance that the Company would be able to obtain necessary financing or on terms favorable to it, and the terms of the Indenture may restrict the ability of the Company to obtain such financing.

Holders will not be entitled to require the Company to purchase their notes in the event of a takeover, recapitalization, leveraged buyout or similar transaction which is not a Change of Control.

The Company will not be required to make a Change of Control Offer upon a Change of Control if: (a) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all notes validly tendered and not withdrawn under such Change of Control Offer; or (b) prior to the date the Change of Control Offer is required to be made, the Company has given notice of redemption in respect of all of the outstanding notes in accordance with the Indenture. Covenants in the Indenture restricting the ability of the Company and its Restricted Subsidiaries to Incur additional Indebtedness, to grant Liens on property, to make Restricted Payments and to make Asset Sales may also make more difficult or discourage a takeover of the Company, whether favored or opposed by the management or its Board of Directors. Consummation of any Asset Sale may, in certain circumstances, require redemption or repurchase of the notes, and the Company or the acquiring party may not have sufficient financial resources to effect such redemption or repurchase. In addition, restrictions on transactions with Affiliates may, in certain circumstances, make more difficult or discourage any leveraged buyout of the Company or any of its Subsidiaries. While these restrictions cover a wide variety of arrangements that have traditionally been used to effect highly leveraged transactions, the Indenture may not afford the holders protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger, recapitalization or similar transaction.

Certain Covenants

Suspension of covenants

If on any date following the Issue Date (i) the notes have Investment Grade Ratings from two of the Rating Agencies, and (ii) no Default or Event of Default has occurred and is continuing under the Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), the Company and its Restricted Subsidiaries will not be subject to the following covenants (collectively, the “Suspended Covenants”):

(1) “—Limitation on Incurrence of Additional Indebtedness”;

(2) “—Limitation on Restricted Payments”;

(3) “—Limitation on the Ownership of Capital Stock of Restricted Subsidiaries”;

(4) “—Limitation on Asset Sales”;

(5) “—Limitation on Designation of Unrestricted Subsidiaries”;

(6) “—Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries”;

148

(7) clause (A)(b) of “—Limitation on Merger, Consolidation and Sale of Assets”;

(8) “—Limitation on Transactions with Affiliates”; and

(9) “—Conduct of Business”.

No Subsidiary that is a Restricted Subsidiary on the date of the occurrence of a Covenant Suspension Event (the “Suspension Date”) may be redesignated as an Unrestricted Subsidiary during the Suspension Period. In the event that the Company and its Restricted Subsidiaries are not subject to the Suspended Covenants under the Indenture for any period of time as a result of the foregoing, and on any subsequent date (the “Reversion Date”) one of the Rating Agencies no longer gives the notes Investment Grade Ratings, then the Company and its Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants under the Indenture. The Company shall provide written notice to the Trustee of any Covenant Suspension Event.

The period of time between the occurrence of a Covenant Suspension Event and the Reversion Date is referred to in this description as the “Suspension Period.” In the event of any such reinstatement, no action taken or omitted to be taken by the Company or any of its Restricted Subsidiaries prior to such reinstatement will give rise to a Default or Event of Default under the Indenture with respect to notes; provided that (1) with respect to Restricted Payments made after any such reinstatement, the amount of Restricted Payments made will be calculated as though the covenant described under “—Limitation on Restricted Payments” had been in effect prior to and throughout the Suspension Period; and (2) all Indebtedness Incurred, or Disqualified Capital Stock or Preferred Stock issued, during the Suspension Period will be classified to have been Incurred or issued pursuant to clause (c) of the second paragraph of “— Limitation on Incurrence of Additional Indebtedness”. Limitation on Incurrence of Additional Indebtedness

(1) The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness, including Acquired Indebtedness, except that the Company and/or any of the Restricted Subsidiaries may Incur Indebtedness, including Acquired Indebtedness, if, at the time of and immediately after giving pro forma effect to the Incurrence thereof and the application of the proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio of the Company is greater than or equal to 2.0 to 1.0.

(2) Notwithstanding clause (1) above, the Company and/or any of its Restricted Subsidiaries, as applicable, may Incur the following Indebtedness (“Permitted Indebtedness”):

(a) Indebtedness consisting of the notes, excluding Additional Notes;

(b) Guarantees by (x) any Guarantor of Indebtedness of the Company or another Guarantor permitted under the Indenture and (y) the Company of Indebtedness of any Guarantor; provided that, if any such Guarantee is of Subordinated Indebtedness, then the obligations of the Company under the notes and the Indenture or the Note Guarantee of such Guarantor, as applicable, will be senior to the Guarantee of such Subordinated Indebtedness;

(c) Indebtedness of the Company and/or any of its Restricted Subsidiaries outstanding on the Issue Date, excluding Indebtedness permitted under clauses (e), (f), (g), (j) or (m) of this definition of Permitted Indebtedness;

(d) Hedging Obligations not entered into for speculative purposes and any Guarantees thereof and any reimbursement obligations with respect to letters of credit related thereto, in each case entered into by the Company and/or any of its Restricted Subsidiaries; provided that, upon the drawing of such letters of credit, such obligations are reimbursed within 30 days following such drawing;

(e) Intercompany Indebtedness between the Company and any Restricted Subsidiary or between any Restricted Subsidiaries; provided that:

149

(1) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or any Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full of all obligations under the notes and the Indenture, in the case of the Company, or such Guarantor’s Note Guarantee, in the case of any such Guarantor, and

(2) in the event that at any time any such Indebtedness (including, for the avoidance of doubt, Indebtedness Incurred pursuant to paragraph (1) of this sub-Section (e)) ceases to be held by the Company or a Restricted Subsidiary, such Indebtedness shall be deemed to be Incurred and not permitted by this clause (e) at the time such event occurs;

(f) Indebtedness of the Company and/or any of its Restricted Subsidiaries represented by endorsements of negotiable instruments in the ordinary course of business;

(g) Indebtedness of the Company and/or any of its Restricted Subsidiaries represented by (i) documentary credits (including all forms of letters of credit), performance bonds or guarantees, advance payments, bank guarantees, bankers’ acceptances, surety or appeal bonds or similar instruments for the account of, or guaranteeing performance by, the Company and/or any Restricted Subsidiary in the ordinary course of business, and (ii) reimbursement obligations with respect to letters of credit and performance Guarantees in the ordinary course of business; provided that upon the drawing of such letters of credit or the Incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or Incurrence;

(h) Refinancing Indebtedness in respect of:

(1) Indebtedness (other than Indebtedness owed to the Company or any Restricted Subsidiary of the Company) Incurred pursuant to clause (1) above (it being understood that no Indebtedness outstanding on the Issue Date is Incurred pursuant to such clause (1) above), or

(2) Indebtedness Incurred pursuant to clause (a), (b) or (c) above or this clause (h);

(i) Capitalized Lease Obligations, Sale and Leaseback Transactions or export credit facilities with a maturity of at least one year and Purchase Money Indebtedness of, including Guarantees of any of the foregoing by, the Company and/or any Restricted Subsidiary, in an aggregate principal amount at any one time outstanding not to exceed the greater of (x) U.S.$75 million (or the equivalent in other currencies) and (y) 5% of Consolidated Tangible Assets;

(j) Indebtedness arising from agreements entered into by the Company and/or a Restricted Subsidiary providing for bona fide indemnification, adjustment of purchase price or similar obligations not for financing purposes, in each case, Incurred or assumed in connection with the acquisition or disposition of any business, assets or Capital Stock of a Restricted Subsidiary (including minority interests);

(k) Indebtedness of the Company and/or any of its Restricted Subsidiaries for taxes levied, assessments due and other governmental charges required to be paid as a matter of law or regulation in the ordinary course of business;

(l) Indebtedness in respect of netting services, overdraft protections and otherwise in connection with deposit accounts provided that such Indebtedness is extinguished within five Business Days; and

150

(m) Indebtedness of the Company or any Restricted Subsidiary under Credit Facilities in an aggregate principal amount at any time outstanding not to exceed U.S.$450 million (when taken together with the aggregate principal amount outstanding under the Existing Credit Facilities);

(n) In addition to Indebtedness referred to in clauses (a) through (m) above, Indebtedness of the Company and/or any of its Restricted Subsidiaries, determined on a consolidated basis, in an aggregate amount outstanding not to exceed the greater of (x) U.S.$75 million (or the equivalent in other currencies) and (y) 5% of Consolidated Tangible Assets.

(3) The aggregate principal amount of Indebtedness of the Restricted Subsidiaries that are not Guarantors, permitted to be Incurred pursuant to clauses (1), (2)(m) and 2(n) above, will not exceed at any one time, when taken together with all other Indebtedness of the Restricted Subsidiaries that are not Guarantors incurred pursuant to clauses (1), (2)(m) and 2(n) above, the greater of (a) U.S.$75 million (or the equivalent in other currencies) and (b) 10% of the total Indebtedness of the Company and its Restricted Subsidiaries.

Notwithstanding anything to the contrary contained in this covenant:

(1) The Company shall not, and shall not permit any Guarantor to, Incur any Permitted Indebtedness if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Indebtedness unless such Indebtedness shall be subordinated to the notes or the applicable Note Guarantee, as the case may be, to at least the same extent as such Subordinated Indebtedness.

(2) For purposes of determining compliance with, and the outstanding principal amount of, any particular Indebtedness Incurred pursuant to and in compliance with this covenant, the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with IFRS. Accrual of interest, the accretion or amortization of original issue discount, the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument or the payment of regularly scheduled dividends on Disqualified Capital Stock in the form of additional Disqualified Capital Stock with the same terms will not be deemed to be an Incurrence of Indebtedness for purposes of this covenant. For purposes of determining compliance with this covenant, mark-to-market fluctuations of Hedging Obligations or any other derivative obligations outstanding on the Issue Date shall not constitute Incurrence of Indebtedness.

(3) For purposes of determining compliance with this covenant, the principal amount of Indebtedness denominated in foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in foreign currency, and such refinancing would cause the applicable restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

(4) For purposes of determining compliance with this covenant:

(i) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, including, without limitation, the first paragraph of this covenant, the Company, in its sole discretion, will classify such item of Indebtedness at the time of Incurrence and only be required to include the amount and type of such Indebtedness in one of the above clauses and may later reclassify all or a portion of such item of Indebtedness as having been Incurred pursuant to any other clause to the extent such Indebtedness could be Incurred pursuant to such clause at the time of such reclassification; and

151

(ii) the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described above, including, without limitation, the first paragraph of this covenant.

Limitation on Restricted Payments

The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, take any of the following actions (each, a “Restricted Payment”):

(a) declare or pay any dividend or return of capital or make any distribution on or in respect of shares of Capital Stock of the Company or any Restricted Subsidiary to holders of such Capital Stock, other than:

(1) dividends, distributions or returns on capital payable in Qualified Capital Stock of the Company,

(2) dividends, distributions or returns on capital payable to the Company and/or a Restricted Subsidiary, and

(3) dividends, distributions or returns of capital made on a pro rata basis to the Company and its Restricted Subsidiaries, on the one hand, and minority holders of Capital Stock of a Restricted Subsidiary, on the other hand (or on a less than pro rata basis to any minority holder);

(b) purchase, redeem or otherwise acquire or retire for value:

(1) any Capital Stock of the Company, or

(2) any Capital Stock of any Restricted Subsidiary held by an Affiliate of the Company or any Preferred Stock of a Restricted Subsidiary, except for:

(i) Capital Stock held by the Company or a Restricted Subsidiary, or

(ii) purchases, redemptions, acquisitions or retirements for value of Capital Stock on a pro rata basis from the Company and/or any Restricted Subsidiaries, on the one hand, and minority holders of Capital Stock of a Restricted Subsidiary, on the other hand, according to their respective percentage ownership of the Capital Stock of such Restricted Subsidiary;

(c) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment of, as the case may be, any Subordinated Indebtedness (excluding (x) any intercompany Indebtedness between or among the Company and/or any Restricted Subsidiaries provided that it is permitted under the Indenture or(y) the purchase, repurchase or other acquisition of Indebtedness that is contractually subordinate to the notes or any Note Guarantee, as the case may be, purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case, within one year of such date of purchase, repurchase or acquisition); or

(d) make any Investment (other than Permitted Investments);

if at the time of the Restricted Payment immediately after giving effect thereto:

(1) a Default or an Event of Default shall have occurred and be continuing;

152

(2) the Company is not able to Incur at least U.S.$1.00 of additional Indebtedness pursuant to clause (1) of “—Limitation on Incurrence of Additional Indebtedness”; or

(3) the aggregate amount (the amount expended for these purposes, if other than in cash, being the Fair Market Value of the relevant property at the time of the making thereof) of the proposed Restricted Payment and all other Restricted Payments made subsequent to the Issue Date up to the date thereof, less any Investment Return, calculated as of the date thereof, would exceed the sum of:

(A) 50% of cumulative Consolidated Net Income of the Company or, if cumulative Consolidated Net Income of the Company is a loss, minus 100% of the loss, accrued during the period, treated as one accounting period, beginning on the first full fiscal quarter after the Issue Date to the end of the most recent fiscal quarter for which consolidated financial information of the Company is available; plus

(B) 100% of the aggregate net cash proceeds received by the Company from any Person from any:

• contribution to the equity capital of the Company (not representing an interest in Disqualified Capital Stock) or issuance and sale of Qualified Capital Stock of the Company, in each case, subsequent to the Issue Date, or

• issuance and sale subsequent to the Issue Date (and, in the case of Indebtedness of a Restricted Subsidiary, at such time as it was a Restricted Subsidiary) of any Indebtedness for borrowed money of the Company or any Restricted Subsidiary that has been converted into or exchanged for Qualified Capital Stock of the Company,

excluding, in each case, any net cash proceeds:

(w) received from a Restricted Subsidiary of the Company;

(x) used to redeem notes under “—Optional Redemption—Optional Redemption Upon Equity Offerings”;

(y) used to acquire Capital Stock or other assets from an Affiliate of the Company; or

(z) applied in accordance with clause (2)(y) or (3)(x) of the second paragraph of this covenant below.

Notwithstanding the preceding paragraph, this covenant does not prohibit:

(1) the payment of any dividend within 60 days after the date of declaration of such dividend if the dividend would have been permitted on the date of declaration pursuant to the preceding paragraph;

(2) if no Default or Event of Default shall have occurred and be continuing, the acquisition of any shares of Capital Stock of the Company,

(x) in exchange for Qualified Capital Stock of the Company, or

(y) through the application of the Net Cash Proceeds received by the Company from a substantially concurrent sale of Qualified Capital Stock of the Company or a contribution to the equity capital of the Company not representing an interest in Disqualified Capital Stock, in each case not received from a Subsidiary of the Company;

153

provided, that the value of any such Qualified Capital Stock issued in exchange for such acquired Capital Stock and any such Net Cash Proceeds shall be excluded from clause (d)(3)(B) of the first paragraph of this covenant (and were not included therein at any time);

(3) if no Default or Event of Default shall have occurred and be continuing, the voluntary prepayment, purchase, defeasance, redemption or other acquisition or retirement for value of any Subordinated Indebtedness:

(x) solely in exchange for, or through the application of, Net Cash Proceeds of a substantially concurrent sale, other than to a Restricted Subsidiary of the Company, of Qualified Capital Stock of the Company, or

(y) solely in exchange for Refinancing Indebtedness for such Subordinated Indebtedness,

provided, that the value of any Qualified Capital Stock issued in exchange for Subordinated Indebtedness and any Net Cash Proceeds referred to above shall be excluded from clause (d)(3)(B) of the first paragraph of this covenant (and were not included therein at any time);

(4) repurchases by the Company of Common Stock of the Company or options, warrants or other securities exercisable or convertible into Common Stock of the Company from employees or directors of the Company or any of its Subsidiaries or their authorized representatives upon the death, disability or termination of employment or directorship of the employees or directors, in an amount not to exceed U.S.$5 million in any calendar year and any repurchases other than in connection with compensation of Common Stock of the Company pursuant to binding written agreements in effect on the Issue Date;

(5) repurchases by the Company of Capital Stock of the Company solely with the Net Cash Proceeds of any sale of Repurchased Capital Stock; provided that the Company shall only be permitted to repurchase such shares from, and sell such shares to, Persons that are not Affiliates of the Company or any of its Restricted Subsidiaries; provided further, that the aggregate cash proceeds applied to repurchase such Capital Stock, when added with the cash proceeds applied to repurchase all other shares repurchased by the Company after the Issue Date, shall not, at the time of any such repurchase, exceed the aggregate cash proceeds received by the Company from the sale of Repurchased Capital Stock after the Issue Date;

(6) payments of dividends on Disqualified Capital Stock issued pursuant to the covenant described under “—Limitation on Incurrence of Additional Indebtedness”; provided, however, that such dividends shall be excluded in the calculation of the amount of Restricted Payments;

(7) non-cash repurchases of Capital Stock deemed to occur upon exercise of stock options, warrants or other similar rights if such Capital Stock represents a portion of the exercise price of such options, warrants or other similar rights;

(8) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of the Company;

(9) purchases of any Subordinated Indebtedness of the Company (A) at a purchase price not greater than 101% of the principal amount thereof (together with accrued and unpaid interest) in the event of the occurrence of a Change of Control or (B) at a purchase price not greater than 100% of the principal amount thereof (together with accrued and unpaid interest) in the event of an Asset Sale in accordance with provisions similar to those set forth under “—Limitation on Asset Sales”; provided, however, that prior to such purchase of any such Subordinated Indebtedness, the Company has made the Change of Control Offer as provided under “—Change of Control” or “—Limitation on Asset Sales”, respectively, and has purchased all notes validly tendered and not properly withdrawn pursuant thereto; and

(10) so long as (i) no Default or Event of Default shall have occurred and be continuing (or result therefrom) and (ii) the Company could Incur at least U.S.$1.00 of additional Indebtedness pursuant to clause (1) of

154

the first paragraph of the covenant described under “—Limitation on Incurrence of Additional Indebtedness,” payment of any dividends on Capital Stock (other than Disqualified Capital Stock) of the Company in an aggregate amount which, when taken together with all dividends paid pursuant to this clause (10), does not exceed U.S.$30.0 million (or the equivalent in other currencies) in any fiscal year.

In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date, amounts expended pursuant to clauses (1) (without duplication for the declaration of the relevant dividend), (4) and (9) above shall be included in such calculation and amounts expended pursuant to clauses (2), (3), (5), (6), (7), (8) and (10) above shall not be included in such calculation.

The amount of any Restricted Payments not in cash will be the Fair Market Value on the date of such Restricted Payment of the property, assets or securities proposed to be paid, transferred or issued by the Company or the relevant Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.

Limitation on Asset Sales

The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(a) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (to be determined as of the date on which such sale is contracted) of the assets sold or otherwise disposed of, and

(b) at least 75% of the consideration received for the assets sold by the Company or the Restricted Subsidiary, as the case may be, in the Asset Sale shall be in the form of cash or Cash Equivalents received at the time of such Asset Sale; provided that, for purposes of this clause (b), the assumption by the purchasers of Indebtedness or other obligations (other than Subordinated Indebtedness) of the Company or a Restricted Subsidiary pursuant to a customary novation agreement, and instruments or securities received from the purchasers that are promptly, but in any event within 90 days of the closing, converted by the Company or a Restricted Subsidiary to cash, to the extent of the cash actually so received, shall be considered a Cash Equivalent received at the time of such Asset Sale.

The Company or any Restricted Subsidiary may apply (or enter into a commitment to apply) the Net Cash Proceeds of any such Asset Sale within 365 days thereof to:

(x) repay any Senior Indebtedness for borrowed money or constituting a Capitalized Lease Obligation and permanently reduce the commitments with respect thereto,

(y) make capital expenditures in a Permitted Business, or

(z) purchase:

(1) assets (except for current assets as determined in accordance with IFRS or Capital Stock) to be used by the Company or any Restricted Subsidiary in a Permitted Business, or

(2) all or substantially all of the assets of a Permitted Business or Capital Stock of a Person engaged in a Permitted Business that will become, upon purchase, a Restricted Subsidiary

from a Person other than the Company and its Restricted Subsidiaries.

To the extent all of the Net Cash Proceeds of any Asset Sale are not applied or committed to be applied within the 365 days of the Asset Sale as described in clause (x), (y) or (z) of the immediately preceding paragraph, the Company will make an offer to purchase notes (the “Asset Sale Offer”), at a purchase price equal to 100% of the principal amount of the notes to be purchased, plus accrued and unpaid interest thereon, to the date of purchase (the “Asset Sale Offer Amount”). The Company will purchase pursuant to an Asset Sale Offer from all tendering holders on a pro rata basis, and, at the Company’s option, on a pro rata basis with the holders of any other Senior Indebtedness with similar provisions requiring

155

the Company to offer to purchase the other Senior Indebtedness with the proceeds of Asset Sales, that principal amount (or accreted value in the case of Indebtedness issued with original issue discount) of the notes and the other Senior Indebtedness to be purchased equal to such unapplied Net Cash Proceeds. The Company may satisfy its obligations under this covenant with respect to the Net Cash Proceeds of an Asset Sale by making an Asset Sale Offer prior to the expiration of the relevant 365-day period.

Pending the final application of any Net Cash Proceeds pursuant to this covenant, the holder of such Net Cash Proceeds may apply such Net Cash Proceeds temporarily to reduce Indebtedness outstanding under a revolving credit facility or otherwise invest such Net Cash Proceeds in any manner not prohibited by the Indenture.

The purchase of the notes pursuant to an Asset Sale Offer will occur not less than 20 Business Days following the date thereof, or any longer period as may be required by law, nor more than 45 days following the 365th day following the Asset Sale. The Company may, however, defer an Asset Sale Offer until there is an aggregate amount of unapplied Net Cash Proceeds from one or more Asset Sales equal to or in excess of U.S.$50 million. At that time, the entire amount of unapplied Net Cash Proceeds, and not just the amount in excess of U.S.$50 million, will be applied as required pursuant to this covenant.

Each notice of an Asset Sale Offer will be mailed first class, postage prepaid, to the record holders as shown on the register of holders within 20 days following such 365th day (or such earlier date as the Company shall have elected to make such Asset Sale Offer), with a copy to the Trustee offering to purchase the notes as described above. Each notice of an Asset Sale Offer will state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date the notice is mailed, other than as may be required by law (the “Asset Sale Offer Payment Date”). Upon receiving notice of an Asset Sale Offer, holders may elect to tender their notes in whole or in part in denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof in exchange for cash.

On the Asset Sale Offer Payment Date, the Company will, to the extent lawful:

(1) accept for payment all notes or portions thereof properly tendered pursuant to the Asset Sale Offer;

(2) deposit with the Paying Agent funds in an amount equal to the Asset Sale Offer Amount in respect of all notes or portions thereof so tendered; and

(3) deliver or cause to be delivered to the Trustee the notes so accepted together with an Officer’s Certificate stating the aggregate principal amount of the notes or portions thereof being purchased by the Company.

To the extent holders of the notes and holders of other Senior Indebtedness, if any, which are the subject of an Asset Sale Offer properly tender and do not withdraw notes or the other Senior Indebtedness in an aggregate amount exceeding the amount of unapplied Net Cash Proceeds, the Company will purchase the notes and the other Senior Indebtedness on a pro rata basis (based on amounts tendered). If only a portion of a note is purchased pursuant to an Asset Sale Offer, a new note in a principal amount equal to the portion thereof not purchased will be issued in the name of the holder thereof upon cancellation of the original note (or appropriate adjustments to the amount and beneficial interests in a global note will be made, as appropriate). Notes (or portions thereof) purchased pursuant to an Asset Sale Offer will be cancelled and cannot be reissued.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other applicable securities laws in connection with the purchase of notes pursuant to an Asset Sale Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with the “Asset Sale” provisions of the Indenture, the Company will comply with these laws and regulations and will not be deemed to have breached its obligations under the “Asset Sale” provisions of the Indenture by doing so.

Upon completion of an Asset Sale Offer, the amount of Net Cash Proceeds will be reset at zero. Accordingly, to the extent that the aggregate amount of the notes and other Indebtedness tendered pursuant to an Asset Sale Offer is less than the aggregate amount of unapplied Net Cash Proceeds, the Company may use any remaining Net Cash Proceeds for general corporate purposes of the Company and its Restricted Subsidiaries.

156

In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under “—Limitation on Merger, Consolidation and Sale of Assets,” the Successor Company will be deemed to have sold the properties and assets of the Company and its Restricted Subsidiaries not so transferred for purposes of this covenant, and will comply with the provisions of this covenant with respect to the deemed sale as if it were an Asset Sale. In addition, the Fair Market Value of properties and assets of the Company or its Restricted Subsidiaries so deemed to be sold will be deemed to be Net Cash Proceeds for purposes of this covenant.

If at any time any non-cash consideration received by the Company or any Restricted Subsidiary, as the case may be, in connection with any Asset Sale, is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any non-cash consideration), the conversion or disposition will be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof will be applied in accordance with this covenant within 365 days of conversion or disposition.

Limitation on the Ownership of Capital Stock of Restricted Subsidiaries

The Company will not permit any Person other than the Company or another Restricted Subsidiary to, directly or indirectly, own or control any Capital Stock of any Restricted Subsidiary, except for:

(1) Capital Stock owned by such Person on the Issue Date;

(2) directors’ qualifying shares;

(3) the sale or Disposition of 100% of the shares of the Capital Stock of any Restricted Subsidiary held by the Company and its Restricted Subsidiaries to any Person other than the Company or another Restricted Subsidiary effected in accordance with, as applicable, “—Limitation on Asset Sales” and “—Limitation on Merger, Consolidation and Sale of Assets”;

(4) in the case of a Restricted Subsidiary other than a Restricted Subsidiary that is a Wholly Owned Subsidiary, the issuance by that Restricted Subsidiary of Capital Stock on a pro rata basis to the Company and its Restricted Subsidiaries, on the one hand, and minority holders of Capital Stock of such Restricted Subsidiary, on the other hand (or on less than a pro rata basis to any minority holder);

(5) the sale of Capital Stock of a Restricted Subsidiary by the Company or another Restricted Subsidiary or the sale or issuance by a Restricted Subsidiary of its newly-issued Capital Stock if such sale or issuance is made in compliance with “—Limitation on Asset Sales” and either:

(A) such Restricted Subsidiary is no longer a Subsidiary, and the continuing Investment of the Company and its Restricted Subsidiaries in such former Restricted Subsidiary is in compliance with “—Limitation on Restricted Payments”; or

(B) such Restricted Subsidiary continues to be a Restricted Subsidiary.

Limitation on Designation of Unrestricted Subsidiaries

The Company may designate after the Issue Date any Subsidiary of the Company other than a Guarantor as an “Unrestricted Subsidiary” under the Indenture (a “Designation”) only if:

(1) no Default or Event of Default shall have occurred and be continuing at the time of or after giving effect to such Designation and any transactions between the Company or any of its Restricted Subsidiaries and such Unrestricted Subsidiary are in compliance with “— Limitation on Transactions with Affiliates”;

(2) at the time of and after giving effect to such Designation, the Company could Incur U.S.$1.00 of additional Indebtedness pursuant to clause (1) of “—Limitation on Incurrence of Additional Indebtedness”;

157

(3) the Company would be permitted to make an Investment at the time of Designation (assuming the effectiveness of such Designation and treating such Designation as an Investment at the time of Designation) as a Restricted Payment pursuant to the first paragraph of “—Limitation on Restricted Payments” in an amount (the “Designation Amount”) equal to the amount of the Company’s Investment in such Subsidiary on such date; and

(4) the terms of any Affiliate Transaction existing on the date of such Designation between the Subsidiary being Designated (and its Subsidiaries) and the Company or any Restricted Subsidiary would be permitted under “—Limitation on Transactions with Affiliates” if entered into immediately following such Designation;

provided, however, that, the provisions of clauses (1) and (2) of this paragraph will not apply in the case of a Designation of a Project Finance Subsidiary as an Unrestricted Subsidiary.

Neither the Company nor any Restricted Subsidiary will at any time:

(1) provide credit support for, subject any of its property or assets (other than the Capital Stock of any Unrestricted Subsidiary) to the satisfaction of, or Guarantee, any Indebtedness of any Unrestricted Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness); or

(2) be directly or indirectly liable for any Indebtedness of any Unrestricted Subsidiary.

The Company may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a “Revocation”) only if:

(1) no Default or Event of Default shall have occurred and be continuing at the time of and after giving effect to such Revocation; and

(2) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding immediately following such Revocation, if Incurred at such time, would have been permitted to be Incurred for all purposes of the Indenture.

The Designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be deemed to include the Designation of all of the Subsidiaries of such Subsidiary as Unrestricted Subsidiaries. All Designations and Revocations must be evidenced by an Officer’s Certificate of the Company, delivered to the Trustee certifying compliance with the preceding provisions.

Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries

(a) Except as provided in paragraph (b) below, the Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on or in respect of its Capital Stock to the Company or any other Restricted Subsidiary or pay any Indebtedness owed to the Company or any other Restricted Subsidiary;

(2) make loans or advances to, or make any Investment in, the Company or any other Restricted Subsidiary; or

(3) transfer any of its property or assets to the Company or any other Restricted Subsidiary.

(b) Paragraph (a) above will not apply to encumbrances or restrictions existing under or by reason of:

(1) applicable law, rule, regulation or order;

158

(2) the Indenture, the notes or the Note Guarantees;

(3) the Existing Credit Facilities;

(4) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date, and any amendments, restatements, renewals, replacements or refinancings thereof; provided, that any amendment, restatement, renewal, replacement or refinancing is not materially more restrictive, taken as a whole, with respect to such encumbrances or restrictions than those in existence on the Issue Date as determined in good faith by the Company’s senior management;

(5) customary non-assignment provisions of any contract and customary provisions restricting assignment or subletting in any lease governing a leasehold interest of any Restricted Subsidiary;

(6) an agreement governing Indebtedness Incurred to Refinance the Indebtedness issued, assumed or Incurred pursuant to an agreement in place at the Issue Date, provided that such Refinancing agreement is not materially more restrictive with respect to such encumbrances or restrictions than those contained in the agreement referred in this clause;

(7) restrictions with respect to a Restricted Subsidiary of the Company imposed pursuant to a binding agreement which has been entered into for the sale or disposition of Capital Stock or assets of such Restricted Subsidiary to the extent permitted under the Indenture; provided, that such restrictions apply solely to the Capital Stock or assets of such Restricted Subsidiary being sold (and in the case of Capital Stock, its Subsidiaries);

(8) customary restrictions imposed on the transfer of copyrighted or patented materials;

(9) Liens permitted to be Incurred pursuant to the provisions of the covenant described under “Certain Covenants—Limitation on Liens” that limit the right of any person to transfer the assets subject to such Liens;

(10) Purchase Money Indebtedness for property acquired in the ordinary course of business and Capitalized Lease Obligations that impose restrictions of the nature discussed in clause (3) of paragraph (a) above on the property so acquired;

(11) restrictions on cash or other deposits imposed by customers under contracts or other arrangements entered into or agreed to in the ordinary course of business not materially more restrictive than those existing on the Issue Date as determined in good faith by the Company’s senior management;

(12) customary provisions limiting the payment of dividends in organizational documents, shareholders’ agreements, joint venture agreements or similar documents of, or related to, Restricted Subsidiaries that are not Wholly Owned Subsidiaries and which have been entered into with the approval of the Company’s Board of Directors;

(13) restrictions in Indebtedness Incurred by a Restricted Subsidiary in compliance with the covenant described under “Certain Covenants—Limitation on Incurrence of Additional Indebtedness”; provided that such restrictions (i) are not materially more restrictive with respect to such encumbrances and restrictions than those such Restricted Subsidiary was subject to in agreements related to obligations referenced in clause (3) above or (ii) constitute financial covenants or similar restrictions that limit the ability to pay dividends or make distributions upon the occurrence or continuance of a default or event of default or that would result in a default or event of default under such Indebtedness upon the declaration or payment of dividends or other distributions;

159

(14) restrictions customarily granted in connection with securitization, factoring or discounting involving receivables that are imposed in connection with a Qualified Receivables Transaction; and

(15) net worth provisions in leases entered into by the Company or any Restricted Subsidiary in the ordinary course of business not materially more restrictive than those existing on the Issue Date as determined in good faith by the Company’s senior management.

Limitation on Layered Indebtedness

The Company will not, and will not permit any Guarantor to, directly or indirectly, Incur any Indebtedness that is subordinate in right of payment to any other Indebtedness, unless such Indebtedness is expressly subordinate in right of payment to the notes or, in the case of a Guarantor, its Note Guarantee, to the same extent, on the same terms and for so long as such Indebtedness is subordinate to such other Indebtedness.

Limitation on Liens

The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, incur, grant, assume or suffer to exist any Liens of any kind (except for Permitted Liens) (i) against or upon any of their respective properties or assets, whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, to secure any Indebtedness or trade payables or (ii) deemed to exist in respect of Capitalized Lease Obligations (including any Capitalized Lease Obligations in respect of Sale and Leaseback Transactions), in each case unless contemporaneously therewith effective provision is made:

(1) in the case of the Company or any Restricted Subsidiary that is not a Guarantor, to secure the notes and all other amounts due under the Indenture; and

(2) in the case of a Guarantor, to secure such Guarantor’s Note Guarantee of the notes and all other amounts due under the Indenture,

in each case, equally and ratably with such Indebtedness or other obligation (or, in the event that such Indebtedness is subordinated in right of payment to the notes or such Note Guarantee, as the case may be, prior to such Indebtedness or other obligation) with a Lien on the same properties and assets securing such Indebtedness or other obligation for so long as such Indebtedness or other obligation is secured by such Lien.

Limitation on Merger, Consolidation and Sale of Assets

(A) The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person (whether or not the Company is the surviving or continuing Person), or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company’s properties and assets (determined on a consolidated basis for the Company and its Restricted Subsidiaries), to any Person unless:

(a) either:

(1) the Company shall be the surviving or continuing corporation, or

(2) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and the Restricted Subsidiaries substantially as an entirety (the “Successor Company”):

(i) shall be a corporation organized and validly existing under the laws of México or the United States of America, any State thereof or the District of Columbia,

160

or any other country that is a member country of the European Union or of the OECD (each a “Permitted Merger Jurisdiction”); and

(ii) shall expressly assume all of the Obligations of the Company under the Indenture, the notes by executing a supplemental indenture and such transaction is otherwise in compliance with the Indenture;

(b) immediately after giving effect to such transaction and the assumption contemplated by clause (a)(2)(ii) above (including giving effect on a pro forma basis to any Indebtedness, including any Acquired Indebtedness, Incurred or anticipated to be Incurred or discharged in connection with or in respect of such transaction), the Company or such Successor Company, as the case may be:

(1) will have a Consolidated Fixed Charge Coverage Ratio that will be not less than the Consolidated Fixed Charge Coverage Ratio of the Company immediately prior to such transaction; or

(2) will be able to Incur at least U.S.$1.00 of additional Indebtedness pursuant to clause (1) of “— Limitation on Incurrence of Additional Indebtedness”;

(c) immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (a)(2)(ii) above (including, without limitation, giving effect on a pro forma basis to any Indebtedness, including any Acquired Indebtedness, Incurred or anticipated to be Incurred or discharged and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing;

(d) in the case of a transaction resulting in a Successor Company, each Guarantor has confirmed, if necessary, by executing a supplemental indenture, that its Note Guarantee will apply for Obligations of the Successor Company in respect of the Indenture and the notes; and

(e) in the case of a transaction resulting in a Successor Company, the Successor Company delivers to the Trustee in form and substance acceptable to the Trustee (x) an Officer’s Certificate and (y) an Opinion of Counsel, in each case stating that such consolidation, merger or transfer and the relevant supplemental indenture complies with this provision and that all conditions precedent provided for in the Indenture relating to such transaction have been complied with.

The provisions of clauses (b) and (c) of the previous paragraph will not apply to any merger of the Company into a Guarantor or a Wholly Owned Subsidiary of the Company.

The Successor Company will succeed to, and be substituted for, the Company under the Indenture and the notes.

None of the foregoing restrictions in clause (A) shall apply to (i) any transfer of assets by the Company to any Guarantor, (ii) any transfer of assets by any Guarantor to any other Guarantor, or (iii) any transfer of assets by a Restricted Subsidiary that is not a Guarantor to (x) another Restricted Subsidiary that is not a Guarantor or (y) the Company or any Guarantor.

(B) Each Guarantor will not, and the Company will not cause or permit any such Guarantor to, consolidate with or merge into, or sell or dispose of all or substantially all of its assets to, any Person that is not a Guarantor unless:

(a) such Person (if such Person is the surviving entity) (the “Successor Guarantor”) assumes all of the obligations of such Guarantor in respect of its Note Guarantee by executing a supplemental indenture and providing the Trustee with an Officer’s Certificate and Opinion of Counsel stating that such consolidation, merger or transfer and the relevant supplemental indenture complies with this provision and that all conditions precedent provided for in the Indenture relating to

161

such transaction have been complied with, and such transaction is otherwise in compliance with the Indenture;

(b) such Note Guarantee is to be released as provided under “Note Guarantees”; or

(c) such sale or other disposition of substantially all of such Guarantor’s assets is made in accordance with “—Limitation on Asset Sales.”

Subject to certain limitations described in the Indenture, the Successor Guarantor will succeed to, and be substituted for, such Guarantor under the Indenture and such Guarantor’s Note Guarantee.

The provisions of clause (B) will not apply to:

(1) any transfer of the properties or assets of a Guarantor to the Company or another Guarantor;

(2) any merger of a Guarantor into the Company or another Guarantor; or

(3) any merger of a Guarantor into a Wholly Owned Subsidiary of the Company.

Limitation on Transactions with Affiliates

(1) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an “Affiliate Transaction”), unless:

(a) the terms of such Affiliate Transaction are on fair and reasonable terms not less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate of the Company;

(b) in the event that such Affiliate Transaction involves aggregate payments, or transfers of property or services with an aggregate value in excess of U.S.$20 million (or the equivalent thereof at the time of determination), the Company must first deliver to the Trustee an Officer’s Certificate to the effect that such transaction or series of related transactions comply with clause (a) above; and

(c) in the event that such Affiliate Transaction involves aggregate payments, or transfers of property or services with an aggregate value in excess of U.S.$40 million (or the equivalent thereof at the time of determination), the Company must first deliver to the Trustee a resolution of the majority of the members of the Company’s Board of Directors (or subcommittee of independent directors) approving such transaction or series of related transactions in accordance with Mexican law.

(2) Paragraph (1) above does not apply to:

(a) any transaction between the Company and any Restricted Subsidiary or between or among Restricted Subsidiaries;

(b) transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Company solely because the Company owns (directly or indirectly through an Unrestricted Subsidiary) Capital Stock in, or controls, such Person;

(c) reasonable fees and compensation (whether in cash or Capital Stock of the Company) paid to, and any indemnity provided on behalf of, officers, directors, employees, consultants or agents of

162

the Company or any Restricted Subsidiary as determined in good faith by the Company’s Board of Directors or, to the extent consistent with past practice, senior management;

(d) Permitted Investments and any Restricted Payments that do not violate the provisions under the caption “—Limitation on Restricted Payments”;

(e) transactions pursuant to any contractual obligations or rights in existence on the Issue Date, as amended, modified or replaced from time to time so long as the amended, modified or new agreements, taken as a whole, are no less favorable to the Company and its Restricted Subsidiaries than those in effect on the Issue Date, as determined in good faith by the Company’s senior management;

(f) any intercompany Indebtedness in compliance with “—Limitation on Incurrence of Additional Indebtedness”;

(g) any Sale and Leaseback Transaction otherwise permitted under clause (2)(i) in the caption “―Limitation on Incurrence of Additional Indebtedness” if such transaction is on market terms;

(h) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services that are Affiliates, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture which are fair to the Company and its Restricted Subsidiaries, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;

(i) loans and advances to officers, directors and employees of (A) the Company in an amount not to exceed U.S.$3 million or (B) any Restricted Subsidiary for travel, entertainment, moving and other relocation expenses, in each case made in the ordinary course of business in amounts consistent with the past practice of the Company or such Restricted Subsidiary;

(j) any employment agreements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

(k) sales of accounts receivable, or participations therein, or any related transaction, in connection with any Qualified Receivables Transaction;

(l) cost-sharing and tax-sharing arrangements among the Company and any of its Affiliates; and

(m) the issuance of Capital Stock (other than Disqualified Capital Stock) of the Company to any of its direct or indirect parent companies or to any of its Restricted Subsidiaries.

Conduct of Business

The Company and its Restricted Subsidiaries will not engage in any business other than a Permitted Business.

Reports to Holders

So long as any notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will furnish to the holders of the notes and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

The Company will furnish or cause to be furnished to the Trustee in English (for distribution only to the holders of notes):

• within 60 days after the close of each of the first three fiscal quarters in each fiscal year of the Company commencing with the quarter ending June 30, 2017, copies of (i) the complete unaudited, consolidated

163

balance sheet of the Company and each Guarantor (other than GCC Cemento) for such period, together with the related unaudited, consolidated statement of income, statement of changes in shareholders’ equity and statement of cash flows of the Company and such Guarantor for such period, and (ii) the complete unaudited, unconsolidated balance sheet of GCC Cemento for such period, together with the related unaudited, unconsolidated statement of income, statement of changes in shareholders’ equity and statement of cash flows of GCC Cemento for such period, all of which shall be prepared in accordance with Reporting IFRS, certified by an Officer’s Certificate issued by the chief financial officer of the companies being reported on as fairly presenting, in all material respects, their financial position, results of operations and changes in financial position, subject to normal recurring year-end adjustments; and

• within 120 days after the close of each fiscal year of the Company commencing with the fiscal year ended December 31, 2017, (i) the consolidated and consolidating balance sheets of the Company and of each Guarantor (other than GCC Cemento) for such fiscal year, together with the related consolidated and consolidating statement of income, statement of changes in shareholders’ equity and statement of cash flows of the Company and of each Guarantor (other than GCC Cemento) for such period, and (ii) the complete unconsolidated balance sheet of GCC Cemento for such fiscal year, together with the related unconsolidated statement of income, statement of changes in shareholders’ equity and statement of cash flows of GCC Cemento for such period, in each case, prepared in accordance with Reporting IFRS, together with an audit report thereon by the Company’s independent public accountants.

Each such financial statements will include a management’s discussion and analysis of financial condition and results of operations, addressing the Company’s consolidated results of operations for the relevant annual period and the most recent comparable period, and the Company’s liquidity and capital resources.

For the avoidance of doubt, compliance by the Company with respect to all covenants in the Indenture other than this reporting covenant shall be governed exclusively by IFRS. Reporting IFRS shall only be applicable to financial statements and reports prepared by the Company for the purpose of complying with the matters specified in the second paragraph above. So long as the notes are outstanding, the Company will make available the information specified in the preceding paragraphs at the specified office of each paying agent of the notes.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s or any other Person’s compliance with any of its covenants under the Indenture or the notes (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

The Trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise, the Company’s or any other Person’s compliance with the covenants described above or with respect to any reports or other documents filed under the Indenture, nor shall the Trustee have any responsibility for the timeliness or content of any filing.

Notwithstanding anything in the Indenture to the contrary, the Company will not be deemed to have failed to comply with any of its obligations hereunder for purposes of clause (4) under “Events of Default” or for any other purpose hereunder until 60 days after the date any report hereunder is due.

Listing

Application has been made to the SGX-ST for the listing and quotation of the Notes on the SGX-ST. The Notes will be traded on the SGX-ST in a minimum board lot size of U.S.$200,000 for so long as the Notes are listed on the SGX-ST. If and for so long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require, in the event that the global certificates of the Notes are exchanged for certificates in definitive form, the Company will appoint and maintain a paying agent in Singapore where the Notes may be presented or surrendered for payment or redemption. The Company will announce through the SGX-ST any issue of certificates in definitive form in exchange for the global certificates of the Notes, including in the announcement all material information with respect to the delivery of the certificates in definitive form, including details of the paying agent in Singapore. There can be no guarantee that the notes become listed, and if listed, that they remain listed. See “Risk Factors—Risks Related to our Indebtedness, the Notes and the Guarantees—There may not be a liquid trading market for the notes.”

164

Notices

All notices to holders of the notes will be validly given if mailed to them at their respective addresses in the register of the holders of such notes, if any, maintained by the registrar. For so long as any notes are represented by global notes, all notices to holders of the notes will be delivered to Euroclear, Clearstream and DTC, delivery of which shall be deemed to satisfy the requirements of this paragraph.

Each such notice shall be deemed to have been given on the date of delivery or mailing. Any notice or communication mailed to a holder shall be mailed to such Person by first-class mail or other equivalent means and shall be sufficiently given to them if so mailed within the time prescribed. Failure to mail a notice or communication to a holder or any defect in it shall not affect its sufficiency with respect to other holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

Events of Default

The following are “Events of Default”:

(1) default in the payment when due of the principal of or premium, if any, or any related Additional Interest, if any, on any note, including the failure to make a required payment to purchase notes tendered pursuant to an optional redemption, a Change of Control Offer or an Asset Sale Offer;

(2) default for 30 days or more in the payment when due of interest or Additional Interest on any notes;

(3) the failure to perform or comply with any of the provisions described under “Certain Covenants—Limitation on Merger, Consolidation and Sale of Assets”;

(4) the failure by the Company or any Restricted Subsidiary to comply with, or in the case of non-guarantor Restricted Subsidiaries, to perform according to, any other covenant or agreement contained in the Indenture or in the notes for 45 consecutive days or more after written notice to the Company from the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding notes;

(5) default by the Company or any Restricted Subsidiary under any Indebtedness which:

(a) is caused by a failure to pay principal of or premium, if any, when due or interest on such Indebtedness prior to the later of the expiration of any applicable grace period provided in such Indebtedness on the date of such default or five days past when due; or

(b) results in the acceleration of such Indebtedness prior to its stated maturity;

and the principal or accreted amount of Indebtedness covered by (a) or (b) at the relevant time, aggregates U.S.$35 million or more;

(6) failure by the Company or any of its Restricted Subsidiaries to pay and discharge one or more final judgments against any of them, aggregating U.S.$35 million or more, which judgment(s) are not paid, discharged or stayed for a period of 60 consecutive days after the entry thereof or discharged within 120 days after the expiration of such stay;

(7) certain events of bankruptcy under applicable law (including concurso mercantil or quiebra) affecting the Company or any of its Restricted Subsidiaries;

(8) except as permitted by the Indenture, any Note Guarantee is held to be unenforceable or invalid in a judicial proceeding or ceases for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms such Guarantor’s obligations under its Note Guarantee;

165

(9) [Reserved]; or

(10) all or substantially all of the undertaking, assets and revenues of the Company or any of its Restricted Subsidiaries, taken as a whole, are condemned, seized or otherwise appropriated by any Person acting under the authority of any national, regional or local government or the Company or any of its Restricted Subsidiaries is prevented by any such Person for a period of 60 consecutive days or longer from exercising normal control over all or substantially all of their undertakings, assets and revenues on a consolidated basis.

If an Event of Default (other than an Event of Default specified in clause (7) above with respect to the Company) shall occur and be continuing, the Trustee or the holders of at least 25% in principal amount of outstanding notes may declare the unpaid principal of (and premium, if any) and accrued and unpaid interest on all the notes to be immediately due and payable by notice in writing to the Company and the Trustee specifying the Event of Default and that it is a “notice of acceleration.” If an Event of Default specified in clause (7) above occurs with respect to the Company, then the unpaid principal of (and premium, if any) and accrued and unpaid interest on all the notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any holder.

At any time after a declaration of acceleration with respect to the notes as described in the preceding paragraph, the holders of a majority in principal amount of the notes may rescind and cancel such declaration and its consequences:

(1) if the rescission would not conflict with any judgment or decree;

(2) if all existing Events of Default have been cured or waived, except nonpayment of principal or interest that has become due solely because of the acceleration;

(3) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; and

(4) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and advances.

No rescission will affect any subsequent Default or impair any rights relating thereto.

The holders of a majority in principal amount of the notes may waive any existing Default or Event of Default under the Indenture, and its consequences, except a default in the payment of the principal of, premium, if any, or interest on any notes.

Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the holders, unless such holders have offered to the Trustee indemnity satisfactory to it. Subject to all provisions of the Indenture and applicable law, the holders of a majority in aggregate principal amount of the then outstanding notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee.

No holder of any notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless:

(1) such holder gives to the Trustee written notice of a continuing Event of Default;

(2) holders of at least 25% in principal amount of the then outstanding notes make a written request to pursue the remedy;

(3) such holders of the notes provide the Trustee indemnity satisfactory to it;

166

(4) the Trustee does not comply within 60 days; and

(5) during such 60 day period the holders of a majority in principal amount of the outstanding notes do not give the Trustee a written direction which, in the opinion of the Trustee, is inconsistent with the request;

provided, that a holder of a note may institute suit for enforcement of payment of the principal of and premium, if any, or interest on such note on or after the respective due dates expressed in such note.

The Company is required to deliver to the Trustee written notice of any event which would constitute Defaults or Events of Default, their status and what action the Company is taking or proposes to take in respect thereof. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, an Officer’s Certificate indicating whether the signers thereof know of any Default or Event of Default that occurred during the previous fiscal year. The Indenture provides that if a Default or Event of Default occurs, is continuing and is actually known to the Trustee, the Trustee must mail to each holder notice of the Default or Event of Default within 90 days after the occurrence thereof. Except in the case of a Default or Event of Default in the payment of principal of, premium, if any, or interest on any note, the Trustee may withhold notice if and so long as it determines that withholding notice is in the interest of the holders.

Legal Defeasance and Covenant Defeasance

The Company may, at its option and at any time, elect to have its obligations discharged with respect to the outstanding notes after the deposit referred to below has been made (“Legal Defeasance”). Such Legal Defeasance means that the Company will be deemed to have paid and discharged the entire indebtedness represented by the outstanding notes upon fulfillment of the conditions described below, except for:

(1) the rights of holders to receive payments in respect of the principal of, premium, if any, and interest on the notes when such payments are due from the trust described below;

(2) the Company’s obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payments;

(3) the rights, powers, trust, duties and immunities of the Trustee and the Company’s obligations in connection therewith; and

(4) the Legal Defeasance provisions of the Indenture.

In addition, the Company may, at its option and at any time, elect to have its obligations released with respect to certain covenants that are described in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with such obligations will not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, reorganization and insolvency events) described under “Events of Default” will no longer constitute an Event of Default with respect to the notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the holders, cash in U.S. Dollars, certain direct non-callable obligations of, or guaranteed by, the United States, or a combination thereof, in such amounts as will be sufficient without reinvestment, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest (including Additional Interest) on the notes on the stated date for payment thereof or on the applicable redemption date, as the case may be;

(2) in the case of Legal Defeasance, the Company must deliver to the Trustee an Opinion of Counsel from counsel in the United States reasonably acceptable to the Trustee and independent of the Company to the effect that:

167

(a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

(b) since the Issue Date, there has been a change in the applicable U.S. federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall state that, the holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of Covenant Defeasance, the Company must deliver to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee to the effect that the holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default shall have occurred and be continuing on the date of the deposit pursuant to clause (1) of this paragraph (except any Default or Event of Default resulting from the failure to comply with “Certain Covenants—Limitation on Incurrence of Additional Indebtedness” as a result of the borrowing of funds required to effect such deposit);

(5) the Trustee has received an Officer’s Certificate stating that such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

(6) the Company has delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Company with the intent of preferring the holders over any other creditors of the Company or any Subsidiary of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others;

(7) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel independent of the Company, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and

(8) the Company has delivered to the Trustee an Opinion of Counsel independent of the Company to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940.

Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the notes, as expressly provided for in the Indenture) as to all outstanding notes when:

(1) either:

(a) all the notes theretofore authenticated and delivered (except lost, stolen or destroyed notes which have been replaced or paid and notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation; or

(b) all notes not theretofore delivered to the Trustee for cancellation have become due and payable, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds or certain direct, non-callable obligations of, or guaranteed by, the United States sufficient without reinvestment to pay and discharge the entire Indebtedness on the notes not theretofore delivered

168

to the Trustee for cancellation, for principal of, premium, if any, and interest on the notes to the date of deposit, together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment;

(2) the Company has paid all other sums payable under the Indenture and the notes by it; and

(3) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with.

Modification of the Indenture

From time to time, the Company, the Guarantors and the Trustee, without the consent of the holders, may amend the Indenture or the notes for certain specified purposes, including curing ambiguities, defects or inconsistencies, adding Note Guarantees or covenants, issuing Additional Notes, and making other changes which do not adversely affect the rights of any of the holders in any material respect. In executing such supplemental indentures, the Trustee will be entitled to rely on such evidence as it deems appropriate, including solely on an Opinion of Counsel and an Officer’s Certificate. Other modifications and amendments of the Indenture or the notes may be made with the consent of the holders of a majority in principal amount of the then outstanding notes issued under the Indenture, except that, without the consent of each holder affected thereby, no amendment may:

(1) reduce the amount of notes whose holders must consent to an amendment or waiver;

(2) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, on any notes;

(3) reduce the principal of or change or have the effect of changing the fixed maturity of any notes, or change the date on which any notes may be subject to redemption, or reduce the redemption price therefor;

(4) make any notes payable in money other than that stated in the notes;

(5) make any change in provisions of the Indenture entitling each holder to receive payment of principal of, premium, if any, and interest on such note on or after the due date thereof or to bring suit to enforce such payment, or permitting holders of a majority in principal amount of notes to waive Defaults or Events of Default;

(6) amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer in respect of a Change of Control that has occurred or make and consummate an Asset Sale Offer with respect to any Asset Sale that has been consummated;

(7) make any change in the provisions of the Indenture described under “Additional Interest” that adversely affects the rights of any holder or amend the terms of the notes in a way that would result in a loss of exemption from Taxes; and

(8) make any change to the provisions of the Indenture or the notes that adversely affect the ranking of the notes.

Governing Law; Jurisdiction

The Indenture and the notes will be governed by, and construed in accordance with, the law of the State of New York. The Company and the Guarantors have consented to the jurisdiction of the Federal and State courts located in The City of New York, Borough of Manhattan and have appointed an agent for service of process with respect to any actions brought in these courts arising out of or based on the Indenture or the notes.

169

The Trustee

Except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payments of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise.

No Personal Liability

An incorporator, director, officer, employee, stockholder or controlling person, as such, of the Company or any Guarantor will not have any liability for any obligations of the Company or any Guarantor under the notes (including the Note Guarantees) or the Indenture or for any claims based on, in respect of or by reason of such obligations or their creation. By accepting a note, each holder waives and releases all such liability.

Currency Indemnity

The Company and each Guarantor will pay all sums payable under the notes solely in U.S. Dollars. Any amount that you receive or recover in a currency other than U.S. Dollars in respect of any sum expressed to be due to you from the Company or any Guarantor will only constitute a discharge to us to the extent of the U.S. Dollar amount which you are able to purchase with the amount received or recovered in that other currency on the date of the receipt or recovery or, if it is not practicable to make the purchase on that date, on the first date on which you are able to do so. If the U.S. Dollar amount is less than the U.S. Dollar amount expressed to be due to you under any note, the Company and each Guarantor will indemnify you, to the greatest extent permitted by law, against any loss you sustain as a result. In any event, the Company and each Guarantor will indemnify you, to the greatest extent permitted by law, against the cost of making any purchase of U.S. Dollars. For the purposes of this paragraph, it will be sufficient for you to certify in a satisfactory manner that you would have suffered a loss had an actual purchase of U.S. Dollars been made with the amount received in that other currency on the date of receipt or recovery or, if it was not practicable to make the purchase on that date, on the first date on which you were able to do so. In addition, you will also be required to certify in a satisfactory manner the need for a change of the purchase date.

The indemnities described above:

• constitute a separate and independent obligation from the other obligations of the Company and the Guarantors;

• will give rise to a separate and independent cause of action;

• will apply irrespective of any indulgence granted by any holder; and

• will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any note.

Certain Definitions

Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for a full definition of all such terms, as well as any other terms used herein for which no definition is provided.

“Acquired Indebtedness” means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or at the time it merges or consolidates with the Company or any of its Restricted Subsidiaries or is assumed in connection with the acquisition of assets from such Person. Such Indebtedness will be deemed to have been Incurred at the time such Person becomes a Restricted Subsidiary or at the time it merges or

170

consolidates with the Company or a Restricted Subsidiary or at the time such Indebtedness is assumed in connection with the acquisition of assets from such Person.

“Acquisition” means any merger, consolidation, acquisition or lease of assets, acquisition of securities or business combination or acquisition, or any two or more of such transactions, if, upon the completion of such transaction or transactions, the Company or any Restricted Subsidiary thereof has acquired an interest in any Person who would be deemed to be a Restricted Subsidiary under the Indenture and was not a Restricted Subsidiary prior thereto.

“Additional Interest” has the meaning set forth under “—Additional Interest” above.

“Additional Notes” has the meaning set forth under “—Additional Notes” above.

“Affiliate” means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. Solely for purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

“Affiliate Transaction” has the meaning set forth in “Certain Covenants—Limitations on Transactions with Affiliates” above.

“Asset Sale” means any direct or indirect sale, disposition, issuance, conveyance, transfer, lease (other than an operating lease entered into in the ordinary course of business), assignment or other transfer, including a Sale and Leaseback Transaction (each, a “disposition”) by the Company or any Restricted Subsidiary of:

(a) any Capital Stock other than Capital Stock of the Company (other than directors’ qualifying shares); or

(b) any property or assets (other than cash, Cash Equivalents or Capital Stock) of the Company or any Restricted Subsidiary.

Notwithstanding the preceding, the following will not be deemed to be Asset Sales:

(1) the disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries as permitted under “Certain Covenants—Limitation on Merger, Consolidation and Sale of Assets” or any disposition which constitutes a Change of Control;

(2) any disposition of (i) property or equipment that, in the reasonable determination of the Company, is not usable or has become obsolete, worn out or damaged or is otherwise no longer useful or unused in the ordinary course of business or (ii) any disposition of inventory or goods (or other assets) held for sale or no longer used in the ordinary course of business;

(3) for purposes of “Certain Covenants—Limitation on Asset Sales” only, the making or disposition of a Permitted Investment or Restricted Payment permitted under “Certain Covenants—Limitation on Restricted Payments”;

(4) a disposition to the Company or a Restricted Subsidiary, including a Person that is or will become a Restricted Subsidiary immediately after the disposition;

(5) the creation of a Lien permitted under the Indenture (other than a deemed Lien in connection with a Sale and Leaseback Transaction);

(6) (i) the disposition of Receivables Assets pursuant to a Qualified Receivables Transaction and (ii) the disposition of other accounts receivable in the ordinary course of business;

171

(7) (i) the licensing or sublicensing of intellectual property or other general intangibles, including entering into cross-licensing arrangements, in the ordinary course of business and (ii) the abandonment or other disposition of intellectual property that is, in the reasonable judgment of management of the Company or the relevant Restricted Subsidiary, no longer economically convenient to maintain or useful in the conduct of the Permitted Business;

(8) the disposition of inventory pursuant to an Inventory Financing or similar arrangement in the ordinary course of business that is otherwise permitted under the Indenture;

(9) the disposition of any asset compulsorily acquired by a Governmental Authority;

(10) sales, transfers and other dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements;

(11) the good faith surrender or waiver of contract rights, tort claims or statutory rights in connection with a settlement to the extent permitted under this Indenture;

(12) sales, leases, licensing, conveyances or other dispositions, including, without limitation, exchanges or swaps of assets, for the development of the Company’s or any of its Restricted Subsidiaries’ projects in the ordinary course of business;

(13) the lease, assignment, licensing or sub-lease or sub-licensing of any real or personal property in the ordinary course of business;

(14) sales, transfers and other dispositions of any interest in a Project Finance Subsidiary; and

(15) any disposition or series of related dispositions involving property or assets with a Fair Market Value not to exceed the greater of U.S.$5 million (or the equivalent in other currencies).

“Asset Sale Offer” has the meaning set forth under “Certain Covenants—Limitation on Asset Sales” above.

“Board of Directors” means, as to any Person, the board of directors, management committee or similar governing body of such Person or any duly authorized committee thereof.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City, New York or México, D.F., México are authorized or required by law or other governmental action to remain closed.

“Capital Stock” means:

(1) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person;

(2) with respect to any Person that is not a corporation, any and all partnership or other equity or ownership interests of such Person; and

(3) any warrants, rights or options to purchase any of the instruments or interests referred to in clause (1) or (2) above, but excluding any Indebtedness exchangeable into such equity interest in existence on the Issue Date or Incurred pursuant to “Certain Covenants—Limitation on Incurrence of Additional Indebtedness.”

“Capitalized Lease Obligations” means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under IFRS. For purposes of this definition, the amount of such obligations at any date will be the capitalized amount of such obligations at such date, determined in accordance with IFRS.

172

“Cash Equivalents” means:

(1) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof;

(2) marketable direct obligations issued by the Mexican government, or issued by any agency thereof, including but not limited to, Certificados de la Tesorería de la Federación (Cetes), Bonos de Desarrollo del Gobierno Federal (Bondes) or Bonos Ajustables del Gobierno Federal (Ajustabonos), in each case, issued by the government of México and maturing not later than one year after the acquisition thereof;

(3) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Fitch or any successor thereto;

(4) commercial paper or corporate debt obligations issued by any Person maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 or AAA from S&P, at least F-1 or AAA from Fitch or P-1 or Aaa from Moody’s;

(5) demand deposits, certificates of deposit, time deposits or bankers’ acceptances or other short-term unsecured debt obligations (and any cash or deposits in transit in any of the foregoing) maturing within one year from the date of acquisition thereof issued by (a) any bank organized under the laws of the United States of America or any state thereof or the District of Columbia, (b) any U.S. branch of a non-U.S. bank having at the date of acquisition thereof combined capital and surplus of not less than U.S.$500 million, or (c) in the case of Mexican peso deposits, any financial institution in good standing with Banco de México organized under the laws of México and authorized to act as such by the Ministry of Finance and Public Credit or the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores).

(6) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) and (2) above entered into with any bank meeting the qualifications specified in clause (5) above;

(7) investments in money market funds which invest substantially all of their assets in securities of the types described in clauses (1) through (6), (8) and (9);

(8) certificates of deposit issued by any of Nacional Financiera, S.N.C., Banco Nacional de Comercio Exterior, S.N.C., Banco Nacional de Obras y Servicios Públicos, S.N.C. or any other development bank controlled by the Mexican government;

(9) any other debt instrument rated “investment grade” (or the local equivalent thereof according to local criteria in a country in which the Company or a Restricted Subsidiary operates and in which local pensions are permitted by law to invest) with maturities of one year or less from the date of acquisition; and

(10) Investments in mutual funds, managed by banks, with a local currency credit rating of at least MxAA by S&P or other equally reputable local rating agency, that invest principally in marketable direct obligations issued by the Mexican Government, or issued by any agency or instrumentality thereof.

In the case of Investments by any Restricted Subsidiary, Cash Equivalents will also include (a) investments of the type and maturity described in clauses (1) through (10) of any Restricted Subsidiary outside of Mexico in the country in which such Restricted Subsidiary operates, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalents ratings from comparable foreign rating agencies, (b) local currencies and other short-term investments utilized by Restricted Subsidiaries in accordance with normal investment practices for cash management in

173

investments analogous to the foregoing investments in clauses (1) through (10) and in this paragraph and (c) investments of the type described in clauses (1) through (9) maturing within one year of the Issue Date.

“Change of Control” means the occurrence of one or more of the following events:

(1) any Person who is not a Controlling Shareholder, or two or more Persons who are not Controlling Shareholders acting in concert shall have acquired beneficial ownership, directly or indirectly, of Voting Stock of the Company (or other securities convertible into such voting securities) representing 51% or more of the combined voting power of all Voting Stock of the Company; or

(2) any Person who is not a Controlling Shareholder, or two or more Persons who are not Controlling Shareholders acting in concert, shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of the power directly or indirectly to name the majority of the members of the Board of Directors of the Company or directly or indirectly to vote or control the vote of a majority of the Voting Stock of the Company (or other securities convertible into such voting securities).

As used in the foregoing definition, “Controlling Shareholder” means any of the related (by blood or marriage) individuals whose names were, on March 31, 2017, set forth in the shareholder registries of Acciones y Valores del Norte, S.A. de C.V. and Promotora de Inversiones Mexicanas, S.A. de C.V., the principal indirect shareholders of Camcem, S.A. de C.V., which individuals, as of such date, owned indirectly a majority of the combined voting power of all Voting Stock of the Company.

“Change of Control Offer” has the meaning set forth under “—Change of Control” above.

“Change of Control Payment” has the meaning set forth under “—Change of Control” above.

“Change of Control Payment Date” has the meaning set forth under “—Change of Control” above.

“Commission” means the U.S. Securities and Exchange Commission, or any successor agency thereto with respect to the regulation or registration of securities in the United States of America.

“Commodity Price Purchase Agreement” means, in respect of any Person, any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect such Person from fluctuations in commodity prices.

“Common Stock” means, with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common equity interests, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common equity interests.

“Consolidated EBITDA” means, for any Person for any period, Consolidated Net Income for such Person for such period, plus the following, without duplication, to the extent deducted or added in calculating such Consolidated Net Income:

(1) Consolidated Income Tax Expense and workers’ profit sharing for such Person for such period;

(2) Consolidated Interest Expense for such Person for such period;

(3) any exchange gain (or loss) and other related expenses;

(4) any income or loss from discontinued operations;

(5) any income or loss from foreign exchange translation or change in net monetary position;

(6) Consolidated Non-Cash Charges for such Person for such period;

174

(7) net after-tax losses from Asset Sale transactions or abandonments, impairments or reserves (write offs) relating thereto for such period;

(8) any income or loss from extraordinary transactions, including non-recurring severance payments to employees or any income or loss from sales of Subsidiaries’ Capital Stock; and

(9) the cumulative effect of changes in accounting principles.

less (x) all non-cash credits and gains increasing Consolidated Net Income for such Person for such period, other than any items which represent the reversal in such period of any accrual of, or cash reserve for, anticipated charges in any prior period where such accrual or reserve is no longer required under IFRS and (y) all cash payments made by such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Company) during such period relating to non-cash charges that were added back in determining Consolidated EBITDA in any prior period.

Notwithstanding any requirements of IFRS to the contrary, the determination of Consolidated EBITDA for purposes of determining compliance with the Consolidated Fixed Charge Coverage Ratio shall be calculated on a Dollar-basis by converting any Peso-denominated income-statement accounts of the Company and its consolidated Subsidiaries into Dollars as of the end of each calendar month during such four-quarter period on the basis of the Period Average Exchange Rate (this is, monthly conversions in accordance with IFRS).

“Consolidated Fixed Charge Coverage Ratio” means, with respect to any Person as of any date of determination, the ratio of the aggregate amount of Consolidated EBITDA of such Person for the four most recent full fiscal quarters for which financial statements are available ending prior to the date of such determination (the “Four Quarter Period”) to Consolidated Fixed Charges for such Person for such Four Quarter Period. For purposes of this definition, Consolidated EBITDA and Consolidated Fixed Charges will be calculated after giving effect on a pro forma basis in good faith for the period of such calculation for the following:

(1) the Incurrence, repayment or redemption of any Indebtedness (including Acquired Indebtedness) of such Person or any of its Subsidiaries (Restricted Subsidiaries in the case of the Company) and the application of the proceeds thereof, including the Incurrence of any Indebtedness (including Acquired Indebtedness), and the application of the proceeds thereof, giving rise to the need to make such determination, occurring during such Four Quarter Period and at any time subsequent to the last day of such Four Quarter Period and prior to or on such date of determination, as if such Incurrence, and the application of the proceeds thereof, repayment or redemption occurred on the first day of such Four Quarter Period; and

(2) any Asset Sale transaction or Acquisition by such Person or any of its Subsidiaries (Restricted Subsidiaries in the case of the Company), including any Asset Sale or Acquisition giving rise to the need to make such determination, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and prior to or on such date of determination, as if such Asset Sale transaction or Acquisition occurred on the first day of such Four Quarter Period.

Furthermore, in calculating “Consolidated Fixed Charges” for purposes of determining the denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage Ratio”:

(a) interest on any Indebtedness bearing a floating rate of interest will be calculated as if the rate in effect on the applicable date of determination had been the applicable rate for the entire Four Quarter Period;

(b) interest on any Indebtedness under a revolving credit facility will be computed based upon the average daily balance of such Indebtedness during such Four Quarter Period, or if such facility was created after the end of such Four Quarter Period, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation;

(c) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, will be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Company may designate;

175

(d) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with IFRS; and

(e) notwithstanding clause (a) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by Hedging Obligations, will be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.

“Consolidated Fixed Charges” means, for any Person for any period, the sum, without duplication, of:

(1) Consolidated Interest Expense for such Person for such period, plus

(2) the amount of all cash and non-cash dividend payments on any series of Preferred Stock or Disqualified Capital Stock of such Person (other than dividends paid in Qualified Capital Stock) or any Subsidiary of such Person (Restricted Subsidiary in the case of the Company) paid, accrued or scheduled to be paid or accrued during such period, excluding dividend payments on Preferred Stock or Disqualified Capital Stock paid, accrued or scheduled to be paid to such Person or another Subsidiary (Restricted Subsidiary in the case of the Company).

“Consolidated Income Tax Expense” means, with respect to any Person for any period, the provision for U.S. federal, state and local and any other non-U.S. income and asset taxes payable, including current and deferred taxes, by such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Company) for such period as determined on a consolidated basis in accordance with IFRS.

“Consolidated Interest Expense” means, for any Person for any period, the sum of, without duplication determined on a consolidated basis in accordance with IFRS, the aggregate of cash and non-cash interest expense of such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Company) for such period determined on a consolidated basis in accordance with IFRS, including, without limitation (whether or not interest expense in accordance with IFRS):

(1) any amortization or accretion of debt discount or any interest paid on Indebtedness of such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Company) in the form of additional Indebtedness;

(2) any amortization of deferred financing costs but excluding the amortization of any capitalized amount of any fees and expenses in connection with any Indebtedness existing prior to the Issue Date that is being Refinanced with the Notes;

(3) the net costs under Hedging Obligations (but excluding amortization of fees);

(4) all capitalized interest, except in the case of capitalized interest relating to financing for construction of, or improvement to, plants, properties or equipment, prior to the date of completion of such construction or improvement, as permitted by IFRS;

(5) the interest portion of any deferred payment obligation;

(6) commissions, discounts and other fees and charges Incurred in respect of letters of credit or bankers’ acceptances; and

(7) any interest expense paid in respect of Indebtedness of another Person that is Guaranteed by such Person or one of its Subsidiaries (Restricted Subsidiaries in the case of the Company) or secured by a Lien on the assets of such Person or one of its Subsidiaries (Restricted Subsidiaries in the case of the Company).

Notwithstanding any requirements of IFRS to the contrary, the determination of Consolidated Interest Expense for purposes of determining compliance with the Consolidated Fixed Charge Coverage Ratio shall be calculated on a Dollar-basis by converting any Peso-denominated interest expense accounts of the Company and its consolidated Subsidiaries into Dollars

176

as of the end of each calendar month during such four-quarter period on the basis of the Period Average Exchange Rate (this is, monthly conversions in accordance with IFRS).

“Consolidated Net Income” means, with respect to any Person for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period on a consolidated basis, determined in accordance with IFRS; provided, that there shall be excluded therefrom to the extent reflected in such aggregate net income (loss):

(1) net after-tax gains or losses from Asset Sale transactions, abandonments, reserves or non-cash impairment of fixed assets or non-cash asset write-offs relating thereto;

(2) any unrealized gains and losses due solely to fluctuations in inflation or currency values and the related tax effects;

(3) net after-tax items classified as extraordinary gains or losses, including non-recurring severance payments to employees and sales of Subsidiaries’ Capital Stock;

(4) the net income (but not loss) of any Subsidiary of such Person (Restricted Subsidiary in the case of the Company) to the extent that (and only so long as) a corresponding amount could not be distributed to such Person at the date of determination as a result of any restriction pursuant to the constituent documents of such Subsidiary (Restricted Subsidiary in the case of the Company) or any law, regulation, agreement or judgment applicable to any such distribution;

(5) any income or loss from discontinued operations;

(6) any gains or losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of Indebtedness and Hedging Obligations; and

(7) the cumulative effect of changes in accounting principles.

“Consolidated Non-Cash Charges” means for any Person for any period the aggregate depreciation, amortization, other non-cash expenses or losses, any provision for an allowance for doubtful accounts, any provision for obsolete inventory, and the positive difference, if any, between any pension expense less any pension contributions made during such period, of such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Company) for such period, determined on a consolidated basis in accordance with IFRS.

“Consolidated Tangible Assets” means, with respect to any Person at any time, the total consolidated assets of such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Company) as set forth on the balance sheet as of the most recent fiscal quarter of such Person, prepared in accordance with IFRS, less Intangible Assets.

“Covenant Defeasance” has the meaning set forth under “Legal Defeasance and Covenant Defeasance” above.

“Covenant Suspension Event” has the meaning set forth under “Certain Covenants—Suspension of Covenants” above.

“Credit Facilities” means one or more debt facilities, commercial paper facilities or Debt Issuances, in each case with banks, investment banks, insurance companies, mutual funds and/or other institutional lenders or institutional investors providing for revolving credit loans, term loans, letters of credit or Debt Issuances, in each case, as amended, extended, renewed, restated, Refinanced (including, Refinancing with Debt Issuances), supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time.

“Currency Agreement” means, with respect to any Person, any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party designed to hedge foreign currency risk of such Person.

“Debt Issuances” means, with respect to the Company or any Restricted Subsidiary, one or more issuances after the Issue Date of Indebtedness evidenced by notes, debentures, bonds or other similar securities or instruments.

177

“Default” means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.

“Designation” and “Designation Amount” have the meanings set forth under “Certain Covenants—Limitation on Designation of Unrestricted Subsidiaries” above.

“Disposition ” means, with respect to any property, any sale, lease, Sale and Leaseback Transaction, assignment, conveyance, transfer or other disposition thereof.

“Disqualified Capital Stock” means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof, in any case, on or prior to the 91st day after the final maturity date of the notes, but excluding with respect to Mexican companies, any shares of such Mexican company that are part of the variable portion of its Capital Stock and that are redeemable under the Mexican General Law of Business Corporations (Ley General de Sociedades Mercantiles).

“Equity Offering” has the meaning set forth under “Optional Redemption” above.

“Event of Default” has the meaning set forth under “Events of Default” above.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.

“Exchange Rate” means, as of any date, the Peso/Dollar exchange rate published by Banco de México in the Diario Oficial de la Federación as the rate “para solventar obligaciones denominadas en moneda extranjera pagaderas en la República Mexicana” on the Business Day immediately prior to the relevant calculation date to be in effect on such calculation date; provided that if Banco de México ceases to publish such exchange rate, the Exchange Rate shall equal the Peso/Dollar average exchange rates published by Banco Nacional de México, S.A., BBVA Bancomer and Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat at the close of business on the Business Day immediately prior to the relevant calculation date (i.e., twenty-four (24) hours forward), to be in effect on such calculation date.

“Existing Credit Facilities” means, collectively, (1) the secured credit facility, dated as of November 8, 2016, among the Company, the Guarantors and Banco Inbursa S.A. Institución de Banca Múltiple, Grupo Financiero Inbursa, as administrative agent and a lender and other lenders party thereto from time to time, and (2) the unsecured credit facility, dated as of November 8, 2016, among the Company, the Guarantors and Banco Inbursa S.A. Institución de Banca Múltiple, Grupo Financiero Inbursa, as administrative agent and a lender and other lenders party thereto from time to time, in each case as such agreement may be amended, modified or waived from time to time, including any refinancing thereof in full or in part.

“Fair Market Value” means, with respect to any asset, the price (after taking into account any liabilities relating to such assets) which could be negotiated in an arm’s length free market transaction, for cash, between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction. Fair Market Value shall be determined conclusively, except as otherwise provided, by the Company in good faith.

“Fitch” means Fitch Ratings and any successor to its rating agency business.

“Four Quarter Period” has the meaning set forth in the definition of Consolidated Fixed Charge Coverage Ratio above.

“Governmental Authority” shall mean any ministry, administrative department, agency, commission, bureau, board, regulatory authority, registry, instrumentality, corporation or other governmental body, entity or court exercising executive, legislative, judicial, monetary, regulatory or administrative functions (including, without limitation, central banks and other banking and taxing authorities) of or owned or controlled by, as the case may be, United Mexican States, the United States or any other jurisdiction, or any political subdivision thereof.

178

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person:

(1) to purchase or pay, or advance or supply funds for the purchase or payment of, such Indebtedness of such other Person, whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise; or

(2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof, in whole or in part;

provided, that “Guarantee” will not include endorsements for collection or deposit in the ordinary course of business. “Guarantee” used as a verb has a corresponding meaning.

“Guarantors” has the meaning set forth under “General” above; provided that any Person constituting a Guarantor shall cease to constitute a Guarantor when its respective Note Guarantee is released in accordance with the terms of the Indenture.

“Hedging Obligations” means the obligations of any Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Price Purchase Agreement.

“IFRS” means the International Financial Reporting Standards, as issued by the International Accounting Standards Board as in effect on the Issue Date.

“Incur” means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (including by conversion, exchange or otherwise), assume, Guarantee or otherwise become liable in respect of such Indebtedness or other obligation on the balance sheet of such Person (and “Incurrence,” “Incurred” and “Incurring” will have meanings correlative to the preceding); provided that any Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary of the Company will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary of the Company, unless otherwise stated under the Indenture.

“Indebtedness” means with respect to any Person, without duplication:

(1) the principal amount (or, if less, the accreted value) of all obligations of such Person for borrowed money;

(2) the principal amount (or, if less, the accreted value) of all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, including any perpetual bonds, debenture notes or similar instruments without regard to maturity date;

(3) all Capitalized Lease Obligations;

(4) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all payment obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities accounted for as current liabilities (in accordance with IFRS) arising in the ordinary course of business) due more than 365 days after such property is acquired (unless contested in good faith and by appropriate proceedings for which adequate reserves have been established), except any earn out obligations until such obligation becomes a liability on the balance sheet of such Person in accordance with IFRS and only if not paid after becoming due and payable;

(5) reimbursement obligations with respect to letters of credit, bankers’ acceptances or similar credit transactions;

179

(6) Guarantees and other contingent obligations of such Person in respect of Indebtedness referred to in clauses (1) through (5) above and clauses (8) through (10) below;

(7) all Indebtedness of any other Person of the type referred to in clauses (1) through (6) which is secured by any Lien on any property or asset of the first Person, the amount of such Indebtedness being deemed to be the lesser of (x) the Fair Market Value of such property or asset and (y) the amount of the Indebtedness so secured;

(8) all obligations under Hedging Obligations of such Person on a net basis (to the extent the netting mechanisms apply in the corresponding instrument governing such Hedging Obligations);

(9) all liabilities (contingent or otherwise) recorded on the balance sheet of such Person in connection with a sale or other disposition of accounts receivable and related assets (not including Qualified Receivables Transactions), irrespective of their treatment under IFRS; and

(10) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any; provided, that:

(a) if the Disqualified Capital Stock does not have a fixed repurchase price, such maximum fixed repurchase price will be calculated in accordance with the terms of the Disqualified Capital Stock as if the Disqualified Capital Stock were purchased on any date on which Indebtedness will be required to be determined pursuant to the Indenture; and

(b) if the maximum fixed repurchase price is based upon, or measured by, the fair market value of the Disqualified Capital Stock, the fair market value will be the Fair Market Value thereof.

The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingency obligations at such date.

For the avoidance of doubt, the recognition and acknowledgement by the Company or any Restricted Subsidiary of its obligation to make payment of a trade payable arising in the ordinary course of business to a bank following the sale and assignment thereof pursuant to any non-recourse factoring or similar arrangements, shall not be Indebtedness.

“Indenture” has the meaning set forth in the first paragraph of this Description of Notes.

“Intangible Assets” means, with respect to any Person, all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, software and all other items which would be treated as intangibles on the consolidated balance sheet of such Person prepared in accordance with IFRS.

“Interest Rate Agreement” means, with respect to any Person, any interest rate protection agreement (including, without limitation, interest rate swaps, caps, floors, collars, derivative instruments and similar agreements) and/or other types of hedging agreements designed to hedge interest rate risk of such Person.

“Inventory Financing” means a financing arrangement pursuant to which the Company or any of its Restricted Subsidiaries sells inventory to a bank or other institution (or a special purpose vehicle or partnership incorporated or established by or on behalf of such bank or other institution or an Affiliate of such bank or other institution) and has an obligation to repurchase such inventory to the extent that it is not sold to a third party within a specified period.

“Investment” means, with respect to any Person, any:

(1) direct or indirect loan, advance or other extension of credit (including, without limitation, a Guarantee) to any other Person;

180

(2) capital contribution (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others) to any other Person; or

(3) purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by any other Person.

“Investment” will exclude accounts receivable, advances or extensions of credit in connection with supplier or customer financings consistent with industry or past practice, advance payment of capital expenditures arising in the ordinary course of business, deposits arising in the ordinary course of business and transactions (other than (i) any sale, lease, license, transfer or other disposal and (ii) the granting or creation of a Lien or the Incurring or permitting to subsist of Indebtedness) conducted in the ordinary course of business on arm’s length terms. “Invest,” “Invested” and “Investing” will have meanings correlative to the preceding.

For purposes of the “Limitation on Restricted Payments” covenant, the Company will be deemed to have made an “Investment” in an Unrestricted Subsidiary at the time of its Designation, which will be valued at the Fair Market Value of the sum of the net assets of such Unrestricted Subsidiary multiplied by the percentage equity ownership of the Company and its Restricted Subsidiaries in such Designated Unrestricted Subsidiary at the time of its Designation and the amount of any Indebtedness of such Unrestricted Subsidiary or owed to the Company or any Restricted Subsidiary immediately following such Designation. Any property transferred to or from an Unrestricted Subsidiary will be valued at its Fair Market Value at the time of such transfer. If the Company or any Restricted Subsidiary sells or otherwise disposes of any Capital Stock of a Restricted Subsidiary (including any issuance and sale of Capital Stock by a Restricted Subsidiary) such that, after giving effect to any such sale or disposition, such Restricted Subsidiary would cease to be a Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition equal to the sum of the Fair Market Value of the Capital Stock of such former Restricted Subsidiary held by the Company or any Restricted Subsidiary immediately following such sale or other disposition and the amount of any Indebtedness of such former Restricted Subsidiary Guaranteed by the Company or any Restricted Subsidiary or owed to the Company or any other Restricted Subsidiary immediately following such sale or other disposition. The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person. Except as otherwise provided in the Indenture, the amount of an Investment will be determined at the time the Investment is made without giving effect to subsequent changes in value.

“Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.

“Investment Return” means, in respect of any Investment (other than a Permitted Investment) made after the Issue Date by the Company or any Restricted Subsidiary:

(1) the cash proceeds received by the Company upon the sale, liquidation or repayment of such Investment or, in the case of a Guarantee, the amount of the Guarantee upon the unconditional release of the Company and its Restricted Subsidiaries in full, less any payments previously made by the Company or any Restricted subsidiary in respect of such Guarantee;

(2) in the case of the Revocation of the Designation of an Unrestricted Subsidiary, an amount equal to the lesser of:

(a) the Company’s Investment in such Unrestricted Subsidiary at the time of such Revocation;

(b) that portion of the Fair Market Value of the net assets of such Unrestricted Subsidiary at the time of Revocation that is proportionate to the Company’s equity interest in such Unrestricted Subsidiary at the time of Revocation; and

(c) the Designation Amount with respect to such Unrestricted Subsidiary upon its Designation which was treated as a Restricted Payment; and

181

(3) in the event the Company or any Restricted Subsidiary makes any Investment in a Person that, as a result of or in connection with such Investment, becomes a Restricted Subsidiary, the existing Investment of the Company and its Restricted Subsidiaries in such Person,

in the case of each of (1), (2) and (3), up to the amount of such Investment that was treated as a Restricted Payment under “Certain Covenants—Limitation on Restricted Payments” less the amount of any previous Investment Return in respect of such Investment.

“Issue Date” means the first date of issuance of notes under the Indenture and following a Covenant Suspension Event (except under “Optional Redemption—Optional Redemption for Changes in Withholding Taxes”, “Certain Covenants—Suspension of Covenants” and the definition of “Permitted Liens”) the most recent Reversion Date.

“Legal Defeasance” has the meaning set forth under “Legal Defeasance and Covenant Defeasance” above.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, fideicomiso de garantía, fideicomiso de administración, charge, security interest or encumbrance of any kind in respect of such asset. The Company or any Restricted Subsidiary shall be deemed to own, subject to a Lien, any asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capitalized Lease Obligations or other title retention lease relating to such asset, or any account receivable transferred by it with recourse (including any such transfer subject to a holdback or similar arrangement that effectively imposes the risk of collectability on the transferor).

“Mexican Guarantor” has the meaning set forth under “General” above.

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

“Net Cash Proceeds” means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents, including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents received by the Company or any of its Restricted Subsidiaries from such Asset Sale, net of:

(1) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions);

(2) taxes paid or payable in respect of such Asset Sale after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements;

(3) repayment of Indebtedness secured by a Lien permitted under the Indenture that is required to be repaid in connection with such Asset Sale;

(4) all distributions and other payments made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale to the extent permitted under the Indenture; and

(5) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with IFRS, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, but excluding any reserves with respect to Indebtedness.

“Note Guarantee” means any guarantee of the Company’s Obligations under the notes and the Indenture by any Guarantor pursuant to the Indenture.

“Obligations” means, with respect to any Indebtedness, any principal, interest (including, without limitation, Post-Petition Interest), penalties, fees, indemnifications, reimbursements, damages, and other liabilities payable under the documentation governing such Indebtedness, including in the case of the notes and the Note Guarantees and the Indenture.

182

“OECD” means the Organization for Economic Co-operation and Development, or its successor.

“Officer’s Certificate” means a certificate signed on behalf of a Person by an Officer, duly authorized to act on behalf, of such Person, who must be the principal executive officer, the principal financial officer, the controller, the treasurer, the principal accounting officer, the general counsel or the secretary of such Person, that meets the requirements set forth in the Indenture and is provided to the Trustee.

“Opinion of Counsel” means a written opinion of counsel, who may be an employee of or counsel for the Company (except as otherwise provided in the Indenture) and who shall be reasonably acceptable to the Trustee.

“Paying Agent” has the meaning set forth in the first paragraph of this Description of notes.

“Period Average Exchange Rate” shall mean the average daily Exchange Rate for each calendar month or fiscal quarter, as applicable, during such period, as determined in accordance with the methodology described in the definition of “Exchange Rate.”

“Permitted Business” means (i) the business or businesses conducted or proposed to be conducted as disclosed in this offering memorandum by the Company and its Restricted Subsidiaries as of the Issue Date and any business ancillary, incidental, complementary or related thereto or (ii) any other business that would not constitute a substantial change to the general nature of its business from that carried on by the Company and its Restricted Subsidiaries as of the Issue Date.

“Permitted Indebtedness” has the meaning set forth under clause (2) of “Certain Covenants—Limitation on Incurrence of Additional Indebtedness” above.

“Permitted Investments” means:

(1) Investments by the Company or any Restricted Subsidiary in any Person that is, or that result in any Person becoming, immediately after such Investment, a Restricted Subsidiary or constituting a merger or consolidation of such Person into the Company or with or into a Restricted Subsidiary;

(2) any Investments in the Company;

(3) Investments in cash and Cash Equivalents;

(4) any extension, modification or renewal of any Investments existing as of the Issue Date (but not Investments involving additional advances, contributions or other investments of cash or property or other increases thereof, other than as a result of the accrual or accretion of interest or original issue discount or payment-in-kind pursuant to the terms of such Investment as of the Issue Date);

(5) Investments permitted pursuant to clause (2)(d) of “Certain Covenants—Limitation on Transactions with Affiliates”;

(6) Investments received as a result of the bankruptcy or reorganization of any Person or taken in settlement of or other resolution of claims or disputes, and, in each case, extensions, modifications and renewals thereof;

(7) Investments made by the Company or its Restricted Subsidiaries as a result of non-cash consideration permitted to be received in connection with an Asset Sale made in compliance with the covenant described under “Certain Covenants—Limitation on Asset Sales”;

(8) Investments in the form of Hedging Obligations permitted under clause 2(d) of “Certain Covenants—Limitation on Incurrence of Additional Indebtedness”;

(9) Investments in intercompany Indebtedness permitted pursuant to clause 2(e) of “Certain Covenants—Limitation on Incurrence of Additional Indebtedness”;

183

(10) Investments in existence on the Issue Date or made pursuant to binding commitments in effect on the Issue Date or any Investment consisting of any extension, modification or renewal of any Investment existing on the Issue Date; provided that the amount of any such Investment may be increased (a) as required by the terms of such Investment as in existence on the Issue Date or (b) as otherwise permitted by the Indenture;

(11) Investments by the Company or any Restricted Subsidiary in a Receivables Entity in connection with a Qualified Receivables Transaction which does not constitute an Asset Sale by virtue of clause (7) of the definition thereof; provided, however, that any such Investments are made only in the form of Receivables Assets;

(12) Investments made solely in the form of common equity of the Company constituting Qualified Capital Stock;

(13) Investments in prepaid expenses, marketable securities or negotiable instruments held for collection and lease, utility and workers compensation, to fund the Company’s or a Restricted Subsidiary’s pension and other employee related obligations, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business;

(14) loans or advances to officers, employees and agents made in the ordinary course of business in a principal amount that in the aggregate does not exceed U.S.$3 million;

(15) Investments in the Capital Stock of any Person other than a Restricted Subsidiary that are required to be held pursuant to an involuntary governmental order of condemnation, nationalization, seizure or expropriation or other similar order with respect to Capital Stock of such Person (prior to which order such Person was a Restricted Subsidiary); provided that such Person contests such order in good faith in appropriate proceedings;

(16) repurchases of the notes in accordance with the terms of the Indenture;

(17) Investments by the Company or any of its Restricted Subsidiaries in infrastructure or other projects that are sponsored by a Governmental Authority of the United Mexican States, provided that such Investment relates to a Permitted Business;

(18) Investments by the Company or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (18), in an aggregate amount outstanding at any one time not to exceed the greater of (x) U.S.$75 million (or the equivalent in other currencies) and (y) 5% of Consolidated Tangible Assets; and

(19) Investments to which the Company or any of its Restricted Subsidiaries is contractually committed as of the Issue Date in any Person other than a Subsidiary in which the Company or any of its Restricted Subsidiaries maintains an Investment in equity securities.

“Permitted Liens” means any of the following:

(1) (i) Liens existing on the Issue Date other than in respect of the Credit Facilities provided, however, that the total amount of Indebtedness so secured by any such Lien described in this clause (i) is not increased in connection with such extension, renewal or replacement (other than with respect to any premiums, fees and expenses incurred in connection with such extension, renewal or replacement) and (ii) Liens in respect of Credit Facilities incurred or outstanding pursuant to clause 2(m) of “Certain Covenants—Limitation on Incurrence of Additional Indebtedness” and, in each case, any extension, renewal or replacement, in whole or in part, of any such Lien described in clauses (i) and (ii);

(2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet

184

due or the payment of which is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserves or other appropriate provision, if any, as shall be required by IFRS shall have been made in respect thereof;

(3) Liens in respect of pledges or deposits in connection with workers’ compensation, unemployment insurance and other types of social security legislation, including any Lien securing letters of credit issued in the ordinary course of business, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, customs duties, bids, leases, reclamation activity required by any Governmental Authority, government performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of Indebtedness);

(4) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate, the purchase, shipment or storage of such inventory or other goods;

(5) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

(6) Liens encumbering deposits made to secure obligations from statutory or regulatory requirements of the Company or a Restricted Subsidiary, including rights of offset and set-off to the extent required by the applicable law or regulation;

(7) Liens for taxes, assessments or other governmental charges or levies not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings, provided that appropriate reserves required pursuant to IFRS have been made in respect thereof;

(8) Liens on patents, trademarks, service marks, trade names, copyrights, technology, know-how and processes to the extent such Liens arise from the granting of license to use such patents, trademarks, service marks, trade names, copyrights, technology, know-how and processes to any Person in the ordinary course of business of the Company or any of its Restricted Subsidiaries;

(9) encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(10) deposits securing liability for reimbursement obligations of insurance carriers providing insurance to the Company or its Restricted Subsidiaries in the ordinary course of business and any Liens thereon;

(11) Liens with respect to any judgment, decree or order of any court not giving rise to, or arising from, an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceeding may be initiated has not expired;

(12) Liens arising solely by virtue of any statutory or common law provisions relating to bankers’ Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution;

(13) Liens securing Hedging Obligations not entered into for speculative purposes;

(14) Liens to secure any Refinancing Indebtedness which is Incurred to Refinance any Indebtedness which has been secured by a Lien permitted under the covenant described under “—Covenants—Limitation on Liens” not incurred pursuant to clause (17) or (24) and which Indebtedness has been Incurred in

185

accordance with “—Covenants—Limitation on Incurrence of Additional Indebtedness”; provided that such new Liens:

(a) are no less favorable to the holders of notes and are not more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced; and

(b) do not extend to any property or assets other than the property or assets securing the Indebtedness Refinanced by such Refinancing Indebtedness;

(15) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary and permitted to be Incurred under the Indenture;

(16) Liens securing Acquired Indebtedness Incurred in accordance with “—Covenants—Limitation on Incurrence of Additional Indebtedness” not incurred in connection with, or in anticipation or contemplation of, the relevant acquisition, merger or consolidation or the Incurrence of such Acquired Indebtedness; provided that:

(a) such Liens secured such Acquired Indebtedness at the time of and prior to the Incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary; and

(b) such Liens do not extend to or cover any property of the Company or any Restricted Subsidiary other than the property that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Restricted Subsidiary and are no more favorable to the lienholders than the Liens securing the Acquired Indebtedness prior to the Incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary;

(17) Liens securing Purchase Money Indebtedness or Capitalized Lease Obligations Incurred to finance the acquisition or leasing of property of the Company or a Restricted Subsidiary used in a Permitted Business; provided that:

(a) the related Purchase Money Indebtedness does not exceed the cost of such property and will not be secured by any property of the Company or any Restricted Subsidiary other than the property so acquired;

(b) the Lien securing such Indebtedness will be created within 365 days of such acquisition; and

(c) such Purchase Money Indebtedness or Capitalized Lease Obligation is permitted to be Incurred under the Indenture.

(18) Liens securing the notes and any Guarantees;

(19) Liens on Receivables Assets or Capital Stock of a Receivables Subsidiary, in each case granted in connection with a Qualified Receivables Transaction;

(20) Sale and Leaseback Transactions permitted to be Incurred under the Indenture;

(21) Liens arising from precautionary Uniform Commercial Code financing statement and similar filings in other jurisdictions regarding operating leases entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

(22) any Lien permitted by the Trustee, acting on the instructions of a number of votes representing a majority of the outstanding notes;

(23) Liens on property existing on such property at the time of acquisition thereof (other than Liens created in contemplation of such acquisition);

186

(24) Liens on the Capital Stock of any Unrestricted Subsidiary; and

(25) in addition to the Liens permitted by the foregoing clauses (1) through (24), Liens securing an amount of Indebtedness outstanding at any one time not to exceed the greater of (x) U.S.$75 million (or the equivalent in other currencies) and (y) 5% of Consolidated Tangible Assets, provided such Indebtedness is permitted to be Incurred under the Indenture.

“Permitted Merger Jurisdiction” has the meaning set forth in “Certain Covenants—Limitation on Merger, Consolidation and Sale of Assets” above.

“Person” means an individual, partnership, limited partnership, corporation, company, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.

“Pesos” or “Ps” means the lawful money of México.

“Post-Petition Interest” means all interest accrued or accruing after the commencement of any insolvency or liquidation proceeding (and interest that would accrue but for the commencement of any insolvency or liquidation proceeding) in accordance with and at the contract rate (including, without limitation, any rate applicable upon default) specified in the agreement or instrument creating, evidencing or governing any Indebtedness, whether or not, pursuant to applicable law or otherwise, the claim for such interest is allowed as a claim in such insolvency or liquidation proceeding.

“Preferred Stock” means, with respect to any Person, any Capital Stock of such Person that has preferential rights over any other Capital Stock of such Person with respect to dividends, distributions or redemptions or upon liquidation.

“Project Finance Subsidiary” means any direct or indirect special-purpose Subsidiary of the Company (i) that is formed and organized to acquire, develop and/or operate a defined property, asset or project not held or owned by the Company or its Subsidiaries as of the date hereof and the sole business of which is to own, develop and/or operate such property, asset or project and (ii) the Indebtedness of which is (x) incurred solely to finance such acquisition, development and operation of such property, asset or project, (y) secured only by Liens applicable to such property, asset or project, and (z) payable solely from the net revenues and other proceeds arising from the ownership, development and operation or other realization of such property, asset or project, with no recourse whatsoever to the Company and its other Subsidiaries or their respective properties or assets.

“Purchase Money Indebtedness” means Indebtedness Incurred for the purpose of financing all or any part of the purchase price or other cost of construction or improvement of any property other than Capital Stock; provided, that the aggregate principal amount of such Indebtedness does not exceed the lesser of the Fair Market Value of such property or such purchase price or cost, including any Refinancing of such Indebtedness that does not increase the aggregate principal amount (or accreted amount, if less) thereof as of the date of such Refinancing.

“Qualified Capital Stock” means any Capital Stock that is not Disqualified Capital Stock and any warrants, rights or options to purchase or acquire Capital Stock that is not Disqualified Capital Stock that are not convertible into or exchangeable into Disqualified Capital Stock.

“Qualified Receivables Transaction” means any transaction or series of transactions that may be entered into by the Company or any Restricted Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell, convey, assign or otherwise transfer to a Receivables Entity any Receivables Assets to obtain funding for the operations of the Company and its Restricted Subsidiaries:

(1) for which no term of any portion of the Indebtedness or any other obligations (contingent or otherwise) or securities Incurred or issued by any Person in connection therewith:

(a) directly or indirectly provides for recourse to, or any obligation of, the Company or any Restricted Subsidiary in any way, whether pursuant to a Guarantee or otherwise, except for Standard Undertakings,

187

(b) directly or indirectly subjects any property or asset of the Company or any Restricted Subsidiary (other than Capital Stock of a Receivables Subsidiary) to the satisfaction thereof, except for Standard Undertakings, or

(c) results in such Indebtedness, other obligations or securities constituting Indebtedness of the Company or a Restricted Subsidiary, including following a default thereunder, and

(2) for which the terms of any Affiliate Transaction between the Company or any Restricted Subsidiary, on the one hand, and any Receivables Entity, on the other, other than Standard Undertakings and Permitted Investments, are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arm’s length basis from a Person that is not an Affiliate of the Company, and

(3) in connection with which, neither the Company nor any Restricted Subsidiary has any obligation to maintain or preserve a Receivable Entity’s financial condition, cause a Receivables Entity to achieve certain levels of operating results, fund losses of a Receivables Entity, or except in connection with Standard Undertakings, purchase assets of a Receivables Entity.

“Rating Agencies” mean Fitch, Moody’s and S&P. In the event that Fitch, Moody’s or S&P is no longer in existence or issuing ratings, such organization may be replaced by a nationally recognized statistical rating organization (as such term is defined by the Commission for purposes of Rule 3(a)(62) under the Exchange Act or any successor provision) designated by the Company with notice to the Trustee.

“Receivables Assets” means:

(1) accounts receivable, leases, conditional sale agreements, instruments, chattel paper, installment sale contracts, obligations, general intangibles, and other similar assets, in each case relating to goods, inventory or services of the Company and its Subsidiaries,

(2) equipment and equipment residuals relating to any of the foregoing,

(3) contractual rights, Guarantees, letters of credit, Liens, insurance proceeds, collections and other similar assets, in each case related to the foregoing, and

(4) proceeds of all of the foregoing.

“Receivables Entity” means a Receivables Subsidiary or any other Person not an Affiliate of the Company, in each case whose sole business activity is to engage in Qualified Receivables Transactions, including to issue securities or other interests in connection with a Qualified Receivables Transaction.

“Receivables Subsidiary” means an Unrestricted Subsidiary of the Company that engages in no activities other than Qualified Receivables Transactions and activities related thereto and that is designated by the Company as a Receivables Subsidiary. Any such designation by the Company will be evidenced to the Trustee by filing with the Trustee an Officer’s Certificate of the Company.

“Refinance” means, in respect of any Indebtedness, to issue any Indebtedness in exchange for or to refinance, repay, redeem, replace, defease or refund such Indebtedness in whole or in part. “Refinanced” and “Refinancing” will have correlative meanings.

“Refinancing Indebtedness” means Indebtedness of the Company or any Restricted Subsidiary issued to Refinance any other Indebtedness of the Company or a Restricted Subsidiary so long as:

(1) the aggregate principal amount (or initial accreted value, if applicable) of such new Indebtedness as of the date of such proposed Refinancing does not exceed the aggregate principal amount (or accreted value as of such date, if applicable) of the Indebtedness being Refinanced (plus all accrued interest and any

188

premium required to be paid under the terms of the instrument governing such Indebtedness and the amount of reasonable expenses incurred by the Company in connection with such Refinancing);

(2) such new Indebtedness has:

(a) a Weighted Average Life to Maturity that is equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being Refinanced, and

(b) a final maturity that is equal to or later than the final maturity of the Indebtedness being Refinanced; and

(3) if the Indebtedness being Refinanced is:

(a) Indebtedness of the Company, then such Refinancing Indebtedness will be Indebtedness of the Company and/or any Guarantor,

(b) Indebtedness of a Guarantor, then such Refinancing Indebtedness will be Indebtedness of the Company and/or any Guarantor,

(c) Indebtedness of any of the Restricted Subsidiaries, then such Refinancing Indebtedness will be Indebtedness of such Restricted Subsidiary, the Company and/or any Guarantor, and

(d) Subordinated Indebtedness, then such Refinancing Indebtedness shall be subordinate to the notes or the relevant Note Guarantee, if applicable, at least to the same extent and in the same manner as the Indebtedness being Refinanced.

“Reporting IFRS” means IFRS or any subsequent financial reporting standards authorized by a Governmental Authority and used by the Company or any Guarantor.

“Repurchased Capital Stock” means, at any time, any Capital Stock of the Company repurchased from any shareholders of the Company that are not Affiliates of the Company or any of its Restricted Subsidiaries, which are held for resale pursuant to the Company’s share repurchase program, as approved by its board of directors and at its annual shareholders’ meeting.

“Restricted Payment” has the meaning set forth under “Certain Covenants—Limitation on Restricted Payments” above.

“Restricted Subsidiary” means any Subsidiary of the Company which at the time of determination is not an Unrestricted Subsidiary.

“Reversion Date” has the meaning set forth under “Certain Covenants—Suspension of Covenants” above.

“Revocation” has the meaning set forth under “Certain Covenants—Limitation on Designation of Unrestricted Subsidiaries” above.

“S&P” means Standard & Poor’s Ratings Group and any successor to its rating agency business.

“Sale and Leaseback Transaction” means any direct or indirect arrangement with any Person or to which any such Person is a party providing for the leasing to the Company or a Restricted Subsidiary of any property, whether owned by the Company or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person by whom funds have been or are to be advanced on the security of such property.

“Senior Indebtedness” means (i) the notes and any other Indebtedness of the Company or any Guarantor that ranks equal in right of payment with the notes or the relevant Note Guarantee, as the case may be (including, for the avoidance of doubt, the Existing Credit Facilities) or (ii) Indebtedness for borrowed money or constituting Capitalized Lease Obligations of any Restricted Subsidiary other than a Guarantor.

189

“Standard Undertakings” means representations, warranties, covenants, indemnities and similar obligations, including servicing obligations, entered into by the Company or any Subsidiary of the Company in connection with a Qualified Receivables Transaction, which are customary in similar non-recourse receivables securitization, purchase or financing transactions.

“Subordinated Indebtedness” means, with respect to the Company or any Guarantor, any Indebtedness of the Company or such Guarantor, as the case may be, which is expressly subordinated in right of payment to the notes or the relevant Note Guarantee, as the case may be.

“Subsidiary” means with respect to any Person, any corporation, partnership, joint venture, limited liability company, trust, estate or other entity of which (or in which) more than fifty percent (50%) of (a) in the case of a corporation, the issued and outstanding Capital Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time Capital Stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency that has not occurred and is not in the control of such Person), (b) in the case of a limited liability company, partnership or joint venture, the voting or other power to control the actions of such limited liability company, partnership or joint venture or (c) in the case of a trust or estate, the voting or other power to control the actions of such trust or estate, is at the time directly or indirectly owned or controlled by (X) such Person, (Y) such Person and one or more of its other Subsidiaries or (Z) one or more of such Person’s other Subsidiaries. Unless the context otherwise requires, all references herein to a “Subsidiary” shall refer to a Subsidiary of the Company.

“Successor Company” has the meaning set forth under “Certain Covenants—Limitation on Merger, Consolidation and Sale of Assets” above.

“Successor Guarantor” has the meaning set forth under “Certain Covenants—Limitation on Merger, Consolidation and Sale of Assets” above.

“Suspended Covenants” has the meaning set forth under “Certain Covenants—Suspension of Covenants” above.

“Suspension Date” has the meaning set forth under “Certain Covenants—Suspension of Covenants” above.

“Suspension Period” has the meaning set forth under “Certain Covenants—Suspension of Covenants” above.

“Taxes” has the meaning set forth under “Additional Interest” above.

“Taxing Jurisdiction” has the meaning set forth under “Additional Interest” above.

“Trustee” has the meaning set forth in the first paragraph of this Description of notes.

“Unrestricted Subsidiary” means any Subsidiary of the Company Designated as such pursuant to “Certain Covenants—Limitation on Designation of Unrestricted Subsidiaries” above. Any such Designation may be revoked by the Company, subject to the provisions of such covenant.

“Voting Stock” means, with respect to any Person, securities of any class of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors (or equivalent governing body) of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years (calculated to the nearest one-twelfth) obtained by dividing:

(1) the sum of the products obtained by multiplying:

(a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal or liquidation preference, as the case may be, including payment at final maturity, in respect thereof, by

190

(b) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment; by

(2) the then outstanding aggregate principal amount or liquidation preference, as the case may be, of such Indebtedness.

“Wholly Owned Subsidiary” means, for any Person, any Subsidiary (Restricted Subsidiary in the case of the Company) of such Person of which all of the outstanding Capital Stock (other than, in the case of a Subsidiary not organized in the United States, directors’ qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) is owned by such Person or any other Person that satisfies this definition in respect of such Person.

191

DIVIDENDS

The payment of dividends, their amount and the date of payment are determined by a majority vote of the shareholders at the shareholders’ annual meeting, based upon a recommendation by the Board. Under Mexican law, dividends may only be paid from retained earnings included in the financial statements that have been approved by the shareholders if (i) losses from previous fiscal years have been recovered and (ii) if a company has increased its legal reserve by at least 5% of its annual net profits, until such reserve reaches 20% of the company’s capital stock.

We have paid dividends every year since 1992 other than in 2009, 2010, 2011 and 2012, due to the economic crisis faced during these years, which resulted in a contraction of the economy and market volatility. During these years, GCC’s shareholders decided not to pay dividends in order to optimize our use of resources and reduce our debt. The table below sets forth the nominal amount of dividends paid per share for the last five years in Mexican pesos. Such dividends were paid in Mexican pesos.

Year ended December 31, Mexican Pesos per share

2016 Ps.0.516 2015 Ps.0.430 2014 Ps.0.375 2013 Ps.0.340 2012 —

At our shareholders’ meeting held on April 27, 2017, our shareholders approved the distribution of dividends in

the amount of Ps.0.6192 per share, for a total of Ps.205.9 million. As of the date of this offering memorandum, the dividends have not been paid.

The amount and payment of future dividends, if any, will be subject to applicable law and will depend upon a variety of factors that may be considered by the Board or our shareholders, including our future operating results, financial condition, capital requirements, contractual restrictions contained in the instruments governing our indebtedness, need for capital investments and our ability to obtain funds from our subsidiaries. Such factors may limit our ability to pay future dividends and may be considered by the Board in recommending, or by our shareholders in approving, the payment of future dividends.

As we are a holding company with no significant assets other than the stock of our direct and indirect subsidiaries, our income, and therefore our ability to pay dividends, is dependent upon the dividends and other distributions that we receive from our subsidiaries. The payment of dividends or other distributions by our subsidiaries will depend upon their operating results, financial condition, capital expenditures plans, contractual restrictions in the instruments governing our or their indebtedness, applicable regulations, including provisions restricting the payment of dividends based on interim financial results or minimum net worth, applicability of exchange controls on remittances to other jurisdictions and other factors that their respective board of directors deem relevant.

192

BOOK-ENTRY; DELIVERY AND FORM

The Global Notes

The notes are being offered and sold to QIBs in reliance on Rule 144A. The notes may also be offered and sold to persons other than U.S. persons in offshore transactions in reliance on Regulation S. Except as set forth below, all of the notes will be issued in registered, global form in minimum denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. Notes will be issued at the closing of this offering only against payment in immediately available funds.

Rule 144A global notes initially will be represented by one or more global notes in registered form without interest coupons. Regulation S global notes initially will be represented by one or more temporary Regulation S global notes in registered form without interest coupons. The Rule 144A global notes and the temporary Regulations S global notes will be deposited upon issuance with the trustee as custodian for DTC in New York, New York, and registered in the name of DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below. Through and including the 40th day after the later of the commencement of this offering and the closing of this offering (such period, through and including such 40th day, the “distribution compliance period” as defined in Regulation S under the Securities Act), beneficial ownership interests in the temporary Regulation S global notes may be held only through Euroclear and Clearstream, Luxembourg as indirect participants in DTC, unless transferred to a person that takes delivery through a Rule 144A global note in accordance with the certification requirements described under “—Exchanges among Global Notes” below.

Following the expiration of the “distribution compliance period” as defined in Regulation S under the Securities Act, the temporary Regulation S global notes may be exchanged for one or more permanent Regulation S global notes in registered form without interest coupons or a definitive note in registered certificated form (a “Certificated Note”) upon (i) delivery to DTC of certification of compliance with the transfer restrictions applicable to the notes and pursuant to Regulation S as provided in the indenture, (ii) a certification in form satisfactory to the trustee that beneficial ownership interests in such temporary Regulation S global notes are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require registration under the Securities Act and (iii) in the case of an exchange for Certificated Notes, in compliance with the requirements described under “—Exchange of Global Notes for Certificated Notes” below. Beneficial interests in the Rule 144A global notes may not be exchanged for beneficial interests in the Regulation S global notes at any time except in the limited circumstances described under “—Exchanges among Global Notes” below. Each global note will be deposited with the registrar and transfer agent as custodian for DTC and registered in the name of Cede & Co., as nominee of DTC.

Except as set forth below, global notes may be transferred only to another nominee of DTC or to a successor of DTC or its nominee, in whole and not in part. Except in the limited circumstances described below, beneficial interests in global notes may not be exchanged for notes in certificated form and owners of beneficial interests in global notes will not be entitled to receive physical delivery of notes in certificated form. See “—Exchange of Global Notes for Certificated Notes.”

Rule 144A global notes and Regulation S global notes (including beneficial interests in the notes they represent) will be subject to certain restrictions on transfer and will bear restrictive legends as described under “Transfer Restrictions; Notice to Investors.” In addition, transfers of beneficial interests in global notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including Euroclear and Clearstream, Luxembourg (as indirect participants in DTC)), which may change from time to time.

Book-Entry Procedures for the Global Notes

Ownership of beneficial interests in each global note will be limited to persons who have accounts with DTC, or DTC participants, or persons who hold interests through DTC participants. We expect that under procedures established by DTC:

• upon deposit of each global note with DTC’s custodian, DTC will credit portions of the principal amount of the global note to the accounts of the DTC participants designated by the initial purchasers; and

193

• ownership of beneficial interests in each global note will be shown on, and transfer of ownership of those interests will be effected only through, records maintained by DTC (with respect to interests of DTC participants) and the records of DTC participants (with respect to other owners of beneficial interests in the global note).

All interests in the global notes will be subject to the operations and procedures of DTC, Euroclear and Clearstream, Luxembourg. We provide the following summaries of those operations and procedures solely for the convenience of investors. The information in this section concerning DTC, Euroclear and Clearstream, Luxembourg and their book-entry systems has been obtained from sources that we believe to be reliable, but none of us, the initial purchasers, the trustee, or any of their respective agents take any responsibility for or make any representation or warranty with respect to the accuracy of this information. DTC, Euroclear and Clearstream are under no obligation to follow the procedures described herein to facilitate the transfer of interest in global notes among participants and account holders of DTC, Euroclear and Clearstream, and such procedures may be discontinued or modified at any time. Neither we, nor the trustee or any paying agent will have any responsibility for the performance of DTC, Euroclear and Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

DTC has advised us that it is:

• a limited purpose trust company organized under the laws of the State of New York;

• a “banking organization” within the meaning of the New York State Banking Law;

• a member of the Federal Reserve System;

• a “clearing corporation” within the meaning of the Uniform Commercial Code; and

• a “clearing agency” registered under Section 17A of the Exchange Act.

DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic book-entry changes to the accounts of its participants. DTC’s participants include securities brokers and dealers, including the initial purchasers; banks and trust companies; clearing corporations and other organizations. Indirect access to DTC’s system is also available to others such as banks, brokers, dealers and trust companies; these indirect participants clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Investors who are not DTC participants may beneficially own securities held by or on behalf of DTC only through DTC participants or indirect participants in DTC.

So long as DTC’s nominee is the registered owner of a global note, that nominee will be considered the sole owner or holder of the notes represented by that global note for all purposes under the indenture.

As a result, each investor who owns a beneficial interest in a global note must rely on the procedures of DTC to exercise any rights of a holder of notes under the indenture (and, if the investor is not a participant or an indirect participant in DTC, on the procedures of the DTC participant through which the investor owns its interest).

Payments of principal, premium (if any) and interest with respect to the notes represented by a global note will be made by the paying agent to DTC’s nominee as the registered holder of the global note. Neither we nor the paying agent will have any responsibility or liability for the payment of amounts to owners of beneficial interests in a global note, for any aspect of the records relating to or payments made on account of those interests by DTC, or for maintaining, supervising or reviewing any records of DTC relating to those interests.

Payments by participants and indirect participants in DTC to the owners of beneficial interests in a global note will be governed by standing instructions and customary industry practice and will be the responsibility of those participants or indirect participants and DTC.

194

Transfers between participants in DTC will be effected under DTC’s procedures and will be settled in same-day funds. Transfers between participants in Euroclear or Clearstream, Luxembourg will be effected in the ordinary way under the rules and operating procedures of those systems.

Cross-market transfers between DTC participants, on the one hand, and Euroclear or Clearstream, Luxembourg participants, on the other hand, will be effected within DTC through the DTC participants that are acting as depositaries for Euroclear and Clearstream, Luxembourg. To deliver or receive an interest in a global note held in a Euroclear or Clearstream, Luxembourg account, an investor must send transfer instructions to Euroclear or Clearstream, Luxembourg, as the case may be, under the rules and procedures of that system and within the established deadlines of that system. If the transaction meets its settlement requirements, Euroclear or Clearstream, Luxembourg, as the case may be, will send instructions to its DTC depositary to take action to effect final settlement by delivering or receiving interests in the relevant global notes in DTC, and making or receiving payment under normal procedures for same-day funds settlement applicable to DTC. Euroclear and Clearstream, Luxembourg participants may not deliver instructions directly to the DTC depositaries that are acting for Euroclear or Clearstream, Luxembourg.

Because of time zone differences, the securities account of a Euroclear or Clearstream, Luxembourg participant that purchases an interest in a global note from a DTC participant will be credited on the business day for Euroclear or Clearstream, Luxembourg immediately following the DTC settlement date. Cash received in Euroclear or Clearstream, Luxembourg from the sale of an interest in a global note to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Euroclear or Clearstream, Luxembourg cash account as of the business day for Euroclear or Clearstream, Luxembourg following the DTC settlement date.

DTC, Euroclear and Clearstream, Luxembourg have agreed to the above procedures to facilitate transfers of interests in the global notes among participants in those settlement systems. However, the settlement systems are not obligated to perform these procedures and may discontinue or change these procedures at any time. Neither we nor the trustee or any of our respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream, Luxembourg or their participants or indirect participants of their obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Certificated Notes

A global note is exchangeable for a certificated note if:

• DTC (a) notifies us that it is unwilling or unable to continue as depositary for the global notes or (b) has ceased to be a clearing agency registered under the Exchange Act, at a time when DTC is required to be so registered in order to act as a depository, and, in each case, a successor depositary is not appointed within 90 days of such notice;

• we, at our option, notify the trustee in writing that we elect to cause the issuance of certificated notes; or

• there has occurred and is continuing an Event of Default with respect to the notes subject, in the case of a temporary Regulation S global note, to the certification required under “—Certifications by Holders of the Temporary Regulation S Global Notes.”

In addition, beneficial interests in a global note may be exchanged for certificated notes upon prior written notice given to the trustee by or on behalf of DTC in accordance with the indenture. In all cases, certificated notes delivered in exchange for any global note or beneficial interests in a global note will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures) and will bear the applicable restrictive legend referred to in “Transfer Restrictions; Notice to Investors,” unless that legend is not required by applicable law.

Exchange of Certificated Notes for Global Notes

If certificated notes are issued in the future, they will not be exchangeable for beneficial interests in any global note unless the transferor first delivers to the trustee a written certificate (in the form provided in the indenture) to the effect

195

that the transfer will comply with the appropriate transfer restrictions applicable to the notes being transferred. See “Transfer restrictions; Notice to Investors.”

Exchanges among Global Notes

Beneficial interests in a Rule 144A global note may be transferred to a person who takes delivery in the form of an interest in a Regulation S global note (whether before or after the expiration of the “distribution compliance period” as defined in Regulation S under the Securities Act) only if the transferor first delivers to the trustee a written certificate (in the form provided in the indenture) to the effect that the transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if such transfer occurs prior to the expiration of the “distribution compliance period” as defined in Regulation S under the Securities Act, the interest transferred will be held immediately thereafter through Euroclear or Clearstream, Luxembourg.

Transfers of beneficial interest in the temporary Regulation S global note may be made to a person who takes delivery in the form of an interest in the Rule 144A global note; provided that a written certification (in the form provided in the indenture) is delivered to the trustee to the effect that such transfer is being made to a person who is reasonably believed to be a QIB acquiring for its own account or the account of a QIB in a transaction complying with Rule 144A and any applicable securities laws of the states of the United States and other jurisdictions. Beneficial interests in the permanent Regulation S global note may be transferred to a person who takes delivery in the form of a beneficial interest in the Rule 144A global note without compliance with this certification requirement.

Transfers involving exchanges of beneficial interests between a Regulation S global note and a Rule 144A global note will be effected in DTC by means of an instruction originated by the trustee through the DTC Deposit/Withdraw at Custodian system. Accordingly, in connection with any such transfer, appropriate adjustments will be made to reflect the changes in the principal amounts of the Regulation S global note and the Rule 144A global note, as applicable. Any beneficial interest in one of the global notes that is transferred to a person who takes delivery in the form of an interest in the other global note will, upon transfer, cease to be an interest in the original global note and will become an interest in the other global note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in the other global note. The policies and practices of DTC may prohibit transfers of beneficial interests in the Regulation S global note prior to the expiration of the “distribution compliance period” as defined in Regulation S under the Securities Act.

Certifications by Holders of the Temporary Regulation S Global Notes

A holder of a beneficial interest in the temporary Regulation S global notes must provide Euroclear or Clearstream, Luxembourg, as the case may be, with a certificate in the form required by the indenture certifying that the beneficial owner of the interest in the temporary Regulation S global notes is either a non-U.S. person or a U.S. person that has purchased such interest in a transaction that is exempt from the registration requirements under the Securities Act, and Euroclear or Clearstream, Luxembourg, as the case may be, must deliver to the trustee a certificate in the form required by the indenture, prior to any exchange of such beneficial interest for a beneficial interest in the permanent Regulation S global notes.

196

TRANSFER RESTRICTIONS; NOTICE TO INVESTORS

Because of the following restrictions, you are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of the notes offered hereby.

The notes have not been registered under the Securities Act or any other applicable securities laws and may not be offered or sold within the United States or to U.S. Persons except pursuant to an exception from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. Accordingly, the notes are being offered hereby only to (1) QIBs in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A and (2) persons other than U.S. Persons in offshore transactions meeting the requirements of Regulation S. As used herein, the terms “offshore transaction,” “U.S.” and “U.S. Person” have the respective meanings given to them in Regulation S.

As a purchaser of the notes offered hereby, by accepting the notes, you will be deemed to have represented and agreed with us and the initial purchasers as follows (terms used herein that are defined in Rule 144A or Regulation S are used herein as defined therein):

(1) You are (A)(i) a QIB, (ii) aware that the sale of the notes to you is being made in reliance on Rule 144A and (iii) acquiring such notes for your own account or for the account of a QIB, as the case may be, or (B) not a U.S. Person and are acquiring the notes in an offshore transaction pursuant to Regulation S.

(2) You understand that the notes are being offered in a transaction not involving any public offering in the United States within the meaning of the Securities Act, that the notes have not been and will not be registered under the Securities Act and that the notes may not be reoffered, resold, pledged or otherwise transferred except (A)(i) to a person whom you reasonably believe is a QIB in a transaction meeting the requirements of Rule 144A, (ii) in an offshore transaction complying with Rule 903 or 904 of Regulation S, (iii) pursuant to an effective registration statement under the Securities Act, or (iv) to us or a subsidiary of ours and (B) in accordance with all applicable securities laws of the states of the United States, and you will, and each subsequent holder is required to, deliver to each person to whom this note or interest therein is transferred a notice substantially to the effect hereof.

(3) You understand that the notes will, unless we determine otherwise in compliance with applicable law, bear a legend substantially to the following effect:

“THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, AND TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS MADE IN RELIANCE ON RULE 144A (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (4) TO US OR A SUBSIDIARY OF OURS AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES, AND ANY SELLER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.”

In the case of notes sold pursuant to Regulation S, the notes will bear an additional legend substantially to the following effect unless otherwise agreed to by us and the holder thereof:

“BY ITS ACQUISITION HEREOF, THE HOLDER THEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON, NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON, AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.”

Regulation S temporary global notes will bear an additional legend substantially to the following effect:

197

“THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE SECURITIES ACT. NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, DELIVERED OR EXCHANGED FOR AN INTEREST IN A PERMANENT GLOBAL NOTE OR OTHER NOTE EXCEPT UPON DELIVERY OF THE CERTIFICATIONS SPECIFIED IN THE INDENTURE.”

(4) If you are a purchaser in a sale that occurs outside the United States within the meaning of Regulation S, you acknowledge that until the expiration of the “40-day distribution compliance period” within the meaning of Rule 903 of Regulation S, any offer or sale of these notes shall not be made by you to a U.S. person or for the account or benefit of a U.S. person within the meaning of Rule 902 under the Securities Act, except in accordance with all applicable securities laws of the states of the United States.

(5) You understand that in accordance with the Employee Retirement Income Security Act of 1974, as amended, no employee benefit plan as to which we are a party in interest or disqualified person, or a qualified institutional buyer acting on behalf of such a plan, may acquire a note unless the acquisition would constitute an exempt transaction under a statutory exemption or any one of the administrative exemptions issued by the U.S. Department of Labor.

(6) You (a) are able to act on your own behalf in the transactions contemplated by this offering memorandum, (b) have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of your prospective investment in the notes, and (c) (or the account for which you are acting) have the ability to bear the economic risks of your prospective investment in the notes and can afford the complete loss of such investment.

(7) You acknowledge that (a) none of us or our affiliates, nor the initial purchasers, nor any person acting on behalf of any of the foregoing has made any statement, representation, or warranty, express or implied, to it with respect to us or the offer or sale of any notes, other than the information we have included in this offering memorandum (and as supplemented to the issue date), (b) you acknowledge that no representation or warranty is made by the initial purchasers as to the accuracy or completeness of such materials, (c) you are relying only on this offering memorandum in making your investment decision with respect to the notes and (d) any information you desire concerning us, the notes or any other matter relevant to your decision to acquire the notes (including a copy of the offering memorandum) is or has been made available to you.

(8) You acknowledge that we, the initial purchasers and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements. If you are acquiring any notes for the account of one or more QIBs, you represent that you have full power to make the foregoing acknowledgements, representations and agreements on behalf of such account. You agree that if any of the acknowledgments, representations or agreements you are deemed to have made by your purchase of notes is no longer accurate, you will promptly notify us and the initial purchasers.

198

TAXATION

The following summary contains a general description of certain Mexican federal and U.S. federal income tax consequences of the acquisition, ownership and disposition of the notes, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase, hold or dispose of the notes. In particular, this summary does not describe any tax consequences arising under the laws of any state, municipality or taxing jurisdiction other than certain federal laws of Mexico and the United States.

This discussion does not constitute, and should not be considered as, legal or tax advice to prospective holders of our notes. The discussion is for general information purposes only and is based upon the federal tax laws of Mexico and of the United States as in effect on the date of this offering memorandum (including the “Tax Treaty,” as defined below), which are subject to change, and such changes may have retroactive effect. Potential investors in our notes should consult their own tax advisors as to the Mexican, U.S. or other tax consequences of the purchase, ownership and disposition of our notes, including, in particular, the effect of any foreign, state or local tax laws and any tax treaties to which Mexico is a party, which are in effect.

The Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion, and the protocols thereto, between the United States and Mexico, became effective on January 1, 1994 and were amended by an additional protocol on July 3, 2003 (collectively, the “Tax Treaty”). The United States and Mexico have also entered into an agreement concerning the exchange of information with respect to tax matters.

Mexican Taxation

The following summary contains a description of certain tax consequences, under the Mexican Income Tax Law and regulations thereunder, of the acquisition, ownership and disposition of our notes by a beneficial owner of such notes that is a non-Mexican holder (as described below). It does not purport to be a comprehensive description of all of the Mexican federal tax considerations that may be relevant to a decision to purchase, hold or dispose of our notes. In addition, this summary does not address any non-Mexican or Mexican state or municipal tax considerations that may be relevant to any non-Mexican holder.

This summary is intended to be for general information purposes only, and is based upon the Mexican Income Tax Law and regulations thereunder, as in effect on the date of this offering memorandum, which are subject to change, including changes with retroactive effects.

Prospective investors in the notes should consult their own tax advisors as to the United States, Mexican or other tax consequences of the purchase, ownership and disposition of the notes including, in particular, the effect of any foreign, state, local or municipal tax laws, and their entitlement to the benefits, if any, afforded by the Tax Treaty and other tax treaties to which Mexico may be a party and which are in effect.

For purposes of this summary, the term “non-Mexican holder” shall mean a beneficial owner that is not a resident of Mexico for tax purposes, and that will not hold the notes, or a beneficial interest therein, in connection with the conduct of a trade or business through a permanent establishment for tax purposes in Mexico.

For purposes of Mexican taxation:

• individuals are residents of Mexico if any such individual has established his or her place of residence in Mexico or, if any such individual has also established a place of residence outside Mexico, if his or her centro de intereses vitales (center of vital interests) is located within the territory of Mexico. This will be deemed to occur if (i) more than 50.0% of such individual’s aggregate annual income derives from Mexican sources or (ii) the main center of such individual’s professional activities is located in Mexico. Mexican individuals who filed a change of tax residence to a country or jurisdiction that does not have a comprehensive exchange of information agreement with Mexico in which their income is subject to a preferred tax regime pursuant to the provisions of the Mexican Income Tax Law, will be considered Mexican residents for tax purposes during the year of filing of the notice of such residence change and during the following three years;

199

• unless proven differently, a Mexican national individual is deemed a resident of Mexico for tax purposes. An individual will also be considered a resident of Mexico if such individual is a state employee, regardless of the location of the individual’s center of vital interests; and

• a legal entity is a resident of Mexico for tax purposes if it maintains the principal administration of its business, or the place of effective management, in Mexico.

Non-residents of Mexico who are deemed to have a permanent establishment in Mexico for tax purposes will be subject to Mexican tax laws, and all income attributable to such permanent establishment will be subject to Mexican taxes in accordance with the Mexican Income Tax Law and regulations thereunder.

Payments of Interest

Pursuant to the Mexican Income Tax Law, payments of interest on the notes (including original issue discount or any premium paid in respect of the notes, which is deemed to be interest) made by us to non-Mexican holders, will be subject to Mexican withholding tax imposed at a rate of 4.9%, if, as expected, the following requirements are met:

• the issuance of the notes (including the principal characteristics of the notes) is notified to the CNBV pursuant to Article 7 of the Mexican Securities Market Law and Articles 24 Bis, 24 Bis 1 and other applicable provisions of the Disposiciones de Carácter General Aplicables a las Emisoras de Valores y a Otros Participantes del Mercado de Valores (General Regulations Applicable to Issuers and Other Market Participants);

• the notes, as expected, are placed outside of Mexico through banks or brokerage houses, in a country with which

Mexico has in force a treaty for the avoidance of double taxation (which currently includes the United States); and

• we comply in a timely manner with the informational requirements specified from time to time by the Mexican tax authorities under their general rules, including, after completion of the transaction described in this offering memorandum, the filing with the Servicio de Administración Tributaria Service (Mexican Tax Administration or “SAT”), 15 business days after the placement of the notes, certain information regarding such placement and this offering memorandum.

If any of the above requirements is not met, the Mexican withholding tax will be 10% or higher. If the effective

beneficiaries, whether acting directly or indirectly, individually or jointly with related parties, that receive more than 5% of the interest paid under the notes (i) are persons who own, directly or indirectly, individually or with related parties, 10% of our voting stock, or (ii) are corporations or other entities, of which 20% or more of the voting stock is owned, directly or indirectly, jointly or severally, by persons related to us, then the Mexican withholding tax rate applicable to payments of interest under our notes may increase to the maximum applicable rate according to the law (currently 35%). For these purposes, persons will be related if:

• one person holds an interest in the business of the other person; • both persons have common interests; or

• a third party has an interest in the business or assets of both persons.

As of the date of this offering memorandum, the Tax Treaty is not expected to have any effect on the Mexican tax

consequences described in this summary, because, as described above, under the Mexican Income Tax Law, we expect to be entitled to withhold taxes in connection with interest payments under the notes at a 4.9% rate.

Payments of interest on the notes made by us to non-Mexican pension and retirement funds will be exempt from Mexican withholding tax provided that:

• the applicable fund is duly incorporated pursuant to the laws of its country of residence and is the effective beneficiary of the interest payment;

200

• such income is exempt from taxes in its country of residence; and

• such fund provides information to us, that we may in turn provide to the SAT, in accordance with rules issued by SAT for these purposes.

Holders or beneficial owners of the notes may be requested to, subject to specified exceptions and limitations, provide

certain information or documentation necessary to enable us to apply the appropriate Mexican withholding tax rate on interest payments under the notes made by us to such holders or beneficial owners. Additionally, the Mexican Income Tax Law provides that, in order for a non-Mexican holder to be entitled to the benefits under the treaties for the avoidance of double taxation entered into by Mexico, which are in effect, it is necessary for the non-Mexican holder to meet the procedural requirements established in such Law. In the event that the specified information or documentation concerning the non-Mexican holder or beneficial owner, if requested, is not provided in a timely manner, we may withhold Mexican tax from interest payments on the notes to that non-Mexican holder or beneficial owner at the maximum applicable rate in effect, and our obligation to pay Additional Interest relating to those withholding taxes will be limited as described under “Description of the Notes—Additional Interest.”

Payments of Principal

Under Mexican Income Tax Law, payments of principal on the notes made by us to non-Mexican holders, will not be subject to any Mexican withholding tax.

Taxation on Capital Gains

Under the Mexican Income Tax Law, capital gains resulting from the sale or other disposition of the notes by a non-Mexican holder to another foreign holder are not taxable in Mexico. Gains resulting from the sale of the notes by a non-Mexican holder to a Mexican resident for tax purposes or to a non-Mexican holder deemed to have a permanent establishment in Mexico for tax purposes, will be subject to the Mexican taxes pursuant to the rules described above with respect to interest payments.

Other Mexican Taxes

There is currently no Mexican estate, gift, inheritance or value-added tax applicable to the purchase, ownership or disposition of our notes by a non-Mexican holder; however, gratuitous transfers of our notes may, in certain circumstances, result in the imposition of Mexican federal income tax on the recipient.

There is currently no Mexican stamp, issue, registration or similar tax or duty payable by a non-Mexican holder with respect to the purchase, ownership or disposition of the notes.

Certain United States Federal Income Tax Considerations

The following is a summary of certain U.S. federal income tax considerations relating to the acquisition, ownership, and disposition of notes acquired in this offering for the price set forth on the cover page of this offering memorandum by U.S. holders (as defined below) that will hold their notes as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the “Code”). This summary is based upon existing U.S. federal tax law, which is subject to differing interpretations or change, possibly with retroactive effect. This summary does not discuss all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual investment circumstances, including investors subject to special tax rules (for example, financial institutions, insurance companies, dealers in securities or currencies, traders in securities that elect to mark to market, entities taxed as partnerships and the partners therein, tax-exempt organizations, regulated investment companies, investors who own or are treated as owning 10% or more of our voting stock, U.S. expatriates, nonresident alien individuals present in the United States for more than 182 days in a taxable year, investors that will hold their notes as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes or investors that have a functional currency other than the U.S. dollar), all of whom may be subject to tax rules that differ from those summarized below. In addition, this summary does not discuss the alternative minimum tax or the Medicare tax on net-investment income, or state, local or non-U.S. tax considerations. Prospective investors in our notes should consult their own tax

201

advisors regarding tax considerations related to the purchase, ownership and disposition of our notes, including the application of state, local, non-U.S. and other tax laws.

For purposes of this summary, a “U.S. holder” is a beneficial owner of notes acquired in the offering that is a citizen or resident of the United States, a U.S. corporation or that is otherwise subject to federal income taxation on a net income basis in respect of such notes.

U.S. Federal Income Tax Consequences to U.S. Holders

Payments of Interest

Payments of interest on the notes, including the amount of any withholding taxes and any additional interest paid with respect thereto, generally will be taxable to a U.S. holder as ordinary interest income at the time that the payments accrue or are received, in accordance with the U.S. holder’s method of accounting for U.S. federal income tax purposes.

It is expected, and this discussion assumes, that the notes will not be issued with original issue discount (“OID”) for U.S. federal income tax purposes. In general, however, if the notes are issued at a discount from their stated principal amount, and such discount is equal to or more than the product of one-fourth of one percent (0.25%) of the stated principal amount of the notes and the number of full years to their maturity, the notes will have OID equal to such discount and a U.S. holder will have to include OID as ordinary gross income under a “constant yield method” before the receipt of cash attributable to such income, regardless of the U.S. holder’s regular method of accounting for U.S. federal income tax purposes.

With certain exceptions as noted below, any Mexican withholding tax that is imposed on payments of interest or additional interest will be treated as a foreign income tax that is eligible (subject to generally applicable limitations and conditions under U.S. federal income tax law) for credit against a U.S. holder’s U.S. federal income tax liability or, at the U.S. holder’s election, for deduction in computing the U.S. holder’s taxable income provided that the U.S. holder has elected to deduct all foreign income taxes for the relevant taxable year. Payments of interest on the notes generally will constitute foreign-source “passive category income” for U.S. foreign tax credit purposes. The calculation and availability of foreign tax credits and, in the case of a U.S. holder that elects to deduct foreign taxes, the availability of the deduction involves the application of complex rules that depend on a U.S. holder’s particular circumstances. U.S. holders should consult their own tax advisors regarding the availability of foreign tax credits.

Dispositions of the Notes

A U.S. holder generally will recognize gain or loss on the sale, exchange, redemption or other taxable disposition of the notes in an amount equal to the difference between the amount realized on the disposition (less any amounts attributable to accrued but unpaid interest, which will be taxable as such) and the U.S. holder’s adjusted tax basis in the notes. A U.S. holder’s adjusted tax basis in a note generally will equal its purchase price of that note. Gain or loss realized by a U.S. holder on a sale, exchange, redemption or other disposition of the notes generally will be long-term capital gain or loss if, at the time of the disposition, the U.S. holder has held the notes for more than one year. The deduction of capital losses is subject to limitations.

Capital gain or loss recognized by a U.S. holder generally will be U.S.-source gain or loss. Consequently, if any such gain is subject to Mexican withholding tax, a U.S. holder may not be able to credit the tax against its U.S. federal income tax liability unless the credit can be applied (subject to the applicable limitations) against tax due on other income treated as derived from foreign sources. U.S. holders should consult their own tax advisors as to the foreign tax credit implications of a disposition of the notes.

Foreign Financial Asset Reporting

Individual U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of U.S.$ 50,000 are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer (which may include notes issued in certificated form) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living

202

abroad and to certain married individuals. U.S. Treasury regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in the notes, including the application of the rules to their particular circumstances.

United States Information Reporting and Backup Withholding

Information returns will be filed with the Internal Revenue Service (“IRS”) in connection with payments on the notes made to, and the proceeds of dispositions of notes effected by, certain U.S. taxpayers. In addition, certain U.S. taxpayers may be subject to backup withholding in respect of such amounts if they do not provide their taxpayer identification numbers to the person from whom they receive payments. Non-U.S. taxpayers may be required to comply with applicable certification procedures to establish that they are not U.S. taxpayers in order to avoid the application of such information reporting requirements and backup withholding. The amount of any backup withholding from a payment to a U.S. or non-U.S. taxpayer will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is timely furnished to the IRS.

203

PLAN OF DISTRIBUTION

Citigroup Global Markets Inc., BBVA Securities Inc. and Scotia Capital (USA) Inc. are acting as joint book-running managers of the offering and as representatives of the initial purchasers named below. Subject to the terms and conditions stated in the purchase agreement dated the date of this offering memorandum, each initial purchaser named below has severally agreed to purchase, and we have agreed to sell to that initial purchaser, the principal amount of the notes set forth opposite the initial purchaser’s name.

Initial Purchaser Principal Amount

of Notes Citigroup Global Markets Inc. .................................................................................................. U.S.$221,000,00 BBVA Securities Inc. ................................................................................................................ U.S.$29,250,000 Scotia Capital (USA) Inc. .......................................................................................................... U.S.$ 9,750,000

Total ................................................................................................................................ U.S.$260,000,000

The purchase agreement provides that the obligations of the initial purchasers to purchase the notes are subject to approval of legal matters by counsel and to other conditions. The initial purchasers must purchase all the notes if they purchase any of the notes.

The initial purchasers propose to resell the notes at the offering price set forth on the cover page of this offering memorandum within the United States to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A and outside the United States in reliance on Regulation S. See “Transfer Restrictions.” The price at which the notes are offered may be changed at any time without notice.

The notes have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. See “Transfer Restrictions.”

In addition, until 40 days after the commencement of this offering, an offer or sale of notes within the United States by a dealer that is not participating in this offering may violate the registration requirements of the Securities Act if that offer or sale is made otherwise than in accordance with Rule 144A.

We have agreed that, for a period of 30 days from the date of this offering memorandum, we will not, without the prior written consent of Citigroup Global Markets Inc., BBVA Securities Inc. and Scotia Capital (USA) Inc., offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce the offering of, any U.S. dollar-denominated debt securities issued or guaranteed by us. Citigroup Global Markets Inc., BBVA Securities Inc. and Scotia Capital (USA) Inc. in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.

The notes will constitute a new class of securities with no established trading market. However, we cannot assure you that the prices at which the notes will sell in the market after this offering will not be lower than the initial offering price or that an active trading market for the notes will develop and continue after this offering. The initial purchasers have advised us that they currently intend to make a market in the notes. However, they are not obligated to do so and they may discontinue any market-making activities with respect to the notes at any time without notice. Accordingly, we cannot assure you as to the liquidity of, or the trading market for, the notes.

In connection with the offering, the initial purchasers may purchase and sell notes in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions and stabilizing purchases.

• Short sales involve secondary market sales by the initial purchasers of a greater number of notes than they are required to purchase in the offering.

• Covering transactions involve purchases of notes in the open market after the distribution has been completed in order to cover short positions.

204

• Stabilizing transactions involve bids to purchase notes so long as the stabilizing bids do not exceed a specified maximum.

Purchases to cover short positions and stabilizing purchases, as well as other purchases by the initial purchasers for their own accounts, may have the effect of preventing or retarding a decline in the market price of the notes. They may also cause the price of the notes to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The initial purchasers may conduct these transactions in the over-the-counter market or otherwise. If the initial purchasers commence any of these transactions, they may discontinue them at any time.

Certain of the initial purchasers and their affiliates have engaged, and may in the future engage, in investment banking, commercial banking and other financial advisory and commercial dealings with us and our associates. They have received (or will receive) customary fees and commissions for these transactions.

Affiliates of the initial purchasers are lenders under the Term Loan Facility. See “Management's Discussion and Analysis of Financial Condition and Results of Operations―Our Indebtedness.”

The initial purchasers are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The initial purchasers and their respective affiliates have in the past performed commercial banking, investment banking and advisory services for us from time to time for which they have received customary fees and reimbursement of expenses and may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the initial purchasers and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The initial purchasers and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

We have agreed to indemnify the initial purchasers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the initial purchasers may be required to make because of any of those liabilities.

205

Selling Restrictions

Notice to Investors in the European Economic Area

In relation to each Member State of the European Economic Area, each Underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive was implemented in that Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of notes which are the subject of the offering contemplated by this offering memorandum to the public in that Member State, except that it may, with effect from and including the Relevant Implementation Date, make an offer of such notes to the public in that Member State:

(a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Underwriters; or

(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of notes shall require Ford Credit or any Underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

In this section, the expression an offer of notes to the public in relation to any notes in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the notes 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. The expression Prospectus Directive means Directive 2003/71/EC (as amended), and includes any relevant implementing measure in the Member State concerned.

This offering memorandum has been prepared on the basis that any offer of notes in any Member State of the European Economic Area will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of notes.

Notice to Investors in the United Kingdom

This offering memorandum is for distribution only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This offering memorandum is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this offering memorandum relates is available only to relevant persons and will be engaged in only with relevant persons.

Each agent represents and warrants, and each further agent appointed under the Program will be required to represent and warrant, that:

(a) it has 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 FSMA) received by it in connection with the issue or sale of any notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer;

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or otherwise involving the United Kingdom; and

206

(c) in relation to any notes which have a maturity of less than one year from their date of issue, (i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell any notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the notes would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer.

Notice to Investors in Italy

Each agent has represented and agreed that:

The offering of the notes has not been registered with the Commissione Nazionale per la Societaa` e la Borsa (CONSOB) (the Italian Securities Exchange Commission); pursuant to Italian securities legislation and, accordingly, no notes may be offered, sold or delivered, nor may copies of the offering memorandum or of any other document relating to the notes be distributed in the Republic of Italy, except:

(i) to qualified investors (investitori qualificati), as defined pursuant to Article 100 of Legislative Decree No. 58 of 24 February, 1998, as amended (the Financial Services Act) and Article 34-ter, first paragraph, letter b) of CONSOB Regulation No. 11971 of 14 May, 1999, as amended from time to time (Regulation No. 11971); or

(ii) in any other circumstances where an express exemption from compliance with the restrictions on offers to the public applies, including, without limitation, as provided under Article 100 of the Financial Services Act and its implementing CONSOB regulations, including the Regulation No. 11971.

Any offer, sale or delivery of the notes or distribution of copies of the offering memorandum or any other document relating to the notes in the Republic of Italy under (i) or (ii) above must be:

(a) made by investment firms, banks or financial intermediaries to the extent permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190 of 29 October, 2007 and Legislative Decree No. 385 of 1 September 1993, (the Banking Act) (in each case, as amended from time to time), and any other applicable laws and regulations; and

(b) in compliance with any other applicable Italian securities, tax and exchange control laws and regulations and other applicable requirements or limitation which may be imposed by CONSOB or the Bank of Italy or any other Italian regulatory authority from time to time.

Notice to Investors in Hong Kong

Each agent has represented and agreed that the notes may not be offered or sold 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 (Winding Up and Miscellaneous Provisions) 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 (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or document relating to the notes 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 notes 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.

Notice to Investors in Singapore

Each agent has represented and agreed that the offering memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the offering memorandum and any other document or material in

207

connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may the notes 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.

Where the notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individuals who is an accredited investor, Securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (however described) in that trust shall not be transferred within 6 months after that corporation or that trust has acquired the notes pursuant to an offer made under Section 275 of the SFA except: (1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; (2) where no consideration is or will be given for the transfer; (3) when the transfer is by operation of law; (4) as specified in Section 276(7) of the SFA; or (5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Notice to Investors in Chile

This private offer commences on June 20, 2017 and it avails itself of the General Regulation No. 336 of the Superintendence of Securities and Insurance. This offer relates to securities not registered with the Securities Registry or the Registry of Foreign Securities of the Superintendence of Securities and Insurance, and therefore such ADSs are not subject to oversight by the latter. Being unregistered securities, there is no obligation on the issuer to provide public information in Chile regarding such securities. These securities may not be subject to a public offer until they are registered in the corresponding Securities Registry.

ESTA OFERTA PRIVADA SE INICIA EL DÍA 20 DE JUNIO, 2017 Y SE ACOGE A LAS DISPOSICIONES DE LA NORMA DE CARÁCTER GENERAL Nº 336 DE LA SUPERINTENDENCIA DE VALORES Y SEGUROS. ESTA OFERTA VERSA SOBRE VALORES NO INSCRITOS EN EL REGISTRO DE VALORES O EN EL REGISTRO DE VALORES EXTRANJEROS QUE LLEVA LA SUPERINTENDENCIA DE VALORES Y SEGUROS, POR LO QUE TALES VALORES NO ESTÁN SUJETOS A LA FISCALIZACIÓN DE ÉSTA. POR TRATAR DE VALORES NO INSCRITOS NO EXISTE LA OBLIGACIÓN POR PARTE DEL EMISOR DE ENTREGAR EN CHILE INFORMACIÓN PÚBLICA RESPECTO DE LOS VALORES SOBRE LOS QUE VERSA ESTA OFERTA. ESTOS VALORES NO PODRÁN SER OBJETO DE OFERTA PÚBLICA MIENTRAS NO SEAN INSCRITOS EN EL REGISTRO DE VALORES CORRESPONDIENTE.

Notice to Investors in Canada

The notes may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

208

Notice to Investors in Japan

The notes offered in this offering memorandum have not been and will not be registered under the Financial Instruments and Exchange Law of Japan. The notes 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 (including any corporation or other entity organized under the laws of Japan), except (i) pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.

Notice to Investors in Republic of Korea

The notes have not been and will not be registered under the Financial Investment Services and Capital Markets Act and the decrees and regulations thereunder (the “FSCMA”) and the notes have been and will be offered in Korea as a private placement under the FSCMA. None of the notes may be offered, sold and delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea except as otherwise permitted under the applicable laws and regulations of Korea, including the FSCMA and the Foreign Exchange Transaction Law of Korea and the decrees and regulations thereunder (the “FETL”). For a period of one year from the issue date of the notes, any acquirer of the notes who was solicited to buy the notes in Korea is prohibited from transferring any of the notes to another person in any way other than as a whole to one transferee. Furthermore, the purchaser of the notes shall comply with all applicable regulatory requirements (including but not limited to requirements under the FETL) in connection with the purchase of the notes.

Notice to Investors in Taiwan

The notes have not been, and will not be, registered or filed with, or approved by, the Financial Supervisory Commission of Taiwan, the Republic of China (“Taiwan”) and/or other regulatory authority of Taiwan pursuant to applicable securities laws and regulations and may not be sold, issued or offered within the Taiwan through a public offering or in circumstances which constitute an offer within the meaning of the Taiwan Securities and Exchange Act or relevant laws and regulations that requires a registration, filing or approval of the Financial Supervisory Commission of Taiwan and/or other regulatory authority of the Taiwan. No person or entity in Taiwan is authorized to offer, sell or distribute or otherwise intermediate the offering of the notes or the provision of information relating to this offering memorandum and the accompanying prospectus.

The notes may be made available to Taiwan resident investors outside Taiwan for purchase by such investors outside Taiwan for purchase outside Taiwan by investors residing in Taiwan, but may not be issued, offered sold or resold in Taiwan, unless otherwise permitted by Taiwan laws and regulations. No subscription or other offer to purchase the notes shall be binding on us until received and accepted by us or any underwriter outside of Taiwan (the “Place of Acceptance”), and the purchase/sale contract arising therefrom shall be deemed a contract entered into in the Place of Acceptance.

Notice to Investors in People’s Republic of China (excluding Hong Kong, Macau and Taiwan)

The notes are not being offered or sold and may not be offered or sold, directly or indirectly, in the People’s Republic of China, or the PRC (for such purposes, not including the Hong Kong and Macau Special Administrative Regions or Taiwan), except as permitted by all relevant laws and regulations of the PRC.

This offering memorandum (i) has not been filed with or approved by the PRC authorities and (ii) do not constitute an offer to sell, or the solicitation of an offer to buy, any notes in the PRC to any person to whom it is unlawful to make the offer of solicitation in the PRC.

The notes may not be offered, sold or delivered, or offered, sold or delivered to any person for reoffering or resale or redelivery, in any such case directly or indirectly (i) by means of any advertisement, invitation, document or activity which is directed at, or the contents of which are likely to be accessed or read by, the public in the PRC, or (ii) to any person within the PRC, other than in full compliance with the relevant laws and regulations of the PRC.

209

Investors in the PRC are responsible for obtaining all relevant government regulatory approvals/licenses, verification and/or registrations themselves, including, but not limited to, those which may be required by the China Securities Regulatory Commission, the State Administration of Foreign Exchange and/or the China Banking Regulatory Commission, and complying with all relevant PRC laws and regulations, including, but not limited to, all relevant foreign exchange regulations and/or securities investment regulations.

Notice to Investors in Switzerland

The notes may not be publicly offered, sold or advertised, directly or indirectly, in, into or from Switzerland and will not be listed on the SIX Swiss Exchange or on any other exchange or regulated trading facility in Switzerland. Neither this offering memorandum nor any other offering or marketing material relating to the notes constitutes a prospectus as such term is understood pursuant to article 652a or article 1156 S-15 of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange or any other regulated trading facility in Switzerland, and neither this offering memorandum nor any other offering or marketing material relating to the notes may be publicly distributed or otherwise made publicly available in Switzerland.

Other Jurisdictions

No action has been or will be taken in any jurisdiction by us that would permit a public offering of notes, or possession or distribution of any offering material in relation thereto, in any country or jurisdiction where action for that purpose is required. Persons into whose hands this offering memorandum comes are required by us to comply with all applicable laws at their own expense.

210

LISTING AND GENERAL INFORMATION

Clearing Information

The global notes representing the notes will be accepted into the applicable systems used by DTC, Euroclear and Clearstream, Luxembourg. The CUSIP, ISIN and Common Code numbers for the notes are as follows:

Rule 144A Note CUSIP

40053D AB9

Rule 144A Note ISIN

US40053DAB91

Rule 144A Note Common Code

163881705

Regulation S Note CUSIP

P4954U AB0

Regulation S Note ISIN

USP4954UAB00

Regulation S Note Common Code

163881616

Listing

Application has been made to the SGX-ST for the listing and quotation of the notes on the Official List of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained herein. Approval in-principle from, and admission of the notes to the Official List of the SGX-ST and quotation of any notes on the SGX-ST are not to be taken as an indication of the merits of the offering, the Company, the Guarantor, their respective subsidiaries (if any), their respective associated companies (if any), their respective joint venture companies (if any) or such notes. If the application to the SGX-ST to list the notes is approved, for so long as such notes are listed on the SGX-ST and the rules of the SGX-ST so require, such notes will be traded on the SGX-ST in a minimum board lot size of at least U.S.$200,000.

For so long as the notes are listed on the SGX-ST and the rules of the SGX-ST so require, GCC shall appoint and maintain a paying agent in Singapore, where the notes may be presented or surrendered for payment or redemption, in the event that a global note is exchanged for definitive notes. In addition, in the event that a global note is exchanged for definitive notes, an announcement for such exchange shall be made by or on behalf of GCC through the SGX-ST, and such announcement shall include all material information with respect to the delivery of the definitive notes, including details of the paying agent in Singapore, so long as the notes are listed on the SGX-ST and the rules of the SGX-ST so require.

Authorization

The Board of Directors authorized the issuance of the notes and their generic terms and conditions in a meeting on May 31, 2017.

Company Information

Our principal executive offices are located at Avenida Vicente Suárez y Calle Sexta S/N, Colonia Nombre de Dios, C.P. 31110, Chihuahua, Chihuahua, México, and our telephone number is +52 (614) 442-3100. Our commercial registry number is 10313*13.

Guarantor Information—Contribution in Excess of 20% to our EBITDA or Total Assets

U.S. dollar amounts in the text below are translated from the Mexican peso amounts for the assets and liabilities at the closing exchange rate of Ps.18.81 per U.S.$1.00 and Ps.20.73 per U.S.$1.00 as of March 31, 2017 and December 31, 2016, respectively, and for the items in the consolidated interim statement of comprehensive income at a weighted average exchange rate of Ps.20.37 per U.S.$1.00 and Ps.18.67 per U.S.$1.00 the three months ended March 31, 2017 and for the year ended December 31, 2016, respectively, in accordance with the procedures for the presentation of the Company’s reporting currency in the interim consolidated financial statements and the annual consolidated financial statements.

211

The Company’s obligations under the notes will be unconditionally guaranteed by GCC Cemento, Cementos de Chihuahua and GCC of America. The Guarantors and their respective direct and indirect subsidiaries, after eliminations from consolidation, accounted for Ps.3,364.5 million (U.S.$165.2 million), or 100%, of our revenues and contributed Ps.744.0 million (U.S.$36.5 million), or 113%, of our EBITDA for the three months ended March 31, 2017, and Ps.34,876.8 million (U.S.$1,854.2 million), or 98%, of our total assets and Ps.4,253.5 million (U.S.$226.1 million), or 22%, of our total liabilities as of March 31, 2017. The Guarantors and their respective direct and indirect subsidiaries, after eliminations from consolidation, accounted for Ps.13,996.8 million (U.S.$749.7 million), or 100%, of our revenues and contributed Ps.3,854.6 million (U.S.$206.5 million), or 109%, of our EBITDA for the year ended December 31, 2016, and Ps.37,870.4 million (U.S.$1,826.8 million), or 98%, of our total assets and Ps.4,317.3 million (U.S.$208.3 million), or 21%, of our total liabilities as of December 31, 2016.

Certain of our non-Guarantor subsidiaries generate expenses but not revenues and offset the EBITDA presented above for the Guarantors. As of March 31, 2017, our non-Guarantor subsidiaries that are not subsidiaries of Guarantors had total assets of Ps.671.1 million (U.S.$35.7 million), or 2% of our total assets. EBITDA for those non-guarantor subsidiaries for the three months ended March 31, 2017 was Ps.(80.8) million (U.S.$(4.0) million), or (12%) of our EBITDA. As of December 31, 2016, our non-Guarantor subsidiaries that are not subsidiaries of Guarantors had total assets of Ps.836.9 million (U.S.$40.4 million), or 2% of our total assets. EBITDA for those non-guarantor subsidiaries for the year ended December 31, 2016, was Ps.(321.0) million (U.S.$(17.2) million), or (9)% of our EBITDA.

As of March 31, 2017, GCC’s (not including its subsidiaries) total assets were Ps.671.2 million (U.S.$35.7 million), or 2% of our total assets, in each case on an unconsolidated basis. EBITDA of GCC (not including its subsidiaries) for the three months ended March 31, 2017 was Ps.(4.6) million (U.S.$(0.2) million), or (1)% of our EBITDA, in each case on an unconsolidated basis. As of December 31, 2016, the total assets of GCC (not including its subsidiaries) were Ps.834.7 million (U.S.$40.3 million), or 2% of our total assets, in each case on an unconsolidated basis. EBITDA of GCC (not including its subsidiaries) for the year ended December 31, 2016 was Ps.(28.1) million (U.S.$(1.5) million), or (1)% of our EBITDA, in each case on an unconsolidated basis.

GCC Cemento, located at Vicente Suárez y Sexta S/N, Col. Nombre de Dios, Chihuahua, Chihuahua, was incorporated on October 2, 1999, registration number 14627 under Mexican law. GCC Cemento’s main activity is the production of cement. Its main facilities are located in the state of Chihuahua, Mexico. As of March 31, 2017, the total assets of GCC Cemento together with its direct and indirect subsidiaries were Ps.2,630.4 million (U.S.$139.8 million), or 7% of our total assets. EBITDA of GCC Cemento together with its direct and indirect subsidiaries for the three months ended March 31, 2017 was Ps.(266.6) million (U.S.$(13.1) million), or (40%) of our EBITDA. As of December 31, 2016, the total assets of GCC Cemento together with its direct and indirect subsidiaries were Ps.3,110.7 million (U.S.$150.1 million), or 8% of our total assets. EBITDA of GCC Cemento together with its direct and indirect subsidiaries for the year ended December 31, 2016 was Ps.(1,098.0) million (U.S.$(58.8) million), or (31)% of our EBITDA. There are no risks specific to GCC Cemento that could materially affect its ability to meet the obligations under its guarantee.

Cementos de Chihuahua, located at Vicente Suárez y Sexta S/N, Col. Nombre de Dios, Chihuahua, Chihuahua, Mexico, was incorporated on September 9, 1941, registration number 1615 under Mexican law. Cementos de Chihuahua’s serves as a holding company for our Mexican operations. Its main facilities are located in the state of Chihuahua, Mexico. As of March 31, 2017, the total assets of Cementos de Chihuahua together with its direct and indirect subsidiaries were Ps.32,246.4 million (U.S.$1,714.3 million), or 91% of our total assets. EBITDA of Cementos de Chihuahua together with its direct and indirect subsidiaries was Ps.1,010.6 million (U.S.$49.6 million), or 153% of our EBITDA for the three months ended March 31, 2017. As of December 31, 2016, the total assets of Cementos de Chihuahua together with its direct and indirect subsidiaries were Ps.34,759.6 million (U.S.$1,676.8 million), or 90% of our total assets. EBITDA of Cementos de Chihuahua together with its direct and indirect subsidiaries was Ps.4,952.5 million (U.S.$265.3 million), or 140% of our EBITDA for the year ended December 31, 2016. The figures presented in this paragraph include the results from GCC of America, its subsidiary. There are no risks specific to Cementos de Chihuahua that could materially affect its ability to meet the obligations under its guarantee.

GCC of America, located at 1013 Centre Road, Wilmington, New Castle, Delaware, was incorporated on June 16, 1994, under the laws of Delaware. As of March 31, 2017, the total assets of GCC of America together with its direct and indirect subsidiaries were Ps.26,933.9 million (U.S.$1,431.9 million), or 76% of our total assets. EBITDA of GCC of America together with its direct and indirect subsidiaries was Ps.379.4 million (U.S.$18.6 million), or 57% of our EBITDA for the three months ended March 31, 2017. As of December 31, 2016, the total assets of GCC of America together with its

212

direct and indirect subsidiaries were Ps.29,250.2 million (U.S.$1,411.0 million), or 76% of our total assets. EBITDA of GCC of America together with its direct and indirect subsidiaries was Ps.2,596.6 million (U.S.$139.1 million), or 74% of our EBITDA for the year ended December 31, 2016. There are no risks specific to GCC of America that could materially affect its ability to meet the obligations under its guarantee.

Financial Statements

Our annual consolidated financial statements are prepared on a consolidated basis, including our Guarantor and non-Guarantor subsidiaries.

No Material Adverse Change

There has been no material adverse change in our prospects since December 31, 2016 and no significant adverse change in our financial or trading position since March 31, 2017, except as otherwise disclosed herein.

213

LEGAL MATTERS

Certain matters relating to the validity of the notes and other legal matters under Mexican law will be passed upon for us by Ritch, Mueller, Heather y Nicolau, S.C., Mexico City, Mexico, our Mexican counsel, and for the initial purchasers by White & Case, S.C., Mexico City, Mexico, Mexican counsel to the initial purchasers. Certain legal matters under U.S. federal and New York state law will be passed upon for us by Cleary Gottlieb Steen & Hamilton LLP, New York, New York, our U.S. counsel, and for the initial purchasers by Shearman & Sterling LLP, New York, New York, U.S. counsel to the initial purchasers.

INDEPENDENT AUDITORS

The consolidated financial statements of Grupo Cementos de Chihuahua, S.A.B. de C.V. at December 31, 2016, 2015 and 2014, and for each of the three years in the period ended December 31, 2016, included in the offering memorandum, have been audited by Galaz, Yamazaki, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu Limited, independent auditors, as stated in their report appearing herein.

F-1

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Grupo Cementos de Chihuahua, S.A.B. de C.V. and subsidiaries:

Interim Unaudited Condensed Consolidated Financial Statements Page Independent Accountant’s Report ............................................................................................................ F-3 Interim condensed consolidated statements of financial position.................................................. F-5 Interim condensed consolidated statements of profit .................................................................... F-7 Interim condensed consolidated statements of comprehensive income ........................................ F-8 Interim condensed consolidated statements of cash flows ............................................................ F-9 Interim condensed consolidated statements of changes in stockholders’ equity ........................... F-10 Notes to interim condensed consolidated financial statements ..................................................... F-11 Annual Audited Consolidated Financial Statements Independent Auditors’ Report ....................................................................................................... F-29 Consolidated statements of financial position ............................................................................... F-36 Consolidated statements of profit .................................................................................................. F-38 Consolidated statements of other comprehensive income ............................................................. F-39 Consolidated statements of cash flows .......................................................................................... F-40 Consolidated statements of changes in stockholders’ equity ......................................................... F-41 Notes to consolidated financial statements .................................................................................... F-42

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B.

DE C.V. AND SUBSIDIARIES

Interim Condensed Consolidated Financial

Statements as of March 31, 2017 and

December 31, 2016 and for three-month period ended March 31, 2017 and 2016, and

Independent Accountants’ Report Dated

May 31, 2017

F-2

Independent Accountant’s Report to the

Board of Directors and Stockholders of Grupo Cementos de Chihuahua, S.A.B. de C.V. and Subsidiaries

Introduction

We have reviewed the accompanying interim condensed consolidated statement of financial position of Grupo Cementos de Chihuahua, S.A.B. de C.V. and Subsidiaries (the “Company”) as of March 31, 2017, and the related interim condensed consolidated statements of profit, the consolidated statements of comprehensive income, the consolidated statements of changes in stockholders’ equity and the consolidated statements of cash flows, for the three-month period ended on March 31, 2017 and 2016. Management is responsible for the preparation and fair presentation of these interim condensed consolidated financial statements in accordance with International Accounting Standard 34 “Interim Financial Reporting” of the International Financial Reporting Standards (IFRS), issued by the International Standards Accounting Board. Our responsibility is to express a conclusion on these interim financial statements based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”, of the International Standards on Auditing. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements do not give a true and fair view of the consolidated financial position of Grupo Cementos de Chihuahua, S.A.B. de C.V. and Subsidiaries as of March 31, 2017, and of their consolidated performance and their consolidated cash flows for the three-month period ended on March 31, 2017 and 2016 in accordance with International Accounting Standard 34 “Interim Financial Reporting” of the IFRS.

Galaz, Yamazaki, Ruiz Urquiza, S.C. Lázaro Cárdenas 2321 Pte., PB Residencial San Agustín 66260 Garza García, N.L. México

Tel: +52 (81) 8133 7300 Fax:+52 (81) 8133 7383 www.deloitte.com/mx

F-3

Other matters

We have previously audited the consolidated financial statements of Grupo Cementos de Chihuahua, S.A.B. de C.V. and Subsidiaries as of and for the year ended December 31, 2016 in accordance with International Standards on Auditing, for which we issued an unqualified opinion on March 9, 2017. Such consolidated financial statements are not included in this report, except for the condensed consolidated statement of financial position for comparative purposes. For a comprehensive understanding, the accompanying interim condensed consolidated financial statements, should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2016.

Convenience translation and explanation for translation into English

As mentioned in Note 3, the consolidated financial statements as of December 31, 2016

include the translation of Mexican peso amounts into U.S. dollar amounts, titled

"Convenience" and are presented solely for the convenience of the reader. These

amounts are presented for informational purposes only and do not represent amounts

in accordance with International Financial Reporting Standards or the equivalent in U.S.

dollars in which transactions were conducted or in which the amounts presented in

Mexican pesos could be translated or realized. Additionally, the accompanying

consolidated financial statements have been translated into English for the convenience

of readers.

Galaz, Yamazaki, Ruiz Urquiza, S. C.

Member of Deloitte Touche Tohmatsu Limited

C.P.C. Gabriel González Martínez

May 31, 2017

F-4

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Interim condensed consolidated statements of financial position (In millions of Mexican pesos ($) and millions of U.S. dollars (US$))

As of March 31, 2017 (unaudited) and December 31, 2016

Convenience

Translation

Note (Note 3)

March 31, 2017

December 31, 2016

ASSETS

CURRENT ASSETS

Cash and cash equivalents US$ 137.0 $ 2,577.0 $ 3,396.9

Accounts receivable:

Trade accounts receivable, net 6 80.7 1,517.0 1,518.8

Other accounts receivable 6 42.5 798.6 815.8

Due from related parties 7 1.8 33.8 53.2

262.0 4,926.4 5,784.7

Inventories 8 123.9 2,329.8 2,207.3

Prepaid expenses 10.1 189.7 231.0

Total current assets 396.0 7,445.9 8,223.0

NON-CURRENT ASSETS

Investments in associates, joint venture

and other investments 9.0 169.5 160.8

Property, plant and equipment, net 9 934.4 17,576.6 19,177.0

Goodwill 404.8 7,613.1 8,398.2

Intangible assets, net 63.7 1,198.1 1,351.1

Other assets 8.5 159.4 160.3

Deferred income tax 11 73.7 1,386.3 1,237.9

Total non-current assets 1,494.1 28,103.0 30,485.3

TOTAL ASSETS US$ 1,890.1 $ 35,548.9 $ 38,708.3

See accompanying notes to interim condensed consolidated financial statements.

F-5

Convenience

Translation

Note

(Note 3)

March 31, 2017

December 31, 2016

LIABILITIES AND EQUITY

SHORT-TERM LIABILITIES

Debt and current portion of long-term

financial debt

10

US$ 5.2 $ 98.7 $ 79.8

Trade accounts payable

69.3 1,302.3 1,467.0

Due to related parties 7

0.8 15.6 17.0

Short-term employee benefits

19.6 368.9 492.3

Accrued expenses and taxes

other than income taxes

43.5 818.5 1,044.4

Provisions

5.8 108.5 106.8

Total current liabilities

144.2 2,712.5 3,207.3

LONG-TERM LIABILITIES

Long-term financial debt 10

684.8 12,879.7 14,217.5

Employee benefits

38.4 721.4 771.0

Provision for environmental restoration

8.6 161.3 177.5

Other long-term liabilities

0.7 13.7 15.6

Income taxes payable 11

43.0 809.6 809.6

Deferred income tax 11

89.9 1,690.1 1,452.5

Total non-current liabilities

865.4 16,275.8 17,443.7

Total liabilities

1,009.6 18,988.3 20,651.0

STOCKHOLDERS’ EQUITY 12

Capital stock

21.1 396.3 396.3

Additional paid-in capital

97.4 1,832.9 1,832.9

Legal reserve

14.9 280.0 280.0

Retained earnings

644.5 12,121.6 12,090.8

Other items of comprehensive income

102.4 1,925.8 3,451.4

Equity attributable to owners

of the Company

880.3 16,556.6 18,051.4

Non-controlling interest

0.2 4.0 5.9

Total stockholders’ equity

880.5 16,560.6 18,057.3

TOTAL LIABILITIES AND

STOCKHOLDERS’ EQUITY

US$ 1,890.1 $ 35,548.9 $ 38,708.3

F-6

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Interim condensed consolidated statements of profit (In millions of Mexican pesos ($) and millions of U.S. dollars (US$), except per share amounts)

For the three-month period ended March 31, 2017 and 2016 (unaudited)

Note

Convenience

Translation

(Note 3)

Three-month period ended March 31,

2017 2016

Net sales 14 US$ 178.9 $ 3,364.5 $ 2,361.5

Cost of sales 13 142.5 2,679.7 1,866.4

Gross profit 36.4 684.8 495.1

General, administrative and selling expenses 13 23.5 441.1 318.2

Operating income before other expenses 12.9 243.7 176.9

Other expenses - - 30.4

Operating income 12.9 243.7 146.5

Financial expenses 14.4 270.5 157.7

Financial income 0.9 16.1 8.4

Exchange loss, net ( 2.4) ( 45.2) ( 5.8)

Share of profit of associates and joint venture 0.3 6.4 5.6

Loss before income tax benefit ( 2.7) ( 49.5) ( 3.0)

Income tax benefit 11 4.3 81.0 61.9

Consolidated net income for the period US$ 1.6 $ 31.5 $ 58.9

Consolidated net income attributable to:

Owners of the Company 1.6 30.8 58.5

Non-controlling interest - 0.7 0.4

Consolidated net income for the period US$ 1.6 $ 31.5 $ 58.9

Basic and diluted earnings per share:

Weighted average outstanding shares (millions) 332.5 332.5

Basic and diluted earnings per share of controlling

interest (in pesos) $ 0.09 $ 0.18

See accompanying notes to interim condensed consolidated financial statements.

F-7

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Interim condensed consolidated statements of comprehensive income (In millions of Mexican pesos ($) and millions of U.S. dollars (US$))

For the three-month period ended March 31, 2017 and 2016 (unaudited)

Note

Convenience

Translation

(Note 3)

Three-mont period ended March 31,

2017 2016

Consolidated net income for the period US$ 1.6 $ 31.5 $ 58.9

Other comprehensive income items:

Exchange difference on translating foreign operations ( 81.2) ( 1,528.2) 131.8

Total other items of comprehensive income ( 81.2) ( 1,528.2) 131.8

Consolidated comprehensive (loss) income for the period US$ ( 79.6) $ ( 1,496.7) $ 190.7

Consolidated comprehensive income for the period attributable to:

Owners of the Company US$ ( 79.5) $ ( 1,494.8) $ 192.7

Non-controlling interests ( 0.1) ( 1.9) ( 2.0)

US$ ( 79.6) $ ( 1,496.7) $ 190.7

See accompanying notes to interim condensed consolidated financial statements.

F-8

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Interim condensed consolidated statements of cash flows (In millions of Mexican pesos ($) and millions of U.S. dollars (US$))

For the three-month period ended March 31, 2017 and 2016 (unaudited)

Convenience

Translation (Note 3)

Three-month period ended March 31,

Note 2017 2016

Cash Flows from operating activities

Consolidated net income for the period US$ 1.6 $ 31.5 $ 58.9

Adjustments for:

Cost of pensions and seniority premium benefits 3.9 73.8 23.0

Share of profit of associates and joint venture ( 0.3) ( 6.4) ( 5.6)

Depreciation 9 20.4 382.8 253.8

Amortization 1.8 34.7 8.8

Loss on sale of property, plant and equipment - 0.6 1.0

Income tax benefit ( 4.3) ( 81.0) ( 61.9)

Financial expenses 10 14.4 270.5 157.7

Financial income ( 0.9) ( 16.1) ( 8.4)

Changes in working capital:

Trade accounts receivable ( 6.0) ( 113.3) ( 31.3)

Due to related parties 0.7 12.7 7.3

Other accounts receivable ( 0.1) ( 2.1) ( 26.3)

Inventories ( 14.0) ( 262.7) ( 260.4)

Prepaid expenses 1.1 21.3 5.0

Other assets ( 5.0) ( 93.6) 35.7

Trade accounts payable ( 4.4) ( 82.7) 21.0

Benefits paid to employees ( 1.2) ( 23.1) ( 7.7)

Provisions and liabilities ( 12.6) ( 237.4) ( 124.2)

Cash (used in) generated by operations ( 4.9) ( 90.5) 46.4

Interest received 0.9 16.1 8.4

Income tax paid ( 1.7) ( 32.6) ( 29.7)

Net cash flows (used in) generated by operating activities ( 5.7) ( 107.0) 25.1

Cash Flows from investing activities

Additions of property, plant and equipment and other assets ( 18.5) ( 348.5) ( 255.8)

Proceeds from disposal of property, plant and equipment - 0.8 30.2

Net cash flows used in investing activities ( 18.5) ( 347.7) ( 225.6)

Cash Flows from financing activities

Payments of short-term and long-term financing ( 0.4) ( 6.6) -

Interest paid ( 19.7) ( 370.2) ( 240.3)

Net cash flows used in financing activities ( 20.1) ( 376.8) ( 240.3)

Net decrease in cash and cash equivalents ( 44.3) ( 831.5) ( 440.8)

Adjustment to cash flows for variations in exchange rates 0.7 11.6 ( 38.7)

Cash and cash equivalents at the beginning of the period 180.6 3,396.9 2,522.8

Cash and cash equivalents at the end of the period Dls. 137.0 $ 2,577.0 $ 2,043.3

See accompanying notes to interim condensed consolidated financial statements.

F-9

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Interim condensed consolidated statements of changes in stockholders’ equity (In millions of Mexican pesos ($) and millions of U.S. dollars (US$))

For the three-month period ended March 31, 2017 and 2016 (unaudited)

Capital

stock

Additional paid-in

capital

Legal

reserve

Retained

earnings

Other comprehensive

income

Equity attributable to owners of the Company

Non-controlling’

interest

Total stockholders’

equity

Balances as of January 1, 2016 Note $ 396.3 $ 1,832.9 $ 280.0 $ 10,973.8 $ 1,242.0 $ 14,725.0 $ 6.5 $ 14,731.5

Net income - - - 58.5 - 58.5 0.4 58.9

Other comprehensive income items - - - - 134.1 134.1 ( 2.3) 131.8

Balances as of March 31, 2016 $ 396.3 $ 1,832.9 $ 280.0 $ 11,032.3 $ 1,376.1 $ 14,917.6 $ 4.6 $ 14,922.2

Balances as of December 31, 2016 $ 396.3 $ 1,832.9 $ 280.0 $ 12,090.8 $ 3,451.4 $ 18,051.4 $ 5.9 $ 18,057.3

Net income - - - 30.8 - 30.8 0.7 31.5

Other comprehensive income items - - - - ( 1,525.6) ( 1,525.6) ( 2.6) ( 1,528.2)

Balances as of March 31, 2017 $ 396.3 $ 1,832.9 $ 280.0 $ 12,121.6 $ 1,925.8 $ 16,556.6 $ 4.0 $ 16,560.6

Convenience Translation (Note 3) US$ 21.1 US$ 97.4 US$ 14.9 US$ 644.5 US$ 102.4 US$ 880.3 US$ 0.2 US$ 880.5

See accompanying notes to interim condensed consolidated financial statements.

F-10

1. Description of activities and Seasonality Activities Grupo Cementos de Chihuahua, S.A.B. de C.V. is a holding company that is organized under the laws of Mexico whose subsidiaries are primarily engaged in the production and sale of hydraulic cement, concrete and aggregates in the markets of Mexico (state of Chihuahua) and the United States of America (principally in the central corridor from the state of Texas and New Mexico to Montana and North Dakota). Grupo Cementos de Chihuahua, S.A.B. de C.V. is listed on the Mexican Stock Exchange (BMV) and is a subsidiary of CAMCEM, S.A. de C.V. (direct holding), an entity that owns 51.621% of its shares and 24.820% is traded on the BMV with the symbol GCC *.

Hereinafter the terms “GCC” or the “Company" are used to refer to Grupo Cementos de Chihuahua, S.A.B. de C.V. and Subsidiaries. The corporate offices are located at Avenida Vicente Suarez y calle Sexta s/n, Colonia Nombre de Dios, C.P. 31110, Chihuahua, Chihuahua, Mexico. Seasonality Seasonality is a characteristic of a time series in which the operations and the financial information of the Company undergo regular and predictable changes that occur every year. The results of the Company vary substantially in the first semester compared to the second semester, primarily related to the low temperatures of the winter season. During the first five months of the year, the construction industry in the U.S. is impacted negatively, and as a result, sales and earnings before interest, taxes and depreciation (EBITDA) in the first and second semester of the year differ, representing approximately 35% and 65%, for each semester, respectively.

2. Application of new and revised International Financial Reporting Standards a. Application of new and revised International Financing Reporting Standards (“IFRS” or “IAS”) and

interpretations that are mandatorily effective for the current year

In the current period, the Company has applied a number of amendments to IFRS and new Interpretations issued by

the International Accounting Standards Board (“IASB”) that are mandatorily effective for accounting periods that begin

on or after January 1, 2017.

Amendments to IAS 7 Statements of Cash Flows

Amendments to IAS 12 Income taxes

The application of these amendments had no material effect on the Company’s interim condensed consolidated financial

statements.

F-11

b. New and revised IFRS in issue but not yet effective

The Company has not applied the following new and revised IFRS that have been issued but are not yet effective:

IFRS 9 Financial Instruments 1

IFRS 15 Revenue from Contracts with Customers 1

IFRS 16 Leases 2

1 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted. 2 Effective for annual periods beginning on or after 1 January 2019, with earlier application permitted.

For further information about these new and revised IFRS, which are not yet effective, the interim condensed consolidated financial statements should be read in conjunction with the annual consolidated audited financial statements for the year ended December 31, 2016. The Company’s management is in the process of evaluating the potential impact of these amendments and new IFRS in its consolidated financial position and results of operations.

3. Convenience translation The interim condensed consolidated financial statements as of March 31, 2017, include in the presentation in each line item of the financial statements amounts denominated in U.S. dollars under the heading “Convenience translation”, which are presented solely for the readers convenience. Such amounts were translated using the exchange rate of $ 18.8092 per U.S. dollar, using the exchange rate to settle obligations denominated in foreign currency payable in Mexico, published by “Banco de Mexico”, at March 31, 2017.

The referred information in U.S. dollars is solely for informational purposes and does not represent amounts in accordance with IFRS or the equivalent in U.S. dollars in which the transactions were conducted or in which the amounts presented in Mexican pesos could be translated or realized. 4. Significant accounting polices a) Statement of compliance The unaudited interim condensed consolidated financial statements (hereafter “interim consolidated financial statements”) have been prepared in accordance with International Accounting Standard (IAS) 34, “Interim Financial Reporting” of the IFRS, issued by the International Accounting Standards Board (IASB). For the purpose of the interim condensed consolidated financial statements, certain information and disclosures normally included in the annual consolidated audited financial statements prepared in accordance with IFRS have been condensed accompanying the provisions pursuant to IAS 34. Additionally, the operating results of the interim periods

presented are not necessarily indicative of the results that the Company would have had if they had been presented on an annual basis. Therefore, for a better understanding, the interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements as of and for the year ended December 31, 2016.

F-12

b) Basis of preparation The same accounting policies, preparation and methods of computation were followed in these interim condensed consolidated financial statements as were applied in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2016. The interim condensed consolidated financial statements are presented in Mexican pesos ($) and U.S. dollars (US$), all values are rounded to millions (000,000) except when otherwise mentioned. c) Basis of consolidation

The interim condensed consolidated financial statements incorporate the financial statements of Grupo Cementos de Chihuahua, S.A.B. de C.V. and the subsidiaries controlled by it. Control is achieved when the Company: Has power over the investee; Is exposed, or has rights, to variable returns from its involvement with the investee; and Has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. The subsidiaries included in the interim condensed consolidated financial statements are presented as follows:

Subsidiaries

% Ownership Interest as of

March 31, 2017 and December 31, 2016

Direct equity interest in Mexican subsidiaries: Cementos de Chihuahua, S.A. de C.V. 99.999 GCC Ingeniería y Proyectos, S.A. de C.V. 99.999 GCC Cemento, S.A. de C.V. 99.999 GCC Corporativo, S.A. de C.V. 99.990

Indirect equity interest in Mexican subsidiaries: Materiales Industriales de Chihuahua, S.A. de C.V. 99.964 GCC Concreto, S.A. de C.V. 99.989 Minera Rarámuri, S.A. 99.990 Construcentro de Chihuahua, S.A. de C.V. 99.990 GCC Edificaciones y Servicios, S.A. de C.V. 99.990

GCC Inversiones y Comercialización, S.A. de C.V. 99.319 GCC Transporte, S.A. de C.V. 99.950 GCC Comercial, S.A. de C.V. 99.990 Urbanizaciones Contemporáneas, S.A. de C.V. 99.990 GCC Latinoamérica, S.A. de C.V. 99.990

F-13

Subsidiaries

% Ownership Interest as of

March 31, 2017 and December 31, 2016

Indirect equity interest in foreign subsidiaries (located mainly in the United States of America):

GCC of America, Inc. 99.999 GCC Rio Grande, Inc. (GCCRG) 99.999 GCC Dacotah, Inc. (Dacotah) 99.999

GCC Ready Mix, LLC. (GCCRM) 99.999 Mid Continent Concrete Company, Inc. (Midco) 99.999 Alliance Transportation, Inc. (Alliance) 99.999 GCC Holding Company, LLC. 99.999 American Investments Company, LLC. 99.999 GCC Energy, LLC. (GCCE) 99.999 Consolidated Ready Mix, Inc. (CRM) 99.999 Materiales (Hungary) Investment Group Financing, Ltd. 99.999 GCC Alliance Concrete, Inc. (GCCAC) 99.999 Colorado Energy Recyclers, LLC. 99.999 GCC Technology and Processes, S.A. 99.999 GCC Investment, Ltd. 99.999 GCC Premium Transloaders, LLC. 99.999 Cross Border Logistics, LLC. 49.999 Sunset Properties, LLC. 99.999

NM Energy, LLC. 99.999 GCC Permian, LLC. 99.999 GCC Sun City Materials, LLC. 99.999

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. Intercompany balances, investments and transactions were eliminated in the consolidation. d) Foreign currencies In preparing the financial statements of each individual entity, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are

measured in terms of historical cost in a foreign currency are not translated. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:

- Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.

- Exchange differences on transactions entered into in order to hedge certain foreign currency risks.

For the purposes of presenting these interim condensed consolidated financial statements, the assets and liabilities of the Company’s foreign operations are translated into Mexican pesos using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used.

F-14

Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (and attributed to non-controlling interests as appropriate). Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences are recognized in other comprehensive income. Foreign currency transactions Foreign currency transactions are recorded at the applicable exchange rate in effect at the transaction date. Exchange

differences between that date and its collection or payment date, and those arising from the translation of balances in foreign currencies at the exchange rate in effect at the interim condensed consolidated statements of financial position date are recorded as a component of exchange loss, net in the interim condensed consolidated statements of profit and other comprehensive income. The exchange rates between the Mexican peso and U.S. dollar used in the preparation of the interim condensed consolidated financial statements are presented below:

The exchange rate at the date of issuance of the interim condensed consolidated financial statements is $ 18.5121 pesos per U.S. dollar. 5. Critical accounting judgments and key sources of estimation uncertainty In the application of the Company’s accounting policies, the Company’s management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities of the consolidated financial statements. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The Company considers as critical accounting judgments and estimates the following: Critical judgments in applying accounting policies

1. Discount rate used to determine the carrying amount of the Company’s defined benefit obligation 2. Lease classification (finance versus operating)

Key sources of estimation uncertainty

1. Useful lives of property, plant and equipment 2. Impairment of non-financial assets 3. Assumptions to estimate long-term employee benefit obligations 4. Contingencies 5. Recoverability of deferred income tax assets 6. Fair value of the business combinations

March 31, 2017

March 31, 2016

December 31, 2016

Closing exchange rate $ 18.8092 $ 17.4015 $ 20.7314 Average exchange rate $ 20.3661 $ 18.0246 $ 18.6673

F-15

6. Trade accounts receivable and other accounts receivable Balances receivable from customers and allowance for doubtful accounts as of March 31, 2017 and December 31, 2016, are as follows:

March 31,

2017 December 31,

2016

Trade accounts receivable $ 1,760.7 $ 1,771.1 Allowance for doubtful accounts ( 243.7) ( 252.3)

$ 1,517.0 $ 1,518.8

Movements in the allowance for doubtful accounts are as follows:

March 31,

2017 December 31,

2016

Beginning balance $ ( 252.3) $ ( 201.9) Increases during the period ( 24.2) ( 86.9) Write-off 12.6 60.1 Translation effect 20.2 ( 23.6)

$ ( 243.7) $ ( 252.3)

The balance of other accounts receivable as of March 31, 2017 and December 31, 2016, are as follows:

March 31,

2017

December 31,

2016

Recoverable taxes $ 615.3 $ 624.7 Other 183.3 191.1

$ 798.6 $ 815.8

7. Related parties a) As of March 31, 2017 and December 31, 2016, the accounts receivable from related parties are as follows:

Accounts receivable March 31,

2017 December 31,

2016

Cemex, S.A.B. de C.V. $ 10.3 $ 22.2 Copachisa, S.A. de C.V. 9.8 21.7 Inmobiliaria Ruba, S.A. de C.V. 7.1 4.8

Abastecedora de Fierro y Acero, S.A. de C.V. 6.6 4.5

$ 33.8 $ 53.2

Balances due from related parties are considered to be recoverable. Accordingly, for the three-month period ended March 31, 2017 and 2016, there was no expense resulting from the uncollectibility of balances due from related parties.

F-16

b) As of March 31, 2017 and December 31, 2016, the accounts payable to related parties are as follows:

Accounts payable March 31,

2017 December 31,

2016

Cemex, S.A.B. de C.V. $ 9.4 $ 10.8 Madata It, S.A. de C.V. 5.1 5.2 Abastecedora de Fierro y Acero, S.A. de C.V. 1.1 1.0

$ 15.6 $ 17.0

c) During the three-month periods ended March 31, 2017 and 2016, the Company had transactions with related

parties, as follows:

Sales of cement and construction materials Three-month period

2017 2016

Inmobiliaria Ruba, S.A. de C.V. $ 13.5 $ 25.1 Cemex, S.A.B. de C.V. 4.9 16.6 Copachisa, S.A. de C.V. 11.9 6.4 Abastecedora de Fierro y Acero, S.A. de C.V. 9.0 7.0

$ 39.3 $ 55.1

Purchases of inventories and other services Three-month period

2017 2016

Cemex, S.A.B. de C.V. $ 32.0 $ 10.8 Abastecedora de Fierro y Acero, S.A. de C.V. 1.3 1.2 Madata It, S.A. de C.V. 13.2 14.2

$ 46.5 $ 26.2

8. Inventories An analysis of this line item as of March 31, 2017 and December 31, 2016, is as follows:

March 31,

2017 December 31,

2016

Finished goods $ 696.1 $ 669.1 Work in process 412.9 253.8 Raw materials and spare parts 601.4 666.1 Developed land for sale 619.4 618.3

$ 2,329.8 $ 2,207.3

The amount of inventories that was recognized in cost of sales for the three-month period ended March 31, 2017 and 2016 amounted to $ 2,353.0 and $ 1,659.0, respectively.

F-17

9. Property, plant and equipment An analysis of this line item as of March 31, 2017 is as follows:

December 31,

2016 Additions Disposals Transfers Depreciation

Translation

effect

March 31,

2017

Property $ 6,928.7 $ 1.4 $ - $ 1.6 $ - $ ( 817.2) $ 6,114.5

Machinery and

equipment 16,989.0 23.7 - 0.9 - ( 1,224.6) 15,789.0

Vehicles 2,500.3 12.3 ( 3.8) 4.4 - ( 297.0) 2,216.2

Furniture and

equipment

466.0 0.4 - - ( 32.8) 433.6

Acummulated

depreciation ( 11,152.8) - 3.7 - ( 382.8) 1,020.7 ( 10,511.2)

Net carrying

amount

15,731.2 37.8 ( 0.1) 6.9 ( 382.8) ( 1,350.9) 14,042.1

Land 2,712.9 - - - - ( 69.0) 2,643.9

Investments projects in process

732.9

234.7

-

( 6.9)

-

( 70.1)

890.6

$ 19,177.0 $ 272.5 $ ( 0.1) $ - $ ( 382.8) $ ( 1,490.0) $ 17,576.6

An analysis of this line item as of March 31, 2016 is as follows:

December 31, 2015

Additions Disposals Transfers Depreciation Translation

effect March 31,

2016

Property $ 5,225.2 $ 0.7 $ - $ - $ - $ 45.6 $ 5,271.5

Machinery and

equipment 12,330.2 33.8 ( 15.3) 29.8 - 108.5 12,487.0

Vehicles 1,609.3 35.7 ( 48.3) - - 112.2 1,708.9

Furniture and equipment

390.8

1.7

( 7.1)

-

-

3.5

388.9

Acummulated

depreciation ( 8,520.1) - 58.8 - ( 253.8) ( 205.4) ( 8,920.5)

Net carrying amount

11,035.4

71.9

( 11.9)

29.8

( 253.8)

64.4

10,935.8

Land 2,096.0 0.4 ( 0.3) - - 12.7 2,108.8

Investments projects

in process

769.6

244.8

-

( 29.8)

-

( 1.0)

983.6

$ 13,901.0 $ 317.1 $ ( 12.2) $ - $ ( 253.8) $ 76.1 $ 14,028.2

The depreciation expense for the three-month period ended March 31, 2017 and 2016 was $ 382.8 and $ 253.8, respectively.

10. Financial instruments Capital management The objectives of the Company's capital management is primarily focused on ensuring that the financial requirements are met to continue as a going concern and to meet its growth objectives in order to maximize profits for shareholders and provide the benefits for other stakeholders and to maintain an optimal capital structure. The Company manages the capital structure and makes adjustments considering the changes in economic conditions, its business, investment and growth plans and risk characteristics of the underlying assets. The Company's management reviews monthly the ratios of financial debt and interest expense to the operation flow (EBITDA, equals to operating income before other expenses plus depreciation and amortization) for the purposes of complying with contract requirements and to maintain leverage and interest coverage.

F-18

Financial risk management objectives The Company’s corporate treasury department coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk, liquidity risk and risk of interest rate of the cash flow. The corporate treasury department is to apply the policies approved by the Board of Directors to mitigate risk

exposures. The main risks associated with the financial instruments of the Company are:

- Market risks - Credit Risk - Liquidity Risk

The Board of Directors, upon recommendation from the Audit and Corporate Practices Committee, reviews and approves the risk management policies of the Company. For the periods ended March 31, 2017 and 2016, the Company has not contracted any derivative financial instrument.

i) Market Risk: interest rate The Company is exposed to market risk primarily related to fluctuations in the exchange rate and interest rates.

Whereas 100% of the financial indebtedness is denominated in U.S. dollars, and 63% bears interest at a variable rate, the volatility of interest rates in the United States of America and Mexico markets may adversely affect the results of the Company, increasing financial expenses and impacting liquidity and ability of the Company to meet its obligations to pay interest and principal. Exposure to interest rate risk lies mainly in variations that may arise in the interest rates of reference, LIBOR (London Interbank Offered Rate). Sensitivity analysis of the risk of increases on interest rates The Company analyzes the sensitivity to the exposure of volatility of interest rates in relation to financial liabilities contracted at variable interest rates at end of period. The Company considers that a change of one percentage point is a reasonable assumption to measure the possible effect in its results. As of March 31, 2017, a change of ± 1 percentage point in interest rates, assuming that the other assumptions remain constant, would annually increase or decrease financial expenses before taxes by approximately U.S. $ 1.1 million dollars.

ii) Market Risk: Foreign currency

The Company’s exposure to the volatility of the Mexican peso exchange rate against the U.S. dollar is shown as follows as of March 31, 2017 and December 31, 2016, for the items in the interim condensed consolidated financial statements.

March 31, 2017

December 31, 2016

Financial assets US$ 14.8 US$ 13.6 Financial liabilities ( 724.1) ( 733.4)

Short, net position US$ ( 709.3) US$ ( 719.8)

F-19

The Company designates its net investment in a foreign operation (U.S. subsidiaries) as a cash flow hedge, whereby the exchange fluctuations arising from financial debt denominated in U.S. dollars, is recognized in other comprehensive income to the extent of its investment in subsidiaries in the U.S. The following table shows an analysis of sensitivity of the financial assets and liabilities with a possible fluctuation of the Mexican peso compared to the U.S. dollar, showing the effects in the interim condensed consolidated statements of profit and stockholders´equity as of March 31, 2017 and December 31, 2016:

Sensitivity analysis: March 31, 2017 December 31, 2016

Results Equity (1) Results Equity (1)

Mexican peso appreciation 10% $ 109.6 $ 1,177.5 $ 43.9 $ 1,429.7 Mexican peso depreciation 10% ( 109.6) ( 1,177.5) ( 43.9) ( 1,429.7)

(1) The effect of the resulting devaluation of financial long-term debt will be offset by the effect of the revaluation or

appreciation or depreciation of foreign investment since the investment is considered to be a cash flow hedge as previously disclosed.

The Company assumes that a 10% change in the exchange rate is reasonably possible for purposes of performing the sensitivity analysis.

iii) Liquidity risk Cash generated from operations is used to make debt payments and capital expenditures. The Company manages liquidity and establishes adequate working capital policies to manage the short, medium and long-term financing. The Company handles liquidity risk by maintaining adequate reserves, banking facilities and authorized credit lines to obtain financing through continuous monitoring of actual and projected cash flows, and reconciling the maturity profiles of financial assets and liabilities. The contractual maturities of financial debt instruments as of March 31, 2017, are shown in the following table:

Line item Contractual maturities:

Total 1-3 months

3 months to 1 year 1-5 years Over 5 years

Financial debt $ 19.7 $ 79.0 $ 11,738.2 $ 1,333.0 $ 13,169.9 Interest $ 113.9 $ 755.3 $ 2,381.6 $ 66.6 $ 3,317.4

As of March 31, 2017 and December 31, 2016, the Company was in the process of renewing financing facilities for $ 282.1 (US$ 15) and $ 311 (US$ 15), respectively, which were undrawn at the end of both periods. Additionally, as of March 31, 2017 and December 31, 2016, the Company had letters of credit in the United States for $ 171.2 (US$ 9.1) and $ 215.6 (US$ 10.4), respectively, which are primarily used to ensure payment of deductibles in connection with insurance programs of the Company in the United States and as collateral for debt issued in the United States. a) Fair value of financial instruments Except as for the details in the following table, management believes that the carrying amounts of assets and liabilities recognized at amortized cost in the financial statements, approximates their fair value given their short-term maturities. The fair value of financial instruments presented below has been determined by the Company using available market information or other valuation techniques that require judgment in developing and interpreting the estimates of fair values, and also uses assumptions based on market conditions existing at each of the dates in the interim condensed consolidated statements of financial position.

F-20

The fair value of the Company’s international debt securities included in the following table is determined considering the market price of the instrument prevailing at the date of the interim condensed consolidated statements of financial position, while borrowings with banks was estimated using the present value of cash flows discounted at market rates as of the end of each period. Their book values and their fair values as of March 31, 2017 and December 31, 2016, are as follows: Financial liabilities recognized at amortized cost:

Carrying amount Fair value

March 31, 2017 $ 13,169.9 $ 13,558.2

December 31, 2016 $ 14,523.1 $ 14,951.3

In the determination of the fair value of financial liabilities measured at amortized cost, the publicly traded debt is determined based on level 1 of the fair value hierarchy, while the syndicated loan’s fair value is calculated by applying a valuation technique, which is considered within level 2 of such hierarchy. b) Current and long-term financial debt (i) As of March 31, 2017 and December 31, 2016, the financial debt is as follows:

As of March 31, 2017 Maturities

Loans Currencies Interest Rates Amounts Current Portion of Long-Term

Debt Long-Term debt

International bond

Seven years U.S. Dollar 8.125% $ 4,890.4 $ - $ 4,890.4

Unsecured Credit

Tranche “A” Seven years

U.S. Dollar LIBOR + 4.75% 3,230.5 - 3,230.5

Tranche “B” Five years

U.S. Dollar LIBOR + 2.75% 1,524.5 92.2 1,432.3

Guaranteed Credit

Tranche “A” Seven years

U.S. Dollar LIBOR + 4.75% 2,391.1 - 2,391.1

Tranche “B” Five years

U.S. Dollar LIBOR + 2.75% 1,086.0 - 1,086.0

Other

Other U.S. Dollar Various 47.4 6.5 40.9

Issuance costs ( 191.5) - ( 191.5)

$ 12,978.4 $ 98.7 $ 12,879.7

F-21

As of December 31, 2016 Maturities

Loans Currencies Interest Rates Amounts Current Portion of Long-Term

Debt Long-Term debt

International bond

Seven years U.S. Dollar 8.125% $ 5,390.2 $ - $ 5,390.2

Unsecured Credit

Tranche “A” Seven years

U.S. Dollar LIBOR + 4.75% 3,560.6 - 3,560.6

Tranche “B” Five years

U.S. Dollar LIBOR + 4.50% 1,687.6 72.6 1,615.0

Guaranteed Credit

Tranche “A” Seven years

U.S. Dollar LIBOR + 4.75% 2,635.5 - 2,635.5

Tranche “B” Five years

U.S. Dollar LIBOR + 4.50% 1,197.0 - 1,197.0

Other

Other U.S. Dollar Various 52.2 7.2 45.0

Issuance costs ( 225.8) - ( 225.8)

$ 14,297.3 $ 79.8 $ 14,217.5

(ii) In November 2016, the Company prepaid the syndicated loan signed in 2015, with the proceeds from a new secured loan for US$ 184.8 integrated with a tranche of US$ 127.1 with a seven years maturity, and a tranche of US$ 57.7 with a five-year maturity, at LIBOR interest rates plus a margin of 4.75% for the seven-year tranche and LIBOR plus a margin of 4.50% for the five-year tranche. The Company also engaged an unsecured loan for US$ 253.5, to finance the acquired assets, comprised of a tranche of US$ 171.7 with a seven years maturity, and a tranche of US$ 81.7 with a five-year maturity, at LIBOR interest rates plus a margin of 4.75% for the seven-year tranche and LIBOR plus a margin of 4.50% for the five-year tranche. Both credits were contracted with a national credit institution. In February 2017, the holder of the unsecured and secured credits ceded the rights and obligations as creditor with respect of the secured credit’s tranche "B" for US$ 57.7 million and the unsecured credit’s tranche "B" with an outstanding balance of US$ 81.4 million. This assignment was distributed among five financial institutions. With this assignment, the Company reduced the applicable interest rate, as the additional margin on the benchmark interest rate for both tranches changed from a fixed margin of 4.50% per annum, to a margin ranging from 3.75% to 2.00% per annum, which is reduced or increased according to the decrease or increase of the Net Leverage Ratio, respectively. (iii) Loan agreements establish specific clauses relating to the sale of assets, investments, additional financing and debt payments, as well as the obligation to maintain certain specific financial ratios (net financial leverage ratio and net interest expense coverage), which in case of non-compliance, would lead to a breach of the credit agreements, allowing the creditor to force the advance payment of the corresponding loan. As of March 31, 2017, the Company has complied with these conditions. The financial reasons required and / or permitted by the credit agreements for the period ended March 31, 2017 are as follows:

March 2017 Required / Permited

Net leverage (1) 2.65 4.00 Net interest expense coverage (2) 6.38 3.50

(1) Net leverage - means the number of times net debt (debt with cost less cash) on EBITDA. (2) Net Interest expense coverage - means the number of times EBITDA on net financial expenses (financial expenses less

financial products).

F-22

For the three-month period ended March 31, 2017, the weighted average interest rate of the senior secured international bond was 8.125% and the weighted average interest rate of the current syndicated loan was 5.20%.

The Company’s subsidiaries, GCC Cemento, S.A. de C.V., Cementos de Chihuahua, S.A. de C.V. and GCC of America, Inc., are guarantors for both loans and the shares thereof were pledged as collateral. This commitment will be released when the international bond is settled or refinanced without guarantees.

11. Income taxes

The Company is subject to income tax whose rate is 30% in Mexico and 38% (includes the federal rate of 35% and

an average rate for state taxes) in the United states.

The Company and their subsidiaries in Mexico adopted the option established to calculate income tax together in groups of entities under the tax integration regimen. The income taxes of subsidiaries in the United States are determined on a consolidated basis.

The Company’s effective income tax, for the three-month periods ended March 31, 2017 and 2016, which represents the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the income before income tax for the periods ended in these dates.

Pursuant to Transitional Article 9, section XV, subsection d) of the 2014 Tax Law, given that as of December 31, 2013, the Company was considered to be a holding company and was subject to the payment scheme contained in Article 4, Section VI of the transitional provisions of the income tax law published in the Federal Official Gazette on December 7, 2009, or article 70-A of the ISR law of 2013 which was repealed, it must continue to pay the tax that it deferred under the tax consolidation scheme in 2007 and previous years based on the aforementioned provisions, until such payment

is concluded. The income tax liability as of March 31, 2017 related to the effects of benefits and tax deconsolidation are $809.6, of which $ 124 are presented in the short term in the area of taxes and accrued expenses.

12. Stockholders’ equity

a) As of March 31, 2017 and December 31, 2016, common stock is variable and its fixed minimum capital with noright of withdrawal is $ 135, represented by 337,400,000 common registered shares with no par value and issummarized as follows:

Shares Amount

Authorized and issued capital 337,400,000 $ 135 Shares repurchased ( 4,864,492) ( 0.5)

332,535,508 $ 134.5

b) According to the General Law of Commercial Companies, the net income for the year must be separated by at least5% to increase the legal reserve until it reaches 20% of share capital.

c) If the Company pays dividends that come from the Net Tax Profit Account (CUFIN, by its acronomy in spanish), theCompany shall not be liable to pay income tax. However, this balance can be applied only once to the balance of theNet Reinvested Tax Profit Account (CUFINRE, by its acronomy in spanish).

Of dividends arising from CUFINRE, 5% will be paid for years 2001 and 2000, and 3% for 1999. The distribution of dividends in excess of CUFIN will be subject to ISR by the Company at the current tax rate at that time.

F-23

13. Cost of sales and operating expenses by nature a) Cost of sales An analysis of cost of sales for the three-month period ended March 31, 2017 and 2016, is as follows:

2017 2016

Employee benefits $ 678.6 $ 518.8 Raw materials cost 740.9 523.5 Energy cost 282.8 198.6

Distribution expenses 251.2 172.2 Depreciation 327.1 205.4 Maintenance expenses 324.9 242.0 Overhead expenses 74.2 5.9

$ 2,679.7 $ 1,866.4

b) General, administrative and selling expenses An analysis of operating expenses for the three-month periods ended March 31, 2017, and 2016 is as follows:

2017 2016

Employee benefits $ 166.9 $ 129.2 Depreciation and amortization 90.4 57.3 Professional services 46.9 11.1 Other expenses 136.9 120.6

$ 441.1 $ 318.2

14. Segment information The Company is a Mexican entity that manufactures and sells hydraulic cement, ready-mix concrete and aggregates. The Company’s operations in the United States of America are mainly performed by three subsidiaries with an ownership interest of 99.99%. Inter-segment revenues are eliminated upon consolidation and reflected in the “eliminations and other adjustments” column. All other adjustments and eliminations are part of detailed reconciliations presented further below.

F-24

In the following information, the column representing Mexico includes all domestic transactions. Information for the three-month periods ended March 31, 2017, and 2016, and for the year ended December 31, 2016, is as follows:

For the three-month period ended March 31, 2017

Mexico

United States of America

Eliminations and other

adjustments Consolidated

Net sales: External customers $ 953.4 $ 2,411.1 $ - $ 3,364.5 Intercompany sales 138.0 84.8 ( 222.8) -

1,091.4 2,495.9 ( 222.8) 3,364.5

Operating income before other expenses 239.5 4.2 - 243.7

(Loss) income before income tax benefit ( 243.6) 194.1 - ( 49.5)

Depreciation and amortization 98.3 319.2 - 417.5

Financial income 13.5 2.6 - 16.1

Financial expenses 6.5 264.0 - 270.5

Exchange loss, net $ ( 29.4) $ ( 15.8) $ - $ ( 45.2)

Goodwill $ - $ 7,613.1 $ - $ 7,613.1

Property, plant and equipment, net 4,441.4 13,135.2 - 17,576.6

Total assets $ 16,773.4 $ 18,775.5 $ - $ 35,548.9

Total liabilities $ 2,885.5 $ 16,102.8 $ - $ 18,988.3

For the three-month period ended March 31, 2016

Mexico

United States of America

Eliminations and other

adjustments Consolidated

Net sales: External customers $ 779.8 $ 1,581.7 $ - $ 2,361.5 Intercompany sales 89.5 39.5 ( 129.0) -

869.3 1,621.2 ( 129.0) 2,361.5

Operating income before other expenses 130.8 46.1 - 176.9

(Loss) income before income tax benefit ( 114.9) 111.9 - ( 3.0)

Depreciation and amortization 85.0 177.6 - 262.6

Financial income 5.1 3.3 - 8.4

Financial expenses 5.9 151.8 - 157.7

Exchange loss, net $ ( 5.9) $ 0.1 $ - $ ( 5.8)

As of December 31, 2016

Goodwill $ - $ 8,398.2 $ - $ 8,398.2

Property, plant and equipment, net 4,509.5 14,667.5 - 19,177.0

Total assets $ 9,458.1 $ 29,250.2 $ - $ 38,708.3

Total liabilities $ 2,680.3 $ 17,970.7 $ - $ 20,651.0

F-25

Net sales information by country and by product for the three-month periods ended March 31, 2017, and 2016, is presented in the following table:

For the three-month period ended March 31, 2017

Country Cement Concrete Other Eliminations Consolidated

Mexico $ 692.1 $ 290.1 $ 109.8 $ ( 138.6) $ 953.4

United States of America 1,507.3 678.7 382.5 ( 157.4) 2,411.1

$ 2,199.4 $ 968.8 $ 492.3 $ ( 296.0) $ 3,364.5

For the three-month period ended March 31, 2016

Country Cement Concrete Other Eliminations Consolidated

Mexico $ 535.6 $ 246.6 $ 129.5 $ ( 132.0) $ 779.7

United States of America 858.3 541.0 268.0 ( 85.5) 1,581.8

$ 1,393.9 $ 787.6 $ 397.5 $ ( 217.5) $ 2,361.5

The column “Other” includes mainly aggregates, concrete blocks, prefabricated products, developed land, coal and other materials for construction. 15. Commitments and contingencies a) In order to guarantee the ecological restoration of the zone in case of closing the GCCRG Tijeras plant, pursuant to the requirements of the State of New Mexico, the Company has bonds for $ 1.3 (US$ 0.07) for the office of the United States Forest Service and a Certificate of deposit $ 16.9 (US$ 0.9) with the New Mexico Bank and Trust as financial guarantee on behalf of the Department of Mines of the State of New Mexico. In addition, GCC has ensured ecological restoration in the amount of $ 52.6 (US$ 2.8) in the event of failure to conduct GCCRG fulfilling their obligations.

b) Operating leases – The following are the amounts of minimum payment under operating leases for the rental of rail cars, light vehicles and office spaces:

As of March 31: Amounts of minimum payments

2017 $ 267.2 2018 194.2 2019 139.0 2020 110.7

Subsequent years 121.8

$ 832.9

The amount of rents recognized in expenses as of March 31, 2017 and 2016, amounted to $ 102.4 and $ 72.7, respectively.

c) On August 18, 2011, GCC sold its 47.02% share of the stock of the company Sociedad Boliviana de Cemento, S.A. (SOBOCE) in favor of Consorcio Cementero del Sur, S.A. (CCS), a subsidiary of Grupo Gloria, based in Peru. The resources obtained from the transaction were mainly used to reduce the Company’s debt. After selling the shares of SOBOCE, the Company no longer participated in Bolivia’s cement industry. SOBOCE’s majority stockholder, Compañía de Inversiones Mercantiles, S.A. (CIMSA), filed an international arbitration request with the Inter-American Commercial Arbitration Commission, which was notified to GCC on November 16, 2011. The request claims, with no grounds, breach to the right of first refusal to purchase the stock subject of the above-mentioned sale, based on the Stockholders Agreement entered into by and between GCC and CIMSA.

F-26

In December 2014, CIMSA sold its 51.3% share of SOBOCE’s stock to CCS, turning CCS into SOBOCE’S major stockholder and controlling parent company, holding 98.32% of the stock. In September 2013, the Arbitral Court issued the responsability Award indicating GCC and GCC Latinoamerica responsible for breaching the shareholders agreement. GCC and GCC Latinoamerica responded the Award filing an action for annulament on November 29, 2013, and therefore the Award was annulled. In case of confirming the Award’s annulment it will also leave without effect any subsequent resolution. On April 10, 2015, within the international arbitration filed by CIMSA against GCC before the IACAC, the Damages Final Award was issued stating a payment by GCC and its subsidiary GCC Latinoamérica in the amount of US$36.1 million

as damages and expenses in favor of CIMSA. GCC considers that the award is contrary to the Bolivian Law and the International Law, and has therefore filed an annulment resource against the Award, annulling such Damages Final Award. In addition, GCC obtained a preventive measures resolution from the Mexican courts, to prevent CIMSA from enforcing any award issued under the arbitration until all the outstanding annulment resources are resolved. GCC will exercise its contractual rights to recover on due time any damages and expenses caused by the Arbitration Final Resolution. As per the Bolivian Law, the enforcement of the Final Award is suspended until all the outstanding annulment resources are resolved. GCC is confident on a favorable resolution; however, GCC cannot assure that this legal procedure will not have a negative effect on the Company’s interests. d) On October 8, 2015, the Company, signed a strategic agreement for three years with Madata It, S.A. de C.V. ("MADATA") (related party), whereby MADATA provides business process and information technology services ( "IT").

The contract life is for three years and forced renewed every year until the Company decides not to renew and is expected to generate savings to GCC, during this period. The contract includes data processing services and infrastructure services, support and maintenance of IT applications in different locations of the Company. The annual payment of services will be $ 51,931, for the first two years and may decrease if the operating hours used by the Company and its subsidiaries and related parties, decrease. The amount of paid services recognized in the interim condensed consolidated statements of profit for the three-month period ended March 31, 2017 is disclosed in Note 7. 16. Authorization to issue the interim condensed consolidated financial statements On May 31, 2017, the accompanying interim condensed consolidated financial statements were authorized for their issuance by Enrique Escalante Ochoa, Chief Ejecutive Officer; consequently, they do not reflect events that have occurred after that date and are subject to the approval of the Company’s Board of Directors.

F-27

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B.

DE C.V. AND SUBSIDIARIES

Consolidated Financial Statements for the

Years Ended December 31, 2016, 2015 and

2014, and Independent Auditors’ Report Dated March 9, 2017

F-28

Independent Auditors’ Report to the

Board of Directors and Stockholders of Grupo Cementos de Chihuahua, S. A. B. de C. V.

(In thousands of Mexican pesos)

Opinion We have audited the accompanying consolidated financial statements of Grupo Cementos de Chihuahua, S. A. B. de C. V. and subsidiaries (the Company), which comprise the consolidated statements of financial position as of December 31, 2016, 2015 and 2014, and the consolidated statements of profit, other comprehensive income, changes in stockholders’ equity and cash flows for the years ended December 31, 2016, 2015 and 2014, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2016, 2015 and 2014, and their consolidated financial performance and their consolidated cash flows for the years then ended, in accordance with International Financial Reporting Standards (IFRSs), issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audits in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code for Professional Accountants (IESBA Code) together with the Code of Ethics issued by the Mexican Institute of Public Accountants (IMCP Code), and we have fulfilled all our other ethical responsibilities in accordance with the IESBA Code and with the IMCP Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined that the matters described below are the key audit issues which should be communicated in our report.

Galaz, Yamazaki, Ruiz Urquiza, S.C. Lázaro Cárdenas 2321 Pte., PB Residencial San Agustín 66260 Garza García, N.L. México Tel: +52 (81) 8133 7300 Fax:+52 (81) 8133 7383 www.deloitte.com/mx

F-29

1. Evaluation of goodwill impairment

Given the importance of the goodwill balance and the economic changes to certain

markets in which the Company operates, goodwill must be adequately reviewed to

identify potential impairment. The conclusion as to whether the book value of

goodwill is recoverable requires that the Company’s management prepare significant

estimates regarding key assumptions to determine future cash flows. The goodwill

balance was generated by business acquisitions in the United States. In order to

evaluate the impairment, the Company has assigned two cash generating units

involving the Cement and Concrete Divisions.

The International Accounting Standard 36 (IAS 36) requires the performance of an

impairment evaluation each year, which calculates future discounted cash flows to

ascertain the potential impairment of the book values of the acquired assets. We

identified the risk whereby the assumptions utilized by management to calculate

future cash flows might not be fair based on current market conditions and those

prevailing in the foreseeable future.

As auditors, we have analyzed the key assumptions utilized in the impairment model,

specifically including cash flow projections, discount rates, the long-term growth rate

and operating margin. Our valuation specialists assisted us to independently

evaluate the utilized discount rates and methodology used to prepare the impairment

test model. We have also tested the completeness and accuracy of the impairment

model.

As discussed in Note 14 to the consolidated financial statements, the Company has

not presented impairment effects at December 31, 2016, 2015 and 2014, which may

have required adjustments to the book values of its long-lived assets.

2. Deferred income taxes

Certain entities in Mexico and the United States generated tax losses in prior years

which have not yet been applied. Accordingly, deferred tax assets have been

recognized in the consolidated statements of changes in financial position for

$2,465,452 for the Mexican entities and $1,566,949 for the US entities.

According to the International Accounting Standard 12 (IAS 12), when determining

deferred income taxes, the Company estimates the probability of generating a tax

basis in future periods so as to apply the deferred assets generated by tax losses.

However, there is a risk that: a) the assumptions utilized by management to

calculate future cash flows might not be fair based on current conditions and those

prevailing in the foreseeable future; b) assumptions regarding transactions

performed outside the normal course of business might be considered; c) a fair

recovery period might not be considered, or d) there are incorrect calculations.

The audit procedures we applied to cover the risk related to the determination of

deferred taxes included verifying the fairness of the assumptions used by

management to determine the recoverability of tax losses. The result of our audit

procedures was satisfactory.

F-30

The accounting policy utilized by the Company to recognize deferred taxes, together

with details of their disclosure, are included in Notes 4.t and 20, respectively, of the

accompanying consolidated financial statements.

3. Business Acquisition

On August 23, 2016, the Company executed agreements to acquire certain net

assets of Cemex, S.A.B. de C.V. (“Cemex”) located in the United States. The

agreement includes a cement plant located in Odessa, Texas; cement terminals in

Amarillo and El Paso, Texas, as well as the concrete aggregates, asphalt and

construction materials businesses located in El Paso, Texas and Las Cruces, New

Mexico.

The transaction amounted to $6,181,249 (US$306.1 million); and the acquired

assets include all facilities, equipment and inventories. On November 8, 2016, the

Company obtained the financing needed to perform this transaction and, on

November 10, 2016, the US Federal Trade Commission authorized the acquisition,

which took effect on November 18, 2016.

As discussed in Note 18.b, this transaction was financed with the Company’s own

resources, together with a new unsecured credit by the amount of $5,249,190

(US$253.2 million). The Company simultaneously refinanced its syndicated bank

loan through a guaranteed credit by the amount of $3,833,235 (US$184.9 million).

The new bank debt structure derived from the acquisition totals $9,082,426

(US$438.1 million), of which the amount of approximately $6,196,615 (US$289.9

million) will mature in seven years, while the remainder matures in five years.

The audit procedure we applied to cover the risk associated with the business

acquisition involved reviewing the accounting record prepared for the purchase price

allocation. We gave special attention to the valuation of property, plant and

equipment and intangible assets including goodwill, the noncompetition agreement

and relations with the customers of the acquired entities. We verified that the

Company had consistently applied the generally accepted valuation method to these

assets. Similarly, we placed special emphasis on the review of opening balances and

fair value adjustments. We confirmed that the applied accounting treatment was

appropriate and timely according to the clauses of the purchase-sale agreement and

IFRS 3, “Business combinations”. We also considered the audit work we performed

to determine the Company’s goodwill as a “Key audit matter”, and validated the

adequate and correct disclosure of this transaction in the consolidated financial

statements.

The accounting policy utilized by the Company for this business acquisition and

details of its disclosure are included in Notes 4.p and 13, respectively, of the

accompanying consolidated financial statements.

F-31

4. Contingencies

As a result of its daily operations, the Company is involved in a series of legal

proceedings. Given the incipient nature of most of these proceedings or the inability

to determine a provision, reserves have not been created. Furthermore, the

specialists contracted by the Company’s management consider that the verdicts

issued for these proceedings will not significantly affect the Company’s consolidated

financial position or its consolidated result of operations. A commercial lawsuit has

been filed against the Company following the sale of its 47.02% equity in Sociedad

Boliviana de Cemento, S.A. (SOBOCE); the cancellation of this sale has been

requested.

The lawsuit has evolved through different stages in which both favorable and

unfavorable verdicts have been issued to the Company. However, in the opinion of

the specialists contracted by Management, the Company has a good chance of

obtaining a favorable verdict that will not imply any cost.

Our audit procedures consisted of the following:

i) Perform inquiries with Company’s management regarding the status of this

lawsuit.

ii) Verify the available information published by the media with regard to the

lawsuit status.

iii) Obtain the purchase-sale contract executed to sell the Company’s shares in

SOBOCE.

iv) Obtain confirmation from the specialists contracted by the Company

regarding the status of the lawsuit and their evaluation of confirmed facts.

Based on the application of our audit procedures, we did not identify any facts leading

us to believe that the Company should recognize a provision for the commercial

lawsuit filed based on the sale of its equity in SOBOCE.

The accounting policy utilized by the Company for contingencies and details of its

disclosure are included in Notes 4.u and 26, respectively, to the accompanying

consolidated financial statements.

Information other than the Consolidated Financial Statements and Auditors’

Report Thereon

Management is responsible for the other information. The other information comprises the

information that will be included in the Annual Report that the Company will prepare

according to Article 33, Section I, paragraph b) Fourth Title, First Chapter of the “General

Provisions Applicable to Issuers and Other Stock Market Participants in Mexico”, together

with the Instructions Guide accompanying these provisions (the Provisions). The Annual

Report is expected to be made available to us after the date of this audit report.

Our opinion on the consolidated financial statements does not cover the other information

and we will not express any form of assurance conclusion thereon.

F-32

In connection with our audit of the consolidated financial statements, our responsibility is

to read the Annual Report when it becomes available and in doing so, consider whether

the other information is materially inconsistent with the consolidated financial statements,

or from our knowledge obtained during the audit, or otherwise appears to be materially

misstated. When we read the Annual Report, we will issue a statement in this regard over

our reading of the Annual Report, as required by Article 33, Section I, paragraph b),

number 1.2 of the Provisions. Convenience translation and explanation for translation into English

The consolidated financial statements as of December 31, 2016 include the translation of

Mexican peso amounts into U.S. dollar amounts, titled "Convenience" and are presented

solely for the convenience of the reader. These amounts are presented for informational

purposes only and do not represent amounts in accordance with International Financial

Reporting Standards or the equivalent in U.S. dollars in which transactions were conducted

or in which the amounts presented in Mexican pesos could be translated or realized.

Additionally, the accompanying consolidated financial statements have been translated

into English for the convenience of readers. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated

financial statements in accordance with IFRSs, and for such internal control as

management determines is necessary to enable the preparation of consolidated financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for

assessing the Company’s ability to continue as a going concern, disclosing, as applicable,

matters related to going concern and using the going concern basis of accounting unless

management either intends to liquidate the Company or to cease operations, or has no

realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial

reporting process. Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial

statements as a whole are free from material misstatement, whether due to fraud or error,

and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high

level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs

will always detect a material misstatement when it exists. Misstatements can arise from

fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of

these consolidated financial statements.

F-33

As part of an audit in accordance with ISAs, we exercise professional judgment and

maintain professional skepticism throughout the audit. We also:

- Identify and asses the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or override of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

- Evaluate the appropriateness of accounting policies used and the reasonableness

of accounting estimates and related disclosures made by management.

- Conclude on the appropriateness of management´s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors´ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the consolidated

financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters,

the planned scope and timing of the audit and significant audit findings, including any

significant deficiencies in internal control that we identify during our audit.

We will also provide those charged with governance with a statement that we have

complied with relevant ethical requirements regarding independence, and to communicate

with them relationships and other matters that may reasonably be thought to bear our

independence, and where applicable, related safeguards.

F-34

From the matters communicated with those charged with governance, we determine those

matters that were of most significance in the audit of the consolidated financial statements

of the current period and are therefore the key audit matters. We describe these matters

in our auditor’s report unless law or regulation precludes public disclosure about the matter

or when, in extremely rare circumstances, we determine that a matter should not be

communicated in our report because the adverse consequences of doing so would

reasonably be expected to outweigh the public interest benefits of such communication.

Galaz, Yamazaki, Ruiz Urquiza, S. C.

Member of Deloitte Touche Tohmatsu Limited

C.P.C. Gabriel González Martínez

March 9, 2017

F-35

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated statements of financial position (In thousands of Mexican pesos ($) and thousands of U.S. dollars (US$))

Convenience

translation As of December 31,

Note (Note 3) 2016 2015 2014

ASSETS

CURRENT ASSETS

Cash and cash equivalents 6 US$ 163,851 $ 3,396,868 $ 2,522,835 $ 1,786,656

Accounts receivable:

Trade accounts receivable, net 7 73,260 1,518,792 1,194,643 1,027,499

Other accounts receivable 7 39,351 815,798 653,650 517,991

Due from related parties 8 2,564 53,159 29,989 77,510

279,026 5,784,617 4,401,117 3,409,656

Inventories 9 106,470 2,207,281 1,735,051 1,635,521

Prepaid expenses 10 11,142 230,998 196,352 175,843

Total current assets 396,638 8,222,896 6,332,520 5,221,020

NON-CURRENT ASSETS

Investments in associates, joint

venture and other investments 11 7,756 160,800 137,818 128,961

Property, plant and equipment, net 12 925,016 19,176,875 13,900,911 12,749,080

Goodwill 14 405,097 8,398,222 5,534,419 4,733,273

Intangible assets, net 15 65,172 1,351,111 103,303 102,047

Other assets 16 7,735 160,354 101,974 139,548

Deferred income tax 20 59,713 1,237,928 863,837 1,155,718

Total non-current assets 1,470,489 30,485,290 20,642,262 19,008,627

TOTAL ASSETS US$ 1,867,127 $ 38,708,186 $ 26,974,782 $ 24,229,647

See accompanying notes to consolidated financial statements.

F-36

Convenience translation As of December 31,

Note (Note 3) 2016 2015 2014

LIABILITIES AND EQUITY

SHORT-TERM LIABILITIES

Debt and current portion of long-term financial debt

18

US$ 3,850 $ 79,816 $ 115,473 $ 753,349

Trade accounts payable

70,763 1,467,019 918,428 984,873

Due to related parties 8

820 16,996 14,045 11,831

Short-term employee benefits 17

23,745 492,275 332,224 296,746

Accrued expenses and taxes

other than income taxes 19

50,380 1,044,446 774,233 560,693

Provisions 19

5,151 106,787 99,230 70,272

Total current liabilities

154,709 3,207,339 2,253,633 2,677,764

LONG-TERM LIABILITIES

Long-term financial debt 18

685,795 14,217,493 7,413,526 6,084,116

Employee benefits 17

37,190 771,004 649,829 577,629

Provision for environmental

restoration 19

8,560 177,454 74,761 57,188

Other long-term liabilities

745 15,455 - -

Income taxes payable 20

39,054 809,638 933,724 991,720

Deferred income tax 20

70,062 1,452,474 917,784 312,854

Total non-current liabilities

841,406 17,443,518 9,989,624 8,023,507

Total liabilities

996,115 20,650,857 12,243,257 10,701,271

STOCKHOLDERS’ EQUITY 21

Capital stock

19,114 396,270 396,270 396,270

Additional paid-in capital

88,414 1,832,940 1,832,940 1,832,940

Legal reserve

13,506 279,998 279,998 279,998

Retained earnings

583,212 12,090,805 10,973,850 10,204,141

Other items of comprehensive

income

166,484 3,451,442 1,241,970 811,322

Equity attributable to owners

of the Company

870,730 18,051,455 14,725,028 13,524,671

Non-controlling interest

282 5,874 6,497 3,705

Total stockholders’ equity

871,012 18,057,329 14,731,525 13,528,376

TOTAL LIABILITIES AND

STOCKHOLDERS’ EQUITY

US$ 1,867,127 $ 38,708,186 $ 26,974,782 $ 24,229,647

F-37

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated statements of profit (In thousands of Mexican pesos ($) and thousands of U.S. dollars (US$), except per share amounts)

Note

Convenience

translation

(Note 3)

For the years ended December 31,

2016 2015 2014

Net sales 25 US$ 675,149 $ 13,996,791 $ 11,983,778 $ 10,009,669

Cost of sales 22 493,155 10,223,785 9,074,092 7,682,894

Gross profit 181,994 3,773,006 2,909,686 2,326,775

General, administrative and selling expenses 22 68,057 1,410,917 1,235,172 1,137,474

Operating income before other expenses 113,937 2,362,089 1,674,514 1,189,301

Other expenses 23 5,730 118,801 25,292 66,323

Operating income 108,207 2,243,288 1,649,222 1,122,978

Financial expenses 24 35,201 729,769 641,269 564,425

Financial income 1,652 34,243 27,020 23,086

Exchange gain, net 1,187 24,603 37,395 9,000

Share of profit of associates and joint venture 966 20,019 12,777 14,300

Income before income taxes 76,811 1,592,384 1,085,145 604,939

Income taxes 20 ( 14,866) ( 308,194) ( 169,654) ( 42,695)

Consolidated net income for the year US$ 61,945 $ 1,284,190 $ 915,491 $ 562,244

Consolidated net income attributable to:

Owners of the Company 61,778 1,280,737 912,699 561,923

Non-controlling interests 167 3,453 2,792 321

Consolidated net income for the year US$ 61,945 $ 1,284,190 $ 915,491 $ 562,244

Basic and diluted earnings per share:

Weighted average outstanding shares

(thousands) 332,536 332,536 332,536

Basic and diluted earnings per share of

controlling interest (in pesos) $ 3.86 $ 2.75 $ 1.69

See accompanying notes to consolidated financial statements.

F-38

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated statements of other comprehensive income (In thousands of Mexican pesos ($) and thousands of U.S. dollars (US$))

Convenience

translation

(Note 3)

For the years ended December 31,

2016 2015 2014

Consolidated net income for the year US$ 61,945 $ 1,284,190 $ 915,491 $ 562,244

Other comprehensive income:

Items that may be reclassified to net income in the future:

Cumualtive translation adjutments 84,314 1,747,955 98,327 683,192

Items that will not be reclassified to net income in

the future:

Remeasurements of employee benefits ( 1,920) ( 39,805) 24,536 ( 197,627)

Income taxes 24,182 501,322 307,785 277,097

Total other items of comprehensive income 106,576 2,209,472 430,648 762,662

Consolidated comprehensive income for the

year US$ 168,521 $ 3,493,662 $ 1,346,139 $ 1,324,906

Consolidated comprehensive income for the

year attributable to:

Owners of the Company US$ 168,550 $ 3,494,285 $ 1,343,347 $ 1,324,585

Non-controlling interests ( 29) ( 623) 2,792 321

US$ 168,521 $ 3,493,662 $ 1,346,139 $ 1,324,906

See accompanying notes to consolidated financial statements.

F-39

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated statements of cash flows (In thousands of Mexican pesos ($) and thousands of U.S. dollars (US$))

Convenience translation

(Note 3)

For the years ended December 31,

Note 2016 2015 2014

Cash Flows from operating activities

Consolidated net income for the year US$ 61,945 $ 1,284,190 $ 915,491 $ 562,244 Adjustments for: Increase in pensions and seniority premium 17 4,270 88,529 79,648 59,213 Share of profit of associates and joint venture ( 966) ( 20,019) ( 12,777) ( 14,300) Depreciation 12 54,242 1,124,507 932,651 829,630 Amortization 15 1,880 38,971 31,943 20,620 Impairment of non–current assets 23 - - - 41,533 Loss (gain) on sale of property, plant and equipment 1,124 23,301 ( 11,445) ( 1,463) Income tax 20 14,866 308,194 169,654 42,695 Financial expenses 24 35,201 729,769 641,269 564,425 Financial income ( 1,652) ( 34,243) ( 27,020) ( 23,086)

Movements in working capital: Trade accounts receivable ( 6,511) ( 134,986) ( 60,731) 14,412 Due to related parties ( 1,260) ( 26,121) 44,496 ( 24,445) Other accounts receivable ( 6,502) ( 134,799) ( 120,632) ( 357,135) Inventories ( 944) ( 19,565) 28,562 ( 12,904) Prepaid expenses 164 3,417 7,444 ( 38,102) Trade accounts payable 20,430 423,546 ( 143,313) 115,456 Direct benefits paid to employees ( 2,666) ( 55,278) ( 38,861) ( 38,491) Accrued provisions and liabilities ( 13,995) ( 290,133) 129,976 ( 81,827) Cancelation of assets retirement obligation 23 ( 2,778) ( 57,600) - -

Cash generated from operations 156,848 3,251,680 2,566,355 1,658,475

Interest received 1,652 34,243 27,020 23,086

Income tax paid ( 6,876) ( 142,544) ( 142,950) ( 159,622)

Net cash flows generated by operating activities 151,624 3,143,379 2,450,425 1,521,939

Cash Flows from investing activities

Additions of property, plant and equipment and other assets ( 40,940) ( 848,741) ( 835,323) ( 772,281) Proceeds from disposal of property, plant and equipment 2,662 55,185 20,135 14,925

Merger effect 377 7,806 - -

Business combination 13 ( 298,159) ( 6,181,249) - -

Net cash flows used in investing activities ( 336,060) ( 6,966,999) ( 815,188) ( 757,356)

Cash Flows from financing activities Payments of short-term and long-term financing ( 181,985) ( 3,772,809) ( 3,503,883) ( 270,213) Proceeds from short and long-term financing 429,664 8,907,534 3,117,566 - Interest paid ( 29,605) ( 613,759) ( 508,542) ( 480,949) Dividends paid ( 8,277) ( 171,588) ( 142,990) ( 124,700)

Net cash flows generated by (used in) financing activities 209,797 4,349,378 ( 1,037,849) ( 875,862)

Net increase (decrease) in cash and cash equivalents 25,361 525,758 597,388 ( 111,279) Adjustment to cash flows for variations in exchange rates 16,799 348,275 138,791 636,335

Cash and cash equivalents at the beginning of the year 121,691 2,522,835 1,786,656 1,261,600

Cash and cash equivalents at the end of the year US$ 163,851 $ 3,396,868 $ 2,522,835 $ 1,786,656

See accompanying notes to consolidated financial statements.

F-40

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. DE C.V. AND SUBSIDIARIES

Consolidated statements of changes in stockholders’ equity (In thousands of Mexican pesos ($) and thousands of U.S. dollars (US$))

Capital

stock

Additional

paid-in

capital

Legal

reserve

Retained

earnings

Other

comprehensive

income

Equity

attributable

to owner

Non-controlling’

interest

Total

stockholders’

equity

Balances as of January 1, 2014 $ 396,270 $ 1,832,940 $ 279,998 $ 9,766,918 $ 48,660 $ 12,324,786 $ 3,384 $ 12,328,170

Consolidated net income for the year - - - 561,923 - 561,923 321 562,244

Dividends paid - - - ( 124,700) - ( 124,700) - ( 124,700)

Other comprehensive income - - - - 762,662 762,662 - 762,662

Balances as of December 31, 2014 $ 396,270 $ 1,832,940 $ 279,998 $ 10,204,141 $ 811,322 $ 13,524,671 $ 3,705 $ 13,528,376

Consolidated net income for the year - - - 912,699 - 912,699 2,792 915,491

Dividends paid - - - ( 142,990) - ( 142,990) - ( 142,990)

Other comprehensive income - - - - 430,648 430,648 - 430,648

Balances as of December 31, 2015 $ 396,270 $ 1,832,940 $ 279,998 $ 10,973,850 $ 1,241,970 $ 14,725,028 $ 6,497 $ 14,731,525

Consolidated net income for the year - - - 1,280,737 - 1,280,737 3,453 1,284,190

Dividends paid - - - ( 171,588) - ( 171,588) ( 4,076) ( 175,664)

Merger efect (Note 1) - - - 7,806 - 7,806 - 7,806

Other comprehensive income - - - - 2,209,472 2,209,472 - 2,209,472

Balances as of December 31, 2016 $ 396,270 $ 1,832,940 $ 279,998 $ 12,090,805 $ 3,451,442 $ 18,051,455 $ 5,874 $ 18,057,329

Convenience translation (Note 3) US$ 19,114 US$ 88,414 US$ 13,506 US$ 583,212 US$ 166,484 US$ 870,730 US$ 282 US$ 871,012

See accompanying notes to consolidated financial statements.

F-41

1. Description of activities, Relevant event and Merging of the Company Description of activities Grupo Cementos de Chihuahua, S.A.B. de C.V. is a holding company that is organized under the laws of Mexico whose subsidiaries are principally engaged in the production and sale of hydraulic cement, concrete and aggregates in the markets of Mexico (state of Chihuahua) and the United States of America (principally in the central corridor from the state of Texas and New Mexico to Montana and North Dakota). Grupo Cementos de Chihuahua, S.A.B. de C.V. is listed on the Mexican Stock Exchange (BMV) and is a subsidiary of CAMCEM, S.A. de C.V. (direct holding), an entity that owns 51.621% of its shares and 24.820% is traded on the BMV with the symbol GCC *.

Hereinafter the terms “GCC” or the “Company" are used to refer to Grupo Cementos de Chihuahua, S.A.B. de C.V. and Subsidiaries. The corporate offices are located at Avenida Vicente Suarez y calle Sexta s/n, Colonia Nombre de Dios, C.P. 31110, Chihuahua, Chihuahua, Mexico. Relevant event On August 27, 2016, Grupo Cementos de Chihuahua, S.A.B de C.V. issued an Information Supplement regarding a corporate restructuring in which it informs to the investing public of the executed agreement dated August 23, 2016, to acquire certain net assets of Cemex, S.A.B. de C.V. (Cemex) located in the United States, in a transaction that was announced initially on May 2, 2016. The agreement includes a cement plant located in Odessa, Texas; two cement terminals in Amarillo and El Paso, Texas, and the concrete, aggregate, asphalt and building materials businesses located in El Paso, Texas and Las Cruces, New Mexico.

The acquisition price is Dls $ 306 million and the assets acquired include all facilities, equipment and inventories. On November 8, 2016, the Company obtained the necessary funding to carry out this operation and on November 10, 2016 the "Federal Trade Commission" of the United States of America gave its approval for the acquisition, it became effective on November 18, 2016. This transaction was financed with the Company’s own resources and with a new loan not guaranteed for US$ 253.2 million. Simultaneously, the Company refinanced its syndicated bank loan with a loan guaranteed for US$ 184.9 million. The new bank debt structure derived from the acquisition totals US$ 438.1 million, of which US$ 298.9 million have a final maturity of seven years and the rest have a five year maturity. Both credits were contracted with a national credit institution. Merging of the Company On August 27, 2016, Grupo Cementos de Chihuahua, S.A.B. de C.V. issued an Information Supplement regarding a corporate restructuring in which it informed the investing public of the simultaneous merger of the Company as the merging entity, with two of its holding companies, Control Administrativo Mexicano, S.A. de C.V. and Imin de Mexico, S.A. de C.V.; whereby the latter two companies merged in order to simplify GCC’s control structure and make it more transparent to investors. Such corporate restructuring proposal has already been approved by the Federal Competition Commission in Mexico.

F-42

Additionally, on September 12, 2016, at an Extraordinary General Shareholders’ Meeting, the simultaneous merger was approved. The effects of the merger on the Company’s consolidated statements of financial positions is the following:

September 12, 2016

Cash and cash equivalents $ 4,819

Other accounts receivable 2,987

TOTAL ASSETS $ 7,806

Retained earnings 7,806

TOTAL STOCKHOLDERS’ EQUITY $ 7,806

2. Application of new and revised International Financial Reporting Standards a. Application of new and revised International Financing Reporting Standards (“IFRS” or “IAS”) and

interpretations that are mandatorily effective for the current year

In the current year, the Company has applied a number of amendments to IFRS and new Interpretation issued by the

International Accounting Standards Board (“IASB”) that are mandatorily effective for an accounting period that begins

on or after January 1, 2016.

Amendments to IAS 1, “Disclosure Initiative”

The amendments to IAS 1 give some guidance on how to apply the concept of materiality in practice.

The application of these amendments to IAS 1 did not have impacts on the Company’s consolidated financial

statements.

Amendments to IFRS 11, “Accounting for Acquisitions of Interests in Joint Operations”

The amendments to IFRS 11 provide guidance on how to account for the acquisition of a joint operation that constitutes

a business as defined in IFRS 3, “Business Combinations”. Specifically, the amendments state that the relevant

principles on accounting for business combinations in IFRS 3 and other standards (e.g. IAS 12, “Income Taxes”,

regarding the recognition of deferred taxes at the time of acquisition and IAS 36, “Impairment of Assets”, regarding

impairment testing of a cash-generating unit to which goodwill on acquisition of a joint operation has been allocated)

should be applied. The same requirements should be applied to the formation of a joint operation if and only if an

existing business is contributed to the joint operation by one of the parties that participate in the joint operation.

A joint operator is also required to disclose the relevant information required by IFRS 3 and other standards for business

combinations.

The amendments are applied prospectively to acquisitions of interests in joint operations (in which the activities of the

joint operations constitute businesses as defined in IFRS 3) occurring from the beginning of annual periods beginning

on or after January 1, 2016.

The application of these amendments to IFRS 11 did not have an impact on the Company’s consolidated financial

statements.

F-43

Amendments to IAS 16 and IAS 38, “Clarification of Acceptable Methods of Depreciation and

Amortization”

The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property,

plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate

basis for amortization of an intangible asset. This presumption can only be rebutted in the following two limited

circumstances:

a) When the intangible asset is expressed as a measure of revenue; or

b) When it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset

are highly correlated.

The amendments apply prospectively for annual periods beginning on or after January 1, 2016. Currently, the Company

uses the straight-line method for depreciation and amortization for its property, plant and equipment, and intangible

assets, respectively. The management of the Company believes that the straight-line method is the most appropriate

method to reflect the consumption of economic benefits inherent in the respective assets and accordingly, the

application of these amendments to IAS 16 and IAS 38 did not have an impact on the Company’s consolidated financial

statements.

Annual Improvements to IFRS 2012-2014 Cycle

The Annual Improvements to IFRS 2012-2014 Cycle include a number of amendments to various IFRS, which are

summarized below.

The amendments to IFRS 5 introduce specific guidance in IFRS 5 for when an company reclassifies an asset (or disposal

group) from held for sale to held for distribution to owners (or vice versa). The amendments clarify that such a change

should be considered as a continuation of the original plan of disposal and hence requirements set out in IFRS 5

regarding the change of sale plan do not apply. The amendments also clarifies the guidance for when held-for-

distribution accounting is discontinued.

The amendments to IFRS 7 provide additional guidance to clarify whether a servicing contract is continuing involvement

in a transferred asset for the purpose of the disclosures required in relation to transferred assets.

The amendments to IAS 19 clarify that the rate used to discount post-employment benefit obligations should be

determined by reference to market yields at the end of the reporting period on high quality corporate bonds. The

assessment of the depth of a market for high qualify corporate bonds should be at the currency level (i.e. the same

currency as the benefits are to be paid). For currencies for which there is no deep market in such high quality corporate

bonds, the market yields at the end of the reporting period on government bonds denominated in that currency should

be used instead.

The application of these amendments had no material effect on the Company’s consolidated financial statements.

F-44

b. New and revised IFRS in issue but not yet effective

The Company has not applied the following new and revised IFRS that have been issued but are not yet effective:

Amendments to IAS 7 Statements of Cash Flows1

Amendments to IAS 12 Income taxes1

IFRS 9 Financial Instruments2

IFRS 15 Revenue from Contracts with Customers2

IFRS 16 Leases3

1 Effective for annual periods beginning on or after January 1, 2017, with earlier application permitted. 2 Effective for annual periods beginning on or after January 1, 2018, with earlier application permitted. 3 Effective for annual periods beginning on or after January 1, 2019, with earlier application permitted.

Amendments to IAS 7, “Statements of Cash Flows: Provide disclosures”

The amendments in disclosure initiative (Amendments to IAS 7) come with the objective that entities shall provide

disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities.

To achieve this objective, the IASB requires that the following changes in liabilities arising from financing activities are

disclosed (to the extent necessary): (i) changes from financing cash flows; (ii) changes arising from obtaining or losing

control of subsidiaries or other businesses; (iii) the effect of changes in foreign exchange rates; (iv) changes in fair

values; and (v) other changes.

Companies are required to apply the amendments for annual periods beginning on or after January 1, 2017. Earlier

application is permitted.

The management of the Company does not expect significant impacts as a result of these amendments.

Amendments to IAS 12, “Income Tax: Recognition of Deferred Tax Assets for Unrealized Losses”, clarify

how to account for deferred tax assets related to debt instruments measured at fair value

IAS 12 provides requirements on the recognition and measurement of current or deferred tax liabilities or assets. The

amendments clarify the requirements on recognition of deferred tax assets for unrealized losses, to address diversity

in practice.

Companies are required to apply the amendments for annual periods beginning on or after January 1, 2017. Earlier

application is permitted.

The management of the Company does not expect significant impacts as a result of these amendments.

F-45

IFRS 9, “Financial Instruments”

IFRS 9, issued in November 2009, introduced new requirements for the classification and measurement of financial

assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and

measurement of financial liabilities and for derecognition, and in November 2014 to include the new requirements for

general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a) impairment

requirements for financial assets and b) limited amendments to the classification and measurement requirements by

introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt

instruments.

Key requirements of IFRS 9:

All recognized financial assets that are within the scope of IAS 39, “Financial Instruments: Recognition and Measurement”, are required to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are generally measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, companies may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in net income (loss).

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires a company to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognized.

The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced.

From now on, a retrospective effectiveness assessment will not be required, and improved disclosure

requirements for the Company's risk management have been introduced.

The management of the Company anticipates that the application of IFRS 9 in the future may have a material impact

on amounts reported in respect of the Company’s financial assets and financial liabilities. However, it is not practicable

to provide a reasonable estimate of the effect of IFRS 9 until the Company undertakes a detailed review.

F-46

IFRS 15, “Revenue from Contracts with Customers”

In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for

revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance

including IAS 18, “Revenue”, IAS 11, “Construction Contracts”, and the related Interpretations when it becomes

effective.

The core principle of IFRS 15 is that a company should recognize revenue to depict the transfer of promised goods or

services to customers in an amount that reflects the consideration to which the company expects to be entitled in

exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when (or as) the company satisfies a performance obligation

Under IFRS 15, a company recognizes revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’

of the goods or services underlying the particular performance obligation is transferred to the customer. Far more

prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures

are required by IFRS 15.

The Company is in the process of determining the potential impacts that will be derived in its consolidated financial

statements by the adoption of this standard, however, it is impractical to provide a reasonable estimate of such effect

until the Company has performed a detailed review.

IFRS 16, “Leases”

IFRS 16, “Leases”, was issued in January 2016 and supersedes IAS 17, “Leases”, and related interpretations. The new

standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between

operating and finance leases. Lessor accounting, however, remains largely unchanged and the distinction between

operating and finance leases is retained. IFRS 16 is effective for periods beginning on or after January 1, 2019, with

earlier adoption permitted if IFRS 15, “Revenue from Contracts with Customers”, has also been applied.

Under IFRS 16 a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly

to other non-financial assets and depreciated accordingly and the liability accrues interest. This will typically produce a

front-loaded expense profile (whereas operating leases under IAS 17 would typically have had straight-line expenses)

as an assumed linear depreciation of the right-of-use asset and the decreasing interest on the liability will lead to an

overall decrease of expense over the reporting period.

The lease liability is initially measured at the present value of the lease payments payable over the lease term,

discounted at the rate implicit in the lease if that can be readily determined. If that rate cannot be readily determined,

the lessee shall use their incremental borrowing rate.

However, a lessee may elect to account for lease payments as an expense on a straight-line basis over the lease term

for leases with a lease term of 12 months or less and containing no purchase options (this election is made by class of

underlying asset); and leases where the underlying asset has a low value when new, such as personal computers or

small items of office furniture (this election can be made on a lease-by-lease basis).

IFRS 16 establishes different transitional provisions, including retrospective application or the modified retrospective

application where the comparative period is not restated.

F-47

The Company is in the process of determining the potential impacts that will be derived in its consolidated financial

statements by the adoption of this standard, however, it is impractical to provide a reasonable estimate of such effect

until the Company has performed a detailed review.

3. Convenience translation The consolidated financial statements as of December 31, 2016 include in the presentation in each line item of the financial statements amounts denominated in U.S. dollars under the heading “Convenience translation”, which are presented solely for the readers’ convenience. Such amounts were translated using the exchange rate of $ 20.73 per U.S. dollar, using the exchange rate to settle obligations denominated in foreign currency payable in Mexico, published

by “Banco de Mexico”, at December 31, 2016. The referred information in U.S. dollars is solely for informational purposes and does not represent amounts in accordance with IFRS or the equivalent in U.S. dollars in which the transactions were conducted or in which the amounts presented in Mexican pesos could be translated or realized. The consolidated financial statements are presented in Mexican pesos ($) and U.S. dollars (US$), all values are rounded to thousands (000) except when otherwise mentioned.

4. Significant accounting polices a) Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards released by the IASB.

b) Explanation for translation into English The accompanying consolidated financial statements have been translated from Spanish into English for use outside of Mexico. Certain accounting practices applied by the Company that conform with IFRS may not conform with accounting principles generally accepted in the country of use. c) Basis of preparation The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that for disclosures purposes are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 or value in use in IAS 36.

F-48

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

- Level 1 - inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;

- Level 2 - inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

- Level 3 - inputs are unobservable inputs for the asset or liability.

Reclassifications Certain amounts in the consolidated financial statements as of and for the years ended December 31, 2015 and 2014 have been reclassified to conform to the presentation of the 2016 consolidated financial statements.

d) Basis of consolidation The consolidated financial statements incorporate the financial statements of Grupo Cementos de Chihuahua, S.A.B. de C.V. and the subsidiaries controlled by it. Control is achieved when the Company: Has power over the investee; Is exposed, or has rights, to variable returns from its involvement with the investee; and Has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are

changes to one or more of the three elements of control listed above. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. The subsidiaries included in the consolidated financial statements are presented as follows:

Subsidiaries % Ownership

Interest 2016 2015 2014

Direct equity interest in Mexican subsidiaries: Cementos de Chihuahua, S.A. de C.V. 99.999 99.999 99.999

GCC Ingeniería y Proyectos, S.A. de C.V. 99.999 99.999 99.999 GCC Cemento, S.A. de C.V. 99.999 99.999 99.999 GCC Corporativo, S.A. de C.V. 99.990 99.990 99.990 Indirect equity interest in Mexican subsidiaries: Materiales Industriales de Chihuahua, S.A. de C.V. 99.964 99.964 99.964 GCC Concreto, S.A. de C.V. 99.998 99.998 99.998 Minera Rarámuri, S.A. 99.990 99.990 99.990 Construcentro de Chihuahua, S.A. de C.V. 99.990 99.990 99.990 GCC Edificaciones y Servicios, S.A. de C.V. 99.990 99.990 99.990 GCC Inversiones y Comercialización, S.A. de C.V. 99.319 99.319 99.319 GCC Transporte, S.A. de C.V. 99.950 99.950 99.950 GCC Comercial, S.A. de C.V. 99.990 99.990 99.990 GCC Proyectos y Administración, S.A. de C.V. - 99.749 99.749 Urbanizaciones Contemporáneas, S.A. de C.V. 99.990 99.990 99.990

GCC Latinoamérica, S.A. de C.V. 99.990 99.990 99.990

F-49

Subsidiaries % Ownership

Interest 2016 2015 2014

Indirect equity interest in foreign subsidiaries (located mainly in the United States of America):

GCC of America, Inc. 99.999 99.999 99.999 GCC Rio Grande, Inc. (GCCRG) 99.999 99.999 99.999 GCC Dacotah, Inc. (Dacotah) 99.999 99.999 99.999 GCC Ready Mix, LLC. (GCCRM) 99.999 99.999 99.999

Mid Continent Concrete Company, Inc. (Midco) 99.999 99.999 99.999 Alliance Transportation, Inc. (Alliance) 99.999 99.999 99.999 GCC Holding Company, LLC. 99.999 99.999 99.999 American Investments Company, LLC. 99.999 99.999 99.999 GCC Energy, LLC. (GCCE) 99.999 99.999 99.999 Consolidated Ready Mix, Inc. (CRM) 99.999 99.999 99.999 Materiales (Hungary) Investment Group Financing, Ltd. 99.999 99.999 99.999 GCC Alliance Concrete, Inc. (GCCAC) 99.999 99.999 99.999 Colorado Energy Recyclers, LLC. 99.999 99.999 99.999 GCC Technology and Processes, S.A. 99.999 99.999 99.999 GCC Investment, Ltd. 99.999 99.999 99.999 GCC Premium Transloaders, LLC. 99.999 99.999 99.999 Cross Border Logistics, LLC. 49.999 49.999 49.999 Sunset Properties, LLC. 99.999 99.999 99.999 NM Energy, LLC. 99.999 99.999 99.999

GCC Permian, LLC. 99.999 - - GCC Sun City Materials, LLC. 99.999 - -

The financial statements of the subsidiaries and associates are prepared for the same reporting period as the Company, using consistent accounting policies. Intercompany balances, investments and transactions were eliminated in the consolidation. e) Cash and cash equivalents Cash and cash equivalents are financial assets. Cash equivalents are readily convertible into a known amount of cash with original maturities of three months or less. For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand and in banks, deposits held on call with banks and other short-term, highly liquid investments, net of outstanding bank overdrafts. f) Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

F-50

g) Financial assets Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. The Company has only financial instruments classified as loans and receivables. Effective interest method The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating

interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as of FVTPL. Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity. Subsequent to initial recognition, held-to maturity investments are measured at amortized cost using the effective interest method less any impairment. Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortized cost using the effective interest method, less any impairment. Accounts receivable are recognized at the original invoice value less an estimate for doubtful accounts created based on a review of all balances of the financial asset at the end of the year. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial. Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For all other financial assets, objective evidence of impairment could include:

- Significant financial difficulty of the issuer or counterparty; or - Breach of contract, such as a default or delinquency in interest or principal payments; or - It becoming probable that the borrower will enter bankruptcy or financial re-organization; or - The disappearance of an active market for that financial asset because of financial difficulties.

For certain categories of financial assets such as trade receivable, assets are subject to impairment tests for purposes that have not been impaired individually are included in the assessment of impairment on a collective basis. Between objective evidence that a portfolio of accounts receivable may be impaired, it could include the Company's past experience regarding the collection, an increase in the backlog in the portfolio exceeding the credit period payments as well as observable changes in national and local economic conditions that correlate with default on payments. For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the carrying amount of the asset and the present value of future collections, discounted at the original effective interest

rate of the asset financial.

F-51

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets, except for accounts receivable where the carrying amount is reduced through an allowance for doubtful accounts. When a receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the estimate. Changes in the carrying amount of the income estimates are recognized in the results. For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment

not been recognized. Derecognition of financial assets The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. h) Inventories and cost of sales Inventories are stated at the lower of cost and net realizable value. The cost of inventories includes all the purchase and production costs incurred to provide them with their current location and condition, and is valued as follows:

- Raw material: at acquisition cost according to the average cost formula. - Finished goods and work in process: at cost of materials, direct labor, and indirect production expenses,

excluding financial costs. - Spare parts and supplies: at cost based on the average cost.

Net realizable value is the sale price estimated in the ordinary course of operations, less applicable sale expenses. The inventories line item includes developed lands that are traded as part of the normal operating activities, which are recorded at their acquisition cost, which does not exceed net realizable value. i) Prepaid expenses Prepaid expenses are recognized for the amount paid upon payment. The Company recognizes the amount related to the prepaid expenses as an asset when the Company has the right to receive goods or services in the future. j) Property, plant and equipment Property, plant and equipment and their significant components with useful lives different from the other assets that

compose a group of fixed assets, are initially recognized at acquisition value and are presented net of the accumulated depreciation and accumulated losses for impairment. The acquisition value of the property, plant and equipment components include costs initially incurred to be acquired or constructed, and those incurred subsequently to replace them or increase their potential service. Property, plant and equipment are presented using the cost model as required by IAS 16, "Property, Plant and Equipment". Depreciation is recognized for expensing the cost or valuation of assets (other than land and properties under construction) less their residual value and is calculated using the straight-line method based on the estimated useful life of the assets , which is estimated according to the period in which the benefits derived from their use will be received. The useful life, residual value and depreciation method are reviewed periodically by management of the Company and the effect of any changes in the registered estimate is recognized on a prospective basis.

F-52

Depreciation commences when the asset is available to be used as properties, plant and equipment on the following basis:

Percentage

Buildings 2.00% - 2.33% Machinery and equipment 3.33% - 10.00% Vehicles 6.67% - 25.00% Furniture and equipment 10.00% - 33.33%

Construction in progress

Construction in progress includes the costs associated with the construction of property, plant and equipment. Once construction is complete, these assets are classified as property, plant and equipment and depreciation begins as of the date they are capitalized, which is when their period of use begins. Maintenance and repairs Major repair and maintenance costs are capitalized and a useful life and depreciation rate are estimated similarly as the other components of the same Company or class, with similar lives, and, lastly, the part of the replaced component is written off. Property, plant and equipment sales and write offs Property, plant and equipment are written off upon their sale or when future economic benefits are not expected from their use or sale. Any profit of loss upon write off of the asset (calculated as the difference between the net income

arising from the sale of the asset and its carrying amount), is included in the consolidated statement of comprehensive income in the period in which it occurs. Restoration provisions The present value of the initial estimate of the place decommissioning and remediation obligation of the assets subject to this type of legal obligation is included in the Company’s property cost. Changes in the measurement of a provision that result from changes in the estimated timing or amount of cash outflows, or a change in the discount rate, are added to, or deducted from, the cost of the related fixed asset. k) Intangible assets Intangible assets acquired separately Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization

and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. The amounts for the mining rights for the extraction of coal used as fuel for cement plants and for sale to third parties are depreciated according to depletion of estimated reserves. Internally-generated intangible assets - research and development expenditure Expenditure on research activities is recognized as an expense in the period in which it is incurred.

F-53

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated: The technical feasibility of completing the intangible asset so that it will be available for use or sale. The intention to complete the intangible asset and use or sell it. The ability to use or sell the intangible asset. How the intangible asset will generate probable future economic benefits. The availability of adequate technical, financial and other resources to complete the development and to use or

sell the intangible asset. The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred. Subsequent to initial recognition, an intangible asset that is generated internally is recognized at cost less accumulated amortization and any accumulated impairment losses on the same basis as intangible assets acquired separately. Intangible assets acquired in a business combination Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less

accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. Derecognition of intangible assets An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognized in profit or loss when the asset is derecognized. l) Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the Company’s cash-generating units (or

Companies of cash-generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

F-54

m) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

n) Impairment of tangible and intangible assets other than goodwill At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Company of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss. When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a

revaluation increase. o) Investments in associates and joint ventures

An associate is an Company over which the Company has significant influence. Significant influence is the power to participate in deciding the financial and operating policies of the company in which it invests, but does not imply a control or joint control over those policies.

A joint venture is a contractual arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control in a business, which exists when decisions about the relevant activities require the unanimous consent of the parties sharing control.

F-55

The results and assets and liabilities of associates and joint ventures are incorporated into the financial statements using the equity method, unless the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5, "Assets non-current held for sale and discontinued operations".

Under the equity method, investments in associates or joint ventures are initially recognized in the consolidated

statement of financial position at cost and adjusted for subsequent changes to the acquisition by the Company's

participation in the profit or loss and the associate or joint venture. When the participation of the Company in the losses

of an associated company or joint venture exceeds the participation of the Company in the associate or joint venture,

the Company ceases to recognize its share of losses.

When the Company carries out transactions with its associate or joint venture, the profit or loss resulting from such transactions with the associate or joint venture are recognized in the consolidated financial statements of the Company only to the extent of participation in the associate or set that is not related to the Company. p) Business combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Entity, liabilities incurred by the Entity to the former owners of the acquiree and the equity interests issued by the Entity in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:

- Deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 "Income Taxes" and IAS 19 "Employee Benefits" respectively;

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquire (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. When the consideration transferred by the Entity in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognized in profit or loss. When a business combination is achieved in stages, the Entity’s previously held equity interest in the acquiree is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

F-56

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Entity reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. q) Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Company as lessee

Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated statement of financial position as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on borrowing costs. Contingent rentals are recognized as expenses in the periods in which they are incurred.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where

another systematic basis is more representative of the time pattern in which economic benefits from the leased asset

are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which

they are incurred.

r) Foreign currencies In preparing the financial statements of each individual entity, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:

- Exchange differences on foreign currency borrowings relating to assets under construction for future

productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.

- Exchange differences on transactions entered into in order to hedge certain foreign currency risks.

For the purposes of presenting these consolidated financial statements, the assets and liabilities of the Company’s foreign operations are translated into Mexican pesos using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (and attributed to non-controlling interests as appropriate).

F-57

Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognized in other comprehensive income. Foreign currency transactions Foreign currency transactions are recorded at the applicable exchange rate in effect at the transaction date. Exchange differences between that date and its collection or payment date, and those arising from the translation of balances in foreign currencies at the exchange rate in effect at the consolidated statements of financial position date are recorded

as a component of exchange loss, net in the consolidated statements of profit and other comprehensive income. The exchange rates between the Mexican peso and U.S. dollar used in the preparation of the consolidated financial statements are presented below:

December 31, 2016

December 31, 2015

December 31, 2014

Closing exchange rate $ 20.7314 $ 17.2065 $ 14.7180 Average exchange rate $ 18.6673 $ 15.8542 $ 13.3020

The exchange rate at the date of issuance of the consolidated financial statements is $ 19.5210 pesos per U.S. dollar. s) Employee benefits from termination, retirement and statutory employee profit - sharing (PTU) i) Short-term employee benefits

Employee remuneration liabilities are recognized in the consolidated statements of profit on services rendered according to the salaries and wages that the Company expects to pay at the date of the consolidated statements of financial position, including related contributions payable by the Company. ii) Defined benefit plans For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the consolidated statements of financial position with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in other comprehensive income and is not subsequently reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined

benefit liability or asset. Defined benefit costs are categorized as follows:

- Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements).

- Net interest expense or income. - Remeasurement.

The Company presents the first two components of defined benefit cost as an expense or income according to the item. Gains and losses on service reduction are recognized as past service costs. The retirement benefit obligation recognized in the consolidated statements of financial position represents the actual deficit or surplus in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

F-58

Defined benefits plan and seniority premiums granted to employees of subsidiaries in Mexico The Company has a defined benefit pension covering all employees in the Mexican subsidiaries. Pensions are determined based on the compensation of employees in their final year of service, years of service in the Company and the age at retirement. Additionally, it is required to cover the employees with seniority premiums in Mexico, which are determined based on the provisions of the Federal Labor Law. Under Mexican law, the payment is a premium equivalent to twelve days salary for each year of service, where an employee becomes entitled to benefits after fifteen years of service. The cost of pension and seniority premiums are recognized based on calculations by independent actuaries using the projected unit credit method.

Defined benefit plans and seniority premiums granted to employees of subsidiaries in the United States The subsidiaries GCC Rio Grande, Inc. (GCCRG) and GCC Dacotah (Dacotah), Inc. have established the following pension plans and benefits: GCCRG and Dacotah, have both established defined benefit plans and supplemental executive retirement plans, determined based on actuarial calculations using the projected unit credit method and nominal financial assumptions. The employees of GCCRG and Dacotah are not beneficiaries of this plan until they have a seniority of 5 and 3 years, respectively. When they fulfill such terms, they are 100% beneficiaries of the plan. Additionally, GCCRG, Dacotah, CRM, GCCE, Midco, GCCAC and Alliance have a defined contribution plan which qualifies as a 401(k) plan and covers substantially all of their employees. The Company matches contributions up to 4.0% of their salary paid. Dacotah also has a sick leave plan as described in Note 17. All gains and looses from remeasurements associated with changes in actuarial assumptions and losses are recognized in other comprehensive income for all defined benefit plans and are not reclassified to earnings in future periods. The financial cost component part of the net periodic cost is presented in financial expenses in the consolidated statements of profit.

iii) Compensated absences Costs derived from compensated absences such as vacations and vacation premiums are recognized in a cumulative manner, for which the respective provision is created. iv) Termination benefits Severance payments are recognized when the Company decides to dismiss an employee or when such employee accepts an offer of termination benefits. In Mexico, these benefits include a lump sum equivalent to three months’ salary plus 20 days per year of service in case of unfair dismissal. v) Statutory employee profit sharing (PTU) PTU is recorded in income (loss) for the year in which it is incurred and presented under operating expenses in the

consolidated statements of profit. As a result of the amendments to the law of income tax at December 31, 2016, 2015 and 2014 employee profit sharing is based on the taxable income under Section I of Article 10 of the Law on Income Tax. t) Income taxes

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current income tax

Current income tax (ISR) is recognized in the results of the year in which is incurred.

Deferred income tax

Deferred income tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.

F-59

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized

to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent

that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be

recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the

liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively

enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax for the year Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. u) Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation

at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

1. Onerous contracts

Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract

is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations

under the contract exceed the economic benefits expected to be received from the contract.

F-60

2. Warranties

Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognized at the date

of sale of the relevant products, at the Company’s management best estimate of the expenditure required to settle the

Company’s obligation.

3. Contingent liabilities acquired in a business combination

Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that

would be recognized in accordance with IAS 37 and the amount initially recognized less cumulative amortization recognized in accordance with IAS 18, “Revenues”. v) Financial liabilities and equity instruments Classification as debt or equity Debt and equity instruments issued by a group Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an Company after deducting all of its liabilities. Equity instruments issued by a group company are recognized at the proceeds received, net of direct

issue costs. Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’. Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statements of financial position if, and only if (i) there is currently a legally enforceable right to offset the recognized amounts, and (ii) the intention is to settle on a net basis or to realize the assets and settle the liabilities in a simultaneously amount. Borrowings and interest-bearing loans After initial recognition, interest-bearing loans are subsequently measured at amortized cost using the effective interest rate. Gains and losses are recognized in the consolidated statements of profit and other comprehensive income when the liabilities are derecognized as well as through the amortization process of the effective interest rate.

F-61

Amortized cost is calculated taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. The amortization is included under the caption financial expenses in the consolidated statements of profit and other comprehensive income. Derecognition of financial liabilities

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

A financial liability is no longer recognized when the obligation is fulfilled, canceled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such exchange or modification is treated as non-recognition of the original liability and the recognition of a new liability, and the difference in net values in respective books is recognized in the consolidated statements of comprehensive income. w) Hedge accounting Hedges of net investments in foreign operations The Company designates the net investment of its foreign operations as a cash flow hedge related to the debt denominated in US dollars, so the exchange rate fluctuations arising from such debt are recognized in the effect of translation of foreign operations in other comprehensive income. x) Revenue recognition

Revenue from sale of goods is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar discounts. These revenues should be recognized when they meet each and every one of the following conditions:

- The Company has transferred to the buyer the significant risks and rewards of ownership of the goods. - The Company retains neither continuing managerial involvement to the degree usually associated with

ownership nor effective control over the goods sold. - The amount of revenue can be measured reliably. - It is probable that the economic benefits associated with the transaction will flow to the Company. - The costs incurred or to be incurred in respect of the transaction can be measured reliably.

For the sale of land, the above conditions are usually met when the title of the property is transferred to the buyer. Interest income is recognized when it is probable that the economic benefits will flow to the Company and the amount

of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. Income from other activities than the main operations of the Company are recognized when the revenue has been earned through the delivery of the good or service delivery, provided there is no uncertainty regarding their realization and the goods or services provided have been accepted by customers. y) Earnings per share Net earnings per share result from dividing the consolidated net income attributable to controlling interest for the year by the weighted average of outstanding shares during the year. To determine the weighted average of the outstanding shares, the shares repurchased by the Company are excluded. The Company does not have any instruments with dilutive effects.

F-62

z) Treasury shares The Company recognizes a reserve for repurchase of its own shares and it is shown under the retained earnings in the consolidated financial statements. In the event that the sale price is greater than the cost, the difference is recorded as contributed capital under the additional-paid-in capital caption. aa) Presentation of the consolidated statements of profit The costs and expenses reflected in the consolidated statements of profit of the Company were classified according to their function, in Note 22, costs and expenses by nature are disclosed. The caption Gross profit is presented because

it shows an objective assessment of operating margin, considering the industry in which the Company operates. ab) Segment information Operating segments are defined as components of a Company that develop activities and which economic benefits and results obtained are reviewed by management on a regular basis for decision making. The Company’s management analyzes geographical segment information by country and by product. Consequently, management evaluates the performance of its operating results for Mexico and the United States of America for the following products: cement, ready mix concrete and the rest of the segments are grouped in “Other” (see Note 25). Under the concept "Other" are included products with similar characteristics related to the core business as sale of aggregates, concrete blocks and other building materials. 5. Critical accounting judgments and key sources of estimation uncertainty

In the application of the Company’s accounting policies, which are described in Note 4, the Company’s management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities of the consolidated financial statements. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Critical judgments in applying accounting policies The following are the critical judgments, apart from those involving estimations, that the Company’s management has made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements.

Discount rate used to determine the carrying amount of the Company’s defined benefit obligation The Company’s defined benefit obligation of the Company is discounted at a rate set at market rates of high quality corporate bonds in the absence of a deep market for high quality corporate bonds, is discounted using government bonds. It is required to use professional judgment to establish the criteria for the existence of a deep market for high quality corporate bonds, therefore, the Company performed its assessment considering different markets to Mexico and the United States of America division. Lease classification The Company's management determines the classification of the leases using their judgment and considering the requirements of IAS 17, "Leases". At the date of each reporting period, the Company only has operating leases.

F-63

Key sources of estimation uncertainty The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. a) Useful lives of property, plant and equipment. - The Company reviews the estimated useful life of property, plant and equipment at the end of each annual period. The degree of uncertainty related to the estimated useful lives is related to the changes in the market and the use of assets for production volumes as well as technological developments.

b) Impairment of non-financial assets. - When testing assets for impairment, the Company requires estimating the value in use assigned to property, plant and equipment, and cash generating units. The calculations of value in use require the Company to determine future cash flows generated by cash generating units and an appropriate discount rate to calculate the present value thereof. The Company uses cash inflow projections using estimated market conditions, determination of future prices of products and volumes of production and sale. Similarly, for discount rate and perpetuity growth purposes, the Company uses market risk premium indicators and long-term growth expectations of markets where the Company operates. c) Employee benefits. - The Company’s management uses assumptions to determine the best estimate for these benefits. Such estimates, like the assumptions, are established along with independent actuaries. An actuarial valuation involves the realization of several assumptions, which can be different from the future actual events. These assumptions include, among others, demographic hypothesis, discount rates and expected increases in remunerations and future permanence.

d) Contingencies. - The Company is subject to contingent transactions or events on which it uses professional judgment in the development of estimates of occurrence probability. The factors considered in these estimates are the current legal situation as of the date of the estimate, and the legal advisors’ opinion. e) Deferred income tax. - Deferred tax assets are recognized for all tax loss carry forwards to the extent that management believes that recovery is probable through the generation of future taxable income. 6. Cash and cash equivalents For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash on hand and in banks and investment instruments in the money market as of December 31, 2016, 2015 and 2014 are as follows:

2016 2015 2014

Cash and banks balances $ 2,125,353 $ 1,892,324 $ 1,237,542 Short-term deposits 1,271,515 630,511 549,114

$ 3,396,868 $ 2,522,835 $ 1,786,656

7. Trade accounts receivable and other accounts receivable Balances receivable from customers and allowance for doubtful accounts as of December 31, 2016, 2015 and 2014, are as follows:

2016 2015 2014

Trade accounts receivable $ 1,771,080 $ 1,396,547 $ 1,207,975 Allowance for doubtful accounts ( 252,288) ( 201,904) ( 180,476)

$ 1,518,792 $ 1,194,643 $ 1,027,499

F-64

Movements in the allowance for doubtful accounts are as follows:

2016 2015 2014

Beginning balance $ ( 201,904) $ ( 180,476) $ ( 158,480) Increases during the year ( 86,945) ( 67,993) ( 123,809) Aplication 60,070 60,747 110,766 Translation effect ( 23,509) ( 14,182) ( 8,953)

$ ( 252,288) $ ( 201,904) $ ( 180,476)

The balance of other accounts receivable as of December 31, 2016, 2015 and 2014, are as follows:

2016 2015 2014

Recoverable taxes $ 624,637 $ 556,092 $ 458,325 Other 191,161 97,558 59,666

$ 815,798 $ 653,650 $ 517,991

8. Related parties a) As of December 31, 2016, 2015 and 2014, the accounts receivable from related parties are as follows:

Accounts receivable 2016 2015 2014

Cemex, S.A.B. de C.V. $ 22,144 $ 10,455 $ 59,535 Copachisa, S.A. de C.V. 21,663 7,012 5,718 Inmobiliaria Ruba, S.A. de C.V. 4,813 6,744 8,985 Abastecedora de Fierro y Acero, S.A. de C.V. 4,539 5,778 3,272

$ 53,159 $ 29,989 $ 77,510

Balances due from related parties are considered to be recoverable. Accordingly, for the years ended December 31, 2016, 2015 and 2014, there was no expense resulting from the uncollectibility of balances due from related parties. b) As of December 31, 2016, 2015 and 2014, the accounts payable to related parties are as follows:

Accounts payable 2016 2015 2014

Cemex, S.A.B. de C.V. $ 10,820 $ 7,499 $ 9,365 Madata It, S.A. de C.V. 5,161 5,239 - Abastecedora de Fierro y Acero, S.A. de C.V. 1,015 1,307 2,466

$ 16,996 $ 14,045 $ 11,831

c) During the years ended December 31, 2016, 2015 and 2014, the Company had transactions with related parties, as follows:

Sales of cement and construction materials 2016 2015 2014

Inmobiliaria Ruba, S.A. de C.V. $ 76,259 $ 120,426 $ 89,672 Cemex, S.A.B. de C.V. 53,921 87,900 242,594 Copachisa, S.A. de C.V. 55,277 52,717 17,584 Abastecedora de Fierro y Acero, S.A. de C.V. 28,574 28,460 20,372

$ 214,031 $ 289,503 $ 370,222

F-65

Purchases of inventories and other services 2016 2015 2014

Cemex, S.A.B. de C.V. $ 69,914 $ 67,488 $ 34,459 Abastecedora de Fierro y Acero, S.A. de C.V. 4,983 15,511 9,679 Madata It, S.A. de C.V. 54,625 13,167 -

$ 129,522 $ 96,166 $ 44,138

d) An analysis of employee benefits granted to the Company’s directors and senior management for the years ended December 31, 2016, 2015 and 2014, is as follows:

2016 2015 2014

Short-term direct benefits $ 74,153 $ 66,478 $ 71,933

9. Inventories An analysis of this line item as of December 31, 2016, 2015 and 2014, is as follows:

2016 2015 2014

Finished goods $ 669,046 $ 413,869 $ 413,341 Work in process 253,796 185,013 192,413 Raw materials and spare parts 666,149 564,342 501,142 Developed land for sale 618,290 571,827 528,625

$ 2,207,281 $ 1,735,051 $ 1,635,521

The amount of inventories that was recognized in cost of sales in 2016, 2015 and 2014 amounted to $9,308,188,

$8,316,329 and $7,014,822, respectively. 10. Prepaid expenses An analysis of this line item as of December 31, 2016, 2015 and 2014, is as follows:

2016 2015 2014

Advances to service suppliers $ 168,524 $ 134,432 $ 89,693 Prepaid insurance expenses 62,474 61,920 86,150

$ 230,998 $ 196,352 $ 175,843

11. Investments in associates, joint venture and other investments

An analysis of this line item as of December 31, 2016, 2015 and 2014, is as follows:

% Equity Interest 2016 2015 2014

Associate company: Inmobiliaria Médica de México, S.A. de C.V. 17.48% $ 143,299 $ 133,381 $ 125,472 Joint venture: Madata It, S.A. de C.V. 58.00% 15,062 2,499 - Investment under cost method: Other 2,439 1,938 3,489

$ 160,800 $ 137,818 $ 128,961

F-66

12. Property, plant and equipment An analysis of this line item as of December 31, 2016 is as follows:

December 31,

2015

Additions and

depreciation Disposals Transfers

Business

combination

Translation

effect

December 31,

2016

Property $ 5,225,166 $ 29,170 $ ( 33) $ 20,172 $ 803,968 $ 850,241 $ 6,928,684

Machinery and

equipment 12,330,188 297,042 ( 28,771) 559,999 1,607,331 2,223,202 16,988,991

Vehicles 1,609,256 275,599 ( 162,393) 5,296 334,238 438,305 2,500,301

Furniture and

equipment

390,838

16,112

( 7,468)

4,487

2,372

59,609

465,950 Accumulated

Depreciation ( 8,520,124) (1,124,507) 174,090 - - ( 1,682,306) ( 11,152,847)

Net carrying amount 11,035,324 ( 506,584) ( 24,575) 589,954 2,747,909 1,889,051 15,731,079

Lands 2,095,971 16,323 ( 308) - 357,158 243,748 2,712,892

Investments projects

in process 769,616 446,380 - (589,954) 34,629 72,233 732,904

$ 13,900,911 $ ( 43,881) $ ( 24,883) $ - $ 3,139,696 $ 2,205,032 $ 19,176,875

An analysis of this line item as of December 31, 2015 is as follows:

December 31, 2014

Additions Disposals Transfers Depreciation Translation

effect December 31,

2015

Property $ 4,572,541 $ 28,042 $ - $ 48,256 $ - $ 576,327 $ 5,225,166

Machinery and

equipment 10,306,562 253,944 ( 39,945) 153,997 - 1,655,630 12,330,188

Vehicles 1,248,481 201,246 ( 63,925) 63,863 - 159,591 1,609,256

Furniture and

equipment

319,465

25,312

( 1,254)

6,814

-

40,501

390,838 Acummulated

depreciation ( 6,327,203) - 97,992 - ( 932,651) ( 1,358,262) ( 8,520,124)

Net carrying

amount

10,119,846

508,544

( 7,132)

272,930

( 932,651)

1,073,787

11,035,324 Lands 1,920,783 14,432 ( 1,601) 93 - 162,264 2,095,971

Investments projects in process

708,451

283,626

-

(273,023)

-

50,562

769,616

$ 12,749,080 $ 806,602 $ ( 8,733) $ - $ ( 932,651) $ 1,286,613 $ 13,900,911

An analysis of this line item as of December 31, 2014 is as follows:

December 31, 2013

Additions Disposals Transfers Depreciation Translation

effect December 31,

2014

Property $ 4,176,802 $ 8,448 $ ( 669) $ 11,660 $ - $ 376,300 $ 4,572,541

Machinery and

equipment 9,205,150 166,903 ( 49,081) ( 14,068) - 997,658 10,306,562

Vehicles 990,555 110,298 ( 44,460) 52,264 - 139,824 1,248,481

Furniture and

equipment

265,509

22,253

( 1,536)

7,669

-

25,570

319,465 Acummulated

depreciation ( 4,863,489) - 85,039 - ( 829,630) ( 719,123) ( 6,327,203)

Net carrying

amount

9,774,527

307,902

( 10,707)

57,525

( 829,630)

820,229

10,119,846 Lands 1,818,356 3,633 ( 5,681) 23,963 - 80,512 1,920,783

Investments projects in process

352,201

369,916

-

( 95,669)

-

82,003

708,451

$ 11,945,084 $ 681,451 $ ( 16,388) $ ( 14,181) $ ( 829,630) $ 982,744 $ 12,749,080

F-67

As of December 31, 2016, construction in progress is mainly due to the modification of the "oven 6" in the cement plant of Rapid City, South Dakota for $ 258,338, to various investments in the plants of Rapid City, South Dakota, Tijeras, New Mexico, Pueblo, Colorado, Energy, Durango Colorado for $ 189,155, as well as the implementation of software in Mexico for $ 66,147. In Mexico, the Company has capitalized $ 61,602, corresponding to borrowing costs in the construction of the cement plant in Samalayuca, Chihuahua. At December 31, 2016, 2015 and 2014, the net book value is $ 13,288, $ 15,704 and $ 18,120, respectively. In the United States of America for the years ended December 31, 2016, 2015 and 2014, the Company capitalized

borrowing costs related to the construction of the cement plant in Pueblo, Colorado and expanding its coal mine located in Durango, Colorado, for $ 364,541 (US$ 17,584), $ 320,505 (US$ 18,634) and $ 289,723 (US$ 19,685), respectively. The capitalized borrowing costs are included in the category of property, plant and equipment and depreciated over the useful life of such assets. The balances of construction in progress and capitalized financing costs for the periods ended December 31, 2016, 2015 and 2014, is as follows:

Cumulative amount of

Investment for the acquisition of qualifying

assets

Financing cost

capitalized

Percentage depreciation

Annualized capitalization

rates

Construction in progress 2015 $ 279,391 $ 4,227 3% -5% 2.66% Construction in progress 2014 $ 210,674 $ 1,923 3% -5% 3.08%

The depreciation expense for the years ended December 31, 2016, 2015 and 2014 was $ 1,124,507, $ 932,651 and $ 829,630, respectively. Machinery and equipment includes strategic spare parts of $ 302,687, $ 233,366 and $ 205,483 as of December 31, 2016, 2015 and 2014, respectively. 13. Business combinations a) Subsidiaries established to operate all the acquired assets

Entity name Principal activity

Date of acquisition

Consideration transferred

Consideration transferred

GCC Sun City Materials, LLC.

Sale of ready-

mix concrete, aggregates and

construction material

November 18, 2016

US$ 63,331 $ 1,278,640

GCC Permian, LLC. Sale of cement November 18,

2016 242,826 4,902,609

US$ 306,157 $ 6,181,249

These subsidiaries were established in the United States of America with the purpose of continuing the activities of expansion and strengthening of the operation in that country. Costs related to the acquisition of $ 137,700 were excluded from the consideration transferred and were recognized as an expense in the period, under "other expenses" in the consolidated statement of profit.

F-68

b) Assets acquired and liabilities recognized at the date of acquisition

GCC Sun City Materials, LLC.

GCC Permian, LLC.

Total Total

Current assets Inventories US$ 8,703 US$ 4,562 US$ 13,265 $ 267,817

Non-current assets Property, plant and equipment 57,681 97,828 155,509 3,139,696 Non-compete agreement - 18,845 18,845 380,477

Customer relations - 41,613 41,613 840,157 Operation permits 428 581 1,009 20,372

58,109 158,867 216,976 4,380,702

Total assets 66,812 163,429 230,241 4,648,519

Non-current liabilities Assets retirement obligation 7,462 - 7,462 150,656

Total liabilities 7,462 - 7,462 150,656

Net-asset by business combination US$ 59,350 US$ 163,429 US$ 222,779 $ 4,497,863

c) Goodwill arising on acquisition

GCC Sun City Materials, LLC.

GCC Permian, LLC.

Total Total

Consideration transferred US$ 63,331 US$ 242,826 US$ 306,157 $ 6,181,249 Less: fair value of identifiable net assets acquired 59,350 163,429 222,779 4,497,863

Goodwill arising on acquisition US$ 3,981 US$ 79,397 US$ 83,378 $ 1,683,386

Goodwill arose for the acquired assets of GCC Sun City Materials, LLC. and GCC Permian, LLC relates to the cost of the combination included, principally for a non-compete agreement and customer relations. In addition, the consideration paid for the combination effectively included amounts in relation to the benefits of expected synergies, revenue growth, future market development and the workforce that has gathered. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

d) Impact of acquisitions on the results of the Company The result for the year includes US$ 1,376 attributable to the additional business generated by GCC Sun City Materials, LLC. and US$ 404 attributable to GCC Permian, LLC. Revenue for the period includes US$ 5,822 related to GCC Sun City Materials, LLC. and US$ 7,712 related to GCC Permian, LLC. If business combinations had been made as of January 1, 2016, the Company’s revenue from continuing operations would have been $ 16,262 million, while the result of the year of continuing operations would have been $ 1,402 million.

F-69

14. Goodwill As of December 31, 2016, 2015 and 2014, this line item is as follows:

2016 2015 2014

Beginning balance $ 5,534,419 $ 4,733,273 $ 4,205,720 Business combination 1,683,386 - - Translation effect 1,180,417 801,146 527,553

Ending balance $ 8,398,222 $ 5,534,419 $ 4,733,273

The cash generating units that generated goodwill and their carrying amounts are described as follows:

2016 2015 2014

Concrete division (USA) $ 5,774,838 $ 4,724,456 $ 4,040,451 Cement and energy division (USA) 2,623,384 809,963 692,822

$ 8,398,222 $ 5,534,419 $ 4,733,273

Assessment of goodwill impairment The behavior of the economic and competition trends in the markets where the Company operates have a significant impact in the assessment of goodwill impairment and the determination of recovery values of cash generating units. The total goodwill balance arose from business combinations performed in the United States of America. The following factors are considered to assess the recovery value:

- Market share and expected price levels - Size of the market where the Company operates for purposes of estimating the recoverable values - Behavior of main costs of raw materials and inputs, and the expenses necessary to maintain fixed assets in

operational conditions - The specific discount rate of the country where the Company operates, based on the weighted capital cost

and variables of market conditions as of the measurement date - Estimated perpetuity growth rate

Below are the parameters used to measure the recoverable value of the cash generating units to which goodwill is assigned:

- Cash flow projections of the next five years based on the estimates performed during the last quarter of the fiscal year of the assessment date, considering the budget approved by Management as a base, which includes the last trends known

- A discount rate of the country where the Company operates, which considers specific market risks - Perpetuity growth rate for the business segment and the market where the Company operates

Below are the discount and perpetuity growth rates used for the periods ended December 31, 2016, 2015 and 2014: Rates corresponding to the United States of America market:

2016 2015 2014

Discount rate 8.7% 8.8% 8.1% Perpetuity growth rate 2.4% 2.6% 2.6%

F-70

At December 31, 2016, the Company performed a sensitivity analysis on the impact of a possible increase or decrease of one percentage point in the discount rate and the perpetuity growth rate for the cash-generating units and is as follows:

Cash generating unit

Excess recoverable value over

carrying amount

Impact on decrease or increase in recoverable

Discount rate

Cash generating unit

+ 1% - 1% + 1% - 1%

Concrete division USA

US$ 29,788

US$ ( 62,859)

US$ 86,748

US$ 49,519

US$ ( 35,942)

Cement and energy

division USA 499,990 309,216 758,058 604,524 424,117

15. Intangible assets At December 31, 2016, this item is as follows:

Useful

life December 31,

2015 Investments and

amortization Business

combination Translation

effect December 31,

2016

Coal mining rights $ 24,255 $ 12,697 $ - $ 3,990 $ 40,942 Non-compete

agreements 5 103,234 - 380,477 31,354 515,065

Customer relations 20 - - 840,157 22,539 862,696

Software licenses 5 376,655 327 - 39,320 416,302 Accumulated amortization ( 400,841) ( 38,971) - ( 44,082) ( 483,894)

$ 103,303 $ ( 25,947) $ 1,220,634 $ 53,121 $ 1,351,111

At December 31, 2015, this item is as follows:

Useful

life December 31,

2014 Investments Amortization

Translation effect

December 31, 2015

Coal mining rights $ 21,745 $ - $ - $ 2,510 $ 24,255 Non-compete agreements 88,304 - - 14,930 103,234

Software licenses 5 324,811 23,607 - 28,237 376,655 Accumulated amortization ( 332,813) - ( 31,943) ( 36,085) ( 400,841)

$ 102,047 $ 23,607 $ (31,943) $ 9,592 $ 103,303

At December 31, 2014, this item is as follows:

Useful

life December 31,

2013 Investments Amortization

Translation effect

December 31, 2014

Coal mining rights $ 20,089 $ - $ - $ 1,656 $ 21,745

Non-compete agreements 78,455 - - 9,849 88,304

Software licenses 5 278,282 28,043 - 18,486 324,811

Accumulated amortization ( 271,237) - ( 20,620) ( 40,956) ( 332,813)

$ 105,589 $ 28,043 $ (20,620) $ ( 10,965) $ 102,047

F-71

16. Other assets As of December 31, 2016, 2015 and 2014, this item consists of the following:

2016 2015 2014

Guarantee deposits $ 26,045 $ 24,700 $ 35,046 Long-term accounts and notes receivable 56,714 35,196 40,397 Other assets 56,600 41,563 36,362 Operation permits (Business combination) 20,372 - - Restricted cash 623 515 27,743

$ 160,354 $ 101,974 $ 139,548

Restricted cash consists of cash deposited in an escrow account required by the State of Colorado’s Mined Land Reclamation Board, in the United States of America. 17. Employee benefits Short-term benefits Short-term employee benefits as of December 31, 2016, 2015 and 2014 are as follows:

2016 2015 2014

Salaries and wages payable $ 357,611 $ 252,928 $ 221,351 Vacations and vacation premium 90,355 56,963 38,206 Social security contributions and other taxes 29,324 17,844 26,502 Other benefits 14,985 4,489 10,687

$ 492,275 $ 332,224 $ 296,746

Post-retirement benefit obligation a) Retirement benefits are granted through defined pension plans that cover all workers of the Mexican subsidiaries.

Pensions are determined based on employees’ salaries in their last year of work, seniority in the Company, and their age upon retirement. Seniority premiums are paid to personnel based on the provisions of the Mexican Labor Law.

b) The components of the net cost of the period charged to results for the years ended December 31, 2016, 2015 and

2014, and the employee benefit obligations as of December 31, 2016, 2015 and 2014 are as follows:

Net cost of the year 2016 2015 2014

Mexico $ 32,247 $ 30,737 $ 28,040 United States of America 56,282 48,911 31,173

$ 88,529 $ 79,648 $ 59,213

The employee benefit obligation as of December 31, 2016, 2015 and 2014, is as follows:

Employee benefit obligation 2016 2015 2014

Mexico $ 258,427 $ 266,897 $ 250,337 United States of America 512,577 382,932 327,292

$ 771,004 $ 649,829 $ 577,629

F-72

Balances as of December 31, 2016, are as follows:

Defined benefit obligation (DBO) Seniority premium

Pension plan Total Mexico Pension plan

USA

DBO present value as of January 1, 2016 $ 18,825 $ 248,961 $ 267,786 $ 800,690

Service cost 1,411 13,076 14,487 37,345 Interest cost 1,166 16,594 17,760 18,937

Net cost of the period $ 2,577 $ 29,670 $ 32,247 $ 56,282

Actuarial remeasurement 268 ( 8,361) ( 8,093) 47,898 Benefits paid ( 2,977) ( 29,647) ( 32,624) ( 22,654) Translation effect - - - 164,028

( 2,709) ( 38,008) ( 40,717) 189,272

DBO present value as of December 31, 2016 $ 18,693 $ 240,623 $ 259,316 $ 1,046,244 Fair value of plan assets ( 889) - ( 889) ( 533,667)

Net liability in balance $ 17,804 $ 240,623 $ 258,427 $ 512,577

Plan assets (PA) are recognized at fair value; as of December 31, 2016, the changes to these assets are as follows:

2016 Mexico USA

PA fair value as of January 1, 2016 $ ( 889) $ ( 417,758) Contributions - ( 31,645) Benefits paid - 22,654

Expected return on assets - ( 21,349) Exchange gain - ( 85,569)

PA fair value as of December 31, 2016 $ ( 889) $ ( 533,667)

Balances as of December 31, 2015, are as follows:

Defined benefit obligation (DBO) Seniority premium

Pension plan Total Mexico Pension plan

USA

DBO present value as of January 1, 2015 $ 17,534 $ 233,692 $ 251,226 $ 685,042

Service cost 1,337 12,946 14,283 34,138 Interest cost 1,092 15,362 16,454 14,773

Net cost of the period $ 2,429 $ 28,308 $ 30,737 $ 48,911

Actuarial remeasurement 3,219 6,719 9,938 ( 34,474) Benefits paid ( 4,357) ( 19,758) ( 24,115) ( 14,746) Translation effect - - - 115,957

$ ( 1,138) $ ( 13,039) $ ( 14,177) $ 66,737

DBO present value as of December 31, 2015 18,825 248,961 267,786 800,690 Fair value of plan assets ( 889) - ( 889) ( 417,758)

Net liability in balance $ 17,936 $ 248,961 $ 266,897 $ 382,932

F-73

Plan assets (PA) are recognized at fair value; as of December 31, 2015, the changes to these assets are as follows:

2015 Mexico USA

PA fair value as of January 1, 2015 $ ( 889) $ ( 357,750) Contributions - ( 15,038) Benefits paid - 14,746 Expected return on assets - 774 Exchange gain - ( 60,490)

PA fair value as of December 31, 2015 $ ( 889) $ ( 417,758)

Balances as of December 31, 2014, are as follows:

Defined benefit obligation (DBO) Seniority premium

Pension plan Total Mexico Pension plan

USA

DBO present value as of January 1, 2014 $ 15,313 $ 208,426 $ 223,739 $ 439,160

Service cost 1,185 11,052 12,237 23,006 Interest cost 1,085 14,718 15,803 8,167

Net cost of the period $ 2,270 $ 25,770 $ 28,040 $ 31,173

Actuarial remeasurement 1,111 22,889 24,000 173,627 Benefits paid ( 1,160) ( 23,393) ( 24,553) ( 13,938) Translation effect - - - 55,020

$ ( 49) $ ( 504) $ ( 553) $ 214,709

DBO present value as of December 31, 2014 17,534 233,692 251,226 685,042 Fair value of plan assets ( 889) - ( 889) ( 357,750)

Net liability in balance $ 16,645 $ 233,692 $ 250,337 $ 327,292

Plan assets (PA) are recognized at fair value; as of December 31, 2014, the changes to these assets are as follows:

2014 Mexico USA

PA fair value as of January 1, 2014 $ ( 825) $ ( 294,280) Contributions ( 64) ( 22,121) Benefits paid - 13,938 Expected return on assets - ( 17,720) Exchange gain - ( 37,567)

PA fair value as of December 31, 2014 $ ( 889) $ ( 357,750)

F-74

The fair value of pension plan assets of the Company’s USA subsidiaries as of December 31, 2016, 2015 and 2014 is as follows:

2016 2015 2014

Cash equivalents $ 21,166 $ 11,477 $ 18,780 Common shares: USA companies 275,935 218,110 194,307 International companies 62,547 49,469 44,625

Level 1 $ 359,648 $ 279,056 $ 257,712

Debt securities:

Common funds: $ 72,042 $ 32,813 $ 25,094 USA government bonds 59,955 81,094 53,456 Corporate bonds 37,814 23,057 19,678 Foreign obligations 4,208 1,738 1,810

Level 2 $ 174,019 $ 138,702 $ 100,038

Total $ 533,667 $ 417,758 $ 357,750

Level 1. - Quoted prices in active markets for identical assets Level 2. - Significant other observable inputs Fixed income consists of corporate bonds, government securities, and fixed income share funds. Government securities are measured by third party pricing sources. Corporate bonds are measured using either the yields currently available on comparable securities of issuers with similar credit ratings or using a discounted cash flows approach that utilizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such credit and liquidity risks. Fixed income share funds are measured at the net asset value per share

multiplied by the number of shares held as of the measurement date. Hedge funds are investments structures that pursue a diverse array of investments strategies with a wide range of different securities and derivatives instruments. The most significant assumptions selected in the determination of net cost of the period are as follows:

Actual rates 2016 2015 2014

Mexico

Discount rates 7.50 % 6.75 % 6.75 % Salary increase rate 4.50 % 4.50 % 4.50 % United States of America

Discount rates 4.24 % 4.00 % 3.89 % Salary increase rate 4.00 % 4.00 % 4.00 %

The liability for employee benefits is sensitive to the movement of interest rates used to discount the obligations, then a sensitivity analysis is presented in scenarios of increase and decrease of 1% in the discount rate and salary increase, assuming that all other actuarial assumptions are unchanged:

Sensitivity Analysis Mexico USA

DBO present value $ 259,316 $ 1,046,244 + 1% Discount rate ( 24,803) 144,812 - 1% Discount rate 29,103 ( 183,999)

F-75

The expected payments related to the corresponding obligations for subsequent years are as follows:

Mexico USA

2017 $ 9,698 $ 31,014 2018 2,149 31,802 2019 12,029 35,658 2020 33,763 38,975

2021 – 2026 200,788 375,128

$ 258,427 $ 512,577

Plan assets in the United States of America: The Company’s investment policy for its pension plan is to balance risk and return using a diversified portfolio consisting primarily of high-quality equity and fixed-income securities. Plan assets are managed by outside investment managers. Dacotah’s Employee Pension Plan Committee provides oversight of the plan investments and the performance of the investments managers. Equity securities consist of publicly traded U.S. companies and international companies. Publicly traded equities are valued at the closing prices reported in the active market in which the individual securities are traded. These investments are made through funds-of-funds (commingled, multi manager fund structures) and through direct investments in individual hedge funds. Hedge funds are primarily valued by each fund’s third party administrator based upon the valuation of the underlying securities and instruments and primarily by applying a market or income valuation methodology as appropriate depending on the specific type of security or instrument held. Funds-of-funds are valued

based upon the net asset values of the underlying investments in hedge funds. The Company’s funding policy in the United States of America: The Company funds its pension plan and no contributions are made by employees. The Company funds the plan annually by making a contribution of at least the minimum amount required by applicable regulations and as recommended by the Company’s actuary. However, the Company also may fund the plan in excess of the minimum required amount. Cash contributions in subsequent years will depend on a number of factors including performance of plan assets. 401 (K) Plans GCCRG, GCC Dacotah, CRM, GCCE, Midco, GCCAC and Alliance have defined contribution benefit plans (the Plans), which qualify as 401 (K) plans. The Plans are available to substantially all employees. The Company matches contributions up to 4.0% of their salary paid. The Company’s contributions to the plans recorded in the consolidated statements of profit for the years ended of December 31, 2016, 2015 and 2014 amounted to $ 31,934 (US$ 1,885), $ 32,375 (US$ 1,883) and $ 24,844 (US$ 1,688), respectively. Incentive Bonus Plan The Company has an incentive bonus plan. At December 31, 2016, 2015 and 2014, the Company has accrued, $ 102,519 (US$4,945), $ 65,471 (US$ 3,805) and $ 53,853 (US$ 3,659) to this effect, respectively. Sick Leave Plan Dacotah has a sick leave plan, which pays employees for 25% of their unused sick leave at their current pay rate, not to exceed 550 hours in total, per employee.

F-76

18. Financial instruments Capital management The objectives of the Company's capital management is primarily focused on ensuring that the financial requirements are met to continue as a going concern and to meet its growth objectives in order to maximize profits for shareholders and provide the benefits for other stakeholders and to maintain an optimal capital structure. The Company manages the capital structure and makes adjustments considering the changes in economic conditions, its business, investment and growth plans and risk characteristics of the underlying assets.

The Company's management reviews monthly the ratios of financial debt and interest expense to the operation flow (EBITDA, equals to operating income before other expenses plus depreciation and amortization) for the purposes of complying with contract requirements and to maintain net debt and interest rate hedging ratios. The Company's overall strategy remains unchanged from 2015. Gearing ratio The gearing ratio for the reporting period is as follows:

2016 2015 2014

Financial debt (i) $ 14,297,309 $ 7,528,999 $ 6,837,465 Cash and banks 3,396,868 $ 2,522,835 $ 1,786,656

Net debt 10,900,441 $ 5,006,164 $ 5,050,809

Stockholders' equity (ii) $ 18,057,329 $ 14,731,525 $ 13,528,376

Net debt to equity ratio 60% 34% 37%

(i) Debt is defined as long and short term loans, as describe in Notes 4.v and 18. (ii) Stockholders' equity includes all reserves and capital stock of the Company that are managed as capital.

The Company's management considerated the increase the gearing ratio will not affect its operation, as it arose from

the Business Combination (See Note 13) and will results in increases in its operating income net and in its cash flows. Financial instruments category

2016 2015 2014

Financial assets: Cash and held-to-maturity investments $ 3,396,868 $ 2,522,835 $ 1,786,656 Loans and accounts receivable 1,518,792 1,194,643 1,027,499 Financial liabilities at amortized cost: Payables and financial debt $ 14,297,309 $ 7,528,999 $ 6,837,465

Financial risk management objectives The Company Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk, liquidity risk and risk of interest rate of the cash flow. The Corporate Treasury function applies the policies authorized by the Board of Directors to mitigate risk exposures.

F-77

The main risks associated with the financial instruments of the Company are:

- Market risks - Credit Risk - Liquidity Risk

The Board of Directors, upon recommendation from the Audit and Corporate Practices Committee, reviews and approves the risk management policies of the Company. For the years ended December 31, 2016, 2015 and 2014, the Company has not retained any derivative financial instrument.

i) Market Risk: interest rate GCC is exposed to market risk primarily related to fluctuations in the exchange rate and interest rates. Considering that the Company's total financial debt is denominated in US dollars and 63% is subject to variable interest rates, the volatility of interest rates in the markets of the United States of America and Mexico may adversely affect the results of the Company, increasing its financial expenses, and impacting the liquidity and capacity of the Company to meet its principal and interest payment obligations. Exposure to interest rate risk lies mainly in variations that may arise in the interest rates of reference, LIBOR (London Interbank Offered Rate). Sensitivity analysis of the risk of increases on interest rates The Company analyzes the sensitivity to the exposure of volatility of interest rates in relation to financial liabilities contracted at variable interest rates at end of period. The Company considers that a change of one percentage point

is a reasonable assumption to measure the possible effect in its results. As of December 31, 2016, a change of ± 1 percentage point in interest rates, assuming that the other assumptions remain constant, would annually increase or decrease financial expenses before taxes by approximately US$ 2.16 million.

ii) Market Risk: Foreign currency The Company’s exposure to the volatility of the Mexican peso exchange rate against the U.S. dollar is shown as follows as of December 31, 2016, 2015 and 2014, for the items in the consolidated financial statements.

2016 2015 2014

Financial assets US$ 13,562 US$ 10,535 US$ 15,733 Financial liabilities ( 733,443) ( 478,573) ( 500,137)

Short, net position US$ ( 719,881) US$ ( 468,038) US$ ( 484,404)

As mentioned in Note 4, the Company designates net investment in a foreign operation as cash flow hedge, whereby

the exchange fluctuations arising from financial debt denominated in U.S. dollars, associated to acquisition of subsidiaries in the United States of America, is recognized in other comprehensive income.

F-78

The following table shows an analysis of sensitivity of the financial assets and liabilities at a possible fluctuation of the Mexican peso compared to the U.S. dollar, showing the effects in the consolidated statements of profit and stockholders´equity as of December 31, 2016, 2015 and 2014:

Sensitivity analysis: Results Equity (1)

2016

Mexican peso appreciation 10% $ 43,878 $ 1,429,731 Mexican peso depreciation 10% ( 43,878) (1,429,731)

2015

Mexican peso appreciation 10% $ 36,701 $ 752,900 Mexican peso depreciation 10% ( 36,701) ( 752,900)

2014

Mexican peso appreciation 10% $ 20,440 $ 683,747 Mexican peso depreciation 10% ( 20,440) ( 683,747)

(1) The effect of the resulting devaluation of financial long-term debt will be offset by the effect of the revaluation or

appreciation or depreciation of foreign investment since the investment is considered as a hedge of cash flows as previously mentioned.

The Company assumes that a 10% change in the exchange rate is reasonably possible for purposes of performing the sensitivity analysis.

iii) Credit risk Credit risk represents the potential loss due to the failure of the counterparty to meet all its payment obligations. Financial instruments which could potentially bind the Company to significant credit risk are cash and cash equivalents and accounts receivable. Cash and cash equivalents of the Company are held in various financial institutions with high credit quality. The Company’s policy is designed to limit its exposure to any single financial institution or counterparty. The credit risk on accounts receivable is diversified because the Company has a broad customer base that is geographically dispersed in both Mexico and the United States. At December 31, 2016, 2015 and 2014, no individual customer represents a significant amount of reported net sales or accounts receivable balance. The Company periodically evaluates the creditworthiness of its customers and, if necessary, guarantees are required from them to ensure the recovery of receivables. The carrying amount of financial assets represents the maximum credit exposure to the same reporting date is as follows:

2016 2015 2014

Cash and cash equivalents $ 3,396,868 $ 2,522,835 $ 1,786,656 Accounts receivable 1,518,792 1,194,643 1,027,499 Other receivables 815,798 653,650 517,991

F-79

Cash and cash equivalents An analysis of the credit ratings of financial institutions where the Company maintains cash and cash equivalents at the close of each period is as follows:

As of December 31, 2016 2015 2014

A rating institutions $ 1,852,021 $ 1,716,735 $ 269,096 AA- rating institutions 313,930 - 887,552 A+ rating institutions 11,549 24,933 -

AA rating institutions 43,564 29,820 - MXAAA rating institutions 40,362 48,906 93,552 MXA+ rating institutions 22,838 17,217 534,407 MXAA rating institutions - 56,217 - MXAA- rating institutions 938,895 606,067 - MXAA+ rating institutions 63,185 - - Not applicable 110,524 22,940 2,049

$ 3,396,868 $ 2,522,835 $ 1,786,656

Trade accounts receivable Below is an analysis of the aging of trade accounts receivable as of December 31, 2016, 2015 and 2014:

Year Unmatured

Maturity:

Total 1–30 days

31– 60 days

61- 90 days

91- 120 days

Over 121 days

2016 $ 921,928 $ 375,582 $ 161,140 $ 66,241 $ 37,214 $ 203,975 $ 1,771,080 2015 $ 811,316 $ 259,082 $ 101,316 $ 68,420 $ 41,703 $ 114,710 $ 1,396,547 2014 $ 715,691 $ 189,033 $ 87,122 $ 59,395 $ 37,715 $ 119,019 $ 1,207,975

i) Liquidity risk

Cash generated from operations is used to make debt payments and capital expenditures. The management of the Company administers liquidity and establishes adequate working capital policies to manage the short, medium and long-term financing. The Company handles liquidity risk by maintaining adequate reserves, banking facilities and authorized credit lines to obtain credits through continuous monitoring of actual and projected cash flows, and reconciling the maturity profiles of financial assets and liabilities. The contractual maturities of financial debt instruments as of December 31, 2016, are shown in the following table:

Line item Contractual maturities:

Total 1-3 months

3 months to 1 year 1-5 years Over 5 year

Financial debt $ 7,256 $ 72,560 $ 12,314,736 $ 2,128,581 $ 14,523,133 Interest $ 247,397 $ 659,168 $ 2,711,418 $ 100,589 $ 3,718,572

As of December 31, 2016, 2015 and 2014, the Company had access to financing facilities for $ 310,971 (US$ 15,000) in process of formalization, $ 258,097 (Dls. 15,000) and $ 344,130 (US$ 20,000), respectively, which were undrawn at the end of both years. Additionally, at December 31, 2016, 2015 and 2014, the Company had letters of credit in the United States Division for $ 215,607 (US$ 10,400), $ 178,947 (US$ 10,400) and $ 175,506 (US$ 10,200), respectively, which are primarily used to ensure payment of deductibles in connection to insurance programs of the Company in the United States and as collateral for bonds issued in the United States as well.

F-80

a) Fair value of financial instruments Except as for the detail in the following table, management believes that the carrying amounts of assets and liabilities recognized at amortized cost in the financial statements, approximates their fair value given their short-term maturities. The fair value of financial instruments presented below has been determined by the Company using available market information or other valuation techniques that require judgment in developing and interpreting the estimates of fair values, and also uses assumptions based on market conditions existing at each of the dates in the consolidated statements of financial position.

The fair value of the Company’s international bonds included in this disclosure in the following table is determined considering the market price of the instrument prevailing at the date of the consolidated statements of financial position, while borrowings with banks was estimated using the present value of cash flows discounted at market rates as of December 31 of each year. Their book values and their fair values as of December 31, 2016, 2015 and 2014 are as follows: Financial liabilities recognized at amortized cost:

Carrying amount Fair value

December 31, 2016 $ 14,523,133 $ 14,951,324 December 31, 2015 $ 7,753,423 $ 7,986,026 December 31, 2014 $ 7,072,221 $ 7,254,830

b) Debt and long-term financial debt (i) As of December 31, 2016, 2015 and 2014, the financial debt is as follows:

As of December 31, 2016 Maturities

Loans Currencies Interest rates Amounts Current portion

of long-term debt

Long-term debt

International bond

7 years U.S. Dollar 8.125% $ 5,390,163 $ - $ 5,390,163

Unsecured Credit

Tranche “A” 7 years

U.S. Dollar LIBOR + 4.75% 3,560,618 - 3,560,618

Tranche “B” 5 years

U.S. Dollar LIBOR + 4.50% 1,687,536 72,560 1,614,976

Guaranteed Credit

Tranche “A” 7 years

U.S. Dollar LIBOR + 4.75% 2,635,465 - 2,635,465

Tranche “B” 5 years

U.S. Dollar LIBOR + 4.50% 1,197,004 - 1,197,004

Other

Other U.S. Dollar Various 52,347 7,256 45,091

Issuance costs ( 225,824) - ( 225,824)

$ 14,297,309 $ 79,816 $ 14,217,493

F-81

As of December 31, 2015 Maturities

Loans Currencies Interest rates Amounts Current portion

of long-term debt

Long-term debt

International bond

7 years U.S. Dollar 8.125% $ 4,473,690 $ - $ 4,473,690

Syndicated loan

Several Banks 5 years

U.S. Dollar LIBOR + 2.50% (margin range: 2.50% - 1.75%)

2,807,757 98,765 2,708,992

Several Banks 5 years

Mexican Peso TIIE + 2.50%

(Margin range: 2.50% - 1.75%)

471,976 16,708 455,268

Issuance costs ( 224,424) - ( 224,424)

$ 7,528,999 $ 115,473 $ 7,413,526

As of December 31, 2014 Maturities

Loans Currencies Interest rates Amounts Current portion

of long-term debt

Long-term debt

International bonds

7 years U.S. Dollar 8.125% $ 3,826,680 $ - $ 3,826,680

Syndicated loan

Several Banks 5 years

U.S. Dollar LIBOR + 4.50% (margin range: 5.00% - 2.75%)

2,730,557 633,610 2,096,947

Several Banks 5 years

Mexican Peso TIIE + 4.50%

(Margin range: 5.00% - 2.75%)

514,670 119,425 395,245

Other

Other U.S. Dollar Various 314 314 -

Issuance costs ( 234,756) - ( 234,756)

$ 6,837,465 $ 753,349 $ 6,084,116

(ii) In November 2016, the Company prepaid the syndicated loan contracted in 2015, with the proceeds from a new loan guaranteed by US$ 184,863 integrated with a tranche by US$ 127,124 with a maturity of seven years and a tranche for US$ 57,739 with a five-year maturity, at LIBOR interest rates plus a margin of 4.75% for the seven-year tranche and LIBOR plus a margin of 4.50% for the five-year tranche. The Company also contracted a loan not guaranteed by US$ 253,500, to finance the assets acquired, integrated with a tranche per US$ 171,750 with a maturity of seven years and a tranche for US$ 81,750 with a five-year maturity, at LIBOR interest rates plus a margin of 4.75% for the seven-year tranche and LIBOR plus a margin of 4.50% for the five-year tranche. Both credits were contracted with a national credit institution.

F-82

In February 2017, the holder of the unsecured and guaranteed credits ceded the rights and obligations of the creditor in respect of the tranche "B" by US$ 57,739 of the guaranteed credit and the tranche "B" by US$ 81,400 of the unsecured credit. This assignment was distributed among five financial institutions. With this assignment, the Company reduced the applicable interest rate, as the additional margin on the benchmark interest rate for both tranches changed from a fixed margin of 4.50% per annum, to a margin ranging from 3.75% to 2.00 % per annum and which is reduced or increased according to the decrease or increase of the Net Leverage Ratio, respectively. (iii) Loan agreements establish specific clauses relating to the sale of assets, investments, additional financing and debt payments, as well as the obligation to maintain certain specific financial ratios (net financial leverage ratio and net interest), which in case of non-compliance, would lead to a breach of contract allowing the creditor to require the

advance payment of the corresponding loan. As of December 31, 2016, the Company has complied with these conditions. The financial reasons required and / or permitted by the contracts for the period ended December 31, 2016 are as follows:

2016 Required / Permited

Net leverage (1) 2.57 4.00 Interest coverage (2) 7.06 3.50

(1) Net leverage - means the number of times net debt (debt with cost) less cash on EBITDA.

(2) Interest coverage - means the number of times EBITDA on financial expenses. For the year ended December 31, 2016, the weighted average interest rate of the senior secured international bond was 8.125% the weighted average interest rate of the prepaid syndicated loan was 3.60% and the weighted average interest rate of the current syndicated loan as of December 31, 2016 was 5.61%.

The Company’s subsidiaries, GCC Cemento, S.A. de C.V., Cementos de Chihuahua, S.A. de C.V and GCC of America, Inc., are guarantors for both loans and the shares thereof were pledged as collateral. This commitment will be released when the international bond is settled or refinanced without guarantees. 19. Accrued expenses and taxes other than income taxes and provisions

a) Accrued expenses and taxes other than income taxes Accrued expenses and taxes other than income taxes as of December 31, 2016, 2015 and 2014, are as follows:

2016 2015 2014

Taxes payable $ 651,462 $ 398,646 $ 286,675 Other accounts payable 164,262 229,065 151,070 Interest payable 228,722 146,522 122,948

$ 1,044,446 $ 774,233 $ 560,693

b) Provisions

2016 2015 2014

Beginning balance $ 99,230 $ 70,272 $ 56,033 Increase during the year 140,752 155,114 151,370 Payments made ( 136,131) ( 128,098) ( 138,188) Translation effect 3,116 1,942 1,057

Ending balance $ 106,787 $ 99,230 $ 70,272

F-83

c) Restoration provisions The Mining Law of the State of New Mexico in the USA requires the Company to incur costs to restore operations affected by raw material extraction where the plant is located at the end of operations in the same area. Measures are planned for the incremental implementation of the plan and simultaneously over a period of forty years, with more than half of it being disturbed recovered during the operational life of the plan area. The Company has recognized a long-term provision for the estimated costs to incur for site restoration at present value, using appropriate discount rates. Additionally, for Mexico division there is an obligation under the General Law of Ecological Equilibrium and

Environmental Protection which states that whoever carries out activities that affect the environment is required to prevent, minimize or repair damage involved. The Act establishes the obligation to perform environmental impact assessments. At December 31, 2016, 2015 and 2014, Mexico division has recognized a provision of $ 15,598, $ 11,673 and $ 9,274, respectively, for such restoration activities. Movements in the provision for restoration are as follows:

Balance as of January

1, 2016

Arising (decrease) during the

period

Interest cost

Business combination

Translation effect

Balance as of December 31,

2016

Restoration provision $ 74,761 $ ( 67,882) $ 5,090 $ 150,656 $ 14,829 $ 177,454

Balance as of

January 1, 2015

Arising (decrease) during the

period

Interest cost Translation

effect Balance as of December 31,

2015

Restoration provision $ 57,188 $ 3,541 $ 4,391 $ 9,641 $ 74,761

Balance as of

January 1, 2014

Arising (decrease) during the

period

Interest cost Translation

effect Balance as of December 31,

2014

Restoration provision $ 56,355 $ - $ - $ 833 $ 57,188

20. Income taxes The Company is subject to income tax whose rate is 30%. ISR caused the Company on a consolidated basis until 2013 with its Mexican subsidiaries. Because the Income Tax Law in force was repealed until December 31, 2013, the tax consolidation regime was removed, therefore, the Company and its subsidiaries have the obligation to pay the deferred tax determined at that time for the next ten years from 2014, as shown below. Income taxes of subsidiaries in the

United States are determined on the basis of consolidation directly held by GCC of America, Inc. While the 2014 Tax Law repealed the tax consolidation regime, an option was established to calculate the ISR together in groups of companies (under the tax integration regimen). The new system allows for the case of consolidated companies owned directly or indirectly more than 80% for an inclusive society, have certain benefits in the tax payment (when within the group of companies there are companies with profits or losses in the same year ), which may differ for three years and reported, as updated, at the filing date of the tax declaration corresponding to the tax year following the completion of the aforementioned three-year period.

The Company and its mexican subsidiaries opted to join the new scheme, so income tax for the year 2016, 2015 and

2014 was determined together.

F-84

Pursuant to Transitory Article 9, section XV, subsection d) of the 2014 Tax Law, and given that as of December 31, 2013, the Company was considered to be a holding company and was subject to the payment scheme contained in Article 4, Section VI of the transitory provisions of the ISR law published in the Federal Official Gazette on December 7, 2009, or article 70-A of the ISR law of 2013 which was repealed, it must continue to pay the tax that it was deferred under the tax consolidation scheme in 2007 and previous years based on the aforementioned provisions, until such payment is concluded. The following are the tax rates on taxable income in countries where the Company mainly operates:

Country 2016 2015 2014

Mexico 30% 30% 30% United States of America 38% 38% 38%

a) For the years ended December 31, 2016, 2015 and 2014, income tax charged to results is as follows:

2016 2015 2014

Current ISR $ ( 160,430) $ ( 146,832) $ ( 50,698) Deferred ISR ( 147,764) ( 22,822) 8,003

Total income taxes $ ( 308,194) $ ( 169,654) $ ( 42,695)

b) Deferred taxes in the consolidated statements of financial position The main items comprising the deferred income taxes are:

Mexico December 31,

2016 December 31,

2015 December 31,

2014

Deferred tax assets: Provisions and allowances $ 466,272 $ 282,233 $ 177,702 Customer advances and other 38,328 39,520 43,014 Tax loss carry forwards 2,465,452 2,181,934 1,848,666

2,970,052 2,503,687 2,069,382

Deferred tax liabilities: Property, plant and equipment ( 1,630,440) ( 1,534,811) ( 812,812) Inventories ( 15,814) ( 14,792) ( 16,805) Prepaid expenses and other ( 85,870) ( 90,247) ( 84,047)

( 1,732,124) ( 1,639,850) ( 913,664)

Deferred income tax asset $ 1,237,928 $ 863,837 $ 1,155,718

USA December 31,

2016

December 31,

2015

December 31,

2014

Deferred tax asset: Provisions and allowances $ 580,962 $ 455,612 $ 384,903 Tax loss carry forwards 1,566,949 1,384,510 1,206,641

2,147,911 1,840,122 1,591,544

Deferred tax liability: Property, plant and equipment ( 3,345,705) ( 2,627,640) ( 1,748,818) Prepaid expenses ( 45,086) ( 31,526) ( 76,189)

( 3,390,791) ( 2,659,166) ( 1,825,007)

Deferred income tax liability $ (1,242,880) $ ( 819,044) $ ( 233,463)

F-85

Switzerland December 31,

2016 December 31,

2015 December 31,

2014

Deferred tax liability: Accounts receivable $ ( 209,594) $ ( 98,740) $ ( 79,391)

Deferred income tax liability $ ( 209,594) $ ( 98,740) $ ( 79,391)

Total deferred income tax liability

$ (1,452,474)

$ ( 917,784)

$ ( 312,854)

c) The main items for which the sum of the current income tax and deferred income tax for the period differs from the

statutory rate are as follows:

December 31, 2016

December 31, 2015

December 31, 2014

Income before income tax $ 1,592,384 $ 1,085,145 $ 604,939 Statutory rate 30% 30% 30%

Statutory income taxes ( 477,715) ( 325,544) ( 181,482)

Other items: Non-deductible expenses ( 14,619) ( 11,108) ( 5,487) Adjustment for inflation ( 51,730) ( 25,340) ( 33,221) Change in probability of recovering tax loss carryforwards

( 107,539)

2,918

( 23,226)

Effects of inflation and other items 169,139 63,448 80,656 Effect of different tax rates in effect in foreign

companies

174,270

125,972

120,065

Tax benefit 169,521 155,890 138,787

Income taxes $ ( 308,194) $ ( 169,654) $ ( 42,695)

d) As of December 31, 2016, the Company’s tax loss carryforwards, are as follows:

Mexico United States of America

Year of loss Amount restated as of December

31, 2016

Effect on deferred

income tax

Amount as of December 31,

2016

Effect on deferred

income tax

2018 $ 664,651 $ 199,395 $ - $ - 2019 254,623 76,387 - - 2020 887,317 266,195 1,216,797 425,879

2021 1,791,814 537,544 1,072,769 375,469 2022 19,224 5,767 1,330,789 465,776 2023 524,900 157,470 930,520 325,682 2024 2,045,573 613,672 49,587 17,355 2025 3,187,113 956,134 - - 2026 190,222 57,067 - -

$ 9,565,437 $ 2,869,631 $ 4,600,462 $ 1,610,161 USA state tax loss 116,023 Unrecognized deferred taxes ( 1,347,263) ( 404,179) ( 454,957) ( 159,235)

Recognized deferred tax asset $ 8,218,174 $ 2,465,452 $ 4,145,505 $ 1,566,949

F-86

e) Tax consolidation The income tax liability as of December 31, 2016 related to the effects of benefits and tax deconsolidation will be paid in the following years:

Year Amount

2017 $ 124,089 2018 229,727 2019 196,922

2020 and beyond 382,989

$ 933,727

The balance of accrued expenses and taxes other than income taxes as of December 31, 2016 as shown in the consolidated statements of financial position include $ 124,089 corresponding to the liability of income tax to be paid during 2017. The remaining amount of $ 809,638 is presented in long-term liabilities. 21. Stockholders’ equity a) As December 31, 2016, 2015 and 2014, common stock is variable and its fixed minimum capital with no right to withdrawal is $ 134,960, represented by 337,400,000 common registered shares with no par value and is summarized as follows:

Shares Amount

Authorized and issued capital 337,400,000 $ 134,960 Shares repurchased ( 4,864,492) ( 487)

332,535,508 $ 134,473

b) According to the General Law of Commercial Companies, the net income for the year must be separated by at least 5% to increase the legal reserve until it reaches 20 % of share capital. c) If the Company pays dividends that come from the Net Tax Profit Account (CUFIN), the Company shall not be liable to pay income tax. However, this balance can be applied only once the balance of the Net Reinvested Tax Profit Account (CUFINRE). Of dividends arising from CUFINRE, 5% will be paid for those for years 2001 and 2000, and 3% for 1999. The distributed of dividends in excess of CUFIN will be subject to ISR by the Company at the current tax rate at that time. d) In an ordinary general meeting of the shareholders held on April 29, 2016, a payment of dividends was declared for $ 171,588 ($0.51 pesos per share). e) In an ordinary general meeting of the shareholders held on April 30, 2015, a payment of dividends was declared for $ 142,990 ($0.43 pesos per share). f) In an ordinary general meeting of the shareholders held on April 30, 2014, a payment of dividends was declared for $ 124,700 ($0.38 pesos per share).

F-87

g) The balance of the cumulative translation effect of foreign subsidiaries as of December 31, 2016, 2015 and 2014 is as follows:

2016 2015 2014

Initial balance $ 1,375,323 $ 961,850 $ 60,849 Conversion effect of the year 3,379,223 1,148,815 1,409,222 Net investment coverage in foreign operations ( 1,631,268) ( 1,050,488) ( 726,030) Income taxes 489,380 315,146 217,809

Final balance of effect for conversion of foreign operations $ 3,612,658 $ 1,375,323 $ 961,850

h) The balance of remeasurements of actuarial liabilities associated with the Company's defined benefit plans and the related deferred income tax effect as of December 31, 2016, 2015 and 2014 is as follows:

2016 2015 2014

Beginning balance of remeasurement gains and losses $ ( 133,353) $ ( 150,528) $ ( 12,189)

Remeasurement gains and losses of the period ( 39,805) 24,536 ( 197,627) Deferred income tax 11,942 ( 7,361) 59,288

Ending balance $ ( 161,216) $ ( 133,353) $ ( 150,528)

Cumulative amount (g) + (h) $ 3,451,442 $ 1,241,970 $ 811,322

22. Cost of sales and operating expenses by nature a) Cost of sales An analysis of cost of sales as of December 31, 2016, 2015 and 2014, is as follows:

2016 2015 2014

Employee benefits $ 2,710,425 $ 2,351,261 $ 2,015,863 Raw materials cost 3,098,919 2,511,693 2,179,408 Energy cost 950,672 839,192 681,757 Distribution expenses 1,172,969 1,095,006 978,237 Depreciation 898,010 757,763 668,072 Maintenance expenses 909,275 853,958 756,556 Overhead expenses 483,515 665,219 403,001

$ 10,223,785 $ 9,074,092 $ 7,682,894

b) General, administrative and selling expenses An analysis of operating expenses as of December 31, 2016, 2015 and 2014 is as follows:

2016 2015 2014

Employee benefits $ 489,883 $ 422,425 $ 396,714 Depreciation and amortization 265,468 206,831 182,177 Professional services 156,454 53,649 40,183 Other expenses 494,240 547,089 513,860 Advertising 4,872 5,178 4,540

$ 1,410,917 $ 1,235,172 $ 1,137,474

F-88

c) Employee benefit expenses Employee benefit expenses as of December 31, 2016, 2015 and 2014, are as follows:

2016 2015 2014

Salaries and wages $ 1,793,989 $ 1,528,272 $ 1,265,409 Employee benefits from retirement 121,794 125,313 87,141 Social security contributions 229,340 206,825 168,393 Social welfare 287,272 234,194 231,525 Social prevision and other benefits 767,913 679,082 660,109

$ 3,200,308 $ 2,773,686 $ 2,412,577

23. Other expenses Other operating expenses as of December 31, 2016, 2015 and 2014 are as follows:

2016 2015 2014

Charitable contributions $ 15,400 $ 10,075 $ 11,102 Business combination 137,700 - - Impairment of plant and equipment - - 13,688 Restoration provision cancellation ( 57,600) - - Loss on sale of fixed assets 23,301 - - Impairment of exploration costs - - 41,533 Restructuring costs - 15,217 -

$ 118,801 $ 25,292 $ 66,323

On November 18, 2016, the Company acquired certain net assets of Cemex, S.A.B. Of C.V. ("Cemex") located in the United States of America, for which it incurred various expenses in order to realize such acquisition, which amounted to $ 137,700. At December 31, 2016, the Company requested a modification of the State's permit for its Tijeras, New Mexico plant, which had as its purpose to increase the mining area and the territorial reserves. In addition, a new closure plan was presented to the State, which considered an increase in the life of the quarry and the plant in approximately 40 years, and updated the costs and concepts of restoration, as well as the time in which they will be incurred. As a result of these modifications to the permit, the restoration provision was canceled generating a favorable adjustment of $ 57,600. During 2015, the Company undertook a restructuring of the Information Technology area, for which it recognized in "other expenses" the costs of restructuring for $ 15,217, corresponding to personnel costs due to the termination of the employment relationship. As of December 31, 2014, the Company recognized in one of the subsidiaries of the US division an impairment loss of certain exploration costs related to a project that aimed to identify coal deposits amounting to $ 41,533. 24. Financial expenses Financial expenses as of December 31, 2016, 2015 and 2014, are as follows:

2016 2015 2014

Debt interest expenses $ 590,362 $ 503,496 $ 466,670 Cancellation and amortization of debt

issuance costs 112,191 92,664 65,414 Other financial expenses 27,216 45,109 32,341

$ 729,769 $ 641,269 $ 564,425

F-89

25. Segment information The Company is a Mexican entity that manufactures and sells hydraulic cement, ready-mix concrete and aggregates. The Company’s operations in the United States of America are mainly performed by three subsidiaries with an ownership interest of 99.99%. Inter-segment revenues are eliminated upon consolidation and reflected in the “eliminations and other adjustments” column. All other adjustments and eliminations are part of detailed reconciliations presented further below. In the following information, the column representing Mexico includes all domestic transactions. Information for the

years ended December 31, 2016, 2015 and 2014, is as follows:

2016

Mexico

United States of America

Eliminations and other

adjustments Consolidated

Net sales: External customers $ 3,689,594 $ 10,307,197 $ - $ 13,996,791 Intercompany sales 419,115 165,327 ( 584,442) -

4,108,709 10,472,524 ( 584,442) 13,996,791

Operating income before other expenses 807,284 1,554,805 2,362,089

Income before income taxes 643,566 948,818 1,592,384

Depreciation and amortization 347,578 815,900 1,163,478

Financial income 23,599 10,644 34,243

Financial expenses 728,308 1,461 729,769

Exchange income, net 1,920 22,683 24,603

Goodwill - 8,398,222 8,398,222

Property, plant and equipment, net 4,509,348 14,667,527 19,176,875

Total assets $ 9,457,994 $ 29,250,192 $ $ 38,708,186

Total liabilities $ 2,680,170 $ 17,970,687 $ $ 20,650,857

Non cash expenditures $ 93,260 $ 289,216 $ $ 382,476

2015

Mexico

United States of America

Eliminations and other

adjustments Consolidated

Net sales: External customers $ 3,434,870 $ 8,548,908 $ - $ 11,983,778 Intercompany sales 409,545 179,767 ( 589,312) -

3,844,415 8,728,675 ( 589,312) 11,983,778

Operating income before other expenses 533,972 1,140,542 - 1,674,514

Income before income taxes 722,022 363,123 - 1,085,145

Depreciation and amortization 365,385 599,209 - 964,594

Financial income 17,062 9,958 - 27,020

Financial expenses 622,970 18,299 - 641,269

Exchange income, net 27,041 10,354 - 37,395

-

Goodwill - 5,534,419 - 5,534,419

Property, plant and equipment, net 4,506,205 9,394,706 - 13,900,911

Total assets $ 16,758,388 $ 10,216,394 $ - $ 26,974,782

Total liabilities $ 2,422,702 $ 9,820,555 $ - $ 12,243,257

Non cash expenditures $ 43,766 $ 47,414 $ - $ 91,180

F-90

2014

Mexico

United States of America

Eliminations and other

adjustments Consolidated

Net sales: External customers $ 2,997,660 $ 7,012,009 $ - $ 10,009,669 Intercompany sales 339,994 180,405 ( 520,399) -

3,337,654 7,192,414 ( 520,399) 10,009,669

Operating income before other expenses 329,896 859,405 - 1,189,301

(Loss) income before income taxes ( 168,752) 773,691 - 604,939

Depreciation and amortization 355,822 494,428 - 850,250

Financial income 13,235 9,851 - 23,086

Financial expenses 554,033 10,392 - 564,425

Exchange income, net 9,000 - - 9,000

Goodwill - 4,733,273 - 4,733,273

Property, plant and equipment, net 4,635,955 8,113,125 $ - 12,749,080

Total assets $ 10,669,336 $ 13,560,311 $ - $ 24,229,647

Total liabilities $ 2,624,931 $ 8,076,340 $ - $ 10,701,271

Non cash expenditures $ 89,507 $ 96,244 $ - $ 185,751

Net sales information by country and by product for the periods ended as of December 31, 2016, 2015 and 2014, is presented in the following table:

2016

Country Cement Concrete Other Eliminations Consolidated

Mexico $ 2,583,551 $ 1,180,407 $ 586,940 $ ( 661,304) $ 3,689,594

United States of America 6,938,023 3,719,979 1,011,538 ( 1,362,343) 10,307,197

$ 9,521,574 $ 4,900,386 $ 1,598,478 $ ( 2,023,647) $ 13,996,791

2015

Country Cement Concrete Other Eliminations Consolidated

Mexico $ 2,130,594 $ 1,174,449 $ 746,885 $ ( 617,058) $ 3,434,870

United States of America 5,920,742 2,823,584 1,060,815 ( 1,256,233) 8,548,908

$ 8,051,336 $ 3,998,033 $ 1,807,700 $ ( 1,873,291) $ 11,983,778

2014

Country Cement Concrete Other Eliminations Consolidated

Mexico $ 1,847,906 $ 1,123,841 $ 626,912 $ ( 600,999) $ 2,997,660 United States of America 4,594,971 2,287,112 1,044,237 ( 914,311) 7,012,009

$ 6,442,877 $ 3,410,953 $ 1,671,149 $ ( 1,515,310) $ 10,009,669

The column “Other” includes mainly aggregates, concrete blocks, prefabricated products, developed land, coal and other materials for construction. 26. Commitments and contingencies a) In order to guarantee the ecological restoration of the zone in case of closing the GCCRG Tijeras plant, pursuant to the requirements of the State of New Mexico, the Company has bonds for $ 1,451 (US$ 70) for the office of the United States Forest Service and a Certificate of deposit $ 17,974 (US$ 867) with the New Mexico Bank and Trust as financial guarantee on behalf of the Department of Mines of the State of New Mexico. In addition, GCC has ensured ecological restoration in the amount of $ 58,317 (US$ 2,813) in the event of failure to conduct GCCRG fulfilling their obligations.

F-91

b) Operating leases - The following are the amounts of minimum payment under operating leases for the rental of rail cars, light vehicles and office spaces:

Years ending December 31: Amounts of minimum payments

2017 $ 284,196 2018 189,612 2019 134,340 2020 107,197

Subsequent years 101,979

$ 817,324

The amount of rents recognized in expenses as of December 31, 2016, 2015 and 2014, amounted to $ 347,622, $ 250,939 and $ 180,364, respectively. c) On August 18, 2011, GCC sold its 47.02% share of the stock of the company Sociedad Boliviana de Cemento, S.A. (SOBOCE) in favor of Consorcio Cementero del Sur, S.A. (CCS), a subsidiary of Grupo Gloria, based in Peru. The resources obtained from the transaction were mainly used to reduce the Company’s debt. After selling the shares of SOBOCE, the Company no longer participated in Bolivia’s cement industry. SOBOCE’s majority stockholder, Compañía de Inversiones Mercantiles, S.A. (CIMSA), filed an international arbitration request with the Inter-American Commercial Arbitration Commission, which was notified to GCC on November 16, 2011. The request claims, with no grounds, breach to the right of first refusal to purchase the stock subject of the above-mentioned sale, based on the Stockholders Agreement entered into by and between GCC and CIMSA. In December 2014, CIMSA sold its 51.3% share of SOBOCE’s stock to CCS, turning CCS into SOBOCE’S major stockholder and controlling parent company, holding 98.32% of the stock. In September 2013, the Arbitral Court issued the responsability Award indicating GCC and GCC Latinoamerica responsible for breaching the shareholders agreement. GCC and GCC Latinoamerica contested the Award filing an action for annulament on November 29, 2013, and therefore the Award was annulled. In case of confirming the Award’s annulment it will also leave without effect any subsequent resolution. On April 10, 2015, within the international arbitration filed by CIMSA against GCC before the IACAC, the Damages Final Award was issued stating a payment by GCC and its subsidiary GCC Latinoamérica in the amount of US$ 36.1 million as damages and expenses in favor of CIMSA. GCC considers that the award is contrary to the Bolivian Law and the International Law, and has therefore filed an annulment resource against the Award, annulling such Damages Final Award. In addition, GCC obtained a preventive measures resolution from the Mexican courts, to prevent CIMSA from enforcing any award issued under the arbitration until all the outstanding annulment resources are resolved. GCC will exercise its contractual rights to recover on due time any damages and expenses caused by the Arbitration Final Resolution. As per the Bolivian Law, the enforcement of the Final Award is suspended until all the outstanding annulment resources are resolved. GCC is confident on a favorable resolution; however, we cannot assure that this legal procedure will not have a negative effect on the Company’s interests.

F-92

d) On October 8, 2015, the Company, signed a strategic agreement for three years with Madata It, S.A. de C.V. ( "MADATA") (related party), whereby MADATA provides business process and information technology services ( "IT"). The contract life is for three years and forced renewed every year until the Company decides not to renew and is expected to generate savings to GCC, during this period. The contract includes data processing services and infrastructure services, support and maintenance of IT applications in different localities of the Company. The annual payment of services will be $ 51,931, for the first two years and may decrease if the operating hours used by the Company and its subsidiaries and related parties, decrease. The amount of paid services recognized in the consolidated financial statements of profit for the year ended December 31, 2016 is disclosed in Note 8.

27. Operations that do not generate cash flows During the years ended December 31, 2016, 2015 and 2014, the Company conducted operations that did not generate cash flows from investing activities and therefore are not reflected in the consolidated statements of cash flows:

2016 2015 2014

Acquisition of property, plant and equipment $ 382,476 $ 91,180 $ 185,751 28. Authorization to issue the consolidated financial statements On March 9 2017, the accompanying consolidated financial statements were authorized for their issuance by Martha Rodriguez Rico, Chief Financial Officer; consequently, they do not reflect events occurred after that date and are subject to the approval of the Company’s ordinary shareholders’ meeting where they may be modified, based on provisions set forth in the Mexican General Corporate Law.

F-93

PRINCIPAL OFFICE

Grupo Cementos de Chihuahua, S.A.B. de C.V. Avenida Vicente Suárez y Calle Sexta S/N

Colonia Nombre de Dios 31110, Chihuahua, Chihuahua

México

INDEPENDENT AUDITORS

Galaz, Yamazaki, Ruiz Urquiza, S.C. A Member of Deloitte Touche Tohmatsu Limited

Lázaro Cárdenas 2321 Poniente, PB Residencial San Agustín

66260, San Pedro Garza García, Nuevo León México

TRUSTEE, REGISTRAR, PRINCIPAL PAYING AGENT, AND PAYING AGENT

Wells Fargo Bank, National Association 150 East 42nd Street, 40th Floor New York, New York 10017

United States of America

LEGAL ADVISORS TO THE COMPANY

As to U.S. Federal and New York Law As to Mexican Law Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza New York, New York 10006

United States of America

Ritch, Mueller, Heather y Nicolau, S.C. Av. Pedregal No. 24

Piso 10 Col. Molino del Rey

11040 Ciudad de México México

LEGAL ADVISORS TO THE INITIAL PURCHASERS

As to U.S. Federal and New York Law As to Mexican Law Shearman & Sterling LLP

599 Lexington Avenue New York, New York 10022

United States of America

White & Case, S.C. Blvd. Manuel Ávila Camacho No. 24

Torre del Bosque – PH Lomas de Chapultepec

11000, Ciudad de México, México

U.S.$260,000,000

GRUPO CEMENTOS DE CHIHUAHUA, S.A.B. de C.V.

5.250% Senior Notes due 2024

Joint Book-Running Managers

Citigroup BBVA Scotiabank

OFFERING MEMORANDUM

June 20, 2017