CRH ANNUAL REPORT AND FORM 20-F I 2019 | CRH Annual Report and Form 20-F I 2018
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | Analysis of change | | | | | | | | € million | | 2018 | | | Exchange | | | Acquisitions | | | Divestments | | | Leases | | | Organic | | | 2019 | | | % change | | | Sales revenue | | | 8,951 | | | | +460 | | | | +657 | | | | -26 | | | | - | | | | +343 | | | | 10,385 | | | | 16% | | | EBITDA (as defined)* | | | 1,493 | | | | +84 | | | | +135 | | | | -5 | | | | +98 | | | | +155 | | | | 1,960 | | | | 31% | | | Operating profit | | | 1,009 | | | | +60 | | | | +61 | | | | -4 | | | | +9 | | | | +136 | | | | 1,271 | | | | 26% | | | EBITDA (as defined)*/sales | | | 16.7% | | | | | | | | | | | | | | | | | | | | | | | | 18.9% | | | | | | | Operating profit/sales | | | 11.3% | | | | | | | | | | | | | | | | | | | | | | | | 12.2% | | | | | |
| | | | | The underlying results2019 was a strong year for 2017 were augmented by twoone-off items; a past service creditAmericas Materials, generating operating profit of€81 million due to changes in a Swiss pension scheme and a€447 million reduction in the Group’s net deferred tax liabilities1 due to changes in tax legislation related to the enactment of the “Tax Cuts and Jobs Act” in the US during 2017.
Liquidity and Capital Resources - 2017 compared with 2016
The comments that follow refer to the major components of the Group’s cash flows for 2017 and 2016 as shown in the Consolidated Statement of Cash Flows on page 127.
Throughout 2017 the Group remained focused on cash management. Operating cash flow decreased marginally to€2.2 billion (2016:€2.3 billion) with net working capital outflow for 2017 of€209 million (2016:€56 million inflow) which reflected trends in overall sales, seasonal weather patterns and the impact of acquisitions in the final quarter of 2017.
Focused spending on property, plant and equipment in markets and businesses with increased demand backdrop and efficiency requirements, particularly in the Americas, resulted in higher cash outflows of€1.0 billion (2016:€853 million).
During 2017 the Group spent€1.9 billion on 34 transactions (2016:€213 million) which was partly financed by divestment and disposal proceeds of€222 million (net of cash disposed and deferred proceeds) (2016:€283 million).
Cash dividend payments of€477 million in 2017 (2016:€360 million) reflected the Group’s continued focus on returns to shareholders. Net proceeds of€42 million from share issues in 2017 were similar to 2016 (2016:€52 million).
Year-end 2017 interest-bearing loans and borrowings increased by€0.2 billion to
€8.0 billion (2016:€7.8 billion). At year end 2017, the stronger euro against both the US Dollar and Pound Sterling had a positive translation impact on net debt.
| | Development Review
2017
In 2017, the Group spent a total of
€1.9 billion (including deferred and contingent consideration in respect of prior year acquisitions) on 34 acquisition/investment transactions. On the divestment front, the Group realised business and asset disposal proceeds of€0.2 billion.
In the Americas, c.€1.3 billion, was spent on 21 acquisitions26% ahead of 2018. Headwinds driven by wet weather and one investment. Our Materials Division completedincreased raw materials costs in the largest 2017 acquisition atfirst half of the endyear were offset by a stronger second-half performance reflecting increased volumes, positive pricing and reduced operating expenses. Organic sales were 4% ahead of November2018, while organic operating profit grew 13%.
Economic activity in the US remained favourable during 2019 with the acquisitioninfrastructure sector supported by the FAST Act as well as a significant number of Suwannee American Cement together with certain other materials assetslocal and state funded transportation projects. The Canadian market experienced growth during the year and economic expansion is expected to continue at a moderate pace. Americas Materials completed 29 acquisitions/ investments in Florida. The total assets acquired consisted of a 1 million tonne cement plant in North Central Florida, 18 readymixed concrete plants, an aggregates quarry, two block plants and nine gunite facilities. The Materials Division also completed 12 furtherbolt-on acquisitions, including two in Canada, adding c. 2.5 billion tonnes of additional aggregates reserves. The Products Division completed eight acquisitions and one investment in 20172019 at a cost of c.€0.2 billion.210 million, strengthening its operational footprint through the addition of c. 260 million tonnes of mineral reserves. Building Materials In Europe, c.€0.6 billion was spent on tenTotal aggregates volumes benefited from acquisitions and two investments. This was split between eight acquisitions and one investment in Europe Heavyside and two acquisitions and one investment in Europe Distribution.
The largest acquisition in Europe in 2017 was that of the Fels lime business which was acquired at the end of October 2017. Fels’ assets included significant high-quality limestone reserves and 11 production locations; nine in Germany and one in both the Czech Republic and Russia.
Business divestments during 2017, all in Europe, generated net proceeds of c.€85 million. The remaining clay products businesses in Europe (Belgium, Germany, Netherlands and Poland) were divested and our Heavyside Division also sold its civil prefabricated concrete businesses in the Benelux, along with seven other smallnon-core businesses. In addition to these business divestments, the Group realised proceeds of c.€137 million from the disposal of surplus property, plant and equipment.
| | 2016
In 2016, the Group completed 21bolt-on acquisitions and three investment transactions for a total spend of€213 million (including deferred and contingent consideration in respectfinished 5% ahead of prior year, acquisitions)whilelike-for-like volumes were 1% ahead as a strong performance in the West was partly offset by a focused reduction in lower margin contracts in the South division. Average prices increased 5% on alike-for-like basis and 4% overall compared with 2018 and margins were maintained against a backdrop of increased input costs.
Like-for-like and total asphalt volumes were 1% behind 2018 as flooding and tropical storms negatively impacted our Central and South divisions, partly offset by strong demand in the North.Like-for-like prices improved 5%, more than offsetting higher input costs and resulted in strong margin expansion. Total readymixed concrete volumes were 9% ahead of 2018 and prices improved 4%. In Europe, eightLike-for-like volumes were 2% ahead as poor weather in the first half of the year for Central and West was offset by strong volumes in the South division. Readymixed concrete margins were impacted by increased input costs. Total paving and construction services revenues were 3% ahead, 2% on alike-for-like basis, as overall margins improved driven by favourable regional mix and increased higher margin work in the South and West divisions, partly offset by challenging first-half weather in Canada. Regional Performance The North division comprises operations in 13 states, with key operations in Ohio, New York, New Jersey and Michigan. Total sales in the North division increased 5% primarily due to favourable volumes and prices across our product range, as well as greater construction revenue. This improved revenue coupled with strong cost control resulted in a good operating profit performance. The South division comprises operations in 12 states with key operations in Florida, West Virginia and North Carolina. Total sales in the division increased 1% with improved pricing in all products largely offset by lower construction revenue due to the timing of major projects in key states. Strong pricing together with focused management of operating expenses resulted in a solid operating profit performance. The Central division has operations in ten states, with key operations in Texas, Arkansas and Kansas. Weather challenges continued in the division with flooding and record levels of rainfall in the first half of the year; however, a strong performance later in the year and contributions from acquisitions and two investments withhelped drive a total spendsales increase of c.20%, 7% ahead on a€like-for-like43 million basis.Like-for-like operating profit finished ahead of prior year as weather challenges were completed. Our Heavyside business acquired 11offset by favourable second-half volumes and pricing. The West division has operations in ten states with key operations in Utah, Idaho, Washington and Colorado. Strong pricing across all products and volumes growth in aggregates and readymixed concrete plantssupported the West division’s total sales increase of 5%, 2% on alike-for-like basis. Despite challenges from weather and higher input costs, mainly bitumen and labour, favourable pricing across all products and tight cost control resulted in operating profit well ahead of 2018. Cement Like-for-like sales volumes in our US operations were ahead in 2019. Despite adverse weather, strong price realisation across major markets and good synergy delivery supported robust operating profits. The integration of Ash Grove is now complete and the business is performing well. Despite poor weather conditions in the UK, three quarries in Ireland, an aggregates terminal in Belgiumfirst half of the year, cement volumes and entered into a sand & gravel joint venture in France, adding reserves of 11 million tonnes. Further investments were also made to buy out a minority position in Spain and add to an existing joint venture in Ireland. Our Lightside Division completed two acquisitions in the UK. The Distribution Division acquired a small builders merchant in Austria. In the Americas, c.€170 million was spent on 13 acquisitions and one investment. Our Materials Division completed eightbolt-on acquisitions and one investment in 2016. The principal acquisition was of a significant aggregates and asphalt operation in Utah. Seven furtherbolt-on acquisitions were completed. In total 93 million tonnes of permitted reserves were added during the year. The Products Division completed five acquisitions, the largest of which was of a Canadian exterior surfaces company which was a strong addition to the core hardscape business of our Architectural Products Group (APG). Three Infrastructurebolt-on operations were also acquired. Finally, a glass hardware company was added in Perth, Australia. On the divestment front, the Group completed 13 transactions and realised total business and asset disposal proceeds of€283 million in 2016. Business divestments during 2016 generated net proceeds of€123 million. In Europe, our Distribution Division disposed of a roofing products company in the Netherlands while the Heavyside business divested of operations in Poland, Switzerland and Romania. Two small joint venture holdings in France and Germany were also divested. The Americas Materials Division disposed of select aggregates and asphalt operations in Missouri, a small waterproofing business in Michigan and a readymixed concrete operation in Iowa and Minnesota. Certain aggregates assets in Oregon and Montana were also disposed in a cash neutral swap. Finally, our Americas Products Division disposed of a pavement products operation, certain Infrastructure operationsprices in Canada were ahead of 2018, driven by solid market conditions.
Cement consumption in Southeast Brazil improved in 2019 enabling CRH to achieve volumes growth supported by a consistent focus on key customer segments. A strong emphasis on logistics optimisation and the assets of a burial vaults business. |
1. Net deferred tax liabilities reduction of€447 million is stated on a continuing (€440 million) and discontinued (€7 million) basis.
| * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. | 31 |
| | | | | Farrans, a division of Northstone, which is part of CRH’s Europe Heavyside Division, completed the design and construction of a new cable-stayed dual carriageway bridge over the River Wear in Sunderland, England, in August 2018. The project, known as the Northern Spire, was carried out in a joint-venture partnership between Farrans and Belgian steel construction specialist, Victor Buyck. The bridge is a three span cable-stayed bridge with a 105m-highA-frame pylon, which stands taller than London’s Big Ben. It has two lanes of traffic in both directions which are forecast to carry 27,000 vehicles per day, plus dedicated cycleways and footpaths along its full length. | | |
CRH Annual Report and Form 20-F I2018
Materials Overview
CRH is a leading vertically integrated producer and supplier of heavyside building materials globally. We produce aggregates, lime, cement, concrete products, and asphalt in major markets across North America, Europe and Asia. CRH is the largest heavyside materials business in Europe and the largest producer of aggregates and asphalt in North America.
What we do
Our materials businesses are founded in resource-backed cement and aggregates assets, which support the manufacture and supply of aggregates, lime, cement, concrete products and asphalt.
These materials are used extensively in a wide range of construction applications from major public road and infrastructure projects, to the development or refurbishment of commercial buildings and private residential structures. Customers typically range from national, regional and local governments, to building
contractors and other construction product and service providers.
In addition to leveraging the benefits of scale and best practice, our businesses are differentiated in their markets by a proven track record in serving the unique needs of local customers and successfully delivering for those customers.
How we create value
Our portfolio of vertically integrated materials businesses build strong regional leadership positions underpinned in local markets. We place great emphasis on performance improvement initiatives across our businesses and seek to
| | | | | | | | | | | AGGREGATES | | LIME | | CEMENT | | | | | | | | | | | | | | Aggregates are naturally occurring mineral deposits such as granite, limestone and sandstone. Our businesses extract these deposits and process them for sale. They are supplied as a range of products for use in general construction and engineering projects as well as in a variety of additional CRH product lines including asphalt and readymixed concrete. For additional information on the Group’s mineral reserves, see page 223. | | Lime is a versatile chemical product used in multiple industries. Our Europe based lime businesses produce and supply a wide range of specialist products for the agricultural, environmental, industrial and construction sectors. CRH is the second largest producer of lime in the European market and has operations in Ireland, the Czech Republic, Germany, Poland, Russia and the UK. | | Cement is the primary binding agent in the production of concrete products for the construction industry. Primarily produced from limestone, cement products are most commonly mixed with sand, stone or other aggregates and water to form concrete. While typically produced for sale within each country, cement can also be traded internationally. Because cement manufacturing is an energy-intensive process, our businesses have established a range of initiatives to reduce our carbon footprint.
| | 44 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | | |
1. Net Assets at 31 December 2018 comprise segment assets less segment liabilities as disclosed in note 2 to the Consolidated Financial Statements.
Europe Materials 2. Geography, sector exposure and end-use balance are based on sales.
3. Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.
| | |  | | With market leading positions across a broad geographic footprint and a highly integrated portfolio of businesses, our Europe Materials Division is a leading heavyside materials business in Europe. What We Do Our Europe Materials Division manufactures and supplies a broad range of materials for use in construction projects including aggregates, cement, lime, asphalt, readymixed concrete and concrete products. This vertically integrated business is founded in resource-backed assets engaged in the production and supply of cement and aggregates along with downstream material products such as readymixed concrete, concrete products and asphalt. These materials are used extensively in a wide range of construction applications from major public infrastructure projects to commercial buildings and residential structures. Our businesses are established players in local markets and have long-standing relationships with customers which typically range from national, regional and local governments, to building contractors and other construction product and service providers. With an extensive network in the strong and stable markets of Western Europe, a strong footprint in growing Eastern European markets and an attractive position in Asia, the Division is geographically balanced and has broad exposure to residential,non-residential and infrastructure sectors. We have leading positions and a broad range of well-established brands in most markets across Western Europe, from Ireland and the UK to France, Germany, Denmark, Finland, Switzerland and Benelux. In Eastern Europe, we have built up a strong portfolio of businesses across eight different countries. While cement is our core product in these Eastern European markets, we have also developed strong positions in the lime, readymixed concrete, precast and aggregates sectors in recent years. |
| CRH Annual Report and Form 20-F I 2018
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| | | | | | | | | | | AMERICAS MATERIALS | | EUROPE HEAVYSIDE | | ASIA | | | | |  | |  | |  | | | | | | | | | | | | | | create value through optimisation of our asset base. Our deep market knowledge drives performance, while our extensive network allows us to leverage talent, synergies for procurement, cost and logistics management and drive both commercial and operational excellence.
With a strong pipeline of opportunities across regions, our development strategy is focused on identifying and integratingbolt-on acquisitions for synergies, reserves and further vertical integration, in addition to opportunities in contiguous regions to extend and strengthen regional positions.
| | How we structure our operations
Our Americas Materials Division is organised across three countries (the US, Canada and Brazil) and employs approximately 27,300 people at over 1,450 locations.
Our Europe Heavyside Division is organised across four operational clusters (Tarmac (UK), Europe North, Europe West and Europe East). Europe Heavyside employs approximately 25,900 people at close to 1,140 locations.
| | Our operations in Asia comprise cement operations in the Philippines along with equity accounted investments in Northeast China and Southern India. Approximately 1,300 people are employed at 12 operating locations with a further 7,300 people in our equity accounted investments. As of 1 January 2019, Asia was combined with Europe Heavyside to form Europe Materials.
Annualised Sales Volumes3: Aggregates: 304.6m tonnes; Lime: 7.7m tonnes; Cement: 48.2m tonnes; Readymixed Concrete: 31.0m m3; Concrete Products: 6.4m tonnes; Asphalt: 57.3m tonnes
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| | | | | | | | | | | | | READYMIXED CONCRETE
| | CONCRETE PRODUCTS | | PAVING & CONSTRUCTION | | ASPHALT | | | | | Readymixed concrete is a highly versatile building material comprised of aggregates bound together with cement and water. It is strong, customisable and durable, making it the world’s most popular building material. Our readymixed concrete is produced to customer specifications, mainlyon-site at aggregates locations and is delivered in a timely manner from our extensive network in local markets. | | Europe Heavyside manufactures concrete products such as floor and wall elements, beams and vaults, pavers and fillers. Raw materials include cement, crushed stone and sand and gravel, all of which are readily available locally. Concrete products are sold to both the public and private construction sectors. Competition comes mainly from other readymixed concrete and concrete products producers, as well as from a variety of smaller manufacturers in local economies. | | CRH is the leading supplier of product for road construction and repair/maintenance demand in North America. Annually, our crews complete approximately€3.8 billion in paving and construction projects.
In Europe CRH has a number of paving and construction businesses in Ireland, Poland and the UK.
| | Asphalt is primarily used in road surfacing and other transport infrastructure including airport runways. It consists of aggregates bound together with bitumen, aby-product of the oil industry. Customers are typically government and local authorities involved in the construction and maintenance of road networks. CRH uses recycled materials and innovative technologies that result in lower emissions. CRH is the number one asphalt producer in North America, and has leadership positions in the UK and Ireland.
| | | | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
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CRH Annual Report and Form 20-F I2018
| | | Operations Review - Americas Materials | | | Prior Year 2017 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | | | | Analysis of change | | | | | | | | | | | | | | € million | | 2016 | | | Exchange | | | Acquisitions | | | Divestments | | | LH Costs1 | | | Organic | | | 2017 | | | % change | | | Sales revenue | | | 7,598 | | | | -123 | | | | +379 | | | | -80 | | | | - | | | | +196 | | | | 7,970 | | | | 5% | | | EBITDA (as defined)* | | | 1,204 | | | | -24 | | | | +46 | | | | -5 | | | | +7 | | | | +42 | | | | 1,270 | | | | 5% | | | Operating profit | | | 818 | | | | -19 | | | | +12 | | | | -2 | | | | +7 | | | | +42 | | | | 858 | | | | 5% | | | EBITDA (as defined)*/sales | | 15.8% | | | | | | | | | | | | | | | | | | 15.9% | | | | | | Operating profit/sales | | 10.8% | | | | | | | | | | | | | | | | | | 10.8% | | | | |
1The LH integration costs refers to the businesses acquired from LafargeHolcim in 2015
2017 was a year of progress in Americas Materials, supported by economic growth across residential andnon-residential sectors, while infrastructure remained stable in our markets. Despite record levels of rainfall during 2017 and hurricane activity experienced in Florida and Texas, both sales and operating profit increased 5%, as selling price increases were achieved across all products in North America.
Aggregates had a strong finish to 2017 and together with the positive impact of acquisitions during 2017, total volumes were 7% ahead, whilelike-for-like volumes were flat. Average price increases of 6% on alike-for-like basis combined with efficient cost control resulted in margin expansion.
Margin improvement was also experienced in our readymixed concrete operations aslike-for-like volumes increased 4% while overall volumes were 3% ahead, impacted by 2016 divestments in our Central division. Bothlike-for-like and total average prices increased by 3%.
Althoughlike-for-like asphalt volumes increased 2% and 6% on an overall basis, asphalt margins were under pressure withlike-for-like average price increases unable to offset higher input costs.
With pockets of increased state infrastructure spending,like-for-like sales for paving and construction services increased 1% with overall sales 7% ahead. Construction margin improved slightly in 2017, despite the competitive bidding environment.
Our cement business in North America saw total volumes 3% ahead in 2017 and marginal price increases, supported by stronger demand in the US. Against the backdrop of a favourable US price environment, Americas Materials optimised its terminal network and market penetration by repositioning more volumes to the US from Canada, where competitive market conditions remained, especially in Quebec.
Americas Materials strengthened its position in existing and complementary markets throughout North America in 2017 and completed 13 acquisitions for a combined total of€1.1 billion. The principal acquisition, which was completed at the end of November 2017 and therefore had a limited contribution to 2017 trading, was Suwannee American Cement together with certain other materials assets; consisting of a 1 million tonne cement plant in Florida, 18 readymixed concrete plants, an aggregates quarry, two block plants and nine gunite facilities.
United States
Trading benefited from solid demand in the US and, despite some unfavourable weather, total volumes and prices increased across all products in 2017.Like-for-like sales saw a resulting 4% increase in 2017. Operating profit also increased though margin expansion in aggregates and readymixed concrete was partly offset by a decline in asphalt margins due to higher bitumen prices, a key component of asphalt mix.
With significant precipitation as well as softer markets in Michigan and Connecticut in 2017, volumes were down across all products in the North division, although increased pricing and improved construction sales resulted in alike-for-like sales increase. Operating profit was impacted by increased input costs, and margin declined.Like-for-like South division sales and operating profit were ahead 7% and 14% respectively in 2017, despite the impact of hurricane Irma which caused downtime at several locations in Florida and Georgia. Improvements were mainly driven by increased construction activity and margin, as well as price increases across all products.
Like-for-like Central division sales were down 3% in 2017 mainly due to unfavourable weather during the summer which continued into autumn, along with the impact of hurricane Harvey; however, with strong cost control and the benefit of operating efficiencies, overall operating profit improved over 2016. Overall demand was strong across the West division, with improved volumes across all product lines resulting inlike-for-like sales up 11% compared with 2016. Operating profit was also well ahead in the division, with aggregates and readymixed concrete price increases taking hold and driving increased margin.
Canada
The overall Canadian economy expanded in 2017, led by robust gains in the core markets of Ontario, Quebec and Alberta. The pace of growth was largely fuelled by improvements in oil prices and spending by Canadian consumers. Despite the positive environment and increased volumes across all products,like-for-like sales were muted by regional variations in pricing and the performance within the construction business, which was impacted by adverse weather conditions and thenon-recurrence of key projects in 2017.
Brazil
Weakness in the construction market continued during 2017 due to the unfavourable economic and political situation; however, in late 2017, lower interest rates and a reduction in inflation started to have a positive impact. While cement consumption was down 5% in 2017 in the Southeast region, CRH saw volume improvements through a focus on key customer segments; however, selling prices fell below 2016 levels.
| * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
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| 1. | Geography, sector exposure andend-use balance are based on sales. |
| 2. | Net Assets at 31 December 2019 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 226. |
| 3. | Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 45 |
In 2019, the Division was reorganised to include Asia, which comprises cement operations in the Philippines where we are the second biggest producer, along with an equity-accounted investment in Northeast China. How We Create Value Value creation is an area of continuous focus for our Europe Materials Division and we place great emphasis on performance improvement initiatives and collaboration across the Division. In addition to understanding and meeting the unique needs of local customers, our deep market knowledge drives performance and our extensive network allows us to leverage talent, synergies for procurement, cost and logistics management and drive both commercial and operational excellence. Our vertically integrated business model means that we can maximise the use of our assets through a combination of self-supply to our downstream operations as well as sales to our customers. With a strong pipeline of opportunities across regions, our development strategy is focused on identifying and integratingbolt-on acquisitions for synergies, reserves and further vertical integration, in addition to opportunities to extend and strengthen existing regional positions. We have a strong track record in adding businesses for vertical integration and to strengthen regional positions, ensuring we are competitive in all individual product lines and our combined business delivers a stronger return on assets and generates more cash. How We Structure Our Operations Our Europe Materials Division spans 19 countries in Europe and two in Asia and is organised across five operational clusters (Tarmac (UK), Europe North, Europe West, Europe East and Asia). Europe Materials employs approximately 27,250 people at over 1,160 locations. A further 5,650 people are employed in our equity accounted investment in China. Annualised Sales Volumes3: Aggregates: 115.0m tonnes; Cement: 33.5m tonnes; Readymixed Concrete: 18.1m m3; Asphalt: 11.6m tonnes; Lime: 7.4m tonnes; Concrete Products: 6.7m tonnes Where Our Products Are Used 
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Operations Review - Europe Materials Prior Year 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | Analysis of change | | | | | | | | € million | | 2017 | | | Exchange | | | Acquisitions | | | Divestments | | | Pension Credit1 | | | Organic | | | 2018 | | | % change | | | Sales revenue | | | 7,338 | | | | -90 | | | | +511 | | | | -53 | | | | - | | | | +336 | | | | 8,042 | | | | 10% | | | EBITDA (as defined)* | | | 891 | | | | -16 | | | | +65 | | | | -1 | | | | -20 | | | | +17 | | | | 936 | | | | 5% | | | Operating profit | | | 493 | | | | -10 | | | | +36 | | | | - | | | | -20 | | | | -12 | | | | 487 | | | | -1% | | | EBITDA (as defined)*/sales | | | 12.1% | | | | | | | | | | | | | | | | | | | | | | | | 11.6% | | | | | | | Operating profit/sales | | | 6.7% | | | | | | | | | | | | | | | | | | | | | | | | 6.1% | | | | | |
1Swiss pension plan service credit of €20 million in 2017 The 2018 trading performance for the Europe Materials Division was mixed with positive results in our operations in Ireland, the Benelux, Denmark and Poland, with more challenging trading conditions in the Philippines and UK. Theyear-on-year organic sales growth reflected continued price progression, however cost inflation, which was a feature across all markets resulted in a decrease in operating profit. Tarmac (UK) Despite challenging weather conditions earlier in 2018 and ongoing political and economic uncertainty as to the impact on construction activity following the Brexit vote, sales in our Tarmac business were ahead of 2017, underpinned by growth in contracting sales and more modest growth in other materials. Overall, operating profit was behind compared with 2017 as continued progress on performance improvement measures was offset by increased input costs and a challenging market environment. Europe North A positive performance in the UK lime business as a result of strong environmental volumes partially offset the decline in cement volumes, resulting in overall UK sales and operating profit being behind 2017. In Ireland, sales and operating profit were ahead of 2017 mainly due to the continued market recovery, particularly in the Dublin region. Volumes increased and positive pricing trends were evident across key products, offsetting increased input costs, particularly energy. Although cement and readymixed concrete volumes in Finland were slightly behind in 2018, aggregates volumes were higher, positively impacted by project activity. The concrete products business also performed well due to good market demand, particularly residential, and overall sales and operating profit finished ahead of 2017. Europe West Sales and operating profit in France benefited from favourable trading conditions, as good underlying demand resulted in increased volumes and a positive pricing environment for key products, with the exception of the precast concrete business, which was impacted by project delays. Sales in the Benelux were ahead of 2017, as a positive contribution from the structural businesses reflected good demand in the residential sector, together with improved readymixed concrete pricing. Operating profit finished ahead of 2017, benefiting from good underlying market demand andone-off income. In Denmark, sales and operating profit finished ahead of 2017, as the business benefited from good underlying demand and progress in pricing achieved during 2018. In Spain, results advanced on 2017, with improved pricing in cement and readymixed concrete partly offset by lower cement volumes, due to severe weather at the beginning of 2018 and the conclusion of a major project during 2018. Despite a significant increase in cement volumes in Switzerland, benefiting from solid construction growth, sales and operating profit were behind 2017 due to a decline in cement and readymixed concrete prices, reflecting strong competition. In Germany, improved cement pricing as well as the contribution of our lime business Fels, resulted in sales and operating profit ahead of 2017. Europe East Trading in Poland was ahead of 2017 with good performance in all businesses. Healthy volumes were supported by the economy and the construction sector, which continued to grow at high rates. In addition, good price development was achieved across all activities in a competitive market, contributing to the positive performance in 2018. In Ukraine, pricing improved in all businesses in 2018 resulting in organic sales finishing aheadyear-on-year, however cement volumes declined due to increased market capacity and unfavourable weather conditions during the first quarter, which combined with cost inflation and logistical constraints resulted in operating profit being behind 2017. Continued solid economic and construction growth in 2018 contributed to improved sales in Hungary and Slovakia. Despite increasing input costs, operating profit was ahead of 2017, mainly as a result of higher volumes across the businesses. In Serbia, cement and readymixed concrete volumes increased compared to 2017 and overall sales and operating profit were ahead, supported by performance improvement initiatives. In Romania, after a slow start to 2018, affected by very poor weather conditions, cement volumes recovered and were ahead of 2017. In addition good pricing and margin progression contributed to sales and operating profit growth. Asia Against a backdrop of strong domestic demand and accelerated government infrastructure spending, the Philippine economy continued to perform despite inflationary pressures and tighter global financial conditions. Organic revenue performance advanced due to positive prices and ongoing demand from all segments. However, notwithstanding this, operating profit was significantly behind 2017 primarily due to higher fuel and power costs, which were only partially offset by continued commercial excellence and operational performance initiatives. Cement demand remained subdued in Northeast China. Price increases partially offset lower volumes and increased coal prices, however Yatai Building Materials’ 2018 performance was lower than 2017. Strong growth in MHIL volumes in India was driven mainly by a sustained pick up in infrastructure spend in Andhra Pradesh and Telangana. However, prices continued to be under pressure due to competition and large institutional sales. Increased fuel prices were exacerbated by adverse foreign exchange rates. As a result, MHIL ended 2018 with operating profit lower than 2017. | * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 47 |
| CRH Annual ReportCurrent Year 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | Analysis of change | | | | | | | | € million | | 2018 | | | Exchange | | | Acquisitions | | | Divestments | | | Leases | | | Organic | | | 2019 | | | % change | | | Sales revenue | | | 8,042 | | | | +70 | | | | +35 | | | | -27 | | | | - | | | | +374 | | | | 8,494 | | | | 6% | | | EBITDA (as defined)* | | | 936 | | | | +10 | | | | +2 | | | | +1 | | | | +113 | | | | +17 | | | | 1,079 | | | | 15% | | | Operating profit | | | 487 | | | | +6 | | | | -1 | | | | +2 | | | | +16 | | | | +45 | | | | 555 | | | | 14% | | | EBITDA (as defined)*/sales | | | 11.6% | | | | | | | | | | | | | | | | | | | | | | | | 12.7% | | | | | | | Operating profit/sales | | | 6.1% | | | | | | | | | | | | | | | | | | | | | | | | 6.5% | | | | | |
Overall Europe Materials experienced a positive year with good sales growth and Form 20-F I particularly strong performances in Eastern Europe, the Philippines, France and Ireland. Operating profit was ahead of 2018 as price increases and a good contribution from performance improvement initiatives offset higher input costs and the impact of more challenging trading conditions in the UK. Tarmac (UK) Ongoing political and economic uncertainty as a result of Brexit negatively impacted Tarmac’s trading environment as volumes in our aggregates and asphalt businesses finished lower than 2018. Operating profit declined as progress from performance improvement initiatives was offset by challenging market conditions and input cost inflation. Europe North Sales and operating profit in our UK cement and lime business were behind 2018 as Brexit uncertainty impacted activity levels. In Ireland, sales and operating profit were well ahead of 2018 as the business benefited from continued market growth, underpinned by strong demand and some large projects in the Dublin region. Good volumes and price growth for all key products was achieved. Sales and operating profit in Finland were behind 2018 impacted by reduced demand in the residential and infrastructure sectors. Lower cement and readymixed concrete volumes were partly offset by project-related aggregates sales growth. Europe West Sales and operating profit in France benefited from favourable trading conditions as good underlying demand in thenon-residential and civil engineering sectors resulted in volumes growth and a positive pricing environment for key products. Ongoing performance improvement initiatives and cost savings also positively impacted profitability. Sales in the Benelux were ahead of 2018, with a positive contribution from our Dutch precast businesses reflecting good demand in the residential sector, while improved readymixed concrete pricing was partly offset by weaker volumes in the Belgian precast business. Excluding the impact ofone-off income in 2018, operating profit finished ahead of prior year. In Denmark, sales were ahead of 2018, as the business benefited from good demand aided by additional production capacity together with progress in pricing. Operating profit finished broadly in line with prior year impacted by thenon-recurrence ofone-off income in 2018. In Spain, increased demand resulted in improved readymixed concrete volumes and prices and despite lower cement volumes, sales and operating profit finished ahead of 2018. Lower cement and readymixed concrete volumes resulted in lower sales for Switzerland; however, operating profit benefited from cost savings and good delivery of performance initiatives. In Germany, sales were marginally ahead of 2018 while operating profit was behind as cement pricing progress was offset by lower volumes in our lime business. Europe East Trading in Poland was strong with a good overall performance for 2019. Robust cement volumes and positive pricing supported by cost savings initiatives resulted in operating profit ahead of 2018. In Ukraine, continued growth in cement volumes reflected good market demand. Strong price progression was partly offset by slightly higher input costs and sales and operating profit finished ahead of 2018. Stable economic and construction growth in 2019 contributed to improved sales in Hungary and Slovakia. Operating profit was ahead of 2018, mainly as a result of advances in pricing, cost optimisation and savings initiatives across the businesses. In Serbia, sales and operating profit were ahead of 2018 with higher cement volumes driven by continued strong construction activity, pricing progress and cost benefits of enhanced production facilities. In Romania, results were ahead of 2018 due to improved pricing combined with stronger volumes in cement and readymixed concrete. Asia Domestic demand for cement in the Philippines remained strong; however, delays in government infrastructure spending impacted cement volumes. While overall sales were in line with prior year, advances in pricing, performance improvement initiatives and cost savings resulted in operating profit well ahead of 2018. CRH’s operations include a 26% stake in Yatai Building Materials in North Eastern China. Strong volumes growth was only partly offset by lower prices, driven by intense local competition and lower margins on exports, resulting in higher operating profit than prior year. On 31 December 2019, the Group divested of its share of the Indian joint venture, MHIL, for a total deferred consideration of€0.3 billion. During the year, reduced demand in housing negatively impacted cement demand in MHIL’s key markets in Andhra Pradesh and Telangana; despite this, operating profit was ahead of prior year as pricing improved. | * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
| | | Current Year 2018 | | 
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | Analysis of change | | | | | | | | | | | € million | | 2017 | | | Exchange | | | Acquisitions | | | Divestments | | | Organic | | | 2018 | | | % change | | | Sales revenue | | | 7,970 | | | | -356 | | | | +1,026 | | | | -26 | | | | +337 | | | | 8,951 | | | | 12% | | | EBITDA (as defined)* | | | 1,270 | | | | -56 | | | | +267 | | | | -12 | | | | +24 | | | | 1,493 | | | | 18% | | | Operating profit | | | 858 | | | | -37 | | | | +176 | | | | -9 | | | | +21 | | | | 1,009 | | | | 18% | | | EBITDA (as defined)*/sales | | 15.9% | | | | | | | | | | | | | | | 16.7% | | | | | | Operating profit/sales | | 10.8% | | | | | | | | | | | | | | | 11.3% | | | | |
Following significant development activity in 2018 and the latter half of 2017, Americas Materials operating profit was€1.0 billion in 2018, 18% ahead of the prior year. Continued economic growth in the residential,non-residential and infrastructure sectors drove underlying demand and organic sales were 4% ahead of 2017, while organic operating profit grew 3%. The Division experienced pricing progress, with improvements across all products. However, margins were impacted by poor weather in key markets and ongoing cost inflation, with notable increases in bitumen, a key input in asphalt production, and energy costs, including diesel and gasoline.
Total aggregates volumes including acquisitions increased 8% in 2018, with the impact of inclement weather impactinglike-for-like volumes, which were 1% ahead. Average prices increased 3% on alike-for-like basis and 2% overall compared with 2017, however margins were under pressure due to increased input costs.
With a later start to paving projects across some key regions and further weather-related delays experienced in the third quarter in the North and Central divisions,like-for-like asphalt volumes were down 3% with total volumes down 2%.Like-for-like prices improved 10%, but higher bitumen costs negatively impacted margins.
Total readymixed concrete volumes were 29% ahead of 2017 due to acquisition activity, and prices improved 3%.Like-for-like volumes were impacted by the unfavourable weather, though margins improved as management continued to focus on operational performance.
Overall paving and construction services revenue for 2018 increased 6% andlike-for-like revenue was up 4%, mainly driven by the South division, which benefited from a good paving season that extended into the last quarter of the year. Input cost pressure, particularly in raw materials and energy, negatively impacted overall margins in the year.
The acquisition of Ash Grove in June 2018 gave CRH a market leadership position in the North American cement market, and including the partial year of ownership with our operations in Florida, Canada and Brazil, resulted in total cement volumes in 2018 of over ten million tonnes. Combined with an additional 24bolt-on transactions, Americas Materials spent€3.3 billion in the year, adding c. 1.6 billion tonnes of reserves to the business.
United States
Despite unfavourable weather throughout the year,like-for-like sales increased 5% in 2018, andlike-for-like operating profit increased 4%. US operations are organised into five divisions: North, South, Central, West and Cement.
The North division comprises operations in 13 states, with key operations in Ohio, New York, New Jersey and Michigan.Like-for-like sales increased 5%, mainly due to improved aggregates volumes and prices, as well as greater construction sales. However, adverse weather conditions and increased input costs resulted in a flat operating profit performance.
The South division comprises operations in 12 states with key operations in Florida, West Virginia and North Carolina.Like-for-like sales increased 11%, benefiting from increased construction activity with several new projects undertaken in key states. Volumes and price increases across all products resulted in a strong operating profit performance in the year.
The Central division has operations in ten states, with key operations in Texas, Minnesota and Arkansas. With record levels of rainfall and flooding,like-for-like sales decreased 4%. Reduced volumes and margin pressure resulted in operating profit finishing behind 2017.
The West division has operations in ten states, with key operations in Utah, Idaho, Washington and Colorado. With strong pricing across all products and volumes growth aided by
acquisitions, sales increased 12% during 2018. Although delayed funding in certain states impactedlike-for-like aggregates and asphalt volumes, operating profit was ahead of 2017.
Our cement operations delivered higher volumes in 2018 primarily due to the acquisition of Ash Grove and a full year of ownership of the Suwannee American Cement business. Strong price realisation across our major markets and synergies with CRH’s heritage businesses contributed good operating profits in 2018. Integration of the Ash Grove business progressed well and the business performed in line with expectations.
Canada
Canada had moderate GDP growth in 2018, with solid jobs growth. The economy lost some momentum in the second half of the year due to a slowdown in business and government spending. Cement volumes and prices were behind 2017 due to the exit of the Maritimes market and competitive cement market conditions. The business continued to optimise its terminal network and to further penetrate US markets. Furthermore, adverse weather conditions impacted volumes in our other product categories and as a result, operating profit was behind 2017.
Brazil
Continued political uncertainty, particularly in relation to the presidential elections as well as a truck drivers strike, impacted the Brazilian economy during 2018. The weakness in the construction market continued. CRH cement volumes were stable, in line with consumption trends in the Southeast region. Selling price increases were achieved in a higher input cost environment.
| | | | 48 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Building Products 
CRH’s Building Products Division is a leading manufacturer and supplier of highly engineered and high value-added building products in 19 countries around the world. What We Do Building Products is a new Division established by CRH in 2019 as part of our strategy to create a more simplified and focused business which is better positioned to exploit opportunities presented by economic development, changing demographics, sustainability and other evolving trends in construction markets globally. The Division brings together related products businesses in Europe, North America and Asia Pacific across four strategic product groups for growth: Architectural Products, Building Envelope, Infrastructure Products and Construction Accessories. These businesses are leading suppliers of a wide range of high quality, value-added, innovative building products and solutions, spanning multiple construction applications from residential and commercial structures to public spaces and infrastructure. Typically, they involve a high focus on understanding the needs of our customer, more process and product innovation and a portfolio of products that is exportable to a range of markets globally. From the glazing systems that hold glass in place, to the masonry supports that keep walls standing, our products play a vital role in completing construction projects big and small. They include the products that house the electronics that keep roads moving and connect water and electricity to homes, offices and factories. We supply the pavers, blocks and patio products used to create outdoor living spaces and pave city centres. Bringing these related products together under one Division provides important opportunities to better leverage our scale, capabilities and people to bring more consistent focus on value. How We Create Value Establishing a single Building Products Division enables us to place a consistent focus on value creation and drive sustainable growth. The Division is organised around similar product groups designed to leverage scale, drive strategy and performance excellence and advance our digital and innovation capabilities globally. | * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
| 1. | Products, sector exposure andend-use balance are based on sales. |
| 2. | Net Assets at 31 December 2019 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 226. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 49 |
| | | | | | | | | Creating Value Through Our Global Scale | Our businesses have deep technical expertise and the ability to customise solutions with international market reach. With leadership positions in high growth segments, our strategy is to build and grow scalable businesses, balanced across products, geographies andend-use sectors, increasing the penetration of our range of value-added products and creating competitive advantage through strong customer relationships, brand leadership and service. Our development focus aims to deepen our position in existing business product groups and to broaden our differentiated product portfolio through new growth platforms that are exposed to global megatrends. By operating as one global Building Products Division we can adapt and grow as our markets continue to evolve. How We Structure Our Operations Our Building Products Division is structured around four core product groups: Architectural Products, Building Envelope, Infrastructure Products and Construction Accessories. The Division employs approximately 24,450 people at over 490 locations across 19 countries. | | | |  | | | | | �� Building Products (Discontinued Operations) CRH’s Europe Distribution businesses supplied building materials to professional builders, specialist heating and plumbing contractors, and DIY customers through a network of trusted local and regional brands across a number of mature markets in Western Europe. In July 2019, following a comprehensive strategic review, the Group entered into a sales agreement to divest of its Europe Distribution business. The transaction closed on 31 October 2019. In accordance with IFRS 5Non-Current Assets Held for Sale and Discontinued Operations, the business is reported as discontinued operations for 2019 (see note 3 to the Consolidated Financial Statements). Europe Distribution consisted of three primary business areas: German DIY(Do-It-Yourself), General Builders Merchants (GBM) and Sanitary, Heating and Plumbing (SHAP). | | | | | | | | |
CRH Annual Report and Form 20-F I2018
| 50 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | |
| | | Operations Review - Building Products | | | | Prior Year 2018 | | (Continuing Operations) |
| | | | | | | | | | | | | | | | Results | | | | Analysis of change | | | | | | | | | | | | | | € million | | 2017 | | Exchange | | Acquisitions | | Divestments | | Organic | | 2018 | | % change | Sales revenue | | 6,345 | | -198 | | +209 | | -269 | | +161 | | 6,248 | | -2% | EBITDA (as defined)* | | 769 | | -26 | | +23 | | -23 | | +44 | | 787 | | 2% | Operating profit | | 576 | | -20 | | +13 | | -17 | | +23 | | 575 | | - | EBITDA (as defined)*/sales | | 12.1% | | | | | | | | | | 12.6% | | | Operating profit/sales | | 9.1% | | | | | | | | | | 9.2% | | |
The commentary below excludes the trading performance of Europe HeavysideDistribution which, following its divestment, has been classified as a discontinued operation. Its trading performance is detailed on page 52. Following the disposal of Europe’s DIY business in Benelux, Building Products sales declined 2% in 2018. However, the Division experienced underlying growth, with organic sales 3% ahead of 2017. Targeted price increases, operational efficiencies, procurement initiatives and overhead cost reductions all helped deliver improved margins despite cost increases in raw materials, labour, and logistics. Operating profit increased by 4% on an organic basis as a result of the improved sales performance and a continued focus on cost optimisation and margin enhancement. Construction activity in the US benefited from the improved macroeconomic backdrop; however, US volumes were impacted by bad winter and wet fall weather, continued supply-side factors such as labour and construction cost inflation, and competitive markets. Growth was seen along the West Coast of the US and in parts of the South due to good residential andnon-residential | |  | Prior Year construction activity, partly offset by softness in Canada and parts of the Northern US, due to weather and slower growth markets.The Netherlands saw a significant improvement in performance as the economy expanded. Activity levels in Australia were good and the Polish market also benefited from a strong increase in demand. Sales in the key markets of Germany and the UK remained stable, where the UK incurred some headwinds on profitability driven by the under-performance of the now divested Plaka UK business and a changing customer mix. Architectural Products In North America, Architectural Products saw modest sales growth in 2018, benefiting from healthy residential RMI demand, but volumes were limited by adverse weather, as well as contract labour shortages. Demand for most products was particularly strong along the West Coast, which together with commercial initiatives, drove a small increase inlike-for-like sales compared with 2017. Overall, the business saw solid operating profit growth due to acquisition results and cost reduction initiatives, which more than offset the unfavourable impacts from rising logistics and input costs. As a result of a favourable economic environment in certain key markets, sales and operating profit in Europe finished ahead of 2017. In Poland, operations experienced strong demand and an improvement in performance, through increased sales of higher margin products and overall price improvement. Despite the disruptive weather conditions early in 2018, sales in the German business finished ahead of 2017, |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | | | | Analysis of change | | | | | | | | | | | | | | € million | | 2016 | | | Exchange | | | Acquisitions | | | Divestments | | | Pension Credit1/
LH Costs2 | | | Organic | | | 2017 | | | %
change | | Sales revenue | | | 6,945 | | | | -203 | | | | +95 | | | | -110 | | | | - | | | | +175 | | | | 6,902 | | | | -1% | | EBITDA (as defined)* | | | 781 | | | | -26 | | | | +3 | | | | -17 | | | | +52 | | | | +46 | | | | 839 | | | | 7% | | Operating profit | | | 386 | | | | -16 | | | | -3 | | | | -14 | | | | +52 | | | | +73 | | | | 478 | | | | 24% | | EBITDA (as defined)*/sales | | | 11.2% | | | | | | | | | | | | | | | | | | | | | | | | 12.2% | | | | | | Operating profit/sales | | | 5.6% | | | | | | | | | | | | | | | | | | | | | | | | 6.9% | | | | | |
1Swiss pension plan past service credit of€20 million in 2017
2LH integration costs of€32 million were incurred in 2016
The LH integration costs refers to the businesses acquired from LafargeHolcim in 2015
The commentary below excludes the impact of a past service credit due to pension plan amendments in Switzerland.
Overall the 2017 outturn for Heavyside was positive with market recovery in Ireland, France, Poland and Finland in particular compensating for more subdued trading conditions in Switzerland and the UK. Although total sales declined, modestyear-on-year organic growth resulted in improved operating profit, due to strong operating leverage arising from volume growth in some key countries, signs of progress on pricing and a focus on performance improvement initiatives and synergies.
Tarmac (UK)
Despite political and economic uncertainty in the UK, organic sales in our Tarmac business were ahead of 2016, with growth in building products and contracting sales and modest improvements in pricing for aggregates, asphalt and readymixed concrete compensating for a slight decline in overall volumes. Operating profit was slightly behind 2016, with increased bitumen costs in the asphalt division not fully compensated by increased sales and the impact of performance improvement initiatives.
Europe North
The UK cement and lime operations maintained stable pricing against a backdrop of modest economic growth in 2017, while improvements in production processes and synergies, achieved through network optimisation, further contributed to operating profit growth.
In Ireland, both sales and operating profit were ahead of 2016 mainly due to market recovery, particularly in the residential and commercial sectors, and the resulting growth in cement, aggregates and readymixed concrete volumes; positive trends on pricing across key products also contributed to sales and operating profit.
Improvement in the residential sector and an overall positive economic backdrop resulted in cement volumes in Finland finishing ahead of 2016 and, despite competition from importers negatively affecting cement pricing, operating profit increased.
Europe West
Both sales and operating profits in France benefited from increased volumes in all major products in 2017, particularly cement and readymixed concrete, driven by growth in the residential sector, although pricing remained challenging.
Organic sales in the Benelux grew in 2017 with a strong contribution from some larger projects in the Belgian structural business and growth in the Dutch residential sector; operating profit declined, impacted by aone-off cost in the structural business.
The 2017 outturn in Denmark was positive, with sales and operating profit significantly ahead of 2016 supported by residential construction in major cities, some largenon-residential projects and overall modest economic growth.
The performance in Spain advanced on 2016, with an improvement in the macroeconomic situation.
Both sales and organic operating profit were behind 2016 in Switzerland due to difficult market conditions, with overall domestic cement consumption also impacted by poor weather early in 2017. With pricing pressure arising from imports, cement prices declined.
Lower cement volumes were experienced in our German operations due to reduced demand in key rural markets, a competitive landscape and individual project delays; results were behind 2016. Our lime acquisition, Fels, performed in line with expectations.
Europe East
Overall economic growth was experienced in Poland, driven by private consumption and supported byEU-financed public spending. In addition, execution of previously delayed infrastructure projects resulted in growth in cement volumes and both sales and operating profit were well ahead of 2016.
Both sales and operating profit in Ukraine increased in 2017, with pricing improvement mitigating the impact of inflation and compensating for a decline in cement volumes, which were affected by an increased level of imports.
Our operations in Hungary and Slovakia benefited from solid economic and construction growth in 2017. Improved sales and operating profits were driven by higher cement and readymixed concrete volumes, some positive signs on pricing and an emphasis on performance improvement.
Although the mix of products and projects in Serbia negatively affected cement pricing, overall sales and operating profit were ahead of 2016, supported by both ongoing infrastructure projects and some residential growth.
Organic sales in Romania were slightly ahead of 2016, with poor weather in the early part of 2017 and slower than anticipated commencement of major infrastructure projects compensated by stronger volumes in the last quarter of 2017. Operating profits were ahead of 2016, positively impacted by price improvement and by performance improvement initiatives. however, operational challenges and an unfavourable sales mix resulted in operating profit below 2017. The French business was divested in November. The Benelux operations benefited from higher demand in public markets.
The Shutters & Awnings business recorded a 1% increase in sales compared with 2017, whilst operating profit remained flat. Operations in the Netherlands were assisted by a positive economic environment, supported by favourable weather conditions, while a focus on improvement initiatives and an increased online presence in the UK business resulted in sales and margin growth. Our German businesses were impacted by lower margins due to increased input and labour costs in a more competitive environment. Building Envelope Non-residential building activity in 2018 was muted by higher building materials costs, increasingly tight skilled labour markets and higher interest rates. Building Envelope saw relatively flat organic revenue in 2018 because of a strategic shift away from larger projects. However, increased operating profits were achieved due to improved trading results at its metals and glazing hardware businesses and the inclusion of acquisition results, which more than offset the effects of higher labour and raw material costs. Infrastructure Products Sales growth in North America advanced in 2018 due to good demand for both private construction and public infrastructure, particularly in the Southeast, West and Mountain states of the US. Our Infrastructure Products business recorded significantly increased operating profits, due to reductions in fixed overheads, better operational execution, and good acquisition performance. Infrastructure Products was also able to pass on price increases to offset input cost inflation, and the business saw backlog growth in 2018. Network Access Products had another year of growth in sales and operating profit. The Australian business experienced growth driven by a robust construction market. The French market also saw improvements, while the underlying performance in the UK was behind 2017 due to a change in customer mix, which was partly offset by an acquisition in the second quarter of 2018. The Perimeter Protection business showed a solid increase in sales and operating profit. In the permanent fencing business, performance was driven by the Netherlands, which benefited from the strong economy, while improvement in the mobile fencing business was driven by strong trading across most of our key markets. Construction Accessories It was another year of solid organic sales and operating profit growth, primarily driven by improvements in Western European markets. In Germany, labour shortages on building sites and resulting project delays impacted overall performance. Excluding the divested Plaka business, trade in our UK business saw growth. The Australian business benefited from demand in the high-rise residential market and was boosted by an acquisition earlier in 2018. The export market remained important but challenging due to further project delays, however performance in the Chinese and US markets improved. DIY While DIY sales in the Benelux were down on alike-for-like basis driven by the ongoing trend towards online sales, focus on operational productivity resulted in improved underlying profits. The business was divested in July 2018. | * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
|
| CRH Annual Report and Form 20-F I 2018
|
| | | Current Year 2018 | |  |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | | | | Analysis of change | | | | | | | | | | | | | | € million | | 2017 | | | Exchange | | | Acquisitions | | | Divestments | | | Pension Credit1 | | | Organic | | | 2018 | | | % change | | Sales revenue | | | 6,902 | | | | -54 | | | | +511 | | | | -53 | | | | - | | | | +305 | | | | 7,611 | | | | 10% | | EBITDA (as defined)* | | | 839 | | | | -9 | | | | +65 | | | | -1 | | | | -20 | | | | +37 | | | | 911 | | | | 9% | | Operating profit | | | 478 | | | | -6 | | | | +36 | | | | - | | | | -20 | | | | +13 | | | | 501 | | | | 5% | | EBITDA (as defined)*/sales | | | 12.2% | | | | | | | | | | | | | | | | | | | | | | | | 12.0% | | | | | | Operating profit/sales | | | 6.9% | | | | | | | | | | | | | | | | | | | | | | | | 6.6% | | | | | |
1Swiss pension plan past service credit of€20 million in 2017
The 2018 trading performance for Europe Heavyside was positive, particularly for our operations in Ireland, the Benelux, Denmark and Poland, with more challenging trading conditions in the UK due to increased input costs and continued uncertainty as to the impact on construction activity following the Brexit vote. Theyear-on-year organic sales growth was reflected in an increase in operating profit, as prices progressed and a continued focus on performance initiatives contributed to the growth to offset cost inflation, which is a feature across all markets.
Tarmac (UK)
Despite challenging weather conditions earlier in the year and ongoing political and economic uncertainty in the UK, sales in our Tarmac business were ahead of 2017, underpinned by growth in contracting sales and more modest growth in other materials. Overall, operating profit was behind compared with prior year as continued progress on performance improvement measures was offset by increased input costs and a challenging market environment.
Europe North
A positive performance in the UK lime business as a result of strong environmental volumes partially offset the decline in cement volumes, resulting in overall UK sales and operating profit being behind 2017.
In Ireland, sales and operating profit were ahead of 2017 mainly due to the continued market recovery, particularly in the Dublin region. Volumes increased and positive pricing trends were evident across key products, offsetting increased input costs, particularly energy.
Although cement and readymixed concrete volumes in Finland were slightly behind in 2018, aggregates volumes were higher, positively
impacted by project activity. The concrete products business also performed well due to good market demand, particularly residential, and overall sales and operating profit finished ahead of 2017.
Europe West
Sales and operating profit in France benefited from favourable trading conditions, as good underlying demand resulted in increased volumes and a positive pricing environment for key products, with the exception of the precast concrete business, which was impacted by project delays.
Sales in the Benelux were ahead of 2017, as a positive contribution from the structural businesses reflected good demand in the residential sector, together with improved readymixed concrete pricing. Operating profit finished ahead of 2017, benefiting from good underlying market demand andone-off income.
In Denmark, sales and operating profit finished ahead of prior year, as the business benefited from good underlying demand and progress in pricing achieved during the year.
In Spain, results advanced on prior year, with improved pricing in cement and readymixed concrete partly offset by lower cement volumes, due to severe weather at the beginning of the year and the conclusion of a major project during the year.
Despite a significant increase in cement volumes in Switzerland, benefiting from solid construction growth, sales and operating profit were behind prior year due to a decline in cement and readymixed concrete prices, reflecting strong competition.
In Germany, improved cement pricing as well as the contribution of our lime business Fels, resulted in sales and operating profit ahead of prior year.
Europe East
Trading in Poland was ahead of prior year with good performance in all businesses. Healthy volumes were supported by the economy and the construction sector, which continued to grow at high rates. In addition, good price development was achieved across all activities in a competitive market, contributing to the positive performance in 2018.
In Ukraine, pricing improved in all businesses in 2018 resulting in organic sales finishing aheadyear-on-year, however cement volumes declined due to increased market capacity and unfavourable weather conditions during the first quarter, which combined with cost inflation and logistical constraints resulted in operating profit being behind 2017.
Continued solid economic and construction growth in 2018 contributed to improved sales in Hungary and Slovakia. Despite increasing input costs, operating profit was ahead of prior year, mainly as a result of higher volumes across the businesses.
In Serbia, cement and readymixed concrete volumes increased compared to prior year and overall sales and operating profit were ahead of 2017, supported by performance improvement initiatives.
In Romania, after a slow start to the year, affected by very poor weather conditions, cement volumes recovered and were ahead of prior year. In addition good pricing and margin progression contributed to sales and operating profit growth.
| * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
| | | | | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 51 |
CRH Annual Report and Form 20-F I2018
| | | Operations Review - Asia | |  | Prior |
| | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | Analysis of change | | | | | | | | € million | | 2016 | | | Exchange | | | LH Costs1 | | | Organic | | | 2017 | | | % change | | | Sales revenue | | | 508 | | | | -39 | | | | - | | | | -33 | | | | 436 | | | | -14% | | | EBITDA (as defined)* | | | 109 | | | | -11 | | | | +6 | | | | -52 | | | | 52 | | | | -52% | | | Operating profit | | | 71 | | | | -7 | | | | +6 | | | | -55 | | | | 15 | | | | -79% | | | EBITDA (as defined)*/sales | | 21.5% | | | | | | | | | | | | 11.9% | | | | | | Operating profit/sales | | 14.0% | | | | | | | | | | | | 3.4% | | | | |
1The LH integration costs refers to the businesses acquired from LafargeHolcim in 2015
Philippines
While economic growth and market fundamentals remained robust, with both residential andnon-residential demand stable, major infrastructure projects progressed at a slower pace in 2017.
Although volumes increased in 2017, driven by a strong performance in the Visayas and Mindanao (VisMin) housing sector, overall sales were behind, as prices were impacted by additional capacities in the market and aggressive competitor pricing. The impact of lower selling prices combined with increased fuel and power costs resulted in lower operating profit than 2016.
Equity Accounted Investments
China
Despite volumes being under pressure in Northeast China, prices significantly recovered in the market, with both cement and clinker prices in Yatai Building Materials well ahead of 2016. The higher prices more than offset increased coal prices and resulted in improved performance in 2017.
India
Despite recording higher cement volumes and marginally higher prices, My Home Industries (MHIL) ended 2017 with operating profit behind 2016 due to increased fuel prices, as well as lower sales of power to third parties.
2019 | * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
|
| CRH Annual Report and Form 20-F I 2018 |
| | | | | | | | | | | | | | | | | | Results | | | | Analysis of change | | | | | | | | | | | | | | | € million | | 2018 | | Exchange | | Acquisitions | | Divestments | | Leases | | Organic | | 2019 | | % change | Sales revenue | | 6,248 | | +234 | | +231 | | -576 | | - | | +113 | | 6,250 | | - | EBITDA (as defined)* | | 787 | | +33 | | +27 | | -48 | | +100 | | +62 | | 961 | | 22% | Operating profit | | 575 | | +25 | | +10 | | -16 | | +15 | | +59 | | 668 | | 16% | EBITDA (as defined)*/sales | | 12.6% | | | | | | | | | | | | 15.4% | | | Operating profit/sales | | 9.2% | | | | | | | | | | | | 10.7% | | |
| | | Current YearThe table above and commentary below exclude the trading performance of Europe Distribution which, following its divestment, has been classified as a discontinued operation. Its trading performance is detailed on page 52. Building Products saw continued organic growth in 2019, with sales 2% ahead of 2018, | |  |
| | | | | | | | | | | | | | | | | | | | | | Results | | | | | Analysis of change | | | | | | | | € million | | 2017 | | | Exchange | | | Organic | | | 2018 | | | % change | | | Sales revenue | | | 436 | | | | -36 | | | | +31 | | | | 431 | | | | -1% | | | EBITDA (as defined)* | | | 52 | | | | -7 | | | | -20 | | | | 25 | | | | -52% | | | Operating profit/(loss) | | | 15 | | | | -4 | | | | -25 | | | | -14 | | | | -193% | | | EBITDA (as defined)*/sales | | 11.9% | | | | | | | | | 5.8% | | | | | | Operating profit/sales | | 3.4% | | | | | | | | | -3.2% | | | | |
Philippines
Against a backdrop of strong domestic demand and accelerating government infrastructure spending, the Philippine economy continued to perform despite inflationary pressures and tighter global financial conditions. The favourable long-term outlook for the construction industry remains with the government’s increased focus on capital investment.
Organic revenue performance advanced due to positive prices and ongoing demand from all segments. However, notwithstanding this, operating profit was significantly behind 2017 primarily due to higher fuel and power costs, which were only partially offset by continued commercial excellence and operational performance initiatives.
Equity Accounted Investments
China
Cement demand remained subdued in Northeast China. Price increases partially offset lower volumes and increased coal prices, however Yatai Building Materials’ 2018 performance was lower than 2017.
India
Strong growth in MHIL volumes in India was driven mainly by a sustained pick up in infrastructure spend in Andhra Pradesh and Telangana. However, prices continued to be under pressure due to competition and large institutional sales. Increased fuel prices were exacerbated by adverse foreign exchange rates. As a result, MHIL ended 2018 with operating profit lower than prior year.
* | EBITDA is defined while operating profit increased organically by 10% as earnings beforea result of increased sales and continued emphasis on margin optimisation. Initiatives, which included production efficiencies, commercial excellence, procurement savings and overhead cost control also helped to deliver improved margins.
Solid macroeconomic conditions in the US continued to provide a positive backdrop for construction demand. Volumes growth, especially new residential construction activity, was limited by higher interest taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
CRH Annual Report and Form 20-F I2018
Products Overview
CRH is a leading supplier of building products globally. Our businesses manufacture, supply and deliver a wide range of high quality, value-added, innovative products and solutions needed to shape and enhance the built environment for modern communities.
What we do
Our businesses are leading suppliers of value-added building products, primarily to residential andnon-residential construction projects in markets globally. Customer understanding, product and process innovation and the relative ease with which certain of our products can be transported long distances, are all key features of our products businesses.
We operate a portfolio of product platforms; in Europe, our product platforms are Construction Accessories, Shutters & Awnings,
Network Access Products & Perimeter Protection and Architectural Products, and in North America, our product platforms are Infrastructure, BuildingEnvelope® and Architectural Products.
We continually focus on product innovation and development and we work with specialistend-users, such as architects and engineers, to develop design-solutions that are approved and certified for individual target markets.
We leverage our scale, breadth and capabilities to build competitive advantage in key segments and channels.
| | | | | | | | | | | | | INFRASTRUCTURE
| | | | NETWORK ACCESS PRODUCTS
& PERIMETER PROTECTION
| | | | CONSTRUCTION ACCESSORIES | CRH’s Infrastructure group manufactures a range of precast concrete and polymer-based products such as underground vaults, drainage pipe and structures, utility enclosures and modular precast structures which are supplied to the water, electrical, telephone and railroad markets and to selectnon-residential building applications.
| | | | Similar to our Infrastructure platform, Network Access Products design and manufacture technical systems for access to and protection of utilities infrastructure, including composite access chambers and covers, and meter boxes. These solutions offer a time-saving alternative to traditional methods of construction.
| | | | Our Perimeter Protection business designs, manufactures, installs and services fully integrated outdoor security and detection solutions. This includes fencing, entrance control and perimeter intrusion detection.
| | | | Our Construction Accessories business is a leading global manufacturer and supplier of high-value innovative products and engineered solutions for challenging construction projects. Construction Accessories products include a broad range of engineered anchoring, fixing and connection solutionsrates entering 2019, as well as lifting systems, formwork accessories and general accessories for construction applications.
| 1. Net Assets at 31 December 2018 comprise segment assets less segment liabilities as disclosed in note 2 to the Consolidated Financial Statements.
2. Products, sector exposure andend-use balance are based on sales.
| | |
| CRH Annual Report and Form 20-F I 2018
|
AMERICAS PRODUCTS
How we create value
Our strategy is to build and grow scalable businesses, balanced across products, geographies andend-use sectors, through increasing the penetration of our range of value-added products and creating competitive advantage through strong customer relationships, brand leadership and service.
Our development focus aims to deepen our positions in existing business platforms, to
EUROPE LIGHTSIDE
broaden our differentiated product portfolio through selected new growth platforms that are exposed to attractive global megatrends, and to expand our presence in developing regions as construction markets become more sophisticated. This enables CRH to provide innovative solutions that meet the longer-term opportunities presented by economic development, changing demographics and sustainability.
As part of our ongoing focus on value creation we consistently invest in talent development, commercial and operational excellence processes, innovation and technology to ensure continuous improvement in everything we do. Our commitment to building better businesses is demonstrated in our approach at national, regional and global levels to facilitate best practice sharing.
How we structure
our operations
Our Americas Products Division is organised into three strategic product groups: Infrastructure, BuildingEnvelope® and Architectural Products employing approximately 17,800 people at nearly 370 locations.
Our Europe Lightside Division is organised into four business areas: Construction Accessories, Shutters & Awnings, Network Access Products & Perimeter Protection and Architectural Products. This Division employs approximately 7,300 people at close to 180 locations.
As of 1 January 2019, both these Divisions, together with our Europe Distribution Division merged into one new global Building Products Division.
| | | | | | | BUILDING
ENVELOPE®
| | ARCHITECTURAL PRODUCTS | | | | SHUTTERS
& AWNINGS
| | | | | | | | Our Oldcastle BuildingEnvelope® (OBE) business is a leading integrated supplier of products specified to close the building envelope, including architectural glass, storefront systems, custom engineered curtain and window wall, architectural windows, doors and skylights.
| | In North America, our Architectural Products (APG) business is a leading supplier of concrete masonry, hardscape and related products for residential, commercial and DIY construction markets.
Our concrete masonry products are used for veneers, walls and foundations. Hardscape products comprise pavers, retaining wall and patio products. Dry cement mixes,continued supply-side factors such as Sakrete®labour availability and Amerimix®, are also an important product offering of our business. Lawn & garden products are marketedconstruction cost inflation. Similar to major DIY
| | prior years, growth primarily occurred along the West Coast, Southeast and homecenter chains across the US. Composite decking products, ChoiceDekTMSouth Central US due to goodnon-residential construction activity and MoistureShieldTM are another key outdoor living offering in our portfolio. positive residential RMI demand. In Europe, markets in the Netherlands and Poland continued to benefit from good demand. Despite Brexit uncertainties, our businesses in the UK showed resilience with solid performances in the residential and telecoms sectors. Results in Germany were impacted by slower markets and increased competition. 2019 saw further refinement of the portfolio, including the divestment of Europe Distribution, the Shutters & Awnings and Perimeter Protection businesses in Europe, together with 16bolt-on acquisitions, primarily at our Infrastructure and Architectural Products businesses. Architectural Products Architectural Products in North America experienced good sales growth, capitalising on solid residential RMI demand and favourable weather in most markets, especially in Eastern US. Product mix optimisation and targeted selling prices helped to recover input cost inflation in most markets, but trading was partly offset by challenging market conditions in Canada. Overall, the business isdelivered strong operating profit growth, bolstered by operating efficiencies, contributions from recent acquisitions and cost reduction initiatives. The European businesses recorded strong sales and profits in the first half of 2019, supported by good weather, operational improvements and selling price advancement. Demand slowed during the second-half in Western Europe, with wet weather being a leading producer of exterior hardscape products across five countries. It produces pavers, kerbs, retaining wallscontributory factor. Overall sales and slabsprofits for both private and public use. Products are sold to General Builders Merchants and DIY outlets as well as to municipalities and large contractors.the year were mixed, with a strong performance in Poland partly offset by some softness in Western Europe. | | OurThe Shutters & Awnings business, designs, manufactureswhich was divested in June, recorded results similar to the comparable period in the prior year, with the positive impact of more benign weather conditions in the first half of the year offset by increased competition in Germany.
Building Envelope Building Envelope sawlike-for-like sales growth driven by good demand and supplies roller shutters, awnings, terrace roofsincreased selling prices in our C.R. Laurence and related productsaluminium glazing businesses. Sales growth was limited by competitive markets in the fabricated glass business. In addition to revenue growth, higher operating profits were achieved due to more stable aluminium input costs, a strategic shift away from larger lower margin projects and focus on self-help initiatives. Infrastructure Products Our Infrastructure Products business in North America recorded healthy sales growth in 2019 due to good demand for sun protectionboth private construction and outdoor living. CRH companies offer energy-efficient productspublic infrastructure, particularly in the Southeast and solutions which contributeWest regions of the US. Building on progress from the prior year, Infrastructure Products was successful at delivering price increases in excess of input cost inflation. The business recorded significantly increased operating profit due to improved operational efficiencies, commercial initiatives and overhead cost control. The business also experienced another year of backlog growth in 2019. Our European and Australian business (formerly Network Access Products) delivered another year of solid growth. Performance in Europe was well ahead of the prior year due to increased sales to the telecom and rail sectors. However, Australian sales were below prior year due to challenging market conditions in the telecom sector. Overall operating profit finished ahead of 2018. The Perimeter Protection business was divested in September. Compared with the same period in 2018, the business recorded lower sales while operating profits advanced due to cost improvements. Construction Accessories The US business achieved strong organic sales and operating profit growth due to increased volumes and prices against the backdrop of a secure, sustainablesolid USnon-residential market. The Construction Accessories business in Europe recorded a 4% increase inlike-for-like sales compared with prior year, along with higher operating profit, driven by commercial excellence initiatives and comfortable environment. | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposalspositive market trends in certain geographies. Revenue growth was driven by the UK, France, the Netherlands and Switzerland. Our German business was impacted by increased competition and market uncertainty during the Group’s sharesecond half of equity accounted investments’ profit after tax.
|
CRH Annual Report and Form 20-F I2018
| | | Operations Review -Americas Products | |  | Prior Year 2017 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | | | Analysis of change | | | | | | | | | | € million | | | 2016 | | | | Exchange | | | | Acquisitions | | | | Divestments | | | | Organic | | | | 2017 | | | | % change | | | Sales revenue | | | 4,280 | | | | -79 | | | | +87 | | | | -14 | | | | +53 | | | | 4,327 | | | | 1% | | | EBITDA (as defined)* | | | 543 | | | | -10 | | | | +10 | | | | +1 | | | | +29 | | | | 573 | | | | 6% | | | Operating profit | | | 411 | | | | -8 | | | | +4 | | | | +2 | | | | +26 | | | | 435 | | | | 6% | | | EBITDA (as defined)*/sales | | | 12.7% | | | | | | | | | | | | | | | | | | | | 13.2% | | | | | | | Operating profit/sales | | | 9.6% | | | | | | | | | | | | | | | | | | | | 10.1% | | | | | |
Improvements in macroeconomic conditions positively impacted construction; however, activity was limited by historically high levels of precipitation in 2017, supply-side factors such as the shortage of skilled construction labour and competitive markets. Americas Products saw good growth along the West Coast and parts of the South and Southeast due to improved residential andnon-residential construction, partly offset by more modest trading in Canada and parts of the Northern US. Contributions from improved operational efficiencies, improved product and project mix, procurement initiatives and targeted price increases more than offset the impact of input cost inflation. Benefiting from the contribution of acquisitions and synergies from the CRL acquisition, Americas Products achieved a 6% increase in operating profit in 2017 and margins improved.
Americas Products completed eight acquisitions and one joint venture investment in 2017 for total consideration of€0.2 billion. The acquisition of Advanced Environmental Recycling Technologies, Inc. (AERT), a manufacturer of composite decking, added an outdoor living product complementary to APG’s Belgard hardscapes and retaining wall products. Also, the acquisition of Block USA extended APG’s masonry footprint into Alabama, Mississippi and the Gulf Coast.
Architectural Products
With the benefit of acquisitions, APG saw increased activity in 2017, especially in the residential RMI sector. Growth was at a more measured pace than 2016, with volumes affected by unfavourable weather and installation labour shortages. Activity was good across most of the US but more moderate in Canada. Solid demand from major products and distribution channels, together with product innovation and commercial initiatives, drove a modest increase inlike-for-like sales compared with 2016. APG focused on operating cost reduction efforts to maximise returns. Overall, APG saw good operating profit growth for 2017.
BuildingEnvelope®
In 2017,non-residential building activity advanced but at a slower pace than prior years. OBE experienced relatively flat sales revenue in 2017 because of more challenging market conditions, more selective bidding on larger projects and tighter skilled labour markets. However, OBE recorded improved operating profits because of better sales mix, improved operational performance and synergies from the integration of the CRL and OBE businesses.
Infrastructure
Sales growth was achieved in 2017 but was limited by unfavourable weather and relatively slower demand growth for both private construction and public infrastructure in certain markets. The Infrastructure group recorded increased operating profits, due to better operational performance at construction project businesses, partly offset by margin impacts from increased input costs. In addition, backlogs remained strong in 2017.
| * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
| CRH Annual Report and Form 20-F I 2018 |
| | | | | Current Year 2018 | |  |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | | | Analysis of change | | | | | | | | | | € million | | | 2017 | | | | Exchange | | | | Acquisitions | | | | Divestments | | | | Organic | | | | 2018 | | | | % change | | | Sales revenue | | | 4,327 | | | | -187 | | | | +193 | | | | -2 | | | | +102 | | | | 4,433 | | | | 2% | | | EBITDA (as defined)* | | | 573 | | | | -25 | | | | +21 | | | | +1 | | | | +33 | | | | 603 | | | | 5% | | | Operating profit | | | 435 | | | | -19 | | | | +12 | | | | +1 | | | | +30 | | | | 459 | | | | 6% | | | EBITDA (as defined)*/sales | | | 13.2% | | | | | | | | | | | | | | | | | | | | 13.6% | | | | | | | Operating profit/sales | | | 10.1% | | | | | | | | | | | | | | | | | | | | 10.4% | | | | | |
Construction activity continued to benefit from the improved macroeconomic backdrop; however, volumes were impacted by bad winter and wet fall weather, continued supply-side factors such as labour and construction cost inflation, and competitive markets. Similar to 2017, Americas Products saw growth along the West Coast of the US and in parts of the South due to good residential andnon-residential construction activity, partly offset by softness in Canada and parts of the Northern US, due to weather and slower growth markets. Targeted price increases, operational efficiencies, procurement initiatives and overhead cost reductions all helped deliver improved margins despite cost increases in raw materials, labour, and logistics. Americas Products achieved a 6% increase in total operating profit.
Americas Products completed six acquisitions for total consideration of c.€160 million. The acquisitions of Coral Industries and SIGCO extended OBE’s geographic footprint and product offerings in the Southeast and Northeast US, respectively. Similarly, the Concrete Specialties acquisition and the Ash Grove packaging division added geographic exposure to Central US markets where Infrastructure and APG, respectively, had a relatively small presence.
Architectural Products
APG saw modest sales growth in 2018, benefiting from healthy residential RMI demand, but volumes were limited by adverse weather, as well as contract labour shortages. Demand for most products was particularly strong along the West Coast, which together with commercial initiatives, drove a small increase inlike-for-like sales compared with 2017. Overall, APG saw solid operating profit growth due to acquisition results and cost reduction initiatives, which more than offset the unfavourable impacts from rising logistics and input costs.
BuildingEnvelope®
Non-residential building activity in 2018 was muted by higher building materials costs, increasingly tight skilled labour markets and higher interest rates. OBE saw relatively flat organic revenue in 2018 because of a strategic shift away from larger projects. However, OBE achieved increased operating profits due to improved trading results at its metals and glazing hardware businesses and the inclusion of acquisition results, which more than offset the effects of higher labour and raw material costs.
Infrastructure
The Oldcastle Precast business was rebranded to Oldcastle Infrastructure in 2018 to better reflect the diversity of its product offerings. Sales growth advanced in 2018 due to good demand for both private construction and public infrastructure, particularly in the Southeast, West and Mountain states of the US. Infrastructure recorded significantly increased operating profits, due to reductions in fixed overheads, better operational execution, and good acquisition performance. Infrastructure was also able to pass on price increases to offset input cost inflation, and the business saw backlog growth in 2018.
* | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
|
CRH Annual Report and Form 20-F I2018
| | | Operations Review -Europe Lightside | |  | Prior Year 2017 |
| | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | | | Analysis of change | | | | | | | | | | € million | | | 2016 | | | | Exchange | | | | Acquisitions | | | | Organic | | | | 2017 | | | | % change | | | Sales revenue | | | 1,392 | | | | -15 | | | | +7 | | | | +56 | | | | 1,440 | | | | 3% | | | EBITDA (as defined)* | | | 137 | | | | -2 | | | | +1 | | | | +7 | | | | 143 | | | | 4% | | | Operating profit | | | 92 | | | | -2 | | | | +1 | | | | +11 | | | | 102 | | | | 11% | | | EBITDA (as defined)*/sales | | | 9.8% | | | | | | | | | | | | | | | | 9.9% | | | | | | | Operating profit/sales | | | 6.6% | | | | | | | | | | | | | | | | 7.1% | | | | | |
Europe Lightside experienced a year of growth in 2017 as good performances in a number of key markets resulted in total sales for the Division finishing 3% ahead of 2016. Strong activity levels in the UK market underpinned demand, particularly for our Construction Accessories and Network Access Products businesses. Economic recovery in the Netherlands and Poland in 2017 resulted in good growth, while activity in other key markets, including Belgium and Germany, was stable. Against this overall favourable market backdrop, cost optimisation and margin enhancement resulted in an 11% operating profit increase for the Division.
Construction Accessories
2017 was one of progress for the Construction Accessories platform with strong organic sales due to robust activity levels across core markets and product innovation. Operating profit also expanded, despite restructuring charges taken as part of the platform’s optimisation of its production network. OurUK-based engineered accessories business experienced strong demand for its products, supported by good activity levels and both sales and operating profit were ahead of 2016. In Germany, the business also advanced in 2017, as positive trading conditions resulted in increased demand. For our Swiss business, reasonable activity levels saw sales finish ahead of 2016. Activities in the Netherlands and France benefited from economic recovery in 2017 while sales in our Belgian business advanced in competitive markets. Our export markets proved challenging as project delays impacted performance, though our Australian business saw organic growth due to good demand for its products.
Shutters & Awnings
The Shutters & Awnings business recorded a 3% increase in sales compared with 2016. The Netherlands, supported by underlying market activity and benefiting from operational improvements, reported a good trading performance. Our German businesses experienced challenges arising from tighter labour markets and increased input costs; however, sales across the businesses advanced in 2017. The UK business reported a solid trading performance despite currency pressure. Operating profit for the platform remained in line with 2016.
Network Access Products
& Perimeter Protection
The Network Access Products business had another year of growth in both sales and operating profit in 2017. Positive underlying infrastructure demand continued, particularly in itsUK-based business; in addition, focus on optimising costs and product profile resulted in positive margin development for the business.
The permanent fencing business overall had a positive year in 2017 as it reported both sales and operating profit ahead of 2016. Continued cost focus at our UK businesses resulted in improved sales and profitability and margins advanced in the Netherlands, despite competitive markets. The mobile fencing business, after a strong 2016, experienced another year of growth benefiting from improved building activity in its core markets.
Architectural Products
Despite a good demand backdrop across the platform’s main markets and sales progression, operating profit finished behind 2016 as a result of a lower margin product profile in some markets. In the Benelux, trading advanced in 2017 in an overall positive economic environment. For our German business, trading was broadly in line with 2016 while results were positively impacted by improved pricing and operational performance. In Poland, our operations experienced strong demand, albeit for some lower margin products, and with good volume growth sales finished ahead of 2016.
* | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
|
| CRH Annual Report and Form 20-F I 2018 |
| | | | | Current Year 2018 | |  |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | | | Analysis of change | | | | | | | | | | € million | | | 2017 | | | | Exchange | | | | Acquisitions | | | | Divestments | | | | Organic | | | | 2018 | | | | % change | | | Sales revenue | | | 1,440 | | | | -11 | | | | +16 | | | | -12 | | | | +75 | | | | 1,508 | | | | 5% | | | EBITDA (as defined)* | | | 143 | | | | -1 | | | | +2 | | | | +1 | | | | +7 | | | | 152 | | | | 6% | | | Operating profit | | | 102 | | | | -1 | | | | +1 | | | | +1 | | | | +7 | | | | 110 | | | | 8% | | | EBITDA (as defined)*/sales | | | 9.9% | | | | | | | | | | | | | | | | | | | | 10.1% | | | | | | | Operating profit/sales | | | 7.1% | | | | | | | | | | | | | | | | | | | | 7.3% | | | | | |
With sales 5% ahead of 2017, it was a successful year for Europe Lightside, boosted by acquisitions in the Network Access Products and Construction Accessories platforms. The Netherlands saw a significant improvement in performance as the economy continued to expand. Activity levels in Australia were good and the Polish market also benefited from a strong increase in demand. Sales in the key markets of Germany and the UK remained stable, where the UK incurred some headwinds on profitability driven by the under-performance of the now divested Plaka UK business and a changing customer mix in Network Access Products. Operating profit for the Division increased by 8% as a result of the improved sales performance and a continued focus on cost optimisation and margin enhancement.
Construction Accessories
It was another year of solid organic sales and operating profit growth for the Construction Accessories platform, primarily driven by improvements in Western European markets. In Germany, labour shortages on building sites and resulting project delays impacted overall performance. Excluding the divested Plaka business, trade in our UK business saw continued growth. The Australian business benefited from continued demand in the high-rise residential market and was also boosted by an acquisition earlier in the year. The export market remained important but challenging due to further project delays, however performance in the Chinese and US markets improved.
Shutters & Awnings
The Shutters & Awnings business recorded a 1% increase in sales compared with the prior year, whilst operating profit remained flat. Once again operations in the Netherlands were assisted by a positive economic environment, supported by favourable weather conditions, while a focus on improvement initiatives and an increased online presence in the UK business resulted in sales and margin growth. Our German businesses were impacted by lower margins due to a combination of increasing input and labour costs in a more competitive environment.
Network Access Products & Perimeter Protection
Network Access Products had another year of growth in sales and operating profit. The Australian business continued to experience growth driven by a robust construction market. The French market also saw improvements, while the underlying performance in the UK was behind last year due to a change in customer mix, which was partly offset by an acquisition in the second quarter of 2018.
The Perimeter Protection business showed a solid increase in sales and operating profit. In the permanent fencing business, performance was driven by the Netherlands, which benefited from the strong economy, while improvement in the mobile fencing business was driven by strong trading across most of our key markets.
Architectural Products
As a result of a favourable economic environment in certain key markets, sales and operating profit finished ahead of prior year. In Poland, operations experienced strong demand and an improvement in performance, through increased sales of higher margin products and overall price improvement. Despite the disruptive weather conditions early in the year, sales in the German business finished ahead of 2017, however, operational challenges and an unfavourable sales mix resulted in operating profit below prior year. The French business was divested in November. The Benelux operations benefited from higher demand in public markets.
* | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
|
CRH Annual Report and Form 20-F I2018
Distribution Overview
CRH’s Europe Distribution businesses supply building materials to professional builders, specialist heating and plumbing contractors, and DIY customers through a network of trusted local and regional brands across a number of mature markets in Western Europe.
What we do
We supply a wide range of building materials, catering to different local markets and varied customer groups.
Typically we serve professional customers, including both specialist and general contractors, as well as consumers.
Our distribution customers rely on us to have the right products in stock, at the right time and in the right location in order to ensure their own operations can continue to operate in an efficient and economical manner. They also expect us to have a high degree of product knowledge and technical information, which is an area we focus on through ongoing employee training and development.
| | | | | | | | | DIY
| | | | | | | | GENERAL BUILDERS MERCHANTS | Our DIY platform operates under two different brands: Hagebaumarkt (Germany) and our Maxmat joint venture (Portugal). Serving the residential RMI segment, our DIY business sells decorative and home improvement products direct to the consumer from easily-accessible retail locations.
| | | | | | | | Our businesses distribute heavy building materials and related products from 332 locations to professional customers, mainly small and medium sized builders. These businesses have strong regional positions based on a comprehensive branch coverage, wide product offering and high stock availability.
| 1. Net Assets at 31 December 2018 comprise segment assets less segment liabilities as disclosed in note 2 to the Consolidated Financial Statements.
2. Activities, sector exposure and end-use balance are based on sales.
|
| CRH Annual Report and Form 20-F I 2018
|
EUROPE DISTRIBUTION
| | | | | | | | | | | | | | | | € million | | % of Group | | Sales | | | | 3,856 | | | | | 14% | | | | | | | | | | | | | | Operating Profit | | | | 112 | | | | | 5% | | | | | | | | | | | | | | EBITDA (as defined)* | | | | 181 | | | | | 5% | | | | | | | | | | | | | | Net Assets1 | | | | 1,242 | | | | | 5% | |
How we create value
We operate a portfolio of local brands that focus on building deep customer relationships through quality of service, reliability and focused propositions tailored to selected market segments.
We innovate around the changing needs of our customers through the introduction of additional product categories, new formats and technology supporting our interaction with customers.
Collective expertise from across our various business segments is leveraged to optimise the supply chain, withjust-in-time logistics, a category-management-based approach to procurement and focused IT systems.
Our development strategy is focused on increasing the network density of our existing businesses in our core markets, while also investing in new platforms and formats in other attractive segments of building materials distribution.
Substantial opportunities remain to develop our existing network in our core markets and to establish new propositions aimed at increasing our exposure to growing RMI market demand.
How we structure our operations
Our businesses are active in three primary business areas: DIY(Do-It-Yourself), General Builders Merchants (GBM) and Sanitary, Heating and Plumbing (SHAP). We also hold a 21.13% equity interest in Samse S.A., a publicly-quoted distributor of building materials to the merchanting sector in theRhône-Alpes region of France. The Division employed approximately 10,200 people during the year, and following the divestment of the DIY business in Benelux in July 2018, now operates across over 550 locations.
| | | | | | | SANITARY, HEATING AND PLUMBING
| | |
| | | | | | | Our SHAP businesses specialise in servicing the needs of plumbers and heating, gas, water, and ventilation technicians at 178 locations. The businesses are organised around public-facing showrooms to facilitate product choice, central warehousing and a wide network ofpick-up locations for installers to collect orco-ordinate delivery.
| | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
|
CRH Annual Report and Form 20-F I2018
| | | Operations Review -Europe Distribution | |  | Prior Year 2017
|
| | | | | | | | | | | | | | | | Results | | | | | | Analysis of change | | | | | | | | € million | | 2016 | | Exchange | | Acquisitions | | Pension Credit1 | | Organic | | 2017 | | % change | | Sales revenue | | 4,066 | | -20 | | +28 | | - | | +71 | | 4,145 | | 2% | | EBITDA (as defined)* | | 206 | | -1 | | - | | +61 | | +3 | | 269 | | 31% | | Operating profit | | 130 | | -1 | | - | | +61 | | +17 | | 207 | | 59% | | EBITDA (as defined)*/sales | | 5.1% | | | | | | | | | | 6.5% | | | | Operating profit/sales | | 3.2% | | | | | | | | | | 5.0% | | | | | | | | | | | | 1Swiss pension plan past service credit of€61 million in 2017 |
| | | | | | 52 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Operations Review - Building Products | | | | | (Discontinued Operations) |
Current Year 2019 The commentary below excludesrefers to the impacttrading results of a past service credit dueEurope Distribution for the first ten months of 2019 prior to pension plan amendments in Switzerland. its divestment on 31 October 2019. Europe Distribution experienced stablemodest sales and profit development in 2017growth during 2019 but with mixed performances across ourthe businesses. Overall sales were slightly ahead of 2016 with a strong contribution from ourthe GBM business in the NetherlandsGermany, which benefited from an increase in residential building volumes.increasedend-user demand. In addition, ourthe SHAP businesses in Germany and Belgium gainedcontinued to gain market share in consolidating markets. These positive developments were partly offset by difficult market conditions in Switzerland.Switzerland and slowing residential demand in the Netherlands. General Builders Merchants OurThe GBM business showed 3%2% sales growth in 2017,the first ten months of 2019, with stable operating profit excluding depreciation. Increasedprofit. Despite slowing residential demand in the Netherlands, combinedoverall sales in the Dutch business were marginally ahead of 2018 and, with deliverycontinued focus on performance improvement projects, resulted in further growth of the Dutch operating profit. Ourprofit was also ahead.
The German business showed sales growth against a flatan improving RMI market backdrop,backdrop; however, with an increasing portion of demand coming from lower margin direct sales, margins were under pressure which resulted in operating profit impacted by acquisition-related costs.being slightly behind. Market conditions in Switzerland remained challenging in 2017 due to sluggish residential demand, and cost savings initiatives could not fully offset the impact of lower sales andas increased pressurecompetition on trade margins. Ourmargins more than offset stabilising demand. The French business benefited from an improving residential sector andwhile sales in the performanceAustrian business declined due to market pressure in our Austrian businessall channels; however, operating profit improved due to thecontinued focus on our cost base. | | Sanitary, Heating and& Plumbing SalesContinued sales growth from additionalpick-up locations and further investments in showrooms led to market share improvement in our German and Belgian SHAP businesses in 2017.businesses. Operating profit decreased due towas ahead, benefiting from increased volumes together with operational improvement and procurement initiatives, partly offset by declining results in Switzerland, whichSwitzerland.
DIY The substantial part of our European DIY footprint was disposed in July 2018. The remaining business, part of our overall German Distribution operations, was divested with the wider Europe Distribution business in October. Results in 2019 prior to disposal were positive withlike-for-like sales ahead of 2018 for the ten months to October. Prior Year 2018 Europe Distribution realised modestlike-for-like sales growth in 2018, excluding the change in treatment of certain direct sales. This increase was driven mainly by our GBM business, with ongoing positive momentum in the Netherlands, particularly in residential construction activity. Furthermore, our SHAP business in Germany continued to gain market share in a relatively flat market. These positive developments were partly offset by operationalchallenging market conditions in a competitive environment across our Swiss business, particularly in the first half of 2018. Operating profit was further impacted by thenon-recurrence of theone-off Swiss pension scheme credit in 2018. General Builders Merchants Our GBM business realised solidlike-for-like sales, excluding the change in treatment of certain direct sales, and improvedlike-for-like operating profit. Positive market conditions and performance improvement procurement initiatives andled to continued growth in Belgium and Germany. DIY
Despite improved consumer confidenceof operating profit in the Netherlands, Belgiumwhile sales and profit growth in Germany was partly attributable to 2017 acquisitions. Underlying sales in Switzerland were marginally behind 2017, competitive pressures and an increased trend towards online sales contributed to declining store sales. Operating profit in our Netherlands business improvedwith the residential market remaining challenging due to a focus on overhead coststendency towards multi-family homes, which contributed to lower margin levels. Our businesses in France and personnel productivity initiatives. Despite the opening of a new storeAustria were impacted by adverse weather in the Brussels area,beginning of 2018 and increased competition from new entrants.
Sanitary, Heating and Plumbing Our SHAP business in Germany continued to realise growth and gained further market share, benefiting from additionalpick-up locations and showrooms. Our Belgian business faced some challenges in a somewhat slower market, which negatively impacted results. Sales and profit at our business in Switzerland were below 2017, due to continued challenges in the residential market and increased competition. Our SHAP business completed acquisitions in Germany and Belgium in the second half of 2018. Thesebolt-on acquisitions had a modest impact on sales and operating profit remained stable in a competitive environment. Our German2018. DIY In Germany, our DIY business performed in line with 2016, although trading was impacted by some unfavourablerecovered from the inclement weather conditions atin the beginning of 2017. | | |
* | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges,2018 and realised stable sales and profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
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levels.
| CRH Annual Report and Form 20-F I 2018 |
| | | Current Year 2018
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Results | | | | | | | | Analysis of change | | | | | | | | | | | | | | | € million | | 2017 | | | Exchange | | | Acquisitions | | | Divestments | | | Pension
Credit2 | | | Organic | | | 2018 | | | %
change | | | Sales revenue1 | | | 4,145 | | | | -38 | | | | +109 | | | | -255 | | | | - | | | | -105 | | | | 3,856 | | | | -7% | | | EBITDA (as defined)* | | | 269 | | | | -2 | | | | +2 | | | | -25 | | | | -61 | | | | -2 | | | | 181 | | | | -33% | | | Operating profit | | | 207 | | | | -1 | | | | +1 | | | | -19 | | | | -61 | | | | -15 | | | | 112 | | | | -46% | | | EBITDA (as defined)*/sales | | | 6.5% | | | | | | | | | | | | | | | | | | | | | | | | 4.7% | | | | | | | Operating profit/sales | | | 5.0% | | | | | | | | | | | | | | | | | | | | | | | | 2.9% | | | | | | | 1Reported 2018 sales were impacted by the change in treatment of certain direct sales at GBM to an agency (net commission) basis following the adoption of the new revenue accounting standard, IFRS 15. Excluding the adjustment (c. €175 million),like-for-like sales were 2% ahead of 2017 | | | 2Swiss pension plan past service credit of €61 million in 2017 | |
Europe Distribution realised modestlike-for-like sales growth in 2018, excluding the change in treatment of certain direct sales. This increase was driven mainly by our GBM business, with ongoing positive momentum in the Netherlands, particularly in residential construction activity. Furthermore, our SHAP business in Germany continued to gain market share in a relatively flat market. These positive developments were partly offset by challenging market conditions in a competitive environment across our Swiss business, particularly in the first half of the year. Overall sales were behind 2017, primarily due to the divestment of our DIY business in the Benelux.
General Builders Merchants
Our GBM business realised solidlike-for-like sales, excluding the change in treatment of certain direct sales, and improvedlike-for-like operating profit. Positive market conditions and performance improvement initiatives led to continued growth of operating profit in the Netherlands, while sales and profit growth in Germany was partly attributable to prior year acquisitions. Underlying sales in Switzerland were marginally behind 2017, with the residential market remaining challenging due to a tendency towards multi-family homes, which contributed to lower margin levels. Our businesses in France and Austria were impacted by adverse weather in the beginning of the year and increased competition from new entrants.
Sanitary, Heating and Plumbing
Our SHAP business in Germany continued to realise growth and gained further market share, benefiting from additionalpick-up locations and showrooms. Our Belgian business faced some challenges in a somewhat slower market, which negatively impacted results. Sales and profit at our business in Switzerland were below prior year, due to continued challenges in the residential market and increased competition.
Our SHAP business completed acquisitions in Germany and Belgium in the second half of the year. Thesebolt-on acquisitions had a modest impact on sales and operating profit in 2018.
DIY
While DIY sales were down on alike-for-like basis driven by the ongoing trend towards online sales, focus on operational productivity resulted in improved underlying profits. In Germany, our DIY business recovered from the inclement weather conditions in the beginning of the year and realised stable sales and profit levels. Overall results however were impacted by the disposal of our DIY business in the Benelux in July 2018.
* | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
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| | Stradus, part of CRH’s Building Products Division, supplied c.1,000 Hydro Lineo XL grass tiles to pave the surroundings of an office complex in Doornik, Belgium. The lattice structure allows water to slowly drain away, keeping the surface free from water while not overloading drainage systems.
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| | | CRH’s ‘Life Saving Rules’ set out the minimum safety standards for all CRH operations globally. Helmets and safety glasses similar to those worn by this Raw Materials Manager at Mykolaivcement, Ukraine,HALFEN, part of CRH’s Europe HeavysideBuilding Products Division, are amongsupplied 200 panel anchors to affix the minimum mandatory personal protective equipment (PPE) requirements when working at CRH sites. | | |
facade of the new Pavilion 6 of the Paris Expo Porte de Versailles exhibition centre. The centre, which is Europe’s largest conference venue, welcomes more than 7.5 million visitors and hosts 200 events each year.
CRH Annual Report and Form 20-F I2018
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Richie Boucher | | | | Albert Manifold | | | | Senan Murphy | | | | | | | | | | | | Chairman | | | | Chief Executive | | | | Group Finance Director | | | | | | | | | | | | Appointed to the Board:March 2018 | | | | Appointed to the Board:January 2009 | | | | Appointed to the Board:January 2016 | | | | | | | | | | | | Nationality:Irish Age:61 | | | | Nationality:Irish Age:57 | | | | Nationality:Irish Age:51 | | | | | | | | | | | | Committee membership: | | | | Committee membership: | | | | Committee membership: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Skills and experience: | | | | | | | | | | | | | Board of Directors | | Nicky
Hartery
Chairman
Appointed to the Board:
June 2004
Nationality:
Irish
Age:
67
Committee membership:
| | | | Albert
Manifold
Chief Executive
Appointed to the Board:
January 2009
Nationality:
Irish
Age:
56
Committee membership:
| | | | Senan
Murphy
Group Finance Director
Appointed to the Board:
January 2016
Nationality:
Irish
Age:
50
Committee membership:
| | | | | | | | | | Board Committees
 Acquisitions
 Audit
 Finance
 Nomination & Corporate Governance
 Remuneration
 Safety, Environment & Social Responsibility
 Committee Chairman
| | Skills and experience:
Nicky was Vice President of Manufacturing and Business Operations for Dell Inc.’s Europe, Middle East and Africa (EMEA) operations from 2000 to 2008. Prior to joining Dell, he was Executive Vice President at Eastman Kodak and previously held the position of President and Chief Executive Officer at Verbatim Corporation, based in the US.
Qualifications: C.Eng, FIEI,
MBA.
External appointments:
Listed:Non-executive Director of Finning International, Inc., the world’s largest Caterpillar equipment dealer.Non-listed: Chief Executive of Prodigium, a consulting company which provides business advisory services;non-executive Chairman of Musgrave Group plc, a privately-owned international food retailer; and Chair of Horse Racing Ireland, a body which is responsible for developing and promoting Ireland as a world centre for excellence for horse racing and breeding.
| | | | Skills and experience:
Albert was appointed a CRH Board Director in January 2009. He joined CRH in 1998. Prior to joining CRH, he was Chief Operating Officer with a private equity group. While at CRH he has held a variety of senior positions, including Finance Director of the Europe Materials Division, Group Development Director and Managing Director of Europe Materials. He became Chief Operating Officer in January 2009 and was appointed Group Chief Executive with effect from
1 January 2014.
Qualifications: FCPA, MBA, MBS.
External appointments:
Listed: Not applicable.
Non-listed: Not applicable.
| | | | Skills and experience:
Senan has over 28 years’ experience in international business across financial services, banking and renewable energy. He joined CRH from Bank of Ireland Group plc where he was the Chief Operating Officer and a member of the Group’s Executive Committee. He previously held positions as Chief Operating Officer and Finance Director at Ulster Bank, Chief Financial Officer at Airtricity and numerous senior financial roles in GE, both in Ireland and the US.
Qualifications: BComm, FCA.
Richie has extensive experience in all aspects of financial services and was Chief Executive of Bank of Ireland Group plc between February 2009 and October 2017. He also held a number of key senior management roles within Bank of Ireland, Royal Bank of Scotland and Ulster Bank. He is a past President of the Institute of Banking in Ireland and of the Irish Banking Federation. Qualifications: Bachelor of Arts (Economics) from Trinity College, Dublin; Fellow of the Institute of Banking in Ireland. External appointments: Listed: Director of Kennedy-Wilson Holdings, Inc., a global real estate investment company, and Eurobank Ergasias S.A., a bank based in Athens, Greece which has operations in Greece and several other European counties. Non-listed: Not applicable. | | | | Skills and experience: Albert joined CRH in 1998. Prior to joining CRH, he was Chief Operating Officer with a private equity group. While at CRH he has held a variety of senior positions, including Finance Director of the Europe Materials Division, Group Development Director and Managing Director of Europe Materials. He became Chief Operating Officer in January 2009 and was appointed Group Chief Executive with effect from 1 January 2014. Qualifications: FCPA, MBA, MBS. External appointments: Listed: Non-executive Director of LyondellBasell Industries N.V., one of the largest plastics, chemicals and refining companies in the world. Non-listed: Not applicable. | | | | Skills and experience: Senan has extensive experience in international business across financial services, banking and renewable energy. He joined CRH from Bank of Ireland Group plc where he was the Chief Operating Officer and a member of the Group’s Executive Committee. He previously held positions as Chief Operating Officer and Finance Director at Ulster Bank, Chief Financial Officer at Airtricity and numerous senior financial roles in GE, both in Ireland and the US. Qualifications: Fellow of Chartered Accountants Ireland. Senan also holds a Bachelor of Commerce and Diploma in Professional Accounting from University College Dublin. External appointments: Listed: Not applicable. Non-listed: Not applicable. | | |
| | | | | | | | | CRH Annual Report and Form 20-F I 2018
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gillian L. | | | | | | | | | | | | | | | Gillian L.
Platt
Senior Independent Director
Appointed to the Board:
January 2017
Nationality:
Canadian
Age:
65
Committee membership:
| | | | Richard
Boucher
Non-executive Director
Appointed to the Board:
March 2018
Nationality:
Irish
Age:
60
Committee membership:
| | | | Patrick J.
Kennedy
Non-executive Director
Appointed to the Board:
January 2015
Nationality:
Irish
Age:
65
Committee membership:
| | | | | | | | | | | | Skills and experience:
During the course of her executive career, Gillian has held a number of senior leadership positions in a variety of industries, geographies and roles including human resources, corporate affairs and strategy. Most recently she was Executive Vice President and Chief Human Resources Officer at Finning International, Inc. (the world’s largest Caterpillar equipment dealer) with global responsibility for human resources, talent development and communications. She previously held senior executive roles at Aviva, the multinational insurance company, as Executive Vice President Human Resources and Executive Vice President Strategy and Corporate Development.
Qualifications: Bachelor of Arts from the University of Western Ontario and a Masters of Education from the University of Toronto.
External appointments:
Listed:Non-executive Director and Chair of the Management Resources & Compensation Committee of Interfor Corporation, a Canadian listed company, which is one of the world’s largest providers of lumber.
Non-listed: Not applicable.
| | | | Skills and experience:
Richie has extensive experience in all aspects of financial services and was Chief Executive of Bank of Ireland Group plc between February 2009 and October 2017. He also held a number of key senior management roles within Bank of Ireland, Royal Bank of Scotland and Ulster Bank. He is a past President of the Institute of Banking in Ireland and of the Irish Banking Federation.
Qualifications: Bachelor of Arts (Economics) from Trinity College, Dublin; Fellow of the Institute of Banking in Ireland.
External appointments:
Listed: Director of Kennedy-Wilson Holdings, Inc., a global real estate investment company; Atlas Mara Limited, a company with investments in banks in Africa; and Eurobank Ergasias SA, a bank based in Athens, Greece which has operations in Greece and several other European countries.Non-listed: Not applicable.
| | | | Skills and experience:
Pat was Chairman of the Executive Board of Directors of SHV Holdings (SHV), a large family-owned Dutch multinational company with a diverse portfolio of businesses, including the production and distribution of energy, the provision of industrial services, heavy lifting and transport solutions, cash and carry wholesale and the provision of private equity. During a 32 year career with SHV, he held various leadership roles across SHV’s diverse portfolio of businesses, while living in various parts of the world, and was a member of the Executive Board of SHV from 2001, before becoming Executive Chairman in 2006. He retired from SHV inmid-2014.
Qualifications: BComm, MBS. External appointments:
Listed: Not applicable.
Non-listed: Member of the Supervisory Board of SHV Holdings N.V.
Platt | | | | Johan Karlström | | | | Shaun Kelly | | |
| | | | | Senior Independent Director | | | | Non-executive Director | | | | Non-executive Director | | |
CRH Annual Report and Form 20-F I2018
| | | | | | | | | Appointed to the Board:January 2017 | | | | Appointed to the Board:September 2019 | | | | Appointed to the Board:December 2019 | | | | | | | | | | | | Nationality:Canadian Age:66 | | | | Nationality:Swedish Age:63 | | | | Nationality:Dual United States and Irish | | | | | | | | | | | | Committee membership: | | | | | | | | | | | | | Board of Directors - continued | | Donald A.
McGovern,Jr.
Non-executive Director
Appointed to the Board:
July 2013
Nationality:
United States
Age:
68
Committee membership:
| | | | Heather Ann
McSharry
Non-executive Director
Appointed to the Board:
February 2012
Nationality
Irish
Age:
57
Committee membership:
| | | | Mary K.
Rhinehart
Non-executive Director
Appointed to the Board:
October 2018
Nationality:
United States
Age:
60
Committee membership:
| | | | | | | | | | Board Committees
 Acquisitions
 Audit
 Finance
 Nomination & Corporate Governance
 Remuneration
 Safety, Environment & Social Responsibility
 Committee Chairman
| | Skills and experience:
Don retired from Pricewaterhouse Coopers (PwC) in June 2013, following a 39 year career with the firm. During that time he was Vice Chairman, Global Assurance at PwC, a position he had held since July 2008 and directed the US firm’s services for a number of large public company clients. He also held various leadership roles in PwC and was, from July 2001 to June 2008, a member of, and past lead Director for, the Board of Partners and Principals of the US firm as well as a member of PwC’s Global Board.
Qualifications: CPA, MBA.
External appointments:
Listed: Director of Cars.com Inc.Non-listed: Director of Neuraltus Pharmaceuticals, Inc.
| | | | Skills and experience:
Heather Ann is a former Managing Director Ireland of Reckitt Benckiser and Boots Healthcare and was previously anon-executive Director of Bank of Ireland plc and IDA Ireland.
Qualifications: BComm, MBS.
External appointments:
Listed:Non-executive Director of Greencore Group plc and Jazz Pharmaceuticals plc.
Non-listed: Director of Ergonomics Solutions International and the Institute of Directors in Ireland.
| | | | Skills and experience:
Mary is Chairman, Chief Executive Officer and President of Johns Manville Corporation, a Berkshire Hathaway company, which is a leading global manufacturer of premium-quality building products and engineered specialty materials. Over nearly 40 years with Johns Manville she has held a wide range of global leadership roles, encompassing responsibility for business management and strategic business development and was also Chief Financial Officer. Mary was until recently anon-executive Director of Ply Gem Holdings Inc., a leader in exterior building products in North America and Lead Director of CoBiz Financial Inc.
Qualifications: Bachelor’s degree in Finance from the University of Colorado; MBA from the University of Denver.
External appointments:
Listed: Not applicable.
Non-listed: Chairman, Chief Executive Officer and President of Johns Manville Corporation and member of the Board of Trustees of the University of Denver.
| | | | | 1. Audit Committee Financial Expert as determined by the Board.
| | | | | | | | 1.
| | | | Committee membership: | | | | Age:60 Committee membership: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Skills and experience: During the course of her executive career, Gillian has held a number of senior leadership positions in a variety of industries, geographies and roles including human resources, corporate affairs and strategy. Most recently she was Executive Vice President and Chief Human Resources Officer at Finning International, Inc. (the world’s largest Caterpillar equipment dealer) with global responsibility for human resources, talent development and communications. She previously held senior executive roles at Aviva, the multinational insurance company, as Executive Vice President Human Resources and Executive Vice President Strategy and Corporate Development. Qualifications: Bachelor of Arts from the University of Western Ontario and a Masters of Education from the University of Toronto. External appointments: Listed: Non-executive Director and Chair of the Management Resources & Compensation Committee of Interfor Corporation, a Canadian listed company, which is one of the world’s largest providers of lumber. Non-listed: Not applicable. | | | | Skills and experience: Johan was President and Chief Executive Officer of Skanska AB, a leading multinational construction and project development company until 2017. Over a thirty-year career with Skanska, he held a variety of leadership roles in Europe and America, before becoming President and Chief Executive in 2008. He also served as President and Chief Executive Officer of BPA (now Bravida), a listed mechanical and installation group from 1996 to 2000. Qualifications: Masters degree in Engineering from the KTH Royal Institute of Technology, Sweden. External appointments: Listed: Non-executive Director of Sandvik AB. Non-listed: Not applicable. | | | | Skills and experience: Shaun was until September 2019, the Global Chief Operating Officer of KPMG International, where he was responsible for the execution of the firm’s global strategy and for the delivery of various global initiatives. Over a thirty-year career with KPMG, the majority of which was spent in the US, he held a variety of senior leadership positions, including Partner in Charge, US Transaction Services (2001-2005), Vice Chair and Head of US Tax (2005 to 2010) and Vice Chair Operations and Chief Operating Officer Americas (2010 to 2015), before his appointment as Global Chief Operating Officer in 2015. Qualifications: Fellow of Chartered Accountants Ireland and a US Certified Public Accountant. Shaun also holds a Bachelor of Commerce and Diploma in Professional Accounting from University College Dublin and an honorary doctorate from Queen’s University Belfast. External appointments: Listed: Not applicable. Non-listed: Shaun holds a number of non-profit board memberships. *Audit Committee Financial Expert as determined by the Board. | | |
| | Board of Directors - continued | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Patrick J. Kennedy | | | | Heather Ann McSharry | | | | Mary K. Rhinehart | | | | | | | | | | | | Non-executive Director | | | | Non-executive Director | | | | Non-executive Director | | | | | | | | | | | | Appointed to the Board:January 2015 | | | | Appointed to the Board:February 2012 | | | | Appointed to the Board:October 2018 | | | | | | | | | | | | Nationality:Irish Age:66 | | | | Nationality:Irish Age:58 | | | | Nationality:United States Age:61 | | | | | | | | | | | | Committee membership: | | | | Committee membership: | | | | Committee membership: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Skills and experience: Pat was Chairman of the Executive Board of Directors of SHV Holdings (SHV), a large family-owned Dutch multinational company with a diverse portfolio of businesses, including the production and distribution of energy, the provision of industrial services, heavy lifting and transport solutions, cash and carry wholesale and the provision of private equity. During a 32 year career with SHV, he held various leadership roles across SHV’s diverse portfolio of businesses, while living in various parts of the world, and was a member of the Executive Board of SHV from 2001, before becoming Executive Chairman in 2006. He retired from SHV in mid-2014. Qualifications: BComm, MBS. External appointments: Listed: Not applicable. Non-listed: Member of the Supervisory Board of SHV Holdings N.V. | | | Skills and experience: Heather Ann is a former Managing Director Ireland of Reckitt Benckiser and Boots Healthcare and was previously a non-executive Director of Bank of Ireland plc and IDA Ireland. Qualifications: BComm, MBS. External appointments: Listed: Non-executive Director of Greencore Group plc, Jazz Pharmaceuticals plc and Uniphar Group plc. Non-listed: Director of the Institute of Directors in Ireland. | | | | Skills and experience: Mary is Chairman, Chief Executive Officer and President of Johns Manville Corporation, a Berkshire Hathaway company, which is a leading global manufacturer of premium-quality building products and engineered specialty materials. Over nearly 40 years with Johns Manville she has held a wide range of global leadership roles, encompassing responsibility for business management and strategic business development and was also Chief Financial Officer. Mary was until recently a non-executive Director of Ply Gem Holdings Inc., a leader in exterior building products in North America, and lead Director of CoBiz Financial Inc. Qualifications: Bachelor’s degree in Finance from the University of Colorado; MBA from the University of Denver. External appointments: Listed: Not applicable. Non-listed: Chairman, Chief Executive Officer and President of Johns Manville Corporation and member of the Board of Trustees of the University of Denver. *Audit Committee Financial Expert as determined by the Board. | | | CRH Annual Report and Form 20-F I 2018
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| | | | | | | | | | | | | | | Lucinda J.
Riches
Non-executive Director
Appointed to the Board:
March 2015
Nationality:
British
Age:
57
Committee membership:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Henk Th.
Rottinghuis
Non-executive Director
Appointed to the Board:
February 2014
Nationality:
Dutch
Age:
63
Committee membership:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lucinda J. Riches | | | | Henk Th. Rottinghuis | | | | Siobhán Talbot Non-executive Director
Appointed to the Board:
December 2018
Nationality:
Irish
Age:
55
Committee membership:
| | | | William J.
Teuber, Jr.
Non-executive Director
Appointed to the Board:
March 2016
Nationality:
United States
Age:
67
Committee membership:
| | | | | | | | | | | Skills and experience:
Lucinda spent the majority of her career in investment banking, including 21 years in UBS Investment Bank and its predecessor firms where she worked until 2007. She held senior management positions in the UK and the US, including Global Head and Chairman of UBS’ Equity Capital Markets Group and Vice Chairman of the Investment Banking Division.
Qualifications: Masters in
Philosophy, Politics and Economics and a Masters in Political Science.
External appointments:
Listed:Non-executive Director of Ashtead Group plc and ICG Enterprise Trust plc.
Non-listed:Non-executive Director of the British Standards Institution.
| | | | Skills and experience:
Henk has a background in distribution, wholesale and logistics. Until 2010, he was Chief Executive Officer at Pon Holdings B.V., a large, privately held international company which is focused on the supply and distribution of passenger cars and trucks, and equipment for the construction and marine sectors. He was also a member of the Supervisory Boards of the Royal Bank of Scotland N.V., the food-retail group Detailresult Groep and the retail group Blokker Holding B.V.
Qualifications: Masters degree in Dutch Law; PMD Harvard Business School.
External appointments:
Listed: Not applicable.
Non-listed: Chairman of Koole Terminals B.V. Henk also holds severalnon-profit board memberships.
| | | | Skills and experience:
Siobhán is Group Managing Director of Glanbia plc, a global nutrition company with operations in 32 countries, a position she has held since 2013. She has been a member of the Glanbia Board since 2009 and was previously Finance Director, a role which encompassed responsibility for Glanbia’s strategic planning. Prior to joining Glanbia, she worked with PricewaterhouseCoopers in Dublin and Sydney.
Qualifications: BComm and Diploma in Professional Accounting from University College Dublin, FCA.
External appointments:
Listed: Group Managing Director of Glanbia plc.
Non-listed: Director of the Irish Business Employers Confederation (IBEC).
| | | | Skills and experience:
Until September 2016, Bill was the Vice Chairman of EMC Corporation. In previous roles he was responsible for EMC’s global sales and distribution organisation (2006-2012) and served as Chief Financial Officer (1996-2006). Prior to joining EMC he was a partner in the audit and financial advisory services practice of Coopers & Lybrand LLP.
Qualifications: MBA degree from Babson College, a Masters of Science in Taxation from Bentley College and a Bachelors degree from Holy Cross.
External appointments:
Listed: Member of the Board of Directors of Popular, Inc. a diversified financial services company, and Inovalon Holdings, Inc., a healthcare technology company.
Non-listed: Director of Accedian Networks, a technology company and BGP Bravo Holdings, a technology services company.
1. Audit Committee Financial Expert as determined by the Board.
| | |
| | | | | | | | | Non-executive Director | | | | Non-executive Director | | | | Non-executive Director | | | | | | | | | | | | Appointed to the Board:March 2015 | | | | Appointed to the Board:February 2014 | | | | Appointed to the Board:December 2018 | | | | | | | | | | | | Nationality:British Age:58 | | | | Nationality:Dutch Age:64 | | | | Nationality:Irish Age:56 | | | | | | | | | | | | Committee membership: | | | | Committee membership: | | | | Committee membership: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Skills and experience: Lucinda spent the majority of her career in investment banking, including 21 years in UBS Investment Bank and its predecessor firms where she worked until 2007. She held senior management positions in the UK and the US, including Global Head and Chairman of UBS’ Equity Capital Markets Group and Vice Chairman of the Investment Banking Division. Qualifications: Masters in Philosophy, Politics and Economics and a Masters in Political Science. External appointments: Listed: Non-executive Director of Ashtead Group plc, Greencoat UK Wind plc and ICG Enterprise Trust plc. Non-listed: Non-executive Director of the British Standards Institution. | | | Skills and experience: Henk has a background in distribution, wholesale and logistics. Until 2010, he was Chief Executive Officer at Pon Holdings B.V., a large, privately held international company which is focused on the supply and distribution of passenger cars and trucks, and equipment for the construction and marine sectors. He was also a member of the Supervisory Boards of the Royal Bank of Scotland N.V., the food-retail group Detailresult Groep, the retail group Blokker Holding B.V. and Chairman of the Supervisory Board of Stork Technical Services B.V. Qualifications: Masters degree in Dutch Law; PMD Harvard Business School. External appointments: Listed: Not applicable. Non-listed: Chairman of Koole Terminals B.V. Henk also holds several non-profit board memberships. | | | | Skills and experience: Siobhán is Group Managing Director of Glanbia plc, a global nutrition company with operations in 32 countries, a position she has held since 2013. She has been a member of the Glanbia Board since 2009 and was previously Finance Director, a role which encompassed responsibility for Glanbia’s strategic planning. Prior to joining Glanbia, she worked with PricewaterhouseCoopers in Dublin and Sydney. Qualifications: Fellow of Chartered Accountants Ireland; Bachelor of Commerce; Diploma in Professional Accounting from University College Dublin. External appointments: Listed: Group Managing Director of Glanbia plc. Non-listed: Director of the Irish Business Employers Confederation (IBEC). *Audit Committee Financial Expert as determined by the Board. | | | 57 |
CRH Annual Report and Form 20-F I2018
| Corporate Governance Report
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| | | | |  | | meeting settings throughout the year and during twice yearly Board visits to our operations.
Safety is a key strategic issue for the Board. The Chief Executive commented in his review in last year’s Annual Report and Form20-F that, despite our progress in safety matters, a number of fatalities at our operations underlined the need for us to do even more to ensure that all of our people return home safe to their families at the end of each working day. When fatalities occur, the full Board receives a report on the background circumstances and the actions being taken to ensure that any corrective actions or procedure changes have been taken not only at the site concerned but across the Group. During 2018, the Board received regular updates on the progress of a number of new initiatives, including, the creation of an external advisory panel of safety management experts who were tasked with reviewing the background to recent fatalities and existing safety programmes, undertaking site visits and identifying areas for improvement.
Priorities for the Board’s Committees in 2018
During the last year, the Audit Committee oversaw an audit tender process, which resulted in the Board selecting Deloitte for appointment as the Group’s auditors, with effect from the 2020 financial year. The appointment will be subject to a confirmatory advisory vote at the 2020 Annual General Meeting (AGM). Further details on the process and on other matters dealt with by the Audit Committee during 2018 are set out on pages 60 to 62.
In addition to its work in the area of Board renewal mentioned above, the Nomination & Corporate Governance Committee report describes the work of the Committee in the areas of committee composition and diversity.
In his role as Remuneration Committee Chairman, Richie Boucher has led anin-depth consultation with shareholders on the Group’s remuneration policy and on how remuneration will be implemented in 2019. This follows a significant vote against the 2017 Directors’ Remuneration Report at the 2018 AGM.
| Chairman’s Overview The Corporate Governance report contains details of CRH’s governance structures and highlights the main areas of focus for the Board and its Committees during 2018.2019. In keeping with prior years, details of CRH’s general governance practices are available in the governance appendix on CRH’s website, www.crh.com (the ‘Governance Appendix’)1. CRH implemented the 20162018 UK Corporate Governance Code (the ‘2016‘2018 Code’) and complied with its provisions in 2018.this Report explains how the principles of the 2018 Code have been applied. A copy of the 20162018 Code can be obtained from the Financial Reporting Council’s website, www.frc.org.uk. Shareholder Engagement As Chairman, a core part of my role is shareholder engagement. Therefore, following the announcement of my appointment as Chairman Designate in September 2019, I contacted CRH’s largest shareholders, representing over 50% of CRH’s issued share capital, offering to meet with them. In addition to an initial introduction, the purpose was to set out my thinking in relation to the main areas of focus for the Board and, equally importantly, to gain an understanding of their perspectives on CRH. I very much appreciate that a significant number of shareholders, representing around 30% of the shares in issue, gave freely of their time for this engagement. The 2019priority areas of Board focus that I discussed with shareholders in those meetings are set out in my introduction to this Annual Report and Form20-F will contain detailson page 4. The feedback I received was consistent in a number of respects, with support for CRH’s strategy and a widespread view that CRH had a strong and effective management team led by our Chief Executive, Albert Manifold, alongside a recognition of the importance of having succession plans in place for key executive roles. Shareholders also expressed a range of views on topics such as the optimal approach to capital allocation, the Group’s organisation structure and portfolio, and CRH’s remuneration structures. There was a good understanding of the Board’s approach to sustainability, and I was particularly pleased to hear that shareholders were very complimentary in respect of our approach to this critical area and positive regarding the opportunities for CRH to differentiate itself from other companies in the sector. The detailed feedback from the meetings has been considered by the Board and relevant Committees. Safety, Environment and Social Responsibility Committee In last year’s Corporate Governance Report, Nicky Hartery reported that the Board had set up a new permanent Committee, the Safety, Environment & Social Responsibility (SESR) Committee, to ensure that sufficient time, energy and focus was allocated to these strategically important matters. A detailed summary of the principal topics considered by the Committee in 2019 is set out in table 1. During 2019, the Board and the SESR Committee monitored developments in the area of safety, including considering reports on the background to (and learnings from) serious accidents, the implementation of recommendations from an external advisory panel, the 2018 UK Corporate Governance Code (the ‘2018 Code’), which was publishedrollout of CRH’s frontline leadership programme, the implementation of policies in July 2018 and is effective for CRH from 1 January 2019. Areas of Focus for the Board
In 2018, the Board focused on strategy, Board renewal, succession planning, talentrelation to contractor management and safety,energy isolation and these areas will continuethe ongoing work to be areasreinforce roles, responsibilities and expectations in the area of priority for the Board over the next 12 months.
In May 2018, we announced our plans for margin improvement and financial capacity targets over the next number of years. This gave us an opportunity to provide shareholders with additionalsafety. Further details on the strategic directionGroup’s approach to safety, and our ongoing objective of zero fatalities and ambition of zero harm at every location across our business, are set out in the Sustainability section on pages 20 to 25.
| | Given that the topic of sustainability has become a key element of shareholder and wider stakeholder engagement, and the increased focus on workforce engagement and corporate purpose following the introduction of the 2018 Code, the section below highlights some of the important initiatives in these areas that fall under the remit of the SESR Committee. The various ways in which CRH engages with its stakeholders is summarised in the Sustainability section on page 25. Feedback from stakeholder engagement is reported to, and carefully considered by, the Board. Sustainability The Board believes that sustainability and corporate social responsibility are fundamental to CRH being the leading building materials business in the world. CRH is ranked amongst industry leaders by ESG rating agencies. ambitions
| 1. | The Governance Appendix is published in conjunction with the Directors’ Report in compliance with Section 1373 of the Companies Act 2014. For the purposes of Section 1373(2) of the Companies Act 2014, the Governance Appendix and the risk management disclosures on pages 26 to 29 and 108 to 113 form part of, and are incorporated by reference into, this Corporate Governance Report. |
The primary (premium) listing of CRH plc is on the Group inLSE, with the medium-term. Anad-hoc committee oflisting on Euronext Dublin characterised as secondary. For this reason, CRH plc is not subject to the Board has been formedsame ongoing listing requirements as would apply to monitor delivery and progress against these plans. The report from the Nomination & Corporate Governance Committeean Irish company with a primary listing on pages 63 and 64 containsEuronext Dublin. For further information, shareholders should consult their financial adviser. Further details on the Board renewal process. The Board views executive talent management and succession planning as core responsibilities and receives regular updates fromGroup’s listing arrangements, including its premium listing on the Chief Human Resources OfficerLSE, are set out on developments in this area generally and, in particular, in relation to retaining and adding world class talent, ensuring we have capacity to support growth, developing the talent pipeline and succession planning for senior executive roles. Thenon-executive Directors also have a number of opportunities to interact directly with executives in formalpage 72.
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| 1. | The Governance Appendix is publishedIn addition, many of our operating companies have been recognised for excellence in conjunctionthis area. Our 2030 sustainability targets, which have recently been agreed, are set out on page 21 in the Sustainability section.
I am pleased to report that we have achieved one year ahead of time our 2020 target of a 25% reduction in specific net CO2 cement plant emissions, compared with 1990 levels. Looking forward, our stretching and industry leading 2030 CO2 reduction targets have been independently verified to be in line with the Directors’ Report in compliance with Section 1373Paris Climate Agreement. Our Chief Executive, Albert Manifold was the inaugural president of the Companies Act 2014. ForGlobal Cement & Concrete Association (GCCA). Sustainable development of our industry is at the purposes of Section 1373(2)core of the Companies Act 2014,GCCA’s work. We strongly believe that collaboration like this, both within and outside of our industry, is key to addressing global construction challenges and sustainable development goals while ensuring the Governance Appendixvalue of concrete as a sustainable construction material is recognised. Inclusion & Diversity CRH’s inclusion and diversity (I&D) vision is set out in table 4 on page 62. The SESR Committee is responsible for working with management, and monitoring progress, in relation to I&D below Board level. The approach to I&D is based on four initial workstreams: Communication; Education & Awareness; People & Practices; and Data & Measures and includes the risk management disclosuresdevelopment of programmes to address unconscious bias, toolkits to supplement recruitment guidelines, best practices and KPIs. The Committee receives regular reports on pages 22, 23progress towards each priority objective on the I&D roadmap. Workforce Engagement The Board has designated the SESR Committee with responsibility for stakeholder engagement, including with the workforce. Given the footprint of CRH with c. 80,300 employees in 30 countries, we believe this is the best and 104 to 109 form partmost effective way of ensuring that the views of employees are understood and are incorporated by referencetaken into this Corporate Governance Report.consideration in our decision-making process. |
The primary (premium) listing of CRH plc is on the LSE, with the listing on Euronext Dublin characterised as secondary. For this reason, CRH plc is not subject to the same ongoing listing requirements as would apply to an Irish company with a primary listing on Euronext Dublin. For further information, shareholders should consult their financial adviser. Further details on the Group’s listing arrangements, including its premium listing on the LSE, are set out on page 66.
| | | | 62 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Corporate Governance Report - continued To facilitate its work in this area, which will evolve over time, the Committee has identified a number of key areas for regular updates and reporting. The SESR Committee has also commenced a number of important initiatives: In addition to the interaction Board members have with employees during visits to operations in Europe and the US, the Committee utilised the opportunity during a Board visit to operations in Spain to pilot a session with employees in an open forum to discuss their views of CRH. The conversation focussed on the importance of safety, training and development, I&D, the environment and engaging with the community. It is intended that there will be similar engagements in other countries or regions to focus on themes relevant to employees, and on culture and values in particular; A workforce engagement project team, made up of a cross section of employees from across our global business, has been established under the Chief Executive’s sponsorship. This is a key initiative as only a small number of such projects operate globally each year to address critical business issues or opportunities. The team has been tasked with recommending priorities and developing an implementation plan. The outputs will be reported to the SESR Committee; and During 2020, members of the SESR Committee will have opportunities to attend employee development programmes, forums, conferences and other events in their local regions. Additional information on training provided to employees on the CoBC and relevant compliance policies and on the role of Internal Audit in investigating material matters raised by employees, is set out on page 72. Corporate Purpose CRH’s purpose is expressed in our values, set out in table 3 below, and is delivered through our strategy, which is summarised on page 14. It encompasses many different aspects, ranging from propositions for investors, employees, suppliers and customers, to the sustainable operations of our companies and the products we manufacture. Connected to all of these elements, and to the articulation of CRH’s purpose, is CRH’s brand. The SESR Committee is currently working with management on a project to connect these different but complementary concepts. The aim is to set out CRH’s purpose in a way that captures our aspirations beyond financial returns, communicates the unique nature of CRH, inspires our people, guides our actions, is true to our culture and underpins our dialogue with our stakeholders. In addition, the work on corporate 
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 63 | CRH Annual Report and Form 20-F I 2018
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| | | | | The 2018 Directors’ Remuneration Report on pages 68 to 97 sets out how the feedback received from shareholders has been reflected in the Committee’s remuneration proposals, which will be submitted to shareholders at the 2019 AGM.
During 2018, the Board set up a new permanent committee to dealpurpose, together with safety, environmental and social responsibility (SESR) matters. The SESR Committee receives regular updates in each of these areas and is responsible for external reporting on sustainability matters. It will also monitor progress being made in relation to inclusion and diversity and will be responsible for the new provisions in the 2018 Code regarding culture monitoring and stakeholder engagement.
| | While the building materials industry is somewhat challenging from a gender diversity perspective, we are committed to a sustainableCRH’s approach to inclusionI&D and diversity acrossemployee engagement, will further facilitate the GroupBoard’s assessment of the alignment of CRH’s purpose, values and we have a comprehensive strategy in place that is supported by the senior leadership team and includes changes in policy, recruitment practices, culture and Board oversight.
with our culture. Re-election of Directors I have evaluated the performance of each Director standing forre-election and am satisfied that each Director is committed to their role, provides constructive challenge and devotes sufficient time and energy to contribute effectively to the performance of the Board. | | Table 811 on page 6569 provides a summary of competencies, important to the long-term success of the Group, that each Director seekingre-election at the 20192020 AGM brings to the Board. Their full biographies are set out on pages 5456 to 57.59. I recommend that shareholders vote in favour of there-appointment of each Director going forward forre-election at the 20192020 AGM. Conclusion The governance landscapeBoard is ever-changingcommitted to ensuring that CRH is an industry leader in areas such as CO2 emissions reduction and there is now an important newto making the investments in technology and knowledge required to achieve this. We are also committed to continuing our focus on safety, I&D and stakeholder engagement and on the alignment of corporateCRH’s purpose, strategy, culturevalues and stakeholder engagement. Weculture. I strongly believe that CRH is well positioned to meet our challenges and to grasp strategic opportunities for the structures and processes outlined in this report leave us well placed to demonstrate this alignment. Nevertheless, we have carried out a reviewbenefit of our structuresshareholders and processes in the context of the 2018 Code and we look forward to sharing details with you on how these will evolve in the 2019 Annual Report and Form20-F.stakeholders. Nicky HarteryRichie Boucher
Chairman 27 February 20192020 |  |
| 59
| | | The Board met on six occasions during 2019. This included site visits to Cementos Lemona S.A. in Spain and Tilcon New York Inc in the US. Such visits are an important opportunity for the Board to meet and interact with management and employees at our operating businesses as well as in our central support functions. | | |
CRH Annual Report and Form 20-F I2018
Corporate Governance Report - continued
Audit Committee Report
| | | | |  | | required by applicable law or regulation before being appointed as auditor.Chairman’s Overview
The proposals received, and other activities conducted, were evaluated against the following criteria:
• Audit quality;
• Cultural fit;
• Corporate fit; and
• Experience
Following evaluation of the proposals and activities, whichI was done on a “fee blind” basis, it was agreed to invite two of the firms to make final presentations to the Committee and Group Finance Director.
Following these final presentations and discussions, the Committee2 recommendedappointed to the Board that Deloitte be appointed to succeed EYand as CRH’s auditor. Whilst the Committee appreciated the qualityChairman of the proposals presented by all the firms, it believes that the strength and experience of Deloitte’s team best met the predefined criteria it had set.
After considering the Committee’s recommendation, the Board selected Deloitte as CRH’s auditor for the financial year ending 31Audit Committee in December 2020. The appointment will be subject to a confirmatory advisory vote at the 2020 AGM.
On behalf of the Committee,2019. I would like to express my sincere thanks to each of the firmsthank Bill Teuber, who participated in the tender process.
Effectiveness
The Committee, on behalf of the Board, is responsible for the relationship with EY and for monitoring the effectiveness and quality of the external audit process. The Committee’s primary means of assessing the effectiveness of the external audit process is by monitoring performance against the agreed audit plan. Each yearchaired the Committee considers the experiencefrom February 2018 until June 2019 and knowledge of the EY audit team and the results of post-audit interviews with management and theHeather Ann McSharry who acted as Interim Audit Committee Chairman. These annual procedures are supplemented by periodic formal reviews of the performance of EY.
All of the above procedures indicate a continued high level of satisfactionChair until my appointment and with EY and the services provided by them to CRH.whom I have worked closely since my appointment.
| Chairman’s Overview
| | | On behalf of the Committee, I am pleased to introduce the Audit Committee Report for the year ended 31 December 2018.2019. The purpose of this report is to provide shareholders with an insight into the workings of, and principal matters considered by, the Committee in 2018.2019. General details in relation to the roles and responsibilities of the Committee, its operation and the policies applied by it, can be found in the Governance Appendix. Table 2 on page 625 outlines the key areas that the Committee focused on in 2018.2019. Audit Committee Membership The Committee currently consists of sixsevennon-executive Directors considered by the Board to be independent1.independent1. The biographical details of each member are set out on pages 56 and 57.57 to 59. Together, the members of the Committee bring a broad range of relevant experience and expertise from a variety of industries which is vital in supporting effective governance. Mary Rhinehart, Siobhán Talbot and I have been designated by the Board as the Committee’s financial experts and meet the specific requirements for recent and relevant financial experience, as set out in the 2018 Code. External Auditors Audit Tender/RotationChange of External Auditors
As outlined in last year’s Audit Committee Report, aA key focus for the Committee during 2018for 2019 was monitoring the launch of a competitive audit tender process with a viewplans and progress in relation to appointing a new external auditor for the 2020 financial year.
| | The Committee was responsible for the design and operationtransition of the tender process and our key objectives were to ensure that (i) the process was efficient, fair, effective, open and transparent; and (ii) at the end of the tender process we would be in a position to submit two potential firms to the Board for appointment, with a reasoned preference for the appointment of one of them.
An assessment was carried out in 2017 to identify the firms reasonably likely to be capable of performing the audit. This assessment considered:
• Sector experience;
• Size and geographical presence; and
• Extent and nature of existingnon-audit services provided to CRH
Based on this assessment, three firms were invited to tender. EY, CRH’s current auditor, was not invited to participate due to the length of their tenure.
Following the issuance of the Request for Proposal (RFP) in April 2018, we conducted a number of evaluation activities, including site visits with each firm covering CRH’s Divisions, key functions and geographies. In addition, we sought assurance that each firm would be capable of being independent in the timeframe
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| 1. | The Board has determined that all of thenon-executive Directors on the Audit Committee are independent according to the requirements of Rule 10A.3 of the rules of the Securities and Exchange Commission (SEC).
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| 2. | Due to his connection with one of the firms, Mr. McGovern took no part in the Committee’s recommendation and recused himself when the Board discussed and approved the appointment.
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| 3. | A copy of Section 404 of the Sarbanes Oxley Act 2002 can be obtained from the SEC’s website, www.sec.gov.
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CRH Annual Report and Form 20-F | 2018
Further details in relation to the external auditors, including information on how auditor objectivity and independence are maintained, are included in Section 2 of the Governance Appendix.
Non-audit Fees
In order to ensure auditor independence and objectivity, the Committee has a policy on the provision of audit andnon-audit services by the external auditor.
In 2018, the external auditors provided a number of audit-related services, including Sarbanes-Oxley Section 404 attestation3, andnon-audit services, including due diligence services associated with proposed acquisitions and disposals. EY were also engaged during 2018 in a number of jurisdictions in which the Group operates to provide help with local tax compliance, advice on taxation laws and other related matters; assignments which typically involve relatively small fees. The Committee is satisfied that the external auditors’ knowledge of the Group was an important factor in choosing them to provide these services. The Committee is also satisfied that the fees paid to EY fornon-audit work in 2018, which amounted to€1.2 million and represented 6% of the total fees for the year, did not compromise their independence or integrity. Details of the amounts paid to the external auditors during the year for audit and other services are set out in note 5 to the Consolidated Financial Statements on page 147 (see also table 4 on page 62). Further details in relation to the Group’s policy regardingnon-audit fees are set out in Section 2 of the Governance Appendix.
Internal Audit Effectiveness
In December 2017, the Committee received and approved the Internal Audit plan for 2018. During the year, the Committee received regular updates from the Head of Internal Audit outlining the principal findings from the work of Internal Audit and management’s responses thereto.
Audit Committee Effectiveness and Priorities for 2019
During 2018, the Committee and the Board reviewed the operation, performance and effectiveness of the Committee and I am pleased to confirm that the Committee continues to operate effectively. I would like
| | | Audit Tender - Key Activities & Timeline
| | Table 1
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to thank my fellow Committee members for their commitment and input to the work of the Committee during 2018.
The Committee will continue to focus on external audit planning, internal control, IT governance and cyber security and enterprise risk management during 2019. In addition, the
Committee will receive regular updates in 2019 on the plans to transition external audit services from EY to Deloitte in 2020.
William J. Teuber, Jr.
Chairman of Audit Committee
February 2019
CRH Annual Report and Form 20-F I2018
Corporate Governance Report - continued
Audit Committee Report - continued
| | | | | Key Areas of Focus in 2018 | | Table 2 | Issue | | Description | | | External
Auditors
| | EY have been the Group’s external auditors since 1988. Following an assessment of EY’s continued independence, objectivity and performance, and having received confirmation of their willingness to continue in office, the Committee has recommended to the Board their continuance in office for the 2019 financial year. As in prior years, their continuance in office will be subject to anon-binding advisory vote at the 2019 AGM. Pat O’Neill has been the Group’s lead audit engagement partner with effect from the financial year beginning 1 January 2016.
Following the conclusion of a competitive tender process during 2018, the Board has selected, subject to a confirmatory advisory vote at the 2020 AGM, Deloitte for appointment as the external auditor for the financial year commencing 1 January 2020. Further details
During 2019, we had regular discussions and interactions with management, EY and Deloitte on the status of work being undertaken across the Group to ensure that Deloitte are well prepared for their engagement as external auditors. Briefly, the audit transition work has included the following: Meetings across the Group between management, Deloitte and EY, in order to increase Deloitte’s knowledge and understanding of CRH; Deloitte completing a review of EY’s working papers in respect of the tender2018year-end audit (Deloitte will also review, in due course, the relevant papers from the 2019year-end audit); and Regular updates and reports from management to the Committee on the status of the transition process are outlinedand activities, including the work to monitor the termination of services previously provided by Deloitte, which will be prohibited when Deloitte become CRH’s external auditor. Deloitte has confirmed to the Committee that it has achieved the relevant independence status. On behalf of the Committee and the wider Board, I would like to take this opportunity to thank EY for their professional approach over the years, and for their ongoing engagement during the transition period. Effectiveness The Committee, on pages 60 and 61. | Financial Reporting
and External Audit
| | We reviewedbehalf of the 2018 Annual Report and Form20-F, togetherBoard, is responsible for the relationship with the annualexternal auditors and half-year trading statementsfor monitoring the effectiveness and recommended them to Board for approval.
In July, we met with EY to agreequality of the 2018 external audit process. The Committee’s primary means of assessing the effectiveness of the external audit process is by monitoring performance against the agreed audit plan. Table 3 below outlinesIn addition, we consider the key areas identified as being potentially significantexperience and how we addressed these duringknowledge of the year.
| Impairment Testing | | Through discussion with both management and EY, we reviewed management’s impairment testing methodology and processes. We found the methodology to be robustexternal audit team and the results of the testing process appropriate.
| New Accounting
Standards
| | The Committee considered and discussedpost-audit interviews with management and the plans for, and expected impactAudit Committee Chairman. These annual procedures are supplemented by periodic formal reviews of the implementationperformance of the new accounting standard in relation to IFRS 16 Leases with effect from 1 January 2019. Please see page 129 for further information on the implementation of IFRS 16.external auditor.
| Enterprise Risk Management | | The Committee continued to monitor and review the Group’s Enterprise Risk Management framework and the methodology and process underlying the Viability Statement included on page 100 of the Directors’ Report (furtherFurther details in relation to CRH’s risk governancethe external auditors, including information on how auditor objectivity and independence are outlinedmaintained, are included in Section 2 of the Governance Appendix.
All of the above procedures indicated a high level of satisfaction with the services provided by EY to CRH during 2019. Non-audit Fees In order to ensure auditor independence and objectivity, the Committee has a policy governing the provision of audit andnon-audit services by the external auditor. In 2019, EY provided a number of audit services, including Sarbanes-Oxley Section 404 attestation2, andnon-audit services, including due diligence services associated with proposed acquisitions and disposals. EY was also engaged during 2019 in a number of jurisdictions in which the Group operates to provide help with local tax compliance, advice on pages 22taxation laws and 23).other | 1. | The Board has determined that all of thenon-executive Directors on the Audit Committee are independent according to the requirements of Rule 10A.3 of the rules of the Securities and Exchange Commission (SEC) and Provision 10 of the 2018 Code. |
| 2. | A copy of Section 404 of the Sarbanes Oxley Act 2002 can be obtained from the SEC’s website, www.sec.gov. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 65 |
We also considered an assessment of the Group’s risk management and internal control systems. This had regard to all material controls, including financial, operational and compliance controls that could affect the Group’s business.
| | | | Key Areas of Focus in 2019 | | Table 5 | |
IT Governance and
Cyber Security
| | We continued to monitor the Group’s IT governance and information security programme and ability to address cyber security threats.
| | | | 66 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Audit Committee Report - continued | | | | Areas Identified for Focus during the 2019 External Audit Planning Process | | Table 6 |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 67 |
related matters; assignments which typically involve relatively low fees. The Committee is satisfied that the external auditors’ knowledge of the Group was an important factor in choosing them to provide these services. The Committee is also satisfied that the fees paid to EY fornon-audit work in 2019, which amounted to€1.1 million and represented 6% of the total fees for the year, did not compromise their independence or objectivity. Details of the amounts paid to the external auditors during the 2018 External Audit Planning Process | | Table 3 | Area of Focus | | Audit Committee Action | | | Impairment of Goodwill | | For the purposes of its annual impairment testing process, the Group assesses the recoverable amount of each of CRH’s cash-generating units (CGUs – see detailsyear for audit and other services are set out in note 165 to the Consolidated Financial Statements) basedStatements on avalue-in-use computation or fair value less costs to sell. The annual goodwill impairment testing was conducted by management, and papers outlining the methodology and assumptions used in, and the results of, that assessment were presented to the Audit Committee. Following its deliberations, the Audit Committee was satisfied that the methodology used by management and the results of the assessment, together with the disclosures in note 16, were appropriate.
| Impairment of Property, Plant and Equipment, and Financial Assets | | In addition to the goodwill impairment testing process discussed above, the Grouppage 153 (see also undertook its annual assessment of the need for impairment of othernon-current assets (property, plant and equipment and financial assets) as and when indicators of impairment exist. The Audit Committee considered the methodology used by management in that process and was satisfied that it was appropriate.
| Contract Revenue
Recognition
| | IFRS 15Revenue from Contracts with Customersrequires revenue and expenses to be recognisedtable 7 on uncompleted contracts, with the underlying principle that, once the outcome of a long-term construction contract can be reliably estimated, revenue and expenses associated with that contract should be recognised by reference to thepercentage-of-completion using an input method based on the proportion of contract costs incurred at the balance sheet date. If it is anticipated that the contract will be onerous (i.e. its unavoidable cost exceeds the economic benefit of the contract), a provision is created; being the lower of costs to complete the contract and the cost of exiting the contract. Following discussion with management and EY, and on the basis that the majority of contracts were completed within the financial year, the Audit Committee was satisfied that the recognition of contract revenue was appropriate for the Group in 2018.
| Accounting for
Acquisitions and
Divestments
| | During 2018, the Group completed 46 acquisitions and investments at a total cost of€3.6 billion and realised disposal proceeds of approximately€3.0 billion across 20 business disposals. Particular focus was given to the acquisition of Ash Grove, due to its size and scale, and the judgements and estimates used by managementpage 66). Further details in relation to the purchase price allocationGroup’s policy regardingnon-audit fees are set out in Section 2 of the Governance Appendix.Internal Audit Effectiveness In December 2018, the Committee received and approved the Internal Audit Charter and audit plan for property, plant2019. During the year, the Committee received regular updates from the Head of Internal Audit outlining the principal findings from the work of Internal Audit and equipmentmanagement’s responses thereto. External Quality Assessments of Internal Audit are conducted periodically to ensure that the Internal Audit function continues to work efficiently and effectively and in the recognition of provisions related to this acquisition. Following discussioncompliance with managementgood practice standards. Audit Committee Effectiveness and EY,Priorities for 2020 During 2019, the Committee was satisfiedand the Board reviewed the operation, performance and effectiveness of the Committee and I am pleased to confirm that the accounting treatment appliedCommittee continues to all acquisitionsoperate effectively. I would like to thank my fellow Committee members for their commitment and divestmentsinput to the work of the Committee during 2018 was appropriate. |
2019. | | | | | | | PercentageLooking ahead to 2020, the Committee will continue to focus on external audit planning, and specifically the change of external auditors from EY to Deloitte, together with the key ongoing areas outlined in table 5 page 65.
Shaun Kelly Chairman of Audit and Non-audit FeesCommittee 27 February 2020 | | | 
| | | In 2019 our Americas Materials Division launched a communications campaign to celebrate the people and teams across the Division that collectively make it successful. The campaign featured six employees and their families in a three-part video series, and profiled this Environmental Health & Safety (EHS) Coordinator from ICON Materials in Auburn, Washington, who has been with the company for over 30 years. | | Table 4 |
| 62
| CRH Annual Report and Form 20-F I 2018
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��
Nomination & Corporate Governance Committee Report
| | | | | Chairman’s Overview DuringFollowing my appointment as CRH Chairman, the last 12 months,Board appointed me as Chairman of the Nomination & Corporate Governance Committee with effect from 1 January 2020 and I am pleased to present the report of the Committee for the year ended 31 December 2019. The report outlines the main areas of focus forof the Committee were the ongoing renewal and refreshment of the Board, the composition of the Board’s Committees and reviewing the approach to improving inclusion and diversity in the Group.past year and the areas of priority going forward.
The Board has designated responsibility to the SESR Committee for working with management and monitoring improvements in I&D below Board level. The SESR Committee’s work in this area is summarised on pages 60 to 63. Nomination & Corporate Governance Committee Membership
The Committee currently consists of six fivenon-executive Directors, considered by the Board to be independent. The biographical details of each member are set out on pages 5456 to 57.58. The Chief Executive normally attends meetings of the Committee. Board Composition & Renewal TheRenewal of the CRH Board is an ongoing and dynamic process, with the focus forof the Committee being on ensuring that the Board includes a diverse group of individuals based on a broad set of factors and that renewal is aligned towith CRH’s strategy and the needs of the business. The Committee maintains a skills matrix of the current Board to identify areas for enhancement and to highlight skills which may need to be replaced due to Board retirements.
During the year,2019, the Committee recommended to the Board that the following be appointed asnon-executive Directors: • Richie Boucher (March 2018)
Johan Karlström (September 2019); and Shaun Kelly (December 2019) • Mary K. Rhinehart (October 2018);Johan Karlström was President and Chief Executive Officer of Skanska AB, a leading multinational construction and project development company until 2017. Over a thirty-year career with Skanska, he held a variety of leadership roles in Europe and America, before becoming President and Chief Executive in 2008. His background and his knowledge of our industry will be an important addition to the collective skills and experience of the Board.
• Siobhán Talbot (December 2018)
In order to identify shortlists for these roles,Shaun Kelly was, until September 2019, the areasGlobal Chief Operating Officer of focus were industry expertise, increasing the number ofnon-executive Directors with financial expertiseKPMG International, where he was responsible for the Audit Committee (inexecution of the contextfirm’s global strategy and for the delivery of potential retirementsvarious global initiatives. Over a thirty-year career with KPMG, the majority of which was spent in the coming years), global experience, mergersUS, he held a variety of senior leadership positions. Through his career with KPMG, Shaun has extensive knowledge and acquisitions expertise, strategic planning skills and improving Board diversity.
Richie is a former Chief Executive of Bank of Ireland and has experience in finance, risk management, mergersauditing, financial reporting, strategic development and acquisitions and private equity. Mary is currently Chief Executive of Johns Manville, and has c. 40 years’ experience inoperational management.
Following a recommendation from the building materials sector, and was previously also Chief Financial Officer at Johns Manville. Siobhán is currently Managing Director of Glanbia, a listed multinational food company and has held a number of senior management roles including Finance Director. Their biographies, along with those of the rest ofCommittee the Board are set out in full on pages 54 to 57. | |  | | I have agreed tailored induction programmes with each of Richie, Mary and Siobhán. Further details in relation to the induction process, including an indicative sample induction programme, are set out on page 4 of the Governance Appendix.
External agents (Egon Zehnder and Leaders Mores) were used to identify candidates during the course of 2018. Egon Zehnder provides executive recruitment services to the business. Leaders Mores has no other connection with the Group.
In February 2019, the Committee recommended to the Board that Bill Teuber,asked Gillian Platt, who has completed hisher initial three-year term as anon-executive Director, be appointed forto serve a second three-year term.
At the conclusion of the 20192020 AGM, Don McGovernPat Kennedy and Henk Rottinghuis will retire from the Board. In addition to Nicky Hartery, who retired at year end, during 2019 Don McGovern and Bill Teuber stepped down from the Board. I would like to thank each of them for their service and commitment to CRH. Going forward, ensuring that the Board following completioncontinues to have the requisite skills to support the Company’s strategy will be a priority for my tenure as Chairman. A particular area of hisfocus for renewal in the next two to three years will be on further enhancing the Board’s expertise through having additional colleagues, from diverse backgrounds, join the Board who have extensive experience of capital intensive businesses with similar activities in North America or Europe. As shown in table 9, the Board is balanced in terms of tenure with fivenon-executive Directors in their first term of three years; four in their second three-year term asand one undertaking a Director.third term of three years. The Committee uses the services of external search agents for Board searches. The agencies used for the appointments of Johan Karlström and Shaun Kelly were Egon Zehnder and Leaders Mores. Neither firm has any other connection with CRH other than, in the case of Egon Zehnder, the provision of executive recruitment services from time to time and in connection with the Chairman succession process outlined below. Chairman Succession As I reported in last year’s Annual Report and Form20-F, the Board asked me in February 2018 to extend my termNicky Hartery retired as Chairman to acton
31 December 2019. The process which resulted in my appointment as a bridge until my successor is identified and a timeline for induction and appointment is agreed. A thorough and robust succession process is beingChairman was led by Gillian Platt, Senior Independent Director, who chaired the Nomination & Corporate Governance Committee and the Board when Chairman succession was being dealt with. As part of that process, a specification for the role of Chairman was developed by the Board and both internal and external candidates were considered. Gillian met with a number of shareholders prior to the Board’s decision on the next Chairman to hear their views on the process and the key attributes required for the role. Their feedback was considered by the Committee and the Board.
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 69 |
Board of Directors | | | | | | | | | Summary of Board Changes - 2019/2020 | | Table 8 | | | | | Retirement/Resignation: | | Appointments: | | Renewal of Three Year Terms: | | Not seekingre-election at 2020 AGM: | | | | | Don McGovern - April 2019 | | Johan Karlström - September 2019 | | Gillian Platt - February 2020 | | Patrick Kennedy - April 2020 | | | | | Bill Teuber - June 2019 | | Shaun Kelly - December 2019 | | | | Henk Rottinghuis - April 2020 | | | | | Nicky Hartery - December 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Membership of the CRH Board (as at 31 December 2019) | | Table 9 | | | | Independence (determined by CRH Board annually) | | Tenure of Non-executive Directors | | Geographical Spread (by residency) | | | |  | |  | |  | | | | | | | | |
| | | | | Gender Diversity - % of Female Directors (as at 31 December) | | Table 10 | | 
| | | | | | | | | | |
| | | | 70 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Nomination Committee Report - continued Inclusion and Diversity Inclusion and diversity are key factors in conjunction withthe specifications given to search agents when developing long and short lists of candidates for consideration by the Committee. The Board expectspercentage of women directors has increased from 15% in 2013 to make an announcement on42% at 31 December 2019 and will be 50% at the appointment of a Chairman Designate later this year. As partconclusion of the process for2020 AGM. In addition to gender, the appointment ofBoard’s focus on diversity includes social and ethnic backgrounds, business and geographic experience, as well as cognitive and personal strengths. This objective is embedded in the next Chairman, the Committee will take the provision of the 2018 Code, that the chair should not remain in position beyond nine years from the
| | Board’s policy on diversity which is set out on pages 71 and 72. date of appointment to the Board, into account. The 2018 Code applies to CRH with effect from
1 January 2019.
Board Committee Composition
During the year, the Committee considered and made recommendations to the Board regarding changes to the composition of the Board’s Committees to ensure refreshmentCommittees. On the recommendation of the membership. Details of each Director’s Committee, memberships are set outShaun Kelly was appointed as permanent Audit Committee Chairman on pages 54his appointment to 57. In September 2018, Richie Boucher took overthe Board. Heather Ann McSharry acted as interim Audit Committee Chair in the period between Bill Teuber’s resignation from the Board and Shaun’s appointment. Heather Ann McSharry has succeeded me as Chairman of the Remuneration Committee from Don McGovern. RichieCommittee. She was a member of the Remuneration Committee of Atlas Mara, a listed company, for a yearnumber of years prior to hisher appointment as the CRH Remuneration Committee Chairman.
The current committee memberships of each Director are set out on pages 56 to 59. Senior Independent DirectorExecutive Succession In September 2018, Gillian Platt succeeded Don McGovern as Senior Independent Director.
Inclusion & Diversity
I am pleasedThe area of senior executive succession is a priority for the Board. An external agency is currently working with the management team and provides updates to report that, as at 31 December 2018, 38%the Board on assessment and development programmes for c. 100 CRH individuals, with the objective of ensuring maximum flexibility when considering appointments for key roles. Consideration of the Directorsbenefits of the recruitment of external hires to complement and enhance our management teams is an important component of CRH’s strategy to ensure the Company has a management team of the highest calibre and quality. In addition, the Nomination & Corporate Governance Committee is leading, on behalf of the Board, were women. This percentage will increasea related process in relation specifically to 42% at the conclusionsenior executive succession. The overall approach of the 2019 AGM. ProgressCommittee is to consider succession planning over short, medium and long term timelines.
Board Effectiveness As reported in improving the gender diversity on2018 Annual Report and Form20-F, the most recent external evaluation of the effectiveness of the Board since 2013 is shownand its Committees was carried out by Independent Audit, which met Board members, the Head of Internal Audit, the Company Secretary and a number of the senior executive management team in table 7 on page 65. Diversity is a key criteria for considerationone-to-one interviews. During 2019, as part of the annual internal Board evaluation, the Senior Independent Director undertook an internal Board evaluation review which built upon the priorities identified as part of the Independent Audit review, reinforced the areas of focus for future Board renewal process.outlined above, and identified ways to further enhance the strategic planning process and the efficient workings of the Board.
Additional Directorships The Chief Executive, Albert Manifold, was appointed as anon-executive Director of LyondellBasell Industries N.V., one of the world’s largest plastics, chemicals and refining companies in April 2019. Prior to him accepting the position he discussed the requirements of the role with the Nomination & Corporate Governance Committee and the Board. The Committee and the Board were satisfied that this external position would not have an adverse impact on his responsibilities as CRH Chief Executive and was of the view that the additional perspectives obtained would be beneficial to him and to the Company. The Board also considered the appointments of Heather Ann McSharry and Lucinda Riches asnon-executive Directors of Uniphar Group plc and Greencoat UK Wind plc, respectively, during 2019 and was satisfied that the responsibilities resulting from these new positions would not adversely impact on their time commitment to CRH. Corporate Governance The Committee is responsible for reviewing the independence of Board members and has updated its policyrecommended to the Board that all of thenon-executive directors be deemed to be independent. The Committee also monitors developments in best practice in relation to corporate governance and makes recommendations to the Board in relation to changes and enhancements to current procedures. Each year the Chairman, Senior Independent Director and Remuneration Committee undertake an extensive engagement with shareholders prior to the AGM to hear their views on diversityAGM proposals and on governance topics of interest to highlightshareholders. In 2019, shareholders representing 20% of the importanceshare register took up the offer of diversity in all aspects, including gender, sociala meeting. The Committee and ethnicthe Board considered the feedback from these sessions and from other shareholder interactions during the year. Richie Boucher Chairman of the Nomination & Corporate Governance Committee 27 February 2020
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 71 |
Board of Directors Membership Structure of the Board We consider the current size and composition of the Board to be within a range which is appropriate. The spread of nationalities of the Directors reflects the geographical reach of the Group and we consider that the Board as a whole has the appropriate blend of skills, knowledge and experience, from a wide range of industries, regions and backgrounds, cognitivenecessary to lead the Group. Section 1 of the Governance Appendix on the CRH website (www.crh.com) contains further details on the Board’s structures and personal strengths. the Board’s policies with regard to the appointment and retirement of Directors. Role and Responsibilities The updated policyBoard is responsible for the leadership, oversight, control, development and long-term success of the Group. It is also responsible for instilling the appropriate culture, values and behaviour throughout the organisation. There is a formal schedule of matters reserved to the Board for consideration and decision. This includes the matters set out in table 12. The Group’s strategy, which is regularly reviewed by the Board, and business model are summarised on page 64. |
pages 14 to 17.
| | | | | Matters Reserved
to the Board | | Table 12 |
Appointment of Directors
CRHStrategic plans for the Group
Annual budget Major acquisitions and disposals Significant capital expenditure Approval of full-year results and the Annual Report and Form 20-F I20-F Approval of the interim results The Board has delegated some of its responsibilities to Committees of the Board. While responsibility for monitoring the effectiveness of the Group’s risk management and internal control systems has been delegated to the Audit Committee1, the Board retains ultimate responsibility for determining the Group’s risk appetite and tolerance, and annually considers a report in relation to the monitoring, controlling and reporting of identified risks and uncertainties. In addition, the Board receives regular reports from the Chairman of the Audit Committee in relation to the work of that Committee in the area of risk management. Individual Directors may seek independent professional advice, at the expense of the Company, in the furtherance of their duties as a Director. The Group has a Directors’ and Officers’ liability insurance policy in place. Independence of Directors The Nomination & Corporate Governance Committee has reviewed the interests of each Director and the Board has determined that eachnon-executive Director remains independent. Chairman Richie Boucher was appointed Chairman of the Group with effect from 1 January 2020. On his appointment as Chairman, he met the independence criteria set out in the 2018 Corporate Governance Report - continued
Increasing the percentage of women executives at below Board level and inclusion and diversity generally is also a key priority for the management team and the Board. Monitoring of progress being made in the area of inclusion and diversity comes under the terms of reference of the newly formed Safety, Environment and Social Responsibility Committee.
Board Effectiveness
Independent Audit was engaged to carry out an external evaluation of the effectiveness of the Board and its Committees in 2018. Independent Audit met Board members, the Head of Internal Audit, the Company Secretary and a number of the senior executive management team inone-to-one interviews. They also observed Board and Committee meetings and reviewed the content and structure of Board papers. The resulting report has recently been presented to the Board. The Nomination & Corporate Governance Committee will review the recommendations contained in the report and agree appropriate action plans with the Board during the course of 2019. Independent Audit has no other connection with CRH.
Time Commitment
During 2018, I was appointed asnon-executive Chairman of Horse Racing Ireland, a body which is responsible for developing and promoting Ireland as a world centre of excellence for horse racing and breeding. I am satisfied that the responsibilities resulting from this new position will not impact on my time commitment to CRH. Prior to accepting the role, I discussed the nature of, and the time requirement associated with, the position with the Committee.
Nicky Hartery,
Chairman of Nomination & Corporate
Governance Committee
February 2019
Board of Directors
Membership Structure of the Board
Following the changes outlined on page 63, the Board increased in size to 13 members during 2018. This will reduce to 12 following the 2019 AGM. This recent expansion beyond the Board’s normal range of 10 to 11 members is primarily for timing and succession planning reasons and it is expected to reduce in size in due course.
The spread of nationalities of the Directors reflects the geographical reach of the Group and we consider that the Board as a whole has the appropriate blend of skills, knowledge and experience, from a wide range of industries, regions and backgrounds, necessary to lead the Group. Section 1 of the Governance Appendix on the CRH website (www.crh.com) contains further details on the Board’s structures and the Board’s policies with regard to the appointment and retirement of Directors.
Role and Responsibilities
The Board is responsible for the leadership, oversight, control, development and long-term success of the Group. It is also responsible for instilling the appropriate culture, values and behaviour throughout the organisation. There is a formal schedule of matters reserved to the Board for consideration and decision. This includes the matters set out in table 5 below.
Matters Reserved to the Board Table 5
Appointment of Directors
Strategic plans for the Group
Annual budget
Major acquisitions and disposals
Significant capital expenditure
Approval of full-year results and the Annual Report and Form20-F
Approval of the interim results
The Group’s strategy, which is regularly reviewed by the Board, and business model are summarised on pages 10 to 13.
The Board has delegated some of its responsibilities to Committees of the Board. While responsibility for monitoring the effectiveness of the Group’s risk management and internal control systems has been delegated to the Audit Committee1, the Board retains ultimate responsibility for determining the Group’s risk appetite and tolerance, and annually considers a report in relation to the monitoring,
controlling and reporting of identified risks and uncertainties. In addition, the Board receives regular reports from the Chairman of the Audit Committee in relation to the work of that Committee in the area of risk management.
Individual Directors may seek independent professional advice, at the expense of the Company, in the furtherance of their duties as a Director.
The Group has a Directors’ and Officers’ liability insurance policy in place.
Independence of Directors
The Nomination & Corporate Governance Committee has reviewed the interests of each Director and the Board has determined that eachnon-executive Director remains independent.
Chairman
Nicky Hartery was appointed Chairman of the Group in 2012. On his appointment as Chairman, he met the independence criteria set out in the 2016 Code. Notwithstanding the new provisions in the 2018 Code regarding tenure, the Board has determined that Mr. Hartery remains independent and is satisfied that he continues to demonstrate objective judgement and promotes constructive challenge amongst other Board members. Although he holds a number of other directorships, the Board has satisfied itself that these do not adversely impact on his role as Chairman. Changes in Mr. Hartery’s time commitments in the past 12 months are outlined in the Nomination & Corporate Governance Committee report above.
Policy on Diversity We are committed to ensuring that the Board is sufficiently diverse and appropriately balanced. In its work in the area of Board renewal and succession planning, the Nomination & Corporate Governance Committee looks at the following four criteria when consideringnon-executive Director roles: international business experience, particularly in the regions in which the Group operates or into which it intends to expand; skills, knowledge and expertise (including education or professional background) in areas relevant to the operation of the Board;
diversity in all aspects, including nationality, gender, social and ethnic backgrounds, cognitive and personal strengths; and
the need for an appropriately sized Board
| | | | | Attendance at Meetings during the year ended 31 December 2019 | | Table 13 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Board | | | | Acquisitions | | | | Audit | | | | Finance | | | | Nomination (i) | | | | Remuneration | | | | SESR (ii) | | | | Total | | Attended | | | | Total | | Attended | | | | Total | | Attended | | | | Total | | Attended | | | | Total | | Attended | | | | Total | | Attended | | | | Total | | Attended | | R. Boucher | | 6 | | 6 | | | | 7 | | 7 | | | | - | | - | | | | 4 | | 4 | | | | - | | - | | | | 6 | | 6 | | | | - | | - | | | | | | | | | | | | | | | | | | | | | | | J. Karlström (iii) | | 2 | | 2 | | | | - | | - | | | | 1 | | 1 | | | | - | | - | | | | - | | - | | | | 1 | | 1 | | | | 1 | | 1 | | | | | | | | | | | | | | | | | | | | | | | S. Kelly (iv) | | 1 | | 1 | | | | - | | - | | | | 1 | | 1 | | | | - | | - | | | | - | | - | | | | - | | - | | | | - | | - | | | | | | | | | | | | | | | | | | | | | | | N. Hartery | | 6 | | 6 | | | | 7 | | 7 | | | | - | | - | | | | 4 | | 4 | | | | 13 | | 13 | | | | - | | - | | | | 5 | | 5 | | | | | | | | | | | | | | | | | | | | | | | P.J. Kennedy | | 6 | | 6 | | | | - | | - | | | | - | | - | | | | - | | - | | | | 13 | | 12 | | | | 6 | | 6 | | | | 5 | | 5 | | | | | | | | | | | | | | | | | | | | | | | D.A. McGovern, Jr. (v) | | 1 | | 1 | | | | - | | - | | | | 1 | | 1 | | | | - | | - | | | | 5 | | 5 | | | | 2 | | 2 | | | | - | | - | | | | | | | | | | | | | | | | | | | | | | | H.A. McSharry | | 6 | | 6 | | | | - | | - | | | | 6 | | 6 | | | | - | | - | | | | 13 | | 13 | | | | 6 | | 5 | | | | - | | - | | | | | | | | | | | | | | | | | | | | | | | A. Manifold | | 6 | | 6 | | | | 7 | | 7 | | | | - | | - | | | | - | | - | | | | - | | - | | | | - | | - | | | | 5 | | 5 | | | | | | | | | | | | | | | | | | | | | | | S. Murphy | | 6 | | 6 | | | | 7 | | 6 | | | | - | | - | | | | 4 | | 4 | | | | - | | - | | | | - | | - | | | | - | | - | | | | | | | | | | | | | | | | | | | | | | | G.L. Platt | | 6 | | 6 | | | | - | | - | | | | - | | - | | | | - | | - | | | | 13 | | 13 | | | | 6 | | 6 | | | | 5 | | 5 | | | | | | | | | | | | | | | | | | | | | | | M.K. Rhinehart | | 6 | | 6 | | | | - | | - | | | | 5 | | 5 | | | | - | | - | | | | 11 | | 11 | | | | - | | - | | | | 4 | | 3 | | | | | | | | | | | | | | | | | | | | | | | L.J. Riches | | 6 | | 6 | | | | 7 | | 7 | | | | 6 | | 6 | | | | 4 | | 4 | | | | - | | - | | | | - | | - | | | | - | | - | | | | | | | | | | | | | | | | | | | | | | | H. Th. Rottinghuis | | 6 | | 6 | | | | 7 | | 6 | | | | 6 | | 6 | | | | - | | - | | | | - | | - | | | | - | | - | | | | 5 | | 5 | | | | | | | | | | | | | | | | | | | | | | | S. Talbot | | 6 | | 5 | | | | 6 | | 6 | | | | 3 | | 3 | | | | 3 | | 3 | | | | - | | - | | | | - | | - | | | | 2 | | 2 | | | | | | | | | | | | | | | | | | | | | | | W.J. Teuber, Jr. (vi) | | 3 | | 2 | | | | - | | - | | | | 1 | | 1 | | | | 1 | | 1 | | | | - | | - | | | | - | | - | | | | - | | - |
| | | | | | | | (i) | | Nomination & Corporate Governance Committee. | | (v) | | Retired April 2019. | | (ii) | | Safety, Environment & Social Responsibility Committee. | | (vi) | | Resigned June 2019. | | (iii) | | Appointed September 2019. | | | | | | (iv) | | Appointed December 2019. | | | | |
1. | In accordance with Section 167(7) of the Companies Act 2014. |
| | | | 72 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | CRH Annual Report and Form 20-F I 2018
|
|
skills, knowledge and expertise (including education or professional background) in areas relevant to the operation of the Board; | | | | diversity in all aspects, including nationality, gender, social and ethnic backgrounds, cognitive and personal strengths; and Membership
the need for an appropriately sized Board During the ongoing process of Board renewal, each, or a combination, of these factors can take priority. To date, the Board has not set any policy regarding age. The ages of the CRH Board (as at 31 December 2018) | | Table 6
|
| | | Gender Diversity - % of Female Directors (as at 31 December)
| | Table 7
|
| | | Summary of Director Competencies
| | Table 8
| | | Competency
| | Board Member
| Accounting, Internal Control & Financial Expertise | | A. Manifold, S. Murphy, M.K. Rhinehart, S. Talbot, W. J. Teuber Jr.
| Financial Services | | R. Boucher, S. Murphy, L.J. Riches
| Governance | | R. Boucher, N. Hartery, H.A. McSharry, G. Platt, M.K. Rhinehart, L.J. Riches, H. Th. Rottinghuis, W.J. Teuber Jr.
| Industry Experience | | N. Hartery, A. Manifold, S. Murphy, M.K. Rhinehart, H. Th. Rottinghuis
| IT & Cyber Security | | N. Hartery, S. Murphy, W.J. Teuber Jr.
| Mergers & Acquisitions, Private Equity & Emerging Markets | | R. Boucher, N. Hartery, P.J. Kennedy, A. Manifold, S. Murphy, L.J. Riches, H. Th. Rottinghuis, S. Talbot, W.J. Teuber Jr.
| Organisational Change, Succession Planning & Talent Management | | N. Hartery, G. Platt, M.K. Rhinehart
| Remuneration | | R. Boucher, N. Hartery, H.A. McSharry, G. Platt, L.J. Riches
| Safety & Sustainability | | N. Hartery, P.J. Kennedy, A. Manifold, G. Platt, M.K. Rhinehart, H. Th. Rottinghuis, S. Talbot
| Strategy | | R. Boucher, N. Hartery, P.J. Kennedy, H.A. McSharry, A. Manifold, S. Murphy, G. Platt, M. K. Rhinehart, L.J. Riches, H.Th. Rottinghuis, S. Talbot, W.J. Teuber Jr. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Attendance at Meetings during the year ended 31 December 2018 | | | | | | | | | | | | | | | | | | | | | | Table 9 | | Name | | Board | | Acquisitions | | Audit | | Finance | | Nomination (i) | | | Remuneration | | | SESR (ii) | | | | Total | | Attended | | Total | | Attended | | Total | | Attended | | Total | | Attended | | Total | | | Attended | | | Total | | | Attended | | | Total | | | Attended | | | | | | | | | | | | | | | | | | | | | | R. Boucher (iii) | | 5 | | 5 | | 2 | | 2 | | - | | - | | 4 | | 4 | | | - | | | | - | | | | 5 | | | | 5 | | | | - | | | - | | N. Hartery | | 6 | | 6 | | 3 | | 3 | | - | | - | | 6 | | 6 | | | 6 | | | | 6 | | | | - | | | | - | | | | 2 | | | 2 | | P.J. Kennedy | | 6 | | 6 | | 1 | | 1 | | - | | - | | - | | - | | | 6 | | | | 6 | | | | 11 | | | | 11 | | | | 2 | | | 2 | | D.A. McGovern, Jr. | | 6 | | 6 | | - | | - | | 6 | | 5(vi) | | - | | - | | | 6 | | | | 6 | | | | 11 | | | | 11 | | | | - | | | - | | H.A. McSharry | | 6 | | 6 | | - | | - | | 7 | | 7 | | - | | - | | | 4 | | | | 4 | | | | 11 | | | | 11 | | | | - | | | - | | A. Manifold | | 6 | | 6 | | 3 | | 3 | | - | | - | | - | | - | | | - | | | | - | | | | - | | | | - | | | | 2 | | | 2 | | S. Murphy | | 6 | | 6 | | 3 | | 3 | | - | | - | | 6 | | 6 | | | - | | | | - | | | | - | | | | - | | | | - | | | - | | G.L. Platt | | 6 | | 6 | | - | | - | | - | | - | | - | | - | | | 6 | | | | 6 | | | | 11 | | | | 11 | | | | 2 | | | 2 | | M.K. Rhinehart (iv) | | 1 | | 1 | | - | | - | | - | | - | | - | | - | | | - | | | | - | | | | - | | | | - | | | | - | | | - | | L.J. Riches | | 6 | | 6 | | 2 | | 2 | | 6 | | 6 | | 4 | | 4 | | | 2 | | | | 2 | | | | 6 | | | | 5 | | | | - | | | - | | H. Th. Rottinghuis | | 6 | | 6 | | 3 | | 3 | | 7 | | 6 | | - | | - | | | - | | | | - | | | | - | | | | - | | | | 2 | | | 2 | | S. Talbot (v) | | 1 | | 1 | | - | | - | | - | | - | | - | | - | | | - | | | | - | | | | - | | | | - | | | | - | | | - | | W.J. Teuber, Jr. | | 6 | | 6 | | - | | - | | 7 | | 7 | | 6 | | 6 | | | - | | | | - | | | | - | | | | - | | | | - | | | - | | | | | | | | | | | | | | | | | | | | |
| | | (i)range from 51 to 66, which the Nomination & Corporate Governance Committee.Committee believes is appropriate at the current time.
(ii) Committees
The Board has established six permanent Committees to assist in the execution of its responsibilities. The current permanent Committees are: Acquisitions; Audit; Finance; Nomination & Corporate Governance; Remuneration; and Safety, Environment & Social Responsibility Committee. Ad-hoc Committees are formed from time to time to deal with specific matters. (iii) Appointed March 2018.
(iv) Appointed October 2018.
| | (v) Appointed December 2018.
(v) Due to his connection with oneEach of the prospective audit firms, Mr. McGovern took no part inpermanent Committees has Terms of Reference1, under which authority is delegated to them by the AuditBoard. The Chairman of each Committee meeting wherereports to the two shortlisted firms for potential appointment asBoard on its deliberations and minutes of all Committee meetings are circulated to all Directors. The Chairmen of the Group’s external auditor presentedCommittees attend the AGM and are available to answer questions from shareholders.
Each of the Committees has reviewed their final audit proposals. |
CRH Annual Report and Form 20-F | 2018
Corporate Governance Report - continued
During the ongoing process of Board renewal, each, or a combination, of these factors can take priority.
To date, the Board has not set any policy regarding age. The ages of the Directors range from 50 to 68, which the Nomination & Corporate Governance Committee believes is appropriate at the current time.
Committees
The Board has established six permanent Committees to assist in the execution of its responsibilities. The current permanent Committees are:
Acquisitions;
Audit;
Finance;
Nomination & Corporate Governance;
Remuneration; and
Safety, Environment & Social Responsibility
Ad-hoc Committees are formed from time to time to deal with specific matters.
Each of the permanent Committees has Terms of Reference1, under which authority is delegated to them by the Board. The Chairman of each Committee reports to the Board on its deliberations and minutes of all Committee meetings are circulated to all Directors. The Chairmen of the Committees attend the AGM and are available to answer questions from shareholders.
Each of the Committees has reviewed their respective Terms of Reference.
respective Terms of Reference. The Terms of Reference of each Committee are available on the CRH website, www.crh.com. Substantial Holdings The Company is not owned or controlled directly or indirectly by any government or by any corporation or by any other natural or legal person severally or jointly. The major shareholders do not have any special voting rights. Details of the substantial holdings as at 31 December 20182019 are provided in table 1014 below. The Company has not been advised of any changes in holdings since 31 December 2018.2019. Stock Exchange Listings CRH, which is incorporated in Ireland and subject to Irish company law, has a premium listing on the London Stock Exchange (LSE), a secondary listing on Euronext Dublin (formerly the Irish Stock Exchange) and its American Depositary Shares are listed on the New York Stock Exchange (NYSE). Regulatory,Legal and Compliance & Ethics
CRH’s Regulatory,Legal and Compliance & Ethics (RCE) programmes support the Group in operating sustainably and consistently towith its core values. CRH’s Legal and Compliance team provides advice, guidance and support to executive and operational management and works closely with them to provide training to our employees. Legal and Compliance provides support on a range of matters including establishing policies and procedures, providing compliance training and communications, providing legal advice on compliance and business issues, monitoring and investigating Hotline calls, competition/antitrust law, and ensuring the Group is informed of any changes to regulation and/or reporting requirements. During 2018, RCE’s2019, Legal and Compliance priorities included enhancing ourantitrust/competition law, international trade compliance, programmes around data privacy, trade sanctions, antitrust,Hotline awareness and culture.policy refresh. Code of Business Conduct The foundation of the RCELegal and Compliance programmes is the Code of Business Conduct (CoBC) and supporting policies, which setsets out the guiding business principlesour standards of legal, honest and core values of the CRH Group.ethical behaviour. The CodeCoBC complies with the applicable code of ethics regulations of the SEC arising from the Sarbanes-Oxley Act and it also reinforces the fundamental CRH principle that “there is never a good business reason to do the wrong thing.” The CodeCoBC is applicable to all employees of the CRH Group, including the Chief Executive and senior financial officers. A detailed review and benchmarking exercise has resulted in recommendations for refresh and the CoBC will be updated in the first half of 2020. CRH’s Internal Audit function worksside-by-side with Legal and Compliance in monitoring compliance with the CoBC and supporting policies, and in providing an integrated approach to assurance. This cross-functional collaboration supports CRH’s goal: to ensure CRH leads with integrity. Awareness and Training In line with our commitment to maintain high ethical business conduct standards, the CoBC and Advanced Compliance Training (which includes Anti-bribery, Anti-fraud, Anti-theft and Competition/Antitrust topics)e-Learning modules were enhanced to include both a first time and refresher element to the programme in 23 languages. During 2018, RCE implemented policies and guidance to support compliance with the General Data Privacy Regulation (GDPR) across the CRH businesses. Personal Data Privacye-Learning along with general Personal Data Privacy information was rolled out. Additionally, a robust communication plan was put in place to promote awareness among employees in the form of toolkits, implementation checklists, and progress reports along with ensuring a “Business as Usual” operating model for data privacy within CRH.
| | | | | | | | | | | | | | | | | | | | | | | | | Substantial Holdings | | | | | | | | | | | | | | | | | | | | | | | Table 10 | | As at 31 December 2018, the Company had received notification of the following interests in its Ordinary Share capital, which were equal to, or in excess of, 3%: | | | | | 31 December 2018 | | | 31 December 2017 | | | 31 December 2016 | | | | | | | | | | | | | Name | | Holding/
Voting Rights | | | % at
year end | | | Holding/
Voting Rights | | | % at
year end | | | Holding/
Voting Rights | | | % at
year end | | | | | | | | | | | | | Baillie Gifford Overseas Limited and Baillie Gifford & Co. | | | Holding below 3% | | | | Holding below 3% | | | | 33,171,299 | | | | 3.98 | | | | | | | | | | BlackRock, Inc. (i) | | | 65,387,207 | | | | 8.01 | | | | 75,119,286 | | | | 8.95 | | | | 74,809,499 | | | | 8.98 | | | | | | | | Standard Life Aberdeen plc. | | | Holding below 3% | | | | 25,643,747 | | | | 3.05 | | | | Holding below 3% | | | | | | | | | UBS AG | | | 26,380,604 | | | | 3.23 | | | | 26,380,604 | | | | 3.16 | | | | 26,380,604 | | | | 3.16 | | | | | | | | | | | |
| | | | | Substantial Holdings | | Table 14 |
(i) As at 31 December 2019, the Company had received notification of the following interests in its Ordinary Share capital, which were equal to, or in excess of, 3%:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 31 December 2019 | | | | | | 31 December 2018 | | | | | | 31 December 2017 | | | | | | | | | | | | Name | | Holding/ Voting Rights | | | % at year end | | | | | | Holding/ Voting Rights | | | % at year end | | | | | | Holding/ Voting Rights | | | % at year end | | | | | | | | | | | | BlackRock, Inc. (i) | | | 53,813,273 | | | | 6.82 | | | | | | | | 65,387,207 | | | | 8.01 | | | | | | | | 75,119,286 | | | | 8.95 | | | | | | | | | | Standard Life Aberdeen plc. | | | Holding below 3% | | | | | | | | Holding below 3% | | | | | | | | 25,643,747 | | | | 3.05 | | | | | | | | | | | | UBS AG | | | 26,380,604 | | | | 3.34 | | | | | | | | 26,380,604 | | | | 3.23 | | | | | | | | 26,380,604 | | | | 3.16 | |
| (i) | BlackRock, Inc. has advised that its interests in CRH shares arise by reason of discretionary investment management arrangements entered into by it or its subsidiaries. |
| 1. | The Terms of Reference of these Committees comply fully with the 20162018 Code; CRH considers that the Terms of Reference are generally responsive to the relevant NYSE rules, but may not address all aspects of these rules. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 73 |
| CRH Annual Report and Form 20-F I 2018
|
| | | | | | | CRH Hotline A 24/7 multi-lingual confidential “Hotline” facility is available for employees to report good faith concerns of violations of the CRH policies or the law. The Hotline is maintained by an independent operator. All reports received via the Hotline (or through other channels) are handled discreetly and professionally, and investigated with appropriate actions taken based on investigation findings.
CRH engages an external service provider to administer an independent 24/7 multi-lingual confidential “Hotline” facility. The CRH Hotline allows employees, customers, suppliers and or other external stakeholders to raise good faith concerns that may be relevant to the CoBC, inappropriate or illegal behaviour or violations of any CRH policies or local laws. All concerns are handled discreetly and are professionally investigated with appropriate actions taken based on investigation findings. CRH is committed to creating an atmosphere where employees feel empowered to speak up when they have good faith concerns. Retaliation or reprisals are not tolerated at CRH. Communications with Shareholders Communications with shareholders are given high priority and the Group devotes considerable time and resources each year to shareholder engagement. We recognise the importance of effective dialogue as an integral element of good corporate governance. The Investor Relations team, together with the Chief Executive, Finance Director and other senior executives, regularly meet with institutional shareholders (each year covering over 60% of the shareholder base). Detailed reports on the issues covered in those meetings and the views of shareholders are circulated to the Board after each group of meetings. Table 1216 provides a brief outline of the nature of the activities undertaken by our Investor Relations team. In addition to the above, major acquisitions and disposals are notified to the Stock Exchanges in accordance with the requirements of the Listing Rules and development updates, giving details of other acquisitions or disposals completed and major capital expenditure projects, are issued periodically. During 2018,2019, the former Chairman, Senior Independent Director and Company Secretary again participated in a number of meetings with some of the Group’s major shareholders, in advance of the 20182019 AGM. Also, as outlined in the Remuneration Committee Chairman’s introduction to the Directors’ Remuneration Report on page 68, there60, Mr Boucher met with a significant portion of the Group’s shareholders following his appointment as Chairman designate. There was extensivealso continued engagement with the Group’s major shareholders in late 2018/early 2019 on the Remuneration Committee’s proposals regarding the 2019 Directors’ Remuneration Policy.remuneration matters. We respond throughout the year to correspondence from shareholders on a wide range of issues.
| | | | | | | US Listing - Additional Information | | Table 15 | | | | | Additional details in relation to CRH’s general corporate governance practices are set out in the Governance Appendix, which has been filed as an exhibit to the Annual Report on Form 20-F as filed with the SEC. For the purposes of the Annual Report on Form 20-F, the Governance Appendix, and in particular the following sections thereof, are incorporated by reference herein: | | | | | | Section 1 – Frequently Asked Questions • Page 3: For what period are non-executive Directors appointed? • Page 5: What are the requirements regarding the retirement and re-election of Directors? | | Section 2 - Operation of the Board’s Committees • Page 6: Audit Committee: Role and Responsibilities • Page 6: Audit Committee: Meetings • Page 8: Audit Committee: Non-audit Fees Details of the executive Directors’ service contracts and the policy for loss of office are set out on page 81 of the 2018 Annual Report and Form 20-F. | | | | | Table 11
| | Additional details in relation to CRH’s general corporate governance practices are set out in the Governance Appendix, which has been filed as an exhibit to the Annual Report on Form20-F as filed with the SEC. For the purposes of the Annual Report on Form20-F, the Governance Appendix, and in particular the following sections thereof, are incorporated by reference herein:
Section 1 - Frequently Asked Questions
• Page 3: For what period arenon-executive Directors appointed?
• Page 5: What are the requirements regarding the retirement andre-election of Directors?
Section 2 - Operation of the Board’s Committees
• Page 6: Audit Committee: Role and Responsibilities
• Page 6: Audit Committee: Meetings
• Page 8: Audit Committee:Non-audit Fees
Details of the executive Directors’ service contracts and the policy for loss of office are set out on page 81.
| | Investor Relations Activities | | | | Table 12 | | • Formal Announcements: including the release of the annual and interim results and the issuance of trading statements. These announcements are typically accompanied by presentations and webcasts or conference calls
• Investor Roadshows: typically held following the release of formal announcements, provide an opportunity for the management team to meet existing and/or potential investors in a concentrated set of meetings
• Industry Conferences: attendance at key sector and investor conferences affords members of the senior management team the opportunity to engage with key investors and analysts
• Investor Briefings: in addition to regular contact with investors and analysts during the year, the Company periodically holds capital market days, which include presentations on various aspects of CRH’s operations and strategy and provides an opportunity for investors and analysts to meet with CRH’s wider management team
• Media Briefings: each year, the Company provides media briefings on numerous issues
| | The following are available on the CRH website (www.crh.com)
| | Table 13
| | | | Corporate Governance | | Investors | | | | | • Governance Appendix
• Directors’ Remuneration Policy
• Terms of Reference of the Acquisitions, Audit, Finance, Nomination & Corporate Governance, Remuneration and Safety, Environment & Social Responsibility Committees
• Memorandum and Articles of Association of the Company
• Pre-approval policy fornon-audit services provided by the auditors
• Compliance & Ethics statement, Code of Business Conduct and Hotline contact numbers
| | • Annual and Interim Reports, the Annual Report and Form20-F (separate documents up to 2015) and the annual Sustainability Report
• News releases
• Webcast recordings of results briefings
• General Meeting dates, notices, shareholder circulars, presentations and poll results
• Answers to Frequently Asked Questions, including questions regarding dividends and shareholder rights in respect of general meetings
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Investor Relations Activities | | Table 16 | | | | | | • Formal Announcements: including the release of the annual and interim results and the issuance of trading statements. These announcements are typically accompanied by presentations and webcasts or conference calls • Investor Roadshows: typically held following the release of formal announcements, provide an opportunity for the management team to meet existing and/or potential investors in a concentrated set of meetings • Industry Conferences: attendance at key sector and investor conferences affords members of the senior management team the opportunity to engage with key investors and analysts | | • Investor Briefings: in addition to regular contact with investors and analysts during the year, the Company periodically holds capital market days, which include presentations on various aspects of CRH’s operations and strategy and provides an opportunity for investors and analysts to meet with CRH’s wider management team • Media Briefings: each year, the Company provides media briefings on numerous issues | | | | | | | | | | |
| | | | | | The following are available on www.crh.com | | Table 17 | | | 67 |
CRH Annual Report and Form 20-F | 2018
Directors’ Remuneration Report
| Corporate Governance | | Investors | | | | | | • Governance Appendix • Directors’ Remuneration Policy • Terms of Reference of the Acquisitions, Audit, Finance, Nomination & Corporate Governance, Remuneration and Safety, Environment & Social Responsibility Committees • Memorandum and Articles of Association of the Company • Pre-approval policy for non-audit services provided by the auditors • Compliance & Ethics statement, Code of Business Conduct and Hotline contact numbers | | • Annual and Interim Reports, the Annual Report and Form 20-F (separate documents up to 2015) and the annual Sustainability Report • News releases • Webcast recordings of results briefings • General Meeting dates, notices, shareholder circulars, presentations and poll results • Answers to Frequently Asked Questions, including questions regarding dividends and shareholder rights in respect of general meetings | | | |  |
| | | Chairman’s Overview
Chair’s Overview Introduction As ChairmanI succeeded Richie Boucher as Committee Chair in January 2020 following his appointment as Group Chairman. On behalf of the Remuneration Committee, I am pleased to presentintroduce the Directors’ Remuneration Report (the ‘Report’) for the year ended 31 December 2018. I succeeded Don McGovern as Committee Chairman in September 2018. On behalf of2019. Similar to prior years, the Committee, I would like to take this opportunity to thank Don for his stewardship of the Committee since 2015. I would also like to thank him for his help and guidance as I have transitioned into the role in recent months.
The Directors’ Remuneration Report (the ‘Report’) is split into three sections:
•
this Chairman’sChair’s Statement (pages 6874 to 72)78), which sets out: | – | –the Committee’s approach to setting remuneration; and
|
| – | a high-level summary of the Group’s performance in 2019, related remuneration outcomes and the way in which we intend to implement remuneration in 2020 |
– the background to the remuneration review carried out by the Committee in 2018 and details
a summary of our proposed updates to the Directors’ Remuneration Policy (the ‘Policy’) (pages 80 to 86), which was approved by shareholders at the 20162019 AGM (the ‘2016 Policy’);and is available at www.crh.com; and – the Group’s performance in 2018 and details of the relevant incentive plan outcomes for 2018; and
– the way in which we intend to implement remuneration in 2019;
• the proposed Directors’ Remuneration Policy (the ‘2019 Policy’) (pages 74 to 83), which will be submitted to shareholders for approval at the 2019 AGM; and
| | •
the Annual Report on Remuneration (pages 8488 to 97)100), which sets out details ofin detail the remuneration paid to Directors in respect of 20182019 and how the 2019 Policy will operate for 20192020.Committee’s Approach to Remuneration The key principles underpinning the Committee’s approach to remuneration are that remuneration should be set at a level that: •
is fair and balanced; •
is market competitive, enabling the Company to recruit and retain talented executives; •
incentivises executives in a way that focuses on delivering the Company’s strategic objectives; and •
aligns the interests of the executive team with those of shareholders The Committee also seeks to ensure that updates to the Policy take into account the views of shareholders and evolving best practice. The Board and the Committee are regularly updated on the perspectives of our employees and take these perspectives into account when making remuneration decisions. Further details in relation to workforce engagement on remuneration matters are set out on page 96. The Committee also has oversight of remuneration policy across the Group and endeavours to keep the principles and structure of remuneration consistent in so far as is possible given CRH’s international footprint. Generally speaking, total remuneration is more variable (and, in particular, weighted towards long-term performance) for roles with greater levels of responsibility and scope. In setting the remuneration policy and practices for executive Directors, the Committee also committedtakes into consideration the six pillars outlined in the 2018 Code; clarity, simplicity, risk, predictability, proportionality and alignment to engagingculture, and is satisfied that the Policy addresses each of these areas. 2019 Performance 2019 was a year of significant profit growth and positive momentum across our businesses, with EBITDA (as defined)* from continuing and discontinued operations of€4.2 billion (+25%). A total of€0.8 billion was returned to shareholders via the ongoing share repurchase programme while the full year dividend per share was increased by 15%. At the same time, CRH’s balance sheet strength was enhanced with the ratio of Net Debt to understand their viewsEBITDA (as defined)* of 1.7x as at 31 December 2019 (2018: 2.1x). Incentive Outcomes for 2019 The Group’s strong performance in 2019 is reflected in the executive Directors’ remuneration for 2019, which is summarised on remuneration. |
Outcome of 2018 Annual General Meeting Vote on Remuneration
A significant number of votes (39.69%) were received against the resolution to consider the 2017 Annual Report on Remuneration at the 2018 AGM. We engaged extensively with shareholders and proxy voting agencies before the 2018 AGM and subsequently communicated with shareholders again afterwards. Based on all of the feedback received, we understand that the votes cast against the resolution related mainly to remuneration levels (particularly in the context of the increase for the Finance Director in 2018), the timing of disclosures for bonus plan outcomes and certain elements of the performance measures in the Performance Share Plan (PSP).
Remuneration Review
Followingin-depth consideration of the feedback referred to above, developments in best practice and newly introduced provisions in the 2018 Code, the Committee developed a number of proposals for policy changes and for the implementation of remuneration in 2019. A key element of the remuneration review was a desire to address shareholder feedback, promote consistency in remuneration and simplify CRH’s remuneration structures where possible. On behalf of the Committee, I contacted shareholders representing c. 70% of the issued share capital and major proxy voting agencies, to consult on our proposals. The consultation process took place over two phases in October 2018 and January 2019. We received feedback through in person meetings, conference calls and via correspondence. Overall, the feedback on the proposals was positive and supportive. The finalised proposals are summarised in table 14.
2019 Performance Share Plan Targets
In determining the appropriate targets for the long-term PSP incentive plan, one area of feedback that we received from a number of shareholders was that they would like to see a returns metric introduced. We considered the merits of different returns measures and proposed the introduction of RONA, in line with our approach of simplicity and transparency, astable 22 on page 79 and set out in detail on pages 88 to 100.
| CRH Annual Report and Form 20-F I 2018
| * | EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 75 |
| | | | | | Summary of Key Decisions Activities | | Table 18 |
| | | | 76 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Chair’s Overview - continued Executive Directors’ Remuneration Summary | | | | | | | | | 2019 Remuneration Snapshot (full details of 2019 remuneration are set out in table 22 on page 79) | | Table 19 | | | Summary |
| | | | | | | | | | | | | | | | Fixed | | | | Performance Related Variable Remuneration | | | | | | | | | | Director | | Salary | | | | Annual Bonus (% of Max) | | 2017 PSP Award (i) (% of Max) | | | | | | | | | | Albert Manifold | | €1,522,500 | | | | 86% | | 70.7% | | | | | | | | | | Senan Murphy | | €794,500 | | | | 86% | | 70.7% | | | | | (i) The awards, for which performance was measured over the three-year period to end 2019, will vest at 70.7% in 2022 following the completion of atwo-year holding period. Further details in relation to the estimated value of the awards, split between the value created for performance and the value created through share price growth, are included in table 22 on page 79. The market value per share on the date of award (in March 2017) was€30.97. | | |
| | | | | | | | | 2020 Remuneration Snapshot | | Table 20 | | |
| | | | | | | | | | | | | | | | | | | | | Director | | Salary | | Max. Annual Bonus (% of salary) | | Metrics for 2020 Bonus Award | | 2020 PSP Award (% of Salary) | | Metrics for 2020 PSP Award | | | | | | | | | | | Albert Manifold | | €1,564,400 (+2.75%) | | 225% | | EPS (25%) RONA (25%) | | 365% | | Cashflow (50%) TSR (25%) | | | | | | | | | | | Senan Murphy | | €816,350 (+2.75%) | | 150% | | Operating Cashflow (30%) Personal Strategic (20%) | | 225% | | RONA (25%) | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Alignment of Executive Remuneration with Strategy | | Table 21 | | |
| | | | | | | | | | | | | | Performance Measure | | Annual Bonus | | PSP | | Reason for Selection | | | | | | | | EPS | | ✓ | | | | EPS is a key measure of the underlying profitability | | | | | | | | Cash Flow | | ✓ | | ✓ | | Operating cashflow is a key measure of CRH’s ability to generate cash to fund organic and acquisitive growth and provide returns to our shareholders via dividends and share buybacks | | | | | | | | RONA | | ✓ | | ✓ | | RONA is a key measure of CRH’s ability to create value through excellence in operational performance | | | | | | | | TSR | | | | ✓ | | TSR is a key measure of CRH’s returns to shareholders through the cycle | | | | | | | | Personal Strategic Objectives | | ✓ | | | | Personal strategic objectives enable a focus on specific factors aligned with CRH’s short and medium-term strategic objectives that promote long-term performance | | |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 77 |
Incentive Outcomes for 2019 - continued In respect of 2019, the Committee determined that, based on the achievement of performance targets, the annual bonus plan should pay out at 86% of the maximum opportunity for the Chief Executive and the Finance Director. Further details in relation to the annual bonus plan, including the relevant targets on which the 2019 plan was based, are set out on page 88. The Committee also determined that 70.7% of the maximum awards made in 2017 under the PSP will vest, based on the achievement of relevant performance criteria for the period 2017-2019. Further details in relation to the 2017 Awards, including details of the applicable targets and performance for each of the components of the 2017 Awards, are set out on page 90. In assessing performance against the relevant metrics for the annual bonus plan and PSP, consistent with prior years we excluded certainnon-recurring‘one-off’ items. Following consideration of the financial performance referred to above, and the Company’s underlying performance, the Remuneration Proposals | | Table 14 | Element | | Proposal | | Further Details | | | | | Salary | | • | | 2.5% increaseCommittee did not exercise any discretion over the incentive outcomes for 2019 and is satisfied that the outcomes are appropriate and balanced.Alignment between Pay, Performance and Strategy The Committee is satisfied that there was a strong alignment between the pay outcomes outlined above and the execution of our value creation strategy and the achievement of strategic objectives. The connections between the metrics used by the Committee to incentivise management and CRH’s strategy are summarised in salarytable 21. Approach to Remuneration from 2020 Pensions In 2019, CRH’s Remuneration Policy was updated to the effect that pension-related contributions/allowances for newly hired executive Directors in 2019, which iswill be in line with average workforce increases in CRH’s core countries | | see page 94 | | | | | | | | Annual Bonus Plan | | • | | No change in annual bonus opportunity | | see pages 84 and 94 | | | | | | | • | | Annual bonus targets to be disclosed immediately on a reported year basis | | | | | | | | | • | | Expanded disclosures on how targets are set to be included in the Director’s Remuneration Report | | | | | | | | | • | | Percentage of earned annual bonus to be deferred into sharesgeneral practice for a period of three years to be increased from 25% to 33.3% | | | | | | | | | | Performance Share Plan | | • | | No change in PSP opportunity | | see page 95 | | | | | | | • | | RONA to be introduced as a measure in the PSP | | | | | | | | | • | | TSR is to be measured against are-confirmed bespoke peer group of companies, which will be more relevant and comparable by being weighted for market capitalisation. The TSR component will also be simplified by the removal of the FTSEAll-World Construction and Materials Index | | | | | | | | | • | | The weightings for PSP awards in 2019 will be 50% cash flow, 25% TSR and 25% RONA | | | | | | | | | • | | For future awards, the Committee will retain flexibility to adjust the weightings of the PSP measures with no measure’s weighting falling below 25% | | | | | | | | | • | | The targets for each PSP measure are set out in table 16 on page 70 | | | | | | | | | • | | The policy will be updated to introduce clawback provisions in addition to the existing malus provisions | | | | | | | | | | Pension | | • | | Introduction of new policy provision that pension contribution rates for new executive Director hires will not exceed the norm for pension related contributions/allowances for other new recruits, across the general workforce, in the individual’s home jurisdiction or, if applicable, the jurisdiction in which the individual is to be based in their executive Director role. For example, in Ireland and the UK such contributions/allowancescontributions range betweenfrom 8%-12% to 12% of base salary depending on the rules of the | | see page 75 | | | | | | | | Shareholding Guidelines | | • | | Minimumscheme. There was a recognition at the time, in our discussions with shareholders prior to the 2019 AGM, that addressing this issue for new hires was more achievable than seeking to change the contracts for incumbent executive Directors, although we committed to keeping the matter under review.Since the 2019 AGM, there has been an evolution in investor views on the issue of pension contributions/allowances for incumbent executives. The Chief Executive has considered the matter and has voluntarily offered to reduce the monetary value of the pension contribution/allowance to which he is contractually entitled by 10% per annum in 2020 and 2021, with a further reduction such that his pension allowance will be below 25% of salary in January 2022. His pension entitlement will cease in August 2022 when he reaches age 60. The Finance Director’s pension contribution is currently 25% of salary. Taking into account his continued strong performance and the positioning of his total remuneration, which is lower quartile compared to the FTSE 50 excluding financial services companies which CRH uses for benchmarking purposes, the Committee was of the view that a change to his pension contribution would not be fair and balanced in the circumstances. Nevertheless, having considered the matter, the Finance Director has voluntarily offered to permanently cap his entitlement at the monetary level due in respect of 2020. The Committee has accepted the Chief Executive’s and Finance Director’s waiver of their contractual entitlements and welcomes their positive initiative in this regard. Post-employment shareholdings The 2018 Code requires companies to develop policies for post-employment shareholding requirements. Prior to the 2019 AGM, we discussed with shareholders the Committee’s view that the current holding period on our vested PSP awards provides a considerable de facto post-employment shareholding requirement as it continues to apply post-cessation of employment. Since then investor views on approaches to post-employment shareholdings for executive Directors have also evolved. Having considered the matter in detail, we have decided to introduce a new requirement whereby the Chief Executive will be required to hold shares equivalent to two times salary for a period of two years post-employment. Until the two times limit is achieved, commencing in 2020, Deferred Share or PSP awards which vest will be transferred on a net of tax basis to a third party to be increased from 250% of salaryheld in trust for Mr. Manifold’s benefit. The shares will be held in trust on a rolling basis, until his employment ceases and a subsequenttwo-year period has elapsed. The Committee will retain discretion on a case by case basis to 350% of salary, with the revised guidelinerelease these shares in exceptional circumstances. A similar structure will apply to be met from no later than 31 December 2023 | | see page 83 | | | | | | | • | | Minimum shareholding requirement for the Finance Director, except that the requirement in his case will be one times salary.2020 Remuneration Salary For 2020, Mr. Manifold and Mr. Murphy will each receive a 2.75% increase, which is broadly in line with average workforce increases in CRH’s core countries. Annual Bonus The structure and metrics for the 2020 annual bonus are unchanged from 2019, and are set out in table 20 on page 76. The targets will be disclosed in the 2020 Annual Report and Form 20-F. Pensions As outlined above, the monetary value of the pension contribution/allowance for Mr. Manifoldwill be reduced by 10% in 2020 such that his allowance will be c.€600,000 (2019:€667,000) and the contributions/allowance for Mr. Murphy will be capped permanently at€204,000 (25% of his 2020 salary). Performance Share Plan In 2019, the Committee introduced RONA as a metric in the long-term PSP, to remain at 200%reflect a strong desire amongst shareholders for the introduction of salary,a returns measure. A range of views had been expressed regarding the form of returns measure to be metused. The Committee chose RONA as it is the metric used in the business and the measure that the management team communicate to shareholders. Following the 2019 AGM, we received feedback from no later than 31 December 2022 | | | | | | | | | | Post-employment Holdings | | • | | Introductiona small number of a new policy on post-employment holdings, whereby, ifshareholders that they would prefer an executive leaves employment,alternative returns measure. The Committee has also considered this matter further. Recognising that there are arguments in favour of other methodologies, the Committee continues to strongly believe that RONA is the extent that theirmost appropriate measure in an incentive context and has decided to retain it as the returns metric for PSP awards have met, or subsequently meet, the PSP financial criteria, at the discretion of the Remuneration Committee such awards will continue in place and will vest on a phased basis up to four years after date of cessation of employment or a minimum of five years aftver the date of award | | see page 832020.
| | | | | | | Non-executive | | • | | Fees to be increased with effect from 1 January 2019, as follows: | | see page 94 | Directors | | | | | 78 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
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| | Chairman fee increased to€630,000 from€575,000Chair’s Overview - continued
| | | | | | | | | | | | – | | non-executive Director base fee to increase by€10,000 to€88,000 | | | | | | | | | | | | – | | Committee fee to increase by€5,000 to€32,000 | | | | | | | | | | | | – | | Remuneration Chair fee to increase from€15,000 to€30,000 (when not combined with Senior Independent Director role)
| | | | | | | The Committee has also considered feedback from some shareholders on the peer group used to measure TSR performance in relation to whether consideration should be given to the introduction of certain companies, that compete in individual markets in which CRH operates but do not operate internationally, into the peer group. Other shareholders asked whether the relatively small market capitalisation of some companies in the peer group could unduly influence the performance outcome. The Committee has considered these views. It is satisfied that the existing peer group achieves a robust measurement of TSR performance against industry peers that have similar geographic exposure to CRH. In addition, the peer group is weighted by market capitalisation to reduce the influence of smaller companies. Therefore, it is proposed to retain the existing peer group for PSP awards in 2020. However, shareholder views will be kept under review for future awards. In engagement with shareholders and wider stakeholders on sustainability matters, the potential for introducing an environmental target into the PSP was raised. As outlined in the Sustainability section on page 21, the Board has set a series of ambitious environmental targets which are in line with the Paris Climate Agreement. However, given the very long-term nature of those sustainability targets, the Committee determined that it was not currently feasible to develop robust, measurable and stretching performance targets on an annual or three-year performance cycle at this time. However, this will be kept under review going forward. Further details in relation to the structure, metrics and targets for the PSP awards to be made in 2020 are set out in table 39 on page 96. Non-executive Directors No changes are proposed to the fees paid to the Chairman or thenon-executive Directors in 2020. Details of the fees currently payable are set out in table 37 on page 95. | | | | 
| | Tarmac, part of CRH’s Europe Materials Division, was responsible for resurfacing the world-famous racetrack at Silverstone, home of the British Grand Prix, where Lewis Hamilton clinched a record sixth British Grand Prix victory in 2019. The surface was designed specifically to withstand the extremes of braking and cornering generated by high-performance racing cars and motorbikes. Tarmac used cutting-edge technology and processes to complete the project, including the first use of 3DGPS-guided asphalt planing in the UK as well asstate-of-the-art BPO ASPHALT management system software. | | Conclusion | | | | The Committee believes that the remuneration paid to the executive Directors in respect of 2019 is appropriate and is well aligned with the performance of the Company and the value delivered for shareholders. We hope to receive your support for the Annual Report on Remuneration at the 2020 AGM. | | |
RONA is a key metric used by management to assess investment opportunities and to run the business. In order to retain an equal balance between growth and returns, we have proposed that RONA and TSR be weighted at 25% each, with the important cash generation metric continuing to be weighted at 50%.
In discussions with shareholders, we emphasised that all targets (particularly those for RONA) need to be seen in the context of
the economic cycle and other factors such as portfolio management and mix. For example, RONA is generally negatively impacted by material acquisitions in the initial years post acquisition as integration and performance enhancing measures are implemented. Similarly, divestments of high RONA performing businesses (albeit with limited growth potential) have the effect of reducing overall Group RONA. The recent acquisition of Ash Grove and the
divestment of Americas Distribution, both of which were in the Board’s view in the best long-term interests of shareholders, are cases in point. Further details in relation to the cash flow, TSR and RONA targets are set out on page 95.
CRH Annual Report and Form 20-F | 2018
Directors’ Remuneration Report - continued
Executive Directors’ Remuneration Summary
| | | | | | | | | | | | 2019 Remuneration Snapshot | | | | | | | | Table 15 | | Director | | Salary | | Max. Annual Bonus (% of
salary) | | Metrics for 2019 Bonus | | 2019 PSP Award (% of salary) | | Metrics for 2019 PSP Award | | Albert Manifold | | €1,522,500 (+2.5%) | | 225% | | • EPS (25%) | | 365% | | • Cash flow (50%) • TSR (25%) • RONA (25%) | | | • RONA (25%) | | Senan Murphy | | €794,500 (+2.5%) | | 150% | | • Operating cash flow (30%) | | 225% | | | • Personal/Strategic (20%) |
| | | | | | | | | Chair of the Remuneration Committee 27 February 2020 | | | Performance Share Plan Metrics – 2019
Awards | | | | | | | | Table 16 |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 79 |
| (i) | For the purposes of the PSP, operating cash flow is defined as reported internally. The figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. Further information on the cash flow targets for the 2019 awards is set out on page 95.
| |
| (ii) | The methodology for TSR assumes all dividends are reinvested on theex-dividend date at the closing share price on that day; the open and close price is based on the three-month average closing price on the last day before the start of the performance period and the final day of the performance period respectively. Details of the tailored peer group are set out in table 17 below.
| |
| (iii) | RONA is also defined as reported internally and differs from the RONA reported in theNon-GAAP Performance Measures in this report as it excludesone-off items and reflects seasonality and timing of development activity. Further information on the RONA targets for the 2019 awards is set on page 95.
| |
| | | | | | | Peer Group for Performance Share Plan Awards (i) | | Table 17 | ACS
| | Cemex
| | Saint Gobain
| | Vicat
| Boral
| | Heidelberg Cement
| | Skanska
| | Vinci
| Buzzi Unicem
| | LafargeHolcim
| | Titan Cement
| | Wienerberger
|
| (i) | As outlined on page 95, following consultation with our brokers and advisers, Braas Monier and Rockwool have been removed from the peer group used for awards between 2014 and 2018.
| |
| | | | | | | 2018 Remuneration Snapshot (full details of 2018 remuneration are set out in table 32 on page 85) | | Table 18 | | | | Fixed | | Performance Related Variable Remuneration | | Director | | Salary | | Annual Bonus (% of max) | | Value of PSP awarded in 2016 (i) (% of max) | Albert Manifold | | €1,485,260 | | 81.48% | | 59.13% | Senan Murphy | | €775,000 | | 81.48% | | 59.13% |
| (i) | The awards, for which performance was measured over the three-year period to end 2018, will vest at 59.13% in 2021 following the completion of atwo-year holding period. Further details in relation to the estimated value of the awards are included in table 32 on page 85. The market value per share on the date of award (March 2016) was€24.56.
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| CRH Annual Report and Form 20-F I 2018
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We also discussed with shareholders the extent to which the targets for cash flow and RONA in the PSP were related to the targets for margin improvement and cash capacity announced in May 2018. The proposed targets for full payout reflect most of our ambitious plan to improve margin and cash capacity. To achieve the RONA target for full payout, EBITDA (as defined)* margins would need to broadly equate to the highest ever achieved by the Group. The Committee is satisfied that these are significantly stretching targets.
For PSP awards made in 2019 and in future years, clawback provisions will apply, in addition to the existing malus provisions, for a period of three years from the date of vesting. The PSP rules and the relevant award certificates will be updated to reflect this policy change.
New 2018 Code Provisions
In July, new 2018 Code provisions relating to remuneration were introduced, which apply for CRH from 1 January 2019. The main new provisions which impact on the remuneration policy relate to pensions and post-employment shareholding requirements.
During the consultation process, an area which resulted in a certain amount of discussion with shareholders was the issue of pension contributions, particularly for newly hired executive Directors. We have reflected on the various viewpoints expressed to us on this topic and have decided to update our policy to the effect that pension related contributions/ allowances for newly hired executive Directors will be in line with the general practice for new recruits, across the general workforce, in the individual’s home jurisdiction or, if applicable, the jurisdiction in which the individual is to be based in their executive Director role. For example, in Ireland and the UK such contributions range from8%-12% of base salary depending on the rules of the relevant scheme. There was a recognition in our discussions with shareholders that addressing this issue for new hires is more achievable than seeking to change the contracts for incumbent executive Directors, although we will keep the latter under review.
We also discussed with shareholders the newly evolving area of post-employment shareholding requirements.
| | | | | | | | | | | | Executive Director Shareholdings as a % of 2019 Base
Salary (i) | | Table 19 |
(i) | For the purposes of this table, the interests have been valued using the three-month average share price to 31 December 2018,€24.90.
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(ii) | Appointed with effect from 1 January 2016.
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The 2018 Code requires companies to develop policies for such shareholding requirements. I discussed with shareholders the Committee’s view that the current holding period on our vested PSP awards provides a considerable de facto post-employment shareholding requirement as it continues to apply post-cessation of employment. Assuming 50% vesting (the average PSP vesting since 2006 has been 50%), PSP awards that remain subject to atwo-year holding requirement at the time of cessation of employment would equate to c. 1.8x salary for the Chief Executive and c. 1.1x salary for the Finance Director, on a net of tax basis. These shares are released on a phased basis during the two years from the date of leaving. In addition, unvested PSP awards at the date of leaving, which would vest subject to performance on a time pro-rated basis, would be released on a phased basis up to four years from the date of leaving. In the case of the Chief Executive, for example, this is designed to result in expected post holding multiples as follows:
Year 1: 1.8x salary;
Year 2: 1.5x salary;
Year 3: 0.9x salary; and
Year 4: 0.3x salary
We, therefore, propose to implement the 2018 Code requirement on this basis initially. However, as post-employment shareholding guidelines are a recent development, we will keep the position under review over the next year, during which market and best practice design should become more clear.
The Board is regularly kept abreast of the perspectives of our employees and takes these perspectives into account when making decisions. The Committee has oversight of remuneration policy across the Group and endeavours to keep the principles and structure of remuneration consistent as far as possible across the Group.
In line with the requirements of the 2018 Code, when we announced the voting results of the 2018 AGM, we also announced the actions that we would take to understand the reasons behind the voting outcome on the Directors’ Remuneration Report referred to above. We also issued an update at the end of October.
The Committee’s Terms of Reference have been reviewed by the Committee and will be updated to reflect the requirements of the 2018 Code. The Terms of Reference are available on CRH’s website, www.crh.com.
| * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
71
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CRH Annual Report and Form 20-F I2018
Directors’ Remuneration Report - continued
2018 Performance
Against a backdrop of international economic uncertainty, 2018 has been another year of progress for CRH with EBITDA (as defined)* for the year of€3.4 billion. Continued focus on strong financial performance in 2018 resulted in Net Debt at year end being 2.1x EBITDA (as defined)* despite significant development activity and the completion of€789 million of the€1 billion buyback programme announced in April 2018.
Incentive Outcomes for 2018
The Group’s performance in 2018 is reflected in the executive Directors’ remuneration for 2018, which is summarised on table 18 on page 70 and set out in detail on pages 84 to 88. The Committee determined that the annual bonus plan should pay out at 81.48% of the maximum opportunity for the Chief Executive and the Finance Director. Further details in relation to the annual bonus plan are set out on page 86. In line with evolving best practice, we have accelerated the disclosure of targets that the plan was based on in 2018 in this Report. Previously, these targets would have been disclosed in the 2019 Directors’ Remuneration Report.
The Committee also determined that 59.13% of the awards made in 2016 under the PSP had met the relevant performance criteria for the period 2016-2018. Further details in relation to the 2016 Awards, including details of the applicable targets and performance for each of the components of the 2016 Awards, are set out on page 88.
Alignment between Pay and Performance
In conjunction with Mercer Kepler, our external remuneration consultants, the Committee has conducted an analysis of the Company’s remuneration outcomes in 2018 against the TSR performance of the bespoke peer group used for PSP awards (see table 17 on page 70 for a list of these peer companies). This peer group is also used for remuneration benchmarking exercises by the Committee. Following this analysis, the Committee is satisfied that there was a strong alignment between pay and performance in 2018.
2019 Annual General Meeting
At the 2019 AGM, shareholder approval will be sought in respect of three separate remuneration related resolutions:
the Directors’ Remuneration Report, which is an advisory vote on the way in which our remuneration policy was implemented in 2018, and the Committee’s proposed approach to its implementation in 2019;
the updated 2019 Remuneration Policy, which contains the policy changes outlined above. Shareholders have voted on CRH’s remuneration policy since 2014; and
the resolution to increase the limit on Directors’ fees, which is required as a result of an increased number ofnon-executive Directors on the Board (10 at the conclusion of the 2019 AGM) as well as the increase innon-executive Director fees
Conclusion
I would like to thank shareholders and proxy advisory institutions who gave very generously of their time to review our proposals and provide feedback during the course of our remuneration review and consultation. This was an extensive process and I am satisfied that the Committee is aware of the issues which drove the significant vote against the remuneration report at the 2018 AGM. We believe that the proposals we have put forward both in terms of implementation in 2019 and updated policies for the next three years are fair and balanced, aligned to the interests of shareholders and executives and promote the long-term sustainable success of CRH. We hope to receive your support at the 2019 AGM on each of the three proposed resolutions.
Richard Boucher
Chairman of the Remuneration Committee
27 February 2019
| 72 * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
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| | | | | | | | | Individual Executive Remuneration for the year ended 31 December 2019 (Audited) | | | | | | |
| | | CRH Annual Report and Form 20-F I 2018
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| | | | | TSR Performance (2008-2018)
| | Table 20
| 
| (i) For the purposes of comparability, the FTSE100 Index is converted to euro using the closing exchange rate at each year end.
| (ii) See table 17 on page 70 for details of the peer group.
| | | Historic Vesting of Performance Share Plan Awards as a % of Max. Opportunity
| | Table 21
| 
| (i) The awards which ‘vested’ in 2017, 2018 and 2019 are subject to atwo-year hold period and will be released in 2019, 2020 and 2021 respectively.
| | | Historic Bonus Payout as a % of Max. Opportunity
| | Table 22 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Albert Manifold | | | | | | Senan Murphy | | | | | | | | | | | | | 2019 | | | | 2018 | | | | 2017 | | | | | | | | 2019 | | | | 2018 | | | | 2017 | | | | | | | | | | | Fixed Pay | | | €000 | | | | €000 | | | | €000 | | | | | | | | €000 | | | | €000 | | | | €000 | | | | | | | | | | | Basic Salary (i) | | | 1,523 | | | | 1,485 | | | | 1,442 | | | | | | | | 794 | | | | 775 | | | | 706 | | | | | | | | | | | Benefits (ii) | | | 43 | | | | 55 | | | | 35 | | | | | | | | 27 | | | | 25 | | | | 25 | | | | | | | | | | | Retirement Benefit Expense (iii) | | | 667 | | | | 684 | | | | 677 | | | | | | | | 199 | | | | 194 | | | | 176 | | | | | | | | | | | Total Fixed Pay | | | 2,233 | | | | 2,224 | | | | 2,154 | | | | | | | | 1,020 | | | | 994 | | | | 907 | | | | | | | | | | | Performance-related Pay | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Bonus (iv): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Element | | | 1,964 | | | | 2,042 | | | | 2,338 | | | | | | | | 683 | | | | 710 | | | | 762 | | | | | | | | | | | Deferred Shares | | | 982 | | | | 681 | | | | 779 | | | | | | | | 342 | | | | 237 | | | | 254 | | | | | | | | | | | Total Annual Bonus | | | 2,946 | | | | 2,723 | | | | 3,117 | | | | | | | | 1,025 | | | | 947 | | | | 1,016 | | | | | | | | | | | Long-term Incentives (v): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Share Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - value delivered through performance | | | 3,834 | | | | 3,238 | | | | 2,720 | | | | | | | | 1,028 | | | | 792 | | | | - | | | | | | | | | | | - value delivered through share price growth | | | 298 | | | | 45 | | | | 668 | | | | | | | | 80 | | | | 11 | | | | - | | | | | | | | | | | Total Long-term Incentives | | | 4,132 | | | | 3,283 | | | | 3,388 | | | | | | | | 1,108 | | | | 803 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Performance-related Pay | | | 7,078 | | | | 6,006 | | | | 6,505 | | | | | | | | 2,133 | | | | 1,750 | | | | 1,016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Single Figure | | | 9,311 | | | | 8,230 | | | | 8,659 | | | | | | | | 3,153 | | | | 2,744 | | | | 1,923 | | | | | | | | | | | (fixed and performance-related) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (ii) | | Benefits: For executive Directors these relate principally to the use of company cars, medical insurance and life assurance and, where relevant, the value of thenon-taxable discount on the grant of options under the Group’s 2010 SAYE Scheme. |
| (iii) | | Retirement Benefit Expense: As noted on page 94, Albert Manifold receives a supplementary taxablenon-pensionable cash allowance, in lieu of prospective pension benefits foregone. This allowance is similar in value to the reduction in the Company’s liability represented by the pension benefit foregone. It is calculated based on actuarial advice as the equivalent of the reduction in the Company’s liability to Mr. Manifold and spread over the term to retirement as annual compensation allowances. Senan Murphy receives a taxablenon-pensionable cash supplement equivalent to 25% of his annual base salary in lieu of a pension contribution. |
| (iv) | | Annual Bonus Plan: Under the executive Directors’ Annual Bonus Plan for 2019, a bonus was payable for meeting clearly defined and stretch targets and strategic goals. The structure of the 2019 Plan, together with details of the performance against targets and payouts in respect of 2019, are set out on pages 88 and 89. A third of the 2019 bonuses to be paid to executive Directors will be deferred into shares for a period of three years, with no additional performance conditions. For 2018 and 2017 bonuses, 25% of executive Directors’ bonuses were paid in Deferred Shares, vesting after three years, with no additional performance conditions. |
| (v) | | Long-term Incentives: In February 2020, the Remuneration Committee determined that 70.7% of the maximum PSP awards made in 2017 will vest, based on performance. The awards are subject to a furthertwo-year holding period and will vest in 2022. For the purposes of this table, the values of these awards have been estimated using a share price of€33.38, being the three-month average share price to 31 December 2019, as the share price on the date of vesting is not yet known. Amounts in the long-term incentive column for 2018 reflect the value of long-term incentive awards with a performance period ending in 2018 (i.e. the PSP awards granted in 2016), which the Remuneration Committee determined in February 2019 had met the applicable performance targets. The awards are scheduled to vest in 2021 following the completion of atwo-year holding period. For the purposes of this table, the value of these awards have been estimated using a share price of€24.90, being the three-month average share price to 31 December 2018. Amounts in the long-term incentive column for 2017 reflect the value of long-term incentive awards with a performance period ending in 2017 (i.e. the PSP awards granted in 2015), which the Remuneration Committee determined in February 2018 had met the applicable performance targets. The awards are scheduled to vest in 2020 following the completion of atwo-year holding period. For the purposes of this table, the value of these awards have been estimated using a share price of€30.42, being the three-month average share price to 31 December 2017. |
| | | | 80 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Remuneration Policy Summary | | | | | | | | 2019 Directors’ Remuneration Policy The Remuneration Committee’s aim is to make sure that CRH’s pay structures are fair, responsible and competitive, in order that CRH can attract and retain staff of the calibre necessary for it to compete in all of its markets. CRH’s Remuneration Policy, which was approved by shareholders at the 2019 AGM is available on the Group’s website, www.crh.com, and was included in full in the 2018 Annual Report and Form20-F. As the Company is not seeking shareholder approval for any revision of the Policy in 2019, the full text of the Policy has not been reproduced in this report. The following paragraphs and tables 23 to 27 on pages 81 and 86 provide a summary of key elements of the Policy. The Policy is consistent with that shown last year, save the changes to the performance scenario charts, the addition of post-exit shareholding guidelines and the update to the Finance Director’s service contract. The Group’s remuneration structures are designed to drive performance and link reward to the responsibilities and individual contribution of executives, while at the same time reflecting the risk policies of the Group. It is our policy to grant participation in the Group’s performance-related plans to key management to encourage alignment with shareholders’ interests and to create a community of common interest among different regions and nationalities. In setting remuneration levels, the Remuneration Committee takes into consideration the remuneration practices of other international companies of similar size and scope and trends in executive remuneration generally, in each of the regions in which the Company operates. The Remuneration Committee is cognisant that the pending legislation resulting from the updated Shareholder Rights Directive will introduce new provisions in relation to remuneration, which the Committee will consider in due course. | | | | CRH’s Approach to Remuneration | | | | The purpose of the Policy is to: 
| | | | | |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 81 |
Future Policy Table The purpose, operation and opportunity for the five components of executive Directors’ remuneration are summarised in table 23 below. Further details and explanatory notes are included in the full Policy, a copy of which is available on the Group’s website, www.crh.com. The components of remuneration comprise three fixed elements: basic salary, pension and benefits, and two variable elements: annual bonus and PSP. Details regarding the implementation of the Policy in 2019 can be found on pages 88 to 100 of the Annual Report on Remuneration. | | | | | | | | | Policy Table | | | | | | Table 23 | | | | | | | | Element | | Fixed Base Salary | | | | Fixed Pension | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Remuneration Related Votes 2014-2018 | | | | | | | | | | | | Table 23 | | | | | Year of
AGM | | | % in Favour | | | %
Against | | | No. of Votes Withheld | | | Total No. of Votes Cast
(incl. Votes Withheld) | | | % of Issued Share
Capital Voted | | | Directors’ Remuneration Report (“Say on Pay”) | | | 2018 | | | | 60.31 | | | | 39.69 | | | | 23,445,412 | | | | 533,151,076 | | | | 63.10 | | | | | 2017 | | | | 82.31 | | | | 17.69 | | | | 8,260,492 | | | | 522,037,881 | | | | 62.45 | | | | | 2016 | | | | 91.35 | | | | 8.65 | | | | 4,214,665 | | | | 559,004,377 | | | | 67.83 | | | | | 2015 | | | | 94.39 | | | | 5.61 | | | | 8,946,923 | | | | 569,847,488 | | | | 69.51 | | | | | 2014 | | | | 98.11 | | | | 1.89 | | | | 13,587,697 | | | | 511,277,387 | | | | 68.90 | | | Directors’ Remuneration Policy Report | | | 2016 | | | | 59.15 | | | | 40.85 | | | | 13,830,863 | | | | 559,015,684 | | | | 67.83 | | | | | | 2014 | | | | 95.23 | | | | 4.77 | | | | 3,648,186 | | | | 511,208,343 | | | | 68.90 | |
Purpose and link to strategy | | • Competitive salaries help to attract and retain staff with the experience and knowledge required to enable the Group to compete in its markets | | | | • Pension arrangements provide competitive and appropriate retirement plans • Given the long-term nature of the business, pension is an important part of the remuneration package to support creation of value and succession planning
CRH Annual Report and Form 20-F I2018
Directors’ Remuneration Report - continued
The Remuneration Committee
The Remuneration Committee consists of fivenon-executive Directors considered by the Board to be independent. They bring the range of experience of large organisations and public companies, including experience in the area of senior executive remuneration, to enable the Committee to fulfil its role. Their biographical details are set out on pages 55 and 56. A schedule of attendance at Committee meetings is set out in table 9 on page 65.
The main focus of the Committee is to:
determine and agree with the Board the Group’s policy on executive remuneration;
seek shareholder approval for the Directors’ Remuneration Policy at least every three years;
ensure that CRH’s remuneration structures are fair and responsible; and
consider and approve salaries and other terms of the remuneration packages for the executive Directors and the Chairman
In addition, the Committee:
recommends and monitors the level and structure of remuneration for the executive Directors and senior management; and
oversees the preparation of this Directors’ Remuneration Report
In considering remuneration levels for executive Directors particularly, the Committee takes into account remuneration trends across the CRH Group, which has a diverse range of operations in 32 countries, in geographic regions which are often at different stages in the economic cycle. Annually, the Chairman of the Remuneration Committee reviews with the Audit Committee the Group’s remuneration structures from a risk perspective.
Proposed 2019 Directors’ Remuneration Policy
As outlined in the Committee Chairman’s Statement on page 68, the Committee carried out a review of the Group’s remuneration arrangements during 2018. The principal proposed changes to the 2016 Policy, which was approved by shareholders at the 2016 AGM, are set out on in table 14 on page 69. The following sets out the full updated 2019 Policy.
The 2019 Policy, if approved, will provide the framework for remuneration decisions made by the Remuneration Committee. It is the Company’s intention that the 2019 Policy will apply until the 2022 AGM, unless the Remuneration Committee seeks shareholder approval for a renewed policy at an earlier date.
The Remuneration Committee’s aim is to make sure that CRH’s pay structures are fair, responsible and competitive, in order that CRH can attract and retain staff of the calibre necessary for it to compete in all of its markets.
The Group’s remuneration structures are designed to drive performance and link reward to the responsibilities and individual contribution of executives, while at the same time reflecting the risk policies of the Group. It is our policy to grant participation in the Group’s performance-related plans to key management to encourage alignment with shareholders’ interests and to create a community of interest among different regions and nationalities.
In setting remuneration levels, the Remuneration Committee takes into consideration the remuneration practices of other international companies of similar size and scope and trends in executive remuneration generally, in each of the regions in which the Company operates. The Remuneration Committee is cognisant that the pending legislation resulting from the updated Shareholder Rights Directive will introduce new provisions in relation to remuneration, which the Committee will consider in due course.
| | | | | | | | CRH’s Approach to Remuneration
The purpose of the Policy is to:
| | | | | | | | |  | | Attract andretain executives of the highest calibre | |  | | Foster entrepreneurship in regional companies by rewarding
the creation of shareholder value through organic and
acquisitive growth
| | | | |  | | Reward andmotivate executives to perform in the
long-term interests of the shareholders
| |  | | Reflect the spread of the Group’s operationsso that
remuneration packages in each geographical area are
appropriate and competitive for that area
| | | | |  | | Provide an appropriateblend of fixed and variable
remuneration andshort and long-term incentives
| | 
| | Reflect therisk policies and appetite of the Group |
| | | | | | CRH Annual Report and Form 20-F I 2018
|
Future Policy Table
Further details regarding the operation of the 2019 Policy for the 2019 financial year can be found on pages 94 and 95 of the Directors’ Remuneration Report.
| | | | | Policy Table
| | | | Table 24
| | | | Element
| | Fixed Base Salary
| | Fixed Pension
| Purpose and link to strategy | | • Competitive salaries help to attract and retain staff with the experience and knowledge required to enable the Group to compete in its markets
| | • Pension arrangements provide competitive and appropriate retirement plans
• Given the long-term nature of the business, pension is an important part of the remuneration package to support creation of value and succession planning
| Operation | | • Base salaries are set by the Committee taking into account:
– the size and scope of the executive Director’s role and responsibilities;
– the individual’s skills, experience and performance;
– salary levels at FTSE listed companies of a similar size and complexity to CRH and other international construction and building materials companies; and
– pay and conditions elsewhere in the Group
• Base salary is normally reviewed annually with changes generally effective on 1 January, although the Committee may make anout-of-cycle increase if it considers it to be appropriate
| | • Irish-based executive Directors may participate in a contributory defined benefit scheme or, if they joined the Group after 1 January 2012, in a defined contribution scheme as the defined benefit scheme which the Directors participate in is closed to new entrants
• For new appointments to the Board the Committee may determine that alternative pension provisions will operate (for example a cash contribution). When determining pension arrangements for new appointments the Committee will give regard to existing entitlements, the cost of the arrangements, market practice and the pension arrangements received elsewhere in the Group. Pension contribution rates for any newly hired executive Directors will not exceed the norm for pension related contributions/allowances for new recruits, across the general workforce, in the individual’s home jurisdiction or, if applicable, the jurisdiction in which the individual is to be based in their executive Director role
| Maximum opportunity | | • Base salaries are set at a level which the Committee considers to be appropriate taking into consideration the factors outlined in the “operation” section above
• While there is no maximum base salary, normally increases will be in line with the typical level of increase awarded to other employees in the Group but may be higher in certain circumstances. These circumstances may include:
– Where a new executive Director has been appointed at a lower salary, higher increases may be awarded over an initial period as the executive Director gains in experience and the salary is moved to what the Committee considers is an appropriate positioning;
– Where there has been a significant increase in the scope or responsibility of an executive Director’s role or where an individual has been internally promoted, higher salary increases may be awarded; and
– Where a larger increase is considered necessary to reflect significant changes in market practice
| | • The entitlement of individuals participating in defined contribution schemes reflects the accumulated individual and matching company contributions paid into the schemes. At present no Ireland-based executive Directors are members of a defined contribution scheme
• In relation to Mr. Manifold, who joined the Group prior to 31 December 2011, the defined benefit pension is provided through an Irish-revenue approved retirement benefit scheme (the ‘Scheme’). Accrued benefits for service to 31 December 2011 are based on pensionable salary and years of service as at that date (annual accrual of 1/60th), with this tranche being revalued annually at the Consumer Price Index subject to a 5% ceiling. For service subsequent to that date a career-average revalued earnings system was introduced with each year of service being subject to annual revaluation on the same basis as outlined above. Mr. Manifold has elected to cease accruing pension benefits and to receive a supplementary taxablenon-pensionable cash allowance in lieu of pension benefits foregone as a result of the pension cap (see page 94 for more details). This allowance is similar in value to the reduction in the Company’s liability represented by the pension benefit foregone. Whilst there is no absolute maximum to the quantum of these payments they are calculated based on actuarial advice as the equivalent of the reduction in the liability the Company would otherwise have had under the Scheme in respect of Mr. Manifold’s benefits and spread over the term to retirement as annual compensation allowances
| Performance measure | | • Not applicable
| | • Not applicable
| | | | | |
Operation | | • Base salaries are set by the Committee taking into account: – the size and scope of the executive Director’s role and responsibilities; – the individual’s skills, experience and performance; – salary levels at FTSE listed companies of a similar size and complexity to CRH and other international construction and building materials companies; and – pay and conditions elsewhere in the Group • Base salary is normally reviewed annually with changes generally effective on 1 January, although the Committee may make anout-of-cycle increase if it considers it to be appropriate | 75 |
| | | | | | | • Irish-based executive Directors may participate in a contributory defined benefit scheme or, if they joined the Group after 1 January 2012, in a defined contribution scheme as the defined benefit scheme which the Directors participate in is closed to new entrants • For new appointments to the Board the Committee may determine that alternative pension provisions will operate (for example a cash contribution). When determining pension arrangements for new appointments the Committee will give regard to existing entitlements, the cost of the arrangements, market practice and the pension arrangements received elsewhere in the Group. Pension contribution rates for any newly hired executive Directors will not exceed the norm for pension related contributions/allowances for new recruits, across the general workforce, in the individual’s home jurisdiction or, if applicable, the jurisdiction in which the individual is to be based in their executive Director role | | |
CRH Annual Report and Form 20-F | 2018
Directors’ Remuneration Report - continued
| | | | | | | | | | | | | | Maximum opportunity | | • Base salaries are set at a level which the Committee considers to be appropriate taking into consideration the factors outlined in the “operation” section above | | | Policy Table | continued
| | | Element• While there is no maximum base salary, normally increases will be in line with the typical level of increase awarded to other employees in the Group but may be higher in certain circumstances. These circumstances may include: – Where a new executive Director has been appointed at a lower salary, higher increases may be awarded over an initial period as the executive Director gains in experience and the salary is moved to what the Committee considers is an appropriate positioning; – Where there has been a significant increase in the scope or responsibility of an executive Director’s role or where an individual has been internally promoted, higher salary increases may be awarded; and – Where a larger increase is considered necessary to reflect significant changes in market practice
| | | | • The entitlement of individuals participating in defined contribution schemes reflects the accumulated individual and matching company contributions paid into the schemes. At present no Ireland-based executive Directors are members of a defined contribution scheme • In relation to Mr. Manifold, who joined the Group prior to 31 December 2011, the defined benefit pension is provided through an Irish-revenue approved retirement benefit scheme (the ‘Scheme’). Accrued benefits for service to 31 December 2011 are based on pensionable salary and years of service as at that date (annual accrual of 1/60th), with this tranche being revalued annually at the Consumer Price Index subject to a 5% ceiling. For service subsequent to that date a career-average revalued earnings system was introduced with each year of service being subject to annual revaluation on the same basis as outlined above. Mr. Manifold has elected to cease accruing pension benefits and to receive a supplementary taxablenon-pensionable cash allowance in lieu of pension benefits foregone as a result of the pension cap (see page 94 for more details). This allowance is similar in value to the reduction in the Company’s liability represented by the pension benefit foregone. Whilst there is no absolute maximum to the quantum of these payments they are calculated based on actuarial advice as the equivalent of the reduction in the liability the Company would otherwise have had under the Scheme in respect of Mr. Manifold’s benefits and spread over the term to retirement as annual compensation allowances | | | | | | | | | | | | | | | | | Performance Measure | | • Not applicable | | Fixed Benefits | | | Purpose and
link to strategy
| | • To provide a market competitive level of benefits for executive Directors
| | | | | | | | Operation | | • The Committee’s policy is to set benefit provision at an appropriate market competitive level taking into account market practice, the level of benefits provided for other employees in the Group, the individual’s home jurisdiction and the jurisdiction in which the individual is based
| | | | | • Employment-related benefits include the use of company cars (or a car allowance), medical insurance for the executive Director and his/her family and life assurance
| | | | | • In the event that the Chief Executive falls ill or is injured in such a way as which would constituteill-health or disablement so that the Chief Executive could not work for a period of more than six months, in lieu of the earlyill-health retirement provisions in the pension scheme which would otherwise operate in such cases, he shall be entitled to receive a disability salary of€1,000,000 per annum. Such payment would cease when the Chief Executive reaches age 60, returns to work or if the service agreement is terminated
| | | | | • Benefits may also be provided in relation to legal fees incurred in respect of agreeing service contracts, or similar agreements (for which the Company may settle any tax incurred by the executive Director) and a gift on retirement
| | | | | • The Committee may remove benefits that executive Directors receive or introduce other benefits if it is considered appropriate to do so. The Company may also pay the tax due on benefits if it considers that it is appropriate to do so
| | | | | • All-employee share schemes - executive Directors are eligible to participate in the Company’sall-employee share schemes on the same terms as other employees. Executive Directors may also receive other benefits which are available to employees generally
| | | | | • Re-location policy - where executive Directors are required tore-locate to take up their role, the Committee may determine that they should receive appropriatere-location and ongoing expatriate benefits. The level of such benefits would be determined based on individual circumstances taking into account typical market practice
| | | | | | | | Maximum
opportunity
| | • The level of benefit provided will depend on the cost of providing individual items and the individual’s circumstances, and therefore the Committee has not set a maximum level of benefits
| | | | | | | | Performance
measure
| | • Not applicable |
| | | | | | CRH Annual Report and Form 20-F I 2018
|
| | | Policy Table | continued
| | | | | Performance-related pay - Annual Bonus
| | Performance-related pay - 2014 Performance Share Plan | | | • The Annual Performance-related Incentive Plan is designed to reward the creation of shareholder value through operational excellence and organic and acquisitive growth. The Plan incentivises executive Directors to deliver Group and individual goals that support long-term value creation
| | • The purpose of the 2014 Plan is to align the interest of key management across different regions and nationalities with those of shareholders through an interest in CRH shares and by incentivising the achievement of long-term performance goals
| | | • A Deferred Annual Performance-related Incentive Plan element links the value of executive Directors’ reward with the long-term performance of the CRH share price and aligns the interests of executive Directors with shareholders interests
| | • “Malus” and clawback provisions enable the Company to mitigate risk
| | | • “Malus” and clawback provisions enable the Company to mitigate risk
| | | | | • The Annual Performance-related Incentive Plan rewards executive Directors for meeting Company performance goals over a financial year of the Company. Targets are set annually by the Committee
| | • Awards (in the form of conditional share awards ornil-cost options) normally vest based on performance over a period of not less than three years. Awards may also be settled in cash
| | | • The annual bonus is paid in a mix of cash and shares (structured as a deferred share award)
• For 2019:
| | • Awards are normally subject to an additional holding period ending on the fifth anniversary of the grant date (or another date determined by the Committee)
| | | – 66.7% of the bonus will be paid in cash; and
– 33.3% will be paid in shares
• In future years, the Committee may determine that a different balance between cash and shares is appropriate and adjust the relevant payments accordingly
• When assessing performance and determining bonus payouts the Committee also considers the underlying financial performance of the business to ensure it is consistent with the overall award level
| | • Dividend equivalents may be paid on PSP awards that vest in respect of dividends paid during the vesting period until the end of the holding period. These payments may be made in cash or shares and may assume reinvestment on a cumulative basis
• “Malus” provisions (as set out in the rules of the 2014 Plan) will apply to awards. Clawback provisions will apply with effect from the 2019 awards
| | | • The deferred element of the bonus will be structured as a conditional share award ornil-cost option and will normally vest after three years from grant (or a different period determined by the Committee). Deferred share awards may be settled in cash
| | |
• Dividend equivalents may be paid on deferred share awards in respect of dividends paid during the vesting period. These payments may be made in cash or shares and may assume the reinvestment of dividends on a cumulative basis
| | | | 82 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Remuneration Policy Summary - continued | | | | | Policy Table | | Table 23 - continued | | | | | | Element | | Fixed Benefits | | | | | | Purpose and link to strategy | | • To provide a market competitive level of benefits for executive Directors | | | | | | | | | | | Operation | | • The Committee’s policy is to set benefit provision at an appropriate market competitive level taking into account market practice, the level of benefits provided for other employees in the Group, the individual’s home jurisdiction and the jurisdiction in which the individual is based • Employment-related benefits include the use of company cars (or a car allowance), medical insurance for the executive Director and his/ her family and life assurance • In the event that the Chief Executive falls ill or is injured in such a way as which would constituteill-health or disablement so that the Chief Executive could not work for a period of more than six months, in lieu of the earlyill-health retirement provisions in the pension scheme which would otherwise operate in such cases, he shall be entitled to receive a disability salary of€1,000,000 per annum. Such payment would cease when the Chief Executive reaches age 60, returns to work or if the service agreement is terminated • Benefits may also be provided in relation to legal fees incurred in respect of agreeing service contracts, or similar agreements (for which the Company may settle any tax incurred by the executive Director) and a gift on retirement • The Committee may remove benefits that executive Directors receive or introduce other benefits if it is considered appropriate to do so. The Company may also pay the tax due on benefits if it considers that it is appropriate to do so • All-employee share schemes - executive Directors are eligible to participate in the Company’sall-employee share schemes on the same terms as other employees. Executive Directors may also receive other benefits which are available to employees generally • Re-location policy - where executive Directors are required tore-locate to take up their role, the Committee may determine that they should receive appropriatere-location and ongoing expatriate benefits. The level of such benefits would be determined based on individual circumstances taking into account typical market practice | | | | | | | | | | | Maximum opportunity | | • The level of benefit provided will depend on the cost of providing individual items and the individual’s circumstances, and therefore the Committee has not set a maximum level of benefits | | | | | | | | | | | Performance Measure | | • Not applicable | | |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 83 | • For deferred awards, “malus” provisions apply. Cash bonus payments are subject to clawback of the net amount paid for a period of three years from payment
|
| | | | | • Maximum annual opportunity of 225% of base salary
| | • Maximum annual opportunity of up to 365% of base salary
| | | • For 2019, the intended maximum award levels are:
| | • For 2019, the intended award levels are:
| | | – 225% of base salary for Chief Executive; and
| | – 365% of base salary for Chief Executive; and
| | | – 150% of base salary for the Finance Director
| | – 225% of base salary for Finance Director
| | | • The performance-related incentive plan is based on achieving clearly defined and stretching annual targets and strategic goals set by the Committee each year based on key business priorities
| | • Awards to be granted in 2019 will vest based on cumulative cash flow (50%), a relative TSR test compared to a tailored group of key peers (25%) and RONA (25%)
| | | • The performance metrics used are a mix of financial targets including return goals and personal/strategic objectives generally. Currently 80% of the bonus is based on financial performance measures
• The Committee may vary the weightings of measures but no less than 50% shall be based on financial performance measures
• A portion of the bonus metrics for any Director may be linked to his/her specific area of responsibility
• Up to 50% of the maximum bonus will be paid for achieving target levels of performance
| | | | | | | | | • For threshold levels of performance, 25% of the award vests
• Where applicable, when determining vesting under the PSP the Committee reviews whether the TSR performance has been impacted by unusual events and whether it therefore, reflects the underlying performance of the business
• The Committee may adjust the weightings of the measures at the start of each cycle, with no measure’s weighting falling below 25%
• The Committee may amend the performance conditions if an event occurs that causes it to consider that an amended performance condition would be more appropriate and would not be materially less difficult to satisfy
| Policy Table | | | | Table 23 - continued | | | | | | | |
Element | | Performance-related pay - Annual Bonus | | | | Performance-related pay - Performance Share Plan | | | | | | | | Purpose and link to strategy | | • The Annual Performance-related Incentive Plan (the “Plan”) is designed to reward the creation of shareholder value through operational excellence and organic and acquisitive growth. The Plan incentivises executive Directors to deliver Group and individual goals that support long-term value creation • A deferred element of the Plan links the value of executive Directors’ reward with the long-term performance of the CRH share price and aligns the interests of executive Directors with shareholders’ interest • “Malus” and clawback provisions enable the Company to mitigate risk | | | | • The purpose of the 2014 Plan is to align the interest of key management across different regions and nationalities with those of shareholders through an interest in CRH shares and by incentivising the achievement of long-term performance goals • “Malus” and clawback provisions enable the Company to mitigate risk | | | | | | | | | | | | | | | | | Operation | | • The Annual Performance-related Incentive Plan rewards executive Directors for meeting Company performance goals over a financial year of the Company. Targets are set annually by the Committee • The annual bonus is paid in a mix of cash and shares (structured as a deferred share award) • For 2020: – 66.7% of the bonus will be paid in cash; and – 33.3% will be paid in shares • In future years, the Committee may determine that a different balance between cash and shares is appropriate and adjust the relevant payments accordingly • When assessing performance and determining bonus payouts the Committee also considers the underlying financial performance of the business to ensure it is consistent with the overall award level • The deferred element of the bonus will be structured as a conditional share award ornil-cost option and will normally vest after three years from grant (or a different period determined by the Committee). Deferred share awards may be settled in cash • Dividend equivalents may be paid on deferred share awards in respect of dividends paid during the vesting period. These payments may be made in cash or shares and may assume the reinvestment of dividends on a cumulative basis • For deferred awards, “malus” provisions apply. Cash bonus payments are subject to clawback of the net amount paid for a period of three years from payment | | | | • Awards (in the form of conditional share awards ornil-cost options) normally vest based on performance over a period of not less than three years. Awards may also be settled in cash • Awards are normally subject to an additional holding period ending on the fifth anniversary of the grant date (or another date determined by the Committee) • Dividend equivalents may be paid on PSP awards that vest in respect of dividends paid during the vesting period until the end of the holding period. These payments may be made in cash or shares and may assume reinvestment on a cumulative basis • “Malus” and clawback provisions (as set out in the rules of the 2014 Plan) will apply to awards | | | | | | | | | | | | | | | | | Maximum opportunity | | • Maximum annual opportunity of 225% of base salary • For 2020, the intended maximum award levels are: – 225% of base salary for the Chief Executive; and – 150% of base salary for the Finance Director | | | | • Maximum annual opportunity of up to 365% of base salary • For 2020, the intended award levels are: – 365% of base salary for the Chief Executive; and – 225% of base salary for the Finance Director | | | | | | | | | | | | | | | | | Performance Measure | | • The performance-related incentive plan is based on achieving clearly defined and stretching annual targets and strategic goals set by the Committee each year based on key business priorities • The performance metrics used are a mix of financial targets including return goals and personal/strategic objectives generally. Currently 80% of the bonus is based on financial performance measures • The Committee may vary the weightings of measures but no less than 50% shall be based on financial performance measures • A portion of the bonus metrics for any Director may be linked to his/ her specific area of responsibility • Up to 50% of the maximum bonus will be paid for achieving target levels of performance | | | | • Awards to be granted in 2020 will vest based on cumulative cash flow (50%), a relative TSR test compared to a tailored group of key peers (25%) and RONA (25%) • For threshold levels of performance, 25% of the award vests • Where applicable, when determining vesting under the PSP the Committee reviews whether the TSR performance has been impacted by unusual events and whether it therefore, reflects the underlying performance of the business • The Committee may adjust the weightings of the measures at the start of each cycle, with no measure’s weighting falling below 25% • The Committee may amend the performance conditions if an event occurs that causes it to consider that an amended performance condition would be more appropriate and would not be materially less difficult to satisfy | | | |
CRH Annual Report and Form 20-F | 2018
| 84 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | | | |
Remuneration Policy Summary - continued Directors’ Remuneration Report - continued
Notes to Policy Table
Changes to 2016
Remuneration Policy
Proposed changes to the 2016 Policy are outlined in the Chairman’s introductory statement on pages 68 to 72.
Plan Rules
The 2014 Deferred Share Bonus Plan
| | | | | Remuneration Outcomes in different Performance Scenarios Remuneration at CRH consists of fixed pay (salary, pension and benefits), short-term variable pay and long-term variable pay. A significant portion of executive Directors’ remuneration is linked to the delivery of key business goals over the short and long-term and the 2014 Performance Share Plan form part of the 2019 Policy and shall be operated in accordance with the relevant plan rules. Awards may be (i) adjusted in accordance with the rules in the event of a variation of the Company’s share capital, merger,de-merger, special dividend or other event that, in the opinion of the Committee, materially affects the price of shares; and (ii) amended in accordance with the plan rules. Clawback/Malus
For Deferred Annual Performance-related Incentive plan awards and Performance Share Plan awards, the Committee has the discretion to reduce or impose further conditions on awards prior to vesting in certain circumstances, including but not limited to:
a material misstatement of the Group’s audited financial results;
a material failure of risk management; or
serious reputational damage to the Group or one of its businesses as a result of a participant’s misconduct or otherwise
Cash bonus payments are subject to clawback of the net amount paid for a period of three years from payment in the circumstances outlined. With effect from the awards made in 2019, vested PSP awards will be subject to clawback for a period of three years from the date of vesting.
Other elements of remuneration are not subject to clawback or malus provisions.
General
The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any discretions available to it in connection with such payments) notwithstanding that they are not
in line with the policy set out above where the terms of the payment were agreed (i) before 7 May 2014 (the date the Company’s first shareholder-approved Directors’ Remuneration Policy came into effect); (ii) before the policy set out above came into effect, provided that the terms of the payment were consistent with the shareholder-approved Directors’ Remuneration Policy in force at the time they were agreed; or (iii) at a time when the relevant individual was not a director of the Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a director of the Company; or (iv) in settlement of statutory employment rights. For these purposes “payments” includes the Committee satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the payment are “agreed” at the time the award is granted.
Minor Amendments
The Committee may make minor changes to the 2019 Policy for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation without seeking shareholder approval for that amendment.
Information Supporting the Policy Table
Selection of Performance Measures and Targets
(i) Annual bonus
Annual incentive plan targets are selected each year to incentivise executive Directors to achieve annual financial, operational, strategic and personal goals across a range of metrics which are considered important for delivering long-term performance excellence.
(ii) Performance share plan
The ultimate goal of our strategy is to provide growth and long-term sustainable value for all of our shareholders. Performance measures for PSP awards to be granted in 2019 are, therefore, focused on generating cash in the business, achieving relative outperformance of TSR against our key peers and generating a return on net assets.
Targets for the annual bonus and PSP are set each year by the Committee taking into account internal plans and external expectations. Targets are calibrated to be stretching but motivational to management and to be aligned with the long-term creation of shareholder value.
Table 26 shows hypothetical values of the remuneration package for executive Directors under four assumed performance scenarios. No share price growth or the payment of dividend equivalents has been assumed in these scenarios, with the exception of the maximum +50% share price growth scenario. Potential benefits underall-employee share schemes have not been included. | | Remuneration Outcomes in different Performance Scenarios Table 24 | | Performance Scenario | | Payout Level | | Minimum | | • Fixed pay (see table 25 for each executive Director) • No bonus payout • No vesting under the Performance Share Plan | | On-target performance | | • Fixed pay (see table 25 for each executive Director) • 50% annual bonus payout (112.5% of salary for the Chief Executive and 75% for the Finance Director) • 25% vesting under the Performance Share Plan (91.25% of salary for the Chief Executive and 56.25% for the Finance Director) | | Maximum performance ((i) at constant share prices; and (ii) assuming a 50% increase in share prices) | | • Fixed pay (see table 25 for each executive Director) • 100% annual bonus payout (225% of salary for the Chief Executive and 150% of salary for the Finance Director) • 100% Performance Share Plan vesting (365% of salary for the Chief Executive and 225% for the Finance Director) |
| | | | | | | | | | | | | | | | | | | | | | Hypothetical Remuneration Values | | | | | | | | | | | | | | | Table 25 | | | | | Salary
With effect from
1 January 2020 | | | Benefits Level paid
in 2019 (i) | | | Estimated
Pension (ii) | | | Total
Fixed Pay | | | | | | | | Chief Executive (Albert Manifold) | | | €1,564,400 | | | | 43,000 | | | | 600,000 | | | | €2,207,400 | | | | | | | | Finance Director (Senan Murphy) | | | €816,350 | | | | 27,000 | | | | 204,000 | | | | €1,047,350 | |
(i) Based on 2019 expenses. (ii) See page 77 for details in relation to retirement benefit arrangements. | | | | | Performance-related Remuneration Outcomes | | Table 26 |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 85 |
Remuneration Arrangements Throughout the Group CRH operates significant operations in over 3,7003,100 locations in 3230 countries with approximately 90,000c. 80,300 employees across the globe. Remuneration arrangements throughout the organisation, therefore, differ depending on the specific role being undertaken, the level of seniority and responsibilities, the location of the role and local market practice. However, remuneration arrangements are designed based on a common set of principles: that reward should be set at a level which is appropriate to retain and motivate individuals of the necessary calibre to fulfil the roles without paying more than is considered necessary. The reward framework is designed to incentivise employees to deliver the requirements of their roles and add value for shareholders. The Group operates share participation plans and savings-related share option schemes for eligible employees, including executive Directors, in all regions where the regulations permit the operation of such plans. Remuneration Policy for New Hires
CRH has a strong history of succession planning and developing internal executive talent.
The Committee’s key principle when determining appropriate remuneration arrangements for a new executive Director (appointed from within the organisation or externally) is that arrangements are in the best interests of both CRH and its shareholders without paying more than is considered necessary by the Committee to recruit an executive of the required calibre to develop and deliver the business strategy.
| CRH Annual Report and Form 20-F I 2018
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| | | | | The Committee would generally seek to align the remuneration package offered with our remuneration policy outlined in table 24. Although in exceptional circumstances, the Committee may make remuneration proposals on hiring a new executive Director which are outside the standard policy to facilitate the hiring of someone of the calibre required to deliver the Group’s strategy. When determining appropriate remuneration arrangements the Committee will take into account all relevant factors including (among others) the level of opportunity, the type of remuneration opportunity being forfeited and the jurisdiction the candidate was recruited from. Any remuneration offered would be within the limit on variable pay outlined in this 2019 Policy.
Variable remuneration in respect of an executive Director’s appointment shall be limited to 590% of base salary measured at the time of award. This limit is in line with the plan maximum outlined in table 24. This limit excludes any awards made to compensate the Director for awards forfeited from his or her previous employer.
| | The Committee may make awards on appointing an executive Director to“buy-out” remuneration terms forfeited on leaving a previous employer. In doing so the Committee will take account of relevant factors including any performance conditions attached to these awards, the form in which they were granted (e.g. cash or shares) and the time over which they would have vested. The Committee’s key principle is that generallybuy-out awards will be made on a comparable basis to those forfeited.
To facilitate awards outlined above, the Committee may grant awards under Company incentive schemes or under UK Listing Rule 9.4.2 which allows for the granting of awards, to facilitate, in unusual circumstances, the recruitment of an executive Director, without seeking prior shareholder approval or under other relevant company incentive plans. The use of Listing Rule 9.4.2 shall be limited tobuy-out awards.
| | In the event that an internal candidate is promoted to the Board, legacy terms and conditions will normally be honoured, including pension entitlements and any outstanding incentive awards.
In the event of the appointment of a new Chairman ornon-executive Director, remuneration arrangements will normally reflect the policy outlined in table 25 below. Other remuneration arrangements may be provided to a new Chairman ornon-executive Director if these arrangements are considered appropriate in accordance with the principles set out in table 25.
| | | Remuneration Policy forNon-Executive Directors
| | Table 25 | Approach to Setting Fees
| | Basis of Fees
| | Other Items
| | | | • The remuneration ofnon-executive Directors is determined by a Board committee of the Chairman and the executive Directors
• The Remuneration Committee determines the remuneration of the Chairman within the framework or broad policy agreed with the Board
• Remuneration is set at a level which will attract individuals with the necessary experience and ability to make a substantial contribution to the Company’s affairs and reflect the time and travel demands of Board duties
• Fees are set taking into account typical practice at other companies of a similar size and complexity to CRH
• Fees are reviewed at appropriate intervals
| | • Fees are paid in cash
• Non-executive Director fees policy is to pay:
– a basic fee for membership of the Board;
– an additional fee for chairing a Committee;
– an additional fee for the role of Senior Independent Director;
– an additional fee to reflect committee work (combined fee for all committee roles); and
– an additional fee based on the location of the Director to reflect time spent travelling to Board meetings
• Other fees may also be paid to reflect other Board roles or responsibilities
• In accordance with the Articles of Association, shareholders set the maximum aggregate amount of the fees payable tonon-executive Directors. The current limit of€875,000 was set by shareholders at the Annual General Meeting held in 2016. A resolution to increase the limit to€1,000,000 will be included on the agenda for the 2019 AGM
| | • Thenon-executive Directors do not participate in any of the Company’s performance-related incentive plans or share schemes
• Non-executive Directors do not receive pensions
• The Group Chairman is reimbursed for expenses incurred in travelling from his residence to his CRH office on a gross up basis so that he is not at a net loss after deduction of tax
• Benefits including retirement gifts (provided they do not exceed the de minimis threshold outlined on page 95) may be provided if, in the view of the Board (fornon-executive Directors or for the Chairman), this is considered appropriate. The Company may gross up any expenses so that thenon-executive Directors are not at a net loss after deduction of tax. Details regarding any benefit provided will be disclosed in the relevant year of receipt
| | | | | |
CRH Annual Report and Form 20-F | 2018
Directors’ Remuneration Report - continued
| | | | | | | Remuneration Outcomes in different Performance Scenarios
Remuneration at CRH consists of fixed pay (salary, pension and benefits), short-term variable pay and long-term variable pay. A significant portion of executive Directors’ remuneration is linked to the delivery of key business goals over the short and long-term and the creation of shareholder value.
Table 28 shows hypothetical values of the remuneration package for executive Directors under four assumed performance scenarios (based on 2019 proposals).
No share price growth or the payment of dividend equivalents has been assumed in these scenarios. Potential benefits underall-employee share schemes have not been included.
| | Remuneration Outcomes in different Performance Scenarios
| | Table 26 | | Performance Scenario
| | Payout Level | | | | Minimum
| | • Fixed pay (see table 27 for each executive Director)
| | | | • No bonus payout
| | | | • No vesting under the Performance Share Plan
| | On-target performance
| | • Fixed pay (see table 27 for each executive Director)
| | | | • 50% annual bonus payout (112.5% of salary for the Chief Executive and 75% for the Finance Director)
| | | | • 25% vesting under the Performance Share Plan (91.25% of salary for the Chief Executive and 56.25% for the Finance Director)
| | Maximum performance (at constant share prices and assuming a 50% increase in share price)
| | • Fixed pay (see table 27 for each executive Director)
• 100% annual bonus payout (225% of salary for the Chief Executive and 150% of salary for the Finance Director)
• 100% Performance Share Plan vesting (365% of salary for the Chief Executive and 225% for the Finance Director)
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| | | | | | | | | | | | | | | | | Hypothetical Remuneration Values
| | | | | | | | | | | Table 27
| | | | Salary
With effect from
1 January 2019 | | | Benefits
Level paid
in 2018 (i) | | | Estimated
Pension (ii) | | | Total
Fixed Pay | | Chief Executive (Albert Manifold) | | | €1,522,500 | | | | €55,000 | | | | €761,250 | | | | €2,338,750 | | Finance Director (Senan Murphy) | | | €794,500 | | | | €25,000 | | | | €198,625 | | | | €1,018,125 | |
(i) | Based on 2018 expenses.
|
(ii) | See page 94 for details in relation to retirement benefit arrangements.
|
| | | | | | | | | Performance-related Remuneration Outcomes
| | | | | | | | Table 28
|
| CRH Annual Report and Form 20-F I 2018
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Executive Director Service Contracts and Policy on Payment for Loss of Office
When determining leaving arrangements for an executive Director the Committee takes into account any contractual agreements (including any incentive arrangements) and the performance and conduct of the individual.
Service Contracts The Chief Executive and Finance Director have entered into service contracts with the Company. The summaries in tables 29 and 30 set out the key remuneration terms of those contracts (other than in respect of bonus or other incentive arrangements, for which the discretion of the Committee will remain). As part of a review and harmonisation of executive service contracts generally in 2018, we identified an anomaly in the Finance Director’s service contract whereby the notice period from the company is six months but the restriction on termination of employment provisions in the contract arewas for a period of up to 12 months. We indicatedAn addendum to shareholders during the course of the consultation referred to in the Remuneration Committee Chairman’s introduction on page 68 that we will look to regularise this and we would expect to do so during the course of 2019.
The Committee reserves the right to make any other payments in connection with a director’s cessation of office or employment where the payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of a compromise or settlement of any claim arising in connection with the cessation of a director’s office or employment.
Under Irish Company Law, CRH is not required to makeFinance Director’s service contracts available for inspection ascontract has since been executed amending the notice period is not more than 12 months. Service contracts will only be available with the executive Director’s consent dueperiods to data protection reasons.
Annual Cash Bonus
Executive Directors may, at the discretion of the Committee, remain eligible to receive an annual bonus award for the financial year in which they leave employment. Such awards will be determined by the Committee taking into account time in employment and performance.
| | | | | | | Chief Executive Service Contract
| | Table 29
| Notice period | | • | | 12 months’ notice by the Company or the executive
| | | | Expiry date | | • | | Indefinite duration | | | | | | • | | Terms of contract will automatically terminate on the executive’s 62ndbirthday
| | | | Termination payments | | • | | On lawful termination of employment, the Committee may, at its absolute discretion, make a termination payment in lieu of 12 months’ notice based on base salary, benefits and pension contribution due during that period | | | | | | • | | Where the Company terminates the contract lawfully without notice then no payment in lieu of notice shall be due | | | | | | • | | If, in the event of a change of control, there is a diminution in the role and responsibilities of the Chief Executive he may terminate the contract; on such termination a payment equal to one year’s remuneration (being salary, pension, other benefits and vested incentive awards) will be made to the executive
| | | | Disability | | • | | In the event that the Chief Executive falls ill or is injured in such a way as which would constituteill-health or disablement so that the Chief Executive could not work for a period of more than six months, in lieu of the earlyill-health retirement provisions in the pension scheme which would otherwise operate in such cases, he shall be entitled to receive a disability salary of€1,000,000 per annum. Such payment would cease when the Chief Executive reaches age 60, returns to work or if the service agreement is terminated
| | | | Other information | | • | | The Company retains the ability to suspend the executive from employment on full salary and to require the executive to observe a period of “garden leave” of up to 12 months on full salary, contractual benefits and pension contribution
| | | Finance Director Service Contract | | Table 30
| | | | Notice period | | • | | Six months’, notice by the Company or the executive
| | | | Expiry date | | • | | Indefinite duration | | | | | | • | | Terms of contract will automatically terminate on the executive’s 65thbirthday
| | | | Termination payments | | • | | On lawful termination of employment, the Committee may, at its absolute discretion, make a termination payment in lieu of six months’ notice based on base salary, benefits and pension contribution due during that period | | | | | | • | | Where the Company terminates the contract lawfully without notice then no payment in lieu of notice shall be due
| | | | Other information | | • | | The Company retains the ability to suspend the executive from employment on full salary and to require the executive to observe a period of “garden leave” of up to 12 months on full salary, contractual benefits and pension contribution
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Share Plan Rules – Leaver Provisions
The treatment of outstanding share awards in the event that an executive Director leaves is governed by the relevant share plan rules. Table 31 on page 82 summarises leaver provisions under the executive share plans.
“Good leaver” circumstances are defined in the 2014 Performance Share Plan and deferred annual performance-related incentive plans asill-health, injury, disability, the participant’s employing company or business being sold out of the Group or any other reason at the Committee’s absolute discretion (except where a participant is summarily dismissed).
Where an individual leaves by mutual agreement the Committee has discretion to determine the treatment of outstanding share awards.
Individuals who are dismissed for gross misconduct would not be treated as “good leavers”.
Awards under the 2010 Savings-related Share Option Scheme are treated in accordance with the rules. The rules provide that awards may be exercised by a participant’s executor within 12 months of the date of death, and six months from the date of termination of employment in other circumstances where options automatically become exercisable, for example in the case of retirement.each case.
CRH Annual Report and Form 20-F | 2018
Directors’ Remuneration Report - continued
Where an executive ceases employment on his own volition or as a result of summary dismissal they will normally forfeit outstanding share incentive awards.
The Committee may allow awards to vest early at its discretion in the event an executive Director is to be transferred to a jurisdiction where he would suffer a tax disadvantage or he would be subject to restrictions in connection with his award, the underlying shares or the sales proceeds.
Change of Control
In the event of a change in control of the Company, the Committee will consider whether it would be appropriate for awards to be exchanged for equivalent awards in the purchaser’s shares.
Unless the Committee determines otherwise, in the event of a change in control of the Company:
awards granted under the 2014 Plan will vest taking into account the extent to which any performance condition has been satisfied and, unless the Committee determines otherwise the period of time that has elapsed since grant and the relevant event (or if the event occurs during an applicable holding period, to the beginning of the holding period); and
awards granted under the 2014 Deferred Annual Performance-related Incentive Plan may, at the discretion of the Committee, vest in full
If the Company is wound up or there is ade-merger,de-listing, special dividend or other similar event which the Committee considers may affect the price of the Company’s shares:
awards granted under the 2014 Plan may, at the Committee’s discretion, vest taking into account the extent to which any performance condition has been satisfied and, unless the Committee determines otherwise, the period of time that has elapsed since the date of grant and the relevant event (or if the event occurs during an applicable holding period, to the beginning of the holding period); and
awards granted under the 2014 Deferred Annual Performance-related Incentive Plan will vest to the extent the Committee determines
| | | | | | | Leaver Provisions
| | | | Table 31 | | | Death | | “Good Leavers” as determined by the Committee in accordance
with the plan rules
| | Leavers in other
circumstances | Deferred Annual Performance Incentive Plan 2014 | | • Unvested awards vest, unless the Committee determines otherwise, to the extent determined by the Committee
• Awards in the form ofnil-cost options may be exercised for 12 months from death (or another period determined by the Committee)
| | • Awards shall normally vest in full at the normal vesting date. Alternatively, the Committee may determine that awards should vest at the time the individual leaves, subject to the Committee determining that the individual has a shareholding sufficient to apply as a de facto post-shareholding requirement post-cessation of employment
• Where awards vesting in such circumstances are granted in the form ofnil-cost options participants shall have six months from vesting to exercise their award
• Where awards have already vested at cessation of employment, participants shall have six months from cessation of employment to exercise their option
| | • Awards will lapse on the individual’s cessation of office or employment
| Performance Share Plan 2014 | | • Unvested awards shall vest as soon as practicable following death unless the Committee determines otherwise. The number of shares vesting shall be determined by the Committee taking into account the extent to which the performance condition has been met and, if the Committee determines, the length of time that has elapsed since the award was granted until the date of death (or if death occurs during an applicable holding period, to the beginning of the holding period)
• Awards in the form ofnil-cost options may be exercised for 12 months from death (or another period determined by the Committee)
| | • Awards shall normally vest at the normal vesting date. Alternatively the Committee may determine that awards should vest at the time the individual leaves, subject to the Committee determining that the individual has a shareholding sufficient to apply as a de facto shareholding requirement post-cessation
• The level of vesting shall be determined by the Committee taking into account the extent to which the performance condition has been met and, unless the Committee determines otherwise, the period of time that has elapsed since the date of grant until the date of cessation (or if cessation occurs during an applicable holding period, to the beginning of the holding period)
• Awards vesting in such circumstances in the form ofnil-cost options may be exercised for six months from vesting (or another period determined by the Committee). Where anil-cost option was already vested at cessation of employment, participants may exercise such options for six months from cessation (or another period determined by the Committee)
| | • Awards will lapse on the individual’s cessation of office or employment
|
| | | | | | CRH Annual Report and Form 20-F I 2018
|
Shareholding Guideline for Executive Directors Executive Directors are required to build up (and maintain) a minimum holding in CRH shares. The shareholding guidelines for the Chief Executive and Finance Director are 3.5x basic salary and 2.0x basic salary respectively, with the guidelines to be achieved by 31 December 2023 and 31 December 2022, respectively. For the purposes of determining the number of shares held by the executive Directors, the relevant calculation will include shares beneficially owned by the executive Directors, annual bonus awards which are deferred into shares for three years and PSP awards that have met the financial performance criteria but are subject to atwo-year holding period prior to release. The deferred share awards and PSP awards subject to atwo-year hold period are not subject to any further performance criteria other than continued employment with the Group. In the event that the shareholding guidelines are not met by the applicable deadlines, the Remuneration Committee will consider what action to take at that time. Post-employment Holding Requirements The Remuneration Committee believes thatAs outlined in the current holding periodChair’s Overview on our vested PSP awards provides a considerable de facto post-employment shareholding requirement as it continues to apply post-cessation. Assuming 50% vesting, PSP awards that remain subject to atwo-year holding requirement at the time of cessation of employment would equate to c. 1.8x basic salary for the Chief Executive and c. 1.1x basic salary for the Finance Director, on a net tax basis. These shares are released on a phased basis during the two years from the date of leaving. In addition, unvested PSP awards at the date of leaving, which can, at the discretion of the Remuneration Committee, vest subject to performance on a time pro-rated basis, would be released on a phased basis up to four years from the date of leaving.
Non-executive Director – Letters of Appointment
Non-executive Directors serve under letters of appointment, copies of which are available for inspection at the Company’s Registered Office and at the AGM.
In line with the 2016 Code, allnon-executive Directors submit themselves forre-election by shareholders every year at the AGM. Allnon-executive Director appointments can be terminated by either party without notice. There is no payment in lieu of notice provided.
Considering Employee Views
The Board is regularly kept abreast of employees’ perspectives and takes them into account when making decisions. In particular,page 77, the Remuneration Committee has oversightdecided to introduce a requirement whereby the Chief Executive will be required to hold shares equivalent to two times salary for a period of remuneration policy acrosstwo years post-employment. Accordingly, commencing in 2020, until the Grouptwo times limit is achieved, any Deferred Share or PSP awards which vest will be transferred on a net of tax basis to a third party to be held in trust for the Chief Executive’s benefit. The shares will be held in Trust on a rolling basis, until his employment ceases and endeavours to keep thea subsequent two year period has elapsed. A similar structure of remuneration consistent as far as possible.
Consulting with Shareholders
The Committee believes that it is very important to maintain open dialogue with shareholders on remuneration matters. CRH consulted extensively with shareholders in relationwill apply to the 2019 Policy. Shareholder views were importantFinance Director, except that the requirement in shaping the final proposals outlined in the 2019 Policy.
The Committeehis case will continue to liaise with shareholders regarding remuneration matters more generally and CRH arrangements as appropriate. It is the Committee’s intention to consult with major shareholders in advance of making any material changes to remuneration arrangements.be one times salary.
| 83 |
| | | | 86 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
CRH Annual Report and Form 20-F | 2018
Remuneration Policy Summary - continued | | | | | | Remuneration Policy forNon-Executive Directors | | Table 27 |
Directors’ Remuneration Report - continued
| | | CRH is a leading provider of structural concrete to the Danish market. In 2019, CRH Denmark, part of our Europe Materials Division, supplied 15,000m² of materials to the ‘Karré 31’ project in the town of Holbaek, north-east of Copenhagen. Products included hollow-core floor slabs, walls and facades for the 17-story apartment building. | | |
| | | | 88 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Annual Report on Remuneration The Remuneration Committee The Remuneration Committee consists of fivenon-executive Directors considered by the Board to be independent. They bring the range of experience of large organisations and public companies, including experience in the area of senior executive remuneration, to enable the Committee to fulfil its role. Their biographical details are set out on pages 56 to 59. A schedule of attendance at Committee meetings is set out in table 13 on page 71. The main focus of the Committee is to: determine and agree with the Board the Group’s policy on executive remuneration; seek shareholder approval for the Directors’ Remuneration Policy at least every three years; ensure that CRH’s remuneration structures are fair and responsible; and consider and approve salaries and other terms of the remuneration packages for the executive Directors and the fee for the Chairman In addition, the Committee: recommends and monitors the level and structure of remuneration for the executive Directors and senior management; and oversees the preparation of this Directors’ Remuneration Report In considering remuneration levels for executive Directors particularly, the Committee takes into account remuneration trends across the CRH Group, which has a diverse range of operations in 30 countries, in geographic regions which are often at different stages in the economic cycle. Annually, the Chairman of the Remuneration Committee reviews with the Audit Committee the Group’s remuneration structures from a risk perspective. Remuneration Received by Executive Directors in Respect of 20182019 Details of individual remuneration for executive Directors for the year ended 31 December 2018,2019, including explanatory notes, are given in table 3222 on page 85.79. Details of Directors’ remuneration charged against profit in the year are given in table 4746 on page 97.100. 20182019 Annual Bonus Plan
CRH’s Annual Bonus Plan for 20182019 was based on a combination of financial targets and personal/strategic goals. The metrics for target payout, which is up to a maximum of 50% of the total annual bonus opportunity, are based on achieving the budget set by the Board in respect of each metric. The threshold level for bonus payouts is for the achievement of 92% of budget, whereas maximum payout is achieved for stretch performance of between 105% of budget for EPS and Cash Flow and 108% of budget for RONA. The relative weighting of the components of the 20182019 plan, together with details of the applicable targets and performance for each measure is given in table 3328 on page 86.89. When setting the targets for the annual bonus plan, the Committee makes assumptions regarding exchange rates and development activity. The Committee also compares the proposed targets to the outturn for the previous year to ensure that the targets are sufficiently stretching. In this regard, it is important to note that the metrics in the plan are influenced by the economic cycle and other factors, such as ongoing portfolio management. In relation to For example, the targetsRONA target for 2019 was less than the 2018 bonus plan, a number of factors, including,outturn primarily due to the impact of the divestmentGroup’s acquisition of Americas Distribution,Ash Grove Cement as such long term value-creating acquisitions are generally returns dilutive in thenon-recurrence ofone-off gains, lower expected asset disposals, challenging markets in CRH’s operations in Asia and adverse exchange rates resulted in target EPS, cash flow and RONA being set by the Board at a initial years post acquisition.
level that was lower than the actual outturn for 2017 (see tables 33 and 35 on pages 86 and 87).
When reviewing performance against the bonus plan, the Committee typically makes a number of routine adjustments to the financial targets, for example, in relation to reflect actual exchange rates, major development activity and developmentactual share buyback activity during the year. For the 20182019 bonus plan, adjustmentsthe financial targets were made duealso adjusted to the later than planned closing of the acquisition of Ash Grove, the additional contribution from other acquisitions completed in 2018, the deduction of budgeted income for the period from July to December 2018 as a result of the divestment of the DIY business by Europe Distribution (which was completed on 13 July 2018) and for exchange rates. Also, when assessing performance, the Committee made adjustments to counteractreflect the impact of the share buyback programme (which commenced in May 2018) on EPS andimplementation of IFRS16 Leases. When assessing the outturn for 2019, the Committee excluded the significant profit from the divestment of Americas Distribution,exceptional items which was awereone-off item in 2018.nature and are not expected to recur. This had the impact of reducing the formulaic outcome for the financial element under the 2019 bonus plan. Details of each executive Director’s personal and strategic objectives and their achievement against these objectives are set out in table 3429 on page 86.89. Overall, the combination of the performance by the Group in 20182019 and the achievement against personal and strategic objectives translated to annual bonus payouts of 81.48%86% of the maximum opportunity for Albert Manifold and Senan Murphy, with total bonus payments of 183%194% of salary and 122%129% of salary respectively. In accordance with the 2016 Policy, 25%33% of the bonus amounts for Albert Manifold and Senan Murphy will be deferred into shares for a period of three years. Deferred Share awards are not subject to any additional performance conditions during the deferral period and are adjusted for dividend equivalents based on dividends paid by CRH during the deferral period.CRH. Annual bonus awards are subject to recovery provisions for three years from the date of payment (cash awards) or grant (deferred awards). 2017
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 89 |
Annual Bonus – Retrospective Disclosure of Targets2019 CRH’s
| | | | | | | | | | | | | | | | | | | | | | 2019 Plan - Achievement | | | | | | | | | | | Table 28 | | | | �� | | | 2019 Targets - Performance needed for payout at (i) | | | | | | | Measure | | Weighting
(% of total bonus) | | Threshold | | Target (ii) | | Maximum | | 2019
Performance
Achieved (iii) | | Percentage of
Maximum Awarded | | | | | | | | | | CRH EPS | | 25% | | 183c | | 199c | | 209c | | 205c | | | 20.5% | | | | | | | | | | CRH Cash Flow (iv) | | 30% | | €2,553m | | €2,775m | | €2,914m | | €3,050m | | | 30.0% | | | | | | | | | | CRH RONA (iv) | | 25% | | 8.0% | | 8.7% | | 9.4% | | 9.1% | | | 18.5% | | | | | | | | | | Personal/Strategic | | 20% | | | | | | | | See table 29 | | | 17.0% | | | | | | | | | | Total | | 100% | | | | | | | | | | | 86.0% | | (i) 0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line payout schedule between these points. (ii) Targets have been adjusted to reflect actual exchange rates, the actual timing of development activity, the impact of the share buyback programme and the impact of the implementation of IFRS 16 Leases. (iii) The outturn achieved for 2019 excludes exceptional items which wereone-off in nature and not expected to recur. (iv) For the purposes of the annual bonus plan, operating cash flow and RONA have been defined as reported internally. For cash flow the figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. Similarly, RONA as reported internally differs from the RONA reported in theNon-GAAP Performance Measures in this report as it reflects seasonality and the timing impact of development activity. | | | |
| | | | | | | | | | 2019 Plan - Personal/Strategic Achievement | | Table 29 | | Directors | | Weighting (% of total bonus) | | Achievements | | Percentage of Maximum Awarded | | | | | | | | | Safety: Supporting the launch of a safety front-line leadership programme and the implementation of recommendations from a review by an external advisory panel of experts, including updating policies and guidelines for contractor management, energy isolation and consequence management. | | | | | | | | | | | Performance: Continued monitoring, assessment and challenge of performance improvement across the business. | | | | | | | | Albert Manifold | | 20% | | Group Leadership Team (GLT): Continued development of the GLT as a functioning executive leadership team for CRH, including, working with the team to provide effective management succession for senior roles across the Group. | | 17.0% | | | | | | | | | Strategy: Continued assessment of the strategic alternatives for the Group in discussion with the Board and senior management and ensuring that the organisation structure of CRH is aligned with its future strategy. | | | | | | | | | | | Safety: Supporting the launch of a safety front-line leadership programme and the implementation of recommendations from a review by an external advisory panel of experts, including updating policies and guidelines for contractor management, energy isolation and consequence management. | | | | | | | | Senan Murphy | | 20% | | Performance: Continued monitoring, assessment and challenge of performance improvement across the business. | | 17.0% | | | | | | | | | Talent Management: Development of new processes and procedures to aid career pathing, talent review and talent development in order to meet the longer term CRH leadership needs. | | | | | | | | | | | | Leadership and Strategy: Working across all business and functional areas to facilitate, develop and progress CRH strategy and other key cross CRH priorities. | | |
| | | | 90 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Annual Bonus Plan for 2017 was also basedReport on a combination of financial targets and personal/strategic goals. The Group-related financial targets are set out in table 35 on page 87.Remuneration - continued Long-term Incentives Performance Share Plan 2016 - 2017 awards
In 2016,2017, the executive Directors were granted conditional awards under the 2014 PSP. The awards were based on TSR (50% of the award) – 25% against a tailored group of key peers (see table 17 on page 70)30 below) and 25% against the FTSEAll-World Construction & Materials Index – and Cumulative Cash Flow (50% of the award), and performance was measured over the three-year period 1 January 20162017 to 31 December 2018. Based on performance, the Committee has determined that 59.13%2019. In respect of the awards had metTSR element, CRH’s TSR over the relevant performance criteriaperiod of 15.6% ranked between the 50th and 75th percentile as performance in relation to the cumulative cash flow element (50% out of 50%) and TSR performance againstcompared with the tailored peer group, element (9.13% outbut was below the TSR of 25%) exceeded the relevant threshold targets for vesting. TSR performance against the FTSEAll-World Construction & Materials IndexIndex. Accordingly, 20.7% out of 50% will vest for the TSR element. In respect of the cumulative cash flow element, actual outturn over the period was below€4.5 billion, which exceeded the minimum thresholdstretch target of€3.7 billion, resulting in 100% vesting for vesting.the cash flow element. The Committee considers that the vesting outcome is reflective of the Company’s underlying performance over the performance period. In particular, the Committee considered RONA performance since 20162017 as an underpin to the TSR component. As the RONA target in each of the annual bonus plans for 2016, 2017, 2018 and 20182019 was met, the Committee determined that the TSR percentagevesting outcome was appropriate and did not need to be adjusted. In accordance with the Policy, the 20162017 awards to executive Directors will vest in 20212022 on completion of an additionaltwo-year holding period. Vested awards will be adjusted for dividend equivalents based on dividends in the period from grant to the date of vesting in 2021.2022. Table 3631 on page 8891 sets out details of the relevant targets. Table 3732 on page 8891 sets out details of the awards.
| | | | | | CRH Annual Report and Form 20-F I 2018
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Individual Executive Remuneration for the year ended 31 December 2018 (Audited) | | | | | | Table 32 | | | | | Albert Manifold | | | | | | | | | Senan Murphy | | | | | | | | | Maeve Carton (i) | | | | | 2018 | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | | 2016 | | | Fixed Pay | | €000 | | | €000 | | | €000 | | | | | | €000 | | | €000 | | | €000 | | | | | | €000 | | | €000 | | | €000 | | | Basic Salary (ii) | | | 1,485 | | | | 1,442 | | | | 1,400 | | | | | | | | 775 | | | | 706 | | | | 625 | | | | | | | | - | | | | 470 | | | | 689 | | | Benefits (iii) | | | 55 | | | | 35 | | | | 22 | | | | | | | | 25 | | | | 25 | | | | 22 | | | | | | | | - | | | | 18 | | | | 10 | | | Retirement Benefit Expense (iv) | | | 684 | | | | 677 | | | | 671 | | | | | | | | 194 | | | | 176 | | | | 156 | | | | | | | | - | | | | 135 | | | | 252 | | | Total Fixed Pay | | | 2,224 | | | | 2,154 | | | | 2,093 | | | | | | | | 994 | | | | 907 | | | | 803 | | | | | | | | - | | | | 623 | | | | 951 | | | | | | | | | | | | | | | Performance-related Pay | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Bonus (v): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash Element | | | 2,042 | | | | 2,338 | | | | 2,323 | | | | | | | | 710 | | | | 762 | | | | 679 | | | | | | | | - | | | | 634 | | | | 748 | | | Deferred Shares | | | 681 | | | | 779 | | | | 774 | | | | | | | | 237 | | | | 254 | | | | 227 | | | | | | | | - | | | | - | | | | 250 | | | Total Annual Bonus | | | 2,723 | | | | 3,117 | | | | 3,097 | | | | | | | | 947 | | | | 1,016 | | | | 906 | | | | | | | | - | | | | 634 | | | | 998 | | | | | | | | | | | | | | | Long-term Incentives (vi): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Share Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - value delivered through performance | | | 3,238 | | | | 2,720 | | | | 3,171 | | | | | | | | 792 | | | | - | | | | - | | | | | | | | - | | | | 1,138 | | | | 1,320 | | | - value delivered through share price growth | | | 45 | | | | 668 | | | | 1,622 | | | | | | | | 11 | | | | - | | | | - | | | | | | | | - | | | | 280 | | | | 675 | | | Total Long-term Incentives | | | 3,283 | | | | 3,388 | | | | 4,793 | | | | | | | | 803 | | | | - | | | | - | | | | | | | | - | | | | 1,418 | | | | 1,995 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Performance-related Pay | | | 6,006 | | | | 6,505 | | | | 7,890 | | | | | | | | 1,750 | | | | 1,016 | | | | 906 | | | | | | | | - | | | | 2,052 | | | | 2,993 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Single Figure | | | 8,230 | | | | 8,659 | | | | 9,983 | | | | | | | | 2,744 | | | | 1,923 | | | | 1,709 | | | | | | | | - | | | | 2,675 | | | | 3,944 | |
(fixed and performance-related)
(i) | Maeve Carton retired as a Director on 31 August 2017.
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(ii) | Basic Salary: Further details and background in relation to the changes in salaries effective for 2018 are set out on pages 72 and 73 of the 2017 Directors’ Remuneration Report.
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(iii) | Benefits: For executive Directors these relate principally to the use of company cars, medical insurance and life assurance and, where relevant, the value of thenon-taxable discount on the grant of options under the Group’s 2010 Savings-related Option Scheme and any retirement gifts or long-service awards.
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(iv) | Retirement Benefit Expense: As noted on page 94, Albert Manifold receives a supplementary taxablenon-pensionable cash allowance, in lieu of prospective pension benefits foregone. This allowance is similar in value to the reduction in the Company’s liability represented by the pension benefit foregone. It is calculated based on actuarial advice as the equivalent of the reduction in the Company’s liability to Mr. Manifold and spread over the term to retirement as an annual compensation allowance. Senan Murphy receives a supplementary taxablenon-pensionable cash supplement equivalent to 25% of his annual base salary in lieu of a pension contribution.
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(v) | Annual Bonus Plan: Under the executive Directors’ Annual Bonus Plan for 2018, a bonus was payable for meeting clearly defined and stretch targets and strategic goals. The structure of the 2018 Annual Bonus Plan, together with details of the performance against targets and payouts in respect of 2017 and 2018, are set out on pages 86 and 87. For 2018, 2017 and 2016 bonuses, 25% of executive Directors’ bonuses were paid in Deferred Shares, vesting after three years, with no additional performance conditions. In the case of Maeve Carton, following her retirement in 2017 the Remuneration Committee determined that the Deferred Shares in respect of the bonus granted in 2016 should be released to her and that her 2017 bonus,pro-rated for service to her retirement in August 2017, should be paid in cash.
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(vi) | Long-term Incentives: In February 2019, the Remuneration Committee determined that 59.13% of the performance conditions which applied to the PSP awards made in 2016 have been met. The awards are subject to atwo-year holding period and will vest in 2021. For the purposes of this table, the value of these awards (including accrued dividend equivalents), which were subject to a three-year performance period ending in 2018, has been estimated using a share price of€24.90, being the three-month average share price to 31 December 2018. Amounts in the long-term incentive column for 2017 reflect the value of long-term incentive awards with a performance period ending in 2017 (i.e. the PSP awards granted in 2015), which the Remuneration Committee determined in February 2018 had met 78.7% of the applicable performance targets. The awards are scheduled to vest in 2020 following the completion of atwo-year holding period. For the purposes of this table, the value of these awards (including accrued dividend equivalents) has been estimated using a share price of€30.42, being the three-month average share price to 31 December 2017. Amounts in the long-term incentive column for 2016 reflect the value of long-term incentive awards with a performance period ending in 2016 (i.e. the PSP awards granted in 2014), which the Remuneration Committee determined in February 2017 had met the applicable performance targets. The awards are scheduled to vest in 2019 following the completion of atwo-year holding period. For the purposes of this table, the value of these awards (including accrued dividend equivalents) has been estimated using a share price of€30.97, being the three-month average share price to 31 December 2016.
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CRH Annual Report and Form 20-F | 2018
Directors’ Remuneration ReportPerformance Share Plan - continued
Annual Bonus Plan - 2018
| | | | | | | | | | | | | | | 2018 Annual Bonus - Achievement - Financial Targets | | | | | | | | Table 33 | | | | | | | | 2018 Targets - Performance needed for payout at (i) | | | | | | Measure | | Weighting | | 2017
Performance
Achieved | | Threshold | | Target (ii) | | Maximum | | 2018
Performance
Achieved | | Percentage of
Maximum Awarded | | CRH EPS | | 25% | | 166c | | 148c | | 161c | | 169c | | 172c | | 25.00% | | | | | | | | | | CRH Cash Flow (iii) | | 30% | | €2,234m | | €1,847m | | €2,008m | | €2,108m | | €2,068m | | 23.89% | | | | | | | | | | CRH RONA (iii) | | 25% | | 10.3% | | 8.5% | | 9.2% | | 9.9% | | 9.3% | | 14.59% | | | | | | | | | Personal/Strategic | | 20% | | | | | | | | | | See table 34 | | 18.00% | Total | | 100% | | | | | | | | | | | | 81.48% |
(i) | 0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line payout schedule between these points.
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(ii) | Targets have been adjusted to reflect actual currency rates, the actual timing of acquisitions and disposals, the impact of the 2018 share buyback programme and the exclusion of the significant profit from the disposal of Americas Distribution, which was aone-off item.
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(iii) | For the purposes of the annual bonus plan, operating cash flow has been defined as reported internally. The figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. Similarly, RONA has also been defined as reported internally and differs from the RONA reported in theNon-GAAP Performance Measures in this report as it excludesone-off items and reflects seasonality and the timing of development activity.
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| | | | | | | 2018 Annual Bonus - Achievement - Personal/Strategic Targets | | Table 34 | | Directors | | Weighting | | Achievements | | Percentage of
Maximum Awarded | Albert Manifold | | 20% | | Safety: Development and implementation of plans for a safety front-line leadership programme and for the implementation of recommendations from a review by an external advisory panel of experts, in the Chief Executive’s area of responsibility. | | 18% | | | Inclusion & Diversity: The establishment and implementation of an inclusion & diversity roadmap for the Group, including initiatives and measures and a timeline for implementation. | | | Group Leadership Team (GLT): Continued development of the GLT as a functioning executive leadership team for CRH, including, working with the team to provide effective management succession for senior roles across the Group. | | | Strategy: Continued assessment of the strategic alternatives for the Group in discussion with the Board and senior management and ensuring that the organisation structure of CRH is aligned with its future strategy. | Senan Murphy | | 20% | | Safety: Development and implementation of plans for a safety front-line leadership programme and for the implementation of recommendations from a review by an external advisory panel of experts, in the Finance Director’s area of responsibility. | | 18% | | | Inclusion & Diversity: The establishment and implementation of an inclusion & diversity roadmap for the Finance organisation, including initiatives and measures and a timeline for implementation. | | | Strategy: Support for the next phase of the rollout of our strategic playbooks process, ensuring that robust roadmaps are developed, actioned and integrated with the strategic planning process and that KPIs are developed to track progress. | | | Risk Management, Internal Control and Management of External Relations: Maintaining a strong risk and control environment across the Group, including audit, Sarbanes Oxley and regulatory compliance, supervising the successful integration of all acquisitions and managing relations with investors, banks, rating agencies and other key stakeholders. |
| | | | | | CRH Annual Report and Form 20-F I 2018
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Annual Bonus Plan - 2017
| | | | | | | | | | | | | 2017 Annual Bonus - Achievement - Financial Targets (i) | | Table 35 | | | | | | Performance needed for payout at | | | | | | Measure | | Weighting | | Threshold | | Target | | Maximum | | Performance
Achieved | | Percentage of
Maximum Awarded | | | | | | | | | CRH EPS | | 25% | | 134c | | 146c | | 153c | | 166c (iii) | | 25% | | | | | | | | | CRH Cash Flow (ii) | | 30% | | €1,656m | | €1,800m | | €1,890m | | €2,234m | | 30% | | | | | | | | CRH RONA | | 25% | | 8.8 | | 9.6 | | 10.4 | | 10.3% (iii) | | 24% |
(i) | Due to commercial sensitivity, 2017 bonus targets were not disclosed in the 2017 Directors’ Remuneration Report.
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(ii) | For the purpose of the annual bonus, operating cash flow has been defined as reported internally. The figure differs from the net cash inflow from operating activities of€2,189 million reported in the 2017 Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net of proceeds for the disposal of PP&E, and before deducting interest and tax payments. Similarly, RONA has also been defined as reported internally and differs from the RONA reported in theNon-GAAP Performance Measures in this report as it excludesone-off items and reflects seasonality and the timing of development activity.
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(iii) | Reported EPS and RONA have been adjusted by the Remuneration Committee to excludeone-off benefits.
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Long-term Incentives - continued
20182019 awards
During 20182019, awards under the 2014 PSP were made to the executive Directors, details of which are summarised in table 39 on page 89.34. 50% of each award madegranted in 2018 is subject to a TSR measure, with 25% being measured against a tailored sector peer group (see table 17 on page 70) and 25% against the FTSEAll-World Construction & Materials Index (as at the start of the relevant performance period). Given the importance of returns-based measures to a number of our shareholders, the TSR measure will be subject to a RONA underpin. At the end of the three-year performance period, the Remuneration Committee will consider the RONA performance of the business and the outcome for the TSR element may be adjusted (downwards only) if RONA performance has not met the expectations of the Board and the Remuneration Committee. The other 50% of each award made in 20182019 is subject to a cumulative cash flow metric. The definition of cash flow is the net increase/decrease in cash and cash equivalents adjusted to exclude: dividends to shareholders; acquisition/investment expenditure; proceeds from divestments; share issues (scrip dividend, share options, other); financing cash flows (new loans/repayments); back funding pension payments;schemes; and foreign exchange translation The Remuneration Committee considers that it is appropriate to make these adjustments in order to remove items that do not reflect the quality of management’s operational performance, or are largely outside of the Company’s control. The Remuneration Committee will also consider whether any adjustments are required to cash flows, for example, as a result of significant acquisitions completed during the performance period or a significant underspend or delay in budgeted capital expenditure, both ordinary and extraordinary. 25% of each award is subject to a TSR metric, with performance being measured against a tailored peer group (see table 30 below). The remaining 25% of each award is subject to a RONA metric, a key measure used by management to assess investment opportunities and to run the business. Performance for the awards made in 20182019 will be assessed over the three-year period to 31 December 2020.2021. Details of the performance targets are set out in table 38 on page 89. 33. Awards, to the extent that they vest, will be adjusted for dividend equivalents based on dividends in the period from grant to the date of vesting in 2023. “Malus” and clawback provisions apply to the awards. Other Employee Share PlansShareholding Guideline for Executive Directors
Executive Directors are eligiblerequired to participatebuild up (and maintain) a minimum holding in CRH shares. The shareholding guidelines for the Chief Executive and Finance Director are 3.5x basic salary and 2.0x basic salary respectively, with the guidelines to be achieved by 31 December 2023 and 31 December 2022, respectively. For the purposes of determining the number of shares held by the executive Directors, the relevant calculation will include shares beneficially owned by the executive Directors, annual bonus awards which are deferred into shares for three years and PSP awards that have met the performance criteria but are subject to atwo-year holding period prior to release. The deferred share awards and PSP awards subject to atwo-year hold period are not subject to any further performance criteria other than continued employment with the Group. In the event that the shareholding guidelines are not met by the applicable deadlines, the Remuneration Committee will consider what action to take at that time. Post-employment Holding Requirements As outlined in the 2010 Savings-related Option Scheme (RepublicChair’s Overview on page 77, the Remuneration Committee has decided to introduce a requirement whereby the Chief Executive will be required to hold shares equivalent to two times salary for a period of Ireland) (the ‘2010 SAYE Scheme’)two years post-employment. Accordingly, commencing in 2020, until the two times limit is achieved, any Deferred Share or PSP awards which vest will be transferred on a net of tax basis to a third party to be held in trust for the Chief Executive’s benefit. The shares will be held in Trust on a rolling basis, until his employment ceases and a subsequent two year period has elapsed. A similar structure will apply to the Finance Director, except that the requirement in his case will be one times salary.
| | | | 86 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Remuneration Policy Summary - continued | | | | | | Remuneration Policy forNon-Executive Directors | | Table 27 |
| | | CRH is a leading provider of structural concrete to the Danish market. In 2019, CRH Denmark, part of our Europe Materials Division, supplied 15,000m² of materials to the ‘Karré 31’ project in the town of Holbaek, north-east of Copenhagen. Products included hollow-core floor slabs, walls and facades for the 17-story apartment building. | | |
| | | | 88 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Annual Report on Remuneration The Remuneration Committee The Remuneration Committee consists of fivenon-executive Directors considered by the Board to be independent. They bring the range of experience of large organisations and public companies, including experience in the Group’s Irish Revenue approved Share Participation Scheme (the ‘Participation Scheme’).area of senior executive remuneration, to enable the Committee to fulfil its role. Their biographical details are set out on pages 56 to 59. A schedule of attendance at Committee meetings is set out in table 13 on page 71. The 2010 SAYE Scheme is an Irish Revenue approved plan open to all Irish employees. Participants may save up to€500 a month from their net salaries for a fixed term of three or five years and at the endmain focus of the savings period they haveCommittee is to: determine and agree with the option to buyBoard the Group’s policy on executive remuneration; seek shareholder approval for the Directors’ Remuneration Policy at least every three years; ensure that CRH’s remuneration structures are fair and responsible; and consider and approve salaries and other terms of the remuneration packages for the executive Directors and the fee for the Chairman In addition, the Committee: recommends and monitors the level and structure of remuneration for the executive Directors and senior management; and oversees the preparation of this Directors’ Remuneration Report In considering remuneration levels for executive Directors particularly, the Committee takes into account remuneration trends across the CRH sharesGroup, which has a diverse range of operations in 30 countries, in geographic regions which are often at different stages in the economic cycle. Annually, the Chairman of the Remuneration Committee reviews with the Audit Committee the Group’s remuneration structures from a discountrisk perspective. Remuneration Received by Executive Directors in Respect of 2019 Details of individual remuneration for executive Directors for the year ended 31 December 2019, including explanatory notes, are given in table 22 on page 79. Details of Directors’ remuneration charged against profit in the year are given in table 46 on page 100. 2019 Annual Bonus Plan CRH’s Annual Bonus Plan for 2019 was based on a combination of financial targets and personal/strategic goals. The metrics for target payout, which is up to 15%a maximum of 50% of the market pricetotal annual bonus opportunity, are based on achieving the date of invitationbudget set by the Board in respect of each savings contract. metric. The threshold level for bonus payouts is for the achievement of 92% of budget, whereas maximum payout is achieved for stretch performance of between 105% of budget for EPS and Cash Flow and 108% of budget for RONA. The relative weighting of the components of the 2019 plan, together with details of the applicable targets and performance for each measure is given in table 28 on page 89. When setting the targets for the annual bonus plan, the Committee makes assumptions regarding exchange rates and development activity. The Committee also compares the proposed targets to the outturn for the previous year to ensure that the targets are sufficiently stretching. In this regard, it is important to note that the metrics in the plan are influenced by the economic cycle and other factors, such as ongoing portfolio management. For example, the RONA target for 2019 was less than the 2018 outturn primarily due to the impact of the Group’s acquisition of Ash Grove Cement as such long term value-creating acquisitions are generally returns dilutive in the initial years post acquisition. When reviewing performance against the bonus plan, the Committee typically makes a number of routine adjustments to the financial targets, for example, to reflect actual exchange rates, major development activity and actual share buyback activity during the year. For the 2019 bonus plan, the financial targets were also adjusted to reflect the impact of the implementation of IFRS16 Leases. When assessing the outturn for 2019, the Committee excluded exceptional items which wereone-off in nature and are not expected to recur. This had the impact of reducing the formulaic outcome for the financial element under the 2019 bonus plan. Details of the outstanding awards ofeach executive Directors under the 2010 SAYE SchemeDirector’s personal and strategic objectives and their achievement against these objectives are set out in table 4029 on pages 90page 89. Overall, the combination of the performance by the Group in 2019 and 91. The Participation Scheme is an Irish Revenue approved planthe achievement against personal and is openstrategic objectives translated to all employees in Ireland. Grants can be made to participants up to aannual bonus payouts of 86% of the maximum of€12,700 annually in CRH shares.opportunity for Albert Manifold and Senan Murphy, participated inwith total bonus payments of 194% of salary and 129% of salary respectively.
In accordance with the Participation Scheme in 2018.Policy, 33% of the bonus amounts for Albert Manifold and Senan Murphy will be deferred into shares for a period of three years. Deferred Share awards are not subject to any additional performance conditions during the deferral period and are adjusted for dividend equivalents based on dividends paid by CRH. Annual bonus awards are subject to recovery provisions for three years from the date of payment (cash awards) or grant (deferred awards).
CRH Annual Report and Form 20-F | 2018
Directors’ Remuneration Report - continued
| | | Long-Term Incentives - Awards 2016CRH ANNUAL REPORT AND FORM 20-F I 2019
| | | Performance Share Plan Metrics
| | Table 36
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Annual Bonus 2019 (i) | See page 87 for further information on how cash flow is calculated for 2016, 2017, 2018 and 2019 awards.
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| | | | | | | | | | | | | | | | | | | | | | 2019 Plan - Achievement | | | | | | | | | | | Table 28 | | | | �� | | | 2019 Targets - Performance needed for payout at (i) | | | | | | | Measure | | Weighting
(% of total bonus) | | Threshold | | Target (ii) | | Maximum | | 2019
Performance
Achieved (iii) | | Percentage of
Maximum Awarded | | | | | | | | | | CRH EPS | | 25% | | 183c | | 199c | | 209c | | 205c | | | 20.5% | | | | | | | | | | CRH Cash Flow (iv) | | 30% | | €2,553m | | €2,775m | | €2,914m | | €3,050m | | | 30.0% | | | | | | | | | | CRH RONA (iv) | | 25% | | 8.0% | | 8.7% | | 9.4% | | 9.1% | | | 18.5% | | | | | | | | | | Personal/Strategic | | 20% | | | | | | | | See table 29 | | | 17.0% | | | | | | | | | | Total | | 100% | | | | | | | | | | | 86.0% | | (i) 0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line payout schedule between these points. (ii) Targets have been adjusted to reflect actual exchange rates, the actual timing of development activity, the impact of the share buyback programme and the impact of the implementation of IFRS 16 Leases. (iii) The outturn achieved for 2019 excludes exceptional items which wereone-off in nature and not expected to recur. (iv) For the purposes of the annual bonus plan, operating cash flow and RONA have been defined as reported internally. For cash flow the figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. Similarly, RONA as reported internally differs from the RONA reported in theNon-GAAP Performance Measures in this report as it reflects seasonality and the timing impact of development activity. | | | |
| | | | | | | | | | 2019 Plan - Personal/Strategic Achievement | | Table 29 | | Directors | | Weighting (% of total bonus) | | Achievements | | Percentage of Maximum Awarded | | | | | | | | | Safety: Supporting the launch of a safety front-line leadership programme and the implementation of recommendations from a review by an external advisory panel of experts, including updating policies and guidelines for contractor management, energy isolation and consequence management. | | | | | | | | | | | Performance: Continued monitoring, assessment and challenge of performance improvement across the business. | | | | | | | | Albert Manifold | | 20% | | Group Leadership Team (GLT): Continued development of the GLT as a functioning executive leadership team for CRH, including, working with the team to provide effective management succession for senior roles across the Group. | | 17.0% | | | | | | | | | Strategy: Continued assessment of the strategic alternatives for the Group in discussion with the Board and senior management and ensuring that the organisation structure of CRH is aligned with its future strategy. | | | | | | | | | | | Safety: Supporting the launch of a safety front-line leadership programme and the implementation of recommendations from a review by an external advisory panel of experts, including updating policies and guidelines for contractor management, energy isolation and consequence management. | | | | | | | | Senan Murphy | | 20% | | Performance: Continued monitoring, assessment and challenge of performance improvement across the business. | | 17.0% | | | | | | | | | Talent Management: Development of new processes and procedures to aid career pathing, talent review and talent development in order to meet the longer term CRH leadership needs. | | | | | | | | | | | | Leadership and Strategy: Working across all business and functional areas to facilitate, develop and progress CRH strategy and other key cross CRH priorities. | | |
(ii) | The methodology for calculating TSR assumes all dividends are reinvested on theex-dividend date at the closing share price on that day; the open and close price is based on the three-month average closing price on the last day before the start of the performance period and the final day of the performance period respectively.
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(iii) | For the purposes of the 2016 Award, TSR performance was above the median against the tailored peer group (see table 17 on page 70) and below the FTSEAll-World Construction & Materials Index. TSR performance was subject to a RONA underpin (see page 84). The cumulative cash flow for the three years to end 31 December 2018 was€4.5 billion. The Committee has reviewed the primary drivers for the outperformance against the target for cumulative cash flow set in early 2016. It has concluded that this resulted from increased cash flow, in 2016 in particular, mainly from the faster than anticipated integration of the assets acquired from Lafarge and Holcim in 2015.
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| | | | | | | | | | | | | 2016 Performance Share Plan Award - Vesting Details | | Table 37 | | Executive Director | | Interests Held | | Vesting Outcome (% of max) | | Interests
Due to Vest | | Date of Vesting | | Assumed
Share Price (i) | | Estimated Value | | Albert Manifold | | 222,976 | | 59.13% | | 131,846 | | March 2021 | | €24.90 | | €3,282,958 | | Senan Murphy | | 54,543 | | 59.13% | | 32,251 | | March 2021 | | €24.90 | | €803,057 |
(i) | As the share price on the date of vesting is not yet known, for the purposes of this table, the value of these awards, which were subject to a three-year performance period ending in 2018, has been estimated using a share price of€24.90, being the three-month average share price to 31 December 2018.
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| 88
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| | | | 90 | | | CRH Annual Report and FormANNUAL REPORT AND FORM 20-F I 20182019 |
| | | Long-Term Incentives - Awards in 2017 and 2018
| | | Performance Share Plan Metrics
| | Table 38
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(i) and (ii) see footnotes to table 36.
| | | | | | | | | | | 2018 Performance Share Plan Award Details | | Table 39 | | Executive Director | | Date of Grant | | Number of Shares | | Market Price on which
Award was Based | | Face Value at Date
of Award | | Face Value at Date of Award (% of salary) | | Albert Manifold | | 15 March 2018 | | 196,278 | | €27.62 | | €5,421,198 | | 365% | | Senan Murphy | | 15 March 2018 | | 63,194 | | €27.62 | | €1,745,418 | | 225% |
CRH Annual Report and Form 20-F | 2018
Directors’on Remuneration Report - continued
| | | | | | | | | | | | | | | | | | | | | | | | | Summary of Outstanding Share Incentive Awards (Audited) | | | Table 40 | | | | | Year of
Award | | | Performance Period | | | Release
Date | | | Market Value at
Date of Award | | | Exercise
Price | | | Balance at 31
December 2017 | | | | | | | | | | Albert Manifold | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Bonus Plan (Deferred Share Awards) (i) | | | 2015 | | | | 01/01/14-31/12/2014 | | | | 2018 | | | | €18.05 | | | | n/a | | | | 24,928 | | | | | | | | | | | | 2016 | | | | 01/01/15-31/12/2015 | | | | 2019 | | | | €25.60 | | | | n/a | | | | 18,900 | | | | | | | | | | | | 2017 | | | | 01/01/16-31/12/2016 | | | | 2020 | | | | €30.97 | | | | n/a | | | | 25,007 | | | | | | | | | | | | 2018 | | | | 01/01/17-31/12/2017 | | | | 2021 | | | | €30.42 | | | | n/a | | | | - | | | | | | | | | | 2014 Performance Share Plan (ii) | | | 2014 | | | | 01/01/14-31/12/2016 | | | | 2019 | | | | €20.49 | | | | n/a | | | | 142,900 | | | | | | | | | | | | 2015 | | | | 01/01/15-31/12/2017 | | | | 2020 | | | | €24.42 | | | | n/a | | | | 132,064 | | | | | | | | | | | | 2016 | | | | 01/01/16-31/12/2018 | | | | 2021 | | | | €24.56 | | | | n/a | | | | 208,104 | | | | | | | | | | | | 2017 | | | | 01/01/17-31/12/2019 | | | | 2022 | | | | €32.24 | | | | n/a | | | | 163,254 | | | | | | | | | | | | 2018 | | | | 01/01/18-31/12/2020 | | | | 2023 | | | | €27.62 | | | | n/a | | | | - | | | | | | | | | | 2010 Savings-Related Share Option Scheme | | | 2017 | | | | n/a | | | | 2022 | | | | n/a | | | | €27.86 | | | | 1,085 | | | | | | | | | | | | 2018 | | | | n/a | | | | 2023 | | | | n/a | | | | €23.39 | | | | - | | | | | | | | | | Senan Murphy | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Bonus Plan (Deferred Share Awards) (i) | | | 2017 | | | | 01/01/16-31/12/2016 | | | | 2020 | | | | €30.97 | | | | n/a | | | | 7,316 | | | | | | | | | | | | 2018 | | | | 01/01/17-31/12/2017 | | | | 2021 | | | | €30.42 | | | | n/a | | | | - | | | | | | | | | | 2014 Performance Share Plan (i) | | | 2016 | | | | 01/01/16-31/12/2018 | | | | 2021 | | | | €24.56 | | | | n/a | | | | 50,906 | | | | | | | | | | | | 2017 | | | | 01/01/17-31/12/2019 | | | | 2022 | | | | €32.24 | | | | n/a | | | | 43,779 | | | | | | | | | | | | | 2018 | | | | 01/01/18-31/12/2020 | | | | 2023 | | | | €27.62 | | | | n/a | | | | - | |
The market price of the Company’s shares at 31 December 2018 was€23.10 and the range during 2018 was€21.84 and€32.62.
(i) | The Remuneration Committee has determined that dividend equivalents should accrue on awards under the Annual Bonus Plan. Such dividend equivalents will be released to participants on the date of release of the Deferred Shares.
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(ii) | The Remuneration Committee has determined that dividend equivalents should accrue on awards under the 2014 Performance Share Plan. Subject to satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shares on vesting.
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| | | | | | CRH Annual Report and Form 20-F I 2018
|
| | | | | | | | | | | | | Granted
in 2018 | | Released
in 2018 | | Exercised
in 2018 | | Lapsed
in 2018 | | Balance at 31
December 2018 | | Dividends Awarded
& Released | | Market Value on Date
of Exercise/Released | | | | | | | | | - | | 24,928 | | - | | - | | - | | 1,786 | | €27.24 | | | | | | | | | - | | - | | - | | - | | 18,900 | | - | | - | | | | | | | | | - | | - | | - | | - | | 25,007 | | - | | - | | | | | | | | | 25,619 | | - | | - | | - | | 25,619 | | - | | - | | | | | | | | | - | | - | | - | | - | | 142,900 | | - | | - | | | | | | | | | - | | - | | - | | 28,130 | | 103,934 | | - | | - | | | | | | | | | - | | - | | - | | - | | 208,104 | | - | | - | | | | | | | | | - | | - | | - | | - | | 163,254 | | - | | - | | | | | | | | | 196,278 | | - | | - | | - | | 196,278 | | - | | - | | | | | | | | | - | | - | | - | | 1,085 | | - | | - | | - | | | | | | | | 1,293 | | - | | - | | - | | 1,293 | | - | | - | | | | | | | | | - | | - | | - | | - | | 7,316 | | - | | - | | | | | | | | | 8,352 | | - | | - | | - | | 8,352 | | - | | - | | | | | | | | | - | | - | | - | | - | | 50,906 | | - | | - | | | | | | | | | - | | - | | - | | - | | 43,779 | | - | | - | | | | | | | | | 63,134 | | - | | - | | - | | 63,134 | | - | | - |
CRH Annual Report and Form 20-F | 2018
Directors’ Remuneration Report - continued
| | | | | Shareholdings of Directors and Company Secretary | | Table 41 |
| | | | | | | | | | | | Beneficially Owned (i) | | | Name | | 31 December 2018 | | | 31 December 2017 | | | | | | Executive Directors | | | | | | | | | | | | | A. Manifold | | | 21,310 | | | | 20,170 | | | | | | S. Murphy | | | 1,520 | | | | 1,039 | | | | | | Non-executive Directors | | | | | | | | | | | | | R. Boucher | | | 1,790 | | | | - (ii) | | | | | | N. Hartery | | | 17,629 | | | | 17,309 | | | | | | P.J. Kennedy | | | 2,000 | | | | 2,000 | | | | | | D.A. McGovern, Jr. (iii) | | | 5,604 | | | | 5,481 | | | | | | H.A. McSharry | | | 4,170 | | | | 4,111 | | | | | | G.L. Platt | | | 1,038 | | | | 1,019 | | | | | | M.K. Rhinehart (iii) | | | 1,000 | | | | - (iv) | | | | | | L.J. Riches | | | 5,000 | | | | 5,000 | | | | | | H.Th. Rottinghuis | | | 1,000 | | | | 1,000 | | | | | | W.J. Teuber, Jr. (iii) | | | 1,000 | | | | 1,000 | | | | | | S. Talbot (v) | | | 1,550 | | | | 1,550 | | | | | | Company Secretary | | | | | | | | | | | | N. Colgan | | | 10,915 | | | | 10,416 | | | Total | | | 75,526 | | | | 70,095 | |
(i) | Excludes awards of Deferred Shares, details of which are disclosed on pages 90 and 91. The Directors and Company Secretary do not have any special voting rights.
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(ii) | Appointed with effect from 1 March 2018. Richie Boucher did not have a holding of CRH shares on his appointment.
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(iii) | Holdings in the form of American Depositary Receipts (ADRs).
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(iv) | Appointed with effect from 1 October 2018. Mary Rhinehart did not have a holding of CRH Shares on her appointment.
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(v) | Appointed with effect from 1 December 2018.
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CRH Annual ReportIn 2017, the executive Directors were granted conditional awards under the 2014 PSP. The awards were based on TSR (50% of the award) – 25% against a tailored group of key peers (see table 30 below) and Form 20-F I 25% against the FTSE2018All-World Construction & Materials Index – and Cumulative Cash Flow (50% of the award), and performance was measured over the three-year period 1 January 2017 to 31 December 2019. In respect of the TSR element, CRH’s TSR over the period of 15.6% ranked between the 50th and 75th percentile as compared with the tailored peer group, but was below the TSR of the FTSEAll-World Construction & Materials Index. Accordingly, 20.7% out of 50% will vest for the TSR element. In respect of the cumulative cash flow element, actual outturn over the period was€4.5 billion, which exceeded the stretch target of€3.7 billion, resulting in 100% vesting for the cash flow element.
The Committee considers that the vesting outcome is reflective of the Company’s underlying performance over the performance period. In particular, the Committee considered RONA performance since 2017 as an underpin to the TSR component. As the RONA target in each of the annual bonus plans for 2017, 2018 and 2019 was met, the Committee determined that the TSR vesting outcome was appropriate and did not need to be adjusted. In accordance with the Policy, the 2017 awards to executive Directors will vest in 2022 on completion of an additionaltwo-year holding period. Vested awards will be adjusted for dividend equivalents based on dividends in the period from grant to the date of vesting in 2022. Table 31 on page 91 sets out details of the relevant targets. Table 32 on page 91 sets out details of the awards. Non-executive DirectorsPerformance Share Plan - 2019 awards
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Individual Remuneration for the year ended 31 December 2018 (Audited) | | | Table 42 | | | | | | | | | | | | | Basic salary and fees (i)
€000 | | | | | | Benefits (ii) €000 | | | | | | Other remuneration (iii)
€000 | | | | | | Total €000 | | | | | | | | | | | | | | | | | | 2018 | | | 2017 | | | | | | 2018 | | | 2017 | | | | | | 2018 | | | 2017 | | | | | | 2018 | | | 2017 | | | 2016 | | Non-executive Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | E.J. Bärtschi (iv) | | | - | | | | 78 | | | | | | | | - | | | | - | | | | | | | | - | | | | 81 | | | | | | | | - | | | | 159 | | | | 159 | | R. Boucher (v) | | | 65 | | | | - | | | | | | | | - | | | | - | | | | | | | | 34 | | | | - | | | | | | | | 99 | | | | - | | | | - | | N. Hartery | | | 78 | | | | 78 | | | | | | | | 1 | | | | 1 | | | | | | | | 512 | | | | 512 | | | | | | | | 591 | | | | 591 | | | | 597 | | P.J. Kennedy | | | 78 | | | | 78 | | | | | | | | - | | | | - | | | | | | | | 42 | | | | 42 | | | | | | | | 120 | | | | 120 | | | | 120 | | D.A. McGovern, Jr. | | | 78 | | | | 78 | | | | | | | | - | | | | - | | | | | | | | 86 | | | | 96 | | | | | | | | 164 | | | | 174 | | | | 174 | | H.A. McSharry | | | 78 | | | | 78 | | | | | | | | - | | | | - | | | | | | | | 42 | | | | 42 | | | | | | | | 120 | | | | 120 | | | | 120 | | G.L. Platt | | | 78 | | | | 78 | | | | | | | | - | | | | - | | | | | | | | 63 | | | | 53 | | | | | | | | 141 | | | | 131 | | | | - | | M.K. Rhinehart (vi) | | | 20 | | | | - | | | | | | | | - | | | | - | | | | | | | | 7 | | | | - | | | | | | | | 27 | | | | - | | | | - | | L.J. Riches | | | 78 | | | | 78 | | | | | | | | - | | | | - | | | | | | | | 42 | | | | 42 | | | | | | | | 120 | | | | 120 | | | | 120 | | H.Th. Rottinghuis | | | 78 | | | | 78 | | | | | | | | - | | | | - | | | | | | | | 42 | | | | 42 | | | | | | | | 120 | | | | 120 | | | | 120 | | S. Talbot (vii) | | | 7 | | | | - | | | | | | | | - | | | | - | | | | | | | | 1 | | | | - | | | | | | | | 8 | | | | - | | | | - | | W.J. Teuber, Jr. | | | 78 | | | | 78 | | | | | | | | - | | | | - | | | | | | | | 90 | | | | 57 | | | | | | | | 168 | | | | 135 | | | | 112 | | | | | 716 | | | | 702 | | | | | | | | 1 | | | | 1 | | | | | | | | 961 | | | | 967 | | | | | | | | 1,678 | | | | 1,670 | | | | 1,522 | |
(i) | Further information in relation to thenon-executive Director fee structure is set out in table 44 on page 95.
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(ii) | Benefits: In the case of Nicky Hartery the amount reflects the reimbursement of travel expenses from his residence to his Chairman’s office in Dublin, which have been grossed up for Irish tax purposes.
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(iii) | Other Remuneration: Includes remuneration for Chairman, Board Committee work and travel allowances fornon-executive Directors.
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(iv) | Ernst Bärtschi resigned as a Director on 20 December 2017.
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(v) | Richie Boucher became a Director on 1 March 2018.
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(vi) | Mary Rhinehart became a Director on 1 October 2018.
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(vii) | Siobhán Talbot became a Director on 1 December 2018.
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CRH Annual ReportDuring 2019, awards under the 2014 PSP were made to the executive Directors, details of which are summarised in table 34. 50% of each award granted in 2019 is subject to a cumulative cash flow metric. The definition of cash flow is the net increase/decrease in cash and Form 20-F | 2018
Directors’ Remuneration Report - continuedcash equivalents adjusted to exclude:
dividends to shareholders; Retirement Benefit Expense
acquisition/investment expenditure; Albert Manifold
proceeds from divestments; share issues (scrip dividend, share options, other); financing cash flows (new loans/repayments); back funding pension schemes; and foreign exchange translation The Remuneration Committee considers that it is a participantappropriate to make these adjustments in a contributory defined benefit plan which is based on an accrual rateorder to remove items that do not reflect the quality of 1/60th of salary1 for each year of pensionable service and is designed to providetwo-thirds of career average salary at retirement for full service. Albert Manifold will become entitled to a deferred pension, payable from Normal Retirement Age, if he leaves service prior to Normal Retirement Age. The Finance Act 2006 established a cap on pension provisions by introducing a penalty tax charge on pension assets in excessmanagement’s operational performance, or are largely outside of the higher of€5.4 million (in the Finance Act 2011, this threshold was reducedCompany’s control. The Remuneration Committee will also consider whether any adjustments are required to€2.3 million and reduced further to€2 million by the Finance (No. 2) Act 2013) or the value of individual accrued pension entitlements cash flows, for example, as at 7 December 2005. As a result of these legislative changes,significant acquisitions completed during the Remuneration Committee decided that executive Directors should haveperformance period or a significant underspend or delay in budgeted capital expenditure, both ordinary and extraordinary.
25% of each award is subject to a TSR metric, with performance being measured against a tailored peer group (see table 30 below). The remaining 25% of each award is subject to a RONA metric, a key measure used by management to assess investment opportunities and to run the option of continuingbusiness. Performance for the awards made in 2019 will be assessed over the three-year period to accrue pension benefits as previously, or of choosing an alternative arrangement - by accepting pension benefits limited by the cap - with a similar overall cost to the Group. Albert Manifold has opted for an arrangement whereby his pension is capped in line with the provisions 31 December 2021. Details of the Finance Act 2006 and receives a supplementary taxablenon-pensionable cash supplement in lieu of pension benefits foregone. There was, therefore, no additional accrual in 2018. The cash pension supplement for 2018 is detailed in table 32 on page 85. This supplement is similar in value to the reduction in the Company’s liability represented by the pension benefits foregone. It is calculated based on actuarial advice as the equivalent of the reduction in the Company’s liability to Mr. Manifold and spread over the term to retirement as annual compensation allowances. The contributory defined benefit plan in which Albert Manifold participates closed to new entrants at the end of 2011.
Senan Murphy receives a taxablenon-pensionable cash supplement equivalent to 25% of his annual base salary in lieu of a pension contribution.
Details regarding the pension entitlements of Albert Manifoldperformance targets are set out in table 43 below.33.
Awards, to the extent that they vest, will be adjusted for dividend equivalents based on dividends in the period from grant to the date of vesting in 2023. “Malus” and clawback provisions apply to the awards. Shareholding Guideline for Executive Directors Pursuant to the 2016 Policy, executiveExecutive Directors are required to build up (and maintain) a minimum holding in CRH shares. The current shareholding guidelineguidelines for the Chief Executive is 2.5xand Finance Director are 3.5x basic salary and 2.0x basic salary forrespectively, with the Finance Director. As part of the 2019 Policy proposals, the shareholding guideline requirement for the Chief Executive will be increased to 3.5x basic salary,guidelines to be achieved by 31 December 2023. The guideline for the Finance Director, which must be achieved by2023 and 31 December 2022, will remain at 2.0x salary.respectively.
The current shareholdingsFor the purposes of determining the number of shares held by the executive Directors, as a multiple of basic salary are shown in table 19 on page 71. The table includes, for illustrative purposes,the relevant calculation will include shares beneficially owned by the executive Directors, as at 27 February 2019,annual bonus awards which are deferred into shares for three years and PSP awards that have met the estimated after tax vesting ofperformance criteria but are subject to atwo-year holding period prior to release. The deferred share awards and PSP awards subject to atwo-year hold period only, whichare not subject to any further performance criteria other than continued employment with the Group.
In the event that the shareholding guidelines are not met by the applicable deadlines, the Remuneration Committee will consider what action to take at that time. Post-employment Holding Requirements As outlined in the Chair’s Overview on page 77, the Remuneration Committee has decided to introduce a requirement whereby the Chief Executive will be releasedrequired to hold shares equivalent to two times salary for a period of two years post-employment. Accordingly, commencing in 20192020, until the two times limit is achieved, any Deferred Share or PSP awards which vest will be transferred on a net of tax basis to a third party to be held in trust for the Chief Executive’s benefit. The shares will be held in Trust on a rolling basis, until his employment ceases and 2020 respectively,a subsequent two year period has elapsed. A similar structure will apply to the Finance Director, except that the requirement in his case will be one times salary.
| | | | 86 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Remuneration Policy Summary - continued | | | | | | Remuneration Policy forNon-Executive Directors | | Table 27 |
| | | CRH is a leading provider of structural concrete to the Danish market. In 2019, CRH Denmark, part of our Europe Materials Division, supplied 15,000m² of materials to the ‘Karré 31’ project in the town of Holbaek, north-east of Copenhagen. Products included hollow-core floor slabs, walls and facades for the 17-story apartment building. | | |
| | | | 88 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Annual Report on Remuneration The Remuneration Committee The Remuneration Committee consists of fivenon-executive Directors considered by the Board to be independent. They bring the range of experience of large organisations and public companies, including experience in the area of senior executive remuneration, to enable the Committee to fulfil its role. Their biographical details are set out on pages 56 to 59. A schedule of attendance at Committee meetings is set out in table 13 on page 71. The main focus of the Committee is to: determine and agree with the Board the Group’s policy on executive remuneration; seek shareholder approval for the Directors’ Remuneration Policy at least every three years; ensure that CRH’s remuneration structures are fair and responsible; and consider and approve salaries and other terms of the remuneration packages for the executive Directors and the estimated after tax vestingfee for the Chairman In addition, the Committee: recommends and monitors the level and structure of Deferred Share awards grantedremuneration for the executive Directors and senior management; and oversees the preparation of this Directors’ Remuneration Report In considering remuneration levels for executive Directors particularly, the Committee takes into account remuneration trends across the CRH Group, which has a diverse range of operations in 30 countries, in geographic regions which are often at different stages in the economic cycle. Annually, the Chairman of the Remuneration Committee reviews with the Audit Committee the Group’s remuneration structures from a risk perspective. Remuneration Received by Executive Directors in Respect of 2019 Details of individual remuneration for executive Directors for the year ended 31 December 2019, including explanatory notes, are given in table 22 on page 79. Details of Directors’ remuneration charged against profit in the year are given in table 46 on page 100. 2019 Annual Bonus Plan CRH’s Annual Bonus Plan for 2019 was based on a combination of financial targets and personal/strategic goals. The metrics for target payout, which is up to a maximum of 50% of the total annual bonus opportunity, are based on achieving the budget set by the Board in respect of 2016, 2017each metric. The threshold level for bonus payouts is for the achievement of 92% of budget, whereas maximum payout is achieved for stretch performance of between 105% of budget for EPS and 2018, as appropriate.Cash Flow and 108% of budget for RONA. The relative weighting of the components of the 2019 plan, together with details of the applicable targets and performance for each measure is given in table 28 on page 89. Non-executive Directors
When setting the targets for the annual bonus plan, the Committee makes assumptions regarding exchange rates and development activity. The remuneration ofnon-executive DirectorsCommittee also compares the proposed targets to the outturn for the previous year to ensure that the targets are sufficiently stretching. In this regard, it is determinedimportant to note that the metrics in the plan are influenced by the Boardeconomic cycle and other factors, such as ongoing portfolio management. For example, the RONA target for 2019 was less than the 2018 outturn primarily due to the impact of Directors. the Group’s acquisition of Ash Grove Cement as such long term value-creating acquisitions are generally returns dilutive in the initial years post acquisition. The feesWhen reviewing performance against the bonus plan, the Committee typically makes a number of routine adjustments to the financial targets, for example, to reflect actual exchange rates, major development activity and actual share buyback activity during the year. For the 2019 bonus plan, the financial targets were last increasedalso adjusted to reflect the impact of the implementation of IFRS16 Leases. When assessing the outturn for 2019, the Committee excluded exceptional items which wereone-off in 2016. nature and are not expected to recur. This had the impact of reducing the formulaic outcome for the financial element under the 2019 bonus plan.
Details of the remuneration paid tonon-executive Directors in 2018each executive Director’s personal and strategic objectives and their achievement against these objectives are set out in table 4229 on page 93. As part89. Overall, the combination of the recent remuneration review referredperformance by the Group in 2019 and the achievement against personal and strategic objectives translated to in the Committee Chairman’s introduction, increases to the fees have been implemented with effect from January 2019 to ensure that CRH fees remain market competitive. The revised fees are set out in table 44. Proposed Implementationannual bonus payouts of Remuneration in 2019
Basic Salary and Benefits
Details86% of the executive Directors’ salariesmaximum opportunity for 2019 comparedAlbert Manifold and Senan Murphy, with 2018 are set out in the Committee Chairman’s introduction on pages 68 to 72. These increases are in linetotal bonus payments of 194% of salary and 129% of salary respectively.
In accordance with the average workforce increases in CRH’s core countries for 2019, which range from 2% to 3%. Executive Directors will receive benefits in line with the 2019 Policy, in 2019. The level of benefits provided will depend on the cost of providing individual items and the individual circumstances.
2019 Annual Bonus Plan
The Remuneration Committee has determined that the 2019 Annual Bonus Plan will be operated broadly in line with the 2018 Annual Bonus Plan (as described on page 84). However, the EPS and RONA targets will need to be adjusted by the Committee when performance against the targets is being assessed to reflect the impact of IFRS 16, which introduces new rules for lease accounting with effect from the 2019 financial year. In addition, subject to approval33% of the 2019 Policy at the 2019 AGM, the amountbonus amounts for Albert Manifold and Senan Murphy will be deferred into shares will increasefor a period of three years. Deferred Share awards are not subject to any additional performance conditions during the deferral period and are adjusted for dividend equivalents based on dividends paid by CRH. Annual bonus awards are subject to recovery provisions for three years from 25% to 33.3%the date of payment (cash awards) or grant (deferred awards).
| | | | | | | | Pension Entitlements - Defined Benefit (Audited) | | | | Table 43 | | Executive Director | | Increase in accrued personal pension during 2018 (i) €000 | | Transfer value of increase in dependants
pension (i) €000 | | Total accrued personal pension at year end (ii) €000 | Albert Manifold | | - | | 112 | | 273 |
(i) | As noted above, the pension of Albert Manifold has been capped in line with the provisions of the Irish Finance Acts. However, dependants’ pensions continue to accrue resulting in Greenbury transfer values which have been calculated on the basis of actuarial advice. These amounts do not represent sums paid out or due in 2018 in the event of Mr. Manifold leaving service.
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(ii) | The accrued pensions shown are those which would be payable annually from normal retirement date.
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| | 94 1. Salary is defined as basic annual salary and excludes any fluctuating emoluments. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 89 |
CRH
Annual Report and Form 20-F I 2018Bonus 2019 | | | | | | | | | | | | | | | | | | | | | | 2019 Plan - Achievement | | | | | | | | | | | Table 28 | | | | �� | | | 2019 Targets - Performance needed for payout at (i) | | | | | | | Measure | | Weighting
(% of total bonus) | | Threshold | | Target (ii) | | Maximum | | 2019
Performance
Achieved (iii) | | Percentage of
Maximum Awarded | | | | | | | | | | CRH EPS | | 25% | | 183c | | 199c | | 209c | | 205c | | | 20.5% | | | | | | | | | | CRH Cash Flow (iv) | | 30% | | €2,553m | | €2,775m | | €2,914m | | €3,050m | | | 30.0% | | | | | | | | | | CRH RONA (iv) | | 25% | | 8.0% | | 8.7% | | 9.4% | | 9.1% | | | 18.5% | | | | | | | | | | Personal/Strategic | | 20% | | | | | | | | See table 29 | | | 17.0% | | | | | | | | | | Total | | 100% | | | | | | | | | | | 86.0% | | (i) 0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line payout schedule between these points. (ii) Targets have been adjusted to reflect actual exchange rates, the actual timing of development activity, the impact of the share buyback programme and the impact of the implementation of IFRS 16 Leases. (iii) The outturn achieved for 2019 excludes exceptional items which wereone-off in nature and not expected to recur. (iv) For the purposes of the annual bonus plan, operating cash flow and RONA have been defined as reported internally. For cash flow the figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. Similarly, RONA as reported internally differs from the RONA reported in theNon-GAAP Performance Measures in this report as it reflects seasonality and the timing impact of development activity. | | | |
| | | | | | | | | | 2019 Plan - Personal/Strategic Achievement | | Table 29 | | Directors | | Weighting (% of total bonus) | | Achievements | | Percentage of Maximum Awarded | | | | | | | | | Safety: Supporting the launch of a safety front-line leadership programme and the implementation of recommendations from a review by an external advisory panel of experts, including updating policies and guidelines for contractor management, energy isolation and consequence management. | | | | | | | | | | | Performance: Continued monitoring, assessment and challenge of performance improvement across the business. | | | | | | | | Albert Manifold | | 20% | | Group Leadership Team (GLT): Continued development of the GLT as a functioning executive leadership team for CRH, including, working with the team to provide effective management succession for senior roles across the Group. | | 17.0% | | | | | | | | | Strategy: Continued assessment of the strategic alternatives for the Group in discussion with the Board and senior management and ensuring that the organisation structure of CRH is aligned with its future strategy. | | | | | | | | | | | Safety: Supporting the launch of a safety front-line leadership programme and the implementation of recommendations from a review by an external advisory panel of experts, including updating policies and guidelines for contractor management, energy isolation and consequence management. | | | | | | | | Senan Murphy | | 20% | | Performance: Continued monitoring, assessment and challenge of performance improvement across the business. | | 17.0% | | | | | | | | | Talent Management: Development of new processes and procedures to aid career pathing, talent review and talent development in order to meet the longer term CRH leadership needs. | | | | | | | | | | | | Leadership and Strategy: Working across all business and functional areas to facilitate, develop and progress CRH strategy and other key cross CRH priorities. | | |
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| | | | | | | | | Non-executive Director Fee Structure | | | Table 44 | | Role | | 2019 | | | 2018 | | Group Chairman (includingnon-executive Director salary and fees for committee work) | | | €630,000 | | | | €575,000 | | Basicnon-executive Director fee | | | €88,000 | | | | €78,000 | | Committee fee | | | €32,000 | | | | €27,000 | | Additional fees | | | | | | | | | Senior Independent Director | | | €25,000 | | | | €25,000 | | Remuneration Committee Chairman | | | €30,000 | | | | €15,000 | | Audit Committee Chairman | | | €39,000 | | | | €39,000 | | Fee for Europe-basednon-executive Directors | | | €15,000 | | | | €15,000 | | Fee forUS-basednon-executive Directors | | | €30,000 | | | | €30,000 | |
Annual Report on Remuneration - continued 2019 Long-term Incentives
Performance Share Plan Awards - 2017 awards ForIn 2017, the executive Directors were granted conditional awards under the 2014 PSP. The awards were based on TSR (50% of the award) – 25% against a tailored group of key peers (see table 30 below) and 25% against the FTSEAll-World Construction & Materials Index – and Cumulative Cash Flow (50% of the award), and performance was measured over the three-year period 1 January 2017 to 31 December 2019. In respect of the TSR element, CRH’s TSR over the period of 15.6% ranked between the 50th and 75th percentile as compared with the tailored peer group, but was below the TSR of the FTSEAll-World Construction & Materials Index. Accordingly, 20.7% out of 50% will vest for the TSR element. In respect of the cumulative cash flow element, actual outturn over the period was€4.5 billion, which exceeded the stretch target of€3.7 billion, resulting in 100% vesting for the cash flow element.
The Committee considers that the vesting outcome is reflective of the Company’s underlying performance over the performance period. In particular, the Committee considered RONA performance since 2017 as an underpin to the TSR component. As the RONA target in each of the annual bonus plans for 2017, 2018 and 2019 was met, the Committee determined that the TSR vesting outcome was appropriate and did not need to be adjusted. In accordance with the Policy, the 2017 awards to executive Directors will vest in 2022 on completion of an additionaltwo-year holding period. Vested awards will be adjusted for dividend equivalents based on dividends in the period from grant to the date of vesting in 2022. Table 31 on page 91 sets out details of the relevant targets. Table 32 on page 91 sets out details of the awards. Performance Share Plan - 2019 awards During 2019, awards under the 2014 PSP were made to the executive Directors, details of which are summarised in table 34. 50% of each award granted in 2019 is subject to a cumulative cash flow metric. The definition of cash flow is the net increase/decrease in cash and cash equivalents adjusted to exclude: dividends to shareholders; acquisition/investment expenditure; proceeds from divestments; share issues (scrip dividend, share options, other); financing cash flows (new loans/repayments); back funding pension schemes; and foreign exchange translation The Remuneration Committee considers that it is appropriate to make these adjustments in order to remove items that do not reflect the quality of management’s operational performance, or are largely outside of the Company’s control. The Remuneration Committee will also consider whether any adjustments are required to cash flows, for example, as a result of significant acquisitions completed during the performance period or a significant underspend or delay in budgeted capital expenditure, both ordinary and extraordinary. 25% of each award is subject to a TSR metric, with performance being measured against a tailored peer group (see table 30 below). The remaining 25% of each award is subject to a RONA metric, a key measure used by management to assess investment opportunities and to run the business. Performance for the awards awardsmade in 2019 will be assessed over the three-year period to 31 December 2021. The metrics, weightings and opportunity for the 2019 PSP awards are summarised in table 16 on page 70 and further details in relation to the operationDetails of the metrics is provided below. Cumulative Cash Flow (weighting 50%)
As outlined in the Chairman’s introduction on pages 68 to 71, 50% of the 2019 awards will be subject to a cumulative cashflow metric. 25% of the measure will vest at€3.3 billion of cumulative cash flow, with full vesting at or above€4.3 billion of cumulative cash flow, and straight-line vesting in between.
In setting the target, the Committee reviews the proposed target to the outturn of the most recent PSP award cycle and the prior year award, considering items such as EBITDA (as defined)* changes, exchange rates, capital expenditure levels, tax and interest charges etc. While cumulative cash flow (as defined above) over the period 2016-2018 (€4.5 billion) is above the target for maximum achievement for the 2019 awards, these figures differ in a number of important respects:
planned capital expenditure in the period 2019-2021 is higher;
growth forecasts for the coming years are projected to moderate; and
the underlying EBITDA (as defined)*performance targets are based on current euro/US Dollar exchange rates, which are unfavourable compared to the prior three years
The Committee will adjust the vesting outcomes if the cash targets are achieved because capital expenditure was less than planned and to reflect actual exchange rates over the period.
TSR (weighting 25%)
The Committee is proposing to simplify the TSR measure by measuring performance against peer companies only. This will remove the FTSEAll-World Construction & Materials Index as a benchmark. Following consultation with our brokers and advisers, the peer group used for previous PSP awards has beenre-confirmed with two minor modifications; Braas Monier has been removed as it is no longer listed and Rockwool has been removed as its business is not comparable with CRH. The proposed peer group, which will be weighted by market capitalisation, is set out in table 1733.
Awards, to the extent that they vest, will be adjusted for dividend equivalents based on page 70. 25%dividends in the period from grant to the date of this measure will vestvesting in 2023. “Malus” and clawback provisions apply to the awards. Other Employee Share Plans Executive Directors are eligible to participate in the 2010 Savings-related Option Scheme (Republic of Ireland) (the ‘2010 SAYE Scheme’) and in the Group’s Irish Revenue approved Share Participation Scheme (the ‘Participation Scheme’). The 2010 SAYE Scheme is an Irish Revenue approved plan open to all Irish employees. Participants may save up to€500 a month from their net salaries for a fixed term of three or five years and at median performance againstthe end of the savings period they have the option to buy CRH shares at a discount of up to 15% of the market price on the date of invitation of each savings contract. Details of the outstanding awards of executive Directors under the 2010 SAYE Scheme are set out in table 35 on pages 92 and 93. The Participation Scheme is an Irish Revenue approved plan and is open to all employees in Ireland. Grants can be made to participants up to a maximum of€12,700 annually in CRH shares. Albert Manifold and Senan Murphy participated in the Participation Scheme in 2019. | | | | | | | | | | | | Peer Group for Performance Share Plan Awards (i) | | Table 30 | | | | | | | ACS | | Cemex | | Saint Gobain | | Vicat | | | | | | | | | Boral | | Heidelberg Cement | | Skanska | | Vinci | | | | | | | | | Buzzi Unicem | | LafargeHolcim | | Titan Cement | | Wienerberger | | |
(i) For the purposes of the PSP awards made in 2017 and 2018, the peer group with full vesting at the upper quartile,also includes Braas Monier and straight line vesting in between. Rockwool
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Long-term Incentives - Performance Share Plan Awards | | | 2017 Award Metrics | | Table 31 |
| | 
| | (i) For the purposes of the PSP, operating cash flow is defined as reported internally. The figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. (ii) The methodology for calculating TSR assumes all dividends are reinvested on theex-dividend date at the closing share price on that day; the open and close price is based on the three-month average closing price on the last day before the start of the performance period and the final day of the performance period respectively. (iii) For the purposes of the 2017 Award, TSR performance was above the median against the tailored peer group (see table 30 on page 90) and below the FTSEAll-World Construction & Materials Index. TSR performance was subject to a RONA underpin (see page 90). The cumulative cash flow for the three years to end 31 December 2019 was€4.5 billion. |
| | | 2017 Award Vesting Details | | Table 32 |
| | | | | | | | | | | | | Executive Director | | Interests Held | | Vesting Outcome
(% of max) | | Interests
Due to Vest | | Date of Vesting | | Assumed
Share Price (i) | | Estimated
Value | | | | | | | | | Albert Manifold | | 175,095 | | 70.7% | | 123,792 | | March 2022 | | €33.38 | | €4,132,182 | | | | | | | | | Senan Murphy | | 46,954 | | 70.7% | | 33,196 | | March 2022 | | €33.38 | | €1,108,098 |
| (i) As the share price on the date of vesting is not yet known, for the purposes of this table, the value of these awards, which were subject to a three-year performance period ending in 2019, has been estimated using a share price of€33.38, being the three-month average share price to 31 December 2019. |
| | | 2019 Award Metrics | | Table 33 |
| (i) and (ii) see footnotes to table 31 above. (iii) RONA is also defined as reported internally and differs from the RONA reported in theNon-GAAP Performance Measures in this report as it excludesone-off items and reflects seasonality and timing impact of development activity. |
| | | 2019 Award - Grant Details | | Table 34 |
| | | | | | | | | | | | Executive Director | | Date of Grant | | Number of Shares | | Market Price on which Award was Based | | Face Value at Date of Award | | Face Value at Date of Award (% of salary) | | | | | | | | Albert Manifold | | 7 May 2019 | | 186,106 | | €29.86 | | €5,557,125 | | 365% | | | | | | | | Senan Murphy | | 7 May 2019 | | 59,867 | | €29.86 | | €1,787,628 | | 225% |
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Annual Report on Remuneration - continued | Summary of Outstanding Share Incentive Awards (Audited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of
Award | | | | | | Performance Period | | | | | | Release
Date | | | | | | Market Value at
Date of Award | | | | | | Exercise
Price | | | | | Balance at 31
December 2018 | | | Albert Manifold | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Bonus Plan (Deferred Share Awards) (i) | | | 2016 | | | | | | | | 01/01/15-31/12/2015 | | | | | | | | 2019 | | | | | | | | €25.60 | | | | | | | | n/a | | | | | | 18,900 | | | | | | | | | | | | | | | | | 2017 | | | | | | | | 01/01/16-31/12/2016 | | | | | | | | 2020 | | | | | | | | €30.97 | | | | | | | | n/a | | | | | | 25,007 | | | | | | | | | | | | | | | | | 2018 | | | | | | | | 01/01/17-31/12/2017 | | | | | | | | 2021 | | | | | | | | €30.42 | | | | | | | | n/a | | | | | | 25,619 | | | | | | | | | | | | | | | | | 2019 | | | | | | | | 01/01/18-31/12/2018 | | | | | | | | 2022 | | | | | | | | €24.90 | | | | | | | | n/a | | | | | | - | | | | | | | | | | | | | | | 2014 Performance Share Plan (ii) | | | 2014 | | | | | | | | 01/01/14-31/12/2016 | | | | | | | | 2019 | | | | | | | | €20.49 | | | | | | | | n/a | | | | | | 142,900 | | | | | | | | | | | | | | | | | 2015 | | | | | | | | 01/01/15-31/12/2017 | | | | | | | | 2020 | | | | | | | | €24.42 | | | | | | | | n/a | | | | | | 103,934 | | | | | | | | | | | | | | | | | 2016 | | | | | | | | 01/01/16-31/12/2018 | | | | | | | | 2021 | | | | | | | | €24.56 | | | | | | | | n/a | | | | | | 208,104 | | | | | | | | | | | | | | | | | 2017 | | | | | | | | 01/01/17-31/12/2019 | | | | | | | | 2022 | | | | | | | | €32.24 | | | | | | | | n/a | | | | | | 163,254 | | | | | | | | | | | | | | | | | 2018 | | | | | | | | 01/01/18-31/12/2020 | | | | | | | | 2023 | | | | | | | | €27.62 | | | | | | | | n/a | | | | | | 196,278 | | | | | | | | | | | | | | | | | 2019 | | | | | | | | 01/01/19-31/12/2021 | | | | | | | | 2024 | | | | | | | | €29.86 | | | | | | | | n/a | | | | | | - | | | | | | | | | | | | | | | 2010 Savings-Related Share Option Scheme | | | 2018 | | | | | | | | n/a | | | | | | | | 2023 | | | | | | | | n/a | | | | | | | | €23.39 | | | | | | 1,293 | | | | | | | | | | | | | | | Senan Murphy | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Bonus Plan (Deferred Share Awards) (i) | | | 2017 | | | | | | | | 01/01/16-31/12/2016 | | | | | | | | 2020 | | | | | | | | €30.97 | | | | | | | | n/a | | | | | | 7,316 | | | | | | | | | | | | | | | | | 2018 | | | | | | | | 01/01/17-31/12/2017 | | | | | | | | 2021 | | | | | | | | €30.42 | | | | | | | | n/a | | | | | | 8,352 | | | | | | | | | | | | | | | | | 2019 | | | | | | | | 01/01/18-31/12/2018 | | | | | | | | 2022 | | | | | | | | €24.90 | | | | | | | | n/a | | | | | | - | | | | | | | | | | | | | | | 2014 Performance Share Plan (i) | | | 2016 | | | | | | | | 01/01/16-31/12/2018 | | | | | | | | 2021 | | | | | | | | €24.56 | | | | | | | | n/a | | | | | | 50,906 | | | | | | | | | | | | | | | | | 2017 | | | | | | | | 01/01/17-31/12/2019 | | | | | | | | 2022 | | | | | | | | €32.24 | | | | | | | | n/a | | | | | | 43,779 | | | | | | | | | | | | | | | | | 2018 | | | | | | | | 01/01/18-31/12/2020 | | | | | | | | 2023 | | | | | | | | €27.62 | | | | | | | | n/a | | | | | | 63,134 | | | | | | | | | | | | | | | | | 2019 | | | | | | | | 01/01/19-31/12/2021 | | | | | | | | 2024 | | | | | | | | €29.86 | | | | | | | | n/a | | | | | | - | |
The Committee is satisfied that the proposed peer group provides an appropriately robust benchmark against which to compare CRH’s TSR performance. RONA (weighting 25%)
As outlined in the Chairman’s introduction on page 68, it is proposed to introduce a RONA metric into the PSP for awards made in 2019. 25%market price of the RONA measure will vestCompany’s shares at RONA of 9%, with full vesting at or above RONA of 11.5%31 December 2019 was€35.67 and straight-line vesting in between.the range during 2019 was€22.89 to€36.25.
The Committee considers the maximum RONA target to be very stretching. In order to achieve this target, EBITDA (as defined)* margins would
| (i) | The Remuneration Committee has determined that dividend equivalents should accrue on awards under the Annual Bonus Plan. Such dividend equivalents will be released to participants on the date of release of the Deferred Shares. |
| (ii) | The Remuneration Committee has determined that dividend equivalents should accrue on awards under the 2014 Performance Share Plan. Subject to satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shares on vesting. |
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| | | | | | | | | | | | | Granted in 2019 | | Released in 2019 | | Exercised in 2019 | | Lapsed in 2019 | | Balance at 31
December 2019 | | Dividends Awarded
& Released | | Market Value on Date
of Exercise/Released | | | | | | | | | | | | | | | - | | 18,900 | | - | | - | | - | | 1,351 | | €28.04 | | | | | | | | | - | | - | | - | | - | | 25,007 | | - | | - | | | | | | | | | - | | - | | - | | - | | 25,619 | | - | | - | | | | | | | | | 27,337 | | - | | - | | - | | 27,337 | | - | | | | | | | | | | | - | | 142,900 | | - | | - | | - | | 19,007 | | €28.04 | | | | | | | | | - | | - | | - | | - | | 103,934 | | - | | - | | | | | | | | | - | | - | | - | | 85,052 | | 123,052 | | - | | - | | | | | | | | | - | | - | | - | | - | | 163,254 | | - | | - | | | | | | | | | - | | - | | - | | - | | 196,278 | | - | | - | | | | | | | | | 186,106 | | - | | - | | - | | 186,106 | | - | | - | | | | | | | | | - | | - | | - | | - | | 1,293 | | - | | - | | | | | | | | | | | | | | | - | | - | | - | | - | | 7,316 | | - | | - | | | | | | | | | - | | - | | - | | - | | 8,352 | | - | | - | | | | | | | | | 9,510 | | - | | - | | - | | 9,510 | | - | | - | | | | | | | | | - | | - | | - | | 20,805 | | 30,101 | | - | | - | | | | | | | | | - | | - | | - | | - | | 43,779 | | - | | - | | | | | | | | | - | | - | | | | - | | 63,134 | | - | | - | | | | | | | | | 59,867 | | - | | | | - | | 59,867 | | - | | - |
need to broadly equate to the highest ever achieved by the Group.
In addition, payouts for threshold achievement would require a RONA which meets our cost of capital at a minimum.
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The RONA target for the 2019 PSP awards will need to be adjusted by the Committee in due course to reflect the impact of IFRS 16, which introduces new rules for lease accounting with effect from the 2019 financial year.
Annual Report on Remuneration - continued Retirement Benefit Expense NoAlbert Manifold is a participant in a contributory defined benefit plan which is based on an accrual rate of 1/60th of salary1 for each year of pensionable service and is designed to providetwo-thirds of career average salary at retirement for full service. Albert Manifold will become entitled to a deferred pension, payable from Normal Retirement Age, if he leaves service prior to Normal Retirement Age. The Finance Act 2006 established a cap on pension provisions by introducing a penalty tax charge on pension assets in excess of the higher of€5.4 million (in the Finance Act 2011, this threshold was reduced to€2.3 million and reduced further to€2 million by the Finance (No. 2) Act 2013) or the value of individual accrued pension entitlements as at 7 December 2005.
As a result of these legislative changes, the Remuneration Committee decided that executive Directors should have the option of continuing to accrue pension benefits as previously, or of choosing an alternative arrangement - by accepting pension benefits limited by the cap - with a similar overall cost to the Group. Albert Manifold has opted for an arrangement whereby his pension is capped in line with the provisions of the Finance Act 2006 and receives a supplementary taxablenon-pensionable cash supplement in lieu of pension benefits foregone. There was, therefore, no additional accrual in 2019. The cash pension supplement for 2019 is detailed in table 36 below. This supplement is similar in value to the reduction in the Company’s liability represented by the pension benefits foregone. It is calculated based on actuarial advice as the equivalent of the reduction in the Company’s liability to Mr. Manifold and spread over the term to retirement as annual compensation allowances. The contributory defined benefit plan in which Albert Manifold participates closed to new entrants at the end of 2011. Senan Murphy receives a taxablenon-pensionable cash supplement equivalent to 25% of his annual base salary in lieu of a pension contribution. Details regarding the pension entitlements of Albert Manifold are set out in table 36 below. Details of the pension arrangements that will apply for 2020 are proposedset out on page 77. Shareholding Guideline for Executive Directors Pursuant to the Policy, executive Directors are required to build up (and maintain) a minimum holding in CRH shares. The current shareholding guideline for the Chief Executive is 3.5x basic salary and 2.0x basic salary for the Finance Director, to be achieved by 31 December 2023 and 31 December 2022 respectively. The current shareholdings of executive Directors as a multiple of basic salary are shown in table 45 on page 99. The table includes, for illustrative purposes, shares beneficially owned by the executive Directors as at 27 February 2020, the estimated after tax vesting of PSP awards subject to atwo-year hold period only, which will be released in 2020 and 2021 respectively, and the estimated after tax vesting of Deferred Share awards granted in respect of 2017, 2018 and 2019, as appropriate. Non-executive Directors The remuneration ofnon-executive Directors is determined by the Board of Directors. The fees were increased in 2019 (see table 37 for details of the current fees). Details of the remuneration paid tonon-executive Directors in 2019 are set out in table 38. Proposed Implementation of Remuneration in 2020 Basic Salary and Benefits Details of the executive Directors’ salaries for 2020 compared with 2019 are set out in the Committee Chair’s Overview on page 76. These increases are within the range of the average workforce increases in CRH’s core countries (2.5% to 3%). Executive Directors will receive benefits in line with the 2019 Policy in 2020. The level of benefits provided will depend on the cost of providing individual items and the individual circumstances. Retirement Benefit Expense As outlined in the Chair’s Overview on page 77, the monetary value of pension contribution/ allowance for Mr. Manifold will be reduced by 10% in 2020 such that his allowance will be c.€600,000 (2019:€667,000) and the contribution/allowance for Mr. Murphy will be capped permanently at€204,000 (25% of his 2020 salary). 2020 Annual Bonus Plan The Remuneration Committee has determined that the 2020 Annual Bonus Plan will be operated broadly in line with the 2019 Annual Bonus Plan. 80% of the bonus will be based on financial targets and the remaining 20% on individual objectives aligned to key strategic areas for each executive Director. | | | Pension Entitlements - Defined Benefit (Audited) | | Table 36 |
| | | | | | | | | | | | | | Executive Director | | Increase in accrued personal pension
during 2019 (i) €000 | | | Transfer value of increase in dependants
pension (i) €000 | | | Total accrued
personal pension at year end (ii)
€000 | | | | | | | Albert Manifold | | | - | | | | 122 | | | | 273 | |
| (i) | As noted above, the pension of Albert Manifold has been capped in line with the provisions of the Irish Finance Acts. However, dependants’ pensions continue to accrue resulting in Greenbury transfer values which have been calculated on the basis of actuarial advice. These amounts do not represent sums paid out or due in 2019 in the event of Mr. Manifold leaving service. |
| (ii) | The accrued pensions shown are those which would be payable annually from normal retirement date. |
1. Salary is defined as basic annual salary and excludes any fluctuating emoluments.
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 95 |
Non-executive Directors | | | | | Fee Structure | | | Table 37 | | | Role | | | | | | | Group Chairman (includingnon-executive Director salary and fees for Committee work) | | | €630,000 | | | | | Basicnon-executive Director fee | | | €88,000 | | | | | Committee fee | | | €32,000 | | | | | Additional fees | | | | | | | | Senior Independent Director | | | €25,000 | | | | | Remuneration Committee Chair | | | €30,000 | | | | | Audit Committee Chairman | | | €39,000 | | | | | Fee for Europe-basednon-executive Directors | | | €15,000 | | | | | Fee forUS-basednon-executive Directors | | | €30,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Individual Remuneration for the year ended 31 December 2019 (Audited) | | | | | | | | Table 38 | | | | | | | | | | | Basic fees (i) | | Benefits (ii) | | Other fees (iii) | | | | | Total | | | | | €000 | | €000 | | €000 | | | | | €000 | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | 2019 | | | 2018 | | | | | 2019 | | | 2018 | | | | | 2019 | | | 2018 | | | 2017 | | | | | | | | | | | | | | | | Non-executive Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. Boucher (iv) | | | 88 | | | | 65 | | | | | | - | | | | - | | | | | | 77 | | | | 34 | | | | | | 165 | | | | 99 | | | | - | | | | | | | | | | | | | | | | N. Hartery | | | 88 | | | | 78 | | | | | | 7 | | | | 1 | | | | | | 557 | | | | 512 | | | | | | 652 | | | | 591 | | | | 591 | | | | | | | | | | | | | | | | J. Karlström (v) | | | 23 | | | | - | | | | | | - | | | | - | | | | | | 13 | | | | - | | | | | | 36 | | | | - | | | | - | | | | | | | | | | | | | | | | S. Kelly (vi) | | | 7 | | | | - | | | | | | - | | | | - | | | | | | 8 | | | | - | | | | | | 15 | | | | - | | | | - | | | | | | | | | | | | | | | | P.J. Kennedy | | | 88 | | | | 78 | | | | | | - | | | | - | | | | | | 47 | | | | 42 | | | | | | 135 | | | | 120 | | | | 120 | | | | | | | | | | | | | | | | D.A. McGovern Jr. (vii) | | | 28 | | | | 78 | | | | | | - | | | | - | | | | | | 20 | | | | 86 | | | | | | 48 | | | | 164 | | | | 174 | | | | | | | | | | | | | | | | H.A. McSharry | | | 88 | | | | 78 | | | | | | - | | | | - | | | | | | 63 | | | | 42 | | | | | | 151 | | | | 120 | | | | 120 | | | | | | | | | | | | | | | | G.L. Platt | | | 88 | | | | 78 | | | | | | - | | | | - | | | | | | 87 | | | | 63 | | | | | | 175 | | | | 141 | | | | 131 | | | | | | | | | | | | | | | | M.K. Rhinehart (vii) | | | 88 | | | | 20 | | | | | | - | | | | - | | | | | | 62 | | | | 7 | | | | | | 150 | | | | 27 | | | | - | | | | | | | | | | | | | | | | L.J. Riches | | | 88 | | | | 78 | | | | | | - | | | | - | | | | | | 47 | | | | 42 | | | | | | 135 | | | | 120 | | | | 120 | | | | | | | | | | | | | | | | H.Th. Rottinghuis | | | 88 | | | | 78 | | | | | | - | | | | - | | | | | | 47 | | | | 42 | | | | | | 135 | | | | 120 | | | | 120 | | | | | | | | | | | | | | | | S. Talbot (ix) | | | 88 | | | | 7 | | | | | | 2 | | | | - | | | | | | 47 | | | | 1 | | | | | | 137 | | | | 8 | | | | - | | | | | | | | | | | | | | | | W.J. Teuber, Jr. (x) | | | 44 | | | | 78 | | | | | | - | | | | - | | | | | | 51 | | | | 90 | | | | | | 95 | | | | 168 | | | | 135 | | | | | 894 | | | | 716 | | | | | | 9 | | | | 1 | | | | | | 1,126 | | | | 961 | | | | | | 2,029 | | | | 1,678 | | | | 1,511 | |
| (i) | Further information in relation to thenon-executive Director fee structure are set out in table 37 above. |
| (ii) | Benefits: Reflects the reimbursement of taxable travel expenses. |
| (iii) | Other Fees: Includes fees for Chairman, Board Committee work and travel allowances fornon-executive Directors based outside of Ireland. |
| (iv) | Richie Boucher became a Director on 1 March 2018. |
| (v) | Johan Karlström became a Director on 25 September 2019. |
| (vi) | Shaun Kelly became a Director on 3 December 2019. |
| (vii) | Don McGovern retired as a Director on 25 April 2019. |
| (viii) | Mary Rhinehart became a Director on 1 October 2018. |
| (ix) | Siobhan Talbot became a Director on 1 December 2018. |
| (x) | Bill Teuber resigned as a Director on 25 June 2019. |
| | | | 96 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Annual Report on Remuneration - continued 2020 Performance Share Plan Awards For the 2020 PSP awards, awards will be assessed over the three-year period to 31 December 2022. The metrics, weightings and opportunity for the 2020 PSP awards are summarised in table 39 below. The Committee believes that the targets are robust and stretching, with a significant increase in the level of stretch required for the cashflow and RONA metrics compared to 2019. Fees Paid to Former Directors The 2013 Large andMedium-sized Companies and Groups (Accounts and Reports) (Amendment Regulations) Regulations in the UK, require disclosure of payments to former Directors in certain circumstances. No payments have been made to individual former Directors in those circumstances which exceed the de minimis threshold of€20,000 per annum set by the Remuneration Committee.
| | | | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
| | 95 |
CRH Annual Report and Form 20-F | 2018
Directors’ Remuneration Report - continued
Executives’ External Appointments The executive Directors may accept external appointments with the prior approval of the Board provided that such appointments do not prejudice the individual’s ability to fulfil their duties at the Group. Whether any related fees are retained by the individual or remitted to the Group is considered on acase-by-case basis. Total Shareholder Return The value at 31 December 20182019 of€100 invested in CRH in 2008,2009, compared with the value of€100 invested in the Eurofirst 300 Index and the FTSE100 Index (which CRH joined in December 2011) is shown in table 2040 on page 73.97. TSR performance has been compared against the FTSE100 and the Eurofirst 300 as these are broad general market indices of which CRH is a constituent. The Committee, therefore, considers that they offer a reasonable comparison for performance. Compound TSR growth since the formation of the Group in 1970 (assuming the reinvestment of dividends) is 14.8%15.6%. Workforce Engagement Engagement of our workforce is at the heart of what we do at CRH. The proximity of our senior leaders to daily operations across CRH is a key reason for the Company’s continued success and growth. The Company operates an annual talent and performance review process, where colleagues and their managers work together to review performance and set annual goals. The outcome of the review process is closely aligned to remuneration, both in terms of any increase in base salary for the next year, and any variable remuneration component. In order to guide our leaders’ discussions with employees across the group on remuneration structures, there is a reward policy section, which is based on the principles of remuneration applied by the Remuneration Committee and remuneration policy approved by shareholders, in policy documents issued to the managing directors of our operating companies. The SESR Committee has taken formal responsibility for workforce engagement. Its work in this area, which will evolve over time, is explained further in the Chairman’s Overview on pages 60 to 63. Remuneration Committee members are keptup-to-date on the workings of the SESR Committee and the feedback it receives from employees on all matters including remuneration. Remuneration Paid to Chief Executive 20092010 – 20182019 Table 4641 shows the total remuneration paid to the Chief Executive in the period 20092010 to 20182019 inclusive and shows bonuses and vested long-term incentive awards as a percentage of the maximum bonus and award that could have been received in respect of each year. Albert Manifold succeeded Myles Lee as Chief Executive in January 2014. | | | | | Relative Importance of Spend on Pay
| | Table 45
|
Excluding the impact of vested share-based awards and thenon-taxable benefit associated with participation in the Group’s Savings-related Share Option Scheme, the percentage change in the Chief Executive’s salary, benefits and bonus between 20172018 and 20182019 was as follows: •Salary +3.0% +2.5%• Benefits-22% Benefits +57.1%
• Bonus +8% Bonus-12.6%
The combined percentage change was-7.2% 6%. There was a 6.5%5% increase in the total average employment costs in respect of employees in the Group as a whole between 20172018 and 2018.2019. Chief Executive Pay Ratio Table 42 sets out the ratio of Chief Executive’s total pay in 2019 in comparison to the 25th, 50th and 75th percentile remuneration received by the Group’s UK employees in 2019. Total remuneration for the lower quartile, median and upper quartile employees were determined using the ‘single figure’ methodology. This methodology was chosen as it provides alike-for-like comparison between the Chief Executive and other employees. For practical reasons (primarily relating to the number of employing entities and employees covered by this analysis), the ranking of employees to identify the three individuals representing 25th (P25), 50th (P50) and 75th (P75) percentile was conducted in November 2019. Given the timing, for the purpose of the ranking exercise, total remuneration was defined as the sum of base salary, employer pension contributions and other taxable benefits for the period 1 January to 31 October 2019, and 2018 incentive | | | Performance Share Plan Metrics – 2020 Awards | | Table 39 |
(i), (ii), (iii) See Table 33 on page 91.
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 97 |
values. All elements of remuneration were calculated on a full-time and full-year equivalent basis. In January 2020, total remuneration was recalculated for the three employees representing P25, P50 and P75 using the same single figure methodology used to report the Chief Executive’s remuneration. The Committee has considered the pay data for the three individuals identified and believes that it fairly reflects pay at the relevant quartiles amongst the UK employee population. Each of the three individuals identified was a full-time employee during the year and none received an exceptional incentive award which would otherwise inflate their pay figures. No adjustments or assumptions were made by the Committee, with the total remuneration of these employees calculated in accordance with the methodology used to calculate the single figure of the Chief Executive. With this being the first year of being expected to publish a Chief Executive’s pay ratio, there is no comparative data against which to compare the pay ratios detailed below. Going forward, the Committee will monitor both the absolute remuneration ratios and the trend over time, and seek to understand the underlying drivers of these. In light of the expectation that the total remuneration pay ratio will be volatile over time (driven in large part by the upweighting in the Chief Executive’s package of variable, performance-based remuneration), the Committee has also elected to calculate and disclose the pay ratio for base salary alone. In line with the Committee’s policy that executive Directors’ base salaries will normally increase in line with the typical level of increase awarded to other employees in the Group, it is anticipated that this ratio will be more stable – and representative of relative changes in fixed pay over time. | | | TSR Performance (2009-2019) | | Table 40 |
Chief Executive’s Remuneration | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Remuneration 2009 to 2019 inclusive | | | | | Table 41 | | | | | | | | | | | | | | | | | | | | | | | | | 2010 | | | | 2011 | | | | 2012 | | | | 2013 | | | | 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | | 2018 | | | | 2019 | | | | | | | | | | | | | | | | | | | | | | Single figure Remuneration (€m) (i) | | €2.6m | | | | €2.9m | | | | €2.5m | | | | €4.2m | | | | €4.3m | | | | €5.4m | | | | €9.9m | | | | €8.7m | | | | €8.2m | | | | | €9.3m | | | | | | | | | | | | | | | | | | | | | | | Annual Bonus (% of max) | | 21% | | | | 39% | | | | 28% | | | | 30% | | | | 100% | | | | 100% | | | | 98% | | | | 96% | | | | 81% | | | | | 86% | | | | | | | | | | | | | | | | | | | | | | | Long-term incentive award vesting (% of max) | | 46% | | | | 17% | | | | 0% | | | | PSP: 49% LTIP: 34% | | | | PSP: 0% Options: 75% | | | | PSP: 78% Options: 37% | | | | 100% | | | | 79% | | | | 59% | | | | | 71% | | | | | (i) Single figure remuneration comprises the total fixed pay, annual bonus and the value of long-term incentives vesting in respect of each year. | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Pay Ratio | | | Table 42 | | | | | | | | | | | | | | | | Financial Year | | Calculation
Method | | | | | P25
(lower quartile) | | | | P50
(median) | | | | P75
(upper quartile) | | | | Chief Executive | | | | 2019 | | | C | | | Total remuneration pay ratio | | 289:1 | | | | 207:1 | | | | 158:1 | | | | | | | | | | | Total remuneration (€) | | 32,200 | | | | 44,900 | | | | 58.900 | | | | | 9,311,400 | | | | | | Base salary pay ratio | | 53:1 | | | | 36:1 | | | | 31:1 | | | | | | | | | | | Base salary (€) | | 28,500 | | | | 42,400 | | | | 49,900 | | | | | 1,522,500 | | | |
| | | | 98 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Annual Report on Remuneration - continued Relative Importance of Spend on Pay Table 4543 sets out the amount paid by the Group in remuneration to employees compared to the amount returned to shareholders as part of the share buybackrepurchase programme in 2018 and dividend distributions made to shareholders in 20172018 and 2018.2019. We have also shown the change in EBITDA (as defined)* performanceyear-on-year to provide an indication of the change in profit performance. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Remuneration Paid to Chief Executive - 2009 to 2018 inclusive | | | | | | | | | | | | Table 46 | | | | | 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | Single figure Remuneration (€m) (i) | | | €2.6m | | | | €2.6m | | | | €2.9m | | | | €2.5m | | | | €4.2m | | | | €4.3m | | | | €5.4m | | | | €9.9m | | | | €8.7m | | | | €8.2m | | | | | | | | | | | | | Annual Bonus (% of max) | | | 22% | | | | 21% | | | | 39% | | | | 28% | | | | 30% | | | | 100% | | | | 100% | | | | 98% | | | | 96% | | | | 81% | | Long-term incentive award vesting (% of max) | | | 50% | | | | 46% | | | | 17% | | | | 0% | | |
| PSP: 49%
LTIP: 34% |
| |
| PSP: 0%
Options: 75% |
| |
| PSP: 78%
Options: 37% |
| | | 100% | | | | 79% | | | | 59% | |
(i) | Single figure remuneration comprises the total fixed pay, annual bonus and the value of long-term incentives vesting in respect of each year.
|
| | | | | 96 | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
|
CRH Annual Report and Form 20-F I 2018
Advisers to the Remuneration Committee During 2019, the Committee carried out a review of our external remuneration consultant arrangements and, following the completion of this process, Mercer Kepler a brand of Mercer, arewere reappointed as the Committee’s independent remuneration consultants. The Committee has satisfied itself that the advice provided by Mercer Kepler is robust and independent and that the Mercer Kepler engagement partner and team that provide remuneration advice to the Committee do not have connections with CRH plc that may impair their independence. Mercer Kepler are signatories to the Voluntary Code of Conduct in relation to executive remuneration consulting in the UK. During 2018,2019, Mercer Kepler provided the following remuneration services: research and advice regarding remuneration trends, best practice and remuneration levels for executive andnon-executive Directors in companies of similar size and complexity; advice in relation to remuneration matters generally; and attendance at Committee meetings, when required In 2018,2019, Mercer Kepler’s parent, the MMC Group, provided pensions advice and related services to the Company. In 2018,2019, the total fees paid to Mercer Kepler were Stg£99,366.63,110. 20182019 Annual General Meeting
The voting outcome in respect of the remuneration-related votes at the 20182019 AGM is set out in table 2347 on page 73. Further details in relation to the voting outcome are set out in the Committee Chairman’s introduction on page 68.100. On behalf of the Board Richie BoucherHeather Ann McSharry
ChairmanChair of Remuneration Committee
27 February 20192020 Details of Remuneration Charged against Profit in 2018
| | | | | | | | | | | | | Directors’ Remuneration (i) (Audited) | | | Table 47 | | | | | 2018
€000 | | | 2017
€000 | | | 2016
€000 | | Executive Directors | | | | | | | | | | | | | Basic Salary | | | 2,260 | | | | 2,618 | | | | 4,023 | | Performance-related Incentive Plan | | | | | | | | | | | | | - cash element | | | 2,752 | | | | 3,734 | | | | 5,197 | | - deferred shares element | | | 918 | | | | 1,033 | | | | 1,734 | | Retirement Benefits Expense | | | 878 | | | | 988 | | | | 1,341 | | Benefits | | | 80 | | | | 78 | | | | 128 | | Total executive Directors’ remuneration | | | 6,888 | | | | 8,451 | | | | 12,423 | | | | | | Average number of executive Directors | | | 2.00 | | | | 2.67 | | | | 4.00 | | | | | | Non-executive Directors | | | | | | | | | | | | | Fees | | | 716 | | | | 702 | | | | 722 | | Other remuneration | | | 961 | | | | 967 | | | | 980 | | Benefits | | | 1 | | | | 1 | | | | 7 | | Totalnon-executive Directors’ remuneration | | | 1,678 | | | | 1,670 | | | | 1,709 | | | | | | Average number ofnon-executive Directors | | | 9.16 | | | | 9.00 | | | | 9.24 | | | | | | Payments to former Directors (ii) | | | 14 | | | | 9 | | | | 124 | | Total Directors’ remuneration | | | 8,580 | | | | 10,130 | | | | 14,256 | |
(i) | See analysis of 2018 remuneration by individual in tables 32 and 42 on pages 85 and 93 respectively.
|
(ii) | Consulting and other amounts paid to a number of former Directors.
|
| | | 97 | | | Relative Importance of Spend on Pay | | Table 43 |
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 99 |
| | | Shareholdings of Directors and Company Secretary | | Table 44 |
| | | | | | | | | | | | Beneficially Owned (i) | | | Name | | 31 December 2019 | | | 31 December 2018 | | | | | Executive Directors | | | | | | | | | | | | | A. Manifold (ii) | | | 1,297 | | | | 21,310 | | | | | | S. Murphy (ii) | | | 1,970 | | | | 1,520 | | | | | | Non-executive Directors | | | | | | | | | | | | | R. Boucher | | | 13,800 | | | | 1,790 | | | | | | J. Karlström | | | 2,000 | | | | (iii) | | | | | | S. Kelly (v) | | | 1,000 | | | | (iv) | | | | | | P.J. Kennedy | | | 2,000 | | | | 2,000 | | | | | | H.A. McSharry | | | 4,170 | | | | 4,170 | | | | | | G.L. Platt | | | 1,059 | | | | 1,038 | | | | | | M.K. Rhinehart (v) | | | 1,000 | | | | 1,000 | | | | | | L.J. Riches | | | 5,000 | | | | 5,000 | | | | | | H.Th. Rottinghuis | | | 1,000 | | | | 1,000 | | | | | | S. Talbot | | | 1,550 | | | | 1,550 | | | | | | Company Secretary | | | | | | | | | | | | | N. Colgan | | | 11,365 | | | | 10,915 | | | Total | | | 47,211 | | | | 51,293 | | (i) Excludes awards of Deferred Shares, details of which are disclosed on pages 92 and 93. The Directors and Company Secretary do not have any special voting rights. (ii) The total interests of the executive Directors, using the methodology set out in the Shareholding Guideline section on page 94, are illustrated in table 45 below. (iii) Appointed with effect from 25 September 2019. (iv) Appointed with effect from 3 December 2019 (v) Holdings in the form of American Depositary Receipts (ADRs). | |
| | | Executive Director Shareholdings as a % of 2020 Base Salary (i) | | Table 45 |  |
| (i) | For the purposes of this table, the interests have been valued using the three-month average share price to 31 December 2019 (€33.38). |
| | | | 100 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Annual Report and Form 20-F | 2018on Remuneration - continued Details of Remuneration Charged against Profit in 2019 | | | Directors’ Remuneration (i) (Audited) | | Table 46 |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | €000 | | | €000 | | | €000 | | | Executive Directors | | | | | | | | | | | | | | Basic Salary | | | 2,317 | | | | 2,260 | | | | 2,618 | | | Performance-related Incentive Plan | | | | | | | | | | | | | | - cash element | | | 2,647 | | | | 2,752 | | | | 3,734 | | | - deferred shares element | | | 1,324 | | | | 918 | | | | 1,033 | | | Retirement Benefits Expense | | | 866 | | | | 878 | | | | 988 | | | Benefits | | | 70 | | | | 80 | | | | 78 | | | Total executive Directors’ remuneration | | | 7,224 | | | | 6,888 | | | | 8,451 | | | | | | | Average number of executive Directors | | | 2.00 | | | | 2.00 | | | | 2.67 | | | | | | | Non-executive Directors | | | | | | | | | | | | | | Fees | | | 894 | | | | 716 | | | | 702 | | | Other remuneration | | | 1,124 | | | | 961 | | | | 967 | | | Benefits | | | 9 | | | | 1 | | | | 1 | | | Totalnon-executive Directors’ remuneration | | | 2,029 | | | | 1,678 | | | | 1,670 | | | | | | | Average number ofnon-executive Directors | | | 10.16 | | | | 9.16 | | | | 9.00 | | | | | | | Payments to former Directors (ii) | | | 9 | | | | 14 | | | | 9 | | | Total Directors’ remuneration | | | 9,262 | | | | 8,580 | | | | 10,130 | | (i) See analysis of 2019 remuneration by individual in tables 22 and 38 on pages 79 and 95 respectively. (ii) Consulting and other amounts paid to a number of former Directors. | | | | | | | | | | | | | | |
| | | Remuneration Related Votes 2019 | | Table 47 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Year of
AGM | | | %
in Favour | | | %
Against | | | No. of
Votes Withheld | | | Total No. of Votes Cast
(incl. Votes Withheld) | | | % of Issued Share
Capital Voted | | | | | | | | | | Directors’ Remuneration Report (“Say on Pay”) | | | 2019 | | | | 84.52 | | | | 15.48 | | | | 6,358,488 | | | | 496,833,132 | | | | 61.43 | | | | | | | | | | Directors’ Remuneration Policy Report | | | 2019 | | | | 86.73 | | | | 13.27 | | | | 4,846,043 | | | | 496,827,532 | | | | 61.43 | |
| | | Part of CRH’s Americas Materials Division and in operation since January 2005, Texas Materials’ plant at Seward Junction, located in the Greater Austin metropolitan area, includes a rail terminal to facilitate delivery of aggregates from the company’s nearby quarry in Marble Falls. The rail terminal was expanded in 2016 to help meet strong demand in what is the fastest growing large city in the US. | | |
| | | | 102 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Directors’ Report The Directors submit their report and the audited Consolidated Financial Statements for the year ended 31 December 2018.2019. Principal Activity, Results for the Year and Review of Business CRH is a leading global diversified building materials group which manufacturesbusiness in the world, employing c. 80,300 people at 3,100 locations worldwide. We manufacture and distributessupply a diverse range of products servicing the breadth of construction needs, from the fundamentals of heavysuperior building materials and elements to constructproducts for use in the frame, through value-added exteriorconstruction and maintenance of infrastructure, housing and commercial projects. Our materials and products that completeare used extensively, in construction projects of all sizes, all across the building envelope, to distribution channels which service constructionfit-out and renewal.world. The Group has over 1,2501,000 subsidiary, joint venture and associate undertakings; the principal ones as at 31 December 20182019 are listed on pages 252260 to 257.264. The Group’s strategy, business model and development activity are summarised on pages 108 to 1329 and 2732 to 3152 and are deemed to be incorporated in this part of the Directors’ Report. As set out in the Consolidated Income Statement on page 123,128, the Group reported a profit before tax for the year of€1.862.1 billion from continuing operations. Comprehensive reviews of the financial and operating performance of the Group during 20182019 are set out in the Business Performance section on pages 2432 to 51;52; key financial performance indicators are set out on pages 1418 and 15.19. The treasury policy and objectives of the Group are set out in detail in note 2324 to the Consolidated Financial Statements. On 25 April 2018,During the Group announced its intention to return excess cash to shareholders and to repurchase ordinary shares of up to€1.0 billion over the forthcoming 12 months.
Between 2 May andyear ended 31 December 2018, 27.92019, 27,357,116 million ordinary shares were repurchased on the London Stock Exchange
and Euronext Dublin for a total of€789 million,0.8 billion, at an average price of€28.2428.87 per share. On 7 January 2020, the Group announced its intention to repurchase ordinary shares on CRH’s behalf for a maximum consideration of€200 million (the “Buyback”). The Group remains committed to the programmeBuyback commenced on 7 January 2020 and it is expected that it will complete over the timeframe indicated.end no later than 31 March 2020. Further details in relation to the buyback programme and the Company’s profits available for distribution are set on pages 101105 and 212221 respectively. Dividend CRH’s capital allocation policy reflects the Group’s strategy of generating industry leading returns through value-accretive allocation of capital while delivering long-term dividend growth for shareholders. The Board continues to believe that a progressive dividend policy is appropriate for the Group and further to the 5%6% dividend increase in 2017,2018, an interim dividend of 19.6c (2017: 19.2c)20.0c (2018: 19.6c) per share was paid in September 2018.2019. The Board is recommending a final dividend of 52.463.0c per share. This would give a total dividend of 72.0c83.0c for the year (2017: 68.0c)(2018: 72.0c), an increase of 6%15% over last year. The earnings per share for the year were 302.4c,240.7c, representing a cover of 4.2x2.9x the proposed dividend for the year while continuing operations earnings per share for the year were 172.0c,202.2c, representing a cover of 2.4x the proposed dividend for 2018.2019. It is proposed to pay the final dividend on 3028 April 20192020 to shareholders registered at the close of business on 1513 March 2019.2020. In connection with the share buyback programme, CRH announced the suspension of the scrip dividend scheme on 2 May 2018. Therefore the final dividend will be paid wholly in cash. While the Board continues to believe that a progressive dividend policy is appropriate for the Group, our target is to build dividend cover to 3.0x beforeone-off items over the medium-term and accordingly, any dividend increases in coming years will continue to lag increases in earnings per share. 20192020 Outlook
The 20192020 outlook set out in the Chief Executive’s Review on page 911 is deemed to be incorporated in this part of the Directors’ Report. Non-Financial Reporting The European Union (Disclosure ofNon-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (the‘Non-Financial Regulations’) require CRH to provide certainnon-financial information to investors and other stakeholders necessary to provide them with an understanding of the Company’s development, performance, position and impact of its activity. Table 48 below provides more details on the information required to be provided by theNon-Financial Regulations and where this information has been provided in this Annual Report and Form20-F. | | | Non-Financial Reporting | | Table 48 |
| | | | | | | Non-FinancialReporting
Requirement | | Relevant Policies (i) | | | | Table 48
| Reporting Requirement
| | Relevant Policies (i)
| | Location of Information (ii) | | Pages | Environmental and Climate Related Matters | | Environmental Policy | | Sustainability – Creating long-term value and Risk Governance | | 1620 to 21
29 | Social & Employee Matters | | Health & Safety Policy, Social Policy | | Sustainability – Creating long-term value | | 1620 to 21, 63 and 64
25 | Human Rights | | Social Policy, Code of Business Conduct | | Sustainability – Creating long-term value | | 1620 to 21
25 | Anti-bribery & Corruption | | Code of Business Conduct | | Sustainability – Creating long-term value | | 1620 to 21
25 | Business Model | | – | | Business Model | | 1216 to 13
17 | Non-financial KPIs | | – | | Managing Performance | | 1418 to 15
19 | Principal Risks | | – | | Risk Governance | | 2226 to 23
| | | | | Principal Risks and Uncertainties
| | 104 to 109
29 |
| (i) | Policies are available on CRH’s website, www.crh.com. |
| (ii) | The referenced sections are deemed to be incorporated within this Directors’ Report. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 103 |
| CRH Annual Report and Form 20-F I 2018
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| | | | | Regulatory Information1 | | Table 49 | | | | | | | | | | | | | | | | | Companies Companies Act 2014
| | For the purpose of Section 1373, the Corporate Governance Report on pages 5860 to 67,73, together with the Governance Appendix located on the CRH website (www.crh.com), which contains the information required by Section 1373(2) of the Companies Act 2014 and the risk management disclosures on pages 22, 2326 to 29 and 104108 to 109,113, are deemed to be incorporated in the Directors’ Report and form part of the corporate governance statement required by Section 1373 of the Companies Act. Details of the Company’s employee share schemes and capital structure can be found in notes 9 and 31 to the Consolidated Financial Statements on pages 150156 to 152158 and 189198 to 191200 respectively. | 2006 Takeover Regulations | | | | | | 2006 Takeover Regulations | | For the purpose of Regulation 21 of Statutory Instrument 255/2006 European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006, the rules relating to the appointment and replacement of Directors are summarised in the Governance Appendix. The Chief Executive and the Finance Director have entered into service contracts, the principal terms of which are summarised in the 2019 Directors’ Remuneration Policy which is available on page 81the CRH website (www.crh.com) and are deemed to be incorporated in this part of the Directors’ Report. The Company’s Memorandum and Articles of Association, which are available on the CRH website, are also deemed to be incorporated in this part of the Directors’ Report. The Group has certain banking facilities and bond issues outstanding which may require repayment in the event that a change in control occurs with respect to the Company. In addition, the Company’s Share Option Schemes and Performance Share Plan contain change of control provisions which can allow for the acceleration of the exercisability of share options and the vesting of share awards in the event that a change of control occurs with respect to the Company. | | | | | | 2007 Transparency Regulations | | For the purpose of Statutory Instrument 277/2007 Transparency (Directive 2004/109/EC) Regulations 2007, the following sections of this Annual Report and Form20-F are deemed to be incorporated into this part of the Directors’ Report2: the Chairman’s Introduction on pagepages 4 and 5, the Strategy Review section on pages 68 to 23,29, the Principal Risks and Uncertainties section on pages 104108 to 109,113, the Business Performance section on pages 2432 to 51,52, the information on inclusion and diversity on pages 63 and 64,70 to 72, the details of earnings per Ordinary Share in note 14 to the Consolidated Financial Statements, the details of derivative financial instruments in note 26,27, the details of the reissue of Treasury Shares in note 31 and the details of employees in note 7. | Disclaimer/Forward-Looking Statements | | | | | | Disclaimer/ Forward- Looking Statements | | In order to utilise the “Safe Harbor” provisions of the United StatesUS Private Securities Litigation Reform Act of 1995, CRH plc (the ‘Company’), and its subsidiaries (collectively, ‘CRH’ or the ‘Group’) is providing the following cautionary statement. | | | | | This document contains certain statements that are, or may be deemed to be forward-looking statements with respect to the financial condition, results of operations, business, viability and future performance of CRH and certain of the plans and objectives of CRH including but not limited to the statements under: “Overview – Chairman’s Introduction”; “Strategy Review – Chief Executive’s Review – Outlook”; “Strategy Review” regarding the Group’s strategy for future growth and delivery; “Measuring“Strategy Review – Measuring Performance” with regard to our focus for 2019; “Business2020; “Strategy Review – Sustainability” with regard to our strategies for our sustainability priorities;“Business Performance – Finance Director’s Review” with respect to our belief that the Group has sufficient resources to meet its debt obligations and capital and other expenditure requirements in 2019;2020; “Business Performance” with respect to our expectations regarding economic activity and fiscal developments in our operating regions; and our expectations for the residential,non-residential and infrastructure markets; the statements relating to our strategies for individual segments and business lines in the section entitled “Segmental Reviews”; “Governance – Directors’ Remuneration Report” with regard to growth forecasts for the coming years; and “Governance – Principal Risks and Uncertainties” with respect to the potential impact and evolving nature of risk as well as the direction risk may be trending. | | | | | | | | These forward-looking statements may generally, but not always, be identified by the use of words such as “will”, “anticipates”, “should”, “could”, “would”, “targets”, “aims”, “may”, “continues”, “expects”, “is expected to”, “estimates”, “believes”, “intends” or similar expressions. These forward-looking statements include all matters that are not historical facts or matters of fact at the time of this document. | | | | | | | | By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future and reflect the Company’s current expectations and assumptions as to such future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, certain of which are beyond our control and which include, among other things: economic and financial conditions generally in various countries and regions where we operate; the pace of recoverygrowth in the overall construction and building materials sector; demand for infrastructure, residential andnon-residential construction in our geographic markets; increased competition and its impact on prices; increases in energy and/or raw materials costs; adverse changes to laws and regulations; approval or allocation of funding for infrastructure programmes; adverse political developments in various countries and regions; failure to complete or successfully integrate acquisitions; and the specific factors identified in the discussions accompanying such forward-looking statements and in the Principal Risks and Uncertainties included on pages 104108 to 109113 of the Directors’ Report and in the Risk Factors included on pages 225233 to 233241 of this Annual Report and Form20-F. | | | | | You are cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this Directors’ Report. The Company expressly disclaims any obligation or undertaking to publicly update or revise these forward-looking statements other than as required by applicable law. | | | | | | | | The forward-looking statements in this Annual Report and Form20-F do not constitute reports or statements published in compliance with any of Regulations 4 to 8 and 26 of the Transparency (Directive 2004/109/EC) Regulations 2007. | | | | | | | | | | Location of Information required pursuant to Listing Rule 9.8.4C | | Table 50 | Listing Rule
| | Information to be included (i):
| | | LR 9.8.4 (12) and (13) | | Waivers of Dividends Disclosure | | | | | | | | | | | | | | | | | | Listing Rule | | Information to be included (i): | | | | | | LR 9.8.4 (12) and (13) | | Waivers of Dividends Disclosure: The Trustees of the Employee Benefit Trust have elected to waive dividends in respect of certain holdings of CRH shares. | | | | | See page 191200 to the Consolidated Financial Statements. | | | | |
| (i) | No information is required to be disclosed in respect of Listing Rules 9.8.4 (1), (2), (4), (5), (6), (7), (8), (9), (10), (11) and (14). | | |
| 1. | This table contains information which is required to be provided for regulatory purposes. |
| 2. | | | 2. For the purposes of the Company’s Annual Report on Form20-F as filed with the SEC, the Sustainability Report, and any reference thereto, is explicitly excluded from this Directors’ Report.
| | 99 |
| | | | 104 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
CRH Annual Report and Form 20-F I2018
Directors’ Report - continued understanding of the Company’s development, performance, position and impact of its activity. Table 48 on page 102 provides more details on the information required to be provided by theNon-Financial Regulations and where this information has been provided in this Annual Report and Form20-F. Going Concern The time period that the Directors have considered in evaluating the appropriateness of the going concern basis in preparing the financial statements for 2019 is a period of at least twelve months from the date of approval of these financial statements (the ‘period of assessment’). The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategy Review section and in this report on pages 68 to 2329 and 104pages 108 to 109 respectively.113. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Business Performance sectionReview on pages 2432 to 51.52. In addition, notes 2223 to 2627 to the Consolidated Financial Statements include the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit, currency cash flow and liquidity risks. The Group has considerable financial resources and a large number of customers and suppliers across different geographic areas and industries. In addition, the local nature of building materials means that the Group’s products are not usually shipped cross-border. Having assessed the relevant business risks, the Directors believe that the Group is well placedwell-placed to manage these risks successfully and they have a reasonable expectation that CRH plc, and the Group as a whole, has adequate resources to continue in operational existence for the foreseeable futureperiod of assessment with no material uncertainties. For this reason, the Directors continue to adopt the going concern basis in preparing the Consolidated Financial Statements. Risk Management and Internal Control1 The Directors confirm that, in addition to the monitoring carried out by the Audit Committee under its Terms of Reference, they have reviewed the effectiveness of the Group’s risk management and internal control systems up to and including the date of approval of the financial statements. This review had regard to all material controls, including financial, operational and compliance controls that could affect the Group’s business. Directors’ Remuneration Report Resolution 3 to be proposed at the 20192020 AGM deals with the 20182019 Directors’ Remuneration Report (excluding the Remuneration Policy Report)Section), as set out on pages 6874 to 97,100, which the Board has again decided to present to shareholders for the purposes of anon-binding advisory vote. This is in line with international best practice. Resolution 4 to be proposed at the 2019 AGM deals with the Remuneration Policy, as set out on pages 74 to 83. The 2019 Directors’ Remuneration Policy will, if approved, provide the framework for remuneration decisions made by the Remuneration Committee. It is the Company’s intention that this will apply until the 2022 AGM, unless the Remuneration Committee seeks shareholder approval for a renewed policy at an earlier date.
| | | | | 100 | | 1. For more information in relation to the Group’s risk management and internal control systems, please see the Risk Management and Internal Control section in the Supplementary20-F Disclosures section on page 234.
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| CRH Annual Report and Form 20-F I 2018
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Directors’ Fees
An ordinary resolution will be proposed at the 2019 AGM to increase the limit of the aggregate fees fornon-executive Directors to€1,000,000. The current limit, approved at the 2016 AGM, is€875,000. The proposed increase is required as a result of an increase in the number ofnon-executive Directors and fee increases with effect from 1 January 2019.
Changes to the Board of Directors Mr. R. BoucherD.A. McGovern, Jr. retired from the Board with effect from 25 April 2019; Mr. W.J. Teuber resigned from the Board with effect from 25 June 2019; Mr. J. Karlström was appointed to the Board with effect from 1 March 2018;25 September 2019; Mrs. M.K. RhinehartMr. S. Kelly was appointed to the Board with effect from 1 October 2018;3 December 2019; and
Mrs. S. Talbot was appointed toMr. N. Hartery retired from the Board with effect from 131 December 2018; and
Mr. D. A. McGovern, Jr. will retire from the Board at the conclusion of the AGM to be held on 25 April 2019
Under the Company’s Articles of Association,co-opted Directors are required to submit themselves to shareholders for election at the AGM following their appointment and all Directors are required to submit themselves forre-election at intervals of not more than three years. However, in accordance with the provisions contained in the UK Corporate Governance Code, the Board has decided that all Directors eligible forre-election should retire at each AGM and offer themselves forre-election. Auditors As required under Section 381(1)(b) of the Companies Act 2014, the AGM agenda includes a resolution authorising the Directors to fix the remuneration of the auditors. Section 383 of the Companies Act 2014 provides for the automaticre-appointment of the auditor of an Irish company at a company’s AGM, unless the auditor has given notice in writing of his unwillingness to bere-appointed or a resolution has been passed at that meeting appointing someone else or providing expressly that the incumbent auditor shall not bere-appointed. The auditors, EY, Chartered Accountants, are willing to continue in office. Notwithstanding the provisions of Irish company law, the Board has decided to provide shareholders with an opportunity to have a say on the continuance in office of EY and anon-binding resolution has been included on the agenda for the 2019 AGM for this purpose.
As outlined in the Audit Committee Report on pages 6064 and 61,67, following a comprehensive and competitive tender process in 2018, the Board has selected Deloitte for appointmentto replace Ernst & Young as the Company’s auditor with effect from the 2020 financial year. An ordinary resolution confirming the appointing of Deloitte will be proposed at the 2020 AGM (Resolution 6). Authority to Allot Shares The Directors require the authority of the shareholders to allot any unissued Ordinary Share capital of the Company. Accordingly, an ordinary resolution will be proposed at the 20192020 AGM (Resolution 9)7) to renew the annual authority for that purpose. The authority will be for an amount which represents just under 50% of the issued Ordinary Share capital as at 27 February 2019.2020. Any allotment exceeding 33% of the issued Ordinary Share capital will only be made pursuant to apre-emptive issue and no issue of shares will be made which could effectively alter control of the Company without prior approval of the Company in General Meeting. | 1. | For more information in relation to the Group’s risk management and internal control systems, please see the Risk Management and Internal Control section in the Supplementary20-F Disclosures section on page 242. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 105 |
The Directors have no present intention of making any issue of shares, other than in connection with the Group’s share incentive plans and, if applicable, scrip dividend scheme. If approved, this authority will expire on the earlier of the date of the AGM in 20202021 or 2422 July 2020.2021. Disapplication ofPre-emption Rights Resolutions 108 and 119 are special resolutions which, if approved by shareholders, will renew the annual authorities of the Directors to disapply statutorypre-emption rights in relation to allotments of Ordinary Shares for cash in certain circumstances. Resolution 108 will, if approved, authorise the Directors to allot Ordinary Shares on anon-pre-emptive basis and for cash (otherwise than in connection with a rights issue or similarpre-emptive issue) up to a maximum nominal value of€14,337,000.13,593,000. This amount represents approximately 5% of the issued Ordinary Share capital as at 27 February 2019,2020, being the latest practicable date prior to publication of this document. Resolution 108 will also allow the Directors to disapplypre-emption rights in order to accommodate any regulatory restrictions in certain jurisdictions where the Company might otherwise wish to undertake apre-emptive issue. Resolution 119 will, if approved, afford the Directors with an additional power to allot Ordinary Shares on anon-pre-emptive basis and for cash up to a further 5% of the issued share capital as at 27 February 2019.2020. The power conferred by Resolution 119 can be used only in connection with an acquisition or a specified capital investment which is announced contemporaneously with the issue, or which has taken place in the precedingsix-month period and is disclosed in the announcement of the issue. The 5% limits in Resolutions 108 and 119 include any Treasury Shares reissued by the Company during the same period. The Directors confirm that in respect of Resolutions 108 and 11,9, they intend to follow the Statement of Principles updated by thePre-Emption Group in that allotments of shares for cash and the reissue of Treasury Shares on anon-pre-emptive basis (other than for an open offer or rights issue to Ordinary Shareholders, the operation of CRH’s employee share schemes or in connection with an acquisition or specified capital investment) will not exceed 7.5% of the issued Ordinary Share capital within a rolling three-year period without prior consultation with shareholders. Transactions in Own Shares Under the share buyback programme, a total of 32,429,35227,357,116 Ordinary/Income Shares, equivalent to 3.84%3.42% of the Company’s issued share capital have beenwere repurchased to date,during 2019, at an average price of€27.8628.87 per share. 43,750,000 Ordinary/Income Shares, equivalent to 5.18% of the Company’s issued share capital were cancelled on 16 December 2019. As at 27 February 2019, 32,063,8442020, 14,784,464 shares were held as Treasury Shares, equivalent to 3.95%1.88% of the Ordinary Shares in issue (excluding Treasury Shares) (2018: 53,848(2019: 32,063,844 shares). During 2018, 403,933 (2017: 29,575)2019, 1,147,149 (2018: 403,933) Treasury Shares were reissued under the Group’s employees’ share schemes.
CRH Annual Report and Form 20-F I2018
Directors’ Report - continued
A special resolution will be proposed at the 20192020 AGM (Resolution 12)10) to renew the authority of the Company, or any of its subsidiaries, to purchase up to 10% of the Company’s Ordinary/Income Shares in issue at the date of the AGM. If approved, the minimum price which may be paid for shares purchased by the Company shall not be less than the nominal value of the shares and the maximum price will be 105% of the higher of the last independent trade in the Company’s shares (or current independent bid, if higher) and the average market price of such shares over the preceding five days. A special resolution (Resolution 13)11) will also be proposed for the purpose of renewing the authority to set the maximum and minimum prices at which Treasury Shares (effectively shares purchased and not cancelled) may be reissuedoff-market by the Company. If granted, both of these authorities will expire on the earlier of the date of the AGM in 20202021 or 2422 July 2020. 2021. As at 27 February 2019,2020, options to subscribe for a total of 2,471,5231,769,860 Ordinary/Income Shares are outstanding, representing 0.30%0.23% of the issued Ordinary/Income Share capital (excluding Treasury Shares). If the authority to purchase Ordinary/lncome Shares was used in full, the options would represent 0.32%0.25% of the remaining shares in issue. The ongoing share buyback programme is scheduled to expire on 2931 March 2019.2020. While no decision has been made to extend the programme, the Board believes that the Company should retain the ability to buyback its own shares so that it can be used in the best interests of shareholders generally. Authority to Offer Scrip Dividends The scrip dividend scheme was suspended during 2018 in connection with the buyback programme. The buyback programme was expected to be for a period of up to 12 months when the suspension of the scrip dividend programme was announced. No decision has yet been taken on whether the scrip dividend scheme will bere-introduced. However, to provide flexibility should a decision be made tore-introduce the scheme, an ordinary resolution is being proposed to renew the Directors’ authority to make scrip dividend offers. Unless renewed at the AGM in 2020,2021, this authority shall expire at the close of business on 2422 July 2020.2021. Annual General Meeting The Notice of Meeting for the 20192020 AGM is available on the CRH website (www.crh.com) and willis expected to be posted to shareholders on 2725 March 2019.2020.
| | | 102106 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Directors’ Report - continued On behalf of the Board, R. Boucher, A. Manifold Directors 27 February 2020
| | | | | | | In July 2019, OPTERRA, part of CRH’s Europe Materials Division and one of the leading cement producers in Germany, officially inaugurated a new exhaust gas purification system at its Karsdorf cement plant near Leipzig. The new filter technology, which includes astate-of-the-art AUTONOX® Low Dust System installed on the existing kilns, enables the factory to comply with new limits for dust, ammonia and nitrogen oxide emissions. | | |
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| | | On behalf of the Board,
N. Hartery, A. Manifold
Directors
27 February 2019
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Oldcastle Infrastructure, part of CRH’s Building Products Division, is supplying 2.1 miles ofpre-fabricated concrete | | | | | | | In operation for more than 20 years, the Texas Materials Beckmann Plant in San Antonio has supplied materials to highway projects including San Antonio’s heavily travelled Interstate 10, Loop 1604 and Loop 410 highways. | | | | | | | | 110 | | |
box culverts to a storm water drainage project in downtown Tampa, Florida. The project will reduce flooding and provide enhanced safety for pedestrians and vehicles. Construction is expected to be completed in 2021.
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Independent Auditor’s US Reports REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of CRH public limited company (CRH plc): Opinion on the Financial Statements We have audited the accompanying Consolidated Balance Sheets of CRH plc (‘the Company’) as of 31 December 20182019 and 2017,2018, the related Consolidated Income Statements and Consolidated Statements of Comprehensive Income, Changes in Equity and Cash Flows for each of the three years in the period ended 31 December 2018,2019, and the related notes (collectively referred to as the ‘financial statements’). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company at 31 December 20182019 and 2017,2018, and the consolidated results of its operations and its cash flows for each of the three years in the period ended 31 December 2018,2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of 31 December 2018,2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (2013 Framework) and our report dated 27 February 20192020 expressed an unqualified opinion thereon. Adoption of New Accounting Standard As discussed in the Accounting Policies to the financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of IFRS 16Leases. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. | | | | | Assessment of the carrying value of goodwill | | | Description of the Matter | | At 31 December 2019, the Company’s carrying value of goodwill was€8.1 billion. As discussed in note 16 of the financial statements, goodwill is subject to impairment testing on an annual basis and at any time during the year if an indicator of impairment exists. The Company’s Goodwill acquired through business combination activity has been allocated to cash-generating units (CGUs). The recoverable amount of the CGUs is determined based on avalue-in-use computation. | | | | | Auditing management’s annual goodwill impairment test is complex and judgemental due to the significant estimation required in determining the fair value of each CGU especially where an indicator of impairment exists. In particular, judgemental aspects include assumptions of future profitability, revenue growth, margins and forecast cash flows, and the selection of appropriate discount rates. | | | How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process. For example, we tested controls over the Company’s review of significant assumptions, including future profitability, revenue growth, margins and forecast cash flows, and the selection of appropriate discount rates, among others. | | | | | To test the estimated fair value of the Company’s CGUs where indicators of impairment existed, we performed audit procedures that included, among others, assessing fair values methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to external economic forecasts and construction activity measures, the Company’s historical results, and evaluated whether changes in the Company’s business would affect the significant assumptions. We assessed the historical accuracy of management’s |
| | | | | 126 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
Independent Auditor’s US Reports - continued | | | | | estimates and performed sensitivity analysis of significant assumptions to evaluate the change in the fair value of the CGUs resulting from changes in these assumptions. We involved valuation specialists to assist in our evaluation of the valuation methodology and comparison of key inputs to external market data (principally risk-free rates, country risk premium and inflation rates) used by management in calculating discount rates. | | | | | We also evaluated management’s disclosures in respect of impairment testing. | | | | | Assessment of the carrying value of property, plant and equipment and financial assets | | | Description of the Matter | | At 31 December 2019, the Company’s carrying value of property, plant and equipment (PP&E) and financial assets was€17.4 billion and€0.7 billion respectively. As discussed in notes 15 and 17 of the financial statements, the carrying values of PP&E and financial assets are reviewed for indicators of impairment at each reporting date and are subject to impairment testing when events or changes in circumstances indicate that the carrying values may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined by reference to the CGU to which the asset belongs. | | | | | Auditing management’s impairment test is complex and judgemental due to the significant estimation required in determining the fair value of the CGUs. In particular,judgemental aspects include assumptions of future profitability, revenue growth, margins and forecast cash flows, and the selection of appropriate discount rates. | | | How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s impairment review process. For example, we tested controls over the Company’s review of significant assumptions, including future profitability, revenue growth, margins and forecast cash flows, and the selection of appropriate discount rates, among others. | | | | | To test the estimated fair value of the Company CGUs where indicators of impairment existed, we performed audit procedures that included, among others, evaluation of the internal and external indicators of impairment used within the Company’s assessment, assessing fair values methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to external economic forecasts and construction activity measures, the Company’s historical results, and evaluated whether changes in the Company’s business would affect the significant assumptions. We assessed the historical accuracy of management’s estimates and performed sensitivity analysis of significant assumptions to evaluate the change in the fair value of the reporting units resulting from changes in these assumptions. We involved valuation specialists to assist in our evaluation of the valuation methodology and comparison of key inputs to external market data (principally risk-free rates, country risk premium and inflation rates) used by management in calculating discount rates. | | | | | Revenue recognition for construction contracts | | | Description of the Matter | | At 31 December 2019, the Company’s revenue for construction contracts was€5.9 billion. As discussed in note 1 of the financial statements, revenue yet to be recognised from fixed-price long-term construction contracts, primarily within the Europe Materials and Americas Materials businesses, amounted to€1.9 billion at 31 December 2019. The majority of the Company’s construction contracts have a maturity within one year. | | | | | Auditing management’s revenue recognition for construction contracts is complex and judgemental as such recognition is materially affected by changes in assumptions regarding the determination of the stage of completion, the timing of revenue recognition and the calculation under thepercentage-of-completion method. In particular, judgemental aspects include assumptions of the estimated materials, hours, and other costs required to fulfil contractual performance obligations. | | | How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition for construction contracts process. For example, we tested controls over the Company’s process for evaluating the estimated contract value, estimated and actual costs upon completion, including the estimation of units of measurement, and the amount of profit or loss to be recognised in accordance with IFRS 15. | | | | | To test the revenue recognised by the Company, we performed audit procedures that included, among others, testing a sample of contracts and evaluating the original executed contract including any change orders. For these contracts, we tested key components of the cost to complete estimates and actual costs to date, including vouching materials, hours, and subcontractor costs to source documentation, and conducted interviews with and inspected questionnaires prepared by project personnel. We recalculated revenues recognised and assessed compliance with IFRS 15. In addition, our audit procedures included performing a retrospective review of estimated profit and costs to complete and enquiring of key personnel regarding adjustments for job costing and potential contract losses. |
ERNST & YOUNG We have served as the Company’s auditor since 1988. Dublin, Ireland 27 February 20192020
CRH ANNUAL REPORT AND FORM20-F | 2019
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127 |
Independent Auditor’s US Reports - continued
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of CRH public limited company (CRH plc): Opinion on Internal Control over Financial Reporting We have audited CRH plc’s internal control over financial reporting as of 31 December 2018,2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (2013 Framework) (the ‘COSO criteria’). In our opinion, CRH plc (the Company)(‘the Company’) maintained, in all material respects, effective internal control over financial reporting as of 31 December 2018,2019, based on the COSO criteria. As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of business combinations during the year ended 31 December 2018,2019, which are included in the 20182019 Consolidated Financial Statements of the Company and constituted 9.5%1.5% and 14.6%2.3% of total and net assets, respectively, as of 31 December 20182019 and 4.6%0.8% and 4.2%0.1% of revenue and group profit, respectively, for the year then ended. Of these acquisitions, the acquisition of Ash Grove Cement Company represented 7.1% and 10.9% of total and net assets, respectively, as of 31 December 2018 and 2.4% and 3.5% of revenue and group profit, respectively, for the financial year. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of business combinations completed during the year ended 31 December 2018.2019. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Consolidated Balance Sheets of CRH plc as of 31 December 20182019 and 2017,2018, the related Consolidated Income Statements and Consolidated Statements of Comprehensive Income, Changes in Equity and Cash Flows for each of the three years in the period ended 31 December 2018,2019, and the related notes (collectively referred to as the “financial statements”) of the Company and our report dated 27 February 20192020 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ERNST & YOUNG Dublin, Ireland 27 February 20192020
| | | | | 122128 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
| | | | | | | CRH Annual Report and Form 20-F |2018
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Consolidated Income Statement for the financial year ended 31 December 20182019 | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | | 2019 €m | | | Restated (i)
2018 €m | | | Restated (i)
2017 €m | | Notes | | | | | | | | | | | | | | | | | | 1,2 | | Revenue | | | 26,790 | | | | 25,220 | | | | 24,789 | | | Revenue | | | 25,129 | | | | 23,241 | | | | 21,653 | | | 4 | | Cost of sales | | | (18,152) | | | | (16,903) | | | | (16,566) | | | Cost of sales | | | (16,846) | | | | (15,572) | | | | (14,275) | | | | | Gross profit | | | 8,638 | | | | 8,317 | | | | 8,223 | | | Gross profit | | | 8,283 | | | | 7,669 | | | | 7,378 | | | 4 | | Operating costs | | | (6,461) | | | | (6,222) | | | | (6,315) | | | Operating costs | | | (5,789) | | | | (5,598) | | | | (5,451) | | 2,5,7,8 | | Group operating profit | | | 2,177 | | | | 2,095 | | | | 1,908 | | | Group operating profit | | | 2,494 | | | | 2,071 | | | | 1,927 | | | 2,6 | | (Loss)/profit on disposals | | | (24) | | | | 56 | | | | 53 | | | (Loss)/profit on disposals | | | (1) | | | | (27) | | | | 54 | | | | | Profit before finance costs | | | 2,153 | | | | 2,151 | | | | 1,961 | | | Profit before finance costs | | | 2,493 | | | | 2,044 | | | | 1,981 | | | 10 | | Finance costs | | | (339) | | | | (301) | | | | (325) | | | Finance costs | | | (346) | | | | (339) | | | | (301) | | | 10 | | Finance income | | | 34 | | | | 12 | | | | 8 | | | Finance income | | | 20 | | | | 34 | | | | 12 | | | 10 | | Other financial expense | | | (46) | | | | (60) | | | | (66) | | | Other financial expense | | | (112) | | | | (46) | | | | (59) | | | 11 | | Share of equity accounted investments’ profit | | | 60 | | | | 65 | | | | 42 | | | Share of equity accounted investments’ profit | | | 60 | | | | 48 | | | | 52 | | 2 | | Profit before tax from continuing operations | | | 1,862 | | | | 1,867 | | | | 1,620 | | | Profit before tax from continuing operations | | | 2,115 | | | | 1,741 | | | | 1,685 | | | 12 | | Income tax expense | | | (426) | | | | (55) | | | | (431) | | | Income tax expense | | | (477) | | | | (396) | | | | (12) | | | | | Group profit for the financial year from continuing operations | | | 1,436 | | | | 1,812 | | | | 1,189 | | | Group profit for the financial year from continuing operations | | | 1,638 | | | | 1,345 | | | | 1,673 | | | 3 | | Profit after tax for the financial year from discontinued operations | | | 1,085 | | | | 107 | | | | 81 | | | Profit after tax for the financial year from discontinued operations | | | 310 | | | | 1,176 | | | | 246 | | | | | Group profit for the financial year | | | 2,521 | | | | 1,919 | | | | 1,270 | | | Group profit for the financial year | | | 1,948 | | | | 2,521 | | | | 1,919 | | | | | | Profit attributable to: | | | | | | | | Profit attributable to: | | | | | | | | | | | Equity holders of the Company | | | | | | | | Equity holders of the Company | | | | | | | | | | | From continuing operations | | | 1,432 | | | | 1,788 | | | | 1,162 | | | From continuing operations | | | 1,620 | | | | 1,342 | | | | 1,650 | | | | | | From discontinued operations | | | 1,085 | | | | 107 | | | | 81 | | | From discontinued operations | | | 309 | | | | 1,175 | | | | 245 | | | | | | Non-controlling interests | | | | | | | | Non-controlling interests | | | | | | | | | | | From continuing operations | | | 4 | | | | 24 | | | | 27 | | | From continuing operations | | | 18 | | | | 3 | | | | 23 | | | | | Group profit for the financial year | | | 2,521 | | | | 1,919 | | | | 1,270 | | | | | | | | From discontinued operations | | | 1 | | | | 1 | | | | 1 | | | | | | Group profit for the financial year | | | 1,948 | | | | 2,521 | | | | 1,919 | | | 14 | | Basic earnings per Ordinary Share | | | 302.4c | | | | 226.8c | | | | 150.2c | | | Basic earnings per Ordinary Share | | | 240.7c | | | | 302.4c | | | | 226.8c | | | 14 | | Diluted earnings per Ordinary Share | | | 300.9c | | | | 225.4c | | | | 149.1c | | | Diluted earnings per Ordinary Share | | | 238.8c | | | | 300.9c | | | | 225.4c | | | 14 | | Basic earnings per Ordinary Share from continuing operations | | | 172.0c | | | | 214.0c | | | | 140.4c | | | Basic earnings per Ordinary Share from continuing operations | | | 202.2c | | | | 161.2c | | | | 197.4c | | | 14 | | Diluted earnings per Ordinary Share from continuing operations | | | 171.2c | | | | 212.7c | | | | 139.4c | | | Diluted earnings per Ordinary Share from continuing operations | | | 200.6c | | | | 160.4c | | | | 196.2c | | | | | | | | |
| (i) | Restated to show the results of our former Europe Distribution segment in discontinued operations. See note 3 for further details. |
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
129 |
Consolidated Statement of Comprehensive Income for the financial year ended 31 December 20182019 | | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Notes | | | | | | | | | | | | | | | | | | | | | Group profit for the financial year | | | 2,521 | | | | 1,919 | | | | 1,270 | | | Group profit for the financial year | | | 1,948 | | | | 2,521 | | | | 1,919 | | | | | | Other comprehensive income | | | | | | | | Other comprehensive income | | | | | | | | | | | Items that may be reclassified to profit or loss in subsequent years: | | | | | | | | Items that may be reclassified to profit or loss in subsequent years: | | | | | | | | | | | Currency translation effects | | | 276 | | | | (1,076) | | | | (82) | | | Currency translation effects | | | 343 | | | | 276 | | | | (1,076) | | | 26 | | (Losses)/gains relating to cash flow hedges | | | (40) | | | | 8 | | | | 14 | | | 27 | | | Gains/(losses) relating to cash flow hedges | | | 24 | | | | (40) | | | | 8 | | | 12 | | Tax relating to cash flow hedges | | | 5 | | | | - | | | | - | | | Tax relating to cash flow hedges | | | (3) | | | | 5 | | | | - | | | | | | | | 241 | | | | (1,068) | | | | (68) | | | | | | 364 | | | | 241 | | | | (1,068) | | | | | | Items that will not be reclassified to profit or loss in subsequent years: | | | | | | | | Items that will not be reclassified to profit or loss in subsequent years: | | | | | | | | 29 | | Remeasurement of retirement benefit obligations | | | 10 | | | | 114 | | | | (61) | | | 30 | | | Remeasurement of retirement benefit obligations | | | (17) | | | | 10 | | | | 114 | | | 12 | | Tax relating to retirement benefit obligations | | | (1) | | | | (33) | | | | 3 | | | Tax relating to retirement benefit obligations | | | (3) | | | | (1) | | | | (33) | | | | | | | | 9 | | | | 81 | | | | (58) | | | | | | (20) | | | | 9 | | | | 81 | | | | | | Total other comprehensive income for the financial year | | | 250 | | | | (987) | | | | (126) | | | Total other comprehensive income for the financial year | | | 344 | | | | 250 | | | | (987) | | | | | | Total comprehensive income for the financial year | | | 2,771 | | | | 932 | | | | 1,144 | | | Total comprehensive income for the financial year | | | 2,292 | | | | 2,771 | | | | 932 | | | | | | Attributable to: | | | | | | | | Attributable to: | | | | | | | | | | | Equity holders of the Company | | | 2,768 | | | | 969 | | | | 1,128 | | | Equity holders of the Company | | | 2,249 | | | | 2,768 | | | | 969 | | | | | | Non-controlling interests | | | 3 | | | | (37) | | | | 16 | | | Non-controlling interests | | | 43 | | | | 3 | | | | (37) | | | | | Total comprehensive income for the financial year | | | 2,771 | | | | 932 | | | | 1,144 | | | Total comprehensive income for the financial year | | | 2,292 | | | | 2,771 | | | | 932 | |
| | | | | 124130 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
| | | | | | | CRH Annual Report and Form 20-F |2018
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Consolidated Balance Sheet as at 31 December 20182019 | | | | | 2018 €m | | �� | 2017 €m | | | | 2019 €m | | | 2018 €m | | Notes | | | | | | | | | | | | | | | | ASSETS | | | | | | ASSETS | | | | | | | | | Non-current assets | | | | | | Non-current assets | | | | | | 15 | | Property, plant and equipment | | | 15,761 | | | | 13,094 | | | Property, plant and equipment | | | 17,424 | | | | 15,761 | | | 16 | | Intangible assets | | | 8,433 | | | | 7,214 | | | Intangible assets | | | 8,434 | | | | 8,433 | | | 17 | | Investments accounted for using the equity method | | | 1,163 | | | | 1,248 | | | Investments accounted for using the equity method | | | 690 | | | | 1,163 | | | 17 | | Other financial assets | | | 23 | | | | 25 | | | Other financial assets | | | 12 | | | | 23 | | | 19 | | Other receivables | | | 181 | | | | 156 | | | Other receivables | | | 317 | | | | 181 | | | 26 | | Derivative financial instruments | | | 30 | | | | 30 | | | 27 | | | Derivative financial instruments | | | 76 | | | | 30 | | | 28 | | Deferred income tax assets | | | 71 | | | | 95 | | | 29 | | | Deferred income tax assets | | | 67 | | | | 71 | | | | | | Totalnon-current assets | | | 25,662 | | | | 21,862 | | | Totalnon-current assets | | | 27,020 | | | | 25,662 | | | | | | Current assets | | | | | | Current assets | | | | | | 18 | | Inventories | | | 3,061 | | | | 2,715 | | | Inventories | | | 2,742 | | | | 3,061 | | | 19 | | Trade and other receivables | | | 4,074 | | | | 3,630 | | | Trade and other receivables | | | 3,767 | | | | 4,074 | | | | | | Current income tax recoverable | | | 15 | | | | 165 | | | Current income tax recoverable | | | 20 | | | | 15 | | | 26 | | Derivative financial instruments | | | 15 | | | | 34 | | | 27 | | | Derivative financial instruments | | | 6 | | | | 15 | | | 24 | | Cash and cash equivalents | | | 2,346 | | | | 2,115 | | | | | | | Assets held for sale | | | - | | | | 1,112 | | | 25 | | | Cash and cash equivalents | | | 3,755 | | | | 2,346 | | | | | | Total current assets | | | 9,511 | | | | 9,771 | | | Total current assets | | | 10,290 | | | | 9,511 | | | | | | Total assets | | | 35,173 | | | | 31,633 | | | Total assets | | | 37,310 | | | | 35,173 | | | | | | EQUITY | | | | | | EQUITY | | | | | | | | | Capital and reserves attributable to the Company’s equity holders | | | | | | Capital and reserves attributable to the Company’s equity holders | | | | | | 31 | | Equity share capital | | | 287 | | | | 286 | | | Equity share capital | | | 272 | | | | 287 | | | 31 | | Preference share capital | | | 1 | | | | 1 | | | Preference share capital | | | 1 | | | | 1 | | | 31 | | Share premium account | | | 6,534 | | | | 6,417 | | | Share premium account | | | 6,534 | | | | 6,534 | | | 31 | | Treasury Shares and own shares | | | (792) | | | | (15) | | | Treasury Shares and own shares | | | (325) | | | | (792) | | | | | | Other reserves | | | 296 | | | | 285 | | | Other reserves | | | 326 | | | | 296 | | | | | | Foreign currency translation reserve | | | (109) | | | | (386) | | | Foreign currency translation reserve | | | 210 | | | | (109) | | | | | | Retained income | | | 9,812 | | | | 7,903 | | | Retained income | | | 9,922 | | | | 9,812 | | | | | | Capital and reserves attributable to the Company’s equity holders | | | 16,029 | | | | 14,491 | | | Capital and reserves attributable to the Company’s equity holders | | | 16,940 | | | | 16,029 | | | 33 | | Non-controlling interests | | | 525 | | | | 486 | | | Non-controlling interests | | | 540 | | | | 525 | | | | | | Total equity | | | 16,554 | | | | 14,977 | | | Total equity | | | 17,480 | | | | 16,554 | | | | | | LIABILITIES | | | | | | LIABILITIES | | | | | | | | | Non-current liabilities | | | | | | Non-current liabilities | | | | | | 25 | | Interest-bearing loans and borrowings | | | 8,698 | | | | 7,660 | | | 22 | | | Lease liabilities | | | 1,240 | | | | - | | | 26 | | Derivative financial instruments | | | 18 | | | | 3 | | | Interest-bearing loans and borrowings | | | 8,199 | | | | 8,698 | | | 28 | | Deferred income tax liabilities | | | 2,209 | | | | 1,666 | | | 27 | | | Derivative financial instruments | | | 1 | | | | 18 | | | 29 | | | Deferred income tax liabilities | | | 2,338 | | | | 2,209 | | | 20 | | Other payables | | | 472 | | | | 226 | | | Other payables | | | 485 | | | | 472 | | | 29 | | Retirement benefit obligations | | | 424 | | | | 377 | | | 30 | | | Retirement benefit obligations | | | 427 | | | | 424 | | | 27 | | Provisions for liabilities | | | 719 | | | | 693 | | | 28 | | | Provisions for liabilities | | | 760 | | | | 719 | | | | | | Totalnon-current liabilities | | | 12,540 | | | | 10,625 | | | Totalnon-current liabilities | | | 13,450 | | | | 12,540 | | | | | | Current liabilities | | | | | | Current liabilities | | | | | | 22 | | | Lease liabilities | | | 271 | | | | - | | | 20 | | Trade and other payables | | | 4,609 | | | | 4,534 | | | Trade and other payables | | | 4,376 | | | | 4,609 | | | | | | Current income tax liabilities | | | 443 | | | | 458 | | | Current income tax liabilities | | | 503 | | | | 443 | | | 25 | | Interest-bearing loans and borrowings | | | 618 | | | | 316 | | | | 26 | | Derivative financial instruments | | | 41 | | | | 11 | | | Interest-bearing loans and borrowings | | | 815 | | | | 618 | | | 27 | | Provisions for liabilities | | | 368 | | | | 371 | | | Derivative financial instruments | | | 16 | | | | 41 | | | 28 | | | Provisions for liabilities | | | 399 | | | | 368 | | | | | | Liabilities associated with assets classified as held for sale | | | - | | | | 341 | | | Total current liabilities | | | 6,380 | | | | 6,079 | | | | | | Total current liabilities | | | 6,079 | | | | 6,031 | | | Total liabilities | | | 19,830 | | | | 18,619 | | | | | | Total liabilities | | | 18,619 | | | | 16,656 | | | Total equity and liabilities | | | 37,310 | | | | 35,173 | | | | | | Total equity and liabilities | | | 35,173 | | | | 31,633 | | | R. Boucher, A. Manifold, Directors | | | | | | | | | N. Hartery, A. Manifold, Directors | | | | | |
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
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Consolidated Statement of Changes in Equity for the financial year ended 31 December 20182019 | | | | | Attributable to the equity holders of the Company | | | | | | | | | Attributable to the equity holders of the Company | | | | | | | | | | | Issued
share
capital
€m | | Share
premium
account
€m | | Treasury
Shares/
own shares
€m | | Other
reserves
€m | | Foreign
currency
translation
reserve
€m | | Retained
income
€m | | Non-
controlling
interests
€m | | Total
equity
€m | | | | Issued
share
capital
€m | | Share
premium
account
€m | | Treasury
Shares/
own shares
€m | | Other
reserves
€m | | Foreign
currency
translation
reserve
€m | | Retained
income
€m | | Non-
controlling
interests
€m | | Total
equity
€m | | | Notes | | | | | | | | | | | | At 1 January 2019 | | | 288 | | | | 6,534 | | | | (792) | | | | 296 | | | | (109) | | | | 9,812 | | | | 525 | | | | 16,554 | | | | | | Group profit for the financial year | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,929 | | | | 19 | | | | 1,948 | | | | | | Other comprehensive income | | | - | | | | - | | | | - | | | | - | | | | 319 | | | | 1 | | | | 24 | | | | 344 | | | | | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | 319 | | | | 1,930 | | | | 43 | | | | 2,292 | | | | 9 | | | Share-based payment expense | | | - | | | | - | | | | - | | | | 77 | | | | - | | | | - | | | | - | | | | 77 | | | 31 | | | Shares acquired by CRH plc (Treasury Shares) | | | - | | | | - | | | | (791) | | | | - | | | | - | | | | - | | | | - | | | | (791) | | | 31 | | | Treasury Shares/own shares reissued | | | - | | | | - | | | | 35 | | | | - | | | | - | | | | (35) | | | | - | | | | - | | | 31 | | | Shares acquired by Employee Benefit Trust (own shares) | | | - | | | | - | | | | (61) | | | | - | | | | - | | | | - | | | | - | | | | (61) | | | 31 | | | Shares distributed under the Performance Share Plan Awards | | | - | | | | - | | | | 62 | | | | (62) | | | | - | | | | - | | | | - | | | | - | | | 31 | | | Cancellation of Treasury Shares | | | (15) | | | | - | | | | 1,222 | | | | 15 | | | | - | | | | (1,222) | | | | - | | | | - | | | 12 | | | Tax relating to share-based payment expense | | | - | | | | - | | | | - | | | | - | | | | - | | | | 9 | | | | - | | | | 9 | | | | | | Share option exercises | | | - | | | | - | | | | - | | | | - | | | | - | | | | 20 | | | | - | | | | 20 | | | 13 | | | Dividends | | | - | | | | - | | | | - | | | | - | | | | - | | | | (584) | | | | (10) | | | | (594) | | | 3 | | | Disposal of non-controlling interests | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (8) | | | | (8) | | | 32 | | | Non-controlling interests arising on acquisition of subsidiaries | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1 | | | | 1 | | | | | | Transactions involvingnon-controlling interests | | | - | | | | - | | | | - | | | | - | | | | - | | | | (8) | | | | (11) | | | | (19) | | | | | | At 31 December 2019 | | | 273 | | | | 6,534 | | | | (325) | | | | 326 | | | | 210 | | | | 9,922 | | | | 540 | | | | 17,480 | | | | | | | for the financial year ended 31 December 2018 | | | | | At 1 January 2018 | | | 287 | | | | 6,417 | | | | (15) | | | | 285 | | | | (386) | | | | 7,903 | | | | 486 | | | | 14,977 | | | At 1 January 2018 | | | 287 | | | | 6,417 | | | | (15) | | | | 285 | | | | (386) | | | | 7,903 | | | | 486 | | | | 14,977 | | | | | Group profit for the financial year | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,517 | | | | 4 | | | | 2,521 | | | Group profit for the financial year | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,517 | | | | 4 | | | | 2,521 | | | | | Other comprehensive income | | | - | | | | - | | | | - | | | | - | | | | 277 | | | | (26) | | | | (1) | | | | 250 | | | Other comprehensive income | | | - | | | | - | | | | - | | | | - | | | | 277 | | | | (26) | | | | (1) | | | | 250 | | | | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | 277 | | | | 2,491 | | | | 3 | | | | 2,771 | | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | 277 | | | | 2,491 | | | | 3 | | | | 2,771 | | | | 31 | | Issue of share capital (net of expenses) | | | - | | | | 62 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 62 | | | Issue of share capital (net of expenses) | | | - | | | | 62 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 62 | | | 9 | | Share-based payment expense | | | - | | | | - | | | | - | | | | 67 | | | | - | | | | - | | | | - | | | | 67 | | | Share-based payment expense | | | - | | | | - | | | | - | | | | 67 | | | | - | | | | - | | | | - | | | | 67 | | | 31 | | Shares acquired by CRH plc (Treasury Shares) | | | - | | | | - | | | | (789) | | | | - | | | | - | | | | - | | | | - | | | | (789) | | | Shares acquired by CRH plc (Treasury Shares) | | | - | | | | - | | | | (789) | | | | - | | | | - | | | | - | | | | - | | | | (789) | | | 31 | | Treasury/own shares reissued | | | - | | | | - | | | | 15 | | | | - | | | | - | | | | (15) | | | | - | | | | - | | | Treasury Shares/own shares reissued | | | - | | | | - | | | | 15 | | | | - | | | | - | | | | (15) | | | | - | | | | - | | | 31 | | Shares acquired by Employee Benefit Trust (own shares) | | | - | | | | - | | | | (3) | | | | - | | | | - | | | | - | | | | - | | | | (3) | | | Shares acquired by Employee Benefit Trust (own shares) | | | - | | | | - | | | | (3) | | | | - | | | | - | | | | - | | | | - | | | | (3) | | | 31 | | Shares distributed under the Performance Share Plan Awards | | | 1 | | | | 55 | | | | - | | | | (56) | | | | - | | | | - | | | | - | | | | - | | | Shares distributed under the Performance Share Plan Awards | | | 1 | | | | 55 | | | | - | | | | (56) | | | | - | | | | - | | | | - | | | | - | | | 12 | | Tax relating to share-based payment expense | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2) | | | | - | | | | (2) | | | Tax relating to share-based payment expense | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2) | | | | - | | | | (2) | | | | | Share option exercises | | | - | | | | - | | | | - | | | | - | | | | - | | | | 7 | | | | - | | | | 7 | | | Share option exercises | | | - | | | | - | | | | - | | | | - | | | | - | | | | 7 | | | | - | | | | 7 | | | 13 | | Dividends (including shares issued in lieu of dividends) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (572) | | | | (12) | | | | (584) | | | Dividends (including shares issued in lieu of dividends) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (572) | | | | (12) | | | | (584) | | | 32 | | Non-controlling interests arising on acquisition of subsidiaries | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 48 | | | | 48 | | | Non-controlling interests arising on acquisition of subsidiaries | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 48 | | | | 48 | | | | | At 31 December 2018 | | | 288 | | | | 6,534 | | | | (792) | | | | 296 | | | | (109) | | | | 9,812 | | | | 525 | | | | 16,554 | | | At 31 December 2018 | | | 288 | | | | 6,534 | | | | (792) | | | | 296 | | | | (109) | | | | 9,812 | | | | 525 | | | | 16,554 | | | | | | for the financial year ended 31 December 2017 | | | for the financial year ended 31 December 2017 | | | | | | At 1 January 2017 | | | 285 | | | | 6,237 | | | | (14) | | | | 286 | | | | 629 | | | | 6,472 | | | | 548 | | | | 14,443 | | | | | At 1 January 2017 | | | 285 | | | | 6,237 | | | | (14) | | | | 286 | | | | 629 | | | | 6,472 | | | | 548 | | | | 14,443 | | | Group profit for the financial year | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,895 | | | | 24 | | | | 1,919 | | | | | Group profit for the financial year | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,895 | | | | 24 | | | | 1,919 | | | Other comprehensive income | | | - | | | | - | | | | - | | | | - | | | | (1,015) | | | | 89 | | | | (61) | | | | (987) | | | | | Other comprehensive income | | | - | | | | - | | | | - | | | | - | | | | (1,015) | | | | 89 | | | | (61) | | | | (987) | | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | (1,015) | | | | 1,984 | | | | (37) | | | | 932 | | | | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | (1,015) | | | | 1,984 | | | | (37) | | | | 932 | | | | | | | | Issue of share capital (net of expenses) | | | 1 | | | | 118 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 119 | | | 31 | | Issue of share capital (net of expenses) | | | 1 | | | | 118 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 119 | | | | | | Share-based payment expense | | | - | | | | - | | | | - | | | | 62 | | | | - | | | | - | | | | - | | | | 62 | | | | 31 | | Treasury/own shares reissued | | | - | | | | - | | | | 2 | | | | - | | | | - | | | | (2) | | | | - | | | | - | | | | 31 | | Shares acquired by Employee Benefit Trust (own shares) | | | - | | | | - | | | | (3) | | | | - | | | | - | | | | - | | | | - | | | | (3) | | | | 31 | | Shares distributed under the Performance Share Plan Awards | | | 1 | | | | 62 | | | | - | | | | (63) | | | | - | | | | - | | | | - | | | | - | | | | 12 | | Tax relating to share-based payment expense | | | - | | | | - | | | | - | | | | - | | | | - | | | | (5) | | | | - | | | | (5) | | | | 13 | | Dividends (including shares issued in lieu of dividends) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (546) | | | | (8) | | | | (554) | | | | 32 | | Non-controlling interests arising on acquisition of subsidiaries | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 20 | | | | 20 | | | | | | Transactions involvingnon-controlling interests | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (37) | | | | (37) | | | | | | At 31 December 2017 | | | 287 | | | | 6,417 | | | | (15) | | | | 285 | | | | (386) | | | | 7,903 | | | | 486 | | | | 14,977 | | | | | | | for the financial year ended 31 December 2016 | | | | | | | At 1 January 2016 | | | 282 | | | | 6,021 | | | | (28) | | | | 240 | | | | 700 | | | | 5,800 | | | | 529 | | | | 13,544 | | | | | | Group profit for the financial year | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,243 | | | | 27 | | | | 1,270 | | | | | | Other comprehensive income | | | - | | | | - | | | | - | | | | - | | | | (71) | | | | (44) | | | | (11) | | | | (126) | | | | | | Total comprehensive income | | | - | | | | - | | | | - | | | | - | | | | (71) | | | | 1,199 | | | | 16 | | | | 1,144 | | | | | | | Issue of share capital (net of expenses) | | | 3 | | | | 216 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 219 | | | Share-based payment expense | | | - | | | | - | | | | - | | | | 62 | | | | - | | | | - | | | | - | | | | 62 | | | | | Share-based payment expense | | | - | | | | - | | | | - | | | | 46 | | | | - | | | | - | | | | - | | | | 46 | | | Treasury Shares/own shares reissued | | | - | | | | - | | | | 2 | | | | - | | | | - | | | | (2) | | | | - | | | | - | | | | | Treasury/own shares reissued | | | - | | | | - | | | | 18 | | | | - | | | | - | | | | (18) | | | | - | | | | - | | | Shares acquired by Employee Benefit Trust (own shares) | | | - | | | | - | | | | (3) | | | | - | | | | - | | | | - | | | | - | | | | (3) | | | | | Shares acquired by Employee Benefit Trust (own shares) | | | - | | | | - | | | | (4) | | | | - | | | | - | | | | - | | | | - | | | | (4) | | | Shares distributed under the Performance Share Plan Awards | | | 1 | | | | 62 | | | | - | | | | (63) | | | | - | | | | - | | | | - | | | | - | | | 12 | | Tax relating to share-based payment expense | | | - | | | | - | | | | - | | | | - | | | | - | | | | 12 | | | | - | | | | 12 | | | Tax relating to share-based payment expense | | | - | | | | - | | | | - | | | | - | | | | - | | | | (5) | | | | - | | | | (5) | | | 13 | | Dividends (including shares issued in lieu of dividends) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (519) | | | | (8) | | | | (527) | | | Dividends (including shares issued in lieu of dividends) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (546) | | | | (8) | | | | (554) | | | 32 | | Non-controlling interests arising on acquisition of subsidiaries | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 9 | | | | 9 | | | Non-controlling interests arising on acquisition of subsidiaries | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 20 | | | | 20 | | | | | Transactions involvingnon-controlling interests | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2) | | | | 2 | | | | - | | | Transactions involvingnon-controlling interests | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (37) | | | | (37) | | | | | At 31 December 2016 | | | 285 | | | | 6,237 | | | | (14) | | | | 286 | | | | 629 | | | | 6,472 | | | | 548 | | | | 14,443 | | | At 31 December 2017 | | | 287 | | | | 6,417 | | | | (15) | | | | 285 | | | | (386) | | | | 7,903 | | | | 486 | | | | 14,977 | |
| | | | | 126132 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
| | | | | | | CRH Annual Report and Form 20-F |2018
|
Consolidated Statement of Cash Flows for the financial year ended 31 December 20182019 | | | | | | | | | | | | | | | | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | Notes | | | | | | | | | | | | | | | | | | Cash flows from operating activities | | | | | | | | | | | | | | | | Profit before tax from continuing operations | | | 1,862 | | | | 1,867 | | | | 1,620 | | 3 | | Profit before tax from discontinued operations | | | 1,558 | | | | 146 | | | | 121 | | | | | Profit before tax | | | 3,420 | | | | 2,013 | | | | 1,741 | | 10 | | Finance costs (net) | | | 351 | | | | 349 | | | | 383 | | 11 | | Share of equity accounted investments’ profit | | | (60) | | | | (65) | | | | (42) | | 6 | | Profit on disposals | | | (1,539) | | | | (59) | | | | (55) | | | | | Group operating profit | | | 2,172 | | | | 2,238 | | | | 2,027 | | 15 | | Depreciation charge | | | 1,071 | | | | 1,006 | | | | 1,009 | | 16 | | Amortisation of intangible assets | | | 61 | | | | 66 | | | | 71 | | 15,16 | | Impairment charge | | | 56 | | | | - | | | | 23 | | 9 | | Share-based payment expense | | | 67 | | | | 65 | | | | 46 | | | | | Other (primarily pension payments) | | | (67) | | | | (186) | | | | (65) | | 21 | | Net movement on working capital and provisions | | | (463) | | | | (209) | | | | 56 | | | | | Cash generated from operations | | | 2,897 | | | | 2,980 | | | | 3,167 | | | | �� | Interest paid (including finance leases) | | | (335) | | | | (317) | | | | (346) | | | | | Corporation tax paid | | | (663) | | | | (474) | | | | (481) | | | | | Net cash inflow from operating activities | | | 1,899 | | | | 2,189 | | | | 2,340 | | | | | | | | | | Cash flows from investing activities | | | | | | | | | | | | | 6 | | Proceeds from disposals (net of cash disposed and deferred proceeds) | | | 3,009 | | | | 222 | | | | 283 | | | | | Interest received | | | 34 | | | | 11 | | | | 8 | | 17 | | Dividends received from equity accounted investments | | | 48 | | | | 31 | | | | 40 | | 15 | | Purchase of property, plant and equipment | | | (1,121) | | | | (1,044) | | | | (853) | | 32 | | Acquisition of subsidiaries (net of cash acquired) | | | (3,505) | | | | (1,841) | | | | (149) | | 17 | | Other investments and advances | | | (2) | | | | (11) | | | | (7) | | 21 | | Deferred and contingent acquisition consideration paid | | | (55) | | | | (53) | | | | (57) | | | | | Net cash outflow from investing activities | | | (1,592) | | | | (2,685) | | | | (735) | | | | | | | | | | Cash flows from financing activities | | | | | | | | | | | | | 31 | | Proceeds from issue of shares (net) | | | 11 | | | | 42 | | | | 52 | | | | | Proceeds from exercise of share options | | | 7 | | | | - | | | | - | | | | | Transactions involvingnon-controlling interests | | | - | | | | (37) | | | | - | | 22 | | Increase in interest-bearing loans, borrowings and finance leases | | | 1,434 | | | | 1,010 | | | | 600 | | 22 | | Net cash flow arising from derivative financial instruments | | | 6 | | | | 169 | | | | (5) | | 10 | | Premium paid on early debt redemption | | | - | | | | (18) | | | | - | | 31 | | Treasury/own shares purchased | | | (792) | | | | (3) | | | | (4) | | 22 | | Repayment of interest-bearing loans, borrowings and finance leases | | | (246) | | | | (343) | | | | (2,015) | | 13 | | Dividends paid to equity holders of the Company | | | (521) | | | | (469) | | | | (352) | | 13 | | Dividends paid tonon-controlling interests | | | (12) | | | | (8) | | | | (8) | | | | | Net cash (outflow)/inflow from financing activities | | | (113) | | | | 343 | | | | (1,732) | | | | | | | | | | | | | | | | | | | | | Increase/(decrease) in cash and cash equivalents | | | 194 | | | | (153) | | | | (127) | | | | | | | | | | Reconciliation of opening to closing cash and cash equivalents | | | | | | | | | | | | | | | | Cash and cash equivalents at 1 January | | | 2,135 | | | | 2,449 | | | | 2,518 | | | | | Translation adjustment | | | 17 | | | | (161) | | | | 58 | | | | | Increase/(decrease) in cash and cash equivalents | | | 194 | | | | (153) | | | | (127) | | 24 | | Cash and cash equivalents at 31 December | | | 2,346 | | | | 2,135 | | | | 2,449 | |
| | | | | | | | | | | | | | | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Notes | | | | | | | | | | | | | | | | | | Cash flows from operating activities | | | | | | | | | | | | | | | | Profit before tax from continuing operations | | | 2,115 | | | | 1,741 | | | | 1,685 | | 3 | | Profit before tax from discontinued operations | | | 333 | | | | 1,679 | | | | 328 | | | | | Profit before tax | | | 2,448 | | | | 3,420 | | | | 2,013 | | 10 | | Finance costs (net) | | | 445 | | | | 351 | | | | 349 | | 11 | | Share of equity accounted investments’ profit | | | (72) | | | | (60) | | | | (65) | | 6 | | Profit on disposals | | | (226) | | | | (1,539) | | | | (59) | | | | | Group operating profit | | | 2,595 | | | | 2,172 | | | | 2,238 | | 15,22 | | Depreciation charge | | | 1,538 | | | | 1,071 | | | | 1,006 | | 16 | | Amortisation of intangible assets | | | 59 | | | | 61 | | | | 66 | | 15,16 | | Impairment charge | | | 8 | | | | 56 | | | | - | | 9 | | Share-based payment expense | | | 77 | | | | 67 | | | | 65 | | | | | Other (primarily pension payments) | | | (3) | | | | (67) | | | | (186) | | 21 | | Net movement on working capital and provisions | | | (64) | | | | (463) | | | | (209) | | | | | Cash generated from operations | | | 4,210 | | | | 2,897 | | | | 2,980 | | | | | Interest paid (including leases) (i) | | | (419) | | | | (335) | | | | (317) | | | | | Corporation tax paid | | | (325) | | | | (663) | | | | (474) | | | | | Net cash inflow from operating activities | | | 3,466 | | | | 1,899 | | | | 2,189 | | | | | | | | | | Cash flows from investing activities | | | | | | | | | | | | | 6 | | Proceeds from disposals (net of cash disposed and deferred proceeds) | | | 2,096 | | | | 3,009 | | | | 222 | | | | | Interest received | | | 20 | | | | 34 | | | | 11 | | 17 | | Dividends received from equity accounted investments | | | 35 | | | | 48 | | | | 31 | | 15 | | Purchase of property, plant and equipment | | | (1,229) | | | | (1,121) | | | | (1,044) | | 32 | | Acquisition of subsidiaries (net of cash acquired) | | | (650) | | | | (3,505) | | | | (1,841) | | 17 | | Other investments and advances | | | (29) | | | | (2) | | | | (11) | | 21 | | Deferred and contingent acquisition consideration paid | | | (48) | | | | (55) | | | | (53) | | | | | Net cash inflow/(outflow) from investing activities | | | 195 | | | | (1,592) | | | | (2,685) | | | | | | | | | | Cash flows from financing activities | | | | | | | | | | | | | 31 | | Proceeds from issue of shares (net) | | | - | | | | 11 | | | | 42 | | | | | Proceeds from exercise of share options | | | 20 | | | | 7 | | | | - | | | | | Transactions involvingnon-controlling interests | | | (19) | | | | - | | | | (37) | | 23 | | Increase in interest-bearing loans and borrowings | | | 91 | | | | 1,434 | | | | 1,010 | | 23 | | Net cash flow arising from derivative financial instruments | | | (36) | | | | 6 | | | | 169 | | 10 | | Premium paid on early debt redemption | | | - | | | | - | | | | (18) | | 23 | | Repayment of interest-bearing loans, borrowings and finance leases (ii) | | | (572) | | | | (246) | | | | (343) | | 22 | | Repayment of lease liabilities (iii) | | | (317) | | | | - | | | | - | | 31 | | Treasury Shares/own shares purchased | | | (852) | | | | (792) | | | | (3) | | 13 | | Dividends paid to equity holders of the Company | | | (584) | | | | (521) | | | | (469) | | 13 | | Dividends paid tonon-controlling interests | | | (10) | | | | (12) | | | | (8) | | | | | Net cash (outflow)/inflow from financing activities | | | (2,279) | | | | (113) | | | | 343 | | | | | | | | | | | | | | | | | | | | | Increase/(decrease) in cash and cash equivalents | | | 1,382 | | | | 194 | | | | (153) | | | | | | | | | | Reconciliation of opening to closing cash and cash equivalents | | | | | | | | | | | | | | | | Cash and cash equivalents at 1 January | | | 2,346 | | | | 2,135 | | | | 2,449 | | | | | Translation adjustment | | | 27 | | | | 17 | | | | (161) | | | | | Increase/(decrease) in cash and cash equivalents | | | 1,382 | | | | 194 | | | | (153) | | 25 | | Cash and cash equivalents at 31 December | | | 3,755 | | | | 2,346 | | | | 2,135 | |
| (i) | Leases include finance leases previously capitalised under IAS 17Leasesin 2018 and 2017 and all capitalised leases included as lease liabilities under IFRS 16Leases in 2019. |
| (ii) | Finance leases as previously capitalised under IAS 17 in 2018 and 2017. |
| (iii) | Repayment of lease liabilities capitalised under IFRS 16 in 2019 amounted to€386 million, of which€69 million related to interest paid which is presented in cash flows from operating activities. |
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
133 |
Accounting Policies (including key accounting estimates and assumptions) This document constitutes both the Annual Report and the Financial Statements in accordance with the Irish and UK requirements, and the Annual Report on Form20-F in accordance with the US Securities Exchange Act of 1934. Basis of Preparation The Consolidated Financial Statements of CRH plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the International Accounting Standards Board. CRH plc, the Parent Company, is a publicly traded limited company incorporated and domiciled in the Republic of Ireland. The Consolidated Financial Statements, which are presented in euro millions, have been prepared under the historical cost convention as modified by the measurement at fair value of share-based payments, retirement benefit obligations and certain financial assets and liabilities including derivative financial instruments. The accounting policies set out below have been applied consistently by all of the Group’s subsidiaries, joint ventures and associates to all periods presented in thesethe Consolidated Financial Statements. In accordance with Section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its individual profit and loss account to the Annual General Meeting and from filing it with the Registrar of Companies. Adoption of IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations The following new standards, interpretations and standard amendments became effective for the Group as of 1 January 2018:2019: | • | | IFRIC 23Uncertainty over Income Tax Treatments |
| • | | Amendments to IFRS 9Financial Instruments |
| • | | IFRS 15Revenue from Contracts with Customers
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• | | IFRIC 22Foreign Currency Transactions and Advanced Consideration
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• | | Amendments to IFRS 2IAS 19Share-based PaymentEmployee Benefits |
| • | | Amendments to IAS 28Investments in Associates and Joint Ventures |
| • | �� | Annual Improvements 2015 – 2017 Cycle |
While theThe new standards, interpretations and standard amendments did not result in a material impact on the Group’s results, the nature and effect of changes required by IFRS 9 and IFRS 15 are described below.
IFRS 9Financial Instruments
IFRS 9 replaces IAS 39Financial Instruments: Recognition and Measurement. It addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces a new impairment model for financial assets and new rules for hedge accounting. The Group has applied IFRS 9 retrospectively, but elected not to restate comparative information.
The Group has assessed the business models and contractual cash flows which apply to its financial assets and classified the assets into the appropriate IFRS 9 categories accordingly.
Financial asset classifications under IFRS 9:
| | | | | | | Financial asset category | | Classification and
measurement under IAS 39 | | Classification and
measurement under IFRS 9 | | Classification test outcomes | Cash and cash equivalents
Trade receivables
Other receivables
Other financial assets
Deferred proceeds
| | Loans and receivables at fair value (initial recognition) followed by amortised cost (subsequent measurement). | | Financial assets at fair value (initial recognition) followed by amortised cost net of impairments (subsequent measurement). | | Business model test result: hold to collect contractual cash flows.
Cash flow characteristics test result: solely payments of principal and interest.
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| | | | Contingent proceeds | | Fair value through profit or loss. | | Fair value through profit or loss. | | Business model test result: hold to collect contractual cash flows.
Cash flow characteristics test result: potential variability in future payments results in changes to fair value.
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As outlined above, the classification requirements under IFRS 9 did not impact the measurement or carrying amount of financial assets.
| | | | | | | CRH Annual Report and Form 20-F |2018
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Impairment of Financial Assets
The Group’s financial assets measured at amortised cost, the most significant of which are trade receivables and amounts receivable in respect of construction contracts, are subject to IFRS 9’s new expected credit loss model. The Group’s impairment methodology has been revised in line with the requirementsexception of IFRS 9. The simplified approach to providing for expected credit losses has been applied to trade receivables,16 which requires the use of a lifetime expected loss provision.
As part of the IFRS 9 transition project, the Group assessed its existing trade and other receivables for impairment, using reasonable and supportable information that is available without undue cost or effort, to determine the credit risk of the receivables at the date on which they were initially recognised and compared that to the credit risk as at 1 January 2018. This assessment has not resulted in a material adjustment to trade and other receivables.
Hedge Accounting
The new hedge accounting rules align the accounting for hedging instruments more closely with the Group’s risk management practices. The Group’s current hedge relationships qualify as continuing hedges upon the adoption of IFRS 9. Accordingly, there has not been a significant impact to the financial position of the Group as a result of adopting IFRS 9.
IFRS 15Revenue from Contracts with Customers
IFRS 15 replaced IAS 18Revenue, IAS 11Construction Contracts and related interpretations. The Group adopted IFRS 15 following an extensive transition project, which included an assessment of the impact of multiple performance obligations and variable consideration within our construction contract businesses, and whether certain revenue might be more appropriately recorded on an agency or net basis, rather than on a gross basis in accordance with the principal of control. The assessment resulted in an immaterial change in the treatment of certain direct sales from a principal to an agency basis in our Europe Distribution segment. There was no material impact on the Group’s revenue recognition or the classification of contract related assets or liabilities in the Group’s Consolidated Balance Sheet as a result of transitioning to IFRS 15.
A description of the Group’s revenue recognition policy under IFRS 15 is set out on page 133. In accordance with the requirements of IFRS 15, new disclosures outlining the disaggregation of revenue by primary geographic markets and principal activities and products are included in note 1 to the Consolidated Financial Statements.
IFRS and IFRIC interpretations being adopted in subsequent yearsdetailed below.
IFRS 16Leases IFRS 16 will replacereplaces IAS 17Leases and related interpretations.. CRH will adoptadopted IFRS 16 from 1 January 2019 by applying the modified retrospective approach.approach on the transition date of 1 January 2019. The Group will applyapplied the recognition exemption for both short-term leases and leases of low valuelow-value assets. The Group doesdid not expect to avail of the practical expedient not to not separatenon-lease components from lease components; nor does it intend to avail ofcomponents or the practical expedient allowing leases previously classified as operating leases and ending within 12 months of the date of transition, to be accounted for as short-term leases. Theright-of-use asset has been calculated as the lease liability at 1 January 2019 adjusted for any prepayments, accruals and onerous lease provisions with no adjustment to opening retained earnings. The Group relied on its assessment of whether leases are onerous applying IAS 37Provisions, Contingent Liabilities and Contingent Assets immediately before the date of initial application as an alternative to performing an impairment review. Certain of the Group’s key financial metrics will be impacted upon transition to IFRS 16. The adoption of the new standard will haveIFRS 16 had a material impact on the Group’s Consolidated Income StatementFinancial Statements and Consolidated Balance Sheet, as follows:certain key financial metrics, which is quantified and further explained in the table overleaf.
| | | | | 134 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
Accounting Policies - continued Primary statement line item / financial metric | | | | | | | | | | | | | | As at 1 January 2019
€m
| | | Consolidated Balance Sheet | | | | | | | Property, plant and equipment (i) (ii) | | | | | +1,939 | | | Lease liabilities; net debt (i) (ii) | | | | | +1,954 | | | | | | | | | For the year ended
31 December 2019
€m
| | | Consolidated Income Statement | | | | | | | Depreciation (i) | | | +334 | | Finance costs | | | +69 | | EPS (i) (iii) | | | -3c | | | | | | | | Consolidated Statement of Cash Flows | | | | | | | Net cash flow from operating activities | | | | | +317 | | | Net cash flow from financing activities | | | | | -317 | |
| (i) | The operating profit and depreciation impact of IFRS 16 on discontinued operations included above are +€4 million and +€63 million respectively for the year ended 31 December 2019. Theright-of-use asset and discounted lease liability related to discontinued operations are€398 million as at 1 January 2019. |
| (ii) | The impact of the adoption of IFRS 16 on property, plant and equipment and net debt is net of existing finance leases (€23 million at 31 December 2018) which have been recorded as part of theright-of-use assets and lease liabilities at their previous carrying amounts on 1 January 2019. |
| (iii) | The impact of the adoption of IFRS 16 on operating profit for the year ended 31 December 2019 is€0.05 billion and has been calculated based only on the portfolio of leases which existed at 1 January 2019. |
Income Statement Cost of sales and operating costs (excluding depreciation) will decrease,have decreased, as the Group currently recognisespreviously recognised operating lease expenses in either cost of sales or operating costs (depending on the nature of the relevant operations and of the lease). The Group’s operating lease expense for the year ended 31 December 2018 from continuing operations was€628533 million (2017:€606513 million) and is disclosed in note 5 to these Consolidated Financial Statements.. Payments for leases which meet the recognition exemption criteria and certain other lease payments which do not meet the criteria for capitalisation will continue to be(excluding depreciation) have been recorded as an expense within cost of sales and operating costs (excluding depreciation).costs. Due to business seasonality, certain assets are leased on a short-term basis (i.e. 12 months or less) to deal with peak demand. Accordingly, it is likely that a portion of costs previously classified as operating lease expenses in 2018 willhave not bebeen capitalised on the Group’s Consolidated Balance Sheet and will continue to be expensed in the Group’s Consolidated Income Statement from 2019 onwards. Ignoring acquisition and divestment activity, potential changes in asset procurement strategies and foreign currency movements, the current estimate of expected spend on exempt leases in 2019 is in the range of€0.25 billion.(see note 22).
Depreciation and finance costs as currently reported inhave increased due to the Group’s Consolidated Income Statement will increase, as under the new standardcapitalisation of aright-of-use asset will be capitalised andunder IFRS 16 which is depreciated over the term of the lease with an associated finance cost applied annually to the lease liability. Balance Sheet At transition date, theThe Group will determinehas identified the minimum lease payments outstanding at that date (along with(including payments for renewal options which are reasonably certain to be exercised) and applyhas applied the appropriate discount rate to calculate the present value of the lease liability andright-of-use asset to be recognised on the Group’s Consolidated Balance Sheet. The discount rates applied were arrived at using a methodology to calculate the incremental borrowing rates across the Group. The weighted average incremental borrowing rate applied to lease liabilities on the balance sheet was 3.95% at 1 January 2019.
The Group’s outstanding commitment in respect of all operating leases as at 31 December 2018 is€1,911 million (2017:€1,939 million for continuing operations) (see note 30 to these Consolidated Financial Statements).
Taking into account existing finance leases, the present valueA reconciliation of the operating lease commitment previously reported under IAS 17 to the discounted lease liability andright-of-use asset to be recognised on the Group’s Consolidated Balance Sheetas at 1 January 2019 under IFRS 16 is expected to be c.€2.0 billion.as follows:
| | | | | | | As at 1 January 2019
€m
| | Operating lease commitment under IAS 17 | | | 1,911 | | Lease extensions beyond break date | | | 632 | | Leases that are cancellable at any time | | | 35 | | Existing IAS 17 finance leases (i) | | | 23 | | Other lease payments not included in discounted lease liability under IFRS 16 (ii) | | | (108) | | Undiscounted lease liability under IFRS 16 | | | 2,493 | | Less impact of discounting | | | (516) | | Discounted lease liability under IFRS 16 | | | 1,977 | |
| (i) | Existing IAS 17 finance leases are presented at discounted amounts as the impact of discounting on these leases is not considered material. |
| (ii) | Other lease payments not included in the discounted lease liability under IFRS 16 include payments related to short-term andlow-value leases which were included in the operating lease commitment under IAS 17 but are exempt from capitalisation under IFRS 16. |
| | | | | | | CRH ANNUAL REPORT AND FORM20-F | 2019 | | 135 |
IFRS and IFRIC interpretations being adopted in subsequent years IFRS 17Insurance Contracts In May 2017, the IASB issued IFRS 17. It is expected to be effective for reporting periods beginning on or after 1 January 2022, with presentation of comparative figures required. The Group is currently evaluating the impact of this standard on future periods. IFRIC 23Uncertainty over Income Tax Treatments
IFRIC 23 was issued in June 2017; with an effective date of 1 January 2019. It clarifies the accounting for uncertainties in income taxes. The Group does not expect the adoption of IFRIC 23 to have a material impact on its results.
| | | | | | | CRH Annual Report and Form 20-F|2018
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Accounting Policies - continued
IAS 19Employee Benefits
In February 2018, the IASB issued a narrow scope amendment to IAS 19. The amendment will be applied prospectively for plan amendments, curtailments or settlements occurring on or after 1 January 2019. These amendments are not expected to have an impact on the Group on the effective date, but will impact how the Group determines current service cost and net interest in the event of any plan amendments, curtailments or settlements which arise thereafter.
IFRS 3Business Combinations In October 2018, the IASB issued amendments to IFRS 3, regarding the definition of a business. The amendments clarify that the process required to meet the definition of a business (together with inputs to create outputs) must be substantive; and, that the inputs and process must together significantly contribute to creating outputs. The definition of outputs has been narrowed to focus on goods and services provided to customers and other income from ordinary activities. In addition, the amendments indicate that an acquisition of primarily a single asset or group of similar assets is unlikely to meet the definition of a business. The amendments will be applied prospectively for business combinations and asset acquisitions occurring on or after 1 January 2020. The Group is currently evaluatingfinalising its review of the impact of this amendment, but does not expect the clarification to have a material impact on future periods.the value of acquisitions or additions to property, plant and equipment. Disclosure Initiative – Definition of Material (Amendments to IAS 1 and IAS 8) In October 2018, the IASB issued Definition of Material (Amendments to IAS 1Presentation of Financial Statements and IAS 8Accounting Policies, Changes in Accounting Estimates andErrors), which is effectivewill be applied prospectively from 1 January 2020. The amendments clarify and align the definition of “material” to the definition used in the Conceptual Framework and other IFRS standards. Information is now considered material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. This amendment is not expected to have an impact on the Group. Interest Rate Benchmark Reform – Amendments to IFRS 9, IAS 39 and IFRS 7 In September 2019, the IASB issued amendments to IFRS 9, IAS 39Financial Instruments: Recognition and Measurement and IFRS 7Financial Instruments: Disclosures, which concludes phase one of its work to respond to the effects of Interbank Offered Rates (IBOR) reform on financial reporting. The amendments provide mandatory temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark with an alternative nearly risk-free interest rate (an RFR). To the extent that a hedging instrument is altered so that its cash flows are based on an RFR, but the hedged item is still based on IBOR (or vice versa), there is no relief from measuring and recording any ineffectiveness that arises due to differences in their changes in fair value. The amendments are effective from 1 January 2020 and must be applied retrospectively. However, any hedge relationships that have previously been de-designated cannot be reinstated upon application, nor can any hedge relationships be designated with the benefit of hindsight. The Group is currently evaluating the impact of this amendment, but does not expect the amendment to have a material impact. There are no other IFRS or IFRIC interpretations that are effective subsequent to the CRH 20182019 financial year endyear-end that would have a material impact on the results or financial position of the Group. Key Accounting Policies which involve Estimates, Assumptions and Judgements The preparation of the Consolidated Financial Statements in accordance with IFRS requires management to make certain estimates, assumptions and judgements that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Management believes that the estimates, assumptions and judgements upon which it relies are reasonable based on the information available to it at the time that those estimates, assumptions and judgements are made. In some cases, the accounting treatment of a particular transaction is specifically dictated by IFRS and does not require management’s judgement in its application. Management considers that their use of estimates, assumptions and judgements in the application of the Group’s accounting policies are inter-related and therefore discuss them together below. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates may be necessary if there are changes in the circumstances or experiences on which the estimate was based or as a result of new information. The critical accounting policies which involve significant estimates, assumptions or judgements, the actual outcome of which could have a material impact on the Group’s results and financial position outlined below, are as follows: Impairment of goodwill – Note 16 In the year in which a business combination is effected and where some or all of the goodwill allocated to a particular cash-generating unit arose in respect of that combination, the cash-generating unit is tested for impairment prior to the end of the relevant annual period. Goodwill is subject to impairment testing on an annual basis and at any time during the year if an indicator of impairment is considered to exist. A decision to dispose of a business unit represents one such indicator and in these circumstances the recoverable amount is assessed on a fair value less costs of disposal basis. In the year in which a business combination is effected and where some or all of the goodwill allocated to a particularcash-generating unit arose in respect of that combination, the cash-generating unit is tested for impairment prior to the end of the relevant annual period. Where the carrying value exceeds the estimated recoverable amount (being the greater of fair value less costs of disposal andvalue-in-use), an impairment loss is recognised by writing down goodwill to its recoverable amount. In assessingvalue-in-use, the estimated future cash flows are discounted to their present value using apre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. The estimates of future cash flows exclude cash inflows or outflows attributable to financing activities and income tax. The recoverable amount of goodwill is determined by reference to the cash-generating unit to which the goodwill has been allocated. Impairment losses arising in respect of goodwill are not reversed once recognised. Goodwill relating to associates and joint ventures is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Where indicators of impairment of an investment arise in accordance with the requirements of IFRS 9, the carrying amount is tested for impairment by comparing its recoverable amount with its carrying amount.
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Accounting Policies - continued The impairment testing process requires management to make significant judgements and estimates regarding the future cash flows expected to be generated by cash-generating units to which goodwill has been allocated. Future cash flows relating to the eventual disposal of these cash-generating units and other factors may also be relevant to determine the fair value of goodwill. Management periodically evaluates and updates the estimates based on the conditions which influence these variables. A detailed discussion of the impairment methodology applied and key assumptions used by the Group in the context of goodwill is provided in note 16 to the Consolidated Financial Statements. The assumptions and conditions for determining impairments of goodwill reflect management’s best assumptions and estimates, but these items involve inherent uncertainties described above, many of which are not under management’s control. As a result, the accounting for such items could result in different estimates or amounts if management used different assumptions or if different conditions occur in future accounting periods.
| | | | | | | CRH Annual Report and Form 20-F |2018
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Retirement benefit obligations – Note 2930 Costs arising in respect of the Group’s defined contribution pension schemes are charged to the Consolidated Income Statement in the period in which they are incurred. The Group has no legal or constructive obligation to pay further contributions in the event that the fund does not hold sufficient assets to meet its benefit commitments. The liabilities and costs associated with the Group’s defined benefit pension schemes (both funded and unfunded) are assessed either on the basis of the attained age, the projected unit credit, the current unit credit or the aggregate cost methods by professionally qualified actuaries and are arrived at using actuarial assumptions based on market expectations at the balance sheet date. The discount rates employed in determining the present value of the schemes’ liabilities are determined by reference to market yields at the balance sheet date on high-quality corporate bonds of a currency and term consistent with the currency and term of the associatedpost-employment benefit obligations. The net surplus or deficit arising on the Group’s defined benefit pension schemes, together with the liabilities associated with the unfunded schemes, are shown either withinnon-current assets ornon-current liabilities in the Consolidated Balance Sheet. The deferred tax impact of pension scheme surpluses and deficits is disclosed separately within deferred tax assets or liabilities as appropriate. Remeasurements, comprising actuarial gains and losses and the return on plan assets (excluding net interest), are recognised immediately in the Consolidated Balance Sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods. The defined benefit pension asset or liability in the Consolidated Balance Sheet comprises the total for each plan of the present value of the defined benefit obligation less the fair value of plan assets out of which the obligations are to be settled directly. Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Fair value is based on market price information and, in the case of published quoted securities; it is the published bid price. The value of any defined benefit asset is limited to the present value of any economic benefits available in the form of refunds from the plan and reductions in the future contributions to the plan. The Group’s obligation in respect ofpost-employment healthcare and life assurance benefits represents the amount of future benefit that employees have earned in return for service in the current and prior periods. The obligation is computed on the basis of the projected unit credit method and is discounted to present value using a discount rate equating to the market yield at the balance sheet date onhigh-quality corporate bonds of a currency and term consistent with the currency and estimated term of the post-employment obligations. Assumptions The assumptions underlying the actuarial valuations (including discount rates, rates of increase in future compensation levels, mortality rates and healthcare cost trends), from which the amounts recognised in the Consolidated Financial Statements are determined, are updated annually based on current economic conditions and for any relevant changes to the terms and conditions of the pension and post-retirement plans. These assumptions can be affected by (i) for the discount rate, changes in the rates of return on high-quality corporate bonds; (ii) for future compensation levels, future labour market conditions and (iii) for healthcare cost trend rates, the rate of medical cost inflation in the relevant regions. The weighted average actuarial assumptions used and sensitivity analysis in relation to the significant assumptions employed in the determination of pension and other post-retirement liabilities are contained in note 2930 to the Consolidated Financial Statements. Whilst management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the obligations and expenses recognised in future accounting periods. The assets and liabilities of defined benefit pension schemes may exhibit significantperiod-on-period volatility attributable primarily to changes in bond yields and longevity. In addition to future service contributions, significant cash contributions may be required to remediate past service deficits. A sensitivity analysis of the change in these assumptions is provided in note 29.30. Provisions for liabilities – Note 2728 A provision is recognised when the Group has a present obligation (either legal or constructive) as a result of a past event, it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group anticipates that a provision will be reimbursed, the reimbursement is recognised as a separate asset only when it is virtually certain that the reimbursement will arise. The expense relating to any provision is presented in the Consolidated Income Statement net of any reimbursement. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in the provision due to the passage of time is recognised as an interest expense. Contingent liabilities arising on business combinations are recognised as provisions if the contingent liability can be reliably measured at its acquisition date fair value. Provisions are not recognised for future operating losses. Management is not aware of any potential changes to key assumptions that have a significant risk of causing a material adjustment to the carrying value of provisions within the next financial year; however due to the nature of some of our provisions, estimates may depend on the outcome of future events and need to be revised as circumstances change in future accounting periods. Refer to note 2728 for the expected timing of outflows by provisions category.
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Environmental and remediation provisions The measurement of environmental and remediation provisions is based on an evaluation of currently available facts with respect to each individual site and considers factors such as existing technology, currently enacted laws and regulations and prior experience in remediation of sites. Inherent uncertainties exist in such evaluations primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability, the protracted length of theclean-up periods and evolving technologies. The environmental and remediation liabilities provided for in the Consolidated Financial Statements reflect the judgement applied by management in respect of information available at the time of determining the liability and are adjusted periodically as remediation efforts progress or as additional technical or legal information becomes available. Due to the inherent uncertainties described above, many of which are not under management’s control, actual costs and cash outflows could differ if management used different assumptions or if different conditions occur in future accounting periods.
| | | | | | | CRH Annual Report and Form 20-F|2018
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Accounting Policies - continued
Legal contingencies The status of each significant claim and legal proceeding in which the Group is involved is reviewed by management on a periodic basis and the Group’s potential financial exposure is assessed. If the potential loss from any claim or legal proceeding is considered probable, and the amount can be reliably estimated, a liability is recognised for the estimated loss. Because of the uncertainties inherent in such matters, the related provisions are based on the best information available at the time; the issues taken into account by management and factored into the assessment of legal contingencies include, as applicable, the status of settlement negotiations, interpretations of contractual obligations, prior experience with similar contingencies/claims, the availability of insurance to protect against the downside exposure and advice obtained from legal counsel and other third parties. As additional information becomes available on pending claims, the potential liability is reassessed and revisions are made to the amounts accrued where appropriate. Such revisions in the judgements and estimates of the potential liabilities could have an impact on the results of operations and financial position of the Group in future accounting periods. Insurance provisions Insurance provisions are subject to actuarial valuation and are based on actuarial triangulations which are extrapolated from historical claims experience. These provisions include claims which are classified as “incurred but not reported”, the status of which are reviewed periodically by management, in conjunction with appropriately qualified advisors. Changes in actuarial methodologies and assumptions, along with the receipt of new information, could have an impact on the financial position of the Group through recognition of additional, or release of, provisions in future accounting periods. Taxation – current and deferred – Notes 12 and 2829 Current tax represents the expected tax payable (or recoverable) on the taxable profit for the year using tax rates enacted for the period. Any interest or penalties arising are included within current tax. Where items are accounted for outside of profit or loss, the related income tax is recognised either in other comprehensive income or directly in equity as appropriate. Deferred tax is recognised using the liability method on temporary differences arising at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. In addition, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. For the most part, no provision has been made for temporary differences applicable to investments in subsidiaries and joint ventures as the Group is in a position to control the timing of reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. However, a temporary difference has been recognised to the extent that specific assets have been identified for sale or where there is a specific intention to unwind the temporary difference in the foreseeable future. Due to the absence of control in the context of associates (significant influence only), deferred tax liabilities are recognised where appropriate in respect of CRH’s investments in these entities on the basis that the exercise of significant influence would not necessarily prevent earnings being remitted by other shareholders in the undertaking. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets and liabilities are not subject to discounting. Deferred tax assets are recognised in respect of all deductible temporary differences, carry-forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which the temporary differences can be utilised. The carrying amounts of deferred tax assets are subject to review at each balance sheet date and are reduced to the extent that future taxable profits are considered to be inadequate to allow all or part of any deferred tax asset to be utilised. The Group’s income tax charge is based on reported profit and expectedenacted statutory tax rates, which reflect various allowances and reliefs and tax planning opportunities available to the Group in the multiple tax jurisdictions in which it operates. The determination of the Group’s provision for income tax requires certain judgements and estimates in relation to matters where the ultimate tax outcome may not be certain. The recognition ornon-recognition of deferred tax assets as appropriate also requires judgement as it involves an assessment of the future recoverability of those assets. In addition, the Group is subject to tax audits which can involve complex issues that could require extended periods to conclude, the resolution of which is often not within the control of the Group. Although management believes that the estimates included in the Consolidated Financial Statements and its tax return positions are reasonable, there is no certainty that the final outcome of these matters will not be different than that which is reflected in the Group’s historical income tax provisions and accruals. Whilst it is possible, the Group does not currently anticipate that any such differences could have a material impact on the income tax provision and profit for the period in which such a determination is made nor does it expect any significant impact on its financial position in the near term. This is based on the Group’s knowledge and experience, as well as the profile of the individual components which have been reflected in the current tax liability, the status of the tax audits, enquiries and negotiations in progress at each year end,year-end, previous claims and any factors specific to the relevant tax environments.
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Accounting Policies - continued Other Significant Accounting Policies Basis of consolidation The Consolidated Financial Statements include the financial statements of the Parent Company and all subsidiaries, joint ventures and associates, drawn up to 31 December each year. The financial year-ends of the Group’s subsidiaries, joint ventures and associates areco-terminous. Subsidiaries Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. A change in the ownership interest of a subsidiary without a change in control is accounted for as an equity transaction. When the Group holds less than the majority of voting rights, other facts and circumstances including contractual arrangements that give the Group power over the investee may result in the Group controlling the investee. The Group reassesses whether it controls an investee if, and when, facts and circumstances indicate that there are changes to the elements evidencing control. Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to the Parent Company and are presented separately in the Consolidated Income Statement and within equity in the Consolidated Balance Sheet, distinguished from Parent Company shareholders’ equity.
| | | | | | | CRH Annual Report and Form 20-F |2018
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Acquisitions ofnon-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transactions. On an acquisition by acquisition basis, the Group recognises anynon-controlling interest in the acquiree either at fair value or at thenon-controlling interest’s proportionate share of the acquiree’s net assets. Investments in associates and joint ventures – Notes 11 and 17 An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of an entity, but is not control or joint control over those policies. A joint venture is a type of joint 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 of the arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The Group’s investments in its associates and joint ventures are accounted for using the equity method from the date significant influence/joint control is deemed to arise until the date on which significant influence/joint control ceases to exist or when the interest becomes classified as an asset held for sale. The Consolidated Income Statement reflects the Group’s share of profit after tax of the related associates and joint ventures. Investments in associates and joint ventures are carried in the Consolidated Balance Sheet at cost adjusted in respect of post-acquisition changes in the Group’s share of net assets, less any impairment in value. Loans advanced to equity accounted investments that have the characteristics of equity financing are also included in the investment held on the Consolidated Balance Sheet. If necessary, impairment losses on the carrying amount of an investment are reported within the Group’s share of equity accounted investments’ results in the Consolidated Income Statement. If the Group’s share of losses exceeds the carrying amount of an associate or joint venture, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate or joint venture. Joint operations A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. The Group’s investments in its joint operations are accounted for by recognising its assets and its liabilities, including its share of any assets or liabilities held jointly; its share of the revenue from the sale of the output by the joint operation; and its expenses, including its share of any expenses incurred jointly. Revenue recognition – Note 1 The Group recognises revenue in the amount of the price expected to be received for goods and services supplied at a point in time or over time, as contractual performance obligations are fulfilled and control of goods and services passes to the customer. It excludes trade discounts and value-added tax/sales tax. Revenue derived from sale of goods (sources other than construction contracts) The Group manufactures and distributes a diverse range of building materials and products. Whilst there are a number of different activities across the Group; recognition of revenue from the sale of goods is similar; being at the point in time when control is deemed to pass to the customer upon leaving a CRH premises or upon delivery to a customer depending on the terms of the sale. Contracts do not contain multiple performance obligations (as defined by IFRS 15)15Revenue from Contracts with Customers). Across the Group, goods are often sold with discounts or rebates based on cumulative sales over a period. This variable consideration is only recognised when it is highly probable that it will not be subsequently reversed and is recognised using the most likely amount or expected value methods, depending on the individual contract terms. In the application of appropriate revenue recognition, judgement is exercised by management in the determination of the likelihood and quantum of such items based on experience and historical trading patterns. The Group is deemed to be a principal to an arrangement when it controls a promised good or service before transferring them to a customer; and accordingly recognises revenue on a gross basis. Where the Group is determined to be an agent to a transaction, based on the principal of control; the net amount retained after the deduction of any costs to the principal is recognised as revenue. Within thenon-construction contract businesses no element of financing is deemed present as transactions are all made with average credit terms (usually 90 days), consistent with market practice.
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Revenue derived from construction contracts The Group enters into a number of construction contracts, to complete large construction projects. Contracts usually commence and complete within one financial period and are generally fixed price. The Group typically recognises revenue within its construction contract businesses over time, as it performs its obligations. Management believe this best reflects the transfer of control to the customer by providing a faithful depiction of primarily the enhancement of a customer controlled asset or the construction of an asset with no alternative use. Thepercentage-of-percentage-of-completion completion method is used to recognise revenue when the outcome of a contract can be estimated reliably. Thepercentage-of-percentage-of-completion completion is calculated using an input method and based on the proportion of contract costs incurred at the balance sheet date relative to the total estimated costs of the contract. In all of our construction contract arrangements the Group has an enforceable right to payment for work and performance obligations completed to date. Some of the Group’s construction contracts may contain forms of variable consideration that can either increase or decrease the transaction price. Variable consideration is estimated based on the most likely amount or expected value methods (depending on the contract terms) and the transaction price is adjusted to the extent it is probable that a significant reversal of revenue recognised will not occur. In some instances a customer can be billed and revenue recognised in the period subsequent to the contracted work being completed when items such as variable consideration are agreed with the customer. Recognition of contract assets and liabilities In our construction contract businesses, amounts are billed as work progresses in accordance withpre-agreed contractual terms. When a performance obligation is satisfied but a customer has not yet been billed this is recognised as a contract asset (unbilled revenue) and included within Trade and Other Receivables (note 19). Retentions are also a common feature of construction contracts and are recognised as a contract asset within Trade
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Accounting Policies - continued
and Other Receivables when we have a right to consideration in exchange for the completion of the contract. Retentions are consistent with industry norms and the purpose of these is not to provide a form of financing. Apart from retentions, the Group does not have any construction contracts where the period between the transfer of the promised goods to the customer and payment by the customer exceeds one year. As a consequence, the Group applies the practical expedient in IFRS 15 and does not adjust any of its transaction prices for the time value of money. When consideration is received in advance of work being performed, or we have billed an amount to a customer that is in excess of revenue recognised on the contract; this is recognised as a contract liability within Trade and Other Payables (note 20); and the revenue is generally recognised in the subsequent period when the right to recognise revenue has been determined. As a result, advance payments received for construction contract arrangements are not considered a significant form of financing. Cumulative costs incurred, net of amounts transferred to cost of sales, after deducting onerous provisions, provisions for contingencies and payments on account not matched with revenue, are included as construction contract balances in inventories (note 18). Cost includes all expenditure directly related to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity. The Group’s contracts generally are for a duration of less than one year and therefore the Group does not capitalise incremental contract costs; instead expensing as incurred, as permitted by the practical expedient under IFRS 15. Onerous contracts and warranties When a contract is identified as being onerous (i.e. its unavoidable cost exceeds the economic benefit of the contract), a provision is created; being the lower of costs to complete the contract and the cost of exiting the contract. The Group recognises a provision for assurance-type (standard) warranties offered across the Group under its terms and conditions in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.37. The Group provides assurance-type warranties for general repairs and does not typically provide service-type (extended) warranties. Segment reporting – Note 2 Operating segments are reported in a manner consistent with the internal organisational and management structure and the internal reporting information provided to the Chief Operating Decision Maker who is responsible for allocating resources and assessing performance of the operating segments. Assets and liabilities held for sale – Note 3 Non-current assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within 12 months from the date of classification as held for sale. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. The Group ceases to use the equity method of accounting from the date on which an interest in a joint venture or associate becomes held for sale.Non-current assets classified as held for sale and liabilities directly associated with those assets are presented separately as current items in the Consolidated Balance Sheet. Discontinued operations – Note 3 Discontinued operations are reported when a component of the Group, that represents a separate major line of business or geographical area of operation, has been disposed of, or when a sale is highly probable; and its operations and cash flows can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Group and is classified as held for sale or has been disposed of. The Group classifies anon-current asset or disposal group as held for disposal if its carrying value will be recovered through a sales transaction or distribution to shareholders rather than continuing use. In the Consolidated Income Statement, discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations. Corresponding notes to the Consolidated Income Statement exclude amounts for discontinued operations, unless stated otherwise.
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Accounting Policies - continued Share-based payments – Note 9 The Group operates a number of equity-settled share-based payment plans. Its policy in relation to the granting of share options and awards under these plans, together with the nature of the underlying market andnon-market performance and other vesting conditions, are addressed in the Directors’ Remuneration Report on page 68.74. The Group has no material exposure in respect of cash-settled share-based payment transactions and share-based payment transactions with cash alternatives. Awards under the Performance Share Plans 50%25% of the awards under the 2014 Performance Share Plan are subject to a TSR (and hence market-based) vesting condition;condition measured against a tailored sector peer group (2018 and 2017: 50%; with 25% being measured against a tailored sector peer group and 25% against the FTSEAll-World Construction & Materials Index.Index). Accordingly, the fair value assigned to the related equity instruments at the grant date is derived using a Monte Carlo simulation technique to model the combination of market-based andnon-market-based performance conditions in the plan; and is adjusted to reflect the anticipated likelihood as at the grant date of achieving the vesting condition. Awards are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied.
In 2019 a new RONA metric of 25% was introduced for awards made in 2019. The remaining 50% of awards granted under the 2014 Performance Share Plan are subject to a cumulative cash flow target(non-market-based) vesting condition. The fair value of the awards is calculated as the market price of the shares at the date of grant. No expense is recognised for awards that do not ultimately vest. At the balance sheet date the estimate of the level of vesting is reviewed and any adjustment necessary is recognised in the Consolidated Income Statement. If awards which vest under the 2014 Performance Share Plan are allotted to an Employee Benefit Trust, an increase in nominal Share Capitalshare capital and Share Premiumshare premium are recognised accordingly on allotment.
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Savings-related Share Option Scheme The fair values assigned to options under the Savings-related Share Option Scheme are derived in accordance with the trinomial valuation methodology on the basis that the services to be rendered by employees as consideration for the granting of share options will be received over the vesting period, which is assessed as at the grant date. The cost is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The Consolidated Income Statement expense/credit for a period represents the movement in cumulative expense recognised at the beginning and end of that period. The cumulative charge to the Consolidated Income Statement is reversed only where an employee in receipt of share options leaves service prior to completion of the expected vesting period and those options forfeit in consequence. Where an award is cancelled, it is treated as if it is vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award wherenon-vesting conditions within the control of either the Company or the employee are not met. All cancellations of awards are treated equally. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. The dilutive effect of outstanding options is reflected as additional share dilution in the determination of diluted earnings per share. Property, plant and equipment – Note 15 The carrying value of property, plant and equipment (excluding leased right-of-use assets) of€15,76115,954 million at 31 December 20182019 represents 45%43% of total assets at that date. Property, plant and equipment are stated at cost less any accumulated depreciation and any accumulated impairments except for certain items that had been revalued to fair value prior to the date of transition to IFRS (1 January 2004). Repair and maintenance expenditure is included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenditure is charged to the Consolidated Income Statement during the financial period in which it is incurred. Borrowing costs incurred in the construction of major assets which take a substantial period of time to complete are capitalised in the financial period in which they are incurred. In the application of the Group’s accounting policy, judgement is exercised by management in the determination of residual values and useful lives. Depreciation and depletion is calculated to write off the book value of each item of property, plant and equipment over its useful economic life on a straight-line basis at the following rates: Land and buildings The book value of mineral-bearing land, less an estimate of its residual value, is depleted over the period of the mineral extraction in the proportion which production for the year bears to the latest estimates of proven and probable mineral reserves. Land, other than mineral-bearing land, is not depreciated. In general, buildings are depreciated at 2.5% per annum (p.a.). Plant and machinery These are depreciated at rates ranging from 3.3% p.a. to 20% p.a. depending on the type of asset. Plant and machinery includes transport which is, on average, depreciated at 20% p.a. Depreciation methods, useful lives and residual values are reviewed at each financial year end.year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the depreciation period or method as appropriate on a prospective basis. Impairment of of property, plant and equipment The carrying values of items of property, plant and equipment are reviewed for indicators of impairment at each reporting date and are subject to impairment testing when events or changes in circumstances indicate that the carrying values may not be recoverable.
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Property, plant and equipment assets are reviewed for potential impairment by applying a series of external and internal indicators specific to the assets under consideration; these indicators encompass macroeconomic issues including the inherent cyclicality of the building materials sector, actual obsolescence or physical damage, a deterioration in forecast performance in the internal reporting cycle and restructuring and rationalisation programmes. Similar to the process for goodwill, where the carrying value exceeds the estimated recoverable amount (being the greater of fair value less costs of disposal andvalue-in-use), an impairment loss is recognised by writing down the assets to their recoverable amount. In assessingvalue-in-use, the estimated future cash flows are discounted to their present value using apre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. The estimates of future cash flows exclude cash inflows or outflows attributable to financing activities and income tax. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined by reference to the cash-generating unit to which the asset belongs. Business combinations – Note 32 The Group applies the acquisition method in accounting for business combinations. The cost of an acquisition is measured as the aggregate of the consideration transferred (excluding amounts relating to the settlement ofpre-existing relationships), the amount of anynon-controlling interest in the acquiree and, in a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously-held equity interest in the acquiree. Transaction costs that the Group incurs in connection with a business combination are expensed as incurred. To the extent that settlement of all or any part of consideration for a business combination is deferred, the fair value of the deferred component is determined through discounting the amounts payable to their present value at the date of exchange. The discount component is unwound as an interest charge in the Consolidated Income Statement over the life of the obligation. Any contingent consideration is recognised at fair value at the acquisition date and included in the cost of the acquisition. The fair value of contingent consideration at acquisition date is arrived at through discounting the expected payment (based on scenario modelling) to present value. In general, in order for contingent consideration to become payable,pre-defined profit and/or profit/net asset ratios must be exceeded. Subsequent changes to the fair value of the contingent consideration will be recognised in profit or loss unless the contingent consideration is classified as equity, in which case it is not remeasured and settlement is accounted for within equity. The assets and liabilities arising on business combination activity are measured at their acquisition-date fair values. Contingent liabilities
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Accounting Policies - continued
assumed in business combination activity are recognised as of the acquisition date, where such contingent liabilities are present obligations arising from past events and their fair value can be measured reliably. In the case of a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously-held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit or loss. When the initial accounting for a business combination is determined provisionally, any adjustments to the provisional values allocated to the consideration, identifiable assets or liabilities (and contingent liabilities, if relevant) are made within the measurement period, a period of no more than one year from the acquisition date. Goodwill – Note 16 Goodwill arising on a business combination is initially measured at cost, being the excess of the cost of an acquisition over the fair value of the net identifiable assets and liabilities assumed at the date of acquisition and relates to the future economic benefits arising from assets which are not capable of being individually identified and separately recognised. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. If the cost of the acquisition is lower than the fair value of the net assets of the subsidiary acquired, the identification and measurement of the related assets and liabilities and contingent liabilities are revisited and the cost is reassessed with any remaining balance recognised immediately in the Consolidated Income Statement. The carrying amount of goodwill in respect of associates and joint ventures is included in investments accounted for using the equity method (i.e. within financial assets) in the Consolidated Balance Sheet. Where a subsidiary is disposed of or terminated through closure, the carrying value of any goodwill of that subsidiary is included in the determination of the net profit or loss on disposal/termination. Intangible assets (other than goodwill) arising on business combinations – Note 16 An intangible asset is capitalised separately from goodwill as part of a business combination at cost (fair value at date of acquisition). Subsequent to initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The carrying values of definite-lived intangible assets (the Group does not currently have any indefinite-lived intangible assets other than goodwill) are reviewed for indicators of impairment at each reporting date and are subject to impairment testing when events or changes in circumstances indicate that the carrying values may not be recoverable. Intangible assets are amortised on a straight-line basis. In general, definite-lived intangible assets are amortised over periods ranging from one to ten years, depending on the nature of the intangible asset. Amortisation periods, useful lives, expected patterns of consumption and residual values are reviewed at each financial year end.year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method as appropriate on a prospective basis. Leases – Notes 515 and 3022 LeasesThe Group enters into leases for a range of assets, principally relating to property. These property leases have varying terms, renewal rights and escalation clauses, including periodic rent reviews linked with a consumer price index and/or other indices. The Group also leases plant and machinery, vehicles and equipment. The terms and conditions of these leases do not impose significant financial restrictions on the Group.
A contract contains a lease if it is enforceable and conveys the right to control the use of a specified asset for a period of time in exchange for consideration, which is assessed at inception. Aright-of-use asset and lease liability are recognised at the commencement date for contracts containing a lease, with the exception of leases with a term of 12 months or less which do not contain a purchase option, leases where the underlying asset is of low value and leases with associated payments that vary directly in line with usage or sales. The commencement date is the date at which the asset is made available for use by the Group.
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Accounting Policies - continued The lease liability is initially measured at the present value of the future minimum lease payments, discounted using the incremental borrowing rate or the interest rate implicit in the lease, if this is readily determinable, over the remaining lease term. Lease payments include fixed payments less any lease incentives receivable, variable payments that are dependent on a rate or index known at the commencement date, amounts expected to be paid under residual value guarantees and any payments for an optional renewal period and purchase and termination option payments, if the Group is reasonably certain to exercise those options. The lease term is thenon-cancellable period of the lease adjusted for any renewal or termination options which are reasonably certain to be exercised. Variable lease payments that do not depend on an index or a rate and rentals relating to low value or short-term leases are recognised as an expense in the period in which they are incurred. Management applies judgement in determining whether it is reasonably certain that a renewal, termination or purchase option will be exercised. Incremental borrowing rates are calculated using a portfolio approach, based on the risk profile of the entity holding the lease and the term and currency of the lease. After initial recognition, the lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future minimum lease payments or when the Group changes its assessment of whether it is reasonably certain to exercise an option within the contract. A corresponding adjustment is made to the carrying amount of theright-of-use asset. Theright-of-use asset is initially measured at cost, which comprises the lease liability adjusted for any payments made at or before the commencement date, initial direct costs incurred, lease incentives received and an estimate of the cost to dismantle or restore the underlying asset or the site on which it is located at the end of the lease term. Theright-of-use asset is depreciated over the lease term or, where a purchase option is reasonably certain to be exercised, over the useful economic life of the asset in line with depreciation rates for owned property, plant and equipment. Theright-of-use asset is tested periodically for impairment if an impairment indicator is considered to exist. Non-lease components in a contract such as maintenance and other service charges are separated from minimum lease payments and are expensed as incurred. Regarding the comparatives, leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Operating lease rentals are charged to the Consolidated Income Statement on a straight-line basis over the lease term. Inventories – Note 18 Inventories are stated at the lower of cost and net realisable value. Cost is based on thefirst-in/first-out principle (and weighted average, where appropriate) and includes all expenditure incurred in acquiring the inventories and bringing them to their present location and condition. Raw materials are valued on the basis of purchase cost on afirst-in/first-out basis. In the case of finished goods andwork-in-progress, cost includes direct materials, direct labour and attributable overheads based on normal operating capacity and excludes borrowing costs. Net realisable value is the estimated proceeds of sale less all further costs to completion, and less all costs to be incurred in marketing, selling and distribution. Estimates of net realisable value are based on the most reliable evidence available at the time the estimates are made, taking into consideration fluctuations of price or cost directly relating to events occurring after the end of the period, the likelihood of short-term changes in buyer preferences, product obsolescence or perishability (all of which are generally low given the nature of the Group’s products) and the purpose for which the inventory is held. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished goods, in which they will be incorporated, are expected to be sold at or above cost. Cash and cash equivalents – Note 2425 Cash and cash equivalents comprise cash balances held for the purpose of meeting short-term cash commitments and investments which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. Bank overdrafts are included within current interest-bearing loans and borrowings in the Consolidated Balance Sheet. Where the overdrafts are repayable on demand and form an integral part of cash management, they are netted against cash and cash equivalents for the purposes of the Consolidated Statement of Cash Flows. Interest-bearing loans and borrowings – Note 2526 All loans and borrowings are initially recorded at the fair value of the consideration received net of directly attributable transaction costs. Subsequent to initial recognition, current andnon-current interest-bearing loans and borrowings are, in general, measured at amortised cost employing the effective interest methodology. Fixed rate term loans, which have been hedged to floating rates (using interest rate swaps), are measured at amortised cost adjusted for changes in value attributable to the hedged risks arising from changes in underlying market interest rates. The computation of amortised cost includes any issue costs and any discount or premium materialising on settlement. Gains and losses are recognised in the Consolidated Income Statement through amortisation on the basis of the period of the loans and borrowings. Borrowing costs arising on financial instruments are recognised as an expense in the period in which they are incurred (unless capitalised as part of the cost of property, plant and equipment). Derivative financial instruments and hedging practices – Note 2627 In order to manage interest rate, foreign currency and commodity risks and to realise the desired currency profile of borrowings, the Group employs derivative financial instruments (principally interest rate swaps, currency swaps and forward foreign exchange contracts). Derivative financial instruments are recognised initially at fair value on the date on which a derivative contract is entered into and are
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subsequently remeasured at fair value. The carrying value of derivatives is fair value based on discounted future cash flows and adjusted for counterparty risk. Future floating rate cash flows are estimated based on future interest rates (from observable yield curves at the end of the reporting period). Fixed and floating rate cash flows are discounted at future interest rates and translated atperiod-end foreign exchange rates. Short dated forward foreign exchange contracts are used to hedge the spot price risk on currency exposures. The forward price elements to these contracts are immaterial and accounted for in the Consolidated Income Statement. At the inception of a derivative transaction, the Group documents the relationship between the hedged item and the hedging instrument together with its risk management objective and the strategy underlying the proposed transaction. The Group also documents its assessment, both at the inception of the hedging relationship and subsequently on an ongoing basis, of the effectiveness of the hedging instrument in offsetting movements in
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the fair values or cash flows of the hedged items. Where derivatives do not fulfil the criteria for hedge accounting, changes in fair values are reported in the Consolidated Income Statement and Consolidated Balance Sheet. Fair value and cash flow hedges The Group uses fair value hedges and cash flow hedges in its treasury activities. For the purposes of hedge accounting, hedges are classified either as fair value hedges (which entail hedging the exposure to movements in the fair value of a recognised asset or liability or an unrecognised firm commitment that could affect profit or loss) or cash flow hedges (which hedge exposure to fluctuations in future cash flows derived from a particular risk associated with a recognised asset or liability, or a highly probable forecast transaction that could affect profit or loss). Where the conditions for hedge accounting are satisfied and the hedging instrument concerned is classified as a fair value hedge, any gain or loss stemming from the remeasurement of the hedging instrument to fair value is reported in the Consolidated Income Statement. In addition, any gain or loss on the hedged item which is attributable to the hedged risk is adjusted against the carrying amount of the hedged item and reflected in the Consolidated Income Statement. Where the adjustment is to the carrying amount of a hedged interest-bearing financial instrument, the adjustment is amortised to the Consolidated Income Statement with the objective of achieving full amortisation by maturity. Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective part of any gain or loss on the derivative financial instrument is recognised as other comprehensive income, net of the income tax effect, with the ineffective portion being reported in the Consolidated Income Statement. The associated gains or losses that had previously been recognised as other comprehensive income are transferred to the Consolidated Income Statement contemporaneously with the materialisation of the hedged transaction. Any gain or loss arising in respect of changes in the time value of the derivative financial instrument is excluded from the measurement of hedge effectiveness and is recognised immediately in the Consolidated Income Statement. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised as other comprehensive income remains there until the forecast transaction occurs. If a hedged transaction is no longer anticipated to occur, the net cumulative gain or loss previously recognised as other comprehensive income is transferred to the Consolidated Income Statement in the period. Net investment hedges Where foreign currency borrowings provide a hedge against a net investment in a foreign operation, and the hedge is deemed to be effective, foreign exchange differences are taken directly to a foreign currency translation reserve. The ineffective portion of any gain or loss on the hedging instrument is recognised immediately in the Consolidated Income Statement. Cumulative gains and losses remain in equity until disposal of the net investment in the foreign operation at which point the related differences are transferred to the Consolidated Income Statement as part of the overall gain or loss on sale. Share capital and dividends – Notes 31 and 13 Treasury Shares and own shares Ordinary Shares acquired by the Parent Company or purchased by the Employee Benefit Trust on behalf of the Parent Company under the terms of the Performance Share Plans and the Restricted Share Plan are deducted from equity and presented on the face of the Consolidated Balance Sheet. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Parent Company’s Ordinary Shares. Dividends Dividends on Ordinary Shares are recognised as a liability in the Consolidated Financial Statements in the period in which they are declared by the Parent Company. Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the(the functional currency’)currency). The Consolidated Financial Statements are presented in euro, which is the presentation currency of the Group and the functional currency of the Parent Company. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All currency translation differences are taken to the Consolidated Income Statement with the exception of all monetary items that provide an effective hedge for a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are recognised in the Consolidated Income Statement. Results and cash flows of subsidiaries, joint ventures and associates withnon-euro functional currencies have been translated into euro at average exchange rates for the year, and the related balance sheets have been translated at the rates of exchange ruling at the balance sheet date. Adjustments arising on translation of the results and net assets ofnon-euro subsidiaries, joint ventures, associates and joint operations are recognised in a separate translation reserve within equity, net of differences on related currency borrowings. All other translation differences are taken to the Consolidated Income Statement. Goodwill and fair value adjustments arising on acquisition of a foreign operation are regarded as assets and liabilities of the foreign operation and are translated accordingly.
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Accounting Policies - continued The principal exchange rates used for the translation of results, cash flows and balance sheets into euro were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average | | | | | | Year-end | | | euro 1 = | | 2018 | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | Brazilian Real | | | 4.3085 | | | | 3.6054 | | | | 3.8561 | | | | | | | | 4.4440 | | | | 3.9729 | | | | | | | | | Canadian Dollar | | | 1.5294 | | | | 1.4647 | | | | 1.4659 | | | | | | | | 1.5605 | | | | 1.5039 | | | | | | | | | Chinese Renminbi | | | 7.8081 | | | | 7.6290 | | | | 7.3522 | | | | | | | | 7.8751 | | | | 7.8044 | | | | | | | | | Hungarian Forint | | | 318.8897 | | | | 309.1933 | | | | 311.4379 | | | | | | | | 320.9800 | | | | 310.3300 | | | | | | | | | Indian Rupee | | | 80.7332 | | | | 73.5324 | | | | 74.3717 | | | | | | | | 79.7298 | | | | 76.6055 | | | | | | | | | Philippine Peso | | | 62.2101 | | | | 56.9734 | | | | 52.5555 | | | | | | | | 60.1130 | | | | 59.7950 | | | | | | | | | Polish Zloty | | | 4.2615 | | | | 4.2570 | | | | 4.3632 | | | | | | | | 4.3014 | | | | 4.1770 | | | | | | | | | Pound Sterling | | | 0.8847 | | | | 0.8767 | | | | 0.8195 | | | | | | | | 0.8945 | | | | 0.8872 | | | | | | | | | Romanian Leu | | | 4.6540 | | | | 4.5688 | | | | 4.4904 | | | | | | | | 4.6635 | | | | 4.6585 | | | | | | | | | Serbian Dinar | | | 118.2302 | | | | 121.3232 | | | | 123.1356 | | | | | | | | 118.3157 | | | | 118.3086 | | | | | | | | | Swiss Franc | | | 1.1550 | | | | 1.1117 | | | | 1.0902 | | | | | | | | 1.1269 | | | | 1.1702 | | | | | | | | | Ukrainian Hryvnia | | | 32.0987 | | | | 30.0341 | | | | 28.2812 | | | | | | | | 31.6900 | | | | 33.6769 | | | | | | | | | US Dollar | | | 1.1810 | | | | 1.1297 | | | | 1.1069 | | | | | | | | 1.1450 | | | | 1.1993 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Average | | | | | | Year-end | | | euro 1 = | | 2019 | | | 2018 | | | 2017 | | | | | | 2019 | | | 2018 | | Brazilian Real | | | 4.4134 | | | | 4.3085 | | | | 3.6054 | | | | | | | | 4.5157 | | | | 4.4440 | | | | | | | | | Canadian Dollar | | | 1.4855 | | | | 1.5294 | | | | 1.4647 | | | | | | | | 1.4598 | | | | 1.5605 | | | | | | | | | Chinese Renminbi | | | 7.7355 | | | | 7.8081 | | | | 7.6290 | | | | | | | | 7.8205 | | | | 7.8751 | | | | | | | | | Hungarian Forint | | | 325.2967 | | | | 318.8897 | | | | 309.1933 | | | | | | | | 330.5300 | | | | 320.9800 | | | | | | | | | Indian Rupee | | | 78.8361 | | | | 80.7332 | | | | 73.5324 | | | | | | | | 80.1870 | | | | 79.7298 | | | | | | | | | Philippine Peso | | | 57.9851 | | | | 62.2101 | | | | 56.9734 | | | | | | | | 56.9000 | | | | 60.1130 | | | | | | | | | Polish Zloty | | | 4.2976 | | | | 4.2615 | | | | 4.2570 | | | | | | | | 4.2568 | | | | 4.3014 | | | | | | | | | Pound Sterling | | | 0.8778 | | | | 0.8847 | | | | 0.8767 | | | | | | | | 0.8508 | | | | 0.8945 | | | | | | | | | Romanian Leu | | | 4.7453 | | | | 4.6540 | | | | 4.5688 | | | | | | | | 4.7830 | | | | 4.6635 | | | | | | | | | Serbian Dinar | | | 117.8377 | | | | 118.2302 | | | | 121.3232 | | | | | | | | 117.8237 | | | | 118.3157 | | | | | | | | | Swiss Franc | | | 1.1124 | | | | 1.1550 | | | | 1.1117 | | | | | | | | 1.0854 | | | | 1.1269 | | | | | | | | | Ukrainian Hryvnia | | | 28.8881 | | | | 32.0987 | | | | 30.0341 | | | | | | | | 26.7377 | | | | 31.6900 | | | | | | | | | US Dollar | | | 1.1195 | | | | 1.1810 | | | | 1.1297 | | | | | | | | 1.1234 | | | | 1.1450 | |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 145 |
Notes on Consolidated Financial Statements 1. Revenue CRH is a leading global diversified building materials group which manufactures and distributessupplies a diverse range of superior building materials and products fromfor use in the fundamentalsconstruction and maintenance of heavyinfrastructure, housing and commercial products. Our materials and elements to constructproducts are used extensively, in construction projects of all sizes, all across the frame, through value-added products that complete the building envelope, to distribution channels which service constructionfit-out and renewal.world. The Group’s sixAs discussed in more detail in note 2, the Group has three operating segments generate(as identified under IFRS 8Operating Segments) from 1 January 2019; generating revenue through the following activities:
Europe Heavysidebusinesses are predominantly engaged in the manufacture and supply of cement, lime, aggregates, readymixed and precast concrete and asphalt products. The segment comprises businesses operating in 19 countries across Western, Central and Eastern Europe.
Europe Lightsidebusinesses are predominantly engaged in the production and supply of construction accessories, architectural products, shutters & awnings, perimeter protection & network access products across 17 countries primarily in Western Europe.
Europe Distributionbusinesses are predominantly engaged in supplying General Merchants and Sanitary, Heating and Plumbing (SHAP) businesses in Austria, Belgium, France, Germany, the Netherlands and Switzerland, andDo-It-Yourself (DIY) businesses in Germany, and up to date of disposal in Belgium and the Netherlands, catering to the general public and small andmedium-sized builders selling a range of bricks, cement, sanitary, heating, plumbing and other building products.
Americas Materialsbusinesses are predominantly engaged in the production and sale of aggregates, asphalt, cement and readymixed concrete products and provide asphalt paving services in the US and Canada. This segment also includes the Group’s cement operations in Brazil. Americas ProductsEurope Materials businesses are predominantly engaged in the production and sale in the US and Canada of concrete masonry and hardscapes, packaged lawn and garden products, packaged cement mixes, fencing, utility, drainage and structural precast products, construction accessories and glass and aluminium glazing systems.
Asiabusinesses are predominantly engaged in the manufacture and supply of cement, lime, aggregates, readymixed and precast concrete and asphalt products. The segment comprises businesses operating in 21 countries across Western, Central and Eastern Europe as well as the Philippines in Asia.
OurBuilding Productssegment includes businesses operating across a portfolio of building product related platforms including infrastructure, construction accessories, Building Envelope, architectural products and, up to their disposal in 2019, perimeter protection and shutters & awnings. This segment also included our Do-It-Yourself (DIY) businesses in Belgium and the Netherlands which were disposed of in 2018. The segment comprises businesses operating in 19 countries primarily in the Philippines.US, Canada and Western Europe. See note 2The divestment of our Europe Distribution business (excluding DIY Benelux), formerly part of the Building Products segment, was completed in 2019. As a result, it has been classified as discontinued operations in the current year; its performance in this year and comparative years is therefore part of discontinued operations. As referenced above, DIY Benelux was separately divested in 2018 and therefore its performance up to the date of divestment is shown as part of continuing operations in 2018 and 2017.
As a result of the more simplified operating structure implemented on 1 January 2019, the classification of reported revenue into the principal activities and products below has been amended to better reflect the basis on which management now reviews its businesses. Accordingly, the revenue formerly disaggregated across perimeter protection, shutters & awnings, network access products, architectural and precast products has now been reorganised and presented in two new categories: architectural products and infrastructure products. Comparative amounts for more detailed information on reportable segments, as identified under IFRS 8Operating Segments.2018 have been restated where necessary to reflect the new format for disaggregation of revenue. A. Disaggregated revenue In the following tables, revenue is disaggregated by primary geographic market and by principal activities and products. Due to the diversified nature of the Group, the basis on which management reviews its businesses varies across the Group. Geography is the primary basis for the Europe Heavyside, Americas Materials and AsiaEurope Materials businesses; while activities and products are used for the Europe Lightside, Europe Distribution and AmericasBuilding Products businesses. Revenue from external customers (as defined in IFRS 8) attributable to the country of domicile and all foreign countries of operation greater than 10% are included below. Further operating segment disclosures are set out in note 2. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December | | | | | Europe
Heavyside
2018 | | | Europe
Lightside
2018 | | | Europe
Distribution
2018 | | | Americas
Materials
2018 | | | Americas
Products
2018 | | | Asia
2018 | | | Total
2018 | | | 2017 | | | 2016 | | | Primary geographic markets | | €m | | | €m | | | €m | | | €m | | | €m | | | €m | | | €m | | | €m | | | €m | | Continuing operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Republic of Ireland (country of domicile) | | | 468 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 468 | | | | 435 | | | | 403 | | Benelux (mainly the Netherlands) | | | 562 | | | | 371 | | | | 1,498 | | | | - | | | | - | | | | - | | | | 2,431 | | | | 2,589 | | | | 2,576 | | United Kingdom | | | 3,045 | | | | 223 | | | | - | | | | - | | | | - | | | | - | | | | 3,268 | | | | 3,023 | | | | 3,091 | | Rest of Europe (i) | | | 3,536 | | | | 791 | | | | 2,358 | | | | - | | | | - | | | | - | | | | 6,685 | | | | 6,348 | | | | 6,250 | | United States | | | - | | | | - | | | | - | | | | 7,896 | | | | 4,065 | | | | - | | | | 11,961 | | | | 10,844 | | | | 10,415 | | Rest of World (ii) | | | - | | | | 123 | | | | - | | | | 1,055 | | | | 368 | | | | 431 | | | | 1,977 | | | | 1,981 | | | | 2,054 | | | | | | | | | | | | Total Group from continuing operations | | | 7,611 | | | | 1,508 | | | | 3,856 | | | | 8,951 | | | | 4,433 | | | | 431 | | | | 26,790 | | | | 25,220 | | | | 24,789 | | Discontinued operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States - Americas Distribution | | | | | | | | | | | | | | | | | | | | | | | | | | | 7 | | | | 2,343 | | | | 2,315 | | | | | | | | | | | | Total Group | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,797 | | | | 27,563 | | | | 27,104 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December | | | | | Americas
Materials
2019 | | | Europe
Materials
2019 | | | Building
Products
2019 | | | Total
2019 | | | | | | Americas
Materials
2018 | | | Europe
Materials
2018 | | | Building
Products
2018 | | | Total
2018 | | | | | | Total
2017 | | | Primary geographic markets | | €m | | | €m | | | €m | | | €m | | | | | | €m | | | €m | | | €m | | | €m | | | | | | €m | | Continuing operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Republic of Ireland (country of domicile) | | | - | | | | 585 | | | | - | | | | 585 | | | | | | | | - | | | | 468 | | | | - | | | | 468 | | | | | | | | 435 | | United Kingdom | | | - | | | | 3,107 | | | | 217 | | | | 3,324 | | | | | | | | - | | | | 3,045 | | | | 223 | | | | 3,268 | | | | | | | | 3,023 | | Rest of Europe (i) | | | - | | | | 4,328 | | | | 1,038 | | | | 5,366 | | | | | | | | - | | | | 4,098 | | | | 1,469 | | | | 5,567 | | | | | | | | 5,370 | | United States | | | 9,207 | | | | - | | | | 4,543 | | | | 13,750 | | | | | | | | 7,896 | | | | - | | | | 4,065 | | | | 11,961 | | | | | | | | 10,844 | | Rest of World (ii) | | | 1,178 | | | | 474 | | | | 452 | | | | 2,104 | | | | | | | | 1,055 | | | | 431 | | | | 491 | | | | 1,977 | | | | | | | | 1,981 | | | | | | | | | | | | | | Total Group from continuing operations | | | 10,385 | | | | 8,494 | | | | 6,250 | | | | 25,129 | | | | | | | | 8,951 | | | | 8,042 | | | | 6,248 | | | | 23,241 | | | | | | | | 21,653 | | Discontinued operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | United States - Americas Distribution | | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | | | | | 7 | | | | | | | | 2,343 | | Rest of Europe (i) - Europe Distribution | | | | | | | | | | | | | | | 3,177 | | | | | | | | | | | | | | | | | | | | 3,549 | | | | | | | | 3,567 | | | | | | | | | | | | | | Total Group | | | | | | | | | | | | | | | 28,306 | | | | | | | | | | | | | | | | | | | | 26,797 | | | | | | | | 27,563 | |
| (i) | The Rest of Europe principally includes Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Luxembourg, Netherlands, Poland, Romania, Serbia, Slovakia, Spain, Sweden, Switzerland and Ukraine. |
| (ii) | The Rest of World principally includes Australia, Brazil, Canada and the Philippines. |
| | | | | 146 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | 139 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
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1. Revenue - continued | | | | Year ended 31 December | | | Year ended 31 December | | | | | Europe
Heavyside (iii) 2018 | | | Europe
Lightside 2018 | | | Europe
Distribution 2018 | | | Americas
Materials (iii) 2018 | | | Americas
Products 2018 | | | Asia 2018 | | | Total 2018 | | | Americas
Materials (iii)
2019 | | Europe
Materials (iii)
2019 | | Building
Products
2019 | | Total
2019 | | | | Americas
Materials (iii)
2018 | | Europe
Materials (iii)
2018 | | Building
Products
2018 | | Total
2018 | | | Principal activities and products | | €m | | | €m | | | €m | | | €m | | | €m | | | €m | | | €m | | | €m | | €m | | €m | | €m | | | | | | €m | | €m | | €m | | €m | | Continuing operations | | | | | | | | | | | | | | | | Cement, lime and cement products | | | 2,075 | | | | - | | | | - | | | | 810 | | | | - | | | | 431 | | | | 3,316 | | | | 1,222 | | | | 2,646 | | | | - | | | | 3,868 | | | | 810 | | | | 2,506 | | | | - | | | | 3,316 | | Aggregates, asphalt and readymixed products | | | 2,919 | | | | - | | | | - | | | | 4,330 | | | | - | | | | - | | | | 7,249 | | | | 5,046 | | | | 3,061 | | | | - | | | | 8,107 | | | | 4,330 | | | | 2,919 | | | | - | | | | 7,249 | | Construction contract activities* | | | 1,542 | | | | 62 | | | | - | | | | 3,811 | | | | 178 | | | | - | | | | 5,593 | | | | 4,117 | | | | 1,609 | | | | 165 | | | | 5,891 | | | | 3,811 | | | | 1,542 | | | | 240 | | | | 5,593 | | Architectural products | | | | - | | | | 955 | | | | 2,664 | | | | 3,619 | | | | - | | | | 903 | | | | 2,597 | | | | 3,500 | | Infrastructure products | | | | - | | | | 223 | | | | 1,239 | | | | 1,462 | | | | - | | | | 172 | | | | 1,080 | | | | 1,252 | | Construction accessories | | | - | | | | 459 | | | | - | | | | - | | | | - | | | | - | | | | 459 | | | | - | | | | - | | | | 590 | | | | 590 | | | | - | | | | - | | | | 593 | | | | 593 | | | Perimeter protection, shutters & awnings and network access products | | | - | | | | 482 | | | | - | | | | - | | | | - | | | | - | | | | 482 | | | Architectural and precast products | | | 1,075 | | | | 505 | | | | - | | | | - | | | | 2,824 | | | | - | | | | 4,404 | | | | Architectural glass and glazing systems and wholesale hardware distribution | | | - | | | | - | | | | - | | | | - | | | | 1,431 | | | | - | | | | 1,431 | | | | - | | | | - | | | | 1,592 | | | | 1,592 | | | | - | | | | - | | | | 1,431 | | | | 1,431 | | | General Builders Merchants, DIY and Sanitary, Heating & Plumbing | | | - | | | | - | | | | 3,856 | | | | - | | | | - | | | | - | | | | 3,856 | | | DIY | | | | - | | | | - | | | | - | | | | - | | | | | - | | | | - | | | | 307 | | | | 307 | | | Total Group from continuing operations | | | 7,611 | | | | 1,508 | | | | 3,856 | | | | 8,951 | | | | 4,433 | | | | 431 | | | | 26,790 | | | | 10,385 | | | | 8,494 | | | | 6,250 | | | | 25,129 | | | | | 8,951 | | | | 8,042 | | | | 6,248 | | | | 23,241 | | Discontinued operations | | | | | | | | | | | | | | | | | Exterior and interior products - Americas Distribution | | | | | | | | | | | | | | | 7 | | | | - | | | | 7 | | | General Builders Merchants, DIY Germany and Sanitary, Heating & Plumbing - Europe Distribution | | | | | 3,177 | | | | | 3,549 | | | Total Group | | | | | | | | | | | | | | | 26,797 | | | | | 28,306 | | | | | 26,797 | |
| (iii) | Europe HeavysideAmericas Materials and AmericasEurope Materials both operate vertically integrated businesses, which are founded in resource-backed cement and aggregates assets and which support the manufacture and supply of aggregates, asphalt, cement, readymixed and precast concrete and landscaping products. Accordingly, for the purpose of disaggregation of revenue we have included certain products together, as this is how management review and evaluate this business line.
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There are no material dependencies or concentrations of individual customers which would warrant disclosure under IFRS 8. The individual entities within the Group have a large number of customers spread across various activities,end-uses and geographies. Revenue derived through the supply of services and intersegment revenue are not material to the Group. The transfer pricing policy implemented by the Group between operating segments and across its constituent entities is described in note 34. In addition, due to the nature of building materials, which have a lowvalue-to-weight ratio, the Group’s revenue streams include a low level of cross-border transactions. B. Contract balances For information on the Group’s construction contract balances refer to notes 18, 19 and 20. Movements in our net contract balances are not considered significant and are primarily driven by the timing of billingwork-in-progress within our construction contract businesses. C. Unsatisfied long-term construction contracts and other performance obligations Revenue yet to be recognised from fixed-price long-term construction contracts, primarily within our Europe HeavysideAmericas Materials and AmericasEurope Materials businesses, amounted to €1,8481,867 million at 31 December 2018.2019 (2018: €1,848 million). The Group has applied the practical expedient of IFRS 15Revenue from Contracts with Customerswhereby revenue yet to be recognised on contracts that had an original expected duration of less than one year is not disclosed. As permitted under the transitional provisions of IFRS 15, the transaction price allocated to (partially) unsatisfied performance obligations at 31 December 2017 is not disclosed. The majority of open contracts at 31 December 20182019 will close and revenue will be recognised within 12 months of the balance sheet date. | | | 140 | | * Revenue principally recognised over time. Construction contracts are generally completed within the same financial reporting year. |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 147 |
2. Segment Information As outlined in noteEffective 1 January 2019 the Group reports across the followingimplemented a simplified new structure reducing its operating segments from six operating segments:to three: Americas Materials, Europe Materials (formerly Europe Heavyside and Asia), and a new Building Products segment. The Building Products segment brings together our former Americas Products, Europe Lightside and, up to its disposal, Europe Distribution Americas Materials, Americas Productssegments. Comparative segment amounts for 2018 and Asia.2017 have been restated where necessary to reflect the new format for segmentation. The segments reflect the Group’s organisational structure in 2018 and the nature of the financial information reported to and assessed by the Group Chief Executive and Finance Director, who are together determined to fulfil the role of Chief Operating Decision Maker (as defined in IFRS 8). Effective 1 January 2019 the Group implemented a simplified new structure reducing itsNo operating segments from sixhave been aggregated to three: Europe Materials (formerly Europe Heavyside), Americas Materials and a new Building Products segment. The Building Products segment brings together our Europe Lightside, Europe Distribution and Americas Productsform these reportable segments.
The principal factors employed in the identification of the sixthree segments reflected in this note include: the Group’s organisational structure in 20182019 (during 20182019 each divisional President fulfilled the role of “segment manager” as outlined in IFRS 8); | | fulfilled the role of “segment manager” as outlined in IFRS 8, with the President of Europe Lightside and Distribution acting as “segment manager” for each of the Europe Lightside and Europe Distribution segments respectively);
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the nature of the reporting lines to the Chief Operating Decision Maker (as defined in IFRS 8); the structure of internal reporting documentation such as management accounts and budgets; and the degree of homogeneity of products services and geographical areasservices within each of the segments from which revenue is derived The Chief Operating Decision Maker monitors the operating results of segments separately in order to allocate resources between segments and to assess performance. Segment performance is predominantly evaluated based on operating profit. As performance is also evaluated using operating profit before depreciation, amortisation and impairment (EBITDA (as defined)*), supplemental information based on EBITDA (as defined)* is provided overleaf. Given that net finance costs and income tax are managed on a centralised basis, these items are not allocated between operating segments for the purposes of the information presented to the Chief Operating Decision Maker and are accordingly omitted from the detailed segmental analysis overleaf. There are no asymmetrical allocations to reporting segments which would require disclosure. | | | | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. | | | 141 | |
| | | | | 148 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | | CRH Annual Report and Form 20-F|2018
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2. Segment Information - continued A. Operating segments disclosures - Consolidated Income Statement data | | | | Year ended 31 December | | | Year ended 31 December | | | | | | | Revenue | | | | Group EBITDA (as defined)* | | Depreciation,
amortisation and
impairment | | Group
operating profit | | | | | Revenue | | | | Group EBITDA
(as defined)* | | Depreciation,
amortisation and
impairment | | Group
operating profit | | | | | 2018 €m | | 2017 €m | | 2016 €m | | | | | 2018 €m | | 2017 €m | | 2016 €m | | | | | 2018 €m | | 2017 €m | | 2016 €m | | | | 2018 €m | | 2017 €m | | 2016 €m | | | 2019
€m | | 2018
€m | | 2017
€m | | | | | 2019
€m | | 2018
€m | | 2017
€m | | | | | 2019
€m | | 2018
€m | | 2017
€m | | | | 2019
€m | | 2018
€m | | 2017
€m | | Continuing operations | | | | | | | | | | | | | Europe Heavyside | | | 7,611 | | | | 6,902 | | | | 6,945 | | | | | | 911 | | | | 839 | | | | 781 | | | | | | 410 | | | | 361 | | | | 395 | | | | 501 | | | | 478 | | | | 386 | | | Europe Lightside | | | 1,508 | | | | 1,440 | | | | 1,392 | | | | | | 152 | | | | 143 | | | | 137 | | | | | | 42 | | | | 41 | | | | 45 | | | | 110 | | | | 102 | | | | 92 | | | Europe Distribution | | | 3,856 | | | | 4,145 | | | | 4,066 | | | | | 181 | | | | 269 | | | | 206 | | | | | 69 | | | | 62 | | | | 76 | | | | | 112 | | | | 207 | | | | 130 | | | Europe | | | 12,975 | | | | 12,487 | | | | 12,403 | | | | | 1,244 | | | | 1,251 | | | | 1,124 | | | | | 521 | | | | 464 | | | | 516 | | | | | 723 | | | | 787 | | | | 608 | | | | Americas Materials | | | 8,951 | | | | 7,970 | | | | 7,598 | | | | 1,493 | | | | 1,270 | | | | 1,204 | | | | 484 | | | | 412 | | | | 386 | | | | 1,009 | | | | 858 | | | | 818 | | | | 10,385 | | | | 8,951 | | | | 7,970 | | | | | | 1,960 | | | | 1,493 | | | | 1,270 | | | | | | 689 | | | | 484 | | | | 412 | | | | 1,271 | | | | 1,009 | | | | 858 | | Americas Products | | | 4,433 | | | | 4,327 | | | | 4,280 | | | | | 603 | | | | 573 | | | | 543 | | | | | 144 | | | | 138 | | | | 132 | | | | | 459 | | | | 435 | | | | 411 | | | Americas | | | 13,384 | | | | 12,297 | | | | 11,878 | | | | | 2,096 | | | | 1,843 | | | | 1,747 | | | | | 628 | | | | 550 | | | | 518 | | | | | 1,468 | | | | 1,293 | | | | 1,229 | | | | | | | | | | | | | Asia | | | 431 | | | | 436 | | | | 508 | | | | | 25 | | | | 52 | | | | 109 | | | | | 39 | | | | 37 | | | | 38 | | | | | (14) | | | | 15 | | | | 71 | | | | | | | | | | | | | Europe Materials | | | | 8,494 | | | | 8,042 | | | | 7,338 | | | | | | 1,079 | | | | 936 | | | | 891 | | | | | | 524 | | | | 449 | | | | 398 | | | | 555 | | | | 487 | | | | 493 | | Building Products | | | | 6,250 | | | | 6,248 | | | | 6,345 | | | | | 961 | | | | 787 | | | | 769 | | | | | 293 | | | | 212 | | | | 193 | | | | | 668 | | | | 575 | | | | 576 | | | Total Group from continuing operations | | | 26,790 | | | | 25,220 | | | | 24,789 | | | | | 3,365 | | | | 3,146 | | | | 2,980 | | | | | 1,188 | | | | 1,051 | | | | 1,072 | | | | | 2,177 | | | | 2,095 | | | | 1,908 | | | | 25,129 | | | | 23,241 | | | | 21,653 | | | | | 4,000 | | | | 3,216 | | | | 2,930 | | | | | 1,506 | | | | 1,145 | | | | 1,003 | | | | | 2,494 | | | | 2,071 | | | | 1,927 | | | Discontinued operations | | | | | | | | | | | | | | | Americas Distribution | | | 7 | | | | 2,343 | | | | 2,315 | | | | | (5) | | | | 164 | | | | 150 | | | | | - | | | | 21 | | | | 31 | | | | | (5) | | | | 143 | | | | 119 | | | | - | | | | 7 | | | | 2,343 | | | | - | | | | (5) | | | | 164 | | | | - | | | | - | | | | 21 | | | | - | | | | (5) | | | | 143 | | Europe Distribution | | | | 3,177 | | | | 3,549 | | | | 3,567 | | | | | 200 | | | | 149 | | | | 216 | | | | | 99 | | | | 43 | | | | 48 | | | | | 101 | | | | 106 | | | | 168 | | | Total Group | | | 26,797 | | | | 27,563 | | | | 27,104 | | | | | 3,360 | | | | 3,310 | | | | 3,130 | | | | | 1,188 | | | | 1,072 | | | | 1,103 | | | | | 2,172 | | | | 2,238 | | | | 2,027 | | | | 28,306 | | | | 26,797 | | | | 27,563 | | | | | 4,200 | | | | 3,360 | | | | 3,310 | | | | | 1,605 | | | | 1,188 | | | | 1,072 | | | | | 2,595 | | | | 2,172 | | | | 2,238 | | | Group operating profit from continuing operations | Group operating profit from continuing operations | | | | 2,177 | | | | 2,095 | | | | 1,908 | | Group operating profit from continuing operations | | | | 2,494 | | | | 2,071 | | | | 1,927 | | (Loss)/profit on disposals (i) | | | | | | | | | | | | | | | | | | | | | | | | | | | (24) | | | | 56 | | | | 53 | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1) | | | | (27) | | | | 54 | | Finance costs less income | | | | | | | | | | | | | | | | | | | | | | | | | | | (305) | | | | (289) | | | | (317) | | | | | | | | | | | | | | | | | | | | | | | | | | | | (326) | | | | (305) | | | | (289) | | Other financial expense | | | | | | | | | | | | | | | | | | | | | | | | | | | (46) | | | | (60) | | | | (66) | | | | | | | | | | | | | | | | | | | | | | | | | | | | (112) | | | | (46) | | | | (59) | | Share of equity accounted investments’ profit (ii) | Share of equity accounted investments’ profit (ii) | | | | | | | | | | | | | | | | | | | | | | 60 | | | | 65 | | | | 42 | | Share of equity accounted investments’ profit (ii) | | | | | | | | | | | | | | | | 60 | | | | 48 | | | | 52 | | Profit before tax from continuing operations | Profit before tax from continuing operations | | | | | | | | | | | | | | | | | | | | | | 1,862 | | | | 1,867 | | | | 1,620 | | Profit before tax from continuing operations | | | | | | | | | | | | | | | | 2,115 | | | | 1,741 | | | | 1,685 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (i) (Loss)/profit on
disposals
(note 6) | | | | | (ii) Share of equity
accounted investments’
profit/(loss) (note 11) | | Europe Heavyside | | | | | | | | | | | | | | | | | | | 7 | | | | 19 | | | | 24 | | | | | | 13 | | | | 9 | | | | 12 | | Europe Lightside | | | | | | | | | | | | | | | | | | | (33) | | | | - | | | | 1 | | | | | | - | | | | - | | | | - | | Europe Distribution | | | | | | | | | | | | | | | | | | | (9) | | | | 4 | | | | 13 | | | | | | 17 | | | | 15 | | | | 13 | | Europe | | | | | | | | | | | | | | | | | | | (35) | | | | 23 | | | | 38 | | | | | | 30 | | | | 24 | | | | 25 | | | | | | | | | | | | | | | | | | Americas Materials | | | | | | | | | | | | | | | | | | | 44 | | | | 29 | | | | (19) | | | | | | 25 | | | | 32 | | | | 34 | | Americas Products | | | | | | | | | | | | | | | | | | | (33) | | | | 4 | | | | 34 | | | | | | - | | | | - | | | | - | | Americas | | | | | | | | | | | | | | | | | | | 11 | | | | 33 | | | | 15 | | | | | | 25 | | | | 32 | | | | 34 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Asia | | | | | | | | | | | | | | | | | | | - | | | | - | | | | - | | | | | | 5 | | | | 9 | | | | (17) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Group | | | | | | | | | | | | | | | | | | | (24) | | | | 56 | | | | 53 | | | | | | 60 | | | | 65 | | | | 42 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (i) (Loss)/profit on
disposals
(note 6) | | | | | (ii) Share of equity
accounted investments’
profit (note 11) | | Americas Materials | | | | | | | | | | | | | | | | | | | 2 | | | | 44 | | | | 29 | | | | | | 38 | | | | 25 | | | | 32 | | Europe Materials | | | | | | | | | | | | | | | | | | | (131) | | | | 7 | | | | 19 | | | | | | 13 | | | | 18 | | | | 18 | | Building Products | | | | | | | | | | | | | | | | | | | 128 | | | | (78) | | | | 6 | | | | | | 9 | | | | 5 | | | | 2 | | Total Group from continuing operations | | | | | | | | | | | | | | | | | | | (1) | | | | (27) | | | | 54 | | | | | | 60 | | | | 48 | | | | 52 | |
| | | 142 | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 149 |
B. Operating segments disclosures - Consolidated Balance Sheet data | | | | | | | | | | | | | | | | | | | | | | | | As at 31 December | | | | | Total assets | | | | | | Total liabilities | | | | | 2018 €m | | | 2017 €m | | | | | | 2018 €m | | | 2017 €m | | Europe Heavyside | | | 9,042 | | | | 8,932 | | | | | | | | 2,599 | | | | 2,641 | | Europe Lightside | | | 1,079 | | | | 1,100 | | | | | | | | 287 | | | | 302 | | Europe Distribution | | | 1,720 | | | | 2,178 | | | | | | | | 478 | | | | 563 | | Europe | | | 11,841 | | | | 12,210 | | | | | | | | 3,364 | | | | 3,506 | | | | | | | | Americas Materials | | | 13,798 | | | | 9,180 | | | | | | | | 2,063 | | | | 1,628 | | Americas Products | | | 4,404 | | | | 4,017 | | | | | | | | 977 | | | | 895 | | Americas | | | 18,202 | | | | 13,197 | | | | | | | | 3,040 | | | | 2,523 | | | | | | | | | | | | | | | | | | | | | | | | Asia | | | 1,467 | | | | 1,402 | | | | | | | | 188 | | | | 172 | | | | | | | | | | | | | | | | | | | | | | | | Total Group | | | 31,510 | | | | 26,809 | | | | | | | | 6,592 | | | | 6,201 | | | | | | | | Reconciliation to total assets as reported in the Consolidated Balance Sheet: | | | | | | | | | | | | | | | | | | | | | Investments accounted for using the equity method | | | 1,163 | | | | 1,248 | | | | | | | | | | | | | | Other financial assets | | | 23 | | | | 25 | | | | | | | | | | | | | | Derivative financial instruments (current andnon-current) | | | 45 | | | | 64 | | | | | | | | | | | | | | Income tax assets (current and deferred) | | | 86 | | | | 260 | | | | | | | | �� | | | | | | Cash and cash equivalents | | | 2,346 | | | | 2,115 | | | | | | | | | | | | | | Assets held for sale | | | - | | | | 1,112 | | | | | | | | | | | | | | Total assets as reported in the Consolidated Balance Sheet | | | 35,173 | | | | 31,633 | | | | | | | | | | | | | | | | | | | | Reconciliation to total liabilities as reported in the Consolidated Balance Sheet: | | | | | | | | | | | | | | | | | | | | | Interest-bearing loans and borrowings (current andnon-current) | | | | | | | | | | | | | | | 9,316 | | | | 7,976 | | Derivative financial instruments (current andnon-current) | | | | | | | | | | | | | | | 59 | | | | 14 | | Income tax liabilities (current and deferred) | | | | | | | | | | | | | | | 2,652 | | | | 2,124 | | Liabilities associated with assets classified as held for sale | | | | | | | | | | | | | | | - | | | | 341 | | Total liabilities as reported in the Consolidated Balance Sheet | | | | | | | | | | | | | | | 18,619 | | | | 16,656 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
|
2. Segment Information - continued
| | | | | | | | | | | | | | | | | | | | | | | | As at 31 December | | | | | Total assets | | | | | | Total liabilities | | | | | 2019 €m | | | 2018 €m | | | | | | 2019 €m | | | 2018 €m | | Americas Materials | | | 14,608 | | | | 13,798 | | | | | | | | 2,642 | | | | 2,063 | | Europe Materials | | | 11,669 | | | | 10,509 | | | | | | | | 3,441 | | | | 2,787 | | Building Products | | | 6,407 | | | | 7,203 | | | | | | | | 1,875 | | | | 1,742 | | Total Group | | | 32,684 | | | | 31,510 | | | | | | | | 7,958 | | | | 6,592 | | | | | | | | Reconciliation to total assets as reported in the Consolidated Balance Sheet: | | | | | | | | | | | | | | | | | | | | | Investments accounted for using the equity method | | | 690 | | | | 1,163 | | | | | | | | | | | | | | Other financial assets | | | 12 | | | | 23 | | | | | | | | | | | | | | Derivative financial instruments (current andnon-current) | | | 82 | | | | 45 | | | | | | | | | | | | | | Income tax assets (current and deferred) | | | 87 | | | | 86 | | | | | | | | | | | | | | Cash and cash equivalents | | | 3,755 | | | | 2,346 | | | | | | | | | | | | | | Total assets as reported in the Consolidated Balance Sheet | | | 37,310 | | | | 35,173 | | | | | | | | | | | | | | | | | | | | Reconciliation to total liabilities as reported in the Consolidated Balance Sheet: | | | | | | | | | | | | | | | | | | | | | Interest-bearing loans and borrowings (current andnon-current) | | | | | | | | | | | | | | | 9,014 | | | | 9,316 | | Derivative financial instruments (current andnon-current) | | | | | | | | | | | | | | | 17 | | | | 59 | | Income tax liabilities (current and deferred) | | | | | | | | | | | | | | | 2,841 | | | | 2,652 | | Total liabilities as reported in the Consolidated Balance Sheet | | | | | | | | | | | | | | | 19,830 | | | | 18,619 | |
C. Operating segments disclosures - other items Additions tonon-current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December | | | | | Property, plant and
equipment (note 15) | | | | | Financial assets
(note 17) | | | | | Total Group | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | Continuing operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Europe Heavyside | | | 351 | | | | 349 | | | | 260 | | | | | | - | | | | - | | | | 2 | | | | | | 351 | | | | 349 | | | | 262 | | Europe Lightside | | | 42 | | | | 36 | | | | 27 | | | | | | - | | | | - | | | | - | | | | | | 42 | | | | 36 | | | | 27 | | Europe Distribution | | | 31 | | | | 33 | | | | 26 | | | | | | - | | | | - | | | | - | | | | | | 31 | | | | 33 | | | | 26 | | Europe | | | 424 | | | | 418 | | | | 313 | | | | | | - | | | | - | | | | 2 | | | | | | 424 | | | | 418 | | | | 315 | | | | | | | | | | | | | | Americas Materials | | | 429 | | | | 375 | | | | 328 | | | | | | 2 | | | | 5 | | | | 5 | | | | | | 431 | | | | 380 | | | | 333 | | Americas Products | | | 166 | | | | 167 | | | | 142 | | | | | | - | | | | 6 | | | | - | | | | | | 166 | | | | 173 | | | | 142 | | Americas | | | 595 | | | | 542 | | | | 470 | | | | | | 2 | | | | 11 | | | | 5 | | | | | | 597 | | | | 553 | | | | 475 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Asia | | | 102 | | | | 55 | | | | 47 | | | | | | - | | | | - | | | | - | | | | | | 102 | | | | 55 | | | | 47 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Group from continuing operations | | | 1,121 | | | | 1,015 | | | | 830 | | | | | | 2 | | | | 11 | | | | 7 | | | | | | 1,123 | | | | 1,026 | | | | 837 | | | | | | | | | | | | | | Discontinued operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Americas Distribution | | | - | | | | 29 | | | | 23 | | | | | | - | | | | - | | | | - | | | | | | - | | | | 29 | | | | 23 | | | | | | | | | | | | | | Total Group | | | 1,121 | | | | 1,044 | | | | 853 | | | | | | 2 | | | | 11 | | | | 7 | | | | | | 1,123 | | | | 1,055 | | | | 860 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December | | | | | Property, plant and equipment (note 15, 22) | | | | | Financial assets (note 17) | | | | | Total Group | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Continuing operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Americas Materials (i) | | | 671 | | | | 429 | | | | 375 | | | | | | 27 | | | | 2 | | | | 5 | | | | | | 698 | | | | 431 | | | | 380 | | Europe Materials | | | 491 | | | | 453 | | | | 404 | | | | | | 1 | | | | - | | | | - | | | | | | 492 | | | | 453 | | | | 404 | | Building Products | | | 315 | | | | 209 | | | | 207 | | | | | | - | | | | - | | | | 6 | | | | | | 315 | | | | 209 | | | | 213 | | | Total Group from continuing operations | | | 1,477 | | | | 1,091 | | | | 986 | | | | | | 28 | | | | 2 | | | | 11 | | | | | | 1,505 | | | | 1,093 | | | | 997 | | | | | | | | | | | | | | Discontinued operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Americas Distribution | | | - | | | | - | | | | 29 | | | | | | - | | | | - | | | | - | | | | | | - | | | | - | | | | 29 | | Europe Distribution | | | - | | | | 30 | | | | 29 | | | | | | 1 | | | | - | | | | - | | | | | | 1 | | | | 30 | | | | 29 | | | | | | | | | | | | | | Total Group | | | 1,477 | | | | 1,121 | | | | 1,044 | | | | | | 29 | | | | 2 | | | | 11 | | | | | | 1,506 | | | | 1,123 | | | | 1,055 | |
| (i) | Additions to property, plant and equipment include€86 million relating to leased mineral reserves which fall outside the scope of IFRS 16. |
| | | | | 150 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
2. Segment Information - continued D. Information about geographical areas Thenon-current assets (as defined in IFRS 8) attributable to the country of domicile and all foreign countries of operation, for which revenue exceeds 10% of total external Group revenue, are set out below. | | | | As at 31 December | | | As at 31 December | | | | | Non-current assets* | | | Non-current assets* | | | | | | 2018 | | | 2017 | | | 2019 | | | 2018 | | | | | | €m | | | | €m | | | | €m | | | | €m | | Continuing operations | | | | | | Republic of Ireland (country of domicile) | | | 495 | | | | 493 | | | | 506 | | | | 495 | | Benelux (mainly the Netherlands) | | | 816 | | | | 1,162 | | | United Kingdom | | | 2,461 | | | | 2,395 | | | | 2,772 | | | | 2,461 | | United States | | | 12,925 | | | | 8,749 | | | | 14,259 | | | | 12,925 | | Other | | | 8,660 | | | | 8,757 | | | | 9,011 | | | | 9,476 | | Total Group from continuing operations | | | 25,357 | | | | 21,556 | | | | Discontinued operations | | | | | | United States - Americas Distribution | | | - | | | | 476 | | | Total Group | | | 25,357 | | | | 22,032 | | | | 26,548 | | | | 25,357 | |
| | | 144 | | *Non-current assets comprise property, plant and equipment, intangible assets and investments accounted for using the equity method. |
| | | | | | | CRH Annual Report and Form 20-F |2018
|
3. Assets Held for Sale and Discontinued Operations A. Profit on disposal of discontinued operations On 2 January 2018,In October 2019, the Group completed the divestment of its 100% holding in AlliedEurope Distribution business, formerly part of our Building Products the trading name of our former Americas Distribution segment. The assets and liabilities associated with this transaction met the “held for sale” criteria set out in IFRS 5Non-Current Assets Held for Sale and Discontinued Operationsand were reclassified accordingly as assets or liabilities held for sale as at 31 December 2017. As the business was
divested in 2018, all opening balances have been reclassified back to the relevant asset and liability categories prior to their divestment for presentation purposes. With the exception of Allied Building Products,our Europe Distribution business, no other businesses divested in 20182019 are considered to be either separate major lines of business or geographical areas of operation and therefore do not constitute discontinued operations as defined in IFRS 5.5Non-CurrentAssets Held for Sale and Discontinued Operations.
No businesses
In January 2018, the Group completed the divestment of its 100% holding in Allied Building Products, the trading name of our former Americas Distribution segment, which was considered a discontinued operation in 2018 and was classified accordingly. Assets and liabilities that met the IFRS 5 held for sale criteria at 31 December 2018.2019 have not been separately disclosed as held for sale as they were not considered material in the context of the Group. The table belowoverleaf sets out the proceeds and related profit recognised on the divestment which is included in profit after tax for the financial year from discontinued operations. | *Non-current assets comprise property, plant and equipment, intangible assets and investments accounted for using the equity method. |
| | | | | | | | 2018
CRH ANNUAL REPORT AND FORM€20-F | 2019m | | Assets/(liabilities) disposed of at net carrying amount:
| | | | | -non-current assets
| | | 472 | | - cash and cash equivalents151
| | | 18 | | - working capital and provisions
| | | 367 | | - deferred tax
| | | (14) | | Net assets disposed
| | | 843 | | Reclassification of currency translation effects on disposal
| | | (27) | | Total
| | | 816 | | Proceeds from disposal (net of disposal costs)
| | | 2,379 | | Profit on disposal from discontinued operations
| | | 1,563 | | | | Net cash inflow arising on disposal
| | | | | Proceeds from disposal from discontinued operations
| | | 2,379 | | Less: cash and cash equivalents disposed
| | | (18) | | Total
| | | 2,361 | |
| | | | | | | | | | | | 2019 €m | | | 2018 €m | | Assets/(liabilities) disposed of at net carrying amount: | | | | | | | | | -non-current assets | | | 1,309 | | | | 472 | | - cash and cash equivalents | | | 100 | | | | 18 | | - working capital and provisions | | | 596 | | | | 367 | | - current tax | | | 2 | | | | - | | - lease liabilities | | | (367) | | | | - | | - deferred tax | | | (28) | | | | (14) | | - retirement benefit obligations | | | (42) | | | | - | | -non-controlling interests | | | (8) | | | | - | | Net assets disposed | | | 1,562 | | | | 843 | | Reclassification of currency translation effects on disposal | | | (123) | | | | (27) | | Total | | | 1,439 | | | | 816 | | Proceeds from disposal (net of disposal costs) | | | 1,663 | | | | 2,379 | | Profit on disposal from discontinued operations | | | 224 | | | | 1,563 | | | | | Net cash inflow arising on disposal | | | | | | | | | Proceeds from disposal from discontinued operations | | | 1,663 | | | | 2,379 | | Less: cash and cash equivalents disposed | | | (100) | | | | (18) | | Total | | | 1,563 | | | | 2,361 | |
B. Results of discontinued operations The results of the discontinued operations included in the Group profit for the financial year are set out as follows: | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Revenue | | | 7 | | | | 2,343 | | | | 2,315 | | | | 3,177 | | | | 3,556 | | | | 5,910 | | | EBITDA (as defined)* | | | (5) | | | | 164 | | | | 150 | | | | 200 | | | | 144 | | | | 380 | | Depreciation | | | - | | | | (16) | | | | (22) | | | | (96) | | | | (41) | | | | (55) | | Amortisation | | | - | | | | (5) | | | | (9) | | | | (2) | | | | (2) | | | | (14) | | Operating (loss)/profit | | | (5) | | | | 143 | | | | 119 | | | Impairment | | | | (1) | | | | - | | | | - | | Operating profit | | | | 101 | | | | 101 | | | | 311 | | Profit on disposals | | | 1,563 | | | | 3 | | | | 2 | | | | 227 | | | | 1,566 | | | | 5 | | Profit before finance costs | | | | 328 | | | | 1,667 | | | | 316 | | Finance costs | | | | (7) | | | | - | | | | (1) | | Share of equity accounted investments’ profit | | | | 12 | | | | 12 | | | | 13 | | Profit before tax | | | 1,558 | | | | 146 | | | | 121 | | | | 333 | | | | 1,679 | | | | 328 | | Attributable income tax expense | | | (473) | | | | (39) | | | | (40) | | | | (23) | | | | (503) | | | | (82) | | Profit after tax | | | 1,085 | | | | 107 | | | | 81 | | | Profit after tax for the financial year from discontinued operations | | | | 310 | | | | 1,176 | | | | 246 | | | Profit attributable to: | | | | | | | | Equity holders of the Company | | | | 309 | | | | 1,175 | | | | 245 | | Non-controlling interests | | | | 1 | | | | 1 | | | | 1 | | Profit for the financial year from discontinued operations | | | | 310 | | | | 1,176 | | | | 246 | | | Basic earnings per Ordinary Share from discontinued operations | | | 130.4c | | | | 12.8c | | | | 9.8c | | | | 38.5c | | | | 141.2c | | | | 29.4c | | Diluted earnings per Ordinary Share from discontinued operations | | | 129.7c | | | | 12.7c | | | | 9.7c | | | | 38.2c | | | | 140.5c | | | | 29.2c | | | Cash flows from discontinued operations | | | | | | | | | | | | | Net cash (outflow)/inflow from operating activities (i) | | | (469) | | | | 111 | | | | 123 | | | Net cash inflow/(outflow) from operating activities (i) | | | | 32 | | | | (367) | | | | 204 | | Net cash inflow/(outflow) from investing activities (ii) | | | 2,361 | | | | (27) | | | | (22) | | | | 1,542 | | | | 2,339 | | | | (75) | | Net cash (outflow)/inflow from financing activities | | | (5) | | | | 1 | | | | (1) | | | Net cash outflow from financing activities | | | | (71) | | | | (19) | | | | (13) | | Net cash inflow | | | 1,887 | | | | 85 | | | | 100 | | | | 1,503 | | | | 1,953 | | | | 116 | |
| (i) | Includes the corporation tax paid in 2018 on the sale of Allied Building Products.discontinued operations. |
| (ii) | Includes the proceeds from the sale of Allied Building Products.discontinued operations. |
| | | | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. | | | 145 | |
| | | | | 152 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | | CRH Annual Report and Form 20-F|2018
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4. Cost Analysis Continuing operations | | | | 2018
€m | | 2017
€m | | 2016
€m | | | 2019 €m | | | 2018 €m | | 2017 €m | | | Cost of sales analysis | | | | | | | | | | | | Raw materials and goods for resale | | | 7,653 | | | | 7,428 | | | | 7,307 | | | | 5,216 | | | | 5,058 | | | | 4,785 | | Employment costs (note 7) | | | 3,155 | | | | 2,869 | | | | 2,725 | | | | 3,467 | | | | 3,155 | | | | 2,869 | | Energy conversion costs | | | 1,222 | | | | 1,004 | | | | 940 | | | | 1,307 | | | | 1,222 | | | | 1,004 | | Repairs and maintenance | | | 882 | | | | 811 | | | | 803 | | | | 980 | | | | 882 | | | | 811 | | Depreciation, amortisation and impairment (i) | | | 939 | | | | 830 | | | | 817 | | | | 1,225 | | | | 939 | | | | 830 | | Change in inventory | | | (189) | | | | (142) | | | | (33 | ) | | | (62) | | | | (179) | | | | (117) | | Other production expenses (primarilysub-contractor costs and equipment rental) | | | 4,490 | | | | 4,103 | | | | 4,007 | | | Other production expenses (primarilysub-contractor costs) | | | | 4,713 | | | | 4,495 | | | | 4,093 | | Total | | | 18,152 | | | | 16,903 | | | | 16,566 | | | | 16,846 | | | | 15,572 | | | | 14,275 | | | Operating costs analysis | | | | | | | | | | | | Selling and distribution costs | | | 4,511 | | | | 4,236 | | | | 4,100 | | | | 4,062 | | | | 3,822 | | | | 3,561 | | Administrative expenses | | | 1,950 | | | | 1,986 | | | | 2,215 | | | | 1,727 | | | | 1,776 | | | | 1,890 | | Total | | | 6,461 | | | | 6,222 | | | | 6,315 | | | | 5,789 | | | | 5,598 | | | | 5,451 | |
(i) | (i) Depreciation, amortisation and impairment analysis |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost of sales | | | | | | Operating costs | | | | | | Total | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | Depreciation and depletion (note 15) | | | 903 | | | | 830 | | | | 817 | | | | | | | | 168 | | | | 160 | | | | 170 | | | | | | | | 1,071 | | | | 990 | | | | 987 | | Amortisation of intangible assets (note 16) | | | - | | | | - | | | | - | | | | | | | | 61 | | | | 61 | | | | 62 | | | | | | | | 61 | | | | 61 | | | | 62 | | Impairment of property, plant and equipment (note 15) | | | 36 | | | | - | | | | - | | | | | | | | - | | | | - | | | | - | | | | | | | | 36 | | | | - | | | | - | | Impairment of intangible assets (note 16) | | | - | | | | - | | | | - | | | | | | | | 20 | | | | - | | | | 23 | | | | | | | | 20 | | | | - | | | | 23 | | Total | | | 939 | | | | 830 | | | | 817 | | | | | | | | 249 | | | | 221 | | | | 255 | | | | | | | | 1,188 | | | | 1,051 | | | | 1,072 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost of sales | | | | | | Operating costs | | | | | | Total | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Depreciation and depletion (note 15, 22) | | | 1,219 | | | | 903 | | | | 830 | | | | | | | | 223 | | | | 127 | | | | 121 | | | | | | | | 1,442 | | | | 1,030 | | | | 951 | | Amortisation of intangible assets (note 16) | | | - | | | | - | | | | - | | | | | | | | 57 | | | | 59 | | | | 52 | | | | | | | | 57 | | | | 59 | | | | 52 | | Impairment of property, plant and equipment (note 15) | | | 6 | | | | 36 | | | | - | | | | | | | | 1 | | | | - | | | | - | | | | | | | | 7 | | | | 36 | | | | - | | Impairment of intangible assets (note 16) | | | - | | | | - | | | | - | | | | | | | | - | | | | 20 | | | | - | | | | | | | | - | | | | 20 | | | | - | | Total | | | 1,225 | | | | 939 | | | | 830 | | | | | | | | 281 | | | | 206 | | | | 173 | | | | | | | | 1,506 | | | | 1,145 | | | | 1,003 | |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 153 |
5. Operating Profit DisclosuresAuditor’s Remuneration Continuing operations | | | | | | | | | | | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | Operating lease rentals | | | | | | | | | | | | | - hire of plant and machinery | | | 324 | | | | 292 | | | | 262 | | - land and buildings | | | 243 | | | | 258 | | | | 250 | | - other operating leases | | | 61 | | | | 56 | | | | 57 | | Total | | | 628 | | | | 606 | | | | 569 | |
Auditor’s remuneration
In accordance with statutory requirements in Ireland, fees for professional services provided by the Group’s independent auditor in respect of each of the following categories were: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | EY Ireland
(statutory auditor) | | | EY
(network firms) | | | | | | Total | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | Audit fees (i) | | | 4 | | | | 4 | | | | 3 | | | | | | | | 15 | | | | 16 | | | | 16 | | | | | | | | 19 | | | | 20 | | | | 19 | | Other audit-related assurance fees (ii) | | | - | | | | - | | | | - | | | | | | | | 1 | | | | 1 | | | | - | | | | | | | | 1 | | | | 1 | | | | - | | Tax advisory services | | | - | | | | - | | | | - | | | | | | | | - | | | | 1 | | | | 1 | | | | | | | | - | | | | 1 | | | | 1 | | Total | | | 4 | | | | 4 | | | | 3 | | | | | | | | 16 | | | | 18 | | | | 17 | | | | | | | | 20 | | | | 22 | | | | 20 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | EY Ireland (statutory auditor) | | | | | | EY (network firms) | | | | | | Total | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Audit fees (i) (ii) | | | 4 | | | | 4 | | | | 4 | | | | | | | | 14 | | | | 14 | | | | 14 | | | | | | | | 18 | | | | 18 | | | | 18 | | Other audit-related assurance fees (iii) (iv) | | | - | | | | - | | | | - | | | | | | | | - | | | | 1 | | | | 1 | | | | | | | | - | | | | 1 | | | | 1 | | Tax advisory services (iv) | | | - | | | | - | | | | - | | | | | | | | 1 | | | | - | | | | 1 | | | | | | | | 1 | | | | - | | | | 1 | | Total | | | 4 | | | | 4 | | | | 4 | | | | | | | | 15 | | | | 15 | | | | 16 | | | | | | | | 19 | | | | 19 | | | | 20 | |
| (i) | Audit of the Group accounts includes audit of internal controls over financial reporting and parent and subsidiary statutory audit fees, but excludes€2 million (2017:(2018:€2 million; 2016:2017:€2 million) paid to auditors other than EY. |
| (ii) | Audit fees including discontinued operations amounted to€18 million (2018:€19 million; 2017:€20 million). |
(ii)(iii) | Other assurance services includes attestation and due diligence services that are closely related to the performance of the audit. |
| (iv) | Other audit-related assurance fees and tax advisory services including discontinued operations amounted to€nil million and€1 million respectively (2018: €1 million and€nil million respectively; 2017:€1 million and€1 million respectively). |
There were no other fees for services provided by the Group’s independent auditor (2017:(2018:€nil million; 2016:2017:€nil million).
| | | | | 154 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | 147 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
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6. Business andNon-Current Asset Disposals | | | | Business disposals | | | | | | Disposal of other
non-current assets | | | | | | Total | | | Business disposals | | | | | | Disposal of other
non-current assets | | | | | | Total | | | | | 2018
€m | | | 2017 €m | | | 2016 €m | | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2019
€m | | | 2018
€m | | | 2017
€m | | | | | | 2019
€m | | | 2018
€m | | | 2017
€m | | | | | | 2019
€m | | | 2018
€m | | | 2017
€m | | Continuing operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Assets/(liabilities) disposed of at net carrying amount: | | | | | | | | | | | | | | | | | | | �� | | | | | | | | | | | | | | | | | | | | | | | | | | | | -non-current assets | | | 622 | | | | 47 | | | | 147 | | | | | | 59 | | | | 79 | | | | 109 | | | | | | 681 | | | | 126 | | | | 256 | | | | 596 | | | | 622 | | | | 47 | | | | | | 140 | | | | 56 | | | | 78 | | | | | | 736 | | | | 678 | | | | 125 | | - cash and cash equivalents | | | 60 | | | | 11 | | | | 3 | | | | | | - | | | | - | | | | - | | | | | | 60 | | | | 11 | | | | 3 | | | | 45 | | | | 60 | | | | 11 | | | | | | - | | | | - | | | | - | | | | | | 45 | | | | 60 | | | | 11 | | - working capital and provisions | | | 132 | | | | 29 | | | | 24 | | | | | | - | | | | - | | | | - | | | | | | 132 | | | | 29 | | | | 24 | | | | 83 | | | | 132 | | | | 29 | | | | | | - | | | | - | | | | - | | | | | | 83 | | | | 132 | | | | 29 | | - current tax | | | (2) | | | | - | | | | - | | | | | | - | | | | - | | | | - | | | | | | (2) | | | | - | | | | - | | | | (1) | | | | (2) | | | | - | | | | | | - | | | | - | | | | - | | | | | | (1) | | | | (2) | | | | - | | - lease liabilities | | | | (48) | | | | - | | | | - | | | | | | (29) | | | | - | | | | - | | | | | | (77) | | | | - | | | | - | | - deferred tax | | | (2) | | | | 2 | | | | (1) | | | | | | - | | | | - | | | | - | | | | | | (2) | | | | 2 | | | | (1) | | | | (3) | | | | (2) | | | | 2 | | | | | | - | | | | - | | | | - | | | | | | (3) | | | | (2) | | | | 2 | | - retirement benefit obligations | | | (6) | | | | - | | | | - | | | | | | - | | | | - | | | | - | | | | | | (6) | | | | - | | | | - | | | | (2) | | | | (6) | | | | - | | | | | | - | | | | - | | | | - | | | | | | (2) | | | | (6) | | | | - | | Net assets disposed | | | 804 | | | | 89 | | | | 173 | | | | | | 59 | | | | 79 | | | | 109 | | | | | | 863 | | | | 168 | | | | 282 | | | | 670 | | | | 804 | | | | 89 | | | | | | 111 | | | | 56 | | | | 78 | | | | | | 781 | | | | 860 | | | | 167 | | | Reclassification of currency translation effects on disposal | | | 15 | | | | 9 | | | | (44) | | | | | | - | | | | - | | | | - | | | | | | 15 | | | | 9 | | | | (44) | | | | 66 | | | | 15 | | | | 9 | | | | | | - | | | | - | | | | - | | | | | | 66 | | | | 15 | | | | 9 | | Total | | | 819 | | | | 98 | | | | 129 | | | | | | 59 | | | | 79 | | | | 109 | | | | | | 878 | | | | 177 | | | | 238 | | | | 736 | | | | 819 | | | | 98 | | | | | | 111 | | | | 56 | | | | 78 | | | | | | 847 | | | | 875 | | | | 176 | | Proceeds from disposals (net of disposal costs) | | | 697 | | | | 99 | | | | 133 | | | | | | 106 | | | | 134 | | | | 158 | | | | | | 803 | | | | 233 | | | | 291 | | | | 699 | | | | 697 | | | | 99 | | | | | | 147 | | | | 100 | | | | 131 | | | | | | 846 | | | | 797 | | | | 230 | | Asset exchange (note 32) | | | 12 | | | | - | | | | - | | | | | | - | | | | - | | | | - | | | | | | 12 | | | | - | | | | - | | | | - | | | | 12 | | | | - | | | | | | - | | | | - | | | | - | | | | | | - | | | | 12 | | | | - | | Profit on step acquisition (note 32) | | | 39 | | | | - | | | | - | | | | | | - | | | | - | | | | - | | | | | | 39 | | | | - | | | | - | | | | - | | | | 39 | | | | - | | | | | | - | | | | - | | | | - | | | | | | - | | | | 39 | | | | - | | | (Loss)/profit on disposals from continuing operations | | | (71) | | | | 1 | | | | 4 | | | | | | 47 | | | | 55 | | | | 49 | | | | | | (24) | | | | 56 | | | | 53 | | | | (37) | | | | (71) | | | | 1 | | | | | | 36 | | | | 44 | | | | 53 | | | | | | (1) | | | | (27) | | | | 54 | | | Discontinued operations | | | | | | | | | | | | | | | �� | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit on disposals from discontinued operations (note 3) | | | 1,563 | | | | - | | | | - | | | | | | - | | | | 3 | | | | 2 | | | | | | 1,563 | | | | 3 | | | | 2 | | | | 224 | | | | 1,563 | | | | - | | | | | | 3 | | | | 3 | | | | 5 | | | | | | 227 | | | | 1,566 | | | | 5 | | Total Group profit on disposals | | | 1,492 | | | | 1 | | | | 4 | | | | | | 47 | | | | 58 | | | | 51 | | | | | | 1,539 | | | | 59 | | | | 55 | | | | 187 | | | | 1,492 | | | | 1 | | | | | | 39 | | | | 47 | | | | 58 | | | | | | 226 | | | | 1,539 | | | | 59 | | | Net cash inflow arising on disposal | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Continuing operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proceeds from disposals from continuing operations | | | 697 | | | | 99 | | | | 133 | | | | | | 106 | | | | 134 | | | | 158 | | | | | | 803 | | | | 233 | | | | 291 | | | | 699 | | | | 697 | | | | 99 | | | | | | 147 | | | | 100 | | | | 131 | | | | | | 846 | | | | 797 | | | | 230 | | Less: cash and cash equivalents disposed | | | (60) | | | | (11) | | | | (3) | | | | | | - | | | | - | | | | - | | | | | | (60) | | | | (11) | | | | (3) | | | | (45) | | | | (60) | | | | (11) | | | | | | - | | | | - | | | | - | | | | | | (45) | | | | (60) | | | | (11) | | | Less: deferred proceeds arising on disposal (note 21) | | | (10) | | | | (3) | | | | (7) | | | | | | - | | | | - | | | | - | | | | | | (10) | | | | (3) | | | | (7) | | | | Less: investment and loan to associate in lieu of cash proceeds (i) (note 17) | | | (85) | | | | - | | | | - | | | | | | - | | | | - | | | | - | | | | | | (85) | | | | - | | | | - | | | | Less: deferred proceeds arising on disposal (note 21) (i) | | | | (269) | | | | (10) | | | | (3) | | | | | | - | | | | - | | | | - | | | | | | (269) | | | | (10) | | | | (3) | | | Less: investment and loan to associate in lieu of cash proceeds (note 17) (ii) | | | | - | | | | (85) | | | | - | | | | | | - | | | | - | | | | - | | | | | | - | | | | (85) | | | | - | | | Net cash inflow arising on disposal from continuing operations | | | 542 | | | | 85 | | | | 123 | | | | | | 106 | | | | 134 | | | | 158 | | | | | | 648 | | | | 219 | | | | 281 | | | | 385 | | | | 542 | | | | 85 | | | | | | 147 | | | | 100 | | | | 131 | | | | | | 532 | | | | 642 | | | | 216 | | | Discontinued operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net cash inflow arising on disposal from discontinued operations (note 3) | | | 2,361 | | | | - | | | | - | | | | | | - | | | | 3 | | | | 2 | | | | | | 2,361 | | | | 3 | | | | 2 | | | | 1,563 | | | | 2,361 | | | | - | | | | | | 1 | | | | 6 | | | | 6 | | | | | | 1,564 | | | | 2,367 | | | | 6 | | Total Group net cash inflow arising on disposal | | | 2,903 | | | | 85 | | | | 123 | | | | | | 106 | | | | 137 | | | | 160 | | | | | | 3,009 | | | | 222 | | | | 283 | | | | 1,948 | | | | 2,903 | | | | 85 | | | | | | 148 | | | | 106 | | | | 137 | | | | | | 2,096 | | | | 3,009 | | | | 222 | |
| (i) | AsOn 31 December, CRH completed the sale of the Group’s 50% stake in its joint venture in India, MHIL for deferred proceeds of€0.3 billion which will be received in several agreed tranches.
|
| For the purposes of compliance with Indian law requirements, CRH is obliged to retain a minority shareholding and associated minority board representation in MHIL both of which will further reduce as the tranches are completed. The Group no longer has any rights to share in the profit/loss of MHIL or to receive any dividends. CRH has determined that MHIL has ceased to be a joint venture or an associate as the Group is no longer exposed to variability of returns from the performance of MHIL and does not have significant influence (as defined under IAS 28Interests in Associates and Joint Ventures) over MHIL. With the other partners acting in concert to exercise control, CRH effectively retains only protective voting rights in defined limited circumstances. Accordingly, the Group has discontinued the use of the equity method of accounting for its interest in MHIL from 31 December 2019. The fair value of the retained interest in MHIL is recorded as a financial asset within Other Receivables as it represents a contractual right to receive cash. |
| (ii) | In 2018, as part of the divestment of our DIY business in Belgium and the Netherlands (see note 16 and note 17 for further details) we acquired an equity stake of 22.78% in, and advanced a loan of€50 million to the purchaser, Intergamma.Intergamma, which was repaid in 2019. |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 155 |
7. Employment Continuing operations The average number of employees is as follows: | | | | | | | | | | | | | | | | Year ended 31 December | | | | | 2018 | | | 2017 | | | 2016 | | Europe Heavyside | | | 25,910 | | | | 24,401 | | | | 24,551 | | Europe Lightside | | | 7,340 | | | | 7,272 | | | | 7,084 | | Europe Distribution | | | 10,167 | | | | 11,036 | | | | 10,971 | | Europe | | | 43,417 | | | | 42,709 | | | | 42,606 | | | | | | Americas Materials | | | 27,272 | | | | 24,077 | | | | 22,650 | | Americas Products | | | 17,834 | | | | 17,146 | | | | 16,259 | | Americas | | | 45,106 | | | | 41,223 | | | | 38,909 | | | | | | | | | | | | | | | | Asia | | | 1,308 | | | | 1,431 | | | | 1,374 | | | | | | | | | | | | | | | | Total Group | | | 89,831 | | | | 85,363 | | | | 82,889 | |
| | | | | | | | | | | | | | | | Year ended 31 December | | | | | 2019 | | | 2018 | | | 2017 | | Americas Materials | | | 28,576 | | | | 27,272 | | | | 24,077 | | Europe Materials | | | 27,238 | | | | 27,218 | | | | 25,832 | | Building Products | | | 24,437 | | | | 26,399 | | | | 26,927 | | Total Group | | | 80,251 | | | | 80,889 | | | | 76,836 | |
The average number of employees including discontinued operations was 86,951 (2018: 89,831; 2017: 89,213). Employment costs charged in the Consolidated Income Statement are analysed as follows: | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Wages and salaries | | | 4,225 | | | | 3,997 | | | | 3,915 | | | | 4,112 | | | | 3,841 | | | | 3,629 | | Social welfare costs | | | 478 | | | | 465 | | | | 454 | | | | 423 | | | | 407 | | | | 397 | | Other employment-related costs (i) | | | 581 | | | | 546 | | | | 531 | | | Redundancy, healthcare and other employment benefit costs | | | | 584 | | | | 540 | | | | 506 | | Share-based payment expense (note 9) | | | 67 | | | | 60 | | | | 44 | | | | 74 | | | | 65 | | | | 58 | | Total retirement benefits expense (note 29) | | | 296 | | | | 236 | | | | 307 | | | Total | | | 5,647 | | | | 5,304 | | | | 5,251 | | | Total retirement benefits expense (note 30) | | | | 304 | | | | 268 | | | | 264 | | Total (i) | | | | 5,497 | | | | 5,121 | | | | 4,854 | | | Total charge analysed between: | | | | | | | | | | | | | Cost of sales | | | 3,155 | | | | 2,869 | | | | 2,725 | | | | 3,467 | | | | 3,155 | | | | 2,869 | | Operating costs | | | 2,482 | | | | 2,424 | | | | 2,514 | | | | 2,017 | | | | 1,956 | | | | 1,975 | | Finance costs (net) - applicable to retirement benefit obligations (note 10) | | | 10 | | | | 11 | | | | 12 | | | | 13 | | | | 10 | | | | 10 | | Total | | | 5,647 | | | | 5,304 | | | | 5,251 | | | Total (i) | | | | 5,497 | | | | 5,121 | | | | 4,854 | |
| (i) | Other employmentEmployment costs relate principally to healthcare, redundancy and severance costs.including discontinued operations are analysed as follows:
|
| | | | | | | | | | | | | Wages and salaries | | | 4,455 | | | | 4,226 | | | | 4,221 | | Social welfare costs | | | 486 | | | | 478 | | | | 483 | | Redundancy, healthcare and other employment benefit costs | | | 605 | | | | 581 | | | | 576 | | Share-based payment expense (note 9) | | | 77 | | | | 67 | | | | 65 | | Total retirement benefits expense (note 30) | | | 329 | | | | 296 | | | | 243 | | Total | | | 5,952 | | | | 5,648 | | | | 5,588 | |
8. Directors’ Emoluments and Interests Directors’ emoluments (which are included in administrative expenses in note 4) and interests are presented in the Directors’ Remuneration Report on pages 6874 to 97.100.
| | | | | 156 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | 149 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
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9. Share-based Payment Expense Continuing operations | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Performance Share Plans and Restricted Share Plan expense | | | 64 | | | | 57 | | | | 38 | | | | 71 | | | | 62 | | | | 55 | | Share option expense | | | 3 | | | | 3 | | | | 6 | | | | 3 | | | | 3 | | | | 3 | | Total share-based payment expense | | | 67 | | | | 60 | | | | 44 | | | | 74 | | | | 65 | | | | 58 | |
| (i) | The total share-based payment expense including discontinued operations amounted to€77 million (2018:€67 million; 2017: €65 million). | |
Share-based payment expense relates primarily to awards granted under the 2014 Performance Share Plan and the Group’sSavings-related Share Option Schemes. The expense, which also includes charges in relation to the 2013 Restricted Share Plan, is reflected in operating costs in the Consolidated Income Statement. 2014 Performance Share Plan The structure of the 2014 Performance Share Plan is set out in the Directors’ Remuneration Report on page 84.90. An expense of€6370 million was recognised in 2018 (2017:2019 (2018:€5661 million; 2016:2017:€3754 million). Details of awards granted under the 2014 Performance Share Plan | | | | | | | | | Number of shares | | | | | | | | Number of shares | | | | | Share price at
date of award | | Period to earliest
release date | | | Initial
award (i) | | | Net outstanding at
31 December 2018 | | | Share price at
date of award | | Period to earliest release date | | | Initial award (i) | | | Net outstanding at
31 December 2019 | | Granted in 2019 | | | €29.44 | | | 3 years | | | | 3,688,027 | | | | 3,578,105 | | Granted in 2018 | | €28.32 | | | 3 years | | | | 3,863,433 | | | | 3,775,573 | | | €28.32 | | | 3 years | | | | 3,863,433 | | | | 3,610,323 | | Granted in 2017 | | €33.21 | | | 3 years | | | | 3,342,900 | | | | 2,927,331 | | | €33.21 | | | 3 years | | | | 3,342,900 | | | | 2,818,931 | | Granted in 2016 | | €24.87 | | | 3 years | | | | 3,879,901 | | | | 3,201,098 | | |
| (i) | Numbers represent the initial awards including those granted to employees of Europe Distribution in 2019, 2018 and 2017 and Allied Building Products in 2017 and 2016.2017. The Remuneration Committee has determined that dividend equivalents will accrue on awards under the 2014 Performance Share Plan. Subject to satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shares on vesting. | |
25% of each award made in 2019 is subject to TSR performance measured against a tailored peer group; 25% is subject to a new RONA metric introduced in 2019; with the remaining 50% subject to a cumulative cashflow metric (2018 and 2017: 50% of each award made is subject to a TSR measure, with 25% being measured against a tailored sector peer group and 25% against the FTSEAll-World Construction & Materials Index. The other 50% of each award made is subject to a cumulative cash flow metric.cashflow metric). Further details are set out on page 8490 in the Directors’ Remuneration Report. The fair values assigned to the portion of awards which are subject to TSR performance against peers and, in the case of 2018 and 2017, the index, werewas€18.59 (2018:€13.52 and€13.18 respectively (2017:respectively; 2017:€17.43 and€14.99 respectively; 2016:€11.94 and€10.52 respectively). The fair value of these awards was calculated using a TSR pricing model taking account of peer group TSR, volatilities and correlations together with the following assumptions: | | | | 2018 | | | 2017 | | | 2016 | | | 2019 | | | 2018 | | | 2017 | | Risk-free interest rate (%) | | | (0.43) | | | | (0.40) | | | | (0.53) | | | | (0.37) | | | | (0.43) | | | | (0.40) | | Expected volatility (%) | | | 27.4 | | | | 30.1 | | | | 21.7 | | | | 23.2 | | | | 27.4 | | | | 30.1 | |
The expected volatility was determined using a historical sample of daily CRH share prices. The fair value of (i) the portion of awards subject to cash flow performanceperformance; (ii) from 2019, the portion of awards subject to a RONA metric; and (ii)(iii) the awards with no performance conditions (which are subject to a one or three-year service period) was€28.32 (2017:29.44 (2018: €33.21; 2016:28.32; 2017:€24.87)33.21). The fair value was calculated using the closing CRH share price at the date the award was granted.
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 157 |
Share Option Schemes The 2010 Share Option Scheme was replaced in 2014 by the 2014 Performance Share Plan, and accordingly no options have been granted since 2013. Details of movement and options outstanding under Share Option Schemes (excluding Savings-related Share Option Schemes) | | | | Weighted average
exercise price | | Number of
options | | | | | Weighted average
exercise price | | Number of
options | | | | | Weighted average
exercise price | | | Number of
options | | | Weighted average
exercise price | | | Number of
options | | | | | Weighted average
exercise price | | Number of
options | | | | | Weighted average
exercise price | | Number of
options | | | | | | | 2018 | | | | | | | | 2017 | | | | | | | | | 2016 | | | | | | 2019 | | | | | | | | 2018 | | | | | | | | 2017 | | Outstanding at beginning of year | | €17.96 | | | 1,441,779 | | | | €21.51 | | | 2,997,495 | | | | | €21.14 | | | | 8,620,690 | | | | €16.48 | | | | 800,770 | | | | €17.96 | | | 1,441,779 | | | | €21.51 | | | 2,997,495 | | Exercised (i) | | €19.82 | | | (634,994) | | | | €24.85 | | | (1,462,863) | | | | | €22.04 | | | | (2,102,332) | | | | €16.65 | | | | (520,115) | | | | €19.82 | | | (634,994) | | | | €24.85 | | | (1,462,863) | | Lapsed | | €17.36 | | | (6,015) | | | | €24.14 | | | (92,853) | | | | | €20.27 | | | | (3,520,863) | | | | €16.19 | | | | (2,306) | | | | €17.36 | | | (6,015) | | | | €24.14 | | | (92,853) | | Outstanding at end of year (ii) | | €16.48 | | | 800,770 | | | | €17.96 | | | 1,441,779 | | | | | €21.51 | | | | 2,997,495 | | | | €16.19 | | | | 278,349 | | | | €16.48 | | | 800,770 | | | | €17.96 | | | 1,441,779 | | Exercisable at end of year | | €16.48 | | | 800,770 | | | | €17.96 | | | 1,441,779 | | | | | €21.51 | | | | 2,997,495 | | | | €16.19 | | | | 278,349 | | | | €16.48 | | | 800,770 | | | | €17.96 | | | 1,441,779 | |
| (i) | The weighted average share price at the date of exercise of these options was€27.90 (2017:29.10 (2018:€32.24; 2016:27.90; 2017:€29.70)32.24). |
| (ii) | All options granted have a life of ten years. |
| | | | 2018 | | | 2017 | | | 2016 | | | 2019 | | | 2018 | | | 2017 | | | Weighted average remaining contractual life for the share options outstanding at 31 December (years) | | | 2.57 | | | | 2.53 | | | | 2.46 | | | | 3.30 | | | | 2.57 | | | | 2.53 | | | euro-denominated options outstanding at end of year (number) | | | 796,850 | | | | 1,436,115 | | | | 2,991,831 | | | | 278,349 | | | | 796,850 | | | | 1,436,115 | | Range of exercise prices (€) | | | 16.19-17.30 | | | | 16.19-21.52 | | | | 16.19-29.86 | | | | 16.19 | | | | 16.19-17.30 | | | | 16.19-21.52 | | | Pound Sterling-denominated options outstanding at end of year (number) | | | 3,920 | | | | 5,664 | | | | 5,664 | | | | - | | | | 3,920 | | | | 5,664 | | Range of exercise prices (Stg£) | | | 15.30 | | | | 15.30-17.19 | | | | 15.30-17.19 | | | | - | | | | 15.30 | | | | 15.30-17.19 | |
2010 Savings-related Share Option Schemes The Group operates Savings-related Share Option Schemes. Participants may save up to€500/Stg£500 per month from their net salaries for a fixed term of three or five years and at the end of the savings period they have the option to buy CRH shares at a discount of up to 15% of the market price on the date of invitation of each savings contract. Details of options granted under the Savings-related Share Option Schemes | | | | Weighted average
exercise price | | | Number of
options | | | | | Weighted average
exercise price | | | Number of
options | | | | | Weighted average
exercise price | | | Number of
options | | | Weighted average
exercise price | | | Number of
options | | | | | Weighted average
exercise price | | | Number of
options | | | | | Weighted average
exercise price | | | Number of
options | | | | | | | | 2018 | | | | | | | | | 2017 | | | | | | | | | 2016 | | | | | | 2019 | | | | | | | | | 2018 | | | | | | | | | 2017 | | Outstanding at beginning of year | | | €21.50/Stg£18.05 | | | | 1,556,299 | | | | | €18.63/Stg£15.92 | | | | 1,402,174 | | | | | €16.96/Stg£14.27 | | | | 593,177 | | | | €22.15/Stg£18.74 | | | | 1,686,176 | | | | | €21.50/Stg£18.05 | | | | 1,556,299 | | | | | €18.63/Stg£15.92 | | | | 1,402,174 | | Exercised (i) | | | €19.00/Stg£15.26 | | | | (161,950) | | | | | €15.73/Stg£14.27 | | | | (126,472) | | | | | €13.66/Stg£11.95 | | | | (121,242) | | | | €19.09/Stg£16.20 | | | | (627,034) | | | | | €19.00/Stg£15.26 | | | | (161,950) | | | | | €15.73/Stg£14.27 | | | | (126,472) | | Lapsed | | | €24.62/Stg£20.75 | | | | (209,264) | | | | | €21.42/Stg£18.22 | | | | (123,455) | | | | | €17.55/Stg£15.68 | | | | (81,628) | | | | €23.49/Stg£20.85 | | | | (207,070) | | | | | €24.62/Stg£20.75 | | | | (209,264) | | | | | €21.42/Stg£18.22 | | | | (123,455) | | Granted (ii) | | | €23.39/Stg£20.83 | | | | 501,091 | | | | | €27.86/Stg£24.51 | | | | 404,052 | | | | | €20.83/Stg£16.16 | | | | 1,011,867 | | | | €24.24/Stg£20.11 | | | | 656,790 | | | | | €23.39/Stg£20.83 | | | | 501,091 | | | | | €27.86/Stg£24.51 | | | | 404,052 | | Outstanding at end of year | | | €22.15/Stg£18.74 | | | | 1,686,176 | | | | | €21.50/Stg£18.05 | | | | 1,556,299 | | | | | €18.63/Stg£15.92 | | | | 1,402,174 | | | | €23.67/Stg£20.17 | | | | 1,508,862 | | | | | €22.15/Stg£18.74 | | | | 1,686,176 | | | | | €21.50/Stg£18.05 | | | | 1,556,299 | | Exercisable at end of year | | | €18.75/Stg£15.54 | | | | 14,059 | | | | | €15.89/n/a | | | | 15,890 | | | | | €13.45/Stg£12.22 | | | | 23,897 | | | | €18.88/Stg£15.89 | | | | 13,065 | | | | | €18.75/Stg£15.54 | | | | 14,059 | | | | | €15.89/n/a | | | | 15,890 | |
| (i) | The weighted average share price at the date of exercise of these options was€29.54 (2017:28.52 (2018:€31.14; 2016:29.54; 2017:€27.90)31.14). |
| (ii) | Pursuant to the 2010 Savings-related Share Option Schemes operated by the Group, employees were granted options over 501,091656,790 of CRH plc’s Ordinary Shares (556,493 options granted in April 2018 (2017:2019 and 100,297 options in May 2019) (2018: 501,091 share options in April 2018; 2017: 404,052 share options in March 2017; 2016: 1,011,867 share options in March 2016)2017). This figure comprises options over 379,253 (2017: 304,492; 2016: 692,334)518,944 (2018: 379,253; 2017: 304,492) shares and 121,838 (2017: 99,560; 2016: 319,533)137,846 (2018: 121,838; 2017: 99,560) shares which are normally exercisable within a period of six months after the third or the fifth anniversary of the contract, whichever is applicable. The exercise price at which the options are granted under the scheme represents a discount of 15% to the market price on the date of invitation of each savings contract. |
| | | | | 158 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | 151 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
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9. Share-based Payment Expense - continued Continuing operations | | | | 2018 | | | 2017 | | | 2016 | | | 2019 | | | 2018 | | | 2017 | | Weighted average remaining contractual life for the share options outstanding
at 31 December (years) | | | 1.50 | | | | 1.90 | | | | 2.41 | | | | 1.87 | | | | 1.50 | | | | 1.90 | | | euro-denominated options outstanding at end of year (number) | | | 304,713 | | | | 304,963 | | | | 320,362 | | | | 290,627 | | | | 304,713 | | | | 304,963 | | Range of exercise prices (€) | | | 14.15-27.86 | | | | 13.64-27.86 | | | | 12.82-21.12 | | | | 17.67-27.86 | | | | 14.15-27.86 | | | | 13.64-27.86 | | | Pound Sterling-denominated options outstanding at end of year (number) | | | 1,381,463 | | | | 1,251,336 | | | | 1,081,812 | | | | 1,218,235 | | | | 1,381,463 | | | | 1,251,336 | | Range of exercise prices (Stg£) | | | 14.94-24.51 | | | | 12.22-24.51 | | | | 11.55-16.16 | | | | 14.94-24.51 | | | | 14.94-24.51 | | | | 12.22-24.51 | |
The weighted fair values assigned to options issued under the Savings-related Share Option Schemes, which were computed in accordance with the trinomial valuation methodology, were as follows: | | | | | | | | | | | | 3-year | | | 5-year | | Granted in 2019 (April) | | | €7.55 | | | € | 7.98 | | Granted in 2019 (May) | | | €6.67 | | | € | 7.19 | | Granted in 2018 | | | €5.38 | | | € | €5.88 | | Granted in 2017 | | | €5.97 | | | | €6.49 | | Granted in 2016
| | | €5.01 | | | € | 5.576.49 | |
The fair value of these options were determined using the following assumptions:
| | The fair value of these options were determined using the following assumptions: |
| | | | | 2019 | | 2018 | | 2017 | | | | | | | | | | | | | | | | | | | | 3-year | | 5-year | | | | 3-year | | 5-year | | | | 3-year | | 5-year | | | | | 2018 | | | 2017 | | | 2016 | | | | April | | | | May | | | | April | | | | May | | | | April | | | | April | | | | March | | | | March | | | | | 3-year | | | 5-year | | | | 3-year | | | 5-year | | | | 3-year | | | 5-year | | | | | | | Weighted average exercise price (€) | | | 23.39 | | | | 23.39 | | | | | 27.86 | | | | 27.86 | | | | | 20.83 | | | | 20.83 | | | | 23.30 | | | | 24.24 | | | | 23.30 | | | | 24.24 | | | | 23.39 | | | | 23.39 | | | | 27.86 | | | | 27.86 | | Risk free interest rate (%) | | | (0.44) | | | | (0.06) | | | | | (0.72) | | | | (0.45) | | | | | (0.48) | | | | (0.33) | | | | (0.56) | | | | (0.58) | | | | (0.40) | | | | (0.41) | | | | (0.44) | | | | (0.06) | | | | (0.72) | | | | (0.45) | | Expected dividend payments over the expected life (€) | | | 2.21 | | | | 3.83 | | | | | 2.07 | | | | 3.55 | | | | | 1.95 | | | | 3.32 | | | | 2.34 | | | | 2.34 | | | | 4.06 | | | | 4.06 | | | | 2.21 | | | | 3.83 | | | | 2.07 | | | | 3.55 | | Expected volatility (%) | | | 20.0 | | | | 20.5 | | | | | 20.9 | | | | 20.6 | | | | | 21.8 | | | | 22.9 | | | | 19.6 | | | | 20.0 | | | | 21.1 | | | | 21.3 | | | | 20.0 | | | | 20.5 | | | | 20.9 | | | | 20.6 | | Expected life in years | | | 3 | | | | 5 | | | | | 3 | | | | 5 | | | | | 3 | | | | 5 | | | | 3 | | | | 3 | | | | 5 | | | | 5 | | | | | 3 | | | | 5 | | | | | 3 | | | | 5 | |
The expected volatility was determined using a historical sample of 37month-end CRH share prices in respect of the three-year savings-related share options and 61month-end share prices in respect of the five-year savings-related share options. The expected lives of the options are based on historical data and are therefore not necessarily indicative of exercise patterns that may materialise. Other than the assumptions listed above, no other features of options grants were factored into the determination of fair value. The terms of the options issued under the Savings-related Share Option Schemes do not contain any market conditions within the meaning of IFRS 2Share-based Payment.
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 159 |
10. Finance Costs and Finance Income Continuing operations | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Finance costs | | | | | | | | | | | | | Interest payable on borrowings | | | 335 | | | | 300 | | | | 337 | | | | 333 | | | | 335 | | | | 300 | | Net loss/(income) on interest rate and currency swaps | | | 7 | | | | 2 | | | | (10) | | | Net cost on interest rate and currency swaps | | | | 14 | | | | 7 | | | | 2 | | Mark-to-market of derivatives and related fixed rate debt: | | | | | | | | | | | | | - interest rate swaps (i) | | | 12 | | | | 16 | | | | 14 | | | | (64) | | | | 12 | | | | 16 | | - currency swaps and forward contracts | | | (4) | | | | - | | | | (3) | | | | 2 | | | | (4) | | | | - | | - fixed rate debt (i) | | | (16) | | | | (23) | | | | (20) | | | | 61 | | | | (16) | | | | (23) | | Net loss on interest rate swaps not designated as hedges | | | 5 | | | | 6 | | | | 7 | | | | - | | | | 5 | | | | 6 | | Net finance cost on gross debt including related derivatives | | | 339 | | | | 301 | | | | 325 | | | | 346 | | | | 339 | | | | 301 | | | Finance income | | | | | | | | | | | | | Interest receivable on loans to joint ventures and associates | | | (4) | | | | (5) | | | | (4) | | | | (5) | | | | (4) | | | | (5) | | Interest receivable on cash and cash equivalents and other | | | (30) | | | | (7) | | | | (4) | | | | (15) | | | | (30) | | | | (7) | | Finance income | | | (34) | | | | (12) | | | | (8) | | | | (20) | | | | (34) | | | | (12) | | | | | | | | | | | | | | | | Finance costs less income | | | 305 | | | | 289 | | | | 317 | | | | 326 | | | | 305 | | | | 289 | | | Other financial expense | | | | | | | | | | | | | Premium paid on early debt redemption | | | - | | | | 18 | | | | - | | | | - | | | | - | | | | 18 | | Unwinding of discount element of provisions for liabilities (note 27) | | | 21 | | | | 24 | | | | 30 | | | Unwinding of discount applicable to deferred and contingent acquisition
consideration (note 20) | | | 15 | | | | 7 | | | | 24 | | | Pension-related finance cost (net) (note 29) | | | 10 | | | | 11 | | | | 12 | | | Unwinding of discount element of lease liabilities (note 22) | | | | 62 | | | | - | | | | - | | | Unwinding of discount element of provisions for liabilities (note 28) | | | | 22 | | | | 21 | | | | 24 | | Unwinding of discount applicable to deferred and contingent acquisition
consideration and divestment proceeds | | | | 15 | | | | 15 | | | | 7 | | Pension-related finance cost (net) (note 30) | | | | 13 | | | | 10 | | | | 10 | | Total | | | 46 | | | | 60 | | | | 66 | | | | 112 | | | | 46 | | | | 59 | | | | | | | | | | | | | | | | Total net finance costs | | | 351 | | | | 349 | | | | 383 | | | Total net finance costs (ii) | | | | 438 | | | | 351 | | | | 348 | |
| (i) | The Group uses interest rate swaps to convert fixed rate debt to floating rate. Fixed rate debt, which has been converted to floating rate through the use of interest rate swaps, is stated in the Consolidated Balance Sheet at adjusted value to reflect movements in underlying fixed rates. The movement on this adjustment, together with the offsetting movement in the fair value of the related interest rate swaps, is included in finance costs in each reporting period. | |
| (ii) | Net finance costs for 2019 including discontinued operations amounted to€445 million (2018:€351 million; 2017:€349 million). | |
| | | | | 160 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | 153 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
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11. Share of Equity Accounted Investments’ Profit Continuing operations The Group’s share of joint ventures’ and associates’ profit after tax is equity accounted and is presented as a single line item in the Consolidated Income Statement; it is analysed as follows between the principal Consolidated Income Statement captions: | | | | Joint Ventures | | | | | Associates | | | | | Total | | | Joint Ventures | | | | | Associates | | | | | Total | | | | | 2018 €m | | | 2017
€m | | | 2016
€m | | | | | | 2018 €m | | | 2017
€m | | | 2016
€m | | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2019 €m | | 2018 €m | | | 2017 €m | | | | | | 2019 €m | | 2018 €m | | | 2017 €m | | | | | | 2019 €m | | 2018 €m | | | 2017 €m | | Group share of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Revenue | | | 672 | | | | 582 | | | | 480 | | | | | 903 | | | | 816 | | | | 769 | | | | | 1,575 | | | | 1,398 | | | | 1,249 | | | | 634 | | | | 603 | | | | 517 | | | | | 615 | | | | 603 | | | | 534 | | | | | 1,249 | | | | 1,206 | | | | 1,051 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | EBITDA (as defined)* | | | 57 | | | | 77 | | | | 85 | | | | | 81 | | | | 77 | | | | 52 | | | | | 138 | | | | 154 | | | | 137 | | | | 70 | | | | 51 | | | | 71 | | | | | 68 | | | | 63 | | | | 58 | | | | | 138 | | | | 114 | | | | 129 | | Depreciation and amortisation | | | (23) | | | | (28) | | | | (26) | | | | | | (41) | | | | (39) | | | | (40) | | | | | | (64) | | | | (67) | | | | (66) | | | | (24) | | | | (22) | | | | (27) | | | | | | (35) | | | | (34) | | | | (33) | | | | | | (59) | | | | (56) | | | | (60) | | Operating profit | | | 34 | | | | 49 | | | | 59 | | | | | 40 | | | | 38 | | | | 12 | | | | | 74 | | | | 87 | | | | 71 | | | | 46 | | | | 29 | | | | 44 | | | | | 33 | | | | 29 | | | | 25 | | | | | 79 | | | | 58 | | | | 69 | | Profit on disposals | | | - | | | | - | | | | - | | | | | | 3 | | | | - | | | | - | | | | | | 3 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | - | | | | 3 | | | | - | | | | | | - | | | | 3 | | | | - | | Profit before finance costs | | | 34 | | | | 49 | | | | 59 | | | | | 43 | | | | 38 | | | | 12 | | | | | 77 | | | | 87 | | | | 71 | | | | 46 | | | | 29 | | | | 44 | | | | | 33 | | | | 32 | | | | 25 | | | | | 79 | | | | 61 | | | | 69 | | Finance costs (net) | | | 1 | | | | (1) | | | | (4) | | | | | | (9) | | | | (10) | | | | (15) | | | | | | (8) | | | | (11) | | | | (19) | | | | - | | | | 1 | | | | (1) | | | | | | (12) | | | | (9) | | | | (9) | | | | | | (12) | | | | (8) | | | | (10) | | Profit/(loss) before tax | | | 35 | | | | 48 | | | | 55 | | | | | 34 | | | | 28 | | | | (3) | | | | | 69 | | | | 76 | | | | 52 | | | Profit before tax | | | | 46 | | | | 30 | | | | 43 | | | | | 21 | | | | 23 | | | | 16 | | | | | 67 | | | | 53 | | | | 59 | | Income tax expense | | | (2) | | | | (5) | | | | (4) | | | | | | (7) | | | | (6) | | | | (6) | | | | | | (9) | | | | (11) | | | | (10) | | | | (5) | | | | (1) | | | | (4) | | | | | | (2) | | | | (4) | | | | (3) | | | | | | (7) | | | | (5) | | | | (7) | | Profit/(loss) after tax | | | 33 | | | | 43 | | | | 51 | | | | | | 27 | | | | 22 | | | | (9) | | | | | | 60 | | | | 65 | | | | 42 | | | Profit after tax (i) | | | | 41 | | | | 29 | | | | 39 | | | | | | 19 | | | | 19 | | | | 13 | | | | | | 60 | | | | 48 | | | | 52 | |
An analysis of the profit after tax by operating segment is presented in note 2. The aggregated balance sheet data (analysed between current andnon-current assets and liabilities) in respect of the Group’s investment in joint ventures and associates is presented in note 17. | (i) | Share of profit after tax for 2019 including discontinued operations amounted to€72 million (2018:€60 million; 2017:€65 million). |
12. Income Tax Expense Continuing operations | | | | | | | | | | | | | | Recognised within the Consolidated Income Statement | | 2018 €m | | | 2017 €m | | | 2016 €m | | (a) Current tax | | | | | | | | | | | | | Republic of Ireland | | | 10 | | | | 9 | | | | 5 | | Overseas | | | 313 | | | | 312 | | | | 443 | | Total current tax expense | | | 323 | | | | 321 | | | | 448 | | | | | | (b) Deferred tax | | | | | | | | | | | | | Origination and reversal of temporary differences: | | | | | | | | | | | | | Retirement benefit obligations | | | 3 | | | | 16 | | | | 8 | | Share-based payment expense | | | 4 | | | | (4) | | | | (11) | | Derivative financial instruments | | | (1) | | | | 2 | | | | 1 | | Other items (2017 includes deferred tax credit associated with the
“Tax Cuts and Jobs Act”) | | | 97 | | | | (280) | | | | (15) | | Total deferred tax expense/(income) | | | 103 | | | | (266) | | | | (17) | | | | | | | | | | | | | | | | Income tax reported in the Consolidated Income Statement | | | 426 | | | | 55 | | | | 431 | |
| | | | | | | | | | | | | Recognised within the Consolidated Income Statement | | 2019 €m | | | 2018 €m | | | 2017 €m | | (a) Current tax | | | | | | | | | | | | | Republic of Ireland | | | 17 | | | | 10 | | | | 9 | | Overseas | | | 345 | | | | 279 | | | | 275 | | Total current tax expense | | | 362 | | | | 289 | | | | 284 | | | | | | (b) Deferred tax | | | | | | | | | | | | | Origination and reversal of temporary differences: | | | | | | | | | | | | | Retirement benefit obligations | | | (1) | | | | 4 | | | | 6 | | Share-based payment expense | | | (5) | | | | 4 | | | | (4) | | Derivative financial instruments | | | 2 | | | | (1) | | | | 2 | | Other items (2017 includes deferred tax credit associated with the
“Tax Cuts and Jobs Act”) | | | 119 | | | | 100 | | | | (276) | | Total deferred tax expense/(income) | | | 115 | | | | 107 | | | | (272) | | Income tax reported in the Consolidated Income Statement | | | 477 | | | | 396 | | | | 12 | |
| | | 154 | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges and profit on disposals. |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 161 |
12. Income Tax Expense - continued
| | | | 2018
€m | | | 2017
€m | | 2016
€m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | Recognised outside the Consolidated Income Statement | | | | | | | | | | | (a) Within the Consolidated Statement of Comprehensive Income: | | | | | | | | | | | Deferred tax - retirement benefit obligations | | | (1) | | | | (33 | ) | | | 3 | | | | (3) | | | | (1) | | | | (33) | | Deferred tax - cash flow hedges | | | 5 | | | | - | | | | - | | | | (3) | | | | 5 | | | | - | | | | | | 4 | | | | (33 | ) | | | 3 | | | | (6) | | | | 4 | | | | (33) | | (b) Within the Consolidated Statement of Changes in Equity: | | | | | | | | | | | | Current tax | | | | | | | | | | | Current tax - share option exercises | | | 2 | | | | 2 | | | | - | | | | 4 | | | | 2 | | | | 2 | | | Deferred tax | | | | | | | | | | | Deferred tax - share-based payment expense | | | (4) | | | | (7 | ) | | | 12 | | | | 5 | | | | (4) | | | | (7) | | | | | | (2) | | | | (5 | ) | | | 12 | | | | 9 | | | | (2) | | | | (5) | | | | | | | | | | | | | | Income tax recognised outside the Consolidated Income Statement | | | 2 | | | | (38 | ) | | | 15 | | | | 3 | | | | 2 | | | | (38) | | | Reconciliation of applicable tax rate to effective tax rate | | | | | | | | | | | | Profit before tax (€m) | | | 1,862 | | | | 1,867 | | | | 1,620 | | | | 2,115 | | | | 1,741 | | | | 1,685 | | Tax charge expressed as a percentage of profit before tax (effective tax rate): | | | | | | | | | | | - current tax expense only | | | 17.3% | | | | 17.2% | | | | 27.7% | | | | 17.1% | | | | 16.6% | | | | 16.9% | | - total income tax expense(current and deferred) | | | 22.9% | | | | 2.9% | | | | 26.6% | | | | 22.6% | | | | 22.7% | | | | 0.7% | |
The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective tax rate (current and deferred) of the Group: | | | | % of profit before tax | | | % of profit before tax | | Irish corporation tax rate | | | 12.5 | | | | 12.5 | | | | 12.5 | | | | 12.5 | | | | 12.5 | | | | 12.5 | | Higher tax rates on overseas earnings | | | 11.7 | | | | 15.9 | | | | 15.1 | | | | 12.1 | | | | 11.6 | | | | 16.3 | | Deferred tax credit relating to the enactment of the “Tax Cuts and Jobs Act” | | | - | | | | (23.6) | | | | - | | | | - | | | | - | | | | (26.1) | | Other items (primarily comprising items not chargeable to tax/expenses not deductible for tax) | | | (1.3) | | | | (1.9) | | | | (1.0) | | | | (2.0) | | | | (1.4) | | | | (2.0) | | Total effective tax rate | | | 22.9 | | | | 2.9 | | | | 26.6 | | | | 22.6 | | | | 22.7 | | | | 0.7 | |
Other disclosures Effective tax rate The 20182019 effective tax rate is 22.9% (2017: 2.9%22.6% (2018: 22.7%; 2017: 0.7%). The 2017 reported tax charge included anon-cash deferred tax credit of€440 million related to the enactment of the “Tax Cuts and Jobs Act” in the US. The 2017 effective tax rate excluding the impact of this exceptional deferred tax credit was 26.5%26.8%. The tax charge associated with discontinued operations is recognised separately in “Profit after tax for the financial year from discontinued operations”. See note 3 for further details. Changes in tax rates The total tax charge in future periods will be affected by any changes to the tax rates in force in the countries in which the Group operates. Excess of capital allowances over depreciation The current tax charge will also be impacted by changes in the excess of tax depreciation (capital allowances) over accounting depreciation. Based on current capital investment plans, the Group expects to continue to be in a position to claim capital allowances in excess of depreciation in future years. Investments in subsidiaries Given management’s intention not to unwind temporary differences in respect of its investment in subsidiaries or tax exemptions and credits being available in the majority of jurisdictions in which the Group operates, the aggregate amount of deferred tax liabilities on temporary differences which have not been recognised would be immaterial. Proposed dividends There are no income tax consequences for the Company in respect of dividends proposed prior to issuance of the Consolidated Financial Statements and for which a liability has not been recognised.
| | | | | 162 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | 155 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
|
13. Dividends The dividends paid and proposed in respect of each class of share capital are as follows: | | | | | | | | | | | | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | Dividends to shareholders | | | | | | | | | | | | | Preference | | | | | | | | | | | | | 5% Cumulative Preference Shares€3,175 (2017:€3,175; 2016:€3,175) | | | - | | | | - | | | | - | | 7% ‘A’ Cumulative Preference Shares€77,521 (2017:€77,521; 2016:€77,521) | | | - | | | | - | | | | - | | Equity | | | | | | | | | | | | | Final - paid 48.80c per Ordinary Share (2017: 46.20c; 2016: 44.00c) | | | 409 | | | | 386 | | | | 363 | | Interim - paid 19.60c per Ordinary Share (2017: 19.20c; 2016: 18.80c) | | | 163 | | | | 160 | | | | 156 | | Total | | | 572 | | | | 546 | | | | 519 | | | | | | Reconciliation to Consolidated Statement of Cash Flows | | | | | | | | | | | | | Dividends to shareholders | | | 572 | | | | 546 | | | | 519 | | Less: issue of scrip shares in lieu of cash dividends (note 31) | | | (51) | | | | (77) | | | | (167) | | Dividends paid to equity holders of the Company | | | 521 | | | | 469 | | | | 352 | | Dividends paid by subsidiaries tonon-controlling interests | | | 12 | | | | 8 | | | | 8 | | Total dividends paid | | | 533 | | | | 477 | | | | 360 | | | | | | Dividends proposed (memorandum disclosure) | | | | | | | | | | | | | Equity | | | | | | | | | | | | | Final 2018 - proposed 52.40c per Ordinary Share (2017: 48.80c; 2016: 46.20c) | | | 425 | | | | 409 | | | | 385 | |
| | | | | | | | | | | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Dividends to shareholders | | | | | | | | | | | | | Preference | | | | | | | | | | | | | 5% Cumulative Preference Shares€3,175 (2018:€3,175; 2017:€3,175) | | | - | | | | - | | | | - | | 7% ‘A’ Cumulative Preference Shares€77,521 (2018:€77,521; 2017:€77,521) | | | - | | | | - | | | | - | | Equity | | | | | | | | | | | | | Final - paid 52.40c per Ordinary Share (2018: 48.80c; 2017: 46.20c) | | | 425 | | | | 409 | | | | 386 | | Interim - paid 20.00c per Ordinary Share (2018: 19.60c; 2017: 19.20c) | | | 159 | | | | 163 | | | | 160 | | Total | | | 584 | | | | 572 | | | | 546 | | | | | | Reconciliation to Consolidated Statement of Cash Flows | | | | | | | | | | | | | Dividends to shareholders | | | 584 | | | | 572 | | | | 546 | | Less: issue of scrip shares in lieu of cash dividends (note 31) | | | - | | | | (51) | | | | (77) | | Dividends paid to equity holders of the Company | | | 584 | | | | 521 | | | | 469 | | Dividends paid by subsidiaries tonon-controlling interests | | | 10 | | | | 12 | | | | 8 | | Total dividends paid | | | 594 | | | | 533 | | | | 477 | | | | | | Dividends proposed (memorandum disclosure) | | | | | | | | | | | | | Equity | | | | | | | | | | | | | Final 2019 - proposed 63.00c per Ordinary Share (2018: 52.40c; 2017: 48.80c) | | | 495 | | | | 425 | | | | 409 | |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 163 |
14. Earnings per Ordinary Share The computation of basic and diluted earnings per Ordinary Share is set out below: | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Numerator computations | | | | | | | | | | | | | Group profit for the financial year | | | 2,521 | | | | 1,919 | | | | 1,270 | | | | 1,948 | | | | 2,521 | | | | 1,919 | | Profit attributable tonon-controlling interests | | | (4) | | | | (24) | | | | (27) | | | | (19) | | | | (4) | | | | (24) | | Profit attributable to equity holders of the Company | | | 2,517 | | | | 1,895 | | | | 1,243 | | | | 1,929 | | | | 2,517 | | | | 1,895 | | Preference dividends | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Profit attributable to ordinary equity holders of the Company - numerator
for basic/diluted earnings per Ordinary Share | | | 2,517 | | | | 1,895 | | | | 1,243 | | | | 1,929 | | | | 2,517 | | | | 1,895 | | | Profit after tax for the financial year from discontinued operations | | | 1,085 | | | | 107 | | | | 81 | | | Profit after tax for the financial year from discontinued operations - attributable to equity holders
of the Company | | | | 309 | | | | 1,175 | | | | 245 | | Profit attributable to ordinary equity holders of the Company - numerator
for basic/diluted earnings per Ordinary Share from continuing operations | | | 1,432 | | | | 1,788 | | | | 1,162 | | | | 1,620 | | | | 1,342 | | | | 1,650 | | | Denominator computations | | | | | | | | | | | | | | Weighted average number of Ordinary Shares (millions) outstanding for the year (i) | | | 832.4 | | | | 835.6 | | | | 827.8 | | | | 801.3 | | | | 832.4 | | | | 835.6 | | | Effect of dilutive potential Ordinary Shares (employee share options) (millions) (i) and (ii) | | | 4.2 | | | | 5.2 | | | | 6.1 | | | | Effect of dilutive potential Ordinary Shares (employee share options) (millions) (i) (ii) | | | | 6.4 | | | | 4.2 | | | | 5.2 | | Denominator for diluted earnings per Ordinary Share | | | 836.6 | | | | 840.8 | | | | 833.9 | | | | 807.7 | | | | 836.6 | | | | 840.8 | | | Basic earnings per Ordinary Share | | | 302.4c | | | | 226.8c | | | | 150.2c | | | | 240.7c | | | | 302.4c | | | | 226.8c | | Diluted earnings per Ordinary Share | | | 300.9c | | | | 225.4c | | | | 149.1c | | | | 238.8c | | | | 300.9c | | | | 225.4c | | | Basic earnings per Ordinary Share from continuing operations | | | 172.0c | | | | 214.0c | | | | 140.4c | | | | 202.2c | | | | 161.2c | | | | 197.4c | | Diluted earnings per Ordinary Share from continuing operations | | | 171.2c | | | | 212.7c | | | | 139.4c | | | | 200.6c | | | | 160.4c | | | | 196.2c | |
| (i) | The weighted average number of Ordinary Shares included in the computation of basic and diluted earnings per Ordinary Share has been adjusted to exclude shares held by the Employee Benefit Trust and Ordinary Shares repurchased and held by the Company (CRH plc) as Treasury Shares given that these shares do not rank for dividend. The number of Ordinary Shares so held at the balance sheet date is detailed in note 31. | |
| (ii) | Contingently issuable Ordinary Shares (totalling 3,618,278 at 31 December 2019, 7,274,916 at 31 December 2018 and 5,710,247 at 31 December 2017 and 3,095,404 at 31 December 2016)2017) are excluded from the computation of diluted earnings per Ordinary Share where the conditions governing exercisability have not been satisfied as at the end of the reporting period or they are antidilutive for the periods presented. |
| | | | | 164 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
15. Property, Plant and Equipment | | | | | | | | | | | | | | | | | | | | Land and buildings (i) €m | | | Plant and machinery €m | | | Assets in course of construction €m | | | Total €m | | |
|
|
At 31 December 2019 | | | | | | | | | | | | | | | | | Cost/deemed cost | | | 9,189 | | | | 16,283 | | | | 674 | | | | 26,146 | | Accumulated depreciation (and impairment charges) | | | (2,322) | | | | (7,835) | | | | (35) | | | | (10,192) | | Net carrying amount | | | 6,867 | | | | 8,448 | | | | 639 | | | | 15,954 | | | | | | | At 1 January 2019, net carrying amount | | | 6,972 | | | | 8,196 | | | | 593 | | | | 15,761 | | Effect of adopting IFRS 16 | | | (7) | | | | (20) | | | | 4 | | | | (23) | | Translation adjustment | | | 155 | | | | 203 | | | | 19 | | | | 377 | | Reclassifications | | | 101 | | | | 446 | | | | (547) | | | | - | | Transfer (to)/from leased assets (note 22) | | | (5) | | | | 17 | | | | - | | | | 12 | | Additions at cost | | | 72 | | | | 590 | | | | 567 | | | | 1,229 | | Additions to leased mineral reserves (note 21) (ii) | | | 86 | | | | - | | | | - | | | | 86 | | Arising on acquisition (note 32) | | | 152 | | | | 94 | | | | 7 | | | | 253 | | Disposals at net carrying amount | | | (405) | | | | (120) | | | | (4) | | | | (529) | | Depreciation charge for year (iii) | | | (251) | | | | (953) | | | | - | | | | (1,204) | | Impairment charge for year (iv) | | | (3) | | | | (5) | | | | - | | | | (8) | | At 31 December 2019, net carrying amount | | | 6,867 | | | | 8,448 | | | | 639 | | | | 15,954 | | | | | | | | | | Land and buildings €m | | | Plant and machinery €m | | | Other €m | | | | | Leasedright-of-use assets (v) | | | | | | | | | | | | | | | | | At 31 December 2019, net carrying amount (note 22) | | | 1,086 | | | | 337 | | | | 47 | | | | 1,470 | | Total property, plant and equipment | | | | | | | | | | | | | | | 17,424 | | | | | | | | The equivalent disclosure for the prior year is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | Land and buildings (i) €m | | | Plant and machinery €m | | | Assets in course of construction €m | | | Total €m | | | | | | | At 31 December 2018 | | | | | | | | | | | | | | | | | Cost/deemed cost | | | 9,335 | | | | 15,535 | | | | 629 | | | | 25,499 | | Accumulated depreciation (and impairment charges) | | | (2,363) | | | | (7,339) | | | | (36) | | | | (9,738) | | Net carrying amount | | | 6,972 | | | | 8,196 | | | | 593 | | | | 15,761 | | | | | | | At 1 January 2018, net carrying amount | | | 6,224 | | | | 6,319 | | | | 551 | | | | 13,094 | | Reclassified from held for sale | | | 22 | | | | 79 | | | | 3 | | | | 104 | | Translation adjustment | | | 139 | | | | 112 | | | | 8 | | | | 259 | | Reclassifications | | | 71 | | | | 386 | | | | (457) | | | | - | | Additions at cost | | | 74 | | | | 541 | | | | 506 | | | | 1,121 | | Arising on acquisition (note 32) | | | 832 | | | | 1,759 | | | | 23 | | | | 2,614 | | Disposals at net carrying amount | | | (158) | | | | (161) | | | | (5) | | | | (324) | | Depreciation charge for year (iii) | | | (232) | | | | (839) | | | | - | | | | (1,071) | | Impairment charge for year (iv) | | | - | | | | - | | | | (36) | | | | (36) | | At 31 December 2018, net carrying amount | | | 6,972 | | | | 8,196 | | | | 593 | | | | 15,761 | | | | | | | At 1 January 2018 | | | | | | | | | | | | | | | | | Cost/deemed cost | | | 8,472 | | | | 13,157 | | | | 551 | | | | 22,180 | | Accumulated depreciation (and impairment charges) | | | (2,248) | | | | (6,838) | | | | - | | | | (9,086) | | Net carrying amount | | | 6,224 | | | | 6,319 | | | | 551 | | | | 13,094 | |
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
165 |
15. Property, Plant and Equipment
| | | | | | | | | | | | | | | | | | | | Land and
buildings (i)
€m | | | Plant and
machinery
€m | | | Assets in
course of
construction
€m | | | Total €m | | At 31 December 2018 | | | | | | | | | | | | | | | | | Cost/deemed cost | | | 9,335 | | | | 15,535 | | | | 629 | | | | 25,499 | | Accumulated depreciation (and impairment charges) | | | (2,363) | | | | (7,339) | | | | (36) | | | | (9,738) | | Net carrying amount | | | 6,972 | | | | 8,196 | | | | 593 | | | | 15,761 | | | | | | | At 1 January 2018, net carrying amount | | | 6,224 | | | | 6,319 | | | | 551 | | | | 13,094 | | Reclassified from held for sale (ii) | | | 22 | | | | 79 | | | | 3 | | | | 104 | | Translation adjustment | | | 139 | | | | 112 | | | | 8 | | | | 259 | | Reclassifications | | | 71 | | | | 386 | | | | (457) | | | | - | | Additions at cost | | | 74 | | | | 541 | | | | 506 | | | | 1,121 | | Arising on acquisition (note 32) | | | 832 | | | | 1,759 | | | | 23 | | | | 2,614 | | Disposals at net carrying amount | | | (158) | | | | (161) | | | | (5) | | | | (324) | | Depreciation charge for year (iii) | | | (232) | | | | (839) | | | | - | | | | (1,071) | | Impairment charge for year (iv) | | | - | | | | - | | | | (36) | | | | (36) | | At 31 December 2018, net carrying amount | | | 6,972 | | | | 8,196 | | | | 593 | | | | 15,761 | | | | | | | The equivalent disclosure for the prior year is as follows: | | | | | | | | | | | | | | | | | | | | | | At 31 December 2017 | | | | | | | | | | | | | | | | | Cost/deemed cost | | | 8,472 | | | | 13,157 | | | | 551 | | | | 22,180 | | Accumulated depreciation (and impairment charges) | | | (2,248) | | | | (6,838) | | | | - | | | | (9,086) | | Net carrying amount | | | 6,224 | | | | 6,319 | | | | 551 | | | | 13,094 | | | | | | | At 1 January 2017, net carrying amount | | | 6,157 | | | | 6,035 | | | | 498 | | | | 12,690 | | Translation adjustment | | | (483) | | | | (460) | | | | (33) | | | | (976) | | Reclassifications | | | 60 | | | | 348 | | | | (408) | | | | - | | Additions at cost | | | 87 | | | | 481 | | | | 476 | | | | 1,044 | | Arising on acquisition (note 32) | | | 703 | | | | 812 | | | | 21 | | | | 1,536 | | Disposals at net carrying amount | | | (53) | | | | (37) | | | | - | | | | (90) | | Depreciation charge for year (iii) | | | (225) | | | | (781) | | | | - | | | | (1,006) | | Reclassified as held for sale | | | (22) | | | | (79) | | | | (3) | | | | (104) | | At 31 December 2017, net carrying amount | | | 6,224 | | | | 6,319 | | | | 551 | | | | 13,094 | | | | | | | At 1 January 2017 | | | | | | | | | �� | | | | | | | | Cost/deemed cost | | | 8,438 | | | | 13,182 | | | | 498 | | | | 22,118 | | Accumulated depreciation (and impairment charges) | | | (2,281) | | | | (7,147) | | | | - | | | | (9,428) | | Net carrying amount | | | 6,157 | | | | 6,035 | | | | 498 | | | | 12,690 | |
| (i) | The carrying value of mineral-bearing land included in the land and buildings category aboveon page 164 amounted to€3,1123,272 million at the balance sheet date (2017:(2018: €2,8313,112 million). | |
| (ii) | Reflects amounts at 1 January 2018 relatingRelates to assets held for sale at 31 December 2017leased mineral reserves which were subsequently divested in 2018. Refer to note 3 for further details.fall outside the scope of IFRS 16.
| |
| (iii) | The depreciation charge for the year includes€nil33 million (2017:(2018:€1641 million; 2016:2017:€2255 million) relating to discontinued operations. | |
| (iv) | The impairment charge of€368 million (2017:(2018:€nil36 million; 2016:2017:€nil million) principally relates to the write-down of idle property, plant and equipment in Americas Materials and Europe Heavyside toMaterials. The charge includes€1 million (2018:€nil million.million; 2017:€nil million) relating to discontinued operations. | |
| | | | | | | | Future purchase commitments for property, plant and equipment | | 2018 €m | | 2017 €m | | Contracted for but not provided in the financial statements | | 449 | | | 346 | | Authorised by the Directors but not contracted for | | 366 | | | 491 | |
| (v) | See note 22 for more detailed information onright-of-use assets and lease liabilities of the Group under IFRS 16. |
| | | | | | | | | | Future purchase commitments for property, plant and equipment | | 2019 €m | | | 2018 (vi) €m | | Contracted for but not provided in the financial statements | | | 373 | | | | 449 | | Authorised by the Directors but not contracted for | | | 355 | | | | 366 | |
| (vi) | Includes contracted for but not provided for and authorised but not contracted for commitments of€22 million and€6 million respectively relating to discontinued operations. |
| | | | | 158166 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
| | | | | | | CRH Annual Report and Form 20-F |2018
|
16. Intangible Assets | | | | | | | Other intangible assets | | | | | | | | | Other intangible assets | | | | | | | | | Goodwill €m | | | Marketing-
related €m | | | Customer-
related (i) €m | | | Contract- based €m | | | Total €m | | | At 31 December 2019 | | | | | | | | | | | | Cost/deemed cost | | | | 8,378 | | | | 148 | | | | 512 | | | | 77 | | | | 9,115 | | Accumulated amortisation (and impairment charges) | | | | (284) | | | | (64) | | | | (276) | | | | (57) | | | | (681) | | Net carrying amount | | | | 8,094 | | | | 84 | | | | 236 | | | | 20 | | | | 8,434 | | | At 1 January 2019, net carrying amount | | | | 8,116 | | | | 76 | | | | 217 | | | | 24 | | | | 8,433 | | Translation adjustment | | | | 203 | | | | 1 | | | | 4 | | | | 1 | | | | 209 | | Arising on acquisition (note 32) | | | | 278 | | | | 17 | | | | 75 | | | | - | | | | 370 | | Disposals | | | | (503) | | | | (1) | | | | (15) | | | | - | | | | (519) | | Amortisation charge for year (ii) | | | | - | | | | (9) | | | | (45) | | | | (5) | | | | (59) | | At 31 December 2019, net carrying amount | | | | 8,094 | | | | 84 | | | | 236 | | | | 20 | | | | 8,434 | | | The equivalent disclosure for the prior year is as follows: | | | | | | | | | | | | | | | Goodwill €m | | | Marketing-
related €m | | Customer-
related (i) €m | | Contract-
based €m | | Total €m | | | At 31 December 2018 | | | | | | | | | | | | | | | Cost/deemed cost | | | 8,400 | | | | 138 | | | | 592 | | | | 79 | | | | 9,209 | | | | 8,400 | | | | 138 | | | | 592 | | | | 79 | | | | 9,209 | | Accumulated amortisation (and impairment charges) | | | (284) | | | | (62 | ) | | | (375 | ) | | | (55 | ) | | | (776 | ) | | | (284) | | | | (62) | | | | (375) | | | | (55) | | | | (776) | | Net carrying amount | | | 8,116 | | | | 76 | | | | 217 | | | | 24 | | | | 8,433 | | | | 8,116 | | | | 76 | | | | 217 | | | | 24 | | | | 8,433 | | | At 1 January 2018, net carrying amount | | | 6,905 | | | | 75 | | | | 204 | | | | 30 | | | | 7,214 | | | | 6,905 | | | | 75 | | | | 204 | | | | 30 | | | | 7,214 | | Reclassified from held for sale (ii) | | | 363 | | | | - | | | | 8 | | | | 1 | | | | 372 | | | Reclassified from held for sale | | | | 363 | | | | - | | | | 8 | | | | 1 | | | | 372 | | Translation adjustment | | | 137 | | | | 3 | | | | 8 | | | | 1 | | | | 149 | | | | 137 | | | | 3 | | | | 8 | | | | 1 | | | | 149 | | Reclassifications | | | - | | | | - | | | | (2 | ) | | | 2 | | | | - | | | | - | | | | - | | | | (2) | | | | 2 | | | | - | | Arising on acquisition (note 32) | | | 1,504 | | | | 6 | | | | 51 | | | | 1 | | | | 1,562 | | | | 1,504 | | | | 6 | | | | 51 | | | | 1 | | | | 1,562 | | Disposals | | | (773) | | | | - | | | | (9 | ) | | | (1 | ) | | | (783 | ) | | | (773) | | | | - | | | | (9) | | | | (1) | | | | (783) | | Amortisation charge for year (iii) | | | - | | | | (8 | ) | | | (43 | ) | | | (10 | ) | | | (61 | ) | | Impairment charge for year (iv) | | | (20) | | | | - | | | | - | | | | - | | | | (20 | ) | | Amortisation charge for year (ii) | | | | - | | | | (8) | | | | (43) | | | | (10) | | | | (61) | | Impairment charge for year (iii) | | | | (20) | | | | - | | | | - | | | | - | | | | (20) | | At 31 December 2018, net carrying amount | | | 8,116 | | | | 76 | | | | 217 | | | | 24 | | | | 8,433 | | | | 8,116 | | | | 76 | | | | 217 | | | | 24 | | | | 8,433 | | | The equivalent disclosure for the prior year is as follows: | | | | | | | At 31 December 2017 | | | | | | At 1 January 2018 | | | | | | | | | | | | Cost/deemed cost | | | 7,198 | | | | 129 | | | | 535 | | | | 80 | | | | 7,942 | | | | 7,198 | | | | 129 | | | | 535 | | | | 80 | | | | 7,942 | | Accumulated amortisation (and impairment charges) | | | (293) | | | | (54 | ) | | | (331 | ) | | | (50 | ) | | | (728 | ) | | | (293) | | | | (54) | | | | (331) | | | | (50) | | | | (728) | | Net carrying amount | | | 6,905 | | | | 75 | | | | 204 | | | | 30 | | | | 7,214 | | | | 6,905 | | | | 75 | | | | 204 | | | | 30 | | | | 7,214 | | | At 1 January 2017, net carrying amount | | | 7,396 | | | | 89 | | | | 229 | | | | 47 | | | | 7,761 | | | Translation adjustment | | | (593) | | | | (10 | ) | | | (22 | ) | | | (4 | ) | | | (629 | ) | | Arising on acquisition (note 32) | | | 487 | | | | 4 | | | | 51 | | | | 1 | | | | 543 | | | Disposals | | | (22) | | | | - | | | | (1 | ) | | | - | | | | (23 | ) | | Amortisation charge for year (iii) | | | - | | | | (8 | ) | | | (45 | ) | | | (13 | ) | | | (66 | ) | | Reclassified as held for sale | | | (363) | | | | - | | | | (8 | ) | | | (1 | ) | | | (372 | ) | | At 31 December 2017, net carrying amount | | | 6,905 | | | | 75 | | | | 204 | | | | 30 | | | | 7,214 | | | | At 1 January 2017 | | | | | | Cost/deemed cost | | | 7,701 | | | | 142 | | | | 659 | | | | 87 | | | | 8,589 | | | Accumulated amortisation (and impairment charges) | | | (305) | | | | (53 | ) | | | (430 | ) | | | (40 | ) | | | (828 | ) | | Net carrying amount | | | 7,396 | | | | 89 | | | | 229 | | | | 47 | | | | 7,761 | | |
| (i) | The customer-related intangible assets relate predominantly tonon-contractual customer relationships. |
| (ii) | Reflects amounts at 1 January 2018 relating to assets held for sale at 31 December 2017 which were subsequently divested in 2018. Refer to note 3 for further details.
|
(iii) | The amortisation charge for the year includes€nil2 million (2017:(2018:€52 million; 2016:2017:€914 million) in respect of discontinued operations, which primarily relates to customer-related intangible assets. |
(iv)(iii) | In July 2018, the Group divested of its DIY business in the Netherlands and Belgium, together with certain related property assets, which formed part of the former Europe Distribution segment, for total consideration of€0.5 billion. The decision to divest resulted in the recognition of an impairment charge of€20 million. The recoverable amount, at the date of impairment, was based on fair value less costs of disposal. The fair value was determined using Level 2 inputs in accordance with the fair value hierarchy, as a market price was agreed and paid. |
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
167 |
16. Intangible Assets - continued
Annual goodwill testing The net book value of goodwill capitalised under previous GAAP (Irish GAAP) as at the transition date to IFRS (1 January 2004) has been treated as deemed cost. Goodwill arising on acquisition since that date is capitalised at cost. Cash-generating units Goodwill acquired through business combination activity has been allocated to cash- generatingcash-generating units (CGUs) that are expected to benefit from synergies in that combination. The CGUs represent the lowest level within the Group at which the associated goodwill is monitored for internal management purposes, and are not larger than the operating segments
determined in accordance with IFRS 8. A total of 26 (2017: 25)25 (2018: 26) CGUs have been identified and these are analysed between the sixthree business segments and Americas Distribution below. All businesses within the similar and/or consistent profit margin and asset intensity characteristics. Assets, liabilities, deferred tax and goodwill have been assigned to the CGUs on a reasonable and consistent basis. | | | | | | | | | | | | | | | | | | | | | | | | Cash-generating units | | | | | | Goodwill | | | | | 2018 | | | 2017 | | | | | | 2018 €m | | | 2017 €m | | Europe Heavyside | | | 15 | | | | 14 | | | | | | | | 1,821 | | | | 1,770 | | Europe Lightside | | | 1 | | | | 1 | | | | | | | | 367 | | | | 365 | | Europe Distribution | | | 1 | | | | 1 | | | | | | | | 373 | | | | 671 | | Europe | | | 17 | | | | 16 | | | | | | | | 2,561 | | | | 2,806 | | | | | | | | Americas Materials | | | 7 | | | | 6 | | | | | | | | 3,441 | | | | 2,082 | | Americas Products | | | 1 | | | | 1 | | | | | | | | 1,655 | | | | 1,555 | | Americas Distribution | | | - | | | | 1 | | | | | | | | - | | | | - | | Americas | | | 8 | | | | 8 | | | | | | | | 5,096 | | | | 3,637 | | | | | | | | | | | | | | | | | | | | | | | | Asia | | | 1 | | | | 1 | | | | | | | | 459 | | | | 462 | | | | | | | | | | | | | | | | | | | | | | | | Total Group | | | 26 | | | | 25 | | | | | | | | 8,116 | | | | 6,905 | |
| | | | | | | | | | | | | | | | | | | | | | | | Cash-generating units | | | | | | Goodwill | | | | | 2019 | | | 2018 | | | | | | 2019 €m | | | 2018 €m | | |
Americas Materials | | | 7 | | | | 7 | | | | | | | | 3,558 | | | | 3,441 | | Europe Materials | | | 16 | | | | 16 | | | | | | | | 2,354 | | | | 2,280 | | Building Products | | | 2 | | | | 3 | | | | | | | | 2,182 | | | | 2,395 | | Total Group | | | 25 | | | | 26 | | | | | | | | 8,094 | | | | 8,116 | |
Impairment testing methodology and results Goodwill is subject to impairment testing on an annual basis. The recoverable amount of 2625 CGUs is determined based on avalue-in-use computation, using Level 3 inputs in accordance with the fair value hierarchy. The cash flow forecasts are primarily based on a five-year strategic plan document formally approved by the Board of Directors and specifically exclude the impact of future development activity. These cash flows are projected forward for an additional five years to determine the basis for an annuity-based terminal value, calculated on the same basis as the Group’s acquisition modelling methodology. As in prior years, the terminal value is based on a20-year annuity, with the exception of certain long-lived cement assets, where an assumption of a30-year annuity has been used. Projected cash flows beyond the initial evaluation period have been extrapolated using real growth rates ranging from 0.7% to 1.9% in Europe, 1.2% to 1.9%ranging from 1.3% to 1.8% in the Americas, 0.7% to 2.0% in Europe and 4.1%3.1% in Asia. Such real growth rates do not exceed the long-term average growth rates for the countries in which each CGU operates. Thevalue-in-use represents the present value of the future cash flows, including the terminal value, discounted at a rate appropriate to each CGU. The realpre-tax discount rates used range from 6.6% to 8.7% (2018: 7.0% to 9.2% (2017: 7.0% to 10.3%); these rates are in line with the Group’s estimated weighted average cost of capital, arrived at using the Capital Asset Pricing Model.
Other than theThe 2019 annual goodwill impairment recognisedtesting process has resulted in our DIY business, theno intangible asset impairments. The 2018 annual goodwill impairment testing process resulted in no further intangible asset impairments (2017:an impairment of€nil million).20 million being recorded in respect of one CGU in our Building Products segment.
Key sources of estimation uncertainty The cash flows have been arrived at taking account of the Group’s strong financial position, its established history of earnings and cash flow generation and the nature of the building materials industry, where product obsolescence is very low. However, expected future cash flows are inherently uncertain and are therefore liable to material change over time. The key assumptions employed in arriving at the estimates of future cash flows factored into impairment testing are subjective and include projected EBITDA (as defined)* margins, net cash flows, discount rates used and the duration of the discounted cash flow model. Significant under-performance in any of CRH’s major CGUs may give rise to a materialwrite-down of goodwill which would have a substantial impact on the Group’s income and equity, however given the excess headroom on the models the likelihood of this happening is not considered a realistic possibility.
| | | 160 | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. |
| | | | | 168 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | | CRH Annual Report and Form 20-F |2018
|
16. Intangible Assets - continued Significant goodwill amounts The goodwill allocated to the USAmericas Cement (Americas Materials segment) and the Americas Building Products (Americas(Building Products segment) between 17%18% and 20%23% of the total carrying amount shown on page 159.166. The goodwill allocated to each of the remaining CGUs is less than 10% of the total carrying other cases. The additional disclosures required for the two CGUs with significant goodwill are as follows: | | | | United States
Cement | | | | | | Americas
Building Products | | | Americas
Cement | | | | | | Americas
Building Products | | | | | 2018 | | | | | | 2018 | | | 2017 | | | 2019 | | | 2018 | | | | | | 2019 | | | 2018 | | Goodwill allocated to the cash-generating unit at balance sheet date | | | €1,412m | | | | | | €1,655m | | | | €1,555m | | | | €1,450m | | | | €1,412m | | | | | | €1,883m | | | | €1,655m | | Discount rate applied to the cash flow projections (realpre-tax) | | | 8.2% | | | | | | 9.1% | | | | 10.3% | | | | 7.6% | | | | 8.2% | | | | | | 8.4% | | | | 9.1% | | Average EBITDA (as defined)* margin over the initial5-year period | | | 37.9% | | | | | | 15.3% | | | | 15.1% | | | | 39.1% | | | | 37.9% | | | | | | 18.3% | | | | 15.3% | | Value-in-use (present value of future cash flows) | | | €5,579m | | | | | | €6,753m | | | | €5,628m | | | | €7,031m | | | | €5,579m | | | | | | €8,560m | | | | €6,753m | | Excess ofvalue-in-use over carrying amount | | | €2,594m | | | | | | €3,412m | | | | €2,152m | | | | €3,529m | | | | €2,594m | | | | | | €4,938m | | | | €3,412m | |
The key assumptions and methodology used in respect of these two CGUs are consistent with those described above. The values applied to each of the key estimates and assumptions are specific to the individual CGUs and were derived from a combination of internal and external factors based on historical experience and took into account the cash flows specifically associated with these businesses. The cash flows and annuity-based terminal value were projected in line with the methodology disclosed above. The USAmericas Cement and Americas Building Products CGUs are not included in the CGUs referred to in the ‘Sensitivity analysis’ section below. Given the magnitude of the excess ofvalue-in-use over carrying amount, and our belief that the key assumptions are reasonable, management believes that it is not reasonably possible that there would be a change in the key assumptions such that the carrying amount would exceed thevalue-in-use. Consequently no further disclosures relating to sensitivity of thevalue-in-use computations for the USAmericas Cement or Americas Building Products CGUs are considered to be warranted. Sensitivity analysis Sensitivity analysis has been performed and results in additional disclosures in respect of twoone of the total 2625 CGUs. The key assumptions, methodology used and values applied to each of the key assumptions for the two CGUsthis CGU are in line with those outlined above (a30-year annuity period has been used). The two CGUsCGU had aggregate goodwill of€630459 million at the date of testing. The table below identifies the amounts by which each of the following assumptions may either decline or increase to arrive at a zero excess of the present value of future cash flows over the book value of net assets in the two CGUsCGU selected for sensitivity analysis disclosures: | | | | | | | | TwoOne cash-generating unitsunit | | Reduction in EBITDA (as defined)* margin | | | 2.2 to 3.1 percentage points | | Reduction in profit before tax | | | 16.2% to 22.3%15.7% | | Reduction in net cash flow | | | 13.6% to 19.6%14.4% | | Increase inpre-tax discount rate | | | 1.1 to 2.01.3 percentage points | |
The average EBITDA (as defined)* margin for the aggregate of these two CGUsthis CGU over the initial five-year period was 18.1%20.2%. Thevalue-in-use (being the present (being the present value of the future net cash flows) was€1,6091,379 million and the carrying amount was€1,3491,176 million, resulting in an excess of
excess ofvalue-in-use over carrying amount of€260203 million.
| | | | | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. | | | 161 | |
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17. Financial Assets | | | | | | | | | | | | | | | | | | | | Investments accounted for
using the equity method
(i.e. joint ventures and associates) | | | | | | | | Share of net
assets
€m | | | Loans
€m | | | Total
€m | | | Other
€m | | At 1 January 2018 | | | 1,123 | | | | 125 | | | | 1,248 | | | | 25 | | Translation adjustment | | | (18) | | | | (3) | | | | (21) | | | | - | | Investments and advances | | | 1 | | | | 1 | | | | 2 | | | | - | | Investment and loan to associate in lieu of cash proceeds | | | 35 | | | | 50 | | | | 85 | | | | - | | Joint ventures becoming subsidiaries (note 32) | | | (13) | | | | (107) | | | | (120) | | | | - | | Disposals and repayments | | | (39) | | | | (5) | | | | (44) | | | | (2) | | Arising on acquisition (note 32) | | | 1 | | | | - | | | | 1 | | | | - | | Share of profit after tax | | | 60 | | | | - | | | | 60 | | | | - | | Dividends received | | | (48) | | | | - | | | | (48) | | | | - | | At 31 December 2018 | | | 1,102 | | | | 61 | | | | 1,163 | | | | 23 | | | | | | | The equivalent disclosure for the prior year is as follows: | | | | | | | | | | | | | | | | | | | | | | At 1 January 2017 | | | 1,152 | | | | 147 | | | | 1,299 | | | | 26 | | Translation adjustment | | | (67) | | | | (16) | | | | (83) | | | | (1) | | Investments and advances | | | 5 | | | | 6 | | | | 11 | | | | - | | Disposals and repayments | | | (1) | | | | (12) | | | | (13) | | | | - | | Share of profit after tax | | | 65 | | | | - | | | | 65 | | | | - | | Dividends received | | | (31) | | | | - | | | | (31) | | | | - | | At 31 December 2017 | | | 1,123 | | | | 125 | | | | 1,248 | | | | 25 | |
| | | | | | | | | | | | | | | | | | | | Investments accounted for
using the equity method
(i.e. joint ventures and associates) | | | | | | | | Share of net
assets
€m | | | Loans
€m | | | Total
€m | | | Other
€m | | At 1 January 2019 | | | 1,102 | | | | 61 | | | | 1,163 | | | | 23 | | Translation adjustment | | | 3 | | | | - | | | | 3 | | | | 1 | | Investments and advances | | | 12 | | | | 15 | | | | 27 | | | | 2 | | Disposals and repayments | | | (489) | | | | (51) | | | | (540) | | | | (14) | | Share of profit after tax (i) | | | 72 | | | | - | | | | 72 | | | | - | | Dividends received | | | (35) | | | | - | | | | (35) | | | | - | | At 31 December 2019 | | | 665 | | | | 25 | | | | 690 | | | | 12 | |
The equivalent disclosure for the prior year is as follows: | | | | | | | | | | | | | | | | | At 1 January 2018 | | | 1,123 | | | | 125 | | | | 1,248 | | | | 25 | | Translation adjustment | | | (18) | | | | (3) | | | | (21) | | | | - | | Investments and advances | | | 1 | | | | 1 | | | | 2 | | | | - | | Investment and loan to associate in lieu of cash proceeds | | | 35 | | | | 50 | | | | 85 | | | | - | | Joint ventures becoming subsidiaries (note 32) | | | (13) | | | | (107) | | | | (120) | | | | - | | Disposals and repayments | | | (39) | | | | (5) | | | | (44) | | | | (2) | | Arising on acquisition (note 32) | | | 1 | | | | - | | | | 1 | | | | - | | Share of profit after tax (i) | | | 60 | | | | - | | | | 60 | | | | - | | Dividends received | | | (48) | | | | - | | | | (48) | | | | - | | At 31 December 2018 | | | 1,102 | | | | 61 | | | | 1,163 | | | | 23 | |
| (i) | Share of profit after tax includes€12 million (2018:€12 million) relating to discontinued operations. |
Summarised financial information for the Group’s investment in joint ventures and associates which are accounted for using the equity method is as follows: | | | | Joint Ventures | | | | | Associates | | | | | Total | | | Joint Ventures | | | | | Associates | | | | | Total | | | | | 2018 €m | | | 2017 €m | | | | | | 2018 €m | | | 2017 €m | | | | | | 2018 €m | | | 2017 €m | | | 2019
€m | | | 2018
€m | | | | | | 2019
€m | | | 2018
€m | | | | | | 2019
€m | | | 2018
€m | | Non-current assets | | | 711 | | | | 752 | | | | | 775 | | | | 754 | | | | | 1,486 | | | | 1,506 | | | | 246 | | | | 711 | | | | | 686 | | | | 775 | | | | | 932 | | | | 1,486 | | Current assets | | | 220 | | | | 209 | | | | | 468 | | | | 492 | | | | | 688 | | | | 701 | | | | 276 | | | | 220 | | | | | 389 | | | | 468 | | | | | 665 | | | | 688 | | Non-current liabilities | | | (331) | | | | (348) | | | | | (115) | | | | (73) | | | | | (446) | | | | (421) | | | | (164) | | | | (331) | | | | | (91) | | | | (115) | | | | | (255) | | | | (446) | | Current liabilities | | | (140) | | | | (115) | | | | | (486) | | | | (548) | | | | | (626) | | | | (663) | | | | (254) | | | | (140) | | | | | (423) | | | | (486) | | | | | (677) | | | | (626) | | Net assets | | | 460 | | | | 498 | | | | | 642 | | | | 625 | | | | | 1,102 | | | | 1,123 | | | | 104 | | | | 460 | | | | | 561 | | | | 642 | | | | | 665 | | | | 1,102 | |
A listing of the principal equity accounted investments is contained on page 257.264.
The Group holds a 21.13% stake (2017: 21.13%) in Samse S.A., a publicly-listed distributor in France which is accounted for as an associate investment above. The fair value of this investment at the balance sheet date, calculated based on the number of shares held multiplied by the closing share price at 31 December 2018 (Level 1 input in the fair value hierarchy), was€96 million (2017:€125 million).
| | | | | 162170 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
| | | | | | | CRH Annual Report and Form 20-F |2018
|
18. Inventories | | | | 2018 €m | | | 2017 €m | | | 2019
€m | | | 2018
€m | | Raw materials | | | 1,149 | | | | 885 | | | | 1,142 | | | | 1,149 | | Work-in-progress (i) | | | 109 | | | | 92 | | | | 128 | | | | 109 | | Finished goods | | | 1,803 | | | | 1,738 | | | | 1,472 | | | | 1,803 | | Total inventories at the lower of cost and net realisable value | | | 3,061 | | | | 2,715 | | | | 2,742 | | | | 3,061 | |
| (i) | Work-in-progress includes€32 million (2017:(2018:€23 million) in respect of the cumulative costs incurred, net of amounts transferred to cost of sales underpercentage-of-completion accounting, for construction contracts in progress at the balance sheet date. | |
An analysis of the Group’s cost of sales expense is provided in note 4 to the financial statements. Write-downs of inventories recognised as an expense within cost of sales for continuing operations amounted to€238 million (2017:(2018:€3110 million; 2016:2017:€1723 million). 19. Trade and Other Receivables | | | | 2018 €m | | | 2017 €m | | | 2019 €m | | | 2018 €m | | Current | | | | | | | | | Trade receivables | | | 2,761 | | | | 2,456 | | | | 2,387 | | | | 2,761 | | Amounts receivable in respect of construction contracts (i) | | | 878 | | | | 773 | | | | 914 | | | | 878 | | Total trade receivables, gross | | | 3,639 | | | | 3,229 | | | | 3,301 | | | | 3,639 | | Loss allowance | | | (133) | | | | (131) | | | | (118) | | | | (133) | | Total trade receivables, net | | | 3,506 | | | | 3,098 | | | | 3,183 | | | | 3,506 | | Amounts receivable from equity accounted investments | | | 9 | | | | 8 | | | | 8 | | | | 9 | | Prepayments and other receivables | | | 559 | | | | 524 | | | | 576 | | | | 559 | | Total | | | 4,074 | | | | 3,630 | | | | 3,767 | | | | 4,074 | | | Non-current | | | | | | | | | Other receivables | | | 181 | | | | 156 | | | | 317 | | | | 181 | |
| (i) | Includes unbilled revenue and retentions held by customers in respect of construction contracts at the balance sheet date amounting to€247 million and€183 million respectively (2018:€245 million and€168 million respectively). | |
Trade and other receivables are measured at amortised cost (less any loss allowance) as the Group’s business model is to “hold to collect” contractual cash flows, and the cash flows arising from trade and other receivables are solely payments of principal and interest. (i) | Includes unbilled revenue and retentions held by customers in respect of construction contracts at the balance sheet date amounting to€245 million and€168 million respectively (2017:€176 million and€154 million respectively).
| |
CRH ANNUAL REPORT AND FORM20-F | 2019
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171 |
19. Trade and Other Receivables - continued
Valuation and qualifying accounts (loss allowance) The movements in the loss allowance for receivables during the financial year were as follows: | | | | 2018 €m | | 2017 €m | | 2016 €m | | | | | | | | | | | | 2019 €m | | 2018 €m | | 2017 €m | | | | | | | | | | | At 1 January | | | 131 | | | | 152 | | | | 161 | | | | | 133 | | | | 131 | | | | 152 | | | Reclassified from*/(as) held for sale | | | 6 | | | | (6) | | | | - | | | | Reclassified from/(as) held for sale | | | | - | | | | 6 | | | | (6) | | | Translation adjustment | | | - | | | | (7) | | | | (1) | | | | | 2 | | | | - | | | | (7) | | | Provided during year | | | 35 | | | | 32 | | | | 43 | | | | | 45 | | | | 35 | | | | 32 | | | Disposed of during year | | | (3) | | | | - | | | | (1) | | | | | (30) | | | | (3) | | | | - | | | Written off during year | | | (30) | | | | (36) | | | | (43) | | | | | (26) | | | | (30) | | | | (36) | | | Arising on acquisition (note 32) | | | 6 | | | | 3 | | | | 2 | | | | | 1 | | | | 6 | | | | 3 | | | Recovered during year | | | (12) | | | | (7) | | | | (9) | | | | | (7) | | | | (12) | | | | (7) | | | At 31 December | | | 133 | | | | 131 | | | | 152 | | | | | 118 | | | | 133 | | | | 131 | | |
Given the common profile of CRH’s customers, how customer credit risk is managed at appropriate group locations, and the breadth and scale of its international operations, a disclosure of concentrations of credit risk by geographic locationsegment best enables users of financial statements to assess CRH’s credit risk exposure. The following table sets out the gross carrying value of trade receivables and loss allowance by segment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gross carrying value of
trade receivables |
| | | | | |
| Loss
allowance |
| | | |
| 2018
€m |
| |
| 2017
€m |
| |
| 2016
€m |
| | | | | |
| 2018
€m |
| |
| 2017
€m |
| |
| 2016
€m |
| |
Europe Heavyside | | | 1,144 | | | | 1,084 | | | | 1,109 | | | | | | | | 61 | | | | 67 | | | | 68 | | Europe Lightside | | | 174 | | | | 184 | | | | 176 | | | | | | | | 8 | | | | 9 | | | | 10 | | Europe Distribution | | | 409 | | | | 391 | | | | 374 | | | | | | | | 27 | | | | 25 | | | | 26 | | Europe | | | 1,727 | | | | 1,659 | | | | 1,659 | | | | | | | | 96 | | | | 101 | | | | 104 | | | | | | | | | | Americas Materials | | | 1,322 | | | | 1,054 | | | | 1,004 | | | | | | | | 19 | | | | 17 | | | | 21 | | Americas Products | | | 566 | | | | 495 | | | | 573 | | | | | | | | 15 | | | | 10 | | | | 13 | | Americas Distribution | | | - | | | | - | | | | 303 | | | | | | | | - | | | | - | | | | 10 | | Americas | | | 1,888 | | | | 1,549 | | | | 1,880 | | | | | | | | 34 | | | | 27 | | | | 44 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Asia | | | 24 | | | | 21 | | | | 26 | | | | | | | | 3 | | | | 3 | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Group | | | 3,639 | | | | 3,229 | | | | 3,565 | | | | | | | | 133 | | | | 131 | | | | 152 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gross carrying value of
trade receivables |
| | | | | |
| Loss
allowance |
| | | |
| 2019
€m |
| |
| 2018
€m |
| |
| 2017
€m |
| | | | | |
| 2019
€m |
| |
| 2018
€m |
| |
| 2017
€m |
| |
Americas Materials | | | 1,353 | | | | 1,322 | | | | 1,054 | | | | | | | | 27 | | | | 19 | | | | 17 | | Europe Materials | | | 1,228 | | | | 1,168 | | | | 1,105 | | | | | | | | 70 | | | | 64 | | | | 70 | | Building Products (i) | | | 720 | | | | 1,149 | | | | 1,070 | | | | | | | | 21 | | | | 50 | | | | 44 | | Total Group | | | 3,301 | | | | 3,639 | | | | 3,229 | | | | | | | | 118 | | | | 133 | | | | 131 | |
| | | 164 | (i) | * Reflects amounts at 1 January 2018 relating to assets held for sale at 31 December 2017 which were subsequently divested in 2018. Refer to note 3 for further details.
|
| | | | | | | CRH Annual Report and Form 20-F |2018
Analysis of Building Products segment by geographic location: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019
€m |
| |
| 2018
€m |
| |
| 2017
€m |
| | | | | |
| 2019
€m |
| |
| 2018
€m |
| |
| 2017
€m |
| |
Americas | | | 589 | | | | 566 | | | | 495 | | | | | | | | 16 | | | | 15 | | | | 10 | | Europe | | | 131 | | | | 583 | | | | 575 | | | | | | | | 5 | | | | 35 | | | | 34 | | Total | | | 720 | | | | 1,149 | | | | 1,070 | | | | | | | | 21 | | | | 50 | | | | 44 | |
Customer credit risk is managed according to established policies, procedures and controls. Customer credit quality is assessed in line with strict credit rating criteria and credit limits are established where appropriate. Outstanding customer balances are regularly monitored and a review for indicators of impairment (evidence of financial difficulty of the customer, payment default, breach of contract etc.) is carried out at each reporting date. Significant balances are reviewed individually while smaller balances are grouped and assessed collectively. Receivables balances are in general unsecured andnon-interest-bearing. The trade receivables balances disclosed above comprise a large number of customers spread across the Group’s activities and geographies with balances classified as “neither past due nor impaired” representing 64%65% of the total trade receivables balance at the balance sheet date (2017:(2018: 64%). There have been no significant changes to the Group’s credit risk parameters or to the composition of the Group’s trade receivables portfolio during the financial year. The Group applies the simplified approach to providing for expected credit losses (ECL) permitted by IFRS 9Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Receivables such as those which government contracts and receivables which fall under credit insurance are considered low risk and would not attract a material ECL. Given the positive economic outlook (e.g. forecast Gross Domestic Product) for the next 12 months in the majority of the economies in which we operate we consider that our ECL adequately represents the risk of default on our receivable balances. Trade receivables are written-offwritten off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the company. Where recoveries are made, these are recognised in the Consolidated Income Statement.
| | | | | 172 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
19. Trade and Other Receivables - continued Aged analysis The aged analysis of trade receivables and amounts receivable in respect of construction contracts at the balance sheet date was as follows: | | | | 2018 €m | | | 2017 €m | | | 2019 €m | | | 2018 €m | | Neither past due nor impaired | | | 2,319 | | | | 2,070 | | | | 2,140 | | | | 2,319 | | Past due but not impaired: | | | | | | | | | - less than 60 days | | | 922 | | | | 832 | | | | 770 | | | | 922 | | - 60 days or greater but less than 120 days | | | 169 | | | | 129 | | | | 186 | | | | 169 | | - 120 days or greater | | | 96 | | | | 67 | | | | 87 | | | | 96 | | Impaired (partial or full provision) | | | 133 | | | | 131 | | | | 118 | | | | 133 | | Total | | | 3,639 | | | | 3,229 | | | | 3,301 | | | | 3,639 | |
Trade receivables and amounts receivable in respect of construction contracts are in general receivable within 90 days of the balance sheet date.
CRH ANNUAL REPORT AND FORM20-F | 2019
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173 |
20. Trade and Other Payables | | | | 2018 €m | | | 2017 €m | | | 2019
€m | | | 2018
€m | | Current | | | | | | | | | Trade payables | | | 2,453 | | | | 2,304 | | | | 2,202 | | | | 2,453 | | Construction contract-related payables (i) | | | 218 | | | | 217 | | | | 229 | | | | 218 | | Deferred and contingent acquisition consideration (ii) | | | 48 | | | | 167 | | | | 45 | | | | 48 | | Accruals and other payables | | | 1,887 | | | | 1,802 | | | | 1,897 | | | | 1,887 | | Amounts payable to equity accounted investments | | | 3 | | | | 44 | | | | 3 | | | | 3 | | Total | | | 4,609 | | | | 4,534 | | | | 4,376 | | | | 4,609 | | | Non-current | | | | | | | | | Other payables | | | 181 | | | | 128 | | | | 195 | | | | 181 | | Deferred and contingent acquisition consideration (ii) | | | 291 | | | | 98 | | | | 290 | | | | 291 | | Total | | | 472 | | | | 226 | | | | 485 | | | | 472 | |
| (i) | Construction contract-related payables include billings in excess of revenue, together with advances received from customers in respect of work to be performed under construction contracts and foreseeable losses thereon.€192174 million was recognised in the Consolidated Income Statement during 20182019 which was included in the contract-related payables balance in the prior year.at 31 December 2018. | |
| | Other than deferred and contingent consideration, the carrying amounts of trade and other payables approximate their fair value largely due to the short-term maturities and nature of these instruments. | |
| (ii) | The fair value of total contingent consideration is€220248 million (2017:(2018:€118220 million), (Level 3 input in the fair value hierarchy), and deferred consideration is€11987 million (2017:(2018:€147119 million). On an undiscounted basis, the corresponding future payments relating to contingent consideration, for which the Group may be liable, ranges from€263267 million to€396410 million. This is based on a range of estimated potential outcomes of the expected payment amounts. The movement in deferred and contingent consideration during the financial year was as follows: | |
| | | | 2018 €m | | | 2017 €m | | | 2019
€m | | | 2018
€m | | At 1 January | | | 265 | | | | 301 | | | | 339 | | | | 265 | | Reclassified from*/(as) held for sale | | | 2 | | | | (2 | ) | | Reclassified from held for sale | | | | - | | | | 2 | | Translation adjustment | | | 19 | | | | (36) | | | | 6 | | | | 19 | | Arising on acquisitions and investments during year (note 32) | | | 103 | | | | 45 | | | | 18 | | | | 103 | | Changes in estimate | | | (8) | | | | 3 | | | | 5 | | | | (8) | | Disposals | | | (2) | | | | - | | | | (4) | | | | (2) | | Paid during year | | | (55) | | | | (53) | | | | (48) | | | | (55) | | Discount unwinding | | | 15 | | | | 7 | | | | 19 | | | | 15 | | At 31 December | | | 339 | | | | 265 | | | | 335 | | | | 339 | |
| | | | | 166174 | | * Reflects amounts at 1 January 2018 relating to liabilities held for sale at 31 December 2017 which were subsequently divested in 2018. Refer to note 3 for further details.CRH ANNUAL REPORT AND FORM 20-F | 2019
|
| | | | | | | CRH Annual Report and Form 20-F |2018
|
21. Movement in Working Capital and Provisions for Liabilities | | | | Inventories
€m | | | Trade and other
receivables €m | | | Trade and other
payables €m | | | Provisions
for liabilities
€m | | | Total €m | | | Inventories
€m | | | Trade and other
receivables
€m | | | Trade and
other
payables
€m | | | Provisions
for
liabilities
€m | | | Total €m | | At 1 January 2019 | | | | 3,061 | | | | 4,255 | | | | (5,081) | | | | (1,087) | | | | 1,148 | | Effect of adopting IFRS 16 | | | | - | | | | 3 | | | | 11 | | | | 1 | | | | 15 | | Translation adjustment | | | | 64 | | | | 94 | | | | (107) | | | | (17) | | | | 34 | | Arising on acquisition (note 32) | | | | 58 | | | | 66 | | | | (73) | | | | (6) | | | | 45 | | Disposals | | | | (520) | | | | (669) | | | | 510 | | | | - | | | | (679) | | Deferred and contingent acquisition consideration: | | | | | | | | | | | - arising on acquisitions during year (note 32) | | | | - | | | | - | | | | (18) | | | | - | | | | (18) | | - paid during year | | | | - | | | | - | | | | 48 | | | | - | | | | 48 | | Deferred proceeds arising on disposals during year | | | | - | | | | 269 | | | | - | | | | - | | | | 269 | | Interest accruals and discount unwinding | | | | - | | | | (11) | | | | (1) | | | | (22) | | | | (34) | | Additions to leased mineral reserves | | | | - | | | | - | | | | (86) | | | | - | | | | (86) | | Increase/(decrease) in working capital and provisions for liabilities | | | | 79 | | | | 77 | | | | (64) | | | | (28) | | | | 64 | | At 31 December 2019 | | | | 2,742 | | | | 4,084 | | | | (4,861) | | | | (1,159) | | | | 806 | | | The equivalent disclosure for the prior years is as follows: | | | | | | | | | | | | At 1 January 2018 | | | 2,715 | | | | 3,786 | | | | (4,760) | | | | (1,064) | | | | 677 | | | | 2,715 | | | | 3,786 | | | | (4,760) | | | | (1,064) | | | | 677 | | Reclassified from held for sale (i) | | | 266 | | | | 334 | | | | (306) | | | | - | | | | 294 | | | Reclassified from held for sale | | | | 266 | | | | 334 | | | | (306) | | | | - | | | | 294 | | Translation adjustment | | | 52 | | | | 57 | | | | (71) | | | | (10) | | | | 28 | | | | 52 | | | | 57 | | | | (71) | | | | (10) | | | | 28 | | Arising on acquisition (note 32) | | | 255 | | | | 318 | | | | (224) | | | | (84) | | | | 265 | | | | 255 | | | | 318 | | | | (224) | | | | (84) | | | | 265 | | Disposals | | | (405) | | | | (390) | | | | 293 | | | | 3 | | | | (499) | | | | (405) | | | | (390) | | | | 293 | | | | 3 | | | | (499) | | Deferred and contingent acquisition consideration: | | | | | | | | | | | | | | | | | | | - arising on acquisitions during year (note 32) | | | - | | | | - | | | | (103) | | | | - | | | | (103) | | | | - | | | | - | | | | (103) | | | | - | | | | (103) | | - paid during year | | | - | | | | - | | | | 55 | | | | - | | | | 55 | | | | - | | | | - | | | | 55 | | | | - | | | | 55 | | Deferred proceeds arising on disposals during year | | | - | | | | 10 | | | | - | | | | - | | | | 10 | | | | - | | | | 10 | | | | - | | | | - | | | | 10 | | Interest accruals and discount unwinding | | | - | | | | - | | | | (21) | | | | (21) | | | | (42) | | | | - | | | | - | | | | (21) | | | | (21) | | | | (42) | | Increase in working capital and provisions for liabilities | | | 178 | | | | 140 | | | | 56 | | | | 89 | | | | 463 | | | | 178 | | | | 140 | | | | 56 | | | | 89 | | | | 463 | | At 31 December 2018 | | | 3,061 | | | | 4,255 | | | | (5,081) | | | | (1,087) | | | | 1,148 | | | | 3,061 | | | | 4,255 | | | | (5,081) | | | | (1,087) | | | | 1,148 | | | The equivalent disclosure for the prior years is as follows: | | | | | | | | | | | | At 1 January 2017 | | | 2,939 | | | | 4,191 | | | | (5,276) | | | | (1,060) | | | | 794 | | | | 2,939 | | | | 4,191 | | | | (5,276) | | | | (1,060) | | | | 794 | | Translation adjustment | | | (218) | | | | (286) | | | | 348 | | | | 72 | | | | (84) | | | | (218) | | | | (286) | | | | 348 | | | | 72 | | | | (84) | | Arising on acquisition (note 32) | | | 114 | | | | 129 | | | | (149) | | | | (49) | | | | 45 | | | | 114 | | | | 129 | | | | (149) | | | | (49) | | | | 45 | | Disposals | | | (34) | | | | (16) | | | | 20 | | | | 1 | | | | (29) | | | | (34) | | | | (16) | | | | 20 | | | | 1 | | | | (29) | | Deferred and contingent acquisition consideration: | | | | | | | | | | | | | | | | | | | - arising on acquisitions during year (note 32) | | | - | | | | - | | | | (45) | | | | - | | | | (45) | | | | - | | | | - | | | | (45) | | | | - | | | | (45) | | - paid during year | | | - | | | | - | | | | 53 | | | | - | | | | 53 | | | | - | | | | - | | | | 53 | | | | - | | | | 53 | | Deferred proceeds arising on disposals during year | | | - | | | | 3 | | | | - | | | | - | | | | 3 | | | | - | | | | 3 | | | | - | | | | - | | | | 3 | | Interest accruals and discount unwinding | | | - | | | | 1 | | | | - | | | | (24) | | | | (23) | | | | - | | | | 1 | | | | - | | | | (24) | | | | (23) | | Reclassification | | | (3) | | | | (14) | | | | 65 | | | | - | | | | 48 | | | | (3) | | | | (14) | | | | 65 | | | | - | | | | 48 | | Increase/(decrease) in working capital and provisions for liabilities | | | 183 | | | | 112 | | | | (82) | | | | (4) | | | | 209 | | | | 183 | | | | 112 | | | | (82) | | | | (4) | | | | 209 | | Reclassified as held for sale | | | (266) | | | | (334) | | | | 306 | | | | - | | | | (294) | | | | (266) | | | | (334) | | | | 306 | | | | - | | | | (294) | | At 31 December 2017 | | | 2,715 | | | | 3,786 | | | | (4,760) | | | | (1,064) | | | | 677 | | | | 2,715 | | | | 3,786 | | | | (4,760) | | | | (1,064) | | | | 677 | | | At 1 January 2016 | | | 2,873 | | | | 4,126 | | | | (5,171) | | | | (1,035) | | | | 793 | | | Translation adjustment | | | 20 | | | | (12) | | | | 26 | | | | 26 | | | | 60 | | | Arising on acquisition (note 32) | | | 9 | | | | 28 | | | | (14) | | | | 18 | | | | 41 | | | Disposals | | | (18) | | | | (15) | | | | 8 | | | | 1 | | | | (24) | | | Deferred and contingent acquisition consideration: | | | | | | | | | | | - arising on acquisitions during year (note 32) | | | - | | | | - | | | | (22) | | | | - | | | | (22) | | | - paid during year | | | - | | | | - | | | | 57 | | | | - | | | | 57 | | | Deferred proceeds arising on disposals during year | | | - | | | | 7 | | | | - | | | | - | | | | 7 | | | Interest accruals and discount unwinding | | | - | | | | - | | | | (24) | | | | (30) | | | | (54) | | | Transfer to property, plant and equipment | | | - | | | | (8) | | | | - | | | | - | | | | (8) | | | Increase/(decrease) in working capital and provisions for liabilities | | | 55 | | | | 65 | | | | (136) | | | | (40) | | | | (56) | | | At 31 December 2016 | | | 2,939 | | | | 4,191 | | | | (5,276) | | | | (1,060) | | | | 794 | | |
| | | | | | | CRH ANNUAL REPORT AND FORM20-F | 2019 | | 175 |
22. Leases A. IFRS 16Leases disclosures | | | | | | | | | | | | | | | | | | Leasedright-of-use assets | | Land and
buildings €m | | | Plant and
machinery
€m | | | Other €m | | | Total €m | | At 31 December 2019 | | | | | | | | | | | | | | | | | Cost | | | 1,205 | | | | 453 | | | | 67 | | | | 1,725 | | Accumulated depreciation | | | (119) | | | | (116) | | | | (20) | | | | (255) | | Net carrying amount | | | 1,086 | | | | 337 | | | | 47 | | | | 1,470 | | | | | | | At 1 January 2019, net carrying amount | | | - | | | | - | | | | - | | | | - | | Effect of adopting IFRS 16 | | | 1,478 | | | | 424 | | | | 60 | | | | 1,962 | | Translation adjustment | | | 27 | | | | 12 | | | | - | | | | 39 | | Transfer from/(to) owned assets | | | 5 | | | | (17) | | | | - | | | | (12) | | Additions at cost | | | 47 | | | | 87 | | | | 28 | | | | 162 | | Arising on acquisition (note 32) | | | 63 | | | | 3 | | | | - | | | | 66 | | Disposals at net carrying amount | | | (384) | | | | (47) | | | | (15) | | | | (446) | | Adjustment as a result of remeasurement of lease liability | | | 22 | | | | 8 | | | | 3 | | | | 33 | | Depreciation charge for year (i) | | | (172) | | | | (133) | | | | (29) | | | | (334) | | At 31 December 2019, net carrying amount | | | 1,086 | | | | 337 | | | | 47 | | | | 1,470 | | | | | | | Lease liabilities | | | | | | | | | | | | | | | | | At 1 January 2019 | | | - | | | | - | | | | - | | | | - | | Effect of adopting IFRS 16 | | | 1,493 | | | | 425 | | | | 59 | | | | 1,977 | | Translation adjustment | | | 29 | | | | 10 | | | | - | | | | 39 | | Addition ofright-of-use assets | | | 47 | | | | 87 | | | | 28 | | | | 162 | | Arising on acquisition (note 32) | | | 63 | | | | 1 | | | | - | | | | 64 | | Disposals | | | (386) | | | | (46) | | | | (15) | | | | (447) | | Remeasurements | | | 22 | | | | 8 | | | | 3 | | | | 33 | | Payments | | | (198) | | | | (157) | | | | (31) | | | | (386) | | Discount unwinding (ii) | | | 55 | | | | 12 | | | | 2 | | | | 69 | | At 31 December 2019 | | | 1,125 | | | | 340 | | | | 46 | | | | 1,511 | |
| (i) | Reflects amounts at 1 January 2018The depreciation charge for the year includes€63 million relating to assets/(liabilities) held for sale at 31 December 2017 which were subsequently divested in 2018. Refer to note 3 for further details.discontinued operations.
|
| (ii) | Includes€7 million relating to discontinued operations. |
The table below shows a maturity analysis of the discounted and undiscounted lease liability arising from the Group’s leasing activities. The projections are based on the foreign exchange rates applying at the end of the relevant financial year and on interest rates (discounted projections only) applicable to the lease portfolio. | | | | | | | | | | | | As at 31 December 2019 | | | | | Discounted
€m | | | Undiscounted
€m | | Within one year | | | 271 | | | | 275 | | Between one and two years | | | 219 | | | | 231 | | Between two and three years | | | 174 | | | | 193 | | Between three and four years | | | 136 | | | | 158 | | Between four and five years | | | 112 | | | | 135 | | After five years | | | 599 | | | | 1,046 | | Total | | | 1,511 | | | | 2,038 | |
| | | | | 176 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
22. Leases - continued The Group avails of the exemption from capitalising lease costs for short-term leases andlow-value assets where the relevant criteria are met. Variable lease payments directly linked to sales or usage are also expensed as incurred. The following lease costs have been charged to the Consolidated Income Statement as incurred: | | | | | | Continuing operations | | 2019 €m | | Short-term leases | | | 171 | | Lease oflow-value assets | | | 7 | | Variable lease payments not included in the lease liability | | | 90 | | Total | | | 268 | | | | | | | Total cash outflow for lease payments | | | 654 | |
Lease commitments for short-term leases are similar to the portfolio of short-term leases for which the costs, as above, were expensed to the Consolidated Income Statement. The effect of excluding future cash outflows arising from variable lease payments, termination options, residual value guarantees and leases not yet commenced from lease liabilities was not material for the Group. The potential undiscounted future cash outflows arising from the exercise of renewal options that are not expected to be exercised (and are therefore not included in the lease term) are as follows: | | | | | | | | As at
31 December
2019
€m | 167 | Within one year | | | 2 | | Between one and two years | | | 3 | | Between two and three years | | | 4 | | Between three and four years | | | 6 | | Between four and five years | | | 7 | | After five years | | | 483 | | Total | | | 505 | |
Income from subleasing and gains/losses on sale and leaseback transactions were not material for the Group. B. IAS 17Leases disclosures Operating lease rentals charged to the Consolidated Income Statement for the years ended 31 December 2018 and 31 December 2017 under IAS 17were as follows: | | | | | | | | | | | | 2018 €m | | | 2017 €m | | Continuing operations | | | | | | | | | Hire of plant and machinery | | | 308 | | | | 279 | | Land and buildings | | | 174 | | | | 188 | | Other operating leases | | | 51 | | | | 46 | | Total | | | 533 | | | | 513 | |
Lease commitments were provided for up to the earliest break clause in the lease. | | | | | | | As at
31 December
2018
€m | | Within one year | | | 353 | | After one year but not more than five years | | | 769 | | More than five years | | | 789 | | Total | | | 1,911 | |
The commitments above include€408 million of operating lease commitments relating to discontinued operations in 2018.
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 177 |
22.23. Analysis of Net Debt
Components of net debt Net debt is anon-GAAP measure which we provide to investors as we believe they find it useful. Net debt comprises lease liabilities under IFRS 16, cash and cash equivalents, derivative financial instrument assets and liabilities and interest-bearing loans and borrowings and enables investors to see the economic effects of these in total (see note 2324 for details of the capital and risk management policies employed by the Group). Net debt is commonly used in computations such as Net Debtnet debt as a % of total equity and Net Debtnet debt as a % of market capitalisation. | | | | | | | | | | | | | | | | | | | | | | | | As at 31 December 2018 | | | | | | As at 31 December 2017 | | | | | Fair value (i) €m | | | Book value €m | | | | | | Fair value (i) €m | | | Book value €m | | Cash and cash equivalents (note 24) | | | 2,346 | | | | 2,346 | | | | | | | | 2,135 | | | | 2,135 | | Interest-bearing loans and borrowings (note 25) | | | (9,223) | | | | (9,316) | | | | | | | | (8,421) | | | | (7,981) | | Derivative financial instruments (net) (note 26) | | | (14) | | | | (14) | | | | | | | | 50 | | | | 50 | | Group net debt | | | (6,891) | | | | (6,984) | | | | | | | | (6,236) | | | | (5,796) | |
| | | | | | | | | | | | | | | | | | | | | | | | As at 31 December 2019 | | | | | | As at 31 December 2018 | | | | | Fair value* €m | | | Book value €m | | | | | | Fair value* €m | | | Book value €m | | Lease liabilities under IFRS 16 (note 22) (i) | | | (1,511) | | | | (1,511) | | | | | | | | - | | | | - | | Interest-bearing loans and borrowings (note 26) (ii) | | | (9,572) | | | | (9,014) | | | | | | | | (9,223) | | | | (9,316) | | Derivative financial instruments (net) (note 27) | | | 65 | | | | 65 | | | | | | | | (14) | | | | (14) | | Cash and cash equivalents (note 25) | | | 3,755 | | | | 3,755 | | | | | | | | 2,346 | | | | 2,346 | | Group net debt | | | (7,263) | | | | (6,705) | | | | | | | | (6,891) | | | | (6,984) | |
| | | | | | | | | | | | | | Reconciliation of opening to closing net debt | | 2019 €m | | | 2018 €m | | | 2017 €m | | At 1 January | | | (6,984) | | | | (5,796) | | | | (5,297) | | Movement in year | | | | | | | | | | | | | Effect of adopting IFRS 16 | | | (1,954) | | | | - | | | | - | | Debt, including lease liabilities, in acquired companies (note 32) | | | (73) | | | | (74) | | | | (12) | | Debt, including lease liabilities, in disposed companies | | | 415 | | | | - | | | | - | | Increase in interest-bearing loans and borrowings | | | (91) | | | | (1,434) | | | | (1,010) | | Net increase in lease liabilities under IFRS 16 (i) | | | (163) | | | | - | | | | - | | Net cash flow arising from derivative financial instruments | | | 36 | | | | (6) | | | | (169) | | Repayment of interest-bearing loans, borrowings and finance leases (ii) | | | 572 | | | | 246 | | | | 343 | | Repayment of lease liabilities under IFRS 16 (i) | | | 317 | | | | - | | | | - | | Mark-to-market adjustment | | | 25 | | | | 2 | | | | 9 | | Translation adjustment on financing activities | | | (214) | | | | (133) | | | | 654 | | Increase in liabilities from financing activities | | | (1,130) | | | | (1,399 | ) | | | (185 | ) | Translation adjustment on cash and cash equivalents | | | 27 | | | | 17 | | | | (161 | ) | Increase/(decrease) in cash and cash equivalents | | | 1,382 | | | | 194 | | | | (153 | ) | At 31 December | | | (6,705) | | | | (6,984) | | | | (5,796) | |
(i)Notes | (i) and (ii) are set out overleaf. |
| * All interest-bearing loans and borrowings are Level 2 fair value measurements. |
| | | | | 178 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
| | | | | | | | | | | | | | Reconciliation of opening to closing net debt | | 2018
€m | | | 2017
€m | | | 2016
€m | | At 1 January | | | (5,796) | | | | (5,297) | | | | (6,618) | | Debt in acquired companies (note 32) | | | (74) | | | | (12) | | | | (3) | | Increase in interest-bearing loans, borrowings and finance leases | | | (1,434) | | | | (1,010) | | | | (600) | | Net cash flow arising from derivative financial instruments | | | (6) | | | | (169) | | | | 5 | | Repayment of interest-bearing loans, borrowings and finance leases | | | 246 | | | | 343 | | | | 2,015 | | Increase/(decrease) in cash and cash equivalents | | | 194 | | | | (153) | | | | (127) | | Mark-to-market adjustment | | | 2 | | | | 9 | | | | 21 | | Translation adjustment | | | (116) | | | | 493 | | | | 10 | | At 31 December | | | (6,984) | | | | (5,796) | | | | (5,297) | |
23. Analysis of Net Debt - continued The following table shows the effective interest rates onperiod-end fixed, gross and net debt: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As at 31 December 2018 | | | | | | As at 31 December 2017 | | | | | €m | | | Interest
rate | | | Weighted
average
fixed period
Years | | | | | | €m | | | Interest
rate | | | Weighted
average
fixed period
Years | | Interest-bearing loans and borrowings nominal - fixed rate (i) | | | (9,107) | | | | | | | | | | | | | | | | (7,844) | | | | | | | | | | Derivative financial instruments - fixed rate | | | 1,726 | | | | | | | | | | | | | | | | 1,505 | | | | | | | | | | Net fixed rate debt including derivatives | | | (7,381) | | | | 3.5% | | | | 9.8 | | | | | | | | (6,339) | | | | 3.3% | | | | 9.2 | | Interest-bearing loans and borrowings nominal - floating rate (ii) | | | (157) | | | | | | | | | | | | | | | | (70) | | | | | | | | | | Adjustment of debt from nominal to book value (i) | | | (52) | | | | | | | | | | | | | | | | (67) | | | | | | | | | | Derivative financial instruments - currency floating rate | | | (1,740) | | | | | | | | | | | | | | | | (1,455) | | | | | | | | | | Gross debt including derivative financial instruments | | | (9,330) | | | | 3.6% | | | | | | | | | | | | (7,931) | | | | 4.2% | | | | | | Cash and cash equivalents - floating rate (note 24) | | | 2,346 | | | | | | | | | | | | | | | | 2,135 | | | | | | | | | | Group net debt | | | (6,984) | | | | | | | | | | | | | | | | (5,796) | | | | | | | | | | Cash at bank and in hand reclassified as held for sale (note 24) | | | - | | | | | | | | | | | | | | | | (20) | | | | | | | | | | Bank overdrafts reclassified as held for sale (note 25) | | | - | | | | | | | | | | | | | | | | 5 | | | | | | | | | | Group net debt excluding net debt reclassified as held for sale | | | (6,984) | | | | | | | | | | | | | | | | (5,811) | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As at 31 December 2019 | | | | | | As at 31 December 2018 | | | | | €m | | | Interest
rate | | | Weighted average fixed period Years | | | | | | €m | | | Interest
rate | | | Weighted average fixed period Years | | Interest-bearing loans and borrowings nominal - fixed rate (iii) | | | (8,743) | | | | | | | | | | | | | | | | (9,107) | | | | | | | | | | Derivative financial instruments - fixed rate | | | 1,599 | | | | | | | | | | | | | | | | 1,726 | | | | | | | | | | Net fixed rate debt including derivatives | | | (7,144) | | | | 3.4% | | | | 9.2 | | | | | | | | (7,381) | | | | 3.5% | | | | 9.8 | | Interest-bearing loans and borrowings nominal - floating rate (iv) | | | (158) | | | | | | | | | | | | | | | | (157) | | | | | | | | | | Adjustment of debt from nominal to book value (iii) | | | (113) | | | | | | | | | | | | | | | | (52) | | | | | | | | | | Derivative financial instruments - currency floating rate | | | (1,534) | | | | | | | | | | | | | | | | (1,740) | | | | | | | | | | | Gross debt including derivative financial instruments, excluding lease liabilities | | | (8,949) | | | | 3.3% | | | | | | | | | | | | (9,330) | | | | 3.6% | | | | | | Lease liabilities - fixed rate | | | (1,511) | | | | | | | | | | | | | | | | - | | | | | | | | | | | Gross debt including derivative financial instruments, including lease liabilities | | | (10,460) | | | | | | | | | | | | | | | | (9,330) | | | | | | | | | | Cash and cash equivalents - floating rate (note 25) | | | 3,755 | | | | | | | | | | | | | | | | 2,346 | | | | | | | | | | Group net debt | | | (6,705) | | | | | | | | | | | | | | | | (6,984) | | | | | | | | | |
| (i) | All leases capitalised under IFRS 16 have been included as lease liabilities in 2019. |
| (ii) | Interest-bearing loans and borrowings in 2018 include finance leases previously capitalised under IAS 17. |
| (iii) | Of the Group’s nominal fixed rate debt at 31 December 2018,2019,€1,599 million (2018:€1,726 million (2017:€1,505 million) is hedged to floating rate using interest rate swaps. |
(ii)(iv) | Floating rate debt comprises bank borrowings and finance leases bearing interest at rates set in advance for periods ranging from overnight to less than one year largely by reference to inter-bank interest rates. |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 179 |
Currency profile The currency profile of the Group’s net debt and net worth (capital and reserves attributable to the Company’s equity holders) as at 31 December 20182019 and 31 December 20172018 is as follows: | | | | euro
€m | | | US
Dollar
€m | | | Pound
Sterling
€m | | | Canadian
Dollar
€m | | | Philippine
Peso €m | | | Polish
Zloty
€m | | | Swiss
Franc
€m | | | Other (i)
€m | | | Total
€m | | | euro
€m | | | US
Dollar
€m | | | Pound
Sterling
€m | | | Canadian Dollar €m | | | Philippine Peso €m | | | Polish
Zloty
€m | | | Swiss
Franc
€m | | | Other (i)
€m | | | Total
€m | | Cash and cash equivalents (note 24) | | | 1,077 | | | | 646 | | | | 214 | | | | 69 | | | | 13 | | | | 90 | | | | 81 | | | | 156 | | | | 2,346 | | | Interest-bearing loans and borrowings (note 25) | | | (3,824) | | | | (4,332) | | | | (495) | | | | (2) | | | | (354) | | | | - | | | | (302) | | | | (7) | | | | (9,316) | | | Derivative financial instruments (net) (note 26) | | | 1,826 | | | | (399) | | | | (340) | | | | (440) | | | | (60) | | | | (198) | | | | (299) | | | | (104) | | | | (14) | | | Lease liabilities under IFRS 16 (note 22) (ii) | | | | (255) | | | | (752) | | | | (223) | | | | (151) | | | | (11) | | | | (27) | | | | (48) | | | | (44) | | | | (1,511) | | Cash and cash equivalents (note 25) | | | | 1,935 | | | | 863 | | | | 238 | | | | 175 | | | | 34 | | | | 105 | | | | 168 | | | | 237 | | | | 3,755 | | Interest-bearing loans and borrowings (note 26) | | | | (3,310) | | | | (4,444) | | | | (469) | | | | (9) | | | | (439) | | | | - | | | | (303) | | | | (40) | | | | (9,014) | | Derivative financial instruments (net) (note 27) | | | | 1,438 | | | | 93 | | | | (391) | | | | (676) | | | | (38) | | | | (150) | | | | - | | | | (211) | | | | 65 | | | Net debt by major currency including derivative financial instruments | | | (921) | | | | (4,085) | | | | (621) | | | | (373) | | | | (401) | | | | (108) | | | | (520) | | | | 45 | | | | (6,984) | | | | (192) | | | | (4,240) | | | | (845) | | | | (661) | | | | (454) | | | | (72) | | | | (183) | | | | (58) | | | | (6,705) | | | | Non-debt assets and liabilities analysed as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-current assets | | | 4,650 | | | | 13,007 | | | | 2,461 | | | | 1,375 | | | | 1,352 | | | | 283 | | | | 741 | | | | 1,763 | | | | 25,632 | | | | 4,242 | | | | 14,340 | | | | 2,783 | | | | 1,741 | | | | 1,507 | | | | 331 | | | | 459 | | | | 1,541 | | | | 26,944 | | Current assets | | | 1,884 | | | | 3,222 | | | | 746 | | | | 458 | | | | 117 | | | | 142 | | | | 297 | | | | 284 | | | | 7,150 | | | | 1,256 | | | | 3,315 | | | | 788 | | | | 499 | | | | 150 | | | | 138 | | | | 71 | | | | 312 | | | | 6,529 | | Non-current liabilities | | | (669) | | | | (2,275) | | | | (276) | | | | (203) | | | | (137) | | | | (5) | | | | (164) | | | | (95) | | | | (3,824) | | | | (672) | | | | (2,417) | | | | (314) | | | | (205) | | | | (150) | | | | (19) | | | | (121) | | | | (112) | | | | (4,010) | | Current liabilities | | | (1,696) | | | | (1,820) | | | | (836) | | | | (309) | | | | (156) | | | | (136) | | | | (182) | | | | (285) | | | | (5,420) | | | | (1,442) | | | | (1,995) | | | | (837) | | | | (320) | | | | (183) | | | | (147) | | | | (77) | | | | (277) | | | | (5,278) | | Non-controlling interests | | | (51) | | | | (61) | | | | - | | | | - | | | | (384) | | | | - | | | | (11) | | | | (18) | | | | (525) | | | | (48) | | | | (50) | | | | - | | | | - | | | | (414) | | | | - | | | | (6) | | | | (22) | | | | (540) | | | Capital and reserves attributable to the Company’s equity holders | | | 3,197 | | | | 7,988 | | | | 1,474 | | | | 948 | | | | 391 | | | | 176 | | | | 161 | | | | 1,694 | | | | 16,029 | | | | 3,144 | | | | 8,953 | | | | 1,575 | | | | 1,054 | | | | 456 | | | | 231 | | | | 143 | | | | 1,384 | | | | 16,940 | | | The equivalent disclosure for the prior year is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents (note 24)* | | | 743 | | | | 714 | | | | 215 | | | | 140 | | | | 43 | | | | 99 | | | | 61 | | | | 100 | | | | 2,115 | | | Interest-bearing loans and borrowings (note 25)* | | | (3,827) | | | | (3,097) | | | | (465) | | | | (2) | | | | (293) | | | | - | | | | (281) | | | | (11) | | | | (7,976) | | | Derivative financial instruments (net) (note 26) | | | 2,078 | | | | (908) | | | | (157) | | | | (480) | | | | (17) | | | | (171) | | | | (247) | | | | (48) | | | | 50 | | | | Net debt* by major currency including derivative financial instruments | | | (1,006) | | | | (3,291) | | | | (407) | | | | (342) | | | | (267) | | | | (72) | | | | (467) | | | | 41 | | | | (5,811) | | | Cash and cash equivalents (note 25) | | | | 1,077 | | | | 646 | | | | 214 | | | | 69 | | | | 13 | | | | 90 | | | | 81 | | | | 156 | | | | 2,346 | | Interest-bearing loans and borrowings (note 26) | | | | (3,824) | | | | (4,332) | | | | (495) | | | | (2) | | | | (354) | | | | - | | | | (302) | | | | (7) | | | | (9,316) | | Derivative financial instruments (net) (note 27) | | | | 1,826 | | | | (399) | | | | (340) | | | | (440) | | | | (60) | | | | (198) | | | | (299) | | | | (104) | | | | (14) | | | Net debt by major currency including derivative financial instruments | | | | (921) | | | | (4,085) | | | | (621) | | | | (373) | | | | (401) | | | | (108) | | | | (520) | | | | 45 | | | | (6,984) | | | | Non-debt assets and liabilities (including cash and bank overdrafts reclassified as held for sale) analysed as follows: | | | | | | | | | | | | | | | | | | | | | Non-debt assets and liabilities analysed as follows: | | | | | | | | | | | | | | | | | | | | Non-current assets | | | 5,030 | | | | 8,815 | | | | 2,400 | | | | 1,466 | | | | 1,292 | | | | 310 | | | | 715 | | | | 1,804 | | | | 21,832 | | | | 4,650 | | | | 13,007 | | | | 2,461 | | | | 1,375 | | | | 1,352 | | | | 283 | | | | 741 | | | | 1,763 | | | | 25,632 | | Current assets | | | 1,935 | | | | 3,718 | | | | 692 | | | | 454 | | | | 110 | | | | 138 | | | | 302 | | | | 273 | | | | 7,622 | | | | 1,884 | | | | 3,222 | | | | 746 | | | | 458 | | | | 117 | | | | 142 | | | | 297 | | | | 284 | | | | 7,150 | | Non-current liabilities | | | (713) | | | | (1,311) | | | | (295) | | | | (206) | | | | (153) | | | | (5) | | | | (181) | | | | (98) | | | | (2,962) | | | | (669) | | | | (2,275) | | | | (276) | | | | (203) | | | | (137) | | | | (5) | | | | (164) | | | | (95) | | | | (3,824) | | Current liabilities | | | (1,745) | | | | (2,093) | | | | (806) | | | | (322) | | | | (137) | | | | (130) | | | | (186) | | | | (285) | | | | (5,704) | | | | (1,696) | | | | (1,820) | | | | (836) | | | | (309) | | | | (156) | | | | (136) | | | | (182) | | | | (285) | | | | (5,420) | | Non-controlling interests | | | (49) | | | | (14) | | | | - | | | | - | | | | (391) | | | | - | | | | (11) | | | | (21) | | | | (486) | | | | (51) | | | | (61) | | | | - | | | | - | | | | (384) | | | | - | | | | (11) | | | | (18) | | | | (525) | | | Capital and reserves attributable to the Company’s equity holders | | | 3,452 | | | | 5,824 | | | | 1,584 | | | | 1,050 | | | | 454 | | | | 241 | | | | 172 | | | | 1,714 | | | | 14,491 | | | | 3,197 | | | | 7,988 | | | | 1,474 | | | | 948 | | | | 391 | | | | 176 | | | | 161 | | | | 1,694 | | | | 16,029 | |
| (i) | The principal currencies included in this category are the Chinese Renminbi, the Romanian Leu, the Indian Rupee, the Ukrainian Hryvnia and the Serbian Dinar. |
| (ii) | All leases capitalised under IFRS 16 have been included as lease liabilities in 2019. |
| | | | | * Excluding€20 million cash and€5 million bank overdrafts reclassified as held for sale which are analysed by major currency in current assets and liabilities above.180
| | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | 169 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
|
22.23. Analysis of Net Debt - continued
| Liquidity and capital resources | | The following table provides certain information related to our cash generation and changes in our cash and cash equivalents position: |
The following table provides certain information related to our cash generation and changes in our cash and cash equivalents position:
| | | | | | | | | | | | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | Net cash inflow from operating activities | | | 1,899 | | | | 2,189 | | | | 2,340 | | Net cash outflow from investing activities | | | (1,592) | | | | (2,685) | | | | (735) | | Net cash (outflow)/inflow from financing activities | | | (113) | | | | 343 | | | | (1,732) | | Increase/(decrease) in cash and cash equivalents | | | 194 | | | | (153) | | | | (127) | | Cash and cash equivalents at beginning of year, excluding overdrafts (note 24) | | | 2,135 | | | | 2,449 | | | | 2,518 | | Effect of exchange rate changes | | | 17 | | | | (161) | | | | 58 | | Cash and cash equivalents at end of year, excluding overdrafts (note 24) | | | 2,346 | | | | 2,135 | | | | 2,449 | | Bank overdrafts | | | (113) | | | | (71) | | | | (78) | | Borrowings | | | (9,203) | | | | (7,910) | | | | (7,712) | | Derivative financial instruments | | | (14) | | | | 50 | | | | 44 | | Total liabilities from financing activities | | | (9,330) | | | | (7,931) | | | | (7,746) | | Net debt at end of year | | | (6,984) | | | | (5,796) | | | | (5,297) | | Cash at bank and in hand reclassified as held for sale (note 24) | | | - | | | | (20) | | | | - | | Bank overdrafts reclassified as held for sale (note 25) | | | - | | | | 5 | | | | - | | Group net debt excluding net debt reclassified as held for sale | | | (6,984) | | | | (5,811) | | | | (5,297) | |
Part of the Group’s financing strategy objectives include maintenance of adequate financial resources and liquidity. During 2018 the Group’s total net cash inflow from operating activities of€1.9 billion less net cash outflow from financing activities of€0.1 billion funded investing activities of€1.6 billion.
| | | | | | | | | | | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Net cash inflow from operating activities | | | 3,466 | | | | 1,899 | | | | 2,189 | | Net cash inflow/(outflow) from investing activities | | | 195 | | | | (1,592) | | | | (2,685) | | Net cash (outflow)/inflow from financing activities | | | (2,279) | | | | (113) | | | | 343 | | Increase/(decrease) in cash and cash equivalents | | | 1,382 | | | | 194 | | | | (153) | | Cash and cash equivalents at beginning of year, excluding overdrafts (note 25) | | | 2,346 | | | | 2,135 | | | | 2,449 | | Effect of exchange rate changes | | | 27 | | | | 17 | | | | (161) | | Cash and cash equivalents at end of year, excluding overdrafts (note 25) | | | 3,755 | | | | 2,346 | | | | 2,135 | | Lease liabilities under IFRS 16 | | | (1,511) | | | | - | | | | - | | Bank overdrafts | | | (41) | | | | (113) | | | | (71) | | Borrowings | | | (8,973) | | | | (9,203) | | | | (7,910) | | Derivative financial instruments | | | 65 | | | | (14) | | | | 50 | | Total liabilities from financing activities | | | (10,460) | | | | (9,330) | | | | (7,931) | | Net debt at end of year | | | (6,705) | | | | (6,984) | | | | (5,796) | | Cash at bank and in hand reclassified as held for sale | | | - | | | | - | | | | (20) | | Bank overdrafts reclassified as held for sale | | | - | | | | - | | | | 5 | | Group net debt excluding net debt reclassified as held for sale | | | (6,705) | | | | (6,984) | | | | (5,811) | |
The Group believes that its financial resources (operating cash together with cash and cash equivalents of€2.33.8 billion and undrawn committed loan facilities of€3.6 billion) will be sufficient to cover the Group’s cash requirements. At 31 December 2018,2019, euro and US Dollar denominated cash and cash equivalents represented 52% (2018: 46% (2017: 35%) and 23% (2018: 27% (2017: 34%) of total cash and cash equivalents respectively.
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 181 |
Significant borrowings The main sources of Group debt funding are public bond markets in Europe and North America. The following external bonds were outstanding as at 31 December 2018:2019: | | | | Annual
coupons | | Outstanding
millions | | | Final maturity | | Annual
coupons | | Outstanding
millions | | | Final
maturity | euro bonds | | 5.000% | | | €500 | | | 2019 | | euro bonds | | 2.750% | | | €750 | | | 2020 | | 2.750% | | | €750 | | | 2020 | US Dollar bonds | | 5.750% | | | US$400 | | | 2021 | | 5.750% | | | US$400 | | | 2021 | euro bonds | | 1.750% | | | €600 | | | 2021 | | 1.750% | | | €600 | | | 2021 | Swiss Franc bonds | | 1.375% | | | CHF330 | | | 2022 | | 1.375% | | | CHF330 | | | 2022 | euro bonds | | 3.125% | | | €750 | | | 2023 | | 3.125% | | | €750 | | | 2023 | euro bonds | | 1.875% | | | €600 | | | 2024 | | 1.875% | | | €600 | | | 2024 | US Dollar bonds | | 3.875% | | | US$1,250 | | | 2025 | | 3.875% | | | US$1,250 | | | 2025 | US Dollar bonds | | 3.400% | | | US$600 | | | 2027 | | 3.400% | | | US$600 | | | 2027 | US Dollar bonds | | 3.950% | | | US$900 | | | 2028 | | 3.950% | | | US$900 | | | 2028 | euro bonds | | 1.375% | | | €600 | | | 2028 | | 1.375% | | | €600 | | | 2028 | Pound Sterling bonds | | 4.125% | | | £400 | | | 2029 | | 4.125% | | | £400 | | | 2029 | US Dollar bonds (i) | | 6.400% | | | US$213 | | | 2033 | | 6.400% | | | US$213 | | | 2033 | US Dollar bonds | | 5.125% | | | US$500 | | | 2045 | | 5.125% | | | US$500 | | | 2045 | US Dollar bonds | | 4.400% | | | US$400 | | | 2047 | | 4.400% | | | US$400 | | | 2047 | US Dollar bonds | | 4.500% | | | US$600 | | | 2048 | | 4.500% | | | US$600 | | | 2048 |
| (i) | The US$300 million bond was issued in September 2003, and at time of issuance the bond was partially swapped to floating interest rates. In August 2009 and December 2010, US$87.445 million of the issued notes were acquired by CRH plc as part of liability management exercises undertaken and the interest rate hedge was closed out. At 31 December 2018,2019, the remaining fair value on the hedged item on the Consolidated Balance Sheet was US$42 millon (2018: US$45 million (2017: US$48 million). | |
CRH ANNUAL REPORT AND FORM 20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
|
23.24. Capital and Financial Risk Management
Capital management Overall summary The primary objectives of CRH’s capital management strategy are to ensure that the Group maintains a strong credit rating to support its business and to create shareholder value by managing the debt and equity balance and the cost of capital. The Group is committed to optimising the use of its balance sheet within the confines of the overall objective to maintain an investment grade credit rating. The capital structure of the Group, which comprises net debt and capital and reserves attributable to the Company’s equity holders, may be summarised as follows: | | | | 2018
€m | | | 2017
€m | | | 2019
€m | | | 2018
€m | | Capital and reserves attributable to the Company’s equity holders | | | 16,029 | | | | 14,491 | | | | 16,940 | | | | 16,029 | | Net debt | | | 6,984 | | | | 5,796 | | | | 6,705 | | | | 6,984 | | Capital and net debt | | | 23,013 | | | | 20,287 | | | | 23,645 | | | | 23,013 | |
The Board periodically reviews the capital structure of the Group, including the cost of capital and the risks associated with each class of capital. The Group manages and, if necessary, adjusts its capital structure taking account of underlying economic conditions; any material adjustments to the Group’s capital structure in terms of the relative proportions of debt and equity are approved by the Board. In order to maintain or adjust the capital structure, the Group may issue new shares, dispose of assets, amend investment plans, alter dividend policy or return capital to shareholders. Dividend cover for the year ended 31 December 20182019 amounted to 4.20x (2017: 3.34x)2.90x (2018: 4.20x). No changes were made in the objectives or policies during 2018. Processes may change to accomodate transactions such as a share buyback programme.2019. Financial risk management objectives and policies The Group uses financial instruments throughout its businesses: interest-bearing loans and borrowings, cash and cash equivalents and finance leases are used to finance the Group’s operations; trade receivables and trade payables arise directly from operations; and derivatives, principally interest rate and currency swaps and forward foreign exchange contracts, are used to manage interest rate risks and currency exposures and to achieve the desired profile of borrowings. With respect to interest-bearing loans and borrowings and interest rate swaps, the Group is aware of plans to phase out the current benchmark for lending rates (Inter-bank Offered Rates - IBOR), and replace it with alternative benchmarks or reference rates. The Group is currently performing an assessment of the impact of the benchmark switch. The Group does not trade in financial instruments nor does it enter into any leveraged derivative transactions. The Group’s corporate treasury function provides services to the business units,co-ordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the Group. The Group Treasurer reports to the General ManagerDirector of Group Finance and the activities of the corporate treasury function are subject to regular internal audit. Systems and processes are in place to monitor and control the Group’s liquidity risks. The Group’s net debt position forms part of the monthly documentation presented to the Board. The Group’s hedging activity is based on observable economic relationships, when there is confidence that such relationships will continue for the forseeableforeseeable future. Matching critical terms such as notional amount, tenure,tenor, timing and currency, the Group establishes relationships between a hedge item and hedge instrument where directional response to changes in fair value, driven by underlying economic conditions, are opposing and proportional in equal measure being an economic relationship under IFRS 9. Hedging ratios of one to one are used throughout all hedging activity as the hedge item and hedge instrument are of the same type and currency. The hedges employed mitigate identified risks and have consistently demonstrated close economic relationships. Ineffectiveness between the hedge item and hedge instrument are immaterial in the overall context of the Group. The main risks attaching to the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk, liquidity risk and commodity price risk. The Board reviews and agrees policies for the prudent management of each of these risks as documented below. Interest rate risk The Group’s exposure to market risk for changes in interest rates stems predominantly from its long-term debt obligations. Interest cost is managed using a mix of fixed and floating rate debt. With the objective of managing this mix in a cost-efficient manner, the Group enters into interest rate swaps, under which the Group contracts to exchange, at predetermined intervals, the difference between fixed and variable interest amounts calculated by reference to apre-agreed notional principal. Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt and the cash flow exposures of issued floating rate debt. The majority of these swaps are designated under IFRS 9to9 to hedge underlying debt obligations and qualify for hedge accounting treatment; undesignated financial instruments are termed “not designated as hedges” in the analysis of derivative financial instruments presented in note 26.27. The Group’s interest rate hedging strategy and activity employs the premise that changes in macro-economic factors are reflected in current interest rates. In the economic relationship the relative value of the fixed rate at which a bond was issued will change in line with market interest rates and a floating rate swap will counterbalance changes in the bond’s fair value. A hypothetical derivative is used to replicate the impact that changes in market interest rates could have on the fixed rate bond (hedged item) which is measured against the interest rate swap (hedge instrument). A hedge ratio of one to one is established. Potential sources of ineffectiveness comprise the timing of floating rate resets and counterparty credit adjustments to the interest rate swap. Past observations on interest rate movements provide evidence that such relationships will continue for the foreseeable future. The notional amount of interest rate swaps is set out in note 22.
| | | | | | | CRH Annual Report and Form 20-F |201823.
|
The following table demonstrates the impact on profit before tax and total equity of a range of possible changes in the interest rates applicable to net floating rate borrowings, with all other variables held constant. These impacts are calculated based on the closing balance sheet for the relevant period and assume all floating interest rates and interest curves change by the same amount. For profit before tax, the impact shown is the impact on closing balance sheet floating rate net debt for a full year while for total equity the impact shown is the impact on the value of financial instruments. | | | | | | | | | Percentage change in cost of
borrowings (i) | | | | | +/-1%- 1% | | | Impact on profit before tax | | | 2019 | | | | +/-€6m | | | | | 2018 | | | | +/-€4m | | | | | | 2017 | | | | +/-€6m | | | | | 2016 | | | | +/-€6m | | | | | | Impact on total equity | | | 2019 | | | | -/+ €2.5m | | | | | 2018 | | | | -/+€6.7m | | | | | | 2017 | | | | -/+€0.4m | |
| (i) | Sensitivity analysis for cost of borrowing has been presented for continuing operations only. |
| | | | | | | | | 2016CRH ANNUAL REPORT AND FORM20-F | 2019 | | | | -/+€1.0m | 183 |
Foreign currency risk Due to the nature of building materials, which in general have a lowvalue-to-weight ratio, the Group’s activities are conducted primarily in the local currency of the country of operation resulting in low levels of foreign currency transaction risk; variances arising in this regard are reflected in operating costs or cost of sales in the Consolidated Income Statement in the period in which they arise. Given the Group’s presence in 3230 countries worldwide, the principal foreign exchange risk arises from fluctuations in the euro value of the Group’s net investment in a wide basket of currencies other than the euro; such changes are reported separately within the Consolidated Statement of Comprehensive Income. A currency profile of the Group’s net debt and net worth is presented in note 22.23. The Group’s established policy is to spread its net worth across the currencies of its various operations with the objective of limiting its exposure to individual currencies and thus promoting consistency with the geographical balance of its operations. In order to achieve this objective, the Group manages its borrowings, where practicable and cost effective, to hedge a portion of its foreign currency assets. Hedging is done using currency borrowings in the same currency as the assets being hedged or through the use of other hedging methods such as currency swaps. The Group’s foreign exchange hedging strategy and activity is based on the assumption that changes in international economic factors are reflected in current foreign exchange rates and impacts the translation of the Group’s non-euro net assets. The economic relationship, being the translation impact of the Group’s net investment in non-euro subsidiaries (hedge item) is hedged against a foreign currency swap (hedge instrument) to counterbalance movements in foreign currency rates. The Group identifies certain portions of foreign currency net investments where foreign currency translation movements can be mitigated through the use of currency swaps in the same currency pairing. A hedge ratio of one to one is established. As at 31 December 2018,2019, the notional amount of hedged net investments was€942939 million (2017:(2018:€927942 million). The fair value movements of the hedge instruments are inverse to the impact of the translation of the hedged net assets because the critical terms match. This reduces the Group’s exposure to fluctuations on the translation of the Group’s subsidiaries with a non-euro functional currency into euro. Potential sources of ineffectiveness are forward points,changes in the interest rate differential of the hedged currency pair, recorded through the Consolidated Income Statement. Past trends indicate that the economic relationship described will continue for the foreseeable future. The fair values and maturity analysis of the hedge instruments are set out in note 26.27. The following table demonstrates the sensitivity of profit before tax and equity to selected movements in the relevant euro/US Dollar exchange rate (with all other variables held constant); the US Dollar has been selected as the appropriate currency for this analysis given the materiality of the Group’s activities in the US. The impact on profit before tax is based on changing the euro/US Dollar exchange rate used in calculating profit before tax for the period. The impact on total equity and financial instruments is calculated by changing the euro/US Dollar exchange rate used in measuring the closing balance sheet. | | | | | | | | | Percentage change in relevant
€/US$ exchange rate (i) | | | | | +/-5%- 5% | | | Impact on profit before tax | | | 2019 | | | | -/+ €83m | | | | | 2018 | | | | -/+€149m | | | | | | 2017 | | | | -/+€53m | | | | | 2016 | | | | -/+€54m52m | | | | | Impact on total equity* | | | 2019 | | | | -/+ €448m | | | | | 2018 | | | | -/+€399m | | | | | | 2017 | | | | -/+€291m | | | | | 2016 | | | | -/+ €275m | | | | | * Includes the impact on financial instruments which is as follows: | | | 2019 | | | | +/-€212m | | | | | 2018 | | | | +/-€204m | | | | | | 2017 | | | | +/-€165m | |
| | | 2016 | | | | +/-€146m | (i) Sensitivity analysis for exchange rates has been presented for continuing operations only. |
Financial instruments include deposits, money market funds, commercial papers, bank loans, medium-term notes and other fixed term debt, interest rate swaps, commodity swaps and foreign exchange contracts. They exclude trade receivables and trade payables. Credit/counterparty risk In addition to cash at bank and in hand, the Group holds significant cash balances which are invested on a short-term basis and are classified as cash equivalents (see note 24)25). These deposits and other financial instruments (principally certain derivatives and loans and receivables included within financial assets) give rise to credit risk on amounts due from counterparty financial institutions (stemming from their insolvency or a downgrade in their credit ratings). Credit risk is managed by limiting the aggregate amount and duration of exposure to any one counterparty primarily depending on its credit rating and by regular review of these ratings. Acceptable credit ratings are high investment-grade ratings - in general - counterparties have ratings ofA3/A- or higher from Moody’s/Standard & Poor’s ratings agencies. The maximum exposure arising in the event of default on the part of the counterparty (including insolvency) is the carrying value of the relevant financial instrument.
| | | | | | | CRH Annual Report and Form 20-F|2018
|
23. Capital and Financial Risk Management - continued
In its worldwide insurance programme, the Group carries appropriate levels of insurance for typical business risks (including product liability) with various leading insurance companies. However, in the event of the failure of one or more of its insurance counterparties, the Group could be impacted by losses where recovery from such counterparties is not possible. Credit risk arising in the context of the Group’s operations is not significant with the total loss allowance at the balance sheet date amounting to 3.7%3.6% of gross trade receivables (2017: 4.1%(2018: 3.7%). Information in relation to the Group’s credit risk management of trade receivables is provided in note 19. Amounts receivable from related parties (notes 19 and 34) are immaterial. Factoring and credit guarantee arrangements are employed in certain of the Group’s operations where deemed to be of benefit by operational management. Liquidity risk The principal liquidity risks faced by the Group stem from the maturation of debt obligations and derivative transactions. A downgrade of CRH’s credit ratings may give rise to increases in funding costs in respect of future debt and may impair the Group’s ability to raise funds on acceptable terms. The Group’s corporate treasury function ensures that sufficient resources are available to meet such liabilities as they fall due through a combination of cash and cash equivalents, cash flows and undrawn committed bank facilities. Flexibility in funding sources is achieved through a variety of means including (i) maintaining cash and cash equivalents only with a diverse group ofhighly-rated counterparties; (ii) limiting the annual maturity of such balances; (iii) borrowing the bulk of the Group’s debt requirements under committed bank lines or other term financing; and (iv) having surplus committed lines of credit. The undrawn committed facilities available to the Group as at the balance sheet date are quantified in note 25;26; these facilities span a wide number of highly-rated financial institutions thus minimising any potential exposure arising from concentrations in borrowing sources. The repayment schedule (analysed by maturity date) applicable to the Group’s outstanding interest-bearing loans and borrowings as at the balance sheet date is also presented in note 25.26. The Group has an€8.0 billion Euro Medium-Term Note (EMTN) Programme in place, which along with aGroup’s€1.5 billion Euro Commercial Paper Programme and a US$1.52.0 billion US Dollar Commercial Paper Programme means we have framework programmes in the capitalmoney markets
| | | | | 184 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
24. Capital and money markets Financial Risk Management - continued in place that allow the Group to issue in the relevant markets within a short period of time. The Group reinstated its Registration Statement programme in the US during 2019, which allows it to issue SEC registered notes in the US Dollar Debt Capital Markets. Commodity price risk The principal commodity price risks are identified in a variety of highly probable and active commodity contracts where a significant part of the price to be paid relies on a reference to specific floating price indices (usually US Dollar) for a specific period. Programmes are in place to hedge the quantities and qualities of commodity products, including coal, high sulphur fuel oil, diesel, electricity and steel.carbon credits. The aim of the programmes areis to neutralise the variability in the Consolidated Income Statement as a result of changes in associated commodity indices over a timeframe of approximately five years (2018: three years.years). A hedge ratio of one to one is established. Fixed price swap contracts in the entity’s operating currency are used to hedge the same specific floating index risk and currency risk where it is determined that those risks are better managed at a fixed price rather than being exposed to uncontrollable price fluctuations due to the floating price index element of the contract. Sources of ineffectiveness can relate to timing of cash flows and counterparty credit risk adjustments. The derivative contracts qualify for cash flow hedge accounting under IFRS 9 and the fair values by maturity are set out in note 26.27. The notional and fair values in respect of derivative contracts as at 31 December 20182019 and 31 December 20172018 were as follows: | | | | | | | | | | | | | | | | | | | | | | Profile of commodity products | | | | | As at 31 December 2018 | | | | | | As at 31 December 2017 | | | | | Notional value
€m | | | Fair value
€m | | | | | | Notional value
€m | | | Fair value
€m | | Commodity contracts | | | 162 | | | | - | | | | | | | | 49 | | | | - | | Derivative (liability)/asset | | | - | | | | (27) | | | | | | | | - | | | | 11 | |
| | | | | | | | | | | | | | | | | | | | | | Profile of commodity products | | | | | As at 31 December 2019 | | | | | | As at 31 December 2018 | | | | | Notional value
€m | | | Fair value
€m | | | | | | Notional value
€m | | | Fair value
€m | | Commodity contracts | | | 105 | | | | - | | | | | | | | 162 | | | | - | | Derivative liability | | | - | | | | - | | | | | | | | - | | | | (27) | |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 185 |
The tables below show the projected contractual undiscounted total cash outflows (principal and interest) arising from the Group’s trade and other payables, gross debt and derivative financial instruments. The tables also include the gross cash inflows projected to arise from derivative financial instruments. These projections are based on the interest and foreign exchange rates applying at the end of the relevant financial year. | | | | Within
1 year
€m | | | Between
1 and 2
years €m | | | Between
2 and 3
years €m | | | Between
3 and 4
years €m | | | Between
4 and 5
years €m | | | After
5 years
€m | | | Total
€m | | | Within
1 year
€m | | | Between
1 and 2
years €m | | | Between
2 and 3
years €m | | | Between
3 and 4
years €m | | | Between
4 and 5
years €m | | | After 5 years
€m | | | Total €m | | At 31 December 2018 | | | | | | | | | | | | | | | | At 31 December 2019 | | | | | | | | | | | | | | | | | Financial liabilities - cash outflows | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade and other payables | | | 4,609 | | | | 160 | | | | 30 | | | | 18 | | | | 11 | | | | 348 | | | | 5,176 | | | | 4,376 | | | | 139 | | | | 40 | | | | 24 | | | | 165 | | | | 212 | | | | 4,956 | | | Finance leases | | | 5 | | | | 3 | | | | 3 | | | | 2 | | | | 2 | | | | 6 | | | | 21 | | | Lease liabilities under IFRS 16 (i) | | | | 275 | | | | 231 | | | | 193 | | | | 158 | | | | 135 | | | | 1,046 | | | | 2,038 | | | Other interest-bearing loans and borrowings | | | 620 | | | | 752 | | | | 953 | | | | 375 | | | | 753 | | | | 5,856 | | | | 9,309 | | | | 824 | | | | 962 | | | | 391 | | | | 754 | | | | 602 | | | | 5,429 | | | | 8,962 | | | Interest payments on finance leases | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2 | | | | 2 | | | | Interest payments on other interest-bearing loans and borrowings (i) | | | 328 | | | | 297 | | | | 265 | | | | 248 | | | | 224 | | | | 2,022 | | | | 3,384 | | | Interest payments on other interest-bearing loans and borrowings (ii) | | | | 307 | | | | 275 | | | | 258 | | | | 233 | | | | 227 | | | | 1,856 | | | | 3,156 | | | Cross-currency swaps - gross cash outflows | | | 2,320 | | | | 2 | | | | - | | | | - | | | | - | | | | - | | | | 2,322 | | | | 1,615 | | | | 13 | | | | - | | | | - | | | | - | | | | - | | | | 1,628 | | | Other derivative financial instruments | | | 30 | | | | 2 | | | | - | | | | - | | | | - | | | | - | | | | 32 | | | | 4 | | | | 1 | | | | - | | | | - | | | | - | | | | - | | | | 5 | | Gross projected cash outflows | | | 7,912 | | | | 1,216 | | | | 1,251 | | | | 643 | | | | 990 | | | | 8,234 | | | | 20,246 | | | | 7,401 | | | | 1,621 | | | | 882 | | | | 1,169 | | | | 1,129 | | | | 8,543 | | | | 20,745 | | | Derivative financial instruments - cash inflows | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps - net cash inflows (ii) | | | (11) | | | | (9) | | | | (9) | | | | (9) | | | | (4) | | | | (1) | | | | (43) | | | Interest rate swaps - net cash inflows (iii) | | | | (13) | | | | (13) | | | | (13) | | | | (8) | | | | (6) | | | | (12) | | | | (65) | | | Cross-currency swaps - gross cash inflows | | | (2,346) | | | | (2) | | | | - | | | | - | | | | - | | | | - | | | | (2,348) | | | | (1,605) | | | | (13) | | | | - | | | | - | | | | - | | | | - | | | | (1,618) | | | Other derivative financial instruments | | | (3) | | | | (2) | | | | (1) | | | | - | | | | - | | | | - | | | | (6) | | | | (4) | | | | (1) | | | | - | | | | - | | | | - | | | | - | | | | (5) | | Gross projected cash inflows | | | (2,360) | | | | (13) | | | | (10) | | | | (9) | | | | (4) | | | | (1) | | | | (2,397) | | | | (1,622) | | | | (27) | | | | (13) | | | | (8) | | | | (6) | | | | (12) | | | | (1,688) | | | The equivalent disclosure for the prior year is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At 31 December 2017 | | | | | | | | | | | | | | | | At 31 December 2018 | | | | | | | | | | | | | | | | | Financial liabilities - cash outflows | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade and other payables | | | 4,534 | | | | 126 | | | | 38 | | | | 20 | | | | 16 | | | | 36 | | | | 4,770 | | | | 4,609 | | | | 160 | | | | 30 | | | | 18 | | | | 11 | | | | 348 | | | | 5,176 | | | Finance leases | | | 3 | | | | 2 | | | | 2 | | | | 1 | | | | 1 | | | | 3 | | | | 12 | | | Finance leases (i) | | | | 5 | | | | 3 | | | | 3 | | | | 2 | | | | 2 | | | | 6 | | | | 21 | | | Other interest-bearing loans and borrowings | | | 320 | | | | 501 | | | | 751 | | | | 934 | | | | 362 | | | | 5,082 | | | | 7,950 | | | | 620 | | | | 752 | | | | 953 | | | | 375 | | | | 753 | | | | 5,856 | | | | 9,309 | | | Interest payments on finance leases | | | 1 | | | | - | | | | - | | | | - | | | | - | | | | 2 | | | | 3 | | | Interest payments on finance leases (i) | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2 | | | | 2 | | | Interest payments on other interest-bearing loans and borrowings (i) | | | 283 | | | | 260 | | | | 231 | | | | 200 | | | | 184 | | | | 1,381 | | | | 2,539 | | | Interest payments on other interest-bearing loans and borrowings (ii) | | | | 328 | | | | 297 | | | | 265 | | | | 248 | | | | 224 | | | | 2,022 | | | | 3,384 | | | Cross-currency swaps - gross cash outflows | | | 2,391 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,391 | | | | 2,320 | | | | 2 | | | | - | | | | - | | | | - | | | | - | | | | 2,322 | | | Other derivative financial instruments | | | | 30 | | | | 2 | | | | - | | | | - | | | | - | | | | - | | | | 32 | | Gross projected cash outflows | | | 7,532 | | | | 889 | | | | 1,022 | | | | 1,155 | | | | 563 | | | | 6,504 | | | | 17,665 | | | | 7,912 | | | | 1,216 | | | | 1,251 | | | | 643 | | | | 990 | | | | 8,234 | | | | 20,246 | | | Derivative financial instruments - cash inflows | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest rate swaps - net cash inflows (ii) | | | (26) | | | | (14) | | | | (13) | | | | (13) | | | | (13) | | | | (16) | | | | (95) | | | Interest rate swaps - net cash inflows (iii) | | | | (11) | | | | (9) | | | | (9) | | | | (9) | | | | (4) | | | | (1) | | | | (43) | | | Cross-currency swaps - gross cash inflows | | | (2,399) | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,399) | | | | (2,346) | | | | (2) | | | | - | | | | - | | | | - | | | | - | | | | (2,348) | | | Other derivative financial instruments | | | | (3) | | | | (2) | | | | (1) | | | | - | | | | - | | | | - | | | | (6) | | Gross projected cash inflows | | | (2,425) | | | | (14) | | | | (13) | | | | (13) | | | | (13) | | | | (16) | | | | (2,494) | | | | (2,360) | | | | (13) | | | | (10) | | | | (9) | | | | (4) | | | | (1) | | | | (2,397) | |
| (i) | Finance leases in 2018 relate to leases previously capitalised under IAS 17. All leases capitalised under IFRS 16 have been included as lease liabilities in 2019. |
| (ii) | At 31 December 20182019 and 31 December 2017,2018, a portion of the Group’s long-term debt carried variable interest rates. The Group uses the interest rates in effect on 31 December to calculate the interest payments on the long-term debt for the periods indicated. |
(ii)(iii) | The Group uses interest rate swaps to help manage its interest cost. Under these contracts the Group has agreed to exchange at predetermined intervals, the difference between fixed and variable interest amounts calculated by reference to apre-agreed notional principal. The Group uses the interest rates in effect on 31 December to calculate the net interest receipts or payments on these contracts. |
CRH ANNUAL REPORT AND FORM 20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
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24.25. Cash and Cash Equivalents
Cash and cash equivalents balances are spread across a wide number of highly-rated financial institutions. The credit risk attaching to these items is documented in note 23.24. Cash and cash equivalents are included in the Consolidated Balance Sheet at amortised cost and are analysed as follows: | | | | 2018 €m | | | 2017 €m | | | 2019 €m | | | 2018 €m | | Cash at bank and in hand | | | 814 | | | | 737 | | | | 1,005 | | | | 814 | | | Investments (short-term deposits) | | | 1,532 | | | | 1,378 | | | | 2,750 | | | | 1,532 | | Total | | | 2,346 | | | | 2,115 | | | | 3,755 | | | | 2,346 | |
Cash at bank earns interest at floating rates based on daily deposit bank rates. Short-term deposits, which include bank and money market deposits, are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. Cash and cash equivalents at amortised cost include the following for the purposes of the Consolidated Statement of Cash Flows:
| | | | | | | | | | | | 2018 €m | | | 2017 €m | | Cash at bank and in hand | | | 814 | | | | 737 | | | | | Investments (short-term deposits) | | | 1,532 | | | | 1,378 | | | | | | Cash at bank and in hand reclassified as held for sale | | | - | | | | 20 | | Total | | | 2,346 | | | | 2,135 | |
25.26. Interest-bearing Loans and Borrowings
Loans and borrowings outstanding
| | | | 2018 €m | | | 2017 €m | | | 2019 €m | | | 2018 €m | | Bank overdrafts | | | 113 | | | | 66 | | | | 41 | | | | 113 | | | Bank loans | | | 356 | | | | 295 | | | | 465 | | | | 356 | | | Finance leases | | | 21 | | | | 12 | | | Bonds | | | | 8,508 | | | | 8,825 | | | Bonds | | | 8,825 | | | | 7,602 | | | Finance leases (i) | | | | - | | | | 21 | | | Other | | | 1 | | | | 1 | | | | - | | | | 1 | | Interest-bearing loans and borrowings | | | 9,316 | | | | 7,976 | | | | 9,014 | | | | 9,316 | | | Bank overdrafts reclassified as held for sale | | | - | | | | 5 | | | Total | | | 9,316 | | | | 7,981 | | |
Interest-bearing loans and borrowings include loans of€5nil million (2017:(2018:€25 million) secured on specific items of property, plant and equipment; these figures do not include finance leases. | (i) | | | 176 | | Finance leases in 2018 relate to leases previously capitalised under IAS 17. Refer to note 22 for all leases capitalised under IFRS 16 in 2019. |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 187 |
25. Interest-bearing Loans and Borrowings - continued
Maturity profile of loans and borrowings and undrawn committed facilities | | | | As at 31 December 2018 | | | As at 31 December 2017 | | | As at 31 December 2019 | | | As at 31 December 2018 | | | | | Loans and
borrowings
€m | | | Undrawn
committed
facilities €m | | | Loans and
borrowings
€m | | | Undrawn
committed
facilities €m | | | Loans and borrowings €m | | | Undrawn committed facilities €m | | | Loans and borrowings €m | | | Undrawn committed facilities €m | | Within one year | | | 618 | | | | - | | | | 316 | | | | - | | | | 815 | | | | - | | | | 618 | | | | - | | | Between one and two years | | | 748 | | | | - | | | | 498 | | | | - | | | | 956 | | | | 12 | | | | 748 | | | | - | | | Between two and three years | | | 948 | | | | 15 | | | | 746 | | | | - | | | | 385 | | | | 5 | | | | 948 | | | | 15 | | | Between three and four years | | | 370 | | | | 50 | | | | 930 | | | | - | | | | 771 | | | | 50 | | | | 370 | | | | 50 | | | Between four and five years | | | 776 | | | | 3,500 | | | | 359 | | | | 3,554 | | | | 598 | | | | 3,500 | | | | 776 | | | | 3,500 | | | After five years | | | 5,856 | | | | 18 | | | | 5,127 | | | | - | | | | 5,489 | | | | 43 | | | | 5,856 | | | | 18 | | Total | | | 9,316 | | | | 3,583 | | | | 7,976 | | | | 3,554 | | | | 9,014 | | | | 3,610 | | | | 9,316 | | | | 3,583 | | | Bank overdrafts reclassified
as held for sale | | | - | | | | - | | | | 5 | | | | - | | | Total | | | 9,316 | | | | 3,583 | | | | 7,981 | | | | 3,554 | | |
The Group manages its borrowing ability by entering into committed borrowing agreements. Revolving committed bank facilities are generally available to the Group for periods of up to five years from the date of inception. The undrawn committed facilities figures shown in the table above represent the facilities available to be drawn by the Group at 31 December 2018.2019. In March 2018,April 2019, the Group exercised the first ofsuccessfully extended its options to extend the€3.5 billion syndicated credit facility to 2023.with a group of bank lenders and at the same time made a number of amendments including the removal of all financial covenants which improved the flexibility of the facility. Guarantees The Company has given letters of guarantee to secure obligations of subsidiary undertakings as follows:€8.98.5 billion in respect of loans and borrowings, bank advances, derivative obligations and future lease obligations (2017: (2018:€7.78.9 billion) and€0.30.4 billion in respect of letters of credit (2017:(2018:€0.20.3 billion). Any Irish registered wholly-owned subsidiary of the Company may avail of the exemption from filing its statutory financial statements for the year ended 31 December 20182019 as permitted by section 357 of the Companies Act 2014 and if an Irish registered wholly-owned subsidiary of the Company elects to avail of this exemption, there will be in force an irrevocable guarantee from the Company in respect of all commitments entered into by suchwholly-owned subsidiary, including amounts shown as liabilities (within the meaning of section 357(1)357 (1)(b) of the Companies Act 2014) in such wholly-owned subsidiary’s statutory financial statements for the year ended 31 December 2018. Lender covenants
The Group’s major bank facilities require the Group to maintain certain financial covenants.Non-compliance with financial covenants would give the relevant lenders the right to terminate facilities and demand early repayment of any sums drawn thereunder thus altering the maturity profile of the Group’s debt and the Group’s liquidity. Calculations for financial covenants are completed for twelve-month2019.
periods half-yearly on 30 June and 31 December. The Group was in full compliance with its financial covenants throughout each of the periods presented. The Group is not aware of any stated events of default as defined in the Agreements.
The financial covenants are:
(1) | Minimum interest cover defined as PBITDA/Net Interest (all as defined in the relevant agreement) cover at no lower than 4.5x (2017: 4.5x; 2016: 4.5x). As at 31 December 2018 the ratio was 11.2x (2017: 11.6x; 2016: 10.1x);
|
(2) | Minimum net worth defined as total equity plus deferred tax liabilities and capital grants less repayable capital grants being in aggregate no lower than€5.1 billion (2017: €6.2 billion) (such minimum being adjusted for foreign exchange translation impacts). As at 31 December 2018 net worth (as defined in the relevant agreement) was€18.8 billion (2017:€16.6 billion).
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CRH ANNUAL REPORT AND FORM 20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
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26.27. Derivative Financial Instruments
The fair values of derivative financial instruments are analysed by year of maturity and by accounting designation as follows: | | | | | | | | | | | | | | | | | | | | | | | | Fair value
hedges €m | | | Cash flow
hedges €m | | | Net
investment
hedges €m | | | Not
designated
as hedges
€m | | | Total €m | | At 31 December 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative assets | | | | | | | | | | | | | | | | | | | | | | | | | | | Within one year - current assets | | | - | | | | 3 | | | | 10 | | | | 2 | | | | 15 | | | | | | | | Between one and two years | | | - | | | | 2 | | | | - | | | | - | | | | 2 | | | | | | | | Between two and three years | | | - | | | | 1 | | | | - | | | | - | | | | 1 | | | | | | | | Between four and five years | | | 24 | | | | - | | | | - | | | | - | | | | 24 | | | | | | | | After five years | | | 3 | | | | - | | | | - | | | | - | | | | 3 | | Non-current assets | | | 27 | | | | 3 | | | | - | | | | - | | | | 30 | | | | | | | | | | | | | | | | | | | | | | | | Total derivative assets | | | 27 | | | | 6 | | | | 10 | | | | 2 | | | | 45 | | | | | | | | Derivative liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | Within one year - current liabilities | | | - | | | | (32) | | | | (2) | | | | (7) | | | | (41) | | | | | | | | Between one and two years | | | - | | | | (2) | | | | - | | | | - | | | | (2) | | | | | | | | After five years | | | (16) | | | | - | | | | - | | | | - | | | | (16) | | Non-current liabilities | | | (16) | | | | (2) | | | | - | | | | - | | | | (18) | | | | | | | | | | | | | | | | | | | | | | | | Total derivative liabilities | | | (16) | | | | (34) | | | | (2) | | | | (7) | | | | (59) | | | | | | | | | | | | | | | | | | | | | | | | Net asset/(liability) arising on derivative financial instruments | | | 11 | | | | (28) | | | | 8 | | | | (5) | | | | (14) | | | | | | | | The equivalent disclosure for the prior year is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | At 31 December 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative assets | | | | | | | | | | | | | | | | | | | | | | | | | | | Within one year - current assets | | | 2 | | | | 11 | | | | 19 | | | | 2 | | | | 34 | | | | | | | | Between one and two years | | | - | | | | 1 | | | | - | | | | 3 | | | | 4 | | | | | | | | After five years | | | 26 | | | | - | | | | - | | | | - | | | | 26 | | Non-current assets | | | 26 | | | | 1 | | | | - | | | | 3 | | | | 30 | | | | | | | | | | | | | | | | | | | | | | | | Total derivative assets | | | 28 | | | | 12 | | | | 19 | | | | 5 | | | | 64 | | | | | | | | Derivative liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | Within one year - current liabilities | | | - | | | | (1) | | | | (10) | | | | - | | | | (11) | | | | | | | | After five years | | | (3) | | | | - | | | | - | | | | - | | | | (3) | | Non-current liabilities | | | (3) | | | | - | | | | - | | | | - | | | | (3) | | | | | | | | | | | | | | | | | | | | | | | | Total derivative liabilities | | | (3) | | | | (1) | | | | (10) | | | | - | | | | (14) | | | | | | | | | | | | | | | | | | | | | | | | Net asset arising on derivative financial instruments | | | 25 | | | | 11 | | | | 9 | | | | 5 | | | | 50 | |
| | | | | | | | | | | | | | | | | | | | | | | | Fair value
hedges
€m | | | Cash flow
hedges
€m | | | Net
investment
hedges
€m | | | Not
designated
as hedges
€m | | | Total
€m | | At 31 December 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative assets | | | | | | | | | | | | | | | | | | | | | | | | | | | Within one year - current assets | | | - | | | | 3 | | | | 2 | | | | 1 | | | | 6 | | | | | | | | Between one and two years | | | - | | | | 1 | | | | - | | | | - | | | | 1 | | | | | | | | Between three and four years | | | 23 | | | | - | | | | - | | | | - | | | | 23 | | | | | | | | After five years | | | 52 | | | | - | | | | - | | | | - | | | | 52 | | Non-current assets | | | 75 | | | | 1 | | | | - | | | | - | | | | 76 | | | | | | | | | | | | | | | | | | | | | | | | Total derivative assets | | | 75 | | | | 4 | | | | 2 | | | | 1 | | | | 82 | | | | | | | | Derivative liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | Within one year - current liabilities | | | - | | | | (8) | | | | (4) | | | | (4) | | | | (16) | | | | | | | | Between one and two years -non-current liabilities | | | - | | | | (1) | | | | - | | | | - | | | | (1) | | | | | | | | | | | | | | | | | | | | | | | | Total derivative liabilities | | | - | | | | (9) | | | | (4) | | | | (4) | | | | (17) | | | | | | | | | | | | | | | | | | | | | | | | Net asset/(liability) arising on derivative financial instruments | | | 75 | | | | (5) | | | | (2) | | | | (3) | | | | 65 | | | | | | | | The equivalent disclosure for the prior year is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | At 31 December 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | Derivative assets | | | | | | | | | | | | | | | | | | | | | | | | | | | Within one year - current assets | | | - | | | | 3 | | | | 10 | | | | 2 | | | | 15 | | | | | | | | Between one and two years | | | - | | | | 2 | | | | - | | | | - | | | | 2 | | | | | | | | Between two and three years | | | - | | | | 1 | | | | - | | | | - | | | | 1 | | | | | | | | Between four and five years | | | 24 | | | | - | | | | - | | | | - | | | | 24 | | | | | | | | After five years | | | 3 | | | | - | | | | - | | | | - | | | | 3 | | Non-current assets | | | 27 | | | | 3 | | | | - | | | | - | | | | 30 | | | | | | | | | | | | | | | | | | | | | | | | Total derivative assets | | | 27 | | | | 6 | | | | 10 | | | | 2 | | | | 45 | | | | | | | | Derivative liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | Within one year - current liabilities | | | - | | | | (32) | | | | (2) | | | | (7) | | | | (41) | | | | | | | | Between one and two years | | | - | | | | (2) | | | | - | | | | - | | | | (2) | | | | | | | | After five years | | | (16) | | | | - | | | | - | | | | - | | | | (16) | | Non-current liabilities | | | (16) | | | | (2) | | | | - | | | | - | | | | (18) | | | | | | | | | | | | | | | | | | | | | | | | Total derivative liabilities | | | (16) | | | | (34) | | | | (2) | | | | (7) | | | | (59) | | | | | | | | | | | | | | | | | | | | | | | | Net asset/(liability) arising on derivative financial instruments | | | 11 | | | | (28) | | | | 8 | | | | (5) | | | | (14) | |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 189 |
At 31 December 20182019 and 2017,2018, the Group had no master netting or similar arrangements, collateral posting requirements, or enforceable right ofset-off agreements with any of its derivative counterparts. Fair value hedges consist of interest rate swaps and currency swaps. These instruments hedge risks arising from changes in asset/liability fair values due to interest rate and foreign exchange rate movements. Cash flow hedges consist of forward foreign exchange and commodity contracts and interest rate and currency swaps. These instruments hedge risks arising to future cash flows from movements in foreign exchange rates and commodity prices and interest rates.prices. Cash flow hedges are expected to affect profit and loss over the period to maturity. Net investment hedges comprisecross-currency swaps and hedge changes in the value of net investments due to currency movements. The profit/(loss)/profit arising on fair value, cash flow, net investment hedges and related hedged items reflected in the Consolidated Income Statement is shown below: | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Fair value of hedge instruments | | | (12) | | | | (16) | | | | (11) | | | | 64 | | | | (12) | | | | (16) | | | Fair value of the hedged items | | | 11 | | | | 18 | | | | 13 | | | | (64) | | | | 11 | | | | 18 | | | Components of other comprehensive income - cash flow hedges | | | | | | | | | | | | | | (Losses)/gains arising during the year: | | | | | | | | Gains/(losses) arising during the year: | | | | | | | | | - Commodity forward contracts | | | (38) | | | | 9 | | | | 14 | | | - commodity forward contracts | | | | 27 | | | | (38) | | | | 9 | | | - Currency forward contracts | | | (2) | | | | (1) | | | | - | | | - currency forward contracts | | | | (3) | | | | (2) | | | | (1) | | Total | | | (40) | | | | 8 | | | | 14 | | | | 24 | | | | (40) | | | | 8 | | | | Fair value hierarchy | | 2018
Level 2
€m | | | 2017 Level 2 €m | | | | | | 2019
Level 2 €m | | | 2018 Level 2 €m | | | | | Assets measured at fair value | | | | | | | | | | | | | | Fair value hedges - cross-currency and interest rate swaps | | | 27 | | | | 28 | | | | | Fair value hedges - interest rate swaps | | | | 75 | | | | 27 | | | | | Cash flow hedges - cross-currency and commodity forwards | | | | 4 | | | | 6 | | | | | Net investment hedges - cross-currency swaps | | | 10 | | | | 19 | | | | | | 2 | | | | 10 | | | | | Cash flow hedges - cross-currency, interest rate swaps and commodity forwards | | | 6 | | | | 12 | | | | | | Not designated as hedges (held for trading) - interest rate swaps | | | 2 | | | | 5 | | | | | Not designated as hedges (held for trading) - cross-currency swaps and forward foreign exchange contracts | | | | 1 | | | | 2 | | | | Total | | | 45 | | | | 64 | | | | | | 82 | | | | 45 | | | | | Liabilities measured at fair value | | | | | | | | | | | | | | Fair value hedges - cross-currency and interest rate swaps | | | (16) | | | | (3) | | | | | Fair value hedges - interest rate swaps | | | | - | | | | (16) | | | | | Cash flow hedges - cross-currency and commodity forwards | | | | (9) | | | | (34) | | | | | Net investment hedges - cross-currency swaps | | | (2) | | | | (10) | | | | | | (4) | | | | (2) | | | | | Cash flow hedges - cross-currency, interest rate swaps and commodity forwards | | | (34) | | | | (1) | | | | | | Not designated as hedges (held for trading) - interest rate swaps | | | (7) | | | | - | | | | | Not designated as hedges (held for trading) - cross-currency swaps and forward foreign exchange contracts | | | | (4) | | | | (7) | | | | Total | | | (59) | | | | (14) | | | | | | (17) | | | | (59) | | | |
At 31 December 20182019 and 20172018 there were no derivatives valued using Level 1 or Level 3 fair value techniques.
CRH ANNUAL REPORT AND FORM 20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
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27.28. Provisions for Liabilities
| | | | At 1
January
€m | | | Translation
adjustment
€m | | | Arising on
acquisition
(note 32)
€m | | | Provided
during
year €m | | | Utilised
during
year
€m | | | Disposed
during
year €m | | | Reversed
unused
€m | | | Discount
unwinding
€m | | | At 31
December
€m | | | At 1
January
€m | | Effect of
adopting
IFRS 16
€m | | Translation
adjustment
€m | | Arising on
acquisition
(note 32)
€m | | Provided
during
year €m | | Utilised
during
year
€m | | Disposed
during
year €m | | Reversed
unused
€m | | Discount
unwinding
€m | | At 31
December
€m | | 31 December 2018 | | | | | | | | | | | | | | | | | | | | 31 December 2019 | | | | | | | | Insurance (i) | | | 292 | | | | 10 | | | | 7 | | | | 95 | | | | (71) | | | | - | | | | (61) | | | | 7 | | | | 279 | | | | 279 | | | | - | | | | 5 | | | | - | | | | 114 | | | | (88) | | | | - | | | | (24) | | | | 8 | | | | 294 | | | | Environment and remediation (ii) | | | 441 | | | | - | | | | 75 | | | | 28 | | | | (26) | | | | (2) | | | | (43) | | | | 11 | | | | 484 | | | | 484 | | | | - | | | | 13 | | | | 6 | | | | 41 | | | | (26) | | | | - | | | | (8) | | | | 11 | | | | 521 | | | | Rationalisation and redundancy (iii) | | | 25 | | | | - | | | | - | | | | 30 | | | | (31) | | | | - | | | | (1) | | | | - | | | | 23 | | | | 23 | | | | - | | | | - | | | | - | | | | 29 | | | | (35) | | | | - | | | | (3) | | | | - | | | | 14 | | | Other (iv) | | | 306 | | | | - | | | | 2 | | | | 75 | | | | (32) | | | | (1) | | | | (52) | | | | 3 | | | | 301 | | | | 301 | | | | (1) | | | | (1) | | | | - | | | | 108 | | | | (34) | | | | - | | | | (46) | | | | 3 | | | | 330 | | Total | | | 1,064 | | | | 10 | | | | 84 | | | | 228 | | | | (160) | | | | (3) | | | | (157) | | | | 21 | | | | 1,087 | | | | 1,087 | | | | (1) | | | | 17 | | | | 6 | | | | 292 | | | | (183) | | | | - | | | | (81) | | | | 22 | | | | 1,159 | | | Analysed as: | | | | | | | | | | | | | | | | | | | | | Non-current liabilities | | | 693 | | | | | | | | | | | | | | | | | | 719 | | | | 719 | | | | 760 | | | Current liabilities | | | 371 | | | | | | | | | | | | | | | | | | 368 | | | | 368 | | | | 399 | | Total | | | 1,064 | | | | | | | | | | | | | | | | | | 1,087 | | | | 1,087 | | | | 1,159 | | | | The equivalent disclosure for the prior year is as follows: | The equivalent disclosure for the prior year is as follows: | | The equivalent disclosure for the prior year is as follows: | | | 31 December 2017 | | | | | | | | | | | | | | | | | | | | 31 December 2018 | | | | | | | | Insurance (i) | | | 286 | | | | (28) | | | | 3 | | | | 101 | | | | (61) | | | | - | | | | (19) | | | | 10 | | | | 292 | | | | 292 | | | | - | | | | 10 | | | | 7 | | | | 95 | | | | (71) | | | | - | | | | (61) | | | | 7 | | | | 279 | | | | Environment and remediation (ii) | | | 430 | | | | (25) | | | | 43 | | | | 27 | | | | (29) | | | | - | | | | (14) | | | | 9 | | | | 441 | | | | 441 | | | | - | | | | - | | | | 75 | | | | 28 | | | | (26) | | | | (2) | | | | (43) | | | | 11 | | | | 484 | | | | Rationalisation and redundancy (iii) | | | 23 | | | | - | | | | - | | | | 32 | | | | (27) | | | | - | | | | (3) | | | | - | | | | 25 | | | | 25 | | | | - | | | | - | | | | - | | | | 30 | | | | (31) | | | | - | | | | (1) | | | | - | | | | 23 | | | Other (iv) | | | 321 | | | | (19) | | | | 3 | | | | 106 | | | | (37) | | | | (1) | | | | (72) | | | | 5 | | | | 306 | | | | 306 | | | | - | | | | - | | | | 2 | | | | 75 | | | | (32) | | | | (1) | | | | (52) | | | | 3 | | | | 301 | | Total | | | 1,060 | | | | (72) | | | | 49 | | | | 266 | | | | (154) | | | | (1) | | | | (108) | | | | 24 | | | | 1,064 | | | | 1,064 | | | | - | | | | 10 | | | | 84 | | | | 228 | | | | (160) | | | | (3) | | | | (157) | | | | 21 | | | | 1,087 | | | Analysed as: | | | | | | | | | | | | | | | | | | | | | Non-current liabilities | | | 678 | | | | | | | | | | | | | | | | | | 693 | | | | 693 | | | | 719 | | | Current liabilities | | | 382 | | | | | | | | | | | | | | | | | | 371 | | | | 371 | | | | 368 | | Total | | | 1,060 | | | | | | | | | | | | | | | | | | 1,064 | | | | 1,064 | | | | 1,087 | |
| (i) | This provision relates to obligations arising under the self-insurance components of the Group’s insurance arrangements which comprise employers’ liability (workers’ compensation in the US), public and products liability (general liability in the US), automobile liability, property damage, business interruption and various other insurances; a substantial proportion of the total provision pertains to claims which are classified as “incurred but not reported”. Due to the extended timeframe associated with many of the insurances, a significant proportion of the total provision is subject to periodic actuarial valuation. The projected cash flows underlying the discounting process are established through the application of actuarial triangulations, which are extrapolated from historical claims experience. The triangulations applied in the discounting process indicate that the Group’s insurance provisions have an average life of five years (2017: 5.5(2018: five years). |
| (ii) | This provision comprises obligations governing site remediation, restoration and environmental works to be incurred in compliance with either local or national environmental regulations together with constructive obligations stemming from established best practice. Whilst a significant element of the total provision will reverse in the medium-term (two to ten years), those legal and constructive obligations applicable to long-lived assets (principallymineral-bearing land) will unwind over a30-year timeframe. In discounting the related obligations, expected future cash outflows have been determined with due regard to extraction status and anticipated remaining life. |
| (iii) | These provisions relate to irrevocable commitments under various rationalisation and redundancy programmes, none of which are individually material to the Group. In 2018,2019,€29 million (2018:€30 million (2017:million; 2017:€32 million; 2016:€23 million) was provided in respect of rationalisation and redundancy activities as a consequence of undertaking various cost reduction initiatives across all operations. These initiatives included removing excess capacity from manufacturing and distribution networks and scaling operations to match market supply; back office rationalisation; and the consolidation of certain regional support functions into central and more coordinated hubs. The Group expects that these provisions will primarily be utilised within one to two years of the balance sheet date (2017:(2018: one to two years). |
| (iv) | Other provisions primarily relate to legal claims, onerous contracts, guarantees and warranties and employee related provisions. The Group expects the majority of these provisions will be utilised within two to five years of the balance sheet date (2017:(2018: two to five years); however due to the nature of the legal provisions there is a level of uncertainty in the timing of settlement as the Group generally cannot determine the extent and duration of the legal process. |
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28.29. Deferred Income Tax
The deductible and taxable temporary differences in respect of which deferred tax has been recognised are as follows: | | | | 2018 €m | | | 2017 €m | | | 2019 €m | | | 2018 €m | | Reported in balance sheet after offset | | | | | | | | | | Deferred tax liabilities | | | 2,209 | | | | 1,666 | | | | 2,338 | | | | 2,209 | | | Deferred tax assets | | | (71) | | | | (95) | | | | (67) | | | | (71) | | Net deferred income tax liability | | | 2,138 | | | | 1,571 | | | | 2,271 | | | | 2,138 | | | Deferred income tax assets (deductible temporary differences) | | | | | | | | | | Deficits on Group retirement benefit obligations (note 29) | | | 95 | | | | 72 | | | Deficits on Group retirement benefit obligations (note 30) | | | | 91 | | | | 95 | | | Revaluation of derivative financial instruments to fair value | | | 13 | | | | 7 | | | | 7 | | | | 13 | | | Tax loss carryforwards | | | 153 | | | | 132 | | | | 152 | | | | 153 | | | Share-based payment expense | | | 21 | | | | 29 | | | | 32 | | | | 21 | | | Provisions for liabilities and working capital-related items | | | 266 | | | | 157 | | | | 257 | | | | 266 | | | Lease liabilities | | | | 283 | | | | - | | | Other deductible temporary differences | | | 39 | | | | 145 | | | | 23 | | | | 39 | | Total | | | 587 | | | | 542 | | | | 845 | | | | 587 | |
Deferred income tax assets have been recognised in respect of all deductible temporary differences, with the exception of some tax loss carryforwards. The amount of tax losses where recovery is not probable and is therefore not recognised in the Consolidated Balance Sheet is€1.5 billion (2017:(2018:€1.5 billion). The vast majority either do not expire based on current tax legislation or they expire post 2023 (2017: 2022)2024 (2018: 2023). | Deferred income tax liabilities (taxable temporary differences) | | | | | | | | | | Taxable temporary differences principally attributable to accelerated tax depreciation and fair value adjustments arising on acquisition (i) | | | 2,701 | | | | 2,089 | | | | 2,819 | | | | 2,701 | | | | Leased right-of-use assets | | | | 273 | | | | - | | | Revaluation of derivative financial instruments to fair value | | | 11 | | | | 11 | | | | 11 | | | | 11 | | | Rolled-over capital gains | | | 13 | | | | 13 | | | | 13 | | | | 13 | | Total | | | 2,725 | | | | 2,113 | | | | 3,116 | | | | 2,725 | |
| Movement in net deferred income tax liability | | | | | | | | | | At 1 January | | | 1,571 | | | | 1,849 | | | | 2,138 | | | | 1,571 | | | Reclassified from*/(as) held for sale | | | 14 | | | | (14) | | | Reclassified from held for sale | | | | - | | | | 14 | | | Translation adjustment | | | 47 | | | | (173) | | | | 51 | | | | 47 | | | Net expense/(income) for the year (ii) | | | 111 | | | | (265) | | | Net expense for the year (ii) | | | | 112 | | | | 111 | | | Arising on acquisition (note 32) | | | 411 | | | | 132 | | | | - | | | | 411 | | | Disposal | | | (16) | | | | 2 | | | | (31) | | | | (16) | | | Movement in deferred tax recognised in the Consolidated Statement of Comprehensive Income | | | (4) | | | | 33 | | | | 6 | | | | (4) | | | Movement in deferred tax recognised in the Consolidated Statement of Changes in Equity | | | 4 | | | | 7 | | | | (5) | | | | 4 | | At 31 December | | | 2,138 | | | | 1,571 | | | | 2,271 | | | | 2,138 | |
| (i) | Fair value adjustments arising on acquisition principally relate to property, plant and equipment. |
| (ii) | The net expense/(income)expense for the year includes anincome of€3 million (2018: expense of€8 million (2017:€14 million) relating to discontinued operations. |
| | | * Reflects amounts at 1 January 2018 relating to liabilities held for sale at 31 December 2017 which were subsequently divested in 2018. Refer to note 3 for further details.
| | 181 |
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29.30. Retirement Benefit Obligations
The Group operates either defined benefit or defined contribution pension schemes in all of its principal operating areas. The disclosures included below relate to all pension schemes in the Group. The Group operates defined benefit pension schemes in Belgium, Brazil, Canada, France, Germany, Italy, the Netherlands, the Philippines, the Republic of Ireland, Romania, Serbia, Slovakia, Switzerland, the UK and the US. The Group has a mixture of funded and unfunded defined benefit pension schemes. The net liability of the funded schemes is€11398 million, (netnet of surpluses of€51 million) (2017:67 million (2018:€175113 million, net of surpluses of€51 million). Unfunded obligations (including jubilee, post-retirement healthcare obligations andlong-term service commitments) comprise of a number of schemes in Brazil, Canada, France, Germany, Italy, the Netherlands, the Philippines, Romania, Serbia, Slovakia, Switzerland and the US, totalling a net liability of€311329 million (2017:(2018:€202311 million). Funded defined benefit schemes in the Republic of Ireland, Switzerland and the UK are administered by separate funds that are legally distinct from the Group under the jurisdiction of Trustees. The Trustees of these pension funds are required by law and by their Articles of Association to act in the best interests of the scheme participants and are responsible for the definition of investment strategy and for scheme administration. Other schemes are also administered in line with the local regulatory environment. The level of benefits available to most members depends on length of service and either their average salary over their period of employment or their salary in the final years leading up to retirement. The Group’s pension schemes in Switzerland are contribution-based schemes with guarantees to provide further contributions in the event that certain targets are not met, largely in relation to investment return and the annuity conversion factor on retirement. Defined benefit pension schemes - principal risks Through its defined benefit pension and jubilee schemes, long-term service commitments and post-retirement healthcare plans, the Group is exposed to a number of risks, the most significant of which are detailed below: Asset volatility:Under IAS 19Employee Benefits, the assets of the Group’s defined benefit pension schemes are reported at fair value (using bid prices, where relevant). The majority of the schemes’ assets comprise equities, bonds and property, all of which may fluctuate significantly in value from period to period. Given that liabilities are discounted to present value based on bond yields and that bond prices are inversely related to yields, an increase in the liability discount rate (which would reduce liabilities) would reduce bond values, though not necessarily by an equal magnitude. Given the maturity of certain of the Group’s funded defined benefit pension schemes,de-risking frameworks have been introduced to mitigate deficit volatility and enable better matching of investment returns with the cash outflows related to benefit obligations. These frameworks entail the usage of asset-liability matching techniques, whereby triggers are set for the conversion of equity holdings into bonds of similar average duration to the relevant liabilities. Discount rates: The discount rates employed in determining the present value of the schemes’ liabilities are determined by reference to market yields at the balance sheet date on high-quality corporate bonds of a currency and term consistent with the currency and term of the associated post-employment benefit obligations. Changes in discount rates impact the quantum of liabilities as discussed above. Inflation risk: A significant amount of the Group’s pension obligations are linked to inflation; higher inflation will lead to higher liabilities (although in most cases, caps on the level of inflationary increases are in place to protect the schemes against extreme inflation). Longevity risk: In the majority of cases, the Group’s defined benefit pension schemes provide benefits for life with spousal and dependent child reversionary provisions; increases in life expectancy (decreases in mortality assumptions) will therefore give rise to higher liabilities. Aggregation For the purposes of the disclosures which follow; the schemes in Belgium, France, Germany, Italy, the Netherlands, the Republic of Ireland and Slovakia have been aggregated into a “Eurozone” category on the basis of common currency and financial assumptions; schemes in Brazil, the Philippines, Romania, Serbia and the UK have been aggregated into an “Other” category.
| | | | | | | CRH Annual Report and Form 20-F |2018
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Financial assumptions - assumptions—scheme liabilities The major long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities and post-retirement healthcare obligations are as follows: | | | | Eurozone | | | | | | Switzerland | | | | | | United States and Canada | | | Eurozone | | | | | | Switzerland | | | | | | United States and Canada | | | | | 2018
% | | | 2017
% | | | 2016
% | | | | | | 2018
% | | | 2017
% | | | 2016
% | | | | | | 2018
% | | | 2017
% | | | 2016
% | | | 2019 % | | | 2018 % | | | 2017 % | | | | | | 2019 % | | | 2018 % | | | 2017 % | | | | | | 2019 % | | | 2018 % | | | 2017 % | | Rate of increase in: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - salaries | | | 3.50 | | | | 3.59 | | | | 3.41 | | | | | | 1.50 | | | | 1.25 | | | | 1.25 | | | | | | 3.38 | | | | 3.27 | | | | 3.28 | | | | 3.37 | | | | 3.50 | | | | 3.59 | | | | | | 1.50 | | | | 1.50 | | | | 1.25 | | | | | | 3.37 | | | | 3.38 | | | | 3.27 | | | - pensions in payment | | | 1.62 | | | | 1.70 | | | | 1.50 | | | | | | - | | | | - | | | | - | | | | | | - | | | | - | | | | - | | | | 1.46 | | | | 1.62 | | | | 1.70 | | | | | | - | | | | - | | | | - | | | | | | - | | | | - | | | | - | | | Inflation | | | 1.65 | | | | 1.75 | | | | 1.50 | | | | | | 1.00 | | | | 0.75 | | | | 0.75 | | | | | | 2.00 | | | | 2.00 | | | | 2.00 | | | | 1.50 | | | | 1.65 | | | | 1.75 | | | | | | 1.00 | | | | 1.00 | | | | 0.75 | | | | | | 2.00 | | | | 2.00 | | | | 2.00 | | | Discount rate | | | 2.12 | | | | 2.05 | | | | 1.86 | | | | | | 0.85 | | | | 0.70 | | | | 0.65 | | | | | | 4.10 | | | | 3.52 | | | | 4.01 | | | | 1.43 | | | | 2.12 | | | | 2.05 | | | | | | 0.30 | | | | 0.85 | | | | 0.70 | | | | | | 3.14 | | | | 4.10 | | | | 3.52 | | | Medical cost trend rate | | | n/a | | | | n/a | | | | n/a | | | | | | n/a | | | | n/a | | | | n/a | | | | | | 1.55 | | | | 6.33 | | | | 5.98 | | | | n/a | | | | n/a | | | | n/a | | | | | | n/a | | | | n/a | | | | n/a | | | | | | 5.18 | | | | 1.55 | | | | 6.33 | |
| | | | | | | CRH ANNUAL REPORT AND FORM20-F | 2019 | | 193 |
The mortality assumptions employed in determining the present value of scheme liabilities under IAS 19 represent actuarial best practice in the relevant jurisdictions, taking account of mortality experience and industry circumstances. For schemes in the Republic of Ireland and the UK, the mortality assumptions used are in accordance with the underlying funding valuations. For the Group’s most material schemes, the future life expectations factored into the relevant valuations, based on retirement at 65 years of age for current and future retirees, are as follows: | | | �� | Republic of Ireland | | | | | | Switzerland | | | | | | United States and Canada | | | Republic of Ireland | | | | | | Switzerland | | | | | | United States and Canada | | | | | 2018 | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | | 2016 | | | 2019 | | | 2018 | | | 2017 | | | | | | 2019 | | | 2018 | | | 2017 | | | | | | 2019 | | | 2018 | | | 2017 | | Current retirees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - male | | | 22.4 | | | | 22.7 | | | | 22.5 | | | | | | 22.5 | | | | 22.4 | | | | 22.3 | | | | | | 20.1 | | | | 20.6 | | | | 20.5 | | | | 23.0 | | | | 22.4 | | | | 22.7 | | | | | | 22.6 | | | | 22.5 | | | | 22.4 | | | | | | 20.2 | | | | 20.1 | | | | 20.6 | | | - female | | | 24.1 | | | | 24.4 | | | | 24.3 | | | | | | 24.5 | | | | 24.4 | | | | 24.3 | | | | | | 22.6 | | | | 23.1 | | | | 23.0 | | | | 24.5 | | | | 24.1 | | | | 24.4 | | | | | | 24.7 | | | | 24.5 | | | | 24.4 | | | | | | 22.3 | | | | 22.6 | | | | 23.1 | | | Future retirees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - male | | | 24.9 | | | | 25.5 | | | | 25.4 | | | | | | 24.7 | | | | 24.6 | | | | 24.6 | | | | | | 22.0 | | | | 22.3 | | | | 22.3 | | | | 25.4 | | | | 24.9 | | | | 25.5 | | | | | | 24.8 | | | | 24.7 | | | | 24.6 | | | | | | 22.1 | | | | 22.0 | | | | 22.3 | | | - female | | | 26.4 | | | | 27.0 | | | | 26.9 | | | | | | 26.7 | | | | 26.6 | | | | 26.6 | | | | | | 24.5 | | | | 24.7 | | | | 24.7 | | | | 26.8 | | | | 26.4 | | | | 27.0 | | | | | | 26.8 | | | | 26.7 | | | | 26.6 | | | | | | 24.2 | | | | 24.5 | | | | 24.7 | |
The above data allows for future improvements in life expectancy.
| | | | | | | CRH Annual Report and Form 20-F|2018
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29. Retirement Benefit Obligations - continued
Impact on Consolidated Income Statement The total retirement benefit expense from continuing operations in the Consolidated Income Statement is as follows: | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | Total defined contribution expense | | | 235 | | | | 237 | | | | 232 | | | | 259 | | | | 225 | | | | 228 | | | Total defined benefit expense/(credit) | | | 61 | | | | (1) | | | | 75 | | | Total defined benefit expense | | | | 45 | | | | 43 | | | | 36 | | Total expense in Consolidated Income Statement | | | 296 | | | | 236 | | | | 307 | | | | 304 | | | | 268 | | | | 264 | |
At 31 December 2018,2019,€96 million (2018:€90 million (2017:€78 million) was included in other payables in respect of defined contribution pension liabilities. Analysis of defined benefit expense/(credit)expense Charged in arriving at Group profit before finance costs: | Current service cost | | | 64 | | | | 62 | | | | 61 | | | | 43 | | | | 43 | | | | 40 | | Administration expenses | | | 4 | | | | 4 | | | | 4 | | | | 7 | | | | 3 | | | | 3 | | Past service credit (net) | | | (17) | | | | (78) | | | | (2) | | | Past service credit (net) (iii) | | | | (18) | | | | (13) | | | | (17) | | Subtotal | | | 51 | | | | (12) | | | | 63 | | | | 32 | | | | 33 | | | | 26 | |
Included in finance income and finance costs respectively: | Interest income on scheme assets | | | (59) | | | | (49) | | | | (58) | | | | (64) | | | | (55) | | | | (45) | | Interest cost on scheme liabilities | | | 69 | | | | 60 | | | | 70 | | | | 77 | | | | 65 | | | | 55 | | Net interest expense | | | 10 | | | | 11 | | | | 12 | | | | 13 | | | | 10 | | | | 10 | | | | | | | | | | | | | | | | Net expense/(credit) to Consolidated Income Statement | | | 61 | | | | (1) | | | | 75 | | | Net expense to Consolidated Income Statement | | | | 45 | | | | 43 | | | | 36 | |
The composition of the net expense/(credit) to the Consolidated Income Statement is as follows: | Eurozone | | | 23 | | | | 25 | | | | 18 | | | | 25 | | | | 23 | | | | 24 | | Switzerland | | | 25 | | | | (49) | | | | 37 | | | | 7 | | | | 7 | | | | (11) | | United States and Canada | | | 6 | | | | 14 | | | | 11 | | | | 5 | | | | 6 | | | | 14 | | Other | | | 7 | | | | 9 | | | | 9 | | | | 8 | | | | 7 | | | | 9 | | Total | | | 61 | | | | (1) | | | | 75 | | | | 45 | | | | 43 | | | | 36 | |
Past service credit in 2017 includes a gain of€81 million due to plan amendments in Switzerland. The principal amendment related to the reduction of the annuity conversion factorNotes (i), (ii) and (iii) are set out on retirement from 6.4% to 5.0% of accumulated savings.page 195.
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| | | | | | | CRH Annual Report and Form 20-F |2018
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30. Retirement Benefit Obligations - continued | | Reconciliation of scheme assets (bid value) | | 2018 €m | | | 2017 €m | | | 2019 €m | | | 2018 €m | | At 1 January | | | 2,622 | | | | 2,556 | | | | 2,913 | | | | 2,622 | | Movement in year | | | | | | | | | Interest income on scheme assets | | | 59 | | | | 49 | | | Interest income on scheme assets (ii) | | | | 68 | | | | 59 | | Arising on acquisition (note 32) | | | 337 | | | | 5 | | | | 3 | | | | 337 | | Disposals | | | | (592) | | | | - | | Remeasurement adjustments | | | | | | | | | - return on scheme assets excluding interest income | | | (137) | | | | 112 | | | | 316 | | | | (137) | | Employer contributions paid | | | 118 | | | | 123 | | | | 52 | | | | 118 | | Contributions paid by plan participants | | | 14 | | | | 14 | | | | 13 | | | | 14 | | Benefit and settlement payments | | | (130) | | | | (114) | | | | (139) | | | | (130) | | Administration expenses | | | (4) | | | | (4) | | | Administration expenses (ii) | | | | (7) | | | | (4) | | Translation adjustment | | | 34 | | | | (119) | | | | 55 | | | | 34 | | At 31 December | | | 2,913 | | | | 2,622 | | | | 2,682 | | | | 2,913 | |
The composition of scheme assets is as follows: | Eurozone | | | 1,181 | | | | 1,184 | | | | 1,283 | | | | 1,181 | | Switzerland | | | 808 | | | | 781 | | | | 344 | | | | 808 | | United States and Canada | | | 728 | | | | 448 | | | | 845 | | | | 728 | | Other | | | 196 | | | | 209 | | | | 210 | | | | 196 | | Total | | | 2,913 | | | | 2,622 | | | | 2,682 | | | | 2,913 | |
| | Reconciliation of actuarial value of liabilities | | | | | | | | | | | | | At 1 January | | | (2,999) | | | | (3,147) | | | | (3,337) | | | | (2,999) | | Movement in year | | | | | | | | | Current service cost | | | (64) | | | | (62) | | | Past service credit (net) | | | 17 | | | | 78 | | | Interest cost on scheme liabilities | | | (69) | | | | (60) | | | Current service cost (ii) | | | | (60) | | | | (64) | | Past service credit (net) (ii) | | | | 18 | | | | 17 | | Interest cost on scheme liabilities (ii) | | | | (81) | | | | (69) | | Arising on acquisition (note 32) | | | (452) | | | | (57) | | | | (4) | | | | (452) | | Disposals | | | 6 | | | | - | | | | 636 | | | | 6 | | Remeasurement adjustments | | | | | | | | | - experience variations | | | 1 | | | | 11 | | | | 33 | | | | 1 | | - actuarial gain/(loss) from changes in financial assumptions | | | 120 | | | | (29) | | | - actuarial (loss)/gain from changes in financial assumptions | | | | (384) | | | | 120 | | - actuarial gain from changes in demographic assumptions | | | 26 | | | | 20 | | | | 18 | | | | 26 | | Contributions paid by plan participants | | | (14) | | | | (14) | | | | (13) | | | | (14) | | Benefit and settlement payments | | | 130 | | | | 114 | | | | 139 | | | | 130 | | Translation adjustment | | | (39) | | | | 147 | | | | (74) | | | | (39) | | At 31 December | | | (3,337) | | | | (2,999) | | | | (3,109) | | | | (3,337) | |
The composition of the actuarial value of liabilities is as follows: | | | | | | | | | Eurozone | | | (1,318) | | | | (1,384) | | Switzerland | | | (829) | | | | (819) | | United States and Canada | | | (946) | | | | (540) | | Other | | | (244) | | | | (256) | | Total | | | (3,337) | | | | (2,999) | |
| Eurozone | | | | (1,425) | | | | (1,318) | | | Switzerland | | | | (341) | | | | (829) | | | United States and Canada | | | | (1,058) | | | | (946) | | | Other | | | | (285) | | | | (244) | | Total | | | | (3,109) | | | | (3,337) | | | Recoverable deficit in schemes | | | (424) | | | | (377) | | | | (427) | | | | (424) | | | Related deferred income tax asset | | | 95 | | | | 72 | | | | 91 | | | | 95 | | Net pension liability | | | (329) | | | | (305) | | | | (336) | | | | (329) | |
The composition of the net pension liability is as follows: | Eurozone | | | (113) | | | | (168) | | | | (119) | | | | (113) | | | Switzerland | | | (17) | | | | (30) | | | | 3 | | | | (17) | | | United States and Canada | | | (162) | | | | (68) | | | | (160) | | | | (162) | | | Other | | | (37) | | | | (39) | | | | (60) | | | | (37) | | Total | | | (329) | | | | (305) | | | | (336) | | | | (329) | |
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
195 |
29. Retirement Benefit Obligations - continued
| (i) | The total defined contribution expense including discontinued operations amounted to€267 million (2018:€235 million; 2017:€244 million). |
| (ii) | The net defined benefit expense/(credit) includes the following relating to discontinued operations: |
| | | | | | | | | | | | | | Charged in arriving at Group profit before finance costs: | | 2019 €m | | | 2018 €m | | | 2017 €m | | Current service cost | | | 17 | | | | 21 | | | | 22 | | Administration expenses | | | - | | | | 1 | | | | 1 | | Past service credit (net) (iii) | | | - | | | | (4) | | | | (61) | | Subtotal | | | 17 | | | | 18 | | | | (38) | | Included in finance income and finance costs respectively: | | | | | | | | | | | | | Interest income on scheme assets | | | (4) | | | | (4) | | | | (4) | | Interest cost on scheme liabilities | | | 4 | | | | 4 | | | | 5 | | Net interest expense | | | - | | | | - | | | | 1 | | | | | | | | | | | | | | | | Net expense/(credit) to Consolidated Income Statement | | | 17 | | | | 18 | | | | (37) | |
| (iii) | Past service credit in 2017 includes a gain of€81 million (€20 million relating to continuing operations and€61 million relating to discontinued operations) due to plan amendments in Switzerland. The principal amendment related to the reduction of the annuity conversion factor on retirement from 6.4% to 5.0% of accumulated savings. | |
A UK High Court ruling in October 2018 relating to the equalisation of guaranteed minimum pensions for men and women did not materially impact the liability associated with the Group’s UK defined benefit pension schemes. Sensitivity analysis The revised liabilities due to the impact of a movement (as indicated below) in the principal actuarial assumptions would be as follows: | | | | | Eurozone
2018 €m | | Switzerland
2018 €m | | United States
and Canada
2018 €m | | Other
2018 €m | | Total Group
2018 €m | | | | Eurozone
2019 €m | | Switzerland
2019 €m | | United States
and Canada
2019 €m | | Other
2019 €m | | Total Group
2019 €m | | Scheme liabilities at 31 December 2018 | | | | | (1,318 | ) | | | (829 | ) | | | (946 | ) | | | (244 | ) | | | (3,337) | | | Scheme liabilities at 31 December | | | | | | (1,425 | ) | | | (341 | ) | | | (1,058 | ) | | | (285 | ) | | | (3,109 | ) | | Revised liabilities | | | | | | | | | | Discount rate | | Increase by 0.25% | | | (1,263 | ) | | | (797 | ) | | | (918 | ) | | | (233 | ) | | | (3,211) | | | Increase by 0.25% | | | (1,362 | ) | | | (326 | ) | | | (1,026 | ) | | | (273 | ) | | | (2,987 | ) | | | | | Decrease by 0.25% | | | (1,375 | ) | | | (865 | ) | | | (975 | ) | | | (256 | ) | | | (3,471) | | | Decrease by 0.25% | | | (1,491 | ) | | | (357 | ) | | | (1,092 | ) | | | (298 | ) | | | (3,238 | ) | | Inflation rate | | Increase by 0.25% | | | (1,370 | ) | | | (832 | ) | | | (951 | ) | | | (253 | ) | | | (3,406) | | | Increase by 0.25% | | | (1,487 | ) | | | (342 | ) | | | (1,063 | ) | | | (294 | ) | | | (3,186 | ) | | | | | Decrease by 0.25% | | | (1,268 | ) | | | (827 | ) | | | (942 | ) | | | (236 | ) | | | (3,273) | | | Decrease by 0.25% | | | (1,367 | ) | | | (340 | ) | | | (1,054 | ) | | | (276 | ) | | | (3,037 | ) | | Mortality assumption | | Increase by 1 year | | | (1,272 | ) | | | (802 | ) | | | (921 | ) | | | (238 | ) | | | (3,233) | | | Increase by 1 year | | | (1,371 | ) | | | (330 | ) | | | (1,026 | ) | | | (278 | ) | | | (3,005 | ) | | | | | Decrease by 1 year | | | (1,363 | ) | | | (856 | ) | | | (971 | ) | | | (251 | ) | | | (3,441) | | | Decrease by 1 year | | | (1,479 | ) | | | (352 | ) | | | (1,089 | ) | | | (292 | ) | | | (3,212 | ) |
The above sensitivity analysis are derived through changing the individual assumption while holding all other assumptions constant.
| | | | | 196 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
| | | | | | | | | | Split of scheme assets | | 2018 €m | | | 2017 €m | | Investments quoted in active markets | | | | | | | | | Equity instruments (i) | | | 862 | | | | 828 | | Debt instruments (ii) | | | 1,596 | | | | 1,413 | | Property | | | 109 | | | | 120 | | Cash and cash equivalents | | | 34 | | | | 26 | | Investment funds | | | 9 | | | | 95 | | Assets held by insurance company | | | 123 | | | | - | | | | | Unquoted investments | | | | | | | | | Equity instruments | | | 2 | | | | 2 | | Debt instruments (iii) | | | 9 | | | | 8 | | Property | | | 112 | | | | 92 | | Cash and cash equivalents | | | 40 | | | | 13 | | Assets held by insurance company | | | 17 | | | | 25 | | Total assets | | | 2,913 | | | | 2,622 | |
30. Retirement Benefit Obligations - continued | | | | | | | | | | Split of scheme assets | | 2019 €m | | | 2018 €m | | Investments quoted in active markets | | | | | | | | | Equity instruments (i) | | | 746 | | | | 862 | | Debt instruments (ii) | | | 1,594 | | | | 1,596 | | Property | | | 93 | | | | 109 | | Cash and cash equivalents | | | 27 | | | | 34 | | Investment funds | | | 128 | | | | 9 | | Assets held by insurance company | | | - | | | | 123 | | | | | Unquoted investments | | | | | | | | | Equity instruments | | | 2 | | | | 2 | | Debt instruments (iii) | | | 9 | | | | 9 | | Property | | | 52 | | | | 112 | | Cash and cash equivalents | | | 18 | | | | 40 | | Assets held by insurance company | | | 13 | | | | 17 | | Total assets | | | 2,682 | | | | 2,913 | |
| (i) | Equity instruments primarily relate to developed markets. | |
| (ii) | Quoted debt instruments are made up of€8451,101 million (2017:(2018:€831845 million) and€751493 million (2017:(2018:€582751 million) ofnon-government and government instruments respectively. | |
| (iii) | Unquoted debt instruments primarily relate to government debt instruments. | |
| | | | | | | CRH Annual Report and Form 20-F |2018
|
Actuarial valuations - funding requirements and future cash flows In accordance with statutory requirements in the Republic of Ireland and minimum funding requirements in the UK, additional annual contributions andlump-sum payments are required to certain of the schemes in place in those jurisdictions. The funding requirements in relation to the Group’s defined benefit schemes are assessed in accordance with the advice of independent and qualified actuaries and valuations are prepared in this regard either annually, where local requirements mandate that this be done, or at triennial intervals at a maximum in all other cases. In the Republic of Ireland and the UK, either the attained age or projected unit credit methods are used in the valuations. In the Netherlands and Switzerland, the actuarial valuations reflect the current unit method, while the valuations are performed in accordance with the projected unit credit methodology in Germany. In the US, valuations are performed using a variety of actuarial cost methodologies - current unit, projected unit and aggregate cost. In Canada, the projected unit credit method is used in valuations. The dates of the funding valuations range from March 2016 to December 2018.January 2019. In general, funding valuations are not available for public inspection; however, the results of valuations are advised to the members of the various schemes on request.
| | | | | | | CRH ANNUAL REPORT AND FORM20-F | 2019 | | 197 |
The Group’sGroup has contracted payments (on(presented on a discounted basis) to certain schemes is€nil million (2017:€18 million; 2016:€35 million) in the Republic of Ireland and€14 million (2017: €16 million; 2016:€20 million) in the UK. following countries: | | | | | | | | | | | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Republic of Ireland | | | - | | | | - | | | | 18 | | | | | | United Kingdom | | | 19 | | | | 14 | | | | 16 | | Total | | | 19 | | | | 14 | | | | 34 | |
The maturity profile of the Group’s contracted payments (on a discounted basis) is as follows: | | | | 2018
€m | | 2017
€m | | 2016
€m | | | 2019 €m | | 2018 €m | | 2017 €m | | Within one year | | | 2 | | | | 19 | | | | 20 | | | | 2 | | | | 2 | | | | 19 | | | Between one and two years | | | 2 | | | | 2 | | | | 19 | | | | 2 | | | | 2 | | | | 2 | | | Between two and three years | | | 2 | | | | 2 | | | | 2 | | | | 2 | | | | 2 | | | | 2 | | | Between three and four years | | | 1 | | | | 2 | | | | 2 | | | | 2 | | | | 1 | | | | 2 | | | Between four and five years | | | 1 | | | | 1 | | | | 2 | | | | 2 | | | | 1 | | | | 1 | | | After five years | | | 6 | | | | 8 | | | | 10 | | | | 9 | | | | 6 | | | | 8 | | Total | | | 14 | | | | 34 | | | | 55 | | | | 19 | | | | 14 | | | | 34 | |
Employer contributions payable in the 20192020 financial year including minimum funding payments (expressed using year endyear-end exchange rates for 2018)2019) are estimated at€7145 million. Average duration and scheme composition | | | | Eurozone | | Switzerland | | | | United States
and Canada | | | Eurozone | | Switzerland | | | | United States and Canada | | | | | 2018 | | 2017 | | 2016 | | | | | | 2018 | | 2017 | | 2016 | | | | | | 2018 | | 2017 | | 2016 | | | 2019 | | 2018 | | 2017 | | | | | | 2019 | | 2018 | | 2017 | | | | | | 2019 | | 2018 | | 2017 | | Average duration of defined benefit obligation (years) | | | 17.1 | | | | 17.8 | | | | 17.1 | | | | 16.4 | | | | 17.2 | | | | 18.6 | | | | 12.1 | | | | 12.2 | | | | 13.1 | | | | 18.1 | | | | 17.1 | | | | 17.8 | | | | 17.8 | | | | 16.4 | | | | 17.2 | | | | 12.5 | | | | 12.1 | | | | 12.2 | | | Allocation of defined benefit obligation by participant: | | | | | | | | | | | | | | | | | | | | Active plan participants | | | 71% | | | | 72% | | | | 63% | | | | 83% | | | | 84% | | | | 84% | | | | 46% | | | | 40% | | | | 41% | | | | 74% | | | | 71% | | | | 72% | | | | 74% | | | | 83% | | | | 84% | | | | 44% | | | | 46% | | | | 40% | | | Deferred plan participants | | | 9% | | | | 9% | | | | 12% | | | | - | | | | - | | | | - | | | | 18% | | | | 16% | | | | 17% | | | | 8% | | | | 9% | | | | 9% | | | | - | | | | - | | | | - | | | | 12% | | | | 18% | | | | 16% | | | Retirees | | | 20% | | | | 19% | | | | 25% | | | | | 17% | | | | 16% | | | | 16% | | | | | 36% | | | | 44% | | | | 42% | | | | 18% | | | | 20% | | | | 19% | | | | | 26% | | | | 17% | | | | 16% | | | | | 44% | | | | 36% | | | | 44% | |
| | | | | 198 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | 187 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
|
30. | Commitments under Operating and Finance Leases
|
Operating leases
The Group has entered into operating leases for a range of assets, principally relating to property. Lease commitments are provided for up to the earliest break clause in the lease. These property leases have varying terms, renewal rights and escalation clauses, including periodic rent reviews linked with a consumer price index and/or other indices. The Group also leases plant and machinery, vehicles and equipment under operating leases. The terms and conditions of these operating leases do not impose any significant financial restriction on the Group.
| | | | | | | | | | | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | Within one year | | | 353 | | | | 419 | | | | 402 | | After one year but not more than five years | | | 769 | | | | 962 | | | | 978 | | More than five years | | | 789 | | | | 810 | | | | 791 | | | | | | 1,911 | | | | 2,191 | | | | 2,171 | |
The commitments above include€nil million of operating lease commitments (2017:€252 million; 2016:€237 million) relating to discontinued operations.
Finance leases
Future minimum lease payments under finance leases are not material for the Group.
| | | | | | | CRH Annual Report and Form 20-F |2018
|
31. Share Capital and Reserves | | Equity share capital | | 2018
| | | | | | 2017
| | | 2019
| | | | | 2018
| | | | | Ordinary Shares of €0.32 each (i) | | | Income
Shares of
€0.02 each (ii) | | | | | | Ordinary
Shares of
€0.32 each (i) | | | Income Shares of
€0.02 each (ii) | | | Ordinary
Shares of
€0.32 each (i) | | Income
Shares of
€0.02 each (ii) | | | | | | Ordinary
Shares of
€0.32 each (i) | | | Income
Shares of
€0.02 each (ii) | | Authorised | | | | | | | | | | | | | | | | | At 1 January and 31 December (€m) | | | 400 | | | | 25 | | | | | | 400 | | | | 25 | | | | 400 | | | | 25 | | | | | 400 | | | | 25 | | | | | | | | | | | | | | | | | | | | Number of Shares at 1 January and 31 December (millions) | | | 1,250 | | | | 1,250 | | | | | | 1,250 | | | | 1,250 | | | | 1,250 | | | | 1,250 | | | | | 1,250 | | | | 1,250 | | | | | | | | | | | | | | | | | | | | Allotted,called-up and fully paid | | | | | | | | | | | | | | | | | At 1 January (€m) | | | 271 | | | | 15 | | | | | | 269 | | | | 15 | | | | 272 | | | | 15 | | | | | 271 | | | | 15 | | Cancellation of Treasury Shares (iii) | | | | (14 | ) | | | (1 | ) | | | | - | | | | - | | Performance Share Plan Awards | | | 1 | | | | - | | | | | | 1 | | | | - | | | | - | | | | - | | | | | 1 | | | | - | | Issue of scrip shares in lieu of cash dividends (iii) | | | - | | | | - | | | | | | 1 | | | | - | | | At 31 December (€m) | | | 272 | | | | 15 | | | | | | 271 | | | | 15 | | | | 258 | | | | 14 | | | | | 272 | | | | 15 | | | The movement in the number of shares (expressed in millions) during the financial year was as follows: | The movement in the number of shares (expressed in millions) during the financial year was as follows: | | | | The movement in the number of shares (expressed in millions) during the financial year was as follows: | | | | | At 1 January | | | 839 | | | | 839 | | | | | | 833 | | | | 833 | | | | 843 | | | | 843 | | | | | 839 | | | | 839 | | Cancellation of Treasury Shares (iii) | | | | (44 | ) | | | (44 | ) | | | | - | | | | - | | Performance Share Plan Awards | | | 2 | | | | 2 | | | | | | 2 | | | | 2 | | | | - | | | | - | | | | | 2 | | | | 2 | | Issue of scrip shares in lieu of cash dividends (iii) | | | 2 | | | | 2 | | | | | | 3 | | | | 3 | | | Share options and share participation schemes | | | - | | | | - | | | | | | 1 | | | | 1 | | | Issue of scrip shares in lieu of cash dividends (iv) | | | | - | | | | - | | | | | 2 | | | | 2 | | At 31 December | | | 843 | | | | 843 | | | | | | 839 | | | | 839 | | | | 799 | | | | 799 | | | | | 843 | | | | 843 | |
| (i) | The Ordinary Shares represent 93.73%93.71% of the total issued share capital. |
| (ii) | The Income Shares, which represent 5.86% of the total issued share capital, were created on 29 August 1988 for the express purpose of giving shareholders the choice of receiving dividends on either their Ordinary Shares or on their Income Shares (by notice of election to the Company). The Income Shares carried a different tax credit to the Ordinary Shares. The creation of the Income Shares was achieved by the allotment of fully paid Income Shares to each shareholder equal to his/her holding of Ordinary Shares but the shareholder is not entitled to an Income Share certificate, as a certificate for Ordinary Shares is deemed to include an equal number of Income Shares and a shareholder may only sell, transfer or transmit Income Shares with an equivalent number of Ordinary Shares. Income Shares carry no voting rights. Due to changes in Irish tax legislation since the creation of the Income Shares, dividends on the Company’s shares no longer carry a tax credit. As elections made by shareholders to receive dividends on their holding of Income Shares were no longer relevant, the Articles of Association were amended on 8 May 2002 to cancel such elections. |
| (iii) | During 2019 43,750,000 Ordinary Shares (including Income Shares) were cancelled. The amount paid to repurchase these shares was initially recognised in Treasury Shares/own shares and was transferred to retained income on cancellation. |
| (iv) | Issue of scrip shares in lieu of cash dividends: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of shares | | | | | | Price per share | | | | | 2018 | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | | 2016 | | May 2018 - Final 2017 dividend (2017: Final 2016 dividend; 2016: Final 2015 dividend) | | | 1,841,430 | | | | 433,046 | | | | 5,301,827 | | | | | | | € | 27.47 | | | € | 33.08 | | | € | 24.69 | | September 2018 - Interim 2018 dividend* (2017: Interim 2017 dividend; 2016: Interim 2016 dividend) | | | - | | | | 2,130,496 | | | | 1,243,042 | | | | | | | | - | | | € | 29.24 | | | € | 29.41 | | Total | | | 1,841,430 | | | | 2,563,542 | | | | 6,544,869 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | Number of shares | | | | | | Price per share | | | | | 2018 | | | 2017 | | | | | | 2018 | | | 2017 | | May 2018: Final 2017 dividend (2017: Final 2016 dividend) | | | 1,841,430 | | | | 433,046 | | | | | | | € | 27.47 | | | € | 33.08 | | September 2018: Interim 2018 dividend (2017: Interim 2017 dividend) | | | - | | | | 2,130,496 | | | | | | | | - | | | € | 29.24 | | Total | | | 1,841,430 | | | | 2,563,542 | | | | | | | | | | | | | |
In 2019, the Final 2018 and Interim 2019 dividends were paid wholly in cash in May and September respectively. The Interim 2018 dividends were also paid wholly in cash in September 2018. Share schemes The aggregate number of shares which may be committed for issue in respect of any share option scheme, savings-related share option scheme, share participation scheme, performance share plan or any subsequent option scheme or share plan, may not exceed 10% of the issued ordinary share capital from time to time. | | | * The Interim 2018 dividend was paid wholly in cash.
| | 189 |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 199 |
31. Share Capital and Reserves - continued
Share option schemes Details of share options granted under the Company’s Share Option Schemes and the terms attaching thereto are provided in note 9 to the financial statements. Under these schemes, options over a total of 796,9441,147,149 Ordinary Shares were exercised during the financial year (2017: 1,589,335; 2016: 2,223,574)(2018: 796,944; 2017: 1,589,335). | | | | Number of shares | | | Number of shares | | | | | 2018 | | | 2017 | | | 2016 | | | 2019 | | | 2018 | | | 2017 | | Options exercised during the year (satisfied by the issue of new shares) | | | 496,661 | | | | 1,589,335 | | | | 2,209,638 | | | | - | | | | 496,661 | | | | 1,589,335 | | Options exercised during the year (satisfied by the reissue of Treasury Shares) | | | 300,283 | | | | - | | | | 13,936 | | | | 1,147,149 | | | | 300,283 | | | | - | | Total | | | 796,944 | | | | 1,589,335 | | | | 2,223,574 | | | | 1,147,149 | | | | 796,944 | | | | 1,589,335 | |
Share participation schemes As at 31 December 2018, 8,025,732 (2017: 7,862,416)2019, 8,174,578 (2018: 8,025,732) Ordinary Shares had been appropriated to participation schemes. In the financial year ended 31 December 2018,2019, the appropriation was satisfied by the purchase of 163,316148,846 shares was(2018: 59,666 satisfied by the issue of 59,666 (2017: 133,004) new shares andshares; 103,650 by there-issue of 103,650 (2017: no shares) treasury shares.Treasury Shares). The Ordinary Shares appropriated pursuant to these schemes were issued at market value on the dates of appropriation.appropriation). The shares issued pursuant to these schemes are excluded from the scope of IFRS 2 and are hence not factored into the expense computation and the associated disclosures in note 9. | | Preference share capital | | 5% Cumulative Preference Shares of€1.27 each | | | | | | 7% ‘A’ Cumulative Preference Shares of€1.27 each | | | 5% Cumulative
Preference Shares
of€1.27 each | | | | | | 7% ‘A’ Cumulative
Preference Shares
of€1.27 each | | | | | Number of Shares
‘000s | | | €m | | | | | | Number of Shares
‘000s | | | €m | | | Number of Shares
‘000s | | | €m | | | | | | Number of Shares
‘000s | | | €m | | Authorised | | | | | | | | | | | | | | | | | At 1 January 2018 and 31 December 2018 | | | 150 | | | | - | | | | | | 872 | | | | 1 | | | At 1 January 2019 and 31 December 2019 | | | | 150 | | | | - | | | | | | 872 | | | | 1 | | | Allotted,called-up and fully paid | | | | | | | | | | | | | | | | | At 1 January 2018 and 31 December 2018 | | | 50 | | | | - | | | | | | 872 | | | | 1 | | | At 1 January 2019 and 31 December 2019 | | | | 50 | | | | - | | | | | | 872 | | | | 1 | |
There was no movement in the number of cumulative preference shares in either the current or the prior year. The holders of the 5% Cumulative Preference Shares are entitled to a fixed cumulative preference dividend at a rate of 5% per annum and priority in awinding-up to repayment of capital, but have no further right to participate in profits or assets and are not entitled to be present or vote at general meetings unless their dividend is in arrears. Dividends on the 5% Cumulative Preference Shares are payable half-yearly on 15 April and 15 October in each year. The 5% Cumulative Preference Shares represent 0.02% of the total issued share capital. The holders of the 7% ‘A’ Cumulative Preference Shares are entitled to a fixed cumulative preference dividend at a rate of 7% per annum, and subject to the rights of the holders of the 5% Cumulative Preference Shares, priority in awinding-up to repayment of capital, but have no further right to participate in profits or assets and are not entitled to be present or vote at general meetings unless their dividend is in arrears or unless the business of the meeting includes certain matters, which are specified in the Articles of Association. Dividends on the 7% ‘A’ Cumulative Preference Shares are payable half-yearly on 5 April and 5 October in each year. The 7% ‘A’ Cumulative Preference Shares represent 0.39%0.41% of the total issued share capital. | | Treasury Shares/own shares | | 2018 €m | | | 2017 €m | | | 2019
€m | | | 2018
€m | | At 1 January | | | (15) | | | | (14) | | | | (792) | | | | (15) | | New shares allotted to the Employee Benefit Trust (own shares) | | | (56) | | | | (63) | | | | Own shares released by the Employee Benefit Trust under the 2014 Performance Share Plan | | | 56 | | | | 63 | | | | Shares acquired by CRH plc (Treasury Shares) (i) (ii) | | | (789) | | | | - | | | New Shares allotted to the Employee Benefit Trust (own shares) | | | | - | | | | (56) | | | Own Shares released by the Employee Benefit Trust under the 2014 Performance Share Plan | | | | 62 | | | | 56 | | | Shares acquired by CRH plc (Treasury Shares) (i) | | | | (791) | | | | (789) | | Shares acquired by Employee Benefit Trust (own shares) | | | (3) | | | | (3) | | | | (61) | | | | (3) | | Treasury Shares/own shares reissued | | | 15 | | | | 2 | | | Treasury Shares/own shares reissued (ii) | | | | 35 | | | | 15 | | Cancellation of Treasury Shares | | | | 1,222 | | | | - | | At 31 December | | | (792) | | | | (15) | | | | (325) | | | | (792) | |
Notes (i) to (ii) are set out below.overleaf.
| | | | | 190200 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
| | | | | | | CRH Annual Report and Form 20-F |2018
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31. Share Capital and Reserves - continued The movement in the number of Treasury Shares/own shares during the financial year was as follows: | | | | | | | Number of shares | | | | | 2018 | | | 2017 | | | 2019 | | | 2018 | | At 1 January | | | 391,757 | | | | 368,403 | | | | 27,843,927 | | | | 391,757 | | New shares allotted to the Employee Benefit Trust (own shares) | | | 2,034,112 | | | | 1,890,668 | | | Own shares released by the Employee Benefit Trust under the 2014 Performance Share Plan | | | (2,034,112) | | | | (1,890,668) | | | Shares acquired by CRH plc (Treasury Shares) (i) (ii) | | | 27,901,471 | | | | - | | | New Shares allotted to the Employee Benefit Trust (own shares) | | | | - | | | | 2,034,112 | | Own Shares released by the Employee Benefit Trust under the 2014 Performance Share Plan | | | | (2,256,986) | | | | (2,034,112) | | Shares acquired by CRH plc (Treasury Shares) (i) | | | | 27,357,116 | | | | 27,901,471 | | Shares acquired by Employee Benefit Trust (own shares) | | | 108,377 | | | | 96,783 | | | | 2,189,448 | | | | 108,377 | | Treasury Shares/own shares reissued (iii) | | | (557,678) | | | | (73,429) | | | Treasury Shares/own shares reissued (ii) | | | | (1,147,149) | | | | (557,678) | | Cancellation of Treasury Shares | | | | (43,750,000) | | | | - | | At 31 December | | | 27,843,927 | | | | 391,757 | | | | 10,236,356 | | | | 27,843,927 | | | Split of Treasury/own shares (iv) | | | | | | Split of Treasury Shares/own shares (iii) | | | | | | Treasury Shares | | | 27,551,386 | | | | 53,848 | | | | 10,011,353 | | | | 27,551,386 | | Own shares | | | 292,541 | | | | 337,909 | | | | 225,003 | | | | 292,541 | | | | | | 27,843,927 | | | | 391,757 | | | | 10,236,356 | | | | 27,843,927 | |
| (i) | In April 2018, CRH announced its intention to introduce a share repurchase programme (the ‘Programme’) to repurchase Ordinary Shares (including Income Shares) of up to€1 billion (the ‘Programme’).billion. During 2018, CRH subsequently announced in May 2018 and August 2018 that it had entered into arrangements with UBS A.G., London Branch and, in November 2018 with Merril Lynch International, to repurchaserepurchased a total of 27,901,471 Ordinary Shares on CRH’s behalf. Atunder the Programme, returning a total of€0.8 billion in cash to shareholders. The Programme was extended in 2019, with CRH repurchasing a total of 27,357,116 Ordinary Shares in 2019 and returning a further€0.8 billion to shareholders. As at 31 December 2018 the2019, a total cost of shares repurchased€1.6 billion cash has been returned to shareholders under the programme was€789 million.Programme. | |
(ii) | On 2 January 2019, CRH commenced Phase 4 of the Programme through arrangements, for an additional€200 million, with UBS A.G., London Branch. This will complete the share buyback programme.On 7 January 2020, CRH announced a further extension of the Programme for an additional€200 million.
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(iii)(ii) | These reissued Treasury Shares were previously purchased at an average price of€27.96 (2017:30.56 (2018:€15.89)27.96). | |
(iv)(iii) | As at the balance sheet date, the nominal value of the Treasury Shares and own shares was€9.43.4 million and€0.1 million respectively (2017:(2018:€nil9.4 million and€0.1 million respectively). Dividends have been waived by the Trustees of the own shares. | |
| | Reconciliation of shares issued to net proceeds | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2018
€m | | | 2017
€m | | Shares issued at nominal amount: | | | | | | | | | | | - Performance Share Plan Awards | | | 1 | | | | 1 | | | | - | | | | 1 | | | | 1 | | - scrip shares issued in lieu of cash dividends | | | - | | | | 1 | | | | 2 | | | | - | | | | 1 | | - share options and share participation schemes | | | - | | | | - | | | | 1 | | | Premium on shares issued | | | 117 | | | | 180 | | | | 216 | | | | 117 | | | | 180 | | Total value of shares issued | | | 118 | | | | 182 | | | | 219 | | | | 118 | | | | 182 | | Issue of scrip shares in lieu of cash dividends (note 13) | | | (51) | | | | (77) | | | | (167) | | | | (51) | | | | (77) | | Shares allotted to the Employee Benefit Trust (v) | | | (56) | | | | (63) | | | | - | | | Shares allotted to the Employee Benefit Trust (vi) | | | | (56) | | | | (63) | | Net proceeds from issue of shares | | | 11 | | | | 42 | | | | 52 | | | | 11 | | | | 42 | |
(v)(vi) | During the year,In 2018 and 2017, shares were allottedallotted/re-issued to the Employee Benefit Trust to satisfy the vesting and release of awards under the 2014 Performance Share Plan to qualifying employees. An increase in nominal Share Capital and Share Premium of€56 million (2017: and€63 million)million, respectively, arose on the allotment to the Employee Benefit Trust. No such allotment occured during 2019.
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| | Share premium | |
| 2018
€m |
| |
| 2017
€m |
| |
| 2019
€m |
| |
| 2018
€m |
| At 1 January | | | 6,417 | | | | 6,237 | | | | 6,534 | | | | 6,417 | | Premium arising on shares issued | | | 117 | | | | 180 | | | | - | | | | 117 | | At 31 December | | | 6,534 | | | | 6,417 | | | | 6,534 | | | | 6,534 | |
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
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32. Business Combinations The acquisitions completed during the year ended 31 December 20182019 by reportable segment, together with the completion dates, are detailed below; these transactions entailed the acquisition of an effective 100% stake except where indicated to the contrary: Europe Heavyside:Americas Materials:
France:Canada: Bellefleur Group (1Beecroft Property (14 March), Mirabel Property (7 May) and Speyside Property (23 December);
Colorado:Otter Creek Property (28 March); Connecticut:Wallingford Property (30 January); Florida:Golden Gate Property (7 March) and Fortress Block, LLC (28 June); Idaho:Heyrend Property (26 November) and Greenleaf Property (27 November); Iowa:Kenyon Property (11 January); Kentucky:Brushy Creek Stone LLC (9 August); Michigan:Ottawa Lake Property (31 January), Delton Property (26 April) and Dinkgrave Property (29 July); Ireland:Nebraska:Treadway Property (25 November);
New York:Solvay Rail Terminal (28 June); North Carolina:Cherokee County Property (18 November); Ohio:KMC Paving (8 March); Oregon:Windsor Rock Products (1 March), The Dalles Concrete, Inc. (29 March), Hood River Sand, Gravel andReady-Mix (29 March) and Pioneer Asphalt (31 May); Texas:JLB Contracting (25 January) and CIG Rail Unloading Operations (3 July); Utah:Schmidt Property (25 November) and Grantsville Property (30 December); and Washington:Colville Valley Concrete (2 August). Europe Materials: Denmark:RC Beton A/S (1 October); Finland:certain assets of Lujabetoni Oulu (1 September) and Ämmän Betoni Oy (31 December); France:land adjacent to GooigDecize Quarry (10(19 December), land adjacent to Lumbres Quarry (20 December) and land adjacent to CastlemineLa Villeneuve au Châtelot Quarry (19(27 December); IslePoland:land adjacent to Sitkówka Quarry (13 March), land adjacent to Ożarów Quarry (23 September) and Astaldi Asphalt Plant (9 December);
Romania:certain assets of Man:Pomponio SRL (1 October); and UK: Mini Mixlands adjacent to Whisby Quarry (13 December & 20 December), land adjacent to Park Quarry (18 December), land adjacent to Block Fen Quarry (20 December) and land adjacent to Langford Quarry (23 December). Building Products: Americas Canada:Primex Technologies Inc. (9 July) and Abbotsford Concrete Limited (19 September)Products Ltd. (31 July); Arizona:Torrent Resources, Inc. (4 November); Florida:Suntree Technologies, Inc. (5 March) and Standard Precast Inc. (1 October); Ohio:Buckeye Resources, Inc. (9 May); Texas:Charlotte’s Concrete, Inc. (5 August) and certain assets of Glass Wholesalers, Inc. (13 December); Virginia:certain assets of Allied Concrete Company, LLC (28 March); and Washington:Quality Concrete Products, Inc. (15 February) and Granite Precasting & Concrete Inc. (6 June). Other Australia:Aus Pits Pty Ltd (30 August); Germany:BVG Ranck (30 April); Netherlands:Filoform B.V. (1 May); Poland:Libet S.A. Lublin Paving Plant (1 March); and UK: Alun Griffiths Contractors Ltd. (4 January), Hopkins Concrete Ltd. (13 April), certain assets of Breedon plc (1 July), land adjacent to Kingsley Quarry (16th July), land adjacent to Langford Quarry (21Isedio Ltd (30 September) and Keele & Kingsley Quarries (16 November).
Europe Lightside:
Australia: Connolly Key Joint Pty Ltd. (30 April); and
UK:NAL Developments Ltd. (3 April).
Europe Distribution:
Belgium:Florisan NV (1 August); and
Germany:Bergmann & Franz Nach. GmbH & Co. KG (1 November).
Americas Materials:
Substantial acquisition: On 20 June, CRH acquired Ash Grove Cement Company (Ash Grove), a leading US cement manufacturer headquartered in Overland Park, Kansas, US. Ash Grove operates eight cement plants across eight states, combined with extensive readymixed concrete, aggregates, packaged products (managed within our Americas Products segment post-acquisition) and associated logistics assets across the US.
Arkansas: Sharp’s Property (26 June);
Canada: certain assets of Seegmiller Companies (9 May);
Florida:American Cement Company, LLC. (17 April);
Georgia: assets of Martin Marietta’s Forsyth Quarry (27 April);
Idaho: assets of Valley Paving Company (2 April);
Maine: assets of Bruce A. Manzer, Inc. and North Country Concrete, LLC. (2 February);
Michigan: Maybee Property (5 April) and Denniston Property (10 April);
Mississippi: Hazlehurst Property (29 November);
Ohio:East Liberty Property (20 February), certain assets of Allard Excavation, LLC. and its affiliate Mae Materials, LLC. (16 May) and New Conklin Property (14 December);
Oklahoma: assets of Glover & Associates (6 June), certain assets ofMid-Continent Concrete Company and Alliance Transportation, Inc. (22 June) and Roberts Quarry (19 November);
Tennessee: Sand Products of Monterey, LLC. (21 September);
Texas: Robinson Property (9 April), Perales Property (3 July) and certain assets ofTex-Mix (18 September);
Virginia: certain assets of Pounding Mill Quarry Corporation (2 July);
Washington: assets of American Rock Products (2 March) and assets of Spokane Rock Products (2 March); and
West Virginia: David Hill Concrete (24 August).
Americas Products:
Alabama: Coral Industries, Inc. (10 April);
Canada:Les Distributions Vimac, Inc. (31 July);
Idaho:Valley Precast, Inc. (6 November);
Illinois: Concrete Specialties Company, Inc. (15 August);
Maine:SIGCO, LLC. (6 July); and
Utah: assets of Robertson Manufacturing, Inc. (22 March).
| | | | | 192202 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
| | | | | | | CRH Annual Report and Form 20-F |2018
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32. Business Combinations - continued The identifiable net assets acquired, including adjustments to provisional fair values, were as follows: | | | | Ash Grove | | | Other
acquisitions | | | Total | | �� | | | | | | | | | | | | | | | 2018 €m | | | 2018 €m | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | ASSETS | | | | | | | | | | | | | | | | | | Non-current assets | | | | | | | | | | | | | | | | | | Property, plant and equipment | | | 2,076 | | | | 538 | | | | 2,614 | | | | 1,536 | | | | 19 | | | | 319 | | | | 2,614 | | | | 1,536 | | | Intangible assets | | | - | | | | 58 | | | | 58 | | | | 56 | | | | 14 | | | | 92 | | | | 58 | | | | 56 | | | Equity accounted investments | | | 1 | | | | - | | | | 1 | | | | - | | | | - | | | | - | | | | 1 | | | | - | | | Totalnon-current assets | | | 2,077 | | | | 596 | | | | 2,673 | | | | 1,592 | | | | 33 | | | | 411 | | | | 2,673 | | | | 1,592 | | | Current assets | | | | | | | | | | | | | | | | | | Inventories | | | 183 | | | | 72 | | | | 255 | | | | 114 | | | | 9 | | | | 58 | | | | 255 | | | | 114 | | | Trade and other receivables (i) | | | 191 | | | | 127 | | | | 318 | | | | 129 | | | | 28 | | | | 66 | | | | 318 | | | | 129 | | | Cash and cash equivalents | | | 48 | | | | 21 | | | | 69 | | | | 174 | | | | 4 | | | | 10 | | | | 69 | | | | 174 | | | Total current assets | | | 422 | | | | 220 | | | | 642 | | | | 417 | | | | 41 | | | | 134 | | | | 642 | | | | 417 | | | LIABILITIES | | | | | | | | | | | | | | | | | | Trade and other payables | | | (94) | | | | (130) | | | | (224) | | | | (149) | | | | (14) | | | | (73) | | | | (224) | | | | (149) | | | Provisions for liabilities | | | (81) | | | | (3) | | | | (84) | | | | (49) | | | | 18 | | | | (6) | | | | (84) | | | | (49) | | | Retirement benefit obligations | | | (114) | | | | (1) | | | | (115) | | | | (52) | | | | (1) | | | | (1) | | | | (115) | | | | (52) | | | Interest-bearing loans and borrowings and finance leases | | | (32) | | | | (42) | | | | (74) | | | | (12) | | | | (3) | | | Lease liabilities | | | | (64) | | | | - | | | | - | | | Interest-bearing loans and borrowings and finance leases* | | | | (9) | | | | (74) | | | | (12) | | | Current income tax liabilities | | | (8) | | | | (7) | | | | (15) | | | | (22) | | | | 4 | | | | 9 | | | | (15) | | | | (22) | | | Deferred income tax liabilities | | | (365) | | | | (46) | | | | (411) | | | | (132) | | | | 35 | | | | - | | | | (411) | | | | (132) | | | Total liabilities | | | (694) | | | | (229) | | | | (923) | | | | (416) | | | | 39 | | | | (144) | | | | (923) | | | | (416) | | | Total identifiable net assets at fair value | | | 1,805 | | | | 587 | | | | 2,392 | | | | 1,593 | | | | 113 | | | | 401 | | | | 2,392 | | | | 1,593 | | | Goodwill arising on acquisition (ii) | | | 1,204 | | | | 300 | | | | 1,504 | | | | 487 | | | | 71 | | | | 278 | | | | 1,504 | | | | 487 | | | Joint ventures becoming subsidiaries | | | - | | | | (120) | | | | (120) | | | | - | | | | - | | | | - | | | | (120) | | | | - | | | Non-controlling interests* | | | (48) | | | | - | | | | (48) | | | | (20) | | | | (9) | | | Non-controlling interests** | | | | (1) | | | | (48) | | | | (20) | | | Total consideration | | | 2,961 | | | | 767 | | | | 3,728 | | | | 2,060 | | | | 175 | | | | 678 | | | | 3,728 | | | | 2,060 | | | Consideration satisfied by: | | | | | | | | | | | | | | | | | | Cash payments | | | 2,961 | | | | 613 | | | | 3,574 | | | | 2,015 | | | | 153 | | | | 660 | | | | 3,574 | | | | 2,015 | | | Asset exchange | | | - | | | | 12 | | | | 12 | | | | - | | | | - | | | | - | | | | 12 | | | | - | | | Deferred consideration (stated at net present cost) | | | - | | | | 10 | | | | 10 | | | | 45 | | | | 21 | | | | 10 | | | | 10 | | | | 45 | | | Contingent consideration (iii) | | | - | | | | 93 | | | | 93 | | | | - | | | | 1 | | | Contingent consideration | | | | 8 | | | | 93 | | | | - | | | Profit on step acquisition (iv) | | | - | | | | 39 | | | | 39 | | | | - | | | | - | | | Profit on step acquisition | | | | - | | | | 39 | | | | - | | | Total consideration | | | 2,961 | | | | 767 | | | | 3,728 | | | | 2,060 | | | | 175 | | | | 678 | | | | 3,728 | | | | 2,060 | | | Net cash outflow arising on acquisition | | | | | | | | | | | | | | | | | | Cash consideration | | | 2,961 | | | | 613 | | | | 3,574 | | | | 2,015 | | | | 153 | | | | 660 | | | | 3,574 | | | | 2,015 | | | Less: cash and cash equivalents acquired | | | (48) | | | | (21) | | | | (69) | | | | (174) | | | | (4) | | | | (10) | | | | (69) | | | | (174) | | | Total outflow in the Consolidated Statement of Cash Flows | | | 2,913 | | | | 592 | | | | 3,505 | | | | 1,841 | | | | 149 | | | | 650 | | | | 3,505 | | | | 1,841 | |
Notes (i) to (iv)(ii) are set out overleaf. | | | | | * Includes€6 million in 2018 relating to finance leases previously capitalised under IAS 17. All leases capitalised under IFRS 16 have been included as lease liabilities in 2019. ** Non-controlling interests are measured at the proportionate share of net assets. | | | 193 | |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 203 |
32. Business Combinations - continued
The acquisition balance sheet presented on the previous page reflects the identifiable net assets acquired in respect of acquisitions completed during 2019, together with adjustments to provisional fair values in respect of acquisitions completed during 2018. The measurement period for a number of acquisitions completed in 2018, including Ash Grove Cement Company, closed in 2019 with no material adjustments identified. CRH performs a detailed quantitative and qualitative assessment of each acquisition in order to determine whether it is material for the purposes of separate disclosure under IFRS 3Business Combinations. The acquisition of Ash Grove is deemed to be a material acquisition. None of the remaining acquisitions completed during the financial year were considered sufficiently material to warrant separate disclosure of the attributable fair values. Due to the size and scale of the Ash Grove acquisition, the determinationThe initial assignment of the fair values ofto identifiable assets acquired and liabilities assumed as disclosed on page 193 are provisional (principally in respect of property, plant and equipment, provisions for liabilities and the associated goodwill and deferred tax aspects).equipment) in respect of certain acquisitions due to timing of close. The fair value assigned to identifiable assets and liabilities acquired is based on estimates and assumptions made by management at the time of acquisition. CRH may revise its purchase price allocation during the subsequent reporting window as permitted under IFRS 3. | (i) | TradeThe gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to€67 million (2018:€324 million; 2017: €132 million). The fair value of these receivables is€66 million (all of which is expected to be recoverable) (2018:€318 million; 2017:€129 million).
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gross contractual amounts due | | | | | | Loss
allowance | | | | | | Fair value | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | Ash Grove | | | 194 | | | | - | | | | - | | | | | | | | (3 | ) | | | - | | | | - | | | | | | | | 191 | | | | - | | | | - | | Other acquisitions | | | 130 | | | | 132 | | | | 30 | | | | | | | | (3 | ) | | | (3) | | | | (2) | | | | | | | | 127 | | | | 129 | | | | 28 | | Total Group | | | 324 | | | | 132 | | | | 30 | | | | | | | | (6 | ) | | | (3) | | | | (2) | | | | | | | | 318 | | | | 129 | | | | 28 | |
| (ii) | The principal factor contributing to the recognition of goodwill on acquisitions entered into by the Group is the realisation of cost savings and other synergies with existing entities in the Group which do not qualify for separate recognition as intangible assets. Due to the asset-intensive nature of operations in the Europe HeavysideMaterials and Americas Materials business segments, no significant separately identifiable intangible assets are recognised on business combinations in these segments.€277164 million of the goodwill recognised in respect of acquisitions completed in 20182019 is expected to be deductible for tax purposes (2017:(2018:€277 million; 2017:€260 million; 2016:€15 million). |
(iii) | The fair value of contingent consideration of€93 million is arrived at through discounting the expected payment (based on scenario modelling) to present value. On an undiscounted basis, the corresponding future payments on current year acquisitions, for which the Group may be liable, ranges from€136 million to€206 million. This is based on a range of estimated potential outcomes of the expected payment amounts.
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(iv) | The profit on step acquisition relates to the acquisition of a controlling stake in American Cement Company, LLC. A gain of€39 million was recognised from remeasuring the 50% equity interest in the acquiree held by the Group prior to the business combination to its acquisition date fair value of€52 million. The gain is recognised within the profit on disposals line in the Consolidated Income Statement.
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| | | | | | | | | | | | | | Acquisition-related costs | | 2018
€m | | | 2017
€m | | | 2016
€m | | Ash Grove | | | 13 | | | | - | | | | - | | Other acquisitions | | | 7 | | | | 11 | | | | 2 | | Total Group | | | 20 | | | | 11 | | | | 2 | |
The above acquisition-relatedAcquisition-related costs for continuing operations, which exclude post-acquisition integration costs, amounting to€6 million (2018:€18 million; 2017: €10 million) have been included in operating costs in the Consolidated Income Statement (note 4).
| | | | | | | CRH Annual Report and Form 20-F |2018
|
The following table analyses the 4458 acquisitions completed in 2018 (2017:2019 (2018: 44 acquisitions; 2017: 31 acquisitions; 2016: 21 acquisitions) by reportable segment and provides details of the goodwill and consideration figures arising in each of those segments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of
acquisitions | | | | | | Goodwill | | | | | | Consideration | | | Reportable segments | | 2018 | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | | 2016 | | | | | | | | | | | | | | | | | €m | | | €m | | | €m | | | | | | €m | | | €m | | | €m | | Europe Heavyside | | | 10 | | | | 8 | | | | 5 | | | | | | | | 46 | | | | 155 | | | | 2 | | | | | | | | 86 | | | | 698 | | | | 15 | | Europe Lightside | | | 2 | | | | - | | | | 2 | | | | | | | | 14 | | | | - | | | | 7 | | | | | | | | 34 | | | | - | | | | 22 | | Europe Distribution | | | 2 | | | | 2 | | | | 1 | | | | | | | | - | | | | 17 | | | | - | | | | | | | | 33 | | | | 30 | | | | - | | Europe | | | 14 | | | | 10 | | | | 8 | | | | | | | | 60 | | | | 172 | | | | 9 | | | | | | | | 153 | | | | 728 | | | | 37 | | | | | | | | | | | | | | Americas Materials (i) | | | 24 | | | | 13 | | | | 8 | | | | | | | | 1,353 | | | | 239 | | | | 10 | | | | | | | | 3,398 | | | | 1,171 | | | | 97 | | Americas Products (i) | | | 6 | | | | 8 | | | | 5 | | | | | | | | 60 | | | | 76 | | | | 7 | | | | | | | | 177 | | | | 162 | | | | 33 | | Americas | | | 30 | | | | 21 | | | | 13 | | | | | | | | 1,413 | | | | 315 | | | | 17 | | | | | | | | 3,575 | | | | 1,333 | | | | 130 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Group | | | 44 | | | | 31 | | | | 21 | | | | | | | | 1,473 | | | | 487 | | | | 26 | | | | | | | | 3,728 | | | | 2,061 | | | | 167 | | Adjustments to provisional fair values of prior year acquisitions | | | | | | | | | | | | | | | | | | | 31 | | | | - | | | | 45 | | | | | | | | - | | | | (1) | | | | 8 | | Total | | | | | | | | | | | | | | | | | | | 1,504 | | | | 487 | | | | 71 | | | | | | | | 3,728 | | | | 2,060 | | | | 175 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of acquisitions | | | | | | Goodwill | | | | | | Consideration | | | Reportable segments | | 2019 | | | 2018 | | | 2017 | | | | | | 2019 | | | 2018 | | | 2017 | | | | | | 2019 | | | 2018 | | | 2017 | | | Continuing operations | | | | | | | | | | | | | | €m | | | €m | | | €m | | | | | | €m | | | €m | | | €m | | Americas Materials | | | 27 | | | | 24 | | | | 13 | | | | | | | | 31 | | | | 1,353 | | | | 239 | | | | | | | | 161 | | | | 3,398 | | | | 1,171 | | Europe Materials | | | 15 | | | | 10 | | | | 8 | | | | | | | | 3 | | | | 46 | | | | 155 | | | | | | | | 64 | | | | 86 | | | | 698 | | Building Products | | | 15 | | | | 8 | | | | 8 | | | | | | | | 228 | | | | 74 | | | | 76 | | | | | | | | 450 | | | | 211 | | | | 162 | | Total Group from continuing operations | | | 57 | | | | 42 | | | | 29 | | | | | | | | 262 | | | | 1,473 | | | | 470 | | | | | | | | 675 | | | | 3,695 | | | | 2,031 | | | | | | | | | | | | | | Discontinued operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Europe Distribution | | | 1 | | | | 2 | | | | 2 | | | | | | | | - | | | | - | | | | 17 | | | | | | | | 3 | | | | 33 | | | | 30 | | Total Group | | | 58 | | | | 44 | | | | 31 | | | | | | | | 262 | | | | 1,473 | | | | 487 | | | | | | | | 678 | | | | 3,728 | | | | 2,061 | | Adjustments to provisional fair values of prior year acquisitions | | | | | | | | | | | | | | | | | | | 16 | | | | 31 | | | | - | | | | | | | | - | | | | - | | | | (1) | | Total | | | | | | | | | | | | | | | | | | | 278 | | | | 1,504 | | | | 487 | | | | | | | | 678 | | | | 3,728 | | | | 2,060 | |
| | | | | 204 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
(i) | The acquisition of Ash Grove is included within the Americas Materials segment with a portion of goodwill and consideration being allocated to the Americas Products segment to reflect the acquired packaged products business.
32. Business Combinations - continued |
The post-acquisition impact of acquisitions completed during the year on the Group’s profit for the financial year was as follows: | | | | Ash Grove 2018 €m | | Other
acquisitions
2018 €m | | | Total 2018 €m | | 2017 €m | | 2016 €m | | | 2019 | | | 2018 | | | 2017 | | | Continuing operations | | | €m | | | €m | | | €m | | Revenue | | 633 | | | 595 | | | | 1,228 | | | | 532 | | | | 101 | | | | 204 | | | | 1,202 | | | | 505 | | Profit/(loss) before tax for the financial year | | 119 | | | 25 | | | | 144 | | | | (2) | | | | 1 | | | | 2 | | | | 145 | | | | (1) | |
The revenue and profit of the Group for the financial year determined in accordance with IFRS as though the acquisitions effected during the year had been at the beginning of the year would have been as follows: | | | | Pro-forma 2018 | | | 2019 acquisitions | | | CRH Group excluding 2019 acquisitions | | | Pro-forma consolidated Group | | | | | 2018 acquisitions
€m | | | CRH Group
excluding 2018
acquisitions
€m | | | CRH Group including 2018 acquisitions
€m | | | | Continuing operations | | | €m | | | €m | | | €m | | Revenue | | | 2,095 | | | | 25,562 | | | | 27,657 | | | | 458 | | | | 24,925 | | | | 25,383 | | Profit before tax for the financial year | | | 190 | | | | 1,718 | | | | 1,908 | | | | 18 | | | | 2,113 | | | | 2,131 | |
There have been no acquisitions completed subsequent to the balance sheet date which would be individually material to the Group, thereby requiring disclosure under either IFRS 3 or IAS 10Events after the Balance Sheet Date. Development updates, giving details of acquisitions which do not require separate disclosure on the grounds of materiality, are published periodically.
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
205 |
33.Non-controlling Interests The totalnon-controlling interest at 31 December 20182019 is€525540 million (2017:(2018:€486525 million) of which€384414 million (2017:(2018:€391384 million) relates to Republic Cement & Building Materials (RCBM), Inc. and Republic Cement Land & Resources (RCLR), Inc. Thenon-controlling interests in respect of the Group’s other subsidiaries are not considered to be material. | | | | | | | | Name | | Principal activity | | Country of incorporation | | Economic ownership interest
held by non-controlling interest | | | | | Republic Cement & Building Materials, Inc. | | Manufacture, development and | | Philippines | | 45% | | and Republic Cement Land & Resources Inc. | | sale of cement and building materials | | | | |
The following is summarised financial information for RCBM and RCLR prepared in accordance with IFRS 12Disclosure of Interests in Other Entities. This information is before intragroup eliminations with other Group companies. | | Summarised financial information | | 2018 €m | | | 2017 €m | | | 2019 €m | | | 2018 €m | | (Loss)/profit for the year | | | (11) | | | | 14 | | | Profit/(loss) for the year | | | | 19 | | | | (11) | | | Current assets | | | 153 | | | | 159 | | | | 190 | | | | 153 | | Non-current assets | | | 1,351 | | | | 1,292 | | | | 1,504 | | | | 1,351 | | Current liabilities | | | (160) | | | | (140) | | | | (186) | | | | (160) | | Non-current liabilities | | | (712) | | | | (663) | | | | (822) | | | | (712) | | Net assets | | | 632 | | | | 648 | | | | 686 | | | | 632 | | | Cash flows from operating activities | | | 36 | | | | 9 | | | | 60 | | | | 36 | |
There were no dividends paid tonon-controlling interests of the combined Philippines business during the current or the prior year. CRH holds 40% of the equity share capital in RCBM and RCLR and has an economic interest of 55% of the combined Philippines business.Non-controlling interest relates to another party who holds 60% of the equity share capital in RCBM and RCLR and has an economic interest of 45% of the combined Philippines business. CRH has obtained control (as defined under IFRS 10Consolidated Financial Statements) by virtue of contractual arrangements which give CRH power to direct the relevantnon-nationalised activities of the business, in compliance with Philippine law.
| | | | | 206 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | | | CRH Annual Report and Form 20-F |2018
|
34. Related Party Transactions The principal related party relationships requiring disclosure in the Consolidated Financial Statements of the Group under IAS 24Related Party Disclosurespertain to: the existence of subsidiaries, joint ventures and associates; transactions with these entities entered into by the Group; the identification and compensation of key management personnel; and lease arrangements. Subsidiaries, joint ventures and associates The Consolidated Financial Statements include the financial statements of the Company (CRH plc, the ultimate parent) and its subsidiaries, joint ventures and associates as documented in the accounting policies on pages 128133 to 138.144. The Group’s principal subsidiaries, joint ventures and associates are disclosed on pages 252260 to 257.264. Sales to and purchases from joint ventures and associates are as follows: | | | | Joint Ventures | | | | | Associates | | | Joint ventures | | | | | Associates | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | Continuing operations | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | Sales | | | 107 | | | | 111 | | | | 88 | | | | | 40 | | | | 51 | | | | 56 | | | | 118 | | | | 107 | | | | 111 | | | | | 37 | | | | 40 | | | | 51 | | Purchases | | | 31 | | | | 55 | | | | 54 | | | | | 193 | | | | 400 | | | | 401 | | | | 24 | | | | 31 | | | | 55 | | | | | 16 | | | | 193 | | | | 400 | |
Loans extended by the Group to joint ventures and associates (see note 17) are included in financial assets. Amounts receivable from and payable to equity accounted investments (arising from the aforementioned sales and purchases transactions) as at the balance sheet date are included as separate line items in notes 19 and 20 to the Consolidated Financial Statements. Terms and conditions of transactions with subsidiaries, joint ventures and associates In general, the transfer pricing policy implemented by the Group across its subsidiaries is market-based. Sales to and purchases from joint ventures and associates are conducted in the ordinary course of business and on terms equivalent to those that prevail in arms-length transactions. The outstanding balances included in receivables and payables as at the balance sheet date in respect of transactions with joint ventures and associates are unsecured and settlement arises in cash. No guarantees have been either requested or provided in relation to related party receivables and payables. Loans to joint ventures and associates (as disclosed in note 17) are extended on normal commercial terms in the ordinary course of business with interest accruing and, in general, paid to the Group at predetermined intervals. Key management personnel For the purposes of the disclosure requirements of IAS 24, the term “key management personnel” (i.e. those persons having authority and responsibility for planning, directing and controlling the activities of the Company) comprises the Board of Directors which manages the business and affairs of the Company. | | | | | | | | | | | | | | Key management remuneration amounted to: | | 2018 €m | | | 2017 €m | | | 2016 €m | | Short-term benefits | | | 8 | | | | 9 | | | | 13 | | Post-employment benefits | | | 1 | | | | 1 | | | | 1 | | | Share-based payments - calculated in accordance with the principles disclosed in note 9 | | | 4 | | | | 3 | | | | 3 | | Total | | | 13 | | | | 13 | | | | 17 | |
| | | | | | | | | | | | | | Key management remuneration amounted to: | | 2019 €m | | | 2018 €m | | | 2017 €m | | Short-term benefits | | | 8 | | | | 8 | | | | 9 | | Post-employment benefits | | | 1 | | | | 1 | | | | 1 | | | Share-based payments - calculated in accordance with the principles disclosed in note 9 | | | 5 | | | | 4 | | | | 3 | | Total | | | 14 | | | | 13 | | | | 13 | |
Other than these compensation entitlements, there were no other transactions involving key management personnel. Lease arrangements CRH has a number of lease arrangements in place with related parties across the Group, which have been negotiated on an arms-length basis at market rates. We do not consider these arrangements to be material either individually or collectively in the context of the 2019, 2018 2017 and 20162017 Consolidated Financial Statements. 35. Events after the Balance Sheet Date With effect from 1 January 2020, the Group’s reporting currency changed from euro to US Dollar to reduce the potential for foreign exchange volatility in our future reported earnings. 36. Board Approval The Board of Directors approved and authorised for issue the financial statements on pages 123128 to 206215 in respect of the year ended 31 December 20182019 on 27 February 2019.2020.
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
207 |
36.37. Supplemental Guarantor Information
The following consolidating information presents Condensed Consolidated Balance Sheets as at 31 December 20182019 and 20172018 and Condensed Consolidated Income Statements and Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flow for the years ended 31 December 2019, 2018 2017 and 20162017 of the Company and CRH America, Inc. as required by Article3-10(c) of RegulationS-X. This information is prepared in accordance with IFRS with the exception that the subsidiaries are accounted for as investments under the equity method rather than being consolidated. CRH America, Inc. is 100% owned by the Company. The Guarantees of the Guarantor are full and unconditional. CRH plc also fully and unconditionally guarantees securities issued by CRH America Finance, Inc., which is a 100% owned finance subsidiary of CRH plc. CRH America, Inc. (the ‘Issuer’) has the following notes which are fully and unconditionally guaranteed by CRH plc (the ‘Guarantor’): US$400 million 5.750% Notes due 2021 – listed on the NYSE US$1,250 million 3.875% Notes due 2025 – listed on Euronext Dublin US$300 million 6.40% Notes due 2033 – listed on Euronext Dublin (i) US$500 million 5.125% Notes due 2045 – listed on Euronext Dublin | (i) | Originally issued as a US$300 million bond in September 2003. Subsequently in August 2009 and December 2010, US$87.445 million of the issued notes were acquired by CRH plc as part of liability management exercises undertaken. |
| | | | | 198208 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
37. Supplemental Guarantor Information - continued Supplemental Condensed Consolidated Balance Sheet as at 31 December 2019 | | | | | | | | | | | | | | | | | | | | | | | | Guarantor €m | | | Issuer
€m | | | Non-Guarantor subsidiaries €m | | | Eliminate and reclassify €m | | | CRH and subsidiaries €m | | ASSETS | | | | | | | | | | | | | | | | | | | | | Non-current assets | | | | | | | | | | | | | | | | | | | | | Property, plant and equipment | | | - | | | | - | | | | 17,424 | | | | - | | | | 17,424 | | Intangible assets | | | - | | | | - | | | | 8,434 | | | | - | | | | 8,434 | | Subsidiaries | | | 15,621 | | | | 709 | | | | 1,682 | | | | (18,012) | | | | - | | Investments accounted for using the equity method | | | - | | | | - | | | | 690 | | | | - | | | | 690 | | Advances to subsidiaries and parent undertakings | | | - | | | | 3,549 | | | | - | | | | (3,549) | | | | - | | Other financial assets | | | - | | | | - | | | | 12 | | | | - | | | | 12 | | Other receivables | | | - | | | | - | | | | 317 | | | | - | | | | 317 | | Derivative financial instruments | | | - | | | | 20 | | | | 56 | | | | - | | | | 76 | | Deferred income tax assets | | | - | | | | - | | | | 67 | | | | - | | | | 67 | | Totalnon-current assets | | | 15,621 | | | | 4,278 | | | | 28,682 | | | | (21,561) | | | | 27,020 | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Inventories | | | - | | | | - | | | | 2,742 | | | | - | | | | 2,742 | | Trade and other receivables | | | - | | | | - | | | | 3,767 | | | | - | | | | 3,767 | | Advances to subsidiaries and parent undertakings | | | 967 | | | | - | | | | 106 | | | | (1,073) | | | | - | | Current income tax recoverable | | | - | | | | - | | | | 20 | | | | - | | | | 20 | | Derivative financial instruments | | | - | | | | - | | | | 6 | | | | - | | | | 6 | | Cash and cash equivalents | | | 458 | | | | - | | | | 3,297 | | | | - | | | | 3,755 | | Total current assets | | | 1,425 | | | | - | | | | 9,938 | | | | (1,073) | | | | 10,290 | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | 17,046 | | | | 4,278 | | | | 38,620 | | | | (22,634) | | | | 37,310 | | | | | | | | EQUITY | | | | | | | | | | | | | | | | | | | | | Capital and reserves attributable to the Company’s equity holders | | | 16,940 | | | | 2,087 | | | | 15,925 | | | | (18,012) | | | | 16,940 | | Non-controlling interests | | | - | | | | - | | | | 540 | | | | - | | | | 540 | | Total equity | | | 16,940 | | | | 2,087 | | | | 16,465 | | | | (18,012) | | | | 17,480 | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | Non-current liabilities | | | | | | | | | | | | | | | | | | | | | Lease liabilities | | | - | | | | - | | | | 1,240 | | | | - | | | | 1,240 | | Interest-bearing loans and borrowings | | | - | | | | 2,171 | | | | 6,028 | | | | - | | | | 8,199 | | Derivative financial instruments | | | - | | | | - | | | | 1 | | | | - | | | | 1 | | Deferred income tax liabilities | | | - | | | | - | | | | 2,338 | | | | - | | | | 2,338 | | Other payables | | | - | | | | - | | | | 485 | | | | - | | | | 485 | | Advances from subsidiary and parent undertakings | | | - | | | | - | | | | 3,549 | | | | (3,549) | | | | - | | Retirement benefit obligations | | | - | | | | - | | | | 427 | | | | - | | | | 427 | | Provisions for liabilities | | | - | | | | - | | | | 760 | | | | - | | | | 760 | | Totalnon-current liabilities | | | - | | | | 2,171 | | | | 14,828 | | | | (3,549) | | | | 13,450 | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Lease liabilities | | | - | | | | - | | | | 271 | | | | - | | | | 271 | | Trade and other payables | | | - | | | | 20 | | | | 4,356 | | | | - | | | | 4,376 | | Advances from subsidiary and parent undertakings | | | 106 | | | | - | | | | 967 | | | | (1,073) | | | | - | | Current income tax liabilities | | | - | | | | - | | | | 503 | | | | - | | | | 503 | | Interest-bearing loans and borrowings | | | - | | | | - | | | | 815 | | | | - | | | | 815 | | Derivative financial instruments | | | - | | | | - | | | | 16 | | | | - | | | | 16 | | Provisions for liabilities | | | - | | | | - | | | | 399 | | | | - | | | | 399 | | Total current liabilities | | | 106 | | | | 20 | | | | 7,327 | | | | (1,073) | | | | 6,380 | | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 106 | | | | 2,191 | | | | 22,155 | | | | (4,622) | | | | 19,830 | | | | | | | | | | | | | | | | | | | | | | | | Total equity and liabilities | | | 17,046 | | | | 4,278 | | | | 38,620 | | | | (22,634) | | | | 37,310 | |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 209 |
Supplemental Condensed Consolidated Balance Sheet as at 31 December 2018 | | | | Guarantor
€m | | Issuer
€m | | Non-Guarantor
subsidiaries
€m | | Eliminate and
reclassify
€m | | CRH and
subsidiaries
€m | | | Guarantor
€m | | Issuer
€m | | Non-Guarantor subsidiaries
€m | | Eliminate and
reclassify €m | | CRH and
subsidiaries
€m | | ASSETS | | | | | | | Non-current assets | | | | | | | Property, plant and equipment | | | - | | | | - | | | | 15,761 | | | | - | | | | 15,761 | | | | - | | | | - | | | | 15,761 | | | | - | | | | 15,761 | | Intangible assets | | | - | | | | - | | | | 8,433 | | | | - | | | | 8,433 | | | | - | | | | - | | | | 8,433 | | | | - | | | | 8,433 | | Subsidiaries | | | 14,892 | | | | 572 | | | | 1,682 | | | | (17,146) | | | | - | | | | 14,892 | | | | 572 | | | | 1,682 | | | | (17,146) | | | | - | | Investments accounted for using the equity method | | | - | | | | - | | | | 1,163 | | | | - | | | | 1,163 | | | | - | | | | - | | | | 1,163 | | | | - | | | | 1,163 | | Advances to subsidiaries and parent undertakings | | | - | | | | 3,550 | | | | - | | | | (3,550) | | | | - | | | | - | | | | 3,550 | | | | - | | | | (3,550) | | | | - | | Other financial assets | | | - | | | | - | | | | 23 | | | | - | | | | 23 | | | | - | | | | - | | | | 23 | | | | - | | | | 23 | | Other receivables | | | - | | | | - | | | | 181 | | | | - | | | | 181 | | | | - | | | | - | | | | 181 | | | | - | | | | 181 | | Derivative financial instruments | | | - | | | | - | | | | 30 | | | | - | | | | 30 | | | | - | | | | - | | | | 30 | | | | - | | | | 30 | | Deferred income tax assets | | | - | | | | - | | | | 71 | | | | - | | | | 71 | | | | - | | | | - | | | | 71 | | | | - | | | | 71 | | Totalnon-current assets | | | 14,892 | | | | 4,122 | | | | 27,344 | | | | (20,696) | | | | 25,662 | | | | 14,892 | | | | 4,122 | | | | 27,344 | | | | (20,696) | | | | 25,662 | | | Current assets | | | | | | | Inventories | | | - | | | | - | | | | 3,061 | | | | - | | | | 3,061 | | | | - | | | | - | | | | 3,061 | | | | - | | | | 3,061 | | Trade and other receivables | | | - | | | | - | | | | 4,074 | | | | - | | | | 4,074 | | | | - | | | | - | | | | 4,074 | | | | - | | | | 4,074 | | Advances to subsidiaries and parent undertakings | | | 1,233 | | | | - | | | | 507 | | | | (1,740) | | | | - | | | | 1,233 | | | | - | | | | 507 | | | | (1,740) | | | | - | | Current income tax recoverable | | | - | | | | - | | | | 15 | | | | - | | | | 15 | | | | - | | | | - | | | | 15 | | | | - | | | | 15 | | Derivative financial instruments | | | - | | | | - | | | | 15 | | | | - | | | | 15 | | | | - | | | | - | | | | 15 | | | | - | | | | 15 | | Cash and cash equivalents | | | 411 | | | | - | | | | 1,935 | | | | - | | | | 2,346 | | | | 411 | | | | - | | | | 1,935 | | | | - | | | | 2,346 | | Total current assets | | | 1,644 | | | | - | | | | 9,607 | | | | (1,740) | | | | 9,511 | | | | 1,644 | | | | - | | | | 9,607 | | | | (1,740) | | | | 9,511 | | | | | | | | | | Total assets | | | 16,536 | | | | 4,122 | | | | 36,951 | | | | (22,436) | | | | 35,173 | | | | 16,536 | | | | 4,122 | | | | 36,951 | | | | (22,436) | | | | 35,173 | | | EQUITY | | | | | | | Capital and reserves attributable to the Company’s equity holders | | | 16,029 | | | | 1,950 | | | | 15,196 | | | | (17,146) | | | | 16,029 | | | | 16,029 | | | | 1,950 | | | | 15,196 | | | | (17,146) | | | | 16,029 | | Non-controlling interests | | | - | | | | - | | | | 525 | | | | - | | | | 525 | | | | - | | | | - | | | | 525 | | | | - | | | | 525 | | Total equity | | | 16,029 | | | | 1,950 | | | | 15,721 | | | | (17,146) | | | | 16,554 | | | | 16,029 | | | | 1,950 | | | | 15,721 | | | | (17,146) | | | | 16,554 | | | LIABILITIES | | | | | | | Non-current liabilities | | | | | | | Interest-bearing loans and borrowings | | | - | | | | 2,098 | | | | 6,600 | | | | - | | | | 8,698 | | | | - | | | | 2,098 | | | | 6,600 | | | | - | | | | 8,698 | | Derivative financial instruments | | | - | | | | 16 | | | | 2 | | | | - | | | | 18 | | | | - | | | | 16 | | | | 2 | | | | - | | | | 18 | | Deferred income tax liabilities | | | - | | | | - | | | | 2,209 | | | | - | | | | 2,209 | | | | - | | | | - | | | | 2,209 | | | | - | | | | 2,209 | | Other payables | | | - | | | | - | | | | 472 | | | | - | | | | 472 | | | | - | | | | - | | | | 472 | | | | - | | | | 472 | | Advances from subsidiary and parent undertakings | | | - | | | | - | | | | 3,550 | | | | (3,550) | | | | - | | | | - | | | | - | | | | 3,550 | | | | (3,550) | | | | - | | Retirement benefit obligations | | | - | | | | - | | | | 424 | | | | - | | | | 424 | | | | - | | | | - | | | | 424 | | | | - | | | | 424 | | Provisions for liabilities | | | - | | | | - | | | | 719 | | | | - | | | | 719 | | | | - | | | | - | | | | 719 | | | | - | | | | 719 | | Totalnon-current liabilities | | | - | | | | 2,114 | | | | 13,976 | | | | (3,550) | | | | 12,540 | | | | - | | | | 2,114 | | | | 13,976 | | | | (3,550) | | | | 12,540 | | | Current liabilities | | | | | | | Trade and other payables | | | - | | | | 21 | | | | 4,588 | | | | - | | | | 4,609 | | | | - | | | | 21 | | | | 4,588 | | | | - | | | | 4,609 | | Advances from subsidiary and parent undertakings | | | 507 | | | | - | | | | 1,233 | | | | (1,740) | | | | - | | | | 507 | | | | - | | | | 1,233 | | | | (1,740) | | | | - | | Current income tax liabilities | | | - | | | | - | | | | 443 | | | | - | | | | 443 | | | | - | | | | - | | | | 443 | | | | - | | | | 443 | | Interest-bearing loans and borrowings | | | - | | | | 37 | | | | 581 | | | | - | | | | 618 | | | | - | | | | 37 | | | | 581 | | | | - | | | | 618 | | Derivative financial instruments | | | - | | | | - | | | | 41 | | | | - | | | | 41 | | | | - | | | | - | | | | 41 | | | | - | | | | 41 | | Provisions for liabilities | | | - | | | | - | | | | 368 | | | | - | | | | 368 | | | | - | | | | - | | | | 368 | | | | - | | | | 368 | | Total current liabilities | | | 507 | | | | 58 | | | | 7,254 | | | | (1,740) | | | | 6,079 | | | | 507 | | | | 58 | | | | 7,254 | | | | (1,740) | | | | 6,079 | | | | | | | | | | Total liabilities | | | 507 | | | | 2,172 | | | | 21,230 | | | | (5,290) | | | | 18,619 | | | | 507 | | | | 2,172 | | | | 21,230 | | | | (5,290) | | | | 18,619 | | | | | | | | | | Total equity and liabilities | | | 16,536 | | | | 4,122 | | | | 36,951 | | | | (22,436) | | | | 35,173 | | | | 16,536 | | | | 4,122 | | | | 36,951 | | | | (22,436) | | | | 35,173 | |
| | | | | | | CRH Annual Report and FormANNUAL REPORT AND FORM 20-F|2018 2019 |
36. Supplemental Guarantor Information - continued
Supplemental Condensed Consolidated Balance Sheet as at 31 December 2017
| | | | | | | | | | | | | | | | | | | | | | | | Guarantor
€m | | | Issuer
€m | | | Non-Guarantor
subsidiaries
€m | | | Eliminate and
reclassify
€m | | | CRH and
subsidiaries
€m | | ASSETS | | | | | | | | | | | | | | | | | | | | | Non-current assets | | | | | | | | | | | | | | | | | | | | | Property, plant and equipment | | | - | | | | - | | | | 13,094 | | | | - | | | | 13,094 | | Intangible assets | | | - | | | | - | | | | 7,214 | | | | - | | | | 7,214 | | Subsidiaries | | | 8,658 | | | | 458 | | | | 1,682 | | | | (10,798) | | | | - | | Investments accounted for using the equity method | | | - | | | | - | | | | 1,248 | | | | - | | | | 1,248 | | Advances to subsidiaries and parent undertakings | | | - | | | | 3,627 | | | | - | | | | (3,627) | | | | - | | Other financial assets | | | - | | | | - | | | | 25 | | | | - | | | | 25 | | Other receivables | | | - | | | | - | | | | 156 | | | | - | | | | 156 | | Derivative financial instruments | | | - | | | | - | | | | 30 | | | | - | | | | 30 | | Deferred income tax assets | | | - | | | | - | | | | 95 | | | | - | | | | 95 | | Totalnon-current assets | | | 8,658 | | | | 4,085 | | | | 23,544 | | | | (14,425) | | | | 21,862 | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | Inventories | | | - | | | | - | | | | 2,715 | | | | - | | | | 2,715 | | Trade and other receivables | | | - | | | | 4 | | | | 3,626 | | | | - | | | | 3,630 | | Advances to subsidiaries and parent undertakings | | | 6,141 | | | | - | | | | 704 | | | | (6,845) | | | | - | | Current income tax recoverable | | | - | | | | - | | | | 165 | | | | - | | | | 165 | | Derivative financial instruments | | | - | | | | 4 | | | | 30 | | | | - | | | | 34 | | Cash and cash equivalents | | | 401 | | | | - | | | | 1,714 | | | | - | | | | 2,115 | | Assets held for sale | | | - | | | | - | | | | 1,112 | | | | - | | | | 1,112 | | Total current assets | | | 6,542 | | | | 8 | | | | 10,066 | | | | (6,845) | | | | 9,771 | | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | 15,200 | | | | 4,093 | | | | 33,610 | | | | (21,270) | | | | 31,633 | | | | | | | | EQUITY | | | | | | | | | | | | | | | | | | | | | Capital and reserves attributable to the Company’s equity holders | | | 14,491 | | | | 1,797 | | | | 9,001 | | | | (10,798) | | | | 14,491 | | Non-controlling interests | | | - | | | | - | | | | 486 | | | | - | | | | 486 | | Total equity | | | 14,491 | | | | 1,797 | | | | 9,487 | | | | (10,798) | | | | 14,977 | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | Non-current liabilities | | | | | | | | | | | | | | | | | | | | | Interest-bearing loans and borrowings | | | - | | | | 2,020 | | | | 5,640 | | | | - | | | | 7,660 | | Derivative financial instruments | | | - | | | | 3 | | | | - | | | | - | | | | 3 | | Deferred income tax liabilities | | | - | | | | - | | | | 1,666 | | | | - | | | | 1,666 | | Other payables | | | - | | | | - | | | | 226 | | | | - | | | | 226 | | Advances from subsidiary and parent undertakings | | | - | | | | - | | | | 3,627 | | | | (3,627) | | | | - | | Retirement benefit obligations | | | - | | | | - | | | | 377 | | | | - | | | | 377 | | Provisions for liabilities | | | - | | | | - | | | | 693 | | | | - | | | | 693 | | Totalnon-current liabilities | | | - | | | | 2,023 | | | | 12,229 | | | | (3,627) | | | | 10,625 | | | | | | | | Current liabilities | | | | | | | | | | | | | | | | | | | | | Trade and other payables | | | 3 | | | | 29 | | | | 4,502 | | | | - | | | | 4,534 | | Advances from subsidiary and parent undertakings | | | 704 | | | | - | | | | 6,141 | | | | (6,845) | | | | - | | Current income tax liabilities | | | - | | | | - | | | | 458 | | | | - | | | | 458 | | Interest-bearing loans and borrowings | | | 2 | | | | 244 | | | | 70 | | | | - | | | | 316 | | Derivative financial instruments | | | - | | | | - | | | | 11 | | | | - | | | | 11 | | Provisions for liabilities | | | - | | | | - | | | | 371 | | | | - | | | | 371 | | Liabilities associated with assets classified as held for sale | | | - | | | | - | | | | 341 | | | | - | | | | 341 | | Total current liabilities | | | 709 | | | | 273 | | | | 11,894 | | | | (6,845) | | | | 6,031 | | | | | | | | | | | | | | | | | | | | | | | | Total liabilities | | | 709 | | | | 2,296 | | | | 24,123 | | | | (10,472) | | | | 16,656 | | | | | | | | | | | | | | | | | | | | | | | | Total equity and liabilities | | | 15,200 | | | | 4,093 | | | | 33,610 | | | | (21,270) | | | | 31,633 | |
| | | | | | | CRH Annual Report and Form 20-F |2018
|
Supplemental Condensed Consolidated Income Statement
| | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2018 | | | | | Guarantor
€m | | | Issuer €m | | | Non-Guarantor
subsidiaries €m | | | Eliminate and reclassify €m | | | CRH and
subsidiaries
€m | | Revenue | | | - | | | | - | | | | 26,790 | | | | - | | | | 26,790 | | Cost of sales | | | - | | | | - | | | | (18,152) | | | | - | | | | (18,152) | | Gross profit | | | - | | | | - | | | | 8,638 | | | | - | | | | 8,638 | | Operating income/(costs) | | | 1,741 | | | | - | | | | (8,202) | | | | - | | | | (6,461) | | Group operating profit | | | 1,741 | | | | - | | | | 436 | | | | - | | | | 2,177 | | Loss on disposals | | | (15) | | | | - | | | | (9) | | | | - | | | | (24) | | Profit before finance costs | | | 1,726 | | | | - | | | | 427 | | | | - | | | | 2,153 | | Finance costs | | | - | | | | (224) | | | | (346) | | | | 231 | | | | (339) | | Finance income | | | 1 | | | | 231 | | | | 33 | | | | (231) | | | | 34 | | Other financial expense | | | - | | | | - | | | | (46) | | | | - | | | | (46) | | Share of subsidiaries’ profit before tax | | | 71 | | | | 115 | | | | - | | | | (186) | | | | - | | Share of equity accounted investments’ profit | | | 60 | | | | - | | | | 60 | | | | (60) | | | | 60 | | Profit before tax from continuing operations | | | 1,858 | | | | 122 | | | | 128 | | | | (246) | | | | 1,862 | | Income tax expense | | | (426) | | | | (32) | | | | (394) | | | | 426 | | | | (426) | | Group profit for the financial year from continuing operations | | | 1,432 | | | | 90 | | | | (266) | | | | 180 | | | | 1,436 | | Profit after tax for the financial year from discontinued operations | | | 1,085 | | | | - | | | | 1,085 | | | | (1,085) | | | | 1,085 | | Group profit for the financial year | | | 2,517 | | | | 90 | | | | 819 | | | | (905) | | | | 2,521 | | | | | | | | Profit attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | 1,432 | | | | 90 | | | | (270) | | | | 180 | | | | 1,432 | | From discontinued operations | | | 1,085 | | | | - | | | | 1,085 | | | | (1,085) | | | | 1,085 | | Non-controlling interests | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | - | | | | - | | | | 4 | | | | - | | | | 4 | | Group profit for the financial year | | | 2,517 | | | | 90 | | | | 819 | | | | (905) | | | | 2,521 | | | | | | | | | Supplemental Condensed Consolidated Statement of Comprehensive Income | | | | | | | | | | | | | | | | | | | | | Group profit for the financial year | | | 2,517 | | | | 90 | | | | 819 | | | | (905) | | | | 2,521 | | Other comprehensive income | | | | | | | | | | | | | | | | | | | | | Items that may be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Currency translation effects | | | 277 | | | | 63 | | | | 213 | | | | (277) | | | | 276 | | Losses relating to cash flow hedges | | | (40) | | | | - | | | | (40) | | | | 40 | | | | (40) | | Tax relating to cash flow hedges | | | 5 | | | | - | | | | 5 | | | | (5) | | | | 5 | | | | | | 242 | | | | 63 | | | | 178 | | | | (242) | | | | 241 | | Items that will not be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Remeasurement of retirement benefit obligations | | | 10 | | | | - | | | | 10 | | | | (10) | | | | 10 | | Tax relating to retirement benefit obligations | | | (1) | | | | - | | | | (1) | | | | 1 | | | | (1) | | | | | | 9 | | | | - | | | | 9 | | | | (9) | | | | 9 | | | | | | | | Total other comprehensive income for the financial year | | | 251 | | | | 63 | | | | 187 | | | | (251) | | | | 250 | | | | | | | | Total comprehensive income for the financial year | | | 2,768 | | | | 153 | | | | 1,006 | | | | (1,156) | | | | 2,771 | | | | | | | | Attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | 2,768 | | | | 153 | | | | 1,003 | | | | (1,156) | | | | 2,768 | | Non-controlling interests | | | - | | | | - | | | | 3 | | | | - | | | | 3 | | Total comprehensive income for the financial year | | | 2,768 | | | | 153 | | | | 1,006 | | | | (1,156) | | | | 2,771 | |
| | | | | | | CRH Annual Report and Form 20-F|2018
|
36.37. Supplemental Guarantor Information - continued
Supplemental Condensed Consolidated Income Statement | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2017 | | | | | Guarantor €m | | | Issuer €m | | | Non-Guarantor
subsidiaries €m | | | Eliminate and
reclassify €m | | | CRH and
subsidiaries €m | | Revenue | | | - | | | | - | | | | 25,220 | | | | - | | | | 25,220 | | Cost of sales | | | - | | | | - | | | | (16,903) | | | | - | | | | (16,903) | | Gross profit | | | - | | | | - | | | | 8,317 | | | | - | | | | 8,317 | | Operating income/(costs) | | | 22 | | | | - | | | | (6,244) | | | | - | | | | (6,222) | | Group operating profit | | | 22 | | | | - | | | | 2,073 | | | | - | | | | 2,095 | | Profit on disposals | | | - | | | | - | | | | 56 | | | | - | | | | 56 | | Profit before finance costs | | | 22 | | | | - | | | | 2,129 | | | | - | | | | 2,151 | | Finance costs | | | - | | | | (235) | | | | (308) | | | | 242 | | | | (301) | | Finance income | | | 2 | | | | 242 | | | | 10 | | | | (242) | | | | 12 | | Other financial expense | | | - | | | | - | | | | (60) | | | | - | | | | (60) | | Share of subsidiaries’ profit before tax | | | 1,754 | | | | 83 | | | | - | | | | (1,837) | | | | - | | Share of equity accounted investments’ profit | | | 65 | | | | - | | | | 65 | | | | (65) | | | | 65 | | Profit before tax from continuing operations | | | 1,843 | | | | 90 | | | | 1,836 | | | | (1,902) | | | | 1,867 | | Income tax expense | | | (55) | | | | (29) | | | | (26) | | | | 55 | | | | (55) | | Group profit for the financial year from continuing operations | | | 1,788 | | | | 61 | | | | 1,810 | | | | (1,847) | | | | 1,812 | | Profit after tax for the financial year from discontinued operations | | | 107 | | | | - | | | | 107 | | | | (107) | | | | 107 | | Group profit for the financial year | | | 1,895 | | | | 61 | | | | 1,917 | | | | (1,954) | | | | 1,919 | | | | | | | | Profit attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | 1,788 | | | | 61 | | | | 1,786 | | | | (1,847) | | | | 1,788 | | From discontinued operations | | | 107 | | | | - | | | | 107 | | | | (107) | | | | 107 | | Non-controlling interests | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | - | | | | - | | | | 24 | | | | - | | | | 24 | | Group profit for the financial year | | | 1,895 | | | | 61 | | | | 1,917 | | | | (1,954) | | | | 1,919 | | | | | | | | | Supplemental Condensed Consolidated Statement of Comprehensive Income | | | | | | | | | | | | | | | | | | | | | Group profit for the financial year | | | 1,895 | | | | 61 | | | | 1,917 | | | | (1,954) | | | | 1,919 | | Other comprehensive income | | | | | | | | | | | | | | | | | | | | | Items that may be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Currency translation effects | | | (1,015) | | | | (186) | | | | (890) | | | | 1,015 | | | | (1,076) | | Gains relating to cash flow hedges | | | 8 | | | | - | | | | 8 | | | | (8) | | | | 8 | | | | | | (1,007) | | | | (186) | | | | (882) | | | | 1,007 | | | | (1,068) | | Items that will not be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Remeasurement of retirement benefit obligations | | | 114 | | | | - | | | | 114 | | | | (114) | | | | 114 | | Tax on items recognised directly within other comprehensive income | | | (33) | | | | - | | | | (33) | | | | 33 | | | | (33) | | | | | | 81 | | | | - | | | | 81 | | | | (81) | | | | 81 | | | | | | | | Total other comprehensive income for the financial year | | | (926) | | | | (186) | | | | (801) | | | | 926 | | | | (987) | | | | | | | | Total comprehensive income for the financial year | | | 969 | | | | (125) | | | | 1,116 | | | | (1,028) | | | | 932 | | | | | | | | Attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | 969 | | | | (125) | | | | 1,153 | | | | (1,028) | | | | 969 | | Non-controlling interests | | | - | | | | - | | | | (37) | | | | - | | | | (37) | | Total comprehensive income for the financial year | | | 969 | | | | (125) | | | | 1,116 | | | | (1,028) | | | | 932 | |
| | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2019 | | | | | Guarantor
€m | | | Issuer
€m | | | Non-Guarantor
subsidiaries
€m | | | Eliminate and reclassify
€m | | | CRH and subsidiaries
€m | | Revenue | | | - | | | | - | | | | 25,129 | | | | - | | | | 25,129 | | Cost of sales | | | - | | | | - | | | | (16,846) | | | | - | | | | (16,846) | | Gross profit | | | - | | | | - | | | | 8,283 | | | | - | | | | 8,283 | | Operating income/(costs) | | | 1,531 | | | | - | | | | (7,320) | | | | - | | | | (5,789) | | Group operating profit | | | 1,531 | | | | - | | | | 963 | | | | - | | | | 2,494 | | (Loss)/profit on disposals | | | (13) | | | | - | | | | 12 | | | | - | | | | (1) | | Profit before finance costs | | | 1,518 | | | | - | | | | 975 | | | | - | | | | 2,493 | | Finance costs | | | (3) | | | | (280) | | | | (353) | | | | 290 | | | | (346) | | Finance income | | | - | | | | 290 | | | | 20 | | | | (290) | | | | 20 | | Other financial expense | | | - | | | | - | | | | (112) | | | | - | | | | (112) | | Share of subsidiaries’ profit before tax | | | 522 | | | | 136 | | | | - | | | | (658) | | | | - | | Share of equity accounted investments’ profit | | | 60 | | | | - | | | | 60 | | | | (60) | | | | 60 | | Profit before tax from continuing operations | | | 2,097 | | | | 146 | | | | 590 | | | | (718) | | | | 2,115 | | Income tax expense | | | (477) | | | | (36) | | | | (441) | | | | 477 | | | | (477) | | Group profit for the financial year from continuing operations | | | 1,620 | | | | 110 | | | | 149 | | | | (241) | | | | 1,638 | | Profit after tax for the financial year from discontinued operations | | | 309 | | | | - | | | | 310 | | | | (309) | | | | 310 | | Group profit for the financial year | | | 1,929 | | | | 110 | | | | 459 | | | | (550) | | | | 1,948 | | | | | | | | Profit attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | 1,620 | | | | 110 | | | | 131 | | | | (241) | | | | 1,620 | | From discontinued operations | | | 309 | | | | - | | | | 309 | | | | (309) | | | | 309 | | Non-controlling interests | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | - | | | | - | | | | 18 | | | | - | | | | 18 | | From discontinued operations | | | - | | | | - | | | | 1 | | | | - | | | | 1 | | Group profit for the financial year | | | 1,929 | | | | 110 | | | | 459 | | | | (550) | | | | 1,948 | | | | | | | | | Supplemental Condensed Consolidated Statement of Comprehensive Income | | | | | | | | | | | | | | | | | | | | | Group profit for the financial year | | | 1,929 | | | | 110 | | | | 459 | | | | (550) | | | | 1,948 | | Other comprehensive income | | | | | | | | | | | | | | | | | | | | | Items that may be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Currency translation effects | | | 319 | | | | 27 | | | | 316 | | | | (319) | | | | 343 | | Gains relating to cash flow hedges | | | 24 | | | | - | | | | 24 | | | | (24) | | | | 24 | | Tax relating to cash flow hedges | | | (3) | | | | - | | | | (3) | | | | 3 | | | | (3) | | | | | | 340 | | | | 27 | | | | 337 | | | | (340) | | | | 364 | | Items that will not be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Remeasurement of retirement benefit obligations | | | (17) | | | | - | | | | (17) | | | | 17 | | | | (17) | | Tax relating to retirement benefit obligations | | | (3) | | | | - | | | | (3) | | | | 3 | | | | (3) | | | | | | (20) | | | | - | | | | (20) | | | | 20 | | | | (20) | | | | | | | | Total other comprehensive income for the financial year | | | 320 | | | | 27 | | | | 317 | | | | (320) | | | | 344 | | | | | | | | Total comprehensive income for the financial year | | | 2,249 | | | | 137 | | | | 776 | | | | (870) | | | | 2,292 | | | | | | | | Attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | 2,249 | | | | 137 | | | | 733 | | | | (870) | | | | 2,249 | | Non-controlling interests | | | - | | | | - | | | | 43 | | | | - | | | | 43 | | Total comprehensive income for the financial year | | | 2,249 | | | | 137 | | | | 776 | | | | (870) | | | | 2,292 | |
| | | | | | | CRH Annual Report and Form 20-F |2018
|
Supplemental Condensed Consolidated Income Statement
| | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2016 | | | | | Guarantor €m | | | Issuer €m | | | Non-Guarantor
subsidiaries €m | | | Eliminate and
reclassify €m | | | CRH and
subsidiaries €m | | Revenue | | | - | | | | - | | | | 24,789 | | | | - | | | | 24,789 | | Cost of sales | | | - | | | | - | | | | (16,566) | | | | - | | | | (16,566) | | Gross profit | | | - | | | | - | | | | 8,223 | | | | - | | | | 8,223 | | Operating income/(costs) | | | 20 | | | | - | | | | (6,335) | | | | - | | | | (6,315) | | Group operating profit | | | 20 | | | | - | | | | 1,888 | | | | - | | | | 1,908 | | Profit on disposals | | | - | | | | - | | | | 53 | | | | - | | | | 53 | | Profit before finance costs | | | 20 | | | | - | | | | 1,941 | | | | - | | | | 1,961 | | Finance costs | | | - | | | | (266) | | | | (334) | | | | 275 | | | | (325) | | Finance income | | | 2 | | | | 275 | | | | 6 | | | | (275) | | | | 8 | | Other financial expense | | | - | | | | - | | | | (66) | | | | - | | | | (66) | | Share of subsidiaries’ profit before tax | | | 1,529 | | | | 95 | | | | - | | | | (1,624) | | | | - | | Share of equity accounted investments’ profit | | | 42 | | | | - | | | | 42 | | | | (42) | | | | 42 | | Profit before tax from continuing operations | | | 1,593 | | | | 104 | | | | 1,589 | | | | (1,666) | | | | 1,620 | | Income tax expense | | | (431) | | | | (41) | | | | (390) | | | | 431 | | | | (431) | | Group profit for the financial year from continuing operations | | | 1,162 | | | | 63 | | | | 1,199 | | | | (1,235) | | | | 1,189 | | Profit after tax for the financial year from discontinued operations | | | 81 | | | | - | | | | 81 | | | | (81) | | | | 81 | | Group profit for the financial year | | | 1,243 | | | | 63 | | | | 1,280 | | | | (1,316) | | | | 1,270 | | | | | | | | Profit attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | 1,162 | | | | 63 | | | | 1,172 | | | | (1,235) | | | | 1,162 | | From discontinued operations | | | 81 | | | | - | | | | 81 | | | | (81) | | | | 81 | | Non-controlling interests | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | - | | | | - | | | | 27 | | | | - | | | | 27 | | Group profit for the financial year | | | 1,243 | | | | 63 | | | | 1,280 | | | | (1,316) | | | | 1,270 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Supplemental Condensed Consolidated Statement of Comprehensive Income | | | | | | | | | | | | | | | | | | | | | | | | | | | Group profit for the financial year | | | 1,243 | | | | 63 | | | | 1,280 | | | | (1,316) | | | | 1,270 | | | | | | | | Other comprehensive income | | | | | | | | | | | | | | | | | | | | | Items that may be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Currency translation effects | | | (71) | | | | 49 | | | | (131) | | | | 71 | | | | (82) | | Gains relating to cash flow hedges | | | 14 | | | | - | | | | 14 | | | | (14) | | | | 14 | | | | | | (57) | | | | 49 | | | | (117) | | | | 57 | | | | (68) | | Items that will not be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Remeasurement of retirement benefit obligations | | | (61) | | | | - | | | | (61) | | | | 61 | | | | (61) | | Tax on items recognised directly within other comprehensive income | | | 3 | | | | - | | | | 3 | | | | (3) | | | | 3 | | | | | | (58) | | | | - | | | | (58) | | | | 58 | | | | (58) | | | | | | | | Total other comprehensive income for the financial year | | | (115) | | | | 49 | | | | (175) | | | | 115 | | | | (126) | | | | | | | | Total comprehensive income for the financial year | | | 1,128 | | | | 112 | | | | 1,105 | | | | (1,201) | | | | 1,144 | | | | | | | | Attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | 1,128 | | | | 112 | | | | 1,089 | | | | (1,201) | | | | 1,128 | | Non-controlling interests | | | - | | | | - | | | | 16 | | | | - | | | | 16 | | Total comprehensive income for the financial year | | | 1,128 | | | | 112 | | | | 1,105 | | | | (1,201) | | | | 1,144 | |
| | | | | | | | | 203CRH ANNUAL REPORT AND FORM20-F | 2019 | | 211 |
Supplemental Condensed Consolidated Income Statement | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2018 | | | Restated (i) | | | | | Guarantor €m | | | Issuer €m | | | Non-Guarantor subsidiaries €m | | | Eliminate and
reclassify €m | | | CRH and subsidiaries €m | | Revenue | | | - | | | | - | | | | 23,241 | | | | - | | | | 23,241 | | Cost of sales | | | - | | | | - | | | | (15,572) | | | | - | | | | (15,572) | | Gross profit | | | - | | | | - | | | | 7,669 | | | | - | | | | 7,669 | | Operating income/(costs) | | | 1,741 | | | | - | | | | (7,339) | | | | - | | | | (5,598) | | Group operating profit | | | 1,741 | | | | - | | | | 330 | | | | - | | | | 2,071 | | Loss on disposals | | | (15) | | | | - | | | | (12) | | | | - | | | | (27) | | Profit before finance costs | | | 1,726 | | | | - | | | | 318 | | | | - | | | | 2,044 | | Finance costs | | | - | | | | (224) | | | | (346) | | | | 231 | | | | (339) | | Finance income | | | 1 | | | | 231 | | | | 33 | | | | (231) | | | | 34 | | Other financial expense | | | - | | | | - | | | | (46) | | | | - | | | | (46) | | Share of subsidiaries’ (loss)/profit before tax | | | (37) | | | | 115 | | | | - | | | | (78) | | | | - | | Share of equity accounted investments’ profit | | | 48 | | | | - | | | | 48 | | | | (48) | | | | 48 | | Profit before tax from continuing operations | | | 1,738 | | | | 122 | | | | 7 | | | | (126) | | | | 1,741 | | Income tax expense | | | (396) | | | | (32) | | | | (364) | | | | 396 | | | | (396) | | Group profit for the financial year from continuing operations | | | 1,342 | | | | 90 | | | | (357) | | | | 270 | | | | 1,345 | | Profit after tax for the financial year from discontinued operations | | | 1,175 | | | | - | | | | 1,176 | | | | (1,175) | | | | 1,176 | | Group profit for the financial year | | | 2,517 | | | | 90 | | | | 819 | | | | (905) | | | | 2,521 | | | | | | | | Profit attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | 1,342 | | | | 90 | | | | (360) | | | | 270 | | | | 1,342 | | From discontinued operations | | | 1,175 | | | | - | | | | 1,175 | | | | (1,175) | | | | 1,175 | | Non-controlling interests | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | - | | | | - | | | | 3 | | | | - | | | | 3 | | From discontinued operations | | | - | | | | - | | | | 1 | | | | - | | | | 1 | | Group profit for the financial year | | | 2,517 | | | | 90 | | | | 819 | | | | (905) | | | | 2,521 | | | (i) Restated to show the results of our former Europe Distribution segment in discontinued operations. | | | | | | | | | Supplemental Condensed Consolidated Statement of Comprehensive Income | | | | | | | | | | | | | | | | | | | | | Group profit for the financial year | | | 2,517 | | | | 90 | | | | 819 | | | | (905) | | | | 2,521 | | Other comprehensive income | | | | | | | | | | | | | | | | | | | | | Items that may be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Currency translation effects | | | 277 | | | | 63 | | | | 213 | | | | (277) | | | | 276 | | Losses relating to cash flow hedges | | | (40) | | | | - | | | | (40) | | | | 40 | | | | (40) | | Tax relating to cash flow hedges | | | 5 | | | | - | | | | 5 | | | | (5) | | | | 5 | | | | | | 242 | | | | 63 | | | | 178 | | | | (242) | | | | 241 | | Items that will not be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Remeasurement of retirement benefit obligations | | | 10 | | | | - | | | | 10 | | | | (10) | | | | 10 | | Tax relating to retirement benefit obligations | | | (1) | | | | - | | | | (1) | | | | 1 | | | | (1) | | | | | | 9 | | | | - | | | | 9 | | | | (9) | | | | 9 | | | | | | | | Total other comprehensive income for the financial year | | | 251 | | | | 63 | | | | 187 | | | | (251) | | | | 250 | | | | | | | | Total comprehensive income for the financial year | | | 2,768 | | | | 153 | | | | 1,006 | | | | (1,156) | | | | 2,771 | | | | | | | | Attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | 2,768 | | | | 153 | | | | 1,003 | | | | (1,156) | | | | 2,768 | | Non-controlling interests | | | - | | | | - | | | | 3 | | | | - | | | | 3 | | Total comprehensive income for the financial year | | | 2,768 | | | | 153 | | | | 1,006 | | | | (1,156) | | | | 2,771 | |
| | | | | 212 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
37. Supplemental Guarantor Information - continued Supplemental Condensed Consolidated Income Statement | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2017 | | | Restated (i) | | | | | Guarantor €m | | | Issuer €m | | | Non-Guarantor subsidiaries €m | | | Eliminate and reclassify €m | | | CRH and subsidiaries €m | | Revenue | | | - | | | | - | | | | 21,653 | | | | - | | | | 21,653 | | Cost of sales | | | - | | | | - | | | | (14,275) | | | | - | | | | (14,275) | | Gross profit | | | - | | | | - | | | | 7,378 | | | | - | | | | 7,378 | | Operating income/(costs) | | | 22 | | | | - | | | | (5,473) | | | | - | | | | (5,451) | | Group operating profit | | | 22 | | | | - | | | | 1,905 | | | | - | | | | 1,927 | | Profit on disposals | | | - | | | | - | | | | 54 | | | | - | | | | 54 | | Profit before finance costs | | | 22 | | | | - | | | | 1,959 | | | | - | | | | 1,981 | | Finance costs | | | - | | | | (235) | | | | (308) | | | | 242 | | | | (301) | | Finance income | | | 2 | | | | 242 | | | | 10 | | | | (242) | | | | 12 | | Other financial expense | | | - | | | | - | | | | (59) | | | | - | | | | (59) | | Share of subsidiaries’ profit before tax | | | 1,586 | | | | 83 | | | | - | | | | (1,669) | | | | - | | Share of equity accounted investments’ profit | | | 52 | | | | - | | | | 52 | | | | (52) | | | | 52 | | Profit before tax from continuing operations | | | 1,662 | | | | 90 | | | | 1,654 | | | | (1,721) | | | | 1,685 | | Income tax expense | | | (12) | | | | (29) | | | | 17 | | | | 12 | | | | (12) | | Group profit for the financial year from continuing operations | | | 1,650 | | | | 61 | | | | 1,671 | | | | (1,709) | | | | 1,673 | | Profit after tax for the financial year from discontinued operations | | | 245 | | | | - | | | | 246 | | | | (245) | | | | 246 | | Group profit for the financial year | | | 1,895 | | | | 61 | | | | 1,917 | | | | (1,954) | | | | 1,919 | | | | | | | | Profit attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | 1,650 | | | | 61 | | | | 1,648 | | | | (1,709) | | | | 1,650 | | From discontinued operations | | | 245 | | | | - | | | | 245 | | | | (245) | | | | 245 | | Non-controlling interests | | | | | | | | | | | | | | | | | | | | | From continuing operations | | | - | | | | - | | | | 23 | | | | - | | | | 23 | | From discontinued operations | | | - | | | | - | | | | 1 | | | | - | | | | 1 | | Group profit for the financial year | | | 1,895 | | | | 61 | | | | 1,917 | | | | (1,954) | | | | 1,919 | | | (i) Restated to show the results of our former Europe Distribution segment in discontinued operations. | | | | | | | | | Supplemental Condensed Consolidated Statement of Comprehensive Income | | | | | | | | | | | | | | | | | | | | | Group profit for the financial year | | | 1,895 | | | | 61 | | | | 1,917 | | | | (1,954) | | | | 1,919 | | Other comprehensive income | | | | | | | | | | | | | | | | | | | | | Items that may be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Currency translation effects | | | (1,015) | | | | (186) | | | | (890) | | | | 1,015 | | | | (1,076) | | Gains relating to cash flow hedges | | | 8 | | | | - | | | | 8 | | | | (8) | | | | 8 | | | | | | (1,007) | | | | (186) | | | | (882) | | | | 1,007 | | | | (1,068) | | Items that will not be reclassified to profit or loss in subsequent years: | | | | | | | | | | | | | | | | | | | | | Remeasurement of retirement benefit obligations | | | 114 | | | | - | | | | 114 | | | | (114) | | | | 114 | | Tax on items recognised directly within other comprehensive income | | | (33) | | | | - | | | | (33) | | | | 33 | | | | (33) | | | | | | 81 | | | | - | | | | 81 | | | | (81) | | | | 81 | | | | | | | | Total other comprehensive income for the financial year | | | (926) | | | | (186) | | | | (801) | | | | 926 | | | | (987) | | | | | | | | Total comprehensive income for the financial year | | | 969 | | | | (125) | | | | 1,116 | | | | (1,028) | | | | 932 | | | | | | | | Attributable to: | | | | | | | | | | | | | | | | | | | | | Equity holders of the Company | | | 969 | | | | (125) | | | | 1,153 | | | | (1,028) | | | | 969 | | Non-controlling interests | | | - | | | | - | | | | (37) | | | | - | | | | (37) | | Total comprehensive income for the financial year | | | 969 | | | | (125) | | | | 1,116 | | | | (1,028) | | | | 932 | |
| | | | | | | | | | CRH Annual Report and Form ANNUAL REPORT AND FORM20-F | 2019|2018 | | 213 |
36.
Supplemental Condensed Consolidated Statement of Cash Flow | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2019 | | | | | Guarantor €m | | | Issuer €m | | | Non-Guarantor subsidiaries €m | | | Eliminate and
reclassify €m | | | CRH and
subsidiaries €m | | Cash flows from operating activities | | | | | | | | | | | | | | | | | | | | | Profit before tax from continuing operations | | | 2,097 | | | | 146 | | | | 590 | | | | (718) | | | | 2,115 | | Profit before tax from discontinued operations | | | 332 | | | | - | | | | 333 | | | | (332) | | | | 333 | | Profit before tax | | | 2,429 | | | | 146 | | | | 923 | | | | (1,050) | | | | 2,448 | | Finance costs (net) | | | 3 | | | | (10) | | | | 452 | | | | - | | | | 445 | | Share of subsidiaries’ profit before tax | | | (842) | | | | (136) | | | | - | | | | 978 | | | | - | | Share of equity accounted investments’ profit | | | (72) | | | | - | | | | (72) | | | | 72 | | | | (72) | | Loss/(profit) on disposals | | | 13 | | | | - | | | | (239) | | | | - | | | | (226) | | Group operating profit | | | 1,531 | | | | - | | | | 1,064 | | | | - | | | | 2,595 | | Depreciation charge | | | - | | | | - | | | | 1,538 | | | | - | | | | 1,538 | | Amortisation of intangible assets | | | - | | | | - | | | | 59 | | | | - | | | | 59 | | Impairment charge | | | - | | | | - | | | | 8 | | | | - | | | | 8 | | Share-based payment (income)/expense | | | (26) | | | | - | | | | 103 | | | | - | | | | 77 | | Other (primarily pension payments) | | | - | | | | - | | | | (3) | | | | - | | | | (3) | | Net movement on working capital and provisions | | | - | | | | (1) | | | | (63) | | | | - | | | | (64) | | Cash generated from operations | | | 1,505 | | | | (1) | | | | 2,706 | | | | - | | | | 4,210 | | Interest paid (including leases) | | | (3) | | | | (280) | | | | (426) | | | | 290 | | | | (419) | | Corporation tax paid | | | - | | | | (36) | | | | (289) | | | | - | | | | (325) | | Net cash inflow/(outflow) from operating activities | | | 1,502 | | | | (317) | | | | 1,991 | | | | 290 | | | | 3,466 | | | | | | | | Cash flows from investing activities | | | | | | | | | | | | | | | | | | | | | Proceeds from disposals (net of cash disposed and deferred proceeds) | | | - | | | | - | | | | 2,096 | | | | - | | | | 2,096 | | Interest received | | | - | | | | 290 | | | | 20 | | | | (290) | | | | 20 | | Dividends received from equity accounted investments | | | - | | | | - | | | | 35 | | | | - | | | | 35 | | Purchase of property, plant and equipment | | | - | | | | - | | | | (1,229) | | | | - | | | | (1,229) | | Advances from subsidiary and parent undertakings | | | (375) | | | | 70 | | | | (336) | | | | 641 | | | | - | | Acquisition of subsidiaries (net of cash acquired) | | | - | | | | - | | | | (650) | | | | - | | | | (650) | | Other investments and advances | | | - | | | | - | | | | (29) | | | | - | | | | (29) | | Deferred and contingent acquisition consideration paid | | | - | | | | - | | | | (48) | | | | - | | | | (48) | | Net cash (outflow)/inflow from investing activities | | | (375) | | | | 360 | | | | (141) | | | | 351 | | | | 195 | | | | | | | | Cash flows from financing activities | | | | | | | | | | | | | | | | | | | | | Proceeds from exercise of share options | | | 20 | | | | - | | | | - | | | | - | | | | 20 | | Transactions involvingnon-controlling interests | | | - | | | | - | | | | (19 | ) | | | - | | | | (19 | ) | Advances to subsidiary and parent undertakings | | | 336 | | | | - | | | | 305 | | | | (641) | | | | - | | Increase in interest-bearing loans and borrowings | | | - | | | | - | | | | 91 | | | | - | | | | 91 | | Net cash flow arising from derivative financial instruments | | | - | | | | - | | | | (36) | | | | - | | | | (36) | | Repayment of interest-bearing loans, borrowings and finance leases | | | - | | | | (43) | | | | (529) | | | | - | | | | (572) | | Repayment of lease liabilities | | | - | | | | - | | | | (317) | | | | - | | | | (317) | | Treasury Shares/own shares purchased | | | (852) | | | | - | | | | - | | | | - | | | | (852) | | Dividends paid to equity holders of the Company | | | (584) | | | | - | | | | - | | | | - | | | | (584) | | Dividends paid tonon-controlling interests | | | - | | | | - | | | | (10) | | | | - | | | | (10) | | Net cash (outflow)/inflow from financing activities | | | (1,080) | | | | (43) | | | | (515) | | | | (641) | | | | (2,279) | | | | | | | | | | | | | | | | | | | | | | | | Increase in cash and cash equivalents | | | 47 | | | | - | | | | 1,335 | | | | - | | | | 1,382 | | | | | | | | Reconciliation of opening to closing cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at 1 January | | | 411 | | | | - | | | | 1,935 | | | | - | | | | 2,346 | | Translation adjustment | | | - | | | | - | | | | 27 | | | | - | | | | 27 | | Increase in cash and cash equivalents | | | 47 | | | | - | | | | 1,335 | | | | - | | | | 1,382 | | Cash and cash equivalents at 31 December | | | 458 | | | | - | | | | 3,297 | | | | - | | | | 3,755 | |
| | | | | 214 | | CRH ANNUAL REPORT AND FORM 20-F | 2019 | | |
37. Supplemental Guarantor Information - continued Supplemental Condensed Consolidated Statement of Cash Flow | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2018 | | | | | Guarantor €m | | | Issuer €m | | | Non-Guarantor
subsidiaries €m | | | Eliminate and
reclassify €m | | | CRH and
subsidiaries €m | | Cash flows from operating activities | | | | | | | | | | | | | | | | | | | | | Profit before tax from continuing operations | | | 1,858 | | | | 122 | | | | 128 | | | | (246) | | | | 1,862 | | Profit before tax from discontinued operations | | | 1,558 | | | | - | | | | 1,558 | | | | (1,558) | | | | 1,558 | | Profit before tax | | | 3,416 | | | | 122 | | | | 1,686 | | | | (1,804) | | | | 3,420 | | Finance costs (net) | | | (1) | | | | (7) | | | | 359 | | | | - | | | | 351 | | Share of subsidiaries’ profit before tax | | | (1,629) | | | | (115) | | | | - | | | | 1,744 | | | | - | | Share of equity accounted investments’ profit | | | (60) | | | | - | | | | (60) | | | | 60 | | | | (60) | | Loss/(profit) on disposals | | | 15 | | | | - | | | | (1,554) | | | | - | | | | (1,539) | | Group operating profit | | | 1,741 | | | | - | | | | 431 | | | | - | | | | 2,172 | | Depreciation charge | | | - | | | | - | | | | 1,071 | | | | - | | | | 1,071 | | Amortisation of intangible assets | | | - | | | | - | | | | 61 | | | | - | | | | 61 | | Impairment charge | | | - | | | | - | | | | 56 | | | | - | | | | 56 | | Share-based payment (income)/expense | | | (13) | | | | - | | | | 80 | | | | - | | | | 67 | | Other (primarily pension payments) | | | - | | | | - | | | | (67) | | | | - | | | | (67) | | Net movement on working capital and provisions | | | - | | | | (4) | | | | (459) | | | | - | | | | (463) | | Cash generated from operations | | | 1,728 | | | | (4) | | | | 1,173 | | | | - | | | | 2,897 | | Interest paid (including finance leases) | | | - | | | | (224) | | | | (342) | | | | 231 | | | | (335) | | Corporation tax paid | | | - | | | | (32) | | | | (631) | | | | - | | | | (663) | | Net cash inflow/(outflow) from operating activities | | | 1,728 | | | | (260) | | | | 200 | | | | 231 | | | | 1,899 | | | | | | | | Cash flows from investing activities | | | | | | | | | | | | | | | | | | | | | Proceeds from disposals (net of cash disposed and deferred proceeds) | | | - | | | | - | | | | 3,009 | | | | - | | | | 3,009 | | Interest received | | | 1 | | | | 231 | | | | 33 | | | | (231) | | | | 34 | | Dividends received from equity accounted investments | | | - | | | | - | | | | 48 | | | | - | | | | 48 | | Purchase of property, plant and equipment | | | - | | | | - | | | | (1,121) | | | | - | | | | (1,121) | | Advances from subsidiary and parent undertakings | | | (184) | | | | 241 | | | | 238 | | | | (295) | | | | - | | Acquisition of subsidiaries (net of cash acquired) | | | - | | | | - | | | | (3,505) | | | | - | | | | (3,505) | | Other investments and advances | | | - | | | | - | | | | (2) | | | | - | | | | (2) | | Deferred and contingent acquisition consideration paid | | | - | | | | - | | | | (55) | | | | - | | | | (55) | | Net cash (outflow)/inflow from investing activities | | | (183) | | | | 472 | | | | (1,355) | | | | (526) | | | | (1,592) | | | | | | | | Cash flows from financing activities | | | | | | | | | | | | | | | | | | | | | Proceeds from issue of shares (net) | | | 11 | | | | - | | | | - | | | | - | | | | 11 | | Proceeds from exercise of share options | | | 7 | | | | - | | | | - | | | | - | | | | 7 | | Advances to subsidiary and parent undertakings | | | (238) | | | | - | | | | (57) | | | | 295 | | | | - | | Increase in interest-bearing loans, borrowings and finance leases | | | - | | | | 31 | | | | 1,403 | | | | - | | | | 1,434 | | Net cash flow arising from derivative financial instruments | | | - | | | | - | | | | 6 | | | | - | | | | 6 | | Treasury/own shares purchased | | | (792) | | | | - | | | | - | | | | - | | | | (792) | | Repayment of interest-bearing loans, borrowings and finance leases | | | (2) | | | | (243) | | | | (1) | | | | - | | | | (246) | | Dividends paid to equity holders of the Company | | | (521) | | | | - | | | | - | | | | - | | | | (521) | | Dividends paid tonon-controlling interests | | | - | | | | - | | | | (12) | | | | - | | | | (12) | | Net cash (outflow)/inflow from financing activities | | | (1,535) | | | | (212) | | | | 1,339 | | | | 295 | | | | (113) | | | | | | | | | | | | | | | | | | | | | | | | Increase in cash and cash equivalents | | | 10 | | | | - | | | | 184 | | | | - | | | | 194 | | | | | | | | Reconciliation of opening to closing cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at 1 January | | | 401 | | | | - | | | | 1,734 | | | | - | | | | 2,135 | | Translation adjustment | | | - | | | | - | | | | 17 | | | | - | | | | 17 | | Increase in cash and cash equivalents | | | 10 | | | | - | | | | 184 | | | | - | | | | 194 | | Cash and cash equivalents at 31 December | | | 411 | | | | - | | | | 1,935 | | | | - | | | | 2,346 | |
| | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2018 | | | | | Guarantor
€m | | | Issuer
€m | | | Non-Guarantor
subsidiaries €m | | | Eliminate and
reclassify €m | | | CRH and
subsidiaries
€m | | Cash flows from operating activities | | | | | | | | | | | | | | | | | | | | | Profit before tax from continuing operations | | | 1,738 | | | | 122 | | | | 7 | | | | (126) | | | | 1,741 | | Profit before tax from discontinued operations | | | 1,678 | | | | - | | | | 1,679 | | | | (1,678) | | | | 1,679 | | Profit before tax | | | 3,416 | | | | 122 | | | | 1,686 | | | | (1,804) | | | | 3,420 | | Finance costs (net) | | | (1) | | | | (7) | | | | 359 | | | | - | | | | 351 | | Share of subsidiaries’ profit before tax | | | (1,629) | | | | (115) | | | | - | | | | 1,744 | | | | - | | Share of equity accounted investments’ profit | | | (60) | | | | - | | | | (60) | | | | 60 | | | | (60) | | Loss/(profit) on disposals | | | 15 | | | | - | | | | (1,554) | | | | - | | | | (1,539) | | Group operating profit | | | 1,741 | | | | - | | | | 431 | | | | - | | | | 2,172 | | Depreciation charge | | | - | | | | - | | | | 1,071 | | | | - | | | | 1,071 | | Amortisation of intangible assets | | | - | | | | - | | | | 61 | | | | - | | | | 61 | | Impairment charge | | | - | | | | - | | | | 56 | | | | - | | | | 56 | | Share-based payment (income)/expense | | | (13) | | | | - | | | | 80 | | | | - | | | | 67 | | Other (primarily pension payments) | | | - | | | | - | | | | (67) | | | | - | | | | (67) | | Net movement on working capital and provisions | | | - | | | | (4) | | | | (459) | | | | - | | | | (463) | | Cash generated from operations | | | 1,728 | | | | (4) | | | | 1,173 | | | | - | | | | 2,897 | | Interest paid (including leases) | | | - | | | | (224) | | | | (342) | | | | 231 | | | | (335) | | Corporation tax paid | | | - | | | | (32) | | | | (631) | | | | - | | | | (663) | | Net cash inflow/(outflow) from operating activities | | | 1,728 | | | | (260) | | | | 200 | | | | 231 | | | | 1,899 | | | | | | | | Cash flows from investing activities | | | | | | | | | | | | | | | | | | | | | Proceeds from disposals (net of cash disposed and deferred proceeds) | | | - | | | | - | | | | 3,009 | | | | - | | | | 3,009 | | Interest received | | | 1 | | | | 231 | | | | 33 | | | | (231) | | | | 34 | | Dividends received from equity accounted investments | | | - | | | | - | | | | 48 | | | | - | | | | 48 | | Purchase of property, plant and equipment | | | - | | | | - | | | | (1,121) | | | | - | | | | (1,121) | | Advances from subsidiary and parent undertakings | | | (184) | | | | 241 | | | | 238 | | | | (295) | | | | - | | Acquisition of subsidiaries (net of cash acquired) | | | - | | | | - | | | | (3,505) | | | | - | | | | (3,505) | | Other investments and advances | | | - | | | | - | | | | (2) | | | | - | | | | (2) | | Deferred and contingent acquisition consideration paid | | | - | | | | - | | | | (55) | | | | - | | | | (55) | | Net cash (outflow)/inflow from investing activities | | | (183) | | | | 472 | | | | (1,355) | | | | (526) | | | | (1,592) | | | | | | | | Cash flows from financing activities | | | | | | | | | | | | | | | | | | | | | Proceeds from issue of shares (net) | | | 11 | | | | - | | | | - | | | | - | | | | 11 | | Proceeds from exercise of share options | | | 7 | | | | - | | | | - | | | | - | | | | 7 | | Advances to subsidiary and parent undertakings | | | (238) | | | | - | | | | (57) | | | | 295 | | | | - | | Increase in interest-bearing loans and borrowings | | | - | | | | 31 | | | | 1,403 | | | | - | | | | 1,434 | | Net cash flow arising from derivative financial instruments | | | - | | | | - | | | | 6 | | | | - | | | | 6 | | Repayment of interest-bearing loans, borrowings and finance leases | | | (2) | | | | (243) | | | | (1) | | | | - | | | | (246) | | Treasury Shares/own shares purchased | | | (792) | | | | - | | | | - | | | | - | | | | (792) | | Dividends paid to equity holders of the Company | | | (521) | | | | - | | | | - | | | | - | | | | (521) | | Dividends paid tonon-controlling interests | | | - | | | | - | | | | (12) | | | | - | | | | (12) | | Net cash (outflow)/inflow from financing activities | | | (1,535) | | | | (212) | | | | 1,339 | | | | 295 | | | | (113) | | | | | | | | | | | | | | | | | | | | | | | | Increase in cash and cash equivalents | | | 10 | | | | - | | | | 184 | | | | - | | | | 194 | | | | | | | | Reconciliation of opening to closing cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at 1 January | | | 401 | | | | - | | | | 1,734 | | | | - | | | | 2,135 | | Translation adjustment | | | - | | | | - | | | | 17 | | | | - | | | | 17 | | Increase in cash and cash equivalents | | | 10 | | | | - | | | | 184 | | | | - | | | | 194 | | Cash and cash equivalents at 31 December | | | 411 | | | | - | | | | 1,935 | | | | - | | | | 2,346 | |
| | | | | | | CRH Annual Report and Form 20-F |2018
|
Supplemental Condensed Consolidated Statement of Cash Flow
| | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December 2017 | | | | | Guarantor
€m | | | Issuer
€m | | | Non-Guarantor
subsidiaries
€m | | | Eliminate and
reclassify
€m | | | CRH and
subsidiaries
€m | | Cash flows from operating activities | | | | | | | | | | | | | | | | | | | | | Profit before tax from continuing operations | | | 1,843 | | | | 90 | | | | 1,836 | | | | (1,902) | | | | 1,867 | | Profit before tax from discontinued operations | | | 146 | | | | - | | | | 146 | | | | (146) | | | | 146 | | Profit before tax | | | 1,989 | | | | 90 | | | | 1,982 | | | | (2,048) | | | | 2,013 | | Finance costs (net) | | | (2) | | | | (7) | | | | 358 | | | | - | | | | 349 | | Share of subsidiaries’ profit before tax | | | (1,900) | | | | (83) | | | | - | | | | 1,983 | | | | - | | Share of equity accounted investments’ profit | | | (65) | | | | - | | | | (65) | | | | 65 | | | | (65) | | Profit on disposals | | | - | | | | - | | | | (59) | | | | - | | | | (59) | | Group operating profit | | | 22 | | | | - | | | | 2,216 | | | | - | | | | 2,238 | | Depreciation charge | | | - | | | | - | | | | 1,006 | | | | - | | | | 1,006 | | Amortisation of intangible assets | | | - | | | | - | | | | 66 | | | | - | | | | 66 | | Share-based payment (income)/expense | | | (1) | | | | - | | | | 66 | | | | - | | | | 65 | | Other (primarily pension payments) | | | - | | | | - | | | | (186) | | | | - | | | | (186) | | Net movement on working capital and provisions | | | - | | | | (11) | | | | (198) | | | | - | | | | (209) | | Cash generated from operations | | | 21 | | | | (11) | | | | 2,970 | | | | - | | | | 2,980 | | Interest paid (including finance leases) | | | - | | | | (236) | | | | (323) | | | | 242 | | | | (317) | | Corporation tax paid | | | - | | | | (29) | | | | (445) | | | | - | | | | (474) | | Net cash inflow/(outflow) from operating activities | | | 21 | | | | (276) | | | | 2,202 | | | | 242 | | | | 2,189 | | | | | | | | Cash flows from investing activities | | | | | | | | | | | | | | | | | | | | | Proceeds from disposals (net of cash disposed and deferred proceeds) | | | - | | | | - | | | | 222 | | | | - | | | | 222 | | Interest received | | | 2 | | | | 242 | | | | 9 | | | | (242) | | | | 11 | | Dividends received from equity accounted investments | | | - | | | | - | | | | 31 | | | | - | | | | 31 | | Purchase of property, plant and equipment | | | - | | | | - | | | | (1,044) | | | | - | | | | (1,044) | | Advances from subsidiary and parent undertakings | | | 407 | | | | 356 | | | | - | | | | (763) | | | | - | | Acquisition of subsidiaries (net of cash acquired) | | | - | | | | - | | | | (1,841) | | | | - | | | | (1,841) | | Other investments and advances | | | - | | | | - | | | | (11) | | | | - | | | | (11) | | Deferred and contingent acquisition consideration paid | | | - | | | | - | | | | (53) | | | | - | | | | (53) | | Net cash inflow/(outflow) from investing activities | | | 409 | | | | 598 | | | | (2,687) | | | | (1,005) | | | | (2,685) | | | | | | | | Cash flows from financing activities | | | | | | | | | | | | | | | | | | | | | Proceeds from issue of shares (net) | | | 42 | | | | - | | | | - | | | | - | | | | 42 | | Transactions involvingnon-controlling interests | | | - | | | | - | | | | (37) | | | | - | | | | (37) | | Advances to subsidiary and parent undertakings | | | - | | | | - | | | | (763) | | | | 763 | | | | - | | Increase in interest-bearing loans, borrowings and finance leases | | | - | | | | 6 | | | | 1,004 | | | | - | | | | 1,010 | | Net cash flow arising from derivative financial instruments | | | - | | | | 11 | | | | 158 | | | | - | | | | 169 | | Premium paid on early debt redemption | | | - | | | | (18) | | | | - | | | | - | | | | (18) | | Treasury/own shares purchased | | | (3) | | | | - | | | | - | | | | - | | | | (3) | | Repayment of interest-bearing loans, borrowings and finance leases | | | - | | | | (321) | | | | (22) | | | | - | | | | (343) | | Dividends paid to equity holders of the Company | | | (469) | | | | - | | | | - | | | | - | | | | (469) | | Dividends paid to non-controlling interests | | | - | | | | - | | | | (8) | | | | - | | | | (8) | | Net cash (outflow)/inflow from financing activities | | | (430) | | | | (322) | | | | 332 | | | | 763 | | | | 343 | | | | | | | | | | | | | | | | | | | | | | | | Decrease in cash and cash equivalents | | | - | | | | - | | | | (153) | | | | - | | | | (153) | | | | | | | | Reconciliation of opening to closing cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at 1 January | | | 401 | | | | - | | | | 2,048 | | | | - | | | | 2,449 | | Translation adjustment | | | - | | | | - | | | | (161) | | | | - | | | | (161) | | Decrease in cash and cash equivalents | | | - | | | | - | | | | (153) | | | | - | | | | (153) | | Cash and cash equivalents at 31 December | | | 401 | | | | - | | | | 1,734 | | | | - | | | | 2,135 | |
CRH ANNUAL REPORT AND FORM20-F | 2019
| | | | | | | CRH Annual Report and Form 20-F|2018
215 |
36. Supplemental Guarantor Information - continued
Supplemental Condensed Consolidated Statement of Cash Flow | | | | Year ended 31 December 2016 | | | Year ended 31 December 2017 | | | | | Guarantor
€m | | | Issuer
€m | | | Non-Guarantor
subsidiaries
€m | | | Eliminate and
reclassify
€m | | CRH and
subsidiaries
€m | | | Guarantor
€m | | | Issuer
€m | | | Non-Guarantor
subsidiaries
€m | | | Eliminate and
reclassify €m | | | CRH and
subsidiaries
€m | | Cash flows from operating activities | | | | | | | | | | | | | | | | | | | Profit before tax from continuing operations | | | 1,593 | | | | 104 | | | | 1,589 | | | | (1,666 | ) | | | 1,620 | | | | 1,662 | | | | 90 | | | | 1,654 | | | | (1,721) | | | | 1,685 | | Profit before tax from discontinued operations | | | 121 | | | | - | | | | 121 | | | | (121 | ) | | | 121 | | | | 327 | | | | - | | | | 328 | | | | (327) | | | | 328 | | Profit before tax | | | 1,714 | | | | 104 | | | | 1,710 | | | | (1,787) | | | | 1,741 | | | | 1,989 | | | | 90 | | | | 1,982 | | | | (2,048) | | | | 2,013 | | Finance costs (net) | | | (2) | | | | (9) | | | | 394 | | | | - | | | | 383 | | | | (2) | | | | (7) | | | | 358 | | | | - | | | | 349 | | Share of subsidiaries’ profit before tax | | | (1,650) | | | | (95) | | | | - | | | | 1,745 | | | | - | | | | (1,900) | | | | (83) | | | | - | | | | 1,983 | | | | - | | Share of equity accounted investments’ profit | | | (42) | | | | - | | | | (42) | | | | 42 | | | | (42) | | | | (65) | | | | - | | | | (65) | | | | 65 | | | | (65) | | Profit on disposals | | | - | | | | - | | | | (55) | | | | - | | | | (55) | | | | - | | | | - | | | | (59) | | | | - | | | | (59) | | Group operating profit | | | 20 | | | | - | | | | 2,007 | | | | - | | | | 2,027 | | | | 22 | | | | - | | | | 2,216 | | | | - | | | | 2,238 | | Depreciation charge | | | - | | | | - | | | | 1,009 | | | | - | | | | 1,009 | | | | - | | | | - | | | | 1,006 | | | | - | | | | 1,006 | | Amortisation of intangible assets | | | - | | | | - | | | | 71 | | | | - | | | | 71 | | | | - | | | | - | | | | 66 | | | | - | | | | 66 | | Impairment charge | | | - | | | | - | | | | 23 | | | | - | | | | 23 | | | Share-based payment (income)/expense | | | (3) | | | | - | | | | 49 | | | | - | | | | 46 | | | | (1) | | | | - | | | | 66 | | | | - | | | | 65 | | Other (primarily pension payments) | | | - | | | | - | | | | (65) | | | | - | | | | (65) | | | | - | | | | - | | | | (186) | | | | - | | | | (186) | | Net movement on working capital and provisions | | | - | | | | (1) | | | | 57 | | | | - | | | | 56 | | | | - | | | | (11) | | | | (198) | | | | - | | | | (209) | | Cash generated from operations | | | 17 | | | | (1) | | | | 3,151 | | | | - | | | | 3,167 | | | | 21 | | | | (11) | | | | 2,970 | | | | - | | | | 2,980 | | Interest paid (including finance leases) | | | - | | | | (266) | | | | (355) | | | | 275 | | | | (346) | | | Interest paid (including leases) | | | | - | | | | (236) | | | | (323) | | | | 242 | | | | (317) | | Corporation tax paid | | | - | | | | (41) | | | | (440) | | | | - | | | | (481) | | | | - | | | | (29) | | | | (445) | | | | - | | | | (474) | | Net cash inflow/(outflow) from operating activities | | | 17 | | | | (308) | | | | 2,356 | | | | 275 | | | | 2,340 | | | | 21 | | | | (276) | | | | 2,202 | | | | 242 | | | | 2,189 | | | Cash flows from investing activities | | | | | | | | | | | | | | | | | | | Proceeds from disposals (net of cash disposed and deferred proceeds) | | | - | | | | - | | | | 283 | | | | - | | | | 283 | | | | - | | | | - | | | | 222 | | | | - | | | | 222 | | Interest received | | | 2 | | | | 275 | | | | 6 | | | | (275) | | | | 8 | | | | 2 | | | | 242 | | | | 9 | | | | (242) | | | | 11 | | Dividends received from equity accounted investments | | | - | | | | - | | | | 40 | | | | - | | | | 40 | | | �� | - | | | | - | | | | 31 | | | | - | | | | 31 | | Purchase of property, plant and equipment | | | - | | | | - | | | | (853) | | | | - | | | | (853) | | | | - | | | | - | | | | (1,044) | | | | - | | | | (1,044) | | Advances from subsidiary and parent undertakings | | | 287 | | | | 644 | | | | - | | | | (931) | | | | - | | | | 407 | | | | 356 | | | | - | | | | (763) | | | | - | | Acquisition of subsidiaries (net of cash acquired) | | | - | | | | - | | | | (149) | | | | - | | | | (149) | | | | - | | | | - | | | | (1,841) | | | | - | | | | (1,841) | | Other investments and advances | | | - | | | | - | | | | (7) | | | | - | | | | (7) | | | | - | | | | - | | | | (11) | | | | - | | | | (11) | | Deferred and contingent acquisition consideration paid | | | - | | | | - | | | | (57) | | | | - | | | | (57) | | | | - | | | | - | | | | (53) | | | | - | | | | (53) | | Net cash inflow/(outflow) from investing activities | | | 289 | | | | 919 | | | | (737) | | | | (1,206) | | | | (735) | | | | 409 | | | | 598 | | | | (2,687) | | | | (1,005) | | | | (2,685) | | | Cash flows from financing activities | | | | | | | | | | | | | | | | | | | Proceeds from issue of shares (net) | | | 52 | | | | - | | | | - | | | | - | | | | 52 | | | | 42 | | | | - | | | | - | | | | - | | | | 42 | | Transactions involvingnon-controlling interests | | | | - | | | | - | | | | (37) | | | | - | | | | (37) | | Advances to subsidiary and parent undertakings | | | - | | | | - | | | | (931) | | | | 931 | | | | - | | | | - | | | | - | | | | (763) | | | | 763 | | | | - | | Increase in interest-bearing loans, borrowings and finance leases | | | - | | | | - | | | | 600 | | | | - | | | | 600 | | | Increase in interest-bearing loans and borrowings | | | | - | | | | 6 | | | | 1,004 | | | | - | | | | 1,010 | | Net cash flow arising from derivative financial instruments | | | - | | | | 25 | | | | (30) | | | | - | | | | (5) | | | | - | | | | 11 | | | | 158 | | | | - | | | | 169 | | Treasury/own shares purchased | | | (4) | | | | - | | | | - | | | | - | | | | (4) | | | Premium paid on early debt redemption | | | | - | | | | (18) | | | | - | | | | - | | | | (18) | | Repayment of interest-bearing loans, borrowings and finance leases | | | (9) | | | | (636) | | | | (1,370) | | | | - | | | | (2,015) | | | | - | | | | (321) | | | | (22) | | | | - | | | | (343) | | Treasury Shares/own shares purchased | | | | (3) | | | | - | | | | - | | | | - | | | | (3) | | Dividends paid to equity holders of the Company | | | (352) | | | | - | | | | - | | | | - | | | | (352) | | | | (469) | | | | - | | | | - | | | | - | | | | (469) | | Dividends paid tonon-controlling interests | | | - | | | | - | | | | (8) | | | | - | | | | (8) | | | | - | | | | - | | | | (8) | | | | - | | | | (8) | | Net cash (outflow)/inflow from financing activities | | | (313) | | | | (611) | | | | (1,739) | | | | 931 | | | | (1,732) | | | | (430) | | | | (322) | | | | 332 | | | | 763 | | | | 343 | | | | | | | | | | | | | | | | | | | | | | Decrease in cash and cash equivalents | | | (7) | | | | - | | | | (120) | | | | - | | | | (127) | | | | - | | | | - | | | | (153) | | | | - | | | | (153) | | | Reconciliation of opening to closing cash and cash equivalents | | | | | | | | | | | | | | | | | | | Cash and cash equivalents at 1 January | | | 408 | | | | - | | | | 2,110 | | | | - | | | | 2,518 | | | | 401 | | | | - | | | | 2,048 | | | | - | | | | 2,449 | | Translation adjustment | | | - | | | | - | | | | 58 | | | | - | | | | 58 | | | | - | | | | - | | | | (161) | | | | - | | | | (161) | | Decrease in cash and cash equivalents | | | (7) | | | | - | | | | (120) | | | | - | | | | (127) | | | | - | | | | - | | | | (153) | | | | - | | | | (153) | | Cash and cash equivalents at 31 December | | | 401 | | | | - | | | | 2,048 | | | | - | | | | 2,449 | | | | 401 | | | | - | | | | 1,734 | | | | - | | | | 2,135 | |
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CRH’s office in Atlanta, Georgia underwent a significant redesign of its 80,000 sq. ft workspace in 2019. CRH’s own materials and products feature throughout the three office floors, including aggregates, concrete, hardware, glass and staircases. The project was completed in June 2019, creating astate-of-the-art, open-plan work environment.
 
| Supplementary 20-F Disclosures |
| | | | 224 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
CRH Annual Report and Form 20-F | 2018
Selected Financial Data The Consolidated Financial Statements of CRH plc have been prepared in accordance with IFRS as issued by the International Accounting Standards Board. Selected financial data is presented below for the five years ended on 31 December 2018.2019. For the three years ended 31 December 2018,2019, the selected financial data is qualified in its entirety by reference to, and should be read in conjunction with, the audited Consolidated Financial Statements, the related Notes and the Business Performance section included elsewhere in this Annual Report and Form20-F. Year ended 31 December (amounts in millions, except per share data)
| | Year ended 31 December (amounts in millions, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 €m | | | 2018 (i) €m | | | 2017 (i) €m | | | 2016 (i) €m | | | 2015 (i) €m | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | 2015
€m | | | 2014
€m | | | | Consolidated Income Statement data | | | | | | | | | | | | | | | | | | | | | | | Revenue | | | 26,790 | | | | 25,220 | | | | 24,789 | | | | 21,406 | | | | 17,136 | | | | 25,129 | | | | 23,241 | | | | 21,653 | | | | 21,308 | | | | 17,849 | | | | Group operating profit | | | 2,177 | | | | 2,095 | | | | 1,908 | | | | 1,166 | | | | 834 | | | | 2,494 | | | | 2,071 | | | | 1,927 | | | | 1,813 | | | | 1,102 | | | | Profit attributable to equity holders of the Company | | | 1,432 | | | | 1,788 | | | | 1,162 | | | | 639 | | | | 520 | | | | 1,620 | | | | 1,342 | | | | 1,650 | | | | 1,068 | | | | 588 | | | | Basic earnings per Ordinary Share | | | 172.0c | | | | 214.0c | | | | 140.4c | | | | 78.7c | | | | 70.4c | | | | 202.2c | | | | 161.2c | | | | 197.4c | | | | 129.0c | | | | 72.4c | | | | Diluted earnings per Ordinary Share | | | 171.2c | | | | 212.7c | | | | 139.4c | | | | 78.3c | | | | 70.4c | | | | 200.6c | | | | 160.4c | | | | 196.2c | | | | 128.1c | | | | 72.1c | | | | Dividends paid during calendar year per Ordinary Share | | | 68.4c | | | | 65.4c | | | | 62.8c | | | | 62.5c | | | | 62.5c | | | | 72.4c | | | | 68.4c | | | | 65.4c | | | | 62.8c | | | | 62.5c | | | | Average number of Ordinary Shares outstanding (i) | | | 832.4 | | | | 835.6 | | | | 827.8 | | | | 812.3 | | | | 737.6 | | | | Average number of Ordinary Shares outstanding (ii) | | | | 801.3 | | | | 832.4 | | | | 835.6 | | | | 827.8 | | | | 812.3 | | | | All data relates to continuing operations | | | | | | | | | | | | | | | | | | | | | | Consolidated Balance Sheet data | | | | | | | | | | | | | | | | | | | | | | | Total assets | | | 35,173 | | | | 31,633 | | | | 31,594 | | | | 32,007 | | | | 22,017 | | | | 37,310 | | | | 35,173 | | | | 31,633 | | | | 31,594 | | | | 32,007 | | | | Net assets (ii) | | | 16,554 | | | | 14,977 | | | | 14,443 | | | | 13,544 | | | | 10,198 | | | | Net assets (iii) | | | | 17,480 | | | | 16,554 | | | | 14,977 | | | | 14,443 | | | | 13,544 | | | | Ordinary shareholders’ equity | | | 16,028 | | | | 14,490 | | | | 13,894 | | | | 13,014 | | | | 10,176 | | | | 16,939 | | | | 16,028 | | | | 14,490 | | | | 13,894 | | | | 13,014 | | | | Equity share capital | | | 287 | | | | 286 | | | | 284 | | | | 281 | | | | 253 | | | | 272 | | | | 287 | | | | 286 | | | | 284 | | | | 281 | | | | Number of Ordinary Shares (i) | | | 843.4 | | | | 839.0 | | | | 832.8 | | | | 823.9 | | | | 744.5 | | | | Number of Ordinary Shares (ii) | | | | 799.6 | | | | 843.4 | | | | 839.0 | | | | 832.8 | | | | 823.9 | | | | Number of Treasury Shares and own shares (i) | | | 27.8 | | | | 0.4 | | | | 0.4 | | | | 1.3 | | | | 3.8 | | | | Number of Treasury Shares and own shares (ii) | | | | 10.2 | | | | 27.8 | | | | 0.4 | | | | 0.4 | | | | 1.3 | | | | Number of Ordinary Shares net of Treasury Shares and own shares (i) | | | 815.6 | | | | 838.6 | | | | 832.4 | | | | 822.6 | | | | 740.7 | | | | Number of Ordinary Shares net of Treasury Shares and own shares (ii) | | | | 789.4 | | | | 815.6 | | | | 838.6 | | | | 832.4 | | | | 822.6 | |
| (i) | Prior year comparative income statement data has been restated to show the results of our Europe Distribution segment in discontinued operations. See note 3 to the Consolidated Financial Statements for further details. |
| (ii) | All share numbers are shown in millions of shares. |
(ii)(iii) | Net assets is calculated as the sum of total assets less total liabilities. |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 225 |
| CRH Annual Report and Form 20-F I 2018
Non-GAAP Performance Measures |
CRH uses a number ofnon-GAAP performance measures to monitor financial performance. These measures are referred to throughout the discussion of our reported financial position and operating performance and are measures which are regularly reviewed by CRH management. These performance measures may not be uniformly defined by all companies and accordingly they may not be directly comparable with similarly titled measures and disclosures by other companies. Certain information presented is derived from amounts calculated in accordance with IFRS but is is not itself an expressly permitted GAAP measure. Thenon-GAAP performance measures as summarised below should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
Reconciliation of Revenue, EBITDA (as defined)* and Operating Profit by segment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended 31 December | | | | | Year ended 31 December | | | Revenue | | | | | | Group EBITDA (as defined)* | | Depreciation,
amortisation and
impairment | | | | Group operating profit (i) | | | | | Revenue | | | | | | Group EBITDA (as defined)* | | | | | | Depreciation,
amortisation and
impairment | | | | | | Group operating profit (i) | | | 2019
€m | | 2018
€m | | 2017
€m | | | | | | 2019
€m | | 2018
€m | | 2017
€m | | | | | | 2019
€m | | 2018
€m | | 2017
€m | | | | | | 2019
€m | | 2018
€m | | 2017
€m | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | | | 2018
€m | | | 2017
€m | | | 2016
€m | | | | Continuing operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Europe Heavyside | | | 7,611 | | | | 6,902 | | | | 6,945 | | | | | | 911 | | | | 839 | | | | 781 | | | | | | 410 | | | | 361 | | | | 395 | | | | | | 501 | | | | 478 | | | | 386 | | | | | Europe Lightside | | | 1,508 | | | | 1,440 | | | | 1,392 | | | | | | 152 | | | | 143 | | | | 137 | | | | | | 42 | | | | 41 | | | | 45 | | | | | | 110 | | | | 102 | | | | 92 | | | | | Europe Distribution | | | 3,856 | | | | 4,145 | | | | 4,066 | | | | | | 181 | | | | 269 | | | | 206 | | | | | | 69 | | | | 62 | | | | 76 | | | | | | 112 | | | | 207 | | | | 130 | | | | | Europe | | | 12,975 | | | | 12,487 | | | | 12,403 | | | | | | 1,244 | | | | 1,251 | | | | 1,124 | | | | | | 521 | | | | 464 | | | | 516 | | | | | | 723 | | | | 787 | | | | 608 | | | | | Americas Materials | | | 8,951 | | | | 7,970 | | | | 7,598 | | | | | | 1,493 | | | | 1,270 | | | | 1,204 | | | | | | 484 | | | | 412 | | | | 386 | | | | | | 1,009 | | | | 858 | | | | 818 | | | | 10,385 | | | 8,951 | | | 7,970 | | | | | | 1,960 | | | 1,493 | | | 1,270 | | | | | | 689 | | | 484 | | | 412 | | | | | | 1,271 | | | 1,009 | | | 858 | | | | Americas Products | | | 4,433 | | | | 4,327 | | | | 4,280 | | | | | | 603 | | | | 573 | | | | 543 | | | | | | 144 | | | | 138 | | | | 132 | | | | | | 459 | | | | 435 | | | | 411 | | | | Europe Materials | | | | 8,494 | | | 8,042 | | | 7,338 | | | | | | 1,079 | | | 936 | | | 891 | | | | | | 524 | | | 449 | | | 398 | | | | | | 555 | | | 487 | | | 493 | | | | Americas | | | 13,384 | | | | 12,297 | | | | 11,878 | | | | | | 2,096 | | | | 1,843 | | | | 1,747 | | | | | | 628 | | | | 550 | | | | 518 | | | | | | 1,468 | | | | 1,293 | | | | 1,229 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Asia | | | 431 | | | | 436 | | | | 508 | | | | | | 25 | | | | 52 | | | | 109 | | | | | | 39 | | | | 37 | | | | 38 | | | | | | (14) | | | | 15 | | | | 71 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Building Products | | | | 6,250 | | | 6,248 | | | 6,345 | | | | | | 961 | | | 787 | | | 769 | | | | | | 293 | | | 212 | | | 193 | | | | | | 668 | | | 575 | | | 576 | | | | | | | | | | | | Total Group from continuing operations | | | 26,790 | | | | 25,220 | | | | 24,789 | | | | | | 3,365 | | | | 3,146 | | | | 2,980 | | | | | | 1,188 | | | | 1,051 | | | | 1,072 | | | | | | 2,177 | | | | 2,095 | | | | 1,908 | | | | 25,129 | | | 23,241 | | | 21,653 | | | | | | 4,000 | | | 3,216 | | | 2,930 | | | | | | 1,506 | | | 1,145 | | | 1,003 | | | | | | 2,494 | | | 2,071 | | | 1,927 | | | | Discontinued operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Americas Distribution | | | 7 | | | | 2,343 | | | | 2,315 | | | | | | (5) | | | | 164 | | | | 150 | | | | | | - | | | | 21 | | | | 31 | | | | | | (5) | | | | 143 | | | | 119 | | | | - | | | 7 | | | 2,343 | | | | | | - | | | (5) | | | 164 | | | | | | - | | | | - | | | 21 | | | | | | - | | | (5) | | | 143 | | | | Europe Distribution | | | | 3,177 | | | 3,549 | | | 3,567 | | | | | | 200 | | | 149 | | | 216 | | | | | | 99 | | | 43 | | | 48 | | | | | | 101 | | | 106 | | | 168 | | | | | | | | | | | | Total Group | | | 26,797 | | | | 27,563 | | | | 27,104 | | | | | | 3,360 | | | | 3,310 | | | | 3,130 | | | | | | 1,188 | | | | 1,072 | | | | 1,103 | | | | | | 2,172 | | | | 2,238 | | | | 2,027 | | | | 28,306 | | | 26,797 | | | 27,563 | | | | | | 4,200 | | | 3,360 | | | 3,310 | | | | | | 1,605 | | | 1,188 | | | 1,072 | | | | | | 2,595 | | | 2,172 | | | 2,238 | | | | Group operating profit from continuing operations | Group operating profit from continuing operations | | | | | | | | | | | | | | | | | | | | 2,177 | | | | 2,095 | | | | 1,908 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,494 | | | 2,071 | | | 1,927 | | | | (Loss)/profit on disposals | | | | | | | | | | | | | | | | | | | | | | | | | | | (24) | | | | 56 | | | | 53 | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1) | | | (27) | | | 54 | | | | Finance costs less income | | | | | | | | | | | | | | | | | | | | | | | | | | | (305) | | | | (289) | | | | (317) | | | | | | | | | | | | | | | | | | | | | | | | | | | | (326) | | | (305) | | | (289) | | | | Other financial expense | | | | | | | | | | | | | | | | | | | | | | | | | | | (46) | | | | (60) | | | | (66) | | | | | | | | | | | | | | | | | | | | | | | | | | | | (112) | | | (46) | | | (59) | | | | Share of equity accounted investments’ profit | Share of equity accounted investments’ profit | | | | | | | | | | | | | | | | | | | | 60 | | | | 65 | | | | 42 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 60 | | | 48 | | | 52 | | | | Profit before tax from continuing operations | Profit before tax from continuing operations | | | | | | | | | | | | | | | | | | | | 1,862 | | | | 1,867 | | | | 1,620 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,115 | | | 1,741 | | | 1,685 | | | | Income tax expense | | | | | | | | | | | | | | | | | | | | | | | | | | | (426) | | | | (55) | | | | (431) | | | | | | | | | | | | | | | | | | | | | | | | | | | | (477) | | | (396) | | | (12) | | | | Group profit for the financial year from continuing operations | Group profit for the financial year from continuing operations | | | | | | | | | | | | | | | | | | | | 1,436 | | | | 1,812 | | | | 1,189 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,638 | | | 1,345 | | | 1,673 | | | | Profit after tax for the financial year from discontinued operations | Profit after tax for the financial year from discontinued operations | | | | | | | | | | | | | | | | | | 1,085 | | | | 107 | | | | 81 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 310 | | | 1,176 | | | 246 | | | | | | | | Group profit for the financial year | Group profit for the financial year | | | | | | | | | | | | | | | | | | 2,521 | | | | 1,919 | | | | 1,270 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,948 | | | 2,521 | | | 1,919 | |
| (i) | Throughout this document, Group operating profit is reported as shown in the Consolidated Income Statement and excludes profit on disposals. |
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
217
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| | | | 226 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
CRH Annual Report and Form 20-F | 2018
Non-GAAP Performance Measures - continued Return on Net Assets
| | Return on Net Assets | | | | | | | | | | | | | 2018 (i)
€m | | | | | | 2017
€m | | | | | | 2016
€m | | | | | | 2019 €m | | | 2018 (iii) €m | | | 2017 €m | | | | | | | Group operating profit from continuing operations | | | 2,177 | | | | | | 2,095 | | | | | | 1,908 | | | | | | | | 2,494 | | | | 2,071 | | | | 1,927 | | | | | | Group operating profit from discontinued operations | | | - | | | | | | 143 | | | | | | 119 | | | | | | 101 | | | | 106 | | | | 311 | | | | | | Group operating profit (numerator for RONA computation) | | | 2,177 | | | | | | 2,238 | | | | | | 2,027 | | | | | | 2,595 | | | | 2,177 | | | | 2,238 | | | | | | Current year | | | | | | | | | | | | | | | | | | | | | | | Segment assets (ii) | | | 31,510 | | | | | | 26,809 | | | | | | 27,581 | | | | | | Segment assets (i) | | | | 32,684 | | | | 31,510 | | | | 26,809 | | | | | | Segment liabilities (ii) | | | (6,592) | | | | | | (6,201) | | | | | | (6,927) | | | | | | Segment liabilities (i) | | | | (7,958) | | | | (6,592) | | | | (6,201) | | | | | | Group segment net assets | | | 24,918 | | | | | | 20,608 | | | | | | 20,654 | | | | | | 24,726 | | | | 24,918 | | | | 20,608 | | | | | | Lease liabilities (ii) | | | | 1,511 | | | | - | | | | - | | | | | | Assets held for sale | | | - | | | | | | 1,112 | | | | | | - | | | | | | - | | | | - | | | | 1,112 | | | | | | Liabilities associated with assets classified as held for sale | | | - | | | | | | (341) | | | | | | - | | | | | | - | | | | - | | | | (341) | | | | | | Group net assets (including net assets held for sale) | | | 24,918 | | | | | | 21,379 | | | | | | 20,654 | | | | | | Group segment net assets excluding lease liabilities (including net assets held for sale) | | | | 26,237 | | | | 24,918 | | | | 21,379 | | | | | | Prior year | | | | | | | | | | | | | | | | | | | | | | | Segment assets (ii) | | | 26,809 | | | | | | 27,581 | | | | | | 27,881 | | | | | | Segment assets (i) | | | | 31,510 | | | | 26,809 | | | | 27,581 | | | | | | Segment liabilities (ii) | | | (6,201) | | | | | | (6,927) | | | | | | (6,794) | | | | | | Segment liabilities (i) | | | | (6,592) | | | | (6,201) | | | | (6,927) | | | | | | Group segment net assets | | | 20,608 | | | | | | 20,654 | | | | | | 21,087 | | | | | | 24,918 | | | | 20,608 | | | | 20,654 | | | | | | Average net assets including net assets held for sale (denominator for RONA computation) | | | 22,763 | | | | | | 21,017 | | | | | | 20,871 | | | | | | 25,578 | | | | 22,763 | | | | 21,017 | | | | | | RONA | | | 9.6% | | | | | | 10.6% | | | | | | 9.7% | | | | | | 10.1% | | | | 9.6% | | | | 10.6% | | | | | | Reconciliation of Segment Assets and Liabilities to Group Assets and Liabilities | | Reconciliation of Segment Assets and Liabilities to Group Assets and Liabilities | | | | | | | | | | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | 2016 €m | | | | Assets | | | | | | | | | | | | Segment assets (i) | | | | 32,684 | | | | 31,510 | | | | 26,809 | | | | 27,581 | | | | Reconciliation to total assets as reported in the Consolidated Balance Sheet: | | | | | | | | | | | | Investments accounted for using the equity method | | | | 690 | | | | 1,163 | | | | 1,248 | | | | 1,299 | | | | Other financial assets | | | | 12 | | | | 23 | | | | 25 | | | | 26 | | | | Derivative financial instruments (current andnon-current) | | | | 82 | | | | 45 | | | | 64 | | | | 76 | | | | Income tax assets (current and deferred) | | | | 87 | | | | 86 | | | | 260 | | | | 163 | | | | Cash and cash equivalents | | | | 3,755 | | | | 2,346 | | | | 2,115 | | | | 2,449 | | | | Assets held for sale | | | | - | | | | - | | | | 1,112 | | | | - | | | | | | Total assets as reported in the Consolidated Balance Sheet | | | | 37,310 | | | | 35,173 | | | | 31,633 | | | | 31,594 | | | | Liabilities | | | | | | | | | | | | Segment liabilities (i) | | | | 7,958 | | | | 6,592 | | | | 6,201 | | | | 6,927 | | | | Reconciliation to total liabilities as reported in the Consolidated Balance Sheet: | | | | | | | | | | | | Interest-bearing loans and borrowings (current andnon-current) | | | | 9,014 | | | | 9,316 | | | | 7,976 | | | | 7,790 | | | | Derivative financial instruments (current andnon-current) | | | | 17 | | | | 59 | | | | 14 | | | | 32 | | | | Income tax liabilities (current and deferred) | | | | 2,841 | | | | 2,652 | | | | 2,124 | | | | 2,402 | | | | Liabilities associated with assets classified as held for sale | | | | - | | | | - | | | | 341 | | | | - | | | | | | Total liabilities as reported in the Consolidated Balance Sheet | | | | 19,830 | | | | 18,619 | | | | 16,656 | | | | 17,151 | |
| (i) | In line withSegment assets and liabilities as disclosed in note 2 to the purposeConsolidated Financial Statements.
|
| (ii) | Segment liabilities include lease liabilities capitalised under IFRS 16 in 2019 which are debt in nature and are therefore adjusted for in arriving at the calculation of the metric, as set out on page 220, to “measure management’s ability to generate profits from theGroup segment net assets required to support that business”, for the calculation of RONA. Segment lease liabilities at 31 December 2019 amounted to; America Materials€363 million, Europe Materials€493 million and Building Products€655 million. |
| (iii) | For the 2018 calculation, as the net segment assets classified as held for sale at 31 December 2017 were disposed of on 2 January 2018, these have been excluded from the prior year element. For consistency, the related immaterial operating loss of€5 million in 2018 is also excluded. |
Reconciliation of Segment Assets and Liabilities to Group Assets and Liabilities
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018
€m | | | | | | 2017
€m | | | | | | 2016
€m | | | | | | 2015
€m | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Segment assets (ii) | | | 31,510 | | | | | | | | 26,809 | | | | | | | | 27,581 | | | | | | | | 27,881 | | | | | | | | | | | Reconciliation to total assets as reported in the Consolidated Balance Sheet: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Investments accounted for using the equity method | | | 1,163 | | | | | | | | 1,248 | | | | | | | | 1,299 | | | | | | | | 1,317 | | | | | | | | | | | Other financial assets | | | 23 | | | | | | | | 25 | | | | | | | | 26 | | | | | | | | 28 | | | | | | | | | | | Derivative financial instruments (current andnon-current) | | | 45 | | | | | | | | 64 | | | | | | | | 76 | | | | | | | | 109 | | | | | | | | | | | Income tax assets (current and deferred) | | | 86 | | | | | | | | 260 | | | | | | | | 163 | | | | | | | | 154 | | | | | | | | | | | Cash and cash equivalents | | | 2,346 | | | | | | | | 2,115 | | | | | | | | 2,449 | | | | | | | | 2,518 | | | | | | | | | | Assets held for sale | | | - | | | | | | | | 1,112 | | | | | | | | - | | | | | | | | - | | | | | | | | | | Total assets as reported in the Consolidated Balance Sheet | | | 35,173 | | | | | | | | 31,633 | | | | | | | | 31,594 | | | | | | | | 32,007 | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Segment liabilities (ii) | | | 6,592 | | | | | | | | 6,201 | | | | | | | | 6,927 | | | | | | | | 6,794 | | | | | | | | | | | Reconciliation to total liabilities as reported in the Consolidated Balance Sheet: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest-bearing loans and borrowings (current andnon-current) | | | 9,316 | | | | | | | | 7,976 | | | | | | | | 7,790 | | | | | | | | 9,221 | | | | | | | | | | | Derivative financial instruments (current andnon-current) | | | 59 | | | | | | | | 14 | | | | | | | | 32 | | | | | | | | 24 | | | | | | | | | | | Income tax liabilities (current and deferred) | | | 2,652 | | | | | | | | 2,124 | | | | | | | | 2,402 | | | | | | | | 2,424 | | | | | | | | | | Liabilities associated with assets classified as held for sale | | | - | | | | | | | | 341 | | | | | | | | - | | | | | | | | - | | | | | | | | | | Total liabilities as reported in the Consolidated Balance Sheet | | | 18,619 | | | | | | | | 16,656 | | | | | | | | 17,151 | | | | | | | | 18,463 | |
(ii) | Segment assets and liabilities as disclosed in note 2 to the Consolidated Financial Statements.
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| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 227 |
| CRH Annual Report and Form 20-F I 2018
|
Calculation of EBITDA (as defined)* Net Interest Cover | | | | 2018
€m | | | | | | 2017
€m | | | 2016
€m | | | 2019 €m | | | 2018 €m | | | 2017 €m | | | | Interest | | | | | | | | | | | | | | | | | Finance costs (i) | | | 339 | | | | | | 301 | | | | 325 | | | | 346 | | | | 339 | | | | 301 | | | | Finance income (i) | | | (34) | | | | | | (12) | | | | (8) | | | | (20) | | | | (34) | | | | (12) | | | | Net interest | | | 305 | | | | | | 289 | | | | 317 | | | | 326 | | | | 305 | | | | 289 | | | | EBITDA (as defined)* from continuing operations | | | 3,365 | | | | | | 3,146 | | | | 2,980 | | | | 4,000 | | | | 3,216 | | | | 2,930 | | | | | | Times | | | | | | Times | | | | | | EBITDA (as defined)* Net Interest Cover (EBITDA (as defined)* divided by net interest) | | | 11.0 | | | | | | 10.9 | | | | 9.4 | | | | 12.3 | | | | 10.5 | | | | 10.1 | | (i) These items appear on the Consolidated Income Statement on page 123. Calculation of Net Debt/EBITDA (as defined)* | | | | | (i) These items appear on the Consolidated Income Statement on page 128. | | | | | | | | | | Calculation of Net Debt/EBITDA (as defined)* | | | | | | | | | | | | | 2019 €m | | | 2018 €m | | | | | | | | 2018
€m | | | | | | 2017
€m | | | | | | | Net debt | | | | | | | | | | | | | | | | | Lease liabilities under IFRS 16 (i) | | | | (1,511) | | | | - | | | | | Interest-bearing loans and borrowings (i) | | | | (9,014) | | | | (9,316) | | | | | Derivative financial instruments (net) (i) | | | | 65 | | | | (14) | | | | | Cash and cash equivalents (i) | | | 2,346 | | | | | | 2,115 | | | | | | 3,755 | | | | 2,346 | | | | | | Interest-bearing loans and borrowings (i) | | | (9,316) | | | | | | (7,976) | | | | | | | Derivative financial instruments (net) (i) | | | (14) | | | | | | 50 | | | | | | Group net debt excluding net debt reclassified as held for sale (i) (ii) | | | (6,984) | | | | | | (5,811) | | | | | | Group net debt (i) | | | | (6,705) | | | | (6,984) | | | | | | | | | | | | | | | EBITDA (as defined)* from continuing operations | | | 3,365 | | | | | | 3,146 | | | | | | 4,000 | | | | 3,216 | | | | | EBITDA (as defined)* from discontinued operations | | | | 200 | | | | 144 | | | | | EBITDA (as defined)* from continuing and discontinued operations | | | | 4,200 | | | | 3,360 | | | | | | | | Times | | | | | | Times | | | | | Net Debt divided by EBITDA (as defined)* from continuing operations (ii) | | | 2.1 | | | | | | 1.8 | | | | | | 1.7 | | | | | | (i) These items appear in notes 22 to 26 to the Consolidated Financial Statements. (ii) Net debt/EBITDA (as defined)* from continuing and discontinued operations was 2.1x (2017: 1.8x). 2017 Group net debt including net debt reclassified as held
for sale of€15 million was€5,796 million. Adjusted Basic Earnings per Ordinary Share | | | | | | | | | | | | 2017
€m | | | | | | | | Numerator for basic and diluted earnings per Ordinary Share (i) | | | | | | | 1,895 | | | | | | | One-off Swiss pension past service credit (net of tax) (ii) | | | | | | | (59) | | | | | | | One-off deferred tax credit (including credit relating to discontinued operations) | | | | | | | (447) | | | | | | | Numerator for adjusted basic EPS excludingone-off gains per Ordinary Share from continuing and discontinued operations | | | | | | | 1,389 | | | | | | | Average shares (i) | | | | | | | 835.6 | | | | | | | Adjusted basic earnings per Ordinary Share - continuing and discontinued operations | | | | | | | 166.2c | | | | | | | Dividend declared for the year | | | | | | | 68.0c | | | | | | | Dividend cover (adjusted basic earnings per share/dividend declared per share) | | | | | | | 2.4x | | | | | | Net Debt divided by EBITDA (as defined)* from continuing and discontinued operations (ii) | | | | | | 2.1 | | | |
| (i) | These items appear in note 14notes 22 to 27 to the Consolidated Financial Statements. |
| (ii) | Theone-off Swiss pension past service credit was€81 million beforeIn line with the purpose of the metric, as set out on page 228, to “assess the Company’s level of indebtedness relative to its profitability and cash-generating capabilities”, the 2019 calculation is based on a tax charge of€22 million.continuing operations basis. For 2018, the Group net debt position includes debt related to operations discontinued in 2019 and therefore for comparability purposes the 2018 calculation uses EBITDA (as defined)* from continuing and discontinued operations.
|
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
219
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| | | | 228 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
CRH Annual Report and Form 20-F I2018
Non-GAAP Performance Measures - continued EBITDA (as defined). EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax and is quoted by management in conjunction with other GAAP andnon-GAAP financial measures, to aid investors in their analysis of the performance of the Group and to assist investors in the comparison of the Group’s performance with that of other companies. EBITDA (as defined)* and operating profit by segment are monitored by management in order to allocate resources between segments and to assess performance. Given that net finance costs and income tax are managed on a centralised basis, these items are not allocated between operating segments for the purpose of the information presented to the Chief Operating Decision Maker. EBITDA (as defined)* margin is calculated by expressing EBITDA (as
(as defined)* as a percentage of sales. Net Debt. Net debt is used by management as it gives a more complete picture of the Group’s current debt situation than total interest-bearing loans and borrowings. Net debt is provided to enable investors to see the economic effect of gross debt, related hedges and cash and cash equivalents in total. Net debt is anon-GAAP measure and comprises current andnon-current interest-bearing loans and borrowings, lease liabilities under IFRS 16, cash and cash equivalents and current andnon-current derivative financial instruments. Net Debt/EBITDA (as defined)* is monitored by management and is useful to investors in assessing the Company’s level of indebtedness relative to its profitability and cash-generating capabilities. It is the ratio of Net Debt to EBITDA (as defined)* and is calculated on page 219.227. EBITDA (as defined)* Net Interest Cover.EBITDA (as defined)* Net Interest Cover is used by management as a measure which matches the earnings and cash generated by the business to the underlying funding costs. EBITDA (as defined)* Net Interest Cover is presented to provide investors with a greater understanding of the impact of CRH’s debt and financing arrangements. It is the ratio of EBITDA (as defined)* to Net Interest and is calculated on page 219. The definitions and calculations used as a metric in lender covenant agreements include certain specified adjustments to the amounts included in the Consolidated Financial Statements. The ratios as calculated on the basis of the definitions in those covenants are disclosed in note 25 to the Consolidated Financial Statements.227. RONA. Return on Net Assets is a key internalpre-tax measure of operating performance throughout the CRH Group and can be used by management and investors to measure the relative use of assets between CRH’s business segments and to compare to other businesses. The metric measures management’s ability to generate profits from the net assets required to support that business, focusing on both profit maximisation and the maintenance of an efficient asset base; it encourages effective fixed asset maintenance programmes, good decisions regarding expenditure on property, plant and equipment and the timely disposal of surplus assets, and also supports the effective management of the Group’s working capital base. RONA is calculated by expressing total Group operating profit as a percentage of average net assets. Net assets comprise total assets by segment (including assets held for sale) less total liabilities by segment (including(excluding lease liabilities and including liabilities associated with assets classified as held for sale) as shown on page 218226 and detailed in note 2 to the Consolidated Financial Statements, and excludes equity accounted investments and other financial assets, net debt (as previously defined) and tax assets & liabilities. The average net assets for the year is the simple average of the opening and closing balance sheet figures. Organic Revenue, Organic Operating Profit and Organic EBITDA (as defined)*. CRH pursues a strategy of growth through acquisitions and investments, with€3,562727 million spent on acquisitions and investments in 2018 (2017:2019 (2018:€1,9053,562 million). Acquisitions completed in 20172018 and 20182019 contributed incremental sales revenue of€1,855923 million, operating profit of€22670 million and EBITDA (as defined)* of€357164 million in 2018.2019. Proceeds from divestments andnon-current asset disposals amounted to€3,0092,096 million (net of cash disposed and deferred proceeds) (2017:(2018:€2223,009 million). The sales impact of divested activities in 20182019 was a negative€348629 million and the impact at an operating profit and EBITDA (as defined)* level was a negative€2618 million and€3652 million respectively. The euro strengthenedweakened against most major currencies during 20182019 resulting in the average euro/US Dollar rate weakeningstrengthening from 1.1297 in 2017 to 1.1810 in 2018 to 1.1195 in 2019 and the Pound Sterling weakeningstrengthening from an average 0.8767 in 2017 to 0.8847 in 2018.2018 to 0.8778 in 2019. Overall currency movements resulted in an unfavourablea favourable net foreign currency translation impact on our results as shown on the table on page 28.34. Because of the impact of acquisitions, divestments, exchange translation and othernon-recurring items on reported results each year, the Group uses organic revenue, organic operating profit and organic EBITDA (as defined)* as additional performance indicators to assess performance ofpre-existing (also referred to as underlying, heritage,like-for-like or ongoing) operations each year. Organic revenue, organic operating profit and organic EBITDA (as defined)* is arrived at by excluding the incremental revenue, operating profit and EBITDA (as defined)* contributions from current and prior year acquisitions and divestments, the impact of exchange translation and the impact of anynon-recurring items. In the Business Performance section on pages 2438 to 51,52, changes in organic revenue, organic operating profit and organic EBITDA (as defined)* are presented as additional measures of revenue, operating profit and EBITDA (as defined)* to provide a greater understanding of the performance of the Group. A reconciliation of the changes in organic revenue, organic operating profit and organic EBITDA (as defined)* to the changes in total revenue, operating profit and EBITDA (as defined)* for the Group and by segment, is presented with the discussion of each segment’s performance in tables contained in the segment discussion commencing on page 32.30. Revenue from continuing and discontinued operations, EBITDA (as defined)* from continuing and discontinued operations and Operating Profit from continuing and discontinued operations. As detailed in note 3 to the Consolidated Financial Statements, our Europe Distribution and our Americas Distribution segment hassegments have been classified as discontinued operations in accordance with IFRS 5. In certain instances throughout the Annual Report and Form20-F we refer to revenue, EBITDA (as defined)* and operating profit from continuing and discontinued operations. Information presented on this basis is useful to investors as (i) it provides a greater understanding of the Group’s performance and (ii) assists investors in the comparison of the Group’s performance with that of other companies. A reconciliation of each of these measures is detailed in note 2 to the Consolidated Financial Statements and on page 217.225. Adjusted Basic Earnings per Ordinary Share.Cash paid to Shareholders. In 2017, adjusted basic earnings per Ordinary Share was used by managementCash paid to shareholders is a measure of cash returned to shareholders representing dividends of€0.6 billion (2018:€0.5 billion) paid during the year and excess cash of€0.8 billion (2018:€0.8 billion) returned through the share buyback programme. The metric provides information on dividend growth for shareholders and is reflective of CRH’s continued commitment to return excess cash to shareholders. CRH monitor the cash paid to shareholders as it presented a more accurate picturepart of the profit attributable to equity holders of the Group, before certainone-off items (net of related tax). As these wereone-off items, relating to 2017 only, no adjusted basic earnings per Ordinary Share is presented for 2018.their overall capital allocation strategy.
| * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
220
|
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 229 |
| CRH Annual Report and Form 20-F I 2018
|
Contractual Obligations An analysis of the maturity profile of debt, finance and operating leases capitalised under IFRS 16, purchase obligations, deferred and contingent acquisition consideration and pension scheme contribution commitments at 31 December 20182019 is as follows: Contractual Obligations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payments due by period | | Total €m | | | | | | Less than
1 year
€m | | | | | | 1-3 years
€m | | | | | | 3-5 years
€m | | | | | | More than
5 years
€m | | | | | | | | | | | | Interest-bearing loans and borrowings (i) | | | 9,309 | | | | | | | | 620 | | | | | | | | 1,705 | | | | | | | | 1,128 | | | | | | | 5,856 | | | | | | | | | | | | Finance leases | | | 21 | | | | | | | | 5 | | | | | | | | 6 | | | | | | | | 4 | | | | | | | 6 | | | | | | | | | | | | Estimated interest payments on contractually-committed debt and finance leases (ii) | | | 3,386 | | | | | | | | 328 | | | | | | | | 562 | | | | | | | | 472 | | | | | | | 2,024 | | | | | | | | | | | | Deferred and contingent acquisition consideration | | | 339 | | | | | | | | 48 | | | | | | | | 47 | | | | | | | | 18 | | | | | | | 226 | | | | | | | | | | | | Operating leases | | | 1,911 | | | | | | | | 353 | | | | | | | | 483 | | | | | | | | 286 | | | | | | | 789 | | | | | | | | | | | | Purchase obligations (iii) | | | 1,416 | | | | | | | | 719 | | | | | | | | 218 | | | | | | | | 127 | | | | | | | 352 | | | | | | | | | | | | Retirement benefit obligation commitments (iv) | | | 14 | | | | | | | | 2 | | | | | | | | 4 | | | | | | | | 2 | | | | | | | 6 | | | | | | | | | | | | Total | | | 16,396 | | | | | | | | 2,075 | | | | | | | | 3,025 | | | | | | | | 2,037 | | | | | | | 9,259 |
| | | | | | | | | | | | | | | | | | | | | Payments due by period | | Total
€m | | | Less than
1 year
€m | | | 1-3 years
€m | | | 3-5 years
€m | | | More than 5
years €m | | | Interest-bearing loans and borrowings (i) | | | 8,962 | | | | 824 | | | | 1,353 | | | | 1,356 | | | | 5,429 | | | Lease liabilities under IFRS 16 (ii) | | | 2,038 | | | | 275 | | | | 424 | | | | 293 | | | | 1,046 | | | Estimated interest payments on contractually-committed debt (iii) | | | 3,156 | | | | 307 | | | | 533 | | | | 460 | | | | 1,856 | | | Deferred and contingent acquisition consideration | | | 335 | | | | 45 | | | | 46 | | | | 120 | | | | 124 | | | Purchase obligations (iv) | | | 1,398 | | | | 700 | | | | 218 | | | | 141 | | | | 339 | | | Retirement benefit obligation commitments (v) | | | 19 | | | | 2 | | | | 4 | | | | 4 | | | | 9 | | | Total | | | 15,908 | | | | 2,153 | | | | 2,578 | | | | 2,374 | | | | 8,803 | |
| (i) | Of the€9.39.0 billion total gross debt,€0.1 billion is drawn on revolving facilities which may be repaid and redrawn up to the date of maturity. The interest payments are estimated assuming these loans are repaid on facility maturity dates. |
| (ii) | Lease liabilities are presented on an undiscounted basis as detailed in note 22 and note 24 to the Consolidated Financial Statements. |
| (iii) | These interest payments have been estimated on the basis of the following assumptions: (a) no change in variable interest rates; (b) no change in exchange rates; (c) that all debt is repaid as if it falls due from future cash generation; and (d) none is refinanced by future debt issuance. |
(iii)(iv) | Purchase obligations include contracted for capital expenditure. A summary of the Group’s future purchase commitments as at 31 December 20182019 for capital expenditure is set out in note 15 to the Consolidated Financial Statements. These expenditures for replacement and new projects are in the ordinary course of business and will be financed from internal resources. |
(iv)(v) | These retirement benefit commitments comprise the contracted payments related to our pension schemes in the UK. See further details in note 2930 to the Consolidated Financial Statements. |
Quantitative and Qualitative Information about Market Risk CRH addresses the sensitivity of the Group’s interest rate swaps and debt obligations to changes in interest rates in a sensitivity analysis technique that measures the estimated impacts on the income statement and on equity of either an increase or decrease in market interest rates or a strengthening or weakening in the US Dollar against all other currencies, from the rates applicable at 31 December 2018,2019, for each class of financial instrument with all other variables remaining constant. The technique used measures the estimated impact on profit before tax and on total equity arising on netyear-end floating rate debt and onyear-end equity, based on either an increase/decrease of 1% in floating interest rates or a 5% strengthening/weakening in the euro/US Dollar exchange rate. The euro/US Dollar rate has been selected for this sensitivity analysis given the materiality of the Group’s activities in the US. This analysis, set out in note 2324 to the Consolidated Financial Statements, is for illustrative purposes only as in practice interest and foreign exchange rates rarely change in isolation. Quantitative and qualitative information and sensitivity analysis of market risk is contained in notes 2223 to 2627 to the Consolidated Financial Statements. Off-Balance Sheet Arrangements CRH does not have anyoff-balance sheet arrangements that have, or are reasonably likely to have a current or future effect on CRH’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
| 221 |
| | | | 230 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
CRH Annual Report and Form 20-F | 2018
Property, Plants and Equipment At 1514 February 2019,2020, CRH had a total of 3,1523,102 building materials production locations and 553 Merchanting and DIY locations. 1,5281,069 locations are leased, with the remaining 2,1772,033 locations held on a freehold basis. The significant subsidiary locations as at 31 December 20182019 are the cement facilities in the US, Philippines, Poland, Ukraine, the UK, Romania, Canada, Slovakia, Ireland, Germany, France and Brazil. The clinker (the key intermediate product in the manufacture of cement) capacity for these locations is set out in the table below. Further details on locations and products manufactured are provided on pages 258268 and 259. 269. None of CRH’s individual properties is of material significance to the Group. CRH believes that all the facilities are in good condition, adequate for their purpose and suitably utilised according to the individual nature and requirements of the relevant operations. CRH has a continuing programme of improvements and replacements to properties when considered appropriate to meet the needs of the individual operations. Further information in relation to the Group’s accounting policy and process governing any impairment of property, plant and equipment is given on page 135140 and in note 15 to the Consolidated Financial Statements on page 158.164. Significant Locations – Clinker Capacity
| | | | | | | | | | | | | | Subsidiary | | Country | | | Number of plants | | | Clinker capacity
(tonnes per hour) | | | | | | | Ash Grove | | | United States | | | | 8 | | | | 934 | | | | | | | Republic Cement | | | Philippines | | | | 5 | | | | 613 | | | | | | | Grupa Ożarów | | | Poland | | | | 1 | | | | 342 | | | | | | | Podilsky Cement PJSC | | | Ukraine | | | | 1 | | | | 325 | | | | | | | Tarmac | | | United Kingdom | | | | 3 | | | | 306 | | | | | | | CRH Romania | | | Romania | | | | 2 | | | | 305 | | | | | | | CRH Canada | | | Canada | | | | 2 | | | | 292 | | | | | | | CRH Slovakia | | | Slovakia | | | | 2 | | | | 290 | | | | | | | Irish Cement | | | Ireland | | | | 2 | | | | 288 | | | | | | | Opterra | | | Germany | | | | 2 | | | | 268 | | | | | | | Eqiom | | | France | | | | 3 | | | | 243 | | | | | | | CRH Brazil | | | Brazil | | | | 3 | | | | 200 | |
Sources and Availability of Raw Materials CRH generally owns or leases the real estate on which its main raw materials, namely aggregates, are found. CRH is a significant purchaser of certain important materials or resources such as cement, bitumen, steel, gas, fuel and other energy supplies, the cost of which can fluctuate significantly and consequently have an adverse impact on CRH’s business. CRH is not generally dependent on any one source for the supply of these materials or resources, other than in certain jurisdictions with regard to the supply of gas and electricity. Competitive markets generally exist in the jurisdictions in which CRH operates for the supply of cement, bitumen, steel and fuel. Mine Safety Disclosures The information concerning mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is included in Exhibit 16 to CRH’s Annual Report on Form20-F, as filed with the Securities and Exchange Commission (SEC). Significant Locations – Clinker Capacity | | | | | | | | | | | | | Subsidiary | | Country | | | Number of plants | | | Clinker capacity
(tonnes per hour) | | | Ash Grove | | | United States | | | | 8 | | | | 925 | | | | | | | Republic Cement | | | Philippines | | | | 5 | | | | 628 | | | | | | | Grupa Ożarów | | | Poland | | | | 1 | | | | 342 | | | | | | | Podilsky Cement PJSC | | | Ukraine | | | | 1 | | | | 325 | | | | | | | Tarmac | | | United Kingdom | | | | 3 | | | | 306 | | | | | | | CRH Romania | | | Romania | | | | 2 | | | | 305 | | | | | | | CRH Slovakia | | | Slovakia | | | | 2 | | | | 290 | | | | | | | CRH Canada | | | Canada | | | | 2 | | | | 288 | | | | | | | Irish Cement | | | Ireland | | | | 2 | | | | 288 | | | | | | | Opterra | | | Germany | | | | 2 | | | | 268 | | | | | | | Eqiom | | | France | | | | 3 | | | | 243 | | | | | | | Suwannee American Cement Company | | | United States | | | | 2 | | | | 223 | | | | | | | CRH Brazil | | | Brazil | | | | 3 | | | | 200 | |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 231 |
| CRH Annual Report and Form 20-F I 2018
|
Activities with Reserves Backing (i) | | | | | | | | | Property acreage
(hectares) (ii) | | | | | | | | | % of mineral
reserves by rock type | | | | | | | | | | | Surface acreage
(hectares) (ii) | | | | | | | | | % of mineral reserves by rock type | | | | | | | | Physical location | | No. of
quarries
/pits | | | Owned | | | Leased | | | Proven &
probable
reserves (iii) | | | Years to
depletion (iv) | | | Hard
rock | | | Sand &
gravel | | | Other | | | 2018
Annualised
extraction (v) | | | Physical location | | No. of
quarries
/pits | | | Owned | | | Leased | | | Proven &
probable
reserves (iii) | | | Years to
depletion (iv) | | | Hard
rock | | | Sand &
gravel | | | Other | | | 2019
Annualised
extraction (v) | | | | | | | | | Europe Heavyside | | | | | | | | | | | | | | | | | | | | | | | | | France | | | 3 | | | | 512 | | | | - | | | | 89 | | | | 32 | | | | 90% | | | | - | | | | 10% | | | | 2.9 | | | | | | Germany | | | 3 | | | | 314 | | | | - | | | | 153 | | | | 55 | | | | 100% | | | | - | | | | - | | | | 2.9 | | | | | Europe Materials | | | | | | | | | | | | | | | | | | | | | | | | Ireland | | | 2 | | | | 260 | | | | - | | | | 205 | | | | 76 | | | | 100% | | | | - | | | | - | | | | 2.9 | | | France | | | 3 | | | | 778 | | | | - | | | | 83 | | | | 29 | | | | 100% | | | | - | | | | - | | | | 2.9 | | | | | | Germany | | | 3 | | | | 462 | | | | - | | | | 152 | | | | 56 | | | | 98% | | | | - | | | | 2% | | | | 2.4 | | | | Poland | | | 2 | | | | 293 | | | | - | | | | 297 | | | | 73 | | | | 93% | | | | 6% | | | | 1% | | | | 4.4 | | | Ireland | | | 2 | | | | 484 | | | | - | | | | 202 | | | | 72 | | | | 100% | | | | - | | | | - | | | | 2.9 | | | | | | Philippines | | | 14 | | | | 996 | | | | 213 | | | | 475 | | | | 70 | | | | 100% | | | | - | | | | - | | | | 6.7 | | | | Romania | | | 6 | | | | 220 | | | | 898 | | | | 237 | | | | 56 | | | | 83% | | | | - | | | | 17% | | | | 4.7 | | | Poland | | | 1 | | | | 409 | | | | - | | | | 290 | | | | 68 | | | | 93% | | | | 6% | | | | 1% | | | | 4.2 | | | | | | Romania | | | 6 | | | | 588 | | | | 166 | | | | 233 | | | | 54 | | | | 74% | | | | - | | | | 26% | | | | 4.3 | | | Cement | | Serbia | | | 2 | | | | 57 | | | | 41 | | | | 107 | | | | 135 | | | | 100% | | | | - | | | | - | | | | 0.9 | | | Serbia | | | 2 | | | | 120 | | | | 41 | | | | 106 | | | | 121 | | | | 100% | | | | - | | | | - | | | | 1.0 | | | | | Slovakia | | | 5 | | | | 331 | | | | 47 | | | | 299 | | | | 138 | | | | 92% | | | | - | | | | 8% | | | | 2.0 | | | | | | Spain | | | 1 | | | | 34 | | | | - | | | | 85 | | | | 231 | | | | 100% | | | | - | | | | - | | | | 0.4 | | | | | | Switzerland | | | 3 | | | | 93 | | | | 6 | | | | 22 | | | | 17 | | | | 92% | | | | - | | | | 8% | | | | 1.0 | | | | | | Ukraine | | | 2 | | | | 240 | | | | - | | | | 125 | | | | 44 | | | | 78% | | | | - | | | | 22% | | | | 2.8 | | | Slovakia | | | 5 | | | | 303 | | | | 96 | | | | 287 | | | | 130 | | | | 92% | | | | - | | | | 8% | | | | 2.3 | | | | | | Spain | | | 1 | | | | 34 | | | | - | | | | 84 | | | | 210 | | | | 100% | | | | - | | | | - | | | | 0.4 | | | | United Kingdom | | | 11 | | | | 700 | | | | 154 | | | | 274 | | | | 68 | | | | 97% | | | | - | | | | 3% | | | | 4.1 | | | Switzerland | | | 3 | | | | 183 | | | | 26 | | | | 87 | | | | 73 | | | | 100% | | | | - | | | | - | | | | 1.1 | | | | | | Ukraine | | | 2 | | | | - | | | | 297 | | | | 122 | | | | 44 | | | | 77% | | | | - | | | | 23% | | | | 3.1 | | | | Finland | | | 103 | | | | 526 | | | | 421 | | | | 185 | | | | 16 | | | | 70% | | | | 30% | | | | - | | | | 12.0 | | | United Kingdom | | | 11 | | | | 1,676 | | | | 199 | | | | 270 | | | | 64 | | | | 96% | | | | - | | | | 4% | | | | 4.4 | | | | | | | | | | France | | | 51 | | | | 636 | | | | 917 | | | | 242 | | | | 27 | | | | 70% | | | | 30% | | | | - | | | | 8.6 | | | Finland | | | 101 | | | | 1,359 | | | | 919 | | | | 200 | | | | 17 | | | | 77% | | | | 23% | | | | - | | | | 12.5 | | | | | | France | | | 47 | | | | 737 | | | | 1,171 | | | | 233 | | | | 27 | | | | 70% | | | | 30% | | | | - | | | | 8.2 | | | | Ireland | | | 123 | | | | 5,182 | | | | 74 | | | | 1,096 | | | | 70 | | | | 85% | | | | 15% | | | | - | | | | 17.0 | | | Ireland | | | 122 | | | | 5,098 | | | | 84 | | | | 1,034 | | | | 61 | | | | 87% | | | | 13% | | | | - | | | | 18.3 | | | | | | Philippines | | | 1 | | | | - | | | | 17 | | | | 62 | | | | 214 | | | | 100% | | | | - | | | | - | | | | 0.0 | | | Aggregates | | Poland | | | 3 | | | | 243 | | | | 10 | | | | 146 | | | | 48 | | | | 100% | | | | - | | | | - | | | | 3.5 | | | Poland | | | 2 | | | | 160 | | | | 10 | | | | 130 | | | | 39 | | | | 100% | | | | - | | | | - | | | | 3.9 | | | | | | Romania | | | 14 | | | | 402 | | | | 217 | | | | 52 | | | | 34 | | | | 92% | | | | 8% | | | | - | | | | 1.4 | | | | Romania | | | 14 | | | | 120 | | | | 325 | | | | 54 | | | | 32 | | | | 96% | | | | 4% | | | | - | | | | 1.5 | | | Spain | | | 10 | | | | 106 | | | | 78 | | | | 108 | | | | 59 | | | | 100% | | | | - | | | | - | | | | 1.5 | | | | | | United Kingdom | | | 151 | | | | 10,716 | | | | 7,311 | | | | 1,366 | | | | 34 | | | | 88% | | | | 12% | | | | - | | | | 39.0 | | | | Spain | | | 11 | | | | 118 | | | | 64 | | | | 105 | | | | 56 | | | | 99% | | | | 1% | | | | - | | | | 2.0 | | | Other | | | 43 | | | | 470 | | | | 452 | | | | 146 | | | | 17 | | | | 62% | | | | 38% | | | | - | | | | 8.8 | | | | | | | | | | United Kingdom | | | 160 | | | | 11,259 | | | | 3,420 | | | | 1,403 | | | | 34 | | | | 86% | | | | 14% | | | | - | | | | 40.2 | | | Czech Republic, | | | | | | | | | | | | | | | | | | | | | | | Ireland, Poland, | | | | | | | | | | | | | | | | | | | | | Other | | | 42 | | | | 351 | | | | 562 | | | | 186 | | | | 21 | | | | 72% | | | | 28% | | | | - | | | | 8.6 | | | | | | Czech Republic, | | | | | | | | | | | | | | | | | | | | | | | Ireland, Poland, | | | | | | | | | | | | | | | | | | | | | | Lime | | United Kingdom | | | 4 | | | | 155 | | | | 11 | | | | 115 | | | | 34 | | | | 100% | | | | - | | | | - | | | | 3.5 | | | United Kingdom | | | 4 | | | | 354 | | | | 12 | | | | 113 | | | | 35 | | | | 100% | | | | - | | | | - | | | | 3.2 | | | | | Germany | | | 9 | | | | 779 | | | | 10 | | | | 263 | | | | 37 | | | | 100% | | | | - | | | | - | | | | 7.2 | | | Germany | | | 9 | | | | 814 | | | | 10 | | | | 257 | | | | 38 | | | | 100% | | | | - | | | | - | | | | 5.9 | | | | | | | | | Subtotals | | | | | 560 | | | | 22,423 | | | | 6,960 | | | | 5,688 | | | | | | 88% | | | | 10% | | | | 2% | | | | | | | | 557 | | | | 26,249 | | | | 11,319 | | | | 6,092 | | | | | | 90% | | | | 10% | | | | - | | | | | | | | | | | Americas Materials | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Brazil | | | 3 | | | | 1,194 | | | | - | | | | 106 | | | | 56 | | | | 91% | | | | - | | | | 9% | | | | 1.8 | | | | Brazil | | | 3 | | | | 1,072 | | | | - | | | | 149 | | | | 77 | | | | 100% | | | | - | | | | - | | | | 2.0 | | | | | Cement | | Canada | | | 2 | | | | 717 | | | | - | | | | 290 | | | | 93 | | | | 100% | | | | - | | | | - | | | | 3.1 | | | Canada | | | 2 | | | | 732 | | | | - | | | | 285 | | | | 95 | | | | 100% | | | | - | | | | - | | | | 2.9 | | | | | United States | | | 9 | | | | 2,323 | | | | - | | | | 591 | | | | 63 | | | | 100% | | | | - | | | | - | | | | 9.4 | | | United States | | | 9 | | | | 2,447 | | | | - | | | | 581 | | | | 91 | | | | 99% | | | | 1% | | | | - | | | | 9.8 | | | | | | | | | Aggregates | | Canada | | | 46 | | | | 5,865 | | | | 662 | | | | 721 | | | | 39 | | | | 82% | | | | 18% | | | | - | | | | 20.1 | | | Canada | | | 42 | | | | 5,487 | | | | 694 | | | | 732 | | | | 37 | | | | 81% | | | | 19% | | | | - | | | | 20.9 | | | | | | United States | | | 677 | | | | 50,096 | | | | 22,212 | | | | 15,287 | | | | 93 | | | | 74% | | | | 26% | | | | - | | | | 173.0 | | | | United States | | | 828 | | | | 49,798 | | | | 21,072 | | | | 15,413 | | | | 100 | | | | 75% | | | | 25% | | | | - | | | | 168.0 | | | | | | | Subtotals | | | | | 888 | | | | 59,775 | | | | 21,734 | | | | 17,164 | | | | | | 77% | | | | 23% | | | | - | | | | | | | Asia | | | | | | | | | | | | | | | | | | | | | | | | Cement | | Philippines | | | 14 | | | | 2,247 | | | | 17 | | | | 411 | | | | 60 | | | | 100% | | | | - | | | | - | | | | 7.2 | | | | | Aggregates | | Philippines | | | 1 | | | | - | | | | 17 | | | | 62 | | | | 134 | | | | 100% | | | | - | | | | - | | | | 0.3 | | | | | Subtotals | | | | | 15 | | | | 2,247 | | | | 34 | | | | 473 | | | | | | 100% | | | | - | | | | - | | | | | | | | 733 | | | | 59,956 | | | | 22,906 | | | | 16,991 | | | | | | 80% | | | | 20% | | | | - | | | | | | | | | | | Group totals | | | | | 1,463 | | | | 84,445 | | | | 28,728 | | | | 23,325 | | | | | | 80% | | | | 20% | | | | - | | | | | | | | 1,290 | | | | 86,205 | | | | 34,225 | | | | 23,083 | | | | | | 83% | | | | 17% | | | | - | | | | | | | | |
| (i) | The disclosures made in this category refer to those facilities which are engaged inon-site processing of reserves in the various forms. |
| (ii) | 1 hectare equals approximately 2.47 acres. |
| (iii) | Where reserves are leased, the data presented above is restricted to include only that material which can be produced over the life of the contractual commitment inherent in the lease; the totals shown pertain only to amounts which are proven and probable. All of the proven and probable reserves are permitted and are quoted in millions of tonnes. |
| (iv) | Years to depletion is based on the average of the most recent three years annualised production. |
| (v) | Annualised extraction is quoted in millions of tonnes. |
| 223 |
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CRH Annual Report and Form 20-F | 2018
Mineral Reserves - continued The Group’s reserves for the production of primary building materials (which encompasses cement, lime, aggregates (stone, sand and gravel), asphalt, readymixed concrete and concrete products) fall into a variety of categories spanning a wide number of rock types and geological classifications – see the table on the previous page setting out the activities with reserves backing. Reserve estimates are generally prepared by third-party experts (i.e. geologists or engineers) prior to acquisition; this procedure is a critical component in the Group’s due diligence process in connection with any acquisition. Subsequent to acquisition, estimates are typically updated by company engineers and/or geologists and are reviewed annually by corporate and/or divisional staff. However, where deemed appropriate by management, in the context of large or strategically important deposits, the services of third-party consultant geologists and/or engineers may be employed to validate reserves quantities outside of the aforementioned due diligence framework on an ongoing basis. The Group has not employed third-parties to review reserves over the three-year period ending 31 December 20182019 other than in business combination activities and specific instances where such a review was warranted. Reserve estimates are subject to annual review by each of the relevant operating entities across the Group. The estimation process distinguishes between owned and leased reserves segregated into permitted and unpermitted as appropriate and includes only those permitted reserves which are proven and probable. The term “permitted” reserves refers to those tonnages which can currentlycould be mined without any environmentaleconomically and legally extracted or legal constraints.produced at the time of the reserve determination. Permitted owned reserve estimates are based on estimated recoverable tonnes whilst permitted leased reserve estimates are based on estimated total recoverable tonnes which may be extracted over the term of the lease contract. Proven and probable reserve estimates are based on recoverable tonnes only and are thus stated net of estimated production losses and other matters factored into the computation (e.g. required slopes/benches). In order for reserves to qualify for inclusion in the “proven and probable” category, the following conditions must be satisfied: the reserves must be homogeneous deposits based on drill data and/or local geology; and the deposits must be located on owned land or on land subject to lease None of CRH’s mineral-bearing properties is individually material to the Group.
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| CRH Annual Report and Form 20-F I 2018
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Risk Factors This section describes the key risk factors that could affect the Group’s business. If any of these risks occur, the Group’s business, financial condition, results of operations and prospects could be materially adversely affected. The risk factors listed below should be considered in connection with any forward-lookingforward- looking statements in this Annual Report and Form20-F and the cautionary statements contained in Corporate Governance - Disclaimer/Forward-Looking Statements on page 99.103. The risk factors presented below are reviewed on an annual basis and represent the key risk factors faced by the Group at the time of compilation of the 20182019 Annual Report and Form20-F. During the course of 2019,2020, new risk factors may materialise materialise attributable to changes in markets, regulatory environments and other factors and existing risk factors may become less relevant.
The Risk Factors have been grouped to focus on key strategic, operational, compliance and financial and reporting risks. Key Strategic Risk Factors Industry Cyclicality and Adverse Economic Conditions | | | | | Risk | | Discussion | Description: Construction activity, and therefore demand for the Group’s products, is inherently cyclical as it is influenced by global and national economic circumstances, governments’ ability to fund infrastructure projects, consumer sentiment and weather conditions. The Group may also be negatively impacted by unfavourable swings in fuel and other commodity/raw material prices. Impact: Failure to predict and plan for cyclical events or adverse economic conditions could negatively impact financial performance. | | The Group’s operating and financial performance is influenced by general economic conditions and the state of theinfrastructure, residential industrial, commercial and infrastructure construction marketsnon-residential sectors in the countries in which it operates. In general, economic uncertainty exacerbates negative trends in construction activity leading to postponement of orders. Construction markets are inherently cyclical and are affected by many factors that are beyond the Group’s control, including: • the price of fuel and principal energy-related raw materials such as bitumen and steel (which accounted for approximately 9%11% of annual Group sales revenues in 2018)2019); • the performance of the national economies in the countries in which the Group operates, across Europe, the Americas and Asia; • monetary policies in the countries in which the Group operates — for example, an increase in interest rates typically reduces the volume of mortgage borrowings thus adversely impacting residential construction activity; • the allocation of government funding for public infrastructure programmes, such as the development of highways in the US under the Fixing Americas Surface Transportation Act (FAST Act); and • the level of demand for construction materials and services, with sustained adverse weather conditions leading to potential disruptions or curtailments in outdoor construction activity The adequacy and timeliness of the actions taken by the Group’s management team are of critical importance in maintaining financial performance at appropriate levels. Each of the above factors could have a material adverse effect on the Group’s operating results and the market price of CRH plc’s Ordinary Shares. |
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Key Strategic Risk Factors - continued Geopolitical and/or Social InstabilityPortfolio Management
| | | | | Risk | | Discussion | Description: AdverseThe Group may engage in acquisition and fast changing economic, social,divestment activity during the year as part of the Group’s active portfolio management which presents risks around due diligence, execution and political situations in any country in whichintegration of assets. Additionally, the Group operates could lead to business interruption, restrictions on repatriationmay be liable for liabilities of earningscompanies it has acquired or a loss of plant access.
Impact:
Changes in these conditions may adversely affect the Group’s business, results of operations, financial condition or prospects.
| | The UK’s decision to withdraw from the European Union, together with the effects of unwinding the sustained monetary stimulus in the US, the ECB’s plans to scale back quantitative easing in the Eurozone and ongoing tensions in the Ukraine, where the Group has significant business interests, have collectively contributed to heightened uncertainty, with possible upside and downside economic consequences.
The Group currently operates mainly in Western Europe and North America as well as, to a lesser degree, in developing countries/emerging markets in Eastern Europe, the Philippines, Brazil, China and India. The economies of these countries are at varying stages of socioeconomic and macroeconomic development which could give rise to a number of risks, uncertainties and challenges that could include the following:
• changes in political, social or economic conditions;
• trade protection measures and import or export licensing requirements;
• potentially negative consequences from changes in tax laws;
• labour practices and differing labour regulations;
• procurement which contravenes ethical considerations;
• unexpected changes in regulatory requirements;
• state-imposed restrictions on repatriation of funds; and
• the outbreak of armed conflict
|
Brexit
| | | | | Risk
| | Discussion
| Description:
Uncertainties resulting from the UK’s withdrawal from the European Union could pose challenges with currency devaluations, a fall in construction activity in the UK, challenges in labour resources accessing the UK, movement of goods and services and repatriating earnings.divested.
Impact: Failure by the Group to manage the uncertainties posed by Brexit could resultidentify and execute deals in adverse financial performance and a fall inan efficient manner may limit the Group’s net worth. growth potential and impact financial performance. | | The uncertainties aroundGroup’s acquisition strategy focuses on value-enhancingmid-sized acquisitions, largely in existing markets, supplemented from time to time by larger strategic acquisitions into new markets or new building products. In addition, as part of its ongoing commitment to active portfolio management, the UK’s withdrawalGroup may, from the European Union leavestime to time, divest businesses potentially openwhich are evaluated to significant risks, which will be intensified should the UK leave without a formal agreement.non-core or underperforming. Any significant economic shock caused by Brexit,The realisation of the uncertainty around the process or negative consumer sentiment could have an adverse impactGroup’s acquisition strategy is dependent on the performanceability to identify and acquire suitable assets at appropriate prices thus satisfying the stringent cash flow and return on investment criteria underpinning such activities. The Group may not be able to identify such companies, and, even if identified, may not be able to acquire them because of a variety of factors including the UK’s economy, leadingoutcome of due diligence processes, the ability to a fallraise funds (as required) on acceptable terms, the need for competition authority approval in demandcertain instances and competition for transactions from peers and other entities exploring acquisition opportunities in the building materials sector. In addition, situations may arise where the Group may be liable for the Group’s products. Commercial projects could be delayedpast acts, omissions or cancelled as businesses decide whether to investliabilities of companies acquired, or may remain liable in cases of divestment; for example, the UK market or not. Mortgage interest rates could risepotential environmental liabilities addressed under the Sustainability and credit could tighten which would adversely impact the residential sector and government investments, infrastructure projects or initiatives may be delayed or cancelled as government funds tighten.Corporate Social Responsibility Risk Factor on page 237.
Further, uncertainty around Brexit has created,The Group’s ability to realise the expected benefits from acquisition activity depends, in large part, on its ability to integrate newly-acquired businesses in a timely and will continue to create, volatility for the Pound Sterling. Any significant fall in the value of the Pound Sterling against the euro (the Group’s reporting currency) could adversely impact consolidated results and net worth. For additional information on the impact of foreign exchange movements on the Consolidated Financial Statements foreffective manner. Even if the Group foris able to acquire suitable companies, it still may not achieve the year ended 31 December 2018, seegrowth synergies or other financial and operating benefits it expected to achieve, and the Business Performance section commencing on page 24.Group may incur write-downs, impairment charges or unforeseen liabilities that could negatively affect its operating results or financial position or could otherwise harm the Group’s business. Further, integrating an acquired business, product or technology could divert management time and resources from other matters.
|
Commodity Products and Substitution | | | | | Risk | | Discussion | Description: Many of the Group’s products are commodities, which face strong volume and price competition, and may be replaced by substitute products which the Group does not produce or distribute.produce. Further, the Group must maintain strong customer relationships to ensure changing consumer preferences are addressed. Impact: Failure to differentiate and innovate could lead to market share decline, thus adversely impacting financial performance. | | The competitive environment in which the Group operates can be significantly impacted by general economic conditions in combination with local factors including the number of competitors, the degree of utilisation of production capacity and the specifics of product demand. Many of the Group’s products are commodities and competition in such circumstances is driven largely by price. Across the multitude of largely local markets in which the Group conducts business, downward pricing pressure is experienced from time to time, and the Group may not always be in a position to recover increased operating expenses (caused by factors such as increased fuel and raw material prices) through higher sale prices. The cement business, in particular, is capital intensive resulting in significant fixed and semi-fixed costs. The Group’s profits are therefore sensitive to changes in volume, which is driven by highly competitive markets, and impacted by ongoing capital expenditure needs. A number of the products sold by the Group (both those manufactured internally and those distributed) compete with other building products that do not feature in the Group’s existing product range. Any significant shift in demand preference from the Group’s existing products to substitute products, which the Group does not produce, or distribute, could adversely impact market share and results of operations. |
Geopolitical and/or Social Instability | | | 226Risk | | Discussion | Description: Adverse and fast changing economic, social, political and public health situations in any country in which the Group operates could lead to business interruption, restrictions on repatriation of earnings or a loss of plant access. Impact: Changes in these conditions may adversely affect the Group’s business, results of operations, financial condition or prospects. | | The Group currently operates mainly in Western Europe and North America as well as, to a lesser degree, in developing countries/emerging markets in Eastern Europe, the Philippines, Brazil and China. The economies of these countries are at varying stages of socioeconomic and macroeconomic development which could give rise to a number of risks, uncertainties and challenges that could include the following: • changes in political, social or economic conditions; • trade protection measures and import or export licensing requirements; • political unrest and currency disintegration; • activism and civil disturbance, triggered by natural disasters, terrorist events, outbreak of armed conflict, etc.; • labour and procurement practices which contravene ethical considerations; • unexpected changes in regulatory and tax requirements; • state-imposed restrictions on repatriation of funds; and • outbreak of public health emergencies/epidemics/pandemics While economic trends are positive across many of the Group’s major markets, the ongoing uncertainty around the UK’s decision to withdraw from the European Union, together with the effects of US and China trade negotiations and ongoing tensions in the Ukraine, where the Group has significant business interests, have collectively contributed to heightened uncertainty, with possible upside and downside economic consequences. |
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| CRH Annual Report and Form 20-F I 2018
|
Strategic Mineral Reserves Availability and Planning | | | | | Risk | | Discussion | Description: Appropriate reserves are an increasingly scarce commodity and licences and/or permits required to enable operation are becoming harder to secure. There are numerous uncertainties inherent in reserves estimation and in projecting future rates of production. Impact: Failure by the Group to plan for reserve depletion, or to secure permits, may result in operation stoppages, adversely impacting financial performance. | | Continuity of the cash flows derived from the production and sale of the related heavyside materials and products is dependent on satisfactory reserves planning and on the presence of appropriate long-term arrangements for replacement. There can be no assurance that the required licences and permits will be forthcoming at the appropriate juncture or that relevant operating entities will continue to satisfy the many terms and conditions under which such licences and permits are granted. The failure to plan adequately for current and future extraction and utilisation or to ensure ongoing compliance with the requirements of issuing authorities could lead to withdrawal of the related licence or permit and consequential disruption to operations. |
Portfolio ManagementBrexit
| | | | | Risk | | Discussion | Description: Uncertainties resulting from the UK’s withdrawal from the European Union could pose challenges with currency devaluations, a fall in construction activity in the UK, challenges in labour resources accessing the UK, movement of goods and services and repatriating earnings. Impact: Failure by the Group to manage the uncertainties posed by Brexit could result in adverse financial performance and a fall in the Group’s net worth. | | The uncertainties around the UK’s withdrawal from the European Union leave businesses potentially open to significant risks, which may be intensified should the UK leave without a formal agreement. Having formed a majority Conservative government, the UK left the European Union on 31 January 2020, entering into a transition period until 31 December 2020. Uncertainties remain throughout the transition period, and if a deal is not agreed before 31 December 2020, the default position will be ano-deal Brexit. Any significant economic shock caused by Brexit, the uncertainty around the process or negative consumer sentiment could have an adverse impact on the performance of the UK’s economy, leading to a fall in demand for the Group’s products. Commercial projects could be delayed or cancelled as businesses decide whether to invest in the UK market or not. Mortgage interest rates could rise, and credit could tighten which may adversely impact the residential sector leading to a fall in demand for residential housing and as such, a fall in demand for the Group’s products. Further, government investments, infrastructure projects or initiatives may be delayed or cancelled as government funds tighten leading to the delay or cancellation of contracts which may have an adverse impact on the financial position of the Group. Further, uncertainty around Brexit has created, and will continue to create, volatility for the Pound Sterling. Any significant fall in the value of the Pound Sterling against the Group’s reporting currency could adversely impact consolidated results and net worth. For additional information on the impact of foreign exchange movements on the Consolidated Financial Statements for the Group may engage in acquisition and divestment activity duringfor the year ended 31 December 2019, see the Business Performance section commencing on page 30. |
People Management | | | Risk | | Discussion | Description: Existing processes around people management (such as part of the Group’s active portfolio management which presents risks around due diligence, executionattracting, retaining and integration of assets. Additionally,developing people, leadership succession planning, as well as dealing with collective representation groups) may not deliver, inhibiting the Group may be liable for liabilities of companies it has acquired or divested.achieving its strategy. Impact: Failure to identifyeffectively manage talent and execute deals in an efficient manner may limitplan for leadership succession could impede the Group’s growth potential and impact financial performance.realisation of strategic objectives. | | The identification and subsequent assessment, management, development and deployment of talented individuals is of major importance in continuing to deliver on the Group’s acquisition strategy focuses on value-enhancingmid-sized acquisitions, largelyand in existing markets, supplemented from time to time by larger strategic acquisitions into new markets or new building products. In addition,ensuring that succession planning objectives for key executive roles throughout its international operations are satisfied. As well as part of its ongoing commitment to active portfolio management,ensuring the Group may, from time to time, divest businesses which are evaluated to benon-core or underperforming.identifies, hires, integrates, develops and promotes talent, the Group must navigate talent and front-line labour shortages, promote mobility and hire a diverse workforce. The realisationmaintenance of positive employee and trade/labour union relations is key to the successful operation of the Group. Some of the Group’s acquisition strategy is dependent onemployees are represented by trade/labour unions under various collective agreements. For unionised employees, the ability to identify and acquire suitable assets at appropriate prices thus satisfying the stringent cash flow and return on investment criteria underpinning such activities. The Group may not be able to identify such companies,renegotiate satisfactorily the relevant collective agreements upon expiration and even if identified,may face tougher negotiations and higher wage demands. In addition, existing labour agreements may not be able to acquire them becauseprevent a strike or work stoppage, with any such activity creating reputational risk and potentially having a material adverse effect on the results of a varietyoperations and financial condition of factors including the outcome of due diligence processes, the ability to raise funds (as required) on acceptable terms, the need for competition authority approval in certain instances and competition for transactions from peers and other entities exploring acquisition opportunities in the building materials sector. In addition, situations may arise where the Group may be liable for the past acts, omissions or liabilities of companies acquired, or may remain liable in cases of divestment; for example, the potential environmental liabilities addressed under the “Sustainability, Corporate Social Responsibility and Climate Change” Risk Factor on page 228. The Group’s ability to realise the expected benefits from acquisition activity depends, in large part, on its ability to integrate newly-acquired businesses in a timely and effective manner. Even if the Group is able to acquire suitable companies, it still may not achieve the growth synergies or other financial and operating benefits it expected to achieve, and the Group may incur write-downs, impairment charges or unforeseen liabilities that could negatively affect its operating results or financial position or could otherwise harm the Group’s business. Further, integrating an acquired business, product or technology could divert management time and resources from other matters.Group.
|
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Key Strategic Risk Factors - continued Joint Ventures and Associates | | | | | Risk | | Discussion | Description: The Group does not have a controlling interest in certain of the businesses (i.e. joint ventures and associates) in which it has invested and may invest, which gives rise to increased governance complexity and a need for proactive relationship management. Impact: The lack of a controlling interest could impair the Group’s ability to manage joint ventures and associates effectively and/or realise its strategic goals for these businesses. | | Due to the absence of full control of joint ventures and associates, important decisions such as the approval of business plans and the timing and amount of cash distributions and capital expenditures, for example, may require the consent of partners or may be approved without the Group’s consent. In addition, the lack of controlling interest may give rise to thenon-realisation of operating synergies and lower cash flows than anticipated at the time of investment, thereby increasing the likelihood of impairment of goodwill or other assets. These limitations could impair the Group’s ability to manage joint ventures and associates effectively and/or realise its strategic goals for these businesses. In addition, improper management or ineffective policies, procedures or controls fornon-controlled entities could adversely affect the business, results of operations or financial condition of the relevant investment and, by corollary, the Group. |
CRH Annual Report and Form 20-F | 2018
Key Strategic Risk Factors - continued
People Management
| | | | | Risk
| | Discussion
| Description:
Existing processes around people management (such as attracting, retaining and developing people, leadership succession planning, as well as dealing with collective representation groups) may not deliver, inhibiting the Group achieving its strategy.
Impact:
Failure to effectively manage talent and plan for leadership succession could impede the realisation of strategic objectives.
| | The identification and subsequent assessment, management, development and deployment of talented individuals is of major importance in continuing to deliver on the Group’s strategy and in ensuring that succession planning objectives for key executive roles throughout its international operations are satisfied. As well as ensuring the Group identify, hire, integrate, develop and promote talent, the Group must navigate talent and front-line labour shortages, promote mobility and hire a diverse workforce.
The maintenance of positive employee and trade/labour union relations is key to the successful operation of the Group. Some of the Group’s employees are represented by trade/labour unions under various collective agreements. For unionised employees, the Group may not be able to renegotiate satisfactorily the relevant collective agreements upon expiration and may face tougher negotiations and higher wage demands than would be the case fornon-unionised employees. In addition, existing labour agreements may not prevent a strike or work stoppage, with any such activity creating reputational risk and potentially having a material adverse effect on the results of operations and financial condition of the Group.
|
Key Operational Risk Factors Sustainability, Corporate Social ResponsibilityClimate Change and Climate ChangePolicy
| | | | | Risk | | Discussion | Description: The Group may face challenges associated with developing and providing innovative building products and solutions that help deliver a more sustainable environment while meeting our social responsibilities,cement industry has recognised the stringent and ever evolving laws and regulations that govern theimpact of climate change agenda and changing consumer demand.its responsibilities in transitioning to a lower carbon economy. The Group is exposed to financial, reputational and market risks arising from changes to CO2policies and regulations. Impact: FailureShould the Group not reduce its greenhouse gases (GHGs) emissions by its identified targets, the Group may be subject to innovate, keep up with current technological changes or changing consumer preferences may result in falling demand for the Group’s products, adversely impactingincreased costs, adverse financial performance.performance and reputational damage.
| | The Group recognises that the demand for sustainable products is undoubtedly increasing and seeks opportunities to deliver sustainable products, buildings and infrastructure at reduced environmental cost throughout their lifetime. Customers, from architects and construction companies to public bodies, have an immediate need for sustainable solutions which respond to climate change. In order to be involved in the green agenda, the Group needs to work with customers to innovate around design, delivery and application of products. If the Group fails to identify and execute on areas for improved sustainable performance, the demand for the Group’s products may fall. If customer’s sustainability expectations are not satisfied, the Group’s product portfolio will be of reduced relevance and the Group will experience a deterioration in financial performance.
The impact of climate change may over time affect the operations of the Group and the markets in which the Group operates. This could include physical risks such as acute and chronic changes in weather and/or transitional risks such as technological development, policy and regulatory change, and market and economic responses. Efforts to address climate change through laws and regulations, for example by requiring reductions in emissions of greenhouse gases (GHGs)GHGs such as CO2, can create economic risks and uncertainties for the Group’s businesses. Such risks could include the cost of purchasing allowances or credits to meet GHG emissionemissions caps, the cost of installing equipment to reduce emissions to comply with GHG limits or required technological standards, decreased profits or losses arising from decreased demand for the Group’s goods and higher production costs resulting directly or indirectly from the imposition of legislative or regulatory controls. Manifestation of these increased costs may increase the underlying cost of production of the Group’s products which may adversely impact the financial performance of the Group. Stakeholder expectations in relation to climate change continue to increase. The Group is subject to a broad and increasingly stringent range of existingadditional environmental product information requests by customers in certain regions and evolving laws, regulations, standardsincreasing levels of disclosure regarding climate-related environmental performance. The Group includes within its offerings products aimed at climate adaptation, including sustainable drainage systems, flood defences and best practicesmore resilient structures, as well as products that lower the operational carbon footprint of buildings, including high performance glass and glazing products that incorporate innovative thermal break technologies for superior thermal performance, precast concrete flooring and walling elements delivering energy savings, and balcony connector products that reduce thermal bridging, delivering energy saving. If customers’ and other stakeholders’ sustainability expectations are not satisfied, the Group’s product portfolio may be of reduced relevance, the Group’s reputation may be harmed and the Group could experience a deterioration in financial performance. Please refer to page 244 of this Annual Report and Form20-F for further details. In addition, the Group publishes an annual independently-assured Sustainability Report, which is prepared in line with respect to governance, the environmentGlobal Reporting Initiative Standards and social performance in each of the jurisdictions in which it operates giving rise to significant compliance costs, potential legal liability exposure and potential obligations for the development of its operations. These laws, regulations, standards and best practices relate to, amongst other things, climate change, noise, emissions to air, water and soil, the use and handling of hazardous materials and waste disposal practices.available on www.crh.com. |
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Key Operational Risk Factors - continued |
Health and Safety Performance | | | | | Risk | | Discussion | Description: The Group’s businesses operate in an industry where health and safety risks are inherently prominent. Further, the Group is subject to stringent regulations from a health and safety perspective in the various jurisdictions in which it operates. Impact: A significantserious health and safety incident could have a serioussignificant impact on the Group’s operational and financial performance, as well as the Group’s reputation. | | The Group’s industry involves dangerous work and a failure to maintain the focus on making its workplaces safe for our people could result in a deterioration in the Group’s safety performance and ultimately fatalities. Building materials production and distribution can be hazardous and particular hazards are associated with heavy vehicles, working at height and using mechanised processes. Additionally, the Group’s safety risks are not limited to facility sites but extend to paving and construction sites and regular encounters with stakeholder sites. This presents a complex challenge which requires safe behaviours and engagement from employees that match the Group’s robust policies and procedures. The Group is subject to a broad and stringent range of existing and evolving laws, regulations, standards and best practices with respect to health and safety in each of the jurisdictions in which it operates. Should the health and safety frameworks, processes and controls implemented throughout the Group to protect our people fail, the Group would be exposed to significant potential legal liabilities and penalties. Further, high numbers of accidents could pose additional challenges in recruiting new employees, ensuring operational continuity and maintaining licenses and permits. For additional information on the Group’s health and safety performance, see page 1418 of the Strategy Review section. |
Operational ContinuitySustainability and Corporate Social Responsibility
| | | | | Risk | | Discussion | Description: The Group’s operating entitiesnature of our activities poses inherent environmental, social and governance (ESG) risks, which are also subject to a wide range of operating risksan evolving regulatory framework and hazards including climatic conditions, technical failures, interruptions to power supplies, industrial accidents and disputes, environmental hazards, fire and crime.changing societal expectations. Impact: The occurrence of a significant adverse event couldFailure to embed sustainability principles within the Group’s businesses and strategy may result innon-compliance with relevant regulations, standards and best practices and lead to prolonged operational interruption, negatively impactingadverse stakeholder sentiment and reduced financial performance or the Group’s prospects.
performance. | | ResponsibilityThe Group recognises that the demand for business continuity managementsustainable products is vestedundoubtedly increasing and seeks opportunities to deliver sustainable products, buildings and infrastructure at reduced environmental cost throughout their lifetime. Customers, from architects and construction companies to public bodies, have an immediate need for sustainable solutions which respond to climate change. In order to be involved in operating entity management throughoutthe green agenda, the Group needs to ensure thatwork with customers and vendors to innovate around design, delivery and application of products. If the circumstances likelyGroup fails to give rise to material operational disruptionidentify and execute on areas for improved sustainable performance, the demand for the Group’s products may fall. If customers’ and other stakeholders’ sustainability expectations are addressednot satisfied, the Group’s product portfolio will be of reduced relevance and the Group will experience a deterioration in a manner appropriate to the relevant operating entity.financial performance.
The insurance coverage provided for operating entities includes property damage and business interruption, public and products liability/general liability, employers’ liability/workers’ compensation, environmental impairment liability, automobile liability and directors’ and officers’ liability. Adequate coverage at reasonable rates is not always commercially available to cover all potential risks and no assurance can be given that the insurance arrangements in place would be sufficient to cover all losses or liabilities to which the Group might be exposed. As at 31 December 2018, the total insurance provision, which is subject to periodic actuarial valuationa broad and is discounted, amountedincreasingly stringent range of existing and evolving laws, regulations, standards and best practices with respect to€279 million (2017:€292 million); a substantial proportion governance, the environment and social performance in each of the jurisdictions in which it operates giving rise to significant compliance costs, potential legal liability exposure and potential obligations for the development of its operations. These laws, regulations, standards and best practices relate to, amongst other things, climate change, noise, emissions to air, water and soil, the use and handling of hazardous materials and waste disposal practices.
Please refer to pages 20 to 25 of this figure pertained to claimsAnnual Report and Form20-F for further details. In addition, the Group publishes an annual independently-assured Sustainability Report, which are classified as “incurred but not reported”.is prepared in line with the Global Reporting Initiative Standards and available on www.crh.com. |
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Key Operational Risk Factors - continued Information Technology and/or Cyber Security | | | | | Risk | | Discussion | Description: The Group is dependent on information and operational technology systems to support its business activities. Any significant operational event, whether caused by external attack, insider threat or error could lead to loss of access to systems or data, adversely impacting business operations. Impact: Security breaches, IT interruptions or data loss could result in significant business disruption, loss of production, reputational damage andand/or regulatory penalties and significantpenalties. Significant financial costs in remediation. remediation are also likely in a major cyber security incident. | | SecurityThe Group employs numerous operational technology and cyber incidentsinformation technology systems, networks and services, many of which are becoming increasingly sophisticatedmanaged, hosted, provided and/or used by third parties, to assist in conducting our business. The proper functioning of our technology and are continually evolving.systems is critical to the efficient operation and management of our business. The Group’s systems for protecting our assets against cyber security risks may not always be sufficient.
As cyber incidents continue to evolve,part of our business, the Group collects, processes, and retains potentially sensitive and confidential information about our customers, suppliers, employees and business performance. Despite the security measures we have in place, and those of third-party suppliers and vendors with which we do business, the Group may be required to expend additional resources to continue to modify or enhance protection measures or to investigate and remediate any vulnerabilitysubject to cyber incidents.security attacks. Such attacks may result in interference with production software, corruption or theft of sensitive data, manipulation of financial data accessible through digital infrastructure, or reputational losses as a result of misrepresentation via social media and other websites. Security and cyber incidents are becoming increasingly sophisticated and are continually evolving. As this threat continues to evolve, the Group may be required to expend additional resources to continue to modify or enhance protection measures or to investigate and remediate any vulnerability to cyber incidents. There can be no assurance that future attacks will not be successful due to their increasing sophistication and the difficulties in detecting and defending against them in a timely fashion. While the Group has experienced, and expects to continue to experience, these types of threats and incidents, the Group has not detected any material cyber security events. |
Key Compliance Risk Factors Laws and Regulations | | | | | Risk | | Discussion | Description: The Group is subject to a wide variety of local and international laws and regulations across the many jurisdictions in which it operates, which vary in complexity, application and frequency of change. Impact: Potential breaches of local and international laws and regulations could result in the imposition of significant fines or sanctions and may inflict reputational damage. | | The Group is subject to various statutes, regulations and laws applicable to businesses generally in the countries and markets in which it operates. These include statutes, regulations and laws affecting land usage, zoning, labour and employment practices, competition,competition/anti-trust, financial reporting, taxation, anti-bribery, anti-corruption, international trade compliance, governance and other matters. The Group mandates that its employees comply with its Code of Business Conduct which stipulates best practices in relation to regulatory matters. legal, compliance and ethical matters amongst other issues. The Code of Business Conduct is available on www.crh.com. The Group cannot guarantee that its employees will at all times successfully comply with all demands of regulatory agencies in a manner which will not materially adversely affect its business, results of operations, financial condition or prospects. There can be no assurance that the Group’s policies and procedures will afford adequate protection against fraudulent and/or corrupt activity and any such activity could have a material adverse effect on the Group’s business, results of operations, financial condition or prospects. |
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Key Financial and Reporting Risk Factors
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Key Financial and Reporting Risks Factors Financial Instruments | | | | | Risk | | Discussion | Description: The Group uses financial instruments throughout its businesses giving rise to interest rate and leverage, foreign currency, counterparty, credit rating and liquidity risks. In addition, the Group must maintain a certain minimum interest coverage ratio and a certain minimum level of net worth. Impact: A downgrade of the Group’s credit ratings or inability to maintain certain financial ratios may give rise to increases in future funding costs and may impair the Group’s ability to raise funds on acceptable terms. In addition, insolvency of the financial institutions with which the Group conducts business may adversely impact the Group’s financial position. | | Interest rate and leverage risks: The Group’s exposures to changes in interest rates result from investing and borrowing activities undertaken to manage liquidity and capital requirements and stem predominantly from long-term debt obligations. Borrowing costs are managed through employing a mix of fixed and floating rate debt and interest rate swaps, where appropriate. As at 31 December 2018,2019, the Group had outstanding net indebtedness of approximately€7.06.7 billion (2017:(2018:€5.87.0 billion). Recent acquisitionAcquisition activity may impair its operating and financial flexibility over the longer term and could adversely affect its business, results of operations and financial position. This relatively high level of absolute indebtedness could give rise to the Group dedicating a substantial portion of its cash flow to debt service thereby reducing the funds available in the longer term for working capital, capital expenditure, acquisitions, distributions to shareholders and other general corporate purposes and limiting its ability to borrow additional funds and to respond to competitive pressures. In addition, the Group’s level of indebtedness may give rise to a general increase in interest rates borne and there can be no assurance that the Group will not be adversely impacted by increases in borrowing costs in the future. The prescribed minimum PBITDA/Net Interest Cover ratio (all as defined in the relevant agreements as discussed in note 25Group has a number of material interest rate derivatives and finance contracts linked to the Consolidated Financial Statements),Inter-Bank Offered Rate (“IBOR”) which may be impacted by the transition away from IBOR linked rates to a risk-free rate as IBOR is phased out in 2021. At this time, it is not possible to predict the Group’s principaleffect any discontinuance, modification or other reforms to IBOR or any other reference rate, the establishment of alternative reference rates or the transition away from IBOR will have on contracts linked to IBOR or the broader financial covenant, is 4.5x and the prescribed minimum net worth, which is the Group’s other financial covenant, is€5.1 billion. For the year ended 31 December 2018, PBITDA/Net Interest was 11.2x (2017: 11.6x) and the Group’s net worth was€18.8 billion (2017:€16.6 billion). In both instances, there ismarkets. Such reforms could have a significant level of headroom.impact on the financial markets and may impact CRH’s borrowing costs and cash flows. Such changes may or may not adversely affect CRH’s financial position. Foreign currency risks: If the euro, which is the Group’s reporting currency weakens relative to the basket of foreign currencies in which net debt is denominated (principally(including the US Dollar, Canadian Dollar, Swiss Franc, Polish Zloty, Philippine Peso and Pound Sterling), the net debt balance would increase; the converse would apply if the euroGroup’s reporting currency was to strengthen. The Group may not succeed in managing these foreign currency risks. Effective 1 January 2020, the Group has decided to change reporting currency from euro to US Dollar. Counterparty risks: Insolvency of the financial institutions with which the Group conducts business, or a downgrade in their credit ratings, may lead to losses in derivative assets and cash and cash equivalents balances or render it more difficult either to utilise existing debt capacity or otherwise obtain financing for operations. The maximum exposure arising in the event of default on the part of the counterparty (including insolvency) is the carrying amount of the relevant financial instrument. The Group holds significant cash balances on deposit with a variety of highly-rated financial institutions (typically invested on a short-term basis) which, together with cash and cash equivalents at 31 December 2018,2019, totalled€2.33.8 billion (2017:(2018:€2.12.3 billion). In addition to the above, the Group enters into derivative transactions with a variety of highly-rated financial institutions giving rise to derivative assets and derivative liabilities; the relevant balances as at 31 December 20182019 were€82 million and€17 million respectively (2018:€45 million and€59 million respectively (2017:€64 million and€14 million respectively). The counterparty risks inherent in these exposures may give rise to losses in the event that the relevant financial institutions suffer a ratings downgrade or become insolvent. In addition, certain of the Group’s activities (e.g. highway paving in the US) give rise to significant amounts receivable from counterparties at the balance sheet date; at year end 2018,year-end 2019, this balance was€0.9 billion (2017:(2018:€0.80.9 billion). In the business environment, there is increased exposure to counterparty default, particularly as regards bad debts. Credit rating risks: A downgrade of the Group’s credit ratings may give rise to increases in funding costs in respect of future debt and may, among other concerns, impair its ability to access debt markets or otherwise raise funds or enter into letters of credit, for example, on acceptable terms. Such a downgrade may result from factors specific to the Group, including increased indebtedness stemming from acquisition activity, or from other factors such as general economic or sector-specific weakness or sovereign credit rating ceilings. Liquidity risks: The principal liquidity risks stem from the maturation of debt obligations and derivative transactions. The Group aims to achieve flexibility in funding sources through a variety of means including (i) maintaining cash and cash equivalents with a number of highly-rated counterparties; (ii) limiting the annual maturity of such balances; (iii) meeting the bulk of debt requirements through committed bank linesdebt capital markets or other term financing; and (iv) having surplus committed bank lines of credit. However, market or economic conditions may make it difficult at times to realise this objective. For additional information on the above risks see note 2324 to the Consolidated Financial Statements. |
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Key Financial and Reporting RiskRisks Factors - continued Defined Benefit Pension Schemes and Related Obligations | | | | | Risk | | Discussion | | | Description: The assets and liabilities of defined benefit pension schemes, in place in certain operating jurisdictions, exhibit significantperiod-on-period volatility attributable primarily to asset values, changes in bond yields/ discount rates and anticipated longevity. Impact: Significant cash contributions may be required to remediate deficits applicable to past service. Fluctuations in the accounting surplus/deficit may adversely impact the Group’s credit metrics thus harming its ability to raise funds. | | The assumptions used in the recognition of pension assets, liabilities, income and expenses (including discount rates, rate of increase in future compensation levels, mortality rates and healthcare cost trend rates) are updated based on market and economic conditions at the respective balance sheet date and for any relevant changes to the terms and conditions of the pension and post-retirement plans. These assumptions can be affected by (i) the discount rate, changes in the rates of return on high-quality fixed income investments; (ii) future compensation levels, future labour market conditions and anticipated inflation; (iii) mortality rates, changes in the relevant actuarial funding valuations or changes in best practice; and (iv) healthcare cost trend rates, the rate of medical cost inflation in the relevant regions. The weighted average actuarial assumptions used and sensitivity analysis in relation to the significant assumptions employed in the determination of pension and other post-retirement liabilities are disclosed on pages 182192 to 187.197. A prolonged period of financial market instability or other adverse changes in the assumptions mentioned above would have an adverse impact on the valuations of pension scheme assets. In addition, a number of the defined benefit pension schemes in operation throughout the Group have reported material funding deficits thus necessitating remediation either in accordance with legislative requirements or as agreed with the relevant regulators. These obligations are reflected in the contracted payments disclosure on page 221. The extent of such contributions may be exacerbated over time as a result of a prolonged period of instability in worldwide financial markets or other adverse changes in the assumptions mentioned above.
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Taxation Charge and Balance Sheet Provisioning | | | | | Risk | | Discussion | | | Description: The Group is exposed to uncertainties stemming from governmental actions in respect of taxes paid and payable in all jurisdictions of operation. In addition, various assumptions are made in the computation of the overall tax charge and in balance sheet provisions which may not be borne out in practice. Impact: Changes in tax regimes or findingsassessment of additional tax liabilities in future audits that additional taxes are due could result in incremental tax liabilities which could have a material adverse effect on cash flows, financial condition and results of operations. | | The Group’s income tax charge is based on reported profitprofits and expected statutory tax rates, which reflect various allowances and reliefs and tax planning opportunities available to the Group in the multiple tax jurisdictions in which it operates. The determination of the Group’s provision for income tax requires certain judgements and estimates in relation to matters where the ultimate tax outcome may not be certain. The recognition of deferred tax assets also requires judgement as it involves an assessment of the future recoverability of those assets. In addition, the Group is subject to tax audits which can involve complex issues that could require extended periods to conclude, the resolution of which is often not within its control. Although management believes that the estimates included in the Consolidated Financial Statements and the Group’s tax return positions are reasonable, there can be no assurance that the final outcome of these matters will not differ fromequal the estimates reflected in the Group’s historical income tax provisions and accruals. As a multinational corporation, the Group is subject to various taxes in all jurisdictions of operation. Due to economic and political conditions, tax rates and the interpretation of tax rules in these jurisdictions may be subject to significant change. For example, the 2017 US Tax Cuts and Jobs Act has made significant changes to US tax rules. TheIn addition, the Group’s future effective income tax rate could be affected (positively or negatively) by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets or changes in tax laws or their interpretation. In addition,Finally, recent developments, including the European Commission’s investigations on illegal state aid as well as the Organisation for EconomicCo-operation and Development project on Base Erosion and Profit Shifting may result in changes to long-standing international tax principles, which could adversely affect the Group’s effective tax rate or result in higher cash tax liabilities. If the Group’s effective income tax rate was to increase, its cash flows, financial condition and results of operations could be adversely affected.
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Foreign Currency Translation | | | | | Risk | | Discussion | | | Description: The principal foreign exchange risks to which the Consolidated Financial Statements are exposed pertain to (i) adverse movements in reported results when translated into eurothe reporting currency and (ii) declines in the euroreporting currency value of net investments which are denominated in a wide basket of currencies other than the euro.reporting currency. Impact: Adverse changes in the exchange rates will continue to negatively affect retained earnings. The annual impact is reported in the Consolidated Statement of Comprehensive Income. | | Given the geographic diversity of the Group, a significant proportion of its revenues, expenses, assets and liabilities are denominated in currencies other than the euro, principally US Dollar,Group’s reporting currency, including the Canadian Dollar, Swiss Franc, Polish Zloty, Philippine Peso and Pound Sterling. From year to year, adverse changes in the exchange rates used to translate these and other foreign currencies into eurothe reporting currency have impacted and will continue to impact consolidated results and net worth. Effective 1 January 2020, the Group has decided to change reporting currency from euro to US Dollar. For additional information on the impact of foreign exchange movements on the Consolidated Financial Statements for the Group for the year ended 31 December 2018,2019, see the Business Performance section commencing on page 2430 and note 2324 to the Consolidated Financial Statements. |
Goodwill Impairment | | | | | Risk | | Discussion | | | Description: Significant under-performance in any of the Group’s major cash-generating units or the divestment of businesses in the future may give rise to a material write-down of goodwill. Impact: A write-down of goodwill could have a substantial impact on the Group’s income and equity. | | An acquisition generates goodwill to the extent that the price paid exceeds the fair value of the net assets acquired. Under IFRS, goodwill and indefinite-lived intangible assets are not amortised but are subject to annual impairment testing. Other intangible assets deemed separable from goodwill arising on acquisitions are amortised. A detailed discussion of the impairment testing process, the key assumptions used, the results of that testing and the related sensitivity analysis is contained in note 16 to the Consolidated Financial Statements on pages 159166 to 161.168. While a goodwill impairment charge does not impact cash flow, a full write-down at 31 December 20182019 would have resulted in a charge to income and a reduction in equity of€8.1 billion (2017:(2018:€6.98.1 billion). |
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Corporate Governance Practices Compliance Statement Non-US companies such as CRH are exempt from most of the corporate governance rules of the NYSE. In common with companies listed on the LSE and Euronext Dublin, CRH’s corporate governance practices reflect, inter alia, compliance with (a) domestic company law; (b) the Listing Rules of the UK Listing Authority and Euronext Dublin; and (c) the 20162018 UK Corporate Governance Code, which is appended to the listing rules of the LSE and Euronext Dublin. The Board of CRH has adopted a robust set of governance principles, which reflect the Code and its principles-based approach to corporate governance. Accordingly, the way in which CRH makes determinations of Directors’ independence differs from the NYSE rules. The Board has determined that, in its judgement, all of thenon-executive Directors are independent. In doing so, however, the Board did not explicitly take into consideration the independence requirements outlined in the NYSE’s listing standards. Shareholder Approval of Equity Compensation Plans The NYSE rules require that shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions to those plans with certain limited exceptions. CRH complies with Irish requirements, which are similar to the NYSE rules. The Board, however, does not explicitly take into consideration the NYSE’s detailed definition on what are considered “material revisions”. Risk Management and Internal Control The Board has delegated responsibility for monitoring the effectiveness of the Group’s risk management and internal control systems to the Audit Committee1.Committee1. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and, in the case of internal control systems, can provide only reasonable and not absolute assurance against material misstatement or loss. The Consolidated Financial Statements are prepared subject to oversight and control of the Finance Director, who seeks to ensure that data is captured from Group locations and all required information for disclosure in the Consolidated Financial Statements is provided. An appropriate control framework has been put in place around the recording of appropriate consolidation journals and other adjustments. The Consolidated Financial Statements are reviewed by the internal CRH Financial Reporting and Disclosure Group prior to being reviewed by the Finance Director and Audit Committee and approved by the Board of Directors. Group management has responsibility for major strategic development and financing decisions. Responsibility for operational issues is devolved, subject to limits of authority, to product group and operating company management. Management at all levels is responsible for internal control over the business functions that have been delegated. This embedding of the system of internal control throughout the Group’s operations is designed to enable the organisation to respond quickly to evolving business risks, and to ensure that significant internal control issues, should they arise, are reported promptly to appropriate levels of management. Management’s Report on Internal Control over Financial Reporting In accordance with the requirements of Rule13a-15 of the US Securities Exchange Act, the following report is provided by management in respect of the Company’s internal control over financial reporting. As defined by the SEC, internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Consolidated Financial Statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Consolidated Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and Directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Company’s assets that could have a material effect on the Consolidated Financial Statements Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules13a-15(f) and15d-15(f) under the US Securities Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our Company’s published Consolidated Financial Statements for external purposes under generally accepted accounting principles. In connection with the preparation of the Company’s annual Consolidated Financial Statements, management has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of 31 December 2018,2019, based on criteria established in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organisations of the Treadway Commission. 1. In accordance with Section 167(7) of the Companies Act 2014.
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As permitted by the SEC, based on the quantitative and qualitative risk factors of our acquisitions in 2019, the Company has elected to exclude an assessment of the internal controls of these acquisitions made duringfor the year 2018.2019. These acquisitions, which are listed in note 32 to the Consolidated Financial Statements, constituted 9.5%1.5% and 14.6%2.3% of total and net assets respectively, as of 31 December 20182019 and 4.6%0.8% and 4.2% of revenue and Group profit, respectively, for the financial year then ended. Of these acquisitions, the acquisition of Ash Grove represented 7.1% and 10.9% of total and net assets, respectively, and 2.4% and 3.5%0.1% of revenue and Group profit, respectively, for the financial year then ended. Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of those controls. Based on this assessment, management has concluded and hereby reports that as of 31 December 2018,2019, the Company’s internal control over financial reporting is effective. Our auditors, EY, a registered public accounting firm, who have audited the Consolidated Financial Statements for the year ended 31 December 2018,2019, have audited the effectiveness of the Company’s internal controls over financial reporting. Their report, on which an unqualified opinion is expressed thereon, is included on page 122.127. Changes in Internal Control over Financial Reporting During 2018,2019, there has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rules13a-15 that occurred during the period covered by this Annual Report and Form20-F that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Acquisitions excluded from the 20172018 assessment of internal control over financial reporting (including the 2018 acquisition of Ash Grove) were all successfully integrated into the CRH internal control systems in 2018.2019. Evaluation of Disclosure Controls and Procedures Management has evaluated the effectiveness of the design and operation of the disclosure controls and procedures as defined in Exchange Act Rules13a-15(e) as of 31 December 2018.2019. Based on that evaluation, the Chief Executive and the Finance Director have concluded that these disclosure controls and procedures were effective as of such date at the level of providing reasonable assurance. In designing and evaluating our disclosure controls and procedures, management, including the Chief Executive and the Finance Director, recognised that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Change In Registrant’s Certifying Accountant Following the issuance of a Request for Proposal (RFP) in April 2018, the Audit Committee recommended to the Board that Deloitte Ireland LLP be appointed to succeed Ernst & Young as CRH’s auditor, with effect from the financial year commencing 1 January 2020. As a result, following completion of the audit of our financial statements as of and for the year ended 31 December 2019 and the audit of the effectiveness of internal control over financial reporting as of 31 December 2019, Deloitte Ireland LLP will become CRH’s external auditor, subject toa confirmatory advisory vote at the 2020 AGM. Ernst & Young’s reports on our Consolidated Financial Statements for the two years ended 31 December 2019, did not contain an adverse opinion or disclaimer of opinion or report, nor was any report qualified or modified as to uncertainty, audit scope or accounting principles. During our two most recent fiscal years and to 6 March 2020, there were no disagreements with Ernst & Young whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement, if not resolved to the satisfaction of Ernst & Young, would have caused Ernst & Young to make a reference to the subject matter of the disagreement in connection with any reports it would have issued, and there were no “reportable events” as that term is defined in Item 16F(a)(1)(v) of Form20-F. We have provided Ernst & Young with a copy of the foregoing disclosure, and we have requested that it furnish us with a letter addressed to the SEC stating whether or not it agrees with the above disclosures. A copy of this letter is filed as Exhibit 15.3 to CRH’s Annual Report on Form20-F, as filed with the SEC.
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The Environment and Government Regulations The most important government regulations relevant to CRH as a building materials company are environmental laws and regulations relevant to extractive and production processes. In the European Union, operations are subject to national environmental laws and regulations, most of which now emanate from European Union Directives and Regulations. In North America, operations may be subject to federal, state, provincial and local environmental laws and regulations. In other jurisdictions, national environmental and local laws apply. Environmental Compliance Policy In order to comply with environmental regulations, CRH has developed the following Group environmental policy, approved by the Boardwhich was reviewed and updated during 2019. The statement of policy, applied across all Group companies, which is to: comply, asat a minimum, with all applicable environmental legislation and continuouslycontinually improve our environmental stewardship, aiming all the timemanagement, always striving to meet or exceed industry best practice;practice standards, monitoring and reporting performance to ensure Policy compliance; maintain open communications and ensure that our employees and contractors respectadhere to their environmental responsibilities; proactively address proactively the challenges and opportunities of climate change; reduce emissions and optimise our use of energy, water, land and allother resources; promote environmentally drivensustainable product and process innovation and new business opportunities and; develop positive relationships with stakeholders and strive to be good neighbours in every community in which we operate Achieving the Group’s environmental policy objectives at all locations is a management imperative; this line responsibility continues right up to Board level where there is also a dedicated Safety, Environment & Social Responsibility (SESR) Committee. Daily responsibility for ensuring that the Group’s environmental policy is effectively implemented lies with individual location managers, assisted by a network of Environmental Liaison Officers (ELOs). At each year end, the ELOs assist the Group Sustainability team in carrying out a detailed assessment of Group environmental performance, which is reviewed by the SESR Committee and the Board. Addressing Climate Change CRH has evaluated the risks and opportunities arising from climate change and has put in place a management strategy to address these. In striving to reduce its emissions, CRH delivers carbon, energy and financial efficiencies for its businesses and helps to address climate change on a societal level. There is a focus on reducing the carbon footprint of products during manufacture and on increasing their contribution to reducing emissions during their lifetime. There are value creation opportunities for the Group, including opportunities for sales ofFor example, CRH includes within its offerings products aimed at climate adaptation, such asincluding sustainable drainage systems, flood defences, and more resilient structures. Having achieved its 2020 CO2 reduction commitment, CRH is now committing to a target of 520kg CO2/tonnes of cementitious product by 2030, covering the portfolio of cement plants owned by CRH in 2019. This target represents a 33% reduction in specific net cement CO2 compared with 1990 levels. We have also set an ambition to achieve carbon neutrality along the cement and concrete value chain by 2050. CRH continues to be a member of the World Business Council for Sustainable Development (WBCSD) and is a founding member of the Global Cement and Concrete Association (GCCA), which is dedicated to developing and strengthening the sector’s contribution to sustainable construction. Having achieved its initial CO reduction commitment three years ahead 2 of target in 2012, CRH ison-track for its 2020 CO reduction commitment. This is for a 25% reduction 2 in specific net CO emissions on 1990 levels, and covers the portfolio 2 of cement plants owned by CRH in 2013 when the target was set.
Through its membership of the GCCA, WBCSD and regional industry associations including the European Cement Association (CEMBUREAU) and the European Lime Association (EuLA) in Europe and the National Asphalt Pavement Association (NAPA) and the Portland Cement Association (PCA) in the US, CRH is actively involved in global and regional discussions on the climate change agenda. RelevantIn regions and countries where trading schemes are in operation, facilities that fall within this scope of this legislation comply with CO2 “cap and trade” schemes including the European 2 Union Emissions Trading Scheme and other regional schemes. CRH acknowledges the “Paris Climate Agreement” to limit global temperature rise to 2°C (with efforts towards 1.5°C), made at the 21st21st Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2015. CRH has implemented capital expenditure programmes in its cement operations to reduce carbon emissions in the context of international and national commitments to reduce greenhouse gas emissions. Theemissions as well as its emission reduction programme. In 2019 the European Commission announced the European Green Deal, a roadmap with actions to reachnet-zero greenhouse gas emissions by 2050. As part of this plan, the European Union has binding targetspolitical commitments to reduce greenhouse gases, on 1990 levels, by 20%50-55% by 2020 and by 40% by 2030. In addition, the European Commission has suggested an objective to reduce emissions by 80% by 2050 compared to 1990. Achieving such reductions would represent a significant extra constraint on cement operations in Europe.
US federal, state and local laws continue to develop to address carbon emissions. The Group may incur costs in monitoring and reporting emissions. Ultimately a “cap and trade” scheme may be implemented in the US and Canada; depending on the scope of the legislation, this could significantly impact certain operations in North America. As of 1514 February 2019,2020, the Group is not aware of any such schemes that would materially affect its US operations, however, CRH continuously monitors developments in regulations and greenhouse gas initiatives involving local, provincial, state or federal governments. Possible Environmental Liabilities At 1514 February 2019,2020, there were no material pending legal proceedings relating to site remediation which are anticipated to have a material adverse effect on the financial position or results of operations or liquidity of the Group, nor have internal reviews revealed any situations of likely material environmental liability to the Group. Governmental Policies The overall level of government capital expenditures and the allocation by state entities of available funds to different projects, as well as interest rate and tax policies, directly affect the overall levels of construction activity. The terms and general availability of government permits required to conduct Group business also has an impact on the scope of Group operations. As a result such governmental decisions and policies can have a significant impact on the operating results of the Group.
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 245 | |
CRH Annual Report and Form 20-F I 2018
| | | | | Other Disclosures | | | | | | | | |
History, Development and Organisational Structure of the Company CRH is the leading building materials business in the world. Our global footprint spans 3230 countries, employing 90,000c. 80,300 people at over 3,7003,100 operating locations, serving customers across the entirebreadth of the building materials spectrum, on five continents.spectrum. CRH is the largest building materials companybusiness in North America, and has leadership positions in Europe, where it is the largesta leading heavyside materials business along with established strategicin Europe and has positions in the emerging economic regions ofboth Asia and South America. CRH manufactures and distributessupplies a diverse range of superior building materials, products and productsinnovative solutions for the construction industry. From primary materials that we extract, process and supply, to products that are highly engineered and high-value-added, CRH is uniquely positioned to address evolving trends in global construction markets. Our products can be found throughout the built environment. From foundations, to frame and roofing, to fitting out the interior space and improving the exterior aesthetic, toon-site works and infrastructural projects including roads and bridges, our materials and products are used extensivelyenvironment in a wide range of construction projects of all sizes, all across the world.from major public infrastructure to commercial buildings and residential structures. The Group resulted from the merger in 1970 of two leading Irish public companies, Cement Limited (established in 1936) and Roadstone Limited (incorporated in 1949). Cement Limited manufactured and supplied cement while Roadstone Limited was primarily involved in the manufacture and supply of aggregates, readymixed concrete, mortar, coated macadam, asphalt and contract surfacing to the Irish construction industry. As a result of planned geographic diversification since themid-1970s, the Group has expanded by acquisition and organic growth into an international manufacturer and supplier of building materials. The Company is incorporated and domiciled in the Republic of Ireland. CRH is a public limited company operating under the Companies Act of Ireland 2014. The Group’s worldwide headquarters is located in Dublin, Ireland. Our principal executive offices are located at Belgard Castle, Clondalkin,Stonemason’s Way, Rathfarnham, Dublin 2216, Ireland (telephone: +353 1 404 1000). The Company’s registered office is located at 42 Fitzwilliam Square, Dublin 2, Ireland and our US agent is CRH Americas, Inc., 900 Ashwood Parkway, Suite 600, Atlanta, Georgia 30338. The Company is the holding company of the Group, with direct and indirect share and loan interests in subsidiaries, joint ventures and associates. From Group headquarters, a small team of executives exercisesexercise strategic control over our decentralised operations. In the detailed description of CRH’s business on pages 2430 to 51,52, estimates of the Group’s various aggregates and stone reserves have been provided by engineers employed by the individual operating companies. Details of productend-use by sector for each reporting segment are based on management estimates. A listing of the principal subsidiary undertakings and equity accounted investments is contained on pages 252260 to 257.264. Statements Regarding Competitive Position and Construction Activity Statements made in the Business Performance section and elsewhere in this document referring to the Group’s competitive position are based on the Group’s belief, and in some cases rely on a range of sources, including investment analysts’ reports, independent market studies and the Group’s internal assessment of market share based on publicly available information about the financial results and performance of market participants. Unless otherwise specified, references to construction activity or other market activity relate to the relevant market as a whole and are based on publicly available information from a range of sources, including independent market studies, construction industry data and economic forecasts for individual jurisdictions. Exchange Rates In this Annual Report and Form20-F, references to “US$”, “US Dollars” or “US cents” are to the United States currency, references to “euro”, “euro cent”,“cent” “cent”, “c” or “€” are to the euro currency and “Stg£” or “Pound Sterling” are to the currency of the United Kingdom of Great Britain and Northern Ireland (UK). Other currencies referred to in this Annual Report and Form20-F include Polish Zloty (PLN), Swiss Franc (CHF), Canadian Dollar (CAD), Chinese Renminbi (RMB), Indian Rupee (INR), Ukrainian Hryvnia (UAH), Philippine Peso (PHP), Romanian Leu (RON) and Serbian Dinar (RSD). For a discussion on the effects of exchange rate fluctuations on the financial condition and results of the operations of the Group, see the Business Performance section beginning on page 24.30. Legal Proceedings Group companies are parties to various legal proceedings, including some in which claims for damages have been asserted against the companies. Having taken appropriate advice, we believe that the aggregate outcome of such proceedings will not have a material effect on the Group’s financial condition, results of operations or liquidity. In 2015, the Swiss Competition Commission imposed fines on the Association of Swiss Wholesalers of the Sanitary Industry and on major Swiss wholesalers including certain Swiss CRH subsidiaries; the fine attributable to these subsidiaries was CHF34 million. While the Group remains of the view that the fine is unjustified and it has appealed to the Swiss Federal Appeals Court, a provision of€3031 million (2017:(2018:€2930 million) is recorded in the Group’s Consolidated Balance Sheet. Research and Development Research and development is not a significant focus of the Group. CRH’s policy is to expense all research and development costs as they occur. Employees The average number of employees for the past three financial years is disclosed in note 7 to the Consolidated Financial Statements on page 149.155. No significant industrial disputes have occurred at any of CRH’s factories or plants during the past five years. The Group believes that relations with its employees and labour unions are satisfactory. Seasonality Activity in the construction industry is characterised by cyclicality and is dependent to a considerable extent on the seasonal impact of weather in CRH’s operating locations, with activity in some markets reduced significantly in winter due to inclement weather. First-half sales accounted for 45% of full-year 2018 (2017: 47%2019 (2018: 44%), while EBITDA (as defined)* for the first six months of 20182019 represented 34%36% of the full-yearout-turn (2017: 36%(2018: 33%). Significant Changes NoOther than as disclosed in note 35 to the Consolidated Financial Statements on page 206 no significant changes have occurred since the balance sheet date.
Latest Practical Information Where referenced in the Supplementary20-F Disclosures and Shareholder Information sections, information is provided at the latest practicable date, 1514 February 2019.2020. | * | * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
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| 237 |
| Polbruk, part of CRH’s Building Products Division, supplied products for this school in Rzeszów, Poland. Urbanika 60 slabs covered the courtyard and main entrance and a range of other products finished off areas around the buildings, comprising over 5,000m2 of products in total. |
| | | | 248 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
CRH Annual Report and Form 20-F | 2018
Stock Exchange Listings CRH has a premium listing on the LSE and a secondary listing on Euronext Dublin represented by the ticker symbols CRH and CRG respectively. ADSs,American Depositary Shares (ADSs), each representing one Ordinary Share, are listed on the NYSE. The ADSs are evidenced by ADRs issued by The Bank of New York Mellon (the ‘Depositary’) as Depositary under an Amended
Amended and Restated Deposit Agreement dated 28 November 2006. The ticker symbol for the ADSs on the NYSE is CRH.
Share price data
| | Share price data | | | | | | | | | | | | | | | | | | | | 2018 | | | | | | 2017 | | | | | | | | LSE | | | Euronext Dublin | | | NYSE | | | | | | LSE | | | Euronext Dublin | | | NYSE | | | 2019 | | | | | 2018 | | | | LSE | | Euronext Dublin | | NYSE | | | | | LSE | | Euronext Dublin | | NYSE | Share price at 31 December | | | £20.71 | | | | €23.10 | | | | $26.35 | | | | | | £26.57 | | | | €29.96 | | | | $36.09 | | | £30.42 | | €35.67 | | $40.33 | | | | £20.71 | | €23.10 | | $26.35 | | Market capitalisation | | | £16.9bn | | | | €18.8bn | | | | $21.5bn | | | | | | £22.3bn | | | | €25.1bn | | | | $30.3bn | | | £24.0bn | | €28.2bn | | $31.8bn | | | | £16.9bn | | €18.8bn | | $21.5bn | | Share price movement during year: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | -high | | | £28.57 | | | | €32.62 | | | | $38.96 | | | | | | £29.20 | | | | €34.53 | | | | €37.86 | | | £31.00 | | €36.25 | | $40.36 | | | | £28.57 | | €32.62 | | $38.96 | | -low | | | £19.72 | | | | €21.84 | | | | $24.92 | | | | | | £25.30 | | | | €28.48 | | | | €33.41 | | | £20.72 | | €22.89 | | $26.05 | | | | £19.72 | | €21.84 | | $24.92 |
For further information on CRH shares see note 31 to the Consolidated Financial Statements. Ownership of Ordinary Shares Shareholdings as at 31 December 2018
| | | | | | Shareholdings as at 31 December 2019 | | | | | | | | Number of shares | | | | Geographic location (i) | | held ‘000s | | % of total | | | | United Kingdom | | 246,773 | | 30.9 | | | | North America | | 226,943 | | 28.4 | | | | Europe/Other | | 164,445 | | 20.6 | | | | Retail | | 128,459 | | 16.0 | | | | Ireland | | 23,009 | | 2.9 | | | | Treasury (ii) | | 10,011 | | 1.2 | | | | | | 799,640 | | 100.0 |
| | | | | | | | | | Number of shares | | | | | Geographic location (i) | | held ‘000s | | % of total | | | | | | | | North America | | 237,585 | | 28.17 | | | | | | | | United Kingdom | | 230,987 | | 27.39 | | | | | | | | Europe/Other | | 168,126 | | 19.93 | | | | | | | | Retail | | 153,466 | | 18.20 | | | | | | | | Treasury (ii) | | 27,551 | | 3.27 | | | | | | | | Ireland | | 25,675 | | 3.04 | | | | | | | | | 843,390 | | 100 | | | (i) This represents a best estimate of the number of shares controlled by fund managers resident in the geographic regions indicated. Private shareholders are classified as retail above. (ii) As detailed in note 31 to the Consolidated Financial Statements. | | |
| (i) | This represents a best estimate of the number of shares controlled by fund managers resident in the geographic regions indicated. Private shareholders are classified as retail above. | |
| (ii) | As detailed in note 31 to the Consolidated Financial Statements. |
| | | | | | | | | Number | | | | | | | | | | | | | | | Number of | | % of | | of shares | | % of | Holdings | | Number of
shareholders | | % of total | | Number
of shares
held ‘000s | | % of total | | | | shareholders | | total | | held ‘000s | | total | | | 1 - 1,000 | | 14,834 | | 60.68 | | 4,689 | | 0.56 | | | | 14,431 | | 61.0 | | 4,476 | | 0.5 | | | 1,001 - 10,000 | | 7,651 | | 31.30 | | 22,771 | | 2.70 | | | | 7,254 | | 30.7 | | 21,614 | | 2.7 | | | 10,001 - 100,000 | | 1,397 | | 5.71 | | 42,980 | | 5.10 | | | | 1,414 | | 6.0 | | 43,619 | | 5.5 | | | 100,001 - 1,000,000 | | 434 | | 1.78 | | 140,144 | | 16.61 | | | | 431 | | 1.8 | | 132,426 | | 16.6 | | | Over 1,000,000 | | 129 | | 0.53 | | 632,806 | | 75.03 | | | | 127 | | 0.5 | | 597,505 | | 74.7 | | | | 24,445 | | 100 | | 843,390 | | 100 | | | | 23,657 | | 100.0 | | 799,640 | | 100.0 |
The Company is not owned or controlled directly or indirectly by any government or by any corporation or by any other natural or legal person severally or jointly. The major shareholders do not have any special voting rights. As at 27 February 2019,2020, the Company had received notification of certain interests in its Ordinary Share capital that were equal to, or in excess of, 3%. These interests are presented in Corporate Governance – Substantial Holdings on page 66. 72.
| | | | | | | | | | | | | | CRH Annual Report and FormANNUAL REPORT AND FORM 20-F I 20182019 | | | | | | | | Ownership of Ordinary Shares - continued | | | | | | | | | | | | | | | | | 249 |
Ownership of Ordinary Shares - continued Purchases of Equity Securities by the Issuer and Affiliated Persons In April 2018, CRH announced its intention to introduce a share repurchase programme to repurchase Ordinary Shares (including Income Shares) of up to€1 billion.billion (the ‘Programme’). During 2018, CRH repurchased a total of 27,901,471 Ordinary Shares under the Programme, returning a total of€0.8 billion in cash to shareholders. The tableProgramme was extended in 2019, with CRH repurchasing a total of 27,357,116 Ordinary Shares in 2019 and returning a further€0.8 billion to shareholders. As at 31 December 2019, a total of€1.6 billion cash has been returned to shareholders under the Programme. On 7 January 2020, CRH announced a further extension of the Programme for an additional€200 million. The tables below sets forth the Ordinary Shares repurchased under this programme together with details of the Ordinary Shares purchased by the Employee Benefit Trust (EBT) during 2019 and 2018. See note 31 to the Consolidated Financial Statements for further details. | | | | | | | | | | | | | | | | | | 2018 | | | | 2017 | | | | | | | Month | | Total number of share
buyback purchases | | Total number of
EBT purchases | | Total number of
shares purchased | | Average price paid per share (i) | | | | Month | | Total number of
EBT purchases | | Average price
paid per share | | | | | | | March | | - | | 108,377 | | 108,377 | | €27.57 | | | | March | | 90,971 | | €33.21 | | May | | 3,184,696 | | - | | 3,184,696 | | €30.85/£27.07 | | | | July | | 179 | | €33.33 | | June | | 3,683,973 | | - | | 3,683,973 | | €31.40/£27.62 | | | | November | | 5,633 | | €31.48 | | July | | 4,490,643 | | - | | 4,490,643 | | €30.14/£26.73 | | | | | | | | | | August | | 611,038 | | - | | 611,038 | | €28.98/£26.05 | | | | | | | | | | September | | 4,873,147 | | - | | 4,873,147 | | €27.94/£25.05 | | | | | | | | | | October | | 6,973,594 | | - | | 6,973,594 | | €27.10/£23.84 | | | | | | | | | | November | | 1,007,835 | | - | | 1,007,835 | | €24.58/£21.81 | | | | | | | | | | December | | 3,076,545 | | - | | 3,076,545 | | €23.05/£20.64 | | | | | | | | | | | | | | | | 27,901,471 | | 108,377 | | 28,009,848 | | | | | | | | 96,783 | | | | | | | |
(i) Where applicable, for shares purchased on the LSE, the average price paid per share in Pound Sterling is disclosed.
| | | | | | | | | | 2019 | | Month | | Total number of share | | Total number of | | Total number of | | Average price paid per | | | buyback purchases | | EBT purchases | | shares purchased | | share - share buyback (i) (ii) | | | | | | January | | 2,933,611 | | - | | 2,933,611 | | €24.56/£ 21.80 | | | | | | February | | 1,599,462 | | 429,272 | | 2,028,734 | | €27.02/£ 23.55 | | | | | | March | | 3,087,817 | | 1,500,000 | | 4,587,817 | | €27.44/£ 23.56 | | | | | | April | | - | | 248,750 | | 248,750 | | - | | | | | | May | | 4,211,110 | | 11,426 | | 4,222,536 | | €28.80/£ 25.09 | | | | | | June | | 4,015,079 | | - | | 4,015,079 | | €28.45/£ 25.41 | | | | | | July | | 2,032,600 | | - | | 2,032,600 | | €29.58/£ 26.70 | | | | | | August | | 1,904,650 | | - | | 1,904,650 | | €28.54/£ 26.16 | | | | | | September | | 3,050,181 | | - | | 3,050,181 | | €30.81 | | | | | | October | | 2,179,962 | | - | | 2,179,962 | | €30.55 | | | | | | November | | 1,636,369 | | - | | 1,636,369 | | €33.46 | | | | | | December | | 706,275 | | - | | 706,275 | | €34.48 | | | | 27,357,116 | | 2,189,448 | | 29,546,564 | | | | | | | | | | | | | | | | | | 2018 | | Month | | Total number of share | | Total number of | | Total number of | | Average price paid per | | | buyback purchases | | EBT purchases | | shares purchased | | share - share buyback (i) (ii) | | | | | | March | | - | | 108,377 | | 108,377 | | - | | | | | | May | | 3,184,696 | | - | | 3,184,696 | | €30.85/£27.07 | | | | | | June | | 3,683,973 | | - | | 3,683,973 | | €31.40/£27.62 | | | | | | July | | 4,490,643 | | - | | 4,490,643 | | €30.14/£26.73 | | | | | | August | | 611,038 | | - | | 611,038 | | €28.98/£26.05 | | | | | | September | | 4,873,147 | | - | | 4,873,147 | | €27.94/£25.05 | | | | | | October | | 6,973,594 | | - | | 6,973,594 | | ��27.10/£23.84 | | | | | | November | | 1,007,835 | | - | | 1,007,835 | | €24.58/£21.81 | | | | | | December | | 3,076,545 | | - | | 3,076,545 | | €23.05/£20.64 | | | | 27,901,471 | | 108,377 | | 28,009,848 | | | (i) Average price paid per share in respect of 2019 EBT purchases; February€28.74, March€27.11, April€28.44 and May€28.54 (2018: March€27.57). (ii) Where applicable, for shares purchased on the LSE, the average price paid per share in Pound Sterling is disclosed. |
Other than the above, there were no purchases of equity securities by the issuer and/or affiliated persons during the course of 2018.2019. CREST Transfer of the Company’s shares takes place through the CREST system. Shareholders have the choice of holding their shares in electronic form or in the form of share certificates. Where shares are held in CREST, dividends are automatically paid in euro unless a currency election is made. CREST members should use the facility in CREST to make currency elections. Such elections must be made in respect of entire holdings as partial elections are not permissible. 
| 241 |
| | | | 250 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
CRH Annual Report and Form 20-F I2018
Dividends The Company has paid dividends on its Ordinary Shares in respect of each fiscal year since the formation of the Group in 1970. Dividends are paid to shareholders on the Register of Members on the record date for the dividend. Record dates are set by the LSE and Euronext Dublin. An interim dividend is normally declared by the Board of Directors in August of each year and is generally paid in September/October. A final dividend is normally recommended by the Board of Directors following the end of the fiscal year to which it relates and, if approved by the shareholders at an AGM, is generally paid in April/May of that year. The payment of future cash dividends will be dependent upon future earnings, the financial condition of the Group and other factors. The below table sets forth the amounts of interim, final and total dividends in euro cent per Ordinary Share declared in respect of each fiscal year indicated. Each amount represents the actual dividend payable. Solely for the convenience of the reader, these dividends have been translated into US cents per ADS using the FRB Noon Buying Rate on the date of payment. An interim dividend of 19.6c20.0c was paid in respect of Ordinary Shares on 2625 September 2018.2019. The final dividend, if approved at the forthcoming AGM of shareholders to be held on 2523 April 2019,2020, will be paid on 3028 April 20192020 to shareholders on the Register of Members as at the close of business on 1513 March 20192020 and will bring the full-year dividend for 20182019 to 72.0c.83.0c. The proposed final dividend has been translated using the FRB Noon Buying Rate on 1514 February 2019.2020. Dividend Withholding Tax (DWT) must be deducted from dividends paid by an Irish resident company, unless a shareholder is entitled to an exemption and has submitted a properly completed exemption form to the Company’s Registrars, Link Asset Services (the ‘Registrars’). DWT applies to dividends paid by way of cash or by way of shares under a scrip dividend scheme and is deducted at the standard rate of Income Tax (currently 20%)(20% throughout 2019, increased to 25% effective 1 January 2020).Non-resident shareholders and certain Irish companies, trusts, pension schemes, investment undertakings and charities may be entitled to claim exemption from DWT. Copies of the exemption form may be obtained from the Registrars. Shareholders should note that DWT will be deducted from dividends in cases where a properly completed form has not been received by the record date for a dividend. Individuals who are resident in the Republic of Ireland for tax purposes are not entitled to an exemption. ShareholdersHolders of Ordinary Shares who wish to have their dividend paid direct to their bank account, by electronic funds transfer, can do so by logging on to www.signalshares.com, selecting CRH plc and registering for the share portal (the ‘Share Portal’). Shareholders should note that they will need to have their Investor Code (found on their share certificate), and follow the instructions online to register.
Alternatively shareholders can complete a paper dividend mandate form and submit it to the Registrars. A copy of the form can be obtained by logging onto the Registrar’s share portal and following the instructions as set out under Registrars on page 249.257. Tax vouchers will continue to be sent to the shareholder’s registered address under this arrangement. Dividends are generally paid in euro. However, in order to avoid costs to shareholders, dividends are paid in Pound Sterling and US Dollars to shareholders whose shares are not held in the CREST system (see page 241)249) and whose address, according to the Share Register, is in the UK and the US respectively, unless they require otherwise. In respect of the 20182019 final dividend, the latest date for receipt of currency elections is 1513 March 2019.2020. Dividends in respect of 7% ‘A’ Cumulative Preference Shares are paid half-yearly on 5 April and 5 October. Dividends in respect of 5% Cumulative Preference Shares are paid half-yearly on 15 April and 15 October. | | | | | | | | | | | | | | | | | | | | euro cent per Ordinary Share | | | | | Translated1 into US cents per ADS | | | | | | | | | | Years ended 31 December | | Interim | | Final | | Total | | | | | Interim | | Final | | Total | | | | | | | | | | 2014 | | 18.50 | | 44.00 | | 62.50 | | | | | | 23.45 | | 49.46 | | 72.91 | | | | | | | | | | 2015 | | 18.50 | | 44.00 | | 62.50 | | | | | | 19.88 | | 50.25 | | 70.13 | | | | | | | | | | 2016 | | 18.80 | | 46.20 | | 65.00 | | | | | | 20.91 | | 50.80 | | 71.71 | | | | | | | | | | 2017 | | 19.20 | | 48.80 | | 68.00 | | | | | | 22.30 | | 58.30 | | 80.60 | | | | | | | | | | 2018 | | 19.60 | | 52.40(i) | | 72.00 | | | | | | 23.05 | | 59.04(i) | | 82.09 | | | | | | | | | (i) Proposed. | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | euro cent per Ordinary Share | | | | | | Translated1 into US cents per ADS | | | Years ended 31 December | | Interim | | | Final | | | Total | | | | | | Interim | | | Final | | | Total | | | | | | | | | | 2015 | | | 18.50 | | | | 44.00 | | | | 62.50 | | | | | | | | 19.88 | | | | 50.25 | | | | 70.13 | | | | | | | | | | 2016 | | | 18.80 | | | | 46.20 | | | | 65.00 | | | | | | | | 20.91 | | | | 50.80 | | | | 71.71 | | | | | | | | | | 2017 | | | 19.20 | | | | 48.80 | | | | 68.00 | | | | | | | | 22.30 | | | | 58.30 | | | | 80.60 | | | | | | | | | | 2018 | | | 19.60 | | | | 52.40 | | | | 72.00 | | | | | | | | 23.05 | | | | 58.69 | | | | 81.74 | | | | | | | | | | 2019 | | | 20.00 | | | | 63.00(i) | | | | 83.00 | | | | | | | | 21.90 | | | | 68.29(i) | | | | 90.19 | | | | | | | | | | (i) Proposed. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. At the FRB Noon Buying Rate on the date of payment. 2. Whether by way of the allotment of new shares or the reissue of Treasury Shares.
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| CRH Annual Report and Form 20-F I 2018
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Share Plans The Group operates share option schemes, performance share plans, share participation schemes and savings-related share option schemes (the ‘Schemes’) for eligible employees in all regions where the regulations permit the operation of such schemes. A brief description of the Schemes is outlined below. Shares issued (whether by way of the allotment of new shares or the reissue of Treasury Shares) in connection with the Schemes rank pari passu in all respects with the Ordinary and Income Shares of the Company. 2000 Share Option Schemes
At the AGM held on 3 May 2000, shareholders approved the adoption of Share Option Schemes (the ‘2000 Share Option Schemes’) to replace schemes which were approved in May 1990. The 2000 Share Option Schemes were replaced by new schemes in May 2010 (see below).
Options granted under the 2000 Share Option Schemes vested when EPS growth exceeded the growth on the Irish Consumer Price Index by 5% compounded over a period of at least three years subsequent to the granting of options.
Options may be exercised not later than ten years from the date of grant of the option, and not earlier than the expiration of three years from the date of grant. Benefits under the schemes are not pensionable.
2010 Share Option Schemes At the AGM held on 5 May 2010, shareholders approved the adoption of new share option schemes to replace the schemes which were approved in May 2000 (see above)(2000 share option schemes). Following the approval by shareholders of the 2014 Performance Share Plan (see below), no further awards will be granted under the 2010 Share Option Schemes. Consequently, the last award under the 2010 Share Option Schemes was made in 2013. The 2010 Share Option Schemes arewere based on one tier of options with a single vesting test. The performance criteria for the 2010 Share Option Schemes arewasEPS-based. Vesting only occursoccurred once an initial performance target hashad been reached and, thereafter, iswas dependent on performance. In considering the level of vesting based on EPS performance, the Remuneration Committee also considersconsidered the overall results of the Group. Subject to the achievement of the EPS performance criteria, options may be exercised not later than ten years from the date of grant of the option, and not earlier than the expiration of three years from the date of grant. Benefits under the schemes are not pensionable. 2010 Savings-related Share Option Schemes At the AGM held on 5 May 2010, shareholders approved the adoption of savings-related share option schemes (the ‘2010 Savings-related Share Option Schemes’) to replace the 2000 Savings-related Share Option Schemes. All employees of a participating subsidiary in the Republic of Ireland or the UK, who have satisfied a required qualifying period, are invited to participate in this scheme. Eligible employees who wish to participate in the scheme enter into a savings contract with a nominated savings institution, for a three or a five-year period, to save a maximum of€500 or Stg£500, as appropriate, per month. At the commencement of each contract period employees are granted an option to acquire Ordinary Shares in the Company at an option price which is equal to the amount proposed to be saved plus the bonus payable by the nominated savings institution at the end of the savings period. The price payable for each Ordinary Share under an option will be not less than the higher of par or 75% (or in the case of the UK scheme 80%) of the market value of a share on the day the invitation to apply for the option is issued. On completion of the savings contract, employees may use the amount saved, together with the bonus earned, to exercise the option. At 27 February 2019, 843,0632020, 1,463,688 Ordinary Shares have been issued2issued1 pursuant to the 2010 Savings-related Share Option Schemes to date. Share Participation Schemes At the AGM on 13 May 1987, shareholders approved the establishment of Share Participation Schemes for the Company, its subsidiaries and companies under its control. Directors and employees of the companies who have at least one year’s service may elect to participate in these Share Participation Schemes. At 27 February 2019, 8,025,7322020, 8,175,310 Ordinary Shares have been issued2issued1 pursuant to the Share Participation Schemes. 2014 Performance Share Plan The 2014 Performance Share Plan was approved by shareholders at the AGM on 7 May 2014. It replaces the 2010 Share Option Schemes and the 2006 Performance Share Plan. See the 20182019 Directors’ Remuneration Report on page 8488 for more details. Restricted Share Plan In 2013, the Board approved the adoption of the 2013 Restricted Share Plan. Under the rules of the 2013 Restricted Share Plan, certain senior executives (excluding executive Board Directors) can receive conditional awards of shares. As (i) executive Directors are excluded from awards and (ii) no shares are allotted or reissued to satisfy the awards, the listing rules of the LSE and Euronext Dublin do not require shareholder approval for the 2013 Restricted Share Plan. 1. Whether by way of the allotment of new shares, the reissue of Treasury Shares or the purchase of Ordinary Shares. | 243 |
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CRH Annual Report and Form 20-F I2018
American Depositary Shares Fees and charges payable by a holder of ADSs.ADSs The Depositary collects fees for delivery and surrender of ADSs directly from investors or from intermediaries acting for them depositing shares or surrendering ADSs for the purpose of withdrawal. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may generally refuse to providefee-attracting services until its fees for those services are paid. | | | | | | | Persons depositing or withdrawing shares must pay: | | | | For: | $5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | | • | | ●
| | Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property | | | | | | | • | | ● | | Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates | $5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | | • | | ●
| | Distribution of deposited securities by the Depositary to ADS registered holders | | | | | (A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for issuance of ADSs) | | | | | | | Applicable Registration or Transfer fees | | • | | ●
| | Transfer and registration of shares on our share register to or from the name of the Depositary or its agent when the holder deposits or withdraws shares | Applicable Expenses of the Depositary | | • | | ●
| | Cable, telex and facsimile transmissions | | | | | | | • | | ● | | Converting foreign currency to US Dollars | Applicable Taxes and other governmental charges the Depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes | | | | ●• | | As necessary |
Fees and direct/indirect payments made by the Depositary to the Company | | | | | Category of expense reimbursed to the Company | | Amount reimbursed for the year ended | | The Depositary has agreed to reimburse certain Company expenses related to the Company’s ADS programme and incurred by the Company in connection with the ADS programme. For the year ended 31 December 2019 the Depositary reimbursed to the Company, or paid amounts on its behalf to third parties, a total sum of US$166,055. This table sets forth the category of expense that the Depositary has agreed to reimburse to the Company and the amounts reimbursed for the year ended 31 December 2019. The Depositary has also agreed to waive fees for standard costs associated with the administration of the ADS programme and has paid certain expenses directly to third parties on behalf of the Company. Under certain circumstances, including removal of the Depositary or termination of the ADS programme by the Company before November 2021, the Company is required to repay the Depositary, up to a maximum of US$250,000, the amounts waived, reimbursed and/or expenses paid by the Depositary to or on behalf of the Company. | | | 31 December 20182019 | | | US$ | New York Stock Exchange listing fees | | 71,000 | 68,000
| | | | Investor relations expenses | | 65,00094,108 | Total | | 133,000165,108
| The table below sets forth the types of expenses that the Depositary has paid to third parties and the amounts reimbursed for the year ended 31 December 2019: |
The table below sets forth the types of expenses that the Depositary has paid to third parties and the amounts reimbursed for the year ended 31 December 2018:
| | | Category of expense waived or paid | | Amount reimbursed for the year ended | directly to third parties | | 31 December 20182019 | | | US$ | Printing, distribution and administration costs paid | | | directly to third parties in connection with United States US | | | shareholder communications and Annual General | | 947 | Meeting related expenses in connection | | | with the American Depositary Share programme | | 745 | Total
| | | Total 745
| | 947 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Depositary has agreed to reimburse certain Company expenses related to the Company’s ADS programme and incurred by the Company in connection with the ADS programme. For the year ended 31 December 2018 the Depositary reimbursed to the Company, or paid amounts on its behalf to third parties, a total sum of US$133,745. This table sets forth the category of expense that the Depositary has agreed to reimburse to the Company and the amounts reimbursed for the year ended 31 December 2018.
The Depositary has also agreed to waive fees for standard costs associated with the administration of the ADS programme and has paid certain expenses directly to third parties on behalf of the Company.
Under certain circumstances, including removal of the Depositary or termination of the ADS programme by the Company before November 2021, the Company is required to repay the Depositary, up to a maximum of US$250,000, the amounts waived, reimbursed and/or expenses paid by the Depositary to or on behalf of the Company.
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| CRH Annual Report and Form 20-F I 2018
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Taxation The following summary outlines the material aspects of US federal income and Republic of Ireland tax law regarding the ownership and disposition of Ordinary Shares or ADSs. Because it is a summary, holders of Ordinary Shares or ADSs are advised to consult their tax advisors with respect to the tax consequences of their ownership or disposition. The discussion regarding US federal income tax only applies to you if you hold your shares or ADSs as capital assets for US federal income tax purposes. This discussion addresses only US federal income and Republic of Ireland taxation and does not discuss all of the tax consequences that may be relevant to you in light of your individual circumstances, including foreign, state or local tax consequences, estate and gift tax consequences, and tax consequences arising under the Medicare contribution tax on net investment income or the alternative minimum tax. This summary does not take into account the specific circumstances of any particular holders (such astax-exempt entities, certain insurance companies, broker-dealers, traders in securities that elect tomark-to-market, investors liable for alternative minimum tax, investors that actually or constructively own 10% or more of the stock of the Company (by vote or value), investors that hold Ordinary Shares or ADSs as part of a straddle or a hedging or conversion transaction, investors that hold Ordinary Shares or ADSs as part of a wash sale for tax purposes or investors whose functional currency is not the US Dollar), some of which may be subject to special rules. In addition, if a partnership holds the Ordinary Shares or ADSs, the US federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership and may not be described fully below. Holders of Ordinary Shares or ADSs are advised to consult their tax advisors with respect to US federal, state and local, Republic of Ireland and other tax consequences of owning and disposing of Ordinary Shares and ADSs in their particular circumstances, and in particular whether they are eligible for the benefits of the Income Tax Treaty (as defined below) in respect of their investment in the Ordinary Shares or ADSs. The statements regarding US and Irish laws set forth below are based, in part, on representations of the Depositary and assume that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with their terms. This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed US Treasury regulations, published rulings and court decisions, and the laws of the Republic of Ireland all as currently in effect, as well as the Convention between the Government of the United States of America and the Government of Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains (the ‘Income Tax Treaty’). These laws are subject to change, possibly on a retroactive basis. In general, holders of ADSs will be treated as the owners of Ordinary Shares represented thereby for the purposes of the Income Tax Treaty and for US federal income tax purposes. Exchanges of Ordinary Shares for ADSs, and ADSs for Ordinary Shares, generally will not be subject to US federal income or Irish tax. As used herein, the term “US holder” means a beneficial owner of an Ordinary Share or ADS who, for US federal income tax purposes: (i) is a US citizen or resident, a US corporation, an estate whose income is subject to US federal income tax regardless of its source, or a trust if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust, and (ii) is not a resident of, or ordinarily resident in, the Republic of Ireland for purposes of Irish taxes. Taxation of Dividends Paid to United StatesUS Holders Under general Irish tax law, US holders are not liable for Irish tax on dividends received from the Company. On the payment of dividends, the Company is obliged to withhold DWT. The statutory rate at present isduring 2019 was 20% (increased to 25% effective 1 January 2020) of the dividend payable. Dividends paid by the Company to a US tax resident individual will be exempt from DWT provided the following conditions are met: | 1. | the individual (who must be the beneficial owner) is resident for tax purposes in the US (or any country with which Ireland has a double tax treaty) and neither resident nor ordinarily resident in Ireland; and |
| 2. | the individual signs a declaration to the Company, which states that he/she is a US tax resident individual at the time of making the declaration and that he/she will notify the Company in writing when he/she no longer meets the condition in (1) above; or |
| 3. | the individual provides the Company with a certificate of tax residency from the US tax authorities |
Dividends paid by the Company to a US tax resident company (which must be the beneficial owner) will be exempt from DWT, provided the following conditions are met: | 1. | the recipient company is resident for tax purposes in the US (or any country with which Ireland has a double tax treaty) and not under the control, either directly or indirectly, of Irish resident persons; |
| 2. | thethe recipient company is not tax resident in Ireland; and
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| 3. | the recipient company provides a declaration to the Company, which states that it is entitled to an exemption from DWT, on the basis that it meets the condition in (1) above at the time of making the declaration, and that it will notify the Company when it no longer meets the condition in (1) above |
For US federal income tax purposes, and subject to the passive foreign investment company (PFIC) rules discussed below, US holders will include in gross income the gross amount of any dividend paid by the Company out of its current or accumulated earnings and profits (as determined for US federal income tax purposes) as ordinary income when the dividend is actually or constructively received by the US holder, in the case of Ordinary Shares, or by the Depositary, in the case of ADSs. Any Irish tax withheld from this dividend payment must be included in this gross amount even though the amount withheld is not in fact received. Dividends paid tonon-corporate US holders that constitute qualified dividend income will be taxed at the preferential rates applicable to long-term capital gains provided certain holding period requirements are met. Dividends the Company pays with respect to Ordinary Shares or ADSs generally will be qualified dividend income. Dividends paid by CRH will not be eligible for the dividends received deduction generally allowed to US corporations in respect of dividends received from other US corporations. The amount of the dividend distribution includable in income of a US holder will be the US Dollar value of the euro payments made, determined at the spot euro/US Dollar rate on the date such dividend distribution is includable in the income of the US holder, regardless of whether the payment is in fact converted to US Dollars. Generally any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includable in income to the date such payment is converted into US Dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. Such gain or loss will generally be income or loss from sources within the US for foreign tax credit limitation purposes. | 245 |
CRH Annual Report and Form 20-F I2018
CRH ANNUAL REPORT AND FORM 20-F I 2019 | | |
Taxation - continued Distributions in excess of current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as anon-taxable return of capital to the extent of the US holder’s basis in the Ordinary Shares or ADSs and thereafter as capital gain. However, the Company does not calculate earnings and profits in accordance with US federal income tax principles. Accordingly, US holders should expect to generally treat distributions the Company makes as dividends. For foreign tax credit limitation purposes, dividends the Company pays with respect to Ordinary Shares or ADSs will generally be income from sources outside the US, and will, depending on your circumstances, generally be “passive” income for purposes of computing the foreign tax credit allowable to a US holder. Subject to certain limitations, the Irish tax withheld in accordance with the Income Tax Treaty and paid over to the Republic of Ireland will be creditable or deductible against your US federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates. Any Irish tax withheld from distributions will not be eligible for a foreign tax credit to the extent an exemption from the tax withheld is available to the US holder. Capital Gains Tax A US holder will not be liable for Irish tax on gains realised on the sale or other disposition of Ordinary Shares or ADSs unless the Ordinary Shares or ADSs are held in connection with a trade or business carried on by such holder in the Republic of Ireland through a branch or agency. A US holder will be liable for US federal income tax on such gains in the same manner as gains from a sale or other disposition of any other shares in a company. Subject to the PFIC rules below, US holders who sell or otherwise dispose of Ordinary Shares or ADSs will recognise a capital gain or loss for US federal income tax purposes equal to the difference between the US Dollar value of the amount realised on the sale or disposition and the tax basis, determined in US Dollars, in the Ordinary Shares or ADSs. Capital gains of anon-corporate US holder are generally taxed at a preferential rate where the holder has a holding period greater than one year, and the capital gain or loss will generally be US source for foreign tax credit limitation purposes. Capital Acquisitions Tax (Estate/ (Estate/Gift Tax)
Althoughnon-residents may hold Ordinary Shares, the shares are deemed to be situated in the Republic of Ireland, because the Company is required to maintain its Share Register in the Republic of Ireland for Irish Capital Gains Tax purposes. Accordingly, holders of Ordinary Shares may be subject to Irish gift or inheritance tax, notwithstanding that the parties involved are domiciled and resident outside the Republic of Ireland. Certain exemptions apply to gifts and inheritances depending on the relationship between the donor and donee. Under theIreland-US Estate Tax Treaty with respect to taxes on the estates of deceased persons, credit against US federal estate tax is available in respect of any Irish inheritance tax payable in respect of transfers of Ordinary Shares. Additional United States US Federal Income Tax Considerations The Company believes that Ordinary Shares and ADSs should not currently be treated as stock of a PFIC for US federal income tax purposes and does not expect them to become stock of a PFIC in the foreseeable future. However, this conclusion is a factual determination that is made annually and thus may be subject to change. If the Company is treated as a PFIC and you are a US holder that did not make amark-to-market election, you will be subject to special rules with respect to any gain you realise on the sale or other disposition of your Ordinary Shares or ADSs and any excess distribution that the Company makes to you. Generally, any such gain or excess distribution will be allocated ratably over your holding period for the Ordinary Shares or ADSs, the amount allocated to the taxable year in which you realised the gain or received the excess distribution, or to prior years before the first year in which we were a PFIC with respect to you, will be taxed as ordinary income, the amount allocated to each prior year will be generally taxed as ordinary income at the highest tax rate in effect for each other such year, and an interest charge will be applied to any tax attributable to such gain or excess distribution for the prior years. With certain exceptions, Ordinary Shares or ADSs will be treated as stock in a PFIC if the company was a PFIC at any time during the investor’s holding period in the Ordinary Shares or ADSs. In addition, dividends that you receive from the Company will not constitute qualified dividend income to you if the Company is deemed to be a PFIC either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income. Stamp Duty Section 90 Stamp Duties Consolidation Act 1999 exempts from Irish stamp duty transfers of ADSs where the ADSs are dealt in and quoted on a recognised stock exchange in the US and the underlying deposited securities are dealt in and quoted on a recognised stock exchange. The Irish tax authorities regard NASDAQ and the NYSE as recognised stock exchanges. Irish stamp duty will be charged at the rate of 1% of the amount or value of the consideration on any conveyance or transfer on sale of Ordinary Shares (exemption generally available in the case of single transfers with a value of less than€1,000).
| CRH Annual Report and Form 20-F I 2018
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Memorandum and
Articles of Association
The Company’s Memorandum of Association sets out the objects and powers of the Company. The Articles of Association detail the rights attaching to each share class; the method by which the Company’s shares can be purchased or reissued; the provisions which apply to the holding of and voting at general meetings; and the rules relating to the Directors, including their appointment, retirement,re-election, duties and powers.
A copy of the current Memorandum and Articles of Association can be obtained from the Group’s website, www.crh.com.
The following summarises certain provisions of CRH’s Memorandum and Articles of Association and applicable Irish law.
Objects and Purposes
CRH is incorporated under the name CRH public limited company and is registered in Ireland with registered number 12965. Clause 4 of CRH’s Memorandum of Association provides that its objects include the business of an investment holding company. Clause 4 also sets out other objects including the business of quarry masters and proprietors and lessees and workers of quarries, sand and gravel pits, mines and the like generally; the business of road-makers and contractors, building contractors, builders merchants and providers and dealers in road making and building materials, timber merchants; and the carrying on of any other business calculated to benefit CRH. The memorandum grants CRH a range of corporate capabilities to effect these objects.
Directors
The Directors manage the business and affairs of CRH.
Directors who are in any way, whether directly or indirectly, interested in contracts or other arrangements with CRH must declare the nature of their interest at a meeting of the Directors, and, subject to certain exemptions, may not vote in respect of any contract or arrangement or other proposal whatsoever in which they have any material interest other than by virtue of their interest in shares or debentures in the Company. However, in the absence of some other material interest not indicated below, a Director is entitled to vote and to be counted in a quorum for the purpose of any vote relating to a resolution concerning the following matters:
the giving of security or indemnity with respect to money lent or obligations taken by the Director at the request or for the benefit of the Company;
the giving of security or indemnity to a third party with respect to a debt or obligation of the Company which the Director has assumed responsibility for under a guarantee, indemnity or the giving of security;
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CRH Annual ReportMemorandum and Form 20-F I2018Articles of Association
| | | The Company’s Memorandum of Association sets out the objects and powers of the Company. The Articles of Association detail the rights attaching to each share class; the method by which the Company’s shares can be purchased or reissued; the provisions which apply to the holding of and voting at general meetings; and the rules relating to the Directors, including their appointment, retirement,re-election, duties and powers. A copy of the current Memorandum and Articles of Association can be obtained from the Group’s website, www.crh.com. The following summarises certain provisions of CRH’s Memorandum and Articles of Association and applicable Irish law. Objects and Purposes CRH is incorporated under the name CRH public limited company and is registered in Ireland with registered number 12965. Clause 4 of CRH’s Memorandum of Association provides that its objects include the business of an investment holding company. Clause 4 also sets out other objects including the business of quarry masters and proprietors and lessees and workers of quarries, sand and gravel pits, mines and the like generally; the business of road-makers and contractors, building contractors, builders merchants and providers and dealers in road making and building materials, timber merchants; and the carrying on of any other business calculated to benefit CRH. The memorandum grants CRH a range of corporate capabilities to effect these objects. Directors The Directors manage the business and affairs of CRH. Directors who are in any way, whether directly or indirectly, interested in contracts or other arrangements with CRH must declare the nature of their interest at a meeting of the Directors, and, subject to certain exemptions, may not vote in respect of any contract or arrangement or other proposal whatsoever in which they have any material interest other than by virtue of their interest in shares or debentures in the Company. However, in the absence of some other material interest not indicated below, a Director is entitled to vote and to be counted in a quorum for the purpose of any vote relating to a resolution concerning the following matters: • the giving of security or indemnity with respect to money lent or obligations taken by the Director at the request or for the benefit of the Company; • the giving of security or indemnity to a third party with respect to a debt or obligation of the Company which the Director has assumed responsibility for under a guarantee, indemnity or the giving of security; | | 
| | | Marlux, part of CRH’s Building Products Division, contributed to a home makeover programme on Belgian television in 2019, supplying its Mosaic Victoria tiling solution to pave a back yard. The decorative yet durable tiles can be custom patterned for individual distributors. |
| | | | 256 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Memorandum and Articles of Association - continued any proposal in which the Director is interested concerning the underwriting of Company shares, debentures or other securities; any other proposal concerning any other company in which the Director is interested, directly or indirectly (whether as an officer, shareholder or otherwise) provided that the Director is not the holder of 1% or more of the voting interest in the shares of such company; and proposals concerning the modification of certain retirement benefits under which the Director may benefit and which have been approved or are subject to approval by the Irish Revenue Commissioners The Directors may exercise all the powers of the Company to borrow money, except that such general power is restricted to the aggregate amount of principal borrowed less cash balances of the Company and its subsidiaries not exceeding an amount twice the aggregate of (i) the share capital of the Company; and (ii) the amount standing to the credit of retained income, foreign currency translation reserve and other reserves, capital grants, deferred taxation andnon-controlling interest; less any repayable government grants; less (iii) the aggregate amount of Treasury Shares and own shares held by the Company. The Company in general meeting from time to time determines the fees payable to the Directors. The Board may grant special remuneration to any of its number who being called upon, shall render any special or extra services to the Company or go or reside abroad in connection with the conduct of any of the affairs of the Company. The qualification of a Director is the holding alone and not jointly with any other person of 1,000 Ordinary Shares in the capital of the Company. Voting Rights The Articles provide that, at shareholders’ meetings, holders of Ordinary Shares, either in person or by proxy, are entitled on a show of hands to one vote and on a poll to one vote per share. No member is entitled to vote at any general meeting unless all calls or other sums immediately payable in respect of their shares in the Company have been paid. Laws, Decrees or other Regulations There are no restrictions under the Memorandum and Articles of Association of the Company or under Irish law that limit the right ofnon-Irish residents or foreign owners freely to hold their Ordinary Shares or to vote their Ordinary Shares. Liquidation Rights/Return of Capital In the event of the Company being wound up, the liquidator may, with the sanction of a shareholders’ special resolution, divide among the holders of the Ordinary Shares the whole or any part of the net assets of the Company (after the return of capital and payment of accrued dividends on the preference shares) in cash or in kind, and may set such values as he deems fair upon any property to be so divided and determine how such division will be carried out. The liquidator may, with a like sanction, vest such assets in trust as he thinks fit, but no shareholders will be compelled to accept any shares or other assets upon which there is any liability. Variation in Class Rights Subject to the provisions of the Companies Act 2014, the rights attached to any class of shares may be varied with the consent in writing of the holders of not less than three fourths in nominal value of the issued shares of that class, or with the sanction of a special resolution passed at a separate general meeting of the holders of those shares. Issue of Shares Subject to the provisions of the Companies Act 2014 and the Articles of Association, the issue of shares is at the discretion of the Directors. Dividends Shareholders may by ordinary resolution declare final dividends and the Directors may declare interim dividends but no final dividend may be declared in excess of the amount recommended by the Directors and no dividend may be paid otherwise than out of income available for that purpose in accordance with the Companies Act 2014. There is provision to offer scrip dividends in lieu of cash. The preference shares rank for fixed rate dividends in priority to the Ordinary and Income Shares for the time being of the Company. Any dividend which has remained unclaimed for 12 years from the date of its declaration shall, if the Directors so decide, be forfeited and cease to remain owing by the Company. Meetings Shareholder meetings may be convened by majority vote of the Directors or requisitioned by shareholders holding not less than 5% of the voting rights of the Company. A quorum for a general meeting of the Company is constituted by five or more shareholders present in person and entitled to vote. The passing of resolutions at a meeting of the Company, other than special resolutions, requires a simple majority. A special resolution, in respect of which not less than 21 clear days’ notice in writing must be given, requires the affirmative vote of at least 75% of the votes cast. Disclosure of Shareholders’ Interests A shareholder may lose the right to vote by not complying with any statutory notice or notice pursuant to Article 14 of the Articles of Association given by the Company requiring an indication in writing of: (i) the capacity in which the shares are held or any interest therein; (ii) the persons who have an interest in the shares and the nature of their interest; or (iii) whether any of the voting rights carried by such shares are the subject of any agreement or arrangement under which another person is entitled to control the shareholder’s exercise of these rights. Preference Shares Details of the 5% and 7% ‘A’ Cumulative Preference Shares are disclosed in note 31 to the Consolidated Financial Statements. Use of Electronic Communication Whenever the Company, a Director, the Secretary, a member or any officer or person is required or permitted by the Articles of Association to give information in writing, such information may be given by electronic means or in electronic form, whether as electronic communication or otherwise, provided that the electronic means or electronic form has been approved by the Directors.
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 257 |
| CRH Annual Report and Form 20-F I 2018
|
General Information Electronic Communications Following the introduction of the 2007 Transparency Regulations, and in order to adopt a more environmentally friendly and cost effective approach, the Company provides the Annual Report and Form20-F to shareholders electronically via the CRH website, www.crh.com, and only sends a printed copy to those shareholders who specifically request a copy. Shareholders who choose to do so can receive other shareholder communications, for example, notices of general meetings and shareholder circulars, electronically. However, shareholders will continue to receive printed proxy forms, dividend documentation and, if the Company deems it appropriate, other documentation by post. Shareholders can alter the method by which they receive communications by contacting the Registrars. CRH Website Information on or accessible through our website, www.crh.com, other than the item identified as the Annual Report and Form20-F, does not form part of and is not incorporated into the Company’s Annual Report on Form20-F as filed with the SEC (the ‘Form20-F’). References in this document to other documents on the CRH website, such as the CRH Sustainability Report, are included only as an aid to their location and are not incorporated by reference into the Form20-F. The Group’s website provides the full text of the Form20-F, which is filed annually with the SEC, interim reports, trading updates, copies of presentations to analysts and investors and circulars to shareholders. News releases are made available in the News & Events section of the website, immediately after release to the Stock Exchanges. Electronic Proxy Voting Shareholders may lodge a proxy form for the 20192020 AGM electronically by accessing the Registrars’ website as described below. CREST members wishing to appoint a proxy via CREST should refer to the CREST Manual and the notes to the Notice of the AGM. Registrars Enquiries concerning shareholdings should be addressed to the Registrars: Link Asset Services, P.O. Box 7117,1110 Dublin 2, Maynooth,
Co. Kildare, Ireland. Telephone: +353 1 553 0050 Fax: +353 1 224 0700 Website: www.linkassetservices.com Shareholders with access to the internet may check their accounts by logging onto www.signalshares.com, selecting CRH plc and registering for the share portal. Shareholders should note that they will need to have their Investor Code (found on their share certificate) and follow the instructions online to register. This facility allows shareholders to check their shareholdings and dividend payments, registere-mail addresses, appoint proxies electronically and download standard forms required to initiate changes in details held by the Registrars. Shareholders will need to register for a User ID before using some of the services. Financial Calendar | | | | | Announcement of final results for 20182019 | | 28 February 2019 2020 | | | Ex-dividend date | | 1412 March 20192020 | | | Record date for dividend | | 1513 March 20192020 | | | Latest date for receipt of completed bank mandates | | 1513 March 20192020 | | | Latest date for revocation of existing bank mandates | | 1513 March 20192020 | | | Annual General Meeting | | 2523 April 20192020 | | | Dividend payment date | | 3028 April 2019
2020 |
Further updates to the calendar can be found on www.crh.com. | | | American Depositary Receipts The ADR programme is administered by the Bank of New York Mellon and enquiries regarding ADRs should be addressed to: BNY Mellon Shareowner Services, P.O. Box 505000, Louisville, KY 40233-5000, U.S.A. Telephone: Toll Free Number US residents:1-888-269-2377 International: +1201-680-6825 E-mail: shrrelations@cpushareownerservices.com American Depositary Receipts
The ADR programme is administered by the Bank of New York Mellon and enquiries regarding ADRs should be addressed to:
BNY Mellon Shareowner Services,
P.O. Box 505000, Louisville,
KY 40233-5000, U.S.A.
Telephone: Toll Free Number
US residents:1-888-269-2377
International: +1201-680-6825
E-mail: shrrelations@cpushareownerservices.comWebsite: www.mybnymdr.com
Frequently Asked Questions (FAQs) The Group’s website contains answers to questions frequently asked by shareholders, including questions regarding shareholdings, dividend payments, electronic communications and shareholder rights. The FAQs can be accessed in the Investors section of the website under “Equity Investors”. Exchange Controls Certain aspects of CRH’s international monetary operations outside the European Union were, prior to 31 December 1992, subject to regulation by the Central Bank of Ireland. These controls have now ceased. There are currently no Irish foreign exchange controls, or other statute or regulations that restrict the export or import of capital, that affect the remittance of dividends, other than dividend withholding tax on the Ordinary Shares, or that affect the conduct of the Company’s operations. Principal Accountant Fees and Services Details of auditors’ fees are set out in note 5 to the Consolidated Financial Statements. For details on the audit andnon-audit servicespre-approval policy see Corporate Governance – External Auditors on pages 60 and 61. page 64. Documents on Display It is possible to read and copy documents referred to in this Form20-F, that have been filed with the SEC at the SEC’s public reference room located at 100 F Street, NE, Washington, DC 20549. Please call the SEC at1-800-SEC-0330 for further information on the public reference rooms and their copy charges. The SEC filings are also available to the public from commercial document retrieval services and, for most recent CRH periodic filings only, at the website maintained by the SEC at www.sec.gov. | |  |
Suwannee American Cement Company, part of CRH’s Americas Materials Division, uses a dragline to mine limestone. Limestone comprises nearly 80% of the raw materials used to make cement at the Sumterville Plant in Florida. Due to the low peninsula elevation and proximity to the water table, almost all mining is carried out underwater. This equipment can mine 8,000 tonnes of rock per day and 2.9m tonnes per year.
CRH Annual Report and Form 20-F I2018
Principal Subsidiary Undertakings
as at 31 December 2018
Europe Heavyside
| | | | 260 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Principal Subsidiary Undertakings as at 31 December 2019 Europe Materials | | | | | | | | | Incorporated and operating in | | | | % held | | | Products and services | | | | | Belgium | | Douterloigne N.V. | | | 100 | | | Concrete floor elements, pavers and blocks | | Ergon N.V. | | | 100 | | | Precast concrete and structural elements | | Oeterbeton N.V. | | | 100 | | | Precast concrete | | Prefaco N.V. | | | 100 | | | Precast concrete structural elements | | Schelfhout N.V. | | | 100 | | | Precast concrete wall elements | | VVM N.V. | | | 100 | | | Cement transport and trading, readymixed concrete, clinker grinding | | | | | | Northstone (NI) Limited (including Farrans | | | 100 | | | Aggregates, readymixed concrete, mortar, coated macadam, | | | Construction Limited, Materials and Cubis divisions) | | | | | | | % held | | | Products and services | | | | | | Douterloigne N.V.
| | | 100
| | | Concrete floor elements, pavers and blocks
| | | | | | | Ergon N.V. | | | 100 | | | Precast concrete and structural elements | | | | | Belgium | | Oeterbeton N.V. | | | 100 | | | Precast concrete | | Prefaco N.V.
| | | 100
| | | Precast concrete structural elements
| | | | | | | Schelfhout N.V. | | | 100 | | | Precast concrete wall elements | | | | | | | VVM N.V.
| | | 100 | | | Cement transport and trading, readymixed concrete, clinker grinding
| | | | | | Northstone (NI) Limited
(including Farrans Construction Limited, Materials and Cubis divisions)
| | | 100
| | | Aggregates, readymixed concrete, mortar, coated macadam, rooftiles, building and civil engineering contracting
| | | | | | | Premier Cement Limited | | | 100 | | | Marketing and distribution of cement | | Britain & | | Southern Cement Limited | | | 100 | | | Sale and distribution of cement | | Northern Ireland | | Tarmac Aggregates Limited | | | 100 | | | Marketing and distribution of cement | | | | | Britain &
Northern Ireland
| | Southern Cement Limited | | | 100 | | | Sale and distribution of cement | | Tarmac Aggregates Limited
| | | 100
| | | Aggregates, asphalt, readymixed concrete and contracting | | | | | | | Tarmac Building Products Limited | | | 100 | | | Building products | | | | | | | Tarmac Cement and Lime Limited | | | 100 | | | Cement and lime | | | Tarmac Trading Limited | | | 100 | | | Aggregates, asphalt, cement, readymixed concrete and contracting | | | | Czech Republic | | Vapenka Vitosov s.r.o | | | 75 | | | Production of lime and lime products | | | | | Denmark | | Betongruppen RBR A/S | | | 100 | | | Concrete paving manufacturer | | CRH Concrete A/S | | | 100 | | | Structural concrete products | | | | | Finland | | Finnsementti Oy | | | 100 | | | Cement | | Rudus Oy | | | 100 | | | Aggregates, readymixed concrete and concrete products | | | | | | Eqiom | | | 99.99 | | | Aggregates, asphalt, cement and readymixed concrete | | | L’industrielle du Béton S.A.* | | | 100 | | | Structural concrete products | | France & La Réunion | | Stradal | | | 100 | | | Utility and infrastructural concrete products | | | Teralta Ciment Reunion* | | | 82.94 | | | Cement | | | Teralta Granulat Beton Reunion* | | | 93.35 | | | Aggregates, readymixed concrete | | | | | | Fels Holding GmbH | | | 100 | | | Holding company | | | Fels Netz GmbH | | | 100 | | | Logistics and owned railway infrastructure operator | | Germany | | Fels Vertriebs und Service GmbH & Co. KG. | | | 100 | | | Lime and limestone, development of new products | | | Fels-Werke GmbH | | | 100 | | | Production and sale of lime and limestone | | | Opterra GmbH | | | 100 | | | Cement | | | | | Hungary | | CRH Magyarország Kft. | | | 100 | | | Cement and readymixed concrete | | Ferrobeton Beton-és Vasbetonelem gyártó Zrt. | | | 100 | | | Precast concrete structural elements | | | | | | Clogrennane Lime Limited | | | 100 | | | Burnt and hydrated lime | | | Irish Cement Limited | | | 100 | | | Cement | Ireland | | Roadstone Limited | | | 100 | | | Aggregates, readymixed concrete, mortar, coated macadam, concrete blocks and pipes, asphalt, agricultural and chemical limestone and contract surfacing | | | | | | Calduran Kalkzandsteen B.V. | | | 100 | | | Sand-lime bricks and building elements | | Netherlands | | Cementbouw B.V. | | | 100 | | | Cement transport and trading, readymixed concrete and aggregates | | | Heembeton B.V. | | | 100 | | | Precast concrete structural elements | | | Dycore B.V. | | | 100 | | | Concrete flooring elements | | | | | Philippines (i) | | Republic Cement & Building Materials, Inc. | | | 40 | | | Cement | | Republic Cement Land & Resources Inc. | | | 40 | | | Cement and Building Materials | | | | | | Przedsiebiorstwo Produkcji Mas Betonowych | | | 90.30 | | | Readymixed concrete | | | Bosta Beton Sp. z o.o. | | | | | | | | | Drogomex Sp. z o.o.* | | | 100 | | | Asphalt and contract surfacing | | Poland | | Cement Ożarów S.A. | | | 100 | | | Cement | | | Masfalt Sp. z o.o.* | | | 100 | | | Asphalt and contract surfacing | | | Trzuskawica S.A. | | | 100 | | | Production of lime and lime products | | | |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 261 |
Europe Materials - continued | | | | | | | | | Incorporated and operating in | | | | % held | | | Products and services | | | | | Romania | | CRH RMX & Agregate S.R.L. | | | 98.61 | | | Readymixed concrete | | CRH Ciment (Romania) S.A. | | | 98.61 | | | Cement | | Elpreco S.A. | | | 100 | | | Architectural concrete products | | Ferrobeton Romania SRL | | | 100 | | | Structural concrete products | | | Russia | | LLC Fels Izvest | | | 100 | | | Production of lime and lime products | | | | Serbia | | CRH (Srbija) d.o.o. | | | 100 | | | Cement | | | | Slovakia | | CRH (Slovensko) a.s. | | | 99.78 | | | Cement and readymixed concrete | | | | Spain | | Beton Catalan S.A. | | | 100 | | | Readymixed concrete | | Cementos Lemona S.A. | | | 98.75 | | | Cement | | | | Switzerland | | JURA-Holding AG | | | 100 | | | Cement, aggregates and readymixed concrete | | | | | | LLC Cement* | | | 100 | | | Cement and clinker grinding | | Ukraine | | PJSC Mykolaivcement | | | 100 | | | Cement | | | Podilsky Cement PJSC | | | 100 | | | Cement and lime | | | | | | | Tarmac Trading Limited
| | | 100 | | | Aggregates, asphalt, cement, readymixed concrete and contracting
| | | | Czech Republic | | Vapenka Vitosov s.r.o
| | | 75
| | | Production of lime and lime products
| | | | Denmark | | Betongruppen RBR A/S
| | | 100
| | | Concrete paving manufacturer
| | CRH Concrete A/S
| | | 100
| | | Structural concrete products
| | | | Finland | | Finnsementti Oy
| | | 100
| | | Cement
| | Rudus Oy
| | | 100
| | | Aggregates, readymixed concrete and concrete products
| | | | | | Eqiom
| | | 99.99
| | | Aggregates, asphalt, cement and readymixed concrete
| | | | | France &
La Réunion
| | L’industrielle du Béton S.A.* | | | 100 | | | Structural concrete products | | Stradal
| | | 100
| | | Utility and infrastructural concrete products
| | Teralta Ciment Reunion* | | | 82.90 | | | Cement | | | | | | | Teralta Granulat Beton Reunion*
| | | 93.33 | | | Aggregates, readymixed concrete
| | | | | | Fels Holding Company GmbH
| | | 100
| | | Holding company
| | | | | | | Fels Netz GmbH | | | 100 | | | Logistics and owned railway infrastructure operator | | | | | Germany | | Fels Vertriebs und Service GmbH & Co. KG. | | | 100 | | | Lime and limestone, development of new products | | | | | | | Fels-Werke GmbH | | | 100 | | | Production and sale of lime and limestone | | | | | | | Opterra GmbH
| | | 100 | | | Cement
| | | | Hungary | | CRH Magyarország Kft.
| | | 100
| | | Cement and readymixed concrete
| | Ferrobeton Beton-és Vasbetonelem gyártó Zrt.
| | | 100
| | | Precast concrete structural elements
| | | | | | Clogrennane Lime Limited
| | | 100
| | | Burnt and hydrated lime
| | | | | | | Irish Cement Limited | | | 100 | | | Cement | | | | | Ireland | | Roadstone Limited | | | 100 | | | Aggregates, readymixed concrete, mortar, coated macadam, concrete | | | | | | | | blocks and pipes, asphalt, agricultural and chemical limestone and | | | | | | | | contract surfacing
| | | | Netherlands
| | Calduran Kalkzandsteen B.V.
| | | 100
| | | Sand-lime bricks and building elements
| | Cementbouw B.V.
| | | 100
| | | Cement transport and trading, readymixed concrete and aggregates
| | CRH Structural Concrete B.V.
| | | 100
| | | Precast concrete structural elements
| | Dycore B.V.
| | | 100
| | | Concrete flooring elements
| | | |
| CRH Annual Report and Form 20-F I 2018
|
Europe Heavyside
| | | | | | | | | Incorporated
and operating in
| | | | | % held | | | Products and services | | | | | | Przedsiebiorstwo Produkcji Mas Betonowych Bosta Beton Sp. z o.o. | | | 90.30 | | | Readymixed concrete | | | | | Poland
| | Drogomex Sp. z o.o.* | | | 100 | | | Asphalt and contract surfacing | | Grupa Oźarów S.A.
| | | 100
| | | Cement
| | | | | | | Masfalt Sp. z o.o.* | | | 100 | | | Asphalt and contract surfacing | | | | | | | Trzuskawica S.A.
| | | 100 | | | Production of lime and lime products
| | | | | | CRH RMX & Agregate S.R.L.
| | | 100
| | | Readymixed concrete
| | | | | Romania | | CRH Ciment (Romania) S.A. | | | 98.61 | | | Cement | | Elpreco S.A.
| | | 100
| | | Architectural concrete products
| | | | | | | Ferrobeton Romania SRL
| | | 100 | | | Structural concrete products
| | | | Russia | | LLC Fels Izvest
| | | 100
| | | Production of lime and lime products
| | | | Serbia | | CRH (Srbija) d.o.o.
| | | 100
| | | Cement
| | | | Slovakia | | CRH (Slovensko) a.s.
| | | 99.70
| | | Cement and readymixed concrete
| | | | Spain | | Beton Catalan S.A. | | | 100 | | | Readymixed concrete | | Cementos Lemona S.A.
| | | 98.75
| | | Cement
| | | | | | | | Switzerland | | JURA-Holding AG
| | | 100
| | | Cement, aggregates and readymixed concrete
| | | | | | LLC Cement* | | | 100 | | | Cement and clinker grinding | | | | | Ukraine | | PJSC Mykolaivcement | | | 99.27 | | | Cement | | | | | | | Podilsky Cement PJSC
| | | 99.60 | | | Cement
| | | |
Europe Lightside
| | | | | | | | | | | | Australia | | Ancon Building Products Pty Ltd
| | | 100
| | | Construction accessories
| | | | | | Plakabeton N.V. | | | 100 | | | Construction accessories | | | | | Belgium | | Marlux N.V. | | | 100 | | | Concrete paving and landscaping products | | | | | | | Stradus Infra N.V.
| | | 100 | | | Concrete paving and landscaping products
| | | | Britain &
Northern Ireland
| | Ancon Limited
| | | 100
| | | Construction accessories
| | CRH Fencing & Security Group (UK) Limited
| | | 100
| | | Security fencing
| | Security Windows Shutters Limited
| | | 100
| | | Physical security, industrial and garage doors, roofing systems
| | | | France | | Plaka Group France S.A.S.
| | | 100
| | | Construction accessories
| | | | | | Alulux GmbH* | | | 100 | | | Roller shutter and awning systems | | | | | | | EHL AG | | | 100 | | | Concrete paving and landscape walling products | | | | | Germany | | ERHARDT Markisenbau GmbH* | | | 100 | | | Roller shutter and awning systems | | Halfen GmbH
| | | 100
| | | Construction accessories
| | | | | | | Heras Deutschland GmbH | | | 100 | | | Security fencing and access control | | | | | | | Tenbrink Rolladensysteme GmbH
| | | 100 | | | Roller shutter and awning systems
| | | |
CRH Annual Report and Form 20-F I2018
Principal Subsidiary Undertakings - continued
as at 31 December 2018
Europe Lightside - continued
| | | | | | | | | Incorporated
and operating in
| | | | % held | | | Products and services | | | | | | | | Ireland | | Cubis Systems Limited
| | | 100 | | | Supplier of access chambers and ducting products
| | | | | | | | | | B.V. Aluminium Verkoop Zuid | | | 100 | | | Roller shutter and awning systems | | | | | Netherlands | | Heras B.V. | | | 100 | | | Security fencing and perimeter protection | | | | | | | Struyk Verwo Groep B.V.
| | | 100 | | | Concrete paving products
| | | | | | | | Poland | | Polbruk S.A.
| | | 100 | | | Concrete paving products
| | | | | | | | Slovakia | | Premac, spol. s.r.o.
| | | 100 | | | Concrete paving and floor elements
| | | | | | | | Sweden | | Heras Stängsel AB
| | | 100 | | | Security fencing
| | | | | | | | Switzerland | | F.J. Aschwanden AG*
| | | 100 | | | Construction accessories
| | | | | | | | United States | | Halfen USA Inc.
| | | 100 | | | Construction accessories
| | | | | | | Europe Distribution
| | | | | | | | | | | | | | Austria | | Quester Baustoffhandel GmbH
| | | 100 | | | Builders merchants | | | | | | Creyns N.V.
| | | 100 | | | Builders merchants | | | | | | | BMB Bouwmaterialen BVBA | | | 100 | | | Builders merchants | | | | | Belgium | | Lambrechts N.V. | | | 100 | | | Builders merchants | | | | | | | Sax Sanitair N.V. | | | 100 | | | Sanitary ware, heating and plumbing | | | | | | | Schrauwen Sanitair en Verwarming N.V.
| | | 100 | | | Sanitary ware, heating and plumbing
| | | | | | CRHIle-de-France Distribution* | | | 100 | | | Builders merchants | | | | | France | | CRH Normandie Distribution | | | 100 | | | Builders merchants | | | | | | | CRH TP Distribution
| | | 100 | | | Builders merchants
| | | | | | Andreas Paulsen GmbH | | | 100 | | | Sanitary ware, heating and plumbing | | | | | Germany | | BauKing AG | | | 100 | | | Builders merchants, DIY stores | | | | | | | Bergmann & Franz Gmbh
| | | 100 | | | Building Merchants
| | | | | | | | Netherlands | | CRH Bouwmaten B.V.
BMN | Bouwmaterialen B.V.
| | | 100
100
| | | Cash & Carry building materials
Builders merchants
| | | | | | | | | | | | Switzerland | | BR Bauhandel AG (trading as BauBedarf and Richner)
Regusci Reco S.A. (trading as Regusci and Reco)
| | | 100
100
| | | Builders merchants, sanitary ware and ceramic tiles
Builders merchants
| | | |
| CRH Annual Report and Form 20-F I 2018
|
Americas Materials
| | | | | | | | | Incorporated
and operating in
| | | | | % held | | | Products and services | | | | Canada | | CRH Canada Group Inc.
| | | 100
| | | Aggregates, asphalt, cement and readymixed concrete and provider of construction services
| | | | | | | | | | APAC Holdings, Inc. and Subsidiaries | | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | | | | | | Ash Grove Cement Company | | | 100 | | | Aggregates, readymixed concrete and cement | | | | | | | Callanan Industries, Inc. | | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | | | | | | CPM Development Corporation | | | 100 | | | Aggregates, asphalt, readymixed concrete, prestressed concrete and related construction activities | | | | | | | Dolomite Products Company, Inc. | | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | | | | | | Michigan Paving and Materials Company | | | 100 | | | Aggregates, asphalt and related construction activities | | | | | | | Mountain Enterprises, Inc. | | | 100 | | | Aggregates, asphalt and related construction activities | | | | | | | Mulzer Crushed Stone | | | 100 | | | Aggregates, asphalt, readymixed concrete, aggregates distribution and related construction activities | | | | | | | CRH Americas Materials, Inc. | | | 100 | | | Holding company | | | | | | | Oldcastle SW Group, Inc. | | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | | | | United States | | OMG Midwest, Inc.
| | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | Pennsy Supply, Inc. | | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | | | | | | Pike Industries, Inc. | | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | | | | | | P.J. Keating Company | | | 100 | | | Aggregates, asphalt and related construction activities | | | | | | | Preferred Materials, Inc. | | | 100 | | | Aggregates, asphalt, readymixed concrete, aggregates distribution and related construction activities | | | | | | | Staker & Parson Companies | | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | | | | | | Suwannee American Cement Company, LLC | | | 80 | | | Cement | | | | | | | Tilcon Connecticut Inc. | | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | | | | | | Tilcon New York Inc. | | | 100 | | | Aggregates, asphalt and related construction activities | | | | | | | The Shelly Company | | | 100 | | | Aggregates, asphalt, readymixed concrete and related construction activities | | | | | | | Trap Rock Industries, LLC* | | | 60 | | | Aggregates, asphalt and related construction activities | | | | | | | West Virginia Paving, Inc.
| | | 100 | | | Aggregates, asphalt and related construction activities | | | | | | | | Brazil | | CRH Brasil Participações S.A.
CRH Sudeste Indústria de Cimentos S.A
| | | 100100
| | | Holding company
Cement
| | | |
CRH Annual Report and Form 20-F | 2018
Principal Subsidiary Undertakings - continued
as at 31 December 2018
Americas Products
| | | | | | | | | Incorporated
and operating in
| | | | % held | | | Products and services | | | | | | | | | | Oldcastle BuildingEnvelope™Canada, Inc. | | | 100 | | | Custom fabricated and tempered glass products and curtain wall | | | | | Canada | | Oldcastle Building Products Canada, Inc. (trading as Techniseal, Expocrete Concrete Products, Groupe Permacon, Oldcastle Enclosure Solutions)
| | | 100 | | | Specialty masonry, hardscape and patio
products, utility boxes and trench systems
| | | | | | | | | | Advanced Environmental Recycling Technologies, Inc. | | | 100 | | | Composite building products | | | | | | | CRH Americas Products, Inc. | | | 100 | | | Holding company | | | | | | | CRH America, Inc. | | | 100 | | | Holding company | | | | | | | CRH America Finance, Inc. | | | 100 | | | Holding company | | | | | | | C.R. Laurence Co., Inc. | | | 100 | | | Fabrication and distribution of custom hardware products for the glass industry | | | | | | | Meadow Burke, LLC | | | 100 | | | Concrete accessories | | | | | | | CRH Americas, Inc. | | | 100 | | | Holding company | | | | | | | Oldcastle APG Northeast, Inc. (trading principally as Anchor Concrete Products and Trenwyth Industries) | | | 100 | | | Specialty masonry, hardscape and patio products | | | | | United States | | Oldcastle APG South, Inc. (trading principally as Adams Products, Georgia Masonry Supply, Northfield Block Company, Anchor Block and Oldcastle Coastal) | | | 100 | | | Specialty masonry, hardscape and patio products | | | | | | | Oldcastle APG West, Inc. (trading principally as Amcor Masonry Products, CentralPre-Mix Concrete Products, Jewell Concrete, and Sierra Building Products and Superlite Block) | | | 100 | | | Specialty masonry and stone products, hardscape and patio products | | | | | | | Oldcastle APG, Inc. | | | 100 | | | Holding company | | | | | | | Oldcastle BuildingEnvelope™, Inc. | | | 100 | | | Custom fabricated architectural glass | | | | | | | Oldcastle Building Products, Inc. | | | 100 | | | Holding company | | | | | | | Oldcastle Lawn & Garden, Inc. | | | 100 | | | Patio products, bagged stone, mulch and stone | | | | | | | Oldcastle Infrastructure, Inc.
| | | 100 | | | Precast concrete products, concrete pipe, prestressed plank and structural elements
| | | | | | | | Asia | | | | | | | | | | | | | | | | | | Republic Cement & Building Materials, Inc. | | | 40 | | | Cement | Philippines (i) | | | | | | | | | | | Republic Cement Land & Resources Inc.
| | | 40 | | | Cement and Building Materials
| | | |
| (i) | 55% economic interest in the combined Philippines business (see note 33 to the Consolidated Financial Statements). |
| 256
| | | | 262 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Principal Subsidiary Undertakings - continued as at 31 December 2019 Americas Materials | | | | | | | Incorporated and operating in | | |
| CRH Annual Report and Form 20-F I 2018
|
Principal Equity Accounted Investments
as at 31 December 2018
Europe Heavyside
| | | | | | | Incorporated and operating in
| | | | % held | | Products and services | | | | Brazil | | CRH Brasil Participações S.A. | | 100 | | Holding company | | CRH Sudeste Indústria de Cimentos S.A | | 100 | | Cement | | | | Canada | | CRH Canada Group Inc. | | 100 | | Aggregates, asphalt, cement and readymixed concrete and provider of construction services | | | | | | Ash Grove Cement Company | | 100 | | Aggregates, readymixed concrete and cement | | | Callanan Industries, Inc. | | 100 | | Aggregates, asphalt, readymixed concrete | | | | | | | and related construction activities | | | CPM Development Corporation | | 100 | | Aggregates, asphalt, readymixed concrete, prestressed | | | | | | | concrete and related construction activities | | | Dolomite Products Company, Inc. | | 100 | | Aggregates, asphalt, readymixed concrete | | | | | | | and related construction activities | | | Michigan Paving and Materials Company | | 100 | | Aggregates, asphalt and related construction activities | | | Mountain Enterprises, Inc. | | 100 | | Aggregates, asphalt and related construction activities | | | Mulzer Crushed Stone | | 100 | | Aggregates, asphalt, readymixed concrete, aggregates | | | | | | | distribution and related construction activities | | | CRH Americas Materials, Inc. and subsidiaries | | 100 | | Holding company | | | Oldcastle SW Group, Inc. | | 100 | | Aggregates, asphalt, readymixed concrete | | | | | | | and related construction activities | | | OMG Midwest, Inc. | | 100 | | Aggregates, asphalt, readymixed concrete | | | | | | | and related construction activities | United States | | Pennsy Supply, Inc. | | 100 | | Aggregates, asphalt, readymixed concrete | | | | | | | and related construction activities | | | Pike Industries, Inc. | | 100 | | Aggregates, asphalt, readymixed concrete | | | | | | | and related construction activities | | | P.J. Keating Company | | 100 | | Aggregates, asphalt and related construction activities | | | Preferred Materials, Inc. | | 100 | | Aggregates, asphalt, readymixed concrete, aggregates | | | | | | | distribution and related construction activities | | | Staker & Parson Companies | | 100 | | Aggregates, asphalt, readymixed concrete | | | | | | | and related construction activities | | | Suwannee American Cement Company, LLC | | 80 | | Cement | | | Tilcon Connecticut Inc. | | 100 | | Aggregates, asphalt, readymixed concrete | | | | | | | and related construction activities | | | Tilcon New York Inc. | | 100 | | Aggregates, asphalt and related construction activities | | | The Shelly Company | | 100 | | Aggregates, asphalt, readymixed concrete | | | | | | | and related construction activities | | | Trap Rock Industries, LLC* | | 60 | | Aggregates, asphalt and related construction activities | | | West Virginia Paving, Inc. | | 100 | | Aggregates, asphalt and related construction activities | | | |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 263 |
Ireland
| | Kemek Limited*
| | 50
| | Commercial explosives
| | | | | | | Incorporated and operating in | | | | % held | | Products and services | | | | Europe Distribution
| | | | | | | | France
| | Samse S.A.*
| | 21.13
| | Builders merchants
| | | | Portugal
| | Modelo Distribuição de Materials de Construção S.A.*
| | 50
| | DIY stores
| | | | | | | | Asia | | | | | | | | | | China
| | Jilin Yatai Group Building Materials Investment Company Limited*
| | 26
| | Cement
| | | | India
| | My Home Industries Limited
| | 50
| | Cement
| | | | Americas Materials
| | | | | | | | Canada
| | Blackbird Infrastructure 407 General Partnership*
| | 50 | | Special-purpose entity on highway infrastructure construction | | Blackbird Infrastructure 407 CRH GP Inc.
| | 50 | | Special-purpose entity on highway infrastructure construction | | Mosaic Transit Partners General Partnership
| | 33 | | Special-purpose entity on Ontario infrastructure construction | | | Mosaic Transit Constructors General Partnership
| | 33
| | Special-purpose entity on Ontario infrastructure construction
| | | | United States
| | American Asphalt of West Virginia, LLC*
| | 50 | | Asphalt and related construction activities | | Buckeye Ready Mix, LLC*
| | 45 | | Readymixed concrete | | Cadillac Asphalt, LLC*
| | 50 | | Asphalt | | HMA Concrete, LLC*
| | 50 | | Readymixed concrete | | Piedmont Asphalt, LLC*
| | 50 | | Asphalt | | Southside Materials, LLC*
| | 50
| | Aggregates
| Australia | | Ancon Building Products Pty Ltd | | 100 | | Construction accessories | | Cubis Systems Australia Pty Ltd* | | 100 | | Supplier of access chambers and ducting products | | | | | | Plakabeton N.V. | | 100 | | Construction accessories | Belgium | | Marlux N.V. | | 100 | | Concrete paving and landscaping products | | | Stradus Infra N.V. | | 100 | | Concrete paving and landscaping products | | | | Britain & | | Ancon Limited | | 100 | | Construction accessories | Northern Ireland | | | | | | | | | Oldcastle BuildingEnvelope™ Canada, Inc. | | 100 | | Custom fabricated and tempered | | | | | | | glass products and curtain wall | Canada | | Oldcastle Building Products Canada, Inc. (trading as Abbotsford | | 100 | | Specialty masonry, hardscape and patio | | | Concrete Products, Techniseal, Expocrete Concrete Products, | | | | products, utility boxes and trench systems | | | Groupe Permacon, Oldcastle Enclosure Solutions) | | | | | | | | France | | Plaka Group France S.A.S. | | 100 | | Construction accessories | | | | Germany | | EHL AG | | 100 | | Concrete paving and landscape walling products | | Halfen GmbH | | 100 | | Construction accessories | | | | Ireland | | Cubis Systems Limited | | 100 | | Supplier of access chambers and ducting products | | | | Netherlands | | Struyk Verwo Groep B.V. | | 100 | | Concrete paving products | | | | Poland | | Polbruk S.A. | | 100 | | Concrete paving products | | | | Slovakia | | Premac, spol. s.r.o.* | | 100 | | Concrete paving and floor elements | | | | Switzerland | | F.J. Aschwanden AG* | | 100 | | Construction accessories | | | | | | MoistureShield, Inc. | | 100 | | Composite building products | | | CRH Americas Products, Inc. | | 100 | | Holding company | | | CRH America, Inc. | | 100 | | Holding company | | | CRH America Finance, Inc. | | 100 | | Holding company | | | C.R. Laurence Co., Inc. | | 100 | | Fabrication and distribution of custom | | | | | | | hardware products for the glass industry | | | Meadow Burke, LLC | | 100 | | Concrete accessories | | | CRH Americas, Inc. | | 100 | | Holding company | | | Oldcastle APG Northeast, Inc. (trading principally as Anchor Concrete Products) | | 100 | | Specialty masonry, hardscape and patio products | United States | | Oldcastle APG South, Inc. (trading principally as Adams | | 100 | | Specialty masonry, hardscape and patio products | | | Products, Georgia Masonry Supply, Northfield Block Company, | | | | | | | Anchor Block, Allied Concrete Company and Oldcastle Coastal) | | | | | | | Oldcastle APG West, Inc. (trading principally as Amcor Masonry | | 100 | | Specialty masonry and stone products, | | | Products, CentralPre-Mix Concrete Products, Jewell Concrete, | | | | hardscape and patio products | | | and Sierra Building Products and Superlite Block) | | | | | | | Oldcastle APG, Inc. | | 100 | | Holding company | | | Oldcastle BuildingEnvelope™, Inc. | | 100 | | Custom fabricated architectural glass | | | Oldcastle Building Products, Inc. | | 100 | | Holding company | | | Oldcastle Lawn & Garden, Inc. | | 100 | | Patio products, bagged stone, mulch and stone | | | Oldcastle Infrastructure, Inc. | | 100 | | Precast concrete products, concrete pipe, | | | | | | | prestressed plank and structural elements | | | |
| | | | 264 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Principal Equity Accounted Investments as at 31 December 2019 Europe Materials | | | | | | | Incorporated and operating in | | | | % held | | Products and services | | | | China | | Jilin Yatai Group Building Materials Investment Company Limited* | | 26 | | Cement | | | | Ireland | | Kemek Limited* | | 50 | | Commercial explosives | | | | | | | | Americas Materials | | | | | | | | | | Blackbird Infrastructure 407 General Partnership* | | 50 | | Special-purpose entity on highway infrastructure construction | | | Blackbird Maintenance 407 General Partnership* | | 50 | | Construction | | | Blackbird Constructors 407 General Partnership* | | 50 | | Construction | Canada | | Blackbird Infrastructure 407 CRH GP Inc* | | 50 | | Special-purpose entity on highway infrastructure construction | | | Mosaic Transit Partners General Partnership* | | 33 | | Special-purpose entity on Ontario infrastructure construction | | | Mosaic Transit Constructors General Partnership* | | 33 | | Construction | | | | | | American Asphalt of West Virginia, LLC* | | 50 | | Asphalt and related construction activities | | | Buckeye Ready Mix, LLC* | | 45 | | Readymixed concrete | United States | | Cadillac Asphalt, LLC* | | 50 | | Asphalt | | | Piedmont Asphalt, LLC* | | 50 | | Asphalt | | | Southside Materials, LLC* | | 50 | | Aggregates | | | |
* | Audited by firms other than Ernst & Young |
Pursuant to Sections314-316 of the Companies Act, 2014, a full list of subsidiaries, joint ventures and associated undertakings will be annexed to the Company’s Annual Return to be filed in the Companies Registration Office in Ireland.
CRH Annual Report and Form 20-F I2018
| | | | | Our Products and Services Locations
| | | CRH’s Building Products Division acquired Filoform B.V. in May 2019. The business, which is headquartered in Geldermalsen in the Netherlands, manufactures components and systems for network infrastructure solutions and exports to over 40 countries. | | 
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| 258 1. Includes the Group’s equity accounted investments.
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| CRH Annual Report and Form 20-F I 2018
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| | Glass & | | Custom | | Construction | | Network Access | | Shutters & | | General | | Sanitary | | DIY | Concrete
| | Glazing
| | Glazing
| | Accessories
| | Products & | | Awnings
| | Builders | | Heating & | | | Products
| | Systems
| | Hardware
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CRH Annual Report and Form 20-F I2018
| 266 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | |
Exhibits The following documents are filed in the SEC’s EDGAR system, as part of this Annual Report on Form20-F, and can be viewed on the SEC’s website. | * | Incorporated by reference to Annual Report on Form20-F for the year ended 31 December 2018 that was filed by the Company on 8 March 2019. |
| ** | Incorporated by reference to Annual Report on Form20-F for the year ended 31 December 2006 that was filed by the Company on 3 May 2007. |
| *** | Furnished but not filed. |
The total amount of long-term debt of the Registrant and its subsidiaries authorised under any one instrument does not exceed 10% of the total assets of CRH plc and its subsidiaries on a consolidated basis. The BankCompany agrees to furnish copies of New York Mellon.*any such instrument to the SEC upon request.
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 267 | | | 2.2 | | |
| | | 8. | | Listing of principal subsidiary undertakings and equity accounted investments (included on pages 252Cross Reference to 257 ofForm20-F RequirementsThis table has been provided as a cross reference from the information included in this Annual Report and Form20-F).20-F | | | 12. | | Certifications to the requirements of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Public Company Accounting Reform and Investor Protection Act of 2002. | | | 13. | | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002.*** | | | 15.1 | | Consent of Independent Registered Public Accounting Firm. | | | 15.2 | | Governance Appendix. | | | 16. | | Disclosure of Mine Safety and Health Administration (MSHA) Safety Data. | | | 101. | | eXtensible Business Reporting Language (XBRL). | | | | * | | Incorporated by reference to Annual Report on Formthis20-F for the year ended 31 December 2006 that was filed by the Company on 3 May 2007. | | | ** | | Incorporated by reference to Annual Report on Form20-F for the year ended 31 December 2017 that was filed by the Company on 9 March 2018. | | | *** | | Furnished but not filed. | | | † | | Certain terms omitted pursuant to a request for confidential treatment. |
| CRH Annual Report and Form 20-F I 201820-F.
| Item 1. | | Identity of Directors, Senior Management and Advisors | | n/a | | | | | Item 2. | | Offer Statistics and Expected Timetable | | n/a | | | | | Item 3. | | Key Information | | | | |
Cross Reference to Form20-F Requirements
This table has been provided as a cross reference from the information included in this Annual Report and Form20-F to the requirements of this20-F.
| | | | | | | | | | | | | Page | | | | | PART I | | | | | | | | | | Item 1. | | Identity of Directors, Senior Management and Advisors | | n/a | | | | Item 2. | | Offer Statistics and Expected Timetable | | n/a | | | | Item 3. | | Key Information | | | | | | | | | A | | - Selected Financial Data | | 216 | | | | | | | B | | - Capitalisation and Indebtedness | | n/a | | | | | | | C | | - Reasons for the Offer and Use of Proceeds
| | n/a | | | | | | | D | | - Risk Factors | | 225 | | | | Item 4. | | Information on the Company | | | | | | | | | A | | - History and Development of the Company
| | 2, 3, 29, 31, 237 | | | | | | | B | | - Business Overview | | 26, 32 | | | | | | | C | | - Organisational Structure | | 237 | | | | | | | D | | - Property, Plants and Equipment
| | 222 | | | | Item 4A. | | Unresolved Staff Comments | | None | | | | Item 5. | | Operating and Financial Review and Prospects | | | | | | | | | A | | - Operating Results | | 8, 24, 217 | | | | | | | B | | - Liquidity and Capital Resources | | 28, 29, 31, 168, 221 | | | | | | | C | | - Research and Development, Patents and Licences, etc.
| | 237 | | | | | | | D | | - Trend Information
| | 9, 27 | | | | | | | E | | -Off-Balance Sheet Arrangements
| | 221 | | | | | | | F | | - Tabular Disclosure of Contractual Obligations
| | 221 | | | | | | | G | | - Safe Harbor | | 99 | | | | Item 6. | | Directors, Senior Management and Employees | | | | | | | A | | - Directors and Senior Management | | 54 | | | | | | | B | | - Compensation | | 68 | | | | | | | C | | - Board Practices | | 58 | | | | | | | D | | - Employees | | 237 | | | | | | | E | | - Share Ownership | | 92, 240, 241 | | | | Item 7. | | Major Shareholders and Related Party Transactions | | | | | | | A | | - Major Shareholders | | 66, 240 | | | | | | | B | | - Related Party Transactions | | 197 | | | | | | | C | | - Interests of Experts and Counsel | | n/a | | | | Item 8. | | Financial Information | | | | | | | | | A | | - Consolidated Statements and Other Financial Information
| | 123-206 | | | | | | | | | - Legal Proceedings | | 237 | | | | | | | | | - Dividends | | 242 | | | | | | | B | | - Significant Changes | | 237
| | | | Item 9. | | The Offer and Listing | | | | | | | | | A | | - Offer and Listing Details | | 240 | | | | | | | B | | - Plan of Distribution | | n/a | | | | | | | C | | - Markets | | 240 | | | | | | | A | | - Selected Financial Data | | 224 | | | | | | | B | | - Capitalisation and Indebtedness | | n/a | | | | | | | C | | - Reasons for the Offer and Use of Proceeds | | n/a | | | | | | | D | | - Risk Factors | | 233 | | | | | | | | | Item 4. | | Information on the Company | | | | | | | | | | | A | | - History and Development of the Company | | 2, 3, 35, 37, 245 | | | | | | | B | | - Business Overview | | 32, 38, 244 | | | | | | | C | | - Organisational Structure | | 245 | | | | | | | D | | - Property, Plants and Equipment | | 230 | | | | | Item 4A. | | Unresolved Staff Comments | | None | | | | | Item 5. | | Operating and Financial Review and Prospects | | | | | | | | A | | - Operating Results | | | | 10, 30, 225 | | | | | | | B | | - Liquidity and Capital Resources | | 33, 34, 37, 177, 229 | | | | | | | | C | | - Research and Development, Patents and Licences, etc. | | | | 245 | | | | | | | D | | - Trend Information | | 10, 33 | | | | | | | E | | -Off-Balance Sheet Arrangements | | 229 | | | | | | | F | | - Tabular Disclosure of Contractual Obligations | | 229 | | | | | | | G | | - Safe Harbor | | 103 | | | | | Item 6. | | Directors, Senior Management and Employees | | | | | | | A | | - Directors and Senior Management | | 56 | | | | | | | B | | - Compensation | | 74 | | | | | | | C | | - Board Practices | | 60 | | | | | | | D | | - Employees | | 245 | | | | | | | E | | - Share Ownership | | 99, 248, 249, 251 | | | | | Item 7. | | Major Shareholders and Related Party Transactions | | | | | | | A | | - Major Shareholders | | 72, 248 | | | | | | | B | | - Related Party Transactions | | 206 | | | | | | | C | | - Interests of Experts and Counsel | | n/a | | | | | Item 8. | | Financial Information | | | | | | | | | | | A | | - Consolidated Statements and Other Financial Information | | 128–215 | | | | | | | | | - Legal Proceedings | | 245 | | | | | | | | | - Dividends | | 250 | | | | | | | B | | - Significant Changes | | 245 | | | | | Item 9. | | The Offer and Listing | | | | | | | | | | | A | | - Offer and Listing Details | | 248 | | | | | | | B | | - Plan of Distribution | | n/a | | | | | | | C | | - Markets | | 248 | | | | | | | D | | - Selling Shareholders | | n/a | | | | | | | E | | - Dilution | | n/a | | | | | | | F | | - Expenses of the Issue | | n/a |
| | | | | | | | | | | | | Page | | | | | | | | | | | | | Item 10. | | Additional Information | | | | | | | | | A | | - Share Capital
| | n/a | | | | | | | B | | - Memorandum and Articles of Association
| | 247 | | | | | | | C | | - Material Contracts
| | None | | | | | | | D | | - Exchange Controls
| | 249 | | | | | | | E | | - Taxation | | 245 | | | | | | | F | | - Dividends and Paying Agents
| | n/a | | | | | | | G | | - Statements by Experts
| | n/a | | | | | | | H | | - Documents on Display | | 249 | | | | | | Item 10. | | Additional Information | | | | | | | | | | | A | | - Share Capital | | n/a | | | | | | | B | | - Memorandum and Articles of Association | | 255 | | | | | | | C | | - Material Contracts | | None | | | | | | | D | | - Exchange Controls | | 257 | | | | | | | E | | - Taxation | | 253 | | | | | | | F | | - Dividends and Paying Agents | | n/a | | | | | | | G | | - Statements by Experts | | n/a | | | | | | | H | | - Documents on Display | | 257 | | | | | | | I | | - Subsidiary Information | | 252 | | | | Item 11. | | Quantitative and Qualitative Disclosures about Market Risk | | 221 | | | | | | | Item 12. | | Description of Securities Other than Equity Securities | | | | | | | | | A | | - Debt Securities | | n/a | | | | | | | B | | - Warrants and Rights | | n/a | | | | | | | C | | - Other Securities | | n/a | | | | | | | D | | - American Depositary Shares | | 244 | | | | | | | | PART II | | | | | | | | | | | | Item 13. | | Defaults, Dividend Arrearages and Delinquencies | | None | | | | Item 14. | | Material Modifications to the Rights of Security Holders and Use of Proceeds | | None | | | | Item 15. | | Controls and Procedures | | 122, 234 | | | | Item 16A. | | Audit Committee Financial Expert | | 56, 57 | | | | Item 16B. | | Code of Ethics | | 66 | | | | Item 16C. | | Principal Accountant Fees and Services | | 61, 67, 147, 249 | | | | Item 16D. | | Exemptions from the Listing Standards for Audit Committees | | n/a | | | | Item 16E. | | Purchases of Equity Securities by the Issuer and Affiliated Purchasers | | 241 | | | | Item 16F. | | Change in Registrant’s Certifying Accountant | | None | | | | Item 16G. | | Corporate Governance | | 234 | | | | Item 16H. | | Mine Safety Disclosures | | 222 | | | | | | | | PART III | | | | | | | | | | | | Item 17. | | Financial Statements | | n/a | | | | Item 18. | | Financial Statements | | 123-206 | | | | Item 19. | | Exhibits | | 260 | | | |
| |
| | Item 11. | | Quantitative and Qualitative Disclosures about Market Risk | | 229 | | | | | Item 12. | | Description of Securities Other than Equity Securities | | | | | | | A | | - Debt Securities | | n/a | | | | | | | B | | - Warrants and Rights | | n/a | | | | | | | | C | | - Other Securities | | | | n/a | | | | | | | D | | - American Depositary Shares | | 252 | | | | | | | | PART II | | | | | | | | | Item 13. | | Defaults, Dividend Arrearages and Delinquencies | | None | | | | | Item 14. | | Material Modifications to the Rights of Security Holders and Use of Proceeds | | None | | | | | Item 15. | | Controls and Procedures | | 127, 242 | | | | | Item 16A. | | Audit Committee Financial Expert | | 57, 58, 59 | | | | | Item 16B. | | Code of Ethics | | | | 72 | | | | | Item 16C. | | Principal Accountant Fees and Services | | 64, 73, 153, 257 | | | | | Item 16D. | | Exemptions from the Listing Standards for Audit Committees | | n/a | | | | | Item 16E. | | Purchases of Equity Securities by the Issuer and Affiliated Purchasers | | 249 | | | | | Item 16F. | | Change in Registrant’s Certifying Accountant | | 243 | | | | | Item 16G. | | Corporate Governance | | 242 | | | | | Item 16H. | | Mine Safety Disclosures | | | | 230 | | | | | | | | PART III | | | | | | | | | Item 17. | | Financial Statements | | n/a | | | | | Item 18. | | Financial Statements | | 128–215 | | | | | Item 19. | | Exhibits | | | | 266 | | | |
| 261
| | | | 268 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Our Products and Services Locations | | | | | | | | | | | | | | | | | | | | | | Cement | | Aggregates | | Lime | | Readymixed | | Asphalt | | Paving & | | | | | | | | | Concrete | | | | Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRH Annual Report and Form 20-F I2018
Index
| | | | | A | | | | | | | | | | | Accounting Policies | | | 128 | | | | | | | Acquisitions Committee | | | 66 | | | | | | | American Depositary Shares | | | 244 | | | | | | | Americas Materials | | | 35 | | | | | | | Americas Products | | | 43 | | | | | | | Annual General Meeting | | | 102 | | | | | | | Asia | | | 35 | | | | | | | Audit Committee | | | 60 | | | | | | | Auditors (Directors’ Report) | | | 101 | | | | | | | Auditor’s Remuneration (note 5) | | | 61, 147, 211 | | | | | | | Auditor’s Report, Independent (Irish) | | | 112 | | | | | | | Auditor’s Report, Independent (US) | | | 121 | | | | | | | B | | | | | | | | | | | Balance Sheet | | | | | | | | | | - Company | | | 207 | | | | | | | - Consolidated | | | 125 | | | | | | | Balanced Portfolio | | | 2 | | | | | | | Board Approval of Financial | | | 197 | | | | Statements (note 35) | | | | | | | | | | Board Committees | | | 66 | | | | | | | Board Effectiveness | | | 64 | | | | | | | Board of Directors | | | 54 | | | | | | | Board Responsibilities | | | 64 | | | | | | | Business andNon-Current Asset | | | 148 | | | | Disposals (note 6) | | | | | | | | | | Business Combinations (note 32) | | | 135, 192 | | | | | | | Business Model | | | 12 | | | | | | | Business Overview | | | 26 | | | | | | | Business Performance | | | 24 | | | | | | | C | | | | | | | | | | | Capital and Financial Risk | | | 172 | | | | Management (note 23) | | | | | | | | | | Cash and Cash Equivalents | | | 136, 176 | | (note 24) | | | | | | | | | | Cash Flow, Operating | | | 15 | | | | |
| | | | | | | | | | | | | | | | | | Cash Flow Statement, Consolidated | | | 127 | | | | | | | Chairman’s Introduction | | | 5 | | | | | | | Chief Executive’s Review | | | 8 | | | | | | | Communications with Shareholders | | | 67 | | | | | | | Company Secretary | | | 67 | | | | | | | Compliance and Ethics | | | 66 | | | | | | | Contractual Obligations | | | 221 | | | | | | | Corporate Governance Practices | | | 234 | | | | | | | Corporate Governance Report | | | 58 | | | | | | | Cost Analysis (note 4) | | | 146 | | | | | | | CREST | | | 241 | | | | | | | D | | | | | | | | | | | Debt, Analysis of Net (note 22) | | | 168 | | | | | | | Deferred Income Tax | | | | | | | | | | - expense (note 12) | | | 132, 154 | | | | | | | - assets and liabilities (note 28) | | | 132, 181 | | | | | | | Depreciation | | | | | | | | | | - cost analysis (note 4) | | | 146 | | | | | | | - property, plant and equipment | | | 135, 158 | | | | (note 15) | | | | | | | | | | - segment analysis (note 2) | | | 141 | | | | | | | Derivative Financial Instruments | | | 136, 178 | | (note 26) | | | | | | | | | | Directors’ Emoluments and Interests | | | 149, 212 | | | | (note 8) | | | | | | | | | | Directors’ Interests in Share Capital | | | 92 | | | | | | | Directors’ Remuneration Report | | | 68 | | | | | | | Directors’ Report | | | 98 | | | | | | | Directors’ Responsibilities, | | | 102 | | Statement of | | | | | | | | | | Directors’ Share Options | | | 90 | | | | | | | Discontinued Operations (note 3) | | | 145 | | | | | | | Distribution | | | 48 | | | | | | | Dividend Payments | | | 98, 242 | | (Shareholder Information) | | | | | | | | | | Dividend per Share | | | 1 | | | | | | | Dividends (note 13) | | | 137, 156 | | | | |
| | | | | E | | | | | | | | | Earnings per Ordinary Share (note 14) | | | 157 | | | | | | | Employees, Average Number (note 7) | | | 149 | | | | | | | Employment Costs (note 7) | | | 149 | | | | | | | End-use Exposure | | | 3 | | | | | | | Equity Accounted Investments’
Profit, Share of (note 11)
| | | 154 | | | | | | | Europe Distribution | | | 49 | | | | | | | Europe Heavyside | | | 35 | | | | | | | Europe Lightside | | | 43 | | | | | | | Exchange Rates | | | 138 | | | | | | | Exhibits | | | 260 | | | | | | | F | | | | | | | | | Finance Committee | | | 66 | | | | | | | Finance Costs and Finance Income | | | 153 | | (note 10) | | | | | | | | | | Finance Director’s Review | | | 27 | | | | | | | Financial Assets (note 17) | | | 162 | | | | | | | Financial Calendar | | | 249 | | | | | | | Financial Statements, Consolidated | | | 123 | | | | | | | Foreign Currency Translations | | | 109, 233 | | | | | | | Frequently Asked Questions | | | 249 | | | | | | | G | | | | | | | | | Global Business | | | 2 | | | | | | | Going Concern | | | 100 | | | | | | | Governance | | | 52 | | | | | | | Greenhouse Gas Emissions | | | 14 | | | | | | | Guarantees (note 25; note 11 to | | | 177, 212 | | Company Balance Sheet) | | | | | | | | | | H | | | | | | | | | | | | | | Australia | | | | | | | | | | | | | | | | | | | | Austria | | | | | | | | | | | | | | | | | | | | Belgium | |  | | | | | | | | | | | | | | | | | | Brazil | | | | | | | | | | | | | | | | | | | | Canada | | | |  | | | | | | | | | | | | | | | | China1 | | | | | | | | | | | | | | | | | | | | Czech Republic | | | | | | | | | | | | | | | | | | | | Denmark | | | | | | | | | | | | | | | | | | | | Estonia | | | | | | | | | | | | | | | | | | | | Finland | | | | | | | | | | | | | | | | | | | | France | | | | | | | | | | | | | | | | | | | | Germany | | | | | | | | | | | | | | | | | | | | Hungary | | | | | | | | | | | | | | | | | | | | Ireland | | | | | | | | | | | | | | | | | | | | Italy | | | | | | | | | | | | | | | | | | | | Malaysia | | | | | | | | | | | | | | | | | | | | Netherlands | | | | | | | | | | | | | | | | | | | | Norway | | | | | | | | | | | | | | | | | | | | Philippines | | | | | | | | | | | | | | | | | | | | Poland | | | | | | | | | | | | | | | | | | | | Romania | | | | | | | | | | | | | | | | | | | | Russia | | | | | | | | | | | | | | | | | | | | Serbia | | | | | | | | | | | | | | | | | | | | Slovakia | | | | | | | | | | | | | | | | | | | | Spain | | | | | | | | | | | | | | | | | | | | Sweden | | | | | | | | | | | | | | | | | | | | Switzerland | | | | | | | | | | | | | | | | | | | | Ukraine | | | | | | | | | | | | | | | | | | | | United Kingdom | | | | | | | | | | | | | | | | | | | | United States | | | | | | | | | | | | |
1. Includes the Group’s equity accounted investments.
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 269 |
| | | | 270 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 |
Index | | | | | | A | | | | | | Accounting Policies | | | 133 | | | Acquisitions Committee | | | 72 | | | American Depositary Shares | | | 252 | | | Americas Materials | | | 40 | | | Annual General Meeting | | | 105 | | | Audit Committee | | | 64 | | | Auditors (Directors’ Report) | | | 104 | | | Auditor’s Remuneration | | | 64, 153, 220 | | | Auditor’s Report, Independent (US) | | | 125 | | | | | B | | | | | | Balance Sheet | | | | | | - Consolidated | | | 130 | | | Balanced Portfolio | | | 12 | | Board Approval of Financial
Statements (note 36) | | | 206 | | | Board Committees | | | 72 | | | Board Effectiveness | | | 70 | | | Board of Directors | | | 56 | | | Board Responsibilities | | | 71 | | | Building Products | | | 48 | | Business andNon-Current Asset
Disposals (note 6) | | | 154 | | | Business Combinations (note 32) | | | 141, 201 | | | Business Model | | | 16 | | | Business Overview | | | 32 | | | Business Performance | | | 30 | | | | | C | | | | | Capital and Financial Risk
Management (note 24) | | | 182 | | Cash and Cash Equivalents
(note 25) | | | 142, 186 | | | Cash Flow, Operating | | | 19 | | | Cash Flow Statement, Consolidated | | | 132 | |
| | | | | | | | | | | Chairman’s Introduction | | | 4 | | | Chief Executive’s Review | | | 10 | | | Communications with Shareholders | | | 73 | | | Company Secretary | | | 73 | | | Compliance and Ethics | | | 72 | | | Contractual Obligations | | | 229 | | | Corporate Governance Practices | | | 242 | | | Corporate Governance Report | | | 60 | | | Cost Analysis (note 4) | | | 152 | | | CREST | | | 249 | | | | | D | | | | | | Debt, Analysis of Net (note 23) | | | 177 | | | Deferred Income Tax | | | | | | - expense (note 12) | | | 137, 160 | | | - assets and liabilities (note 29) | | | 137, 191 | | | Depreciation | | | | | | - cost analysis (note 4) | | | 152 | | - property, plant and equipment
(note 15) | | | 140, 164 | | | - segment analysis (note 2) | | | 147 | | | Derivative Financial Instruments (note 27) | | | 142, 188 | | | Directors’ Emoluments and Interests (note 8) | | | 155, 221 | | | Directors’ Interests in Share Capital | | | 99 | | | Directors’ Remuneration Report | | | 74 | | | Directors’ Report | | | 102 | | Directors’ Responsibilities,
Statement of | | | 105 | | | Directors’ Share Options | | | 92 | | | Discontinued Operations (note 3) | | | 150 | | Dividend Payments
(Shareholder Information) | | | 102, 250 | | | Dividend per Share | | | 1 | | | Dividends (note 13) | | | 143, 162 | |
| | | | | | E | | | | | | Earnings per Ordinary Share (note 14) | | | 163 | | | Employees, Average Number (note 7) | | | 155 | | | Employment Costs (note 7) | | | 155 | | | End-use Exposure | | | 12 | | Equity Accounted Investments’
Profit, Share of (note 11) | | | 160 | | | Europe Materials | | | 44 | | Events After the Balance Sheet Date
(note 35) | | | 206 | | | Exchange Rates | | | 144 | | | Exhibits | | | 266 | | | | | F | | | | | | Finance Committee | | | 72 | | Finance Costs and Finance Income
(note 10) | | | 159 | | | Finance Director’s Review | | | 33 | | | Financial Assets (note 17) | | | 169 | | | Financial Calendar | | | 257 | | | Financial Statements, Consolidated | | | 128 | | | Foreign Currency Translation | | | 113, 241 | | | Frequently Asked Questions | | | 257 | | | | | G | | | | | | Global Business | | | 2 | | | Going Concern | | | 104 | | | Governance | | | 54 | | | Greenhouse Gas Emissions | | | 18 | | | Guarantees (note 26) | | | 187 | | | | | H | | | | | | Health and Safety | | | 18 | |
| | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | | 271 |
| | | | | | I | | | | | | Inclusion and Diversity | | | 18, 61 | | | Income Statement, Consolidated | | | 128 | | | Income Tax Expense (note 12) | | | 160 | | | Intangible Assets (note 16) | | | 141, 166 | | | Inventories (note 18) | | | 142, 170 | | | Investor Relations Activities | | | 73 | | | | | K | | | | | Key Components of 2019
Performance | | | 33 | | | KPIs, Financial | | | 19 | | | KPIs,Non-Financial | | | 18 | | | | | L | | | | | | Leases (note 22) | | | 133, 141, 175 | | | Listing Rule 9.8.4C | | | 103 | | Loans and Borrowings,
Interest-Bearing (note 26) | | | 142, 186 | | | | | M | | | | | | Measuring Performance | | | 18 | | Memorandum and Articles of
Association | | | 73, 255 | | | | | N | | | | | Nomination & Corporate Governance
Committee | | | 68 | | | Non-controlling Interests (note 33) | | | 205 | | | Non-GAAP Performance Measures | | | 225 | | Notes on Consolidated Financial
Statements | | | 145 | | | | | O | | | | | | Operating Costs (note 4) | | | 152 | |
| | | | | | P | | | | | Pensions, Retirement Benefit
Obligations (note 30) | | | 136, 192 | | Principal Equity Accounted
Investments | | | 264 | | | Principal Subsidiary Undertakings | | | 260 | | | Profit on Disposals (note 6) | | | 154 | | Property, Plant and Equipment
(note 15) | | | 140, 164 | | | Property, Plants and Equipment | | | 230 | | | Provisions for Liabilities (note 28) | | | 136, 190 | | | Proxy Voting, Electronic | | | 257 | | | | | R | | | | | | Registrars | | | 257 | | | Regulatory Information | | | 103 | | | Related Party Transactions (note 34) | | | 206 | | | Remuneration Committee | | | 88 | | | Reserves, Mineral | | | 231 | | Retirement Benefit Obligations
(note 30) | | | 136, 192 | | | Return on Net Assets (RONA) | | | 19, 226, 228 | | | Revenue (note 1) | | | 145 | | | Risk Governance | | | 26 | | Risk Management and Internal
Control | | | 104, 242 | | | Risk Factors | | | 233 | | | | | S | | | | | Safety, Environment & Social
Responsibility Committee | | | 20, 60, 244 | | | Sector Exposure andEnd-Use | | | | | | - Americas Materials | | | 40 | | | - Europe Materials | | | 44 | | | - Building Products | | | 48 | | | Segment Information (note 2) | | | 139, 147 | | | Selected Financial Data | | | 224 | | | Senior Independent Director | | | 57 | |
| | | | | | | | | | | Share-based Payments (note 9) | | | 140, 156 | | Share Capital and Reserves
(note 31) | | | 143, 198 | | | Share Options | | | | | | - Directors | | | 92 | | | - Employees (note 9) | | | 156 | | | Share Price Data | | | 248 | | | Shareholder Communication | | | 73 | | | Shareholdings as at 31 December 2019 | | | 72, 248 | | Statement of Changes in Equity,
Consolidated | | | 131 | | Statement of Comprehensive
Income, Consolidated | | | 129 | | Statement of Directors’
Responsibilities | | | 105 | | | Stock Exchange Listings | | | 72, 248 | | | Strategy | | | 14 | | | Substantial Holdings | | | 72 | | Supplemental Guarantor Information
(note 37) | | | 207 | | | Sustainability | | | 20 | | | | | T | | | | | | Total Shareholder Return (TSR) | | | 8, 19 | | | Trade and Other Payables (note 20) | | | 173 | | | Trade and Other Receivables (note 19) | | | 170 | | | | | V | | | | | | Volumes, Annualised | | | | | | - Americas Materials | | | 41 | | | - Europe Materials | | | 45 | | | | | W | | | | | | Website | | | 73, 257 | | Working Capital and Provisions for
Liabilities, Movement in (note 21) | | | 174 | |
| CRH Annual Report and Form 20-F I 2018
| | | | | I | | | | | | | | | | | Inclusion and Diversity | | | 14, 63 | | | | | | | Income Statement, Consolidated | | | 123 | | | | | | | Income Tax Expense (note 12) | | | 154 | | | | | | | Intangible Assets (note 16) | | | 136, 159 | | | | | | | Inventories (note 18) | | | 136, 163 | | | | | | | Investor Relations Activities | | | 67 | | | | | | | K | | | | | | | | | | | Key Components of 2018 | | | 28 | | Performance | | | | | | | | | | KPIs, Financial | | | 15 | | | | | | | KPIs,Non-Financial | | | 14 | | | | | | | L | | | | | | | | | | | Leases, Commitments Under | | | 129, 136, 188 | | Operating and Finance (note 30) | | | | | | | | | | Listing Rule 9.8.4C | | | 99 | | | | | | | Loans and Borrowings, Interest- | | | 136, 176 | | Bearing (note 25) | | | | | | | | | | M | | | | | | | | | | | Materials | | | 34 | | | | | | | Measuring Performance | | | 14 | | | | | | | Memorandum and Articles of | | | 67, 247 | | Association | | | | | | | | | | N | | | | | | | | | | | Nomination & Corporate Governance Committee | | | 63 | | | | | | | Non-controlling Interests (note 33) | | | 196 | | | | | | | Non-GAAP Performance Measures | | | 217 | | | | | | | Notes on Consolidated Financial | | | 139 | | Statements | | | | | | | | | | Notes to the Company Balance Sheet | | | 209 | | | | | | O | | | | | | | | | | | Operating Costs (note 4) | | | 146 | | | | | | | Operating Leases (note 30) | | | 136, 188 | | | | | | | Operating Profit Disclosures
(note 5) | | | 147 | | | | |
| | | | | P | | | | | | | | | | | Pensions, Retirement Benefit | | | 131, 182 | | Obligations (note 29) | | | | | | | | | | Principal Equity Accounted | | | 257 | | Investments | | | | | | | | | | Principal Risks and Uncertainties | | | 104 | | | | | | | Principal Subsidiary Undertakings | | | 252 | | | | | | | Products | | | 42 | | | | | | | Profit on Disposals (note 6) | | | 148 | | | | | | | Property, Plant and Equipment | | | 135, 158 | | (note 15) | | | | | | | | | | Property, Plants and Equipment | | | 222 | | | | | | | Provisions for Liabilities (note 27) | | | 131, 180 | | | | | | | Proxy Voting, Electronic | | | 249 | | | | | | | R | | | | | | | | | | | Registrars | | | 249 | | | | | | | Regulatory Information | | | 99 | | | | | | | Related Party Transactions (note 34) | | | 197 | | | | | | | Remuneration Committee | | | 74 | | | | | | | Reserves | | | 223 | | | | | | | Retirement Benefit Obligations | | | 131, 182 | | (note 29) | | | | | | | | | | Return on Net Assets (RONA) | | | 15, 218, 220 | | | | | | | Revenue (note 1) | | | 139 | | | | | | | Risk Governance | | | 22 | | | | | | | Risk Management and Internal | | | 100, 234 | | Control | | | | | | | | | | Risk Factors | | | 225 | | | | | | | S | | | | | | | | | | | Safety, Environment & Social | | | 16, 66, 236 | | Responsibility Committee | | | | | | | | | | Sector Exposure andEnd-Use | | | | | | | | | | - Americas Materials | | | 35 | | | | | | | - Americas Products | | | 43 | | | | | | | - Asia | | | 35 | | | | | | | - Europe Distribution | | | 49 | | | | | | | - Europe Heavyside | | | 35 | | | | | | | - Europe Lightside | | | 43 | | | | |
| | | | | | | | | | | | | | | | Segment Information (note 2) | | | 134, 141 | | | | | | | Selected Financial Data | | | 216 | | | | | | | Senior Independent Director | | | 55 | | | | | | | Share-based Payments (note 9) | | | 134, 150 | | | | | | | Share Capital and Reserves | | | 137, 189 | | (note 31) | | | | | | | | | | Share Options | | | | | | | | | | - Directors | | | 90 | | | ��
| | | | - Employees (note 9) | | | 150 | | | | | | | Share Price Data | | | 240 | | | | | | | Shareholder Communication | | | 67 | | | | | | | Shareholdings as at 31 December 2018 | | | 66, 240 | | | | | | | Statement of Changes in Equity, | | | 126 | | Consolidated | | | | | | | | | | Statement of Changes in Equity, | | | 208 | | Company | | | | | | | | | | Statement of Comprehensive | | | 124 | | Income, Consolidated | | | | | | | | | | Statement of Directors’ | | | 102 | | Responsibilities | | | | | | | | | | Stock Exchange Listings | | | 66, 240 | | | | | | | Strategy | | | 10 | | | | | | | Substantial Holdings | | | 66 | | | | | | | Supplemental Guarantor Information | | | 198 | | (note 36) | | | | | | | | | | Sustainability | | | 16 | | | | | | | T | | | | | | | | | | | Total Shareholder Return (TSR) | | | 4, 15 | | | | | | | Trade and Other Payables (note 20) | | | 166 | | | | | | | Trade and Other Receivables (note 19) | | | 163 | | | | | | | V | | | | | | | | | | | Volumes, Annualised | | | | | | | | | | - Materials | | | 35 | | | | | | | W | | | | | | | | | | | Website | | | 67, 249 | | | | | | | Working Capital and Provisions for | | | 167 | | Liabilities, Movement in (note 21) | | | | | | | |
CRH Annual Report and Form 20-F I2018
| 272 | | CRH ANNUAL REPORT AND FORM 20-F I 2019 | |
Signatures The registrant hereby certifies that it meets all of the requirements for filing on Form20-F and that it has duly caused and authorised the undersigned to sign this Annual Report on its behalf. | | | | | | | | | CRH public limited company | | | | | | | | (Registrant) | | | | | | | | | By: | | /s/ S. Murphy
| | | | | | | | Senan Murphy | | | | | Finance Director | | |
Dated: 8 March 2019
| CRH public limited company | | | (Registrant) | | | | | /s/ S. Murphy | | By: | | | 264 | | | | | Senan Murphy | | | Group Finance Director |
Dated: 6 March 2020
CRH Annual Report and Form 20-F I 2018
| | | | | 
CRH plc
Belgard Castle
Clondalkin
Dublin 22
D22 AV61
| | | | |  | | | | | CRH plc Stonemason’s Way Rathfarnham Dublin 16 D16 KH51 Ireland Telephone: +353 1 404 1000 E-mail: mail@crh.com Website: www.crh.com Registered Office 42 Fitzwilliam Square Dublin 2 D02 R279 Ireland Telephone: +353 1 634 4340 Fax: +353 1 676 5013
E-mail: crh42@crh.com | | | | Cover image: Oldcastle Infrastructure, part of CRH’s Building Products Division, designed bespoke floating concrete slabs for a Los Angeles Metro Rail project in California. The slabs reduce vibration and noise from trains passing under the Walt Disney Concert Hall. When complete, over 500 slabs will support a section of track around three-quarters of a mile long. | CRH® is a registered trade mark of CRH plc. | | | | Cover image: Ash Grove Cement Company’s Foreman Plant in Arkansas. Ash Grove is a leading cement manufacturer in the United States. Its Foreman Plant was one of eight cement plants, 25 terminals and extensive readymixed concrete and aggregates operations acquired by CRH for€2.9 billion in 2018. |
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By considering the full life cycle of our products and innovating to drive more sustainable outcomes in the built environment, we aim to have a more positive impact on wider society and the environment while delivering profitable growth.
