CRH Annual Report 2007
P E R F O R M A N C E A N D G R O W T H
CRH – Track record of performance and growth
Sales
CRH sales increased by 12% in 2007, bringing the
average annual growth rate to 19% over the last
15 years, delivered through a combination of organic
and acquisitive growth.
Pro(cid:31) t before Tax
The Group’s size and structure are leveraged to
drive margin improvement and growth. In the period
1992-2007, CRH delivered 24% average annual
PBT growth.
Development Activity
Value-creating acquisition and developmental capital
expenditure opportunities are sourced, evaluated,
negotiated and integrated by regional and product
group development teams. CRH typically completes
50-75 small to medium-sized transactions each year
augmented by periodic larger acquisitions.
(cid:31)Bn
20
18
16
14
12
10
8
6
4
2
0
(cid:31)Bn
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
(cid:31)Bn
2.4
2.1
1.8
1.5
1.2
0.9
0.6
0.3
0
IF RS
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
I FRS
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
cent
270
240
210
180
150
120
90
60
30
0
cent
70
60
50
40
30
20
10
0
(cid:31)000
64
56
48
40
32
24
16
8
0
IFRS
Earnings per Share
(before goodwill amortisation)
While building materials demand is influenced by
economic cycles, CRH’s consistent strategy and
relentless focus on operations has delivered 15 years
of continuous earnings growth averaging 20% per
annum from 1992 to 2007.
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
Dividend per Share
2007 is the 24th consecutive year of dividend increase.
CRH operates a progressive dividend policy with an
average annual growth rate in dividend of 13% since
1970. The 31% dividend increase in 2007 follows
a 33% increase in 2006 and reflects CRH’s policy to
raise its payout ratio over the period 2006-2008.
Total Shareholder Return
CRH has delivered a 20% compound annual growth in
Total Shareholder Return from 1992 to 2007 and 18%
from 1970 to 2007. A shareholder who invested the
equivalent of (cid:31)100 in 1970 and re-invested gross
dividends would hold shares valued at (cid:31)50,522 based
on a share price of (cid:31)24.85 on 31st December 2007.
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
CRH’s broad geographic, sectoral and product balance, together with
its vigorous and consistent development strategy, once again delivered
strong performance and growth in 2007. Sales, profits and earnings
increased for the 15th consecutive year to new record levels.
2007 Highlights
€ million
Sales
EBITDA
20,992
+12%
2,860
+16%
Operating profit
2,086
+18%
Profit before tax
1,904
+19%
Basic earnings per share
262.7c
+17%
Cash earnings per share
404.9c
+15%
Dividend per share
68.0c
+31%
Dividend cover (times)
EBITDA Interest cover (times)
EBIT Interest cover (times)
3.9
9.4
6.9
CRH shares are listed on the Irish (ISE) and London (LSE) Stock
Exchanges and on the New York Stock Exchange (NYSE) in the
form of American Depositary Receipts (ADRs).
The Group has consistently delivered superior long-term growth
in total shareholder return, averaging 18% per annum since the
Group was formed in 1970.
CRH
1
CRH is a diversified building materials group which manufactures and distributes
building material products from the fundamentals of heavy materials and elements
to construct the frame, through value-added products that complete the building
envelope, to distribution channels which service construction fit-out and renewal.
Materials: The Fundamentals
Products: Constructing the Frame
Aggregates – crushed stone from quarries
Cement – primary binding agent
Asphalt – road and highway surfaces
Precast – structural elements cast into designed/highly-engineered
forms: floors, beams, vaults ...
Architectural – concrete elements for residential and
non-residential building: blocks, bricks, pavers ...
Readymixed concrete – a mix of aggregates, sand and cement
that can be poured into forms
Construction accessories – components to assist in the
building process
2
CRH
Products: Completing the Envelope
Distribution: Fit-out and Renewal
Clay – traditional facing brick cladding products
Merchants – channelling building material products to the
Glass – engineered products for external and internal use
professional contractor
Insulation – to improve the comfort and energy efficiency
Fencing & Security – outdoor security and protection systems
Daylight & Ventilation – products to optimise climate control
and daylight access
Roller, Shutters & Awnings – security and climate control
DIY – providing decorative and home improvement products to
the consumer
CRH
3
CRH, a group centred in heavy materials and construction elements, embraces the
benefits of vertical integration in manufacturing and of horizontal integration in servicing
the breadth of construction demand. Strategy implementation underpins performance
and has enabled CRH to achieve positions of scale in each core business area.
Materials: The Fundamentals
Products: Constructing the Frame
CRH operates vertically integrated primary materials businesses
with strategically located long-term reserves in all its major
markets. With an emphasis on servicing infrastructure and new
construction demand, operations include cement, aggregates,
asphalt and readymixed concrete. CRH has aggregates reserves
totalling approximately 13 billion tonnes worldwide; circa 10 billion
tonnes in the Americas and circa 3 billion tonnes in Europe.
CRH manufactures architectural and structural concrete
products for use in residential, non-residential and infrastructure
applications. These include building systems and engineered
concrete solutions for use in the electrical, transportation,
drainage and communications industries; construction
accessories and components to assist in the construction
process; and architectural products to enhance the facade and
surroundings of buildings.
Strategy
Strategy
To build and maintain strong vertically integrated businesses
with leading market positions. Implementation focuses on
accumulating long-term permitted reserves, continuously
investing in plant and equipment for product quality, operational
efficiency and customer service, and seeking value-creating
expansion opportunities via greenfield development and
acquisitions in selected markets.
To build and expand leadership positions in targeted markets in
the manufacture of structural and architectural concrete products
and related accessories. Implementation focuses on continuously
improving the businesses with state-of-the-art IT, exchange of
process and product know-how and leveraging engineering,
project management, logistics and marketing skills to add more
value for customers, while simultaneously pursuing new product
and new region opportunities.
Annualised production volumes
Annualised production volumes
Aggregates – 260.3 million tonnes
Structural/Precast concrete – 10.6 million tonnes
Cement – 15.6 million tonnes
Asphalt – 56.3 million tonnes
Readymixed concrete – 25.8 million cubic metres
Architectural concrete – 33.2 million tonnes
55%
EBITDA
75%
20%
4
CRH
Products: Completing the Envelope
Distribution: Fit-out and Renewal
CRH produces a range of complementary value-added building
products to complete the building envelope and optimise climate
control and energy efficiency of buildings. Products include
architectural glass, clay brick and block, insulation materials,
systems for daylight and ventilation, fencing and security, and
rollers, shutters and awnings, each of which serves to provide a
balanced exposure to demand drivers.
CRH distributes building materials to professional roofing/siding
and interior products contractors in the United States and to
general building contractors and Do-It-Yourself (DIY) customers
in Europe. With an expanding network of 200 branches in the
United States and 688 branches in Europe, CRH is now a
leading international player in building materials distribution.
Strategy
Strategy
To develop current strong positions and seek new platforms
for growth in these complementary product segments.
Implementation focuses on increasing penetration for CRH
product offerings, edge expansion into new architectural
products and solutions, developing positions to benefit from
scale and best practices, and creating competitive advantage
through product, process and end-use innovation.
To build and grow a strong network of professional builders
merchants and DIY stores primarily in metropolitan areas.
Implementation focuses on organisational initiatives and best-
in-class IT to realise operational excellence, optimise the supply
chain and provide superior customer service, while seeking
opportunities to invest in new regions and other attractive
segments of building materials distribution.
Annualised production volumes
Outlets
Clay – 4.3 million tonnes
Builders merchants – 648 stores
Glass/Rooflights – 13.7 million square metres
DIY – 240 stores
Insulation – 6.2 million cubic metres
Fencing & security – 14.2 million lineal metres
12%
EBITDA
25%
13%
CRH
5
CRH is an international group with strong regional, national and international leadership
positions. With operations in 32 countries, CRH employed approximately 92,000 people
at over 3,500 locations in 2007. From a strong developed world base, CRH is growing
its presence in emerging economic regions.
North America
South America
45% of Group EBITDA*
No.1
Asphalt – US
1% of Group EBITDA*
No.1
Clay Rooftiles – Argentina
No.1
Concrete Products – Canada, US
No.2
Clay Wall & Floor Tiles – Argentina
No.1
Architectural Glass Supplier – Canada, US
No.2
Construction Accessories - US
No.3
Aggregates – US
Top 3
Roofing/Siding Distributor – US
Top 3
Interior Products Distributor – US
Top 10 Readymixed Concrete – US
6
CRH
Western Europe
Central Eastern Europe, Mediterranean, North Africa, Asia
40% of Group EBITDA*
14% of Group EBITDA*
No.1
Concrete Products
No.1
Building Materials – Poland
No.1
Construction Accessories
No.1
Cement – Aegean region Turkey
Top 3
Building Materials Distributor
No.1
Paving Products – Slovakia
Top 10 Cement
Leading national positions:
Aggregates & Readymixed Concrete
No 3
Cement - Ukraine
No 3
Cement - Tunisia
*Approximate annualised EBITDA
CRH
7
As an international leader in building materials, CRH is committed to operating ethically
and responsibly. We are focused on embedding Corporate Social Responsibility (CSR)
in all aspects of Group operations which relate to our employees, customers, local
communities and all other stakeholders.
Corporate Governance
CRH is committed to the highest standards of corporate governance. Since
2003 it has implemented a Code of Business Conduct groupwide. In the
context of growth into developing economies and increased legislative
requirements, an updated Code is being launched during 2008. CRH’s
excellence in corporate governance was recently rated at 10, the highest
assigned by GMI (Governance Metrics International), putting CRH in the top
1% of GMI’s global research universe.
CSR embraces four key aspects of our business, namely
corporate governance, environment, health & safety and social
performance. In each of these areas, we have clearly defined
Group policies, objectives, implementation programmes, review
procedures, feedback and reporting mechanisms.
The positive commitment to CSR is a defining characteristic of
management in CRH. Much progress has been made and more
remains to be achieved as we strive to meet the ever-increasing
expectations of all our stakeholders. We believe that achieving
these expectations will be positive for our businesses.
As part of our CSR commitments, we are actively addressing
climate change through significant upgrading investments in our
cement, lime and clay brick plants. In addition, we see climate
change as an innovative driving force in all our activities and the
associated challenges can become our future opportunities.
This section contains examples of some of our main CSR
activities during the year. A detailed review of corporate
governance is addressed on pages 42 to 45 of this Report
and full details of our environmental, health & safety and
social performance are published in our annual CSR Report,
downloadable from our website www.crh.com.
Environment
CRH is committed to good environmental stewardship in all its activities.
In particular, it is addressing the challenges of climate change through
major capital investment programmes at its cement plants in Finland,
Ireland, Ukraine and Poland. The Ukraine project is the world’s first
Joint Implementation Project (JI-0001) registered by the UNFCCC under
the flexible mechanisms of the Kyoto Protocol, and will replace an old-
technology wet-process plant with a state-of-the-art dry process plant.
8
CRH
Health & Safety
CRH continues to commit significant resources to improving Health &
Safety at all its locations groupwide. Very significant reductions have
been achieved in accident rates in recent years and this continues to be a
management priority going forward. CRH is Co-Chair of the Health & Safety
Task Force within the Cement Sustainability Initiative, which is dedicated to
improving industry safety standards globally.
During 2007 CRH was again distinguished in its ranking among
the sector leaders by all the leading Socially Responsible
Investment (SRI) rating agencies.
We continued as a constituent member of the FTSE4Good Index
and of the Dow Jones World and STOXX Sustainability Indexes.
In the latter case we recently received the additional accolades of
“Silver Class” and “Sector Mover”. We also continue to be highly
ranked by Innovest (London), Vigeo (Paris) and Ethibel (Brussels)
SRI indexes.
In 2007, CRH underlined its commitment to CSR in an Irish
context through its signature of the Business in the Community
Ireland Membership Charter. Storebrand Investments designated
CRH as “Best in Class” in its sector review of CSR reporting.
We continue with an open-door policy on communications with
key stakeholder groups. At Group level, we discuss our CSR
performance with the investment community, third-party survey
and assessment organisations and other interested parties. At
company level, we are in regular dialogue with local communities,
authorities and permitting agencies, underlining our commitment
to operate as a good neighbour.
CRH was among the first in its sector to achieve full independent
verification of its CSR reporting. This was carried out by Det
Norske Veritas (DNV). Our CSR Report covering 2007 will be
available in mid-2008.
Social & Community
CRH, as a significant employer in its many locations, actively supports
social and community activities local to its operations. As one example,
the CRH companies in Ireland undertook to make quarterly donations,
proportional to the number of accident-free locations, to the Simon
Community which supports people with housing needs, This has been
a great incentive to better safety performance at CRH locations, while
simultaneously supporting a very worthy charitable cause.
CRH
9
CRH strategy is consistent and clear – to sustain and build a balanced business with
exposure to multiple demand drivers that can deliver CRH’s strategic vision to “be a
responsible international leader in building materials delivering superior performance
and growth”.
Building Materials is an inherently cyclical business linked
primarily to GDP growth in local economies. Recognising the
variability that cyclicality brings, CRH strategy is to build a
balanced business with exposure to multiple demand drivers.
Geographic and product balance serves to smooth out the
effects of changing economic conditions and to provide multiple
opportunities for growth. Sectoral and end-use balance reduces
the effects of varying demand patterns across building and
construction activity by maintaining a balanced portfolio of
products, serving a broad customer base.
In 2007, CRH was evenly balanced between the geographies of
North America and Western Europe with a growing component
of activity in the emerging regions of Central and Eastern Europe,
the Mediterranean, North Africa, South and Central America
and Asia. While product balance remains weighted towards the
heavyside with 75% in materials and concrete products and 25%
in lightside products and distribution, each of these businesses
deliver strong returns on capital through the cycle. Sectoral
balance remains stable at 40:35:25 and end-use balance,
which tends to trend towards RMI in developed economies is
counter-balanced by significant new build demand in developing
economies.
North America
Geography
45%
Western Europe
40%
Emerging
15%
Materials
Products
55%
Residential
End-use
40%
New/RMI
New
60%
Concrete products
Other products
Distribution
20%
12%
13%
Non-residential
35%
Infrastructure
25%
Repair, Maintenance and Improvement (RMI)
40%
Approximate annualised EBITDA
Our unique balance across regions, products and all building and
construction sectors is one of the key drivers of CRH strategy.
Together with the Group’s relentless focus on performance,
multiple growth platforms from which to pursue value-creating
opportunities, dedicated people with ambition to achieve,
operating in an environment which values strong governance
and prudent polices, these characteristics underpin the Group’s
ability to deliver consistent performance.
10 CRH
This strategy has enabled CRH to deliver consistent performance and consistent returns
over the long-term. 2007 is CRH’s 15th consecutive year of earnings and profit growth
despite a weaker economic backdrop in the early 2000’s – a significant achievement within
our industry.
CRH has a track record of unbroken growth since 1992 when
the global economy began to emerge from a severe recession
caused primarily by the Gulf War and high energy prices. During
1990-1992 CRH also experienced a decline in demand and
earnings, but strong cash flows enabled the business to recover
rapidly as the world economies began to improve.
In the economic prosperity that followed, CRH developed
extensively making significant steps in the United States and
in Europe. From a largely Ireland and materials focus in 1990,
CRH expanded through the decade to become a business with
balanced exposure to Europe and the Americas, and balanced
exposure to materials, products and distribution by 2000.
During 2001-2003, the world economies experienced a
slowdown albeit of lesser scale than in 1990, driven primarily
by the dot.com crash and the tragedy of the September 11
atrocities in New York. Despite a weaker US Dollar and a marked
decline in United States activity, the strength of the business
balance provided CRH with a basis to continue to pursue growth
opportunities and, with a culture of performance, CRH delivered
modest growth each year through this period. In the four years
from 2003-2007 profits and earnings grew strongly with an
average compound annual growth of approximately 20% in
earnings per share.
GDP
5%
4%
3%
2%
1%
0%
-1%
Western Europe GDP US GDP CRH EPS
EPS
250c
200c
150c
100c
50c
0c
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
While CRH strategy has and will continue to evolve with the
expansion and development of the Group, the solid foundation of
a balanced business with an emphasis on performance delivery
remains core. As we look to the future, CRH will continue to
optimise its business positions in the developed world where
returns are more predictable and business practices are more
developed. In parallel, CRH will seek to establish, in a measured
way, platforms for the future in emerging economies that show
the potential for above-average growth.
CRH is committed to meeting the future needs of its customer
base. With its diverse yet balanced business, experience of
managing through economic cycles, devolved organisation
responsive to market conditions and strong focus on delivery,
CRH has a sound basis on which to continue its strategy of
delivering superior performance and growth.
CRH
11
Chairman’s Statement
Strong Growth in Difficult
Conditions
The Group once again performed
strongly in 2007 to deliver record
full year financial results with profits
before tax of €1.9 billion and
earnings per share of 262.7 cent,
representing increases of 19% and
17% respectively.
These results were delivered
against a background of particularly
challenging trading conditions
including a sharp drop in residential
construction activity in the United
States, continuing increases
in energy costs, and reducing
growth rates in some of our major
European markets. We were also
confronted with a steep decline
in the US Dollar which had a
significant adverse effect on the
translation into euro of our United
States operating profits.
The ability of CRH management and
staff to achieve exceptional levels
of operational performance in this
environment is to be commended.
The benefits of the balanced spread
of operations across many geo-
graphic regions and construction
sectors were again demonstrated in
these results.
Details of the performances of the
Group’s Divisions are given in the
Chief Executive’s Review and in the
Operations and Finance Reviews
which follow.
Profitability and Earnings
Profit before tax increased by 19%
to €1.9 billion. Earnings per share
increased by 17% to 262.7 cent.
Cash earnings per share were
404.9 cent compared with 352.1
cent in the preceding year. Over the
past five years, despite significant
currency impacts and high energy
cost inflation, the Group has delivered
annualised earnings per share
growth of 17% per annum. We
regard this as a very good outcome.
Dividend
As indicated in the 2006 Annual
Report, the Board decided last year
to move towards a higher payout
ratio and reduced level of dividend
cover over the three financial
years 2006 to 2008, with the aim
of achieving dividend cover of the
order of 3.5 times for the 2008
financial year. Accordingly, in this
the second year of our three year
process, a final dividend of 48 cent
per share (2006: 38.5 cent per
share) is now being recommended
by the Board. This, if approved by
the Annual General Meeting on
7th May 2008, will result in a total
dividend for 2007 of 68 cent, an
increase of 31% over 2006, and
representing 2007 dividend cover
of 3.9 times.
This is CRH’s 24th consecutive year
of dividend increase at a compound
annual rate of 14%.
Development Activity
Full year development spend for
2007 amounted to €2.2 billion,
a new record for CRH. The
comparative figure for 2006 was
€2.1 billion (net), and €1.3 billion
and €1 billion for 2005 and 2004
respectively. The nature and extent
of these investments will make an
important contribution to delivering
further growth for the Group in the
years ahead.
First half expenditure of €1 billion
comprised the acquisition of Swiss
builders merchant Gétaz Romang
completed in May; the purchase
of a 50% stake in Denizli Cement
in Turkey and the buyout of the
remaining 50% of Paver Systems
in the United States announced
in April; the acquisition of Harbin
Sanling Cement in China announced
in February plus 31 other initiatives
announced in the Development
Strategy Update of July 2007.
Second half spending of €1.2 billion
included the August buyout of the
remaining 55% of Cementbouw bv
in the Netherlands; completion
of four separate transactions by
the Americas Materials Division
as announced in September; the
purchase of certain Cemex assets
in Florida and Arizona announced
in late November plus a strong flow
of traditional CRH development
opportunities outlined in the
Development Strategy Update
released in January 2008.
In addition during the year we
commenced three major cement
projects in Ireland, Poland and
Ukraine. These combined with
ongoing construction of our joint
venture cement plant in Florida
represent a total investment over
three years of approximately €0.7
billion targeted at modernising and
expanding cement production in
three key European markets and
providing CRH’s first investment in
cement in the United States.
Corporate Governance
A detailed statement setting out
CRH’s key governance principles
and practices is provided on
pages 42 to 45. The Board and
Management of CRH are committed
to achieving the highest standards
of Corporate Governance and
ethical business conduct, and are
satisfied that appropriate systems
of internal control are in place
throughout the Group.
Kieran McGowan
12 CRH
CRH’s unique culture of performance and achievement delivered
another year of record results in 2007
Conclusion
Management’s views on the
outlook for 2008 are set out more
comprehensively in the Chief
Executive’s Review and the various
Operations Reviews. While trading
conditions will be challenging in
residential construction in the
United States, and growth in
some European markets will be
slower than in 2007, it is expected
that these will be balanced by
continuing good activity levels in
the infrastructure sector in the
United States as well as by strong
growth in Central and Eastern
European economies. Continued
relentless focus on price and
cost effectiveness across the
Group, the benefits of our record
2007 acquisition spend and our
continuing focus on development
will, we expect, enable the Group
to deliver further progress in the
current year.
Board and Senior Management
Pat Molloy retired from the Board
and from the Chairmanship
following the Annual General
Meeting on 9th May 2007. Pat
joined the Board in 1997 and
became Chairman in May 2000.
His leadership of the Board over
the past seven years has been
exceptional and he has made a
huge contribution to the successful
growth and development of the
Group during that time. He is a
great role model and I thank him
sincerely for his valued inputs and
wise counsel.
Declan Doyle retired from his role as
Managing Director Europe Materials
on 30th June 2007 after 39 years
with CRH. He was a member of
the Board since 2004 and was one
of a number of extremely talented
executives who built CRH to its
present size and strength.
David Kennedy will retire from the
Board on completion of the Annual
General Meeting on 7th May 2008.
David has been a non-executive
Director since 1989 and has been
Senior Independent Director and
Chairman of the Remuneration
Committee since May 2006. I thank
David for his unique contributions to
the effectiveness of the Board and
to the development and success
of CRH over the many years of his
directorship.
In July 2007 we announced the
co-option to the Board of Professor
Utz-Hellmuth Felcht as a non-
executive Director. Utz-Hellmuth
Felcht, who is a German national,
was until May of 2006 Chief
Executive of Degussa GmbH,
Germany’s third largest chemical
company, with operations on
all five continents and sales of
approximately €11 billion. He brings
valuable international experience
to the Board and his appointment
continues the process of Board
renewal at a pace which is
consistent with the maintenance
of the Board’s teamwork and
core values.
As provided in the Company’s
Articles of Association, Utz-Hellmuth
Felcht is proposed for re-election at
the Annual General Meeting on 7th
May 2008. Also, in accordance with
the Articles of Association and best
practice in relation to re-election of
directors, Nicky Hartery, Tom Hill,
Joyce O’Connor and I will retire
from the Board and seek re-election
at the Annual General Meeting.
I have conducted a formal
evaluation of the performances of
all Directors and can confirm that
each of the Directors continues
to perform effectively and to
demonstrate commitment to
the role.
Management and Staff
CRH’s management and staff
have been the key element in
differentiating the Group from its
competitors. We have a quite
exceptional management team.
Their leadership and their ability to
attract, develop and retain talented
people is a fundamental strength
of CRH. There is a unique culture
of performance and achievement
throughout the Group, and this will
ensure that, whatever the business
environment, CRH has the capacity
to deliver superior performance and
growth. On behalf of the Board, I
thank Liam O’Mahony and all CRH
employees for their commitment
and loyalty to the success of the
Group and I congratulate them on
another great set of results in 2007.
CRH
13
Conrad Yelvington Distributors’
aggregates distribution terminal
in Gainesville, Florida operates on
the same site as an APAC asphalt
plant. The track is utilised to
receive 75-car unit train shipments
of aggregates, and to position
the cars for efficient unloading
at the facility.
14 CRH
Liam O’Mahony
Chief Executive’s Review
Overview
CRH’s broad geographic, sectoral
and product balance, together
with its vigorous and consistent
development strategy, once again
delivered strong performance and
growth in 2007. Sales, profits and
earnings increased for the 15th
consecutive year to new record
levels. As in previous years, 2007
growth came both from organic
operations and acquisitions.
Development activity was also at
new record levels. This continued
year-in-year-out delivery over such
an extended period, is a striking
testament to CRH’s strategy and to
the talent and commitment of our
90,000-strong team across
the world. My thanks to all
throughout our organisation who
have made this tremendous track
record happen.
Some of the year’s significant
highlights include:
•
•
•
•
•
Sales up 12% to €21 billion,
exceeding the €20 billion mark for
the first time.
EBITDA up 16% to €2.9 billion,
operating profit up 18% to €2.1
billion, and profit before tax up
19% to €1.9 billion.
Profit on disposal of fixed
assets up from €40 million to
€57 million; it is expected that
disposal of surplus properties will
be an ongoing feature.
Earnings per share up 17% to
262.7 cent, the 15th consecutive
year of earnings growth.
This significant increase in profits
and earnings was achieved
despite the translation impact
of the further decline in the US
Dollar in 2007, which had a
negative impact of approximately
5% on profits and earnings.
•
•
•
•
•
Dividend per share up for the
24th consecutive year, a 31%
increase to 68 cent. This follows
a 33% increase in 2006, and
is part of a 3-year programme
of increasing payout to reduce
dividend cover to a targeted 3.5
times for the 2008 financial year.
Operating margin (Operating
Profit/Sales) increasing sharply
to 9.9% (2006: 9.4%); a
combination of good cost control
and successful commercial focus.
Return on capital employed
(EBIT/Net Assets) up again
to 16%.
Record acquisition spend of €2.2
billion, surpassing 2006’s
€2.1 billion (net), spread across
all Divisions and regions including
taking us into Turkey and China
for the first time.
Capital expenditure of €1
billion. In addition to normal
replacements (approximately
90% of depreciation in 2007),
this included €0.3 billion of
development capital expenditure,
building the base of our business
for the future.
Continued strong cash flow,
with a year-end EBITDA/Interest
cover of 9.4 times. This has
enabled CRH to launch a limited
share buy-back programme in
early 2008, while maintaining
significant flexibility and
capacity to continue to grow the
Group through value-creating
acquisitions.
2007 Operations
2007 was a year of robust delivery
despite many challenges. Economic
growth was strong in Eastern
Europe, while in the core Eurozone
countries a very busy first half was
followed by a somewhat slower
pace of growth in the second half.
CRH
15
Chief Executive’s Review continued
In the United States the decline
in new residential construction
which started in 2006 accelerated
considerably, exacerbated by the
credit crisis, but the non-residential
sector continued to grow while
highway activity benefited from
robust public funding programmes.
Europe Materials, which has leading
positions in Ireland, Finland, the
Baltics, Poland, Ukraine, Switzer-
land, Spain, Portugal and the
Eastern Mediterranean, enjoyed,
with some exceptions, generally
favourable economic conditions.
Activity was particularly busy in
Eastern Europe with strong volume
and profit increases; profits also
increased across the Western
European network at a satisfactory
pace with some volume growth
and good price and cost discipline.
Operating profit for the year grew
by a strong 39%.
Europe Products & Distribution
continued its recovery from the
relatively anaemic markets of the
early part of the decade, and
operating profit grew by over 30%.
There was a marked improvement
in operating profit and margin in
the first half, while the second half
saw a slower pace of demand
growth, particularly in Germany.
The Eurozone is the largest region
for Europe Products & Distribution
and had a reasonable growth in
activity. Denmark and Switzerland
were strong, the UK was flat, while
the Division also benefited from
its small but growing exposure in
Eastern Europe. The Concrete,
Clay and Building Products
businesses all delivered increased
profits, as did Distribution, with a
particularly strong initial eight-month
contribution from Gétaz Romang in
Switzerland.
Our Americas Materials business,
which is a national leader in
16 CRH
aggregates, asphalt and readymixed
concrete, delivered operating profits
up 31% in dollar terms. Organic
profits were up approximately 10%,
while APAC, the major acquisition
in 2006, performed very strongly.
Infrastructure is the key end-use
and highway funding was strong
with good spend from the multi-year
dedicated Federal programme and
from State and local sources. As
in recent years, recovery of energy
cost increases through efficiency,
cost and pricing initiatives was
a priority; the successful push-
through of the necessary price
increases led to volume reductions
but boosted profitability.
Our Americas Products &
Distribution businesses sell
principally to the residential and
non-residential sectors. The
significant decline in new residential
construction led to difficult market
conditions right across the
country, but this was in part offset
by continued strength in non-
residential activity. MMI, the new
platform acquired in 2006, was
hardest hit among our Products
businesses and had a poor year;
various initiatives are in place to
improve future profitability. The
Architectural Products, Precast
and Glass groups all performed
satisfactorily. Distribution was also
hit hard by the residential decline;
while operating profit and margin
were down from the record 2006
levels, a margin of 5.3% was
resilient in the circumstances. Our
operations in Canada, Argentina
and Chile once again had strong
outcomes. Overall operating profits
for Americas Products & Distribution
declined 6% in dollar terms.
Development
Following a record acquisition
spend of €2.1 billion (net) in 2006,
CRH continued the momentum
2007 Acquisition Spend
€ billion
Materials
Products: – Concrete
– Other
Distribution
Total
Europe
Americas
0.36
0.19
0.03
0.44
1.02
0.64
0.22
0.14
0.21
1.21
Total
1.00
0.41
0.17
0.65
2.23
in 2007, spending €2.2 billion on
78 acquisitions which strengthen,
expand, and add value to our
network. In addition a further
€0.7 billion 3-year programme
of investment in cement plant
modernisation and expansion
was progressed.
As the above table shows, the
acquisitions were well spread across
all geographies and product groups.
Europe Materials acquired 50% of
Denizli Cement, a 1.8 million tonne
per annum modern cement plant in
southwestern Turkey with a
vertically integrated readymixed
concrete business, and 100% of
Harbin Sanling Cement, a modern
650,000 tonne cement plant in
northeastern China. These
represent our first ventures in those
regions, and provide platforms
for future growth – indeed since
year-end we have signed a contract
to acquire 26%, with an option to
go to 49% in due course, of the
leading cement manufacturer in
northeastern China, Yatai Cement,
with 9 million tonnes of cement
capacity which is currently being
expanded to 18 million tonnes.
In the Americas the largest deals
were the acquisition of Conrad
Yelvington Distributors, with a major
network of depots and railcars for
distributing aggregates in Florida;
together with certain aggregates
and readymixed concrete assets
acquired from Cemex in Florida and
Arizona.
On the Products & Distribution side,
the keynote European deal was the
acquisition of Gétaz Romang, the
leading building materials distributor
in French-speaking Switzerland
which, together with our existing
operations in the German-speaking
area, gives CRH strong national
leadership.
In the western United States, the
acquisition of Acoustical Materials
Services brings leadership in the
distribution of interior products, a
growing sub-sector for our United
States Distribution Division, while the
acquisition of Vistawall enhances the
product offering of our Glass group
in architectural glazing systems.
The vast majority of our 2007
acquisitions are value-enhancing
bolt-ons which continue to develop
our cement and aggregates platforms,
expand existing strong market
positions for our Products operations
and leverage our successful
Distribution business model.
There were also a number of major
cement development projects
commenced and/or progressed
during the year:
•
In Ireland a €200 million new state-
of-the-art 1.3 million tonne plant at
Platin, partly replacement, partly
expansion; planned to come on-
stream towards year-end.
Sales, profits and earnings increased for the 15th consecutive year
to new record levels. This continued year-in-year-out delivery over
such an extended period is a striking testament to CRH’s strategy.
•
•
•
In Ukraine a €210 million wet
to dry conversion giving a new
state-of-the-art 3 million tonne
plant; planned to come on-stream
in 2009.
In Poland a €200 million 1.8
million tonne capacity expansion
to meet growing demand; planned
to come on-stream in 2009.
In the United States, progress
in the 50% joint venture cement
plant announced in 2006; a
US$200 million, 1.1 million tonne
plant in Florida, which is planned
to come on-stream towards
year-end.
The combination of our acquisition
and greenfield investment initiatives
continues to underpin CRH’s future
performance and growth.
Organisation and People
Following the significant evolution
in our organisation in recent years,
when a number of senior executives
retired and were succeeded
from within, 2007 was a year for
consolidation. The new leaders
have stepped up into their roles
extremely well and the organisation
is functioning very effectively, all
of which augurs well for the future
progress of the Group.
As mentioned in the 2006 Report,
Declan Doyle, Managing Director
Europe Materials, and Tony
O’Loghlen, Chief Operating Officer,
retired during the year and Albert
Manifold and Henry Morris stepped
up very successfully to succeed
them. Declan and Tony have been
at the heart of CRH for many
years and we thank them for their
enormous contributions to our
success.
Corporate Social Responsibility
(CSR)
CRH’s commitment to CSR, which
is embedded throughout the Group,
is set out elsewhere in this Report,
and in the separate CSR Report
on our website www.crh.com.
The leading Socially Responsible
Investment Rating Agencies rank
CRH as a sector leader, and we
are a member of the FTSE4Good
and Dow Jones World and STOXX
Sustainability indexes.
Our major cement investments
outlined earlier are a practical
example of our commitment to
reduce our specific cement CO2
emissions by 15% by 2015. In this
regard our Ukrainian investment
is the first project, JI-0001, to
be approved under the Joint
Implementation Protocol by the
United Nations for any industry
worldwide. We actively participate in
the Cement Sustainability Initiative
with the World Business Council for
Sustainable Development, whose
aim is to address the challenges
of sustainable development and
provide a framework for working
with the various stakeholders.
Strategy
As set out elsewhere, we are
focused on the manufacture and
distribution of building materials,
with balance being fundamental
to smooth-out cycles and provide
multiple platforms for growth.
Approximately 75% of our business
is heavy-side – cement, aggregates,
asphalt, readymixed concrete
and concrete products – with the
remaining 25% split between other
value-added building products
and distribution. This balances
In April 2007 CRH Europe Materials
acquired 50% of Denizli Cement,
the largest cement factory in the
Aegean region of Turkey. Denizli is
an efficient, modern cement factory
with excellent limestone reserves
and an annual cement production
capacity of 1.8 million tonnes.
CRH
17
Chief Executive’s Review continued
Outlook
CRH’s geographic, sectoral and
product balance continued to
deliver in 2007 both in terms
of overall trading performance
and development activity. While
developments over recent
months have added to economic
uncertainties, CRH is well
positioned across its operations
to deal with the evolving market
circumstances. Following record
levels of acquisition activity in 2006
and 2007 and with an ongoing
strong pipeline of opportunities,
we are continuing to develop our
Western European and North
American businesses while building
on our growing platforms in
emerging markets. With a relentless
emphasis on operational efficiency,
and targeted cost reduction
measures, we remain focused
on our twin goals – performance
and growth – and on delivering a
sixteenth consecutive year of profit
and earnings growth in 2008.
residential/non-residential/
infrastructure end-uses, and also
new build/RMI (repair, maintenance
and improvement) end-uses, all of
which operate in cycles of different
timing, amplitude and duration. It
also provides a unique perspective
to understand and capitalise
on market developments which
benefits ongoing operations and
enhances growth possibilities.
Geographically, CRH has
traditionally been roughly 50/50
Western Europe/United States.
While there are still significant
growth opportunities in these
developed markets, we have in
recent years been increasing our
focus on emerging markets which
now comprise 15% of our end-use.
With a strong focus on operational
performance, capital expenditure
geared towards cost-effectiveness
and expansion, and a broad-based
acquisition programme which
adds value to the existing network
and provides platforms for future
growth, CRH has uniquely delivered
unbroken sales, profits and earnings
growth since 1992. We believe
we have significant continued
momentum as we look to build on
this successful track record into
the future.
18 CRH
Operations Review: Europe
Albert Manifold
Máirtín Clarke
Materials
€ million
% of
Group
2007
2006
Change
Organic
2006
2007
Analysis of Change
Acquisitions
Sales Revenue
18
3,651
2,967
+684
+457
+24
+210
Operating Profit
28
586
421
+165
+125
+6
+34
Exchange
translation
-7
-
Average Net Assets
2,611
2,125
Operating Profit Margin
16.1% 14.2%
Products
€ million
% of
Group
2007
2006
Change
Organic
2006
2007
Acquisitions
Non-
recurring
items
Exchange
translation
Analysis of Change
Sales Revenue
17
3,628
3,186
+442
+161
+196
+85
-
Operating Profit
15
308
221
+87
+30
+20
+6
+31
-
-
Average Net Assets
2,392
2,081
Operating Profit Margin
8.5% 6.9%
Excluding non-recurring
8.5% 7.9%
Distribution
Analysis of Change
€ million
% of
Group
2007
2006
Change
Organic
2006
2007
Acquisitions
Sales Revenue
16
3,435
2,786
+649
+76
+25
+566
Operating Profit
10
212
172
+40
+23
+1
+36
Non-
recurring
items
Exchange
translation
-
-19
-18
-1
Average Net Assets
1,287
1,014
Operating Profit Margin
6.2% 6.2%
Excluding non-recurring
6.2% 5.5%
CRH
19
Europe Materials
2007 Overview
Europe Materials continued to
benefit from strong economic
conditions and increased its
profitability significantly during 2007,
primarily through organic growth.
In Ireland we benefited from the
high levels of infrastructure and
non-residential activity which
compensated for the decline in the
residential sector that has emerged
following record house completions
in 2006.
The Finnish economy performed
well with strong construction
growth, particularly in the non-
residential sector which posted a
double-digit advance. The Baltic
States eased in the second half, but
St. Petersburg continued to grow
at pace.
Strong growth in foreign direct
investment led to high demand for
construction materials in Poland,
particularly in the industrial and
commercial sectors. While there
was a good level of activity in roads,
this will grow in the years ahead as
substantial European Union funding
flows through into construction
projects. High levels of demand
helped the pricing environment for
all products.
Following some difficult years, the
Ukrainian economy grew strongly
and construction activity benefited
resulting in a significant increase in
cement demand.
Switzerland continued on a stable
path and CRH operations benefited
from infrastructure projects in its
regions.
In Spain housing demand eased,
particularly in Madrid and the
South. While volumes were weaker
generally, good cost control led to
better margins and profitability.
20 CRH
Portugal again saw a lower level of
construction despite a recovery in
the economy. Downstream activity,
exports and a good performance
in operations outside of Portugal
resulted in an overall improved
performance.
In August we bought out our
partners in the Benelux cement
trading, readymixed concrete
and aggregates joint venture,
Cementbouw bv. The company
was reorganised to report under
the Europe Materials Division and
has performed to expectation since
acquisition.
2007 saw the commencement of
three major cement projects aimed
at modernising and expanding our
cement facilities in Ireland, Poland
and Ukraine. With a combined
value of approximately €0.6
billion, this investment programme
demonstrates CRH’s commitment
to investing for the future.
The focus on developing and
emerging markets continued and
the Division’s acquisition of a 100%
stake in Harbin Sanling Cement,
China and a 50% stake in Denizli
Cement, Turkey, has created new
platforms for growth.
Ireland
In Ireland construction demand
continued to grow in the first half of
2007; however, the second half saw
an accelerating decline in residential
output. The National Development
Plan continued to underpin demand
in the road sector, while private
investment remained strong
particularly in commercial and retail
projects. Agricultural construction
recovered well, supported by
environmental improvement grant
aid. As a result overall demand
for our products was at a similar
level to 2006. The Northern
Ireland business, particularly
quarry products and construction,
benefited from the general sense of
optimism in the economy.
Ongoing programmes to reduce
operating costs and improve
efficiency delivered further
savings in 2007, particularly in
the area of energy cost reduction.
Commercially, the emphasis on cost
recovery through price improvement
continued. Profits were ahead
of 2006.
Irish Cement commenced a
€200 million investment project
to modernise its Platin Works.
The investment will create an
ultra-modern, energy-efficient
plant meeting world best practice
emissions standards. It is due
on-stream towards the end of
2008 and demonstrates CRH’s
commitment to meeting the long-
term needs of the Irish economy
and construction sector.
Finland/Baltics
The Finnish economy grew by 4%
in 2007. Broad-based strength in
construction activity contributed
to strong advances in cement,
aggregates and readymixed
concrete volumes. There was a
particularly strong increase in new
non-residential construction, which
grew by over 20% when compared
with 2006 levels. Ongoing
investments in infrastructure such
as the Helsinki-Turku motorway
and Vuosaari port, combined with
a stable residential construction
market, also underpinned volume
growth. All products achieved
improved pricing and this resulted
in a very good uplift in operating
performance. The new clinker line
at the Lappeenranta cement plant,
commissioned during the first half
of 2007 has performed satisfactorily
to date.
Sales volumes in Estonia, Latvia
and St. Petersburg were generally
ahead of 2006. Higher input costs
remained a challenge, particularly
in Russia, though good cost control
and better pricing held overall
profits in line with 2006 levels.
Overall, good volume growth and
better pricing delivered improved
profitability in the Finland/Baltic
region in 2007.
Central Eastern Europe
2007 was another good year for the
Polish economy with GDP growth
at 6.5% and unemployment falling
to a new low of 11.4%. Inflation,
although low, rose to an average
2.5% while overall construction
output increased by an estimated
16% on 2006. The unusually mild
A year of substantial progress in organic sales and
operating profit, record growth in Central and Eastern
Europe, commencement of a major cement plant
modernisation programme, and investments in the
emerging markets of Turkey and China.
Project JI-0001 to convert its
Ukrainian cement plant from wet
to dry process with associated
environmental and operational
benefits. These two projects,
totalling approximately €0.4 billion,
demonstrate CRH’s commitment to
meeting the growing construction
materials needs of these rapidly
developing economies, which in
2007 accounted for approximately
one-third of Europe Materials
operating profits.
Switzerland
The Swiss economy grew by
2.8% in 2007 with continuing
strong private consumption and
substantially increased exports.
Inflation and unemployment rates
remained at low levels. Construction
grew by 1.4%, with residential
activity reaching its peak mid-year
and levelling off in the second half.
Growth drivers were infrastructure
and industrial construction. Start-
up infrastructure projects led to
an increase in cement sales while
excellent weather conditions in
the first quarter of the year, as well
as strong construction activities
in all the regional markets, led to
better profitability in downstream,
aggregates, asphalt and readymixed
concrete operations.
Iberia
Although the Spanish economy
continued to grow, our volumes
in Spain were a little down on the
record levels achieved in 2006.
Nevertheless, better pricing and
improved cost control led to higher
margins and increased profitability.
Activity remained strong in our
main markets with the exception of
Madrid. Corporación Uniland, the
Group’s 26% cement associate,
recorded a strong increase in
profitability.
The Portuguese economy grew
by 1.9% in 2007; however,
construction had another difficult
year with activity decreasing
3.9%, reflecting reduced activity
in housing. Secil’s three cement
plants operated at full capacity
taking advantage of strong export
markets. Overall, Secil recorded
a satisfactory year due to a good
advance in profitability in its
Tunisian cement operation and in its
downstream activities in Portugal.
Ciment de Sibline, the cement and
concrete business in Lebanon in
which Secil acquired a controlling
stake in January 2007, performed in
line with expectations.
Eastern Mediterranean
Our investment in Denizli Cement
in Turkey provides a platform for
growth in the Aegean region of
southwestern Turkey, which is an
expanding construction market.
Denizli is one of three large cement
producers in the region and is
vertically integrated downstream
in readymixed concrete. The
performance of the business since
acquisition has been in line with our
expectations and ahead of prior
year results.
In Israel, Mashav, in which CRH
holds a 25% stake, performed
slightly ahead of 2006.
China
Our purchase in February 2007
of Harbin Sanling Cement in
Heilongjiang in northeast China
represented a first step for CRH in
the Chinese cement and building
materials market. Economic and
construction growth in the target
region continued as anticipated and
the performance of the company
and its integration into the CRH
Group is progressing well. In
January 2008, CRH signed an
agreement for the acquisition of a
26% shareholding in Yatai Cement
with capacity to produce 9 million
tonnes of cement per annum which
is currently being expanded to 18
million tonnes per annum. This
transaction, which is subject to
Chinese regulatory approval and
which is expected to be completed
later in 2008, is a further step in our
strategy to build a regional position
in cement in northeastern China.
Outlook 2008
Construction demand in Ireland
is expected to decline in 2008 as
housing output adjusts to a more
sustainable level. Both infrastructure
and commercial investment are
expected to continue at current high
levels, and will help to moderate the
demand reduction. Cost reduction
programmes are expected to
reduce the profit impact of lower
overall activity.
Finland’s economy and construction
demand are anticipated to grow
in 2008, though at a slower pace
than in 2007. A decline in new
residential construction will be more
than offset by continued strength
in non-residential and infrastructure
investment. The Estonian and
Latvian economies face a more
uncertain period, although we
expect demand in St. Petersburg to
remain strong. Overall, we expect to
see a further advance in profitability
in the Finland/Baltics region in 2008.
Polish GDP is forecast to advance
5.6% with construction output
expected to grow by over 10%. The
continued availability of European
Union funding coupled with strong
foreign direct investment will
underpin growth.
In Ukraine GDP is projected to
grow by 6%. Expanding private
sector investment and ongoing
rehabilitation of infrastructure are
expected to be the major drivers
CRH
21
The Vuosaari Harbour project in
Finland, to be completed in 2008,
is one of Europe’s largest harbour
projects with 3.4km of new quay
wall. Rudus delivered the concrete
used in the construction of 675 high-
quality quay elements at the site.
first quarter set the tone for cement
demand with annual volumes up
17% on 2006 levels. Our concrete
businesses performed extremely
well with improvement in both
volumes and prices across all
product groups. Despite some
delays in the road programme
our aggregates and blacktop
businesses performed well with
a significant increase in hardrock
aggregates sales. The lime group
continued to perform satisfactorily
with lime product volumes up 7%.
Overall, profits in Poland improved
significantly on 2006 levels.
In Ukraine GDP grew by 8% with
increased demand for cement.
Higher cement pricing in Russia
and other neighbouring countries
had a positive knock-on effect on
pricing and profitability progressed
significantly to record levels.
Work has commenced on both the
.
1.8 million tonne Oz
arów cement
capacity expansion in Poland and
on CRH’s Joint Implementation
Europe Materials continued
of economic growth with increased
demand for all our building
products.
GDP in Switzerland is forecast to
grow in 2008 by 1.9% driven by a
strong export performance, tourism
and good internal consumption.
Construction activity is anticipated
to remain stable with further small
declines in housing offset by growth
in industrial and commercial work
and a stable infrastructural sector.
In Spain a further decline in
housing activity is anticipated.
We expect volume reductions
in all regions across the country
with the exception of our principal
market in Catalonia where road
and rail infrastructural projects and
commercial activity are expected to
mitigate the impact of the housing
decline. In Portugal construction is
expected to show a modest recovery
in 2008 due to an expected increase
in public capital expenditure.
Continued growth is forecast for
construction in Turkey next year with
cement volumes rising accordingly.
Denizli should once again operate to
full capacity.
As in recent years, the home market
in Israel should show modest growth
but significant progress will depend
on the political environment.
Cement demand in China is again
expected to grow at close to 10%
in 2008 and we believe that Harbin
Sanling Cement will operate at full
capacity.
Overall, the market outlook for
2008 is good. While organic growth
is unlikely to be as strong as an
outstanding 2007, we will benefit
from acquisitions completed during
the year, and the major cement
capital expenditure projects
underway will contribute strongly to
the development of the Division in
2009 and beyond.
22 CRH
The Europe Materials Division is a major
vertically integrated producer of primary
materials and value-added manufactured
products operating in 19 countries and
is actively involved in the Group’s
development efforts in Asia. Its
principal products are cement,
aggregates, readymixed concrete,
concrete products, asphalt and lime.
Ireland, Poland, Finland, Switzerland,
Spain, Portugal and Ukraine are
the major markets. In total, the
Division employs approximately
14,500 people at over 540
locations.
Product end-use (EBITDA)
Residential
40%
Non-residential
30%
New
80%
30%
Infrastructure
20%
RMI
Activities
Cement
China, Finland, Ireland, Lebanon (25%), Poland,
Portugal (49%), Switzerland, Tunisia (49%),
Turkey (50%), Ukraine
15.6m tonnes*
Market leadership positions
No.1: Finland, Ireland
No.2: Portugal, Switzerland
No.3: Poland, Ukraine
Aggregates
Estonia, Finland, Ireland, Latvia, Poland,
Portugal (49%), Slovakia, Spain, Switzerland
86.3m tonnes*
No.1: Finland, Ireland
Asphalt
Finland, Ireland, Poland, Switzerland
4.9m tonnes*
No.1: Ireland
Readymixed concrete
Estonia, Finland, Ireland, Latvia, Poland,
Portugal (49%), Russia, Spain, Switzerland,
Tunisia (49%), Turkey (50%)
16.1m cubic metres*
No.1: Finland and Ireland
No.2: Portugal and Switzerland
Agricultural & chemical lime
Ireland, Poland, Switzerland
1.9m tonnes*
No.1: Ireland
No.2: Poland
Concrete products
Estonia, Finland, Ireland, Poland, Portugal
(49%), Spain, Tunisia (49%)
8.6m tonnes*
No.1: Blocks and rooftiles: Ireland
*CRH share of annualised production volumes. Cement and readymixed concrete volumes above exclude CRH share of associates Uniland in
Spain (26.3%) and Mashav in Israel (25%). CRH’s share of annualised production volumes for these businesses amounts to approximately 3.1m
tonnes of cement and 0.8m cubic metres of readymixed concrete.
Europe Products & Distribution
2007 Overview
After a strong first half, housing
demand in the Netherlands
moderated later in the year.
Germany also reported a robust
start, but slowed somewhat in
the latter months. Nordic markets
witnessed significant growth while
Belgium, Switzerland and France
remained positive. The UK saw
stable markets with operational
efficiencies leading to good profit
growth. Results in Eastern Europe
were exceptional with strong growth
and high margins.
During 2007 we invested €663
million in 26 acquisitions including
the Builders Merchants business
Gétaz Romang, a major addition to
our Swiss distribution business. We
also completed several strategically
important bolt-on acquisitions in
our various markets, in line with our
strategy of building local leadership
positions.
Overall, the Division once again
achieved record sales and
operating profits, up 18% and 32%
respectively.
Concrete Products
This group manufactures concrete
products for two principal end-
uses: pavers, tiles and blocks for
architectural use, and floor and
wall elements, beams and vaults
for structural use. In addition,
sand-lime bricks are produced for
the residential market. 2007 saw
good progress on the development
front with eight acquisitions which
further consolidated our positions in
existing Western European markets
and expanded our operations in
Eastern Europe, in particular in
Poland and Romania. The group
reported a solid underlying profit
advance boosted by contributions
from acquisitions.
Architectural
Architectural operations performed
ahead of 2006 despite difficult
market conditions in several markets.
Our Dutch and Belgian businesses
continued to face tough competition
due to market over-capacity and
downward price pressure. The
German business posted strong
results despite a downturn in
new residential construction. In
France results improved driven by
operational synergies. Our Danish
and Slovakian businesses continued
to perform strongly. Supreme in
the UK, acquired in April 2006,
contributed above expectations in its
first full year. The architectural group
made four acquisitions in 2007
including an add-on to Supreme in
the UK, two bolt-ons to our water
treatment and paving business in
Belgium, and Elpreco, an entry into
the Romanian market.
Structural
Our structural concrete operations
again delivered excellent results
driven by tight operational control
and strong markets in Belgium,
France, Denmark and Poland, in
particular in the new non-residential
sector. Our sand-lime brick business
posted lower results reflecting
slower activity levels in the Dutch
residential market. The structural
group expanded its product range
and market position in Denmark with
the acquisition of a concrete stairs
business in March followed by the
purchase of a lightweight wall panels
and flooring manufacturer in August;
this group also acquired a small
add-on in France and completed
the buyout of the remaining 75% of
Ergon Poland.
Clay Products
The Clay Products group,
with operations in the UK, the
Netherlands, Germany, Poland
and Belgium, principally produces
clay facing bricks, pavers, blocks
and rooftiles. This group delivered
increased profits for 2007.
UK brick industry volumes showed a
welcome return to growth in the first
half of 2007; however, with heavy
rain across the UK in mid-summer,
volumes for the year finished at a
similar level to 2006. Ibstock profits
advanced strongly due to operating
and overhead efficiencies.
In the Netherlands our markets
slowed as the year progressed and
profitability declined slightly.
In Germany the initial early optimism
was not sustained and our clay
operations were restructured
and capacity reduced. However,
underlying results improved
on 2006. Our Polish operation
advanced strongly and profits
increased sharply, as a result of
good volume and price growth.
In November, we expanded our
presence with the acquisition of
a clay brick, block and rooftile
manufacturer in western Poland.
Building Products
The Building Products group
is active in lightside building
materials and focuses on three
core business areas: Construction
Accessories, Building Envelope
Products and Insulation Products.
Market conditions in 2007 were
positive, particularly in non-
residential sectors in Germany, the
Benelux and the UK. All business
units contributed to organic
improvement, complemented by
acquisitive growth.
Construction Accessories
This business unit, market leader
in construction accessories in
Europe, experienced another year
of top performance and growth.
The full year contribution of Halfen,
acquired in May 2006, exceeded
CRH
23
Europe Products & Distribution continued
our expectations and all our other
businesses showed solid operating
results. We closed four small bolt-
on acquisitions during the year,
which performed as expected. With
its main focus on non-residential
construction and civil engineering,
Construction Accessories is well
positioned for further growth.
Building Envelope Products
This business unit comprises
Fencing & Security (F&S),
Daylight & Ventilation (D&V) and
Roller Shutters & Awnings (RSA)
businesses which specialise in
entrance control and climate control
products. All segments contributed
to a stronger 2007 performance.
F&S once again delivered record
results. Despite difficult markets
for our glass projects business,
D&V showed a year of progress
in operating results, mainly driven
by an excellent performance in its
German roof lights business. The
first full year contribution from our
RSA business, acquired in August
2006, exceeded expectations. The
Building Envelope unit continues
to benefit from a growing market
focus on repair, maintenance and
improvement, safety and comfort.
Insulation Products
Insulation Products had another
year of organic improvement in both
sales and operating profits. Good
returns from recent restructuring
initiatives and growing demand
in our key markets, especially
in Poland, underpinned a solid
performance. The business is well
positioned for further improvements,
given the ongoing European
legislation for energy management
of buildings.
Distribution
2007 was another strong year with
a further improvement in sales
and operating profit. Good market
conditions in most of our markets,
a mild winter and a continued
focus on margin improvement and
cost control underpinned organic
growth. This was supplemented by
excellent contributions from the ten
acquisitions completed in 2007.
24 CRH
Professional Builders Merchants
With 448 locations in five countries,
Professional Builders Merchants
has strong market positions in all its
regions and generated significant
margin improvement in 2007.
The Netherlands: Following a good
final quarter in 2006, this business
performed very strongly in the
first half of 2007, supported by a
positive market and mild winter
conditions. Although the global
credit crunch impacted sentiment
from mid-year, demand remained
solid throughout the second half.
This positive backdrop combined
with a targeted “quality for quantity”
margin improvement programme
enabled our Dutch professional
business to report strong sales and
profit growth.
France: Our heritage operations in
Ile-de-France (100%), Burgundy
and Franche-Comté (58%)
benefited from good market
conditions resulting in improved
sales and profits. LDP (100%),
acquired in January 2007 with 17
locations in Normandy, delivered
very satisfactory results exceeding
our initial expectations.
Switzerland: Our acquisition
(effective 1st May 2007) of Gétaz
Romang, created the largest
builders merchants business in
Switzerland with more than 100
locations and annualised sales
of approximately €1 billion. In
addition to its traditional builders
merchants business, the new
group has a leading position in
The latest technology combined
with time honoured craftsmanship
work in harmony to produce this
cast stone window cill - part of
the popular Forticrete range of
exceptional quality cast stone
dressings.
a number of specialised builders
merchants businesses including
sanitary ware, tiles, kitchens and
ironmongery. Organic improvement
in the heritage Baubedarf and
Richner operations, a performance
well above initial expectations from
Gétaz Romang and a successful
integration of all three businesses,
resulted in a highly satisfactory
2007 performance. In addition, two
further acquisitions added three
branches to the existing network.
Austria: Quester, our Austrian
builders merchants company,
failed to benefit in 2007 from the
positive market conditions and
from re-organisation measures
taken in 2006. As a result, sales,
operating profit and margins were
lower than 2006. In response,
further restructuring initiatives were
implemented from mid-2007 which
are expected to restore margins
to appropriate levels. Taking
account of these restructuring
costs, Quester was loss-making at
operating profit level in 2007.
Germany: Bauking, in which
we have a 48% stake, operates
primarily in the northwestern half of
Germany. After a good start to the
year due to mild winter weather, the
expiry of home ownership grants
and the increase in value added tax
(VAT) effective 1st January 2007
began to impact from the second
quarter. As a result, like-for-like
sales were lower than in 2006.
However, with relentless cost
control, like-for-like operating profit
was maintained and, with an active
year on the development front,
overall sales and operating profit
advanced.
DIY
The DIY Europe platform has
activities in five countries with
240 DIY stores. These stores
are operated under five different
Improved economic conditions together with profit enhancement
initiatives led to strong performance across all businesses. Operating
margins advanced and an active development programme included
the doubling of our Swiss distribution activities.
in our Scandinavian businesses
will be tempered somewhat by the
slowdown in Danish new housing,
but overall we consider the outlook
for these markets to be positive.
Following successful delivery in
2006 and 2007, ongoing margin
improvement through a combination
of price recovery and cost reduction
remains the key focus of our
management teams. The search for
acquisition opportunities in Europe
across our full range of activities
continues. We look to further
success on the operational and
development front in 2008 leading
to further profit advances, despite a
somewhat slower growth backdrop.
Maxgarden concept. Start-up losses
for the new openings resulted in
lower profits than in 2006.
Spain: We entered the Spanish
DIY market in May 2007 with
the acquisition of a 60% interest
in a small business in the
Alicante/Valencia region.
Outlook
Current forecasts for our European
construction markets are for a
slower pace of growth than in 2007.
In the Netherlands, we expect
the residential and non-residential
sectors to be stable in 2008. In
Belgium after several years of strong
growth, the market is expected to
vary somewhat by segment, with
a slower new residential market,
growth in non-residential spend and
a stable infrastructure sector.
While we anticipate a slowdown in
the new non-residential sector in
France the residential markets are
expected to remain stable.
After a long downturn, 2006 and
2007 saw the start of a modest
recovery in overall German
construction activity. Although the
residential sector remains weak,
we expect that non-residential and
infrastructure will continue growth
into 2008.
Swiss construction output is
anticipated to grow at a moderate
pace in 2008 with a slight decrease
in the new housing sector more
than offset by a positive non-
residential outlook.
In the UK despite recent reductions
in interest rates, we expect the
more cautious lending environment
generally to dampen 2008 demand
with the exception of non-
residential, which is expected to
remain relatively stable.
Strong growth is expected in
Eastern Europe, with the current
robust climate in Poland expected
to continue. Strong but more
moderate growth is still expected
in Slovakia and we see a positive
outlook to our newly acquired
Romanian concrete operations.
The growth we have experienced
CRH
25
brands: Gamma (The Netherlands
and Belgium), Karwei (The
Netherlands), Hagebau (Germany),
Maxmat (Portugal) and BricoHouse
(Spain).
The Netherlands: After some flat
years, 2007 saw a healthy increase
in the total DIY market underpinned
by increasing consumer confidence.
The mild winter and sunny spring
period resulted in a very successful
garden season, while good
promotional campaigns and sharp
formula management resulted in an
increase in market share. Organic
sales and profit advanced strongly.
In addition, two stores were added
from one acquisition, and three
greenfield stores were opened.
Belgium: Gamma Belgium showed
a healthy increase in both sales and
profits but, in the absence of new
greenfield store openings, market
share declined.
Germany: Bauking operates 54
DIY stores under the brand name
Hagebau. In a very competitive
market which was depressed by the
effect of the VAT increase, Bauking’s
Hagebau stores reported sales and
profits in line with 2006. From two
acquisitions Bauking added 14
Hagebau stores bringing its total
network to 140 stores.
Portugal: Despite generally weak
economic conditions, like-for-
like sales at Maxmat remained at
2006 levels. With the lifting of legal
limitations on new store openings,
Maxmat greenfielded seven new
stores in 2007 and introduced the
In May 2007 CRH aquired Gétaz
Romang, the market leader in
building materials distribution
in the French speaking part of
Switzerland. Pictured is one of
Gétaz’s branches in Daillens, a
sanitary ware distribution centre.
The Products & Distribution Division in Europe is organised as
three groups of related manufacturing businesses and a
distribution group. The manufacturing groups are involved
in concrete, clay and other building products. Distribution
encompasses professional builders merchants and
“do-it-yourself” (DIY) stores. The Division operates
in 19 European countries with the Netherlands,
Belgium, UK, Germany, France and Switzerland
being our major markets. Europe Products &
Distribution seeks leadership positions in the markets
and sectors in which it operates and employs more than
30,000 people at over 1,200 locations.
Product end-use (EBITDA)
Residential
60%
Non-residential
30%
New
60%
10%
Infrastructure
40%
RMI
Activities
Market leadership positions
Concrete paving and landscaping
Benelux, Denmark, France, Germany, Italy,
Slovakia, UK
10.1m tonnes*
No.1 paving products: Benelux, France, Slovakia
No.1 paving/landscape walling: Germany; No.1 architectural masonry: UK
No.2 paving products: Denmark
Precast concrete products
Benelux, Denmark, France, Poland, Romania,
Switzerland, UK
7.3m tonnes*
No.1 precast flooring: Benelux; No.1 precast architectural concrete: Denmark
No.1 utility precast: France; No.1 precast structural elements: Switzerland
No.1 concrete fencing and lintels: UK
Clay bricks, pavers, rooftiles and blocks
Benelux, Germany, Poland, UK
3m tonnes*
No.1 facing bricks: UK; No.2 facing bricks, pavers & blocks: Europe
Insulation Products
Benelux, Denmark, Estonia, Finland, Germany,
Ireland, Poland, Sweden, UK
6.2m cubic metres*
No.1 EPS: Ireland, Netherlands, Poland, Nordic region
Joint No.1 XPS: Germany (50%); No.1 XPE: Germany
No.1 PUR/PIR: Netherlands
Fencing & Security
Benelux, France, Germany, UK
2.4m lineal metres*
No.1 security fencing and perimeter protection: Europe
Daylight & Ventilation
Benelux, France, Germany, Ireland, UK
1.2m square metres*
Joint No.1 glass structures, plastic rooflights, natural ventilation and smoke
exhaust systems: Europe
Construction accessories
Benelux, France, Germany, Ireland, Italy, Norway,
Poland, Spain, Switzerland, Sweden, UK
n/a
No.1 Western Europe
Professional builders merchants
Austria, France, Germany, Netherlands,
Switzerland
448 branches
No.1: Netherlands; No.1: Burgundy, Rhône-Alps and Franche-Comté
No.1 Switzerland; No.1: Sachsen-Anwalt, Niedersachsen and northern
Nord Rhein Westfalen; No.1: Austria; No.2: Ile-de-France
DIY stores
Benelux, Germany (48%), Portugal (50%)
240 stores
Member of Gamma franchise, No.1: Netherlands, No.2: Belgium
Member of Hagebau franchise, No.5: Germany; Joint No. 2: Portugal
*CRH share of annualised production volumes.
26 CRH
Operations Review: Americas
Tom Hill
Materials
€ million
% of
Group
2007
2006
Change
Organic
2006
2007
Analysis of Change
Acquisitions
Sales Revenue
26
5,445
4,778
+667
-61
+1,002
+127
Operating Profit
28
570
475
+95
+42
+80
+12
Average Net Assets
4,169
3,671
Operating Profit Margin
10.5% 9.9%
Excluding APAC
12.1% 11.2%
Products
€ million
% of
Group
2007
2006
Change
Organic
2006
2007
Analysis of Change
Acquisitions
Sales Revenue
17
3,510
3,572
Operating Profit
16
340
375
-62
-35
-186
+226
+185
-17
-1
+13
Average Net Assets
1,931
1,764
Operating Profit Margin
9.7% 10.5%
Excluding MMI
11.0% 11.3%
Exchange
translation
-401
-39
Exchange
translation
-287
-30
Distribution
€ million
Sales Revenue
Operating Profit
Analysis of Change
Acquisitions
% of
Group
6
3
2007
2006
Change
Organic
2006
2007
1,323
1,448
-125
-209
+163
+42
70
103
-33
-39
+15
-
Exchange
translation
-121
-9
Average Net Assets
484
362
Operating Profit Margin
5.3% 7.1%
CRH
27
Americas Materials
2007 Overview
Americas Materials had another
good year, with continuing success
in recovering higher energy and
other input costs and in delivering
an improvement in heritage
operating profit margin for the
third consecutive year. After a
record net acquisition spend of
€1.1 billion (US$1.4 billion) in
2006, our main development focus
during the first half of 2007 was on
integrating APAC, the major 2006
transaction, which performed well
ahead of expectations in 2007. The
significant incremental contribution
from APAC, combined with a 2007
acquisition spend of €0.6 billion
(US$0.9 billion) arising mainly
in the second half of the year,
and the strong organic heritage
performance, resulted in another
record year of sales and operating
profit for the Division.
Despite record high crude oil prices
bitumen costs increased a relatively
modest 5%. Energy used at our
asphalt plants, consisting of fuel
oil, recycled oil and natural gas,
had a composite cost decrease
of 7%. The cost of diesel fuel and
gasoline used to power our mobile
fleet increased by 6%. Against this
backdrop, overall prices increased
7% for aggregates, 8% for
readymixed concrete and 12% for
asphalt, the product most impacted
by input cost increases.
Non-residential demand continued
to improve and somewhat offset the
significant decline in new residential
construction. Overall funding
available for highway projects
showed further growth on 2006
levels. However, with relatively fixed
highway budgets, the volume of
activity was again impacted by the
strong price increases necessary
to recover continuing higher input
costs. Total volumes, including
28 CRH
acquisition effects, increased 5%
for aggregates, 2% for readymixed
concrete and 14% for asphalt.
Heritage volumes declined 7% for
aggregates, 13% for readymixed
concrete, and 13% for asphalt.
The overall 2007 Divisional margin
of 10.5% (2006: 9.9%) again
reflected the dampening effect of
APAC’s profitable but lower margin
business mix. The operating margin
excluding APAC again advanced to
12.1% (2006: 11.2%).
The acquisition of APAC has
resulted in an optimisation of
our regional operating structure.
The newly formed Mid-Atlantic
region comprises our operations
in Pennsylvania, Delaware and
Michigan, which previously reported
as part of our Central region. We
have merged APAC’s operations
in western North Carolina, eastern
Tennessee and Virginia, which
represent approximately 20%
of APAC’s total operations, into
a redefined Central operating
region together with our heritage
operations in Ohio, Kentucky,
West Virginia, North Carolina and
Virginia. We have created two APAC
operating regions, the Southeast
operations in Alabama, Florida,
Georgia and Mississippi and the
Southwest comprising operations in
Arkansas, Missouri, Kansas, western
Tennessee, Oklahoma and Texas.
With a total investment of
approximately US$0.9 billion,
2007 was another very busy
year in acquisition terms for
the Division. Major transactions
included the acquisition of Conrad
Yelvington Distributors (CYDI) and
the purchase of certain assets
in Florida and Arizona formerly
owned by Cemex. CYDI is the
largest rail distributor of aggregates
in the southeast United States
and, with a major presence in
Florida, is a strong geographic and
complementary fit with APAC’s
Florida activities and also with
CRH’s extensive local Precast and
Architectural Products businesses
in the southeast United States. The
former Cemex assets fit well with
our expanding interests in Florida
and offer development opportunities
in Arizona. In addition the Division
completed 17 other transactions
which included some significant
moves in the western states and in
Pennsylvania, and commencement
of a bolt-on acquisitions programme
across the APAC platform.
Construction of the 1.1 million tonne
joint venture greenfield cement plant
in central Florida is progressing well
with completion scheduled for
end 2008.
New England
In 2007, New Hampshire and
Vermont enjoyed good trading in
solid markets. Massachusetts had
another favourable year with good
demand and a continuing positive
pricing environment. The states
of Maine and Connecticut both
reduced highway spending and
higher prices impacted volumes
at the municipal and local level
resulting in profit declines in these
areas. Overall, profits improved.
September saw the acquisition
of Burgess Brothers based in
Bennington, Vermont, which
establishes a presence for our
business in a new market area in
the state.
New York/New Jersey
Our New York/New Jersey
businesses had record results
mainly due to asphalt margin
expansion. In Upstate New York,
our Albany operations once again
increased profits despite challenging
market conditions. Recent years
have seen significant contraction
in the Rochester region with many
large local employers continuing to
scale back their activities. However,
Another year of improvement in heritage operating profit margin
combined with a significant incremental contribution from APAC,
and benefits from a $0.9 billion 2007 acquisition spend, resulted in a
31% increase in US$ operating profits.
A section of Interstate 93 in
Canterbury, New Hampshire being
resurfaced by Pike Industries. To
prepare the road for resurfacing
cold planing is done to re-establish
the profile of the road and then
a conducive surface for repaving
is established by removing the
top layer of the road. A glass
grid pavement fabric is installed
acting as a barrier to retard future
reflective cracking. Finally, a fresh
layer of hotmix asphalt is laid
producing a resurfaced road that
provides a safe and smooth ride to
its travellers. Materials for this job
were produced by Pike Industries’
Hooksett facility.
Prospect Aggregates, a vertically
integrated materials business based
near Lancaster, Pennsylvania was
acquired, adding approximately
170 million tonnes of well-located
reserves and providing a good
growth platform for further vertically
integrated expansion. Other
transactions included the Delaware
component of the readymixed
concrete and concrete products
assets, acquired from US Concrete
in November, and the January
purchase of a crushing facility
adjacent to an existing Materials
Division quarry in Virginia.
Central
This region delivered record results
in the year with solid contributions
from APAC’s operations in the
region, improvements in pricing
and good benefits from its winter-fill
programme. Our bitumen storage
capacity in this region mitigated
significant bitumen cost increases
during the busy highway paving
season. Transactions completed
during 2007 included the April
purchase of a 1 million tonne
per annum Cleveland, Ohio-based
asphalt producer; the August
acquisition of a small asphalt
producer based in Ridgeland, South
Carolina; and in November the
addition of the Knoxville, Tennessee
component of the readymixed
concrete and concrete products
assets acquired from US Concrete.
Materials’ overall operating margin
in 2007, underlying trading in the
business for 2007 was well ahead
of expectations. The integration
programme was completed on
schedule and overall performance
was well ahead of expectations.
CYDI and the former Cemex assets
in Florida acquired during 2007
complement APAC’s operations
in the state. In addition two other
acquisitions during 2007 served
to expand APAC’s aggregates
and asphalt activities in Texas and
Oklahoma respectively.
Outlook 2008
Infrastructure is the key end-use
for Americas Materials and while
funding for highway projects is
forecast to increase further in 2008,
volumes and activity levels will
continue to be influenced by input
cost movements and associated
product pricing trends.
The key focus in 2008 is to
continue the improving underlying
trend in operating profit margin
through prudent cost and overhead
savings, combined with the ongoing
achievement of efficiency gains and
additional price improvements.
With a continuing favourable pricing
environment, a sustained emphasis
on operating efficiency and with
benefits from our record 2006/07
development spend we look forward
to another year of progress for this
Division.
West
Our West region had another
excellent year. Local economies
were mixed, but overall remained
strong with solid non-residential and
highway markets offsetting weak
residential demand. Once again,
Utah and Idaho saw significant
profit gains due to a better pricing
environment in solid markets for
all products, and volume gains
associated with major projects.
In Washington, results improved
significantly. Our operations in
Wyoming, Montana, South Dakota,
Colorado, and New Mexico had
another record year. Our Iowa
operations suffered profit declines
as a result of weak residential
demand. The major acquisitions
completed during 2007 were the
purchase in August of Eugene Sand
& Gravel, based in Eugene, Oregon
and of Cessford Construction,
which operates in central and
eastern Iowa and in west central
Illinois; in November we acquired
HK Contractors, based in Idaho
Falls. These combined with five
smaller bolt-on deals plus the
acquisition of former Cemex assets
in Arizona contributed to a busy
development year in this region.
APAC
We achieved significant synergies
through overhead reductions and
by shifting the business emphasis
from construction to materials.
Although APAC’s structurally
lower margins (due to higher
revenue, lower margin construction
sales) again impacted Americas
CRH
29
2007 brought some improvement
in local demand and our Rochester
operations reported higher profits.
Work continued on our major
project to double aggregates
production capacity at our key West
Nyack quarry, just north of New
York City; this will further enhance
our ability to service the New
York Metro market. A readymixed
concrete producer based in Utica,
New York was acquired in July.
Mid-Atlantic
The newly formed Mid-Atlantic
region delivered positive results.
Despite continued poor markets in
Michigan, our operations delivered
good results reflecting strong
cost control and reduced fixed
overhead. The slowing economy
in Pennsylvania and Delaware
resulted in sales declines for
heritage operations, although
cost and price initiatives achieved
earnings on par with prior year. At
end-August, McMinn’s Asphalt and
The Americas Materials Division
operates in 44 states in the United
States through six regional business
units. CRH is the third largest
aggregates producer, the largest
asphalt producer and a top 10
readymixed concrete producer
in the United States. It owns
integrated aggregates and asphalt
operations thoughout the United
States with strategically located
long-term aggregates reserves.
Integrated readymixed concrete
operations are spread throughout
many states, with particular concentration
in the west. The Division is currently
developing a greenfield joint venture
cement plant in Florida. Americas
Materials employs approximately
23,500 people at over 1,200 locations.
Product end-use (EBITDA)
Residential
20%
Non-residential
30%
New
30%
Activities
Aggregates
United States
Asphalt
United States
Market leadership positions
174.0m tonnes*
No. 3 national producer
51.4m tonnes*
No. 1 national producer
50%
Infrastructure
70%
RMI
Readymixed concrete
United States
9.7m cubic metres*
Top 10 United States
*CRH share of annualised production volumes.
30 CRH
Americas Products & Distribution
2007 Overview
Americas Products & Distribution
faced a challenging year with the
sharp decline in new residential
construction and financial market
turmoil from mid-year. Against this
backdrop, our Products businesses
delivered a resilient performance
with continued growth in non-
residential activity mitigating the
impact of residential weakness,
leaving full-year US$ operating
profit only slightly below the record
2006 outcome. In Distribution,
strong acquisition contributions
were unable to compensate
for an organic profit decline as
residential demand weakened and
Florida demand fell sharply from
2006 peak levels. Regionally, our
Products & Distribution operations
in the western and southern states
performed relatively better; while
the midwest and northeastern
operations were noticeably weaker
than 2006. Significant cost reduction
measures were implemented in our
residential-orientated businesses
which mitigated the impact of
volume declines. Overall, the
Division recorded a 5% increase in
sales and a 6% decline in operating
profit before translation adjustments.
We believe that this represents a
very positive outcome and once
again demonstrates the merits of the
Division’s broad sectoral exposure
and product diversity.
Architectural Products (APG)
APG, with 234 locations in 39
states and two Canadian provinces,
is the leading North American
producer of concrete products
for the commercial masonry,
professional landscaping and
consumer DIY markets. The
group is also a regional leader in
clay brick, packaged dry-mixes,
packaged decorative stone,
mulches and soils.
APG faced difficult trading
conditions in 2007 due to the
sharp and continuing slowdown
in the residential construction
sector and weaker demand from
the homecenter channel. These
negative influences were partially
offset by strong non-residential
construction which limited the
decline in like-for-like sales to
approximately 10%. Despite the
reduction in turnover, strong
margin management, a significant
turnaround in our Lawn & Garden
bagged soil and mulch activities
and a strong performance from our
Canadian operations resulted in
broadly maintained profits and an
improved overall operating margin
compared with 2006.
APG completed 12 acquisitions in
2007. These included the purchase
of concrete block operations,
masonry distribution businesses
and other bolt-on acquisitions
in masonry, packaged soils and
mulches, and packaged specialty
concrete products.
Precast
The Precast group is a leading
manufacturer of precast,
prestressed and polymer concrete
products, small plastic box
enclosures and concrete pipe in
North America. The group operates
from 81 locations in 26 states and
the province of Québec.
The continued strength of the
non-residential construction sector
during the year was offset by a very
weak residential sector. However,
margins were sustained by good
cost control and effective price
management and profits were
only slightly behind a record 2006.
Backlog volumes and margins
heading into 2008 are similar to
2007. Management’s focus will be
on internal improvements and cost
reduction as we move into a more
challenging environment.
Internal developments completed
during 2007 included the
commissioning of the new concrete
pipe production plant in the
Panhandle region of Florida and the
completion of two major concrete
pipe plant expansions in eastern
Pennsylvania and Utah. Together
these investments will result in
increased capacity and lower
manufacturing costs in three
key markets.
Precast completed two acquisitions
in 2007 – the acquisition of a plastic
and polymer box manufacturer
with plants in California, Kentucky
and Ohio, expanding our national
leadership position in concrete,
polymer and concrete small box
enclosures, and the purchase of
a concrete manhole producer in
Southern California, adding to our
strong market position in
that region.
Glass
The Glass group custom
manufactures high-performance
architectural glass and engineered
aluminium glazing systems for multi-
storey commercial, institutional and
residential construction.
In June the Glass group acquired
the Vistawall Group. With annual
sales of US$323 million, Vistawall
is a leading vertically-integrated
manufacturer of a broad range of
architectural aluminium glazing
systems, including storefront
systems, curtain wall, glass
skylights, translucent roof and wall
systems and operable windows.
Headquartered in Terrell, Texas,
Vistawall has 26 locations and a
national footprint with sales in all 50
states. The acquisition of Vistawall
provides scale and critical mass
for Glass group’s growth strategy
CRH
31
Americas Products & Distribution continued
to assemble a unique product and
service bundle of architectural
glass and architectural aluminium
glazing systems. With an expanded
network of 73 locations in 26 states
and four Canadian provinces, the
Glass group continues to be the
largest supplier of high-performance
glazing products and services in
North America.
Trading conditions in the architec-
tural glass market weakened
in the second half of the year,
although continued demand for
high-performance energy-efficient
architectural glass products and
value-added fabrication services
resulted in similar like-for-like
sales and operating profit. This,
combined with an excellent first-
time contribution from Vistawall due
to strong demand for storefront,
curtain wall systems and operable
windows, enabled the group to
achieve a record performance
in 2007.
MMI
MMI, acquired in April 2006, has
17 manufacturing plants and 59
distribution centres across 29 states
plus a plant in Mexico.
Sales and profitability in its fencing
division (which depends to an
important degree on residential
applications) declined significantly
due to the dramatic fall in residential
construction activity and price
development which failed to
keep up with increasing steel
costs. The residential downturn
also impacted certain product
categories in the welded wire
reinforcement division and this
weakness was not sufficiently offset
by demand from the commercial
and infrastructure sectors. Although
disappointing volumes and
pricing were also factors for the
construction accessories division
(especially in the state of Florida),
it performed relatively well for the
year particularly in those products
used in tilt-up wall construction and
as anchoring systems for building
facades and structural components.
In light of market conditions, strong
management actions are underway
to rationalise MMI’s cost structure
and improve operating profit
margins.
Distribution
Oldcastle Distribution, trading
primarily as Allied Building Products
(“Allied”), has 200 branches in 30
32 CRH
US states and 2 Mexican states,
focused on major metropolitan
areas. It comprises two divisions
which supply contractor groups
specialising in Roofing/Siding
and Interior Products (wallboard,
steel studs and acoustical ceiling
systems).
Roofing/Siding is the group’s
traditional business and Allied is
one of the top three distributors in
this segment in the United States.
Demand is largely influenced by
residential replacement activity with
the key products having an average
life span of roughly 20 years.
In 2005, we organised our
fast-growing Interior Products
operations, focused equally on
the commercial and residential
construction markets, into a
separate division. We have
Left: Baylor University in Texas
decided to incorporate their
branded BU logo into every new
project on campus. Baylor selected
multiple colours of Belgard® Holland
pavers to create the large logo at the
entrance to its baseball and softball
complex, complementing the existing
traditional architecture found at the
university..
Right: Vinyl siding being handled
efficiently at a branch of Allied
Building Products, CRH’s Americas
Distribution business. The multi-
directional forklift facilitates greater
productivity of warehouse space.
Vinyl siding is the most popular
residential exterior cladding material
in most regions of the United
States, and is an important product
in Allied’s Roofing/Siding division.
Strong margin management and targeted cost reduction, combined with
acquisition contributions, limited the decline in US$ operating profit to just
6% – a good outcome in tough circumstances.
significantly expanded this segment
and, with the recent acquisition
of Acoustical Materials Services
in the western United States
and Baja California, Mexico,
Interior Products accounts for
approximately 47% of annualised
Distribution sales and we are now
the third largest Interior Products
distributor in the United States. Key
to Oldcastle Distribution’s success
is its well-trained, highly motivated
workforce and strategically-focused
organisational structure, supported
by superior IT.
2007 was a challenging year for
Americas Distribution in both its
business sectors. Roofing/Siding
demand declined in almost all areas
reflecting the downturn in both new
and remodel activity. Florida was
particularly impacted due to the
absence of extensive 2006
roofing/siding repair activity which
followed active hurricane seasons
in both 2004 and 2005. Hawaii
and the Pacific Northwest were the
bright spots for the year. Interior
Products performed well despite a
generally weakening background
and significant price deflation in
gypsum wallboard and, with the
benefits of good contributions
from acquisition activity in recent
years particularly in Hawaii, Texas
and North Carolina, profits were
maintained. Against this backdrop,
full year operating profit for
Americas Distribution declined by
26% before translation effects; while
down from the record 2006 level,
the operating margin of 5.3% was
resilient in the circumstances.
South America
Our operations in Argentina and
Chile had another record year
in a robust regional economic
environment. In Argentina, the
recent capacity expansion made in
our ceramic tile business resulted
in further strong gains in sales and
profits. Our Chilean glass business
performed extremely well and the
new state-of-the-art laminating
facility remains on track for start up
in March 2008.
Outlook 2008
New United States residential
demand is forecast to show further
declines in 2008 and the timing
and pace of a recovery is not clear
given the continued uncertainty in
credit markets. Residential repair,
maintenance and improvement
activity is historically less cyclical
and is expected to remain close
to 2007 levels. Following good
momentum in 2007, non-residential
construction looks likely to
moderate later in 2008. Benefits
from acquisitons, improvements
made in 2007, and further targeted
cost reductions measures will
mitigate the effects of an overall
weaker market, and we look to a
slightly lower US$ outcome for our
Products and Distribution activities.
CRH
33
The Americas Products & Distribution Division
operates primarily in the United States and
has a significant presence in Canada. Its
product groups – Architectural Products,
Precast, Glass, MMI and Distribution – all
have leading positions in national and regional
markets. The Division is also a leading producer
of clay tile products in Argentina and operates
glass fabrication businesses in Argentina and
Chile. Employees total approximately 24,000
at almost 600 locations.
Product end-use (EBITDA)
Residential
45%
Non-residential
45%
New
60%
10%
Infrastructure
40%
RMI
Activities
Market leadership positions
Concrete masonry, patio products,
pavers and rooftiles
Canada, United States
13.4m tonnes*
No. 1 in masonry, paving and patio in United States
No. 1 in paving and patio in Canada
Prepackaged concrete mixes
United States
2m tonnes*
No. 2 United States
Clay bricks, pavers and tiles
Argentina, United States
1.3m tonnes*
No. 1 brick producer in northeast and midwest United States
No. 1 in rooftiles in Argentina
No. 2 wall and floor tiles in Argentina
Precast concrete products
Canada, United States
Glass fabrication
Argentina, Canada, Chile, United States
2.4m tonnes*
No. 1 United States
12.5m square metres*
No. 1 in architectural glass fabrication in North America
Aluminium Glazing Systems
Canada, United States
Construction accessories
United States
Welded wire reinforcement
United States
Fencing products
United States
Roofing/Siding
United States
Interior products
Mexico, United States
34 CRH
n/a
n/a
n/a
No. 1 in custom-engineered aluminium glazing systems in North America
No. 1 United States
No. 2 fencing distributor and manufacturer United States
11.8m lineal metres
No. 3 roofing/siding distributor United States
135 branches
No. 3 interior products distributor United States
65 branches
*CRH share of annualised production volumes.
Finance Review
Myles Lee
Results
margin of approximately 7%.
CRH performed robustly in 2007
with growth in reported sales of
12%, in operating profit of 18% and
in pre-tax profit of 19%. The key
components of 2007 performance
are analysed in Table 1.
Exchange Translation Effects
2007 saw a sharp decline in the
value of the US Dollar with the
average US$/euro rate of 1.3705
for 2007 being 8% weaker versus
the euro than in 2006 (1.2556).
This combined with movements
in average exchange rates for our
other operating currencies resulted
in an adverse translation impact of
€67 million at profit before tax level.
The average and year-end exchange
rates used in the preparation of
CRH’s financial statements are
included under Accounting Policies
on page 63 of this Report.
Incremental Impact of 2006
Acquisitions
2006 acquisitions contributed
incremental operating profit of €121
million on sales of €1,636 million, an
effective incremental operating profit
In Europe, 2006 acquisitions
generated an incremental €27
million in operating profit on sales
of €245 million to give a margin of
approximately 11%. This primarily
arose in Product operations and
mainly reflected the impact of
the Halfen-Deha Construction
Accessories acquisition completed
in May and the AVZ Roller Shutters
& Awnings purchase finalised in
August together with 11 other
Products acquisitions spread
throughout 2006.
In the Americas, 2006 acquisitions
contributed an incremental €94
million in operating profit on
sales of €1,391 million, with the
incremental operating profit margin
of approximately 7% reflecting
inherently low margins in both
APAC, acquired by Americas
Materials in August 2006, and in our
MMI platform acquired by Americas
Products in April. APAC exceeded
expectations in 2007 contributing
almost all of the incremental €80
million in operating profit and
€1,002 million in sales generated
by 2006 Materials acquisitions. In
Products, MMI had a tough year
as the downturn in new housing
particularly impacted its residential-
orientated fencing activities. As a
result the incremental operating
profit impact from 2006 Products
acquisitions was slightly negative
on incremental sales of €226
million. However, 2006 Distribution
acquisitions contributed strongly
delivering incremental operating
profit of €15 million on sales of
€163 million.
Incremental Impact of 2007
Acquisitions
The incremental impact from 2007
acquisitions amounted to €101
million in operating profit and
€1,215 million in sales, an effective
operating margin of just over 8%.
2007 acquisitions by our European-
based operations contributed an
incremental €76 million in operating
profit and €861 million in sales, a
margin of approximately 9%. Our
Materials operations benefited from
acquisitions in Poland, Portugal,
Turkey and China and from the buy-
out of the outstanding 55% stake
Table 1 Key Components of 2007 Performance
€ million
2006 as reported
Exchange effects
Revenue
Operating Profit on
profit disposals
Trading Finance Associates’ Pre-tax
profit
costs
profit
PAT
18,737
1,767
(834)
(79)
1,807
(252)
47
1,602
(80)
13
-
(67)
1,727
(239)
47
1,535
2006 at 2007 exchange rates
17,903
1,688
Incremental impact in 2007 of:
– 2006 acquisitions
– 2007 acquisitions
Non-recurring items
Ongoing operations
1,636
1,215
-
238
121
101
12
164
2007 as reported
20,992
2,086
40
(1)
39
-
-
-
18
57
121
101
12
182
(64)
(42)
-
42
2,143
(303)
% change as reported
+12%
+18%
+19%
1
-
-
16
64
58
59
12
240
1,904
+19%
CRH
35
Finance Review continued
in Cementbouw bv, following which
responsibility for this business
passed from Europe Products
to Europe Materials. Materials
acquisitions added €34 million in
operating profit and €210 million
in sales to the 2007 outcome.
The acquisition in May of Gétaz
Romang, the publicly-quoted Swiss
builders merchanting group,
was the major contributor to the
very strong incremental impact
from 2007 Distribution acquisitions
– €36 million in operating profit
on sales of €566 million. The
contribution from 2007 acquisitions
undertaken by Europe Products
– €6 million in operating profit on
sales of €85 million – is stated
net of the impact of transfer of
responsibility for Cementbouw bv
to Europe Materials effective end-
August 2007.
2007 acquisitions in the Americas,
which were mainly concentrated
in the second half of the year,
contributed an incremental €25
million in operating profit on sales
of €354 million, with acquisitions
across Materials and Products
operations accounting for the bulk
of the total impact.
CRH’s 2008 results are expected
to reflect a significant incremental
impact from 2007 acquisitions
which combined added annual
sales of approximately €2.7 billion.
Non-recurring Items
In 2006 two non-recurring items
affecting our Europe Products &
Distribution businesses had a net
adverse impact of €12 million on
reported profits. Their absence in
2007 is reflected in the movement in
non-recurring items in Table 1.
Ongoing Operations
2007 organic sales growth
amounted to €238 million, a growth
rate of just over 1% compared
with 9% in 2006. Overall organic
sales growth in Europe of 8% was
substantially offset by a decline of
5% in the Americas; this compared
with 2006 which saw organic
sales growth of approximately 7%
in Europe and almost 12% in the
Americas. Despite the lower overall
organic sales growth, underlying
operating profit progress maintained
strong momentum with an increase
of €164 million (2006: €201 million).
Our European operations generated
underlying operating profit growth
of €178 million on an underlying
sales increase of €694 million to
give an effective margin of 26%.
Our Materials businesses performed
strongly through the year, with
particularly strong markets in
central and eastern countries,
delivering an underlying operating
profit increase of €125 million. Our
Products & Distribution operations
both enjoyed very strong first half
growth but, with a slower economic
backdrop in core Eurozone markets,
underlying second half performance
was slightly below a strong second
half in 2006. For the year as a
whole, underlying operating profit
advanced by €30 million in Products
and €23 million in Distribution.
Our operations in the Americas had
a challenging year but successfully
limited the decline in like-for-like
operating profit to just €14 million
despite a €456 million decline in
underlying sales. The Materials
Division achieved significant
success in recovering higher energy
and other input costs to report an
excellent €42 million advance in
underlying operating profit. Despite
a turbulent backdrop in financial and
housing markets, growth in non-
residential construction markets and
profit improvement measures limited
the like-for-like operating profit
reduction in our Products activities
to just €17 million. Our Distribution
operations suffered from the decline
in residential construction and
significant price deflation in gypsum
wallboard and underlying operating
profit was €39 million lower.
Operating Profit Margins
Structurally low operating margins
in the two major 2006 acquisitions,
APAC and MMI, together with 2006
restructuring charges at APAC plus
the impact of non-recurring items
outlined above, affect comparisons
of reported Group and segmental
operating profit margins for
2006 and 2007. The table below
compares the reported operating
profit margins with margins
excluding APAC, MMI and the non-
recurring items in order to provide
a fuller appreciation of CRH’s 2007
operating performance.
Profit on Disposal of Fixed Assets,
Finance Costs, Taxation, Earnings
per Share, Dividend
Profit on disposal of fixed assets of
€57 million was well ahead of 2006
(€40 million) and it is expected that
disposal of surplus properties
will be an ongoing feature of the
Group’s activities.
While the substantial acquisition
activity over the past two years
resulted in a significant increase in
net finance costs to €303 million
(2006: €252 million), EBITDA/net
interest cover for the year remained
very comfortable at 9.4 times (2006:
9.7 times).
The tax charge at 24.5% of
Group profit before tax increased
compared with 2006 (23.6%). The
reduction in the share of profits from
minority interests mainly reflects the
exercise early in 2007 of our call
option to acquire the remaining 50%
of Paver Systems in Florida. Prior
to this, results for Paver Systems
had been fully consolidated with the
appropriate 50% share of profits
included in minorities.
Earnings per share grew by 17%
while cash earnings per share was
ahead by 15%.
The 31% total dividend increase
for 2007 to 68 cent follows a 33%
increase in 2006 and reflects the
second step in a phased reduction
in dividend cover which aims to
achieve cover of the order of 3.5
times for the 2008 financial year.
Table 2 Operating Profit Margin Data
Excluding APAC/MMI
and non-recurring items
Reported
2007
2006
2007
2006
Europe Materials
16.1%
14.2%
16.1%
14.2%
Europe Products
8.5%
7.9%
8.5%
6.9%
Europe Distribution
6.2%
5.5%
6.2%
Americas Materials
12.1%
11.2%
10.5%
6.2%
9.9%
Americas Products
11.0%
11.3%
9.7%
10.5%
Americas Distribution
5.3%
7.1%
5.3%
7.1%
Group
10.4%
9.9%
9.9%
9.4%
36 CRH
CRH delivered strongly on all fronts in 2007; with robust cash generation the Group
remains very well positioned to pursue a strong development pipeline, continue the
phased reduction in dividend cover and the current limited share repurchase
programme, while maintaining CRH’s investment grade credit rating.
Table 3 Compound Average Growth Rates
Table 5 Cash Flow
5-year
10-year
€ million
2007
2006
Sales*
EBITDA*
Earnings per share*
Cash earnings per share*
Net dividend
14%
14%
17%
13%
22%
17%
Inflows
20%
Profit before tax
16%
Depreciation
16%
Amortisation of intangibles
18%
Working capital
* Due to the implementation of IFRS these percentage increases have been
calculated by combining earlier percentage increases computed under Irish
GAAP with the relevant percentage increases since 2005 computed under
IFRS.
Table 4 Key Financial Performance Indicators
Outflows
Taxation
Dividends
Interest cover, excluding joint ventures
Other
2007
2006
Capital expenditure
– EBITDA basis (times)
– EBIT basis (times)
Effective tax rate (%)*
Net debt as a percentage of total equity (%)
Net debt as a percentage of year-end
market capitalisation (%)
Return on average capital employed (%)*
Return on average equity (%)*
9.4
6.9
24.5
64.4
39.6
16.1
19.0
9.7
7.0
23.6
63.2
26.2
15.4
18.4
EBITDA – earnings before finance costs, tax, depreciation and intangible
asset amortisation
EBIT – earnings before finance costs and tax (trading profit)
*Effective tax rate excludes associates
Operating cash flow
Acquisitions & investments
Disposals
Share issues (net of expenses)
Ordinary Shares purchased, net
Translation adjustment
Increase in net debt
Opening net debt
Closing net debt
1,904
1,602
739
35
227
664
25
(76)
2,905
2,215
(388)
(318)
(1,028)
(81)
(378)
(222)
(832)
(51)
(1,815)
(1,483)
1,090
732
(2,227)
(2,311)
156
104
(31)
237
252
112
(15)
187
(671)
(1,043)
(4,492)
(3,449)
(5,163)
(4,492)
The 2007 dividend was covered 3.9
times (2006: 4.3 times and 2005:
4.8 times).
The strong growth in sales, earnings
before interest, tax, depreciation and
amortisation (EBITDA), earnings per
share and cash earnings per share
and net dividend, over a five-year
and ten-year period, are highlighted
in Table 3.
Financial Performance Indicators
provided for in our banking covenants.
Some key financial performance
indicators which, taken together, are a
measure of performance and financial
strength are set out in Table 4.
Interest cover measures remain very
comfortable with 2007 EBITDA/
net interest cover of 9.4 times more
than double the 4.5 times minimum
Year-end net debt of €5,163 million
was €671 million higher than
end-2006 resulting in an increase
in the percentage of net debt to
total equity. With a lower market
capitalisation, the debt to market
capitalisation ratio showed a
proportionately greater increase.
Overall Group return on average
capital employed increased to 16.1%.
The acquisition spend of over
€4 billion delivered in 2006 and
2007 has made greater use of the
Group’s significant debt capacity
contributing to an improvement in
the Group’s return on equity
to 19.0%.
CRH
37
Finance Review continued
Cash Generation
While spending a total of over €3.25
billion on acquisitions, investments
and capital projects, the strong
cash generation characteristics of
the Group limited the increase in
net debt to €0.7 billion, helped by
a positive translation adjustment
of €0.2 billion. Table 5 summarises
CRH’s cash flows for 2007
and 2006.
The increased charges for
depreciation and amortisation of
intangible assets mainly reflect the
impact of acquisitions completed in
2006 and 2007.
A continuing strong focus on
working capital management across
the Group’s heritage operations
combined with a significant
reduction in working capital levels at
APAC, associated with the scaling
back of its low margin contracting
activities, resulted in a working
capital inflow for the year of €227
million compared with a €76 million
outflow in 2006.
Taxation payments were slightly
higher than in 2006.
The increase in dividend cost
reflects the 39% increase in the
final 2006 dividend and the 48%
increase in the interim 2007
dividend both of which were paid
during the course of 2007.
Capital expenditure of €1,028
million represented 4.9% of
Group turnover (2006: 4.4%)
and amounted to 1.39 times
depreciation (2006: 1.25 times).
Of the total capital expenditure
50% was invested in Europe with
50% in the Americas.
The caption denoted “Other” mainly
reflects the elimination of non-
cash income items, mainly share
of associates’ profits and profit
on disposal of fixed assets, and
38 CRH
non-cash expense items such as
IFRS share based compensation
expense, which are included in
arriving at profit before tax.
2007 saw a record €2.2 billion
spend on acquisitions and
investments. This compared with
a net €2.1 billion in 2006 after
adjusting the reported gross spend
of €2.3 billion for subsequent
selective APAC asset disposals of
approximately €0.2 billion.
Proceeds from share issues
principally reflect the take-up of
shares in lieu of dividends under the
Company’s scrip dividend scheme
(€68 million, 2006: €25 million)
augmented by issues under Group
share option and share participation
schemes of €36 million (2006: €87
million).
Purchase of shares reflects the
purchase of existing shares in
respect of the Performance Share
Plan (€10 million) and purchases to
satisfy the exercise of share options
during the year (€21 million net of
proceeds from exercise of options).
In 2006 shares were purchased in
respect of the Performance Share
Plan only.
Exchange rate movements during
2007 reduced the euro amount of
net foreign currency debt by €237
million principally due to the 12%
revaluation of the euro against the
US Dollar from 1.3170 at end-2006
to 1.4721 at end-2007. The
favourable translation adjustment
in 2006 also reflected a 12%
revaluation of the euro versus the
US Dollar from 1.1797 at end-2005
to 1.3170 at end-2006.
Year-end net debt of €5,163 million
(2006: €4,492 million) includes
€164 million (2006: €248 million) in
respect of the Group’s proportionate
share of net debt in joint venture
undertakings. The reduction reflects
the fact that following the August
2007 buy-out of the remaining 55%
of Cementbouw bv its net debt is
no longer included in the joint
venture total.
Employee Benefits
In compliance with IFRS, the net
assets and actuarial liabilities
(excluding related deferred taxation)
of the defined benefit pension
schemes operated by various
Group companies, computed in
accordance with IAS 19, have been
included on the face of the balance
sheet under retirement benefit
obligations. At end-2007, retirement
benefit obligations amounted to
€95 million (2006: €262 million);
after deducting deferred tax the
net liability amounted to €62 million
(2006: €177 million). The net liability
represented 0.5% of CRH’s year-
end 2007 market capitalisation
(2006: 1.0%).
Share Price and Share
Repurchase Programme
The Company’s Ordinary Shares
traded in the range €21.92 to
€38.20 during 2007. The year-end
share price was €23.85 (2006:
€31.54). Shareholders recorded
a negative gross return of -23%
(dividends and capital depreciation)
during 2007 following returns of
+29% in 2006, +28% in 2005 and
+23% in 2004.
Subsequent to year-end, on 3rd
January 2008, CRH introduced
a share repurchase programme
limited to 5% of the 547 million
Ordinary Shares then in issue. To
date, 6 million shares have been
repurchased at an average price
of €25. These shares are held as
Treasury Shares.
CRH is one of six building
materials companies included in
the FTSE Eurotop 300, a market-
capitalisation-weighted index of
Europe’s largest 300 companies.
At year-end 2007 CRH’s market
capitalisation of €13.1 billion (2006:
€17.1 billion) placed it among the
top 6 building materials companies
worldwide.
Insurance
Group headquarters advises
management on different aspects
of risk and monitors overall safety
and loss prevention performance;
operational management is
responsible for the day-to-day
management of business risks.
Insurance cover is held for all
significant insurable risks and
against major catastrophe. For any
such events, the Group generally
bears an initial cost before external
cover begins.
Legal Proceedings
Group companies are parties to
various legal proceedings, including
some in which claims for damages
have been asserted against the
companies. The final outcome of
all the legal proceedings to which
Group companies are party cannot
be accurately forecast. However,
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.
Financial Risk Management
The Board of Directors sets the
treasury policies and objectives of
the Group, which include controls
over the procedures used to
manage financial market risks.
These are set out in detail in note
23 to the financial statements.
Interest rate and debt/liquidity
management
At the end of 2007, 46% of the
Group’s net debt was at interest
conclusions in the Company’s
Annual Report on Form 20-F, filed
with the Securities and Exchange
Commission. For the year ended
31st December 2006, management
concluded that the Company’s
internal control over financial
reporting was effective. As required
by US law, Ernst & Young audited
management’s assessment and
the effectiveness of the Company’s
controls over financial reporting
and issued an unqualified opinion
with regard to the effectiveness of
management’s assessment and of
the Company’s financial controls.
Management’s assessment and the
auditors’ report on the effectiveness
of internal controls for the year
ended 31st December 2007 will be
included in the 2007 Annual Report
on Form 20-F which will be filed
later in the year.
rates which were fixed for an
average period of 4.8 years. The
euro accounted for approximately
38% of net debt at the end of 2007
and 48% of the euro component of
net debt was at fixed rates. The US
Dollar accounted for approximately
47% of net debt at the end of
2007 and 53% of the US Dollar
component of net debt was at
fixed rates.
The Group finished the year in a
very strong financial position with
97% of the Group’s gross debt
drawn under committed term
facilities, 94% of which mature after
more than one year. In addition, at
year-end the Group held €1.6 billion
of undrawn committed facilities,
which had an average maturity of
1.3 years.
At year-end 2007, 92% of the
Group’s cash, short-term deposits
and liquid resources had a maturity
of six months or less.
Currency management
The bulk of the Group’s net worth
is denominated in the world’s two
largest currencies – the US Dollar
and the euro – which accounted for
43% and 35% respectively of the
Group’s net worth at end-2007.
2007 saw a negative €410 million
currency translation effect on
foreign currency net worth mainly
arising on US Dollar net assets.
This negative effect is stated net of
a €237 million positive translation
impact on net foreign currency debt.
Sarbanes-Oxley Act
As a result of its NYSE Listing,
CRH is subject to the provisions
of Section 404 of the Sarbanes-
Oxley Act of 2002, which requires
management to perform an annual
assessment of the effectiveness
of internal control over financial
reporting and to report its
CRH
39
Board of Directors
Board Committees
Acquisitions
K. McGowan, Chairman
M. Lee
T.V. Neill
D.N. O’Connor
W.I. O’Mahony
Audit
J.M. de Jong, Chairman
T.V. Neill
D.N. O’Connor
J.M.C. O’Connor
Finance
K. McGowan, Chairman
U-H. Felcht
D.M. Kennedy
M. Lee
W.I. O’Mahony
Nomination
K. McGowan, Chairman
W.P. Egan
U-H. Felcht
N. Hartery
D.M. Kennedy
W.I. O’Mahony
Remuneration
D.M. Kennedy, Chairman
W.P. Egan
U-H. Felcht
N. Hartery
K. McGowan
Senior Independent Director
D.M. Kennedy
The photograph above shows
members of the Board during
a visit to APAC’s Oklahoma quarry
in June 2007.
40 CRH
Left to right:
W.I. O’Mahony BE, BL, MBA, FIEI
T.V. Neill * MA, MSc
Terry Neill became a non-executive
Director in January 2004. He was,
until August 2001, Senior Partner in
Accenture and had been Chairman
of Accenture/Andersen Consulting’s
global board. He is a member of the
Court of Bank of Ireland. He is also
a member of the Governing Body
of the London Business School,
where he is Chair of the Finance
Committee, and of the Trinity
Foundation Board. (Aged 62).
Chief Executive
Liam O’Mahony joined CRH
in 1971. He has held senior
management positions including
Chief Operating Officer of the United
States operations and Managing
Director, Republic of Ireland and UK
Group companies. He joined the
CRH Board in 1992, was appointed
Chief Executive, Oldcastle, Inc. in
November 1994 and became Group
Chief Executive in January 2000.
He is a director of Smurfit Kappa
Group plc, and a member of The
Irish Management Institute Council
and of the Harvard Business School
European Advisory Board.
(Aged 61).
J.M. de Jong *
Jan Maarten de Jong, a Dutch
national, became a non-executive
Director in January 2004. He is
Vice Chairman of the Supervisory
Board of Heineken N.V. He is a
former member of the Managing
Board of ABN Amro Bank N.V. and
continued to be a Special Advisor
to the board of that company until
April 2006. He also holds a number
of other directorships of European
companies including AON Groep
Nederland B.V. (Aged 62).
K. McGowan *
Chairman
Kieran McGowan became Chairman
of CRH in 2007 having been a
non-executive Director since 1998.
He retired as Chief Executive of IDA
Ireland in December 1998. He is a
director of a number of companies
including Elan Corporation plc,
Enterprise Ireland, Irish Life &
Permanent plc and United Drug plc.
He is also Chairman of the
Governing Authority of University
College Dublin. (Aged 64).
D.N. O’Connor * BComm, FCA
Dan O’Connor became a non-
executive director in June 2006.
He was, until March 2006, President
and Chief Executive Officer of GE
Consumer Finance – Europe and a
Senior Vice-President of GE. He is a
director of Allied Irish Banks, p.l.c.
(Aged 48).
for the Group’s materials, products
and distribution businesses in the
Americas. He was appointed a
CRH Board Director in January
2002. (Aged 51).
W.P. Egan *
Bill Egan became a non-executive
Director in January 2007. He is
founder and general partner of Alta
Communications, a venture capital
company headquartered in Boston.
He is Past President and Chairman
of the National Venture Capital
Association and is a trustee of the
University of Pennsylvania and a
member of the board of overseers
of the Wharton School of Finance at
the University of Pennsylvania. He
is a director of Cephalon, Inc., the
Irish venture capital company Delta
Partners Limited and also serves
on the boards of several privately
held communications, cable and
information technology companies.
(Aged 62).
J.M.C. O’Connor * B.Soc.Sc.,
M.Soc.Sc., PhD
Joyce O’Connor became a non-
executive Director in June 2004.
She is President Emeritus of the
National College of Ireland. She
currently chairs the Digital Hub
Development Agency, the National
Guidance Forum and the Dublin
Inner City Partnership. She is
a non-executive director of the
Hugh Lane Gallery and Caring for
Carers Association. She is a board
member of the National Centre
for Partnership and Performance,
a Council Member of the Dublin
Chamber of Commerce and an
Eisenhower Fellow. (Aged 60).
T.W. Hill BA, MBA
Chief Executive Officer
Oldcastle, Inc.
Tom Hill joined CRH in 1980.
He was appointed President of
Oldcastle Materials, Inc. in 1991
and became its Chief Executive
Officer in January 2000. He was
appointed to his current position
with effect from July 2006. A United
States citizen, he is responsible
D.M. Kennedy * MSc
U-H. Felcht *
David Kennedy became a non-
executive Director in 1989. He is a
director of a number of companies
in Ireland and overseas, including
Bon Secours Health System
Limited, Drury Communications
Limited and Pimco Funds Global
Investors Series plc. He was
formerly Chief Executive of Aer
Lingus plc. (Aged 69).
M. Lee BE, FCA
Finance Director
Myles Lee joined CRH in 1982. Prior
to this he worked in a professional
accountancy practice and in the
oil industry. He was appointed
General Manager Finance in 1988
and became Finance Director in
November 2003.
(Aged 54).
Utz-Hellmuth Felcht became a
non-executive Director in July 2007.
A German national, he was, until
May of 2006, Chief Executive of
Degussa GmbH, Germany’s third
largest chemical company. He is
on the board of CIBA AG and is a
partner in the private equity group
One Equity Europe GmbH. He is a
member of the Advisory Board of
Hapag-Lloyd and of the Supervisory
Board of SGL Carbon AG.
(Aged 60).
N. Hartery * CEng, FIEI, MBA
Nicky Hartery became a non-
executive Director in June 2004.
He is Vice President of
Manufacturing, Business Operations
and Customer Experience for
Dell Europe, the Middle East and
Africa. Prior to joining Dell, he
was Executive Vice President at
Eastman Kodak and previously held
the position of President and CEO
at Verbatim Corporation, based in
the United States. (Aged 56).
*Non-executive
CRH
41
Corporate Governance
CRH has primary listings on the
Irish and London Stock Exchanges
and its ADRs are listed on the New
York Stock Exchange (NYSE).
The Directors are committed to
maintaining the highest standards
of corporate governance and
this statement describes how
CRH applies the main and
supporting principles of section
1 of the Combined Code on
Corporate Governance (June
2006) published by the Financial
Reporting Council in the UK.
Board of Directors
Role
The Board is responsible for
the leadership and control of
the Company. There is a formal
schedule of matters reserved to
the Board for consideration and
decision. This includes Board
appointments, approval of strategic
plans for the Group, approval of
financial statements, the annual
budget, major acquisitions and
significant capital expenditure,
and review of the Group’s
system of internal controls.
The Board has delegated
responsibility for the management
of the Group, through the
Chief Executive, to executive
management. The roles of
Chairman and Chief Executive
are not combined and there is a
clear division of responsibilities
between them, which is set
out in writing and has been
approved by the Board. The Chief
Executive is accountable to the
Board for all authority delegated
to executive management.
The Board has also delegated
some of its responsibilities to
Committees of the Board. 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 policy in
place which indemnifies the
Directors in respect of legal
action taken against them.
Membership
It is the practice of CRH that a
majority of the Board comprises
42 CRH
non-executive Directors and that
the Chairman be non-executive. At
present, there are three executive
and nine non-executive Directors.
Biographical details are set out
on pages 40 and 41. The Board
considers that, between them,
the Directors bring the range of
skills, knowledge and experience,
including international experience,
necessary to lead the Company.
Directors are appointed for
specified terms and subject to
the Memorandum and Articles of
Association of the Company.
All of the Directors bring
independent judgement to bear on
issues of strategy, performance,
resources, key appointments
and standards. The Board has
determined that each of the non-
executive Directors is independent.
In reaching that conclusion, the
Board considered the principles
relating to independence contained
in the Combined Code and the
guidance provided by a number of
shareholder voting agencies. Those
principles and guidance address
a number of factors that might
appear to affect the independence
of Directors, including former
service as an executive, extended
service on the Board and cross-
directorships. However, they
also make clear that a Director
may be considered independent
notwithstanding the presence
of one or more of these factors.
This reflects the Board’s view that
independence is determined by
a Director’s character, objectivity
and integrity. Where relevant, the
Board took account of these factors
and in each case was satisfied
that the Director’s independence
was not compromised.
Chairman
Mr. Kieran McGowan succeeded
Mr. Pat Molloy as Chairman on Mr.
Molloy’s retirement following the
Annual General Meeting on 9th
May 2007. On his appointment as
Chairman, Mr. McGowan met the
independence criteria set out in the
Combined Code. The Chairman
is responsible for the efficient and
effective working of the Board. He
ensures that Board agendas cover
the key strategic issues confronting
the Group; that the Board reviews
and approves management’s plans
for the Group; and that Directors
receive accurate, timely, clear
and relevant information. While
Mr. McGowan holds a number of
other directorships (see details
on page 40), the Board considers
that these do not interfere with the
discharge of his duties to CRH.
Senior Independent Director
The Board has appointed Mr.
David Kennedy as the Senior
Independent Director. Mr. Kennedy
is available to shareholders who
have concerns that cannot be
addressed through the Chairman,
Chief Executive or Finance Director.
On Mr. Kennedy’s retirement from
the Board on 7th May 2008, Mr.
Nicky Hartery will take on the role
of Senior Independent Director.
Company Secretary
The appointment and removal
of the Company Secretary is a
matter for the Board. All Directors
have access to the advice
and services of the Company
Secretary, who is responsible to
the Board for ensuring that Board
procedures are complied with.
Terms of appointment
The standard terms of the letter
of appointment of non-executive
Directors is available, on request,
from the Company Secretary.
Induction and development
New Directors are provided with
extensive briefing materials on the
Group and its operations. Directors
meet with key executives and, in
the course of twice-yearly visits by
the Board to Group locations, see
the businesses at first hand and
meet with local management teams.
Remuneration
Details of remuneration paid
to the Directors (executive
and non-executive) are set
out in the Report on Directors’
Remuneration on pages 48 to 55.
Share ownership and dealing
Details of the shares held by
Directors are set out on page 55.
CRH has a policy on dealings in
securities that applies to Directors
and senior management. Under
the policy, Directors are required to
obtain clearance from the Chairman
and Chief Executive before dealing
in CRH shares. Directors and
senior management are prohibited
from dealing in CRH shares during
designated prohibited periods and
at any time at which the individual
is in possession of price-sensitive
information. The policy adopts the
terms of the Model Code, as set
out in the Listing Rules published
by the UK Listing Authority and
the Irish Stock Exchange.
Performance appraisal
The Senior Independent Director
conducts an annual review
of corporate governance, the
operation and performance of
the Board and its Committees
and the performance of the
Chairman. This is achieved through
discussion with each Director.
A review of individual Directors’
performance is conducted by the
Chairman and each Director is
provided with feedback gathered
from other members of the Board.
Performance is assessed against a
number of measures, including the
ability of the Director to contribute
to the development of strategy,
to understand the major risks
affecting the Group, to contribute
to the cohesion of the Board,
to commit the time required to
fulfil the role, and to listen to and
respect the views of other Directors
and the management team.
Directors’ retirement and re-election
The Board has determined that
when a non-executive Director
has served on the Board for more
than nine years, that Director will
be subject to annual re-election.
Of the remaining Directors, at
least one-third retire at each
Annual General Meeting and
Directors must submit themselves
to shareholders for re-election
every three years. Re-appointment
is not automatic. Directors
who are seeking re-election
are subject to a performance
appraisal, which is overseen by
the Nomination Committee.
Directors appointed by the
Board must submit themselves
to shareholders for election at
the Annual General Meeting
following their appointment.
Board succession planning
The Board plans for its own
succession with the assistance of
the Nomination Committee. In so
doing, the Board considers the
skill, knowledge and experience
necessary to allow it to meet the
strategic vision for the Group.
The Board engages the services
of independent consultants
to undertake a search for
suitable candidates to serve
as non-executive Directors.
Meetings
There were eight full meetings of
the Board during 2007. Details
of Directors’ attendance at those
meetings are set out in the table
on page 45. The Chairman sets
the agenda for each meeting, in
consultation with the Chief Executive
and Company Secretary. Two visits
are made each year by the Board
to Group operations; one in Europe
and one in North America. Each
visit lasts between three and five
days and incorporates a scheduled
Board meeting. In 2007, these
visits were to Poland and to Texas,
Oklahoma and Arkansas in the
United States. Additional meetings,
to consider specific matters,
are held when and if required.
Board papers are circulated to
Directors in advance of meetings.
The non-executive Directors
met twice during 2007 without
executives being present.
Committees
The Board has established five
permanent Committees to assist in
the execution of its responsibilities.
These are the Acquisitions
Committee, the Audit Committee,
the Finance Committee, the
Nomination Committee and the
Remuneration Committee. Ad hoc
committees are formed from time to
time to deal with specific matters.
Each of the permanent Committees
has terms of reference, under which
authority is delegated to them by the
Board. The terms of reference are
available on the Group’s website,
www.crh.com. The Chairman of
each Committee reports to the
Board on its deliberations and
minutes of all Committee meetings
are circulated to all Directors.
The current membership of each
Committee is set out on page 40.
Attendance at meetings held in 2007
is set out in the table on page 45.
Chairmen of the Committees
attend the Annual General Meeting
and are available to answer
questions from shareholders.
During the year each of the
relevant Committees reviewed its
performance and terms of reference.
The role of the Acquisitions
Committee is to approve
acquisitions and capital
expenditure projects within
limits agreed by the Board.
The Audit Committee consists
of four non-executive Directors,
considered by the Board to be
independent. The Board has
determined that Mr. Jan Maarten
de Jong, Mr. Terry Neill and Mr.
Dan O’Connor are the Committee’s
financial experts. It will be seen
from the Directors’ biographical
details, appearing on pages 40
and 41, that the members of the
Committee bring to it a wide range
of experience and expertise.
The Committee met twelve times
during the year under review. The
Finance Director and the Head
of Internal Audit normally attend
meetings of the Committee, while
the Chief Executive and other
executive Directors attend when
necessary. The external auditors
attend as required and have
direct access to the Committee
Chairman at all times. During
the year, the Committee met
with the Head of Internal Audit
and with the external auditors in
the absence of management.
The main role and responsibilities
are set out in written terms
of reference and include:
•
monitoring the integrity of the
Group’s financial statements
and reviewing significant
financial reporting issues and
judgements contained therein;
•
reviewing the effectiveness of the
Group’s internal financial controls;
•
•
•
monitoring and reviewing
the effectiveness of the
Group’s internal auditors;
making recommendations to the
Board on the appointment and
removal of the external auditors
and approving their remuneration
and terms of engagement; and
monitoring and reviewing the
external auditors’ independence,
objectivity and effectiveness,
taking into account professional
and regulatory requirements.
These responsibilities are
discharged as follows:
•
•
the Committee reviews the
trading statements issued by the
Company in January and July;
at a meeting in February,
the Committee reviews
the Company’s preliminary
results announcement/Annual
Report and accounts. The
Committee receives reports
at that meeting from the
external auditors identifying
any accounting or judgemental
issues requiring its attention;
•
the Committee also meets with
the external auditors to review
the Annual Report on Form
20-F, which is filed annually with
the United States Securities
and Exchange Commission;
•
in August, the Committee
reviews the interim report;
•
the external auditors present
their audit plans in advance
to the Committee;
•
the Committee approves the
annual internal audit plan;
•
•
regular reports are received
from the Head of Internal Audit
on reviews carried out; and
the Head of Internal Audit also
reports to the Committee on
other issues including, in the
year under review, updates in
relation to Section 404 of the
Sarbanes-Oxley Act 2002 and the
arrangements in place to enable
employees to raise concerns,
in confidence, in relation to
possible wrongdoing in financial
reporting or other matters.
As noted above, one of the duties
of the Audit Committee is to make
recommendations to the Board
in relation to the appointment of
the external auditors. A number of
factors are taken into account by
the Committee in assessing whether
to recommend the auditors for
re-appointment. These include:
•
•
•
the quality of reports provided
to the Audit Committee
and the Board, and the
quality of advice given;
the level of understanding
demonstrated of the Group’s
business and industry; and
the objectivity of the auditors’
views on the financial controls
around the Group and their ability
to co-ordinate a global audit,
working to tight deadlines.
The Committee has put in
place safeguards to ensure
that the independence of the
audit is not compromised.
Such safeguards include:
•
•
•
seeking confirmation that
the auditors are, in their
professional judgement,
independent from the Group;
obtaining from the external
auditors an account of all
relationships between the
auditors and the Group;
monitoring the number of former
employees of the external
auditors currently employed
in senior positions in the
Group and assessing whether
those appointments impair, or
appear to impair, the auditors’
judgement or independence;
•
considering whether, taken as a
whole, the various relationships
between the Group and the
external auditors impair, or
appear to impair, the auditors’
judgement or independence; and
CRH
43
Corporate Governance continued
•
reviewing the economic
importance of the Group to
the external auditors and
assessing whether that
importance impairs, or appears
to impair, the external auditors’
judgement or independence.
The Group has a policy
governing the conduct of non-
audit work by the auditors.
Under that policy, the auditors
are prohibited from performing
services where the auditors:
•
may be required to audit
their own work;
•
•
participate in activities that
would normally be undertaken
by management;
are remunerated through
a ‘success fee’ structure,
where success is dependent
on the audit; or
•
act in an advocacy role
for the Group.
Other than the above, the Group
does not impose an automatic ban
on the Group auditors undertaking
non-audit work. The auditors are
permitted to provide non-audit
services that are not, or are not
perceived to be, in conflict with
auditor independence, providing
they have the skill, competence
and integrity to carry out the
work and are considered by
the Committee to be the most
appropriate to undertake such
work in the best interests of the
Group. The engagement of the
external auditors to provide any
non-audit services must be pre-
approved by the Audit Committee
or entered into pursuant to pre-
approval policies and procedures
established by the Committee.
The Group audit engagement
partner rotates every five years.
Details of the amounts paid to the
external auditors during the year
for audit and other services are
set out in note 4 to the financial
statements on page 72.
The Finance Committee advises
the Board on the financial
requirements of the Group and on
appropriate funding arrangements.
44 CRH
The Nomination Committee assists
the Board in ensuring that the
composition of the Board and
its Committees is appropriate
to the needs of the Group by:
•
•
assessing the skills, knowledge,
experience and diversity required
on the Board and the extent to
which each are represented;
establishing processes for
the identification of suitable
candidates for appointment
to the Board; and
•
overseeing succession
planning for the Board and
senior management.
To facilitate the search for
suitable candidates to serve as
non-executive Directors, the
Committee uses the services
of independent consultants.
During 2007, the Committee
identified, and recommended to
the Board, a suitable candidate for
appointment as a non-executive
Director. The Committee also
reviewed succession planning
at senior management level in
the four operating Divisions.
The Remuneration Committee,
which consists solely of non-
executive Directors considered by
the Board to be independent:
•
determines the Group’s policy
on executive remuneration;
•
determines the remuneration
of the executive Directors;
•
monitors the level and
structure of remuneration for
senior management; and
•
reviews and approves the design
of all share incentive plans.
The Committee receives advice
from leading independent firms
of compensation and benefit
consultants when necessary
and the Chief Executive is fully
consulted about remuneration
proposals. The Committee oversees
the preparation of the Report
on Directors’ Remuneration.
In 2007, the Committee determined
the salaries of the executive
Directors and awards under the
performance-related incentive
plans; set the remuneration of
the Chairman; and reviewed
the remuneration of senior
management. It also approved
the award of share options to
the executive Directors and key
management and the conditional
allocation of shares under the
Performance Share Plan.
A Succession Committee
has been appointed to make
recommendations to the Board in
relation to the appointment of a
new Chief Executive to succeed
Mr. Liam O’Mahony, whose
retirement at the end of 2008 has
been announced. The members
of this committee are Mr. Kieran
McGowan, Mr. Nicky Hartery, Mr.
Jan Maarten de Jong, Mr. David
Kennedy and Mr. Terry Neill.
Corporate Social Responsibility
Corporate Social Responsibility is
embedded in all CRH operations
and activities. Excellence in
environmental, health, safety
and social performance is a daily
key priority of line management.
Group policies and implementation
systems are summarised on
pages 8 and 9 and are described
in detail in the CSR Report on the
Group’s website, www.crh.com.
During 2007, CRH was again
recognised by several key rating
agencies as being among the
leaders in its sector in respect
of sustainability performance.
Code of Business Conduct
The CRH Code of Business
Conduct is applicable to all Group
employees and is supplemented by
local codes throughout the Group’s
operations. The Code is available
on the Group’s website,
www.crh.com. Regional hotline
facilities are in place, to enable
employees to report suspected
breaches of the Code. The
Board recently approved a new
Code of Business Conduct,
which will be rolled out to the
operating companies during
the course of 2008.
Communications with
Shareholders
Communications with shareholders
are given high priority and
there is regular dialogue with
institutional shareholders, as well
as presentations at the time of
the release of the annual and
interim results. Conference calls
are held following the issuance
of trading statements and major
announcements by the Group,
which afford Directors the
opportunity to hear investors’
reactions to the announcements
and their views on other issues.
Trading statements are issued in
January and July. Major acquisitions
are notified to the Stock
Exchanges in accordance with the
requirements of the Listing Rules.
In addition, development updates,
giving details of other acquisitions
completed and major capital
expenditure projects, are issued
in January and July each year.
During 2007, the Board received
reports from management on the
issues raised by investors in the
course of presentations following
the annual and interim results.
The Group’s website,
www.crh.com, provides the full
text of the Annual and Interim
Reports, the Annual Report on
Form 20-F, which is filed annually
with the United States Securities
and Exchange Commission,
trading statements and copies
of presentations to analysts and
investors. News releases are
made available in the News &
Media section of the website
immediately after release to
the Stock Exchanges.
The Company’s Annual General
Meeting affords individual
shareholders the opportunity to
question the Chairman and the
Board. Notice of the Annual General
Meeting is sent to shareholders
at least 20 working days before
the meeting. At the meeting,
after each resolution has been
dealt with, details are given of
the level of proxy votes lodged,
the balance for and against that
resolution and the number of
abstentions. This information is
made available on the Company’s
website following the meeting.
In addition, the Company responds
throughout the year to numerous
letters from shareholders on
a wide range of issues.
Internal Control
The Directors have overall
responsibility for the Group’s system
of internal control and for reviewing
its effectiveness. Such a system
is designed to manage rather
than eliminate the risk of failure to
achieve business objectives and
can provide only reasonable and
not absolute assurance against
material misstatement or loss.
The Directors confirm that
the Group’s ongoing process
for identifying, evaluating and
managing its significant risks is
in accordance with the updated
Turnbull guidance (Internal Control:
Revised Guidance for Directors on
the Combined Code) published
in October 2005. The process
has been in place throughout the
accounting period and up to the
date of approval of the Annual
Report and financial statements and
is regularly reviewed by the Board.
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 respective business functions
that have been delegated. This
embedding of the system of
internal control throughout the
Group’s operations ensures that
the organisation is capable of
responding quickly to evolving
business risks, and that significant
internal control issues, should they
arise, are reported promptly to
appropriate levels of management.
The Board receives, on a regular
basis, reports on the key risks to
the business and the steps being
taken to manage such risks. It
considers whether the significant
risks faced by the Group are
being identified, evaluated and
appropriately managed, having
regard to the balance of risk, cost
and opportunity. In addition, the
Audit Committee meets with internal
auditors on a regular basis and
satisfies itself as to the adequacy of
the Group’s internal control system.
The Audit Committee also meets
with and receives reports from the
external auditors. The Chairman
of the Audit Committee reports to
the Board on all significant issues
considered by the Committee
and the minutes of its meetings
are circulated to all Directors.
The Directors confirm that they
have conducted an annual review of
the effectiveness of the system of
internal control up to and including
the date of approval of the financial
statements. This had regard to the
material risks that could affect the
Group’s business (as outlined in
the Directors’ Report on pages 46
and 47), the methods of managing
those risks, the controls that are
in place to contain them and the
procedures to monitor them.
Going Concern
After making enquiries, the
Directors have a reasonable
expectation that the Company,
and the Group as a whole, have
adequate resources to continue
in operational existence for
the foreseeable future. For this
reason, they continue to adopt the
going concern basis in preparing
the financial statements.
Compliance
In the period under review, CRH
complied with the provisions set
out in section 1 of the Combined
Code. The Company also complied
with the rules issued by the United
States Securities and Exchange
Commission to implement the
Sarbanes-Oxley Act 2002, in so
far as they apply to the Group.
Attendance at Board and Board Committee meetings during the year ended 31st December 2007
Board
Acquisitions
Audit
Finance
Nomination Remuneration
A
B
A
B
A
B
A
B
A
B
A
B
D.W. Doyle ***
W.P. Egan *
U-H. Felcht ****
N. Hartery
T.W. Hill
J.M. de Jong
D.M. Kennedy
M. Lee
K. McGowan
P.J. Molloy **
T.V. Neill
D.N. O’Connor
J.M.C. O’Connor
W.I. O’Mahony
4
8
3
8
8
8
8
8
8
2
8
8
8
8
4
8
2
7
8
8
8
8
8
2
8
8
8
8
2
1
3
2
0
3
3
3
2
1
1
2
1
1
3
1
5
5
3
2
3
0
5
5
3
2
3
3
2
1
3
2
3
2
1
2
12
10
5
5
7
12
12
7
12
10
5
5
3
2
5
5
3
2
3
3
5
5
3
3
Column A - indicates the number of meetings held during the period the Director
was a member of the Board and/or Committee.
Column B - indicates the number of meetings attended during the period the Director
was a member of the Board and/or Committee.
* Appointed 1st January 2007
** Retired 9th May 2007
*** Retired 30th June 2007
**** Appointed 25th July 2007
CRH
45
Directors’ Report
The Directors submit their Report
and Financial Statements for the
year ended 31st December 2007.
Accounts and Dividends
Sales revenue at €20,992 million
was 12% higher than in 2006. Profit
before tax amounted to €1,904
million, an increase of €302 million
(19%) on the previous year. After
providing for tax, Group profit for the
financial year amounted to €1,438
million (2006: €1,224 million). Basic
earnings per share amounted to
262.7c compared with 224.3c in the
previous year, an increase of 17%.
An interim dividend of 20.0c
(2006: 13.5c) per share was paid
in November 2007. It is proposed
to pay a final dividend of 48.0c
per share on 12th May 2008 to
shareholders registered at close
of business on 18th March 2008.
The total dividend of 68c compares
with a dividend of 52c for 2006, an
increase of 31%. Shareholders will
have the option of receiving new
shares in lieu of cash dividends.
Other net expense recognised
directly within equity in the
year amounted to €317 million
(2006: €233 million).
Some key financial performance
indicators are set out in the Finance
Review on pages 35 to 39. The
financial statements for the year
ended 31st December 2007 are set
out in detail on pages 58 to 115.
Books and Records
The Directors are responsible for
ensuring that proper books and
accounting records, as outlined in
Section 202 of the Companies Act,
1990, are kept by the Company.
The Directors have appointed
appropriate accounting personnel,
including a professionally qualified
Finance Director, in order to ensure
that those requirements are met.
The books and accounting
records of the Company are
maintained at the principal
executive offices located at Belgard
Castle, Clondalkin, Dublin 22.
Business Review
€1.3 billion and €1 billion for 2005
and 2004 respectively. The nature
and extent of these investments
will make an important contribution
to delivering further growth for the
Group in the years ahead. First half
expenditure of €1 billion comprised
the acquisition of Swiss builders
merchant Gétaz Romang completed
in May; the purchase of a 50% stake
in Denizli Cement in Turkey and the
buyout of the remaining 50% of
Paver Systems in the United States
announced in April; the acquisition
of Harbin Sanling Cement in China
announced in February plus 31
other initiatives announced in the
July Development Strategy Update.
Second half spending of €1.2 billion
included the August buyout of the
remaining 55% of Cementbouw
bv in the Netherlands; completion
of four separate transactions by
the Americas Materials Division
as announced in September; the
purchase of certain Cemex assets
in Florida and Arizona announced
in late November plus a strong flow
of traditional CRH development
opportunities outlined in the
Development Strategy Update
released in January 2008.
CRH’s Materials Divisions in both
Europe and the Americas achieved
significant profit advances in
2007, with strong organic growth
and significant contributions from
acquisitions. While the Products
& Distribution Division in Europe
also reported good organic and
acquisition profit growth, the results
of the Products & Distribution
Division in the Americas were
affected by the sharp decline in new
residential construction in the United
States. Comprehensive reviews of
the development and financial and
operating performance of the Group
during 2007 are set out in the Chief
Executive’s Review on pages 15 to
18, the separate Operations Reviews
for each of the Divisions on pages
19 to 34 and the Finance Review
on pages 35 to 39 (including Key
Financial Performance Indicators on
page 37). The treasury policy and
objectives of the Group are set out in
note 23 to the financial statements.
Full year acquisition spend for 2007
was a record €2.2 billion, compared
with €2.1 billion (net) in 2006, and
The Group is fully committed
to operating ethically and
responsibly in all aspects of its
46 CRH
business relating to employees,
customers, neighbours and other
stakeholders. The Corporate Social
Responsibility (CSR) report available
on the Group’s website at www.
crh.com sets out CRH’s policies
and performance relating to the
Environment, Health & Safety and
Social & Community matters.
Outlook 2008
CRH’s geographic, sectoral and
product balance continued to
deliver in 2007 both in terms
of overall trading performance
and development activity. While
developments over recent
months have added to economic
uncertainties, CRH is well positioned
across its operations to deal with
the evolving market circumstances.
Following record levels of acquisition
activity in 2006 and 2007, and
with an ongoing strong pipeline of
opportunities, we are continuing to
develop our Western European and
North American businesses while
building on our growing platforms in
emerging markets. With a relentless
emphasis on operational efficiency,
and targeted cost reduction
measures, we remain focused
on our twin goals - performance
and growth - and on delivering a
sixteenth consecutive year of profit
and earnings growth in 2008.
Principal Risks and Uncertainties
Under Irish Company law (Regulation
37 of the European Communities
(Companies: Group Accounts)
Regulations 1992, as amended),
the Group is required to give a
description of the principal risks and
uncertainties which it faces. These
principal risks are set out below.
•
CRH operates in cyclical
industries which are affected by
factors beyond Group control
such as the level of construction
activity, fuel and raw material
prices, which are in turn affected
by the performance of national
economies, the implementation
of economic policies by
sovereign governments and
political developments.
•
The onset of a cycle of reduced
economic growth in the
countries in which CRH has
significant operations or the
•
•
•
•
•
implementation of unfavourable
governmental policies could
adversely affect Group revenues
and operating margins.
CRH pursues a strategy of growth
through acquisitions. CRH may
not be able to continue to grow
as contemplated in its business
plan if it is unable to identify
attractive targets, complete
the acquisition transactions
and integrate the operations
of the acquired businesses.
CRH faces strong competition in
its various markets, and if CRH
fails to compete successfully,
market share will decline.
Existing products may be
replaced by substitute products
which CRH does not produce
and, as a result, CRH may
lose market share in the
markets for these products.
Severe weather can reduce
construction activity and lead to
a decrease in demand for Group
products in areas affected by
adverse weather conditions.
CRH is subject to stringent and
evolving environmental and health
and safety laws, regulations and
standards which could result
in costs related to compliance
and remediation efforts that may
adversely affect Group results of
operations and financial condition.
•
CRH may be adversely affected
by governmental regulations.
•
Many of CRH’s subsidiaries
operate in currencies other
than the euro, and adverse
changes in foreign exchange
rates relative to the euro could
adversely affect Group reported
earnings and cash flow.
The Group has long experience
of coping with these risks while
delivering superior performance and
strong Total Shareholder Return.
Board of Directors
Mr. P.J. Molloy retired from the
Board on 9th May 2007. Mr.
D.W. Doyle retired from the
Board on 30th June 2007.
Mr. N. Hartery, Mr. T.W. Hill, Mr.
K. McGowan and Ms. J.M.C.
O’Connor retire from the Board
by rotation and, being eligible,
offer themselves for re-election.
Mr. U-H. Felcht was appointed to
the Board on 25th July 2007. In
accordance with the provisions of
Article 109, he retires and, being
eligible, offers himself for re-election.
Mr. D.M. Kennedy will retire from
the Board at the Annual General
Meeting on 7th May 2008.
Disapplication of
Pre-emption Rights
A special resolution will be proposed
at the Annual General Meeting to
renew the Directors’ authority to
disapply statutory pre-emption rights
in relation to allotments of shares for
cash. In respect of allotments other
than for rights issues to ordinary
shareholders and employees’ share
schemes, the authority is limited to
Ordinary/Income Shares (excluding
Treasury Shares) having a nominal
value of €9,195,000, representing
5% approximately of the issued
Ordinary/Income share capital at
3rd March 2008. This authority will
expire on the earlier of the date
of the Annual General Meeting
in 2009 or 6th August 2009.
Purchase of Own Shares
At the Annual General Meeting
held on 9th May 2007, authority
was granted to purchase up to
54,348,665 of the Company’s
Ordinary/Income Shares. On 3rd
January 2008, the Company
announced the introduction of a
share repurchase programme of up
to 5% of the 547,227,194 shares
then in issue and the intention to
hold the repurchased shares as
Treasury Shares. In the period
to 3rd March 2008, 6,422,583
Ordinary/Income Shares were
purchased and 88,584 Treasury
Shares were re-issued under the
Group’s Share Schemes. As at
3rd March 2008, 547,227,194
Ordinary/Income Shares were in
issue, of which 6,333,999 (1.16%)
were held as Treasury Shares.
at the date of the Annual General
Meeting and in relation to the
maximum and minimum prices at
which Treasury Shares (effectively
shares purchased and not cancelled)
may be re-issued off-market by the
Company. If granted, the authorities
will expire on the earlier of the date
of the Annual General Meeting
in 2009 or 6th August 2009.
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 average market price
of such shares over the preceding
five days. Options to subscribe for
a total of 24,475,051 Ordinary/
Income Shares are outstanding,
representing 4.47% of the issued
Ordinary/Income share capital. If
the authority to purchase Ordinary/
Income Shares was used in full, the
options would represent 4.97%.
The Directors will only exercise
the power to purchase shares
if they consider it to be in the
best interests of the Company
and its shareholders.
Memorandum and Articles
of Association
Resolutions 8 and 9 to be proposed
at the Annual General Meeting seek
shareholders’ approval for certain
changes to the Memorandum
and Articles of Association.
Memorandum of Association
Clause 4 (21) of the Memorandum of
Association deals with the Company’s
powers to lend money and to provide
guarantees and indemnities and the
current clause has been in place since
1975. The proposed replacement
clause, set out in Resolution 8,
is more suited to the current
structure and needs of the Group.
Articles of Association
Paragraph (i) of Resolution 9
updates certain definitions contained
in the Articles of Association,
in line with current practice.
Special resolutions will be proposed
at the Annual General Meeting 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
Article 12 deals with the Company’s
power to pay commissions in
connection with subscriptions for
shares. It is necessary to amend
this Article to take account of a
change in Irish company law.
Article 89 deals with the Directors’
powers to borrow and secure
indebtedness and places limits
on these powers based on the
consolidated audited balance sheet
of the Company. It is proposed to
amend this Article in respect of the
calculation of the borrowing limits
to reflect current practice and to
take account of the Company’s
purchase of its own shares.
Article 127 provides for the use of
electronic communication between
the Company and its shareholders.
The revised Article, set out in
paragraph (iv) of Resolution 9,
reflects current practice in this area.
Corporate Governance
Statements by the Directors in
relation to the Company’s appliance
of corporate governance principles,
compliance with the provisions of
the Combined Code on Corporate
Governance (June 2006), the
Group’s system of internal controls
and the adoption of the going
concern basis in the preparation
of the financial statements are
set out on pages 42 to 45.
The Report on Directors’
Remuneration is set out
on pages 48 to 55.
Details of the Company’s capital
structure and of employee share
schemes can be found in note
29 to the financial statements on
pages 105 to 106. Details regarding
the appointment and replacement
of Directors can be found in the
section on Corporate Governance.
Subsidiary, Joint Venture and
Associated Undertakings
The Group has over 1,100
subsidiary, joint venture and
associated undertakings. The
principal ones as at 31st December
2007 are listed on pages 120 to 125.
Auditors
The Auditors, Ernst & Young,
Chartered Accountants, are willing
to continue in office and a resolution
authorising the Directors to fix their
remuneration will be submitted
to the Annual General Meeting.
Annual General Meeting
Your attention is drawn to
the Notice of Meeting set out
on pages 131 and 132.
Your Directors believe that the
Resolutions to be proposed
at the Meeting are in the best
interests of the Company and
its shareholders as a whole and,
therefore, recommend you to vote
in favour of the Resolutions. Your
Directors intend to vote in favour of
the Resolutions in respect of their
own beneficial holdings of Ordinary
Shares, amounting in total, on 3rd
March 2008, to 1,273,755 Ordinary
Shares, representing approximately
0.23% of the issued Ordinary
share capital of your Company.
On behalf of the Board,
K. McGowan, W.I. O’Mahony,
Directors
3rd March 2008
Substantial Holdings
As at 3rd March 2008, the Company had received notification of the
following interests in its Ordinary share capital:
Name
Holding
Bank of Ireland Asset Management Limited.
27,013,024
Capital Group International, Inc.
19,489,063
Capital Research and Management Company
22,939,982
FMR LLC and Fidelity International Limited
and their direct subsidiaries
UBS AG
16,806,463
26,380,604
%
4.99
3.60
4.24
3.10
4.87
Bank of Ireland Asset Management Limited, Capital Group International,
Inc. and Capital Research and Management Company have stated that
these shares are not beneficially owned by them.
CRH
47
Report on Directors’ Remuneration
The Remuneration Committee
The Remuneration Committee
of the Board consists of non-
executive Directors of the Company.
The terms of reference for the
Remuneration Committee are to
determine the Group’s policy on
executive remuneration and to
consider and approve salaries and
other terms of the remuneration
packages for the executive
Directors. The Committee receives
advice from leading independent
firms of compensation and benefit
consultants when necessary
and the Chief Executive attends
meetings except when his own
remuneration is being discussed.
Membership of the Remuneration
Committee is set out on page 40.
Remuneration Policy
CRH is an international group of
companies, with activities in 32
countries. Our policy on Directors’
remuneration is designed to
attract and retain Directors of the
highest calibre who can bring their
experience and independent views
to the policy, strategic decisions
and governance of CRH.
In setting remuneration levels,
the Remuneration Committee
takes into consideration the
remuneration practices of other
international companies of similar
size and scope. Executive Directors
must be properly rewarded and
motivated to perform in the best
interest of the shareholders. The
spread of the Group’s operations
requires that the remuneration
packages in place in each
geographical area are appropriate
and competitive for that area.
Performance-related rewards,
based on measured targets, are a
key component of remuneration.
CRH’s strategy of fostering
entrepreneurship in its regional
companies requires well-designed
incentive plans that reward the
creation of shareholder value
through organic and acquisitive
growth. The typical elements
of the remuneration package
for executive Directors are
basic salary and benefits, a
performance-related incentive plan,
a contributory pension scheme and
48 CRH
participation in the share option
plan. It is policy to grant options
to key management to encourage
identification with shareholders’
interests and to create a community
of interest among different
regions and nationalities.
The Group also operates share
participation plans and savings-
related share option schemes for
eligible employees in all regions
where the regulations permit the
operation of such plans. In total
there are approximately 6,700
employees of all categories who
are shareholders in the Group.
Executive Directors’
Remuneration
Basic salary and benefits
The basic salaries of executive
Directors are reviewed annually
having regard to personal
performance, company
performance, step changes in
responsibilities and competitive
market practice in the area of
operation. Employment-related
benefits relate principally to the
use of company cars and medical/
life assurance. No fees are
payable to executive Directors.
Performance-related incentive plan
The performance-related incentive
plan is totally based on achieving
clearly defined and stretch annual
profit targets and strategic goals
with an approximate weighting
of 80% for profits and 20% for
personal and strategic goals.
At target performance payout is
80% of basic salary for Europe-
based participants and 90%
of basic salary for US-based
participants. A maximum payout
of 1.5 times these levels is
payable for a level of performance
well in excess of target.
The three components
of the plan are:
(i)
Individual performance
(ii) Earnings per share growth
targets
(iii) Return on net assets
targets
Up to one-third of the earned bonus
in each year is receivable in CRH
shares and deferred for a period
of three years, with forfeiture in
the event of departure from the
Group in certain circumstances
during that time period.
In addition, the Chief Executive has
a special long-term incentive plan
incorporating targets set for the
four-year period 2005-2008. The
plan incorporates challenging goals
in respect of Total Shareholder
Return by comparison with a peer
group, growth in earnings per share
and the strategic development of
the Group, with a total maximum
earnings potential of 40% of
aggregate basic salary. While
accruals are made on an annual
basis, there is no commitment
to any payment until the end of
the period. Details of the manner
in which earnings are provided
for under the plan are set out in
note 2 to the table of Directors’
remuneration on page 50.
Performance Share Plan/Share
Option Scheme
Long-term incentive plans involving
conditional awards of shares are
now a common part of executive
remuneration packages, motivating
high performance and aligning
the interests of executives and
shareholders. The Performance
Share Plan approved by
shareholders in May 2006 is tied to
Total Shareholder Return (TSR). Half
of the award is assessed against
TSR for a group of global building
materials companies and the other
half against TSR for the constituents
of the Eurofirst 300 Index. An
earnings per share growth underpin
of the Irish Consumer Price Index
plus 5% per annum is also applied.
The maximum award under the
Performance Share Plan is 150%
of basic salary per annum in the
form of conditional shares and the
vesting period is three years. The
awards lapse if over the three-
year period CRH’s TSR is below
the median of the peer group/
index; 30% of the award vests if
CRH’s performance is equal to
the median while 100% vests if
CRH’s performance is equal to or
greater than the 75th percentile;
for TSR performance between
the 50th and the 75th percentiles,
between 30% and 100% of the
award vests on a straight-line basis.
Participants in the Plan are not
entitled to any dividends (or other
distributions made) and have no
right to vote in respect of the shares
subject to the award, until such
time as the shares vest. Details
of awards to Directors under the
Plan are provided on page 53.
Under the terms of the share
option scheme approved by
shareholders in May 2000, two
tiers of options have been available
subject to different performance
conditions as set out below:
(i) Exercisable only when
earnings per share (EPS)
growth exceeds the growth
of the Irish Consumer Price
Index by 5% compounded
over a period of at least
three years subsequent to
the granting of the options
(Basic Tier).
(ii) Exercisable, if over a period
of at least five years
subsequent to the granting
of the options, the growth
in EPS exceeds the growth
of the Irish Consumer Price
Index by 10% compounded
and places the Company in
the top 25% of EPS
performance of a peer
group of international
building materials and other
manufacturing companies.
If below the 75th percentile,
these options are not
exercisable (Second Tier).
With the introduction of the
Performance Share Plan, the
Remuneration Committee decided
that no further Second Tier share
options should be granted under
the existing share option scheme;
however, Basic Tier options
continue to be issued. Subject to
satisfactory performance, options
are expected to be awarded
annually, ensuring a smooth
progression over the life of the
share option scheme. Grants of
share options are at the market
price of the Company’s shares at
the time of grant, and are made
after the final results announcement
ensuring transparency.
which involves capping their
pensions in line with the provisions
of the Finance Act and receiving
a supplementary taxable non-
pensionable cash allowance in
lieu of pension benefits foregone.
These allowances are similar
in value to the reduction in the
Company’s liability represented by
the pension benefits foregone. They
are calculated based on actuarial
advice as the equivalent of the
reduction in the Company’s liability
to each individual and spread
over the term to retirement as
annual compensation allowances.
The allowances for 2007 are
detailed in note (ii) on page 51.
Mr. Hill participates in a defined
contribution retirement plan in
respect of basic salary; in addition
he participates in an unfunded
defined contribution Supplemental
Executive Retirement Plan (SERP)
also in respect of basic salary, to
which contributions are made at an
agreed rate, offset by contributions
made to the other retirement plan.
Since 1991, it has been your
Board’s policy that non-executive
Directors do not receive pensions.
A defined benefit scheme was
in operation prior to 1991 in
which one current non-executive
Director still participates.
Directors’ Service Contracts
No executive Director has a
service contract extending
beyond twelve months.
Directors’ Remuneration and
Interests in Share Capital
Details of Directors’ remuneration
charged against profit in the year
are given on page 50. Details of
individual remuneration and pension
benefits for the year ended 31st
December 2007 are given on page
51. Directors’ share options and
shareholdings are shown on page
53 and page 55 respectively.
The percentage of share capital
which can be issued under the
Performance Share Plan and share
option schemes, and individual
share option grant limits, comply
with institutional guidelines.
Non-executive Directors’
Remuneration
The remuneration of non-executive
Directors, including that of the
Chairman, is determined by the
Board of Directors as a whole. The
fees paid to the Chairman and non-
executive Directors are 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
their Board duties. They do not
participate in any of the Company’s
performance-related incentive
plans or share schemes.
Pensions
The Irish-based executive Directors
participate in a contributory
defined benefit plan which is based
on an accrual rate of 1/60th of
pensionable salary for each year of
pensionable service and is designed
to provide two-thirds of salary at
retirement for full service. There
is provision for Mr. Lee to retire at
60 years of age. Mr. O’Mahony’s
pension is fully funded, under
arrangements which provided for
his retirement on two-thirds salary
at completion of five years in the
role of Chief Executive at end 2004.
The Finance Act 2006 established
a cap on pension provision by
introducing a penalty tax charge
on pension assets in excess of the
higher of €5 million or the value
of individual accrued pension
entitlements as at 7th December
2005. As a result of these legislative
changes, the Remuneration
Committee has decided that Irish-
based 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 Group. The Irish-based
executive Directors chose to opt
for the alternative arrangement
CRH
49
Report on Directors’ Remuneration continued
Directors’ Remuneration
Notes
Executive Directors
Basic salary
Performance-related incentive plan
- cash element
- deferred shares element
Retirement benefits expense
Other remuneration
Benefits
1
2
Provision for Chief Executive long-term incentive plan
Total executive Directors’ remuneration
2007
€000
2006
€000
2,975
3,306
2,414
785
399
-
96
6,669
536
7,205
2,669
905
497
43
104
7,524
496
8,020
Average number of executive Directors
3.50
4.32
Non-executive Directors
Fees
Other remuneration
1
Total non-executive Directors’ remuneration
571
644
1,215
455
501
956
Average number of non-executive Directors
8.78
7.85
3
Payments to former Directors
Total Directors’ remuneration
Notes to Directors’ remuneration
98
95
8,518
9,071
1
2
See analysis of 2007 remuneration by individual on page 51.
As set out on page 48, the Chief Executive has a special long-term incentive plan tied to the achievement
of exceptional growth and key strategic goals for the four-year period 2005 to 2008 with a total maximum
earnings potential of 40% of aggregate basic salary. While accruals are made on an annual basis, there is no
commitment to any payment until the end of the four-year period.
3
Consulting and other fees paid to a number of former directors.
50 CRH
Individual remuneration for the year ended 31st December 2007
Executive Directors
D. W. Doyle (v)
T.W. Hill
M. Lee
W. I. O’Mahony (vi)
J.L. Wittstock (vii)
Non-executive Directors
W.P. Egan (viii)
U-H. Felcht (ix)
N. Hartery
J.M. de Jong
D. M. Kennedy
K. McGowan (x)
P. J. Molloy (x)
T. V. Neill
A. O’Brien (xi)
D.N. O’Connor (xii)
J.M.C. O’Connor
Basic salary
and fees
€000
305
730
600
1,340
-
2,975
65
28
65
65
65
65
23
65
-
65
65
571
Incentive Plan
Cash
element
(i)
€000
Deferred
shares
(i)
€000
Retirement
benefits
Other
expense Remuneration
(iii)
€000
(ii)
€000
Benefits
(iv)
€000
366
583
453
1,012
-
2,414
-
-
-
-
-
-
-
-
-
-
-
-
-
182
187
416
-
785
-
-
-
-
-
-
-
-
-
-
-
-
53
146
200
-
-
399
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50
15
20
56
62
250
131
20
-
20
20
644
12
33
25
26
-
96
-
-
-
-
-
-
-
-
-
-
-
-
Total
2007
€000
736
1,674
1,465
2,794
-
6,669
115
43
85
121
127
315
154
85
-
85
85
1,215
Total
2006
€000
1,344
1,825
1,411
2,656
288
7,524
-
-
75
75
103
104
375
75
36
38
75
956
(i) Performance-related Incentive Plan Under the executive Directors’ incentive plan for 2007, a bonus is payable for meeting clearly defined and stretch
profit targets and strategic goals. The structure of the 2007 incentive plan is set out on pages 48 and 49 and includes a cash element paid out when
earned and an element receivable in CRH shares deferred for a period of three years, with forfeiture in the event of departure from the Group in certain
circumstances during that time period.
(ii) Retirement Benefits Expense The Irish Finance Act 2006 established a cap on pension provision by introducing a penalty tax charge on pension assets in
excess of the higher of €5 million or the value of individual prospective pension entitlements as at 7th December 2005. As a result of these legislative changes,
the Remuneration Committee has decided that Irish-based 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. The three Irish-based
executive Directors chose to opt for the alternative arrangement which involves capping their pensions in line with the provisions of the Finance Act and receiving
a supplementary taxable non-pensionable cash allowance, in lieu of prospective pension benefits foregone. These allowances are similar in value to the reduction
in the Company’s liability represented by the pension benefit foregone. They are calculated based on actuarial advice as the equivalent of the reduction in the
Company’s liability to each individual and spread over the term to retirement as annual compensation allowances. For 2007 the compensation allowances
amount to €52,577 for Mr. Doyle; €200,137 for Mr. Lee and €631,570 for Mr. O’Mahony. Mr. O’Mahony has waived his right to equivalent prospective benefit
entitlements from his benefit plan arrangements, which were fully funded at end-2004, and as a result no net pension-related expense arises in his respect.
(iii) Other Remuneration Executive Director: Expatriate and housing allowance for Mr. J.L. Wittstock in 2006. Non-executive Directors: Includes remuneration for
Chairman and for Board Committee work.
(iv) Benefits These relate principally to the use of company cars and medical/life assurance.
(v) Mr. D.W. Doyle retired on 30th June 2007.
(vi) Mr. W.I. O’Mahony became a non-executive Director of the Smurfit Kappa Group plc in March 2007 for which he received fees of €104,167 in 2007.
(vii) Mr. J.L. Wittstock resigned on 26th April 2006.
(viii) Mr. W.P. Egan became a Director on 1st January 2007.
(ix) Professor U-H. Felcht became a Director on 25th July 2007.
(x) Mr. K. McGowan became Chairman on 9th May 2007 succeeding Mr. P.J. Molloy who retired as a non-executive Director on the same date.
(xi) Mr. A. O’Brien retired on 3rd May 2006.
(xii) Mr. D.N. O’Connor became a Director on 28th June 2006.
CRH
51
Report on Directors’ Remuneration continued
Pension entitlements - defined benefit
Executive Directors
D. W. Doyle
M. Lee
W. I. O’Mahony
Non-executive Director
D. M. Kennedy
Increase in
accrued
personal pension
during 2007
(i)
€000
-
-
-
Increase in
accrued
personal pension
during 2007
(i)
Transfer value
of increase in
dependants’
pension
(i)
€000
20
49
-
Transfer value
of increase
Total accrued
personal
pension at
year-end
(ii)
€000
367
275
839
Total accrued
personal
pension at
year-end
(ii)
11
180
35
(i) As noted on page 51, the pensions of Mr. Doyle, Mr. Lee and Mr. O’Mahony have been capped in line with the provisions of the Finance Act 2006 and
Mr. O’Mahony’s pension arrangements were fully funded as at end-2004 and as a result no further personal pension benefit accrues. Since the accrual
of personal pension has ceased, other than indexation of the accrued pension, no Greenbury pension charge arises - except in the cases of Mr. Doyle
and Mr. Lee where dependants’ pensions continue to accrue. The transfer values above represent the increase in the value of these dependants’
benefits. These transfer values have been calculated on the basis of actuarial advice. These transfer values do not represent sums paid out or due, but
are the amounts that the pension scheme would transfer to another pension scheme in relation to the benefits accrued in 2007 in the event of the
member leaving service.
(ii) Accrued pension shown is that which would be paid annually on normal retirement date.
Pension entitlements - defined contribution
The accumulated liablility related to the unfunded Supplemental Executive Retirement Plan for Mr. T.W. Hill is as follows:
Executive Director
T.W. Hill
As at 31st
December
2006
€000
2007
contribution
€000
836
126
2007
notional
interest
€000
(iii)
52
Translation
adjustment
€000
As at 31st
December
2007
€000
(100)
914
(iii) Notional interest, which is calculated based on the average bid yields of United States Treasury fixed-coupon securities with remaining terms to maturity
of approximately 20 years, plus 1.5%, is credited to Mr. Hill’s account each year.
Deferred Shares (iv)
Executive Directors
T.W. Hill
M. Lee
W. I. O’Mahony
Number at
1st January
2007
Awards of
Deferred
Shares
during 2007
(v)
New Shares
allotted under
the Scrip
Dividend
Scheme
during 2007
Number at
31st December
2007
-
-
-
-
8,625
5,846
13,446
27,917
134
92
210
436
8,759
5,938
13,656
28,353
Release date
March 2010
March 2010
March 2010
(iv) Under the executive Directors’ incentive plan, up to one third of the earned bonus in each year is receivable in CRH shares, deferred for a period of three
years, with forfeiture in the event of departure from the Group in certain circumstances during that period.
(v) The shares awarded during 2007 related to the deferred portion of 2006 bonuses and were included in total remuneration reported for 2006. These
shares were purchased by the Trustees of the CRH plc Employee Benefit Trust on 7th March 2007 at €32.00 per Ordinary Share.
52 CRH
Directors’ awards under the Performance Share Plan (i)
D.W. Doyle
T.W. Hill
M. Lee
W.I. O’Mahony
31st
December
2006
-
Granted in
2007
-
31st
December
2007
-
Performance
Period
-
-
25,000
-
18,000
30,000
25,000
20,000
18,000
01/01/06 - 31/12/08
01/01/07 - 31/12/09
01/01/06 - 31/12/08
01/01/07 - 31/12/09
30,000
-
20,000
-
60,000
Release
Date
-
March 2009
March 2010
March 2009
March 2010
Market
Price in euro
on award
-
24.82
33.55
24.82
33.55
(ii)
(ii)
(ii)
(ii)
-
60,000
01/01/06 - 31/12/08
March 2009
24.82
(ii)
(i)
This is a long term share incentive plan under which share awards are granted in the form of a provisional allocation of shares for which no exercise price
is payable. The shares are scheduled for release in March 2009 and March 2010 to the extent that the relative TSR performance conditions are achieved.
The structure of the Performance Share Plan is set out on pages 48 and 49.
(ii) The Trustees of the CRH plc Employee Benefit Trust purchased Ordinary Shares at €24.82 per share on 21st June 2006 in respect of the 2006 award,
and at €33.55 per share on 11th April 2007 in respect of part of the 2007 award. No dividends are payable on these shares until such time as they are
released to plan participants.
Directors’ interests
The Company’s Register of Directors’ Interests contains full details of Directors’ shareholdings and options to subscribe for shares.
Directors’ share options
Details of movements on outstanding options and those exercised during the year are set out in the table below:
D.W. Doyle
T.W. Hill
M. Lee
W.I. O’Mahony
31st December
2006
Granted Exercised
in 2007
in 2007
31st December
2007
61,476
46,108
185,000
56,000
82,335
170,000
195,000
40,454
13,228
195,000
125,000
1,211
203,093
241,516
520,000
250,000
-
-
-
-
-
70,000
-
-
-
30,000
-
-
-
-
-
-
-
-
-
-
-
50,000
-
40,454
-
50,000
-
1,211
27,445
54,890
-
-
61,476
46,108
185,000
56,000
82,335
190,000
195,000
-
13,228
175,000
125,000
-
175,648
186,626
520,000
250,000
2,385,421
100,000
224,000
2,261,421
Weighted average
option price at
31st December
2007
€
15.48
15.66
15.90
19.28
18.01
26.77
17.07
-
17.26
22.11
16.48
-
15.97
14.83
20.30
18.84
(a)
(b)
(c)
(d)
(b)
(c)
(d)
(a)
(b)
(c)
(d)
(e)
(a)
(b)
(c)
(d)
Options exercised during 2007
Weighted
average
exercise
price
€
Weighted
average market
price at date
of exercise
€
19.68
17.26
18.98
16.09
7.10
7.10
32.18
34.13
34.13
36.46
31.95
31.95
CRH
53
Report on Directors’ Remuneration continued
Options by Price
€
31st December
2006
Granted Exercised
in 2007
in 2007
31st December
2007
Earliest
exercise date
Expiry date
7.1015
7.1015
12.6416
12.6416
14.5652
14.5652
14.6563
14.6563
17.2615
17.2615
18.0084
18.28
18.28
19.68
19.68
13.15
13.15
13.26
16.71
16.71
16.73
16.73
20.79
20.91
29.00
24.83
32.70
33.12
16.09
27,445
54,890
42,814
62,575
14,271
14,271
38,423
76,846
182,070
92,270
82,335
175,000
251,000
195,000
215,000
170,000
40,000
50,000
130,000
35,000
35,000
35,000
50,000
35,000
80,000
200,000
-
-
1,211
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
70,000
-
27,445
54,890
-
-
-
-
-
-
40,454
-
-
25,000
-
75,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,211
-
-
42,814
62,575
14,271
14,271
38,423
76,846
141,616
92,270
82,335
150,000
251,000
120,000
215,000
170,000
40,000
50,000
130,000
35,000
35,000
35,000
50,000
35,000
80,000
200,000
30,000
70,000
-
(a)
(b)
(a)
(b)
(a)
(b)
(a)
(b)
(a)
(b)
(b)
(c)
(d)
(c)
(d)
(c)
(d)
(d)
(c)
(d)
(c)
(d)
(c)
(c)
(c)
(c)
(c)
(c)
(e)
2,385,421
100,000
224,000
2,261,421
March 2008
March 2008
March 2008
March 2008
March 2008
March 2008
March 2008
March 2008
March 2008
March 2008
March 2008
March 2008
March 2008
March 2008
April 2008
April 2008
April 2008
April 2008
April 2009
April 2009
April 2009
April 2009
April 2010
April 2010
April 2010
April 2011
April 2011
April 2012
April 2012
April 2013
April 2013
April 2013
April 2014
April 2014
April 2014
April 2014
April 2015
April 2015
April 2016
June 2016
April 2017
April 2017
No options lapsed during the year. The market price of the Company’s shares at 31st December 2007 was €23.85 and the range during 2007 was €21.92 to
€38.20.
(a) Granted under the 1990 share option scheme, these options are only exercisable when earnings per share (EPS) growth exceeds the growth of the Irish
Consumer Price Index over a period of at least three years subsequent to the granting of the options.
(b) Granted under the 1990 share option scheme, these options are only exercisable if, over a period of at least five years subsequent to the granting of the
options, the growth in EPS would place the Company in the top 25% of the companies listed in the FTSE 100 Stock Exchange Equity Index.
(c) Granted under the 2000 share option scheme, these options are only exercisable when EPS growth exceeds the growth of the Irish Consumer Price
Index by 5% compounded over a period of at least three years subsequent to the granting of the options.
(d) Granted under the 2000 share option scheme, these options are only exercisable if, over a period of at least five years subsequent to the granting of the
options, the growth in EPS exceeds the growth of the Irish Consumer Price Index by 10% compounded and places the Company in the top 25% of EPS
performance of a peer group of international building materials companies. If below the 75th percentile, these options are not exercisable.
(e)
Granted under the 2000 savings-related share option scheme.
54 CRH
Directors’ Interests in Share Capital at 31st December 2007
The interests of the Directors and Secretary in the shares of the Company,
which are beneficial unless otherwise indicated, are shown below. Between 31st
December 2007 and 3rd March 2008, there were no transactions in the Directors’
and Secretary’s interests.
The Directors and Secretary have no beneficial interests in any of the Group’s
subsidiary, joint venture or associated undertakings.
Ordinary Shares
Directors
W.P. Egan
- Non-beneficial
U-H. Felcht
N. Hartery
T.W. Hill
J.M. de Jong
D.M. Kennedy
- Non-beneficial
M. Lee
K. McGowan
T.V. Neill
D.N. O’Connor
J.M.C. O’Connor
W.I. O’Mahony
Secretary
A. Malone
31st December
2007
31st December
2006
15,000
12,000
1,000
1,000
79,792
10,031
59,999
9,250
240,218
10,039
69,881
11,376
2,131
744,935
10,000 *
-
- *
1,000
78,744
3,084
57,388
9,250
225,904
7,915
59,031
7,278
1,000
662,173
36,820
1,303,472
28,463
1,151,230
* Holding as at date of appointment.
Of the above holdings, the following are held in the form of American
Depository Receipts (ADRs):
Directors
W.P. Egan
- Non-beneficial
T.W. Hill
31st December
2007
31st December
2006
10,000
12,000
21,726
5,000
-
21,726
CRH
55
Statement of Directors’ Responsibilities
in respect of the financial statements
Company law in the Republic of Ireland requires the Directors to prepare
financial statements for each financial year which give a true and fair view of
the state of affairs of the Parent Company and of the Group and of the profit
or loss of the Group for that period.
In preparing the financial statements of the Group, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
•
make judgements and estimates that are reasonable and prudent;
•
comply with applicable International Financial Reporting Standards
as adopted by the European Union, subject to any material departures
disclosed and explained in the financial statements; and
•
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in business.
The considerations set out above for the Group are also required to be
addressed by the Directors in preparing the financial statements of the Parent
Company (which are set out on pages 113 to 115), in respect of which the
applicable accounting standards are those which are generally accepted in
the Republic of Ireland.
The Directors have elected to prepare the Parent Company’s financial
statements in accordance with generally accepted accounting practice in
Ireland (Irish GAAP) comprising the financial reporting standards issued by
the Accounting Standards Board and published by the Institute of Chartered
Accountants in Ireland, together with the Companies Acts, 1963 to 2006.
The Directors are responsible for keeping proper books of account which
disclose with reasonable accuracy at any time the financial position of
the Parent Company and which enable them to ensure that the financial
statements of the Group are prepared in accordance with applicable
International Financial Reporting Standards as adopted by the European
Union and comply with the provisions of the Companies Acts, 1963 to
2006, and Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
56 CRH
Independent Auditors’ Report
to the members of CRH public limited company
We have audited the Group and Parent Company (“Company”) financial
statements (the “financial statements”) of CRH plc for the year ended 31st
December 2007 which comprise the Group Income Statement, the Group
Statement of Recognised Income and Expense, the Group and Company
Balance Sheets, the Group Cash Flow Statement, the related notes 1 to 35
(Group) and the related notes 1 to 10 (Company). These financial statements
have been prepared under the accounting policies set out therein.
This Report is made solely to the Company’s members, as a body, in
accordance with section 193 of the Companies Act, 1990. Our audit work
has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditors’ report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company’s
members as a body, for our audit work, for this Report, or for the opinions
we have formed.
Basis of Audit Opinion
We conducted our audit in accordance with International Standards on
Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence relevant to the amounts
and disclosures in the financial statements. It also includes an assessment
of the significant estimates and judgements made by the Directors in the
preparation of the financial statements, and of whether the accounting policies
are appropriate to the Group’s and Company’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information
and explanations which we considered necessary in order to provide us
with sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Respective responsibilities of Directors and Auditors
Opinion
The Directors are responsible for the preparation of the Group financial
statements in accordance with applicable Irish law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union, and for
the preparation of the Company financial statements in accordance with
applicable Irish law and Accounting Standards issued by the Accounting
Standards Board and promulgated by the Institute of Chartered Accountants
in Ireland (“Generally Accepted Accounting Practice in Ireland”) as set out in
the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give
a true and fair view and have been properly prepared in accordance with
the Companies Acts, 1963 to 2006 and whether, in addition, the Group
financial statements have been properly prepared in accordance with Article
4 of the IAS Regulation. We also report to you our opinion as to: whether
proper books of account have been kept by the Company; whether, at the
balance sheet date, there exists a financial situation which may require the
convening of an extraordinary general meeting of the Company; and whether
the information given in the Directors’ Report is consistent with the financial
statements. In addition, we state whether we have obtained all the information
and explanations necessary for the purposes of our audit and whether the
Company Balance Sheet is in agreement with the books of account.
We also report to you if, in our opinion, any information specified by law or the
Listing Rules of the Irish Stock Exchange regarding directors’ remuneration
and other transactions is not disclosed and, where practicable, include such
information in our Report.
We review whether the Corporate Governance Statement reflects the
Company’s compliance with the nine provisions of the 2006 Financial
Reporting Council’s Combined Code specified for our review by the Listing
Rules of the Irish Stock Exchange, and we report if it does not. We are not
required to consider whether the Board’s statements on internal control cover
all risks and controls, or form an opinion on the effectiveness of the Group’s
corporate governance procedures or its risk and control procedures.
We read other information contained in the Annual Report and consider whether
it is consistent with the audited financial statements. The other information
comprises only the Directors’ Report, the Chairman’s Statement, Chief
Executive’s Review, Operations Reviews, Finance Review and the Corporate
Governance Statement. We consider the implications for our Report if we
become aware of any apparent misstatements or material inconsistencies
with the financial statements. Our responsibilities do not extend to any other
information.
In our opinion the Group financial statements give a true and fair view, in
accordance with IFRSs as adopted by the European Union, of the state
of affairs of the Group as at 31st December 2007 and of its profit for the
year then ended and have been properly prepared in accordance with the
Companies Acts, 1963 to 2006 and Article 4 of the IAS Regulation.
In our opinion the Company financial statements give a true and fair view, in
accordance with Generally Accepted Accounting Practice in Ireland, of the
state of affairs of the Company as at 31st December 2007 and have been
properly prepared in accordance with the Companies Acts, 1963 to 2006.
We have obtained all the information and explanations we consider necessary
for the purposes of our audit. In our opinion proper books of account have
been kept by the Company. The Company Balance Sheet is in agreement
with the books of account.
In our opinion the information given in the Directors’ Report is consistent with
the financial statements.
In our opinion, the Company Balance Sheet does not disclose a financial
situation which under section 40(1) of the Companies (Amendment) Act,
1983 would require the convening of an extraordinary general meeting of the
Company.
Ernst & Young
Registered Auditors
Dublin
3rd March 2008
CRH
57
Group Income Statement
for the financial year ended 31st December 2007
Notes
1
3
Revenue
Cost of sales
Gross profit
Operating costs
1, 4, 5
1
Group operating profit
Profit on disposal of fixed assets
1
8
8
9
10
31
Profit before finance costs
Finance costs
Finance revenue
Group share of associates’ profit after tax
Profit before tax
Income tax expense
Group profit for the financial year
Profit attributable to:
Equity holders of the Company
Minority interest
Group profit for the financial year
2007
€m
20,992
(14,715)
6,277
(4,191)
2,086
57
2,143
(473)
170
64
1,904
(466)
1,438
1,430
8
1,438
2006
€m
18,737
(13,123)
5,614
(3,847)
1,767
40
1,807
(407)
155
47
1,602
(378)
1,224
1,210
14
1,224
12
Basic earnings per Ordinary Share
262.7c
224.3c
12
Diluted earnings per Ordinary Share
260.4c
222.4c
Group Statement of Recognised Income and Expense
for the financial year ended 31st December 2007
Notes
30
27
30
10
Items of income and expense recognised directly within equity
Currency translation effects
Actuarial gain on Group defined benefit pension obligations
Gains/(losses) relating to cash flow hedges
Tax on items taken directly to equity
Net expense recognised directly within equity
Group profit for the financial year
Total recognised income and expense for the financial year
Attributable to:
Equity holders of the Company
Minority interest
Total recognised income and expense for the financial year
2007
€m
(410)
159
8
(74)
(317)
1,438
1,121
1,116
5
1,121
2006
€m
(371)
155
(2)
(15)
(233)
1,224
991
980
11
991
K. McGowan, W.I. O’Mahony, Directors
58 CRH
Group Balance Sheet
as at 31st December 2007
Notes
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in associates
Other financial assets
Derivative financial instruments
Deferred income tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Liquid investments
Cash and cash equivalents
Total current assets
Total assets
EQUITY
Capital and reserves attributable to the Company’s equity holders
Equity share capital
Preference share capital
Share premium account
Own shares
Other reserves
Foreign currency translation reserve
Retained income
13
14
15
15
23
26
17
18
23
21
21
29
29
30
30
30
30
30
31
Minority interest
Total equity
22
23
26
19
27
25
28
19
22
23
25
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings
Derivative financial instruments
Deferred income tax liabilities
Trade and other payables
Retirement benefit obligations
Provisions for liabilities
Capital grants
Total non-current liabilities
Current liabilities
Trade and other payables
Current income tax liabilities
Interest-bearing loans and borrowings
Derivative financial instruments
Provisions for liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
K. McGowan, W.I. O’Mahony, Directors
2007
€m
8,226
3,692
574
78
124
336
2006
€m
7,480
2,966
554
97
74
489
13,030
11,660
2,226
3,199
9
318
1,006
6,758
2,036
3,172
5
370
1,102
6,685
19,788
18,345
186
1
2,420
(19)
70
(547)
5,843
7,954
66
8,020
5,928
52
1,312
141
95
248
11
7,787
2,956
244
570
70
141
3,981
11,768
19,788
184
1
2,318
(14)
52
(137)
4,659
7,063
41
7,104
5,313
47
1,301
160
262
320
10
7,413
2,788
216
645
38
141
3,828
11,241
18,345
CRH
59
Group Cash Flow Statement
for the financial year ended 31st December 2007
Notes
Cash flows from operating activities
Profit before tax
Finance costs (net)
Group share of associates’ profit after tax
Profit on disposal of fixed assets
Group operating profit
Depreciation charge
Share-based payments
Amortisation of intangible assets
Amortisation of capital grants
Other non-cash movements
Net movement on provisions
Decrease/(increase) in working capital
Cash generated from operations
Interest paid (including finance leases)
Irish corporation tax paid
Overseas corporation tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Inflows
Proceeds from disposal of fixed assets
Interest received
Capital grants received
Dividends received from associates
Outflows
Purchase of property, plant and equipment
Acquisition of subsidiaries and joint ventures
Investments in and advances to associates
Advances to joint ventures and purchase of trade investments
Deferred and contingent acquisition consideration paid
Net cash outflow from investing activities
Cash flows from financing activities
Inflows
Proceeds from issue of shares
Shares issued to minority interests
Decrease in liquid investments
Increase in interest-bearing loans and borrowings
Increase in finance lease liabilities
Outflows
Ordinary Shares purchased (own shares), net
Increase in liquid investments
Repayment of interest-bearing loans and borrowings
Repayment of finance lease liabilities
Net cash movement in derivative financial instruments
Dividends paid to equity holders of the Company
Dividends paid to minority interests
Net cash inflow from financing activities
Decrease in cash and cash equivalents
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1st January
Translation adjustment
Decrease in cash and cash equivalents
13
7
14
28
25
20
16
28
13
33
15
15
20
31
24
30
24
24
11
11
24
24
24
Cash and cash equivalents at 31st December
2007
€m
1,904
303
(64)
(57)
2,086
739
23
35
(3)
(2)
(49)
261
3,090
(352)
(18)
(370)
2,350
156
64
3
30
253
(1,028)
(1,858)
-
(40)
(107)
(3,033)
(2,780)
36
-
29
1,481
2
1,548
(31)
-
(753)
(27)
(113)
(250)
(5)
(1,179)
369
(61)
1,102
(35)
(61)
1,006
2006
€m
1,602
252
(47)
(40)
1,767
664
16
25
(2)
10
11
(132)
2,359
(253)
(20)
(358)
1,728
252
46
-
22
320
(832)
(1,978)
(7)
(13)
(74)
(2,904)
(2,584)
87
3
-
1,708
3
1,801
(15)
(35)
(656)
(13)
(29)
(197)
(12)
(957)
844
(12)
1,149
(35)
(12)
1,102
A reconciliation of cash and cash equivalents to net debt is presented in note 24 to the financial statements.
K. McGowan, W.I. O’Mahony, Directors
60 CRH
Accounting Policies
Statement of compliance
The consolidated financial statements of CRH plc have been prepared
in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union, which comprise standards and interpretations
approved by the International Accounting Standards Board (IASB).
CRH plc, the Parent Company, is a public limited company incorporated and
domiciled in the Republic of Ireland.
IFRS as adopted by the European Union differ in certain respects from IFRS
as issued by the IASB. However, the consolidated financial statements for the
financial years presented would be no different had IFRS as issued by the IASB
been applied. References to IFRS hereafter should be construed as references
to IFRS as adopted by the European Union.
Basis of preparation
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 and certain financial assets
and liabilities including derivative financial instruments. The carrying values
of recognised assets and liabilities that are hedged are adjusted to record
changes in the fair values attributable to the risks that are being hedged.
The accounting policies set out below have been applied consistently by all the
Group’s subsidiaries, joint ventures and associates to all periods presented in
these consolidated financial statements.
The preparation of financial statements in conformity with IFRS requires the use
of certain critical accounting estimates. In addition, it requires management
to exercise judgement in the process of applying the Company’s accounting
policies. The areas involving a high degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements, relate primarily to accounting for defined benefit pension
schemes, provisions for liabilities, property, plant and equipment, goodwill
impairment and current and deferred tax and are documented in the relevant
accounting policies below.
The financial year-ends of the Group’s subsidiaries, joint ventures and
associates are co-terminous.
Adoption of IFRS and International Financial Reporting
Interpretations Committee (IFRIC) Interpretations
IFRS and IFRIC Interpretations adopted during the financial year
The Group adopted the following standards and interpretations during the
financial year: IFRS 7 Financial Instruments: Disclosures; Amendment to IAS 1
Capital Disclosures; IFRIC Interpretation 8 Scope of IFRS 2; IFRIC Interpretation
9 Reassessment of Embedded Derivatives; and IFRIC Interpretation 10
Interim Financial Reporting and Impairment. The adoption of IFRS 7 and the
Amendment to IAS 1 have given rise to new disclosures in the current year
together with the associated comparatives. None of the other standards or
interpretations has had, or is expected to have, a material impact on the Group
financial statements.
IFRS and IFRIC Interpretations which are not yet effective
The Group has not applied the following standards and interpretations that
have been issued but are not yet effective:
−
IFRS 8 Operating Segments (effective date: CRH financial year beginning
1st January 2009);
−
IFRS 2 Share-based Payments – Vesting Conditions and Cancellations
(effective date: CRH financial year beginning 1st January 2009);
−
IFRS 3R Business Combinations and IAS 27R Consolidated and Separate
Financial Statements (effective date: CRH financial year beginning 1st
January 2010);
−
IAS 1 Presentation of Financial Statements (Revised) (effective date: CRH
financial year beginning 1st January 2009);
−
IAS 23 Borrowing Costs (Revised) (effective date: CRH financial year
beginning 1st January 2009);
−
Amendments to IAS 32 and IAS 1 Puttable Financial Instruments (effective
date: CRH financial year beginning 1st January 2009);
−
IFRIC Interpretation 11 Group and Treasury Share Transactions (effective
date: CRH financial year beginning 1st January 2008);
−
IFRIC Interpretation 12 Service Concession Arrangements (effective date:
CRH financial year beginning 1st January 2008);
−
IFRIC Interpretation 13 Customer Loyalty Programmes (effective date: CRH
financial year beginning 1st January 2009);
−
IFRIC Interpretation 14 IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction (effective date: CRH
financial year beginning 1st January 2008).
The standards and interpretations addressed above will be applied for the
purposes of the Group financial statements with effect from the dates listed.
Whilst the application of IFRS 8 will result in amendments to the segment
information note accompanying the Group financial statements, these
amendments will not be of a recognition and measurement nature given the
disclosure focus of the IFRS.
The application of IFRS 2 Share-based Payments – Vesting Conditions and
Cancellations, IAS 23 Borrowing Costs (Revised), the Amendments to IAS 32
and IAS 1 Puttable Financial Instruments and IFRIC Interpretation 11 do not
have any impact on the Group financial statements.
IFRS 3R introduces a number of changes to the accounting for business
combinations that will impact the amount of goodwill recognised, the reported
results in the period when an acquisition occurs and future reported results.
IAS 27R requires that a change in the ownership interest of a subsidiary is
accounted for as an equity transaction. The application of IAS 1 Presentation
of Financial Statements (Revised) will give rise to some presentational
changes in the Group financial statements but will not change the recognition,
measurement or disclosure of specific transactions and other events required
by other IFRS.
IFRIC Interpretations 12 and 13 are not applicable in the context of the Group’s
activities. Whilst defined benefit pension schemes are operated by various of
the subsidiaries and joint ventures in the Group, IFRIC Interpretation 14 will
only be of relevance where surpluses emerge and those surpluses are of a
sufficient magnitude to warrant application of the surplus cap.
Basis of consolidation
The consolidated financial statements include the financial statements of the
Company and all subsidiaries, joint ventures and associates, drawn up to
31st December each year.
Subsidiaries
The financial statements of subsidiaries are included in the consolidated
financial statements from the date on which control over the operating and
financial decisions is obtained and cease to be consolidated from the date
on which control is transferred out of the Group. Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain economic benefits from its
activities. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered in determining the existence or
otherwise of control.
CRH
61
Accounting Policies continued
Joint ventures
In line with IAS 31 Interests in Joint Ventures, the Group’s share of results and
net assets of joint ventures (jointly controlled entities), which are entities in
which the Group holds an interest on a long-term basis and which are jointly
controlled by the Group and one or more other venturers under a contractual
arrangement, are accounted for on the basis of proportionate consolidation
from the date on which the contractual agreements stipulating joint control
are finalised and derecognised when joint control ceases. The Group
combines its share of the joint ventures’ individual income and expenses,
assets and liabilities and cash flows on a line-by-line basis with similar items
in the Group’s consolidated financial statements.
Loans to joint ventures are classified as loans and receivables within financial
assets and are recorded at amortised cost.
Associates
Entities other than subsidiaries and joint ventures in which the Group has a
participating interest, and over whose operating and financial policies the
Group is in a position to exercise significant influence, are accounted for as
associates using the equity method and are included in the consolidated
financial statements from the date on which significant influence is deemed
to arise until the date on which such influence ceases to exist. If the Group’s
share of losses exceeds the carrying amount of an associate, 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.
Equity method
Under the equity method, which is used in respect of accounting for the
Group’s investments in associates, the Group Income Statement reflects
the Group’s share of profit after tax of the related associates. Investments
in associates are carried in the Group Balance Sheet at cost adjusted in
respect of post-acquisition changes in the Group’s share of net assets, less
any impairment in value. Where indicators of impairment arise in accordance
with the requirements of IAS 39 Financial Instruments: Recognition and
Measurement, the carrying amount of the investment is tested for impairment
by comparing its recoverable amount with its carrying amount.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from
such transactions, are eliminated in preparing the consolidated financial
statements. Unrealised gains arising from transactions with joint ventures
and associates are eliminated to the extent of the Group’s interest in the
entity. Unrealised losses are eliminated in the same manner as unrealised
gains, but only to the extent that there is no evidence of impairment in the
Group’s interest in the entity.
Revenue recognition
Revenue represents the value of goods and services supplied to external
customers and excludes intercompany sales, trade discounts and value
added tax/sales tax. Other than in the case of construction contracts,
revenue is recognised to the extent that it is subject to reliable measurement,
that it is probable that economic benefits will flow to the Group and that
the significant risks and rewards of ownership have passed to the buyer.
Revenue on construction contracts is recognised in accordance with the
percentage-of-completion method with the completion percentage being
computed on an input cost basis.
Contract costs are recognised as incurred. When the outcome of a construction
contract cannot be estimated reliably, contract revenue is recognised only to
the extent of contract costs incurred that are likely to be recoverable. When
the outcome of a construction contract can be estimated reliably and it is
probable that the contract will be profitable, contract revenue is recognised
over the period of the contract. When it is probable that total contract
62 CRH
costs will exceed total contract revenue, the expected loss is immediately
recognised as an expense. The percentage-of-completion method is used
to determine the appropriate amount to recognise in a particular reporting
period with the stage of completion assessed by reference to the proportion
that contract costs incurred at the balance sheet date bear to the total
estimated cost of the contract.
Segment reporting
A segment is a distinguishable component of the Group that is engaged
either in providing products or services (business segment), or in providing
products or services within a particular economic environment (geographical
segment), which is subject to risks and returns different to those of other
segments. Based on the Group’s internal organisational and management
structure and its system of internal financial reporting, segmentation by
business is regarded as being the predominant source and nature of the risks
and returns facing the Group and is thus the primary segment under IAS 14
Segment Reporting. Geographical segmentation is therefore the secondary
segment.
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 functional currency”). The consolidated financial
statements are presented in euro, which is the presentation currency of the
Group and the functional currency of the 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 Group Income
Statement with the exception of differences on foreign currency borrowings;
to the extent that such borrowings are used to provide a hedge against
foreign equity investments, the translation differences are taken directly to
equity together with the translation differences on the carrying amount of the
related investments. Translation differences applicable to foreign currency
borrowings are taken directly to equity until disposal of the net investment, at
which time they are recycled through the Group Income Statement.
Results and cash flows of subsidiaries, joint ventures and associates based
in non-euro countries 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 of non-euro subsidiaries, joint ventures and
associates at average rates, and on restatement of the opening net assets
at closing rates, are dealt with in a separate translation reserve within equity,
net of differences on related currency borrowings. All other translation
differences are taken to the Group Income Statement.
On disposal of a foreign operation, accumulated currency translation
differences are recognised in the Group Income Statement as part of the
overall gain or loss on disposal. Goodwill and fair value adjustments arising
on acquisition of a foreign operation are regarded as assets and liabilities
of the foreign operation, are expressed in the functional currency of the
foreign operation, are recorded in euro at the exchange rate at the date of
the transaction and are subsequently retranslated at the applicable closing
rates.
The principal exchange rates used for the translation of results, cash flows
and balance sheets into euro were as follows:
euro 1 =
US Dollar
Pound Sterling
Polish Zloty
Ukrainian Hryvnia
Swiss Franc
Canadian Dollar
Argentine Peso
Israeli Shekel
Average
Year-end
2007
2006
2007
2006
1.3705
0.6843
3.7837
6.8982
1.6427
1.4678
4.2718
5.6270
1.2556 1.4721 1.3170
0.6817 0.7334 0.6715
3.8959 3.5935 3.8310
6.3290 7.3588 6.6583
1.5729 1.6547 1.6069
1.4237 1.4449 1.5281
3.8623 4.5948 4.0373
5.5928 5.6201 5.5623
Retirement benefit obligations
The Group operates defined contribution and defined benefit pension
schemes in a number of its operating areas. In addition, the Group has also
undertaken to provide certain additional post-employment healthcare and
life assurance benefits, which are unfunded, to certain current and former
employees in the United States.
Costs arising in respect of the Group’s defined contribution pension schemes
are charged to the Group Income Statement in the period in which they are
incurred. Under these schemes, the Group has no obligation, either legal or
constructive, 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 on the basis of the
projected unit credit method 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 associated
post-employment benefit obligations. When the benefits of a defined benefit
scheme are improved, the portion of the increased benefit relating to past
service by employees is recognised as an expense in the Group Income
Statement on a straight-line basis over the average period until the benefits
become vested. To the extent that the enhanced benefits vest immediately,
the related expense is recognised immediately in the Group Income
Statement. 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 within non-current assets or non-current liabilities
on the face of the Group Balance Sheet. The deferred tax impact of pension
scheme surpluses and deficits is disclosed separately within deferred tax
assets or liabilities as appropriate. The Group has elected to recognise post
transition date actuarial gains and losses immediately in the Statement of
Recognised Income and Expense.
In relation to the Group’s defined benefit pension schemes, a full actuarial
valuation is undertaken on an annual basis, where local requirements
mandate that this be done, and at triennial intervals at a maximum in all
other cases.
The defined benefit pension asset or liability in the Group Balance Sheet
comprises the total for each plan of the present value of the defined benefit
obligation (using a discount rate based on high-quality corporate bonds)
less any past service cost not yet recognised and less the fair value of plan
assets (measured at bid value) out of which the obligations are to be settled
directly.
The Group’s obligation in respect of post-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 on high-quality corporate bonds of a
currency and term consistent with the currency and estimated term of the
post-employment obligations.
Share-based payments
The Group operates both Share Option Schemes and a Performance Share
Plan. Its policy in relation to the granting of share options and the granting
of awards under the Performance Share Plan together with the nature of the
underlying market and non-market performance and other vesting conditions
are addressed in the Report on Directors’ Remuneration on page 48.
Share options
For equity-settled share-based payment transactions (i.e. the issuance
of share options), the Group measures the services received and the
corresponding increase in equity at fair value at the measurement date (which
is the grant date) using a recognised valuation methodology for the pricing of
financial instruments (i.e. the trinomial model). Given that the share options
granted do not vest until the completion of a specified period of service
and are subject to the realisation of demanding performance conditions, the
fair value is determined 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 share options granted by the Company are not subject to market-
based vesting conditions as defined in IFRS 2 Share-Based Payment. Non-
market vesting conditions are not taken into account when estimating the
fair value of share options as at the grant date; such conditions are taken
into account through adjusting the number of equity instruments included in
the measurement of the transaction amount so that, ultimately, the amount
recognised equates to the number of equity instruments that actually vest.
The expense in the Group Income Statement in relation to share options
represents the product of the total number of options anticipated to vest and
the fair value of those options; this amount is allocated to accounting periods
on a straight-line basis over the vesting period. The cumulative charge to the
Group Income Statement is reversed only where the performance condition
is not met or where an employee in receipt of share options relinquishes
service prior to completion of the expected vesting period.
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 measurement requirements of IFRS 2 have been implemented in respect
of share options that were granted after 7th November 2002. In accordance
with the standard, the disclosure requirements of IFRS 2 have been applied
in relation to all outstanding share-based payments regardless of their grant
date.
To the extent that the Group receives a tax deduction relating to the services
paid in shares, deferred tax in respect of share options is provided on the
basis of the difference between the market price of the underlying equity as
at the date of the financial statements and the exercise price of the option;
as a result, the deferred tax impact of share options will not directly correlate
with the expense reported in the Group Income Statement.
The Group has no exposure in respect of cash-settled share-based payment
transactions and share-based payment transactions with cash alternatives
as defined in IFRS 2.
CRH
63
Accounting Policies continued
Awards under the Performance Share Plan
The fair value of shares awarded under the Performance Share Plan is
determined using a Monte Carlo simulation technique. The Performance
Share Plan contains inter alia a TSR-based (and hence market-based)
vesting condition, and accordingly, the fair value assigned to the related
equity instruments on initial application of IFRS 2 is adjusted so as to reflect
the anticipated likelihood as at the grant date of achieving the market-based
vesting condition.
the Group and the cost of the item can be measured reliably. All other repair
and maintenance expenditure is charged to the Group Income Statement
during the financial period in which it is incurred.
Borrowing costs
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.
Property, plant and equipment
With the exception of the one-time revaluation of land and buildings noted
below, items of property, plant and equipment are stated at historical cost
less any accumulated depreciation and any accumulated impairments.
Depreciation and depletion
Depreciation 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
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.
Transport: On average, transport equipment is depreciated at 20% p.a.
Certain items of property, plant and equipment that had been revalued to fair
value prior to the date of transition to IFRS (1st January 2004) are measured
on the basis of deemed cost, being the revalued amount as at the date the
revaluation was performed.
The residual values and useful lives of property, plant and equipment are
reviewed, and adjusted if appropriate, at each balance sheet date.
Impairment of property, plant and equipment
In accordance with IAS 36 Impairment of Assets, the carrying values of
items of property, plant and equipment are reviewed for 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. Where the carrying values exceed the estimated recoverable
amount (being the greater of fair value less costs to sell and value-in-use),
the assets or cash-generating units are written-down to their recoverable
amount. Fair value less costs to sell is defined as the amount obtainable from
the sale of an asset or cash-generating unit in an arm’s length transaction
between knowledgeable and willing parties, less the costs which would
be incurred in disposal. Value-in-use is defined as the present value of the
future cash flows expected to be derived through the continued use of an
asset or cash-generating unit including those anticipated to be realised on
its eventual disposal. In assessing value-in-use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and
the risks specific to the asset for which the 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.
Repair and maintenance expenditure
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
64 CRH
Business combinations
The purchase method of accounting is employed in accounting for the
acquisition of subsidiaries, joint ventures and associates by the Group.
The cost of a business combination is measured as the aggregate of the
fair values at the date of exchange of assets given, liabilities incurred or
assumed and equity instruments issued in exchange for control together
with any directly attributable expenses. To the extent that settlement of all or
any part of 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 Group Income Statement over the life of the
obligation.
Where a business combination agreement provides for an adjustment to
the cost of the combination contingent on future events, the amount of the
adjustment is included in the cost at the acquisition date if the adjustment is
probable and can be reliably measured. Contingent consideration is included
in the acquisition balance sheet on a discounted basis.
The assets and liabilities and contingent liabilities of a subsidiary are
measured at their fair values at the date of acquisition. In the case of a
business combination which is completed in stages, the fair values of the
identifiable assets, liabilities and contingent liabilities are determined at the
date of each exchange transaction.
When the initial accounting for a business combination is determined
provisionally, any adjustments to the provisional values allocated to the
identifiable assets, liabilities and contingent liabilities are made within twelve
months of the acquisition date.
The interest of minority shareholders is stated at the minority’s proportion
of the fair values of the assets and liabilities recognised; goodwill is not
allocated to the minority interest. Subsequently, any losses applicable to the
minority interest in excess of the minority interest are allocated against the
interests of the parent.
Goodwill
Goodwill is the excess of the consideration paid over the fair value of the
identifiable assets, liabilities and contingent liabilities in a business combination
and relates to the future economic benefits arising from assets which are not
capable of being individually identified and separately recognised.
The carrying amount of goodwill in respect of associates is included in
investments in associates under the equity method in the Group Balance
Sheet. Goodwill applicable to jointly controlled entities is accounted for on the
basis of proportionate consolidation and is therefore included in the goodwill
caption in the Group Balance Sheet, net of any impairments assessed in
accordance with the methodology discussed below.
Where a subsidiary is disposed of or terminated through closure, the carrying
value of any goodwill which arose on acquisition of that subsidiary, net of
any impairments, is included in the determination of the net profit or loss on
disposal/termination.
To the extent that the Group’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities acquired exceeds the cost of a
business combination, the identification and measurement of the related
assets, liabilities and contingent liabilities are revisited and the cost is
reassessed and any remaining balance is recognised immediately in the
Group Income Statement.
Goodwill acquired in a business combination is allocated, from the acquisition
date, to the cash-generating units that are anticipated to benefit from the
combination’s synergies. Following initial recognition, goodwill is measured
at cost less any accumulated impairment losses. The cash-generating units
represent the lowest level within the Group at which goodwill is monitored
for internal management purposes and these units are not larger than the
primary and secondary reporting segments determined in accordance with
IAS 14 Segment Reporting. 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. 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.
Impairment is determined by assessing the recoverable amount of the cash-
generating unit to which the goodwill relates. Where the recoverable amount
of the cash-generating unit is less than the carrying amount, an impairment
loss is recognised. Impairment losses arising in respect of goodwill are not
reversed once recognised.
When part of an operation within a cash-generating unit is disposed of, any
goodwill associated with that operation is included in the carrying amount
of the operation when determining the gain or loss on disposal. Goodwill
disposed of in this circumstance is measured on the basis of the relative
values of the operation disposed of and the portion of the cash-generating
unit retained.
Intangible assets (other than goodwill) arising on business combinations
An intangible asset, which is an identifiable non-monetary asset without
physical substance, is capitalised separately from goodwill as part of a
business combination to the extent that it is probable that the expected
future economic benefits attributable to the asset will flow to the Group and
that its cost can be measured reliably. The asset is deemed to be identifiable
when it is separable (i.e. capable of being divided from the entity and sold,
transferred, licensed, rented or exchanged, either individually or together
with a related contract, asset or liability) or when it arises from contractual
or other legal rights, regardless of whether those rights are transferable or
separable from the Group or from other rights and obligations.
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 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.
The amortisation of intangible assets is calculated to write-off the book value
of definite-lived intangible assets over their useful lives on a straight-line basis
on the assumption of zero residual value. In general, definite-lived intangible
assets are amortised over periods ranging from one to ten years, depending
on the nature of the intangible asset.
Investments
All investments are initially recognised at the fair value of the consideration
given net of any acquisition charges arising.
Where equity investments are actively traded in organised financial markets,
fair value is determined by reference to Stock Exchange quoted market
bid prices at the close of business on the balance sheet date. Where it is
impracticable to determine fair value in accordance with IAS 39, unquoted
equity investments are recorded at historical cost and are included within
financial assets in the Group Balance Sheet.
Leases
Assets held under finance leases, which are leases where substantially all
the risks and rewards of ownership of the asset have transferred to the
Group, and hire purchase contracts are capitalised in the Group Balance
Sheet and are depreciated over their useful lives with any impairment being
recognised in accumulated depreciation. The asset is recorded at an amount
equal to the lower of its fair value and the present value of the minimum
lease payments at the inception of the finance lease. The capital elements of
future obligations under leases and hire purchase contracts are included in
liabilities in the Group Balance Sheet and analysed between current and non-
current amounts. The interest elements of the rental obligations are charged
to the Group Income Statement over the periods of the relevant agreements
and represent a constant proportion of the balance of capital repayments
outstanding in line with the implicit interest rate methodology.
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 Group Income Statement on a straight-line basis over the
lease term.
Inventories and construction contracts
Inventories are stated at the lower of cost and net realisable value. Cost
is based on the first-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 a first-in, first-out basis. In the case
of finished goods and work-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.
Amounts recoverable on construction contracts, which are included in
debtors, are stated at the net sales value of the work done less amounts
received as progress payments on account. Cumulative costs incurred, net
of amounts transferred to cost of sales, after deducting foreseeable losses,
provision for contingencies and payments on account not matched with
revenue, are included as construction contract balances in inventories. Cost
includes all expenditure related directly to specific projects and an allocation
of fixed and variable overheads incurred in the Group’s contract activities
based on normal operating capacity.
Trade and other receivables and payables
Trade and other receivables and payables are stated at cost, which
approximates fair value given the short-dated nature of these assets and
liabilities.
Trade receivables are carried at original invoice amount less an allowance
for potentially uncollectible debts. Provision is made when there is objective
evidence that the Group will not be in a position to collect the associated
debts. Bad debts are written-off in the Group Income Statement on
identification.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances held for the purposes
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 changes in value. Where investments are categorised as cash equivalents,
the related balances have a maturity of three months or less from the date
of acquisition. Bank overdrafts are included within current interest-bearing
loans and borrowings in the Group 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.
CRH
65
Accounting Policies continued
Liquid investments
investments comprise short-term deposits and current asset
Liquid
investments which are held as readily disposable stores of value and include
investments in government gilts and commercial paper and deposits of less
than one year in duration. The maturity of these investments falls outside the
three months timeframe for classification as cash and cash equivalents under
IAS 7 Cash Flow Statements, and accordingly these investments are treated
as financial assets and are categorised as either “fair value through profit
and loss” or “loans and receivables”. Regular way purchases of financial
assets are recognised using settlement date accounting. The fair value of
liquid investments is determined by reference to the traded value of actively
traded instruments.
Derivative financial instruments
The Group employs derivative financial instruments (principally interest rate
and currency swaps and forward foreign exchange contracts) to manage
interest rate risks and to realise the desired currency profile of borrowings.
In accordance with its treasury policy, the Group does not trade in financial
instruments nor does it enter into leveraged derivative transactions.
At the inception of a transaction entailing the usage of derivatives, 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 hedge in
offsetting movements in the fair values or cash flows of the hedged items.
Derivative financial instruments are stated at fair value. Where derivatives
do not fulfil the criteria for hedge accounting, they are classified as “held
for trading” and changes in fair values are reported in the Group Income
Statement. The fair value of interest rate and currency swaps is the estimated
amount the Group would pay or receive to terminate the swap at the balance
sheet date taking into account current interest and currency rates and
the creditworthiness of the swap counterparties. The fair value of forward
exchange contracts is calculated by reference to current forward exchange
rates for contracts with similar maturity profiles and equates to the quoted
market price at the balance sheet date (being the present value of the quoted
forward price).
Hedging
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 cash flow hedges (which hedge
exposure to fluctuations in future cash flows derived from a particular risk
associated with a recognised asset or liability, a firm commitment or a highly
probable forecast transaction).
In the case of fair value hedges which satisfy the conditions for hedge
accounting, any gain or loss stemming from the re-measurement of the
hedging instrument to fair value is reported in the Group 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 Group Income Statement. Where the adjustment is to
the carrying amount of a hedged interest-bearing financial instrument, the
adjustment is amortised to the Group 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 liability or a highly probable forecast
transaction, the effective part of any gain or loss on the derivative financial
66 CRH
instrument is recognised as a separate component of equity with the
ineffective portion being reported in the Group Income Statement. The
associated gains or losses that had previously been recognised in equity
are transferred to the Group 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 Group 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 a separate component of equity remains in equity until the
forecast transaction occurs. If a hedged transaction is no longer anticipated
to occur, the net cumulative gain or loss recognised in equity is transferred to
the Group Income Statement in the period.
Hedges of monetary assets and liabilities
Where a derivative financial instrument is used to hedge economically the
foreign exchange exposure of a recognised monetary asset or liability, hedge
accounting is not applied and any gain or loss accruing on the hedging
instrument is recognised in the Group Income Statement.
Net investment hedges
Where foreign currency borrowings provide a hedge against a net investment
in a foreign operation, foreign exchange differences are taken directly to a
foreign currency translation reserve (being a separate component of equity).
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 Group Income Statement as part of the overall gain or
loss on sale.
Interest-bearing loans and borrowings
All loans and borrowings are initially recorded at cost being the fair value of
the consideration received net of attributable transaction costs.
Subsequent to initial recognition, current and non-current interest-bearing
loans and borrowings are, in general, measured at amortised cost employing
the effective interest yield 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. Borrowings are classified as current liabilities
unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the balance sheet date.
Gains and losses are recognised in the Group Income Statement through
amortisation on the basis of the period of the loans and borrowings and/or
on impairment and derecognition of the associated loans and borrowings.
Borrowing costs arising on financial instruments are recognised as an
expense in the period in which they are incurred.
Provisions for liabilities
A provision is recognised on a discounted basis 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 when it is virtually
certain that the reimbursement will arise. Provisions are not recognised in
respect of future operating losses.
Capital grants
Capital grants are recognised at their fair value where there is reasonable
assurance that the grant will be received and all attaching conditions
have been complied with. When the grant relates to an expense item, it is
recognised as income over the periods necessary to match the grant on a
systematic basis to the costs that it is intended to compensate. Where the
grant relates to an asset, the fair value is treated as a deferred credit and
is released to the Income Statement over the expected useful life of the
relevant asset through equal annual instalments.
Share capital
Own shares
Ordinary Shares purchased by the Company under the terms of the
Performance Share Plan are recorded as a deduction from equity on the face
of the Group Balance Sheet.
Dividends
Dividends on Ordinary Shares are recognised as a liability in the Group’s
financial statements in the period in which they are declared by the
Company.
Emission rights
Emission rights are accounted for such that a liability is recognised only
in circumstances where emission rights have been exceeded from the
perspective of the Group as a whole and the differential between actual and
permitted emissions will have to be remedied through the purchase of the
required additional rights at fair value; assets and liabilities arising in respect
of under and over-utilisation of emission credits respectively are accordingly
netted against one another in the preparation of the consolidated financial
statements.
Provisions arising on business combination activity are accordingly
recognised only to the extent that they would have qualified for recognition in
the financial statements of the acquiree prior to acquisition.
Tax (current and deferred)
Current tax represents the expected tax payable (or recoverable) on the taxable
profit for the year using tax rates enacted or substantively enacted at the
balance sheet date and taking into account any adjustments stemming from
prior years. Any interest or penalties arising are included within current tax.
Deferred tax is provided on the basis of the balance sheet liability method on
all temporary differences at the balance sheet date. Temporary differences
are defined as the difference between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. Deferred tax assets
and liabilities are not subject to discounting and are measured at the tax
rates that are anticipated to apply in the period in which the asset is realised
or the liability is settled based on tax rates and tax laws that have been
enacted or substantively enacted at the balance sheet date.
Deferred tax liabilities are recognised for all taxable temporary differences
(i.e. differences that will result in taxable amounts in future periods when
the carrying amount of the asset or liability is recovered or settled) with the
exception of the following:
•
•
where the deferred tax liability arises from the initial recognition of goodwill
or the initial recognition of an asset or a liability in a transaction that is not
a business combination and affects neither the accounting profit nor the
taxable profit or loss at the time of the transaction; and
where, in respect of taxable temporary differences associated with
investments in subsidiaries and joint ventures, the timing of the reversal
of the temporary difference is subject to control by the Group and it is
probable that reversal will not materialise in the foreseeable future.
Deferred tax assets are recognised in respect of all deductible temporary
differences (i.e. differences that give rise to amounts which are deductible in
determining taxable profits in future periods when the carrying amount of the
asset or liability is recovered or settled), 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 to offset these items. The following exceptions
apply in this instance:
•
•
where the deferred tax asset arises from the initial recognition of an asset
or a liability in a transaction that is not a business combination and affects
neither the accounting profit nor the taxable profit or loss at the time of
the transaction; and
where, in respect of deductible temporary differences associated with
investments in subsidiaries, joint ventures and associates, a deferred tax
asset is recognised only if it is probable that the deductible temporary
difference will reverse in the foreseeable future and that sufficient taxable
profits will be available against which the temporary difference 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.
Where items are accounted for directly through equity (for example, in the
context of certain derivative financial instruments and actuarial gains and
losses on defined benefit pension schemes and share-based payments), the
related income tax is charged or credited to equity. In all other circumstances,
income tax is recognised in the Group Income Statement.
CRH
67
Notes on Financial Statements
1. Segment Information
Analysis by class of business and by geography
The Group is organised into four Divisions, two in Europe: Materials and Products & Distribution; and two in the Americas: Materials in the United States and Products
& Distribution in the United States, Mexico, Canada, Argentina and Chile. These activities comprise three reporting business segments as follows:
Materials businesses are involved in the production of cement, aggregates, asphalt and readymixed concrete.
Products businesses are involved in the production of concrete products and a range of construction-related products and services.
Distribution businesses are engaged in the marketing and sale of builders’ supplies to the construction industry and of materials and products for the DIY market.
Intersegment revenue is not material.
Group Income Statement
Segment revenue
Europe
Americas
Continuing operations - year ended 31st December
Materials
Products
Distribution
Total Group
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
3,651
5,445
2,967
4,778
3,628
3,510
3,186
3,572
3,435
1,323
2,786
1,448
10,714
10,278
8,939
9,798
9,096
7,745
7,138
6,758
4,758
4,234
20,992
18,737
Segment revenue includes €3,706 million (2006: €3,065 million) in respect of revenue applicable to construction contracts.
Group operating profit before depreciation and amortisation (EBITDA) (i)
Europe
Americas
Depreciation
Europe
Americas
Amortisation of intangible assets
Europe
Americas
Group operating profit (i)
Europe
Americas
Profit on disposal of fixed assets
Europe
Americas
Segment result (profit before finance costs) (i)
Europe
Americas
Finance costs (net)
Group share of associates’ profit after tax (note 9)
Profit before tax
Income tax expense
Group profit for the financial year
746
834
564
695
461
468
361
506
261
90
210
120
1,468
1,392
1,135
1,321
1,580
1,259
929
867
351
330
2,860
2,456
159
263
143
220
145
112
134
116
422
363
257
250
1
1
2
-
-
-
8
16
24
586
570
421
475
308
340
1,156
896
648
29
11
40
28
2
30
11
2
13
6
15
21
221
375
596
2
3
5
46
14
60
3
6
9
37
14
51
1
3
4
350
389
739
12
23
35
314
350
664
7
18
25
212
70
172
103
1,106
980
814
953
282
275
2,086
1,767
3
1
4
4
1
5
43
14
57
34
6
40
615
581
1,196
449
477
926
319
342
661
223
378
601
215
71
176
104
1,149
994
848
959
286
280
2,143
1,807
(303)
64
(252)
47
1,904
(466)
1,602
(378)
1,438
1,224
(i) Segment result in 2006 for Europe Products included a goodwill impairment loss of €50 million relating to the Cementbouw bv joint venture (see note
14). In addition, segment result in 2006 for Europe Products included €19 million of a total €38 million gain which arose on deconsolidation of certain
pension schemes in the Netherlands (see note 27). The remaining €19 million of this deconsolidation gain was included in the segment result in 2006
for Europe Distribution.
68 CRH
1. Segment Information continued
Group Balance Sheet
Continuing operations - year ended 31st December
Segment assets
Europe
Americas
Reconciliation to total assets as reported in the Group Balance Sheet
Investments in associates
Other financial assets
Derivative financial instruments (current and non-current)
Deferred income tax assets
Liquid investments
Cash and cash equivalents
Total assets as reported in the Group Balance Sheet
Segment liabilities
Europe
Americas
Reconciliation to total liabilities as reported in the Group Balance Sheet
Interest-bearing loans and borrowings (current and non-current)
Derivative financial instruments (current and non-current)
Income tax liabilities (current and deferred)
Capital grants
Total liabilities as reported in the Group Balance Sheet
Materials
Products
Distribution
Total Group
2007
€m
3,815
5,030
2006
€m
2,982
5,067
2007
€m
3,295
2,561
2006
€m
3,142
2,511
2007
€m
1,939
703
2006
€m
1,376
576
2007
€m
9,049
8,294
2006
€m
7,500
8,154
8,845
8,049
5,856
5,653
2,642
1,952
17,343
15,654
574
78
133
336
318
1,006
554
97
79
489
370
1,102
19,788
18,345
823
858
753
901
777
567
877
643
1,681
1,654
1,344
1,520
405
151
556
337
160
497
2,005
1,576
1,967
1,704
3,581
3,671
6,498
122
1,556
11
5,958
85
1,517
10
11,768
11,241
CRH
69
Notes on Financial Statements
1. Segment Information continued
Geographical analysis
The following is a geographical analysis of the segmental data presented above with Ireland (including Northern Ireland) and the Benelux (which comprises Belgium,
the Netherlands and Luxembourg) separately analysed on the basis of the aggregation thresholds contained in IAS 14:
Group Income Statement
Continuing operations - year ended 31st December
Ireland
2006
€m
2007
€m
Benelux
Rest of Europe
Americas
Total Group
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
Segment revenue
1,402
1,251
2,918
2,628
6,382
5,058
10,290
9,800
20,992
18,737
Group EBITDA
207
209
354
301
905
624
1,394
1,322
2,860
2,456
Depreciation
Amortisation of intangible assets
48
-
52
-
82
2
81
2
Group operating profit
159
157
270
218
220
10
675
181
5
438
389
23
350
18
739
35
664
25
982
954
2,086
1,767
Profit on disposal of fixed assets
26
23
7
3
9
8
15
6
57
40
Segment result (profit before finance costs)
185
180
277
221
684
446
997
960
2,143
1,807
Group Balance Sheet
Segment assets
959
830
2,468
2,101
5,617
4,563
8,299
8,160
17,343
15,654
Segment liabilities
282
289
487
485
1,235
1,195
1,577
1,702
3,581
3,671
Other segment information - capital expenditure
Continuing operations - year ended 31st December
Materials
Products
Distribution
Total Group
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
291
334
213
288
153
159
625
501
312
123
142
265
72
19
91
46
20
516
512
66
1,028
382
450
832
119
88
309
512
1,028
78
79
225
450
832
By business segment
Europe
Americas
Geographical analysis
Ireland
Benelux
Rest of Europe
Americas
70 CRH
2. Proportionate Consolidation of Joint Ventures
Year ended 31st December
Impact on Group Income Statement
Group share of:
Revenue
Cost of sales
Gross profit
Operating costs
Impairment of Cementbouw bv goodwill (note 14)
Operating profit
Profit on disposal of fixed assets
Profit before finance costs
Finance costs (net)
Profit before tax
Income tax expense
Group profit for the financial year
Depreciation
Impact on Group Balance Sheet
Group share of:
Non-current assets
Current assets
Total assets
Total equity
Non-current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
Net debt included above
Impact on Group Cash Flow Statement
Group share of:
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1st January
Translation adjustment
Cash and cash equivalents at 31st December
Reconciliation of cash and cash equivalents to net debt
Cash and cash equivalents as above
Liquid investments
Derivative financial instruments (current and non-current)
Interest-bearing loans and borrowings (current and non-current)
Net debt at 31st December
The Group’s share of net debt in joint ventures is non-recourse to the Group.
2007
€m
1,076
(734)
342
(229)
-
113
-
113
(14)
99
(25)
74
43
1,002
380
1,382
835
265
282
547
2006
€m
901
(628)
273
(180)
(50)
43
4
47
(16)
31
(18)
13
37
806
289
1,095
553
273
269
542
1,382
1,095
(164)
(248)
106
(224)
145
27
51
(1)
77
77
1
-
(242)
(164)
87
(75)
(34)
(22)
74
(1)
51
51
-
1
(300)
(248)
CRH
71
Notes on Financial Statements
3. Operating Costs
Selling and distribution costs
Administrative expenses
Other operating expenses
Other operating income
Total
Other operating expenses and income comprise the following charges/(credits):
Other operating expenses
Share-based payments expense (note 7)
Amortisation of intangible assets (note 14)
Goodwill impairment loss (note 14)
Mark-to-market of undesignated derivative financial instruments
Total
Other operating income
Excess of fair value of identifiable net assets over consideration paid (note 33)
Mark-to-market of undesignated derivative financial instruments
Income from financial assets
Capital grants released (note 28)
Total
2007
€m
2,675
1,474
58
(16)
4,191
23
35
-
-
58
(4)
(5)
(4)
(3)
(16)
2006
€m
2,496
1,267
96
(12)
3,847
16
25
50
5
96
(7)
(1)
(2)
(2)
(12)
4. Group Operating Profit
Group operating profit has been arrived at after charging the following amounts (including the Group’s proportionate share
of amounts in joint ventures):
Depreciation
- included in cost of sales
- included in operating costs
Total
Foreign exchange gains and losses (net)
- included in cost of sales
Operating lease rentals
- hire of plant and machinery
- land and buildings
- other operating leases
Total
Auditors’ remuneration (included in administrative expenses)
Audit fees, including Sarbanes-Oxley attestation
Non-audit services comprising the following:
- acquisition-related financial due diligence (i)
- other advice
2007
€m
2006
€m
447
292
739
1
109
120
39
268
16
-
1
414
250
664
1
82
99
40
221
17
1
-
(i)
In addition to the due diligence fees expensed in the Group Income Statement, further due diligence fees of €1.7
million (2006: €0.3 million) paid to the auditors have been included in the fair value of purchase consideration of
business combinations for the respective periods.
72 CRH
5. Directors’ Emoluments and Interests
Directors’ emoluments (which are included in administrative expenses in note 3) and interests are given in the Report on
Directors’ Remuneration on pages 48 to 55 of this Annual Report.
6. Employment
The average number of employees (including CRH’s proportionate share of employees in joint ventures) is as follows:
Year ended 31st December 2007
Europe
Americas
Total
Year ended 31st December 2006
Europe
Americas
Total
Materials
Products Distribution
14,583
23,521
38,104
19,298
20,538
39,836
10,381
3,712
14,093
Total
Group
44,262
47,771
92,033
12,221
18,856
31,077
17,705
18,867
36,572
8,420
3,491
11,911
38,346
41,214
79,560
Employment costs charged in the Group Income Statement (including the Group’s proportionate share of joint ventures’
costs) are analysed as follows:
Wages and salaries
Social welfare costs
Other employment-related costs
Share-based payment expense (note 7)
Total pension costs (note 27)
Total
Total charge analysed between:
Cost of sales
Operating costs
Finance costs (net) - defined benefit pension schemes (note 8)
Total
7. Share-based Payments
Share option expense
Performance Share Plan expense
2007
€m
3,018
377
355
23
194
3,967
1,759
2,223
(15)
3,967
2007
€m
18
5
23
2006
€m
2,689
337
348
16
140
3,530
1,658
1,884
(12)
3,530
2006
€m
15
1
16
€2 million (2006: €1 million) of the total expense reported in the Group Income Statement relates to the Directors.
CRH
73
Notes on Financial Statements
7. Share-based Payments continued
Share Option Schemes
The Group operates share option schemes, which were approved by shareholders in May 2000 (replacing the schemes which were approved in May 1990),
and savings-related share option schemes, also approved by shareholders in May 2000. The general terms and conditions applicable to the share options
granted by CRH under these schemes are set out in the Report on Directors’ Remuneration on pages 48 to 55.
The Group’s employee share options are equity-settled share-based payments as defined in IFRS 2 Share-based Payment. The IFRS requires that a
recognised valuation methodology be employed to determine the fair value of share options granted and stipulates that this methodology should be
consistent with methodologies used for the pricing of financial instruments. The expense of €18 million (2006: €15 million) reported in the Group Income
Statement has been arrived at through applying the trinomial model, which is a lattice option-pricing model.
Impact on Group Income Statement
The measurement requirements of IFRS 2 have been implemented in respect of share options that were granted after 7th November 2002. As options to
acquire Ordinary Shares in the Company are traditionally granted in April of each year, the expense disclosed in the Group Income Statement relates to
options granted in April 2003 and in the subsequent periods.
The total share option expense is analysed as follows:
Grant
price
Duration
of vesting
period
Number of
options
Weighted
average
fair value
Expense in Group
Income Statement
2006
€m
2007
€m
Granted in 2003
Share option schemes
Savings-related share option schemes
Granted in 2004
Share option schemes
Savings-related share option schemes
Granted in 2005
Share option schemes
Savings-related share option schemes
Granted in 2006
Share option schemes
Savings-related share option schemes
Granted in 2007
Share option schemes
Savings-related share option schemes
€13.15 / €13.26 / Stg£9.06
€10.63 / Stg£7.18
3 and 5 years
3 and 5 years
4,247,900
768,853
€16.71 / €16.73 / Stg£11.13
€14.45 / Stg£9.66
3 and 5 years
3 and 5 years
4,372,990
219,658
€20.79 / €20.91 / Stg£14.37
€17.99 / Stg£12.38
3 years
3 and 5 years
2,362,450
162,731
€29.00 / €24.83 / Stg£19.99
€23.16 / Stg£15.68
3 years
3 and 5 years
2,534,443
324,673
€32.70 / €33.12 / Stg£22.43
€26.89 / Stg£18.61
3 years
3 and 5 years
2,788,341
256,787
€3.63
€3.73
€4.37
€4.67
€4.32
€5.41
€6.39
€7.12
€6.65
€7.84
1
-
3
-
3
-
5
1
5
-
2
-
5
-
3
-
4
1
-
-
18
15
Details of options granted under the share option schemes
A summary of activity under the Company’s share option schemes in the two years ended 31st December 2007 and 31st December 2006 together with the
weighted average exercise price of the share options is as follows:
Share options
Outstanding at beginning of year
Granted (a)
Exercised
Lapsed
Outstanding at end of year
Exercisable at end of year
Weighted average
exercise price
€18.33 / Stg£13.85
€32.90 / Stg£22.43
€15.54 / Stg£10.99
€19.83 / Stg£17.91
Number of
options
2007
23,785,368
2,807,900
(2,810,420)
(478,295)
Weighted average
exercise price
€16.75 / Stg£11.32
€28.68 / Stg£19.99
€15.28 / Stg£10.35
€18.00 / Stg£13.93
Number of
options
2006
26,434,144
2,618,400
(4,886,939)
(380,237)
€20.38 / Stg£16.06
23,304,553
€18.33 / Stg£13.85
23,785,368
€16.73 / Stg£11.26
8,652,124
€16.02 / Stg£11.16
7,270,476
(a) Pursuant to the 2000 share option schemes, employees were granted options over 2,807,900 (2006: 2,618,400) of the Company’s Ordinary Shares on
10th April 2007. These options may be exercised after the expiration of three years from their date of grant, subject to specified EPS growth targets
being achieved. All options granted have a life of ten years.
74 CRH
7. Share-based Payments continued
Analysis of share options - outstanding at end of year
31st December 2007
31st December 2006
Options by exercise price
€ options
Stg£ options
Exercise
prices
Number
of options
Actual
remaining
life
€7.09
€7.10
€12.64
€14.57
€14.66
€17.26
€18.01
€18.28
€19.68
€13.15
€13.26
€16.71
€16.73
€20.79
€20.91
€24.83
€29.00
€32.70
€33.12
Stg£8.22
Stg£10.99
Stg£11.16
Stg£12.04
Stg£9.06
Stg£11.13
Stg£14.37
Stg£19.99
Stg£22.43
-
-
354,221
268,364
494,307
1,559,918
1,505,809
2,248,403
2,669,495
1,555,943
1,382,980
1,983,221
1,564,300
1,235,640
1,073,000
200,000
2,301,070
1,442,090
1,317,500
-
13,945
8,897
17,580
3,717
6,769
37,010
31,623
28,751
-
-
0.3
1.3
1.3
2.3
2.3
3.3
4.3
5.3
5.3
6.3
6.3
7.3
7.3
8.5
8.3
9.3
9.3
-
2.3
3.3
4.3
5.3
6.3
7.3
8.3
9.3
Number
of options
39,192
258,532
549,639
319,714
571,149
1,810,775
1,621,136
2,561,178
3,139,102
1,793,707
1,577,980
2,517,799
1,910,500
1,292,640
1,095,000
200,000
2,370,711
-
-
975
18,497
20,426
22,880
6,853
14,441
39,010
33,532
-
Total outstanding as at 31st December
23,304,553
23,785,368
Analysis of share options - exercisable at end of year
Options by exercise price
€ options
Stg£ options
Total exercisable as at 31st December
€7.09
€7.10
€12.64
€14.57
€14.66
€17.26
€18.01
€18.28
€19.68
€13.15
€13.26
€16.71
€16.73
Stg£8.22
Stg£10.99
Stg£11.16
Stg£12.04
Stg£9.06
Stg£11.13
-
-
354,221
268,364
494,307
1,559,918
1,505,809
939,903
922,895
587,443
504,480
812,076
651,800
-
13,945
8,897
17,580
3,717
6,769
8,652,124
-
-
0.3
1.3
1.3
2.3
2.3
3.3
4.3
5.3
5.3
6.3
6.3
-
2.3
3.3
4.3
5.3
6.3
39,192
258,532
549,639
319,714
571,149
776,045
764,307
1,184,178
1,283,502
785,607
668,980
-
-
975
18,497
20,426
22,880
6,853
-
7,270,476
Actual
remaining
life
0.3
0.3
1.3
2.3
2.3
3.3
3.3
4.3
5.3
6.3
6.3
7.3
7.3
8.3
8.3
9.5
9.3
-
-
1.3
3.3
4.3
5.3
6.3
7.3
8.3
9.3
-
0.3
0.3
1.3
2.3
2.3
3.3
3.3
4.3
5.3
6.3
6.3
-
-
1.3
3.3
4.3
5.3
6.3
-
CRH
75
Notes on Financial Statements
7. Share-based Payments continued
The weighted average fair values assigned to options granted in 2006 and 2007 under the 2000 share option schemes, which were computed in accordance with
the trinomial valuation methodology, were as follows:
Granted during 2007 (amounts in €)
Granted during 2006 (amounts in €)
* € equivalents at the date of grant
The fair values of these options were determined using the following assumptions:
Weighted average exercise price (amounts in €)
Risk-free interest rate (%)
Expected dividend payments over the expected life (€ cent)
Expected volatility (%)
Expected life in years
Denominated in
€
3-year
6.65
6.39
Stg£*
3-year
6.60
6.49
2007
3-year
32.90
4.08
503.05
21.3
5
2006
3-year
28.68
3.64 / 3.77
324.62
23.2 / 22.4
5
The expected volatility was determined using an historical sample of 61 month-end CRH share prices. Share options are granted at market value at the date of grant.
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 granted under the share option schemes do not contain any market conditions within the meaning of IFRS 2.
No relevant modifications were effected to the share option schemes during the course of 2007 or 2006.
Details of options granted under the savings-related share option schemes
Savings-related share options
Outstanding at beginning of year
Granted (a)
Exercised
Lapsed
Outstanding at end of year
Weighted
average
exercise price
Number of
options
2007
Weighted
average
exercise price
€15.85 / Stg£10.97
€26.89 / Stg£18.61
€14.95 / Stg£9.83
€20.56 / Stg£14.00
1,263,622
265,300
(211,702)
(58,138)
€12.71 / Stg£8.76
€23.16 / Stg£15.68
€12.40 / Stg£7.62
€14.35 / Stg£10.41
Number of
options
2006
1,434,061
358,986
(450,229)
(79,196)
€18.37 / Stg£12.53
1,259,082
€15.85 / Stg£10.97
1,263,622
Exercisable at end of year
€15.20 / Stg£9.94
3,313
€15.39 / Stg£7.18
1,948
(a) Pursuant to the savings-related share option schemes operated by the Company in the Republic of Ireland and the United Kingdom, employees were
granted options over 265,300 of the Company’s Ordinary Shares on 5th April 2007 (143,261) and 11th April 2007 (122,039) respectively (2006: 358,986
share options on 7th April 2006). This figure comprises options over 144,138 (2006: 202,624) shares and 121,162 (2006: 156,362) shares which are
normally exercisable within a period of six months after the third or the fifth anniversary of the contract, whichever is applicable, and are not subject to
specified EPS growth targets being achieved. The exercise price at which the options are granted under the schemes represents a discount of 15% to
the market price on the date of grant.
76 CRH
7. Share-based Payments continued
Analysis of savings-related share options - outstanding at end of year
31st December 2007
31st December 2006
Options by exercise price
€ options
Stg£ options
Exercise
prices
Number
of options
Weighted
average
remaining
contractual
life (years)
€15.39
€16.09
€10.63
€14.45
€17.99
€23.16
€26.89
Stg£10.08
Stg£7.18
Stg£9.66
Stg£12.38
Stg£15.68
Stg£18.61
-
725
198,186
26,793
46,576
131,749
120,321
1,149
232,289
59,356
114,047
191,425
136,466
-
0.1
0.9
1.8
2.0
2.9
4.0
0.1
0.9
1.9
1.7
2.7
3.6
Weighted
average
remaining
contractual
life (years)
0.1
0.9
1.9
1.8
3.0
3.9
-
0.9
1.9
1.7
2.7
3.7
-
Number
of options
871
19,782
200,447
61,952
50,573
139,361
-
56,166
239,310
160,229
124,152
210,779
-
Total outstanding as at 31st December
1,259,082
1,263,622
As at 31st December 2007, 3,313 (2006: 1,948) options were exercisable under the savings-related share option schemes.
The weighted average 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:
Granted during 2007 (amounts in €)
Granted during 2006 (amounts in €)
* € equivalents at the date of grant
The fair values of these options were determined using the following assumptions:
Weighted average exercise price (amounts in €)
Risk-free interest rate (%)
Expected dividend payments over the expected life (€ cent)
Expected volatility (%)
Expected life in years
Denominated in
€
3-year
7.09
6.54
€
5-year
8.55
7.88
Stg£*
3-year
7.23
6.54
Stg£*
5-year
8.71
7.88
2007
2006
3-year
27.20
4.08
246.06
17.3
3
5-year
27.10
4.10
503.05
21.3
5
3-year
23.16
3.43
162.94
20.8
3
5-year
23.16
3.64
324.62
23.2
5
The expected volatility was determined using an historical sample of 37 month-end CRH share prices in respect of the three-year savings-related share
options and 61 month-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 option 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 2.
No modifications were effected to the savings-related share option schemes during the course of 2007 or 2006.
CRH
77
Notes on Financial Statements
7. Share-based Payments continued
Performance Share Plan
The Group operates a Performance Share Plan which was approved by shareholders in May 2006. The general terms and conditions applicable to shares
awarded by CRH under this Plan are set out in the Report on Directors’ Remuneration on pages 48 to 55.
Shares awarded under the Group’s Performance Share Plan are equity-settled share-based payments as defined in IFRS 2 Share-based Payment. The IFRS
requires that a recognised valuation methodology be employed to determine the fair value of shares awarded and stipulates that this methodology should
be consistent with methodologies used for the pricing of financial instruments. The expense of €5 million (2006: €1 million) reported in the Group Income
Statement has been arrived at through applying a Monte Carlo simulation technique to model the combination of market and non-market based performance
conditions in the Plan.
Impact on Group Income Statement
The first award of shares under the Plan was in June 2006 when a total of 627,750 shares were awarded; of this total, 12,000 lapsed during the course of
2007. A second award of 594,750 shares was made in April 2007.
The total expense is analysed as follows:
Granted in 2006
Performance Share Plan
Granted in 2007
Performance Share Plan
Share price
at date of award
Period to
earliest
release date
Number
of shares
Fair
value
2007
€m
2006
€m
Expense in Group
Income Statement
€24.82
3 years
615,750
€12.11
€33.29
3 years
594,750
€17.14
2
3
5
1
-
1
The fair value of the shares awarded was determined using a Monte Carlo simulation technique taking account of peer group total shareholder return volatilities and
correlations, together with the following assumptions:
Risk-free interest rate (%)
Expected volatility (%)
4.07
20
3.77
20
The expected volatility was determined using an historical sample of 37 month-end CRH share prices.
Impact on Group Balance Sheet
In accordance with the terms of the Performance Share Plan, following the award of 594,750 shares in April 2007 (2006: 627,750), 310,000 Ordinary Shares
(2006: 627,750) were purchased by the Trustees of the Plan at a total cost of €10 million (2006: €15 million). These shares are recorded at cost and reported
as a deduction from equity in the Group Balance Sheet, net of the related income statement expense of €5 million (2006: €1 million) (see note 30).
78 CRH
8. Finance Costs and Finance Revenue
Finance costs
Interest payable on bank loans and overdrafts repayable wholly within five years:
- by instalments
- not by instalments
Interest payable under finance leases and hire purchase contracts
Interest payable on other borrowings
Total interest payable
Unwinding of discount element of provisions for liabilities (note 25)
Unwinding of discount applicable to deferred and contingent acquisition consideration
Income on interest rate and currency swaps
Mark-to-market of designated fair value hedges and related debt and ineffectiveness of net investment hedges:
- interest rate swaps (i)
- currency swaps and forward contracts
- hedged fixed rate debt (i)
Interest cost on defined benefit pension scheme liabilities
Total finance costs
Finance revenue
Interest receivable on loans to joint ventures and associates
Interest receivable on liquid investments
Interest receivable on cash and cash equivalents
Expected return on defined benefit pension scheme assets
Total finance revenue
Finance costs (net)
2007
€m
2006
€m
17
230
2
137
386
17
5
(31)
(90)
2
92
92
473
(4)
(18)
(41)
(63)
(107)
(170)
303
18
154
3
160
335
19
8
(51)
42
3
(42)
93
407
(5)
(15)
(30)
(50)
(105)
(155)
252
(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 Group Balance Sheet at adjusted fair 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 taken to income in each reporting period.
9. Group Share of Associates’ Profit after Tax
The Group’s share of associates’ profit after tax is equity-accounted and is presented as a single-line item in the Group Income Statement. The Group’s share
of profit after tax generated by associates is analysed as follows between the principal Group Income Statement captions:
Group share of:
Revenue
Profit before finance costs
Finance costs (net)
Profit before tax
Income tax expense
Profit after tax (i)
2007
€m
806
91
(1)
90
(26)
64
2006
€m
773
72
(2)
70
(23)
47
(i)
The Group’s share of associates’ profit after tax comprises €52 million (2006: €36 million) in Europe Materials, €2 million (2006: €2 million) in Europe
Products, €10 million (2006: €7 million) in Europe Distribution and €nil million (2006: €2 million) in Americas Materials.
The aggregated balance sheet data (analysed between current and non-current assets and liabilities) in respect of the Group’s investment in associates is
presented in note 15.
CRH
79
Notes on Financial Statements
10. Income Tax Expense
Current tax
Ireland
Corporation tax at 12.5% (2006: 12.5%)
Less: manufacturing relief
Overseas tax
Tax on disposal of fixed assets
Total current tax
Deferred tax
Origination and reversal of temporary differences:
Defined benefit pension obligations
Share-based payments
Derivative financial instruments
Other items
Total deferred tax
Income tax expense
Reconciliation of applicable tax rate to effective tax rate
Profit before tax (€m)
Tax charge expressed as a percentage of profit before tax (effective tax rate):
- current tax expense only
- total income tax expense (current and deferred)
The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective
tax rate (current and deferred) of the Group:
Irish corporation tax rate
Manufacturing relief in the Republic of Ireland
Higher tax rates on overseas earnings
Other items (comprising items not chargeable to tax/expenses not deductible for tax)
Total effective tax rate
Current and deferred tax movements applicable to items recognised directly within equity
Current tax
Share option exercises
Deferred tax
Defined benefit pension obligations
Share-based payments
Cash flow hedges
Total
80 CRH
2007
€m
2006
€m
17
(4)
13
398
15
426
8
(4)
(1)
37
40
22
(4)
18
298
12
328
10
3
-
37
50
466
378
1,904
1,602
22.4%
24.5%
20.5%
23.6%
% of profit before tax
12.5
(0.2)
12.0
0.2
24.5
€m
13
(46)
(39)
(2)
(74)
12.5
(0.3)
12.9
(1.5)
23.6
€m
-
(42)
27
-
(15)
10. Income Tax Expense continued
Factors that may affect future tax charges and other disclosure requirements
Excess of capital allowances over 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.
Unremitted earnings in subsidiaries, joint ventures and associates
No provision has been recognised in respect of the unremitted earnings of subsidiaries and joint ventures as there is no commitment to remit earnings. A
deferred tax liability has been recognised in relation to unremitted earnings of associates on the basis that the exercise of significant influence would not
necessarily prevent earnings being remitted by other shareholders in the undertaking.
Investments in subsidiaries and associates and interests in joint ventures
No provision has been made for temporary differences applicable to investments in subsidiaries and interests in 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. Due
to the absence of control in the context of associates, deferred tax liabilities are recognised where appropriate in respect of CRH’s investments in these
entities. Given that participation exemptions and tax credits would be available in the context of the Group’s investments in subsidiaries and joint ventures in
the majority of the jurisdictions in which the Group operates, the aggregate amount of temporary differences in respect of which deferred tax liabilities have
not been recognised would be immaterial.
Other considerations
The total tax charge in future periods will be affected by any changes to the corporation tax rates in force in the countries in which the Group operates. The
current tax charge will also be impacted by changes in the excess of tax depreciation (capital allowances) over accounting depreciation and the use of tax
credits.
11. Dividends
As shown in note 29, the Company has various classes of share capital in issue comprising Ordinary Shares, 5% Cumulative Preference Shares and 7% ‘A’ Cumulative
Preference Shares. The dividends paid and proposed in respect of these classes of share capital are as follows:
Dividends to shareholders
Preference
5% Cumulative Preference Shares €3,175 (2006: €3,175)
7% ‘A’ Cumulative Preference Shares €77,521 (2006: €77,521)
Equity
Final - paid 38.50c per Ordinary Share in May 2007 (27.75c paid in May 2006)
Interim - paid 20.00c per Ordinary Share (2006: 13.50c)
Total
Dividends proposed (memorandum disclosure)
Equity
Final 2007 - proposed 48.00c per Ordinary Share (2006: 38.50c)
Reconciliation to Cash Flow Statement
Dividends to shareholders
Less: issue of shares in lieu of dividend (i)
Dividends paid to equity holders of the Company
Dividends paid by subsidiaries to minority interests (note 31)
Total dividends paid
2007
€m
-
-
209
109
318
2006
€m
-
-
149
73
222
260
209
318
(68)
250
5
255
222
(25)
197
12
209
(i)
In accordance with the scrip dividend scheme, shares to the value of €68 million (2006: €25 million) were issued in lieu of dividends.
CRH
81
Notes on Financial Statements
12. Earnings per Ordinary Share
The computation of basic and diluted earnings per Ordinary Share is set out
below:
Numerator computations - basic and diluted earnings per Ordinary Share
Group profit for the financial year
Profit attributable to minority interest
Profit attributable to equity holders of the Company
Preference dividends
Profit attributable to ordinary equity holders of the Company
Amortisation of intangible assets
Profit attributable to ordinary equity holders of the Company
excluding amortisation of intangible assets
Depreciation
Numerator for “cash” earnings per Ordinary Share (ii)
Denominator computations
Denominator for basic earnings per Ordinary Share
Weighted average number of Ordinary Shares (millions) outstanding for the year
Effect of dilutive potential Ordinary Shares (employee share options) (millions) (i)
Denominator for diluted earnings per Ordinary Share
2007
€m
2006
€m
1,438
(8)
1,430
-
1,430
35
1,465
739
2,204
544.3
4.8
549.1
1,224
(14)
1,210
-
1,210
25
1,235
664
1,899
539.4
4.7
544.1
Basic earnings per Ordinary Share
- including amortisation of intangible assets
262.7c
224.3c
- excluding amortisation of intangible assets
269.2c
229.0c
Diluted earnings per Ordinary Share
- including amortisation of intangible assets
260.4c
222.4c
- excluding amortisation of intangible assets
266.8c
227.1c
“Cash” earnings per Ordinary Share (ii)
404.9c
352.1c
(i)
The issue of certain Ordinary Shares in respect of employee share options is contingent upon satisfaction of
specified performance conditions in addition to the passage of time. In accordance with IAS 33 Earnings per
Share, these contingently issuable Ordinary Shares (totalling 14,652,429 at 31st December 2007 and 16,514,892
at 31st December 2006) 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. Vesting of
shares awarded under the Performance Share Plan is also contingent upon satisfaction of specified performance
conditions and these shares have also been excluded from the computation of diluted earnings.
(ii)
“Cash” earnings per Ordinary Share, which is computed through adding amortisation of intangible assets and
depreciation to profit attributable to ordinary equity holders of the Company, is presented here for information as
management believes it is a useful indicator of the Group’s ability to generate cash from operations. Cash
earnings per share is not a recognised measure under generally accepted accounting principles.
82 CRH
At 31st December, net of accumulated depreciation
4,030
3,416
402
8,226
13. Property, Plant and Equipment
31st December 2007
At 1st January, net of accumulated depreciation
Translation adjustment
Reclassifications of assets in course of construction
Additions at cost
Arising on acquisition (note 33)
Disposals at net carrying amount
Depreciation charge for year
At 31st December 2007
Cost/deemed cost
Accumulated depreciation
Net carrying amount
The equivalent disclosure for the prior year is as follows:
31st December 2006
At 1st January, net of accumulated depreciation
Translation adjustment
Reclassifications of assets in course of construction
Additions at cost
Arising on acquisition (note 33)
Disposals at net carrying amount
Depreciation charge for year
Land and
buildings
€m
Plant and
machinery
€m
Assets in
course of
Transport construction
€m
€m
3,857
(233)
19
148
423
(38)
(146)
3,010
(193)
177
473
486
(29)
(508)
311
(24)
9
91
83
(7)
(85)
378
302
(18)
(205)
316
7
-
-
Total
€m
7,480
(468)
-
1,028
999
(74)
(739)
4,963
(933)
4,030
6,303
(2,887)
3,416
731
(353)
378
402
-
402
12,399
(4,173)
8,226
3,679
2,599
(213)
67
92
414
(46)
(136)
(156)
81
428
633
(119)
(456)
257
(23)
65
87
21
(24)
(72)
311
289
(15)
(213)
225
16
-
-
6,824
(407)
-
832
1,084
(189)
(664)
302
7,480
At 31st December, net of accumulated depreciation
3,857
3,010
At 31st December 2006
Cost/deemed cost
Accumulated depreciation
Net carrying amount
4,689
(832)
5,675
(2,665)
3,857
3,010
656
(345)
311
302
-
302
11,322
(3,842)
7,480
The carrying value of mineral-bearing land included in the land and buildings category above amounted to €1,690 million at the balance sheet date (2006:
€1,793 million).
Borrowing costs capitalised during the financial year amounted to €3 million (2006: nil). The capitalisation rate employed was 5.5%.
Revaluation of land and buildings
Land and buildings purchased since 31st December 1980 are reflected at cost. Land and buildings (excluding buildings of a specialised nature) purchased
prior to 31st December 1980 were revalued by professional valuers at that date on an existing use basis; this revaluation was carried forward as deemed cost
under the transitional provisions of IFRS 1 First-time Adoption of International Financial Reporting Standards. Other than the aforementioned revaluation, all
items of property, plant and equipment are recorded at cost.
The original historical cost of revalued assets cannot be obtained without unreasonable expense. The analysis of land and buildings assets held at deemed
cost and at cost is as follows:
At deemed cost as at 31st December 1980
At cost post 31st December 1980
Total
2007
€m
55
4,908
4,963
2006
€m
56
4,633
4,689
CRH
83
Notes on Financial Statements
13. Property, Plant and Equipment continued
Assets held under finance leases
The net carrying amount and the depreciation charge during the year in respect of assets held under finance leases, and capitalised in property, plant and equipment,
are as follows:
Cost
Accumulated depreciation
Net carrying amount
Depreciation charge for year
Future purchase commitments for property, plant and equipment
Contracted for but not provided in the financial statements
Authorised by the Directors but not contracted for
14. Intangible Assets
31st December 2007
At 1st January, net of accumulated impairment losses and amortisation
Translation adjustment
Arising on acquisition (note 33)
Amortisation charge for year (i)
At 31st December, net of accumulated impairment losses and amortisation
At 31st December 2007
Cost
Accumulated impairment losses and amortisation
Net carrying amount
The equivalent disclosure for the prior year is as follows:
31st December 2006
At 1st January, net of accumulated amortisation
Translation adjustment
Arising on acquisition (note 33)
Impairment loss
Amortisation charge for year (i)
2007
€m
101
(38)
63
2006
€m
88
(23)
65
11
6
612
466
340
286
Other intangible assets
Goodwill
€m
Marketing-
related
€m
Customer-
related
€m
Contract-
based
€m
2,841
(166)
807
-
3,482
3,532
(50)
3,482
2,194
(121)
818
(50)
-
17
(1)
6
(4)
18
27
(9)
18
8
-
12
-
(3)
17
23
(6)
17
97
(10)
117
(29)
175
230
(55)
175
46
(6)
78
-
(21)
97
126
(29)
97
11
(1)
9
(2)
17
21
(4)
17
4
-
8
-
(1)
11
12
(1)
11
Total
€m
2,966
(178)
939
(35)
3,692
3,810
(118)
3,692
2,252
(127)
916
(50)
(25)
2,966
3,052
(86)
2,966
At 31st December, net of accumulated impairment losses and amortisation
2,841
At 31st December 2006
Cost
Accumulated impairment losses and amortisation
Net carrying amount
2,891
(50)
2,841
(i) Goodwill is not subject to amortisation under IFRS. The useful lives of all other intangible assets are finite and, in general, range from one to ten years
dependent on the nature of the asset.
As noted below, a goodwill impairment loss of €50 million was recognised in 2006 (2007: nil). No impairment losses have been recognised in respect of other
intangible assets.
Due to the asset-intensive nature of operations in the Materials business segment (and the fact that goodwill arising on transactions in this segment is typically relatively
small), no significant intangible assets are recognised on business combinations in this segment. Business combinations in the Group’s Products and Distribution
segments, wherein the majority of goodwill arises, do not exhibit the same level of asset intensity and hence give rise to the recognition of intangible assets.
84 CRH
14. Intangible Assets continued
Goodwill
The goodwill balances disclosed above include goodwill arising on the acquisition of joint ventures which are accounted for on the basis of proportionate
consolidation. Goodwill arising in respect of investments in associates is included in investments in associates in the Group Balance Sheet (see note 15).
The net book value of goodwill capitalised under previous GAAP (Irish GAAP) as at the transition date to IFRS (1st January 2004) has been treated as deemed
cost. Goodwill arising on acquisition since that date is capitalised at cost.
Impairment testing
Goodwill is subject to impairment testing on an annual basis.
No impairment losses were recognised by the Group in 2007.
Testing in 2006 identified an impairment in respect of the Group’s 45% share of goodwill in Cementbouw bv, a joint venture which was established in 2003
in a leveraged buyout of Cementbouw’s materials trading and readymixed concrete operations in the Netherlands, undertaken in conjunction with CRH’s
100% purchase of Cementbouw’s distribution, concrete and clay products activities. An impairment loss of €50 million was recognised in the Group Income
Statement for the 2006 financial year and included in the segment result for Europe Products in that year (note 1). During 2007, the Group acquired the
remaining 55% of Cementbouw bv (see note 33).
Cash-generating units
Goodwill acquired through business combination activity has been allocated to cash-generating units for the purposes of impairment testing based on
the business segment into which the business combination will be assimilated. The cash-generating units represent the lowest level within the Group at
which the associated goodwill is monitored for internal management purposes and are not larger than the primary and secondary segments determined
in accordance with IAS 14 Segment Reporting. A total of 24 cash-generating units have been identified and these are analysed as follows between the six
business segments in the Group:
Europe Materials
Europe Products
Europe Distribution
Americas Materials
Americas Products
Americas Distribution
Total cash-generating units
Cash-generating units
7
5
1
5
5
1
24
Impairment testing methodology and results
The recoverable amount of each of the 24 cash-generating units is determined based on a value-in-use computation. The cash flow forecasts employed for
the value-in-use computation are extracted from a five-year strategic plan document formally approved by senior management and the Board of Directors
and specifically exclude incremental profits and other cash flows stemming from future acquisition activity. The five-year cash flows obtained from this
document are projected forward for an additional five years using the lower of historical compound annual growth and anticipated inflation as the relevant
general growth factor. A 20-year annuity-based terminal value is calculated using the average of the last five years’ cash flows adjusted to take account
of cumulative inflation to year 10 (being the end of the projection period); the terminal value specifically excludes any underlying growth assumption. The
recoverable amount stemming from this exercise represents the present value of the future cash flows, including the terminal value, discounted at a before-tax
weighted average cost of capital appropriate to the cash-generating unit being assessed for impairment; the before-tax discount rates range from 7.4% to
10.7% (2006: 7.4% to 10.6%). The average before-tax discount rate represents a premium of circa 0.5 percentage points on the Group’s estimated before-
tax weighted average cost of capital.
Key assumptions include management’s estimates of future profitability, replacement capital expenditure requirements, trade working capital investment
needs and tax considerations. The duration of the discounted cash flow model is a significant factor in determining the fair value of the cash-generating units
and has been arrived at taking account of the Group’s strong financial position, its established history of earnings growth and cash flow generation, its proven
ability to pursue and integrate value-enhancing acquisitions and the nature of the building materials industry where product obsolescence risk is very low.
Additional disclosures - significant goodwill amounts
The goodwill allocated to each of the 24 cash-generating units accounts for between 10% and 20% of the total carrying amount of €3,482 million in the case
of Europe Distribution (within the Europe Products & Distribution Division) and less than 10% of the total carrying amount in all other cases. The additional
disclosures required under IAS 36 Impairment of Assets in relation to significant goodwill amounts arising in Europe Distribution are as follows:
Carrying amount of goodwill allocated to the cash-generating unit
Carrying amount of indefinite-lived intangible assets allocated to the cash-generating unit
Basis on which recoverable amount of the cash-generating unit has been assessed
Discount rate applied to the cash flow projections (real before-tax)
Excess of value-in-use over carrying amount
2007
€342m
Nil
Value-in-use
9.3%
€593m
2006
€334m
Nil
Value-in-use
9.4%
€395m
CRH
85
Notes on Financial Statements
14. Intangible Assets continued
The key assumptions used for the value-in-use computation for this cash-generating unit were in line with those addressed above. The values applied to each
of the key assumptions were derived from a combination of internal and external factors based on historical experience and took into account the stability of
cash flows typically associated with this business.
The cash flows for the cash-generating unit were projected in line with the methodology disclosed above with the cash flows arising after the five-year period
in the strategic plan document being projected forward for an additional five years using inflation as the relevant growth factor.
Given the magnitude of the excess of value-in-use over carrying amount, and the reasonableness of the key assumptions employed, no further disclosures
relating to sensitivity of the value-in-use computations were required.
15. Financial Assets
31st December 2007
At 1st January
Translation adjustment
Arising on acquisition (note 33)
Investments and advances
Disposals
Retained profit less dividends paid
At 31st December
The equivalent disclosure for the prior year is as follows:
31st December 2006
At 1st January
Translation adjustment
Arising on acquisition (note 33)
Investments and advances
Disposals
Retained profit less dividends paid
At 31st December
Investments in associates
Share of
net assets
€m
Goodwill
€m
Loans
€m
444
107
(1)
(3)
-
(9)
34
(2)
-
-
-
-
465
105
416
109
(4)
1
6
-
25
(2)
-
-
-
-
444
107
3
-
1
-
-
-
4
3
-
-
1
(1)
-
3
Total
€m
554
(3)
(2)
-
(9)
34
574
528
(6)
1
7
(1)
25
554
The investment in associates (including goodwill and loans payable) is analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Total
financial
assets
€m
Other (i)
€m
97
(1)
(42)
40
(16)
-
78
107
(1)
-
13
(22)
-
97
2007
€m
617
378
(225)
(196)
574
651
(4)
(44)
40
(25)
34
652
635
(7)
1
20
(23)
25
651
2006
€m
600
322
(205)
(163)
554
The Group holds a 21.66% stake (2006: 21.66%) in Groupe SAMSE, a publicly-quoted distributor of building materials to the merchanting sector in France
which is accounted for as an associate investment above. The fair value of this investment as at the balance sheet date amounted to €70 million (2006: €60
million).
(i) Other financial assets comprise trade investments carried at historical cost together with quoted investments at fair value and loans extended by the
Group to joint ventures (which are treated as loans and receivables under IAS 39 Financial Instruments: Recognition and Measurement and are included
within financial assets at historical cost). The balance as at 31st December 2007 comprises €15 million in respect of trade and quoted investments and
€63 million in respect of loans to joint ventures (2006: €14 million and €83 million respectively).
86 CRH
16. Disposal of Fixed Assets
Fixed assets disposed of at net carrying amount:
- property, plant and equipment (note 13)
- financial assets (note 15)
Total
Profit on disposal of fixed assets
Proceeds from disposal of fixed assets - Group Cash Flow Statement
17. Inventories
Raw materials
Work-in-progress (i)
Finished goods
Total inventories at the lower of cost and net realisable value
2007
€m
74
25
99
57
156
2007
€m
617
116
1,493
2,226
2006
€m
189
23
212
40
252
2006
€m
624
73
1,339
2,036
(i) Work-in-progress includes €15 million (2006: €17 million) in respect of the cumulative costs incurred, net of amounts transferred to cost of sales under
percentage-of-completion accounting, for construction contracts in progress at the balance sheet date.
Write-downs of inventories recognised as an expense within cost of sales amounted to €20 million (2006: €24 million).
None of the above carrying amounts has been pledged as security for liabilities entered into by the Group.
18. Trade and Other Receivables
All current
Trade receivables
Amounts receivable in respect of construction contracts (i)
Other receivables (ii)
Amounts receivable from associates
Prepayments and accrued income
Total
2007
€m
2,166
480
386
1
166
3,199
2006
€m
2,220
429
340
2
181
3,172
(i) Unbilled revenue at the balance sheet date in respect of construction contracts amounted to €131 million (2006: €109 million).
(ii) Retentions held by customers at the balance sheet date amounted to €97 million (2006: €105 million).
The aged analysis of trade receivables and amounts receivable in respect of construction contracts split between amounts that were neither past due nor
impaired and amounts past due but not impaired at 31st December 2007 and 31st December 2006 was as follows:
Neither past due nor impaired:
Receivable within 3 months of the balance sheet date
Past due but not impaired:
Receivable between 3 and 6 months of the balance sheet date
Receivable between 6 and 9 months of the balance sheet date
Receivable between 9 and 12 months of the balance sheet date
Total
2007
€m
2006
€m
2,385
2,405
183
31
47
190
23
31
2,646
2,649
CRH
87
Notes on Financial Statements
18. Trade and Other Receivables continued
Trade receivables and amounts receivable in respect of construction contract activity are in general receivable within 90 days of the balance sheet date,
are unsecured and are not interest-bearing. The figures disclosed above are stated net of provisions for impairment. The movements in the provision for
impairment of receivables are as follows:
At 1st January
Translation adjustment
Arising on acquisition
Provided during year
Written-off during year
Recovered during year
At 31st December
2007
€m
129
(6)
30
45
(32)
(8)
2006
€m
118
(5)
16
32
(27)
(5)
158
129
A general discussion of the terms and conditions applicable to related party receivables is provided in note 34 to the financial statements.
19. Trade and Other Payables
Current
Trade payables
Irish employment-related taxes
Other employment-related taxes
Value added tax
Deferred and contingent acquisition consideration
Other payables (i)
Accruals and deferred income
Amounts payable to associates
Subtotal - current
Non-current
Other payables
Deferred and contingent acquisition consideration (stated at net present cost) due as follows:
- between one and two years
- between two and five years
- after five years
Subtotal - non-current
Total
2007
€m
1,475
5
70
93
49
441
801
22
2,956
33
42
36
30
2006
€m
1,399
5
51
92
110
383
719
29
2,788
24
29
63
44
141
160
3,097
2,948
(i) Billings in excess of costs incurred together with advances received from customers in respect of work to be performed under construction contracts
and foreseeable losses thereon amounted to €216 million at the balance sheet date (2006: €188 million).
88 CRH
20. Movement in Working Capital
31st December 2007
At 1st January
Translation adjustment
Arising on acquisition (note 33)
Deferred and contingent acquisition consideration:
- arising on acquisition (note 33)
- paid during the year
Interest accruals
Increase/(decrease) in working capital
At 31st December
The equivalent disclosure for the prior year is as follows:
At 1st January
Translation adjustment
Arising on acquisition (note 33)
Deferred and contingent acquisition consideration:
- arising on acquisition (note 33)
- paid during the year
Interest accruals
Reclassifications
Increase/(decrease) in working capital
At 31st December
Inventories
€m
Trade and
other
receivables
€m
Trade and
other
payables
€m
2,036
(110)
263
-
-
-
37
2,226
3,172
(149)
411
-
-
(1)
(234)
3,199
(2,948)
160
(313)
(31)
107
(8)
(64)
Total
€m
2,260
(99)
361
(31)
107
(9)
(261)
(3,097)
2,328
1,723
(101)
363
2,476
(138)
615
-
-
-
-
51
-
-
4
-
215
(2,443)
1,756
125
(438)
(98)
74
(39)
5
(134)
(114)
540
(98)
74
(35)
5
132
2,036
3,172
(2,948)
2,260
21. Liquid Investments and Cash and Cash Equivalents
Liquid investments
Liquid investments comprise short-term deposits and current asset investments which are held as readily disposable stores of value and include investments
in government gilts and commercial paper and deposits of less than one year in duration. The maturity of these investments falls outside the three months
timeframe for classification as cash and cash equivalents under IAS 7 Cash Flow Statements, and accordingly, the related balances have been separately
reported in the Group Balance Sheet and have been categorised as either “held for trading” or “loans and receivables” in accordance with IAS 39 Financial
Instruments: Recognition Measurement in the table below. The credit risk attaching to these items is documented in note 23.
Held for trading (fair value through profit and loss)
Loans and receivables
Total
2007
€m
316
2
318
2006
€m
366
4
370
Cash and cash equivalents
In accordance with IAS 7, cash and cash equivalents comprise cash balances held for the purposes 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. Where investments are categorised as
cash equivalents, the related balances have a maturity of three months or less from the date of investment. Bank overdrafts are included within current
interest-bearing loans and borrowings in the Group Balance Sheet.
Cash and cash equivalents are reported at fair value and are analysed as follows:
Cash at bank and in hand
Investments (short-term deposits)
Included in Group Balance Sheet and Group Cash Flow Statement
2007
€m
592
414
2006
€m
719
383
1,006
1,102
Cash at bank earns interest at floating rates based on daily deposit bank rates. Short-term 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.
CRH
89
Notes on Financial Statements
22. Interest-bearing Loans and Borrowings
Bank loans and overdrafts:
- unsecured
- secured *
Other term loans:
- unsecured
- secured *
Group share of joint ventures’ interest-bearing loans and borrowings (non-current and current)
Interest-bearing loans and borrowings (non-current and current)
Included in current liabilities in the Group Balance Sheet:
- loans repayable within one year
- bank overdrafts
Current interest-bearing loans and borrowings
Non-current interest-bearing loans and borrowings
* Secured on specific property, plant and equipment
Repayment schedule
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Instalment payments
Loans fully repayable within five years:
- not by instalments
- by instalments
Subtotal
Loans fully repayable in more than five years:
- not by instalments
- by instalments**
Subtotal
2007
€m
2,487
63
3,664
42
2006
€m
1,549
40
4,034
35
242
300
6,498
5,958
(386)
(184)
(570)
(449)
(196)
(645)
5,928
5,313
570
2,235
247
721
892
1,833
6,498
4,432
191
4,623
1,797
78
1,875
645
240
1,201
228
762
2,882
5,958
2,846
202
3,048
2,862
48
2,910
Interest-bearing loans and borrowings (non-current and current)
6,498
5,958
** €36 million (2006: €20 million) falls due for repayment after five years
90 CRH
22. Interest-bearing Loans and Borrowings continued
Borrowing facilities
The Company manages its borrowing ability by entering into committed borrowing agreements. Revolving committed bank facilities are generally available
to the Company for periods of up to five years from the date of inception. Various borrowing facilities are available to the Group. The undrawn committed
facilities available as at 31st December 2007 and 31st December 2006, in respect of which all conditions precedent had been met, mature as follows:
Within one year
Between one and two years
Between two and five years
After five years
2007
€m
195
1,282
122
-
1,599
2006
€m
37
77
309
4
427
Included in the figures above is an amount of €248 million in respect of the Group’s share of facilities available to joint ventures (2006: €137 million).
Guarantees
The Company has given letters of guarantee to secure obligations of subsidiary undertakings as follows: €6,205 million in respect of loans, bank advances,
derivative obligations and future lease obligations (2006: €5,536 million), €6 million in respect of deferred and contingent acquisition consideration (2006: €11
million), €284 million in respect of letters of credit (2006: €205 million) and €50 million in respect of other obligations (2006: €14 million).
Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of its wholly-owned subsidiary
undertakings and of Concrete Building Systems Limited and the Oldcastle Finance Company general partnership in the Republic of Ireland for the financial
year ended 31st December 2007 and, as a result, such subsidiary undertakings and the general partnership have been exempted from the filing provisions
of Section 7, Companies (Amendment) Act, 1986 and Regulation 20 of the European Communities (Accounts Regulations), 1993 respectively.
The Company has not guaranteed any debt or other obligations of joint ventures or associates.
Lender covenants
The Group’s major bank facilities and debt issued pursuant to Note Purchase Agreements in private placements require the Group to maintain its consolidated
EBITDA/net interest cover (excluding share of joint ventures) at no lower than 4.5 times for twelve-month periods ending 30th June and 31st December.
Non-compliance with financial covenants would give the relevant lenders the right to demand early repayment of the related debt thus altering the maturity
profile of the Group’s debt and the Group’s liquidity.
CRH
91
Notes on Financial Statements
23. Derivative Financial Instruments
The fair values of derivative financial instruments are analysed by year of maturity and by accounting designation as follows:
31st December 2007
Assets
Fair value hedges
Cash flow hedges
Not designated as hedges
Analysed as:
Non-current assets
Current assets
Total
Liabilities
Fair value hedges
Cash flow hedges
Net investment hedges
Not designated as hedges
Analysed as:
Non-current liabilities
Current liabilities
Total
Net asset arising on derivative financial instruments
The equivalent disclosure for the prior year is as follows:
31st December 2006
Assets
Fair value hedges
Cash flow hedges
Net investment hedges
Not designated as hedges
Analysed as:
Non-current assets
Current assets
Total
Liabilities
Fair value hedges
Cash flow hedges
Net investment hedges
Not designated as hedges
Analysed as:
Non-current liabilities
Current liabilities
Total
Net liabilty arising on derivative financial instruments
9
Total
€m
122
9
2
133
124
133
(67)
(1)
(50)
(4)
(122)
(52)
(70)
(122)
11
71
4
3
1
79
74
5
79
(37)
(4)
(40)
(4)
(85)
(47)
(38)
(85)
(6)
Between Between Between Between
4 and 5
years
€m
2 and 3
years
€m
1 and 2
years
€m
3 and 4
years
€m
Within
1 year
€m
-
7
2
9
(25)
(1)
(40)
(4)
(70)
-
1
3
1
5
(6)
(2)
(26)
(4)
(38)
-
2
-
2
(42)
-
-
-
(42)
-
2
-
-
2
(7)
(1)
(14)
-
(22)
-
-
-
-
-
-
-
-
-
-
1
-
-
1
(10)
(1)
-
-
(11)
14
-
-
14
54
-
-
54
-
-
-
-
-
7
-
-
-
7
-
-
-
-
-
-
-
-
-
-
8
-
-
-
8
-
-
-
-
-
After
5 years
€m
54
-
-
54
-
-
(10)
-
(10)
56
-
-
-
56
(14)
-
-
-
(14)
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. In accordance with IAS 39 Financial Instruments: Recognition and Measurement, fair value hedges and
the related hedged items are recorded at fair value through profit and loss.
92 CRH
23. Derivative Financial Instruments continued
Cash flow hedges consist of forward foreign exchange and commodity contracts and interest rate swaps. These instruments hedge risks arising to future
cash flows from movements in foreign exchange rates, commodity prices and interest rates. Cash flow hedges are expected to affect profit and loss in
periods closely matching the maturities shown above.
Net investment hedges consist of currency swaps and hedge changes in the value of net investments due to currency movements.
The profit/(loss) impact of fair value, cash flow and net investment hedges on the Group Income Statement is shown below:
Cash flow hedges - ineffectiveness
Fair value hedges - profit and loss
Fair value of the hedged item - profit and loss
Net investment hedges - ineffectiveness
2007
€m
-
91
(92)
1
2006
€m
1
(42)
42
(2)
Capital management
The primary objectives of CRH’s capital management strategy are to ensure that the Group maintains a strong credit rating to support the continued organic
and acquisitive growth of its business and to maximise shareholder value through optimisation of the debt and equity balance.
The Board periodically reviews the capital structure of the Group, considering 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. 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. During the course of 2006, a decision was taken to
implement a phased reduction in dividend cover with the objective of achieving dividend cover of 3.5 times for the 2008 financial year; dividend cover for the
2007 financial year amounted to 3.9 times (2006: 4.3 times). In addition, as part of the Board’s capital management strategy, a share buyback programme
was initiated subsequent to the balance sheet date in January 2008.
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:
Capital and reserves attributable to the Company’s equity holders
Net debt (note 24)
Capital and net debt
2007
€m
7,954
5,163
2006
€m
7,063
4,492
13,117
11,555
Financial risk management objectives and policies
The Group uses financial instruments throughout its businesses: interest-bearing loans and borrowings, cash and cash equivalents, short-dated liquid
investments 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. The Group does not trade in financial instruments nor does it enter into any leveraged derivative
transactions.
The main risks attaching to the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. Commodity price risk
is of minimal relevance given that exposure is confined to a small number of contracts entered into for the purpose of hedging future movements in energy
costs. 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 by
a centrally-controlled treasury function using a mix of fixed and floating rate debt; in recent years, the Group’s target has been to fix interest rates on
approximately 50% of net debt as at the period-end. 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 a pre-agreed notional principal.
The majority of these swaps are designated under IAS 39 to hedge underlying debt obligations; undesignated financial instruments are termed “not designated
as hedges” in the preceding analysis of derivative financial instruments in the Group Balance Sheet.
CRH
93
Notes on Financial Statements
23. Derivative Financial Instruments continued
Foreign currency risk
Due to the nature of building materials, which in general exhibit a low value-to-weight ratio, CRH’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 Group Income Statement in the period in which they arise.
Given its presence in 32 countries worldwide, the principal foreign exchange risk is translation-related arising from fluctuations in the euro value of the Group’s
net investment in currencies other than the euro. 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, partially to hedge 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.
Credit 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 either cash
equivalents or liquid investments. 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 counterparties. 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 - generally counterparties have ratings of A2/A from Moody’s/Standard & Poor’s ratings agencies. The maximum exposure arising in the event of
default on the part of the counterparty is the carrying value of the relevant financial instrument.
Credit risk arising in the context of the Group’s operations is not significant. Customers who wish to trade on credit terms are subject to strict verification
procedures prior to credit being advanced and are subject to continued monitoring at operating company level.
Liquidity risk
The Group is exposed to liquidity risk which arises primarily from the maturing of short-term and long-term debt obligations and derivative transactions. The
Group’s policy is to ensure that sufficient resources are available either from cash balances, cash flows or undrawn committed bank facilities, to ensure all
obligations can be met as they fall due. To achieve this objective, the Group:
−
−
−
maintains cash balances and liquid investments with highly-rated counterparties;
limits the maturity of cash balances; and
borrows the bulk of its debt needs under committed bank lines or other term financing.
The tables below show the projected undiscounted total cash outflows (principal and interest) arising from the Group’s gross debt, trade and other payables
and derivatives. The tables also include the gross cash inflows projected to arise from derivatives. These projections are based on the interest and foreign
exchange rates applying at the end of the relevant year.
31st December 2007
Financial liability cash outflows
Trade and other payables
Finance leases
Interest-bearing loans and borrowings
Interest payments on finance leases
Interest payments on interest-bearing loans and borrowings
Interest rate swaps - net cash outflows
Cross-currency swaps - gross cash outflows
Other derivatives
Gross projected cash outflows
Derivatives - cash inflows
Interest rate swaps - net cash inflows
Cross-currency swaps - gross cash inflows
Other derivatives
Gross derivative cash inflows
Within
1 year
€m
2,956
14
556
2
350
3
1,135
3
5,019
(13)
(1,070)
(7)
(1,090)
Between
1 and 2
years
€m
Between
2 and 5
years
€m
After
5 years
€m
78
5
2,230
1
282
3
370
-
2,969
(12)
(330)
(2)
(344)
43
6
1,786
2
530
8
54
-
2,429
(28)
(61)
-
(89)
39
5
1,773
1
512
3
405
-
2,738
(14)
(397)
-
(411)
Total
€m
3,116
30
6,345
6
1,674
17
1,964
3
13,155
(67)
(1,858)
(9)
(1,934)
94 CRH
23. Derivative Financial Instruments continued
The equivalent disclosure for the prior year is as follows:
31st December 2006
Financial liability cash outflows
Trade and other payables
Finance leases
Interest-bearing loans and borrowings
Interest payments on finance leases
Interest payments on interest-bearing loans and borrowings
Interest rate swaps - net cash outflows
Cross-currency swaps - gross cash outflows
Other derivatives
Gross projected cash outflows
Derivatives - cash inflows
Interest rate swaps - net cash inflows
Cross-currency swaps - gross cash inflows
Other derivatives
Gross derivative cash inflows
Within
1 year
€m
2,788
17
628
3
326
5
1,187
6
4,960
(10)
(1,179)
(1)
(1,190)
Between
1 and 2
years
€m
Between
2 and 5
years
€m
55
17
223
2
308
5
386
1
997
(10)
(371)
(1)
(382)
75
13
2,178
4
715
15
350
1
3,351
(27)
(339)
-
(366)
After
5 years
€m
58
7
2,875
1
709
9
-
-
3,659
(10)
-
-
(10)
Total
€m
2,976
54
5,904
10
2,058
34
1,923
8
12,967
(57)
(1,889)
(2)
(1,948)
Commodity price risk
The Group’s exposure to price risk in this regard is minimal with the fair value of derivatives used to hedge future energy costs being €7 million favourable as
at the balance sheet date (2006: €4 million unfavourable).
24. Analysis of Net Debt
Components of and reconciliation of opening to closing net debt
Net debt comprises cash and cash equivalents, liquid investments, derivative financial instrument assets and liabilities and current and non-current interest-
bearing loans and borrowings.
31st December 2007
Cash and cash equivalents (note 21)
Liquid investments (note 21)
Interest-bearing loans and borrowings (note 22)
Derivative financial instruments (net) (note 23)
Group net debt (including share of non-recourse debt in
joint ventures)
Group net debt excluding proportionately consolidated
joint ventures
The equivalent disclosure for the prior year is as follows:
31st December 2006
Cash and cash equivalents (note 21)
Liquid investments (note 21)
Interest-bearing loans and borrowings (note 22)
Derivative financial instruments (net) (note 23)
Group net debt (including share of non-recourse debt in
joint ventures)
Group net debt excluding proportionately consolidated
joint ventures
Note (i) appears on page 96.
At 1st
January
€m
1,102
370
(5,958)
(6)
Cash
flow
€m
(144)
(29)
(703)
113
Acqui-
sitions
€m
83
-
(222)
-
Mark-to- Translation
At 31st
market adjustment December December
Fair value
€m
Book value
€m
At 31st
€m
€m
(i)
-
-
(92)
86
(35)
(23)
477
(182)
1,006
318
(6,498)
11
1,006
318
(6,363)
11
(4,492)
(763)
(139)
(6)
237
(5,163)
(5,028)
(4,244)
(762)
(221)
(6)
234
(4,999)
(4,864)
1,149
342
(5,107)
167
(81)
35
(1,042)
29
69
-
(239)
-
-
-
42
(43)
(35)
(7)
388
(159)
1,102
370
(5,958)
(6)
1,102
370
(6,017)
(6)
(3,449)
(1,059)
(170)
(1)
187
(4,492)
(4,551)
(3,177)
(1,081)
(171)
(2)
187
(4,244)
(4,303)
CRH
95
Notes on Financial Statements
24. Analysis of Net Debt continued
(i)
The fair values of cash and cash equivalents and floating rate loans and borrowings are based on their carrying amounts, which constitute a reasonable
approximation of fair value. The carrying value of liquid investments is the market value of these investments. The carrying value of derivatives is fair value
based on discounted future cash flows at current foreign exchange and interest rates. The fair value of fixed rate debt is calculated based on actual
traded prices for publicly traded debt or discounted future cash flows reflecting market interest rate changes since issuance for other fixed rate debt.
Interest rate and currency profile
The interest rate and currency profile of the Group’s net debt and net worth (capital and reserves attributable to the Company’s equity holders) as at 31st
December 2007 is as follows:
Cash and cash equivalents - floating rate
Liquid investments - floating rate
Interest-bearing loans and borrowings - fixed rate
Interest-bearing loans and borrowings - floating rate
Net debt by major currency excluding derivative financial instruments
Derivative financial instruments (including mark-to-market)
euro
€m
US
Dollar
€m
Pound
Sterling
€m
Swiss
Franc
€m
354
100
(50)
(1,207)
323
105
(3,448)
(879)
(803)
(1,152)
(3,899)
1,475
56
112
(7)
(398)
(237)
168
72
1
(22)
(280)
(229)
(208)
Other
€m
Total
€m
201
-
(4)
(203)
(6)
(272)
1,006
318
(3,531)
(2,967)
(5,174)
11
Net debt by major currency including derivative financial instruments
(1,955)
(2,424)
(69)
(437)
(278)
(5,163)
Non-debt assets and liabilities analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Minority interest
4,526
2,102
(432)
(1,404)
(47)
5,976
2,247
(1,037)
(1,320)
(2)
497
312
(136)
(232)
-
691
346
(96)
(162)
(6)
1,216
418
(106)
(223)
(11)
12,906
5,425
(1,807)
(3,341)
(66)
Capital and reserves attributable to the Company’s equity holders
2,790
3,440
372
336
1,016
7,954
Interest-bearing loans and borrowings - fixed rate
The fixed rate interest-bearing loans and borrowings including the impact of derivative financial instruments (interest rate and cross-currency swaps) as at 31st
December 2007 are as follows:
Interest-bearing loans and borrowings - fixed rate as above (ii)
Impact of derivative financial instruments on fixed rate debt
(50)
(892)
(3,448)
2,174
(7)
(21)
(22)
-
(4)
(80)
(3,531)
1,181
Net fixed rate interest-bearing loans and borrowings
(942)
(1,274)
(28)
(22)
(84)
(2,350)
Weighted average fixed interest rates
Weighted average fixed periods - years
4.1%
3.1
6.7%
6.3
4.9%
0.9
3.4%
0.8
5.5%
0.8
5.6%
4.8
Gross debt by major currency - analysis of effective interest rates
- interest rates excluding derivative financial instruments
- gross debt excluding derivative financial instruments
- interest rates including derivative financial instruments
- gross debt including derivative financial instruments
4.9%
(1,257)
4.6%
(2,409)
6.3%
(4,327)
6.5%
(2,852)
6.7%
(405)
7.0%
(237)
2.9%
(302)
2.9%
(510)
5.4%
(207)
5.4%
(479)
5.8%
(6,498)
5.4%
(6,487)
96 CRH
24. Analysis of Net Debt continued
The corresponding interest rate and currency profile of the Group’s net debt and net worth as at 31st December 2006 is as follows:
euro
€m
US
Dollar
€m
Pound
Sterling
€m
Cash and cash equivalents - floating rate
Liquid investments - floating rate
Interest-bearing loans and borrowings - fixed rate
Interest-bearing loans and borrowings - floating rate
484
92
(206)
(1,011)
324
95
(3,875)
(271)
Net (debt)/cash by major currency excluding derivative financial instruments
Derivative financial instruments (including mark-to-market)
(641)
(1,127)
(3,727)
1,438
48
183
(17)
(406)
(192)
172
Swiss
Franc
€m
105
-
(9)
(9)
87
(260)
Other
€m
Total
€m
141
-
(3)
(151)
(13)
(229)
1,102
370
(4,110)
(1,848)
(4,486)
(6)
Net debt by major currency including derivative financial instruments
(1,768)
(2,289)
(20)
(173)
(242)
(4,492)
Non-debt assets and liabilities analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Minority interest
4,209
1,932
(405)
(1,293)
(22)
5,682
2,528
(1,220)
(1,378)
(5)
534
266
(290)
(211)
-
376
175
(78)
(91)
(8)
785
307
(60)
(172)
(6)
11,586
5,208
(2,053)
(3,145)
(41)
Capital and reserves attributable to the Company’s equity holders
2,653
3,318
279
201
612
7,063
Interest-bearing loans and borrowings - fixed rate
The fixed rate interest-bearing loans and borrowings including the impact of derivative financial instruments (interest rate and cross-currency swaps) as at
31st December 2006 are as follows:
Interest-bearing loans and borrowings - fixed rate as above (ii)
Impact of derivative financial instruments on fixed rate debt
(206)
(629)
(3,875)
2,603
(17)
(23)
(9)
(32)
(3)
(76)
(4,110)
1,843
Net fixed rate interest-bearing loans and borrowings
(835)
(1,272)
(40)
(41)
(79)
(2,267)
Weighted average fixed interest rates
Weighted average fixed periods - years
3.5%
2.4
6.9%
7.4
5.0%
1.5
1.7%
1.2
5.3%
1.8
5.5%
5.1
Gross debt by major currency - analysis of effective interest rates
- interest rates excluding derivative financial instruments
- gross debt excluding derivative financial instruments
- interest rates including derivative financial instruments
- gross debt including derivative financial instruments
3.8%
(1,217)
3.7%
(2,344)
6.5%
(4,146)
6.9%
(2,708)
5.5%
(423)
5.6%
(251)
3.5%
(18)
2.1%
(278)
5.1%
(154)
5.0%
(383)
5.8%
(5,958)
5.2%
(5,964)
(ii) Of the Group’s gross fixed rate debt at 31st December 2007, €2,176 million (2006: €2,659 million) has been hedged to floating rate at inception using
interest rate swaps. In accordance with IAS 39 Financial Instruments: Recognition and Measurement, hedged fixed rate debt is recorded at amortised
cost adjusted for the change in value arising from changes in underlying market interest rates and the related hedging instruments (interest rate swaps)
are stated at fair value. Adjustments to fixed rate debt values and the changes in the fair value of the hedging instrument are taken through profit and
loss. The balance of gross fixed rate debt of €1,355 million (2006: €1,451 million) are financial liabilities measured at amortised cost in accordance with
IAS 39.
Based on the level and composition of year-end net debt, a change in average interest rates of one per cent per annum would change the interest charge,
before tax, by €28 million per annum (2006: €22 million).
A change in the value of other currencies by 10% against the euro would change the Group’s net worth by €516 million and change the Group’s year-end
net debt by €320 million (2006: €441 million and €272 million respectively).
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 (US$ LIBOR, Sterling LIBOR, Swiss Franc LIBOR and Euribor).
Gains and losses arising on the re-translation of net worth are dealt with in the Statement of Recognised Income and Expense. Transactional currency
exposures arise in a number of the Group’s operations and these result in net currency gains and losses which are recognised in the Group Income Statement
and are disclosed in note 4. As at 31st December 2007 and 2006, these exposures were not material.
CRH
97
At 1st Translation Arising on
January adjustment acquisition
€m
€m
€m
Provided
during
year
€m
Utilised
during Reversed
unused
€m
year
€m
Reclass- Discount
At 31st
ifications* unwinding December
€m
€m
€m
Notes on Financial Statements
25. Provisions for Liabilities
Net present cost
31st December 2007
Insurance (i)
Guarantees and warranties (ii)
Rationalisation and redundancy (iii)
Environment and remediation (iv)
Other
Total
Analysed as:
Non-current liabilities
Current liabilities
Total
(20)
(1)
-
(3)
(2)
(26)
1
1
1
1
(18)
83
6
19
11
15
(99)
(7)
(29)
(18)
(21)
(14)
134
(174)
233
25
23
73
107
461
320
141
461
The equivalent disclosure for the prior year is as follows:
31st December 2006
Insurance (i)
Guarantees and warranties (ii)
Rationalisation and redundancy (iii)
Environment and remediation (iv)
Other
Total
Analysed as:
Non-current liabilities
Current liabilities
Total
* Reclassifications (to)/from payables.
147
31
16
79
60
333
223
110
333
(14)
(1)
-
(3)
(1)
(19)
75
1
4
7
25
104
6
15
6
52
(92)
(9)
(12)
(17)
(34)
112
183
(164)
-
(2)
(2)
(2)
(3)
(9)
(1)
(2)
(2)
(3)
-
(8)
-
-
-
-
-
-
11
1
1
2
2
17
209
23
13
64
80
389
248
141
389
2
(2)
1
2
2
5
12
1
1
2
3
233
25
23
73
107
19
461
320
141
461
(i) Insurance
This provision relates to workers’ compensation (employers’ liability) and third-party liabilities or claims covered under the Group’s self-insurance schemes.
Reflecting the operation of these self-insurance schemes, a substantial portion of the total provision relates to claims which are classified as incurred but
not reported in respect of which the Group will bear an excess which will not be recoverable from insurers. In addition, due to the extended timeframe
which is typically involved in such claims, a significant component of the total provision is subject to actuarial valuation. Where actuarial valuation is either
inappropriate or impractical, other external assessments are made.
(ii) Guarantees and warranties
Some of the products sold by Group companies (subsidiaries and joint ventures) carry formal guarantees in relation to satisfactory performance spanning
varying periods subsequent to purchase. Provision is accordingly made on a net present cost basis for the anticipated cost of honouring such guarantees
and warranties at each balance sheet date. Although the expected timing of any payments is uncertain, best estimates have been made in determining a
likely cash profile for the purposes of discounting using past experience as a guide.
(iii) Rationalisation and redundancy
These provisions relate to irrevocable commitments under various rationalisation and redundancy programmes throughout the Group, none of which is
individually material. The Group expects that these provisions will be utilised within three years of the balance sheet date.
(iv) Environment and remediation
This provision comprises obligations governing site remediation and improvement costs 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), the majority of the legal and constructive obligations applicable to long-lived assets (principally mineral-bearing land) will
unwind over a 30-year timeframe. In discounting the related obligations, expected future cash outflows have been determined with due regard to extraction
status and anticipated remaining life.
98 CRH
26. Deferred Income Tax
The deductible and taxable temporary differences at the balance sheet date in respect of which deferred tax has been recognised are analysed as follows:
Deferred income tax assets (deductible temporary differences)
Deficits on Group defined benefit pension obligations
Revaluation of derivative financial instruments to fair value
Employee share options
Other deductible temporary differences (i)
Total
2007
€m
38
1
21
276
336
2006
€m
88
-
56
345
489
(i)
These items relate principally to deferred tax assets arising on deferred and contingent acquisition consideration and provisions for liabilities.
Deferred income tax assets have been recognised in respect of all deductible temporary differences.
Deferred income tax liabilities (taxable temporary differences)
Taxable temporary differences principally attributable to accelerated tax depreciation and fair value adjustments arising on acquisition
Surpluses on Group defined benefit pension obligations
Revaluation of derivative financial instruments to fair value
Rolled-over capital gains
Total
Movement in net deferred income tax liability
At 1st January
Translation adjustment
Net charge for the year (note 10)
Arising on acquisition (note 33)
Movement in deferred tax asset on Group defined benefit pension obligations
Movement in deferred tax asset on share-based payments
Movement in deferred tax liability on cash flow hedges
At 31st December
1,280
5
2
25
1,312
1,268
3
1
29
1,301
812
(67)
40
104
46
39
2
976
718
(63)
50
92
42
(27)
-
812
27. Retirement Benefit Obligations
The Group operates either defined benefit or defined contribution pension schemes in all of its principal operating areas. Scheme assets are held in separate
trustee administered funds.
At the year-end, €49 million (2006: €52 million) was included in other payables in respect of defined contribution pension liabilities.
The Group operates defined benefit pension schemes in the Republic of Ireland, Britain and Northern Ireland, the Netherlands, Belgium, Germany, Portugal,
Switzerland and the United States; for the purposes of the disclosures which follow, the schemes in the Republic of Ireland, the Netherlands, Belgium,
Germany and Portugal (49% joint venture) have been aggregated into a “Eurozone” category on the basis of common currency and financial assumptions.
In line with the principle of proportionate consolidation, the assets, liabilities, income and expenses attaching to defined benefit pension schemes in joint
ventures are reflected in the figures below on the basis of the Group’s share of these entities. The majority of the defined benefit pension schemes operated
by the Group are funded as disclosed in the analysis of the defined benefit obligation presented below with unfunded schemes restricted to one scheme in
each of the Netherlands, Portugal and the United States and three schemes in Germany.
In addition to the aforementioned defined benefit pension schemes, provision has been made in the financial statements for post-retirement healthcare
obligations in respect of certain current and former employees principally in the United States and in Portugal and for long-term service commitments in
respect of certain employees in the Eurozone and Switzerland. These obligations are unfunded in nature and the required disclosures are set out below.
In all cases, the projected unit credit method has been employed in determining the present value of the obligations arising, the related current service cost
and, where applicable, past service cost.
CRH
99
Notes on Financial Statements
27. Retirement Benefit Obligations continued
The cumulative actuarial gains and losses attributable to the Group’s defined benefit pension scheme obligations at 1st January 2004 (the date of transition
to IFRS) were recognised in full as at that date and adjusted against retained income. Actuarial gains and losses and the associated movement in the net
deferred tax asset are recognised via the Statement of Recognised Income and Expense.
Actuarial valuations - funding requirements
The funding requirements in relation to the Group’s defined benefit schemes are assessed in accordance with the advice of independent 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 Ireland and Britain, 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 Portugal
and Germany. In the United States, valuations are performed using a variety of actuarial cost methodologies - current unit, projected unit and aggregate cost.
The actuarial valuations range from January 2005 to December 2007.
The assumptions which have the most significant effect on the results of the actuarial valuations are those relating to the rate of return on investments and
the rates of increase in remuneration and pensions. In the course of preparing the funding valuations, it was assumed that the rate of return on investments
would, on average, exceed annual remuneration increases by 2% and pension increases by 3% per annum.
In general, actuarial valuations are not available for public inspection; however, the results of valuations are advised to the members of the various
schemes.
Financial assumptions
The financial assumptions employed in the valuation of the defined benefit liabilities arising on pension schemes, post-retirement healthcare obligations and
long-term service commitments applying the projected unit credit methodology are as follows:
Scheme liabilities
The major long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities as at 31st December 2007 and 31st December
2006 are as follows:
Rate of increase in:
- salaries
- pensions in payment
Inflation
Discount rate
Medical cost trend rate
Eurozone
Britain and
Northern Ireland
Switzerland
United States
2007
%
4.25
2.25
2.25
5.50
5.25
2006
%
4.00
2.00
2.00
4.75
5.25
2007
%
4.00
3.25
3.00
5.75
n/a
2006
%
4.50
3.00
2.75
5.00
n/a
2007
%
2.25
1.00
1.50
3.50
n/a
2006
%
2.25
1.50
1.50
2.75
n/a
2007
%
4.50
-
2.50
6.25
11.00
2006
%
4.50
-
2.50
5.75
11.00
The mortality assumptions employed in determining the present value of scheme liabilities under IAS 19 are in accordance with the underlying funding
valuations and represent actuarial best practice in the relevant jurisdictions taking account of mortality experience and industry circumstances.
Scheme assets
The long-term rates of return expected at 31st December 2007 and 31st December 2006, determined in conjunction with the Group’s actuaries and analysed
by class of investment, are as follows:
8.00
4.50
7.00
4.00
7.50
4.00
7.00
3.50
8.00
4.50
7.00
5.50
7.75
4.25
7.00
5.00
6.50
3.25
4.50
2.50
6.00
2.75
4.00
2.50
8.00
6.00
7.00
4.25
8.25
5.75
7.00
5.25
Equities
Bonds
Property
Other
100 CRH
27. Retirement Benefit Obligations continued
(a) Impact on Group Income Statement
The total expense charged to the Group Income Statement in respect of defined contribution and defined benefit pension schemes, post-retirement
healthcare obligations and long-term service commitments is as follows:
Total defined contribution pension expense
Defined benefit
Pension schemes (funded and unfunded)
Post-retirement healthcare schemes (unfunded)
Long-term service commitments (unfunded)
Total defined benefit expense
2007
€m
147
46
-
1
47
2006
€m
117
23
2
(2)
23
Total expense in Group Income Statement
194
140
Analysis of defined benefit expense
The total defined benefit expense (comprising funded and unfunded defined benefit pension schemes and unfunded post-retirement healthcare obligations
and long-term service commitments) is analysed as follows:
Eurozone
Britain and
Northern Ireland
Switzerland
United States
Total Group
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
Charged in arriving at Group operating profit
Current service cost
Past service cost: benefit enhancements
Deconsolidation of defined benefit
pension schemes (i)
19
1
33
3
19
-
18
-
16
1
11
-
-
(38)
-
-
-
-
Subtotal
20
(2)
19
18
17
11
6
-
-
6
8
-
-
8
60
2
70
3
-
(38)
62
35
Included in finance revenue and finance
costs respectively
Expected return on scheme assets
Interest cost on scheme liabilities
Subtotal
(50)
38
(12)
(55)
42
(13)
(31)
32
1
(27)
31
4
(16)
12
(4)
(13)
9
(4)
(10)
10
-
(10)
11
1
(107)
92
(105)
93
(15)
(12)
Net charge to Group Income Statement
8
(15)
20
22
13
7
6
9
47
23
Actual return on pension scheme assets
2
79
32
33
3
22
9
16
46
150
No reimbursement rights have been recognised as assets in accordance with IAS 19 Employee Benefits.
(i) During 2006, in response to legislative changes implemented in the Netherlands, the Group reached agreement with its employees in the Netherlands
on changes to certain pension arrangements which altered their basis under IFRS from defined benefit to defined contribution. This resulted in the
elimination of certain defined benefit obligations from the Group Balance Sheet with a resultant gain of €38 million which was reflected in arriving at
Group operating profit for the 2006 financial year.
CRH
101
Notes on Financial Statements
27. Retirement Benefit Obligations continued
(b) Impact on Group Balance Sheet
The net pension liability (comprising funded and unfunded defined benefit pension schemes and unfunded post-retirement healthcare obligations and
long-term service commitments) as at 31st December 2007 is analysed as follows:
Equities
Bonds
Property
Other
Bid value of assets
Actuarial value of liabilities (present value)
Asset limit adjustment
Recoverable (deficit)/surplus in schemes
Related deferred income tax asset/(liability) (note 26)
Net pension (liability)/asset
Analysis of liabilities - funded and unfunded
Funded
Defined benefit pension schemes
Unfunded
Defined benefit pension schemes
Eurozone
Britain and
Northern Ireland
Switzerland
United States
Total Group
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
455
214
81
17
767
(793)
-
(26)
9
(17)
499
188
80
17
784
(818)
-
(34)
11
(23)
290
162
18
8
478
(526)
- -
299
168
4
9
480
(662)
128
187
83
60
108
110
78
36
89
48
-
6
458
(439)
(10)
332
(328)
-
143
(173)
- -
(48)
13
(182)
55
(35)
(127)
9
(2)
7
4
(1)
(30)
13
3
(17)
91
49
-
3
143
(193)
(50)
20
(30)
962
611
182
91
997
515
162
65
1,846
(1,931)
(10)
1,739
(2,001)
-
(95)
33
(262)
85
(62)
(177)
(751)
(783)
(526)
(662)
(434)
(326)
(162)
(181)
(1,873)
(1,952)
(26)
(20)
-
-
-
-
(4)
(4)
(30)
(24)
Total - defined benefit pension schemes
Post-retirement healthcare obligations (unfunded)
Long-term service commitments (unfunded)
(777)
(8)
(8)
(803)
(8)
(7)
(526)
-
- -
(662)
-
(434)
-
(5)
(326)
-
(2)
(166)
(7)
-
(185)
(8)
-
(1,903)
(15)
(13)
(1,976)
(16)
(9)
Actuarial value of liabilities (present value)
(793)
(818)
(526)
(662)
(439)
(328)
(173)
(193)
(1,931)
(2,001)
Split of asset values
Equities
Bonds
Property
Other
Total
%
59.3
27.9
10.6
2.2
100
%
63.6
24.0
10.2
2.2
100
%
60.7
33.9
3.8
1.6
100
%
62.3
35.0
0.8
1.9
100
%
27.9
40.8
18.2
13.1
100
%
32.5
33.1
23.5
10.9
100
%
62.2
33.6
-
4.2
100
%
63.6
34.3
-
2.1
100
%
52.1
33.1
9.9
4.9
100
%
57.3
29.6
9.4
3.7
100
The asset values above include €7 million in respect of investment in Ordinary Shares of the Company as at 31st December 2007 (2006: €11 million).
Analysis of amount included in the Statement of Recognised Income and Expense (SORIE)
Actual return less expected return on
scheme assets
Experience (loss)/gain arising on
scheme liabilities (present value)
Assumptions gain arising on scheme
liabilities (present value)
Asset limit adjustment
Actuarial gain recognised in SORIE
(48)
24
1
6
(13)
9
(1)
6
(61)
45
(13)
(19)
-
19
(9)
(4)
(3)
(2)
(25)
(6)
63
-
2
89
-
94
126
-
127
27
-
52
54
(10)
22
-
-
5
12
-
-
-
255
(10)
8
4
159
116
-
155
102 CRH
27. Retirement Benefit Obligations continued
Actuarial gains and losses and percentages of scheme assets and liabilities
Actual return less expected return on
scheme assets
% of scheme assets
Experience (loss)/gain arising on
scheme liabilities (present value)
% of scheme liabilities (present value)
Eurozone
Britain and
Northern Ireland
Switzerland
United States
Total Group
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
2007
€m
2006
€m
(48)
(6.3%)
24
1
6
(13)
9
3.1%
0.2%
1.3%
(2.8%)
2.7%
(1)
(0.7%)
6
4.2%
(61)
(3.3%)
45
2.6%
(13)
(19)
1.6%
2.3%
-
-
19
(2.9%)
(9)
(4)
(3)
2.1%
1.2%
1.7%
(2)
1.0%
(25)
1.3%
(6)
0.3%
Actuarial gain recognised in SORIE
% of scheme liabilities (present value)
2
(0.3%)
94
(11.5%)
127
(24.1%)
52
(7.9%)
22
(5.0%)
5
(1.5%)
8
(4.6%)
4
(2.1%)
159
(8.2%)
155
(7.7%)
Following transition to IFRS on 1st January 2004, the cumulative actuarial gain recognised in the SORIE is as follows:
Recognised in 2004 financial year
Recognised in 2005 financial year
Recognised in 2006 financial year
Recognised in 2007 financial year
Cumulative actuarial gain recognised in SORIE
Reconciliation of scheme assets (bid value)
At 1st January
Movement in year
Translation adjustment
Arising on acquisition (note 33)
Employer contributions paid
Contributions paid by plan participants
Benefit payments
Actual return on scheme assets
Deconsolidation adjustment
Bid value of assets
Asset limit adjustment
At 31st December
Reconciliation of actuarial value of liabilities
At 1st January
Movement in year
Translation adjustment
Arising on acquisition (note 33)
Current service cost
Contributions paid by plan participants
Benefit payments
Past service cost: benefit enhancements
Interest cost on scheme liabilities
Actuarial gain/(loss) arising on:
- experience variations
- changes in assumptions
Deconsolidation adjustment
2007
€m
(119)
(86)
155
159
109
784
933
480
423
332
277
143
138
1,739
1,771
-
2
15
4
(40)
2
-
767
-
767
-
2
27
7
(34)
79
(230)
784
-
784
(43)
-
21
5
(17)
32
-
478
-
478
9
6
20
5
(16)
33
-
480
-
480
(9)
131
12
8
(19)
3
-
458
(10)
448
(11)
45
8
6
(15)
22
-
332
-
332
(15)
-
14
-
(8)
9
-
143
-
143
(15)
1
11
-
(8)
16
-
(67)
133
62
17
(84)
46
-
(17)
54
66
18
(73)
150
(230)
143
-
1,846
(10)
1,739
-
143
1,836
1,739
(818)
(1,093)
(662)
(651)
(328)
(277)
(193)
(200)
(2,001)
(2,221)
-
(3)
(19)
(4)
40
(1)
(38)
(13)
63
-
-
(12)
(33)
(7)
34
(3)
(42)
49
-
(19)
(5)
17
-
(32)
(19)
89
268
-
126
-
(13)
(6)
(18)
(5)
16
-
(31)
19
27
-
11
(149)
(16)
(8)
19
(1)
(12)
(9)
54
-
13
(49)
(11)
(6)
15
-
(9)
(4)
-
-
19
-
(6)
-
8
-
(10)
(3)
12
-
21
(1)
(8)
-
8
-
(11)
79
(152)
(60)
(17)
84
(2)
(92)
21
(68)
(70)
(18)
73
(3)
(93)
(2)
-
-
(25)
255
-
(6)
116
268
At 31st December
(793)
(818)
(526)
(662)
(439)
(328)
(173)
(193)
(1,931)
(2,001)
Anticipated employer contributions payable in the 2008 financial year (expressed using average exchange rates for 2007) amount to €58 million in
aggregate.
CRH
103
Notes on Financial Statements
27. Retirement Benefit Obligations continued
History of scheme assets, liabilities and actuarial gains and losses
Given that the Group transitioned to IFRS with effect from 1st January 2004, a five-year history in respect of assets, liabilities and actuarial gains and losses
is not available; the relevant data for the Group for the four years after transition to IFRS are as follows:
Bid value of assets
Actuarial value of liabilities (present value)
Asset limit adjustment
Recoverable deficit
Actual return less expected return on scheme assets
% of scheme assets
Experience (loss)/gain arising on scheme liabilities (present value)
% of scheme liabilities (present value)
2007
€m
2006
€m
2005
€m
2004
€m
1,846
(1,931)
(10)
1,739
(2,001)
-
1,771
(2,221)
-
1,465
(1,815)
-
(95)
(262)
(450)
(350)
(61)
(3.3%)
45
2.6%
177
10.0%
17
1.2%
(25)
1.3%
(6)
0.3%
42
(1.9%)
(7)
0.4%
Post-retirement healthcare benefits - sensitivity analysis on key actuarial assumptions
The impact of the sensitivity analysis on the key actuarial assumptions employed in the valuation of post-retirement healthcare benefits as required under IAS
19 Employee Benefits is not material to the Group.
28. Capital Grants
At 1st January
Translation adjustment
Received
Released to Group Income Statement
At 31st December
There are no unfulfilled conditions or other contingencies attaching to capital grants received.
2007
€m
2006
€m
10
1
3
14
(3)
11
12
-
-
12
(2)
10
104 CRH
29. Share Capital - Equity and Preference
31st December 2007
Authorised
At 1st January and 31st December
Number of Shares (000s)
Allotted, called-up and fully paid
At 1st January
Share options and share participation schemes (iv)
Shares issued in lieu of dividends (v)
At 31st December
Number of Shares (000s)
The corresponding disclosure in respect of the year ended 31st December 2006 is as follows:
Authorised
At 1st January and 31st December
Number of Shares (000s)
Allotted, called-up and fully paid
At 1st January
Share options and share participation schemes (iv)
Shares issued in lieu of dividends (v)
At 31st December
Number of Shares (000s)
Equity
Preference
Ordinary
Shares of
€0.32 each
€m
Income
Shares of
€0.02 each
(i)
€m
5%
Cumulative
Preference
Shares of
€1.27 each
(ii)
€m
7% ‘A’
Cumulative
Preference
Shares of
€1.27 each
(iii)
€m
235
15
735,000
735,000
-
150
173
2
-
175
11
-
-
11
547,208
547,208
-
-
-
-
50
235
15
735,000
735,000
-
150
171
2
-
173
11
-
-
11
542,790
542,790
-
-
-
-
50
1
872
1
-
-
1
872
1
872
1
-
-
1
872
(i) Income Shares
The Income Shares were created on 29th 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 8th May
2002 to cancel such elections.
(ii) 5% Cumulative Preference Shares
The holders of the 5% Cumulative Preference Shares are entitled to a fixed cumulative preferential dividend at a rate of 5% per annum and priority in a
winding-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 15th April and 15th October in each year.
(iii) 7% ‘A’ Cumulative Preference Shares
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 a winding-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 7% ‘A’ Cumulative Preference
Shares are payable half-yearly on 5th April and 5th October in each year.
CRH
105
Notes on Financial Statements
29. Share Capital - Equity and Preference continued
(iv) Share schemes
Details of share options granted under the Company’s share option schemes and savings-related share option schemes and the terms attaching thereto
are provided in note 7 and in the Report on Directors’ Remuneration on pages 48 to 55. Under these schemes, options over a total of 3,022,122 Ordinary
Shares were exercised during the financial year (2006: 5,337,168). Of this total, 1,795,766 (2006: 5,337,168) were satisfied by the issue of new shares for
total proceeds of €27 million (2006: €80 million). The remaining options were satisfied by the purchase of 1,226,356 Ordinary Shares on the market by the
Employee Benefit Trust (see footnote (i) in note 30 below). The difference of €21 million (2006: nil) between the proceeds of €20 million (2006: nil) from the
exercise of these latter options and the €41 million cost (2006: nil) of the shares purchased has been debited to retained income.
Share participation schemes At 31st December 2007, 6,028,916 (2006: 5,676,369) Ordinary Shares had been appropriated to participation schemes. The
Ordinary Shares appropriated pursuant to these schemes were issued at market value on the dates of appropriation. The shares issued pursuant to these
schemes are excluded from the scope of IFRS 2 Share-based Payment and are hence not factored into the expense computation and the associated
disclosures in note 7.
During the ten-year period commencing on 3rd May 2000, the total number of Ordinary Shares which may be issued in respect of the share option schemes,
the savings-related share option schemes, the share participation schemes and any subsequent share option schemes, may not exceed 15% in aggregate
of the issued Ordinary share capital from time to time.
(v) Shares issued in lieu of dividends
In May 2007, 1,922,128 (2006: 497,960) Ordinary Shares were issued to the holders of Ordinary Shares who elected to receive additional Ordinary Shares
at a price of €29.92 (2006: €28.48) per share, instead of part or all of the cash element of their 2006 and 2005 final dividends. In November 2007, 347,752
(2006: 381,691) Ordinary Shares were issued to the holders of Ordinary Shares who elected to receive additional Ordinary Shares at a price of €31.01 (2006:
€27.12) per share, instead of part or all of the cash element of their 2007 and 2006 interim dividends.
30. Reserves
2007
2006
Share
premium
account
€m
Own
shares (i)
€m
Foreign
currency
Share
Other translation Retained premium
account
€m
reserve
€m
income
€m
reserves
€m
Own
shares (i)
€m
Other
reserves
€m
Foreign
currency
translation
reserve
€m
Retained
income
€m
At 1st January
2,318
(14)
52
(137)
4,659
2,208
Currency translation effects
Premium on shares issued
Share option expense (note 7)
- share option schemes
- Performance Share Plan
Shares acquired by Employee Benefit Trust (i)
Share option exercises (note 29 (iv))
Dividends (including shares issued in lieu
of dividend) (note 11)
Actuarial gain on Group defined
benefit pension obligations (note 27)
Movement in deferred tax asset on Group
defined benefit pension obligations
Current tax impact of share option exercises
Movement in deferred tax asset on
share-based payments
Gains/(losses) relating to cash flow hedges
Movement in deferred tax liability on cash
flow hedges
Group profit for the financial year attributable
to equity holders of the Company
-
102
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
(10)
-
-
-
18
-
-
-
(410)
-
-
-
-
110
-
-
-
-
-
-
(41)
20
-
-
-
-
-
-
-
(318)
-
-
-
-
-
-
-
-
-
-
159
-
-
-
-
-
-
-
-
-
(46)
13
(39)
8
-
-
-
-
-
-
(2)
-
-
-
1,430
-
-
-
-
-
1
(15)
-
-
-
-
-
-
-
-
-
37
234
3,533
-
(371)
-
-
15
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(222)
-
-
155
-
-
-
-
-
-
-
-
(42)
-
27
(2)
-
-
-
-
-
1,210
At 31st December
2,420
(19)
70
(547)
5,843
2,318
(14)
52
(137)
4,659
106 CRH
30. Reserves continued
(i) Shares acquired by Employee Benefit Trust
Pursuant to the terms of the Performance Share Plan (see note 7), which was approved by shareholders at the 2006 Annual General Meeting, 310,000
Ordinary Shares were purchased by the Trustees of the Plan in the financial year ended 31st December 2007 at a cost of €10 million (2006: 627,750 Ordinary
Shares at a cost of €15 million). The nominal value of these shares, on which dividends have been waived by the Trustees of the Plan, amounted to €0.3
million at 31st December 2007 (2006: €0.2 million). These shares are included in the balance sheet at cost of €25 million (2006: €15 million), and are stated
net of the accumulated income statement charge of €5 million (2006: €1 million) in respect of the Performance Share Plan.
In addition, a further 1,226,356 Ordinary Shares were purchased by the Trustees at a cost of €41 million (2006: nil) in order to satisfy the exercise during the
period of options over the same number of shares.
Reconciliation of shares issued to proceeds shown in Group Cash Flow Statement
Shares issued at nominal amount (note 29):
- share options and share participation schemes
Premium on shares issued
Total value of shares issued
Shares issued in lieu of dividends (note 11)
Proceeds from issue of shares - Group Cash Flow Statement
31. Minority Interest
At 1st January
Translation adjustment
Profit after tax (less attributable to associates)
Dividends paid by subsidiaries to minority interests
Arising on acquisition (note 33)
Shares issued to minority interests
At 31st December
32. Commitments under Operating and Finance Leases
Operating leases
Future minimum rentals payable under non-cancellable operating leases at 31st December are as follows:
Within one year
After one year but not more than five years
More than five years
2007
€m
2
102
104
(68)
36
2006
€m
2
110
112
(25)
87
2007
€m
2006
€m
41
(3)
8
(5)
25
-
66
39
(3)
14
(12)
-
3
41
2007
€m
230
498
320
1,048
2006
€m
199
426
286
911
Finance leases
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:
Within one year
After one year but not more than five years
More than five years
Total minimum lease payments
Less: amounts allocated to future finance costs
Present value of minimum lease payments
Minimum
payments
€m
2007
Present
value of
payments
€m
Minimum
payments
€m
2006
Present
value of
payments
€m
16
14
6
36
(6)
30
14
11
5
30
20
36
8
64
(10)
54
17
30
7
54
CRH
107
Notes on Financial Statements
33. Acquisition of Subsidiaries and Joint Ventures
The principal business combinations completed during the year ended 31st December 2007 by reporting segment,
together with the completion dates, were as follows; these transactions entailed the acquisition of a 100% stake
where not indicated to the contrary:
Europe Materials
China: Harbin Sanling Cement (8th February); Finland: Murskauskolmio Oy (1st November); Lebanon: Ciment de
Sibline - additional 21.9% (1st January); the Netherlands: remaining 55% of Cementbouw bv (30th August); Ireland:
T.O’Connell & Sons (17th September); Poland: Gniewkow (30th May) and readymixed concrete assets of Schwenk
(13th June); Slovakia: Jablonica quarry (31st August); Portugal (49% joint venture): increased interest in Secil
Martinganca (1st January), additional 42.9% of Cimentos Madeira (5th June) and Minerbetao (1st June); Turkey:
50% of Denizli Cimento (14th April); Ukraine: Shchyrets readymixed concrete plant (3rd October) and Belotserkovsky
concrete plant (10th December).
Europe Products
Belgium: Olivier (1st October) and MBI Beton (31st October); Denmark: Dalton (29th March) and Expan (31st August);
France: Cinor (2nd January), OREP (4th May) and Sodeco (11th June); Italy: Plastybeton (29th March); Norway:
Halfen-Frimeda (15th May); Poland: remaining 75% of Ergon (26th April) and Cerabud (29th November); Romania:
Elpreco (17th December); Sweden: Tuvan Stangsel (7th March); United Kingdom: Anderton Concrete (24th April),
West Midland Fencing (2nd July) and Forsite Construction Accessories (4th July).
Europe Distribution
France: LDP (3rd January); Germany: acquisitions by CRH’s 48% joint venture BauKing - Mobau (22nd February),
Kapella Baustoffe (17th July) and Moller & Forster Baustoffe (31st August); the Netherlands: Vlutters (3rd March),
Bouweijden Almere (7th September) and Haringsma (5th October); Spain: Jelf Brico-House (24th May); Switzerland:
Gétaz Romang (25th May) and G. von Gunten (14th December).
Americas Materials
Arizona: Hancock Materials (16th November); Florida: Conrad Yelvington Distributors (4th September) and selected
Cemex Rinker assets (30th November); Idaho: International Stone (23rd August) and HK Contractors (5th November);
Iowa: Cessford Construction (10th August); New York: Madden Concrete (30th July); Ohio: Kenmore Construction
Company (2nd April); Oklahoma: Bellco Materials (31st December); Oregon: Eugene Sand & Gravel (3rd August);
Pennsylvania: McMinn’s Asphalt & Prospect Aggregates (31st August); South Carolina: Southeast Asphalt (22nd
August); Tennessee: selected assets of US Concrete (9th November); Texas: Matthews Construction & Jasper Asphalt
(2nd November); Utah: Kaneco Products (13th June) and Hales Sand & Gravel (2nd December); Vermont: Burgess
Brothers (24th September); Virginia: Rock It Stone (11th January); and Wyoming: Big Sky Asphalt (10th April).
Americas Products
California: Carson Industries (20th July; also including operations in Kentucky, Ohio and Ireland) and Inland Concrete
Enterprises (17th December); Florida: remaining 50% of Paver Systems (January 3rd), Ruck Brothers (13th August),
Amerimix and Cementec Industries (17th August), Coloroc Materials (23rd February) and Harwood Brick (11th June);
Georgia: remaining 20% of Custom Surfaces (29th June; also South Carolina), selected block assets of Lafarge North
America (30th November; Georgia and New Mexico); Illinois: Valley Block (3rd January) and River City Landscape
Supply (21st December; also Alabama); New Jersey: Pre-Blend Products (31st May); New Mexico: Rinker Block (23rd
July); Texas: Vistawall (29th June) and Headwaters Mortar and Stucco Group (20th December).
Americas Distribution
California: Spartan Supply (11th April), John Ray Company (13th April) and Acoustical Materials Services (16th
November; also Nevada, Hawaii, Arizona and Mexico); and Florida: Florida Waterproofing Supply (7th September).
108 CRH
33. Acquisition of Subsidiaries and Joint Ventures continued
Identifiable net assets acquired (excluding net debt assumed)
Assets
Non-current assets
Property, plant and equipment (note 13)
Intangible assets: - goodwill (note 14)
- excess of fair value of identifiable net assets over consideration paid
- other intangible assets (note 14)
Investments in associates (note 15)
Other financial assets (note 15) (i)
Deferred income tax assets (note 26)
Total non-current assets
Current assets
Inventories (note 20)
Trade and other receivables (note 20)
Total current assets
Equity
Minority interest (note 31)
Total equity
Liabilities
Non-current liabilities
Deferred income tax liabilities (note 26)
Retirement benefit obligations (note 27)
Provisions for liabilities (stated at net present cost - note 25) (ii)
Total non-current liabilities
Current liabilities
Trade and other payables (note 20) (ii)
Current income tax liabilities
Provisions for liabilities (stated at net present cost - note 25) (ii)
Total current liabilities
Total consideration (enterprise value)
Satisfied by
Cash payments
Professional fees incurred on business combinations
Cash and cash equivalents acquired on acquisition (note 24)
Net cash outflow
Net debt (other than cash and cash equivalents) assumed on acquisition:
- non-current interest-bearing loans and borrowings and finance leases (note 24)
- current interest-bearing loans and borrowings and finance leases (note 24)
Deferred and contingent acquisition consideration (stated at net present cost - note 20)
Total consideration (enterprise value)
2007
€m
2006
€m
999
807
(4)
132
(2)
(42)
18
1,908
263
411
674
(25)
(25)
(122)
(19)
(3)
(144)
(313)
(6)
17
(302)
1,084
818
(7)
98
1
-
11
2,005
363
615
978
-
-
(103)
(14)
(82)
(199)
(438)
(1)
(30)
(469)
2,111
2,315
1,922
19
(83)
1,858
22
200
31
2,028
19
(69)
1,978
7
232
98
2,111
2,315
(i) The amount arising on acquisition in 2007 includes the derecognition of €44 million of loans to Cementbouw bv, a former joint venture, following the
purchase of the remaining 55% stake during the year.
(ii) Certain amounts were re-allocated from provisions for liabilities to trade and other payables in restating provisional fair value estimates during the 2007
financial year.
CRH
109
Notes on Financial Statements
33. Acquisition of Subsidiaries and Joint Ventures continued
None of the business combinations completed during the financial year was considered sufficiently material to warrant separate disclosure of the attributable fair
values.
No contingent liabilities were recognised on the business combinations completed during the financial year or the prior financial year.
The principal factor contributing to the recognition of goodwill on business combinations entered into by the Group is the realisation of cost savings and synergies
with existing entities in the Group.
The carrying amounts of the assets and liabilities acquired determined in accordance with IFRS before completion of the combination, together with the adjustments
made to those carrying values to arrive at the fair values disclosed above, were as follows:
Book
Fair value
values adjustments
€m
€m
Accounting Adjustments
policy to provisional
fair values
€m
alignments
€m
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities
Current liabilities
Minority interest
Identifiable net assets acquired (excluding goodwill and net debt assumed)
Goodwill arising on acquisition
Total consideration (enterprise value)
766
661
(62)
(294)
(21)
1,050
1,068
2,118
295
25
(48)
(9)
(6)
257
(257)
-
-
(3)
-
(4)
-
(7)
7
-
44
(9)
(34)
5
2
8
(15)
(7)
Fair
value
€m
1,105
674
(144)
(302)
(25)
1,308
803
2,111
The initial assignment of fair values to identifiable net assets acquired has been performed on a provisional basis in respect of a number of the business
combinations disclosed above given the timing of closure of these deals; any amendments to these fair values made during the subsequent reporting window
(within the twelve-month timeframe from the acquisition date imposed by IFRS 3) will be subject to subsequent disclosure. The total adjustments processed
in 2007 to the fair values of business combinations completed during 2006 where those fair values were not readily or practicably determinable as at 31st
December 2006 were as follows:
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities
Current liabilities
Minority interest
Identifiable net assets acquired (excluding goodwill and net debt assumed)
Goodwill arising on acquisition
Total consideration (enterprise value)
Initial Adjustments
fair value to provisional
fair values (iii)
assigned
€m
€m
Revised
fair value
€m
955
877
(183)
(436)
-
1,213
648
1,861
44
(9)
(34)
5
2
8
(15)
999
868
(217)
(431)
2
1,221
633
(7)
1,854
(iii) The majority of the adjustments to the provisional fair values booked in 2006 and reflected above pertain to the APAC acquisition where an independent
fair value assessment was pending at 31st December 2006.
110 CRH
33. Acquisition of Subsidiaries and Joint Ventures continued
The post-acquisition impact of business combinations completed during the year on Group profit for the financial year was as follows:
Revenue
Cost of sales
Gross profit
Operating costs
Group operating profit
Profit on disposal of fixed assets
Profit before finance costs
Finance costs (net)
Profit before tax
Income tax expense
Group profit for the financial year
2007
€m
1,215
(881)
334
(233)
101
-
101
(42)
59
(18)
41
2006
€m
1,907
(1,455)
452
(343)
109
-
109
(56)
53
(13)
40
The revenue and profit of the Group for the financial year determined in accordance with IFRS as though the acquisition date for all business combinations effected
during the year had been the beginning of that year would be as follows:
Pro-forma 2007
2007
acquisitions
€m
CRH Group
excluding
Pro-forma
2007 consolidated
Group
€m
acquisitions
€m
Pro-forma
2006
€m
Revenue
2,786
19,777
22,563
20,719
Group profit for the financial year
85
1,397
1,482
1,239
A number of business combinations have been completed subsequent to the balance sheet date. None of these combinations is individually material to the Group
thereby requiring disclosure under either IFRS 3 or IAS 10 Events after the Balance Sheet Date. Development updates, giving details of acquisitions which do not
require separate disclosure, are published in January and July each year.
CRH
111
Notes on Financial Statements
34. Related Party Transactions
The principal related party relationships requiring disclosure in the consolidated financial statements of the Group under IAS 24 Related Party Disclosures
pertain to: the existence of subsidiaries, joint ventures and associates; transactions with these entities entered into by the Group; and the identification and
compensation of key management personnel.
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 61 to 67. The Group’s principal subsidiaries, joint ventures and associates are disclosed on
pages 120 to 125.
Sales to and purchases from, together with outstanding payables to and receivables from, subsidiaries and joint ventures are eliminated in the preparation
of the consolidated financial statements in accordance with IAS 27 Consolidated and Separate Financial Statements. Loans extended by the Group to
joint ventures and associates are included in financial assets (whilst the Group’s share of the corresponding loans payable by joint ventures are included in
interest-bearing loans and borrowings due to the application of proportionate consolidation in accounting for the Group’s interests in these entities). Sales
to and purchases from associates during the financial year ended 31st December 2007 amounted to €19 million (2006: €17 million) and €497 million (2006:
€438 million) respectively. Amounts receivable from and payable to associates (arising from the aforementioned sales and purchases transactions) as at the
balance sheet date are included as separate line items in notes 18 and 19 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 other related
parties (being joint ventures and associates) are conducted in the ordinary course of business and on terms equivalent to those that prevail in arm’s-length
transactions. The outstanding balances included in receivables and payables as at the balance sheet date in respect of transactions with 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 (the respective amounts being disclosed in note 15) are extended on normal commercial terms 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.
As identified in the Report on Directors’ Remuneration on pages 48 to 55, the Directors, other than the non-executive Directors, serve as executive officers of
the Company. Full disclosure in relation to the compensation entitlements of the Board of Directors is provided in the Report on Directors’ Remuneration.
35. Board Approval
The Board of Directors approved and authorised for issue the financial statements on pages 58 to 112 in respect of the year ended 31st December 2007
on 3rd March 2008.
112 CRH
Company Balance Sheet
as at 31st December 2007
Notes
2
3
4
6
6
7
6
7
7
7
Fixed assets
Financial assets
Current assets
Debtors
Cash at bank and in hand
Creditors (amounts falling due within one year)
Trade and other creditors
Bank loans and overdrafts
Net current assets
Total assets less current liabilities
Creditors (amounts falling due after more than one year)
Bank loans
Capital and reserves
Called-up share capital
Preference share capital
Share premium
Own shares
Revaluation reserve
Other reserves
Profit and loss account
Shareholders’ funds
2007
€m
2006
€m
311
1,074
4,768
98
4,866
1,669
2
1,671
3,683
55
3,738
1,386
1
1,387
3,195
2,351
3,506
3,425
-
19
3,506
3,406
186
1
2,424
(19)
42
60
812
3,506
184
1
2,322
(14)
42
557
314
3,406
K. McGowan, W.I. O’Mahony, Directors
CRH
113
Notes to the Company Balance Sheet
1. Accounting Policies
Basis of accounting
The financial statements have been prepared under the historical cost convention in accordance with the Companies Acts, 1963 to 2006 and Generally Accepted
Accounting Practice in the Republic of Ireland (Irish GAAP). The following paragraphs describe the principal accounting policies under Irish GAAP, which have been
applied consistently.
Operating income and expenses
Operating income and expenses arise from the Company’s principal activities as a holding company for the Group and are accounted for on an accruals basis.
Financial Assets
Fixed asset investments, including investments in subsidiaries, are stated at cost (and at valuation at 31st December 1980 for those investments in existence at that
date) and are reviewed for impairment if there are indications that the carrying value may not be recoverable.
Foreign currencies
The reporting currency of the Company is euro. Transactions in foreign currencies are translated at the rates of exchange ruling at the transaction date. Monetary
assets and liabilities denominated in foreign currencies are translated into euro at the rates of exchange ruling at the balance sheet date, with a corresponding charge
or credit to the profit and loss account.
Share issue expenses and share premium account
Costs of share issues are written-off against the premium arising on issues of share capital.
Share-based payments
The Company has applied the requirements of FRS 20 Share-based Payment.
The accounting policy applicable to share-based payments is consistent with that applied under IFRS and is accordingly addressed in detail on pages 63 and 64 of
the Group financial statements.
Cash flow statement
The Company has taken advantage of the exemption afforded by FRS 1 Cash Flow Statements not to provide a statement of cash flows.
Dividends
Dividends on Ordinary Shares are recognised as a liability in the Company’s financial statements in the period in which they are declared by the Company.
2. Financial Assets
The Company’s investment in its subsidiaries is as follows:
31st December 2007
At 1st January at cost/valuation
Disposals
Capital contribution in respect of employee share options expense
Capital contribution in respect of Performance Share Plan expense
At 31st December at cost/valuation
The equivalent disclosure for the prior year is as follows:
31st December 2006
At 1st January at cost/valuation
Disposals
Capital contribution in respect of employee share options expense
Capital contribution in respect of Performance Share Plan expense
At 31st December at cost/valuation
Shares (i)
€m
Other
€m
1,030
(779)
-
-
251
1,038
(8)
-
-
1,030
44
-
11
5
60
28
-
15
1
44
Total
€m
1,074
(779)
11
5
311
1,066
(8)
15
1
1,074
(i)
The Company’s investment in shares in its subsidiaries was revalued at 31st December 1980 to reflect the surplus on revaluation of certain property,
plant and equipment (land and buildings) of subsidiaries. The original historical cost of the shares equated to approximately €9 million. The analysis of
the closing balance between amounts carried at valuation and at cost is as follows:
At valuation 31st December 1980
At cost post 31st December 1980
Total
3. Debtors
Amounts owed by subsidiary undertakings
Other debtors
114 CRH
2007
€m
47
204
2006
€m
47
983
251
1,030
4,768
-
4,768
3,681
2
3,683
4. Trade and Other Creditors
Amounts falling due within one year
Amounts owed to subsidiary undertakings
Other creditors
2007
€m
1,669
-
1,669
2006
€m
1,385
1
1,386
5. Dividends Proposed (Memorandum Disclosure)
Details in respect of dividends proposed of €260 million (2006: €209 million) are presented in the dividends note (note 11) on page 81 of the notes to the Group’s
IFRS financial statements.
6. Called-up Share Capital
Details in respect of called-up share capital and own shares are presented in the share capital note (note 29) and in the reserves note (note 30) on pages 105
to 107 respectively of the notes to the Group’s IFRS financial statements.
7. Movement in Shareholders’ Funds
At 1st January
Currency translation effects
Premium on shares issued
Transfer to profit and loss account
Profit before tax and dividends
Shares acquired by Employee Benefit Trust
Share option exercises
Employee share options
Dividends received from subsidiaries
Dividends (including shares issued
in lieu of dividend)
2007
2006
Share
premium Revaluation
reserve
account
€m
€m
Other
reserves
€m
Profit and
loss
account
€m
Share
premium Revaluation
reserve
account
€m
€m
Other
reserve
€m
Profit and
loss
account
€m
2,322
42
557
-
102
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(515)
-
-
-
18
-
-
60
314
(2)
-
515
24
(41)
20
-
300
(318)
812
2,212
-
110
-
-
-
-
-
-
-
42
-
-
-
-
-
-
-
-
-
2,322
42
747
-
-
(205)
-
-
-
15
-
-
557
314
(2)
-
205
19
-
-
-
-
(222)
314
At 31st December
2,424
42
In accordance with Section 148(8) of the Companies Act, 1963 and Section 7(1A) of the Companies (Amendment) Act, 1986, 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. The profit
retained for the financial year dealt with in the Parent Company financial statements amounted to €6 million (2006: loss of €203 million).
8. Share-based Payments
The total expense of €23 million (2006: €16 million) reflected in note 7 to the Group’s financial statements attributable to employee share options and the
Performance Share Plan has been included as a capital contribution in financial assets (note 2) net of reimbursements receivable from subsidiaries.
9. Section 17 Guarantees
Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the Company has guaranteed the liabilities of its wholly-owned subsidiary
undertakings and of Concrete Building Systems Limited and the Oldcastle Finance Company general partnership in the Republic of Ireland for the financial
year ended 31st December 2007 and, as a result, such subsidiary undertakings and the general partnership have been exempted from the filing provisions
of Section 7, Companies (Amendment) Act, 1986 and Regulation 20 of the European Communities (Accounts Regulations), 1993 respectively.
The Company has not guaranteed any debt or other obligations of joint ventures or associates.
10. Approval by Board
The Board of Directors approved and authorised for issue the Company financial statements on pages 113 to 115 in respect of the year ended 31st December 2007
on 3rd March 2008.
CRH
115
Shareholder Information
Dividend payments
An interim dividend of 20.0c, with scrip alternative, was paid in respect of
Ordinary Shares on 2nd November 2007.
A final dividend of 48.0c, if approved, will be paid in respect of Ordinary Shares
on 12th May 2008. A scrip alternative will be offered to shareholders.
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, Capita 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%). Non-resident shareholders and
certain Irish companies, trusts, pension schemes, investment undertakings
and charities may be entitled to claim exemption from DWT and have been
sent the relevant form. Further copies of the form may be obtained from the
Company’s 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
Ireland for tax purposes are not entitled to an exemption.
Shareholders who wish to have their dividend paid direct to a bank account,
by electronic funds transfer, should contact the Company’s Registrars
to obtain a mandate form. Tax vouchers will be sent to the shareholder’s
registered address under this arrangement.
Dividends are paid in euro. In order to avoid costs to shareholders, dividends
are paid in Sterling and US Dollars to shareholders whose address according
to the Share Register is in the UK and the United States respectively, unless
they require otherwise.
Dividends in respect of 5% Cumulative Preference Shares are paid half-yearly
on 15th April and 15th October.
Dividends in respect of 7% ‘A’ Cumulative Preference Shares are paid half-
yearly on 5th April and 5th October.
116 CRH
CREST
Website
Transfer of the Company’s shares takes place through the CREST
settlement system. Shareholders have the choice of holding their shares
in electronic form or in the form of share certificates.
Share price data
Share price at 31st December
Market capitalisation
Share price movement
during the year:
- high
- low
Shareholdings as at 31st December 2007
Ownership of Ordinary Shares
Geographic location*
Ireland
United Kingdom
North America
Europe/Other
Retail
2007
€
23.85
13.1bn
2006
€
31.54
17.1bn
38.20
21.92
31.82
22.65
Number of
shares held
‘000
85,191
89,516
168,593
122,014
81,893
% of
total
16
16
31
22
15
The Group’s website, www.crh.com, provides the full text of the Annual and
Interim Reports, the Annual Report on Form 20-F, which is filed annually with
the United States Securities and Exchange Commission, trading statements
and copies of presentations to analysts and investors. News releases are
made available, in the News & Media section of the website, immediately
after release to the Stock Exchanges.
Registrars
Enquiries concerning shareholdings should be addressed to:
Capita Registrars,
P.O. Box 7117, Dublin 2.
Telephone: +353 (0) 1 810 2400
Fax: +353 (0) 1 810 2422
Shareholders with access to the internet may check their accounts either
by accessing CRH’s website and selecting “Registrars” under “Shareholder
Services” in the Investor Relations section or by accessing the Registrars’
website, www.capitaregistrars.ie. This facility allows shareholders to check
their shareholdings and to download standard forms required to initiate
changes in details held by the Registrars.
American Depositary Receipts
547,207
100
The ADR programme is administered by the Bank of New York Mellon and
enquiries regarding ADRs should be addressed to:
The Bank of New York Mellon
Investor Services
P.O. Box 11258
Church Street Station
New York, NY 10286-1258
Telephone: Toll Free Number (United States residents): 1-888-269 2377
International: +1 212-815 3700
Email: shareowners@bankofny.com
Website: http://www.stockbny.com
Electronic proxy voting
Shareholders may lodge a proxy form for the 2008 Annual General Meeting
electronically. Shareholders who wish to submit proxies via the internet may
do so by accessing CRH’s, or the Registrars’, website as described above.
Shareholders must register for this service on-line before the electronic
proxy service can be used. Instructions on using the service are sent to
shareholders with their proxy form.
CREST members wishing to appoint a proxy via the CREST system should
refer to the CREST Manual and the notes to the Notice of the Annual General
Meeting.
*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.
Holdings
Number of
shareholders
% of
total
1 - 1,000
1,001 - 10,000
10,001 - 100,000
100,001 - 1,000,000
Over 1,000,000
18,091
9,925
1,330
276
72
60.93
33.42
4.48
0.93
0.24
Number of
shares held
‘000
6,703
29,267
35,544
85,928
389,765
% of
total
1.23
5.35
6.50
15.70
71.22
29,694
100
547,207
100
Stock Exchange listings
CRH has primary listings on the Irish and London Stock Exchanges. The
Group’s ADRs are quoted on the New York Stock Exchange (NYSE) in the
United States.
Financial calendar
Announcement of final results for 2007
Ex-dividend date
Record date for dividend
Latest date for receipt of scrip forms
Annual General Meeting
Dividend payment date and first day of dealing
in scrip dividend shares
Trading update statement
Announcement of interim results for 2008
4th March 2008
12th March 2008
14th March 2008
25th April 2008
7th May 2008
12th May 2008
2nd July 2008
26th August 2008
CRH
117
Management
Senior Group Staff
Liam O’Mahony
Chief Executive Officer
Myles Lee
Finance Director
Angela Malone
Company Secretary
Jack Golden
Human Resources Director
Liam Hughes
Business Support Director
Paul Barry
Head of Internal Audit
Maeve Carton
Group Controller
Rossa McCann
Group Treasurer
Jim O’Brien
Group Technical Advisor
Éimear O’Flynn
Head of Investor Relations
Pat O’Shea
Group Taxation Director
Europe
Materials
Albert Manifold
Managing Director
Henry Morris
Chief Operating Officer
Alan Connolly
Finance Director
Eamon Geraghty
Technical Director
Tony Macken
Business Development
Manager
Ireland/Benelux
Donal Dempsey
Regional Director
Ireland & Benelux
Ken McKnight
Managing Director
Irish Cement
Leo Grogan
Managing Director
Premier Periclase
118 CRH
Jim Farrell
Managing Director
Roadstone Dublin
Frank Byrne
Managing Director
Roadstone Provinces
John Hogan
Managing Director
John A. Wood
Noel Quinn
Managing Director
Northstone
Oliver Mahon
Country Manager
Benelux
Central Eastern Europe
Declan Maguire
Regional Director
Central Eastern Europe
David Dillon
Country Manager
Finland
Eero Laatio
Managing Director
Finnsementti
Kalervo Matikainen
Managing Director
Rudus
Owen Rowley
Country Manager
Poland
Andrzej Ptak
President
.
Grupa Oz
arów
Aleksander Szyszko
Country Manager
Ukraine
Switzerland
Urs Sandmeier
Country Manager
Switzerland
Paul Zosso
Managing Director
Jura Aggregates &
Readymix
Spain
Sebastia Alegre
Managing Director
CRH Spain
Middle East/Asia
Jim Nolan
Regional Director
Middle East and Asia
Frank Heisterkamp
Country Manager
Turkey and China
Products & Distribution
Máirtín Clarke
Managing Director
Peter Erkamp
Finance Director
Michael Stirling
Human Resources Director
Concrete Products
Rudy Aertgeerts
Product Group Director
Kees Verburg
Finance/Development
Director
Edwin van den Berg
Managing Director
Architectural Products
Benelux
Mark van Loon
Managing Director
Structural Concrete Benelux
Claus Bering
Managing Director
Scandinavia and Eastern
Europe
Jean-Paul Gelly
Managing Director
Architectural Products
France
Hans-Josef Münch
Managing Director
EHL
Shaun Gray
Managing Director
Forticrete
Richard Lee
Managing Director
Supreme
Clay Products
Wayne Sheppard
Product Group Director
& Managing Director
Ibstock Brick
Geoff Bull
Product Group Finance
Director
Anton Huizing
Development Director
New Regions
Harry Bosshardt
Managing Director
Builders Merchants
Central Europe
Jean-Jacques Miauton
Managing Director
Builders Merchants
Switzerland
René Doors
Managing Director
Builders Merchants
Netherlands
Jos de Nijs
Managing Director
Specialist Builders
Merchants Netherlands
Philippe Denécé
Managing Director
Builders Merchants France
Louis Bruzi
Managing Director
Builders Merchants Ile-de-
France
Peter Wirth
Managing Director
Builders Merchants Austria
Emiel Hopmans
Managing Director
DIY Europe
Jan van Ommen
Managing Director
Clay Mainland-Europe
Claus Arntjen
Managing Director
AKA Ziegelwerke
Joanna Stelmasiak
Managing Director
CRH Klinkier
Building Products
Marc St. Nicolaas
Product Group Director
Erwin Thys
Finance/Development
Director
Tom Beyers
Development Director
Peter Liesker
Human Resources Director
Geert-Jan van Schijndel
Managing Director
Building Envelope Products
Dirk Vael
Managing Director
Construction Accessories
Walter de Backer
Finance Director
Construction Accessories
Gerben Stilma
Managing Director
Insulation Products
Frank Boekholtz
Finance/Development
Director
Insulation Products
John Nash
Development Director
Insulation Products
Distribution
Erik Bax
Group Managing Director
Kees van der Drift
Finance/Development
Director
Erik de Groot
Human Resources Director
The Americas
Tom Hill
Chief Executive Officer
Michael O’Driscoll
Chief Financial Officer
Gary Hickman
Senior Vice President Tax &
Risk Management
North America
Materials
Mark Towe
Chief Executive Officer
Doug Black
President & Chief Operating
Officer
Glenn Culpepper
Chief Financial Officer
Don Eshleman
Executive Vice President
Michael Brady
Senior Vice President
Development
Charles Brown
Vice President Finance
John Hay
Vice President Government
Relations
New England
John Keating
President
New England Division
Christian Zimmerman
President
Pike
Jim Reger
President
P.J. Keating
Ciaran Brennan
President
Tilcon Connecticut
New York/New Jersey
Chris Madden
President
New York/New Jersey
Division
Jonas Havens
President
Callanan Industries
John Cooney
President
Tilcon NY
John Siel
President
Dolomite Group
George Thompson
President
Tilcon NJ
Central
Dan Montgomery
President
Central Division
John Powers
President
Shelly
Dan Cooperrider
President
Appalachian Mountain
Group
Mid-Atlantic
Randy Lake
President
Mid-Atlantic Division
Dennis Rickard
President
Michigan Paving & Materials
West
John Parson
President
West Division
Jeff Schaffer
President
Northwest Group
Shane Evans
President
Rocky Mountain Group
Scott Parson
President
Staker-Parson Group
Jim Gauger
President
Iowa Companies
Southwest
Kirk Randolph
President
Southwest Division
John Walker
Regional President
Arkansas/Oklahoma/Texas
Chris Lodge
Regional President
Memphis/Mississippi/
Ballenger
Damien Murphy
Regional President
Kansas/Missouri
Southeast
Rick Mergens
President
Southeast Division
Sean O’Sullivan
President
Mid-South Materials
Gary Yelvington
President
Conrad Yelvington
Distributors
Robert Duke
President
Preferred Materials
Don Sollie
President
Florida APAC Operations
Products & Distribution
Architectural Products
William Sandbrook
Chief Executive Officer
Paul Valentine
Executive Vice President
Finance & Administration
Ted Kozikowski
President, Masonry
Keith Gauss
Chief Financial Officer
Damian Burke
Vice President Development
John Kemp
Senior Vice President,
Marketing
Bertin Castonguay
Director, Research &
Development
Georges Archambault
President
APG Canada
Steve Matsick
President
Glen-Gery
Wade Ficklin
President
APG West
John O’Neill
President
APG Northeast
Tom Conroy
President
APG South
Marcia Gibson
President
APG Midwest
Keith Haas
President
APG Retail
David Maske
President
Bonsal American
Eoin Lehane
President
Oldcastle Lawn & Garden
Precast
Mark Schack
Chief Executive Officer
Bob Quinn
Chief Administrative Officer
Eric Farinha
Chief Financial Officer
George Heusel
Vice President Development
George Hand
President
Northeast Pipe and Precast
Jan Olsen
President
Southeast Division
Ray Rhees
President
Central Division
Mike Scott
President
Western Division
David Shedd
President
National Products Division
Dave Steevens
President
Enclosures Division
Glass
Ted Hathaway
Chief Executive Officer
Dan Hamblen
Chief Financial Officer
Daipayan Bhattacharya
Vice President
Development & Technology
Jim Avanzini
President Western Group
Bob Berleth
President Eastern Group
Tom Harris
President Engineered
Products Group
Roy Orr
President Central Group
MMI
John Wittstock
Chief Executive Officer
Celeste Mastin
President & Chief Operating
Officer
Bob Tenczar
Chief Financial Officer
Lyle Bumgarner
President
Construction Accessories
David Clark
President
Fencing
Mike McCall
President
Wire Products
Distribution
Michael Lynch
Chief Executive Officer
Robert Feury Jr.
Chief Operating Officer
Greg Bloom
John McLaughlin
Ruben Mendoza
Ron Pilla
Donald Toth
Vice Presidents
Brian Reilly
Chief Financial Officer
Kevin Hawley
Vice President Development
South America
Juan Carlos Girotti
Managing Director
CRH Sudamericana
Canteras Cerro Negro
Alejandro Javier Bertrán
Business Development
Manager
Benjamin Fernandez
Business Development
Manager
Bernardo Alamos
Managing Director
Vidrios Dell Orto
CRH
119
Principal Subsidiary Undertakings
Incorporated and operating in % held Products and services
Incorporated and operating in % held Products and services
Europe Materials
Britain & Northern Ireland
Spain
Beton Catalan Group
Beton Catalan s.a.
100 Readymixed concrete
Northstone (NI) Limited
(including Farrans, Ready Use
Concrete, R.J. Maxwell & Son, Scott)
100 Aggregates, readymixed concrete,
mortar, coated macadam, rooftiles,
building and civil engineering contracting
Premier Cement Limited
100 Marketing and distribution of cement
T.B.F. Thompson (Properties) Limited 100 Property development
Cabi s.a.
99.99 Cementitious materials
Cantera de Aridos Puig Broca s.a. 99.81 Aggregates
Explotacion de Aridos Calizos s.a.
100 Aggregates
Formigo i Bigues s.a.
99.81 Aggregates
China
Harbin Sanling Cement Company
Limited*
100 Cement
Finland
Finnsementti Oy
100 Cement
Lohja Rudus Oy Ab
100 Aggregates and readymixed concrete
Ireland
Formigons Girona s.a.
100 Readymixed concrete and precast
concrete products
Suberolita s.a.
100 Readymixed concrete and precast
Tamuz s.a.
Switzerland
JURA-Holding
concrete products
100 Aggregates
100 Cement, aggregates and
readymixed concrete
Irish Cement Limited
100 Cement
Ukraine
Premier Periclase Limited
100 High quality seawater magnesia
Podilsky Cement
98.88 Cement
Roadstone-Wood Group
Clogrennane Lime Limited
100 Burnt and hydrated lime
Europe Products & Distribution
John A. Wood Limited
100 Aggregates, readymixed concrete,
concrete blocks and pipes, asphalt,
agricultural and chemical limestone
and contract surfacing
Austria
Quester Baustoffhandel GmbH
100 Builders merchants
Ormonde Brick Limited
100 Clay brick
Roadstone Dublin Limited
100 Aggregates, readymixed concrete,
mortar, coated macadam, asphalt,
contract surfacing and concrete blocks
Belgium
Concrete Products
Douterloigne nv
100 Concrete floor elements, pavers and
Roadstone Provinces Limited
Netherlands
Cementbouw bv
Poland
100 Aggregates, readymixed concrete,
mortar, coated macadam, asphalt,
contract surfacing, concrete blocks
and rooftiles
Ergon nv
Klaps nv
100 Cement transport and trading,
readymixed concrete and
aggregates
Marlux nv
MBI Beton bv
Oeterbeton nv
blocks
100 Precast concrete structural
elements
100 Concrete paving, sewerage and
water treatment
100 Decorative concrete paving
100 Architectural products
100 Precast concrete
Bosta Beton Sp. z o.o.
90.3 Readymixed concrete
Olivier Betonfabriek nv
100 Architectural products
Cementownia Rejowiec S.A.
100 Cement
Omnidal nv
100 Precast concrete structural
Drogomex Sp. z o.o.*
99.94 Asphalt and contract surfacing
Faelbud S.A.*
100 Readymixed concrete, concrete
products and concrete paving
.
Grupa Oz
arów S.A.
100 Cement
Remacle sa
Schelfhout nv
Clay Products
elements
100 Precast concrete products
100 Precast concrete wall elements
Grupa Prefabet S.A.*
100 Concrete products
Steenhandel J. De Saegher nv
100 Clay brick factors
Masfalt Sp. z o.o.*
100 Asphalt and contract surfacing
O.K.S.M.
Polbruk S.A.*
99.92 Aggregates
100 Readymixed concrete and concrete
paving
Building Products
Plakabeton nv
Portal sa
Distribution
100 Construction accessories
100 Glass roof structures
ZPW Trzuskawica S.A.
99.98 Production of lime and lime products
Van Neerbos Bouwmarkten nv
100 DIY stores
120 CRH
Incorporated and operating in % held Products and services
Incorporated and operating in % held Products and services
Britain & Northern Ireland
Concrete Products
Forticrete Limited
France continued
Building Products
100 Concrete masonry products and
Heda sa
100 Security fencing
rooftiles
Heras Clôture sarl
100 Temporary fencing
Supreme Concrete Limited
100 Concrete fencing, lintels and
floorbeams
Clay Products
Ibstock Brick Limited
100 Clay brick manufacturer
Kevington Building Products Limited 100 Specialist brick fabricator
Manchester Brick & Precast
100 Brick-clad precast components
Building Products
Airvent Systems Services Limited
100 Smoke ventilation systems and
Laubeuf sas
Plakabeton sa
Distribution
Buscaglia sas*
Doras sa*
100 Glass roof structures
100 Construction accessories
100 Builders merchants
57.85 Builders merchants
Etrechy Matériaux sas
100 Builders merchants
LDP Matériaux sas
100 Builders merchants
services
Matériaux Service sas
100 Builders merchants
Broughton Controls Limited
100 Access control systems
Cox Building Products Limited
100 Domelights, ventilation systems
and continuous rooflights
CRH Fencing Limited
100 Security fencing
EcoTherm Insulations Limited
100 PUR/PIR insulation
FCA Wholesalers Limited
100 Construction accessories
Raboni sas*
Germany
Concrete Products
EHL AG
100 Builders merchants
100 Concrete paving and landscape
walling products
Rhebau GmbH
100 Water treatment and sewerage
products
Geoquip Limited
100 Perimeter intrusion detection
Clay Products
systems
AKA Ziegelgruppe GmbH
100 Clay brick, pavers and rooftiles
Springvale EPS Limited
100 EPS insulation and packaging
TangoRail Limited
100 Non-welded railing systems
Building Products
Adronit GmbH
100 Security fencing and access control
West Midland Fencing Limited
100 Security fencing
Brakel Aero GmbH
100 Rooflights, glass roof structures and
Denmark
Concrete Products
Betonelement A/S
100 Precast concrete structural elements
Gefinex GmbH
100 XPE insulation
EcoTherm GmbH
100 PUR/PIR insulation
ventilation systems
Betongruppen RBR
100 Paving Manufacturer
Greschalux GmbH
100 Domelights and ventilation systems
Dalton Betonelementer A/S
100 Structural products
Halfen GmbH
100 Metal construction accessories
Expan A/S
Building Products
ThermiSol A/S
Estonia
Building Products
ThermiSol OÜ
Finland
Building Products
ThermiSol Oy
France
Concrete Products
100 Structural products
Heras SKS GmbH
100 Security fencing
100 EPS insulation
100 EPS insulation
100 EPS insulation
JET Tageslicht und RWA GmbH
100 Domelights, ventilation systems and
continuous rooflights
Magnetic Autocontrol GmbH
100 Vehicle and pedestrian access
control systems
Syncotec GmbH
100 Construction accessories
Unidek GmbH
100 EPS insulation
Ireland
Building Products
Aerobord Limited
100 EPS insulation and packaging
Construction Accessories Limited
100 Metal and plastic construction
accessories
BMI sa
99.91 Precast concrete products
Chapron Leroy sas
100 Utility products
Cinor sas
Stradal sas
100 Structural products
100 Landscape, utility and
infrastructural concrete products
Italy
Concrete Products
Record S.p.A.
Building Products
Plastybeton S.R.L.
100 Concrete landscaping
100 Construction accessories
CRH
121
Principal subsidiary undertakings continued
Incorporated and operating in % held Products and services
Incorporated and operating in % held Products and services
Netherlands
Concrete Products
Netherlands continued
Distribution
Alvon Bouwsystemen bv
100 Precast concrete structural elements
Ubbens Bouwmaterialen bv
100 Builders merchants
Calduran bv
100 Sand-lime bricks and building
Van Neerbos Bouwmarkten bv
100 DIY stores
Dycore bv
100 Concrete flooring elements
Van Neerbos Bouwmarkten
Exploitatie bv
100 DIY stores
elements
Heembeton bv
100 Precast concrete structural elements
Van Neerbos Bouwmaten bv
100 Cash & Carry building materials
Kellen bv
100 Concrete paving products
Van Neerbos Bouwmaterialen bv
100 Builders merchants
Struyk Verwo bv
100 Concrete paving products
Clay Products
Norway
Building Products
Kleiwarenfabriek Buggenum bv
100 Clay brick manufacturer
Halfen-Frimeda AS
100 Construction accessories
Kleiwarenfabriek De Bylandt bv
100 Clay paver manufacturer
Kleiwarenfabriek De Waalwaard bv 100 Clay brick manufacturer
Kleiwarenfabriek Façade Beek bv
100 Clay brick manufacturer
Poland
Concrete
Ergon Poland Sp. z o.o.
100 Structural products
Kleiwarenfabriek Joosten Kessel bv 100 Clay brick manufacturer
Clay Products
Kleiwarenfabriek Joosten Wessem bv 100 Clay brick manufacturer
Kooy Bilthoven bv
100 Clay brick factors
Leebo bv
100 Designer, manufacturer and installer
of façade and roofing systems
Steenfabriek Nuth bv
100 Clay brick manufacturer
Building Products
Arfman Hekwerk bv
100 Producer and installer of fauna and
railway fencing solutions
Aluminium Verkoop Zuid bv
100 Roller shutter and awning systems
CERG Sp. z o.o.
67.55 Clay brick manufacturer
Cerpol Kozlowice Sp. z o.o.
99.60 Clay brick manufacturer
CRH Klinkier Sp. z o.o.
100 Clay brick manufacturer
Gozdnickie Zaklady Ceramiki
Budowlanej Sp. z o.o.*
Krotoszyñskie Przedsiębiorstwo
Ceramiki Budowlanej
“CERABUD” S.A.
Patoka Industries Limited
Sp. z o.o.*
100 Clay brick manufacturer
56.58 Clay blocks, bricks and rooftiles
99.19 Clay brick manufacturer
BIK Bouwprodukten bv
100 Domelights and continuous
Building Products
rooflights
Termo Organika Sp. z o.o.
100 EPS insulation
Brakel Atmos bv
100 Glass roof structures, continuous
rooflights and ventilation systems
EcoTherm bv
100 PUR/PIR insulation
Heras Nederland bv
100 Security fencing and perimeter
protection
Romania
Concrete
Elpreco SA
Slovakia
100 Architectural products
Premac Spol. s r.o.
100 Concrete paving and floor elements
Mavotrans bv
100 Construction accessories
Unidek Group bv
100 EPS insulation
Unipol bv
Vaculux bv
Distribution
100 EPS granulates
100 Domelights
Spain
Building Products
Plakabeton sa
Distribution
100 Accessories for construction and
precast concrete
CRH Bouwmaterialenhandel bv
100 Builders merchants
JELF Brico House S.L.
60 Builders merchants
CRH Roofing Materials bv
100 Roofing materials merchant
Garfield Aluminium bv
100 Aluminium stockholding
NVB Vermeulen Bouwstoffen bv
100 Builders merchants
Stoel van Klaveren Bouwstoffen bv 100 Builders merchants
Syntec bv
100
Ironmongery merchants
Sweden
Building Products
ThermiSol AB
100 EPS insulation
Tuvan-stängsel AB
100 Security fencing
122 CRH
Incorporated and operating in % held Products and services
Incorporated and operating in % held Products and services
Switzerland
Concrete Products
Element AG
Building Products
Aschwanden AG
Distribution
Baubedarf
100 Prefabricated structural concrete
elements
100 Construction accessories
100 Builders merchants
CRH Gétaz Holding AG
100 Builders merchants
United States continued
Oldcastle SW Group, Inc.
Pennsy Supply, Inc.
100 Aggregates, asphalt, readymixed
concrete and related construction
activities
100 Aggregates, asphalt, readymixed
concrete and related construction
activities
Pike Industries, Inc.
100 Aggregates, asphalt and related
construction activities
P.J. Keating Company
100 Aggregates, asphalt and related
Richner
100 Sanitary ware and ceramic tiles
construction activities
Preferred Materials, Inc.
100 Readymixed concrete
Americas Materials
Staker & Parson Companies
100 Aggregates, asphalt, readymixed
concrete and related construction
activities
United States
APAC, Inc.
100 Aggregates, asphalt and related
construction activities
APAC Mid-South, Inc.
100 Aggregates, asphalt and related
Tilcon Connecticut, Inc.
The Shelly Company
100 Aggregates, asphalt and related
construction activities
100 Aggregates, asphalt, readymixed
concrete and related construction
activities
Callanan Industries, Inc.
construction activities
100 Aggregates, asphalt, readymixed
concrete and related construction
activities
Conrad Yelvington Distributors, Inc. 100 Aggregate distribution
CPM Development Corporation
100 Aggregates, asphalt, readymixed
concrete, prestressed concrete and
related construction activities
Tilcon New York, Inc.
100 Aggregates, asphalt, and related
construction activities
West Virginia Paving, Inc.
100 Aggregates, asphalt and related
construction activities
Americas Products & Distribution
Dolomite Products Company, Inc.
100 Aggregates, asphalt and
Argentina
readymixed concrete
Canteras Cerro Negro S.A.
99.98 Clay rooftiles, wall tiles and fl oor tiles
Eugene Sand Construction, Inc.
Evans Construction Company
Hills Materials Company
100 Aggregates, asphalt, readymixed
concrete and related construction
activities
100 Aggregates, asphalt, readymixed
concrete and related construction
activities
100 Aggregates, asphalt, readymixed
concrete and related construction
activities
Michigan Paving and Materials
Company
100 Aggregates, asphalt and related
construction activities
CRH Sudamericana S.A.
100 Holding company
Superglass S.A.
100 Fabricated and tempered glass
products
Canada
Oldcastle Building Products
Canada, Inc.
(trading as Décor Precast,
Groupe Permacon, Oldcastle Glass
and Synertech Moulded Products)
Xemax Holdings, Inc.
(trading as Antamex International)
100 Masonry, paving and retaining
walls, utility boxes and trenches
and custom-fabricated and
tempered glass products
100 Architectural curtain wall
Mountain Enterprises, Inc.
100 Aggregates, asphalt and related
Chile
OMG Midwest, Inc.
construction activities
100 Aggregates, asphalt, readymixed
concrete and related construction
activities
Oldcastle Industrial Minerals, Inc.
100 Mining and crushing of high calcium
Vidrios Dell Orto, S.A.
99.9 Fabricated and tempered glass
products
United States
CRH America, Inc.
100 Holding company
Oldcastle Materials, Inc.
100 Holding company
Oldcastle Building Products, Inc.
100 Holding company
limestone
Oldcastle, Inc.
100 Holding company
CRH
123
Principal subsidiary undertakings continued
Incorporated and operating in % held Products and services
Incorporated and operating in % held Products and services
United States continued
Architectural Products Group
United States continued
Distribution Group
Bend Industries, Inc.
100 Concrete, brick and stone products
Allied Building Products Corp.
100 Distribution of roofi ng, siding and
Big River Industries, Inc.
100 Lightweight aggregate and fl y-ash
Bonsal American, Inc.
100 Pre-mixed products and specialty
stone products
Oldcastle Surfaces, Inc.
100 Custom fabrication and installation
of countertops
A.L.L. Roofi ng & Building
Materials Corp.
AMS Holding, Inc.
related products, wallboard, metal
studs, acoustical tile and grid
100 Distribution of roofi ng and related
products
100 Distribution of drywall, acoustical
ceiling systems, metal studs and
commercial door solutions
Glen-Gery Corporation
100 Clay brick
Arzee Supply Corp. of New Jersey
100 Distribution of siding, roofi ng and
Northfi eld Block Company
100 Specialty masonry, hardscape and
patio products
Oldcastle Architectural, Inc.
100 Holding company
Mahalo Acquisition
Corp (trading as G. W. Killebrew)
related products
100 Holding company
Oldcastle APG Midwest, Inc.
(trading as 4D, Miller Material Co.,
Oldcastle Sheffi eld,
Schuster’s Building Products)
100 Specialty masonry, hardscape and
patio products
Oldcastle Distribution, Inc.
100 Holding company
Glass Group
Antamex, Inc.
100 Architectural curtain wall
Oldcastle Glass, Inc.
100 Custom architectural glass,
100 Specialty masonry, hardscape and
patio products
Oldcastle APG Northeast, Inc.
(trading as Anchor Concrete Products,
Arthur Whitcomb, Balcon,
Betco Block, Betco Supreme, Domine
Builders Supply, Foster-Southeastern,
Oldcastle Easton, Trenwyth Industries)
engineered aluminium glazing
systems and integrated building
envelope solutions
100 Engineered aluminium glazing
systems
Oldcastle Windows, Inc.
(trading as Vistawall, Moduline,
Naturalite and Skywall)
100 Specialty masonry, hardscape and
patio products
Southwest Aluminum Systems, Inc. 100 Architectural aluminium store fronts
and doors
Oldcastle APG South, Inc.
(trading as Adams Products, Big Rock
Building Products, Bosse Concrete
Products, Georgia Masonry, Goria
Enterprises, The Keystone Group)
Oldcastle APG Texas, Inc.
(trading as Custom-Crete,
Custom Stone Supply,
Eagle-Cordell Concrete Products,
Jewell Concrete Products)
100 Specialty masonry and stone
products, hardscape and patio
products
Oldcastle APG West, Inc.
(trading as Amcor Masonry Products,
Central Pre-Mix Concrete Products,
Oldcastle Stockton, Sierra Building
Products, Superlite Block, Young Block)
100 Specialty masonry, hardscape and
patio products
Texas Wall Systems, Inc.
100 Architectural curtain wall
Construction Accessories and Fencing
Merchants Metals Holding Company 100 Holding company
MMI Products, Inc.
(trading as Merchants Metals,
Ivy Steel & Wire and Meadow Burke)
100 Fabrication and distribution of metal
products including fencing, welded
wire reinforcement and concrete
accessories; distribution of plastic,
lumber and other metal products
Ivy Steel & Wire, Inc.
100 Welded wire reinforcement
manufacturer
MMI StrandCo LP, LLC
100 PC strand
Oldcastle Lawn & Garden, Inc.
100 Patio products, bagged stone,
mulch and stone
Precast Group
Oldcastle Coastal, Inc.
100 Patio products
Oldcastle Westile, Inc.
100 Concrete rooftile and pavers
Oldcastle Precast, Inc.
100 Precast concrete products, concrete
pipe, prestressed plank and
structural elements
Paver Systems, LLC
100 Hardscape products
Inland Concrete Enterprises, Inc.
100 Precast concrete products and
drainage products
Sakrete of North America, LLC
80 Holding company
124 CRH
Principal Joint Venture Undertakings
Principal Associated Undertakings
Incorporated and operating in % held Products and services
Incorporated and operating in % held Products and services
Europe Materials
Ireland
Europe Materials
Israel
Kemek Limited*
50 Commercial explosives
Mashav Initiating and Development 25 Cement
Limited
Portugal
Secil-Companhia Geral de
Cal e Cimento, S.A.*
Turkey
48.99 Cement, aggregates, concrete
Spain
products, mortar and readymixed
concrete
Corporación Uniland S.A.*
26.3 Cement, aggregates, readymixed
concrete and mortar
Denizli Çimento Sanayii T.A.ę.
50 Cement and readymixed concrete
Europe Products & Distribution
Europe Products & Distribution
France
Groupe SAMSE*
21.66 Builders Merchants, DIY stores
Belgium
Gefinex Jackon nv
49 XPS insulation
Americas Materials
Germany
United States
Bauking AG
47.82 Builders merchants, DIY stores
Buckeye Ready Mix, LLC*
45 Readymixed concrete
Jackon Insulation GmbH*
49.20 XPS insulation
Ireland
Williaam Cox Ireland Limited
50 Glass constructions, continuous
rooflights and ventilation systems
Netherlands
Bouwmaterialenhandel de Schelde bv 50 DIY stores
Portugal
Modelo Distribuição de Materiais
de Construção sa*
Americas Materials
United States
50 Cash & Carry building materials
American Cement Company, LLC
50 Cement
Bizzack, LLC
50 Construction
Boxley Aggregates of West Virginia, LLC 50 Aggregates
Cadillac Asphalt, LLC*
50 Asphalt
Americas Products & Distribution
United States
Architectural Products Group
Landmark Stone Products, LLC
50 Veneer stone
* Audited by firms other than Ernst & Young
Pursuant to Section 16 of the Companies Act,
1986, a full list of subsidiaries, joint ventures
and associate undertakings will be annexed to
the Company’s Annual Return to be filed in the
Companies Registration Office in Ireland.
CRH
125
Group Financial Summary
(Figures prepared in accordance with Irish GAAP)
1995
€m
1996
€m
1997
€m
1998
€m
1999
€m
2000
€m
2001
€m
2002
€m
2003
€m
2004
€m
Turnover including share of joint ventures
2,427
3,202
4,080
5,034
6,599
8,702
10,207
10,517
10,774
12,280
Group operating profit
Goodwill amortisation
Profit on disposal of fixed assets
Exceptional items
Profit on ordinary activities before interest
Net interest payable
Profit on ordinary activities before taxation
Tax on profit on ordinary activities
Tax on exceptional items
Profit on ordinary activies after tax
224
-
1
-
225
(21)
204
(42)
-
162
283
-
1
-
284
(28)
256
(58)
-
198
349
-
9
-
358
(36)
322
(76)
-
246
442
(1)
11
-
452
(43)
409
(100)
-
309
676
(19)
7
64
728
(93)
635
(152)
(26)
457
919
(44)
13
-
888
(191)
697
(194)
-
503
1,020
(61)
17
-
976
(173)
803
(217)
-
586
1,049
(70)
16
-
995
(139)
856
(227)
-
629
1,046
(76)
13
-
983
(118)
865
(218)
-
647
1,247
(101)
11
-
1,157
(140)
1,017
(247)
-
770
Employment of capital
Fixed assets
- Tangible assets
- Intangible asset - goodwill
- Financial assets
Net working capital
Other liabilities
Total
Financed as follows
Equity shareholders’ funds
Preference share capital
Minority shareholders’ equity interest
Capital grants
Deferred tax
Net debt
Convertible capital bonds
895
1,236
1,519
- - -
118
133
(13)
127
255
(25)
132
313
(61)
(a)
(b)
2,288
138
53
512
(286)
3,226
629
66
608
(430)
4,551
955
104
915
(470)
5,150
1,153
316
1,040
(479)
5,004
1,154
275
1,078
(443)
5,145
1,475
349
1,116
(429)
5,320
1,443
702
1,244
(429)
1,133
1,593
1,903
2,705
4,099
6,055
7,180
7,068
7,656
8,280
868
1
12
12
49
189
1,308
1,056
1
1
14
13
11
11
104
70
465
442
2 - -
1,553
1
285
20
116
730
-
2,201
1
37
19
172
1,669
-
3,074
1
36
17
307
2,620
-
4,734
1
135
16
400
1,894
-
4,747
1
111
14
485
1,710
-
4,758
1
90
13
486
2,308
-
5,217
1
82
11
528
2,441
-
(c)
(d)
1,133
1,593
1,903
2,705
4,099
6,055
7,180
7,068
7,656
8,280
Purchase of tangible assets
Acquisitions and investments
Total
109
164
273
150
532
682
147
241
388
232
604
360
1,421
430
1,605
452
1,080
367
992
402
1,615
520
922
836
1,781
2,035
1,532
1,359
2,017
1,442
Depreciation and goodwill amortisation
81
104
129
166
275
395
497
526
534
596
Earnings per share after goodwill
amortisation (cent)
Earnings per share before goodwill
amortisation (cent)
Dividend per share (cent)
Cash earnings per share (cent)
Dividend cover (times)
(e)
41.1
48.7
58.1
72.1
97.0
113.8
115.3
119.2
121.9
143.9
(e)
(f)
(e)
41.1
10.52
62.0
3.87
48.7
11.80
74.4
4.02
58.1
13.54
88.9
4.27
72.4
15.61
111.2
4.59
101.6
18.22
161.2
5.29
123.8
20.77
204.1
5.34
127.3
23.00
213.7
4.85
132.5
25.40
219.8
4.68
136.2
28.10
223.4
4.32
163.1
33.00
256.4
4.34
Notes to Irish GAAP financial summary data
(a) Excluding bank advances and cash and liquid investments which are included under net debt (see note (c) below).
(b)
Including deferred and contingent acquisition consideration due after more than one year and provisions for liabilities and charges and excluding
deferred tax.
(c) Net debt represents the sum of loans (including finance leases) and overdrafts falling due within one year, bank loans (including finance leases) falling
due after more than one year less cash and liquid investments.
(d)
Including supplemental interest.
(e) Excluding exceptional net gains in 1999.
(f) Cash earnings per share equals the sum of profit for the year attributable to ordinary shareholders, depreciation and goodwill amortisation divided by
the average number of Ordinary Shares outstanding for the year.
126 CRH
(Figures prepared in accordance with IFRS)
Revenue
Group operating profit
Profit on disposal of fixed assets
Profit before finance costs
Finance costs (net)
Group share of associates’ profit after tax
Profit before tax
Income tax expense
Group profit for the financial year
Employment of capital
Non-current and current assets
Property, plant and equipment
Intangible assets
Investments in associates/other financial assets
Net working capital
Other liabilities - current and non-current
Total
Financed as follows
Capital and reserves excluding preference share capital
Preference share capital
Minority interest
Capital grants
Net deferred income tax liability
Net debt
Total
Purchase of property, plant and equipment
Acquisition of subsidiaries and joint ventures
Total
Depreciation of property, plant and equipment
Amortisation of intangible assets
Restated
2004
€m
2005
€m
2006
€m
2007
€m
12,755 14,449 18,737
20,992
1,220
1,392
1,767
2,086
11
20
40
57
1,231
(146)
19
1,104
(232)
1,412
(159)
26
1,279
(273)
1,807
(252)
47
1,602
(378)
2,143
(303)
64
1,904
(466)
872
1,006
1,224
1,438
5,831
1,774
292
1,540
(1,035)
6,824
2,252
635
1,944
(1,243)
7,480
2,966
651
2,420
(1,099)
8,226
3,692
652
2,469
(869)
(g)
(h)
8,402 10,412 12,418
14,170
4,944
1
34
13
652
2,758
6,194
1
39
12
718
3,448
7,062
1
41
10
812
4,492
7,953
1
66
11
976
5,163
(i)
8,402 10,412 12,418
14,170
551
1,019
652
1,298
832
2,311
1,028
2,227
1,570
1,950
3,143
3,255
516
4
556
9
664
25
739
35
Earnings per share after amortisation of intangible assets (cent)
163.6
186.7
224.3
262.7
Earnings per share before amortisation of intangible assets (cent)
Dividend per share (cent)
Cash earnings per share (cent)
Dividend cover (times)
Notes to IFRS financial summary data
164.3
33.00
261.8
4.96
188.5
39.00
292.5
4.79
229.0
52.00
352.1
4.31
269.2
68.00
404.9
3.86
(j)
(k)
(g) Represents the sum of inventories and trade and other receivables (included in current assets) less trade and other payables (included in current
liabilities).
(h) Represents the sum of current income tax liabilities, current and non-current provisions for liabilities, non-current trade and other payables and retirement
benefit obligations.
(i) Represents the sum of current and non-current interest-bearing loans and borrowings and derivative financial instruments liabilities less the sum of liquid
investments, cash and cash equivalents and current and non-current derivative financial instruments assets.
(j) Cash earnings per share represents profit attributable to equity holders of the Company less preference dividends paid plus depreciation of property,
plant and equipment and amortisation of intangible assets divided by the average number of Ordinary Shares outstanding for the year.
(k) Represents earnings per Ordinary Share divided by dividends per Ordinary Share.
CRH
127
Index
A
Accounting policies
Acquisition of subsidiaries and joint ventures (note 33)
Acquisitions Committee
American Depositary Receipts
Americas - 2007 Results
Americas Materials - Operations Review
Americas Products & Distribution - Operations Review
Amortisation of intangible assets
- Geographical analysis (note 1)
- Intangible assets (note 14)
- Segmental analysis (note 1)
Annual General Meeting
Associated undertakings, principal
Associates’ profit after tax, Group share of (note 9)
Audit Committee
Auditors, Report of Independent
Auditors’ remuneration (note 4)
B
Balance sheet
- Company
- Group
Balance: regional, product, sectoral
Board approval of financial statements (note 35)
Board Committees
Board of Directors
C
Capital grants (note 28)
Cash and cash equivalents (note 21)
Cash flow statement, Group
Cash flow - summary
Chairman’s Statement
Chief Executive’s Review
Climate change
Code of business conduct
Compound average growth rates
Corporate governance
Corporate social responsibility
CREST
D
Debt, analysis of net (note 24)
Deferred acquisition consideration payable (note 19)
Deferred income tax
- Expense (note 10)
- Assets and liabilities (note 26)
128 CRH
Depreciation
- Group operating profit (note 4)
- Geographical (note 1)
- Property, plant and equipment (note 13)
- Segment (note 1)
Derivative financial instruments (note 23)
Page
72
70
83
68
92
Development activity
inside cover, 12
Page
61
108
40, 43
117
27
28
31
70
84
68
47, 131
120
79
40, 43
57
72
113
59
10
112
40, 43
40
104
89
60
37
12
15
10
44
37
Directors’ emoluments and interests (note 5)
Directors’ interests in share capital
Directors’ interests - share options
Directors’ remuneration, Report on
Directors’ Report
Directors’ responsibilities, Statement of
Disposal of fixed assets (note 16)
Dividend payments (shareholder information)
Dividends (note 11)
Dow Jones Sustainability Index
E
Earnings per Ordinary Share (note 12)
Economic cycles
Employees, average numbers (note 6)
Employment costs (note 6)
End-use
- Americas Materials
- Americas Products & Distribution
- Europe Materials
- Europe Products & Distribution
- Group
Environment
Europe - 2007 Results
Europe Materials - Operations Review
Europe Products & Distribution - Operations review
Exchange rates
F
Finance Committee
Finance costs and revenue (note 8)
8, 42
Finance leases (note 32)
8, 9
117
95
88
80
99
Finance Review
Financial assets (note 15)
Financial calendar
Financial summary, Group (1995-2007)
FTSE4Good
Fundamental materials
G
Geographic leadership positions
Group overview
Guarantees (note 25)
73
55
53
48
46
56
87
116
81
9
82
11
73
73
30
34
22
26
10
8
19
20
23
63
40, 44
79
107
35
86
117
126
9
2, 3
6, 7
2, 4, 6, 8, 10
98
Index continued
H
Health & safety
Highlights (financial)
I
Income Statement, Group
Income tax expense (note 10)
Innovest
Intangible assets (note 14)
Internal control
Inventories (note 17)
J
Joint venture undertakings, principal
Joint venture, proportionate consolidation (note 2)
K
Key components of 2007 performance
Key financial performance indicators
L
Leases, commitments under operating and finance (note 32)
Liquid investments (note 21)
Loans and borrowing, interest-bearing (note 22)
M
Management
Minority interest (note 31)
N
Nomination Committee
Notes on financial statements
Notice of Meeting
O
Operating costs (note 3)
Operating leases (note 32)
Operating profit, Group (note 4)
Operating profit margin
Operations reviews
- Americas Materials
- Americas Products & Distribution
- Europe Materials
- Europe Products & Distribution
P
Payments, share-based (note 7)
Pensions, retirement benefit obligations (note 27)
Property, plant and equipment (note 13)
Provisions for liabilities (note 25)
Proxy voting, electronic
Page
9
1
58
80
9
84
45
87
125
71
35
37
107
89
90
118
107
R
Registrars
Related party transactions (note 34)
Remuneration Committee
Reserves, share premium account, own shares, foreign
currency translation and retained income (note 30)
Retirement benefit obligations (note 27)
S
Segmental information (note 1)
Senior Independent Director
Share-based Payments (note 7)
Share capital, equity and preference (note 29)
Share options
- Directors
- Employees
Share premium (note 30)
Share price data
Shareholder information
Shareholdings as at 31st December 2007
Social & Community
Statement of Directors’ responsibilities
Statement of recognised income and expense, Group
Stock Exchange listings
Stakeholder communication
Strategic vision
40, 44
Strategy
Subsidiary undertakings, principal
Substantial holdings
Succession Committee
T
Page
117
112
40, 44
106
99
68
40, 42
73
105
53
74
106
117
116
117
9
56
58
117
44
inside cover
4, 5, 10, 11
120
47
44
Total Shareholder Return
inside cover
Trade and other payables (note 19)
Trade and other receivables (note 18)
Treasury information (note 24)
V
Volumes, annualised production
- Americas Materials
- Americas Products & Distribution
- Europe Materials
- Europe Products & Distribution
- Group
W
Website
Working capital, movement during year (note 20)
88
87
95
30
34
22
26
4, 5
117
89
CRH
129
68
131
72
107
72
36
28
31
20
23
73
99
83
98
Notice of Meeting
The Annual General Meeting of CRH plc will be held at the Royal Marine Hotel,
Marine Road, Dun Laoghaire, Co. Dublin at 11.00 a.m. on Wednesday, 7th May
2008 for the following purposes:
1. To consider the Company’s financial statements and the Reports of the
Directors and Auditors for the year ended 31st December 2007.
2. To declare a dividend on the Ordinary Shares.
3. To re-elect the following Directors:
Mr. N. Hartery
Mr. T.W. Hill
Mr. K. McGowan
Ms. J.M.C. O’Connor
in accordance with Article 103
Mr. U-H. Felcht
in accordance with Article 109.
4. To authorise the Directors to fix the remuneration of the Auditors.
5. To consider and, if thought fit, to pass as a Special Resolution:
That in accordance with the powers, provisions and limitations of
Article 11(e) of the Articles of Association of the Company, the Directors
be and they are hereby empowered to allot equity securities for cash
and in respect of sub-paragraph (iii) thereof up to an aggregate nominal
value of €9,195,000. This authority shall expire at the close of business
on the earlier of the date of the Annual General Meeting in 2009 or 6th
August 2009.
6. To consider and, if thought fit, to pass as a Special Resolution:
That the Company be and is hereby authorised to purchase Ordinary
Shares on the market (as defined in Section 212 of the Companies Act,
1990), in the manner provided for in Article 8A of the Articles of
Association of the Company, up to a maximum of 10% of the Ordinary
Shares in issue at the date of the passing of this Resolution. This
authority shall expire at the close of business on the earlier of the date
of the Annual General Meeting in 2009 or 6th August 2009.
7. To consider and, if thought fit, to pass as a Special Resolution:
That the Company be and is hereby authorised to re-issue treasury
shares (as defined in Section 209 of the Companies Act, 1990), in the
manner provided for in Article 8B of the Articles of Association of the
Company. This authority shall expire at the close of business on the
earlier of the date of the Annual General Meeting in 2009 or 6th August
2009.
Special Business
8. To consider and, if thought fit, to pass as a Special Resolution:
That Clause 4 (21) of the Memorandum of Association of the Company
be deleted and replaced by the following new Clause 4 (21):-
“(21) To lend and advance money or other property or give credit or
financial accommodation to any company or person in any
manner either with or without security and whether with or without
the payment of interest and upon such terms and conditions as
the Company’s board of directors shall think fit or expedient and
to guarantee, indemnify, grant indemnities in respect of, enter into
any suretyship or joint obligation, or otherwise support or secure,
whether by personal covenant, indemnity or undertaking or by
mortgaging, charging, pledging or granting a lien or other security
over all or any part of the Company’s property (both present and
future) or by any one or more of such methods or any other
method and whether in support of such guarantee or indemnity or
suretyship or joint obligation or otherwise, on such terms and
conditions as the Company’s board of directors shall think fit, the
payment of any debts or the performance or discharge of any
contract, obligation or actual or contingent liability of any person
or company (including, without prejudice to the generality of the
foregoing, the payment of any capital, principal, dividends or
interest on any stocks, shares, debentures, debenture stock,
notes, bonds or other securities of any person, authority or
company) including, without prejudice to the generality of the
foregoing, any company which is for the time being the
Company’s holding company as defined in section 155 of the
Companies Act 1963 and in any statutory modification or
re-enactment thereof, or subsidiary (as defined by the said section
155) of the Company or otherwise associated with the Company,
in each case notwithstanding the fact that the Company may not
receive any consideration, advantage or benefit, direct or indirect,
from entering into any such guarantee or indemnity or suretyship
or joint obligation or other arrangement or transaction
contemplated herein.”
9. To consider and, if thought fit, to pass as a Special Resolution:
That the Articles of Association be amended as follows:-
(i)
by deleting the definitions of “The Acts” and “Person” in Article 2
and replacing them with definitions as follows:-
“ “The Acts” means the Companies Acts, 1963 to 2005 and Parts
2 and 3 of the Investment Funds, Companies and Miscellaneous
Provisions Act 2006, all statutory instruments which are to be read
as one with, or construed or read together as one with, the
Companies Acts and every statutory modification and re-
enactment thereof for the time being in force;”
“ “Person” means where the context permits an unincorporated
body of persons, a partnership, a club or other association as well
as an individual and a company which shall be deemed to include
a body corporate, whether a company (wherever formed,
registered or incorporated), a corporation aggregate, a
corporation sole and a national or local government or authority or
department or other legal entity or division or constituent thereof;”
(ii) by deleting Article 12 and replacing it with the following new
Article 12:
“12. The Company may pay commission to any person in
consideration of a person subscribing or agreeing to
subscribe, whether absolutely or conditionally, for any shares
in the Company or procuring or agreeing to procure
subscriptions, whether absolute or conditional, for any
shares in the Company on such terms and subject to such
conditions as the Directors may determine, including, without
limitation, by paying cash or allotting and issuing fully or
partly paid shares or any combination of the two. The
Company may also, on any issue of shares, pay such
brokerage as may be lawful.”
(iii) by deleting sub-paragraphs (a) and (b) from the second paragraph
of Article 89 and replacing them with the following:
“(a) the amount of capital of the Company for the time being
issued, paid up, or credited as paid up and the amount for
the time being of the share premium account; and
CRH
131
Notice of Meeting continued
(b)
the amount standing to the credit of retained income,
Notes
foreign currency translation reserve and other reserves,
capital grants, deferred taxation and minority shareholders’
interest, less the amount of any repayable Government
grants, all as shown in the then latest audited consolidated
financial statements of the Company; less
(c)
the aggregate amount for the time being of treasury shares
and own shares held by the Company (such terms as used
in the latest audited consolidated financial statements of
the Company):”
(iv) by deleting Article 127 and replacing it with the following new
Article 127:
“127. Notwithstanding anything to the contrary contained in
these Articles, whenever any person (including without
limitation the Company, a Director, the Secretary, a
member or any officer or person) is required or
permitted by these Articles, the Acts or any other
enactment of the State to give information in writing,
such information may be given by electronic means or in
electronic form, whether as electronic communication or
otherwise, but only if the use of such electronic or other
communication conforms with all relevant legislation and
provided further that the electronic means or electronic
form used has been approved of by the Directors.”
For the Board, A. Malone, Secretary,
42 Fitzwilliam Square, Dublin 2.
2nd April 2008
(1) The final dividend, if approved, will be paid on the Ordinary Shares on
12th May 2008.
(2) Any member entitled to attend and vote at this Meeting may appoint a
proxy who need not be a member of the Company.
(3) Shareholders who wish to submit proxies via the internet may do so by
accessing either CRH’s website and selecting “Registrars” under
“Shareholder Services” in the Investor Relations section or by accessing
the Registrars’ website, www.capitaregistrars.ie and selecting “login to
Shareholder Services” under “On-line Services”. To submit a proxy on-
line shareholders are initially required to register for the service.
(4) CREST members may appoint one or more proxies through the CREST
electronic proxy appointment service in accordance with the procedures
described in the CREST Manual. CREST Personal Members or other
CREST sponsored members who have appointed a voting service
provider(s) should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their
behalf. Further information on CREST procedures and requirements is
contained in the CREST Manual. The message appointing a proxy(ies)
must be received by the Registrar (ID 7RA08) not later than 11.00 a.m.
on Monday, 5th May 2008. For this purpose, the time of receipt will be
taken to be the time (as determined by the timestamp generated by the
CREST system) from which the Registrar is able to retrieve the message
by enquiry to CREST in the manner prescribed by CREST. The Company
may treat as invalid a proxy instruction in the circumstances set out in
(Uncertificated
Regulation 35(5)(a) of
Securities) Regulations 1996.
the Companies Act 1990
(5) Pursuant to Regulation 14 of the Companies Act, 1990 (Uncertificated
Securities) Regulations, 1996, the Company hereby specifies that only
those shareholders registered in the Register of Members of the
Company as at 6.00 p.m. on Monday, 5th May 2008 shall be entitled to
attend or vote at the Annual General Meeting in respect of the number
of shares registered in their name at that time.
(6) The holders of preference shares, although entitled to receive copies of
the reports and financial statements, are not entitled to attend and vote
at this Meeting in respect of their holdings of such shares.
132 CRH
This report is printed on paper manufactured
to the highest environmental standards.
The wood pulp comes from forests that are
being continuously replanted.
Designed and produced by Lunt McIntyre.
Printed by The Printed Image.
CRH® is a registered trade mark of CRH plc
The International Building
Materials Group
CRH plc
Belgard Castle
Clondalkin
Dublin 22
Ireland
Telephone: +353 1 404 1000
Fax: +353 1 404 1007
E-mail: mail@crh.com
Website: www.crh.com
Registered Office
42 Fitzwilliam Square
Dublin 2
Ireland
Telephone: +353 1 634 4340
Fax: +353 1 676 5013
E-mail: crh42@crh.com
Front cover: Element AG, the largest provider
of precast concrete elements for building
construction and civil engineering in Switzerland,
is constructing various shops and distribution
centres for the discount chain ALDI as they enter
the Swiss market. Pictured here is the installation
of a double T-plate for the 580,000m3 capacity
ALDI Distribution Centre in Domdidier, Fribourg.
This centre is being constructed to tight deadlines
using 1,860 elements (facades and supporting
structures) and will open for operation in summer
2008. With three production locations, Element
AG annually produces and delivers 55,000m 3 of
precast elements to all regions of Switzerland.